Financial Performance - The group's operating revenue for the year ended December 31, 2023, was RMB 4,516,538,000, an increase of 14.3% compared to the previous year[2] - The annual profit reached RMB 969,510,000, representing a growth of 34.1% year-on-year[2] - The earnings per share were RMB 1.28, with a proposed interim dividend of RMB 0.43 per share for 2024[2] - The company achieved a net cash per share of RMB 6.76, equivalent to HKD 7.43[2] - The group reported record sales and profits, with sales exceeding RMB 4.5 billion, driven by growth in respiratory medications and proprietary oral products[3] - The company achieved a record sales revenue of RMB 4,516,538,000 in 2023, representing a 14.3% increase compared to the previous year[6] - Net profit for 2023 reached RMB 969,510,000, marking a growth of 34.1% year-over-year[6] - Gross margin improved by 0.7 percentage points to 75.1%, while net profit margin increased from 18.3% to 21.5%[6] - The company generated free cash flow of approximately RMB 788,310,000, equivalent to RMB 0.95 per share[6] - The profit attributable to the owners of the company for 2023 was RMB 969,510,000, an increase of approximately 34.1% compared to 2022, driven by increased sales revenue and improved operational performance[34] Revenue Breakdown - The sales of injection products increased by 25.5%, driven by a significant rise in the sales of Qingkailing injection, which grew by 75.1% to RMB 850,751,000[8] - Oral product sales accounted for 60.5% of total sales, with an overall growth of 8.0% despite a slowdown in the second half of the year[9] - Sales of essential medicines included in the national essential drug list rose by 32.8% to RMB 1,743,820,000, representing 38.6% of total sales[11] - Prescription drugs and OTC drugs accounted for approximately 87.1% and 12.9% of total sales, respectively, with prescription drugs growing by 14.6%[12] - The sales of influenza treatment respiratory prescription drugs reached RMB 1,102,257,000, an increase of 62.4%, accounting for 24.4% of the total sales[14] - The sales of Qingkailing injection reached RMB 850,751,000, up 75.1%, representing 18.8% of the total sales[14] - The sales of traditional Chinese medicine formula granules increased by 8.9% to RMB 1,201,664,000, accounting for 26.6% of total sales[16] - The sales of exclusive oral prescription products grew by 7.0% to RMB 445,150,000, with significant increases in several specific products[18] - OTC drug sales increased by 12.6% to RMB 583,217,000, with Huoxiang Zhengqi soft capsules growing by 23.3% to RMB 187,249,000[19] Research and Development - The company is advancing multiple research and clinical projects, including the approval of the traditional Chinese medicine "Yiguan Jian Granules" for market[3] - The company plans to continue strengthening R&D investment, focusing on modern Chinese medicine for chronic disease treatment[20] - The group has nearly 100 R&D projects converting ancient classic prescriptions into new traditional Chinese medicines[23] - The company’s research and development costs for 2023 were RMB 110,462,000, slightly down from RMB 117,454,000 in 2022[40] Market Strategy and Opportunities - The group is focusing on digital transformation and smart manufacturing, aiming to establish itself as a leader in the modern Chinese medicine industry[5] - The Chinese government's support for traditional Chinese medicine is expected to enhance market opportunities, with plans to build 130 key hospitals and 64 medical centers by 2025[4] - The company plans to continue expanding its competitive advantages in the formula granule sector and implement a multi-product, multi-channel marketing strategy to drive growth[4] - The company aims to accelerate market development in key provinces and enhance sales in grassroots medical institutions[16] Financial Position and Assets - As of December 31, 2023, the company had cash and bank balances of RMB 5,888,776,000, with net cash per share of HKD 7.43[6] - The total assets less current liabilities amounted to RMB 7,140,275,000 as of December 31, 2023, compared to RMB 6,566,268,000 in 2022[41] - The company’s net assets increased to RMB 7,034,768,000 in 2023 from RMB 6,382,526,000 in 2022[42] - The net book value of property, plant, and equipment as of December 31, 2023, was approximately RMB 1,205,287,000, a decrease of about 1.0% from the previous year[36] Dividends and Shareholder Returns - The company declared an interim dividend of RMB 0.43 per share, with a total dividend related to the fiscal year 2023 amounting to RMB 0.54 per share, resulting in a payout ratio of 42.2%[6] - The company did not recommend any final dividend for the year ended December 31, 2023, but declared an interim dividend of RMB 0.43 per share for the year ending December 31, 2024, totaling RMB 324,822,000[38] - The company declared an interim dividend of RMB 0.31 per share for 2023, totaling RMB 324,822,000, compared to RMB 234,174,000 for the previous year, marking a rise of 38.7%[58] Compliance and Governance - The audit committee has reviewed the audited financial performance for the year ending December 31, 2023, confirming compliance with relevant standards[70] - The company has adopted a higher standard for securities trading by directors than those stipulated in the listing rules, ensuring compliance throughout the year[69] - The company will hold its annual general meeting on May 31, 2024, as per the requirements of the Hong Kong Stock Exchange[65] - The company will publish its annual report, including the board report and audited consolidated financial statements, on its website and the Hong Kong Stock Exchange website[71]

