Financial Performance - The company's operating revenue for Q1 2023 was CNY 1,143,946,162.37, representing a year-on-year increase of 22.50%[4] - The net profit attributable to shareholders was a loss of CNY 50,408,574.68, and the net profit after deducting non-recurring gains and losses was a loss of CNY 88,901,510.70[4] - The net profit for Q1 2023 was a loss of CNY 49,765,383.27, an improvement from a loss of CNY 111,557,219.71 in Q1 2022[16] - The company reported a net loss attributable to the parent company of CNY -50,409,108.66 for Q1 2023, compared to a loss of CNY -111,422,065.03 in Q1 2022[17] - The net loss for Q1 2023 was CNY -45,278,952.12, compared to a net loss of CNY -35,501,940.53 in Q1 2022, representing a decline of 27.5%[25] Cash Flow - The net cash flow from operating activities was negative at CNY 203,223,900.59[4] - The total cash inflow from operating activities for Q1 2023 was CNY 1,464,558,204.32, compared to CNY 848,235,064.96 in Q1 2022, representing a year-over-year increase of approximately 73%[18] - The net cash outflow from operating activities was CNY -203,223,900.59, slightly worse than the previous year's outflow of CNY -199,492,837.60[19] - The total cash and cash equivalents at the end of Q1 2023 were CNY 1,211,362,848.00, down from CNY 2,133,612,721.59 at the end of Q1 2022, indicating a decrease of approximately 43%[20] - The cash flow from operating activities showed a net outflow of CNY -230,509,616.40, compared to CNY -218,081,164.50 in the same period last year[26] Assets and Liabilities - The company's total assets at the end of the reporting period were CNY 14,800,805,858.96, a decrease of 2.06% compared to the end of the previous year[4] - The total current assets decreased to RMB 7,122,767,014.98 from RMB 7,383,990,388.30, reflecting a decline of about 3.5%[13] - The company's accounts receivable stood at RMB 1,917,105,230.41, down from RMB 1,964,955,319.56, indicating a reduction of approximately 2.4%[13] - The total current liabilities decreased to CNY 5,157,359,239.77 from CNY 5,441,511,537.39 in the previous quarter, reflecting a reduction of approximately 5.2%[15] - The total liabilities decreased to CNY 5,225,963,290.04 from CNY 5,459,104,498.52, a decline of 4.3%[23] Shareholder Information - The number of ordinary shareholders at the end of the reporting period was 193,025[7] - The largest shareholder, Guangdong Shennong Enterprise Management Partnership, held 25.31% of the shares, totaling 3,509,413,788 shares[7] - The total equity attributable to shareholders was CNY 6,897,854,467.42, a slight decrease from CNY 6,947,130,703.24 in the previous quarter[15] - The company’s total equity decreased to CNY 11,928,678,270.55 from CNY 11,971,572,385.21, a decline of 0.4%[23] Research and Development - Research and development expenses increased by 141.65% due to higher investment in R&D projects[6] - Research and development expenses for Q1 2023 were CNY 9,486,049.57, significantly higher than CNY 3,925,608.53 in Q1 2022, indicating an increase of about 141.1%[16] - Research and development expenses for Q1 2023 were CNY 4,653,278.58, indicating ongoing investment in innovation[24] Legal and Regulatory Matters - The company has reached an out-of-court settlement regarding the bankruptcy application of its wholly-owned subsidiary, which will allow it to avoid bankruptcy proceedings[10] - The company is in the process of applying to revoke the "other risk warning" status, contingent on the Shanghai Stock Exchange's review[11] - The company has a pending lawsuit involving a financial loan dispute, with a first-instance judgment requiring it to pay approximately RMB 281,989,470.00 in principal and interest[12] Other Financial Metrics - Non-recurring gains and losses totaled CNY 38,492,936.02, with significant contributions from non-current asset disposal gains and government subsidies[5] - The total operating costs for Q1 2023 were CNY 1,230,355,256.52, compared to CNY 1,044,554,905.16 in Q1 2022, indicating an increase of about 17.8%[16] - The deferred tax assets increased to CNY 95,901,705.57 from CNY 40,149,436.75 in the previous quarter, showing a growth of approximately 138.5%[15] - The company reported a financial expense of CNY -4,530,890.08 in Q1 2023, an improvement from CNY -7,088,193.40 in Q1 2022[16]

| 证券代码：600518 | 证券简称：ST康美 | 编号：临2023-014 | | --- | --- | --- | | 债券代码：122354 | 债券简称：15康美债 | | | 债券代码：143730 | 债券简称：18康美01 | | | 债券代码：143842 | 债券简称：18康美04 | | 康美药业股份有限公司 关于召开 2022 年度业绩说明会的公告 本公司董事会及全体董事保证本公告内容不存在任何虚假记载、误导性陈述 或者重大遗漏，并对其内容的真实性、准确性和完整性承担法律责任。 重要内容提示： 会议召开时间：2023 年 05 月 16 日（星期二）上午 10:00-11:30 会议召开地点： 上海证券 交 易 所 上 证 路 演 中 心 （ 网址： http://roadshow.sseinfo.com/） 会议召开方式：上证路演中心视频录播和网络互动 投资者可于 2023 年 05 月 09 日（星期二）至 05 月 15 日（星期一）16:00 前登录上证路演中心网站首页点击"提问预征集"栏目或通过公司邮箱 kangmei@kangmei.com.cn 进行提问。公司将在业绩 ...

[Major Financial Data](index=1&type=section&id=Item%201.%20Major%20Financial%20Data) The company experienced a significant decline in financial performance in the first three quarters of 2022, marked by revenue decrease, substantial net losses, and adverse changes in key financial indicators due to major litigation and operational factors [Key Accounting Data and Financial Indicators](index=1&type=section&id=Key%20Accounting%20Data%20and%20Financial%20Indicators) In the first three quarters of 2022, the company's operating performance declined, with revenue decreasing by **11.80%** year-on-year and net profit attributable to shareholders recording a significant loss of **CNY 885.77 million**, while total assets and shareholders' equity also decreased from the end of the previous year Key Financial Indicators for the First Three Quarters of 2022 | Indicator | Year-to-Date (YTD) | YTD Change vs. Prior Period (%) | | :--- | :--- | :--- | | Operating Revenue | CNY 2,721,807,708.62 | -11.80% | | Net Profit Attributable to Shareholders | CNY -885,770,196.43 | N/A | | Net Profit Attributable to Shareholders (Excluding Non-Recurring Items) | CNY -322,030,545.55 | N/A | | Net Cash Flow from Operating Activities | CNY -336,964,904.38 | -410.31% | | Basic Earnings Per Share (CNY/share) | -0.064 | N/A | | **Indicator** | **As of Report Period End** | **Change vs. Prior Year-End (%)** | | Total Assets | CNY 15,562,044,201.81 | -3.07% | | Shareholders' Equity Attributable to Listed Company | CNY 9,032,649,451.71 | -9.01% | [Non-Recurring Gains and Losses Items and Amounts](index=2&type=section&id=Non-Recurring%20Gains%20and%20Losses%20Items%20and%20Amounts) During the reporting period, non-recurring gains and losses significantly impacted net profit, totaling a loss of **CNY 564 million** year-to-date, primarily due to provisions for liabilities from a financial loan contract dispute case, resulting in approximately **CNY 600 million** in contingent losses - The company recognized approximately **CNY 600 million** in provisions for liabilities due to the first-instance judgment in a financial loan contract dispute case, which is the primary reason for the substantial non-recurring loss[7](index=7&type=chunk) Major Non-Recurring Gains and Losses Items (Year-to-Date) | Item | Amount (CNY) | Description | | :--- | :--- | :--- | | Gains and losses from contingent events unrelated to normal business operations | -600,447,962.18 | Primarily provisions for liabilities from financial loan contract dispute case | | Government grants recognized in current profit or loss | 29,077,387.06 | Government grants | | Debt restructuring gains and losses | -11,255,061.29 | - | | Other non-operating income and expenses not listed above | 22,042,276.94 | - | | **Total** | **-563,739,650.88** | - | [Analysis of Major Financial Indicator Changes](index=3&type=section&id=Changes%20and%20Reasons%20for%20Major%20Accounting%20Data%20and%20Financial%20Indicators) Several financial indicators experienced significant fluctuations, with other current liabilities and non-operating expenses