Anyuan Marine Breeding Company Limited 安源種業技術有限公司 (The “Company”) (Incorporated in the Cayman Islands with Limited Liability)

The Stock Exchange of Hong Kong Limited and the Securities and Futures Commission take no responsibility for the contents of this Application Proof, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Application Proof.

Application Proof of Anyuan Marine Breeding Company Limited 安源種業技術有限公司 (the “Company”) (incorporated in the Cayman Islands with limited liability)

WARNING

The publication of this Application Proof is required by The Stock Exchange of Hong Kong Limited (the “Exchange”) and the Securities and Futures Commission (the “Commission”) solely for the purpose of providing information to the public in Hong Kong.

This Application Proof is in draft form. The information contained in it is incomplete and is subject to change which can be material. By viewing this document, you acknowledge, accept and agree with the Company, its sponsor, advisers or members of the underwriting syndicate that:

(a) this document is only for the purpose of providing information about the Company to the public in Hong Kong and not for any other purposes. No investment decision should be based on the information contained in this document;

(b) the publication of this document or supplemental, revised or replacement pages on the Exchange’s website does not give rise to any obligation of the Company, its sponsor, advisers or members of the underwriting syndicate to proceed with an offering in Hong Kong or any other jurisdiction. There is no assurance that the Company will proceed with the offering;

(c) the contents of this document or supplemental, revised or replacement pages may or may not be replicated in full or in part in the actual final listing document;

(d) the Application Proof is not the final listing document and may be updated or revised by the Company from time to time in accordance with the Rules Governing the Listing of Securities on the Exchange;

(e) this document does not constitute a prospectus, offering circular, notice, circular, brochure or advertisement offering to sell any securities to the public in any jurisdiction, nor is it an invitation to the public to make offers to subscribe for or purchase any securities, nor is it calculated to invite offers by the public to subscribe for or purchase any securities;

(f) this document must not be regarded as an inducement to subscribe for or purchase any securities, and no such inducement is intended;

(g) neither the Company nor any of its affiliates, advisers or underwriters is offering, or is soliciting offers to buy, any securities in any jurisdiction through the publication of this document;

(h) no application for the securities mentioned in this document should be made by any person nor would such application be accepted;

(i) the Company has not and will not register the securities referred to in this document under the United States Securities Act of 1933, as amended, or any state securities laws of the United States;

(j) as there may be legal restrictions on the distribution of this document or dissemination of any information contained in this document, you agree to inform yourself about and observe any such restrictions applicable to you; and

(k) the application to which this document relates has not been approved for listing and the Exchange and the Commission may accept, return or reject the application for the subject public offering and/or listing.

If an offer or an invitation is made to the public in Hong Kong in due course, prospective investors are reminded to make their investment decisions solely based on the Company’s prospectus registered with the Registrar of Companies in Hong Kong, copies of which will be distributed to the public during the offer period. THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. IMPORTANT

If you are in any doubt about any of the contents of this document, you should seek independent professional advice.

Anyuan Marine Breeding Company Limited 安源種業技術有限公司 (Incorporated in the Cayman Islands with limited liability) [REDACTED]

Number of [REDACTED] : [REDACTED] Shares (subject to the [REDACTED]) Number of [REDACTED] : [REDACTED] Shares (subject to reallocation) Number of [REDACTED] : [REDACTED] Shares (subject to the [REDACTED] and reallocation) [REDACTED] : Not more than HK$[REDACTED] per [REDACTED] and expected to be not less than HK$[REDACTED] per [REDACTED], plus brokerage of 1%, SFC transaction levy of 0.0027% and the Stock Exchange trading fee of 0.005% (payable in full on application and subject to refund) Nominal value : US$0.01 per Share [REDACTED] : [•]

Sole Sponsor

[REDACTED] and [REDACTED] [REDACTED]

A copy of this document, having attached thereto the documents specified in the section headed “Documents Delivered to the Registrar of Companies and Available for Inspection” in Appendix VII to this document, has been registered with the Registrar of Companies in Hong Kong as required by section 342C of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong). The Securities and Futures Commission and the Registrar of Companies in Hong Kong take no responsibility as to the contents of this document or any other documents referred to above. Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsibility for the contents of this document, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document. The [REDACTED] is expected to be fixed by agreement between the [REDACTED] (for itself and on behalf of the [REDACTED]) and our Company on or around [REDACTED]. If, for any reason, the [REDACTED] (for itself and on behalf of the [REDACTED]) and our Company are unable to reach an agreement on the [REDACTED] by [REDACTED], the [REDACTED] will not become unconditional and will lapse immediately. The [REDACTED] will be not more than HK$[REDACTED] per [REDACTED] and is currently expected to be not less than HK$[REDACTED] per [REDACTED] unless otherwise announced not later than the morning of the last day for lodging applications under the [REDACTED]. The [REDACTED] (for itself and on behalf of the [REDACTED]) may, with the consent of our Company, reduce the number of [REDACTED] being offered under the [REDACTED] and/or the indicative [REDACTED] range stated in this document at any time on or prior to the morning of the last day for lodging applications under the [REDACTED]. In such case, a notice of the reduction in the number of [REDACTED] being offered under the [REDACTED] and/or of the indicative [REDACTED] range will be published on the Stock Exchange’s website at www.hkexnews.hk and our Company’s website at www.penganyuan.com not later than the morning of the last day for lodging applications under the [REDACTED]. Further details are set out in the sections headed “Structure and Conditions of the [REDACTED]” and “How To Apply For the [REDACTED]” in this document. Prior to making an investment decision, prospective investors should consider carefully all of the information set out in this document and the related [REDACTED], including the risk factors set out in the section headed “Risk Factors” in this document. Pursuant to the termination provisions contained in the [REDACTED] in respect of the [REDACTED], the [REDACTED] (for itself and on behalf of [REDACTED]) shall have the right in certain circumstances, in its sole and absolute discretion, to terminate the [REDACTED] by notice in writing to our Company at any time prior to 8:00 a.m. (Hong Kong time) on the [REDACTED] (which is currently expected to be [REDACTED]). Further details of the terms of the termination provisions are set out in the paragraph headed “[REDACTED] – [REDACTED] arrangements and expenses – The [REDACTED] – Grounds for termination” in this document. It is important that you refer to that section for further details.

The [REDACTED] have not been and will not be registered under the U.S. Securities Act or any state securities law in the United States and may not be offered, sold, pledged or transferred within the United States or to, or for the account or benefit of US persons, except pursuant to an exemption from, or in a transaction not subject to, the registration requirement under the U.S. Securities Act. No information on any website forms part of this document.

[REDACTED] THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. EXPECTED TIMETABLE

[REDACTED]

–i– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. EXPECTED TIMETABLE

[REDACTED]

–ii– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. EXPECTED TIMETABLE

[REDACTED]

– iii – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. CONTENTS

This document is issued by our Company solely in connection with the [REDACTED] and the [REDACTED] and does not constitute an offer to sell or a solicitation of an offer to buy any securities other than the [REDACTED] offered by this document pursuant to the [REDACTED]. This document may not be used for the purpose of, and does not constitute, an offer to sell, or a solicitation of an offer to buy any securities in any other jurisdiction or in any other circumstances. No action has been taken to permit a [REDACTED] of the [REDACTED] or the distribution of this document in any jurisdiction other than Hong Kong. The distribution of this document for the purposes of a [REDACTED] and the [REDACTED] and sale of the [REDACTED] in other jurisdictions are subject to restrictions and may not be made except as permitted under the applicable securities laws of such jurisdictions pursuant to registration with or authorisation by the relevant securities regulatory authorities or an exemption therefrom.

You should rely only on the information contained in this document to make your [REDACTED] decision. Our Company has not authorised anyone to provide you with different information. Any information or representation not made in this document must not be relied on by you as having been authorised by our Company, the Sole Sponsor, the [REDACTED], the [REDACTED], the [REDACTED], any of their respective directors or any other person or party involved in the [REDACTED].

Page

Expected Timetable ...... i

Contents ...... iv

Summary ...... 1

Definitions ...... 11

Glossary of Technical Terms ...... 27

Forward-looking Statements ...... 30

Risk Factors ...... 33

Waiver from Strict Compliance with the Listing Rules ...... 59

Information about this Document and the [REDACTED] ...... 62

Directors and Parties Involved in the [REDACTED]...... 67

Corporate Information ...... 71

–iv– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. CONTENTS

Page

Industry Overview ...... 73

Regulatory Overview ...... 83

History, Reorganisation and Corporate Structure ...... 102

Business ...... 123

Relationship with Controlling Shareholders ...... 218

Directors and Senior Management ...... 225

Share Capital ...... 239

Substantial Shareholders ...... 242

Financial Information...... 244

Future Plans and [REDACTED] ...... 303

[REDACTED] ...... 309

Structure and Conditions of the [REDACTED] ...... 320

How to Apply for the [REDACTED]...... 331

Appendix I — Accountants’ Report ...... I-1

Appendix II — Unaudited [REDACTED] Financial Information ...... II-1

Appendix III — [REDACTED] ...... III-1

Appendix IV — Property Valuation Report ...... IV-1

Appendix V — Summary of the Constitution of the Company and Cayman Islands Company Law ...... V-1

Appendix VI — Statutory and General Information...... VI-1

Appendix VII — Documents Delivered to the Registrar of Companies and Available for Inspection...... VII-1

–v– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. SUMMARY

This summary aims to give you an overview of the information contained in this document. As it is a summary, it does not contain all the information that may be important to you. You should read the whole document before you decide to [REDACTED] in the [REDACTED]. There are risks associated with any investment. Some of the particular risks in [REDACTED] in the [REDACTED] are set out in the section headed “Risk Factors” in this document. You should read that section carefully in full before you decide to [REDACTED] in the [REDACTED].

BUSINESS OVERVIEW

Established in 2006, we have developed into the leading young sea cucumber breeder in the PRC. We ranked first in FY2020 among the sea cucumber breeders in terms of water body and sales volume in the PRC according to the CIC Report. Business Model

During the Track Record Period and up to the Latest Practicable Date, we mainly engaged in the businesses of (i) aquaculture and sales of larvae and juvenile sea cucumbers; and (ii) production and sales of feeds for young sea cucumbers. Products

During the Track Record Period and up to the Latest Practicable Date, we primarily offered four categories of products to our customers, namely (i) larvae; (ii) juvenile sea cucumber; (iii) feeds for young sea cucumbers; and (iv) other products. The following table set forth the breakdown of our sales revenue by categories of products during the Track Record Period:

Year ended 31 December 2018 2019 2020 RMB’000 % RMB’000 % RMB’000 %

Larvae 263 0.2 2,320 1.2 8,588 4.0 Juvenile sea cucumbers small juvenile sea cucumbers 8,794 5.3 8,605 4.3 44,594 20.9 large juvenile sea cucumbers 119,146 71.3 158,443 79.7 142,419 66.7 Feeds for young sea cucumbers 4,205 2.5 8,845 4.4 15,298 7.2 Other products (Note) 34,576 20.7 20,599 10.4 2,711 1.2

Total 166,984 100.0 198,812 100.0 213,610 100.0

Note: “Other products” principally include primarily-processed sea cucumber products and mature sea cucumbers. We have ceased the production of primarily-processed sea cucumber products since April 2021, and we retained a small amount of primarily-processed sea cucumber products as inventories as at the Latest Practicable Date. We have ceased the sale of mature sea cucumbers since August 2019.

–1– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. SUMMARY

Breeding of Anyuan No.1

Our Group cultivated a new breed of sea cucumber Anyuan No.1, and obtained patent in the method to culture the broodstock of sea cucumber. With the effort of over 10 years, Anyuan No.1 was recognised as a new breed of sea cucumber by the National Approval Committee and we were granted Anyuan No.1 Certificate in 2018. According to the CIC Report, in the period from 2010 to 2020, the government of PRC has approved six new breeds of sea cucumber, among which Anyuan No.1 is the only breed that was not cultivated based on wild breed and it is the only one breed the development of which was led by an enterprise and that was named after the enterprise’s name. Anyuan No.1 carries the following genetics characteristics: (i) large number of wart feet and (ii) high growth rate. Owing to the better genetics characteristics of Anyuan No. 1, this breed fetches higher prices than the normal breed. Production

Our young sea cucumbers are reared in water tanks filled with sea water in our hatchery workshops. The major steps in the rearing of young sea cucumber include (i) rearing of broodstock; (ii) induced spawning; (iii) rearing of larvae and young sea cucumber; and (iv) wintering of young sea cucumbers. We offer two types of feeds for young sea cucumbers, namely feeds for infant sea cucumbers and feeds for juvenile sea cucumbers. The two types of feeds are different in size and in formula which are suitable for the needs of young sea cucumber at different stages of development. The major steps of the production of the feeds for young sea cucumbers include (i) sourcing raw materials and drying; (ii) coarse grinding; (iii) mixing, fine grinding and sieving; and (iv) packaging. Pricing Policy

We generally determine the selling price of our products based on a market-oriented approach. In determining the selling price of our juvenile sea cucumbers, we will make reference to the selling prices of mature sea cucumbers in Xiapu County, Fujian Province. COMPETITIVE STRENGTHS

Our Directors believe that the following competitive strengths contribute to our success and differentiate us from our competitors: (i) our leading position in the young sea cucumber aquaculture industry in the PRC with large-scale production; (ii) we specialise in breeding and selling Anyuan No.1 which is developed by our Group in collaboration with Dalian Ocean University and can be sold at a higher price compared to local breeds; (iii) our strong research and development capabilities; (iv) our stringent quality control systems; and (v) our experienced management team with a proven track record to lead our development. BUSINESS STRATEGIES

Our principal goal is to further strengthen our position as the market leader in the PRC’s large-scale young sea cucumber aquaculture industry. We intend to achieve this goal by implementing the following strategies: (i) expanding our production capacity for young sea cucumber production to further enhance our supply capability; (ii) enhancing brand recognition and reputation of our Group; and (iii) continue to enhance research and development capabilities. PRODUCTION FACILITIES

As at the Latest Practicable Date, our Group operates three production bases, namely our (i) Shandong First Production Base, (ii) Shandong Second Production Base and (iii) Liaoning Production Base, primarily for aquaculture of our young sea cucumbers and production of our feeds.

–2– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. SUMMARY

The table below sets forth our production capacities and utilisation rates of our production facilities during the Track Record Period:

FY2018 FY2019 FY2020 Expected Expected Expected Production Actual Utilisation Production Actual Utilisation Production Actual Utilisation capacity production rate capacity production rate capacity production rate (Note 1) volume (Note 2) (Note 1) volume (Note 2) (Note 1) volume (Note 2) (jin) (jin) (%) (jin) (jin) (%) (jin) (jin) (%)

Shandong First Production Base Aquaculture of juvenile sea cucumbers (Note 3) 1,752,234 1,291,387 73.7 1,752,234 1,509,842 86.2 1,752,234 1,752,094 99.9 Production of feeds(Note 4) 24,768,327 3,277,535 13.2 24,768,327 3,941,480 15.9 24,768,327 6,761,860 27.3 Shandong Second Production Base Aquaculture of juvenile sea cucumbers (Note 3) (Note 5) 254,556 87,183 34.2 254,556 20,561 8.1 254,556 44,343 17.4 Liaoning Production Base Aquaculture of juvenile sea Not Not Not Not Not Not cucumbers (Note 3) applicable applicable applicable applicable applicable applicable 923,257 208,984 22.6 Notes: 1. For illustration purposes only, the expected production capacity for aquaculture of juvenile sea cucumbers of a particular production base is calculated by multiplying the expected maximum weight of juvenile sea cucumbers that can be produced by each m3 of water body as per the CIC Report, by the total volume of water body in the relevant production base assuming that the survival rate of our sea cucumbers remains constant throughout the Track Record Period. 2. For illustration purposes only, the utilisation rate of aquaculture of juvenile sea cucumbers of a particular production base is calculated by dividing the actual production volume by expected production capacity of the relevant production base on the assumption that our production facilities for the aquaculture of juvenile sea cucumbers operate for 24 hours per day and the number of available water tanks of that relevant production base remains constant throughout the Track Record Period. 3. The expected production capacity is not applicable for aquaculture of larvae as larvae are only produced upon the requests by the customers. Accordingly, the utilisation rate for aquaculture of larvae is not shown. 4. We have one production line for the production of our feeds for young sea cucumbers and this production line can produce the feeds for infant sea cucumber and juvenile sea cucumbers concurrently. For illustration purposes only, the expected production capacity of production of feeds for young sea cucumbers is calculated by (i) our production facilities for feeds operate for 24 hours per day and 365 days per year and (ii) no provision for maintenance or repair is made. 5. The facility in our Shandong Second Production Base is not suitable for the rearing of small juvenile sea cucumbers with specification of smaller than 1000 PPU (i.e. sea cucumbers with a unit weight heavier than 0.5g). QUALITY CONTROL

Our Group has in place quality control measures which are in line with national standards for each step of the production process to ensure that our products are capable of meeting our requirements. Our quality control measures relating to the breeding and rearing of our sea cucumbers aim to ensure that (i) only the healthiest broodstock are used for breeding purposes, (ii) our sea cucumbers are safeguarded against various diseases and parasites and (iii) our sea cucumbers are reared in an optimal environment through maintaining the water quality standards. Our quality control measures relating to our raw materials and production of our sea cucumber feeds aim to ensure that (i) our suppliers fulfill our requirements and (ii) our raw materials are free from defects, safe for consumption and capable of meeting our specifications.

–3– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. SUMMARY

RESEARCH AND DEVELOPMENT

We believe that a strong focus on research and development is important for us to maintain our market position as well as to improve our efficiency and the cost effectiveness of our operations. The scope of our research and development efforts include (i) conducting joint research with various leading agricultural universities and institutions in the PRC and appointing leading academics as our honorary consultants; (ii) development of new breeds, namely Anyuan No. 1 and Anyuan No. 2; (iii) setting up a marine ranch in the sea in the western part of the Yantai Economic and Technological Development Area for (a) the cultivation of sea cucumbers; (b) conduct research and development in respect of the effect of climate and sea water quality on the growth of sea cucumbers; and (c) to preserve some of our broodstock; and (iv) protection of our know-how. Development of Anyuan No.2

In order to maintain our leading market position, we commence the development of new breed since 2013 which is expected to surpass Anyuan No.1 in terms of the number of wart feet and growth rate. We planned to submit a new application after mid 2022 for the recognition of another new breed “Anyuan No. 2” that we have been developing. CUSTOMERS AND SUPPLIERS

We have a diversified customer base comprising 435, 553 and 499 customers from whom we recognised revenue for FY2018, FY2019 and FY2020, respectively. During the Track Record Period, our customers are classified into (i) corporate customers, (ii) walk-in customers and (iii) one distributor. All of our customers were located in the PRC. We have a seller and buyer relationship with the distributor who distributes our feeds. Our revenue generated from the sales to the distributor is recognised after the risks of and titles to the feeds are passed to the distributor. For FY2018, FY2019 and FY2020, revenue from our five largest customers accounted for approximately 40.3%, 59.6% and 57.0% of our total revenue, respectively, while revenue from our largest customer accounted for approximately 11.4%, 20.3% and 27.7% of our total revenue, respectively. All of our five largest customers during the Track Record Period were Independent Third Parties and we have business relationships from approximately two years to eight years with them. During the Track Record Period, we procure a variety of materials from our suppliers, generally including (i) juvenile sea cucumbers; (ii) raw materials for production of the feeds for young sea cucumbers; (iii) primarily-processed sea cucumbers; and (iv) other materials used in our business such as repair tools, medicines and packaging materials. For FY2018, FY2019 and FY2020, purchases from our five largest suppliers accounted for approximately 39.9%, 37.4% and 44.4% of our total purchases, respectively, while purchases from our largest supplier accounted for approximately 9.2%, 9.3% and 20.4% of our total purchases, respectively. All of our five largest suppliers during the Track Record Period were Independent Third Parties and we have business relationships from approximately three years to seven years with them. COMPETITIVE LANDSCAPE The sea cucumber aquaculture industry in the PRC is extremely fragmented, with more than 1,000 sea cucumber breeders in the market. We face increasing competition from local and national producers of sea cucumber products as well as new entrants to the market. According to the CIC Report, our Group ranked first in terms of sales volume of young sea cucumbers, with a market share of approximately 5.4% of the young sea cucumber aquacultures market in the PRC in 2020. Given the proven track record of our research and development efforts, we believe that our research and development capabilities will continue to contribute to our growth and profitability in the future through enabling us to improve our efficiency and readily responding to market needs and challenges.

–4– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. SUMMARY

OUR CONTROLLING SHAREHOLDERS AND THE [REDACTED] Immediately after completion of the [REDACTED] and the [REDACTED] (without taking into account of the Shares which may be issued pursuant to the exercise of the [REDACTED] and issued upon the exercise of options under the Share Option Scheme), Mr. Zou, Mr. Zou Siyuan, Mr. Zhang and Ms. Liu Shuzhen will, pursuant to the Deed of Acting in Concert, indirectly through Good Standard, Easy Express and Bright Trend hold in aggregate [REDACTED] Shares, which is approximately [REDACTED]% of the issued shares capital of our Company while the [REDACTED] will, indirectly through Topwealth, hold [REDACTED] Shares, which is approximately [REDACTED]% of the issued shares capital of our Company. Please refer to the sections headed “Relationship with Controlling Shareholders” and “Appendix III – [REDACTED]” in this document for further details. KEY OPERATIONAL AND FINANCIAL DATA The tables below are summaries of our combined results for the Track Record Period which were extracted from the Accountants’ Report as set out in Appendix I to this document. Selected information extracted from the combined statements of profits or loss

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Revenue 166,984 198,812 213,610 Cost of sales (165,228) (196,377) (207,918)

Gross profit 1,756 2,435 5,692

Net changes in fair value less costs to sell of biological assets 129,901 128,490 142,330 Other income 522 1,688 812 Selling and distribution costs (237) (259) (420) Administrative and other operating expenses (17,480) (23,233) (31,301) Provision for impairment loss on trade receivables and other receivables, net (52) (628) (298) Finance costs (2,132) (992) (971) [REDACTED] [REDACTED] [REDACTED] [REDACTED]

Profit before taxation 112,278 104,084 106,457

Income tax expense (14,104) (13,108) (12,908)

Profit and total comprehensive income for the year [REDACTED] [REDACTED] [REDACTED]

Our revenue is derived from sales of four categories of products: (i) larvae of sea cucumbers, (ii) juvenile sea cucumbers including small juvenile sea cucumbers and large juvenile sea cucumbers, (iii) feeds for young sea cucumbers, and (iv) other products including primarily-processed sea cucumber products and mature sea cucumbers. For more information, please refer to the paragraph headed “Financial Information – Description of selected items from combined statements of profit or loss and other comprehensive income” in this document. Biological assets

Our biological assets represent live sea cucumbers. We measure biological assets on initial recognition and at the end of each reporting period at their fair value less costs to sell. A gain or loss arising on initial recognition of biological asset at fair value less costs to sell and from a change in fair value less costs to sell of a biological asset is included in profit or loss for the

–5– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. SUMMARY period in which it arises. Biological assets were stated at fair value less costs to sell as at the reporting dates. Our biological assets were independently valued by Jones Lang LaSalle, an independent valuer with extensive experience in valuation of biological assets. For more information, please refer to the paragraph headed “Financial Information – Valuation of biological assets” in this document. The table below sets forth the impact of changes in the fair values of our biological assets on our results of operations during the Track Record Period:

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Biological asset fair value adjustments included in cost of sales (108,355) (128,260) (144,448)

Gain arising from sea cucumbers at fair value less costs to sell at the point of sale (realised) 105,074 103,433 119,391

Net changes in fair value less costs to sell of biological assets (unrealised) 24,827 25,057 22,939

Net changes in fair value less costs to sell of biological assets 129,901 128,490 142,330

Net gain/(loss) resulting from fair value changes of biological assets 21,546 230 (2,118)

Sensitivity Analysis

The following table indicates the instantaneous change in the value of our biological assets that would arise if the key inputs for valuation as of December 31, 2020 had changed at that date, assuming all other risk variables remained constant:

% change in unit market price of sea cucumbers -30% -20% -10% 10% 20% 30% Change in fair value of our biological assets (RMB’000) (14,370) (9,580) (4,790) 4,790 9,580 14,370 % change in costs for raising -30% -20% -10% 10% 20% 30% Change in fair value of our biological assets (RMB’000) 1,407 938 469 (469) (938) (1,407) % change in survival rate -30% -20% -10% 10% 20% 30% Change in fair value of our biological assets (RMB’000) (3,859) (2,573) (1,286) 1,286 2,573 3,859 Selected information extracted from the combined statements of financial position

At 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Current assets 128,385 188,118 238,234 Current liabilities 30,205 40,889 36,762 Net current assets 98,180 147,229 201,472

–6– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. SUMMARY

Our net current assets increased by approximately 49.9% from approximately RMB98.2 million as at 31 December 2018 to approximately RMB147.2 million as at 31 December 2019, primarily due to the increase in trade and other receivables of approximately RMB67.3 million, partly offset by the increase in dividend payable of approximately RMB6.7 million, increase in trade and other payables of approximately RMB5.2 million and increase in interest bearing-borrowings of approximately RMB4.7 million. Our net current assets increased by approximately 36.9% from approximately RMB147.2 million as at 31 December 2019 to RMB201.5 million as at 31 December 2020, primarily due to the increase in bank balances and cash of approximately RMB48.2 million, increase in biological assets of approximately RMB2.8 million and decrease in dividend paid of approximately RMB1.9 million. Selected information extracted from the combined statements of cash flows

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Operating cash flows before changes in working capital 104,222 97,433 101,999

Net cash generated from operating activities 76,868 51,719 105,137 Net cash used in investing activities (25,723) (37,650) (19,208) Net cash used in financing activities (33,272) (19,032) (37,717)

Net increase/(decrease) in cash and cash equivalents 17,873 (4,963) 48,212 Cash and cash equivalents at the beginning of the year 4,657 22,530 17,567

Cash and cash equivalents at the end of the year 22,530 17,567 65,779

For more information, please refer to the section headed “Financial Information – Liquidity and capital resources” in this document. Income tax expense

According to the EIT Law and the Measures on Handling of Enterprise Income Tax Incentives which was promulgated on 25 April 2018 and its Appendix entitled Administrative List for Enterprise Income Tax Incentives, the enterprises engaging in aquatic fishery could enjoy a preferential exemption from 50% of EIT. Accordingly, our income from sales of feeds for sea cucumbers are exempted from EIT while the income from sales of larvae, juvenile and mature sea cucumbers are entitled to a preferential exemption from 50% of EIT during the Track Record Period. Our effective tax rates was approximately 12.6%, 12.6% and 12.1% for FY2018, FY2019 and FY2020, respectively. Our effective tax rates during the Track Record Period were lower than the EIT rate of 25% primarily due to the tax exemptions granted to certain of our operations. For details of the relevant laws and regulations, please refer to the paragraph headed “Regulatory Overview – Laws and regulations governing taxation” in this document.

–7– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. SUMMARY

KEY FINANCIAL RATIOS

As at/For the year ended 31 December 2018 2019 2020

Profitability ratios Return on total assets(1) 27.7% 21.5% 20.2% Return on equity(2) 31.1% 24.3% 23.2%

Liquidity ratios Current ratio(3) 4.3 times 4.6 times 6.5 times Quick ratio(4) 3.7 times 4.2 times 6.0 times

Capital adequacy ratios Gearing ratio(5) 4.2% 4.4% 3.5% Debt-to-equity ratio(6) Net cash Net cash Net cash Interest coverage ratio(7) 53.5 times 107.7 times 119.6 times Notes: 1. Return on total assets is calculated by profit for the respective year after excluding [REDACTED] and government grants divided by the total assets as at the respective year end and multiplied by 100%. 2. Return on equity is calculated by profit for the respective year after excluding [REDACTED] and government grants divided by the total equity as at the respective year end and multiplied by 100%. 3. Current ratio is calculated based on the total current assets divided by the total current liabilities as at the respective year end. 4. Quick ratio is calculated based on the total current assets less inventories divided by the total current liabilities as at the respective year end. 5. Gearing ratio is calculated based on the total debt divided by the total equity as at the respective year end and multiplied by 100%. Total debt includes interest-bearing borrowings and lease liabilities. 6. Debt-to-equity ratio is calculated based on net debt at the end of the year divided by total equity at the end of the respective year and multiplied by 100%. Net debt is calculated as total debt less bank balances and cash. Total debt include interest-bearing borrowings and obligation under finance leases. 7. Interest coverage ratio is calculated based on the profit before interest and tax for the respective year after excluding [REDACTED] and government grants divided by the interest expenses for the respective year. For more information, please refer to the paragraph headed “Financial Information – Key financial ratios” in this document. RECENT DEVELOPMENT AND MATERIAL ADVERSE CHANGES

Save as otherwise disclosed here, our Directors confirm that up to the date of this document, there has been no material adverse change in our financial or trading position or prospects since 31 December 2020 and there has been no event since 31 December 2020 which would materially affect the information shown in our consolidated financial statements set out in Appendix I to this document. In response to the government measures, we extended our Chinese New Year holiday for our employees. Our production workers are required to remain at our production bases during the Chinese New Year holiday to maintain our production such as the breeding and rearing of our young sea cucumbers. Other employees are allowed to work from home until early March after the end of the Chinese New Year holiday. Our Directors confirmed that, based on the extension of the Chinese New Year holiday in 2020 took place during the low season of our sales and the measures imposed by the central and local governments of the PRC as at the Latest Practicable Date, the COVID-19 outbreak did not have any material adverse impact on our business and results of operations, and is not expected to bring any permanent or material interruption to our operations.

–8– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. SUMMARY

[REDACTED] For FY2018, we did not incur any [REDACTED]. For FY2019 and FY2020, we incurred [REDACTED] of approximately RMB[REDACTED] and RMB[REDACTED] respectively. We expect to incur total [REDACTED] of approximately RMB[REDACTED] of which our Group (i) has recognised approximately RMB[REDACTED] in the profit or loss for FY2019 and FY2020; (ii) expects to recognise approximately RMB[REDACTED] in the profit or loss for FY2021; and (iii) expects to recognise approximately RMB[REDACTED] as a deduction in equity directly for FY2021. Expenses in relation to the [REDACTED] are non-recurring in nature. Our Group’s financial performance and result of operations for FY2019 and FY2020 have been, and FY2021 will be, significantly and adversely affected by the expenses in relation to the [REDACTED]. SHARE [REDACTED] STATISTICS

Based on the minimum Based on the maximum [REDACTED] of [REDACTED] of HK$[REDACTED] per HK$[REDACTED] per Share Share

Market capitalisation (Note 1) HK$[REDACTED] HK$[REDACTED] Unaudited [REDACTED] adjusted combined net tangible assets of our Group attributed to equity owners of our Company per Share (Note 2) HK$[REDACTED] HK$[REDACTED] Notes: 1. The calculation of our market capitalisation is based on [REDACTED] Shares which will be in issue immediately following the completion of the [REDACTED] and the [REDACTED], but without taking into account of the Shares which may be issued pursuant to the exercise of the [REDACTED] and issued upon the exercise of options under the Share Option Scheme or any Shares which may be allotted and issued or repurchased by our Company pursuant to the general mandate to issue shares and general mandate to repurchase shares as described in the section headed “Share Capital” of this document. 2. The unaudited [REDACTED] adjusted combined net tangible assets of our Group attributed to equity owners of our Company per Share has been prepared with reference to certain estimation and adjustment, and has been adjusted to show the effect of the [REDACTED]. Please refer to Appendix III to this document for further details. [REDACTED]

We estimate that the [REDACTED] from the [REDACTED] (after deducting [REDACTED] commissions and estimated expenses payable by us in connection with the [REDACTED]), assuming the [REDACTED] is not exercised and an [REDACTED] of HK$[REDACTED] per Share (being the mid-point of the indicative [REDACTED] range), will be approximately HK$[REDACTED] million. We currently intend to apply the [REDACTED] in the following manner:

Approximate %of [REDACTED] HK$ [REDACTED] (million)

Construct our Fourth Production Base [REDACTED] [REDACTED] Develop “Anyuan No. 2” [REDACTED] [REDACTED] General working capital [REDACTED] [REDACTED]

Total [REDACTED] [REDACTED]

–9– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. SUMMARY

DIVIDEND

For FY2018, FY2019 and FY2020, we declared dividends of approximately RMB23.2 million, RMB23.2 million and RMB34.8 million respectively to the then shareholders of the entities now comprising the Group. We intend to declare the dividend for not more than RMB58.0 million for FY2021. We do not have a fixed dividend policy. Dividend payment are discretionary and will be subject to the recommendation of our Board and approval of our Shareholders in general meetings or, in the case of interim dividends, subject to the approval of our Board in accordance with the Articles. The amount of any dividends to be declared by our Company in any given year in the future will depend on, among others, our results of operations, our cash flows, our financial conditions, our Shareholders’ interests, general business conditions and strategies, our capital requirements and other factors our Board may deem relevant in determining whether dividends are to be declared and paid. Our dividend distribution record in the past may not be used as reference or basis to determine the level of dividend which may be declared or paid by our Company in the future. RISK FACTORS

We believe that there are certain risks involved in our operations, some of which are beyond our control. Some of the major risks we face include: (i) we may be not be able to price our products at our desired margins as a result of a decrease in our pricing power or changes in market conditions; (ii) we rely heavily on the reputation and customers’ recognition of our “Anyuan No. 1” breed of sea cucumber and our brand “Peng Anyuan (薘安源)”; (iii) the occurrence of natural disasters, in particular, tsunami, storm surge and extreme temperature may materially and adversely affect our operations and financial performance; (iv) we have limited control over the operations of our customers and actions taken by these customers may materially and adversely affect our reputation, business and prospect; (v) our customers may delay and/or default in their payment to us; (vi) our production is highly dependent on the quality of seawater and pollution of seawater could materially and adversely affect our business; and (vii) we may not be able to adequately protect our intellectual property rights, in particular our trade secret and know-how, which could harm the value of our brand and adversely affect our business and financial performance. Please refer to the section headed “Risk Factors” in this document for details of our risk factors. COMPLIANCE

During the Track Record Period and up to the Latest Practicable Date, we were in compliance with relevant laws and regulations in all material respect except as disclosed in this document, and had obtained all requisite material licenses, permits and registrations for our business operations. In relation to our historical incident of non-compliance, i.e. failure to comply with the Interim Provisions on Labour Dispatch, please refer to the paragraph headed “Business – Compliance” in this document for details. PROPERTY AND PROPERTY VALUATION

As at the Latest Practicable Date, we owned five properties, leased four properties, possessed seven Sea Area Use Certificates and had entered into an agreement with Da Lian to acquire the sea area forming our Liaoning Production Base. There are certain title defects in relation to the these properties and/or sea area. For details of the title defects, please refer to the subsection headed “Business – Properties” in this document for details. Jones Lang LaSalle Corporate Appraisal and Advisory Limited (“JLL”), an independent property valuer, has valued our property interests as at 28 February 2021 and is of the opinion that the aggregate value of our property interests as of such date was approximately RMB14,825,000. The full text of the letter, summary of values and valuation certificates issued by JLL are set out in Appendix IV to this document.

–10– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DEFINITIONS

In this document, the following expressions shall have the meanings set out below unless the context requires otherwise. Certain other terms are explained in the section “Glossary of technical terms”.

“Accountants’ Report” the accountants’ report on our Group for the Track Record Period set out in Appendix I to this document

“Allied Earn” Allied Earn International Group Limited (滙得國際集團有限公司), a company incorporated in the BVI as a BVI business company on 28 January 2019, which is wholly owned by Ms. Zou Cuiwen (鄒翠文) and is one of the BVI Investment Companies

“Anyuan Biotech” Anyuan Biotech Co., Limited (安源生物技術有限公司), a company incorporated in Hong Kong with limited liability on 22 January 2020, which is an indirect wholly-owned subsidiary of our Company after the Reorganisation

“Anyuan Cooperative” Penglai Anyuan Mariculture Professional Cooperative* (蓬萊市安源海水養殖專業合作社), a cooperative formed in the PRC on 22 August 2012, which was duly dissolved on 15 April 2020

“Anyuan Development” Shandong Anyuan Enterprise Development Co., Ltd* (山東安源企業發展有限公司), a company incorporated in the PRC on 17 June 2020, which is an indirect wholly-owned subsidiary of our Company after the Reorganisation

“Anyuan (Liaoning)” Anyuan Seedling (Liaoning) Company Limited* (安源種業(遼寧)有限公司), a company incorporated in the PRC with limited liability on 30 September 2020, which is an indirect wholly-owned subsidiary of our Company after the Reorganisation

“[REDACTED]” [REDACTED]

“Application Lists” the application list(s) used in the [REDACTED]

–11– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DEFINITIONS

“Articles of Association” or the amended and restated articles of association of our “Articles” Company conditionally adopted on [•] and which will become effective upon the [REDACTED], a summary of which is set out in the section headed “Summary of the Constitution of the Company and Cayman Islands Company Law” in Appendix V to this document, as amended from time to time

“associate(s)” has the meaning ascribed thereto under the Listing Rules

“Audit Committee” the audit committee of the Board

“Beijing CXB” Beijing Chuangxinbao Investment Centre (Limited Partnership)* (北京創信寶投資中心(有限合夥)), a partnership formed on 16 December 2010 as a limited partnership in the PRC

“Board” or “Board of Directors” the board of Directors

“Bright Trend” Bright Trend International Investment Limited (耀勢國際投資有限公司), a company incorporated in the BVI as a BVI business company on 2 January 2020, which is owned by Mr. Zhang as to approximately 96.8% and by Ms. Liu Shuzhen as to approximately 3.2%, and is one of the BVI Investment Companies

“business day(s)” a day on which banks in Hong Kong are generally open for business to the public and which is not a Saturday, Sunday or public holiday in Hong Kong

“BVI” British Virgin Islands

“BVI Investment Companies” collectively Allied Earn, Bright Trend, Easy Express, Giant World, Glory Best, Good Standard, Keen Champ, Mighty Power, Nice Well, Qiangsheng, Rich Great, Sheen World and Super Wise

“[REDACTED]” [REDACTED]

–12– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DEFINITIONS

“[REDACTED]” [REDACTED]

“Chairman” the chairman of the Board, namely, Mr. Zou

“chief executive officer” the chief executive officer of our Company, namely, Mr. Zhang

“CIC” China Insights Industry Consultancy Limited, an independent industry consultant engaged by our Company to prepare the CIC Report

“CIC Report” an independent market research report in respect of the industries in which our Group operates or intends to operate prepared by CIC which was commissioned by our Company

“close associate(s)” has the meaning ascribed to it under the Listing Rules

“Code” the Corporate Governance Code and Corporate Governance Report in Appendix 14 to the Listing Rules

“Companies Act” the Companies Act, Cap 22 (Law 3 of 1961 as consolidated and revised) of the Cayman Islands

“Companies Ordinance” the Companies Ordinance (Chapter 622 of the Laws of Hong Kong), as amended, supplemented or otherwise modified from time to time

–13– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DEFINITIONS

“Companies (Winding Up and the Companies (Winding Up and Miscellaneous Miscellaneous Provisions) Provisions) Ordinance (Chapter 32 of the Laws of Hong Ordinance” Kong), as amended, supplemented or otherwise modified from time to time

“Company” or “our Company” Anyuan Marine Breeding Company Limited (安源種業技術有限公司) (formerly known as Anyuan Seedling Tech Co., Limited* (安源種業科技有限公司)), a company incorporated in the Cayman Islands as an exempted company with limited liability on 21 November 2019 and was registered as a non-Hong Kong company pursuant to Part 16 of the Companies Ordinance on 29 May 2020

“connected person(s)” has the meaning ascribed to it under the Listing Rules

“Controlling Shareholders” has the meaning ascribed to it under the Listing Rules and, in the context of our Company, means the controlling shareholders of our Company, namely, Mr. Zou, Mr. Zou Siyuan, Mr. Zhang, Ms. Liu Shuzhen, Good Standard, Easy Express and Bright Trend

“core connected person(s)” has the meaning ascribed to it under the Listing Rules

“COVID-19” a newly identified coronavirus emerging in 2019, known to cause contagious respiratory illness

“Deed of Acting in Concert” the deed of acting in concert (一致行動契據) dated 20 September 2020 executed by our Controlling Shareholders, whereby they confirmed the exercise of their acting in concert arrangements. For details, please refer to the paragraph headed “History, Reorganisation and Corporate Structure – Parties acting in concert” in this document

“Deed of Indemnity” the deed of indemnity dated [•] given by each of our Controlling Shareholders in favour of our Company, details of which are set forth in the section headed “Statutory and General Information” in Appendix VI to this document

“Deed of Non-competition” the deed of non-competition dated [•] given by each of our Controlling Shareholders in favour of our Company, details of which are set forth in the section headed “Relationship with Our Controlling Shareholders” in this document

–14– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DEFINITIONS

“Director(s)” the director(s) of our Company

“Dr. Yee Wu” Dr. Yee Wu Fan Fanny (余胡凡), the [REDACTED] of our Company and the sole shareholder of Topwealth

“Easy Express” Easy Express International Investment Limited (易通國際投資有限公司), a company incorporated in the BVI as a BVI business company on 2 July 2019, which is wholly owned by Mr. Zou Siyuan and is one of the BVI Investment Companies

“EIT” enterprise income tax

“EIT Law” the Enterprise Income Tax Law of the PRC (中華人民共和國企業所得稅法) which came into effect on 1 January 2008

“[REDACTED]” [REDACTED]

“Food Safety Law” the Food Safety Law of the PRC*《中華人民共和國食品 ( 安全法》), which was promulgated on 28 February 2009 and last amended on 29 April 2021 with effect from the same day

“FY2018” the financial year ended 31 December 2018

“FY2019” the financial year ended 31 December 2019

“FY2020” the financial year ended 31 December 2020

“FY2021” the financial year ending 31 December 2021

“[REDACTED]” [REDACTED]

“Giant World” Giant World International Holdings Limited (世裕國際控股有限公司), a company incorporated in the BVI as a BVI business company on 2 September 2019, which is wholly owned by Ms. Luo Mingxiu and is one of the BVI Investment Companies

–15– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DEFINITIONS

“Glory Best” Glory Best International Investment Limited (榮佳國際投資有限公司), a company incorporated in the BVI as a BVI business company on 2 January 2020, which is wholly owned by Mr. Zou Shifang and is one of the BVI Investment Companies

“Good Standard” Good Standard International Investment Limited (高標國際投資有限公司), a company incorporated in the BVI as a BVI business company on 18 April 2019, which is wholly owned by Mr. Zou and is one of the BVI Investment Companies and is one of our Company’s Controlling Shareholders

“Great Winner” Great Winner International Group Limited (巨勝國際集團有限公司), a company incorporated in the BVI as a BVI business company on 2 September 2019, which is a direct wholly-owned subsidiary of our Company after the Reorganisation

“[REDACTED]” [REDACTED]

“Group”, “our Group”, our Company and its subsidiaries or, where the context “we” or “us” requires, in respect of the period prior to our Company becoming the holding company of its present subsidiaries, such subsidiaries as if they were subsidiaries of our Company at the relevant time

“HK$” or “Hong Kong Dollars” Hong Kong dollars, the lawful currency of Hong Kong

“[REDACTED]” [REDACTED]

“ [REDACTED]” [REDACTED]

“Hong Kong”, “HK” or “HKSAR” the Hong Kong Special Administrative Region of the PRC

–16– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DEFINITIONS

“Independent Third Party(ies)” an individual or a company who or which is independent from and not connected with (within the meaning of the Listing Rules) any directors, chief executive, Substantial Shareholders of our Company, its subsidiaries or any of their respective associates

“IASB” International Accounting Standards Board

“IAS(s)” International Accounting Standards issued by the IASB

“IFRS(s)” International Financial Reporting Standards issued by the IASB

“[REDACTED]” [REDACTED]

“Kai Anyuan Investment” Shandong Kai Anyuan Investment Centre (Limited Partnership* (山東開安源投資中心(有限合夥)), a partnership formed on 4 September 2019 as a limited partnership in the PRC

“Keen Champ” Keen Champ International Investment Limited (銳成國際投資有限公司), a company incorporated in the BVI as a BVI business company on 18 April 2019, which is wholly owned by Ms. Ma Liangping and is one of the BVI Investment Companies

“Large-scale young sea cucumber young sea cucumber breeder with water body exceeding breeder” 10,000 m2

“Latest Practicable Date” 15 May 2021, being the latest practicable date prior to the printing of this document for ascertaining certain information contained herein

“Leap Profit” Leap Profit Limited (豐足有限公司), a company incorporated in Hong Kong with limited liability on 2 August 2019, which is wholly owned by Perfect Force (BVI) and is an indirect wholly-owned subsidiary of our Company after the Reorganisation

–17– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DEFINITIONS

“Li Jin” Penglai Anyuan Aquaculture Company Limited Li Jin Branch Company* (蓬萊市安源水產有限公司利津分公司), a branch company of Shandong Anyuan which was established in the PRC on 18 September 2007 and was duly dissolved on 24 September 2020

“Liaoning Production Base” our production base located in Shuangmiao Branch of Dayou Farm, Linghai City, Jinzhou, Liaoning Province (遼寧省錦州市凌海市大有農場雙廟分場)

“[REDACTED]” [REDACTED]

“Listing Rules” the Rules Governing the Listing of Securities on the Main Board, as amended, modified and supplemented from time to time

“Main Board” the stock exchange (excluding the option market) operated by the Stock Exchange which is independent from and operated in parallel with GEM of the Stock Exchange

“Memorandum” the amended and restated memorandum of association of our Company, as amended from time to time

“Mighty Power” Mighty Power International Group Limited (鉅能國際集團有限公司), a company incorporated in the BVI as a BVI business company on 2 January 2020, which is wholly owned by Mr. Wang and is one of the BVI Investment Companies

“MOA” the Ministry of Agriculture of the PRC (中華人民共和國農業部), which reformed to the Ministry of Agriculture and Rural Affairs of the PRC (中華人民共和國農業農村部) in March 2018

“MOFCOM” the Ministry of Commerce of the PRC (中華人民共和國商務部)

“Mr. Liu” Mr. Liu Yongqi (劉永旗), an executive Director and a chief operating officer of our Company

–18– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DEFINITIONS

“Mr. Wang” Mr. Wang Zengdong (王增東), an executive Director and a chief operating officer of our Company

“Mr. Zhang” Mr. Zhang Jianwei (張建偉), an executive Director, chief executive officer and one of our Controlling Shareholders. Mr. Zhang is the cousin of Mr. Zou

“Mr. Zou” Mr. Zou Ange (鄒安革), an executive Director, the chairman of the Board and one of our Controlling Shareholders

“National Approval Committee” the National Committee for Examination and Approval of Original Breeding and Good Breeding of Aquatic Animals* (全國水產原種和良種審定委員會)

“NDRC” the National Development and Reform Commission (國家發展和改革委員會)

“Nice Well” Nice Well International Holdings Limited (至佳國際控股有限公司), a company incorporated in the BVI as a BVI business company on 2 January 2020, which is wholly owned by Mr. Liu and is one of the BVI Investment Companies

“Nomination Committee” the nomination committee of the Board

“NPC” the National People’s Congress (全國人民代表大會)

“[REDACTED]” [REDACTED]

–19– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DEFINITIONS

“[REDACTED]” [REDACTED]

“Peng Anyuan Food” Yantai Peng Anyuan Marine Food Company Limited* (煙台蓬安源海洋食品有限公司), a company incorporated in the PRC with limited liability on 5 April 2016, which is an indirect wholly-owned subsidiary of our Company after the Reorganisation

“Peng Anyuan Investment” Shandong Peng Anyuan Investment Centre (Limited Partnership)* (山東蓬安源投資中心(有限合夥)), a partnership formed on 3 September 2019 as a limited partnership in the PRC

“Perfect Force (BVI)” Perfect Force Limited, a company incorporated in the BVI as a BVI business company on 5 July 2019 and a direct wholly-owned subsidiary of our Company upon completion of the [REDACTED] and the Reorganisation

“[REDACTED]” [REDACTED]

–20– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DEFINITIONS

“[REDACTED]” [REDACTED]

“PRC” or “China” People’s Republic of China which, for the purposes of this document only, excludes Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan

“PRC Government” the government of the PRC, including all governmental subdivisions (including provincial, municipal and other regional or local government entities) and instrumentalities thereof, or, where the context requires, any of them

“PRC Legal Advisers” Grandlex PMT (Qianhai) Law Firm, a qualified PRC law firm, which is the legal advisers to our Company as to the PRC law

“[REDACTED]” [REDACTED]

–21– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DEFINITIONS

“[REDACTED]” [REDACTED]

“Qiangsheng” Qiangsheng International Co., Ltd (強盛國際有限公司), a company incorporated in the BVI as a BVI business company on 8 January 2020, which is one of the BVI Investment Companies

“Remuneration Committee” the remuneration committee of the Board

“Regulation S” Regulation S under the U.S. Securities Act

“Reorganisation” the corporate reorganisation of our Group in preparation for the [REDACTED] as described in the section headed “History, Reorganisation and Corporate Structure” in this document and the section headed “Statutory and General Information” in Appendix VI to this document

“Rich Great” Rich Great International Investment Limited (偉富國際投資有限公司), a company incorporated in the BVI as a BVI business company on 28 January 2019, which is wholly owned by Ms. Chen Fang (陳芳) and is one of the BVI Investment Companies

“RMB” Renminbi, the lawful currency of the PRC

“SAFE” the State Administration of Foreign Exchange of the PRC (中華人民共和國國家外匯管理局)

–22– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DEFINITIONS

“SAT” the State Administration of Taxation of the PRC (中華人民共和國國家稅務總局)

“SCNPC” the Standing Committee of the National People’s Congress (全國人民代表大會常務委員會)

[REDACTED]

“SFC” the Securities and Futures Commission of Hong Kong

“SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) as amended, supplemented or otherwise modified from time to time

“Shandong Anyuan” Shandong Anyuan Marine Breeding Co., Limited* (山東安源種業科技有限公司) (formerly known as Penglai Anyuan Aquaculture Company Limited* (蓬萊市安源水產有限公司) and Shandong Anyuan Aquaculture Company Limited* (山東安源水產股份有限公司)), a company incorporated in the PRC with limited liability on 15 November 2006 and is one of the indirect wholly-owned subsidiaries of our Company after the Reorganisation

“Shandong First Production Base” our production base located in Yaqian Village, Chaoshui Town, Yantai Economic and Technological Development Area, Shandong Province (山東省煙台市經濟技術開發區潮水鎮衙前村)

“Shandong Partnership” Shandong Marine Granary Construction Investment Fund Partnership Corporation (Limited Partnership)* (山東省海上糧倉建設投資基金合夥企業(有限合夥)), a partnership formed in the PRC on 16 May 2016 as a limited partnership which was duly dissolved on 16 December 2020

“Shandong Second Production our production base located in Zhujiazhuang Village, Base” Chaoshui Town, Yantai Economic and Technological Development Area, Shandong Province (山東省煙台市經濟技術開發區潮水鎮朱家莊村)

“Share(s)” ordinary share(s) with nominal value of US$0.01 each in the share capital of our Company

–23– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DEFINITIONS

“Shareholder(s)” holder(s) of the Share(s)

“[REDACTED]” [REDACTED]

“Share Option Scheme” the share option scheme conditionally adopted by our Company on [•], a summary of the principal terms and conditions of which is set forth in the section headed “Statutory and General Information” in Appendix VI to this document

“Sheen World” Sheen World International Group Limited (世耀國際集團有限公司), a company incorporated in the BVI as a BVI business company on 18 April 2019, which is wholly owned by Mr. Liang Wenheng and is one of the BVI Investment Companies

“Shenzhen CXB” Shenzhen Chuangxinbao Investment Corporation (Limited Partnership)* (深圳創信寶投資企業(有限合夥)), a partnership formed on 27 March 2009 as a limited partnership in the PRC

“[REDACTED]” [REDACTED]

“Standardization Administration” the Standardization Administration of the PRC (國家標準化管理委員會)

“[REDACTED]” [REDACTED]

“Stock Exchange” The Stock Exchange of Hong Kong Limited

“subsidiary(ies)” has the meaning ascribed to it under the Listing Rules

“Substantial Shareholder(s)” has the meaning ascribed to it under the Listing Rules

“Super Wise” Super Wise Global Holdings Limited (智超國際控股有限公司), a company incorporated in the BVI as a BVI business company on 18 April 2019, which is wholly owned by Mr. Yu Hao and is one of the BVI Investment Companies

–24– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DEFINITIONS

“Takeovers Code” the Code on Takeovers, and Mergers and Share Buy-backs issued by the SFC, as amended, supplemented or otherwise modified from time to time

“Topwealth” Topwealth Global Holdings Limited (創富環球集團有限公司), a company incorporated in the BVI as a BVI business company on 18 January 2019, which is wholly-owned by Dr. Yee Wu, the [REDACTED] of our Company

“Track Record Period” the period comprising the three years ended 31 December 2020

“U.S.” or “United States” the United States of America, its territories, its possessions and all areas subject to its jurisdiction

“U.S. Securities Act” the U.S. Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder

“[REDACTED]” [REDACTED]

“US$” or “U.S. dollars” United States dollars, the lawful currency of the United States of America

“VBG” or “Sole Sponsor” VBG Capital Limited, a corporation licensed to conduct type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities under the SFO, being the sole sponsor to our Company for the [REDACTED]

“[REDACTED]” [REDACTED]

–25– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DEFINITIONS

“[REDACTED]” [REDACTED]

For the purpose of this circular, unless the context otherwise requires, (i) conversion of Renminbi into Hong Kong dollars is based on the approximate exchange rate of RMB1=HK$1.2011; and (ii) conversion of US$ in Hong Kong dollars is based on the approximate exchange rate of US$1=HK$7.8000. Such exchange rate is for the purpose of illustration only and does not constitute a representation that any amounts in Hong Kong dollars or RMB or US$ have been, could have been or may be converted at such or any other rate or at all.

Certain amounts and percentage figures included in this document have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures preceding them.

In this document, if there is any inconsistency between the Chinese names of the entities, authorities, organisations, institutions or enterprises established in China or the awards, certificates given in China and their English translations, the Chinese language version shall prevail. English translation of company names in Chinese or another language which are marked with “*” is for identification purpose only.

–26– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. GLOSSARY OF TECHNICAL TERMS

This glossary of technical terms contains explanations of certain terms used in this document as they relate to our Company and as they are used in this document in connection with our business or us. These terms and their given meanings may not correspond to standard industry definitions or usage of those terms.

“Anyuan New Breed” the then new breed of young sea cucumber cultivated by our Group prior to it being officially recognised as Anyuan No.1

“Anyuan No.1” the new breed of young sea cucumber cultivated by our Group, which is a relatively fast-growing breed and has more wart feet as compared to the normal breed

“Anyuan No.1 Certificate” the Certificate of New Breed of Aquaculture “Anyuan No.1” (水產新品種–刺參安源1號) granted by the National Aquaculture Original and Improved Species Approved Committee* (全國水產原種和良種審定委員會)on21May 2018 to our Group and Dalian Ocean University (大連海洋大學)

“broodstock” the population of sea cucumber used for the purpose of breeding young sea cucumbers

“CAGR” compound annual growth rate, a method of assessing the average growth of a value over a certain time period

“cm” centimeter

“degenerate”/“degeneration” progressive deterioration of characters from a level representing the norm of earlier generations

“g” gram

“GB” Guobiao (國標), the Chinese national standard issued by the Standardization Administration

“hatchery workshop” our Group’s workshop used for the hatchery of sea cucumbers

“inbreeding” breeding of organisms that are closely related genetically or follow the same bloodline

–27– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. GLOSSARY OF TECHNICAL TERMS

“infant sea cucumber(s)” infant sea cucumber (稚參) refers to the growth stage of sea cucumber after larvae but before juvenile sea cucumber, which is usually of more than 50,000 PPU, i.e. less than 10 mg

“jin” 500 g

“juvenile sea cucumber(s)” juvenile sea cucumber (幼參) refers to the growth stage of sea cucumber after infant sea cucumber but before mature sea cucumber, for the juvenile sea cucumber we offered during the Track Record Period and up to the Latest Practicable Date, it collectively refers to small juvenile sea cucumber and large juvenile sea cucumber

“kg” kilogram

“larvae(s)”, “larva” or “larval” larvae (幼體) is the immature form of sea cucumber, which is in an early growth stage of development before growing into infant sea cucumber. There are three stages of larvae, which includes early auricularia (初耳幼體), mid auricularia (中耳幼體) and late auricularia (大耳幼體). The larvae we offer refers to early auricularia

“large juvenile sea cucumber(s)” large juvenile sea cucumber (大幼參) is a kind of juvenile sea cucumber we offered during the Track Record Period and up to the Latest Practicable Date, with a specification of 5 PPU to less than 100 PPU, i.e. juvenile sea cucumber with a unit weight of more than 5g to 100g

“µm” micrometer

“m” meter

“m2” or “sq.m.” square meters

“m3” cubic meters

“mature sea cucumber(s)” mature sea cucumber (成參) refers to the growth stage of sea cucumber after juvenile sea cucumber, which is usually less than or equal to 5 PPU, i.e. with a unit weight of 100g or above

“mg” milligram

–28– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. GLOSSARY OF TECHNICAL TERMS

“mu” the traditional Chinese unit of area (畝), one mu is equivalent to approximately 666.67 sq.m.

“NVQ Certificate” National Vocational Qualification Certificate (國家職業資格證書) issued by the Ministry of Labour and Social Security for the recognition of professional knowledge and skill level of employees, in which level one is the highest level

“PPU” piece per unit, which refers to the number of sea cucumber per 0.5 kg

“Shuiyuan No. 1” the breed of young sea cucumber used by our Group to cultivate Anyuan No.1

“small juvenile sea cucumber(s)” small juvenile sea cucumber (小幼參) is a kind of juvenile sea cucumber we offered during the Track Record Period and up to the Latest Practicable Date, with a specification of 100 PPU to less than 50,000 PPU, i.e. juvenile sea cucumber with a unit weight of more than 10 mg to 5g

“spawning” the process in which the matured broodstock release their eggs and sperm into water

“water body” a body of water with significant accumulation of water for the rearing of sea cucumber

“wintering” the period from December to March next year in which young sea cucumbers are reared in water tanks

“young sea cucumber(s)” young sea cucumber (海參苗) which refers to infant sea cucumber and juvenile sea cucumber collectively

“°C” degree Celsius

“%” per cent

–29– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements relating to the plans, intentions, beliefs, objectives, expectations and predictions of our Group, which are, by their nature, subject to significant risks and uncertainties and may not represent our Group’s overall performance for the periods of time to which such statements relate. These forward-looking statements are based on numerous assumptions regarding our Group’s present and future business strategies and the environment in which it will operate in the future. Important factors that could cause the actual performance or achievements of our Group to differ materially from those in the forward-looking statements include, without limitation, the following:

• its operations and business prospects;

• the amount and nature of, potential for and future development of its business;

• future developments, trends and conditions, competition for its business activities and future development in the industry and the geographical markets in which our Group operates;

• its strategies, plans and objectives and its various measures to implement or achieve such strategies, plans and objectives;

• its ability to meet the changing needs of its customers;

• its dividend distribution plans or dividend policy;

• its financial condition and performance;

• its needs for capital;

• changes in the laws, rules and regulations in the countries in which our Group operates and the rules, regulations and policies of the relevant government authorities relating to all aspects of its business, including changes in tax policy and environmental regulations;

• general political and economic conditions in Hong Kong, the PRC and overseas;

• the general economic trends and conditions;

• changes in competitive conditions and its ability to compete under these conditions;

• its ability to recruit and retain employees and personnel;

• the general economic trends, market and business conditions in the countries or regions in which our Group operates;

–30– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FORWARD-LOOKING STATEMENTS

• change or volatility in prices, volumes, operations, margins, overall market trends, risk management, interest rates and exchange rates;

• other statements in this document that are not historical facts;

• realisation of the benefits or its future plans and strategies; and

• other factors beyond its control.

When used in this document, the words “aim”, “anticipate”, “believe”, “can”, “consider”, “continue”, “could”, “estimate”, “expect”, “forecast”, “going forward”, “intend”, “may”, “might”, “ought to”, “plan”, “predict”, “project”, “propose”, “potential”, “seek”, “shall”, “should”, “will”, “would”, “with a view to” and the negatives of these terminologies and similar expressions are intended to identify forward-looking statements. We make these forward-looking statements based on current plans and estimates and they speak only as at the date they were made. These forward-looking statements are not a guarantee of future performance. Actual outcomes could be caused to differ materially from those expressed in any forward-looking statements by, including without limitation, the risk factors set forth under the section headed “Risk Factors” in this document.

Although our Directors believe that our Company’s current views as reflected in these forward-looking statements based on currently available information are fair and reasonable and that our Directors confirm that these forward-looking statements are made after due and careful consideration, our Company can give no assurance that these views will prove to be correct. You are strongly cautioned that reliance on any forward-looking statements in this document involves known and unknown risks and uncertainties. The risks and uncertainties in this regard include, but are not limited to, those identified in the section headed “Risk Factors” in this document, many of which are not within the control of our Group. In light of these and other uncertainties, the inclusion of forward-looking statements in this document should not be regarded as representations by our Company or our Directors that our plans or objectives will be achieved.

Should one or more of the risks or uncertainties materialise, or should underlying assumptions prove to be incorrect, the financial condition of our Group may be adversely affected and may vary materially from those described herein as anticipated, believed, estimated or expected.

The information and assumptions contained in the forward-looking statements have not been independently verified by our Company, our Controlling Shareholders, the Sole Sponsor, the [REDACTED], the [REDACTED], the [REDACTED], any other party involved in the [REDACTED] or their respective directors, officers, employees, advisers or agents and no representation is given as to the accuracy or completeness of such information or assumptions on which the forward-looking statements are made. Additional factors that could cause actual performance or achievements of our Group to differ materially include, but are not limited to, those discussed under the section headed “Risk Factors” and elsewhere in this document.

–31– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FORWARD-LOOKING STATEMENTS

Subject to the requirements of applicable laws, rules (including the Listing Rules) and regulations, our Company does not have any and undertakes no obligation to update or otherwise revise any forward-looking statements in this document, whether as a result of new information, future events or developments or otherwise. As a result of these and other risks, uncertainties and assumptions, the forward-looking events and circumstances contained in this document might not occur in the way our Company expects, or at all. Accordingly, you should not place undue reliance on any forward-looking information. All forward-looking statements contained in this document are qualified by reference to the cautionary statements set out in this section.

In this document, statements of or reference to our Group’s intentions or that of any of our Directors are made as at the date of this document. Any such intentions may change in light of future developments.

–32– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS

You should carefully consider all of the information set forth in this document, including the risks and uncertainties described below before making an investment in the [REDACTED]. You should pay particular attention to the fact that we are incorporated in the Cayman Islands and that substantially all of our Group’s operations are conducted in the PRC. Our business, financial condition and results of operations could be materially and adversely affected by any of these risks. The [REDACTED] price of our Shares could decline due to any of these risks, and you may lose all or part of your [REDACTED].

We believe that there are certain risks involved in our operations, some of which are beyond our control. These risks can be broadly categorised into: (i) risks relating to our business; (ii) risk relating to our industry; (iii) risks relating to the PRC; and (iv) risks relating to the [REDACTED].

RISKS RELATING TO OUR BUSINESS

We may not be able to price our products at our desired margins as a result of a decrease in our pricing power or changes in market conditions

We set prices for our products primarily based on a market-oriented approach. The selling price of our products is largely determined by market conditions such as the market demand of our products and the selling prices set by our competitors. This means that we may not be able to set favourable prices at our desired margins and we may be subject to pricing competition and as a result, under pressure to reduce the prices of our products. We cannot assure you that we will be able to maintain our pricing power or that our gross profit margin will not be driven down by market conditions. In the event that we lose pricing power due to weaker demand for our products or we see higher pricing pressure due to intensified competition from our competitors, we may need to lower the prices and the margins for our products. The fluctuation in the selling price of our products as a result of changing market conditions may adversely affect our business and financial conditions.

Our business is subject to changing customer preferences and demands

During the Track Record Period and up to the Latest Practicable Date, we primarily offered four categories of products to our customers, namely (i) larvae; (ii) juvenile sea cucumbers; (iii) feeds for young sea cucumbers; and (iv) other products. Accordingly, our sales volume and continued growth is highly dependent on the popularity of sea cucumber products. If there are changes in consumer tastes, preferences, perceptions which shift away from sea cucumber products to other kinds of food products and changes in the level and pattern of consumer spending in the PRC for sea cucumber products, it could result in lower sales of our products, put pressure on pricing or lead to increased levels of selling and promotional expenses, which could have an adverse effect on our sales and profits.

–33– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS

We rely heavily on the reputation and customers’ recognition of our “Anyuan No.1” breed of sea cucumber and our brand “Peng Anyuan (蓬安源)”

During the Track Record Period, we bred and sold the “Anyuan No. 1” breed of sea cucumbers and sold feeds for our young sea cucumbers under our own brand “Peng Anyuan (蓬安源)”. Therefore, our Directors believe that the success of our Group is highly dependent on the reputation and customers’ recognition of the “Anyuan No.1” breed and our own brand “Peng Anyuan (蓬安源)” as reputation of the breed and brand of sea cucumber products is an important determining factor for customers in making their purchasing decisions in the sea cucumber industry. The reputation and customers’ recognition of our breed of sea cucumber and our own brand may be materially and adversely affected by a number of factors, many of which are outside of our control, including:

• adverse associations with the quality of our products;

• the effects of counterfeit products purporting to be sea cucumbers of the “Anyuan No.1” breed and/or products sold under the “Peng Anyuan (蓬安源)” brand;

• lawsuits and regulatory investigations against us or otherwise relating to our products or industry including product liability claims or complaints; and

• improper or illegal conduct by our employees and customers in respect of the rearing, processing, marketing and sales of our products, whether or not authorised by us.

If we fail to maintain a good reputation and customers’ recognition of our breed and brand of young sea cucumbers, as a result of the above or any other factors, our products may be perceived unfavorably by our customers and the public and as a result, our sales and business prospects could be materially and adversely affected.

The occurrence of natural disasters, in particular, tsunami, storm surge and extreme temperature may materially and adversely affect our operations and financial performance

Our business operations are susceptible to natural disasters and adverse weather conditions such as rainstorms, floods and earthquakes and environmental hazards occurring at or in close proximity to our production bases. In particular, as disclosed in the section headed “Business – Production Facilities” in this document, our three production bases are all currently located by the seaside and are therefore susceptible to damages by tsunami and storm surge, and our operation may be disrupted as a result. If there is any unanticipated or prolonged interruption of operations at our production bases, we may not be able to deliver our products to our customers in a timely manner. As a result, our relationship with our customers may be adversely affected and we may also be subject to contractual claims for compensation from our customers.

–34– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS

Although we have not experienced any material disruption in our operations resulting from tsunami and storm surge during the Track Record Period, any occurrence of such events in the future could materially and adversely affect our business, financial condition and results of operations. Furthermore, as the growth and survival rates of young sea cucumbers are highly sensitive to water temperature, the young sea cucumber aquaculture industry is highly susceptible to extreme temperature. According to the CIC Report, the sea cucumber production volume in China recorded significant decrease of approximately 20.7% in 2018 which was attributable to the high death rate caused by the abnormally-high summer temperature in 2018. Therefore, any occurrence of tsunami, storm surge and extreme temperature in the future may have a material and adverse effect on our business, operations, production volume, financial condition and results of operations.

We may be affected by negative reputation of the sea cucumber industry or the food industry in the PRC in general

As we mainly offer sea cucumber products to our customers, our Directors believe that the success of our Group is highly dependent on the reputation of the sea cucumber industry which could be harmed by negative publicity or media reports. In July 2020, there were media reports regarding the illegal use of a highly toxic insecticide, Dichlorvos and other banned drugs in raising sea cucumbers in Shandong province, the soaking of sea cucumbers in malt mixtures to increase their weights and the labeling of products cultivated in southern parts of China as products from the northern parts of China, which are more prized in the market. Any negative media coverage in respect of the quality or nutritional value of sea cucumber or malpractice in the aquaculture, production or sales of sea cucumbers in the industry and the resulting negative publicity could materially and adversely affect consumers’ confidence and trust in consuming sea cucumbers. Accordingly, consumers may opt for other products that are perceived to be safer and/or more nutritious even if the negative publicity is unfounded or irrelevant to our operation and this could reduce long-term demand for sea cucumbers. Consequently, our business operations, financial performance and prospects may be materially and adversely affected. Additionally, in recent years there have been negative reports and allegations relating to food safety and quality in the food industry in PRC in general, though these reports and allegations may not necessarily relate to the industry in which we operate, nevertheless if there is a negative public perception as to food products in PRC, the general public, including end-users of our products may likewise have a negative perception as to our products. Where this is the case, our business and business prospects may also be materially and adversely affected.

–35– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS

We have limited control over the operations of our customers. Actions taken by these customers may materially and adversely affect our reputation, business and prospects

During the Track Record Period, our customers mainly purchased from us juvenile sea cucumbers for rearing and revenue generated from sales of juvenile sea cucumbers amounted to approximately RMB127.9 million, RMB167.0 million and RMB187.0 million and accounted for approximately 76.6%, 84.0% and 87.6% of our total revenue respectively. Our customers are independent from us and we have limited control over the activities undertaken by them in the course of their operations. The quality of their products may be affected by various factors that are beyond our control such as the practice and manner they adopt in the rearing process. As our customers may market their products as sea cucumbers of the “Anyuan No. 1” breed, if any of their products are found to be substandard or if they are found to be in breach of any applicable laws and regulations, such negative associations may harm the reputation and customers’ recognition of our breed of “Anyuan No.1” and disrupt our sales activities or the price of our products and thereby affecting our business prospects.

Our customers may delay and/or default in their payments to us

Except for our walk-in customers who generally pay on the site, we generally grant credit terms ranging from 90 days to 180 days to our customers and are therefore subject to credit risks of our customers. Our liquidity depends on our customers making prompt payments to us. For further details, please refer to the paragraph headed “Business – Credit policy and payment methods” in this document.

As at 31 December 2018, 2019 and 2020, our trade and other receivables amounted to approximately RMB34.5 million, RMB101.8 million and RMB100.7 million, respectively. Our average trade receivable turnover days for FY2018, FY2019 and FY2020 were approximately 41.4 days, 94.2 days and 113.9 days, respectively. For further details, please refer to the section headed “Financial Information – Analysis of selected items from the combined statements of financial positions – Trade and other receivables” in this document.

If our customers delay or default in their payments to us, we may have to make impairment provisions and write-off the relevant receivables and hence our liquidity may be adversely affected. This may in turn materially and adversely affect our business, financial condition and results of operation. The bankruptcy or deterioration of the credit condition of any of our major customers could also materially and adversely affect our business.

–36– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS

Our production is highly dependent on the quality of seawater and pollution of seawater could materially and adversely affect our business

We maintain the water quality of the water used in the aquaculture of our young sea cucumbers through the constant circulation of fresh clean filtered seawater, and our production is highly dependent on the quality of the seawater. Pollution of seawater from various sources in the neighbourhood of our production bases could materially and adversely affect our business. There are mid-scale and small-scale sea cucumber breeders, large-scale chemical factory and residents in the neighbourhood of our production bases. If they discharge waste gases, waste water, industrial waste, drug residues and other harmful materials in breach of the applicable environmental laws and regulations to the sea near our production bases, it may lead to pollution to the sea and may cause eutrophication and red tides or otherwise tamper with the quality of the seawater we use for the aquaculture of our young sea cucumbers at our production bases. This in turn may result in significant shortfalls in our production of young sea cucumbers. During the Track Record Period and up to the Latest Practicable Date, we have not experienced any material disruptions in our operations resulting from any of the foregoing incidents, however any occurrence of such events in the future may have a material adverse effect on our business, financial condition and results of operations.

The outbreak of any major disease among our sea cucumber could materially adversely affect our business

The sea cucumbers that we breed and rear at our production bases are living organism that are prone to, and may die from, various diseases. Despite we have adopted measures to prevent diseases among our young sea cucumbers as detailed in the section headed “Business – Quality Control” in this document, we cannot guarantee that our young sea cucumbers will be free from any diseases. The source of diseases may include pathogens in the seawater and hereditary factors of young sea cucumbers. Any major outbreak of diseases among young sea cucumbers at any of our production bases may lead to significant shortfalls in the production of our sea cucumber products. We may also be required to suspend our business operations temporarily during any major outbreaks of diseases and examine all of our young sea cucumbers. Although we have not experienced material disruptions in our operations resulting from any outbreak of disease among our young sea cucumbers, any occurrence of such events in the future could materially adversely affect our business, financial condition and results of operations.

–37– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS

We may not be able to adequately protect our intellectual property rights, in particular our trade secret and know-how, which could harm the value of our brand and adversely affect our business and financial performance

Over the years, we have accumulated knowledge and experience in relation to the breeding and rearing of sea cucumbers which form part of our proprietary information and technical know-how. It is important to protect our intellectual property rights, in particular our trade secret and know-how in respect of the breeding and rearing of “Anyuan No.1”. As at the Latest Practicable Date, we owned 14 patents in the PRC and registered seven trademarks in the PRC and two trademarks in Hong Kong. For details, please refer to the paragraph headed “B. Further information about the business of our Group – 2. Intellectual property rights of our Group” in Appendix VI to this document. Although we have also entered into confidentiality agreements with those employees who possess such trade secrets and know-how, there is no guarantee that our employees would not breach such agreements and disclose our trade secrets and know-how, or that our trade secrets and know-how would not otherwise be unlawfully obtained by any of our competitors or other third parties. Furthermore, while we have adopted stringent measures for the safekeeping of our broodstock “Anyuan No.1” as mentioned in the section headed “Business – Production Facilities” in this document, we cannot assure you that such measures are sufficient. If any persons unlawfully use our intellectual properties including our trade secret and know-how or steal our broodstock of “Anyuan No.1” and sell sea cucumbers purporting to be of the “Anyuan No.1” breed in the market, it not only directly affect our revenue as some of our customers may be misled to purchase sea cucumbers from these persons instead of our Group, but it may also cause damage to the reputation and customers’ recognition of our breed of “Anyuan No.1” if these sea cucumbers sold are of low quality. Further, in the event that third parties infringe upon our intellectual property rights, we may face great difficulties and institute litigation or other forms of proceedings which may be time-consuming and costly in order to fully enforce or defend our intellectual property rights, which may in turn materially and adversely affect our profitability.

Loss of any of our key personnel will adversely impact our business and growth prospects

Our future success depends upon the continued services of our Directors and senior management. Our Directors believe that our success, to a large extent, is attributable to the contribution of Mr. Zou, our chairman and executive Director, and our key management personnel, including other executive Directors, as they have generally been working in the sea cucumber aquaculture industry for over 15 years. For details of their expertise and experience, please refer to the section headed “Directors and Senior Management” in this document.

–38– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS

Our key personnel’s efforts, management experience and expertise in the sea cucumber aquaculture industry are crucial to our operations and financial performance. Accordingly, we must continue to attract, retain and motivate a sufficient number of qualified key personnel in order to maintain consistency in the quality of our services and products and support our growth. If the key personnel of our Group are unable or unwilling to continue their present positions, we may not be able to recruit new members of comparable experience and knowledge, which may cause a significant disruption to our business, financial condition and operations. We may have to incur additional and potentially significant expenses to recruit new key personnel, which may in turn increase the costs of operations of our Group and materially and adversely affect our profitability.

Sales of our products are subject to seasonality.

The sales of our products are subject to seasonality due to the breeding and growth cycles of sea cucumbers. During the Track Record Period, our sales of juvenile sea cucumbers generally occurred between April to December and our sales of juvenile sea cucumbers generally ceased between January to March as growth rate and biological activity of the sea cucumbers are very low in winter. If there is any adverse change of market conditions or if our operations are disrupted or affected by unpredictable events taking place during the breeding and growth cycles of sea cucumbers, our business, financial condition and results of operations may be adversely affected.

The fair value of our biological assets may fluctuate significantly from year to year, causing our results of operations to be highly volatile

We have significant biological assets, primarily consisting of live sea cucumbers, which we record at fair value less costs to sell at each reporting date in accordance with IFRSs. Fair value gains or losses with respect to our biological assets, which are non-cash in nature, are attributable to changes in the physical characteristics of the biological assets and changes in market determined prices of biological assets.

The fair values of our biological assets at each reporting date during the Track Record Period were determined by an independent professional valuer and we intend to engage an independent professional valuer, JLL, to determine the fair values of our biological assets going forward. In valuing our biological assets, the independent valuer has relied on a number of major parameters and assumptions which may vary from time to time, such as quantity, market price and the estimated survival rate of the sea cucumbers. For more information, please refer to the paragraph headed “Financial Information – Valuation of biological assets” in this document.

–39– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS

The fair value of our biological assets could be affected by factors including the accuracy of those parameters and assumptions, as well as the quality of our biological assets and changes in the sea cucumber aquaculture industry. Market prices for biological assets are highly volatile and susceptible to significant fluctuations from period to period. As a result of revaluations of our biological assets from year to year, our financial position and results of operations may change significantly from year to year. In addition, an increase or decrease in market prices for biological assets will increase or reduce our revenue, total cost of sales and gains or losses arising from changes in fair value less costs to sell of biological assets, which makes our reported profit more volatile. For FY2018, FY2019 and FY2020, our total cost of sales was increased by biological assets fair value adjustments of approximately RMB108.4 million, RMB128.3 million and RMB144.4 million, respectively. In these respective years, the net gain/(loss) resulting from fair value changes of biological assets that affected our profit or loss were net gain of approximately RMB21.5 million, RMB0.2 million and net loss of approximately RMB2.1 million.

Although we may recognise fair value gains from increases in the fair value of our biological assets, these changes will not represent changes in our cash position as long as the relevant assets continue to be held by us. For more information, please refer to the paragraph headed “Financial Information — Key factors affecting the results of operations and financial condition — Changes in the fair value of biological assets” in this document.

We rely on our distributor for the sale of our feeds in excess of our stock required for feeding our own young sea cucumbers. Termination of or failure to renew our distribution agreement with our distributor, may significantly decrease the sale of our feeds

We primarily sell our feeds for young sea cucumbers to our third party distributor to handle the feeds in excess of our stock required for feeding our own young sea cucumbers. While we are not adhering to any industry norm, our Directors believe that our practice of engaging one distributor is a cost-effective method to handle the feeds in excess and allow us to focus on our core business of breeding sea cucumbers. For the Track Record Period, our revenue from sales of feeds accounted for approximately 2.5%, 4.4% and 7.2% of our total revenue. Revenue from sales of feeds contributed by our distributor represented approximately 27.4%, 48.4% and 71.0% of our revenue from sales of feeds during the Track Record Period, respectively. During the Track Record Period, we generally entered into distribution agreements with our distributor. We cannot assure you that the distribution agreement we have with the existing distributor will be renewed on the same or similar terms, or at all, upon or before the expiration of the distribution agreement, nor can we assure you that our existing distributor will not terminate the distribution agreement before it expires. There is no assurance that we will be able to maintain the existing business relationship with our distributor and that we may be able to identify appropriate replacement in a timely manner. There is also no assurance that the existing distributor will continue to place orders with us at historical levels, or at all. If our distributor substantially reduces its volume of purchases from us or ceases to do business with us altogether, our sales of feeds may decrease substantially and our financial condition and results of operation may be materially and adversely affected.

–40– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS

Our production works are labour-intensive and we may be exposed to the risk of labour shortage and increase in labour costs

Our production relies on the steady supply of skilled and low-cost labour in the PRC. Our staff costs accounted for approximately 11.3%, 10.8% and 10.0% of our total cost of sales for each of FY2018, FY2019 and FY2020, respectively. According to the CIC Report, the average annual salary of workers employed in agriculture, forestry, animal husbandry and fishery industries in the PRC is estimated to increase from RMB40,206.5 in 2020 to RMB54,034.7 by 2025, representing a CAGR of approximately 6.1% between 2020 and 2025. Accordingly, our production and business are susceptible to any labour shortage or reduction of profitability due to increase in labour costs.

Although we have not experienced any significant shortage in production workers in the past, there is no assurance that there will not be any shortage in production workers for our production or increase in labour costs in the future. Shortage in production workers may lead to decrease in our production volume, sales and revenue while increase in labour costs may result in decrease in our profit if we are unable to shift such extra costs to our customers by raising our prices. Accordingly, our financial conditions and results of operations may be materially and adversely affected.

Our future growth and expansion are subject to various uncertainties

In accordance with our business plans as set out in the section headed “Future Plans and [REDACTED]” in this document, we intend to further strengthen our position as the market leader in the PRC’s large-scale young sea cucumber aquaculture industry through (i) expansion of our production capacity for young sea cucumber production to further enhance our supply capability; (ii) enhancing our brand recognition and reputation; and (iii) enhancing our research and development capabilities. Our business plans are based on assumptions of future events which are bound to entail certain risks and are inherently subject to uncertainties which are beyond our control. For instance, we cannot assure you that our personnel, systems, procedures and controls will be adequate to support our future growth. In addition, as we expand our operations, we may encounter regulatory, cultural and other difficulties that may also increase our costs of operations. Moreover, we may require additional financing to achieve our expansion plans and may have difficulty obtaining such financing. As a result, there can be no assurance that our business plans will be implemented successfully as scheduled in terms of, for instance, time and costs, or at all. There is also possibility that our expansion plans, even if effectively implemented, may not achieve the expected benefit. Our financial condition, operating results and growth, prospects may be materially and adversely affected if our business plans fail to achieve positive results.