Financial Performance - The company's revenue for the six months ended June 30, 2023, reached RMB 2,398,680,000, representing a 32.1% increase compared to the same period last year[5]. - Net profit for the period was RMB 491,465,000, reflecting a 48.4% increase year-on-year[5]. - Earnings per share rose to RMB 0.65, an increase of 47.7% compared to the same period last year[5]. - Gross profit margin improved to 75.2%, up from 73.0% in the previous year[5]. - The group achieved a revenue increase of 32.1% in the first six months of 2023, with total revenue reaching RMB 2,398,680,000[17]. - Injection products generated revenue of RMB 957,253,000, up 37.3%, accounting for 39.9% of total revenue[17]. - The net profit for the first six months of 2023 was RMB 491,465,000, an increase of 48.4% compared to the same period last year[23]. Sales and Product Performance - Prescription drugs accounted for approximately 85.7% of total sales, while over-the-counter (OTC) drugs made up 14.3%[6]. - Oral product sales grew by 28.9% year-on-year, with significant contributions from soft capsules (19.0% increase), granules (28.5% increase), and traditional Chinese medicine granules (34.0% increase)[10]. - Sales of essential medicines listed in the national essential drug list increased by 57.0% to RMB 928,912,000, accounting for 38.7% of total sales, with 77.0% being prescription drugs[9]. - Prescription drug sales rose by 27.2% to RMB 2,056,849,000, while OTC drug sales surged by 72.6% to RMB 341,831,000[10]. - The company ranks among the top five in the national market for traditional Chinese medicine granules, with sales accounting for 26.2% of total sales and a 34.0% increase[11]. - The company’s injection products recorded a growth of 37.3%, driven by respiratory and cardiovascular prescription drugs[10]. Research and Development - The company is focusing on enhancing research and development, particularly in digital and intelligent supply chain projects[7]. - The group plans to enhance evidence-based medical research for exclusive oral prescription products and increase marketing efforts to boost sales[13]. - The company has continued to focus on the research and development of traditional Chinese medicine products, which is its primary operational segment[46]. Dividends and Shareholder Information - The board declared an interim dividend of RMB 0.11 per share for the fiscal year 2023[7]. - The company declared an interim dividend of RMB 0.31 per share for 2023, totaling RMB 234,174,000, compared to RMB 0.21 per share totaling RMB 158,634,000 for 2022, representing a 47.5% increase in dividend payout[53]. - As of June 30, 2023, the major shareholder, 富威, holds 546,802,990 shares, representing 66.12% of the company's equity[30]. Financial Position and Assets - Total assets as of June 30, 2023, amounted to RMB 7,441,052,000, an increase from RMB 6,782,399,000 as of December 31, 2022[40]. - Cash and bank balances amounted to approximately RMB 5,364,576,000 as of June 30, 2023, compared to RMB 4,831,946,000 on December 31, 2022[23]. - Inventory increased by 21.5% compared to December 31, 2022, with raw materials, work-in-progress, and finished goods accounting for 26.2%, 39.7%, and 34.1% of inventory, respectively[23]. Costs and Expenses - The sales cost for the first half of 2023 was RMB 594,723,000, representing 24.8% of total revenue[18]. - Sales and distribution costs increased by 24.3%, accounting for 42.7% of the group's revenue, compared to 45.4% in the same period last year[22]. - Administrative expenses rose by approximately 8.1%, representing 5.8% of the group's revenue, up from 7.0% in the same period last year[22]. - Research and development costs accounted for 2.0% of the group's revenue, compared to 1.6% in the same period last year[22]. Taxation and Compliance - The effective tax rate increased from 19.5% to 26.8%, primarily due to withholding tax from dividends distributed by domestic subsidiaries[22]. - The company recognized income tax expenses of RMB 179,823,000 for the first half of 2023, up from RMB 80,285,000 in the same period of 2022, reflecting a significant increase of 124.4%[51]. - The company’s subsidiaries in western China benefited from a reduced corporate income tax rate of 15% due to local tax incentives, compared to the standard rate of 25%[50]. Employee and Corporate Governance - The number of employees decreased to 3,533 as of June 30, 2023, from 4,131 as of December 31, 2022, reflecting a reduction of approximately 14.5%[24]. - The company has complied with the corporate governance code during the six months ending June 30, 2023, with all directors confirming adherence to the securities trading regulations[33]. - There have been no changes in director information that require disclosure under the listing rules for the six months ending June 30, 2023[34].