surging due to provisions for major litigation, while finance costs sharply decreased following bankruptcy reorganization, and operating cash flow significantly deteriorated due to reduced sales collections and prior-year tax payments - Finance costs decreased by **102.29%** year-on-year, primarily due to a significant reduction in interest-bearing debt after the company's bankruptcy reorganization[9](index=9&type=chunk) - Other current liabilities and non-operating expenses surged by **358.45%** and **32945.70%** respectively, mainly due to provisions for liabilities related to the Bohai International Trust financial loan contract dispute case based on the first-instance court judgment during the reporting period[9](index=9&type=chunk)[11](index=11&type=chunk) - Net cash flow from operating activities decreased by **410.31%** year-on-year, primarily due to reduced cash received from sales of goods and the payment of prior-year income tax arising from bankruptcy reorganization gains[11](index=11&type=chunk) - Research and development expenses increased by **70.48%** year-on-year, indicating increased investment in R&D projects during the reporting period[9](index=9&type=chunk) [Shareholder Information](index=4&type=section&id=Item%202.%20Shareholder%20Information) As of the reporting period end, the company had 177,922 common shareholders, with Guangdong Shennongshi Enterprise Management Partnership as the largest shareholder, while the former controlling shareholder's shares are fully pledged [Shareholding of Shareholders](index=4&type=section&id=Total%20Number%20of%20Common%20Shareholders%20and%20Top%20Ten%20Shareholders%27%20Shareholding%20Table) As of the reporting period end, the company had **177,922** common shareholders, with Guangdong Shennongshi Enterprise Management Partnership (Limited Partnership) as the largest shareholder at **25.31%**, and former controlling shareholder Kangmei Industrial Investment Holding Co., Ltd. holding **5.21%** as the second largest, with all its shares pledged - As of the end of the reporting period, the company had a total of **177,922** common shareholders[12](index=12&type=chunk) Top Three Shareholders' Shareholding | Shareholder Name | Number of Shares Held | Shareholding Percentage (%) | | :--- | :--- | :--- | | Guangdong Shennongshi Enterprise Management Partnership (Limited Partnership) | 3,509,413,788 | 25.31 | | Kangmei Industrial Investment Holding Co., Ltd. | 723,176,677 | 5.21 | | China Construction Bank Corporation Guangdong Branch | 653,206,909 | 4.71 | - The **723,176,677** shares held by the second largest shareholder, Kangmei Industrial Investment Holding Co., Ltd., have all been pledged[12](index=12&type=chunk) [Other Important Matters](index=5&type=section&id=Item%203.%20Other%20Important%20Matters) The company completed preferred share redemption and delisting, disclosed progress on major litigations including a significant provision for liabilities, and noted the expiration of a voting rights entrustment and the bankruptcy liquidation of its former controlling shareholder [Redemption and Delisting of Preferred Shares](index=5&type=section&id=Full%20Redemption%20and%20Delisting%20of%20Company%27s%20Non-Publicly%20Issued%20Preferred%20Shares) The company completed the full redemption and cancellation of its non-publicly issued preferred shares 'Kangmei You 1' on **July 13, 2022**, terminating their transfer service on the Shanghai Stock Exchange as part of its reorganization plan - In accordance with the company's reorganization plan, the full redemption and delisting of non-publicly issued preferred shares 'Kangmei You 1' have been completed, with the redeemed shares cancelled on **July 13, 2022**[14](index=14&type=chunk) [Progress of Major Litigation](index=5&type=section&id=Progress%20of%20Major%20Litigation%20Involving%20the%20Company) The company disclosed progress on two major litigations involving Bohai International Trust, with one ordinary bankruptcy claim confirmation dispute case reaching a final judgment upholding the original verdict, and another financial loan contract dispute case resulting in an unfavorable first-instance judgment, leading the company to appeal and prudently recognize approximately **CNY 605 million** in provisions for liabilities, significantly impacting current year net profit - Regarding the ordinary bankruptcy claim confirmation dispute between Bohai Trust and the company, the Guangdong Provincial High People's Court issued a final judgment, rejecting Bohai Trust's appeal and upholding the original verdict[16](index=16&type=chunk) - In another financial loan contract dispute case with Bohai Trust, the first-instance judgment required the company's related parties to repay a substantial principal and interest amount; the company has appealed, but based on prudence, has recognized provisions for liabilities of **CNY 604.99 million** according to the first-instance judgment[18](index=18&type=chunk) - This provision for liabilities is expected to reduce the company's net profit attributable to shareholders by **CNY 604.99 million** for the current year[18](index=18&type=chunk) [Shareholders' Equity Change](index=7&type=section&id=Expiration%20of%20Company%20Shareholders%27%20Voting%20Rights%20Entrustment%20and%20Equity%20Change) The 'Voting Rights Transfer Agreement' signed between Kangmei Industrial and its concerted parties and Yilin Pharmaceutical expired on **September 18, 2022**, restoring the voting rights corresponding to the **1.005 billion** shares held by Kangmei Industrial and its concerted parties - The voting rights transfer agreement between Kangmei Industrial and its concerted parties and Jieyang Yilin Pharmaceutical Investment Co., Ltd. expired, restoring the voting rights for the **1,005,120,793** shares held by Kangmei Industrial and its concerted parties[19](index=19&type=chunk) [Kangmei Industrial Bankruptcy Liquidation](index=7&type=section&id=Kangmei%20Industrial%20Ruled%20by%20Court%20for%20Bankruptcy%20Liquidation%20and%20Administrator%20Appointed) The company's former controlling shareholder, Kangmei Industrial Investment Holding Co., Ltd., was ruled by the Jieyang Intermediate People's Court of Guangdong Province to accept its bankruptcy liquidation application due to inability to repay due debts and insolvency, with an administrator already appointed - Due to its inability to repay due debts and insolvency, Kangmei Industrial Investment Holding Co., Ltd. was ruled by the Jieyang Intermediate People's Court to accept its bankruptcy liquidation application[20](index=20&type=chunk)[21](index=21&type=chunk) [Quarterly Financial Statements](index=8&type=section&id=Item%204.%20Quarterly%20Financial%20Statements) The quarterly financial statements reveal a decline in total assets and shareholders' equity, significant net losses driven by increased non-operating expenses, and negative operating cash flow due to reduced sales and increased tax payments [Consolidated Balance Sheet](index=8&type=section&id=Consolidated%20Balance%20Sheet) As of **September 30, 2022**, the company's total assets were **CNY 15.56 billion**, a **3.07%** decrease from the prior year-end; total liabilities were **CNY 6.49 billion**; and total equity attributable to owners of the parent company was **CNY 9.03 billion**, a **9.01%** decrease from the prior year-end, indicating a relatively stable asset-liability structure but reduced shareholders' equity due to losses Key Items from Consolidated Balance Sheet (Unit: CNY) | Item | September 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Total Assets | 15,562,044,201.81 | 16,054,259,253.19 | | Total Liabilities | 6,487,608,266.88 | 6,085,784,787.38 | | Total Equity Attributable to Owners of Parent Company | 9,032,649,451.71 | 9,926,555,018.46 | | Total Shareholders' Equity | 9,074,435,934.93 | 9,968,474,465.81 | [Consolidated Income