–41– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS

Our environmental costs may increase if the PRC environmental protection laws and regulations become more onerous

Our business is subject to extensive and increasingly stringent PRC environmental protection laws and regulations. These laws and regulations require us to adopt measures to effectively control and properly dispose of waste gases, wastewater and other environmental waste materials. In order to comply with these laws and regulations, we incurred total environmental costs for FY2018, FY2019 and FY2020 of approximately nil, nil and RMB13,000, respectively. We will continue to incur costs to comply with environmental protection laws and regulations after the [REDACTED]. In addition, new environmental issues could arise and lead to currently unanticipated investigations, assessments or costs. Failure to comply with these laws and regulations may result in significant consequences to us, including administrative, civil and criminal penalties, liability for damages and negative publicity. In case of a serious breach, the PRC government may suspend or close any operation of our Group. For details of the current PRC environmental protection laws and regulations, please refer to the paragraph headed “Business – Environmental protection”. Furthermore, there is no assurance that the PRC government will not change existing laws or regulations or impose additional or stricter laws or regulations, compliance with which may require us to incur significant costs and capital expenditures and, as a result, materially and adversely affect our financial condition and results of operations.

Our historical growth rate, revenue and gross profit margin may not be indicative of our future growth rate, revenue and gross profit margin

For each of FY2018, FY2019 and FY2020, our revenue was approximately RMB167.0 million, RMB198.8 million and RMB213.6 million, respectively. For each of FY2018, FY2019 and FY2020, our gross profits before biological asset fair value adjustments were approximately RMB110.1 million, RMB130.7 million and RMB150.1 million, respectively, whereas our gross profit margins before biological asset fair value adjustments for the same years were approximately 65.9%, 65.7% and 70.3% respectively.

There is inherent risk in using such historical financial information of us to project or estimate our financial performance in the future, as they only reflect our past performance under particular conditions. We may not be able to sustain our historical growth rate, revenue and profit margin for various reasons, including but not limited to, deterioration in the market conditions for sea cucumbers products in the PRC and intensification of competition among our competitors, which reduce the sales volume of our products and/or reduce the profit margin of our products. There is no assurance that we will be able to achieve the performance as we did during the Track Record Period. Prospective investors should not solely rely on our historical financial information as an indication of our future financial or operating performance.

–42– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS

We are subject to various risks relating to settlements through third party arrangements

During the Track Record Period, payments received from a portion of our total revenue were made through third party arrangements, including approximately (i) RMB19.9 million, RMB6.1 million and nil which represented 11.9%, 3.1% and nil of our total revenue, respectively, from inconsistencies between the recipient(s) and the payor(s) of the VAT ordinary invoices and (ii) approximately RMB32.5 million, RMB86.5 million and RMB97.0 million which represented 19.5%, 43.5% and 45.4% of our total revenue, respectively, from settlement of all or part of the amounts due to us through third parties payors (the “Third Party Payors”). For details of the settlements through third party arrangements, please refer to the paragraph headed “Business – V. Third party arrangements” in this document.

As advised by our PRC Legal Advisers, we may be subject to risks of money laundering under the Criminal Law of the PRC《中華人民共和國刑法》 ( ) if we (i) clearly know that the payments by the Third Party Payors represent proceeds and/or gains obtained from drug-related crimes, crimes committed by criminal organisations, crimes of terrorism, smuggling, bribery and corruption, crimes undermining the financial order of society and financial fraud; and (ii) commit certain acts for the purpose of covering up or concealing the source and nature of the above proceeds or gains. Given there is no contractual relationship between the Third Party Payors and our Group, the Third Party Payors may claim against us for return of payments as they were not contractually indebted to us. There may also be possible claims from liquidators of the Third Party Payors if the Third Party Payors became insolvent and were presented a winding up petition or a bankruptcy petition. While we have ceased the third party arrangements since late 2020, there is no assurance that relevant payments received during the Track Record Period will not be subject to claims for return of funds or expose us to risks of money laundering. If we are faced with claims for return of funds or suspected of having committed money laundering, we will have to spend significant financial and managerial resources to defend against such claims and legal proceedings, the financial, operational and liquidity of our business may as a result be adversely affected. Moreover, if we are involved in criminal proceedings for money laundering charge, our reputation may be adversely affected and we may face difficulty in maintaining our existing customers or attract new customers, which may cause a decrease in our operating profit. As a result, our reputation, business, results of operations and financial condition may be materially and adversely affected.

–43– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS

Failure to obtain, renew, or retain certain licenses, permits or approvals may materially and adversely affect our ability to conduct our business

In order to conduct our business operations, we are required by PRC laws and regulations to hold various licenses, permits and approvals issued by relevant regulatory authorities. For details of the licenses and permits required for our operations, please refer to the paragraph headed “Business – Licenses and Permits”. Most of these licenses, permits or approvals are subject to examinations or verifications by relevant authorities and are valid only for a fixed period of time subject to renewal and accreditation. We cannot assure you that we will be able to retain, obtain or renew the relevant licenses, permits or approvals in the future. Any suspension or revocation or failure to obtain or renew any of these licenses, permits and approvals may lead to suspension of our operation and delay in our expansion plans and have a material adverse impact on our business. In addition, we may also be subject to specific licensing conditions or directives that may be imposed on us by the PRC government from time to time. There is no assurance that we may be able to satisfy all such additional conditions on time or at all. Besides, we may have to incur extra costs in order to satisfy all such additional conditions.

Personal injuries, damages to property or fatal accidents may occur in our production facilities

We use machineries and equipment such as shredder, crusher for feeds and stirring cage in our production processes, which are potentially dangerous and may cause industrial accidents. Although we have required our employees to adhere to the safety procedures as stipulated in our safety manual, we cannot guarantee that our employees will not violate the safety measures or other related laws and regulations. If our employees fail to implement safety procedures, personal injuries, damages to property or fatal accidents may occur in our production bases. Any serious accidents could interrupt our operation and result in claims and legal proceedings against our Group. These may adversely affect our financial position to the extent not covered by our insurance policies.

Our insurance coverage may not be adequate to cover all the risks relating to our operations and potential losses

During the Track Record Period, we maintained insurance covering our vehicles, property, plant and equipment. For details of our insurance policies, please refer to the paragraph headed “Business – Insurance”. However, there is no guarantee that our existing insurance policies will be able to fully protect us from all risks associated with the large-scale young sea cucumber aquaculture industry. In addition, we are not required to maintain insurance policies against product liability claims. If we are subject to any losses, claims and/or liabilities which we are not covered by insurance or if our insurance coverage is inadequate, our business, financial condition and results of operations could be materially and adversely affected.

–44– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS

We rely on our five largest customers which accounted for a significant portion of our revenue. Any change in our relationship with our five largest customers may materially and adversely affect our results of operations and financial condition

For FY2018, FY2019 and FY2020, our sales to our five largest customers accounted for approximately 40.3%, 59.6% and 57.0% of our total revenue respectively. In particular, our sales to our two strategic customers in Liaoning Province which were two of our five largest customers accounted for approximately 9.3%, 34.0% and 37.9% of our total revenue, respectively during the Track Record Period. As at the Latest Practicable Date, we have developed business relationship with our five largest customers for periods ranging from about two to eight years. However, we cannot assure you that our major customers will continue to do business with us at the same level or at all in the future. If any of the major customers substantially reduces the volume of its orders or ceases to conduct business with us, there is no assurance that (i) our Group will be able to secure new sales contracts to make up for such loss of sales; or (ii) even if we are able to secure other sales contracts, that they would be on commercially comparable terms. As a result, our business operation and financial performance would be materially and adversely affected.

An occurrence of a widespread health epidemic or other outbreaks of contagious diseases could have a material adverse effect on our business, financial condition and results of operations

Our business could be materially and adversely affected by the occurrence of a widespread health epidemic or outbreak of contagious diseases including without limitation, swine flu, avian influenza, severe acute respiratory syndrome (“SARS”), Ebola, Zika and/or other contagious diseases in the PRC. In particular, since the end of December 2019, the outbreak of COVID-19 has caused significant disruption to the national and regional economic activities in the PRC. The outbreak was declared a global pandemic by the World Health Organisation. To prevent the spread of COVID-19, the PRC government had, amongst other measures, required the closure of businesses in the PRC and impose restriction on transportation among cities and provinces. Despite the outbreak of COVID-19 in the PRC has largely subsided as at the Latest Practicable Date, there is no assurance that there will not be any resurgence of COVID-19 or occurrence of other health epidemic in the future. In such event, the PRC government may require our Group to suspend our production in the future and/or restrict transportation among cities and provinces, which may affect the supply of our raw materials and/or delivery of our products. If our production bases are forced to halt production or if the supply of raw materials was disrupted, our Group’s ability to deliver products timely according to the delivery terms agreed with our customers may be affected. Accordingly, our business reputation, financial performance and results of operations may be materially and adversely affected.

–45– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS

Any local restrictions in the PRC could also affect our sales efforts domestically. Furthermore, the adverse impact of COVID-19 or any other health epidemic on the PRC economy may result in lessened demand for our products. Our customers may cancel the orders they placed or request for delay in payments. Any material adverse change in demand of our products or financial health of our customers would affect our business, financial condition, results of operations and profitability.

As our business strategies and application of the [REDACTED] of the [REDACTED] are contingent upon expected customer demands in the PRC, any material adverse change in demand of our products may result in delays in the implementation of our business strategies and the intended application of the [REDACTED] from the [REDACTED].

Our non-compliance with the relevant interim provisions on labour dispatch in the PRC could lead to imposition of fines and penalties

We did not fully comply with certain legal and statutory requirements in the PRC with respect to our business operations during the Track Record Period. Such non-compliance concerns our failure to comply with the interim provisions on labour dispatch in the PRC. Please refer to the paragraph headed “Business – Compliance” in this document for further details of the incident. Notwithstanding the legal advice obtained from our PRC Legal Advisers detailed thereof, if any of the government agencies in the PRC later strengthens the enforcement action on the relevant labour laws and regulations against us and considers it necessary to impose fines or other penalties against us, this may incur additional costs and we may be exposed to negative media coverage, which could materially and adversely affect our business, financial condition results of operations and reputation.

RISK RELATING TO OUR INDUSTRY

Our operations are extensively regulated by the PRC Government and any changes in the relevant regulations and policies in the future in particular laws relating to food safety may lead to substantial costs and affect our profitability, results of operations and business prospects

The sea cucumber aquaculture industry in the PRC is subject to extensive regulation by PRC governmental authorities, including primarily Ministry of Agriculture and Rural Affairs, National Development and Reform Commission and State Oceanic Administration, Shandong Provincial Party Committee and Department of Finance of Shandong Province. These regulatory bodies have broad discretion and authority to regulate many aspects of aquaculture industry, including without limitation, quality and safety of aquatic products and quality control of aquaculture feeds and veterinary drugs. According to the CIC Report, in FY2019, the PRC government issued a new policy directive on the aquaculture industry, Several Opinions on Accelerating the Green Development of the Aquaculture Industry《關於加快推進水產養殖業綠 ( 色發展的若干意見》), to optimise the overall layout of aquaculture production and strengthen the supervision of product quality and aquaculture environment. Future material changes in regulations in PRC may lead to increase in our operating costs and adversely affect our results of operation and financial positions.

–46– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS

The young sea cucumber industry is also susceptible to the changes in the policy of the PRC government. [According to the CIC Report, the PRC government issued policies to restrict government spending in 2012, which led to a weak demand for sea cucumbers in 2013 and 2016.] We cannot assure you that such changes in the policy of the PRC government will not occur in the future. In such event, our sales volume and hence our results of operations and business prospects may be materially and adversely affected.

Our operations are also subject to the food safety laws and regulations of the PRC, for example, the Food Safety Law and the Implementing Rules on the Food Safety Law of the PRC* (《中華人民共和國食品安全法實施條例》), which was promulgated by the State Council on 20 July 2009 and amended on 6 February 2016 which sets out hygiene, safety and manufacturing standards with respect to food as well as hygiene, safety, packaging and other requirements for food production, production facilities and equipment used for the transportation and sales of food.

Any failure to comply with the applicable food safety and hygiene laws and regulations and/or legal requirements in the PRC applicable to our business operations may result in fines, suspension of operations, loss of licenses and, in more extreme cases, criminal proceedings may be brought against us and our management. These events may have a material adverse impact on our production, business, results of operations and financial condition.

We cannot assure you that the PRC government will not change the existing laws or regulations or adopt additional or more stringent laws or regulations applicable to us and our business operations. Such new laws and regulations may require the re-configuration of our methods for sourcing raw materials, production, processing and transportation, which may require us to incur significant additional production costs and as such materially and adversely affecting our profitability.

We operate in a highly competitive industry and may face new competitors entering the market who could have an adverse impact on our businesses and prospects

As indicated by the CIC Report, the sea cucumber aquaculture industry in the PRC is extremely fragmented, with more than 1,000 sea cucumber breeders in the market. We face increasing competition from local and national producers of sea cucumber products as well as new entrants to the market. Competitors may develop products of a comparable or superior quality to ours, or adapt more quickly than we do to evolving consumer preferences or market trends. According to the CIC Report, from 2010 to 2020, there were six breeds of sea cucumbers cultivated which were recognised as a new breed of sea cucumber by the National Approval Committee. Although Anyuan No.1 was the only new breed among these six breeds the development of which was led by an enterprise and that was named after an enterprise, our current and future competitors may be able to cultivate a new breed of sea cucumber which carry better genetic characteristics in the future. In addition to the quality of our products, our

–47– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS ability to compete successfully in the industry also depends on various factors, including our reputation, brand image, vertically integrated production capabilities and strong relationships with our customers. We cannot assure you that we will be able to compete effectively against current and future competitors. Furthermore, intensified competition may result in price reduction of our products, a decrease in our profit margins, loss of market share and increased difficulty in market penetration, which may have a material and adverse effect on our business, prospects, financial condition and results of operation.

We may be affected by the changes in or cessation of preferential tax treatments

According to the EIT Law and the Measures on Handling of Enterprise Income Tax Incentives (企業所得稅優惠政策事項辦理辦法(2018修訂)) which was promulgated on 25 April 2018 and its Appendix entitled Administrative List for Enterprise Income Tax Incentives (企業所得稅優惠事項管理目錄), the enterprises engaging in aquatic fishery could enjoy a preferential exemption from 50% of EIT. Accordingly, during the Track Record Period our income from sales of feeds for sea cucumbers are exempted from EIT while the income from sales of larvae, juvenile and mature sea cucumbers are entitled to a preferential exemption from 50% of EIT. As a result, our effective tax rates was approximately 12.6%, 12.6% and 12.1% for FY2018, FY2019 and FY2020, respectively. For details, please refer to the paragraph headed “Regulatory Overview – Regulations on enterprise income tax” and Note 10 of the Accountants’ Report in Appendix I to this document. There is no assurance that the preferential tax treatments that were granted to us will continue in the future as the EIT Law and relevant tax rules and regulations may change over time. Any removal, loss, suspension or reduction of such preferential tax treatments may be materially and adversely affected our profitability.

RISKS RELATING TO CONDUCTING BUSINESS IN THE PRC

Uncertainties with respect to the PRC legal system could have an adverse effect on our business and operations

Our business operations are based principally in the PRC and accordingly we are subject to the applicable PRC laws and regulations. The PRC legal system is a civil law system based on written statutes. Unlike in the common law system, prior cases have limited precedential value in deciding subsequent cases in the civil law legal system. PRC written statutes often require detailed interpretations by the enforcement bodies for their application and enforcement. Some of the laws and regulations in the PRC are still in development stage and therefore subject to policy changes. Moreover, some laws and regulations have only been recently adopted by the PRC government. As a result, the implementation, interpretation and enforcement of the PRC laws and regulations may involve uncertainty due to the lack of established practice available for reference. We cannot predict the effect of any promulgation of new laws or changes in existing laws or their interpretation or enforcement. As such, there is substantial uncertainty as to the legal protection available to our Group. Such uncertainties may lead to difficulties in enforcing our rights and in resolving disputes with any persons, and could result in unanticipated costs and liabilities.

–48– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS

Changes in economic, political, legal and social developments and conditions in the PRC and governmental policies could substantially affect our business

All of our business, assets and operations are located in the PRC and all of our revenue is derived from our operations in the PRC. Therefore, our business, results of operations, financial condition and prospect are, to a significant extent, subject to the economic, political, legal and social developments and conditions in the PRC. The economy of the PRC differs from the economies of the most developed countries in many aspects, including but not limited to the degree of the PRC government’s involvement, the growth rate and degree of development, control of foreign exchange and allocation of resources. Any significant changes in the PRC’s economic, political, legal and social developments and governmental policies could have a material adverse effect on the PRC’s overall economic growth and we cannot assure you that such changes will not occur. Where such changes have a material adverse effect on the PRC’s overall economic growth, it may impact the industry in which we operate, which in turn may diminish the demand for our products.

The PRC government’s control over the conversion of foreign exchange and changes in the exchange rate between RMB and other currencies may have a material adverse effect on our financial condition, operations and our ability to pay dividends

The PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and the remittance of currency out of the PRC in certain cases. The majority of our income is received in Renminbi and shortages in the availability of foreign currencies may restrict our ability to pay dividends or other payments, or otherwise satisfy our foreign currency denominated obligations, if any. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and expenditures from trade-related transactions, can be made in foreign currencies without prior approval from SAFE, by complying with certain legal requirements. Approval from appropriate government authorities is required where Renminbi is to be converted into foreign currency and remitted out of the PRC to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC government may, at its discretion, impose restrictions on access to foreign currencies for current account transactions and if this occurs in the future, we may not be able to pay dividends in foreign currencies to our Shareholders. Furthermore, in 2005, the PRC revalued the exchange rate of the RMB to the US$ and abolished the pegging of the RMB solely to the US$ as applied in the past. Instead, it is pegged against a basket of currencies. We cannot assure you that in the future the PRC will not revalue RMB or permit its substantial appreciation. Any increase in the value of RMB may adversely affect the growth of the PRC economy and competitiveness of various industries in the PRC, including the industries in which our Group operates, which could in turn affect the financial condition and operations of our Group. Fluctuations in exchange rates for US$ may also adversely affect the value, translated or converted into RMB, of our net assets, earnings and any declared dividends. We may incur new debt financings which may include foreign currency denominated borrowings. Any adverse fluctuations in exchange rates among these foreign currencies may materially and adversely affect our results of operations.

–49– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS

PRC regulation of direct investment and loans by offshore holding companies to PRC entities may delay or limit us from using the [REDACTED] from the [REDACTED] to make additional capital contributions or loans to our PRC subsidiaries

As an offshore entity, any capital contributions or loans that our Company makes to our PRC subsidiaries, including from the [REDACTED] from the [REDACTED], are subject to PRC regulations. For example, any of our loans to our PRC subsidiaries cannot exceed the difference between the total amount of investment our PRC subsidiaries are approved to make under relevant PRC laws and the registered capital of these PRC subsidiaries (if applicable), and such loans must be registered with a local branch of SAFE. We cannot assure you that we will be able to obtain these approvals on a timely basis, or at all. If we fail to obtain such approvals, our ability to provide loans to our PRC subsidiaries or to fund their operations may be adversely affected. Further, this may negatively affect our ability to use the [REDACTED] from the [REDACTED] as planned which could materially and adversely affect our liquidity and our ability to fund and expand our business.

It may be difficult to effect service of process upon us, our Director or our senior management that reside in the PRC or to enforce against them or us in the PRC any judgment obtained from non-PRC courts

Our assets and the assets of our Directors and senior management are substantially located in the PRC. It may not be possible for investors to effect service of process upon us or those persons inside the PRC, including our Directors or senior management. The PRC has not entered into treaties or arrangements providing for the recognition and enforcement of judgments made by courts of most other jurisdictions. On 14 July 2006, the Supreme People’s Court of the PRC and the Hong Kong government signed the Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of the Mainland and of the Hong Kong Special Administrative Region Pursuant to Choice of Court Agreements between Parties Concerned《最高人民法院關於內地與香港特別行政區法院相互認可和執行當 ( 事人協議管轄的民商事案件判決的安排》). Under this arrangement, where any designated people’s court of the PRC or any designated Hong Kong court has made an enforceable final judgment requiring payment of money in a civil and commercial case pursuant to a choice of court agreement in writing by the parties, any party concerned may apply to the relevant people’s court of the PRC or Hong Kong court for recognition and enforcement of the judgment. Such arrangement came into effect on 1 August 2008. However, it remains to be an uncertainty as to the outcome and enforceability of any action brought under the arrangement.

The PRC does not have treaties providing for the reciprocal recognition and enforcement of judgments of courts with the Cayman Islands, the United States, the United Kingdom, Japan and many other developed countries. Therefore, recognition and enforcement in the PRC of judgments of a court in any of these jurisdictions in relation to any matter not subject to a binding arbitration provision may be difficult or even impossible.

–50– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS

We may be subject to penalties, if our PRC resident Shareholders or beneficial owners fail to comply with relevant PRC foreign exchange regulations, which may have a material adverse impact on our business and financial condition

Circular No. 37 issued by SAFE requires “PRC residents”, including PRC individuals and enterprises, to register with SAFE or its local branches in relation to their direct establishment or indirect control of an offshore special purpose vehicle. An offshore special purpose vehicle is an offshore entity used for the purpose of overseas investment and financing, with such PRC residents’ legally owned assets or equity interests in domestic enterprises or offshore assets or interests. Moreover, such PRC residents must update their foreign exchange registrations with SAFE when the offshore special purpose vehicle undergoes material events relating to any change of basic information (including change of such PRC citizens or residents, name and operation term), increases or decreases in investment amount, share transfers or exchanges, or mergers or divisions.

If any shareholder holding interest in an offshore special purpose vehicle, who is a “PRC resident” as determined by Circular No. 37, fails to fulfill the required foreign exchange registration with the local SAFE branches, the PRC subsidiaries of that offshore special purpose vehicle may be prohibited from distributing their profits and dividends to their offshore parent company or from carrying out other subsequent cross-border foreign exchange activities. The offshore special purpose vehicle may also be restricted in its ability to contribute additional capital to its PRC subsidiaries. Moreover, failure to comply with the SAFE registration described above could result in liability under PRC laws for evasion of applicable foreign exchange restrictions.

We may not be fully informed of the identities of all our Shareholders or beneficial owners who are “PRC residents”, and we cannot provide any assurance that all of our Shareholders and beneficial owners who are “PRC residents” will comply with our request to make, obtain or update any applicable registrations or comply with other requirements required by the Circular No. 37 or other related rules in a timely manner. If any of our Shareholders who is a “PRC resident” as determined by Circular No. 37 fails to fulfill the required foreign exchange registration with the local SAFE branches, our PRC subsidiaries may be prohibited from distributing their profits and dividends to us or from carrying out other subsequent cross-border foreign exchange activities. We may also be restricted in our ability to contribute additional capital to our PRC subsidiaries, which may adversely affect our business and have a material adverse effect on our financial condition.

–51– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS

We may be treated as a PRC tax resident enterprise under the EIT law, which may result in our worldwide income being subject to PRC taxes and have a material adverse impact on our profitability

Under the EIT Law, if an enterprise incorporated outside the PRC has its “de facto management bodies” located within the PRC, such enterprise may be treated as a PRC tax resident enterprise and be subject to the unified enterprise income tax rate of 25% on its worldwide income. Under the implementation rules for the EIT Law, “de facto management bodies” is defined as the bodies that have material and overall management control over the business, personnel, accounts and properties of an enterprise. Since all of our management is currently located in the PRC, we may be treated as a PRC tax resident enterprise for the purpose of the EIT Law and therefore we would be subject to PRC income tax at the rate of 25% on our worldwide income. In such event, our income tax expenses may increase significantly and our net profit and profit margin could be materially and adversely affected.

Our dividend income from our foreign-invested PRC subsidiaries may be subject to a higher rate of withholding tax than that which we currently anticipate

Under the EIT Law and its implementation rules, if a foreign entity is deemed to be a “non-resident enterprise” as defined under the EIT Law, a withholding tax at the rate of 10% will be applicable to any dividends payable to the foreign entity unless otherwise reduced or exempted by relevant tax treaties or similar arrangements. According to the Arrangement between the Mainland of China and Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Incomes (內地和香港特別行政區關於對所得避免雙重徵稅和防止偷漏稅的安排), dividends paid by a PRC foreign-invested enterprise to its shareholder(s) incorporated in Hong Kong will be subject to withholding tax at a rate of 5% if the Hong Kong company directly holds 25% or more interests in the PRC foreign-invested enterprises. The SAT promulgated the State Administration of Taxation issued the Announcement on Certain Issues Concerning the Beneficial Owners in a Tax Agreement (關於稅收協定中「受益所有人」有關問題的公告), also known as Circular 9, on February 3, 2018, which addresses the methods to determine the “beneficial owners” under the treaty articles on dividends, interest and royalties.

It is possible, based on the abovementioned principles, that the PRC tax authorities would not consider our subsidiaries in Hong Kong as the “beneficial owner” of any dividends paid from our PRC subsidiaries and would deny the claim for the reduced rate of withholding tax. Under the current PRC tax law, this would result in dividends from our PRC subsidiaries to our Hong Kong subsidiaries being subject to PRC withholding tax at a 10% rate instead of a 5% rate. This would negatively impact us and it would impact our ability to pay dividends.

–52– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS

RISKS RELATING TO THE [REDACTED]

There has been no prior public market for the Shares and the liquidity, [REDACTED] price and [REDACTED] volume of the Shares may be volatile

Prior to [REDACTED], there is no public market for the Shares. The [REDACTED] of, and the permission to deal in, the Shares on the Stock Exchange do not guarantee the development of an active public market or the sustainability thereof following completion of the [REDACTED]. Factors such as variations in our Group’s revenues, earnings and cash flows, strategic alliances or acquisitions made by our Company or our Group’s competitors, industrial or environmental accidents suffered by our Group, loss of key personnel, litigation or fluctuation in the market prices for our Group’s products or raw materials, the liquidity of the [REDACTED] for the Shares, the general market sentiment regarding the industry could cause the [REDACTED] price and [REDACTED] volume of the Shares to change substantially. In addition, both the [REDACTED] price and [REDACTED] of the Shares could be adversely affected by factors beyond our Group’s control and unrelated to the performance of our Group’s business, especially if the financial market in Hong Kong experiences a significant price and volume fluctuation. In such cases, you may not be able to sell the Shares at or above the [REDACTED].

There may be limited liquidity in our Shares and volatility in the price of our Shares on [REDACTED] which could result in substantial loss for [REDACTED] purchasing our Shares under the [REDACTED]

Our Shares have not been traded in an open market prior to the completion of the [REDACTED] and the [REDACTED] may not serve as an indicator of the price of our Shares as traded on [REDACTED] in the future.

The [REDACTED] is the result of negotiations among us, the Sole Sponsor and the [REDACTED] (for itself and on behalf of the other [REDACTED]), and may be different from the [REDACTED] prices for our Shares after the [REDACTED]. There is no assurance that an active and liquid public trading market of our Shares will develop upon the [REDACTED] or if it does develop, that it may be sustained for any period of time after the [REDACTED]. The [REDACTED] price and [REDACTED] volume of our Shares may fluctuate significantly and rapidly as a result of the following factors, among other things, some of which are beyond our control:

• variation in our results of operation;

• our inability to compete effectively in the market;

• changes in securities analysts’ analysis of our financial performance;

–53– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS

• our announcement of significant acquisitions, dispositions, strategic alliances or joint ventures;

• addition or departure of our key personnel;

• fluctuations in market prices and trading volume of our Shares;

• our involvement in litigation;

• penalties from the relevant authorities in respect of any possible non-compliance in our operations; and

• general economic and stock market conditions in Hong Kong.

All such factors may result in significant fluctuations in the market price and/or transaction volume of our Shares. There is no assurance that such changes will not occur.

Since there will be a gap of several days between pricing and trading of our [REDACTED], holders of our [REDACTED] are subject to risk that the market price of our [REDACTED] could be lower than the [REDACTED]

The [REDACTED] of our [REDACTED] is expected to be determined on the [REDACTED]. However, our [REDACTED] will not commence trading on the Stock Exchange until the [REDACTED]. Investors may not be able to sell or otherwise deal in our [REDACTED] during that period. As a result, holders of our [REDACTED] are subject to the risk that the price of our [REDACTED] could fall before trading begins as a result of adverse market conditions or other adverse developments that may occur between the [REDACTED] and the time when trading of our [REDACTED] begins.

Investor may experience dilution if our Company issues additional Shares in the future

Our Company may issue additional Shares upon exercise of the options to be granted under the Share Option Scheme in the future. The increase in the number of Shares outstanding after the issue would result in the reduction in the percentage ownership of the Shareholders and may result in a dilution in the earnings per Share and net asset value per Share.

In addition, our Company may need to raise additional funds in the future to finance business expansion or new development and acquisitions. If additional funds are raised through the issuance of new equity or equity-linked securities other than on a pro-rata basis to the existing Shareholders, the shareholding of such Shareholders in our Company may be reduced or such new securities may confer rights and privileges that take priority over those conferred by the [REDACTED].

–54– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS

You will incur immediate dilution and may experience further dilution in the future

As the [REDACTED] of our Shares is higher than the net tangible book value per Share of our Shares immediately prior to the [REDACTED], purchasers of our Shares in the [REDACTED] will experience an immediate dilution in [REDACTED] net tangible asset value. In addition, we may issue additional Shares or equity-related securities in the future under the Share Option Scheme or to raise additional funds, finance acquisitions or for other purposes. If we issue additional Shares or equity-related securities in the future, the percentage ownership of our existing Shareholders may be diluted. In addition, such new securities may have preferred rights, options or pre-emptive rights that make them more valuable than or senior to the Shares.

The sale of substantial number of our Shares in the [REDACTED] after the [REDACTED] could have a material adverse effect on our Share price

Future sales of a substantial number of Shares by our Shareholders in the public markets could materially and adversely affect market prices of our Shares prevailing from time to time. The Shares held by our Controlling Shareholders are subject to certain lock up restrictions. For further details on the lock up restrictions, please see the section headed “[REDACTED] - Lock-up undertakings to the [REDACTED]” in this document. Nevertheless, after these restrictions lapse or if they are waived or breached, future sales of a substantial number of our Shares, or the perception that these sales may occur, could materially and adversely affect the market prices of our Shares and our ability to raise equity capital in the future. Upon completion of the [REDACTED] and the [REDACTED] (assuming that the [REDACTED] is not exercised and without taking into account of any shares which may be granted upon the exercise of any options which may be granted under the Share Option Scheme), our Controlling Shareholders will own [REDACTED]% of the Shares in issue (without taking into account of the Shares which may be issued upon the exercise of the [REDACTED] and issued upon the exercise of options under the Share Option Scheme) and will therefore have significant influence over the operations and business strategy of our Group. Accordingly, they will have the ability to require our Group to effect corporate actions according to their own desires. The interests of our Controlling Shareholders may not always coincide with the best interests of other Shareholders. If the interests of any of our Controlling Shareholders conflict with the interests of other Shareholders, or if any of our Controlling Shareholders choose to cause our business to pursue strategic objectives that conflict with the interests of other Shareholders, our Company or those other Shareholders may be materially and adversely affected as a result.

–55– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS

We may require additional funding for future growth

We may be presented with opportunities to expand our business through acquisitions in the future. Under such circumstances, secondary issue(s) of securities after the [REDACTED] may be necessary to raise the required capital to capture these growth opportunities. If additional funds are raised by means of issuing new equity securities in the future to new and/or existing Shareholders after the [REDACTED], such new Shares may be priced at a discount to the then prevailing market price. Inevitably, if existing Shareholders are not offered an opportunity to participate, their shareholding interest in our Company will be diluted. Also, if we fail to utilise the additional funds to generate expected earnings, this could adversely affect our financial results and in turn exerts pressure on the [REDACTED] price of our Shares. Even if additional funds are raised by means of debt financing, any additional debt financing may, apart from increasing interest expense and gearing, contain restrictive covenants with respect to dividends, future fund raising exercises and other financial and operational matters.

Our historical dividend payments should not be taken as an indication of our future dividend policy or our payment of dividends in the future

We may distribute dividends by way of cash or by other means that we consider appropriate. A decision to declare and pay any dividends would require the approval of our Board and will be at their discretion.

Our Board will review our dividend policy from time to time in light of various factors such as our results of operations, our cash flows, our financial conditions, our Shareholders’ interests, general business conditions and strategies, our capital requirements, the payment by our subsidiaries of cash dividends to us and other factors our Board may deem relevant in determining whether dividends are to be declared and paid. For more details on our dividend policy, please see the section headed “Financial Information – Dividend Policy” in this document. As a result, we cannot guarantee whether, when and in what form we will pay dividends in the future.

–56– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS

We cannot guarantee the accuracy of facts and other statistics with respect to certain information obtained from the CIC Report contained in this document or various publicly available publications or sources

Certain facts and statistics in this document, including but not limited to information and statistics relating to the PRC sea cucumber aquaculture industry, are based on the CIC Report or are derived from various publicly available publications or sources, which our Directors believe to be reliable. We cannot, however, guarantee the quality or reliability of such facts and statistics. Although we have taken reasonable care to ensure that the facts and statistics presented are accurately extracted and reproduced from such publications or sources and the CIC Report, they have not been independently verified by us, our Directors, the [REDACTED], the [REDACTED], the [REDACTED], the [REDACTED] or any of their respective directors, affiliates or advisers or any other party involved in the [REDACTED] other than CIC. We therefore make no representation as to the accuracy of such facts and statistics which may not be consistent with other information complied by other sources and prospective investors should not place undue reliance on any facts and statistics derived from public sources or the CIC Report contained in this document.

You should read the entire document carefully (including the risks disclosed) and we strongly caution you not to place any reliance on any information in press articles, other media and/or research analyst reports regarding us, our business, our industry and the [REDACTED]

You should read the entire document carefully and rely solely upon the information in this document in making your investment decisions regarding the Shares. You should note that undue reliance should not be placed on any forward looking statements contained in this document which may not occur in the way we expect or may not materialise at all as set out in the section headed “Forward-looking Statements” in this document. There has been prior to the publication in this document, and there may be subsequent to the date in this document but prior to the completion of the [REDACTED], press, media and/or research analyst coverage regarding us, our business, our industry and the [REDACTED]. We do not accept any responsibility for the accuracy or completeness of the information in such press articles, other media and/or research analyst reports nor the fairness or appropriateness of any forecasts, views or opinions expressed by the press, other media and/or research analysts regarding the Shares, the [REDACTED], our business, our industry or us.

We make no representation as to the appropriateness, accuracy, completeness or reliability of any such information, forecasts, views or opinions expressed or any such publications. To the extent that such statements, forecasts, views or opinions are inconsistent or conflict with the information in this document, we disclaim them. Accordingly, prospective investors are cautioned to make their investment decisions on the basis of the information in this document only and should not rely on any other information.

–57– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RISK FACTORS

Forward-looking statements contained in this document are subject to risks and uncertainties

This document contains certain statements and information that are forward-looking and uses forward-looking terminology such as “anticipate”, “believe”, “could”, “going forward”, “intend”, “plan”, “project”, “seek”, “expect”, “may”, “ought to”, “should”, “would” or “will” and similar expressions. You are cautioned that reliance on any forward-looking statement involves risks and uncertainties and that any or all of those assumptions could prove to be inaccurate and as a result, the forward-looking statements based on those assumptions could also be incorrect. In light of these and other risks and uncertainties, the inclusion of forward-looking statements in this document should not be regarded as representations or warranties by us that our plans and objectives will be achieved and these forward-looking statements should be considered in light of various important factors, including those set forth in this section. Subject to the requirements of the Listing Rules or other requirements of the Stock Exchange, we do not intend publicly to update or otherwise revise the forward-looking statements in this document, whether as a result of new information, future events or otherwise. Accordingly, you should not place undue reliance on any forward-looking information. All forward looking statements in this document are qualified by reference to this cautionary statement.

–58– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. WAIVER FROM STRICT COMPLIANCE WITH THE LISTING RULES

In preparation for the [REDACTED], our Company has sought the following waiver from strict compliance with the relevant provision of the Listing Rules:

MANAGEMENT PRESENCE

Pursuant to Rule 8.12 of the Listing Rules provides that a new applicant applying for a primary [REDACTED] on the Stock Exchange must have sufficient management presence in Hong Kong. This normally means that at least two of its executive directors must be ordinarily resident in Hong Kong.

Our Company does not have sufficient management presence in Hong Kong for the purposes of satisfying the requirements under Rule 8.12 of the Listing Rules as all of our executive Directors are, and will continue to be in the foreseeable future, based in the PRC. We have applied to the Stock Exchange for a waiver from strict compliance with the requirements under Rule 8.12 of the Listing Rules based on the reasons summarised as follows:

(i) Our Group’s management, core business operations and assets are principally based, managed and conducted in the PRC. Currently, all of our executives Directors principally reside and are based in the PRC. They manage our Group’s business operations from the PRC;

(ii) As each and every executive Directors plays very important roles in our Company’s business operations, we consider that it is in the best interests of our Company and it is more effective and efficient for our executive Directors to be based in in a location where our Group has significant operations. We consider that a relocation of our executive Directors to Hong Kong will be burdensome and costly for our Company, and it will require considerable time to process the application for residency in Hong Kong; and

(iii) It may not be in the best interest of our Company and its shareholders as a whole to appoint additional executive Directors who are ordinarily resident in Hong Kong for the sole purpose of satisfying the management presence requirements, as such arrangement will increase our Group’s administrative expenses and reduce the effectiveness and responsiveness of the Board in making decisions. Our Company does not consider such additional appointments conducive to the efficient monitoring and development of our Group’s business, taking into account that our Group’s principal business activities are being conducted in the PRC.

–59– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. WAIVER FROM STRICT COMPLIANCE WITH THE LISTING RULES

Accordingly, we have applied to the Stock Exchange for, and the Stock Exchange [has granted] us, a waiver from strict compliance with Rule 8.12 of the Listing Rules. We will ensure that there is an effective channel of communication between the Stock Exchange and us by implementing the following arrangements:

(a) our Company has appointed two authorised representatives pursuant to Rules 2.11 and 3.05 of the Listing Rules, namely Mr. Zou, one of our executive Directors, and Mr. Sio Chin Tat, our company secretary. The authorised representatives will act as our Company’s principal channel of communication with the Stock Exchange. We have also appointed Mr. Sio Chin Tat as our authorised representative for accepting service of processes and notices in Hong Kong for and on behalf of our Company under Part 16 of the Companies Ordinance, as he ordinarily resides in Hong Kong. Our authorised representatives will be available to meet with the Stock Exchange in Hong Kong within a reasonable period of time upon request and will be readily contactable by the Stock Exchange by telephone, facsimile and/or email to deal promptly with any enquiry which may be made by the Stock Exchange. Each of the two authorised representatives are authorised to communicate on behalf of our Company with the Stock Exchange;

(b) each of our authorised representatives will have all necessary means to contact all the Directors (including our independent non-executive Directors) promptly at all times, as and when the Stock Exchange wishes to contact the Directors on any matters. Our Company will implement a policy whereby:

(i) each Director will provide his or her mobile phone number, office phone number, facsimile number and email address to the authorised representatives; and

(ii) in the event that a Director expects to travel and or otherwise be out of office, he or she will provide the phone number of the place of his or her accommodation to the authorised representatives or maintain an open line of communication via his or her mobile phone;

(c) each Director will provide to the Stock Exchange his telephone number, mobile phone number, office phone number, facsimile number and email address, residential address and contact address (if different for the residential address) for correspondence from and service of notices and other documents by the Stock Exchange to the Stock Exchange in accordance with Chapter 3 of the Listing Rules;

(d) all our Directors who are not ordinarily resident in Hong Kong possess or can apply for valid travel documents to visit Hong Kong and would be able to meet with the Stock Exchange on reasonable notice;

–60– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. WAIVER FROM STRICT COMPLIANCE WITH THE LISTING RULES

(e) our Company has retained the services of VBG Capital Limited as its compliance adviser, in accordance with Rule 3A.19 of the Listing Rules. Our compliance adviser, among other things, will serve as an additional channel of communication in addition to the authorised representatives of our Company. Our compliance adviser will provide our Company with professional advice on ongoing compliance with the Listing Rules and will be available to respond to enquiries from the Stock Exchange. Our compliance adviser will have access at all times to our authorised representatives, Directors and the other senior management of our Company to ensure that it is in a position to provide prompt responses to any query or request from the Stock Exchange in respect of our Company. Our compliance adviser will also provide advice in compliance with Rule 3A.23 of the Listing Rules; and

(f) meetings between the Stock Exchange and the Directors could be arranged through the authorised representatives or our compliance adviser, or directly with the Directors within a reasonable time frame. Our Company will inform the Stock Exchange as soon as practicable in respect of any change of authorised representatives and/or the compliance adviser.

–61– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. INFORMATION ABOUT THIS DOCUMENT AND THE [REDACTED]

[REDACTED]

–62– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. INFORMATION ABOUT THIS DOCUMENT AND THE [REDACTED]

[REDACTED]

–63– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. INFORMATION ABOUT THIS DOCUMENT AND THE [REDACTED]

[REDACTED]

–64– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. INFORMATION ABOUT THIS DOCUMENT AND THE [REDACTED]

[REDACTED]

–65– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. INFORMATION ABOUT THIS DOCUMENT AND THE [REDACTED]

[REDACTED]

–66– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DIRECTORS AND PARTIES INVOLVED IN THE [REDACTED]

DIRECTORS

Name Residential address Nationality

Executive Directors

Zou Ange (鄒安革) No. 11, Unit 1, Block 18, Bihaiyuntian, Chinese Yantai Economic and Technological Development Area, Shandong Province, the PRC

Zhang Jianwei (張建偉) Unit 1301, Block 14, Hengdahai Shangdijing, Chinese Penglai District, Yantai City, Shandong Province, the PRC

Zou Shifang (鄒士方) No. 21, Bohai Road, Penglai District, Chinese Shandong Province, the PRC

Liu Yongqi (劉永旗) No. 501, Unit 1, Block 7, Haiyunyuan, Chinese Penglai District, Yantai City, Shangdong Province, the PRC

Wang Zengdong (王增東) Unit 1301, Block 17, 81 Jialingjiang Road, Chinese Fulaishan Street, Tianyi Licheng Community, Fushan District, Yantai City, Shangdong Province, the PRC

Non-executive Director

Wang Jifa (王吉法) No. 302, Unit 2, Block 7, 30 Qingquan Chinese Road, Laishan District, Yantai City, Shandong Province, the PRC

–67– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DIRECTORS AND PARTIES INVOLVED IN THE [REDACTED]

Name Residential address Nationality

Independent non-executive Directors

Li Hoi Kwong (李海光) 2/F, Block A, Wilmont Court, 25 Kin Wah Chinese Street, North Point, Hong Kong

Ng Yau Kuen Carmen Flat D, 39/F, Block 11, The Palazzo, Chinese (吳幼娟) 28 Lok King Street, Shatin, Hong Kong

Zheng Yongyun (鄭永允) No. 201, Unit 2, 6 Liujiaxia Road, Shinan Chinese District, Qingdao City, Shangdong Province, the PRC

Please refer to the section headed “Directors and senior management” of this document for further information on the profile and background of our Directors.

–68– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DIRECTORS AND PARTIES INVOLVED IN THE [REDACTED]

PARTIES INVOLVED IN THE SHARE OFFER

Sole Sponsor VBG Capital Limited A corporation licensed by the SFC to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities under the SFO 18/F Prosperity Tower, 39 Queen’s Road Central, Hong Kong

[REDACTED]

Legal advisers to our Company As to Hong Kong laws Patrick Mak & Tse Rooms 901–905, 9/F, Wing On Centre, 111 Connaught Road Central, Hong Kong

As to PRC laws Grandlex PMT (Qianhai) Law Firm 1/F, Trading Centre, Special Zone, Vanke Mansion, 63 Qianwan 1st Road, Qianhai Cooperative District, Shenzhen, the PRC

As to Cayman Islands laws Conyers Dill & Pearman Cricket Square, Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands

–69– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DIRECTORS AND PARTIES INVOLVED IN THE [REDACTED]

Legal advisers to the Sole Sponsor As to Hong Kong laws and the [REDACTED] [REDACTED]

As to PRC laws King & Wood Mallesons 18/F, East Tower, World Financial Center 1, Dongsanhuan Zhonglu, Chaoyang District, Beijing 100020, The PRC

Auditors and Reporting Accountants Mazars CPA Limited Certified Public Accountants Registered Public Interest Entity Auditor 42/F, Central Plaza, 18 Harbour Road, Wanchai, Hong Kong

Independent Biological Assets Valuer Jones Lang LaSalle Corporate Appraisal and and Property Valuer Advisory Limited 7th Floor, One Taikoo Place, 979 King’s Road, Hong Kong

Compliance Adviser VBG Capital Limited 18/F, Prosperity Tower, 39 Queen’s Road Central, Hong Kong

Industry Consultant China Insights Industry Consultancy Limited 10/F Block B Jing’an International Center, 88 Puji Road, Jing’an District, Shanghai, China

Receiving Bank [•]

–70– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. CORPORATE INFORMATION

Registered Office Cricket Square, Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands

Company Website www.penganyuan.com

Headquarters and principal place of Economic and Technological Development Area business in the PRC Yaqian Village Chaoshui Town Yantai City Shandong Province the PRC

Principle place of business in Unit D, 35/F, Montery Plaza Hong Kong 15 Chong Yip Street, Kwun Tong Kowloon, Hong Kong

Company Secretary Sio Chin Tat (蕭展達) (HKICPA) Unit 304, Shing Keung House Kwai Shing EA, Kwai Chung New Territories, Hong Kong

Authorised Representatives Zou Ange (鄒安革) No. 11, Unit 1 Block 18, Bihaiyuntian Yantai Economic and Technological Development Area Shandong Province the PRC

Sio Chin Tat (蕭展達) (HKICPA) Unit 304, Shing Keung House Kwai Shing EA, Kwai Chung New Territories, Hong Kong

Audit Committee Ms. Ng Yau Kuen Carmen (吳幼娟) (Chairlady) Mr. Wang Jifa (王吉法) Mr. Li Hoi Kwong (李海光) Mr. Zheng Yongyun (鄭永允)

Nomination Committee Mr. Zou Ange (鄒安革) (Chairman) Mr. Li Hoi Kwong (李海光) Mr. Zheng Yongyun (鄭永允)

–71– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. CORPORATE INFORMATION

Remuneration Committee Mr. Zheng Yongyun (鄭永允) (Chairman) Mr. Zhang Jianwei (張建偉) Mr. Li Hoi Kwong (李海光) Ms. Ng Yau Kuen Carmen (吳幼娟)

Principal share registrar in the Conyers Trust Company (Cayman) Limited Cayman Islands Cricket Square, Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands

Hong Kong Branch Share Registrar Tricor Investor Services Limited and Transfer Office Level 54, Hopewell Centre 183 Queen’s Road East Hong Kong

Principal Bank Agricultural Bank of China Limited (Yantai Chaoshui branch) No. 2, Jingdu Road Chaoshui Town Yantai Economic and Technological Development Area Shandong Province

–72– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. INDUSTRY OVERVIEW

The information presented in this section is, including certain facts, statistics and data, derived from the CIC Report, which was commissioned by us and from various official government publications and other publicly available publications, unless otherwise indicated. We believe that these sources are appropriate for such information and we have taken reasonable care in extracting and reproducing such information. We have no reason to believe that such information is false or misleading in any material respect or that any fact has been omitted that would render such information false or misleading in any material respect. The information has not been independently verified by our Company, the Sole Sponsor, the [REDACTED], the [REDACTED], the [REDACTED], any of our or their respective directors, officers or representatives or any other person involved except CIC in the Share Offer and no representation is given as to its accuracy, completeness or fairness. The information and statistics may not be consistent with other information and statistics compiled within or outside of China. As a result, excessive reliance on the information contained in this section shall be avoided.

SOURCE OF INFORMATION

We have commissioned CIC, a market research and consulting company and an Independent Third Party, to conduct an analysis of, and to prepare a report on China’s sea cucumber aquaculture industry, for the period from 2015 to 2025. The CIC Report has been prepared by CIC independent of our influence. The fee payable to CIC for preparing the CIC Report is HK$750,000, which we believe reflects the market rate for similar services. CIC is a consulting firm founded in Hong Kong. It provides professional industry consulting services across multiple industries. CIC’s services include industry consulting services, commercial due diligence and strategic consulting.

Our Directors are of the view that the information set forth in this section is reliable and not misleading as the information was extracted from the CIC Report and CIC is an independent market research company with extensive experience in their profession. The information and data collected by CIC have been analysed, assessed and validated using CIC’s in-house analysis models and techniques. Primary research was conducted via interviews with key industry experts and leading industry participants. Secondary research involved analysis of market data obtained from several publicly available data sources, such as releases from the governments of the research countries, company reports, independent research reports and CIC’s own internal database. The methodology used by CIC is based on information gathered from multiple levels and allows such information to be cross-referenced for accuracy. On the basis of the aforementioned, we consider the data and statistics to be reliable.

ASSUMPTIONS

The CIC Report contains a variety of market projections which were produced with the following key assumptions: (i) the overall social, economic, and political environment in the globe is expected to remain stable during the forecast period; (ii) the global economy is likely to maintain a steady growth trajectory during the forecast period, accompanied with continuing urbanisation; (iii) related key industry drivers are likely to propel continued growth in China’s sea cucumber aquaculture industry throughout the forecast period, including growth of per capita consumption of seafood, expansion of sea cucumber consumer group and advancement in breeding techniques; and (iv) there is no extreme force majeure or unforeseen industry regulations in which the market may be affected in either a dramatic or fundamental way.

The CIC Report mainly focuses on China’s sea cucumber aquaculture industry. Our Directors confirm that after taking reasonable care, there is no material adverse change in the market information since the date of the relevant data contained in the CIC Report which may qualify, contradict or have an impact on the information in this section.

–73– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. INDUSTRY OVERVIEW

OVERVIEW OF CHINA’S SEA CUCUMBER AQUACULTURE INDUSTRY

Overview of sea cucumbers

Sea cucumbers are a widespread marine animal with a leathery skin and an elongated body. There are approximately 1,400 sea cucumber species worldwide, with the greatest number being in the Asia Pacific region. Among the 1,400 species of sea cucumbers, around 40 species are edible and are majorly consumed as food or for medical purpose. Sea cucumbers are found in all oceans of the world but are more concentrated in the Asian portion of the Pacific Ocean, while sea cucumbers especially stichopus japonicus are mainly cultured in China, Japan, Korea, etc. Although they can live in any marine environment, they are more common in relatively shallow, salty waters, notably preferring coral reefs.

Cultivation process of sea cucumbers

Cultured sea cucumbers enjoy great popularity in China. The cultivation process of sea cucumbers involves four steps, including broodstock aquaculture, young sea cucumber aquaculture, mature sea cucumber aquaculture and sea cucumber processing. Young sea cucumber aquaculture is further divided into six major steps from oviposition and fertilisation to young sea cucumber cultivation. Breeding young sea cucumber involves high environmental requirements, such as water temperature, water quality, and salinity. Feeding and disease prevention in larvae and juvenile sea cucumbers cultivation also require significant effort. According to different aquaculture methods, the maturation time of sea cucumbers varies considerably. There are various methods for deep processing sea cucumbers. Different processing methods produce different flavors and offer different nutrients.

Common aquaculture methods of sea cucumbers

At present, sea cucumbers in China are generally stichopus japonicus which is mainly cultured in the Yellow Sea and the Bohai Sea. Therefore, “sea cucumbers” in the following sections shall mainly refer to stichopus japonicus. Common aquaculture methods include bottom sowing aquaculture, cofferdam aquaculture, pond aquaculture and suspended cage aquaculture.

Types Description Duration Region and percentage

• Without artificial breeding intervention, Wild • Sea cucumbers propagate and grow naturally on the ocean fishermen in coastal areas began to fish in the farming floor. • 4–7 years early 1900’s. • Water depth ranges from 3 to 20 meters. • Wild sea cucumbers are rare now due to the over-farming problem. • Young sea cucumbers are sown in artificial reef areas and • Bottom sowing aquaculture is mainly Bottom grow naturally, with out artificial feeding. • Living environment is close to wild ocean environment applicable to coastal areas in Northern China. sowing • 3–5 years • This method accounts for approximately 10% aquaculture • Losses can be high due to the risks of theft and natural disasters. of the total production volume. • Young sea cucumbers are planted in ponds in the intertidal zone which are surrounded by concrete structures, relying on Cofferdam the terrain. • 2–3 years aquaculture • Sea cucumbers seeding are given supplementary artificial feeds. • These two methods are mainly adopted in • Water cycling relies on tides. major coastal areas in Northern China. • Cofferdam aquaculture and pond aquaculture constitute more than 70% of national output • Sea cucumbers are cultured in ponds. and about 90% of output in North China Pond • Sea cucumbers are fed completely artificially. • Around 2 years respectively. aquaculture • Water is cycled through water control gates, with many artificial interventions. • This method is mainly concentrated in • At present, suspended cage is a unique aquaculture mode in Southern China such as Fujian province. southeast coastal areas of Fujian Province. In autumn, • Suspended cage aquaculture currently accounts large-size young sea cucumbers of 8 to 15 ppu are purchased • Less than 2 years Suspended for about 12% to 13% of national output, and from Shandong, Liaoning and other places in northern this method is gaining popularity. cage China, and transferred to the south. Taking the advantage of aquaculture warmer water temperature in the south, artificial aquaculture is carried out in cages, and the harvest time is usually before early April of the next year when the water temperature rises. • Shorter aquaculture time, with many artificial interventions.

High degree of manual intervention

Source: CIC

–74– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. INDUSTRY OVERVIEW

Major sea cucumber aquaculture area in China

The aquaculture of sea cucumber is distributed in provinces along the eastern coast of China. The total area used for sea cucumber aquaculture was approximately 247.4 thousand hectares (equivalent to approximately 2,474,000 sq.m.) in 2020. The Bohai Bay area is the most important sea cucumber aquaculture base. In 2020, the sea cucumber aquaculture area in Liaoning, Shandong, and Hebei provinces around China’s Bohai Bay accounted for approximately 99% of the total sea cucumber aquaculture area in China in aggregate.

Currently, the sea cucumber aquaculture area in Liaoning Province is much larger than that in Shandong Province. However, due to the limitation of climate, water quality, and other factors, as well as aquaculture methods, the productivity per hectare in Liaoning Province is still relatively low.

Market size of the sea cucumber aquaculture industry

The output value of the sea cucumber aquaculture industry increased from approximately RMB20.8 billion in 2015 to approximately RMB30.0 billion in 2020, representing a CAGR of approximately 7.6%. Compared to production volume, the sea cucumber aquaculture industry in terms of output value presented a relatively smaller fluctuations as rising price offsets the huge decrease in sales volume. The sea cucumber aquaculture industry recovered after market adjustment period in 2017, with production volume and whole sale price for sea cucumbers increasing by 8.4% and 17.7% respectively. It is expected that the sea cucumber aquaculture industry will continue increasing in the next five years fueled by consumers’ growing purchasing power, expansion of consumer group and consumption upgrade. The COVID-19 pandemic caused tremendous disruption to the consumption market in early 2020, especially the catering market. In the first two months in 2020, the total retail sales of consumer goods decreased by 20.5% compared to the same period in 2019. As of the end of March 2020, the COVID-19 pandemic is largely under control in China and normal business operation has resumed. The pandemic will bring pressure on the sea cucumber sales market but the effects are estimated to be immaterial as the pandemic mainly caused disruption in the first quarter. Driven by the consumption upgrading and the standardised industry regulation, it is expected that the output value of sea cucumber aquaculture will increase from RMB30.0 billion in 2020 to RMB42.4 billion in 2025, representing a CAGR of approximately 7.2%.

Output value of the sea cucumber aquaculture industry, China, 2015–2025E

RMB billion 42.4 45 CAGR (2015–2020): 7.6% 40.3 CAGR (2020–2025E): 7.2% 37.7 40 34.9 35 32.5 29.9 30.0 30 25.5 24.6 25 20.8 20.0 20 15 10 5 0 2015 2016 2017 2018 2019 2020 2021E 2022E 2023E 2024E 2025E

Source: CIC

–75– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. INDUSTRY OVERVIEW

OVERVIEW OF CHINA’S YOUNG SEA CUCUMBER AQUACULTURE INDUSTRY

Harvest time and common aquaculture methods of China’s young sea cucumber industry

Young sea cucumber are primarily harvested in summer and winter. Common aquaculture methods of sea cucumber include net cage aquaculture and plant aquaculture. The Company mainly adopts the plant aquaculture for young sea cucumber cultivation, and the harvest time is between April and December.

Categorisation by Productivity per Percentage of annual Price harvest time unit water body output value

Young sea cucumber • ~RMB230/kilogram • 0.5–1 kilogram/cubic meters • Less than 10% harvested in summer

Young sea cucumber • ~RMB180/kilogram • 2–4 kilogram/cubic meters • More than 90% harvested in winter

Categorisation by Manual Percentage of annual Description Cost aquaculture method intervention output value

• After several months of breeding in plants, young Net cage sea cucumber are moved to pond or net cages in • Low • 40%–50% higher than • Less than 30% aquaculture shallow sea. The survival rate of net cage plant aquaculture aquaculture is not as high as plant aquaculture.

• Through the whole process, young sea cucumbers are cultivated in manual setting environment in plants. The • Lower price Plant aquaculture • High • More than 70% survival rate of young sea cucumbers is high during young sea cucumber rearing process.

Source: CIC

Market size of the young sea cucumber aquaculture industry

The market size of the young sea cucumber aquaculture industry in terms of sales revenue increased from approximately RMB1.6 billion in 2015 to approximately RMB3.3 billion in 2020, representing a CAGR of approximately 15.6%. Despite the continuous decrease in production volume between 2015 and 2017, the sales revenue of young sea cucumber experienced growth which is attributable to the rising price. The price of young sea cucumber increased from approximately RMB35 per jin in 2015 to RMB55 per jin in 2017, but the price during this period still remained at a low level compared to historical price. In 2018, the young sea cucumber aquaculture market recorded tremendous growth, as the price of young sea cucumbers increased by more than 50% from 2017 to 2018. Due to the high summer temperature in Liaoning Province in 2018, which caused a large number of deaths of sea cucumbers, the demand for young sea cucumber increased, and therefore the price of young sea cucumber increased. At the same time, the rising sea cucumber price due to the reduction in production volume, which has become another reason for the price increase of young sea cucumbers.

The downstream sea cucumber consumption market has been gradually picking up in recent years after the implementation of restrictions on official spending. Currently mass consumption accounts for more than 70% of the total sea cucumber consumption market. After the market adjustment period between 2013 and 2016, the sea cucumber consumption market is estimated to continue growing in the next five years, boosting demand for young sea cucumbers. At the same time, young sea cucumber price recovered after the shutting down of many small companies and a reduction in production volume. Between 2018 and 2020, the young sea cucumber price keeps a relatively higher level compared to the past, and the output value of the young sea cucumber aquaculture market achieved approximately RMB3.3 billion in 2020. Fuelled by the increasing demand and recovery price, the sea cucumber aquaculture market is estimated to reach RMB4.5 billion by 2025, increasing with a CAGR of approximately 6.4% between 2020 and 2025.

–76– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. INDUSTRY OVERVIEW

Sale value of the young sea cucumber aquaculture industry, China, 2015–2025E

RMB billion

5 CAGR (2015–2020): 15.6% 4.5 4.3 CAGR (2019–2025E): 6.4% 4.0 3.8 4 3.6 3.3 3.1 3.2 3 1.9 2 1.6 1.7

0 2015 2016 2017 2018 2019 2020 2021E 2022E 2023E 2024E 2025E

Source: CIC

Market drivers of China’s young sea cucumber aquaculture industry

(i) Increasing demand driven by growing purchasing power

The rapidly growing per capita disposable incomes has brought about profound changes to China’s food consumption pattern and driving up consumer demand for sea cucumbers. Consumers are showing an increasing preference for more diverse diets. At present, aquatic products account for approximately 9.7% of the total protein intake in China while the proportions in Hong Kong and Japan were approximately 15.2% and 20.4% in 2020 respectively. It is estimated that aquatic products will account for approximately 11% of the total animal protein intake in China by 2025. Moreover, China is shifting towards a large consumption economy and Chinese consumers exhibited surging demand for premium food including sea cucumber with growing purchasing power. The growing purchasing power of consumers will fuel demand for diverse and premium food products including sea cucumber, which will benefit the growth of sea cucumber consumption volume.

(ii) Advancement in breeding techniques

A breeding is regarded as the cornerstone of the fishery industry. The Chinese government focuses on improving the aquaculture industry and limiting the amount of exploitation. The Chinese government has improved the development of the young sea cucumber industry by initiating young sea cucumber breeding research projects, and supporting the establishment of national grade young sea cucumber farms. By 2020, 93 new aquatic breeding varieties were approved by the Ministry of Agriculture and Rural Affairs and 52 of these new varieties were cultivated in Shandong province. In 2017 and 2018, four new young sea cucumber varieties were officially approved. Compared with normal young sea cucumbers, these new varieties have higher survival rates and growth rates. Advances in young sea cucumbers techniques has also improved the development of the young sea cucumber aquaculture industry, by increasing breeders’ risk resistance capability and profitability.

(iii) Expansion of consumption group driven by market education

The consumption of sea cucumbers presents explicit geographic characteristics. People in the coastal and northern areas, especially natives in the Liaoning and Shandong Provinces consider sea cucumbers to be tonic food items and are willing to pay high prices. However, the value of sea cucumbers are less recognised in inland areas, the south or in lower tier cities. In recent years, merchants have been actively promoting sea cucumber as valuable gifts for families and friends or as tonic food items for daily consumption. The sales value of sea cucumbers

–77– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. INDUSTRY OVERVIEW during the Chinese New Year and mid-autumn festival accounts for a large proportion of the annual total sales value. An increasing number of consumers are choosing sea cucumbers as valuable and healthy gifts for families and friends at festivals. The rapid expansion of consumer groups in inland areas, southern areas and lower tier cities will continue driving the demand for sea cucumbers.

Future trends of China’s young sea cucumber aquaculture industry

(i) Industry standardisation

In the young sea cucumber aquaculture industry, most participants are individual farmers and small companies, leading to regulatory challenges and a low degree of industrial standardisation. In 2019, the PRC Government issued a new policy directive on the aquaculture industry, Several Opinions on Accelerating the Green Development of the Aquaculture Industry (《關於加快推進水產養殖業綠色發展的若干意見》). The policy stated that the overall layout of aquaculture production will be optimised, while the supervision of product quality and the aquaculture environment will be strengthened. In the future, it is expected that industry standardisation will be enhanced along with the government’s efforts to bolster supervision and related regulations.

(ii) Enhancements in concentration

Most individual breeders and small companies operating in the sea cucumber aquaculture industry lack sufficient professional knowledge, long-term experience and systematic management capabilities. As a result, the quality of young sea cucumbers produced by these smaller companies cannot be guaranteed. Leading players in the market usually have sound industry experience and continuously invest in research and development. Hence, gap between branded young sea cucumbers provided by larger companies and unbranded young sea cucumbers provided by smaller companies and individual breeders has further widened in terms of quality. It is expected that branded young sea cucumbers provided by larger companies will gradually replace the unbranded young sea cucumbers provided by smaller companies and individual breeders. Increased concentration will therefore remain yet another key development trend in the sea cucumber aquaculture industry.

(iii) Advancements in techniques

The scientific level of aquaculture techniques and the maturation of aquaculture management systems have both gradually improved. New breeds of young sea cucumbers recognised in the past several years have significant improvements, such as survival rates, growth rates and the number of wart feet. Anyuan No.1 is the only new breed among six breeds the development of which was led by an enterprise and that was named after an enterprise from 2010 to 2020. As branded young sea cucumbers gain a larger market share and breeders continuously invest in research and development, advancements in techniques will lead the future development trend in the young sea cucumber aquaculture industry.

Major costs for China’s young sea cucumber aquaculture industry

The average annual salary earned by workers in agriculture, forestry, animal husbandry and fishery industries in China increased from RMB28,869.0 in 2015 to RMB40,206.5 in 2020, representing a CAGR of 6.8%. Since China is one of the world’s top agricultural producers, the national government pays a great deal of attention to workers employed in the country’s agriculture, forestry, animal husbandry and fishery industries. Since China’s population will continue to grow in the years ahead, the demand for agricultural products is therefore expected to continue increasing. The average annual salary of workers employed in agriculture, forestry,

–78– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. INDUSTRY OVERVIEW animal husbandry and fishery industries in China is estimated to reach RMB54,034.7 by 2025, representing a CAGR of approximately 6.1% between 2020 and 2025.

COMPETITIVE LANDSCAPE OF CHINA’S YOUNG SEA CUCUMBER AQUACULTURE INDUSTRY

Ranking of China’s young sea cucumber aquaculture industry

The young sea cucumber aquaculture market is extremely fragmented, with more than 1,000 young sea cucumber breeders in this market. The production volume of young sea cucumber reached approximately 22 million kg in 2020. Approximately 80% of the total young sea cucumber production volume was used for external sales and 20% was used for internal further aquaculture of mature sea cucumbers. Our Group ranked first in terms of sales volume of young sea cucumbers, with a market share of approximately 5.4% of the young sea cucumber aquacultures market in the PRC in 2020. There are approximately 10 to 20 large scale young sea cucumber breeders with aquaculture water body above 50,000 m3. Most participants in this industry are small companies with aquaculture water body less than 10,000 m3. In general, larger companies produce young sea cucumber with higher quality and are equipped with more advanced techniques. Young sea cucumber aquaculture is a traditional industry and participants lack marketing activities, resulting in the extremely fragmented market. Leading companies with brand is expected to capture a larger market share along the brand promotion for their high product quality, advanced techniques, and economies of scale in the future.

In addition, in China’s young sea cucumber aquaculture industry, the number of branded enterprises and self-employed households, including both small scale companies and individual breeders, that are capable of large-scale fertilised eggs cultivation and sales of fertilised eggs is less than ten, among which the number of branded enterprises is less than five, and our Group is one of them.

The following table sets forth the top five players in China’s young sea cucumber aquaculture industry in terms of sales volume in 2020:

Headquarters Sales volume of sea Ranking Company name location cucumber seedlings Market share (thousand kilograms)

1 Our Group Yantai, Shandong 962.3 5.4%

2 Company A Yantai, Shandong 270.0 1.5%

3 Company B Qingdao, Shandong 170.0 0.9%

4 Company C Dongying, 165.0 0.9% Shandong

5 Company D Dalian, Liaoning 155.0 0.9%

Sub total 1,722.3 9.6%

Others 16,244.7 90.4%

Total 17,967.0 100.0%

Source: CIC

–79– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. INDUSTRY OVERVIEW

Backgrounds of top five players in China’s young sea cucumber aquaculture industry

Listing Company Founding Headquarters status name year location (Y/N) Water body Product portfolio Farm grade (Thousand cubic metres)

Our Group 2006 Yantai, N 101.9 • Larvae National grade young sea Shandong • Young sea cucumbers cucumber farm • Sea cucumber feeds

Company A 2000 Yantai, N 67.0 • Young scallop N/A Shandong • Young sea cucumber • Young kelp

Company B 2008 Qingdao, N 70.0 • Larvae Provincial grade young sea Shandong • Young sea cucumbers cucumber farm • Processed sea cucumber product

Company C 2010 Dongying, N 85.0 • Sea cucumber, shrimp, N/A Shandong clam • Young sea cucumbers

Company D 2002 Dalian, N 80.0 • Young sea cucumbers, N/A Liaoning young prawn, young scallop, sea cucumbers, prawns • Processed seafood products

Source: CIC

Entry barriers of China’s young sea cucumber aquaculture industry

(i) Natural resources

Access to natural resources is essential for ensuring the quality and productivity of young sea cucumber aquaculture. The PRC government manages and makes overall plans for the usage of water resources and determines the zoned areas that can be used for marine aquaculture. Companies can submit applications to local governments and acquire rights to rent out water areas. The natural resources suitable for young sea cucumber aquaculture are extremely concentrated, with Shandong and Liaoning Provinces accounting for more than 98% of the total production volume for young sea cucumbers. It is therefore difficult for new entrants to acquire abundant and suitable aquaculture areas, natural resources thus constituting an entry barrier to the young sea cucumber aquaculture industry.

–80– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. INDUSTRY OVERVIEW

(ii) Aquaculture techniques

Advanced aquaculture techniques constitute an entry barrier to the young sea cucumber aquaculture industry. The development of an artificial aquaculture of broodstock has high technical requirements and only a few companies are equipped with these techniques. During the fertilisation process, thermal stimulation and the maintenance of broodstock densities all need to be well-controlled in order to obtain a high inducement rate. Based on the requirements of these processes, only those companies equipped with advanced techniques and sound experience can achieve a high growth rate for larvae. The development of aquaculture techniques requires a long-term accumulation of experience, professional workers and continuous capital investment. Thus, new entrants cannot readily obtain advanced aquaculture techniques in only a short period of time.

(iii) Customer relationships

Well established customer relationships pose another barrier for new entrants. After purchase of young sea cucumbers, clients need to breed for a period of time before reselling them. Frequent change of young sea cucumber breeds may cause changes in the growth environment and water environment and increase the breeding risk. Therefore, clients rarely take the risk to replace the suppliers of young sea cucumbers. In addition, the trading of young sea cucumbers is not a very transparent process, therefore customers heavily rely on existing supplier relationships established through a long-term trading business. Hence, downstream customers show high stickiness to young sea cucumber suppliers, meaning that it is difficult for new entrants to win customers’ trust and establish a cooperative relationship over the short term.

Key success factors of China’s young sea cucumber aquaculture companies

(i) Advanced aquaculture techniques and abundant industry experience

Advanced aquaculture techniques are one of the key success factors for young sea cucumber aquaculture companies. Advanced aquaculture techniques enable companies to produce high-grade young sea cucumbers with a higher survival rate, growth rate, nutritional value and a better taste. For those newer artificially bred sea cucumber varieties approved by the MOA, the growth rate and survival rate have both improved by more than 10% compared with wild sea cucumber varieties. However, it usually takes at least ten years to cultivate a new sea cucumber breed and to obtain the approval of the Ministry of Agriculture and Rural Affairs of the PRC. Therefore, the cultivation of new breeds also requires abundant industry experience. With advanced aquaculture techniques, companies can benefit from higher premiums and avoid fierce pricing competition, all of which will improve a company’s overall profitability.

(ii) Excellent geographical location

A viable environment for a sea cucumber aquaculture requires access to an area of sea water with minimal wind and wave impacts, a rich seaweed base, and suitable temperature and pH value. The Bohai Bay is the most suitable area for young sea cucumber aquaculture, providing an ideal environment in terms of water temperature, and water flow velocity, as well as its moderate level of salinity, fertile water quality and rich biological resources. Moreover, the local supply of raw materials and the clustering of sea cucumber aquaculture industries are also well developed in the area around the Bohai Bay. Companies located in the Bohai Bay area can therefore enjoy significant advantages in terms of accessing natural resources and a complete industry chain.

–81– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. INDUSTRY OVERVIEW

(iii) A large production scale

Breeding young sea cucumber is a labour-intensive task. Companies with a large production scale can construct large and modern factories, which will reduce expenses on labour costs. Some leading participants are also equipped with the production capacity to produce their own fertiliser. Moreover, the sales market for sea cucumbers goes through seasonal fluctuations. Scaled companies are in a better position to actively adjust their sales plans according to changes in the downstream market. Thus, increased economies of scale will make companies more competitive in the young sea cucumber aquaculture market, an advantage which remains a key success factor in the industry.

(iv) Sound industry and management experience

Sound industry and management experience constitutes another key success factor for companies operating in the young sea cucumber aquaculture market. With sound industry experience, companies are able to efficiently manage the entire production process, including raw material procurement, cost control, quality control, storage control and sales plans. A well-organised company management system leads to higher production efficiencies and lower production costs. Moreover, the regulatory requirements and supervision of companies is becoming increasingly stringent in the areas of environmental protection, employee’ benefits and product quality. Hence, small companies that lack industry and management experience will gradually exit this market.

–82– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. REGULATORY OVERVIEW

This section sets out summaries of certain aspects of PRC laws, regulations, rules and policies related to the industry in which our Group engages.

LAWS AND REGULATIONS RELATING TO THE MANAGEMENT OF AQUATIC BREEDS

Research and Development of the New Species of Aquatic Animals

According to the Fisheries Law of the PRC*《中華人民共和國漁業法》 ( ) which was last amended by the SCNPC and became effective on 28 December 2013 (the “Fisheries Law”), the state encourages and supports the breeding, cultivation and promotion of good aquatic species. The new species of aquatic animals shall be examined and approved by the National Approval Committee and can be promoted after being announced by the department of fishery administration under the State Council of the PRC.

According to the Measures for the Administration of Aquatic Breeds《水產苗種管理辦 ( 法》), which was amended by the MOA on 21 December 2004 and became effective on 1 April 2005, the state encourages and supports the breeding, cultivation and promotion of good aquatic species. The department of fisheries administration under the people’s governments above the county level shall arrange scientific research, teaching and production units to breed and cultivate new good breeds of aquatic animals in a planned way. The MOA has set up the National Approval Committee to examine and approve the new species of aquatic animals. The new species of aquatic animals which pass examination and approval can be promoted after being announced by the MOA.

Production of Aquatic Breeds

According to the Fisheries Law, the production of aquatic breeds shall be examined and approved by the department of fisheries administration under the people’s governments above county level. However, self cultivation and self-production of aquatic breeds of the fishery producers would be exempted.

According to the Fishery Breeding and Multiplication Management Measures of Shandong Province*《山東省漁業養殖與增殖管理辦法》 ( ), which was promulgated by the 17th Executive Meeting of Shandong Provincial People’s Government on 21 July 2008 and became effective on 10 October 2008, the license system is implemented for fishery breeding production. The entities and individuals engaging in the production of operational fishery breeds shall obtain a license for the production of fishery breeds in accordance with the laws. Those who have not obtained a license for the production of fishery breeds may not engage in the production of operational fishery breeds. The specific administrative measures for the production license of fishery breeds are formulated by the Department of Fisheries Administration of Shandong Province.

Fishery breeds shall be obtained by artificial cultivation, and natural breeds may not be used for breeding unless otherwise specified by the state.

–83– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. REGULATORY OVERVIEW

Laws and Regulations Relating to Aquaculture

National Policies for Marine Aquaculture

According to the Several Opinions of the State Council on Promoting the Sustainable and Healthy Development of the Marine Fishery*《國務院關於促進海洋漁業持續健康發展的若干 ( 意見》), which was promulgated by the State Council on 8 March 2013 and became effective on 8 March 2013, marine aquaculture should be developed scientifically. According to the National Marine Functional Zoning (2011–2020)*(《全國海洋功能區劃(2011–2020年)》) and other relevant sea-related plans, the state will formulate and implement the plans for waters and mudflat aquaculture and guide fishermen to standardise aquaculture in accordance with the laws. It will strengthen the standardisation transformation of aquaculture ponds, boost the standardisation transformation of offshore aquaculture net cages and vigorously promote the ecological and healthy aquaculture mode. It will promote deepwater anti-wind-and-wave net cages and the industrialisation of recirculating aquaculture equipment and encourage the qualified fishery enterprises to expand offshore and intensive marine aquaculture. It will strengthen the protection of original aquatic varieties and the cultivation of improved varieties, build a number of standardised and large-scale production bases for improved aquatic animals and improve the coverage rate of the improved aquatic animals. It will strengthen the research and development of aquatic feed and actively promote the use of artificial mixed feed. It will also strengthen the prevention and control of aquatic animal diseases and the quality and safety management of aquatic animals.

Certificates for Waters and Mudflat Aquaculture

According to the Fisheries Law, the state makes a unified plan for the utilisation of waters and determines the waters and mudflats that can be used for aquaculture. Where an entity or individual uses the designated waters or mudflats collectively owned in the national plan for aquaculture, the user shall make an application with the competent department of fishery administration of the local people’s government above county level, and the people’s government at the corresponding level shall issue an aquaculture license to permit the use of the waters or mudflat for aquaculture production. The specific measures for the verification and issuance of aquaculture certificate are formulated by the State Council. Waters and mudflats that are owned by the collectives or by all the people and used by agricultural collective economic organisations may be contracted by individuals or collectives for aquaculture production.

–84– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. REGULATORY OVERVIEW

Aquaculture Production

According to the Regulations on Quality and Safety Management of Aquaculture*《水產養 ( 殖質量安全管理規定》), units (i.e. entities other than individuals) and individuals that use waters and mudflats for aquaculture shall apply for aquaculture certificates in accordance with relevant regulations and engage in aquaculture production in accordance with the approved regions and scales. Aquaculture production shall conform to the operation requirements of the relevant national technical specifications for aquaculture. Aquaculture units and individuals shall have water treatment facilities in commensurate with their waters and production capabilities, and have basic instruments and equipment for testing water quality and aquatic organism. The fingerlings used for testing aquaculture shall meet the national or local quality standards. Professional aquaculture technicians shall be qualified to practice after receiving vocational skill training and professional qualification certificates. Aquaculture units and individuals shall fill in the Aquaculture Production Record*《水產養殖生產記錄》 ( ) to record the aquaculture varieties, the source and growth of breeds, the source and feeding of feeds and the change of water quality. The Aquaculture Production Record shall be kept for more than 2 years after related aquatic animals are sold.

Production and Use of the Feed

According to the Regulations on the Administration of Feed and Feed Additives*《飼料和 ( 飼料添加劑管理條例》)which was revised for the fourth time under the Decision of the State Council on Amending and Abolishing Some Administrative Regulations*《國務院關於修改和廢 ( 止部分行政法規的決定》) issued by the State Council on 1 March 2017 and implemented from 1 March 2017, an enterprise applying for engaging in the production of feed and feed additives shall make an application to the feed administration department of the province, autonomous region or municipality directly under the central government, as the case may be. The production license is valid for five years. If the enterprise wants to continue the production of feed and feed additives upon expiration of the validity period of the production license, it shall apply for renewal six months prior to the expiration of the validity period.

According to the Fisheries Law, feeds containing toxic and harmful substances shall not be used in aquaculture production.

According to the Regulations on the Administration of Feed and Feed Additives*《飼料和 ( 飼料添加劑管理條例》), breeders shall use feeds according to the product instructions and precautions. If feed additives are added to feeds or animal drinking water, they shall comply with the requirements of the instructions and precautions for the use of feed additives and the safe use standards of feed additives formulated by the competent agricultural administration department of the State Council. When using self-formulated feeds, the breeders shall abide by the standards for the use of self-formulated feed formulated by the competent agricultural administration department under the State Council and may not provide feed formulated by themselves to the public. The use of restricted substances for animal breeding shall comply with the restrictive provisions of the competent agricultural administration department under the State Council. It is prohibited to add the restricted substances announced by the competent

–85– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. REGULATORY OVERVIEW agricultural administration department under the State Council and other substances that impose direct or potential harms on human body in feed or animal drinking water, or to directly use the above substances to feed animals.

According to Regulations on Quality and Safety Management of Aquaculture, the use of fishery feed shall comply with the Regulations on the Administration of Feed and Feed Additives and the Safety Limit of Fishery Feed for Pollution-Free Food (NY5072-2002)*《無公害食品漁 ( 用飼料安全限量》(NY5072-2002)) issued by the MOA. The use of mixed feed is encouraged. Direct feeding of chilled (frozen) feed is restricted so as to prevent residual feed from polluting the water quality. It is prohibited to use feed and feed additive without product quality standards, quality inspection certificate, production license and product approval number. It is prohibited to the use of deteriorated or expired feed.

Use of Veterinary Drugs

According to the Regulations on Administration of Veterinary Drugs*《獸藥管理條例》 ( ), which was promulgated by the State Council and became effective on 27 March 2020, veterinary drug users shall abide by the regulations on the safe use of veterinary drugs published by the veterinary administration department under the State Council and establish medication records. It is prohibited to use fake or inferior veterinary drugs, drugs and other compounds prohibited by the veterinary administration department under the State Council. When veterinary drugs with a withdrawal period are used for food animals, breeders shall provide accurate and true medication records to the purchasers or slaughterers; the purchasers or slaughterers shall ensure that the animals and their products will not be used for food consumption during the medication or withdrawal period. It is prohibited to sell food animal products containing forbidden drugs or veterinary drug residues above the specified standard.

According to the Regulations on Quality and Safety Management of Aquaculture, the use of aquaculture drugs shall comply with the Guideline of Fishery Drug Application for Pollution-free Food (NY5071-2002)《無公害食品漁用藥物使用準則》 ( (NY5071-2002)) issued by the MOA. The aquatic products using drugs may not be used for human food consumption during the withdrawal period. It is prohibited to use fake or inferior veterinary drugs, drugs, other compounds and biological agents prohibited by the MOA. Bulk drugs may not be directly used in aquaculture. Aquaculture entities and individuals shall use the drugs scientifically according to the requirements of aquaculture drug use instructions or under the guidance of aquatic organism disease prevention and control personnel. Aquatic organism disease prevention and control personnel shall take up their posts according to relevant national employment access requirements and after receiving vocational skill training and obtaining professional qualification certificates. Aquaculture units and individuals shall fill in Aquaculture Production Record to record the occurrence of diseases, main symptoms, drug name, time, dosage, etc. Aquaculture Production Record shall be kept for more than two years after related aquatic products are sold.

–86– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. REGULATORY OVERVIEW

LAWS AND REGULATIONS RELATING TO THE QUALITY OF AQUATIC PRODUCTS

Product Quality Law of the PRC

Products that we manufacture are subject to the PRC laws and regulations in relation to product quality. The Product Quality Law of the PRC*《中華人民共和國產品質量法》 ( ) (the “Product Quality Law”), which was promulgated on 22 February 1993 and last amended on 29 December 2018, is the principal law governing the supervision and administration of product quality.

According to the Product Quality Law, manufacturers are liable for the quality of products they produce, and sellers must take reasonable actions to ensure the quality of the products they sell. The manufacturer shall be liable to compensate for any bodily harm or damage to property (other than the defective product itself) caused by any defective product of the manufacturer unless the manufacturer is able to prove that:

• it has not circulated the product;

• the defect did not exist at the time when the product was circulated; or

• the state of scientific or technological knowledge at the time when the product was circulated was not such that it allowed the defect to be discovered.

A seller will be liable to compensate for any bodily harm or damage to property (other than the defective product itself) caused by any defective product it sold if such defect is attributable to the seller. A person who is harmed or whose property is damaged by any defective product may claim such loss against the manufacturer or the seller of the product.

