柳药集团(603368) - 2025 Q2 - 季度财报

Definitions Definitions of Common Terms This chapter provides definitions for key terms, company names, regulatory bodies, and industry-specific terminology to ensure clarity Definitions of Common Terms | Common Term | Meaning | | :--- | :--- | | The Company, Company, Liuyao Group | Guangxi Liuyao Group Co., Ltd | | CSRC | China Securities Regulatory Commission | | SSE | Shanghai Stock Exchange | | Guangxi Guizhong Pharmacy | Guangxi Guizhong Pharmacy Chain Co., Ltd | | Guangxi XianZhu TCM Technology | Guangxi XianZhu Traditional Chinese Medicine Technology Co., Ltd | | DTP Drugs | Direct-to-Patient (DTP) drugs, high-value self-paid drugs for major illnesses with multi-point distribution | | SPD Project | Supply, Processing, and Distribution (SPD) project, a medical supply chain management platform for full traceability of pharmaceuticals and consumables | | Two-Invoice System | Drugs are invoiced once from manufacturer to distributor, and once from distributor to hospital | | Dual Medical Insurance Channels | Allows purchase of national medical insurance negotiation drugs through both designated medical institutions and retail pharmacies | | Reporting Period | January 1, 2025 - June 30, 2025 | Company Profile and Key Financial Indicators Company Information This chapter provides fundamental company identification details, including its official names and legal representative Basic Company Information | Item | Content | | :--- | :--- | | Chinese Name | 广西柳药集团股份有限公司 | | Chinese Abbreviation | 柳药集团 | | English Name | Guangxi Liuyao Group Co., Ltd | | Legal Representative | Zhu Chaoyang | Contact Persons and Information This chapter lists contact details for the Board Secretary and Securities Affairs Representative, enabling investor communication Contact Information | Position | Name | Contact Address | Phone | Fax | Email | | :--- | :--- | :--- | :--- | :--- | :--- | | Board Secretary | Xu Yang | No. 68 Guantang Avenue, Liuzhou City | 0772-2566078 | 0772-2566078 | lygf@lzyy.cn | | Securities Affairs Representative | Wei Panyu | No. 68 Guantang Avenue, Liuzhou City | 0772-2566078 | 0772-2566078 | lygf@lzyy.cn | Overview of Changes in Basic Information This chapter outlines historical changes to the company's registered address, confirming stability during the reporting period Company Address Information | Item | Content | | :--- | :--- | | Company Registered Address | No. 68 Guantang Avenue, Liuzhou City | | Historical Changes in Company Registered Address | On December 31, 2014, changed from "Building 1, R&D Center, Guantang Entrepreneurship Park, Liudong New District, Liuzhou City, No. 8-2" to "No. 68 Guantang Avenue, Liuzhou City" | | Company Office Address | No. 68 Guantang Avenue, Liuzhou City | | Postal Code of Company Office Address | 545000 | | Company Website | www.lzyy.cn | | Email | lygf@lzyy.cn | | Index for Changes during the Reporting Period | No changes occurred during the reporting period | Overview of Changes in Information Disclosure and Document Availability Locations This chapter specifies the company's official information disclosure channels and document availability locations, confirming no changes during the reporting period Information Disclosure and Document Availability Locations | Item | Content | | :--- | :--- | | Names of Newspapers Selected for Information Disclosure | China Securities Journal, Shanghai Securities News, Securities Times, Securities Daily | | Website Address for Semi-Annual Report Publication | www.sse.com.cn | | Location for Company Semi-Annual Report Availability | Company Securities Investment Department | | Index for Changes during the Reporting Period | No changes occurred during the reporting period | Brief Introduction to Company Shares This chapter provides A-share listing details, including exchange, stock abbreviation, and code, for investor convenience Brief Introduction to Company Shares | Share Type | Listing Exchange | Stock Abbreviation | Stock Code | Previous Stock Abbreviation | | :--- | :--- | :--- | :--- | :--- | | A-shares | Shanghai Stock Exchange | Liuyao Group | 603368 | Liuyao Shares | Key Accounting Data and Financial Indicators This chapter presents key accounting data and financial indicators for H1 2025, showing decreased revenue and profit but significantly improved operating cash flow Key Accounting Data (Unit: RMB) | Key Accounting Data | Current Reporting Period (Jan-Jun) | Same Period Last Year | YoY Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 10,300,787,773.83 | 10,641,992,346.59 | -3.21 | | Total Profit | 499,039,943.11 | 565,054,514.71 | -11.68 | | Net Profit Attributable to Shareholders of Listed Company | 429,281,796.54 | 464,193,662.02 | -7.52 | | Net Profit Attributable to Shareholders of Listed Company After Deducting Non-Recurring Gains and Losses | 421,955,479.09 | 456,431,115.54 | -7.55 | | Net Cash Flow from Operating Activities | 88,433,415.37 | 49,662,478.02 | 78.07 | | End of Current Reporting Period | End of Previous Year | Change from End of Previous Year (%) | | | Net Assets Attributable to Shareholders of Listed Company | 7,756,951,998.17 | 7,624,408,552.37 | 1.74 | | Total Assets | 21,163,425,613.13 | 21,268,946,240.75 | -0.50 | Key Financial Indicators | Key Financial Indicators | Current Reporting Period (Jan-Jun) | Same Period Last Year | YoY Change (%) | | :--- | :--- | :--- | :--- | | Basic Earnings Per Share (RMB/share) | 1.08 | 1.24 | -12.90 | | Diluted Earnings Per Share (RMB/share) | 1.08 | 1.24 | -12.90 | | Basic Earnings Per Share After Deducting Non-Recurring Gains and Losses (RMB/share) | 1.06 | 1.22 | -13.11 | | Weighted Average Return on Net Assets (%) | 5.48 | 6.57 | Decrease of 1.09 percentage points | | Weighted Average Return on Net Assets After Deducting Non-Recurring Gains and Losses (%) | 5.38 | 6.46 | Decrease of 1.08 percentage points | Non-Recurring Gains and Losses and Amounts This chapter itemizes non-recurring gains and losses for H1 2025, totaling RMB 7.33 million, including asset disposals and government subsidies Non-Recurring Gains and Losses and Amounts (Unit: RMB) | Non-Recurring Gains and Losses Item | Amount | | :--- | :--- | | Gains and losses from disposal of non-current assets, including the write-back of asset impairment provisions | 234,834.50 | | Government subsidies recognized in current profit or loss, excluding those closely related to the company's normal business operations, compliant with national policies, enjoyed according to fixed standards, and having a continuous impact on the company's profit or loss | 11,401,597.82 | | Other non-operating income and expenses apart from the above