Statement](index=11&type=section&id=Consolidated%20Income%20Statement) In the first three quarters of 2022, the company achieved operating revenue of **CNY 2.72 billion**, a **11.80%** year-on-year decrease; due to a surge in non-operating expenses from provisions for major litigation, total profit was **CNY -877 million**, and net loss attributable to parent company shareholders reached **CNY 886 million** Key Items from Consolidated Income Statement (Unit: CNY) | Item | First Three Quarters of 2022 (Jan-Sep) | First Three Quarters of 2021 (Jan-Sep) | | :--- | :--- | :--- | | Total Operating Revenue | 2,721,807,708.62 | 3,086,034,284.80 | | Operating Profit | -296,886,015.90 | -1,003,730,820.89 | | Non-Operating Expenses | 608,744,991.25 | 1,842,130.46 | | Total Profit | -876,727,472.61 | -998,477,197.48 | | Net Profit Attributable to Owners of Parent Company | -885,770,196.43 | -1,024,589,865.52 | [Consolidated Cash Flow Statement](index=12&type=section&id=Consolidated%20Cash%20Flow%20Statement) In the first three quarters of 2022, the company's cash flow was unfavorable, with net cash flow from operating activities at **CNY -337 million**, turning negative year-on-year due to reduced sales collections and increased tax payments, while both investing and financing activities resulted in net cash outflows, leading to a **CNY 405 million** decrease in cash and cash equivalents from the beginning of the period Key Items from Consolidated Cash Flow Statement (Unit: CNY) | Item | First Three Quarters of 2022 (Jan-Sep) | First Three Quarters of 2021 (Jan-Sep) | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | -336,964,904.38 | 108,590,934.19 | | Net Cash Flow from Investing Activities | -12,766,125.95 | 975,992,806.16 | | Net Cash Flow from Financing Activities | -55,656,906.48 | -915,042,844.55 | | Net Increase in Cash and Cash Equivalents | -405,384,999.53 | 169,558,739.67 |

[Important Reminders](index=1&type=section&id=%E9%87%8D%E8%A6%81%E5%86%85%E5%AE%B9%E6%8F%90%E7%A4%BA) The company's board and management guarantee the report's accuracy, with this quarter's financial statements being unaudited - The company's board of directors, supervisory board, and senior management guarantee the truthfulness, accuracy, and completeness of the quarterly report, with no false records, misleading statements, or major omissions[3](index=3&type=chunk) - This quarter's financial statements are unaudited[3](index=3&type=chunk) [Key Financial Data](index=1&type=section&id=%E4%B8%80%E3%80%81%20%E4%B8%BB%E8%B4%A2%E5%8A%A1%E6%95%B0%E6%8D%AE) This section presents the company's primary financial performance and position indicators for the reporting period [Key Accounting Data and Financial Indicators](index=1&type=section&id=(%E4%B8%80)%E4%B8%BB%E8%A6%81%E4%BC%9A%E8%AE%A1%E6%95%B0%E6%8D%AE%E5%92%8C%E8%B4%A2%E5%8A%A1%E6%8C%87%E6%A0%87) Kangmei Pharmaceutical's Q1 2022 operating revenue decreased by **14.15%**, with a net loss of **CNY 111 million** and a **321.94%** drop in net cash flow from operating activities 2022 Q1 Key Accounting Data and Financial Indicators | Item | Amount for Current Period (CNY) | Change from Same Period Last Year (%) | | :--- | :--- | :--- | | Operating Revenue | 933,848,192.84 | -14.15 | | Net Profit Attributable to Shareholders of Listed Company | -111,422,065.03 | N/A | | Net Profit Attributable to Shareholders of Listed Company (Excluding Non-recurring Gains and Losses) | -121,493,079.02 | N/A | | Net Cash Flow from Operating Activities | -199,492,837.60 | -321.94 | | Basic Earnings Per Share (CNY/share) | -0.008 | N/A | | Diluted Earnings Per Share (CNY/share) | -0.008 | N/A | | Weighted Average Return on Net Assets (%) | -1.12 | N/A | 2022 Q1 End Asset and Liability Indicators | Item | Amount at End of Current Period (CNY) | Amount at End of Last Fiscal Year (CNY) | Change from End of Last Fiscal Year (%) | | :--- | :--- | :--- | :--- | | Total Assets | 15,919,718,524.85 | 16,054,259,253.19 | -0.84 | | Total Equity Attributable to Shareholders of Listed Company | 9,815,132,953.43 | 9,926,555,018.46 | -1.12 | [Non-recurring Gains and Losses and Amounts](index=2&type=section&id=(%E4%BA%8C)%20%E9%9D%9E%E5%B8%B8%E8%A7%84%E6%80%A7%E6%8D%9F%E7%9B%8A%E9%A1%B9%E7%9B%AE%E5%92%8C%E9%A2%9D) This period's total non-recurring gains and losses amounted to **CNY 10.07 million**, primarily from government grants, non-current asset disposals, and debt restructuring 2022 Q1 Non-recurring Gains and Losses and Amounts | Item | Amount for Current Period (CNY) | Explanation | | :--- | :--- | :--- | | Gains/Losses on Disposal of Non-current Assets | 322,130.28 | 处置非流动资产 | | Government Grants Included in Current Period's Profit/Loss | 9,204,297.03 | 政府补助 | | Debt Restructuring Gains/Losses | 338,334.48 | | | Other Non-operating Income and Expenses Apart from the Above | 803,735.73 | | | Less: Income Tax Impact | 13,308.25 | | | Impact on Minority Interests (After Tax) | 584,175.28 | | | **Total** | **10,071,013.99** | | [Changes and Reasons for Key Accounting Data and Financial Indicators](index=3&type=section&id=(%E4%B8%89)%E4%B8%BB%E8%A6%81%E4%BC%9A%E8%AE%A1%E6%95%B0%E6%8D%AE%E3%80%81%E8%B4%A2%E5%8A%A1%E6%8C%87%E6%A0%87%E5%8F%91%E7%94%9F%E5%8F%98%E5%8A%A8%E7%9A%84%E6%83%85%E5%86%B5%E3%80%81%E5%8E%9F%E5%9B%A0) Significant changes include a **235.24%** increase in trading financial assets, an **88.46%** decrease in notes receivable financing, and a **101.42%** drop in financial expenses due to debt reduction Changes in Key Accounting Data and Financial Indicators | No. | Item Name | Amount at Period-end/Current Period (CNY) | Amount at Period-start/Last Period (CNY) | Change Percentage (%) | Primary Reason | | :--- | :--- | :--- | :--- | :--- | :--- | | 1 | Trading Financial Assets | 1,757,632.04 | 524,298.00 | 235.24% | Due to increase in trading financial assets | | 2 | Notes Receivable Financing | 4,251,281.82 | 36,823,883.67 | -88.46% | Decrease in customer bank acceptance bills received for supplier payments compared to same period last year | | 4 | Selling Expenses | 87,599,302.51 | 130,637,893.75 | -32.94% | Strengthened management led to a year-on-year decrease in variable expenses such as sales service fees and office expenses; depreciation and amortization also decreased year-on-year | | 5 | Financial Expenses | -7,088,193.40 | 498,291,322.52 | -101.42% | Significant reduction in interest-bearing debt after bankruptcy reorganization | | 6 | Credit Impairment Losses | -13,288,230.63 | 4,534,070.07 | 393.08% | Due to impairment provision for receivables | | 9 | Non-operating Expenses | 640,382.50 | 160,282.22 | 299.53% | Due to payment of lease termination penalties | | 11 | Net Cash Flow from Operating Activities | -199,492,837.60 | 89,885,237.79 | -321.94% | Due to decrease in cash received from sales of goods in current period compared to same period last year | | 12 | Net Cash Flow from Investing Activities | -1,171,394.16 | -60,754,045.09 | -98.07% | Due to reduced investment in long-term assets in current period | | 13 | Net Cash Flow from Financing Activities | -10,456,437.26 | 55,453,944.01 | -118.86% | Due to subsidiary borrowing from related parties in same period last year | [Shareholder Information](index=4&type=section&id=%E4%BA%8C%E3%80%81%20%E8%82%A1%E4%B8%9C%E4%BF%A1%E6%81%AF) This section details the total number of ordinary and preferred shareholders, along with the top ten shareholders' holdings [Total Number of Ordinary Shareholders and Top Ten Shareholders' Holdings](index=4&type=section&id=(%E4%B8%80)%E6%99%AE%E9%80%9A%E8%82%A1%E8%82%A1%E4%B8%9C%E6%80%BB%E6%95%B0%E5%92%8C%E8%A1%A8%E5%86%B3%E6%9D%83%E6%81%A2%E5%A4%8D%E7%9A%84%E4%BC%98%E5%85%88%E8%82%A1%E8%82%A1%E4%B8%9C%E6%95%B0%E9%87%8F%E5%8F%8A%E5%89%8D%E5%8D%81%E5%90%8D%E8%82%A1%E4%B8%9C%E6%8C%81%E8%82%A1%E6%83%85%E5%86%B5%E8%A1%A8) As of the reporting period end, the company had **185,550** ordinary shareholders, with Guangdong Shennongshi holding **25.31%** as the largest shareholder - The total number of ordinary shareholders at the end of the reporting period was **185,550**[10](index=10&type=chunk) Top Ten Ordinary Shareholders' Holdings | Shareholder Name | Shareholder Nature | Number of Shares Held (shares) | Shareholding Percentage (%) | Share Status | Pledged, Marked, or Frozen Shares (shares) | | :--- | :--- | :--- | :--- | :--- | :--- | | Guangdong Shennongshi Enterprise Management Partnership (Limited Partnership) | Other | 3,509,413,788 | 25.31 | Unknown | - | | Kangmei Industrial Investment Holding Co., Ltd. | Domestic Non-state-owned Legal Person | 1,263,328,032 | 9.11 | Pledged | 1,263,328,032 | | Kangmei Pharmaceutical Co., Ltd. Bankruptcy Enterprise Property Disposal Special Account | Other | 1,023,686,349 | 7.38 | Unknown | - | [Total Number of Preferred Shareholders and Top Ten Preferred Shareholders' Holdings](index=5&type=section&id=(%E4%BA%8C)%E5%85%AC%E5%8F%B8%E4%BC%98%E5%85%88%E8%82%A1%E8%82%A1%E4%B8%9C%E6%80%BB%E6%95%B0%E5%8F%8A%E5%89%8D%2010%20%E5%90%8D%E4%BC%98%E5%85%88%E8%82%A1%E8%82%A1%E4%B8%9C%E6%8C%81%E8%82%A1%E6%83%85%E5%86%B5%E8%A1%A8) The company had **8** preferred shareholders, with Boshi Fund, Huashang Fund, and BOCOM Schroders Asset Management as the top three, holding **30%**, **20%**, and **20%** respectively - The total number of preferred shareholders at the end of the reporting period was **8**[12](index=12&type=chunk) Top Ten Preferred Shareholders' Holdings | Shareholder Name | Shareholder Nature | Number of Shares Held (shares) | Shareholding Percentage (%) | | :--- | :--- | :--- | :--- | | Boshi Fund - ICBC - Boshi - ICBC - Flexible Allocation No. 5 Specific Multi-Client Asset Management Plan | Other | 9,000,000 | 30.00 | | Huashang Fund - PSBC - Postal Savings Bank of China Co., Ltd. | Other | 6,000,000 | 20.00 | | BOCOM Schroders Asset Management - Bank of Communications - Bank of Communications Co., Ltd. | Other | 6,000,000 | 20.00 | - The company has approved the redemption of preferred shares and has settled them as ordinary claims, with coordination ongoing for preferred share cancellation[13](index=13&type=chunk) [Other Reminders](index=6&type=section&id=%E4%B8%89%E3%80%81%20%E5%85%B6%E4%BB%96%E6%8F%90%E9%86%92%E4%BA%8B%E9%A1%B9) No other significant information regarding the company's operating performance during the reporting period requires investor attention - There is no other important information regarding the company's operating performance during the reporting period that requires investors' attention[14](index=14&type=chunk) [Quarterly Financial Statements](index=6&type=section&id=%E5%9B%9B%E3%80%81%20%E5%AD%A3%E5%BA%A6%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8) This section presents the unaudited quarterly financial statements, including balance sheets, income statements, and cash flow statements [Type of Audit Opinion](index=6&type=section&id=(%E4%B8%80)%E5%AE%A1%E8%AE%A1%E6%84%8F%E8%A7%81%E7%B1%BB%E5%9E%8B) The financial statements for this quarter have not been audited - This quarter's financial statements are unaudited[14](index=14&type=chunk) [Financial Statements](index=6&type=section&id=(%E4%BA%8C)%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8) This section includes the company's consolidated and parent company balance sheets, income statements, and cash flow statements for Q1 2022 [Consolidated Balance Sheet](index=6&type=section&id=%E5%90%88%E5%B9%B6%E8%B5%84%E4%BA%A7%E8%B4%9F%E5%80%BA%E8%A1%A8) As of March 31, 2022, the company's consolidated total assets were **CNY 15.92 billion**, a slight decrease of **0.84%** from the end of last year Consolidated Balance Sheet Key Data (March 31, 2022 vs December 31, 2021) | Item | March 31, 2022 (CNY) | December 31, 2021 (CNY) | Change (%) | | :--- | :--- | :--- | :--- | | Total Assets | 15,919,718,524.85 | 16,054,259,253.19 | -0.84 | | Total Current Assets | 8,232,663,490.84 | 8,284,793,366.93 | -0.63 | | Total Non-current Assets | 7,687,055,034.01 | 7,769,465,886.26 | -1.06 | | Total Liabilities | 6,062,801,278.75 | 6,085,784,787.38 | -0.38 | | Total Owners' Equity | 9,856,917,246.10 | 9,968,474,465.81 | -1.12 | - Cash and cash equivalents decreased from **CNY 2.419 billion** to **CNY 2.188 billion**[15](index=15&type=chunk) - Accounts receivable increased from **CNY 1.357 billion** to **CNY 1.552 billion**[16](index=16&type=chunk) [Consolidated Income Statement](index=9&type=section&id=%E5%90%88%E5%B9%B6%E5%88%A9%E6%B6%A6%E8%A1%A8) In Q1 2022, consolidated operating revenue was **CNY 934 million**, down **14.15%** year-on-year, with net loss narrowing significantly to **CNY 112 million** Consolidated Income Statement Key Data (Q1 2022 vs Q1 2021) | Item | Q1 2022 (CNY) | Q1 2021 (CNY) | Change (%) | | :--- | :--- | :--- | :--- | | Total Operating Revenue | 933,848,192.84 | 1,087,761,605.96 | -14.15 | | Total Operating Costs | 1,044,554,905.16 | 1,707,361,995.39 | -38.82 | | Financial Expenses | -7,088,193.40 | 498,291,322.52 | -101.42 | | Net Profit | -111,557,219.71 | -596,824,311.74 | 81.37 (Loss narrowed) | | Net Profit Attributable to Parent Company Shareholders | -111,422,065.03 | -595,231,251.64 | 81.29 (Loss narrowed) | | Basic Earnings Per Share (CNY/share) | -0.008 | -0.121 | 93.40 (Loss narrowed) | - Selling expenses decreased by **32.94%** year-on-year, and administrative expenses decreased by **21.23%** year-on-year[19](index=19&type=chunk) [Consolidated Cash Flow Statement](index=11&type=section&id=%E5%90%88%E5%B9%B6%E7%8E%B0%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) In Q1 2022, net cash flow from operating activities turned negative to **CNY 199 million**, a significant decrease from the prior year's positive flow Consolidated Cash Flow Statement Key Data (Q1 2022 vs Q1 2021) | Item | Q1 2022 (CNY) | Q1 2021 (CNY) | Change (%) | | :--- | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | -199,492,837.60 | 89,885,237.79 | -321.94 | | Net Cash Flow from Investing Activities | -1,171,394.16 | -60,754,045.09 | 98.07 (Outflow decreased) | | Net Cash Flow from Financing Activities | -10,456,437.26 | 55,453,944.01 | -118.86 | | Net Increase in Cash and Cash Equivalents | -211,120,669.02 | 84,595,092.28 | -349.04 | - Cash received from sales of goods and provision of services decreased by **44.79%** year-on-year[22](index=22&type=chunk) [Parent Company Balance Sheet](index=12&type=section&id=%E6%AF%8D%E5%85%AC%E5%8F%B8%E8%B5%84%E4%BA%A7%E8%B4%9F%E5%80%BA%E8%A1%A8) As of March 31, 2022, the parent company's total assets were **CNY 18.59 billion**, a slight decrease of **0.40%** from the end of last year Parent Company Balance Sheet Key Data (March 31, 2022 vs December 31, 2021) | Item | March 31, 2022 (CNY) | December 31, 2021 (CNY) | Change (%) | | :--- | :--- | :--- | :--- | | Total Assets | 18,591,209,766.15 | 18,664,989,290.86 | -0.40 | | Total Current Assets | 13,392,091,061.83 | 13,435,043,229.49 | -0.32 | | Total Non-current Assets | 5,199,118,704.32 | 5,229,946,061.37 | -0.59 | | Total Liabilities | 4,288,004,984.18 | 4,326,282,568.36 | -0.88 | | Total Owners' Equity | 14,303,204,781.97 | 14,338,706,722.50 | -0.25 | - Parent company cash and cash equivalents decreased from **CNY 2.096 billion** to **CNY 1.869 billion**[23](index=23&type=chunk) - Parent company accounts receivable increased from **CNY 1.059 billion** to **CNY 1.216 billion**[24](index=24&type=chunk) [Parent Company Income Statement](index=14&type=section&id=%E6%AF%8D%E5%85%AC%E5%8F%B8%E5%88%A9%E6%B6%A6%E8%A1%A8) In Q1 2022, parent company operating revenue was **CNY 406 million**, down **30.90%** year-on-year, with net loss narrowing significantly to **CNY 35.5 million** Parent Company Income Statement Key Data (Q1 2022 vs Q1 2021) | Item | Q1 2022 (CNY) | Q1 2021 (CNY) | Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 405,884,780.50 | 587,311,913.47 | -30.90 | | Operating Costs | 341,499,762.75 | 447,906,497.83 | -23.87 | | Financial Expenses | -7,929,998.25 | 494,524,312.00 | -101.60 | | Net Profit | -35,501,940.53 | -481,643,716.31 | 92.63 (Loss narrowed) | | Basic Earnings Per Share (CNY/share) | -0.003 | -0.098 | 96.94 (Loss narrowed) | - Parent company selling expenses decreased by **13.12%** year-on-year, and administrative expenses decreased by **17.28%** year-on-year[26](index=26&type=chunk) [Parent Company Cash Flow Statement](index=16&type=section&id=%E6%AF%8D%E5%85%AC%E5%8F%B8%E7%8E%B0%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) In Q1 2022, parent company net cash flow from operating activities turned negative to **CNY 218 million**, a significant decrease from the prior year's positive flow Parent Company Cash Flow Statement Key Data (Q1 2022 vs Q1 2021) | Item | Q1 2022 (CNY) | Q1 2021 (CNY) | Change (%) | | :--- | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | -218,081,164.50 | 20,825,455.67 | -1147.00 | | Net Cash Flow from Investing Activities | -798,867.26 | -177,928.78 | -348.99 | | Net Cash Flow from Financing Activities | -8,320,669.28 | -8,882,064.44 | 6.32 (Outflow decreased) | | Net Increase in Cash and Cash Equivalents | -227,200,701.04 | 11,765,462.45 | -2031.60 | - Parent company cash received from sales of goods and provision of services decreased by **45.39%** year-on-year[28](index=28&type=chunk) [Other Information](index=17&type=section&id=%E5%85%B6%E4%BB%96%E4%BF%A1%E6%81%AF) This section notes that new accounting standards were first implemented in 2022 without restating prior year-end financial statements - New accounting standards were first implemented in 2022 without restating the financial statements at the beginning of that year[29](index=29&type=chunk) - This quarterly report was published on April 27, 2022[29](index=29&type=chunk)

Financial Performance - The company reported a net profit of ¥7,917,900,623.78 for the year 2021, a significant recovery from a net loss of ¥31,084,832,430.77 in 2020[6]. - Total operating revenue for 2021 was ¥4,152,521,099.09, representing a decrease of 23.27% compared to ¥5,412,007,961.66 in 2020[21]. - The net cash flow from operating activities decreased by 79.23%, amounting to ¥214,205,102.33 in 2021, down from ¥1,031,392,101.60 in 2020[21]. - The company has a negative retained earnings balance of ¥23,316,057,998.94 as of December 31, 2021[6]. - The company reported a net profit attributable to shareholders after deducting non-recurring gains and losses of -¥7,968,233,252.63 in 2021[21]. - The net assets attributable to shareholders decreased to ¥9,926,555,018.46, down from ¥20,515,274,013.61, representing a decline of 48.39%[23]. - Total assets decreased by 51.83% to ¥16,054,259,253.19 from ¥64,586,228,755.01[23]. - Basic earnings per share improved to ¥0.57 from a loss of ¥2.25 in the previous year, marking a significant recovery[24]. - The weighted average return on net assets increased by 295.77% to -120.39% from -416.16%[24]. - The company reported a total revenue of ¥1,087,761,605.96 in Q1 2021, with a gradual increase in subsequent quarters[26]. - Non-recurring gains and losses totaled ¥15,886,133,876.41 for 2021, significantly impacting the overall financial results[29]. Business Strategy and Operations - The company is focusing on the "Smart Pharmacy 020" platform to enhance its O2O mobile medical model, integrating traditional Chinese medicine with modern technology[31]. - The company is undergoing restructuring, with a new controlling shareholder, Guangdong Shennongshi Enterprise Management Partnership (Limited Partnership)[31]. - The company is implementing a strategy to streamline operations by discontinuing non-core businesses to improve overall efficiency[31]. - The company has signed contracts with hundreds of medical institutions, including major hospitals, to provide quality traditional Chinese medicine services, receiving positive feedback[32]. - The company is focusing on the full industry chain of traditional Chinese medicine, optimizing its business structure, and concentrating resources on core traditional Chinese medicine businesses[35]. - The company has implemented an integrated project for business and financial systems to improve internal controls and ensure the unity of business flow, data flow, and capital flow[36]. - The company has established a modern pharmaceutical logistics system and a multi-level marketing network that integrates medical institutions, smart pharmacies, OTC retail, chain pharmacies, direct sales, e-commerce, and mobile healthcare[62]. - The company has developed a comprehensive marketing network that includes medical institutions, smart pharmacies, OTC retail, chain pharmacies, direct sales, and e-commerce[53]. Research and Development - As of December 31, 2021, the company has applied for 83 technology patents, with 52 granted, including 10 invention patents and 42 utility model patents[33]. - The company has established a 3,000 square meter traditional Chinese medicine research platform, including a 945 square meter experimental animal barrier environment, approved by the Guangdong Provincial Science and Technology Department[34]. - The company has developed key technologies in traditional Chinese medicine, including production and quality control, which are positioned at the forefront of the industry[85]. - The company has 22 ongoing R&D projects, with several products currently under review by the evaluation center[114]. - The company is actively involved in research and development of new formulations, particularly in the areas of respiratory and gastrointestinal health, to enhance its product portfolio[101]. Market Expansion and Product Development - The company is focusing on the development of high-value consumables and small to medium-sized medical devices, gradually expanding into larger equipment[45]. - The company is actively pursuing new strategies for market expansion and product development to drive future growth[77]. - The company plans to expand its market presence, focusing on enhancing its product offerings and exploring new technologies[77]. - The company is exploring potential mergers and acquisitions to strengthen its market position and diversify its product offerings[101]. - The company aims to enhance its distribution channels to reach a broader customer base, particularly in underserved regions[101]. - The company is focusing on expanding its product offerings in the traditional Chinese medicine sector[100]. Financial Management and Governance - The company has improved its financial management structure and implemented strict internal control measures to maintain its operational sustainability and mitigate debt risks[187]. - The company has established a competitive salary and benefits management mechanism, linking employee income to company performance[175]. - The company has emphasized the importance of independent directors in the decision-making process regarding profit distribution[179]. - The company has implemented a unified information system to enhance management efficiency and prevent data leakage risks[184]. - The company has actively communicated with minority shareholders to ensure their rights and interests are protected[179]. Social Responsibility and Community Engagement - The company has directly employed over 56,000 individuals and assisted approximately 30,000 households, benefiting over 2 million farmers through its poverty alleviation initiatives[195]. - The company actively engaged in health poverty alleviation by providing medical services and health education to rural communities, addressing urgent medical needs[196]. - The company has supported over 4,600 students from Jieyang to pursue higher education through its educational assistance programs[197]. - The company plans to enhance its commitment to poverty alleviation by leveraging its health service industry and the entire Chinese medicine supply chain[198].