Financial Performance - The group recorded a revenue of RMB 2,398,680,000 for the six months ended June 30, 2023, representing a 32.1% increase compared to the same period last year[2]. - Net profit for the period was RMB 491,465,000, reflecting a 48.4% increase year-on-year[2]. - Earnings per share rose to RMB 0.65, an increase of 47.7% compared to the same period last year[2]. - The gross profit margin improved to 75.2%, up from 73.0% in the previous year[2]. - The group achieved a revenue increase of 32.1% in the first six months of 2023, with injection products generating RMB 957,253,000, up 37.3%[18]. - The net profit attributable to the company's owners for the six months ended June 30, 2023, was RMB 491,465,000, representing a 48.4% increase from RMB 331,123,000 in the same period of 2022[46]. - Revenue for the first half of 2023 reached RMB 2,398,680,000, up from RMB 1,815,194,000 in the same period of 2022, reflecting a significant growth in sales[33]. Sales Performance - Sales of essential medicines included in the national essential drug list increased by 57.0% to RMB 928,912,000, accounting for 38.7% of total sales[5]. - Prescription drug sales grew by 27.2%, with a total sales amount of RMB 2,056,849,000, representing 85.7% of total sales[7]. - Oral product sales increased by 28.9%, driven by exclusive oral products such as specific capsules and granules[4]. - The sales of traditional Chinese medicine formula granules increased significantly by 34.0%, accounting for 26.2% of the total sales of the company[9]. - The sales revenue of respiratory prescription drugs surged by 82.0%, reaching RMB 512,898,000, which represents 21.4% of the company's overall sales[10]. - The sales of the Qingkailing injection reached RMB 400,632,000, up 92.8%, contributing 16.7% to the total sales[10]. - The overall sales of the company's injectable products rose by 37.3%, with significant growth in cardiovascular injectable drugs, which increased by 13.3% to RMB 498,150,000[11]. - The sales of the company's OTC products grew by 72.6%, with the Huoxiang Zhengqi soft capsule and Qingkailing soft capsule increasing by 110.8% and 54.6%, respectively[13]. Cost and Expenses - The overall sales and distribution costs increased by only 24.3%, while administrative expenses rose by 8.1%, contributing to an increase in net profit margin from 18.2% to 20.5%[3]. - The sales cost for the first six months of 2023 was RMB 594,723,000, representing 24.8% of the total revenue[19]. - The sales and distribution costs increased by 24.3% year-on-year, accounting for 42.7% of total revenue, down from 45.4% in the previous year[25]. - Administrative expenses rose by approximately 8.1% year-on-year, representing 5.8% of total revenue, compared to 7.0% in the same period last year[26]. - Research and development costs accounted for 2.0% of total revenue in the first half of 2023, up from 1.6% in the same period of 2022[27]. Dividends and Equity - The group declared an interim dividend of RMB 0.11 per share for the fiscal year 2023[2]. - The company declared an interim dividend of RMB 0.31 per share for 2023, compared to RMB 0.21 per share for 2022, reflecting a 47.6% increase[46]. - The company’s total equity as of June 30, 2023, was RMB 6,639,817,000, an increase of 4.0% from RMB 6,382,526,000 at the end of 2022[36]. Government Support and Grants - The group received government subsidies amounting to RMB 8,812,000, an increase from RMB 7,634,000 in the previous year[21]. - The company received government grants totaling RMB 8,812,000 during the period, compared to RMB 7,634,000 in the previous year[44]. Research and Development - The group is currently conducting clinical trials for three exclusive innovative drugs, including "Sailuotong Capsules" in Phase III trials[15]. - The group submitted new drug applications for two ancient classic formulas, "Shaoyao Gancao Decoction Granules" and "Yiguan Decoction Granules" during the reporting period[16]. - The group plans to accelerate the registration applications for multiple classic formulas by the end of 2023[16]. Market Development - The company has completed the listing of traditional Chinese medicine formula granules in 13 provinces and municipalities, with plans to accelerate market development in key regions[9]. - The company aims to enhance its exclusive oral prescription products through evidence-based medical research and increased academic promotion[12]. - The company has successfully bid for multiple traditional Chinese medicine injections in national and provincial centralized procurement, indicating a recovery in demand[12]. - The company is positioned to benefit from the aging population, which is expected to increase the demand for cardiovascular injectable drugs[12]. Financial Position - As of June 30, 2023, the company had cash and bank balances of approximately RMB 5,364,576,000, an increase from RMB 5,046,495,000 at the end of 2022[29]. - The