Joincare Pharmaceutical Group Annual Report 2023
Stock Code: 600380 Stock Short Name: 健康元
Joincare Pharmaceutical Group Industry Co., Ltd.
2023 Annual Report
Joincare Pharmaceutical Group Annual Report 2023
Important Notice
I. The Board of Directors (the “Board”), the Board of Supervisors and directors, supervisorsand senior management of the Company hereby warrant the truthfulness, accuracy andcompleteness of the contents of this annual report (the “Report”), and that there are no falserepresentations, misleading statements or material omissions contained in the Report, andseverally and jointly accept legal responsibility.
II. All directors of the Company attended the Board meeting.
III. Grant Thornton (Special General Partnership) issued a standard unqualified audit reportfor the Company.
IV. Mr. Zhu Baoguo (朱保国), the person-in-charge of the Company, and Mr. Qiu Qingfeng(邱庆丰), the person-in-charge of accounting work and the person-in-charge of the accountingdepartment (the head of the accounting department) declare that they hereby warrant thetruthfulness, accuracy and completeness of the financial statements contained in the Report.
V. Profit distribution plan or plan for conversion of capital reserve to share capital approvedby the Board resolution during the Reporting Period
Based on the audit conducted by Grant Thornton (Special General Partnership), in 2023, the ParentCompany generated net profit of RMB1,241,411,898.00, 10% of which was contributed to thestatutory surplus reserve, namely RMB124,141,189.80, the remainder of which, together withundistributed profits for the last year of RMB1,968,175,713.20 and gain on disposal of other equityinvestments of RMB1,245,892.23, subtracting cash dividends for the last year ofRMB336,792,056.76, is the profits available for distribution to shareholders for the year ofRMB2,749,900,256.87. The Company plans to distribute cash dividends for the fiscal year 2023,based on the total number of shares for dividend distribution, which is defined by the total shares ofCompany on the equity registration date designated by the annual profit distribution plan. TheCompany plans to distribute cash dividend of RMB1.80 (tax inclusive) for every 10 shares of to allshareholders of the Company, and the remaining undistributed profits will be carried forward to thefollowing year.
VI. Risk declaration for the forward-looking statements
√Applicable □N/A
The Report contains forward-looking statements which involve the future plans, developmentstrategies, etc. of the Company, yet do not constitute substantive undertakings of the Company toinvestors. Investors should exercise caution prior to making investment decisions.
VII. Whether there is non-operating use of funds by the controlling shareholder and theirrelated partiesNo
VIII. Whether there is a violation of the prescribed decision-making procedures to provideexternal guarantees
Joincare Pharmaceutical Group Annual Report 2023
No
IX. Whether more than half of directors cannot warrant the truthfulness, accuracy andcompleteness of the Report disclosed by the CompanyNo
X. Significant risk warningsThere is no exceptionally significant risk that will have a material impact on the production andoperation of the Company during the Reporting Period. In this Report, the Company has elaboratedon the risks and countermeasures that the Company may face in the course of production andoperation, including industry policy risk, market risk, risk of safety and environmental protection,risk in price and supply of raw materials and R&D risk. For more information, please refer to“Potential risks” part in Chapter 3 Management Discussion and Analysis.
XI. Others
□Applicable √N/A
Joincare Pharmaceutical GroupAnnual Report 2023
Table of Contents
Important Notice ...... 2
Chairman's Statement ...... 5
Financial Highlights ...... 9
Chapter 1 Definitions ...... 11
Chapter 2 Company Profile and Major Financial Indicators ...... 13
Chapter 3 Management Discussion and Analysis ...... 18
Chapter 4 Corporate Governance ...... 78
Chapter 5 Environmental and Corporate Social Responsibility ...... 100
Chapter 6 Major Events ...... 128
Chapter 7 Changes in Equity and Shareholders ...... 146
Chapter 8 Information on Preferred Shares ...... 153
Chapter 9 Information on Bonds ...... 154
Chapter 10 Financial Statements ...... 155
| List of documents available for inspection | The Financial Statements signed and sealed by the person-in-charge of the Company, the person-in-charge of the Company's accounting work and the person-in-charge of the accounting department (the head of the accounting department) |
| The original document of the auditors’ report sealed by the accounting firm and signed and sealed by the certified public accountants | |
| The original copies of all documents and announcements of the Company which have been disclosed to the public on the website designated by CSRC (China Securities Regulatory Commission) during the Reporting Period |
Joincare Pharmaceutical Group Annual Report 2023
Chairman's Statement
Dear shareholders,2023 marked the first year of the implementation of the guiding principles of the 20th CPC NationalCongress. China’s health undertakings made new significant achievements and the construction ofhealthy China accelerated. This year, the pharmaceuticals industry underwent all-sector, full-chainand full-coverage system governance, while industry-friendly policies were introduced frequentlyamidst challenges and opportunities. Driven by policy support, scientific and technologicalinnovation, and market demand, the pharmaceutical industry system witnessed notable optimizationand upgrading, with innovation-led and high-quality development emerging as the prevailing theme.In retrospect of 2023, Joincare adhered to its dual-drive strategy of innovative medicines and high-barrier complex formulations, focusing on the high-quality development of the principalpharmaceutical business. Overcoming challenges, Joincare not only achieved substantialachievements in research, production, and marketing, but also enhanced its overall R&D capabilitiesand innovation levels by leveraging business development channels to swiftly expand its R&D andinnovation pipeline reserves, which laid a solid foundation for the Group to achieve comprehensiveinnovative transformation. Facing various challenges such as price reductions in key varieties dueto volume-based procurementand intensified competition in the APIs market, all employees of theGroup worked diligently and unitedly and made concerted efforts to achieve the Group’s annualbusiness objectives.In 2023, the Group realized total revenues of RMB16.646 billion, representing a year-on-yeardecrease of 2.90%; realized a net profit attributable to shareholders of the listed company ofRMB1.443 billion, representing a year-on-year decrease of 3.99%; and realized a net profitattributable to shareholders of the listed company after deduction of the extraordinary gains andlosses of RMB1.374 billion, representing a year-on-year decrease of 3.18%.We firmly believe that robust performance is the cornerstone of creating value forshareholders and we are committed to providing shareholders with excellent returns. Basedon the operating results and overall financial position of the Group in 2023, the Board of Directorsproposed that we continue to adopt a stable profit distribution scheme in 2023. Specifically, a cashdividend of RMB1.80 (tax inclusive) for every 10 shares will be distributed to all shareholders ofthe Company, based on the total number of shares on the equity registration date designated by theannual profit distribution plan for 2023. No bonus shares will be distributed and no conversion ofcapital reserve into share capital will be carried out. The profit distribution scheme for 2023 is yetto be reviewed and approved at the Company’s 2023 Annual General Meeting.In 2023, the Group further carried out and practiced the dual-drive strategy of innovativemedicines and high-barrier complex formulations, implemented differentiated R&Dstrategy,and created a diversified product matrix and a rich pipeline. In terms of R&D innovation, theGroup adhered to a development philosophy centered on R&D innovation, and differentiallydeployed innovative medicines and high-barrier complex formulations through self-research andintroduction to achieve high-quality development.We continued to increase our R&D expenditures and made breakthroughs in the construction ofseveral major platforms, including inhalation formulation, antibody, and sustained-releasemicrospheres for injections. In 2023, the Group made great progress on various innovativemedicines and high-barrier complex formulations in the R&D pipeline. In terms of innovativemedicines, Ilaprazole Sodium for injection (注射用艾普拉唑钠) with new indication andTriptorelin Acetate Microspheres for Injection (注射用醋酸曲普瑞林微球) with prostatic cancer
Joincare Pharmaceutical Group Annual Report 2023
indication were approved for launching; Recombinant SARS-COV-2 Bivalent (Original/OmicronXBB) Fusion Protein Vaccine (CHO Cell) (重組新型冠状病毒融合蛋白二价(原型株/OmicronXBB变异株)疫苗(CHO细胞)) was approved for EUA; and Aripiprazole Microspheres forInjection (注射用阿立哌唑微球) were applied for marketing launch. TG-1000 capsules andRecombinant Anti-human IL-17A/F Humanized Monoclonal Antibody Injection (重组抗人IL-17A/F人源化单克隆抗体注射液) had commenced the phase III clinical trials. In terms of high-barrier complex formulations, Formoterol Fumarate Inhalation Solution (富马酸福莫特罗吸入溶液), Long Chain Fat Emulsion Injection (长链脂肪乳注射液) (OO) and Tocilizumab Injection (托珠单抗注射液) were approved for market launch; and Salmeterol Xinafoate-FluticasonePropionate Powder for Inhalation (沙美特罗替卡松吸入粉雾剂) completed Phase III clinical trialand was the first to apply for marketing launch after the issuance of new domestic regulations.We are deeply engaged in the construction of innovative R&D technology platforms for innovativeand high-barrier complex formulations, so as to continuously improve our independent R&Dcapabilities and competitiveness. In December 2023, Meloxicam Nanocrystalline Injection (美洛昔康纳米晶注射液), which was independently developed by the Group, received approval forclinical trials. This success represents a significant breakthrough in the Group’s newly establishedR&D platform for complex injections, injecting fresh energy into the Group’s progress in this area.Meanwhile, Joincare Biopharmaceutical Research Institute also made a series of significantbreakthroughs in the field of synthetic biology. As of the end of 2023, the Institute had applied fora total of 14 national invention patents (with 4 granted), 8 utility model patents (with 4 granted),Moreover, the Institute obtained 1 software copyright and published 2 high-level academic papers.In order to further deepen the implementation of the Group’s innovative development strategy, westrengthened independent innovation and foreign cooperation to accelerate R&D innovation andupgrading. In 2023, the Group successfully introduced innovative medicines such as TG-1000, anew anti-influenza medicine, and DBM-1152A, a new dual-targeted medicine of LABA+LAMA,further expanding the Group’s R&D pipeline in the sector of respiratory diseases. Additionally, theGroup actively expanded into new sectors, and obtained the exclusive licensing rights for FZ008-145, an analgesic drug in the Greater China region.In terms of marketing innovation, in 2023, the Group continuously consolidated its user-centricdigital marketing system and promoted steady performance growth with brand building. In therespiratory drug sector, the Group continued to promote the construction of its digital marketingplatform through the establishment of a flat management ecosystem and the acceleration of digitalmarketing and other measures. Leveraging digital tools, the Group expedited its marketing progress.Meanwhile, through analyzing patients’ feedback on medicine taking and focusing on publicawareness campaigns on respiratory diseases, the Group offered entire-process services fromdisease awareness to disease treatment, ultimately improving our brand recognition and influence.In the health care productsand OTC segment, the Group accomplished a successful marketingreform, showing robust growth in sales revenue. Through ongoing optimization and enhancementof its marketing strategy, which integrated online and offline channels, the Group established a data-driven DTC brand digital marketing system centered on user engagement. This initiative injectednew vitality into the brand, resulting in significant performance-driven outcomes.In terms of international expansion, the Group steadily accelerated its internationalization strategy.In 2023, the revenues of the Group from overseas operations were RMB2,584 million, representing
15.64% of the Group’s revenues from principalbusinesses.
In addition to maintaining its existing strengths in APIs exports, the Group proactively promotedthe global planning and strategy for our key formulation products. In 2023, 4 chemical formulations
Joincare Pharmaceutical Group Annual Report 2023
of the Company were approved for registration in overseas markets, and 14 new registrations weresubmitted. Among them, Compound Ipratropium Bromide Solution was completed the registrationreview in Philippines and obtained the registration approval in January 2024, LevosalbutamolHydrochloride Nebulizer Solution was submitted the registration application in Macao and obtainedthe registration approval in February 2024, and Cetrorelix Acetate for Injection was submitted theregistration application to the United States.Leveraging the opportunity of the successful issuance of Global Depository Receipts (GDRs) onthe Swiss Exchange in 2022, the Group’s Investor Relation Team actively engaged in overseasroadshows in countries such as Singapore, the United Arab Emirates, Switzerland. They showcasedthe Group’s business model, financial condition, and development strategy to overseas investors,effectively enhancing the Group’s international visibility and influence This initiative receivedpositive responses from a wide range of investors.In addition to commitment to business development, we actively participated in social welfareundertakings, effectively fulfilled our social responsibilitiesby integrating ESG concepts intoour strategic planning and daily operations. As a leading manufacturer of inhalation formulationsin China, we consistently upheld our commitment to serving the nation and its people as apharmaceutical company. Following the inclusion of three inhalation formulation products,雾舒?,舒坦琳?, and 丽雾安?, in the fifth round of national volume-based procurement, and theinclusion of 特瑞通
?in the seventh round of national volume-based procurement, LevosalbutamolHydrochloride Nebulizer Solution (盐酸左沙丁胺醇雾化吸入溶液) successfully won the biddingin the ninth round of national volume-based procurement. As of the end of 2023, TobramycinSolution for Inhalation (妥布霉素吸入溶液) (健可妥
?
), the first independently developed inhaledantibiotics in China, was included in the latest National Reimbursement Drug List. Thisdevelopment is anticipated to enhance the drug’s accessibility and offer more convenient andeffective treatment options for a large number of patients. In 2023, the inhalation formulationsegment of Joincare recorded a revenue of RMB1,741 million, representing a year-on-year increaseof 48.35%. This also means that more and more Chinese people are using domestically produced,high-quality and affordable new drugs.To improve public awareness of chronic disease diagnosis, treatment, and management, the Grouporderly conducted public awareness campaigns through academic publications, public welfareactions, and the promotion of science popularization, thereby raising public health awareness andadvancing universal healthcare development. As of the end of 2023, “Respiratory Experts’ Views”(呼吸专家说), a public welfare patient education platform in the domestic respiratory diseasessector under the Group, which is the first of its kind in the industry, has collaborated with over 5,000doctors in popularizing the scientific concept on the prevention of chronic respiratory diseasesamong millions of followers. It focused on chronic obstructive pulmonary disease (COPD), asthma,bronchiectasis and other respiratory diseases with high morbidity but low awareness and rate ofstandardized treatment, so as to support the “Healthy China 2030” initiative.Over the years, we have always kept in mind our responsibilities as a corporate citizen, activelyresponded to national call, and continued to devote ourselves to the construction of healthy Chinaand the rural revitalization plan. Leveraging our industrial strengths, we consistently launched the“Access to Public Welfare for Chronic Diseases Prevention and Treatment (普惠慢病防治公益项目)” program. This program currently covers 8 provinces and 4 autonomous regions in China,effectively easing the financial burdens of low-income households and solidifying the gains madein poverty alleviation efforts. In 2023, the Group’s public welfare donations amounted toapproximately RMB25.9846 million.As we look forward to 2024, the international situation will be complex and unpredictable,
Joincare Pharmaceutical Group Annual Report 2023
presenting various challenges to the development of China’s pharmaceutical industry alongside newopportunities for growth. This year, for the first time “innovative medicines, bio-manufacturing,and life sciences” were collectively mentioned in the government work report during the NationalPeople's Congress and the Chinese People's Political Consultative Conference indicating potentialbreakthroughs for the industry. The Group will stay true to its original aspiration, be poised to seizeopportunities, and steadfastly commit to achieving high-quality growth objectives by anchoring tothe two pillars of “innovation” and “internationalization”, so as to promote the Group's all-aroundinnovation and transformation.Firstly, we will continue to increase investment in innovation to improve R&D and businessdevelopment capabilities, boost the Group’s R&D employment across various segments, andcontinuously enrich and consolidate the Group’s innovative product pipelines. Secondly, we willtransform and upgrade our intelligent manufacturing to comprehensively enhance productcompetitiveness through quality improvements, cost reductions and efficiency enhancements.Thirdly, we will deepen digital marketing reforms to reshape brand positioning with a user-centricdriver, thereby expanding product market shares. Fourthly, we will strengthen our partnership withglobal strategic customers, accelerate international product registrations and certifications, enhancethe market development of our superior products, so as to further increase our overseas marketshares, and propel the Group towards sustainable high-quality growth.In 2023, we faced challenges head-on and moved forward with courage. In 2024, we embrace ouroriginal aspirations, ready to embark on the journey with renewed vigor and determination.In the new year, we will continue to deepen the dual-drive strategy of innovative medicines andhigh-barrier complex formulations, deeply integrate the overall situation of “introduction” and“going global”, fully accelerate the progress of innovative research and development and thecommercialization of new products, further enhance our competitive edges in the future, andcontinue to struggle for the Group’s all-around innovation, transformation and high-qualitydevelopment. On behalf of the Board of the Company, I would like to take this opportunity toexpress my sincere gratitude to all Shareholders, employees and business partners of Joincare foryour long-lasting care, companionship and support!
Chairman: Zhu Baoguo
2 April 2024
Joincare Pharmaceutical Group Annual Report 2023
Financial Highlights
Joincare Pharmaceutical Group Annual Report 2023
Financial Highlights
Joincare Pharmaceutical Group Annual Report 2023
Chapter 1 Definitions
I. Definitions
In this Report, unless the context otherwise requires, the following expressions shall have thefollowing meanings:
| Definitions of common terms | ||
| CSRC | Refers to | China Securities Regulatory Commission |
| SSE | Refers to | Shanghai Stock Exchange |
| Baiyeyuan or the Controlling Shareholder | Refers to | Shenzhen Baiyeyuan Investment Co., Ltd. * (深圳市百业源投资有限公司) |
| Company, the Company, Group or the Group | Refers to | Joincare Pharmaceutical Group Industry Co., Ltd.* (健康元药业集团股份有限公司) |
| BD | Refers to | Business Development |
| GMP | Refers to | Good Manufacturing Practice |
| GSP | Refers to | Good Supply Practice |
| CE | Refers to | The certification of the products by European Union, indicating that the product has complied the safety requirements specified in the European Directives. The access condition for a product to enter the EU market is that the product has undergone the appropriate conformity assessment procedures and the declaration of conformity of a manufacturer, with attachment of CE mark |
| CEP | Refers to | Certificate of Suitability to Monograph of European Pharmacopoeia |
| NRDL | Refers to | National Reimbursement Drug List |
| BE | Refers to | Bioequivalence |
| EUA | Refers to | Emergency Use Authorization |
| CPC | Refers to | Cephalosporin C |
| DTC | Refers to | Direct-to-Consumers |
| KOL | Refers to | Key Opinion Leader |
| AIPL | Refers to | Awareness, Interest, Purchase, Loyalty |
| ANDA | Refers to | Abbreviated New Drug Application |
| BLA | Refers to | Biologics License Application |
| IND | Refers to | Investigational New Drug Application |
| R&D | Refers to | Research and Development |
| TCM | Refers to | Traditional Chinese Medicine |
| NHSA | Refers to | National Health Security Administration |
| NMPA | Refers to | National Medical Products Administration |
| RTO | Refers to | Regenerative Thermal Oxidizer |
| Livzon Group | Refers to | Livzon Pharmaceutical Group Inc.* (丽珠医药集团股份有限公司) |
| Haibin Pharma | Refers to | Shenzhen Haibin Pharmaceutical Co., Ltd.* (深圳市海滨制药有限公司) |
| Joincare Haibin | Refers to | Joincare Haibin Pharmaceutical Co., Ltd.* (健康元海滨药业有限公司) |
| Xinxiang Haibin | Refers to | Xinxiang Haibin Pharmaceutical Co., Ltd. * (新乡海滨药业有限公司) |
| Taitai Pharmaceutical | Refers to | Shenzhen Taitai Pharmaceutical Co., Ltd. * (深圳太太药业有限公司) |
| Taitai Genomics | Refers to | Shenzhen Taitai Genomics Inc. Co., Ltd. * (深圳太太基因工程有限公司) |
| Joincare Biopharmaceutical Research Institute | Refers to | Henan Province Joincare Biopharmaceutical Research Institute Co., Ltd. *（河南省健康元生物医药研究院有限公司） |
| Jiaozuo Joincare | Refers to | Jiaozuo Joincare Bio Technological Co., Ltd.*（焦作健康元生物制品有限公司） |
| Joincare Daily-Use | Refers to | Joincare Daily-Use & Health Care Co., Ltd. * (健康元日用保健品有限公司) |
Joincare Pharmaceutical Group Annual Report 2023
| Topsino | Refers to | Topsino Industries Limited * (天诚实业有限公司) |
| Fenglei Electric Power | Refers to | Shenzhen Fenglei Electric Power Investment Co., Ltd. *（深圳市风雷电力投资有限公司） |
| Health Pharmaceutical | Refers to | Health Pharmaceutical (China) Co., Ltd. * (健康药业(中国)有限公司) |
| Shanghai Frontier | Refers to | Shanghai Frontier Health Pharmaceutical Technology Co., Ltd. *(上海方予健康医药科技有限公司) |
| Joincare Special Medicine Food | Refers to | Joincare (Guangdong) Special Medicine Food Co., Ltd. *(健康元(广东)特医食品有限公司) |
| Livzon MAB | Refers to | Livzon MABPharm Inc. * (珠海市丽珠单抗生物技术有限公司) |
| Livzon Diagnostics | Refers to | Zhuhai Livzon Diagnostics Inc. * ( 珠海丽珠试剂股份有限公司) |
| Fuzhou Fuxing | Refers to | Livzon Group Fuzhou Fuxing Pharmaceutical Co., Ltd.*(丽珠集团福州福兴医药有限公司) |
| Livzon Xinbeijiang | Refers to | Livzon Group Xinbeijiang Pharmaceutical Manufacturing Inc.*( 丽珠集团新北江制药股份有限公司) |
| Ningxia Pharmaceutical | Refers to | Livzon Group (Ningxia) Pharmaceutical Manufacturing Co., Ltd.* ( 丽珠集团 ( 宁夏) 制药有限公司) |
| Gutian Fuxing | Refers to | Gutian Fuxing Pharmaceutical Co., Ltd. * ( 古田福兴医药有限公司) |
| Livzon Hecheng | Refers to | Zhuhai FTZ Livzon Hecheng Pharmaceutical Manufacturing Co., Ltd. * ( 珠海保税区丽珠合成制药有限公司) |
| Livzon Limin | Refers to | Livzon Group Limin Pharmaceutical Manufacturing Factory *(丽珠集团利民制药厂) |
| Livzon Pharmaceutical Factory | Refers to | Livzon Group Livzon Pharmaceutical Factory * (丽珠集团丽珠制药厂) |
| Jiaozuo Hecheng | Refers to | Jiaozuo Livzon Hecheng Pharmaceutical Manufacturing Co., Ltd.* ( 焦作丽珠合成制药有限公司) |
| Shanghai Livzon | Refers to | Shanghai Livzon Pharmaceutical Manufacturing Co., Ltd. *( 上海丽珠制药有限公司) |
| Sichuan Guangda | Refers to | Sichuan Guangda Pharmaceutical Manufacturing Co., Ltd. *( 四川光大制药有限公司) |
| Jinguan Electric Power | Refers to | Jiaozuo Jinguan Jiahua Electric Power Co., Ltd. *( 焦作金冠嘉华电力有限公司) |
| LivzonBio | Refers to | Zhuhai Livzon Biotechnology Co., Ltd.*( 珠海市丽珠生物医药科技有限公司) |
| COVID-19 | Refers to | A new coronavirus (SARS-CoV-2) |
| COVID- 19 pandemic or pandemic | Refers to | The outbreak of the disease caused by a new coronavirus called SARS-CoV-2 |
| Ruihua Certi?ed Public Accountants | Refers to | Ruihua Certi?ed Public Accountants (Special General Partnership) |
| Grant Thornton | Refers to | Grant Thornton (Special General Partnership) |
| Reporting Period | Refers to | From 1 January 2023 to 31 December 2023 |
| End of the Reporting Period | Refers to | 31 December 2023 |
| Currency or unit | Refers to | RMB unless otherwise speci?ed |
Joincare Pharmaceutical Group Annual Report 2023
Chapter 2 Company Profile and Major Financial Indicators
I. Company profile
| Chinese name of the Company | 健康元药业集团股份有限公司 |
| Abbreviation of the Chinese name | 健康元 |
| English name of the Company | Joincare Pharmaceutical Group Industry Co., Ltd. |
| Abbreviation of the English name | Joincare |
| Legal representative of the Company | Zhu Baoguo(朱保国) |
II. Contact persons and contact information
| Board Secretary | Representatives of Securities A?airs | |
| Name | Zhao Fengguang ( 赵凤光 ) | Li Hongtao( 李洪涛 ) and Luo Xiao( 罗逍 ) |
| Address | Joincare Pharmaceutical Group Building, No. 17, Langshan Road, North District, Hi-tech Zone, Nanshan District, Shenzhen | Joincare Pharmaceutical Group Building, No. 17, Langshan Road, North District, Hi-tech Zone, Nanshan District, Shenzhen |
| Telephone | 0755-86252656, 0755-86252388 | 0755-86252656, 0755-86252388 |
| Fax | 0755-86252165 | 0755-86252165 |
| zhaofengguang@joincare.com | lihongtao@joincare.com luoxiao@joincare.com |
III. Introduction of the Company's basic information
| Registered address | Joincare Pharmaceutical Group Building, No. 17, Langshan Road, North District, Hi-tech Zone, Nanshan District, Shenzhen |
| Historical changes in registered address | Registered at B5, Hengfeng Industrial City, Hezhou Community, Huangtian Village, Xin’an Town, Bao’an County on 18 December 1992 Changed its registered address to 4-5/F, Dongpeng Building, Shangmeilin Industrial Area, Futian District, Shenzhen on 25 May 1994 Changed its registered address to 24/F, Block B, Fujian Building, Caitian South Road, Futian District, Shenzhen on 4 July 1995 Changed its registered address to 23/F, Diwang Building, Shun Hing Square, No .333, Shennan East Road, Shenzhen on 20 June 1997 Changed its registered address to Taitai Pharmaceutical Industrial Building, the 5th Industrial Area, Nanshan District, Shenzhen on 22 September 2000 Changed its registered address to 23/F, Diwang Building, Shun Hing Square, No .5002, Shennan East Road, Luohu District, Shenzhen on 4 June 2003 Changed its registered address to Joincare Pharmaceutical Group Building, No. 17, Langshan Road, North District, Hi-tech Zone, Nanshan District, Shenzhen on 29 January 2008 Changed its registered address to Joincare Pharmaceutical Group Building, No. 17, Langshan Road, North District, Hi-tech Zone, Nanshan District, Shenzhen on 27 November 2012 |
| O?ce address | Joincare Pharmaceutical Group Building, No. 17, Langshan Road, North District, Hi-tech Zone, Nanshan District, Shenzhen |
| Postal code of O?ce address | 518057 |
| Website | www.joincare.com |
| joincare@joincare.com |
IV. Information disclosure and place for inspection
Joincare Pharmaceutical Group Annual Report 2023
| Designated media and website for disclosing annual report | China Securities Journal, Securities Times, Securities Daily, and Shanghai Securities News |
| Stock exchange website for disclosing annual report | www.sse.com.cn |
| The place for inspection of annual report | O?ce address of the Company |
V. Company stock profile
| Company Stock Profile | ||||
| Class of stock | Listed on | Stock Abbreviation | Stock code | Stock abbreviation prior to change |
| A Share | Shanghai Stock Exchange | 健康元 | 600380 | 太太药业, S健康元 |
| GDR | SIX Swiss Exchange | Joincare Pharmaceutical Group Industry Co., Ltd. | JCARE | / |
VI. Other relevant information
| Accounting firm appointed by the Company (domestic) | Name | Grant Thornton (Special General Partnership) |
| O?ce address | 5th Floor, Scitech Palace, 22 Jianguomen Wai Avenue, Chaoyang District, Beijing | |
| Name of the signing accountants | Wang Yuan (王远) and Wang Qilai (王其来) | |
| Sponsor appointed for performing the duty of continuous supervisory responsibilities during the Reporting Period | Name | Minsheng Securities Co., Ltd. |
| O?ce address | 8 Puming Road, China (Shanghai) Pilot Free Trade Zone | |
| Representatives signing the report | Yu Chunyu (于春宇) and Ma Chujin (马初进) | |
| Period of continuous supervision | From 24 October 2018 to 31 December 2019 |
Note: According to Article 12.2.2 of “the Rules Governing the Listing of Stocks on Shanghai Stock Exchange”, foroffering of new stocks or convertible corporate bonds by a listed company, the period of continuous supervision andguidance shall be the remaining time of the current year of the listing of securities and the following one fullaccounting year. As the Company issued shares to the public by allotment on 24 October 2018, the period ofcontinuous supervision should start from the completion of this issuance and end on 31 December 2019. Furthermore,according to “Article 13 of the Guidelines of Shanghai Stock Exchange for Self-Regulation Rules for ListedCompanies No. 11 - Continuous Supervision”, the sponsor shall continue to perform the obligations of continuoussupervision if the funds raised have not been fully utilized upon the expiration of the continuous supervision period.During the Reporting Period, funds raised in this issuance have not yet been fully utilized, so the sponsor, MinshengSecurities, shall continue to perform its continuous supervision obligations in respect of the deposit and utilizationof the funds raised.
VII. Major accounting data and financial indicators in the last three years
(1) Major accounting data
Unit: Yuan Currency: RMB
| Major accounting data | 2023 | 2022 | YoY Change (%) | 2021 | ||
| After adjustment | Before adjustment | After adjustment | Before adjustment | |||
| Revenues | 16,646,350,349.72 | 17,142,753,068.82 | 17,142,753,068.82 | -2.90 | 15,903,688,266.59 | 15,903,688,266.59 |
| Net pro?t attributable to shareholders of the listed | 1,442,779,722.23 | 1,502,777,133.76 | 1,502,595,840.48 | -3.99 | 1,328,453,099.44 | 1,328,499,432.05 |
Joincare Pharmaceutical Group Annual Report 2023
| company | ||||||
| Net pro?t attributable to shareholders of the listed company after deduction of extraordinary gains and losses | 1,374,136,730.41 | 1,419,232,205.54 | 1,419,050,912.26 | -3.18 | 1,224,951,038.96 | 1,224,997,371.57 |
| Net cash ?ow from operating activities | 3,928,909,609.73 | 3,977,705,139.29 | 3,977,705,139.29 | -1.23 | 2,563,089,045.24 | 2,563,089,045.24 |
| End of 2023 | End of 2022 | Increase or decrease at the end of the period over the same period of last year(%) | End of 2021 | |||
| After adjustment | Before adjustment | After adjustment | Before adjustment | |||
| Net assets attributable to shareholders of the listed company | 13,755,901,924.06 | 13,121,955,371.22 | 13,121,820,410.55 | 4.83 | 11,820,247,324.08 | 11,820,293,656.69 |
| Total assets | 36,358,126,258.82 | 35,735,429,731.71 | 35,729,253,651.41 | 1.74 | 31,112,098,179.40 | 31,103,900,389.29 |
Note: Retroactive adjustments to accounting data for the previous years due to changes in accounting policies.
(2) Major financial indicators
| Major ?nancial indicators | 2023 | 2022 | YoY Change (%) | 2021 | ||
| After adjustment | Before adjustment | After adjustment | Before adjustment | |||
| Basic earnings per share (RMB/share) | 0.7580 | 0.7934 | 0.7933 | -4.46 | 0.6863 | 0.6864 |
| Diluted earnings per share (RMB/share) | 0.7565 | 0.7922 | 0.7921 | -4.51 | 0.6858 | 0.6858 |
| Basic earnings per share after deduction of extraordinary gains and losses (RMB/share) | 0.7219 | 0.7493 | 0.7492 | -3.66 | 0.6329 | 0.6329 |
| Weighted average return on net assets (%) | 11.00 | 12.23 | 12.23 | Decreased by 1.23 percentage points | 11.50 | 11.50 |
| Weighted average return on net assets after deduction of extraordinary gains and losses (%) | 10.47 | 11.55 | 11.55 | Decreased by 1.08 percentage points | 10.60 | 10.60 |
Note: Retroactive adjustments to accounting data for the previous years due to changes in accounting policies.
Statement on major accounting data and ?nancial indicators within three years before the End ofthe Reporting Period
□Applicable √N/A
VIII. Differences in accounting data under domestic and foreign accounting standards
(1) Differences in net profit and net assets attributable to shareholders of the listed companydisclosed in the financial statements according to international financial reporting standards(IFRS) and Chinese accounting standards (Chinese GAAP)
□ Applicable √ N/A
Joincare Pharmaceutical Group Annual Report 2023
(2) Differences in net profit and net assets attributable to shareholders of the listed companydisclosed in the financial statements according to foreign accounting standards and Chineseaccounting standards
□ Applicable √ N/A
(3) Explanations on differences under domestic and foreign accounting standards:
□ Applicable √ N/A
IX. Major financial indicators in 2023 by quarter
Unit: Yuan Currency: RMB
| 1st quarter (Jan. - Mar.) | 2nd quarter (Apr.- Jun.) | 3rd quarter (Jul. - Sept.) | 4th quarter (Oct. - Dec.) | |
| Revenues | 4,559,049,786.82 | 4,160,691,812.41 | 3,931,515,787.21 | 3,995,092,963.28 |
| Net pro?t attributable to shareholders of the listed company | 462,746,183.03 | 352,688,551.87 | 268,214,419.85 | 359,130,567.48 |
| Net profit attributable to Shareholders of the listed company after deducting the extraordinary gains or losses | 446,772,473.94 | 334,971,668.24 | 267,477,595.49 | 324,914,992.74 |
| Net cash flow from operating activities | 248,084,750.71 | 1,009,122,934.83 | 1,202,644,059.16 | 1,469,057,865.03 |
Statement on differences between quarterly data and the data disclosed in previous periodicreports
□Applicable √N/A
X. Items and amounts of extraordinary gains and losses
√Applicable □N/A
Unit: Yuan Currency: RMB
| Item of extraordinary gains and losses | 2023 | 2022 | 2021 |
| Gain or loss on disposal of non-current assets | -169,901.01 | -705,357.30 | 14,492,047.24 |
| Government grants recognized in profit or loss for the current period (excluding government grants that are closely related to the business of the Company and are provided in fixed amount or quantity continuously according to the applicable polices and standards of the country) | 233,058,407.11 | 286,842,932.33 | 245,335,140.69 |
| Gains and losses on fair value changes incurred from financial assets held for trading, derivative financial assets, financial liabilities held for trading and derivative financial liabilities, and investment income on disposal of financial assets held for trading, derivative financial assets, financial liabilities held for trading, derivative financial liabilities and other debt investments, except for effective hedging activities related to the ordinary operating business of the Company | -48,440,235.41 | -109,887,696.11 | 8,110,644.25 |
| Reversal of impairment loss on accounts receivable and contract assets tested for impairment individually | 1,013,650.67 | 158,470.77 | 1,013,650.67 |
| Other non-operating income and expenses apart from the above items | -41,010,372.38 | -23,830,838.49 | -30,737,442.83 |
| Less: Effect of income tax | 21,086,934.90 | 31,919,034.26 | 39,580,260.30 |
| Effect of minority equity (after tax) | 54,721,622.26 | 37,113,548.72 | 95,131,719.24 |
| Total | 68,642,991.82 | 83,544,928.22 | 103,502,060.48 |
Joincare Pharmaceutical Group Annual Report 2023
Explanations for the Company’s extraordinary gain or loss items as defined in the “ExplanatoryAnnouncement No.1 for Public Company Information Disclosures – Extraordinary Gains orLosses”, and the extraordinary gain or loss items as illustrated in the “Explanatory AnnouncementNo.1 for Public Company Information Disclosures – Extraordinary Gains or Losses” which hasbeen defined as its recurring gain or loss items.
□ Applicable √ N/A
XI. Items measured at fair value
√ Applicable □ N/A
Unit: Yuan Currency: RMB
| Item | Beginning balance | Ending balance | Change for the period | Effect on profits & losses for the period |
| Financial assets held for trading | 109,015,664.98 | 82,899,154.24 | -26,116,510.74 | -48,752,886.09 |
| Financial liabilities held for trading | 755,634.43 | 86,817.12 | -668,817.31 | 668,817.31 |
| Other equity instrument investments | 1,193,958,879.05 | 1,155,283,408.36 | -38,675,470.69 | 29,344,854.27 |
| Total | 1,303,730,178.46 | 1,238,269,379.72 | -65,460,798.74 | -18,739,214.51 |
XII. Others
□ Applicable √ N/A
Joincare Pharmaceutical Group Annual Report 2023
Chapter 3 Management Discussion and Analysis
I. Discussion and analysis of business operation2023 is the first year to fully implement the spirit of the 20th National Congress of the CommunistParty of China, and also the key year for economic recovery after three years of pandemic preventionand control in COVID-19. The pharmaceutical industry has ushered in a systematic governance inall fields, chains and coverages. Facing the slow global economic recovery, as well as marketchallenges such as price reduction in centralized procurement in Meropenem for Injection andintensified competition in the API market, the Company adhered to the mission of “For the health,For the future” and the vision to “Diligently make high-quality and innovative drugs”, focused onhigh-quality development of the pharmaceutical industry, increased R&D investment, enhancedR&D innovation capabilities as well as promoted differentiated product pipeline upgrading, so asto achieve long-term sustainable development.
(1) Dual-driver strategy of “innovative drugs + high-barrier complex formulations” andaccelerating the transformation to innovative pharmaceutical enterprisesThe Company deeply implemented the dual-driver strategy of “innovative drugs + high-barriercomplex formulations”, focused on unmet clinical needs, accelerated product projects initiation anddevelopment, optimized R&D pipelines as well as improved the technical contents and levels ofproducts. In terms of innovative drugs, the new indications of Ilaprazole Sodium for injection andthe prostate cancer indications of Triptorelin Acetate Microspheres for Injection were approved forlaunching, Recombinant SARS-COV-2 Bivalent (Original/Omicron XBB) Fusion Protein Vaccine(CHO Cell) was approved for EUA, Lipustobart for Injection was submitted for conditionallaunchapproval, Aripiprazole Microspheres for Injection and Triptorelin Acetate Microspheres forInjection were submitted for launching application for endometriosis indication, and RecombinantAnti-human IL-17A/F Humanized Monoclonal Antibody Injection was initiated Phase III clinicaltrials. In terms of high-barrier complex formulations, Formoterol Fumarate Inhalation Solution,Long Chain Fat Emulsion Injection (OO) and Tocilizumab Solution for Injection were approved forlaunching, Salmeterol Xinafoate-Fluticasone Propionate Powder for Inhalation completed Phase Ⅲclinical trials, which the first company submitted for registration application in China following thepublication of the Guideline for Bioequivalence Study on Genetic Drugs of Orally Inhaled DrugProducts. And Meloxicam Nanocrystal Injection and other products had obtained clinical approvaland conducted Phase III clinical trails. The Company is actively expanding the research anddevelopment of pharmaceutical and medical device combinations, its mesh nebulizer was approvedas a Class II medical device, its airway stent was submitted a Class III medical device registrationapplication, and the smear drug dispenser was completed the registration of Class I medical device.
Joincare Pharmaceutical Group Annual Report 2023
While continuously strengthening independent innovation, the Company continued to deepen thecooperative development and licensing introduction of varieties in core fields, docked with globalsuperior resources and cutting-edge technologies, and strengthened its own commercialization andintegration capabilities. During the Reporting Period, the Company made significant progress inBusiness Development (BD), successfully introduced several innovative pharmaceutical productsin the respiratory, digestive, nervous, cardiovascular and analgesia systems accelerating itstransformation into an innovative pharmaceutical enterprise. TG-1000 capsules, a new influenzadrug, entered Phase III clinical trails andcompleted the enrolment plan. DBM-1152A, a double-target innovative drug, could act on both M receptor and β receptor (MABA) at the same time toplay a synergistic role in bronchiectasis, and successfully entered Phase I clinical trials. N91115, anoral innovative drug for asthma treatment, a small molecular inhibitor of GSNOR, could reduce theinflammatory response of asthma patients has entered Phase Ⅰ clinical trails. Potassium IonCompetitive Acid Blocker (P-CAB), an innovative medicine of digestive system, obtained clinicalapproval in February 2024. FZ008-145, a highly selective second-generation Nav1.8 inhibitor,providing potent, non-addictive analgesia, obtained clinical approval in January 2024, and is poisedto enter clinical trials. Meanwhile, both the thrombin inhibitor HHT120 and the innovativeantidepressant LS21031 have been carried out Phase Ⅰ clinical trials.
(2) Establishing a sound marketing management system and enhancing the brand value ofJoincareDuring the Reporting Period, the Company’s sales of prescription drugs faced challenges due toprice reduction in centralized procurement, industry regulation and other factors. Combining withnational policies, the Company continued to build and improve the marketing system by takingvarious measures, and actively implemented the sales deployment: paid attention to the constructionof a sales team, enhanced the terminal coverage of core products, implemented refined managementand precise coverage of terminals, formulated scientific and personalized performance appraisalindicators, optimized salary system, and enhanced self-driving force and team vitality of the salesteam; centered on core varieties, continued to deepen evidence-based construction, advocatedcooperation among the medical department, the marketing department and the sales team, activelyparticipated in national or regional academic conferences, pushed forward post-marketing researchof key products in an orderly manner; as well as continued to promote the construction of a digitalmarketing platform, focused on popular science of diseases, linked doctors with patients, offeredrefined services for patients, and gave full-process services for patients from “knowing diseases” to“treating diseases”; Increased patients’ awareness of diseases and products, and enhanced brandawareness; as well as actively followed up the implementation of national medical reform policy.During the Reporting Period, Tobramycin Inhalation Solution and Triptorelin Acetate Microspheresfor Injection were included in the China’s National Reimbursement Drug List and IlaprazoleSodium for injection was successfully renewed its qualification for NRDL and expended thereimbursement scope. Meanwhile, 2 products were included in the eighth batch of national volume-
Joincare Pharmaceutical Group Annual Report 2023
basedprocurement and 1 product was included in the ninth batch of national volume-basedprocurement, reducing the economic burden of patients and improving the accessibility of drugs.In 2023, the global trade environment was complicated and changeable. Facing the challengingexternal situations and fierce competitions, the Company’s API sales team actively sought abreakthrough. The export business of high-end antibiotics, pet deworming medications andintermediate products continued to deepen the market segment. In the second half of the year, theCompany seized the opportunity of market recovery, and had several products maintained theirleading positions in terms of global market share: High-end antibiotic products such as teicoplaninand daptomycin maintained good growth as a result of benefiting from the volume of downstreamformulation products; Pet deworming medication series products including Milbeoxime, Moxikedinand Doramectin were cooperated with internationally renowned animal protection companies,making the market share further rose. The export of intermediate mycophenolic acid deepenedcustomer cooperation, and the ceftriaxone industry chain was linked up and down, achieving steadygrowth. And in terms of domestic sales, the domestic market share of meropenem API, ceftriaxonesodium and cefuroxime sodium continued to rise, while the sales of other products such as lovastatinand acarbose kept growing.
(3) Deepening the international strategies and steadily advancing the internationalizationprocessThe Company’s products have been exported to over 80 countries and regions in Asia, Europe,North America, Africa, etc. In order to continuously intensify the overseas market layout, theCompany has carried out business visits to Southeast Asia, and made strategic deployments toestablish international production bases and accelerate product exports in the future. The Companyis actively promoting international registration and certification; and currently, the registration andapplication process for Meropenem APIs is underway in Japan. High-end pet drugs like Fluralanerand Afoxolaner, antibiotic products like Dalbavancin Hydrochloride as well as Meropenem Crudehave completed industrial validation and batch production and are currently undergoing registrationand application in the United States; and Sulfate Polymyxin B has also completed industrialvalidation and batch production and is currently undergoing registration and application in China,the United States and Europe simultaneously. As at the end of 2023, 18 varieties have passed theon-site inspection of international certification, and 35 international certificates were obtainedwithin the validity period.The Company actively expanded its international business in pharmaceutical products, andcontinued to sell and register respiratory, assisted reproductive, digestive, psychiatric and anti-infection products in countries such as Pakistan, Indonesia, the Philippines and Vietnam. During theReporting Period, 4 chemical formulations of the Company were approved for registration inoverseas markets, and 14 new registrations were submitted. Among them, Compound Ipratropium
Joincare Pharmaceutical Group Annual Report 2023
Bromide Solution was completed the registration review in Philippines and obtained the registrationapproval in January 2024, Levosalbutamol Hydrochloride Nebulizer Solution was submitted theregistration application in Macao and obtained the registration approval in February 2024, andCetrorelix Acetate for Injection was submitted the registration application in the United States.
(4) Emphasizing both to quality and efficiency, prioritizing automation and intelligence toenhance productivity.The Company actively practiced high-standard and compliant system management, continuouslystrengthened quality and EHS capacity building, constantly elevated system support capacity,further enhanced core business competitiveness, and better guaranteed sustainable and healthydevelopment. In terms of quality system management, the Company adhered to the basic principlesof “risk management, full-process control and social co-governance”, and established a riskmanagement system covering R&D, production and operation modules to comprehensively controlquality risks throughout the product lifecycle. In the meantime, with a view to improving employeequality awareness and strengthening the quality culture construction, the Company publicizedquality knowledge through monthly quality activities, regulatory training, document training andother methods, and created a quality awareness of “emphasizing quality and valuing regulations”,thereby providing effective guarantees for the safety and stability of its products in various fields.In terms of EHS system management, the Company established an environmental managementsystem conforming to ISO14001 standard and an occupational health and safety managementsystem conforming to ISO45001 standard, continuously optimized the management system, activelyadvanced the certification of green factory, and steadily improved its own safety, environment andoccupational health levels. The Company continuously strengthened the development andconstruction of source emission reduction and pretreatment processes for wastewater, waste gas andsolid waste, and constantly promoted the construction of and capacity improvement in three-wastefacilities.The Company continuously increased its investment in upgrading equipment and facilities andtechnically transforming production processes, with its investment amount for technical upgradeand operation maintenance of environmental protection equipment exceeding RMB103 million. Allproduction enterprises inferior to the Company continued to embrace independent innovation toupgrade quality and efficiency, and carried out actions such as automation upgrading, processoptimization, energy saving and consumption reduction, so as to help the Company produce safelyand efficiently and accelerate production capacity release. Among them, the new factory of SichuanGuangda Pharmaceutical Manufacturing Co., Ltd. has been completed and put into use, realizingthe transformation and upgrading of Chinese medicine manufacturing; and Shenzhen HaibinPharmaceutical Co., Ltd. has completed the construction of electronic management system in someworkshops and put it into use.
Joincare Pharmaceutical Group Annual Report 2023
(5) Deeply engage in practicing the ESG principles, driving the fulfillment of corporate socialresponsibilityThe Company actively practiced the concept of sustainable development, and continuouslyoptimized corporate governance, R&D innovation, employee care, environmental protection andsocial responsibility, having achieved remarkable results. In 2023, MSCI, an internationalauthoritative index institution, upgraded the Company’s rating from “BBB” to “AA”, revealing theindustry-leading level of the Company, and fully reflecting the recognition and affirmation of theCompany’s ESG management achievements and sustainable development ability by theinternational capital market. The Company valued environmental protection, carried forward theenvironmental management policy of “pollution prevention, compliance with laws and regulations,continuous improvement”, actively improved energy efficiency, intensified green investment, aswell as formulated and strove to achieve the goal of “carbon emission peaking in 2028 and carbonneutrality in 2055”. The Company always kept in mind its corporate citizenship responsibility,actively responded to the call of the state, invested in the healthy China construction and the ruralrevitalization plan, and carried out the “Access to Public Welfare for Chronic Diseases Preventionand Treatment Program” in combination with its own industrial advantages, which so far hascovered 8 provinces and 4 autonomous regions across the country, effectively alleviating theeconomic burden of low-income families. Meanwhile, the Company fully supported industrialassistance, consolidated the achievements of poverty alleviation and difficulty tackling, carried outpublic science popularization in an orderly manner, and helped improve public health knowledge.In 2023, the aggregate amount of public welfare donations of the Company was approximatelyRMB25.9846 million.II. Overview on the industry in which the Company operates during the Reporting PeriodThe pharmaceutical industry is a national strategic emerging industry bearing on the nationaleconomy and people’s livelihood, and an important part of the national economy. During the “13thFive-Year Plan” period, the average annual growth rate of the added value of pharmaceuticalindustry above designated scale was 9.5%, 4.2 percentage points higher than the overall growth rateof all the industries, and the proportion of the total added value of the pharmaceutical industry tothat of all the industries increased from 3.0% to 3.9%; the average annual growth rate of theoperating revenues and total profit of enterprises above designated scale were 9.9% and 13.8%,respectively, being at the forefront of various industries in terms of growth rate. At the same time,the scale of leading pharmaceutical manufacturers has further expanded with the steadily increasingindustry concentration. According to the 14th Five-Year Plan for the Development ofPharmaceutical Industry (《“十四五”医药工业发展规划》), the overall development of thepharmaceutical industry will reach a new level. In 2023, with the deepening reform of the nationalmedical and healthcare system and increasing improvement in the innovation environment, thepharmaceutical industry continued to advance towards high-quality development featuring
Joincare Pharmaceutical Group Annual Report 2023
transformation as well as upgrading and encouraging innovation. With the aging population and theincreasing urbanization rate in China, from the long-term and holistic perspective, China’spharmaceutical industry will continue to present a promising development trend.Data of National Bureau of Statistics shows that in 2023, enterprises in the pharmaceuticalmanufacturing industry above designated scale in China recorded revenues of RMB2,520.57 billion,representing a year-on-year decrease of 3.7%; operating costs of RMB1,440.16 billion, representinga year-on-year decrease of 2.3%; and total profits of RMB347.30 billion, representing a year-on-year decrease of 15.1%.III. Overview on the businesses of the Company during the Reporting Period(I) Principal businesses and products of the CompanyThe Company is primarily engaged in the R&D, production and sales of pharmaceutical productsand health care products. The business scope of the Company covers chemical pharmaceuticals,biologics, chemical active pharmaceutical ingredients (APIs) and intermediates, traditional Chinesemedicine, diagnostic reagents, equipment, health care products, etc. The enriched product series andmix provide larger market and growth opportunities for the Company. Main products of theCompany are as follows:
Joincare Pharmaceutical Group Annual Report 2023
(II) Business model of the CompanyWith the stable operation and rapid development over the years, the Company has become anintegrated pharmaceutical group that is driven by scientific research and innovation, integrating theR&D, production, sale and service of pharmaceutical and health care products. It has completesystems of R&D, procurement, production and sale. Main business models of the Company are asfollows:
1. R&D
Combining independent R&D, external introduction and cooperative development, the Companyhas been paying attention to the cutting-edge technology and unmet clinical needs, with effortsfocused on innovative drugs and high-barrier complex formulations and has established an efficientR&D innovation management model. In terms of independent innovation, the Company has adiversified and multi-dimensional R&D organization with mature R&D teams for chemicalpharmaceuticals, biologics, TCM drugs, APIs, diagnostic reagents and health care products. Basedon technology platform construction, the Company has built a clear product R&D pipeline centeringon key areas such as respiratory, tumor immunity and psychiatry. In terms of cooperative innovation,the Company has launched technical cooperation with domestic and foreign scientific researchinstitutions by way of commissioned development or cooperative development, and has introducednew technologies and products that meet the strategic development goal of the Company throughtechnology transfer or license-in to implement industrial transformation, so as to reinforce andstrengthen our position and strategy in the leading and emerging fields.
2. Procurement
In terms of procurement, the Company pays strict attention to effectiveness, quality and cost ofprocurement and has established long-term and stable partnership with many suppliers. Activepharmaceutical ingredients, supplementary materials, and packaging materials were purchased andstocked up by manufacturers according to production schedules. The Company has developed strictquality standards and procurement management systems and required subordinate manufacturers tomake procurements in accordance with the GMP. Meanwhile, the Company established long-termstrategic partnerships with bulk material suppliers, and strengthened the management of supplyquality and cost control based on strict quality standards. The Company has established an internalevaluation system and files of market prices so as to promptly acquire market information forprocurement through comparisons of quality and price.
3. Production
In terms of production, the Company adopts the principle of market demand-oriented approachpaying attention to real market demand. Specifically, the Sales Department of the Companyinvestigated market demands, made sales plans, and comprehensively considered factors such asthe product inventory quantity and capacity of production lines of the Company so as to determine
Joincare Pharmaceutical Group Annual Report 2023
the monthly production quantities and specifications. Moreover, the purchase orders of rawmaterials are determined according to the production schedule and the inventory levels of rawmaterials. The final production plans are issued upon approval of the management of the Companyand implemented by the Production Technology Department of the Company.The Company has been carrying out production in strict accordance with the GMP. The Companyand its affiliates have established a sound quality management system and implemented thequalified-person system. In terms of quality control, the Company has established a strict and soundproduction quality assurance system, and is geared to international standards and subject tointernational certification while in compliance with national standards. The Company conductsannual GMP self-inspection, ISO9001 internal and external audits, and is subject to various externalaudits. It actively pursued the internationally advanced GMP management, and implemented whole-process quality control over supplier selection, audit, incoming material inspection, productionprocess, product release from factory, and market tracking. The system is running well.
4. Sales
(1) Drug formulation products
End customers of drug formulation products (chemical pharmaceuticals, biologics, traditionalChinese medicine) of the Company are mainly hospitals, clinics, and retail pharmacies. In line withthe pharmaceutical industry practice and the sales model of most peers in the industry, the Companyhas conducted sales of drug formulation products through drug distribution enterprises. TheCompany carried out selection and centralized management of qualified drug distributionenterprises (with Drug Supply Certificate, GSP Certification, etc.) according to their distributioncapability, market familiarity, financial strength, credit record, and operation scale. General salesprocess: After end customers place purchase orders to distribution enterprises, drug distributionenterprises will send those orders to the Company according to their inventories, distributionagreements and conditions; then, the Group will deliver products to drug distribution enterprisesand do the revenue recognition.
(2) APIs and intermediates
Main target customers of APIs are large pharmaceutical manufacturers. The selling prices aredetermined based on a set of integrated factors such as costs of production, inventory levels, industryrivalry and market trend. Specific pricing method: The sales and marketing department conductweekly or bi-weekly meetings to analyze the current market conditions, the trends and drivers ofprices; the selling prices are determined based on a set of comprehensive factors such as costs ofproduction, inventory levels, industry rivalry and market conditions; the selling prices will beeffective once are reported by the managers of the sales department to our management team andget approvals.
Joincare Pharmaceutical GroupAnnual Report 2023
Specific sales methods of APIs include: ① Domestic market: The Company directly signs productsales contracts with large manufacturers to directly sell products to customers. Meanwhile, theCompany also sells products through distributors. ② Foreign market: The Company directly sellsproducts in the foreign market and in areas with high market and political risks, products are soldthrough distributors. At present, products of the Company are mainly exported to over 60 countriesand regions in Asia, Europe, North America, and Africa.
(3)Diagnostic reagents and equipment
Diagnostic reagents and equipment sold by the Company both domestically manufactured andimported. Main end customers are hospitals, centers for disease control and prevention, and healthdepartments. The Company mainly sells those products in combination with direct sales and salesthrough drug distribution enterprises.The Company has an experienced sales team responsible for the sales of diagnostic reagents andequipment, with provision of marketing support for some drug distribution enterprises. TheCompany carried out selection and centralized management of qualified drug distributionenterprises (with Drug Supply Certificate, GSP Certification, etc.) according to their distributioncapability, market familiarity, financial strength, credit record, and operation scale.
(4)Health care products
The sales model of health care products is mainly distributor management model. Productpromotion, price control, and channel carding are managed and improved with the distributordistribution channel and terminal coverage capability. At present, the Company has set up 25provincial branches and maintained long-term partnership with distributors with better areacoverage capability for stable strategic alliance and common development. The Company hascooperated with about 103 first-level/primary distributors in total, including 82 businesses in drugdistribution line and approximately 30 businesses in food distribution line with more than 400,000subordinate secondary businesses and end user businesses in drug and food distribution lines.Products are well managed and promoted through the tiered marketing channel. In addition to thetraditional distribution management model, the Company realizes synergetic development throughonline channels. At present, the Company has set up official flagship stores on mainstream e-commerce platforms such as Tmall(天猫), Jingdong（京东）, Douyin（抖音）, Kuaishou (快手)and Pinduoduo (拼多多).(III)Industry status of the CompanyThrough years of development, the Company has become an integrated pharmaceutical enterprisecovering multiple sectors including chemical pharmaceuticals, biologics, chemical APIs andintermediates, traditional Chinese medicine, diagnostic reagents and equipment, health careproducts. Chemical pharmaceuticals are the largest revenue generator of the Company, amongwhich gastroenterological products, anti-infection products and gonadotropic hormones products
Joincare Pharmaceutical Group Annual Report 2023
are traditional competitive products of the Company, with key products securing a long-standingleading position in national drug formulation market segment. Respiratory and psychiatric productshave been the focus of the Company, with key products maintaining a strong sales growthmomentum.During the Reporting Period, the Company, leveraging its robust R&D and production capabilitiesand steady marketing presence, the Company ranked Top 10 in “2022 Annual Ranking of Top 100Chinese Chemical Drug Enterprises”, and top 100 in “China's comprehensive strength in drug R&Din 2023”.(IV) Performance drivers during the Reporting Period2023 marks a year of China’s economic recovery. Despite the tightening macroeconomicenvironment including tightening industry regulation policy, the company remained focused on itscore business. Despite the adverse factors such as a decrease in the volume-based procurement priceof its key product Meropenem for injection and intensified competition in the APIs market, westrengthened sales through professional, refined and compliant management. During the ReportingPeriod, the contribution of sales revenues from key formulation products in key specialist areas,especially in fields of respiratory and psychiatry, to overall revenues was continuously improved.In terms of the health care products segment, the Company continued to upgrade the market strategyof interpenetration and coordination between online and offline channels, and have established auser-centric digital marketing system, leading to rapid growth in sales performance. At the sametime, the Company continues to increase its R&D expenditures. While strengthening its independentR&D capabilities, the Company had introduced multiple innovative medicine projects throughexternal introductions and co-development, continuously reinforced its leading position in areassuch as respiratory and gastroenterology, and gradually expanded and upgraded its pipelines in areassuch as cardiovascular diseases and analgesia to consolidate the foundation for its overall innovationand transformation.IV. Analysis of core competitive strengths during the Reporting Period
√Applicable □N/A
1. Leading integrated pharmaceutical company under continuous innovation anddevelopment in ChinaThe Company is primarily engaged in the R&D, production and sale of pharmaceutical productsand health care products. The business scope of the Company covers chemical pharmaceuticals,biologics, chemical APIs and intermediates, TCM drugs, diagnostic reagents and equipment, as wellas health care products, allowing the Company to establish competitive advantages across varioustherapeutic areas such as respiratory, anti-infection, assisted reproduction, gastroenterology,psychiatry, and tumor immunity. 1) Innovative R&D drives growth: The Company has developedand launched a number of innovative medicine products and high-barrier complex formulation
Joincare Pharmaceutical Group Annual Report 2023
products, strengthening the Group’s product portfolio and drug candidates in the pipeline. 2) TheCompany has first-tier commercialization ability, and its sales network covers all provinces in Chinaand over 80 overseas countries and regions in the world. The Company emphasizes scientificpromotion and evidence-based marketing. By building a professional marketing team, the Companyhas established a comprehensive marketing system, and market education and brand building havebeen deeply strengthened through digital marketing. Leveraging our comprehensive sales channels,broad market coverage, leading digital marketing and brand awareness, the Company is able to sellthe products at scale in an efficient manner. 3) Cross-industry and multi-specialist innovative R&Dand coordinated development: On one hand, the Company actively adapts to the changes in thepharmaceutical market and constantly adjusts its product strategy and R&D direction according topolicies and clinical needs. This will realize the continuous iteration and upgrade of the mainproducts. On the other hand, the Company fully utilizes external scientific research and commercialresources, such as strategic collaboration with Chinese Academy of Sciences, Tencent QuantumLab and other scientific research institutes and innovative companies and invests in cutting-edgebiotechnology companies to expand the Company’s product portfolio and R&D pipeline, thusrealizing the Company’s sustainable development.
2. Strong R&D capabilities, diversified product portfolio and leading commercializationcapabilitiesFocusing on innovative medicines and high-barrier complex formulation, the Company has formeddiversified product portfolio. With the huge clinical demand and high product quality, it hasestablished market competitive advantages in many pharmaceutical segments. The Company’schemical pharmaceuticals cover gastroenterology, assisted reproduction, anti-infection, respiratory,psychiatry, tumor and other fields, among which alimentary tract proton pump inhibitor (PPI) drugs,gonadorelin hormone drugs, and inhalation formulation for respiratory diseases have anadvantageous market position. Relying on APIs production, the Company’s core products, togetherwith our chemical APIs and intermediates, form an integrated and stable pharmaceutical industrialchain of “APIs-formulations vertical integration”. Meanwhile, the Company actively developsoverseas markets, and our products are marketed and distributed worldwide, facilitating strategiccooperation with many internationally renowned pharmaceutical companies. In addition, theCompany also has a number of TCM drugs and in vitro diagnostic reagent products and hasaccumulated resources and extensive brand influence in healthcare products for many years.
3. Making breakthroughs in the key R&D and industrialization technologies of complexformulationThe technology platform, which has been developed over the years in the field of innovativemedicines and high-barrier complex formulation, enables the Company to address the complexprocess problems in the R&D and production of relevant drugs. Guided by clinical value, theCompany develops R&D projects with high short-term certainty and cutting-edge technologies with
Joincare Pharmaceutical GroupAnnual Report 2023
long-term growth potential (such as AI-driven drug molecular design, proteolysis targeted chimeric(PROTAC), synthetic biology, gene-editing, cellular treatment, etc.). All in all, the Company’sR&D system covers through-cycle of drug development and production. Based on the mature R&Dplatform of innovative drugs and high-barrier complex formulations, the Company has designedextensive pipeline in fields with significant clinical demand such as respiratory, gastroenterology,assisted reproduction, psychiatry, and tumor.In recent years, the company has continuously enhanced and strengthened its commercial expansionefforts, adhering to our dual-drive strategy of innovative medicines and high-barrier complexformulations. While focusing on independent innovation, we also continued to deepen cooperationin the development and licensing introduction of core varieties, aligning with global advantageousresources and cutting-edge technologies. This strategic initiative strengthens the company'scommercial and integration capabilities, accelerating the pace of the company's transformation intoan innovative pharmaceutical enterprise.
4.Stable management and R&D team with expertise, long-term vision and commitment tosocial responsibilityThe Company has a stable, visionary and experienced, results-oriented management team and anoutstanding talent team. Outstanding leaders are the key to the Company’s rapid development. Thefounder of the Company has over 30 years of expertise in the pharmaceutical industry as well as aglobal vision and a strategic mindset. With a deep industry insight, the founder has led us developplatform technologies centered on high-barrier complex formulations, which has established leadingposition of the Group with sustainable development in the broader healthcare industry. The seniormanagement team of the Company has over 20 years of industry experience on average, with anaverage of more than 10 years of service in the Company, and has a thorough understanding ofmarket demand, industry development and growth opportunities. Each key R&D field of theCompany is led by industry-leading scientists and accompanied by an efficient R&D managementteam. In addition, the Company has upheld the core value of “Putting People First, ValuingWorkmanship and Quality, Pursuing Innovation and Truth, Promoting Cooperation and Sharing”and laid emphasis on talent team training to build a diversified reserve of talents with global vision,advanced knowledge, strong implementation capability and sense of self-reliance. Driven by thecorporate culture of pursuing excellence, the talent team works diligently and conscientiously tojointly contribute to the sustainable development of the enterprise through teamwork andcollaboration.V.Overview of business operations during the Reporting PeriodDuring the Reporting Period, the Company realized revenues of RMB16,646 million, representinga year-on-year decrease of approximately 2.90%; a net profit attributable to shareholders of thelisted company of RMB1,443 million, representing a year-on-year decrease of approximately 3.99%,and a net profit attributable to shareholders of the listed company after deducting the extraordinary
Joincare Pharmaceutical Group Annual Report 2023
gains or loss of RMB1,374 million, representing a year-on-year decrease of approximately 3.18%.Business development of various segments of the Company is as follows:
(1)Livzon Group (excluding Livzon MAB)
As at the End of the Reporting Period, the Company directly and indirectly held 45.34% equityinterest in Livzon Group (000513.SZ, 01513.HK). During the Reporting Period, Livzon Group(excluding Livzon MAB) realized revenues of RMB12,521 million, representing a year-on-yearincrease of approximately 0.78%; and realized a net profit of approximately RMB1,130 millionattributable to shareholders of the Company.During the Reporting Period, the formulation drug sector of Livzon Group was affected by multiplefactors such as price reduction in medical insurance and centralized rectification of thepharmaceutical industry, resulting in a slight decline. The proportion and profitability of high-endspecialty APIs in the API segment steadily increased. The sales of its products in the key therapeuticareas are as follows: Gastroenterology products realized revenues of RMB2,903 million,representing a year-on-year decrease of approximately 15.50%; gonadotropic hormones productsrealized revenues of RMB2,767 million, representing a year-on-year increase of approximately
6.80%; and psychiatry products realized revenues of RMB602 million, representing a year-on-yearincrease of approximately 10.54%.
(2)Livzon MAB
As at the End of the Reporting Period, the equity interest held by the Company in Livzon MAB was
56.19%, and the amount affecting the Company's net profit attributable to the parent company forthe current period was approximately RMB-609 million.Livzon MAB continued to focus on the fields such as autoimmune diseases, vaccines, oncology andassisted reproduction. With the R&D projects gradually enter the production and commercializationstage, the quality system improvement and product commercialization process of Livzon MAB werealso continuously accelerating. During the Reporting Period, the progress in R&D of key biologicalproducts was set out as below:
Recombinant Human Choriogonadotropin alfa for Injection（注射用重组人绒促性素） wasapproved for market launch and sales in 2021 as the first generic drug in China’s mainland. Throughactively conducting its work related to overseas registration, it has been approved for market launchin Tajikistan and Indonesia and its launching application has been submitted in Uzbekistan, Pakistan,Philippines and Nigeria. Tocilizumab Injection（托珠单抗注射液） has been approved for marketlaunch in early 2023. Its approved indications include rheumatoid arthritis, cytokine releasesyndrome (CRS) and systemic juvenile idiopathic arthritis (sJIA). Following the emergency use ofRecombinant SARS-CoV-2 Fusion Protein Vaccine V-01（重组新型冠状病毒融合蛋白疫苗V-01), Recombinant SARS-COV-2 Bivalent (Original/Omicron XBB) Fusion Protein Vaccine (CHO
Joincare Pharmaceutical Group Annual Report 2023
Cell) （重组新型冠状病毒融合蛋白二价（原型株/Omicron XBB变异株）疫苗 （CHO细胞））Vaccine was approved for emergency use in December 2023. Recombinant Human Follitropin AlfaSolution for Injection（重组人促卵泡激素注射液）is in the phase III clinical trials, and more than65% of the subjects have been enrolled as of the end of the Reporting Period; Recombinant Anti-human IL-17A/F Humanized Monoclonal Antibody Injection（重组抗人IL-17A/F人源化单克隆抗体注射液） officially launched the phase III clinical trial for psoriasis indication in August 2023,which is the first IL-17 drug in China to initiate a head-to-head clinical study with Secukinumab（司库奇尤）. In addition, the indication of ankylosing spondylitis indication declared by BeijingKanova, our partner, officially launched the phase Ⅲ clinical trial in September 2023. The launchingof pre-BLA for the conditional marketing of Lipustobart for Injection（注射用利普苏拜单抗）(PD-1) has been submitted.With the successive approvals for market launch of its products, Livzon MAB has enriched relevantteams such as pharmacovigilance, production quality and production-sales connection, graduallyimproved the GMP system and industrialization capabilities and enhanced the overall operationalcapabilities.
(3) Joincare (excluding Livzon Group and Livzon MAB)
During the Reporting Period, Joincare (excluding Livzon Group and Livzon MAB) realizedrevenues of RMB4,556 million, representing a year-on-year decrease of approximately 5.72%, andrealized a net profit attributable to shareholders of listed companies of RMB924 million,representing a year-on-year decrease of approximately 0.55%. Joincare realized a net profitattributable to shareholders of the listed company after deducting the extraordinary gains and lossesof RMB903 million, representing a year-on-year increase of approximately 4.56%. Key results ofthe main business segments are as follows:
① Prescription medicines
During the Reporting Period, Joincare (excluding Livzon Group and Livzon MAB) realized salesrevenues of RMB1,988 million from prescription drug segment, representing a year-on-yeardecrease of approximately 6.20%. Among which, the sales revenues and year-on-year change ofkey therapeutic areas are as follows: the revenues generated from the field of respiratory totaledRMB1,741 million, representing a year-on-year increase of 48.35%; the revenues generated fromthe field of anti-infection totaled RMB2.24 million, representing a year-on-year decrease of 75.64%.In 2023, the Company implemented the principle of “respecting talents and putting people first”,and continuously expanded the sales team size of the national respiratory line and optimized theteam gradient construction by integrating internal and external resources and talents. By seizing theopportunity that Levosalbutamol Hydrochloride Nebulizer Solution was listed in the NationalReimbursement Drug List and Tobramycin Inhalation Solution was the only approved inhalationantibiotic in China, the Company further optimized its marketing promotion structure, and had its
Joincare Pharmaceutical Group Annual Report 2023
operation quality improved steadily. By the end of 2023, the Company’s respiratory formulationproducts had covered more than 4,000 hospitals above grade II. The Company actively supportedand participated in regional and national academic conferences, helped to improve the scientificresearch capabilities of experts, transformed the diagnosis and treatment concepts of clinicians,consolidated the academic promotion foundation around innovative drugs, supported researchers inclinical trials and large-scale post-market research, and assisted in publishing 7 medical papers.Among them, the Phase III results about Tobramycin Inhalation Solution were internationallyrecognized and published in CHEST, the top journal in the respiratory field. The Companycontinued to promote the construction of a digital marketing platform and accelerated the marketingprocess by digital means. With the help of the platform of “Respiratory Experts’ Views”, theCompany carried out corporate communication in all directions to enhance brand awareness andinfluence. As at the end of the Reporting Period, the platform of “Respiratory Experts’ Views” hasgathered over 5000 respiratory experts, broadcast over 500 sessions of popular science live streamson respiratory diseases, and received over 25 million views.
② APIs and intermediates
During the Reporting Period, Joincare (excluding Livzon Group and Livzon MAB) realized salerevenues of RMB2,079 million from APIs and intermediates segment, representing a year-on-yeardecrease of approximately 11.89%.During the Reporting Period, in the API segment, Joincare adhered to the management concept of“green production, cost reduction and efficiency enhancement”, focused on the transformation andupgrading of production equipment, enhanced the establishment of the quality management systemand strengthened the construction of safety and environmental management, guaranteeing the steadyimprovement in the production and yield of key products of the Company. In terms of marketing,the terminal market demands for 7-ACA, a key product of the Company, was generally stable, andthe sales price has declined. The Company maintained its advantage position in market share bystrengthening the in-depth cooperation with strategic customers and actively expanding domesticand international markets. Another key product, Meropenem Trihydrate, is facing challenges suchas intensified international market competition and pricing pressures. The Company had takenactive measures to maintain its existing market share, at the same time, the Company also activelyexpanded its overseas business to carry out a number of applications for the registration ofMeropenem aseptic powder and crude product so as to enhance the Company's profitability.Furthermore, the Company leveraged on its advantages of APIs - formulations vertical integration,actively expanded the domestic API market. And it has established collaborations with severaldomestic manufacturers to minimize the impacts of volume-based drug procurement.In terms of the R&D of APIs, the Company continued to conduct in-depth research in the field ofsynthetic biology and had achieved a series of results. In terms of Escherichia coli, the Companysuccessfully completed the construction of the first set of automatic adaptive continuous evolution
Joincare Pharmaceutical Group Annual Report 2023
platform in cooperation with Hamburg University of Technology in Germany. In terms offilamentous fungi, the Company broke through the technical bottleneck, significantly improved thepositive rate of protoplast transformation and screening of filamentous fungi, and completed theoptimization of screening conditions for compound mutagenesis of Acremonium chrysogenum. Interms of Saccharomyces cerevisiae, the Company cooperated with Technical University ofDenmark to build a platform for editing technology, gene assembly and large fragment plasmidintegration technology, breaking through the bottleneck of easily losing fragments during largeplasmid construction, and achieving the phased goal of heterologous synthesis of ACV tripeptidesand penicillin N in Saccharomyces cerevisiae. In terms of Streptomycetes, the Company completedthe development and accumulation of a series of key research technologies based on Streptomycesprotoplast transformation, gene overexpression, gene editing, site-directed mutation of key enzymes,etc., and is currently undergoing the transformation of strains for producing Acarbose andDoramectin. In terms of the construction of biocatalytic platform, the Company is building anindependent and controllable knowledge base, adopting the AlphaFold 2 algorithm to predict thestructure of key enzyme proteins on the CPC metabolic pathway, and applying the AI method ofnatural product biosynthesis pathways to predict key genes of aromatic amino acid metabolites. Bythe end of 2023, Joincare Research Institute had applied for a total of 14 national invention patents(with 4 granted), 8 utility model patents (with 4 granted). Moreover, the Company obtained 1software copyright and published 2 high-level academic papers.
③Health care products and OTC drugs
During the Reporting Period, Joincare (excluding Livzon Group and Livzon MAB) realizedrevenues of RMB453 million from health care products and OTC segment, representing a year-on-year increase of approximately 46.31%.During the Reporting Period, the Company built a set of DTC brand digital marketing system withuser operations as the core data to drive sales growth. In terms of content marketing, the Companymade a key layout of social media drivers with Douyin, Little Red Book and WeChat, cooperatedwith many professional KOLs, and promoted brands and products through images, short videos,live streaming and self-streaming, greatly upgrading brand exposure, continuously exporting healthscience knowledge, optimizing and upgrading marketing links, and greatly enhancing AIPLcirculation efficiency. In terms of brand marketing, the Company conveyed scientific health andwellness concepts and established a professional brand image and reputation by conducting popularscience education through authoritative media and industry experts; and based on good reputationof the original brand, the Company’s brand renewal efficiency is obvious and higher than that ofnew brands, and the penetration rate of the brand’s target audience is gradually increasing. In termsof channel sales, it mainly strengthened channel transformation, enhanced online channelundertaking, opened such flagship stores as Tmall, JD, Douyin and Little Red Book, reachedcooperation and implemented strategic agreements with Top 50 offline chain institutions, as well as
Joincare Pharmaceutical Group Annual Report 2023
vigorously developed offline food line channels. Under the condition of maintaining the originalsales model, online channels Tmall, JD.COM and Douyin are mainly laid out to improve thepenetration rate of channels, thus enhancing brand sales. In terms of organizational structure, it setup a content marketing department by brand operation, and formed a team with diversifiedbackgrounds, international vision and rich practical experience in brand marketing so as tostrengthen the brand talent capacity.
(I) Analysis of principal business
1. Analysis of changes in items of income statement and cash flows statement
Unit: Yuan Currency: RMB
| Item | Amount for the period | Amount for the same period of last year | Change (%) |
| Revenues | 16,646,350,349.72 | 17,142,753,068.82 | -2.90 |
| Operating costs | 6,298,465,671.11 | 6,252,265,308.40 | 0.74 |
| Selling expenses | 4,434,442,281.05 | 4,950,802,456.16 | -10.43 |
| Administrative expenses | 930,481,615.70 | 992,483,591.51 | -6.25 |
| Financial expenses | -404,841,133.45 | -352,447,424.62 | N/A |
| R&D expenses | 1,661,757,980.90 | 1,742,088,079.94 | -4.61 |
| Net cash flow from operating activities | 3,928,909,609.73 | 3,977,705,139.29 | -1.23 |
| Net cash flow from investing activities | -877,424,336.85 | -2,252,167,188.62 | N/A |
| Net cash flow from financing activities | -1,927,493,522.28 | 566,122,659.80 | -440.47 |
Reasons for changes in net cash flow from investing activities: Mainly due to the increase in cashreceipts from investment returns and the decrease in expenditures on purchasing large denominationdeposits during the reporting period.Reasons for changes in net cash flow from financing activities: Mainly due to the increase in cashoutflows due to loan repayments, distribution of dividends, and share repurchases, as well as thedecrease in financing activities during the reporting period.
Details of material changes in business type, components or source of profits during thecurrent period
□Applicable √N/A
2. Analysis of revenues and costs
√Applicable □N/A
During the Reporting Period, the Company realized revenues of RMB16,646 million, representinga year-on-year decrease of 2.90%; the operating costs totaled RMB6,298 million, representing ayear-on-year increase of 0.74%.
(1). Composition of principal businesses by industry, product, region and sales model
Unit: Yuan Currency: RMB
Joincare Pharmaceutical Group Annual Report 2023
| Principal business by industry | ||||||
| By industry | Revenues | Operating costs | Gross profit margin (%) | YoY change in revenues (%) | YoY change in operating costs | YoY change in gross profit margin (%) |
| Pharmaceutical manufacturing Industry | 16,521,723,930.99 | 6,206,181,318.60 | 62.44 | -2.89 | 0.74 | Decreased by 1.35percentage points |
| Principal business by product | ||||||
| By product | Revenues | Operating costs | Gross profit margin (%) | YoY change in revenues (%) | YoY change in operating costs | YoY change in gross profit margin (%) |
| Chemical pharmaceuticals | 8,714,333,568.23 | 1,838,766,252.49 | 78.90 | -5.55 | 1.37 | Decreased by 1.44 percentage points |
| Chemical APIs and intermediates | 5,045,478,897.44 | 3,348,124,481.16 | 33.64 | -3.50 | -1.79 | Decreased by 1.15 percentage points |
| Traditional Chinese medicine | 1,805,427,390.05 | 575,932,282.52 | 68.10 | 39.24 | 34.60 | Increased by 1.10 percentage points |
| Diagnostic reagents and equipment | 658,966,438.70 | 256,124,411.27 | 61.13 | -8.92 | -27.37 | Increased by 9.87 percentage points |
| Health care products | 195,865,865.05 | 71,643,900.63 | 63.42 | 61.56 | 55.00 | Increased by 1.55 percentage points |
| Biologics | 84,426,083.26 | 102,589,712.45 | -21.51 | -79.33 | -3.95 | Decreased by 95.37 percentage points |
| Principal business by region | ||||||
| By region | Revenues | Operating costs | Gross profit margin (%) | YoY change in revenues (%) | YoY change in operating costs | YoY change in gross profit margin (%) |
| Domestic | 13,938,078,133.85 | 4,471,521,161.40 | 67.92 | -1.64 | 3.36 | Decreased by 1.55 percentage points |
| Overseas | 2,583,645,797.14 | 1,734,660,157.20 | 32.86 | -9.09 | -5.42 | Decreased by 2.60 percentage points |
| Principal business by sales model | ||||||
| By sales model | Revenues | Operating costs | Gross profit margin (%) | YoY change in revenues (%) | YoY change in operating costs | YoY change in gross profit margin (%) |
| Channel sales | 11,220,434,988.89 | 2,722,733,195.38 | 75.73 | 0.31 | 6.10 | Decreased by 1.32 percentage points |
| Direct sales | 5,301,288,942.10 | 3,483,448,123.22 | 34.29 | -9.03 | -3.08 | Decreased by 4.04 percentage points |
Explanations on composition of principal businesses by industry, product, region and salesmodel
Joincare Pharmaceutical Group Annual Report 2023
During the Reporting Period, the Company’s principal businesses generated revenues ofRMB16,522 million, representing a year-on-year decrease of RMB491 million or 2.89%.The company was affected by multiple factors such as price reduction in collection and global de-stocking of APIs, and the company's overall revenue from principal businesses declined slightly.Chemical pharmaceuticals achieved revenues of RMB8,714 million, representing a decrease of 5.55%year-on-year. Among them, the sales revenues in the field of gastroenterology reached RMB2903million, dropping by 15.50% year-on-year; the sales revenues in the field of gonadorelin hormonesamounted to RMB27.67 million, increasing by 6.80% year-on-year; the sales revenues in the fieldof respiratory reached RMB1,741 million, a year-on-year increase of 48.35%; the sales revenues ofpsychiatry products was RMB602 million, a year-on-year increase of 10.54%; the sales revenues inthe field of anti-infection was RMB5.10 million, dropping by 60.88% year-on-year. Chemical APIsand intermediates achieved revenues of RMB5,045 million, a year-on-year decrease of 3.50%.Traditional Chinese Medicine achieved revenues of RMB1,805 million, a year-on-year increase of
39.24%. Diagnostic reagents and equipment achieved revenues of RMB659 million, a year-on-yeardecrease of 8.92%. Healthcare products achieved revenues of RMB196 million, a year-on-yearincrease of 61.56%. Biological products achieved revenues of RMB84 million, a year-on-yeardecrease of 79.33%.
(2). Analysis of production and sales
√Applicable □N/A
| Main products | Unit | Production | Sales | Inventory level | YoY change in production (%) | YoY change in sales (%) | YoY change in Inventory（%） |
| Leuprorelin Acetate Microspheres for Injection | Ten thousand boxes | 186.34 | 186.22 | - | 22.61 | 22.57 | - |
| Ilaprazole sodium for injection | Ten thousand boxes | 1,983.56 | 1,969.44 | 238.88 | 6.28 | 0.68 | 5.99 |
| Ilaprazole Enteric-Coated Tablets | Ten thousand boxes | 1,879.06 | 1,820.53 | 540.85 | -24.90 | -19.35 | 12.02 |
| 7-ACA (including D-7ACA) | Ton | 3,011.97 | 3,108.39 | 6.08 | -1.75 | 2.96 | -94.07 |
| Shenqi Fuzheng Injection | Ten thousand bottles/ Ten thousand bags | 1,043.26 | 1,006.72 | 76.34 | 46.13 | 42.40 | 13.76 |
Explanations on production and salesIn 2023, the company continued to strengthen evidence-based research on key products of TCMformulations already launched. There was a focus on cultivating terminal markets including tertiaryhospitals, grassroots medical institutions, retail pharmacies, and e-commerce platforms whilecontinuously optimizing traditional distribution channels and structures of the end-user market.
Joincare Pharmaceutical Group Annual Report 2023
The sales volume of the Shenqi Fuzheng Injection continued to increase in the grassroots market,resulting in an increase in both production and sales volume. The fluctuation in the inventory of 7-ACA (including D-7ACA) was mainly influenced by the supply-demand relationship at the terminal.
(3). Performance of major procurement contracts and major sales contracts
□Applicable √N/A
(4). Cost analysis
Unit: Yuan
| By industry | Cost components | Amount incurred in the current period | As a percentage of total costs in the current period (%) | Amount incurred in the same period of previous year | As a percentage of total costs in the same period of previous year (%) | YoY change (%) |
| Pharmaceutical manufacturing Industry | Costs of materials | 3,814,984,465.46 | 60.57 | 3,908,782,585.27 | 62.52 | -2.40 |
| Labor costs | 869,230,688.54 | 13.80 | 809,277,538.94 | 12.94 | 7.41 | |
| Manufacturing costs | 1,496,213,350.61 | 23.76 | 1,684,532,284.52 | 26.94 | -11.18 | |
| Depreciation | 456,623,740.32 | 7.25 | 406,107,662.76 | 6.50 | 12.44 | |
| Others | -339,777,290.85 | -5.39 | -559,185,005.37 | -8.94 | N/A | |
| Subtotal | 6,297,274,954.09 | 99.98 | 6,249,515,066.13 | 99.96 | 0.76 | |
| Service industry | Costs of materials | 126,265.53 | 0.00 | 512,284.05 | 0.01 | -75.35 |
| Labor costs | 933,523.43 | 0.01 | 1,757,712.56 | 0.03 | -46.89 | |
| Manufacturing costs | 91,122.96 | 0.00 | 327,719.99 | 0.01 | -72.19 | |
| Depreciation | 39,805.10 | 0.00 | 152,525.67 | 0.00 | -73.90 | |
| Subtotal | 1,190,717.02 | 0.02 | 2,750,242.27 | 0.04 | -56.71 | |
| Total | Costs of materials | 3,815,110,730.99 | 60.57 | 3,909,294,869.32 | 62.53 | -2.41 |
| Labor costs | 870,164,211.97 | 13.82 | 811,035,251.51 | 12.97 | 7.29 | |
| Manufacturing costs | 1,496,304,473.57 | 23.76 | 1,684,860,004.51 | 26.95 | -11.19 | |
| Depreciation | 456,663,545.42 | 7.25 | 406,260,188.43 | 6.50 | 12.41 | |
| Others | -339,777,290.85 | -5.39 | -559,185,005.37 | -8.94 | N/A | |
| Subtotal | 6,298,465,671.11 | 100.00 | 6,252,265,308.40 | 100.00 | 0.74 | |
| By product | Cost components | Amount incurred in the current period | As a percentage of total costs in the current period (%) | Amount incurred in the same period of previous year | As a percentage of total costs in the same period of previous year (%) | YoY change (%) |
| Health care products | Costs of materials | 58,832,542.11 | 0.93 | 36,089,962.70 | 0.58 | 63.02 |
Joincare Pharmaceutical Group Annual Report 2023
| Labor costs | 10,675,288.60 | 0.17 | 11,329,854.63 | 0.18 | -5.78 | |
| Manufacturing costs | 10,085,408.48 | 0.16 | 9,444,348.04 | 0.15 | 6.79 | |
| Depreciation | 4,035,742.61 | 0.06 | 5,463,682.37 | 0.09 | -26.14 | |
| Others | -11,985,081.17 | -0.19 | -16,104,826.72 | -0.26 | N/A | |
| Subtotal | 71,643,900.63 | 1.14 | 46,223,021.02 | 0.74 | 55.00 | |
| Pharmaceutical Products | Costs of materials | 3,738,329,801.68 | 59.35 | 3,841,254,506.51 | 61.44 | -2.68 |
| Labor costs | 856,996,739.54 | 13.61 | 795,400,898.83 | 12.72 | 7.74 | |
| Manufacturing costs | 1,422,660,060.12 | 22.59 | 1,620,338,814.98 | 25.92 | -12.20 | |
| Depreciation | 449,880,221.02 | 7.14 | 400,238,957.27 | 6.40 | 12.40 | |
| Others | -334,520,121.42 | -5.31 | -546,139,386.60 | -8.74 | N/A | |
| Subtotal | 6,133,346,700.94 | 97.38 | 6,111,093,791.00 | 97.74 | 0.36 |
Other information on cost analysisCost and variety of main medicinal herbs used in main TCMs
| Main TCMs | Variety of main medicinal herb | Supply and demand | Procurement model | Influence of price fluctuation |
| Shenqi Fuzheng Injection(参芪扶正注射液) | Codonopsis Root and Astragalus Root | The supply of Livzon Limin’s Codonopsis Root and Astragalus Root is relatively stable. Both medicinal herbs are supplied by plantation bases and external suppliers. Plantation Base of Livzon Limin Pharmaceutical Manufacturing Factory (“Livzon Limin Base”) maintains safety stock of medicinal herbs, which ensures the supply quantity and stabilizes the supply price. Meanwhile, Limin signed annual demand-based supply agreements with external suppliers who are obligated to stock up according to Limin’s quality requirements, so as to ensure sufficient supply of herbs with stable quality. | Supplied by Livzon Limin Base and external suppliers | Codonopsis Root: the supply price fall compared with the same period last year due to natural disasters; Astragalus Root: the supply maintained relatively stable, and the supply price edged up due to the increase in processing costs, labor costs and other expenses. |
| Anti-Viral Granules, Anti-Viral Granules (Sugar-free), Anti-Viral Syrup, Anti-Viral Tablets | Indigowoad Root, Fructus Forsythiae, Anemarrhena, Acori graminei Rhizoma, Gypsum, Rhizoma Phragmitis, Patchouli, Rehmanniae Radix, Radix Curcumae, Dahurian Angelica Root | The overall supply of main raw medicinal herbs used in Anti-Viral Granules was relatively stable in 2023 due to the Company’s safety stock strategy and the launch of emergency procurement plans after the assessment of risk trends, which ensured the production and supply. Indigowoad Root, Acori Graminei Rhizome, Anemarrhena, Patchouli, Rehmanniae Radix and Radix Curcumae are supplied by plantation bases and external suppliers; some wild medicinal herbs such as Acori Graminei Rhizome have a certain | Tendering procurement, internally supplied by plantation base and external suppliers | The prices of some medicinal herbs such as Fructus Forsythiae and Indigowoad Root increased significantly due to the surge in market demand for Anti-Viral Granules. In 2023, the increase in prices of main raw medicinal herbs was well controlled compared with the same period of the previous year due to the Company’s safety stock strategy and the launch of emergency procurement plans after the |
Joincare Pharmaceutical Group Annual Report 2023
| amount of safety stock to ensure basically stable supply and price. | assessment of risk trends, which ensured the production and supply. The price of Acori graminei Rhizoma stayed relatively the same benefiting from the strategic inventory and the supply from co-built base; purchase price of Rehmanniae Radix fell in 2023 as the plantation area was supplemented stimulated by the high price in the previous year; and price changes of other varieties were within controllable range. |
(5). Changes in consolidation scope due to equity change of major subsidiaries during theReporting Period
□Applicable √N/A
(6). Material changes or adjustments in business, products or services during the ReportingPeriod
□Applicable √N/A
(7). Major customers of sales and major suppliers
A. Major customers of sales
√Applicable □N/A
Sales to the top 5 customers were RMB1,503 million, representing 9.03% of the total annual sales;of which the sales to related parties were RMB0 million, representing 0.00% of the total annualsales.
Sales to any individual customer in excess of 50% of the total, any new customer in the top 5customers or heavy dependence on a few customers during the Reporting Period
□Applicable √N/A
B. Information on major suppliers
√Applicable □ N/A
Purchases from top 5 suppliers were RMB802 million, representing 16.98% of the total annualpurchase cost, of which the purchases from related parties were RMB268 million, representing 5.68%of the total annual purchase cost.
Purchases from any individual supplier in excess of 50% of the total, any new supplier in top 5suppliers or heavy dependence on a few suppliers during the Reporting Period.
□Applicable √N/A
Joincare Pharmaceutical GroupAnnual Report 2023
3.Expenses
√Applicable □ N/A
Unit: Yuan
| Item | 2023 | 2022 | YOY Change(%) | Explanations |
| Selling expenses | 4,434,442,281.05 | 4,950,802,456.16 | -10.43 | No material change |
| Administrative expenses | 930,481,615.70 | 992,483,591.51 | -6.25 | No material change |
| Financial expenses | -404,841,133.45 | -352,447,424.62 | N/A | No material change |
| R&D expenses | 1,661,757,980.90 | 1,742,088,079.94 | -4.61 | No material change |
4.Investment in R&D
(1). Investment in R&D
√Applicable □ N/A
Unit: Yuan
| Current expensed R&D expenditure | 1,357,343,510.45 |
| Current capitalized R&D expenditure | 274,513,905.45 |
| Total R&D expenditure | 1,631,857,415.90 |
| Total amount R&D expenditure as a percentage of Revenues (%) | 9.80 |
| Ratio of capitalized R&D expenditure (%) | 16.82 |
(2). R&D Staff
√Applicable □ N/A
| Number of R&D staff | 1,740 |
| Proportion of R&D staff to the total employees (%) | 12.11 |
| Education background of R&D staff | |
| Education composition | Number |
| PhD | 61 |
| Postgraduate | 491 |
| Bachelor | 768 |
| Junior college graduate | 289 |
| High school and below | 131 |
| Age composition of R&D staff | |
| Age composition | Number |
| Under 30 years old (exclusive) | 767 |
| 30-40 years old (including 30 years old, excluding 40 years old) | 717 |
| 40-50 years old (including 40 years old, excluding 50 years old) | 209 |
| 50-60 years old (including 50 years old, excluding 60 years old) | 47 |
| Over 60 years old | 0 |
(3). Explanations
□Applicable √ N/A
Joincare Pharmaceutical Group Annual Report 2023
(4). Reasons for and impact of the material change in the composition of R&D staffpersonnel on future development of theCompany
□Applicable √ N/A
5. Cash flows
√Applicable □ N/A
Unit: Yuan
| Item | 2023 | 2022 | YOY Change（%） | Explanations |
| Net cash flow from operating activities | 3,928,909,609.73 | 3,977,705,139.29 | -1.23 | No material change |
| Net cash flow from investing activities | -877,424,336.85 | -2,252,167,188.62 | N/A | Mainly due to the increase in cash receipts from investment returns and the decrease in expenditures on purchasing large denomination deposits during the reporting period. |
| Net cash flow from financing activities | -1,927,493,522.28 | 566,122,659.80 | -440.47 | Mainly due to the increase in cash outflows due to loan repayments, distribution of dividends, and share repurchases, as well as the decrease in financing activities during the reporting period. |
(II) Statement on material changes in profits arising from non-principal businesses
√Applicable □ N/A
Unit: Yuan
| Item | Amount | As a percentage of total profit | Cause | Sustainable or not |
| Investment income | 79,474,572.01 | 2.29% | Mainly due to changes in gains or losses of the associates and receipt of dividend payments. | No |
| Gains or losses from changes in fair value | -25,419,715.12 | -0.73% | Mainly due to fluctuations in market value of the securities investment held. | No |
| Losses of credit impairment | -16,846,468.56 | -0.49% | Mainly due to expected credit losses on accounts receivable. | No |
| Impairment loss of assets | -312,369,926.37 | -9.01% | Mainly due to the impairment provision for inventories. | No |
| Non-operating income | 7,980,415.72 | 0.23% | Mainly due to income on disposal of wastes and the transfer without any payment. | No |
| Non-operating expenses | 48,990,788.10 | 1.41% | Mainly due to donation expenses. | No |
| Other income | 259,061,799.00 | 7.48% | Mainly due to government grants. | Yes |
(III) Analysis of assets and liabilities
√Applicable □ N/A
1. Status of assets and liabilities
Joincare Pharmaceutical Group Annual Report 2023
Unit: Yuan
| Item | Ending balance of this period | Proportion of ending balance of this period to the total assets (%) | Ending balance of previous period | The proportion of ending balance of previous period to the total assets (%) | Change in amount (%) | Explanations |
| Non-current assets due within one year | 406,376,425.44 | 1.12 | 54,048,611.11 | 0.15 | 651.87 | Mainly due to the reclassification of large certificates of deposit and time deposits maturing within one year. |
| Other current assets | 77,402,185.01 | 0.21 | 163,539,900.32 | 0.46 | -52.67 | Mainly due to the maturity proceeds from cash management operations. |
| Investment properties | 16,958,213.00 | 0.05 | 6,191,475.43 | 0.02 | 173.90 | Mainly due to the new leasing of buildings business by subsidiaries during the Period. |
| Construction in progress | 531,059,118.06 | 1.46 | 811,300,068.96 | 2.27 | -34.54 | Mainly due to the transfer of the production lines of the new factories and workshops of the subsidiaries which met the conditions for transfer into fixed assets. |
| Financial liabilities held for trading | 86,817.12 | 0.00 | 755,634.43 | 0.00 | -88.51 | Mainly due to the changes in fair value of forward foreign exchange contracts. |
| Contract liabilities | 159,082,637.65 | 0.44 | 292,977,730.74 | 0.82 | -45.70 | Mainly due to the fact that part of the contract payments received in advance fulfilled the conditions for revenue recognition and were transferred to revenue during the Period. |
| Employee benefits payable | 399,466,473.91 | 1.10 | 573,010,571.46 | 1.60 | -30.29 | Mainly due to the payment of Medium to Long-term Business Partner Share Ownership Scheme provisioned in the previous year. |
Joincare Pharmaceutical Group Annual Report 2023
| Non-current liabilities due within one year | 718,564,144.31 | 1.98 | 63,077,260.98 | 0.18 | 1,039.18 | Mainly due to the transfer of long-term borrowings due within one year. |
| Other current liabilities | 51,087,001.83 | 0.14 | 101,276,714.35 | 0.28 | -49.56 | Mainly due to the decrease in expected refunds payable. |
| Lease liabilities | 15,422,948.41 | 0.04 | 23,482,486.07 | 0.07 | -34.32 | Mainly due to the transfer to lease payables maturing within one year. |
| Capital reserve | 1,601,720,087.71 | 4.41 | 2,343,693,215.99 | 6.56 | -31.66 | Mainly due to the reduction in share premium resulting from stock repurchases. |
| Treasury shares | - | - | 347,176,561.29 | 0.97 | N/A | Mainly due to the cancellation of repurchased shares. |
| Other comprehensive income | -12,246,131.22 | -0.03 | 4,704,473.53 | 0.01 | -360.31 | Mainly due to changes in the fair value of other equity instruments investment. |
2. Overseas assets
√Applicable □ N/A
(1) Asset size
Of which: Overseas assets were 51.93 (Unit: 100 million Currency: RMB), representing 14.28% ofthe total assets.
(2) Statement on high proportion of overseas assets
□Applicable √ N/A
3. Restrictions on assets entitlements as at the end of the Reporting Period
√Applicable □ N/A
Unit: Yuan
| Item | Carrying value at the end of the period | Cause of restriction |
| Other monetary funds | 6,627,449.66 | Letters of credit, bank acceptances and forward exchange settlement deposits, etc. |
| Notes receivable | 519,789,027.16 | Notes pool business and pledge of notes receivable |
| Total | 526,416,476.82 |
4. Others
□Applicable √ N/A
(IV) Analysis of industry-related business information
√Applicable □N/A
Joincare Pharmaceutical Group Annual Report 2023
According to the Guidelines for the Industry Statistics and Classification of Listed Companiesissued by the China Association for Public Companies, the Company is operating in thepharmaceutical manufacturing industry (C27). Adhering to the mission of “For the health, For thefuture” and the vision of “diligently make high-quality and innovative drugs”, the Company hasbeen committed to the pharmaceutical business and been strengthening R&D, production, marketingand management of medical products, to strive to become a domestic leading integratedpharmaceutical enterprise with capacity for independent innovation and internationalcompetitiveness in terms of production, technology and management in the near future.Analysis of business information on pharmaceutical manufacturing industry
1.Basic information on industry and main drugs (products)
(1). Basic information on industry
√Applicable □N/A
1.Influence of industry policies
The year 2023 marks the first year for fully implementing the spirit of the 20th CPC NationalCongress, a critical year for comprehensively building a modern socialist country and marchingtowards the second Centenary Goal, and the third year of the 14th Five-Year Plan. China has issueda number of planning documents to make top-level plans for the development of pharmaceuticalindustry inthe future. The major policies that had a significant impact on the Company are as follows:
①Revitalization and development of traditional Chinese medicineIn February 2023, the State Council issued the Notice on the Implementation Plan of Major Projectsfor the Revitalization and Development of Traditional Chinese Medicine (《中医药振兴发展重大工程实施方案的通知》), which further increases support for the development of traditional Chinesemedicine and strive to promote the revitalization and development of traditional Chinese medicineduring the 14th Five-Year Plan period. In April 2023, the National Health Commission issued theImplementation Plan of Programs on Promoting the Culture of Traditional Chinese MedicineDuring the 14th Five-Year Plan Period (《“十四五”中医药文化弘扬工程实施方案》), whichfurther defines the supporting measures and the division of work under the 14th Five-Year Plan forthe Development of Traditional Chinese Medicine (《“十四五”中医药发展规划》).
②Key Work Points of 2023 Healthy China Initiative
In March 2023, the Office for Promoting Healthy China Initiative and its member entities and otherrelevant entities have formulated the Key Work Points of 2023 Healthy China Initiative (《健康中国行动2023年工作要点》), with an aim to promote the implementation of all actions, ensure theachievement of all tasks and goals as scheduled and protect the all-round and full-cycle health ofthe public.
③Adjustment of the catalog of medicines covered by medical insurance
Joincare Pharmaceutical Group Annual Report 2023
In December 2023, the National Healthcare Security Administration issued the National DrugCatalog for Basic Medical Insurance, Work-Related Injury Insurance and Maternity Insurance(2023) (《国家基本医疗保险、工伤保险和生育保险药品目录(2023年)》), effective from 1January 2024. In this round of adjustment, a total of 126 drugs were added to the Catalog and a drugwas removed from the Catalog. A total of 143 drugs not included in the Catalog participated innegotiations or bidding, of which 121 drugs succeeded. The negotiation success rate was 84.6% andthe average price reduction was 61.7%, which were basically the same as those in 2022.
④Routine operation of volume-based procurement
Since 2018, the National Healthcare Security Administration has carried out nine batches ofcentralized procurement of pharmaceuticals, which covers a total of 374 drugs with an average pricereduction of over 50%. China organized the centralized volume-based procurement ofpharmaceuticals in a routine and institutionalized manner, and the ninth batch of centralized drugprocurement has been conducted. While continuously exploring and optimizing the rules, China hasestablished a sound centralized procurement plan. In the future, the national volume-basedprocurement will be refined to enhance the quality and efficiency of the whole process, and focuson the refined management of centralized drug procurement especially in early volume reporting,circulation and procurement, and clinical use.
⑤Centralized rectification campaign of the pharmaceutical industry
In July 2023, the National Health Commission held a joint video conference with the Ministry ofEducation, the Ministry of Public Security, the National Audit Office, the State-owned AssetsSupervision and Administration Commission of the State Council, the State Administration forMarket Regulation, the National Healthcare Security Administration, the National Administrationof Traditional Chinese Medicine, the National Disease Control and Prevention Administration andthe National Medical Products Administration, which arranged a one-year nation-wide centralizedrectification campaign to address corruption issues in the pharmaceutical industry. The centralizedrectification focused on six aspects: (i) the administrative departments in the pharmaceutical sectorwhich use power to seek for benefits; (ii) “key persons” and key positions in medical and healthinstitutions, and kickback-based sales of medicines, equipment and consumables; (iii) socialorganizations under the management and guidance of the administrative departments in thepharmaceutical sector which use the conveniences of work to seek profits; (iv) issues related to theuse of medical insurance funds; (v) pharmaceutical production and operation companies whichconduct illegal behaviors in the purchase and sales; and (vi) medical personnel who violate the NinePrinciples for Integrity-based Practices of Workers in Medical Institutions (《医疗机构工作人员廉洁从业九项准则》). Through measures such as self-examination and self-correction, centralizedrectification, and overall rectification, China has conducted a systematic governance covering allareas, the entire chain and full spectrum against prominent corruption issues in the pharmaceuticalindustry, and has established and improved a series of long-term mechanisms to secure the effective
Joincare Pharmaceutical GroupAnnual Report 2023
results.Response measures: The Company will take effective measures to cope with major changes inpolicies of the pharmaceutical industry through early layout, transformation, and compliance, andconstantly improve its core competitive strength. Meanwhile, the Company will actively increasethe research, development and innovation of new products, drive development through R&D,continuously optimize and adjust the product structure, strenuously apply for medical insurancecoverage, maintain the competitive sales of large varieties, strengthen the market development ofnew and potential varieties, and promote sales to lower-tier markets, so as to expand sales scale, andcreate more competitive advantages of products. The Company will also improve the productionquality management, standardize the safe and environmentally friendly production, further refinethe compliant management system and mechanism, operate in compliance with regulations, andestablish a more reasonable market-oriented system in order to establish its own advantageousposition and core competitiveness.II.Basic information on the sector where the Company operatesThe Company is primarily engaged in the R&D, production and sale of hundreds of varieties ofpharmaceutical products and health care products in areas such as chemical pharmaceuticals,biologics, chemical active pharmaceutical ingredients (APIs), TCM, and health care products. Basicinformation on the market niches in which the Company operates are follows:
Chemical pharmaceuticals: In recent years, influenced by policies regarding medical insurancepayment control, volume-based procurement and consistency evaluation, chemical pharmaceuticalshave recorded a slower growth in revenues and profit. The market of chemical pharmaceuticals isrelatively competitive as there are many domestic manufacturers. However, innovative drugs andhigh-barrier formulations will become an industry trend and an important source of profits thanksto low competitive pressure and continuous support from national policies. The Company'schemical pharmaceuticals cover many therapeutic fields with competitive strengths in productvarieties, sales channels, end user groups and brand awareness. In the future, the Company willspeed up research and development, introduce new technologies, and accelerate the productstructure optimization and strategic planning to cope with the increasingly fierce market competition.Biologics: Biologics include monoclonal antibodies, vaccines, recombinant therapeutic proteins andother biological therapies. Globally, the development of biologics has been relatively late comparedto chemical pharmaceuticals products, and it is only in the last 40 years that they have entered thelarge-scale industrialization stage. However, due to the safety, efficacy, and other clinical needs metby biologics that chemical pharmaceuticals could not satisfy, the biologics industry has grownrapidly in recent years, especially in emerging markets such as China, where the biologics industryis growing at a much faster rate than the general pharmaceutical industry. China's biologics marketis still in a period of unstable segment structure, continued increase in unmet clinical needs, more
Joincare Pharmaceutical Group Annual Report 2023
frequent technology iteration, and rapid growth of emerging segments such as monoclonalantibodies. LivzonBio is the primary biopharmaceutical R&D platform of the Company andprincipally engages in the independent innovative R&D and commercialization ofbiopharmaceuticals, including innovative mAbs (monoclonal antibodies), mAb biosimilars,bispecific antibodies, antibody drug conjugates, CAR-T cell therapies, etc., with its productscovering multiple fields such as tumor, autoimmune disease, vaccine, etc.Chemical APIs: At present, the Company has the following chemical APIs: cephalosporin series,statin series, and carbapenem series among others. Restricted by heavy investment, longconstruction period, high technical threshold and strict environmental protection requirements, thebulk API market in China is relatively concentrated. However, overcapacity causes fiercecompetition. To adapt to future competition, the Company gradually completed the transformationand upgrading from bulk APIs to high-end characteristic APIs, from nonstandard market tostandardized market and from domestic market to international market. Meanwhile, in an effort tofurther implement the Implementation Plan to Promote the High-quality Development of the APIIndustry issued by the National Development and Reform Commission and the Ministry of Industryand Information Technology in November 2021, the Company strengthened forward-lookingresearch layout to accelerate high-quality development of APIs under new background. SinceOctober 2020, the Company has focused on building a research and development platform insynthetic biology with AI integrated to promote green, low-carbon transformation of the industry,to give more added value to pharmaceutical intermediates and APIs, and to accelerate integrationinto the global industrial chain and value chain.Traditional Chinese medicine: In recent years, the traditional Chinese medicine has experienceda sustained influx of favorable policies and refined regulatory frameworks. In terms of policies,China increased its support for traditional Chinese medicine from the top-level design, and shiftedits policies from the overall long-term planning in the past to more specific guidance includingmedical insurance payment, optimization of review and approval rules, and encouragement oftraditional Chinese medicine innovation. The 14th Five-Year Plan for the Development ofTraditional Chinese Medicine released in 2022 is the first five-year plan for traditional Chinesemedicine issued in the name of the State Council, further clarifying China’s determination todevelop traditional Chinese medicine. Since 2023, the traditional Chinese medicine industry alsobenefited from a large number of major favorable policies, including the Special Provisions on theAdministration of Traditional Chinese Medicine Registration (《中药注册管理专门规定》) andthe Several Measures on Further Strengthening the Scientific Supervision of Traditional ChineseMedicine to Promote the Inheritance, Innovation and Development of Traditional Chinese Medicine,which provide a vast space for the development of the traditional Chinese medicine industry.Traditional Chinese medicine stands as a cornerstone of the Company’s traditional strengths.Flagship products such as Shenqi Fuzheng Injection and Anti-Viral Granules represent keytraditional Chinese medicines of the Company. In the future, the Company will make every effort
Joincare Pharmaceutical Group Annual Report 2023
to develop an innovative R&D platform for traditional Chinese medicine to further strengthen theresearch and development of innovative traditional Chinese medicine products and continuouslydiversify the product pipeline of the Company.Diagnostic reagents and equipment: As China's healthcare industry develops gradually, in vitrodiagnostic reagents industry is seeing a bigger market but remains in primary stage compared withdeveloped countries such as European countries and America. With more product varieties and moreadvanced technologies, in vitro diagnostic reagents are used in more scenarios, from traditionalhospital laboratories to third-party medical diagnostic institutions, physical examination centers,families, and other primary healthcare institutions. More application scenarios make the demand fordifferent kinds of in vitro diagnostic reagents fully released, promoting rapid development of theindustry. Since its establishment, Livzon Diagnostics, controlled by Livzon Group (a holdingsubsidiary of the Company), has been committed to the R&D, production and sales of diagnosticreagents and equipment. After years of efforts and development, it has built a multi-faceted technicalplatform that supports ELISA test, colloidal gold rapid test, chemiluminescence assay, multiplexliquid-chip assay, and nucleic acid assay. It has strong market influence in such fields as respiratoryinfection, infectious diseases, and drug concentration monitoring. Some of its products hold bigmarket shares in China.Health care products: Driven by increasing public awareness of wellness, aging, consumptionupgrading and promotion of direct sales, health care industry has developed rapidly in recent years.However, due to low technical threshold and high gross profit, the domestic market is highlycompetitive with serious product homogeneity issues and low market concentration. TheCompany’s well-known health care foods brands such as “Taita” (太太),“ Jingxin” (静心) and“Eagle's” (鹰牌) deeply rooted in people's minds and have high market awareness. Faced withintense market competition, while staying committed to traditional pharmaceutical chain channels,the Company also actively expands online channels through strategic cooperation with new sociale-commerce sales platforms to drive sales growth. In addition, the Company actively prepares toaccess to fields of functional food by leveraging its R&D and market strengths to enrich productpipelines and enhance core competitiveness.