Quality of Agricultural Products

The Agricultural Products Safety Law of the PRC*《中華人民共和國農產品質量安全法》 ( ) (the “Agricultural Products Safety Law”), which was promulgated by the SCNPC on 29 April 2006 and amended on 26 October 2018, governs the supervision and administration of the quality and safety of primary agricultural products, including plants, animals, microorganisms and other products obtained in the course of agricultural activities. The Agricultural Products Safety Law regulates the agricultural products in the following aspects to ensure that they meet the requirements necessary to protect people’s health and safety, including:

• the quality and safety standards of agricultural products;

• the production places of agricultural products;

• the production of agricultural products; and

• the packaging and labelling of agricultural products.

–87– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. REGULATORY OVERVIEW

According to the Agricultural Products Safety Law, producers of agricultural products shall reasonably use chemical products in order to avoid contaminating production places of agricultural products. Agricultural producers shall also ensure that the preservatives, additives and other chemicals used in the process of production, packaging, preservation, storage and transportation of agricultural products shall be in conformity with the relevant compulsory technical specifications set by the state; or otherwise, these products shall not be sold.

Product Liability

Pursuant to the Civil Code of the PRC*《中華人民共和國民法典》 ( ) (the “Civil Code”) which was promulgated by the NPC on 28 May 2020 and became effective on 1 January 2021, and the Protection of Consumers’ Rights and Interests Law of the PRC*《中華人民共和國消費 ( 者權益保護法》), which was promulgated by the SCNPC on 31 October 1993 and last amended on 25 October 2013, both manufacturers and distributors shall be held jointly liable for losses and damage suffered by consumers caused by the defective products they manufacture or distribute. Where a product endangers personal life or property safety due to its defect, the manufacturer and the distributor(s) thereof shall bear liability in tort.

Animal Epidemic Prevention

The Law on Animal Epidemic Prevention of the PRC*《中華人民共和國動物防疫法》 ( ), which was promulgated on 3 July 1997 and last amended on 22 January 2021 by the SCNPC, provides that an animal farm shall meet the following conditions for prevention of animal epidemics, and the operator of the animal farm shall apply to the animal husbandry and veterinary medicine authority under the local people’s government at or above the county level for a certificate for meeting animal epidemic prevention conditions:

• The farm is located at certain distance from public places, such as residential areas, sources of drinking water, schools and hospitals as prescribed by the veterinary medicine authority under the State Council;

• The enclosure and isolation of the production area, and the engineering design and technological processes shall meet the requirements for animal epidemic prevention;

• The farm has necessary facilities and equipment for innocuous treatment, cleaning and decontamination of wastewater, waste materials, animals that die of diseases, and infected animal products;

• Technicians for animal epidemic prevention have been equipped for the farm;

• A sound system for animal epidemic prevention has been established for the farm; and

• The farm meets other conditions for animal epidemic prevention as promulgated by the veterinary medicine authority under the State Council.

–88– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. REGULATORY OVERVIEW

As provided for by the Law on Animal Epidemic Prevention of the PRC, animal epidemic prevention authorities shall monitor the outbreak and spread of animal epidemics; an entity or individual engaged in raising, slaughtering, marketing, isolation or transportation of animals and/or other activities in connection therewith shall immediately report to the local agricultural and rural authority or animal epidemic prevention and control authorities when it finds that animals have, or are suspected to have, contracted epidemics, and in addition, it shall have the animals isolated and take other control measures to prevent the spread of the epidemics. According to the Regulations on Administration of National Animal Epidemics Surveillance and Reporting System (For Trial Implementation)*《國家動物疫情測報體系管理規範 ( (試行)》) promulgated on 10 June 2002 by the MOA, regular surveillance shall be conducted on any large scale animal farm where a certain classified disease breaks out, and all documents relating to the animal epidemic surveillance shall be reported to the animal husbandry and veterinary medicine bureau under MOA within the prescribed period of time.

Environmental Protection

According to the Fisheries Law, breeders shall protect the ecological environment of the waters, scientifically determine the breeding density, reasonably feed and fertilise animals and use the drugs without causing environmental pollution to the waters. The state protects aquatic germplasm resources and their living environment and establishes aquatic germplasm resources protection zones in the main growth and breeding areas of aquatic germplasm resources with high economic value and genetic breeding value. No unit or individual may engage in fishing activities in the aquatic germplasm resources protection zone without the approval of the department of fishery administration under the State Council.

According to the Regulations on the Protection of the Reproduction of Aquatic Resources (《水產資源繁殖保護條例》) which was promulgated by the State Council on 10 February 1979 and took effect on the same day, it is prohibited to discharge pollutants and wastes such as sewage, oil and oily mixtures harmful to aquatic resources into the fishery waters. All industrial and mining enterprises shall strictly implement the Trial Implementation Standard for the Discharge of Industrial “Wastewater, Gases and Residues”*《工業 ( “三廢”排放試行標準》), the Regulations for Radiological Protection*《放射防護規定》 ( ) and other relevant regulations issued by the state. When it is necessary to pour the drugs into the fishery waters due to sanitation and epidemic prevention or pest control, the reproduction protection of aquatic resources shall be taken into consideration. Retting in rural areas shall be conducted in the designated waters.

–89– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. REGULATORY OVERVIEW

According to Marine Environmental Protection Law of the PRC*《中華人民共和國海洋環 ( 境保護法》), which was last amended by the SCNPC on 4 November 2017, the entities and individuals that directly discharge pollutants to the sea shall pay the pollutant discharge fee according to the national regulations. When dumping wastes into the sea, the dumping fees shall be paid according to the national regulations. Pollutant discharge fee and dumping fee that are collected according to that law shall be used for the remediation of marine environmental pollution and may not be misappropriated for other purposes. Specific measures will be issued by the State Council. In the process of developing and utilising the marine resources, rational distribution shall be made according to marine functional zoning, the red line of ecological protection shall be strictly observed, and no damage to the marine ecological environment is caused.

Pursuant to the Environmental Protection Law of the PRC*《中華人民共和國環境保護 ( 法》) which was amended by the SCNPC and took effect on 24 April 2014, all entities and individuals shall have the obligation to protect the environment and the right to report and charge the entities and individuals that have caused pollution and damage to the environment.

According to the Law on the Prevention and Control of Air Pollution of the PRC*《中華 ( 人民共和國大氣污染防治法》) which was amended by the SCNPC on 26 October 2018 and became effective on the same day, entities that construct projects capable to discharge pollutants into the air shall conduct environmental impact assessments and disclose the documents related to such environmental impact assessments. The discharge of atmospheric pollutants must not exceed the state and local discharging standards.

According to the Law for the Prevention and Treatment of Solid Waste Pollution of the PRC*《中華人民共和國固體廢物污染環境防治法》 ( ) which was amended by the SCNPC on 29 April 2020 and became effective on 1 September 2020, entities that construct projects capable to discharge solid waste shall conduct environmental impact assessments and disclose documents related to such environmental impact assessments. Measures should be taken to prevent the solid waste from dispersing, moving, leaking or otherwise which might affect the environment. Any individual or entity is prohibited from dumping, piling or storing solid waste in the river, lake, canal, channel and reservoir and other places specified by laws.

According to the Law on Prevention and Control of Water Pollution of the PRC*《中華人 ( 民共和國水污染防治法》), which was amended by the SCNPC on 27 June 2017 and became effective on 1 January 2018, the entities and individuals engaging in aquaculture shall protect the ecological environment of the waters, scientifically determine the breeding density, reasonably feed animals and use the drugs and prevent water environment pollution.

–90– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. REGULATORY OVERVIEW

LAWS AND REGULATIONS RELATING TO PROPERTIES

Use of Sea Areas

According to the Law on the Administration of the Use of Sea Areas of the PRC*《中華人 ( 民共和國海域使用管理法》), which was promulgated by the SCNPC on 27 October 2001 and became effective on 1 January 2002, entities and individuals may apply for the use of sea areas with the marine administration department of the people’s government above county level and pay the required fees. Certain circumstances of sea area use shall be subject to approval by the State Council. Therefore, for the use subject to the approval by the State Council, when the application for sea area use is approved, the marine administration department under the State Council shall make registration and issue sea area use certificate to the applicant; for the use subject to the approval by the local people’s government, when the application for sea area use is approved, the local people’s government shall make registration and issue certificate of sea area use right to the applicant. The applicant is granted with the right to use the sea area from the date of receiving the sea area use certificate. Anyone who illegally occupies any sea areas without approval or where such approval is fraudulently obtained shall be ordered to return the illegally occupied sea areas and revert them to their original state while the illegal gains will be confiscated. A fine of not less than five times but not more than fifteen times the amount of fees that should have been paid according to the size of the sea areas during the illegal occupation shall also be imposed.

According to Regulations on the Administration of the Use Right of Sea Areas*《海域使 ( 用權管理規定》) promulgated by the State Oceanic Administration on 13 October 2006 and became effective on 1 January 2007, the use right of sea area can be legally transferred in case it is sold, granted, exchanged or contributed into company for shares. Where the use right of sea area is leased, the lessee shall use the sea area in accordance with the area, term and usage set out in the sea area use certificate. When the use right of sea area is leased or mortgaged, the fixed ancillary marine facilities will be leased or mortgaged along with. When the fixed ancillary marine facilities are leased or mortgaged, the use right of sea area within the usage scope shall be leased or mortgaged along with, unless otherwise provided by the laws and regulations. If the use right of sea area is acquired with exemption from payment or reduced amount of payment, the use right of sea area may be leased or mortgaged only after the balance is paid.

Rural Land Contracting

According to the Civil Code, arable land, woodland, grassland and other land used for agricultural purpose and owned collectively by farmers through the economic collective of which the farmers are members, or owned by the state but used collectively by farmers through the economic collective, may be contracted to third parties, or contractors.

–91– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. REGULATORY OVERVIEW

According to the Rural Land Contracting Law of the PRC*《中華人民共和國農村土地承 ( 包法》) which was promulgated by the SCNPC on 29 August 2002 and amended on 27 August 2009 and 29 December 2018 (the “Rural Land Contracting Law”), contractors of rural land can be members of the economic collective that owns or uses the relevant land, or enterprises and individuals outside the economic collective. A contractor of rural land is primarily entitled to the following rights:

• using and benefiting from the use of contracted land, transferring the right to operate the contracted land, and independently organising the operation of the contracted land;

• transferring the land operation right in accordance with the laws;

• obtaining compensation if the contracted land is expropriated or occupied by the government in accordance with the laws; and

• other rights specified by the laws.

At the same time, a contractor of rural land must undertake the following obligations:

• maintaining the agricultural usage of the contracted land and refraining from using the land for non-agricultural purposes;

• protecting and using the contracted land in accordance with the laws and refraining from causing any permanent damage to the contracted land; and

• other obligations specified by the laws.

The awarding party of contracted land, primarily the economic collective that owns or uses the relevant land, is entitled to monitor whether the contractor is using the contracted land in agreed manners. However, it may not interfere with normal operations of the contractor in accordance with the laws.

Under the Civil Code and the Rural Land Contracting Law, the contracting term for arable land shall be 30 years, for grassland shall be between 30 to 50 years, and for woodland shall be between 30 to 70 years.

Contracting Rural Land to Non-member of Economic Collective

According to the Rural Land Contracting Law, the decision to contract the rural land to an enterprise or individual that is not a member of the economic collective which owns the land must be made in accordance with relevant procedures, which require (i) the approval by at least two-thirds of the members of the economic collective or two-thirds of the representatives for members of the economic collective, and (ii) the approval by the competent government at the township level.

–92– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. REGULATORY OVERVIEW

Transferring Right to Operating Contracted Land

According to the Measures for the Administration of Transferring Right to Operating Contracted Rural Land*《農村土地承包經營權流轉管理辦法》 ( ) which was promulgated by the MOA on 19 January 2005 and became effective on 1 March 2005, the relationship between the contractor and the awarding party of the contracted land will not be affected if the contractor transfers its right to operate the contracted land to a third party. If the transfer is accomplished through assignment, prior consent from the awarding party must be obtained. If the transfer is accomplished though other means, the contractor only needs to file the transfer with the awarding party timely.

Land Used for Agricultural Facilities

On 17 December 2019, the Circular of the Ministry of Natural Resources and the Ministry of Agriculture and Rural Affairs on Issues Concerning the Management of Facility Agricultural Land*《自然資源部、農業農村部關於設施農業用地管理有關問題的通知》 ( , the “2019 Circular”) was issued. The 2019 Circular stipulates that land used for agricultural facilities is divided into land directly for crop cultivation and land for livestock, poultry and aquaculture, including related land used for storage, drying, packaging, disposal, inspection, and etc. General cultivated land can be used for facility agricultural land, while permanent capital farmland shall not be used as facility agricultural land in principle unless certain procedures for allocation are completed. Rural collective economic organisation is responsible to file the use of facility agricultural land to a township government, and the township government consolidates such information periodically and reports to the authority of natural resources at county level.

Regulation on Foreign Investment Policies and Foreign-invested Enterprises

On 23 June 2020, NDRC and the MOFCOM jointly promulgated the Special Administrative Measures for Access of Foreign Investments (Negative List) (2020 version)《外商投資准入特別 ( 管理措施(負面清單) (2020年版)》) (the “Negative List”), which came into effect on 23 July 2020. According to the Negative List, foreign investors shall not invest in any of the prohibited sectors specified in the Negative List; they must obtain the permit for access of foreign investments if they intend to invest in other sectors set out in the Negative List that are not prohibited; if they intend to invest in sectors subject to limits on the proportion of foreign investment, they are not allowed to establish foreign-invested partnerships.

The Foreign Investment Law of the PRC《中華人民共和國外商投資法》 ( ) (the “Foreign Investment Law”) was adopted by the NPC on 15 March 2019, which came into force as at 1 January 2020. Under the Foreign Investment Law, the state shall implement the management systems of pre-establishment national treatment and negative list for foreign investment, according to which the treatment given to foreign investors and their investments during the investment access stage shall not be lower than that given to their domestic counterparts, and the State shall give national treatment to foreign investment beyond the negative list where special administrative measures for the access of foreign investment in specific fields is specified. Besides, the state shall protect foreign investors’ investment, earnings and other legitimate rights

–93– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. REGULATORY OVERVIEW and interests within the territory of the PRC in accordance with the law. The state will take measures to prompt foreign investment such as ensuring fair competition for foreign-invested enterprises to participate in government procurement activities, and protection of intellectual property rights of foreign investors and foreign-invested enterprises. In respect of administration of foreign investment, foreign investment shall go through relevant verification and record-filing formalities if required by relevant state laws and regulations. The organisation form, institutional framework and standard of conduct of a foreign-funded enterprise shall be subject to the provisions of the Company Law or the Partnership Enterprise Law of the PRC, if applicable.

The Regulations on Implementing the Foreign Investment Law of the PRC*《中華人民共 ( 和國外商投資法實施條例》) (the “Implementing Regulations of Foreign Investment Law”) were issued by the State Council on 26 December 2019, which came into effect on 1 January 2020 and replaced the Detailed Implementing Rules for the Wholly Foreign Owned Enterprise Law of the PRC. The Implementing Regulations of Foreign Investment Law provide for detailed rules on relevant foreign investment issues. Investments made in the PRC by investors from the Hong Kong and the Macao Special Administrative Region, and by the PRC citizens residing abroad shall be governed by the Foreign Investment Law of the PRC and the Implementing Regulations of Foreign Investment Law, unless otherwise provided by laws, administrative regulations or the State Council.

The Measures for the Reporting of Foreign Investment Information《外商投資信息報告辦 ( 法》) were issued by the MOFCOM and the State Administration for Market Regulation on 30 December 2019, which came into effect on 1 January 2020. Since 1 January 2020, for foreign investors carrying out investment activities directly or indirectly in the PRC, the foreign investors or foreign-invested enterprises shall submit investment information to the commerce authorities pursuant to these measures.

Regulations on Merger and Acquisition

On 8 August 2006, six PRC governmental and regulatory agencies, including the MOFCOM and CSRC, promulgated the Rules on Acquisition of Domestic Enterprises by Foreign Investors (《關於外國投資者併購境內企業的規定》) (the “M&A Rules”), a regulation with respect to the mergers and acquisitions of domestic enterprises by foreign investors, which became effective on 8 September 2006 and revised on 22 June 2009. Foreign investors should comply with the M&A Rules when they purchase equity interests of a domestic company or subscribe the increased capital of a domestic company, which changes the nature of a domestic company into a foreign-invested enterprise; or when the foreign investors establish a foreign-invested enterprise in the PRC, purchase the asset of a domestic company and operate the asset; or when the foreign investors purchase the asset of a domestic company, establish a foreign-invested enterprise by injecting such assets, and operate the assets.

–94– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. REGULATORY OVERVIEW

LAWS AND REGULATIONS GOVERNING FOREIGN EXCHANGE AND DIVIDEND DISTRIBUTION

Regulations on Foreign Exchange

The Foreign Exchange Administration Rules of the PRC《中華人民共和國外匯管理條 ( 例》), promulgated on 29 January 1996 and last amended on 5 August 2008 by the State Council, and Administrative Regulations on Settlements, Sales and Payments in Foreign Exchange*《結 ( 匯、售匯及付匯管理規定》) promulgated on 20 June 1996 by People’s Bank of the PRC, apply and provide regulatory provisions to the foreign exchange transactions for foreign-invested enterprises. Foreign-invested enterprises are permitted to convert after-tax dividends into foreign exchange and to remit such foreign exchange from their bank accounts in the PRC.

On 4 July 2014, the SAFE promulgated the Circular on Relevant Issues Relating to Domestic Residents’ Investment and Financing and Round-Trip Investment through Special Purpose Vehicles*《國家外匯管理局關於境內居民通過特殊目的公司境外投融資及返程投資外 ( 匯管理有關問題的通知》) (the “SAFE Circular 37”), effective as at 4 July 2014. Under SAFE Circular No. 37, (1) a resident in China must register with the local SAFE branch before he or she contributes assets or equity interests in an overseas special purpose vehicle (the “overseas SPV”), that is directly established or indirectly controlled by the PRC resident for the purpose of conducting investment or financing; and (2) following the initial registration, the PRC resident is also required to register with the local SAFE branch for any major change, in respect of the overseas SPV, including, amongst other things, a change in the overseas SPV’s resident shareholder in the PRC, name of the overseas SPV, term of operation, or any increase or reduction of the contributions by the PRC resident, share transfer or swap, and merger or division. Additionally, pursuant to the Circular of the State Administration of Foreign Exchange on Further Simplifying and Improving the Direct Investment related Foreign Exchange Administration Policies*《國家外匯管理局關於進一步簡化和改進直接投資外匯管理政策的通 ( 知》) (the “SAFE Circular 13”), promulgated by the SAFE on 13 February 2015 and became effective on 1 June 2015, the aforesaid registration shall be directly reviewed and handled by qualified banks in accordance with the SAFE Circular 13, and the SAFE and its branches shall perform indirect regulation over the foreign exchange registration via qualified banks.

On 23 October 2019, the SAFE promulgated the Circular on Further Promoting the Facilitation of Cross-border Trade and Investment*《關於進一步促進跨境貿易投資便利化的通 ( 知》) (the “SAFE Circular 28”). Pursuant to the SAFE Circular 28, on the basis of allowing investment-oriented foreign-invested enterprises (including foreign-invested investment companies, foreign-invested venture capital enterprises and foreign-invested equity investment enterprises) to use capital funds for domestic equity investment in accordance with laws and regulations, non-investment foreign-invested enterprises shall be allowed to use capital funds for domestic equity investment in accordance with the laws under the premise of not violating the existing special management measures for entry of foreign investment (negative list) and the authenticity and compliance of their domestic invested projects.

–95– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. REGULATORY OVERVIEW

Regulations on Dividend Distribution

The Company Law, the Foreign Investment Law and the Implementing Regulations of Foreign Investment Law regulate the distribution of dividends by foreign invested enterprises. Under the laws and regulations above, foreign-invested enterprises in the PRC may distribute dividends only out of their accumulated profit, if any, determined in accordance with PRC accounting standards and regulations. Wholly foreign owned enterprises are required to set aside as statutory common reserves 10% of its after-tax profit, until the cumulative amount of such reserves have reached 50% of its registered capital. These reserves are not distributable as cash dividends.

LAWS AND REGULATIONS GOVERNING INTELLECTUAL PROPERTY RIGHTS

Regulations on Copyright

The Copyright Law of the PRC (Revised in 2010)*《中華人民共和國著作權法 ( (2010年修訂)》) (the “Copyright Law”) promulgated by the SCNPC on 26 February 2010 and became effective on 1 April 2010, provides that Chinese citizens, legal persons, or other organisations shall, whether published or not, enjoy copyright in their works, which include, among others, works of literature, art, natural science, social science, engineering technology and computer software.

Regulations on Patent

Pursuant to the Patent Law of the PRC*《中華人民共和國專利法》 ( ) promulgated by the SCNPC on 12 March 1984 and amended on 4 September 1992, 25 August 2000, 27 December 2008 and 17 October 2020 as well as the Implementation Rules of the Patent Law of the PRC* (《中華人民共和國專利法實施細則》) promulgated by the State Council on 15 June 2001 and amended on 28 December 2002 and 9 January 2010, once an invention or a utility model patent right has been granted, unless otherwise specified, no organisation or individual may exploit the patent without licensing from the patentee, i.e., they may not, for the purposes of production and business operation, produce, use, offer to sell, sell, or import the patented products, nor use the patented method or use, offer to sell, sell or import products that are acquired directly through the patented method. Once a design patent right has been granted, no organisation or individual may exploit the patent without licensing from the patentee, i.e., they may not produce, offer to sell, sell or import the design patent products for the purposes of production and business operation. Where the infringement of patent is determined, the infringer shall, in accordance with the regulations, undertake to cease an infringement, take remedial action, pay damages etc. The duration of an invention patent right shall be 20 years and that of a utility model patent right or design patent right shall be ten years, commencing from the date of application. The patentee shall pay annual fees commencing from the year when the patent right is granted.

–96– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. REGULATORY OVERVIEW

Regulations on Trademark

Trademarks are protected by the Trademark Law of the PRC*《中華人民共和國商標法》 ( ) (the “Trademark Law”) which was promulgated by the SCNPC on 23 August 1982 and amended on 22 February 1993, 27 October 2001, 30 August 2013 and 23 April 2019 respectively as well as the Implementation Regulation of the Trademark Law of the PRC (Revised in 2014)* (《中華人民共和國商標法實施條例(2014修訂)》) promulgated by the State Council on 29 April 2014 and became effective on 1 May 2014. Pursuant to the Trademark Law, registered trademarks include commodity trademarks, service trademarks, collective marks and certification marks.

The Trademark Office of China National Intellectual Property Administration, is responsible for trademark registrations and grants a term of ten years to registered trademarks. As for trademarks, the Trademark Law has adopted a “first come, first file” principle with respect to trademark registration. Trademarks are renewable every ten years where a registered trademark needs to be used after the expiration of its validity term. A trademark registrant may licence its registered trademark to another party by entering into a trademark licence contract. Trademark licence agreements must be filed with the Trademark Office to be recorded.

Regulations on Domain Name

Internet domain name registration and related matters are primarily regulated by the Administrative Measures for Internet Domain Names*《互聯網絡域名管理辦法》 ( ), issued by the Ministry of Industry and Information Technology on 24 August 2017 and effective as at 1 November 2017, and the Implementing Rules for Registration of Country Code Top Level Domain Names*《國家頂級域名註冊實施細則》 ( ) promulgated by China Internet Network Information Center and became effective on 18 June 2019. Domain name registrations are handled through domain name service agencies established under the relevant regulations, and the applicants become domain name holders upon successful registration.

LAWS AND REGULATIONS GOVERNING TAXATION

Regulations on Enterprise Income Tax

On 16 March 2007, the NPC promulgated the Law on Enterprise Income Tax of the PRC* (《中華人民共和國企業所得稅法》) which became effective on 1 January 2008 and was amended on 24 February 2017 and 29 December 2018, and the State Council enacted the Regulations for the Implementation of the Law on Enterprise Income Tax of the PRC《中華人民共和國企業所 ( 得稅法實施條例》) on 6 December 2007 (collectively, the “EIT Law”) which was amended on 23 April 2019. According to the EIT Law, taxpayers consist of resident enterprises and non-resident enterprises. Under the EIT Law and relevant implementing regulations, a uniform corporate income tax rate of 25% is applicable. However, if non-resident enterprises have not formed permanent establishments or premises in the PRC, or if they have formed permanent establishment institutions or premises in the PRC but there is no actual relationship between the relevant income derived in the PRC and the established institutions or premises set up by them, the enterprise income tax is, in that case, set at the rate of 10% for their income generated in the PRC.

–97– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. REGULATORY OVERVIEW

Pursuant to the Measures on Handling of Enterprise Income Tax Incentives (Revised in 2018)*《企業所得稅優惠政策事項辦理辦法 ( (2018修訂)》) which was promulgated by the SAT on 25 April 2018 and its Appendix entitled Administrative List for Enterprise Income Tax Incentives*《企業所得稅優惠事項管理目錄》 ( ), the enterprises engaging in aquatic fishery could enjoy a preferential exemption from 50% of EIT.

Regulations on Value-added Tax

The Provisional Regulations on Value-added Tax of the PRC*《中華人民共和國增值稅暫 ( 行條例》) were promulgated by the State Council on 13 December 1993 and came into effect on 1 January 1994 which were last amended on 19 November 2017. The Detailed Rules for the Implementation of the Provisional Regulations on Value-added Tax of the PRC*《中華人民共和 ( 國增值稅暫行條例實施細則》) were promulgated by the Ministry of Finance and the SAT on 28 October 2011 and came into effect on 1 November 2011 (collectively, the “VAT Laws”). Pursuant to the VAT Laws, all enterprises and individuals engaged in the sale of goods, the provision of processing, repair and replacement services, and the importation of goods within the territory of the PRC must pay value-added tax. The sale of the self-produced agricultural products by agricultural producers is exempt from the value-added tax.

Regulations on Dividend Withholding Tax

The EIT Law provides that an income tax rate of 10% will normally be applicable to dividends payable to investors that are “non-resident enterprises”, and gains derived by such investors, which (a) do not have an establishment or place of business in the PRC or (b) have an establishment or place of business in the PRC, but the relevant income is not effectively connected with the establishment or place of business to the extent such dividends and gains are derived from sources within the PRC. Such income tax on the dividends may be reduced pursuant to a tax treaty between the PRC and the jurisdictions in which foreign shareholders reside.

According to the Announcement on Promulgating the Administrative Measures for Convention Treatment for Non-resident Taxpayers*《關於發佈 ( 〈非居民納稅人享受稅收協定待遇管理辦法〉的公告》), which was promulgated by the SAT on 14 October 2019 and came into effect on 1 January 2020, any non-resident taxpayer meeting conditions for enjoying the convention treatment may be entitled to the convention treatment itself/himself when filing a tax return or making a withholding declaration through a withholding agent, subject to the collection and preservation of relevant materials for review pursuant to these measures and the subsequent administration by the tax authorities.

–98– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. REGULATORY OVERVIEW

According to the Notice on Widening the Scope of Application of Temporary Waiver for Withholding Income Tax for Overseas Investors Using Distributed Profits for Direct Investments (《關於擴大境外投資者以分配利潤直接投資暫不徵收預提所得稅政策適用範圍的通知》) jointly issued by the Ministry of Finance, SAT, NDRC and MOFCOM on 29 September 2018 which became effective on 1 January 2018, for the profits distributed by domestic resident enterprises in the PRC to overseas investors, the scope of application of temporarily exemption of withholding income tax for domestic direct investment shall be extended from the foreign investment encouraged projects to cover all non-prohibited foreign investment projects and fields.

LAWS AND REGULATIONS GOVERNING LABOUR PROTECTION

Labour

The Labour Contract Law of the PRC*《中華人民共和國勞動合同法》 ( ) (the “Labour Contract Law”), which was implemented on 1 January 2008 and amended on 28 December 2012, as well as the Implementing Regulations of the Labour Contract Law of the PRC《中華人 ( 民共和國勞動合同法實施條例》) which was promulgated and took effect on 18 September 2008, regulates the rights and obligations of parties of labour contracts, including matters with respect to the establishment, performance and termination of labour contracts. Pursuant to the Labour Contract Law and its implementing regulations, labour contracts shall be concluded in writing if labour relationships are to be or have been established between the employer and the employee. The employer is forbidden to force employees to work beyond the time limit and the employer shall pay the employee for overtime work in accordance with national regulations. In addition, the employees’ wages shall not be lower than local standards on minimum wages and shall be paid to the employees in a timely manner.

According to the Labour Law of the People’s Republic of China*《中華人民共和國勞動 ( 法》) amended by the SCNPC on 29 December 2018, the employers shall establish and improve their system of workplace safety and sanitation, strictly abide by the state rules and standards on workplace safety, and educate the employees in labour safety and sanitation. The labour safety and sanitation facilities shall comply with the national standards. The employers shall provide the employees with a safe workplace and sanitation conditions which are in compliance with the state stipulations and the relevant standards of labour protection.

Pursuant to the Interim Provisions on Labour Dispatch*《勞務派遣暫行規定》 ( ) which was promulgated on 24 January 2014 by Ministry of Human Resources and Social Security and came into effect on 1 March 2014, the employer shall strictly control the number of dispatched staff and the number of such dispatched staff utilised by an employer shall not exceed 10% of the total number of its workers. Otherwise, the labor administrative department may impose on the employer a fine of not less than RMB5,000 but not more than RMB10,000 per dispatched worker, if the employer refuses to rectify the violation after being ordered to do so within a specified period.

–99– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. REGULATORY OVERVIEW

Social Insurance

Pursuant to the Law of Social Insurance of the PRC*《中華人民共和國社會保險法》 ( ) amended by the SCNPC on 29 December 2018 and came into effect on the same day, the Chinese social security system basically consists of five major types of social insurances, namely maternity insurance, endowment insurance, medical insurance, unemployment insurance and work-related injury insurance, and each company in the PRC is required to contribute social insurance for its employees.

If any company fails to fully pay the social insurance premiums, relevant administration authority on social insurance premiums collection (the premiums collection authority) shall order such company to fully pay the outstanding social insurance premiums within a time limit; if such company fails to pay the premiums in accordance with the order, the premiums collection authority is entitled to check the company’s bank account with banks or other financial institutions, and could ask the relevant PRC authorities above county level to order the bank or other financial institutions in writing to settle the outstanding social insurance premiums with the money in such company’s bank account. If the balance of the company’s bank account is lower than the amount of the social insurance premiums payable, the premiums collection authority is entitled to require such company to provide guarantee and enter into an agreement in relation to late payment of social insurance premiums. Provided such company fails to fully settle the social insurance premiums and has not provided any guarantee, the premiums collection authority is entitled to apply to a people’s court to detrain, seal up and auction such company’s property, and the proceeds from the auction will be appropriated by the premiums collection authority to pay up the outstanding social insurance premiums.

Under the Interim Regulation on the Collection and Payment of Social Insurance Premiums*《社會保險費征繳暫行條例》 ( ) promulgated on 22 January 1999 and amended by the State Council on 24 March 2019 and took effect on the same day, employers and individuals shall pay social insurance premiums timely in full amount, at the same time, it clarified that if an employer fails to pay and withhold social insurance premiums, the labour insurance administrative department or the tax authority shall order it to pay within a prescribed time limit. In addition to arrears, 0.2% of the number of arrears per day shall be collected.

Pursuant to the Regulation on Labour Security Supervision*《勞動保障監察條例》 ( ) promulgated by the State Council on 1 November 2004, and implemented on 1 December 2004, and the Administrative Penalty Law of the PRC*《中華人民共和國行政處罰法》 ( ) promulgated on 17 March 1996 and amended by the SCNPC on 27 August 2009, 1 September 2017 and 22 January 2021, where an act of violating labour security laws, regulations or rules is neither investigated by the labour security administration nor reported or complained by others within two years, the labour security administration shall no longer investigate it. The period prescribed above shall be counted from the date on which the violation is committed. However, if the violation is of a continuous or continual nature, it shall be counted from the date on which such a violation is terminated.

– 100 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. REGULATORY OVERVIEW

According to the Urgent Notice of the General Office of the Ministry of Human Resources and Social Security on Implementing the Spirit of the Executive Meeting of the State Council in Stabilizing the Collection of Social Security Contributions*《關於貫徹落實國務院常務會議精 ( 神切實做好穩定社保徵收工作的緊急通知》) issued by Ministry of Human Resources and Social Security on 21 September 2018, the existing policies of collection in relation to basic endowment insurance premiums and the rates apply to residents in different areas shall remain unchanged until the implementation of restructuring of institutions responsible for collection of social insurance. The local authorities responsible for the collection of social insurance are strictly forbidden to conduct self-collection in a centralised manner of unpaid social insurance contributions from enterprises for the previous years.

According to the Notice of the State Administration of Taxation on Implementing Measures to Further Support and Serve the Development of Private Economy*《關於進一步支持和服務民 ( 營經濟發展若干措施的通知》) issued by SAT on 16 November 2018, SAT shall actively cooperate with relevant departments in conducting research into proposals for cuts in social insurance contribution rates, so as to ensure that the overall burden on enterprises will not be increased and the actual social insurance contribution burden borne by enterprises will be relieved substantially. In the process of reforming the collection and administration mechanism of social insurance contributions, the tax authorities at all levels must ensure that the payment methods are stable, actively cooperate with relevant departments in reasonably preparing the revenue budget of social insurance contributions that reflects the requirements for cuts in such contributions, and strictly levy such contributions according to the budget adopted by the NPC upon deliberation. With regard to the arrearages of contributors including private enterprises for previous years, centralised settlement shall not be organised or implemented without authorisation.

Housing Provident Fund

Pursuant to the Regulation on the Administration of Housing Provident Fund*《住房公積 ( 金管理條例》) promulgated by the State Council on 3 April 1999 and amended on 24 March 2002 and on 24 March 2019 and became effective on the same day, employers in the PRC must register with the housing provident fund management centre. Employers will then need to open housing fund accounts with specified banks for their employees and contribute to the fund at a rate of not less than 5% of the employee’s average monthly salary in the previous year.

Any entity fails to make payment and deposit registration of housing provident fund or go through the formalities for opening housing provident fund account for its employees will be ordered by the housing provident management centre to process the foregoing within prescribed period, otherwise it will be imposed a fine ranging from RMB10,000 to RMB50,000. Any entity fails to make payment of housing provident fund within the time limit or have shortfall in payment of housing provident fund will be ordered to make the payment or make up the shortfall within the prescribed time limit, otherwise, the housing provident management centre is entitled to apply for compulsory enforcement with a people’s court.

– 101 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HISTORY, REORGANISATION AND CORPORATE STRUCTURE

ESTABLISHMENT AND DEVELOPMENT OF OUR GROUP

Overview

The history of our Group can be traced back to the establishment by Mr. Zou and Mr. Zou Siyuan of Shandong Anyuan, our principal operating subsidiary, in November 2006. Since then, we have been carrying on the business of breeding and selling sea cucumbers in the PRC. Under the management of our senior management team led by Mr. Zou, we have emerged to become a leading sea cucumber breeder in the PRC and has ranked first among the young sea cucumber breeders in terms of water body, sales volume and market share in the PRC in 2020. Mr. Zou has over 33 years of experience in the sea cucumber aquaculture industry. For more information about Mr. Zou, please refer to the paragraph headed “Directors and Senior Management – Executive Directors” in this document.

Key Milestones

The following table sets out a summary of our Group’s key milestones since our inception:

Year Event

2006 Shandong Anyuan was established on 15 November 2006.

Our Shandong First Production Base began operation.

2008 Our Group was awarded and recognised as “Leading Enterprise for Agricultural Industrialisation in Shandong Province”* (山東省農業產業化重點龍頭企業).

We began to develop a new breed of sea cucumbers named as “Anyuan No.1” in collaboration with Dalian Ocean University.

2010 Our Group was awarded and recognised as “Famous Brand of Agricultural Product in Yantai (Aqua product)”* (煙台名牌農產品(水產品)) by Yantai Agricultural Branding Development Team* (煙台市農業品牌化建設領導小組).

2012 Our Group was awarded and recognised as “Provincial Penglai Sea Cucumber Fine Breed Production Base”* (省級蓬萊刺參良種場)bythe Department of Marine and Fishery of Shandong Province* (山東省海洋與漁業廳).

– 102 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HISTORY, REORGANISATION AND CORPORATE STRUCTURE

Year Event

2013 Our Group was awarded the Yantai Science and Technology Progress Award* (煙台市科學技術進步獎) by Yantai Science and Technology Award Evaluation Committee* (煙台市科學技術獎評審委員會).

Our Group was awarded the Marine and Fishery Science and Technology Award of Shandong Province* (山東省海洋與漁業科學技術獎) by The China Society of Fisheries of Shandong Province (山東水產學會).

We commenced the development of a new breed of sea cucumber named as “Anyuan No.2”.

We received the recognition as “National Shandong Penglai Sea Cucumber Breeding Site”* (國家級山東蓬萊刺參原種場)bythe Ministry of Agriculture and Rural Affairs of the PRC (中華人民共和國農業農村部).

2014 We received the recognition as the Enterprise of “Contracts Honouring and Creditworthy” in 2012–2013* (2012–2013年度“守合同重信用”企業) by State Administration for Industry and Commerce of the PRC* (中華人民共和國國家工商行政管理總局).

2015 Our Group was awarded the State Sciences and Technology Progress Award* (國家科學技術進步獎) by the State Council of the PRC.

Our Group was awarded the Chinese Academy of Fishery Sciences and Technology Progress Award* (中國水產科學研究院科技進步獎)bythe Chinese Academy of Fishery Sciences (中國水產科學研究院).

2016 Our Group was awarded the Science and Technology Progress Award of Shandong Province (山東省科學技術進步獎) by the People’s Government of Shandong Province.

2017 Our Shandong Second Production Base began operation.

We received the recognition as a Provincial Marine Ranching Demonstration Zone* (省級海洋牧場示範區) by the Department of Marine and Fishery of Shandong Province* (山東省海洋與漁業廳).

2018 We together with Dalian Ocean University obtained Anyuan No.1 Certificate.

– 103 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HISTORY, REORGANISATION AND CORPORATE STRUCTURE

Year Event

2019 We received recognition as a Marine Ranching Demonstration Zone at National Level* (國家級海洋牧場示範區) by the Ministry of Agriculture and Rural Affairs of the PRC (中華人民共和國農業農村部).

2020 Our Liaoning Production Base began operation.

We received recognition as Marine Aquaculture Comprehensive Standardisation Demonstration Zone at National Level* (國家海洋水產養殖綜合標準化示範區) by the Standardization Administration (國家標準化管理委員會).

Our Group obtained GB/T 19001 – 2016/ISO 9001:2015 Certificates of Quality Management System for the production of sea cucumber feeds and rearing of young sea cucumbers respectively, both on 12 May 2020.

OUR CORPORATE STRUCTURE

Our Company

In preparation for the [REDACTED], our Company was incorporated in the Cayman Islands under the Companies Act as an exempted company with limited liability on 21 November 2019. Upon completion of the Reorganisation, our Company became the holding company of our Group.

Our operating subsidiaries

As at the Latest Practicable Date, we have three operating subsidiaries as set out below:

Shandong Anyuan

Shandong Anyuan, our main operating subsidiary, known as Penglai City Anyuan Aquaculture Co., Ltd.* (蓬萊市安源水產有限公司) upon incorporation, was established in the PRC as a limited liability company on 15 November 2006 with a registered capital of RMB1,000,000.00, fully paid by Mr. Zou in the sum of RMB600,000.00 and Mr. Zou Siyuan (鄒斯源) in the sum of RMB400,000.00 respectively, on the same day. Accordingly, Mr. Zou and Mr. Zou Siyuan held 60% and 40% of equity interest in Shandong Anyuan respectively upon its incorporation.

– 104 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HISTORY, REORGANISATION AND CORPORATE STRUCTURE

On 14 October 2010, Shandong Anyuan’s registered capital was increased from RMB1,000,000 to RMB9,000,000.00 by RMB8,000,000.00 of which RMB4,800,000.00 and RMB3,200,000.00 were contributed in cash and in kind by Mr. Zou and Mr. Zou Siyuan respectively. Such increase in registered capital was duly registered on 26 October 2010.

Pursuant to the equity transfer agreements all dated 28 November 2010 respectively entered into between Mr. Zou and 25 individuals, Mr. Zou transferred approximately 7.90% in aggregate of the total equity interest of Shandong Anyuan at a total consideration of RMB5,434,489 which was each determined at arm’s length and with reference to the amount of registered capital contributed by Mr. Zou. On the same day, Mr. Zou Siyuan entered into equity transfer agreements with 20 individuals respectively and transferred approximately 9.21% in aggregate of the total equity interest of Shandong Anyuan at a total consideration of RMB6,337,603 which was each determined at arm’s length and with reference to the amount of registered capital contributed by Mr. Zou Siyuan. Such transfers of equity interests were duly registered on 17 December 2010. Upon the completion of such transfers, the shareholding structure of Shandong Anyuan was as follows:

Approximate percentage of Capital equity interest No. Name of equity interest owners contribution held (RMB)

1. Mr. Zou (Note 1) 4,688,910 52.10% 2. Mr. Zou Siyuan (鄒斯源) 2,770,740 30.79% 3. Mr. Zou Shifang (鄒士方) (Note 1) 149,400 1.66% 4. Mr. Liu (劉永旗) (Note 1) 142,200 1.58% 5. Mr. Liang Wenheng (梁文恒) (Note 3) 99,000 1.10% 6. Mr. Zhang (張建偉) (Notes 1 and 2) 83,700 0.93% 7. Ms. Zou Cuiwen (鄒翠文) (Note 2) 81,000 0.90% 8. Ji Shumei (季樹梅) (Note 2) 63,000 0.70% 9. Zhang Jian (張健) (Note 2) 59,580 0.66% 10. Yuan Zhonghui (苑忠輝) (Note 2) 18,000 0.20% 11. Zou Cuiyuan (鄒翠雲) (Note 2) 14,850 0.17% 12. Zou Hongyu (鄒紅宇) (Note 2) 14,400 0.16% 13. Zhang Jie (張傑) (Note 2) 12,600 0.14% 14. Liu Zhixing (劉志興) (Note 2) 12,150 0.14% 15. Zou Changbin (鄒昌斌) (Note 2) 10,800 0.12% 16. Ren Donghui (任東輝) (Note 2) 10,800 0.12% 17. Ji Huanqi (季煥琪) (Note 3) 5,400 0.06% 18. Ms. Liu Shuzhen (劉淑珍) (Note 2) 4,500 0.05% 19. Liu Weijia (劉偉家) (Note 2) 4,500 0.05% 20. Other equity interest owners (Note 3) 754,470 8.38%

Total 9,000,000 100%

– 105 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HISTORY, REORGANISATION AND CORPORATE STRUCTURE

Notes:

1. They are the executive Directors of our Company.

2. They are relatives to Mr. Zou.

3. To the best knowledge of our Directors having made all reasonable enquiries, Mr. Liang Wenheng, Ji Huanqi and “other equity interest owners” comprising of 28 individuals in total in the PRC are all Independent Third Parties. None of them held more than 5% of equity interests in Shandong Anyuan.

Set forth below is a summary of the change in ownership of Shandong Anyuan from 19 January 2011 to 30 June 2018:

Approximate % of shareholding of Shandong Anyuan as at: 19 January 14 September 21 September 31 December 30 November 30 November 28 February 30 June 2011 2011 2012 2013 2016 2017 2018 2018

Mr. Zou (Note 1) 46.89% 45.99% 44.05% 44.05% 42.93% 43.45% 43.45% 44.32% Mr. Zou Siyuan (鄒斯源) 27.71% 27.71% 26.54% 24.64% 24.64% 24.99% 24.99% 24.12% Mr. Zou Shifang (鄒士方) (Note 1) 1.49% 1.49% 1.93% 1.93% 1.93% 1.93% 1.93% 1.93% Mr. Liu (Note 1) 1.42% 1.42% 1.86% 1.86% 1.86% 1.86% 1.86% 1.86% Mr. Zhang (Notes 1 and 2) 0.84% 0.84% 1.30% 1.30% 1.30% 1.30% 1.30% 1.30% Ms. Zou Cuiwen (鄒翠文) (Note 2) 0.81% 0.81% 0.78% 0.78% 0.78% 0.78% 0.78% 0.78% Ji Shumei (季樹梅) (Note 2) 0.63% 0.63% 0.60% 0.60% 0.60% 0.60% 0.60% 0.60% Zhang Jian (張健) (Note 2) 0.60% 0.69% 0.71% 0.71% 0.71% 0.71% 0.71% 0.71% Yuan Zhonghui (苑忠輝) (Note 2) 0.18% 0.18% 0.17% 0.17% 0.17% 0.17% 0.17% 0.17% Wang Zengdong (王增東) (Note 1) N/A N/A 0.16% 0.16% 0.16% 0.16% 0.21% 0.21% Zou Cuiyuan (鄒翠雲) (Note 2) 0.15% 0.15% 0.14% 0.14% 0.14% 0.14% 0.14% 0.14% Zou Hongyu (鄒紅宇) (Note 2) 0.14% 0.14% 0.14% 0.14% 0.14% 0.14% 0.14% 0.14% Zhang Jie (張傑) (Note 2) 0.13% 0.13% 0.12% 0.12% 0.12% 0.12% 0.12% 0.12% Liu Zhixing (劉志興) (Note 2) 0.12% 0.12% 0.27% 0.27% 0.27% 0.27% 0.27% 0.27% Zou Changbin (鄒昌斌) (Note 2) 0.11% 0.11% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% Ren Donghui (任東輝) (Note 2) 0.11% 0.11% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% Ji Huanqi (季煥琪) (Note 3) 0.05% 0.05% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% Ms. Liu Shuzhen (劉淑珍) (Note 2) 0.05% 0.05% 0.04% 0.04% 0.04% 0.04% 0.04% 0.04% Liu Weijia (劉偉家) (Note 2) 0.05% 0.05% 0.04% 0.04% 0.04% 0.04% 0.04% 0.04% Zou Xue (鄒雪) (Note 2) N/A N/A 0.02% 0.02% 0.02% 0.02% 0.02% 0.02% Beijing CXB (Note 3) 6.58% 8.35% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% Shenzhen CXB (Note 3) 3.42% 3.42% 3.28% 3.28% 3.28% 3.28% 3.28% 3.28% Other Independent Third Parties 8.53%(Note 4) 7.57%(Note 5) 9.54%(Note 6) 11.43%(Note 7) 12.55%(Note 8) 11.69%(Note 9) 11.65%(Note 10) 11.65%(Note 11)

Total 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Notes:

1. They are the executive Directors of our Company.

2. They are relatives to Mr. Zou.

3. Ji Huanqi, Beijing CXB and Shenzhen CXB are Independent Third Parties.

– 106 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HISTORY, REORGANISATION AND CORPORATE STRUCTURE

4. To the best knowledge of our Directors, the 8.53% of the total equity interest in Shandong Anyuan was held by 29 individuals in the PRC, who are all Independent Third Parties.

5. To the best knowledge of our Directors, the 7.57% of the total equity interest in Shandong Anyuan was held by 29 individuals in the PRC, who are all Independent Third Parties.

6. To the best knowledge of our Directors, the 9.54% of the total issued shares in Shandong Anyuan was held by 66 individuals in the PRC, who are all Independent Third Parties.

7. To the best knowledge of our Directors, the 11.43% of the total issued shares in Shandong Anyuan was held by 67 individuals in the PRC, who are all Independent Third Parties.

8. To the best knowledge of our Directors, the 12.55% of the total issued shares in Shandong Anyuan was held by 67 individuals in the PRC, who are all Independent Third Parties.

9. To the best knowledge of our Directors, the 11.69% of the total issued shares in Shandong Anyuan was held by 66 individuals in the PRC, who are all Independent Third Parties.

10. To the best knowledge of our Directors, the 11.65% of the total issued shares in Shandong Anyuan was held by 65 individuals in the PRC, who are all Independent Third Parties.

11. To the best knowledge of our Directors, the 11.65% of the total issued shares in Shandong Anyuan was held by 65 individuals in the PRC, who are all Independent Third Parties.

Peng Anyuan Food

Peng Anyuan Food was incorporated in the PRC on 5 April 2016 as a limited liability company. Since its incorporation, Peng Anyuan Food’s registered capital has been RMB80,000,000.00 contributed by Shandong Anyuan. As at the Latest Practicable Date, it is an indirect wholly-owned subsidiary of our Company.

Anyuan (Liaoning)

Anyuan (Liaoning) was incorporated in the PRC on 30 September 2020 as a limited liability company. Since its incorporation, Anyuan (Liaoning)’s registered capital has been RMB10,000,000.00. As at the Latest Practicable Date, it is an indirect wholly-owned subsidiary of our Company.

– 107 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HISTORY, REORGANISATION AND CORPORATE STRUCTURE

Our dissolved entities

As at the Latest Practicable Date, we have dissolved three entities as set out below, to streamline our Group’s corporate structure:

Anyuan Cooperative

Anyuan Cooperative was formed in the PRC on 22 August 2012 as a specialised cooperative economic organisation of farmers* (農民專業合作經濟組織). As at the date of its formation, Anyuan Cooperative’s registered capital was RMB2,000,000.00. Shandong Anyuan was responsible for contributing RMB960,000.00 to its registered capital, representing 48% of the equity interest in Anyuan Cooperative. Anyuan Cooperative did not commence any business operation and was duly dissolved on 15 April 2020 as it was inactive.

Shandong Partnership

Shandong Partnership was formed in the PRC on 16 May 2016 as a limited partnership. As at the date of its formation, Shandong Partnership’s registered capital was RMB320,000,000.00. Since its formation, Shandong Anyuan has been one of its limited partners contributing 6.25% of its registered capital (i.e. RMB20,000,000.00), and it owned 6.25% of the equity interest of Shandong Partnership. Shandong Partnership had not commenced any operation and was duly dissolved on 16 December 2020 as it was inactive.

Li Jin

Li Jin was established in the PRC on 18 September 2007 by Shandong Anyuan as a branch company of Shandong Anyuan. Li Jin had no business operation since incorporation and its business licence was revoked on 30 November 2012 for its failure to comply with the requirement for annual examinations. On 24 September 2020, Li Jin was duly dissolved as it was inactive.

– 108 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HISTORY, REORGANISATION AND CORPORATE STRUCTURE

REORGANISATION

The corporate structure of Shandong Anyuan immediately before the Reorganisation is set out as follows:

Other Mr. Zou Beijing Shenzhen Ms. Chen Mr. Zou Mr. Yu Mr. Liang Mr. Zou Mr. Liu Mr. Zhang shareholders Siyuan CXB CXB Fang Shifang Yuequan Wenheng (Note)

44.32% 24.12% 8.00% 3.28% 2.84% 1.93% 1.90% 1.86% 1.45% 1.30% 9.00%

Shandong Anyuan

100% 48% 6.25% 100%

Peng Anyuan Anyuan Shandong Li Jin Food Cooperative Partnership

Note: To the best knowledge of the Directors having made all reasonable enquiries, ″other shareholders″ comprise of 77 individuals in the PRC.

1. Incorporation of BVI Investment Companies

For the purpose of the Reorganisation, the following companies were incorporated in the BVI as BVI business companies:

Name Details

Rich Great Rich Great was incorporated on 28 January 2019 and is authorised to issue 50,000 shares each with a par value of US$1.00.

On 27 July 2019, Rich Great allotted and issued one share as fully paid to Ms. Chen Fang. Since then, Rich Great has been wholly-owned by Ms. Chen Fang.

Allied Earn Allied Earn was incorporated on 28 January 2019 and is authorised to issue 50,000 shares each with a par value of US$1.00.

On 27 July 2019, Allied Earn allotted and issued one share as fully paid to Mr. Zou.

On 3 March 2020, Mr. Liang Wenheng (梁文恒), an employee of the Group, acquired the said one share in Allied Earn from Mr. Zou at the consideration of HK$27,000. On 9 March 2020, Allied Earn further allotted and issued 6,570 shares as fully paid to Mr. Liang Wenheng.

– 109 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HISTORY, REORGANISATION AND CORPORATE STRUCTURE

Name Details

On 16 April 2020, Allied Earn bought back 1,684 shares from Mr. Liang Wenheng and the shares were cancelled accordingly. On the same day, Ms. Zou Cuiwen, cousin-in-law of Mr. Zou, acquired 4,887 shares in Allied Earn from Mr. Liang Wenheng at the consideration of US$4,887. Upon completion of the transfer, Allied Earn became wholly-owned by Ms. Zou Cuiwen.

On 16 October 2020, Ms. Zou Cuiwen entered into a share entrustment agreement pursuant to which she agreed to hold 3,987 shares out of her 4,887 shares in Allied Earn for and on behalf of 15 individuals in the PRC who have made contribution to the registered capital of Shandong Anyuan through Peng Anyuan Investment or Kai Anyuan Investment. These 15 individuals include 13 relatives of Mr. Zou and two Independent Third Parties.

Good Standard Good Standard was incorporated on 18 April 2019 and is authorised to issue 50,000 shares each with a par value of US$1.00.

On 3 September 2019, Good Standard allotted and issued one share as fully paid to Mr. Zou. Since then, Good Standard has been wholly-owned by Mr. Zou.

Sheen World Sheen World was incorporated on 18 April 2019 and is authorised to issue 50,000 shares each with a par value of US$1.00.

On 3 September 2019, Sheen World allotted and issued one share as fully paid to Mr. Zou.

On 3 March 2020, Mr. Liang Wenheng acquired the said one share in Sheen World from Mr. Zou at a consideration of HK$27,000. On 9 March 2020 and 16 April 2020, Sheen World allotted and issued, in aggregate, 6,907 shares as fully paid to Mr. Liang Wenheng at par value. Since then, Sheen World has been wholly owned by Mr. Liang Wenheng.

On 16 October 2020, Mr. Liang Wenheng entered into a share entrustment agreement pursuant to which he agreed to hold 5,229 shares out of his 6,908 shares in Sheen World for and on behalf of 59 individuals in the PRC, all Independent Third Parties, who have contributed to the registered capital of Shandong Anyuan through Peng Anyuan Investment or Kai Anyuan Investment.

–110– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HISTORY, REORGANISATION AND CORPORATE STRUCTURE

Name Details

Keen Champ Keen Champ was incorporated on 18 April 2019 and is authorised to issue 50,000 shares each with a par value of US$1.00.

On 17 October 2019, Keen Champ allotted and issued one share as fully paid to Ms. Ma Liangping (馬良萍) at par value. Since then, Keen Champ has been wholly-owned by Ms. Ma.

Super Wise Super Wise was incorporated on 18 April 2019 and is authorised to issue 50,000 shares each with a par value of US$1.00.

On 3 September 2019, Super Wise allotted and issued one share as fully paid to Mr. Yu Hao (于皓) at par value. Since then, Super Wise has been wholly-owned by Mr. Yu.

Easy Express Easy Express was incorporated on 2 July 2019 and is authorised to issue 50,000 shares each with a par value of US$1.00.

On 3 September 2019, Easy Express allotted and issued one share as fully paid to Mr. Zou Siyuan at par value. Since then, Easy Express has been wholly-owned by Mr. Zou Siyuan.

Giant World Giant World was incorporated on 2 September 2019 and is authorised to issue 50,000 shares each with a par value of US$1.00.

On 6 January 2020, Giant World allotted and issued one share as fully paid to Ms. Luo Mingxiu (羅明秀) at par value. Since then, Giant World has been wholly-owned by Mr. Luo.

Bright Trend Bright Trend was incorporated on 2 January 2020 and is authorised to issue 50,000 shares each with a par value of US$1.00.

On 15 March 2020, Bright Trend allotted and issued one share as fully paid to Mr. Zhang, an executive Director, at par value.

On 22 April 2020, 1,506 shares and 50 shares in Bright Trend were allotted and issued as fully paid at par to Mr. Zhang and Ms. Liu Shuzhen (劉淑珍) (spouse of Mr. Zhang), respectively, at par value. Since then, Bright Trend has been owned by Mr. Zhang as to approximately 96.8% and by Ms. Liu as to approximately 3.2%.

– 111 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HISTORY, REORGANISATION AND CORPORATE STRUCTURE

Name Details

Nice Well Nice Well was incorporated on 2 January 2020 and is authorised to issue 50,000 shares each with a par value of US$1.00.

On 15 March 2020, Nice Well allotted and issued one share as fully paid at par to Mr. Liu, an executive Director. Since then, Nice Well has been wholly-owned by Mr. Liu.

Mighty Power Mighty Power was incorporated on 2 January 2020 and is authorised to issue 50,000 shares each with a par value of US$1.00.

On 15 March 2020, Mighty Power allotted and issued one share as fully paid to Mr. Wang, an executive Director, at par value. Since then, Mighty Power has been wholly-owned by Mr. Wang.

Glory Best Glory Best was incorporated on 2 January 2020 and is authorised to issue 50,000 shares each with a par value of US$1.00.

On 15 March 2020, Glory Best allotted and issued one share as fully paid at par to Mr. Zou Shifang (鄒士方), an executive Director. Since then, Glory Best has been wholly-owned by Mr. Zou Shifang.

Qiangsheng Qiangsheng was incorporated on 8 January 2020 and is authorised to issue 50,000 shares each with a par value of US$1.00. On the same day, Qiangsheng allotted and issued one share as fully paid to Mr. Xie Qiang (謝強) at par value.

On 10 June 2020, Mr. Xie Shiyu acquired from Mr. Xie Qiang the said one share in Qiangsheng at a consideration of HK$1.00. On the same day, 2,319 shares and 2,320 shares in Qiangsheng were allotted and issued as fully paid to Mr. Xie Shiyu and Ms. Yang Yamei (楊亞梅), respectively, at par value. Since then, Qiangsheng has been owned as to 50% by Mr. Xie Shiyu and 50% by Ms. Yang Yamei.

2. Change of shareholding in Shandong Anyuan

Pursuant to a share transfer agreement dated 10 March 2019, an Independent Third Party agreed to transfer 45,000 shares in Shandong Anyuan to Mr. Wang, an executive Director, at the consideration of RMB45,000, which was determined based on arm’s length negotiation with reference to the amount of contribution made by the said Independent Third Party towards the registered capital of Shandong Anyuan. Such transfer of shares was duly completed on 15 March 2019.

–112– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HISTORY, REORGANISATION AND CORPORATE STRUCTURE

Pursuant to a share transfer agreement dated 13 June 2019, another Independent Third Party agreed to transfer 2,200,000 shares in Shandong Anyuan to Mr. Yu Hao at the consideration of RMB10,780,000 which was determined based on arm’s length negotiation between the parties. Such transfer of shares was duly completed on 15 June 2019.

On 20 November 2019, Beijing CXB and Shenzhen CXB, who are both Independent Third Parties, together with Ms. Ma Liangping, Mr. Xie Qiang and Ms. Luo Mingxiu entered into a share transfer agreement, pursuant to which (i) Beijing CXB agreed to transfer 4,639,944 and 4,640,000 shares in Shandong Anyuan to Ms. Ma Liangping and Mr. Xie Qiang at the consideration of RMB19,049,885.04 and RMB19,050,114.96, respectively; and (ii) Shenzhen CXB agreed to transfer 2,740,708 shares and 1,060,459 shares in Shandong Anyuan to Ms. Ma Liangping and Ms. Luo Mingxiu at the consideration of RMB11,247,873.63 and RMB4,352,126.37, respectively. The considerations of the said transfers were determined based on arm’s length negotiations with reference to the amount of contribution made by Beijing CXB and Shenzhen CXB towards the registered capital of Shandong Anyuan, respectively.

Pursuant to a share transfer agreement entered into on 22 November 2019 between Mr. Zou, Mr. Wang Dong (王棟) and Ms. Ma Liangping, Mr. Zou agreed to transfer 2,222,222 shares in Shandong Anyuan to Mr. Wang Dong at nil consideration as compensation for his contribution in procuring the settlement of the dispute between Mr. Zou and Beijing CXB and Shenzhen CXB. Upon the instruction of Mr. Wang Dong, the said 2,222,222 shares were transferred to Ms. Ma Liangping as his nominee, who shall hold such shares for and on behalf of Mr. Wang Dong. Such transfer was duly completed on 30 November 2019.

3. Establishment of limited partnerships as shareholding platforms

Peng Anyuan Investment

On 27 August 2019, Mr. Zou and other 36 shareholders of Shandong Anyuan entered into a partnership agreement in relation to the establishment of Peng Anyuan Investment.

On 3 September 2019, Peng Anyuan Investment was established as a limited partnership under the laws of the PRC. As at the date of the establishment of Peng Anyuan Investment, Mr. Zou was its general partner and it had 36 limited partners, all of whom were individuals in the PRC and shareholders of Shandong Anyuan.

On 25 September 2019, Mr. Zou and the then limited partners of Peng Anyuan Investment entered into share transfer agreements with Peng Anyuan Investment, pursuant to which they agreed to transfer 13,449,289 shares in aggregate in Shandong Anyuan to Peng Anyuan Investment at nil consideration. Upon completion of such transfers on 22 January 2020, the said share interests of Mr. Zou and the said 36 individuals in Shandong Anyuan were indirectly held through Peng Anyuan Investment.

–113– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HISTORY, REORGANISATION AND CORPORATE STRUCTURE

Kai Anyuan Investment

On 30 August 2019, Mr. Zou and other 44 shareholders of Shandong Anyuan entered into a partnership agreement in relation to the establishment of Kai Anyuan Investment.

On 4 September 2019, Kai Anyuan Investment was established as a limited partnership under the laws of the PRC. As at the date of establishment of Kai Anyuan Investment, Mr. Zou was its general partner and it had 44 limited partners, all of whom were individuals in the PRC and shareholders of Shandong Anyuan.

On 25 September 2019, Mr. Zou and the said 44 limited partners of Kai Anyuan Investment entered into share transfer agreements with Kai Anyuan Investment, pursuant to which they agreed to transfer 4,604,600 shares in aggregate in Shandong Anyuan to Kai Anyuan Investment at nil consideration. Upon completion of such transfers on 22 January 2020, the said share interests of Mr. Zou and the said 44 individuals in Shandong Anyuan were indirectly held through Kai Anyuan Investment.

4. Incorporation of our Company

On 21 November 2019, our Company was incorporated in the Cayman Islands as an exempted company with limited liability, having an authorised share capital of US$50,000.00 divided into 50,000 Shares with a par value of US$1.00 each. On the same day, one Share was allotted and issued to the initial subscriber, an Independent Third Party, at par, which was then immediately transferred to Allied Earn.

5. Incorporation of a subsidiary in the BVI

On 2 September 2019, Great Winner was incorporated in the BVI under the laws of the BVI as a BVI business company. It is authorised to issue a maximum of 50,000 shares each with a par value of US$1.00. On 7 January 2020, one share in Great Winner was allotted and issued as fully paid to our Company at par value and thus Great Winner became a wholly-owned subsidiary of our Company.

6. Conversion of Shandong Anyuan from a joint stock company with limited liability to a limited liability company

On 21 January 2020, the then shareholders of Shandong Anyuan have passed resolutions approving, among other things, the conversion of Shandong Anyuan from a joint stock company with limited liability into a limited liability company, and the renaming of Shandong Anyuan as “Shandong Anyuan Marine Breeding Co., Limited* (山東安源種業科技有限公司)”. The legal procedure for such conversion and renaming was duly completed on 22 January 2020.

–114– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HISTORY, REORGANISATION AND CORPORATE STRUCTURE

Upon the completion of Step 6 above, the registered capital of Shandong Anyuan was RMB116,000,000.00 and its ownership structure was as follows:

Approximate percentage of Capital equity interest Name of equity interest owners contribution held (RMB)

Mr. Zou 49,164,778 42.38% Mr. Zou Siyuan 27,978,000 24.12% Peng Anyuan Investment 13,449,289 11.60% Ms. Ma Liangping 9,602,874 8.28% Mr. Xie Qiang 4,640,000 4.00% Kai Anyuan Investment 4,604,600 3.97% Ms. Chen Fang 3,300,000 2.84% Mr. Yu Hao 2,200,000 1.90% Ms. Luo Mingxiu 1,060,459 0.91%

Total: 116,000,000 100%

7. Incorporation of a subsidiary in Hong Kong

On 22 January 2020, Anyuan Biotech was incorporated in Hong Kong under the laws of Hong Kong as a limited liability company. Upon incorporation, one share in Anyuan Biotech was allotted and issued as fully paid to Great Winner. Thus, Anyuan Biotech became wholly owned by Great Winner, and an indirect wholly-owned subsidiary of our Company.

–115– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HISTORY, REORGANISATION AND CORPORATE STRUCTURE

8. Subdivision of share capital of our Company and allotment of Shares to the BVI Investment Companies

On 20 April 2020, each issued and unissued share of par value US$1.00 in the share capital of the Company was subdivided into 100 Shares of par value US$0.01 each, following which the authorised share capital of our Company became US$50,000.00 divided into 5,000,000 Shares each with a par value of US$0.01. On the same day, after allotment and issuance of Shares to the BVI Investment Companies, the shareholding of our Company was as follows:

Approximate Number of percentage of Name of Shareholders Shares shareholding

Good Standard 48,023 41.82% Easy Express 27,978 24.36% Keen Champ 9,603 8.36% Sheen World 6,908 6.02% Allied Earn 4,887 4.26% Qiangsheng 4,640 4.04% Rich Great 3,300 2.87% Glory Best 2,239 1.95% Super Wise 2,200 1.92% Nice Well 2,159 1.88% Bright Trend 1,557 1.36% Giant World 1,061 0.92% Mighty Power 285 0.25%

Total: 114,840 100%

–116– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HISTORY, REORGANISATION AND CORPORATE STRUCTURE

9. [REDACTED] by Dr. Yee Wu

Please refer to the paragraph headed “Transfer of equity interest in Shandong Anyuan” in Appendix III to this document for details of the [REDACTED].

10. Establishment of Anyuan Development and its acquisition of 99% of the total equity interest in Shandong Anyuan

On 17 June 2020, Anyuan Development was established in the PRC as a limited liability company with a registered capital of HK$3,600,000.00. As at the date of its establishment, Anyuan Development was wholly owned by Anyuan Biotech.

On 27 June 2020, all the then equity owners of Shandong Anyuan, except Mr. Xie Shiyu, Ms. Yang Yamei and Leap Profit, agreed to transfer 95% in aggregate of the total equity interest in Shandong Anyuan to Anyuan Development at a total consideration of RMB110,200,000, which was financed by capitalised shareholder’s loan and determined with reference to the then registered capital of Shandong Anyuan. Such transfers were duly completed on 30 October 2020.

On 30 October 2020, each of Mr. Xie Shiyu and Ms. Yang Yamei entered into an equity transfer agreement with Anyuan Development whereby they agreed to transfer, in aggregate, 4% of the total equity interest in Shandong Anyuan to Anyuan Development at a total consideration of RMB4,640,000 which was financed by capitalised shareholder’s loan and was determined with reference to the then registered capital of Shandong Anyuan. Such transfers were duly completed on 30 October 2020.

Upon completion of the above transfers of equity interest, Shandong Anyuan became owned as to 99% by Anyuan Development and 1% by Leap Profit.

11. Share swap

Please refer to the paragraph headed “Share Swap” as set out in Appendix III to this document for details of the share swap between our Company and Dr. Yee Wu.

12. Establishment of Anyuan (Liaoning)

On 30 September 2020, Anyuan (Liaoning) was established in the PRC as a company with limited liability. As at the date of its establishment, Anyuan (Liaoning)’s registered capital was RMB10,000,000.00. Anyuan (Liaoning) has been wholly owned by Shandong Anyuan since incorporation.

–117– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HISTORY, REORGANISATION AND CORPORATE STRUCTURE

13. Deregistration of entities in Shandong Anyuan

As part of the Reorganisation, to streamline the corporate structure of the Group, the following entities have been deregistered:

Name of deregistered Reason(s) for entities (Note) Date of deregistration deregistration

Anyuan Cooperative 15 April 2020 The entity was inactive and had no business operation

Li Jin 24 September 2020 The company was inactive and had no business operation

Shandong Partnership 16 December 2020 The entity was inactive and had no business operation

Note: As confirmed by our Directors, each of the deregistered entities had complied with the applicable laws and regulations in all material respects, and had not been involved in any material legal, regulatory, arbitral or administrative proceedings, investigations or claims before its deregistration.

PARTIES ACTING IN CONCERT

Mr. Zou, Mr. Zou Siyuan, Mr. Zhang, Ms. Liu Shuzhen, Bright Trend, Good Standard and Easy Express, being our ultimate Controlling Shareholders, were acting in concert with each other and they collectively managed and supervised the major business, operational, financial and other material matters of our Group.

In light of the trust and confidence they have in each other, our ultimate Controlling Shareholders have agreed to formalize the acting in concert arrangement and to reach unanimous decisions on the major business, operational, financial and other material matters of our Group. On 20 September 2020, our Controlling Shareholders entered into the Deed of Acting in Concert and the Deed of Acting in Concert shall take effect from the date of the Deed of Acting in Concert and continue to be effective until the occurrence of any of the following events: (a) any party gives the other parties prior written notice of its termination of the Deed of Acting in Concert; (b) If one year after [REDACTED], any party does not agree to continue acting in concert with the heir of any party (if any) or any of the heirs (if any) is unwilling to be bound by the Deed of Acting in Concert; and (c) any of the parties cease to have any direct or indirect interest in our Group. The principal terms of the Deed of Acting in Concert are as follows:

(a) The parties herein shall reach unanimous decision and/or act in concert for all material matters and commercial decisions, including but not limited to financial and operational matters, of our Group;

–118– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HISTORY, REORGANISATION AND CORPORATE STRUCTURE

(b) The parties herein shall give unanimous consent, approval or rejection on any other material issues and decisions in relation to the business of our Group;

(c) The parties herein shall cast unanimous votes collectively for or against all resolutions in all shareholders’ meetings of our Group; and

(d) When consensus cannot be reached through negotiations, Mr. Zou and Good Standard shall make a decision and other parties shall unconditionally comply with this decision.

Corporate structure immediately upon the completion of the Reorganisation

The chart below illustrates the corporate structure of our Group immediately after the Reorganisation but before the completion of the [REDACTED] and [REDACTED]:

(Note 1)

Mr. Zou Ms. Liu Ms. Ma Mr. Liang Ms. Zou Mr. Xie Ms. Yang Ms. Chen Mr. Zou Ms. Luo Mr. Zou Mr. Zhang Wenheng Cuiwen Mr. Yu Hao Mr. Liu Dr. Yee Wu Mr. Wang Siyuan Shuzhen Liangping (Note 2) (Note 3) Shiyu Yamei Fang Shifang Mingxiu 100% 100% 96.8% 3.2% 100%100% 100%50% 50% 100% 100% 100% 100% 100% 100% 100%

Good Standard Easy Express Bright Trend Keen Champ Sheen World Allied Earn Qiangsheng Rich Great Glory Best Super Wise Nice Well Topwealth Giant World Mighty Power (BVI) (BVI) (BVI) (BVI) (BVI) (BVI) (BVI) (BVI) (BVI) (BVI) (BVI) (BVI) (BVI) (BVI)

41.40% 24.12%1.34% 8.28%5.96% 4.21% 4.00% 2.84% 1.93% 1.90% 1.86% 1.00%0.91% 0.25%

Our Company (Cayman Islands)

100% 100%

Great Winner Perfect Force (BVI) (BVI)

100% 100%

Anyuan Biotech Leap Profit (Hong Kong) (Hong Kong) Offshore

100% 1% Onshore

Anyuan Development (PRC)

99%

Shandong Anyuan (PRC)

100% 100%

Peng Anyuan Anyuan Food (Liaoning) (PRC) (PRC)

Notes:

1. On 20 September 2020, Mr. Zou, Mr. Zou Siyuan, Mr. Zhang, Ms. Liu Shuzhen, Bright Trend, Good Standard and Easy Express entered into the Deed of Acting in Concert. They agreed to act in concert with each other and to reach unanimous decision on the major business, operational, financial and other material matters of our Group.

2. On 16 October 2020, Mr. Liang Wenheng entered into a share entrustment agreement pursuant to which he agreed to hold 5,229 shares out of his 6,908 shares in Sheen World for and on behalf of 59 individuals in the PRC who have contributed to the registered capital of Shandong Anyuan through Peng Anyuan Investment or Kai Anyuan Investment.

3. On 16 October 2020, Ms. Zou Cuiwen entered into a share entrustment agreement pursuant to which she agreed to hold 3,987 shares out of her 4,887 shares in Allied Earn for and on behalf of 15 individuals in the PRC who have made contribution to the registered capital of Shandong Anyuan through Peng Anyuan Investment or Kai Anyuan Investment. These 15 individuals include 13 relatives of Mr. Zou and two Independent Third Parties.

–119– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HISTORY, REORGANISATION AND CORPORATE STRUCTURE

[REDACTED] AND [REDACTED]

[REDACTED]

Pursuant to the written resolutions of our Shareholders passed on [•], conditional upon the fulfillment or waiver of the conditions set out in “Structure and Condition of the [REDACTED]” in this document and subject to the share premium account of our Company having sufficient balance, or otherwise being credited as a result of the issue of the new Shares under the [REDACTED], our Directors are authorised to allot and issue a total of [260,884,000] Shares credited as fully paid at par to the Shareholders whose names appear on the register of members of our Company at the close of business on [28 October 2021] in proportion to their shareholdings by way of capitalisation of an amount of US$ [REDACTED] standing to the credit of the share premium account of our Company.

[REDACTED]

The [REDACTED] comprises the [REDACTED] and the [REDACTED], involving the issue of a total of [REDACTED] Shares. Under the [REDACTED], [REDACTED] Shares, representing approximately [REDACTED]% of the enlarged issued share capital of our Company upon [REDACTED] will be issued and placed. Under the [REDACTED], [REDACTED] Shares, representing approximately [REDACTED]% of the enlarged issued share capital of our Company upon [REDACTED], will be offered for subscription by members of the public in Hong Kong.

Corporate structure immediately after the completion of the [REDACTED] and [REDACTED]

The chart below sets out the corporate structure of our Group immediately after the Reorganisation and the completion of the [REDACTED] and [REDACTED]:

(Note 1)

Mr. Zou Ms. Liu Ms. Ma Mr. Liang Ms. Zou Mr. Xie Ms. Yang Ms. Chen Mr. Zou Ms. Luo Mr. Zou Mr. Zhang Liangping Wenheng Mr. Yu Hao Mr. Liu Dr. Yee Wu Mr. Wang Siyuan Shuzhen (Note 2) Cuiwen (Note 3) Shiyu Yamei Fang Shifang Mingxiu 100% 100% 96.8% 3.2% 100%100% 100%50% 50% 100% 100% 100% 100% 100% 100% 100%

Good Standard Easy Express Bright Trend Keen Champ Sheen World Allied Earn Qiangsheng Rich Great Glory Best Super Wise Nice Well Topwealth Giant World Mighty Power Public (BVI) (BVI) (BVI) (BVI) (BVI) (BVI) (BVI) (BVI) (BVI) (BVI) (BVI) (BVI) (BVI) (BVI) shareholders

[REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]%[REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]%

Our Company (Cayman Islands)

100% 100%

Great Winner Perfect Force (BVI) (BVI)

100% 100%

Anyuan Biotech Leap Profit (Hong Kong) (Hong Kong) Offshore

100% 1% Onshore

Anyuan Development (PRC)

99%

Shandong Anyuan (PRC)

100% 100%

Peng Anyuan Anyuan Food (Liaoning) (PRC) (PRC)

– 120 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HISTORY, REORGANISATION AND CORPORATE STRUCTURE

Notes:

1. On 20 September 2020, Mr. Zou, Mr. Zou Siyuan, Mr. Zhang, Ms. Liu Shuzhen, Bright Trend, Good Standard and Easy Express entered into the Deed of Acting in Concert. They agreed to act in concert with each other to reach unanimous decision on the major business, operational, financial and other material matters of our Group.

3. On 16 October 2020, Ms. Zou Cuiwen entered into a share entrustment agreement pursuant to which she agreed to hold 3,987 shares out of her 4,887 shares in Allied Earn for and on behalf of 15 individuals in PRC who have made contribution to the registered capital of Shandong Anyuan through Peng Anyuan Investment or Kai Anyuan Investment. These 15 individuals include 13 relatives of Mr. Zou and two Independent Third Parties.

PRC REGULATORY REQUIREMENTS

The Regulations on the Mergers and Acquisition of Domestic Enterprises by Foreign Investors in the PRC

According to the Regulations on Merger and Acquisition of Domestic Enterprises by Foreign Investors*《關於外國投資者併購境內企業的規定》 ( ) (the “PRC Regulations on Merger and Acquisition”) jointly issued by the authorities in the PRC on 8 August 2006, and revised on 22 June 2009 a foreign investor is required to obtain necessary approvals when it (i) acquires the equity of a domestic enterprise so as to convert the domestic enterprise into a foreign-invested enterprise; (ii) subscribes the increased capital of a domestic enterprise so as to convert the domestic enterprise into a foreign-invested enterprise; (iii) establishes a foreign-invested enterprise through which it purchases the assets of a domestic enterprise and operates these assets; or (iv) purchases the assets of a domestic enterprise, and then invests such assets to establish a foreign invested enterprise.

The PRC Regulations on Merger and Acquisition, among other things, further purport to require that an offshore special vehicle, or a special purpose vehicle, formed for listing purposes and controlled directly or indirectly by PRC companies or individuals, shall obtain the approval of the China Securities Regulatory Commission (the “CSRC”) prior to the listing and trading of such special purpose vehicle’s securities on an overseas stock exchange, especially in the event that the special purpose vehicle acquires shares of or equity interests in the PRC companies in exchange for the shares of offshore companies.

– 121 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HISTORY, REORGANISATION AND CORPORATE STRUCTURE

SAFE Circular 37 and ODI Rules

Pursuant to the Circular on Foreign Exchange Administration of Overseas Investment, Financing and Round-trip Investments Conducted by Domestic Residents through Special Purpose Vehicles*《關於境內居民通過特殊目的公司境外投融資及返程投資外匯管理有關問題 ( 的通知》) (the “SAFE Circular 37”), promulgated by State Administration of Foreign Exchange of the PRC (the “SAFE”), a PRC resident must register with the local SAFE branch before he or she contributes assets or equity interests in an overseas special purpose vehicle that is directly established or indirectly controlled by the PRC resident for the purpose of conducting investment or financing. [Pursuant to the Circular of the SAFE on Further Simplification and Improvement in Foreign Exchange Administration on Direct Investment*《關於進一步簡化和改 ( 進直接投資外匯管理政策的通知》) (the “SAFE Circular 13”), promulgated by SAFE which became effective on 1 June, 2015, the power to accept SAFE registration was delegated from local SAFE to local banks where the domestic entity was registered. [Pursuant to the Administrative Measures for the Outbound Investment of Enterprises*《企業境外投資管理辦 ( 法》) and the Measures on the Administration of Overseas Investments*《境外投資管理辦法》 ( ) (collectively, “ODI Rules”), promulgated by the National Development and Reforming Commission and the Ministry of Commerce of the PRC respectively, a domestic institution shall undergo approval or record-filing or other procedure with the relevant authorities prior to its overseas investment in accordance with the provisions of the ODI Rules.

As advised by our PRC Legal Advisers, our ultimate PRC individual shareholders (as PRC residents as defined under the applicable provisions under SAFE Circular 37) have completed the registration under the Circular 37 by 22 October 2020.

PRC Legal Compliance

Our PRC Legal Advisers confirm that all relevant approvals and permits (where applicable) required under the PRC laws and regulations in respect of the Reorganisation as described above have been obtained and the procedures and steps involved are in compliance with the relevant PRC laws and regulations.

– 122 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

OVERVIEW

We are the leading young sea cucumber breeder in the PRC, as we ranked first in 2020 among the sea cucumber breeders in terms of water body and sales volume in the PRC according to the CIC Report. Our Group has a large-scale water body for the aquaculture of young sea cucumber. As at the Latest Practicable Date, our Group has three production bases, namely Shandong First Production Base, Shandong Second Production Base and Liaoning Production Base with a total water body of approximately 101,900 m3 for the aquaculture of sea cucumbers at our workshops. Our Group is principally based in Shandong and Liaoning in the PRC, with more than 14 years of experience in the sea cucumber industry. Over the years, our management and working team has accumulated experience and developed technical know-how in breeding sea cucumber and production of feeds for young sea cucumber.

Cultivated a new breed of sea cucumber: Our Group has been continuously modifying our breed of sea cucumber, with the effort spent for over 10 years, the breed of sea cucumber “Anyuan No.1” cultivated by our Group has been recognised as a new breed of sea cucumber in 2018 and we were granted with Anyuan No.1 Certificate by the PRC government.

Our products: As at the Latest Practicable Date, our main products include (i) larvae; (ii) juvenile sea cucumbers; and (iii) the feeds for young sea cucumbers.

The following table set forth the breakdown of our revenue by business segment during the Track Record Period:

Year ended 31 December 2018 2019 2020 RMB’000 % RMB’000 % RMB’000 %

Aquaculture and sales of sea cucumbers (Note) 162,779 97.5 189,967 95.6 198,312 92.8 Production and sales of feeds for young sea cucumbers 4,205 2.5 8,845 4.4 15,298 7.2

Total 166,984 100.0 198,812 100.0 213,610 100.0

Note: The sea cucumbers include larvae of sea cucumber, small juvenile sea cucumbers, large juvenile sea cucumbers, mature sea cucumber and primarily-processed sea cucumber products. We have ceased the production of primarily-processed sea cucumber products since April 2021, we retained a small amount of primarily-processed sea cucumber products as inventories as at the Latest Practicable Date. We have ceased the sale of mature sea cucumbers since August 2019.