items | -5,558,198.12 | | Less: Income tax impact | 256,354.40 | | Impact on minority interests (after tax) | -1,504,437.65 | | Total | 7,326,317.45 | Management Discussion and Analysis Explanation of the Company's Industry and Main Business Operations during the Reporting Period This chapter analyzes the pharmaceutical distribution and manufacturing industries, detailing the company's wholesale, retail, and manufacturing business model, emphasizing digital empowerment and synergistic development - The pharmaceutical distribution industry is transforming towards specialization, digitalization, extreme efficiency, and diversification, influenced by an aging population, healthcare reform policies (centralized procurement, medical insurance payment reform), and new technologies (AI, internet)[27] - The pharmaceutical wholesale industry is seeing increased concentration, with leading enterprises gaining prominence, digital empowerment transforming supply chain services, and extended industrial chains and optimized structures ensuring sustained profitability[34][35][36] - The pharmaceutical retail industry is driven by "Internet+Pharmacy" and electronic prescription policies, accelerating prescription outflow, developing new retail formats, and transforming pharmacies into professional health management providers[42][46] - The pharmaceutical manufacturing industry (TCM industry) benefits from policy dividends, with centralized procurement driving the industry towards standardized, scaled, and high-quality development[49][51] Analysis of the Industry in which the Company's Main Business Operates This chapter analyzes the pharmaceutical distribution, wholesale, retail, and manufacturing sectors, highlighting policy, digital transformation, and market concentration impacts - The pharmaceutical distribution industry is driven by rigid market demand for continuous growth, with policy and digital integration propelling its transformation from a "drug transporter" to a "health service solution provider"[27] - The pharmaceutical wholesale segment is impacted by the "Two-Invoice System" and volume-based procurement, accelerating industry consolidation, increasing market concentration, and highlighting the advantages of leading enterprises[34] - The pharmaceutical retail segment is driven by "Internet+Pharmacy" and electronic medical insurance prescription policies, fostering integrated online-offline development, and expanding pharmacy functions to include health promotion and nutritional care[42][46] - The pharmaceutical manufacturing segment (TCM industry) benefits from national support policies, with centralized procurement of Traditional Chinese Medicine (TCM) decoction pieces and formula granules driving standardized and scaled development[49][51] Main Business Operating Model This chapter details the company's core business model in wholesale, retail, and manufacturing, highlighting digital transformation and synergistic development of value-added services - The company's main businesses include pharmaceutical wholesale, retail, and manufacturing, serving customers through procurement, warehousing, logistics, distribution, and retail channels[52] Operating Performance of Each Business Segment in H1 2025 (Unit: RMB 10,000) | Business Segment | Main Business Revenue | Proportion (%) | YoY Change (%) | Net Profit Attributable to Shareholders of Listed Company | Proportion (%) | YoY Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Pharmaceutical Wholesale | 805,082.28 | 78.49 | -4.70 | 27,038.93 | 62.99 | -9.11 | | Pharmaceutical Retail | 164,317.76 | 16.02 | 3.62 | 6,896.49 | 16.07 | 0.20 | | Pharmaceutical Manufacturing | 56,329.99 | 5.49 | 0.31 | 8,992.76 | 20.95 | -8.12 | | Total | 1,025,730.04 | 100.00 | -3.19 | 42,921.10 | 100.00 | -7.54 | Discussion and Analysis of Operations This chapter analyzes the company's operational strategies and performance during the reporting period, detailing responses to industry challenges and reasons for revenue decline, emphasizing optimization and digital empowerment - The company adheres to a "seeking progress while maintaining stability, collaborative innovation" development strategy, strengthening risk prevention and control, expanding new businesses, and leveraging the advantages of "pharmaceutical-device synergy, wholesale-retail synergy, and industry-commerce synergy"[60] - In H1 2025, operating revenue decreased by 3.21% year-on-year, and net profit attributable to the parent company decreased by 7.52% year-on-year, primarily due to the decline in pharmaceutical wholesale business[61] - The pharmaceutical wholesale business experienced sales decline and reduced gross profit due to medical insurance cost control and expanded centralized procurement, with the company responding by optimizing product structure, digitally empowering supply chain services, and strengthening risk management[61][63] - The pharmaceutical retail business achieved a revenue growth of 3.62% through franchise expansion, DTP business development, upgraded chronic disease health services, and new retail operations[67] - The pharmaceutical manufacturing segment's revenue grew by 0.31%, while net profit decreased by 8.12%, with the company responding through product R&D innovation, quality control upgrades, and market expansion[72] Pharmaceutical Wholesale Segment Wholesale business revenue decreased by 4.70% and net profit by 9.11% in H1 2025 due to procurement policies, with the company responding through optimization and AI integration Pharmaceutical Wholesale Business Performance | Item | H1 2025 (RMB 10,000) | YoY Change (%) | | :--- | :--- | :--- | | Operating Revenue | 805,082.28 | -4.70 | | Net Profit Attributable to Shareholders of Listed Company | 27,038.93 | -9.11 | - The company added 347 new upstream suppliers, over 1,200 new product specifications, and more than 380 exclusive agency products, optimizing its product structure[64] - The company launched an "AI+Medical" full-process service solution, added 5 new medical device and consumable SPD project hospitals, and accumulated partnerships with over 40 core medical institutions[65] - Medical device operating revenue reached RMB 1,249.16 million, a year-on-year increase of 1.44%[65] Pharmaceutical Retail Segment Retail business revenue grew by 3.62% to RMB 1,643.18 million in H1 2025, with net profit up 0.20%, driven by franchise expansion and new retail strategies Pharmaceutical Retail Business Performance | Item | H1 2025 (RMB 10,000) | YoY Change (%) | | :--- | :--- | :--- | | Operating Revenue | 164,317.76 | 3.62 | | Net Profit Attributable to Shareholders of Listed Company | 6,896.49 | 0.20 | - As