Joincare Pharmaceutical Group Annual Report 2023
(2). Basic information on main drugs (products)
√Applicable □N/A
Basic information on main drugs (products) by segment and therapeutic areas
√Applicable □N/A
Note: The starting and expiration dates listed above refer to the corresponding term of patents of core products in each product category.
| Segment | Main therapeutic area | Name of drug (product) | Registration Category | Indications | Prescription drug or not | Protected TCM or not (if applicable) | Effective and expiration date of patent right for invention (if applicable) | New drug (product) launched during the Reporting Period or not | Included in the Catalog of National Essential Drugs or not | Included in NRDL or not |
| Chemical pharmaceuticals | Gonadotropic hormones | Leuprorelin Acetate Microspheres for Injection | Chemical drugs Class 6 | Endometriosis, hysteromyoma, breast cancer, etc. | Yes | No | 2010.12.23-2030.12.23 | No | No | Yes |
| Chemical pharmaceuticals | Gastroenterology | Ilaprazole Sodium for Injection | Chemical drugs Class 2 | Peptic ulcer bleeding, and prevention of stress ulcer bleeding in severe patients | Yes | No | 2018-08-10-2038-08-10 | No | No | Yes |
| Chemical pharmaceuticals | Gastroenterology | Ilaprazole Enteric-Coated Tablets | Chemical drugs Class 1.1 | Duodenal ulcer and reflux esophagitis | Yes | No | 2006.03.24-2026.03.24 | No | No | Yes |
| Traditional Chinese medicine | Antitumor | Shenqi Fuzheng Injection | Traditional Chinese medicine Class 2 | Enhancing the vital energy and strengthening the body resistance It is used for the treatment of mental fatigue, lacking in strength, weak breath, laziness to speak, spontaneous perspiration and dizziness caused by the deficiency of vital energy in lung and spleen; the auxiliary treatment of patients with lung or gastric cancer who suffer from the above indications. | Yes | No | 2005.04.13-2025.04.13 | No | No | Yes |
Joincare Pharmaceutical GroupAnnual Report 2023
Main drugs (products) newly added into and exited from the National Reimbursement Drug
List during the Reporting Period
√Applicable □N/A
| Name of main products | Catalog of National Essential Drugs | National Reimbursement Drug List |
| Leuprorelin Acetate Microspheres for Injection | Not included | Included |
| Ilaprazole Sodium for Injection | Not included | Included |
| Ilaprazole Enteric-Coated Tablets | Not included | Included |
| Shenqi Fuzheng Injection | Not included | Included |
Winning bids for main drugs in centralized drug procurement during the Reporting Period
√Applicable □N/A
| Name of main drugs | Bid-winning price range | Total actual procurement volume by medical institutions | Unit |
| Leuprorelin Acetate Microspheres for Injection | RMB903.86-1295.9 | 199.80 | Ten thousand boxes |
| Ilaprazole Sodium for Injection | RMB71.00 | 2,139.12 | Ten thousand boxes |
| Ilaprazole Enteric-Coated Tablets (6 tablets) | RMB70.51-83.73 | 1,466.21 | Ten thousand boxes |
| Ilaprazole Enteric-Coated Tablets (10 tablets) | RMB156.30 | 133.91 | Ten thousand boxes |
| Shenqi Fuzheng Injection | RMB90.63-113.24 | 506.87 | Ten thousand bottles |
Explanations
√Applicable □N/A
①Data regarding total actual procurement volume by medical institutions are from IQVIA;
②The information disclosed is the bid-winning price of the issuer province and newlyimplemented winning prices during the Reporting Period.Operating data by therapeutic areas or main drug (products)
√Applicable □N/A
Unit: 10,000 Yuan Currency: RMB
| Therapeutic area | Operating income | Operating costs | Gross profit margin (%) | YoY change In operating income (%) | YoY change in operating costs (%) | YoY change in gross profit margin (%) | Gross profit margin of products in the same field in the same industry |
| Gastroenterology | 290,319.98 | 33,307.79 | 88.53 | -15.50 | -29.15 | 2.21 | 78.70% |
| Gonadotropic hormones | 276,696.11 | 84,760.16 | 69.37 | 6.80 | 3.13 | 1.09 | - |
| Respiratory | 174,104.21 | 34,432.63 | 80.22 | 48.35 | 72.04 | -2.72 | 88.66% |
| Psychiatry | 60,226.32 | 3,344.57 | 94.45 | 10.54 | 17.54 | -0.33 | 83.05% |
| Anti-infection | 51,040.16 | 19,495.40 | 61.80 | -60.88 | -21.28 | -19.21 | 46.46% |
Explanations
√Applicable □N/A
①The gross profit margin of products in the field of gastroenterology is derived from that of the
Joincare Pharmaceutical GroupAnnual Report 2023
relevant industry in “Major products of metabolism and alimentary system” in Fosun Pharma's2022 Annual Report.
②No comparable data on gross profit margin in the field of gonadotropic hormones has beenfound.
③The gross profit margin data of products in the field of the respiratory comes from that of“respiratory system category” in 2022 Annual Report of Tianjin Tianyao Pharmaceuticals Co.,Ltd.
④The gross profit margin data of products in the psychiatric field comes from that of “psychiatriccategory” in Nhwa Pharmaceutical's 2022 Annual Report.
⑤The gross profit margin data of products in the field of the anti-infection comes from that of
“anti-infection category” in 2022 Annual Report of Tianjin Tianyao Pharmaceuticals Co., Ltd.
2.Drug (product) R&D of the Company
(1). Overview of R&D of the Company
√Applicable □N/A
During the Reporting Period, the total R&D investment of the Company was up to RMB1,632million, accounting for 9.80% of its total revenues. The Company adhered to the two-wheel drivestrategy of “innovative drugs + high-barrier complex formulations”, and promoted the developmentand commercialization of innovative technologies and products through independent research anddevelopment, cooperative development and licensing introduction. As at the disclosure date of thisReport, the Company introduced a variety of innovative drugs to consolidate its existing competitiveadvantages and enrich its product pipelines, among which the progress of main products are asfollows:
| No. | Disease Field | Major R&D Project | Registration Classification | Indication(Tentative) | R&D Progress |
| 1 | Respiratory system disease | TG-1000 | Chemical drugs Class 1 | Used for patients aged 12 years and above with simple acute influenza A and B infection but without complications | Phase III Clinical trails, completed enrollment in January 2024 |
| 2 | Respiratory system disease | DBM-1152A | Chemical drugs Class 1 | Used for relief (emergency) and maintenance treatment of bronchospasm caused by chronic obstructive pulmonary disease, including chronic bronchitis and emphysema | Phase I clinical trials |
| 3 | Respiratory system disease | N91115 | Chemical drugs Class 1 | Asthma | Phase I clinical trials |
| 4 | Respiratory system disease | QX008N | Therapeutic biological products Class 1 | 1.Asthma; 2. Moderate and severeCOPD | Phase Ib clinical trials |
| 5 | Respiratory system disease | BA2101 | Therapeutic biological | Used for treating respiratory diseases such as asthma and COPD | Phase II clinical trials |
Joincare Pharmaceutical Group Annual Report 2023
| products Class 1 | |||||
| 6 | Pain | FZ008-145 | Chemical drugs Class 1 | Analgesia | Obtained approval for clinical trials in January 2024 |
| 7 | Digestive system disease | JP-1366 | Chemical drugs Class 1 | Reflux esophagitis | Obtained approval for clinical trials in February 2024 |
| 8 | Cardiovascular disease | HHT120 | Chemical drugs Class 1 | Used for preventing venous thromboembolism after a major orthopedic surgery | Phase I clinical trials |
| 9 | Mental disease | LS21031 | Chemical drugs Class 1 | Depression | Phase I clinical trials |
By the end of the Reporting Period, the Company had formed multi-location R&D institutions inShenzhen, Zhuhai, Shanghai, Guangzhou, etc. to achieve synergistic development of R&D centers.And the Company had 1,740 R&D personnel, including 552 with a master’s degree or above. Theoverall picture of R&D in various fields is as follows:
1)Chemical pharmaceuticals
①High-barrier complex formulations
| No. | Major R&D Project | Registration Classification | Dosage Form | Project Progress |
| 1 | Formoterol Fumarate Inhalation Solution | Chemical drugs Class 3 | Inhalation formulations | Launched |
| 2 | Indacaterol Maleate Powder for Inhalation | Chemical drugs Class 4 | Inhalation formulations | Filed application for launching and completed submission of required supplementary materials |
| 3 | Salmeterol Xinafoate-Fluticasone Propionate Powder for Inhalation | Chemical drugs Class 4 | Inhalation formulations | Filed application for launching and completed submission of required supplementary materials in January 2024 |
| 4 | Fluticasone Propionate Inhalation Suspension | Chemical drugs Class 4 | Inhalation formulations | Filed application for launching |
| 5 | XYP-001 | Chemical drugs Class 2 | Inhalation formulations | Phase I clinical trials completed |
| 6 | Triptorelin Acetate Microspheres for Injection | Chemical drugs Classes 2.2 and 2.4 | Sustained-release microspheres | 1.Indications for prostate cancer launched;and 2.Endometriosis indication: Phase IIIclinical trials completed and application for launching filed |
| 7 | Aripiprazole Microspheres for Injection | Chemical drugs Class 2.2 | Sustained-release microspheres | Filed application for launching |
| 8 | Octreotide Acetate Microspheres for Injection | Chemical drugs Class 4 | Sustained-release microspheres | BE Study |
| 9 | Leuprorelin Acetate | Chemical drugs Class 4 | Sustained-release | BE Study |
Joincare Pharmaceutical Group Annual Report 2023
| Microspheres for Injection (3-month sustained-release) | microspheres | |||
| 10 | Alarelin Microspheres for Injection | Chemical drugs Classes 2.2 and 2.4 | Sustained-release microspheres | 1.Prostate cancer: Phase I clinical trialscompleted; and 2.Breast cancer and endometriosis: Clinicaltrials approval obtained. |
| 11 | Triptorelin Pamoate Microspheres for Injection | Chemical drugs Class 2.2 | Sustained-release microspheres | Preclinical |
| 12 | Long Chain Fat Emulsion Injection (OO) | Chemical drugs Class 4 | Fat emulsion | Launched |
| 13 | Meloxicam Nanocrystal Injection | Chemical drugs Class 3 | Nanocrystal | Completed PK-BE and obtained clinical approval |
| 14 | Goserelin Acetate Sustained-release Implant | Chemical drugs Class 4 | Sustained-release implant | Preclinical |
| 15 | Ilaprazole Enteric-coated Pellets | Chemical drugs Class 2 | Pellet | Phase I clinical trails |
②Other key R&D projects in development
| No. | Major R&D Project | Registration Classification | Therapeutic Field | Project Progress |
| 1 | Biapenem for Injection | Chemical drugs Class 4 | Anti-infection | Launched |
| 2 | Voriconazole for Injection (0.2g) | Chemical drugs Class 4 | Anti-infection | Launched |
| 3 | Ilaprazole Sodium for injection (new indication) | Chemical drugs Class 2.4 | Gastroenterology | Launched |
| 4 | Blonanserin Tablets | Chemical drugs Class 4 | Psychiatry | Launched |
| 5 | Quetiapine Hemifumarate Sustained-release Tablets | Chemical drugs Class 4 | Psychiatry | Launched |
| 6 | Cetrorelix Acetate for Injection (USA) | ANDA | Assisted reproduction | Submitted an application for registration |
| 7 | Voriconazole for Oral Suspension | Chemical drugs Class 4 | Anti-infection | Filed application for launching |
| 8 | Rabeprazole Sodium Enteric-coated Tablets | Chemical drugs Class 4 | Gastroenterology | Filed application for launching |
| 9 | Progesterone Injection | Chemical drugs Class 3 | Assisted reproduction | Filed application for launching |
| 10 | Magnesium Sulfate, Sodium Sulfate and Potassium Sulfate Concentrate Oral Solution | Chemical drugs Class 4 | Gastroenterology | Filed application for launching |
| 11 | Tedizolid Phosphate for Injection | Chemical drugs Class 4 | Anti-infection | Filed application for launching |
| 12 | Vonoprazan Fumarate Tablets | Chemical drugs Class 4 | Gastroenterology | Process validation |
| 13 | Paliperidone Palmitate Injection | Chemical drugs Class 4 | Mentality | BE Study |
Joincare Pharmaceutical Group Annual Report 2023
| 14 | Asenapine Transdermal Patch | Chemical drugs Class 2.2 | Mentality | Phase I clinical trails |
| 15 | Ilaprazole Oral Suspension | Chemical drugs Class 2.2 | Gastroenterology | Preclinical |
| 16 | Special project of the Joint Research Center | Chemical drugs Class 1 | Anti-tumor | Preclinical |
| 17 | GWT1 inhibitor project | Chemical drugs Class 1 | Anti-infection | Preclinical |
2)Biologics
| No. | Major R&D Project | Registration Classification | Project Progress |
| 1 | Tocilizumab Solution for Injection | Therapeutic biological products Class 3.3 | Launched |
| 2 | Recombinant SARS-COV-2 Bivalent (Original/Omicron XBB) Fusion Protein Vaccine (CHO Cell) | Preventive biological products Class 1.1 | Approved for emergency use |
| 3 | Lipustobart for Injection | Therapeutic biological products Class 1 | Declared for conditional market launch (Pre-BLA) |
| 4 | Semaglutide Injection | Therapeutic biological products Class 3.3 | 1.Type II diabetes mellitus: Phase IIIclinical trails; 2. Weight loss: Approved for clinical trials in February 2024 |
| 5 | Recombinant Anti-human IL-17A/F Humanized Monoclonal Antibody Injection | Therapeutic biological products Class 1 | Phase III clinical trails |
| 6 | Recombinant Human Follitropin Alfa Solution for Injection | Therapeutic biological products Class 3.3 | Phase III clinical trails |
3)APIs and intermediates
| No. | Major R&D Project | Project Purpose | Project Progress |
| 1 | Establishment of genetic and screening technology platform for Cephalosporium acremonium and breeding of high-yield Cephalosporin C strains | Technical transformation of existing products | Steadily increased in yield of Cephalosporin C in industrial scale fermentation |
| 2 | Breeding of high-yield strain of Demeclocycline | Technical transformation of existing products | Completed production scale validation |
| 3 | Development and breeding of a novel high-yield strain of L-phenylalanine based on IBT technology | Technical transformation of existing products | Entered pilot and small-scale study validation |
| 4 | Breeding of high-producing strains of Acarbose based on system metabolic engineering | Technical transformation of existing products | Completed production scale validation |
| 5 | Development and application of algorithms for mining biosynthetic gene clusters (BGCs) based on deep learning | Technical transformation of existing products | Cooperated with Tencent Quantum Laboratory to complete cooperative patent application |
| 6 | Construction of a computational biology/bioinformatics platform for predicting the structure and function of macromolecules | Technical transformation of existing products | Technology platform construction in progress |
| 7 | Biapenem APIs | New product R&D | Launched |
Joincare Pharmaceutical Group Annual Report 2023
| 8 | Caspofungin Acetate APIs | New product R&D | Completed submission of required supplementary materials, and under professional review |
| 9 | Formoterol Fumarate APIs | New product R&D | Completed submission of required supplementary materials, and under professional review |
| 10 | Meloxicam APIs | New product R&D | Under professional review |
| 11 | Cilastatin intermediates | New product R&D | Completed the pilot test |
4) Traditional Chinese medicine
As at the end of the Reporting Period, there were 10 projects in development, among which fourproducts under “Class 3.1 of Ancient Classic Traditional Chinese Medicine CompoundFormulations” were undergoing compound formulation study, and the main progress was as follows:
| No. | Major R&D Project | Project Purpose | Project Progress |
| 1 | JDMF01 | Used for treating the patients with rheumatoid arthritis, rheumatoid arthritis, hyperosteogeny, ankylosing spondylitis and other rheumatic diseases | Study on classic prescription compound formulations |
| 2 | JDMF02 | Used for treating the patients with vaginitis, cervical erosion and pelvic inflammation but with spleen deficiency, liver depression and damp turbidity | Study on classic prescription compound formulations |
| 3 | JDMF03 | Used for treating the patients with otogenic vertigo, hypertension, neurogenic vertigo epilepsy and facial paralysis, showing syndrome of wind-phlegm invading upward | Study on classic prescription compound formulations |
| 4 | JDMF04 | Used for treating the patients with pulmonary heart disease, arrhythmia, coronary heart disease, angina pectoris, rheumatic heart disease, etc. | Study on classic prescription compound formulations |
(2). Basic information on main R&D projects
√Applicable □N/A
| R&D projects (including projects subject to GCE) | Name of drug (product) | Registration Category | Indications | Prescription drug or not | Protected TCM or not (if applicable) | R&D stage |
| Indacaterol Maleate Powder for Inhalation | Indacaterol Maleate Powder for Inhalation | Chemical drugs Class 4 | It is indicated for maintenance therapy of bronchiectasis to relieve symptoms in adults with chronic obstructive pulmonary disease (COPD), including chronic bronchitis and emphysema. | Yes | No | Application for registration |
| Salmeterol Xinafoate and Fluticasone Propionate Powder for Inhalation | Salmeterol Xinafoate and Fluticasone Propionate Powder for Inhalation | Chemical drugs Class 4 | In combination (bronchodilators and inhaled corticosteroids) for the regular treatment of reversible obstructive airways disease, including asthma in adults and children. | Yes | No | Application for registration |
Joincare Pharmaceutical GroupAnnual Report 2023
| TG-1000 | TG-1000 | Chemical drugs Class 1 | For patients 12 years of age and older with uncomplicated acute infection of simple influenza A or B. | Yes | No | Clinical trial |
| XYP-001 | XYP-001 | Chemical drugs Class 2.2; Class 2.4 | For the treatment of Idiopathic pulmonary fibrosis (IPF) | Yes | No | Clinical trial |
| DBM-1152A | DBM-1152A | Chemical drugs Class 1 | For chronic obstructive pulmonary disease (COPD), including relief (emergency treatment) and maintenance therapy for bronchospasm caused by chronic bronchitis and emphysema. | Yes | No | Clinical trial |
| N91115 | N91115 | Chemical drugs Class 1 | Asthma | Yes | No | Clinical trial |
| JP-1366 | JP-1366 Tablets | Chemical drugs Class 1 | Treatment of reflux esophagitis. | Yes | No | Application for Clinical trials |
| Semaglutide Injection | Semaglutide Injection | Therapeutic biological product (Class 3.3) | 1.Type II Diabetes2.It is used for the chronic weightmanagement in adult patients with an initial body mass index value of 30kg/m2 or above (obesity) or 27kg/m2 or above (overweight) and the presence of at least one weight-related complication (such as hypertension, dyslipidemia, fatty liver and obstructive sleep apnea syndrome). | Yes | No | 1.Clinical trials; 2.Approvedfor clinical trials. 1. |
| Recombinant Novel Coronavirus Fusion Protein Bivalent (Lintotype strain/Omicron strain) Vaccine (CHO cells) | Recombinant Novel Coronavirus Fusion Protein Bivalent (Lintotype strain/Omicron strain) Vaccine (CHO cells) | Preventive Biological products Class 1.1 | Used for prevention of diseases caused by novel coronavirus (SARS-CoV-2) infection (COVID-19). | Yes | No | Launched under EUA |
| LZM012(IL-17 A/F) | Recombinant Anti-Human IL-17A/F Humanized Monoclonal Antibody for Injection | Therapeutic biological product (Class 1) | Moderate to severe plaque psoriasis | Yes | No | Clinical trial |
(3). Drugs (products) filed for regulatory approval and granted approval during theReporting Period
√Applicable □N/A
①Drugs (products) filed for regulatory approval during the Reporting Period
| Name of drug | Registration Category | Approval items | Indications |
| Salmeterol Xinafoate-Fluticasone Propionate Powder for Inhalation | Chemical drugs Class 4 | Application for market launch | Used for regular treatment of reversible obstructive airway diseases through combination of drugs |
Joincare Pharmaceutical Group Annual Report 2023
| (bronchodilators and inhaled corticosteroids), including asthma in adults and children. | |||
| Voriconazole for Oral Suspension | Chemical drugs Class 4 | Application for market launch | This product is a broad-spectrum triazole antifungal drug, which is indicated for the treatment of the following fungal infections in adults and children aged 2 years and above: 1. Invasive aspergillosis. 2. Candidemia in patients with neutropenia. 3. Severe invasive infections caused by fluconazole-resistance candida (including monilia krusei). 4. Severe infections caused by scedosporium and fusarium This product is mainly used for the treatment of patients with progressive and potentially life-threatening fungal infections, as well as the prevention of invasive fungal infections in high-risk patients undergoing allogeneic hematopoietic stem cell transplantation (HSCT). |
| Aripiprazole Microspheres for Injection | Chemical drugs Class 2.2 | Application for market launch | Schizophrenia in adults. |
| Triptorelin Acetate Microspheres for Injection | Chemical drugs Class 2.4 | Application for market launch | Endometriosis. |
| Rabeprazole Sodium Enteric-coated Tablets | Chemical drugs Class 4 | Application for market launch | Treatment of gastric ulcer, duodenal ulcer, marginal ulcer, reflux esophagitis, and Zollinger-Ellison syndrome. Auxiliary treatment to eradicate helicobacter pylori in patients with gastric ulcer or duodenal ulcer. |
| Magnesium Sulfate, Sodium Sulfate and Potassium Sulfate Concentrate Oral Solution | Chemical drugs Class 4 | Application for market launch | This product is indicated for adults and are used for intestinal cleaning before any operation that requires so (such as operations that require intestinal visualization, including endoscopy, radiological examination and surgery). |
| Tedizolid Phosphate for Injection | Chemical drugs Class 4 | Application for market launch | Treatment of acute bacterial infections in skin and its soft tissue. |
| Progesterone Injection | Chemical drugs Class 3 | Application for market launch | This product acts on endometrium and can help conceive and maintain pregnancy. It is generally used for luteal function supplementation in the treatment with assisted reproductive technology. |
| Tracheal stent | Medical devices Class III | Application for market launch | Treatment of tracheal stenosis caused by malignant lesions. |
| Lipustobart for Injection | Therapeutic biological product (Class 1) | Approval for conditional market launch | Recurrent or metastatic thymic carcinoma after failure of first-line chemotherapy. |
Joincare Pharmaceutical Group Annual Report 2023
| Cetrorelix Acetate for Injection (USA) | - | ANDA | This product can prevent premature ovulation in patients with controlled ovarian stimulation during the treatment with assisted reproductive technology. |
| Semaglutide Injection | Therapeutic biological product (Class 3.3) | Application for Clinical trials | It is used for the chronic weight management in adult patients with an initial body mass index value of 30kg/m2 or above (obesity) or 27kg/m2 or above (overweight) and the presence of at least one weight-related complication (such as hypertension, dyslipidemia, fatty liver and obstructive sleep apnea syndrome). |
| JP-1366 Tablets | Chemical drugs Class 1 | Application for Clinical trials | Treatment of reflux esophagitis. |
② Drugs (products) granted clinical approval during the Reporting Period
| Name of drug | Registration Category | Indications |
| Meloxicam Nanocrystal Injection | Chemical drugs Class 3 | It is indicated for the management of moderate to severe pain in adults, and can be used alone or in combination with non-NSAID analgesics. Due to the delayed onset of analgesia, it is not recommended to use alone when a rapid onset of action is required. |
| Alarelin Microspheres for Injection | Chemical drugs Class 2.2 and 2.4 | Estrogen receptor positive breast cancer during premenopause |
| Alarelin Microspheres for Injection | Chemical drugs Class 2.2 | Endometriosis |
| Asenapine Transdermal Patch | Chemical drugs Class 2.2 | Treatment of schizophrenia in adults |
| Elagolix Sodium Tablets | Chemical drugs Class 3 | Treatment of moderate to severe pain related to endometriosis |
| Recombinant Novel Coronavirus Fusion Protein Bivalent (Lintotype strain/Omicron strain) Vaccine (CHO cells) | Preventive Biological products Class 1.1 | Used for prevention of diseases caused by novel coronavirus (SARS-CoV-2) infection (COVID-19). |
③ Drugs (products) granted registration approval during the Reporting Period
| Name of drug | Registration classification | Indications |
| Formoterol Fumarate Inhalation Solution | Chemical drugs Class 3 | Indicated for the maintenance treatment of bronchoconstriction in patients with chronic obstructive pulmonary disease (COPD), including chronic bronchitis and emphysema. Used twice a day (morning and evening) for long-term treatment. |
| Biapenem for Injection | Chemical drugs Class 3 | It is indicated for the treatment of septicemia, pneumonia, lung abscess, acute bronchitis, acute exacerbation of chronic bronchitis, refractory urocystitis, pyelonephritis, peritonitis and pelvic inflammation caused by sensitive bacteria. |
| Long Chain Fat Emulsion Injection (OO) | Chemical drugs Class 4 | It is indicated for patients with infeasible, insufficient or contraindicated enteral nutrition to supplement fats through parenteral nutrition. As a component of parenteral nutrition, it provides fats including refined olive oil and soybean oil necessary for the human body. |
Joincare Pharmaceutical Group Annual Report 2023
| Ilaprazole Sodium for Injection (New Indications) | Chemical drugs Class 2.4 | Prevention of stress ulcer bleeding in severe patients |
| Triptorelin Acetate Microspheres for Injection | Chemical drugs Class 2.2 | Prostate cancer patients requiring androgen deprivation therapy. |
| Tocilizumab Injection | Therapeutic biological product (Class 3.3) | 1. Rheumatoid arthritis (RA); 2. Systemic juvenile idiopathic arthritis (sJIA), and cytokine release syndrome (CRS) |
| Blonanserin Tablets | Chemical drugs Class 4 | Schizophrenia. |
| Quetiapine Fumarate Sustained-release Tablets | Chemical drugs Class 4 | This product is used to treat schizophrenia and paralepsy of bipolar disorder. |
| Voriconazole for Injection | Chemical drugs Class 4 | Treatment of invasive aspergillosis. Treatment of severe invasive infections caused by fluconazole-resistance candida (including monilia krusei) Treatment of severe infections caused by scedosporium and fusarium This product is mainly used for the treatment of immunodeficient patients with progressive and potentially life-threatening fungal infections. |
| Recombinant Novel Coronavirus Fusion Protein Bivalent (Lintotype strain/Omicron strain) Vaccine (CHO cells) (EUA) | Preventive Biological products Class 1.1 | Used for prevention of diseases caused by novel coronavirus (SARS-CoV-2) infection (COVID-19). |
| Cyclosporine Softgels (under consistency evaluation) | Chemical drugs | 1. Prevention and treatment of rejection reaction or graft-versus-host reaction after allogeneic organ transplantation or bone marrow transplantation. 2. Treatment of autoimmune diseases such as lupus nephritis and refractory nephrotic syndrome undergoing ineffective treatment with other immunosuppressive treatments. |
| Vancomycin Hydrochloride for Injection (under consistency evaluation) | Chemical drugs | Intravenous infusion of this product is indicated for infections caused by methicillin-resistant staphylococcus aureus and other bacteria: septicemia, infective endocarditis, osteomyelitis, arthritis, burns, surgical trauma and other superficial secondary infections, pneumonia, lung abscess, empyema, peritonitis and meningitis. It may be administered orally for antibiotic-associated pseudomembranous colitis due to clostridium difficile and staphylococcal enterocolitis. |
| Bismuth potassium citrate capsules (under consistency evaluation) | Chemical drugs | Used for gastric and duodenal ulcers, and chronic superficial gastritis with helicobacter pylori infection. |
| Mesh nebulizer | Medical devices Class II | Administer liquid medication to patients via inhalation by nebulization |
(4). Cancellation of main R&D projects or the failure to obtain approval for drugs(products) during the Reporting Period
□Applicable √N/A
(5). R&D accounting policy
√Applicable □N/A
Joincare Pharmaceutical Group Annual Report 2023
The research and development (R&D) expenses of our company consist of expenses directly relatedto R&D activities, including salaries of R&D personnel, direct input costs, depreciation andamortization of long-term assets, equipment debugging costs, amortization of intangible assets,expenses for outsourcing research and development, clinical trial expenses, and other expenses.Among these, the salaries of R&D personnel are allocated to R&D expenses based on project hours.Equipment, production lines, and premises shared between R&D activities and other productionoperations are allocated to R&D expenses based on the proportion of hours or area utilized.Expenditures on an internal research and development project are classified into expenditures onthe research phase and expenditures on the development phase.Expenditures on the research phase shall be recognized in profit or loss for the current period whenincurred.Expenditures on the development phase will be capitalized only when all of the following conditionsare satisfied: it is technically feasible to finish the development of the intangible asset so that it willbe available for use or sale; the Company intends to finish the development of the intangible assetand use or sell it; it can be demonstrated how the intangible asset will generate economic benefits,including proving that the intangible assets or the products produced by it will have markets, or theintangible assets for internal use will be useful; there are adequate technical, financial and otherresources to complete the development and the Company is able to use or sell the intangible assets;and expenditures on the development phase attributable to the intangible assets can be reliablymeasured. The development expenditures that do not satisfy the above conditions shall berecognized in profit or loss for the current period.Our research and development projects enter the development stage after meeting the aboveconditions and forming the project through the technical and economic feasibility studies.Capitalized expenditures on the development phase are shown as development expenditures on thebalance sheet and reclassified as intangible assets on the date the project meets the intended purpose.Capitalization conditions for specific research and development projects are as follows:
① For research and development projects that are not required to obtain clinical approvals, theperiod from the beginning of research and development to before the pilot phase is treated as theresearch phase, and all expenditures shall be recognized in profit or loss for the current period whenincurred; the period from the pilot phase to the obtaining of production approvals is treated as thedevelopment phase, and all expenditures shall be recognized as development expenditures andreclassified as intangible assets after the obtaining of production approvals.
② For research and development projects that require clinical approval, the period from thebeginning of research and development to the obtaining of clinical approval is treated as the researchphase, and all expenditures incurred shall be recognized in profit or loss for the current period when
Joincare Pharmaceutical Group Annual Report 2023
incurred; the period from the obtaining of clinical approval to the obtaining of production approvalis treated as the development phase, and the expenditures shall be recognized as developmentexpenditures and reclassified as intangible assets after the obtaining of production approval.
③The purchase price of the purchased external technology or formula is recognized as developmentexpenditures, and subsequent research and development expenditures are accounted for inaccordance with ① and ② above.
④The Company reviews the latest research and development status of each project at the end ofeach year and if the research and development project no longer qualifies for the development stage,the corresponding development expenditure are recognized in profit or loss for the current period.
⑤Where it is impossible to differentiate the expenditures on the research phase and the expenditureson the development phase, all the research and development expenditures are recognized in profitor loss for the current period.
(6). R&D expenditures
Horizontal comparison
√Applicable □N/A
Unit: 10,000 Yuan Currency: RMB
| Comparable peer companies | R&D expenditures amount | Proportion of R&D expenditures to revenues (%) | Proportion of R&D expenditures to net assets (%) | Ratio of capitalized R&D expenditures (%) |
| Fosun Pharma | 588,500.00 | 13.39 | 10.88 | 26.90 |
| Kelun Pharma | 181,489.48 | 9.60 | 10.75 | 1.09 |
| CR Double-Crane | 72,240.26 | 7.65 | 6.73 | 34.29 |
| Humanwell Healthcare (Group) | 113,397.67 | 5.08 | 6.32 | 14.74 |
| North China Pharmaceutical | 60,909.32 | 5.80 | 9.78 | 64.32 |
| Average R&D expenditures in the same industry | 203,307.35 | |||
| Proportion of R&D expenditures to revenues during the Reporting Period (%) | 9.80 | |||
| Proportion of R&D expenditures to net assets during the Reporting Period (%) | 7.21 | |||
| Ratio of capitalized R&D expenditures during the Reporting Period (%) | 16.82 | |||
Notes: 1. The data regarding comparable companies listed above are from each company's 2022annual report;
2. The average R&D expenditures in the same industry is the arithmetic average of the R&Dexpenditures of five comparable companies listed above.Statement on material changes in R&D expenditures and rationality of R&D expendituresproportion and capitalization proportion
□Applicable √N/A
Joincare Pharmaceutical Group Annual Report 2023
Investment in major R&D projects
√Applicable □N/A
Unit: 10,000 Yuan Currency: RMB
| R&D project | R&D expenditures amount | Expensed R&D expenditures | Capitalized R&D expenditures | Proportion of R&D expenditures to revenues (%) | YoY change (%) |
| Indacaterol Maleate Powder for Inhalation | 488.52 | - | 488.52 | 0.03 | -62.95 |
| Salmeterol Xinafoate and Fluticasone Propionate Powder for Inhalation | 2,403.94 | - | 2,403.94 | 0.14 | -20.98 |
| TG-1000 | 6,783.83 | 2,313.62 | 4,470.21 | 0.41 | - |
| XYP-001 | 1,230.89 | 322.45 | 908.44 | 0.07 | -52.46 |
| DBM-1152A | 1,532.41 | 1,532.41 | - | 0.09 | - |
| N91115 | 501.48 | 501.48 | - | 0.03 | - |
| JP-1366 | 12,253.77 | 1,234.78 | 11,019.00 | 0.74 | - |
| Semaglutide Injection | 8,476.38 | 1,796.10 | 6,680.28 | 0.51 | 392.69 |
| Recombinant Novel Coronavirus Fusion Protein Bivalent (Lintotype strain/Omicron strain) Vaccine (CHO cells) | 8,125.85 | 8,125.85 | - | 0.49 | - |
| LZM012(IL-17 A/F) | 7,238.63 | 7,238.63 | - | 0.43 | 84.08 |
Notes:
The main reason for the quite significant YoY change in our R&D expenditure is that our R&D projects were indifferent R&D stages during the Reporting Period, and certain projects mentioned above were acquired by thecompany during the current reporting period.
3. Sales of drugs (products) of the Company
(1). Analysis of main sales model
√Applicable □N/A
Please refer to the “Overview on the businesses of the Company during the Reporting Period” inthis Chapter.
(2). Analysis of selling expenses
Components of selling expenses
√Applicable □N/A
Unit: 10,000 Yuan Currency: RMB
| Item | Amount incurred in the current period | Proportion of amount incurred in the current period to total selling expenses (%) |
| Business promotion expenses | 377,725.97 | 85.18 |
| Employee compensation | 50,204.04 | 11.32 |
| Entertainment and travel expenses | 6,659.74 | 1.50 |
| Business meeting expenses | 2,716.72 | 0.61 |
| Others | 6,137.75 | 1.38 |
| Total | 443,444.23 | 100.00 |
Horizontal comparison
√Applicable □N/A
Unit: 10,000 Yuan Currency: RMB
Joincare Pharmaceutical Group Annual Report 2023
| Comparable peer companies | Selling expenses | Proportion of selling expenses to revenues (%) |
| Fosun Pharma | 917,117.61 | 20.87 |
| Kelun Pharma | 468,594.77 | 24.78 |
| CR Double-Crane | 265,604.45 | 28.12 |
| Humanwell Healthcare (Group) | 427,470.75 | 19.14 |
| North China Pharmaceutica | 184,406.86 | 17.56 |
| Total selling expenses of the Company during the Reporting Period | 443,444.23 | |
| Proportion of selling expenses to revenues during the Reporting Period (%) | 26.64 | |
Note: The data regarding comparable companies listed above are from each company's 2022 annual report.
Statement on material changes in selling expenses and reasonableness of selling expenses
√Applicable □N/A
During the Reporting Period, the Company's selling expenses were RMB4,434.44 million,accounting for 26.64% of revenues, representing a year-on-year decrease of 10.43%. Lookingforward, the Company will continue to deepen the reform of the marketing system to optimize saleschannels and increase the cost efficiency for high profitability.
4. Others
□Applicable √N/A
(V) Analysis of investmentsOverall analysis of equity investments
√Applicable □N/A
During the Reporting Period, the Company carried out strategic investments in accordance withour development plans as follow:
Joincare Pharmaceutical Group Annual Report 2022
1. Major equity investment
√Applicable □N/A
Unit: 10,000 Yuan Currency: RMB
| Name of investee | Principal business | Whether the target is primarily engaged in investment business | Investment method | Investment amount | Percentage of shareholding | In the Consolidation scope of the Company or not | Item on the financial statement (if applicable) | Source of funds | Partner (if applicable | Investment period (if any) | Status as of balance sheet date | Expected return (if any) | Impact of gain or loss for the period | Litigation involved or not | Disclosure date (if any) | Disclosure index (if any) |
| Wuhan Kangli Health Investment Management Co., Ltd. (武汉康丽健康投资管理有限公司) | Engaged in investment activities with its own funds; asset management services invested with its own funds; corporate management; entrepreneurship investment and financing advisory services. | Yes | New establishment | 100,000 | 67.20% | Yes | N/A | Own funds | Livzon Group | Long term | Capital contribution of RMB100 thousand was completed | - | -0.04 | No | Please see Note 1 for details | Please see Note 1 for details |
| Lijian (Guangdong) Animal Healthcare Co., Ltd. (丽健（广东）动物保健有限公司) | Engaged in production of veterinary medicine; operation of veterinary medicine; import and export of goods and technology and sale of disinfectors (excluding dangerous chemicals) and animal health products; technical advisory services | No | New establishment | 20,000 | 72.12% | Yes | N/A | Own funds | Livzon Group | Long term | Capital contribution of RMB150.00 million was completed | - | -1,577.99 | No | Please see Note 2 for details | Please see Note 2 for details |
Joincare Pharmaceutical Group Annual Report 2022
| on animal breeding, etc. | ||||||||||||||||
| Jiaozuo Joincare Bio Technological Co., Ltd.(焦作健康元生物制品有限公司) | General items: research and development of industrial enzymes; research and development of fermentation process optimization technology; biological feed research and development (except for the items subject to approval according to law, business activities shall be carried out pursuant to the business license independently according to law) Licensed items: pharmaceutical production; production of feed additives (for items subject to approval according to laws, the relevant operation activities may be carried out only after approval by relevant authorities, and the specific | No | Capital injection | 20,000 | 100.00% | Yes | N/A | Own funds | N/A | Long term | Capital contribution of RMB200.00 million was completed | - | 19,525.75 | No | N/A | N/A |
Joincare Pharmaceutical GroupAnnual Report 2022
| operation items shall be subject to approval documents or licenses by relevant authorities) | ||||||||||||||||
| Total | / | / | / | 140,000.00 | / | / | / | / | / | / | / | - | 17,947.72 | / | / | / |
Note 1: For details, please refer to the Announcement of Joincare Pharmaceutical Group Industry Co., Ltd. on the Establishment of the Joint Venture with Livzon Group, a ControllingSubsidiary (Lin 2022-142) disclosed by the Company on 13 December 2022;Note 2: For details, please refer to the Announcement on Investment in the Establishment of the Joint Venture with Joincare, the Controlling Shareholder and Connected Transaction disclosedby Livzon Group (000513.SZ, 01513.HK) on 17 January 2023.
2.Major non-equity investment
□Applicable √N/A
3.Financial assets measured at fair value
√Applicable □N/A
Unit: Yuan Currency: RMB
| Type of assets | Amount at the beginning of the period | Gain or loss on change in fair value for the period | Accumulated change in fair value included in equity | Impairment provision for the period | Amount of purchase during the period | Amount of disposal / redemption during the period | Other change | Amount at the end of the period |
| Shares | 235,534,124.87 | -24,381,075.99 | -47,547,131.07 | - | 6,183,753.83 | - | - | 169,789,671.64 |
| Funds | 688,053,816.62 | 3,298.53 | -60,605,611.86 | - | - | 20,271,628.35 | - | 607,179,874.94 |
| Derivatives | 5,432,511.57 | -2,295,776.28 | - | - | - | - | - | 3,136,735.29 |
| Others | 373,954,090.97 | 585,021.31 | 53,565,146.76 | - | 30,000,000.00 | 27,978.31 | 3,279.44 | 458,076,280.73 |
| Total | 1,302,974,544.03 | -26,088,532.43 | -54,587,596.17 | - | 36,183,753.83 | 20,299,606.66 | 3,279.44 | 1,238,182,562.60 |
Information on investment in securities
√Applicable □N/A
Joincare Pharmaceutical Group Annual Report 2022
Unit: Yuan Currency: RMB
| Type of securities | Securities code | Securities abbreviation | Initial investment cost | Source of fund | Carrying amount at the beginning of the period | Gain or loss on change in fair value for the period | Accumulated change in fair value included in equity | Amount of purchase during the period | Amount of disposal during the period | Profit or loss for the period | Carrying amount at the end of the period | Accounting item |
| Share | 00135 | Kunlun Energy | 4,243,647.64 | Own funds | 4,975,513.90 | 1,404,274.90 | - | - | - | 260,579.14 | 6,379,788.80 | Financial assets held for trading |
| Fund | 206001 | Penghua Fund | 150,000.00 | Own funds | 934,289.94 | 3,298.53 | - | - | - | - | 937,588.47 | Financial assets held for trading |
| Share | 000963 | Huadong Medicine | 39,851.86 | Own funds | 15,425,841.60 | -1,760,128.08 | - | - | - | 95,587.48 | 13,665,713.52 | Financial assets held for trading |
| Share | BEAM(US) | Beam Therapeutics, Inc. | 31,117,151.47 | Own funds | 82,218,236.97 | -24,025,222.81 | - | - | - | - | 58,193,014.16 | Financial assets held for trading |
| Share | ELTX(US) | Elicio Therapeutics, Inc. | 35,363,302.05 | Own funds | 34,823,014.36 | - | -27,002,953.43 | - | - | - | 7,820,060.93 | Other equity instruments investment |
| Share | CARM(US) | Carisma Therapeutics, Inc. | 38,807,266.00 | Own funds | 34,821,295.50 | - | -26,098,003.75 | 6,183,753.83 | - | - | 14,907,045.58 | Other equity instruments investment |
| Share | LLAI（LME） | LungLife Ai, Inc. | 58,837,745.24 | Own funds | 9,615,483.94 | - | -4,010,721.79 | - | - | - | 5,604,762.15 | Other equity instruments investment |
| Share | 02480 | Luzhu Biotech- B | 30,000,00- | Own funds | 53,654,738.60 | - | 9,564,547.90 | - | - | - | 63,219,286.50 | Other equity instruments investment |
| Others | - | - | 27,978.31 | Own funds | 29,271.00 | -1,292.69 | - | - | 27,978.31 | 3,279.44 | - | Financial assets held for trading |
| Total | / | / | 198,586,942.57 | / | 236,497,685.81 | -24,379,070.15 | -47,547,131.07 | 6,183,753.83 | 27,978.31 | 359,446.06 | 170,727,260.11 | / |
Statement of investments in securities
□Applicable √N/A
Joincare Pharmaceutical Group Annual Report 2022
Information on investment in private equity fund
√Applicable □N/A
The Company had no new private equity funds invested during the reporting period. As at the end of the reporting period, the book balance of private equity fundsinvested by the Company amounted to approximately RMB385 million.
Information on investment in derivatives
√Applicable □N/A
(1) Derivative investments for hedging purposes during the reporting period.
√Applicable □N/A
Unit: 10,000 Yuan
| Type of derivatives investment | Initial investment amount | Carrying amount at the beginning of the period | Gain or loss on change in fair value for the period | Accumulated change in fair value included in equity | Amount of purchase during the period | Amount of disposal during the period | Carrying amount at the end of the period | Percentage of investment amount to the net assets of the Company at the end of the period(%) |
| Forward foreign exchange | 223,365.24 | 46,113.94 | -162.70 | - | 176,731.57 | 188,649.06 | 35,683.35 | 1.58 |
Total
| Total | 223,365.24 | 46,113.94 | -162.70 | - | 176,731.57 | 188,649.06 | 35,683.35 | 1.58 |
Explanation as to whether there hasbeen a material change in theaccounting policy and accountingprinciples for the Company’sderivatives during the ReportingPeriod as compared with theprevious reporting period
| Explanation as to whether there has been a material change in the accounting policy and accounting principles for the Company’s derivatives during the Reporting Period as compared with the previous reporting period | No material change |
| Explanation of actual gain or loss during the Reporting Period | The gain or loss realized during the Reporting Period was RMB-23.0238 million yuan. |
| Explanation of hedging effect | The company's foreign exchange derivative transactions are conducted around the actual foreign exchange receipts and payments of the company. Adhering to the principle of exchange rate neutrality and based on specific operational activities, the company aims to mitigate adverse effects caused by significant exchange rate fluctuations and avoid foreign exchange market risks. |
| Source of funds for derivatives investment | Own funds |
Joincare Pharmaceutical Group Annual Report 2022
| Risk analysis of derivatives position held during the Reporting Period and explanation of control measures (including but not limited to market risk, liquidity risk, credit risk, operational risk, legal risk, etc.) | To effectively manage the uncertainty of exchange rate fluctuations on assets denominated in foreign currency of the Company, foreign exchange forward contracts and other financial derivatives are employed to lock relevant exchange rates for the purpose of hedging. The Company has formulated the Management System for Financial Derivatives Trading (《金融衍生品交易业务管理制度》) in relation to the operation and control of foreign exchange derivatives: 1. Market risk: the uncertainty of exchange rate fluctuations in the foreign exchange market has led to higher market risk in foreign exchange forward business. Control measures: The Company’s foreign exchange forward business is entered into for hedging exchange rate risk associated with assets denominated in US dollar and lock the future exchange settlement price of such assets. It is designed to be used as a hedging instrument. Such foreign exchange derivatives shall not be used for speculative trading. The principle of prudence and conservation shall be observed so as to effectively prevent market risk. 2. Operational risk: operational risk arises from imperfect internal process, improper operation, system failure and other factors. Control measures: The Company has formulated the corresponding management measures, clearly defined the responsibilities of all parties, improved the review and approval process and established supervisory mechanism, so as to effectively reduce operational risk. 3. Legal risk: The Company’s foreign exchange forward business is subject to applicable laws and regulations, and shall clearly stipulate the relationship of rights and obligations with financial institutions. Control measures: In addition to strengthening the knowledge of laws and regulations and market rules in the Company’s responsible department, the Company’s legal department shall also strictly review various business contracts, agreements and other documents, specify the rights and obligations, and strengthen compliance inspection, so as to ensure that the Company’s investment and operation in derivatives have met the requirements of applicable laws and regulations as well as the Company’s internal systems. In order to manage the uncertainty risk caused by price fluctuations of bulk commodities on the purchase cost of raw materials of the Company, financial derivatives such as commodity futures contracts are employed to hedge raw materials. The Company has formulated the Internal Control System for Commodity Futures Hedging Business (《商品期货套期保值业务内部控制制度》) to standardize the management and risk control of commodity futures derivatives: 1. Market risk: the uncertainty of price changes of bulk commodities has led to greater market risk in futures business. Control measures: The Company’s futures hedging business shall not carry out speculative trading, the operation principle of prudence and conservation shall be observed, the number of hedging transactions shall be strictly limited, such that it does not exceed the actual number of spot transactions, and the futures position shall not exceed the spot volume for hedging purpose. 2. Operational risk: operational risk arises from imperfect internal process, improper operation, system failure and other factors. Control measures: The Company has formulated the corresponding management system, clearly defined the division of responsibilities and approval process, and established an improved supervisory mechanism, so as to effectively reduce operational risk through risk control of business process, decision-making process and transaction process. 3. Legal risk: The Company’s commodity futures hedging business is subject to applicable laws and regulations, and shall clearly stipulate the relationship of rights and obligations with financial institutions. Control measures: In addition to strengthening the knowledge of laws and regulations and market rules in the Company’s responsible department, the Company’s legal department shall also strictly review various business contracts, agreements and other documents, specify the rights and obligations, and strengthen compliance inspection, so as to ensure that the Company’s investment and operation in derivatives have met the requirements of applicable laws and regulations as well as the Company’s internal systems. |
Change in market price or fair valueof the derivatives invested duringthe Reporting Period, the specificmethod, related assumptions andparameters used in the analysis ofthe fair value of derivatives shall bedisclosed
| Change in market price or fair value of the derivatives invested during the Reporting Period, the specific method, related assumptions and parameters used in the analysis of the fair value of derivatives shall be disclosed | Gains and losses arising from change in fair value of the forward foreign exchange contracts, option contracts and commodity futures contracts during the Reporting Period were RMB-1.6270 million. |
Litigation involved (if applicable)
| Litigation involved (if applicable) | Not applicable |
Joincare Pharmaceutical Group Annual Report 2022
| Disclosure date of the announcement in relation to the approval of investment in derivatives by the Board (if any) | 7 April 2023 |
| Disclosure date of the announcement in relation to the approval of investment in derivatives by the general meeting of shareholders (if any) | Not applicable |
(2). Derivative investments for speculative purposes during the reporting period.
□Applicable √N/A
Joincare Pharmaceutical Group Annual Report 2023
4. Progress of Material Asset Restructurings of the Company during the Reporting Period
□Applicable √N/A
(VI) Sale of major assets and equity
□Applicable √N/A
(VII) Analysis of major controlled and invested companies
√Applicable □N/A
Unit: 10,000 Yuan
| Company | Nature of business | Main products and services | Registered capital | Total assets | Net assets | Revenues | Operating profit | Net profit |
| Taitai Pharmaceutical | Industry | R&D, production and sale of oral liquids, tablets (hormone-containing), aerosols (including hormone-containing aerosols), inhalation formulations (solution for inhalation) (hormone-containing), nasal sprays (hormone- containing), and dietary supplements | 10,000 | 48,736.59 | 34,504.23 | 27,194.40 | 8,918.35 | 7,687.52 |
| Haibin Pharma | Industry | Powders for injection (including penicillin-containing powders), tablets, hard capsules, APIs, sterile APIs, inhalation formulations (solution for inhalation), powders for inhalation, pharmaceutical excipients, R&D technical services, and testing technical services | 70,000 | 163,228.18 | 107,840.72 | 99,227.74 | 15,457.17 | 15,037.88 |
| Xinxiang Haibin | Industry | Manufacturing and sale of pharmaceutical intermediates and APIs (excluding proprietary Chinese medicine or TCM decoction pieces) (excluding hazardous chemicals) | 17,000 | 47,438.09 | 33,391.11 | 69,978.68 | 6,186.48 | 5,381.50 |
| Joincare Haibin | Industry | R&D, production, storage, transportation and sale of chemical APIs (including intermediates) and pharmaceuticals. Import and export business and domestic trading (excluding State controlled or franchised goods) | 50,000 | 137,417.36 | 122,363.16 | 83,518.52 | 46,844.92 | 40,228.10 |
| Health Pharmaceutical | Industry | Production and sale of self-produced dietary supplements, TCM decoction pieces, and drug products | HKD7,317 | 14,545.40 | 10,124.80 | 4,620.46 | 1,124.22 | 772.06 |
| Shanghai Frontier | Industry | R&D of new pharmaceutical products, dietary supplements, medical devices, diagnostic reagents, and pharmaceutical intermediates, and provision of relevant technical consulting, technical services and technology transfer | 5,000 | 16,780.11 | 11,305.79 | 10,028.84 | 3,056.98 | 2,843.91 |
| Jiaozuo Joincare | Industry | R&D, production and sale of pharmaceuticals, chemical APIs, biological APIs, pharmaceutical intermediates, and biological products | 70,000 | 179,139.15 | 128,261.93 | 147,394.06 | 22,898.14 | 20,173.56 |
| Topsino | Commerce | Investment and trading | HKD89,693 | 210,221.50 | 157,325.19 | 0.00 | 29,807.20 | 29,517.54 |
| Livzon Group | Industry | Drug R&D, production, manufacturing and sale | 92,394 | 2,504,482.71 | 1,476,670.30 | 1,243,003.83 | 241,510.85 | 189,760.10 |
Notes: 1. The companies listed above are companies where the Company directly or indirectly held 100% equity interest, exceptforLivzon Group and Shanghai Frontier; financial data thereof are data of individual accounting statements and that attributed toparentcompanies; as there are transactions between subsidiaries or between a subsidiary and the Company, data of individual financialstatements are not separately analyzed.
2. For business conditions of Livzon Group, please refer to the 2023 Annual Report of Livzon Pharmaceutical Group Inc.
(VIII) Structured entities controlled by the Company
□ Applicable √N/A
VI. Discussion and analysis of the Company's future development
Joincare Pharmaceutical Group Annual Report 2023
(I)Industry landscape and trend
√Applicable □N/A
For details, please refer to the “Basic information on industry” in this chapter.(II)Company's strategies for business development
√Applicable □N/A
Taking scientific and technological innovation as a strategic priority and executing our dual-drivestrategy of developing platforms of both innovative medicines and high-barrier complexformulation, we have been evolving into a world-wide influential innovative pharmaceuticalenterprise paying great attention to people's livelihood and actively undertaking socialresponsibilities. Over the years, the Company has been committed to developing itself in thepharmaceutical field, and has grown into an integrated pharmaceutical enterprise covering multipleareas including chemical pharmaceuticals, biologics, chemical APIs and intermediates, traditionalChinese medicine, diagnostic reagents and equipment. In the future, the Company will continue toincrease R&D expenditures to improve its research and innovation capacity, accelerate theoptimization and adjustment of its product structure, fully leverage its existing market advantages,and actively deepen the reform of the marketing system, to promote its sustainable and steadybusiness growth.(III)Business plan
√Applicable □N/A
In 2023, Joincare made great efforts to overcome difficulties to seek development, concentrated onimproving quality and efficiency, and thus harvested all hard-won achievements. In 2024, a crucialyear to realize the objectives and tasks of China’s “14th Five-Year Plan”, the Company willstrengthen the two-wheel drive strategy of “innovative drugs + high-barrier complex formulations”,accelerate the transformation to an innovative pharmaceutical enterprise with internationalcompetitiveness, comprehensively enhance its own sustainable development capacity throughdigital and intelligent new technologies and new models, actively respond to changes in industrypolicies, as well as continuously deepen market promotion. The main focus of work for eachbusiness segment of the Company is as follows:
1.R&D Center
In the government work report of the Second Session of the 14th National People’s Congress in2024, the term “innovative drugs” was written into the government work report for the first time,and the pharmaceutical-related areas of focus like promoting innovations in traditional Chinesemedicines and improving centralized procurement of drugs were also widely concerned. TheCompany will continue to strengthen and improve its independent research and development system,efficiently promote the R&D and clinical development progress of existing innovative drugs suchas TG-1000, DBM-1152A, FZ008-145 and JP-1366, as well as high-barrier complex formulationssuch as Salmeterol Xinafoate-Fluticasone Propionate Powder for Inhalation and MeloxicamNanocrystal Injection around several advantageous fields including respiratory diseases,Gastroenterology, psychiatry, assisted reproduction and anti-tumor, and build a differentiatedproduct pipeline layout. It will accelerate the construction of a R&D platform, fully push forwardthe commercialization of these technical platforms for innovative drugs, inhalation formulations,sustained-release microspheres, monoclonal antibodies, micro-nanocrystalline formulations, andensure continuous output of these products in its core advantage areas. Targeting core R&D talents,it will introduce such talents through various channels to enrich its human resources, furtherstrengthen the construction of a talent pool, and maintain continuous technological innovations. Inthe meantime, the Company will focus on advantageous areas, establish market-oriented thinkingof products, face unmet clinical needs, and pay constant attention to international cutting-edge
Joincare Pharmaceutical Group Annual Report 2023
technologies and product international layout opportunities. Through various means includingcooperative development and licensing, the Company has introduced more innovative drug projectsand improved its product combinations in such advantageous areas. As at the disclosure date of thisReport, the Company has completed the cooperative introduction of innovative drugs, i.e., QX008Nand BA2101. In the future, the Company will deepen international cooperation in respect ofinnovative drugs and leverage its partnership with the International Finance Corporation (IFC) topromote its internationalization strategy and achieve sustainable development.
2. Sales Center
The key tasks in prescription drug marketing of the Company are as follows: Firstly, continuouslyreinforce the sales team, enhance combat capability of the team, establish a sound managementmechanism for sales personnel, and further optimize the performance evaluation system to ensuresmooth realization of the annual target. Secondly, further improve the cooperation mechanism,strengthen the cooperation and coordination among these departments for marketing, medicine,digital development, commerce, bidding, etc., support the sales function, integrate overall resources,ensure accurate and efficient resource input, concentrate on the access of key products in keyhospitals, as well as give full play to the status of new national negotiation drugs includingTobramycin Inhalation Solution and the policy advantages like “dual channels”, and open up “thelast mile” of drug negotiation and admission to improve drug accessibility and ensure drug supply.Thirdly, optimize the compliance marketing system, further improve the compliance managementsystem, and upgrade the risk pre-warning and disposal mechanism and the sales accountability andevaluation mechanism by regularly carrying out sales compliance trainings and cultural construction,so as to improve the sales risk management level and thus escort steady progress in the future.Fourthly, enhance the public awareness of chronic disease management through multi-channelmarketing and promotion. And meanwhile with the help of such platforms as “Respiratory Experts’Views” and “Gastroenterology Experts’ Views”, carry out patient education activities online,organize free clinical treatment to communities offline, as well as elevate patients’ managementlevel and awareness of chronic systemic diseases through double-line linkage medical services, thuscontributing to Health China 2030.In terms of marketing and promotion of APIs and intermediates, pay equal attention to bothinternational and domestic markets. As to the international market, constantly deepen cooperationwith global strategic customers, explore market segments, actively develop customer resources,maintain cooperative partnerships, give full play to the advantages of corporate brand, and form along-term, stable and win-win cooperation model with strategic partners; establish a good brandreputation in the global market through close cooperation with international first-class enterprises;and meanwhile keep a close eye on the changes in exchange rate and market conditions, and adjustsales strategies in a timely manner. As to the domestic market, pay close attention to the developmenttrend of the industry, fully grasp the market opportunities such as national centralized procurement,make overall plans, optimize cost and product quality, and achieve steady progress.In terms of healthcare and OTC marketing, focus on brand promotion and user enhancement, builda brand-driven business flow, organizational structure and talent system, further implement digitalmarketing system, drive sustainable business growth by virtue of brand, constantly strengthen“online + offline” collaborative linkage to drive offline channel sales, continuously promoteorganizational structure reform, channel deep distribution and key chain cooperation through offlinechannels, increasingly promote digital marketing system, off-site drainage and on-site linkagethrough online channels based on market resources, as well as deeply embrace platform promotionand holiday marketing, and promote online channel sales through platform promotion and holidaygift boxes. In terms of content marketing, continuously expand the number of KOL cooperation,break through the audiences from vertical to non-vertical KOL, and constantly expand brand
Joincare Pharmaceutical Group Annual Report 2023
exposure; as well as improve the closed loop in multi-channel stations, introduce self-streaming andreach streaming, and perfect the efficiency of content marketing. In terms of brand marketing andconstruction, cooperate deeply with offline channel chains, establish a trinity offline marketingsystem of chain-regional market-users, make use of brands to drive offline marketing, widenindustry endorsement, deepen cooperation with industry associations and professional forumstogether with official media, strengthen brand professionalism, as well as carry out correspondingjoint cooperation on platform promotion and holiday marketing to expand brand exposure andfurther enhance brand sales. In terms of user operation, enhance the experience of users, providethem with a professional and intimate service system from only just solving user problems to valuingbrand dimension, and attach importance to user experience. And meanwhile, optimize core businessflows, support business organization adjustment and elevate talent capabilities based on the newgrowth model.
3.Production Center
Adhere to the transformation and upgrading towards intelligent manufacturing, apply digital andinformation management monitoring and traceability approaches, and adopt lean production andlean management ideas to improve product quality, reduce production costs and lower energyconsumption costs, thereby comprehensively enhancing product competitiveness; stick to safetyproduction, focus on product quality, continuously build a quality management system, carry outrisk control centered on product quality, make extensive inspections to raw and auxiliary materials,production sites and production processes, identify safety production risks according to the six GMPtesting systems, continuously optimize the entire product production process by introducing greensynthesis technology and adopting synthetic biology technology, improve employee training systemto continuously enhance their professional skills and ensure uniform and stable product quality;persist in cost reduction and efficiency increase, optimize production, improve system andstreamline management by introducing advanced technologies and equipment, and effectivelyimprove the levels of production and operation around cost reduction and efficiency increase; aswell as persevere in green development, continuously uphold and carry forward the concept of green,healthy and sustainable production, upgrade environmental protection and quality standards andrequirements, set environmental goals, strengthen monitoring over energy consumption, pollutantemissions and other environmental information during production and operation, and implementenergy-saving, emission reduction and green production in practice. And meanwhile activelypromote international certification of the Company’s products, make an advance layout by takingadvantage of the opportunity that China becomes a formal applicant for PIC/S, complete GMPinspections subject to international standards, and promote the Company’s production and qualitymanagement levels to align with international standards.
4.Functions and strategies
The key tasks in the functional areas of the Company are as follows: Firstly, further improve theorganizational structure and institutional setup of these subsidiaries under the Group,comprehensively promote lean management, as well as reduce costs and increase efficiency.Secondly, continuously value talents and systems, implement a target management system thatcombines OKR and KPI, implement quarterly rolling dynamic tracking and adjustment, and requireall departments to cooperate closely and give full support to provide strong services and guaranteesfor R&D, production and sales. Thirdly, continue to promote corporate cultural progress, and furtherpublicize corporate culture of the Group and its subsidiaries, so as to enhance cohesive andcentripetal forces. Fourthly, actively leverage the resource advantages of internal and externalbusiness cooperation and invest in the layout and introduction of innovative products andtechnologies to enhance the overall strategic layout. Fifthly, actively practice corporate socialresponsibility, strive to enhance corporate governance level and expedite high-quality and
Joincare Pharmaceutical Group Annual Report 2023
sustainable development.(IV) Potential risks
√ Applicable □ N/A
1. Risks of changes in industrial policies
The pharmaceutical manufacturing industry is significantly affected by changes in industrialpolicies. The pharmaceutical industry will face great challenge in development in the future withcontinuous deepening of medical reform, advancement of supply-side structural reform in theindustry, revision of Drug Administration Law, acceleration of consistency evaluation of genericdrugs, adjustment of the new edition of National Reimbursement Drug List, expansion of volume-based procurement, centralized rectification of the pharmaceutical industry and other industrialpolicies that have been successively launched. In November 2023, the Company’s key productLevosalbutamol Hydrochloride Nebulizer Solution (盐酸左沙丁胺醇雾化吸入溶液) was selectedin the ninth batch of national volume-based drug procurement. This is expected to be implementedin March 2024 and it is anticipated to have a significant impact on the sales price and market shareof this product.Response measures: The Company will pay close attention to industry dynamics and reforms, copewith major changes in policies of the pharmaceutical industry through early planning,transformation and compliance, and further establish and improve its compliant operationmechanism and system. It will actively strengthen new product R&D and innovation and constantlyimprove its core competitive strengths. Meanwhile, the Company actively engages in the access tothe national reimbursement drug list and negotiation, and continue to increase the coverage ofhospitals and sales, to realize the objective of “price for quantity”, so as to reduce the impact ofprice adjustment on the Company’s steady growth. The volume-based drug procurement isbecoming a regular practice. In the face of the volume-based drug procurement and the possibleimpact on the business performance of the Company, the Company will continue to enhance itsinnovative efforts, boost its competitive edge, and strive to ensure the stable operation of thebusiness. With the Company’s new high-barrier complex formulations, represented by inhalationformulations, being launched on the market, commercialization will gradually enter a stablecontribution period. The Company’s product structure will be further optimized, and the reliance onspecific products will also gradually reduce. In the future, relying on combining independent R&D,external introduction and cooperative development, the Company will continue to innovate anddevelop clinically needed innovative drugs with substantial added value, as well as high-barriercomplex formulations. It will delve into products with market potential and technological barriers,actively advance post-market evaluations for key products, and conduct consistency evaluations forrelated products. The Company will continuously optimize its product portfolio and actively exploreand expanding into international markets to promote the sustained and steady development of salesperformance.
2. Market risk
With advancement of supply-side structural reform in the pharmaceutical manufacturing industryand two invoice policy in circulation domain, pharmaceutical market structure is deeply changed.With the gradual standardization and centralization of the market, competition in the pharmaceuticalindustry becomes increasingly fierce. Affected by increasingly stricter drug regulation, policy-baseddrug price reduction, price cutting during bidding, medical insurance premium control, andminimum procurement commitment of the pharmaceutical industry in current stage, bid winningprice of drugs will be further lowered, competition among enterprises in the industry will beintensified, and price war will occur frequently, thus the Company will be at the risk of drug pricereduction.
Joincare Pharmaceutical Group Annual Report 2023
Response measures: The Company will establish a more reasonable market system through strictcompliance operation so as to maintain its dominant position and core competitive strengths, andensure that it can achieve sustainable and steady development and improve its profitability byreinforcing marketing. Meanwhile, the Company will offset the impact of product price reductionby means of price supplement based on quantity, and optimize technical process and reduceproduction costs through internal exploration and transformation. Moreover, the Company willspeed up the R&D and marketing of new products, spread risks of the Company while expandingthe range of existing products in segment markets, improve sales and form new profit growth pointby increasing product varieties in the future.
3.Risk of safety and environmental protection
The Company is an integrated pharmaceutical manufacturing enterprise. During production, itimplements relevant chemical synthesis process and uses a large number of acid and alkali and otherchemical components, which are inflammable, explosive, toxic, irritant and corrosive, and havehidden hazards of fire, explosion and poisoning, posing certain risks to the production and operationof the Company. As environmental protection policies and regulations have been constantly issuedin recent years, environmental protection standards have become more stringent, and the state hasstrengthened its control over pollutants, risks of environmental protection of the Company areincreasing.Response measures: The Company has always obeyed the safety work concept of “Putting PeopleFirst” and the guideline of “Safety First, Precaution Crucial and Comprehensive Treatment”. It willstrengthen the construction of safe production infrastructure and ensure a sound environment forsafe production of the Company through regular internal audit of safety and environment systemsas well as employee safety education and training. The Company will carry out discharge aftertreatment and reaching standards in accordance with environmental protection provisions, activelyaccept supervision and inspection of environmental protection authorities, and try to reduceemission and increase expenditures in environmental protection by improving production processand promptly updating environmental protection technology.
4.Risk in price and supply of raw materials
There is a larger fluctuation in the supply price of some raw materials of the Company due tochanges in material prices, especially the materials of traditional Chinese medicine, causing greatervolatility or rise in production costs of the Company. Meanwhile, the quantity and category of rawmaterial suppliers of the Company are various, thus quality of final products of the Company willbe directly affected by the selection of raw material suppliers and the guarantee and control ofquality of raw materials.Response measures: In terms of selection of suppliers, the Company will conduct an open tenderingand bidding based on the principle of selecting qualified suppliers, strengthen audit of suppliers, andeliminate the adulteration of adverse suppliers. The Quality Assurance Department and SupplyDepartment of the Company will directly conduct process control of products provided by suppliersof key raw materials and carry out quality inspection and control of final products
5.Risk of R&D for new drugs
New drug R&D is characterized by high input, high risk and long period. The State has frequentlyissued drug R&D related policies in recent years to further enhance approval work requirements ofnew drugs for marketing, thus bringing certain risks for new drug R&D of the Company. Meanwhile,promotion of drugs after marketing is affected by national regulations, industry policies, marketenvironment and competitive intensity, causing that income obtained after marketing of new drugscannot reach the expected income, making the Company at risk of product R&D.
Joincare Pharmaceutical Group Annual Report 2023
Response measures: The Company will focus on innovative medicines and high-barrier complexformulation, pay attention to unmet clinical needs, and continuously invest in innovative researchand development. The Company will further improve the R&D and innovation systems, introduceand develop high-end talents, proactively carry out cooperation and introduction of overseasinnovative medicines, strengthen market research and evaluation of varieties, reinforce the processregulation and risk management of the initiation of R&D projects, and concentrate efforts and makekey breakthroughs in the R&D of core products. At the same time, the Group’s advantages in APIswill be fully utilized to reinforce the integration of API and drug formulations to ensure the long-term sustainable development of the Company.(V)Others
□Applicable √N/A
VII.Information not disclosed according to guidelines due to inapplicability of the standard,involving state secrets or trade secrets or other reasons, and notes on relevant reasons
□Applicable √N/A
Joincare Pharmaceutical Group Annual Report 2023
Chapter 4 Corporate Governance
I. Corporate Governance
√Applicable □N/A
The Company is in compliance with the corporate governance requirements applicable to it as aPRC public company listed on the Shanghai Stock Exchange in all material aspects, including butnot limited to the Company Law, the Securities Law, the Guidelines for Corporate Governance ofListed Companies, and the Rules Governing the Listing of Stocks on Shanghai Stock Exchange.During the Reporting Period, the Company continued to improve its corporate governance structure,strengthen information disclosure management and enhance investor relations management andinternal control to standardize the operation of the Company.
1. Shareholders and General Meetings
During the Reporting Period, 1 annual general meeting and 4 extraordinary general meetings wereheld by the Company. The Company convened and held general meetings in strict compliance withthe Articles of Association, Rules of Procedure for the General Meetings and other relevantregulations to ensure that resolutions can be made at general meetings based on fairness andopenness, thereby safeguarding the rights and interests of shareholders. In addition, the Companymade full use of modern information technology such as online voting to ensure that all shareholders,particularly minority shareholders, can attend general meetings and exercise their rights to knowand participate in decision making in the most convenient and fastest way.
2. Controlling shareholders and the listed company
The Company is able to carry on its business and operations independently. In terms of business,personnel, assets, organizations and finance, the Company performed management and accountingindependently from the controlling shareholders of the Company. The controlling shareholders ofthe Company have exercised their rights and assumed their obligations in strict compliance with thelaws and regulations, and have never directly or indirectly interfered with the decision-making orbusiness activities of the Company without authorization of the general meeting. The Company hasformulated the Management Policy of Joincare Pharmaceutical Group Industry Co., Ltd. forPreventing the Controlling Shareholders or De Facto Controller and Other Related Parties fromAppropriating Funds of the Company, and has established a long-term mechanism to prevent thecontrolling shareholders or de facto controller and their related parties from using funds of the listedcompany or damaging the interests of the listed company. During the Reporting Period, there wasno circumstance where the Company's controlling shareholders, de facto controller, and their relatedparties embezzled assets of the Company or damaged the interests of the Company and minorityshareholders.
3. Directors and the Board
During the Reporting Period, the Company held 15 Board meetings in multiple ways, including on-site meeting, voting through electronic means and the combination of on-site meeting and electronicmeans, providing convenience for the attending directors. During the Reporting Period, the Boardof the Company performed its duties actively and effectively in strict compliance with the relevantregulations, including the Company Law, the Articles of Association, and the Rules of Procedurefor the Board Meetings.The Board of the Company comprises a total of 9 directors, including 4 independent directors whoare legal, financial and medical industries professionals and provide constructive advice for theeffective, standard governance and decision-making on major policies of the Company. Besides,five special committees are set up under the Board of the Company, namely the Audit Committee,
Joincare Pharmaceutical Group Annual Report 2023
the Remuneration Committee, the Strategy Committee, the Nomination Committee, and theCorporate Social Responsibility Committee. These committees assist the Board in performing itsdecision-making and supervision functions and give full play to their expertise, so as to ensure thelegality, scientificity, and correctness of decisions made by the Board.During the Reporting Period, the Company convened, held and voted at the board meetings inaccordance with the Rules of Procedure for the Board Meetings, and all directors of the Companyhave attended meetings including the board meetings and general meetings in a conscientious,responsible and honest manner, actively participated in relevant business training, familiarizedthemselves with relevant laws and regulations, and clarified the rights, obligations andresponsibilities of directors.
4. Supervisors and the Supervisory Committee
During the Reporting Period, the Company held 10 meetings of the Supervisory Committee forreview of the periodic report, option exercise, adjustments to the projects of raised funds, and othermatters of the Company. The Supervisory Committee of the Company is comprised of threesupervisors, including one employee's representative. During the Reporting Period, the SupervisoryCommittee of the Company performed its duties in accordance with the law, supervised the dutyperformance of directors and senior management of the Company, carried out regular inspectionson the financial position of the Company, and focused on significant investments of the Company,fully protecting the interests of the Company and all shareholders.
5. Performance evaluation and incentive mechanism for senior managementThe appointment and dismissal of and reward and punishment for senior management of theCompany are performed in strict accordance with the relevant laws, regulations, and the Articles ofAssociation. The Company has established the selection, appointment and performance assessmentcriteria and the remuneration decision-making procedure for the senior management. TheNomination Committee of the Company provided appropriate candidates for directors and seniormanagement in accordance with the law, and submitted the list of candidates to the Board of theCompany for review. The Remuneration Committee of the Company, pursuant to the regulationssuch as the Management Policy on the Remuneration and Performance Assessment of SeniorManagement, determined the result of performance assessment of senior management based on thecompletion of business objectives of the Company and work objectives of the senior managementin 2023. Based on the result of performance assessment, the performance bonus and remunerationof senior management in 2023 were determined and submitted to the Board of the Company forreview and resolution.
6. Investor relations
The Company has always attached great importance to communication and exchange with investors.The Board designated departments and personnel to manage information disclosure and investorrelations, enhance communication with minority shareholders, answer questions from shareholderson the production, management and operation of the Company, and listen earnestly to thesuggestions and advice of shareholders on the strategy and development of the Company. Withoutviolating regulations, the Company satisfied to the maximum extent the information needs ofinvestors for the sustainable and healthy development of the Company.
7. Information disclosure and transparency
The Company disclosed information in a timely, accurate, authentic and complete manner in strictcompliance with the relevant regulations, including the Company Law, the Rules Governing theListing of Stocks on Shanghai Stock Exchange, the Articles of Association, and the InformationDisclosure Management Bylaws. The Company designated the Board Secretary to manageinformation disclosure, receive visitors, answer questions consulted, contact shareholders, and
Joincare Pharmaceutical Group Annual Report 2023
provide investors with the information publicly disclosed by the Company. The Company is able todisclose information in an authentic, accurate, complete and timely manner in accordance with thelaws, regulations, and the Articles of Association, and is able to ensure equal access to informationfor all shareholders.
8. Stakeholders
The Company has fully respected the legitimate rights and interests of stakeholders, including banks,other creditors, employees, consumers, suppliers and communities, and has extendedcommunication and cooperation with such stakeholders based on mutual benefit, so as to jointlypromote the sustained and healthy development of the Company and protect the interests of publicshareholders.During the Reporting Period, the Company did not provide undisclosed information to its substantialshareholders or de facto controller, and the substantial shareholders and de facto controller of theCompany did not interfere with the production, operation and management of the listed company.Overall, no corporate governance irregularities were found.The corporate governance of the Company complies with the Company Law and relevantregulations issued by the CSRC. Achieving good corporate governance is a long journey, whichrequires continuous improvement. The Company will continue to timely update and improve itsinternal governance system in accordance with relevant regulations, discover and solve problems ina timely manner, and strengthen internal management, so as to promote standard operation andcorporate governance as well as advance the steady and healthy development of the Company.
9. Establishment and implementation of insider registration management system for insiderinformationThe Resolution relating to Amendment of the Insider Registration Management System for InsideInformation of Joincare Pharmaceutical Group Industry Co., Ltd. was revised and approved at the8th meeting of the 8th session of the Board of the Company, with a view to strengthening theconfidentiality of inside information, maintaining the principles of openness, fairness and justice forthe Company's information disclosure, and protecting the legitimate rights and interests of investors.During the Reporting Period, the Board Office of the Company was responsible for the managementof inside information of the Company. It is stipulated that the documents and data reported andtransmitted externally and other information involving inside information and informationdisclosure shall be reviewed and approved by the Board or the Board Secretary. When preparingperiodic reports and planning significant matters, the Company performed inside informationregistration timely, and reminded the insiders by mail or phone not to deal with shares of theCompany during the sensitive period. Through self-inspection, it was found that there was nocircumstance where the insiders dealt with shares and derivatives using inside information of theCompany during the Reporting Period.
Whether there are any material deviations of the Company's corporate governance from laws,administrative regulations and CSRC regulations on the governance of listed companies; Ifany, the reasons should be explained.
□Applicable √N/A
II. Measures taken by the controlling shareholder and de facto controllers to ensure theindependence of the Company's assets, personnel, finance, organization, business, in additionto solutions, work schedules and follow-up work plans adopted to enhance the independenceof the Company
□Applicable √N/A
Joincare Pharmaceutical Group Annual Report 2023
Engagement in the same or similar business as the Company by controlling shareholders, de factocontrollers and other units under their control, and the influence of horizontal competition or majorchanges in horizontal competition on the Company, countermeasures taken, progress and follow-upplan
□Applicable √N/A
III. General Meetings
| Meeting session | Date of meeting | Query index of the designated website for publishing the resolution | Disclosure date | Meeting resolution |
| 2023 First Extraordinary General Meeting | 19 May 2023 | www.sse.com.cn | 20 May 2023 | The Resolution on the Proposal on Cancellation of Treasury Shares Previously Repurchased was considered and approved. See the Announcement on Resolutions of 2023 First Extraordinary General Meeting (Lin 2023-056) for details. |
| 2022 Annual General Meeting | 9 June 2023 | www.sse.com.cn | 10 June 2023 | Nine (9) resolutions were considered and approved, including the 2022 Annual Work Report of the Supervisory Committee, 2022 Annual Work Report of the Board of Directors and 2022 Annual Financial Final Accounts Report. See the Announcement on Resolutions of 2022 Annual General Meeting (Lin 2023-061) for details. |
| 2023 Second Extraordinary General Meeting | 15 September 2023 | www.sse.com.cn | 16 September 2023 | The Resolution on the Proposal on the Election of Mr. Yin Xiaoxing as an Independent Director of the Company was considered and approved. See the Announcement on Resolutions of 2023 Second Extraordinary General Meeting (Lin 2023-100) for details. |
| 2023 Third Extraordinary General Meeting | 12 October 2023 | www.sse.com.cn | 13 October 2023 | Two Resolutions resolutions were considered and approved, including the Third Phase Ownership Scheme under Medium to Long-term Business Partner Share Ownership Scheme of the Company (Draft) and its Summary. See the Announcement on Resolutions of 2023 Third Extraordinary General Meeting (Lin 2023-111) for details. |
| 2023 Fourth Extraordinary General Meeting | 8 December 2023 | www.sse.com.cn | 9 December 2023 | The Resolution on the Revise Certain Clauses of the Independent Directors' Working System and the Resolution on the Amend Certain Clauses of the Articles of Association of the Company were considered and approved. See the Announcement on Resolutions of 2023 Fourth Extraordinary General Meeting (Lin 2023-136) for details. |
Holders of preferred shares with resumed voting rights requesting to hold extraordinarygeneral meeting
□ Applicable √ N/A
Explanations of General Meetings
□ Applicable √ N/A
Joincare Pharmaceutical Group Annual Report 2023
IV. Information on directors, supervisors and senior management(I) Changes in shareholding and remuneration of current directors, supervisors, and seniormanagement and those left the Company during the Reporting Period
√Applicable □N/A
Unit: shares
| Name | Position (Note) | Gender | Age | Start date of the tenure | End date of the tenure | Number of shares held at the beginning of the year | Number of shares held at the end of the year | Change in shareholding during the year | Reason for change | Total pre-tax remuneration received from the Company during the Reporting Period (RMB Ten thousand) | Receive any remuneration from any related party of the Company or not |
| Zhu Baoguo | Chairman | Male | 62 | 28 August 2021 | 27 August 2024 | 334.47 | No | ||||
| Liu Guangxia | Vice Chairman | Female | 55 | 28 August 2021 | 27 August 2024 | 436.96 | No | ||||
| Yu Xiong | Director, President | Male | 63 | 28 August 2021 | 27 August 2024 | 800,000 | 980,000 | 180,000 | Equity incentive | 360.00 | No |
| Qiu Qingfeng | Director, Vice President, Chief Financial Officer | Male | 53 | 28 August 2021 | 27 August 2024 | 717,409 | 717,409 | 0 | 225.59 | Yes | |
| Lin Nanqi | Director, Vice President | Male | 42 | 28 August 2021 | 27 August 2024 | 1,291,040 | 1,291,040 | 0 | 225.59 | Yes | |
| Yin Xiaoxing | Independent Director | Male | 58 | 15 September 2023 | 27 August 2024 | 3.50 | No | ||||
| Huo Jing | Independent Director | Female | 48 | 28 August 2021 | 27 August 2024 | 12.00 | No | ||||
| Qin Yezhi | Independent Director | Male | 50 | 28 August 2021 | 27 August 2024 | 12.00 | No | ||||
| Peng Juan | Independent Director | Female | 60 | 28 August 2021 | 27 August 2024 | 12.00 | No | ||||
| Cui Liguo （resigned） | Independent Director | Male | 54 | 28 August 2021 | 15 September 2023 | 8.50 | No | ||||
| Yu Xiaoyun | Chairman of the Supervisory Committee | Male | 56 | 28 August 2021 | 27 August 2024 | 70.36 | No | ||||
| Peng Jinhua | Supervisor | Female | 62 | 28 August 2021 | 27 August 2024 | 38,043 | 38,043 | 0 | 4.80 | No | |
| Xing Zhiwei | Supervisor | Male | 38 | 18 May 2022 | 27 August 2024 | 111.51 | No | ||||
| Zhang Leiming | Vice President | Male | 41 | 8 September 2023 | 27 August 2024 | 201.56 | No | ||||
| Zhao Fengguang | Vice President, Secretary to the Board | Male | 49 | 28 August 2021 | 27 August 2024 | 768,000 | 768,000 | 0 | 205.59 | No | |
| Total | / | / | / | / | / | 3,614,492 | 3,794,492 | 180,000 | / | 2,224.43 | / |
Notes: 1. Mr. Zhu Baoguo serves as the chairman of Livzon Group, a controlled subsidiary of the Company; andMr. Yu Xiong and Mr. Qiu Qingfeng serve as non-executive directors of Livzon Group. The remuneration listedabove does not include the part paid by Livzon Group. Please refer to Livzon Group's 2023 Annual Report fordetails.
| Name | Main work experience |
| Zhu Baoguo | Male, born in 1962, with a bachelor's degree. He was the director of Henan Xinxiang Waterborne Resin Research Institute, vice chairman and general manager of Henan Feilong Fine Chemical Products Co., Ltd., and had been the general manager and vice chairman of the Company since 1992. He is currently the chairman of the Company and the chairman of Livzon Pharmaceutical Group Inc. Mr. Zhu Baoguo is a shareholder of Shenzhen Baiyeyuan Investment Co., Ltd., a controlling shareholder of the Company, and is the de facto controller of the Company. |
| Liu Guangxia | Female, born in 1969, with a college degree. She was the manager of the Advertising Department of CCTV International Corporation Shenzhen, deputy general manager and director of the Company, and the vice chairman of Livzon Group. She is currently the vice chairman of the Company. Ms. Liu Guangxia is a shareholder of Shenzhen Baiyeyuan Investment Co., Ltd., a controlling shareholder of the Company, and is the spouse of Mr. Zhu Baoguo, the de facto controller of the Company. |
Joincare Pharmaceutical Group Annual Report 2023
| Yu Xiong | Male, born in 1961, researcher. He graduated from the Department of Chemistry of Fudan University with a bachelor of science degree in July 1984. In 1999, he received the special government allowance from the State Council. In 2004, he studied at KU Leuven in Modern Enterprise Management. From July 2005 to January 2006, he worked as a senior visiting scholar at California State University, Northridge. Since 2016, he had been the vice president of the Company. He serves currently as director and president of the Company, non-executive director of Livzon Group, chairman of Shanghai Frontier and Haibin Pharma, independent director of Sichuan Biokin Pharmaceutical Co., Ltd., director of Shanghai Huatai Investment Development Co., Ltd., honorary director of Chinese Pharmaceutical Association, honorary chairman of Pharmaceutical Engineering Specialized Committee, honorary director of Shanghai Society of Chemistry and Chemical Industry, and adjunct professor of East China University of Science and Technology. He was formerly the vice president of China State Institute of Pharmaceutical Industry, chemistry department director and vice president of Shanghai Institute of Pharmaceutical Industry, chairman of Shanghai Techwell Biopharmaceutical Co., Ltd., legal person of National Shanghai Center for New Drug Safety Evaluation and Research, and general manager and chairman of Sinopharm Yangzhou VAC Biological Engineering Co., Ltd. He was also the person in charge of the comprehensive new drug research and development platform under the national key project of “new drug creation”(Shanghai Institute of Pharmaceutical Industry) and the technical chief of rolling projects under the 12th Five-Year Plan. |
| Qiu Qingfeng | Male, born in 1971, with an executive master of business administration degree from China Europe International Business School, member of Chinese Institute of Certified Public Accountants (non-practicing). He worked at Tianjin No.1 Machine Tool Works. Since 1996, he had served successively as the finance personnel, finance supervisor, finance manager, deputy general manager of the Company, and the general manager, board secretary, and president of the Company. He is currently the director, vice president and chief financial officer of the Company and a non-executive director of Livzon Pharmaceutical Group Inc. |
| Lin Nanqi | Male, born in 1982, with a bachelor of engineering degree. He was formerly the workshop supervisor of Chongqing Daxin Pharmaceutical Co., Ltd., the workshop manager, production director and deputy general manager of Livzon Group Xinbeijiang Pharmaceutical Manufacturing Inc., and the general manager of Jiaozuo Joincare Bio Technological Co., Ltd., a wholly-owned subsidiary of the Company. He is currently the director and vice president of the Company. |
| Yin Xiaoxing | Male, born in 1966, with a doctoral degree. He used to be Dean of the School of Pharmacy and Vice President of Xuzhou Medical University. He is currently a professor of Xuzhou Medical University, a doctoral supervisor of pharmacology, Director of Jiangsu Key Laboratory of New Drug Research and Clinical Pharmacy, and an independent director of Jiangsu Nhwa Pharmaceutical Co., Ltd. Now, he is a member of the Teaching Steering Committee of Pharmacy Specialty in Colleges and Universities of Ministry of Education, the Chairman of the Steering Committee of Jiangsu Science Class 2 Postgraduate Education, the Vice Chairman of Jiangsu Province Pharmacological Society, and the Chairman of the Preclinical Pharmacology Professional Committee of New Drugs of Jiangsu Province Pharmacological Society. He ever presided over the national natural science fund of China and several natural science funds of Jiangsu Province, published more than 90 papers as included in SCI as a correspondent author, and applied for 12 patents and was authorized 4 patents as the first finisher. He successfully constructed the undergraduate pharmacy program and pharmacy discipline system of Xuzhou Medical University. And he is the head of clinical pharmacy major and pharmacy major in the national first-class specialty construction points, and the head of the Clinical Pharmacology, a national first-class course. |
| Huo Jing | Female, born in 1976, with a bachelor's degree. She is a member of All China Lawyers Association and Tencent Guangdong Real Estate Think Tank. She was a specially invited lawyer by chinacourt.org, 9ask.cn, 66law.cn, Southern Metropolis Daily, and Shenzhen Evening News. Since 2007, she has been the lawyer and partner of Guangdong Sun Law Firm. She was a member of Real Estate Specialized Committee of Shenzhen Lawyers Association, and served successively as permanent legal adviser to many companies, fully responsible for the review of corporate legal affairs, drafting and amendment of economic contracts, and issuance of legal opinions, with extensive litigation experience for various types of cases. She is currently an independent director of the Company. |
| Qin Yezhi | Male, born in 1974, with a bachelor's degree, a practicing member of Chinese Institute of Certified Public Accountants and China Certified Tax Agents Association, and a non-practicing member of China Certified Public Valuers Association. He successively served as auditor of Shenzhen Zhengfeng Lifu Accounting Firm, partner of Shenzhen Jinzheng Accounting Firm, and partner of Asia Pacific (Group) CPAs (Special General Partnership). From 2014 to date, he has served as partner of China Shu Lun Pan Certified Public Accountants LLP. He is currently an independent director of the Company. |
| Peng Juan | Female, born in 1964, doctor and doctoral supervisor. From 1997 to date, she has been an associate professor at the Department of Accounting of Antai College of Economics and Management in Shanghai Jiao Tong University, covering research areas of digital finance, green |
Joincare Pharmaceutical Group Annual Report 2023
| finance, marketing audit, and corporate governance. She is currently an independent director of the Company. She successively served as instructor at the Department of Accounting of School of Economics and Management in Shanghai Maritime University, and director of Executive Education Center of Antai College of Economics and Management in Shanghai Jiao Tong University. She is currently the president and training supervisor of Shanghai Cost Research Society of Shanghai Jiao Tong University, adviser of China Financial Cloud Institute, a member of Behavioral Science Council, a member of Finance and Accounting Association of Shanghai Jiao Tong University, and a member of Green Finance Center of Shanghai Environment and Energy Exchange. She served concurrently as independent director of Shanghai Sunglow Packaging Technology Co., Ltd. (stock code: 603499), Haitong Futures Co., Ltd. (stock code: 872595), and Shanghai Sunmi Technology Co., Ltd. | |
| Yu Xiaoyun | Male, born in 1968, with a bachelor's degree, and an MBA degree from University of Greenwich. He is a senior engineer and high-level professional talent of Shenzhen. He worked for Henan Institute of Traditional Chinese Medicine. From December 1992 to date, he has served successively as technical manager of the Company, government affairs manager of Institute of Traditional Chinese Medicine, and vice president of the Institute. He is currently the adviser of the Institute and chairman of the Supervisory Committee of the Company, and also a managing director of China Healthcare Association. |
| Peng Jinhua | Female, born in 1962, with a college degree. She served as technical data processor at State-owned 272nd Plant of Ministry of Nuclear Industry and accountant of the staff hospital of the Plant, teacher of Hengyang Radio & TV University, and finance manager of Shenzhen New Era Industrial City Industrial Co., Ltd. She joined the Company in March 1994, and served successively as finance supervisor, manager of planning and finance department, manager of finance department, manager of tax department, administration manager, and general manager assistant. She is currently a supervisor of the Company. |
| Xing Zhiwei | Male, born in 1986. He graduated from Sichuan University majoring in light industry biotechnology with a bachelor's degree. He currently serves as the deputy director of the Center of the Production Management and a supervisor of the Company, the general manager and vice president of the Company’s subsidiary Jiaozuo Joincare Bio Technological Co., Ltd. a director and the general manager of the Company’s subsidiary Henan Province Joincare Biopharmaceutical Research Institute Co., Ltd, the chairman of the Company’s subsidiary Xinxiang Haibin Pharmaceutical Co., Ltd. and Jiaozuo Jianfeng Biotechnology Co., Ltd. He served successively as workshop supervisor and workshop manager of Livzon Group Xinbeijiang Pharmaceutical Manufacturing Inc., and workshop manager, production director and deputy general manager of Jiaozuo Joincare Bio Technological Co., Ltd. |
| Zhang Leiming | Male, born in 1983, Chinese nationality, without overseas permanent right of abode, and with a bachelor of science degree. He is currently the vice president of the Company. And he used to be the promotion specialist of the Marketing Department of Livzon Pharmaceutical Group Inc., the provincial manager of Reproductive Products Sales Department, the provincial manager of the Prescription Drug Division, the provincial general manager, the regional general manager and the general manager of the Prescription Drug Division of the Company. |
| Zhao Fengguang | Male, born in 1975, with a bachelor of economics degree and master of science degree, member of Jiusan Society. He was formerly the secretary to president of Shenyang Pharmaceutical University, council secretary and office director of Shenzhen Research Center of Traditional Chinese Medicine and Natural Products, and assistant to director of Chinese Medicine Laboratory of Research Institute of Tsinghua University in Shenzhen. Since August 2011, he served successively as manager of project research and management department of the institute of the Company, deputy head and project research director of the institute of the Group, and director of the controlling subsidiary Shanghai Frontier. He is currently the vice president and board secretary of the Company. |
Explanations of other relevant information
√Applicable □N/A
1. On 23 August 2023, the Company received a written resignation report from Mr. Cui Liguo, anindependent director of the Company. According to the Measures for the Administration ofIndependent Directors of Listed Companies, the tenure of independent directors shall not exceed sixyears consecutively, so that Mr. Cui Liguo applied to resign as an independent director of theCompany and his relevant positions in the Nomination Committee, the Corporate SocialResponsibility Committee and the Strategy Committee.On 23 August 2023, the Company held the 30th Meeting of the 8th Session of the Board, whichconsidered and approved the Proposal on Nominating Mr. Yin Xiaoxing as a Candidate for
Joincare Pharmaceutical Group Annual Report 2023
Independent Director of the Company. After the qualification review by the Nomination Committeeof the Board, the Board agreed to nominate Yin Xiaoxing a candidate for independent director ofthe 8th Session of the Board, and submitted this proposal to the general meeting for consideration.On 15 September 2023, the Company held the 2023 second extraordinary general meeting, whichconsidered and approved the Proposal on Nominating Mr. Yin Xiaoxing as a Candidate forIndependent Director of the Company, and elected Mr. Yin Xiaoxing as an independent director ofthe Company for a term commencing from the date of consideration and approval at the generalmeeting to the date of expiry of the tenure of the 8th Session of the Board.
2. On 8 September 2023, the Company held the 31st Meeting of the 8th Session of the Board, whichconsidered and approved the Proposal on Appointing Mr. Zhang Leiming as Vice President of theCompany. In order to further standardize and improve the prescription drug sales managementsystem of the Company and provide a strong guarantee for its long-term strategic development, andafter being nominated by the President of the Company and the qualification review by theNomination Committee of the Board, the Board approved the appointment of Mr. Zhang Leimingas a vice president of the Company and will be fully responsible for the sales management ofprescription drugs of the Company for a term commencing from the date of vote and approval at theBoard meeting to the date of expiry of the term of the 8th Session of the Board.
(II) Posts held by current directors, supervisors, and senior management and those resignedduring the Reporting Period
1. Posts held at the corporate shareholders of the Company
√Applicable □N/A
| Name | Corporate shareholder | Posts held | Start date of the tenure | End date of the tenure |
| Zhu Baoguo | Baiyeyuan | Chairman, General Manager | 11 March 2014 | / |
| Liu Guangxia | Baiyeyuan | Director | 21 January 1999 | / |
| Note | Mr. Zhu Baoguo, Chairman of the Company, directly holds 90% of shares in Baiyeyuan, and Ms. Liu Guangxia, Vice Chairman of the Company, directly holds 10% of shares in Baiyeyuan. Both of them are directors of Baiyeyuan, and Mr. Zhu Baoguo is the spouse of Ms. Liu Guangxia. | |||
2. Posts held at other entities
√Applicable □N/A
| Name | Other entities | Posts held | Start date of the tenure | End date of the tenure |
| Zhu Baoguo | Shenzhen Federation of Industry and Commerce | Honorary Vice President | November 2014 | / |
| Federation of Shenzhen Commerce | Director | April 2015 | / | |
| TNC Greater China Council of Advisors | Council Member, Secretary General | December 2012 | / | |
| The Paradise International Foundation | Director | April 2015 | / | |
| China Entrepreneur Club | Council Member | April 2017 | / | |
| Central China Management Company Limited | Independent Director | May 2021 | / | |
| Yu Xiong | Shanghai Society of Chemistry and Chemical Industry | Honorary Director | October 2016 | / |
| Shanghai Huatai Investment Development Co., Ltd. | Director | May 2018 | / | |
| East China University of Science and Technology | Adjunct Professor | July 2019 | / | |
| Sichuan Biokin Pharmaceutical Co., Ltd. | Independent Director | September 2019 | / | |
| Pharmaceutical Engineering Specialized Committee of Chinese Pharmaceutical Association | Honorary Chairman | November 2019 | / |
Joincare Pharmaceutical Group Annual Report 2023
| Chinese Pharmaceutical Association | Honorary Director | January 2022 | / | |
| Tianjin Tianyao Pharmaceuticals Co.,Ltd | Independent Director | March 2016 | February 2023 | |
| Qiu Qingfeng | Jiaozuo Jinguan Jiahua Electric Power Co., Ltd. | Director | November 2015 | / |
| Jiangsu Baining Yingchuang Medical Technology Co., Ltd. | Director | November 2020 | / | |
| Lin Nanqi | Jiaozuo Jinguan Jiahua Electric Power Co., Ltd. | Director | January 2022 | / |
| Yin Xiaoxing | Xuzhou Medical University | Professor, Doctoral Supervisor of Pharmacology | August 1988 | / |
| Jiangsu Key Laboratory of New Drug Research and Clinical Pharmacy | Director | September 2014 | / | |
| Jiangsu Nhwa Pharmaceutical Co., Ltd. | Independent Director | March 2022 | / | |
| Teaching Steering Committee for Pharmacy Major in Higher Education Institutions of the Ministry of Education | Member | August 2013 | / | |
| Science 2 Graduate Education Steering Committee of Jiangsu Province | Chairman of the committee | November 2018 | / | |
| Jiangsu Pharmacological Society | Vice Chairman | November 2008 | / | |
| Specialized Committee of Preclinical Pharmacology for New Drugs, Jiangsu Pharmacological Society | Chairman of the committee | November 2012 | / | |
| Huo Jing | Guangdong Sun Law Firm | Lawyer, Partner | June 2007 | / |
| Qin Yezhi | China Shu Lun Pan Certified Public Accountants LLP (Special General Partnership) | Partner | July 2014 | / |
| Shenzhen Yongpeng CTA Firm (Special General Partnership) | Partner | September 2013 | / | |
| Peng Juan | Antai College of Economics and Management of Shanghai Jiao Tong University | Associate Professor of Department of Accounting, Doctoral Supervisor | September 1997 | / |
| Haitong Futures Co., Ltd. | Independent Director | December 2023 | / | |
| Shanghai Sunglow Packaging Technology Co., Ltd. | Independent Director | March 2022 | / | |
| Shanghai Sunmi Technology Co., Ltd. | Independent Director | May 2022 | / | |
| Shanghai Jiaopeng Technology Co., Ltd. | Supervisor | July 2019 | / | |
| Shanghai Jiaoshang Digital Technology Co., Ltd. | General Manager | December 2022 | / | |
| Dynamiker Biotechnology (Tianjin) Co., Ltd. | Independent Director | July 2020 | July 2023 | |
| Yu Xiaoyun | Shenzhen Science and Technology Innovation Commission | Review Expert | November 2022 | / |
| Peng Jinhua | Shenzhen Nanbei Shengying Industrial Development Co., Ltd. | Director | July 2017 | |
| Shenzhen Xinfengfan Technology Development Co., Ltd. | Supervisor | August 2005 | ||
| Description of employment in other offices | Not applicable | |||
(III) Remuneration of directors, supervisors and senior management
√Applicable □N/A
| Decision-making procedure regarding remuneration of directors, supervisors | The emolument of chairman and vice chairman of the Company shall follow the Resolutions of the 2018 Second Extraordinary General Meeting of the Company, which is RMB3.25 million per year, with the individual income tax withheld and remitted by the Company in accordance with the relevant provisions of the tax laws. On 29 March |
Joincare Pharmaceutical Group Annual Report 2023
| and senior management | 2022 and 18 May 2022, the Company convened the ninth meeting of the eighth session of the Board of Directors and the 2021 Annual General Meeting, respectively, at which the Resolution on Adjusting the Emolument of Independent Directors of the Company(《关于调整公司独立董事津贴的议案》) was considered and approved, the emolument of each independent director shall be adjusted to RMB10,000 (before tax) from RMB9,000 (before tax) per month, with the individual income tax withheld and remitted by the Company in accordance with the relevant provisions of the tax laws. On 10 August 2021 and 28 August 2021, the Company convened the 39th meeting of the seventh session of the Supervisory Committee and the 2021 Third Extraordinary General Meeting, respectively, at which Resolution on Adjusting the Emolument of the Supervisors of the Company(《关于调整公司监事津贴的议案》) was considered and approved, the emolument of each supervisor shall be adjusted to RMB4,000 (before tax) per month from RMB3,000 (before tax) per month, with the individual income tax withheld and remitted by the Company in accordance with the relevant provisions of the tax laws. During the Reporting Period, the remuneration received by supervisors is the wage based on the wage system of the Company plus the emolument paid to them. The remuneration of senior management of the Company shall follow the resolution of the 52th meeting of the 6th session of the Board of the Company. The annual basic remuneration of the president, vice president and other senior management members during the term of office is RMB2.60 million, RMB1.35 million and RMB1.20 million, respectively. In addition to the basic remuneration, pursuant to the regulations such as the Management Policy on the Remuneration and Performance Assessment of Senior Management (《高级管理人员薪酬及绩效考核管理制度》), individual assessment shall be performed and performance-based bonuses shall be paid according to the assessment result. In case of holding concurrent positions, the highest remuneration among all positions shall prevail. For the Company's directors who serve concurrently as a senior management member of the Company, the remuneration received by them is equal to the wage paid according to their position as a senior management member, and no directors’ emoluments are paid by the Company. On 29 January 2024, the Remuneration Committee under the Board of the Company convened the 8th meeting of the 8th session of the Board, at which the Resolution on the 2023 Annual Performance Assessment Result and Remuneration Distribution of Senior Management of the Company (《关于公司高级管理人员2023年度绩效考核结果及薪酬分配的议案》) was considered and approved. It was agreed that the Company, pursuant to the regulations such as the Management Policy on the Remuneration and Performance Assessment of Senior Management, determined the 2023 annual performance assessment result and annual remuneration of senior management based on the completion of business objectives of the Company and work objectives of the senior management in 2023. On 29 January 2024, the Board of the Company convened the 37th meeting of the 8th session of the Board, at which the Resolution on Remuneration Distribution of Senior Management for the year 2023 was considered and approved. Except for fulfilling the job responsibilities of being directors, supervisors and senior management of the Company, other remuneration paid for positions held in subsidiaries shall be implemented according to the relevant remuneration system of the corresponding subsidiaries. |
| Whether directors abstaining from discussions on their remuneration at the Board | Yes |
| Details of suggestions on remuneration matters relating to directors, supervisors and senior management by the Remuneration Committee or special meetings of independent directors | On 29 January 2024, the Remuneration Committee under the Board of the Company convened the 8th meeting of the 8th session of the Board, at which the Resolution on the 2023 Annual Performance Assessment Result and Remuneration Distribution of Senior Management of the Company (《关于公司高级管理人员2023年度绩效考核结果及薪酬分配的议案》) was considered and approved. It was agreed that the Company, pursuant to the regulations such as the Management Policy on the Remuneration and Performance Assessment of Senior Management, determined the 2023 annual performance assessment result and annual remuneration of senior management based on the completion of business objectives of the Company and work objectives of the senior management in 2023. |
Joincare Pharmaceutical Group Annual Report 2023
| Basis for determining remuneration of directors, supervisors and senior management | Pursuant to the regulations such as the Management Policy on the Remuneration and Performance Assessment of Senior Management, the result of performance assessment of senior management is determined based on the completion of business objectives of the Company and work objectives of the senior management in 2023. Based on the result of performance assessment, the performance bonus and remuneration of senior management in 2023 were determined and submitted to be reviewed by the Remuneration Committee under the Board who shall then submit it to the Board for review and resolution. |
| Remuneration actually paid to directors, supervisors and senior management | As at the date of the Report, remuneration of directors, supervisors and senior management has been fully paid. |
| Total remuneration paid to all directors, supervisors and senior management as of the end of the Reporting Period | RMB22.2443 million. |
(IV) Changes in directors, supervisors and senior management
√Applicable □N/A
| Name | Position | Change | Reason for change |
| Cui Liguo | Independent Director | Resigned | The tenure has reached the six-year limit. |
| Yin Xiaoxing | Independent Director | Elected | Nomination by the Board, and election at the general meeting |
| Zhang Leiming | Vice President | Appointed | Appointment by the Board |
(V) Statement on punishments imposed by securities regulatory authorities in the last threeyears
□Applicable √N/A
(VI) Others
□Applicable √N/A
V. Board meetings held during the Reporting Period
| Meeting session | Date of meeting | Meeting resolution |
| 22nd Meeting of the 8th Session of the Board | 2023-01-16 | Considered and approved the Proposal on the 2022 Annual Performance Assessment Result and Remuneration Distribution of Senior Management of the Company, the Proposal on the Establishment of Anti-Corruption and Anti-Commercial Bribery System, and the Proposal on the Establishment of Anti-Fraud System. See the Announcement on Resolutions of Joincare Pharmaceutical Group Industry Co., Ltd. at the 22nd Meeting the 8th Session of the Board (Lin 2023-007) disclosed on 17 January 2023 for details. |
| 23rd Meeting of the 8th Session of the Board | 2023-04-07 | Considered and approved nineteen (19) proposals, including the 2022 Annual Work Report of the President, the 2022 Annual Work Report of the Board of Directors, the 2022 Final Account Report, the 2022 Annual Profit Distribution Plan and the 2022 Annual Report of Joincare Pharmaceutical Group Industry Co., Ltd. (Full Text and Summary). See the Announcement on Resolutions of Joincare Pharmaceutical Group Industry Co., Ltd. at the 23rd Meeting the 8th Session of the Board (Lin 2023-030) disclosed on 11 April 2023 for details. |
| 24th Meeting of the 8th Session of the Board | 2023-04-24 | Considered and approved the 2023 First Quarterly Report of Joincare Pharmaceutical Group Industry Co., Ltd. |
| 25th Meeting of the 8th Session of the Board | 2023-04-28 | Considered and approved the Proposal on the Cancellation of Treasury Shares Previously Repurchased, the Proposal on Convening the 2023 First Extraordinary General Meeting of the Company. See the Announcement on Resolutions of Joincare Pharmaceutical Group Industry Co., Ltd. at the 25th Meeting the 8th Session of the Board (Lin 2023-043) disclosed on 29 April 2023 for details. |
| 26th Meeting of the 8th Session of the Board | 2023-05-17 | Considered and approved the Proposal on Convening the 2022 Annual General Meeting of the Company |
Joincare Pharmaceutical Group Annual Report 2023
| 27th Meeting of the 8th Session of the Board | 2023-07-21 | Considered and approved the Proposal on Adjusting the Exercise Price of the 2022 Share Options Incentive Scheme of the Company |
| 28th Meeting of the 8th Session of the Board | 2023-08-11 | Considered and approved the Proposal on the Grant of Reserved Share Options to Incentive Participants, the Proposal on the Cancellation of Certain Share Options Granted under the 2022 Share Options Incentive Scheme. See the Announcement on Resolutions of Joincare Pharmaceutical Group Industry Co., Ltd. at the 28th Meeting the 8th Session of the Board (Lin 2023-076) disclosed on 12 August 2023 for details. |
| 29th Meeting of the 8th Session of the Board | 2023-08-18 | Considered and approved the Proposal on the Satisfaction of Exercise Conditions for the First Exercise Period of the First Grant under the 2022 Share Options Incentive Scheme. |
| 30th Meeting of the 8th Session of the Board | 2023-08-23 | Considered and approved the Proposal on Nominating Mr. Yin Xiaoxing as a Candidate for Independent Director of the Company, the 2023 Interim Report of Joincare Pharmaceutical Group Industry Co., Ltd. and its Summary, the Special Report of Joincare Pharmaceutical Group Industry Co., Ltd. on Deposit and Actual Use of Proceeds for the Half of 2023, and the Proposal on Convening the 2023 Second Extraordinary General Meeting of the Company. See the Announcement on Resolutions of Joincare Pharmaceutical Group Industry Co., Ltd. at the 30th Meeting the 8th Session of the Board (Lin 2023-085) disclosed on 24 August 2023 for details. |
| 31st Meeting of the 8th Session of the Board | 2023-09-08 | Considered and approved the Proposal on Appointing Mr. Zhang Leiming as Vice President of the Company |
| 32nd Meeting of the 8th Session of the Board | 2023-09-15 | Considered and approved six proposals, including the Proposal on the Election of Members of the Nomination Committee of the Board, the Proposal on the Election of Members of the Strategy Committee of the Board, the Proposal on the Election of Members of the Corporate Social Responsibility Committee of the Board, and the Proposal on the Election of the Chairman of the Nomination Committee of the Board. See the Announcement on Resolutions of Joincare Pharmaceutical Group Industry Co., Ltd. at the 32nd Meeting the 8th Session of the Board (Lin 2023-101) disclosed on 16 September 2023 for details. |
| 33rd Meeting of the 8th Session of the Board | 2023-09-21 | Considered and approved the Proposal on the Third Phase Ownership Scheme under Medium to Long-term Business Partner Share Ownership Scheme of the Company (Draft) and its Summary, the Proposal on the General Meeting for Granting Mandate to the Board to Deal with Matters Related to the Third Phase Ownership Scheme under Medium to Long-term Business Partner Share Ownership Scheme of the Company, and the Proposal on Convening the 2023 Third Extraordinary General Meeting of the Company. See the Announcement on Resolutions of Joincare Pharmaceutical Group Industry Co., Ltd. at the 33rd Meeting the 8th Session of the Board (Lin 2023-104) disclosed on 22 September 2023 for details. |
| 34th Meeting of the 8th Session of the Board | 2023-10-25 | Considered and approved eight proposals, including the 2023 Q3 Report of Joincare Pharmaceutical Group Industry Co., Ltd., the Proposal on the Establishment of the System for Special Meetings of Independent Directors, the Proposal on the Amendment to Certain Clauses of the Implementation Rules of the Audit Committee of the Board, the Proposal on the Amendment to Certain Clauses of the Implementation Rules of the Remuneration Committee of the Board, and the Proposal on the Amendment to Certain Clauses of the Implementation Rules of the Strategy Committee of the Board. See the Announcement on Resolutions of Joincare Pharmaceutical Group Industry Co., Ltd. at the 34th Meeting the 8th Session of the Board (Lin 2023-114) disclosed on 26 October 2023 for details. |
| 35th Meeting of the 8th Session of the Board | 2023-11-17 | Considered and approved the Proposal on the Capital Increase and Share Expansion of the Controlling Grandson Company LivzonBio, and the Proposal on Convening the Fourth Third Extraordinary General Meeting of the Company. See the Announcement on Resolutions of Joincare Pharmaceutical Group Industry Co., Ltd. at the 35th Meeting the 8th Session of the Board (Lin 2023-127) disclosed on 18 November 2023 for details. |
| 36th Meeting of the 8th Session of the Board | 2023-12-28 | Considered and approved the Proposal on Adjusting Certain Investment Content of Investment Projects with Proceeds, the Proposal on Temporary Replenishment of Working Capital with Idle Proceeds, the Proposal on the Establishment of the System of Joincare Pharmaceutical Group Industry Co., Ltd. for the Selection of Auditors, and the Proposal on Convening the 2024 First Extraordinary General Meeting of the Company. See the Announcement on Resolutions of Joincare Pharmaceutical Group Industry Co., Ltd. at the 36th Meeting the 8th Session of the Board (Lin 2023-143) disclosed on 29 December 2023 for details. |
VI. Performance of duties by directors
(1) Attendance by directors of the Board meetings and general meetings
Joincare Pharmaceutical Group Annual Report 2023
| Name | Whether independent director | Attendance of the Board meetings | Attendance at general meetings | |||||
| Number of meetings the director should attend for the year | Number of meetings attended in person | Number of meetings attended through electronic means | Number of meetings attended by proxy | Number of Absences | Whether the director has been absent from two consecutive meetings | Number of attendances at the general meetings | ||
| Zhu Baoguo | No | 15 | 15 | 11 | 0 | 0 | No | 5 |
| Liu Guangxia | No | 15 | 15 | 11 | 0 | 0 | No | 5 |
| Yu Xiong | No | 15 | 15 | 11 | 0 | 0 | No | 5 |
| Qiu Qingfeng | No | 15 | 15 | 11 | 0 | 0 | No | 5 |
| Lin Nanqi | No | 15 | 15 | 11 | 0 | 0 | No | 5 |
| Cui Liguo (resigned) | Yes | 10 | 10 | 7 | 0 | 0 | No | 3 |
| Yin Xiaoxing | Yes | 5 | 5 | 4 | 0 | 0 | No | 2 |
| Huo Jing | Yes | 15 | 15 | 11 | 0 | 0 | No | 5 |
| Qin Yezhi | Yes | 15 | 15 | 11 | 0 | 0 | No | 5 |
| Peng Juan | Yes | 15 | 15 | 11 | 0 | 0 | No | 5 |
Statement on absence from two consecutive meetings
□Applicable √N/A
| Board meetings held during the year | 15 |
| In which: On-site meetings | 4 |
| Meetings held through electronic means | 11 |
| Meetings held both in the form of on-site meeting and through electronic means | 0 |
(2) Objections raised by directors to affairs of the Company
□Applicable √N/A
(3) Others
□Applicable √N/A
VII. Board committees
√Applicable □N/A
(1). Members of the Board committees
| Committee name | Member |
| Audit Committee | Qin Yezhi, Huo Jing, Peng Juan |
| Remuneration Committee | Huo Jing, Qin Yezhi, Peng Juan |
| Nomination Committee | Yin Xiaoxing, Qiu Qingfeng, Huo Jing |
| Strategy Committee | Zhu Baoguo, Yu Xiong, Qin Yezhi, Yin Xiaoxing, Peng Juan |
| Corporate Social Responsibility (CSR) Committee | Zhu Baoguo, Lin Nanqi, Yin Xiaoxing |
(2). Seven meetings were held by the Audit Committee during the Reporting Period
| Date of meeting | Content | Important opinion and suggestion |
| 2023-02-03 | Considered the 2022 Annual Financial Statements of Joincare Pharmaceutical Group Industry Co., Ltd. (Unaudited) | Approved |
Joincare Pharmaceutical Group Annual Report 2023
| 2023-03-24 | Considered the Draft Audit Opinions for the 2022 Annual Financial Statements of Joincare Pharmaceutical Group Industry Co., Ltd. | Approved |
| Considered the Draft Audit Opinions for the 2022 Internal Control of Joincare Pharmaceutical Group Industry Co., Ltd. | Approved | |
| 2023-04-07 | Considered the Audit Report for the 2022 Annual Financial Statements of the Company (Final) | Approved |
| Considered the Audit Report for the 2022 Internal Control of the Company (Final) | Approved | |
| Considered the Summary Report on Audit Work for the Year 2022 from Grant Thornton (Special General Partnership) | Approved | |
| Considered the Assessment Report of Joincare Pharmaceutical Group Industry Co., Ltd. on Internal Control for the Year 2022 | Approved | |
| Considered the Proposal on the Appointment of Grant Thornton (Special General Partnership) as the Auditor of the Company for the Year 2023 | Approved | |
| Considered the Proposal on Daily Connected Transactions between the Controlling Subsidiaries Jiaozuo Joincare and Jinguan Electric Power | Approved | |
| Considered the Proposal on the 2022 Annual Report of Joincare Pharmaceutical Group Industry Co., Ltd. (Full Text and Summary) | Approved | |
| Considered the 2022 Report on Performance of Duties of the Audit Committee of the Board of Joincare Pharmaceutical Group Industry Co., Ltd. | Approved | |
| 2023-04-24 | Considered the 2023 Q1 Report of Joincare Pharmaceutical Group Industry Co., Ltd. | Approved |
| 2023-08-23 | Considered the 2023 Interim Report of Joincare Pharmaceutical Group Industry Co., Ltd. | Approved |
| 2023-10-25 | Considered the 2023 Q3 Report of Joincare Pharmaceutical Group Industry Co., Ltd. | Approved |
| Considered the Proposal on the Establishment of the Comprehensive Risk Management System of Joincare Pharmaceutical Group Industry Co., Ltd. | Approved | |
| 2023-11-24 | Considered the2023 Financial Statements and Internal Control Audit Proposal of Joincare Pharmaceutical Group Industry Co., Ltd. | Approved |
(3). Four meetings were held by the Remuneration Committee during the Reporting Period
| Date of meeting | Content | Important opinion and suggestion |
| 2023-01-16 | Considered the Proposal on the 2022 Annual Performance Assessment Result and Remuneration Distribution of Senior Management of the Company | Approved |
| 2023-08-11 | Considered the Proposal on the Grant of Reserved Share Options to Incentive Participants | Approved |
| Considered the Proposal on the Cancellation of Certain Share Options Granted under the 2022 Share Options Incentive Scheme | Approved | |
| 2023-08-18 | Considered the Proposal on the Satisfaction of Exercise Conditions for the First Exercise Period of the First Grant under the 2022 Share Options Incentive Scheme. | Approved |
| 2023-09-21 | Considered the Proposal on the Third Phase Ownership Scheme under Medium to Long-term Business Partner Share Ownership Scheme of the Company (Draft) and its Summary | Approved |
(4). Four meetings were held by the Nomination Committee during the Reporting Period
| Date of meeting | Content | Important opinion and suggestion |
| 2023-04-07 | Considered the Proposal on the Establishment of the Board diversity Policy of Joincare Pharmaceutical Group Industry Co., Ltd. | Approved |
| 2023-08-23 | Considered the Proposal on Nominating Mr. Yin Xiaoxing as a Candidate for Independent Director of the Company | Approved |
| 2023-09-08 | Considered the Proposal on Nominating Mr. Zhang Leiming as vice president of the Company | Approved |
| 2023-09-15 | Considered the Proposal on the Election of Members of the Nomination Committee of the Board | Approved |
Joincare Pharmaceutical Group Annual Report 2023
(5). One meetings were held by the Strategy Committee during the Reporting Period
| Date of meeting | Content | Important opinion and suggestion |
| 2023-11-17 | Considered the Proposal on the Capital Increase and Share Expansion of the Controlling Grandson Company LivzonBio | Approved |
(6). Two meetings were held by the Corporate Responsibility Committee during the ReportingPeriod
| Date of meeting | Content | Important opinion and suggestion |
| 2023-04-07 | Considered the 2022 Corporate Social Responsibility Report of Joincare Pharmaceutical Group Industry Co., Ltd. | Approved |
| Considered the Proposal on the Establishment of the Responsible Marketing Policy of Joincare Pharmaceutical Group Industry Co., Ltd. | Approved | |
| Considered the Proposal on the Establishment of the Diversity, Equality and Inclusiveness Policy of Joincare Pharmaceutical Group Industry Co., Ltd. | Approved | |
| Considered the Proposal on the Establishment of the EHS Management Policy of Joincare Pharmaceutical Group Industry Co., Ltd. | Approved | |
| Considered the Proposal on the Establishment of the Code of Labor and Employment and Conduct Ethics of Joincare Pharmaceutical Group Industry Co., Ltd. | Approved | |
| 2023-10-25 | Considered the Proposal on the Establishment of the Social Responsibility Working Group for 2023 of Joincare Pharmaceutical Group Industry Co., Ltd. | Approved |
| Considered the Proposal on the Amendment to the Code of Labor and Employment and Conduct Ethics of Joincare Pharmaceutical Group Industry Co., Ltd. | Approved | |
| Considered the Proposal on the Establishment of the Climate Change Management System of Joincare Pharmaceutical Group Industry Co., Ltd. | Approved | |
| Considered the Proposal on the Establishment of the Code of Conduct for Suppliers of Joincare Pharmaceutical Group Industry Co., Ltd. | Approved |
(7). Affairs subject to objection
□Applicable √N/A
VIII. Statement on risks of the Company identified by the Board of Supervisors
□Applicable √N/A
The Supervisory Committee had no objection to the matters under their supervision within thereporting period.