impairment losses on financial assets increased to RMB 6,236,000 in the first half of 2023, compared to a reversal of RMB 1,443,000 in the same period of 2022[33]. - Trade receivables, net of expected credit loss provisions, increased to RMB 759,323,000 as of June 30, 2023, compared to RMB 673,380,000 as of December 31, 2022[51]. - Trade payables amounted to RMB 387,013,000 as of June 30, 2023, up from RMB 308,745,000 as of December 31, 2022[55]. - The total amount of notes received was RMB 451,773,000 as of June 30, 2023, compared to RMB 301,682,000 as of December 31, 2022[53]. Corporate Governance - The company has adhered to the corporate governance code as per the Hong Kong Stock Exchange rules, with a noted deviation regarding the separation of roles between the Chairman and the CEO, which is currently held by the same individual[67]. - The audit committee has reviewed the accounting principles and policies adopted by the group for the six months ended June 30, 2023[69]. - The interim report for the six months ended June 30, 2023, will be distributed to shareholders and published on the Hong Kong Stock Exchange website and the company's website[69].

Financial Performance - The company's total sales revenue for 2022 reached RMB 3.956 billion, representing a 22.6% increase compared to the previous year[6]. - The gross profit for 2022 was RMB 2.938 billion, with a gross margin improvement reflected in the overall financial performance[6]. - The net profit attributable to shareholders increased by 29.7% year-on-year to RMB 722.773 million[6]. - The company's total sales for 2022 reached RMB 3,950,636,000, representing a 22.6% increase compared to the previous year, with net profit rising by 29.8% to RMB 722,773,000[12]. - The gross profit margin for the year was 74.4%, slightly down from 74.8% in the previous year, while the net profit margin improved from 17.3% to 18.3%[12]. - The overall gross profit margin for the group was 74.4% in 2022, slightly down from 74.8% in 2021[27]. - The net profit attributable to the company's owners for 2022 was RMB 722,773,000, a 29.8% increase compared to the previous year[35]. - The company's total comprehensive income for 2022 was RMB 722,773,000, compared to RMB 556,674,000 in 2021, marking an increase of approximately 30%[156]. - Basic earnings per share rose to RMB 0.96, up from RMB 0.74, marking a 30% increase year-over-year[153]. - The company's profit before tax for 2022 was RMB 917,025,000, an increase from RMB 720,103,000 in 2021, representing a growth of approximately 27.4%[158]. Sales and Market Expansion - Sales of traditional Chinese medicine formula granules exceeded RMB 1.1 billion, marking a 59.3% increase and positioning the company among the top five publicly listed firms in this sector[9]. - The company has expanded its market presence, with traditional Chinese medicine formula granules now available in 2 municipalities and 13 provinces by the end of 2022[9]. - The company plans to focus on deepening its market in Hebei, expanding in Yunnan, and developing in four additional provinces in 2023[9]. - The sales of injection products, soft capsules, and granules saw significant increases of 6.3%, 24.5%, and 18.1% respectively during the year[9]. - Sales of traditional Chinese medicine formula granules surged by 59.3%, contributing to 27.9% of total sales, with overall oral product sales accounting for 64.0% of total revenue[14]. - The sales of injection products grew by 6.3% to RMB 1,423,254,000, accounting for 36.0% of total sales, despite a slowdown in growth in the second half of the year[16]. - Sales in grassroots markets surged by 196.0% compared to the previous year, with sales in Hebei province increasing by 49.0% and in Yunnan province by 84.0%[17]. - The exclusive product "Synovitis Granules" achieved a sales growth of 34.1%, reaching RMB 231,012,000 in 2022[19]. - "Qi Huang Tong Mi Soft Capsules" recorded a sales growth of 45.8%, totaling RMB 68,359,000 in 2022[20]. - "Cholesterol-Lowering Soft Capsules" saw an impressive sales growth of 82.8%, reaching RMB 35,904,000 in 2022[20]. - "Dan Deng Tong Nao Soft Capsules" achieved a sales growth of 71.9%, totaling RMB 31,088,000 in 2022[20]. Research and Development - The company is actively enhancing evidence-based medical research and academic promotion to support its product offerings[9]. - The company has a strong research team of 48 personnel at the Shenwei Drug Research Institute, focusing on innovative drug development, with three proprietary drugs currently in Phase III clinical trials[22]. - The global dementia patient population is expected to double every 20 years, reaching 67.7 million by 2030, with vascular dementia accounting for 32% of cases, highlighting the potential market for the company's innovative drug, Seluotong capsules[22]. - The Q-B-Q-F concentrated pill is entering Phase III clinical trials, targeting mycoplasma pneumonia, which accounts for 30% of