2021 年半年度报告 公告公司代码：600518 公司简称：*ST 康美 康美药业股份有限公司 2021 年半年度报告 1 / 262 2021 年半年度报告 重要提示 一、 本公司董事会、监事会及董事、监事、高级管理人员保证半年度报告内容的真实、准确、完 整，不存在虚假记载、误导性陈述或重大遗漏，并承担个别和连带的法律责任。 二、 公司全体董事出席董事会会议。 三、 本半年度报告未经审计。 四、 公司负责人马兴谷、主管会计工作负责人宫贵博及会计机构负责人（会计主管人员）宫贵博 声明：保证半年度报告中财务报告的真实、准确、完整。 五、 董事会决议通过的本报告期利润分配预案或公积金转增股本预案 无 六、 前瞻性陈述的风险声明 √适用 □不适用 本报告所涉及的公司未来计划、发展战略等前瞻性陈述，不构成公司对投资者的实质承诺， 请投资者注意投资风险。 七、 是否存在被控股股东及其关联方非经营性占用资金情况 是 八、 是否存在违反规定决策程序对外提供担保的情况？ 否 九、 是否存在半数以上董事无法保证公司所披露半年度报告的真实性、准确性和完整性 否 十、 重大风险提示 公司已在本报告中详细描述可能存在的风险，敬请查 ...

[Important Notice](index=2&type=section&id=Important%20Notice) [Audit Report Opinion](index=2&type=section&id=Audit%20Report%20Opinion) The auditor issued a disclaimer of opinion on the 2020 financial report due to major internal control deficiencies - Lixin Certified Public Accountants (Special General Partnership) issued a disclaimer of opinion on the company's 2020 annual financial report[3](index=3&type=chunk) - The basis for the disclaimer of opinion primarily includes six aspects[4](index=4&type=chunk)[5](index=5&type=chunk)[6](index=6&type=chunk): - **Major deficiencies in internal control over financial reporting**: Inability to obtain complete, accurate, and reliable financial data - **Going concern**: Significant doubts about the company's ability to continue as a going concern due to huge losses in 2020, negative net assets, and a large amount of overdue debt - **Related-party fund appropriation**: The recoverability of **8.481 billion yuan** appropriated by the former actual controller could not be confirmed - **Construction in progress**: Lack of complete financial data for **2.858 billion yuan** in construction projects, preventing confirmation of their accuracy and completeness - **Inventory impairment and revenue recognition for medical devices**: Inability to obtain sufficient evidence regarding the adequacy of inventory write-downs and the accuracy of related accounts receivable and operating revenue - **Pending litigation**: Multiple pending lawsuits whose completeness of disclosure and impact on the financial statements could not be determined [Section 1 Definitions](index=7&type=section&id=Section%201%20Definitions) [Section 2 Company Profile and Key Financial Indicators](index=7&type=section&id=Section%202%20Company%20Profile%20and%20Key%20Financial%20Indicators) [Company Information](index=7&type=section&id=Company%20Information) This section provides basic corporate information, including name, stock code, legal representative, and contact details | Item | Information | | :--- | :--- | | **Company Name (Chinese)** | 康美药业股份有限公司 | | **Company Abbreviation (Chinese)** | ST 康美 | | **Stock Exchange** | Shanghai Stock Exchange | | **Stock Code** | 600518 | | **Legal Representative** | Ma Xinggu | [Key Accounting Data and Financial Indicators for the Last Three Years](index=9&type=section&id=Key%20Accounting%20Data%20and%20Financial%20Indicators%20for%20the%20Last%20Three%20Years) The company's financial condition deteriorated sharply in 2020, with significant declines in revenue and net assets 2020 Key Accounting Data | Key Accounting Data | 2020 | 2019 | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | **Operating Revenue (Yuan)** | 5,412,007,961.66 | 11,445,545,810.05 | -52.72% | | **Net Profit Attributable to Shareholders (Yuan)** | -27,735,943,422.59 | -4,660,675,038.43 | -495.11% | | **Net Cash Flow from Operating Activities (Yuan)** | 1,031,392,101.60 | 2,882,044,986.08 | -64.21% | | **Net Assets Attributable to Shareholders (Yuan)** | -7,185,809,518.69 | 20,515,274,013.61 | -135.03% | | **Total Assets (Yuan)** | 36,212,979,977.45 | 64,586,228,755.01 | -43.93% | 2020 Key Financial Indicators | Key Financial Indicators | 2020 | 2019 | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | **Basic Earnings Per Share (Yuan/Share)** | -5.6158 | -0.9896 | -467.48% | | **Weighted Average Return on Equity (%)** | -416.16% | -21.20% | Decrease of 394.96 percentage points | - The net profit attributable to shareholders in the fourth quarter of 2020 was **-25.364 billion yuan**, which was the main source of the full-year loss[24](index=24&type=chunk) [Section 3 Business Overview](index=12&type=section&id=Section%203%20Business%20Overview) [Main Business, Operating Model, and Industry Overview](index=12&type=section&id=Main%20Business,%20Operating%20Model,%20and%20Industry%20Overview) The company operates an integrated Traditional Chinese Medicine (TCM) industry chain centered on decoction pieces - The company's core business is TCM decoction pieces, implementing an integrated industry chain model covering upstream cultivation, midstream production and logistics, and downstream multi-channel marketing networks[29](index=29&type=chunk) - Sales models are diversified, including direct sales to hospitals, commercial wholesale, smart pharmacies, chain pharmacy distribution, e-commerce, and direct selling[30](index=30&type=chunk)[31](index=31&type=chunk) - The company is a leader in the TCM decoction piece industry, with 11 production bases capable of producing over 1,000 types and 20,000 specifications of products, and participates in setting multiple national and provincial standards[33](index=33&type=chunk) [Core Competitiveness Analysis](index=15&type=section&id=Core%20Competitiveness%20Analysis) Core competitiveness stems from its integrated industry chain, extensive network, and technological advantages - **Full industry chain advantage**: The business system covers upstream cultivation, midstream production and market operations, and downstream multi-channel marketing networks, providing a prominent resource advantage[37](index=37&type=chunk) - **Network advantage**: Deep cooperation with over 2,000 medical institutions and approximately 200,000 chain pharmacies nationwide, complemented by the Kangmei TCM bulk trading platform and multiple offline TCM markets, forming a comprehensive sales system[38](index=38&type=chunk) - **Technological advantage**: Supported by over 20 national and provincial R&D platforms, the company holds more than 610 intellectual property rights and participates in setting multiple national and provincial standards, recognized as a National Technology Innovation Demonstration Enterprise[39](index=39&type=chunk)[40](index=40&type=chunk) [Section 4 Management Discussion and Analysis](index=18&type=section&id=Section%204%20Management%20Discussion%20and%20Analysis) [Management Discussion and Analysis](index=18&type=section&id=Management%20Discussion%20and%20Analysis) The company faced declining sales and debt risks in 2020, leading to a trusteeship arrangement - The company continued its strategy of "focusing on core business, developing industry, streamlining operations, and strengthening fundamentals," but sales revenue declined sharply due to multiple adverse factors[41](index=41&type=chunk) - Based on the principle of prudence, the company made **large impairment provisions** for goodwill, accounts receivable, fixed assets, construction in progress, and inventories, which was a primary reason for the huge loss[41](index=41&type=chunk) - To mitigate debt risks, Jieyang Yilin Pharmaceutical Investment Co, Ltd was introduced as a trustee to advance risk