IX. Employees of the parent company and major subsidiaries(I) Employees
| Number of active employees of the parent company | 1,070 |
| Number of active employees of major subsidiaries | 13,295 |
| Total number of employees | 14,365 |
| Number of retired employees for whom the parent company and major subsidiaries need to pay certain expenses | 660 |
| Profession | |
| Category | Number |
| Production staff | 8,426 |
| Sales staff | 2,607 |
| Technical staff | 2,241 |
| Financial staff | 258 |
| Administrative staff | 833 |
| Total | 14,365 |
| Education background | |
| Education background | Number |
| PhD | 66 |
Joincare Pharmaceutical Group Annual Report 2023
| Postgraduate | 726 |
| Undergraduate | 3,968 |
| Junior college diploma | 4,332 |
| Others | 5,273 |
| Total | 14,365 |
(II) Compensation policy
√Applicable □N/A
The Company implements scientific, reasonable and incentive-based compensation strategies.Based on scientific analysis and assessment of the organizational structure and job responsibilities,the Company determines the relative value of each position, and by combining the external marketcompensation data and the ability of the Company to pay, the Company provides a reasonableemployee compensation package. Employee compensation consists of two parts: fixed income andvariable income. Variable income is linked to business results of the Company and individualperformance of employees. In this way, employees are encouraged to increase their enthusiasm andmotivation at work. Competitive compensation policies are adopted for talents in key positions andthose urgently needed in the market, so as to prevent loss of key talents and provide a talent poolfor the development of the Company.
(III) Training programs
√Applicable □N/A
In 2023, the Company continued to attach great importance to internal talent training. With multi-level, diversified training systems and a combination of online and offline learning, the Companyorganized and carried out new employee orientation training, employee on-the-job training, career-based study for a master's or doctor's degree, training and team building. Meanwhile, the Companyencouraged employees to actively participate in external learning activities related to work,facilitated the improvement of employee competence and team cohesion, and built talent teams.
(IV) Outsourced workers
□Applicable √N/A
X. Profit distribution proposal or proposal for capitalization of capital reserve(I) Formulation, implementation or adjustment of cash dividend distribution policy
√Applicable □N/A
1. Cash dividend distribution policy and its formulation
To establish a scientific, consistent and stable decision-making and supervision mechanism fordividends, and fully protect and safeguard the rights and interests of the majority of shareholders,the Company formulated this cash dividend policy in accordance with the Regulatory Guidelinesfor Listed Companies No. 3 - Distribution of Cash Dividends of Listed Companies released by theCSRC (CSRC announcement [2022] No. 3) and the Regulatory Guideline for Self-regulation ofListed Companies No. 1 - Standardized Operation released by Shanghai Stock Exchange and otherrelevant documents and requirements, and in light of the reality of the Company, clarified theformulation, decision-making and adjustment procedures for the policy in the Articles ofAssociation: If the Company is in a sound operating condition and its cash flow can meet the needsof normal operation and long-term development, the Company shall actively implement the profitdistribution policy to provide reasonable returns to investors while taking into account thesustainable development of the Company, in order to maintain the continuity and stability of thepolicy. The profits may be distributed in cash, stocks, or combination thereof or in any other waypermitted by laws and regulations. Cash dividends are superior to stock dividends in the distribution
Joincare Pharmaceutical Group Annual Report 2023
of profits, and shall be adopted whenever the conditions are met. Unless otherwise provided for inthe Articles of Association, the profits distributed in cash shall not be less than 10% of thedistributable profits realized in the current year. The specific amount and proportion of cashdividends for each year shall be determined by the Board of Directors of the Company in accordancewith relevant provisions and in light of the Company's current operating situation, and shall bereported to the annual general meeting for deliberation and decision.
2. Implementation of cash dividend distribution policy in 2022
On 9 June 2023, the Company convened the 2022 Annual General Meeting, at which the Company'sProfit Distribution Plan for 2022 was considered and approved: a cash dividend of RMB1.80 (taxinclusive) will be distributed to all shareholders for every 10 shares, based on the total share capitalof the Company on the equity registration date as determined for implementation of the Company'sprofit distribution plan for 2022, minus the total number of shares in the Company's specialsecurities account for repurchase, with the remaining undistributed profits to be carried forward tothe following year. As of the end of this Reporting Period, the above cash dividends have been fullydistributed.
3. Profit distribution scheme for 2023
Based on the audit conducted by Grant Thornton (Special General Partnership), in 2023, the ParentCompany generated net profit of RMB1,241,411,898.00, 10% of which was contributed to thestatutory surplus reserve, namely RMB124,141,189.80, the remainder of which, together withundistributed profits for the last year of RMB1,968,175,713.20 and gain on disposal of other equityinvestments of RMB1,245,892.23, subtracting cash dividends for the last year ofRMB336,792,056.76, is the profits available for distribution to shareholders for the year ofRMB2,749,900,256.87. The Company plans to distribute cash dividends for the fiscal year 2023,based on the total number of shares for dividend distribution, which is defined by the total shares ofCompany on the equity registration date designated by the annual profit distribution plan. TheCompany plans to distribute cash dividend of RMB1.80 (tax inclusive) for every 10 shares of to allshareholders of the Company, and the remaining undistributed profits will be carried forward to thefollowing year.
4. Modification and adjustment of the cash dividend distribution policy during the ReportingPeriodThe Company's cash dividend policy was not modified or adjusted during the Reporting Period.
(II) Special statement on cash dividend distribution policy
√Applicable □N/A
| Whether it meets the requirements of the articles of association or the resolution of the general meeting | √Yes □No |
| Are there defined and clear distribution qualifications and proportions | √Yes □No |
| Are there well-designed decision-making procedures and system | √Yes □No |
| Have independent directors performed their duties and role properly | √Yes □No |
| Whether the minority shareholders have the chance to fully express their opinions and demands and whether their legitimate rights and interests have been well protected | √Yes □No |
(III) If the Company made a profit during the Reporting Period and there's profitdistributable by the parent company to shareholders, but the Company does not propose todistribute profits in cash, the Company shall explain the reason in detail, usage of theundistributed profit and usage plan
□Applicable √N/A
Joincare Pharmaceutical Group Annual Report 2023
(IV) Profit distribution and conversion of capital reserve into share capital for the ReportingPeriod
√Applicable □N/A
Unit: Yuan Currency: RMB
| Number of bonus shares to be distributed for every ten shares (share) | 0 |
| Amount to be distributed for every ten shares (RMB) (tax inclusive) | 1.80 |
| Number of shares to be converted into share capital for every ten shares (share) | 0 |
| Amount of cash dividend (tax inclusive) | 335,794,285.26 |
| Net profit attributable to ordinary shareholders of the listed company in the consolidated financial statement during the year of distribution | 1,442,779,722.23 |
| Percentage of the net profit attributable to ordinary shareholders of the listed company in the consolidated financial statement (%) | 23.27 |
| Amount of repurchase of shares under cash offer included in cash dividend | 475,382,587.14 |
| Total amount of dividend (tax inclusive) | 811,176,872.40 |
| Total amount of dividend as a percentage of the net profit attributable to ordinary shareholders of the listed company in the consolidated financial statement (%) | 56.22 |
Note: The Company proposes to distribute cash dividend of RMB1.80 (tax inclusive) for every 10 shares to allshareholders of the Company (except for those in the Share Repurchase Account of the Company). The cashdividends proposed to be distributed for 2023 will be RMB335,794,285.26 (tax inclusive) based on the total sharecapital of 1,865,523,807 shares as of 31 December 2023. The final and actual total distribution amount is calculatedbased on the total shares entitled to participate in the equity distribution on the equity registration date for theimplementation of equity distribution.
XI Share incentive plan, employee share ownership scheme and other employee incentives ofthe Company and their effect
(1) Matters related to equity incentive scheme have been disclosed have been disclosed in theprovisional announcements without progress or change in subsequent implementation
√Applicable □N/A
| Overview | Query index |
| On 21 July 2023, the Company held the 27th Meeting of the 8th Session of the Board and the 22nd Meeting of the 8th Session of the Supervisory Committee, which considered and approved the Proposal on Adjusting the Exercise Price of the 2022 Share Options Incentive Scheme of the Company. Due to profit distribution, the exercise price under the 2022 Share Options Incentive Scheme was adjusted to RMB11.06 per share. | See the Announcement on Adjusting the Exercise Price of the 2022 Share Options Incentive Scheme of Joincare Pharmaceutical Group Industry Co., Ltd. (Lin 2023-072) disclosed by the Company on 22 July 2023 for details. |
| On 11 August 2023, the Company held the 28th Meeting of the 8th Session of the Board and the 23rd Meeting of the 8th Session of the Supervisory Committee, which considered and approved the Proposal on the Grant of Reserved Share Options to Incentive Participants and the Proposal on the Cancellation of Certain Share Options Granted under the 2022 Share Options Incentive Scheme. Accordingly, the Company agreed to grant 5,500,000 share options to 149 incentive participants at the price of RMB11.06 per share. Due to the resignation of some incentive participants and other reasons, 2,370,000 share options granted under the first grant but not yet exercised by incentive participants were cancelled. Upon review and confirmation by the Shanghai Branch of China Securities Depository and Clearing Corporation Limited, the said cancellation of 2,370,000 share options was completed on 17 August 2023. | See the Announcement on the Announcement on the Grant of Reserved Share Options to Incentive Participants of Joincare Pharmaceutical Group Industry Co., Ltd. (Lin 2023-077) and the Announcement on the Cancellation of Certain Share Options Granted under the 2022 Share Options Incentive Scheme of Joincare Pharmaceutical Group Industry Co., Ltd. (Lin 2023-078) disclosed on 12 August 2023, the Announcement on the Completion of the Cancellation of Certain Share Options of the Company Granted but Not Yet Exercised under the 2022 Share Option Incentive Plan of Joincare Pharmaceutical Group Industry Co., Ltd. (Lin 2023-081) disclosed on 19 August 2023 and other relevant announcements disclosed by the Company for details. |
| On 18 August 2023, the Company held the 29th Meeting of the 8th Session of the Board and the 24th Meeting of the 8th Session of the Supervisory Committee, which considered and approved the Proposal on the Satisfaction of Exercise Conditions for the First Exercise Period of the First Grant under the 2022 Share Options Incentive | See the Announcement on the Satisfaction of Exercise Conditions for the First Exercise Period of the First Grant under the 2022 Share Options Incentive Scheme of Joincare Pharmaceutical Group Industry Co., Ltd. (Lin 2023-082) disclosed by the Company on 19 August 2023 for details. |
Joincare Pharmaceutical Group Annual Report 2023
| Scheme. Accordingly, the Board believes that 391 incentive participants under the first grant of the incentive scheme have satisfied the substantive conditions for the exercise of rights during the first exercise period, and agrees to adopt the independent exercise model for this exercise period. The number of options exercised in total was 18,832,000. | |
| The number of options exercised was 799,526 from 1 July 2023 to 30 September 2023. As at 30 September 2023, the number of options cumulatively exercised and completing share transfer registration under the first grant of the 2022 Share Options Incentive Scheme of the Company was 799,526 shares. | See the Announcement on 2023 Q3 Independent Exercise Results of the 2022 Share Options Incentive Scheme of Joincare Pharmaceutical Group Industry Co., Ltd. & Changes in Shares (Lin 2023-109) disclosed by the Company on 10 October 2023 for details. |
| On 21 September 2023, the Company held the Congress of Workers and Staff, the 33rd Meeting of the 8th Session of the Board and the 26th Meeting of the 8th Session of the Supervisory Committee, which considered and approved the Proposal on the Third Phase Ownership Scheme under Medium to Long-term Business Partner Share Ownership Scheme of the Company (Draft) and its Summary and the Proposal on the General Meeting for Granting Mandate to the Board to Deal with Matters Related to the Third Phase Ownership Scheme under Medium to Long-term Business Partner Share Ownership Scheme of the Company. On 12 October 2023, the Company held the 2023 Third Extraordinary General Meeting, which considered and approved the said proposals. | See the Announcement on the Third Phase Ownership Scheme under Medium to Long-term Business Partner Share Ownership Scheme of Joincare Pharmaceutical Group Industry Co., Ltd. (Draft) and its Summary disclosed by the Company on 22 September 2023 and other relevant announcements, and the Announcement on Resolutions of the 2023 Third Extraordinary General Meeting of Joincare Pharmaceutical Group Industry Co., Ltd. (Lin 2023-111) disclosed by the Company on 13 October 2023 for details. |
| On 27 October 2023, the Company held the First Holders’ Meeting of the Third Phase Share Ownership Scheme of Medium to Long-term Business Partners, which considered and approved the Proposal on Establishing the Management Committee of the Third Phase Share Ownership Scheme of the Company, the Proposal on Electing Members of the Management Committee of the Third Phase Share Ownership Scheme and the Proposal on Authorizing the Management Committee of the Third Phase Share Ownership Scheme of the Company to Handle Matters Related to the Employee Share Ownership Scheme. | See the Announcement on Resolutions of Joincare Pharmaceutical Group Industry Co., Ltd. at the First Holders’ Meeting of the Third Phase Share Ownership Scheme of Medium to Long-term Business Partners (Lin 2023-119) disclosed by the Company on 28 October 2023 for details. |
| As at 20 December 2023, the Third Phase Share Ownership Scheme of the Company has purchased a total of 9,370,400 shares by way of secondary market centralized bidding trading, representing 0.50% of the total share capital of the Company at that time, with a total turnover of RMB115,443,300 (the difference between the actual transaction amount and the total amount of the employee share ownership scheme represents the interest generated from the holding of share funds) and an average transaction price of approximately RMB12.32 per share. Then the Company has completed the purchase of the underlying shares for the Third Phase Share Ownership Scheme on the secondary market. | See the Announcement of Joincare Pharmaceutical Group Industry Co., Ltd. on Completing the Purchase of Shares for the Third Phase Share Ownership Scheme under Medium to Long-term Business Partner Share Ownership Scheme (Lin 2023-139) disclosed by the Company on 22 December 2023 for details. |
| The number of options exercised was 2,701,363 from 1 October 2023 to 31 December 2023. As at 31 December 2023, the number of options cumulatively exercised and completing share transfer registration under the first grant of the 2022 Share Options Incentive Scheme of the Company was 3,500,889 shares. | See the Announcement on 2023 Q4 Independent Exercise Results of the 2022 Share Options Incentive Scheme of Joincare Pharmaceutical Group Industry Co., Ltd. & Changes in Shares (Lin 2024-001) disclosed by the Company on 3 January 2023 for details. |
(2) Incentives not disclosed in the provisional announcements or with subsequent progressEquity incentives
□Applicable √N/A
Others
□Applicable √N/A
Joincare Pharmaceutical Group Annual Report 2023
Employee share ownership scheme
□Applicable √N/A
Other incentive program
□Applicable √N/A
(3) Equity incentives granted to directors and senior management during the ReportingPeriod
√Applicable □N/A
Unit: 10,000 shares
| Name | Title | Number of share options held at the beginning of the year | Number of newly granted share options during the Reporting Period | Number of exercisable options during the Reporting Period | Number of exercised options during the Reporting Period | Exercise price of share options(RMB) | Number of share options held at the end of the period | Market price at the end of the Reporting Period (RMB) |
| Yu Xiong | Director, President | 80 | 0 | 32 | 18 | 11.06 | 62 | 12.43 |
| Lin Nanqi | Director, Vice President | 80 | 0 | 32 | 0 | 11.06 | 80 | 12.43 |
| Qiu Qingfeng | Director, Vice President, Chief Financial Officer | 60 | 0 | 24 | 0 | 11.06 | 60 | 12.43 |
| Zhang Leiming | Vice President | 45 | 0 | 18 | 0 | 11.06 | 45 | 12.43 |
| Zhao Fengguang | Vice President, Board Secretary | 60 | 0 | 24 | 0 | 11.06 | 60 | 12.43 |
| Total | / | 325 | 0 | 130 | 18 | / | 307 | / |
(4) Performance assessment mechanism for senior management during the Reporting Period,and the development and implementation of incentive scheme
√Applicable □N/A
According to the relevant provisions of the Company such as the Remuneration and PerformanceAppraisal Management System for Senior Management, the plans on performance appraisal resultsand remuneration of senior management for the year 2023 are set based on the completion of theoperation targets of the Company and the corresponding personal performance of each seniormanagement for the year 2023. The plans shall be submitted to the Board for review and approval.During the Reporting Period, senior management of the Company faithfully performed their dutiesin strict accordance with the Company Law, the Articles of Association and other relevantregulations, actively implemented the relevant resolutions of the Company's General meetings andthe Board meetings, actively adjusted business plans under the guidance of the Board, continuouslystrengthened internal control management, and strived to improve the Company's corecompetitiveness.
XII. Development and implementation of internal controls during the Reporting Period
√Applicable □N/A
Joincare Pharmaceutical Group Annual Report 2023
During the Reporting Period, the Company carried out standard operation and risk control in strictaccordance with the laws and regulations in China and the internal control system of the Company.The Company established a rigorous internal control management system, continued to optimizeand improve the internal control system by combining the industry characteristics and the actualoperation of the Company, enhanced its decision-making efficiency, and ensured the legalcompliance of business management and the security of corporate assets, facilitating the steadyimplementation of strategies of the Company. Thanks to an effective internal control mechanism,the Company can prevent, timely identify and correct any deviation in the operation andmanagement, and can reasonably ensure the security and integrity of corporate assets, as well as theauthenticity, accuracy and completeness of accounting information, safeguarding the interests of theCompany and all shareholders.Based on the identification of material deficiencies of internal control of the Company, there wasno material deficiency or significant deficiency of internal control over financial reporting and non-financial reporting in the Company for the year 2023. Through operation, analysis and evaluationof the internal control system, the Company effectively prevented business management risks, andpromoted the achievement of internal control objectives. Looking ahead, the Company will continueto improve the internal control system, standardize its implementation, strengthen the supervisionand inspection over internal control, and promote the healthy and sustainable development of theCompany. See the Risk Management and Internal Control Self-Assessment Report 2023 of JoincarePharmaceutical Industry Group Co., Ltd. disclosed by the Company on 3 April 2024 for details.
Statement on material loopholes in internal controls during the Reporting Period
□Applicable √N/A
XIII. Management and control of subsidiaries during the Reporting Period
√Applicable □N/A
The Company formulated relevant subsidiary management rules, such as the Detailed Rules forStandardized Operation and Management of Subsidiaries, to strengthen internal control of wholly-owned and majority-owned subsidiaries by specifying their governance structure, the managementof the Board, the general meetings and the Supervisory Committee, special transactions, legalperson's authorization and relevant issues, to improve the Company's overall operating efficiencyand risk control capability. During the Reporting Period, the Company exercised management andcontrol over its subsidiaries in accordance with the Company Law, the Articles of Association andother relevant laws and regulations. First, it provided guidance for the subsidiaries as to how toimprove the corporate governance structure, and how to revise and improve the Articles ofAssociation and other relevant systems in accordance with relevant laws and regulations; second,through internal training such as training on connected transactions, the Company urged subsidiariesto report to the Company on connected transactions, external guarantee and other major matters inadvance; third, the Company updated the internal control manual and related materials, to improvethe internal control system, and strengthen implementation and enhance the effectiveness of internalcontrol.
XIV. Related information on internal control audit report
√Applicable □N/A
In accordance with relevant standards, guidelines and regulatory documents, and upon the approvalby the audit committee of the Board of Directors, the Board of Directors and the general meeting,the Company engaged Grant Thornton China (special general partnership) to conduct internalcontrol audit in 2023. In accordance with the Basic Standards for Enterprise Internal Control andthe Application Guidelines for Enterprise Internal Control, Grant Thornton China conducted audit
Joincare Pharmaceutical Group Annual Report 2023
of the effectiveness of internal control over financial reporting of the Company and its subsidiariesas of 31 December 2023, and issued a standard internal control audit report with unqualified opinion.See the Internal Control Audit Report 2023 of Joincare Pharmaceutical Industry Group Co., Ltd.disclosed by the Company on 3 April 2024 for details.
Disclosure of internal control auditor's report: YesTypes of internal control auditor's opinion: Standard unqualified opinion
XV. Rectification of self-examined deviations in the Special Action for Governance of ListedCompanies
1. Optimization of the meeting convening methods of the Board of Directors and SpecialCommittees of the BoardDescription: At present, the Board of Directors and the special committees mostly hold meetingsthrough electric means which is not conducive to full expression of opinions by directors.Rectification measures: In order to ensure that directors can fully express their opinions, theCompany will increase the number of on-site meetings of the Board of Directors and its specialcommittees. In particular, on-site meetings or on-site + virtual means will be held for matters relatedto major asset purchase or sale or major connected transactions in the future. In 2023, the Companyheld 4 meeting through a combination of on-site + virtual means, accounted for 26.67% of thenumber of all meetings, representing an increase of 22.32% over 2021.
2. Improvement of the audit institution selection and engagement review processDescription: The special self-inspection found that the Company engaged the audit institution basedon inquiry into public available information on its professional competence and integrity, withoutconsulting the record of integrity of the audit institution in the securities and futures market throughthe China Securities Regulatory Commission in advance.Rectification measures: From 2021, in addition to the inquiry into public available information, theCompany would, before selecting and engaging an audit institution, consult the records of integrityof the audit institution and relevant certified public accountants to be engaged in the securities andfutures market as maintained by Shenzhen Securities Regulatory Bureau, to fully learn about itspracticing experience, professional competence and integrity.
XVI. Others
□Applicable √N/A
Joincare Pharmaceutical Group Annual Report 2023
Chapter 5 Environmental and Corporate Social ResponsibilityI. Environmental information
| If the environment protection mechanism was established | Yes |
| Amount of funds invested in environment protection during the Reporting Period (Unit: RMB0’000) | 10,330.01 |
(I) Environmental issues of companies and their major subsidiaries belonging to keypollutant discharging units as announced by the environmental protection department
√ Applicable □ N/A
1. Pollution discharge information
√ Applicable □ N/A
ⅰ Jiaozuo Joincare
| Name of company or subsidiary | Name of major pollutants and specific pollutants | Mode of discharge | Number of discharge outlets | Number of discharge outlets | Discharge concentration (mg/L) | Pollutant discharge standards implemented (mg/L) | Total amount of discharge (t/a) | Total amount of discharge approved (t/a) | Excessive discharge |
| Jiaozuo Joincare | Chemical oxygen demand | Continuous | 1 | Master outlet in sewage treatment workshop | 116.58 | 220 | 809.8 | 942.1 | Nil |
| Ammonia nitrogen | Continuous | 14.9 | 35 | 102.2 | 105.3 | Nil |
ⅱ Taitai Pharmaceutical
| Name of company or subsidiary | Name of major pollutants and specific pollutants | Mode of discharge | Number of discharge outlets | Number of discharge outlets | Discharge concentration (mg/L) | Pollutant discharge standards implemented (mg/L) | Total amount of discharge (t/a) | Total amount of discharge approved (t/a) | Excessive discharge |
| Taitai Pharmaceutical | Chemical oxygen demand | Intermittent | 1 | Master outlet in sewage treatment workshop | 44.72 | 345 | 0.324 | / | Nil |
| Biochemical oxygen demand | 6.18 | 150 | 0.0494 | / | Nil | ||||
| Suspended solids | 7.5 | 250 | 0.061 | / | Nil | ||||
| pH value | 7.64 | 6～9 | / | / | Nil | ||||
| Sulfur dioxide | Intermittent | 1 | Discharge outlet of boiler exhaust gas | 0.76 | 50 | 0.0112 | / | Nil | |
| Nitrogen oxide | 8.47 | 150 | 0.169 | / | Nil | ||||
| Particulate matter | 14.47 | 20 | 0.398 | / | Nil |
iii Haibin Pharma
| Name of company or subsidiary | Name of major pollutants and specific pollutants | Mode of discharge | Number of discharge outlets | Number of discharge outlets | Discharge concentration (mg/L) | Pollutant discharge standards implemented (mg/L) | Total amount of discharge (t/a) | Total amount of discharge approved (t/a) | Excessive discharge |
| Haibin Pharma | Chemical oxygen demand | Intermittent | 1 | Master outlet in sewage treatment workshop | 48.96 | 500 | 3.3 | 41.65 | Nil |
| Ammonia nitrogen | 0.43 | 45 | 0.0292 | 3.7485 | Nil | ||||
| Total nitrogen | 3.16 | 70 | 0.213 | 5.831 | Nil | ||||
| Total volatile organic compounds | 1 | Discharge outlet of process exhaust gas | 1.7 | 100 | 0.010028 | 0.504 | Nil | ||
| Non-methane hydrocarbon | 1 | Discharge outlet of exhaust gas in sewage station | 3.3 | 60 | 0.2036 | 5.04 | Nil |
Joincare Pharmaceutical Group Annual Report 2023
iv Xinxiang Haibin
| Name of company or subsidiary | Name of major pollutants and specific pollutants | Mode of discharge | Number of discharge outlets | Number of discharge outlets | Discharge concentration (mg/L) | Pollutant discharge standards implemented (mg/L) | Total amount of discharge (t/a) | Total amount of discharge approved (t/a) | Excessive discharge |
| Xinxiang Haibin | Chemical oxygen demand | Continuous | 1 | Master outlet in sewage treatment workshop | 96.8 | 220 | 13.120 | 13.2025 | Nil |
| Ammonia nitrogen | 6.212 | 35 | 0.842 | 1.5995 | Nil |
v Fuzhou Fuxing
| Name of company or subsidiary | Name of major pollutants and specific pollutants | Mode of discharge | Number of discharge outlets | Number of discharge outlets | Discharge concentration (mg/L)/ （mg/m3） | Pollutant discharge standards implemented (mg/L) / （mg/m3） | Total amount of discharge (t) | Total amount of discharge approved (t/a) | Excessive discharge |
| Fuzhou Fuxing | Chemical oxygen demand（COD） | Intermittent | 1 | The northwest side of the factory | 14.51 | 100 | 19.40 | 102.19 | Nil |
| Ammonia nitrogen | 0.1735 | 15 | 0.232 | 10.22 | Nil | ||||
| SO2 | Organized | 1 | RTO | 6.91 | 200 | 0.791 | 2.6 | Nil | |
| NOx | 1 | RTO | 8.196 | 200 | 0.938 | 2.6 | Nil | ||
| VOCs | 7 | RTO, fermentation workshop, environmental friendly sewage station, regulating pool, Workshop 2 (East), Workshop 2 (West), QC department | 6.38 | 60 | 7.626 | 30.19 | Nil |
Note: The discharge concentration represents the actual discharge concentration to the environment, and thestandards implemented represent the standards for discharge to the environment by Jiangyin Sewage Treatment Plant（江阴污水处理厂）(i.e. COD ≤ 100 mg/L, ammonia nitrogen ≤ 15 mg/L), and the agreed standard for wastewaterdischarge from Fuzhou Fuxing to Jiangyin Sewage Treatment Plant（江阴污水处理厂）shall be the standards fordischarge to the environment by Jiangyin Sewage Treatment Plant（江阴污水处理厂） (i.e. COD ≤ 500 mg/L,ammonia nitrogen ≤60 mg/L, total phosphorus ≤ 8 mg/L, total nitrogen ≤ 70 mg/L, SS ≤ 400 mg/L). For the dischargeof non-methane total hydrocarbons, particulate matter, sulfur dioxide, and nitrogen oxides, the adopted standard wasthe standard limits stipulated in the Emission Standard of Air Pollutants for Pharmaceutical Industry (《制药工业大气污染物排放标准》)(GB 37823-2019).
vi Livzon Xinbeijiang
| Name of company or subsidiary | Name of major pollutants and specific pollutants | Mode of discharge | Number of discharge outlets | Number of discharge outlets | Discharge concentration (mg/L) | Pollutant discharge standards implemented (mg/L) | Total amount of discharge (t) | Total amount of discharge approved (t/a) | Excessive discharge |
| Livzon Xinbeijiang | Chemical oxygen demand | Intermittent | 1 | Sewage treatment workshop | 66.4 | 240 | 63.66 | 213.6 | Nil |
| Ammonia nitrogen | 4.9 | 70 | 4.73 | 24.5 | Nil |
Note: The discharge concentration represents the concentration of discharge into Qingyuan Henghe SewageTreatment Plant （清远横荷污水处理厂）, while the standard adopted for discharge represents the standardstipulated in the pollutant discharge license of the company, i.e. COD ≤ 240 mg/L, ammonia nitrogen ≤ 70 mg/L.The data was obtained from Qingyuan Environmental Protection Bureau. The boiler waste gas follows the EmissionStandard of Air Pollutants for Boilers (《锅炉大气污染物排放标准》) (DB 44/765-2019); the waste gas emissionfrom the workshops follows the Emission Standard of Air Pollutants for Pharmaceutical Industry (《制药工业大气污染物排放标准》) (GB 37823-2019) and the Emission Standards for Odor Pollutants (《恶臭污染物排放标准》)(GB 14554-93).
Joincare Pharmaceutical Group Annual Report 2023
vii Livzon Hecheng
| Name of company or subsidiary | Name of major pollutants and specific pollutants | Mode of discharge | Number of discharge outlets | Number of discharge outlets | Discharge concentration (mg/L)/(mg/m3) | Pollutant discharge standards implemented (mg/L)/(mg/m3) | Total amount of discharge (t) | Total amount of discharge approved (t/a) | Excessive discharge |
| Livzon Hecheng | Chemical oxygen demand | Intermittent | 1 | Wastewater treatment station | 53.2 | 192 | 11.4 | 26.28 | Nil |
| Ammonia nitrogen (NH3-N) | 2.9 | 40 | 0.613 | 5.48 | Nil | ||||
| Sulfur dioxide | Organized continuous emission | 3 | Boiler room | 3 | 50 | 0.101 | / | Nil | |
| Nitrogen oxide | 3 | Boiler room | 53 | 150 | 0.6646 | / | Nil | ||
| Smoke and dust | 3 | Boiler room | 1.31 | 20 | 0.0235 | / | Nil | ||
| Hydrogen chloride | 7 | Workshop | 3.51 | 100 | 2.13 | / | Nil | ||
| Non-methane hydrocarbon | 7 | Workshop | 18.98 | 60 | 7.31 | 77.76 | Nil | ||
| Non-methane hydrocarbon | 1 | RTO | 8.03 | 60 | 0.15 | Nil | |||
| Nitrogen oxide | 1 | RTO | 5.5 | 200 | 1.01 | / | Nil | ||
| Sulfur dioxide | 1 | RTO | 2.75 | 200 | 0.40 | / | Nil |
Notes: 1. The discharge concentration of pollutants in waste water represents the average concentration by onlinemonitoring from the master discharge outlet by the company into South District Sewage Treatment Plant, while thestandard adopted for discharge represents the standard stipulated in the pollutant discharge license of the company,i.e. COD ≤192mg/L, ammonia nitrogen ≤40mg/L.
2. The discharge concentration of pollutants in the discharge outlet of waste gas represents the averageconcentration detected by a qualified third party engaged, of which the boiler exhaust adopted the Emission Standardof Air Pollutants for Boilers (《锅炉大气污染物排放标准》)(DB 44/765-2019) of Guangdong Province. Theworkshop and wastewater treatment station emission complied with the Emission Standard of Air Pollutants forPharmaceutical Industry (《制药工业大气污染物排放标准》) (GB 37823-2019).
viii Gutian Fuxing
| Name of company or subsidiary | Name of major pollutants and specific pollutants | Mode of discharge | Number of discharge outlets | Number of discharge outlets | Discharge concentration (mg/L) | Pollutant discharge standards implemented (mg/L) | Total amount of discharge (t) | Total amount of discharge approved (t/a) | Excessive discharge |
| Gutian Fuxing | Chemical oxygen demand | Continuous | 1 | Southeastern part of the factory zone | 43.276 | 120 | 7.78 | 108 | Nil |
| Ammonia nitrogen | 8.236 | 35 | 1.54 | 31.5 | Nil |
Note: Wastewater discharge follows the Discharge Standard of Water Pollutants for Pharmaceutical IndustryFermentation Products Category (《发酵类制药工业水污染物排放标准》) (GB21903-2008). The dischargeconcentration represents the concentration of ultimate discharge into the environment, while the discharge standardsstipulated in the pollutant discharge license are COD ≤ 120 mg/L, ammonia nitrogen ≤ 35 mg/L.
ix Livzon Limin
| Name of company or subsidiary | Name of major pollutants and specific pollutants | Mode of discharge | Number of discharge outlets | Number of discharge outlets | Discharge concentration (mg/L) | Pollutant discharge standards implemented (mg/L) | Total amount of discharge (t) | Total amount of discharge approved (t/a) | Excessive discharge |
| Livzon Limin | Chemical oxygen demand | Intermittent | 1 | Wastewater treatment station | 12.67 | 110 | 4.514 | Nil | Nil |
| Ammonia nitrogen | 0.2128 | 15 | 0.075 | Nil | Nil |
Note: The production process of Limin Factory is required to comply with the Water Pollution Prevention andControl Law of the PRC (《中华人民共和国水污染防治法》), the Air Pollution Prevention and Control Law ofthe PRC (《中华人民共和国大气污染防治法》), the Solid Waste Pollution Prevention and Control Law of thePRC (《中华人民共和国固体废物污染环境防治法》), the Integrated Wastewater Discharge Standard of the PRCNational Standard (《中华人民共和国国家标准污水综合排放标准》) (GB 8978-1996), the Emission Standard of
Joincare Pharmaceutical Group Annual Report 2023
Air Pollutants for Boiler (《锅炉大气污染物排放标准》) (GB 13271-2014), the Measures for Pollutant DischargePermitting Administration (TrialImplementation) (《排污许可管理办法（试行）》) and other laws, regulationsand industry standards. The wastewater of Limin Factory was discharged into Shaoguan Second Sewage TreatmentPlant（韶关市第二污水处理厂）and the standard adopted for pollutant discharge represented the standard stipulatedin the pollutant discharge license of the company, i.e. COD ≤ 110 mg/L, ammonia nitrogen ≤ 15 mg/L, while thedata detected by third party inspection firm was adopted as the discharge concentration.
x Livzon Pharmaceutical Factory
| Name of company or subsidiary | Name of major pollutants and specific pollutants | Mode of discharge | Number of discharge outlets | Number of discharge outlets | Discharge concentration (mg/L) | Pollutant discharge standards implemented (mg/L) | Total amount of discharge (t) | Total amount of discharge approved (t/a) | Excessive discharge |
| Livzon Pharmaceutical Factory | Chemical oxygen demand | Intermittent | 1 | Sewage treatment station | 18.69 | 120 | 2.21 | Nil | Nil |
| Ammonia nitrogen | 1 | Sewage treatment station | 0.2 | 20 | 0.024 | Nil | Nil |
Note: The discharge concentration of pollutants in the wastewater discharge outlet represents the averageconcentration detected by a qualified third party engaged, by implementing the strictest of water pollutant dischargeconcentration limits for newly-built enterprises of the Discharge Standard of Water Pollutants for PharmaceuticalIndustry Mixing/ Compounding and Formulation Category (《混装制剂类制药工业水污染物排放标准》 ) (GB21908-2008), water pollutant discharge concentration limits for newly-built enterprises of the Discharge Standardsof Water Pollutants for Pharmaceutical Industry Bio-pharmaceutical Category (《生物工程类制药工业水污染物排放标准》 ) (GB 21907- 2008), or the level 1 of phase II standard of Discharge Limits of Water Pollutants (《水污染物排放限值》) (DB 44/26- 2001) of Guangdong Province.
xi Ningxia Pharmaceutical
| Name of company or subsidiary | Name of major pollutants and specific pollutants | Mode of discharge | Number of discharge outlets | Number of discharge outlets | Discharge concentration (mg/L) / (mg/m3) | Pollutant discharge standards implemented (mg/L) / (mg/m3) | Total amount of discharge (t) | Total amount of discharge approved (t/a) | Excessive discharge |
| Ningxia Pharmaceutical | Chemical oxygen demand | Continuous | 1 | Sewage treatment workshop on the north side of the factory zone | 104.84 | 200 | 102.49 | Nil | Nil |
| Ammonia nitrogen | 0.61 | 25 | 0.6 | Nil | Nil | ||||
| Sulfur dioxide | 1 | Boiler workshop on north side of factory zone | 67.28 | 200 | 29.52 | 156.816 | Nil | ||
| Nitrogen oxide | 138 | 200 | 60.55 | 156.816 | Nil | ||||
| Particulate matter | 6 | 30 | 2.52 | 23.522 | Nil | ||||
| Volatile organic compounds | 9 | 4 outlets for fermentation, 3 outlets for refinery and 2 outlets for sewage | 7.17 | 100 | 10.74 | 79.535 | Nil |
Notes: 1. The discharge concentration of wastewater represents the concentration of ultimate discharge to theenvironmental protection control center of Ningxia Xin'an Technology Co., Ltd. (宁夏新安科技有限公司) (“Xin'anCompany”). The standard adopted for pollutant discharge was the standard stipulated in the pollutant dischargelicense of the company and the amount of discharge was calculated by the amount received by Xin'an Company. Inrespect of the total amount of approved discharge, since Ningxia Pharmaceutical adopted indirect discharge, thelocal government of Ningxia cancelled the limitation of total discharge of chemical oxygen demand and ammonianitrogen of all indirect discharge enterprises, and the total amount index was directly allocated to sewage treatmentplants in the pharmaceutical industrial park established by the government after the renewal of the pollutiondischarge license.
2. The air emission concentration of boilers represents the self-monitoring average concentration throughout
the year, the standard adopted for discharge was the emission limits of coal-fired boilers in Schedule 3 ofEmission Standard of Air Pollutants for Boiler (《锅炉大气污染物排放标准》) (GB 13271-2014) (sulfurdioxide ≤ 200 mg/m
, nitrogen oxides ≤ 200 mg/m
, particulate matter ≤ 30 mg/m
) and Standard for PollutionControl on Hazardous Waste Incineration (《危险废物焚烧污染物控制标准》) (GB18484-2020), and theamount of sulfur dioxide, nitrogen oxides, and particulate matter was calculated by the amount indicated by
Joincare Pharmaceutical Group Annual Report 2023
online monitoring. The concentration of volatile organic compounds represents the concentration of ultimatedischarge to the environment (self-monitoring concentration), the adopted standard was the standard limitsstipulated in Schedule I of the Emission Standard of Air Pollutants for Pharmaceutical Industry (《制药工业大气污染物排放标准》) (GB 37823-2019) and the amount of discharge was calculated by the amount ofwaste gas emissions and the discharge concentration recorded by the monitoring report.
xii Jiaozuo Hecheng
| Name of company or subsidiary | Name of major pollutants and specific pollutants | Mode of discharge | Number of discharge outlets | Number of discharge outlets | Discharge concentration (mg/L) | Pollutant discharge standards implemented (mg/L) | Total amount of discharge (t) | Total amount of discharge approved (t/a) | Excessive discharge |
| Jiaozuo Hecheng | Chemical oxygen demand | Continuous | 1 | Master outlet in industrial wastewater workshop | 96.6 | 220 | 8.022 | 60.8 | Nil |
| Ammonia nitrogen | 3.4 | 35 | 0.279 | 8.8 | Nil |
Note: The discharge concentration and the total amount of discharge represent the concentration and total amount ofultimate discharge into the downstream sewage treatment plant, and the source is online monitoring data.Replacement of hazardous waste signs and labels in pipelines follows the latest Technical Specification for SettingIdentification Signs of Hazardous Waste (《危险废物识别标志设置技术规范》).
xiii Shanghai Livzon
| Name of company or subsidiary | Name of major pollutants and specific pollutants | Mode of discharge | Number of discharge outlets | Number of discharge outlets | Discharge concentration (mg/L)/(mg/m3) | Pollutant discharge standards implemented (mg/L)/(mg/m3) | Total amount of discharge (t) | Total amount of discharge approved (t/a) | Excessive discharge |
| Shanghai Livzon | Chemical oxygen demand | Intermittent | 1 | Master outlet in the park | 40.1 | 500 | 4.93 | 6.1738 | Nil |
| Ammonia nitrogen | 2.45 | 40 | 0.30 | 0.8747 | Nil | ||||
| Particulate matter | Organized intermittent discharge | 2 | No. 5 and 6 outlets on the roof | - | - | - | - | Nil | |
| Volatile organic compounds | 8 | No.1, 2, 3, 4, 7, 8, 9 and 10 outlets on the roof | 3.41 | 60 | 0.28 | 0.88325 | Nil |
Note: The discharge concentration was the average of monthly third-party monitoring data, and the amount ofdischarge was the cumulative sum of monthly discharge. The discharge of VOCs and particulate matter were inaccordance with the Emission Standard of Air Pollutants for Pharmaceutical Industry (《制药工业大气污染物排放标准》) (GB 37823- 2019), and the discharge of COD and ammonia nitrogen were implemented in accordancewith the Integrated Wastewater Discharge Standard ( 《污水综合排放标准》) (DB 31/199-2018). Air pollutantsdischarge follows Emission Standard of Air Pollutants for Pharmaceutical Industry ( 《制药工业大气污染物排放标准》) (DB31/310005-2021), Integrate Emission Standards of Air Pollutants (《大气污染物综合排放标准》)(DB31/933-2015) and Emission Standards for Odor Pollutants (《恶臭（异味）污染物排放标准》) (DB31/1025-2016). Water pollutant discharge follows the The Discharge Standard of Pollutants for Bio-Pharmaceutical Industry(《生物制药行业污染物排放标准》) (DB31/373-2010). Shanghai Livzon was among other key pollutant dischargeunits, but not among the key pollutant discharge units of water environment and atmospheric environment.
xiv Livzon MAB
| Name of company or subsidiary | Name of major pollutants and specific pollutants | Mode of discharge | Number of discharge outlets | Number of discharge outlets | Discharge concentration (mg/L) | Pollutant discharge standards implemented (mg/L) | Total amount of discharge (t) | Total amount of discharge approved (t/a) | Excessive discharge |
| Livzon MAB | Chemical oxygen demand | Intermittent | 1 | Sewage treatment station | 18.69 | 120 | 2.57 | Nil | Nil |
| Ammonia nitrogen | 1 | Sewage treatment station | 0.2 | 20 | 0.0261 | Nil | Nil |
Note: The discharge concentration of pollutants in the wastewater discharge outlet represents the averageconcentration detected by a qualified third party engaged, by implementing the strictest of water pollutant dischargeconcentration limits for newly-built enterprises of the Discharge Standard of Water Pollutants for Pharmaceutical
Joincare Pharmaceutical Group Annual Report 2023
Industry Mixing/ Compounding and Formulation Category (《混装制剂类制药工业水污染物排放标准》) (GB21908-2008), water pollutant discharge concentration limits for newly-built enterprises of the Discharge Standardsof Water Pollutants for Pharmaceutical Industry Bio-pharmaceutical Category (《生物工程类制药工业水污染物排放标准》) (GB 21907- 2008), or the level 1 of phase II standard of Discharge Limits of Water Pollutants (《水污染物排放限值》) (DB 44/26- 2001) of Guangdong Province.
xv Livzon Diagnostics
| Name of company or subsidiary | Name of major pollutants and specific pollutants | Mode of discharge | Number of discharge outlets | Number of discharge outlets | Discharge concentration (mg/L) | Pollutant discharge standards implemented (mg/L) | Total amount of discharge (t) | Total amount of discharge approved (t/a) | Excessive discharge |
| Livzon Diagnostics | Chemical oxygen demand | Intermittent | 1 | Sewage treatment station | 14 | 500 | 0.0419 | Nil | Nil |
| Ammonia nitrogen | 1 | Sewage treatment station | 0.09 | Nil | 0.00027 | Nil | Nil |
Note: The sewage treated by Livzon Diagnostics was discharged into the South District Sewage Treatment Plant inZhuhai （珠海市南区水质净化厂）, and the wastewater discharge was carried out in accordance with the DischargeLimits of Water Pollutants of Guangdong Province Standards (《广东省地方标准水污染物排放限值》) (DB 44/26-2001).
2. Construction and operation of pollution preventive facilities
√ Applicable □ N/A
| Name of company or subsidiary | Construction and operation of pollution preventive facilities |
| Jiaozuo Joincare | Exhaust gas: The treatment process of “Three-level spray + mist eliminator + dry filter + adsorption concentrator + RCO” + “secondary alkali spray” was adopted for fermentation exhaust gas. The treatment process of “bag type dust collector” was adopted for proportioning process dust-laden exhaust gas. The treatment process of “secondary alkali spray” was adopted for exhaust gas treatment facilities in wastewater treatment station. The treatment process of “alkali adsorption” was adopted for process acid waste gas. The treatment process of “tertiary finned condenser + bag type dust collector + secondary alkali spray + RTO”/“-20 ℃ condensation + activated carbon adsorption device (including regenerating device) + RTO”/“adsorption device (including regenerating device) Jiaozuo Joincare + secondary alkali spray + biological uptake + secondary alkali spray”/“secondary alkali spray + biological uptake + secondary alkali spray” was adopted for process organic exhaust gas. 15 discharge outlets were constructed. All of them enable stable and up-to-standard discharge through self-monitoring in 2023. Wastewater: The treatment process of “regulating pool + hydrolysis acidification pool + UASB + (CASS + air flotation) / modified A/O + secondary settling tank + coagulating sedimentation” was primarily adopted. Standard wastewater outlets were set; online automatic monitoring control system was installed at outlets for real-time monitoring of COD, ammonia nitrogen, total nitrogen, pH, fluorion and flow. Wastewater treatment process sections can be stably operated. Moreover, wastewater control factors can be stably emitted in compliance with the required standard. |
| Taitai Pharmaceutical | No new environmental protection facility was set up, and all environmental protection facilities functioned properly. |
| Haibin Pharma | No new pollution preventive facility was set up, and all pollution preventive facilities functioned properly and ensured up-to-standard discharge. |
| Xinxiang Haibin | Wastewater: The wastewater treatment system with daily processing capacity of 600 tonnes through patented A/O process designed by East China University of Science and Technology functioned properly in 2023. In April 2020, a set of MVR concentration wastewater treatment plant was added and functioned properly in 2023. In June 2022, a set of lift aerator system and a set of magnetic levitation blower were added in the biochemical system, which have been functioning properly. A new sewage anaerobic treatment system was built in 2021, which has been functioning properly. In 2023, the company adopted the Fenton advanced sewage treatment system to delete and select reagents and orthogonally test the ratio of each reagent, and implemented a series of measures, such as adjusting the dosage and introducing new reagent manufacturers, to ensure that the advanced wastewater treatment process can operates stably and that the indicators of discharged wastewater meet the standards for discharge. |
Joincare Pharmaceutical Group Annual Report 2023
| Exhaust gas: The 40000m?/h regenerative oxidation exhaust gas treatment system designed by Jiangsu Ruiding started operation on 2 November 2019 and is functioning properly in 2023. After reconstruction of dry tail gas self-circulating process, the activated carbon adsorption device for high concentration waste gas designed by Beijing Rixin Daneng Technology Co., Ltd. has been functioning properly in 2023 and solvent recovery amount was increased. After alkali spray and water spray, the exhaust gas from biochemical aerobic process of wastewater treatment was emitted in compliance with the required standard, and the equipment functioned properly throughout 2023. A set of methylene chloride and tetrahydrofuran membrane recovery system was added for high concentration exhaust gas treatment of the sixth workshop, which has been functioning properly in 2023. A new methylene chloride membrane recovery system was added to the third workshop and the system operates properly in 2023. | |
| Fuzhou Fuxing | The company strictly complies with the “Three Simultaneous” system of environmental protection by collecting and treating “Three Wastes (wastewater, waste gas and solid waste)” according to requirements, and employs an advanced wastewater treatment process known as “Regulating pool + Hydrolysis acidification tank + Sequencing Batch Reactor Activated Sludge Process (SBR) and Cyclic Activated Sludge System (CASS) + Air float”. After the wastewater from production has gone through the above treatment process, all indicators are stable and satisfy the discharge standard. After meeting the discharge standards, the wastewater is discharged to Jiangyin Sewage Treatment Plant operated by Fujian Huadong Water Treatment Co., Ltd.（福建华东水务有限公司）via sewage pipe network at the industrial park area for further treatment. In 2022, the waste gas treatment facilities for Fenton pool and regulating pool have been added, and the waste gas was treated by secondary spraying. The RTO annual maintenance has been completed in the first half of 2023. In 2023, the COD concentration was 5,628.7 mg/L, the ammonia nitrogen concentration was 225.5 mg/L; the COD concentration and ammonia nitrogen concentration discharged into Jiangyin Sewage Treatment Plant（江阴污水处理厂）were 237.2 mg/L and 22.1 mg/L respectively. |
| Livzon Xinbeijiang | The “Three Wastes” were collected and treated effectively in strict compliance with the “Three Simultaneous” system. The sewage treatment facilities with an investment amount of over RMB30 million have a designed processing capacity of 3,000 t/d and adopt the treatment process of “Pre-treatment + Aerobic pool + Hydrolysis acidification tank + SBR + Catalytic oxidation + Air float”. The effluent water quality constantly met the standard; the COD concentration of the influent water in the regulating pool was about 2000 mg/L, and the actual COD concentration discharged after treatment was about 100 mg/L (the discharge standard is ≤ 240 mg/L), and the COD treatment efficiency reached 95%. The waste gas emitted from sewage treatment was treated using a biological deodorization box + 3-level high-efficiency sodium hypochlorite and lye spray + 1-level alkali spray treatment process; the waste gas emission constantly met the standard. For the organic waste gas, the refining workshop adopts the most advanced RTO treatment process, which conveys the waste gas to the RTO furnace chamber at about 800 ?C for high-temperature oxidation and completely decomposes the volatile organic gases into CO2 and water. In 2023, the fourth round of environmental protection improvement and renovation was carried out, including a series of noise reduction measures such as installing sound-proof glass for the shutters on the third floor of the fermentation department 2, adding an enclosure to the fan on the roof of the refining workshop and enclosing the MVR and RTO areas with sound-absorbing cotton panels. In addition, the pre-treatment wastewater pipeline of the sewage station was sorted out, the original remaining waste pipelines were removed, and new wastewater pipelines were sorted out and installed to effectively reduce the leakage of wastewater; for the waste gas of the fermentation workshop 2, the first-level waste gas spray tower was added to strengthen the treatment effect of fermentation waste gas. |
| Livzon Hecheng | The “Three Wastes” were treated in a centralized and effective manner in strict compliance with the “Three Simultaneous” system and the maintenance and management of pollution prevention & treatment facilities were enhanced to ensure that pollutant discharge was stable and in compliance with the required standard. For wastewater, the treatment process of “pre-treatment of drainage from the production process + hydrolytic acidification + Upflow Anaerobic Sludge Bed (UASB) + advanced oxidation + Cyclic Activated Sludge System (CASS) process + air floatation/ozonation advanced treatment” was adopted. Treated sewage was discharged into Zhuhai Leaguer Environmental Protection Co., Ltd.（珠海力合环保有限公司） (water purification plant in the South District) through the municipal sewage pipeline network. The waste gas was treated by spray tower, activated carbon |
Joincare Pharmaceutical Group Annual Report 2023
| adsorption, condensation, liquid nitrogen cryogenic, RTO and other comprehensive treatment technologies to ensure all kinds of pollutants were effectively treated and discharged in compliance with the standards. | |
| Gutian Fuxing | At the same time when the enterprise started production, the “Three Wastes” were collected and treated effectively in accordance with the requirements of the “Three Simultaneous” system of environmental protection. This involves a designed sewage treatment capacity of 1,200 t/d, adoption of the advanced “Anaerobic-Oxic activated sludge process (A/O) + SBR + nitrogen removal by denitrification + Fenton decolorizing + air flotation” wastewater treatment process, 6,000m? of effective reservoir capacity of the treatment system and more than 20 sets of treatment equipment with 350 KW installed capacity to improve the water treatment process, thus ensuring that all wastewater treatment indicators are stable and satisfy the discharge standard. The COD concentration and ammonia nitrogen of untreated wastewater were 2000 mg/L and 400 mg/L respectively; the COD concentration and ammonia nitrogen were lowered to 43.276 mg/L and 8.236 mg/L after treatment, with the removal rate as high as 97.8%. Treated sewage that reaches the grade II discharge standard is directly discharged into Minjiang River. The hazardous waste of the company is entrusted to qualified companies for compliant disposal according to the requirements of environmental impact assessment and acceptance inspection opinions. Two 4-tonne coal-fired boilers were eliminated and one 12-tonne biomass-fired special boiler was replaced. The boiler exhaust treatment facilities were upgraded, with the high-efficiency waste gas treatment facility of “SNCR denitrification + cyclone dust removal + dry desulfurization + bag dust removal + wet desulfurization” adopted. |
| Livzon Limin | The “Three Simultaneous” system was strictly implemented by the company for the treatment of “Three Wastes” by collecting and treating the “Three Wastes” effectively. The original sewage treatment plant with an investment amount of over RMB13 million has a designed processing capacity of 1,500 t/d and adopts the treatment process of “Pre-treatment + Hydrolysis acidification tank + Facultative tank + Aerobic pool + Secondary sedimentation”, and the sewage after treatment was discharged into Shaoguan Second Sewage Treatment Plant（韶关市第二污水处理厂） through the municipal pipeline network. The key pollution indicators are chemical oxygen demand and ammonia nitrogen; the concentrations at water inlets were 365.1 mg/L and 1.187 mg/L respectively in 2022, while the average discharge concentrations at water outlets were 12.67 mg/L and 0.2128 mg/L respectively, far lower than the relevant limits stipulated in the pollutant discharge license and the removal rates reached 93.45% and 54.08% respectively. In respect of waste gas treatment, biomass boilers were all replaced by gas boilers. The technical transformation project of the R&D center has installed waste gas treatment facilities such as activated carbon adsorption and acid mist spray tower. The key pollution indicators are sulfur dioxide, nitrogen oxides and particulate matter. The emission concentrations were 0 mg/m?, 82.92 mg/m? and 2.15 mg/m? respectively in 2023, far lower than the relevant limits stipulated in the pollutant discharge license. In respect of control of noise pollution, investment was made to construct noise segregation wall to reduce noise pollution. |
| Livzon Pharmaceutical Factory | The “Three Wastes” were collected and treated effectively by the Pharmaceutical Factory. For wastewater: an investment of over RMB10 million was made for phase I and phase II sewage treatment station with a designed processing capacity of 1,000 t/d, which adopted the CASS process for phase I and the A/O process for phase II. The indicator of treated wastewater was approximately 50% of the standard limit requirement and the sewage after treatment was discharged into sewage treatment plants through the municipal pipeline network. For waste gas: currently, the company uses purchased steam and uses the boilers as backups, greatly reducing air emissions (sulfur dioxide, nitrogen oxides). The waste gas of the wastewater treatment stations is treated by the biological deodorization tower, which is a combined odor treatment equipment, divided into three areas: biochemical area, physicochemical area and adsorption area. The biological deodorization in biochemical area mainly uses microorganisms to deodorize, and the odorous substances are transformed through the physiological metabolism of microorganisms, so that the target pollutants are effectively decomposed and removed to achieve the purpose of waste gas treatment. |
| Ningxia Pharmaceutical | Through strict enforcement of the “Three Simultaneous” system, the “Three Wastes” were collected and treated effectively. The designed total processing capacity of sewage treatment was 7,500 m3/d (including one plant with capacity of 5,000 m3/d and one plant with capacity of 2,500 m3/d), and the actual total treatment amount was 2,800 m3/d. After the treated sewage had reached the standard stipulated on the pollutant discharge licence, it would be discharged into Xin’an Company through the sewage pipeline network in the industrial park. Waste gas treatment: 4 sets of fermentation and 2 sets of refining waste gas treatment adopt the treatment process of “sodium |
Joincare Pharmaceutical Group Annual Report 2023
| hypochlorite spray + water spray + two-way superoxide water spray + micro-nano bubble spray”; 2 sets of waste water treatment tank odor collection and treatment facilities adopt the treatment process of “three-level spray absorption (level 1: alkaline water spray absorption + level 2: sodium hypochlorite spray absorption + level 3: sulfuric acid spray absorption)”; 1 set of RTO (regenerative thermal oxidizer) waste gas treatment facility adopts incineration method; 2 forty-ton circulating fluidized bed boilers (one in operation and one on standby) were in normal operation, adopting the treatment process of “bag dust removal + double alkali desulfurization + alkaline water spraying and demisting”. General solid waste: slag and sludge were entrusted for landfill disposal; styrene-acrylic slag is sold as organic fertilizer; styrene-acrylic mother liquor was outsourced for recycling; styrene-acrylic spent activated carbon and Lova waste activated carbon were sent to boilers for incineration. Hazardous waste: mycophenolic acid and Dora waste slag are put into boilers for incineration; spent activated carbon, waste and empty reagent bottles, waste packaging bags, etc. were all entrusted to qualified companies for disposal. In 2023, the following pollution prevention measures were mostly completed: 1. decommissioning the former Xinbeijiang sewage treatment system to abate the source of malodorous gas generation; 2. carrying out comprehensive cleaning and maintenance of the existing 9 sets (30 units) of waste gas treatment facilities spray tower; 3. replacing nearly 1,000 meters of DN300 external drainage pipes. | |
| Jiaozuo Hecheng | The “Three Wastes” were collected and treated effectively in strict compliance with the “Three Simultaneous” system. The designed sewage treatment capacity was 3,000 t/d, the treatment process of “hydrolytic acidification tank + UASB + aerobic pool + materialized treatment” was adopted, the treated sewage would be discharged into the sewage treatment plant of Xiuwu Branch of Kangda Water Co., Ltd.（康达水务有限公司修武分公司）through the municipal pipeline network. The sewage treatment facilities were under normal operation with compliant discharge. In 2023, an operation and maintenance contract in relation to online continuous monitoring system for water quality was signed with Jiaozuo Lansheng Environmental Technology Service Co., Ltd.（焦作市蓝晟环保技术服务有限公司）. For waste gas: In 2023, dichloride module equipment was added in the recycling section, and the waste gas was discharged after being treated and the standard limit met; The waste gas generated from technical process in the production zone would be collected and treated by adopting two sets of processes of “spray + activated carbon + spray + RTO incineration equipment” and “-20 Celsius condensation + dichloride module + spray + activated carbon + spray + RTO incineration equipment” and then discharged after reaching the required standard. Solid waste and hazardous waste would be stored in the hazardous waste station constructed in compliance with the requirements of “Three Protections” (protection against leaks, erosion and rain) according to the requirements under the Guidelines for Standardized Management of Hazardous Waste in Henan Province (Trial Implementation) (《河南省危险废物规范化管理工作指南（试行）》). In 2023, hazardous waste disposal contracts were signed with qualified companies Anyang Zhongdan Environmental Protection Technology Co.（安阳中丹环保科技有限公司）, Luoyang Dezheng Waste Resources Recycling Co., Ltd.（洛阳德正废弃资源再利用有限公司）and Qinyang BBMG Jidong Environmental Protection Technology Co., Ltd.（沁阳金隅冀东环保科技有限公司）. In 2023, hazardous waste and other general solid waste were disposed of in compliance with relevant requirements. In January 2023, a self-monitoring and automatic monitoring equipment comparison contract was signed with Henan Chenjie Inspection Technology Co., Ltd.（河南晨颉检验技术有限公司）to regularly monitor the company’s discharge outlets. |
| Shanghai Livzon | The company designed and built a sewage treatment station with a processing capacity of 200 m3/d in 2018. The company’s wastewater was treated by such sewage treatment station and then entered the park’s sewage treatment station for secondary treatment, and finally discharged into the municipal pipeline network. The company had the hazardous waste station in compliance with the requirements of “Three Preventions” to store hazardous waste and appointed a qualified company for compliant disposal. The company’s main discharge outlets were treated with activated carbon adsorption and filtration, and the activated carbon was replaced every half a year to ensure that the air emission met the standards. In January 2022, the company demolished the solid preparation workshop on the third floor and transformed it into a microsphere workshop, and there is no particulate matter emission from the No. 5 and No. 6 discharge outlets accordingly. In order to meet the regulatory requirements under the new environmental impact assessment (at least one emission reduction measure to be replaced with a new one), the 4# exhaust stack was upgraded in March 2023, upgrading |
Joincare Pharmaceutical Group Annual Report 2023
| the secondary activated carbon adsorption equipment and the monitoring platform processing equipment. | |
| Livzon MAB | The “Three Simultaneous” system was strictly implemented by Livzon MAB for the treatment of “Three Wastes” by collecting and treating the “Three Wastes” effectively. For wastewater (relying on the wastewater treatment of Pharmaceutical Factory in the park): an investment of over RMB10 million was made for phase I and phase II sewage treatment station with designed processing capacity of 1,000 t/d, which adopted the CASS process for phase I and the A/O process for phase II, and the sewage after treatment was discharged into sewage treatment plants through the municipal pipeline network. For waste gas: currently, the company uses purchased steam and takes the boilers as backups, greatly reducing air emissions. The waste gas of the wastewater treatment stations is treated by a combination of first-level spray towers, Ultra Violet (UV) photoion equipment and second-level spray towers. |
| Livzon Diagnostics | The “Three Simultaneous” system was strictly implemented by Livzon Diagnostics. The company has sewage treatment facilities, which started construction in 2017 and were completed and passed the acceptance inspection for use in June 2018. The treatment processes include sedimentation tanks, regulating tanks, anaerobic tanks, contact oxidation, secondary settling tanks, etc. The sewage after being treated and met the standard was discharged into the South District Sewage Treatment Plant in Zhuhai （珠海市南区水质净化厂）through the municipal sewage pipeline. Hazardous waste and general industrial solid waste generated by Livzon Diagnostics were entrusted to a qualified third-party company for disposal. |
3. Environmental impact assessment of construction projects and other environmentalprotection administrative licensing
√Applicable □N/A
| Name of company or subsidiary | Environmental impact assessment of construction projects and other environmental protection administrative licensing |
| Jiaozuo Joincare | Jiaozuo Joincare was listed in the mandatory clean production directories on key industries in 2023. Currently, the interim report review has been completed. Due to the delay in the construction of high-cost projects, the clean production review and acceptance is expected to complete by the end of March 2024. |
| Taitai Pharmaceutical | The Environmental Impact Report for new products are currently under preparation and review. |
| Haibin Pharma | No environmental impact assessment project was required in 2023; with strict enforcement of the “Three Simultaneous” system in the production process and implementation of the environmental protection measures required under the environmental impact assessment, the environmental protection facilities have been functioning properly; and the change of pollutant discharge license was applied for and obtained approval in December 2023. |
| Xinxiang Haibin | No environmental impact assessment project was required in 2023. |
| Fuzhou Fuxing | The Environmental Impact Report on the Phase III High-end Antibiotics Project of Livzon Group Fuzhou Fuxing Pharmaceutical Co., Ltd. (《丽珠集团福州福兴医药有限公司三阶段高端抗生素项目环境影响报告书》) was approved on 23 August 2021. The Environmental Impact Report on the Phase IV High-end Antibiotics Project of Livzon Group Fuzhou Fuxing Pharmaceutical Co., Ltd.（丽珠集团福州福兴医药有限公司四阶段高端抗生素项目环境影响报告书》) was approved on 12 October 2022. In March 2023, the second phase, the third phase, the second stage and the third stage of environmental inspection have been completed. The company strictly implements the “Three Simultaneous” system and takes environmental protection measures required for environmental assessment, with the environmental protection facilities under normal operation. Approval was granted for the application of a new national pollutant discharge license on 27 December 2017 and the renewal of the national pollutant discharge license was completed in December 2020. The company has been discharging pollutants in strict compliance with the licensing and administrative requirements. The re-application for the pollutant discharge license was completed in October 2023 with a validity period from 8 October 2023 to 7 October 2028. |
| Livzon Xinbeijiang | The Environmental Impact Report on Current Status of Projects of Livzon Group Xinbeijiang Pharmaceutical Manufacturing Inc. (《丽珠集团新北江制药股份有限公司项目现状环境影响报告书》) was approved and filed on 6 December 2016; with strict enforcement of the “Three Simultaneous” system and implementation of the environmental protection measures required under the environmental impact assessment, the environmental protection facilities have been functioning properly. The |
Joincare Pharmaceutical Group Annual Report 2023
| first application for a new national discharge permit was applied on 29 December 2017, and the renewal of the discharge permit was processed on 29 December 2022, with a validity period until 28 December 2027. The discharge permit for the new plant in Shijiao was changed on 8 May 2023 and is valid until 7 May 2028. | |
| Livzon Hecheng | The Environmental Impact Assessment Report on Current Status of the Product Structure and Production Capacity Adjustment Project of Zhuhai FTZ Livzon Hecheng Pharmaceutical Manufacturing Co., Ltd. (《珠海保税区丽珠合称制药有限公司产品结构及产能调整项目现状环境影响评价报告》) was approved in December 2016. In 2021, the environmental impact assessment for expansion of 14 new products including paliperidone palmitate（棕榈酸帕利哌酮）, aripiprazole（阿立哌唑）, bismuth potassium citrate（枸橼酸铋钾）, i.e. the Environmental Impact Assessment Report on Technological Renovation and Expansion Project of Zhuhai FTZ Livzon Hecheng Pharmaceutical Manufacturing Co., Ltd. (《珠海保税区丽珠合称制药有限公司技改扩建项目环境影响评价报告》), passed the expert review, and obtained approval on 20 January 2022. The company strictly enforced the “Three Simultaneous” system and implemented environmental protection measures as required under environmental impact assessment with normal operation of the environmental protection facilities. In 2023, it was awarded the Green Factory by the Ministry of Industry and Information Technology. In March 2022, the revision and filing of the emergency plan for environmental emergencies was completed. |
| Gutian Fuxing | The company passed the environmental impact assessment on 30 June 1999 and the inspection and acceptance upon completion of construction carried out by Environmental Protection Bureau of Fujian Province on 5 June 2000. The company re-prepared its post-environmental impact assessment report in 2019 and passed the inspection and acceptance carried out by experts on 11 June 2019. The company strictly enforced the “Three Simultaneous” system and implemented the environmental protection measures as required under environmental impact assessment, with normal operation of the environmental protection facilities. In September 2022, the clean production passed the on-site inspection and acceptance of the Ecology and Environment Bureau, and in October 2022, it obtained the inspection and acceptance opinions of the Ningde Environmental Protection Science Research Institute. The existing pollutant discharge license was applied on 26 November 2020 with a validity period from 29 December 2020 to 28 December 2025. |
| Livzon Limin | The Environmental Impact Report on the Technological Reform Project for the R&D Center of Livzon Group Limin Pharmaceutical Manufacturing Factory (《丽珠集团利民制药厂研发中心技改项目环境影响报告表》) was approved on 6 December 2019. A review expert meeting was held on 24 April 2021, and independent review was completed. The Environmental Impact Report for Workshop II of Small-capacity Injection (《小容量注射剂二车间项目环境影响报告表》) was approved on 23 November 2020. On 15 September 2021, a review expert meeting was held, and independent review was completed. The national pollutant discharge license was updated on 22 December 2023. The “Three Simultaneous” system was strictly enforced to implement the environmental protection measures required under the environmental impact assessment, with normal operation of the environmental protection facilities. In September 2022, Limin Pharmaceutical Manufacturing Factory passed the on-site review on clean production by the expert group. In the future, it will continue to explore the potential of energy conservation and emission reduction, establish and improve the clean production mechanism and continuously enhance the level of clean production. It was recognized as a green enterprise in the environmental credit rating by Shaoguan Municipal Ecology and Environment Bureau consecutively from 2019 to 2022. The pollutant discharge license was renewed in 2023 with a validity period from 22 October 2021 to 21 October 2026. |
| Livzon Pharmaceutical Factory | The Environmental Impact Report Form for the Newly-added Wet Granulation Line Project P07 of Livzon Group Livzon Pharmaceutical Factory (《丽珠集团丽珠制药厂P07新增湿法制粒线项目环境影响报告表》) was approved on 18 May 2022. Pharmaceutical Factory updated the pollutant discharge license in June 2022. The Environmental Impact Report Form for New Boilers and Boiler Low-nitrogen Transformation Project (《新增锅炉及锅炉低氮改造項目环境影响报告表》) was approved on 19 August 2022. The company will strictly enforce the “Three Simultaneous” system to implement the environmental protection measures as required by the environmental assessment. The Expansion Project for Production Line of Lyophilized Powder Injection of Livzon Group Livzon Pharmaceutical Factory (《丽珠集团丽珠制药厂东冻干粉針剂生产线扩建项目》) completed its independent acceptance in June 2022, and the Small-capacity Workshop Construction Project of Livzon Group Livzon Pharmaceutical Factory (《丽珠集团丽珠制药厂小容量车间建 |
Joincare Pharmaceutical Group Annual Report 2023
| 设项目》) completed its independent acceptance in August 2022. Livzon Pharmaceutical Factory updated the pollutant discharge license in June 2022, with a validity period from 9 June 2022 to 8 June 2027. The Environmental Impact Report on the Construction Project of Recombinant Human Follicle Stimulating Hormone Injection Pen Production Line (《重组人促卵泡素注射笔生产线建设项目环境影响報告书》) was approved on 11 July 2023. Pharmaceutical Factory updated the pollutant discharge permit in August 2023, which is valid from 18 August 2023 to 17 August 2028. The New Boilers and Boiler Low-nitrogen Transformation Project of Livzon Group Livzon Pharmaceutical Factory (《丽珠集团丽珠制药厂新增锅炉及锅炉低氮改造项目》) passed the independent acceptance in December 2023. | |
| Ningxia Pharmaceutical | The renewal application for the discharge license was completed in December 2020 and the license is valid until 28 December 2025. The environmental protection inspection for completion of doramectin expansion project was completed in March 2021. In September 2021, expert review and government filing were completed for the environmental impact evaluation of project work upon optimized disposal of the company’s solid waste. The company applied to change its pollutant discharge permit and passed the review of the Pingluo Branch of Shizuishan Municipal Ecology and Environment Bureau in December 2021. In December 2022, the company passed the identification of Shizuishan municipal green plant and prepared an environmental impact assessment report on the increase of phenylalanine production capacity (currently under review by experts). The company reported to the national pollution discharge license management information platform (pollution discharge implementation report) and the ecological environment statistics business system (enterprise environment statistics report) quarterly. In 2022, the company also completed the second round of rectification of non-compliance under the supervision of central environmental protection authorities, independent acceptance and government acceptance. The company strictly enforced the “Three Simultaneous” system to implement the environmentalprotection measures as required by environmental assessment, and the environmental protection facilities were innormal operation. In 2023, the main achievements were as follows: 1. the recognition of “Green Factory” at the Ningxia Autonomous Region level was obtained; 2. The environmental compliance procedures related to the use of phenylalaninemother liquor and concentrated waste liquid of lovastatin as organic fertilizer raw materials were completed; 3. Theidentification of hazardous waste such as sludge and lovastatin slag was completed; 4. The phenylalanine productioncapacity increase project（苯丙产能增加项目）was completed and accepted for environmental protection; 5. Theproject approval and environmental assessment procedures for tryptophan and isoleucine project（色氨酸异亮氨酸项目）was completed. |
| Jiaozuo Hecheng | The Environmental Impact Assessment Report on Current Status of Jiaozuo Livzon Hecheng Pharmaceutical Manufacturing Co., Ltd (《焦作丽珠合成制药有限公司现状环境影响评估报告》) was approved and filed on 15 December2016, the “Three Simultaneous” system was strictly enforced, the environmental protection measures as required byenvironmental assessment were implemented and the environmental protection facilities were in normal operation. Theapplication for the national pollutant discharge license was completed in December 2020, the environmental protection policies were strictly enforced and various management tasks were implemented. The pollutant discharge license was changed in December 2023 and has now been submitted to the Ecological Environment Bureau for review. In 2023, the “one enterprise, one policy” plan for Jiaozuo Hecheng, a VOCs discharge enterprise, was formulated in accordance with the Summer Ozone Pollution Prevention and Control Action Plan (《夏季臭氧污染防治攻坚战行动方案》). In accordance with the Notice Requirements on Conducting Special Enforcement Inspections for Enterprises in Volatile Organic Compounds Industry (《省厅2023年关于开展涉挥发性有机物行业企业专项执法检查的通知要求》) by provincial department in 2023, comprehensively self-inspection VOCs inspections were carried out, a list of issues was compiled and active rectifications were made. In March 2023, the current round of clean production audit work was kicked off, and the final meeting was held on 4 January 2024, completing the clean production audit. |
| Shanghai Livzon | The company passed the environmental assessment review of the Leuprorelin Acetate Microspheres for Injection Industrialization Project (《注射用醋酸亮丙瑞林微球产业化项目》) on 11 October 2010, obtained the approval for the Environmental Impact Report on Supporting Engineering and Laboratory Projects of Shanghai Livzon Pharmaceutical Manufacturing Co., Ltd. (《上海丽珠制药有限公司配套工程及实验室项目环境影响报告》) on 10 January 2020, and completed the construction and passed the acceptance inspection in September 2020. The renovation of powder injection |
Joincare Pharmaceutical Group Annual Report 2023
| workshop 2 had completed in 2022, with the Environmental Impact Statement of Construction Project (《建设项目环境影响报告表》) filed in October 2022 and the Approval Opinion of Shanghai Pudong New Area Ecological Environment Bureau on the Environmental Impact Statement of the Reconstruction and Expansion Project of Shanghai Livzon Pharmaceutical Manufacturing Co., Ltd. (《上海市浦东新区生态环境局关于上海丽珠制药有限公司改扩建項目环境影响报告告表的审批意见》) obtained in March 2023. The company strictly implements the “Three Simultaneous” system and takes environmental protection measures required for environmental assessment, with the environmental protection facilities under normal operation. The new Pollutant Discharge License was obtained on 30 May 2023 with a validity period until 29 May 2028. | |
| Livzon MAB | The Environmental Impact Assessment Report on the V01 Industrialization Project of Livzon Group Livzon Pharmaceutical Factory (《关于丽珠集团丽珠制药厂V01产业化项目环境影响评价报告书》) was approved in April 2021; the Environmental Impact Report Form for the Expansion Preparation Line 3 of the Large-scale Production Capacity Building Project of Recombinant SARS-CoV-2 Fusion Protein Vaccine（重组新型冠状病毒融合蛋白疫苗）was approved in March 2022. The company updated the pollutant discharge permit in September 2023. The company strictly enforced the “Three Simultaneous” system to implement the environmental protection measures as required by environmental assessment. |
| Livzon Diagnostics | Livzon Diagnostics prepared the Environmental Impact Report on Engineering and Production Projects of the New Plant (《新厂工程及生产项目环境影响报告书》) in 2017, which was approved by Zhuhai Environmental Protection Bureau on 6 February 2018. The environmental protection acceptance inspection was completed in June 2018. In 2020, according to the “Catalogue of Classified Management of Discharge Permit for Stationary Pollution Sources” (《固定污染源排污许可分类管理名录》) (2019 version) and the Measures for Pollutant Discharge Permitting Administration (Trial Implementation) (《排污许可管理办法（试行）》), the pollutant discharge license was canceled and the pollutant discharge registration and filling were carried out. In 2023, the Environmental Impact Report Form for Expansion Construction Project (《扩建设项目环境影响报告表》) was prepared in 2023 and approved by Zhuhai Ecological Environment Bureau in May 2023. Environmental acceptance was completed in December 2023. Clean production certification was completed in 2023. |
4. Environmental emergency contingency plan
√ Applicable □ N/A
| Name of company or subsidiary | Environmental emergency contingency plan |
| Jiaozuo Joincare | Revision of the environmental emergency contingency plan of Jiaozuo Joincare was completed in May 2022 and was filed with the Macun Branch of Ecology and Environment Bureau of Jiaozuo City on 19 May 2022. |
| Taitai Pharmaceutical | The environmental emergency contingency plan of Taitai Pharmaceutical completed review and filing in July 2023. |
| Haibin Pharma | The Environmental Emergency Contingency Plan was revised and filed (File No. 440308-2024-0005-M) in 2023. Trainings and drills on emergency responses were provided for employees to improve the capability of the Company for dealing with environmental emergencies. In 2023, a total of five emergency drills for environmental emergencies were held. |
| Xinxiang Haibin | The Environmental Emergency Contingency Plan of Xinxiang Haibin Pharmaceutical Co., Ltd. was filed with the Ecology and Environment Bureau on 23 August 2022 (File No. 410771-2022-006-M). |
| Fuzhou Fuxing | Pursuant to relevant provisions and requirements, the Environmental Emergency Contingency Plan of Livzon Group Fuzhou Fuxing Pharmaceutical Co., Ltd. (《丽珠集团福州福兴医药有限公司突发环境事件应急预案》) was prepared based on the principles of “Focus on Prevention, Aim at Self-rescue, Centralized Command and Division of Responsibility（预防为主、自救为主、统一指挥、分工负责）”, for which filing application was accepted on 15 April 2022 (File No.: 350181-2022-024-M). After environmental emergency incidents occur, immediate, quick, effective and orderly emergency rescue actions will be taken to control and prevent accidents and the spread of contamination, protect the surrounding environment effectively and ensure the personal life and property safety of all employees, the company and the nearby communities. In accordance |
Joincare Pharmaceutical Group Annual Report 2023
| with the contents and requirements of such plan, the company provides trainings and drills for its employees to get them well-prepared for environmental emergency incidents, so that rescue actions could be taken in a timely manner and incidents could be controlled effectively in a short period of time in case of any environmental emergency incidents. In June 2023, a comprehensive emergency fire drill for leakage accident in workshop 1 of the second phase was conducted. | |
| Livzon Xinbeijiang | Based on the principles of “Focusing on Prevention, On-alert all the time; Management by Classification, Response by Tiers; Cooperation among Departments, Responsibility by Levels; Scientific Prevention and Efficient Disposal”, Livzon Xinbeijiang entered into the issued Environmental Emergency Contingency Plan of Livzon Group Xinbeijiang Pharmaceutical ManufacturingInc. (《丽珠集团新北江制药股份有限公司突发环境事件应急预案》) (File No.: 441802-2021-0162-H) again on 30 September 2021, which was verified and filed by the Qingyuan Municipal Ecology and Environment Bureau on 22 October 2021. Livzon Xinbeijiang regularly carries out environmental factors and sources of hazards identification training for safety and environmental management personnel of each department every year, and regularly conducts drills on various emergency contingency plan. A company-level environmental emergency contingency drill was conducted in June 2023, which improved the operability thereof, enhanced the performance level of the emergency rescue staff, responsiveness of the rescue team as well as coordination and collaboration of different tasks. |
| Livzon Hecheng | Pursuant to relevant provisions and requirements, the Environmental Emergency Contingency Plan of Zhuhai FTZ Livzon Hecheng Pharmaceutical Manufacturing Co., Ltd. (《珠海保税区丽珠合成制药有限公司突发环境事件应急预案》) was prepared based on the principles of “Focus on Prevention, Aim at Self-rescue, Centralized Command, and Division of Responsibility（预防为主、自救为主、统一指挥、分工负责）”, which has been approved for filing and formally announced with file reference number 440462-2019-001-M. Trainings on emergency events and disposal measures were held regularly for employees to enable implementation of safety measures in a timely, fast, effective and orderly manner to control and prevent the worsening of condition and pollution when encountering any occurrence of environmental emergency cases, so as to alleviate or eliminate the consequences effectively and resume orderly production as soon as possible. |
| Gutian Fuxing | Pursuant to relevant provisions and requirements, the Environmental Emergency Contingency Plan of Gutian Fuxing Pharmaceutical Co., Ltd. (《古田福兴医药有限公司突发环境事件应急预案》) (File No.: 352200-2017-005-L) was prepared based on the principles of “Focus on Prevention, aim at Self-rescue, Centralized Command and Division of Responsibility（预防为主、自救为主、统一指挥、分工负责）”, which was approved in May 2017. The second amendment of the contingency plan was made in June 2020, which passed expert review and completed filing (File No.:350922-2020-002-M). The third amendment of the contingency plan was made in June 2023, which passed expert review and completed filing (File No.: 350922-2023-012-M). According to the plan, the company would conduct an emergency drill for sudden hydrochloric acid leakage on 9 August 2023, and after environmental emergency incidents occur, immediate, quick, effective and orderly emergency rescue actions can be taken to control and prevent accidents and the spread of contamination, protect the surrounding environment effectively and ensure the personal life and property safety of all employees, the company and the nearby communities. In accordance with the contents and requirements of the plan, the company provides trainings for its employees. The company is well-prepared for environmental emergency incidents, so that rescue actions could be taken in a timely manner and incidents could be controlled effectively in a short period of time in case of any environmental emergency incidents. |
| Livzon Limin | The principles of occupational health and safety and the environment administrative system were followed, including occupational protection to ensure health, risk control to ensure safety, prevention and control of pollution to protect the environment, and compliance with discipline and law for continuous improvement. Identification of environmental factors was performed seriously and preventive measures were adopted for significant environmental factors, while the governance of the “Three Wastes” was strengthened to enhance the ability of control over the “Three Wastes” and ensure that the discharge of the “Three Wastes” had reached the discharge standards. The Environmental Emergency Contingency Plan of Livzon Group Limin Pharmaceutical Manufacturing Factory (《丽珠集团利民制药厂突发环境事件应急预案》) (File No.: 440203-2021-009-L) was prepared in accordance with the criteria of the environmental management system and the occupational health and safety administrative system. The plan was issued in May 2021. According to the requirements of the contingency plan, an environmental accident emergency drill was conducted on 24 September 2021, and a specific drill summary was made. Identification of environmental factors and sources of hazards and drills for emergency were conducted internally in the company on a regular basis |
Joincare Pharmaceutical Group Annual Report 2023
| to improve the operability of the contingency plan, enhance the performance level of the emergency rescue staff, responsiveness of the rescue team as well as coordination and collaboration of different tasks. | |
| Livzon Pharmaceutical Factory | Pursuant to relevant provisions, the Environmental Emergency Contingency Plan of Livzon Group Livzon Pharmaceutical Factory (《丽珠集团丽珠制药厂突发环境事件应急预案》) was updated by Pharmaceutical Factory in 2021, and has been approved for filing approval and announced, with the filing number 440404-2021-0212-L. The Pharmaceutical Factory conducted a special emergency response drill for hazardous waste leakage on 16 June 2023, to train the emergency response team and enhance the emergency response and execution abilities of the participants, further clarify the responsibilities and tasks of relevant personnel, improve the emergency linkage mechanism, improve the awareness of risk prevention and the ability of self-rescue and mutual rescue. On 30 October 2023, an on-site emergency drill for alcohol leakage and fire accidents was conducted. Through the drill, the emergency response capabilities of the participants were enhanced, the responsibilities and tasks of the relevant personnel were clarified, and the risk prevention awareness and self-rescue and mutual rescue response capabilities were improved. |
| Ningxia Pharmaceutical | The “Environmental Emergency Contingency Plan of Livzon Group (Ningxia) Pharmaceutical Manufacturing Co., Ltd.” (《丽珠集团（宁夏）制药有限公司突发环境事件应急预案》) was verified, filed and issued in May 2019 (FileNo.: 640221-2019-005-II). Identification of environmental factors and sources of hazards and drills for emergency were conducted internally in the company on a regular basis to improve the operability of the contingency plan, enhance the performance level of the emergency rescue staff, and enhance the responsiveness and coordination of the rescue team in terms of integrated coordination and collaboration capabilities. The Environmental Emergency Contingency Plan was amended in May 2021, and passed expert review and was reviewed by and filed with government environmental department in August 2021 (File No.: 640221-2021-054-H). |
| Jiaozuo Hecheng | The Environmental Emergency Contingency Plan of Jiaozuo Livzon Hecheng Pharmaceutical Manufacturing Co., Ltd. (《焦作丽珠合成制药有限公司突发环境事件应急预案》) was prepared in accordance with the relevant provisions and requirements and based on the principles of “Focusing on Prevention, On-alert all the time; Management by Classification, Response by Tiers, Cooperation among Departments, Responsibility by Levels; Scientific Prevention and Efficient Disposal”. The contingency plan was approved for announcement and filing in April 2021 (File No.: 4108042018005L). The Hazardous Waste Environmental Pollution Emergency Contingency Plan of Jiaozuo Livzon Hecheng Pharmaceutical Manufacturing Co., Ltd. (《焦作丽珠合成制药有限公司危险废物环境污染事故应急预案》) was compiled and was approved for filing in January 2018. Identification of environmental factors and sources of hazards and drills for emergency were conducted internally in the company on a regular basis to improve the operability of the contingency plan, enhance the performance level of the emergency rescue staff, and enhance the responsiveness and coordination of the rescue team in terms of integrated coordination and collaboration capabilities. In 2023, the company newly formulated the Environmental Protection Assessment System (《环保考核制度》), Jiaozuo Livzon EHS Environmental Protection Assessment System (《焦作丽珠EHS环保考核制度》) and Jiaozuo Livzon Potential Safety Hazard Screening Responsibility System (《焦作丽珠隐患排查责任制度》). |
| Shanghai Livzon | In March 2022, the Environmental Emergency Contingency Plan of Shanghai Livzon Pharmaceutical Manufacturing Co., Ltd. (《上海丽珠制药有限公司突发环境事件应急预案》) (File No.: 02-310115-2022-108-L) was filed by the company. The company conducts drills and reviews of the plan every year to improve its emergency response capabilities through regular training on the plan. On 22 May 2023, Shanghai Livzon completed the filing and registration of the General Emergency Response Plan for Work Safety Incidents (《生产安全事故综合应急预案》) (File No. :3101150000002023052200058), in order to improve the emergency response capabilities for production safety accidents through training on the emergency response plan. |
| Livzon MAB | Pursuant to relevant provisions, the Environmental Emergency Contingency Plan of Livzon MAB (《丽珠单抗突发环境事件应急预案》) was prepared by Livzon MAB in 2022. In April 2023, the company conducted an emergency drill for hazardous waste leakage in the hazardous goods warehouse to enhance emergency response capabilities of staff, so as to alleviate or eliminate the impact of the consequences. |
| Livzon Diagnostics | In accordance with relevant regulations, Livzon Diagnostics carried out a risk assessment of environmental emergencies and emergency resources survey in 2021, and prepared the Environmental Emergency Contingency Plan of Zhuhai Livzon Diagnostics Inc. (《珠海丽珠试剂股份有限公司突发环境事件应急预案》) which was approved for filing and announced. Regular training on emergency response and disposal measures was provided to employees to equip them skills of executing safety measures timely, rapidly, effectively and |
Joincare Pharmaceutical Group Annual Report 2023
orderly in environmental emergencies, in order to control and prevent the spread of risk andpollution, reduce or eliminate the impact of the consequences, and resume theproduction as soon as possible.
5. Environmental self-monitoring program
√ Applicable □N/A
| Name of company or subsidiary | Environmental self-monitoring program |
| Jiaozuo Joincare | As required by the self-monitoring program for pollutant discharge licenses, Jiaozuo Joincare developed the 2023 self-monitoring program for wastewater and waste gas at the beginning of the year, and carried out self-monitoring according to the program. Up to the end of the year, Jiaozuo Joincare has completed the self-monitoring for wastewater and waste gas for the year. The company is a key enterprise in terms of soil monitoring, and has completed the annual soil self-monitoring work in August 2023. All control factors are in line with the industrial land control requirements. |
| Taitai Pharmaceutical | Wastewater was monitored once a quarter; boiler exhaust gas and plant boundary noise were monitored once a year; exhaust gases generated from technical process was monitored once half a year; online monitoring facilities of wastewater and boiler exhaust gas were additionally installed and functioning well. |
| Haibin Pharma | A third party is entrusted to conduct regular monitoring strictly in compliance with the relevant national laws and regulations and local requirements and ensure the accuracy, validity and authenticity of the monitoring data. Online wastewater monitoring equipment was installed and connected to environmental monitoring stations at municipal and district levels in accordance with environmental monitoring technical standards. Data was promptly uploaded on the national monitoring platform. |
| Xinxiang Haibin | A self-monitoring program was prepared, the annual self-monitoring of exhaust gas, wastewater and soil has been completed throughout the year in accordance with the pollutant discharge license. |
| Fuzhou Fuxing | According to the relevant requirements of the Measures for Self-Monitoring and Information Disclosure by Enterprises subject to Intensive Monitoring and Control of the State (Trial Implementation) (《国家重点监控企业自行监测及信息公开办法（试行）》) and the Self-monitoring Technology Guidelines for Pollution Sources–Pharmaceutical Industry Fermentation Products Category (《排污单位自行监测技术指南发酵类制药工业》) (HJ 882-2017), the company has completed the establishment of the self-monitoring program based on its own situation in a timely manner and made the program available to the public after being examined by and filed with Fuqing Environment Protection Bureau and Fuzhou Environment Protection Bureau. The analysis methods of the monitoring program comply with the national environmental monitoring technical standards and methods; the monitoring and analysis instruments have been examined and calibrated in strict compliance with the relevant national requirements; the automated monitoring equipment has been installed in accordance with the requirement of environmental assessment technical standards, which are connected to relevant environmental protection authorities and have passed the inspection and acceptance of the relevant environmental protection authorities. The automated monitoring equipment has been functioning properly and the monitoring information is accurate, valid and authentic. In May and October 2023, the works on leakage detection and repair (LDAR) of volatile organic compounds (VOCs) for the first and second half of the year were completed respectively. Information publicity website: http://wryfb.fjemc.org.cn. |
| Livzon Xinbeijiang | According to the relevant requirements of the Measures for Self-Monitoring and Information Disclosure by Enterprises subject to Intensive Monitoring and Control of the State (Trial Implementation) (《国家重点监控企业自行监测及信息公开办法（试行）》), the company has completed the establishment of the self-monitoring program based on its own situation in a timely manner and made the program available to the public after being examined by and filed with Qingyuan Environment Protection Bureau. The analysis methods of the monitoring program comply with the national environmental monitoring technical standards and methods; the monitoring and analysis instruments have been examined and calibrated in strict compliance with the relevant national requirements. The automated monitoring equipment for wastewater (COD, ammonia nitrogen, pH, flow) and waste gas (non-methane hydrocarbons) has been installed in accordance with the requirement of national regulations and environmental assessment technical standards, and the connection between online information and national development platform and Qingyuan municipal platform has been completed. Online monitoring equipment for wastewater and waste gas has passed the inspection and acceptance. The automated monitoring equipment has been functioning properly and the monitoring information is accurate, valid and authentic. In accordance with the requirements of the specification, a qualified third party is hired to conduct LDAR every |
Joincare Pharmaceutical Group Annual Report 2023
| six months for workshops that use VOCs emission. Xinbeijiang Pharma entrusts a qualified professional third-party testing company to test the wastewater, waste gas and noise in the plant area every year in accordance with the project and frequency requirements of the self-monitoring program, and the test results in 2023 are up to standard. | |
| Livzon Hecheng | Through self-monitoring, the requirements under the Technical Specification for Application and Issuance of Pollutant Permit Pharmacy Industry–Active Pharmaceutical Ingredient Manufacturing (《排污许可证申请与核发技术规范制药工业－原料药制造》) (HJ858.1-2017) were strictly implemented, and the monitoring and analysis instruments were examined and calibrated in strict compliance with relevant provisions. The automated monitoring equipment was installed in accordance with the requirements of environmental assessment technical standards, while online monitoring equipment for non-methane hydrocarbons, COD, ammonia nitrogen and pH level were installed and connected with the national development platform as required. In 2022, a third party was entrusted to conduct LDAR inspection, discharge outlet inspection, factory boundary noise monitoring and soil inspection on a regular basis, and the inspection results were all up to the standard. |
| Gutian Fuxing | According to the relevant requirements of the Measures for Self-Monitoring and Information Disclosure by Enterprises subject to Intensive Monitoring and Control of the State (Trial Implementation) (《国家重点监控企业自行监测及信息公开办法（试行）》), the company has completed the establishment of the self-monitoring program based on its own situation in a timely manner and made the program available to the public after being examined by and filed with Ningde Ecology and Environment Bureau and Ningde Gutian Ecology and Environment Bureau. The analysis methods of the monitoring program comply with the national environmental monitoring technical standards and methods; the monitoring and analysis instruments have been examined and calibrated in strict compliance with the relevant national requirements; the automated monitoring equipment has been installed in accordance with the requirements of environmental assessment technical standards, connected to the network of competent environmental protection authorities and passed the acceptance inspection conducted by the competent environmental protection authorities. The automated monitoring equipment was sound, and the monitoring information was accurate, valid and authentic. In May and October 2023, a qualified third party was engaged on two occasions to complete the leakage detection and repair (LDAR) work of volatile organic compounds and relevant reports were obtained. Soil and groundwater self-monitoring was completed in November 2023. The monitoring results was recorded in the Qinqing service platform（亲清服务平台）. Information publicity website: http://wryfb.fjemc.org.cn |
| Livzon Limin | An entity with national qualification on inspection was engaged to conduct monitoring strictly in compliance with the relevant national laws and regulations and standards. By considering its own specific conditions, the company appointed the inspection party to carry out water pollutant detection monitoring every quarter, boiler waste gas monitoring every month and R&D Center VOCs waste gas monitoring every six months, each time the monitoring would be conducted strictly in compliance with the relevant national requirements to ensure the accuracy, validity and authenticity of the monitoring data. The online monitoring equipment for COD and ammonia nitrogen in water passed the acceptance inspection and the equipment was put into operation in January 2021, and it will perform monitoring every 2 hours. Data should be completed and filed to the Pollutant Source Sharing Data Platform of the Shaoguan Municipal Ecology and Environment Bureau on a timely basis, and the relevant data would be announced to the public after being reviewed by the Shaoguan Municipal Ecology and Environment Bureau. |
| Livzon Pharmaceutical Factory | Inspection party with national qualification on inspection was engaged to conduct monitoring strictly in compliance with the relevant national laws and regulations and standards. By considering its own specific conditions, the company appointed the inspection party to carry out monitoring on wastewater and waste gas every month, each time the monitoring would be conducted strictly in compliance with the relevant national requirements to ensure the accuracy, validity and authenticity of the monitoring data. The installation and commissioning of the online sewage monitoring equipment was completed and it was put into use at the beginning of 2021. All test indicators were normal in 2023. |
| Ningxia Pharmaceutical | The company formulated the self-monitoring program for 2022, which was reviewed by and filed with Shizuishan Municipal Ecology and Environment Bureau. Monthly and quarterly monitoring was carried out strictly in accordance with the requirements of the program, which focused primarily on organized air emissions, air emissions from boilers, wastewater, underground water, soil, diffusive environmental air, noise and recycled water TOC at plant boundary. The monitoring results would be announced to the public through the System of National Pollution Sources Monitoring Information Management and Sharing (《全国污染源监测数据管理与共享系統》) and the System of Self-monitoring Information Open Platform for Enterprises in Shizuishan (《石嘴山市企业自行监测信息公开平台系統》). From September 2023, in accordance with the requirements of the Environmental Protection Bureau, the monthly detection of heavy metal pollution factors in the exhaust gas of hazardous waste |
Joincare Pharmaceutical Group Annual Report 2023
| from boiler incineration has been increased. The leakage detection and repair (LDAR) work of volatile organic compounds was carried out. The automated monitoring equipment was passed the inspection and acceptance conducted by the competent environmental protection authority and connected to the network of the competent environmental protection authority. The automated monitoring equipment was sound, and the monitoring data was accurate, valid and authentic. | |
| Jiaozuo Hecheng | According to the relevant requirements of the Measures for Self-Monitoring and Information Disclosure by Enterprises subject to Intensive Monitoring and Control of the State (Trial Implementation) (《国家重点监控企业自行监测及信息公开办法（试行）》), the company implemented and completed the self-monitoring program based on its own situation in a timely manner and made the program available to the public after being examined by and filed with relevant competent environmental protection authorities. The analysis methods of the monitoring program comply with the national environmental monitoring technical standards and methods. The monitoring and analysis instruments have been examined and calibrated in strict compliance with the relevant national requirements. The leakage detection and repair (LDAR) of volatile organic compounds was completed in November 2023. At the request of Livzon Group, the leakage detection of natural gas pipelines was also carried out, and a test report was issued. The inspection of equipment and facilities such as solvent pipes and flanges in the workshop was conducted and maintenance and rectification were carried out on the places where there was leakage. According to the requirements of environmental testing technical specifications, the company has installed online automatic sewage monitoring equipment, and also installed online monitoring equipment for COD, ammonia nitrogen, pH value, flow rate and total nitrogen, which were connected to the Guofa platform（国发平台）as required. The company has installed non-methane hydrocarbon online monitoring equipment for waste gas. The company carried out regular monitoring in strict compliance with the requirements of the established self-testing scheme every year, which focused primarily on organized emissions of waste gas, wastewater, diffusive environmental air and noise at plant boundary. |
| Shanghai Livzon | In accordance with the relevant requirements of the Self-Monitoring Technology Guidelines for Pollution Sources– General Rule (《排污单位自行监测技术指南总则》) (HJ 819-2017) and the pollutant discharge license, the company organized self-monitoring and information disclosure of the pollutants it has discharged, and formulated the self-monitoring program. In 2022, the company monitors main air emission outlets once a month, common discharge outlets once half a year, noise once every quarter and wastewater once a month. The monitoring items and frequency shall meet the requirements of the pollutant discharge license. The other three enterprises in the park and the third-party sewage treatment company in the park enter into an agreement to install an online monitoring comparator at the main discharge outlet for effective monitoring of sewage discharge. |
| Livzon MAB | The company entrusted an agency with national testing qualifications to carry out monitoring in strict compliance with relevant national laws, regulations and standards. By considering its own specific conditions, the company entrusted the inspection party to carry out monitoring on wastewater and waste gas on a regular basis in accordance with the requirements of the implementation plan of the pollutant discharge permit, and each time the monitoring was conducted strictly in compliance with the relevant national requirements to ensure the accuracy, validity and authenticity of the monitoring data. |
| Livzon Diagnostics | Wastewater: An agency with national testing qualifications was entrusted to carry out monitoring in strict compliance with relevant national laws, regulations and standards. The testing agency conducts quarterly inspections on water quality indicators such as chemical oxygen demand, ammonia nitrogen and suspended solids in strict accordance with the relevant national regulations to ensure the data collected from daily monitoring is accurate, valid, true, and meets the emission standards. Waste gas and noise: An inspection of noise and waste gas at the plant boundary is undertaken annually to ensure the monitoring data is accurate, valid, true, and meets the emission standards. |
6. Administrative penalties imposed for environmental issues during the Reporting Period
□ Applicable √ N/A
7. Other environmental information to be disclosed
√ Applicable □N/A
In January 2023, Jiaozuo Joincare disclosed its relevant environmental information in 2023according to the requirements of the Measures for the Administration of the Law-based Disclosureof Environmental Information by Enterprises (《企业环境信息依法披露管理办法》).