pneumonia cases and is prevalent in children[23]. - The company aims to complete the registration of its first batch of classic Chinese medicine formulas by the end of 2023, in line with national policies supporting traditional Chinese medicine[24]. - The company is committed to investing in the research and development of new drugs to diversify its product portfolio[56]. Financial Position and Cash Flow - The company generated a net cash flow from operating activities of RMB 1,109,676,000, with no bank debt reported, resulting in a free cash flow of approximately RMB 980,213,000, equivalent to RMB 1.19 per share[12]. - As of December 31, 2022, the group's cash and structured deposits totaled approximately RMB 5,046,495,000, up from RMB 4,205,722,000 in 2021[36]. - The company's cash and cash equivalents reached RMB 5,026,265 thousand, compared to RMB 4,205,722 thousand in the previous year, showing a growth of 19.5%[154]. - The total liabilities increased to RMB 1,665,593 thousand from RMB 1,098,371 thousand, representing a 51.7% rise[155]. - The net assets of the company were RMB 6,382,526 thousand, up from RMB 5,901,481 thousand, indicating a growth of 8.1%[155]. - Operating cash flow generated from operations for 2022 was RMB 1,266,330,000, compared to RMB 847,723,000 in 2021, indicating a significant increase of about 49.3%[158]. - The net cash increase for cash and cash equivalents at the end of 2022 was RMB 814,218,000, up from RMB 269,226,000 in 2021, reflecting a growth of approximately 202.5%[159]. Corporate Governance and Compliance - The company adheres to corporate governance standards and has implemented new policies, including shareholder communication and anti-fraud measures, in compliance with updated regulations[99]. - The board consists of four executive directors, three independent non-executive directors, and one non-executive director as of December 31, 2022[102]. - The company has established mechanisms to ensure the independence of the board, with three out of eight directors being independent non-executive directors, meeting regulatory requirements[103]. - The board held five meetings and one annual general meeting in 2022, with all executive directors attending all meetings[105]. - The company has established four committees: Audit Committee, Remuneration Committee, Nomination Committee, and Corporate Social Responsibility and Sustainability Committee[104]. - The company has adopted a nomination policy for selecting board members, considering diversity in gender, age, and professional experience[126]. - The company has established a Corporate Governance Committee, which is responsible for reviewing governance policies and compliance with legal requirements[131]. Shareholder Information and Dividends - The board declared a first interim dividend of RMB 0.31 per share, with a total dividend related to the 2022 fiscal year amounting to RMB 0.42 per share, representing a payout ratio of 43.8%[12]. - The company declared an interim dividend of RMB 0.31 per share, totaling RMB 234,174,000, based on 827,000,000 issued shares minus 71,600,000 shares held under the share incentive plan[57]. - As of December 31, 2022, the reserves available for distribution to shareholders amounted to RMB 1,023,848,000, an increase from RMB 874,930,000 in 2021[60]. - The company has a significant shareholder, Fu Wei, holding 546,802,990 shares, which represents approximately 66.12% of the total shares[67]. Related Party Transactions - The company entered into a technical service contract with a related party for a total consideration of RMB 14,000,000, effective from November 5, 2019, to November 4, 2024[80]. - The annual rent payable under a land lease contract with a related party is RMB 1,600,000, covering approximately 49,276 square meters of land for a period of three years[81]. - The company has confirmed compliance with the disclosure requirements under the Listing Rules for all related party transactions[89]. Environmental and Social Responsibility - The company has implemented environmental policies to ensure sustainable operations without compromising environmental integrity[52]. - The company made charitable donations totaling RMB 7,220,600 and contributed 78 hours to public welfare activities during the year[96]. - The board emphasizes values such as quality, social responsibility, innovation, respect for life, and sustainable development to guide business activities[100]. Risk Management and Internal Controls - The group has established a risk management and internal control system to ensure effective governance and compliance with laws and regulations[132]. - The internal audit department has assessed the effectiveness and adequacy of the risk management and internal control system, with no significant deficiencies found[133]. - The company has established internal controls to prevent material misstatements in the financial statements due to fraud or error[149].