– 123 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

Characteristics of “Anyuan No.1”: Penglai Ocean and Fisheries Bureau* (蓬萊市海洋與漁業局), which was the relevant governing authority in respect of application for new breed of sea cucumbers opined that “Anyuan No.1” has a higher weight and more wart feet than the local sea cucumber, which is a sea cucumber breed with better trait. Based on the result of the tests, Penglai Ocean and Fisheries Bureau has opined that “Anyuan No.1” breed of sea cucumber has significant advantages over the local breeds of sea cucumbers. According to the CIC Report, in the period from 2010 to 2020, the government of PRC has approved six new breeds of sea cucumber. Among which Anyuan No.1 is the only sea cucumber breed that is not cultivated based on wild breed and it is the only breed the development of which was led by an enterprise and that was named after the enterprise name. Owing to the better genetics characteristics of Anyuan No. 1, this breed is sold at a higher price than other local breeds.

COMPETITIVE STRENGTHS

Our Directors believe that our success is attributed to, amongst others, the following competitive strengths:

Leading position in the young sea cucumber aquaculture industry in the PRC with large-scale production

We were established in 2006 and have since then developed into the leading young sea cucumber producer in the PRC. According to the CIC Report, in 2020 we ranked as the largest young sea cucumber producer in the PRC by sales volume, with approximately 962,300 kg of young sea cucumber sold and our market share was approximately 5.4%, while the second largest young sea cucumber producer in the PRC during FY2020 had sold approximately 270,000 kg of young sea cucumber and had a market share of approximately 1.5%. We also ranked as the largest sea cucumber producer in terms of aquaculture water body, as our workshops have a water body of approximately 101,900 m3 in aggregate as at the Latest Practicable Date. Also, our size enables us to carry on large-scale breeding and production of sea cucumber products and thus enjoy significant economies of scale, which allows us to achieve cost savings and improve our operational efficiency.

The young sea cucumber aquaculture market in the PRC is extremely fragmented, with over 1,000 young sea cucumber breeders in the market in 2020 and the majority of these young sea cucumber breeders are small scale players whose aquaculture facilities have a water body of less than 10,000 m3. Young sea cucumber breeders which can be considered to be large scale are typically those whose aquaculture facilities have a water body of 50,000 m3 or above and there are only approximately 10 to 20 large scale young sea cucumber breeders in the entire PRC in 2020. Accordingly, we believe that when compared to other market players, we have relatively more bargaining power when negotiating with our suppliers which should enable us to reduce our costs of sales.

– 124 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

Moreover, our large-scale production has also allowed us to reduce the risk of “inbreeding” which refers to the breeding among sea cucumbers with close proximity in genes, which results in offspring that are prone to developing undesirable genetic characteristics and genetic diseases. Other sea cucumber breeders of smaller scale can only use a small number of broodstock to breed sea cucumbers which is more likely to lead to inbreeding.

We also lead our peers as we are one of the few sea cucumber breeders in PRC that produce our own feeds used in breeding our sea cucumbers. To ensure that only feeds of high quality are used in the rearing of our sea cucumbers, we have commenced production of feeds for sea cucumbers prior to the Track Record Period. Additionally, by producing our own feeds, we can reduce our reliance on suppliers and avoid the risk of fluctuation in prices of feeds. We have also increased our sources of income as we sold our feeds to other sea cucumber breeders in PRC.

We specialise in breeding and selling Anyuan No.1 which is developed by our Group in collaboration with Dalian Ocean University and can be sold at a higher price compared to local breeds

During the Track Record Period, all the sea cucumbers we sold to our customers, including larvae and juvenile sea cucumbers, were of the breed of Anyuan No.1. As confirmed by CIC, Anyuan No.1 has more wart feet, higher growth rate and higher survival rate, and therefore can be sold at a higher price, when compared with other local breeds of sea cucumbers.

In view of the importance of Anyuan No.1 to our Group, as disclosed in the paragraph headed “Research and Development – IV. Protection of our know-how” in this section, we have adopted various measures to ensure that no other sea cucumber breeders can breed and sell Anyuan No.1 in large quantities on their own. Accordingly, we believe that we can remain as the exclusive breeder and supplier of Anyuan No.1 which distinguishes us from our competitors.

Moreover, since we have bred and sold only the Anyuan No.1 sea cucumbers, we have become specialised and developed a high level of skills in breeding Anyuan No.1, which enables us to better maintain the quality of our Anyuan No.1 products. We believe that focusing on the breeding of Anyuan No.1 enables us to increase our operational efficiency and reduce our costs as we do not need to adjust our breeding methods and facilities for rearing other breeds of sea cucumbers. Furthermore, as our Anyuan No.1 has relatively high survival rates, we can reduce waste and spoilage as well.

– 125 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

Strong research and development capabilities

We devote extensive efforts in the research and development of matters relating to the rearing and breeding of sea cucumbers. We have two research laboratories which are located at our Shandong First Production Base. As at the Latest Practicable Date, we have a cross-departmental research and development team comprising 23 employees from various departments of our Group, who included certified technicians and a practising assistant aquatic veterinary (“執業助理水生動物獸醫師”). Expenditures on research and development during the Track Record Period amounted to approximately RMB2.8 million, RMB1.6 million and RMB9.4 million in FY2018, FY2019 and FY2020 respectively.

Our research and development team is primarily responsible for (i) researching on methods and techniques in relation to the rearing of sea cucumbers, and (ii) development of new breeds of sea cucumbers to satisfy customer demand. In March 2008, we began developing a new breed of sea cucumbers with Dalian Ocean University through the selective breeding of “Shuiyuan No. 1”, a breed of sea cucumber developed by Dalian Ocean University. In FY2018, the National Approval Committee formally recognised our new breed as “Anyuan No. 1”, being the only new breed of sea cucumbers from 2010 to 2020 that bears the name of a company, and it has better characteristics than other local breeds of sea cucumber as disclosed in the paragraph headed “Products – I. Breeding of Anyuan No. 1” in this section. We intend to submit an application for a new breed of sea cucumbers in mid 2022 that shall bear the name “Anyuan No. 2”.

Aside from collaborating with Dalian Ocean University, we have also collaborated with other leading agricultural universities and institutions in the PRC, including the Yellow Sea Fisheries Research Institute of the Chinese Academy of Fisheries Sciences, the Marine Biology Institute of Shandong Province and the Yantai Fisheries Research Institute to develop systems and processes relating to the rearing of sea cucumbers. Research projects conducted during the Track Record Period have included methods on preventing the spread of sea cucumber related diseases without the use of antibiotics, development of different feed mixtures and rearing techniques to increase efficiency and yields. For details, please refer to the paragraph headed “Research and Development – I. Our research projects and our honorary consultants” in this section.

In light of the success of our research and development efforts, we believe that our research and development capabilities will continue to contribute to our growth and profitability in the future through enabling us to improve our efficiency and readily responding to market needs and challenges.

– 126 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

Stringent quality control systems

We place great emphasis on the quality and safety of our products to safeguard our industry reputation and the safety of our customers and end-users. Therefore, we have adopted a series of quality control measure procedures. As at the Latest Practicable Date, our quality assurance and control teams consists of seven members. We have also been accredited with international certifications including GB/T 27304-2008/ISO 22000:2018 – Food safety management system and GB/T 19001 – 2016/ISO 9001:2015 – Quality management system. Further, in recognition of our stringent quality control systems, we were also invited to participate in the drafting of the “Technical specifications for artificial breeding of sea cucumbers SC/T 2097-2019” industrial standards published in 2019 by the Ministry of Agricultural and Rural Affairs of the PRC government.

As part of our quality control measures and to ensure the safety and quality of the products manufactured by us, we have adopted quality control and food safety assurance measures including but not limited to: (i) raw materials used in the production of our feeds can only be sourced from designated suppliers on our Group’s internal supplier list and will be tested to ensure that they meet the relevant safety requirements, (ii) water quality testing is frequently conducted to ensure that our sea cucumbers are reared in an optimum environment and the water used in our water tanks is required to go through a multi-stage purification process to remove out any impurities and (iii) sample checks are performed on our sea cucumbers to ascertain if there are any diseases, pollutants and other contaminants which may affect their quality and safety so as to ensure that they are able to satisfy the relevant national standards. For details as to our quality control measures, please refer to the paragraph headed “Quality Control” in this section.

Given our quality control measures and efforts in sourcing quality raw materials, we believe that our products are capable of meeting the expectations of our customers, especially in light of the increasing concerns amongst PRC consumers as to product safety. We further believe that our emphasis on product quality will serve to enhance our goodwill and brand reputation, and enable our Group to have long-term success in the sea cucumber aquaculture industry.

– 127 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

Experienced management team with a proven track record to lead our development

We are led by an experienced management team, which is comprised of knowledgeable and experienced personnel in the sea cucumber aquaculture industry in the PRC. Mr. Zou, our founder as well as our chairman and an executive Director, has over 33 years of experience in the sea cucumber aquaculture industry in the PRC. He is primarily responsible for formulating corporate strategies and plans for business development and has been instrumental to our Group’s development. In recognition of his abilities in the sea cucumber aquaculture industry in the PRC, in 2019, Mr. Zou was invited by Shandong Marine Resources and Environment Research Institute* (山東省海洋資源與環境研究院) to be their visiting researcher. Mr. Zhang, our chief executive officer and an executive Director, has over 21 years of experience in the sea cucumber aquaculture industry in the PRC and also possesses over 14 years of experience in management and operations. Mr. Zou Shifang, an executive Director, possesses over 32 years of experience in the sea cucumber aquaculture industry in the PRC and also possesses over 14 years of experience in management and operations. Mr Liu and Mr. Wang, our chief operating officers and executive Directors, possesses over 27 and 16 years of experience in the sea cucumber aquaculture industry in the PRC respectively. Since 2019, Mr. Zhang, Mr. Zou Shifang, Mr. Liu have been hired by Yantai City Fishery Technology Promotion Station as a senior engineer.

Our management team contributed significantly to our continued growth during the Track Record Period and we believe that, given the industry knowledge and experience of our management team, our Group will be able to respond to and cope readily with the changing market conditions in the sea cucumber aquaculture industry in the PRC. For further information on the experience and credentials of our management team, please refer to the section headed “Directors and Senior Management” in this document.

BUSINESS STRATEGIES

Our principal goal is to further strengthen our position as the market leader in the PRC’s large-scale young sea cucumber aquaculture industry. We continuously seek opportunities to achieve sustainable growth of our business and to enhance shareholder value. We intend to achieve this goal by implementing the following strategies:

1. Expand our production capacity for young sea cucumber production to further enhance our supply capability

According to the CIC Report, the sales revenue of young sea cucumbers in the PRC increased from approximately RMB1.6 billion in 2015 to approximately RMB3.3 billion in 2020, representing a CAGR of approximately 15.6%. Going forward, the sales revenue of young sea cucumbers is anticipated to keep the growing trend in the PRC due to increasing demand in food consumption for their high nutritional value and treating them as gifts to friends and families at festivals and holidays. In forecast, the sales revenue of juvenile sea cucumber in the PRC is expected to reach approximately RMB4.5 billion in 2025 with a CAGR of approximately 6.4% from 2020 to 2025.

– 128 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

In FY2020, the annual productivity of juvenile sea cucumbers of our Shandong First Production Base has reached approximately 28.7 jin per m3, which has almost reached the maximum utilisation of our water body according to the CIC Report and we had an annual production capacity of approximately 1,752,094 jin of juvenile sea cucumbers. In view of the growing demand for young sea cucumbers in the PRC, we believe that there is huge market potential for us to further penetrate into the domestic market to take advantage of the uprising demand. Taking into account the limited output capacity of our existing production facilities, we intend to acquire a parcel of land located in Bajiao Bay Marine Economic Innovation Zone* (八角灣海洋經濟創新區) in Yantai City and construct a new production base on it. The total cost of the said acquisition of land and construction of new production base is estimated to be approximately RMB325 million (equivalent to approximately HK$390.33 million) and shall be funded by our internal resources and [REDACTED] from the [REDACTED].

The new production base shall have a water body of approximately 82,969 m3 and facilities which have an estimated gross floor area of approximately 176,855.6 m2 and it shall have hatchery sites, hatchery workshops, storage warehouses, staff dormitory, restaurants and various aquaculture facilities and equipment such as thermoregulators (溫度調節器), devices for transfer of plastic racks (電動機械倒池裝置) and devices for feeding sea cucumber feeds (飼料投餌機). We expect the construction and renovation on the new production base will be completed by May 2024, conditional upon the [REDACTED]. In addition, we will also employ around 100 employees and specialists including hatchery workers and foremen, chefs as well as drivers working at the new production base to enhance our efficiency and management as well as to implement our quality assurance controls in our production. Upon the commencement of the new production base in 2024, we expect that the annual production capacity of juvenile sea cucumbers of our new production base shall be approximately 2,384,520 jin.

Investment payback and breakeven

For illustration purpose only, we set forth below a hypothetical analysis on the payback period and breakeven period in respect of our future plans of (i) acquisition of the land use right of a parcel of land in Bajiao Bay Marine Economic Innovation Zone* (八角灣海洋經濟創新區); (ii) construction of a new production base on the said land to be acquired; (iii) purchase of new machinery and equipment to be installed in the new production base; (iv) employment of additional staff and (v) development of our new breed “Anyuan No.2” (together the “Investment Plans”) using the [REDACTED] from the [REDACTED] as disclosed in the paragraph headed “Future Plans and [REDACTED] – [REDACTED]”. We estimate that the total costs of the Investment Plans shall be approximately HK$[REDACTED] (equivalent to approximately RMB[REDACTED]), which shall be financed by the [REDACTED] from the [REDACTED] and our internal resources. Our analysis on the payback period and breakeven period in respect of the Investment Plans are not indicative of our future performance which may vary significantly, depending on various factors beyond our control.

– 129 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

We consider that the Investment Plans achieve investment payback when the total future net cash flow generated from operating activities, since the commencement of production for the Investment Plans, is able to cover the total investment amount.

We consider that the Investment Plans achieve breakeven when the total revenue generated from the Investment Plans is able to cover the costs and expenses incurred on an accounting basis for the Investment Plans within one year.

The scale of aquaculture, production and sales that are required to achieve payback and breakeven for the Investment Plans varies depending on various factors, including but not limited to market demands and supplies, weather, water quality and other conditions which may affect the market supplies in the PRC and/or our aquaculture of sea cucumbers, general economic conditions and utilisation rates of our production facilities.

The new production base to be built under the Investment Plans shall have a water body of approximately 82,969 m3 and facilities which have an estimated gross floor area of approximately 176,855.6 m2). We expect that, after the commencement of production of the new production base in 2024, the annual production capacity of juvenile sea cucumbers of our new production base shall be approximately 2,384,520 jin.

It is estimated that, based on our Directors’ knowledge and experience, the payback period for the Investment Plans would be approximately nine years. Furthermore, we expected that the Investment Plans will achieve breakeven in 2025.

2. Enhance brand recognition and reputation of our Group

Our Directors believe that our brand recognition is essential to the success of our business development. Over the years, we have gained customers’ confidence and built up our reputation in the market with our Anyuan No.1 sea cucumbers, a breed that is developed by us in collaboration with Dalian Ocean University and well-recognised as having better characteristics than the local breeds of sea cucumber, and thus can be sold at a higher price. We believe that our brand recognition and the high quality of our Anyuan No.1 sea cucumbers are the key factors that our customers consider when they decide to purchase our products.

In order to maintain our reputation in the market, we shall continue to adopt stringent quality control measures to ensure the quality of our Anyuan No.1 sea cucumbers. To further enhance our brand recognition, we are in the course of developing Anyuan No.2, a new breed of sea cucumbers which is expected to have even better genetic characteristics than Anyuan No.1. We are confident that after we have successfully developed Anyuan No.2 and launched it in the market, we can attract more customers who seek sea cucumbers of better quality, and therefore more people from all over the PRC shall get to know our Group and our brand name “Anyuan” by word of mouth.

– 130 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

3. Continue to enhance research and development capabilities

As shown by the success of Anyuan No.1, a breed of sea cucumber that is developed by our Group in collaboration with Dalian Ocean University and can be sold at higher price than the local breeds due to its better genetic characteristics, we consider that our research and development capabilities are the key to the success of our business growth. In order to enhance our research and development capabilities to sharpen our competitive edge, we plan to utilise HK$[REDACTED] out of the [REDACTED] from the [REDACTED] for (i) setting up a research and development workshop; (ii) acquiring the necessary machinery and equipment for installation in the research and development workshop; (iii) recruiting more staff in research and development centre; and (iv) purchasing raw materials to be used.

We shall also continue to conduct research and development to further modify the genetic characteristics of Anyuan No.1. Currently, we are in the course of developing Anyuan No.2, a new breed that is expected to surpass Anyuan No.1 in terms of the number of wart feet and growth rate. For further details of development of Anyuan No.2, please refer to the paragraph headed “Research and Development” in this section.

BUSINESS MODEL

During the Track Record Period, we have also carried on the businesses of production and sales of primarily-processed sea cucumber products, and aquaculture and sales of mature sea cucumbers. However, we have ceased the production of primarily-processed sea cucumber products since April 2021, and we retained a small amount of primarily-processed sea cucumber products as inventories as at the Latest Practicable Date. We have ceased the sale of mature sea cucumbers since August 2019. For details, please refer to the paragraph headed “Products – II. Our products – 4. Other products” this section.

– 131 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

The following diagram illustrates the major business model of our Group:

Our broodstock

Induced spawning

Sales of larvae Larvae

Rearing

Feeds produced Sales of juvenile are used in sea cucumbers the rearing Customers Juvenile sea cucumbers

Sales of feeds for young sea cucumbers Feeds for Distributor young sea cucumbers Sales of feeds for young sea cucumbers Production

Raw materials

Supply of raw materials

Suppliers

Aquaculture and sales of larvae and juvenile sea cucumber

We breed larvae using our own reserve of broodstock of sea cucumbers. Larvae are reared in water tanks in our production bases. We sell some of our larvae directly to other sea cucumber breeders in the PRC upon their demands. We continue to rear the remaining larvae into juvenile sea cucumbers in our water tanks, and we sell the resulting juvenile sea cucumbers to our customers in the PRC.

Meanwhile, a small portion of the juvenile sea cucumbers are regularly selected and retained by our experienced management and working team. We would rear the selected juvenile sea cucumbers into mature sea cucumbers which, if they meet our selection criteria for broodstock, will be used to replenish our broodstock. For details of the breeding process of Anyuan No.1, please refer to the paragraph headed “Products – I. Breeding of Anyuan No.1”.

– 132 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

Production and sales of feeds for young sea cucumbers

We source raw materials from suppliers in the PRC and use such raw materials to produce feeds for young sea cucumbers in our production facility. Most of the feeds produced would then be used for aquaculture of our young sea cucumbers. During the Track Record Period, our Group has formulated a production plan each year for the amount of feeds for young sea cucumbers to be produced each year. The feeds which exceed the stock required for feeding our own young sea cucumbers would be sold to the distributor and other customers, as one of our products.

PRODUCTS

Taking advantage of the location of our production bases, we are able to rear our sea cucumber under an optimal ecological environment which guarantees the quality of our products. Our production bases in Shandong Province and Liaoning Province are surrounded by sea areas with good water quality and low water temperature, which is suitable for the rearing of sea cucumbers.

The following table set forth the breakdown of our sales revenue by categories of products during the Track Record Period:

Year ended 31 December 2018 2019 2020 RMB’000 % RMB’000 % RMB’000 %

Larvae of sea cucumbers 263 0.2 2,320 1.2 8,588 4.0 Juvenile sea cucumbers small juvenile sea cucumbers 8,794 5.3 8,605 4.3 44,594 20.9 large juvenile sea cucumbers 119,146 71.3 158,443 79.7 142,419 66.7 Feeds for young sea cucumbers 4,205 2.5 8,845 4.4 15,298 7.2 Other products (Note) 34,576 20.7 20,599 10.4 2,711 1.2

Total 166,984 100.0 198,812 100.0 213,610 100.0

– 133 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

I. Breeding of Anyuan No.1

Our experienced management and working team possesses technical know-how in breeding of sea cucumber, with techniques in culture of broodstock and selection of broodstock of sea cucumber. Our Group cultivated a new breed of sea cucumber Anyuan No.1, and obtained patent in the method to culture the broodstock of sea cucumber.

For details of the development and application of Anyuan No.1, please refer to the paragraph headed “Research and Development – Development of Anyuan No.1” in this section.

With the effort of over 10 years, Anyuan No.1 was recognised as a new breed of sea cucumber and we were granted Anyuan No.1 Certificate. Led by Penglai Ocean and Fisheries Bureau, which was then the relevant governing authority in respect of application for recognition of new breed of sea cucumber, several tests were conducted to compare “Anyuan No.1” breed of sea cucumber with the local breeds of sea cucumber at Qingdao Xiao Kouzi (青島小口子) and Fujian Xiapu (福建霞浦) as the control group, in terms of their number of wart feet and weight. Anyuan No. 1 has a higher weight and more wart feet than the local sea cucumber. The following are the pictures which show the comparison of Anyuan No. 1 with other local breeds of sea cucumber:

Other local breeds of sea cucumber

Anyuan No.1

– 134 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

Based on the result of the tests, Penglai Ocean and Fisheries Bureau has opined that “Anyuan No.1” breed of sea cucumber has significant advantages over the local sea cucumber. According to the CIC Report, in the period from 2010 to 2020, the government of PRC has approved six new breeds of sea cucumber, among which Anyuan No.1 is the only breed that was not cultivated based on wild breed and it is the only one breed the development of which was led by an enterprise and that was named after the enterprise’s name. Penglai Ocean and Fisheries Bureau further opined that “Anyuan No.1” breed of sea cucumber should be promoted extensively.

Characteristics of “Anyuan No.1”: Anyuan No.1 carries the following genetics characteristics: (i) large number of wart feet and (ii) high growth rate. Owing to the better genetics characteristics of Anyuan No. 1, this breed fetches higher prices than the normal breed. Due to the importance of the broodstock of Anyuan No.1 to our business, we adopted stringent measures to protect them. For details in relation to such protection measures, please refer to the paragraph headed “Production Facilities – II. Storage of broodstock Anyuan No.1 and raw materials” in this section.

II. Our products

1. Larvae

Our larvae are of the breed of Anyuan No. 1. It takes 36 to 48 hours for the fertilised eggs to grow into larvae. For details of rearing of larvae, please refer to the paragraph headed “Production – II. Rearing of young sea cucumbers” in this section.

Specification: 300µm–400µm

Price range: approximately RMB8,000 to RMB12,000 for every approximately 100 million of larvae during the Track Record Period

– 135 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

2. Juvenile sea cucumbers

We offer Anyuan No. 1 juvenile sea cucumbers that are from 5 PPU to less than 50,000 PPU among which sea cucumbers of 10 to 20 PPU are our most popular products. Our sea cucumbers are of the breed of Anyuan No. 1. For details of rearing of young sea cucumbers, please refer to the paragraph headed “Production – II. Rearing of young sea cucumbers” in this section.

(a) small juvenile sea cucumber

Specification: 100 to less than 50,000 PPU, having a unit weight of approximately more than 0.01g to 5g and unit length of approximately 0.5 to 5 cm

Price range: approximately RMB80 to RMB390 per jin during the Track Record PeriodNote 1

small juvenile sea cucumber large juvenile sea cucumber

(b) large juvenile sea cucumber

Specification: 5 to less than 100 PPU, having a unit weight of approximately more than 5g to 100g and unit length of approximately 5 to 15 cm

Price range: approximately RMB50 to RMB140 per jin during the Track Record PeriodNote 2

Notes:

1. The price for each jin of juvenile sea cucumber with larger PPU (i.e. lighter in weight) is generally higher than those with smaller PPU (i.e. heavier in weight).

2. During the Track Record Period, the upper price limit of large juvenile sea cucumber was generally approximately RMB120 per jin except in late 2018, the upper limit was raised to around RMB140 per jin due to the high summer temperature in Liaoning Province that year, which caused a large number of deaths of sea cucumbers, and resulted in the price of young sea cucumber increased.

– 136 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

Due to our Group’s technique in breeding, the average percentage of our larvae that can grow into infant sea cucumber during the Track Record Period was around 30%, while the survival rate of larvae in the industry in the PRC was around 30% in accordance with the CIC report. As our Group did not have enough water body for rearing juvenile sea cucumber during the Track Record Period and up to the Latest Practicable Date, our Group taught some of our customers the cultivation methods and techniques with an aim to increase the survival rate of those customers’ sea cucumbers in hope of stimulating those customers to purchase small juvenile sea cucumbers from us for further rearing.

3. Feeds for young sea cucumbers

We offer two types of feeds for young sea cucumber, which are feeds for infant sea cucumber and feeds for juvenile sea cucumber. The two types of feeds are different in size and formula which are suitable for the needs of sea cucumber at different stages of development.

The feeds we use for rearing young sea cucumbers are mixture of algae, mysis shrimps and scallop mantles. These raw materials are mixed in a specific ratio so as to maximise the benefits of the feeds on the growth of the sea cucumbers. Such ratio is determined based on our research and development team’s studies on the nutrients required by sea cucumbers. For details of our research and development team, please refer to the paragraph headed “Research and Development” in this section.

We produce the feeds for our young sea cucumbers in our feeds production facility. For details of production of feeds, please refer to the paragraph headed “Production – III. Production of the feeds for young sea cucumbers” in this section. Most of the feeds produced is used in the rearing of our young sea cucumbers. During the Track Record Period, our Group has formulated a production plan each year for the amount of feeds for young sea cucumbers to be produced each year. The feeds which exceeds the stock required for feeding our own young sea cucumbers would be primarily sold to the distributor and other customers, as one of our products under our brand name, “Peng Anyuan* (蓬安源)”.

4. Other products

During the Track Record Period, we processed mature sea cucumbers into primarily-processed sea cucumber products. However, we have ceased the production of primarily-processed sea cucumber products since April 2021 so as to focus on the aquaculture of young sea cucumber and we retained a small amount of primarily-processed sea cucumber products as inventories as at the Latest Practicable Date.

During the Track Record Period, our Group had engaged in the aquaculture and sales of mature sea cucumbers as one of our products. However, since August 2019, we no longer engaged in the sale of mature sea cucumbers, due to the reason that the economic yield of young sea cucumbers is higher than that of mature sea cucumbers.

– 137 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

PRODUCTION

I. Birth cycle of young sea cucumber

The chart below illustrates the overall birth cycle of young sea cucumber:

Selection of broodstock

rearing of 3–4 months broodstock

Induced spawning of broodstock and fertilisation of eggs

growth of fertilised 36–48 hours eggs into larvae

Selection of larvae

rearing of 5–7 days larvae

Larvae grow into infant sea cucumber

rearing of infant Around 40 days sea cucumbers

Infant sea cucumbers grow into small juvenile sea cucumbers

rearing of small Around 30 days juvenile sea cucumbers

Small juvenile seas cucumbers grow into large juvenile sea cucumbers

– 138 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

II. Rearing of young sea cucumbers

The chart below illustrates the production cycle of our young sea cucumber:

November Phase 1: Rearing of broodstock Before Anyuan No.1 broodstock are put into water tanks, we would clean December the water tanks; the plastic racks and extract water from the sea and purify it From November to February: Selection January of broodstock, rearing of broodstock in water tanks for maturation

February Phase 2: Induced spawning Induced spawning starts in March March each year. Keep water temperature at 13-16°C to induce spawning April After induced spawning: Fertilisation of eggs in water tanks and growth into larvae after around May 36 to 48 hours.

Phase 3: Rearing of larvae and young June sea cucumbers Selection of larvae, transfer of larvae to new water tanks, July placing of plastic racks into water tanks, and rearing of larvae into infant sea cucumbers August and then into juvenile sea cucumbers Addition of a mixture of marine September yeast, algae and probiotics to provide nutrients During October to November: October Selection and sale of juvenile sea cucumbers which attain our The process of selection of broodstock prescribed specification as starts again, and the whole production products cycle is repeated. November

December

January

Phase 4: Wintering and selection of February juvenile sea cucumbers After sale in December: Rearing of the remaining juvenile sea March cucumbers which were not sold During April to May: Selection and sale of juvenile sea cucumbers which attain our pril A prescribed specifications as products

May

– 139 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

Our young sea cucumbers are reared in water tanks filled with sea water in our hatchery workshops. The following are the major steps in the rearing of young sea cucumber:

Phase 1: Rearing of broodstock

Before Anyuan No.1 broodstock are put into the water tanks for rearing, our production team would first carry out a series of preparatory works to secure an environment which is suitable for the growth of broodstock. Our workers would clean the water tanks and the plastic racks to be used for rearing sea cucumber with clean water thoroughly. Our workers would then extract water from the sea and purify it by sedimentation and filtration in our purification pool. The purified sea water would then be poured into the water tanks to provide the environment for the rearing of sea cucumber.

Our workers conduct selection of broodstock in our purification pool, hatchery workshops and marine ranch in November each year. The broodstock we used are of the breed of Anyuan No. 1 which is developed by our Group in collaboration with Dalian Ocean University. For details of the breeding process of Anyuan No.1, please refer to the paragraph headed “Products – I. Breeding of Anyuan No.1 in this section”. Our workers select broodstock that is around 300g or above, three to five years old, good appearance and no damage. The broodstock selected will be put into the water tanks filled with purified sea water.

To facilitate the digestion of feeds by the broodstock, the feeds would be mixed with sea mud we purchased from supplier in the PRC and the resulting mixture would be added to the water tanks.

From December to February each year, the broodstock are reared in the water tanks for maturation. The water temperatures of the water tanks would be gradually increased to 13 to 16°C to facilitate the maturation.

Phase 2: Induced spawning

Our workers conduct induced spawning of broodstock in March each year. We use two methods in combination to induce spawning, which includes: (i) thermal shock (溫差誘導法) and (ii) stimulation through desiccation and flowing water (陰乾流水刺激法). Spawning refers to the release of sperms by the male broodstock and release of eggs by the female broodstock. Our workers would then maintain the water temperature at optimum levels for the eggs to be fertilised in the water tanks. Thermal shock method refers to induced spawning by a sharp increase in water temperature. Stimulation through desiccation and flowing water method refers to artificially simulating the environment of high tide which would induce marine organisms to lay eggs. After either the thermal shock or stimulation through desiccation and flowing water, we would then drain off the water at the water

– 140 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

tanks, and let the broodstock stay dry for a period of time, and let the water flow through the surface of the broodstock and out of the water tank. Afterwards, we would put water into the water tanks again to induce spawning. The success rate of induced spawning is highly dependent on the water temperature and water flow which are our trade secrets. We carefully adjust the water temperature and water flow to induce spawning.

After around 36 to 48 hours since the fertilisation, the fertilised eggs will grow into larvae.

Phase 3: Rearing of larvae and young sea cucumber

We collect the floating larvae in the water tanks by trawling (拖網法) using a filter net made of silk. The larvae collected will be put into different water tanks based on the amount of larvae needed for each water tank for the rearing of larvae. We would regularly inspect whether the larvae are normal and healthy.

After five to six days, our workers would place plastic racks into the water tanks so that the larvae can adhere to and further grow on them into infant sea cucumber. The environment is carefully adjusted for the effective and efficient growth of sea cucumber infant sea cucumber and the environment maintained is a trade secret of our Group, for details please refer to the paragraph headed “Intellectual Properties” in this section. Due to our Group’s technique in breeding, the average percentage of our larvae that can grow into infant sea cucumber during the Track Record Period was around 30%, while the survival rate of larvae in the industry in the PRC was around 20% according to the CIC report.

We use feeds produced by our Group to feed our sea cucumbers. For details of our feeds for young sea cucumber, please refer to the paragraph headed “Products – I. Our products – 3. Feeds for young sea cucumbers” in this section. We carefully control the amount of feeds put into the water tanks to ensure the effective growth of the infant sea cucumber. A mixture of marine yeast, algae and probiotics (有益菌) would also be added to the water tanks to provide a favourable environment for the healthy growth of the infant sea cucumber and reduction of risk of diseases.

The infant sea cucumber are further reared in such water tanks during which we would continue to adjust and maintain the water temperature of the water tanks at the optimal level for this stage. After around 40 days, the infant sea cucumber will further grow into juvenile sea cucumber by which time the density of juvenile sea cucumber in the water tanks would normally become too high, therefore the juvenile sea cucumber need to be reared in separate water tanks. The optimal density of juvenile sea cucumber in each water tank is the trade secret of our Group. By virtue of our Group’s trade secret in breeding, the average survival rate of our infant sea cucumber that can grow into juvenile sea cucumber of around 1,000 PPU during the Track Record Period was around 30%, which was higher than the average survival rate of infant sea cucumber of 10% in the industry in the PRC according to the CIC report.

– 141 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

As juvenile sea cucumber grows at different rate even under the same circumstances, workers of our Group will weigh juvenile sea cucumber regularly, and sort the juvenile sea cucumber according to their size and weight for rearing, for details of the sorting, please refer to the paragraph headed “Quality Control – Quality control measures relating to the breeding and rearing of our sea cucumbers” in this section. Juvenile sea cucumber are further reared in such water tanks and we would continue to adjust and maintain the water temperature of the water tanks at the optimal level for this stage. During October to November, depending on the growth of sea cucumbers and the demands in the market at the time, our workers would select juvenile sea cucumber of appropriate specifications (i.e. those which meet the required weight) that are from 5 PPU to less than 50,000 PPU from the water tanks and sell them as one of our products. For specification of our sea cucumbers, please refer to the paragraph headed “Products – II. Our products” in this section. Through our Group’s trade secret in breeding, the average survival rate of our juvenile sea cucumber of around 1,000 PPU, namely the percentage of juvenile sea cucumber of around 1,000 PPU that can grow into juvenile sea cucumber of around 20 – 100 PPU during the Track Record Period was around 70%, whereas the average survival rate of juvenile sea cucumber of around 1,000 PPU in the industry was around 60% according to the CIC report.

Phase 4: Wintering and selection of young sea cucumbers

For the period from December to end of March next year, the remaining juvenile sea cucumbers will be kept in the water tanks and continue to grow and we would continue to monitor and maintain the water temperature of the water tanks at the optimal level for this stage. From April to May in the same year, we would select and collect juvenile sea cucumbers which have attained our specifications for sale from the water tanks and sell them in the market. Water tanks will be occasionally emptied and cleaned after regular sorting and sales of sea cucumbers, which would shortly be occupied again by the juvenile sea cucumbers which need to be reared in separate water tanks that year.

III. Production of the feeds for young sea cucumbers

We offer two types of feeds for young sea cucumbers, namely feeds for infant sea cucumbers and feeds for juvenile sea cucumbers. The two types of feeds are different in size and in formula which are suitable for the needs of young sea cucumber at different stages of development.

– 142 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

The chart below illustrates the major steps of the production of the feeds for young sea cucumbers:

Sourcing raw materials and drying

Coarse grinding

Mixing, fine grinding and sieving

Packaging

Sourcing raw materials and drying

The raw materials for the production of the feeds mainly include algae, mysis shrimps and scallop mantles. During the Track Record Period, we purchased such raw materials from local suppliers, to the best knowledge and belief of our Directors who are all Independent Third Parties. For further details of our Group’s suppliers of raw materials for feeds, please refer to the paragraph headed “Suppliers” in this section. The raw materials are delivered to our production bases and then we would dry such raw materials in the sun before we store them in our warehouse.

Coarse grinding

The raw materials would then be grinded into coarse powder in the grinding machine in our production facility.

Mixing, fine grinding and sieving

The coarse powder of different raw materials will be mixed in a specific ratio of their respective weights by a computerised machine. Such ratio is a trade secret of our Group, for details please refer to the paragraph headed “Intellectual property” in this section. After that, the resulting mixture of coarse powder will be further grinded into fine powder. The grinding process was controlled by the computerised machines so as to control the consistency of the size of powder. The mixing, fine grinding and sieving are done in number of machines which are controlled by a computerised programme. It usually takes around 10 minutes for the grinding of coarse powder into uniform fine powder.

– 143 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

Packaging

Lastly, the fine powder is packaged in either 20 kg or 25 kg per bag and to be used in the rearing of our young sea cucumbers. During the Track Record Period, our Group formulated a production plan each year for the amount of feeds for young sea cucumber to be produced in that year. The feeds which exceeds the stock required for feeding our own young sea cucumber would be sold to other sea cucumbers breeders, as one of our products.

The package bags of the feeds are all labelled according to the labelling requirements under the PRC law and regulation, which include the name of the producer (i.e. our Group), product usage (i.e. feeding of sea cucumbers), permit number, ingredient, nutrition facts, manufacture date and expiry period. The package bags also bear our registered logo, .

PRODUCTION FACILITIES

I. Our production bases

1. Shandong First Production Base

Water pump facility

Hatchery Workshops

Warehouse Laboratory

Hatchery Workshops

Staff dormitory Hatchery Workshops Hatchery Workshops

Warehouse Plate heat exchanger Probiotic culturing workshop

Purification pool

0 50 100 M Purification pool

– 144 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

Water pump facility

Plate heat exchanger

Warehouse Purification pool

Testing workshop

Purification pool

0 15 30 M

Cold storage

Staff dormitory

Workshop Workshop

Warehouse

Laboratory

01530 M Office

– 145 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

The table below sets forth details of our Shandong First Production Base:

Water body Commencement Major production and ancillary Site area volume of operations facilities

approximately 408.55 mu (equivalent approximately November 2006 • Four hatchery sites to approximately 272,366 sq. m.) 60,960 m3 • 38 hatchery workshops • Nine testing workshops • 19 purification pools • One feeds production facility • One probiotics culturing workshop (有益菌生產車間) • Two laboratories • Five warehouses • Five cold storages • Six water pump facilities

2. Shandong Second Production Base

Hatchery Workshop

Purification pool

Office

Warehouse

01530 M

– 146 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

The table below sets forth details of our Shandong Second Production Base:

Water body Commencement Major production and ancillary Site area volume of operations facilities

approximately 25.97 mu (equivalent approximately October 2017 • One hatchery site to approximately 17,313 sq. m.) 8,856 m3 • Eight hatchery workshops • Three purification pools • Three water pump facilities • One warehouse

3. Liaoning Production Base

Purification pool

Probiotics culturing workshop Plate heat exchanger

Purification pool Cold storage

Hatchery Workshops

Purification pool Purification pool

– 147 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

The table below sets forth details of our Liaoning Production Base:

Water body Commencement Major production and ancillary Site area volume of operations facilities detail

approximately 507.7 mu (equivalent approximately September 2020 • One hatchery site to approximately 338,000 sq. m.) 32,120 m3 • 12 hatchery workshops • 11 purification pools • 12 water pump facilities • One cold storage

Background of the establishment of the Liaoning Production Base

According to the CIC Report, the production scale of young sea cucumbers in Liaoning Province is much smaller than that in Shandong Province, resulting in the price of young sea cucumbers produced in Liaoning Province being higher than those produced in Shandong Province. Our Directors believed Liaoning was an ideal location for expanding our production base across the PRC because our Directors believed that we would be able to (i) demonstrate to potential customers in Liaoning Province that our Anyuan No. 1 sea cucumbers could adapt to the local aquaculture environment with our experience of rearing Anyuan No. 1 in Liaoning Province]; and (ii) to increase our gross profit margins by selling Anyuan No. 1 at higher prices in Liaoning Province than to breeders in Shandong Province. Our Directors also believe having a production base in Liaoning Province would facilitate the communication between our customers and us, and the prompt supply of products to our customers. In the premises, we therefore purchased, amongst others, our Liaoning Production Base from Linghai City Da Lian Seafood Breeding Limited Liability Company* (淩海市達蓮海珍品養殖有限責任公司)(“Da Lian”), Ms. Liu Qinglian (劉清蓮) who is the legal representative of Da Lian and Mr. Li Junda (李軍達) who is the spouse of Ms. Liu Qinglian at a consideration of RMB41.0 million in February 2019 which was determined after arm’s length negotiation between the parties. For details as to the sales and purchase agreement governing the purchase, please refer to the paragraph headed “Properties” in this section.

II. Storage of broodstock Anyuan No.1 and raw materials

Storage of broodstock Anyuan No.1

In order to protect our important assets, i.e. broodstock of Anyuan No.1, our Group has stored our broodstock Anyuan No.1 at different places at our Shandong First Production Base, namely the purification pool, hatchery workshops and marine ranch respectively, to minimise the risk of having the broodstock damaged or stolen altogether at one place and to be used by the others in an attempt to cultivate Anyuan No.1.

– 148 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

Our Group has also arranged for our staff to conduct patrols in our production bases and multi-functional platform in marine ranch to monitor and prevent the broodstock from being stolen. In addition, our Group has installed surveillance camera at the purification pool and the workshops, and installed drone and radar in different parts of marine ranch which can detect any trespassers and pinpoint the location and motion trail of such trespassers. Moreover, as part of the security measures taken at our marine ranch, our staff would dive in the sea from time to time to monitor the condition of sea cucumbers under the sea.

Storage of raw materials

Raw materials are properly catalogued and stored in the appropriate warehouse with biodegradable raw materials being stored in our cold storage.

III. Functions of production facilities

The functions of each type of production facilities are set forth below:

Hatchery site and hatchery workshop

We rear our young sea cucumbers in water tanks in our hatchery workshops in the hatchery sites. As at the Latest Practicable Date, there were in total six hatchery sites containing 58 hatchery workshops, and more than 4,000 water tanks in our three production bases. Each of our hatchery sites are installed with a comprehensive system that can regulates the water temperature in each water tank so that our workers can closely monitor and adjust the water temperature to optimum levels for different stages of growth of our sea cucumbers. Device for transfer of plastic racks (電動機械倒池裝置) is installed at our workshops. Such device is used for the transfer of plastic racks among water tanks and the clearing of silt at the bottom of the water tanks, in which labour productivity is increased by three times, and as a result the labour costs is reduced correspondingly. At the same time, the use of such device also reduced the damages caused to the larvae as compared to the transfer of larvae conducted by workers. Device for feeding sea cucumber (飼料投餌機) is also installed in our workshops.

– 149 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

The following photographs show the water tanks and the device for transfer of plastic racks.

Testing workshop

There are nine testing workshops in our Shandong First Production Base which are mainly used for conducting experiments for different types of feeds, the feeding amount, water temperature and the impact of biologics on the growth of young sea cucumber. Moreover, it is also used for conducting various scientific research projects.

Laboratory

We have two laboratories which serve as a key component of our quality assurance and control system. The main functions of our laboratories are described as follows:

• Tests on water quality. Our staff regularly collects water samples to conduct tests on the water quality in our testing workshops.

• Tests on raw materials and finished products. Our staff regularly conduct tests for the raw materials for feeds for young sea cucumber and the feeds for young sea cucumber produced. Please refer to the paragraph headed “Quality control” in this section for further details.

– 150 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

• Development of technique and new products. Our staff would cooperate with the production team and the research and development team to carry out analysis and testing for the improvement of technique and development of new products.

• Wastewater treatment. Our staff would carry out laboratory analysis for wastewater treatment and to prepare relevant report.

Moreover, our staff also conduct the isolation and culture of probiotics (有益菌)atthe probiotics culturing workshop.

Water pump facility

As the quality of water near the coast may be tainted by the waste discharged by the household in the neighbourhood and the factories near the coast, our production bases in Shandong Province are equipped with water pump facility which pumps water from the deep sea.

As our Liaoning Production Base is located in the sea area of Linghai City, sea water is filtered and pumped into our Liaoning Production Base by our water pump facility.

Purification pool

The water extracted from the sea would be purified by sedimentation and filtration in our purification pool and then delivered through pipes to our hatchery workshops.

Feeds production facility

As at the Latest Practicable Date, we had one feeds production facility located in the Shandong First Production Base. We process the raw materials sourced from suppliers into feeds for young sea cucumbers using computerised machines in our feeds production facility.

– 151 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

IV. Production capacity

The table below sets forth our production capacities and utilisation rates of our production facilities during the Track Record Period:

Notes:

1. For illustration purposes only, the expected production capacity for aquaculture of juvenile sea cucumbers of a particular production base is calculated by multiplying the expected maximum weight of juvenile sea cucumbers that can be produced by each m3 of water body as per the CIC Report, by the total volume of water body in the relevant production base assuming that the survival rate of our sea cucumbers remains constant throughout the Track Record Period.

– 152 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

2. For illustration purposes only, the utilisation rate of aquaculture of juvenile sea cucumbers of a particular production base is calculated by dividing the actual production volume by expected production capacity of the relevant production base on the assumption that our production facilities for the aquaculture of juvenile sea cucumbers operate for 24 hours per day and the number of available water tanks of that relevant production base remains constant throughout the Track Record Period.

3. The expected production capacity is not applicable for aquaculture of larvae as larvae are only produced upon the requests by the customers. Accordingly, the utilisation rate for aquaculture of larvae is not shown.

4. We have one production line for the production of our feeds for young sea cucumbers and this production line can produce the feeds for infant sea cucumber and juvenile sea cucumbers concurrently. For illustration purposes only, the expected production capacity of production of feeds for young sea cucumbers is calculated by (i) our production facilities for feeds operate for 24 hours per day and 365 days per year and (ii) no provision for maintenance or repair is made.

5. The facility in our Shandong Second Production Base is not suitable for the rearing of small juvenile sea cucumbers with specification of smaller than 1000 PPU (i.e. sea cucumbers with a unit weight heavier than 0.5g).

Machinery and equipment

The following table sets forth average age and average estimated remaining useful life of our principal machinery and equipment located at our production bases as at 31 December 2020:

Average estimated remaining useful life (years) as at 31 Principal machinery Number of December 2020 and equipment Usage Units Average age (Notes 1 and 2)

Three-phase asynchronous Provide power 4 8.96 1.04 motor (“三相異步電機動”) for centrifugal pumps Mixed flow water pump Pump water 38 8.60 1.40 (“混流式水泵”) Plate heat exchanger (“板式換 Increase water 90 8.41 1.59 熱器”) temperature Shredder (“粉碎機”) Crush coarse 13 8.00 2.00 grains Micro-shredder (“超微粉碎機 Crush coarse 2 7.62 2.38 組”) grains Computerised automatic Control the 1 6.58 3.42 batching and central control micro-shredder system (“電腦自動配料及中控系統”)

– 153 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

Average estimated remaining useful life (years) as at 31 Principal machinery Number of December 2020 and equipment Usage Units Average age (Notes 1 and 2)

System for mixing, packing Mix and pack 1 9.33 0.67 and transportation of feeds the feeds for (“餌料混合打包傳輸系統”) young sea cucumbers Dry-type transformer (“乾式變 Convert power 2 7.88 2.12 壓器”) for use Gas and water supply system Supply the gas 4 10.00 0.00 (“供氣供水系統”) and water to the workshops Surveillance system Monitor the 1 2.08 7.92 (“監控系統”) production base Granule packaging machine Package the 1 5.50 4.50 (“顆粒包裝機”) feeds Fire installation system Fire safety 1 2.92 7.08 (“消防安裝系統”) Probiotics production Produce 1 8.17 1.83 equipment (“有益菌生產設 probiotics 備”)

Notes:

1. We assume that our principal machinery and equipment will have an expected useful life of approximately 10 years based upon the straight-line method used to calculate deprecation.

2. The average estimated remaining useful life is calculated by subtracting the average age of the machinery equipment from the expected useful life.

3. The expected production capacity is not applicable for aquaculture of larvae as larvae are only produced upon the requests by the customers.

– 154 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

Machinery and equipment maintenance

To ensure that our operations can operate without disruptions throughout the year, our maintenance team will carry out periodic inspections and maintenance on our machinery. Our employees conduct basic checks and repair on a regular basis, and we also engage external technicians to performance comprehensive inspection and maintenance works from time to time. If there are material problems relating to our production facilities and machineries, we would also engage such external technicians to carry out the necessary repair. As confirmed by our Directors, during the Track Record Period, we did not experience any material or prolonged interruption in the production of our products as a result of equipment or machinery failure.

QUALITY CONTROL

Our Directors believe that quality control is one of the key elements for consistently producing products that are capable of meeting the specifications of our customers and end-users and that our ability to deliver quality products is one of our competitive advantages. As such, our Group has in place quality control measures which are in line with national standards for each step of the production process to ensure that our products are capable of meeting our requirements. As at the Latest Practicable Date, we had seven employees assigned to our quality control and assurance team and we have also been accredited with international and national certifications including GB/T 27304-2008/ISO 22000:2018 – Food Safety System and GB/T 19001-2016/ISO 90001:2015 – Quality management system. Further, we were also invited to participate in the drafting of the “Technical specifications for artificial breeding of sea cucumbers SC/T 2097-2019” industrial standards published in 2019 by the Ministry of Agricultural and Rural Affairs of the PRC government, which outlines the rearing processes of sea cumbers, including matters which pertain to water quality.

Quality control measures relating to the breeding and rearing of our sea cucumbers

To ensure the quality of our sea cucumbers, we have adopted various quality control measures to ensure that (i) only the healthiest broodstock are used for breeding purposes, (ii) our sea cucumbers are safeguarded against various diseases and parasites and (iii) our sea cucumbers are reared in an optimal environment through maintaining the water quality standards.

When selecting the appropriate sea cucumbers to act as broodstock, our staff are required to follow our selection criteria which will set out various factors such as body shape, colour, number of wart feet, size as well as responsiveness that must be fulfilled to ensure that the broodstock can properly represent the “Anyuan No. 1” breed. After the primary selection of our broodstock, they will be placed into separate water tanks in our hatchery workshops to observe their overall health as well as their food intake and growth levels prior to inducing spawning. We will carry out various periodic tests of the water quality to ensure that there is no contaminants that may affect our broodstock. Some of the broodstock may also be selected for testing purposes so that we can evaluate the overall health of the broodstock.

– 155 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

In terms of the rearing of our sea cucumbers, our sea cucumbers are reared in multiple water tanks and we have internal guidelines specifying the sea cumbers per water tank to prevent overcrowding and to guard against the spread of diseases and parasites. Visual inspections of the water tanks are conducted by our staff on a daily basis and if irregularities are found (such as diseased sea cucumbers), it is immediately reported to our management team and follow up measures shall be employed to ascertain the cause. Similar to our quality control measures relating to our broodstock, some of our sea cucumbers in the water tanks will be randomly selected for testing purposes to ascertain the overall health of those sea cucumbers in the same water tank. To prevent the outbreak of disease and parasites, biological and chemical agents will be employed from time-to-time.

As sea cucumbers are reared in sea water, water quality is of the utmost importance to their overall health and growth. Water quality is maintained by our multi-stage water filtration systems, whereby the fresh sea water will pass through and impurities will be removed before it is circulated into our water tanks. We will also regularly collect water samples to determine its temperature, dissolved oxygen levels, ammonia and nitrate levels as well as pH value and salinity to ensure its compliance with national and local standards. The seawater in our water tanks are regularly replaced with fresh seawater to ensure the water quality in our water tanks. In addition, the sediments in the water tanks will be regularly replaced to prevent accumulation of impurities.

Quality control measures relating to our raw materials and production of our sea cucumber feeds

We maintain an internal list of approved suppliers and only those suppliers who have fulfilled our requirements are eligible to be placed upon our internal list and supply raw materials to us. When considering the eligibility of a supplier, we would take into account factors such as the quality of the raw materials supplied and our previous dealings with them. For further details as to the selection criteria of our suppliers, please refer to paragraph headed “Suppliers” in this section.

Upon the delivery of the raw materials, our procurement team will perform a visual inspection to ensure that there are no apparent defects. Our procurement team will also review the relevant orders to ensure that the raw materials supplied correspond to the order in terms of quantity and other specifications. Only after our procurement team is satisfied that there are no apparent defects and that the raw materials supplied correspond to the purchaser order, will we accept delivery. We may also request that the supplier provides to us a certificate as to the safety and quality of the raw materials supplied if necessary. In addition to the above, we will also obtain random samples of the raw materials prior to their delivery for testing purposes to ensure that they are capable of meeting our specifications. In general, our tests will cover and determine the levels of protein and moisture of the raw materials to ensure that there is

– 156 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS sufficient protein and water in the raw materials and if the levels fail to reach an acceptable level, our management team will be notified and the batch in question may be returned to the relevant supplier. If there are no material defects with the raw materials, they will be properly catalogued and stored in the appropriate warehouses (with biodegradable raw materials being stored in our cold storage) until needed. For further details regarding our inventory control measures, please refer to the paragraph headed “Inventory Control” in this section.

Once the raw materials have been processed into the sea cucumber feeds, we will obtain random samples for further testing which determines, among others, the levels of protein, moisture, calcium and phosphorus to ensure that the sea cucumber feeds have the appropriate level of nutrients.

Aside from the above, our staff are required to keep proper records of each inspection conducted. Also, where broodstock or sea cucumbers are removed from their respective water tanks, records of that batch will be catalogued to ensure that they can be properly tracked and traced in the event that material issues relating to quality or other matters arise.

After sales to our customers, we may contact our customers to gather their feedback on our products, and handle compliance from our customers and report to our senior management team accordingly.

During the Track Record Period and up to the Latest Practicable Date, we did not receive any customer complaints which had a material adverse effect on our business or results of operations, nor did we experience any voluntary or mandatory recalls products as a result of requests by the PRC government.

INVENTORY CONTROL

Our Group’s inventory consists primarily of (i) raw materials such as algae, mysis shrimps and scallop mantles which are used in the production of our sea cucumber feeds, (ii) works-in-progress such as grinded scallop mantles and (iii) finished goods such as dried sea cucumbers and sea cucumber feeds. Our living sea cucumbers are not included as our inventory as they are treated as biological assets in our financial statements. For further details, please refer to the section headed “Financial Information – Valuation of biological assets – Stock-take and internal control” in this document.

– 157 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

We store our inventory at each of our production bases and the size and scale of our operations, we have implemented various inventory control measures to ensure that our management has access to accurate data relating to our inventory so as to increase our efficiency, productivity and to reduce wastage. Our major inventory management procedures include the following measures:

• incoming raw materials will be stored according to their nature and their quantities will be recorded in our inventory management system;

• works-in-progress and finished products will also be stored according to their nature and date of production and their quantities will be recorded in our inventory management system; and

• regular stocktaking are performed to ensure that the quantities of raw materials, works-in-progress and finished products correspond with the recorded entries during the relevant period.

In addition to the above, we have also implemented other internal control measures to ensure the sufficiency of our raw materials, works-in-progress and finished goods to satisfy our requirements and the demands of our customers. In general, our inventory levels are determined based upon expected demand patterns, historical sales volume and the shelf life of our products.

CUSTOMERS

The following table sets forth the number of our customers and a breakdown of our revenue by customer type during the Track Record Period:

Year ended 31 December 2018 2019 2020 RMB’000 % RMB’000 % RMB’000 %

Customer type Corporate customers 92,792 55.5 131,289 66.0 118,956 55.7 Walk-in customers 72,880 43.7 62,758 31.6 80,002 37.4 Distributor 1,312 0.8 4,765 2.4 14,652 6.9

Total 166,984 100.0 198,812 100.0 213,610 100.0

– 158 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

I. Our customers

1. Corporate customers

During the Track Record Period, our corporate customers contributed revenue of approximately RMB92.8 million, RMB131.3 million and RMB119.0 million, representing approximately 55.5%, 66.0% and 55.7% of our total revenue for FY2018, FY2019 and FY2020, respectively. We define our corporate customers as customers who purchased our products and were granted a credit term in any one or more financial year during the Track Record Period. We recognised our corporate customers as customers who had signed framework agreements with us or customers which we perceived as reputable based upon factors such as their prior business dealings with our Group or their overall standing in the local market. The credit terms of our corporate customers are determined and approved by any two of our executive Directors.

Our corporate customers are generally breeders and primarily-processed sea cucumber products manufacturers. They primarily purchase from us (i) larvae and juvenile sea cucumbers which they would rear and sell to other breeders; and (ii) feeds which they would use for rearing their young sea cucumbers. During the Track Record Period, some of our corporate customers purchased from us primarily-processed sea cucumber products and mature sea cucumbers(Note).

Corporate customers who purchase our juvenile sea cucumbers typically enter into legally-binding framework agreements with us at the beginning of the year and we then conduct sales to them in accordance with the terms of the framework agreements upon receipt of communication from them specifying the specifications and quantities of the juvenile sea cucumbers to be purchased.

Corporate customers who purchase our products other than our juvenile sea cucumbers typically do not enter into any framework agreement with us and we conduct sales to them only upon receipt of communication from them specifying the type and the quantity of such products to be purchased.

We grant to our corporate customers credit terms ranging from 90 days to 180 days to settle the purchase amounts during the Track Record Period.

Note: We have ceased the production of primarily-processed sea cucumber products since April 2021 and we retained a small amount of primarily-processed sea cucumber products as inventories as at the Latest Practicable Date. We also no longer engaged in the sale of mature sea cucumbers since August 2019.

– 159 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

The following table sets forth the principal terms of a typical framework agreement for sales of our juvenile sea cucumbers:

Duration Approximately one year.

Minimum purchase requirement Nil.

Sales target Nil.

Pricing The price is generally determined based on the market price.

Credit terms Within credit terms ranging from 90 days to 180 days.

Product quality requirement The main requirements include:

(i) the juvenile sea cucumbers should comply with the Guideline of Fishery Drug Application for Pollution-Free Food (NY5071-2002)* (無公害食品漁用藥物使用準則 (NY5071-2002)) issued by the MOA; and

(ii) the juvenile sea cucumbers should comply with the relevant environment protection and safety laws and regulation and meet the relevant national, regional, industry or corporation standards (where applicable).

Products return arrangement Nil.

Delivery Either we would arrange for the delivery of the juvenile sea cucumbers to our corporate customers’ designated production facilities or our corporate customers may choose to arrange for their own delivery.

Termination clause Nil.

Renewal clause There is no automatic renewal clause. Both parties have to sign a new agreement for renewal.

– 160 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

As confirmed by our Directors, during the Track Record Period, there was no material breach of any of the framework agreement and we did not have any material dispute or claim with any of such corporate customers.

Our corporate customers would typically visit our production bases to purchase our products and either we would arrange for the delivery of the products to our corporate customers’ designated destinations or they may choose to arrange for their own delivery. Our corporate customers are responsible for settling the purchase amounts due either by cash or by bank transfer within the credit terms. They are also responsible for the delivery costs. The risks of and titles to the products are passed to the corporate customers once they are transported away from our production bases. In particular for corporate customers who purchase our larvae and juvenile sea cucumbers, they typically inform us in advance of the specifications and quantity of larvae and juvenile sea cucumbers required and visit our production bases to conduct the inspection and weighing of such products with our staff jointly to ensure they meet the relevant specifications and the quantity.

2. Walk-in customers

During the Track Record Period, our walk-in customers contributed revenue of approximately RMB72.9 million, RMB62.8 million and RMB80.0 million, representing approximately 43.7%, 31.6% and 37.4% of our total revenue for FY2018, FY2019 and FY2020, respectively. We define our walk-in customers as customers who purchase our products without any credit terms during the whole Track Record Period. We do not enter into any framework agreement with them.

Our walk-in customers are generally breeders who primarily purchase our larvae, juvenile sea cucumbers and feeds. During the Track Record Period, some of our walk-in customers purchased from us primarily-processed sea cucumber products and mature sea cucumbers (Note). We conduct sales to them upon receipt communication from them specifying the types and quantities of products to be purchased.

Our walk-in customers typically visit our production bases to purchase our products. Similar to our corporate customers, our walk-in customers normally conduct the inspection and weighing of our larvae and juvenile sea cucumbers with our staff jointly to ensure that they meet the relevant specifications and the quantity. Our walk-in customers also purchase feeds and primarily-processed sea cucumber products on site. Thereafter, our walk-in customers would typically arrange for their own delivery. Our walk-in customers are responsible for settling the purchase amounts due on the spot either by cash or by online bank transfer or point of sale system. The risks of and titles to the products purchased are passed to the walk-in customers upon their acknowledgment of acceptance on the spot at our production bases. We do not provide any credit terms to these customers.

– 161 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

At our Shandong First Production Base, our walk-in customers are sometimes led by a leader (who is also a walk-in customer) to come as a group to purchase primarily our larvae and juvenile sea cucumbers. Sometimes these walk-in customers may also purchase our feeds. For FY2018, FY2019 and FY2020, two, two and one leader(s) led groups of walk-in customers to our Shandong First Production Base during the year, respectively. Both of the leaders are individual breeders in Shandong Province. A leader usually brings a group of three to five customers each time. The leader is responsible for estimating the type and quantity of such products required by each group of walk-in customers and informing us in advance to ensure that we have sufficient products in stock available to them. We will communicate with the leader in advance the uniform price for our larvae, juvenile sea cucumbers and feeds before each group purchase. The prices that our walk-in customers pay for our products are generally the same as the prices paid by our corporate customers. However, we usually offer a slight discount to the leader for the purchase of our juvenile sea cucumbers. The leader can only enjoy a slight discount if the group of walk-in customers and himself can satisfy a minimum purchase quantity of 50,000 jin of our juvenile sea cucumbers. The amount of discount that the leader enjoys is based on a fixed formula with reference to the total amount of juvenile sea cucumbers purchased by the group of walk-in customers and himself altogether. To the best of knowledge and belief of our Directors, these walk-in customers also entrust the leader to arrange for the transportation of the products purchased and the discount we offered to the leader is almost equivalent to the costs of the transportation. We have an internal policy that if customers do not purchase at least 2,000 jin of our juvenile sea cucumbers then we would not accept such order. Therefore through conducting group purchase, these customers are able to satisfy our minimum purchase quantity of 2,000 jin of our juvenile sea cucumbers which they are unable to satisfy separately and can enjoy the benefits of having all products purchased to be transported at the same time so as to save transportation costs.

We generally do not contact the walk-in customers other than the leader, except at the time of delivery on-site if required. As each of the walk-in customer has come to our production base for delivery on-site and they can obtain our contact information on our website or through other methods, our Directors believe that the change of leader in each group will not affect our sales with these walk-in customers. Payments for purchases of our products are separately settled by the individual walk-in customers. Therefore, we consider each of these walk-in customers as individual customer and not collectively as a group.

As confirmed by our Directors, during the Track Record Period, we did not have any material dispute or claim with any of the walk-in customers.

– 162 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

3. The Distributor

The Distributor is an individual industrial and commercial household* (個體工商戶) in the PRC and she operates a retail shop in Shandong Province which primarily sells feeds for sea cucumbers.

During the Track Record Period, we sold to the Distributor (i) our feeds for the Distributor’s distribution and sales as our distributor, which contributed to our total revenue of approximately RMB1.2 million, RMB4.3 million and RMB10.9 million respectively; and (ii) our larvae and juvenile sea cucumbers for rearing by the Distributor as an individual breeder, which contributed to our total revenue of approximately RMB0.2 million, RMB0.5 million and RMB3.8 million respectively. The amount of revenue generated from the sales of feeds to the Distributor represented approximately 27.4%, 48.4% and 71.0% of our revenue from sales of feeds for FY2018, FY2019 and FY2020, respectively. We do not offer any credit term to the Distributor.

We started to engage the Distributor to distribute our feeds since January 2017. As we only sell the feeds which exceeds our stock required for feeding our own young sea cucumbers, our Directors believe that, while we are not adhering to any industry norm, our practice of engaging one distributor instead of maintaining a network of distributors or relying on our sales and marketing team to sell our feeds is a cost-effective method to handle the feeds in excess and allow us to focus on our core business of breeding sea cucumbers. The use of the Distributor also allows our feeds to be distributed to a wider customer base which can be evidenced in the increasing trend in the amount of our revenue from sales of feeds contributed by the Distributor during the Track Record Period.

We do not prohibit the Distributor from engaging sub-distributors to sell our feeds. To the best knowledge of our Directors having made all reasonable enquiries, we understand that the Distributor did not engage any sub-distributor to sell our feeds.

(a) Selection and evaluation of Distributor

Our Directors believe that we currently do not have the business need to expand our distribution network. However, we will carefully select our distributor(s) based on our stringent selection criteria when the business need arises, by considering a range of factors including but not limited to the scale of operation, existing customer base, market influence and competitiveness in local market, credit worthiness and logistics capabilities.

We review the Distributor’s performance annually, primarily on whether the Distributor was able to satisfy the minimum annual purchase volume stipulated in the distribution agreement entered between the Distributor and our Group in respect of distribution of feeds (the “Distribution Agreement”). During the Track Record Period, the Distributor was able to satisfy the minimum annual purchase volume and therefore we continued our engagement of the Distributor to distribute our feeds.

– 163 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

(b) Distribution Agreement

We generally enter into a framework Distribution Agreement with our Distributor under which our Distributor makes purchases on a per-order basis. The following table sets forth the principal terms of a typical Distribution Agreement:

Duration Approximately one year.

Geographic or other exclusivity Nil.

Product quality The feeds should meet the national standards and the corporate standards imposed by the Distributor.

If we violate the Regulations on the Administration of Feed and Feed Additives*《飼料和飼料添加劑管理條 ( 例》) or if there is any prohibited substance in the feeds, the Distributor reserves the right to terminate the Distribution Agreement and we will be responsible for any loss caused to the Distributor.

Pricing policies Discounted selling price for sale to the Distributor and mandated retail price which is at prevailing market price for sale to end-consumers.

We reserve the right to terminate or cease selling to the Distributor at the discounted selling price if the Distributor does not sell to the end-consumers at the mandated retail price.

Products return arrangements No product return arrangement but if we fail to provide the agreed quality and/or the quantity of the feeds as stipulated in the Distribution Agreement, the Distributor can have the option not to accept the feeds. We will also be responsible for any loss caused to the Distributor.

– 164 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

Any minimum purchase volume Not less than designated annual purchase volume as stipulated in the Distribution Agreement.

We reserve the right not to renew the Distribution Agreement if the Distributor fails to meet the minimum annual purchase volume.

Payment and credit terms On site payment.

Sales and expansion targets Nil.

Transfer of risks The risks of the feeds are passed to the Distributor when the feeds are passed to the delivery services company arranged by the Distributor after her inspection and acceptance.

Transportation arrangements The Distributor is responsible for arranging the transportation of the feeds.

Conditions for renewing the We have the right to decide whether to agreement renew based on performance.

During the Track Record Period and up to the Latest Practicable Date, there was no material non-compliance with the terms of our Distribution Agreement by our Distributor and we did not receive any material complaint on product quality from our Distributor.

We impose measures to manage the potential competition between our Distributor and ourselves. We currently only authorise one Distributor to sell our feeds in the PRC to avoid any potential competition arising from authorising more than one Distributor. Generally, we only retail a comparatively small amount of feeds for sales to other customers to avoid competition with our Distributor.

Pursuant to the Distribution Agreement, our Group has control over our Distributor in relation to the pricing of our Group’s feeds (i.e. mandated retail price for sale to end-customers). We would visit the Distributor’s shop from time to time to monitor if retail prices of our feeds at the shop deviate from the mandated retail price.

During the Track Record Period as confirmed by our Directors, there was no occurrence of pricing deviation from the mandated retail price.

– 165 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

Our Directors believe that our Distributor has no commercial rationale to accumulate inventory because: (i) full upfront payment for our feeds needs to be made by our Distributor to us before delivery of the feeds and inventory accumulation may cause pressure on her cash flow; (ii) accumulation of inventory of our feeds by our Distributor (if any) would incur additional operating costs (such as warehousing and shelf-space fees); (iii) we have no product return policy in general; and (iv) given that our feeds are perishable products which typically expires after eight months from the date of manufacturing, inventory accumulation may force her to write off expired stocks.

Based on (i) the growth in our revenue from sales of feeds for sea cucumbers derived from sales to the Distributor; (ii) there was no return from sales to the Distributor during the Track Record Period; and (iii) the maintenance of a business relationship of more than four years with the Distributor as at the Latest Practicable Date, our Directors are of the view that there is genuine demand from the Distributor for our feeds and that the likelihood of inventory accumulation by our Distributor is minimal.

(d) Relationship with our Distributor

Our relationship with our Distributor is that of seller and buyer and not principal and agent as we do not maintain control of the actual business operations of our Distributor other than the contractual obligations stipulated in the Distribution Agreement. We recognise our revenue after the risks of and titles to the feeds are passed to the Distributor. We therefore consider the Distributor to be our direct customer.

We have maintained a stable business relationship with our Distributor. As we engaged the same Distributor during the Track Record Period, all historical sales from the Distributor is therefore recurring. Our Directors believe that there is no risk arising from any non-recurring sales to our Distributor. As confirmed by our Directors, during the Track Record Period, we did not have any material dispute with our Distributor.

To the best of the knowledge of our Directors, (i) the Distributor is an Independent Third Party; (ii) the Distributor does not have any relationship with our current or former employees; (iii) the Distributor was not our supplier during the Track Record Period; (iv) the Distributor had not traded under or used our Group’s brand/name during the Track Record Period except distributing our branded products; and (v) the Distributor had not received any material advance or financial assistance from our Group during the Track Record Period.

– 166 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

II. Our five largest customers

As at the Latest Practicable Date, our business relationship with our five largest customers during the Track Record Period ranged from approximately two to eight years. For FY2018, FY2019 and FY2020 sales to our five largest customers amounted to approximately RMB67.3 million, RMB118.6 million and RMB121.5 million, representing approximately 40.3%, 59.6% and 57.0% of our revenue respectively. For FY2018, FY2019 and FY2020, the revenue attributable to our largest customer amounted to approximately 11.4%, 20.3% and 27.7% of our total revenue, respectively. Our five largest customers during the Track Record Period were Independent Third Parties.

The following table sets out the details of our five largest customers during the Track Record Period as well as our total sales to them during the same period:

Year of commencement of business Typical credit relationship term and Asa%of Principal business Principal products with our payment our total Rank Name of Customer activities sold Group method Sales amount revenue RMB’000 (approximate) (approximate)

FY2018

1 Wang Shanli Sea cucumber Large juvenile sea 2014 6 months, bank 19,051 11.4% (王善禮) breeding cucumbers transfer

2 Yantai Huakang Sea cucumber Large juvenile sea 2015 6 months, bank 16,131 9.7% Biomedical Technology breeding and cucumbers, transfer Co., Ltd.* processing mature sea (煙台華康生物醫藥科技 cucumbers(Note) 有限公司) (formerly and feeds of known as Yantai young sea Huakang Marine cucumbers Products Company Limited* (煙台華康海洋食品有限公司)

3 Jinzhou Sheng Da Sea Sea cucumber Large and small 2018 6 months, bank 15,578 9.3% Cucumbers Breeding breeding juvenile sea transfer Company Limited* cucumbers (錦州勝達海參養殖有限公司)(“Sheng Da”)

4 Zhu Jiquan Sea cucumber Mature sea 2017 6 months, bank 9,262 5.5% (祝吉泉) processing cucumbers(Note) transfer

5 Fang Kehua (房克華) Sea cucumber Mature sea 2017 3 months, bank 7,291 4.4% processing cucumbers(Note) transfer

Total 67,313 40.3%

Note: We no longer engaged in the sale of mature sea cucumbers since August 2019.

– 167 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

FY2019

1 Sheng Da Sea cucumber Large and small 2018 6 months, bank 40,429 20.3% breeding juvenile sea transfer cucumbers

2 Wang Shanli Sea cucumber Large juvenile sea 2014 6 months, bank 38,406 19.3% (王善禮) breeding cucumbers transfer

3 Da Lian Sea cucumber Large and small 2019 6 months, bank 27,212 13.7% breeding juvenile sea transfer cucumbers

4 Fang Kehua Sea cucumber Large juvenile sea 2017 3 months, bank 7,118 3.6% (房克華) processing cucumbers and transfer mature sea cucumbers(Note)

5 Cui Dakuan Sea cucumber Large juvenile sea 2015 6 months, bank 5,453 2.7% (崔大寬) breeding and cucumbers, mature transfer and processing sea cucumbers(Note) point of sale and feeds of sea cucumbers

Total 118,618 59.6%

Note: We no longer engaged in the sale of mature sea cucumbers since August 2019.

– 168 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

FY2020

1 Da Lian Sea cucumber Large and small 2019 6 months, bank 59,113 27.7% breeding juvenile sea transfer cucumbers and feeds of young sea cucumbers

2 Sheng Da Sea cucumber Large and small 2018 6 months, bank 21,800 10.2% breeding juvenile sea transfer cucumbers and feeds of young sea cucumbers

3 Wang Shanli Sea cucumber Large juvenile sea 2014 6 months, bank 21,143 9.9% (王善禮) breeding cucumbers transfer

4 Wang Yanjie Sea cucumber Larvae, large 2013 On site 14,652 6.9% (王艶傑) breeding and sales juvenile sea payment, bank of feeds cucumbers and transfer and feeds of young sea cash cucumbers

5 Yang Guangwu Sea cucumber Large juvenile sea 2015 On site 4,828 2.3% (楊廣武)(Note) breeding cucumbers and payment, feeds of young sea bank transfer cucumbers and point of sale

Total 121,536 57.0%

Note: He was a leader who led groups of walk-in customers to our Shandong First Production Base during the year. The sales amount refers to the purchases he made and the amount of sales by walk-in customers was not included.

To the best of our Directors’ knowledge after making reasonable enquiries, none of our Directors and their respective close associates or any Shareholders holding 5% or more of our issued share capital had any interest in any of our five largest customers during the Track Record Period and up to the Latest Practicable Date.

– 169 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

III. Strategic customers in Liaoning Province

During the Track Record Period, our two major customers, Sheng Da and Da Lian who are sea cucumber breeders in Liaoning Province, contributed revenue of approximately RMB15.6 million, RMB67.6 million and RMB80.9 million, representing approximately 9.3%, 34.0% and 37.9% of our total revenue for FY2018, FY2019 and FY2020, respectively.

During the Track Record Period, we entered into with each of Sheng Da and Da Lian (i) one year framework agreements for sales of our juvenile sea cucumbers; and (ii) service agreements for our provision of services to act on their behalf for purchase of small juvenile sea cucumbers and to guide them to rear our young sea cucumbers of Anyuan No. 1 breed. We, as purchaser, also entered into a transfer agreement with Da Lian, as one of the vendors, with respect to the acquisition of the Liaoning Production Base, for details of which please refer to the paragraph headed “Properties” in this section. On 15 February 2021, we entered into legally-binding exclusive cooperation agreements with Sheng Da and Da Lian respectively. (“Exclusive Cooperation Agreements”)

(a) Background of Sheng Da

Sheng Da is a private company incorporated in December 2016 in the PRC, the principal activities of which include aquaculture and sales of seafood in the PRC. The majority shareholder of Sheng Da has also been in the mariculture industry since 2011. In February 2018, Mr. Zou became acquainted with Sheng Da through an informal trade association. According to the CIC Report, Sheng Da had a market share of approximately 1.1% in the young sea cucumber market in Liaoning Province in terms of aquaculture area in FY2020. It also operated 150 ponds in its production base in Liaoning Province which have a total floor area of approximately 24,000 mu (equivalent to approximately 16,000,000m2) and an annual production capacity of approximately 4.8 million jin sea cucumbers in FY2020.

(b) Background of Da Lian

Da Lian is a private company incorporated in February 2001 in the PRC, the principal activities of which include aquaculture and processing of food products in the PRC. In October 2018, Da Lian approached us to discuss about potential cooperation opportunity. According to the CIC Report, Da Lian had a market share of approximately 0.7% in the young sea cucumber market in Liaoning Province in terms of aquaculture area in FY2020. It also operated one processing production base, one breeding and rearing base and one breeding base in Liaoning Province which have a total floor area of approximately 15,000 mu (equivalent to approximately 10,000,000m2) and an annual production capacity of approximately 3.0 million jin sea cucumber in FY2020.

– 170 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

Considering their scale of operation, market influence and competitiveness in the local market and our sales revenue contributed by Sheng Da and Da Lian, our Directors consider that they are our strategic customers for developing the market in Liaoning Province.

During the Track Record Period, Da Lian and Sheng Da primarily purchased the following products from us:

Da Lian Sheng Da

FY2018 • N/A • Small and large juvenile sea cucumbers.

FY2019 • Small and large juvenile sea • Small and large juvenile sea cucumbers. cucumbers.

FY2020 • Feeds; and • Feeds; and

• Small and large juvenile sea • Small juvenile sea cucumbers. cucumbers.

We conduct sales to them upon receipt of their communication specifying the type and quantity of products to be purchased. Similar to our corporate customers, they typically enter into legally-binding framework agreements with us at the beginning of the year for purchasing our juvenile sea cucumbers. We grant to them a credit term of up to 180 days to settle the purchase amounts due.

They typically inform us in advance of the specifications and quantities of products required before they visit our production bases for purchase. Particularly for our larvae and juvenile sea cucumbers, they typically conduct the inspection and weighing with our staff jointly to ensure that the products meet the relevant specifications and the quantity. Once the inspection and weighing are completed, either we would arrange for the delivery of the products to their designated destinations or they may choose to arrange for their own delivery. They are responsible for the delivery costs. The risks of and titles to the products are passed to the customers once they are transported away from our production bases.

– 171 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

(d) Services to the two major customers in Liaoning Province

We also provided additional services to Sheng Da and Da Lian since the commencement of our business relationships in May 2018 and January 2019, respectively, and a legally-binding service agreement (the “Service Agreement”) was entered between our Group and Sheng Da and Da Lian respectively since then for each year during the Track Record Period. The scope of services we provided to Sheng Da and Da Lian included (i) acting on their behalf to purchase small juvenile sea cucumbers from other sea cucumber breeders who had purchased Anyuan No. 1 from us as we did not have sufficient stock of small juvenile sea cucumbers at the time; and (ii) providing guidance to them, such as dispatching our workers to provide guidance, providing raw materials and improving the rearing facilities of Sheng Da and Da Lian, on rearing our larvae and juvenile sea cucumbers. We will arrange payment first in respect of the costs incurred for purchasing small juvenile sea cucumbers and providing support service to Sheng Da and Da Lian. Sheng Da and Da Lian will then reimburse us for the payments made. As at the Latest Practicable Date, outstanding amounts in relation to the Service Agreements due to our Group from Sheng Da and Da Lian amounted to approximately RMB1.9 million and RMB0.4 million, respectively.

As confirmed by our Directors, during the Track Record Period, there was no material breach of any of the Service Agreements and we did not have any material dispute or claim with Sheng Da or Da Lian.

We provided such additional services to Sheng Da and Da Lian as our Directors believe (i) that our techniques and capabilities tailored towards rearing our larvae and juvenile sea cucumbers could guide Sheng Da and Da Lian to overcome obstacles of a change in the aquaculture environment, namely (a) the differences in water quality, temperature and microorganisms between Shandong Province and Liaoning Province; and (b) the differences in breeding methods (i.e. plant aquaculture is widely adopted in Shandong Province while pond aquaculture is more popular) in Liaoning Province, which could impact the growth and survival rate of our larvae and juvenile sea cucumbers; (ii) that having first-hand experience of rearing Anyuan No. 1 in Liaoning Province would aid us to attract other potential customers in Liaoning Province that our larvae and juvenile sea cucumbers could adapt to the local aquaculture environment; (iii) we can promote the brand and reputation of Anyuan No. 1 in Liaoning Province and develop our market in Liaoning Province; and (iv) that we can benefit from the corporate strength of Sheng Da and Da Lian. Furthermore, our customers are able to recognise mature sea cucumbers which are cultivated from our Anyuan No. 1 and grown in Liaoning Province as Liaoning Sea Cucumbers (遼參). According to the CIC Report, Liaoning Sea Cucumbers are better recognised in the market as they have a higher growth rate and better quality when compared to other sea cucumbers from other parts of China. Our Anyuan No. 1 is also featured with a high growth rate and has more wart feet. When reared in Liaoning Province, Sheng Da and Da Lian would therefore be able to sell our Anyuan No. 1 in the name of Liaoning Sea Cucumbers.

– 172 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

We currently do not have plans to extend such services to other customers. We shall enter into service agreements with our customers if we do provide such services to them in the future.

Whenever the quantities of small juvenile sea cucumbers demanded by Sheng Da and Da Lian exceeded our stock, we would seek quotation of small juvenile sea cucumbers from other breeders who had purchased Anyuan No. 1 from us. The price of the small juvenile sea cucumbers is based on the market price and we would only purchase the small juvenile sea cucumbers on behalf of Sheng Da and Da Lian after receiving their acceptance of the quotation. We deliver the small juvenile sea cucumbers to the destinations designated by Sheng Da and Da Lian. They will inspect the quantity and specifications of the small juvenile sea cucumbers at the sellers’ production bases and upon receipt of our products delivered to them. They will confirm their acceptance upon signing on our delivery note.

(e) Exclusive cooperation agreement

We entered into legally-binding Exclusive Cooperation Agreements with Sheng Da and Da Lian respectively on 15 February 2021.

Duration Five years from 15 February 2021.

Scope of the Exclusive We agree to sell juvenile sea cucumbers of our “Anyuan Cooperation Agreement No. 1” breed and provide after-sales services for the duration of the Exclusive Cooperation Agreement.

Sheng Da and Da Lian will provide their production plans to us for us to prepare production of our juvenile sea cucumbers and to make suggestions in respect of their production facilities and raw materials to be purchased.

We have the right to decide if we have the production capacity to sell our juvenile sea cucumbers and provide after-sales services to Sheng Da and Da Lian. If we do not possess the production capacity to satisfy their annual production plans, we have the right to designate other parties to sell juvenile sea cucumbers or provide after-sales services to Sheng Da and Da Lian.

Exclusivity Subject to our consent, Sheng Da and Da Lian are not allowed to purchase juvenile sea cucumbers or receive after-sales services from or enter into any similar cooperation arrangement with other service provider other than our Group.

– 173 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

Product quality requirement The main requirements include:

(i) the juvenile sea cucumbers should comply with the Guideline of Fishery Drug Application for Pollution-Free Food (NY5701-2002)《無公害食品漁 ( 用藥物使用準則》(NY5071-2002)) issued by the MOA; and

Delivery Sheng Da and Da Lian or their representatives would visit our production bases to conduct the weighing of the juvenile sea cucumbers with our staff jointly to agree the quantity to be purchased.

Pricing policies Our prices and fees are based on market price.

Payment and credit terms During the first year of the Exclusive Cooperation Agreement, Sheng Da and Da Lian should settle our invoice(s) within six months of the invoice issue date. From the second year to the fifth year of the Exclusive Cooperation Agreement, Sheng Da and Da Lian should settle our invoice(s) within seven days of the invoice issue date.