Joincare Pharmaceutical Group Annual Report 2023
The relevant environmental information was disclosed on the National Pollutant Discharge PermitManagement Information Platform the National Pollution Source Monitoring Data Managementand Sharing Platform. The annual environmental information disclosure report was prepared on theGreen Development Service Platform of the Department of Ecology and Environment ofGuangdong Province.
(II) Statement on environmental protection measures of companies except for key pollutantdischarge units
√ Applicable □N/A
The rest subsidiaries of the Company strictly implemented and obeyed the Environmental ProtectionLaw of the People’s Republic of China, Cleaner Production Law of the People’s Republic of Chinaand other environmental protection and safe production laws and regulations. They constantlyincreased investment in environmental protection, continuously invested in energy conservation andconsumption reduction projects, actively promoted cleaner production, improved comprehensiveutilization efficiency of resources, and reduced and avoided pollutants so as to ensure mental andphysical health of employees and the coordinated and sustainable development of economic,environmental and social benefits.
1. Administrative penalties imposed for environmental issues
□ Applicable √ N/A
2. Refer to other environmental information disclosed by key pollutant discharge units
□ Applicable √ N/A
3. Reason for non-disclosure of other relavant environmental information
□ Applicable √ N/A
(III) Relevant information contributing to ecological protection, pollution prevention andcontrol, and fulfillment of environmental responsibilities
√ Applicable □N/A
| Name of company or subsidiary | Relevant information contributing to ecological protection, pollution prevention and control, and fulfillment of environmental responsibilities |
| Jiaozuo Joincare | LDAR leak detection and repair for the year 2023 was completed. Self-monitoring of soil and groundwater, as well as detection and treatment of hidden hazards for the year 2023 were completed. Carbon emission verification for the year 2022 was completed. |
| Taitai Pharmaceutical | The establishment of environmental safety standardization and the standardized management of hazardous waste were carried out as required by the Municipal Department of Ecology and Environment. |
| Haibin Pharma | The company carried out LDAR detection twice, to timely repair leakage points and reduce unorganized emission of VOCs. |
| Xinxiang Haibin | The company carried out LDAR leak detection, submit environmental protection commitment to the competent authority and purchased environmental pollution liability insurance for the company. |
| Joincare Haibin | 1. The company conducted regular environmental monitoring and disclosed the monitoring results in a timely manner; 2. The company has formulated an environmental protection plan to define pollutant emission standards and related environmental protection measures, as well as an environmental emergency plan to respond to potential environmental accidents; 3. The company implemented cleaner production; 4. The company strengthened the environmental education for employees to increase their attention to environmental protection. |
Joincare Pharmaceutical Group Annual Report 2023
| Fuzhou Fuxing | Two rounds of LDAR detection and repair were completed to reduce unorganized emission of VOCs; construction of phase II (Paromomycin, Telavancin, Pentostatin, Teicoplanin and Kanamycin Monosulfate), phase III (Pasiniazid and Polymyxin B), stage II (Emodepside, Dalbavancin and Moxidectin) and stage III (Afoxolaner, Fluralaner, Cyclosporine and Selamectin) were completed and the acceptance inspection on environmental protection was passed in 2023. The environmental credit evaluation was completed, and the company was rated as an environmentally credible enterprise. The monthly and quarterly self-monitoring on waste water, waste gas and noise was completed as required. The detection results met the emission standards. The self-monitoring of soil and groundwater was completed. The annual maintenance on the equipment for RTO exhaust was completed to ensure its safe operation and the emission of exhaust gas within the emission standards. Qualified companies were engaged for the compliant disposal of hazardous waste to reduce the risk of environmental pollution. |
| Livzon Xinbeijiang | 1. Two rounds of LDAR leak detection and repair were completed as required to reduce unorganized emission of VOCs; 2. A series of noise control and improvement measures, such as installing soundproof glass in the louvers on 3/F of Workshop II of Fermentation to block the fermentation and stirring noises and using sound-absorbing cotton panels to surround the MVR to block the noise from the operation of the MVR; other equipment with loud noises in the factory has been surrounded by sound-absorbing cotton panels to reduce noise. 3. The company sorted out the pretreatment pipelines of the sewage station and reinstalled the pipelines to avoid wastewater leakage; 4. Each of the second refinery division and the second fermentation division added a waste gas treatment spray tower to enhance the treatment of exhaust gas and reduce the emission of exhaust gas pollutants. 5. The self-monitoring plan for the year was completed and the results of waste water, exhaust gas and noise met the emission standards. 6. A qualified third party is entrusted to dispose of the waste in compliance with laws and regulations, with the compliant disposal rate of 100%. |
| Livzon Hecheng | Four rounds of LDAR detection and repair were completed in 2023 to reduce unorganized emission of VOCs; The installation and commissioning of the new equipment for RTO exhaust was completed, and the equipment has put into use, so that one of the new and existing equipment for RTO exhaust will be under use while the other will stand by to ensure its safe operation and the emission of exhaust gas within the emission standards; replacement and upgrading of treatment facilities for exhaust gases generated from technical processes of the refining workshop and 103 workshop were completed; waste water treatment systems were under stable operation and the discharge was within the emission standards; qualified units were entrusted to treat hazardous waste with a compliant treatment rate of 100%. The self-monitoring program was completed and environmental responsibilities were fulfilled as required. In 2023, the company was rated as a green factory by the Ministry of Industry and Information Technology. |
| Gutian Fuxing | Volatile organic matter leak detection and repair (LDAR) for 2023 was completed and a report was obtained; cover and sealing were added to pools with high concentration and primary sedimentation pools for sewage treatment and waste gas was collected and treated so as to avoid odor emit; HV frame was replaced in the sewage treatment workshop; water content of sludge was reduced; total volume of sludge was reduced; sludge generated was entrusted to qualified units for treatment; the collection, recovery, treatment of VOCs were completed and online monitoring facilities was installed and put into operation to reduce the random emission of VOCs; and the entrusted testing of waste water, waste gas, soil and groundwater for 2023 was completed, with the results showing they all met standards. The construction of the 12-tonne biomass boiler and the upgrading and reconstruction of boiler tail gas treatment facilities were completed. The efficient exhaust gas treatment facilities with “SNCR denitration + cyclone dust removal + dry desulfurization + cloth bag dust removal + wet desulfurization” were adopted. Hazardous waste was entrusted to qualified companies for compliant treatment to reduce the risk of environmental pollution. |
| Livzon Limin | 1. Pollutants were discharged according to the standards in the pollution discharge license and the annual self-monitoring of pollution discharge plan was formulated; a third-party environmental detection company was entrusted to conduct regular environmental test on the |
Joincare Pharmaceutical Group Annual Report 2023
| factory. Test results showed that there was no excessive discharge for the period of January to December 2023; 2. The measures on energy conservation and emission reduction were formulated according to ESG objectives in 2023; 3. Facilities and equipment at waste water treatment stations were regularly maintained; 4. Post-treated waste water was used for watering flowers, trees and grass in the factory in three lines. The recycling of waste water in 2023 was 2,392 tons; 5. Soil testing and underground water testing were carried out on hazardous waste warehouses and the test results were in line with the standards; 6. Identification and updating of environmental factors were carried out in the whole factory. A total of 4,304 environmental factors were identified, including 3,442 general environmental factors and 862 key environmental factors; 7. Argumentation on the comprehensive use of waste alcohol was carried out and it will be recycled and reused in waste water treatment stations to improve the treatment effect of waste water. The fees on supplementing carbon resources at waste water treatment stations were approximately RMB0.1482 million each year and the fees on the treatment of waste alcohol at TCM workshops I, II and III were approximately RMB35.91 thousand. The savings in relevant expenses were approximately RMB0.18411 million for the whole year. | |
| Livzon Pharmaceutical Factory | Livzon Pharmaceutical Factory effectively collected and treated the “Three Wastes”. For wastewater: an investment of over RMB10 million was made for phase I and phase II sewage treatment station with a designed processing capacity of 1,000t/d, which adopted the CASS process for phase I and the A/O process for phase II, and the indicators of treated sewage were about 50% of standard limit, which was discharged through the municipal pipeline network into sewage treatment plants. For waste gas: currently, the company uses purchased steam and takes the boilers as backups, greatly reducing the emission of exhaust gas (sulfur dioxide and nitrogen oxides). The exhaust gas from the wastewater station is treated by a biological deodorization tower, which is a combined odor treatment equipment and consists of three areas, namely biochemical area, physical and chemical area and adsorption area. Biological deodorization in the biochemical area mainly uses microorganisms to remove odor, where odorous substances are transformed through the physiological metabolism of microorganisms. As such, the target pollutants can be effectively decomposed and removed to achieve the control of exhaust gas. |
| Ningxia Pharmaceutical | I. Optimization and improvement of equipment and facilities: The company suspended the use of the waste water treatment system of the former Xinbeijiang to reduce sources of odor gas; conducted comprehensive washing and maintenance of the spraying towers of the current 9 sets (30) exhaust gas treatment facilities; replaced DN300 drainage pipes with a length of nearly 1,000 meters; resealed the water-sealing groove of the cover plate of the sedimentation tank, replaced the original fan with air collection volume of 3000m?/h with a fan with air collection volume of 10000m?/h, and changed the DN80 collection pipes with DN200 ones; and added a new set of waste gas collection facility in the mud press room, which include a 100-meter DN600 collection pipe, a fan with air collection volume of 35,000m?/h and other supporting facilities. II. Compliance procedures: The company obtained the recognition as a green factory from Ningxia Hui Autonomous Region; obtained the rating as a “green card” enterprise in the appraisal on the environment and credit and enterprises in Ningxia Hui Autonomous Region for 2023; obtained the honor of an outstanding enterprise in pollutants treatment in Pingluo county in 2022; entrusted a third party to conduct repair, maintenance and operation of online monitoring equipment on VOCs in the exhaust gas from the RTO; completed LDAR detection and repair as required; and completed the standardized system reports relating to self-inspection, environmental statistics, pollution discharge permits, and new sources of chemical substance pollution. The company has completed: the environmental compliance procedures related to phenylalanine mother liquor and lovastatin concentrated waste liquid as raw materials of organic fertilizers; the hazardous waste identification of sludge and lovastatin bacteria residue; the environmental acceptance upon completion for the phenylalanine production capacity expansion project; and the project establishment and environmental impact assessment procedures for tryptophan and isoleucine project. |
| Jiaozuo Hecheng | The “Three Wastes” were collected and treated effectively in strict compliance with the “Three Simultaneous” system. The designed sewage treatment capacity was 3,000t/d, the treatment process of “hydrolytic acidification tank + UASB + aerobic pool + materialized treatment” was adopted, the treated wastewater would be discharged through the municipal pipeline network |
Joincare Pharmaceutical Group Annual Report 2023
| into the sewage treatment plant of Xiuwu Branch of Kangda Water Co., Ltd. (康达水务有限公司修武分公司). The sewage treatment facilities were under normal operation with compliant discharge. In 2023, an operation and maintenance contract in relation to online continuous monitoring system for water quality was signed with Jiaozuo Lansheng Environmental Technology Service Co., Ltd. (焦作市蓝晟环保技术服务有限公司). Exhaust gas: dichloro film equipment was added in the recycling stage in 2023 and exhaust gas was emitted after treatment and meeting the standards; two techniques, namely “spraying + activated carbon + spraying + RTO incinerator equipment” and “-20℃ condensation + dichloro films + spraying + activated carbon + spraying + RTO incinerator equipment”, were adopted to conduct collection and treatment of exhaust gas from processes in production areas and achieve emission under standards. Solid waste and hazardous waste would be stored in the hazardous waste station constructed in compliance with the requirements of “Three Protections” (Lintection against leaks, erosion and rain) according to the requirements under the (Pilot) Guidelines for Standardized Management of Hazardous Waste in Henan Province (《河南省危险废物规范化管理工作指南(试行)》) for hazardous waste. In 2023, the company entered into hazardous waste disposal agreements with qualified companies including Anyang Zhongdan Environmental Protection Technology Co., Ltd. (安阳中丹环保科技有限公司), Luoyang Dezheng Waste Resources Recycling Co., Ltd. (洛阳德正废弃资源再利用有限公司) and Qinyang Jinyu Jidong Environmental Protection Technology Co., Ltd. (沁阳金隅冀东环保科技有限公司). A total of 14.38 tons of hazardous waste was generated in 2023. Other general solid waste was disposed of in compliance with relevant requirements, with a total of 465.7 tons in 2023. In January 2023, the company entered into a self-monitoring and automatic monitoring equipment comparison contract with Henan Chenjie Inspection Technology Co., Ltd. (河南晨颉检验技术有限公司) to monitor the discharge outlets of the Company on a regular basis. The Leak Detection and Repair (LDAR) work was completed in November 2023. The leak detection for natural gas pipeline was also conducted according to the requirements of Livzon Group, and a qualified test report was issued. | |
| Shanghai Livzon | The company has completed the Filing and Registration of the Contingency Plan for Emergent Environmental Incidents; completed the VOCs emission reduction milestone of “one plan for one factory” in accordance with the plan; discharged pollutants in strict accordance with the Sewage Discharge Permit System obtained, formulated the annual emission self-monitoring programme at the beginning of the year and implemented emission self-monitoring according to the programme, and completed the annual implementation report of the emission permits without any violations of laws or regulations. Meanwhile, we strengthened the daily supervision of the operation of the waste gas treatment facilities and sewage treatment stations, and entrusted a third party to test the emissions of waste gas and sewage every month to ensure the effective operation of the equipment and facilities. The company passed the on-site review of the Level 3 safety standardization by the expert group. The safety facilities, occupational disease protection facilities and pollution prevention facilities of the “Preparation Line 3 and Assembly Line 2 Purification Plant and Utility System” project were designed, constructed and put into production and use at the same time as the workshop renovation project. In order to reduce the emission concentration of exhaust gas and reduce the emission of VOCs, double activated carbon was added and installed to exhaust funnel 4 and it can reduce the emission concentration of exhaust gas and reduce the emission of VOCs after one more treatment. Water purifiers were replaced to improve the efficiency of making water with purifiers and effectively reduce wastewater discharge. |
| Livzon MAB | The company entrusted a qualified third party CTI to test the waste water and waste gas according to the requirements of the pollutant discharge license, and entrusted a qualified entity, Dongjiang Environmental-protection Doumen Yongxingsheng Environmental-protection, Co., Ltd. of Dongjiang Environmental Protection (东江环保斗门永兴盛环保公司), to dispose of hazardous wastes in accordance with the regulations, so as to reduce the risk of environmental pollution. The company carried out the environmental impact assessment of the new workshop according to the requirements of “Three Simultaneities” for construction of workshops newly built, rebuilt and expanded. The production and R&D sewage was uniformly discharged into the sewage station of Livzon Pharmaceutical Factory in Livzon Industrial Park for treatment and discharge up to the standard. |
Joincare Pharmaceutical Group Annual Report 2023
| Livzon Diagnostics | Waste water: an entity with national qualification on inspection was engaged to conduct monitoring strictly in compliance with the relevant national laws and regulations and standards. The testing party carried out routine environmental monitoring on chemical oxygen demand, ammonia nitrogen, suspended solids and other indicators on water quality. The testing is carried out on a quarterly basis with every monitoring strictly in compliance with the relevant national requirements to ensure the accuracy, validity and authenticity of the monitoring data and meeting the discharge standards. Exhaust gas and noise: an entity was engaged to conducting testing on exhaust gas and noise at the factory boundary each year and the monitoring data was accurate, valid and authentic and met the emission standards. Solid waste (including hazardous waste): Solid waste was collected in compliance with regulations, and a qualified third party was engaged for disposal. |
(IV) Measures Taken and Effects on Reducing Carbon Emissions During the ReportingPeriod
| Whether to take carbon reduction measures | Yes |
| Equivalent of carbon emission reduction (unit: ton) | 4,612.70 |
| Types of carbon emission reduction measures (e.g. use of clean energy for power generation, use of carbon reduction technologies in production, research and development of new products that contribute to carbon reduction, etc.) | Use of "clean energy for power generation", adopt carbon emission reduction technologies in production" and other measures, as detailed in "Specific descriptions" below. |
Specific descriptions
√ Applicable □N/A
| Name of company or subsidiary | Measures taken and effects on reducing carbon emissions during the Reporting Period |
| Jiaozuo Joincare | In 2023, Jiaozuo Joincare’s “4000m?/d biogas treatment project”, a project under construction, utilized the purified biogas, which was generated from the anaerobic work section of the industrial wastewater workshop, as the incineration heat source of the RTO equipment, and the project is expected to be put into operation in March 2024. The total investment of the project is about RMB1.79 million. After the completion of the project, it can meet the heat source demand of two RTOs from Jiaozuo Joincare and Jiaozuo Livzon. The consumption of natural gas for RTOs is about 1,000m?/d. The remaining natural gas will be used to burn hot water to replace steam, which can save 10.3m?/d of steam. It is expected that RMB1.507 million can be saved every year by using biogas instead of natural gas, and RMB451,000 can be saved every year by using hot water instead of steam, totalling RMB1.958 million can be saved every year. |
| Taitai Pharmaceutical | 1. Lighting facilities in the park were replaced with LED lamps in response to the call of the municipal government; 2. Employees were organized to learn energy conservation knowledge so as to achieve energy conservation and emission reduction in routine work by turning off lamps and machines timely. |
| Haibin Pharma | 1. Replacing some motors with second-level energy-efficient motors can save 11.3 tons of standard coal equivalent (tce) per year. 2. Retrofitting the ethylene glycol pump with a variable frequency drive (VFD) to control the motor based on system pressure can reduce motor operating current by approximately 40%. This leads to an annual energy saving of 72,000 kWh. 3. All newly purchased air conditioners are first-level energy-efficient models, contributing to energy savings and emission reduction. |
| Xinxiang Haibin | 1. Solar street lamps were purchased, which are expected to save electricity of 2,1900 kWh per year. 2. Screw vacuum pumps were purchased to replace reciprocating vacuum pumps. |
| Joincare Haibin | 1. The air compressor system was upgraded, with an investment amount of RMB638,000, which can save electricity of 121,000kWh/year, reduce carbon emissions by 70.65tCO2 every year, and save RMB90,800 every year after the project is put into operation; |
Joincare Pharmaceutical Group Annual Report 2023
| 2. A solar hot water system was built on the roof of the dormitory buildings, with an investment amount of RMB168,000, which can save electricity of 443,000kWh/year, reduce carbon emissions by 258.67tCO2 every year, and save RMB332,200 every year after the system put into operation. | |
| Fuzhou Fuxing | Used photovoltaic power generation to reduce power consumption; renovated high-energy consuming pumps for energy conservation to effectively reduce energy consumption; replaced with high-efficiency motor water pumps to save energy consumption; vigorously promoted energy conservation and consumption reduction, and called on employees to realize the concept of “turning off lights, air conditioners and computers before leaving office” during their daily work. |
| Livzon Xinbeijiang | Used photovoltaic power generation to reduce power consumption; used water kinetic energy instead of electric motors to drive the cooling tower fans to reduce the electric energy consumption while ensuring the cooling effect; used LED lights to reduce power consumption, and raising employees’ awareness in power conservation and safety; promoted to set the temperature of the air conditioner to not lower than 26 ?C; promoted green travels, encouraged the use of public transportation when going out to work, and set up shuttle buses to transport employees to and from work thereby reducing the use of private cars. |
| Livzon Hecheng | Maintained and updated chiller units to make more rational use of energy and saved electricity consumption for production through more reasonable production scheduling by the production department; used natural gas as fuel for canteens and boilers; replaced sewage treatment Roots blowers in the environmental protection center with magnetic levitation blowers with an energy saving rate of about 30%, saving about 0.21 million kWh of electricity consumption per year; replaced the ultra-low-nitrogen boiler has increased thermal efficiency by 10%, saved 10 cubic meters of natural gas per ton of steam consumption, and reduced nitrogen oxide emissions by 80%; called on all employees of the factory to respond to electricity conservation, turn off lights and air conditioners before leaving office, and limited the minimum temperature of air conditioners; promoted green travel, encouraged the use of public transportation when going out to work, and set up shuttle buses to transport employees to and from work. |
| Gutian Fuxing | Installed 4 air compressors with a capacity of 130 m3/min to replace the original air compressor with high power consumption to reduce power consumption; replaced one chiller unit to reduce electricity consumption; replaced a 100 m3/min air suspension blower and three 55 KW Roots air compressors to reduce power consumption and on-site noise; called on all employees to “save every drop of water, save every kilowatt of electricity”, so that the lights are turned off and the equipment is powered off before leaving office. |
| Livzon Limin | 1. Installed an online remote automatic data monitoring system in the boiler room to analyze and judge the instantaneous flow rate monitoring of the flowmeter in the boiler room, checked whether the steam traps and exhaust valves in the factory were in sound condition, and thereby reduced the waste of steam. The average steam loss in the public pipelines of the factory was 15.6%. The steam loss was reduced to 11% via the relevant renovation of steam pipelines and it was expected that 1,242 tons of steam could be saved thereby; 2. The steam pipelines in the animal room of the research and development center were re-insulated and the steam traps were remodeled to prevent the occurrence of long-time steam exhaust due to the failure of water valves; 3. In the first and second traditional Chinese medicine extraction workshops, a total of 23 drainage devices were added to all condensate drainage pipelines with steam heating equipment to realize automatic drainage and improve the utilization rate of steam. It was expected that approximately 100 tons of steam could be saved thereby per year; in the first and second traditional Chinese medicine extraction workshops, the cooling method of purified water circulation system was changed from cooling by drinking water to cooling by recycled chilled water in order to reduce the consumption of drinking water. It was expected that the consumption of water could be thereby reduced by approximately 3,000 tons per year; 4. In the first traditional Chinese medicine extraction workshop, the existing n-butanol recovery SOP was improved and refined and the powder collection amount of Panax Notoginsenosides-XST was enhanced with an aim to reduce the unit consumption of n-butanol. Based on a production of 20 batches per year, approximately RMB24,800 could be saved per year. |
| Livzon Pharmaceutical Factory | Carried out low-nitrogen transformation for boilers to reduce nitrogen oxide emissions; reduced operation costs by combining the operation of refrigeration stations, and discontinued P06 large air compressor system when P06 workshop stopped production, and supplied individual equipment with gas through small air compressors, which could save about 15,000 kWh of |
Joincare Pharmaceutical Group Annual Report 2023
| electricity and reduce energy consumption; regularly switched on and off the air conditioners in QC, warehouses and other departments according to their needs, which could save about 700 kWh of electricity per day; further strengthened the energy-saving management of functional departments, and advocated employees to turn off the lights during the lunch break, and encouraged them to turn off the lights and shut down their computers when they leave their seats and the office to save electricity. | |
| Ningxia Pharmaceutical | The project of recovering waste heat from air compressors as heat source to heat water for heating in winter was completed and would be put into operation in winter. It was expected that 5,000 tons of steam could be saved thereby; the high-efficiency and energy-saving transformation of fermentation circulating water pump in workshop 103 was completed, saving 1.00 million kWh of electricity annually; the recycling test of solid waste (slag, sludge) was completed and solid waste would no longer be landfilled when relevant facilities were put into use. |
| Jiaozuo Hecheng | Collected and reused steam condense to reduce steam consumption, so as to reduce carbon emissions; changed the packaging equipment to automatic packaging to improve production efficiency; vigorously promoted energy saving and consumption reduction internally, called on all employees to “save every drop of water, save every kilowatt of electricity”, and uniformly managed the paint in the workshop to eliminate waste; installed additional mirrors behind the steam pipeline drainage valves to observe whether there is steam loss; led the steam condense to the production auxiliary system of the hot water tank and the crystallization tank to reduce the use of steam; changed the lighting in the common areas of the workshop, corridors, etc. to sound– or light-controlled switches and gradually replaced the workshop lighting with LED lights; gradually replaced high energy consuming equipment and facilities in workshops with low energy consuming or automated interlocking devices. |
| Shanghai Livzon | Further strengthened the daily energy-saving management according to the established energy-saving plan, effectively improved the energy-saving awareness of employees through inspection, publicity and other means, and cultivated good habit of saving water and electricity among employees; optimized the peptide splicing process, increased the peptide splicing yield by more than 10%, thus reducing the power consumption per unit of product; transformed the solid preparation workshop into the powder injection workshop which produces less waste and conserves electricity; while comfortable air conditioning unit (cooling) utilized the chilled water unit in the power room, the multi-expansion air conditioning unit was placed outdoors to use air cooling, saving cooling capacity and reducing energy consumption. In order to reduce the air emission concentration and VOCs emissions, double-stage activated carbon was installed to the No. 4 exhaust funnel. After one more step of treatment, both the air emission concentration and the VOCs emissions could be reduced. In order to improve the efficiency of pure water production, the pure water equipment was replaced. |
| Livzon MAB | Formulated energy-saving and emission reduction measures in accordance with the ESG targets of the Company and made reasonable use of recycled wastewater; introduced purchased steam to reduce steam consumption effectively. Effectively improved the energy-saving awareness of employees through inspection, publicity and other means, and cultivated good habit of saving water and electricity among employees; used LED lights to reduce electricity consumption, and encouraged employees to turn off lights and computers to save electricity before leaving office. Set up shuttle buses to transport employees to and from work. |
| Livzon Diagnostics | Entrusted a third party to carry out routine monthly maintenance of sewage treatment facilities to ensure that the wastewater treatment system was functioning properly. The water quality was up to standard, and the discharge did not exceed the limit. Formulated an energy management system to save energy and reduce emissions and strengthened daily energy-saving management to improve the company’s performance in energy saving. |
II. Work on Corporate Social Responsibility(I) Whether to disclose separate corporate social responsibility report, sustainable
development report or ESG report
√Applicable □N/A
Joincare Pharmaceutical Group Annual Report 2023
The Company has separately disclosed its corporate social responsibility report. For details, pleaserefer to the 2023 Corporate Social Responsibility Report of Joincare Pharmaceutical Industry GroupCo., Ltd. disclosed by the Company on the website of Shanghai Stock Exchange (www.sse.com.cn)on 3 April 2024 for details.
(II)Specific situation of work on corporate social responsibilities
√Applicable □N/A
| External donation, public welfare | Quantity/content | Description |
| Total investment (RMB’0,000) | 2,598.46 |
Mainly include investment in public welfareprojects for chronic diseases, industrialassistance, earthquake relief, and natureconservation.
| Including: Funds (RMB’0,000) | 1,976.14 | Mainly include investment in earthquake relief project. |
| Cash converted from materials (RMB’0,000) | 622.32 | Mainly include investment in public welfare projects for chronic diseases. |
| Number of beneficiary (person) | 2,125 | Mainly include projects of low-income chronic disease patients and industrial revitalization. |
Specific description
√Applicable □N/A
The Company is striving to be an explorer in the healthcare industry and insisting on creating ahealthy life driven by technology. The Group pays great attention to its sustainable development,and actively focuses on the internal regulatory environment and external policy guidance.Considering China's 14th Five-Year Plan and the local government's development plan, the Grouphas formulated a CSR strategy and goals adapting to its current business situation. Focusing on“health”, the Group's CSR strategy aims to provide the whole society with high-quality, safe,accessible and affordable medical products and services through the development of its principalbusinesses, while improving the overall strength of the health industry. Meanwhile, the strategy iscommitted to empowering employees and communities, emphasizing environmental protection andpromoting the overall health development in society.The development of enterprises relies on society. Over the years, the Company has conscientiouslyfulfilled its social responsibility, paid taxes according to law, supported social public welfareprojects, and actively assumed its social responsibility for building a harmonious society. At thesame time, the Group was actively creating social value. It realized net pro?t attributable toshareholders of the listed company of RMB1,443 million, generated tax revenues for thegovernment of RMB1,866 million, paid RMB2,460 million in salary to employees, distributeddividends and paid interest worth RMB1,615 million to banks and other creditors, donated fundsand goods totaling RMB25.9846 million to the society, and achieved a social contribution per shareof approximately RMB3.97 for the society in 2023.For our performance of social responsibility, see the 2023 Corporate Social Responsibility Reportof Joincare Pharmaceutical Industry Group Co., Ltd. disclosed by the Company on the website ofShanghai Stock Exchange (www.sse.com.cn) on 3 April 2024 for details.
III. Consolidation and expansion of achievements in poverty alleviation and ruralrevitalization
| Targeted Poverty Alleviation and Rural Revitalization Project | Quantity/content | Description |
| Total investment (RMB’0,000) | 196.11 | Public welfare projects for chronic |
Joincare Pharmaceutical Group Annual Report 2023
| diseases to help rural revitalization | ||
| Including: Funds (RMB’0,000) | 113.00 | Donation of rural revitalization |
| Cash converted from materials (RMB’0,000) | 83.11 | Donation of drugs for chronic diseases |
| Number of beneficiary (person) | 1,710 | Low-income patients with chronic diseases |
| Forms of assistance (such as industrial poverty alleviation, vocational poverty alleviation, educational poverty alleviation, etc. ) | Poverty alleviation through industrial development |
Specific description
√Applicable □N/A
1. Industrial revitalization
The Group fully implements the spirit of the important instructions put forward by the CPC CentralCommittee and the General Secretary. In accordance with the relevant requirements, we haveestablished and implemented the plan of “Astragalus Root（黃芪）Industry Revitalization” andadopted the model of “Company + Base” and “Company + Professional Cooperative”, encouraginglocals to cultivate and process astragalus root and develop the astragalus root industry with referenceto the local conditions to make it a pillar industry for poverty relief in the long-term. The Group willexplore the development of the featured astragalus root industry to achieve poverty elimination andpromote the construction of the “Chinese Medicine Ecological Base”.“Astragalus Root（黄芪）Industry Revitalization” has been in place since 2017. Datong LivzonQiyuan Medicine Co., Ltd.（大同丽珠芪源药材有限公司）(“Datong Livzon”), a subsidiary of theCompany, has established its own planting bases in Hunyuan County of Datong City in ShanxiProvince and Zizhou County of Yulin City in Shaanxi Province, respectively, and in 2023, builtastragalus root planting bases together with 12 cooperatives in Hunyuan County, Tianzhen Countyand Yanggao County of Datong City in Shanxi Province and Yulin District of Shaanxi Province,covering an area of approximately 20,000 mu and supporting a total of 415 people, therebyeffectively promoting the economic development of the corresponding areas in Datong, Shanxi andYulin, Shaanxi.During the Reporting Period, based on the national “rural revitalization strategy”, Datong Livzonlaunched the “Joint Construction by Village and Enterprise” project in cooperation with the villagecommittee of Mazhuang Village, Guan’er Town, Hunyuan County, Datong City, Shanxi Provinceto renovate and reconstruct the primary processing plant in the astragalus root planting base whichhas met the requirements on the primary processing and storage of astragalus root. In addition,Datong Livzon trained approximately 30 managers and planters of the co-built base in ZizhouCounty, Yulin City, Shaanxi Province on the new version of GAP, conducted on-site technicalguidance and practical training on the traceability of traditional Chinese medicinal materials, andassisted in the traceable preliminary land planning.
2. Rural Revitalization Inclusive Chronic Disease Prevention and Control Public WelfareProjectIn supporting consolidation and expansion of achievements in poverty alleviation and ruralrevitalization and in order to respond positively to the call of national policy, Joincare have launched“Inclusive Chronic Disease Prevention and Control Public Welfare Project (普惠慢病防治公益项目)” program, which combines our own industrial advantages to provide tangible health benefits tograssroots people. The program targets at common chronic diseases such as hypertension,hyperlipidemia, cardiovascular and cerebrovascular diseases, and treatment drugs have beendonated to remote areas, including Pravastatin Capsules (普伐他汀钠胶囊), Amlodipine Besylate
Joincare Pharmaceutical Group Annual Report 2023
Capsules (苯磺酸氨氯地平胶囊), Valsartan Capsules (缬沙坦胶囊), and Isosorbide BononitrateTablets ( 单硝酸异山梨酯片), which could be worth millions of RMB. These drugs can really helpalleviate the economic difficulties of low-income families arising from long-term medication andmitigate chronic drug medication problems, further help patients with chronic diseases improve theirawareness of chronic disease prevention and health management, effectively prevent “reduced to orreturned to poverty due to disease”, and promote local development of rural revitalization.Since late 2018 onwards, with the support of local government agencies and relevant authorities atall levels, we have successfully carried out the “Inclusive Chronic Disease Prevention and ControlPublic Welfare Project” in areas including Chaotian District of Guangyuan City, Songpan Countyof the Autonomous Prefecture of Aba Zangs and Qiangs, Jinkouhe District of Leshan City, JiangeCounty and Pingwu County in Sichuan Province, Hunyuan County, Guangling County and LingqiuCounty of Datong City in Shanxi Province, Dongxiang County, Tianzhu County, Linze County andShandan County in Gansu Province, Xianghai national nature reserve in Jilin Province, ChayuCounty in Tibet Autonomous Region, Macun District of Jiaozuo City in Henan Province,Huangshan District of Huangshan City in Anhui Province, Suining County of Hunan Province,Fenyi County of Jiangxi Province, Kashgar City of Xinjiang Uygur Autonomous Region, BalinzuoBanner and Tuoketuo County of Inner Mongolia, and Ziyuan County of Guangxi Province. Inrecognition of our outstanding performance in supporting rural revitalization projects, Joincare washonored with a number of awards, including the “Enterprises Contributing to Rural Revitalization”in Typical Case Selection for 2023 CSR Competitiveness Responsibility (2023 “CSR竞争力”责任典型案例精选“乡村振兴贡献企业”), and the Excellent Rural Revitalization Practice Cases ofListed Companies (上市公司乡村振兴优秀实践案例).As at 31 December 2023, the project covered 8 provinces and 4 autonomous regions, including 23remote areas requiring assistance, and helped more than 19,410 low-income people. In 2024, weplan to donate medicines to Tibet, Hubei Province, Gansu Province, Anhui Province, SichuanProvince and other regions.
3. Resilience to Natural Disasters
On 18 December 2023 at 23:59, a 6.2-magnitude earthquake struck Jishishan County in Linxia HuiAutonomous Prefecture of Gansu Province, which caused a serious impact on the local economyand society. When a disaster strikes in one location, help comes from all quarters. In the wake ofthis earthquake, local governments and public welfare organizations paid high attention, respondedquickly to support earthquake-stricken areas and rallied necessary aid and support to residents inthe afflicted areas. On the morning of December 20, Joincare and its controlling subsidiary LivzonGroup donated relief funds and medical supplies with total value of RMB20 million to the disaster-stricken areas through the Zhuhai Red Cross Society, including RMB10 million in cash andmedicines worth of RMB10 million. Our donations were used for emergency rescue operations,living arrangements for disaster-stricken people, rescue team support, post-disaster reconstructionand other related work.
Joincare Pharmaceutical Group Annual Report 2023
Chapter 6 Major EventsI. Fulfillment of undertakings(I) Undertakings fulfilled during the Reporting Period or not yet fulfilled as of theReporting Period by the parties to the commitment such as de facto controllers,shareholders, related parties, acquirers of the Company and the Company
√Applicable □N/A
| Commitment background | Commitment type | Subject | Commitment content | Time of commitment | Whether there is a time limit for fulfillment | Time limit of commitment | Whether commitment is strictly fulfilled in time | Specific reasons for failure in timely fulfillment shall be given | Next plan should be stated in case of failure in timely fulfillment |
| Commitment related to initial public offering | Settlement of horizontal competition | Baiyeyuan | Please see Note 1 for details | 30 April 2001 | No | Long-term | Yes | - | - |
| Settlement of horizon competition | Baiyeyuan, de facto controllers and persons acting-in concert, and the Company | Please see Note 2 for details | 10 January 2014 | No | Long-term | Yes | - | - | |
| Commitment related to seasoned offerings | Others | The Company and de facto controllers | Please see Note 3 for details | 8 March 2016 | Yes | The date of completion of remedial measures in connection with the non-public offering of Livzon Group | Yes | - | - |
| Others | Baiyeyuan and the de facto controller | Please see Note 4 for details | 11 May 2017 | Yes | The date of completion of remedial measures in connection with rights issue of Joincare | Yes | - | - | |
| Others | The Company | Please see Note 5 for details | From the date of proceeds for issuance of the Rights issue in place. | Yes | The date of completion of use of proceeds | Yes | - | - | |
| Other commitments made to the minority shareholders of the company | Others | The Company | Please see Note 6 for details | 17 December 2008 | No | Long-term | Yes | - | - |
Note 1: Shenzhen Baiyeyuan Investment Co., Ltd., the controlling shareholder of the Company, undertook that it would notbe directly or indirectly engaged in or cause subsidiaries and branches under its control to be engaged in any business oractivity constituting horizontal competition with the Company after the founding of the Company, including but not limitedto the research, production and sales of any products that were the same as or similar to products under research, productionand sales of the Company, and was willing to undertake compensation responsibility for economic losses to the Companyarising from violation of the said commitment.Note 2: Whereas the domestically listed foreign shares of Livzon Group, a controlled subsidiary of the Company, soughtlisting on the Main Board of the Stock Exchange of Hong Kong Limited, in order to fully ensure smooth completion of thesaid event and in compliance with relevant requirements of the Stock Exchange of Hong Kong Limited, the controllingshareholders, de facto controller of the Company and the Company entered into relevant undertakings with Livzon Groupas follows: 1. The controlling shareholders, de facto controller and persons acting-in-concert of the Company, the Companyand its controlled subsidiaries except for Livzon Group did not or would not be, directly or indirectly, engaged in anybusiness that constituted competitive relation or potential competitive relation with drug research, development, productionand sale businesses (“Restricted Businesses”) of Livzon Group from time to time. For the avoidance of doubt, the scope of
Joincare Pharmaceutical Group Annual Report 2023
Restricted Businesses did not cover products that were researched, developed, manufactured and sold on the date of relevantletter of undertaking by the controlling shareholders and de facto controller of the Company, the Company and its controlledsubsidiaries except for Livzon Group; 2. If any new business opportunity was found to constitute competitive relation withRestricted Businesses, the controlling shareholders, de facto controllers and persons acting-in-concert of the Company, theCompany and its controlling subsidiaries except for Livzon Group would inform Livzon Group in written form immediatelyand firstly provide Livzon Group with the business opportunity in accordance with reasonable and fair terms and conditions.If Livzon Group gave up the business opportunity, the controlling shareholders and de facto controllers of the Company,the Company and its controlled subsidiaries except for Livzon Group may accept the business opportunity in accordancewith the terms and conditions that were not superior to those offered to Livzon Group; 3. If assets and businesses thatdirectly or indirectly constituted competitive relation and potential competitive relation with Restricted Businesses wereintended to be transferred, sold, leased, licensed to use or otherwise transferred or allowed to use (these Sales and Transfers),the controlling shareholders and de facto controllers of the Company, the Company and its controlled subsidiaries exceptfor Livzon Group would provide the right of first refusal for Livzon Group under the same condition. If Livzon Group gaveup the right of first refusal, the controlling shareholders, de facto controllers and persons acting-in-concert of the Company,the Company and its controlled subsidiaries except for Livzon Group would carry out these Sales and Transfers to a thirdparty in accordance with main terms that were not superior to those offered to Livzon Group; 4. The controlling shareholders,de facto controllers and persons acting-in-concert of the Company, the Company and its controlled subsidiaries except forLivzon Group would not be engaged in or involved in any business that might damage the interests of Livzon Group andother shareholders through the relation with shareholders of Livzon Group or the identity of shareholders of Livzon Group;
5. The controlling shareholders, de facto controllers and persons acting-in-concert of the Company, the Company and itscontrolled subsidiaries except for Livzon Group would not or cause its contact persons (except for Livzon Group) to directlyor indirectly: (1) induce or attempt to induce any director, senior management or consultant of any member of Livzon Groupto terminate his/her employment with or to be an employee or consultant of Livzon Group at any time (whichever isapplicable), no matter if relevant acts of the person were against the Employment Contract or Consultancy Agreement (ifapplicable); (2) Within three years after any person terminated to be the director, senior management or consultant of anymember of Livzon Group, employ the person who had or might have any confidentiality information or business secret inrelation to Restricted Businesses (except for the director, senior management or consultant of the Company and/or itscontrolling subsidiaries except for Livzon Group on the date of issuance of relevant letter of undertaking); (3) Recruit orlobby any person carrying out business in any member of Livzon Group, accept orders, or carry out business separately,through any other person or as any person, firm, or manager, advisor, consultant, employee, agent or shareholder of anycompany (competitor of any member of Livzon Group), or lobby or persuade the person making transaction with LivzonGroup or negotiating with Livzon Group on Restricted Businesses to terminate its transaction with Livzon Group or reduceits normal business volume with Livzon Group, or ask for more favorable transaction terms to any member of Livzon Group.
6. The controlling shareholders, de facto controllers and persons acting-in-concert of the Company, the Company and itscontrolled subsidiaries except for Livzon Group further undertook that: (1) They would allow and cause relevant contactpersons (except for Livzon Group) to allow independent directors of Livzon Group to review if the Company and itscontrolled subsidiaries except for Livzon Group obeyed the Letter of Undertaking at least once a year; (2) They wouldprovide all the data required for annual review and implementation of the Letter of Undertaking for independent directorsof Livzon Group; (3) They would allow Livzon Group to disclose the decision on whether the controlling shareholders andde facto controllers of the Company, the Company and its controlled subsidiaries except for Livzon Group obeyed andimplemented the Letter of Undertaking reviewed by independent directors of Livzon Group through the annual report orannouncement; (4) The controlling shareholders, de facto controllers and persons acting-in-concert of the Company, theCompany (and its controlled subsidiaries except for Livzon Group) would provide Livzon Group with the Letter ofConfirmation in relation to compliance with clauses of the Letter of Undertaking every year so as to be included in theannual report of Livzon Group. 7. The controlling shareholders, de facto controllers and persons acting-in-concert of the
Joincare Pharmaceutical Group Annual Report 2023
Company, and the Company promise that they would bear corresponding legal responsibility and consequence arising fromviolation of any clause by the Company (or the Company's controlled subsidiaries except for Livzon Group or its contactpersons), starting from the date of issuance of relevant letter of undertaking. 8. The said undertakings would terminate incase of the following circumstances (whichever is earlier): (1) The controlling shareholders, de facto controllers and personsacting-in-concert of the Company, the Company and any of its controlled subsidiaries were not the controllingshareholders of Livzon Group anymore; (2) Livzon Group terminated the listing of its shares on the Hong Kong StockExchange and other overseas stock exchanges (except that shares of Livzon Group stopped to be traded temporarily for anyreason).Note 3: Do not interfere in the operation and management activities of Livzon Group or encroach on the interests of LivzonGroup.Note 4: Pursuant to the Guiding Opinions on Matters Relating to the Dilution of Current Returns as a Result of Initial PublicOffering, Refinancing and Major Asset Restructuring (Announcement of CSRC [2015] No. 31), the company shallundertake to adopt specific remedial measures relating to dilution of current returns as a result of the company's initialpublic offering, refinancing of the listed company, or major asset restructuring and shall fulfill such undertaking. Pursuantto relevant provisions of CSRC, Zhu Baoguo, the de facto controller of Shenzhen Baiyeyuan Investment Co., Ltd., acontrolling shareholder:1. Do not intervene in the operation and management activities or encroach on the interests of thecompany; 2. If CSRC issued other new regulatory provisions on the remedial measures in relation to returns and the relevantundertakings and the aforesaid undertakings did not conform to such provisions from the date of issuance of the undertakingto the completion of IPO share allotment, the Company/the de facto controller would undertake to issue a supplementalundertaking in accordance with the latest provisions of CSRC; 3. The Company/the de facto controller undertook topractically take the remedial measures in relation to returns formulated by the company and fulfill the undertakingconcerning the remedial measures. In case of violation of the undertaking, causing losses to the company or investors, theCompany/the de facto controller was willing to assume compensation responsibilities to the company or investors inaccordance with law. In case of violation of the said undertakings or rejection to fulfill the said undertakings, as one of theliability subjects relating to the remedial measures concerning returns, it was agreed that relevant punishment shall beimposed on or relevant management measures shall be taken against the Company/the de facto controller by CSRC, theSSE and other securities regulators in accordance with relevant provisions and rules set or issued by them.Note 5: After the proceeds for issuance of allotment were in place, the Company would use them according to the disclosurein the announcement, and carry out the policies, including deposit in special account, approval by specially-assigned person,and special use of special funds in accordance with management measures for proceeds of the Company. The Board of theCompany would regularly check the progress of projects invested with proceeds, issue a special report on deposit and useof proceeds, engage an accounting firm during the annual audit to issue a verification report on deposit and use of proceeds,would be supervised by regulators and sponsors at any time, and would not make major investment, asset purchase or similarfinancial investment though proceeds in disguise.Note 6: (1) While transferring tradable shares subject to selling restrictions held by the company in Livzon Group, thecompany shall strictly obey relevant provisions of Guidelines of Listed Companies on Transfer of Stock Shares Subject toSelling Restrictions ([2008] No. 15); (2) If the Company had shares subject to selling restrictions held by it in Livzon Groupthat were planned to be sold through the bid trading system of Shenzhen Stock Exchange and reduced more than 5% shareswithin six months from the first share reduction, the Company would pass the Announcement on Sales disclosed by LivzonGroup within two trading days before the first share reduction.(II) If the Company has made profit forecast on its assets or projects and the Reporting Period isstill within the profit forecast period, the Company shall give an explanation on why its assets orprojects achieved its profit forecast
Joincare Pharmaceutical Group Annual Report 2023
□Realized □Unrealized √N/A
(III) Fulfillment of performance covenant and its influence on goodwill impairment test
□Applicable √N/A
II. Information on Non-operating use of funds by controlling shareholders and other related partiesduring the Reporting Period
□Applicable √N/A
III. Information on illegal guarantees
□Applicable √N/A
IV. The Board's statement on the “non-standard opinion auditor's report” issued by theappointed accounting firm
□Applicable √N/A
V. Analysis and explanation from the Company on the reasons and impact of the change ofaccounting policies, accounting estimates or correction on material accounting errors(I) Analysis and explanation from the Company on the reasons and impact of the change ofaccounting policies or accounting estimates
□Applicable √N/A
(II) Analysis and explanation from the Company on the reasons and impact of the correction onmaterial accounting errors
□Applicable √N/A
(III) Communication with former appointed accounting firm
□Applicable √N/A
(IV) Others
□Applicable √N/A
VI. Appointment and termination of appointment of accounting firm
Unit: 10,000 Yuan Currency: RMB
| Current accounting firm | |
| Name of domestic accounting firm | Grant Thornton (Special General Partnership) |
| Remuneration for domestic accounting firm | 128 |
| Continuous years of auditing services provided by domestic accounting firm | 5 |
| Name of certified public accountant (“CPA”) of domestic accounting firm | Wang Yuan(王远) and Wang Qilai（王其来） |
| Continuous years of CPA audit services of domestic accounting firms | 2 and 5 |
Joincare Pharmaceutical Group Annual Report 2023
| Name | Fee | |
| Accounting firm for internal control audit | Grant Thornton (Special General Partnership) | 32 |
Statement on appointment and termination of appointment of accounting firm
□Applicable √N/A
Statement on re-engagement of accounting firm during the audit period
□Applicable √N/A
Explanation of reductions in audit fees of 20% or more (including 20%) compared to the previousyear
□Applicable √N/A
VII. Risk of delisting
(1) Reasons for delisting risk warning
□Applicable √N/A
(2) Countermeasures to be taken by the Company
□Applicable √N/A
(3) Risk of delisting and the reasons
□Applicable √N/A
VIII. Matters related to bankruptcy and reorganization
□Applicable √N/A
IX. Material litigation and arbitration
□The Company was involved in material litigation or arbitration in current year
√The Company was not involved in material litigation or arbitration in current year
X. Violations committed by the listed company and its directors, supervisors, senior management,controlling shareholders and de facto controllers, punishments imposed and rectifications
□Applicable √N/A
XI. Credit standing of the Company and its controlling shareholders and de facto controllers duringthe Reporting Period
□Applicable √N/A
XII. Material related-party transactions(I) Related-party transactions in connection with day-to-day operation
1. Matters already disclosed in interim announcements about which no new information is available
√Applicable □N/A
Joincare Pharmaceutical Group Annual Report 2023
| Overview | Query index |
| Pursuant to the “Resolution on Connected Transactions in the Ordinary Course of Business of the Majority-owned Subsidiaries of Jiaozuo Joincare and Jinguan Electric Power” considered and approved at the 23th Meeting of the 8th Session of the Board on 7 April 2023, Jiaozuo Joincare intended to purchase no more than RMB280 million (inclusive) of steam and power from Jinguan Electric Power in 2023 so as to satisfy the demands of Jiaozuo Joincare for steam and power in the process of production and operation. The independent directors of the Company gave prior approval opinions on the Resolution and gave opinions on the approval of the independent directors at the Board meeting. Both parties referred to the market price to fix a price of the said connected transactions. During the Reporting Period, the actual amount of the said connected transactions was RMB268.2556 million. | See the “Announcement on Resolutions Considered and Approved at the 9th Meeting of the 23th Session of the Board of Joincare Pharmaceutical Group Industry Co., Ltd.” (Lin 2023-030) and the “Announcement of Joincare Pharmaceutical Group Industry Co., Ltd. on the Connected Transactions in the Ordinary Course of Business of the Majority-owned Subsidiaries of Jiaozuo Joincare and Jinguan Electric Power” (Lin 2023-036) disclosed by the Company on 11 April 2023 for details. |
2. Matters already disclosed in interim announcements about which new information is available
□Applicable √N/A
3. Matters not disclosed in interim announcements
□Applicable √N/A
(II) Related-party transactions involving acquisition or sale of assets or equity
1. Matters already disclosed in interim announcements about which no new information is available
□Applicable √N/A
2. Matters already disclosed in interim announcements about which new information is available
□Applicable √N/A
3. Matters not disclosed in interim announcements
□Applicable √N/A
4. Fulfillment of performance covenants (if any) during the Reporting Period
□Applicable √N/A
(III) Material related-party transactions involving joint external investment
1. Matters already disclosed in interim announcements about which no new information is available
□Applicable √N/A
2. Matters already disclosed in interim announcements about which new information is available
□Applicable √N/A
3. Matters not disclosed in interim announcements
□Applicable √N/A
(IV) Claims and debts with related parties
1. Matters already disclosed in interim announcements about which no new information is available
□Applicable √N/A
2. Matters already disclosed in interim announcements about which new information is available
□Applicable √N/A
3. Matters not disclosed in interim announcements
√Applicable □N/A
Unit: Yuan Currency: RMB
Joincare Pharmaceutical Group Annual Report 2023
| Related party | Relationship | Offer funds to related parties | Receive funds from related parties | ||||
| Opening balance | Amount incurred in the current period | Closing balance | Opening balance | Amount incurred in the current period | Closing balance | ||
| Guangdong Blue Treasure Pharmaceutical Co., Ltd. (广东蓝宝制药有限公司) | Others | 5,388,984.29 | 4,759,249.23 | 10,148,233.52 | 117,760.00 | 960,838.23 | 1,078,598.23 |
| Subsidiaries of Sichuan Healthy Deer Hospital Management Co., Ltd. (四川健康阿鹿医院管理有限公司之子公司) | Others | 497,828.30 | -63,405.50 | 434,422.80 | 20,947.89 | 234,512.04 | 255,459.93 |
| Zhuhai Sanmed Gene Diagnostics Ltd. (珠海市圣美基因检测科技有限公司) | Others | 101,526.98 | 81,557.66 | 183,084.64 | |||
| Zhuhai Sanmed Biotech Inc. (珠海圣美生物诊断技术有限公司) | Others | 211,200.00 | 0.00 | 211,200.00 | |||
| Shenzhen Youbao Technology Co., Ltd. (深圳市有宝科技有限公司) | Others | 188,100.00 | -188,100.00 | 0.00 | |||
| Jiangsu Yiyingjia Medical Technology Co., Ltd. (江苏一赢家医疗科技有限公司) | Others | 0.00 | 29,816.00 | 29,816.00 | |||
| Feellife Health Inc. (深圳来福士雾化医学有限公司) | Associated company | 0.00 | 1,259,566.37 | 1,259,566.37 | |||
| Zhongshan Renhe Health Product Co., Ltd. (中山市仁和保健品有限公司) | Others | 469,895.78 | 0.00 | 469,895.78 | |||
| Shenzhen Health Deer Technology Co., Ltd.（深圳市健康阿鹿信息科技有限公司） | Others | 4,680.00 | 0.00 | 4,680.00 | |||
| Jiaozuo Jinguan Jiahua Electric Power Co., Ltd. (焦作金冠嘉华电力有限公司) | Associated company | 75,724,913.57 | -9,910,133.70 | 65,814,779.87 | |||
| Total | 82,587,128.92 | -4,031,449.94 | 78,555,678.98 | 138,707.89 | 1,195,350.27 | 1,334,058.16 | |
| Cause for claims and debts with related parties | During the Reporting Period, the Company had normal operating fund transactions with connected parties. | ||||||
| Impact of claims and debts with related parties on the Company | The said credits and debts with connected persons are operating fund transactions; there was no non-operating use of funds of the Company by shareholders and connected part. | ||||||
(V) Financial business among the Company, related financial companies, financial companiescontrolled by the Company, and related parties
□Applicable √N/A
(VI) Others
□Applicable √N/A
XIII. Material contracts and their fulfilments(I) Trusteeship, contracting and lease
1. Trusteeship
□Applicable √N/A
2. Contracting
□Applicable √N/A
3. Lease
□Applicable √N/A
Joincare Pharmaceutical Group Annual Report 2023
(II) Guarantees
√Applicable □N/A
Unit: 10,000 Yuan Currency: RMB
| Guarantor | Relation-ship between the guarantor and the listed company | Guaranteed party | Guaranteed amount | Date of guarantee (signing date of agreement) | Effective date | Expiration date | Guarantee type | Fulfilled or not | Overdue or not | Overdue amount | Whether there's a counter-guarantee | Guaranteed for a related party or not | Relationship |
| Joincare | Headquarter of the Company | Jinguan Electric Power | 2,045.01 | 2023-06-12 | 2023-06-12 | 2023-12-12 | Joint liability guarantee | Yes | No | 0 | Yes | Yes | Assoiate |
| Joincare | Headquarter of the Company | Jinguan Electric Power | 2,183.85 | 2023-06-12 | 2023-06-12 | 2023-12-12 | Joint liability guarantee | Yes | No | 0 | Yes | Yes | Assoiate |
| Joincare | Headquarter of the Company | Jinguan Electric Power | 2,000.00 | 2023-06-16 | 2023-06-16 | 2023-12-16 | Joint liability guarantee | Yes | No | 0 | Yes | Yes | Assoiate |
| Joincare | Headquarter of the Company | Jinguan Electric Power | 1,495.20 | 2023-07-24 | 2023-07-24 | 2024-07-19 | Joint liability guarantee | No | No | 0 | Yes | Yes | Assoiate |
| Joincare | Headquarter of the Company | Jinguan Electric Power | 1,532.64 | 2023-07-28 | 2023-07-28 | 2024-07-28 | Joint liability guarantee | No | No | 0 | Yes | Yes | Assoiate |
| Joincare | Headquarter of the Company | Jinguan Electric Power | 332.01 | 2023-08-10 | 2023-08-10 | 2024-08-09 | Joint liability guarantee | No | No | 0 | Yes | Yes | Assoiate |
| Joincare | Headquarter of the Company | Jinguan Electric Power | 1,000.00 | 2023-08-21 | 2023-08-21 | 2024-02-21 | Joint liability guarantee | No | No | 0 | Yes | Yes | Assoiate |
| Joincare | Headquarter of the Company | Jinguan Electric Power | 995.61 | 2023-08-21 | 2023-08-21 | 2024-02-21 | Joint liability guarantee | No | No | 0 | Yes | Yes | Assoiate |
Joincare Pharmaceutical Group Annual Report 2023
| Joincare | Headquarter of the Company | Jinguan Electric Power | 1,000.00 | 2023-08-21 | 2023-08-21 | 2024-02-21 | Joint liability guarantee | No | No | 0 | Yes | Yes | Assoiate |
| Joincare | Headquarter of the Company | Jinguan Electric Power | 456.21 | 2023-08-21 | 2023-08-21 | 2024-02-21 | Joint liability guarantee | No | No | 0 | Yes | Yes | Assoiate |
| Joincare | Headquarter of the Company | Jinguan Electric Power | 1,000.00 | 2023-08-28 | 2023-08-28 | 2024-02-28 | Joint liability guarantee | No | No | 0 | Yes | Yes | Assoiate |
| Joincare | Headquarter of the Company | Jinguan Electric Power | 867.00 | 2023-08-28 | 2023-08-28 | 2024-02-28 | Joint liability guarantee | No | No | 0 | Yes | Yes | Assoiate |
| Joincare | Headquarter of the Company | Jinguan Electric Power | 958.63 | 2023-09-11 | 2023-09-11 | 2024-03-11 | Joint liability guarantee | No | No | 0 | Yes | Yes | Assoiate |
| Joincare | Headquarter of the Company | Jinguan Electric Power | 4,000.00 | 2023-09-22 | 2023-09-22 | 2024-09-20 | Joint liability guarantee | Yes | No | 0 | Yes | Yes | Assoiate |
| Joincare | Headquarter of the Company | Jinguan Electric Power | 5,076.44 | 2023-10-16 | 2023-10-16 | 2024-10-15 | Joint liability guarantee | No | No | 0 | Yes | Yes | Assoiate |
| Joincare | Headquarter of the Company | Jinguan Electric Power | 5,123.00 | 2023-10-19 | 2023-10-19 | 2024-10-18 | Joint liability guarantee | No | No | 0 | Yes | Yes | Assoiate |
| Joincare | Headquarter of the Company | Jinguan Electric Power | 3,000.00 | 2023-11-09 | 2023-11-09 | 2024-08-15 | Joint liability guarantee | No | No | 0 | Yes | Yes | Assoiate |
| Joincare | Headquarter of the Company | Jinguan Electric Power | 2,790.00 | 2023-11-14 | 2023-11-14 | 2024-08-26 | Joint liability guarantee | No | No | 0 | Yes | Yes | Assoiate |
| Joincare | Headquarter of the Company | Jinguan Electric Power | 3,000.00 | 2023-11-24 | 2023-11-24 | 2024-11-22 | Joint liability guarantee | No | No | 0 | Yes | Yes | Assoiate |
Joincare Pharmaceutical Group Annual Report 2023
| Jiaozuo Joincare | Wholly-owned subsidiary | Jinguan Electric Power | 2,000.00 | 2023-12-06 | 2023-12-06 | 2024-12-06 | Joint liability guarantee | No | No | 0 | Yes | Yes | Assoiate |
| Joincare | Headquarter of the Company | Jinguan Electric Power | 3,100.00 | 2023-12-13 | 2023-12-13 | 2024-12-12 | Joint liability guarantee | No | No | 0 | Yes | Yes | Assoiate |
| Joincare | Headquarter of the Company | Jinguan Electric Power | 3,100.00 | 2023-12-19 | 2023-12-19 | 2024-12-18 | Joint liability guarantee | No | No | 0 | Yes | Yes | Assoiate |
| Total guaranteed amount occurred during the Reporting Period (excluding guarantees to subsidiaries) | 47,055.61 | ||||||||||||
| Total guaranteed amount as of the End of the Reporting Period (A) (excluding guarantees to subsidiaries) | 40,826.75 | ||||||||||||
| Guarantee provided by the Company and its subsidiaries to subsidiaries | |||||||||||||
| Total amount of guarantees to subsidiaries during the Reporting Period | 252,256.21 | ||||||||||||
| Total amount of guarantees to subsidiaries as of the End of the Reporting Period (B) | 303,465.01 | ||||||||||||
| Total guaranteed amount of the Company (including guarantees to subsidiaries) | |||||||||||||
| Total guaranteed amount (A+B) | 344,291.76 | ||||||||||||
| Percentage of total guaranteed amount in the Company's net assets (%) | 15.21 | ||||||||||||
| In which: | |||||||||||||
| Amount of guarantees provided to shareholders, de facto controllers and their related parties (C) | 0 | ||||||||||||
| Amount of debt guarantee directly or indirectly provided to a guaranteed party with an asset-liability ratio exceeding 70% (D) | 210,806.96 | ||||||||||||
| Portion of total guaranteed amount exceeding 50% of net assets (E) | 0 | ||||||||||||
| Total guaranteed amount of the above three items (C+D+E) | 210,806.96 | ||||||||||||
| Statement on the contingent joint liability that might be assumed in connection with outstanding guarantee | N/A | ||||||||||||
| Statement on guarantees | The above connected guarantees are detailed in Note XI 5(3) to the Financial Statements of this report. | ||||||||||||
Joincare Pharmaceutical Group Annual Report 2023
(III) Entrusted cash asset management
1. Entrusted wealth management
(1) Overall situation of entrusted wealth management
□Applicable √N/A
Other information
□Applicable √N/A
(2) Single entrusted wealth management
□Applicable √N/A
Other information
□Applicable √N/A
(3) Provision for impairment of entrusted wealth management products
□Applicable √N/A
2. Entrusted loans
(1) Overall situation of entrusted loans
□Applicable √N/A
Other information
□Applicable √N/A
(2) Single entrusted loans
□Applicable √N/A
Other information
□Applicable √N/A
(3) Provision for impairment of entrusted loans
□Applicable √N/A
3. Other information
□Applicable √N/A
(IV) Other material contracts
□Applicable √N/A
Joincare Pharmaceutical Group Annual Report 2023
XIV．Progress of Proceeds Usage
√Applicable □N/A
(I) Overall Usage of Proceeds
√Applicable □N/A
Unit: 10,000 Yuan
| Sources of proceeds | Paid-in time of proceeds | Total amount of proceeds | Including: Amount of proceeds from over-allotment | Net amount of proceeds after deducting issuance expenses | Total amount of proceeds commitments | Adjusted total proceeds commitments (1) | Total investment amount of proceeds as at the end of the Reporting Period (2) | Progress of cumulative investment as at the end of the Reporting Period (%) (3) = (2)/(1) | Investment amount during the year (4) | Percentage of investment amount in the year (%) (5) = (4)/(1) | Total amount of proceeds with change of usage |
| Others | 16 Octorber 2018 | ?171,599.38 | 0.00 | ?166,974.02 | ?166,974.02 | ?166,974.02 | ?132,721.79 | 79.49 | ?32,721.83 | 19.60 | 73,587.73 |
| Others | 26 September 2022 | USD$9,204 | 0.00 | USD$8,930.00 | USD$8,930.00 | USD$8,930.00 | 0.00 | - | 0.00 | - | N/A |
(II) Details of Investment Projects with Proceeds
√Applicable □N/A
Unit: 10,000 Yuan
| Name of project | Nature of project | Whether involving any change in investment direction | Sources of proceeds | Paid-in time of proceeds | Whether the proceeds from over-allotment were used | Total amount of proceeds commitments for project | Adjusted total investment amount of proceeds (1) | Investment amount during the year | Total investment amount of proceeds as at the end of the Reporting Period (2) | Progress of cumulative investment as at the end of the Reporting Period (%) (3)＝(2)/(1) | Date when the project reaches intended usable status |
| Haibin Pharma Pingshan Pharmaceutical Industrialization Base Project | Production and construction | No | Others | 16 October 2018 | No | 85,000.00 | 90,000.00 | 5,493.02 | 88,395.21 | 98.22 | December 2023 |
| New products R&D project | R&D | Yes | Others | 16 October 2018 | No | 54,587.73 | 54,587.73 | 20,238.37 | 28,270.77 | 51.79 | January 2027 |
| Haibin Pharma Pingshan Pharmaceutical Industrialization Base Expansion Project | Production and construction | No | Others | 16 October 2018 | No | 16,000.00 | 16,000.00 | 6,358.94 | 11,533.74 | 72.09 | January 2024 |
| Information Platform Construction Project | Others | No | Others | 16 October 2018 | No | 3,000.00 | 3,000.00 | 631.51 | 1,135.79 | 37.86 | January 2025 |
| Global R&D and Industrialization Plan | R&D | No | Others | 26 September 2022 | No | USD$6,251.00 | USD$6,251.00 | 0.00 | 0.00 | 0.00 | N/A |
Joincare Pharmaceutical Group Annual Report 2023
| Construction of global product sales and after-sales network and service system | Production and construction | No | Others | 26 September 2022 | No | USD$893.00 | USD$893.00 | 0.00 | 0.00 | 0.00 | N/A |
| Replenishment of working capital and other general corporate purposes | Operation management | No | Others | 26 September 2022 | No | USD$1,786.00 | USD$1,786.00 | 0.00 | 0.00 | 0.00 | N/A |
(continued)
| Name of project | Whether the project has been completed | Whether the investment progress was in line with the planned progress | Specific reasons why investment progress fell short of scheduled plan | Benefits generated during the year | Benefits or R&D achievements achieved in the project | Whether there was any significant change in the feasibility of project? If so, please describe details. | Surplus Balance |
| Haibin Pharma Pingshan Pharmaceutical Industrialization Base Project | Yes | Yes | N/A | 54,658.86 | Relevant respiratory formulation products have started production and sales | No | 285.38 |
| New products R&D project | No | Yes | N/A | - | - | No | - |
| Haibin Pharma Pingshan Pharmaceutical Industrialization Base Expansion Project | No | No | Note | - | - | No | - |
| Information Platform Construction Project | No | Yes | N/A | - | - | No | - |
| Global R&D and Industrialization Plan | No | Yes | N/A | - | - | No | - |
| Construction of global product sales and after-sales network and service system | No | Yes | N/A | - | - | No | - |
| Replenishment of working capital and other general corporate purposes | No | Yes | N/A | - | - | No | - |
Note: The project progress is affected by the delivery time of imported equipment purchases and the company's progress in registering new products under research, causing the progress ofinvestment has not met the planned schedule.
(III) Changes in or termination of investment of proceeds during the Reporting Period
√Applicable □N/A
Unit: Yuan Currency: RMB
| Name of project before change | Total amount of proceeds before change/termination | Total investment amount of proceeds before change/termination | Name of project after change | Reasons for change/termination | Amount of proceeds used for replenishing working capital after change/termination | Description of decision-making procedures and information disclosure |
| New products R&D project | 54,587.73 | 28,270.77 | New products R&D project | In order to adapt to the latest research and development status of the Company and enhance the efficiency of proceeds usage, the Company added new innovative drugs for the respiratory system, analgesia and other aspects into its new product research and development projects. | N/A | On 28 December 2023, the Company held the 36th Meeting of the 8th Session of the Board and the 28th Meeting of the 8th Session of the Supervisory Committee, which considered and approved the Proposal on Adjusting the Investment Content of Certain Projects Invested with Proceeds. See the Announcement on Adjusting the Investment Content of Certain Projects Invested with Proceeds of Joincare Pharmaceutical Group Industry Co., Ltd. (No. 2023-144) for details. |
Joincare Pharmaceutical Group Annual Report 2023
(IV) Other information on the usage of proceeds during the Reporting Period
1. Previous investment and replacement of projects invested with proceeds
√Applicable □N/A
Pursuant to the Proposal on Replacing Self-raised Funds Previously Invested in Projects with Proceedsconsidered and approved at the 3rd Meeting of the 7th Session of the Board on 29 October 2018, it wasagreed that the Company could use the proceeds of RMB215.3282 million to replace self-raised fundspreviously invested in projects. The replacement with proceeds did not exceed six months from the dateof payment of such proceeds, which complied with relevant laws and regulations, and did not affect thenormal progress of the projects invested with the proceeds. There was no disguised change in theinvestment direction of proceeds, nor would it harm the interests of shareholders. Minsheng Securities Co.,Ltd., the sponsor of the Company, has issued the Opinions on the Verification of Replacing Self-raisedFunds Previously Invested in Projects with Proceeds by Joincare Pharmaceutical Group Industry Co., Ltd.The companies implementing such projects have completed the replacement of self-raised fundspreviously invested in projects of RMB215.3282 million with the proceeds in December 2018.
2. Information on temporary replenishment of working capital with idle proceeds
√Applicable □N/A
(1) Pursuant to the Proposal on the Temporary Replenishment of Working Capital with Idle Proceedsconsidered and approved at the 21st Meeting of the 8th Session of the Board and the 18th Meeting of the8th Session of the Supervisory Committee of the Company on 29 December 2022, it was agreed that theCompany temporarily replenished the working capital with no more than RMB500 million of idle proceedsfrom 1 January 2023 to 31 December 2023 so as to improve the use efficiency of proceeds and reducefinancial expenses of the Company. For details, please refer to the “Announcement on the TemporaryReplenishment of Working Capital with Certain Idle Proceeds of Joincare Pharmaceutical Group IndustryCo., Ltd.” (Lin 2022-146).As at the end of 2023, the Company has recovered all idle proceeds of the company allocated for temporaryreplenishment of working capital
(2) Pursuant to the Proposal on the Temporary Replenishment of Working Capital with Idle Proceedsconsidered and approved at the 36th Meeting of the 8th Session of the Board and the 28th Meeting of the8th Session of the Supervisory Committee of the Company on 28 December 2023, it was agreed that theCompany temporarily replenished the working capital with no more than RMB200 million of idle proceedsfrom 1 January 2024 to 31 December 2024 so as to improve the use efficiency of proceeds and reducefinancial expenses of the Company. For details, please refer to the “Announcement on the TemporaryReplenishment of Working Capital with Certain Idle Proceeds of Joincare Pharmaceutical Group IndustryCo., Ltd.” (Lin 2023-145).As at the disclosure date of this report, the balance of the Company’s idle proceeds of the companyallocated for temporary replenishment of working capitall was RMB200 million.
3. Cash management of idle proceeds and investment in relevant products
□Applicable √N/A
4. Information on using the proceeds from over-allotment to permanently replenish workingcapital or repay bank loans
□Applicable √N/A
Joincare Pharmaceutical GroupAnnual Report 2023
5.Others
√Applicable □N/A
(1) Information on using bank acceptance bills to pay for projects invested with proceedsPursuant to the Proposal on the Payment of Projects Invested with Proceeds with Bank Acceptance Billsand the Equal Replacement with Proceeds considered and approved at the 25th Meeting of the 7th Sessionof the Board on 7 May 2020, it was agreed that during the implementation of projects invested withproceeds, the Company could use bank acceptance bills (or endorsed transfer) to pay for the amountrelating to projects invested with the proceeds and could transfer an equal amount of capital from thespecial account of proceeds to replenish working capital. For details, please refer to the “Announcementon the Payment of Projects Invested with Proceeds with Bank Acceptance Bills and the Equal Replacementwith Proceeds of Joincare Pharmaceutical Group Industry Co., Ltd.” (Lin 2020-054).As at 31 December 2023, the Company’s cumulative amount of bank acceptance bills used to pay forprojects invested with the proceeds was RMB188.3598 million, and the cumulative amount for the equalreplacement with the proceeds was RMB152.4169 million.
(2) Usage of Unutilized proceeds
The Haibin Pharma Pingshan Pharmaceutical Industrialization Base Project plans to use proceeds ofRMB900 million. As at 31 December 2023, the cumulative used proceeds were RMB883.9521 million,and the acceptance bills remaining to be replaced were RMB4.7437 million, the unpaid balance wasRMB11.4584 million, and the unutilized proceeds were RMB2.8538 million (including interest income)accounted for 0.32% of the committed investment amount for the project. For the funds required for thereplacement of bank accepted bills and the unpaid balance, the Company will continue to deposit it in thespecial account of proceeds and make payment according to actual needs. For the unutilized proceeds(including interest income, the specific amount shall be subject to actual use), Company will use it for theHaibin Pharma Pingshan Pharmaceutical Industrialization Base Expansion Project. According to theRegulatory Guideline for Self-regulation of Listed Companies No.1-Standardized Operation released byShanghai Stock Exchange, upon the completion of a single project invested with the proceeds, a listedcompany may use the unutilized proceeds (including interest income) for other projects invested with theproceeds only after the consideration and approval by the Board and the expressed consent fromindependent directors, sponsors and he Supervisory Committee. The company shall publish anannouncement in a timely manner after the consideration and approval by the Board. If the unutilizedproceeds (including interest income) are less than RMB1 million or 5% of total proceeds commitments ofthe project, the company may be exempted from the procedures set out in the preceding paragraph, andshall disclose the usage of proceeds in its annual report.XV. Other significant matters having significant influence on the value judgment and decisions ofinvestors
√Applicable □N/A
1.Matters about share cancellation and share repurchase
(1)Share Cancellation
On 10 February 2020, the Company held the twenty-first meeting of the seventh session of the Board ofDirectors, at which it considered and approved proposals including the Proposal for the Repurchase ofShares through Centralized Price Bidding; The Company planned to repurchase the shares of the Companywith its own funds through centralized price bidding with the total fund of not less than RMB150 million(inclusive) and not more than RMB300 million (inclusive). The share repurchase price was not more than
Joincare Pharmaceutical Group Annual Report 2023
RMB15 per share (inclusive), and the repurchase period was set as not more than 12 months from the dateon which repurchase plan was considered and approved by the Board of Directors. The repurchased sharesshall be used for employee stock ownership plans and share incentive plans, with 40% of the repurchasedshares allocated to employee stock ownership plans and 60% allocated to share incentive plans.The implementation of the share repurchase plan had been completed by the Company on 12 July 2020,and 19,890,613 shares of the Company, accounting for 1.02% of the total share capital (1,947,537,633shares) of the Company at that time, were repurchased through centralized price bidding. Pursuant to thearrangement for use of repurchased shares mentioned above, on 4 August 2021, the Company transferred2,430,800 shares previously repurchased and held in special securities account for repurchases to theaccount of the Company for first phase ownership scheme by non-trading transfer. As of the end of 2022,the number of shares previously repurchased and held in special securities account for repurchases is17,459,813.Pursuant to the relevant requirements of the Company Law (《公司法》), the Self-regulatory Guidelinesfor the Companies Listed on the Shanghai Stock Exchange No.7–Repurchase of Shares (《上海证券交易所上市公司自律监管指引第7号—回购股份》) and share repurchase plan of the Company, the shareswere repurchased for employee stock ownership plans and share incentives, and if the repurchased sharesare not fully utilized by the Company within 36 months after the completion of the share repurchase, theunutilized shares repurchased shall be cancelled.The twenty-fifth meeting of the eighth session of the Board of Directors and the first extraordinary generalmeeting of 2023 were convened by the Company on 28 April 2023 and 19 May 2023, respectively, atwhich the Resolution on the Cancellation of Treasury Shares Previously Repurchased was considered andapproved. As the three-year term for the share repurchase conducted by the Company in 2020 will expiresoon and the Company has no plan to use remaining shares held in special securities account forrepurchases for share incentive plans or employee stock ownership plans in the near future, it was agreedthat the Company should cancel the remaining 17,459,813 shares previously repurchased and held inspecial securities account for repurchases.On 4 July 2023, the aforesaid remaining shares and the special securities account for repurchase werecancelled by the Shanghai Branch of China Securities Depository and Clearing Company Limited. Uponthe completion of the share cancellation, the total share capital of the Company changed from1,929,189,374 shares to 1,911,729,561 shares.
(2) Share Repurchase
Pursuant to the Resolution on Share Repurchase Scheme by Way of Centralized Bidding Transactions andother resolutions considered and approved at the 17th Meeting of the 8th Session of the Board and the2022 Fourth Extraordinary General Meeting of the Company on 14 October 2022 and 18 November 2021,it was approved that the Company repurchased company shares by way of centralized bidding transactionswith its own funds, and the repurchased shares will be used to reduce the registered capital; the totalamount of repurchase funds should be no less than RMB300 million (inclusive) and no more than RMB600million (inclusive); the repurchase price should be no more than RMB16/share (inclusive); the repurchaseterm should be from 18 November 2022 to 17 November 2023. For details, please refer to the“Announcement of Joincare Pharmaceutical Group Industry Co., Ltd. on the Share Repurchase Schemeby Way of Centralized Bidding Transactions” (Lin 2022- 121) and the “Repurchase Report of JoincarePharmaceutical Group Industry Co., Ltd. on Share Repurchase by Way of Centralized BiddingTransactions” (Lin 2022-137).On 14 December 2022, the Company initially repurchased 348,400 shares by way of centralized biddingtransactions, representing 0.02% of the total share capital of the Company. For details, please refer to the“Announcement of Joincare Pharmaceutical Group Industry Co., Ltd. on Initial Share Repurchase by Way
Joincare Pharmaceutical Group Annual Report 2023
of Centralized Bidding Transactions” (Lin 2022-144).As at 27 October 2023, the Company has repurchased a total of 49,706,643 shares by way of centralizedbidding transactions, representing 2.60% of total share capital (1,912,734,363 shares) of the Company,with the total amount paid was RMB599,914,693.93 (including handling fee). Accordingly, the Companyhas completed the repurchase. For details, please refer to the “Announcement of Joincare PharmaceuticalGroup Industry Co., Ltd. on Implementation Results of Share Repurchase and Share Changes” (Lin 2023-120).Upon application by the Company, the above shares were cancelled on 31 October 2023 at the ShanghaiBranch of China Securities Depository and Clearing Corporation Limited. Upon the completion of theshare cancellation, the total share capital of the Company changed from 1,912,734,363 shares to1,863,027,720 shares.
2. GDRs of the Company issued and listed on the SIX Swiss Exchange
On 26 September 2022, the Company’s GDRs were listed on the SIX Swiss Exchange in an offering of6,382,500 GDRs representing 63,825,000 underlying A shares, representing 3.31% of the Company’s totalshare capital at that time, at an issue price of USD$14.42 per GDR, with the final gross proceeds ofapproximately USD$92.04 million.The lock-up restriction period for the redemption of the GDRs issued by the Company is from 26September 2022 (Swiss time) to 23 January 2023 (Swiss time). As 23 January 2023 falls in the ChineseNew Year holiday, the transfer and settlement of A shares in relation to the cross-border conversion ofGDRs cannot proceed during the period from 23 January to 27 January 2023. In accordance with therelevant regulations on stock connect, the GDRs with the expiry of the lock-up restriction period for theredemption can be converted into A shares of the Company from 30 January 2023 (Beijing time). As ofthe closing of the Shanghai Stock Exchange on 30 January 2023, the number of A shares of the Companyrepresented by the outstanding GDRs was less than 50% of the number of underlying A shares representedby the GDRs actually issued by the Company as approved by the CSRC.The proceeds from the Company’s issuance of GDRs, after deducting the issuance fees, are intended forthe business development and strategic investments of the Company, aimed at improving the Company'scapabilities of global research and development, industrialization and commercialization, thus furtherdeepening the international business presence and replenishing the working capitals of the Company. Fordetails about deposit and actual use of GDR proceeds in 2023, please refer to the Special Report of JoincarePharmaceutical Group Industry Co., Ltd. on Deposit and Actual Utilization of Proceeds for 2023 disclosedby the Company on 3 April 2024.
3. Overall relocation and expansion project of Sichuan Guangda
On 6 March 2019, after review and approval by the Board of the Livzon Group, the controlling subsidiaryof the Company, considered and approved that Livzon Group entered into the Investment Agreement forthe “Overall Relocation and Expansion Project of Sichuan Guangda Pharmaceutical Manufacturing”(《四川光大制药整体搬迁调迁扩建项目投资协议书》) (the “Investment Agreement”) and the“Supplemental Agreement I with Sichuan Chengdu Pengzhou Municipal People's Government”(四川省成都市彭州市人民政府). Pursuant to the Investment Agreement, the Livzon Group will inject capital ofRMB646 million for investment in construction of the overall relocation and expansion project (the“Project”) of Sichuan Guangda, a wholly-owned subsidiary of the Company. Pursuant to the SupplementalAgreement I, Pengzhou Municipal People's Government has agreed to pay a compensation for demolitionof RMB90 million and grant total incentive of not more than RMB125.8 million for the construction ofnew plantsto the Company.As at 31 December 2023, the total investment of the specific contracts entered into for the Project
Joincare Pharmaceutical Group Annual Report 2023
amounted to RMB548.5066 million, and the sum of subsidies received from government authorities atvarious levels amounted to RMB174.4317 million. All construction work of the overall relocation andexpansion project have been completed and put into use on 12 July 2023.
4. Proposed Spin-Off and Listing of Livzon Diagnostics
On 10 November 2023, through comprehensively considering the changes in the capital marketenvironment, the Company’s own operating conditions and its future business strategy positioning andmaking overall arrangements for business development and capital operation planning, the Board of theLivzon considered and approved the termination of the preparation for the spin-off and listing of LivzonDiagnostics on the ChiNext Board of the Shenzhen Stock Exchange (the “Termination of the Spin-off”),and the application for listing of Livzon Diagnostics on the National Equities Exchange and Quotations(NEEQ) (the “Proposed Spin-off on NEEQ”). After the listing, Livzon Diagnostics will seek listing on theBeijing Stock Exchange as and when appropriate.On 8 December 2023, the Livzon was notified by the Hong Kong Stock Exchange that the ListingCommittee of the Hong Kong Stock Exchange has agreed that the Company may proceed with theProposed Spin-off on NEEQ under Practice Note 15 of the Hong Kong Listing Rules and has agreed togrant a waiver from strict compliance with the applicable requirements in relation to the assuredentitlement under paragraph 3(f) of Practice Note 15 of the Hong Kong Listing Rules in connection withthe Proposed Spin-off on NEEQ.On 12 January 2024, the Termination of the Spin-off and the Proposed Spin-off on NEEQ were consideredand approved at the 2024 first extraordinary general meeting of the Livzon.As at the disclosure date of the Report, Livzon Diagnostics has not submitted any other application orfiling to the National Equities Exchange and Quotations Co., Ltd. and the relevant regulatory authoritiesof the PRC.
Joincare Pharmaceutical Group Annual Report 2023
Chapter 7 Changes in Equity and Shareholders
I. Changes in Share Capital(I) Table of changes in shares
1. Table of changes in shares
Unit: shares
| Before the current change | Increase/decrease (+, -) due to the current change | After the current change | |||||||
| Number | Percentage (%) | Issuance of new shares | Issuance of bonus shares | Conversion of capital reserve to share capital | Others | Subtotal | Number | Percentage (%) | |
| I. Shares subject to selling restrictions | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 1. Shares held by state government | |||||||||
| 2. Shares held by state-owned entities | |||||||||
| 3. Shares held by other domestic holders | |||||||||
| Of which: Shares held by domestic non-state-owned entities | |||||||||
| Shares held by domestic natural persons | |||||||||
| 4. Shares held by foreign holders | |||||||||
| Including: Shares held by foreign entities | |||||||||
| Shares held by foreign natural persons | |||||||||
| II. Shares without selling restrictions | 1,929,189,374 | 100 | 3,500,889 | -67,166,456 | -63,665,567 | 1,865,523,807 | 100 | ||
| 1. Ordinary shares denominated in Renminbi | 1,929,189,374 | 100 | 3,500,889 | -67,166,456 | -63,665,567 | 1,865,523,807 | 100 | ||
| 2. Domestically listed foreign shares | |||||||||
| 3. Overseas listed foreign shares | |||||||||
| 4. Others | |||||||||
| III. Total number of shares | 1,929,189,374 | 100 | 3,500,889 | -67,166,456 | -63,665,567 | 1,865,523,807 | 100 | ||
2.Explanations on changes in shares
√Applicable □N/A
(1) The Cancellation of the Treasury Shares Previously Repurchased
The twenty-fifth meeting of the eighth session of the Board of Directors and the first extraordinary generalmeeting of 2023 were convened by the Company on 28 April 2023 and 19 May 2023, respectively, atwhich the Resolution on the Cancellation of Treasury Shares Previously Repurchased was considered andapproved. As the threeyear term for the share repurchase conducted by the Company in 2020 will expiresoon and the Company has no plan to use remaining shares held in special securities account forrepurchases for share incentive plans or employee stock ownership plans in the near future, it was agreed
Joincare Pharmaceutical Group Annual Report 2023
that the Company should cancel the remaining 17,459,813 shares previously repurchased and held inspecial securities account for repurchases. The cancellation of shares was completed upon July 4, 2023.
(2) Share repurchase for cancellation
From 18 Novemmber 2022 to 17 November 2023, the Company expected to repurchase shares at a priceof no more than RMB16 per share (inclusive) (The company adjusted the upper limit of the repurchaseprice to RMB15.82 per share after the Implementation of 2022 Profit Distribution) and the total amountof repurchase funds shall be not less than RMB300 million (inclusive) and not more than RMB600 million(inclusive). The repurchased shares will be used to reduce the Company's registered capital. The Companyhas repurchased a total of 49,706,643 shares as of 27 October 2023, and cancelled such shares with theShanghai Branch of China Securities Depository and Clearing Corporation Limited on 31 October 2023.
(3) Exercise of Rights under Share Options Incentive Scheme
The number of share options for the First Exercise Period of the First Grant under the 2022 Share OptionsIncentive Scheme of the Company was 18,832,000, with the exercise period from 5 September 2023 to 4September 2024. As at 31 December 2023, during the exercise period of the first grant under the 2022Share Options Incentive Scheme of the Company, the cumulative number of options completing sharetransfer registration through voluntary exercise at the Shanghai Branch of China Securities Depositoryand Clearing Corporation Limited was 3,500,889 shares.
3.The influence of changes in shares on financial indicators such as earnings per share and net assetsper share in the most recent year and the most recent Reporting Period (if applicable)
□Applicable √N/A
4.Other information disclosed as the Company deems necessary or required by the securitiesregulatory authority
□Applicable √N/A
(II) Changes in shares subject to selling restrictions
□Applicable √N/A
II. Issuance and Listing of Securities(I) Securities issued during the Reporting Period
□Applicable √N/A
Explanations on securities issuance during the Reporting Period (list separately bonds with differentinterest rates during the duration):
□Applicable √N/A
(II) Changes in total number of shares, shareholding structure, and structure of assets and liabilitiesof the Company
□Applicable √N/A
(III) Outstanding shares granted under the employee share ownership scheme
□Applicable √N/A
III. Information on Shareholders and the De Facto Controller(I) Total number of shareholders
| Total number of shareholders of ordinary shares as of the End of the Reporting Period | 77,355 |
| Total number of shareholders of ordinary shares as of the end of the | 78,332 |
Joincare Pharmaceutical Group Annual Report 2023
| month immediately prior to the publish date of this annual report | |
| Total number of holders of preferred shares with voting rights restored as of the end of the reporting period (shareholder) | 0 |
| Total number of shareholders of preferred shares with voting rights restored as at the end of the month immediately preceding the disclosure date of the annual report (shareholder) | 0 |
(II) Shares held by top 10 shareholders and top 10 holders of tradable shares (or shares withoutselling restrictions) as of the End of the Reporting Period
Unit: shares
| Shareholdings of the Top 10 shareholders (excluding shares lent through refinancing business) | ||||||||
| Name of shareholder (Full name) | Change during the Reporting Period | Number of shares held at the end of the Period | Percentage (%) | Number of shares held subject to selling restrictions | Pledge, mark or lock-up | Nature of shareholder | ||
| Share status | Number | |||||||
| Shenzhen Baiyeyuan Investment Co., Ltd.* (深圳市百业源投资有限公司) | 17,380,900 | 895,653,653 | 48.01 | 0 | Pledge | 75,679,725 | Domestic non-state-owned entity | |
| Hong Kong Securities Clearing Company Limited | -31,744,461 | 81,511,706 | 4.37 | 0 | Unknown | Unknown | ||
| Might Seasons Limited | -21,557,735 | 35,929,699 | 1.93 | 0 | Unknown | Foreign entity | ||
| Perseverance Asset Management L.L.P–Gaoyi Xiaofeng No. 2 Zhixin Fund | 16,201,348 | 17,161,348 | 0.92 | 0 | Unknown | Unknown | ||
| China Foreign Economy and Trade Trust Co., Ltd.–Foreign Trust–Gaoyi Xiaofeng Hongyuan Collection Fund Trust Plan | 15,717,148 | 16,677,148 | 0.89 | 0 | Unknown | Unknown | ||
| Huaxia Life Insurance Co., Ltd. -Proprietary | 3,453,500 | 12,729,218 | 0.68 | 0 | Unknown | Unknown | ||
| Abu Dhabi Investment Authority | 4,281,487 | 10,201,829 | 0.55 | 0 | Unknown | Foreign entity | ||
| CPIC Fund -China Pacific Life Insurance Co., Ltd. -with-profit insurance-CPIC Fund China Pacific Life Equity Relative Income (Guaranteed Dividend) single assets management plan | 6,114,029 | 10,135,762 | 0.54 | 0 | Unknown | Unknown | ||
| Joincare Pharmaceutical Group Industry Co., Ltd. — the Third Phase Ownership Scheme under Medium to Long-term Business Partner Share Ownership Scheme | 9,370,400 | 9,370,400 | 0.50 | 0 | Unknown | Others | ||
| Bank of Shanghai Co., Ltd.－Yinhua CSI Innovative Drug Industry Trading Open-end Index Securities Investment Fund | 4,780,100 | 8,458,496 | 0.45 | 0 | Unknown | Unknown | ||
| Shareholdings of the Top 10 shareholders without selling restrictions | ||||||||
| Name of shareholder | Number of tradable shares held without selling restrictions | Class and number of shares | ||||||
| Class | Number | |||||||
Joincare Pharmaceutical Group Annual Report 2023
| Shenzhen Baiyeyuan Investment Co., Ltd.* (深圳市百业源投资有限公司) | 895,653,653 | Ordinary shares denominated in Renminbi | 895,653,653 |
| Hong Kong Securities Clearing Company Limited | 81,511,706 | Ordinary shares denominated in Renminbi | 81,511,706 |
| Might Seasons Limited | 35,929,699 | Ordinary shares denominated in Renminbi | 35,929,699 |
| Perseverance Asset Management L.L.P–Gaoyi Xiaofeng No. 2 Zhixin Fund | 17,161,348 | Ordinary shares denominated in Renminbi | 17,161,348 |
| China Foreign Economy and Trade Trust Co., Ltd.–Foreign Trust–Gaoyi Xiaofeng Hongyuan Collection Fund Trust Plan | 16,677,148 | Ordinary shares denominated in Renminbi | 16,677,148 |
| Huaxia Life Insurance Co., Ltd. -Proprietary | 12,729,218 | Ordinary shares denominated in Renminbi | 12,729,218 |
| Abu Dhabi Investment Authority | 10,201,829 | Ordinary shares denominated in Renminbi | 10,201,829 |
| CPIC Fund -China Pacific Life Insurance Co., Ltd. -with-profit insurance-CPIC Fund China Pacific Life Equity Relative Income (Guaranteed Dividend) single assets management plan | 10,135,762 | Ordinary shares denominated in Renminbi | 10,135,762 |
| Joincare Pharmaceutical Group Industry Co., Ltd. — the Third Phase Ownership Scheme under Medium to Long-term Business Partner Share Ownership Scheme | 9,370,400 | Ordinary shares denominated in Renminbi | 9,370,400 |
| Bank of Shanghai Co., Ltd.－Yinhua CSI Innovative Drug Industry Trading Open-end Index Securities Investment Fund | 8,458,496 | Ordinary shares denominated in Renminbi | 8,458,496 |
| Notes on the special repurchase account among the Top 10 shareholders | Not applicable | ||
| Description of the above shareholders involved in entrustment/entrusted voting right and waiver of voting right | Not applicable | ||
| Description of connection or acting-in-concert relationship of the above shareholders | There was no connection or acting-in-concert relationship between Shenzhen Baiyeyuan Investment Co., Ltd., a controlling shareholder of the Company, and other shareholders; whether there is connection or acting-in-concert relationship among other shareholders is unknown. | ||
| Explanation of Preferred Shareholders and Their Holdings Following the Restoration of Voting Rights | Not applicable | ||
Shares lent by the Top 10 shareholders by participating in the refinancing business
√Applicable □N/A
Unit: shares
| Shares lent by the Top 10 shareholders by participating in the refinancing business | ||||||||
| Name of shareholder (Full name) | Number of shares held in ordinary and credit accounts at the beginning of the Period | Number of shares lent through refinancing business and not yet returned at the beginning of the Period | Number of shares held in ordinary and credit accounts at the end of the Period | Number of shares lent through refinancing business and not yet returned at the end of the Period | ||||
| Total number | Proportion (%) | Total number | Proportion (%) | Total number | Proportion (%) | Total number | Proportion (%) | |
| Shenzhen Baiyeyuan Investment Co., Ltd.* (深圳市百业源投资有限公司) | 878,272,753 | 45.53 | 17,380,900 | 0.90 | 895,653,653 | 48.01 | 0 | 0 |
| Bank of Shanghai Co., Ltd.－Yinhua CSI Innovative Drug Industry Trading Open-end Index Securities Investment Fund | 3,678,396 | 0.19 | 542,600 | 0.03 | 8,458,496 | 0.45 | 10,000 | 0.001 |
Changes shareholdings of the Top 10 shareholders compared with the previous period
Joincare Pharmaceutical Group Annual Report 2023
√Applicable □N/A
Unit: shares
| Changes shareholdings of the Top 10 shareholders compared with the end of the previous period | |||||
| Name of shareholder (Full name) | New / withdrawn shareholdings during the Reporting Period | Number of shares lent through refinancing business and not yet returned at the end of the Period | Number of shares held by shareholders in ordinary and credit accounts, and lent through refinancing business and not yet returned at the end of the Period | ||
| Total number | Proportion (%) | Total number | Proportion (%) | ||
| Perseverance Asset Management L.L.P–Gaoyi Xiaofeng No. 2 Zhixin Fund | New | 0 | 0 | 17,161,348 | 0.92 |
| China Foreign Economy and Trade Trust Co., Ltd.–Foreign Trust–Gaoyi Xiaofeng Hongyuan Collection Fund Trust Plan | New | 0 | 0 | 16,677,148 | 0.89 |
| CPIC Fund -China Pacific Life Insurance Co., Ltd. -with-profit insurance-CPIC Fund China Pacific Life Equity Relative Income (Guaranteed Dividend) single assets management plan | New | 0 | 0 | 10,135,762 | 0.54 |
| Joincare Pharmaceutical Group Industry Co., Ltd. — the Third Phase Ownership Scheme under Medium to Long-term Business Partner Share Ownership Scheme | New | 0 | 0 | 9,370,400 | 0.50 |
| Bank of Shanghai Co., Ltd.－Yinhua CSI Innovative Drug Industry Trading Open-end Index Securities Investment Fund | New | 10,000 | 0.001 | 8,468,496 | 0.45 |
| Citibank, National Association | withdrawn | 0 | 0 | 230 | 0.00 |
| Agricultural Bank of China Limited –CSI 500 Exchange Traded Index Securities Investment Fund | withdrawn | 1,509,200 | 0.08 | 6,564,974 | 0.35 |
| He Zhong | withdrawn | 0 | 0 | 401,100 | 0.02 |
| Joincare Pharmaceutical Group Industry Co., Ltd. — the Second Phase Ownership Scheme under Medium to Long-term Business Partner Share Ownership Scheme | withdrawn | 0 | 0 | 6,275,372 | 0.34 |
| Bosera Funds Management Co., Ltd.-419 portfolio of social security funds | withdrawn | 0 | 0 | 2,962,569 | 0.16 |
Number of shares held by the Top 10 shareholders with selling restrictions and the description ofthe selling restrictions
□Applicable √N/A
(III) Strategic investors or general legal persons who became top 10 shareholders as a result ofallotment of new shares
□Applicable √N/A
IV. Information on the Controlling Shareholder and the De Facto Controller(I) Information on the Controlling shareholder
1. Legal person
√Applicable □N/A
| Name | Shenzhen Baiyeyuan Investment Co., Ltd.* (深圳市百业源投资有限公司) |
| Person in charge of the unit or legal | Zhu Baoguo |
Joincare Pharmaceutical Group Annual Report 2023
| representative | |
| Date of incorporation | 21 January 1999 |
| Principal business | Investment in industry, domestic commerce, and material supply and marketing industry |
| Equity held in other domestic and overseas listed companies during the Reporting Period | Except for the daily trading of securities assets in the secondary market, Baiyeyuan did not hold or participate in the equity of other domestic and overseas listed companies during the Reporting Period. |
| Others | Not applicable |
2.Natural person
□Applicable √N/A
3.Special statement if the Company does not have a controlling shareholder
□Applicable √N/A
4.Statement on changes in controlling shareholders during the Reporting Period
□Applicable √N/A
5.Block diagram describing controlling shareholders' ownership of and control over the Company
√Applicable □N/A
(II) Information on the de facto controller
1.Legal person
□Applicable √N/A
2.Natural person
√Applicable □N/A
| Name | Zhu Baoguo |
| Nationality | China |
| Hold the right of residence in other countries or regions or not | No |
| Main occupation and position | Chairman of the Company and Livzon Group |
| Domestic and overseas listed companies controlled in the past 10 years | Except for the Company and Livzon Group, Mr. Zhu Baoguo has never controlled any other domestic and overseas listed companies |
3.Special statement if the Company does not have a de facto controller
□Applicable √N/A
4.Statement on change of control of the Company during the Reporting Period
□Applicable √N/A
Joincare Pharmaceutical Group Annual Report 2023
5.Block diagram describing de facto controllers' ownership of and control over the Company
√Applicable □N/A
6.De facto controller controls the Company through trust or other asset management methods
□Applicable √N/A
(III) Other information on the controlling shareholder and the de facto controllers
□Applicable √N/A
V. Cumulative Number of Shares Pledged by Controlling Shareholders or the Largest Shareholderof the Company and Their Persons Acting in Concert Accounts for More Than 80% of the SharesHeld by Them in the Company
□Applicable √N/A
VI. Other Corporate Shareholders Holding More Than 10% Shares
□Applicable √N/A
VII. Explanation on Restrictions on Share Selling
□Applicable √N/A
VIII. Information on Implementation of Share Repurchases Plans during the Reporting Period
√Applicable □N/A
Unit: 10,000 Yuan Currency: RMB
| Name of share repurchase plan | Plan on share repurchase by centralized bidding |
| Disclosure date of share repurchase plan | 17 October 2022 |
| Number of shares to be repurchased and its percentage in total share capital (%) | 0.97~1.95 |
| Proposed repurchase amount | 30,000~60,000 |
| Proposed repurchase period | 12 months after the date when the share repurchase plan is approved at the general meeting |
| Purpose of repurchase | To reduce registered capital of the Company |
| Repurchased number (shares) | 49,706,643 |
| Percentage of repurchased shares in the target shares under share incentive scheme (%) (if any) | Not applicable |
| The progress of the Company's reduction of repurchased shares by centralized bidding | Not applicable |
Joincare Pharmaceutical Group Annual Report 2023
Chapter 8 Information on Preferred Shares
□Applicable √N/A
Joincare Pharmaceutical Group Annual Report 2023
Chapter 9 Information on Bonds
I. Corporate Bonds, Debentures and Debt Financing Instruments Issued by Non-Financial Entities
□Applicable √N/A
II. Convertible Corporate Bonds
□Applicable √N/A
Joincare Pharmaceutical Group Annual Report 2023
Chapter 10 Financial Statements
I Auditor’s report
√Applicable □N/A
GTCNSZ（2024）NO.442A006709To all shareholders of Joincare Pharmaceutical Group Industry Co., Ltd.:
I. Auditor's OpinionWe have audited the financial statements of Joincare Pharmaceutical Group Industry Co., Ltd.(健康元药业集团股份有限公司) (the “Group”), which comprise the Consolidated andCompany balance sheets as at 31 December 2023, and the Consolidated and Company incomestatements, the Consolidated and Company cash flow statements, the Consolidated andCompany statements of changes in shareholders' equity for the year ended 2023, and notes tothe financial statements.In our opinion, the accompanying financial statements present fairly, in all material respects,the Consolidated and Company financial positions as at 31 December 2023, and their financialperformance and their cash flows for the year then ended in accordance with the requirementsof Accounting Standards for Business Enterprises.
II. Basis for OpinionWe conducted our audit in accordance with China Standards on Auditing. Our responsibilitiesunder those standards are further described in the Auditor's Responsibilities for the Audit of theFinancial Statements section of our report. We are independent of the Company and havefulfilled our other ethical responsibilities in accordance with the China Code of Ethics forCertified Public Accountants. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our opinion.
III. Key Audit MattersKey audit matters are those matters that, in our professional judgment, were of mostsignificance in our audit of the financial statements for the current year. These matters wereaddressed in the context of our audit of the financial statements as a whole, and in forming ouropinion thereon, and we do not provide a separate opinion on these matters.(I) Revenue recognition
Joincare Pharmaceutical Group Annual Report 2023
For relevant disclosure, please refer to Note III. 29 and Note V. 43 to the financialstatements.
1. Description of the matter
The Group generated revenue from primary operation in year ended 31 December 2023were RMB 16,521.72 million. We identified revenue recognition as a key audit matter dueto the materiality of revenue to the financial statements as a whole and the risk of materialmisstatement as to the occurrence and accuracy for in the appropriate accounting period.
2. Addressed in the context of our audit
(1) We obtained an understanding of and assessed the Company management's design andoperating effectiveness of key internal controls over revenue recognition.
(2) We obtained the contracts signed between the Company and its customers and verified thekey terms of the contracts, such as shipment and acceptance, payment and settlement, exchangeand return policies.
(3) We inquired about the business registration information of the Company's customers andasked relevant personnel of the Company in order to confirm whether there was an affiliatedrelationship between the Company and its customers; obtained an understanding of the reasonsfor customer changes and contract performance among others; counted and analyzed end salesof products purchased by selected customers from the Company based on the business systemof the Company's directly connected customers.
(4) We obtained records of returns and exchanges in the Company's business system andchecked them to confirm whether there were significant abnormalities that affected revenuerecognition.
(5) We selected samples from sales transaction records in 2023 to check contracts, purchaseorders, shipping documents, transportation documents, bookkeeping vouchers, paymentrecords, and periodic reconciliation letters, and performed external confirmation procedures onmajor customer sales and accounts receivable.
(6) We performed analytical procedures for the reasonableness on changes in revenue byconsidering the product type and factors such as market trends, industry trends, businessexpansion plan as well as market data collected by third-party consultants.
(7) We selected samples of revenue transactions around the balance sheet date, reviewed salescontracts, purchase orders, shipping documents, transportation documents, and bookkeepingvouchers, and evaluated whether revenues were recorded in the appropriate accounting period.(II) Allowance for bad debts on accounts receivable
Joincare Pharmaceutical Group Annual Report 2023
For relevant disclosure, please refer to Note III. 10 and Note V. 4 to the financial statements
1. Description of the matter
As of 31 December 2022, the Group's closing balance of accounts receivable as reported inthe consolidated balance sheet was RMB2,779.25 million and the allowance for bad debtswas RMB 86.31 million which were material to the financial statements as a whole. Themanagement is required to apply significant accounting estimates and judgments inassessing the expected recoverable amount of accounts receivable, which could have amaterial impact on the financial statements if they were not collected on time or were notrecovered resulting in a bad debt loss. Therefore, we identified allowance for bad debts ofaccounts receivable as a key audit matter.
2. Addressed in the context of our audit
(1) We obtained an understanding of and assessed the management's design and operatingeffectiveness of key internal controls over the management of accounts receivable
(2) We obtained an understanding of the methodology and process of recognizing theexpected credit loss ratio and the key parameters and assumptions applied in the expectedcredit loss model, including the method of assessing the customers' credit riskcharacteristics for the grouping accounts receivable and the historical migration rate dataused in the expected loss ratio; evaluated whether the expected credit loss ratio was set bytaking into account and was appropriately adjusted for current economic conditions andforward-looking information, and assessed the reasonableness of the estimate of theallowance for bad debts.
(3) We obtained a schedule of allowance for bad debts on accounts receivable and checkedwhether the calculation method was implemented in accordance with the policy for baddebts; and recalculated the amount of allowance for bad debts to ensure its accuracy.
(4) We analysed the ratio of the closing balance of allowance for bad debts to accountsreceivable and compared the allowance for bad debts in the previous period to the actualamount, and analyzed whether the allowance for bad debts on accounts receivable wasadequate.
(5) We evaluated the reasonableness of the allowance for bad debts by analyzing the agingof accounts receivable and the reputation of customers, and performing audit proceduressuch as audit confirmation and subsequent collection of receivables.
IV. Other InformationManagement of the Company is responsible for the other information. The other information
Joincare Pharmaceutical Group Annual Report 2023
comprises the information included in the Company’s 2023 annual report, but does not includethe financial statements and our auditor's report thereon.Our opinion on the financial statements does not cover the other information and we do notexpress any form of assurance conclusion thereon.In connection with our audit of the financial statements, our responsibility is to read the otherinformation and, in doing so, consider whether the other information is materially inconsistentwith the financial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated.If, based on the work we have performed, we conclude that there is a material misstatement ofthis other information, we are required to report that fact. We have nothing to report in thisregard.
V. Responsibilities of Management and Those Charged with Governance for the FinancialStatementsManagement of the Company is responsible for the preparation of the financial statements toachieve fair presentation in accordance with Accounting Standards for Business Enterprises,and for the design, implementation and maintenance of such internal control as managementdetermine is necessary to enable the preparation of the financial statements that are free frommaterial misstatement, whether due to fraud or error.In preparing the financial statements, management is responsible for assessing the Company'sability to continue as a going concern, disclosing, as applicable, matters related to going concernand using the going concern basis of accounting unless management either intend to liquidatethe Company or to cease operations, or have no realistic alternative but to do so.Those charged with governance are responsible for overseeing the Company's financialreporting process.