resolution and maintain stable production and operations[41](index=41&type=chunk) - The company plans to accelerate the resolution of legacy issues in its medical device business and recover funds by clearing inventory through various channels, while gradually adjusting and streamlining its health food business[55](index=55&type=chunk)[56](index=56&type=chunk) [Key Operating Activities During the Reporting Period](index=23&type=section&id=Key%20Operating%20Activities%20During%20the%20Reporting%20Period) Operating performance severely declined in 2020, driven by massive asset impairments and resulting in insolvency Key Changes in Income Statement and Cash Flow Statement | Item | Current Period (Yuan) | Prior Period (Yuan) | Change (%) | | :--- | :--- | :--- | :--- | | **Operating Revenue** | 5,412,007,961.66 | 11,445,545,810.05 | -52.72% | | **Operating Cost** | 5,198,273,863.90 | 9,935,094,405.05 | -47.68% | | **Net Cash Flow from Operating Activities** | 1,031,392,101.60 | 2,882,044,986.08 | -64.21% | Explanation of Significant Profit Changes from Non-Core Business | Item | Current Period (Yuan) | Prior Period (Yuan) | Change (%) | Explanation | | :--- | :--- | :--- | :--- | :--- | | **Credit Impairment Loss** | -1,058,088,831.85 | -180,861,935.00 | 485.03% | Increase in impairment provisions for receivables | | **Asset Impairment Loss** | -21,948,546,728.16 | -1,126,038,320.40 | 1,849.18% | Y-o-Y increase in asset impairment provisions | Key Changes in Assets and Liabilities | Item | Current Period-End (Yuan) | Prior Period-End (Yuan) | Change (%) | Explanation | | :--- | :--- | :--- | :--- | :--- | | **Inventories** | 9,040,162,905.83 | 31,408,236,688.25 | -71.22% | Provision for inventory write-downs | | **Goodwill** | 36,909,405.61 | 81,196,574.37 | -54.54% | Provision for goodwill impairment | | **Short-term Borrowings** | 2,314,766,721.42 | 12,811,329,365.98 | -81.93% | Reclassification of extended short-term borrowings to long-term borrowings | | **Long-term Borrowings** | 10,043,909,260.71 | 2,088,752,629.63 | 380.86% | Reclassification of extended short-term borrowings to long-term borrowings | [Discussion and Analysis of Future Development](index=51&type=section&id=Discussion%20and%20Analysis%20of%20Future%20Development) The company plans to focus on core businesses while facing significant risks, including a delisting warning - The company's development strategy is to "focus on advantageous industries, strengthen large-scale commerce, revitalize potential industries, and clear out marginal businesses," concentrating resources on core TCM operations while divesting non-core assets[107](index=107&type=chunk) - The 2021 operating plan focuses on the upstream TCM industry chain to enhance the competitiveness of key products, strengthen midstream and downstream commercial distribution, revitalize the TCM trading market, and vigorously clear out non-core businesses[109](index=109&type=chunk) - The company faces significant risks, including[115](index=115&type=chunk)[116](index=116&type=chunk): - **Policy risks**: Ongoing impacts from healthcare reform, volume-based procurement, and medical insurance cost controls - **Market competition risks**: Intensifying competition in the TCM decoction piece industry - **Litigation risks**: Facing a special representative action for securities misrepresentation, which could lead to substantial compensation - **Delisting risks**: A delisting risk warning (*ST) will be implemented due to negative net assets at the end of 2020; the company's stock faces termination of listing if the bankruptcy reorganization application fails [Section 5 Significant Events](index=56&type=section&id=Section%205%20Significant%20Events) [Profit Distribution and Commitment Fulfillment](index=56&type=section&id=Profit%20Distribution%20and%20Commitment%20Fulfillment) No profit distribution is planned due to significant losses, and the former controller's repayment commitment is at risk - Due to a net profit attributable to shareholders of **-27.736 billion yuan** in 2020, the company proposes no profit distribution and no capitalization of capital reserves[120](index=120&type=chunk) - The former actual controller, Ma Xingtian, committed to repaying the entire **8.481 billion yuan** of non-operating appropriated funds and interest by the end of 2022, but fulfillment is highly uncertain as he has been subjected to compulsory measures and has transferred control[125](index=125&type=chunk) [Fund Misappropriation and Non-Standard Audit Opinion](index=61&type=section&id=Fund%20Misappropriation%20and%20Non-Standard%20Audit%20Opinion) The controlling shareholder misappropriated funds, and the board accepted the auditor's disclaimer of opinion - At the beginning of the reporting period, the balance of non-operating funds appropriated by the controlling shareholder and its affiliates was **9.481 billion yuan**; after a repayment of 1 billion yuan during the period, the ending balance was **8.481 billion yuan**, with full repayment uncertain[126](index=126&type=chunk)[127](index=127&type=chunk) - The company's Board of Directors accepted the "disclaimer of opinion" audit report issued by the auditor and will take measures to protect shareholder interests[128](index=128&type=chunk) [Delisting Risk, Bankruptcy Reorganization, and Major Litigation](index=63&type=section&id=Delisting%20Risk,%20Bankruptcy%20Reorganization,%20and%20Major%20Litigation) The company faces severe delisting risk due to negative net assets, a bankruptcy petition, and major litigation - The company's stock will be subject to a delisting risk warning (*ST) after the annual report disclosure due to negative net assets at the end of 2020[116](index=116&type=chunk) - A creditor has applied to the court for the company's bankruptcy reorganization; if the reorganization fails and the company is declared bankrupt, its stock will face termination of listing[133](index=133&type=chunk)[134](index=134&type=chunk) - In May 2020, the company received an "Administrative Penalty Decision" and a "Market Ban Decision" from the China Securities Regulatory Commission for alleged violations of information disclosure laws and regulations[137](index=137&type=chunk) [Section 6 Changes in Common Stock and Shareholder Information](index=74&type=section&id=Section%206%20Changes%20in%20Common%20Stock%20and%20Shareholder%20Information) [Shareholders and Actual Controller](index=76&type=section&id=Shareholders%20and%20Actual%20Controller) During the period, the company's controlling shareholder changed, resulting in no actual controller - As of the end of the reporting period, the total number of common shareholders was **154,066**[171](index=171&type=chunk) - During the reporting period, the company's controlling shareholder changed from Kangmei Industrial Investment Holding Co, Ltd to Jieyang Yilin Pharmaceutical Investment Co, Ltd, and the company now has **no actual controller**[177](index=177&type=chunk)[178](index=178&type=chunk) - The change of control was achieved by Kangmei Industrial unconditionally and irrevocably delegating the voting rights corresponding to its **29.90%** shareholding to Yilin Investment[259](index=259&type=chunk) [Section 