IV. Customers who were also our suppliers

During the Track Record Period, some of our customers were also our suppliers. Such procurement from our customers mainly included (i) purchase of juvenile sea cucumbers; (ii) purchase of raw materials for production of the feeds for young sea cucumbers; (iii) purchase of primarily-processed sea cucumbers; and (iv) other materials used in our business such as repair tools. As confirmed by our Directors, the occasional procurements are only made based on our business needs from time to time.

In order to rear our young sea cucumbers to a required specification for our customers and as there were occasions when we lacked juvenile sea cucumbers of certain specifications in our hatchery workshops, we would sometimes purchase juvenile sea cucumbers of certain specifications from a few of our customers so as to adjust and maintain the density of juvenile sea cucumbers in our water tanks in our production bases.

– 174 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

As our customers are mostly sea cucumbers breeders, they would use the raw materials which we require for the production of our feeds to feed their sea cucumbers. We are able to source some of our raw materials from a few of our customers from time to time.

Prior to the commencement of our production of primarily-processed sea cucumber (Note) products 1 in FY2018, we also made one-off purchases of primarily-processed sea cucumbers products for sales in the PRC.

We also occasionally purchased repair tools from a few of our customers for us to carry out our regular inspection and maintenance works.

In respect of the purchase by our Group, there were no material differences in the pricing and credit terms imposed by our customers who were also our suppliers and those imposed by our other suppliers.

For FY2018, FY2019 and FY2020, we incurred approximately RMB4.2 million, RMB3.8 million and RMB3.9 million, respectively, for the procurement of various materials from our customers.

The following table sets forth the details of our transactions with two of our five largest customers who also supplied various materials to us during the Track Record Period:

FY2018 FY2019 FY2020

王善禮 Revenue derived and approximate % of RMB19.1 million (11.4%) RMB38.4 million (19.3%) RMB21.1 million (9.9%) our total revenue Procurement amounts and approximate RMB54,000 (0.0%) – RMB1.7 million (5.0%) % of our total purchase (Raw materials for production of feeds in FY2018 and sea cucumbers in FY2020) Gross profit margin 64.6% 69.6% 66.1%

祝吉泉 Revenue derived and approximate % of RMB9.3 million (5.5%) RMB2.5 million (1.3%) – our total revenue Procurement amounts and approximate RMB1.8 million (9.2%) – – % of our cost of sales (Primarily-processed sea cucumbers) Gross profit margin 63.8% 60.1% –

– 175 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

V. Third party arrangements

During the Track Record Period, part of our total revenue was settled through third party arrangements.

(a) Inconsistency between the recipient(s) and the payor(s) of the value-added tax (“VAT”) ordinary invoices

There were inconsistencies between the recipient(s) and the payor(s) of the VAT ordinary invoices (the “Inconsistencies”) which concerned six of our payors. The amounts of the Inconsistencies were respectively RMB19.9 million, RMB6.1 million and nil, representing 11.9%, 3.1% and nil of our total revenue during the Track Record Period. Yantai Economic and Technological Development Area Taxation Administration* (國家稅務總局煙台經濟技術開發區稅務局) (the “Taxation Administration”) issued a confirmation that our Group paid taxes in compliance with the relevant laws and regulations and we were not subject to any administrative penalties for any violation during the Track Record Period. Our PRC Legal Advisers confirm the Taxation Administration is the competent regulatory authority to issue the confirmation.

Our PRC Legal Advisers consulted with the Taxation Administration in relation to the Inconsistencies. The Taxation Administration was of the view that the Inconsistencies were not prohibited by the relevant laws and regulations. The Taxation Administration further confirmed that they would not take further action in relation to the Inconsistencies. Since December 2020, we have ensured that there is no inconsistency between the recipient(s) and the payor(s) of the VAT ordinary invoices.

Based on (i) the consultation with the Taxation Administration and the Confirmation issued; (ii) the review of sample sales agreements, related sales receipts and related proofs of payment; (iii) the review of sample confirmations made by the invoice recipient(s) and the payor(s) relating to the genuine nature of the transactions and their independence; and (iv) the invoice recipient(s) and the payor(s) are Independent Third Parties of our Group through verification with the National Enterprise Credit Information Publicity System, our PRC Legal Advisers are of the view that the Inconsistencies are not prohibited by the relevant PRC laws and regulations and our Group would not be subject to any administrative penalty imposed by the Taxation Administration.

– 176 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

(b) Payments by third parties

During the Track Record Period, 25 of our customers (the “Relevant Customers”) had settled all or part of the amounts due to us through Third Party Payors. Our aggregate sales to the Relevant Customers during the Track Record Period that were settled through the Third Party Payors amounted to approximately RMB32.5 million, RMB86.5 million and RMB97.0 million representing approximately 19.5%, 43.5% and 45.4% of our total revenue respectively. The practice of settling the amounts due to us through Third Party Payors by the Relevant Customers (the “Practice”) had occurred prior to the Track Record Period. The Relevant Customers, for the sake of convenience, would often arrange for their family members or friends to settle the amounts due to us on their behalf when they were unable to do so themselves in a timely manner. In other situations, to the best knowledge and belief of our Directors, the Third Party Payors were indebted to the Relevant Customers, and would upon the instructions of the Relevant Customers settle the amounts due to us on their behalf. According to the CIC Report, the Practice is not uncommon in the agriculture industry in the PRC especially amongst small-scale companies and sole proprietorships. Since November 2020, we have ceased permitting the Practice and all payments have been settled directly by our customers.

Except when customers directly come to our production bases and conclude the purchase by making payment at the spot, we would normally demand payments after the sales had occurred. Our customers would typically provide to us the relevant proof of payment to enable us to verify payment. In the cases where the Relevant Customers settle the amounts due to us through Third Party Payors, it was our practice to require both the Relevant Customer and the Third Party Payor to confirm their arrangement in order for us to verify payment and to perform the necessary reconciliations. Our Directors confirm that all the Third Party Payors who settled the amounts due to us on behalf of the Relevant Customers during the Track Record Period were Independent Third Parties.

Based on (i) the review of sample sales agreements, related sales receipt and proofs of payment; (ii) the review of sample confirmations made by the Relevant Customers and the Third Party Payors relating to the genuineness nature of the transactions, their independence and the authorisations received from the Relevant Customers; and (iii) the Relevant Customers and the Third Party Payors are Independent Third Parties of our Group through verification with the National Enterprise Credit Information Publicity System, our PRC Legal Advisers are of the view that the Practice did not contravene the relevant PRC laws and regulations.

Furthermore, as confirmed by our Directors that (i) the Practice carried on was pursuant to genuine transactions entered into between the Relevant Customers and our Group; and (ii) the Third Party Payors were aware of the nature of the transactions and had acted under the instruction of the Relevant Customers, our PRC Legal Advisers advised that the Third Party Payors have no recourse and basis (e.g. based on material misunderstanding or unjust enrichment) in disputing the payments made on behalf of the Relevant Customers or requesting the return of the monies from us.

– 177 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

Our Directors confirm that during the Track Record Period and up to the Latest Practicable Date, we have not received any claims or had any material disputes the Relevant Customers and the Third Party Payors in relation to the Practice.

Internal control measures regarding third party arrangements

Based on the recommendation of our internal control consultant, we have enhanced our internal control policies as follows:

(a) In relation to inconsistency between the recipient(s) and the payor(s) of the VAT ordinary invoices

• The VAT invoices must be made payable by the relevant customers;

• The VAT invoices to individual customers must be made payable and signed by the individuals concerned; and

• We are required to review our accounts receivables regularly against invoices issued to verify information such as the sales made, names of customers and payment receipt dates are correct;

(b) In relation to payments by third parties

• a notice was sent to our customers informing them that all payments must be settled by the same party placing the relevant purchase order directly with us and that payment or transfer of funds from third parties will be rejected;

• our finance team is required to verify every remittance made to our bank accounts and to ensure that the payment is made by the same party placing the purchase order; and

• our sales team shall assist the finance team in obtaining the relevant information from our customers, such as bank-in advices or written confirmations of payment instructions.

We have engaged an independent consultant to perform a follow-up review for the testing period from 20 October 2020 and the said consultant confirmed that we have properly implemented the recommended measures regarding third party arrangements. Based on the review of the said consultant, our Directors are of the view that such internal control measures will effectively prevent the recurrence of third party arrangements in the future.

– 178 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

SALES AND MARKETING

During the Track Record Period, to improve customer satisfaction and to maintain our relationship with our customers, our sales and marketing team would contact them from time to time to enquire as to their views on the quality of our products and services. We would also discuss with our customers matters relating to market trends and demands so that we can tailor our future product line-up and to explore potential business opportunities. As at the Latest Practicable Date, our sales and marketing team comprised of five employees.

SEASONALITY

Our sales are affected by seasonality due to the breeding and growth cycles of sea cucumbers. Typically, we conduct induced spawning of sea cucumbers in March and our sales of juvenile sea cucumbers occur from around April to December(Note). However, our sales will generally cease during the winter i.e. from around January to March and will not commence again until April next year as the growth rate and generally all biological activity of sea cucumbers are very low during winter. During the Track Record Period, our sales of juvenile sea cucumbers during the months from April to December were approximately RMB127.9 million, RMB162.8 million and RMB187.0 million accounting for approximately 100.0%, 97.5% and 100.0% of our total sales of juvenile sea cucumbers respectively.

Pricing policy

We generally determine the selling price of our products based on a market-oriented approach. We formulate our pricing policy and adjust our price periodically by taking into account a variety of factors, such as our production costs and the selling prices of similar products on the market.

We also offer a slight discount to a leader who brings a group of walk-in customers to our production base. For details, please refer to the paragraph headed “Customers – I. Our customers – 2. Walk-in customers” in this section.

In determining the selling price of our juvenile sea cucumbers, we will make reference to the selling prices of mature sea cucumbers in Xiapu County, Fujian Province. The selling prices of mature sea cucumbers in Xiapu County are priced in March each year which is the beginning of the sales season in the mature sea cucumber industry. According to the CIC report, the selling prices of mature sea cucumbers determine the pricing trend of juvenile sea cucumbers in the sea cucumber industry.

Note: Our sales of larvae will generally occur from around January to June based on demands from our customers and do not follow the breeding and growth cycles of sea cucumbers.

– 179 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

Product return policy

We have adopted strict quality control measures to ensure the quality of our products. We typically do not permit any return or refund of our products once the risk to the products are transferred. Our sales team is responsible for handling any return and replacement of products as well as for reporting the matter to our management. Our Directors confirm that during the Track Record Period and up to the Latest Practicable Date, we did not experience any returns of products from our customers.

Credit policy and payment methods

Except for our walk-in customers who generally pay on the site, we generally grant to our customers credit terms ranging from 90 days to 180 days for payment of our invoice and payment is generally effected by way of bank transfers. The exact term of the credit period for our customers depends on a number of criteria, such as their past payment records, our business relationship with the particular customer and their financial strength.

We make an assessment as to whether a provision for impairment of trade receivables should be made based on our historical credit loss experience, adjusted for forward-looking factors specific to our debtors and the economic environment. During the Track Record Period, we did not make any material provisions in relation to our trade receivables and we did not experience any cancellation of orders or any bankruptcy or default on the part of any of our customers.

Logistics and transportation

During the Track Record Period, either we would arrange for delivery to our customers’ designated destinations or they may choose to arrange for their own delivery. The risks relating to our products would pass to our customers when the products are transported away from our production base. Our customers are responsible for the delivery costs.

SUPPLIERS

We procure a variety of materials from our suppliers, generally including (i) juvenile sea cucumbers; (ii) raw materials for production of the feeds for young sea cucumbers; (iii) primarily-processed sea cucumbers; and (iv) other materials used in our business such as repair tools, medicines and packaging materials. For FY2018, FY2019 and FY2020, our total purchases amounted to approximately RMB19.5 million, RMB21.5 million and RMB33.8 million respectively.

– 180 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

The materials we primarily used during the Track Record Period was mainly sourced from a variety of suppliers located in the PRC. We strive to source materials from multiple suppliers where possible to ensure a stable supply of materials and to manage price fluctuations, as this multiple sourcing practice allows us to minimise the risk of supplier default, to hedge against price volatility and to reduce our dependency on a single supplier. As part of our Group’s internal control measures, we maintain a list of approved suppliers from which we source our supplies. We carefully select our suppliers based on a number of criteria, including but not limited to (i) the quality of the materials they offer, (ii) the pricing, (iii) past performance. As at the Latest Practicable Date, we had approximately 281 suppliers on our approved list.

We do not enter into long term contracts with our suppliers, rather we may enter into short term contracts or purchase our materials on an order by order basis. These orders placed by our customers will generally set forth the specifications of the materials to be purchased, the amount, price, delivery details and credit period. During the Track Record Period, we did not experience any material shortage or delay in the supply of materials to us.

Five largest suppliers during the Track Record Period

As at the Latest Practicable Date, our business relationship with our five largest suppliers during the Track Record Period ranged from approximately three to seven years. For FY2018, FY2019 and FY2020, purchases from our five largest suppliers amounted to approximately RMB7.8 million, RMB8.0 million and RMB15.0 million, representing approximately 39.9%, 37.4% and 44.4% of our total purchases, respectively. For FY2018, FY2019 and FY2020, purchases from our largest supplier amounted to approximately 9.2%, 9.3% and 20.4% of our total purchases, respectively. Our five largest suppliers during the Track Record Period were Independent Third Parties.

– 181 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

The following table sets out the details of our five largest suppliers during the Track Record Period as well as our total purchases from them during the same period:

The following tables set out the details of our Group’s five largest suppliers during the Track Record Period:

Year of commencement of business Typical credit Products or relationship term and Percentage to Principal business services provided with our payment Total our total Rank Name of supplier activities by the supplier Group method purchases purchases RMB’000 (approximate) (approximate)

FY2018

1 Zhu Jiquan Sea cucumber Primarily-processed 2018 Payment on 1,802 9.2% (祝吉泉) breeding sea cucumbers delivery, Bank transfer

2 Shandong Yakang Manufacturing, Medicines 2014 Payment on 1,624 8.3% Pharmaceutical wholesale and delivery, Bank Co., Ltd.* retail of veterinary transfer (山東亞康藥業股份 medicinal products 有限公司)

3 Sheng Yongjie Scallop breeding and Scallops 2018 Payment on 1,568 8.0% (盛永杰) processing and delivery, Bank sales of scallop transfer mantles

4 Shanxi Ruicheng Tongren Manufacturing, Medicines 2017 Payment on 1,419 7.3% Veterinary Medicine* wholesale and delivery, Bank (山西芮城同仁獸藥) retail of veterinary transfer currently known as medicinal products Ruicheng County Tongren Veterinary Medicine Co., Ltd.* (芮城縣同仁獸藥有限公司)

5 Han Siquan Scallop breeding and Scallops 2016 Payment on 1,381 7.1% (韓思全) processing and delivery, Bank sales of scallop transfer mantles

Total 7,794 39.9%

– 182 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

‘ Year of commencement of business Typical credit Products or relationship term and Percentage to Principal business services provided with our payment Total our total Rank Name of supplier activities by the supplier Group method purchases purchases RMB’000 (approximate) (approximate)

FY2019

1 Han Siquan Scallop breeding and Scallops 2016 Payment on 2,005 9.3% (韓思全) processing and delivery, Bank sales of scallop transfer mantles

2 Zhang Wenxin Sea cucumber Juvenile sea 2018 Payment on 1,627 7.6% (張文新) breeding cucumbers delivery, Bank transfer

3 Sheng Yongjie Scallop breeding and Scallops 2018 Payment on 1,519 7.1% (盛永杰) processing and delivery, Bank sales of scallop transfer mantles

4 Qingdao Dongfang Manufacturing, Medicines 2018 Payment on 1,484 6.9% Pharmaceutical wholesale and delivery, Bank Co., Ltd.* retail of veterinary transfer (青島東方藥業 medicinal products 有限公司)

5 Shandong Yakang Manufacturing, Medicines 2014 Payment on 1,395 6.5% Pharmaceutical wholesale and delivery, Bank Co., Ltd.* retail of veterinary transfer (山東亞康藥業股份 medicinal products 有限公司)

Total 8,030 37.4%

– 183 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

FY2020

1 Chen Jianbo Production, Algae 2015 Payment on 6,895 20.4% (陳建波) processing and delivery, Bank sales of algae transfer

2 Wang Zhiheng Scallop breeding and Scallops 2016 Payment on 2,594 7.7% (王志恒) processing and delivery, Bank sales of scallop transfer mantles

3 Shandong Yakang Manufacturing, Medicines 2014 Payment on 2,315 6.9% Pharmaceutical wholesale and delivery, Bank Co., Ltd retail of veterinary transfer (山東亞康藥業股份 medicinal products 有限公司)

4 Wang Shanli Sea cucumber Sea cucumbers 2014 Payment on 1,689 5.0% (王善禮) breeding delivery, Bank transfer

5 Han Siquan Scallop breeding and Scallop mantles 2016 Payment on 1,504 4.4% (韓思全) processing and delivery, Bank sales of scallop transfer mantles

Total 14,997 44.4%

– 184 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

AWARDS, RECOGNITIONS AND CERTIFICATIONS

Since the establishment of the Group, we have received a number of awards, recognitions and certifications as a result of our quality standards and contribution to the industry. Set out below are highlights of some of the awards, recognitions and certifications we have received:

Year of Awards/Recognitions/ grant Certifications Awarding body

2013 Shandong Penglai Sea Cucumber MOA Breeding Site at National Level* (山東蓬萊刺參國家級原種場)

2013 Second Class Prize for the The China Society of Fisheries of Shandong Marine and Fishery Shandong Province Science and Technology: Winter (山東水產學會) Large-scale Breeding Technology of Young Sea Cucumbers* (山東省海洋與漁業科學技術二等獎︰刺參大規格苗種規模化冬季培育技術)

2014 Enterprise of “Contracts Honouring State Administration for Industry and Creditworthy” in Year and Commerce of the PRC* 2012–2013* (2012–2013年度 (中華人民共和國國家工商行政管 “守合同重信用”企業) 理總局)

2015 Second Class Prize for the State State Council of the PRC Science and Technology Progress: (中華人民共和國國務院) Research on the Integrated Technology of Healthy Aquaculture of Sea Cucumbers and the Application of its Industrialisation* (國家科學技術進步二等獎︰刺參健康養殖綜合技術研究及產業化應用)

– 185 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

Year of Awards/Recognitions/ grant Certifications Awarding body

2015 Second Class Prize for the Marine The China Society of Fisheries of and Fishery Science and Shandong Province Technology of Shandong (山東水產學會) Province: Nutrient Requirements of Sea Cucumbers and the Technology of Developing Effective Compound Effective Feeds* (山東省海洋與漁業科學技術二等獎︰刺參營養需求及高效配合飼料研製技術)

2015 Chinese Academy of Fishery Chinese Academy of Fishery Sciences and Technology Progress Sciences Award (First Class): (中國水產科學研究院) Establishment of Several New Kinds of Aquaculture Patterns and the Demonstration of its Industrialisation* (中國水產科學研究院科技進步一等獎︰刺參幾種新型養殖模式創建與產業化示範)

2016 Second Class Prize for the Science People’s Government of Shandong and Technology Progress of Province Shandong Province: Establishment (山東省人民政府) and Application of the Ecological Breeding of Young Sea Cucumbers and Healthy Aquaculture Technology* (山東省科學技術進步二等獎︰刺參生態苗種培育與健康養殖技術建立與應用)

– 186 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

Year of Awards/Recognitions/ grant Certifications Awarding body

2016 National Agriculture, Animal MOA Husbandry and Fishery Fruitful Harvest Award: Establishment of Pattern of Large-scale Breeding and Aquaculture of Sea Cucumbers and the Promotion of its Industrialisation* (全國農牧漁業豐收獎︰刺參規模化繁育與養殖模式創建及其產業化推廣)

2018 Certificate of New Breed of National Approval Committee Aquaculture – sea cucumber “Anyuan No.1”* (水產新品種證書 – 刺參“安源1號”)

2018 Innovation Award of the Breeding China Fisheries Association and the Application and (中國漁業協會) Promotion of the New Breed of Sea Cucumber “Anyuan No. 1”* (創新獎 – 刺參“安源1號”新品種選育及應用推廣)

2019 The China Society of Fisheries of The China Society of Fisheries of Shandong Province Popular Shandong Province* (山東水產學 Science Education Base* 會) (山東水產學會科普教育基地)

2019 Marine Resource and Environment Marine Resource and Environment Research Institute Scientific Research Institute of Shandong Research Base of Shandong Province* (山東省海洋資源與環 Province* (山東省海洋資源與環境研究院) 境研究院科研基地)

2019 Marine Ranching Demonstration MOA Zone at National Level* (國家級海洋牧場示範區)

– 187 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

Year of Awards/Recognitions/ grant Certifications Awarding body

2020 Marine Aquaculture Comprehensive The Standardization Administration Standardisation Demonstration of the PRC Zone at National Level* (國家海洋水產養殖綜合標準化示範區)

2020 Teaching and research base of Yantai University Yantai University* (煙台大學教學 (煙台大學) 科研基地)

2020 Gold Award of New Breed of “Peng China Fisheries Association Anyuan” Brand Sea Cucumber (中國漁業協會) “Anyuan No.1”* (金獎 –“蓬安源”牌刺參“安源1號” 新品種)

RESEARCH AND DEVELOPMENT

We believe that a strong focus on research and development is important for us to maintain our market position as well as to improve our efficiency and the cost effectiveness of our operations. In order to keep pace with the latest market trends, we have devoted and will continue to devote resources in our research and development, particularly in the area of new breeds of sea cucumbers to satisfy customers’ demand.

We have a proven track record of over 12 years of research and development experience. In May 2018, the National Approval Committee formally recognised our new breed as Anyuan No. 1, being the only new breed of sea cucumber the development of which was led by an enterprise and that was named after a company in the PRC from 2010 to 2020. All larvae and juvenile sea cucumbers we sold during the Track Record Period was of this breed. We strategically combine our research and development activities with our daily production by using the data we collect in our daily breeding and production for our research and implementing new experimental techniques and methods in our daily production based on the results our research. We conduct our research and development with the support of a research and development laboratory located in our Shandong First Production Base. As at the Latest Practicable Date, our research and development team comprised 23 members, which includes technicians certified in the breeding of aquatic animals and laboratory testing as well as a practising assistant aquatic veterinarian.

– 188 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

Our research and development expenses incurred for FY2018, FY2019 and FY2020 amounted to approximately RMB2.8 million, RMB1.6 million and RMB9.4 million respectively, which primarily include depreciation, staff costs and raw materials. We apportioned part of our costs for our staff, maintenance of laboratories and procurement of raw materials as our research and development expenses in the amount of RMB2.4 million, RMB0.9 million and RMB4.2 million for FY2018, FY2019 and FY2020 respectively.

I. Our research projects and our honorary consultants

Our Directors believe that our large-scale sea cucumber aquaculture enables us to attract various leading agricultural universities and institutions in the PRC to cooperate with us to conduct joint research. And we are able to benefit from such researches by improving, including but not limited to, our production techniques, methods on preventing the spread of sea cucumber related diseases without the use of antibiotics, development of different feed mixtures and rearing techniques to increase efficiency and yields. Set out below are details of the major research projects we conducted:

Research time period Research subject Research partners

2006–2011 Comprehensive Technology Yellow Sea Fisheries Research Research and Industrialized Institute, Chinese Academy of Application of Sea Cucumber Fishery Sciences (中國水產科學 Healthy Breeding (刺參健康養殖研究院黃海水產研究所), 綜合技術研究及產業化應用) Dalian Ocean University* (大連海洋大學)

Ocean University of China (中國海洋大學)

Shandong Institute of Marine Biology* (山東省海洋生物研究院)

Dalian One Bridge Ocean Seedling Industry Co., Ltd.* (大連壹橋海洋苗業股份有限公司)

– 189 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

Research time period Research subject Research partners

2008–2018 Development of new breed of sea Dalian Ocean University cucumber “Anyuan No. 1”

2009–2012 Winter Large-scale Breeding Yellow Sea Fisheries Research Technology of Young Sea Institute, Chinese Academy of Cucumber* (刺參大規格苗種規 Fishery Sciences* (中國水產科模化冬季培育技術) 學研究院黃海水產研究所)

2009–2012 Research and Application of Yantai University Operation Optimization Key Technology of 1000m3 –Grade Microalgae Photoreactor System

2013–2015 Construction and Application of Not applicable Commercialized Breeding System of Improved Sea Cucumber* (刺參良種商品化繁育體系建設與應用)

2013–2016 Integrated Demonstration of Liaoning Ocean and Fisheries Engineering and Safe Breeding Science Research Institute Technology of Sea Cucumbers* (遼寧省海洋水產科學研究院) (刺參工程化安全養殖技術集成示 Marine Biology Institute of 範) Shandong Province (山東省海洋水產研究所) Dalian Huixin Titanium Equipment Development Co., Ltd. (大連匯新鈦設備開發有限公司) Shandong Mariculture Research Institute* (山東省海水養殖研究所) Dalian Tianzheng Industrial Co., Ltd.* (大連天正實業有限公司) Dalian Ocean University (大連海洋大學) Hebei University (河北大學)

– 190 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

Research time period Research subject Research partners

2018–2022 Creation of Important Breeding Yellow Sea Fisheries Research Echinoderms Germplasm and Institute, Chinese Academy of Development of New Objects* Fishery Sciences (中國水產科學 (重要養殖棘皮類種質創制與新對研究院黃海水產研究所) 象開發) Dalian Ocean University (大連海洋大學) Qingdao Ruizi Sea Treasures Development Co., Ltd.* (青島瑞茲海珍品發展有限公司) Dongying Haiyue Aquatic Technology Co., Ltd.* (東營海躍水產科技有限公司)

2018–2022 High-efficiency Breed Production Yellow Sea Fisheries Research and Propagation Technology of Institute, Chinese Academy of Improved Sea Cucumber and Sea Fishery Sciences (中國水產科學 Urchin (刺參、海膽良種高效制研究院黃海水產研究所) 種與苗種擴繁技術) Subtask: Large-scale Breeding Technology Of Sea Cucumber In Shallow Sea Cages* (子任務：刺參淺海網箱大規格苗種培育技術)

Aside from the above, we have since 2011 appointed certain leading academics as our honorary consultants including, Mr. Wang Yingeng, Ms. Sun Huiling, Mr. Chen Siqing, Mr. Yan Jingping of the Yellow Sea Fisheries Research Institute Chinese Academy of Fishery Sciences, Mr. Li Qi of the Ocean University of China and Mr. Chang Yaqing of Dalian Ocean University. We consult our honorary consultants from time to time for their views on our research projects.

– 191 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

II. Development of our new breeds

When a broodstock attain certain unique specifications, the National Approval Committee of the PRC will recognise it as a new breed of sea cucumbers upon the developer’s application. For the period from 2010 to 2020, only six new breeds of sea cucumber were approved by the National Approval Committee.

We have been continuously devoting efforts and resources in the development and improvement of our broodstock. In May 2018, the National Approval Committee formally recognised our new breed as “Anyuan No. 1”, which is the only new breed of sea cucumber the development of which was led by an enterprise and that is named after a company in the PRC for the period from 2010 to 2020. All larvae and juvenile sea cucumbers we sold during the Track Record Period and up to the Latest Practicable Date were of this breed. We planned to submit a new application after mid 2022 for the recognition of another new breed “Anyuan No. 2” that we have been developing.

Development of Anyuan No.1

We began our joint research project with Dalian Ocean University in 2008. We selected sea cucumbers from the broodstock of “Shuiyuan No. 1”, a breed cultivated by Dalian Ocean University, with specific age group and whose number of wart feet and weight met our criteria, for breeding. The off-spring of these selected sea cucumbers were labelled “first generation”. These “first generation” sea cucumbers were then being selected for breeding again to produce off-spring labelled “second generation” and this process was repeated. Due to our stringent selection requirement, only less than 1% of the broodstock were selected and bred in each of these selection processes. For over 10 years from 2008 to 2018, the “fourth generation” sea cucumbers were produced. We found that these sea cucumbers exhibited stable characteristics in terms of number of wart feet and growth rate and etc. Based on the above findings, the National Approval Committee approved the application by our Group and Dalian Ocean University for the new breed of sea cucumber and granted the Anyuan No. 1 Certificate.

For details of the characteristics of the breed of “Anyuan No. 1”, please refer to the paragraph headed “Products – I. Breeding of Anyuan No. 1” in this section.

– 192 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

Development of Anyuan No.2

The quality of our larvae and juvenile sea cucumbers products highly depends on the characteristics of our broodstock. In order to maintain our market position, we commence the development of a new breed in 2013 which is expected to surpass Anyuan No.1 in terms of the number of wart feet and growth rate. The broodstock of Anyuan No. 1 were used for the selection and breeding process as we did for development of the breed of “Anyuan No. 1 and the selection criteria include number of wart feet, and growth rate. We have obtained the “third generation” in 2019 and we expect that the “fourth generation” can be selected and bred from the “third generation” in mid 2022. We shall submit the application for new breed of sea cucumber in due course and we intend to name the said new breed as “Anyuan No. 2”.

III. Our marine ranch

Our Group has set up a marine ranch in the sea near the Yantai Economic and Technological Development Area with the total sea area of 3,628,290 m2, and we placed artificial reef in the said sea area to provide a suitable environment for the cultivation of sea cucumbers. We also built a multi-functional platform in the said sea area, which has a total gross floor area of 625 m2, for our staff to monitor the condition of the seabed and the growth of sea cucumbers reared in the marine ranch, and to conduct research and development in respect of [the effect of climate and sea water quality on the growth of sea cucumbers. Our research and development team also preserve some of our broodstock in our marine ranch.

In recognition of our achievement, our marine ranch was awarded by the Department of Marine and Fishery of Shandong Province* (山東省海洋與漁業廳) as a Provincial Marine Ranch Demonstration Zone* (省級海洋牧場示範區) in 2017, and awarded by the MOA of the PRC as National Marine Ranch Demonstration Zone* (國家級海洋牧場示範區) in 2019.

IV. Protection of our know-how

In order to protect our intellectual property rights including trade secrets and know-how, different staff will only be responsible for their respective parts, but not the whole process of the cultivation of our sea cucumbers. Mr. Zou and a few of our core senior management are the only persons who possess the knowledge and skills of the whole process of cultivation of sea cucumbers comprising of three major aspects, namely breeding, feeding and rearing of sea cucumbers.

Furthermore, as our customers depend upon us for the supply of Anyuan No.1 sea cucumbers, and we only sell certain amount of Anyuan No.1 to them, it prevents our competitors from breeding Anyuan No.1 or developing new breed of sea cucumber on the basis of Anyuan No.1.

– 193 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

We believe that protecting and enforcing our intellectual property rights are of significant importance to our business operations, reputation and branding. Accordingly, we seek to register and maintain the registration of our intellectual property rights in accordance with the relevant laws and regulations. However, not all proprietary know-how is patentable and certain proprietary know-how may be extremely difficult to patent. We have entered into non-competition agreements with our senior management team as well as research and development team members, which require these personnel to strictly comply with our confidentiality requirements. According to our PRC Legal Advisers, all of the inventions, designs and technologies our employees developed in their course of employment and/or developed by using our Group’s resources or technology shall belong to our Group. Further, we have also required some of our research and development partners to enter into agreements which contain confidentiality clauses that limit their ability to disclose jointly developed proprietary information.

INTELLECTUAL PROPERTY

As at the Latest Practicable Date, we have obtained 14 patents in the PRC. Our patents primarily relate to rearing methods and machineries to improve our production process and our feed formulations. As at the Latest Practicable Date, we had also registered seven trademarks in the PRC and two trademarks in Hong Kong. For further details as to our intellect property rights, please refer to the paragraphs headed “B. Further information about the business of our Group – 2. Intellectual property rights of our Group” in Appendix VI to this document.

Despite our efforts to protect our proprietary rights, unauthorised parties may attempt to copy or otherwise obtain and use our intellectual property rights. It is difficult to monitor unauthorised use of technology and know-how. In addition, our competitors may independently develop technology and/or know-how similar to ours. Our precautions may not prevent misappropriation or infringement of our intellectual property.

During the Track Record Period and up to the Latest Practicable Date, to the best of our knowledge, we had not been subject to any material intellectual property claims, which could have a material adverse effect on our business or operations.

INSURANCE

During the Track Record Period, we had maintained insurance covering our vehicles, property, plant and equipment. As confirmed by our PRC Legal Advisers, we are not required under the relevant PRC laws and regulations to maintain any product liability insurance. We believe that our insurance coverage during the Track Record Period is adequate in the context of our business and in line with our industry practice. For FY2018, FY2019 and FY2020, our insurance expenses was approximately RMB71,000, RMB81,000 and RMB488,000 respectively.

– 194 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

As confirmed by our Directors, during the Track Record Period and up to the Latest Practicable Date, we had not made any material claims against any of our insurance policies.

ENVIRONMENTAL PROTECTION

We are subject to the PRC national and local environmental laws and regulations, including but not limited to the Fisheries Law, the Regulations on the Protection of the Reproduction of Aquatic Resources, Marine Environmental Protection Law of the PRC, the Law on Prevention and Control of Water Pollution of the PRC, the Environmental Protection Law of the PRC, the Law for the Prevention and Treatment of Air Pollution of the PRC, and the Law for the Prevention and Treatment of Solid Waste Pollution of the PRC. For further details, please refer to the section headed “Regulatory Overview – Environmental protection” in this document.

The primary waste generated from our operations is wastewater arising from the rearing of sea cucumbers and we have implemented environmental protection procedures to treat and dispose of our waste in accordance to applicable environmental laws and regulations. As advised by our PRC Legal Advisers, our Group was in all material respects in compliance with the applicable environmental protection laws and regulations of the PRC during the Track Record Period and up to the Latest Practicable Date.

For each of FY2018, FY2019 and FY2020, our Group’s cost of compliance with the applicable environment protection laws and regulations was approximately nil, nil and RMB13,000 respectively.

Our Directors are also of the view that the production safety measures currently adopted are in line with the market practice of the industries in which our Group is engaged.

– 195 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

EMPLOYEES

We had 252 employees in the PRC as at the Latest Practicable Date. The following table sets forth a breakdown of our employees by function as at the Latest Practicable Date:

Number of Function employee

Management 8 Administration 6 Audit 2 Finance 4 Quality Control 7 Procurement 5 Human Resources 2 Sales and marketing 5 Laboratory 8 Production 196 Engineering 2 Maintenance 7

Total 252

Relationship with our employees

Our Directors believe that our staff is the key to our success and we endeavor to maintain good relationships with our employees. Since 2012, a labour union has been established by our employees in Yantai City, Shandong Province. Our Directors confirm that we had not experienced any material disruption in our operations as a result of labour disputes during the Track Record Period and up to the Latest Practicable Date.

Employee recruitment and remuneration and benefits

We recruit our employees mainly from the open market through advertisements and recruitment conventions. During the Track Record Period, we did not engage any recruitment agents for the purposes of recruiting employees.

– 196 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

To facilitate the recruitment of employees, we strive to offer competitive salaries and benefits to our employees. Further, we will also review the salaries and bonuses of our employees periodically to ensure that their remuneration is competitive and in-line with their performance. In compliance with the applicable statutory requirements in the PRC, our Group participates in social insurance and the housing provident schemes in the PRC. Our Directors confirm that, save as disclosed in the paragraph headed “Compliance” in this section, we were in material compliance with all applicable labor laws of the PRC during the Track Record Period and up to the Latest Practicable Date. Our Directors also confirm that we had not encountered any material difficulty in the recruitment and retention of our employees during the Track Record Period and up to the Latest Practicable Date.

Employee training

We provide our new and existing employees with relevant job training from time to time covering health and safety and operational procedures. To supplement the training to our employees, our Group has also set in place various policies and operating guidelines. Where there are new industry regulations, our Group may also provide supplemental training to our employees.

Employee safety

We promote occupational health and safety measures to ensure that we are in compliance with the applicable laws and regulations through establishing and implementing workplace safety guidelines for our employees. When accidents do occur, it is our policy that the details of such accidents will be reported to the relevant department and handled accordingly. [Our Directors confirm that there were no accidents, health injuries or any material insurance claims relating to employee injuries during the Track Record Period and up to the Latest Practicable Date, which would adversely affect our business, financial condition and operating results in any material respect.

Our business and operations is also subject to various labour and safety laws and regulations in the PRC. Our PRC Legal Advisers have advised us that we were materially in compliance with all relevant mandatory local and national occupational health and safety laws and regulations in the PRC during the Track Record Period and up to the Latest Practicable Date.

PROPERTIES

As at the Latest Practicable Date, we owned five properties, including one parcel of land with a site area of 15,480 m2 and four ancillary facilities erected thereon with an aggregate gross floor area of 6,624.7 m2 in Yantai of Shandong, the PRC, which form part of the Shandong First Production Base.

– 197 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

As at the Latest Practicable Date, we leased four properties including three parcels of land with an aggregate site area of approximately 289,676.7 m2 and a group of agricultural facilities with a gross floor area of approximately 17,313 m2, which form part of the Shandong First Production Base and Shandong Second Production Base.

Our owned properties

The following table sets forth details of the properties owned by our Group as at the Latest Practicable Date:

Gross floor area/site area (m2) Term of land Details of the title No. Property type Location (approximate) use rights defect

1. One parcel of land No. 568 Yaqian 15,480 17 August Nil Village, 2012 to Chaoshui 22 October Town, Yantai 2052 2. Four ancillary City, 6,624.65 Two of the four facilities on Shandong owned ancillary industrial land Province, the facilities with an PRC aggregate gross floor area of 217.65 m2 did not obtain the Building Ownership Certificates (房屋所有權證)

The parcel of land and the four ancillary facilities listed above form part of our Shandong First Production Base. As at the 28 February 2021, above listed parcel of land and buildings thereon had a total carrying amount of approximately RMB7.8 million. For details of valuation of these properties, please refer to the Property Valuation Report set out in Appendix IV to this document.

– 198 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

Title defects of our owned properties

• Failure to report the construction work with relevant government authority and obtain the Building Ownership Certificate

As at the Latest Practicable Date, two of the ancillary facilities owned by our Group with a gross floor area of 217.65 m2 in aggregate have been erected on the parcel of land owned by our Group which were unable to obtain building ownership certificate when the construction work completed in September 2011. Our Group did not report the construction of the said two ancillary facilities with the relevant government authority before the construction work commenced. It was due to inadvertent administrative oversight and miscommunications during the work handover of our responsible staff in the past. Our staff who was in-charge of our property matters left his position, and the successor was not familiar with the relevant laws and regulations at the point of handover and did not actively follow up on this matter subsequently. As such reporting procedure was one of the prerequisite in obtaining the building ownership certificate, our Group therefore currently does not have the building ownership certificate with respect to the said two buildings. As advised by our PRC Legal Advisers, our Group were unable to arrange for the building ownership certificate now as the relevant government authority refused to recognise the construction of mere ancillary structures. The two ancillary facilities comprise of station for security guard and laboratory facilities which are ancillary to the Shandong First Production Base. As advised by our PRC Legal Advisers, failure to obtain the building ownership certificate would prevent the buildings from being accepted by bank as security for mortgage.

According to the Urban and Rural Planning Law of the PRC (中華人民共和國城鄉規劃法), the people’s government of county level or above is entitled to put on hold any construction work which failed to obtain the necessary construction works planning permit (建築工程規劃許可) or failed to comply with the associated regulations. As advised by our PRC Legal Advisers, any non-compliant construction which is rectifiable shall be rectified within the prescribed period and may be subject to a penalty higher than 5% but lower than 10% of the construction cost, the amount of which is expected to be in the range of approximately RMB13,500 to RMB27,100. Any non-compliant construction which is non-rectifiable shall be demolished within the prescribed period prescribed by the relevant government authorities. For the construction which is not able to be demolished or nothing thereon could be confiscated may be subject to a penalty equivalent to 10% of the construction cost provided that no illegal income has been generated.

– 199 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

According to the confirmation letters issued by the following government authorities, save for the title defects mentioned above, our Group were not in breach of the relevant laws and regulations which fall under their respective jurisdiction during the specified period:

Issuing authority Date of issue Confirmations

Construction and 18 August 2020 Our Group had strictly observed the Transportation applicable laws and regulations in Bureau (建設交通 respect of housing construction, 局) and the transportation, natural resources and Planning and planning management and had not been Natural Resources subject to the administrative sanction of Bureau (自然資源 the Construction and Transportation 和規劃局)ofthe Bureau and the Planning and Natural Yantai Economic Resources Bureau of the Yantai & Technological Economic and Technological Development Area Development Area during the period from July 2017 to August 2020.

Comprehensive 23 February 2021 Our Group had strictly observed the Administrative and applicable laws and regulations in Law Enforcement respect of natural resources and Bureau (綜合行政 planning management and had not been 執法局)ofthe subject to the administrative sanction of Yantai Economic the Comprehensive Administrative Law & Technological Enforceable Bureau during the period Development Area from 18 August 2020 to 23 February 2021.

Construction and 5 March 2021 Our Group had not been subject to the Transportation administrative sanction of the Bureau of the Construction and Transportation Bureau Yantai Economic of the Yantai Economic and & Technological Technological Development Area during Development Area the period from 18 August 2020 to the date of issue.

Our PRC Legal Advisers are of the view that the above mentioned bureaux are competent authorities to issue such confirmation letters. As advised by our PRC Legal Advisers, the possibility that our Group will be required to demolish the said two ancillary facilities or imposed with a penalty is low. Our Directors are of the view that the above mentioned title defects would not materially and adversely affect our business operations or financial conditions because: (i) such properties, including security guard and laboratory facilities, are ancillary to the Shandong First Production Base and do not form a core part of our production base; (ii) even if we are required to move away from such properties, we are able to locate alternative premises

– 200 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS within a reasonable period of time under comparable terms without incurring substantial additional costs; and (iii) such title defects were caused by an inadvertent administrative oversight before the Track Record Period, and our Group has subsequently enhanced the internal control procedures to prevent the same from happening again. Nevertheless, Mr. Zou, one of our Controlling Shareholders, has provided an indemnity in favor of our Group to indemnify our Group against any claims, charges, fines and other liabilities arising from the title defects in respect of the properties owned by our Group.

Our leased properties

As at the Latest Practicable Date, we leased four properties, including three parcels of land with an aggregate site area of approximately 256,883.29 m2 and one agricultural facility with a site area of approximately 17,313 m2, which form part of the Shandong First Production Base and Shandong Second Production Base.

The following table sets forth details of the properties leased by our Group as at the Latest Practicable Date:

Gross floor Details of the area/site area defective leased No. Property type Location (mu) (approximate) Tenure properties

1. One parcel of Northeast side of the 315.80 mu 1 May 2012 to Our group were unable land feeds production (equivalent to 30 April 2032 to renew the factory, approximately registration of the Yaqian Village, 210,534.39 m2) facility agricultural Chaoshui Town, land* (設施農用地) Yantai City, on the Leased Land Shandong Province, No. 1 the PRC (the “Leased Land No. 1”)

2. One parcel of Northwestern side of the 45.028 mu 1 May 2012 to Our group were unable land feeds production (equivalent to 30 April 2032 to renew the factory, approximately registration of the Yaqian Village, 30,018.82 m2) facility agricultural Chaoshui Town, land on the Leased Yantai City, Land No. 2 Shandong Province, the PRC (the “Leased Land No. 2”)

– 201 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

Gross floor Details of the area/site area defective leased No. Property type Location (mu) (approximate) Tenure properties

3. One parcel of Northeast side of 24.495 mu 1 May 2016 to The village committee land the feeds production (equivalent to 30 April 2032 of Yaqian Village factory, approximately (the “Yaqian Village Yaqian Village, 16,330.08 m2) Committee”) failed Chaoshui Town, to obtain the consent Yantai City, Shandong of more than Province, the PRC two-thirds of the (the “Leased members in Land No. 3”) villagers’ meetings or more than two-thirds of the villagers’ representatives in advance in relation to the relevant land lease contract

4. A group of North of Zhujiazhuang 25.97 mu (equivalent 31 October 2017 The lessor did not agricultural Village, to approximately to 31 October arrange for facilities on Chaoshui Town, 17,313.42 m2) 2022 registration of the agricultural Yantai City, facility agricultural facility land Shandong Province, land in relation to the PRC (the “Leased the Leased Agricultural Agricultural Facilities”) Facilities

– 202 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

Defective titles of our leased properties

• Failure to obtain sufficient consent from village members

As at the Latest Practicable Date, our Group entered into a land lease contract with the Yaqian Village Committee in relation to the Leased Land No. 3 on 1 May 2016. The Yaqian Village Committee did not obtain consent from at least two-thirds of the villagers or two-thirds of the villagers’ representatives before entering into the relevant land lease contract. As advised by our PRC Legal Advisers, the village members in Yaqian Village or its representatives are entitled to apply to the court to rescind the relevant land lease contract. In such case, the relevant land lease contract may be rescinded and our Group may be required to vacate the land. However, as advised by the PRC Legal Advisers, as the relevant land lease contract has been attested (鑒證) by the People’s Government of Chaoshui Township, the possibility that the relevant land lease contract would be rescinded is low. Our Directors confirmed that, as at the Latest Practicable Date, the relevant land lease contract had been duly observed and our Group had not received any opposition from the village members in respect of the relevant land lease contract.

Importance to the Difference in Remedial actions taken Property operation of our Group rental by our Group

the Leased The Directors are of the Nil 1. On 6 April 2020, our Group Land No. view that the Leased entered into an Investment 3 Land No. 3 is not Cooperation Framework crucial to the Group’s Agreement with Yantai Bajiao Bay business as it accounts Blue Seed Industry Silicon Valley for approximately Work Leadership Office Team* 5.64% of the total site (煙台八角灣藍色種業矽谷工作領 area of the land 導辦公室小組) (the “Leadership occupied or managed Office Team”), pursuant to which by our Group the Task Force will identity a suitable piece of land of approximately 400 mu (equivalent to approximately 267,000 m2)as an alternative production base to serve the productions needs of our Group in the event that the relevant PRC government authorities order our Group to demolish all or park of our buildings and/or facilities in our production bases.

– 203 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

Importance to the Difference in Remedial actions taken Property operation of our Group rental by our Group

2. According to the relevant land lease contract entered into between our Group and the Yaqian Village Committee, the Leased Land No. 3 is used for the Group’s operation as a breeding field. The Yaqian Village Committee undertakes that in the event that our Group is unable to carry out our operations as specified in the relevant land lease contract owing to the breach on part of the Yaqian Village Committee, it shall (i) paid a sum equivalent to 20% of the total rent under the relevant land lease contract as penalty, and (ii) compensate our Group for all losses arising from such breach.

3. Mr. Zou, one of our Controlling Shareholders, has provided an indemnity in favor of our Group to indemnify against any claims, charges, fines and other liabilities arising from the title defects in respect of the properties occupied or managed by our Group.

– 204 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

• Lack of or failure to renew the registration of facility agricultural land

Reasons for and particulars of Importance to the operation of Difference Remedial actions taken by Property the title defects our Group in rental Legal consequences our Group

the Leased On 28 May 2012, the Bureau of Our Directors are of the view Nil As advised by our 1. On 6 June 2020, our Land Marine and Fishery of Penglai* that the Leased Land No. 1 is PRC Legal Group entered into an No. 1 (蓬萊市海洋與漁業局) issued crucial to the operation of the Advisers, pursuant Investment Cooperation the “Approval in relation to the Group as it accounts for to the Notice Framework Agreement construction of a large-scale 72.68% of the total site area of Relating to Issues with the Leadership Office aquatic breeding field” the land occupied or managed of the Team, pursuant to which (Penghai Yu [2012] No. 86)* by our Group. Administration of the Task Force will (《關於同意山東安源水產股份 Facility Agricultural identity a suitable piece of 有限公司興建規模化水產育苗 Land by the land of approximately 400 廠的批復》(蓬海漁[2012]86號)) Ministry of Natural mu (equivalent to approving the construction of a Resources and approximately large-scale aquatic breeding Ministry of 267,000 m2)asan field by our Group. Agriculture (Zi Ran alternative production base Zi Gui (2019) No.4) to serve the productions On 19 October 2012, the 《自然資源部、農業 needs of our Group in the Bureau of Land and Resources 農村部關於設施農 event that the relevant of Penglai City (蓬萊市國土資業用地管理有關問 PRC government 源局) issued a Request for 題的通知》(自然資 authorities order our Instruction on the Use of 規〔2019〕4號), Group to demolish all or Facility Agricultural Land by facility agricultural part of our buildings and/ Shandong Anyuan Aquaculture land can be or facilities in our Company Limited (Pengtu registered by the production bases. Gongzi [2012] No. 20)*《關於 ( rural collective 對山東安源水產股份有限公司 economic 2. Mr. Zou, one of our 使用設施農用地的請示》(蓬土 organisation or the Controlling Shareholders, 供字[2012]20 號) which operator with the has provided an indemnity confirm that our Group could township in favor of our Group to make use of a land situated in government. The indemnify against any Yaqian Village with an area of township claims, charges, fines and approximately 210,534 m2 as government will other liabilities arising facility agricultural land for the then consolidate from the title defects in purpose of building a and report the cases respect of the self-owned large-scale aquatic breeding to the Ministry of properties and leased field. Natural Resources properties in Yaqian at county level. Village and Zhujiazhuang On 22 October 2012, the Where permanent Village. People’s Government of capital farmland is Penglai City issued an involved, the Approval from the Bureau of construction work Land and Resources of Penglai shall only City in relation to the Request commence after for Instruction on the Use of having been Facility Agricultural Land by approved by Shandong Anyuan Aquaculture Ministry of Natural Company Limited (Peng Resources at county Zhengzheng Zi [2012] No. 44)* level. (《關於蓬萊市國土資源局〈關於對山東安源水產股份有限公司使用設施農用地的請示〉的批復》) confirming the registration of the said area as facility agricultural land by the Bureau of Land and Resources of Penglai City.

– 205 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

Reasons for and particulars of Importance to the operation of Difference Remedial actions taken by Property the title defects our Group in rental Legal consequences our Group

Certificate of Registration of Nil Land for Livestock and Poultry Breeding (Registration Number: 2012002)*《山東省規 ( 模化畜禽養殖用地登記備案證明》(登記備案號：2012002)) was issued by the Bureau of Land and Resources of Penglai City on 23 October 2012 with regard to the construction of a large-scale aquatic breeding field of approximately 210,534 m2. The registration was for a period of five years commencing from 22 October 2012 to 21 October 2017 subject to renewal upon expiry of the term.

According to the Feedback on List of Question related to the Opinion of National Marine Inspection Team on Land Reclamation issued by the Bureau of Natural Resources, it has been revealed that during June to October 2012, our Group has filled up a shrimp pond and reshaped it to become a drying field with an area of approximately 2.25 hectares (equivalent to approximately 22,500 m2) before the issuance of the Certificate of Registration of Land Livestock and Poultry Breeding. According to the Announcement of the Feedback by National Marine Inspection Team on the Rectification Status of Yantai Economic and Technological Development Area (Serial Number 71)*《煙 ( 台市開發區關於國家海洋督查反饋意見(序號71)整改情況公示》), the rectification has been completed. When our Group renew the registration of the facility agricultural land, we were informed that the relevant registration will not be further proceeded with owing to historical coastal land use issues.

– 206 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

Reasons for and particulars of Importance to the operation of Difference Remedial actions taken by Property the title defects our Group in rental Legal consequences our Group

the Leased On 28 May 2012, the People’s Our Directors are of the view Nil 3. As to the Leased Land No. Land Government of Chaoshui that the Leased Land No. 2 is 1 and the Leased Land No. 2 Township issued the crucial to the operation of the No. 2 in particular, “Document of the People’s Group as it account for 10.36% according to the relevant Government of Chaoshui of the total site area of the land lease contracts, the Town” (Chao Zhengfa [2012] land occupied or managed by leased land are in No. 62)*《潮水鎮人民政府文 ( our Group. compliance with all the 件》(潮政發[2012]62 號)) requirements and policy approving the construction of a for operating a large-scale large-scale aquatic breeding aquatic breeding field and field on the Leased Land No. 2 have observed the by our Group. On 19 October applicable rules and 2012, the Bureau of Land and regulations with respect to Resources of Penglai City (蓬 the planning an 萊市國土資源局) issued a environments protection of Request for Instruction on the a breeding field. The Use of Facility Agricultural Yaqian Village Committee Land by Shandong Anyuan undertakes that in the Aquaculture Company Limited event our Group is unable (Pengtu Gongzi [2012] No. to perform our operations 22)* 關於對山東安源水產股份 as specified in the relevant 有限公司使用設施農用地的請 land lease contracts owing 示(蓬土供字[2012]22 號) that to the breach on part of confirm our Group could make the village committee, it use of a piece of land situated shall (i) refund the rent in Yaqian Village with an area already paid, (ii) paid a of approximately 46,627 m2 as sum equivalent to 20% of facility agricultural land for the the total rent under the purpose of building a relevant land lease large-scale aquatic breeding contract as penalty, and field. (iii) compensate to our Group for all loss arising On 22 October 2012, the from such breach. People’s Government of Penglai City issued an Approval from the Bureau of Land and Resources of Penglai City in relation to the Request for Instruction on the Use of Facility Agricultural Land by Shandong Anyuan Aquaculture Company Limited (Peng Zhengzheng Zi [2012] No. 46)* (《關於蓬萊市國土資源局〈關於對山東安源水產股份有限公司使用設施農用地的請示〉的批復》) confirming the registration of the said area as facility agricultural land by the Bureau of Land and Resources of Penglai City.

– 207 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

Reasons for and particulars of Importance to the operation of Difference Remedial actions taken by Property the title defects our Group in rental Legal consequences our Group

On 23 October 2012, the Bureau of Land and Resources of Penglai City issued the Certificate of Registration of Land for Livestock and Poultry Breeding (Registration Number: 2012003)《山東省規 ( 模化畜禽養殖用地登記備案證明》(登記備案號：2012003)) with regard to the construction of a large-scale aquatic breeding field of approximately 46,627 m2. The registration was for a period of five years commencing from 22 October 2012 to 21 October 2017 which shall be renewed prior to its expiry. When our Group renew the registration, we were informed that the relevant registration will not be further proceeded with owing to historical coastal land use issues.

the Leased On 31 October 2017, our Group Our Directors are of the view Nil Agricultural entered into a Lease Agreement that the Leased Agricultural Facilities with Yantai Chunsheng Marine Facilities are not crucial to the Aquaculture Co., Ltd.* (煙台春 operation of the Group as it 生海水養殖有限公司) account for 5.98% of the total (“Chunsheng”) in respect of a site area of the land occupied breeding field of 25.97 mu or managed by our Group. (equivalent to approximately 17,313 m2), representing approximately 5.98% of the total site area of the land occupied and managed by our Group as at the Latest Practicable Date. According to our PRC Legal Advisers, Chunsheng, similar to the majority of other breeding field operators of small-scale breeding field in Zhujiazhuang Village, did not arrange for registration of facility agricultural land with the relevant government authority.

– 208 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

According to the confirmations issued by the following government authorities, our Group were not in breach of the applicable laws and regulations which fall under their respective jurisdiction during the relevant period. In particular, according to the two confirmations issued by the Marine Economic Development Bureau of Yantai Economic Technological Development Area, our Group could continue to occupy or manage the concerned breeding field during the course of our business and will not be subject to any administrative sanctions or be ordered to vacate the land and demolish the existing facilities.

Issuing authority Date of issue Confirmations

Construction and Transportation Bureau 18 August 2020 Shandong Anyuan had strictly observed the (建設交通局) and the Planning and applicable laws and regulations in respect Natural Resources Bureau of housing construction, transportation, (自然資源和規劃局) of the Yantai natural resources and planning Economic & Technological management and had not been subject to Development Area the administrative sanction of the Construction and Transportation Bureau and the Planning and Natural Resources Bureau of the Yantai Economic and Technological Development Area during the period from July 2017 to August 2020.

Comprehensive Administrative and Law 23 February 2021 Shandong Anyuan had strictly observed the Enforcement Bureau 綜合行政執法局) applicable laws and regulations in respect of the Yantai Economic & Technological of natural resources and planning management and had not been subject to the administrative sanction of the Comprehensive Administrative Law Enforceable Bureau during the period from 18 August 2020 to 23 February 2021.

Construction and Transportation Bureau 5 March 2021 Shandong Anyuan had not been subject to of the Yantai Economic & Technological the administrative sanction of the Development Area Construction and Transportation Bureau of the Yantai Economic and Technological Development Area during the period from 18 August 2020 to the date of issue.

Marine Economic Development Bureau 20 August 2020 Our Group is allowed to continue to occupy (海洋經濟發展局) of Yantai Economic and 22 February the concerned parcel of land and manage Technological Development Area 2021 the breeding field thereon during the course of our business and we will not be subject to any administrative sanctions or be ordered to vacate the land and relocate to other area.

– 209 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

Sea area use rights

Sea Area Use Certificates in the Shandong First Production Base

As at the Latest Practicable Date, we possessed seven Sea Area Use Certificates with a gross area of approximately 908.40 hectares (equivalent to approximately 9,084,000 m2). The following table sets forth details of the sea area use rights owned by our Company as at the Latest Practicable Date:

Location Site area Usage Term (approximately) (hectare)

North sea area of Yaqian Village, 191.08 Aquaculture 4 January 2013 to Chaoshui Town, Yantai Economic 31 December 2022 and Technological Development Area

North East sea area of Yaqian 51.20 Permeable structure and 15 October 2014 to Village, Chaoshui Town, Yantai aquaculture 31 December 2024 Economic and Technological Development Area

Yaqian Village, Chaoshui Town, 80.21 Permeable structure and 1 January 2021 to Yantai Economic and Technological aquaculture 31 December 2023 Development Area

Chaoshui Town, Yantai Economic and 190.29 Aquaculture 1 January 2021 to Technological Development Area 31 December 2023

North sea area of Zhujiazhuang 177.55 Aquaculture 1 January 2021 to Village, Chaoshui Town, Yantai 31 December 2023 Economic and Technological Development Area

Outer sea area of Zhujiazhuang 22.64 Aquaculture 4 January 2013 to Village, Chaoshui Town, Yantai 31 December 2021 Economic and Technological Development Area

North sea area of Zhujiazhuang 195.42 Aquaculture 26 March 2012 to Village, Chaoshui Town, Yantai 31 December 2021 Economic and Technological Development Area

– 210 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

Sea Area Use Certificate in the Liaoning Production Base

We do not possess the Sea Area Use Certificate with respect to the sea area forming our Liaoning Production Base with an area of approximately 36.66 hectares (equivalent to approximately 366,600 m2) (the “Sea Area of the Liaoning Production Base”), which accounted for approximately 3.88% of the sea area use rights exercised by our Group as at the Latest Practicable Date. The Sea Area of the Liaoning Production Base forms part of our production base for aquaculture of young sea cucumbers and production of our products since February 2019. It is part and parcel of a bigger sea area occupying a gross area of approximately 290.06 hectares (equivalent to approximately 2,900,600 m2) (the “Original Area”) where the sea area use rights is owned by Mr. Li Junda. Mr. Li Junda is the spouse of Ms. Liu Qinglian, the owner of Da Lian which is one of our major customers in Liaoning Province. Our Group agreed to acquire the Sea Area of the Liaoning Production Base pursuant to a transfer agreement dated 28 February 2019 entered into between our Group, as purchaser, and Mr. Li Junda, Ms. Liu Qinglian and Da Lian, as vendors (collectively the “Vendors”), at a consideration of RMB41.0 million. It has been agreed that Mr. Li, being the registered owner of the Sea Area Use Certificate of the Sea Area of the Liaoning Production Base, shall arrange for the transfer of the relevant Sea Area Use Certificate to our Group and complete the necessary registration on or before 31 December 2022 (the “Deadline”) and the Sea Area Use Certificate shall remain valid for not less than 10 years from the Deadline. Failing which, our Group may elect to (i) within one year from Deadline, request the Vendors to buy-back the Sea Area of the Liaoning Production Base at the same consideration of RMB41.0 million; or (ii) extend the Deadline if it deems fit or waive such requirement to buy-back the Sea Area of the Liaoning Production Base within one year from the Deadline.

Our Directors are of the view that although the Sea Area of the Liaoning Production Base was not crucial to the Group’s operations as at FY2020, it is important for our Group to tap into the sea cucumber industry in Liaoning market in the long run.

According to an interview conducted with the Administrative Approval Bureau of Linghai on 9 November 2020, before our Group is able to arrange for Temporary License for Aquatic Seed Production in Liaoning Province* (遼寧省水產苗種生產臨時許可證) after obtaining the sea area use rights, the said Bureau confirmed that our Group could continue to make use of the relevant sea area and breeding field. As at the date of the interview, our Group was not found to have breached the applicable laws and regulations in relation to aquatic seed production and subject to disciplinary actions.

According to an interview conducted with the Linghai branch of Jinzhou Shi Shengtai Huan Jing Ju (錦洲市生態環境局) by our PRC Legal Advisers on 10 November 2020, the said government authority confirmed that no complaint has been received from third party during the period from 2019 to 10 November 2020 nor the Group was found to have breached the applicable laws and regulations in relation to aquatic seed production and subject to administrative sanction or disciplinary action during the said period.

–211– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

On 10 November 2020, our PRC Legal Advisers conducted an interview with Natural Resources Bureau of Linghai during which the said Bureau confirmed that they would process the transfer of the Sea Area Use Certificate by Mr. Li in accordance to the applicable rules and regulations. As advised by our PRC Legal Advisers, there is no legal impediments that would prevent the relevant Sea Area Use Certificate from transferring to our Group. The actual period which the transfer will complete is subject to the situation of tax payment and the assessment period.

According to an interview conducted with the Administrative Bureau for Fisheries, Fishermen and Fishing Boats of Linghai* (漁業漁民漁船管理局) on 11 November 2020, it is confirmed that no complaint has been received from third party during the period from 2019 to 11 November 2020 nor the Group was found to have breached the applicable laws and regulations in relation to aquatic seed production and subject to administrative sanction or disciplinary action during the said period.

As confirmed by the PRC Legal Advisers, the above government authorities are competent authorities to provide such confirmations and attended the relevant interviews. According to the said government authorities, there is no substantive legal impediment for the Group to obtain the Sea Area Use Certificate (now immovable property right certificate) in respect of the Sea Area of the Liaoning Production Base and the actual period which the Sea Area use Certificate will be transferred to our Group is subject to the situation of tax payment and the assessment period.

As advised by our PRC Legal Advisers, during the period from 28 February 2019 up to the date on which the relevant Sea Area Use Certificate is transferred to our Group or the buyback of Sea Area of the Liaoning Production Base by the Vendors, whichever is later, our Group is entitled to occupy and make use of the relevant sea area. As such, the possibility that our Group is required to demolish the existing infrastructure on the Sea Area of the Liaoning Production Base and relocate to other sea area is low.

According to our PRC Legal Advisers, although our Group is yet to receive the Sea Area Use Certificate (now immovable property right certificate) in respect of the Sea Area of the Liaoning Production Base, as soon as the subdivision and transfer is completed, the Group is able to transfer or dispose the Sea Area of the Liaoning Production Base to other parties or to provide the relevant sea area use rights as security to banks or financial institutions for mortgage. As confirmed by our Directors, there will not be substantial difference in the consideration for acquiring the sea area use rights of the Sea Area of the Liaoning Production Base even if the said Sea Area Use Certificate has not been pledged as security and there is no plan for the Group to transfer, dispose or mortgage the sea area use rights under the Transferred Area in the foreseeable future.

– 212 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

LICENSES AND PERMITS

We are subject to laws, regulations and supervision by different levels of regulatory authorities in the PRC and are required to maintain various licenses, permits and approvals in order to operate our facilities and conduct our business. A summary of such relevant PRC laws and regulations which our business operations are subject to is set out in the section headed “Regulatory Overview” in this document. Our PRC Legal Advisers have confirmed that we had obtained all necessary licenses, permits and certificates for our business operations in the PRC during the Track Record Period and such licenses, permits and certificates are valid and remain in effect as at the Latest Practicable Date. The following table sets forth the details of our material licenses and permits for our operation:

Certificate/ permit holder Date of Certificate/permit recipient Issuing authority grant/filing Expiry date

Feed Production Permit* Peng Anyuan Shandong Provincial Animal 12 October 2016 11 October 2021 (飼料生產許可證) Food Husbandry and Veterinary Bureau* (山東省畜牧獸醫局)

Food Operation Permit* Shandong Penglai Administration for Market 2 November 1 November (食品經營許可證) Anyuan Regulation* 2016 2021 (蓬萊市市場監督管理局)

Food Production Permit* Peng Anyuan Food and Drug Administration of 24 August 2018 23 August 2023 (食品生產許可證) Food Yantai Economic and Technological Development Area* (煙台市食品藥品監督管理局)

Aquatic Broodstock Production Shandong Administrative Approval Service 4 March 2019 3 March 2022 Permit* Anyuan Bureau of Yantai Economic and (水產苗種生產許可證) Technological Development Area* (煙台經濟技術開發區行政審批服務局)

Road Transport Operation Shandong Administrative Approval Service 1 June 2018 31 May 2022 Permit* (道路運輸經營許可證) Anyuan Bureau of Yantai Economic and Technological Development Area* (煙台經濟技術開發區行政審批服務局)

Waters and Tidal Flats Shandong Administration Committee of Yantai 19 August 2017 18 August 2022 Aquaculture Permit* Anyuan Economic and Technological (水域灘塗養殖證)(Note) Development Area* (煙台經濟技術開發區管委會)

Notes: As at the Latest Practicable Date, we were granted seven Waters and Tidal Flats Aquaculture Permits, each with a validity period from 19 August 2017 to 18 August 2022.

– 213 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

COMPLIANCE

As at the Latest Practicable Date, there was no material litigation, arbitration or claim pending or threatened by or against us or any of our Directors that would have a material adverse effect on our results of operations or financial condition. Our Directors confirm that there was no material breaches or violation of laws and regulations applicable to us which had or may have a material adverse effect on our results of operations or financial conditions during the Track Record Period and up to the Latest Practicable Date. There was the following material non-compliance incident during the Track Record Period:

Failure to comply with the Interim Provisions on Labour Dispatch

Details of non-compliance incident

During the period from January 2018 to November 2018, our Group utilised and engaged dispatched staff. Pursuant to the Interim Provisions on Labour Dispatch*《勞動派遣暫行規 ( 定》), an employer shall ensure the number of dispatched staff it utilised shall not exceed 10% of its total number of workers.

During the said period, we utilised and engaged 155 dispatched staff under the labour dispatch arrangement which accounted for approximately 41.89% of our total number of staff during the same period. The number of dispatched staff engaged by our Group had therefore exceeded the regulatory threshold of 10% of the total number of workers under the Interim Provisions on Labour Dispatch during the Track Record Period.

Reasons

Our Directors confirm that the dispatched staff assisted in ancillary work in our production such as cleaning of equipment and drying of raw materials in the production of the feeds for young sea cucumbers. Our Directors consider that the labour dispatch arrangement enabled us to maintain a sufficient while flexible level of labour force to meet our production needs as required. Our Directors confirm that the non-compliance happened due to our inadvertent oversight of the relevant legal requirements.

Possible legal consequences and potential maximum penalties

According to the Interim Provisions on Labour Dispatch and as advised by our PRC Legal Advisers, the labour administrative department may impose a fine of not less than RMB5,000 but not more than RMB10,000 per person if the relevant entity refuses to rectify the violation after being ordered to do so by the labour administrative department. During the Track Record Period and up to the Latest Practicable Date, our Directors confirm that we have not been subject to any material regulatory notice, fines, penalties or enforcement actions.

– 214 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

Remedial actions and potential impact on the Group

To rectify the situation, as well as to satisfy our production needs, since December 2018, we have engaged an Independent Third Party subcontractor to provide on-site sub-contracting staff to replace the dispatched staff. Since December 2018, our Group no longer engaged dispatched staff.

The Bureau of Human Resources and Social Security of Yantai Economic and Technological Development Area* (煙台經濟技術開發區人力資源和社會保障局) (the “Bureau”) and Yantai City Health Commission Development Office* (煙台市衛生健康委員會開發區管理辦公室) (the “Office”) issued confirmations that they did not receive any complaint or report against our Group nor any regulatory notice, fines, penalties or enforcement actions has been issued to our Group for violating any relevant laws and regulations during the Track Record Period. Our PRC Legal Advisers confirm the Bureau and the Office are competent regulatory authority to issue the confirmations.

Our PRC Legal Advisers have advised us that, based on the confirmations issued by the competent regulatory authorities and the fact that our Group no longer engaged dispatched staff, the likelihood of our Group being subject to any material regulatory notice, fines, penalties or enforcement actions is low.

RISK MANAGEMENT AND INTERNAL CONTROL

In preparation of the [REDACTED], we have engaged an internal control consultant (the “Internal Control Consultant”) to perform a review of our internal control systems including the areas of financial reporting, operation, and compliance and risk management. Based on our Internal Control Consultant’s review and recommendations, we have modified and adopted certain new measures to refine our internal control systems. Based on the internal control report issued by our Internal Control Consultant, our Directors are of the view that our internal control systems are adequate and effective for our current operations. As our business continues to expand, we will continue to modify and enhance our internal control systems to respond to our changing business needs, as appropriate, to ensure that our business operations are in compliance with the applicable laws, rules and regulations in Hong Kong and the PRC. To enhance the quality of our corporate governance, we have adopted the following measures:

• our Directors have attended training sessions conducted by our Hong Kong legal advisers on 7 December 2020 regarding their ongoing obligations, duties and the responsibilities of directors of under Companies Ordinance, the Companies (Winding Up and Miscellaneous Provisions) Ordinance, the SFO and the Listing Rules;

– 215 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

• we have appointed Mr. Sio Chin Tat as our company secretary. Mr. Sio Chin Tat will act as the principal channel of communication between our Company and other members of our Group in relation to our legal, regulatory and financial reporting compliance matters. Upon receipt of queries or reports on legal, regulatory and financial reporting compliance matters, our company secretary will look into the matter and, if considered appropriate, seek advice, guidance and recommendations from professional advisers and report to relevant members of our Group and/or our Board;

• we have appointed VBG Capital Limited as our compliance adviser to advise our Group on compliance matters upon [REDACTED] in accordance with Rule 3A.19 of the Listing Rules; and

• we have established an audit committee with written terms of reference in compliance with Rule 3.21 of the Listing Rules and paragraph C3 of the Code to review the internal control system and procedures for compliance with the requirements of the Listing Rules, the Companies Ordinance and other applicable laws, rules and regulations.

We also recognize the need for risk management in our strategic and operational planning, day-to-day management and decision making process to identify the material risks associated with our business operations. The key procedures that we have established and implemented are summarized as follows:

• our risk management process is managed by our Board;

• the objectives of risk management are to identify potential risks in relation to our

• business operations. Our Board will formulate action plan to address and to mitigate the identified risks; and

• our Board will hold regular meetings with the heads of different departments to further identify potential risks which may create impediments to our business operations.

– 216 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. BUSINESS

IMPACT OF THE COVID-19 OUTBREAK ON OUR BUSINESS

There has been an outbreak of a novel strain of coronavirus named COVID-19 that was first reported in late 2019 and has spread within the PRC and globally. The COVID-19 is considered highly contagious and may pose a serious public health threat. In order to reduce the risk of widespread of COVID-19, the PRC government had imposed a lockdown in the Wuhan City since 23 January 2020 and announced to extend the Chinese New Year holiday and delay the resumption of work in the PRC. Different local governments of the PRC had imposed temporary restrictions or bans on passenger traffic to control the spread of COVID-19. With the effective COVID-19 control in the PRC, the COVID-19 outbreak gradually calmed down after its peak during February to April 2020 in the PRC and daily life in mainland China has generally returned to normal.

In response to the government measures, we extended our Chinese New Year holiday for our employees. Our production workers are required to remain at our production bases during the Chinese New Year holiday to maintain our production such as the breeding and rearing of our young sea cucumbers. Other employees are allowed to work from home until early March after the end of the Chinese New Year holiday. Our Directors confirmed that, based on the extension of the Chinese New Year holiday in 2020 took place during the low season of our sales and the measures imposed by the central and local governments of the PRC as at the Latest Practicable Date, the COVID-19 outbreak did not have any material adverse impact on our business and results of operations, and is not expected to bring any permanent or material interruption to our operations.

– 217 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RELATIONSHIP WITH CONTROLLING SHAREHOLDERS

OUR CONTROLLING SHAREHOLDERS

The Controlling Shareholders of our Company are Mr. Zou, Mr. Zou Siyuan, Mr. Zhang, Ms. Liu Shuzhen, Good Standard, Easy Express and Bright Trend. Immediately after completion of the [REDACTED] and the [REDACTED] (without taking into account of the Shares which may be issued pursuant to the exercise of the [REDACTED] and issued upon the exercise of options under the Share Option Scheme), Mr. Zou, Mr. Zou Siyuan, Mr. Zhang and Ms. Liu Shuzhen will, pursuant to the Deed of Acting in Concert, indirectly through Good Standard, Easy Express and Bright Trend hold in aggregate [REDACTED] Shares, which is approximately [REDACTED]% of the issued share capital of our Company.

Our Controlling Shareholders have been parties acting in concert (having the meaning as ascribed thereto in the Takeovers Code) in the course of our business history and will continue to be parties acting in concert until such arrangement is terminated pursuant to the Deed of Acting in Concert. For details, please refer to the section headed “History, Reorganisation and Corporate Structure – Parties Acting in Concert” in this document.

INDEPENDENCE FROM OUR CONTROLLING SHAREHOLDERS

Our Directors do not expect that there will be any significant transactions between our Group and our Controlling Shareholders upon or shortly after the [REDACTED].

Our Directors believe that our Group is capable of carrying on our business independent of, and does not place undue reliance on, our Controlling Shareholders or their close associates, for the following reasons:

Management independence

We have an independent management team comprising our Directors and senior management with substantial experience in our business. Our management team is able to implement our Group’s policies and strategies and performs its roles in our Company independently. Our Directors are satisfied that we can manage our business independently of our Controlling Shareholders and their respective subsidiaries with respect to the following factors:

(a) Board structure

Our Board consists of nine Directors, comprising five executive Directors, one non-executive Director and three independent non-executive Directors. The three independent non-executive Directors have extensive experience in different areas or professions and are appointed pursuant to the requirements under the Listing Rules, to ensure a balance of opinions and that decisions of the Board are made after due consideration of independent and impartial opinions. The main functions of our Board

– 218 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RELATIONSHIP WITH CONTROLLING SHAREHOLDERS

include the approval of our overall business plans and strategies, monitoring the implementation of such plans and strategies and the management of our Group. Our Board acts collectively by majority decisions in accordance with the Articles and applicable laws, and no single Director is supposed to have any decision-making power unless otherwise authorised by our Board.

(b) Directors’ disclosure of interest and participation in board meetings

Each of our Directors is aware of his fiduciary duties as a director which requires, among other things, that he/she acts for the benefit and in the best interests of our Company and Shareholders as a whole, and does not allow any conflict between his/her duties as a Director and his/her personal interest to exist. In the event that there is a potential conflict of interests arising out of any transaction to be entered into between our Group and our Directors or their respective close associates, the interested Director(s) shall abstain from voting at the relevant Board meetings in respect of such transactions and shall not be counted in the quorum. Our Board and the senior management operate as a matter of fact independently of our Controlling Shareholders and they are in a position to fully discharge their duties to the Shareholders and our Company as a whole after the [REDACTED] without reference to our Controlling Shareholders.

Operational independence

Our operations are independent of and not connected with any of our Controlling Shareholders. Our Group has not shared its operational resources, such as administration, accounting, human resources functions with our Controlling Shareholders and/or their respective associates. We hold all relevant registrations and licences necessary to carry on our business and have an independent and stable team of employees to carry out our day-to-day operation.

Having considered that (i) we have established our own organisational structure comprising individual departments, each with specific areas of responsibilities; (ii) our Group has not shared our operational resources, such as customers, suppliers, marketing, sale and general administration resources with our Controlling Shareholders and/or their associates; and (iii) our Controlling Shareholders have no interest in any of our customers, suppliers or other business partners that are important to our operations, our Directors consider that our Group can operate independently from our Controlling Shareholders from the operational perspective.

Accordingly, our Directors are satisfied that we have been operating independently from our Controlling Shareholders and their respective close associates during the Track Record Period and will continue to operate independently.

– 219 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RELATIONSHIP WITH CONTROLLING SHAREHOLDERS

Financial independence

Our Group has our own accounting systems and makes financial decisions according to our own business needs. We have sufficient capital to operate our business independently, and have adequate internal resources and a strong credit profile to support our daily operations. During the Track Record Period and up to the Latest Practicable Date, our Group relied principally on cash generated from operations to carry on its business and this is expected to continue after the [REDACTED].

During the Track Record Period, there were certain amounts due from Mr. Zou, one of our Controlling Shareholders, details of which are set out in Note 23 to the Accountants’ Report in Appendix I to this document. All the amounts due from/to Mr. Zou will be fully settled before the [REDACTED].

As at 31 December 2018, 2019 and 2020, aggregate amounts of RMB8,000,000, RMB12,700,000 and RMB12,700,000 of interest-bearing bank borrowings were secured by, inter alia, joint and several personal guarantees given by Mr. Zou and Ms. Zhang Chunna (spouse of Mr. Zou). For further details on these bank borrowings, please refer to Note 20 to the Accountants’ Report as set out in Appendix I to this document. These bank borrowings were for the purpose of daily operation of our Group. All personal guarantees provided by Mr. Zou and Ms. Zheng Chunna as security for banking facilities and bank borrowings of our Group will be released and replaced by a corporate guarantee to be granted by our Company upon [REDACTED].

Notwithstanding the amounts due from Mr. Zou and the personal guarantees mentioned above, during the Track Record Period our Group were able to support our day-to-day operations with revenue generated from our operations. In view of our Group’s internal resources and the estimated [REDACTED] from the [REDACTED], our Directors believe that our Group will have sufficient capital for its financial needs without dependence on our Controlling Shareholders. Our Directors further believe that, upon the [REDACTED], our Group is capable of obtaining financing from external sources independently without the support of our Controlling Shareholders.

Independence of major suppliers

Our Directors confirm that none of our Controlling Shareholders, our Directors and their respective close associates had any relationship with the five largest suppliers of our Group (other than the business contacts in the ordinary and usual course of business of our Group) during the Track Record Period and up to the Latest Practicable Date.

Independence of major customers

Our Directors confirm that none of our Controlling Shareholders, our Directors and their respective close associates had any relationship with the five largest customers of our Group (other than the business contacts in the ordinary and usual course of business of our Group) during the Track Record Period and up to the Latest Practicable Date.

– 220 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RELATIONSHIP WITH CONTROLLING SHAREHOLDERS

RULE 8.10 OF THE LISTING RULES

Save as disclosed above, our Controlling Shareholders, our Directors and their respective close associates do not have any interest in a business apart from our Group’s business which competes and is likely to compete, directly or indirectly, with our Group’s business and would require disclosure under Rule 8.10 of the Listing Rules.

NON-COMPETITION UNDERTAKING

Each of our Controlling Shareholders as covenantors (each a “Covenantor”, and collectively the (“Covenantors”)) entered into the Deed of Non-competition with our Company (for ourselves and as trustee for and on behalf of our subsidiaries) on [•].

Non-competition

In accordance with the Deed of Non-competition, each of the Covenantors irrevocably and unconditionally, jointly and severally warrants and undertakes to our Company, on its own behalf and as trustee for each of our subsidiaries that during the period that the Deed of Non-competition remains effective, he or she or it shall not, and he or she or it shall use his or her or its best endeavours to procure that his or her or its associates (not including our Company or any of our subsidiaries) shall not, whether directly or indirectly (including through any body corporate, partnership, joint venture or other contractual arrangement and whether for profit or otherwise) or as principal or agent, and whether on his or her or its own account or with each other or in conjunction with or on behalf of any person, firm or company or through any entities (except in or through our Company and any of our subsidiaries), do any of the following:

(a) carry on, engage, participate or hold any right or interest in or render any services to or otherwise be involved in any business which is in competition, directly or indirectly, with or is likely to be in competition, directly or indirectly, with any business presently carried on by our Company or any of our subsidiaries or any other business that may be carried on by our Company or any of our subsidiaries from time to time during the term of the Deed of Non-competition (the “Restricted Business”), whether as a shareholder, director, officer, partner, agent, lender, employee, consultant or otherwise and whether for profit, reward or otherwise; and

(b) take any action which interferes with or disrupts or may interfere with or disrupt any business presently carried on by our Company or any of our subsidiaries or any other business that may be carried on by our Company or any of our subsidiaries from time to time during the term of the Deed of Non-competition including, but not limited to, solicitation of any of the then current customers, suppliers or employees of our Company or any of our subsidiaries.

– 221 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RELATIONSHIP WITH CONTROLLING SHAREHOLDERS

The Deed of Non-competition does not preclude the Covenantors from having any interest in any company engaging in any Restricted Business (the “Subject Company”) where: (i) the total number of shares held by the Covenantors does not exceed 5.0% of the issued shares of the Subject Company which is or whose holding company is listed on any recognised exchange (as defined under the SFO); or (ii) any Restricted Business conducted or engaged in by the Subject Company (and assets relating thereto) accounts for not more than 5.0% of the Subject Company’s consolidated turnover or consolidated assets, as shown in the Subject Company’s latest audited accounts provided that (i) there is a holder (together where appropriate, with its associates) with a larger shareholding in the Subject Company than the aggregate shareholding held by the Covenantors and/or their respective associates at all times and (ii) the total number of the Covenantors’ representatives on the board of directors of the Subject Company is not significantly disproportionate in relation to their shareholding in the Subject Company.