VI. Auditor's Responsibilities for the Audit of the Financial StatementsOur objectives are to obtain reasonable assurance about whether the financial statements as awhole are free from material misstatement, whether due to fraud or error, and to issue anauditor's report that includes our opinion. Reasonable assurance is a high level of assurance,but is not a guarantee that an audit conducted in accordance with auditing standards will alwaysdetect a material misstatement when it exists. Misstatements can arise from fraud or error andare considered material if, individually or in the aggregate, they could reasonably be expectedto influence the economic decisions of users taken on the basis of these financial statements.
Joincare Pharmaceutical Group Annual Report 2023
As part of an audit in accordance with auditing standards, we exercise professional judgmentand maintain professional skepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whetherdue to fraud or error, design and perform audit procedures responsive to those risks, and obtainaudit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk ofnot detecting a material misstatement resulting from fraud is higher than for one resulting fromerror, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or theoverride of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design auditprocedures that are appropriate in the circumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
(4) Conclude on the appropriateness of the management’s use of the going concern basis ofaccounting and, based on the audit evidence obtained, whether a material uncertainty existsrelated to events or conditions that may cast significant doubt on the Company's ability tocontinue as a going concern. If we conclude that a material uncertainty exists, the auditingstandards require us to draw attention to users of the financial statements in our auditor's reportto the related disclosures in the financial statements or, if such disclosures are inadequate, tomodify our opinion. Our conclusions are based on the audit evidence obtained up to the date ofour auditor's report. However, future events or conditions may cause the Company to cease tocontinue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, includingthe disclosures, and whether the financial statements represent the underlying transactions andevents in a manner that achieves fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of theentities or business activities within the Company to express an opinion on the financialstatements. We are responsible for the direction, supervision and performance of the group audit.We remain solely responsible for our audit opinion.We communicate with those charged with governance regarding, among other matters, theplanned scope and timing of the audit and significant audit findings, including any significantdeficiencies in internal control that we identify during our audit.We also provide those charged with governance with a statement that we have complied withrelevant ethical requirements regarding independence, and to communicate with them allrelationships and other matters that may reasonably be thought to bear on our independence,and where applicable, related safeguards.
Joincare Pharmaceutical Group Annual Report 2023
From the matters communicated with those charged with governance, we determine thosematters that were of most significance in the audit of the financial statements of the currentperiod and are therefore the key audit matters. We describe these matters in our auditor's reportunless law or regulation precludes public disclosure about the matter or when, in extremely rarecircumstances, we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest benefits of such communication.
| Grant Thornton（Special General Partnership） | Certified Public Accountants Wang Yuan (The partner in charge of the auditing service project) Certified Public Accountants Wang Qilai |
| Beijing, China | 2 April 2024 |
Joincare Pharmaceutical Group Annual Report 2023
II Financial statements
Consolidated Balance Sheet
December 31, 2023
Prepared by: Joincare Pharmaceutical Group Industry Co., Ltd.
Unit: Yuan Currency: RMB
| Item | Note | December 31, 2023 | December 31, 2022 |
| Current assets: | |||
| Cash and bank balances | Ⅴ.1 | 15,691,888,314.83 | 14,808,488,110.96 |
| Financial assets held for trading | Ⅴ.2 | 82,899,154.24 | 109,015,664.98 |
| Notes receivable | Ⅴ.3 | 1,941,200,568.00 | 1,959,985,016.85 |
| Accounts receivable | Ⅴ.4 | 2,692,941,866.24 | 3,103,758,850.15 |
| Receivables financing | |||
| Prepayments | Ⅴ.5 | 280,102,860.94 | 364,265,142.57 |
| Other receivables | Ⅴ.6 | 46,010,624.61 | 52,535,740.14 |
| Including: Interests receivable | |||
| Dividends receivable | |||
| Inventories | Ⅴ.7 | 2,655,808,391.09 | 2,561,869,999.57 |
| Contract assets | |||
| Assets held-for-sale | |||
| Non-current assets due within one year | Ⅴ.8 | 406,376,425.44 | 54,048,611.11 |
| Other current assets | Ⅴ.9 | 77,402,185.01 | 163,539,900.32 |
| Total current assets | 23,874,630,390.40 | 23,177,507,036.65 | |
| Non-current assets: | |||
| Debt investment | |||
| Other debt investment | |||
| Long-term receivables | |||
| Long-term equity investment | Ⅴ.10 | 1,411,036,353.95 | 1,419,882,594.59 |
| Other equity instrument investments | Ⅴ.11 | 1,155,283,408.36 | 1,193,958,879.05 |
| Other non-current financial assets | |||
| Investment properties | Ⅴ.12 | 16,958,213.00 | 6,191,475.43 |
| Fixed assets | Ⅴ.13 | 5,664,352,555.97 | 5,265,200,110.91 |
| Construction in progress | Ⅴ.14 | 531,059,118.06 | 811,300,068.96 |
| Productive biological assets | |||
| Oil and gas assets | |||
| Right-of-use assets | Ⅴ.15 | 36,233,067.49 | 41,843,133.97 |
| Intangible assets | Ⅴ.16 | 683,337,333.73 | 802,115,125.75 |
| Development cost | Ⅴ.17 | 483,494,487.17 | 428,284,884.17 |
| Goodwill | Ⅴ.18 | 636,339,503.82 | 614,468,698.73 |
| Long-term prepaid expenses | Ⅴ.19 | 328,642,740.95 | 277,867,716.95 |
| Deferred tax assets | Ⅴ.20 | 579,534,830.15 | 540,037,823.56 |
| Other non-current assets | Ⅴ.21 | 957,224,255.77 | 1,156,772,182.99 |
| Total non-current assets | 12,483,495,868.42 | 12,557,922,695.06 | |
| Total assets | 36,358,126,258.82 | 35,735,429,731.71 | |
| Current liabilities: | |||
| Short-term loans | Ⅴ.23 | 2,076,159,347.22 | 2,126,050,615.06 |
| Financial liabilities held for trading | Ⅴ.24 | 86,817.12 | 755,634.43 |
| Notes payable | Ⅴ.24 | 1,469,148,287.38 | 1,635,906,989.22 |
| Accounts payable | Ⅴ.26 | 894,286,243.28 | 943,905,580.91 |
| Receipts in advance | |||
| Contract liabilities | Ⅴ.27 | 159,082,637.65 | 292,977,730.74 |
| Employee benefits payable | Ⅴ.28 | 399,466,473.91 | 573,010,571.46 |
| Taxes payable | Ⅴ.29 | 410,202,854.09 | 337,702,273.73 |
| Other payables | Ⅴ.30 | 3,682,604,038.73 | 3,680,334,360.88 |
| Including: Interests payable | |||
Joincare Pharmaceutical Group Annual Report 2023
| Dividends payable | 12,478,280.13 | 12,252,074.84 | |
| Liabilities held-for-sale | |||
| Non-current liabilities due within one year | Ⅴ.31 | 718,564,144.31 | 63,077,260.98 |
| Other current liabilities | Ⅴ.32 | 51,087,001.83 | 101,276,714.35 |
| Total current liabilities | 9,860,687,845.52 | 9,754,997,731.76 | |
| Non-current liabilities: | |||
| Long-term loans | Ⅴ.33 | 3,122,273,278.99 | 3,230,844,042.88 |
| Bonds payable | |||
| Lease liabilities | Ⅴ.34 | 15,422,948.41 | 23,482,486.07 |
| Long-term payables | |||
| Long-term payroll payable | |||
| Estimated liabilities | |||
| Deferred income | Ⅴ.35 | 370,179,550.82 | 384,537,267.55 |
| Deferred tax liabilities | Ⅴ.20 | 260,032,144.44 | 237,193,884.37 |
| Other non-current liabilities | Ⅴ.36 | 90,000,000.00 | 84,000,000.00 |
| Total non-current liabilities | 3,857,907,922.66 | 3,960,057,680.87 | |
| Total liabilities | 13,718,595,768.18 | 13,715,055,412.63 | |
| Owner's equity (or shareholder's equity): | |||
| Share capital | Ⅴ.37 | 1,865,523,807.00 | 1,929,189,374.00 |
| Other equity instruments | |||
| Including: Preferred shares | |||
| Perpetual debts | |||
| Capital reserve | Ⅴ.38 | 1,601,720,087.71 | 2,343,693,215.99 |
| Less: Treasury shares | Ⅴ.39 | 347,176,561.29 | |
| Other comprehensive income | Ⅴ.40 | -12,246,131.22 | 4,704,473.53 |
| Special reserve | |||
| Surplus reserve | Ⅴ.41 | 859,046,203.77 | 734,766,581.50 |
| Undistributed profits | Ⅴ.42 | 9,441,857,956.80 | 8,456,778,287.49 |
| Total shareholders' equity attributable to the parent | 13,755,901,924.06 | 13,121,955,371.22 | |
| Minority shareholder's equity | 8,883,628,566.58 | 8,898,418,947.86 | |
| Total owner's equity (or shareholder's equity) | 22,639,530,490.64 | 22,020,374,319.08 | |
| Total liabilities and owner's equity (or shareholder's equity) | 36,358,126,258.82 | 35,735,429,731.71 | |
Person-in-charge of the Company:
Zhu Baoguo
Person-in-charge of the Company’s
accounting work: Qiu Qingfeng
Person-in-charge of the accounting
department: Qiu Qingfeng
Joincare Pharmaceutical Group Annual Report 2023
Balance Sheet of the Parent Company
December 31, 2023
Prepared by: Joincare Pharmaceutical Group Industry Co., Ltd.
Unit: Yuan Currency: RMB
| Item | Note | December 31, 2022 | December 31, 2021 |
| Current assets: | |||
| Cash and bank balances | 2,216,321,523.93 | 3,148,933,185.29 | |
| Financial assets held for trading | |||
| Notes receivable | 191,417,091.37 | 249,617,024.89 | |
| Accounts receivable | 315,179,282.98 | 291,630,857.74 | |
| Receivable financing | |||
| Prepayments | 142,404,994.03 | 542,966,676.99 | |
| Other receivables | 686,367,834.30 | 785,307,024.78 | |
| Including: Interest receivable | |||
| Dividends receivable | 519,999,500.00 | 544,999,500.00 | |
| Inventories | 88,930,104.82 | 63,656,837.97 | |
| Contract assets | |||
| Assets held-for-sale | |||
| Non-current assets due within one year | 406,376,425.44 | 54,048,611.11 | |
| Other current assets | |||
| Total current assets | 4,046,997,256.87 | 5,136,160,218.77 | |
| Non-current assets: | |||
| Debt investment | |||
| Other debt investment | |||
| Long-term receivables | |||
| Long-term equity investment | 3,748,495,719.02 | 3,524,184,512.63 | |
| Other equity instrument investment | 161,234,048.68 | 141,562,064.27 | |
| Other non-current financial assets | |||
| Investment properties | 6,191,475.43 | 6,191,475.43 | |
| Fixed assets | 44,824,960.31 | 46,410,672.12 | |
| Construction in progress | 8,212,014.32 | 15,330,867.65 | |
| Productive biological assets | |||
| Oil and gas assets | |||
| Right-of-use assets | 3,440,952.82 | 7,570,096.21 | |
| Intangible assets | 39,456,409.04 | 20,154,211.97 | |
| Development cost | 139,141,503.86 | 92,797,615.87 | |
| Goodwill | |||
| Long-term prepaid expenses | 10,365,585.94 | 552,795.74 | |
| Deferred tax assets | 97,251,604.00 | 89,978,336.18 | |
| Other non-current assets | 641,144,559.34 | 815,024,705.98 | |
| Total non-current assets | 4,899,758,832.76 | 4,759,757,354.05 | |
| Total assets | 8,946,756,089.63 | 9,895,917,572.82 | |
| Current liabilities: | |||
| Short-term loans | 200,149,722.22 | 100,091,666.67 | |
| Financial liabilities held for trading | |||
| Notes payable | 371,735,241.80 | 924,199,480.81 | |
| Accounts payable | 91,377,730.30 | 257,832,649.19 | |
| Receipts in advance | |||
| Contract liabilities | 10,456,371.81 | 53,648,681.36 | |
Joincare Pharmaceutical Group Annual Report 2023
| Employee benefits payable | 43,877,751.41 | 139,895,738.09 | |
| Taxes payable | 26,917,149.98 | 10,549,309.54 | |
| Other payables | 460,037,009.32 | 1,303,649,356.48 | |
| Including: Interests payable | |||
| Dividends payable | |||
| Liabilities held-for-sale | |||
| Non-current liabilities due within one year | 52,732,739.68 | 47,152,440.47 | |
| Other current liabilities | 1,308,875.01 | 3,007,795.91 | |
| Total current liabilities | 1,258,592,591.53 | 2,840,027,118.52 | |
| Non-current liabilities: | |||
| Long-term loans | 1,312,000,000.00 | 1,154,000,000.00 | |
| Bonds payable | |||
| Lease liabilities | 3,729,020.22 | ||
| Long-term payables | |||
| Long-term payroll payable | |||
| Estimated liabilities | |||
| Deferred income | 11,109,600.00 | 20,534,000.00 | |
| Deferred tax liabilities | 2,742,846.41 | 2,133,190.37 | |
| Other non-current liabilities | |||
| Total non-current liabilities | 1,325,852,446.41 | 1,180,396,210.59 | |
| Total liabilities | 2,584,445,037.94 | 4,020,423,329.11 | |
| Owner's equity (or shareholder's equity): | |||
| Share capital | 1,865,523,807.00 | 1,929,189,374.00 | |
| Other equity instruments | |||
| Including: Preferred shares | |||
| Perpetual debts | |||
| Capital reserve | 972,063,254.79 | 1,678,414,507.96 | |
| Less: Treasury shares | 347,176,561.29 | ||
| Other comprehensive income | 4,379,477.64 | 726,576.72 | |
| Special reserve | |||
| Surplus reserve | 770,444,255.39 | 646,164,633.12 | |
| Undistributed profits | 2,749,900,256.87 | 1,968,175,713.20 | |
| Total owner's equity (or shareholder's equity) | 6,362,311,051.69 | 5,875,494,243.71 | |
| Total liabilities and owner's equity (or shareholder's equity) | 6,362,311,051.69 | 5,875,494,243.71 | |
| 8,946,756,089.63 | 9,895,917,572.82 | ||
Person-in-charge of the Company:
Zhu Baoguo
Person-in-charge of the Company’saccounting work: Qiu Qingfeng
Person-in-charge of the accounting
department: Qiu Qingfeng
Joincare Pharmaceutical Group Annual Report 2023
Consolidated Income Statement
From January to December, 2023
Unit: Yuan Currency: RMB
| Item | Note | 2023 | 2022 |
| I. Total revenues | Ⅴ.43 | 16,646,350,349.72 | 17,142,753,068.82 |
| Including: Operating revenues | 16,646,350,349.72 | 17,142,753,068.82 | |
| II. Total operating costs | 13,123,515,536.16 | 13,784,938,368.95 | |
| Including: Operating costs | Ⅴ.43 | 6,298,465,671.11 | 6,252,265,308.40 |
| Operating tax and surcharges | Ⅴ.44 | 203,209,120.85 | 199,746,357.56 |
| Selling expenses | Ⅴ.45 | 4,434,442,281.05 | 4,950,802,456.16 |
| Administrative expenses | Ⅴ.46 | 930,481,615.70 | 992,483,591.51 |
| R&D expenses | Ⅴ.47 | 1,661,757,980.90 | 1,742,088,079.94 |
| Financial expenses | Ⅴ.48 | -404,841,133.45 | -352,447,424.62 |
| Including: Interest expenses | 146,728,005.05 | 139,016,104.44 | |
| Interest income | 532,253,758.86 | 395,476,309.66 | |
| Add: Other income | Ⅴ.49 | 259,061,799.00 | 289,868,006.44 |
| Investmnet Income (“-” for loss) | Ⅴ.50 | 79,474,572.01 | 55,973,114.29 |
| Including: Income from investments in associates and joint ventures | 72,794,071.40 | 70,577,657.04 | |
| Gains from derecognition of financial assets at amortized cost | |||
| Gains from net exposure hedges (“-” for loss) | |||
| Gains from changes in fair values (“-” for loss) | Ⅴ.51 | -25,419,715.12 | -76,262,989.83 |
| Losses of credit impairment (“-” for loss) | Ⅴ.52 | -16,846,468.56 | -4,123,743.37 |
| Impairment loss of assets (“-” for loss) | Ⅴ.53 | -312,369,926.37 | -142,627,936.44 |
| Gains from disposal of assets (“-” for loss) | Ⅴ.54 | -169,901.01 | -705,357.30 |
| III. Operating profit (“-” for loss) | 3,506,565,173.51 | 3,479,935,793.66 | |
| Add: Non-operating income | Ⅴ.55 | 7,980,415.72 | 8,229,847.57 |
| Less: Non-operating expenses | Ⅴ.56 | 48,990,788.10 | 32,060,686.06 |
| IV. Total profit (“-” for loss) | 3,465,554,801.13 | 3,456,104,955.17 | |
| Less: Income tax expenses | Ⅴ.57 | 614,535,757.76 | 561,796,743.05 |
| V. Net profit (“-” for loss) | 2,851,019,043.37 | 2,894,308,212.12 | |
| (I) Classified by business continuity | |||
| 1. Net profit from ongoing operation (“-” for loss) | 2,851,019,043.37 | 2,894,308,212.12 | |
| 2. Net profit from discontinuing operation (“-” for loss) | |||
| (II) Classified by ownership | |||
| 1.Net profit attributable to shareholders of the parent company (“-” for loss) | 1,442,779,722.23 | 1,502,777,133.76 | |
| 2.Profit and loss of minority shareholders (“-” for loss) | 1,408,239,321.14 | 1,391,531,078.36 | |
| VI. Other comprehensive income, net of tax | -35,859,587.07 | 74,606,735.39 | |
| (I) Other comprehensive income attributable to shareholders of the parent, net of tax | -14,877,862.38 | -683,072.44 | |
Joincare Pharmaceutical Group Annual Report 2023
| 1. Other comprehensive income that cannot be reclassified into profit or loss | -28,328,225.75 | -85,577,350.31 | |
| (1) Changes from remeasurement of defined benefit plans | |||
| (2) Other comprehensive income that cannot be reclassified into profit or loss under the equity method | 1,329,112.27 | 2,116,352.61 | |
| (3) Changes in fair value of investments in other equity instruments | -29,657,338.02 | -87,693,702.91 | |
| (4) Changes in fair value of the enterprise's own credit risks | |||
| 2. Other comprehensive income that will be reclassified into profit or loss | 13,450,363.36 | 84,894,277.87 | |
| (1) Other comprehensive income that can be reclassified into profit or loss under the equity method | -79,651.80 | 236,421.59 | |
| (2) Changes in fair value of other debt investments | |||
| (3) Amount of financial assets reclassified into other comprehensive income | |||
| (4) Provision for credit impairment of other debt investments | |||
| (5) Reserve for cash flow hedges | |||
| (6) Exchange differences on translation of financial statements denominated in foreign currencies | 13,530,015.17 | 84,657,856.28 | |
| (7) Others | |||
| (II) Other comprehensive income attributable to minority shareholders, net of tax | -20,981,724.69 | 75,289,807.82 | |
| VII. Total comprehensive income | 2,815,159,456.30 | 2,968,914,947.51 | |
| (I) Total comprehensive income attributable to owners of the parent company | 1,427,901,859.85 | 1,502,094,061.32 | |
| (II) Total comprehensive income attributable to minority shareholders | 1,387,257,596.45 | 1,466,820,886.18 | |
| VIII. Earnings per share: | |||
| (I) Basic earnings per share (RMB/share) | 0.7580 | 0.7934 | |
| (II) Diluted earnings per share (RMB/share) | 0.7565 | 0.7922 | |
Person-in-charge of the Company:
Zhu Baoguo
Person-in-charge of the Company’saccounting work: Qiu Qingfeng
Person-in-charge of the accountingdepartment: Qiu Qingfeng
Joincare Pharmaceutical Group Annual Report 2023
Income Statement of the Parent Company
From January to December, 2023
Unit: Yuan Currency: RMB
| Item | Note | 2023 | 2022 |
| I. Operating Revenues | 2,335,368,409.73 | 2,373,887,564.78 | |
| Less: Operating costs | 1,296,620,002.79 | 1,612,899,011.80 | |
| Operating tax and surcharges | 18,191,486.29 | 14,203,470.53 | |
| Selling expenses | 778,265,785.76 | 645,474,076.69 | |
| Administrative expenses | 106,160,726.99 | 195,475,435.39 | |
| R&D expenses | 105,105,802.11 | 66,705,404.14 | |
| Financial expenses | -85,925,210.70 | -38,112,993.67 | |
| Including: Interest expenses | 35,792,436.81 | 25,257,639.51 | |
| Interest income | 112,494,303.53 | 70,313,743.55 | |
| Add: Other income | 3,050,790.24 | 23,934,298.39 | |
| Investmnet Income (“-” for loss) | 1,138,319,195.19 | 991,369,051.76 | |
| Including: Income from investments in associates and joint ventures | 771,206.39 | 1,326,243.55 | |
| Gains from derecognition of financial assets at amortized cost | |||
| Gains from net exposure hedges (“-” for loss) | |||
| Gains from changes in fair values (“-” for loss) | |||
| Losses of credit impairment (“-” for loss) | 893,429.71 | 1,856,898.77 | |
| Impairment loss of assets (“-” for loss) | -154,249.81 | ||
| Gains from disposal of assets (“-” for loss) | |||
| II. Operating profit (“-” for loss) | 1,259,213,231.63 | 894,249,159.01 | |
| Add: Non-operating income | 2,428,107.88 | 232,093.51 | |
| Less: Non-operating expenses | 10,321,190.29 | 1,660,096.56 | |
| III. Total profit (“-” for loss) | 1,251,320,149.22 | 892,821,155.96 | |
| Less: Income tax expenses | 9,908,251.22 | 43,027,817.18 | |
| IV. Net profit (“-” for loss) | 1,241,411,898.00 | 849,793,338.78 | |
| (1) Net profit from ongoing operation (“-” for loss) | 1,241,411,898.00 | 849,793,338.78 | |
| (II) Net profit from discontinuing operation (“-” for loss) | |||
| V. Other comprehensive income, net of tax | 3,738,341.88 | -76,289,376.36 | |
| (I) Other comprehensive income not to be reclassified into profit and loss | 3,738,341.88 | -76,289,376.36 | |
| 1. Changes from remeasurement of defined benefit plans | |||
| 2. Other comprehensive income that cannot be reclassified into profit or loss under the equity method | |||
| 3. Changes in fair value of investments in other equity instruments | 3,738,341.88 | -76,289,376.36 | |
| 4. Changes in fair value of the enterprise's own credit risks | |||
| (II). Other comprehensive income that will be reclassified into profit and loss | |||
| 1. Other comprehensive income that can be reclassified into profit or loss under the equity method | |||
| 2. Changes in fair value of other debt investments | |||
| (3) Amount of financial assets reclassified into other comprehensive income | |||
| (4) Provision for credit impairment of other debt investments | |||
| (5) Reserve for cash flow hedges | |||
| (6) Exchange differences on translation of financial statements denominated in foreign currencies |
Joincare Pharmaceutical Group Annual Report 2023
| (7) Others | |||
| VI. Total comprehensive income | 1,245,150,239.88 | 773,503,962.42 | |
| VII. Earnings per share: | |||
| (1) Basic earnings per share (RMB/share) | |||
| (2) Diluted earnings per share (RMB/share) |
Person-in-charge of the Company:
Zhu Baoguo
Person-in-charge of the Company’saccounting work: Qiu Qingfeng
Person-in-charge of the accountingdepartment: Qiu Qingfeng
Joincare Pharmaceutical Group Annual Report 2023
Consolidated Cash Flow StatementFrom January to December, 2023
Unit: Yuan Currency: RMB
| Item | Note | 2023 | 2022 |
| I. Cash flow from operating activities: | |||
| Cash received from sales of goods and rendering of services | 18,384,911,273.46 | 18,615,546,255.83 | |
| Tax refunds received | 194,255,179.28 | 247,896,245.67 | |
| Other cash received related to operating activities | Ⅴ.58 | 886,837,372.89 | 683,645,734.39 |
| Subtotal of cash inflow from operating activities | 19,466,003,825.63 | 19,547,088,235.89 | |
| Cash paid for goods and services | 6,082,140,644.68 | 5,728,697,037.48 | |
| Cash paid to and on behalf of employees | 2,459,885,718.06 | 2,260,612,483.52 | |
| Payments of all types of taxes | 1,865,755,412.23 | 1,668,389,310.43 | |
| Other cash paid related to operating activities | Ⅴ.58 | 5,129,312,440.93 | 5,911,684,265.17 |
| Subtotal of cash outflow in operating activities | 15,537,094,215.90 | 15,569,383,096.60 | |
| Net cash flow from operating activities | 3,928,909,609.73 | 3,977,705,139.29 | |
| II. Cash flow from investing activities: | |||
| Cash received from disposal of investment | 487,573,781.32 | 270,997,751.54 | |
| Cash received from returns on investments | 153,317,136.18 | 144,358,825.55 | |
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 15,304,216.61 | 3,096,825.59 | |
| Net cash received from disposal of subsidiaries and other business units | |||
| Other cash received related to investing activities | Ⅴ.58 | 354,303,650.67 | 13,563,902.59 |
| Subtotal of cash inflow from investing activities | 1,010,498,784.78 | 432,017,305.27 | |
| Cash paid for purchase and construction of fixed assets, intangible assets and other long-term assets | 1,130,148,501.91 | 1,147,832,255.23 | |
| Cash paid to acquire investment | 204,656,113.68 | 416,183,775.89 | |
| Net cash paid for acquisition of subsidiaries and other business units | 22,461,951.59 | ||
| Other cash paid related to investing activities | Ⅴ.58 | 530,656,554.45 | 1,120,168,462.77 |
| Subtotal of cash outflow in investing activities | 1,887,923,121.63 | 2,684,184,493.89 | |
| Net cash flow from investing activities | -877,424,336.85 | -2,252,167,188.62 | |
| III. Cash flow from financing activities: | |||
| Cash received from capital contribution | 47,272,592.34 | 746,673,937.95 | |
| Including: Cash received from investment by minority interests of subsidiaries | 9,150,000.00 | 45,595,924.92 | |
| Cash received from borrowings | 4,273,570,084.01 | 5,339,517,086.47 | |
| Other cash received related to financing activities | 20,000,000.00 | 381,066,270.61 | |
| Subtotal of cash inflow from financing activities | 4,340,842,676.35 | 6,467,257,295.03 | |
| Cash repayments of amounts borrowed | 3,390,232,777.68 | 3,718,797,777.63 | |
| Cash payments for interest expenses and distribution of dividends or profits | 1,614,965,214.84 | 1,350,994,668.54 | |
| Including: Dividend paid to minority interests of subsidiaries | 1,134,101,424.76 | 961,951,199.52 | |
| Other cash payments related to financing activities | Ⅴ.58 | 1,263,138,206.11 | 831,342,189.06 |
| Subtotal of cash outflow in financing activities | 6,268,336,198.63 | 5,901,134,635.23 | |
| Net cash flow from financing activities | -1,927,493,522.28 | 566,122,659.80 | |
| IV. Effect of foreign exchange rate changes on cash and cash equivalents | 38,411,935.73 | 189,286,934.75 | |
| V. Net increase in cash and cash equivalents | 1,162,403,686.33 | 2,480,947,545.22 | |
| Add: Opening balance of cash and cash equivalents | 14,178,465,686.40 | 11,697,518,141.18 | |
| VI. Closing balance of cash and cash equivalents | 15,340,869,372.73 | 14,178,465,686.40 |
Person-in-charge of the Company:
Zhu Baoguo
Person-in-charge of the Company’saccounting work: Qiu Qingfeng
Person-in-charge of the accounting
department: Qiu Qingfeng
Joincare Pharmaceutical Group Annual Report 2023
Cash Flow Statement of Parent Company
From January to December, 2023
Unit: Yuan Currency: RMB
| Item | Note | 2023 | 2022 |
| I. Cash flow from operating activities: | |||
| Cash received from sales of goods and rendering of services | 2,465,414,605.44 | 3,146,093,806.02 | |
| Tax refunds received | 82,831.63 | ||
| Other cash received related to operating activities | 1,795,031,283.74 | 2,960,613,006.52 | |
| Subtotal of cash inflow from operating activities | 4,260,445,889.18 | 6,106,789,644.17 | |
| Cash paid for goods and services | 1,716,324,045.92 | 1,901,562,593.41 | |
| Cash paid to and on behalf of employees | 315,694,179.79 | 246,881,656.93 | |
| Payments of all types of taxes | 140,037,429.22 | 103,904,304.93 | |
| Other cash paid related to operating activities | 3,259,423,999.51 | 3,109,052,257.96 | |
| Subtotal of cash outflow in operating activities | 5,431,479,654.44 | 5,361,400,813.23 | |
| Net cash flow from operating activities | -1,171,033,765.26 | 745,388,830.94 | |
| II. Cash flow from investing activities: | |||
| Cash received from disposal of investment | 16,009,870.78 | 270,997,751.54 | |
| Cash received from returns on investments | 1,188,686,336.32 | 1,276,079,344.80 | |
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 1,618,089.69 | 21,000.00 | |
| Net cash received from disposal of subsidiaries and other business units | |||
| Other cash received related to investing activities | 348,303,650.67 | 158,470.77 | |
| Subtotal of cash inflow from investing activities | 1,554,617,947.46 | 1,547,256,567.11 | |
| Cash paid for purchase and construction of fixed assets, intangible assets and other long-term assets | 28,550,710.70 | 11,869,023.45 | |
| Cash paid to acquire investment | 253,540,000.00 | 10,000,000.00 | |
| Net cash paid for acquisition of subsidiaries and other business units | |||
| Other cash paid related to investing activities | 200,000,000.00 | 1,084,392,104.38 | |
| Subtotal of cash outflow in investing activities | 482,090,710.70 | 1,106,261,127.83 | |
| Net cash flow from investing activities | 1,072,527,236.76 | 440,995,439.28 | |
| III. Cash flow from financing activities: | |||
| Cash received from capital contribution | 38,122,592.34 | 701,078,013.03 | |
| Cash received from borrowings | 500,000,000.00 | 1,500,000,000.00 | |
| Other cash received related to financing activities | |||
| Subtotal of cash inflow from financing activities | 538,122,592.34 | 2,201,078,013.03 | |
| Cash repayments of amounts borrowed | 236,000,000.00 | 854,000,000.00 | |
| Cash payments for interest expenses and distribution of dividends or profits | 372,359,680.47 | 299,984,479.95 | |
| Other cash payments related to financing activities | 480,842,923.14 | 740,517,545.44 | |
| Subtotal of cash outflow in financing activities | 1,089,202,603.61 | 1,894,502,025.39 | |
| Net cash flow from financing activities | -551,080,011.27 | 306,575,987.64 | |
| IV. Effect of foreign exchange rate changes on cash and cash equivalents | 7,846,043.48 | -5,804,971.77 | |
| V. Net increase in cash and cash equivalents | -641,740,496.29 | 1,487,155,286.09 | |
| Add: Opening balance of cash and cash equivalents | 2,858,062,020.22 | 1,370,906,734.13 | |
| VI. Closing balance of cash and cash equivalents | 2,216,321,523.93 | 2,858,062,020.22 | |
Person-in-charge of the Company:
Zhu Baoguo
Person-in-charge of the Company’s
accounting work: Qiu Qingfeng
Person-in-charge of the accountingdepartment: Qiu Qingfeng
Joincare Pharmaceutical Group Annual Report 2023
Consolidated Statement of Changes in Owner's Equity
From January to December, 2023
Unit: Yuan Currency: RMB
| Item | 2023 | |||||||||||||
| Owner's equity attributable to the parent company | Minority shareholder's equity | Total owner's equity | ||||||||||||
| Paid-up capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | General risk provision | Undistributed profits | Subtotal | |||||
| Preferred share | Perpetual debts | Others | ||||||||||||
| I. Balance at the end of previous year | 1,929,189,374.00 | 2,343,693,215.99 | 347,176,561.29 | 4,704,473.53 | 734,766,581.50 | 8,456,778,287.49 | 13,121,955,371.22 | 8,898,418,947.86 | 22,020,374,319.08 | |||||
| Add: Change of accounting policies | ||||||||||||||
| Correction to errors of the previous period | ||||||||||||||
| Others | ||||||||||||||
| II. Balance in beginning of year | 1,929,189,374.00 | 2,343,693,215.99 | 347,176,561.29 | 4,704,473.53 | 734,766,581.50 | 8,456,778,287.49 | 13,121,955,371.22 | 8,898,418,947.86 | 22,020,374,319.08 | |||||
| III. Increase and decrease of the current year (enter “-” for decrease) | -63,665,567.00 | -741,973,128.28 | -347,176,561.29 | -16,950,604.75 | 124,279,622.27 | 985,079,669.31 | 633,946,552.84 | -14,790,381.28 | 619,156,171.56 | |||||
| (I) Total comprehensive income | -14,877,862.38 | 1,442,779,722.23 | 1,427,901,859.85 | 1,387,257,596.45 | 2,815,159,456.30 | |||||||||
| (II). Capital contribution or reduction from shareholders | -63,665,567.00 | -858,072,890.75 | -347,176,561.29 | -574,561,896.46 | -175,500,041.15 | -750,061,937.61 | ||||||||
| 1. Capital contribution from shareholders | 3,500,889.00 | 35,218,943.34 | 38,719,832.34 | 9,150,000.00 | 47,869,832.34 | |||||||||
| 2. Capitals invested by other equity instrument holders | ||||||||||||||
| 3. Amount of share-based payment included in owner's equity | 13,686,798.08 | 13,686,798.08 | 13,686,798.08 | |||||||||||
| 4. Others | -67,166,456.00 | -906,978,632.17 | -347,176,561.29 | -626,968,526.88 | -184,650,041.15 | -811,618,568.03 | ||||||||
| (III). Profit distribution | 124,141,189.80 | -460,933,246.56 | -336,792,056.76 | -1,134,091,995.09 | -1,470,884,051.85 | |||||||||
Joincare Pharmaceutical Group Annual Report 2023
| 1. Accrual of surplus reserve | 124,141,189.80 | -124,141,189.80 | ||||||||||||
| 2. Accrual of general risk provision | ||||||||||||||
| 3. Amount distributed to owners (or shareholders) | -336,792,056.76 | -336,792,056.76 | -1,134,091,995.09 | -1,470,884,051.85 | ||||||||||
| 4. Others | ||||||||||||||
| (IV) Internal carrying forward of owner's equity | -2,072,742.37 | 138,432.47 | 3,233,193.64 | 1,298,883.74 | 2,420,773.91 | 3,719,657.65 | ||||||||
| 1. Capital reserve transferred to increase capital (or share capital) | ||||||||||||||
| 2. Surplus reserve transferred to increase capital (or share capital) | ||||||||||||||
| 3. Surplus reserve compensating losses | ||||||||||||||
| 4. Retained earnings carried over from changes in the defined benefit plan | ||||||||||||||
| 5. Retained earnings carried over from other comprehensive income | -2,072,742.37 | 138,432.47 | 3,233,193.64 | 1,298,883.74 | 2,420,773.91 | 3,719,657.65 | ||||||||
| 6. Others | ||||||||||||||
| (V) . Special reserve | ||||||||||||||
| 1. Accrual of the current year | ||||||||||||||
| 2. Amount utilized in the current period | ||||||||||||||
| (VI) . Others | 116,099,762.47 | 116,099,762.47 | -94,876,715.40 | 21,223,047.07 | ||||||||||
| IV. Balance at end of year | 1,865,523,807.00 | 1,601,720,087.71 | -12,246,131.22 | 859,046,203.77 | 9,441,857,956.80 | 13,755,901,924.06 | 8,883,628,566.58 | 22,639,530,490.64 |
Joincare Pharmaceutical Group Annual Report 2023
| Item | 2022 | |||||||||||||
| Owner's equity attributable to the parent company | Minority shareholder's equity | Total owner's equity | ||||||||||||
| Paid-up capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | General risk provision | Undistributed profits | Subtotal | |||||
| Preferred share | Perpetual debts | Others | ||||||||||||
| I. Balance at the end of previous year | 1,907,727,908.00 | 2,265,357,311.92 | 222,644,454.50 | 5,387,545.97 | 640,821,179.08 | 7,223,644,166.22 | 11,820,293,656.69 | 8,359,317,322.63 | 20,179,610,979.32 | |||||
| Add: Change of accounting policies | -46,332.61 | -46,332.61 | -19,161.62 | -65,494.23 | ||||||||||
| Correction to errors of the previous period | ||||||||||||||
| Others | ||||||||||||||
| II. Balance in beginning of year | 1,907,727,908.00 | 2,265,357,311.92 | 222,644,454.50 | 5,387,545.97 | 640,821,179.08 | 7,223,597,833.61 | 11,820,247,324.08 | 8,359,298,161.01 | 20,179,545,485.09 | |||||
| III. Increase and decrease of the current year (enter “-” for decrease) | 21,461,466.00 | 78,335,904.07 | 124,532,106.79 | -683,072.44 | 93,945,402.42 | 1,233,180,453.88 | 1,301,708,047.14 | 539,120,786.85 | 1,840,828,833.99 | |||||
| (I). Total comprehensive income | -683,072.44 | 1,502,777,133.76 | 1,502,094,061.32 | 1,466,820,886.18 | 2,968,914,947.51 | |||||||||
| (II). Capital contribution or reduction from shareholders | 21,461,466.00 | 72,932,379.32 | 124,532,106.79 | -30,138,261.47 | -9,149,286.66 | -39,287,548.13 | ||||||||
| 1. Capital contribution from shareholders | 72,421,134.00 | 612,201,980.48 | 724,513,822.62 | -39,890,708.14 | 22,487,013.47 | -17,403,694.67 | ||||||||
| 2. Capitals invested by other equity instrument holders | ||||||||||||||
| 3. Amount of share-based payment included in owner's equity | 9,752,446.67 | 9,752,446.67 | 9,752,446.67 | |||||||||||
| 4. Others | -50,959,668.00 | -549,022,047.83 | -599,981,715.83 | -31,636,300.13 | -31,636,300.13 | |||||||||
| (III). Profit distribution | 84,973,195.80 | -362,530,827.45 | -277,557,631.65 | -967,251,289.90 | -1,244,808,921.55 | |||||||||
| 1. Accrual of surplus reserve | 84,973,195.80 | -84,973,195.80 | ||||||||||||
| 2. Accrual of general risk provision | ||||||||||||||
| 3. Amount distributed to | -277,557,631.65 | -277,557,631.65 | -967,251,289.90 | -1,244,808,921.55 | ||||||||||
Joincare Pharmaceutical Group Annual Report 2023
| owners (or shareholders) | ||||||||||||||
| 4. Others | ||||||||||||||
| (IV) . Internal carrying forward of owner's equity | 8,972,206.62 | 92,934,147.57 | 101,906,354.19 | 15,012,358.44 | 116,918,712.63 | |||||||||
| 1. Capital reserve transferred to increase capital (or share capital) | ||||||||||||||
| 2. Surplus reserve transferred to increase capital (or share capital) | ||||||||||||||
| 3. Surplus reserve compensating losses | ||||||||||||||
| 4. Retained earnings carried over from changes in the defined benefit plan | ||||||||||||||
| 5. Retained earnings carried over from other comprehensive income | 8,972,206.62 | 92,934,147.57 | 101,906,354.19 | 15,012,358.44 | 116,918,712.63 | |||||||||
| 6. Others | ||||||||||||||
| (V) . Special reserve | ||||||||||||||
| 1. Accrual of the current year | ||||||||||||||
| 2. Amount utilized in the current period | ||||||||||||||
| (VI) . Others | 5,403,524.75 | 5,403,524.75 | 33,688,118.79 | 39,091,643.54 | ||||||||||
| IV. Balance at end of year | 1,929,189,374.00 | 2,343,693,215.99 | 347,176,561.29 | 4,704,473.53 | 734,766,581.50 | 8,456,778,287.49 | 13,121,955,371.22 | 8,898,418,947.86 | 22,020,374,319.08 |
Person-in-charge of the Company:
Zhu Baoguo
Person-in-charge of the Company’s accounting work:
Qiu Qingfeng
Person-in-charge of the accounting department:
Qiu Qingfeng
Joincare Pharmaceutical Group Annual Report 2023
Statement of Changes in Owner's Equity of the Parent Company
From January to December, 2023
Unit: Yuan Currency: RMB
| Item | 2023 | ||||||||||
| Paid-up capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | Undistributed profits | Total owner's equity | |||
| Preferred share | Perpetual debts | Others | |||||||||
| I. Balance at the end of previous year | 1,929,189,374.00 | 1,678,414,507.96 | 347,176,561.29 | 726,576.72 | 646,164,633.12 | 1,968,175,713.20 | 5,875,494,243.71 | ||||
| Add: Change of accounting policies | |||||||||||
| Correction to errors of the previous period | |||||||||||
| Others | |||||||||||
| II. Balance in beginning of year | 1,929,189,374.00 | 1,678,414,507.96 | 347,176,561.29 | 726,576.718 | 646,164,633.12 | 1,968,175,713.20 | 5,875,494,243.71 | ||||
| III. Increase and decrease of the current year (enter “-” for decrease) | -63,665,567.00 | -706,351,253.17 | -347,176,561.29 | 3,652,900.92 | 124,279,622.27 | 781,724,543.67 | 486,816,807.98 | ||||
| (I). Total comprehensive income | 3,738,341.88 | 1,241,411,898.00 | 1,245,150,239.88 | ||||||||
| (II) Capital contribution or reduction from shareholders | -63,665,567.00 | -706,351,253.17 | -347,176,561.29 | -422,840,258.88 | |||||||
| 1. Capital contribution from shareholders | 3,500,889.00 | 35,218,943.34 | 38,719,832.34 | ||||||||
| 2. Capitals invested by other equity instrument holders | |||||||||||
| 3. Amount of share-based payment included in owner's equity | 13,822,495.92 | 13,822,495.92 | |||||||||
| 4. Others | -67,166,456.00 | -755,392,692.43 | -347,176,561.29 | -475,382,587.14 | |||||||
| (III). Profit distribution | 124,141,189.80 | -460,933,246.56 | -336,792,056.76 | ||||||||
| 1. Accrual of surplus reserve | 124,141,189.80 | -124,141,189.80 | |||||||||
| 2. Amount distributed to owners (or shareholders) | -336,792,056.76 | -336,792,056.76 | |||||||||
| 3. Others | |||||||||||
| (IV) . Internal carrying forward of owner's equity | -85,440.960 | 138,432.47 | 1,245,892.23 | 1,298,883.74 | |||||||
| 1. Capital reserve transferred to increase capital (or share capital) | |||||||||||
| 2. Surplus reserve transferred to increase capital (or share capital) | |||||||||||
| 3. Surplus reserve compensating losses | |||||||||||
| 4. Retained earnings carried over from changes in the defined benefit plan | |||||||||||
| 5. Retained earnings carried over from other comprehensive income | -85,440.960 | 138,432.47 | 1,245,892.23 | 1,298,883.74 | |||||||
| 6. Others | |||||||||||
| (V) . Special reserve | |||||||||||
| 1. Accrual of the current year | |||||||||||
| 2. Amount utilized in the current period | |||||||||||
| (VI) . Others | |||||||||||
| IV. Balance at end of year | 1,865,523,807.00 | 972,063,254.79 | 4,379,477.64 | 770,444,255.39 | 2,749,900,256.87 | 6,362,311,051.69 | |||||
Joincare Pharmaceutical Group Annual Report 2023
| Item | 2022 | ||||||||||
| Paid-up capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | Undistributed profits | Total owner's equity | |||
| Preferred share | Perpetual debts | Others | |||||||||
| I. Balance at the end of previous year | 1,907,727,908.00 | 1,605,482,128.64 | 222,644,454.50 | 77,015,953.08 | 552,219,230.70 | 1,400,174,178.18 | 5,319,974,944.10 | ||||
| Add: Change of accounting policies | -10,835.91 | -10,835.91 | |||||||||
| Correction to errors of the previous period | |||||||||||
| Others | |||||||||||
| II. Opening balance of the current year | 1,907,727,908.00 | 1,605,482,128.64 | 222,644,454.50 | 77,015,953.08 | 552,219,230.70 | 1,400,163,342.27 | 5,319,964,108.19 | ||||
| III. Increase and decrease of the current year (enter “-” for decrease) | 21,461,466.00 | 72,932,379.32 | 124,532,106.79 | -76,289,376.36 | 93,945,402.42 | 568,012,370.93 | 555,530,135.52 | ||||
| (I). Total comprehensive income | -76,289,376.36 | 849,793,338.78 | 773,503,962.42 | ||||||||
| (II). Capital contribution or reduction from shareholders | 21,461,466.00 | 72,932,379.32 | 124,532,106.79 | -30,138,261.47 | |||||||
| 1. Capital contribution from shareholders | 72,421,134.00 | 612,201,980.48 | 724,513,822.62 | -39,890,708.14 | |||||||
| 2. Capitals invested by other equity instrument holders | |||||||||||
| 3. Amount of share-based payment included in owner's equity | 9,752,446.67 | 9,752,446.67 | |||||||||
| 4. Others | -50,959,668.00 | -549,022,047.83 | -599,981,715.83 | ||||||||
| (III). Profit distribution | 84,973,195.80 | -362,530,827.45 | -277,557,631.65 | ||||||||
| 1. Accrual of surplus reserve | 84,973,195.80 | -84,973,195.80 | |||||||||
| 2. Amount distributed to owners (or shareholders) | -277,557,631.65 | -277,557,631.65 | |||||||||
| 3. Others | |||||||||||
| (IV) . Internal carrying forward of owner's equity | 8,972,206.62 | 80,749,859.60 | 89,722,066.22 | ||||||||
| 1. Capital reserve transferred to increase capital (or share capital) | |||||||||||
| 2. Surplus reserve transferred to increase capital (or share capital) | |||||||||||
| 3. Surplus reserve compensating losses | |||||||||||
| 4. Retained earnings carried over from changes in the defined benefit plan | |||||||||||
| 5. Retained earnings carried over from other comprehensive income | 8,972,206.62 | 80,749,859.60 | 89,722,066.22 | ||||||||
| 6. Others | |||||||||||
| (V) Special reserve | |||||||||||
| 1. Accrual of the current year | |||||||||||
| 2. Amount utilized in the current period | |||||||||||
| (VI) Others | |||||||||||
| IV. Balance at end of year | 1,929,189,374.00 | 1,678,414,507.96 | 347,176,561.29 | 726,576.72 | 646,164,633.12 | 1,968,175,713.20 | 5,875,494,243.71 | ||||
Person-in-charge of the Company: Zhu Baoguo
Person-in-charge of the Company’s accounting work:
Qiu Qingfeng
Person-in-charge of the accounting department:
Qiu Qingfeng
Joincare Pharmaceutical Group Annual Report 2023
Notes to the financial statements
I. Company ProfileJoincare Pharmaceutical Group Industry Co., Ltd. (hereinafter referred to as the "Company" or "theCompany"), formerly known as Shenzhen Aimier Food Co., Ltd. (深圳爱迷尔食品有限公司), was aSino-foreign joint venture officially established on 18 December 1992 with the approval fromShenzhen Administration for Industry and Commerce.On 24 November 1999, the Company was reorganized as a joint stock limited company.On 6 February 2001, the Company was approved by the China Securities Regulatory Commission toissue domestically listed shares (A shares) to the public. On 8 June 2001, shares of the Company werelisted and traded on Shanghai Stock Exchange.As of 31 December 2023, the total share capital of the Company was RMB1,865,523,807 for a totalnumber of shares of 1,865,523,807 shares. The controlling shareholder of the Company is ShenzhenBaiyeyuan Investment Co., Ltd. (深圳市百业源投资有限公司), and the ultimate controlling party isZhu Baoguo (朱保国).The company is registered and headquartered in Jiankang Yuan Pharmaceutical Group Building, No.17, Langshan Road, North District, High-tech Zone, Nanshan District, Shenzhen.The Company is engaged in the pharmaceutical industry.The Company and its subsidiaries primarily engaged in the R&D, production and sale ofpharmaceutical products and healthcare products, which covered drug preparation products, activepharmaceutical ingredients (“APIs”) and intermediates, diagnostic reagents and equipment as well ashealthcare products.These financial statements and the notes to the financial statements were approved by the 38th meetingof the 8th session of the Board of Directors of the Company on 2 April 2024.II. Basis of Preparation for the Financial StatementsThe financial statements have been prepared in accordance with the Accounting Standards forBusiness Enterprises issued by the Ministry of Finance and its application guidance, interpretationsand the other related provisions (collectively, the “Accounting Standards for Business Enterprises”).In addition, the Company also discloses relevant financial information in accordance with theInformation Disclosure and Presentation Rules for Companies Offering Securities to the Public No.15 – General Provisions on Financial Reporting (2023 Revision) issued by the China SecuritiesRegulatory Commission.The financial statements have been prepared on the going-concern basis.
Joincare Pharmaceutical Group Annual Report 2023
The Company's accounting is measured on an accrual basis. Except for certain financial instruments,the financial statements are generally measured at historical cost. Non-current assets held for sale arestated at the lower of fair value less estimated selling costs and their original carrying amount if theyqualify as held for sale. In case of asset impairment, the Company shall make provisions forimpairment in accordance with applicable provisions.III. Significant Accounting Policies and Accounting EstimatesThe Company determines the capitalisation condition of R&D expenses and revenue recognitionpolicies on the basis of its production and operation characteristics. Details of accounting policies areset out in Note III.22 and Note III.29.
1. Statement of compliance with the Accounting Standards for Business EnterprisesThe financial statements comply with the Accounting Standards for Business Enterprises, which gavea true and complete view of the consolidated and the Company's financial positions as at 31 December2023, and the consolidated and the Company’s operating results and the consolidated and theCompany’s cash flows and other relevant information for the year ended 31 December 2023.
2. Accounting period
The fiscal year of the Company is from 1 January to 31 December in each calendar year.
3. Operating cycle
The Company’s operating cycle is 12 months.
4. Functional currency
The functional currency of the Company and its domestic subsidiaries is Renminbi (“RMB”).Overseas subsidiaries of the Company usually recognise HK dollar, Macau dollar and US dollar astheir functional currencies according to the primary economic environment of which these subsidiariesoperate. The Company prepares its financial statements in RMB.
5. Determination and selection basis of materiality criteria
| Item | Materiality criteria |
| Material receivables subject to provision for bad debt individually | Individual debtor accounts for more than 5% of all types of receivables and the amount exceeds RMB50 million |
| Material receivables write-off in the period | Individual write-off amount accounts for more than 5% of all types of receivables and the amount exceeds RMB50 million |
| Material construction in progress | Budget investment amount for a single project accounts for more than 5‰ of consolidated total assets and the amount exceeds RMB100 million |
| Material contract liabilities aged over one year | Individual contract liability aged over one year accounts for more than 10% of consolidated total liabilities and the amount exceeds RMB50 million |
| Material accounts payable and other payables aged over one year | Individual accounts payable/other payable aged over one year accounts for more than 10% of total accounts payables/other payables and the amount exceeds RMB50 million |
| Material non-wholly owned subsidiaries | One or both of the subsidiary's total assets, operating income, net profit (or absolute value of loss) accounts for more than 10% of the corresponding items in the consolidated financial |
Joincare Pharmaceutical Group Annual Report 2023
| statements | |
| Material capitalized research and development projects | Closing balance of a single project accounts for more than 10% of the closing balance of development expenditures and the amount exceeds RMB100 million |
| Material investment activities | Single investment activity accounts for more than 10% of the total cash inflows or outflows related to investment activities received or paid and the amount exceeds RMB100 million |
| Material joint ventures or associates | Carrying amount of long-term equity investments in a single investee accounts for more than 3% of the total consolidated net assets and the amount exceeds RMB500 million, or investment profits and losses under the equity method of long-term equity investment accounts for more than 10% of the consolidated net profit |
6. Accounting treatment for business combinations involving enterprises under common controland business combinations involving enterprises not under common control
(1) Business combinations involving enterprises under common control
For the business combination involving entities under common control, the assets acquired andliabilities assumed are measured based on their carrying amounts in the consolidated financialstatements of the ultimate controlling party as at the combination date. The difference between thecarrying amount of the consideration paid for the combination and the net assets acquired is adjustedagainst share premium in the capital reserve, with any excess adjusted against retained earnings.Business combination involving enterprises under common control and achieved in a number oftransactionsIn the separate financial statements, the initial investment cost will be recognised at the carryingamount of the Company's share in the combined party's net assets in the consolidated financialstatements of the ultimate controlling party on the date of combination. The difference between theinitial investment cost and the sum of the carrying amount of the investment held and the carryingamount of consideration paid for the combination at the combination date is adjusted against sharepremium in the capital reserve, with any excess adjusted against retained earnings.In the consolidated financial statements, the assets acquired and liabilities assumed are measured basedon their carrying amounts in the consolidated financial statements of the ultimate controlling party asat the combination date. The difference between sum of the carrying amount of the investment heldand the carrying amount of the consideration paid for the combination and the carrying amount of thenet assets acquired is adjusted against share premium in the capital reserve, with any excess adjustedagainst retained earnings. For long-term equity investment held before the control over the combinedparty is obtained, profit or loss, other comprehensive income and other changes to equity interestattributable to the owners recognised from the later of the acquisition of the original equity interestand the date when the combing party and the combined party are placed under common control untilthe date of combination shall be offset against retained profit at the beginning of the period of thecomparative financial statements or profit or loss of the period respectively.
(2) Business combinations involving enterprises not under common control
For the business combinations involving enterprises not under common control, the combination costshall be the fair value of the assets transferred, liabilities incurred or assumed, and equity securities
Joincare Pharmaceutical Group Annual Report 2023
issued by the acquirer for acquisition of control in the acquiree on the acquisition date. The assets,liabilities and contingent liabilities acquired or assumed on the date of acquisition are recognised atfair value.Where the combination cost exceeds the fair value of the acquiree's identifiable net assets in thebusiness combination, the difference is recognised as goodwill and is subsequently measured at costless accumulated impairment provisions. Where the combination cost is less than the fair value of theacquiree's identifiable net assets in the business combination, the difference shall be included in profitor loss for the period after review.Business combination involving enterprises not under common control and achieved in a number oftransactionsIn the separate financial statements, the initial cost of the investment is the sum of the carrying amountof the acquiree's equity investment held before the acquisition date and the additional investment coston the acquisition date. In respect of the equity investment held prior to the acquisition date, othercomprehensive income will not be recognised using equity method on the acquisition date, and suchinvestment will be accounted for on the same accounting treatment as direct disposal of relevant assetor liability by the investee at the time of disposal. Shareholder's equity recognised due to the changesof other shareholder's equity other than the changes of net loss and profit, other comprehensive incomeand profit distribution shall be transferred to profit or loss for current period when disposed. If theequity investment held prior to the acquisition date is measured at fair value, the cumulative changesin fair value recognised in other comprehensive income shall be transferred to retained earnings whenaccounted for using cost method.In the consolidated financial statements, the combination cost is the sum of consideration paid on theacquisition date and fair value of the acquiree's equity held prior to the acquisition date. The equity ofthe acquirees held before the acquisition date is re-measured at the fair value of the equity on theacquisition date and the differences between the fair value and the carrying amount are recognised inthe income for the current period; in respect of any other comprehensive income attributable to theequity interest in the acquiree held prior to the acquisition date and any changes of other shareholder'sequity shall be transferred to investment profit or loss for current period on the acquisition date, exceptfor the other comprehensive income arising from changes in net liabilities or net assets of definedbenefit plans remeasured by investees and other comprehensive income related to non-derivativeequity instrument investments designated at fair value through other comprehensive income.
(3) Transaction fees attribution during the combination
The intermediary and other relevant administrative expenses such as audit, legal and valuationadvisory for business combinations are recognised in profit or loss when incurred. Transaction costsof equity or debt securities issued as the considerations of business combination are included in theinitial recognition amounts.
7. Basis in determination of control and preparation of the consolidated financial statements
(1) Basis in determination of control
The scope of consolidated financial statements is determined based on control. Control means theCompany has exposures or rights to variable returns from its involvement with the investee and theability to affect those returns through power over such investee. When changes in relevant facts andcircumstances lead to alterations in the elements involved in the definition of control, the Companywill conduct a reassessment.In assessing whether to include structured entities within the consolidation scope, the company
Joincare Pharmaceutical Group Annual Report 2023
integrates all facts and circumstances, including evaluating the purpose and design of the structuredentity, identifying the types of variable returns, and assessing whether it bears some or all of thevariability of returns by participating in its related activities, to determine if control over the structuredentity exists.
(2) Method for preparation of the consolidated financial statements
The consolidated financial statements are based on the financial statements of the Company and itssubsidiaries, and are prepared by the Company in accordance with other relevant information. Inpreparing the consolidation financial statements, the Company and its subsidiaries are required toapply consistent accounting policy and accounting period, intra-group transactions and balances shallbe offset.A subsidiary or a business acquired through a business combination involving entities under commoncontrol in the reporting period shall be included in the scope of the consolidation of the Company fromthe date when it is under control of the ultimate controlling party, and then its operating results andcash flows will be included in the consolidated income statement and the consolidated cash flowstatement, respectively.For a subsidiary or a business acquired through a business combination involving entities not undercommon control in the reporting period, its income, expenses and profits are included in theconsolidated income statement, and its cash flows are included in the consolidated cash flow statementfrom the acquisition date to the end of the reporting date.The shareholders' equity of the subsidiaries that are not attributable to the Company shall be presentedunder shareholders' equity in the consolidated balance sheet as minority interests. The portion of netprofit or loss of subsidiaries for the period attributable to minority interest is presented in theconsolidated income statement under the “profit or loss of minority interest”. When the amount of lossattributable to the minority shareholders of a subsidiary exceeds the minority shareholders' portion ofthe opening balance of owners' equity of the subsidiary, the excess amount shall be allocated againstminority interest.
(3) Purchase of the minority stake in the subsidiary
The difference between the long-term equity investments costs acquired by the purchase of minorityinterests and the share of the net assets that the subsidiaries have to continue to calculate from the dateof purchase or the date of consolidation in proportion to the new shareholding ratio, and the differencebetween the disposal of the equity investment without losing control over its subsidiary and thedisposal of the long-term equity investment corresponding to the share of the net assets of thesubsidiaries from the date of purchase or the date of consolidation, shall be adjusted to the capitalreserve (or share premium), if the capital reserve is not sufficient, any excess will be adjusted toretained earnings.
(4) Treatment of loss of control of subsidiaries
Where the Company loses its control over the original subsidiary due to the disposal of some equityinvestment or other reasons, the remaining equity is re-measured at its fair value on the date when theCompany loses its control. The difference between the sum of the consideration acquired due to thedisposal of the equity and the fair value of the remaining equity, and the Company's share in the sumof carrying value of net assets of the original subsidiary and goodwill calculated on an ongoing basisfrom the acquisition date based on the original shareholding proportion is recognised in the investmentincome for the current period when the control is lost.Other comprehensive income related to equity investments in the original subsidiary should be
Joincare Pharmaceutical Group Annual Report 2023
accounted for using the same basis as the direct disposal of related assets or liabilities of the originalsubsidiary upon loss of control. Any equity changes related to the original subsidiary under the equitymethod of accounting should be transferred to the profit or loss for the current period when controlceases.
(5) Treatment of disposal through several transactions until the loss of control of subsidiariesWhere the Company disposes of the equity interests in the subsidiary through several transactions untilit loses control, and the transaction terms, conditions and economic effects satisfy one or several ofthe following circumstances, such several transactions shall be deemed as a basket of transactions inaccounting treatment:
① Such transactions are entered into simultaneously or upon the consideration of the mutual impacts;
② No complete commercial result will be realised without such transactions as a whole;
③ The occurrence of one transaction depends on the occurrence of at least another transaction;
④ The result of an individual transaction is not economical, but it would be economical after takeninto account of other transactions in the series.In the separate financial statements, where the Company disposes of the equity investment in thesubsidiary through several transactions until the loss of control, and such transactions are not regardedas “a basket of transactions”, the carrying amount of the long-term equity investment involving eachdisposal will be carried forward, with the difference between the disposal price and the carryingamount of the long-term equity investment involving the disposal being accounted into the investmentincomes for the current period; where the transactions constitute “a basket of transactions”, thedifference between the consideration of each disposal and the carrying amount of the long-term equityinvestment involving the disposal before the loss of the control, is recognised as the othercomprehensive income and will be carried forward to the profit or loss for the current period when thecontrol is lost.In the consolidated financial statements, where the Company disposes of the equity investment in thesubsidiary through several transactions until the loss of control, the measurement of the remainingequity interest and the accounting treatment of the losses and gains of the disposal will be made withreference to the “Treatment of loss of control of subsidiaries” as described above. For the differencebetween the consideration of each disposal before the loss of the control and the carrying amount ofthe Company's share in the net assets involving the disposal of such subsidiary calculated on an on-going basis from the acquisition date, the treatment will be made as follows:
① In case the transactions are “a basket of transactions”, such difference is recognised as the othercomprehensive income and will be carried forward to the profit or loss for the current period when thecontrol is lost.
② In case the transactions are not “a basket of transactions”, such difference is accounted into thecapital reserve (or share premium) as equity, and shall not be carried forward to the profit or loss forthe current period when the control is lost.
8. Classification of joint arrangement and accounting treatment for joint operationA joint arrangement is an arrangement jointly controlled by two or more parties. The Company's jointarrangement is classified into the joint operation and the joint venture.
(1) Joint operation
Joincare Pharmaceutical Group Annual Report 2023
A joint operation is a joint arrangement whereby the Company have rights and obligations to therelevant assets and liabilities.The Company recognises the following items in relation to its interest in a joint operation, and makescorresponding accounting treatment in accordance with relevant accounting standards:
A. The solely-held assets, and the share of any assets held jointly;B. The solely-assumed liabilities, and its share of any liabilities incurred jointly;C. Its revenue from the sale of its share of the output arising from the joint operation;D. Its share of the revenue from the sale of the output by the joint operation;E. The solely-incurred expenses, including its share of any expenses incurred jointly.
(2) Joint ventures
A joint venture is a joint arrangement whereby the Company only entitled to the net assets of thearrangements.The Company's investment in joint ventures is accounted for using the equity method according to therules of the long-term equity investment.
9. Determination of cash and cash equivalents
Cash and cash equivalents of the Company include cash on hand, bank deposit readily available forpayment and those investments held by the Company that are short-term (normally due in three monthssince the acquisition date), highly liquid, readily convertible into known amounts of cash and subjectto an insignificant risk of change in value.
10. Foreign currency transactions and translation of financial statements in foreign currency
(1) Foreign currency transactions
Foreign currency transactions incurred by the Company are translated to the functional currency at thespot exchange rates on the date of the transactions upon initial recognition.Monetary items denominated in foreign currencies are translated to functional currency at the spotexchange rate on the balance sheet date. Exchange differences arising from the differences betweenthe spot exchange rate prevailing at the balance sheet date and those spot rates used on initialrecognition or at the previous balance sheet date are recognised in profit or loss for the current period;non-monetary items denominated in foreign currencies that are measured at historical cost aretranslated using the spot exchange rate on the transaction date. Non-monetary items denominated inforeign currencies that are measured at fair value are translated using the spot exchange rate on thedate the fair value is determined; the resulting exchange differences between the amounts in functionalcurrency upon translation and in original functional currency are recognised in profit or loss for thecurrent period.
(2) Translation of financial statements in foreign currency
At the balance sheet date, when translating the foreign currency financial statements of overseassubsidiaries, the assets and liabilities in the balance sheet are translated at the spot exchange rate at thebalance sheet date; all items except for “Retained earnings” of the shareholders' equity are translatedat the spot exchange rate on the transaction date.The revenue and expenses in profit or loss are translated at the spot exchange rate on the transactiondate.
Joincare Pharmaceutical Group Annual Report 2023
All items in the statement of cash flows are translated at the spot exchange rate on the transaction date.The effect of exchange difference on cash is adjusted and separately presented as “Effect of changesin foreign exchange rates on cash and cash equivalents” in the cash flow statement.The exchange differences arising from translation of the financial statements are presented as the“other comprehensive income” in the shareholders' equity of the balance sheet.When the Company disposes of the overseas operation and loses control, the differences arising fromthe translation of the financial statements in foreign currency that have been presented under theshareholders' equity in the balance sheet and involving such overseas operation are carried forward tothe profit or loss for the current period in whole or in the proportion of the disposal of the overseasoperation.
11. Financial instruments
Financial instruments are contracts creating financial assets of a party and financial liabilities or equityinstruments of other parties.
(1) Recognition and Derecognition of financial instruments
A financial asset or financial liability is recognised when the Company becomes one of the partiesunder a financial instrument contract.The financial assets will be derecognised if any of the following conditions is satisfied:
① The contractual right to receive the cash flow of the financial assets is terminated;
② The financial assets have been transferred and the transferred financial asset satisfies the followingconditions of derecognition.If the current obligation of a financial liability (or a part thereof) has been discharged, the financialliability (or that part of the financial liability) will be derecognised. When the Company (as the debtor)and the lender have signed an agreement which uses a new financial liability to replace the existingfinancial liability, and the contract terms of the new financial liability are substantially different withthe original financial liability, the original financial liability shall be de-recognised, and the newfinancial liability shall be recognised at the same time.The regular transactions of the financial assets are recognised and derecognised at the transaction date.
(2) Classification and measurement of financial assets
The Company classifies financial assets into three categories: financial assets at amortised cost;financial assets at fair value through other comprehensive income; and financial assets at fair valuethrough profit or loss based on the business model for managing financial assets and their contractualcash flow characteristics upon initial recognition.Financial assets are initially recognized at fair value. For financial assets at fair value through profitor loss, transaction costs are directly recognized in the profit or loss for the current period. For othercategories of financial assets, transaction costs are included in the initial recognition amount. Accountsreceivable arising from the sale of products or services, which do not include or consider a significantfinancing component, are initially recognized at the expected amount to be received.Financial assets at amortised costThe Company shall classify financial assets that meet the following conditions and are not designatedas financial assets at fair value through profit or loss for the current period as financial assets measuredat amortised cost:
Joincare Pharmaceutical Group Annual Report 2023
? The Company's business model for managing the financial assets is to collect contractual
cash flow;? The terms of the financial asset contract stipulate that the cash flow generated on aspecific date is only the payment for principal and interest accrued on the outstandingprincipal.After initial recognition, these financial assets are measured at amortised cost using the effectiveinterest method. Gains or losses arising from financial assets which are measured at amortised costand not part of any hedging relationship are included in the profit and loss of the current period uponde-recognition, amortisation using the effective interest method, or impairments recognition.Financial assets at fair value through other comprehensive incomeThe Company shall classify financial assets that meet the following conditions and are not designatedas financial assets measured at fair value through profit or loss for the current period as financial assetsmeasured at fair value through other comprehensive income
? The Company's business model for managing the financial assets is both to collect
contractual cash flows and to sell the financial assets;? The terms of the financial asset contract stipulate that the cash flow generated on a
specific date is only the payment for principal and interest accrued on the outstanding
principalAfter initial recognition, these financial assets are subsequently measured at fair value. Interest,impairment losses or gains and exchange losses and gains calculated using the effective interestmethod are recognised in profit or loss for the current period, while other gains or losses are recognisedin other comprehensive income. The cumulative profit or loss previously included in othercomprehensive income will be transferred to the profit or loss for the current period uponderecognition of the financial assets.Financial assets at fair value through profit or loss for the current periodIn addition to the above financial assets which are measured at amortised cost or at fair value a throughother comprehensive income, the Company classifies all other financial assets as financial assetsmeasured at fair value through profit or loss for the current period. When initial recognition, in orderto eliminate or significantly reduce accounting mismatches, the Company irrevocably designates somefinancial assets that should have been measured at amortised cost or at fair value through othercomprehensive income as financial assets at fair value through profit or loss for the current period.After initial recognition, these financial assets are subsequently measured at fair value, and the profitsor losses (including interest and dividend income) generated from which are recognised in profit orloss for the current period, unless the financial assets are part of the hedging relationship.However, with respect to non-trading equity instrument investments, the Company may irrevocablydesignate them as financial assets measured at fair value through other comprehensive income at initialrecognition. The designation is made on the basis of individual investment, and the relevant investmentconforms to the definition of equity instruments from the issuer's point of view.After initial confirmation, financial assets are subsequently measured at fair value. Dividend incomethat meets the requirements is recognised in profit and loss, and other gains or losses and changes infair value are recognised in other comprehensive gains. When derecognised, the accumulated gains orlosses previously recognised in other comprehensive gains are transferred from other comprehensivegains to retained earnings.The business model of managing financial assets refers to how the Company manages financial assets
Joincare Pharmaceutical Group Annual Report 2023
to generate cash flow. The business model decides whether the source of cash flow of financial assetsmanaged by the Company is to collect contract cash flow, sell financial assets or both of them. Basedon objective facts and the specific business objectives of financial assets management decided by keymanagers, the Company determines the business model of financial assets management.The Company evaluates the characteristics of the contract cash flow of financial assets to determinewhether the contract cash flow generated by the relevant financial assets on a specific date is only topay principal and interest based on the amount of unpaid principal. Among them, principal refers tothe fair value of financial assets at the time of initial confirmation; interest includes the considerationof time value of money, credit risk related to the amount of unpaid principal in a specific period, andother basic borrowing risks, costs and profits. In addition, the Company evaluates the terms andconditions of the contracts that may lead to changes in the time distribution or amount of cash flow infinancial asset contracts to determine whether they meet the requirements of the above contract cashflow's characteristics.Only when the Company changes its business model of managing financial assets, all the financialassets affected shall be reclassified on the first day of the first reporting period after the business modelchanges, otherwise, financial assets shall not be reclassified after initial confirmation.
(3) Classification and measurement of financial liabilities
On initial recognition, the Company's financial liabilities are classified into financial liabilities at fairvalue through profit or loss and financial liabilities at amortised cost. For financial liabilities notclassified as financial liabilities at fair value through profit or loss, the relevant transaction costs areincluded in the initially recognised amount.Financial liabilities at fair value through profit or lossFinancial liabilities at fair value through profit or loss include financial liabilities held for trading andfinancial liabilities designated at fair value through profit or loss upon initial recognition. Suchfinancial liabilities are subsequently measured at fair value, all gains and losses arising from changesin fair value and dividend and interest expense relative to the financial liabilities are recognised inprofit or loss for the current period.Financial liabilities at amortised costOther financial liabilities are subsequently measured at amortised cost using the effective interestmethod; gains and losses arising from derecognition or amortisation is recognised in profit or loss forthe current period.
Distinction between financial liabilities and equity instrumentsThe financial liability is the liability that meets one of following criteria:
① Contractual obligation to deliver cash or other financial instruments to another entity.
② Under potential adverse condition, contractual obligation to exchange financial assets or financialliabilities with other parties.
③ A contract that will or may be settled in the entity's own equity instruments and is a non-derivativefor which the entity is or may be obliged to deliver a variable number of the entity's own equityinstruments.
Joincare Pharmaceutical Group Annual Report 2023
④ A derivative that will or may be settled other than by the exchange of a fixed amount of cash oranother financial asset for a fixed number of the entity's own equity instruments.An equity instrument is any contract that evidences a residual interest in the assets of an entity afterdeducting all of its liabilities.If the Company cannot unconditionally avoid fulfilling a contractual obligation by delivering cash orother financial assets, the contractual obligation meets the definition of financial liability.If a financial instrument must or are able to be settled by the Company's own equity instrument, theCompany should consider whether the Company's equity instrument as the settlement instrument is asubstitute of cash or other financial assets or the residual interest in the assets of the Company afterdeducting all of its liabilities. If the former, the tool is the Company's financial liability; if the latter,the tool is the equity instrument of the Company.
(4) Derivative financial instruments and embedded derivatives
The Company's derivative financial instruments include forward foreign exchange contracts, and areinitially measured at fair value on the date of the derivative contract signed and are subsequentlymeasured at fair value. A derivative with positive fair value shall be recognised as an asset, otherwisethat with negative fair value shall be recognised as a liability. Any profit or loss arising from changesof fair value and not compliance with the accounting provision of hedge shall be recognised as profitor loss for current period.For the hybrid instrument which includes embedded derivatives, where the host contract is a financialasset, requirements in relation to the classification of financial assets shall apply to the hybridinstrument as a whole. Where the host contract is not a financial asset, and the hybrid instrument isnot measured at fair value and its changes are included in the profit and loss for the current period foraccounting purposes, there is no close relation between the embedded derivatives and the host contractin terms of economic features and risks, and the instrument that has the same condition with theembedded derivatives and exists independently meets the definition of derivatives, the embeddedderivatives shall be separated from the hybrid instrument and treated as a separate derivative financialinstrument. If it is unable to separately measure the embedded derivatives upon acquisition or on thesubsequent balance sheet date, the hybrid instrument shall be entirely designated as the financial assetsor financial liabilities measured at fair value and whose movements are included in the profit and lossof the current period.
(5) Fair value of the financial instrument
The methods for determining the fair value of the financial assets or financial liabilities are set out inNote III.12
(6) Impairment of financial assets
The following items are subject to impairment accounting and recognition of loss allowances basedon expected credit losses:
A. Financial assets measured at amortised cost;B. Receivables and debt instrument investments that are measured at fair value through othercomprehensive income;C. Contract assets as defined in the Accounting Standard for Business Enterprises No. 14 – Revenue;D. Lease receivables;
Joincare Pharmaceutical Group Annual Report 2023
E. Financial guarantee contracts, except for those carried at fair value through profit or loss, thosewhich the transfer of financial assets does not satisfy the derecognition condition or those formed as aresult of continued involvement of the transferred financial assets.Measurement of expected credit loss (ECLs)The ECL is a weighted average of credit losses on financial instruments weighted at the risk of default.Credit loss is the difference between all receivable contractual cash flows according to the contractand all cash flows expected to be received by the Company discounted to present value at the originaleffective interest rate, i.e. the present value of all cash shortfalls.The Company takes into account reasonable and valid information on past events, current conditionsand forecasts of future economic conditions, with the risk of default as the weight, to calculate theprobabilistic weighted amount of the present value of the difference between the cash flow receivablefrom contract and the expected cash flow to be received and recognise the expected credit loss.The Company respectively measures the expected credit losses of financial instruments by differentstages. If the credit risk of the financial instrument does not increase significantly since the initialrecognition, it would be classified in Stage 1, the Company would measure loss allowance accordingto the future 12-month expected credit losses. If the credit risk of a financial instrument hassignificantly increased since the initial recognition but not yet credit-impaired, it would be classifiedin Stage 2, the Company would measure loss allowance according to the lifetime expected credit lossesof that instrument. If the financial instrument has credit-impaired since the initial recognition, it wouldbe classified in Stage 3, and the Company would measure loss allowance according to the lifetimeexpected credit losses of that instrument.For financial instruments with lower credit risk on the balance sheet date, the Company assumes thatits credit risk has not increased significantly since the initial recognition, and measures loss allowanceaccording to the 12-month expected credit losses.Lifetime ECLs are the ECLs that result from all possible default event over the expected life of afinancial instrument. Future 12-month ECLs are the portion of ECL that results from default eventson a financial instrument that are possible within the 12 months after the balance sheet date (or theexpected life of the instrument, if it is less than 12 months).The maximum period considered when estimating ECLs is the maximum contractual period overwhich the Company are exposed to credit risk (including the option to renew).For the financial instruments classified in Stage 1 and Stage 2 and those with lower credit risk, theCompany would measure the interest income by the book balance (that is, without deduction for creditallowance) and the effective interest rate. For financial instruments classified in Stage 3, the Companywould measure the interest income by the amortised cost (that is, book balance less impairmentallowance) and the effective interest rate.For accounts receivable such as notes receivable, trade receivables, receivables financing, otherreceivables, contract assets, etc., if the credit risk characteristics of a particular customer significantlydiffer from those of other customers in the portfolio, or if there is a significant change in the credit riskcharacteristics of that customer, the Company individually provides for credit loss for that receivable.Apart from individually providing for credit loss for specific receivables, the Company dividesreceivables into portfolios based on credit risk characteristics and calculates credit losses on a portfoliobasis.Notes receivable, trade receivables and contract assetsFor notes receivable, trade receivables and contract assets, regardless whether it has significant
Joincare Pharmaceutical Group Annual Report 2023
financing components or not, the Company has always measured its loss allowance at an amount equalto lifetime expected credit losses.If the expected credit losses of an individual financial asset or contract asset cannot be estimated at areasonable cost, the Company classifies notes receivable, trade receivables or contract assets intoportfolios based on credit risk characteristics, and measures expected credit losses on portfolios basisto determine portfolios by the following basis:
A. Notes receivable? Bills receivable portfolio 1: Bank acceptance bills? Bills receivable portfolio 2: Commercial acceptance billsB. Accounts receivables
? Accounts receivables portfolio 1: Amount due from domestic customers? Accounts receivables portfolio 2: Amount due from overseas customers? Accounts receivables portfolio 3: Receivables of consolidated companiesContract assets? Contract assets portfolio: Sale of productsFor notes receivable or contract assets classified as portfolio, the Company measures expected creditlosses based on the risk exposures of default and lifetime expected credit losses rate with reference tothe historical credit loss experience, current situation and forecasts of future economic conditions.For accounts receivables classified as portfolio, the Company measures expected credit losses throughpreparing a table of concordance between the aging of trade receivables and lifetime expected creditlosses rate with reference to the historical credit loss experience, current situation and forecasts offuture economic conditions. The aging of accounts receivable is calculated from the date of recognition.
Other receivablesThe Company classifies other receivables into certain portfolios based on credit risk characteristics,and measures expected credit losses on portfolios basis to determine portfolios by the following basis:
? Other receivables portfolio 1: Receivables of export tax refund? Other receivables portfolio 2: Receivables of deposits under guarantee and security deposits
and lease expenses? Other receivables portfolio 3: Other receivables? Other receivables portfolio 4: Receivables of consolidated companiesFor other receivables classified as portfolio, the Company measures expected credit losses based onthe risk exposures of default and future 12-month or lifetime expected credit losses rate. For otherreceivables categorized by aging, the aging is calculated from the date of recognition.Long-term receivablesThe Company's long-term receivables include finance lease receivables and equity transfer receivables.The Company classifies finance lease receivables and equity transfer receivables into certain portfoliosbased on credit risk characteristics, and measures expected credit losses on portfolios basis todetermine portfolios by the following basis:
A. Finance lease receivables? Portfolio of finance lease receivables: other receivables
Joincare Pharmaceutical Group Annual Report 2023
B. Other long-term receivables
? Portfolio of other long-term receivables: equity transfer receivablesFor finance lease receivables and equity transfer receivables, the Company measures expected creditlosses based on the risk exposures of default and lifetime expected credit losses rate with reference tothe historical credit loss experience, current situation and forecasts of future economic conditions.For other receivables and long-term receivables other than finance lease receivables and equity transferreceivables that are classified as portfolio, the Company measures expected credit losses based on therisk exposures of default and future 12-month or lifetime expected credit losses rate.Debt investments and other debt investmentsFor debt investments and other debt investments, the Company measures expected credit losses basedon the nature of investments, counterparties and various types of risk exposures and the risk exposuresof default and future 12-month or lifetime expected credit losses rate.Assessment of significant increase in credit riskBy comparing the risk of default of financial instruments occurring on the balance sheet date and onthe initial recognition date, the Company determines the relative changes in risk of default over theexpected life of financial instruments and assesses whether the credit risk of financial instruments haveincreased significantly since the initial recognition.When determine whether credit risks have significantly increased since the initial recognition, theCompany considers information that is reasonable and supportable, including forward-lookinginformation that is available without undue cost or effort. The information considered by the Companyincludes:
? Failure to make payments of principal or interest on debtors' contractually due dates;
? An actual or expected significant deterioration in a financial instrument's external or internalcredit rating (if any);
? An actual or expected significant deterioration in the operating results of debtors;
? Existing or forecast changes in the technological, market, economic or legal environment thathave significant adverse effect on the debtors' abilities to repay to the Company.Depending on the nature of the financial instruments, the Company assesses whether credit risks havesignificantly increased on either an individual financial instrument basis or a collective financialinstrument basis. When the assessment is performed on a collective financial instrument basis, theCompany can classify the financial instruments based on the shared credit risk characteristics, such aspast due information and credit risk ratings.The Company determines that the credit risk on a financial instrument has increased significantly if itis more than 30 days past due.Credit-impaired financial assetsThe Company assesses whether financial assets at amortised cost and debt investments measured atfair value through other comprehensive income are credit-impaired at balance sheet date. A financialasset is ‘credit-impaired' when one or more events that have an adverse impact on the estimated futurecash flows of the financial asset have occurred. Evidence that a financial asset is credit-impairedincludes the following observable information:
? Significant financial difficulty of the issuer or debtor;
? A breach of contract by debtor, such as a default or delinquency in interest or principal
payments;
Joincare Pharmaceutical Group Annual Report 2023
? For economic or contractual reasons relating to the borrower's financial difficulty, theCompany having granted to the borrower a concession that would not otherwise consider;? It is probable that the borrower will enter bankruptcy or other financial reorganization;? The disappearance of an active market for that financial asset because of financial difficulties.Presentation of allowance for ECLThe Company re-measures the ECLs on each balance sheet date to reflect changes in the financialinstruments' credit risk since initial recognition, and the increase or reversal of the loss provisionresulted therefrom is recognised as an impairment gain or loss in profit or loss. For financial assetsmeasured at amortised cost, the loss provision is offset against their carrying amounts in the balancesheet. For debt investments at FVOCI, the Company recognises the loss provision in othercomprehensive income and does not deduct the carrying amount of the financial assets.Write-offThe gross carrying amount of a financial asset is written off (either partially or in full) to the extentthat there is no realistic prospect of recovery. A write-off constitutes a derecognition event. This isgenerally the case the Company determines that the debtor does not have assets or sources of incomethat could generate sufficient cash flows to repay the amounts subject to the write-off. However,financial assets that are written off could still be subject to enforcement activities in order to complywith the Company's procedures for recovery of amounts due.Subsequent recoveries of an asset that was previously written off are recognised as a reversal ofimpairment in profit or loss in the period in which the recovery occurs.
(7) Transfer of financial assets
Transfer of financial assets refers to the transfer or delivery of financial assets to the other party (thetransferee) other than the issuer of financial assets.The Company derecognises a financial asset only if it transfers substantially all the risks and rewardsof ownership of the financial asset to the transferee; the Company should not derecognise a financialasset if it retains substantially all the risks and rewards of ownership of the financial asset.The Company neither transfers nor retains substantially all the risks and rewards of ownership, showsas the following circumstances: if the Company has forgone control over the financial assets,derecognise the financial assets and verify the assets and liabilities; if the Company retains its controlof the financial asset, the financial asset is recognised to the extent of its continuing involvement inthe transferred financial asset and recognise an associated liability is recognised.
(8) Offsetting financial assets and financial liabilities
When the Company has the legal right to offset recognised financial assets and financial liabilities,and the legal right can be executed at present, and the Company has a plan to settle the financial assetsand financial liabilities at the same time or at net amount, the financial assets and financial liabilitiescan be presented on the balance sheet after offsetting. Except for the above circumstances, financialassets and financial liabilities cannot be offset and shall be presented separately on the balance sheet.
12. Fair value measurement
The fair value is defined as the price that would be received to sell an asset or paid to transfer a liabilityin an orderly transaction between market participants at the measurement date.The Company measures the relevant assets or liability at fair value supposing the orderly transactionof asset selling or liability transferring incurring in a principal market of relevant assets or liabilities.
Joincare Pharmaceutical Group Annual Report 2023
In the absence of a principal market for the asset or liability, the Company assumes that the transactiontakes place at the most advantageous market of relevant asset or liability. A principal market (or themost advantageous market) is the transaction market that the Company can enter into at measurementdate. The Company implements the hypothesis used by the market participants to realise the maximumeconomic benefit in assets or liabilities pricing.If there exists an active market for the financial assets or financial liabilities, the Company uses thequotation on the active market as its fair value. For those in the absence of active market, the Companyuses valuation technique to recognise its fair value. However, under limited circumstances, theCompany may use all information about the results and operation of the investee obtained after thedate of initial recognition to determine whether cost represents fair value. Cost may represent the bestestimate of fair value of the relevant financial asset within the scope of distribution, and such costrepresents the appropriate estimate of fair value within the scope of distribution.For non-financial assets measured at fair value, the Company should consider the capacity of themarket participants to put the assets into optimal use thus generating the economic benefit, or thecapacity to sell assets to other market participants who can put the assets into optimal use and generateeconomic benefit.The Company implements the valuation technique suitable for the current condition and supported byenough available data and other information, gives priority in use of relevant observable inputs, onlythe observable inputs cannot be obtained or impracticable before using unobservable inputs.For the assets and liabilities measured or disclosed at fair value on financial statements, fair valuehierarchies are categorized into three levels as the lowest level input that is significant to the entirefair value measurement: Level 1: inputs are quoted prices (unadjusted) in active markets for identicalassets and liabilities. Level 2: inputs are inputs other than quoted prices included within Level 1 thatare observable for the asset or liability, either directly or indirectly. Level 3: inputs are unobservableinputs for the asset or liability.At each balance sheet date, the Company re-evaluates the assets and liabilities recognised to bemeasured at fair value on the financial statements to make sure whether conversion occurs betweenfair value hierarchies.
13. Inventories
(1) Classification of inventories
The Company's inventories include raw materials, packaging materials, finished goods, work-in-progress, low-value consumables, subcontracting materials, merchandise goods, consumablebiological assets and issued goods.
(2) Method of costing
The method of costing of the Company's inventories: Cost of finished goods are measured at plannedcost, and material cost differences are carried forward at the end of the period to adjust planned costto actual cost; other inventories are measured at actual cost on acquisition and raw materials receivedare accounted for by the weighted-average method; low-value consumables and packaging materialsare amortised in full upon the use.
(3) Determination basis and provision method for decline in value of inventoriesOn the balance sheet date, the inventories are calculated at the lower of cost and the net realisablevalue. When its net realizable value is lower than its cost, a provision for inventory impairment ismade
Joincare Pharmaceutical Group Annual Report 2023
The net realizable value is the estimated selling price of inventory minus the estimated costs tocomplete, estimated selling expenses, and related taxes. In determining the net realizable value ofinventory, reliable evidence is used as a basis, while also considering the purpose of holding theinventory and the impact of subsequent events after the balance sheet date.Provision for inventory impairment is made on an item-by-item basis. For inventory with largequantities and low unit prices, inventory impairment is provided based on inventory categories. Forinventory related to product lines produced and sold in the same region, with similar or identical finaluses or purposes, and difficult to measure separately from other items, inventory impairment iscombined.On the balance sheet date, if the factors that previously impaired the value of inventory havedisappeared, the provision for inventory impairment is reversed within the originally provided amount.
(4) Inventory system
The Company maintains a perpetual inventory system.
(5) Amortisation methods of consumables and packaging materials
Low-value consumables and packaging materials of the Company are amortised in full when used.
14. Held for sale and discontinued operations
(1) Recognition and accounting treatment of non-current assets or the disposal group held forsaleNon-current assets and disposal groups are classified as held for sale if the Company recovers its bookvalue mainly by selling (including the exchange of nonmonetary assets with commercial substance)rather than continuing to use it.The aforesaid non-current assets do not include investment property measured with the basis of fairvalue; the biological assets measured with the basis of fair value less selling costs; the assets formedby employee benefits; financial assets and the right arising from deferred income tax assets andinsurance contracts.A disposal group is a group of assets to be disposed through sale or other means as a whole in a singletransaction, and liabilities directly associated with those assets that will be transferred in thetransaction. In certain circumstance, disposal groups include the goodwill obtained through businesscombination.Non-current assets and disposal groups that meet the following conditions are classified as held forsale: according to the practice of disposing of this type of assets or disposal groups in a similartransaction, a non-current asset or disposal group is available for immediate sale at its present condition;the sale is likely to occur, that is, a decision has been made on a sale plan and a determined purchasecommitment is made, and the sale is expected to be completed within one year. Where the loss ofcontrol over the subsidiaries is due to the sales of investment in subsidiaries, no matter whether theCompany retains part of the equity investment after selling or not, the investment in subsidiaries shallbe classified as held for sale in the separate financial statements when it satisfies the conditions forcategory of held for sale; all assets and liabilities of subsidiaries shall be classified as held for sale inthe consolidated financial statements.The difference between carrying amount of non-current assets or disposal groups classified as held forsale and the net amount of fair value less selling costs shall be recognised as impairment loss on assetsupon initial measurement or when such noncurrent assets or disposal groups are remeasured at thebalance sheet date. For the amount of impairment loss on assets recognised in disposal groups, the
Joincare Pharmaceutical Group Annual Report 2023
carrying amount of disposal groups' goodwill shall be offset against first, and then offset against thecarrying amount of non-current assets according to the proportion of carrying amount of the individualnon-current assets in the disposal groups.If on a subsequent balance sheet date, the net amount of the fair value of a held-for-sale disposal groupless its selling costs increases, the amount reduced previously shall be recovered, and reversed in theasset impairment loss recognised on the noncurrent asset which is applicable to the measurementrequirements of Held-For-Sale Standards after the non-current asset is classified into held-for-salecategory. The reversed amount is credited to current profit or loss. The carrying value of goodwillwhich has been offset cannot be reversed.No depreciation or amortisation is provided for the non-current assets in the held-for-sale and theassets in the disposal group held for sale. The interest on the liabilities and other costs in the disposalgroup held for sale is recognised continuously. As far as all or part of investment in the associates andjoint ventures is concerned, for the part classified into the held-for-sale category, the accounting withequity method shall be stopped, while the remaining part (which is not classified into the held for- salecategory) shall still be accounted for using the equity method. When the Company loses the significantinfluence on the associates and joint venture due to the sale, the use of equity method shall be ceased.When certain non-current asset or disposal group classified into the held-for-sale category no longermeets the classification criteria for held-for-sale category, the Company shall stop classifying it intothe held-for-sale category and measure it according to the lower of the following two amounts:
① The carrying amount of the asset of disposal group before it was classified into the held-for-salecategory after being adjusted with the depreciation, amortisation or impairment that could have beenbe recognised if it was not classified into the held-for-sale category;
② The recoverable amount.
(2) Determination of discontinued operation
Discontinued operation refers to the component meeting one of the following conditions that has beendisposed of by the Company or classified by the Company into the held-for-sale type and can beidentified separately:
① The component represents an independent principal business or a separate principal business place.
② The component is a part of the related plan for the contemplated disposal of an independentprincipal business or a separate principal business place.
③ The component is a subsidiary acquired exclusively for the purpose of resale.
(3) Presentation
The Company presents the non-current assets held for sale and the assets in the disposal group heldfor sale under “assets classified as held for sale”, and the liabilities in the disposal group held for saleunder “liabilities classified as held for sale” in the balance sheet.The Company presents the profit and loss for continuing operation and profit and loss for discontinuedoperation in the income statement, respectively. The impairment loss and reversal amount and disposalprofit and loss of the non-current assets held for sale or disposal group not meeting the definition ofdiscontinued operation will be presented as the profit and loss of continuing operation. The operatingprofit and loss (such as impairment loss and reversal amount) and disposal profit and loss of thediscontinued operation will be presented as the profit and loss of the discontinued operation.
Joincare Pharmaceutical Group Annual Report 2023
The disposal group proposed for retirement rather than sale and meeting the condition about therelevant component in the definition of the discontinued operation will be presented as discontinuedoperation from the date of retirement.For the discontinued operation reported in the current period, the information formerly presented asprofit and loss of continuing operation will be presented as the profit and loss of discontinued operationfor the comparable accounting period in the financial statement of the current period. If thediscontinued operation no longer meets the classification criteria for held for- sale category, theinformation formerly presented as profit and loss of discontinued operation will be presented as theprofit and loss of continuing operation for the comparable accounting period in the financial statementof the current period.
15. Long-term equity investment
The long-term equity investment includes the equity investment in the subsidiary, joint ventures andassociates. The investee over which the Company has significant influence is the associates of theCompany.
(1) Determination of initial investment cost
The long-term equity investment resulting from corporate merger: For the long-term equity investmentresulting from merger of companies under the same control, the carrying amount of the ownershipequity of the merged party obtained on the merger date presented in the consolidated financialstatement of the final controlling party will be used as the investment cost. For the long-term equityinvestment resulting from merger of companies under different controls, the merger cost will be usedas the investment cost of the long-term equity investment.The long-term equity investment obtained by other means: For the long-term equity investmentobtained by paying cash, the actually paid purchase price will be used as the initial investment cost.For the long term equity investment obtained by issuing equity securities, the fair value of the issuedequity securities will be used as the initial investment cost.
(2) Subsequent measurement and recognition method of profit or loss
The investment in subsidiary will be accounted for using cost method, unless the investment meets thecriteria of held-for-sale category. The investment in associates and joint venture will be accounted withequity method.For the long-term equity investment accounted for using cost method, except for the price actuallypaid upon the investment or the cash dividend or profit in the consideration that has been declared butnot released, the cash dividend or profit declared and distributed by the investee is recognised as theinvestment income and recorded into the profit and loss for the current period.For the long-term equity investment accounted for using equity method, the investment cost of thelong-term equity investment shall not be adjusted if the initial investment cost of the long-term equityinvestment is higher than the Company's share in the fair value of the identifiable net value of theinvestee at the time of investment; if the initial investment cost of the long-term equity investment islower than the Company's share in the fair value of the identifiable net value of the investee at the timeof investment, the carrying amount of the long-term equity investment will be adjusted, with thedifference recorded into the profit and loss for the current period of investment.When accounted for using the equity method, return on investment and other comprehensive incomeare recognised according to the share in the investee's realised net profit or loss and othercomprehensive income respectively, and the carrying amount of the long-term equity investment isadjusted. The carrying amount of the long-term equity investment will be deducted according to the
Joincare Pharmaceutical Group Annual Report 2023
profit distribution declared by the investee or cash dividend attributable to the Company. The carryingamount of long term equity investment will be adjusted for changes to equity interest attributable tothe owners of the investee other than net profit or loss, other comprehensive income and profitdistribution, and recorded into capital reserve (other capital reserve). The Company's share of the netprofit or loss of the investees will be recognised after adjustment of the net profit of the investeesaccording to the accounting policy and accounting period of the Company on the basis of fair value ofall identifiable assets of the investee on acquisition.If the Company is able to exert significant influence or implement joint control (which does notconstitute control) on the investee through additional investment or other reason, the sum of the fairvalue of the original equity plus the additional investment cost will be used as the initial investmentcost, which will be accounted for with equity method, on the conversion date. The difference betweenthe fair value of the original equity on the conversion date and its carrying amount, and theaccumulated change of fair value recorded into other comprehensive income will be transferred intothe profit and loss for the current period, which will be accounted for using equity method.If an entity loses joint control or has no significant influence over investees due to the elimination ofparts of the equity investment, the surplus equity after disposal shall be recognised in accordance with“Accounting Standards for Business Enterprises No. 22 – Recognition and Measurement of FinancialInstruments”, and the difference between fair value and carrying amount should be recognised as profitor loss for current period. Other comprehensive income of original equity investment recognised underequity method shall be recognised in accordance with the same foundation used by the investees whendispose the relevant assets or liabilities directly in the termination of equity method. Other changes ofowners' equity related to the original equity investment shall be transferred into profit or loss forcurrent period.If an entity loses control over investees due to the elimination of parts of the equity investment, thesurplus owners' equity that is able to implement joint control or have significant influence overinvestees shall be measured at equity method and are deemed to be recognised under equity methodsince the acquisition date. The surplus owners' equity that are unable to implement joint control orhave no significant influence over investees shall be processed in accordance with “AccountingStandards for Business Enterprises No. 22 – Recognition and Measurement of Financial Instruments”,and the difference between fair value and carrying amount at the day of loss of control shall berecognised as profit or loss for current period.If the shareholding ratio of the Company is reduced due to the increase of capital of other investors,and thus the control is lost, but the joint control or significant influence can be exerted on the investedentity, the Company should recognise net asset according to the new shareholding ratio. The differencebetween the original book value of the long-term equity investment corresponding to the decrease inthe shareholding ratio should be included in the current profit and loss; then, according to the newshareholding ratio, the equity method is used to adjust the investment.The Company recognises the unrealised profit or loss of intra-transaction between the joint venturesor associates that belongs to itself according to the proportion of the shares and recognises theinvestment income or loss after offset. However, the loss arising from the unrealised intra-transactionbetween the Company and investees, which belongs to the impairment loss of assets transferred,cannot be offset.
(3) Basis of determining common control and significant influence on the investeeJoint control is the contractually agreed sharing of control over an arrangement under which thedecisions relating to any activity require the unanimous consent of the parties sharing control. Indetermining whether there is a joint control, the first judge is to determine whether the relevant
Joincare Pharmaceutical Group Annual Report 2023
arrangement is controlled collectively by all the parties involved or the group of the parties involved.Secondly, and then determine whether the decisions related to the basic operating activities shouldrequire the unanimous consent of the parties involved. If the parties involved or the group of the partiesinvolved must act consistently to determine the relevant arrangement, it is considered that the partiesinvolved or the group of the parties involved control the arrangement. If two or more parties involvein the collectively control of certain arrangement, it shall not be considered as joint control. Protectionof rights shall not be considered in determining whether there is joint control.Significant influence refers to the power to participate in the decision making process for financial andoperational policies of the investees without control or common control over the formulation of suchpolicies. When determining whether it has significant influence over the investee, the influence of thevoting shares of the investee held by the investor directly and indirectly and the potential voting rightsheld by the investor and other parties which are exercisable in the current period and converted to theequity of the investee, including the warrants, share options and convertible bonds that are issued bythe investee and can be converted in the current period, shall be taken into account.When the Company owns directly or indirectly through its subsidiaries more than 20% (including 20%)but less than 50% of the voting shares of the investee, it is generally considered to have significantinfluence over the investee, unless there is clear evidence that it cannot participate in the productionand operation decisions of the investee and does not have a significant influence under suchcircumstances. When the Company owns less than 20% (excluding) of the voting shares of the investee,it is generally not considered to have significant influence on the investee unless there is clear evidencethat it can participate in the production and operation decisions of the investee and have significantinfluence under such circumstances.
(4) Held-for-sale equity investment
Refer to Note III. 14 for the relevant accounting treatment of the equity investment to joint venturesor associates all or partially classified as assets held for sale.The surplus equity investments that are not classified as assets held for sale shall be accounted forusing equity method.The equity investment to joint ventures or associates already classified as held for sale no longer meetsthe conditions of assets held for sale shall be adjusted retroactively using equity method from the dateof being classified as assets held for sale.
(5) Impairment test and impairment provision
Refer to note III. 23 for investment to subsidiaries, associates and joint ventures and the impairmentprovision of assets.
16. Investment properties
Investment properties are properties held to earn rental or capital appreciation or both. The investmentproperties of the Company include land use rights that have already been leased out, land use rightsthat are held for the purpose of sale after capital appreciation, buildings that have already been leasedout, etc.Investment properties of the Company are measured initially at cost upon acquisition, and subject todepreciation or amortisation in the relevant periods according to the relevant provisions on fixed assetsor intangible assets.The Company adopts the cost model for subsequent measurement of the investment properties. Themethod for asset impairment provision is set out in note III. 23.
Joincare Pharmaceutical Group Annual Report 2023
The balance after the disposal income from the disposal, transfer, scrapping or destruction of theinvestment properties deducts the book value and the relevant taxes shall be recorded into the profitand loss for the current period.
17. Fixed asset
(1) Conditions for recognition of fixed assets
The Company's fixed assets represent the tangible assets held by the Company using in the productionof goods, rendering of services, rent and for operation and administrative purposes with useful lifeover one year.The fixed asset can be recognised only when the economic benefit related to the fixed asset is probableto flow into the company and the cost of the fixed asset can be reliably measured.The Company's fixed assets are initially measured at the actual cost at the time of acquisition.
(2) Method of depreciation
The Company adopts the straight-line method to provision for depreciation. Depreciation of fixedassets begins when they reach the status of intended use, and ceases to be depreciated when they arederecognized or classified as non-current assets held for sale. Without taking into account the provisionfor impairment, the Company determines the annual depreciation rates of various types of fixed assetsaccording to the type of fixed assets, estimated useful life and estimated residual value as follows:
| Category | Useful years (year) | Annual depreciation | Residual rate % |
| Properties and Buildings | 20 | 4.5%-4.75% | 5%-10% |
| Machine and equipment | 10 | 9%-9.5% | 5%-10% |
| Transportation equipment | 5 | 18%-19% | 5%-10% |
| Electric equipment and others | 5-10 | 18%-19% | 5%-10% |
Where, for the fixed assets for which depreciation provision is made, to determine the depreciationrate, the accumulated amount of the fixed asset depreciation provision that has been made shall bededucted.
(3) Refer to note III. 23 for the impairment testing and the impairment provision of fixed assets.
(4) Recognition basis, valuation and depreciation method of financial leased fixed assetsWhen the Company's leased fixed assets meet one or more of the following criteria, it is recognizedas finance leased fixed assets:
① At the expiration of the lease term, the ownership of the leased assets is transferred to the Company.
② The Company has the option to purchase leased assets. The agreed purchase price is expected tobe much lower than the fair value of the leased asset when the option is exercised. Therefore, it can bereasonably determined that the Company will exercise this option on the lease start date.
③ Even if the ownership of the asset is not transferred, the lease term occupies most of the useful lifeof the leased asset.
④ The present value of the Company's minimum lease payment on the lease start date is almostequivalent to the fair value of the leased assets on the lease start date.
⑤The leased assets are of special nature, and only our company can use them if they don't undergomajor transformation.
Joincare Pharmaceutical Group Annual Report 2023
For fixed assets leased by finance leases, the lower of the fair value of the leased assets on the leasestart date and the present value of the minimum lease payment shall be the entry value. The minimumlease payment is taken as the entry value of the long-term payable, and the difference is taken as theunrecognized financing expense. In the process of lease negotiation and signing of the lease contract,the initial direct costs attributable to the lease item, such as handling fees, attorney fees, travel expenses,stamp duty, etc., are included in the value of the leased asset. The unrecognized financing costs shallbe amortized by the effective interest method during each period of the lease term.The fixed assets acquired by finance lease adopt the same policy as self-owned fixed assets to calculatethe depreciation of leased assets. If it can be reasonably determined that the ownership of the leasedasset will be obtained at the end of the lease term, depreciation shall be accrued on the useful life ofthe leased asset; if it cannot be reasonably determined that the ownership of the leased asset will beobtained at the end of the lease term, depreciation is accrued in the shorter of the lease period and theuseful life of the leased asset.
(5) The Company reviews the useful life and estimated net residual value of fixed asset and thedepreciation method applied annually at each of the period end.The useful lives of fixed asset are adjusted if their expected useful lives are different from the originalestimates; the estimated net residual values are adjusted if they are different from the original estimates.
(6) Overhaul costs
The overhaul costs occurred in regular inspection of f are recognised in the cost of property, plant andequipment if there is undoubted evidence to confirm that they meet the recognition criteria of fixedassets, otherwise, the overhaul costs are recognised in profit or loss for the current period. Property,plant and equipment are depreciated during the intervals of the regular overhaul.
18. Construction in progress
Construction in progress is measured at actual cost. Actual cost comprises necessary projectexpenditure incurred during construction, borrowing cost that are eligible for capitalisation and othernecessary cost incurred to bring the fixed assets ready for their intended use.Basis for transferring construction in progress to fixed assets is as follows:
| Category | Basis for transferring construction in progress to fixed assets |
| Buildings and structures | (1) Main construction project and supporting works have been substantially completed. (2) Construction works have met the predetermined design requirements, verified and accepted by survey, design, construction, supervision, and other units. (3) Approved by fire safety, land administration, and urban planning departments. (4) If GMP certification is required, it must pass the GMP on-site inspection and receive a GMP compliance inspection report. (5) For construction projects that have reached the predetermined status of use but have not yet undergone final settlement, fixed assets are transferred based on the estimated value according to the actual project cost from the date of reaching the predetermined usable state. |
| Production and ancillary equipment requiring installation and debugging | (1) The relevant equipment and other supporting facilities have been installed. (2) The equipment has been debugged and can maintain normal and stable operation for a period of time. (3) The production equipment is capable of consistently producing qualified products for a period of time. (4) The equipment has been verified and accepted by the asset management personnel and users. (5) If GMP certification is required, it must pass the GMP on-site inspection and receive a GMP compliance inspection report. |
Joincare Pharmaceutical Group Annual Report 2023
For provision for impairment of construction in progress, refer to note III. 23.In the balance sheet, the ending balance of construction materials is presented under “construction inprogress”.
19. Borrowing costs
(1) Recognition principle of capitalisation of borrowing costs
For borrowing costs that are directly attributable to the acquisition, construction or production of aqualifying asset, they shall be capitalised and included in the cost of related assets; other borrowingcosts are recognised as expenses and included in profit or loss when incurred. Capitalisation of suchborrowing costs can commence only when all of the following conditions are satisfied:
① Expenditures for the asset incurred, capital expenditure includes the expenditure in the form ofcash payment, transfer of non-cash assets or the interest bearing liabilities for the purpose of acquiringor constructing assets eligible for capitalisation;
② Borrowing costs incurred;
③ Activities relating to the acquisition, construction or production of the asset that are necessary toprepare the asset for its intended use or sale have commenced.
(2) Capitalisation period of borrowing costs
Capitalisation of such borrowing costs ceases when the qualifying assets being acquired, constructedor produced become ready for their intended use or sale. The borrowing cost incurred after that isrecognised as an expense in the period in which they are incurred and included in profit or loss for thecurrent period.Capitalisation of borrowing costs is suspended during periods in which the acquisition, constructionor production of a qualifying asset is interrupted abnormally and when the interruption is for acontinuous period of more than 3 months; the borrowing costs in the normally interrupted periodcontinue to capitalise.
(3) Calculation of the capitalisation rate and amount of borrowing costs
The interest expense of the specific borrowings incurred at the current period, deducting any interestincome earned from depositing the unused specific borrowings in bank or the investment incomearising from temporary investment, shall be capitalised. The capitalisation rate of the generalborrowing is determined by applying the weighted average effective interest rate of generalborrowings, to the weighted average of the excess amount of cumulative expenditures on the assetover the amount of specific borrowings.During the capitalisation period, exchange differences on foreign currency special borrowings shallbe capitalised; exchange differences on foreign currency special borrowings shall be recognised ascurrent profits or losses.
Joincare Pharmaceutical Group Annual Report 2023
20. Biological assets
(1) Determination of biological assets
Biological assets refer to assets comprising living animals and plants. No biological asset shall berecognised unless it meets the conditions as follows simultaneously:
① An enterprise possesses or controls the biological asset as a result of past transaction or event;
② The economic benefits or service potential concerning this biological asset are likely to flow intothe enterprise;
③ The cost of this biological asset can be measured reliably.
(2) Classification of biological assets
The Company’s biological assets are consumable biological assets which include traditional Chinesemedical herbal plant species.The consumable biological assets refer to the biological assets held for sale, or biological assets to beharvested as agricultural products in the future, consisting of growing traditional Chinese medicalherbal plant species. The consumable biological asset is initially measured at cost. The cost of anyconsumable biological assets by way of self-planting, self-cultivating, self-breading is the necessarycost directly attributable to this asset prior to the harvest, consisting of borrowing costs that meet theconditions of capitalisation. The subsequent expenses for the maintenance, protection and cultivationof a consumable biological asset after the harvest shall be included in the current profits or loss.The cost of a consumable biological asset shall, at the time of harvest or sale, be carried over at itsbook value by the weighted average method.
(3) Impairment of biological assets
If the net realisable value of the consumable biological assets is lower than their carrying amount,provision of impairment loss is made and recognised in the profit or loss for the current period as theexcess of the carrying amount over the net realisable value. If the factors affecting the impairment ofconsumable biological assets no longer exist, the amount of write-down shall be resumed and shall bereversed from the original provision for the impairment loss before being recognised in the profit orloss for the current period.