of the end of the reporting period, the company had a total of 931 pharmacies, with 35 new stores opened (including 30 franchise stores), and 845 medical insurance-designated pharmacies[68] - DTP business sales reached RMB 1.127 billion, a year-on-year increase of 11.73%[70] - The "Guizhong Kuaiyao" online platform achieved sales of RMB 132 million, a year-on-year increase of 11.30%[71] Pharmaceutical Manufacturing Segment Manufacturing segment revenue grew by 0.31% to RMB 563.30 million in H1 2025, but net profit declined by 8.12%, with focus on R&D and market expansion Pharmaceutical Manufacturing Business Performance | Item | H1 2025 (RMB 10,000) | YoY Change (%) | | :--- | :--- | :--- | | Operating Revenue | 56,329.99 | 0.31 | | Net Profit Attributable to Shareholders of Listed Company | 8,992.76 | -8.12 | - XianZhu Traditional Chinese Medicine Technology's revenue reached RMB 366.77 million, a year-on-year increase of 20.59%, strengthening R&D and quality control for medicine-food homologous products[73] - XianZhu Pharmaceutical has completed the filing for 621 formula granule varieties, developed over 1,400 hospital clients, and expanded to over 1,000 clients outside the province[75] - In the proprietary Chinese medicine sector, research on improved new drugs like Fufang Jinqiancao Granules is progressing, and the second phase of the Yulin TCM Industrial Park's proprietary Chinese medicine production project has entered trial production and debugging[76] Company's Main Business by Industry and Product This chapter presents main business revenue by industry and product, indicating pharmaceutical wholesale as the primary source, with drug sales dominating and other segments growing Main Business by Industry (Unit: RMB 10,000) | Industry | H1 2025 Revenue | Proportion (%) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Pharmaceutical Wholesale | 805,082.28 | 78.49 | -4.70 | | Pharmaceutical Retail | 164,317.76 | 16.02 | 3.62 | | Pharmaceutical Manufacturing | 56,329.99 | 5.49 | 0.31 | | Total | 1,025,730.04 | 100.00 | -3.19 | Main Business by Product (Unit: RMB 10,000) | Product | H1 2025 Revenue | Proportion (%) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Pharmaceuticals | 889,076.85 | 86.68 | -3.88 | | Medical Devices | 124,915.99 | 12.18 | 1.44 | | Other | 11,737.19 | 1.14 | 2.59 | Analysis of Core Competencies during the Reporting Period This chapter analyzes the company's core competitive advantages in channels, customer reach, supplier relations, TCM industry chain, and logistics, reinforcing its leading market position - Possesses outstanding channel resources and wholesale-retail integration advantages, covering 100% of secondary and above hospitals in the entire region[81] - Achieves full coverage of high-quality hospital end-customers, which are the main venues for pharmaceutical and medical device consumption[82] - Guizhong Pharmacy, a top 100 national pharmaceutical retail enterprise, has strong service capabilities and brand influence in Guangxi, leading in DTP pharmacies and online pharmacy businesses[84] - Possesses abundant upstream supplier resources and strong cooperative relationships, having essentially secured distribution rights for all volume-based procurement varieties within Guangxi[85] - Established a high-quality full Traditional Chinese Medicine (TCM) industry chain business system, covering TCM decoction pieces, proprietary Chinese medicines, and TCM formula granules[86] - Digitally empowered efficient logistics distribution network and professional supply chain service system, forming a distribution network centered around three major logistics bases in Nanning, Liuzhou, and Yulin[88] Key Operating Performance during the Reporting Period This chapter summarizes changes in financial statement items, analyzes asset/liability/investment status, and identifies key market, policy, and operational risks Analysis of Changes in Financial Statement Items | Item | Change (%) | Reason for Change | | :--- | :--- | :--- | | Operating Revenue | -3.21 | Due to increased volume of centralized procurement varieties and hospital cost control policies | | Operating Cost | -2.39 | Due to increased volume of centralized procurement varieties, leading to a corresponding decrease in operating costs | | Selling Expenses | -1.91 | Due to the company implementing budget management mechanisms to control relevant expense expenditures in the current period | | Administrative Expenses | -2.81 | Due to the company implementing budget management mechanisms to control relevant expense expenditures in the current period | | Financial Expenses | -10.39 | Due to a decrease in bank loan and discount rates in the current period | | R&D Expenses | 26.16 | Due to increased investment in R&D projects by industrial subsidiaries in the current period | | Net Cash Flow from Operating Activities | 78.07 | Due to an increase in cash receipts from goods settled in cash in the current period | | Net Cash Flow from Investing Activities | -1,121.93 | Due to increased cash payments for the acquisition of Wantong in the current period | | Net Cash Flow from Financing Activities | N/A | Due to the company completing private placement fundraising in the previous period with no such activity in the current period, and an increase in financing margin payments in the current period | Changes in Assets and Liabilities | Item Name | Change from End of Previous Year (%) | Explanation | | :--- | :--- | :--- | | Non-current assets due within one year | -100.00 | Primarily due to the redemption of large-denomination time deposits upon maturity | | Construction in progress | 43.81 | Primarily due to increased investment in the Yulin TCM Industrial Park Phase II project and Liuzhou Logistics Operations Center project | | Contract liabilities | -56.04 | Primarily due to a decrease in advance receipts for goods in the current period | | Employee benefits payable | -91.28 | Primarily due to the accrual of year-end bonuses at the end of the previous year | | Other payables | -35.57 | Primarily due to the payment for the acquisition of minority interests in Wantong Pharmaceutical in the current period | | Non-current liabilities due within one year | 69.33 | Primarily due to the reclassification of long-term borrowings due within one year | | Other current liabilities | -100.00 | Primarily due to the reclassification of accounts receivable financing | | Long-term borrowings | 117.82 | Primarily due to an increase in pledged borrowings | | Long-term payables | 332.98 | Primarily due to an increase in research project funds | - The company faces risks such as intensified market competition, changes