Each of the Covenantors further irrevocably and unconditionally, jointly and severally undertakes to our Company (for itself and as trustee for each of its subsidiaries) that:

(a) he or she or it shall not directly or indirectly appoint any executive director in the Subject Company;

(b) the principal terms by which he or she or it (or their respective associates) subsequently invests, participates, engages in or operates the Restricted Business are no more favourable than those offered to our Company or any of our subsidiaries; and

(c) if any business opportunity is identified by or made available to him, her or it or any of their associates, it shall and shall procure that their associates (excluding our Company or any of our subsidiaries) shall refer such business opportunity to our Company on a timely basis and in the following manner:

(i) he or she or it shall and shall procure that his or her or its associates (excluding our Company or any of our subsidiaries) shall give written notice to our Company of such business opportunity within seven days identifying the target company (if relevant) and the nature of the business opportunity, the investment or acquisition costs and all other details reasonably necessary for our Company to consider whether to pursue such business opportunity;

(ii) our Company shall seek approval from our Board or a board committee (in each case comprising, among others, independent non-executive Directors) who do not have a material interest in the business opportunity (the “Independent Board”) as to whether to pursue or decline the business opportunity (in which any Director who has an actual or potential material interest shall abstain from attending (unless their attendance is specifically requested by the remaining non-interested Directors) and voting at, and shall not count towards the quorum for, any meeting or part of a meeting convened to consider such business opportunity);

– 222 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RELATIONSHIP WITH CONTROLLING SHAREHOLDERS

(iii) the Independent Board shall consider the financial impact of pursuing the business opportunity offered, whether the nature of the business opportunity is consistent with our Group’s strategies and development plans, the general market conditions in the Restricted Business’s industry in Hong Kong and any advice from independent financial advisers, should the appointment of which be deemed necessary by the Independent Board;

(iv) if appropriate, the Independent Board may appoint independent financial advisers to assist in the decision-making process in relation to such business opportunity;

(v) the Independent Board shall, within 30 days of receipt of the written notice referred to in (i) above, inform the relevant Covenantor in writing on behalf of our Company its decision whether to pursue or decline the business opportunity;

(vi) the relevant Covenantor shall be entitled but not obliged to pursue such business opportunity only if he or she or it has received a notice from the Independent Board declining such business opportunity; and

(vii) if there is any material change in the nature, terms or conditions of such business opportunity pursued by the relevant Covenantor, he or she or it shall refer such business opportunity as so revised to our Company in the manner as outlined in the Deed of Non-competition as if it were a new business opportunity. For this purpose, business opportunity means any new business investment or other business opportunity relating to the Restricted Business, other than in our Company.

For this purpose, business opportunity means any new business investment or other business opportunity relating to the Restricted Business, other than in our Company.

Further, the independent non-executive Directors will review, on an annual basis, the compliance of each of the Covenantors with the Deed of Non-competition (in particular, the right of first refusal relating to any business opportunity (as defined therein)) and our Company will disclose decisions on matters reviewed by the independent non-executive Directors relating to compliance with and enforcement of the Deed of Non-competition in our annual report or by way of announcement to the public.

The provisions contained in the Deed of Non-competition are conditional upon the [REDACTED].Ifthe[REDACTED] does not occur in accordance with the Deed of Non-competition, the Deed of Non-competition shall terminate and, except as otherwise provided therein and without affecting any rights which have accrued prior to termination (including with respect to a breach thereof), no party shall have any further obligation to the other parties thereunder.

– 223 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. RELATIONSHIP WITH CONTROLLING SHAREHOLDERS

The respective obligations of each of the Covenantors under the Deed of Non-competition shall terminate on the earliest of the date on which such Covenantor (together with those acting in concert with he, she or it) ceases to hold directly or indirectly in aggregate 30.0% or more of the entire issued share capital of our Company, or otherwise ceases to be a Controlling Shareholder or our Shares cease to be [REDACTED] and [REDACTED] on the Stock Exchange (except for temporary suspension of [REDACTED] of our Shares on the Stock Exchange due to any reason).

– 224 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DIRECTORS AND SENIOR MANAGEMENT

OVERVIEW

Our Board consists of nine Directors, comprising five executive Directors, one non-executive Director and three independent non-executive Directors. Our Board and senior management are responsible for the day-to-day operation and management of our business.

The following table sets forth certain information of our Directors and senior management:

Date of Date of appointment Current Relation with other joining for the current position in Roles and Director(s) and/or Name Age our Group position our Group Responsibilities senior management

Executive Directors

Mr. Zou Ange 54 15 November 2006 21 November 2019 Chairman, executive Formulating corporate Cousin of (鄒安革) Director and strategies and plans Mr. Zhang chairman of the for business Nomination development, making Committee major business decisions, and supervising the overall operations of our Group

Mr. Zhang 49 15 November 2006 15 June 2020 chief executive officer, Business development Cousin of Jianwei executive Director, and supervising the Mr. Zou (張建偉) member of the day-to-day Remuneration operations of our Committee Group

Mr. Zou 52 15 November 2006 15 June 2020 executive Director Business development Nil Shifang and supervising the (鄒士方) day-to-day operations of our Group

Mr. Liu 46 15 November 2006 15 June 2020 chief operating officer, Business development Nil Yongqi executive Director and supervising the (劉永旗) day-to-day operations of our Group

– 225 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DIRECTORS AND SENIOR MANAGEMENT

Date of Date of appointment Current Relation with other joining for the current position in Roles and Director(s) and/or Name Age our Group position our Group Responsibilities senior management

Mr. Wang 39 1 March 2011 15 June 2020 chief operating officer, Business development Nil Zengdong executive Director and supervising the (王增東) day-to-day operations of our Group

Non-executive Directors

Mr. Wang Jifa 65 1 November 2018 18 May 2021 non-executive Director, Overseeing the Nil (王吉法) member of the Audit Group’s overall Committee strategy, performance and resources management

Independent non-executive Directors

Mr. Li Hoi 67 [•] [•] independent Providing independent Nil Kwong non-executive advice to our Board (李海光) Director, member of the Audit Committee, the Nomination Committee and the Remuneration Committee

Ms. Ng Yau 45 [•] [•] independent Providing independent Nil Kuen non-executive advice to our Board Carmen Director, chairlady (吳幼娟) of Audit Committee, member of the Remuneration Committee

– 226 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DIRECTORS AND SENIOR MANAGEMENT

Date of Date of appointment Current Relation with other joining for the current position in Roles and Director(s) and/or Name Age our Group position our Group Responsibilities senior management

Mr. Zheng 66 [•] [•] independent Providing independent Nil Yongyun non-executive advice to our Board (鄭永允) Director, chairman of the Remuneration Committee, member of the Nomination Committee and the Audit Committee

Senior management

Mr. Sio 34 18 May 2021 18 May 2021 company secretary Responsible for Nil Chin Tat company secretarial (蕭展達) matters of our Group

BOARD OF DIRECTORS

Executive Directors

Mr. Zou Ange (鄒安革), aged 54, is the Chairman, an executive Director and the chairman of the Nomination Committee. Mr. Zou is primarily responsible for formulating corporate strategies and plans for business development as well as in sales and marketing in sea cucumbers, making major business decisions, and supervising the overall operations of our Group.

Mr. Zou is one of the founders of our Group. He has over 33 years of experience in the sea cucumber aquaculture industry. Mr. Zou commenced his career when he worked as a workshop manager at Penglai Seawater Marine Breeding Site* (蓬萊市海水養殖育苗場) which primarily engaged in breeding sea cucumbers, from July 1986 to November 1998. Mr. Zou founded Penglai Ange Breeding Site* (蓬萊市安革育苗場), a company primarily engaged in breeding sea cucumbers in December 1998, and served as the general manager from December 1998 to November 2006. He then founded our Group by establishing Penglai Anyuan Aquaculture Company Limited* (蓬萊市安源水產有限公司), i.e. the predecessor of Shandong Anyuan in November 2006, and served as an executive director and the general manager. In August 2011, he was appointed as the chairman and resigned from the position of general manager in January 2020.

– 227 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DIRECTORS AND SENIOR MANAGEMENT

Mr. Zou completed his study in Aquatic Shipping and graduated from the Aquatic Shipping Vocational Technical High School of Penglai County* (蓬萊縣水產海運職業技術中學), in the PRC in July 1986. He then finished his study in Industry and Corporate Management and graduated from the Penglai Workers Secondary Vocational School of Shandong Province* (山東省蓬萊市職工中等專業學校), in the PRC in December 1992. Mr. Zou obtained the qualification as senior engineer from Yantai Engineering Technical Senior Evaluation Committee* (煙台市工程技術職務高級評審委員會) in December 2012.

Mr. Zou is a cousin of Mr. Zhang, our chief executive officer, executive Director.

Mr. Zhang Jianwei (張建偉), aged 49, is our chief executive officer, executive Director, and he also acts as a member of our Remuneration Committee. Mr. Zhang is primarily responsible for business development and supervising the day-to-day operations of our Group.

Mr. Zhang joined the Group when the Group was founded in November 2006. Prior to joining our Group, Mr. Zhang served in the People’s Liberation Army from December 1990 to December 1994. He then worked as a driver at the Chaoshui Town Rural Economy Management Station* (潮水鎮農村經濟管理站), which primarily engaged in rural financial supervision from March 1995 to August 1998. Mr. Zhang then served as the vice general manager at Penglai Ange Breeding Site* (蓬萊市安革育苗場), which primarily engaged in breeding sea cucumbers from January 1999 to November 2006. He joined our Group in November 2006 as the vice general manager and he was promoted to general manager in January 2020.

He completed his study in Rural Village Management and graduated from the China Communist Party Shandong Provincial Committee School* (中國共產黨山東省委員會黨校), in the PRC in December 1998.

Mr. Zhang is a cousin of Mr. Zou, the Chairman and an executive Director.

Mr. Zou Shifang (鄒士方), aged 52, is our executive Director. Mr. Zou Shifang is primarily responsible for business development and supervising the day-to-day operations of our Group.

Mr. Zou Shifang joined our Group in November 2006. Mr. Zou Shifang commenced his career when he worked as a vice workshop manager at Penglai Seawater Marine Breeding Site* (蓬萊市海水養殖育苗場), which primarily engaged in breeding sea cucumbers from August 1988 to December 2000. He then worked as the vice general manager, in Penglai Ange Breeding Site* (蓬萊市安革育苗場) which primarily engaged in breeding sea cucumbers, from January 2001 to November 2006. Mr. Zou Shifang joined our Group in November 2006 and was employed as a hatchery site manager. He was promoted to the vice general manager of production in January 2012.

Mr. Zou Shifang completed his study in Aquaculture and graduated from the Third Vocational High School of Penglai County* (蓬萊縣第三職業高級中學), in the PRC in June 1988.

– 228 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DIRECTORS AND SENIOR MANAGEMENT

Mr. Liu Yongqi (劉永旗), aged 46, is our chief operating officer and he also acts as our executive Director. Mr. Liu is primarily responsible for business development and supervising the day-to-day operations including operations at the first and second production bases situated in Shandong Province as well as sales and marketing in sea cucumbers of our Group.

Mr. Liu joined our Group in November 2006. Mr. Liu commenced his career when he worked as a workshop manager and deputy site manager at Penglai Ma Ge Zhuang Town Seawater Integrated Marine Breeding Site* (蓬萊市馬格莊鎮海水綜合育苗場) which primarily engaged in breeding sea cucumbers, from October 1993 to December 1999. He was then employed by Penglai Ange Breeding Site* (蓬萊市安革育苗場) which primarily engaged in breeding sea cucumbers, from January 2000 to November 2006 as a production site manager. Mr. Liu joined our Group in November 2006 and was employed as a deputy hatchery site manager, he was subsequently promoted to the testing site manager and vice general manager of production in January 2012.

Mr. Liu completed his study in Aquaculture and graduated from the Aquaculture Secondary Vocational School of Changdao County in Shandong Province* (山東省長島縣水產職業中等專業學校) in the PRC in June 1993.

Mr. Wang Zengdong (王增東), aged 39, is our chief operating officer and executive Director. Mr. Wang is primarily responsible for business development and supervising the day-to-day operations of our Group including operations at the third production base situated in Liaoning Province.

Mr. Wang joined our Group in March 2011. Before joining our Group, Mr. Wang worked as a technical site manager at Penglai Xingdong Aquaculture Breeding Company Limited* (蓬萊市興東水產苗種培育有限公司), a company primarily engaged in breeding sea cucumbers from June 2004 to February 2011. Mr. Wang joined our Group in March 2011 as a hatchery site manager and was promoted to vice general manager of production in June 2019.

Mr. Wang obtained the qualification as engineer from Yantai Engineering Technical Intermediate Evaluation Committee* (煙台市工程技術職務中級評估委員會) in December 2017.

Mr. Wang graduated from Ocean University of China (中國海洋大學) with a bachelor degree of Aquaculture and a master degree of Fishery Agriculture, in June 2004 and January 2020 respectively.

Non-executive Directors

Mr. Wang Jifa (王吉法), aged 65, is our non-executive Director, and a member of the Audit Committee. Mr. Wang joined our Group on 18 May 2021.

Mr. Wang Jifa graduated from Shandong University (山東大學) with a bachelor degree in Economics in January 1982, and had since then been serving as an assistant lecturer, lecturer and a professor of Shandong University until June 2004. During such period, Mr. Wang Jifa was

– 229 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DIRECTORS AND SENIOR MANAGEMENT once named as a minister of organisation unit of the Communist Party Committee of Shangdong University from June 1992 to July 1993, a secretary of the Communist Party Committee of Department of Economics of Shandong University from March 1994 to April 1996, a deputy secretary of the Communist Party Committee of Weihai Campus of Shandong University from January 1998 to June 2004 and an executive vice principal of Weihai Campus of Shandong University (山東大學威海分校) from December 2001 to June 2004. Mr. Wang Jifa then worked at Yantai University (煙台大學) from July 2004 to October 2018, during such period, he had served as the vice principal of Yantai University from July 2004 to November 2009, the deputy secretary of the Communist Party Committee of Yantai University from November 2009 to October 2015, and was appointed as the chairman of Yantai Tri-universities Science Park Development Co., Ltd.* (煙台三校科技園發展有限公司) from June 2006 to October 2011. Mr. Wang Jifa obtained a doctoral thesis degree in Business Administration at Hokkai-Gakuen University (北海學園大學) in Japan in December 2007.

Mr. Wang Jifa participated in the independent director training of the Shanghai Stock Exchange and Shenzhen Stock Exchange in September 2006 and April 2010 respectively, and obtained certificate of qualification after receiving the training. Mr. Wang Jifa has acted as an independent director of Qingdao Hisense Electronics Co., Ltd. (青島海信電器股份有限公司), which is currently known as Hisense Visual Technology Co., Ltd. (海信視像科技股份有限公司), the shares of which are listed on the Shanghai Stock Exchange (Stock Code: 600060SH), from May 2005 to May 2009. Mr. Wang Jifa also served as an independent director of Qingdao Haili Metal One Co., Ltd. (青島海立美達股份有限公司), which is currently known as HyUnion Holding Co., Ltd. (海聯金匯科技股份有限公司), the shares of which are listed on the Shenzhen Stock Exchange (Stock Code: 002537SZ), from April 2009 to May 2012. Mr. Wang Jifa is currently an independent director of Yantai Tayho Advanced Materials Co., Ltd. (煙台泰和新材料股份有限公司), the shares of which are listed on the Shenzhen Stock Exchange (Stock Code: 002254SZ) since June 2020. Mr. Wang Jifa is currently an independent director of Yantai Zhenghai Magnetic Material Co. Ltd (煙台正海磁性材料股份有限公司), the shares of which are listed on the Shenzhen Stock Exchange (Stock Code: 300224SZ), since November 2020. Mr. Wang Jifa was recognised as a State Intellectual Property Expert* (國家知識產權專家庫專家)by the State Intellectual Property Office (國家知識產權局) of the PRC (currently known as the China National Intellectual Property Administration) in December 2011.

Mr. Wang Jifa also held different positions at various academic and research institutions from October 2006 to October 2018, including the council member of China Intellectual Property Society (中國知識產權研究會) from June 2008 to April 2012, the standing council member of Intellectual Property Law Association of China Law Society* (中國法學會知識產權法學研究會) since May 2012, the president of Shandong High School Intellectual Property Research Society* (山東高校知識產權理事會) from October 2009 to October 2015, standing vice president of Shandong Province Institute of Intellectual Property* (山東省知識產權研究院) from October 2006 to October 2015, the manager of Shandong Province Intellectual Property Soft Science Research Base* (山東省知識產權軟科學研究基地) from October 2008 to October 2018, the supervisor for doctorate students at Shandong University and Yantai University since from July 2010 to July 2014 and June 2013 to October 2018, respectively.

– 230 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DIRECTORS AND SENIOR MANAGEMENT

Mr. Wang Jifa was awarded various awards for his research in the areas of intellectual property and enterprise competitiveness. His thesis titled “Comparison of Competitiveness of Chinese and Japanese Enterprises – Modern Chinese Enterprises Competition Strategies* (中日企業競爭力的比較 – 現代中國企業的競爭戰略)” and “Intellectual Property Capitalisation Research* (知識產權資本化研究)” were awarded Shandong Province Third-Grade Award of Outstanding Achievements in Social Sciences* (山東省社會科學優秀成果三等獎) by Shandong Province Social Science Outstanding Achievement Award Selection Committee* (山東省社會科學優秀成果獎評選委員會) in September 2010 and December 2012 respectively. His another thesis titled “Enterprise Intellectual Property Protection Research (企業知識產權保護研究)” was awarded Shandong Province Second-Grade Award of Outstanding Achievements in Social Sciences* (山東省社會科學優秀成果二等獎) issued by Shandong Province Social Science Outstanding Achievement Award Selection Committee in December 1998.

Independent Non-executive Directors

Mr. Li Hoi Kwong (李海光), aged 67, was appointed as our independent non-executive Director on [•]. He is a member of the Audit Committee, Nomination Committee and the Remuneration Committee.

Mr. Li commenced his career as a barrister-at-law from December 1998 to March 2008. Thereafter, Mr. Li acted as a trainee solicitor in Tai, Mak and Partners from December 2007 to November 2008, and a trainee solicitor in K.Y. Lo and Co. from December 2008 to November 2009. Mr. Li then acted as assistant solicitor in K.Y. Lo and Co. from March 2010 to June 2012. Thereafter, he acted as a consultant in Patrick Mak and Tse from December 2012 to October 2015. Since October 2013, he has been the company secretary of DBA Telecommunication (Asia) Holdings Limited, which was primarily listed on HKEX and delisted in November 2020. He has also been the sole proprietor of Li and Associates since October 2015 and a partner of K.Y. Lo and Co since September 2017.

– 231 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DIRECTORS AND SENIOR MANAGEMENT

Mr. Li obtained the Hong Kong Common Professional Examination Certificate in Laws from The University of Hong Kong in June 1997. Mr. Li then obtained the Postgraduate Certificate in Laws from The University of Hong Kong in September 1998, a master’s degree of Laws in Chinese and Comparative Law from City University of Hong Kong in November 1999, a postgraduate diploma in Arbitration and Dispute Resolution in City University of Hong Kong in November 2001, a postgraduate certificate in Research and Professional Studies in Education from University of Bristol in the United Kingdom in January 2012, a master’s degree in Accounting from Curtin University of Technology, which is currently known as Curtin University, in Australia in August 2002, a masters degree in Science in Project Management from The Hong Kong Polytechnic University in November 2004 and a master’s degree in Medical Science from The University of Hong Kong in December 2006.

Ms. Ng Yau Kuen Carmen (吳幼娟), aged 45, was appointed as our independent non-executive Director on [•]. She is a member of the Remuneration Committee and the chairlady of the Audit Committee.

She has over 19 years of experience in accounting. Before joining our Group, Ms. Ng joined PricewaterhouseCoopers Limited in September 1998 as an Associate in the Assurance Department, and left as a senior manager in 17 November 2011. Ms. Ng has been a fellow member of The Hong Kong Institute of Certified Public Accountants since October 2017. She was an independent non-executive director of Koala Financial Group Limited (stock code: 8226) from April 2019 to February 2021. She has been an independent non-executive director of Get Nice Financial Group Limited (stock code: 1469), and Simplicity Holding Limited (stock code: 8367) since March 2016 and January 2018 respectively, in which all these companies are listed on the Hong Kong Stock Exchange. Ms. Ng has also been an independent non-executive director of IEV Holdings Limited (currently known as Medi Lifestyle Limited), a company listed on the Singapore Stock Exchange (stock code: 5TN) since July 2019.

Ms. Ng graduated from The Chinese University of Hong Kong with a bachelor’s degree in Business Administration in December 1998. She subsequently obtained a master’s degree in Business Administration from The Hong Kong University of Science and Technology in November 2007, and a master’s degree of Laws in Corporate and Financial Laws from The University of Hong Kong in November 2013.

Mr. Zheng Yongyun (鄭永允), aged 66, was appointed as our independent non-executive Director on [•], the chairman of the Remuneration Committee, a member of the Nomination Committee and the Audit Committee.

From December 1993 to December 2004, Mr. Zheng was appointed as the deputy director of Marine Aquaculture Institute of Shandong Province* (山東省海水養殖研究院) (currently known as Marine Biology Institute of Shandong Province (山東省海洋生物研究院)). He was later promoted to the director from December 2010 to March 2015.

Mr. Zheng graduated from Xiamen Fisheries College* (廈門水產學院), which is currently known as Fisheries College of Jimei University (集美大學水產學院) in August 1978,

– 232 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DIRECTORS AND SENIOR MANAGEMENT specialising in aquaculture. Since December 1999, Mr. Zheng has been a researcher in Marine Aquaculture Institute of Shandong Province, which mainly focuses on research regarding mariculture. In April 2003, Mr. Zheng was awarded the title of Qingdao City Model Worker* (青島市勞動模範稱號) by the Qingdao Municipal Government (青島市人民政府). In February 2007, Mr. Zheng was awarded a certificate of outstanding performance in agricultural technique by the State Council of the PRC. In April 2008, Mr. Zheng was awarded the title of Advanced Worker in Shandong Province* (山東省先進工作者稱號) by the People’s Government of Shandong Province. In January 2009, Mr. Zheng was awarded the honorary title of Qingdao Professional and Technical Talent* (青島專業技術拔尖人才稱號) by the Qingdao Municipal Government. In April 2015, Mr. Zheng was awarded the honorary title of National Advanced Worker* (全國先進工作者) by the Central Committee of the Chinese Communist Party and the State Council of the PRC.

Mr. Zheng has been the chairman of Shandong Consultant Association of Ocean Engineering (山東省海洋工程諮詢協會) since June 2015, the standing vice president of Shandong Ocean Development Research Association* (山東省海洋發展研究會) since April 2016, a council member of China Ocean Development Research Association* (中國海洋發展研究會) since August 2016 and a council member of China Shellfish Society* (中國貝類學會) since December 1995.

Mr. Zheng was awarded various awards for his national and provincial research projects. Mr. Zheng participated in the drafting of policy documents, which included “Shandong Province ‘Offshore Granary’ Construction Plan (2015–2020)” (山東省“海上糧倉”建設規劃 (2015–2020 年)) and “Shandong Province Marine Ranch Construction Plan (2017–2020)” (山東省海洋牧場建設規劃 (2017年–2020年)).

SENIOR MANAGEMENT AND COMPANY SECRETARY

Mr. Zhang Jianwei (張建偉), aged 49, is our chief executive officer, executive Director, and he also acts as a member of our the Remuneration Committee. Mr. Zhang is primarily responsible for business development and supervising the day-to-day operations of our Group. For further details of Mr. Zhang, please refer to the paragraph headed “Executive Director” in this section.

Mr. Liu Yongqi (劉永旗), aged 46, is our chief operating officer and executive Director. For further details of Mr. Liu, please refer to the paragraph headed “Executive Director” in this section.

Mr. Wang Zengdong (王增東), aged 39, is our chief operating officer and executive Director. For further details of Mr. Wang, please refer to the paragraph headed “Executive Director” in this section.

Mr. Sio Chin Tat (蕭展達), aged 34, was appointed as the company secretary of our Company on 18 May 2021.

– 233 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DIRECTORS AND SENIOR MANAGEMENT

Mr. Sio served in Oriental Link CPA Limited as an audit trainee from April 2010 to November 2010. He served as an audit assistant from January 2011 to May 2012, and subsequently a semi-senior auditor from June 2012 to November 2012, at H.C. Watt & Company Limited. Thereafter, he served as an audit associate and subsequently a senior auditor in Mazars CPA Limited from December 2012 to January 2015. He then acted as a senior auditor from January 2015 to September 2017, and subsequently and audit manager from October 2017 to July 2018, at Deloitte Tocuhe Tohmatus. He has been the partner of UP CPA & Co. since July 2018.

Mr. Sio obtained a Bachelor of Business Administration (Hons) Major in Accountancy with a Minor in Finance from The Hong Kong Polytechnic University in October 2009. Mr. Sio has been currently a fellow member of The Hong Kong Institute of Certified Public Accountants since September 2014.

Other disclosure pursuant to Rule 13.51(2) of the Listing Rules

Save as disclosed above, each of our Directors and members of our senior management (i) did not hold other positions in our Company or other members of our Group as at the Latest Practicable Date; (ii) had no other relationship with any Directors, senior management or substantial or controlling shareholders of our Company as at the Latest Practicable Date; and (iii) did not hold any other directorships in listed companies in the three years prior to the date of this document. Immediately following completion of the [REDACTED] and the [REDACTED], save as the interests in our Shares which are disclosed in the section headed “Substantial Shareholders” in this document, each of our Directors will not have any interest in our Shares within the meaning of Part XV of the SFO. Save as disclosed herein, to the best of the knowledge, information and belief of our Directors having made all reasonable enquiries, there were no other matters with respect to the appointment of our Directors that need to be brought to the attention of our Shareholders and there was no information relating to our Directors that is required to be disclosed pursuant to Rules 13.51(2)(h) to (v) of the Listing Rules as at the Latest Practicable Date.

BOARD COMMITTEES

Our Board of Directors delegates certain responsibilities to various committees. In accordance with our Articles of Association and the Listing Rules, we have formed three board committees, namely the Audit Committee, Remuneration Committee and Nomination Committee.

Audit Committee

We [have established] an Audit Committee with [written terms of reference] in compliance with the Corporate Governance Code and Corporate Governance Report as set out in Appendix 14 to the Listing Rules. The primary duties of the Audit Committee are to [review and supervise our financial reporting process and internal control system of our Company, oversee the audit process, provide advice and comments to our Board and perform other duties and responsibilities as may be assigned by the Board.]

– 234 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DIRECTORS AND SENIOR MANAGEMENT

The Audit Committee consists of four members, namely, [Ms. Ng Yau Kuen Carmen], [Mr. Wang Jifa], [Mr. Li Hoi Kwong] and [Mr. Zheng Yongyun]. The chairlady of the Audit Committee is [Ms. Ng Yau Kuen Carmen], who is an independent non-executive Director.

Remuneration Committee

We [have established] a Remuneration Committee with [written terms of reference] in compliance with the Corporate Governance Code and Corporate Governance Report as set out in Appendix 14 to the Listing Rules. The primary duties of the Remuneration Committee are to [establish, review and make recommendations to our Directors on our policy and structure concerning remuneration of our Directors and senior management and on the establishment of a formal and transparent procedure for developing policies concerning such remuneration, determine the terms of the specific remuneration package of each executive Director and senior management and review and approve performance-based remuneration by reference to corporate goals and objectives resolved by our Directors from time to time. Our Directors may also receive options to be granted under the Share Option Scheme.]

The Remuneration Committee consists of four members, namely [Mr. Zheng Yongyun], [Mr. Zhang], [Mr. Li Hoi Kwong] and [Ms. Ng Yau Kuen Carmen]. The chairman of the remuneration committee is [Mr. Zheng Yongyun], who is an independent non-executive Director.

Nomination Committee

We [have established] a Nomination Committee with [written terms of reference] in compliance with the Corporate Governance Code and Corporate Governance Report as set out in Appendix 14 to the Listing Rules. The primary duties of the Nomination Committee are to [review the structure, size and composition of our Board, assess the independence of the independent non-executive Directors and make recommendations to our Board on the appointment and re-appointment of Directors and succession planning for Directors.]

The Nomination Committee consists of [three] members, namely [Mr. Zou], [Mr. Li Hoi Kwong] and [Mr. Zheng Yongyun]. The chairman of the nomination committee is [Mr. Zou].

COMPENSATION OF DIRECTORS AND SENIOR MANAGEMENT

Our Directors and members of our senior management receive compensation from our Company in the form of Directors fees, salaries, allowances, bonuses and other benefits as well as contributions to retirement benefit schemes.

For each of FY2018, FY2019 and FY2020, the aggregate amounts of remuneration (including [fees, salaries, contributions to retirement benefit schemes and other benefits in kind]) paid to our Directors (of whom, only five received such remuneration) were approximately RMB0.9 million, RMB1.0 million and RMB1.4 million respectively. Save as disclosed above, no other emoluments have been paid or are payable, in respect of each of FY2018, FY2019 and FY2020 by our Company to our Directors.

– 235 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DIRECTORS AND SENIOR MANAGEMENT

Among our Group’s five highest paid individuals during each of FY2018, FY2019 and FY2020, four, five and five of them were our Directors. The aggregate compensation (including fees, salaries, contributions to retirement benefit schemes and other benefits in kind) paid to our Directors for FY2018, FY2019 and FY2020 were approximately RMB0.7 million, RMB1.0 million and RMB1.4 million respectively. The aggregate compensation (including salaries and other benefits, contributions to retirement benefit schemes) paid to remaining individuals during FY2018, FY2019 and FY2020 were approximately RMB0.2 million, nil and nil respectively.

During the Track Record Period, no remuneration was paid by us to, or received by, our Directors or the five highest paid individuals as an inducement to join or upon joining us or as compensation for loss of office. There was no arrangement under which a director waived or agreed to waive any remuneration during the Track Record Period.

Under the arrangement currently in force, we estimate that the aggregate remuneration payable to, and benefits in kind receivable by, our Director (excluding discretionary benefits or bonus or other fringe benefits) for the year ending 31 December 2021 will be approximately RMB2.5 million.

Our Board will review and determine the remuneration and compensation packages of our Directors and senior management and will, following the [REDACTED], receive recommendation from the remuneration committee which will take into account salaries paid by comparable companies, time commitment and responsibilities of our Directors and performance of our Company.

Save as disclosed in this document, no other payments had been made, or are payable, by any member of our Group to our Directors or the five highest paid individuals during the Track Record Period.

For additional information on our Directors’ remuneration during the Track Record Period as well as information on the five highest paid individuals, please refer to Note 9 to the Accountants’ Report as set out in Appendix I to this document.

SHARE OPTION SCHEME

Our Directors may also receive options to be granted under the Share Option Scheme. The principal terms of the Share Option Scheme are summarised in “[D. Share Option Scheme]” in Appendix V in this document.

COMPLIANCE ADVISER

Our Company has appointed [VBG Capital Limited] as our compliance adviser pursuant to Rule 3A.19 of the Listing Rules.

Pursuant to Rule 3A.23 of the Listing Rules, the material terms of the compliance adviser’s agreement entered into between our Company and our compliance adviser are as follows:

– 236 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DIRECTORS AND SENIOR MANAGEMENT

(1) our compliance adviser shall provide our Company with services including guidance and advice as to compliance with the requirements of the Listing Rules and other applicable laws, rules, codes and guidelines, and accompany our Company to any meetings with the Stock Exchange;

(2) our Company may terminate the appointment of our compliance adviser by giving [30 days’] prior written notice to the compliance adviser. Our Company will exercise such right in compliance with Rule 3A.26 of the Listing Rules. The compliance adviser will have the right to terminate its appointment as compliance adviser under certain specific circumstances and upon notification of the reason of its resignation to the Stock Exchange; and

(3) during the period of appointment, our Company must consult with, and if necessary, seek advice from our compliance adviser on a timely basis in the following circumstances:

(a) before the publication of any regulatory announcement, circular or financial report;

(b) where a transaction, which might be a notifiable or connected transaction, is contemplated, including share issues and share repurchases;

– 237 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. DIRECTORS AND SENIOR MANAGEMENT

(c) where we propose to use the [REDACTED] of the [REDACTED] in a manner different from that detailed in this document or where our business activities, developments or results materially deviate from any forecast, estimate, or other information in this document; and

(d) where the Stock Exchange makes an inquiry of our Company regarding unusual movements in the price or trading volume of our Shares.

The term of the appointment shall commence on the [REDACTED] and end on the date on which we distribute our annual report in respect of our financial results for the first full financial year commencing after the [REDACTED].

BOARD DIVERSITY POLICY

In order to enhance the quality of the performance of our Board and to support the attainment of our Company’s strategic objectives and sustainable development, we have adopted a board diversity policy (the “Board Diversity Policy”). Pursuant to the Board Diversity Policy, we seek to achieve Board diversity through the consideration of a number of factors when selecting candidates to our Board, including but not limited to gender, skills, age, professional experience, knowledge, cultural and education background, ethnicity and length of service. Appointments will ultimately be based on merit and the contributions that the selected candidates will bring to our Board. Our Board believes that such merit-based appointments will best enable our Company to serve our Shareholders and other stakeholders.

Our Directors have a balanced mix of knowledge and skills, including in overall management and strategic development, sales and marketing, finance and accounting, law, consulting and corporate governance, as well as experience in breeding young sea cucumber industry. Our Company has three independent non-executive Directors with different gender, industry backgrounds, representing one-third of the members of our Board. Furthermore, our Board has a wide range of age, ranging from 39 years old to 67 years old.

Our Nomination Committee is responsible for reviewing the diversity of our Board. After the [REDACTED] our Nomination Committee will monitor the implementation of the Board Diversity Policy, and review the Board Diversity Policy from time to time to ensure its continued effectiveness. Our Nomination Committee will also include in our annual corporate governance report a summary of the Board Diversity Policy together with measurable objectives set for implementing the Board Diversity Policy, the progress made towards achieving those objectives, as well as the Board’s composition from a diversity perspective.

– 238 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. SHARE CAPITAL

SHARE CAPITAL

The following is a description of the authorised and issued share capital of our Company in issue and to be issued as fully paid or credited as fully paid immediately before and following the completion of the [REDACTED] and the [REDACTED]:

Nominal value US$

Authorised share capital: [REDACTED] Shares of US$0.01 each [REDACTED]

Issued and to be issued, fully paid or credited as fully paid: 116,000 Shares in issue as of the date of this document 1,160 [REDACTED] Shares to be issued pursuant to the [REDACTED] [REDACTED] [REDACTED] Shares to be issued under the [REDACTED] [REDACTED]

Total [REDACTED]

ASSUMPTIONS

The above table assumes that the [REDACTED] becomes unconditional and the Shares are issued pursuant to the [REDACTED] and the [REDACTED]. It takes no account of any Shares which may be issued and allotted or repurchased by our Company pursuant to the exercise of the [REDACTED] or pursuant to the exercise of the options which may be granted under the Share Option Scheme or any Shares which may be issued or repurchased by us pursuant to the general mandates granted to our Directors to issue or repurchase Shares as described below.

MINIMUM [REDACTED] FLOAT

Pursuant to Rule 8.08(1)(a) of the Listing Rules, at the time of the [REDACTED] and at all times thereafter, at least 25% (or such applicable percentage as prescribed by the Stock Exchange) of the total issued share capital of our Company must be held by the [REDACTED]. The [REDACTED] represent not less than 25% of the issued share capital of our Company upon [REDACTED].

RANKINGS

The [REDACTED] will be ordinary shares in the share capital of our Company and will rank pari passu in all respects with all Shares in issue or to be issued as mentioned in this document and, in particular, will rank in full for all dividends or other distributions declared, made or paid on the Shares in respect of a record date which falls after the date of this document save for the entitlement under the [REDACTED].

– 239 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. SHARE CAPITAL

GENERAL MANDATE TO ISSUE SHARES

Subject to the conditions set forth in the paragraph headed “Structure and Conditions of the [REDACTED] – Conditions of the [REDACTED]” in this document being fulfilled, our Directors have been granted a general unconditional mandate to allot, issue and deal with the Shares and to make or grant offers, agreements or options which might require such Shares to be allotted and issued or dealt with subject to the requirement that the aggregate nominal value of the Shares so allotted and issued or agreed conditionally or unconditionally to be allotted and issued (otherwise than pursuant to a rights issue, or scrip dividend scheme or similar arrangements, issuance and allotment of Shares under a specific authority that may be granted by the Shareholders) shall not exceed:

(i) 20% of the aggregate nominal amount of the share capital of our Company in issue immediately upon completion of the [REDACTED]; and

(ii) The aggregate nominal value of share capital of our Company repurchased by our Company (if any) under the “General Mandate to Repurchase Shares” referred to below.

This mandate does not cover Shares to be allotted, issued or dealt with under a rights issue, scrip dividend or similar arrangement in accordance with the Articles. This general mandate to issue Shares will expire at the earliest of:

(i) the conclusion of the next annual general meeting of our Company; or

(ii) the expiration of the period within which our Company is required by any applicable law or the Articles to hold our next annual general meeting; or

(iii) the passing of an ordinary resolution by the Shareholders in general meeting revoking or varying the authority given to our Directors by such mandate.

For further details of this general mandate, please refer to the paragraph headed “A. Further Information about Our Group – 4. Written resolutions of our Shareholders passed on [•]” in Appendix VI to this document.

GENERAL MANDATE TO REPURCHASE SHARES

Subject to the conditions set forth in the paragraph headed “Structure and Conditions of the [REDACTED] – Conditions of the [REDACTED]” of this document being fulfilled, our Directors have been granted a general unconditional mandate to exercise all our powers to repurchase Shares with an aggregate nominal value of not more than 10% of the aggregate nominal amount of our Company’s share capital in issue immediately upon completion of the [REDACTED].

– 240 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. SHARE CAPITAL

This repurchase mandate relates only to repurchases made on the Stock Exchange or on any other stock exchange on which the Shares are [REDACTED] (and which is recognised by the SFC and the Stock Exchange for this purpose), and which are made in accordance with all application laws and the requirements of the Listing Rules. A summary of the relevant Listing Rules is set out in the section headed “A. Further information about Our Group – 6. Repurchase of Shares by our Company” in Appendix VI to this document.

This general mandate to repurchase Shares will expire at the earliest of:

(i) the conclusion of the next annual general meeting of our Company; or

(ii) the expiration of the period within which our Company is required by any applicable law or the Articles to hold our next annual general meeting; or

(iii) the passing of an ordinary resolution by the Shareholders in general meeting revoking or varying the authority given to our Directors by such mandate.

CIRCUMSTANCES UNDER WHICH A MEETING OF THE COMPANY IS REQUIRED

The circumstances under which a meeting is required are provided in the Articles, a summary of which is set out in Appendix V to this document.

– 241 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. SUBSTANTIAL SHAREHOLDERS

SUBSTANTIAL SHAREHOLDERS

So far as our Directors are aware, immediately following completion of the [REDACTED] and the [REDACTED] (without taking into account any Shares which may be allotted and issued pursuant to the [REDACTED] and upon exercise of any options that may be granted under the Share Option Scheme), the following persons will have an interest or a short position in the Shares or underlying Shares which would fall to be disclosed to our Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or, who will, directly or indirectly, be interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any member of our Group:

Approximate percentage of Number of shareholding Shares held in our Name of interested parties Capacity/Nature of interest (long position) Company

Mr. Zou (1) Interest in a controlled [REDACTED] [REDACTED]% corporation, interests held jointly with another person Mr. Zou Siyuan (1) Interest in a controlled [REDACTED] [REDACTED]% corporation, interests held jointly with another person Mr. Zhang (1) Interest in a controlled [REDACTED] [REDACTED]% corporation, interests held jointly with another person Ms. Liu Shuzhen (1) Interest in a controlled [REDACTED] [REDACTED]% corporation, interests held jointly with another person Good Standard (1) Beneficial owner, interests held [REDACTED] [REDACTED]% jointly with another person Easy Express (1) Beneficial owner, interests held [REDACTED] [REDACTED]% jointly with another person Bright Trend (1) Beneficial owner, interests held [REDACTED] [REDACTED]% jointly with another person Ms. Zhang Chunna (2) Interest of spouse [REDACTED] [REDACTED]% Ms. Zhou Yufeng (3) Interest of spouse [REDACTED] [REDACTED]% Ms. Ma Liangping (4) Interest in a controlled [REDACTED] [REDACTED]% corporation Keen Champ Beneficial owner [REDACTED] [REDACTED]% Mr. Wang Dong (王棟) (5) Interest of spouse [REDACTED] [REDACTED]%

– 242 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. SUBSTANTIAL SHAREHOLDERS

Notes:

1. Our Company will be held as to approximately [REDACTED]% jointly by Good Standard, Easy Express and Bright Trend immediately following the completion of the [REDACTED] and the [REDACTED] (without taking into account any Shares which may be allotted and issued pursuant to the [REDACTED] and upon the exercise of any options that may be granted under the Share Option Schemes). Good Standard and Easy Express are respectively wholly owned by Mr. Zou and Mr. Zou Siyuan, and Bright Trend will be owned as to [REDACTED]% by Mr. Zhang and as to [REDACTED]% by Ms. Liu Shuzhen, who is the spouse of Mr. Zhang, respectively. Pursuant to the Deed of Acting in Concert, each of our Controlling Shareholders has agreed to jointly control their respective interests in our Company and reach unanimous decisions as to the major business, operational, financial and other material matters of our Group shall be in line with the decision of Mr. Zou and Good Standard, the company wholly owned and controlled by Mr. Zou. Each of our Controlling Shareholders shall exercise their respective voting rights in our Company in the same way. Hence, each of our Controlling Shareholders is deemed to be interested in all the Shares held by our Controlling Shareholders in aggregate by virtue of the SFO.

2. Ms. Zhang Chunna is the spouse of Mr. Zou. By virtue of the SFO, Ms. Zhang is deemed, or taken to be, interested in all the Shares in which Mr. Zou is deemed to be interested.

3. Ms. Zhou Yufeng is the spouse of Mr. Zou Siyuan. By virtue of the SFO, Ms. Zhou is deemed, or taken to be, interested in all the Shares in which Mr. Zou Siyuan is deemed to be interested.

4. Ms. Ma Liangping directly holds the entire issued share capital of Keen Champ and is therefore deemed to be interested in the same number of Shares in which Keen Champ is interested.

5. Mr. Wang Dong is the spouse of Ms. Ma Liangping. By virtue of the SFO, Mr. Wang Dong is deemed, or taken to be, interested in all the Shares in which Ms. Ma Liangping is deemed to be interested.

Save as disclosed above, our Directors are not aware of any persons who will, immediately following completion of the [REDACTED] and assuming that the [REDACTED] is not exercised, have an interest or a short position in our Shares or underlying Shares which would be required to be disclosed to our Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or, will be, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any member of our Group. Our Directors are not aware of any arrangement which may at a subsequent date result in a change of control of our Company.

– 243 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

You should read the following discussion and analysis together with the audited consolidated financial statements of our Group and the notes thereto as of and for the years ended 31 December 2018, 2019 and 2020, included in the Accountants’ Report set out in Appendix I to this document. The Accountants’ Report has been prepared in accordance with International Financial Reporting Standards.

The following discussion and analysis contains certain forward-looking statements that reflect the current views with respect to future events and financial performance. These statements are based on assumptions and analyses made by our Directors in light of their experience and perception of historical trends, current conditions and expected future developments, as well as other factors they believe are appropriate under the circumstances. Our Group’s business and financial performance are subject to substantial risks and uncertainties and the future results could differ materially from those set forth in the forward-looking statements herein due to a variety of factors including those set forth under the section headed “Risk Factors” in this document.

Any discrepancies in any table or elsewhere in this document between totals and sums of amounts listed herein are due to rounding.

OVERVIEW

We are the leading young sea cucumber breeder in the PRC, as we ranked first in FY2020 among the sea cucumber breeders in terms of water body and sales volume in the PRC according to the CIC Report. We generate our revenue from sales of (i) larvae of sea cucumbers, (ii) juvenile sea cucumbers including small juvenile sea cucumbers and large juvenile sea cucumbers, (iii) feeds for young sea cucumbers; and (iv) other products including primarily-processed sea cucumber products and mature sea cucumbers. We have ceased the production of primarily-processed sea cucumber products since April 2021, and we retained a small amount of primarily-processed sea cucumber products as inventories as at the Latest Practicable Date and we have ceased the sale of mature sea cucumbers since August 2019. For the years ended 31 December 2018, 2019 and 2020, our Group recorded revenue of approximately RMB167.0 million, RMB198.8 million and RMB213.6 million, respectively. For further information about our business and operations, please refer to the section headed “Business” in this document.

– 244 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

BASIS OF PRESENTATION

Our Company was incorporated in the Cayman Islands as an exempted company with limited liability on 21 November 2019 under the Companies Law of the Cayman Islands. Pursuant to the completion of the Reorganisation on 16 December 2020 as set out in the section headed “History, Reorganisation and Corporate Structure – Reorganisation” in this document, our Company became the holding company of our Group. Immediately prior to and after the Reorganisation, our Company and its subsidiaries now comprising the Group are ultimately controlled by the Controlling Shareholders. Our Group’s business is mainly conducted through Shandong Anyuan, Peng Anyuan Food and Anyuan (Liaoning). Our Company and other entities within the Group have not been involved in any other significant activities prior to the Reorganisation. As the Reorganisation did not result in any change in the ultimate control of and the resource employed by our Group’s business, the Group is regarded as a continuing entity and, therefore, the Reorganisation is considered to be a restructuring of entities and business under common control.

As further explained in the paragraph headed “Merger accounting for business combination involving entities under common control” in Note 3 to the Accountants’ Report as set out in Appendix I to this document, the historical financial information presents the combined financial information of the entities now comprising the Group as if the current group structure had always been in existence throughout the Track Record Period.

Please refer to Note 3 to the Accountants’ Report as set out in Appendix I to this document for details in relation to the basis of preparation of the historical financial information of our Group.

KEY FACTORS AFFECTING THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION

Our results of operations and financial position have been and will continue to be affected by a number of factors, including those set out in the section headed “Risk Factors” in this document and those discussed below:

Fluctuations in cost of raw materials and cost of labour

Our raw materials primarily include algae, mysis shrimps and scallop mantle.

In FY2018, FY2019 and FY2020, cost of raw materials represented approximately 10.1%, 13.8% and 11.4% of our cost of sales, respectively. While we are generally able to pass on increases in our cost of raw materials to our customers by increasing the prices of our products accordingly and we have effective mechanism to keep monitoring the supply and price trends of our raw materials, we cannot assure that our key suppliers will not be interrupted and will be able to continue to supply raw materials to us on commercially acceptable terms or that can meet our standards. Our financial conditions and results of operations may accordingly be adversely affected.

– 245 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

Our cost of labour also affects our profitability. In FY2018, FY2019 and FY2020, our cost of labour amounted to approximately RMB18.7 million, RMB21.2 million and RMB20.8 million respectively, representing approximately 11.3%, 10.8% and 10.0% of our cost of sales respectively for the same periods. While we strive to improve our operating efficiency and control our costs, our cost of labour may continue to grow with the increase in our business scale in the foreseeable future.

The following table sets forth the sensitivity analysis on the impact of hypothetical fluctuations in (i) cost of materials consumed; and (ii) staff costs on our net profit for the Track Record Period, assuming all other factors affecting our profit margin remain unchanged:

(i) Hypothetical fluctuation in cost of materials consumed

+/- 5% +/- 10% +/- 15%

Change in net profit (RMB’000) FY2018 -/+ 839 -/+ 1,678 -/+ 2,517 FY2019 -/+ 1,353 -/+ 2,707 -/+ 4,060 FY2020 -/+ 1,193 -/+ 2,386 -/+ 3,578

(ii) Hypothetical fluctuation in staff costs

+/- 5% +/- 10% +/- 15% Change in net profit (RMB’000)

FY2018 -/+ 935 -/+ 1,869 -/+ 2,804 FY2019 -/+ 1,062 -/+ 2,125 -/+ 3,187 FY2020 -/+ 1,041 -/+ 2,082 -/+ 3,123

Our ability to maintain our competitive advantages that differentiate us from our competitors

The sea cucumber aquaculture market in China is an extremely fragmented market with more than 1,000 sea cucumber breeders. We were the leading young sea cucumber breeder in the PRC in terms of sales volume of young sea cucumber with a market share of approximately 5.4% of the young sea cucumber aquaculture market in the PRC in 2020. Any competition against us in terms of pricing would adversely affect our profitability.

Entry barriers and competitiveness of the young sea cucumber aquaculture market largely lie in natural resources, young sea cucumber breeding aquaculture cultivation know-how, and customer relationships. Our Directors believe that we are able to compete by leveraging our strengths as a pioneer in China’s sea cucumber aquaculture market, our access to natural resources and advanced techniques in the sea cucumber breeding aquaculture cultivation. We will also further solidify our status in the market through continuous efforts in testing of cultivation methods and techniques and improvements in product quality.

– 246 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

For further details on our competitive landscape, please refer to the paragraph headed “Industry Overview – Competitive landscape of China’s young sea cucumber aquaculture industry” in this document. For further details on our risks related to competition, please also refer to the paragraph headed “Risk Factors – Risks relating to our industry – We operate in a highly competitive industry and may face new competitors entering the market who could have an adverse impact on our businesses and prospects” in this document.

Changes in the fair value of biological assets

The changes in fair value of our biological assets will have material impact on our results of operations. Our biological assets are live sea cucumbers. We recognise gains and losses arising from two different aspects of our business:

(1) sea cucumber at fair value less costs to sell at the point of sale, which represent changes in fair value of our biological assets that we sold during that period due to changes in the physical attributes of these assets (typically primarily changes in weight and age) and the market-determined prices of these biological assets, less costs to sell at the time of sale; and

(2) changes in fair value less costs to sell in respect of our biological assets, which represent changes in fair value of the biological assets that remained as our biological assets as of the end of a particular period, due to changes in the physical attributes of these assets (typically primarily changes in weight and age) and market-determined prices of these biological assets, less costs to sell at the point of harvest stage.

Our cost of sales in each reporting period is adjusted by item (1) mentioned above, and gain or loss arising from changes in fair value less costs to sell of biological assets recognised in the prior period.

Please refer to the paragraph headed “Valuation of biological assets” in the section for more information on our biological assets’ valuation method, key assumptions and inputs. The valuations used in the methods described above are made as at the time of harvest or the end of the relevant period, as applicable, so they may not result in adjustments that are consistent with general price trends of sea cucumbers over the corresponding period.

– 247 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

The following table sets forth the impact of changes in the fair values of our biological assets on our results of operations during the Track Record Period:

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Biological asset fair value adjustments included in cost of sales (108,355) (128,260) (144,448)

Net change in fair value less costs to sell of biological assets (realised) 105,074 103,433 119,391

Net changes in fair value less costs to sell of biological assets (unrealised) 24,827 25,057 22,939

Net changes in fair value less costs to sell of biological assets 129,901 128,490 142,330

Net gain/(loss) in fair value changes of biological assets 21,546 230 (2,118)

As a result of the biological asset fair value adjustments recognised in our cost of sales, our gross profit and gross profit margin before and after biological asset fair value adjustments may be substantially different, depending on the size and direction of the biological asset fair value adjustments. Changes in biological asset fair value adjustments are affected by changes in market prices, the number of live sea cucumbers reared by us and our average costs to sell the sea cucumbers. Please refer to the paragraph headed “Review of historical results of operations” in this section for the period-to-period discussions on our cost of sales, which include discussions on biological asset fair value adjustments, and the period-to-period discussions on our gross profit and gross profit margin.

None of the fair value adjustments affects our cash flows, yet our profit is expected to be continually affected by the changes in fair values of our live sea cucumbers.

– 248 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

Seasonality

The sales of our products are subject to seasonality due to the breeding and growth cycles of sea cucumbers. During the Track Record Period, we experienced higher sales of our juvenile sea cucumbers between April to December and our sales of juvenile sea cucumbers are generally low between January to March when the growth rate and biological activity of the sea cucumbers are very low in winter. If there is any adverse change of market conditions or if our operations are disrupted or affected by unpredictable events taking place during the breeding and growth cycles of sea cucumbers, our business, financial condition and results of operations may be adversely affected. For further details of our seasonality fluctuations, please refer to the paragraph headed “Business – Seasonality” in this document.

CRITICAL SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES AND JUDGMENTS

Significant Accounting Policies

We have identified certain accounting policies and critical accounting judgments and estimates that we believe are significant to the preparation of our consolidated financial statements. Our significant accounting policies, critical accounting judgments and estimates, which are important for understanding our financial position and results of operations, are set forth in details in Notes 2 and 3 to the Accountants’ Report. In applying our accounting policies, our Directors are required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. We set forth below certain accounting policies, estimates, and judgements to supplement the accounting policies, estimates and judgement disclosed in the Accountants’ Report.

The Accountants’ Report is not qualified or modified by the Reporting Accountants.

Revenue Recognition

We sell larvae of sea cucumbers, juvenile sea cucumbers including small juvenile sea cucumbers and large juvenile sea cucumbers, feeds for young sea cucumbers and other products including primarily-processed sea cucumber products and mature sea cucumbers. Revenue are recognised at a point in time at which the customer obtains the control of the promised asset, which generally considers with the time when the goods are transferred to customers and the title is passed.

– 249 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

Biological Assets

The agricultural produce harvested from the biological assets are measured at their fair value less costs to sell at the point of harvest. Such measurement is the cost at the date when applying IAS 2 Inventories. A gain or loss arising from agricultural produce at the point of harvest at fair value less costs to sell is included in profit or loss for the period in which it arises.

Fair value measurement of biological assets

In accordance with IAS 41 Agriculture, biological assets are stated at fair value less costs to sell, provided that fair value can be measured reliably. The fair value of our live sea cucumbers was measured using the market approach. Costs to sell are the incremental costs directly attributable to the disposal of an asset excluding finance costs. We determined the fair values less costs to sell at the end of each reporting period with reference to the market-based prices, rearing costs, mortality rate, risk in price uncertainty upon harvest stage, growing conditions, other costs incurred and professional valuation, such as weight, age and health, of our live sea cucumbers.

Our Group’s management determines the fair values less costs to sell of biological assets at the end of each reporting period with reference to the market-based prices, species, growing conditions, cost incurred and professional valuation. Our Group’s management works closely with the qualified external valuers to establish the appropriate valuation techniques and inputs to the valuation model. The determination involved the use of significant judgement. If actual results differ from the original estimates made by management, such differences from the original estimates will impact the fair value changes recognised in profit or loss in the period in which the estimates change and in future periods.

– 250 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

RESULTS OF OPERATIONS

The following table sets forth the combined statements of profit or loss and other comprehensive income during the Track Record Period, which is extracted from the Accountants’ Report.

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Revenue 166,984 198,812 213,610 Cost of sales (165,228) (196,377) (207,918)

Gross profit 1,756 2,435 5,692

Profit before taxation 112,278 104,084 106,457

Income tax expense (14,104) (13,108) (12,908)

Profit and total comprehensive income for the year [REDACTED] [REDACTED] [REDACTED]

– 251 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

DESCRIPTION OF SELECTED ITEMS FROM COMBINED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Revenue

The table below sets forth our revenue by product categories for the years indicated.

Year ended 31 December 2018 2019 2020 RMB’000 % RMB’000 % RMB’000 %

Larvae of sea cucumber 263 0.2 2,320 1.2 8,588 4.0

Juvenile sea cucumbers: – small juvenile sea cucumbers 8,794 5.3 8,605 4.3 44,594 20.9 – large juvenile young sea cucumbers 119,146 71.3 158,443 79.7 142,419 66.7

127,940 76.6 167,048 84.0 187,013 87.6

Feeds for young sea cucumbers 4,205 2.5 8,845 4.4 15,298 7.2

Other products (Note) 34,576 20.7 20,599 10.4 2,711 1.2

Total 166,984 100.0 198,812 100.0 213,610 100.0

We derive our revenue mainly from sales of live sea cucumbers. Our total revenue increased by approximately RMB31.8 million or 19.0%, from approximately RMB167.0 million for FY2018 to approximately RMB198.8 million for FY2019. Our total revenue further increased by approximately RMB14.8 million or 7.4%, from approximately RMB198.8 million for FY2019 to approximately RMB213.6 million for FY2020. Such remarkable increase was primarily attributable to the increasing demand for juvenile sea cucumbers and feeds for young sea cucumbers during the corresponding years.

– 252 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

During the Track Record Period, revenue generated from sales of larvae of sea cucumbers amounted to approximately RMB0.3 million, RMB2.3 million and RMB8.6 million for FY2018, FY2019 and FY2020, respectively, representing approximately 0.2%, 1.2% and 4.0% of our total revenue for the respective years.

Sales of juvenile sea cucumbers has the largest contributor to our revenue during the Track Record Period, representing approximately 76.6%, 84.0% and 87.6% of our total revenue for FY2018, FY2019 and FY2020 respectively. Our revenue derived from the sales of juvenile sea cucumbers had recorded a significant increase of approximately RMB39.1 million, or 30.6%, from approximately RMB127.9 million for FY2018 to approximately RMB167.0 million for FY2019; and approximately RMB20.0 million, or 12.0%, from approximately RMB167.0 million for FY2019 to approximately RMB187.0 million for FY2020.

We sold juvenile sea cucumbers which consisted of small juvenile sea cucumbers and large juvenile sea cucumbers. Among the juvenile sea cucumbers, revenue generated from sales of small juvenile sea cucumbers recorded a decrease of approximately RMB0.2 million from approximately RMB8.8 million for FY2018 to approximately RMB8.6 million for FY2019 and an increase of approximately RMB36.0 million from approximately RMB8.6 million for FY2019 to approximately RMB44.6 million for FY2020. The increase of sales of small juvenile sea cucumber in FY2020 is primarily due to the increase of its sales volume in FY2020 attributed to the active development for our business in Liaoning Province.

Revenue generated from sales of large juvenile sea cucumbers recorded an increase of approximately RMB39.3 million from approximately RMB119.1 million for FY2018 to approximately RMB158.4 million for FY2019 and a decrease of approximately RMB16.0 million from approximately RMB158.4 million for FY2019 to approximately RMB142.4 million for FY2020, primarily due to increase in sales volume of large juvenile sea cucumbers in FY2019 attributed to the increasing demand for large juvenile sea cucumbers and decrease in average selling price of large juvenile sea cucumbers in FY2020 respectively.

During the Track Record Period, our revenue derived from sales of feeds for young sea cucumbers represented approximately 2.5%, 4.4% and 7.2% of our total revenue, respectively. Our revenue derived from sales of feeds for young sea cucumbers increased significantly by approximately 109.5% from approximately RMB4.2 million for FY2018 to approximately RMB8.8 million for FY2019 and increased by approximately 73.9% from approximately RMB8.8 million for FY2019 to approximately RMB15.3 million for FY2020, mainly due to the expansion of the business scale of the Distributor who distributes our feeds and hence increase the demand for our feeds.

– 253 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

During the Track Record Period, we sold other products including primarily-processed sea cucumber products and mature sea cucumbers. Among the other products, the revenue generated from sales of primarily-processed sea cucumber products accounted for approximately 2.8%, 1.1% and 1.2% of our total revenue for FY2018, FY2019 and FY2020, respectively. Revenue generated from sales of mature sea cucumbers recorded a decrease of approximately RMB11.5 million from approximately RMB30.0 million for FY2018 to approximately RMB18.5 million for FY2019 and a decrease of approximately RMB18.5 million from approximately RMB18.5 million for FY2019 to nil for FY2020, primarily due to the Group’s focus on sales of larvae of sea cucumbers, juvenile sea cucumbers and feeds for young sea cucumbers businesses. We have ceased sale of mature sea cucumbers since August 2019, ceased the production of primarily-processed sea cucumber products since April 2021, and we retained a small amount of primarily processed sea cucumber products as inventories as at the Latest Practicable Date.

The table below sets forth our sales volume, average selling price and gross profit margin (before biological asset fair value adjustments) by category of products in each business category for the years indicated:

Year ended 31 December 2018 2019 2020 Average Gross Average Gross Average Gross Sales selling profit Sales selling profit Sales selling profit volume price margin volume price margin volume price margin (RMB) % (RMB) % (RMB) % (Note 1) (Note 4) (Note 1) (Note 4) (Note 1) (Note 4)

Aquaculture and sales of sea cucumbers: – larvae of sea cucumbers (Note 2) 32.7 8,059.4 100.0 194.7 11,917.8 100.0 729.3 11,774.8 100.0 per per per hundred hundred hundred million million million unit unit unit

– small juvenile sea cucumbers (Note 3) 53.5 164.4 81.7 50.8 169.3 80.9 218.6 204.0 87.0 per jin per jin per jin

– large juvenile sea cucumbers (Note 3) 1,248.1 95.5 68.5 1,578.0 100.4 67.9 1,705.9 83.5 68.2 per jin per jin per jin

– 254 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

– mature sea cucumbers (Note 3) 356.8 84.0 64.2 219.2 84.5 61.8 – – – per jin per jin

– primarily-processed sea cucumber products (Note 3) 11.8 391.3 15.3 8.2 252.6 13.7 6.9 390.7 12.3 per jin per jin per jin

Production and sales of feeds for young sea cucumbers: Feeds for young sea cucumbers (Note 3) 478.7 8.8 24.9 1,017.7 8.7 24.3 1,795.6 8.5 35.0 per jin per jin per jin

Notes:

1. Average selling price represented total revenue of respective product for the year divided by the respective sales volume.

2. The sales volume of larvae of sea cucumbers is expressed in hundred million unit.

3. The sales volume of small juvenile sea cucumbers, large juvenile sea cucumbers, mature sea cucumbers, primarily-processed sea cucumber products and feeds for sea cucumbers is expressed in thousand jin.

4. The gross profit margin represents the gross profit margin before biological asset fair value adjustments.

– 255 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

As shown in the table above, the sales volume of larvae of sea cucumbers, small juvenile sea cucumbers, large juvenile sea cucumbers and feeds in terms of unit/weight show a significant growth during the Track Record Period. The sales volume of larvae of sea cucumbers increased by approximately 495.4% and 274.6% in FY2019 and FY2020, respectively. The sales volume of small juvenile sea cucumbers decreased by approximately 5.0% in FY2019 and increased by approximately 330.3% in FY2020, respectively while the sales volume of large juvenile sea cucumbers increased by approximately 26.4% and 8.1% in FY2019 and FY2020, respectively. Such increase was primarily due to the increase of the customer’s demand of our sea cucumbers products during the Track Record Period. The sales volume of feeds increased by approximately 112.6% in FY2019 and 76.4% in FY2020. Such increase was mainly due to the increase of demand of the feeds by the Distributor during the Track Record Period. The sales volume of mature sea cucumbers and primarily-processed sea cucumber products dropped during the Track Record Period; which was in line with our plan of ceasing the business of mature sea cucumbers and primarily-processed sea cucumber products.

As shown in the table above, the average selling price of larvae of sea cucumbers increased from approximately RMB8,059.4 per hundred million unit in FY2018 to approximately RMB11,917.8 per hundred million unit in FY2019. Such increase was primarily attributable to Anyuan No.1 has higher growth rate and more wart feet than local sea cucumbers, owing to the better genetics characteristics of Anyuan No.1, the breed is sold at a higher price than other local breeds. Since the wholesale price of the fresh sea cucumber increased in FY2019 and therefore, the average selling price of larvae of sea cucumbers of the Group increased accordingly. The average selling price of larvae of sea cucumbers remained relatively stable in FY2019 and FY2020.

The average selling price of small juvenile sea cucumbers increased from approximately RMB164.4 per jin in FY2018 to approximately RMB169.3 per jin in FY2019. Such increase was primarily attributable to the increase in the wholesale price of fresh sea cucumber. The average selling price of small juvenile sea cucumbers increased from approximately RMB169.3 per jin in FY2019 to approximately RMB204.0 per jin in FY2020, primarily due to the expansion of our business in the Liaoning Province, which resulted in an increase in our sales of small juvenile sea cucumbers in Liaoning Province at a higher average selling price.

The average selling price of large juvenile sea cucumbers increased from approximately RMB95.5 per jin in FY2018 to approximately RMB100.4 per jin in FY2019. Such increase was primarily attributable to the increase in wholesale price of fresh sea cucumber, which was primarily due to the decline of production caused by the extreme high temperature in the summer of 2018 according to the CIC Report. The average selling price of large juvenile sea cucumbers decreased from approximately RMB100.4 per jin in FY2019 to approximately RMB83.5 per jin in FY2020. Such decrease was mainly due to the over supply of young sea cucumbers. According to the CIC Report, generally the breeders tend to increase production capacity when the price of young sea cucumbers is at a higher level, which leads to the over supply of large juvenile sea cucumbers and a subsequent decrease in price. Also, the fluctuation of the average selling price of our large juvenile sea cucumbers from FY2018 to FY2020 was in line with the trend of wholesale price of fresh sea cucumbers according to the CIC Report.

– 256 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

The average selling price of primarily-processed sea cucumber products decreased from approximately RMB391.3 per jin in FY2018 to approximately RMB252.6 per jin in FY2019. Such decrease was primarily attributable to the change in our primarily-processed sea cucumber products portfolio, in which the portion of primarily-processed sea cucumber products with low average selling price increased. The average selling price of primarily-processed sea cucumber products then increased back to approximately RMB390.7 per jin in FY2020, it was mainly due to the change in our primarily-processed sea cucumber products portfolio, in which the portion of primarily-processed sea cucumber products with high average selling price increased.

The average selling price of mature sea cucumbers and feeds for young sea cucumbers remained relatively stable during the Track Record Period.

The table below sets forth our revenue generated by customer type for the years indicated:

Year ended 31 December 2018 2019 2020 RMB’000 % RMB’000 % RMB’000 %

Revenue Corporate customers (Note 1) 92,792 55.5 131,289 66.0 118,956 55.7 Walk-in customers (Note 2) 72,880 43.7 62,758 31.6 80,002 37.4 Distributor (Note 3) 1,312 0.8 4,765 2.4 14,652 6.9

Total 166,984 100.0 198,812 100.0 213,610 100.0

Notes:

1. Corporate customers consists of customers who purchased our products and were granted a credit term during the Track Record Period.

2. Walk-in customers consists of customers who purchased our products without any credit terms granted during the Track Record Period.

3. The Distributor is an individual industrial and commercial household* (個體工商戶) in the PRC and she operates a retail shop in Shandong Province which primarily sells feeds for sea cucumbers. The revenue generated by our Distributor consist of revenue from sales of sea cucumber and sales of feeds. For further details, please refer to the paragraph headed “Business – Customers – 3. The distributor” in this document.

– 257 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

During the Track Record Period, we primarily sold our products to either corporate customers, walk-in customers, and Distributor. For further details, please refer to the paragraph headed “Business – Customers” in this document.

Our revenue from corporate customers and walk-in customers increased moderately during the Track Record Period, save for (i) the revenue from corporate customers which decreased by approximately RMB12.3 million, or 9.4%, from approximately RMB131.3 million for FY2019 to approximately RMB119.0 million for FY2020, and (ii) the revenue from walk-in customers which decreased by approximately RMB10.1 million, or 13.9%, from approximately RMB72.9 million for FY2018 to approximately RMB62.8 million for FY2019. In addition, we devoted more efforts in increasing sales to corporate customers by initiating sales with 2 strategic customers in Liaoning Province. During the Track Record Period, the revenue generated from the 2 strategic customers in Liaoning Province was approximately RMB15.6 million, RMB67.6 million and RMB80.9 million respectively, representing approximately 9.3%, 34.0% and 37.9%, respectively.

The table below sets forth our revenue generated by geographical location of our customers for the years indicated:

Year ended 31 December 2018 2019 2020 RMB’000 % RMB’000 % RMB’000 %

Shandong Province 145,517 87.1 130,238 65.5 124,460 58.3 Liaoning Province 15,714 9.4 68,543 34.5 89,087 41.7 Fujian Province 5,659 3.4 – – 13 0.0 Hebei Province 90 0.1 – – 50 0.0 Beijing – – 31 0.0 – – Zhejiang Province 4 0.0 ––––

166,984 100.0 198,812 100.0 213,610 100.0

During the Track Record Period, we sold our products primarily to customers located in Shandong Province and Liaoning Province where we derived approximately 96.5%, 100.0% and 100% of our revenue for FY2018, FY2019 and FY2020, respectively. Revenue derived from customers in Shandong Province decreased moderately during the Track Record Period. Revenue derived from customers in Liaoning Province increased significantly during the Track Record Period by approximately RMB52.8 million or 336.2% in FY2019 and by approximately RMB20.5 million or 30.0% in FY2020. Such changes in revenue from customers in Shandong Province and Liaoning Province was primarily due to (i) the Group’s initiative to actively develop our business in Liaoning Province; and (ii) the coordination of business in Shandong Province.

– 258 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

Cost of sales

Our cost of sales consists primarily of direct raw materials (primarily costs of ingredients for sea cucumber feeds and medicine), staff costs, depreciation, utilities, repairs and maintenance.

The direct raw materials used in our production are primarily ingredients for feeds including algae, mysis shrimps and scallop mantles and medicine. Other costs on direct raw materials include repair tools and packaging materials. Depreciation represents depreciation on machinery and equipment. Utilities includes electricity.

In addition, when our biological assets are being sold during the year, our cost of sales is adjusted by changes in fair values of our biological assets. We adjust our cost of sales for changes in fair values of biological assets, with fair value gains increasing our cost of sales and fair value losses decreasing our cost of sales, although the timing of these adjustments to our cost of sales are not necessarily the same as the related gains or losses. Our cost of sales in each reporting year is adjusted for gain or loss arising from changes in fair value less costs to sell of biological assets recognised previously. These adjustments increased our total cost of sales by approximately RMB108.4 million, RMB128.3 million and RMB144.4 million for the years ended 31 December 2018, 2019 and 2020, respectively. Our biological asset fair value adjustments increased by approximately 18.4% from approximately RMB108.4 million for FY2018 to approximately RMB128.3 million for FY2019; and further increased by approximately 12.5% to approximately RMB144.4 million for FY2020, primarily due to an increase in revenue from aquaculture and sales of sea cucumbers of approximately 16.7% from approximately RMB162.8 million for FY2018 to approximately RMB190.0 million for FY2019; and approximately 4.4% from approximately RMB190.0 million for FY2019 to approximately RMB198.3 million for FY2020.

– 259 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

The table below sets forth our cost of sales by business categories and their respective percentage of our total cost of sales for the years indicated:

Year ended 31 December 2018 2019 2020 RMB’000 % RMB’000 % RMB’000 %

Cost of sales

Aquaculture and sales of sea cucumbers (Note) 162,071 98.1 189,682 96.6 197,978 95.2 Production and sales of feeds for young sea cucumbers 3,157 1.9 6,695 3.4 9,940 4.8

Total 165,228 100.0 196,377 100.0 207,918 100.0

Note: The sea cucumbers include larvae of sea cucumber, small juvenile sea cucumbers, large juvenile sea cucumbers, mature sea cucumbers and primarily-processed sea cucumber products.

The table below sets forth our cost of sales by business categories before and after biological asset fair value adjustments for the years indicated:

Year ended 31 December 2018 2019 2020 Cost of sales Cost of sales Cost of sales Cost of sales Cost of sales Cost of sales before after before after before after biological Biological biological biological Biological biological biological Biological biological asset fair asset fair asset fair asset fair asset fair asset fair asset fair asset fair asset fair value value value value value value value value value adjustments adjustments adjustments adjustments adjustments adjustments adjustments adjustments adjustments RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Cost of sales

Aquaculture and sales of sea cucumbers (Note) 53,716 108,355 162,071 61,422 128,260 189,682 53,530 144,448 197,978 Production and sales of feeds for young sea cucumbers 3,157 – 3,157 6,695 – 6,695 9,940 – 9,940

Total 56,873 108,355 165,228 68,117 128,260 196,377 63,470 144,448 207,918

Note: The sea cucumbers include larvae of sea cucumber, small juvenile sea cucumbers, large juvenile sea cucumbers, mature sea cucumbers and primarily processed sea cucumber products.

– 260 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

The table below sets forth a breakdown of our cost of sales by production cost and the percentage of such cost to our total cost of sales for the years indicated:

Year ended 31 December 2018 2019 2020 RMB’000 % RMB’000 % RMB’000 %

Cost of materials of aquaculture and sales of sea cucumbers 14,943 9.0 24,480 12.5 19,833 9.5 Ingredients of feeds 1,836 1.1 2,589 1.3 4,023 1.9

Cost of materials consumed 16,779 10.1 27,069 13.8 23,856 11.4

Staff costs 18,694 11.3 21,249 10.8 20,820 10.0 Depreciation 11,641 7.1 9,829 5.0 8,677 4.2 Repairs and maintenance 2,236 1.4 1,994 1.0 2,434 1.2 Rental expenses 971 0.6 878 0.4 21 0.0 Utilities 4,509 2.7 5,219 2.7 5,799 2.8 Others 2,043 1.2 1,879 1.0 1,863 0.9 40,094 24.3 41,048 20.9 39,614 19.1 Biological asset fair value adjustments 108,355 65.6 128,260 65.3 144,448 69.5

Total 165,228 100.0 196,377 100.0 207,918 100.0

– 261 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

Gross profit and gross profit margin

Our gross profit represents our revenue less cost of sales, and our gross profit margin represents gross profit as a percentage of revenue.

The table below sets forth our gross profit and gross profit margin (before and after biological asset fair value adjustments) by business categories for the years indicated:

Year ended 31 December 2018 2019 2020 Before biological After biological Before biological After biological Before biological After biological asset fair value asset fair value asset fair value asset fair value asset fair value asset fair value adjustments adjustments adjustments adjustments adjustments adjustments Gross Gross Gross Gross Gross Gross Gross profit Gross profit Gross profit Gross profit Gross profit Gross profit profit margin profit margin profit margin profit margin profit margin profit margin RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %

Aquaculture and sales of sea cucumbers (Note) 109,063 67.0 708 0.4 128,545 67.7 285 0.2 144,782 73.0 334 0.2 Production and sales of feeds for sea cucumbers 1,048 24.9 1,048 24.9 2,150 24.3 2,150 24.3 5,358 35.0 5,358 35.0

Total 110,111 65.9 1,756 1.1 130,695 65.7 2,435 1.2 150,140 70.3 5,692 2.7

Note: The sea cucumbers include larvae of sea cucumber, small juvenile sea cucumbers, large juvenile sea cucumbers, mature sea cucumbers and primarily processed sea cucumber products.

During the Track Record Period, our gross profit margin before biological asset fair value adjustments was approximately 65.9%, 65.7% and 70.3% respectively, while our gross profit margin after biological asset fair value adjustments was approximately 1.1%, 1.2% and 2.7% respectively.

Our gross profit before biological asset fair value adjustments increased from approximately RMB110.1 million for FY2018 to approximately RMB130.7 million for FY2019, representing a growth of approximately 18.7%. It further increased by approximately 14.8% from approximately RMB130.7 million for FY2019 to approximately RMB150.1 million for FY2020. The increase was mainly attributable to an increase in the sales volume of juvenile sea cucumbers.

For information on the reasons for fluctuation of gross profit margins for each business category, please refer to the paragraph headed “Review of historical results of operations” in this section.

For information on the gross profit margin for the category of product in each business category, please refer to the paragraph headed “Description of selected items from combined statements of profit or loss and other comprehensive income – Revenue”.

– 262 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

Net changes in fair value less costs to sell of biological assets

Changes in fair value less costs to sell of biological assets represent fair value changes of the biological assets (i.e. live sea cucumbers) due to the change in physical attributes and market determined prices of biological assets. During the Track Record Period, our biological assets were revalued at each reporting date by JLL, an independent valuer, with any resultant gain recognised in profit or loss for the year in which it arose. For more information about the valuation method adopted by JLL, please refer to the paragraph headed “Valuation of biological assets – Valuation methodology” in this section.

The fair value less costs to sell of biological assets is determined using the market approaches with respect to the valuation of live sea cucumbers. JLL referenced selling prices of saleable sea cucumbers at harvest stage and made reasonable adjustments to reflect differences in the level of development. Lastly reasonable costs related to selling were deducted from the fair values found.

We recognised gain arising from changes in fair value less costs to sell of biological assets of approximately RMB129.9 million, RMB128.5 million and RMB142.3 million for FY2018, FY2019 and FY2020 respectively. Moreover, our Group’s biological assets amounted to approximately RMB54.0 million, RMB45.6 million and RMB48.3 million as at 31 December 2018, 2019 and 2020 respectively. Our biological assets as a percentage to our total assets at the end of each reporting period during the Track Record Period were approximately 15.3%, 10.6% and 9.6% respectively.

Other income

Our other income principally consisted of net gain on disposal of property, plant and equipment, government grants, interest income and sundry income.

The table below sets forth a breakdown of our other income for the years indicated:

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Gain on disposal of property, plant and equipment, net 32 – – Government grants 420 1,641 641 Interest income 25 47 168 Sundry income 45 – 3

522 1,688 812

– 263 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

Government grants are subject to the discretion of government authorities. During the Track Record Period, our government grants included financial subsidies, including in the form of reimbursement of certain of our expenses, that we received from various levels of government authorities in support of our business in the aquaculture industry. Our other income amounted to approximately RMB0.5 million, RMB1.7 million and RMB0.8 million for FY2018, FY2019 and FY2020, respectively.

Selling and distribution costs

Our selling and distribution costs principally consisted of promotion and advertising expenses, and entertainment expenses.

The following table sets out a breakdown of our selling and distribution costs during the Track Record Period:

Year ended 31 December 2018 2019 2020 RMB’000 % RMB’000 % RMB’000 %

Advertising and promotion 194 81.9 256 98.8 420 100.0 Entertainment 43 18.1 3 1.2 – –

237 100.0 259 100.0 420 100.0

In FY2018, FY2019 and FY2020, our selling and distribution costs were approximately RMB0.2 million, RMB0.3 million and RMB0.4 million, representing approximately 0.1%, 0.1% and 0.2% of our revenue, respectively. During the Track Record Period, advertising and promotion expenses were the largest component of our selling and distribution costs.

Administrative and other operation expenses

Our administrative and other operation expenses principally consisted of staff costs, other tax expenses (including taxes relating to land use rights, property tax and stamp duty), depreciation and loss on disposal of property, plant and equipment, travelling expenses, legal and professional fees, entertainment expenses, research and development expenses and other administration related expenses.

– 264 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

The following table sets out a breakdown of our administrative and other operating expenses during the Track Record Period:

Year ended 31 December 2018 2019 2020 RMB’000 % RMB’000 % RMB’000 %

Auditor’s remuneration 29 0.2 20 0.1 20 0.1 Depreciation 2,781 15.9 3,710 16.0 4,243 13.5 Entertainment 132 0.7 532 2.3 1,659 5.3 Staff costs 7,583 43.4 9,683 41.7 10,832 34.6 Legal and professional fees 1,087 6.2 1,355 5.8 1,515 4.8 Other tax expenses 1,235 7.1 1,254 5.4 1,129 3.6 Research and development expenses 2,810 16.1 1,587 6.8 9,354 29.9 Travelling 477 2.7 562 2.4 584 1.9 Loss on disposal of property, plant and equipment – – 2,720 11.7 19 0.1 Others 1,346 7.7 1,810 7.8 1,946 6.2

17,480 100.0 23,233 100.0 31,301 100.0

In FY2018, FY2019 and FY2020, our administrative and others operating expenses were approximately RMB17.5 million, RMB23.2 million and RMB31.3 million respectively, representing approximately 10.5%, 11.7% and 14.7% of our revenue, respectively. Staff costs were the largest component of administrative and other operating expenses, and represented the salaries and benefits for management and staff in administration department. Staff costs were approximately RMB7.6 million, RMB9.7 million and RMB10.8 million during the Track Record Period respectively, representing approximately 43.4%, 41.7% and 34.6% of the total administrative and other operating expenses, respectively. Research and development expenses were the second largest component of administrative and other operating expenses, amounting to approximately RMB2.8 million, RMB1.6 million and RMB9.4 million during the Track Record Period respectively, representing approximately 16.1%, 6.8% and 29.9% of the total administrative and other operating expenses, respectively. Depreciation is the third largest component of administrative and other operating expenses, amounting to approximately RMB2.8 million, RMB3.7 million and RMB4.2 million during the Track Record Period respectively, representing approximately 15.9%, 16.0% and 13.5% of the total administrative and other operating expenses, respectively. Entertainment expenses were approximately RMB0.1 million, RMB0.5 million and RMB1.7 million during the Track Record Period respectively. Our entertainment expenses increased by approximately RMB1.2 million from RMB0.5 million in FY2019 to RMB1.7 million in FY2020. Such increase is primarily due to the development for our business in Liaoning Province.

– 265 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

Provision for impairment loss on trade receivables and other receivables, net

Our provision for impairment loss is primarily related to our trade receivables and other receivables.

We adopted IFRS 9, effective for the period beginning on or after 1 January 2017. The adoption of IFRS 9 has changed our impairment model by replacing the IAS 39 “incurred loss model” to the “expected credit losses (ECLs) model”. We made provision for impairment loss in the amount of approximately RMB52,000, RMB0.6 million and RMB0.3 million for FY2018, FY2019 and FY2020, respectively, based on the ECLs model.

We elected to measure loss allowances for trade receivables and contract assets using the simplified approach under IFRS 9 and to calculate ECLs based on lifetime ECLs. We have established a provision matrix that is based on the Group’s historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment. Based on the assessment of the management of the Group for the years ended 31 December 2018 and 2019 and 2020, there was no significant change in the historical repayment records of our debtors, and we had not noted any forward-looking factors specific to our debtors or the economic environment which would materially affect the default risk of our debtors. Accordingly, our ECL rates remained the same during the Track Record Period. For further details on ECLs, please refer to Note 3 to the Accountants’ Report as set out in Appendix I to this document.

Finance costs

Our finance costs consisted of interest on interest-bearing borrowings and interest on lease liabilities.

The following table sets out a breakdown of our finance costs during the Track Record Period:

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Interest on interest-bearing borrowings 1,847 753 786 Interest on lease liabilities 285 239 185

2,132 992 971

Our finance costs were approximately RMB2.1 million, RMB1.0 million and RMB1.0 million for FY2018, FY2019 and FY2020, respectively, representing approximately 1.3%, 0.5% and 0.5% of our revenue during the respective years.