21. Intangible assets
An intangible asset is an identifiable non-monetary asset without physical substance owned orcontrolled by the Company. An intangible asset is recognised only when all of the following conditionsare satisfied: It is probable that the economic benefits associated with the intangible assets will flowto the enterprise; The cost of the intangible asset can be reliably measured. Intangible assets areinitially measured at actual cost.The Company's intangible assets include land use rights, patents and proprietary technologies,software, trademark rights, etc.
Joincare Pharmaceutical Group Annual Report 2023
Intangible assets are initially measured at historical cost, and the Company shall make judgement todetermine the useful life of intangible assets upon acquisition. Intangible assets with finite useful lifeare amortised in the profit or loss over the estimated useful life, using the method that reflects theexpected realisation of economic benefits associated with the asset, and if the expected realisationcannot be reliably determined, it is amortised using the straight-line method. Intangible assets withindefinite useful life is not amortised.Amortisation of intangible assets with finite useful life is as follows:
| Category | Useful life | Basis in determination of useful life | Amortisation method | Note |
| Land use rights | 30 to 50 years | Land use period | Straight-line method | |
| Patents and proprietary technologies | 1 to 10 years | Shorter of estimated benefit period and patent validity period | Straight-line method | |
| software | 2 to 10 years | Estimated benefit period | Straight-line method | |
| Trademark rights | 5 years | Shorter of estimated benefit period and trademark validity period | Straight-line method | |
| other | 10 years | Estimated benefit period | Straight-line method |
The useful life for an intangible asset with a finite useful life and the method of amortisation arereviewed at least once at the end of each financial year. If the useful life and amortisation method forthe intangible assets are different from the previous estimate, the change of amortisation is recognisedprospectively as the change of accounting estimate.When the Company estimates an intangible asset can no longer bring future economic benefits to theCompany at the end of a period, the carrying amount in which should be reversed to profit or loss forthe current period.Please refer to note III. 23 for the provision of impairment of intangible assets.
22. Research and development expenditures
The research and development (R&D) expenses of our company consist of expenses directly relatedto R&D activities, including salaries of R&D personnel, direct input costs, depreciation andamortization of long-term assets, equipment debugging costs, amortization of intangible assets,expenses for outsourcing research and development, clinical trial expenses, and other expenses.Among these, the salaries of R&D personnel are allocated to R&D expenses based on project hours.Equipment, production lines, and premises shared between R&D activities and other productionoperations are allocated to R&D expenses based on the proportion of hours or area utilized.Expenditures on an internal research and development project are classified into expenditures on theresearch phase and expenditures on the development phase.Expenditures on the research phase shall be recognised in profit or loss for the current period whenincurred.Expenditures on the development phase will be capitalised only when all of the following conditionsare satisfied: it is technically feasible to complete the intangible asset so that it will be available foruse or sale; the Company intends to complete the intangible asset and use or sell it; it can bedemonstrated how the intangible asset will generate economic benefits, including proving that theintangible assets or the products produced by it will have markets, or the intangible assets for internal
Joincare Pharmaceutical Group Annual Report 2023
use will be useful; there are adequate technical, financial and other resources to complete thedevelopment and the Company is able to use or sell the intangible assets; and expenditures on thedevelopment phase attributable to the intangible assets can be reliably measured. The developmentexpenditures that do not satisfy the above conditions shall be recognised in profit or loss for the currentperiod.Our research and development projects enter the development stage after meeting the above conditionsand forming the project through the technical and economic feasibility studies.Capitalised expenditures on the development phase are shown as development expenditures on thebalance sheet and reclassified as intangible assets on the date the project meets the intended purpose.Capitalisation conditions for specific research and development projects are as follows:
① For research and development projects that are not required to obtain clinical approvals, theperiod from the beginning of research and development to the pilot phase is treated as the researchphase, and all expenditures shall be recognised in profit or loss for the current period when incurred;the period from the pilot phase to the obtaining of production approvals is treated as the developmentphase, and all expenditures shall be recognised as development expenditures and reclassified asintangible assets after the obtaining of production approvals.
② For research and development projects that require clinical approval, the period from thebeginning of research and development to the obtaining of clinical approval is treated as the researchphase, and all expenditures incurred shall be recognised in profit or loss for the current period whenincurred; the period from the obtaining of clinical approval to the obtaining of production approval istreated as the development phase, and the expenditures shall be recognised as developmentexpenditures and reclassified as intangible assets after the obtaining of production approval.
③ The purchase price of the purchased external technology or formula is recognized as developmentexpenditures, and subsequent research and development expenditures are accounted for in accordancewith ① and ② above.
④ The Company reviews the latest research and development status of each project at the end ofeach year and if the research and development project no longer qualifies for the development stage,the corresponding development expenditure are recognised in profit or loss for the current period.
⑤ Where it is impossible to differentiate the expenditures on the research phase and the expenditureson the development phase, all the research and development expenditures are recognised in profit orloss for the current period.Please refer to note III.23 for the impairment testing methodology and impairment provision forintangible assets.
23. Impairment of assets
Joincare Pharmaceutical Group Annual Report 2023
The impairment of subsidiaries, associates and joint ventures in the long-term equity investments,investment properties subsequently measured at cost, fixed assets, construction in progress, right-of-use assets, intangible assets, etc. (Excluding inventories, deferred income tax assets and financialassets) are determined as follows:
At the balance sheet date, the Company determines whether there may be evidence of impairment, ifthere is any, the Company will estimate the recoverable amount for impairment, and then test forimpairment. For goodwill arising from a business combination, intangible assets with indefinite usefullife and the intangible assets that have not yet ready for use are tested for impairment annuallyregardless of whether such evidence exists.The recoverable amount of an asset is determined by the higher amount of fair value deducting disposalcosts and net present value of future cash flows expected from the assets. The Company estimates therecoverable amount based on individual asset; for individual asset which is difficult to estimate therecoverable amount, the recoverable amount of the asset group is determined based on the asset groupinvolving the asset. The identification of the asset group is based on whether the cash flow generatedfrom the asset group is independent of the major cash inflows from other assets or asset groups.When the asset or asset group’s recoverable amount is lower than its carrying amount, the Companyreduces its carrying amount to its recoverable amount, the reduced amount is included in profit or loss,while the provision for impairment of assets is recognised.In terms of impairment test of the goodwill, the carrying amount of the goodwill, arising from businesscombination, shall be allocated to the related asset group in accordance with a reasonable basis atacquisition date. Those that are difficult to be allocated to related assets shall be allocated to relatedasset group. Related assets or assets group refer to those that can benefit from the synergies of businesscombination and are not larger than the Company’s recognised reporting segment.When there is an indication that the asset and asset group are prone to impair, the Company shouldtest for impairment for asset and asset group excluding goodwill and calculate the recoverable amountand recognise the impairment loss accordingly. The Company should test for impairment for asset orthe asset group including goodwill and compare the asset or asset group’s recoverable amount with itscarrying amount, provision for impairment of assets shall be recognised when the recoverable amountof assets is lower than its carrying amount.Once impairment loss is recognised, it cannot be reversed in subsequent accounting periods.
24. Long-term deferred expenses
The Company’s long-term deferred expenses measured at cost actually incurred and evenly amortisedon straight-line basis over the expected beneficial period. For the long-term deferred expense itemsthat cannot benefit in subsequent accounting period, their amortised value is recognised through profitor loss.
Joincare Pharmaceutical Group Annual Report 2023
25. Employee compensation
(1) The scope of employee compensation
Employee compensation are all forms of remuneration and compensation given by the Company inexchange for service rendered by employees or the termination of employment. Employeecompensation include short-term employee compensation, post-employment benefits, terminationbenefits and other long-term employee benefits. Employee compensation include benefits provided toemployees’ spouses, children, other dependants, survivors of the deceased employees or to otherbeneficiaries.According to liquidity, employment compensations are presented separately as “accrued payroll” itemand “long-term employment compensation payable” item in the balance sheet.
(2) Short-term employee compensation
During the accounting period in which the employees render the related services, wages, bonuses,social security contributions (including medical insurance, injury insurance, maternity insurance, etc.)and house funding are recognised as liability and included in the profit or loss for the current periodor related asset costs.
(3) Post-employment benefits
Post-employment benefit plans mainly include defined contribution plans. A defined contribution planrefers to a post-employment benefit plan where the Company no longer bears further paymentobligations after depositing fixed costs into an independent fund. The Company is only involved inDefined contribution plans.Defined contribution plans include basic pension insurance and unemployment insurance.During the accounting period in which the employees provide services, the amount payable calculatedbased on the defined contribution plan is recognized as a liability and is either recorded in the profitor loss of the current period or included in the cost of related assets.
(4) Termination benefits
The liability of employee compensation arising from termination benefits is recognised and includedin profit or loss for the current period in the earlier date of the followings: The Company cannotunilaterally withdraw the offer of termination benefits because of an employment termination plan ora curtailment proposal; the Company recognises costs or expenses related to the restructuring thatinvolves the payment of termination benefits.For the implementation of the internal retirement plan for employees, the economic compensationbefore the official retirement date is a termination benefit. The wage of and social insurancecontributions for the internally retired employee which would have incurred from the date on whichthe employee cease rendering services to the Company to the scheduled retirement date will beincluded in the profit or loss for the current period. Economic compensation after the officialretirement date (such as normal pension) should be treated as post-employment benefits.
Joincare Pharmaceutical Group Annual Report 2023
(5) Other long-term employee benefits
When other long-term employee benefits provided to the employees by the Company are satisfied theconditions of a defined contribution plan, those benefits shall be accounted for in accordance with therelevant provisions of the above defined contribution plans. When the benefits are satisfied theconditions of a defined benefit plan, those benefits shall be accounted for in accordance with therelevant provisions of the above defined benefit plans, except that the “change in remeasurement ofthe net liability or net assets of the defined benefit plans” in the cost of the related employeecompensation shall be included in profit or loss for the current period or related asset costs.
26. Provision for liabilities
An obligation related to a contingency is recognised as a provision when all of the following conditionsare satisfied:
(1) The obligation is a present obligation of the Company;
(2) It is probable that an outflow of economic benefits will be required to settle the obligation;
(3) The amount of the obligation can be measured reliably.
Provisions are initially measured at the best estimate of the payment to settle the associated obligationsand consider the relevant risk, uncertainty and time value of money. If the impact of time value ofmoney is significant, the best estimate is determined as its present value of future cash outflow. TheCompany reviews the carrying amount of provisions at the balance sheet date and adjusts the carryingamount to reflect the best estimate.If the expenses for clearing of provisions is fully or partially compensated by a third party, and thecompensated amount can be definitely received, it is recognised separately as asset. The compensatedamount recognised shall not be greater than the carrying amount of the liability recognised.
27. Share-based payment and equity instruments
(1) Accounting treatment of share-based payment
Share-based payments are transactions in which equity instruments are granted or liabilities areassumed on the basis of equity instruments in order to obtain services from employees or other parties.Share-based payment is classified into equity-settled share-based payment and cash-settled share-based payment.
① Equity-settled share-based payment
Equity-settled share-based payment is measured at the fair value of the equity instruments granted toemployees. If vesting is conditional upon completion of services in the pending period or fulfilmentof performance conditions, at each balance sheet date during the pending period, based on the bestestimates of the number of vested equity instruments, the services received for the period arerecognised as the costs or expenses on a straight-line basis. Instruments which are vested immediatelyupon the grant are included in relevant costs or expenses at the fair value of equity instruments on thedate of grant and capital reserves are increased accordingly.
Joincare Pharmaceutical Group Annual Report 2023
At each balance sheet date during the pending period, the Company makes the best estimate andrevises the number of equity instruments expected to be exercisable based on subsequent informationsuch as changes in the number of exercisable employees obtained from the latest available information.The effect of the above estimates is recognised as the relevant cost or expense in the current period,and capital surplus is adjusted accordingly.For the equity instruments granted under an equity-settled share-based payment for services from otherparties, if the fair value of services received from other parties can be measured reliably, the fair valueof the equity instruments is measured at the fair value of services from other parties on the grant date;if the fair value of services received from other parties cannot be measured reliably but the fair valueof the equity instruments can be measured reliably, the fair value of the equity instruments on the dateon which services are received shall be recognised as related costs or expenses, with a correspondingincrease in owners' equity.
② Cash-settled share-based payment
Cash-settled share-based payments are measured at the fair value of the liabilities (share-based or otherequity instrument-based) assumed by the Company. Instruments which are vested immediately uponthe grant are included in relevant costs or expenses at the fair value of liabilities assumed by theCompany on the date of grant and liabilities are increased accordingly. If vesting is conditional uponcompletion of services in the pending period or fulfilment of performance conditions, at each balancesheet date during the pending period, based on the best estimates of the vesting situation, the servicesreceived for the period are recognised as the costs or expenses and corresponding liabilities at fairvalue of the liabilities assumed by the Company.At each balance sheet date and settlement date before the relevant liabilities are settled, the fair valueof liabilities is re-measured and the resulting changes are included in the profit and loss for the currentperiod.
(2) Accounting treatment for amendment and termination of share-based paymentsWhen the Company modifies the share-based payment plan, and if such modification increases thefair value of the equity instruments granted, the increase in services received will be recognisedaccordingly following the increase in fair value of the equity instruments; if such modificationincreases the number of equity instruments granted, the increase in fair value of the equity instrumentsis recognised as a corresponding increase in service achieved. The increase in fair value of the equityinstruments refers to the difference in fair value on the date of modification before and after themodification in respect of the equity instruments. If the modification reduces the total fair value of theshare-based payments or adopts any form that is unfavorable to employees to modify the terms andconditions of the share-based payment plan, accounting treatment will be continued to be conductedin respect of the services received and the modification will be deemed to have never occurred, unlessthe Company had cancelled part or all of the equity instruments granted.
Joincare Pharmaceutical Group Annual Report 2023
During the pending period, if the equity instruments granted are cancelled (except for failure to meetthe non-market conditions of the vesting conditions), the Company will undertake an acceleratedvesting in respect of the cancelled equity instruments that had been granted, include the remainingamount that shall be recognised during the pending period in the current profit and loss immediatelyand recognise capital reserve accordingly. Where employees or other parties are permitted to chooseto fulfil non-vesting conditions but have not fulfilled during the pending period, the Company willtreat the granted equity instruments as cancelled.
(3) Accounting treatment for share-based payments involving the Company and theshareholders or the de facto controller of the CompanyFor share-based payment transactions involving the Company and the shareholders or the de factocontroller of the Company, the settlement enterprise and the enterprise receiving services (one underthe Company while another external to the Company) shall follow the requirements below to conductaccounting treatment in the Company’s consolidated financial statements:
①For settlement enterprises settling through their own equity instruments, such share-based paymenttransaction will be treated as equity-settled share-based payment; except for this, such share-basedpayment transaction will be treated as cash-settled share-based payment.Where a settlement enterprise is an investor of an enterprise receiving services, the fair value of theequity instruments on the date of grant or the fair value of the liabilities that shall be assumed arerecognised as long-term equity investment in the enterprise receiving services, at the same time, capitalreserve (other capital reserve) or liabilities are recognised.
② Where an enterprise receiving services has no settlement obligations or grants its own equityinstruments to employees, such share-based payment transaction will be treated as equity-settledshare-based payment; where an enterprise receiving services has settlement obligations and grantsequity instruments (other than its own) to employees, such share-based payment transaction will betreated as cash-settled share-based payment.For a share-based payment transaction occurring among enterprises under the Company where theenterprise receiving services and the settlement enterprise are not the same enterprise, such share-based payment transaction shall be recognised and measured in each of the respective financialstatements of the enterprise receiving services and the settlement enterprise by reference to the aboveprinciples.
28. Preferred shares, perpetual bonds and other financial instruments
(1) Classification of financial liabilities and equity instruments
The Company classifies the financial instrument or its components as financial assets, financialliabilities or equity instruments at the initial recognition based on the contract terms of the issuedfinancial instrument and the economic substance it reflects, instead of only in legal form, and combinethe definition of financial assets, financial liabilities and equity instruments.
Joincare Pharmaceutical Group Annual Report 2023
(2) Accounting treatment of preferred shares, perpetual bonds and other financial instrumentsThe financial instruments issued by the Company are initially recognised and measured in accordancewith the financial instrument standards; thereafter, interest or dividends are accrued or distributed oneach balance sheet date and processed in accordance with relevant specific accounting standards forenterprises. That is, on the basis of the classification of the financial instrument issued, the accountingtreatment of interest expenses or dividend distributions of the instrument is determined. For financialinstruments classified as equity instruments, interest expenses or dividend distributions are treated asprofit distribution of the Company, and repurchases and cancellations are treated as changes in equity;for financial instruments classified as financial liabilities, interest expenses or dividend distributionsare in principle treated according to borrowing costs, and gains or losses arising from repurchase orredemption are credited to profit or loss for the current period.The transaction costs such as charges and commissions incurred by the Company when issuingfinancial instruments, if classified as debt instruments and measured at amortised cost, are included inthe initial measurement amount of the issued instrument; if classified as equity instruments, arededucted from equity.
29. Revenue
(1) General principle
The Company shall recognise revenue when the Company satisfies the performance obligation of thecontract, that is, the customer obtains control of relevant goods or services.When the contract contains two or more performance obligations, on the effective date of the contract,the Company allocates the transaction price to each performance obligation based on the percentageof respective unit price of a good or service guaranteed by each performance obligation, and therevenue is measured according to the transaction price allocated to each performance obligation.If one of the following conditions is fulfilled, the Company satisfies a performance obligation overtime; otherwise, it satisfies a performance obligation at a point in time:
① When the customer simultaneously receives and consumes the benefits provided by the Companywhen the Company performs its obligations under the contract.
② When the customer is able to control the commodity in progress in the course of performance bythe Company under the contract.
③ The product produced by the Company under the contract is irreplaceable and the Company hasthe right to payment for performance completed to date during the term of the contract.For a performance obligation satisfied over time, the Company shall recognise revenue over time bymeasuring the process towards complete satisfaction of the performance obligation. When the progressof performance cannot be reasonably determined, if the costs incurred by the Company are expected
Joincare Pharmaceutical Group Annual Report 2023
to be recoverable, the revenue will be recognised to the extent of the costs incurred until the progressof performance can be reasonably determined.For a performance obligation satisfied at a point in time, the Company shall recognise revenue whenthe customer obtains control of relevant goods or services. When determining whether the customerhas obtained control of the goods and services, the Company will consider the following indications:
① The Company has the current right to receive payment for the goods or services, which is whenthe customers have the current payment obligations for the goods.
② The Company has transferred the legal title of the goods to the client, which is when the clientpossesses the legal title of the goods.
③ The Company has transferred the physical possession of goods to the customer, which is when thecustomer obtains physical possession of the goods.
④ The Company has transferred all of the substantial risks and rewards of ownership of the goods tothe customer, which is when the client obtains all of the substantial risks and rewards of ownership ofthe goods to the customer.
⑤ When the customer has accepted the goods or services.
⑥ When other information indicates that the customer has obtained control of the goods.A contract asset represents the Company’s right to consideration in exchange for goods or servicesthat it has transferred to a customer when that right is conditioned on factors other than passage oftime, for which the loss allowances for expected credit loss is recognised (see Note III.11(6) ). TheCompany shall present any unconditional (i.e. if only the passage of time is required) rights toconsideration separately as a receivable. A contract liability is the Company’s obligation to transfergoods or services to a customer for which the Company has received consideration (or the amount isdue) from the customer.The contract assets and liabilities under the same contract shall be shown on a net basis. If the netamount stated in debit balance, it will be presented under the items of “Contract assets” or “Other non-current assets” according to its mobility; If the net amount stated in credit balance, it will be presentedunder the items of “Contract liabilities” or “Other non-current liabilities” according to its mobility.
(2) Specific method
The Company enters into sales contracts with customers. Revenue from sales is recognised accordingto the invoiced amount upon the delivery of goods to the designated carrier or purchaser according tothe orders received from customers; revenue from export sales is recognised mainly by adopting FOBmode according to custom declaration upon making declaration for goods and completing the exportprocedures.The Company offers consistent credit terms to all types of customers, with no significant financing
Joincare Pharmaceutical Group Annual Report 2023
component involved.The Company operates on a buyout sales model with distributors, and revenue recognition under thedistribution model is consistent with the direct sales model.For sales with sales return provisions, revenue recognition is limited to the amount expected not toresult in significant returns based on the cumulative revenue recognized. The Company recognizesliabilities based on the expected refund amount, while recognizing an asset for the expected value ofreturned goods at the time of transfer, net of estimated costs (including the value impairment ofreturned goods).
30. Contract costs
Contract costs are either the incremental costs of obtaining a contract with a customer or the costs tofulfil a contract with a customer.Incremental costs of obtaining a contract are those costs that the Company incurs to obtain a contractwith a customer that it would not have incurred if the contract had not been obtained e.g. anincremental sales commission. The Company recognises as an asset the incremental costs of obtaininga contract with a customer if it expects to recover those costs. Other costs of obtaining a contract areexpensed when incurred.If the costs to fulfil a contract with a customer are not within the scope of inventories or otheraccounting standards, the Company recognises an asset from the costs incurred to fulfil a contract onlyif those costs meet all of the following criteria:
① The costs relate directly to an existing contract or to a specifically identifiable anticipated contract,including direct labour, direct materials, allocations of overheads (or similar costs), costs that areexplicitly chargeable to the customer and other costs that are incurred only because the Companyentered into the contract;
② The costs generate or enhance resources of the Company that will be used in satisfying (or incontinuing to satisfy) performance obligations in the future;
③ The costs are expected to be recovered.
Assets recognised for the incremental costs of obtaining a contract and assets recognised for the coststo fulfil a contract (the “assets related to contract costs”) are amortised on a systematic basis that isconsistent with the transfer to the customer of the goods or services to which the assets relate andrecognised in profit or loss for the current period.The Company recognises an impairment loss in profit or loss to the extent that the carrying amount ofan asset related to contract costs exceeds:
① Remaining amount of consideration that the Company expects to receive in exchange for the goodsor services to which the asset relates;
Joincare Pharmaceutical Group Annual Report 2023
② The cost estimated to be happened for the transfer of related goods or services.The costs of contract performance recognised as assets, if the amortisation period is less than one yearor a normal operating cycle upon the initial recognition, are presented as “Inventories” item, and if theamortisation period is more than one year or a normal operating cycle upon the initial recognition, arepresented as “Other non-current assets” item.The contract obtaining costs recognised as assets, if the amortisation period is less than one year or anormal operating cycle upon the initial recognition, are presented as “Other current assets” item, andif the amortisation period is more than one year or a normal operating cycle upon the initial recognition,are presented as “Other non-current assets” item.
31. Government grants
A government grant shall be recognised only when the enterprise can comply with the conditionsattaching to the grant and the enterprise can receive the grant.If a government grant is in the form of a transfer of a monetary asset, the item is measured at theamount received. If a government grant is in the form of a transfer of a non-monetary asset, the itemis measured at fair value, when fair value is not reliably determinable, the item is measured at anominal amount of RMB1.Government grant related to assets represents the government grant received for acquisition andconstruction of long term assets, or forming long term assets in other ways. Except for these, all aregovernment grant related to income.Regarding to the government grant not clearly defined in the official documents and can form longterm assets, the part of government grant which can be referred to the value of the assets is classifiedas government grant related to assets and the remaining part is government grant related to income.For the government grant that is difficult to distinguish, the entire government grant is classified asgovernment grant related to income.The government grant related to assets is recognised as deferred income and would be transferred toprofit or loss in reasonable and systematic manner within the period of use of the relevant assets. Thegovernment grant related to income which is used to compensate the relevant costs or losses incurredshould be recognised in the profit or loss for the current period; the government grant related to incomewhich is used to compensate the relevant costs or losses for the subsequent period is recognised asdeferred income and shall be recognised in profit or loss during the relevant cost or loss confirmationperiod. Government grants measured in nominal terms are directly included in the profit or loss forthe current period. The Company has adopted a consistent approach to the same or similar governmentgrant business.The government grants related to daily activities are recognised as other gains in accordance with thesubstance of economic business. Government grants that are not related to daily activities are
Joincare Pharmaceutical Group Annual Report 2023
recognised as non-operating income and expenses.If the recognised government grants need to be refunded, adjust the carrying amount of assets whenthe carrying amount of assets is offset at the time of initial recognition; the balance of deferred incomeis offset against the carrying amount of the balance of deferred income and the excess is recognised inthe profit or loss for the current period. Other circumstances, it is directly recognised in the profit orloss for the current period.
32. Deferred tax assets and deferred tax liabilities
Income tax comprises of current tax and deferred tax. Current tax and deferred tax are recognized inprofit or loss except to the extent that they relate to transactions or items recognized directly in equityand goodwill arising from a business combination.Temporary differences arising from the difference between the carrying amount of an asset or liabilityand its tax base are recognized as deferred tax using the balance sheet liability method.All the taxable temporary differences are recognized as deferred tax liabilities except for those incurredin the following transactions:
(1) Initial recognition of goodwill or initial recognition of an asset or liability in a transaction whichis neither a business combination nor affects accounting profit or taxable profit (or deductible loss)when the transaction occurs;
(2) The taxable temporary differences associated with investments in subsidiaries, associates andjoint ventures, and The Company is able to control the timing of the reversal of the temporarydifference and it is probable that the temporary difference will not reverse in the foreseeable future.The Company recognizes a deferred tax asset for the carry forward of deductible temporarydifferences, deductible losses and tax credits to subsequent periods, to the extent that it is probablethat future taxable profits will be available against which the deductible temporary differences,deductible losses and tax credits can be utilized, except for those incurred in the following transactions:
(1) The transaction is neither a business combination nor affects accounting profit or taxable profit(or deductible loss) when the transaction occurs (Except for single transactions resulting in equaltemporary differences and deductible temporary differences arising from initially recognized assetsand liabilities);
(2) The deductible temporary differences associated with investments in subsidiaries, associates andjoint ventures, the corresponding deferred tax asset is recognized when both of the followingconditions are satisfied: it is probable that the temporary difference will reverse in the foreseeablefuture and it is probable that taxable profits will be available in the future against which the temporarydifference can be utilized.At the balance sheet date, deferred tax assets and deferred tax liabilities are measured at the tax ratesthat are expected to apply to the period when the asset is realized or the liability is settled, and theirtax effect is reflected.
Joincare Pharmaceutical Group Annual Report 2023
At the balance sheet date, the Company reviews the carrying amount of a deferred tax asset. If it isprobable that sufficient taxable profits will not be available in future periods to allow the benefit ofthe deferred tax asset to be utilized, the carrying amount of the deferred tax asset is reduced. Any suchreduction in amount is reversed when it becomes probable that sufficient taxable profits will beavailable.At the balance sheet date, deferred tax assets and deferred tax liabilities are presented as a net amountafter offsetting when they simultaneously meet the following conditions:
(1) The legal right exists for the tax-paying entity within the Company to settle current income taxassets and current income tax liabilities on a net basis.
(2) Deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxauthority on the same tax-paying entity within the Company.
33. Leases
(1) Identification of leases
At the inception of a contract, the Company, as a lessee or lessor, assesses if the customer in a contracthas the right to obtain substantially all the economic benefits from use of the identified assets and theright to direct the use of the identified assets in the period of use. The Company would identify that acontract is a lease, or contains a lease if a party of the contract transfers the right to control the use ofone or more identified assets for a period of time in exchange for consideration.
(2) The Company as the lessee
At the inception of a lease, the Company recognises all its leases as the right-of-use assets and leaseliabilities, except for the short-term leases and the leases of low-value assets which are treated with asimplified approach.For the accounting policies on the right-of-use assets, please refer to Note III. 34.Lease liabilities are initially measured based on the present value of outstanding lease payment at theinception of a lease, discounted using the interest rate implicit in the lease or the incremental borrowingrate. Lease payment include: fixed payments and in-substance fixed payments, less any leaseincentives (if there is a lease incentive); variable lease payment that are based on an index or a rate;the exercise price of a purchase option if the lessee is reasonably certain to exercise that option;payments of penalties for terminating the lease option, if the lease term reflects that the lessee willexercise that option; and amounts expected to be payable under the guaranteed residual value providedby the lessee. The Company shall subsequently calculate the interest expenses of lease liabilities overthe lease term at the fixed periodic interest rate, and include it into the profit or loss for the currentperiod. Variable lease payments not included in the measurement of lease liabilities are charged toprofit or loss in the period in which they actually arise.
Joincare Pharmaceutical Group Annual Report 2023
Short-term leaseShort-term lease refers to the lease that the lease term does not exceed 12 months from the inceptionof a lease, and the lease that includes the option of purchase is not a short-term lease.The Company recognises the amount of lease payments of short-term lease in the cost of the relatedasset or the profit or loss for the current period, on a straight-line method over each period of the leaseterm.Leases of low-value assetsLeases of low value assets refer to lease of a single leased asset whose value is less than 40,000 yuanwhen it is a brand-new asset.The Company recognised the lease payments for the leases of low-value assets in the relevant assetcost or the profit or loss for the current period on a straight-line basis over each period of the leaseterm.For leases of low value assets, the Company chooses to adopt the above simplified method accordingto the specific situation of each lease.
(3) The Company as the lessor
When the Company is the lessor, the lease that substantially transfers all the risks and rewards relatedto the ownership of assets is recognised as a finance lease, and leases other than finance leases arerecognised as operating leases.Finance leasesIn a financial lease, the Company uses the net investment in leases as the carrying amount of financelease receivables at the inception of a lease. The net investment in leases is the sum of the unguaranteedresidual value and the present value of the outstanding lease payment at the inception of a lease,discounted using the interest rate implicit in the lease. The Company, as the lessor, calculates andrecognises the interest income over each period of the lease term at a fixed periodic interest rate.Variable lease payments not included in the measurement of the lease liability, which are obtained bythe Company as a lessor, are recognised in profit or loss as incurred.The termination of recognition and impairment of financial lease receivables is accounted for inaccordance with the provisions of “Accounting Standards for Business Enterprises No. 22 –Recognition and Measurement of Financial Instrument” and “Accounting Standards for BusinessEnterprises No. 23 – Transfer of Financial Assets”.Operating leasesFor the rental of operating leases, the Company recognises it in the profit or loss for the current periodon a straight- line basis over each period of the lease term. The initial direct cost incurred in connectionwith an operating lease shall be capitalised and amortised on the same basis for recognition of rentalincome during the lease term, and shall be included in instalments in the profit or loss for the currentperiod. The variable lease payment, which is obtained in connection with an operating lease and not
Joincare Pharmaceutical Group Annual Report 2023
included in the lease receivables, shall be included in the profit and loss for the current period whenthey actually occur.
34. Right-of-use assets
(1) Recognition condition of right-of-use assets
The right-of-use assets of the Company are defined as the right of underlying assets in the lease termfor the Company as a lessee.Right-of-use assets are initially measured at cost as at the commencement date of the lease, whichconsists of: the amount of the initial measurement of the lease liability; any lease payments made ator before the commencement date of the lease less any lease incentives received if any; initial directexpenses incurred by the Company as a lessee; costs to be incurred by the Company as a lessee indismantling and removing a leased asset, restoring the site on which it is located or restoring the leasedassets to the condition required by the terms and conditions of the lease. The Company as a lesseerecognises and measures the costs of demolition and restoration according to “Accounting Standardsfor Business Enterprises No.13 – Contingencies”, and subsequently adjusts for any remeasurement oflease liability.
(2) Depreciation method of right-of-use assets
The Company calculates depreciation on a straight-line basis. Right-of-use assets in which theCompany as a lessee is reasonably certain to obtain ownership of the underlying leased assets at theend of the lease term are depreciated over the remaining useful life. Otherwise, right-of-use assets aredepreciated over the shorter of the lease term and its remaining useful life.
(3) For methods of impairment testing and provision for impairment for right-of-use assets,please refer to note III. 23.
35. Repurchase of shares
Prior to cancellation or transfer of shares repurchased, the Company recognises all expendituresarising from share repurchase as cost of treasury shares in the treasury share account. Considerationsand transaction fee incurred from the repurchase of shares shall lead to the elimination of owners’equity and does not recognise profit or loss when shares of the Company are repurchased, transferredor cancelled.The difference between the actual amount received and the carrying amount of the treasury stock arerecognised as capital reserve when the treasury stocks are transferred, if the capital reserve is notsufficient to be offset, the excess amount shall be recognised to offset surplus reserve and undistributedprofit. When the treasury stocks are cancelled, the capital shall be eliminated according to the numberof shares and par value of cancellation shares, the difference between the actual amount received andthe carrying amount of the treasury stock are recognised as capital reserve, if the capital reserve is notsufficient to be offset, the excess amount shall be recognised to offset surplus reserve and undistributedprofit.
Joincare Pharmaceutical Group Annual Report 2023
36. Significant accounting judgements and estimates
Significant accounting estimates and critical assumptions adopted by the Company are continuallyevaluated based on historical experience and other factors, including expectations of future events thatare believed to be reasonable. The significant accounting estimates and critical assumptions that havea significant risk of causing a material adjustment to the carrying amounts of assets and liabilitieswithin the next accounting year are set out below:
(1) Classification of financial assets
Significant judgements involved in determining the classification of financial assets include analysisof business mode and characteristics of the contractual cash flows.Factors considered by the Company in determining the business model of financial assets managementfor a group of financial assets include past experience on how financial asset’s performance isevaluated and reported to key management personnel, how risks affecting the performance of financialasset are assessed and managed and how managers of related businesses are compensated.When assessing whether the contractual cash flows of financial assets are consistent with basic lendingarrangement, the Company adopts the following significant judgements: whether the time distributionor amounts of the principal within the duration may change due to early repayment and other reasons;whether the interest includes only the time value of money, credit risk, other basic lending risks andthe consideration for cost and profit. For example, the amounts of early repayment only reflectprincipal unpaid, the interest based on principal unpaid and reasonable compensation paid for earlytermination of a contract.
(2) Measurement of ECL for accounts receivables
The Company calculates ECL of accounts receivables according to their exposure at default and ECLrate, and determines ECL rate based on probability of default and loss given default. When determiningECL rate, the Company adopts data like historical credit loss experience in combination with currentsituation and forward-looking information to adjust historical data. When considering forward-lookinginformation, the Company uses indicators including the risk of economic downturn, external marketenvironment, technology environment and changes on customer situation. The Company periodicallymonitors and reviews assumptions relevant to the measurement of ECL.
(3) Impairment of non-current assets other than financial assets (other than goodwill)On the balance sheet date, the Company assesses whether there are indications of impairment for non-current assets other than financial assets. For intangible assets that have not yet reached the status ofuse, impairment testing is conducted when there are indications of impairment, in addition to theannual impairment test. For non-current assets other than financial assets, impairment testing isconducted when there are indications that their carrying amounts may not be recoverable. Impairmentis recognized when the carrying amount of an asset or asset group exceeds the higher of its recoverable
Joincare Pharmaceutical Group Annual Report 2023
amount, which is the net amount of fair value less disposal costs and the present value of estimatedfuture cash flows. The net amount of fair value less disposal costs is determined by reference to theselling price in similar assets in fair transactions or observable market prices, minus incremental costsdirectly attributable to the asset disposal. In estimating the present value of future cash flows,management estimates the expected future cash flows of the asset or asset group and selects anappropriate discount rate to determine the present value of future cash flows.
(4) Impairment of goodwill
The Company evaluates whether goodwill is impaired at least once a year. This requires an estimateof the value in use of the asset groups to which the goodwill is allocated. In estimating the value inuse, the Company needs to estimate the future cash flows generated from the asset groups and also tochoose an appropriate discount rate in order to calculate the present value of the future cash flows.
(5) Development costs
Determining the amounts to be capitalised requires the management to make assumptions regardingthe expected future cash flows generated from the relevant assets, discount rates to be applied and theexpected period of benefits.
(6) Deferred tax assets
The deferred income tax assets will be recognised for all unused tax losses to the extent that it isprobable that there will be sufficient taxable profits against which the loss is utilised. This requires themanagement to exert numerous judgments to estimate the timing and amount of the future taxableprofits so as to determine the amount of deferred income tax assets to be recognised with reference tothe tax planning strategy.
(7) Revenue recognition
As stated in note III. 28, the Company makes the following significant accounting judgements andestimates in terms of revenue recognition: identifying customer contracts; estimating the recoverabilityof the considerations that are entitled to be obtained by transferring goods to customers; identifyingthe performance obligation in the contract; estimating the variable consideration in the contract andcumulative revenue recognised where it is highly probable that a significant reversal therein will notoccur when the relevant uncertainty is resolved; assessing whether there is a significant financingcomponent in the contract; estimating the individual selling price of the individual performanceobligation in the contract, etc. The Company makes judgments primarily based on historicalexperiences and works. Changes in these significant judgments and estimates may have significantimpacts on the operating income, operating costs, and profit or loss of the current or subsequent periods.
(8) Determination of the fair value of unlisted equity investment
The fair value of unlisted equity investments represents the expected future cash flows discounted atthe prevailing discount rate of items with similar terms and risk characteristics. It requires the
Joincare Pharmaceutical Group Annual Report 2023
Company to estimate the expected future cash flows and discount rates, and therefore there isuncertainty. Under limited circumstances, if the information used to determine the fair value isinsufficient, or the possible estimated amount of fair value is widely distributed, and cost representsthe best estimate of the fair value within such scope, the cost may represent an appropriate estimate ofthe fair value within such distribution scope.
37. Changes in significant accounting policies and accounting estimates
① Interpretation No. 16 of Accounting Standards for Business Enterprises
The Ministry of Finance issued the Interpretation No. 16 of Accounting Standards for BusinessEnterprises (Cai Kuai [2022] No. 31, hereinafter referred to as “Interpretation No. 16”) in November2022.Interpretation No. 16 stipulates that for individual transactions that are not business combinations anddo not affect either accounting profit or taxable income (or deductible losses) at the time of occurrence,and where the initial recognition of assets and liabilities results in equal taxable temporary differencesand deductible temporary differences, the temporary differences arising from the initial recognition ofassets and liabilities should be separately recognized as deferred tax liabilities and deferred tax assets,respectively, at the time of the transaction, in accordance with relevant provisions such as AccountingStandards for Business Enterprises No. 18 - Income Taxes. For such transactions occurring betweenthe beginning of the earliest period reported in the financial statements and the effective date of thisinterpretation, the Company adjusts the cumulative impact amount of the earliest period reported inthe financial statements, including retained earnings at the beginning of the earliest period and otherrelated items, in accordance with the aforementioned provisions. The aforementioned accountingtreatment becomes effective from 1 January 2023.When the lease liabilities and right-of-use assets recognized by the Company in lease transactionsresult in temporary differences and deductible temporary differences for tax purposes, adjustmentswere made in accordance with the provisions of Interpretation No. 16.
The impact of implementing the above accounting policies on the consolidated balance sheet as of 31December 2023 and the consolidated income statement for the year ended 2023 is as follows:
| Item in consolidated balance sheet (As at 31 December 2023) | Impact amount |
| Deferred tax assets | 5,448,312.71 |
| Deferred tax liabilities | 5,281,690.30 |
| Undistributed profits | 149,007.43 |
| Minority interests | 17,614.98 |
| Item in consolidated income statement (For the year ended 31 December 2023) | Impact amount |
| Income tax expenses | -20,001.00 |
| Net profit attributable to shareholders of the parent | 14,046.76 |
| Minority interests | 5,954.24 |
The impact of implementing the above accounting policies on the consolidated balance sheet as of 31December 2022 and the consolidated income statement for the year ended 31 December 2022 is as
Joincare Pharmaceutical Group Annual Report 2023
follows:
| Item in consolidated balance sheet (As at 31 December 2022) | Before adjustment | Adjustment amount | After adjustment |
| Deferred tax assets | 533,861,743.26 | 6,176,080.30 | 540,037,823.56 |
| Deferred tax liabilities | 231,164,425.48 | 6,029,458.89 | 237,193,884.37 |
| Undistributed profits | 8,456,643,326.82 | 134,960.67 | 8,456,778,287.49 |
| Minority interests | 8,898,407,287.12 | 11,660.74 | 8,898,418,947.86 |
| Item in consolidated income statement (For the year ended 31 December 2022) | Before adjustment | Adjustment amount | After adjustment |
| Income tax expenses | 562,008,858.69 | -212,115.64 | 561,796,743.05 |
| Net profit attributable to shareholders of the parent | 1,502,595,840.48 | 181,293.28 | 1,502,777,133.76 |
| Minority interests | 1,391,500,256.00 | 30,822.36 | 1,391,531,078.36 |
The impact of implementing the above accounting policies on the consolidated balance sheet as of 1January 2022 is as follows:
| Item in consolidated balance sheet (As at 1 January 2022) | Before adjustment | Adjustment amount | After adjustment |
| Deferred tax assets | 552,542,866.71 | 8,197,790.11 | 560,740,656.82 |
| Deferred tax liabilities | 208,525,905.39 | 8,263,284.34 | 216,789,189.73 |
| Undistributed profits | 7,223,644,166.22 | -46,332.61 | 7,223,597,833.61 |
| Minority interests | 8,359,317,322.63 | -19,161.62 | 8,359,298,161.01 |
② Cumulative impact for the year by changes in accounting policies
| Item begin affected | Current year | Prior year |
| Net assets in beginning of year | -- | -65,494.23 |
| Including: Retained earnings | -- | -46,332.61 |
| Net profit | 20,001.00 | 212,115.64 |
| Net assets at year end | 166,622.41 | 146,621.41 |
| Including: Retained earnings | 149,007.43 | 134,960.67 |
(2) Changes in significant accounting estimates
None.
IV. Taxation
1. Major taxes and their tax rates
| Tax category | Tax basis | Statutory tax rate % |
| Value-added tax | Taxable revenue | 3, 6 or 13 |
| Urban maintenance and construction tax | Subject to turnover tax payable | 1, 5 or7 |
| Education surcharge | Subject to turnover tax payable | 3 |
Joincare Pharmaceutical Group Annual Report 2023
| Local education surcharge | Subject to turnover tax payable | Note 1 |
| Enterprise income tax | Subject to taxable profit | Note 2 |
Note 1. The Company and its subsidiaries that are incorporated in Shenzhen and Zhuhai shall pay localeducation surcharges that are charged as 2% of the turnover tax payable. Other subsidiaries shall paylocal education surcharges according to the tax rate as specified at their places of incorporation on thebasis of turnover tax payable.
Note 2. Enterprise income tax rate implementation is as follows:
| Entity | Income tax rate % |
| Hong Kong Health Pharmaceutical Industry Company Limited (香港健康药业有限公司) , Livzon Pharmaceutical Biotechnology Co., Ltd. (丽珠医药生物科技有限公司) , Lian (Hong Kong) Co., Ltd. (丽安香港有限公司) , Livzon Biologics Hong Kong Limited (丽珠生物科技香港有限公司) | 16.5 |
| Companhia de Macau Carason Limitada (澳门嘉安信有限公司) , Li Zhu (Macau) Limitada (丽珠(澳门) 有限公司) , Macau Livzon Traditional Chinese Medicine Modern Technology Co., Ltd. (澳门丽珠中药现代化科技有限公司) | 0 or 12 (Tax rate is 12% where the taxable income is MOP600,000 or more; for those with taxable income less than MOP600,000, they are exempted from income taxes.) |
| The Company and Shenzhen Taitai Pharmaceutical Industry Co., Ltd. (深圳太太药业有限公司) (Taitai Pharmaceutical) ) , Shenzhen Haibin Pharmaceutical Co., Ltd. (深圳市海滨制药有限公司) ) (Haibin Pharma) , Xinxiang Haibin Pharmaceutical Co., Ltd.(Xinxiang Haibin) (新乡海滨药业有限公司(新乡海滨) ) , Jiaozuo Joincare Bio Technological Co., Ltd. (焦作健康元生物制品有限公司) (Jiaozuo Joincare) ) , Shanghai Frontier Health Pharmaceutical Technology Co., Ltd. (上海方予健康医药科技有限公司)(Shanghai Frontier) , Guangzhou Joincare Respiratory Medicine Engineering Technology Co., Ltd. (广州健康元呼吸药物工程技术有限公司) (Joincare Respiratory), Joincare Haibin Pharmaceutical Co., Ltd. (健康元海滨药业有限公司)(Joincare Haibin) ), Livzon Group and subsidiaries of Livzon Group, Livzon Group Limin Pharmaceutical Manufacturing Factory (丽珠集团利民制药厂) , Livzon Group Livzon Pharmaceutical Factory (丽珠制药厂) , Zhuhai FTZ Livzon Hecheng Pharmaceutical Manufacturing Co., Ltd. (珠海保税区丽珠合成制药有限公司) , Shanghai Livzon Pharmaceutical Manufacturing Co., Ltd. (上海丽珠制药有限公司) , Livzon Group Xinbeijiang Pharmaceutical Manufacturing Inc. (丽珠集团新北江制药股份有限公司) , Sichuan Guangda Pharmaceutical Manufacturing Co., Ltd. (四川光大制药有限公司) , Zhuhai Livzon Diagnostics Inc. (珠海丽珠试剂股份有限公司), Livzon Group Fuzhou Fuxing Pharmaceutical Co., Ltd. (丽珠集团福州福兴医药有限公司) , Shanghai Livzon Biotechnology Co., Ltd. (上海丽珠生物科技有限公司), Livzon Group (Ningxia) Pharmaceutical Manufacturing Co., Ltd. (丽珠集团(宁夏) 制药有限公司), Livzon MABPharm Inc. (珠海市丽珠单抗生物技术有限公司), Zhuhai Lihe Medical Diagnostic Products Co., Ltd. (珠海丽禾医疗诊断产品有限公司), Zhuhai Livzon Chinese Medicine Modern Technology Co., Ltd. (珠海市丽珠中药现代化科技有限公司) | 15 |
| Livzon MAB Pharm (US) Inc. (丽珠单抗生物技术(美国) 有限公司) | 21 |
| LIVZON BIOLOGICS (MALAYSIA) SDN. BHD.， | 17 or 24 (registered capital of less than MYR 2.5 million, the tax rate is 17% on the first profit less than MYR 600,000; the registered capital exceeds MYR 2.5 million or the profit exceeds MYR 600,000, the tax rate is 24%) |
Joincare Pharmaceutical Group Annual Report 2023
| Entity | Income tax rate % |
| Health Investment Holdings Ltd, Joincare Pharmaceutical Group Industry Co.,Ltd., Livzon International Ventures, Livzon International Ventures I, Livzon International Ventures II | 0 (Note1) |
| Other subsidiaries | 25 or enjoy preferential tax policies for small and micro-profit enterprises |
Note 1. Companies registered in the British Virgin Islands and the Cayman Islands are not subject toenterprise income tax.
2. Tax incentives and approval documents
(1) Preferential value added tax
In accordance with the Announcement on Value Added Tax on Biological Products Sold byPharmaceutical Operation Enterprises issued by the State Administration of Taxation (Announcementof State Administration of Taxation 2012 No. 20) and the Notice of the Ministry of Finance, theGeneral Administration of Customs, the State Administration of Taxation and the State DrugAdministration on the Value-Added Tax Policies for Anti-Cancer Drugs (Caishui [2018] No. 47), thebiological products sold by the Company are subject to value added tax at 3% by the simple approach.
(2) Preferential enterprise income tax
The Company’s subsidiary Joincare Haibin (健康元海滨) has been eligible for preferential enterpriseincome tax policies for high-tech enterprises for a duration of 3 years starting from 2021. TheCompany and its subsidiaries Jiaozuo Joincare (焦作健康元) and Joincare Respiratory (健康元呼吸)have been eligible for preferential enterprise income tax policies for high-tech enterprises for aduration of 3 years starting from 2022. The Company’s subsidiaries Taitai Pharmaceutical (太太药业), Haibin Pharma (海滨制药), Xinxiang Haibin (新乡海滨), and Shanghai Frontier (上海方予) areeligible for preferential enterprise income tax policies for high-tech enterprises for a duration of 3years starting from 2023. Livzon Group and its subsidiaries, including Livzon Group LiminPharmaceutical Manufacturing Factory (丽珠集团利民制药厂), Livzon Pharmaceutical Factory (丽珠制药厂), Zhuhai FTZ Livzon Hecheng Pharmaceutical Manufacturing Co., Ltd. (珠海保税区丽珠合成制药有限公司), Shanghai Livzon Pharmaceutical Manufacturing Co., Ltd. (上海丽珠制药有限公司), and Sichuan Guangda Pharmaceutical Manufacturing Co., Ltd. (四川光大制药有限公司), areeligible for preferential enterprise income tax policies for high-tech enterprises for a period of 3 yearsstarting from 2023. Livzon Group Fuzhou Fuxing Pharmaceutical Co., Ltd. (丽珠集团福州福兴医药有限公司) has been officially recognized as a high-tech enterprise in the current period; ShanghaiLivzon Biotechnology Co., Ltd. (上海丽珠生物科技有限公司) has been eligible for preferentialenterprise income tax policies for high-tech enterprises for a duration of 3 years starting from 2021.Livzon Group Xinbeijiang Pharmaceutical Manufacturing Inc. (丽珠集团新北江制药股份有限公司), Zhuhai Livzon Diagnostics Inc. (珠海丽珠试剂股份有限公司), and Livzon MABPharm Inc. (珠海市丽珠单抗生物技术有限公司) has been eligible preferential enterprise income tax policies forhigh-tech enterprises for a duration of 3 years since 2022.Livzon Group (Ningxia) Pharmaceutical Manufacturing Co., Ltd. (丽珠集团(宁夏) 制药有限公司)has been verified to benefit from tax incentives for encouraged industries in the western region. Theabove companies were subject to enterprise income tax rate of 15% for the period.In accordance with Article 27 of the enterprise income tax Law of the People's Republic of China andArticle 86 of the Regulations for the Implementation of the enterprise income tax Law of the People's
Joincare Pharmaceutical Group Annual Report 2023
Republic of China, the business of planting Chinese herbal medicines engaged by the subsidiaries ofthe Livzon, Datong Livzon Qiyuan Medicine Co., Ltd. (大同丽珠芪源药材有限公司) and LongxiLivzon Shenyuan Medicine Co., Ltd. (陇西丽珠参源药材有限公司) are exempted from enterpriseincome tax.According to the "Notice of the Ministry of Finance and the State Administration of Taxation on thePreferential Policies for enterprise income tax in the Hengqin Guangdong-Macao Deep CooperationZone" (Cai Shui [2022] No. 19), enterprise income tax is levied at a reduced rate of 15% for qualifiedindustrial enterprises located in the Hengqin Guangdong-Macao Deep Cooperation Zone. The LivzonGroup’s subsidiaries, Zhuhai Lihe Medical Diagnostic Products Co., Ltd. (珠海丽禾医疗诊断产品有限公司) and Zhuhai Livzon Chinese Medicine Modern Technology Co., Ltd. (珠海市丽珠中药现代化科技有限公司) meet the relevant conditions and are subjected to 15% enterprise income tax ratefor the current period.According to the preferential tax policies for small low-profit enterprises, the portion of annual taxableincome of a small low profit enterprise which does not exceed RMB1 million is subject to enterpriseincome tax at a tax rate of 5%.
V. Notes to the items of consolidated financial statements
1. Cash and bank balances
| Item | 2023.12.31 | 2022.12.31 |
| Cash on hand | 355,538.62 | 231,883.95 |
| Cash at bank | 15,580,242,256.39 | 14,792,867,005.08 |
| Other monetary funds | 111,290,519.82 | 15,389,221.93 |
| Total | 15,691,888,314.83 | 14,808,488,110.96 |
| Including: Total amount of money deposited abroad | 1,502,820,057.55 | 1,491,900,539.35 |
① Other monetary funds are mainly deposits for investments, deposits for letter of credit and bankacceptance bills.
② Restricted funds relating to issuing letters of credit and bank acceptance bills in other monetaryfunds were deducted from cash and cash equivalents in the cash flow statement. Apart from theserestricted funds, there is no other charge, pledge or lock up on the cash at bank balance that may limitits use, is kept outside China and may have probable risks in its collection. Below are the details ofthe use of restricted monetary funds:
| Item | 2023.12.31 | 2022.12.31 |
| Deposits for letter of credit | 602,957.38 | 444,032.37 |
| Deposits for bank acceptance bills | 4,965,960.88 | 947,255.39 |
| Deposits for other business | 1,058,531.40 | 1,120.00 |
| Total | 6,627,449.66 | 1,392,407.76 |
2. Financial assets held for trading
(1) Classification
Joincare Pharmaceutical Group Annual Report 2023
| Item | 2023.12.31 | 2022.12.31 |
| Debt instruments investment | 937,588.47 | 934,289.94 |
| Equity instruments investment | 78,238,516.48 | 102,648,863.47 |
| Derivative financial assets | 3,136,735.29 | 5,432,511.57 |
| Bank wealth management products | 586,314.00 | 0.00 |
| Total | 82,899,154.24 | 109,015,664.98 |
① The Company's investments in equity instruments and debt instruments for financial assets heldfor trading at period end were listed for trading on Shenzhen Stock Exchange, Hong Kong StockExchange and NASQAQ. The fair value was determined based on the closing price on the last tradingday in the Reporting Period.
② Derivative financial assets represent foreign currency forward contracts, futures contracts andgains from unexpired contracts measured at fair value which were recognised as financial assets as atthe balance sheet date.
(2) No restrictive financial asset measured at fair value through profit or loss was included inthe closing balance.
(3) No hedging instruments in the closing balance and no hedging transactions have occurredduring the period.
3. Notes receivable
| Category | 2023.12.31 | 2022.12.31 | ||||
| Book balance | Provision for bad debts | Carrying amount | Book balance | Provision for bad debts | Carrying amount | |
| Bank acceptance bills | 1,941,200,568.00 | 0.00 | 1,941,200,568.00 | 1,959,985,016.85 | 0.00 | 1,959,985,016.85 |
(1) Notes receivable pledged at year end
| Category | Amount pledged at year end |
| Bank acceptance bills | 519,789,027.16 |
As at 31 December 2023, bank acceptance bills with carrying amount of RMB519,789,027.16 (31December 2022: RMB469,659,266.19) have been used as pledge for opening of bills.
(2) Bills endorsed or discounted to other parties but not yet expired at balance sheet date
| Category | Amount derecognized at year end | Amount not derecognized at year end |
| Bank acceptance bills not yet mature but already endorsed | 180,125,188.50 | 0.00 |
| Bank acceptance bills not yet mature but already discounted | 136,098,199.33 | 0.00 |
| Total | 316,223,387.83 | 0.00 |
In the current period, the Company discounted bank acceptance bills of RMB385,575,297.99(previous year: RMB1,190,002,804.98). Since the major risks and rewards such as interest rate riskrelated to these bank acceptance bills have been transferred to the bank, the Company derecognizesthe discounted unexpired bank acceptance bills. Factoring expenses incurred was RMB2,042,497.83(previous year: RMB6,363,472.30).
(3) There was no bills transferred into account receivables for non-performance by the issuer at
Joincare Pharmaceutical Group Annual Report 2023
balance sheet date of the period
(4) Disclosure by method of provision for bad debts
| Category | 2023.12.31 | 2022.12.31 | ||||||||
| Book balance | Provision for bad debts | Carrying amount | Book balance | Provision for bad debts | Carrying amount | |||||
| Amount | Ratio (%) | Amount | Expected credit loss rate (%) | Amount | Ratio (%) | Amount | Expected credit loss rate (%) | |||
| Provision for bad debts on individual item | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Provision for bad debts on portfolio basis | 1,941,200,568.00 | 100.00 | 0.00 | 0.00 | 1,941,200,568.00 | 1,959,985,016.85 | 100.00 | 0.00 | 0.00 | 1,959,985,016.85 |
| Including: | ||||||||||
| Bank acceptance bills | 1,941,200,568.00 | 100.00 | 0.00 | 0.00 | 1,941,200,568.00 | 1,959,985,016.85 | 100.00 | 0.00 | 0.00 | 1,959,985,016.85 |
| Total | 1,941,200,568.00 | 100.00 | 0.00 | 0.00 | 1,941,200,568.00 | 1,959,985,016.85 | 100.00 | 0.00 | 0.00 | 1,959,985,016.85 |
Provision for bad debts on individual item:
None.Provision for bad debts on portfolio basis:
Provision for bad debts on portfolio basis: Bank acceptance bills
| Item | 2023.12.31 | 2022.12.31 | ||||
| Notes receivable | Provision for bad debts | Expected credit loss rate (%) | Notes receivable | Provision for bad debts | Expected credit loss rate (%) | |
| Within one year | 1,941,200,568.00 | 1,959,985,016.85 | ||||
(5) There was no accrual, recovery or reversal of provision for bad debts during the year.
(6) There was no write-off of notes receivable.
4. Accounts receivable
(1) by ageing
| Ageing | 2023.12.31 | 2022.12.31 |
| Within one year | 2,647,481,728.60 | 3,120,189,972.55 |
| 1 to 2 years (inclusive of 2 years) | 101,092,502.23 | 23,444,432.08 |
| 2 to 3 years (inclusive of 3 years) | 2,963,960.00 | 3,734,160.84 |
| 3 to 4 years (inclusive of 4 years) | 3,083,562.86 | 12,774,996.94 |
| 4 to 5 years (inclusive of 5 years) | 10,440,914.56 | 2,294,804.48 |
| Over 5 years | 14,187,114.03 | 13,796,669.97 |
| Subtotal | 2,779,249,782.28 | 3,176,235,036.86 |
| Less: Provision for bad debts | 86,307,916.04 | 72,476,186.71 |
| Total | 2,692,941,866.24 | 3,103,758,850.15 |
According to the credit policy of the Company, the Company usually grants a credit period rangingfrom 30 to 90 days to its customers.
(2) Disclosure by method of provision for bad debts
Joincare Pharmaceutical Group Annual Report 2023
| Category | 2023.12.31 | 2022.12.31 | ||||||||
| Book balance | Provision for bad debts | Carrying amount | Book balance | Provision for bad debts | Carrying amount | |||||
| Amount | Ratio (%) | Amount | Expected credit loss rate (%) | Amount | Ratio (%) | Amount | Expected credit loss rate (%) | |||
| Provision for bad debts on individual item | 9,830,879.27 | 0.35 | 9,830,879.27 | 100.00 | 0.00 | 10,454,599.67 | 0.33 | 6,257,914.47 | 59.86 | 4,196,685.20 |
| Including: | ||||||||||
| Receivables from domestic customers | 9,683,532.50 | 0.35 | 9,683,532.50 | 100.00 | 0.00 | 10,454,599.67 | 0.33 | 6,257,914.47 | 59.86 | 4,196,685.20 |
| Receivables from overseas customers | 147,346.77 | 0.01 | 147,346.77 | 100.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Provision for bad debts on portfolio basis | 2,769,418,903.01 | 99.65 | 76,477,036.77 | 2.76 | 2,692,941,866.24 | 3,165,780,437.19 | 99.67 | 66,218,272.24 | 2.09 | 3,099,562,164.95 |
| Including: | ||||||||||
| Receivables from domestic customers | 2,334,140,677.67 | 83.98 | 69,784,726.72 | 2.99 | 2,264,355,950.95 | 2,659,276,844.47 | 83.72 | 60,180,304.43 | 2.26 | 2,599,096,540.04 |
| Receivables from overseas customers | 435,278,225.34 | 15.66 | 6,692,310.05 | 1.54 | 428,585,915.29 | 506,503,592.72 | 15.95 | 6,037,967.81 | 1.19 | 500,465,624.91 |
| Total | 2,779,249,782.28 | 100.00 | 86,307,916.04 | 3.11 | 2,692,941,866.24 | 3,176,235,036.86 | 100.00 | 72,476,186.71 | 2.28 | 3,103,758,850.15 |
Provision for bad debts on individual item:
| Item | Closing balance | |||
| Book balance | Provision for bad debts | Expected credit loss rate (%) | Reason of provision | |
| Purchase of goods | 9,830,879.27 | 9,830,879.27 | 100 | Full amount is unlikely to be recovered |
Provision for bad debts on portfolio basis:
Provision for bad debts on portfolio basis: Receivables from domestic customers
| Ageing | 2023.12.31 | 2022.12.31 | ||||
| Accounts receivable | Provision for bad debts | Expected credit loss rate (%) | Accounts receivable | Provision for bad debts | Expected credit loss rate (%) | |
| Within one year | 2,212,501,400.71 | 29,899,965.80 | 1.35 | 2,618,111,979.83 | 35,631,686.09 | 1.36 |
| 1 to 2 years (inclusive of 2 years) | 100,128,396.60 | 19,836,728.22 | 19.81 | 18,418,832.08 | 3,486,917.81 | 18.93 |
| 2 to 3 years (inclusive of 3 years) | 2,963,960.00 | 1,908,319.14 | 64.38 | 3,589,415.19 | 2,144,629.72 | 59.75 |
| 3 to 4 years (inclusive of 4 years) | 3,083,562.86 | 2,713,198.64 | 87.99 | 4,381,626.53 | 4,171,620.14 | 95.21 |
| 4 to 5 years (inclusive of 5 years) | 2,047,544.15 | 2,010,701.57 | 98.20 | 1,667,403.89 | 1,637,863.72 | 98.23 |
| Over 5 years | 13,415,813.35 | 13,415,813.35 | 100.00 | 13,107,586.95 | 13,107,586.95 | 100.00 |
| Total | 2,334,140,677.67 | 69,784,726.72 | 2.99 | 2,659,276,844.47 | 60,180,304.43 | 2.26 |
Provision for bad debts on portfolio basis: Receivables from overseas customers
| Ageing | 2023.12.31 | 2022.12.31 | ||||
| Accounts receivable | Provision for bad debts | Expected credit loss rate (%) | Accounts receivable | Provision for bad debts | Expected credit loss rate (%) | |
| Within one year | 434,314,119.71 | 6,498,350.54 | 1.50 | 506,503,592.72 | 6,037,967.81 | 1.19 |
Joincare Pharmaceutical Group Annual Report 2023
| 1-2 years | 964,105.63 | 193,959.51 | 20.12 | 0.00 | 0.00 | 0.00 |
| Total | 435,278,225.34 | 6,692,310.05 | 1.54 | 506,503,592.72 | 6,037,967.81 | 1.19 |
(3) Accrual, recovery or reversal of bad debt provision during the year
| Item | Amount of provision for bad debts |
| Beginning balance | 72,476,186.71 |
| Provision for the year | 17,085,116.32 |
| Recovered or reversal in the year | 0.00 |
| Write-off in the year | 3,256,934.52 |
| Others | 3,547.53 |
| Closing balance | 86,307,916.04 |
At 31 December 2023 and 31 December 2022, the Company had no overdue but not impaired accountsreceivable.
(4) Accounts receivable written-off during the year
| Item | Written-off amount |
| Actual written-off of accounts receivable | 3,256,934.52 |
(5) Accounts receivable due from the top five debtors
As of 31 December 2023, the total amount of the top five debtors in closing balance isRMB233,096,467.18, accounting for 8.39% of the total amount of closing balance of accountsreceivable, and the corresponding closing balance of provision for bad debts is total RMB2,772,860.14.
(6) There were no accounts receivable derecognized due to the transfer of financial assets in eachreporting period.
(7) There were no assets or liabilities formed by the continuing involvement of transferredaccounts receivables in each reporting period.
5. Prepayments
(1) Prepayments by ageing
| Ageing | 2023.12.31 | 2022.12.31 | ||
| Amount | Ratio % | Amount | Ratio % | |
| Within one year | 261,832,941.82 | 93.48 | 343,457,382.98 | 94.29 |
| 1 to 2 years | 9,471,130.48 | 3.38 | 16,867,695.41 | 4.63 |
| 2 to 3 years | 6,936,952.00 | 2.48 | 948,519.54 | 0.26 |
| Over 3 years | 1,861,836.64 | 0.66 | 2,991,544.64 | 0.82 |
| Total | 280,102,860.94 | 100.00 | 364,265,142.57 | 100.00 |
(2) Prepayments due from the top five debtors:
As of 31 December 2023, the total amount of the top five prepayments in closing balance isRMB90,657,673.53, accounting for 32.37% of the total amount of closing balance of prepayments.
6、Other receivables
Joincare Pharmaceutical Group Annual Report 2023
| Item | 2023.12.31 | 2022.12.31 |
| Dividends receivable | 0.00 | 0.00 |
| Other receivables | 46,010,624.61 | 52,535,740.14 |
| Total | 46,010,624.61 | 52,535,740.14 |
(1) Other receivables
① Disclosure by ageing
| Ageing | 2023.12.31 | 2022.12.31 |
| Within one year | 37,991,559.91 | 46,704,835.62 |
| 1 to 2 years | 7,058,808.33 | 6,086,106.11 |
| 2 to 3 years | 3,902,904.05 | 2,206,852.09 |
| 3 to 4 years | 1,311,234.02 | 1,821,553.83 |
| 4 to 5 years | 1,268,993.52 | 1,816,535.04 |
| Over 5 years | 30,945,575.08 | 32,171,819.98 |
| Subtotal | 82,479,074.91 | 90,807,702.67 |
| Less: Provision for bad debts | 36,468,450.30 | 38,271,962.53 |
| Total | 46,010,624.61 | 52,535,740.14 |
② Disclosure by nature
| Item | 2023.12.31 | 2022.12.31 | ||||
| Book balance | Provision for bad debts | Carrying amount | Book balance | Provision for bad debts | Carrying amount | |
| Deposits under guarantee, deposits and lease expenses | 13,157,467.26 | 3,780,044.47 | 9,377,422.79 | 12,668,692.36 | 3,613,600.49 | 9,055,091.87 |
| Reserved fund and advances | 20,493,420.45 | 1,338,678.06 | 19,154,742.39 | 25,494,468.62 | 2,952,756.24 | 22,541,712.38 |
| Related party balances | 1,337,073.19 | 479,197.00 | 857,876.19 | 1,097,855.07 | 477,066.07 | 620,789.00 |
| External entities balances | 15,256,745.76 | 12,461,260.90 | 2,795,484.86 | 13,226,352.58 | 11,966,700.69 | 1,259,651.89 |
| Tax refund on exports | 7,931,105.45 | 373,263.13 | 7,557,842.32 | 16,539,609.68 | 290,344.77 | 16,249,264.91 |
| Treasury bonds and security deposits | 16,954,735.37 | 16,954,735.37 | 0.00 | 17,968,386.04 | 17,968,386.04 | 0.00 |
| Amounts of exercised options | 597,240.00 | 0.00 | 597,240.00 | 0.00 | 0.00 | 0.00 |
| Others | 6,751,287.43 | 1,081,271.37 | 5,670,016.06 | 3,812,338.32 | 1,003,108.23 | 2,809,230.09 |
| Total | 82,479,074.91 | 36,468,450.30 | 46,010,624.61 | 90,807,702.67 | 38,271,962.53 | 52,535,740.14 |
③Information of provision for bad debts
As of 31 December 2023, provision for bad debts on those in first stage
| Category | Book balance | Expected credit loss | Provision for bad debts | Carrying amount | Reason |
Joincare Pharmaceutical Group Annual Report 2023
| rate in the next 12 months (%) | |||||
| Provision for bad debts on individual item | 597,240.00 | 0.00 | 0.00 | 597,240.00 | |
| Amounts of exercised options | 597,240.00 | 0.00 | 0.00 | 597,240.00 | Expected to be recovered |
| Provision for bad debts on portfolio basis | 0.00 | 0.00 | 0.00 | 0.00 | -- |
| Total | 597,240.00 | 0.00 | 0.00 | 597,240.00 |
As of 31 December 2023, provision for bad debts on those in second stage:
| Category | Book balance | Expected credit loss rate for the lifetime(%) | Provision for bad debts | Carrying amount | Reason |
| Provision for bad debts on individual item | 0.00 | 0.00 | 0.00 | 0.00 | -- |
| Provision for bad debts on portfolio basis | 54,681,240.51 | 16.95 | 9,267,855.90 | 45,413,384.61 | |
| Receivable of tax refund on exports | 7,931,105.45 | 4.71 | 373,263.13 | 7,557,842.32 | |
| Receivable of deposits under guarantee, deposits and lease expenses | 13,157,467.26 | 28.73 | 3,780,044.47 | 9,377,422.79 | |
| Other receivables | 33,592,667.80 | 15.23 | 5,114,548.30 | 28,478,119.50 | |
| Total | 54,681,240.51 | 16.95 | 9,267,855.90 | 45,413,384.61 |
As of 31 December 2023, provision for bad debts on those in third stage:
| Category | Book balance | Expected credit loss rate for the lifetime(%) | Provision for bad debts | Carrying amount | Reason |
| Provision for bad debts on individual item | 27,200,594.40 | 100.00 | 27,200,594.40 | 0.00 | |
| Other receivables | 27,200,594.40 | 100.00 | 27,200,594.40 | 0.00 | Likelihood of recovery is expected to be low |
| Provision for bad debts on portfolio basis | 0.00 | 0.00 | 0.00 | 0.00 | -- |
| Total | 27,200,594.40 | 100.00 | 27,200,594.40 | 0.00 |
As of 31 December 2022, information of provision for bad debts:
As of 31 December 2022, there is no provision for bad debts on those in first stage.As of 31 December 2022, Provision for bad debts on those in second stage:
| Category | Book balance | Expected credit loss rate for the lifetime(%) | Provision for bad debts | Carrying amount | Reason |
| Provision for bad debts on individual item | 0.00 | 0.00 | 0.00 | 0.00 | -- |
| Provision for bad debts on portfolio basis | 62,329,598.16 | 15.71 | 9,793,858.02 | 52,535,740.14 | |
| Receivable of tax refund on exports | 16,539,609.68 | 1.76 | 290,344.77 | 16,249,264.91 | |
| Receivable of deposits under guarantee, deposits and lease expenses | 12,668,692.36 | 28.52 | 3,613,600.49 | 9,055,091.87 |
Joincare Pharmaceutical Group Annual Report 2023
| Category | Book balance | Expected credit loss rate for the lifetime(%) | Provision for bad debts | Carrying amount | Reason |
| Other receivables | 33,121,296.12 | 17.78 | 5,889,912.76 | 27,231,383.36 | |
| Total | 62,329,598.16 | 15.71 | 9,793,858.02 | 52,535,740.14 |
As of 31 December 2022, Provision for bad debts on those in third stage:
| Category | Book balance | Expected credit loss rate for the lifetime(%) | Provision for bad debts | Carrying amount | Reason |
| Provision for bad debts on individual item | 28,478,104.51 | 100.00 | 28,478,104.51 | 0.00 | |
| Other receivables | 28,478,104.51 | 100.00 | 28,478,104.51 | 0.00 | Likelihood of recovery is expected to be low |
| Provision for bad debts on portfolio basis | 0.00 | 0.00 | 0.00 | 0.00 | -- |
| Total | 28,478,104.51 | 100.00 | 28,478,104.51 | 0.00 |
④ Accrual, recovery or reversal of bad debt provision during the year
| Provision for bad debts | First stage | Second stage | Third stage | Total |
| Expected credit loss within next 12 months | Expected credit loss for lifetime (no credit impairment occurred) | Expected credit loss for lifetime (credit impairment has occurred) | ||
| Beginning balance | 0.00 | 9,793,858.02 | 28,478,104.51 | 38,271,962.53 |
| Movement of beginning balance during the period | ||||
| --transfer to second stage | 0.00 | 0.00 | 0.00 | 0.00 |
| --transfer to third stage | 0.00 | -1,363,670.19 | 1,363,670.19 | 0.00 |
| --Reverse to second stage | 0.00 | 0.00 | 0.00 | 0.00 |
| --Reverse to first stage | 0.00 | 0.00 | 0.00 | 0.00 |
| Provision for the year | 0.00 | 801,402.91 | 0.00 | 801,402.91 |
| Reversal in the year | 0.00 | 0.00 | 1,040,050.67 | 1,040,050.67 |
| Transfer in the year | 0.00 | 0.00 | 0.00 | 0.00 |
| Write-off in the year | 0.00 | 0.00 | 1,601,129.63 | 1,601,129.63 |
| Other movement | 0.00 | 36,265.16 | 0.00 | 36,265.16 |
| Closing balance | 0.00 | 9,267,855.90 | 27,200,594.40 | 36,468,450.30 |
⑤Actual written-off of other receivables in the year
| Item | Written-off amount |
| Actual written-off of other receivables | 1,601,129.63 |
⑥Other receivables due from the top five debtors
| Name of entity | Nature | Closing balance of other | Ageing | Proportion to total other receivables | Closing balance of provision for |
Joincare Pharmaceutical Group Annual Report 2023
| receivables | (%) | bad debts | |||
| Hua Xia Securities Co., Ltd. (华夏证券股份有限公司) | Treasury bonds and security deposits | 16,954,735.37 | Over 5 years | 20.56 | 16,954,735.37 |
| Export tax refunds receivable | Export tax refunds | 7,931,105.45 | Within 2 years | 9.62 | 373,263.13 |
| Guangzhou Galaxy Sunshine Biological Products Co., Ltd. (广州银河阳光生物制品有限公司) | Borrowings | 5,000,000.00 | Over 5 years | 6.06 | 5,000,000.00 |
| Suzhou Zhongnuo Import and Export Co., Ltd. (苏州中诺进出口有限公司) | Security deposits | 2,000,000.00 | Within 3 years | 2.42 | 368,000.00 |
| Zhongnuo Pharmaceutical Development (Suzhou) Co., Ltd. (中诺医药发展(苏州) 有限公司) | Security deposits | 1,500,000.00 | Within 1 year | 1.82 | 15,000.00 |
| Total | 33,385,840.82 | 40.48 | 22,710,998.50 |
⑦ There were no other receivables derecognised due to the transfer of financial assets in eachreporting period.
⑧ There were no assets or liabilities formed by the continuing involvement of transferred otherreceivables in the period.
7. Inventories
(1) Inventories by category
| Item | 2023.12.31 | 2022.12.31 | ||||
| Book balance | Provision for decline in value | Carrying amount | Book balance | Provision for decline in value | Carrying amount | |
| Raw materials | 718,552,382.00 | 70,207,573.94 | 648,344,808.06 | 642,893,858.16 | 37,543,320.41 | 605,350,537.75 |
| Packaging materials | 129,848,977.45 | 15,944,825.79 | 113,904,151.66 | 137,488,629.87 | 11,191,692.58 | 126,296,937.29 |
| Work-in-progress and Semi-finished products | 769,971,425.39 | 101,298,495.05 | 668,672,930.34 | 649,362,917.78 | 65,482,989.52 | 583,879,928.26 |
| Low value consumables | 71,912,394.69 | 686,883.88 | 71,225,510.81 | 80,473,347.95 | 495,743.41 | 79,977,604.54 |
| Finished goods | 1,305,371,756.83 | 201,497,635.93 | 1,103,874,120.90 | 1,138,363,946.23 | 22,354,857.60 | 1,116,009,088.63 |
| Subcontracting processing materials | 2,918,287.46 | 0.00 | 2,918,287.46 | 2,318,531.50 | 0.00 | 2,318,531.50 |
| Consumptive biological assets | 15,384,338.39 | 0.00 | 15,384,338.39 | 13,692,837.04 | 0.00 | 13,692,837.04 |
| Issued goods | 31,484,243.47 | 0.00 | 31,484,243.47 | 34,344,534.56 | 0.00 | 34,344,534.56 |
| Total | 3,045,443,805.68 | 389,635,414.59 | 2,655,808,391.09 | 2,698,938,603.09 | 137,068,603.52 | 2,561,869,999.57 |
(2) Provision for decline in value of inventories
| Item | 2022.12.31 | Increase | Decrease | 2023.12.31 | ||
| Provision | Others | Reversal or written-off | Others | |||
| Raw materials | 37,543,320.41 | 43,346,261.83 | 0.00 | 10,682,008.30 | 0.00 | 70,207,573.94 |
Joincare Pharmaceutical Group Annual Report 2023
| Item | 2022.12.31 | Increase | Decrease | 2023.12.31 | ||
| Provision | Others | Reversal or written-off | Others | |||
| Packaging materials | 11,191,692.58 | 12,321,845.90 | 0.00 | 7,568,712.69 | 0.00 | 15,944,825.79 |
| Work-in-progress and Semi-finished products | 65,482,989.52 | 63,795,099.63 | 0.00 | 27,979,594.10 | 0.00 | 101,298,495.05 |
| Low value consumables | 495,743.41 | 660,494.82 | 0.00 | 469,354.35 | 0.00 | 686,883.88 |
| Finished goods | 22,354,857.60 | 199,786,273.84 | 0.00 | 20,643,495.51 | 0.00 | 201,497,635.93 |
| Total | 137,068,603.52 | 319,909,976.02 | 0.00 | 67,343,164.95 | 0.00 | 389,635,414.59 |
Provision for decline in value of inventories (Continued)
| Item | Basis in determination of net recoverable amount/residual value and cost to be incurred | Reason for reversal or written-off of provision for decline in value of inventories |
| Raw materials | Estimated selling price less estimated costs of completion, selling expenses and related taxes | Processing, sale of finished goods and discard |
| Packaging materials | Estimated selling price less estimated costs of completion, selling expenses and related taxes | Processing, sale of finished goods and discard |
| Work-in-progress and Semi-finished products | Estimated selling price less estimated costs of completion, selling expenses and related taxes | Processing of finished goods and discard |
| Low value consumables | Estimated selling price less the related taxes | Used or discard |
| Finished goods | Estimated selling price less the estimated selling expenses and related taxes | Sale and discard |
(3) There was no capitalization of borrowing costs in the balance of inventories at the end of the period.
8. Non-current assets due within one year
| Item | 2023.12.31 | 2022.12.31 |
| Fixed deposits due within 1 year | 406,376,425.44 | 54,048,611.11 |
| Total | 406,376,425.44 | 54,048,611.11 |
9. Other current assets
| Item | 2023.12.31 | 2022.12.31 |
| Input VAT pending deduction /Input tax pending for verification | 63,118,496.24 | 35,679,462.66 |
| Prepaid income tax | 7,497,071.94 | 17,665,709.39 |
| Cash management | 0.00 | 92,815,738.44 |
| Return cost receivable | 6,536,364.62 | 12,043,428.52 |
| Others | 250,252.21 | 5,335,561.31 |
| Total | 77,402,185.01 | 163,539,900.32 |
Joincare Pharmaceutical Group Annual Report 2023
10. Long-term equity investment
| Investee | 2022.12.31 | Beginning balance of provision for impairment | Movement in the year | 2023.12.31 | Closing balance of provision for impairment | |||||||
| Additions in investment | Decrease in investment | Investment gain or loss under equity method | Adjustment in other comprehensive income | Changes of other equity | Announced distribution of cash dividend or profit | Provision for impairment | Others | |||||
| ①Subsidiaries | ||||||||||||
| Zhongshan Renhe Health Products Co., Ltd. (中山市仁和保健品有限公司) | 6,337,823.35 | 6,337,823.35 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 6,337,823.35 | 6,337,823.35 |
| Guangzhou Hiyeah Industry Co., Ltd. (广州市喜悦实业有限公司) | 1,949,893.45 | 1,949,893.45 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 1,949,893.45 | 1,949,893.45 |
| Subtotal | 8,287,716.80 | 8,287,716.80 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 8,287,716.80 | 8,287,716.80 |
| ②Associates | ||||||||||||
| Livzon Medical Electronic Equipment (Plant) Co., Ltd. (丽珠集团丽珠医用电子设备有限公司) | 1,200,000.00 | 1,200,000.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 1,200,000.00 | 1,200,000.00 |
| Guangdong Blue Treasure Pharmaceutical Co. Ltd. (广东蓝宝制药有限公司) | 93,084,766.28 | 0.00 | 0.00 | 0.00 | 14,642,835.53 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 107,727,601.81 | 0.00 |
| Shenzhen City Youbao Technology Co., Ltd. (深圳市有宝科技有限公司) | 1,496,595.40 | 0.00 | 0.00 | 0.00 | 67,618.97 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 1,564,214.37 | 0.00 |
| AbCyte Therapeutics Inc. | 13,767,260.06 | 0.00 | 0.00 | 0.00 | -1,861,892.27 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 11,905,367.79 | 0.00 |
| L&L Biopharma, Co. Ltd. (上海健信生物医药科技有限公司) | 13,903,676.49 | 0.00 | 0.00 | 0.00 | -1,296,398.50 | 0.00 | 2,555,502.97 | 0.00 | 0.00 | 0.00 | 15,162,780.96 | 0.00 |
| Zhuhai Sanmed Biotech Inc. (珠海圣美生物诊断技术有限公司) | 61,291,769.61 | 0.00 | 0.00 | 0.00 | -23,586,133.73 | -191,973.74 | 1,006,182.46 | 0.00 | 0.00 | 0.00 | 38,519,844.60 | 0.00 |
| Aetio Biotheraphy, Inc. | 16,034,314.68 | 0.00 | 0.00 | 0.00 | -720,474.30 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 15,313,840.38 | 0.00 |
| Jiangsu Atom Bioscience and Pharmaceutical Co., Ltd. (江苏新元素医药科技有限公司) | 92,803,409.42 | 0.00 | 0.00 | 0.00 | -10,946,507.94 | 15,296.39 | 19,166,547.82 | 0.00 | 0.00 | 0.00 | 101,038,745.69 | 0.00 |
| Tianjin Tongrentang Group Co., Ltd. (天津同仁堂集团股份有限公司) | 726,580,281.08 | 0.00 | 0.00 | 0.00 | 88,716,019.75 | 2,948,132.06 | 0.00 | 112,640,000.00 | 0.00 | 0.00 | 705,604,432.89 | 0.00 |
Joincare Pharmaceutical Group Annual Report 2023
| Investee | 2022.12.31 | Beginning balance of provision for impairment | Movement in the year | 2023.12.31 | Closing balance of provision for impairment | |||||||
| Additions in investment | Decrease in investment | Investment gain or loss under equity method | Adjustment in other comprehensive income | Changes of other equity | Announced distribution of cash dividend or profit | Provision for impairment | Others | |||||
| Infinite Intelligence Pharmaceutical Co. Ltd. (北京英飞智药科技有限公司) | 18,857,727.08 | 0.00 | 0.00 | 0.00 | -1,287,249.07 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 17,570,478.01 | 0.00 |
| Shenzhen Kangti Biomedical Technology Co., Ltd. (深圳康体生物医药科技有限公司) | 6,000,000.00 | 0.00 | 4,000,000.00 | 0.00 | -111,599.15 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 9,888,400.85 | 0.00 |
| Jiaozuo Jinguan Jiahua Electric Power Co., Ltd. (焦作金冠嘉华电力有限公司) | 285,538,495.52 | 0.00 | 0.00 | 0.00 | 9,217,880.97 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 294,756,376.49 | 0.00 |
| Ningbo Ningrong Biomedical Co., Ltd. (宁波宁融生物医药有限公司) | 27,179,209.51 | 0.00 | 0.00 | 0.00 | 606,175.12 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 27,785,384.63 | 0.00 |
| Feellife Health Inc. (深圳来福士雾化医学有限公司) | 15,303,495.74 | 0.00 | 0.00 | 0.00 | -1,528,078.93 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 13,775,416.81 | 0.00 |
| Jiangsu Baining Yingchuang Medical Technology Co., Ltd. (江苏百宁盈创医疗科技有限公司) | 28,732,381.11 | 0.00 | 0.00 | 0.00 | 1,365,081.78 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 30,097,462.89 | 0.00 |
| Shanghai Sheo Pharmaceutical Technology Co., Ltd. (上海偕怡医药科技有限公司) | 19,309,212.61 | 0.00 | 0.00 | 0.00 | -598,944.86 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 18,710,267.75 | 0.00 |
| Haisong Precision Parts (Taicang) Co., Ltd. (海嵩精密零部件(太仓) 有限公司) | 0.00 | 0.00 | 1,500,000.00 | 0.00 | 115,738.03 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 1,615,738.03 | 0.00 |
| Subtotal | 1,421,082,594.59 | 1,200,000.00 | 5,500,000.00 | 0.00 | 72,794,071.40 | 2,771,454.71 | 22,728,233.25 | 112,640,000.00 | 0.00 | 0.00 | 1,412,236,353.95 | 1,200,000.00 |
| Total | 1,429,370,311.39 | 9,487,716.80 | 5,500,000.00 | 0.00 | 72,794,071.40 | 2,771,454.71 | 22,728,233.25 | 112,640,000.00 | 0.00 | 0.00 | 1,420,524,070.75 | 9,487,716.80 |
Joincare Pharmaceutical Group Annual Report 2023
11. Other equity instruments investment
| Item | 2023.12.31 | 2022.12.31 | Reason for designation |
| Shanghai Yunfeng Xinchuang Equity Investment Center (上海云锋新创股权投资中心) | 57,858,983.79 | 67,935,704.36 | Non-trading |
| Shanghai JingYi Investment Center (上海经颐投资中心) | 73,365,064.89 | 73,616,359.91 | Non-trading |
| Qianhai Equity Investment Fund (前海股权投资基金) | 253,730,084.00 | 243,378,742.17 | Non-trading |
| Apricot Forest, Inc (杏树林) | 101,475,500.00 | 120,788,500.00 | Non-trading |
| Chengdu Jinrui Jiye Biotechnology Co., Ltd. (成都金瑞基业生物科技有限公司) | 20,000,000.00 | 0.00 | Non-trading |
| Beijing Shuobai Pharmaceutical Technology Co., Ltd. (北京硕佰医药科技有限责任公司) | 10,000,000.00 | 0.00 | Non-trading |
| Zhuhai China Resources Bank Co., Ltd. (珠海华润银行股份有限公司) | 226,644,000.00 | 158,400,000.00 | Non-trading |
| GLOBAL HEALTH SCIENCE | 205,217,490.01 | 271,980,388.15 | Non-trading |
| Nextech V Oncology S.C.S., SICAV-SIF | 15,837,395.11 | 23,996,121.32 | Non-trading |
| Yizun Biopharmaceutics (Shanghai) Co., Ltd. (羿尊生物医药(上海) 有限公司) | 35,147,356.03 | 30,513,209.27 | Non-trading |
| ELICIO THERAPEUTICS, INC. | 7,820,060.93 | 34,823,014.36 | Non-trading |
| CARISMA THERAPEUTICS, INC. | 14,907,045.58 | 34,821,295.50 | Non-trading |
| Beijing Luzhu Biotechnology Co., Ltd. (北京绿竹生物技术股份有限公司) | 63,219,286.50 | 53,654,738.60 | Non-trading |
| Shanghai Keentai Biotechnology Co., Ltd. (上海科恩泰生物医药科技有限公司) | 12,000,000.00 | 12,000,000.00 | Non-trading |
| Others | 58,061,141.52 | 68,050,805.41 | Non-trading |
| Total | 1,155,283,408.36 | 1,193,958,879.05 |
As the above items are investments that the Company intends to hold for a long period of time for strategicpurposes, the Company designates them as financial assets measured at fair value through othercomprehensive income.Continued:
| Item | Gains and losses recognized in other comprehensive income for the current period | Cumulative gains and losses recognized in other comprehensive income at year end | Dividend income recognised in the year | Cumulative gains and losses that are transferred to retained earnings due to derecognition | Reason of derecognition |
| Shanghai Yunfeng Xinchuang Equity Investment Center (上海云锋新创股权投资中心) | 2,445,163.17 | 2,937,256.61 | 0.00 | 94,149.27 | Disposal of partial investments |
| Shanghai JingYi Investment Center (上海经颐投资中心) | 1,207,737.75 | 1,442,221.03 | 0.00 | -8,708.31 | Disposal of partial investments |
| Qianhai Equity Investment Fund (前海股权投资基金) | 8,798,640.55 | 45,670,571.40 | 8,049,186.88 | 0.00 | -- |
| Apricot Forest, Inc (杏树林) | -14,484,750.00 | -77,383,966.21 | 0.00 | 0.00 | -- |
| Chengdu Jinrui Jiye Biotechnology Co., Ltd. (成都金瑞基业生物科技有限公司) | 0.00 | 0.00 | 0.00 | 0.00 | -- |
| Beijing Shuobai Pharmaceutical Technology Co., Ltd. (北京硕佰医药科 | 0.00 | 0.00 | 0.00 | 0.00 |
Joincare Pharmaceutical Group Annual Report 2023
| Item | Gains and losses recognized in other comprehensive income for the current period | Cumulative gains and losses recognized in other comprehensive income at year end | Dividend income recognised in the year | Cumulative gains and losses that are transferred to retained earnings due to derecognition | Reason of derecognition |
| 技有限责任公司) | |||||
| Zhuhai China Resources Bank Co., Ltd. (珠海华润银行股份有限公司) | 58,007,400.00 | 128,620,504.00 | 0.00 | 0.00 | -- |
| GLOBAL HEALTH SCIENCE | -56,708,740.55 | 10,494,235.28 | 17,709,895.19 | 4,408,075.32 | Disposal of partial investments |
| Nextech V Oncology S.C.S., SICAV-SIF | -8,158,726.21 | -17,320,849.73 | 3,585,772.20 | 0.00 | -- |
| Yizun Biopharmaceutics (Shanghai) Co., Ltd. (羿尊生物医药(上海) 有限公司) | 1,916,103.83 | 2,199,036.10 | 0.00 | 0.00 | -- |
| ELICIO THERAPEUTICS, INC. | -27,002,953.43 | -27,543,241.12 | 0.00 | 0.00 | -- |
| CARISMA THERAPEUTICS, INC. | -26,098,003.75 | -23,900,220.42 | 0.00 | 0.00 | -- |
| Beijing Luzhu Biotechnology Co., Ltd. (北京绿竹生物技术股份有限公司) | 7,173,410.92 | 24,914,464.87 | 0.00 | 0.00 | -- |
| Shanghai Keentai Biotechnology Co., Ltd. (上海科恩泰生物医药科技有限公司) | 0.00 | 0.00 | 0.00 | 0.00 | -- |
| Others | -7,888,423.95 | -17,046,345.77 | 0.00 | 0.00 | -- |
| Total | -60,793,141.67 | 53,083,666.04 | 29,344,854.27 | 4,493,516.28 | -- |
12. Investment properties
| Item | Housing and buildings | Total |
| I. Book value | ||
| 1.Beginning balance | 61,914,754.28 | 61,914,754.28 |
| 2.Increase | 17,727,141.51 | 17,727,141.51 |
| (1) Transfer to fixed assets | 17,727,141.51 | 17,727,141.51 |
| 3.Decrease | 0.00 | 0.00 |
| 4.Closing balance | 79,641,895.79 | 79,641,895.79 |
| II. Accumulated depreciation and amortisation | ||
| 1.Beginning balance | 55,723,278.85 | 55,723,278.85 |
| 2.Increase | 6,960,403.94 | 6,960,403.94 |
| (1) Amortisation for the year | 6,119,520.51 | 6,119,520.51 |
| (2) Transfer to fixed assets | 840,883.43 | 840,883.43 |
| 3.Decrease | 0.00 | 0.00 |
| 4.Closing balance | 62,683,682.79 | 62,683,682.79 |
| III. Provision for impairment | 0.00 | |
| 1.Beginning balance | 0.00 | 0.00 |
| 2.Increase | 0.00 | 0.00 |
| 3. Decrease | 0.00 | 0.00 |
| 4.Closing balance | 0.00 | 0.00 |
| IV. Carrying amount |
Joincare Pharmaceutical Group Annual Report 2023
| Item | Housing and buildings | Total |
| 1.Carrying value at year end | 16,958,213.00 | 16,958,213.00 |
| 2.Carrying value at beginning of year | 6,191,475.43 | 6,191,475.43 |
13. Fixed assets
| Item | 2023.12.31 | 2022.12.31 |
| Fixed assets | 5,625,543,924.13 | 5,265,200,110.91 |
| Fixed assets for disposal | 38,808,631.84 | 0.00 |
| Total | 5,664,352,555.97 | 5,265,200,110.91 |
(1) Fixed assets
①Details of fixed assets
| Item | Housing and buildings | Machinery and equipment | Motor vehicles | Electronic equipment and others | Total |
| I. Book value: | |||||
| 1.Beginning balance | 4,305,054,019.02 | 5,637,544,484.73 | 106,291,576.88 | 856,552,473.06 | 10,905,442,553.69 |
| 2.Increase | 410,068,111.56 | 567,362,650.27 | 14,905,640.90 | 111,254,883.39 | 1,103,591,286.12 |
| (1) Purchase | 2,497,152.47 | 100,780,922.17 | 13,897,709.70 | 61,982,634.16 | 179,158,418.50 |
| (2) Transfer from construction in progress | 407,570,959.09 | 466,581,728.10 | 0.00 | 44,062,722.98 | 918,215,410.17 |
| (3) Changes in consolidation scope | 0.00 | 0.00 | 805,832.74 | 5,193,524.57 | 5,999,357.31 |
| (3) Others | 0.00 | 0.00 | 202,098.46 | 16,001.68 | 218,100.14 |
| 3.Decrease | 70,100,002.95 | 64,743,468.33 | 8,487,076.65 | 36,919,826.81 | 180,250,374.74 |
| (1) Disposal or scrap | 52,372,861.44 | 64,743,468.33 | 8,487,076.65 | 36,919,826.81 | 162,523,233.23 |
| （2）Transfer in investment property | 17,727,141.51 | 0.00 | 0.00 | 0.00 | 17,727,141.51 |
| 4.Closing balance | 4,645,022,127.63 | 6,140,163,666.67 | 112,710,141.13 | 930,887,529.64 | 11,828,783,465.07 |
| II. Accumulated depreciation | - | - | - | - | - |
| 1.Beginning balance | 1,806,888,229.17 | 3,109,967,392.10 | 82,170,130.55 | 538,254,242.39 | 5,537,279,994.21 |
| 2.Increase | 196,688,214.65 | 389,250,489.72 | 9,432,420.36 | 84,186,643.20 | 679,557,767.93 |
| (1) Provision | 196,688,214.65 | 389,250,489.72 | 8,640,079.24 | 80,227,938.47 | 674,806,722.08 |
| (2) Changes in consolidation scope | 0.00 | 0.00 | 592,421.62 | 3,942,703.05 | 4,535,124.67 |
| (3) Other increase | 0.00 | 0.00 | 199,919.50 | 16,001.68 | 215,921.18 |
| 3.Decrease | 27,129,847.67 | 48,452,036.07 | 6,264,872.94 | 33,661,796.83 | 115,508,553.51 |
| (1) Disposal or scrap | 21,010,327.16 | 48,452,036.07 | 6,264,872.94 | 33,661,796.83 | 109,389,033.00 |
| （2）Transfer out investment property | 6,119,520.51 | 0.00 | 0.00 | 0.00 | 6,119,520.51 |
| 4.Closing balance | 1,976,446,596.15 | 3,450,765,845.75 | 85,337,677.97 | 588,779,088.76 | 6,101,329,208.63 |
| III. Provision for impairment | - | - | - | - | - |
Joincare Pharmaceutical Group Annual Report 2023
| Item | Housing and buildings | Machinery and equipment | Motor vehicles | Electronic equipment and others | Total |
| 1.Beginning balance | 26,474,491.83 | 57,549,501.09 | 0.00 | 18,938,455.65 | 102,962,448.57 |
| 2.Increase | 0.00 | 488,174.14 | 78,034.30 | 3,658.84 | 569,867.28 |
| (1) Provision | 0.00 | 488,174.14 | 78,034.30 | 3,658.84 | 569,867.28 |
| 3.Decrease | 37,854.00 | 1,396,058.26 | 78,034.30 | 110,036.98 | 1,621,983.54 |
| (1) Disposal or scrap | 37,854.00 | 1,396,058.26 | 78,034.30 | 110,036.98 | 1,621,983.54 |
| 4.Closing balance | 26,436,637.83 | 56,641,616.97 | 0.00 | 18,832,077.51 | 101,910,332.31 |
| IV. Carrying amount | - | - | - | - | - |
| 1. Carrying amount at year end | 2,642,138,893.65 | 2,632,756,203.95 | 27,372,463.16 | 323,276,363.37 | 5,625,543,924.13 |
| 2. Carrying value at beginning of year | 2,471,691,298.02 | 2,470,027,591.54 | 24,121,446.33 | 299,359,775.02 | 5,265,200,110.91 |
At the balance sheet date, the Company engaged appraisers to conduct impairment testing onproduction equipment with low capacity utilization. When estimating the recoverable amount of thecost input, an assets group associated with the production equipment was used to forecast the presentvalue of future cash flows. As tested, no impairment was identified in the assets groups.The projected future cash flows of the assets group are determined based on the financial budget forthe expected useful life of the production equipment established by the management.The main assumptions for impairment testing using the discounted future cash flow method are asfollows:
The calculation of the present value of projected future cash flows for the assets group adopts keyassumptions, including a 73.65% to 74.35% gross profit margin, revenue growth rates ranging from0% to 5%, and a discount rate of 15.00% for cash flow discounting. These assumptions are determinedby the management based on historical performance and forecasts of market development.
②Fixed assets with temporary idle
| Item | Book value | Accumulated depreciation | Provision for impairment | Carrying amount | Note |
| Housing and buildings | 17,882,426.27 | 12,738,313.16 | 1,981,043.82 | 3,163,069.29 | |
| Machinery and equipment | 121,187,759.61 | 86,414,982.29 | 22,188,236.19 | 12,584,541.13 | |
| Electronic equipment and others | 1,180,809.48 | 912,649.11 | 125,010.98 | 143,149.39 | |
| Total | 140,250,995.36 | 100,065,944.56 | 24,294,290.99 | 15,890,759.81 |
③Fixed assets held under finance leases
| Item | Carrying amount |
| Housing and buildings | 1,574,194.98 |
④Fixed assets without property certificate
| Item | Carrying amount | Reasons for pending title certificate |
| Housing and buildings | 157,449,537.68 | Application in progress |
(2) Fixed assets for disposal
Joincare Pharmaceutical Group Annual Report 2023
| Item | Closing balance | Closing balance of prior year | Reason for disposal |
| Relocation and expansion project of Sichuan Guangda Pharmaceutical Manufacturing | 38,808,631.84 | Handover not completed yet |
14. Construction in progress
| Item | 2023.12.31 | 2022.12.31 |
| Construction in progress | 530,594,323.07 | 810,835,273.97 |
| Construction materials | 464,794.99 | 464,794.99 |
| Total | 531,059,118.06 | 811,300,068.96 |
① Information of construction in progress
| Item | 2023.12.31 | 2022.12.31 | ||||
| Book balance | Provision for impairment | Net book value | Book balance | Provision for impairment | Net book value | |
| Haibin Pharma Pingshang New Factory (深圳海滨坪山新厂) | 153,355,903.52 | 11,068,266.54 | 142,287,636.98 | 133,771,969.05 | 11,068,266.54 | 122,703,702.51 |
| Guangda New Factory Project (光大新厂项目) | 0.00 | 0.00 | 0.00 | 360,963,893.27 | 0.00 | 360,963,893.27 |
| Fuxing Company Phase I & II Projects and others (福兴公司一 二期项目及其他) | 0.00 | 0.00 | 0.00 | 38,842,449.73 | 0.00 | 38,842,449.73 |
| Project of Shijiao New Factory (石角新厂项目) | 11,242,321.59 | 0.00 | 11,242,321.59 | 12,409,895.73 | 0.00 | 12,409,895.73 |
| Semaglutide project (司美项目) | 53,876,039.98 | 0.00 | 53,876,039.98 | 0.00 | 0.00 | 0.00 |
| Pharmaceutical factory workshop renovation project | 100,095,507.68 | 0.00 | 100,095,507.68 | 70,972,186.23 | 0.00 | 70,972,186.23 |
| Construction Project for Microsphere Workshop (including Gose) of Livzon Group Livzon Pharmaceutical Factory (丽珠制药厂微球车间(含戈舍) 建设项目) | 0.00 | 0.00 | 0.00 | 39,976,590.91 | 0.00 | 39,976,590.91 |
| P06 Construction Project of Livzon Group Livzon Pharmaceutical Factory (丽珠制药厂P06建设项目) | 0.00 | 0.00 | 0.00 | 180,053.79 | 0.00 | 180,053.79 |
| Project of lyophilized powder injection workshop (冻干粉针车间项目) | 0.00 | 0.00 | 0.00 | 1,157,559.47 | 0.00 | 1,157,559.47 |
| P04/P05 Construction Project of Livzon Group Livzon Pharmaceutical Factory (丽珠制药厂P04/P05建设项目) | 1,710,588.82 | 0.00 | 1,710,588.82 | 1,560,960.52 | 0.00 | 1,560,960.52 |
| Livzon Group Livzon Pharmaceutical Factory (丽珠制药厂) P03建设项目 | 243,501.31 | 0.00 | 243,501.31 | 0.00 | 0.00 | 0.00 |
| Technology transformation project for Microsphere Phase II of Shanghai Livzon (上海丽珠微球二期技改项目) | 0.00 | 0.00 | 0.00 | 34,677,843.69 | 0.00 | 34,677,843.69 |
Joincare Pharmaceutical Group Annual Report 2023
| Item | 2023.12.31 | 2022.12.31 | ||||
| Book balance | Provision for impairment | Net book value | Book balance | Provision for impairment | Net book value | |
| Jiaozuo new factory relocation project (焦作新厂迁建项目) | 67,116,236.97 | 0.00 | 67,116,236.97 | 0.00 | 0.00 | 0.00 |
| Others | 154,191,830.20 | 169,340.46 | 154,022,489.74 | 127,559,478.58 | 169,340.46 | 127,390,138.12 |
| Total | 541,831,930.07 | 11,237,607.00 | 530,594,323.07 | 822,072,880.97 | 11,237,607.00 | 810,835,273.97 |
② Changes in significant construction in progress
| Name of Project | 2022.12.31 | Increase | Transfer to fixed assets | Other decrease | Cumulative amount of interest capitalised | Including: interest capitalised in the year | Interest capitalisation rate for the year (%) | 2023.12.31 |
| Haibin Pharma Pingshang New Factory (深圳海滨坪山新厂) | 133,771,969.05 | 145,212,282.64 | 98,024,548.46 | 27,603,799.71 | 0.00 | 0.00 | 0.00 | 153,355,903.52 |
| Guangda New Factory Project (光大新厂项目) | 360,963,893.27 | 145,275,853.14 | 506,239,746.41 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Fuxing Company Phase I & II Projects and others (福兴公司一 二期项目及其他) | 38,842,449.73 | 20,306,789.09 | 44,523,939.89 | 14,625,298.93 | 0.00 | 0.00 | 0.00 | 0.00 |
| Project of Shijiao New Factory (石角新厂项目) | 12,409,895.73 | 1,337,540.69 | 2,505,114.83 | 0.00 | 0.00 | 0.00 | 0.00 | 11,242,321.59 |
| Semaglutide project (司美项目) | 0.00 | 88,742,101.07 | 34,866,061.09 | 0.00 | 0.00 | 0.00 | 0.00 | 53,876,039.98 |
| Pharmaceutical factory workshop renovation project | 70,972,186.23 | 95,834,059.18 | 66,710,737.73 | 0.00 | 0.00 | 0.00 | 0.00 | 100,095,507.68 |
| Construction Project for Microsphere Workshop (including Gose) of Livzon Group Livzon Pharmaceutical Factory (丽珠制药厂微球车间(含戈舍) 建设项目) | 39,976,590.91 | 0.00 | 39,976,590.91 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| P06 Construction Project of Livzon Group Livzon Pharmaceutical Factory (丽珠制药厂P06建设项目) | 180,053.79 | 378,308.84 | 558,362.63 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Project of lyophilized powder injection workshop (冻干粉针车间项目) | 1,157,559.47 | 357,798.13 | 1,515,357.60 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| P04/P05 Construction Project of Livzon Group Livzon Pharmaceutical Factory (丽珠制药厂P04/P05建设项目) | 1,560,960.52 | 149,628.30 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 1,710,588.82 |
| Livzon Group Livzon Pharmaceutical Factory (丽珠制药厂P03建设项目 | 0.00 | 243,501.31 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 243,501.31 |
| Jiaozuo new factory relocation project (焦作新厂迁建项目) | 0.00 | 67,116,236.97 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 67,116,236.97 |
| Total | 659,835,558.70 | 564,954,099.36 | 794,920,459.55 | 42,229,098.64 | 0.00 | 0.00 | 0.00 | 387,640,099.87 |
Changes in significant construction in progress (Continued)
| Name of Project | Budget | Proportion of cumulative input to budget % | Progress % | Source of fund |
| Haibin Pharma Pingshang New Factory (深圳海滨坪山新厂) | 1,436,107,400.00 | 77.96 | Completion of some projects | Self-funding and funds raised |
| Guangda New Factory Project (光大新厂项目) | 536,882,000.00 | 99.88 | 100.00 | Self-funding |
Joincare Pharmaceutical Group Annual Report 2023
| Name of Project | Budget | Proportion of cumulative input to budget % | Progress % | Source of fund |
| Fuxing Company Phase I & II Projects and others (福兴公司一 二期项目及其他) | 378,090,800.00 | 94.47 | 100.00 | Self-funding |
| Project of Shijiao New Factory (石角新厂项目) | 377,005,000.00 | 90.27 | 90.00 | Self-funding and funds raised |
| Semaglutide project (司美项目) | 168,900,000.00 | 52.54 | 55.00 | Self-funding |
| Pharmaceutical factory workshop renovation project | 306,558,388.48 | 92.43 | 90.00 | Self-funding |
| Construction Project for Microsphere Workshop (including Gose) of Livzon Group Livzon Pharmaceutical Factory (丽珠制药厂微球车间(含戈舍) 建设项目) | 262,445,000.00 | 89.36 | 100.00 | Self-funding and funds raised |
| P06 Construction Project of Livzon Group Livzon Pharmaceutical Factory (丽珠制药厂P06建设项目) | 117,710,000.00 | 95.34 | 100.00 | Self-funding |
| Project of lyophilized powder injection workshop (冻干粉针车间项目) | 143,500,000.00 | 95.36 | 100.00 | Self-funding and funds raised |
| P04/P05 Construction Project of Livzon Group Livzon Pharmaceutical Factory (丽珠制药厂P04/P05建设项目) | 126,880,000.00 | 1.35 | 1.00 | Self-funding |
| Livzon Group Livzon Pharmaceutical Factory (丽珠制药厂P03建设项目 | 106,033,900.00 | 0.23 | Self-funding | |
| Jiaozuo new factory relocation project (焦作新厂迁建项目) | 184,261,900.00 | 36.42 | 35.00 | Self-funding |
| Others | 0.00 | 0.00 | 0.00 | Self-funding |
| Total | 4,144,374,388.48 | -- | -- | -- |
Other decrease is mainly transferred to long-term deferred expenses.
15. Right-of-use assets
| Item | Housing and buildings | Total |
| I. Book value: | ||
| 1.Beginning balance | 78,335,855.53 | 78,335,855.53 |
| 2.Increase | 26,614,546.23 | 26,614,546.23 |
| (1) Additions by lease in | 26,614,546.23 | 26,614,546.23 |
| 3.Decrease | 10,873,414.93 | 10,873,414.93 |
| 4. Closing balance | 94,076,986.83 | 94,076,986.83 |
| II. Accumulated depreciation | ||
| 1.Beginning balance | 36,492,721.56 | 36,492,721.56 |
| 2.Increase | 31,907,046.92 | 31,907,046.92 |
| (1) Provision | 31,907,046.92 | 31,907,046.92 |
| 3.Decrease | 10,555,849.14 | 10,555,849.14 |
| 4.Closing balance | 57,843,919.34 | 57,843,919.34 |
Joincare Pharmaceutical Group Annual Report 2023
| Item | Housing and buildings | Total |
| III. Provision for impairment | ||
| 1.Beginning balance | 0.00 | 0.00 |
| 2.Increase | 0.00 | 0.00 |
| 3.Decrease | 0.00 | 0.00 |
| 4.Closing balance | 0.00 | 0.00 |
| IV. Carrying amount | ||
| 1. Carrying value at year end | 36,233,067.49 | 36,233,067.49 |
| 2. Carrying value at beginning of year | 41,843,133.97 | 41,843,133.97 |
As of 31 December 2023, the Company recognised lease expenses related to short-term leases and theleases of low value assets of RMB7,030,100.