in industry policies (centralized procurement, DRGs), accounts receivable management, human resources, and new business investment profitability not meeting expectations[95][96][97][98][100] Analysis Table of Changes in Financial Statement Items This chapter details year-on-year changes in key financial statement items, attributing revenue and profit declines to policy, while noting improved operating cash flow Financial Statement Related Item Changes (Unit: RMB) | Item | Current Period Amount | Prior Period Amount | Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 10,300,787,773.83 | 10,641,992,346.59 | -3.21 | | Operating Cost | 9,160,530,355.09 | 9,385,063,709.77 | -2.39 | | Selling Expenses | 279,862,090.26 | 285,325,562.89 | -1.91 | | Administrative Expenses | 189,665,875.88 | 195,156,038.88 | -2.81 | | Financial Expenses | 109,619,683.06 | 122,334,967.10 | -10.39 | | R&D Expenses | 17,672,726.43 | 14,008,342.08 | 26.16 | | Net Cash Flow from Operating Activities | 88,433,415.37 | 49,662,478.02 | 78.07 | | Net Cash Flow from Investing Activities | -315,572,789.25 | 30,880,070.22 | -1,121.93 | | Net Cash Flow from Financing Activities | -1,025,218,533.00 | -433,577,907.56 | N/A | - Reason for change in operating revenue: Due to increased volume of centralized procurement varieties and hospital cost control policies[90] - Reason for change in net cash flow from operating activities: Due to an increase in cash receipts from goods settled in cash in the current period[90] Analysis of Assets and Liabilities This chapter analyzes key changes in assets and liabilities at period-end, detailing variations in non-current assets, construction, and various payables/borrowings Changes in Assets and Liabilities (Unit: RMB) | Item Name | Amount at End of Current Period | Proportion of Total Assets at End of Current Period (%) | Amount at End of Previous Year | Proportion of Total Assets at End of Previous Year (%) | Change from End of Previous Year (%) | Explanation | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Non-current assets due within one year | - | - | 493,594,416.66 | 2.32 | -100.00 | Primarily due to the redemption of large-denomination time deposits upon maturity | | Construction in progress | 119,464,343.50 | 0.56 | 83,069,624.28 | 0.39 | 43.81 | Primarily due to increased investment in the Yulin TCM Industrial Park Phase II project and Liuzhou Logistics Operations Center project | | Contract liabilities | 31,282,957.55 | 0.15 | 71,156,827.03 | 0.33 | -56.04 | Primarily due to a decrease in advance receipts for goods in the current period | | Employee benefits payable | 2,632,634.60 | 0.01 | 30,176,682.60 | 0.14 | -91.28 | Primarily due to the accrual of year-end bonuses at the end of the previous year | | Other payables | 875,754,078.59 | 4.14 | 1,359,301,870.08 | 6.39 | -35.57 | Primarily due to the payment for the acquisition of minority interests in Wantong Pharmaceutical in the current period | | Non-current liabilities due within one year | 217,794,655.90 | 1.03 | 128,620,742.15 | 0.60 | 69.33 | Primarily due to the reclassification of long-term borrowings due within one year | | Other current liabilities | - | - | 340,000,000.00 | 1.60 | -100.00 | Primarily due to the reclassification of accounts receivable financing | | Long-term borrowings | 467,000,000.00 | 2.21 | 214,400,000.00 | 1.01 | 117.82 | Primarily due to an increase in pledged borrowings | | Long-term payables | 3,886,000.00 | 0.02 | 897,500.00 | 0.00 | 332.98 | Primarily due to an increase in research project funds | Analysis of Major Holding and Associate Companies This chapter presents key financial data for major subsidiaries and associates, reflecting their operating performance and impact on the company's net profit Financial Data of Major Subsidiaries (Unit: RMB 10,000) | Company Name | Registered Capital | Total Assets | Net Assets | Operating Revenue | Operating Profit | Net Profit | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Guangxi Guizhong Pharmacy Chain Co., Ltd. | 15,130.00 | 199,484.79 | 93,485.59 | 166,256.73 | 7,891.05 | 6,772.53 | | Guangxi Nanning Liuyao Pharmaceutical Co., Ltd. | 1,980.00 | 313,736.60 | 38,386.02 | 240,850.69 | 2,145.27 | 1,299.62 | | Guangxi XianZhu Traditional Chinese Medicine Technology Co., Ltd. | 12,677.90 | 100,696.97 | 52,835.58 | 36,677.05 | 6,553.48 | 6,594.21 | | Guangxi XianZhu Pharmaceutical Co., Ltd. | 10,000.00 | 48,784.35 | 10,957.35 | 5,477.40 | -1,301.39 | -1,051.37 | | Guangxi Liurun Medical Technology Co., Ltd. | 10,000.00 | 18,818.69 | 14,942.80 | 4,099.54 | 286.77 | 213.00 | | Guangxi Wantong Pharmaceutical Co., Ltd. | 1,898.50 | 51,234.26 | 45,249.68 | 9,940.78 | 3,332.48 | 2,865.24 | Potential Risks This chapter details five key risks: market competition, policy changes, accounts receivable, human resources, and new business profitability, highlighting potential operational challenges - Market competition is intensifying, with competition from large pharmaceutical distribution enterprises, national chain pharmacies entering Guangxi, and internet businesses increasing market complexity[95] - Industry policy risks, with deepening healthcare reform policies (centralized procurement, DRGs, medical insurance catalog adjustments) leading to price reductions and cost controls, affecting profitability[96] - Accounts receivable management risk, primarily concentrated in hospital sales, where expanding sales scale may lead to increased accounts receivable, and long collection cycles put pressure on cash flow[97] - Human resource risk, as business expansion creates an urgent demand for high-level talent, potentially leading to a situation where talent development and recruitment cannot keep pace with the speed of development[98] - Risk of new businesses or investment projects not meeting profitability expectations, as new businesses such as internet healthcare, extended prescriptions, pharmaceutical e-commerce, AI applications, and TCM industry projects face challenges like lack of experience and core competitiveness[100] Corporate Governance, Environment, and Society Changes in Directors, Supervisors, and Senior Management This chapter confirms no changes in the company's directors, supervisors, or senior management during the reporting period, ensuring management stability - Changes in the company's directors, supervisors, and senior management during the reporting period are not applicable[103] Profit Distribution or Capital Reserve Conversion Plan This chapter confirms no profit distribution or capital reserve conversion plans were applicable during the reporting period - The profit distribution plan or capital reserve to share