– 266 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

Income tax expense

Under the EIT Law and the related implementation rules, entity established in the PRC is subject to EIT at a statutory rate of 25%. According to the EIT Law and the Measures on Handling of Enterprise Income Tax Incentives which was promulgated on 25 April 2018 and its Appendix entitled Administrative List for Enterprise Income Tax Incentives, the enterprises engaging in aquatic fishery could enjoy a preferential exemption from 50% of EIT. Accordingly, our income from sales of feeds for sea cucumbers are exempted from EIT while the income from sales of larvae, juvenile and mature sea cucumbers are entitled to a preferential exemption from 50% of EIT during the Track Record Period.

We had income tax expense of approximately RMB14.1 million, RMB13.1 million and RMB12.9 million for FY2018, FY2019 and FY2020, respectively. Our effective tax rates was approximately 12.6%, 12.6% and 12.1% for FY2018, FY2019 and FY2020, respectively. Our effective tax rates during the Track Record Period were lower than the EIT rate of 25% primarily due to the tax exemptions granted to certain of our operations.

Hong Kong profits tax

No provision for Hong Kong profits tax has been made as our Group has no assessable profits during the Track Record Period in Hong Kong. For further details, please refer to Note 10 to the Accountants’ Report as set out in Appendix I to this document.

During the Track Record Period and up to the Latest Practicable Date, we had fulfilled all our tax obligations and did not have any unresolved tax disputes. Our Directors are of the view that our Group has made sufficient and adequate tax provision on the assessable profit based on the tax rates as required in all relevant jurisdictions in which our Group operated in during the Track Record Period. Payments of taxes are made in accordance with the payment schedule stipulated by the relevant tax authorities.

REVIEW OF HISTORICAL RESULTS OF OPERATIONS

FY2018 compared to FY2019

Revenue

Our revenue increased by approximately 19.0%, from approximately RMB167.0 million for FY2018 to approximately RMB198.8 million for FY2019, primarily as a result of the increase in sales volume of sea cucumbers.

– 267 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

Aquaculture and sales of sea cucumbers

For FY2019, revenue from sales of our sea cucumbers increased by approximately 16.7%, from approximately RMB162.8 million for FY2018 to approximately RMB190.0 million for FY2019. The increase in revenue of aquaculture and sales of sea cucumbers is mainly attributed to the increase in sale volume of our large juvenile sea cucumbers of approximately 26.4% and the increase in average selling price of our large juvenile sea cucumbers of approximately 5.1% for FY2019 as compared to FY2018.

The charge in revenue from sales of sea cucumbers was mainly attributable to the combined effects of:

• an increase in sales of our juvenile sea cucumbers of approximately RMB39.1 million, resulting from (i) an increase in sales to one of the new customers, namely Da Lian of approximately RMB27.2 million which had commenced business with our Group since January; (ii) an increase in sales to one of the major customers, namely Sheng Da of approximately RMB24.9 million; and (iii) a decrease in sales to one of the major customers, namely Yantai Huakang Marine Products Company Limited* (煙台華康海洋食品有限公司) of approximately RMB16.1 million which had ceased sourcing juvenile sea cucumbers with our Group since April 2019;

• an increase in sales of larvae of sea cucumbers of approximately RMB2.1 million which was mainly due to more larvae of sea cucumber produced using our own broodstock of sea cucumbers for selling at competitive price;

• a decrease in sales of mature sea cucumbers of approximately RMB11.4 million which was mainly attributed to the cessation of the sales of mature sea cucumbers due to the economic yield of juvenile sea cucumbers is higher than that of mature sea cucumbers; and

• a decrease in sales of primarily-processed sea cucumber products of approximately RMB2.5 million which was mainly attributed to the decrease in average selling price and sales volume as our Group devoted less effort on promotion of selling primarily-processed sea cucumber products and focused more on other product categories.

– 268 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

Production and sales of feeds for young sea cucumbers

Our revenue from sales of feeds for young sea cucumbers increased by approximately 109.5%, from approximately RMB4.2 million for FY2018 to approximately RMB8.8 million for FY2019. The sales volume of feeds for young sea cucumbers increased by approximately 112.6% while the average selling price of feeds for young sea cucumbers remained stable for FY2019 as compared to FY2018.

The increase in revenue from sales of feeds for young sea cucumbers was mainly attributable to an increase in sales of approximately RMB3.1 million to the Distributor due to expansion of the Distributor’s business in FY2019.

Cost of sales

Our total cost of sales (before biological asset fair value adjustments) increased by approximately 19.7%, from approximately RMB56.9 million for FY2018 to approximately RMB68.1 million for FY2019, primarily as a result of an increase in the cost of materials consumed of approximately RMB10.3 million. After the biological asset fair value adjustments of approximately RMB108.4 million, and RMB128.3 million for FY2018 and FY2019, respectively, the total cost of sales increased by approximately 18.9%, from approximately RMB165.2 million for FY2018 to approximately RMB196.4 million for FY2019.

Aquaculture and sales of sea cucumbers

Our cost of sales (before biological asset fair value adjustment) for sales of sea cucumbers increased by approximately RMB7.7 million or 14.3%, from approximately RMB53.7 million for FY2018 to approximately RMB61.4 million for FY2019, mainly attributed to the increase in the sales volume of juvenile sea cucumber.

The biological asset fair value adjustments led to an increase in our cost of sales for sales of live sea cucumbers by approximately RMB108.4 million and RMB128.3 million for FY2018 and FY2019, respectively. Such increase in biological asset fair value adjustment were primarily due to the gain arising from sea cucumbers measured at fair value less costs to sell at the point of sale during FY2018 and FY2019, respectively.

Sales of feeds for young sea cucumbers

Our cost of sales for sales of feeds for young sea cucumbers increased by approximately RMB3.5 million or 109.4%, from approximately RMB3.2 million for FY2018 to approximately RMB6.7 million for FY2019, primarily due to the increase in the sales volume of feeds for young sea cucumbers.

– 269 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

Gross profit and gross profit margin (before biological asset fair value adjustments)

Our gross profit (before biological asset fair value adjustments) increased by approximately 18.7%, from approximately RMB110.1 million for FY2018 to approximately RMB130.7 million for FY2019, while our overall gross profit margin remained stable at approximately 65.9% and 65.7% for FY2018 and FY2019, respectively. Such increase in the gross profit was primarily the result of the increase in our revenue by approximately RMB31.8 million or 19.1% in the corresponding period, mainly attributable to the combined effects of (i) the increase in sales volume of our large juvenile sea cucumbers by approximately 26.4% from approximately 1,248.1 thousand jins to approximately 1,578.0 thousand jins; and (ii) the increase in average selling price of our large juvenile sea cucumbers by approximately 5.1% from approximately RMB95.5 per jin to approximately RMB100.4 per jin. The said effect of increase in our revenue was partially offset by the increase in our cost of sales, which was in line with the increase in sales volume of our sea cucumber products. As a result, our gross profit margin remained stable.

Gross profit and gross profit margin (after biological asset fair value adjustments)

Our gross profit (after biological asset fair value adjustments) increased by approximately 33.3%, from approximately RMB1.8 million for FY2018 to approximately RMB2.4 million for FY2019, with our overall gross profit margin after biological asset fair value adjustments) remained stable at approximately 1.1% and 1.2% for FY2018 and FY2019, respectively. Save for the reasons discussed above, such increase in gross profit margin was mainly attributed to biological asset fair value adjustments and resulting in the increase in our cost of sales of sea cucumbers by approximately RMB108.4 million and RMB128.3 million for FY2018 and FY2019, respectively.

Net change in fair value less costs to sell of biological assets

Our net change in fair value less costs to sell of biological assets decreased by approximately 1.1%, from approximately RMB129.9 million for FY2018 to approximately RMB128.5 million for FY2019. This is primarily attributable to the decrease in realised gain on changes in fair values of live sea cucumbers of approximately RMB1.6 million resulting from the decrease in fair values of live sea cucumbers as at 31 December 2019.

Other income

Our other income increased by approximately 240.0%, from approximately RMB0.5 million for FY2018 to approximately RMB1.7 million for FY2019. The increase in other income was mainly attributable to the government grant provided by Yantai Ocean and Fishery Bureau* (煙台海洋與漁業局) of approximately RMB1.4 million for supporting the development of local enterprises in the aquaculture industry.

– 270 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

Selling and distribution costs

Our selling and distribution costs increased by approximately 50%, from approximately RMB0.2 million for FY2018 to approximately RMB0.3 million for FY2019, mainly due to an increase in advertising and promotion expenses of approximately RMB0.1 million. Our selling and distribution costs as a percentage of our revenue remained stable at 0.1% for FY2018 and FY2019.

Administrative and other operating expenses

Our administrative and other operating expenses increased by approximately 32.6%, from approximately RMB17.5 million for FY2018 to approximately RMB23.2 million for FY2019. The increase was mainly a result of (i) an increase in staff costs of approximately RMB2.1 million due to increase in headcounts and their salary level; (ii) an increase in depreciation of approximately RMB0.9 million resulting from new addition of motor vehicles of approximately RMB4.0 million and plant and machinery of approximately RMB2.2 million during the year; and (iii) an increase in loss on disposal of property, plant and equipment of approximately RMB2.7 million mainly arising from the disposal of net cages as we ceased the sales of mature sea cucumbers. Our administrative and other operating expenses as a percentage of our revenue increased from approximately 10.5% for FY2018 to approximately 11.7% for FY2019.

Finance costs

Our finance costs decreased by approximately 52.4%, from approximately RMB2.1 million for FY2018 to approximately RMB1.0 million for FY2019, primarily as a result of interest expenses of approximately RMB1.5 million incurred for personal borrowings from our staff for FY2018. Such borrowings were fully repaid in December 2018.

Income tax expense

Our income tax expense decreased by approximately 7.1%, from approximately RMB14.1 million for FY2018 to approximately RMB13.1 million for FY2019, primarily due to the decrease in profit before tax in FY2019. Our effective tax rate remained stable at approximately 12.6% for both FY2018 and FY2019.

Profit for the year and net profit margin

As a result of the foregoing, our profit for the year decreased by approximately RMB7.2 million from approximately RMB98.2 million for FY2018 to approximately RMB91.0 million for FY2019 while our net profit margin decreased from approximately 58.8% for FY2018 to approximately 45.8% for FY2019 primarily due to (i) the [REDACTED] of approximately RMB[REDACTED] incurred, (ii) the loss on disposal of property, plant and equipment of approximately RMB2.7 million, and (iii) the increase in staff costs of approximately RMB4.3 million.

– 271 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

FY2019 compared to FY2020

Revenue

Our revenue increased by approximately 7.4%, from approximately RMB198.8 million for FY2019 to approximately RMB213.6 million for FY2020, primarily as a result of the increase in sales volume of sea cucumbers.

Aquaculture and sales of sea cucumbers

Our revenue from sales of sea cucumbers increased by approximately 4.4%, from approximately RMB190.0 million for FY2019 to approximately RMB198.3 million for FY2020. The increase in revenue from aquaculture and sales of sea cucumbers is mainly attributed to the increase in sale volume of our small juvenile sea cucumbers of approximately 330.3% and the increase in average selling price of our small juvenile sea cucumbers of approximately 20.5% for FY2020 as compared to FY2019, offset by the decrease in average selling price of our large juvenile sea cucumbers of approximately 16.8% for FY2020 as compared to FY2019.

The change in revenue from sales of sea cucumbers was mainly attributable to the combined effects of:

• an increase in sales of our juvenile sea cucumbers of approximately RMB20.0 million, mainly resulting from (i) an increase in sales to one of the major customers, namely Da Lian of approximately RMB31.9 million which had commenced business with our Group since January 2019; (ii) an increase in sales to the Distributor of approximately RMB3.3 million; and (iii) a decrease in sales to one of the major customers, namely Sheng Da of approximately RMB18.6 million;

• an increase in sales of larvae of sea cucumbers of approximately RMB6.3 million which was mainly due to more larvae of sea cucumber produced using our own broodstock of sea cucumbers for selling at competitive price; and

• a decrease in sales of mature sea cucumbers of approximately RMB18.6 million which was mainly attributed to our Group has no longer engaged in the sales of mature sea cucumbers since August 2019 due to the economic yield of juvenile sea cucumbers is higher than that of mature sea cucumbers.

– 272 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

Production and sales of feeds for young sea cucumbers

Our revenue from sales of feeds for young sea cucumbers increased by approximately 73.9%, from approximately RMB8.8 million for FY2019 to approximately RMB15.3 million for FY2020. The sales volume of feeds for young sea cucumbers increased by approximately 76.4% while the average selling price of feeds for young sea cucumbers decreased by approximately 2.3% for FY2020 as compared to FY2019.

The increase in revenue from sales of feeds for young sea cucumbers was mainly attributable to an increase in sales of approximately RMB6.6 million to the Distributor due to expansion of the Distributor’s business in FY2020.

Cost of sales

Our total cost of sales (before biological asset fair value adjustments) decreased by approximately 6.8%, from approximately RMB68.1 million for FY2019 to approximately RMB63.5 million for FY2020, primarily as a result of a decrease in cost of materials consumed of approximately RMB3.2 million. After the biological asset fair value adjustments of approximately RMB128.3 million, and RMB144.4 million for FY2019 and FY2020, respectively, our total cost of sales increased by approximately 5.9%, from approximately RMB196.4 million for FY2019 to approximately RMB207.9 million for FY2020.

Aquaculture and sales of sea cucumbers

Our cost of sales (before biological asset fair value adjustments) for sales of sea cucumbers decreased by approximately RMB7.9 million or 12.9%, from approximately RMB61.4 million for FY2019 to approximately RMB53.5 million for FY2020, primarily due to (i) a decrease of cost of material of aquaculture and sales of sea cucumbers of approximately RMB4.6 million; and (ii) the cessation of the sales of mature sea cucumber business since August 2019.

The biological asset fair value adjustments led to an increase in our cost of sales for sales of live sea cucumbers by approximately RMB128.3 million and RMB144.4 million for FY2019 and FY2020, respectively. Such increase in biological asset fair value adjustment were primarily due to the gain arising from sea cucumber measured at fair value less costs to sell at the point of sale during FY2019 and FY2020, respectively.

Sales of feeds for young sea cucumbers

Our cost of sales for sales of feeds for young sea cucumbers increased by approximately RMB3.2 million or 47.8%, from approximately RMB6.7 million for FY2019 to approximately RMB9.9 million for FY2020, primarily due to the increase in the sales volume of feeds for young sea cucumbers.

– 273 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

Gross profit and gross profit margin (before biological asset fair value adjustments)

Our gross profit (before biological asset fair value adjustments) increased by approximately 14.8%, from approximately RMB130.7 million for FY2019 to approximately RMB150.1 million for FY2020, with our overall gross profit margin increased from approximately 65.7% for FY2019 to approximately 70.3% for FY2020. Such increase in the gross profit was primarily the result of the increase in our revenue by approximately RMB14.8 million or 7.4% in the corresponding period, mainly attributable to the increase in the sales volume of our sea cucumber products. The said effect of the increase in our revenue was partially offset by the increase in our cost of sales, which was in line with the increase in sales volume of our sea cucumber products.

The increase in our gross profit margin (before biological asset fair value adjustments) from approximately 65.7% for FY2019 to approximately 70.3% for FY2020 was mainly attributable to the combined effects of (i) the change in revenue of our product portfolio, in which revenue from sales of larvae of sea cucumbers in terms of our total revenue, increased from approximately 1.2% for FY2019 to approximately 4.0% for FY2020, and its gross profit margin was higher than other product categories during the Track Record Period; and (ii) the change in revenue of our product portfolio, in which revenue from sales of small juvenile sea cucumbers in terms of our total revenue, increased from approximately 4.3% for FY2019 to approximately 20.9% for FY2020, and its gross profit margin was higher than the large juvenile sea cucumbers during the Track Record Period.

Gross profit and gross profit margin (after biological asset fair value adjustments)

Our gross profit (after biological asset fair value adjustments) increased by approximately 137.5%, from approximately RMB2.4 million for FY2019 to approximately RMB5.7 million for FY2020, with our overall gross profit margin increased from approximately 1.2% for FY2019 to approximately 2.7% for FY2020. Save for the reasons discussed above, such increase in gross profit margin was mainly attributed to biological asset fair value adjustments and resulting in the increase in our cost of sales of sea cucumbers of approximately RMB128.3 million and RMB144.4 million for FY2019 and FY2020, respectively.

Net changes in fair value less costs to sell of biological assets

Our gain arising from changes in fair value less costs to sell of biological assets increased by approximately 10.7%, from approximately RMB128.5 million for FY2019 to approximately RMB142.3 million for FY2020. This is primarily attributable to the increase in realised gain on changes in fair values of live sea cucumbers of approximately RMB16.0 million.

– 274 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

Other income

Our other income decreased by approximately 52.9%, from approximately RMB1.7 million for FY2019 to approximately RMB0.8 million for FY2020, mainly attributed to a decrease in one-off government grants provided by Yantai Ocean and Fishery Bureau* (煙台海洋與漁業局) for supporting the development of local enterprises in the aquaculture industry, from approximately RMB1.4 million for FY2019 to nil for FY2020 due to the absence of the one-off government grant of approximately RMB1.4 million in FY2020.

Selling and distribution costs

Our selling and distribution costs increased by approximately 33.3%, from approximately RMB0.3 million for FY2019 to approximately RMB0.4 million for FY2020, mainly due to an increase in advertising and promotion expenses of approximately RMB0.1 million for provision of free samples of processed sea cucumbers. Our selling and distribution costs as a percentage of our revenue remained stable at approximately 0.1% and 0.2% for FY2019 and FY2020 respectively.

Administrative and other operating expenses

Our administrative and other operating expenses increased by approximately 34.9%, from approximately RMB23.2 million for FY2019 to approximately RMB31.3 million for FY2020. The increase was mainly as a result of (i) an increase in staff costs of approximately RMB1.1 million due to increase in headcounts and their salary level; and (ii) an increase in research and development expenses of approximately RMB7.8 million as more raw materials were consumed in the research and development projects for the development project of Anyuan No. 2. Our administrative and other operating expenses as a percentage of our revenue increased from approximately 11.7% for FY2019 to approximately 14.7% for FY2020, respectively.

Finance costs

Our finance costs remained stable at approximately RMB1.0 million for FY2019 and FY2020.

Income tax expense

Income tax expense remained stable at approximately RMB13.1 million and approximately RMB12.9 million for FY2019 and FY2020, respectively. Our profit before tax increased from approximately RMB104.1 million for FY2019 to approximately RMB106.5 million for FY2020. Our effective tax rate decreased from approximately 12.6% for FY2019 to approximately 12.1% for FY2020. Such decrease is attributed to an increase in the portion of our Group’s profit being generated from tax exempted business in FY2020.

– 275 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

Profit for the year and net profit margin

As a result of the foregoing, our profit for the year increased by approximately RMB2.5 million, from approximately RMB91.0 million for FY2019 to approximately RMB93.5 million for FY2020 primarily due to the increase in gross profit of approximately RMB3.3 million and the gain from change in fair value less costs to sell of biological asset of approximately RMB13.8 million, which was partially set off by the increase in staff costs of approximately RMB1.5 million, and the increase in research and development expenses of approximately RMB7.8 million. Our net profit margin decreased from approximately 45.8% for FY2019 to approximately 43.8% for FY2020.

LIQUIDITY AND CAPITAL RESOURCES

We have funded our operations principally with cash generated from our operations, borrowings and shareholders’ capital contributions. Our primary uses of cash during the Track Record Period were for working capital needs, and funding our capital expenditures and growth of our operations. Going forward, we expect these sources will continue to be our principal sources of liquidity, and we may use a portion of the proceeds from the [REDACTED] to finance a portion of our liquidity requirements.

As at Latest Practicable Date for the purpose of the disclosure of our liquidity position, we had unutilised banking facilities of approximately RMB0 available for cash drawdown.

Cash flows of our Group

The following table sets forth selected cash flow data from our combined statements of cash flows for the years indicated:

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Operating cash flows before changes in working capital 104,222 97,433 101,999

Net cash generated from operating activities 76,868 51,719 105,137 Net cash used in investing activities (25,723) (37,650) (19,208) Net cash used in financing activities (33,272) (19,032) (37,717)

Net increase/(decrease) in cash and cash equivalents 17,873 (4,963) 48,212 Cash and cash equivalents at the beginning of the year 4,657 22,530 17,567

Cash and cash equivalents at the end of the year 22,530 17,567 65,779

– 276 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

Net cash generated from operating activities

During the Track Record Period, we derived our cash inflow from operating activities principally from the receipt of sales of our products. Our cash outflow from operating activities was principally for purchases of raw materials for sea cucumber aquaculture and payment for staff costs.

For FY2018, we recorded net cash inflow from operating activities of approximately RMB76.9 million, which arose from profit before tax of approximately RMB112.3 million, mainly adjusted for (i) depreciation of approximately RMB14.6 million, (ii) finance costs of approximately RMB2.1 million, (iii) net changes in fair value less costs to sell of biological assets of approximately RMB24.8 million, (iv) decrease in biological assets of approximately RMB6.0 million, (v) increase in trade and other receivables of approximately RMB20.1 million, and (vi) decrease in trade and other payables of approximately RMB7.1 million.

For FY2019, we recorded net cash inflow from operating activities of approximately RMB51.7 million, which arose from profit before tax of approximately RMB104.1 million, mainly adjusted for (i) depreciation of approximately RMB14.1 million, (ii) loss on disposal of property, plant and equipment of approximately RMB2.7 million, (iii) net changes in fair value less costs to sell of biological assets of approximately RMB25.1 million, (iv) decrease in biological assets of approximately RMB33.5 million, (v) increase in trade and other receivables of approximately RMB68.6 million, and (vi) increase in trade and other payables of approximately RMB5.6 million.

For FY2020, we recorded net cash inflow from operating activities of approximately RMB105.1 million, which arose from profit before tax of approximately RMB106.5 million, mainly adjusted for (i) depreciation of approximately RMB17.4 million, (ii) net changes in fair value less costs to sell of biological assets of approximately RMB22.9 million, (iii) decrease in biological assets of approximately RMB20.2 million, and (iv) decrease in trade and other payables of approximately RMB1.3 million.

Net cash used in investing activities

During the Track Record Period, we derived our cash inflow from investing activities principally from the proceeds from disposal of property, plant and equipment, and government grants. Our cash outflow for investing activities was principally for purchases of property, plant and equipment.

For FY2018, net cash used in investing activities of approximately RMB25.7 million mainly comprised: (i) purchase of property, plant and equipment of approximately RMB19.8 million and (ii) the unfulfilled government grants of approximately RMB6.0 million.

– 277 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

For FY2019, net cash used in investing activities of approximately RMB37.7 million mainly comprised: (i) purchase of property, plant and equipment of approximately RMB44.7 million and (ii) the unfulfilled government grants of approximately RMB3.3 million.

For FY2020, net cash used in investing activities of approximately RMB19.2 million mainly comprised: (i) purchase of property, plant and equipment of approximately RMB42.0 million and (ii) the unfulfilled government grants of approximately RMB22.2 million.

Net cash used in financing activities

During the Track Record Period, we derived our cash inflow from financing activities principally from proceeds from interesting-bearing borrowings. Our cash outflow from financing activities related primarily to our repayment of interesting-bearing borrowings and payment of dividends.

For FY2018, net cash used in financing activities of approximately RMB33.3 million mainly comprised (i) new borrowings raised of approximately RMB8.0 million, (ii) repayment of interest-bearing borrowings of approximately RMB13.3 million, (iii) advance to the Controlling Shareholders of approximately RMB3.8 million and (iv) dividends paid of approximately RMB21.1 million.

For FY2019, net cash used in financing activities of approximately RMB19.0 million mainly comprised (i) new borrowings raised of approximately RMB12.7 million, (ii) repayment of interest-bearing borrowings of approximately RMB8.0 million, (iii) advance to the Controlling Shareholders of approximately RMB5.2 million and (iv) dividends paid of approximately RMB16.5 million.

For FY2020, net cash used in financing activities of approximately RMB37.7 million mainly comprised dividends paid of approximately RMB36.7 million.

– 278 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

Net Current Assets

The following table sets forth our current assets, current liabilities and net current assets from the combined statements of financial position as at the dates indicated:

As at 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Current assets Inventories 15,355 15,979 17,261 Biological assets 53,999 45,573 48,330 Trade and other receivables 34,480 101,799 100,731 Amount due from the Controlling Shareholders 2,021 7,200 6,133 Bank balances and cash 22,530 17,567 65,779

128,385 188,118 238,234

Current liabilities Trade and other payables 2,150 7,369 6,183 Interest-bearing borrowings 8,000 12,700 12,700 Lease liabilities 1,094 1,148 1,203 Government grants – unfulfilled 3,300 – – Income tax payable 8,928 6,206 5,076 Dividends payable 6,733 13,466 11,600

30,205 40,889 36,762

Net current assets 98,180 147,229 201,472

We recorded net current assets of approximately RMB98.2 million, RMB147.2 million and RMB201.5 million as at 31 December 2018, 2019 and 2020, respectively.

– 279 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

Our net current assets increased by approximately 36.9% from approximately RMB147.2 million as at 31 December 2019 to approximately RMB201.5 million as at 31 December 2020, primarily due to the increase in bank balances and cash of approximately RMB48.2 million, increase in biological assets of approximately RMB2.8 million and decrease in dividends paid of approximately RMB1.9 million.

ANALYSIS OF SELECTED ITEMS FROM THE COMBINED STATEMENTS OF FINANCIAL POSITIONS

Property, plant and equipment

Our property, plant and equipment consist of right-of-use assets, buildings, hatchery site and workshop, plant and machinery, furniture, fixtures and equipment, motor vehicles, and construction in progress.

The net book value of our property, plant and equipment amounted to approximately RMB219.2 million, RMB196.4 million and RMB215.5 million as at 31 December 2018, 2019 and 2020, respectively.

Certain of our property, plant and equipment with a total carrying amount of approximately RMB2.1 million, RMB10.1 million, RMB8.6 million at 31 December 2018, 2019 and 2020, respectively were pledged to secure banking facilities granted to our Group.

The net book value of our property, plant and equipment decreased by approximately 10.4%, from approximately RMB219.2 million as at 31 December 2018 to approximately RMB196.4 million as at 31 December 2019, which was mainly attributable to (i) the depreciation of property, plant and equipment of approximately RMB14.1 million; (ii) the disposal of hatchery site and workshop of approximately RMB13.0 million, which were partly set off by the addition of plant and machinery, motor vehicles and construction in progress of approximately RMB7.7 million.

The net book value of our property, plant and equipment increased by approximately 9.7%, from approximately RMB196.4 million as at 31 December 2019 to approximately RMB215.5 million as at 31 December 2020, which was mainly attributable to the addition of plant and machinery, motor vehicles and construction in progress of approximately RMB36.8 million, which was partly set off by the depreciation of property, plant and equipment of approximately RMB17.4 million.

– 280 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

Deposits paid for acquisition of property, plant and equipment

The table below sets forth our deposits paid for acquisition of property, plant and equipment for the years indicated:

At 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Deposits paid for acquisition of property, plant and equipment 700 41,300 46,804

Our deposits paid for acquisition of property, plant and equipment increased from approximately RMB0.7 million as at 31 December 2018 to approximately RMB41.3 million as at 31 December 2019, which further increased to approximately RMB46.8 million as at 31 December 2020. Such increases were due to the deposits paid for the acquisition of our Liaoning Production Base, pursuant to a sale and purchase agreement entered into between the Group and Mr. Li Junda, Ms. Liu Qinglian and Da Lian, at a consideration of RMB41,000,000. For further details on the agreement, please refer to the paragraph headed “Business – Properties – Sea area use rights – Sea area use certificate in the Liaoning Production Base” in this document.

Inventories

Our inventories comprise (i) raw materials such as algae, mysis shrimps and scallop mantles which are used for production of our sea cucumber feeds, (ii) work-in-progress such as grinded scallop mantles and (iii) finished goods such as dried sea cucumbers and sea cucumber feeds. The following is a summary of the balance of our inventories as at the dates indicated:

As at 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Raw materials 3,081 3,161 7,508 Work-in-progress 4,264 5,932 6,171 Finished goods 8,010 6,886 3,582

15,355 15,979 17,261

– 281 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

We adopt stringent inventory control and would periodically review our inventory levels and keep track of inventories which were slow-moving, obsolete or had declined in market value. We manage our inventory levels principally based on the anticipated demand.

Balance of our inventories increased from approximately RMB15.4 million as at 31 December 2018 to approximately RMB16.0 million as at 31 December 2019, which further increased to approximately RMB17.3 million as at 31 December 2020. Such increases were due to the increase in raw materials for production of feeds for young sea cucumber, which is in line with the increasing sales of feeds for young sea cucumber during the Track Record Period.

The following table sets out the number of our average inventory turnover days for the Track Record Period:

Year ended 31 December 2018 2019 2020

Average inventory turnover days 32.6 29.1 29.2

Note: Average inventory turnover days is equal to the average inventory divided by cost of sales and multiplied by 365 days. Average inventory is equal to inventory at the beginning of the year plus inventory at the end of the year and divided by two.

The average inventory turnover days were relatively stable for each of FY2018, FY2019 and FY2020.

As at the Latest Practicable Date, approximately RMB11.2 million or 65.1% of our inventory as at 31 December 2020 had been subsequently utilised.

– 282 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

Trade and other receivables

The following table sets out our trade and other receivables for the Track Record Period:

At 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Trade receivables 27,253 75,575 58,121 Less: Loss allowance (43) (183) (226)

27,210 75,392 57,895

Other receivables Deposits 99 99 49 Prepayments 2,567 794 1,037 Prepayment for [REDACTED] [REDACTED] [REDACTED] [REDACTED] Other receivables 4,657 22,375 39,889 Less: Loss allowance (53) (552) (820)

7,270 26,407 42,836

[REDACTED] [REDACTED] [REDACTED]

Our trade and other receivables increased by approximately RMB67.3 million or 195.1%, from approximately RMB34.5 million as at 31 December 2018 to approximately RMB101.8 million as at 31 December 2019. The increase was primarily due to the trade and other receivables from our two strategic customers in Liaoning Province, namely Da Lian and Sheng Da, of approximately RMB35.6 million and RMB48.4 million as at 31 December 2019, respectively which were arising from our business development in Liaoning Province.

Our trade and other receivables remained stable at approximately RMB101.8 million as at 31 December 2019 and approximately RMB100.7 million as at 31 December 2020.

As at being the Latest Practicable Date, the trade and other receivables from our two strategic customers in Liaoning Province, namely Da Lian and Sheng Da, amounted to approximately RMB18.7 million and RMB21.9 million, respectively.

– 283 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

The following table sets out the ageing analysis of our trade receivables, based on the invoice date and net of allowance for doubtful debts, as at the end of each reporting period during the Track Record Period:

At 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Within 30 days 5,134 324 130 31 to 60 days 6,300 38,434 8,581 61 to 90 days 12,696 27,925 14,160 91 to 180 days 22 6,785 19,664 181 to 365 days 2,454 986 3,167 Over 365 days 604 938 12,193

27,210 75,392 57,895

Our policy for impairment loss on trade receivables is based on our estimated rate of credit loss which requires the use of judgment and estimates. Our management closely reviews the trade receivables balances and any overdue balances on an ongoing basis and assessments are made by our management on the collectability of overdue balances. We generally grant credit period up to 180 days to our customers.

As at the Latest Practicable Date, approximately RMB14.1 million, or 24.4%, of our trade and other receivables as at 31 December 2020 had been subsequently settled.

The following table sets out the number of our average trade receivables turnover days for the Track Record Period:

Year ended 31 December 2018 2019 2020

Average trade receivables turnover days 41.4 94.2 113.9

Note: Average trade receivables turnover days is equal to the average trade receivables divided by revenue and multiplied by 365 days. Average trade receivables is equal to trade receivables at the beginning of the year plus trade receivables at the end of the year and divided by two.

– 284 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

The average trade receivables turnover days increased from approximately 41.4 days for FY2018 to approximately 94.2 days for FY2019, which was primarily due to (i) an increase in percentage of our sales to corporate customers, to which we grant a credit term of 90 to 180 days, from approximately 55.5% for FY2018 to approximately 66.0% for FY2019; and (ii) an increase in sales to 2 strategic customers in Liaoning Province who have longer settlement days than our other corporate customers. Based on the agreement we entered into with 2 strategic customers on 15 February 2021, we grant a credit term of up to 180 days for FY2021. We grant credit term for that 2 strategic customers since FY2022. For further details, please refer to the paragraph headed “Business – Customers – III. Strategic customers in Liaoning Province – (e) Exclusive cooperation agreement” in this document.

The average trade receivables turnover days further increased from approximately 94.2 days for FY2019 to approximately 113.9 days for FY2020, which was primarily due to an increase in sales to the two corporate customers mentioned above from approximately 34.0% of our total revenue for FY2019 to approximately 37.9% of our total revenue for FY2020.

Trade and Other Payables

The following table sets out our trade and other payables for the Track Record Period:

At 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Trade payables 797 2,908 3,926

Other payables Accruals 652 792 976 Payable for acquisition of property, plant and equipment 500 126 278 Other tax payables 20 23 – Other payables (deposit from customer, receipt in advance) 181 3,520 1,003

1,353 4,461 2,257

2,150 7,369 6,183

Our trade and other payables increased by approximately RMB5.2 million or 236.4%, from approximately RMB2.2 million as at 31 December 2018 to approximately RMB7.4 million as at 31 December 2019. The increase is primarily due to (i) the increase in trade payables of approximately RMB2.1 million, respectively, and (ii) the increase in other payables of approximately RMB3.3 million.

– 285 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

Our trade and other payables decreased by approximately RMB1.2 million or 16.2%, from approximately RMB7.4 million as at 31 December 2019 to approximately RMB6.2 million as at 31 December 2020. The decrease was primarily due to the decrease in other payables of approximately RMB2.2 million, offset by the increase in trade payables of approximately RMB1.0 million.

Our trade payables primarily relate to the purchase of raw materials for production of our sea cucumber feeds from our suppliers. Our suppliers generally grant no credit terms for our purchases.

The following table sets out the ageing analysis of our trade payables, based on goods receipt date, as at the end of each reporting period during the Track Record Period:

At 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Within 30 days 321 1,044 2,198 31 to 60 days 130 327 232 61 to 90 days 96 118 125 91 to 180 days 85 507 468 181 to 365 days 96 801 32 Over 365 days 69 111 871

797 2,908 3,926

The following table sets out the number of our average trade payables turnover days for the Track Record Period:

Year ended 31 December 2018 2019 2020

Average trade payables turnover days 3.2 3.4 6.0

Note: Average trade payables turnover days is equal to the average trade payables divided by cost of sales and multiplied by 365 days. Average trade payables is equal to the trade payables at the beginning of the year plus trade payables at the end of the year and divided by two.

The average trade payables turnover days were relatively stable for each of the years ended 31 December 2018, 2019 and 2020. We have low trade payables turnover days as our suppliers do not grant any payment terms to us and we always settle our trade payables upon delivery of goods.

– 286 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

As at the Latest Practicable Date, approximately RMB2.1 million, or 53.9%, of our trade payables outstanding as at 31 December 2020 had been subsequently settled.

Amount due from the Controlling Shareholders

The following table sets forth an analysis of the amounts due from the Controlling Shareholders as at the dates indicated:

At 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Mr. Zou Ange 2,021 7,200 6,133

Our amount due from Mr. Zou Ange, one of the Controlling Shareholders, amounted to approximately RMB2.0 million, RMB7.2 million and RMB6.1 million as at 31 December 2018, 2019 and 2020, respectively, which are unsecured, interest-free and repayable on demand.

Biological assets

During the Track Record Period, our biological assets represent live sea cucumbers. The following table sets forth the fair value of our biological assets as at the dates indicated:

At 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Biological assets 53,999 45,573 48,330

As at 31 December 2018, 2019 and 2020, our biological assets at fair value represented approximately 15.3%, 10.6%, and 9.6% of our total asset value, respectively.

Our biological assets were independently valued by JLL, which is an independent professional valuer not connected with us and has extensive experience in valuation of biological assets. Please refer to the paragraph headed “Valuation of biological assets” in this section for more details.

– 287 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

RELATED PARTY TRANSACTIONS

With respect to the related party transactions set forth in the Accountants’ Report, our Directors confirm that the transactions were conducted on normal commercial terms or such terms that were no less favourable to our Group than those available to Independent Third Parties and were fair and reasonable and in the interest of our Shareholders as a whole. Our Directors further confirm that these related party transactions will not distort our results of operations for the Track Record Period or make our historical results not reflective of our future performance.

VALUATION OF BIOLOGICAL ASSETS

Information about the Independent Valuer

We have engaged JLL, an independent valuer, to determine the fair values of our biological assets as at 31 December 2018, 31 December 2019 and 31 December 2020, respectively. The key valuer of the JLL team includes Mr. Simon M.K. Chan. Mr. Simon Chan, Executive Director at JLL, is a Fellow of the Hong Kong Institute of Certified Public Accountants (HKICPA) and a Fellow of CPA Australia. He is also a Chartered Valuer and Appraiser (CVA), a member of The International Association of Consultants, Valuers and Analysts (IACVA), and a member of the Australasian Institute of Mining and Metallurgy (AusIMM). Simon oversees the business valuation services of JLL and has experience in corporate advisory and valuation. He has provided a wide range of valuation services to numerous listed and listing companies of different industries in the PRC, Hong Kong, Singapore and the United States. Simon oversaw the valuation of biological assets for the initial public offerings and subsequent financial reports of Eggriculture Foods Ltd. (stock code: 8609), China Modern Dairy Holdings Ltd. (stock code: 1117), Shangdong Fengxiang Co., Ltd. (stock code: 9977), YuanShengTai Dairy Farm Limited (stock code: 1431), WH Group Limited (stock code: 288) and China Shengmu Organic Milk Limited (stock code: 1432).

Based on market reputation and relevant background research, our Directors and the Sole Sponsor are satisfied that JLL is independent from us and is competent in conducting a valuation on our biological assets.

Valuation Methodology

In arriving at the assessed value, market approach is adopted to value sea cucumbers at the specification of 20 PPU (harvest stage) or larger as market-based prices for such specification of the sea cucumbers can be obtained as at the respective valuation date. The fair values of the sea cucumbers at the specification less than 20 PPU (harvest stage) were developed through the application of market approach with reasonable adjustments to reflect age differences.

– 288 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

Key Assumptions and Inputs

The key inputs and assumptions made for valuing our biological assets include the following:

• classification of our Company’s biological assets according to their specification;

• quantity of each category of our biological assets at each valuation date;

• unit market price of key valuation input at each valuation date;

• cost for raising the biological assets; and

• there are no hidden or unexpected conditions associated with our business that might adversely affect the reported values.

The following factors form an integral part of the bases of JLL’s opinion:

• assumptions on the market and the asset that are considered to be fair and reasonable;

• consideration and analysis on the micro and macro economy affecting our biological assets;

• analysis on tactical planning, management standard and synergy of the biological assets;

• analytical review of the biological assets; and

• assessment of the liquidity of the biological assets.

Set forth below are the key inputs adopted for the valuation of our biological assets:

As at 31 December 2018 2019 2020

Weighted average market unit price at the specification of 20 PPU (harvest stage) (RMB/500g) 93.37 105.22 82.89 Costs for raising (RMB/500g) 32.69 34.09 30.83 Survival rate (%) 45.14–100 24.57–100 70.72–100 Weighted average survival rate (%) 97.09 94.79 97.65

– 289 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

Our market unit price of the sea cucumber is based on the historical average selling prices during the Track Record Period.

The Sole Sponsor and JLL conducted site inspections to perform an independent verification of the physical existence and condition of the biological assets. JLL also engaged Dr. Li Chenghua as a consultant to advise on the physical and biological attributes of the biological assets. Dr. Li has been working in the School of Marine Science of Ningbo University as a researcher since 2010. His current research is mainly on immunology of marine animals. JLL determined Dr. Li to be suitably qualified given his expertise and past experience. JLL is satisfied with the basis of advice presented by Dr. Li and believes it is reasonable.

The Sole Sponsor held various discussions with JLL in relation to its valuation procedure, valuation basis and assumptions, valuation technique and information required to prepare the valuation report of the biological assets to better understand the valuation process. As confirmed by JLL, the valuation of our live sea cucumbers was conducted in accordance with international accounting standards issued by IASB and with reference to the International Valuation Standards issued by the International Valuation Standards Council. JLL has further confirmed that its valuation procedures provide a reasonable basis for its opinion, and that the inputs used in the valuation technique are appropriate and reasonable. In addition, the Sole Sponsor discussed with our management and the Reporting Accountants with respect to the techniques chosen and the inputs used in the valuations. After reviewing the valuation procedures, valuation bases and assumptions, valuation techniques and information and the valuation report used by or prepared by JLL, the Sole Sponsor had further compared the valuation technique chosen, bases and assumptions of the valuation with those used in other similar transactions and market practice. The Sole Sponsor is satisfied that the valuation techniques chosen and the inputs used in the valuation technique are appropriate and reasonable. The Reporting Accountants are also satisfied that the valuation techniques chosen and the inputs used in the valuation technique are appropriate and reasonable. Our Directors confirm that the assumptions adopted are consistent with industry practice and in line with the actual figures during the Track Record Period.

– 290 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

Sensitivity Analysis

Stock-take and internal control

Stock-take

We have established standard protocols to ensure the headcount of our biological assets and the accuracy of other relevant information. Our sea cucumbers are reared in multiple water tanks and we have internal guidelines specifying the sea cucumbers per water tank. Our procedures include (i) conducting stock-take for all sea cucumber production workshops by taking samples for each tank to estimate all the quantities of sea cucumber; and (ii) verification of the amount of biological assets based on the calculation with cost, sales, sea cucumber transfer, and ending balance. We use these procedures to ensure that stock of sea cucumbers and other relevant information are accurately reflected in our inventory system. Each of our workshops conducts stock-take procedures monthly.

Internal control

We have maintained a comprehensive policy for biological asset management. Our biological asset management policy covers, among other things, purchase and inspection of raw materials, monitoring the breeding process, accounting records, record keeping and stock-take.

CAPITAL EXPENDITURE

During the Track Record Period, we incurred capital expenditure mainly on property, plant and equipment. Our additions on property, plant and equipment were approximately RMB27.3

– 291 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION million, RMB7.7 million and RMB36.8 million for FY2018, FY2019 and FY2020, respectively. These capital expenditures were funded by the cash flows from our operating activities.

COMMITMENTS

Capital commitments

The following table sets forth our capital commitments outstanding as at the dates indicated:

At 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Contracted but not provided for: Purchase of property, plant and equipment 987 – 10,915

Our capital commitment contracted for but not provided for in respect of purchase of property, plant and equipment as at 31 December 2018, 2019 and 2020 was approximately RMB1.0 million, nil and RMB10.9 million, respectively. The capital commitment of approximately RMB1.0 million is related to the remaining portion of contract sum of construction of artificial reef at our marine ranch in 2015. Such construction was completed in 2019. In addition, the capital commitment of approximately RMB10.9 million is related to the construction of artificial reef at our marine ranch in 2020, which is expected to be completed in 2022.

– 292 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

Lease Liabilities

Our Group as lessee

Our operating lease arrangement mainly represented rentals payable by our Group for properties, lands and sea-use rights. The table below sets forth our commitments for future minimum lease payments under non-cancellable operating leases as of the dates indicated:

At 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Amounts payable: Within l year 1,332 1,332 1,332 More than l year but within 2 years 1,332 1,332 332 More than 2 years but within 5 years 1,997 997 823 Over 5 years 1,438 1,105 947

6,099 4,766 3,434

Less: future finance charges (912) (673) (488)

Total lease liabilities 5,187 4,093 2,946

Save as disclosed herein, our Group did not have any other material commitments for the Track Record Period.

INDEBTEDNESS

Interest-bearing Bank Borrowings

The following table sets forth the composition of our interest-bearing bank borrowings as at the dates indicated:

At At 31 December 31 March 2018 2019 2020 2021 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited)

Bank borrowings – secured 8,000 12,700 12,700 4,900

– 293 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

The following table sets forth the maturity profile of our interest-bearing bank borrowings as at the dates indicated:

At At 31 December 31 March 2018 2019 2020 2021 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited)

Bank borrowings repayable: – Within one year 8,000 12,700 12,700 4,900

Our bank borrowings are secured by our property, plant and equipment and guaranteed by Mr. Zou, one of the Controlling Shareholder and his close family member. For details, please refer to Note 20 to the Accountants’ Report as set out in Appendix I to this document. Our outstanding bank borrowings were denominated in RMB, and carried effective interest rate of approximately 6.1%, 6.4%, 6.4% and 9.6% per annum for FY2018, FY2019 and FY2020 and 31 March 2021, respectively.

All personal guarantee will be released or replaced by corporate guarantee before [REDACTED].

Leases Liabilities

We lease various properties in the PRC and these lease liabilities were measured at net present value of the lease payments during the lease terms that are not yet paid. We had leases liabilities of approximately RMB5.2 million, RMB4.1 million and RMB2.9 million as at 31 December 2018, 2019 and 2020. The following table sets out the breakdown of our current and non-current lease liabilities as at the dates indicated.

As at As at 31 December 31 March 2018 2019 2020 2021 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited)

Lease liabilities Current 1,094 1,148 1,203 1,218 Non-current 4,093 2,945 1,743 1,764

5,187 4,093 2,946 2,982

At 31 December 2018, 2019 and 2020, and 31 March 2021 the weighted average incremental borrowing rate applied to the lease liabilities was 4.9%, 4.9%, 4.9% and 4.9% per annum, respectively.

– 294 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

Contingent Liabilities

As at 31 December 2018, 31 December 2019 and 31 December 2020, and 31 March 2021, we did not have any significant contingent liabilities. Our Directors confirm that we did not have any material contingent liabilities as at the Latest Practicable Date.

Disclaimer

Except as disclosed above, during the Track Record Period and up to the close of business on 31 March 2021, being the indebtedness date for the purpose of the indebtedness statement, we did not have any material mortgages, charges, debentures, loan capital, debt securities, loans, bank overdrafts or other similar indebtedness, finance lease or hire purchase commitments, liabilities under acceptances (other than normal trade bills), acceptance credits, which are either guaranteed, unguaranteed, secured or unsecured, or guarantees.

KEY FINANCIAL RATIOS

The table below sets out certain key financial ratios of our Group during the Track Record Period:

As at/For the year ended 31 December 2018 2019 2020

Profitability ratios Return on total assets(1) 27.7% 21.5% 20.2% Return on equity(2) 31.1% 24.3% 23.2%

Liquidity ratios Current ratio(3) 4.3 times 4.6 times 6.5 times Quick ratio(4) 3.7 times 4.2 times 6.0 times

Capital adequacy ratios Gearing ratio(5) 4.2% 4.4% 3.5% Debt-to-equity ratio(6) Net cash Net cash Net cash Interest coverage ratio(7) 53.5 times 107.7 times 119.6 times

Notes:

1. Return on total assets is calculated by profit for the respective year after excluding [REDACTED] and government grants divided by the total assets as at the respective year end and multiplied by 100%.

2. Return on equity is calculated by profit for the respective year after excluding [REDACTED] and government grants divided by the total equity as at the respective year end and multiplied by 100%.

3. Current ratio is calculated based on the total current assets divided by the total current liabilities as at the respective year end.

– 295 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

4. Quick ratio is calculated based on the total current assets less inventories divided by the total current liabilities as at the respective year end.

5. Gearing ratio is calculated based on the total debt divided by the total equity as at the respective year end and multiplied by 100%. Total debt includes interest-bearing borrowings and lease liabilities.

6. Debt-to-equity ratio is calculated based on net debt at the end of the year divided by total equity at the end of the respective year and multiplied by 100%. Net debt is calculated as total debt less bank balances and cash. Total debt include interest-bearing borrowings and obligation under finance leases.

7. Interest coverage ratio is calculated based on the profit before interest and tax for the respective year after excluding [REDACTED] and government grants divided by the interest expenses for the respective year.

Return on total assets

Our return on total assets decreased from approximately 27.7% for FY2018 to approximately 21.5% for FY2019, which was primarily due to a decrease in net profit of approximately RMB7.2 million and an increase in trade and other receivables of approximately RMB67.3 million.

Our return on total assets further decreased from approximately 21.5% for FY2019 to approximately 20.2% for FY2020, which was primarily due to an increase in bank balances and cash generated from operations of approximately RMB48.2 million, partly offset by an increase in net profit of approximately RMB2.6 million.

Return on equity

Our return on equity decreased from approximately 31.1% for FY2018 to approximately 24.3% for FY2019, which was primarily due to a decrease in net profit of approximately RMB7.2 million and an increase in total equity arising from profit and total comprehensive income for the year of approximately RMB90.1 million.

Our return on equity further decreased from approximately 24.3% for FY2019 to approximately 23.2% for FY2020, which was primarily due to an increase in total equity arising from profit and total comprehensive income for the year of approximately RMB93.5 million, partly offset by an increase in net profit of approximately RMB2.6 million.

Current ratio

Our current ratio experienced an overall increase during the Track Record Period, which amounted to approximately 4.3 times, 4.6 times and 6.5 times as at 31 December 2018, 2019 and 2020, respectively. The increase in our current ratio between 31 December 2018 and 2019 was primarily attributable to an increase in biological assets and trade and other receivables. Our current ratio further increased to 6.5 times as at 31 December 2020 which was due to an increase in bank balances and cash generated from operations.

– 296 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

Quick ratio

Our quick ratio experienced an overall increase during the Track Record Period, which amounted to approximately 3.7 times, 4.2 times and 6.0 times as at 31 December 2018, 2019 and 2020, respectively. The increase in our quick ratio between 31 December 2018 and 2019 was primarily attributable to an increase in trade and other receivables. The increase in our quick ratio between 31 December 2019 and 2020 was primarily attributable to an increase in bank balances and cash generated from operations.

Gearing ratio

Our gearing ratio remained stable as at 31 December 2018 and 31 December 2019, which was 4.2% and 4.4% respectively.

Our gearing ratio decreased from approximately 4.4% as at 31 December 2019 to approximately 3.5% as at 31 December 2020, which was primarily due to a decrease in lease liabilities of approximately RMB1.1 million and an increase in total equity arising from profit and total comprehensive income for the year of approximately RMB93.5 million.

Debt-to-equity ratio

No debt-to-equity ratio was calculated as at 31 December 2018, 2019 and 2020 because our bank balances and cash were larger than our total debt as at 31 December 2018, 2019 and 2020.

Interest coverage ratio

Our interest coverage ratio increased from approximately 53.5 times for FY2018 to approximately 107.7 times for FY2019, which was primarily due to a decrease in finance costs of approximately RMB1.1 million as a result of full repayment of staff borrowings by the Group in December 2018.

Our interest coverage ratio increased from approximately 107.7 times for FY2019 to approximately 119.6 times for FY2020, which was primarily due to an increase in profit before interest and tax from approximately RMB105.1 million to approximately RMB107.4 million.

MARKET AND OTHER FINANCIAL RISKS

The main risks arising from our Group’s financial instruments are credit risk and liquidity risk, which are detailed in Note 29 to the Accountants’ Report. The following is a description of the principal market and financial risks that we face.

– 297 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

Credit Risk

Credit risk refers to the risk that debtors will default on their obligations to repay the amounts due to our Group, resulting in a loss to our Group. Our Group’s credit risk is mainly attributable to trade and other receivables, refundable rental deposit, deposit paid for acquisition of property, plant and equipment and bank balances and cash. The Group limits its exposure to credit risk by selecting the counterparties with reference to their past credit history and/or market reputation.

The Group trades with recognised and creditworthy third parties. The receivable balances are monitored on an ongoing basis by senior management and the Group’s exposure to bad debts is not significant. Amounts due from related companies are continuously monitored by assessing the credit worthiness of the counterparties, taking into account their financial position, payment history and other factors. Where necessary, an impairment loss is made for estimated irrecoverable amounts.

The management considers the credit risk in respect of bank balances and cash is minimal because the counter-parties are authorised financial institutions with high credit ratings.

The Group reviews the recoverable amount of each individual debtor, including related and third parties, at the end of each reporting period to ensure adequate allowance is made for irrecoverable amount.

At 31 December 2018, 2019 and 2020, the Group had a concentration of credit risk as approximately 53%, 54% and 56% of the total trade receivables was due from the Group’s largest customer, respectively, and approximately 95%, 97% and 98% of the total trade receivables was due from the Group’s five largest customers, respectively.

– 298 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

Liquidity Risk

The Group’s objective is to maintain a balance between continuity of funding and flexibility. The Group has no specific policy for managing its liquidity. The undiscounted contractual maturity profile of the Group’s financial liabilities at the end of each reporting period, based on contractual undiscounted payments is summarized below:

Total Total contractual On demand carrying undiscounted or less than 1to2 2to5 Over amount cash flow one year years years 5 years RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

At 31 December 2018 Trade and other payables 2,150 2,150 2,150––– Lease liabilities 5,187 6,099 1,332 1,332 1,997 1,438 Dividends payable 6,733 6,733 6,733––– Interest-bearing borrowings 8,000 8,105 8,105–––

22,070 23,087 18,320 1,332 1,997 1,438

At 31 December 2019 Trade and other payables 7,369 7,369 7,369––– Lease liabilities 4,093 4,766 1,332 1,322 997 1,105 Dividends payable 13,466 13,466 13,466––– Interest-bearing borrowings 12,700 12,861 12,861–––

37,628 38,462 35,028 1,332 997 1,105

At 31 December 2020 Trade and other payables 6,183 6,183 6,183––– Lease liabilities 2,946 3,434 1,332 332 823 947 Dividends payable 11,600 11,600 11,600––– Interest-bearing borrowings 12,700 12,861 12,861–––

33,429 34,078 31,976 332 823 947

– 299 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

PROPERTY VALUATION

JLL, an independent property valuer, has valued our property interests as at 28 February 2021 and is of the opinion that the aggregate value of our property interests as of such date was approximately RMB14,825,000. The full text of the letter, summary of values and valuation certificates issued by JLL are set out in Appendix IV to this document.

The table below sets forth the reconciliation between the net book value of the property interests as at 31 December 2020 that were valued by JLL and the revalued amount of our property interests as at 28 February 2021.

RMB’000

Net book value of property interest as at 31 December 2020 64,418 Less: Depreciation for the two months ended 28 February 2021 (1,887)

Net book value of property interests as at 28 February 2021 62,531 Valuation deficit (Note) (47,706)

Valuation as at 28 February 2021 (Note) 14,825

Note: Pursuant to the property valuation report set out in Appendix IV to this document, certain of our properties are attributed no commercial value due to the leased land nature or without proper title certificate. The depreciated replacement costs of the said properties were approximately RMB70,644,000 as at the valuation date on 28 February 2021. Assuming the depreciated replacement costs be applied in the reconciliation, the valuation surplus will be approximately RMB22,938,000. Please refer to the Property Valuation Report as set out in Appendix IV to this document for further details.

DIVIDEND POLICY

For the years ended 31 December 2018, 2019 and 2020, we declared dividends of approximately RMB23.2 million, RMB23.2 million and RMB34.8 million respectively to the then shareholders of the entities now comprising the Group. All past dividends declared have been fully settled as at the Latest Practicable Date. We intend to declare the dividend of not more than RMB[58.0] million for FY2021. We do not have a fixed dividend policy. Past payments and non-payments of dividends are not indicative of our future dividend policy.

Our Board may declare dividends in the future after taking into account our operations, earnings, financial condition, cash requirements and availability and other factors as it may deem relevant at such time. Any declaration and payment as well as the amount of dividends will be subject to our constitutional documents and the applicable laws, including the approval of our Shareholders. Our future declarations of dividends may or may not reflect our historical declarations of dividends and will be at the absolute discretion of the Board.

– 300 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

DISTRIBUTABLE RESERVES

Our Company was incorporated in the Cayman Islands and has not carried out any business since the date of its incorporation, save for investment holding and the transactions related to the Reorganisation. Accordingly, our Company has no reserve available for distribution to the Shareholders as at the Latest Practicable Date.

[REDACTED]

For FY2018, we did not incur any [REDACTED]. For FY2019 and FY2020, we incurred [REDACTED] of approximately RMB[REDACTED] and RMB[REDACTED] respectively.

We expect to incur total [REDACTED] of approximately RMB[REDACTED] of which our Group (i) has recognised approximately RMB[REDACTED] in the profit or loss for FY2019 and FY2020; (ii) expects to recognise approximately RMB[REDACTED] in the profit or loss for FY2021; and (iii) expects to recognise approximately RMB[REDACTED] as a deduction in equity directly for FY2021.

Expenses in relation to the [REDACTED] are non-recurring in nature. Our Group’s financial performance and result of operations for FY2019 and FY2020 have been, and FY2021 will be, significantly and adversely affected by the expenses in relation to the [REDACTED].

UNAUDITED [REDACTED] STATEMENT OF ADJUSTED NET TANGIBLE ASSETS

Please refer to the Unaudited [REDACTED] Financial Information as set out in Appendix II to this document for further details.

DISCLOSURE REQUIRED UNDER THE LISTING RULES

The Directors have confirmed that, as at the Latest Practicable Date, they were not aware of any circumstances that would give rise to a disclosure requirement under Rules 13.13 to 13.19 of the Listing Rules.

OFF-BALANCE SHEET ARRANGEMENTS

During the Track Record Period and up to the Latest Practicable Date, we did not have any off-balance sheet arrangements.

WORKING CAPITAL CONFIRMATION

Our Directors are of the opinion that, taking into consideration the financial resources presently available to our Group, including the available banking facilities, other internal resources and the estimated [REDACTED] from the [REDACTED], our Group has sufficient working capital for our present requirements, that is, for at least in the next 12 months commencing from the date of this document.

– 301 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FINANCIAL INFORMATION

NO MATERIAL ADVERSE CHANGE

Impact of the COVID-19 outbreak on our business and our response

– 302 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FUTURE PLANS AND [REDACTED]

FUTURE PLANS

Please refer to the paragraph headed “Business – Business strategies” in this document for a detailed description of our Group’s business objectives and strategies.

REASONS FOR THE [REDACTED] AND THE [REDACTED]

According to the CIC Report, the sea cucumber aquaculture industry is extremely fragmented, with more than 1,000 sea cucumber breeders in the market in 2020 and most of the market participants are small companies with aquaculture water body of less than 10,000 m3. Leading companies with brand are expected to capture a larger market share along the brand promotion for better product quality. It is also expected that branded young sea cucumbers provided by larger companies will gradually replace unbranded young sea cucumbers provided by smaller companies and individual breeders. Accordingly, there exists substantial opportunity in the industry for consolidation of market share, in particular for companies with large-scale water body and brand such as our Group. Further, with rising disposable income in both the urban and rural area in the PRC, which is forecasted to grow at a CAGR of approximately 6.9% and 7.6% respectively from 2020 to 2025, the demand for premium food such as sea cucumber products is expected to increase.

Given the opportunities mentioned above, our Directors believe that the carrying out of our business strategies as set out in “Business – Business Strategies” will enable us to capture and exploit these opportunities for the long-term interests of our Group. Our Directors have considered various means of financing including both debt and equity financing to raise the necessary funds to finance our business strategies and believe that equity financing through the [REDACTED] is the more preferable means, despite its relatively higher immediate cost, after taking into account the interest obligations, potential amount of funds that can be raised and collateral requirements associated with debt financing. Our Directors also believe that equity financing can broaden our capital base and entails less risks on the part of our Group as Shareholders may look to the long-term benefits that can be provided by our Group instead of the periodic repayment of interest and debt that is associated with debt financing. Without the [REDACTED], our Group remains as a privately held company and there is no guarantee that banks or other financial institutions would lend to our Group for the purposes of implementing its business strategies at all or on favorable terms and without the imposition of stringent financing requirements. Debt financing generally entails interest obligations which are subject to rates that may fluctuate throughout the subsistence of the loan or facility. These rates themselves are significantly affected by macro and micro economic factors which are beyond the control of our Group, as such there is no guarantee that the rates would not increase to such an extent that it would affect our Group’s financial performance and its ability to fund its business strategies. Through the [REDACTED] our ability to access debt financing will also enhanced, as we will be able to access the debt capital markets and as a publicly listed company banks and other financial institutions are generally more willing to provide financing and on more favorable terms.

– 303 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FUTURE PLANS AND [REDACTED]

Aside from the financing benefits arising from the [REDACTED], our Directors also believe that as the [REDACTED] will serve to enhance our corporate profile, brand awareness and market presence, it will be particularly beneficial to our Group as the sea cucumber aquaculture industry in the PRC is highly fragmented. As such, it will serve to distinguish our Group from other market players and may provide reassurance and confidence to our customers and suppliers as to our sustainability and commitment towards our growth in the sea cucumber aquaculture industry, which in turn may provide us with a stronger bargaining position for future endeavours and negotiations. Further, given the food safety concerns in the PRC, our enhanced corporate profile may serve as reassurance for our end-users customers as to our quality.

For the reasons set out above, our Directors consider that the [REDACTED] and the [REDACTED] is in the long-term commercial interests of our Group as it will provide us with flexibility as to financing our operations and enhance our overall image which will enable us to distinguish ourselves from our competitors in the sea cucumber aquaculture industry in the PRC.

[REDACTED]

We estimate that the [REDACTED] from the [REDACTED] (after deducting [REDACTED] commissions and estimated expenses payable by us in connection with the [REDACTED]),assuming the [REDACTED] is not exercised and an [REDACTED] of HK$[REDACTED] per Share (being the mid-point of the indicative [REDACTED] range), will be approximately HK$[REDACTED]. We currently intend to apply the [REDACTED] in the following manner:

• approximately HK$[REDACTED] (equivalent to RMB[REDACTED]), representing approximately [REDACTED]%ofthe[REDACTED] of the [REDACTED], will be used to construct our fourth production base at Bajiao Bay Marine Economic Innovation Zone* (八角灣海洋經濟創新區) in Yantai City, Shandong Province (the “Fourth Production Base”), of which:

– approximately HK$[REDACTED] (equivalent to RMB[REDACTED]), representing approximately [REDACTED]% of the net [REDACTED] of the Share Offer will be used to acquire the land use right of a parcel of land in Bajiao Bay Marine Economic Innovation Zone* (八角灣海洋經濟創新區) with an area of approximately 267,000 m2 (or approximately 400 mu) (the “Fourth Production Base Land”). We have entered into a cooperation agreement with the Office of the Bajiao Bay Oceantec Valley Working Leadership Team * (八角灣藍色種業矽谷工作領導小組辦公室) on 6 April 2020 which stipulates that we intend to bid for the Fourth Production Base Land for the expansion of our production capacity. The auction, bidding and quotation process of the Fourth Production Base Land would be expected to take place in early 2022 and our expected bidding price would not exceed RMB75.0 million. We intend to use the Fourth Production Base Land for the establishment of our Fourth Production Base and we shall look for land of similar size and conditions in the proximity should we fail to secure the Fourth Production Base Land in the bidding;

– 304 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FUTURE PLANS AND [REDACTED]

– approximately HK$[REDACTED] (equivalent to RMB[REDACTED]), representing approximately [REDACTED]%ofthe[REDACTED] of the [REDACTED] will be used to construct our Fourth Production Base on the Fourth Production Base Land. The construction of the facilities (excluding a research and development workshop) in our Fourth Production Base, which has a gross floor area of approximately [172,865.6] m2, will consist of the construction of (i) a two-storey hatchery workshop for the hatchery of sea cucumbers, (ii) a purification pool for purifying the sea water, (iii) a waste water treatment centre for treating waste water and (iv) the auxiliary facilities including office building, warehouse and sand filtration pool. We intend to utilise our internal resources, including our cash and cash equivalents and net cash inflow from operating activities, to fund the remaining balance of approximately HK$[145.6] million (equivalent to RMB[121.2] million) for the construction of the facilities (excluding a research and development workshop) in the Fourth Production Base;

The utilisation rates of our Shandong First Production Base had already reached approximately 73.7%, 86.2% and 99.9% respectively in each of FY2018, FY2019 and FY2020. The Fourth Production Base will provide additional production capacity for our aquaculture of juvenile sea cucumbers. The Fourth Production Base is expected to commence productions progressively starting in June 2024. The Fourth Production Base shall have an expected annual production capacity of approximately 2,384,520 jin of juvenile sea cucumbers (based on the calculation of multiplying the expected maximum weight of juvenile sea cucumbers that can be produced by each m3 of water body according to the CIC Report i.e. 28.7 jin per m3 by the total volume of water body, assuming that the survival rate of our sea cucumbers remains constant as that throughout the Track Record Period). We believe that a new production base is vital to us as the increase in production capacity is necessary to accommodate the increased production capacity of our production facilities so as to meet the growing demand for our juvenile sea cucumbers and further expansion of our market share;

– approximately HK$[REDACTED] (equivalent to RMB[REDACTED]), representing approximately [REDACTED]% of the net [REDACTED] of the [REDACTED] will be used to acquire the necessary machinery and equipment to be installed in our Fourth Production Base; and

– approximately HK$[REDACTED] (equivalent to RMB[REDACTED]), representing approximately [REDACTED]% of the net [REDACTED] of the [REDACTED] will be used to employ additional [80] staff members during the year of the commencement of the operation of our Fourth Production Base in [June 2024]. The additional staff members include (i) [50] production workers; (ii) [13] maintenance and engineering staff members; and (iii) [17] staff members in other functional departments including management, administration and quality control;

– 305 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FUTURE PLANS AND [REDACTED]

• approximately HK$[REDACTED] (equivalent to RMB[REDACTED]), representing approximately [REDACTED]% of the net [REDACTED] of the [REDACTED], will be used for the development of our new breed “Anyuan No. 2”, of which:

– approximately HK$[REDACTED] (equivalent to RMB[REDACTED]), representing approximately [REDACTED]% of the net [REDACTED] of the [REDACTED] will be used to construct a two-storey research and development workshop with a gross floor area of approximately 3,990.0 m2 for [implementing new experimental techniques and methods in rearing Anyuan No. 2] [Company to confirm] at our Fourth Production Base;

– approximately HK$[REDACTED] (equivalent to RMB[REDACTED]), representing approximately [REDACTED]% of the net [REDACTED] of the [REDACTED] will be used employ additional 20 research and development personnel during the year of the commencement of the operation of our Fourth Production Base;

– approximately HK$[REDACTED] (equivalent to RMB[REDACTED]), representing approximately [REDACTED]% of the net [REDACTED] of the [REDACTED] will be used to purchase raw materials to be used in the course of breeding Anyuan No. 2; and

• approximately HK$[REDACTED] (equivalent to RMB[REDACTED]), representing approximately [REDACTED]% of the net [REDACTED] of the [REDACTED], will be used as our general working capital.

– 306 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FUTURE PLANS AND [REDACTED]

IMPLEMENTATION PLANS

We set forth below a summary of the timeline for implementation of our business strategies as disclosed above:

Approximate %of For the year ending 31 December [REDACTED] [2021] [2022] [2023] [2024] Total [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]

Construct our Fourth Production Base – Acquire the [land [use right]] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] – Construct our Fourth Production Base [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] – Acquire machinery and equipment [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] – Employ staff members [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]

Subtotal [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]

Develop “[Anyuan No. 2]” – Construct research and development workshop [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] – Acquire machinery and equipment [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] – Employ research and development staff members [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] – Purchase raw materials [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]

Subtotal [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]

General working capital [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]

Total [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]

To the extent that the [REDACTED] from the [REDACTED] are insufficient to fund our Group’s business strategies, our Directors may delay the pace of the implementation of our Group’s business strategies until its internal resources are sufficient. Our Directors may also consider other factors when determining the pace of implementation, such as the long term funding needs of our Group and the need to maintain a healthy level of working capital. Alternatively, our Directors may also consider bank financing or other debt or equity fund raising exercises, though this may affect our Group in such ways as disclosed in the paragraph headed “Reasons for the [REDACTED] and the [REDACTED]” in this section.

– 307 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. FUTURE PLANS AND [REDACTED]

If the [REDACTED] is fixed at the high-end of the indicative range of the [REDACTED], being HK$[REDACTED] per [REDACTED], the [REDACTED] to be received by us from the [REDACTED] will increase by approximately HK$[REDACTED]. We intend to apply the additional [REDACTED] for the above purposes on a pro-rata basis. If the [REDACTED] is set at the low-end of the indicative range of the [REDACTED], being HK$[REDACTED] per [REDACTED], the [REDACTED] to be received by us from the [REDACTED] will decrease by approximately HK$[REDACTED]. We intend to reduce the [REDACTED] for the above purposes on a pro-rata basis.

If the [REDACTED] is exercised in full, we estimate that the additional [REDACTED] from the offering of these additional Shares to be received by us, after deducting the estimated [REDACTED] fee, incentive fee and estimated expenses payable by it, will be approximately (i) HK$[REDACTED], assuming the [REDACTED] is fixed at the high-end of the indicative range of the [REDACTED], being HK$[REDACTED] per [REDACTED]; (ii) HK$[REDACTED], assuming the [REDACTED] is fixed at the midpoint of the indicative range of the [REDACTED], being HK$[REDACTED] per [REDACTED]; and (iii) HK$[REDACTED], assuming the [REDACTED] is fixed at the low-end of the indicative range of the [REDACTED], being HK$[REDACTED] per [REDACTED]. Any additional [REDACTED] received by us from the exercise of the [REDACTED] will also be allocated to the above purposes on a pro-rata basis.

To the extent that the [REDACTED] from the [REDACTED] are not immediately applied to the above purposes or if we are unable to effect any part of the future plans as intended, to the extent permitted by applicable laws and regulations, we may deposit the [REDACTED] into short-term demand deposits with authorised financial institutions and/or licenced banks for so long as it is in the best interests of our Group.

– 308 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. [REDACTED]

[REDACTED]

– 309 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. [REDACTED]

[REDACTED]

– 310 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. [REDACTED]

[REDACTED]

–311– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. [REDACTED]

[REDACTED]

– 312 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. [REDACTED]

[REDACTED]

– 313 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. [REDACTED]

[REDACTED]

– 314 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. [REDACTED]

[REDACTED]

– 315 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. [REDACTED]

[REDACTED]

– 316 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. [REDACTED]

[REDACTED]

– 317 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. [REDACTED]

[REDACTED]

– 318 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. [REDACTED]

[REDACTED]

– 319 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. STRUCTURE AND CONDITIONS OF THE [REDACTED]

[REDACTED]

– 320 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. STRUCTURE AND CONDITIONS OF THE [REDACTED]

[REDACTED]

– 321 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. STRUCTURE AND CONDITIONS OF THE [REDACTED]

[REDACTED]

– 322 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. STRUCTURE AND CONDITIONS OF THE [REDACTED]

[REDACTED]

– 323 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. STRUCTURE AND CONDITIONS OF THE [REDACTED]

[REDACTED]

– 324 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. STRUCTURE AND CONDITIONS OF THE [REDACTED]

[REDACTED]

– 325 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. STRUCTURE AND CONDITIONS OF THE [REDACTED]

[REDACTED]

– 326 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. STRUCTURE AND CONDITIONS OF THE [REDACTED]

[REDACTED]

– 327 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. STRUCTURE AND CONDITIONS OF THE [REDACTED]

[REDACTED]

– 328 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. STRUCTURE AND CONDITIONS OF THE [REDACTED]

[REDACTED]

– 329 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. STRUCTURE AND CONDITIONS OF THE [REDACTED]

[REDACTED]

– 330 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HOW TO APPLY FOR THE [REDACTED]

[REDACTED]

– 331 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HOW TO APPLY FOR THE [REDACTED]

[REDACTED]

– 332 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HOW TO APPLY FOR THE [REDACTED]

[REDACTED]

– 333 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HOW TO APPLY FOR THE [REDACTED]

[REDACTED]

– 334 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HOW TO APPLY FOR THE [REDACTED]

[REDACTED]

– 335 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HOW TO APPLY FOR THE [REDACTED]

[REDACTED]

– 336 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HOW TO APPLY FOR THE [REDACTED]

[REDACTED]

– 337 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HOW TO APPLY FOR THE [REDACTED]

[REDACTED]

– 338 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HOW TO APPLY FOR THE [REDACTED]

[REDACTED]

– 339 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HOW TO APPLY FOR THE [REDACTED]

[REDACTED]

– 340 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HOW TO APPLY FOR THE [REDACTED]

[REDACTED]

– 341 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HOW TO APPLY FOR THE [REDACTED]

[REDACTED]

– 342 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HOW TO APPLY FOR THE [REDACTED]

[REDACTED]

– 343 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HOW TO APPLY FOR THE [REDACTED]

[REDACTED]

– 344 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HOW TO APPLY FOR THE [REDACTED]

[REDACTED]

– 345 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HOW TO APPLY FOR THE [REDACTED]

[REDACTED]

– 346 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HOW TO APPLY FOR THE [REDACTED]

[REDACTED]

– 347 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HOW TO APPLY FOR THE [REDACTED]

[REDACTED]

– 348 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HOW TO APPLY FOR THE [REDACTED]

[REDACTED]

– 349 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HOW TO APPLY FOR THE [REDACTED]

[REDACTED]

– 350 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HOW TO APPLY FOR THE [REDACTED]

[REDACTED]

– 351 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HOW TO APPLY FOR THE [REDACTED]

[REDACTED]

– 352 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

The following is the text of a report, prepared for the purpose of incorporation in this document, received from the Company’s independent reporting accountants, Mazars CPA Limited, Certified Public Accountants, Hong Kong.

中審眾環(香港)會計師事務所有限公司 42nd Floor, Central Plaza 18 Harbour Road, Wanchai, Hong Kong 香港灣仔港灣道18號中環廣場42樓 Tel 電話 : (852) 2909 5555 Fax 傳真 : (852) 2810 0032 Email 電郵 : [email protected] Website 網址 : www.mazars.hk

INDEPENDENT REPORTING ACCOUNTANTS’ REPORT ON HISTORICAL FINANCIAL INFORMATION OF ANYUAN MARINE BREEDING COMPANY LIMITED (FORMERLY KNOWN AS “ANYUAN SEEDLING TECH CO., LIMITED”)

The Directors Anyuan Marine Breeding Company Limited (formerly known as “Anyuan Seedling Tech Co., Limited”) VBG Capital Limited

Introduction

We report on the historical financial information of Anyuan Marine Breeding Company Limited (formerly known as “Anyuan Seedling Tech Co., Limited”) (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”) set out on pages I-1 to I-64, which comprises the combined statements of financial position of the Group at 31 December 2018, 2019 and 2020, the statements of financial position of the Company at 31 December 2019 and 2020, and the combined statements of profit or loss and other comprehensive income, the combined statements of changes in equity and the combined statements of cash flows of the Group for each of the years ended 31 December 2018, 2019 and 2020 (the “Track Record Period”) and a summary of significant accounting policies and other explanatory information (together the “Historical Financial Information”). The Historical Financial Information set out on pages I-4 to I-64 forms an integral part of this report, which has been prepared for inclusion in the document of the Company dated [REDACTED] (the “Document”) in connection with the initial [REDACTED] of shares of the Company on the Main Board of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).

– I-1 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

Directors’ responsibility for the Historical Financial Information

The directors of the Company are responsible for the preparation of the Historical Financial Information that gives a true and fair view in accordance with the basis of preparation and presentation set out in Note 2 to the Historical Financial Information, and for such internal control as the directors of the Company determine is necessary to enable the preparation of the Historical Financial Information that is free from material misstatement, whether due to fraud or error.

Reporting accountants’ responsibility

Our responsibility is to express an opinion on the Historical Financial Information and to report our opinion to you. We conducted our work in accordance with Hong Kong Standard on Investment Circular Reporting Engagements 200 “Accountants’ Reports on Historical Financial Information in Investment Circulars” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”). This standard requires that we comply with ethical standards and plan and perform our work to obtain reasonable assurance about whether the Historical Financial Information is free from material misstatement.

Our work involved performing procedures to obtain evidence about the amounts and disclosures in the Historical Financial Information. The procedures selected depended on the reporting accountants’ judgement, including the assessment of risks of material misstatement of the Historical Financial Information, whether due to fraud or error. In making those risk assessments, we considered internal control relevant to the Group’s preparation of the Historical Financial Information that gives a true and fair view in accordance with the basis of preparation and presentation set out in Note 2 to the Historical Financial Information in order to design procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. Our work also included evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors of the Company, as well as evaluating the overall presentation of the Historical Financial Information.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion

In our opinion, the Historical Financial Information gives, for the purposes of the accountants’ report, a true and fair view of the financial position of the Group at 31 December 2018, 2019 and 2020, of the financial position of the Company at 31 December 2019 and 2020, and of the Group’s financial performance and cash flows for the Track Record Period in accordance with the basis of preparation and presentation set out in Note 2 to the Historical Financial Information.

– I-2 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

REPORT ON OTHER MATTERS UNDER THE RULES GOVERNING THE LISTING OF SECURITIES ON THE STOCK EXCHANGE AND THE COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS) ORDINANCE

Adjustments

In preparing the Historical Financial Information, no adjustments to the Underlying Financial Statements as defined on page I-4 have been made.

Dividends

We refer to Note 12 to the Historical Financial Information contains information about the dividends declared by entities now comprising the Group in respect of the Track Record Period.

Preparation or audit of financial statements

At the date of this report, no statutory audited financial statements have been prepared for the Company since its incorporation.

Note 1 to the Historical Financial Information contains information about whether the financial statements of the members of the Group for the Track Record Period have been audited and, if applicable, the name of the auditors.

Mazars CPA Limited Certified Public Accountants Hong Kong, [Date]

– I-3 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

HISTORICAL FINANCIAL INFORMATION OF THE GROUP

Preparation of the Historical Financial Information

Set out below is the Historical Financial Information which forms an integral part of this accountants’ report.

The combined financial statements of the Group for the Track Record Period, on which the Historical Financial Information is based, were prepared by the directors of the Company in accordance with the accounting policies that conform with International Financial Reporting Standards (“IFRSs”) issued by the International Accounting Standards Board (the “IASB”) and were audited by Mazars CPA Limited, Certified Public Accountants, Hong Kong, in accordance with Hong Kong Standards on Auditing issued by the HKICPA (the “Underlying Financial Statements”).

The Historical Financial Information is presented in Renminbi (“RMB”) and all values are rounded to the nearest thousand (RMB’000) except when otherwise indicated.

– I-4 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

COMBINED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Year ended 31 December 2018 2019 2020 Note RMB’000 RMB’000 RMB’000

Revenue 5 166,984 198,812 213,610 Cost of sales (165,228) (196,377) (207,918) Gross profit 1,756 2,435 5,692

Net changes in fair value less costs to sell of biological assets 16 129,901 128,490 142,330 Other income 6 522 1,688 812 Selling and distribution costs (237) (259) (420) Administrative and other operating expenses (17,480) (23,233) (31,301) Provision for impairment loss on trade receivables and other receivables, net 7 (52) (628) (298) Finance costs 7 (2,132) (992) (971) [REDACTED] – [REDACTED] [REDACTED]

Profit before taxation 7 112,278 104,084 106,457

Income tax expense 10 (14,104) (13,108) (12,908)

Profit and total comprehensive income for the year 98,174 90,976 93,549

– I-5 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

COMBINED STATEMENTS OF FINANCIAL POSITION

At 31 December 2018 2019 2020 Note RMB’000 RMB’000 RMB’000

Non-current assets Property, plant and equipment 13 219,223 196,428 215,503 Refundable rental deposits 4,951 4,962 4,975 Deposits paid for acquisition of property, plant and equipment 14 700 41,300 46,804

224,874 242,690 267,282

Current assets Inventories 15 15,355 15,979 17,261 Biological assets 16 53,999 45,573 48,330 Trade and other receivables 17 34,480 101,799 100,731 Amount due from the Controlling Shareholders 23 2,021 7,200 6,133 Bank balances and cash 18 22,530 17,567 65,779

128,385 188,118 238,234

Current liabilities Trade and other payables 19 2,150 7,369 6,183 Interest-bearing borrowings 20 8,000 12,700 12,700 Lease liabilities 21 1,094 1,148 1,203 Government grants – unfulfilled 22 3,300 – – Income tax payable 8,928 6,206 5,076 Dividends payable 6,733 13,466 11,600

30,205 40,889 36,762

Net current assets 98,180 147,229 201,472

Total assets less current liabilities 323,054 389,919 468,754

– I-6 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

At 31 December 2018 2019 2020 Note RMB’000 RMB’000 RMB’000

Non-current liabilities Lease liabilities 21 4,093 2,945 1,743 Government grants – unfulfilled 22 – – 22,200 Deferred tax liabilities 24 4,510 4,747 3,828

8,603 7,692 27,771

NET ASSETS 314,451 382,227 440,983

Capital and reserves Share capital 25(a) – –* 7 Reserves 26 314,451 382,227 440,976

TOTAL EQUITY 314,451 382,227 440,983

* Represent amounts less than RMB1,000.

– I-7 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

STATEMENTS OF FINANCIAL POSITION OF THE COMPANY

At 31 December 2019 2020 Note RMB’000 RMB’000

Non-current assets Investments in subsidiaries –* 325

Current assets Other receivables –* 7

Current liabilities Other payables –* –

Net current assets –* 7

Total assets less current liabilities –* 332

NET ASSETS –* 332

Capital and reserves Share capital 25(a) –* 7 Reserves 25(b) – 325

TOTAL EQUITY –* 332

* Represent amounts less than RMB1,000.

– I-8 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

COMBINED STATEMENTS OF CHANGES IN EQUITY

Reserves Share Capital Other Statutory Accumulated Total Total capital reserve reserve reserve profits reserves equity RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Note 25(a)) (Note 26) (Note 26) (Note 26)

At 1 January 2018 – 116,000 52,879 11,369 59,229 239,477 239,477

Profit and total comprehensive income for the year ––––98,174 98,174 98,174

Transactions with owners: Contributions and distributions Dividends (Note 12) ––––(23,200) (23,200) (23,200) Appropriation of statutory reserve – – – 7,798 (7,798) – –

– – – 7,798 (30,998) (23,200) (23,200)

At 31 December 2018 – 116,000 52,879 19,167 126,405 314,451 314,451

At 1 January 2019 – 116,000 52,879 19,167 126,405 314,451 314,451

Profit and total comprehensive income for the year ––––90,976 90,976 90,976 Transactions with owners: Contributions and distributions Dividends (Note 12) ––––(23,200) (23,200) (23,200) Issue of shares –* ––––––* Appropriation of statutory reserve – – – 9,582 (9,582) – –

–* – – 9,582 (32,782) (23,200) (23,200)

At 31 December 2019 –* 116,000 52,879 28,749 184,599 382,227 382,227

* Represent amounts less than RMB1,000.