16. Intangible assets
(1) Details of intangible assets
| Item | Land use rights | Patents and proprietary technologies | Software | Trademark rights | Others | Total |
| I. Book value | ||||||
| 1.Beginning balance | 442,251,561.19 | 1,015,955,570.54 | 93,252,884.14 | 62,769,716.98 | 10,985,294.53 | 1,625,215,027.38 |
| 2.Increase | 2,220,284.85 | 220,712,363.81 | 4,828,301.45 | 0.00 | 0.00 | 227,760,950.11 |
| (1) Purchase | 2,220,284.85 | 1,833,600.00 | 4,828,301.45 | 0.00 | 0.00 | 8,882,186.30 |
| (2) Internal research and development | 0.00 | 218,878,763.81 | 0.00 | 0.00 | 0.00 | 218,878,763.81 |
| 3.Decrease | 0.00 | 5,524,303.12 | 3,051,359.93 | 0.00 | 0.00 | 8,575,663.05 |
| (1) Disposals or write-offs | 0.00 | 5,524,303.12 | 3,051,359.93 | 0.00 | 0.00 | 8,575,663.05 |
| 4.Closing balance | 444,471,846.04 | 1,231,143,631.23 | 95,029,825.66 | 62,769,716.98 | 10,985,294.53 | 1,844,400,314.44 |
| II. Accumulated amortisation | ||||||
| 1.Beginning balance | 132,119,481.74 | 542,409,896.29 | 63,402,361.15 | 62,765,668.27 | 6,682,720.82 | 807,380,128.27 |
| 2.Increase | 9,338,295.55 | 325,075,396.30 | 11,026,049.11 | 471.72 | 1,098,529.45 | 346,538,742.13 |
| (1) Provision | 9,338,295.55 | 325,075,396.30 | 11,026,049.11 | 471.72 | 1,098,529.45 | 346,538,742.13 |
| 3.Decrease | 0.00 | 5,524,303.12 | 3,051,359.93 | 0.00 | 0.00 | 8,575,663.05 |
| (1) Disposals or write-offs | 0.00 | 5,524,303.12 | 3,051,359.93 | 0.00 | 0.00 | 8,575,663.05 |
| 4.Closing balance | 141,457,777.29 | 861,960,989.47 | 71,377,050.33 | 62,766,139.99 | 7,781,250.27 | 1,145,343,207.35 |
| III. Provision for impairment | ||||||
| 1.Beginning balance | 981,826.94 | 14,737,946.42 | 0.00 | 0.00 | 0.00 | 15,719,773.36 |
| 2.Increase | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| (1) Provision | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 3.Decrease | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Joincare Pharmaceutical Group Annual Report 2023
| Item | Land use rights | Patents and proprietary technologies | Software | Trademark rights | Others | Total |
| 4.Closing balance | 981,826.94 | 14,737,946.42 | 0.00 | 0.00 | 0.00 | 15,719,773.36 |
| IV. Carrying amount | ||||||
| 1.Carrying amount at year end | 302,032,241.81 | 354,444,695.34 | 23,652,775.33 | 3,576.99 | 3,204,044.26 | 683,337,333.73 |
| 2.Carrying value at beginning of year | 309,150,252.51 | 458,807,727.83 | 29,850,522.99 | 4,048.71 | 4,302,573.71 | 802,115,125.75 |
As of 31 December 2023, intangible assets formed through internal research and development of theCompany account for 54.91% of the balance of intangible assets.At the balance sheet date, the Company engaged an appraiser to conduct an impairment test on thebiological drug technology that was capitalized during the current period. When estimating therecoverable amount of the cost input, an assets group related to the biological technology was used toestimate the present value of future cash flows. As tested, no impairment was identified in this assetsgroup.The projected future cash flows of the assets group are determined based on the financial budget forthe expected useful life of the biological drug technology established by management.The main assumptions for impairment testing using the discounted future cash flow method are asfollows:
The calculation of the present value of projected future cash flows for the assets group related to thebiological technology utilized key assumptions of gross profit margins ranging from 80.65% to
81.94%, operating income growth rates ranging from 5.26% to 91.59%, and a discount rate of 15.00%for cash flow discounting. These assumptions were determined by management based on historicalperformance and forecasts of market development.
(2) Intangible assets pending for certificates of ownership
None.
(3) Intangible assets
The land use rights represent the state-owned land use rights obtained by the Company in accordancewith PRC laws in China, and the term of grant will be 50 years commencing from the date of obtainingthe land use rights
17. Development costs
| 2022.12.31 | Increase | Decrease | 2023.12.31 | |
| Development costs | 428,284,884.17 | 274,513,905.45 | 219,304,302.45 | 483,494,487.17 |
Specific details refer to Note VI Research and development expenditures.
18. Goodwill
(1) Book value of goodwill
| Name of investee | 2022.12.31 | Increase | Decrease | 2023.12.31 | ||
| Formation by business combination | Others | Disposal | Others | |||
| Shanghai Livzon Pharmaceutical Manufacturing Co., Ltd. (上海丽珠 | 2,045,990.12 | 0.00 | 0.00 | 0.00 | 0.00 | 2,045,990.12 |
Joincare Pharmaceutical Group Annual Report 2023
| Name of investee | 2022.12.31 | Increase | Decrease | 2023.12.31 | ||
| Formation by business combination | Others | Disposal | Others | |||
| 制药有限公司) | ||||||
| Zhuhai FTZ Livzon Hecheng Pharmaceutical Manufacturing Co., Ltd. (珠海保税区丽珠合成制药有限公司) | 3,492,752.58 | 0.00 | 0.00 | 0.00 | 0.00 | 3,492,752.58 |
| Sichuan Guangda Pharmaceutical Manufacturing Co., Ltd. (四川光大制药有限公司) | 13,863,330.24 | 0.00 | 0.00 | 0.00 | 0.00 | 13,863,330.24 |
| Livzon Group Xinbeijiang Pharmaceutical Manufacturing Inc. (丽珠集团新北江制药股份有限公司) | 7,271,307.03 | 0.00 | 0.00 | 0.00 | 0.00 | 7,271,307.03 |
| Livzon Group Fuzhou Fuxing Pharmaceutical Co., Ltd. (丽珠集团福州福兴医药有限公司) | 46,926,155.25 | 0.00 | 0.00 | 0.00 | 0.00 | 46,926,155.25 |
| Livzon Group Livzon Pharmaceutical Factory (丽珠制药厂) | 47,912,269.66 | 0.00 | 0.00 | 0.00 | 0.00 | 47,912,269.66 |
| Livzon Group | 395,306,126.41 | 0.00 | 0.00 | 0.00 | 0.00 | 395,306,126.41 |
| Shenzhen Haibin Pharmaceutical Co., Ltd. (深圳市海滨制药有限公司) | 91,878,068.72 | 0.00 | 0.00 | 0.00 | 0.00 | 91,878,068.72 |
| Joincare Daily-Use & Health Care Co., Ltd. (健康元日用保健品有限公司) | 1,610,047.91 | 0.00 | 0.00 | 0.00 | 0.00 | 1,610,047.91 |
| Shenzhen Taitai Pharmaceutical Co., Ltd. (深圳太太药业有限公司) | 635,417.23 | 0.00 | 0.00 | 0.00 | 0.00 | 635,417.23 |
| Health Pharmaceuticals (China) Limited (健康药业(中国) 有限公司) | 23,516,552.65 | 0.00 | 0.00 | 0.00 | 0.00 | 23,516,552.65 |
| Shenzhen Hiyeah Industry Co., Ltd (深圳市喜悦实业有限公司) | 6,000,000.00 | 0.00 | 0.00 | 0.00 | 0.00 | 6,000,000.00 |
| Jiaozuo Joincare Bio Technological Co., Ltd. (焦作健康元生物制品有限公司) | 92,035.87 | 0.00 | 0.00 | 0.00 | 0.00 | 92,035.87 |
| Shanghai Zhongtuo Pharmaceutical Technology Co., Ltd. (上海中拓医药科技有限公司) | 0.00 | 21,870,805.09 | 0.00 | 0.00 | 0.00 | 21,870,805.09 |
| Total | 640,550,053.67 | 21,870,805.09 | 0.00 | 0.00 | 0.00 | 662,420,858.76 |
(2) Provision for impairment of goodwill
| Name of investee or matter from which goodwill arose | 2022.12.31 | Increase | Decrease | 2023.12.31 | ||
| Provision | Others | Disposal | Others | |||
| Livzon Group Xinbeijiang Pharmaceutical Manufacturing Inc. (丽珠集团新北江制药股份有限公司) | 7,271,307.03 | 0.00 | 0.00 | 0.00 | 0.00 | 7,271,307.03 |
| Livzon Group Fuzhou Fuxing Pharmaceutical Co., Ltd. (丽珠集团福州福兴医药有限公司) | 11,200,000.00 | 0.00 | 0.00 | 0.00 | 0.00 | 11,200,000.00 |
| Shenzhen Hiyeah Industry Co., Ltd (深圳市喜悦实业有限公司) | 6,000,000.00 | 0.00 | 0.00 | 0.00 | 0.00 | 6,000,000.00 |
| Joincare Daily-Use & Health Care Co., Ltd. (健康元日用保健 | 1,610,047.91 | 0.00 | 0.00 | 0.00 | 0.00 | 1,610,047.91 |
Joincare Pharmaceutical Group Annual Report 2023
| Name of investee or matter from which goodwill arose | 2022.12.31 | Increase | Decrease | 2023.12.31 | ||
| Provision | Others | Disposal | Others | |||
| 品有限公司) | ||||||
| Total | 26,081,354.94 | 0.00 | 0.00 | 0.00 | 0.00 | 26,081,354.94 |
The goodwill of the Company arose from its business combination involving enterprises not undercommon control.On the balance sheet date, the Company conducts an impairment test on goodwill. When estimatingthe recoverable amount of input costs, it uses a assets group related to goodwill to estimate the presentvalue of future cash flows.The estimated future cash flow of asset groups is calculated according to the five-year financial budgetplan made by the management, the cash flows in the years beyond the five-year budget plan remainstable.Key assumptions of discounted future cash flow for goodwill impairment test are as follows:
For the calculation of estimated present value of future cash flow of the asset groups related togoodwill of Livzon Group, key assumptions are a gross margin of 63.58%-63.74% and a businessrevenue growth rate of 0~10.68% as well as a cash flow discount rate of 12.11%. The managementtook into account historical conditions and predictions for future market development in making theabove assumptions.For the calculation of estimated present value of future cash flow of the asset groups related togoodwill of Shenzhen Haibin Pharmaceutical Co., Ltd. (深圳市海滨制药有限公司), key assumptionsare a gross margin of 36.41%-37.26% and a business revenue growth rate of 2.65%~3.28% as well asa cash flow discount rate of 12.28%. The management took into account historical conditions andpredictions for future market development in making the above assumptions.For the calculation of estimated present value of future cash flow of the asset groups related togoodwill of Livzon Group Livzon Pharmaceutical Factory (丽珠制药厂), key assumptions are a grossmargin of 84.51%-85.77% and a business revenue growth rate of -0.32%~18.40% as well as a cashflow discount rate of 14.72%. The management took into account historical conditions and predictionsfor future market development in making the above assumptions.For the calculation of estimated present value of future cash flow of the asset groups related togoodwill of Fuzhou Fuxing Pharmaceutical Co., Ltd. (丽珠集团福州福兴医药有限公司), keyassumptions are a gross margin of 61.26%-63.22% and a business revenue growth rate of 0~5.17% aswell as a cash flow discount rate of 15.04%. The management took into account historical conditionsand predictions for future market development in making the above assumptions.As tested, the management of the Company expects that no impairment provision is needed duringthe period.
19. Long-term deferred expenses
| Item | 2022.12.31 | Increase | Decrease | 2023.12.31 | |
| Amortization | Other decrease | ||||
| Renovation costs of offices | 32,404,898.26 | 11,841,332.37 | 8,943,822.37 | 0.00 | 35,302,408.26 |
| Renovation costs of plants | 177,270,511.39 | 67,563,674.28 | 36,995,443.60 | 0.00 | 207,838,742.07 |
Joincare Pharmaceutical Group Annual Report 2023
| Others | 68,192,307.30 | 48,028,490.43 | 30,583,946.83 | 135,260.28 | 85,501,590.62 |
| Total | 277,867,716.95 | 127,433,497.08 | 76,523,212.80 | 135,260.28 | 328,642,740.95 |
20. Deferred tax assets and deferred tax liabilities
(1) Deferred tax assets and deferred tax liabilities before offsetting
| Item | 2023.12.31 | 2022.12.31 | |||
| Deductible or taxable timing differences | Deferred tax assets or liabilities | Deductible or taxable timing differences | Deferred tax assets or liabilities | ||
| Deferred tax assets: | |||||
| Provision for impairment of assets | 343,045,560.65 | 53,742,321.13 | 336,502,793.26 | 51,790,732.85 | |
| Deductible difference arising from accrued expenses | 1,023,821,672.31 | 154,078,627.18 | 965,912,234.46 | 145,014,131.32 | |
| Deductible difference arising from tax loss | 570,748,121.27 | 88,985,237.05 | 399,128,528.63 | 61,021,514.54 | |
| Deferred income | 351,168,477.14 | 52,689,271.55 | 329,970,021.95 | 49,511,503.29 | |
| Unrealised gains from intra-company transactions | 557,959,823.99 | 83,860,590.27 | 694,726,037.62 | 104,182,311.29 | |
| Changes in fair value of other equity instruments | 171,808,020.60 | 42,952,005.15 | 146,540,719.40 | 36,635,179.85 | |
| Deductible difference arising from share incentive expenses | 181,626,652.70 | 27,320,365.15 | 107,474,309.53 | 16,149,104.44 | |
| Changes in fair value of financial assets held for trading | 6,788,598.30 | 1,118,844.82 | 7,298,819.37 | 1,234,418.76 | |
| Lease liabilities | 36,032,491.62 | 5,448,312.71 | 40,929,153.44 | 6,176,080.30 | |
| Other deductible temporary difference | 461,922,553.15 | 69,339,255.14 | 455,485,646.11 | 68,322,846.92 | |
| Total | 3,704,921,971.73 | 579,534,830.15 | 3,483,968,263.77 | 540,037,823.56 | |
| Deferred tax liabilities: | |||||
| Changes in fair value of financial assets held for trading | 18,136,499.46 | 2,804,773.32 | 20,265,474.92 | 3,216,065.39 | |
| Accelerated depreciation of fixed assets | 1,168,361,877.72 | 176,372,768.51 | 1,094,571,545.41 | 167,757,444.03 | |
| Changes in fair value of other equity instruments | 336,006,149.00 | 54,781,912.31 | 242,925,303.81 | 39,399,916.06 | |
| Unrealised gains from intra-company transactions | 105,940,000.00 | 20,791,000.00 | 105,940,000.00 | 20,791,000.00 | |
| Right-of-use assets | 34,915,576.08 | 5,281,690.30 | 29,399,049.11 | 6,029,458.89 | |
| Total | 1,663,360,102.26 | 260,032,144.44 | 1,493,101,373.25 | 237,193,884.37 | |
(2) Deductible temporary differences and deductible tax losses of unrecognized deferred taxassets
| Item | 2023.12.31 | 2022.12.31 |
| Deductible temporary differences | 708,195,629.77 | 239,109,485.46 |
| Deductible tax loss | 3,347,867,061.97 | 2,804,958,759.64 |
| Total | 4,056,062,691.74 | 3,044,068,245.10 |
（3）Deductible tax loss of unrecognized deferred income tax assets will expire in the followingyear
Joincare Pharmaceutical Group Annual Report 2023
| Year | 2023.12.31 | 2022.12.31 | Note |
| 2023 | 0.00 | 182,300,762.40 | |
| 2024 | 347,767,088.05 | 385,139,111.62 | |
| 2025 | 411,145,375.34 | 253,044,280.36 | |
| 2026 | 571,314,623.42 | 390,203,263.39 | |
| 2027 | 756,928,429.68 | 1,485,158,186.92 | |
| 2028 | 1,126,656,130.74 | 0.00 | |
| Thereafter | 134,055,414.74 | 109,113,154.95 | |
| Total | 3,347,867,061.97 | 2,804,958,759.64 |
21. Other non-current assets
| Item | 2023.12.31 | 2022.12.31 |
| Fixed deposits and interest | 639,386,083.31 | 812,562,286.58 |
| VAT carry forward | 3,338,552.19 | 3,338,552.19 |
| Prepayment for acquisition of project and equipment | 314,499,620.27 | 340,456,344.22 |
| Prepayment for acquisition of technical know-how | 0.00 | 415,000.00 |
| Total | 957,224,255.77 | 1,156,772,182.99 |
22. Ownership or using rights of assets subject to restriction
| Item | 2023.12.31 | 2022.12.31 | Reason of restriction | |
| Other cash and bank balances | 6,627,449.66 | 1,392,407.76 | Deposits for letter of credit and bank acceptance bills | |
| Notes receivable | 519,789,027.16 | 469,659,266.19 | Acceptance bills and pledged notes receivable | |
| Total | 526,416,476.82 | 471,051,673.95 |
23. Short-term loans
(1) Short-term loans by category
| Item | 2023.12.31 | 2022.12.31 |
| Unsecured loans | 2,066,149,722.22 | 2,089,585,755.20 |
| Guaranteed loans | 10,009,625.00 | 36,464,859.86 |
| Total | 2,076,159,347.22 | 2,126,050,615.06 |
(2) The Company has no overdue short-term loans.
24. Financial liabilities held for trading
| Item | 2023.12.31 | 2022.12.31 |
| Financial liabilities held for trading | 86,817.12 | 755,634.43 |
| Including: | ||
| Derivative financial liabilities | 86,817.12 | 755,634.43 |
| Total | 86,817.12 | 755,634.43 |
Derivative financial liabilities represent foreign currency forward contracts. The loss from unexpired
Joincare Pharmaceutical Group Annual Report 2023
onerous contracts measured at fair value on balance sheet date was recognised as financial liabilitiesheld for trading.
25. Notes payable
| Category | 2023.12.31 | 2022.12.31 |
| Bank acceptance bills | 1,469,148,287.38 | 1,635,906,989.22 |
The Company has no overdue notes payable.
26. Accounts payable
| Item | 2023.12.31 | 2022.12.31 |
| Within one year | 725,938,902.30 | 815,158,453.21 |
| Over 1 year | 168,347,340.98 | 128,747,127.70 |
| Total | 894,286,243.28 | 943,905,580.91 |
(1) The aging of accounts payable is calculated from the date of entry
(2) No significant accounts payable aging over 1 year at the end of the period.
27. Contract liabilities
| Item | 2023.12.31 | 2022.12.31 |
| Within one year | 137,475,266.94 | 260,935,024.18 |
| Over 1 year | 21,607,370.71 | 32,042,706.56 |
| Total | 159,082,637.65 | 292,977,730.74 |
No significant contract liabilities with ageing for more than 1 year at the end of the period. The amountof contract liabilities at beginning of the period recognised as revenue during the period isRMB192,155,336.91.
28. Employee benefits payables
| Item | 2022.12.31 | Increase | Decrease | 2023.12.31 |
| Short-term employee benefits | 571,143,205.10 | 2,089,445,950.71 | 2,262,734,417.03 | 397,854,738.78 |
| Post-employment benefits -Defined contribution plans | 584,624.36 | 164,554,519.87 | 164,810,151.10 | 328,993.13 |
| Termination benefits | 1,282,742.00 | 7,128,897.88 | 7,128,897.88 | 1,282,742.00 |
| Total | 573,010,571.46 | 2,261,129,368.46 | 2,434,673,466.01 | 399,466,473.91 |
(1) Short-term employee benefits
| Item | 2022.12.31 | Increase | Decrease | 2023.12.31 |
| Salaries, bonus and allowances | 375,067,929.19 | 1,873,976,365.83 | 1,858,591,416.63 | 390,452,878.39 |
| Staff welfare | 5,794,481.17 | 79,518,469.82 | 80,443,067.58 | 4,869,883.41 |
| Social insurances | 1,244,430.44 | 64,661,757.23 | 65,410,721.34 | 495,466.33 |
| Including: 1. Medical insurance | 1,153,030.82 | 57,856,336.25 | 58,621,836.12 | 387,530.95 |
| 2. Work injury insurance | 51,322.84 | 4,323,739.25 | 4,300,052.27 | 75,009.82 |
Joincare Pharmaceutical Group Annual Report 2023
| Item | 2022.12.31 | Increase | Decrease | 2023.12.31 |
| 3. Maternity insurance | 40,076.78 | 2,481,681.73 | 2,488,832.95 | 32,925.56 |
| Housing fund | 2,223,574.48 | 64,170,716.07 | 64,780,041.91 | 1,614,248.64 |
| Union funds and staff education | 418,905.96 | 7,118,641.76 | 7,115,287.28 | 422,260.44 |
| Shares ownership plan special fund | 186,393,883.86 | 0.00 | 186,393,882.29 | 1.57 |
| Total | 571,143,205.10 | 2,089,445,950.71 | 2,262,734,417.03 | 397,854,738.78 |
(2) Defined contribution plans
| Item | 2022.12.31 | Increase | Decrease | 2023.12.31 |
| Post-employment benefits | 584,624.36 | 164,554,519.87 | 164,810,151.10 | 328,993.13 |
| Including: 1. Basic pension insurance | 545,595.12 | 159,200,498.37 | 159,464,797.56 | 281,295.93 |
| 2. Unemployment insurance | 39,029.24 | 5,354,021.50 | 5,345,353.54 | 47,697.20 |
| Total | 584,624.36 | 164,554,519.87 | 164,810,151.10 | 328,993.13 |
The Company participates in pension insurance and unemployment insurance plans established by thegovernment in accordance with relevant requirements. According to the plans, the Company makescontributions to these plans in accordance with relevant requirements of the local government. Savefor the above contributions, the Company no longer undertakes further payment obligation. Thecorresponding cost is charged to the profit or loss for the current period or the cost of relevant assetswhen it occurs.
29. Taxes payable
| Taxes | 2023.12.31 | 2022.12.31 |
| Value-added tax | 115,815,594.36 | 166,151,353.61 |
| Urban maintenance and construction tax | 10,479,696.08 | 14,374,197.97 |
| Enterprise income tax | 248,970,115.59 | 124,039,899.44 |
| Property tax | 10,102,159.56 | 7,992,927.81 |
| Land use tax | 3,551,644.81 | 2,847,286.45 |
| Individual income Tax | 8,704,470.10 | 7,524,584.67 |
| Stamp duty | 3,220,463.11 | 2,904,260.39 |
| Education surcharge | 6,963,481.73 | 9,613,697.69 |
| Others | 2,395,228.75 | 2,254,065.70 |
| Total | 410,202,854.09 | 337,702,273.73 |
30. Other payables
| Item | 2023.12.31 | 2022.12.31 |
| Dividends payable | 12,478,280.13 | 12,252,074.84 |
| Other payables | 3,670,125,758.60 | 3,668,082,286.04 |
| Total | 3,682,604,038.73 | 3,680,334,360.88 |
Joincare Pharmaceutical Group Annual Report 2023
(1) Dividends payable
| Item | 2023.12.31 | 2022.12.31 |
| Common shares dividend | 20,174.46 | 20,174.46 |
| Qingyuan Xinbeijiang Enterprise (Group) Company (清远新北江企业(集团)公司) | 1,200,710.00 | 1,200,710.00 |
| Other legal persons and individual shareholder of subsidiaries | 6,709,282.62 | 6,682,964.50 |
| Internal staff shareholders of subsidiaries | 4,548,113.05 | 4,348,225.88 |
| Total | 12,478,280.13 | 12,252,074.84 |
(2) Other payables
| Item | 2023.12.31 | 2022.12.31 |
| Office expenses | 83,598,827.70 | 69,513,003.38 |
| Security deposits | 81,936,094.18 | 89,750,329.22 |
| Utility bill | 43,286,467.16 | 28,378,759.70 |
| Scientific research expenses | 38,500,715.04 | 61,153,064.06 |
| Business promotion expenses | 3,229,954,810.39 | 3,240,077,659.74 |
| Others | 192,848,844.13 | 179,209,469.94 |
| Total | 3,670,125,758.60 | 3,668,082,286.04 |
The obligations of repurchasing restricted shares held by the directors, the senior management andtheir spouses amounted RMB0.00 at period end.At year end, there is no significant other payables aging over 1 year.
31. Non-current liabilities due within one year
| Item | 2023.12.31 | 2022.12.31 |
| Lease liabilities due within one year | 22,085,541.56 | 19,415,779.34 |
| Long-term loans due within one year and interest | 696,478,602.75 | 43,661,481.64 |
| Total | 718,564,144.31 | 63,077,260.98 |
32. Other current liabilities
| Item | 2023.12.31 | 2022.12.31 |
| Output VAT pending for transfer | 11,242,363.91 | 17,734,822.42 |
| Payables for goods return | 39,844,637.92 | 83,440,368.95 |
| Others | 0.00 | 101,522.98 |
| Total | 51,087,001.83 | 101,276,714.35 |
33. Long term loans
| Item | 2023.12.31 | Range of interest rate | 2022.12.31 | Range of interest rate |
| Unsecured loans | 1,626,187,359.91 | 2.15%-3.05% | 1,475,974,398.32 | 2.45%-3.20% |
| Guaranteed loans | 2,192,564,521.83 | 2.65%-3.60% | 1,798,531,126.20 | 2.70%-3.60% |
| Subtotal | 3,818,751,881.74 | 3,274,505,524.52 | ||
| Less: Long-term loans due within one year | 696,478,602.75 | 43,661,481.64 | ||
| Total | 3,122,273,278.99 | 3,230,844,042.88 |
Joincare Pharmaceutical Group Annual Report 2023
34. Lease liabilities
| Item | 2023.12.31 | 2022.12.31 |
| Lease payments payable | 37,508,489.97 | 42,898,265.42 |
| Less: Lease liabilities due within one year | 22,085,541.56 | 19,415,779.35 |
| Total | 15,422,948.41 | 23,482,486.07 |
Interest expenses accrued on lease liabilities during the year 2023 was RMB2.81 million, which wasrecorded in financial expenses-Interest expense.
35. Deferred income
| Item | 2022.12.31 | Increase | Decrease | 2023.12.31 | Reason of formation |
| Government grants | 384,537,267.55 | 81,090,429.36 | 95,448,146.09 | 370,179,550.82 |
Government grants recorded as deferred income refer to Note VIII. Government grants.
36. Other non-current liabilities
| Item | 2023.12.31 | 2022.12.31 |
| Relocation and expansion project of Sichuan Guangda Pharmaceutical Manufacturing | 90,000,000.00 | 84,000,000.00 |
37. Share capital
| Item | 2022.12.31 | Movement in the year (+ or -) | 2023.12.31 | |||
| Issue of new shares | Conversion from capital reserve | Others | Subtotal | |||
| I. Tradable shares subject to selling restrictions | ||||||
| 1. Domestic legal person shares | 0 | 0 | 0 | 0 | 0 | 0 |
| 2. Domestic natural person shares | 0 | 0 | 0 | 0 | 0 | 0 |
| 3. Overseas legal person shares | 0 | 0 | 0 | 0 | 0 | 0 |
| Tradable shares subject to selling restrictions in aggregate | 0 | 0 | 0 | 0 | 0 | 0 |
| II. Tradable shares | ||||||
| 1. Ordinary shares denominated in RMB | 1,929,189,374 | 3,500,889 | 0 | -67,166,456 | -63,665,567 | 1,865,523,807 |
| 2. Foreign-invested stocks listed overseas | 0 | 0 | 0 | 0 | 0 | 0 |
| Tradable shares in aggregate | 1,929,189,374 | 3,500,889 | 0 | -67,166,456 | -63,665,567 | 1,865,523,807 |
| III. Total number of shares | 1,929,189,374 | 3,500,889 | 0 | -67,166,456 | -63,665,567 | 1,865,523,807 |
The increase of share capital in the year: Exercise of share options increased by 3,500,889 shares.The reduction of share capital in this period is cancellation of repurchased shares.
38. Capital reserve
| Item | 2022.12.31 | Increase | Decrease | 2023.12.31 |
Joincare Pharmaceutical Group Annual Report 2023
| Capital premium | 2,221,682,284.77 | 37,735,362.10 | 907,013,552.77 | 1,352,404,094.10 |
| Other capital reserve | 122,010,931.22 | 129,821,481.15 | 2,516,418.76 | 249,315,993.61 |
| Total | 2,343,693,215.99 | 167,556,843.25 | 909,529,971.53 | 1,601,720,087.71 |
The increase in capital premium was due to: 1. The exercise of share options for 3,500,889 sharesresulted in an increase in share premium of RMB35,218,943.34, and the corresponding recognition ofshare-based compensation expense of RMB2,516,418.76, which was transferred from other capitalreserves to share premium.The decrease in capital premium was due to: 1. After the exercise of share options, the differencebetween the expense deductible for tax purposes and the expense previous accrued increased theincome tax payable by RMB34,920.60 in accordance with tax regulations, resulting in a correspondingdecrease in share premium; 2. The Company and its subsidiary Livzon Group repurchased shares,resulting in a corresponding decrease in share premium of RMB906,978,632.17.The increase in other capital reserve was due to: 1. The Company and its subsidiary Livzon Grouprecognized share-based compensation expenses totalling RMB43,360,594.05; 2. The Company’ssubsidiary, Livzon Group, made non-proportional capital contribution to investees under equityaccounting method that led to change in shareholding ratio and other equity, the capital reserve isincreased by RMB12,823,027.01; 3. The subsidiary Livzon Group repurchased and cancelled shares,causing changes in the Company's ownership percentage and other equity adjustments, resulting in anincrease in capital reserves of RMB73,637,860.09.The decrease in other capital reserve was due to: Share incentive expense charged to capital premiumof RMB2,516,418.76.
39. Treasury shares
| Item | 2022.12.31 | Increase | Decrease | 2023.12.31 |
| Repurchase of shares due to Share Ownership Scheme and Share Options Incentive Scheme | 222,644,454.50 | 0.00 | 222,644,454.50 | 0.00 |
| Repurchase of shares to be cancelled | 124,532,106.79 | 475,382,587.14 | 599,914,693.93 | 0.00 |
| Total | 347,176,561.29 | 475,382,587.14 | 822,559,148.43 | 0.00 |
The increase in treasury stock for the period: The total amount of funds used by the company torepurchase its A shares through centralized bidding transactions. The decrease in treasury stock for theperiod: The cancellation of repurchased shares.
40. Other comprehensive income
Other comprehensive income attributable to the parent company in the balance sheet:
| Item | Beginning balance | Current year | Closing balance | |
| Beginning balance (1) | Amount attributable to parent company after tax(2) | Less: Included in other comprehensive income in the previous period and transferred to retained earnings in the current period(3) | (4) =(1) +(2) -(3) | |
| I. Other comprehensive income not reclassified into profit or loss subsequently | 16,979,631.87 | -28,328,225.75 | 2,072,742.37 | -13,421,336.25 |
| 1Other comprehensive income not reclassified to profit or loss under equity method | 8,775,200.25 | 1,329,112.27 | 0.00 | 10,104,312.52 |
Joincare Pharmaceutical Group Annual Report 2023
| Item | Beginning balance | Current year | Closing balance | |
| Beginning balance (1) | Amount attributable to parent company after tax(2) | Less: Included in other comprehensive income in the previous period and transferred to retained earnings in the current period(3) | (4) =(1) +(2) -(3) | |
| 2.Changes in fair value of other equity instrument investments | 8,204,431.61 | -29,657,338.02 | 2,072,742.37 | -23,525,648.78 |
| II. Other comprehensive income that will be reclassified into profit or loss subsequently | -12,275,158.33 | 13,450,363.36 | 0.00 | 1,175,205.03 |
| 1.Other comprehensive income that will be transferred to profit or loss under equity method | 274,411.50 | -79,651.80 | 0.00 | 194,759.70 |
| 2.Translation difference of foreign currency financial statements | -12,549,569.84 | 13,530,015.17 | 0.00 | 980,445.33 |
| Total other comprehensive income | 4,704,473.53 | -14,877,862.38 | 2,072,742.37 | -12,246,131.22 |
Other comprehensive income attributable to the parent company in income statement:
| Item | Current year | ||||
| Amount before tax(1) | Less: transferred to profit or loss in current year(2) | Less: Income tax expenses(3) | Less: Amount attributable to minority interests after tax(4) | Amount attributable to parent company after tax(5) =(1) -(2) -(3) -(4) | |
I. Other comprehensiveincome not reclassified intoprofit or loss subsequently
| I. Other comprehensive income not reclassified into profit or loss subsequently | -47,130,870.01 | 0.00 | 9,080,248.76 | -27,882,893.03 | -28,328,225.75 |
| 1.Other comprehensive income not reclassified to profit or loss under equity method | 2,948,132.06 | 0.00 | 0.00 | 1,619,019.79 | 1,329,112.27 |
| 2.Changes in fair value of other equity instrument investments | -50,079,002.07 | 0.00 | 9,080,248.76 | -29,501,912.81 | -29,657,338.02 |
| II. Other comprehensive income that will be reclassified into profit or loss subsequently | 20,351,531.70 | 0.00 | 0.00 | 6,901,168.34 | 13,450,363.36 |
| 1.Other comprehensive income that will be transferred to profit or loss under equity method | -176,677.35 | 0.00 | 0.00 | -97,025.55 | -79,651.80 |
| 2.Translation difference of foreign currency financial statements | 20,528,209.05 | 0.00 | 0.00 | 6,998,193.88 | 13,530,015.17 |
| Total other comprehensive income | -26,779,338.31 | 0.00 | 9,080,248.76 | -20,981,724.69 | -14,877,862.38 |
41. Surplus reserve
| Item | 2022.12.31 | Increase | Decrease | 2023.12.31 |
| Statutory surplus reserve | 693,451,984.13 | 124,279,622.27 | 0.00 | 817,731,606.40 |
| Discretionary surplus reserve | 40,210,642.44 | 0.00 | 0.00 | 40,210,642.44 |
| Expansion reserve | 1,103,954.93 | 0.00 | 0.00 | 1,103,954.93 |
| Total | 734,766,581.50 | 124,279,622.27 | 0.00 | 859,046,203.77 |
Joincare Pharmaceutical Group Annual Report 2023
42. Undistributed profits
(1) Movement of undistributed profits
| Item | 2023 | 2022 | Appropriation ratio |
| Retained earnings in previous period before adjustments | 8,456,778,287.49 | 7,223,644,166.22 | -- |
| Adjustments to opening balance of retained earnings (increase +, decrease -) | 0.00 | -46,332.61 | -- |
| Opening balance of retained earnings after adjustments | 8,456,778,287.49 | 7,223,597,833.61 | |
| Add: Net profit attributable to parent company for the current year | 1,442,779,722.23 | 1,502,777,133.76 | -- |
| Gains from disposal of other equity instruments investment | 3,371,626.11 | 101,906,354.19 | -- |
| Less: Appropriation of statutory surplus reserve | 124,279,622.27 | 93,945,402.42 | 10% |
| Appropriation of discretionary surplus reserve | 0.00 | 0.00 | |
| Appropriation for dividends to ordinary shares | 336,792,056.76 | 277,557,631.65 | |
| Dividend to ordinary shares converted to share capital | 0.00 | 0.00 | |
| Closing balance of undistributed profits | 9,441,857,956.80 | 8,456,778,287.49 |
(2) Profit distributions
Unit: RMB
| Item | 2023 | 2022 |
| Dividends: | ||
| 2022 year-end dividend (Note 2) | 336,792,056.76 | 0.00 |
| 2021 year-end dividend (Note 3) | -- | 277,557,631.65 |
| Dividends proposed after the balance sheet date: | ||
| 2023 year-end dividend distribution (Note 1) | 0.00 | 0.00 |
| 2022 year-end dividend distribution (Note 2) | 336,792,056.76 |
Note 1: On 2 April 2024, the thirty-eighth meeting of the eighth board of directors of the Companypassed the 2023 annual profit distribution plan. A cash dividend of RMB1.80 (tax inclusive) for every10 shares would be distributed to all shareholders based on the Company's total share capital on theequity registration date determined by the implementation of the Company's 2023 annual profitdistribution plan. The remaining undistributed profits are carried forward for distribution in futureyears.Note 2: On 7 April 2023, the twenty-third meeting of the eighth board of directors of the Companypassed the 2022 annual profit distribution plan. A cash dividend of RMB1.80 (tax inclusive) for every10 shares would be distributed to all shareholders based on the Company's total share capital, deductedby the repurchased shares held in the Company's special securities account, on the equity registrationdate determined by the implementation of the Company's 2022 annual profit distribution plan. Theremaining undistributed profits are carried forward for distribution in future years. The profitdistribution plan was approved by the shareholders' meeting on 9 June 2023, and was subsequentlypaid.Note 3: According to the "Profit Distribution Plan for 2021 of the Company" approved by theCompany's 2021 Annual General Meeting of Shareholders on 18 May 2022, the Company distributedcash dividends to all shareholders, RMB0.15 per share, based on the 1,850,384,211 shares, which was
Joincare Pharmaceutical Group Annual Report 2023
calculated by the 1,912,540,667 issued shares registered in China Securities Depository and ClearingCorporation Limited (Shenzhen Branch) on 29 June 2022 with deduction of 62,156,456 repurchasedshares held in repurchased account, the total amount was RMB277,557,631.65.
43. Operating income and operating cost
(1) Operating income and operating cost
| Item | 2023 | 2022 | ||
| Revenue | Cost | Revenue | Cost | |
| Primary operations | 16,521,723,930.99 | 6,206,181,318.60 | 17,012,733,738.86 | 6,160,330,584.19 |
| Other operations | 124,626,418.73 | 92,284,352.51 | 130,019,329.96 | 91,934,724.21 |
| Total | 16,646,350,349.72 | 6,298,465,671.11 | 17,142,753,068.82 | 6,252,265,308.40 |
(2) Disaggregate information of primary operating income
① Segregation by products
| Item | 2023 | 2022 | ||
| Revenue | Cost | Revenue | Cost | |
| Primary operations: Chemical pharmaceuticals (化学制剂) | 8,714,333,568.23 | 1,838,766,252.49 | 9,226,385,569.43 | 1,813,969,087.68 |
| Chemical active pharmaceutical ingredients (APIs) and intermediates (化学原料药及中间体) | 5,045,478,897.44 | 3,348,124,481.16 | 5,228,344,920.83 | 3,409,237,794.82 |
| Traditional Chinese medicine (中药制剂) | 1,805,427,390.05 | 575,932,282.52 | 1,296,583,761.24 | 427,894,665.07 |
| Biological product (生物制品) | 84,426,083.26 | 102,589,712.45 | 408,488,131.90 | 106,811,638.64 |
| Health care products (保健食品) | 195,865,865.05 | 71,643,900.63 | 121,235,545.22 | 46,223,021.02 |
| Diagnostic reagents and equipment (诊断试剂及设备) | 658,966,438.70 | 256,124,411.27 | 723,535,115.00 | 352,636,503.06 |
| Others | 17,225,688.26 | 13,000,278.08 | 8,160,695.24 | 3,557,873.90 |
| Subtotal | 16,521,723,930.99 | 6,206,181,318.60 | 17,012,733,738.86 | 6,160,330,584.19 |
| Other operations: | ||||
| Sales materials, processing fees, etc | 49,468,965.72 | 28,510,860.51 | 64,214,783.08 | 43,942,003.40 |
| Rental fees | 12,613,941.94 | 2,707,776.69 | 10,731,614.42 | 405,023.12 |
| Others | 62,543,511.07 | 61,065,715.31 | 55,072,932.46 | 47,587,697.69 |
| Subtotal | 124,626,418.73 | 92,284,352.51 | 130,019,329.96 | 91,934,724.21 |
| Total | 16,646,350,349.72 | 6,298,465,671.11 | 17,142,753,068.82 | 6,252,265,308.40 |
② Segregation by operating locations
Joincare Pharmaceutical Group Annual Report 2023
| Item | 2023 | 2022 | ||
| Revenue | Cost | Revenue | Cost | |
| Domestic | 13,938,078,133.85 | 4,471,521,161.40 | 14,170,771,017.92 | 4,326,229,111.25 |
| Overseas | 2,583,645,797.14 | 1,734,660,157.20 | 2,841,962,720.94 | 1,834,101,472.94 |
| Total | 16,521,723,930.99 | 6,206,181,318.60 | 17,012,733,738.86 | 6,160,330,584.19 |
③ Segregation by timing of revenue recognition
| Item | 2023 | 2022 | ||
| Revenue | Cost | Revenue | Cost | |
| Primary operations: | ||||
| Recognized at a point in time | 16,521,723,930.99 | 6,206,181,318.60 | 17,012,733,738.86 | 6,160,330,584.19 |
| Other operations: | ||||
| Recognized at a point in time | 112,012,476.79 | 89,576,575.82 | 119,287,715.54 | 91,529,701.09 |
| Rental income | 12,613,941.94 | 2,707,776.69 | 10,731,614.42 | 405,023.12 |
| Total | 16,646,350,349.72 | 6,298,465,671.11 | 17,142,753,068.82 | 6,252,265,308.40 |
④ Information of top five customers of business revenue
| Period | Total operating revenue from top five customers | Proportion to primary operating income in the period (%) |
| 2023 | 1,503,371,183.85 | 9.10 |
| 2022 | 1,524,490,064.48 | 8.96 |
⑤ Segregation by other operations
| Item | 2023 | 2022 | ||
| Revenue | Cost | Revenue | Cost | |
| Sale of raw materials | 39,304,960.58 | 17,822,121.67 | 47,190,775.25 | 31,174,586.16 |
| Processing fees | 376,599.27 | 1,558,660.40 | 5,995,904.44 | 2,546,785.48 |
| Rental fees | 12,613,941.94 | 2,707,776.69 | 10,731,614.42 | 405,023.12 |
| Power fee | 9,787,405.87 | 9,130,078.44 | 11,028,103.39 | 10,220,631.76 |
| Others | 62,543,511.07 | 61,065,715.31 | 55,072,932.46 | 47,587,697.69 |
| Total | 124,626,418.73 | 92,284,352.51 | 130,019,329.96 | 91,934,724.21 |
44. Taxes and surcharges
| Item | 2023 | 2022 |
| Urban construction tax | 84,322,355.47 | 86,745,317.20 |
| Education surcharge | 63,425,582.72 | 64,105,649.70 |
Joincare Pharmaceutical Group Annual Report 2023
| Land use tax | 10,778,058.26 | 10,656,172.45 |
| Property tax | 30,520,758.40 | 24,496,501.64 |
| Stamp duty and others | 14,162,366.00 | 13,742,716.57 |
| Total | 203,209,120.85 | 199,746,357.56 |
Note: The bases of calculations for major taxes and surcharges are set out in Note IV. Taxation.
45. Selling expenses
| Item | 2023 | 2022 |
| Marketing and promotional expenses | 3,777,259,678.16 | 4,372,087,623.70 |
| Staff salaries | 502,040,446.94 | 456,875,210.86 |
| Entertainment and travel expenses | 66,597,405.00 | 50,363,363.02 |
| Conference fees | 27,167,233.43 | 13,696,783.94 |
| Others | 61,377,517.52 | 57,779,474.64 |
| Total | 4,434,442,281.05 | 4,950,802,456.16 |
46. Administrative expenses
| Item | 2023 | 2022 |
| Staff salaries | 398,539,784.86 | 570,458,570.31 |
| Depreciation and amortisation | 135,294,893.83 | 113,223,517.86 |
| Share incentive expenses | 89,227,389.39 | 56,241,342.12 |
| Advisory, consultancy and information disclosure fees | 26,477,761.47 | 22,074,505.08 |
| Quality project expenses | 51,398,582.85 | 29,400,960.89 |
| Office, entertainment and travelling expenses | 72,905,062.42 | 59,419,007.80 |
| Repair of utilities, transportation and miscellaneous expenses | 27,979,809.29 | 32,266,815.31 |
| Recruitment and staff training expenses | 9,004,540.26 | 10,962,130.33 |
| Others | 119,653,791.33 | 98,436,741.81 |
| Total | 930,481,615.70 | 992,483,591.51 |
47. Research and development expenses
| Item | 2023 | 2022 |
| Material costs | 292,431,042.37 | 290,480,597.96 |
| Staff salaries | 441,951,205.11 | 429,267,039.97 |
| Share incentive expenses | 1,185,242.87 | 835,636.96 |
| Testing fees | 327,359,553.83 | 491,741,656.46 |
| Depreciation and amortisation | 417,142,207.50 | 274,454,884.02 |
| Outsourced R&D expenses | 85,178,642.29 | 105,589,383.10 |
| Others | 96,510,086.93 | 149,718,881.47 |
| Total | 1,661,757,980.90 | 1,742,088,079.94 |
48. Financial expenses
Joincare Pharmaceutical Group Annual Report 2023
| Item | 2023 | 2022 |
| Interest expense | 146,728,005.05 | 139,016,104.44 |
| Less: Interest income | 532,253,758.86 | 395,476,309.66 |
| Exchange gain or loss | -27,248,744.90 | -104,462,941.41 |
| Bank charges and others | 7,933,365.27 | 8,475,722.01 |
| Total | -404,841,133.45 | -352,447,424.62 |
49. Other income
| Item | 2023 | 2022 | Related to assets/ Related to income |
| Government grants | 92,968,065.71 | 132,272,375.37 | Related to assets |
| Government grants | 140,090,341.40 | 154,570,556.96 | Related to income |
| Handling fees for tax withholding | 2,585,013.29 | 3,025,074.11 | |
| Tax refund on super-deduction | 23,418,378.60 | 0.00 | |
| Total | 259,061,799.00 | 289,868,006.44 |
For specific details on government grants, please refer to Note V. 62. Government grants. For specificdetails on government grants as a non-recurring income, please refer to Note VII.1.
50. Investment income
| Item | 2023 | 2022 |
| Long-term equity investments income under equity method | 72,794,071.40 | 70,577,657.04 |
| Investment income from disposal of long-term equity investments | 0.00 | 4,242,404.46 |
| Investment income from financial assets held for trading during the holding period | 356,166.62 | 306,526.30 |
| Dividend income from other equity instrument investments | 29,344,854.27 | 18,713,637.23 |
| Investment income from disposal of financial assets held for trading | -23,020,520.28 | -37,867,110.74 |
| Total | 79,474,572.01 | 55,973,114.29 |
Note 1. The breakdown of the investment income from the disposal of financial assets held fortrading:
| Item | 2023 | 2022 |
| Investment in trading equity instruments - Equity investments | 3,279.44 | 0.00 |
| Derivatives that are not designated as hedges | -23,023,799.72 | -37,867,110.74 |
| Including: Debt instruments investment | -23,023,799.72 | -37,867,110.74 |
| Total | -23,020,520.28 | -37,867,110.74 |
51. Gains from changes in fair value
| Source of gains from changes in fair value | 2023 | 2022 |
| Financial assets held for trading | -26,088,532.43 | -75,650,657.64 |
| Including: Debt instruments investment | 3,298.53 | -5,873.00 |
| Equity instruments investment | -24,382,368.68 | -73,700,967.89 |
| Derivative financial assets | -2,295,776.28 | -1,943,816.75 |
| Bank wealth management products | 586,314.00 | 0.00 |
Joincare Pharmaceutical Group Annual Report 2023
| Source of gains from changes in fair value | 2023 | 2022 |
| Financial liabilities held for trading | 668,817.31 | -612,332.19 |
| Including: Derivative financial liabilities | 668,817.31 | -612,332.19 |
| Total | -25,419,715.12 | -76,262,989.83 |
52. Credit impairment loss (”-” for loss)
| Item | 2023 | 2022 |
| Bad debts of accounts receivable | -17,085,116.32 | -2,978,050.82 |
| Bad debts of other receivables | 238,647.76 | -1,145,692.55 |
| Total | -16,846,468.56 | -4,123,743.37 |
53. Assets impairment loss (”-” for loss)
| Item | 2023 | 2022 |
| Decline in value of inventories | -311,800,059.09 | -120,646,933.39 |
| Impairment loss of fixed assets | -569,867.28 | -186,548.38 |
| Impairment loss of intangible assets | 0.00 | -3,207,819.01 |
| Impairment loss of construction in progress | 0.00 | -11,068,266.54 |
| Impairment loss of development costs | 0.00 | -7,518,369.12 |
| Total | -312,369,926.37 | -142,627,936.44 |
54. Gains from disposal of assets
| Item | 2023 | 2022 |
| Gain from disposal of fixed assets (“-” for Loss) | -169,901.01 | -705,357.30 |
| Total | -169,901.01 | -705,357.30 |
55. Non-operating income
| Item | 2023 | 2022 | Amount included in non-recurring gains and losses |
| Gains on destruction or retirement of non-current assets | 125,401.66 | 520,860.40 | 125,401.66 |
| Income from scraps | 2,131,053.05 | 2,478,956.98 | 2,131,053.05 |
| Compensation income | 589,186.01 | 542,762.41 | 589,186.01 |
| Waiver of payables | 2,618,232.49 | 2,671,703.10 | 2,618,232.49 |
| Others | 2,516,542.51 | 2,015,564.68 | 2,516,542.51 |
| Total | 7,980,415.72 | 8,229,847.57 | 7,980,415.72 |
56. Non-operating expenses
| Item | 2023 | 2022 | Amount included in non-recurring gains and losses |
| Donation expenses | 25,984,618.17 | 12,116,987.32 | 25,984,618.17 |
| Loss on retirement of non-current assets | 2,702,305.53 | 17,045,450.21 | 2,702,305.53 |
| Others | 20,303,864.40 | 2,898,248.53 | 20,303,864.40 |
| Total | 48,990,788.10 | 32,060,686.06 | 48,990,788.10 |
Joincare Pharmaceutical Group Annual Report 2023
57. Income tax expenses
(1) Details of income tax expenses
| Item | 2023 | 2022 |
| Current income tax | 640,259,675.23 | 489,730,614.81 |
| Deferred income tax | -25,723,917.47 | 72,066,128.24 |
| Total | 614,535,757.76 | 561,796,743.05 |
(2) Reconciliation between income tax expenses and accounting profits:
| Item | 2023 | 2022 |
| Profit before tax | 3,465,554,801.13 | 3,456,104,955.17 |
| Income tax expenses calculated at legal/applicable tax rate | 866,388,700.28 | 864,026,238.79 |
| Effect of different tax rates applicable to subsidiaries | -1,595,044.33 | 7,219,165.25 |
| Effect of tax reduction and exemption | -523,463,987.76 | -608,357,224.56 |
| Effect of non-deductible costs, expenses and losses | 22,028,670.72 | -1,550,467.76 |
| Effect of deductible tax losses for which no deferred tax assets were recognised in prior periods | -2,104,712.06 | -1,400,449.92 |
| Effect of deductible tax losses or deductible temporary differences for which no deferred tax asset was recognised in the current period | 222,732,931.76 | 237,204,163.65 |
| Others | 30,549,199.15 | 64,655,317.60 |
| Income tax expenses | 614,535,757.76 | 561,796,743.05 |
58. Notes to cash flows statement
(1) Other cash received relating to operating activities
| Item | 2023 | 2022 |
| Government grants | 219,203,190.38 | 239,196,300.96 |
| Interest income | 524,464,953.53 | 324,250,238.72 |
| Recovery of employee loans | 9,454,971.80 | 7,299,222.31 |
| Security deposits | 43,071,705.81 | 67,623,532.89 |
| Compensation received | 2,370,249.95 | 1,175,630.74 |
| Current accounts and others | 88,272,301.42 | 44,100,808.77 |
| Total | 886,837,372.89 | 683,645,734.39 |
(2) Other cash paid relating to operating activities
| Item | 2023 | 2022 |
| Office Expenses | 31,043,436.20 | 97,503,048.97 |
| Travel expenses | 54,229,198.42 | 30,372,654.60 |
| Business entertainment expenses | 81,720,679.62 | 69,811,587.72 |
| Freight expenses | 36,861,542.49 | 50,691,409.60 |
| Conference fees | 26,769,338.43 | 17,972,567.21 |
| Agency and consulting services fees | 40,368,390.25 | 35,039,742.74 |
| R&D expenses | 685,792,117.17 | 808,023,085.72 |
| Bank charges | 7,394,567.72 | 7,927,848.89 |
Joincare Pharmaceutical Group Annual Report 2023
| Item | 2023 | 2022 |
| Business promotion expenses | 3,824,876,120.39 | 4,634,065,689.94 |
| Other expenses paid and current accounts | 340,257,050.24 | 160,276,629.78 |
| Total | 5,129,312,440.93 | 5,911,684,265.17 |
(3) Cash received related to significant investment activities
| Item | 2023 | 2022 |
| Fixed deposits | 270,000,000.00 | 0.00 |
| Cash management | 191,536,624.91 | 0.00 |
| Capital reduction | 0.00 | 194,647,692.75 |
| Tianjin Tongrentang dividend | 112,640,000.00 | 111,980,000.00 |
| Total | 574,176,624.91 | 306,627,692.75 |
(4) Other cash received relating to investing activities
| Item | 2023 | 2022 |
| Fixed deposits | 347,290,000.00 | 0.00 |
| Security deposits | 0.00 | 7,405,431.82 |
| Compensation for demolition | 6,000,000.00 | 6,000,000.00 |
| Collection of treasury bonds and security deposits | 1,013,650.67 | 158,470.77 |
| Total | 354,303,650.67 | 13,563,902.59 |
(5) Cash paid relating to significant investing activities
| Item | 2023 | 2022 |
| Haibin Pharma Pingshang New Factory (深圳海滨坪山新厂) | 118,519,566.95 | 213,314,081.04 |
| Guangda New Factory Project (光大新厂项目) | 136,779,283.28 | 128,111,538.05 |
| V01 Project | 0.00 | 139,095,656.94 |
| Fixed deposits | 0.00 | 270,000,000.00 |
| Total | 255,298,850.23 | 750,521,276.03 |
(6) Other cash paid relating to investing activities
| Item | 2023 | 2022 |
| Fixed deposits | 500,000,000.00 | 1,084,392,104.38 |
| Security deposits | 1,382,411.40 | 5,755,128.00 |
| Foreign exchange forward contract losses | 29,274,143.05 | 30,021,080.39 |
| Others | 0.00 | 150.00 |
| Total | 530,656,554.45 | 1,120,168,462.77 |
(7) Other cash received relating to financing activities
| Item | 2023 | 2022 |
| Collection and advance payment of individual income tax | 0.00 | 347,182.11 |
| Discount of acceptance bills | 20,000,000.00 | 380,719,088.50 |
Joincare Pharmaceutical Group Annual Report 2023
| Total | 20,000,000.00 | 381,066,270.61 |
(8) Other cash paid relating to financing activities
| Item | 2023 | 2022 |
| Repurchase of shares | 821,537,016.03 | 780,551,259.85 |
| Discounted bills matured and redeemed | 400,719,088.50 | 0.00 |
| Rental payments | 39,867,739.36 | 32,925,995.59 |
| Collection and advance payment of individual income tax | 14,362.22 | 1,237,210.80 |
| GDRs issuance fees | 1,000,000.00 | 16,003,722.82 |
| Others | 624,000.00 | |
| Total | 1,263,138,206.11 | 831,342,189.06 |
(9) Changes in liabilities arising from financing activities
| Item | Beginning balance | Cash movement | Non-cash movement | Closing balance | |||
| Cash inflow | Cash outflow | Interest accrued | Fair value change | Others | |||
| Short-term loans | 2,126,050,615.06 | 2,696,000,000.00 | 2,770,048,974.14 | 24,326,923.40 | 0.00 | -169,217.10 | 2,076,159,347.22 |
| Long term loans | 3,274,505,524.52 | 1,597,570,084.01 | 1,164,800,796.93 | 111,477,070.12 | 0.00 | 0.00 | 3,818,751,881.72 |
| Lease liabilities | 42,898,265.41 | 0.00 | 34,878,856.92 | 2,796,820.91 | 0.00 | 26,692,260.58 | 37,508,489.98 |
| Total | 5,443,454,404.99 | 4,293,570,084.01 | 3,969,728,627.99 | 138,600,814.43 | 0.00 | 26,523,043.48 | 5,932,419,718.92 |
59. Supplement to cash flow statement
(1) Supplement to cash flow statement
| Supplement information | 2023 | 2022 |
| 1. Reconciliation of net profit to cash flow from operating activities: | ||
| Net profit | 2,851,019,043.37 | 2,894,308,212.12 |
| Add: Assets impairment loss | 312,369,926.37 | 142,627,936.44 |
| Credit impairment loss | 16,846,468.56 | 4,123,743.37 |
| Depreciation of fixed assets | 675,647,605.51 | 615,224,869.47 |
| Amortisation of right-of-use assets | 31,907,046.92 | 32,367,074.98 |
| Amortization of intangible assets | 346,538,742.13 | 190,110,160.68 |
| Long-term prepaid expenses amortization | 76,523,212.80 | 58,054,847.07 |
| Losses on disposal of fixed assets, intangible assets and other long-term assets (Gain as in “-”) | 169,901.01 | 705,357.30 |
| Loss on retirement of fixed assets (Gain as in “-”) | 2,576,903.87 | 16,524,589.81 |
| Losses on changes in fair value (Gain as in “-”) | 25,419,715.12 | 76,262,989.83 |
Joincare Pharmaceutical Group Annual Report 2023
| Supplement information | 2023 | 2022 |
| Financial expenses (Gain as in “-”) | 92,921,024.82 | 28,611,954.30 |
| Investment losses (Gain as in “-”) | -79,474,572.01 | -55,973,114.29 |
| Decrease in deferred tax assets (Increase as in “-”) | -33,180,181.29 | 20,541,235.89 |
| Increase in deferred tax liabilities (Decrease as in “-”) | 7,456,263.82 | 51,409,862.83 |
| Decrease in inventories (Increase as in “-”) | -415,385,285.01 | -604,732,283.55 |
| Decrease in operating receivables (Increase as in “-”) | 6,974,012,382.11 | 2,380,941,083.00 |
| Increase in operating payables (Decrease as in “-”) | -7,046,712,674.37 | -1,924,536,232.01 |
| Others | 90,254,086.00 | 51,132,852.05 |
| Net cash flows from operating activities | 3,928,909,609.73 | 3,977,705,139.29 |
| 2.Significant investment or finance activities not involving cash: | ||
| Conversion of debt into capital | 0.00 | 0.00 |
| Convertible bonds mature within one year | 0.00 | 0.00 |
| Right-of-use assets newly added in the current period | 26,614,546.23 | 0.00 |
| 3. Net increase / (decrease) in cash and cash equivalents: | ||
| Cash and bank balance as at end of year | 15,340,869,372.73 | 14,178,465,686.40 |
| Less: cash and bank balance at beginning of year | 14,178,465,686.40 | 11,697,518,141.18 |
| Add: cash equivalents at end of year | 0.00 | 0.00 |
| Less: cash equivalents at beginning of year | 0.00 | 0.00 |
| Net increase in cash and cash equivalents | 1,162,403,686.33 | 2,480,947,545.22 |
(2) Net cash paid for acquisition of subsidiaries during the year
| Item | Current year |
| Cash and cash equivalents paid in current year for business combination happened in current year | 22,500,000.00 |
| Including: Shanghai Zhongtuo Pharmaceutical Technology Co., Ltd. (上海中拓医药科技有限公司) | 22,500,000.00 |
| Less: Cash and cash equivalents held by subsidiary at acquisition date | 38,048.41 |
| Including: Shanghai Zhongtuo Pharmaceutical Technology Co., Ltd. (上海中拓医药科技有限公司) | 38,048.41 |
| Add: Cash and cash equivalents paid in current year for business combination happened in previous years | |
| Including: Shanghai Zhongtuo Pharmaceutical Technology Co., Ltd. (上海中拓医药科技有限公司) | |
| Net cash paid for acquisition of subsidiary | 22,461,951.59 |
(3) Net cash received from disposal of subsidiaries during the year
None
(4) Details of cash and cash equivalents
| Item | 2023 | 2022 |
| I. Cash | 15,340,869,372.73 | 14,178,465,686.40 |
Joincare Pharmaceutical Group Annual Report 2023
| Item | 2023 | 2022 |
| Including: Cash on hand | 355,538.62 | 231,883.95 |
| Cash at bank readily available for payment | 15,235,850,763.95 | 14,164,236,988.28 |
| Other monetary fund readily available for payment | 104,663,070.16 | 13,996,814.17 |
| II. Cash equivalents | 0.00 | 0.00 |
| Including: bonds investment mature within 3 months | 0.00 | 0.00 |
| III. Cash and cash equivalents as at closing balance | 15,340,869,372.73 | 14,178,465,686.40 |
Cash and cash equivalents do not include any cash and cash equivalents that are restricted in use.
(5) Monetary funds not classified as cash and cash equivalents
| Item | Closing balance | Closing balance of prior year | Reason for not classified as cash and cash equivalents |
| Security deposits for bank acceptance bills | 6,627,449.66 | 1,392,407.76 | Frozen |
| Accrued interest income | 44,391,492.44 | 98,630,016.80 | Accrued interest not yet received |
| Fixed deposits | 300,000,000.00 | 530,000,000.00 | Intended to be held until maturity |
| Total | 351,018,942.10 | 630,022,424.56 |
60. Items in foreign currencies
| Item | Balance in foreign currency at year end | Conversion rate | Equivalent RMB balance at year end |
| Cash and bank balances | |||
| Including: HKD | 1,004,532,223.21 | 0.90622 | 910,327,191.33 |
| Euro | 92,685.96 | 7.8592 | 728,437.51 |
| USD | 294,986,518.59 | 7.0827 | 2,089,301,015.24 |
| MOP | 6,263,135.03 | 0.8837 | 5,534,732.43 |
| JPY | 3,551,792.00 | 0.050213 | 178,346.13 |
| GBP | 1,690.10 | 9.0411 | 15,280.36 |
| MYR | 9,793.47 | 1.54154 | 15,097.03 |
| Accounts receivable | |||
| Including: USD | 19,537,428.76 | 7.0827 | 138,377,746.68 |
| MOP | 166,738.45 | 0.8837 | 147,346.77 |
| Other receivables | |||
| Including: USD | 7.0827 | ||
| HKD | 3,373,551.61 | 0.90622 | 3,057,179.94 |
| MOP | 179,548.00 | 0.8837 | 158,666.57 |
| Accounts payable | |||
| Including: USD | 370,452.19 | 7.0827 | 2,623,801.73 |
| Euro | 5,665.41 | 7.8592 | 44,525.59 |
| JPY | 420,856,761.37 | 0.050213 | 21,132,480.56 |
| Other payables | |||
| Including: HKD | 4,054,536.09 | 0.90622 | 3,674,301.69 |
| USD | 4,085,692.73 | 7.0827 | 28,937,735.90 |
Joincare Pharmaceutical Group Annual Report 2023
61. Leases
(1) As leasee
| Item | Current year |
| Short-term rental expenses | 7,030,089.32 |
(2) As lessor
Operating leases
①Rental income
| Item | Current year |
| Rental income | 12,613,941.94 |
② The total undiscounted lease payments to be received annually for the five years subsequent to thebalance sheet date, as well as the total undiscounted lease payments to be received for the remainingyears
| Subsequent to balance sheet date | Closing balance | Closing balance of prior year |
| First year | 8,399,755.50 | 9,221,839.88 |
| Second year | 4,141,314.40 | 4,469,018.03 |
| Third year | 939,324.00 | 2,135,386.60 |
| Fourth year | 252,000.00 | 394,179.00 |
| Fifth year | 252,000.00 | 252,000.00 |
| Thereafter | 1,554,000.00 | 1,806,000.00 |
| Total | 15,538,393.90 | 18,278,423.51 |
VI. Research and development expenditures
1. Research and development expenditures
| Item | Current year | Prior year | ||
| Expenses amount | Capitalised amount | Expenses amount | Capitalised amount | |
| Material costs | 292,431,042.37 | 27,267,774.25 | 290,480,597.96 | 14,545,786.50 |
| Staff salaries | 441,951,205.11 | 25,496,236.78 | 429,267,039.97 | 36,371,140.89 |
| Testing fees | 327,359,553.83 | 77,594,659.61 | 491,741,656.46 | 111,401,639.14 |
| Depreciation and amortisation | 417,142,207.50 | 7,197,468.44 | 274,454,884.02 | 4,515,100.25 |
| External purchase of research projects | 85,178,642.29 | 130,621,099.42 | 105,589,383.10 | 15,267,930.32 |
| Others | 97,695,329.80 | 6,336,666.95 | 150,554,518.43 | 21,061,744.06 |
| Total | 1,661,757,980.90 | 274,513,905.45 | 1,742,088,079.94 | 203,163,341.16 |
2. Development costs
| Item | Beginning balance | Increase | Decrease | Closing balance | ||
| Internal development costs | Other increase | Recognized as intangible assets | Recognized in profit or loss | |||
| Chemical pharmaceuticals (化学制剂) | 136,857,815.87 | 140,106,001.71 | 130,189,959.33 | 64,646,428.39 | 425,538.64 | 342,081,809.88 |
Joincare Pharmaceutical Group Annual Report 2023
| Biologics | 238,227,636.57 | 0.00 | 0.00 | 145,802,628.07 | 0.00 | 92,425,008.50 |
| APIs and others | 53,199,431.73 | 4,217,944.41 | 0.00 | 8,429,707.35 | 0.00 | 48,987,668.79 |
| Total | 428,284,884.17 | 144,323,946.12 | 130,189,959.33 | 218,878,763.81 | 425,538.64 | 483,494,487.17 |
Significant capitalized research and development projects
| Item | Progress | Estimated completion time | Expected method of generating economic benefits | Commencement time of capitalization | Specific basis for capitalization begin |
| Project JP1366 | Submitted clinical trial application and received notification of acceptance from CDE | Marketing | Clinical test | Obtained clinical approval and evaluated by the company | Project JP1366 |
3. External purchase of research projects
JP1366 has completed phase III clinical trials in South Korea and submitted a listing application. Itwas purchased during the period to undergo clinical trials managed by the Company. After evaluationby the Company, it is determined that the future economic benefits of this project are likely to accrueto the Company. Therefore, the purchase price is recognized as development expenses.
VII. Interest in other entities
1. Interests in subsidiaries
(1) Group structure
| Name of subsidiary | Type of subsidiaries | Legal person category | Main operating location | Place of registration | Business nature | Registered capital | Shareholding % | Acquisition method | |
| Direct | Indirect | ||||||||
| Topsino Industries Limited (天诚实业有限公司) (Topsino Industries) | Wholly-owned subsidiary | Limited company | Hong Kong | Hong Kong | Commercial | HKD896,933,973.00 | 100 | Set-up by investment | |
| Shenzhen Taitai Genomics Inc. Co., Ltd. (深圳太太基因工程有限公司) (Taitai Genomics) | Wholly-owned subsidiary | Limited company | Shenzhen | Shenzhen | Industrial | RMB50,000,000.00 | 75 | 25 | Set-up by investment |
| Shenzhen Taitai Pharmaceutical Industry Co., Ltd. (深圳太太药业有限公司) (Taitai Pharmaceutical) ) | Wholly-owned subsidiary | Limited company | Shenzhen | Shenzhen | Industrial | RMB100,000,000.00 | 100 | Set-up by investment | |
| Health Investment Holdings Ltd. (Health Investment) (健康投资公司) | Wholly-owned subsidiary | Limited company | The British Virgin Islands | The British Virgin Islands | Investment | USD50,000.00 | 100 | Set-up by investment | |
| Joincare Pharmaceutical Group Industry Co.,Ltd.(BVI) * | Wholly-owned subsidiary | Limited company | The British Virgin Islands | The British Virgin Islands | Investment | USD 50,000.00 | 100 | Set-up by investment | |
| Joincare Pharmaceutical Group Industry Co.,Ltd.(CAYMAN ISLANDS) | Wholly-owned subsidiary | Limited company | Cayman Islands | Cayman Islands | Investment | USD 50,000.00 | 100 | Set-up by investment | |
| Xinxiang Haibin Pharmaceutical Co., Ltd.(Xinxiang Haibin) (新乡海滨药业有限公司(新乡海滨) ) | Wholly-owned subsidiary | Limited company | Henan Xinxiang | Henan Xinxiang | Industrial | RMB170,000,000.00 | 100 | Set-up by investment | |
| Shenzhen Fenglei Electric Power Investment Co., Ltd. (深圳市风雷电力投资有限公司) (Fenglei Electric Power) | Wholly-owned subsidiary | Limited company | Shenzhen | Shenzhen | Investment | RMB100,000,000.00 | 100 | Set-up by investment | |
| Jiaozuo Joincare Bio Technological Co., Ltd.(焦作健康元生物制品有限公司) (Jiaozuo Joincare) ) | Wholly-owned subsidiary | Limited company | Henan Jiaozuo | Henan Jiaozuo | Industrial | RMB700,000,000.00 | 75 | 25 | Set-up by investment |
Joincare Pharmaceutical Group Annual Report 2023
| Name of subsidiary | Type of subsidiaries | Legal person category | Main operating location | Place of registration | Business nature | Registered capital | Shareholding % | Acquisition method | |
| Direct | Indirect | ||||||||
| Shanghai Frontier Health Pharmaceutical Technology Co., Ltd. (上海方予健康医药科技有限公司)(Shanghai Frontier) | Subsidiaries | Limited company | Shanghai | Shanghai | Industrial | RMB50,000,000.00 | 65 | Set-up by investment | |
| Shenzhen Taitai Biological Technology Co., Ltd. (深圳太太生物科技有限公司)(Taitai Biological) ) | Wholly-owned subsidiary | Limited company | Shenzhen | Shenzhen | Industrial | RMB5,000,000.00 | 100 | Set-up by investment | |
| Guangzhou Joincare Respiratory Medicine Engineering Technology Co., Ltd.(Joincare Respiratory) (广州健康元呼吸药物工程技术有限公司(健康元呼吸) ) | Subsidiaries | Limited company | Guangzhou | Guangzhou | Industrial | RMB10,000,000.00 | 26 | Set-up by investment | |
| Guangdong Taitai Forenstic Test Institute (广东太太法医物证司法鉴定所(鉴定所) ) | Wholly-owned subsidiary | Other organization | Shenzhen | Shenzhen | Commercial | RMB0.00 | 100 | Set-up by investment | |
| Joincare Haibin Pharmaceutical Co., Ltd. (健康元海滨药业有限公司(Joincare Haibin) ) | Wholly-owned subsidiary | Limited company | Shenzhen | Shenzhen | Industrial | RMB500,000,000.00 | 25 | 75 | Set-up by investment |
| Shenzhen Haibin Pharmaceutical Co., Ltd. (深圳市海滨制药有限公司) ) (Haibin Pharma) | Wholly-owned subsidiary | Limited company | Shenzhen | Shenzhen | Industrial | RMB700,000,000.00 | 97.87 | 2.13 | Business combination not under common control |
| Joincare Daily-Use & Health Care Co., Ltd. (健康元日用保健品有限公司) (Joincare Daily-Use) | Wholly-owned subsidiary | Limited company | Shenzhen | Shenzhen | Commercial | RMB25,000,000.00 | 80 | 20 | Business combination not under common control |
| Health Pharmaceuticals (China) Limited (健康药业(中国) 有限公司) (Health China) | Wholly-owned subsidiary | Limited company | Zhuhai | Zhuhai | Industrial | HKD73,170,000.00 | 100 | Business combination not under common control | |
| Livzon Pharmaceutical Group Inc. (丽珠医药集团股份有限公司) (Livzon Group) *Note 1 | Subsidiaries | Joint-stock company | Zhuhai | Zhuhai | Industrial | RMB923,938,139.00 | 23.96 | 21.38 | Business combination not under common control |
| Hong Kong Health Pharmaceutical Industry Company Limited (香港健康药业有限公司) | Wholly-owned subsidiary | Limited company | Hong Kong | Hong Kong | Investment | HKD10,000.00 | 100 | Business combination not under common control | |
| Health Pharmaceutical Industry Company Limited (健康药业有限公司) | Wholly-owned subsidiary | Limited company | Hong Kong | Hong Kong | Investment | HKD10,000.00 | 100 | Business combination not under common control | |
| Shenzhen Hiyeah Industry Co., Ltd (深圳市喜悦实业有限公司) (Shenzhen Hiyeah) | Wholly-owned subsidiary | Limited company | Shenzhen | Shenzhen | Commercial | RMB178,000,000.00 | 97.58 | 2.42 | Business combination not under common control |
| Guangzhou Hiyeah Industry Co., Ltd. (广州市喜悦实业有限公司) | Wholly-owned subsidiary | Limited company | Guangzhou | Guangzhou | Industrial | RMB3,000,000.00 | 100 | Business combination not under common control | |
| Zhongshan Renhe Health Products Co., Ltd. (中山市仁和保健品有限公司) | Wholly-owned subsidiary | Limited company | Zhongshan | Zhongshan | Industrial | RMB500,000.00 | 100 | Business combination not under common control | |
| Joincare (Guangdong) Special medicine Food Co., Ltd. (健康元(广东) 特医食品有限公司) (Joincare Special medicine Food) | Wholly-owned subsidiary | Limited company | Shaoguan | Shaoguan | Industrial | RMB20,000,000.00 | 100 | Set-up by investment | |
| Henan Joincare Biomedical Research Institute Co., Ltd. (河南省健康元生物医药研究院有限公司) | Subsidiaries | Limited company | Jiaozuo | Jiaozuo | Industrial | RMB100,000,000.0 | 70.36 | Set-up by investment | |
| Jiaozuo Jianfeng Biotechnology Co., Ltd. (焦作健风生物科技有限公司) | Subsidiaries | Limited company | Jiaozuo | Jiaozuo | Industrial | RMB50,000,000.0 | 66.5 | Set-up by investment | |
*Note 1: Livzon Group (丽珠集团) controls the subsidiaries in which this company holds equitystakes
(1) On 30 March 2021, the Company’s subsidiary Shanghai Frontier Health Medical Technology Co.,Ltd.( 上海方予健康医药科技有限公司) and Livzon Group (丽珠集团) established Shanghai LiyuBiopharmaceutical Technology Co., Ltd (上海丽予生物医药技术有限责任公司). Livzon Groupholds 55% of the shares, while Shanghai Frontier Health Medical Technology Co., Ltd. holds 45%.
Joincare Pharmaceutical Group Annual Report 2023
(2) The Company and Livzon Group jointly established Li Jian (Guangdong) Animal Health Co., Ltd.(丽健（广东）动物保健有限公司) on 1 February 2023. Livzon Group holds a 51% of the shares,while the Company holds 49%.
(3) The Company and Joincare Pharmaceutical Group Co., Ltd. (健康元药业集团股份有限公司)jointly established Wuhan Kangli Health Investment Management Co., Ltd. (武汉康丽健康投资管理有限公司) on 8 February 2023. Livzon Group holds a 60% of the shares, while the Company holds40%.
(4) Zhuhai Livzon Biotechnology Co., Ltd. (珠海市丽珠生物医药科技有限公司) is a subsidiarywithin the scope of Livzon Group's consolidation. It was originally 100% indirectly held by LivzonGroup. Due to the restructuring of the shareholding structure of the subsidiary, Livzon Group holds51% of its shares, the Company holds 33.07% of the shares, YF Pharmab Limited holds 8.43% of theshares, and Hainan Lishengjuyuan Investment Partnership (Limited Partnership) (海南丽生聚源投资合伙企业(有限合伙)) holds 7.50%.Subsidiaries not included in the scope of consolidation in the current period:
| Name of subsidiary | Registered capital | Actual investment | Interest held |
| Guangzhou Hiyeah Industry Co., Ltd. (广州市喜悦实业有限公司) | 3,000,000.00 | 3,000,000.00 | 100% |
| Zhongshan Renhe Health Products Co., Ltd. (中山市仁和保健品有限公司) | 500,000.00 | 500,000.00 | 100% |
Guangzhou Hiyeah Industry Co., Ltd. (广州市喜悦实业有限公司), Zhongshan Renhe HealthProducts Co., Ltd. (中山市仁和保健品有限公司) are wholly-owned subsidiaries of Shenzhen Hiyeah.They entered the liquidation process in 2008, and has been out of business for many years, andcompleted the tax cancellation procedures, so they were not included in the scope of the consolidated.
(2) Significant non-wholly owned subsidiaries
| Name of subsidiary | Shareholding of minority interest | Profit or loss attributable to minority interest | Dividend paid to minority interest | Balance of minority interests at period end |
| Livzon Group | 54.6638% | 1,072,909,287.03 | 817,351,995.09 | 7,676,161,547.29 |
(3) Principal financial information of significant non-wholly owned subsidiaries
| Name of subsidiary | Closing balance | |||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
| Livzon Group | 17,266,174,718.28 | 7,778,652,409.47 | 25,044,827,127.75 | 8,087,137,474.74 | 2,190,986,656.97 | 10,278,124,131.71 |
Continued (1) :
| Name of subsidiary | Beginning balance | |||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
| Livzon Group | 16,987,297,040.38 | 7,880,872,377.25 | 24,868,169,417.63 | 7,396,664,920.29 | 2,535,220,197.95 | 9,931,885,118.24 |
Continued (2) :
| Name of subsidiary | Current year | Prior year | ||||||
| Operating income | Net profit | Total comprehensive income | Cash flows from operating activities | Operating income | Net profit | Total comprehensive income | Cash flows from operating activities | |
| Livzon Group | 12,430,038,325.82 | 1,897,601,012.24 | 1,860,486,123.97 | 3,248,934,191.80 | 12,629,579,047.66 | 1,955,577,382.63 | 2,084,884,890.22 | 2,772,671,295.03 |
(4) Changes in share of owners' equity in subsidiaries and still controls the subsidiariesNone
Joincare Pharmaceutical Group Annual Report 2023
2. Business combination not under common control
The details of the business combination not under common control involving Livzon Group, asubsidiary of the Company, for the current period are as follows:
(1) Business combination not under common control during the year
| Acquiree | Acquisition date of equity investment | Cost of equity investment | Share-holding acquired % | Acquisition method | Acquisition date | Basis of acquisition date determination | Acquiree’s income from acquisition date to year end | Acquiree’s net profit from acquisition date to year end | Acquiree’s cash flows from acquisition date to year end |
| Shanghai Zhongtuo Pharmaceutical Technology Co., Ltd. (上海中拓医药科技有限公司) | 2023.3.6 | 25,000,000.00 | 100 | Purchase | 2023.3.6 | Completed the asset transfer process | 671,698.11 | -2,155,445.77 | 34,974.17 |
(2) Acquisition cost and goodwill
| Item | Shanghai Zhongtuo Pharmaceutical Technology Co., Ltd. (上海中拓医药科技有限公司) (Shanghai Zhongtuo) |
| Acquisition cost: | |
| Cash | 25,000,000.00 |
| Total acquisition cost | 25,000,000.00 |
| Less: share of the fair value of the identifiable net assets acquired | 3,129,194.91 |
| Goodwill | 21,870,805.09 |
(3) Identifiable assets and liabilities of the acquiree at the acquisition date
| Item | Shanghai Zhongtuo (上海中拓) | |
| Fair value | Carrying amount | |
| Assets: | ||
| Current assets | 3,133,248.41 | 3,133,248.41 |
| Non-current assets | 1,454,117.80 | 1,454,117.80 |
| Liabilities: | ||
| Current liabilities | 1,458,171.30 | 1,458,171.30 |
| Net assets | 3,129,194.91 | 3,129,194.91 |
| Less: Minority interests | ||
| Net assets acquired | 3,129,194.91 | 3,129,194.91 |
The assets purchased from Shanghai Zhongtuo mainly include accounts receivable and fixed assets,while liabilities mainly include accounts payable, employee salaries payable, and other payables. It isanticipated that the fair value of these assets and liabilities will have minimal differences from theircarrying amount. Therefore, the fair value of identifiable assets and liabilities is determined based ontheir carrying amount.
3. Changes in the scope of consolidation due to other reason
On 1 February 2023, the Company and Livzon Group jointly established Li Jian (Guangdong) AnimalHealth Co., Ltd. (丽健(广东) 动物保健有限公司). The registered capital is RMB200 million, withLivzon Group contributing RMB102 million, accounting for 51% of the registered capital, and theCompany contributing RMB98 million, accounting for 49% of the registered capital.On 8 February 2023, the Company and Livzon Group jointly established Wuhan Kangli HealthInvestment Management Co., Ltd. (武汉康丽健康投资管理有限公司). The registered capital isRMB100 million, with Livzon Group contributing RMB60 million, accounting for 60% of theregistered capital, and the Company contributing RMB40 million, accounting for 40% of the
Joincare Pharmaceutical Group Annual Report 2023
registered capital.On 13 April 2023, Livzon Group's subsidiary Zhuhai Livzon Chinese Medicine Modern TechnologyCo., Ltd. (珠海市丽珠中药现代化科技有限公司) and Livzon Group Limin PharmaceuticalManufacturing Factory (丽珠集团利民制药厂) jointly established Macau Livzon Chinese MedicineModern Technology Co., Ltd. (澳门丽珠中药现代化科技有限公司). The registered capital is MOP100,000, with Zhuhai Livzon Chinese Medicine Modern Technology Co., Ltd. holding 70% of theregistered capital and Livzon Group Limin Pharmaceutical Manufacturing Factory holding 30% ofthe registered capital.On 5 July 2023, Livzon Group's subsidiary Zhuhai Livzon Chinese Medicine Modern Technology Co.,Ltd. (珠海市丽珠中药现代化科技有限公司) and Guangxi Youtian Pharmaceutical Co., Ltd. (广西有田药业有限公司) jointly established Linfen Lizhu Qiaoyuan Medicinal Materials Co., Ltd. (临汾丽珠翘源药材有限公司). The registered capital is RMB5 million, with Zhuhai Livzon ChineseMedicine Modern Technology Co., Ltd. holding 51% of the registered capital and Guangxi YoutianPharmaceutical Co., Ltd. holding 49% of the registered capital.On 15 March 2023, Livzon Group's subsidiary Gongshan Lizhu Yaoyuan Technology Co., Ltd. (贡山丽珠药源科技有限公司) was deregistered.
4. Interests in joint arrangement or associates
(1) Significant associates
| Name of joint ventures or associates | Principal place of business | Place of registration | Business nature | Shareholding (%) | Accounting treatment of investment | |
| Direct | Indirect | |||||
| Associates | ||||||
| Tianjin Tongrentang Group Co., Ltd. (天津同仁堂集团股份有限公司) | Tianjin | Tianjin | Pharmaceutical manufacturing | 0.00 | 40 | Equity method |
(2) Main financial information of significant associates
Tianjin Tongrentang Group Co., Ltd. (天津同仁堂集团股份有限公司)
| Item | Tianjin Tongrentang Group Co., Ltd. (天津同仁堂集团股份有限公司) |
| 2023.12.31 | |
| Owners’ equity attributable to parent company | 517,866,873.04 |
| Share of net assets calculated based on shareholding ratio | 207,146,749.21 |
| Adjustments | |
| Including: Goodwill | 498,457,683.68 |
| Carrying value of equity investment in associates | 705,604,432.89 |
| Fair value of publicly quoted equity investments |
Continued:
| Item | Tianjin Tongrentang Group Co., Ltd. (天津同仁堂集团股份有限公司) |
| Current year | |
| Operating income | 1,118,218,327.43 |
| Dividends received by the company from associates in the current period | 112,640,000.00 |
Joincare Pharmaceutical Group Annual Report 2023
The Company calculates the share of assets of associate based on the shareholding for the amountattributable to the parent company in the consolidated financial statements. The amounts in theconsolidated financial statements of associates take into account the fair value of identifiable net assetsand liabilities of associates at the time of acquisition and the impact of unified accounting policies.
(3) Summary of financial information of other insignificant associates
| Item | Closing balance/ Current year | Beginning balance/ Prior year |
| Associates: | ||
| Total carrying amount of investment | 705,431,921.06 | 407,763,817.99 |
| The following amount are calculated on the basis of shareholding ratio | ||
| Net profit | -15,921,948.35 | -11,360,486.63 |
| Other comprehensive income | -176,677.35 | 527,718.52 |
| Total comprehensive income | -16,098,625.70 | -10,832,768.11 |
(4) Significant limitations on the ability of joint ventures or associates to transfer funds to theCompanyNone.VIII. Government grants
1. Government grants recorded as deferred income and measured at gross amount methodsubsequently
| Projects with grants | Category | Beginning balance | Additions in the year | Transfer to profit or loss | Other movement | Closing balance | Item presented in income statement | Related to assets/ Related to income |
| Laboratory project of respiratory system inhalation preparation engineering laboratory project (呼吸系统吸入制剂工程实验室项目) | Financial allocation | 1,885,450.00 | 0.00 | 1,616,100.00 | 0.00 | 269,350.00 | Other income | Related to assets |
| Construction of a recycling production base for carbapenem products (碳青霉烯类系列产品循环化生产基地建设) | Financial allocation | 3,625,000.00 | 0.00 | 0.00 | 0.00 | 3,625,000.00 | Other income | Related to assets |
| Construction of an integrated production line for fully automatic blister-type dry powder inhalant micro-filling and winding (全自动泡罩型干粉吸入剂微量灌封与卷绕一体化生产线建设) | Financial allocation | 685,666.62 | 0.00 | 242,000.04 | 0.00 | 443,666.58 | Other income | Related to assets |
| Shenzhen Sponge City Construction Fund Reward (深圳市海绵城市建设资金奖励) | Financial allocation | 760,947.20 | 0.00 | 44,761.56 | 0.00 | 716,185.64 | Other income | Related to assets |
| Large-scale development subsidy for new inhalation preparations (新型吸入制剂规模化发展补助) | Financial allocation | 1,680,000.00 | 0.00 | 0.00 | 0.00 | 1,680,000.00 | Other income | Related to assets |
| Central financial subsidy funds for park recycling transformation | Financial allocation | 0.00 | 2,323,496.00 | 2,131,544.40 | 0.00 | 191,951.60 | Other income | Related to assets |
| Zhimu total sapogenin project (知母总皂甙元项目) | Financial allocation | 8,900,000.00 | 0.00 | 0.00 | 0.00 | 8,900,000.00 | Other income | Related to assets |
Joincare Pharmaceutical Group Annual Report 2023
| Glucocorticoid inhalation suspension project (糖皮质混悬液项目) | Financial allocation | 7,200,000.00 | 0.00 | 0.00 | 0.00 | 7,200,000.00 | Other income | Related to assets |
| Financial allocation for small molecule peptide projects (财政拨款用于小分子肽项目) | Financial allocation | 239,999.76 | 0.00 | 80,000.04 | 0.00 | 159,999.72 | Other income | Related to assets |
| Leulu total sterone project (漏芦总甾酮项目) | Financial allocation | 2,500,000.00 | 0.00 | 0.00 | 0.00 | 2,500,000.00 | Other income | Related to assets |
| R&D of active substances with bone and joint repair and health care functions(具有 (骨关节修复与保健) 功能的活性物质研发) | Financial allocation | 837,943.68 | 0.00 | 119,706.24 | 0.00 | 718,237.44 | Other income | Related to assets |
| Key technology research and development of budesonide nebulized inhalation solution (布地奈德雾化吸入溶液关键技术研发) | Financial allocation | 2,158,333.29 | 0.00 | 350,000.04 | 0.00 | 1,808,333.25 | Other income | Related to assets |
| Project Subsidy of Marine mollusk kinetic protein (海洋软体动物动能蛋白项目补助) | Financial allocation | 4,278,000.00 | 0.00 | 884,400.00 | 0.00 | 3,393,600.00 | Other income | Related to assets |
| Development of key technologies for new inhaled preparations to treat idiopathic pulmonary fibrosis (治疗特发性肺纤维化的新型吸入制剂关键技术开发) | Financial allocation | 0.00 | 1,000,000.00 | 0.00 | 0.00 | 1,000,000.00 | Other income | Related to assets |
| Development of key technologies for new inhaled preparations to treat idiopathic pulmonary fibrosis | Financial allocation | 4,800,000.00 | 0.00 | 2,800,000.00 | 0.00 | 2,000,000.00 | Other income | Related to assets |
| Research and development of respiratory system drug and clinical research technology service platform project talent funding (呼吸系统药物研发和临床研究技术服务平台项目人才经费) | Financial allocation | 1,550,000.00 | 0.00 | 1,550,000.00 | 0.00 | 0.00 | Other income | Related to assets |
| Science and technology help the economy key special projects (科技助力经济重点专项) | Financial allocation | 500,000.00 | 0.00 | 500,000.00 | 0.00 | 0.00 | Other income | Related to assets |
| City Service Development Special (市服务发展专项) | Financial allocation | 800,000.00 | 0.00 | 0.00 | 0.00 | 800,000.00 | Other income | Related to assets |
| Patent funding (专利资助) | Financial allocation | 200,000.00 | 0.00 | 0.00 | 0.00 | 200,000.00 | Other income | Related to assets |
| 2020 Shanghai Professional Technology Platform Capacity Enhancement Project (2020年度上海市专业技术平台能力提升项目立项) | Financial allocation | 1,000,000.00 | 0.00 | 1,000,000.00 | 0.00 | 0.00 | Other income | Related to assets |
| high-growth small and micro innovation enterprises (高成长小微科创企业) | Financial allocation | 400,000.00 | 0.00 | 0.00 | 0.00 | 400,000.00 | Other income | Related to assets |
| Technology giant (科技小巨人) | Financial allocation | 1,200,000.00 | 0.00 | 1,200,000.00 | 0.00 | 0.00 | Other income | Related to assets |
| First application for corporate postdoctoral project research funding (首次申请企业博士后项目研究资助) | Financial allocation | 120,000.00 | 0.00 | 0.00 | 0.00 | 120,000.00 | Other income | Related to assets |
| Service industry specialization | Financial allocation | 0.00 | 2,000,000.00 | 0.00 | 0.00 | 2,000,000.00 | Other income | Related to income |
| Innovation Voucher (Jingjin Filter Press Equipment) (创新券(景津压滤设备) ) | Financial allocation | 153,332.75 | 0.00 | 80,000.04 | 0.00 | 73,332.71 | Other income | Related to assets |
| Return of land holding tax (土地使用税返还) | Financial allocation | 3,460,631.62 | 0.00 | 107,029.69 | 0.00 | 3,353,601.93 | Other income | Related to assets |
Joincare Pharmaceutical Group Annual Report 2023
| Xinxiang High-tech Project Fund Support (新乡高新技术项目资金扶持) | Financial allocation | 1,804,713.72 | 0.00 | 56,397.36 | 0.00 | 1,748,316.36 | Other income | Related to assets |
| New inhalation drug formulation creation project (新型吸入给药制剂创制项目) | Financial allocation | 20,908,374.88 | 0.00 | 1,840,212.60 | 0.00 | 19,068,162.28 | Other income | Related to assets |
| Subsidies for the development of pharmaceutical APIs industry (医药原料药行业发展支持资金补助) | Financial allocation | 39,522,162.26 | 0.00 | 1,219,192.68 | 0.00 | 38,302,969.58 | Other income | Related to assets |
| Atmospheric environmental quality improvement subsidy funds (大气环境质量提升补贴) 资金) | Financial allocation | 157,915.02 | 0.00 | 21,533.88 | 0.00 | 136,381.14 | Other income | Related to assets |
| R&D and industrialization of innovative Ilaprazole Series (艾普拉唑系列创新药物研发及产业化) | Financial allocation | 11,168,166.21 | 0.00 | 4,910,000.04 | 0.00 | 6,258,166.17 | Other income | Related to assets |
| Strategic emerging industries in 2014 (sustained release microspheres) (2014年战略性新兴产业 (缓释微球) ) | Financial allocation | 16,700,000.00 | 0.00 | 0.00 | 0.00 | 16,700,000.00 | Other income | Related to assets |
| Fund for industrialization of prolonged-action microsphere preparation (长效微球制剂的产业化款项) | Financial allocation | 12,550,000.00 | 0.00 | 0.00 | 0.00 | 12,550,000.00 | Other income | Related to assets |
| Construction project for industrialization of prolonged-action microsphere preparation (phase I) (长效微球制剂产业化建设项目 (一期工程) ) | Financial allocation | 18,314,195.60 | 0.00 | 2,405,309.88 | 0.00 | 15,908,885.72 | Other income | Related to assets |
| Pilot-scale enlargement and industrialization of prolonged-action injection microsphere products (长效注射微球产品的中试放大和产业化) | Financial allocation | 0.00 | 80,000.00 | 0.00 | 0.00 | 80,000.00 | Other income | Related to assets |
| Project subsidy from the Ministry of Industry and Information Technology (工业和信息化部项目补助款) | Financial allocation | 2,400,000.00 | 0.00 | 0.00 | 0.00 | 2,400,000.00 | Other income | Related to assets |
| Project subsidy from the Ministry of Industry and Information Technology (工业和信息化部项目补助款) | Financial allocation | 1,135,750.00 | 0.00 | 231,000.00 | 0.00 | 904,750.00 | Other income | Related to assets |
| Construction of Drug Conformity Evaluation Research Center Platform (药物一致性评价研究中心平台建设) | Financial allocation | 880,000.18 | 0.00 | 159,999.96 | 0.00 | 720,000.22 | Other income | Related to assets |
| Special funds for foreign trade and economic development and port construction | Financial allocation | 0.00 | 32,232.48 | 0.00 | 0.00 | 32,232.48 | Other income | Related to assets |
| R&D and Commercialisation of Mouse Nerve Growth Factor for Injection (注射用鼠神经生长因子研发及产业化) | Financial allocation | 29,485,857.65 | 0.00 | 10,560,089.28 | 0.00 | 18,925,768.37 | Other income | Related to assets |
| Demonstration project on the application of solar photovoltaic architecture (太阳能光电建筑应用示范项目) | Financial allocation | 1,353,499.35 | 0.00 | 1,102,000.08 | 0.00 | 251,499.27 | Other income | Related to assets |
| Subsidy for the Tender of Technology Upgrade Project for PVC Soft Bag Supported by Provincial Finance | Financial allocation | 2,299,785.26 | 0.00 | 380,365.80 | 0.00 | 1,919,419.46 | Other income | Related to assets |
Joincare Pharmaceutical Group Annual Report 2023
| Departments (省财政支持技改招标项目补助金PVC软袋) | ||||||||
| Technical transformation project of Shenqi Fuzheng Injection with flexible bag (软袋(参芪扶正注射液) 技改项目) | Financial allocation | 11,852,941.22 | 0.00 | 3,352,941.00 | 0.00 | 8,500,000.22 | Other income | Related to assets |
| Provision for technology transformation funds and subsequent grants (技术改造资金拨款及事后补奖) | Financial allocation | 4,329,992.36 | 0.00 | 1,129,563.36 | 0.00 | 3,200,429.00 | Other income | Related to assets |
| Provision for technology transformation funds and subsequent grants (技术改造资金拨款及事后补奖) | Financial allocation | 5,576,302.33 | 292,300.88 | 1,783,368.48 | 0.00 | 4,085,234.73 | Other income | Related to assets |
| Electricity distribution transformer performance enhancement for energy-saving and emission reduction projects (节能减排项目)配电变压器能效提升) | Financial allocation | 332,000.00 | 0.00 | 48,000.00 | 0.00 | 284,000.00 | Other income | Related to assets |
| R&D and industrialization team of chemical drug liquid preparation (化药液体制剂研发与产业化团队) | Financial allocation | 1,710,833.60 | 390,000.00 | 252,114.84 | 0.00 | 1,848,718.76 | Other income | Related to assets |
| Innovation capacity building of technology center (antibody laboratory) (技术中心创新能力建设 (抗体药物实验室) ) | Financial allocation | 4,288,140.60 | 0.00 | 445,755.36 | 0.00 | 3,842,385.24 | Other income | Related to assets |
| Innovation capacity building of technology center (antibody laboratory) (技术中心创新能力建设 (抗体药物实验室) ) | Financial allocation | 159,691.94 | 0.00 | 75,330.36 | 0.00 | 84,361.58 | Other income | Related to income |
| Achievement transfer of blood screening (BCI) nucleic acid detection testing (血液筛查 (BCI) 核酸检测试剂成果转化) | Financial allocation | 3,329,659.71 | 0.00 | 631,627.60 | 0.00 | 2,698,032.11 | Other income | Related to assets |
| Technological upgrading and transformation projects of workshop for acarbose (APIs for α-glucosidase inhibitor) (α-葡萄糖苷酶抑制剂类原料药阿卡波糖生产车间工艺升级技术改造项目) | Financial allocation | 357,142.96 | 0.00 | 107,142.84 | 0.00 | 250,000.12 | Other income | Related to assets |
| Scientific technology award and subsidy for technological innovative project (科学技术奖及科技创新项目资助) | Financial allocation | 2,200,000.00 | 0.00 | 1,600,000.00 | 600,000.00 | 0.00 | Other income | Related to income |
| Zhuhai industrial enterprise “cloud and platform” service coupons supporting funds (珠海市工业企业 “云上平台”服务券支持资金) | Financial allocation | 63,891.00 | 0.00 | 25,540.85 | 0.00 | 38,350.15 | Other income | Related to income |
| Commissioner workstation (特派员工作站) | Financial allocation | 25,000.00 | 0.00 | 25,000.00 | 0.00 | 0.00 | Other income | Related to assets |
| Industrial revitalisation supporting funds (产业振兴扶持资金) | Financial allocation | 1,287,500.01 | 0.00 | 1,008,000.01 | 0.00 | 279,500.00 | Other income | Related to assets |
| Government grant for industrial transformation (工业转型政府扶持资金) | Financial allocation | 108,333.83 | 0.00 | 108,333.83 | 0.00 | 0.00 | Other income | Related to assets |
| New industrialization development grant (新型工业化发展奖金) | Financial allocation | 5,035,866.34 | 560,000.00 | 349,999.67 | 0.00 | 5,245,866.67 | Other income | Related to assets |
| Policy fund for leading industrial enterprises loan | Financial allocation | 166,666.53 | 0.00 | 166,666.53 | 0.00 | 0.00 | Other income | Related to assets |
Joincare Pharmaceutical Group Annual Report 2023
| Interests (工业龙头企业贷款贴息政策资金) | ||||||||
| Supporting funds for five advantageous industrial clusters and one high-tech industry (五优一新扶持资金) | Financial allocation | 200,000.24 | 0.00 | 99,999.92 | 0.00 | 100,000.32 | Other income | Related to assets |
| Capital project for innovation and entrepreneurship team funding program (创新创业团队资助计划资金项目) | Financial allocation | 11,750,000.00 | 0.00 | 75,000.00 | 0.00 | 11,675,000.00 | Other income | Related to assets |
| 2020 Zhuhai City Innovation and Entrepreneurship Team (Nanocrystalline) (2020年度珠海市创新创业团队 (纳米晶) ) | Financial allocation | 5,000,000.00 | 0.00 | 13,333.33 | 0.00 | 4,986,666.67 | Other income | Related to assets |
| Key projects of industrial core and key technologies of Zhuhai (Ryanodex) (珠海市产业核心和关键技术攻关方向项目 (丹曲林钠) ) | Financial allocation | 3,000,000.00 | 0.00 | 3,000,000.00 | 0.00 | 0.00 | Other income | Related to assets |
| Data-driven industrial chain collaboration platform demonstration project (数据驱动的产业链协同平台示范项目) | Financial allocation | 2,920,000.00 | 0.00 | 730,000.00 | 0.00 | 2,190,000.00 | Other income | Related to assets |
| Fund for key projects of industrial core and key technologies of Zhuhai (2nd batch) (珠海市产业核心和关键技术攻关方向项目资金 (第二批) ) | Financial allocation | 2,000,000.00 | 0.00 | 0.00 | 0.00 | 2,000,000.00 | Other income | Related to assets |
| Innovative drug of Ilaprazole sodium for injection (创新药注射用艾普拉唑钠针剂) | Financial allocation | 2,280,000.00 | 0.00 | 240,000.00 | 0.00 | 2,040,000.00 | Other income | Related to assets |
| Technological transformation projects of new Cefuroxime (新型头孢粉针剂技术改造项目) | Financial allocation | 1,533,100.00 | 0.00 | 0.00 | 0.00 | 1,533,100.00 | Other income | Related to assets |
| Advanced Pharmaceutical Manufacturing Internet Benchmarking Project (先进药品制造互联网标杆项目) | Financial allocation | 585,000.00 | 0.00 | 90,000.00 | 0.00 | 495,000.00 | Other income | Related to assets |
| Cleaner Production Audit Project (清洁生产审核项目) | Financial allocation | 170,000.12 | 0.00 | 9,999.96 | 0.00 | 160,000.16 | Other income | Related to assets |
| Green factory (绿色工厂) | Financial allocation | 1,001,666.75 | 0.00 | 129,999.96 | 0.00 | 871,666.79 | Other income | Related to assets |
| HCG PROJECT CONSTRUCTION (HCG项目建设) | Financial allocation | 2,992,185.88 | 0.00 | 395,649.96 | 0.00 | 2,596,535.92 | Other income | Related to assets |
| Sewage treatment system upgrade project (污水处理系统升级改造项目) | Financial allocation | 56,209.88 | 0.00 | 8,030.04 | 0.00 | 48,179.84 | Other income | Related to assets |
| R&D and industrialization of Recombinant Human Chorionic Gonadotropin for Injection (注射用重组人绒促性素研发及产业化) | Financial allocation | 987,500.00 | 0.00 | 150,000.00 | 0.00 | 837,500.00 | Other income | Related to assets |
| Development and Industrialization of Cyclosporin Self-emulsifying Soft Capsules with High Technology Barriers (高技术屛障的环孢素自乳化软胶囊制剂的开发及产业化研究) | Financial allocation | 786,000.00 | 0.00 | 64,000.00 | 80,000.00 | 642,000.00 | Other income | Related to assets |
| Guangdong Provincial Key Laboratory of Characteristic Drug R&D Enterprises (广东 | Financial allocation | 941,666.69 | 300,000.00 | 119,999.96 | 0.00 | 1,121,666.73 | Other income | Related to assets |
Joincare Pharmaceutical Group Annual Report 2023
| 省特色药物研发企业重点实验室) | ||||||||
| Subsidies for online monitoring equipment and installations of coalfired boilers (燃煤锅炉在线监控设备装置补助) ) 资金) | Financial allocation | 60,000.00 | 0.00 | 22,500.00 | 0.00 | 37,500.00 | Other income | Related to assets |
| Funds for joint R&D and industrialization of integrated platform for molecular diagnostics (集成一体化分子诊断平台的合作研发及产业化) ) 资金) | Financial allocation | 53,916.31 | 0.00 | 14,687.72 | 0.00 | 39,228.59 | Other income | Related to assets |
| Project supporting fund for the first batch of special funds for scientific and technological innovation in 2019 (2019年度第一批科技创新专项资金立项配套资助) | Financial allocation | 600,000.00 | 0.00 | 0.00 | 0.00 | 600,000.00 | Other income | Related to assets |
| Provincial industrial innovation (provincial enterprise technology center) project in 2019 (2019年度省产业创新 (省级企业技术中心) 项目) | Financial allocation | 79,229.73 | 0.00 | 20,415.63 | 0.00 | 58,814.10 | Other income | Related to assets |
| Pre-appropriation of special grants for industrialization of diagnostic reagents for COVID-19 (新型冠状病毒检测试剂产业化项目补助金预拨) | Financial allocation | 4,089,721.57 | 0.00 | 546,475.25 | 0.00 | 3,543,246.32 | Other income | Related to assets |
| P06 Industrialization Project ( P06产业化项目) | Financial allocation | 0.00 | 2,812,400.00 | 23,436.67 | 0.00 | 2,788,963.33 | Other income | Related to assets |
| Xiangzhou District equipment purchase subsidy supporting funds (Special funds for epidemic prevention and control) (香洲区采购设备补贴扶持资金 (疫情防控专项资金) | Financial allocation | 9,150.21 | 0.00 | 2,179.92 | 0.00 | 6,970.29 | Other income | Related to assets |
| Zhuhai innovation and enterprising team and high-level talent enterprising project Phase I funds (珠海市创新创业团队和高层次人才创业项目首期资金) | Financial allocation | 12,000,000.00 | 8,000,000.00 | 0.00 | 0.00 | 20,000,000.00 | Other income | Related to assets |
| Overall relocation and deployment expansion project (整体搬迁调迁扩建项目) | Financial allocation | 50,000,000.00 | 30,000,000.00 | 2,345,325.00 | 0.00 | 77,654,675.00 | Other income | Related to assets |
| Environmental protection bureau RTO project special funds (环保局RTO项目资金) | Financial allocation | 159,999.92 | 0.00 | 20,000.04 | 0.00 | 139,999.88 | Other income | Related to assets |
| Structure-efficiency optimization of marine microorganisms and evaluation of antitumor activity (海洋微生物构效优化与抗肿瘤活性评价) | Financial allocation | 99,209.17 | 0.00 | 99,209.17 | 0.00 | 0.00 | Other income | Related to income |
| Fish maw (golden owl) R&D and demonstration of key technologies for the development and utilization of marine traditional Chinese medicine resources (鱼鳔(黄金鮸) 海洋中药资源开发与利用关键技术研发与示范) | Financial allocation | 750,000.00 | 250,000.00 | 0.00 | 0.00 | 1,000,000.00 | Other income | Related to income |
| 2022 Special funds for the reconstruction of the | Financial allocation | 27,965,416.69 | 9,828,500.00 | 37,793,916.69 | 0.00 | 0.00 | Other income | Related to assets |
Joincare Pharmaceutical Group Annual Report 2023
2. Government grants recognized in income for the year by gross method
| Projects with grants | Category | Amount recognised in profit or loss in prior year | Amount recognised in profit or loss in the year | Presented in income statement | Related to assets/ Related to income |
| Social security subsidy (社保补助) | Financial allocation | 226,308.66 | 191,422.91 | Other income | Related to income |
| Job stabilization subsidy (稳岗补贴) | Financial allocation | 1,075,941.53 | 472,229.26 | Other income | Related to income |
| Electricity subsidy (用电补助) | Financial allocation | 570,533.30 | 0.00 | Other income | Related to income |
| Maternity benefits (生育津贴) | Financial allocation | 404,108.83 | 973,836.55 | Other income | Related to income |
| Export credit insurance subsidy (出口信保补贴) | Financial allocation | 3,582,595.80 | 1,885,386.46 | Other income | Related to income |
| New inhalation drug formulation creation project (新型吸入给药制剂创制项目) | Financial allocation | 53,637,825.12 | 1,840,212.60 | Other income | Related to assets |
| Budesonide project acceptance transferred to other income (布地奈德项目验收转其他收益) | Financial allocation | 350,000.04 | 350,000.04 | Other income | Related to assets |
| Special support for market access of drugs and medical devices (药品和医疗器械市场准入专项扶持) | Financial allocation | 0.00 | 736,044.78 | Other income | Related to income |
| Enterprise R&D investment support plan project (企业研发投入支持计划项目) | Financial allocation | 0.00 | 665,900.00 | Other income | Related to income |
| Specialized, Special and New Enterprise Incentive Program (专精特新企业奖励项目) | Financial allocation | 1,200,000.00 | 1,100,000.00 | Other income | Related to income |
| Incentive projects for industrial enterprises to expand production and increase efficiency (工业企业扩产增效奖励项目) | Financial allocation | 1,650,000.00 | 3,160,000.00 | Other income | Related to income |
industrial base and the high-quality development of themanufacturing industry fromthe central finance (2022年中央财政产业基础再造和制造业高质量发展专项资金)
| industrial base and the high-quality development of the manufacturing industry from the central finance (2022年中央财政产业基础再造和制造业高质量发展专项资金) | ||||||||||
| Recombinant novel coronavirus fusion protein vaccine (V-01) large-scale production capacity building project (重组新型冠状病毒融合蛋白疫苗（V-01）规模化生产能力建设项目) | Financial allocation | 0.00 | 22,921,500.00 | 1,671,359.41 | 0.00 | 21,250,140.59 | Other income | Related to assets | ||
| National Science and Technology Major Special Project Subsidy Fund LZM009 (国家科技重大专项项目后补助资金 LZM009) | Financial allocation | 2,382,806.91 | 0.00 | 381,599.12 | 0.00 | 2,001,207.79 | Other income | Related to assets | ||
| Xiangzhou District actively responds to the impact of the epidemic and maintains stability, innovation drives technology industry project (香洲区积极应对和疫情影响保稳创新驱动科技工业分项) | Financial allocation | 1,644,800.00 | 0.00 | 0.00 | 0.00 | 1,644,800.00 | Other income | Related to assets | ||
| Guangdong-Hong Kong-Macao Science and Technology Cooperation Fund (粤港澳科技合作资金) | 0.00 | 300,000.00 | 0.00 | 0.00 | 300,000.00 | |||||
| Total | 384,537,267.55 | 81,090,429.36 | 94,768,146.09 | 680,000.00 | 370,179,550.82 | |||||
Joincare Pharmaceutical Group Annual Report 2023
| Projects with grants | Category | Amount recognised in profit or loss in prior year | Amount recognised in profit or loss in the year | Presented in income statement | Related to assets/ Related to income |
| High-tech enterprise cultivation (高新技术企业培育) | Financial allocation | 1,000,000.00 | 320,000.00 | Other income | Related to income |
| Labor subsidies during the Spring Festival (春节期间用工补贴) | Financial allocation | 0.00 | 1,144,600.00 | Other income | Related to income |
| Central financial subsidy funds for park recycling transformation (园区循环化改造中央财政补助资金) | Financial allocation | 0.00 | 2,131,544.40 | Other income | Related to assets |
| Construction of an integrated production line for fully automatic blister-type dry powder inhalant micro-filling and winding (全自动泡罩型干粉吸入剂微量灌封与卷绕一体化生产线建设) | Financial allocation | 242,000.04 | 242,000.04 | Other income | Related to assets |
| Technological Innovation Project Support Plan-Manufacturing Individual Champion Award Project (技术创新项目扶持计划-制造业单项冠军奖励项目) | Financial allocation | 0.00 | 2,000,000.00 | Other income | Related to income |
| Laboratory project of respiratory system inhalation preparation engineering laboratory project (呼吸系统吸入制剂工程实验室项目) | Financial allocation | 1,616,100.00 | 1,616,100.00 | Other income | Related to assets |
| Funds allocated by the Ministry of Finance (财政局拨付补助资金) | Financial allocation | 1,219,192.68 | 1,219,192.68 | Other income | Related to assets |
| Marine projects (海洋项目) | Financial allocation | 19,562,000.00 | 884,400.00 | Other income | Related to assets |
| Nanshan District Special Support Plan to Promote High-Quality Development of Life Science and Technology Related Industries (南山区促进生命科技相关产业高质量发展专项支持计划) | Financial allocation | 0.00 | 1,000,000.00 | Other income | Related to income |
| National Major Special Project Lipid Injection Research Funds (国家重大专项项目注射脂质研究经费) | Financial allocation | 500,000.00 | 0.00 | Other income | Related to assets |
| Rewards for meeting industrial added value growth standards (工业增加值增速达标奖励) | Financial allocation | 2,091,724.88 | 0.00 | Other income | Related to income |
| Funding for Industrial Carbon Peak Work Pilot Demonstration Project (工业碳达峰工作试点示范项目资助款) | Financial allocation | 700,000.00 | 150,000.00 | Other income | Related to income |
| Freeze-dried raw material production line project funding (冻干原料生产线项目资助经费) | Financial allocation | 2,045,300.00 | 0.00 | Other income | Related to income |
| Encourage industrial enterprises to expand production and increase efficiency project funds (鼓励工业企业扩产增效项目经费) | Financial allocation | 620,000.00 | 0.00 | Other income | Related to income |
| Yantian District Industrial Development Fund Energy Management System Certification Funding (盐田区产业发发展资金能源管理体系认证资助经费) | Financial allocation | 14,000.00 | 1,574,275.12 | Other income | Related to income |
| Science and technology help the economy key special projects (科技助力经济重点专项) | Financial allocation | 0.00 | 550,000.00 | Other income | Related to assets |
| Shanghai municipal and Pudong New District Enterprise R&D institutions (上海市级及浦东新区级企业研发机构) | Financial allocation | 0.00 | 200,000.00 | Other income | Related to income |
| Shanghai Technology Giants in 2022 (2022年上海市科技小巨人) | Financial allocation | 0.00 | 1,200,000.00 | Other income | Related to assets |
Joincare Pharmaceutical Group Annual Report 2023
| Projects with grants | Category | Amount recognised in profit or loss in prior year | Amount recognised in profit or loss in the year | Presented in income statement | Related to assets/ Related to income |
| 2020 Shanghai Professional Technology Platform Capacity Enhancement Project (2020年度上海市专业技术平台能力提升项目立项) | Financial allocation | 0.00 | 1,000,000.00 | Other income | Related to assets |
| Support growth technology companies (支持成长型科技企业) | Financial allocation | 0.00 | 650,000.00 | Other income | Related to income |
| Shanghai Zhangjiang Special Fund (上海张江专项资金) | Financial allocation | 1,000,000.00 | 0.00 | Other income | Related to income |
| Recognition and reward of high-tech enterprises (高企认定奖励) | Financial allocation | 400,000.00 | 1,700,000.00 | Other income | Related to income |
| 2016 Guangju Talent Entrepreneurship Leading Team Acceptance Payment (2016年广聚英才创业领军团队验收款) | Financial allocation | 0.00 | 3,500,000.00 | Other income | Related to income |
| Research and development of respiratory system drug and clinical research technology service platform project talent funding (呼吸系统药物研发和临床研究技术服务平台项目人才经费) | Financial allocation | 0.00 | 1,500,000.00 | Other income | Related to assets |
| Development of key technologies for new inhaled preparations to treat idiopathic pulmonary fibrosis (开发区财政局拨款创业领军人才项目：药品吸入制剂共性共建技术的研究) | Financial allocation | 0.00 | 2,800,000.00 | Other income | Related to assets |
| Guangzhou Municipal Science and Technology Bureau/2016 Talented Entrepreneurship Leading Team (广州市科学技术局/2016年广聚英才创业领军团队) | Financial allocation | 0.00 | 1,200,000.00 | Other income | Related to income |
| Venue subsidy for leading entrepreneurial teams in Guangzhou (广州市创业领军团队场地补贴) | Financial allocation | 500,000.00 | 0.00 | Other income | Related to income |
| Central government guides local science and technology development funds in 2022 (2022年中央引导地方科技发展资金) | Financial allocation | 400,000.00 | 0.00 | Other income | Related to income |
| Funds to support business development (扶持企业发展资金) | Financial allocation | 3,543,000.00 | 1,200,000.00 | Other income | Related to income |
| Grant Funding for Science and Technology Projects (科技项目补助资金) | Financial allocation | 1,500,000.00 | 0.00 | Other income | Related to income |
| Government grants | Financial allocation | 1,400,000.00 | 0.00 | Other income | Related to income |
| 2022 Shenzhen High-tech Zone Special Fund Municipal Funding (2022深圳高新区专项资金市级资助款) | Financial allocation | 750,000.00 | 0.00 | Other income | Related to income |
| In the first half of 2022, subsidies for industrial assistance projects to help enterprises bail out (2022年上半年工业助企纾困项目补助) | Financial allocation | 383,300.00 | 0.00 | Other income | Related to income |
| 2022 Second quarter Incentive funds for full production of designated industrial enterprises (2022年第二季度规上工业企业满负荷生产奖励资金) | Financial allocation | 200,000.00 | 200,000.00 | Other income | Related to income |
| High-tech Zone Finance Bureau Special funds for corporate R&D financial subsidies in 2021 (高新区财政局2021年企业研发财政补助专项资金) | Financial allocation | 320,000.00 | 280,000.00 | Other income | Related to income |
| High-tech Zone Finance Bureau 2022 Central Air Pollution Prevention and Control Fund (高新区财政局2022年中央大气污染防治资金) | Financial allocation | 750,000.00 | 1,250,000.00 | Other income | Related to income |
Joincare Pharmaceutical Group Annual Report 2023
| Projects with grants | Category | Amount recognised in profit or loss in prior year | Amount recognised in profit or loss in the year | Presented in income statement | Related to assets/ Related to income |
| 2022 Industry Fund Funding (2022产业基金资金) | Financial allocation | 0.00 | 1,600,000.00 | Other income | Related to income |
| Government subsidies for special funds for scientific and technological innovation-Shenzhen Pingshan District Science and Technology Innovation Bureau (科技创新专项资金政府补助-深圳市坪山区科技创新局) | Financial allocation | 0.00 | 863,994.00 | Other income | Related to income |
| 2023 Economic Development Special Funding Project (2023年经济发展专项资金资助项目) | Financial allocation | 0.00 | 2,422,500.00 | Other income | Related to income |
| 2022 Shenzhen High-tech Zone Development Special Plan Technology Enterprise Cultivation Project Subsidy (2022深圳高新区发展专项计划科技企业培育项目补助) | Financial allocation | 500,000.00 | 250,000.00 | Other income | Related to income |
| Subsidy for the Pingshan District Funding Project of the Central Guidance for Local Science and Technology Development (中央引导地方科技发展专项坪山区资助项目补助) | Financial allocation | 300,000.00 | 0.00 | Other income | Related to income |
| R&D subsidy (研究开发费补助) | Financial allocation | 1,200,440.00 | 852,400.00 | Other income | Related to income |
| Research and development funds for new drug for Class I Treatment of Necrosis Factor in Human Tumour from Human Source (I类治疗用人源化抗人肿瘤坏死因子α单克隆抗体新药的研制资金) | Financial allocation | 5,924,000.00 | 0.00 | Other income | Related to income |
| Government Subsidy for Long-acting Microspheres Major New Drug Creation (长效微球重大新药创制政府补助) | Financial allocation | 3,155,309.88 | 2,480,309.88 | Other income | Related to assets |
| R&D and industrialization of innovative Ilaprazole Series (艾普拉唑系列创新药物研发及产业化) | Financial allocation | 18,720,800.04 | 4,910,000.04 | Other income | Related to assets |
| Innovative drug of Ilaprazole sodium for injection (创新药注射用艾普拉唑钠针剂) | Financial allocation | 120,000.00 | 240,000.00 | Other income | Related to assets |
| Construction of Drug Conformity Evaluation Research Center Platform (药物一致性评价研究中心平台建设) | Financial allocation | 159,999.96 | 159,999.96 | Other income | Related to assets |
| Conformity Evaluation Research of Quality of Varieties such as Livzon Dele (丽珠得乐等品种质量一致性评价研究) | Financial allocation | 231,000.00 | 231,000.00 | Other income | Related to assets |
| HCG PROJECT CONSTRUCTION (HCG项目建设) | Financial allocation | 395,649.96 | 395,649.96 | Other income | Related to assets |
| Fiscal Subsidy and Operating Subsidy (财政补贴及经营运营补贴) | Financial allocation | 59,063,950.86 | 48,788,737.48 | Other income | Related to income |
| R&D and Commercialisation of Mouse Nerve Growth Factor for Injection (注射用鼠神经生长因子研发及产业化) | Financial allocation | 10,560,089.28 | 10,560,089.28 | Other income | Related to assets |
| Import discount and supporting funds (进口贴息及配套资金) | Financial allocation | 500,000.00 | 0.00 | Other income | Related to income |
| Special funds for foreign trade and economic development (外经贸发展专项资金) | Financial allocation | 1,809,479.00 | 2,688,891.30 | Other income | Related to income |
| Subsidy for the Tender of Technology Upgrade Project for PVC Soft Bag Supported by Provincial Finance Departments (省财政支持技改招标项目补助金PVC软袋) | Financial allocation | 403,699.30 | 380,365.80 | Other income | Related to assets |
Joincare Pharmaceutical Group Annual Report 2023
| Projects with grants | Category | Amount recognised in profit or loss in prior year | Amount recognised in profit or loss in the year | Presented in income statement | Related to assets/ Related to income |
| Technical transformation project of Shenqi Fuzheng Injection with flexible bag (软袋(参芪扶正注射液) 技改项目) | Financial allocation | 3,823,529.40 | 3,352,941.00 | Other income | Related to assets |
| Demonstration project on the application of solar photovoltaic architecture (太阳能光电建筑应用示范项目) | Financial allocation | 1,102,000.08 | 1,102,000.08 | Other income | Related to assets |
Subsidies for high and new technologyenterprises and high and new technologyproducts (高新技术企业及高新技术产品项目补贴)
| Financial allocation | 250,000.00 | 800,000.00 | Other income | Related to income | |
| Grants to high-growth technology companies from Dazhangjiang project A04 (大张江项目A04对高增长技术企业资助款) | Financial allocation | 1,500,000.00 | 0.00 | Other income | Related to income |
| Small and medium enterprise market development project funds (中小企业开拓市场项目资金) | Financial allocation | 90,000.00 | 2,000,000.00 | Other income | Related to income |
| Provision for technology transformation funds and subsequent grants (技术改造资金拨款及事后补奖) | Financial allocation | 2,300,000.00 | 2,672,400.00 | Other income | Related to income |
| Provision for technology transformation funds and subsequent grants (技术改造资金拨款及事后补奖) | Financial allocation | 2,543,679.56 | 2,515,113.36 | Other income | Related to assets |
| Technology transformation of recycling system of Acarbose project (阿卡波糖糖回收系统技术改造项目) | Financial allocation | 397,818.48 | 397,818.48 | Other income | Related to assets |
| Scientific technology award and subsidy for technological innovative project (科学技术奖及科技创新项目资助) | Financial allocation | 2,663,400.00 | 3,025,300.57 | Other income | Related to income |
| Scientific technology award and subsidy for technological innovative project (科学技术奖及科技创新项目资助) | Financial allocation | 0.00 | 3,000,000.00 | Other income | Related to assets |
| Patent (Intellectual Property) Support Fund (专利(知识产权) 资助资金) | Financial allocation | 548,500.00 | 1,156,001.57 | Other income | Related to income |
| Reward Fund for Industry Growth and Production Expansion (工业保值增长及增产奖励) | Financial allocation | 667,700.00 | 450,000.00 | Other income | Related to income |
| Industrial revitalisation supporting funds (产业振兴扶持资金) | Financial allocation | 1,158,000.00 | 1,008,000.00 | Other income | Related to assets |
| Industrial supporting funds (产业扶持资金) | Financial allocation | 944,100.00 | 537,181.59 | Other income | Related to income |
| Supporting funds for five advantageous industrial clusters and one high-tech industry (五优一新扶持资金) | Financial allocation | 99,999.96 | 362,499.81 | Other income | Related to assets |
| Employment Assurance and Re-employment and Attraction to Graduates of Tertiary Academic Institutions Subsidy (企业稳岗及再就业和吸纳高校毕业生补贴款) | Financial allocation | 5,949,048.90 | 1,327,871.54 | Other income | Related to income |
| Enterprise Technology Center Innovation Capacity Development (Antibody Laboratory) (企业技术中心创新能力建设 (抗体药物试验室) ) | Financial allocation | 514,338.20 | 445,755.36 | Other income | Related to assets |
| Enterprise Technology Center Innovation Capacity Development (Antibody Laboratory) (企业技术中心创新能力建设 (抗体药物试验室) ) | Financial allocation | 6,747.52 | 75,330.36 | Other income | Related to income |
Joincare Pharmaceutical Group Annual Report 2023
| Projects with grants | Category | Amount recognised in profit or loss in prior year | Amount recognised in profit or loss in the year | Presented in income statement | Related to assets/ Related to income |
| Supporting subsidy for “Talents Plan” and subsidy for talents introduction and cultivation ( “人才计划”配套补贴及引才育才补贴) | Financial allocation | 583,774.23 | 726,000.00 | Other income | Related to income |
| Integrating Informatization and Industrialization Rewards (两化融合奖励) | Financial allocation | 500,000.00 | 0.00 | Other income | Related to income |
| Incentive funds for expansion of export scale (扩大出口规模奖励基金) | Financial allocation | 456,300.00 | 103,939.00 | Other income | Related to income |
| Special funds for key leading enterprises in the 13th Five-Year Plan (2019) (十三五重点领军企业专项资金 (2019年) | Financial allocation | 14,133,300.00 | 8,501,100.00 | Other income | Related to income |
| Subsidies for work-based training (以工代训补贴) | Financial allocation | 395,000.00 | 135,100.00 | Other income | Related to income |
| Subsidies for insurance fees (保险费用补贴) | Financial allocation | 609,243.30 | 38,100.00 | Other income | Related to income |
| Special Funds for Promoting High-quality Economic Development (促进经济高质量发展专项资金) | Financial allocation | 5,741,886.91 | 37,814,332.31 | Other income | Related to assets |
| Special Funds for Promoting High-quality Economic Development (促进经济高质量发展专项资金) | Financial allocation | 11,578,756.00 | 14,383,162.43 | Other income | Related to income |
| Achievement transfer of blood screening BCI nucleic acid detection testing (血液筛查BCI核酸检测试剂成果转化) | Financial allocation | 631,622.73 | 631,627.60 | Other income | Related to assets |
| COVID-19 emergency technology special emergency fund and special grants for industrialization (新冠应急科技攻关专项款及产业化项目补助金) | Financial allocation | 26,694.08 | 2,217,834.66 | Other income | Related to assets |
| Hengqin Guangdong-Macao Deep Cooperation Zone Factory Rental Subsidy (横琴粤澳深度合作区厂房租金补贴) | Financial allocation | 690,024.00 | 0.00 | Other income | Related to income |
| Zhuhai Investment Promotion Award (珠海市招商引资奖) | Financial allocation | 600,000.00 | 0.00 | Other income | Related to income |
| National Science and Technology Major Special Project Subsidy Fund LZM009 (国家科技重大专项项目后补助资金 LZM009) | Financial allocation | 2,362,093.09 | 381,599.12 | Other income | Related to assets |
| Data-driven industrial chain collaboration platform demonstration project (数据驱动的产业链协同平台示范项目) | Financial allocation | 730,000.00 | 730,000.00 | Other income | Related to assets |
| Several Measures for Payment Enterprises to Overcome Difficulties in Response to the Novel Coronavirus Pneumonia Epidemic-Financial Support Project Funds (应对新型冠状病毒肺炎疫情支付企业共渡难关的若干措施-金融支持项目资金) | Financial allocation | 381,000.00 | 0.00 | Other income | Related to income |
| Project funds for promoting the development of the biomedical industry (促进生物医药产业发展用途项目资金) | Financial allocation | 7,665,180.00 | 17,885,420.00 | Other income | Related to income |
| Application of artificial intelligence in triptorelin long-acting microsphere preparation (人工智能在曲普瑞林长效微球制剂中的应用) | Financial allocation | 800,000.00 | -479,813.48 | Other income | Related to income |
| Overall relocation and deployment expansion project (整体搬迁调迁扩建项目) | Financial allocation | 0.00 | 2,345,325.00 | Other income | Related to assets |
| Others | Financial allocation | 2,267,046.58 | 1,972,354.25 | Other income | Related to assets |
Joincare Pharmaceutical Group Annual Report 2023
| Projects with grants | Category | Amount recognised in profit or loss in prior year | Amount recognised in profit or loss in the year | Presented in income statement | Related to assets/ Related to income |
| Others | Financial allocation | 5,633,800.15 | 3,733,029.96 | Other income | Related to income |
| Total | 286,842,932.33 | 233,058,407.11 |
The above government subsidies mainly come from various government departments at the provincialand municipal levels where the Company and its subsidiaries operate. These subsidies are provided bydepartments such as the Development and Reform Commission, Finance Bureau, Commerce Bureau,Science and Technology Bureau, Industry and Information Technology Bureau, Human Resources andSocial Security Bureau, and other relevant government departments. They are intended to supportprojects related to enterprise operation, research and development, technological transformation,technological innovation, export credit insurance, epidemic emergency response, and job stability.