Financial Performance - The group's revenue for the year ended December 31, 2022, was RMB 3,950,636,000, an increase of 22.6% compared to the previous year[2]. - The annual profit was RMB 722,773,000, representing a growth of 29.8% year-on-year[2]. - The company's total sales for 2022 reached RMB 3,950,636,000, an increase of 22.6% compared to the previous year, with net profit rising by 29.8% to RMB 722,773,000[5]. - The gross profit margin was 74.4%, slightly down from 74.8% in the previous year[2]. - The net profit margin improved from 17.3% to 18.3%[5]. - The group achieved a total revenue increase of 22.6% in 2022, with injection products generating approximately RMB 1,423,254,000, a 6.3% increase, accounting for 36.0% of total revenue[20]. - The sales cost for the group in 2022 was approximately RMB 1,012,322,000, representing 25.6% of total revenue[21]. - The pre-tax profit for 2022 was RMB 917,025,000, an increase of 27.4% compared to RMB 720,103,000 in 2021[55]. - The total tax expense for 2022 was RMB 194,252,000, up from RMB 163,429,000 in 2021, reflecting an 18.8% increase[55]. - The basic and diluted earnings per share for 2022 were RMB 0.96, compared to RMB 0.74 in 2021, representing a 29.7% increase[59]. Product Sales and Growth - Sales of traditional Chinese medicine formula granules exceeded RMB 1.1 billion, up 59.3% from the previous year, ranking among the top five listed companies in the industry[3]. - Oral products continued to be the main growth driver, with overall sales increasing by 34.1% to RMB 2,527,382,000, representing 64.0% of total sales[6]. - The sales of the respiratory system drug Qingkailing soft capsule increased by 79.8% to RMB 81,770,000, with a significant growth of 154.4% in the second half of the year[8]. - The sales of traditional Chinese medicine formula granules surged by 59.3% to approximately RMB 1,102,958,000, representing 27.9% of total revenue[20]. - The sales of the company's unique product, Synovitis Granules, grew by 34.1% in 2022, reaching RMB 231,012,000, making it the only approved innovative traditional Chinese medicine for treating synovitis[13]. - The sales of Qi Huang Tong Mi Soft Capsules increased by 45.8% in 2022, totaling RMB 68,359,000, and it is recognized as a new generation of modern traditional Chinese medicine for treating functional constipation[13]. - The company’s proprietary product, Jiang Zhi Tong Liao Soft Capsules, saw an impressive sales growth of 82.8% in 2022, amounting to RMB 35,904,000, and is included in the national medical insurance catalog[13]. - Dan Deng Tong Nao Soft Capsules recorded a sales increase of 71.9% in 2022, reaching RMB 31,088,000, and is effective for treating ischemic stroke and transient ischemic attacks[14]. - The sales revenue from grassroots markets for traditional Chinese medicine formula granules surged by 196.0% compared to the previous year[10]. Market Expansion and Strategy - The company plans to deepen its market presence in Hebei, expand in Yunnan, and develop in four other provinces in 2023[3]. - The company is committed to increasing its digital marketing transformation and expanding its coverage in retail pharmacies and target hospitals[4]. - The company aims to enhance its core competitiveness through projects focused on modern traditional Chinese medicine production and technology standards[4]. - The company has completed the listing registration for national standard varieties in 29 provinces and is focusing on expanding sales in key provinces[11]. - The company aims to establish a national network for traditional Chinese medicine formula granules, leveraging the opportunities presented by the opening of the national market[12]. - The expansion of sales channels is projected to grow from over 2,000 pilot hospitals to one million medical institutions capable of providing traditional Chinese medicine services[12]. - The market for traditional Chinese medicine formula granules is expected to exceed RMB 100 billion by 2025, with a growth