capital conversion plan for the current reporting period is not applicable[103] Status and Impact of Company Equity Incentive Plans, Employee Stock Ownership Plans, or Other Employee Incentive Measures This chapter details the repurchase and cancellation of restricted shares under the 2023 incentive plan due to eligibility and performance issues, and the plan's termination - On October 18, 2024, the company repurchased and cancelled 167,250 restricted shares, due to 6 incentive recipients being ineligible and individual performance targets for 2023 not being met[104] - On April 28, 2025, the company decided to terminate the 2023 restricted stock incentive plan and repurchased and cancelled 1,695,050 restricted shares, including those of 1 resigned incentive recipient and 181 other incentive recipients[105] Specific Progress in Consolidating and Expanding Poverty Alleviation Achievements, Rural Revitalization, etc. This chapter details the company's active participation in poverty alleviation and rural revitalization through TCM cultivation, educational support, and charitable drug donations - The company established 58 standardized Traditional Chinese Medicine (TCM) cultivation base projects, covering hundreds of varieties, driving increased village income, farmer income, and industrial development progress[106] - The company continues to collaborate with local medical universities and research institutions, supporting education through scholarships and educational development funds, and strengthening industry-academia-research cooperation and talent cultivation[107] - In H1 2025, the company carried out 32 charitable drug donation projects, benefiting RMB 4.5721 million, alleviating the medical and medication burden for patients with special diseases[108] Significant Events Fulfillment of Commitments This chapter details the strict fulfillment of IPO and refinancing commitments by the actual controller and controlling shareholder, covering related-party transactions, share lock-up, and prospectus accuracy - Controlling shareholder Zhu Chaoyang committed to strictly abide by the company's articles of association and other regulations, exercise shareholder rights in accordance with the law, minimize related-party transactions, and consciously safeguard the interests of the company and all shareholders during the period of direct or indirect shareholding[110] - Controlling shareholder Zhu Chaoyang committed not to transfer or entrust others to manage his directly or indirectly held shares issued before the company's public offering for 36 months from the listing date, and to transfer no more than 25% of his total shares annually during his tenure[110] - Controlling shareholder Zhu Chaoyang committed that if tax authorities require make-up payments for individual income tax, he will timely and fully pay the relevant individual income tax and all resulting late payment fees or fines according to his shareholding ratio[112] - Controlling shareholder Zhu Chaoyang committed that if the leased property becomes unusable due to restrictions on the lessor's rights, he will bear the corresponding losses incurred by the company due to relocation[112] - Controlling shareholder Zhu Chaoyang committed that if the prospectus contains false records, misleading statements, or major omissions, he will repurchase shares and compensate investors for losses in accordance with the law[114] - Controlling shareholder Zhu Chaoyang committed that his businesses and other enterprises he controls do not have actual or potential horizontal competition with the issuer's businesses[114] - The company and its related parties have not directly or indirectly provided any form of financial assistance or compensation to asset management products and their clients, or partnerships and their partners participating in this private placement[114][116] Semi-Annual Report Audit Status This chapter confirms the re-appointment of Zhongqin Wanxin CPA for 2025 audits and states that this semi-annual report is unaudited - This semi-annual report is unaudited[5][118] - Approved by the 25th meeting of the Fifth Board of Directors and the 2024 Annual General Meeting of Shareholders, the company re-appointed Zhongqin Wanxin Certified Public Accountants (Special General Partnership) as its financial audit and internal control audit firm for 2025[118] Explanation of the Integrity Status of the Company, its Controlling Shareholder, and Actual Controller during the Reporting Period This chapter confirms the good integrity of the company, its controlling shareholder, and actual controller, with no unfulfilled judgments or overdue debts - During the reporting period, the company, its controlling shareholder, and actual controller maintained good integrity, with no unfulfilled effective court judgments or large overdue debts[118] Significant Contracts and Their Fulfillment This chapter details company guarantees to subsidiaries, totaling RMB 2.499 billion (32.23% of net assets), including guarantees for highly leveraged entities Company Total Guarantee Amount (Unit: RMB) | Item | Amount | Proportion of Company Net Assets (%) | | :--- | :--- | :--- | | Total guarantee amount to subsidiaries incurred during the reporting period | 1,633,694,181.14 | | | Total guarantee balance to subsidiaries at the end of the reporting period (B) | 2,499,898,358.14 | | | Total Guarantee Amount (A+B) | 2,499,898,358.14 | 32.23 | | Of which: Debt guarantee amount provided directly or indirectly to guaranteed entities with an asset-liability ratio exceeding 70% (D) | 1,919,998,358.14 | | Explanation of Progress in Use of Raised Funds This chapter details the utilization of raised funds from convertible bonds and private placement, including project specifics, temporary working capital use, and permanent replenishment from completed projects Overall Use of Raised Funds (Unit: RMB) | Source of Raised Funds | Net Amount of Raised Funds (1) | Total Raised Funds Cumulatively Invested as of End of Reporting Period (4) | Cumulative Investment Progress of Raised Funds as of End of Reporting Period (%) (6)＝(4)/(1) | Amount Invested in Current Year (8) | | :--- | :--- | :--- | :--- | :--- | | Issuance of Convertible Bonds | 78,221.96 | 60,184.02 | 76.94 | 3,496.78 | | Private Placement of Shares | 68,863.74 | 28,280.97 | 41.07 | 1,545.50 | | Total | 147,085.70 | 88,464.99 | 60.15 | 5,042.28 | - The company used no more than RMB 310 million of idle raised funds from the private placement of shares to temporarily supplement working capital, with a usage period not exceeding 12 months from the date of board approval[132] - The "Nanning TCM Decoction Pieces