7 Preferred Stock Information](index=81&type=section&id=Section%207%20Preferred%20Stock%20Information) [Preferred Stock Dividend Distribution](index=82&type=section&id=Preferred%20Stock%20Dividend%20Distribution) No preferred stock dividends were distributed for two consecutive years, restoring voting rights to preferred shareholders - Due to the huge loss in 2020, the Board of Directors proposed not to distribute preferred stock dividends; dividends have not been paid for two consecutive years (2019 and 2020)[185](index=185&type=chunk)[186](index=186&type=chunk) - According to the Articles of Association, the voting rights of preferred shareholders will be restored as dividends have not been paid for two consecutive fiscal years[188](index=188&type=chunk) [Section 8 Directors, Supervisors, Senior Management, and Employees](index=85&type=section&id=Section%208%20Directors,%20Supervisors,%20Senior%20Management,%20and%20Employees) [Changes and Penalties of Directors, Supervisors, and Senior Management](index=85&type=section&id=Changes%20and%20Penalties%20of%20Directors,%20Supervisors,%20and%20Senior%20Management) The period saw significant management changes and regulatory penalties, including lifetime market bans for former executives - The company's directors, supervisors, and senior management underwent significant changes, with several key executives including former Chairman Ma Xingtian and former Vice Chairman Xu Dongjin resigning, and a new management team being elected[214](index=214&type=chunk)[215](index=215&type=chunk) - In May 2020, the company and several then-serving directors, supervisors, and senior managers received administrative penalties from the CSRC, with **lifetime securities market bans** imposed on Ma Xingtian, Xu Dongjin, and Qiu Xiwei, and **10-year bans** on Zhuang Yiqing, Wen Shaosheng, and Ma Huanzhou[216](index=216&type=chunk)[218](index=218&type=chunk) [Section 9 Corporate Governance](index=107&type=section&id=Section%209%20Corporate%20Governance) [Internal Control](index=111&type=section&id=Internal%20Control) The company acknowledged major deficiencies in its financial reporting internal controls, confirmed by an adverse audit opinion - The company acknowledged that there are **major deficiencies** in its internal control over financial reporting[234](index=234&type=chunk) - The accounting firm issued an **adverse opinion** on the company's internal control for the year 2020[235](index=235&type=chunk) [Section 10 Corporate Bonds](index=111&type=section&id=Section%2010%20Corporate%20Bonds) [Corporate Bond Basics and Risks](index=111&type=section&id=Corporate%20Bond%20Basics%20and%20Risks) The company's credit rating was severely downgraded to C, reflecting extreme challenges in debt repayment capabilities - In 2020, China Chengxin Securities Rating downgraded the company's corporate credit rating from BBB all the way down to **C**, and the ratings for "15 Kangmei Bond," "18 Kangmei 01," and "18 Kangmei 04" were downgraded to **C** or **CC**[241](index=241&type=chunk) Key Financial Indicators for the Last 2 Years | Key Indicator | 2020 | 2019 | Reason for Change | | :--- | :--- | :--- | :--- | | **EBITDA (Yuan)** | -24,754,454,293.78 | 3,320,604,837.01 | Significant decrease in profit | | **Asset-Liability Ratio (%)** | 119.49% | 68.03% | Large impairment provisions | | **Interest Coverage Ratio** | -11.75 | 1.12 | Decrease in profit | | **Interest Payment Ratio (%)** | 56.26% | 93.33% | Tight cash flow pressure | [Section 11 Financial Report](index=116&type=section&id=Section%2011%20Financial%20Report) [Audit Report](index=116&type=section&id=Audit%20Report) The auditor issued a disclaimer of opinion due to six major issues preventing the acquisition of sufficient audit evidence - The auditor was unable to express an opinion on the financial statements because they could not obtain sufficient and appropriate audit evidence to serve as a basis for an opinion[251](index=251&type=chunk) - The basis for the disclaimer of opinion included: major deficiencies in internal control, going concern issues, related-party fund appropriation, matters related to construction projects, issues with medical device inventory impairment and revenue recognition, and pending litigation[252](index=252&type=chunk)[253](index=253&type=chunk)[254](index=254&type=chunk)[255](index=255&type=chunk)[256](index=256&type=chunk)[258](index=258&type=chunk) [Financial Statements](index=120&type=section&id=Financial%20Statements) Financial statements reveal severe insolvency, with liabilities far exceeding assets and massive net losses for 2020 Consolidated Balance Sheet Summary (As of December 31, 2020) | Item | Amount (Yuan) | | :--- | :--- | | **Total Assets** | 36,212,979,977.45 | | **Total Liabilities** | 43,272,140,531.45 | | **Equity Attributable to Parent Company Owners** | -7,185,809,518.69 | Consolidated Income Statement Summary (For the Year 2020) | Item | Amount (Yuan) | | :--- | :--- | | **Total Operating Revenue** | 5,412,007,961.66 | | **Operating Profit** | -27,141,841,720.45 | | **Net Profit Attributable to Parent Company Shareholders** | -27,735,943,422.59 | | **Asset Impairment Loss** | -21,948,546,728.16 | | **Credit Impairment Loss** | -1,058,088,831.85 | [Notes to the Financial Statements](index=143&type=section&id=Notes%20to%20the%20Financial%20Statements) Notes detail significant uncertainties in going concern, massive inventory write-downs, and extensive litigation risks - At the end of 2020, the company's net profit attributable to the parent was **-27.736 billion yuan**, net assets were **-7.186 billion yuan**, total interest-bearing debt was **33.03 billion yuan** (including **4.539 billion yuan** in overdue debt), indicating significant uncertainty about its ability to continue as a going concern[297](index=297&type=chunk) - The carrying amount of inventories at year-end was 30.111 billion yuan, with a write-down provision of **21.071 billion yuan**, resulting in a net book value of 9.04 billion yuan; this included **19.65 billion yuan** in impairment for TCM materials and **0.67 billion yuan** for medical devices[453](index=453&type=chunk)[456](index=456&type=chunk)[458](index=458&type=chunk)[459](index=459&type=chunk) - The original book value of goodwill was 0.276 billion yuan, with accumulated impairment provisions of 0.239 billion yuan, including **44.287 million yuan** newly provisioned in the current period[497](index=497&type=chunk)[498](index=498&type=chunk)[502](index=502&type=chunk) - As of year-end, the total book value of assets with restricted ownership or use was **6.321 billion yuan**, primarily consisting of inventories, fixed assets, intangible assets, and investment properties used as collateral[611](index=611&type=chunk) - The company disclosed significant contingent liabilities, including lawsuits related to medium-term notes and corporate bonds, as well as 272 pending lawsuits as of March 30, 2021, with a total amount involved of **2.368 billion yuan**[673](index=673&type=chunk)[674](index=674&type=chunk)[675](index=675&type=chunk) [Section 12 List of Documents for Inspection](index=340&type=section&id=Section%2012%20List%20of%20Documents%20for%20Inspection)