rate nearly several times the current market size[12]. - The company has become one of the top five listed companies in the traditional Chinese medicine formula granules industry by sales revenue[12]. Research and Development - The company is in the III phase of clinical research for innovative traditional Chinese medicine, with plans to accelerate trials following the control of the pandemic[4]. - The group is currently conducting Phase III clinical trials for three innovative drugs, including "Sailuotong Capsules," targeting vascular dementia, which is a significant health concern with an expected global increase in dementia cases[16]. - The "Q-B-Q-F Concentrated Pill" is entering Phase III clinical trials, aimed at treating mycoplasma pneumonia in children, addressing a significant clinical need due to rising antibiotic resistance[17]. - The group plans to complete the registration of the first batch of classic Chinese medicine formulas by the end of 2023, in line with national policies promoting traditional medicine[17]. - The group has 48 researchers and is collaborating with prestigious institutions like Tsinghua University and Peking University for drug development[16]. - The group is actively advancing the development and registration of classic Chinese medicine formulas, reflecting the government's support for traditional medicine[19]. Financial Position and Assets - The company recorded a net cash per share of HKD 6.87 and a net asset value per share of HKD 8.72 as of December 31, 2022[5]. - The group had cash and cash equivalents of approximately RMB 5,046,495,000 as of December 31, 2022, compared to RMB 4,205,722,000 in 2021[31]. - Current assets increased significantly from RMB 5,699,112 thousand in 2021 to RMB 6,782,399 thousand in 2022, representing an increase of about 19.0%[37]. - Total liabilities rose from RMB 1,098,371 thousand in 2021 to RMB 1,665,593 thousand in 2022, an increase of approximately 51.7%[37]. - Net assets increased from RMB 5,901,481 thousand in 2021 to RMB 6,382,526 thousand in 2022, representing a growth of about 8.1%[38]. - The company reported a significant increase in trade payables, which rose from RMB 228,620 thousand in 2021 to RMB 308,540 thousand in 2022[37]. - The impairment loss on financial assets for 2022 was RMB 10,432,000, up from RMB 5,424,000 in 2021[26]. Dividends and Shareholder Returns - The company declared a first interim dividend of RMB 0.31 per share[2]. - The company declared an interim dividend of RMB 0.31 per share for 2023, with a total dividend related to the 2022 fiscal year amounting to RMB 0.42 per share, resulting in a payout ratio of 43.8%[5]. - The company declared a first interim dividend of RMB 0.31 per share for 2023, totaling RMB 234,174,000, compared to RMB 0.21 per share totaling RMB 158,634,000 in 2022[58]. Governance and Compliance - The company plans to hold its annual general meeting on May 30, 2023, to discuss future strategies and performance[65]. - The company did not repurchase, sell, or redeem any of its listed securities during the year ended December 31, 2022[67]. - The company has adopted a higher standard of conduct for securities trading than that outlined in the listing rules, and all directors confirmed compliance for the year ended December 31, 2022[69]. - The audit committee reviewed the audited financial performance of the group for the year ended December 31, 2022[70]. - The financial statements for the year ended December 31, 2022, were approved by the board on March 30, 2023, and are consistent with the figures provided by the auditors[70]. - The annual report will include the board report, audited consolidated financial statements, and corporate governance report, to be published on the company's website and the stock exchange's website[71]. - The chairman and president roles are held by the same individual, with responsibilities clearly defined and documented, which the board believes is beneficial for executing the group's business strategy[68].