Capacity Expansion Project," "Chain Pharmacy Expansion Project," and "Supplementing Working Capital" have been completed and closed, with remaining raised funds totaling RMB 57.336 million permanently supplementing working capital[133] Explanation of Other Significant Events This chapter details the company's investment in Suninflam Ltd. via a subsidiary to enter overseas innovative drug markets, aiming for product diversification and profit growth, while noting associated R&D and market risks - The company's wholly-owned subsidiary, Hainan Liuyao Investment Co., Ltd., subscribed for USD 10.4752 million in newly issued shares of Suninflam Ltd., holding a 10.56% stake[134] - This overseas investment aims to enable the company to enter high-tech barrier innovative drug and biopharmaceutical fields, leveraging overseas innovative drug R&D advantages to enrich the company's product categories and enhance overall gross profit margins[135] - The drug development process, from research and clinical trial approval to production, is long and involves many stages, posing various uncertainties and risks related to technology, approval, policies, and market competition, leading to uncertainty in the company's future investment returns[136] Share Changes and Shareholder Information Changes in Share Capital This chapter details a 167,113 share capital reduction due to restricted stock repurchases and convertible bond conversions, with minimal impact on per-share financial metrics Changes in Share Capital (Unit: Shares) | Item | Number Before This Change | Subtotal of Increase/Decrease in This Change (+, -) | Number After This Change | | :--- | :--- | :--- | :--- | | I. Restricted Shares | 1,862,300.00 | -167,250.00 | 1,695,050.00 | | II. Unrestricted Tradable Shares | 397,168,721.00 | 137.00 | 397,168,858.00 | | III. Total Shares | 399,031,021.00 | -167,113.00 | 398,863,908.00 | - On January 9, 2025, the company completed the repurchase and cancellation of 167,250 restricted shares, including 135,000 shares granted but not yet unrestricted to 6 initial incentive recipients who were no longer eligible, and 32,250 shares that could not be unrestricted due to not fully meeting individual performance targets for 2023[140] - On July 18, 2025, the company completed the termination of the 2023 restricted stock incentive plan and repurchased and cancelled 1,695,050 restricted shares[141] - The "Liuyao Convertible Bond" accumulated a total of 137 shares converted during the period from January 1, 2025, to June 30, 2025[142] Shareholder Information This chapter outlines the company's equity structure by detailing the total common shareholders, top ten shareholders, and restricted shareholdings at period-end Total Number of Common Shareholders as of the End of the Reporting Period | Item | Number (Households) | | :--- | :--- | | Total number of common shareholders as of the end of the reporting period | 32,943 | Shareholding Status of Top Ten Shareholders as of the End of the Reporting Period (Partial) | Shareholder Name | Increase/Decrease During Reporting Period | Shares Held at Period-End | Proportion (%) | Number of Restricted Shares Held | Number of Shares Pledged, Marked, or Frozen | | :--- | :--- | :--- | :--- | :--- | :--- | | Zhu Chaoyang | 0 | 101,032,795 | 25.33 | 0 | 32,720,000 | | Guangdong Hengjian International Investment Co., Ltd. | 0 | 10,526,315 | 2.64 | 0 | 0 | - The restricted shares held by the top ten restricted shareholders were all granted but not yet unrestricted restricted shares; following the resolution passed at the company's First Interim Shareholders' Meeting in 2025, the repurchase and cancellation procedures for these restricted shares were completed on July 18, 2025[151] Information on Directors, Supervisors, and Senior Management This chapter details shareholding changes for certain directors and senior management due to equity incentive cancellations, reflecting the plan's impact Changes in Shareholdings of Directors, Supervisors, and Senior Management (Unit: Shares) | Name | Position | Shares Held at Beginning of Period | Shares Held at End of Period | Change in Shares During Reporting Period | Reason for Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Zhu Xianhua | Director, Vice President | 235,989 | 232,389 | -3,600 | Equity incentive cancellation | | Chen Hong | Director | 2,778,190 | 2,767,690 | -10,500 | Equity incentive cancellation | | Tang Xianrong | Vice President | 946,272 | 944,697 | -1,575 | Equity incentive cancellation | Bond-Related Information Convertible Corporate Bonds This chapter details the company's convertible bond issuance, holder information, changes, cumulative conversions, price adjustments, and credit status, confirming good credit - Approved by the China Securities Regulatory Commission (CSRC), the company publicly issued RMB 802.2 million in convertible corporate bonds on January 16, 2020, abbreviated as "Liuyao Convertible Bond," with bond code "113563"[156] Convertible Bond Holder Information for the Reporting Period (Partial Top Ten) | Name of Convertible Corporate Bond Holder | Amount of Bonds Held at Period-End (RMB) | Holding Proportion (%) | | :--- | :--- | :--- | | China Pacific Life Insurance Co., Ltd. - Dividend - Individual Dividend | 52,563,000 | 6.55 | | China Merchants Bank Co., Ltd. - Boshi CSI Convertible Bond and Exchangeable Bond ETF | 34,989,000 | 4.36 | Changes in Convertible Bonds During the Reporting Period (Unit: RMB) | Name of Convertible Corporate Bond | Before This Change | Increase/Decrease in Conversion in This Change | After This Change | | :--- | :--- | :--- | :--- | | Liuyao Convertible Bond | 801,882,000 | 3,000 | 801,879,000 | Cumulative Convertible Bond Conversion Status for the Reporting Period | Item | Liuyao Convertible Bond | | :--- | :--- | | Amount Converted During Reporting Period (RMB) | 3,000 | | Number of Shares Converted During Reporting Period (Shares) | 137 | | Cumulative Number of Shares Converted (Shares) | 13,180 | | Cumulative Number of Shares Converted as a Percentage of Total Shares Issued Before Conversion (%) | 0.0036 | | Amount Not Yet Converted (RMB) | 801,879,000 | | Proportion of Unconverted Convertible Bonds to Total Convertible Bonds Issued (%) | 99.9600 | - As of the end of the reporting period, the company's asset-liability ratio was 61.83%, with a relatively stable asset-liability structure. Shanghai New Century Credit Rating Investment Services Co., Ltd. maintained the company's corporate credit rating at "AA" with a "stable" outlook[165] Financial Report Audit Report This chapter clarifies that the semi-annual report is unaudited, informing investors of its nature - This semi-annual report is unaudited[5][168] Financial Statements This chapter presents the company's H1 2025 consolidated and parent company financial statements, including balance sheets, income statements, cash flow, and equity changes Key Consolidated Balance Sheet Data (Period-End) | Item | Amount (RMB) | | :--- | :--- | | Total Assets | 21,163,425,613.13 | | Total Liabilities | 13,084,853,857.42 | | Total Equity Attributable to Parent Company Owners | 7,756,951,998.17 | Key Consolidated Income Statement Data (Current Period) | Item | H1 2025 (RMB) | | :--- | :--- | | Operating Revenue | 10,300,787,773.83 | | Total Profit | 499,039,943.11 | | Net Profit Attributable to Parent Company Shareholders | 429,281,796.54 | | Basic Earnings Per Share (RMB/share) | 1.08 | Key Consolidated Cash Flow Statement Data (Current Period) | Item | H1 2025 (RMB) | | :--- | :--- | | Net Cash Flow from Operating Activities | 88,433,415.37 | | Net Cash Flow from Investing Activities | -315,572,789.25 | | Net Cash Flow from Financing Activities | -1,025,218,533.00 | Consolidated Balance Sheet As of June 30, 2025, consolidated total assets were RMB 21.16 billion, liabilities RMB 13.08 billion, and parent equity RMB 7.76 billion, indicating a stable structure Consolidated Balance Sheet Major Data (Period-End) | Item | Amount (RMB) | | :--- | :--- | | Total Assets | 21,163,425,613.13 | | Total Liabilities | 13,084,853,857.42 | | Total Equity Attributable to Parent Company Owners | 7,756,951,998.17 | Parent Company Balance Sheet As of June 30, 2025, the parent company reported RMB 16.35 billion in total assets, RMB 10.17 billion in liabilities, and RMB 6.19 billion in equity Key Parent Company Balance Sheet Data (Period-End) | Item | Amount (RMB) | | :--- | :--- | | Total Assets | 16,349,131,631.25 | | Total Liabilities | 10,164,626,326.21 | | Total Owners' Equity | 6,184,505,305.04 | Consolidated Income Statement In H1 2025, total operating revenue was RMB 10.30 billion, total profit RMB 499 million, and net profit attributable to parent shareholders RMB 429 million, with EPS of RMB 1.08 Key Consolidated Income Statement Data (Current Period) | Item | H1 2025 (RMB) | | :--- | :--- | | Total Operating Revenue | 10,300,787,773.83 | | Total Profit | 499,039,943.11 | | Net Profit Attributable to Parent Company Shareholders | 429,281,796.54 | | Basic Earnings Per Share (RMB/share) | 1.08 | Parent Company Income Statement In H1 2025, the parent company reported RMB 8.75 billion in operating revenue, RMB 285 million in total profit, and RMB 243 million in net profit Key Parent Company Income Statement Data (Current Period) | Item | H1 2025 (RMB) | | :--- | :--- | | Operating Revenue | 8,746,798,057.29 | | Total Profit | 285,449,733.89 | | Net Profit | 242,511,813.64 | Consolidated Cash Flow Statement In H1 2025, operating cash flow was RMB 88 million, investing cash flow -RMB 316 million, and financing cash flow -RMB 1.025 billion, showing improved operations but large outflows Key Consolidated Cash Flow Statement Data (Current Period) | Item | H1 2025 (RMB) | | :--- | :--- | | Net Cash Flow from Operating Activities | 88,433,415.37 | | Net Cash Flow from Investing Activities | -315,572,789.25 | | Net Cash Flow from Financing Activities | -1,025,218,533.00 | Parent Company Cash Flow Statement In H1 2025, the parent company reported negative cash flows from operating (-RMB 413 million), investing (-RMB 472 million), and financing (-RMB 22 million) activities Key Parent Company Cash Flow Statement Data (Current Period) | Item | H1 2025 (RMB) | | :--- | :--- | | Net Cash Flow from Operating Activities | -413,107,759.00 | | Net Cash Flow from Investing Activities | -471,629,208.58 | | Net Cash Flow from Financing Activities | -22,069,507.25 | Consolidated Statement of Changes in Owners' Equity In H1 2025, consolidated owners' equity increased by RMB 142 million, driven by net profit attributable to parent owners and share changes Key Consolidated Statement of Changes in Owners' Equity Data (Current Period) | Item | Balance at Beginning of Period (RMB) | Amount of Increase/Decrease in Current Period (RMB) | Balance at End of Period (RMB) | | :--- | :--- | :--- | :--- | | Total Equity Attributable to Parent Company Owners | 7,624,408,552.37 | 132,543,445.80 | 7,756,951,998.17 | | Minority Interests | 312,514,022.04 | 9,105,735.50 | 321,619,757.54 | | Total Owners' Equity | 7,936,922,574.41 | 141,649,181.30 | 8,078,571,755.71 | Parent Company Statement of Changes in Owners' Equity In H1 2025, parent company owners' equity decreased by RMB 54 million, mainly due to profit distribution, share-based payments, and convertible bond conversions Key Parent Company Statement of Changes in Owners' Equity Data (Current Period) | Item | Balance at Beginning of Period (RMB) | Amount of Increase/Decrease in Current Period (RMB) | Balance at End of Period (RMB) | | :--- | :--- | :--- | :--- | | Total Owners' Equity | 6,238,731,842.14 | -54,226,537.10 | 6,184,505,305.04 | Basic Company Information This chapter provides comprehensive background information on the company, including its establishment, share capital history, registration details, and business scope - Guangxi Liuyao Group Co., Ltd. was established on February 28, 2011, through the overall conversion of Guangxi Liuzhou Pharmaceutical Co., Ltd[219] - As of January-June 2025, the company's total share capital changed to 398,863,908 shares[228] - The company primarily operates in pharmaceutical wholesale, retail, manufacturing, and related pharmaceutical health industries[229] Basis of Financial Statement Preparation This chapter confirms financial statements are prepared under Enterprise Accounting Standards and CSRC regulations, based on a going concern assumption for compliance and reliability - The company's financial statements are prepared based on actual transactions and events, in accordance with the "Enterprise Accounting Standards" issued by the Ministry of Finance and the disclosure requirements of "No. 15 Rules for Information Disclosure by Companies Issuing Securities to the Public - General Provisions on Financial Reports" by the China Securities Regulatory Commission[231] - The company assessed its ability to continue as a going concern for 12 months from the end of the reporting period, found no matters affecting its going concern ability, and thus, preparing financial statements on a going concern basis is reasonable[232] Significant Accounting Policies and Accounting Estimates This chapter details the company's significant accounting policies and estimates, covering a wide range of financial reporting aspects, including asset recognition, revenue, and