(1) Government grants offsetting related costs using the net method
None.
(2) Government grants refunded in this year
| Item | Amount | Reason |
| Scientific technology award and subsidy for technological innovative project (科学技术奖及科技创新项目资助) ——扬帆计划项目 | 600,000.00 | Project concluded |
IX. Risks Management of Financial InstrumentsThe major financial instruments of the Company include cash, notes receivable, accounts receivable,other receivables, non-current assets due within one year, other current assets, financial assets held fortrading, other equity instrument investments, notes payable, accounts payable, other payables, short-term borrowings, financial liabilities held for trading, non-current liabilities due within one year, long-term borrowings and long-term payables. The details of these financial instruments are disclosed inthe respective notes. The financial risk of these financial instruments and financial managementpolicies used by the Company to minimize the risk are disclosed as below. The management of theCompany manages and monitors the exposure of these risks to ensure the above risks are controlledin the limited range.
1. Management objectives and policies of risks
The operation activities of the Company are subject to various financial risks: market risks (mainlyincluding foreign exchange risks and interest rate risks), credit risks and liquidity risks. The Companyformulates an overall risk management plan with respect to the unforeseeability of the financial marketin order to minimise the potential adverse impacts on the financial performance of the Company.
(1) Foreign exchange risks
The Company conducts its operation primarily in China. Substantially all of the transactions weredenominated and settled in Renminbi. However, the Company still has certain imports and exportsbusinesses regarding APIs and diagnostic reagents that are settled in U.S. dollar, Euro and JapaneseYen. The Company’s businesses outside China (mainly in Hong Kong, India, Europe) are settled inHong Kong dollars, U.S. dollar and Euro. In addition, the Company will have foreign currency loansaccording to the operating needs. In respect of the above, the Company still exposes to certain foreignexchange risks. Taking into account the foreign exchange risks acceptable by the Company, theCompany adopted Derivative instruments to control foreign exchange risk. However, as to the foreignexchange risk in loans, the Company shall closely monitor the trend of the exchange rate of Renminbi,
Joincare Pharmaceutical Group Annual Report 2023
and timely adjust the extent of borrowings, so as to minimise its risks.Financial assets and liabilitiesin foreign currencies held by the Company expressed in Renminbi are stated below:
①As of 31 December 2023
Unit: RMB 1,000
| Item | HKD | USD | EUR | JPY | GBP | MOP | MYR |
| Financial assets in foreign currency - | |||||||
| Cash and bank balances | 910,327.19 | 2,089,301.02 | 728.44 | 178.35 | 15.28 | 5,534.73 | 15.10 |
| Financial assets held for trading | 64,572.80 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Accounts receivable | 0.00 | 138,377.75 | 0.00 | 0.00 | 0.00 | 147.35 | 0.00 |
| Other receivables | 3,057.18 | 0.00 | 0.00 | 0.00 | 0.00 | 158.67 | 0.00 |
| Other equity instruments investment | 345,535.96 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| Other equity instruments investment | 345,535.96 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Subtotal: | 1,669,029.09 | 2,227,678.76 | 728.44 | 178.35 | 15.28 | 5,840.75 | 15.10 |
| Financial liabilities in foreign currency - | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Accounts payable | 0.00 | 2,623.80 | 44.53 | 21,132.48 | 0.00 | 0.00 | 0.00 |
| Other payables | 3,674.30 | 28,937.74 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Subtotal: | 3,674.30 | 31,561.54 | 44.53 | 21,132.48 | 0.00 | 0.00 | 0.00 |
②As of 31 December 2022
Unit: RMB 1,000
| Item | HKD | USD | EUR | JPY | GBP | MOP | CHF |
| Financial assets in foreign currency - | |||||||
| Cash and bank balances | 689,008.76 | 1,795,183.72 | 702.84 | 18,052.98 | 16.29 | 4,272.78 | 0.00 |
| Financial assets held for trading | 87,193.75 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Accounts receivable | 0.00 | 498,180.41 | 0.00 | 0.00 | 0.00 | 1,097.96 | 0.00 |
| Other receivables | 2,849.00 | 0.15 | 0.00 | 0.00 | 0.00 | 504.53 | 0.00 |
| Other current assets | 0.00 | 92,815.74 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Other equity instruments investment | 524,464.51 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Subtotal: | 1,303,516.02 | 2,386,180.02 | 702.84 | 18,052.98 | 16.29 | 5,875.27 | 0.00 |
| Financial liabilities in foreign currency - | |||||||
| Short-term loans | 0.00 | 13,464.86 | 0.00 | 0.00 | 0.00 | 0.00 | |
| Accounts payable | 0.00 | 3,569.18 | 42.05 | 14,627.29 | 0.00 | 0.00 | 141.89 |
| Other payables | 2,583.45 | 27,967.54 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Subtotal: | 2,583.45 | 45,001.58 | 42.05 | 14,627.29 | 0.00 | 0.00 | 141.89 |
As at 31 December 2023, in respect of the Company’s financial assets and liabilities denominated inforeign currencies such as Hong Kong dollar, U.S. dollar, Euro, Japanese Yen and Macau dollar, shouldthe value of RMB appreciate or depreciate by 5% against foreign currencies such as Hong Kong dollar,U.S. dollar, Euro, Japanese Yen and Macau dollar, and other factors remain unchanged, the Companywould be subject to an increase or decrease in profit of approximately RMB192.35 million (31December 2022: approximately RMB182.60 million).
Joincare Pharmaceutical Group Annual Report 2023
(2) Interest rate risk
The Company’s exposures to interest rate risk are mainly arising from interest-bearing liabilities suchas bank borrowings. The interest rates are affected by the macro monetary policies of China, hencethe Company will face the risks arising from fluctuation of interest rates in the future.The finance department of the head office of the Company continues to monitor the level of interestrate of the Company. The rise in the interest rate will increase the cost of additional interest-bearingliabilities and the interest expenses of the Company’s outstanding interest-bearing liabilities of whichthe interests are calculated at floating rates, and impose material adverse impact on the financial resultsof the Company. The management will make timely adjustment based on the updated marketconditions. The directors of the Company consider that the future changes in the interest rate will haveno material adverse impact on the operating results of the Company.
(3) Credit risk
Credit risk is primarily attributable to cash and cash equivalents, restricted funds, accounts receivablesand other receivables. In respect of cash at banks, they were placed at several banks with goodreputations, for which the credit risk was limited. In respect of receivables, the Company shall assessthe credit limit granted to customers for credit purpose. Moreover, as the customer base of theCompany is large, the credit risk on accounts receivables is not concentrated. In terms of billsreceivable settlement, external payments are settled with bills receivable with priority and most of theremaining bills are high-quality bills with maturity within three months; thus none expected majorcredit risk exits. In addition, the provision made on the impairment of accounts receivables and otherreceivables are adequate to manage the credit risk.Among the accounts receivables of the Company, the accounts receivable of the top five customersaccounted for 8.39% (31 December 2022: 11.98%); among the other receivables of the Company, theother receivables of the top five customers accounted for 40.48% (31 December 2022: 46.23%).
(4) Liquidity risk
The Company adopts prudent liquidity risk management for the sufficient supply of monetary fundsand liquidity. It secures readily available credit loans from banks mainly by maintaining adequatemonetary funds and banking facilities. Apart from indirect financing from banks, a number offinancing channels were available, such as direct financing by inter-bank market including short-termfinancing bills and medium-term financing bills, corporate bonds etc. These instruments caneffectively reduce the effects of scale of financing and the macro monetary policies of China onindirect bank financing, which shall secure adequate funds in a flexible manner.As at the date of the balance sheet, the contractual cash flows of financial assets and financial liabilitiesare presented below by term of maturity:
①As of 31 December 2023
| Item | Within a year | 1-2 years | 2-5 years | Over 5 years | Total |
| Financial assets: | |||||
| Cash and bank balances | 15,691,888,314.83 | 0.00 | 0.00 | 0.00 | 15,691,888,314.83 |
| Financial assets held for trading | 82,899,154.24 | 0.00 | 0.00 | 0.00 | 82,899,154.24 |
| Notes receivable | 1,941,200,568.00 | 0.00 | 0.00 | 0.00 | 1,941,200,568.00 |
| Accounts receivable | 2,692,941,866.24 | 0.00 | 0.00 | 0.00 | 2,692,941,866.24 |
| Other receivables | 46,010,624.61 | 0.00 | 0.00 | 0.00 | 46,010,624.61 |
Joincare Pharmaceutical Group Annual Report 2023
| Item | Within a year | 1-2 years | 2-5 years | Over 5 years | Total |
| Other current assets | 6,536,364.62 | 0.00 | 0.00 | 0.00 | 6,536,364.62 |
| Subtotal: | 20,461,476,892.54 | 0.00 | 0.00 | 0.00 | 20,461,476,892.54 |
| Financial liabilities: | |||||
| Short-term loans | 2,076,159,347.22 | 0.00 | 0.00 | 0.00 | 2,076,159,347.22 |
| Financial liabilities held for trading | 86,817.12 | 0.00 | 0.00 | 0.00 | 86,817.12 |
| Notes payable | 1,469,148,287.38 | 0.00 | 0.00 | 0.00 | 1,469,148,287.38 |
| Accounts payable | 894,286,243.28 | 0.00 | 0.00 | 0.00 | 894,286,243.28 |
| Other payables | 3,682,604,038.73 | 0.00 | 0.00 | 0.00 | 3,682,604,038.73 |
| Other current liabilities | 39,844,637.92 | 0.00 | 0.00 | 0.00 | 39,844,637.92 |
| Non-current liabilities due within one year | 718,564,144.31 | 0.00 | 0.00 | 0.00 | 718,564,144.31 |
| Lease liabilities | 0.00 | 11,783,457.28 | 3,639,491.13 | 0.00 | 15,422,948.41 |
| Long term loans | 0.00 | 2,288,854,277.01 | 833,419,001.98 | 0.00 | 3,122,273,278.99 |
| Subtotal: | 8,880,693,515.96 | 2,300,637,734.29 | 837,058,493.11 | 0.00 | 12,018,389,743.36 |
②As of 31 December 2022
| Item | Within a year | 1-2 years | 2-5 years | Over 5 years | Total |
| Financial assets: | |||||
| Cash and bank balances | 14,808,488,110.96 | 0.00 | 0.00 | 0.00 | 14,808,488,110.96 |
| Financial assets held for trading | 109,015,664.98 | 0.00 | 0.00 | 0.00 | 109,015,664.98 |
| Notes receivable | 1,959,985,016.85 | 0.00 | 0.00 | 0.00 | 1,959,985,016.85 |
| Accounts receivable | 3,103,758,850.15 | 0.00 | 0.00 | 0.00 | 3,103,758,850.15 |
| Other receivables | 52,535,740.14 | 0.00 | 0.00 | 0.00 | 52,535,740.14 |
| Other current assets | 104,859,166.96 | 0.00 | 0.00 | 0.00 | 104,859,166.96 |
| Subtotal: | 20,138,642,550.04 | 0.00 | 0.00 | 0.00 | 20,138,642,550.04 |
| Financial liabilities: | |||||
| Short-term loans | 2,126,050,615.06 | 0.00 | 0.00 | 0.00 | 2,126,050,615.06 |
| Financial liabilities held for trading | 755,634.43 | 0.00 | 0.00 | 0.00 | 755,634.43 |
| Notes payable | 1,635,906,989.22 | 0.00 | 0.00 | 0.00 | 1,635,906,989.22 |
| Accounts payable | 943,905,580.91 | 0.00 | 0.00 | 0.00 | 943,905,580.91 |
| Other payables | 3,680,334,360.88 | 0.00 | 0.00 | 0.00 | 3,680,334,360.88 |
| Other current liabilities | 83,541,891.93 | 0.00 | 0.00 | 0.00 | 83,541,891.93 |
| Non-current liabilities due within one year | 63,077,260.98 | 0.00 | 0.00 | 0.00 | 63,077,260.98 |
| Lease liabilities | 0.00 | 14,509,839.81 | 8,972,646.26 | 0.00 | 23,482,486.07 |
| Long term loans | 0.00 | 907,182,927.81 | 2,323,661,115.07 | 0.00 | 3,230,844,042.88 |
| Subtotal: | 8,533,572,333.41 | 921,692,767.62 | 2,332,633,761.33 | 0.00 | 11,787,898,862.36 |
2. Capital management
The capital management policies are made to keep the continuous operation of the Company, toenhance the return to shareholders, to benefit other stakeholders and to maintain the best capitalstructure to minimize the cost of capital.For the maintenance or adjustment of the capital structure, the Company might adjust financing
Joincare Pharmaceutical Group Annual Report 2023
method, the amount of dividends paid to shareholders, return capital to shareholders, issue new sharesand other equity instruments or make an asset disposal to reduce the liabilities.The Company monitors the capital structure with gearing ratio (calculated by dividing total liabilitiesby total assets). As of 31 December 2023, the Company’s gearing ratio is 37.73% (31 December 2022:
38.37%).
3. Transfer of financial assets
(1) Classification of transfer methods
| Transfer method | Nature of transferred financial assets | Amount of transferred financial assets | Termination of recognition | Judgment basis for termination of recognition |
| Endorsement of notes | Transfer the right to receive the cash flow of the financial asset to the other party | 180,125,188.50 | Termination of confirmation | The contractual right to collect the cash flow of the said financial asset is terminated. |
| Notes discounting | Transfer the right to receive the cash flow of the financial asset to the other party | 136,098,199.33 | Termination of confirmation | The contractual right to collect the cash flow of the said financial asset is terminated. |
| Total | 316,223,387.83 |
(2) Financial assets derecognized due to transfer
| Project | Transfer method | Amount of derecognition | Gains or losses related to derecognition |
| Notes receivable | Endorsement of notes | 180,125,188.50 | |
| Notes receivable | Notes discounting | 136,098,199.33 | |
| Total | 316,223,387.83 | -- |
In the current period, the Company discounted bank acceptance bills of RMB.99 385,575,297 (theprevious period: RMB1,190,002,804.98). As the main risks and rewards related to these bank notes,such as interest rate risk, have been transferred to the banks, the Company derecognizes the discountedundue bank notes. According to the discount agreement, if the bank notes are not accepted uponmaturity, the bank has the right to require the Company to pay off the outstanding balance. Therefore,the Company continues to be involved in the discounted bank notes. As at 31 December 2023, theundue bank notes discounted amounted to RMB0.33 136,098,199 (31 December 2022:
RMB422,899,944.56).As at 31 December 2023, the carrying amount of the Company's undue bank notes endorsed to suppliersin settlement of accounts payable was 180,125,188 RMB.50 (31 December 2022:
RMB542,620,475.62). There are no undue commercial notes endorsed to suppliers for settlement ofaccounts payable (December 31, 2022: RMB 0.00). As of December 31, 2023, its maturity date is 1 to6 months. According to the relevant provisions of the Negotiable Instruments Law, if the acceptingbank refuses to pay, its holder has the right to recourse against the Company (“continued involvement").The Company considers that it has transferred substantially all of its risks and rewards and thereforederecognizes the carrying amount of its and the related settled accounts payable. The maximum lossand undiscounted cash flow of continuing involvement and repurchase are equal to its book value. TheCompany considers that the continuing involvement in fair value is not material.In 2023, the Company did not incur any gain or loss on the date of transfer of the Note. The Company
Joincare Pharmaceutical Group Annual Report 2023
has no current and accumulatively recognized income or expenses due to continuous involvement inthe derecognized financial assets. Endorsements occur roughly evenly in the current period.
(3) Financial assets transferred but not derecognized as a whole
None.
X. Fair valueThe level in which fair value measurement is categorised is determined by the level of the fair valuehierarchy of the lowest level input that is significant to the entire fair value measurement. The levelsare defined as follows:
Level 1 inputs: unadjusted quoted prices in active markets that are observable at the measurementdate for identical assets or liabilities.Level 2 inputs: inputs other than Level 1 inputs that are either directly or indirectly observable forunderlying assets or liabilities.Level 3 inputs: inputs that are unobservable for underlying assets or liabilities.
(1) Items and amounts measured at fair value
As at 31 December 2023, the assets and liabilities measured at fair value are listed as followsaccording to the above three levels:
| Item | Level 1 fair value measurement | Level 2 fair value measurement | Level 3 fair value measurement | Total |
| I. Recurring fair value measurement | ||||
| (1) Financial assets held for trading | 79,176,104.95 | 3,723,049.29 | 0.00 | 82,899,154.24 |
| 1.debt instruments investment | 937,588.47 | 0.00 | 0.00 | 937,588.47 |
| 2.equity instruments investment | 78,238,516.48 | 0.00 | 0.00 | 78,238,516.48 |
| 3.Derivative financial assets | 0.00 | 3,136,735.29 | 0.00 | 3,136,735.29 |
| 4.Financial products | 0.00 | 586,314.00 | 586,314.00 | |
| (2) Other equity instruments investment | 91,551,155.16 | 0.00 | 1,063,732,253.20 | 1,155,283,408.36 |
| Total assets measured at fair value on a recurring basis | 170,727,260.11 | 3,723,049.29 | 1,063,732,253.20 | 1,238,182,562.60 |
| (3) Financial liabilities held for trading | ||||
| Derivative financial liabilities | 0.00 | 86,817.12 | 0.00 | 86,817.12 |
| Total liabilities measured at fair value on a recurring basis | 0.00 | 86,817.12 | 0.00 | 86,817.12 |
| II. Non-recurring fair value measurement | ||||
| Assets held-for-sale | 0.00 | 0.00 | 0.00 | 0.00 |
| Total assets measured at fair value on a non-recurring basis | 0.00 | 0.00 | 0.00 | 0.00 |
| Total liabilities measured at fair value on a non-recurring basis | 0.00 | 0.00 | 0.00 | 0.00 |
During the year ended December 31, 2023, the Company's subsidiary Livzon Group held investmentsin ELICIO THERAPEUTICS, INC. and Carisma Therapeutics, Inc., which were listed on theNASDAQ stock exchange, and investments in Beijing Luzhu Biotechnology Co., Ltd. (北京绿竹生物技术股份有限公司), which was listed on the Hong Kong Stock Exchange. As a result, the fair
Joincare Pharmaceutical Group Annual Report 2023
value measurement of these other equity instruments investments was reclassified from Level 3 toLevel 1. Except for the reclassification of the fair value measurement of the other equity instrumentsinvestment, there were no transfers between Level 1 and Level 2 for the fair value measurement ofother financial assets and financial liabilities of the Company, nor were there any transfers into or outof Level 3.For financial instruments traded in active markets, the Company determines their fair value based ontheir quoted market prices in the active market. The Company's trading debt instruments investmentsand equity instruments investments are listed and traded in markets such as Shenzhen, Hong Kong, andthe United States. Their fair value is determined based on the closing prices on the last trading day ofthe reporting period.For financial instruments not traded in active markets, the Company uses valuation techniques todetermine their fair value. The valuation models primarily include discounted cash flow models andmarket comparable company models. The inputs to valuation techniques mainly include risk-free rates,benchmark interest rates, exchange rates, credit spreads, liquidity premiums, lack of liquidity discounts,etc.
(2) Relevant information of level 2 fair value measurement
| Content | Fair value as at 2023.12.31 | Valuation techniques |
| Derivative financial assets | 3,136,735.29 | Calculated and determined based on the quoted forward exchange rate corresponding to the expiring contract |
| Derivative financial liabilities | 86,817.12 | Calculated and determined based on the quoted forward exchange rate corresponding to the expiring contract |
| Financial products | 586,314.00 | Bank quotation |
(3) Quantitative information of important unobservable input values used in level 3 of fair valuemeasurement
| Content | Fair value as at 2023.12.31 | Valuation techniques |
| Other equity instruments investment - Shanghai Yunfeng Xinchuang Equity Investment Center (上海云锋新创股权投资中心) | 57,858,983.79 | Net assets |
| Other equity instruments investment - Shanghai JingYi Investment Center (上海经颐投资中心) | 73,365,064.89 | Net assets |
| Other equity instruments investment - Qianhai Equity Investment Fund (前海股权投资基金) | 253,730,084.00 | Net assets |
| Other equity instruments investment - Apricot Forest, Inc (杏树林) | 101,475,500.00 | Income method |
| Other equity instrument investments – China Resources Bank of Zhuhai Co., Ltd. (Zhuhai China Resources Bank Co., Ltd. (珠海华润银行股份有限公司) ) ) | 226,644,000.00 | Market method |
| Other equity instrument investments - Yizun Biopharmaceutics (Shanghai) Co., Ltd. (羿尊生物医药(上海) 有限公司) ) | 35,147,356.03 | Market method |
| Other equity instrument investments - Zhuhai Medpha Biotechnology Co., Ltd. (Zhuhai Medpha Biotechnology Co., Ltd. (珠海麦得发生物科技股份有限公司) ) ) | 32,099,443.70 | Recent financing price |
| Other equity instruments investment -享融(上海) 生物科技有限公司 | 19,613,667.00 | Recent financing price |
| Other equity instrument investments –GLOBAL HEALTH SCIENCE | 205,217,490.01 | Net assets |
| Other equity instrument investments –SCC VENTURE VI 2018-B,L.P. | 233,268.67 | Net assets |
| Other equity instrument investments –Nextech V Oncology S.C.S., SICAV-SIF | 15,837,395.11 | Net assets |
| Other equity instrument investments -Others | 42,510,000.00 | Cost |
XI. Related party and related party transactions
Joincare Pharmaceutical Group Annual Report 2023
1. Information of parent company
| Name of parent company | Place of registration | Business nature | Registered capital | Shareholding ratio by parent company (%) | Voting right by parent company (%) |
| Shenzhen Baiyeyuan Investment Co., Ltd. (深圳市百业源投资有限公司) | Shenzhen | Investment and establishment of industry, domestic commerce, and material supply and marketing | 80,000,000.00 | 48.01 | 48.01 |
The ultimate controller of the Company is Zhu Baoguo (朱保国).
(1) Registered capital of parent company and its changes
| Name of other related parties | 2022.12.31 | Increase | Decrease | 2023.12.31 |
| Shenzhen Baiyeyuan Investment Co., Ltd. (深圳市百业源投资有限公司) | 80,000,000.00 | 0.00 | 0.00 | 80,000,000.00 |
(2) Shares of the company held by the parent company and its changes
| Name of other related parties | 2022.12.31 | Ratio | Increase | Decrease | 2023.12.31 | Ratio |
| Shenzhen Baiyeyuan Investment Co., Ltd. (深圳市百业源投资有限公司) | 878,272,753.00 | 45.53% | 17,380,900 | 0.00 | 895,653,653.00 | 48.01% |
On March 21, 2023, Shenzhen Baiyeyuan Investment Co., Ltd. (深圳市百业源投资有限公司)returned 17,380,900 shares involved in the refinancing securities lending business.
2. Subsidiaries of the Company
Details of subsidiaries refer to Note VII. 1.
3. Joint venture and associates of the Company
Details of significant joint ventures or associates refer to Notes V.10 and VII. 4.Other joint ventures or associates entered into transactions with the Company during the period, orduring the prior period with remaining closing balance were as follows:
| Name of joint ventures and associates | Relationship with the Company |
| Jiaozuo Jinguan Jiahua Electric Power Co., Ltd. (焦作金冠嘉华电力有限公司) | Associates |
| Guangdong Blue Treasure Pharmaceutical Co. Ltd. (广东蓝宝制药有限公司) | Associates |
| Shenzhen City Youbao Technology Co., Ltd. (深圳市有宝科技有限公司) | Associates |
| AbCyte Therapeutics Inc. | Associates |
| L&L Biopharma, Co. Ltd. (上海健信生物医药科技有限公司) | Associates |
| Zhuhai Sanmed Biotech Inc. (珠海圣美生物诊断技术有限公司) | Associates |
| Aetio Biotherapy Inc | Associates |
| Jiangsu Atom Bioscience and Pharmaceutical Co., Ltd. (江苏新元素医药科技有限公司) | Associates |
| Tianjin Tongrentang Group Co., Ltd. (天津同仁堂集团股份有限公司) | Associates |
| Infinite Intelligence Pharmaceutical Co. Ltd. (北京英飞智药科技有限公司) | Associates |
| Shenzhen Kangti Biomedical Technology Co., Ltd. (深圳康体生物医药科技有限公司) | Associates |
Joincare Pharmaceutical Group Annual Report 2023
| Name of joint ventures and associates | Relationship with the Company |
| Shanghai Sheo Pharmaceutical Technology Co., Ltd. (上海偕怡医药科技有限公司) | Associates |
| Novastage Pharmaceuticals (Shenzhen) , Ltd. (新领医药技术(深圳) 有限公司) | Associates |
| Feellife Health Inc. (深圳来福士雾化医学有限公司) | Associates |
| Zhuhai Sanmed Gene Diagnostics Ltd. (珠海市圣美基因检测科技有限公司) | Entity controlled by an associate |
| Zhuhai Hengqin Weisheng Precision Medicine Technology Co., Ltd. (珠海横琴维胜精准医学科技有限公司) | Entity controlled by an associate |
Note: Novastage Pharmaceuticals (Shenzhen)., Ltd. (新领医药技术(深圳) 有限公司) was anassociate of the Company in 2022.
4. Other related parties of the Company
| Name of other related parties | Relationship with the Company |
| Shenzhen Taitelixing Investment Development Co., Ltd. (深圳泰特力兴投资发展有限公司) | Subsidiaries of the company’s ultimate actual controller |
| Zhuozhou Jingnan Yongle Golf Club Co., Ltd. (涿州京南永乐高尔夫俱乐部有限公司) | A company controlled by the Company’s parent company |
| Shenzhen Healthy Deer Information Technology Co., Ltd. (深圳市健康阿鹿信息科技有限公司) | An associate of the Company’s parent company |
| Sichuan Healthy Deer Hospital Management Co., Ltd. and its subsidiaries (四川健康阿鹿医院管理有限公司 and its subsidiary ) | A subsidiary of an associate of the Company’s parent company |
| Shenzhen Qianhai WeBank Co., Ltd. (深圳前海微众银行股份有限公司) | An investee of the Company’s parent company |
| Beijing Shuobai Pharmaceutical Technology Co., Ltd. (北京硕佰医药科技有限责任公司) | An investee of the Company |
| Zhuhai Medpha Biotechnology Co., Ltd. (珠海麦得发生物科技股份有限公司) | Company where Livzon Group supervisor is a director |
| Zhuhai Xianghetai Investment Management Partnership (Limited Partnership) (珠海祥和泰投资管理合伙企业(有限合伙) ) | The executive of Livzon Group controls this entity |
| Zhuhai Zhong Hui Yuan Investment Partnership (Limited Partnership) (珠海中汇源投资合伙企业(有限合伙) | The director of Livzon Group controls this entity |
| Zhuhai Liying Investment Management Partnership (Limited Partnership) (珠海丽英投资管理合伙企业(有限合伙) ) | The director of Livzon Group controls this entity |
| Jiangsu One Winner Medical Technology Co., Ltd. (江苏一赢家医疗科技有限公司) | The director of Livzon Group controls this entity |
| Zhuhai Pu Xiaoying Enterprise Management Co., Ltd. (珠海市蒲小英企业管理有限公司) | Businesses controlled by close family members of Livzon Group’s director |
| Directors, Supervisors and other senior management personnel | Key management personnel |
5. Related party transactions
(1) Purchase or sale with related parties
①Purchase of goods/receiving of services
| Name of other related parties | Current year | Prior year | |
| Guangdong Blue Treasure Pharmaceutical Co. Ltd. (广东蓝宝制药有限公司) | Raw materials | 2,592,283.20 | 2,917,946.91 |
| Jiangsu One Winner Medical Technology Co., Ltd. (江苏一赢家医疗科技有限公司) and its subsidiary | Finished goods | 2,669,251.00 | 2,687,051.40 |
Joincare Pharmaceutical Group Annual Report 2023
| Name of other related parties | Current year | Prior year | |
| Zhuhai Sanmed Biotech Inc. (珠海圣美生物诊断技术有限公司) | Testing | 0.00 | 137,358.49 |
| Shenzhen City Youbao Technology Co., Ltd. (深圳市有宝科技有限公司) | Modern service | 1,005,433.00 | 2,083,948.00 |
| Jiangsu One Winner Medical Technology Co., Ltd. (江苏一赢家医疗科技有限公司) and its subsidiary | Modern service | 176,428.00 | 473,616.00 |
| Infinite Intelligence Pharmaceutical Co. Ltd. (北京英飞智药科技有限公司) | Research and development | 693,069.31 | 339,805.83 |
| Zhuhai Pu Xiaoying Enterprise Management Co., Ltd. (珠海市蒲小英企业管理有限公司) | Modern service | 0.00 | 249,975.00 |
| Shanghai Sheo Pharmaceutical Technology Co., Ltd. (上海偕怡医药科技有限公司) | Research and development | 0.00 | 18,867,924.60 |
| Beijing Shuobai Pharmaceutical Technology Co., Ltd. (北京硕佰医药科技有限责任公司) | Research and development | 15,000,000.00 | 0.00 |
| Feellife Health Inc. (深圳来福士雾化医学有限公司) | Nebulizer | 840,000.00 | 902,115.48 |
| Jiaozuo Jinguan Jiahua Electric Power Co., Ltd. (焦作金冠嘉华电力有限公司) | Electricity, Steam | 268,255,646.79 | 268,666,999.03 |
| Total | 291,232,111.30 | 297,326,740.74 |
②Sales of goods/rendering of services
| Name of other related parties | Current year | Prior year | |
| Guangdong Blue Treasure Pharmaceutical Co. Ltd. (广东蓝宝制药有限公司) | Finished products, water, electricity and power | 41,797,488.64 | 35,703,972.73 |
| Zhuhai Sanmed Biotech Inc. (珠海圣美生物诊断技术有限公司) | Finished products, power and others | 643,038.26 | 592,356.49 |
| Zhuhai Sanmed Gene Diagnostics Ltd. (珠海市圣美基因检测科技有限公司) | Finished products, power and others | 648,316.60 | 1,435,666.13 |
| Subsidiary of Sichuan Health Alu Hospital Management Co., Ltd. | Finished products | 2,957,156.52 | 3,036,532.62 |
| Jiangsu One Winner Medical Technology Co., Ltd. (江苏一赢家医疗科技有限公司) and its subsidiary | Finished products | 5,021.65 | 0.00 |
| Shenzhen Qianhai WeBank Co., Ltd. (深圳前海微众银行股份有限公司) | Finished products | 4,786,115.64 | 0.00 |
| Tianjin Tongrentang Group Co., Ltd. (天津同仁堂集团股份有限公司) | Modern service | 566,037.74 | 0.00 |
| Shanghai Sheo Pharmaceutical Technology Co., Ltd. (上海偕怡医药科技有限公司) | Research and development | 0.00 | 3,960,000.00 |
| Total | 51,403,175.05 | 44,728,527.97 |
(2) Rental with related party
| Name of lessee | Type of assets leased | Rental income in current year | Rental income in prior year |
| Zhuhai Sanmed Biotech Inc. (珠海圣美生物诊断技术有限公司) | Building | 2,171,444.85 | 2,226,299.00 |
| Zhuhai Sanmed Gene Diagnostics Ltd. (珠海市圣美基因检测科技有限公司) | Building | 240,000.00 | 240,000.00 |
| Novastage Pharmaceuticals (Shenzhen) , Ltd. (新领医药技术(深圳) 有限公司) | Buildings & Equipment | 0.00 | 468,302.76 |
| Shenzhen Baiyeyuan Investment Co., Ltd. (深圳市百业源投资有限公司) | Building | 18,891.76 | 18,891.76 |
| Shenzhen Taitelixing Investment Development Co., Ltd. (深圳泰特力兴投资发展有限公司) | Building | 18,720.00 | 18,720.00 |
| Shenzhen Healthy Deer Information Technology Co., Ltd. (深圳市健康阿鹿信息科技有限公司) | Building | 17,174.32 | 17,174.32 |
Joincare Pharmaceutical Group Annual Report 2023
| Name of lessee | Type of assets leased | Rental income in current year | Rental income in prior year |
| Shenzhen City Youbao Technology Co., Ltd. (深圳市有宝科技有限公司) | Building | 17,174.32 | 17,174.32 |
| Total | 2,483,405.25 | 3,006,562.16 |
(3) Guarantee with related parties
① In order to ensure the stable development of production and operation of Jinguan Electric Power,the Company and its controlling subsidiary Jiaozuo Joincare jointly provided a revolving guaranteefacility with balance of no more than RMB350 million (inclusive) for Jinguan Electric Power (specificguarantors shall be specified in the guarantee contracts) according to “the Resolution on ProvidingLoan Guarantee for Jinguan Electric Power by the Company and Its Controlling Subsidiary JiaozuoJoincare” considered and approved at the First Extraordinary General Meeting of the Company on 6July 2016, with the guarantee period starting from the date when the resolution was considered andapproved to 31 December 2019. Pursuant to “the Resolution on Providing Loan Guarantee for JinguanElectric Power by the Company and Its Controlling Subsidiary Jiaozuo Joincare” considered andapproved at the 2017 Annual General Meeting of the Company on 22 May 2018, the Company and itscontrolling subsidiary Jiaozuo Joincare jointly provided a revolving guarantee facility with balance ofno more than RMB350 million (inclusive) for Jinguan Electric Power (specific guarantors shall bespecified in the guarantee contracts), with the guarantee period starting from the date when theresolution was considered and approved to 31 December 2022. In order to ensure the stabledevelopment of production and operation of Jinguan Electric Power, the revolving guarantee facilitywith balance of no more than RMB350 million (inclusive) for Jinguan Electric Power (specificguarantors shall be specified in the guarantee contracts) considered and approved at the 2017 GeneralMeeting of the Company was changed to the revolving guarantee facility with balance of no morethan RMB450 million (inclusive) on 10 May 2019 due to the actual business needs of Jinguan ElectricPower, with the guarantee period starting from the date when the resolution was considered andapproved to 31 December 2022. On 18 May 2022, the "Proposal on the Company and its subsidiaryJiaozuo Joincare in Providing Loan Guarantee for Jinguan Electric Power" was reviewed and approvedby the Company's 2021 annual general meeting, the Company and its subsidiary Jiaozuo Joincarejointly provided a guarantee for Jinguan Electric Power on its revolving loans facility with a balanceof not more than RMB450 million (including RMB450 million) (the specific guarantor will bespecified in each guarantee contract), and the term is from the date of approval of this guaranteeproposal at the Company’s annual general meeting to 31 December 2025.As at 31 December 2023, the Company provided Jinguan Electric Power (金冠电力) with guaranteesfor loans of RMB408.27 million; of which RMB226.77 million in Shenzhen Branch of ChinaEverbright Bank, RMB700 million in Shenzhen Branch of Zheshang Bank, RMB91.50 million inShenzhen Branch of Nanyang Commercial Bank and RMB20 million in Jiaozuo Branch of ChinaCITIC Bank.In order to ensure the safety of secured loans, Jinguan Electric Power provided counter guarantees forthe said guarantees provided by the Company and its subsidiary, Jiaozuo Joincare, based on its ownedassets, and undertook that it would unconditionally provide mutual guarantees for the Company or itscontrolling subsidiary designated with total facility of no more than RMB450 million (inclusive)whenever the Company deemed necessary.
② Another shareholder of Livzon MABPharm Inc. (珠海市丽珠单抗生物技术有限公司) – theCompany has issued a "Counter Guarantee Commitment", promising that it will share the joint andseveral guarantee liability to the extent of 33.07% of the scope of guarantee responsibility in relationto the guarantee provided to Livzon MABPharm Inc. (珠海市丽珠单抗生物技术有限公司), and the
Joincare Pharmaceutical Group Annual Report 2023
counter guarantee period will expire on the date when the Company's guarantee responsibility expiry.
③ Zhuhai Zhong Hui Yuan Investment Partnership (Limited Partnership) (珠海中汇源投资合伙企业(有限合伙), being another shareholder of Livzon Group Xinbeijiang PharmaceuticalManufacturing Inc. (丽珠集团新北江制药股份有限公司) has issued a "Counter GuaranteeCommitment", promising that it will share the joint and several guarantee liability to the extent of
8.44% of the scope of guarantee responsibility incurred by Livzon Group in relation to the guaranteeprovided to Livzon MABPharm Inc. (珠海市丽珠单抗生物技术有限公司), and the counterguarantee period will expire on the date when Livzon Group's guarantee responsibility expiry.
(4) Asset transfer and debt restructuring between related parties
None.
(5) Remuneration to key management personnel
Unit: RMB ten thousandFor the year ended 31 December 2023
| Item | Director/ Supervisor Allowance | Wages and allowances | Social security | Housing fund | Bonus | Severance pay | Others | Total |
| Directors: | ||||||||
| Zhu Baoguo (朱保国) | 325.00 | 0.00 | 6.59 | 2.88 | 0.00 | 0.00 | 0.00 | 334.47 |
| Liu Guangxia (刘广霞) | 325.00 | 19.43 | 9.65 | 2.88 | 80.00 | 0.00 | 0.00 | 436.96 |
| Yu Xiong (俞雄) | 0.00 | 260.00 | 0.00 | 0.00 | 100.00 | 0.00 | 0.00 | 360.00 |
| Qiu Qingfeng (邱庆丰) | 0.00 | 135.00 | 7.70 | 2.88 | 80.00 | 0.00 | 0.00 | 225.59 |
| Lin Nanqi (林楠棋) | 0.00 | 135.00 | 7.70 | 2.88 | 80.00 | 0.00 | 0.00 | 225.59 |
| Huo Jing (霍静) | 12.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 12.00 |
| Qin Yezhi (覃业志) | 12.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 12.00 |
| Peng Juan (彭娟) | 12.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 12.00 |
| Yin Xiaoxing (印晓星) | 3.50 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 3.50 |
| Cui Liguo (崔利国) | 8.50 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 8.50 |
| Supervisors: | ||||||||
| Yu Xiaoyun (余孝云) | 4.80 | 38.16 | 7.21 | 2.25 | 17.95 | 0.00 | 0.00 | 70.36 |
| Peng Jinhua (彭金花) | 4.80 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 4.80 |
| Xing Zhiwei (幸志伟) | 4.80 | 57.77 | 6.85 | 2.09 | 40.00 | 0.00 | 0.00 | 111.51 |
| Other senior management: | ||||||||
| Zhang Leiming (张雷明) | 0.00 | 110.97 | 7.70 | 2.88 | 80.00 | 0.00 | 0.00 | 201.56 |
| Zhao Fenguang (赵凤光) | 0.00 | 135.00 | 7.70 | 2.88 | 60.00 | 0.00 | 0.00 | 205.59 |
| Total | 712.40 | 891.33 | 61.11 | 21.64 | 537.95 | 0.00 | 0.00 | 2,224.43 |
Note: Mr. Zhu Baoguo (朱保国) serves as the chairman of Livzon Group, a controlled subsidiary ofthe Company; and Mr. Yu Xiong (俞雄) and Mr. Qiu Qingfeng (邱庆丰) serve as non-executivedirectors of Livzon Group. Cui Liguo (崔利国) has resigned. The remuneration presented in abovedoes not include the portion paid by Livzon Group.For the year ended 31 December 2022
Joincare Pharmaceutical Group Annual Report 2023
| Director/ Supervisor Allowance | Wages and allowances | Social security | Housing fund | Bonus | Severance pay | Others | Total | |
| Directors: | ||||||||
| Zhu Baoguo (朱保国) | 325.00 | 0.00 | 6.44 | 2.66 | 0.00 | 0.00 | 0.00 | 334.09 |
| Liu Guangxia (刘广霞) | 325.00 | 18.48 | 1.85 | 2.66 | 0.00 | 0.00 | 0.00 | 347.98 |
| Yu Xiong (俞雄) | 0.00 | 260.00 | 0.00 | 0.00 | 100.00 | 0.00 | 0.00 | 360.00 |
| Qiu Qingfeng (邱庆丰) | 0.00 | 135.00 | 7.27 | 2.66 | 80.00 | 0.00 | 0.00 | 224.93 |
| Lin Nanqi (林楠棋) | 0.00 | 135.00 | 7.27 | 2.66 | 80.00 | 0.00 | 0.00 | 224.93 |
| Cui Liguo (崔利国) | 11.54 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 11.54 |
| Huo Jing (霍静) | 11.54 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 11.54 |
| Qin Yezhi (覃业志) | 11.54 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 11.54 |
| Peng Juan (彭娟) | 11.54 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 11.54 |
| Supervisors: | ||||||||
| Yu Xiaoyun (余孝云) | 4.80 | 38.31 | 6.82 | 2.25 | 17.95 | 0.00 | 0.00 | 70.13 |
| Peng Jinhua (彭金花) | 4.80 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 4.80 |
| 幸志伟 | 2.97 | 64.00 | 6.82 | 2.09 | 93.00 | 0.00 | 0.00 | 168.88 |
| Xie Youguo(谢友国) | 1.83 | 36.92 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 38.75 |
| Other senior management: | ||||||||
| Zhao Fenguang (赵凤光) | 0.00 | 135.00 | 7.27 | 2.66 | 45.00 | 0.00 | 0.00 | 189.93 |
| Total | 710.57 | 822.71 | 43.75 | 17.61 | 415.95 | 0.00 | 0.00 | 2,010.58 |
Note: Mr. Zhu Baoguo (朱保国) serves as the chairman of Livzon Group, a controlled subsidiary ofthe Company; and Mr. Yu Xiong (俞雄) and Mr. Qiu Qingfeng (邱庆丰) serve as non-executivedirectors of Livzon Group. Xie Youguo (谢友国) has resigned. The remuneration presented in abovedoes not include the portion paid by Livzon Group.
(6) Other related party transactions
None.
6. Receivables and payables with related party
(1) Receivable from related parties
| Item | Related party | 2023.12.31 | 2022.12.31 | ||
| Book balance | Provision for bad debts | Book balance | Provision for bad debts | ||
| Accounts receivable | Guangdong Blue Treasure Pharmaceutical Co. Ltd. (广东蓝宝制药有限公司) | 9,288,000.00 | 93,808.80 | 4,781,500.00 | 47,336.85 |
| Accounts receivable | Zhuhai Sanmed Gene Diagnostics Ltd. (珠海市圣美基因检测科技有限公司) | 180,820.75 | 1,844.37 | 85,731.98 | 840.17 |
| Accounts receivable | Subsidiary of Sichuan Health Alu Hospital Management Co., Ltd. (四川健康阿鹿医院管理有限公司) | 434,422.80 | 87,318.98 | 497,828.30 | 103,325.48 |
Joincare Pharmaceutical Group Annual Report 2023
| Item | Related party | 2023.12.31 | 2022.12.31 | ||
| Book balance | Provision for bad debts | Book balance | Provision for bad debts | ||
| Prepayments | Zhuhai Sanmed Biotech Inc. (珠海圣美生物诊断技术有限公司) | 211,200.00 | 0.00 | 211,200.00 | 0.00 |
| Prepayments | Shenzhen City Youbao Technology Co., Ltd. (深圳市有宝科技有限公司) | 0.00 | 0.00 | 188,100.00 | 0.00 |
| Prepayments | Jiangsu One Winner Medical Technology Co., Ltd. (江苏一赢家医疗科技有限公司) | 29,816.00 | 0.00 | 0.00 | 0.00 |
| Prepayments | Feellife Health Inc. (深圳来福士雾化医学有限公司) | 1,259,566.37 | 0.00 | 0.00 | 0.00 |
| Prepayments | Jiaozuo Jinguan Jiahua Electric Power Co., Ltd. (焦作金冠嘉华电力有限公司) | 65,814,779.87 | 0.00 | 75,724,913.57 | 0.00 |
| Other receivables | Guangdong Blue Treasure Pharmaceutical Co. Ltd. (广东蓝宝制药有限公司) | 860,233.52 | 9,118.48 | 607,484.29 | 6,925.32 |
| Other receivables | Zhuhai Sanmed Gene Diagnostics Ltd. (珠海市圣美基因检测科技有限公司) | 2,263.89 | 52.75 | 15,795.00 | 170.59 |
| Other receivables | Zhongshan Renhe Health Products Co., Ltd. (中山市仁和保健品有限公司) | 469,895.78 | 469,895.78 | 469,895.78 | 469,895.78 |
| Other receivables | Shenzhen Healthy Deer Information Technology Co., Ltd. (深圳市健康阿鹿信息科技有限公司) | 4,680.00 | 129.99 | 4,680.00 | 74.38 |
(2) Payables to related party
| Item | Related party | 2023.12.31 | 2022.12.31 |
| Contract liabilities | Subsidiary of Sichuan Health Alu Hospital Management Co., Ltd. (四川健康阿鹿医院管理有限公司) | 255,459.93 | 12,011.72 |
| Notes payable | Guangdong Blue Treasure Pharmaceutical Co. Ltd. (广东蓝宝制药有限公司) | 883,200.00 | 0.00 |
| Accounts payable | Guangdong Blue Treasure Pharmaceutical Co. Ltd. (广东蓝宝制药有限公司) | 195,398.23 | 117,760.00 |
| Other payables | Subsidiary of Sichuan Health Alu Hospital Management Co., Ltd. (四川健康阿鹿医院管理有限公司) | 0.00 | 8,936.17 |
XII. Share-based payments
1. Information about share-based payments
(1) The Company
A. On 29 August 2022, the Company held the third extraordinary general meeting of shareholders in2022, and reviewed and approved the "Proposal on the Company's 2022 Share option Incentive Plan(Draft) and its Summary", Proposal on the Company's 2022 Share option Incentive PlanImplementation Appraisal Management Measures" and "Proposal on Requesting the Company'sShareholders' Meeting to Authorize the Board of Directors to Handle Matters Related to SharesIncentive". The Company held the 16th meeting of the eighth board of directors on 5 September 2022,and reviewed and passed the "Proposal on First Time Granting Share options to Incentive Participants".With 5 September 2022 as the grant date, 49.45 million share options were granted to 423 incentiveparticipants at a price of RMB11.24 per share. The date of completion and effective date of registrationof share options granted is 16 September 2022.In 2022, the share option incentive plan initially granted 32 former incentive recipients (a total of 2.37million options) had their options revoked due to their resignation and no longer meeting the incentiveconditions. Following the forfeiture, the number of share options initially granted under the Company's2022 share option incentive plan was adjusted from 49.45 million to 47.08 million, and the number ofinitial incentive recipients was adjusted from 423 to 391.The exercise period of the options granted this time and the exercise time schedule for each period are
Joincare Pharmaceutical Group Annual Report 2023
shown in the following table:
| Vesting period | Vesting date | Vesting ratio |
| First vesting period | From the first trading day 12 months after the first grant date to the last trading day within 24 months from the first grant date | 40% |
| Second vesting period | From the first trading day 24 months after the first grant date to the last trading day within 36 months from the first grant date | 30% |
| Third vesting period | From the first trading day 36 months after the first grant date to the last trading day within 48 months from the first grant date | 30% |
Company-level performance appraisal requirements: The share options granted by this incentive planare subject to annual performance appraisal and vesting. To achieve the performance appraisal targetas the vesting condition for incentive participants, the annual performance appraisal targets for the first-time grant are shown in the table below:
| Vesting period | Performance appraisal targets |
| First vesting period | Based on the net profit in 2021, the compound growth rate of net profit in 2022 shall not be less than 15%; |
| Second vesting period | Based on the net profit in 2021, the compound growth rate of net profit in 2023 shall not be less than 15%; |
| Third vesting period | Based on the net profit in 2021, the compound growth rate of net profit in 2024 shall not be less than 15%. |
The calculation of the above "net profit" and "net profit growth rate" indicators is based on the netprofit attributable to shareholders of listed company after deducting non-recurring gains and losses,and excluding the impact of share-based payments in this incentive plan. If the Company fails to meetthe above-mentioned performance appraisal targets, all incentive participants whose share options areexercisable in the year corresponding to the appraisal shall not be exercised and shall be canceled bythe Company.B. On 11 August 2023, the Company convened the 28th meeting of the eighth board of directors todeliberate and approve the "Proposal on Reserving Share Options for Incentive Recipients". The grantdate was set as 11 August 2023, and 5.5 million share options were granted to 149 incentive recipientsat a price of RMB11.06 per share. The registration completion date and effective date for this grant ofshare options were 30 August 2023.The exercise period of the options granted this time and the exercise time schedule for each period areshown in the following table:
| Vesting period | Vesting date | Vesting ratio |
| First vesting period of reserved options | From the first trading day 12 months after the grant date of reserved options to the last trading day within 24 months from the first grant date | 50% |
| Second vesting period of reserved options | From the first trading day 24 months after the grant date of reserved options to the last trading day within 36 months from the first grant date | 50% |
Company-level performance appraisal requirements: The share options granted by this incentive planare subject to annual performance appraisal and vesting. To achieve the performance appraisal targetas the vesting condition for incentive participants, the annual performance appraisal targets for thereserved grant are shown in the table below:
| Vesting period | Performance appraisal targets |
| First vesting period of reserved options | Based on the net profit in 2021, the compound growth rate of net profit in 2023 shall not be less than 15%; |
| Second vesting period of reserved options | Based on the net profit in 2021, the compound growth rate of net profit in 2024 shall not be less than 15%. |
The calculation of the above "net profit" and "net profit growth rate" indicators is based on the net
Joincare Pharmaceutical Group Annual Report 2023
profit attributable to shareholders of listed company after deducting non-recurring gains and losses,and excluding the impact of share-based payments in this incentive plan. If the Company fails to meetthe above-mentioned performance appraisal targets, all incentive participants whose share options areexercisable in the year corresponding to the appraisal shall not be exercised and shall be canceled bythe Company.C、Equity instruments granted are as follows:
Unit: 10,000
| Grant recipients | Grant in the year | Exercised in the year | Vested in the year | Forfeited in the year | ||||
| Quantity | Amount | Quantity | Amount | Quantity | Amount | Quantity | Amount | |
| Sales personnel | 168 | 175 | 1,027 | 16 | ||||
| Administrative personnel | 303 | 100 | 475 | 193 | ||||
| R&D personnel | 79 | 76 | 382 | 28 | ||||
| Total | 550 | 351 | 1,883 | 237 | ||||
(2) The Company’s subsidiary Livzon Group
① Share options
A. On 14 October 2022, Livzon Group’s 2022 Second Extraordinary Shareholders’ Meeting, 2022Second A-Share Class Shareholders’ Meeting and 2022 H-Share Class Shareholders’ Meeting reviewedand approved the “Proposal on the Company's 2022 Share option Incentive Plan (Revised Draft) andIts Summary", "Proposal on the company's 2022 Share option Incentive Plan Implementation AppraisalManagement Measures", "Proposal on submitting to the company's general meeting of shareholders toauthorize the board of directors to handle matters related to the 2022 share options incentive plan". On7 November 2022, the 39th meeting of the 10th Board of Directors of Livzon Group reviewed andapproved the "Proposal on Matters Related to the First Time Grant of the 2022 Share option IncentivePlan". With 7 November 2022 as the grant date, 17,973,500 share options were granted to 1,026incentive participants at a price of RMB31.31 per A share. The date of completion and effective dateof registration of share options granted is 23 November 2022.In 2022, the share option incentive plan initially granted share options to 25 former incentive recipients(a total of 361,000 options), which were revoked due to their resignation and no longer meeting theincentive conditions. Following the forfeiture, the number of share options initially granted under theLivzon Group's 2022 share option incentive plan was adjusted from 17.9735 million to 17.6125 million,and the number of initial incentive recipients was adjusted from 1,026 to 1,001.The exercise period of the options granted this time and the exercise time schedule for each period areshown in the following table:
| Vesting period | Vesting date | Vesting ratio |
| First vesting period of stock options granted for the first time | From the first trading day 12 months after the completion of the first time grant registration to the last trading day within 24 months from the completion of the first time grant registration | 40% |
| Second vesting period of stock options granted for the first time | From the first trading day 24 months after the completion of the first time grant registration to the last trading day within 36 months from the completion of the first time grant registration | 30% |
| Third vesting period of stock options granted for the first time | From the first trading day 36 months after the completion of the first time grant registration to the last trading day within 48 months from the completion of the first time grant registration | 30% |
Joincare Pharmaceutical Group Annual Report 2023
Livzon Group performance appraisal requirements: The stock options granted by this incentive planare subject to annual performance appraisal and vesting during three fiscal years of the vesting period.To achieve the performance appraisal target as the vesting condition for incentive participants, theannual performance appraisal targets for the first-time grant are shown in the table below:
| Vesting period | Performance appraisal targets |
| First vesting period of stock options granted for the first time | Based on the net profit in 2021, the compound growth rate of net profit in 2022 shall not be less than 15%; |
| Second vesting period of stock options granted for the first time | Based on the net profit in 2021, the compound growth rate of net profit in 2023 shall not be less than 15%; |
| Third vesting period of stock options granted for the first time | Based on the net profit in 2021, the compound growth rate of net profit in 2024 shall not be less than 15%. |
B. On 12 October 2023, Livzon Group convened the 4th meeting of the eleventh board of directors todeliberate and approve the " Proposal on matters related to the planned reserved grant of share optionincentive plan in 2022". The grant date was set as 30 October 2023, and 2.0 million share options weregranted to 243 incentive recipients at a price of RMB36.26 per A share. The registration completiondate and effective date for this grant of share options were 28 November 2023.The exercise period of the options granted this time and the exercise time schedule for each period areshown in the following table:
| Vesting period | Vesting date | Vesting ratio |
| First vesting period of reserved options | From the first trading day 12 months after the grant date of reserved options to the last trading day within 24 months from the first grant date | 50% |
| Second vesting period of reserved options | From the first trading day 24 months after the grant date of reserved options to the last trading day within 36 months from the first grant date | 50% |
Livzon Group performance appraisal requirements: The stock options granted by this incentive planare subject to annual performance appraisal and vesting during two fiscal years of the vesting period.To achieve the performance appraisal target as the vesting condition for incentive participants, theannual performance appraisal targets for the first-time grant are shown in the table below:
| Vesting period | Performance appraisal targets |
| First vesting period of reserved options | Based on the net profit in 2021, the compound growth rate of net profit in 2023 shall not be less than 15%; |
| Second vesting period of reserved options | Based on the net profit in 2021, the compound growth rate of net profit in 2024 shall not be less than 15%. |
② Other Shares incentive
Pursuant to “ the Resolution on the Disposal of Certain Equity of a Holding Subsidiary and ConnectedTransaction” considered and approved at the 34th Meeting of the 9th Session of the Board of LivzonGroup on 8 November 2019, it was agreed that 9.5% equity interests (totally 8,382,100 shares) inZhuhai Livzon Diagnostics Inc. (珠海丽珠试剂股份有限公司) held by Livzon Group shall betransferred to Zhuhai Liying Investment Management Partnership (Limited Partnership) (珠海丽英投资管理合伙企业（有限合伙）) at the consideration of RMB21,122,892. Pursuant to the AssetsAppraisal Report on the Valuation of the Shareholders'. According to “Assets evaluation report of allshareholders' equity value project of Zhuhai Livzon Diagnostics Inc. (珠海丽珠试剂股份有限公司)involved in the proposed transfer of equity by Livzon Pharmaceutical Group Co., Ltd.”. (HuayaZhengxin Appraisal Report [2019] No. A02-0011), the valuation of all shareholders’ equity of ZhuhaiLivzon Diagnostics Inc. as at 30 June 2019 was RMB647.3075 million, and the above equity transferprice was lower than its fair value, therefore it constitutes a share-based payment. The total share-based payment of the transaction is RMB40.4017 million, which should be amortized within 5 yearsaccording to the partnership agreement and share incentive expenses were recognised due to the share-
Joincare Pharmaceutical Group Annual Report 2023
based payment as a result of the change in the shareholding of the shareholders of Zhuhai LiyingInvestment Management Partnership (Limited Partnership).Pursuant to “the Resolution on the Implementation of Employee Equity Incentive Scheme by aHolding Subsidiary” considered and approved at the 34th Meeting of the 9th Session of the Board ofLivzon Group on 8 November 2019, the total number of shares of new issuance by Zhuhai LivzonDiagnostics Inc. for implementation of employee equity incentive scheme shall not be more than4,643,839 shares, and the scheme participants shall contribute a total of RMB11,702,474.28 to directlysubscribe for the above shares or indirectly subscribe for the such shares through the holding of thelimited partnership shares of the employee shareholding platform. In December 2019, pursuant to theCapital Increase Agreement of Zhuhai Livzon Diagnostics Inc., the total shares of Zhuhai LivzonDiagnostics Inc. increased from 88,232,932 shares to 92,876,771 shares with par value of RMB1 pershare. The increased number of shares were subscribed for by Zhuhai Haoxun Enterprise ManagementConsulting Partnership (Limited Partnership) (珠海豪汛企业管理咨询合伙企业（有限合伙）),Zhuhai Yichen Enterprise Management Consulting Partnership (Limited Partnership) (珠海熠臣企业管理咨询合伙企业（有限合伙）) and Zhuhai Qijing Enterprise Management Consulting Partnership(Limited Partnership) (海启靖企业管理咨询合伙企业（有限合伙）) at the consideration ofRMB11,702,474. The subscription price is lower than the fair value, therefore it constitutes a share-based payment. The total share-based payment of the transaction is RMB20,709,000, which should beamortized within 5 years according to the Partnership Agreement, and share incentive expenses wererecognized due to the share-based payment as a result of the change in the shares/shareholding of theshareholders or employee stock ownership platform of Zhuhai Livzon Diagnostics Inc.On 31 August 2021, the general meeting of Livzon Bio considered and approved the Equity IncentiveScheme of Zhuhai Livzon Biotechnology Co., Ltd. (珠海市麗珠生物醫藥科技有限公司), granting66,666,667 restricted shares of Livzon Biologics to incentive participants, among which 42 millionshares were granted in the first batch and 24,666,667 shares were reserved. Incentive participantsindirectly subscribed for the above shares through the holding of the limited partnership shares of theemployee shareholding platform. The subscription price is lower than the fair value, therefore itconstitutes a share-based payment. The total share-based payment of the transaction is RMB33.6million, which should be amortized during the lock-up period according to the Equity IncentiveScheme of LivzonBio and the Grant Agreement and RMB7.84 million was amortized in the year ended31 December 2023.
② Equity instruments granted are as follows:
Unit: 10,000
| Grant recipients | Grant in the year | Exercised in the year | Vested in the year | Forfeited in the year | ||||
| Quantity | Amount | Quantity | Amount | Quantity | Amount | Quantity | Amount | |
| Sales personnel | 29.80 | |||||||
| Administrative personnel | 140.65 | |||||||
| R&D personnel | 29.55 | |||||||
| Total | 200.00 | |||||||
Joincare Pharmaceutical Group Annual Report 2023
2. Equity-settled share-based payments
| Method in determining the fair value of equity instruments at the date of grant | Black-Scholes Model, market price |
| Important parameters of fair value of equity instruments on grant date | Risk-free interest rate (1.5%-2.75%), validity period (1-3 years), historical stock price volatility (12.97%-17.12%), dividend rate (1.12%-1.47%) |
| Basis in determining the quantity of exercisable equity instruments | Determined according to exercisable conditions and estimated attrition rate |
| Reason for significant difference of estimation between current year and prior year | No significant differences |
| Accumulated amount recorded in capital reserve for equity-settled share-based payments | 237,393,331.40 |
3. Information on cash-settled share-based payments
None.
4. Information on share-based payments
| Grant recipients | Share-based compensation expense settled in equity | Share-based compensation expense settled in cash |
| Middle and high-level managers and key business personnel | 90,412,632.26 | 0.00 |
XIII. Commitments and contingencies
1. Significant commitments
(1) Capital commitments
| Capital commitments entered into but not recognized in the financial statements | Closing balance | Beginning balance |
| Commitments in relation to acquisition of long-term assets | 522,447,456.93 | 455,161,816.72 |
| Commitments in relation to external investment | 13,000,000.00 | 12,000,000.00 |
| Commitments in relation to research and development expenditures | 683,619,716.31 | 0.00 |
(2) Other commitments
None.
(3) Performance of previous commitments
The Company has duly performed the capital expenditure commitments and the operating leasecommitments and the other commitments as at 31 December 2023.
2. Contingencies
As at 31 December 2023, there was no other significant contingency required to be disclosed by theCompany.XIV. Event after balance sheet date
1. Profit distribution
On 2 April 2024, the thirty-eighth meeting of the eighth Board of Directors of the Company passedthe 2023 profit distribution plan. Based on the Company's total share capital deducted by therepurchased shares held in the Company's special securities account on the registration datedetermined by the implementation of the Company's 2023 annual profit distribution plan, a cash bonusof RMB1.80 (tax included) for every 10 shares will be distributed to all shareholders.The above profit distribution plan needs to be submitted to the company's 2023 annual general meetingof shareholders for consideration and approval.
Joincare Pharmaceutical Group Annual Report 2023
As of 2 April 2024, the Company has no other events that needed to be disclosed after the balance sheetdate.
XV. Other significant eventsAs of the balance sheet date, the Company does not have other important matter to be disclosed.
XVI. Notes to the significant financial statements item of the Parent Company
1. Notes receivable
| Category | 2023.12.31 | 2022.12.31 | ||||
| Book balance | Provision for bad debts | Carrying amount | Book balance | Provision for bad debts | Carrying amount | |
| Bank acceptance bills | 191,417,091.37 | 0.00 | 191,417,091.37 | 249,617,024.89 | 0.00 | 249,617,024.89 |
| Commercial acceptance bills | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 191,417,091.37 | 0.00 | 191,417,091.37 | 249,617,024.89 | 0.00 | 249,617,024.89 |
(1) Notes receivable pledged at year end
| Item | Amount pledged at year end |
| Bank acceptance bills | 99,070,424.71 |
(2) Bills endorsed or discounted to other parties but not yet expired at balance sheet date
| Category | Amount derecognized at year end | Amount not derecognized at year end |
| Bank acceptance bills not yet mature but already endorsed | 64,790,190.55 | -- |
| Bank acceptance bills not yet mature but already discounted | 0.00 | -- |
| Total | 64,790,190.55 |
(3) There was no bills transferred into account receivables for non-performance by the issuer atbalance sheet date of the period.
(4) Disclosure by method of provision for bad debts
| Category | 2023.12.31 | 2022.12.31 | ||||||||
| Book balance | Provision for bad debts | Carrying amount | Book balance | Provision for bad debts | Carrying amount | |||||
| Amount | Ratio (%) | Amount | Expected credit loss rate (%) | Amount | Ratio (%) | Amount | Expected credit loss rate (%) | |||
| Provision for bad debts on individual item | ||||||||||
| Provision for bad debts on portfolio basis | 191,417,091.37 | 100.00 | 0.00 | 0.00 | 191,417,091.37 | 249,617,024.89 | 100.00 | 0.00 | 0.00 | 249,617,024.89 |
| Including: | ||||||||||
| Bank acceptance bills | 191,417,091.37 | 100.00 | 0.00 | 0.00 | 191,417,091.37 | 249,617,024.89 | 100.00 | 0.00 | 0.00 | 249,617,024.89 |
| Total | 191,417,091.37 | 100.00 | 0.00 | 0.00 | 191,417,091.37 | 249,617,024.89 | 100.00 | 0.00 | 0.00 | 249,617,024.89 |
Joincare Pharmaceutical Group Annual Report 2023
(5) There was no accrual, recovery or reversal of bad debt provision during the period
(6) There was no actual write-off of notes receivable in the period
2. Accounts receivable
(1) Disclosure by ageing
| Ageing | 2023.12.31 | 2022.12.31 |
| Within one year | 315,521,678.52 | 290,962,991.84 |
| 1 to 2 years (inclusive of 2 years) | 2,252,749.01 | 2,684,445.48 |
| 2 to 3 years (inclusive of 3 years) | 218,363.74 | 1,178,173.47 |
| 3 to 4 years (inclusive of 4 years) | 1,136,271.11 | 641,804.42 |
| 4 to 5 years (inclusive of 5 years) | 125,802.16 | 388,712.49 |
| Over 5 years | 8,102,724.93 | 7,754,530.87 |
| Subtotal | 327,357,589.47 | 303,610,658.57 |
| Less: Provision for bad debts | 12,178,306.49 | 11,979,800.83 |
| Total | 315,179,282.98 | 291,630,857.74 |
(2) Disclosure by method of provision for bad debts
| Category | 2023.12.31 | 2022.12.31 | ||||||||
| Book balance | Provision for bad debts | Carrying amount | Book balance | Provision for bad debts | Carrying amount | |||||
| Amount | Ratio (%) | Amount | Expected credit loss rate (%) | Amount | Ratio (%) | Amount | Expected credit loss rate (%) | |||
| Provision for bad debts on individual item | 771,300.68 | 0.24 | 771,300.68 | 100.00 | 0.00 | 771,300.68 | 0.25 | 771,300.68 | 100.00 | 0.00 |
| Including: | ||||||||||
| Receivables from domestic customers | 771,300.68 | 0.24 | 771,300.68 | 100.00 | 0.00 | 771,300.68 | 0.25 | 771,300.68 | 100.00 | 0.00 |
| Provision for bad debts on portfolio basis | 326,586,288.79 | 99.76 | 11,407,005.81 | 3.49 | 315,179,282.98 | 302,839,357.89 | 99.75 | 11,208,500.15 | 3.70 | 291,630,857.74 |
| Including: | ||||||||||
| Receivables from domestic customers | 326,586,288.79 | 99.76 | 11,407,005.81 | 3.49 | 315,179,282.98 | 302,839,357.89 | 99.75 | 11,208,500.15 | 3.70 | 291,630,857.74 |
| Total | 327,357,589.47 | 100.00 | 12,178,306.49 | 3.72 | 315,179,282.98 | 303,610,658.57 | 100 | 11,979,800.83 | 3.95 | 291,630,857.74 |
Provision for bad debts on individual item:
| Item | 2023.12.31 | |||
| Book balance | Provision for bad debts | Expected credit loss rate (%) | Reason of provision | |
| Purchase of goods | 771,300.68 | 771,300.68 | 100.00 | Likelihood of recovery is expected to be low |
Provision for bad debts on portfolio basis:
Provision for bad debts on portfolio basis: Receivables from domestic customers
| Ageing | 2023.12.31 | 2022.12.31 | ||||
| Accounts receivable | Provision for bad debts | Expected credit loss rate (%) | Accounts receivable | Provision for bad debts | Expected credit loss rate (%) | |
| Within one year | 315,521,678.52 | 2,890,091.59 | 0.92 | 290,962,991.84 | 2,721,949.54 | 0.94 |
Joincare Pharmaceutical Group Annual Report 2023
| 1 to 2 years (inclusive of 2 years) | 2,252,749.01 | 182,328.02 | 8.09 | 2,684,445.48 | 282,436.48 | 10.52 |
| 2 to 3 years (inclusive of 3 years) | 218,363.74 | 70,618.48 | 32.34 | 1,178,173.47 | 378,821.59 | 32.15 |
| 3 to 4 years (inclusive of 4 years) | 1,136,271.11 | 832,171.89 | 73.24 | 641,804.42 | 474,608.03 | 73.95 |
| 4 to 5 years (inclusive of 5 years) | 125,802.16 | 100,371.58 | 79.79 | 103,939.29 | 82,681.12 | 79.55 |
| Over 5 years | 7,331,424.25 | 7,331,424.25 | 100.00 | 7,268,003.39 | 7,268,003.39 | 100.00 |
| Subtotal | 326,586,288.79 | 11,407,005.81 | 3.49 | 302,839,357.89 | 11,208,500.15 | 3.70 |
(3) Accrual, recovery or reversal of bad debt provision during the period
| Amount of provision for bad debts | |
| Beginning balance | 11,979,800.83 |
| Provision for the year | 198,505.66 |
| Recovered or reversal in the year | 0.00 |
| Write-off in the year | 0.00 |
| Closing balance | 12,178,306.49 |
At 31 December 2023 and 31 December 2022, the Company had no overdue but not impaired accountsreceivable.
(4) No actual written-off of accounts receivable in this period.
(5) Accounts receivable due from the top five debtors
As of 31 December 2023, the total amount of the top five debtors in closing balance isRMB72,504,751.65, accounting for 22.15% of the total amount of closing balance of accountsreceivable, and the corresponding closing balance of provision for bad debts is total RMB725,047.52.
(6) There were no accounts receivable derecognized due to the transfer of financial assets in eachreporting period.
(7) There were no assets or liabilities formed by the continuing involvement of transferredaccounts receivables in each reporting period.
3. Other receivables
| Item | 2023.12.31 | 2022.12.31 |
| Dividends receivable | 519,999,500.00 | 544,999,500.00 |
| Other receivables | 166,368,334.30 | 240,307,524.78 |
| Total | 686,367,834.30 | 785,307,024.78 |
(1) Dividends receivable
| Item | 2023.12.31 | 2022.12.31 |
| Topsino | 499,999,500.00 | 524,999,500.00 |
| Fenglei Electric Power | 20,000,000.00 | 20,000,000.00 |
| Subtotal: | 519,999,500.00 | 544,999,500.00 |
| Less: Provision for bad debts | 0.00 | 0.00 |
| Total | 519,999,500.00 | 544,999,500.00 |
Joincare Pharmaceutical Group Annual Report 2023
(2) Other receivables
① Disclosure by ageing
| Item | 2023.12.31 | 2022.12.31 |
| Within one year | 165,941,822.03 | 239,838,488.56 |
| 1 to 2 years | 195,161.27 | 590,397.78 |
| 2 to 3 years | 276,497.86 | 149,812.10 |
| 3 to 4 years | 147,742.10 | 206,676.00 |
| 4 to 5 years | 201,676.00 | 126,228.36 |
| Over 5 years | 18,223,163.69 | 19,105,586.00 |
| Subtotal | 184,986,062.95 | 260,017,188.80 |
| Less: Provision for bad debts | 18,617,728.65 | 19,709,664.02 |
| Total | 166,368,334.30 | 240,307,524.78 |
Disclosure by nature
| Item | 2023.12.31 | 2022.12.31 | ||||
| Book balance | Provision for bad debts | Carrying amount | Book balance | Provision for bad debts | Carrying amount | |
| Other receivables of each company within the scope of combination | 162,423,627.30 | 0.00 | 162,423,627.30 | 238,041,400.41 | 0.00 | 238,041,400.41 |
| Treasury bonds and security deposits | 16,954,735.37 | 16,954,735.37 | 0.00 | 17,968,386.04 | 17,968,386.04 | 0.00 |
| External entities balances | 2,021,697.55 | 1,299,303.83 | 722,393.72 | 1,384,240.83 | 1,253,731.83 | 130,509.00 |
| Security deposits | 886,662.78 | 288,715.23 | 605,038.61 | 973,098.11 | 354,429.35 | 618,668.76 |
| Amounts of exercised options | 597,240.00 | 0.00 | 597,240.00 | 0.00 | 0.00 | 0.00 |
| Others | 2,102,099.95 | 74,974.22 | 2,020,034.67 | 1,650,063.41 | 133,116.80 | 1,516,946.61 |
| Total | 184,986,062.95 | 18,617,728.65 | 166,368,334.30 | 260,017,188.80 | 19,709,664.02 | 240,307,524.78 |
③ Information of provision for bad debts
At year end, provision for bad debts on those in first stage:
| Category | Book balance | Expected credit loss rate in the next 12 months (%) | Provision for bad debts | Carrying amount | Reason |
| Provision for bad debts on individual item | 0.00 | 0.00 | 0.00 | 0.00 | |
| Provision for bad debts on portfolio basis | 163,020,867.30 | 0.00 | 0.00 | 163,020,867.30 | |
| Amounts of exercised options | 597,240.00 | 0.00 | 0.00 | 597,240.00 | |
| Other receivables of each company within the scope of | 162,423,627.30 | 0.00 | 0.00 | 162,423,627.30 | Expected to be recovered |
Joincare Pharmaceutical Group Annual Report 2023
| Category | Book balance | Expected credit loss rate in the next 12 months (%) | Provision for bad debts | Carrying amount | Reason |
| combination | |||||
| Total | 163,020,867.30 | 0.00 | 0.00 | 163,020,867.30 |
At year end, provision for bad debts on those in second stage:
| Category | Book balance | Expected credit loss rate for the lifetime(%) | Provision for bad debts | Carrying amount | Reason |
| Provision for bad debts on individual item | |||||
| Provision for bad debts on portfolio basis | 5,010,460.28 | 33.19 | 1,662,993.28 | 3,347,467.00 | |
| Receivable of deposits under guarantee, deposits and lease expenses | 886,662.78 | 32.56 | 288,715.23 | 597,947.55 | |
| Other receivables | 4,123,797.50 | 33.33 | 1,374,278.05 | 2,749,519.45 | |
| Total | 5,010,460.28 | 33.19 | 1,662,993.28 | 3,347,467.00 |
At year end, provision for bad debts on those in third stage:
| Category | Book balance | Expected credit loss rate for the lifetime(%) | Provision for bad debts | Carrying amount | Reason |
| Provision for bad debts on individual item | 16,954,735.37 | 100.00 | 16,954,735.37 | 0.00 | |
| Treasury bonds and security deposits | 16,954,735.37 | 100.00 | 16,954,735.37 | 0.00 | Likelihood of recovery is expected to be low |
| Provision for bad debts on portfolio basis | 0.00 | 0.00 | 0.00 | 0.00 | -- |
| Total | 16,954,735.37 | 100.00 | 16,954,735.37 | 0.00 |
As of 31 December 2022, Information of provision for bad debts:
As of 31 December 2022, Provision for bad debts on those in first stage:
| Category | Book balance | Expected credit loss rate in the next 12 months (%) | Provision for bad debts | Carrying amount | Reason |
| Provision for bad debts on individual item | 0.00 | 0.00 | 0.00 | 0.00 | |
| Provision for bad debts on portfolio basis | 238,041,400.41 | 0.00 | 0.00 | 238,041,400.41 | |
| Other receivables of each company within the scope of combination | 238,041,400.41 | 0.00 | 0.00 | 238,041,400.41 | Expected to be recovered |
| Total | 238,041,400.41 | 0.00 | 0.00 | 238,041,400.41 |
As of 31 December 2022, Provision for bad debts on those in second stage:
| Category | Book balance | Expected credit loss rate for the lifetime(%) | Provision for bad debts | Carrying amount | Reason |
| Provision for bad debts on individual item | 0.00 | 0.00 | 0.00 | 0.00 | |
| Provision for bad debts on portfolio basis | 4,007,402.35 | 43.45 | 1,741,277.98 | 2,266,124.37 | |
| Receivable of deposits under guarantee, deposits and lease | 973,098.11 | 36.42 | 354,429.35 | 618,668.76 |
Joincare Pharmaceutical Group Annual Report 2023
| expenses | |||||
| Other receivables | 3,034,304.24 | 45.71 | 1,386,848.63 | 1,647,455.61 | |
| Total | 4,007,402.35 | 43.45 | 1,741,277.98 | 2,266,124.37 |
As of 31 December 2022, Provision for bad debts on those in third stage:
| Category | Book balance | Expected credit loss rate for the lifetime(%) | Provision for bad debts | Carrying amount | Reason |
| Provision for bad debts on individual item | 17,968,386.04 | 100.00 | 17,968,386.04 | 0.00 | |
| Treasury bonds and security deposits | 17,968,386.04 | 100.00 | 17,968,386.04 | 0.00 | Likelihood of recovery is expected to be low |
| Provision for bad debts on portfolio basis | 0.00 | 0.00 | 0.00 | 0.00 | -- |
| Total | 17,968,386.04 | 100.00 | 17,968,386.04 | 0.00 |
④Accrual, recovery or reversal of bad debt provision during the period
| Provision for bad debts | First stage | Second stage | Third stage | Total |
| Expected credit loss within next 12 months | Expected credit loss for lifetime (no credit impairment occurred) | Expected credit loss for lifetime (credit impairment has occurred) | ||
| Beginning balance | 0.00 | 1,741,277.98 | 17,968,386.04 | 19,709,664.02 |
| Movement of beginning balance during the period | ||||
| --transfer to second stage | 0.00 | 0.00 | 0.00 | 0.00 |
| --transfer to third stage | 0.00 | 0.00 | 0.00 | 0.00 |
| --Reverse to second stage | 0.00 | 0.00 | 0.00 | 0.00 |
| --Reverse to first stage | 0.00 | 0.00 | 0.00 | 0.00 |
| Provision for the year | 0.00 | -78,284.70 | 0.00 | -78,284.70 |
| Reversal in the year | 0.00 | 0.00 | 1,013,650.67 | 1,013,650.67 |
| Transfer in the year | 0.00 | 0.00 | 0.00 | |
| Write-off in the year | 0.00 | 0.00 | 0.00 | 0.00 |
| Other movement | 0.00 | 0.00 | 0.00 | 0.00 |
| Closing balance | 0.00 | 1,662,993.28 | 16,954,735.37 | 18,617,728.65 |
⑤ No actual written-off of other receivables in this period
⑥ Other receivables due from the top five debtors
| Name of entity | Nature | Closing balance of other receivables | Ageing | Proportion to total other receivables (%) | Closing balance of provision for bad debts |
| Shenzhen Fenglei Electric Power Investment Co., Ltd. (深圳市风雷电力投资有限公司) | Other receivables of each company within the scope of combination | 129,956,104.29 | Within one year, 3-4 years | 70.25 | 0.00 |
| Joincare (Guangdong) Special medicine Food Co., Ltd. (健康元(广东) 特医食品有限公司) | Other receivables of each company within the scope of combination | 17,585,141.16 | Within 3 years | 9.51 | 0.00 |
| Hua Xia Securities Co., Ltd. (华夏证券股份有限公司) | Treasury bonds and security deposits | 16,954,735.37 | Over 5 years | 9.17 | 16,954,735.37 |
Joincare Pharmaceutical Group Annual Report 2023
| Name of entity | Nature | Closing balance of other receivables | Ageing | Proportion to total other receivables (%) | Closing balance of provision for bad debts |
| Health Pharmaceuticals (China) Limited (健康药业(中国) 有限公司) 深圳分公司 | Other receivables of each company within the scope of combination | 12,320,869.27 | Within 2 years | 6.66 | 0.00 |
| Shanghai Frontier Health Pharmaceutical Technology Co., Ltd. (上海方予健康医药科技有限公司) | Other receivables of each company within the scope of combination | 5,040,076.35 | Within 3 years | 2.72 | 0.00 |
| Total | 181,856,926.44 | 98.31 | 16,954,735.37 |
⑦ There were no other receivables derecognised due to the transfer of financial assets in eachreporting period.
⑧ There were no assets or liabilities formed by the continuing involvement of transferred otherreceivables in the period.
4. Long-term equity investment
| Item | 2023.12.31 | 2022.12.31 | ||||
| Book balance | Provision for impairment | Carrying amount | Book balance | Provision for impairment | Carrying amount | |
| Investment in subsidiaries | 3,676,678,312.11 | 7,010,047.91 | 3,669,668,264.20 | 3,453,138,312.11 | 7,010,047.91 | 3,446,128,264.20 |
| Investment in associates | 78,827,454.82 | 0.00 | 78,827,454.82 | 78,056,248.43 | 0.00 | 78,056,248.43 |
| Total | 3,755,505,766.93 | 7,010,047.91 | 3,748,495,719.02 | 3,531,194,560.54 | 7,010,047.91 | 3,524,184,512.63 |
(1) Investment in subsidiaries
| Investee | 2022.12.31 | Increase | Decrease | 2023.12.31 | Provision for impairment in the year | Closing balance of provision for impairment |
| Livzon Group | 608,741,654.08 | 0.00 | 0.00 | 608,741,654.08 | 0.00 | 0.00 |
| Haibin Pharma | 783,054,186.38 | 0.00 | 0.00 | 783,054,186.38 | 0.00 | 0.00 |
| Joincare Daily-Use | 24,116,498.56 | 0.00 | 0.00 | 24,116,498.56 | 0.00 | 1,610,047.91 |
| Topsino | 813,552,689.31 | 0.00 | 0.00 | 813,552,689.31 | 0.00 | 0.00 |
| Taitai Genomics | 37,500,000.00 | 0.00 | 0.00 | 37,500,000.00 | 0.00 | 0.00 |
| Taitai Pharmaceutical | 105,939,709.72 | 0.00 | 0.00 | 105,939,709.72 | 0.00 | 0.00 |
| Shenzhen Hiyeah | 170,100,000.00 | 0.00 | 0.00 | 170,100,000.00 | 0.00 | 5,400,000.00 |
| Fenglei Electric Power | 100,763,433.06 | 0.00 | 0.00 | 100,763,433.06 | 0.00 | 0.00 |
| Jiaozuo Joincare | 375,000,000.00 | 150,000,000.00 | 0.00 | 525,000,000.00 | 0.00 | 0.00 |
| Shanghai Frontier | 32,500,000.00 | 0.00 | 0.00 | 32,500,000.00 | 0.00 | 0.00 |
| Taitai Biological | 4,832,950.00 | 0.00 | 0.00 | 4,832,950.00 | 0.00 | 0.00 |
| Joincare Haibin | 100,000,000.00 | 0.00 | 0.00 | 100,000,000.00 | 0.00 | 0.00 |
| Joincare Special medicine Food | 3,000,000.00 | 0.00 | 0.00 | 3,000,000.00 | 0.00 | 0.00 |
| Livzon Biologics | 294,037,191.00 | 0.00 | 0.00 | 294,037,191.00 | 0.00 | 0.00 |
| Lijian (Guangdong) Animal Health Co., Ltd. | 0.00 | 73,500,000.00 | 0.00 | 73,500,000.00 | 0.00 | 0.00 |
| Wuhan Kangli Health Investment Management Co., Ltd. | 0.00 | 40,000.00 | 0.00 | 40,000.00 | 0.00 | 0.00 |
| Total | 3,453,138,312.11 | 223,540,000.00 | 0.00 | 3,676,678,312.11 | 0.00 | 7,010,047.91 |
Joincare Pharmaceutical Group Annual Report 2023
(2) Investment in associates and joint ventures
| Investee | 2022.12.31 | Movement in the year | 2023.12.31 | Closing balance of provision for impairment | |||||||
| Additions in investment | Decrease in investment | Investment income/loss recognized under the equity method | Adjustment in other comprehensive income | Changes of other equity | Announced distribution of cash dividend or profit | Provision for impairment | Others | ||||
| Associates | |||||||||||
| Ningbo Ningrong Biomedical Co., Ltd. (宁波宁融生物医药有限公司) | 27,179,209.51 | 0.00 | 0.00 | 606,175.12 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 27,785,384.63 | 0.00 |
| Feellife Health Inc. (深圳来福士雾化医学有限公司) | 12,402,324.22 | 0.00 | 0.00 | -986,141.63 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 11,416,182.59 | 0.00 |
| Jiangsu Baining Yingchuang Medical Technology Co., Ltd. (江苏百宁盈创医疗科技有限公司) | 28,732,381.11 | 0.00 | 0.00 | 1,365,081.78 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 30,097,462.89 | 0.00 |
| Shanghai Sheo Pharmaceutical Technology Co., Ltd. (上海偕怡医药科技有限公司) | 9,742,333.59 | 0.00 | 0.00 | -213,908.88 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 9,528,424.71 | 0.00 |
| Subtotal | 78,056,248.43 | 0.00 | 0.00 | 771,206.39 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 78,827,454.82 | 0.00 |
Joincare Pharmaceutical Group Annual Report 2023
5. Operating income and operating cost
(1) Operating income and operating cost
| Item | 2023 | 2022 | ||
| Revenue | Cost | Revenue | Cost | |
| Primary operations | 2,309,792,979.65 | 1,280,944,324.62 | 2,318,838,433.60 | 1,570,518,398.66 |
| Other operations | 25,575,430.08 | 15,675,678.17 | 55,049,131.18 | 42,380,613.14 |
| Total | 2,335,368,409.73 | 1,296,620,002.79 | 2,373,887,564.78 | 1,612,899,011.80 |
(2) Disaggregate information of primary operating income
① Segregation by products
| Item | 2023 | 2022 | ||
| Revenue | Cost | Revenue | Cost | |
| Chemical pharmaceuticals (化学药物) | 2,080,827,107.18 | 1,150,753,091.34 | 2,156,627,002.13 | 1,467,215,984.98 |
| Traditional Chinese medicine (中药制剂) | 60,534,652.54 | 35,184,583.04 | 42,843,606.38 | 24,726,803.46 |
| Health care products (保健食品) | 167,485,390.35 | 94,205,909.89 | 119,285,823.66 | 78,384,343.41 |
| Others | 945,829.58 | 800,740.35 | 82,001.43 | 191,266.81 |
| Total | 2,309,792,979.65 | 1,280,944,324.62 | 2,318,838,433.60 | 1,570,518,398.66 |
② Segregation by operating location
| Item | 2023 | 2022 | ||
| Revenue | Cost | Revenue | Cost | |
| Domestic | 2,309,519,252.93 | 1,280,859,972.72 | 2,318,555,876.08 | 1,570,367,026.33 |
| Overseas | 273,726.72 | 84,351.90 | 282,557.52 | 151,372.33 |
| Total | 2,309,792,979.65 | 1,280,944,324.62 | 2,318,838,433.60 | 1,570,518,398.66 |
③ Segregation by timing of revenue recognition
| Item | 2023 | 2022 | ||
| Revenue | Cost | Revenue | Cost | |
| Commodities (Recognized at a point in time) | 2,309,792,979.65 | 1,280,944,324.62 | 2,318,838,433.60 | 1,570,518,398.66 |
| Total | 2,309,792,979.65 | 1,280,944,324.62 | 2,318,838,433.60 | 1,570,518,398.66 |
(3) Disaggregate information of other operations
| Item | 2023 | 2022 | ||
| Revenue | Cost | Revenue | Cost | |
| Processing fees | 0.00 | 0.00 | 4,837,029.47 | 4,329,387.37 |
| Rental fees | 8,744,746.23 | 964,743.31 | 9,861,266.50 | 1,445,184.13 |
| Technical services | 2,933,967.45 | 766,177.99 | 27,233,207.55 | 23,946,403.27 |
Joincare Pharmaceutical Group Annual Report 2023
| Others | 13,896,716.40 | 13,944,756.87 | 13,117,627.66 | 12,659,638.37 |
| Total | 25,575,430.08 | 15,675,678.17 | 55,049,131.18 | 42,380,613.14 |
6. Investment income
| Item | 2023 | 2022 |
| Long-term equity investments income under cost method | 1,137,547,988.80 | 985,288,053.40 |
| Long-term equity investments income under equity method | 771,206.39 | 1,326,243.55 |
| Investment income from disposal of long-term equity investments | 0.00 | 4,242,404.46 |
| Dividend income from other equity instrument investments | 0.00 | 512,350.35 |
| Total | 1,138,319,195.19 | 991,369,051.76 |
XVII. Supplement information
1. Schedule of non-recurring gains or losses
| Item | 2023 | 2022 |
| Gain or loss on disposal of non-current assets | -169,901.01 | -705,357.30 |
| Government grants that are included in the profit and loss(except for government grants that are closely related to the company’s normal business operations and that meet the national policy requirements and continue to enjoy a certain amount or quantitative basis according to certain standards) | 233,058,407.11 | 286,842,932.33 |
| Except for the efficient hedging related to the Company’s normal business, profit or loss from changes in fair value as generated from financial assets and financial liabilities held for trading and gains from investment as a result of the disposal of financial assets and financial liabilities held for trading and debt investments | -48,440,235.41 | -109,887,696.11 |
| Reversals of provision for impairment of accounts receivable with individual impairment test | 1,013,650.67 | 158,470.77 |
| Other non-operating income and expenses other than the above | -41,010,372.38 | -23,830,838.49 |
| Total amount of non-recurring items | 144,451,548.98 | 152,577,511.20 |
| Less: effects of income tax on non-recurring items | 21,086,934.90 | 31,919,034.26 |
| Less: Non-recurring items attributable to the minority shareholders (after tax) | 54,721,622.26 | 37,113,548.72 |
| Non-recurring items attributable to the shareholders of the Company | 68,642,991.82 | 83,544,928.22 |
2. Rate of return on net assets and earnings per share
For the year ended 31 December 2023
| Profit in reporting period | Weighted average return on equity (%) | Earnings per share | |
| Basic earnings per share | Diluted earnings per share | ||
| Net profit attributable to the shareholders of the Company | 11.00 | 0.7580 | 0.7565 |
| Net profit attributable to ordinary shareholders of the Company after deducting non-recurring gains and losses | 10.47 | 0.7219 | 0.7205 |
For the year ended 31 December 2022
| Profit in reporting period | Weighted average return on equity (%) | Earnings per share | |
| Basic earnings per share | Diluted earnings per share | ||
Joincare Pharmaceutical Group Annual Report 2023
| Net profit attributable to the shareholders of the Company | 12.23 | 0.7934 | 0.7922 |
| Net profit attributable to ordinary shareholders of the Company after deducting non-recurring gains and losses | 11.55 | 0.7493 | 0.7482 |
Joincare Pharmaceutical Group Industry Co., Ltd.
健康元药业集团股份有限公司2 April 2024