Financial Performance - The overall business revenue for 2020 was RMB 2.66 billion, a slight decrease of 1.9% compared to the previous year[14]. - The net profit for 2020 decreased by 41.4% to RMB 295 million, primarily due to a one-time non-recurring impairment provision of approximately RMB 229 million[14]. - The basic earnings per share for 2020 was RMB 0.39, down from RMB 0.64 in 2019[8]. - The company reported a gross profit of RMB 1.99 billion for 2020, with a gross margin maintained at approximately 74.8%[8]. - The group reported a net profit attributable to shareholders of RMB 295,033,000, a decrease of 41.4% compared to the previous year, primarily due to a one-time impairment provision for a subsidiary's assets[61]. - Excluding the impairment provision, the net profit only declined by 0.7%, with a net profit margin of 18.8%[23]. - The group’s effective tax rate for 2020 was 25.3%, an increase from 21.7% in 2019, primarily due to non-deductible impairment losses[60]. - The company generated a net cash flow from operating activities of RMB 638.57 million, a 73.5% increase from RMB 367.996 million in 2019[46]. - The company’s free cash flow for 2020 is estimated at RMB 572.54 million, equivalent to HKD 680.18 million or HKD 0.82 per share, enhancing its ability to return value to shareholders[46]. Product Development and Strategy - The company has over 400 product registrations and more than 30 proprietary products across 17 therapeutic categories, making it one of the most comprehensive modern Chinese medicine enterprises in the industry[15]. - The company plans to enhance product research and clinical value, focusing on high-end hospitals, grassroots medical care, and internet marketing strategies[16]. - The company aims to leverage national healthcare policy adjustments to promote its major product strategy and extend product life cycles through evidence-based medical research[16]. - The company is focusing resources on developing exclusive innovative drugs with independent intellectual property rights, targeting areas such as cardiovascular diseases, pediatrics, orthopedics, gynecology, and geriatric diseases[37]. - The company aims to expand its national market strategy for formula granules, targeting a production capacity that could reach an annual output value of RMB 4 billion[34]. - The company plans to accelerate the development of oral formulations to diversify profit contributions away from injection products[31]. - The group aims to strengthen its leadership in traditional Chinese medicine injection products and enhance clinical research investments[19]. Sales and Market Performance - The group's sales for 2020 decreased by 1.9% year-on-year to RMB 2,655,701,000 due to the impact of COVID-19 on hospital and outpatient volumes[22]. - The overall sales of soft capsule products increased by 4.5% year-on-year, despite a decline in Q1 due to the pandemic, with growth recorded in Q2 and Q4[29]. - The sales of the exclusive product, synovial inflammation granules, grew by 64.7% during the year, contributing to a 4.4% increase in overall granule product sales[29]. - The sales of traditional Chinese medicine formula granules increased by 10.8% year-on-year, accounting for 20.9% of total sales in 2020[32]. - The company is optimistic about returning to growth in 2021, overcoming previous challenges in achieving sustained sales growth[14]. - The group recorded a significant recovery in sales during Q4 2020, with an 18.4% increase compared to the previous year[28]. Operational Efficiency - The company has implemented a digital manufacturing model, achieving smart factory standards and integrating various information technologies to enhance production efficiency and quality control[44][45]. - The company has established long-term business relationships with key suppliers and customers, focusing on maintaining these relationships[97]. - The company is actively monitoring regulatory changes in China's healthcare reform, which may impact its operations[101]. - The company has a dedicated team to oversee and manage drug bidding processes to secure favorable pricing[102]. Corporate Governance and Compliance - The board consists of four executive directors, three independent non-executive directors, and one non-executive director as of December 31, 2020[181]. - The board held four meetings and one annual general meeting in 2020, with attendance rates for executive directors ranging from 75% to 100%[186]. - The company has implemented a higher standard code for securities trading by directors than that outlined in the listing rules[180]. - The independent non-executive directors reviewed the continuous connected transactions and confirmed that they were conducted at fair and reasonable terms[164]. - The company confirmed compliance with the disclosure requirements under the Listing Rules for the continuous connected transactions[165]. Employee and Director Remuneration - The remuneration policy for employees is determined by the remuneration committee based on employees' abilities, education, and performance[167]. - The total amount of bonuses payable to all directors in any financial year shall not exceed 5% of the audited profit after tax but before extraordinary items[170]. - The committee ensures that any compensation arrangements for dismissed directors are fair and reasonable, adhering to contract terms[199]. - The committee reviews and approves performance-based remuneration in line with the company's objectives[199]. Environmental and Social Responsibility - The company is committed to environmental sustainability and has implemented relevant laws such as the Environmental Protection Law of the People's Republic of China[94]. - The company made charitable donations totaling RMB 3.45 million and contributed 560 hours to public welfare activities during the year[177].