changes in policies - The financial statements prepared by the company comply with the requirements of Enterprise Accounting Standards, truly and completely reflecting the company's financial position, operating results, changes in shareholders' equity, and cash flows[233] - The company implemented "Interpretation No. 17 of Enterprise Accounting Standards," "Interim Provisions on Accounting Treatment of Enterprise Data Resources," and "Interpretation No. 18 of Enterprise Accounting Standards," but these had no significant impact on the company's financial statements during the reporting period[402][403][404] Taxation This chapter details the company's main tax types, rates, and corporate income tax preferential policies, including Western Development and small/micro-enterprise benefits Main Tax Categories and Rates | Tax Category | Tax Basis | Tax Rate | | :--- | :--- | :--- | | Value-Added Tax (VAT) | Output tax calculated based on sales of goods and taxable services as stipulated by tax law, with the difference after deducting input tax for the current period being the VAT payable | 13%, 9%, 6%, 3%, 0% | | Urban Maintenance and Construction Tax | Calculated based on actual VAT paid | 7%, 5% | | Corporate Income Tax | Calculated based on taxable income | 25%, 20%, 15%, 0% | | Education Surcharge | Calculated based on actual VAT paid | 3% | | Local Education Surcharge | Calculated based on actual VAT paid | 2% | - The company and its subsidiaries, including Guangxi Guizhong Pharmacy Chain Co., Ltd., Guangxi XianZhu Pharmaceutical Co., Ltd., and Guangxi Wantong Pharmaceutical Co., Ltd., qualify for the Western Development corporate income tax policy, enjoying a reduced corporate income tax rate of 15%[407][408] - Some subsidiaries qualify for tax preferential policies related to the development of small and micro-enterprises and individual businesses, calculating taxable income at 25% and paying corporate income tax at a rate of 20%[409] - Guangxi XianZhu Traditional Chinese Medicine Technology Co., Ltd. is exempt from corporate income tax on income derived from the initial processing of medicinal plants[410] Changes in Consolidation Scope This chapter reports the establishment and consolidation of Guangxi XianZhu Pharmacy Chain Co., Ltd. by a subsidiary, expanding the company's retail footprint - On April 17, 2025, Guangxi XianZhu Traditional Chinese Medicine Co., Ltd., a subsidiary of the company, established a wholly-owned subsidiary, Guangxi XianZhu Pharmacy Chain Co., Ltd., with a registered capital of RMB 500,000, and was included in the consolidation scope for the current period[650] Interests in Other Entities This chapter details the company's interests in subsidiaries and sub-subsidiaries, including their financial data and organizational structure, reflecting each entity's contribution Subsidiary Information (Partial) | Subsidiary Name | Registered Capital (RMB 10,000) | Business Nature | Shareholding Ratio (%) (Direct) | | :--- | :--- | :--- | :--- | | Guangxi Guizhong Pharmacy Chain Co., Ltd. | 15,130.00 | Retail | 100 | | Guangxi Nanning Liuyao Pharmaceutical Co., Ltd. | 1,980.00 | Wholesale | 53 | | Guangxi XianZhu Traditional Chinese Medicine Technology Co., Ltd. | 12,677.90 | Manufacturing | 100 | Key Financial Information of Significant Non-Wholly-Owned Subsidiaries (Partial) | Subsidiary Name | Minority Shareholding Ratio (%) | Profit/Loss Attributable to Minority Shareholders in Current Period (RMB) | Minority Interests Balance at Period-End (RMB) | | :--- | :--- | :--- | :--- | | Guangxi Nanning Liuyao Pharmaceutical Co., Ltd. | 47 | 6,108,197.19 | 180,414,308.80 | | Guangxi Yida Xiansheng Biopharmaceutical Co., Ltd. | 30 | 2,505,769.21 | 34,918,908.43 | Government Grants This chapter details government grants received, totaling RMB 11.40 million, including deferred income and amounts recognized in current profit or loss Government Grant-Related Liability Items (Unit: RMB) | Financial Statement Item | Balance at Beginning of Period | New Grants Added in Current Period | Amount Recognized in Non-Operating Income in Current Period | Transferred to Other Income in Current Period | Other Changes | Balance at End of Period | Related to Assets/Income | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Deferred Income | 68,254,662.79 | | | 1,427,864.46 | | 66,826,798.33 | Related to Assets | Government Grants Recognized in Current Profit or Loss (Unit: RMB) | Type | Amount Incurred in Current Period | | :--- | :--- | | Related to Assets | 1,427,864.46 | | Related to Income | 9,973,733.36 | | Total | 11,401,597.82 | Risks Related to Financial Instruments This chapter outlines the company's credit, liquidity, and market risks (exchange rate, interest rate) and its strategies for managing them to ensure financial stability - The company's main financial instruments include accounts receivable, accounts payable, etc., leading to primary risks of credit risk, liquidity risk, and market risk[666] - The company manages credit risk through credit risk assessment for new customers, quarterly monitoring of existing customer credit ratings, and monthly review of accounts receivable aging analysis[667] - Liquidity risk is centrally controlled by the company's finance department, ensuring sufficient funds by monitoring cash balances, readily marketable securities, and rolling forecasts of cash flows for the next 12 months[668] - The company has no exchange rate risk, and since borrowings are at fixed interest rates, there is no RMB benchmark interest rate fluctuation risk[671][672] R&D Expenses This chapter details RMB 17.67 million in R&D expenses for the period, including salaries, depreciation, and materials, all expensed, reflecting R&D investment R&D Expenses by Nature of Expense (Unit: RMB) | Item | Amount Incurred in Current Period | | :--- | :--- | | Salaries | 11,334,949.66 | | Depreciation | 1,046,767.49 | | Experimental and Testing Fees | 524,671.03 | | Material Costs | 721,455.75 | | Service Fees | 1,784,142.09 | | Amortization of Intangible Assets | 749,799.99 | | Total | 17,672,726.43 | | Of which: Expensed R&D Expenditures | 17,672,726.43 | Other Significant Matters This chapter reports that as of June 30, 2025, the actual controller, Mr. Zhu Chaoyang, held 25.33% of shares, with 32.39% of his holdings (or 8.20% of total shares) pledged - As of June 30, 2025, Mr. Zhu Chaoyang held 101,032,795 shares of the company, accounting for 25.33% of the company's total share capital[697] - Mr. Zhu Chaoyang cumulatively pledged 32,720,000 shares of the company, representing 32.39% of his total holdings and 8.20% of the company's total share capital[697]