– I-9 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

At 1 January 2020 –* 116,000 52,879 28,749 184,599 382,227 382,227

Profit and total comprehensive income for the year ––––93,549 93,549 93,549

Transactions with owners: Contributions and distributions Dividends (Note 12) ––––(34,800) (34,800) (34,800) Issue of shares 7–––––7 Appropriation of statutory reserve – – – 10,912 (10,912) – –

7 – – 10,912 (45,712) (34,800) (34,793)

At 31 December 2020 7 116,000 52,879 39,661 232,436 440,976 440,983

* Represent amounts less than RMB1,000.

– I-10 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

COMBINED STATEMENTS OF CASH FLOWS

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

OPERATING ACTIVITIES Profit before taxation 112,278 104,084 106,457 Adjustments for: Depreciation 14,644 14,113 17,361 Finance costs 2,132 992 971 (Gain) Loss on disposal of property, plant and equipment, net (32) 2,720 19 Provision for impairment loss on trade receivables and other receivables, net 52 628 298 Interest income (25) (47) (168) Net changes in fair value less costs to sell of biological assets (unrealised) (24,827) (25,057) (22,939)

Operating cash flows before changes in working capital 104,222 97,433 101,999

Changes in working capital: Inventories (1,214) (624) (1,282) Biological assets 5,952 33,483 20,182 Trade and other receivables (20,140) (68,573) 533 Trade and other payables (7,066) 5,593 (1,338)

Cash generated from operations 81,754 67,312 120,094 Income tax paid (4,886) (15,593) (14,957)

Net cash from operating activities 76,868 51,719 105,137

– I-11 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

INVESTING ACTIVITIES Interest received 25 47 168 Purchase of property, plant and equipment (19,841) (44,740) (41,960) Proceeds from disposal of property, plant and equipment 93 10,343 384 Government grants – unfulfilled (6,000) (3,300) 22,200

Net cash used in investing activities (25,723) (37,650) (19,208)

FINANCING ACTIVITIES Interest paid (2,089) (992) (971) Inception of interest-bearing borrowings 8,000 12,700 – Repayment of interest-bearing borrowings (13,349) (8,000) – Repayment of lease liabilities (916) (1,094) (1,147) (Advance to) Repayment from the Controlling Shareholders (3,811) (5,179) 1,067 Dividends paid (21,107) (16,467) (36,666)

Net cash used in financing activities (33,272) (19,032) (37,717)

Net increase (decrease) in cash and cash equivalents 17,873 (4,963) 48,212

Cash and cash equivalents at the beginning of the reporting period 4,657 22,530 17,567

Cash and cash equivalents at the end of the reporting period, represented by bank balances and cash 22,530 17,567 65,779

– I-12 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

NOTES TO THE HISTORICAL FINANCIAL INFORMATION

1. GENERAL INFORMATION AND REORGANISATION

The Company was incorporated in the Cayman Islands as an exempted company with limited liability on 21 November 2019. The address of the Company’s registered office is Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands. The Company’s principal place of business is situated at Unit D, 35/F, Montery Plaza, 15 Chong Yip Street, Kwun Tong, Kowloon, Hong Kong and the Group’s headquarter is situated at Yaqian Village, Chaoshui Town, Yantai Economic & Technological Development Area, Shandong Province, the People’s Republic of China (the “PRC”).

The Company is an investment holding company and its subsidiaries are principally engaged in (i) aquaculture of sea cucumbers and (ii) production and sales of feeds for young sea cucumbers in the PRC.

At the date of this report, in the opinion of the directors of the Company, the Company is ultimately controlled by Mr. Zou Ange, Mr. Zou Siyuan, Mr. Zhang Jianwei and Ms. Liu Shuzhen (collectively referred to as the “Controlling Shareholders”), who have been acting in concert over the course of the Group’s business history.

Pursuant to a group reorganisation (the “Reorganisation”), which was completed on 16 December 2020, as detailed in the paragraph headed “Reorganisation” of the section headed “History, Reorganisation and Corporate Structure” of the Document issued in connection with the initial [REDACTED] of shares of the Company (the “[REDACTED]”) on the Main Board of the Stock Exchange, the Company became the holding company of the entities now comprising the Group.

At the date of this report, the particulars of the Company’s subsidiaries, which are private limited liability companies, of which the Company has direct/indirect interests are as follows:

Attributable equity Place and date of interests held incorporation/ Issued and paid by the Principal activities/ Name of subsidiary establishment up capital Company Place of operation

Directly held by the Company

Great Winner International The British Virgin United States 100% Investment holding/ Group Limited (Note (i)) Islands (the dollars The BVI “BVI”), (“US$”) 1 2 September 2019

Perfect Force Limited The BVI, US$50,000 100% Investment holding/ (“Perfect Force”) (Notes (i) 5 July 2019 The BVI and (v))

Indirectly held by the Company

Anyuan Biotech Co., Limited Hong Kong, Hong Kong 100% Investment holding/ (Note (ii)) 22 January 2020 dollars Hong Kong (“HK$”) 1

Leap Profit Limited (“Leap Hong Kong, HK$10,000 100% Investment holding/ Profit”) (Notes (iii) and (v)) 2 August 2019 Hong Kong

– I-13 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

Attributable equity Place and date of interests held incorporation/ Issued and paid by the Principal activities/ Name of subsidiary establishment up capital Company Place of operation

山東安源企業發展有限公司 The PRC, HK$3,600,000 100% Investment holdings/ Shandong Anyuan 17 June 2020 The PRC Enterprise Development Co., Ltd* (Note (ii))

山東安源種業科技有限公司 The PRC, RMB116,000,000 100% Aquaculture of sea (formerly known as “山東 15 November cucumbers/ 安源水產股份有限公司”) 2006 The PRC Shandong Anyuan Marine Breeding Co., Limited* (“Shandong Anyuan”) (Note (iv))

煙台蓬安源海洋食品有限公司 The PRC, RMB80,000,000 100% Production and sales Yantai Peng Anyuan 5 April 2016 of feeds for young Maritime Food Company sea cucumbers and Limited* (“Peng Anyuan primarily-processed Food”) (Note (iv)) sea cucumber products/ The PRC

安源種業(遼寧)有限公司 The PRC, RMB10,000,000 100% Aquaculture of sea, Anyuan Seedling (Liaoning) 30 September cucumbers/ Company Limited* 2020 The PRC (“Anyuan (Liaoning)”) (Note (ii))

Notes:

(i) No audited financial statements of these companies were issued as there is no statutory audit requirement at their places of incorporation/establishment.

(ii) No audited financial statements of these companies have been issued as they are not yet due for issuance as of the date of this report.

(iii) The statutory financial statements of the company for the period from the date of incorporation to 31 December 2020 was audited by DANNY H.T.SO CPA (PRACTISING).

(iv) The statutory financial statements of these companies for the years ended 31 December 2018, 2019 and 2020 were audited by 煙台匯成會計師事務所 (Yantai Huicheng Certified Public Accountants*).

(v) Dr. Yee Wu Fan Fanny (“Dr. Yee Wu”), the pre-IPO investor of the Company, acquired Perfect Force and Leap Profit from an independent third party with nil identifiable assets on 3 April 2020.

* English translation is for identification purpose only.

– I-14 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

2. BASIS OF PREPARATION AND PRESENTATION OF THE HISTORICAL FINANCIAL INFORMATION

Immediately prior to and after the Reorganisation, the Company and its subsidiaries now comprising the Group are ultimately controlled by the Controlling Shareholders. The Group’s business is mainly conducted through Shandong Anyuan, Peng Anyuan Food and Anyuan (Liaoning). The Company and other entities within the Group have not been involved in any other significant activities prior to the Reorganisation. As the Reorganisation did not result in any change in the ultimate control of and the resource employed by the Group’s business, the Group is regarded as a continuing entity and, therefore, the Reorganisation is considered to be a restructuring of entities and business under common control.

As further explained in the paragraph headed “Merger accounting for business combination involving entities under common control” in Note 3, the Historical Financial Information presents the combined financial information of the entities now comprising the Group as if the current group structure had always been in existence throughout the Track Record Period or since their respective date of incorporation or establishment, where applicable.

The Historical Financial Information aims to include assets, liabilities, income and expenses that are related to and specifically identified for the Group’s business. During the Track Record Period, the following companies, entirely/partially owned by Shandong Anyuan, were regarded as non-core assets (the “Non-core Assets”) of the Group, which are not directly related to, nor form part of, the Group’s principal business.

Equity interest Place of held by the incorporation/ Group prior to Name establishment deregistration Principal activities

蓬萊市安源海上養殖專業合作社 The PRC 48% Inactive since its Penglai Anyuan Mariculture Professional incorporation Cooperative* (“Anyuan Cooperative”)

山東省海上糧倉建設投資基金合夥企業 The PRC 6.25% Inactive since its (有限合夥) Shandong Marine Granary incorporation Construction Investment Fund Partnership Corporation (Limited Partnership)* (“Shandong Partnership”)

蓬萊市安源水產有限公司利津分公司 The PRC 100% Inactive since its Penglai Anyuan Aquaculture Company incorporation Limited Li Jin Branch Company* (“Li Jin”)

* English translation is for identification purpose only.

No investment costs were made to Anyuan Cooperative, Shandong Partnership and Li Jin by the Group and Anyuan Cooperative, Shandong Partnership and Li Jin were deregistered on 15 April 2020, 16 December 2020 and 24 September 2020, respectively.

For the purpose of this report, the Group had segregated the relevant financial information of the Non-core Assets from the historical financial information of the Group’s principal business for the preparation of the Historical Financial Information. Such presentation ceased when the Non-core Assets were formally dissolved in 2020. The Historical Financial Information excludes the movements and balances of the Non-core Assets which, in the opinion of the directors of the Company, are clearly delineated from the Group’s principal business and whose movements and balances are clearly identifiable.

The Historical Financial Information has been prepared based on the accounting policies set out in Note 3 which conforms with IFRSs issued by the IASB.

– I-15 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

3. SIGNIFICANT ACCOUNTING POLICIES

Statement of compliance

The Historical Financial Information has been prepared in accordance with IFRSs issued by the IASB, which collective term includes all applicable individual IFRSs, International Accounting Standards (“IASs”) and Interpretations issued by the IASB.

The Historical Financial Information also complies with the disclosure requirements of the Hong Kong Companies Ordinance and the applicable disclosure provisions of the Rules Governing the Listing of Securities on the Stock Exchange (the “Listing Rules”).

The IASB has issued a number of new/revised IFRSs during the Track Record Period. For the purpose of the Historical Financial Information, the Group has consistently adopted all these new/revised IFRSs that are relevant to its operations and are effective during the Track Record Period (including IFRSs 9, 15 and 16).

A summary of the principal accounting policies adopted by the Group in preparing the Historical Financial Information is set out below.

Basis of measurement

The measurement basis used in the preparation of the Historical Financial Information is the historical cost basis, except for biological assets that are measured at fair value less costs to sell at the end of each reporting period, as explained in the accounting policy set out below.

Merger accounting for business combination involving entities under common control

The Historical Financial Information incorporates the financial statements of the combining entities or businesses in which the common control combination occurs as if they had been combined from the date when the combining entities or businesses first came under the control of the Controlling Shareholders.

The net assets of the combining entities or businesses are combined using the existing carrying values from the Controlling Shareholders’ perspective. No amount is recognised as consideration for goodwill or excess of acquirer’s interest in the net fair value of acquiree’s identifiable assets, liabilities and contingent liabilities over cost at the time of common control combination. All differences between the cost of acquisition (fair value of consideration paid) and the amounts at which the assets and liabilities, arising from the Reorganisation, are recorded have been recognised directly in equity as part of the capital reserve. The Historical Financial Information includes the results of each of the combining entities or businesses from the date of incorporation/establishment or since the date when the combining entities or businesses first came under the common control, where this is a shorter period, regardless of the date of the common control combination.

Transaction costs, including professional fees, registration fees, costs of furnishing information to shareholders, costs or losses incurred in combining operations of the previously separate businesses, etc., incurred in relation to the common control combination that is to be accounted for by using merger accounting, are recognised as an expense in the period in which they are incurred.

Subsidiaries

A subsidiary is an entity that is controlled by the Group. The Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The Group reassesses whether it controls an investee if facts and circumstances indicate that there are changes to one or more of the elements of control.

In the Company’s statements of financial position, investments in subsidiaries are stated at cost less impairment loss. The carrying amount of the investments is reduced to its recoverable amount on an individual basis, if it is higher than the recoverable amount. The results of subsidiaries are accounted for by the Company on the basis of dividends received and receivable.

– I-16 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. The cost of an item of property, plant and equipment comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Repairs and maintenance are charged to profit or loss during the period in which they are incurred.

Depreciation is provided to write off the cost less accumulated impairment losses of property, plant and equipment over their estimated useful lives as set out below from the date on which they are available for use and after taking into account their estimated residual values, using the straight-line method. Where parts of an item of property, plant and equipment have different useful lives, the cost of the item is allocated on a reasonable basis and depreciated separately:

Right-of-use assets Shorter of assets useful lives or over the unexpired terms of lease Buildings 20 years Hatchery site and workshop 10 – 20 years Plant and machinery 10 years Furniture, fixtures and equipment 5 years Motor vehicles 5 years

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in profit or loss in the period in which the item is derecognised.

Construction in progress represents buildings and hatchery site and workshop under construction. It is stated at cost less any accumulated impairment losses, and is not depreciated. Cost comprises the direct costs of construction during the period of construction. Construction in progress is reclassified to the appropriate category of property, plant and equipment when the construction is completed and the asset is available for use.

Intangible assets

Research and development costs

Research costs are expensed as incurred. Costs incurred on development activities, which involve the application of research findings to a plan or design for the production of new or substantially improved products and processes, are capitalised if the product or process is technically and commercially feasible and the Group has sufficient resources to complete the development. The expenditure capitalised includes the cost of materials, direct labour and an appropriate proportion of overheads. Other development expenditure is recognised in profit or loss as an expense as incurred.

Biological assets

Biological assets represent live sea cucumbers include larvae of sea cucumbers, young sea cucumbers and mature sea cucumbers which are classified as current assets. Biological assets are measured on initial recognition and at the end of each reporting period at their fair value less costs to sell. A gain or loss arising on initial recognition of biological asset at fair value less costs to sell and from a change in fair value less costs to sell of a biological asset is included in profit or loss in the period in which it arises.

The agricultural produce harvested from the biological assets are measured at their fair value less costs to sell at the point of harvest. Such measurement is the cost at the date when applying IAS 2 “Inventories”. A gain or loss arising from agricultural produce at the point of harvest at fair value less costs to sell is included in profit or loss for the period in which it arises.

– I-17 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

Financial instruments

Financial assets

Recognition and derecognition

Financial assets are recognised when and only when the Group becomes a party to the contractual provisions of the instruments and on a trade date basis.

A financial asset is derecognised when and only when (i) the Group’s contractual rights to future cash flows from the financial asset expire or (ii) the Group transfers the financial asset and either (a) it transfers substantially all the risks and rewards of ownership of the financial asset, or (b) it neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset but it does not retain control of the financial asset.

If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises the financial asset to the extent of its continuing involvement and an associated liability for amounts it may have to pay.

Classification and measurement

Financial assets (except for trade receivables without a significant financing component) are initially recognised at their fair value plus, in the case of financial assets not carried at fair value through profit or loss (“FVPL”), transaction costs that are directly attributable to the acquisition of the financial assets. Such trade receivables are initially measured at their transaction price.

On initial recognition, a financial asset is classified as (i) measured at amortised cost; (ii) debt investment measured at fair value through other comprehensive income; (iii) equity investment measured at fair value through other comprehensive income; or (iv) measured at FVPL.

The classification of financial assets at initial recognition depends on the Group’s business model for managing the financial assets and the financial asset’s contractual cash flow characteristics. Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing them, in which case all affected financial assets are reclassified on the first day of the first annual reporting period following the change in the business model.

Financial assets measured at amortised cost

A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as FVPL:

(i) it is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

(ii) its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

– I-18 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

Financial assets at amortised cost are subsequently measured using the effective interest method and are subject to impairment. Gains and losses arising from impairment, derecognition or through the amortisation process are recognised in profit or loss.

The Group’s financial assets at amortised cost include refundable rental deposits, trade and other receivables, amount due from a Controlling Shareholder and bank balances and cash.

Financial liabilities

Recognition and derecognition

Financial liabilities are recognised when and only when the Group becomes a party to the contractual provisions of the instruments.

A financial liability is derecognised when and only when the liability is extinguished, that is, when the obligation specified in the relevant contract is discharged, cancelled or expires.

Classification and measurement

Financial liabilities are initially recognised at their fair value plus, in the case of financial liabilities not carried at FVPL, transaction costs that are direct attributable to the issue of the financial liabilities.

The Group’s financial liabilities include trade and other payables, interest-bearing borrowings and lease liabilities. All financial liabilities, except for financial liabilities at FVPL, are recognised initially at their fair value and subsequently measured at amortised cost, using the effective interest method, unless the effect of discounting would be insignificant, in which case they are stated at cost.

Impairment of financial assets

The Group recognises loss allowances for expected credit losses (“ECL”) on financial assets that are measured at amortised cost. Except for the specific treatments as detailed below, at each reporting date, the Group measures a loss allowance for a financial asset at an amount equal to the lifetime ECL if the credit risk on that financial asset has increased significantly since initial recognition. If the credit risk on a financial asset has not increased significantly since initial recognition, the Group measures the loss allowance for that financial asset at an amount equal to 12-month ECL.

Measurement of ECL

ECL is a probability-weighted estimate of credit losses (i.e. the present value of all cash shortfalls) over the expected life of the financial instrument.

For financial assets, a credit loss is the present value of the difference between the contractual cash flows that are due to an entity under the contract and the cash flows that the entity expects to receive.

Lifetime ECL represents the ECL that will result from all possible default events over the expected life of a financial instrument while 12-month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

– I-19 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

Where ECL is measured on a collective basis, the financial instruments are grouped based on the following one or more shared credit risk characteristics:

(i) past due information

(ii) nature of instrument

(iii) nature of collateral

(iv) industry of debtors

(v) geographical location of debtors

(vi) external credit risk ratings

Loss allowance is remeasured at each reporting date to reflect changes in the financial instrument’s credit risk and loss since initial recognition. The resulting changes in the loss allowance are recognised as an impairment gain or loss in profit or loss with a corresponding adjustment to the carrying amount of the financial instrument.

Definition of default

The Group considers the following as constituting an event of default for internal credit risk management purposes as historical experience indicates that the Group may not receive the outstanding contractual amounts in full if the financial asset that meets any of the following criteria.

(i) information developed internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors, including the Group, in full (without taking into account any collaterals held by the Group); or

(ii) there is a breach of financial covenants by the counterparty.

Irrespective of the above analysis, the Group considers that default has occurred when a financial asset is more than 90 days past due unless the Group has reasonable and supportable information to demonstrate that a more lagging default criterion is more appropriate.

Assessment of significant increase in credit risk

In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition, the Group compares the risk of a default occurring on the financial instrument at the reporting date with the risk of a default occurring on the financial instrument at the date of initial recognition. In making this assessment, the Group considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that is available without undue cost or effort. Irrespective of the outcome of the above assessment, the Group presumes that the credit risk on a financial asset has increased significantly since initial recognition when contractual payments are more than 30 days past due, unless the Group has reasonable and supportable information to demonstrate otherwise.

Notwithstanding the foregoing, the Group assumes that the credit risk on a financial instrument has not increased significantly since initial recognition if the financial instrument is determined to have low credit risk at the reporting date.

– I-20 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

Low credit risk

A financial instrument is determined to have low credit risk if:

(i) it has a low risk of default;

(ii) the borrower has a strong capacity to meet its contractual cash flow obligations in the near term; and

(iii) adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to fulfil its contractual cash flow obligations.

Simplified approach of ECL

For trade receivables without a significant financing components or otherwise for which the Group applies the practical expedient not to account for the significant financing components, the Group applies a simplified approach in calculating ECL. The Group recognises a loss allowance based on lifetime ECL at each reporting date and has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.

Credit-impaired financial asset

A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired includes observable data about the following events:

(a) significant financial difficulty of the issuer or the borrower;

(b) a breach of contract, such as a default or past due event;

(c) the lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s financial difficulty, having granted to the borrower a concession(s) that the lender(s) would not otherwise consider;

(d) it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation;

(e) the disappearance of an active market for that financial asset because of financial difficulties; or

(f) the purchase or origination of a financial asset at a deep discount that reflects the incurred credit losses.

Write-off

The Group writes off a financial asset when the Group has no reasonable expectations of recovering the contractual cash flows on a financial asset in its entirety or a portion thereof. The Group expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities under the Group’s procedures for recovery of amounts due, taking into account legal advice if appropriate. Any subsequent recovery is recognised in profit or loss.

– I-21 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

Cash equivalents

For the purpose of the combined statements of cash flows, cash equivalents represent short-term highly liquid investments which are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

Revenue recognition

Revenue from contracts with customers

The Group adopts a 5-step approach to revenue recognition:

Step 1: Identify the contract(s) with a customer Step 2: Identify the performance obligations in the contract Step 3: Determine the transaction price Step 4: Allocate the transaction price to the performance obligations in the contract Step 5: Recognise revenue when (or as) the Group satisfies a performance obligation

Nature of goods or services

The nature of the goods provided by the Group is the live sea cucumbers, feeds for young sea cucumbers and primarily-processed sea cucumber products.

Identification of performance obligations

At contract inception, the Group assesses the goods or services promised in a contract with a customer and identifies as a performance obligation each promise to transfer to the customer either:

(a) a good or service (or a bundle of goods or services) that is distinct; or

(b) a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer.

A good or service that is promised to a customer is distinct if both of the following criteria are met:

(a) the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e. the good or service is capable of being distinct); and

(b) the Group’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e. the promise to transfer the good or service is distinct within the context of the contract).

Timing of revenue recognition

Revenue is recognised when (or as) the Group satisfies a performance obligation by transferring a promised good or service (i.e. an asset) to a customer. An asset is transferred when (or as) the customer obtains control of that asset.

The Group transfers control of a good or service over time and, therefore, satisfies a performance obligation and recognises revenue over time, if one of the following criteria is met:

(a) the customer simultaneously receives and consumes the benefits provided by the Group’s performance as the Group performs;

– I-22 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

(b) the Group’s performance creates or enhances an asset (for example, work in progress) that the customer controls as the asset is created or enhanced; or

(c) the Group’s performance does not create an asset with an alternative use to the Group and the Group has an enforceable right to payment for performance completed to date.

If a performance obligation is not satisfied over time, the Group satisfies the performance obligation at a point in time when the customer obtains control of the promised asset. In determining when the transfer of control occurs, the Group considers the concept of control and such indicators as legal title, physical possession, right to payment, significant risks and rewards of ownership of the asset, and customer acceptance.

Sales of larvae of sea cucumbers, juvenile sea cucumbers, feeds for young sea cucumbers and others including primarily-processed sea cucumber products and mature sea cucumbers are recognised at a point in time at which the customer obtains the control of the promised asset, which generally coincides with the time when the goods are transferred to customers and the title is passed.

Transaction price: significant financing components

When the contract contains a significant financing component (i.e. the customer or the Group is provided with a significant benefit of financing the transfer of goods or services to the customer), in determining the transaction price, the Group adjusts the promised consideration for the effects of the time value of money. The effect of the significant financing component is recognised as an interest income or interest expense separately from revenue from contracts with customers in profit or loss.

The Group determines the interest rate that is commensurate with the rate that would be reflected in a separate financing transaction between the Group and its customer at contract inception by reference to, where appropriate, the interest rate implicit in the contract (i.e. the interest rate that discounts the cash selling price of the goods or services to the amount paid in advance or arrears), the prevailing market interest rates, the Group’s borrowing rates and other relevant creditworthiness information of the customer of the Group.

The Group has applied the practical expedient in paragraph 63 of IFRS 15 and does not adjust the consideration for the effect of the significant financing component if the period of financing is one year or less.

Interest income

Interest income from financial assets is recognised using the effective interest method. For financial assets measured at amortised cost that are not credit-impaired, the effective interest rate is applied to the gross carrying amount of the assets while it is applied to the amortised cost (i.e. the gross carrying amount net of loss allowance) in case of credit-impaired financial assets.

Foreign currency translation

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The Company’s functional currency is HK$ and majority of its subsidiaries have RMB as their functional currency. The Historical Financial Information is presented in the currency of RMB, which is the Group’s presentation currency, and rounded to the nearest thousands unless otherwise stated.

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.

– I-23 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

The results and financial position of all the group entities that have a functional currency different from the presentation currency (“foreign operations”) are translated into the presentation currency as follows:

• assets and liabilities for each statement of financial position presented, are translated at the closing rate at the end of each reporting period;

• income and expenses for each statement of profit or loss and other comprehensive income are translated at average exchange rate;

• all resulting exchange differences arising from the above translation and exchange differences arising from a monetary item that forms part of the Group’s net investment in a foreign operation are recognised as a separate component of equity;

• on the disposal of a foreign operation, which includes a disposal of the Group’s entire interest in a foreign operation and a disposal involving the loss of control over a subsidiary that includes a foreign operation, the cumulative amount of the exchange differences relating to the foreign operation that is recognised in other comprehensive income and accumulated in the separate component of equity is reclassified from equity to profit or loss when the gain or loss on disposal is recognised;

• on the partial disposal of the Group’s interest in a subsidiary that includes a foreign operation which does not result in the Group losing control over the subsidiary, the proportionate share of the cumulative amount of the exchange differences recognised in the separate component of equity is re-attributed to the non-controlling interests in that foreign operation and are not reclassified to profit or loss; and

• on all other partial disposals, the proportionate share of cumulative amount of exchange differences recognised in the separate component of equity is reclassified to profit or loss.

Inventories

Inventories are stated at the lower of cost or the demand cost for agricultural produce harvested from biological assets and net realisable value. Cost, which comprises all costs of purchase and, where applicable, other costs that have been incurred in bringing the inventories to their present location and condition, is calculated using the weighted average cost method. Net realisable value represents the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale.

When inventories are sold, the carrying amount of those inventories is recognised as an expense in the period in which the related revenue is recognised. The amount of any write-down of inventories to net realisable value and all losses of inventories are recognised as an expense in the period of the write-down or loss occurs. The amount of any reversal of any write-down of inventories is recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.

Impairment of other assets

At the end of each reporting period, the Group reviews internal and external sources of information to assess whether there is any indication that its property, plant and equipment (including right-of-use assets) and the Company’s investments in subsidiaries may be impaired or impairment loss previously recognised no longer exists or may be reduced. If any such indication exists, the recoverable amount of the asset is estimated, based on the higher of its fair value less costs of disposal and value in use. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the smallest group of assets that generates cash flows independently (i.e. cash-generating unit).

– I-24 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

If the recoverable amount of an asset or a cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. Impairment losses are recognised as an expense in profit or loss immediately.

A reversal of impairment loss is limited to the carrying amount of the asset or cash-generating unit that would have been determined had no impairment loss been recognised in prior periods. Reversal of impairment loss is recognised as an income in profit or loss immediately.

Government grants

Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. When the grant relates to an expense item, it is recognised as income over the periods necessary to match the grant on a systematic basis to the costs that it is intended to compensate unless there is no future service or other conditions attached to the grants which would recognised in the profit or loss when they are approved by and the cash are received from the relevant authorities. Where the grant relates to an asset, the fair value is recognised as a reduction from the carrying amount of the relevant assets and is released to profit or loss over the expected useful life of the relevant asset.

Borrowing costs

Borrowing costs incurred, net of any investment income on the temporary investment of the specific borrowings, that are directly attributable to the acquisition, construction or production of qualifying assets, i.e. assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets. Capitalisation of such borrowing costs ceases when the assets are substantially ready for their intended use or sale. All other borrowing costs are recognised as an expense in the period in which they are incurred.

Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and when a reliable estimate of the amount of obligation can be made. Expenditures for which a provision has been recognised are charged against the related provision in the year in which the expenditures are incurred. Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount provided is the present value of the expenditures expected to be required to settle the obligation. Where the Group expects a provision to be reimbursed, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.

Leases

The Group assesses whether a contract is, or contains, a lease at inception of the contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

As lessee

The Group applies the recognition exemption to short-term leases that have a lease term of 12 months or less and low-value asset leases. Lease payments associated with these leases are recognised as an expense on a straight-line basis over the lease term.

The Group has elected not to separate non-lease components from lease components, and accounts for each lease component and any associated non-lease components as a single lease component.

– I-25 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

The Group accounts for each lease component within a lease contract as a lease separately. The Group allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component.

Amounts payable by the Group that do not give rise to a separate component are considered to be part of the total consideration that is allocated to the separately identified components of the contract.

The Group recognises a right-of-use asset (as presented within “property, plant and equipment”) and a lease liability at the commencement date of the lease.

The right-of-use asset is initially measured at cost, which comprises:

(a) the amount of the initial measurement of the lease liability;

(b) any lease payments made at or before the commencement date, less any lease incentives received;

(d) an estimate of costs to be incurred by the Group in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease, unless those costs are incurred to produce inventories.

Subsequently, the right-of-use asset is measured at cost less any accumulated depreciation and any accumulated impairment losses and adjusted for any remeasurement of the lease liability. Depreciation is provided on a straight-line basis over the shorter of the lease term and the estimated useful lives of the right-of-use asset (unless the lease transfers ownership of the underlying asset to the Group by the end of the lease term or if the cost of the right-of-use asset reflects that the Group will exercise a purchase option – in which case depreciation is provided over the estimated useful life of the underlying asset).

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date of the lease.

The lease payments included in the measurement of the lease liability comprise the following payments for the right to use the underlying asset during the lease term that are not paid at the commencement date:

(a) fixed payments (including in-substance fixed payments), less any lease incentives receivable;

(b) variable lease payments that depend on an index or a rate;

(d) exercise price of a purchase option if the Group is reasonably certain to exercise that option; and

(e) payments of penalties for terminating the lease, if the lease term reflects the Group exercising an option to terminate the lease.

The lease payments are discounted using the interest rate implicit in the lease, or where it is not readily determinable, the incremental borrowing rate of the lessee.

Subsequently, the lease liability is measured by increasing the carrying amount to reflect interest on the lease liability and by reducing the carrying amount to reflect the lease payments made.

The lease liability is remeasured using a revised discount rate when there are changes to the lease payments arising from a change in the lease term or the reassessment of whether the Group will be reasonably certain to exercise a purchase option.

– I-26 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

The lease liability is remeasured by using the original discount rate when there is a change in the residual value guarantee, the in-substance fixed lease payments or the future lease payments resulting from a change in an index or a rate (other than floating interest rate). In case of a change in future lease payments resulting from a change in floating interest rates, the Group remeasures the lease liability using a revised discount rate.

The Group recognises the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset. If the carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the measurement of the lease liability, the Group recognises any remaining amount of the remeasurement in profit or loss.

Employee benefits

Short term employee benefits

Salaries, annual bonuses, paid annual leave, contributions to defined contribution retirement plans and the cost of non-monetary benefits are accrued in the period in which the associated services are rendered by employees.

Defined contribution plans

The obligations for contributions to defined contribution retirement scheme are recognised as an expense in profit or loss as incurred. The assets of the scheme are held separately from those of the Group in an independently administered fund.

In accordance with the rules and regulations in the PRC, the employees of the Group’s entities established in the PRC are required to participate in defined contribution retirement plans organised by local governments. Contributions to these plans are expensed in profit or loss as incurred and other than these monthly contributions, the Group has no further obligation for the payment of retirement benefits to its employees.

Taxation

The charge for current income tax is based on the results for the period as adjusted for items that are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax is provided, using the liability method, on all temporary differences at the end of the reporting period between the tax bases of assets and liabilities and their carrying amounts in the combined financial statements. However, any deferred tax arising from initial recognition of goodwill; or other asset or liability in a transaction other than a business combination that at the time of the transaction affects neither the accounting profit nor taxable profit or loss is not recognised.

The deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is recovered or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the end of the reporting period.

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences, tax losses and credits can be utilised.

Deferred tax is provided on temporary differences arising on investment in subsidiaries, except where the timing of the reversal of the temporary differences is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

– I-27 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

Related parties

A related party is a person or entity that is related to the Group.

(a) A person or a close member of that person’s family is related to the Group if that person:

(i) has control or joint control over the Group;

(ii) has significant influence over the Group; or

(iii) is a member of the key management personnel of the Group or of the holding company of the Group.

(b) An entity is related to the Group if any of the following conditions applies:

(i) the entity and the Group are members of the same group (which means that each holding company, subsidiary and fellow subsidiary is related to the others).

(ii) one entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).

(iii) both entities are joint ventures of the same third party.

(iv) one entity is a joint venture of a third entity and the other entity is an associate of the third entity.

(v) the entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group. If the Group is itself such a plan, the sponsoring employers are also related to the Group.

(vi) the entity is controlled or jointly controlled by a person identified in (a).

(vii) a person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a holding company of the entity).

(viii) the entity, or any member of a group of which it is a part, provides key management personnel services to the Group or to the holding company of the Group.

Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity and include:

(a) that person’s children and spouse or domestic partner;

(b) children of that person’s spouse or domestic partner; and

In the definition of a related party, an associate includes subsidiaries of the associate and a joint venture includes subsidiaries of the joint venture.

– I-28 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

Segment reporting

Operating segments, and the amounts of each segment item reported in the Historical Financial Information, are identified from the financial information provided regularly to Group’s most senior executive management for the purpose of allocating resources to, and assessing the performance of the Group’s various lines of business and geographical locations.

Individual material operating segments are not aggregated for financial reporting purposes unless the segments have similar economic characteristics and are similar in respect of the nature of products and services, the nature of production processes, the type or class of customers, the methods used to distribute the products or provide the services, and the nature of the regulatory environment. Operating segments which are not individually material may be aggregated if they share a majority of these criteria.

Critical accounting estimates and judgements

Estimates and assumptions concerning the future and judgements are made by the management in the preparation of the Historical Financial Information. They affect the application of the Group’s accounting policies, reported amounts of assets, liabilities, income and expenses and disclosures made. They are assessed on an on-going basis and are based on experience and relevant factors, including expectations of future events that are believed to be reasonable under the circumstances. Where appropriate, revisions to accounting estimates are recognised in the period of revision and future periods, in case the revision also affects future periods.

Key sources of estimation uncertainty are as follows:

Useful lives of property, plant and equipment (including right-of-use assets)

The management determines the estimated useful lives of the Group’s property, plant and equipment based on the historical experience of the actual useful lives of the relevant assets of similar nature and functions. The estimated useful lives could be different as a result of technical innovations which could affect the related depreciation charges included in profit or loss.

Impairment of property, plant and equipment (including right-of-use assets)

The management determines whether the Group’s property, plant and equipment is impaired when an indication of impairment exists. This requires an estimation of the recoverable amount of the property, plant and equipment which is equal to the higher of fair value less costs of disposal and value in use. Estimating the value in use requires the management to make an estimate of the expected future cash flows from the property, plant and equipment and also to choose a suitable discount rate in order to calculate the present value of those cash flows. Any impairment will be charged to profit or loss.

Fair value measurement of biological assets

The Group’s management determines the fair values less costs to sell of biological assets at the end of each reporting period with reference to the market-determined prices, species, growing conditions, cost incurred and the professional valuation. The management works closely with the qualified external valuers to establish the appropriate valuation techniques and inputs to the model. The determination involved the use of significant judgement. If actual results differ from the original estimates made by management, such differences from the original estimates will impact the fair value changes recognised in profit or loss in the period in which the estimates change and in future periods.

– I-29 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

Allowance for inventories

The Group’s management reviews the condition of inventories at the end of each reporting period, and makes allowance for inventories that are identified as obsolete, slow-moving or no longer recoverable. The Group carries out the inventory review on a product-by-product basis and makes allowances at the end of each reporting period by reference to management’s estimation of the net realisable value based on the latest market prices and current market conditions.

Loss allowance for ECL

The management of the Group estimates the loss allowance for financial assets at amortised cost including refundable rental deposits, plant and equipment and trade and other receivables by using various inputs and assumptions including risk of a default and expected loss rate. The estimation involves high degree of uncertainty which is based on the Group’s historical information, existing market conditions as well as forward-looking estimates at the end of each reporting period. Where the expectation is different from the original estimate, such difference will impact the carrying amount of trade receivables.

Income tax

Significant estimates are required in determining the provision for income taxes and deferred taxation. There are transactions and calculations for which the ultimate tax determination is uncertain where the final tax outcome of these matters may be different from the amounts that were initially recorded and such differences will affect the income tax and deferred tax provision in the period in which such determination is made.

Future changes in IFRSs

At the date of approving the Historical Financial Information, the IASB has issued the following new/revised IFRSs that are not yet effective for the Track Record Period, which the Group has not early adopted:

Amendments to IAS 39, IFRSs 4, 7, Interest Rate Benchmark Reform – Phase 2 (1) 9 and 16 Amendments to IFRS 16 Covid-19-Related Rent Concessions (2) Amendments to IAS 16 Proceeds before Intended Use (3) Amendments to IAS 37 Cost of Fulfilling a Contract (3) Amendments to IFRS 3 Reference to the Conceptual Framework (3) Annual Improvements to IFRSs 2018–2020 Cycle (3) Amendments to IAS 1 Classification of Liabilities as Current or Non-current (4) Amendments to IAS 1 Disclosures of Accounting Policies (4) Amendments to IAS 8 Definition of Accounting Estimates (4) IFRS 17 Insurance Contracts (4) Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (5)

(1) Effective for annual periods beginning on or after 1 January 2021 (2) Effective for annual periods beginning on or after 1 April 2021 (3) Effective for annual periods beginning on or after 1 January 2022 (4) Effective for annual periods beginning on or after 1 January 2023 (5) The effective date to be determined

The management of the Group does not anticipate that the adoption of the new/revised IFRSs in future periods will have any material impact on the Group’s combined/consolidated financial information.

– I-30 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

4. SEGMENT INFORMATION

Information reported to the executive directors of the Company, being identified as the chief operating decision makers (the “CODM”), for the purposes of resource allocation and assessment of segment performance focuses on types of goods or services delivered or provided. No operating segments identified by the CODM have been aggregated in arriving at the reportable segments of the Group.

Specifically, the Group’s reportable and operating segments are:

(1) Aquaculture and sales of sea cucumbers; and

(2) Production and sales of feeds for young sea cucumbers.

Segment revenue and results

The accounting policies of the operating segments are the same as the Group’s accounting policies described in Note 3 to the Historical Financial Information.

Segment revenue represents revenue derived from the aquaculture and sales of sea cucumbers, and production and sales of feeds for young sea cucumbers.

Segment results represent the gross profit (before biological asset fair value adjustments) reported by each segment without allocation of other income, selling and distribution costs, administrative expenses, finance costs, [REDACTED] and income tax expense. This is the measure reported to the CODM of the Group for the purposes of resource allocation and performance assessment.

In addition, the Group’s place of domicile is the PRC, where the central management and control is located.

– I-31 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

The followings are analysis of the Group’s revenue and results by reportable and operating segments:

Production and Aquaculture and sales of feeds for sales of young sea sea cucumbers cucumbers Total RMB’000 RMB’000 RMB’000

Year ended 31 December 2018 Segment revenue Revenue from external customers 162,779 4,205 166,984 Intersegment sales 5,526 13,731 19,257

168,305 17,936 186,241

Segment results 109,063 1,048 110,111

Unallocated income 522 Unallocated expenses (17,717) Net gain in fair value changes of biological assets 21,546 Finance costs (2,132) Impairment loss on trade receivables and other receivables, net (52)

Profit before taxation 112,278

Income tax expense (14,104)

Profit for the year 98,174

– I-32 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

Production and Aquaculture and sales of feeds for sales of young sea sea cucumbers cucumbers Total RMB’000 RMB’000 RMB’000

Year ended 31 December 2019 Segment revenue Revenue from external customers 189,967 8,845 198,812 Intersegment sales 238 12,042 12,280

190,205 20,887 211,092

Segment results 128,545 2,150 130,695

Unallocated income 1,688 Unallocated expenses (23,492) Net gain in fair value changes of biological assets 230 Finance costs (992) Impairment loss on trade receivables and other receivables, [REDACTED] (628) [REDACTED] [REDACTED]

Profit before taxation 104,084

Income tax expense (13,108)

Profit for the year 90,976

– I-33 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

Production and Aquaculture and sales of feeds for sales of young sea sea cucumbers cucumbers Total RMB’000 RMB’000 RMB’000

Year ended 31 December 2020 Segment revenue Revenue from external customers 198,312 15,298 213,610 Intersegment sales 32 19,983 20,015

198,344 35,281 233,625

Segment results 144,782 5,358 150,140

Unallocated income 812 Unallocated expenses (31,721) Net loss in fair value changes of biological assets (2,118) Finance costs (971) Impairment loss on trade receivables and other receivables, [REDACTED] (298) [REDACTED] [REDACTED]

Profit before taxation 106,457

Income tax expense (12,908)

Profit for the year 93,549

– I-34 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

Segment assets and liabilities

The following is an analysis of the Group’s assets and liabilities by reportable and operating segments:

Aquaculture Production and and sales sales of feeds of sea for young sea cucumbers cucumbers Unallocated Total RMB’000 RMB’000 RMB’000 RMB’000

At 31 December 2018 Assets Reportable segment assets 293,245 17,912 42,102 353,259

Liabilities Reportable segment liabilities 38,424 384 – 38,808

Other segment information: Depreciation of property, plant and equipment 11,747 804 2,093 14,644 Gain on disposal of property, plant and equipment, net – – (32) (32) Net gain in fair value less costs to sell of biological assets (129,901) – – (129,901) Impairment loss on trade receivables and other receivables, net 52 – – 52 Additions to property, plant and equipment 24,927 485 1,885 27,297 Research and development expenses 2,810 – – 2,810

– I-35 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

Aquaculture Production and and sales sales of feeds of sea for young sea cucumbers cucumbers Unallocated Total RMB’000 RMB’000 RMB’000 RMB’000

At 31 December 2019 Assets Reportable segment assets 362,426 19,423 48,959 430,808

Liabilities Reportable segment liabilities 41,342 7,239 – 48,581

Other segment information: Depreciation of property, plant and equipment 10,695 817 2,601 14,113 Loss on disposal of property, plant and equipment, net – – 2,720 2,720 Net gain in fair value less costs to sell of biological assets (128,490) – – (128,490) Impairment loss on trade receivables and other receivables, net 628 – – 628 Additions to property, plant and equipment 2,756 73 4,852 7,681 Research and development expenses 1,587 – – 1,587 [REDACTED] ––[REDACTED] [REDACTED]

At 31 December 2020 Assets Reportable segment assets 386,313 21,851 97,352 505,516

Liabilities Reportable segment liabilities 56,111 8,422 – 64,533

Other segment information: Depreciation of property, plant and equipment 13,410 815 3,136 17,361 Loss on disposal of property, plant and equipment, net 19 – – 19 Net gain in fair value less costs to sell of biological assets (142,330) – – (142,330) Impairment loss on trade receivables and other receivables, net 197 101 – 298 Additions to property, plant and equipment 31,159 498 5,182 36,839 Research and development expenses 9,354 – – 9,354 [REDACTED] ––[REDACTED] [REDACTED]

– I-36 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

For the purposes of monitoring segment performance and allocating resources between segments:

• segment assets include certain property, plant and equipment, refundable rental deposits, deposits paid for acquisition of property, plant and equipment, inventories, biological assets, trade receivables, certain other receivables and amount due from controlling shareholders. Other assets are not allocated to operating segments as these assets are managed on a corporate basis; and

• segment liabilities include trade and other payables, interest-bearing borrowings, lease liabilities, certain tax payables, dividend payable and certain deferred tax liabilities. Other liabilities (if any) are not allocated to operating segments as these liabilities are managed on a corporate basis.

Geographical information

The principal place of the Group’s operation is in the PRC. All of the Group’s revenue from external customers during the Track Record Period is derived from the PRC. The Group’s all non-current assets are located in the PRC.

Information about major customers

Details of the customers (including entities under common control) individually accounting for 10% or more of aggregate revenue of the Group during the Track Record Period are as follows:

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Customer A 19,051 38,406 Note Customer B Note 40,429 21,800 Customer C Note 27,212 59,113

Note: The customers contributed less than 10% of the total revenue of the Group for the relevant reporting periods.

– I-37 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

5. REVENUE

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Revenue from contracts with customers within IFRS 15, at point in time

Sales of larvae of sea cucumbers 263 2,320 8,588

Sales of juvenile sea cucumbers – small juvenile sea cucumbers 8,794 8,605 44,594 – large juvenile sea cucumbers 119,146 158,443 142,419

127,940 167,048 187,013

Sales of feeds for young sea cucumbers 4,205 8,845 15,298

Others (Note) 34,576 20,599 2,711

166,984 198,812 213,610

Note: Other products principally include sales of primarily-processed sea cucumber products and mature sea cucumbers. The Group has ceased the production of primarily-processed sea cucumber products since April 2021 and sale of mature sea cucumbers since August 2019.

6. OTHER INCOME

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Gain on disposal of property, plant and equipment, net 32 – – Government grants (Note) 420 1,641 641 Interest income 25 47 168 Sundry income 45 – 3

522 1,688 812

Note: In the opinion of the management of the Group, there was no unfulfilled condition or contingency relating to the government grants.

– I-38 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

7. PROFIT BEFORE TAXATION

This is stated after charging (crediting):

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Finance costs Interest on interest-bearing borrowings 1,847 753 786 Interest on lease liabilities 285 239 185

2,132 992 971

Staff costs (including directors’ remuneration) Salaries, allowances, discretionary bonus and other benefits in kind 23,439 26,827 31,191 Contributions to defined contribution plans 3,645 4,523 1,633

27,084 31,350 32,824

Other items Auditor’s remuneration 29 20 20 Cost of live sea cucumbers (Note (i)) 158,161 187,886 195,601 Cost of inventories (Note (ii)) 7,067 8,491 12,317 Depreciation (included in “cost of sales” and “administrative expenses”, as appropriate) 14,644 14,113 17,361 Other rental and related expenses (included in “cost of sales” and “administrative expenses”, as appropriate) 971 878 21 (Gain) Loss on disposal of property, plant and equipment, net (32) 2,720 19 Research and development expenses (included in administrative expenses) 2,810 1,587 9,354 (Reversal of) Provision for impairment loss on trade receivables, net (2) 140 43 Provision for impairment loss on other receivables, net 54 488 255

52 628 298

Notes:

(i) Cost of live sea cucumbers included approximately RMB27,839,000, RMB26,877,000 and RMB25,287,000 relating to the aggregate amount of certain staff costs, depreciation and other rental and related expenses, which were included in the respective amounts as disclosed above during the years ended 31 December 2018, 2019 and 2020, respectively.

(ii) Cost of inventories included approximately RMB3,173,000, RMB5,002,000 and RMB4,059,000 relating to the aggregate amount of certain staff costs, depreciation and other rental and related expenses, which were included in the respective amounts as disclosed above during the years ended 31 December 2018, 2019 and 2020, respectively.

– I-39 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

8. DIRECTORS’ EMOLUMENTS

The Company was incorporated in the Cayman Islands on 21 November 2019 and Mr. Zou Ange, Mr. Zhang Jiangwei, Mr. Zou Shifang, Mr. Liu Yongqi and Mr. Wang Zengdong, were appointed as executive directors of the Company on 15 June 2020. Mr. Wang Jifa was appointed as non-executive director of the Company on 18 May 2021. Mr. Li Hoi Kwong, Ms. Ng Yan Kuen, Carmen and Mr. Zheng Yongyun, were appointed as independent non-executive directors of the Company on [•].

Certain directors of the Company received remuneration from the entities now comprising the Group during the Track Record Period for their employment as directors or employees of these entities. The aggregate amounts of remuneration received and receivable by the directors of the Company during the Track Record Period are set out below.

Year ended 31 December 2018

Salaries, allowances Contributions and other to defined Directors’ benefits in Discretionary contribution fee kind bonus plans Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Executive directors Mr. Zou Ange – 130 – 42 172 Mr. Zhang Jiangwei – 127 – 36 163 Mr. Zou Shifang – 181 – 36 217 Mr. Liu Yongqi – 128 – 36 164 Mr. Wang Zengdong – 127 – 28 155

– 693 – 178 871

Year ended 31 December 2019

Salaries, allowances Contributions and other to defined Directors’ benefits in Discretionary contribution fee kind bonus plans Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Executive directors Mr. Zou Ange – 171 – 37 208 Mr. Zhang Jiangwei – 170 – 36 206 Mr. Zou Shifang – 170 – 50 220 Mr. Liu Yongqi – 169 – 36 205 Mr. Wang Zengdong – 167 – 36 203

– 847 – 195 1,042

– I-40 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

Year ended 31 December 2020

Salaries, allowances Contributions and other to defined Directors’ benefits in Discretionary contribution fee kind bonus plans Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Executive directors Mr. Zou Ange – 271 – 18 289 Mr. Zhang Jiangwei – 258 – 18 276 Mr. Zou Shifang – 268 – 18 286 Mr. Liu Yongqi – 257 – 18 275 Mr. Wang Zengdong – 246 – 18 264

– 1,300 – 90 1,390

During the Track Record Period, no emoluments were paid by the Group to any of the directors as an inducement to join or upon joining the Group, or as a compensation for loss of office. There was no arrangement under which a director waived or agreed to waive any remuneration during the Track Record Period.

9. FIVE HIGHEST PAID INDIVIDUALS

An analysis of the five highest paid individuals during the Track Record Period is as follows:

Number of individuals Year ended 31 December 2018 2019 2020

Director 4 5 5 Non-director 1 – –

555

Details of the remuneration of the above highest paid non-director individual are as follows:

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Salaries, allowances, discretionary bonus and other benefits in kind 158 – – Contributions to defined contribution plans 36 – –

194––

– I-41 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

The number of these non-director individual whose emoluments fell within the following emoluments band is as follows:

Number of individuals Year ended 31 December 2018 2019 2020

Nil to HK$1,000,000 1 – –

During the Track Record Period, no remuneration was paid by the Group to any of these highest paid non-director individual as an inducement to join or upon joining the Group, or as a compensation for loss of office. There was no arrangement under which any of these highest paid non-director individual waived or agreed to waive any emoluments during the Track Record Period.

10. INCOME TAX EXPENSE

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Current tax PRC Enterprise Income Tax (“EIT”) 11,663 12,871 13,827

Deferred taxation Origination and reversal of temporary differences (Note 24) 2,441 237 (919)

Total income tax expense for the year 14,104 13,108 12,908

No provision for Hong Kong profits tax has been made as the Group had no assessable profits arising in or derived from Hong Kong during the Track Record Period. The group entities established in the Cayman Islands and BVI are exempted from income tax. The group entities established in the PRC are subject to EIT at a statutory rate of 25%.

– I-42 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

Reconciliation of income tax expense

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Profit before taxation 112,278 104,084 106,457

Tax calculated at domestic tax rates in the respective tax jurisdictions 28,070 26,021 26,614 Non-deductible expenses 347 1,032 1,039 Tax exempted revenue (847) (1,049) (2,939) Effect of preferential tax treatments (13,466) (12,896) (12,011) Others – – 205

Income tax expense for the year 14,104 13,108 12,908

11. EARNINGS PER SHARE

No earnings per share information is presented as its inclusion, for the purpose of the Historical Financial Information, is not considered meaningful.

12. DIVIDENDS

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Dividends declared to the then equity owners of the entities now comprising the Group 23,200 23,200 34,800

No dividends per share information is presented as its inclusion, for the purpose of the Historical Financial Information, is not considered meaningful.

– I-43 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

13. PROPERTY, PLANT AND EQUIPMENT

Hatchery Furniture, Right-of-use site and Plant and fixtures and Motor Construction- assets Buildings workshop machinery equipment vehicles in-progress Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Note 21)

Reconciliation of carrying amount – year ended 31 December 2018 At 1 January 2018 16,132 75,590 17,085 17,015 532 4,968 81,309 212,631 Additions 117 8,946 – 2,851 235 353 14,795 27,297 Depreciation (1,599) (5,634) (2,767) (3,376) (207) (1,061) – (14,644) Disposals ––––(1)(60) – (61) Transfers – 8,753 ––––(8,753) – Government grants recognised – (6,000) –––––(6,000)

At 31 December 2018 14,650 81,655 14,318 16,490 559 4,200 87,351 219,223

Reconciliation of carrying amount – year ended 31 December 2019 At 1 January 2019 14,650 81,655 14,318 16,490 559 4,200 87,351 219,223 Additions 249 126 – 2,191 157 3,971 987 7,681 Depreciation (1,695) (5,945) (1,315) (3,562) (161) (1,435) – (14,113) Disposals – – (13,003) (46) (1) (13) – (13,063) Transfers – – 88,338 – – – (88,338) – Government grants recognised – – (3,300) ––––(3,300)

At 31 December 2019 13,204 75,836 85,038 15,073 554 6,723 – 196,428

Reconciliation of carrying amount – year ended 31 December 2020 At 1 January 2020 13,204 75,836 85,038 15,073 554 6,723 – 196,428 Additions – – – 2,074 21 7,524 27,220 36,839 Depreciation (1,695) (5,944) (4,035) (3,486) (144) (2,057) – (17,361) Disposals – – – (8) – (395) – (403)

At 31 December 2020 11,509 69,892 81,003 13,653 431 11,795 27,220 215,503

At 31 December 2018 Cost 18,827 123,670 29,381 37,783 2,192 10,669 87,351 309,873 Accumulated depreciation and impairment (4,177) (42,015) (15,063) (21,293) (1,633) (6,469) – (90,650)

Net carrying amounts 14,650 81,655 14,318 16,490 559 4,200 87,351 219,223

– I-44 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

At 31 December 2019 Cost 19,076 123,796 85,038 39,882 2,321 14,390 – 284,503 Accumulated depreciation and impairment (5,872) (47,960) – (24,809) (1,767) (7,667) – (88,075)

Net carrying amounts 13,204 75,836 85,038 15,073 554 6,723 – 196,428

At 31 December 2020 Cost 19,076 123,796 85,038 41,838 2,342 20,465 27,220 319,775 Accumulated depreciation and impairment (7,567) (53,904) (4,035) (28,185) (1,911) (8,670) – (104,272)

Net carrying amounts 11,509 69,892 81,003 13,653 431 11,795 27,220 215,503

Certain of the Group’s property, plant and equipment with a total carrying amount of approximately RMB2,061,000, RMB10,093,000 and RMB8,644,000 at 31 December 2018, 2019 and 2020, respectively, were pledged to secure banking facilities granted to the Group (Note 20).

14. DEPOSITS PAID FOR ACQUISITION OF PROPERTY, PLANT AND EQUIPMENT

At 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Deposits paid for acquisition of property, plant and equipment 700 41,300 46,804

Included in deposits paid for acquisition of property, plant and equipment with an aggregate carrying amount of nil, approximately RMB41,000,000 and RMB41,000,000 at 31 December 2018, 2019 and 2020 respectively, for acquisition of a production base located at Liaoning, the PRC pursuant to a sale and purchase agreement entered into between the Group and an independent third party, at a consideration of RMB41,000,000.

15. INVENTORIES

At 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Raw materials 3,081 3,161 7,508 Work-in-progress 4,264 5,932 6,171 Finished goods 8,010 6,886 3,582

15,355 15,979 17,261

– I-45 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

16. BIOLOGICAL ASSETS

Live sea cucumber RMB’000

Reconciliation of carrying amount – year ended 31 December 2018 At 1 January 2018 35,124 Increase due to raising 53,751 Net changes in fair value less costs to sell (unrealised) 24,827 Net changes in fair value less costs to sell (realised) 105,074 Decrease due to sales and culling (164,777)

At 31 December 2018 53,999

Reconciliation of carrying amount – year ended 31 December 2019 At 1 January 2019 53,999 Increase due to raising 52,890 Net changes in fair value less costs to sell (unrealised) 25,057 Net changes in fair value less costs to sell (realised) 103,433 Decrease due to sales and culling (189,806)

At 31 December 2019 45,573

Reconciliation of carrying amount – year ended 31 December 2020 At 1 January 2020 45,573 Increase due to raising 56,784 Net changes in fair value less costs to sell (unrealised) 22,939 Net changes in fair value less costs to sell (realised) 119,391 Decrease due to sales and culling (196,357)

At 31 December 2020 48,330

The weight of biological assets at the end of each reporting period is as follows:

At 31 December 2018 2019 2020 Kilogram Kilogram Kilogram

Live sea cucumbers 308,210 226,912 295,968

The length of the breeding period of live sea cucumbers depends on individual customers’ requirements on the size of the live sea cucumbers.

– I-46 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

The Group is exposed to a number of risks related to its biological assets. The Group is exposed to the following operating risks:

Regulatory and environmental risks

The Group is subject to laws and regulations in the location in which it operates breeding of live sea cucumbers. The Group has established environmental policies and procedures aimed at compliance with local environmental and other laws. Management performs regular reviews to identify environmental risks and to ensure that the systems in place are adequate to manage these risks.

Climate, disease and other natural risks

The Group’s biological assets are exposed to the risk of damage from climatic changes, diseases and other natural forces. The Group has extensive processes in place aimed at monitoring and mitigating these risks, including regular inspections, disease controls, surveys and insurance.

The fair value less costs to sell of biological assets of the Group at 31 December 2018, 2019 and 2020 has been arrived using valuation carried out at the respective valuation dates by Jones Lang LaSalle Corporate Appraisal and Advisory Limited, an independent qualified professional valuer not connected with the Group.

The major significant unobservable input to the valuation of the biological assets includes estimated market prices. The valuation has also taken into account other factors such as rearing costs and mortality rate.

Set forth below are the valuation techniques, key assumptions and inputs adopted in the valuation process to determine the fair value less costs to sell of the Group’s biological assets at 31 December 2018, 2019 and 2020.

At 31 December 2018 2019 2020 RMB RMB RMB

Live sea cucumbers: Per kilogram market price of live sea cucumber at harvest stage (Note) 186.74 210.44 165.78

Note:

Market approach have been adopted for live sea cucumbers at harvest stage as market-based prices for live sea cucumbers at harvest stage can be obtained as at respective valuation dates. As there was no active market for live young sea cucumber before harvest stage, hence the market price of live young sea cucumbers has been estimated based on the market-based prices of live sea cucumbers at harvest stage, less estimated cost of rearing, and adjusted with mortality rate.

The unit cost to complete is estimated based on the unit cost of live young sea cucumbers yet harvest to live mature sea cucumbers at harvest stage as at the respective valuation dates, under the assumption that the future cost in completing the remaining rearing cycle can be approximated by the historical cost. It is further adjusted by the weight of sea cucumbers expected to be dead during this stage as no additional cost is necessary to feed those dead sea cucumbers.

Mortality rate is estimated based on the historical statistic for respective hatchery site at the respective valuation dates.

A significant increase/decrease in the estimated market price and the estimated production volume in isolation would result in a significant increase/decrease in the fair value less costs to sell of the biological assets.

– I-47 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

17. TRADE AND OTHER RECEIVABLES

At 31 December 2018 2019 2020 Note RMB’000 RMB’000 RMB’000

Trade receivables from third parties 17(a) 27,253 75,575 58,121 Less: Loss allowance 29 (43) (183) (226)

17(b) 27,210 75,392 57,895 Other receivables Deposits 99 99 49 Prepayments 2,567 794 1,037 Prepayments for [REDACTED] [REDACTED] [REDACTED] [REDACTED] Other receivables 4,657 22,375 39,889

7,323 26,959 43,656 Less: Loss allowance 29 (53) (552) (820)

7,270 26,407 42,836

34,480 101,799 100,731

(a) Trade receivables from third parties

The credit terms granted to customers vary and are generally the results of negotiations between individual customers and the Group. The Group normally grants credit period up to 180 days to its customers.

(b) The ageing analysis of trade receivables (net of loss allowance) based on invoice date at the end of each reporting period is as follows:

At 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Within 30 days 5,134 324 130 31 to 60 days 6,300 38,434 8,581 61 to 90 days 12,696 27,925 14,160 91 to 180 days 22 6,785 19,664 181 to 365 days 2,454 986 3,167 Over 365 days 604 938 12,193

27,210 75,392 57,895

– I-48 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

(c) At the end of each reporting period, the ageing analysis of trade receivables (net of allowance for ECL) by due date is as follows:

At 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Neither past due nor impaired 24,151 73,462 42,535

Past due but not impaired: Within 30 days 2,452 165 1,596 31 to 60 days 2 86 1,163 61 to 90 days – 565 387 91 to 180 days – 46 21 181 to 365 days 9 199 11,318 Over 365 days 596 869 875

3,059 1,930 15,360

27,210 75,392 57,895

Information about the Group’s exposure to credit risks and loss allowance for trade and other receivables are set out in Note 29.

The Group does not hold any collateral over these balances.

18. BANK BALANCES AND CASH

Cash at banks earn interest at floating rates based on daily bank deposit rates. The carrying amounts of bank balances and cash are denominated in RMB.

As at 31 December 2018, 2019 and 2020, bank balances that were placed with banks in the PRC amounted to approximately RMB22,530,000, RMB17,567,000 and RMB65,779,000, respectively. Remittance of funds out of the PRC is subject to the exchange controls imposed by the PRC government.

– I-49 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

19. TRADE AND OTHER PAYABLES

At 31 December 2018 2019 2020 Note RMB’000 RMB’000 RMB’000

Trade payables 19(a) 797 2,908 3,926

Other payables Accruals 652 792 976 Payable for acquisition of property, plant and equipment 500 126 278 Other tax payables 20 23 – Other payables 181 3,520 1,003

1,353 4,461 2,257

2,150 7,369 6,183

(a) The trade payables are non-interest bearing and the Group is normally granted no credit terms.

At the end of each reporting period, the ageing analysis of trade payables based on goods receipt date is as follows:

At 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Within 30 days 321 1,044 2,198 31 to 60 days 130 327 232 61 to 90 days 96 118 125 91 to 180 days 85 507 468 181 to 365 days 96 801 32 Over 365 days 69 111 871

797 2,908 3,926

20. INTEREST-BEARING BORROWINGS

At the end of each reporting period, the details of the interest-bearing borrowings of the Group are as follows:

At 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Bank borrowings – secured 8,000 12,700 12,700

The secured bank borrowings of approximately RMB8,000,000, RMB12,700,000 and RMB12,700,000 at 31 December 2018, 2019 and 2020 were repayable within one year and carried effective interest rate of approximately 6.1%, 6.4% and 6.4% per annum, respectively.

– I-50 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

The bank borrowings are drawn under banking facilities. The banking facilities are secured by:

(i) leasehold land (included in “right-of-use assets”) of the Group with an aggregate net carrying amount of approximately RMB2,061,000, RMB1,997,000 and RMB1,933,000 at 31 December 2018, 2019 and 2020, respectively (Note 13);

(ii) buildings of the Group with an aggregate net carrying amount of nil, approximately RMB4,647,000 and RMB4,421,000 at 31 December 2018, 2019 and 2020, respectively (Note 13);

(iii) machineries of the Group with an aggregate net carrying amount of nil, approximately RMB3,449,000 and RMB2,290,000 at 31 December 2018, 2019 and 2020 respectively (Note 13); and

(iv) joint and several personal guarantees in aggregate amounts of RMB8,000,000, RMB12,700,000 and RMB12,700,000 given by one of the Controlling Shareholders, Mr. Zou Ange and Ms. Zhang Chunna (“Ms. Zhang”), a close family member of Mr. Zou Ange at 31 December 2018, 2019 and 2020 respectively.

The above personal guarantees will be released and replaced by a corporate guarantee from the Company upon the [REDACTED].

All of the banking facilities are subject to the fulfilment of covenants as are commonly found in lending arrangements with financial institutions. If the relevant borrowing entities were to breach the covenants, the drawn down facilities would become repayable on demand. At 31 December 2018, 2019 and 2020, none of the covenants relating to drawn down facilities had been breached.

21. LEASES

At 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Right-of-use assets (Note 13) Leased properties 10,286 9,014 7,742 Leasehold lands 3,536 3,362 3,186 Leasehold sea area 828 828 581

14,650 13,204 11,509

At 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Lease liabilities Current 1,094 1,148 1,203 Non-current 4,093 2,945 1,743

5,187 4,093 2,946

– I-51 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

In addition to the information disclosed in Note 7, the Group had the following amounts relating to leases during the Track Record Period:

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Depreciation charge of right-of-use assets Leased properties 1,271 1,271 1,271 Leasehold lands 175 175 175 Leasehold sea area 153 249 249

1,599 1,695 1,695

The total cash outflow for leases for the years ended 31 December 2018, 2019 and 2020 were approximately RMB1,158,000, RMB1,333,000 and RMB1,332,000, respectively.

At 31 December 2018, 2019 and 2020, the weighted average incremental borrowing rate applied to the lease liabilities was 4.9%, 4.9% and 4.9% per annum, respectively.

Commitments and present value of lease liabilities:

Lease payments Present value of lease payments At 31 December At 31 December 2018 2019 2020 2018 2019 2020 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Amounts payable: Within 1 year 1,332 1,332 1,332 1,094 1,148 1,203 More than 1 year but within 2 years 1,332 1,332 332 1,147 1,203 254 More than 2 years but within 5 years 1,997 997 823 1,724 800 662 Over 5 years 1,438 1,105 947 1,222 942 827

6,099 4,766 3,434 5,187 4,093 2,946

Less: future finance charges (912) (673) (488)

Total lease liabilities 5,187 4,093 2,946

– I-52 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

22. GOVERNMENT GRANTS - UNFULFILLED

At 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Government grants – unfulfilled 3,300 – 22,200

At 31 December 2018, 2019 and 2020, the Group had certain unfulfilled government grants relating to construction of property, plant and equipment with a total carrying amount of approximately RMB3,300,000, nil and RMB22,200,000 respectively, that would recognise as a reduction from the carrying amount of the relevant assets when all attaching conditions are compiled with.

23. AMOUNT DUE FROM THE CONTROLLING SHAREHOLDERS

The amount due is unsecured, interest-free and repayable on demand. No provision had been made for the amount due.

Details of the amount due from the Controlling Shareholders are as follows:

Greatest outstanding amount At 31 December Year ended 31 December 2018 2019 2020 2018 2019 2020 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Mr. Zou Ange 2,021 7,200 6,133 2,021 7,200 7,200

– I-53 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

24. DEFERRED TAXATION

The movements in the Group’s deferred tax (assets) liabilities for the Track Record Period were as follows:

Fair value change in biological Compensation Provision for assets received allowance Accrued cost Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Note (i))

Deferred tax arising from: At 1 January 2018 411 8,155 (6,651) 154 2,069 Charged (Credited) to profit or loss 2,693 – (106) (146) 2,441

At 31 December 2018 3,104 8,155 (6,757) 8 4,510

At 1 January 2019 3,104 8,155 (6,757) 8 4,510 Charged (Credited) to profit or loss 28 – 217 (8) 237

At 31 December 2019 3,132 8,155 (6,540) – 4,747

At 1 January 2020 3,132 8,155 (6,540) – 4,747 Charged (Credited) to profit or loss (264) – (655) – (919)

At 31 December 2020 2,868 8,155 (7,195) – 3,828

Notes:

(i) It related to a compensation income received from the local government for the demolishment of the Group’s leasehold land and building during the year ended 31 December 2017. Such compensation income would be recognised in the tax filing upon completion of relevant government approval process.

At the end of each reporting period, other than amounts recognised in the Historical Financial Information, no deferred tax has been recognised for withholding taxes that would be payables on the unremitted earnings of the Group’s subsidiaries established in the PRC. In the opinion of the management of the Group, it is probable that the earnings will not be distributed in the foreseeable future. The estimated withholding tax effects on the distribution of accumulated profits that have not been recognised were approximately RMB12,695,000, RMB18,605,000 and RMB23,510,000 at 31 December 2018, 2019 and 2020, respectively.

– I-54 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

25. SHARE CAPITAL AND FINANCIAL INFORMATION OF THE COMPANY

(a) Share capital

The Company was incorporated in the Cayman Islands as an exemption company with limited liability under the Law of the Cayman Islands on 21 November 2019 with an initial authorised share capital of US$50,000 divided into 50,000 shares of US$1 each and 1 ordinary share of US$1 each was ultimately issued and transferred to Allied Earn International Group Limited.

On 20 April 2020, the share capital of the Company was subdivided into 100 shares of par value US$0.01 each, following which the authorised share capital of the Company became US$50,000 divided into 5,000,000 shares each with a par value of US$0.01.

On 20 April 2020, the Company allotted and issued 114,740 ordinary shares of US$0.01 each. On 23 September 2020, the Company allotted and issued 1,160 ordinary shares of US$0.01 each to Topwealth Global Holdings Limited which is wholly-owned by Dr. Yee Wu in exchange of which Dr. Yee Wu transferred the entire issued share capital of Perfect Force to the Company.

Pursuant to the Reorganisation completed on 16 December 2020, the Company became the holding company of the entities now comprising the Group. Further details of change in authorised and issue capital of the company since its incorporation are set out in the paragraph headed “Reorganisation, History and Corporate Structure – Reorganisaton” in this document.

(b) Reserves

At 31 December 2020, reserves of the Company consist of capital reserve amounted to approximately RMB325,000 which represents the issued share capital of Perfect Force following the share swap agreement entered into between the Company and Dr. Yee Wu on 23 September 2020. There was no other movement in reserves of the Company from 21 November 2019 (date of incorporation) to 31 December 2020. The corporate administrative expenses of the Company and [REDACTED] were borne by the subsidiaries of the Company without recharge.

Save as disclosed above, the Company has not commenced any significant business or operation since its incorporation.

26. RESERVES

Capital reserve

Capital reserve of the Group represents the aggregate amount of the issued and paid-up share capital of the entities now comprising the Group before completion of the Reorganisation less consideration paid to acquire the relevant interests (if any) in relation to the Reorganisation.

Other reserve

Other reserve represents the difference between the nominal value of the registered capital of Shandong Anyuan and the capital contributions made by the then equity interest owners of Shandong Anyuan.

Statutory reserve

As stipulated by the relevant laws and regulations for enterprises incorporated/established in the PRC, the Group’s subsidiaries in the PRC are required to maintain certain statutory reserves. The statutory reserve can be used to make up for losses, expand the existing operation and covert to additional capital.

– I-55 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

27. ADDITIONAL INFORMATION ON THE COMBINED STATEMENTS OF CASH FLOWS

(a) Major non-cash transactions

The Group entered into certain lease arrangements in respect of right-of-use assets with total value at the inception of approximately RMB117,000, RMB249,000 and nil during the years ended 31 December 2018, 2019 and 2020, respectively.

(b) Reconciliation of liabilities arising from financing activities

The movements during the Track Record Period in the Group’s liabilities arising from financing activities are as follows:

Year ended 31 December 2018

Non-cash changes At At 1 January Cash flows, Interest 31 December 2018 net Addition expenses 2018 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Interest-bearing borrowings 13,349 (7,196) – 1,847 8,000 Leases liabilities 6,060 (1,158) – 285 5,187 Dividends payable 4,640 (21,107) 23,200 – 6,733

24,049 (29,461) 23,200 2,132 19,920

Year ended 31 December 2019

Non-cash changes At At 1 January Cash flows, Interest 31 December 2019 net Addition expenses 2019 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Interest-bearing borrowings 8,000 3,947 – 753 12,700 Leases liabilities 5,187 (1,333) – 239 4,093 Dividends payable 6,733 (16,467) 23,200 – 13,466

19,920 (13,853) 23,200 992 30,259

– I-56 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

Year ended 31 December 2020

Non-cash changes At At 1 January Cash flows, Interest 31 December 2020 net Addition expenses 2020 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Interest-bearing borrowings 12,700 (786) – 786 12,700 Leases liabilities 4,093 (1,332) – 185 2,946 Dividends payable 13,466 (36,666) 34,800 – 11,600

30,259 (38,784) 34,800 971 27,246

28. RELATED PARTY TRANSACTIONS

(a) Related party transactions

In addition to the transactions/information disclosed elsewhere in the Historical Financial Information, the Group had the following related party transactions during the Track Record Period:

Name of Year ended 31 December related party Nature of transaction 2018 2019 2020 RMB’000 RMB’000 RMB’000

Mr. Zou Ange (Note (i)) Sales of primarily-processed sea 1,021 – – cucumbers products

Mr. Wang Zengdong Sales of large juvenile sea 432–– (Note (i)) cucumbers

Loan interest expenses 270 – –

Note (i): These related parties are the executive directors and key management personnel of the Company.

(b) Remuneration for key management personnel (including directors) of the Group:

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Salaries, allowances, discretionary bonus and other benefits in kind 693 847 1,300 Contributions to defined contribution retirement plans 178 195 90

871 1,042 1,390

Further details of the directors’ emoluments are set out in Note 8 to the Historical Financial Information.

– I-57 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

29. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group’s principal financial instruments comprise of refundable rental deposits, trade and other receivables, amount due from the Controlling Shareholders, bank balances and cash, interest-bearing borrowings, lease liabilities and dividends payable. The main purpose of these financial instruments is to raise and maintain finance for the Group’s operations. The Group has various other financial instruments such as trade and other receivables and trade and other payables, which arise directly from its business activities.

The main risks arising from the Group’s financial instruments are credit risk and liquidity risk. The Group does not have any written risk management policies and guidelines. However, the management generally adopts conservative strategies on its risk management and limits the Group’s exposure to these risks to a minimum level as follows:

Credit risk

The carrying amount of financial assets recognised on the combined statements of financial position, which is net of impairment loss, represents the Group’s exposure to credit risk on these financial assets without taking into account the credit enhancements.

At 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Refundable rental deposits 4,951 4,962 4,975 Trade and other receivables 31,913 97,314 97,013 Amount due from the Controlling Shareholders 2,021 7,200 6,133 Bank balances and cash 22,530 17,567 65,779

61,415 127,043 173,900

Trade receivables from third parties

The Group trades only with recognised, creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. The Group limits its exposure to credit risk from trade receivables by establishing a maximum payment period of 180 days.

The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer.

The default risk of the industry and place of operation in which customers operate also has an influence on credit risk but to a lesser extent. Credit quality of a customer is assessed based on an extensive credit rating and individual credit limit assessment which is mainly based on the Group’s own trading records.

At 31 December 2018, 2019 and 2020, the Group had a concentration of credit risk as approximately 53%, 54% and 56% of the total trade receivables was due from the Group’s largest trade debtor, respectively, and approximately 95%, 97% and 98% of the total trade receivables was due from the Group’s five largest trade debtors, respectively.

– I-58 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

The Group’s customer base consists of a wide range of customers and the trade receivables are categorised by common risk characteristics that are representative of the customers’ abilities to pay all amounts due in accordance with the contractual terms. The Group applies a simplified approach in calculating ECL for trade receivables and recognises loss allowances based on lifetime ECL at each reporting date and has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment. The expected loss rate used in the provision matrix is calculated based on actual credit loss experience over the past years and adjusted for current and forward-looking factors to reflect differences between economic conditions during the period over which the historical data has been collected, current conditions and the Group’s estimate on future economic conditions over the expected lives of the receivables. The Group rebutted the presumption of default under ECL model for trade receivables over 90 days past due based on the good repayment records for these customers and continuous partial settlement by the customers with the Group. There was no change in the estimation techniques or significant assumptions made during the Track Record Period.

The information about the exposure to credit risk and ECL for trade receivables using provision matrix at 31 December 2018, 2019 and 2020 is summarised as follows:

At 31 December 2018 Group: Non-payment as the principal risk

Average expected Gross carrying Past due loss rate amount Loss allowance % RMB’000 RMB’000

Neither past due nor impaired 0.12 24,181 30

Past due but not impaired Within 30 days 0.41 2,463 10 31 to 60 days 0.45 2 – 61 to 90 days – – – Over 90 days 0.49 607 3

27,253 43

At 31 December 2019 Group: Non-payment as the principal risk

Average expected Gross carrying Past due loss rate amount Loss allowance % RMB’000 RMB’000

Neither past due nor impaired 0.23 73,628 166

Past due but not impaired Within 30 days – 165 – 31 to 60 days – 86 – 61 to 90 days 0.88 571 5 Over 90 days 1.07 1,125 12

75,575 183

– I-59 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

At 31 December 2020 Group: Non-payment as the principal risk

Average expected Gross carrying Past due loss rate amount Loss allowance % RMB’000 RMB’000

Neither past due nor impaired 0.13 42,592 57

Past due but not impaired Within 30 days 0.50 1,604 8 31 to 60 days 4.36 1,216 53 61 to 90 days 5.38 409 22 Over 90 days 0.70 12,300 86

58,121 226

The Group does not hold any collateral over trade receivables at 31 December 2018, 2019 and 2020.

The movement in the loss allowance for trade receivables during the Track Record Period is summarised below.

Year ended 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

At the beginning of the reporting period 45 43 183 (Reversal of) Provision for loss allowance, net (2) 140 43

At the end of the reporting period 43 183 226

Deposits and other receivables

The Group’s deposits and other receivables include refundable rental deposits, plant and equipment and other receivables in the combined statements of financial position.

The Group considers that deposits and other receivables have low credit risk based on the borrowers’ strong capacity to meet its contractual cash flow obligations in the near term and low risk of default. Impairment on deposits and other receivables is measured on 12-month ECL and reflects the short maturities of the exposures.

In estimating the ECL, the Group has taken into account the historical actual credit loss experience and the financial position of the counterparties, past collection history, current creditworthiness, adjusted for forward-looking factors that are specific to the counterparties and general economic conditions of the industry in which the counterparties operate, in estimating the probability of default of these financial assets, as well as the loss upon default. There was no change in the estimation techniques or significant assumptions made during the Track Record Period.

– I-60 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

The movement in the loss allowance for deposits and other receivables during the Track Record Period is summarised below.

Refundable rental deposits Other receivables Total RMB’000 RMB’000 RMB’000

At 1 January 2018 21 27 48 Provision for (Reversal of) loss allowance, net 28 26 54

At 31 December 2018 49 53 102 (Reversal of) Provision for loss allowance, net (11) 499 488

At 31 December 2019 38 552 590 (Reversal of) Provision for loss allowance, net (13) 268 255

At 31 December 2020 25 820 845

Other financial assets carried at amortised cost

The Company’s other financial assets carried at amortised cost include amount due from the Controlling Shareholders and bank balances and cash in the combined statements of financial position. The majority of the Company’s bank balances are deposited in major financial institutions located in the PRC, which are of high credit rating. The management of the Group does not expect any losses arising from non-performance by the counterparty. The Company considers that amount due from the Controlling Shareholders has low credit risk based on the borrowers’ strong capacity to meet its contractual cash flow obligations in the near term and low risk of default. In estimating the ECL, the Group has taken into account the historical actual credit loss experience and the financial position of the counterparties, past collection history, current creditworthiness, adjusted for forward-looking factors that are specific to the counterparties and general economic conditions of the industry in which the counterparties operate, in estimating the probability of default of these financial assets, as well as the loss upon default. The management of the Group considers the ECL of other financial assets to be negligible after taking into account the financial position, credit quality and past settlement records of the counterparties. There was no change in the estimation techniques or significant assumptions made during the Track Record Period.

– I-61 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

Liquidity risk

Total Total contractual On demand carrying undiscounted or less than 1to 2to Over amount cash flow 1 year 2 years 5 years 5 years RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

22,070 23,087 18,320 1,332 1,997 1,438

At 31 December 2019 Trade and other payables 7,369 7,369 7,369––– Lease liabilities 4,093 4,766 1,332 1,332 997 1,105 Dividends payable 13,466 13,466 13,466––– Interest-bearing borrowings 12,700 12,861 12,861–––

37,628 38,462 35,028 1,332 997 1,105

33,429 34,078 31,976 332 823 947

– I-62 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

30. FAIR VALUE MEASUREMENTS

The following presents the assets and liabilities measured at fair value or required to disclose their fair value in the Historical Financial Information on a recurring basis across the three levels of the fair value hierarchy defined in IFRS 13 “Fair Value Measurement” with the fair value measurement categorised in its entirety based on the lowest level input that is significant to the entire measurement. The levels of inputs are defined as follows:

• Level 1 (highest level): quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date;

• Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and

• Level 3 (lowest level): unobservable inputs for the asset or liability.

(a) Assets measured at fair value less costs to sell

At 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Level 3 Biological assets 53,999 45,573 48,330

During the Track Record Period, there were no transfers between Level 1 and Level 2 fair value measurements, and no transfers into or out of Level 3 fair value measurements. The details of the movements, the description of sensitivity of changes in unobservable inputs, and valuation techniques and key inputs of the recurring fair value measurements categorised as Level 3 of the fair value hierarchy are set out in Note 16.

(b) Assets and liabilities with fair value disclosure, but not measured at fair value

All financial assets and financial liabilities are carried at amounts not materially different from their fair values at 31 December 2018 and 2019 and 2020.

31. CAPITAL MANAGEMENT

The objectives of the Group’s capital management are to safeguard the Group’s ability to continue as a going concern and to provide returns for equity owners. The Group manages its capital structure and makes adjustments, including payment of dividend to equity owners, call for additional capital from equity owners or sale of assets to reduce debts. No changes were made in the objectives, policies or processes during the Track Record Period.

32. COMMITMENTS

At the end of the reporting period, the Group had the following capital expenditure commitment:

At 31 December 2018 2019 2020 RMB’000 RMB’000 RMB’000

Contracted but not provided for: Purchase of property, plant and equipment 987 – 10,915

– I-63 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX I ACCOUNTANTS’ REPORT

33. EVENTS AFTER THE REPORTING PERIOD

Subsequent to 31 December 2020, save as disclosed elsewhere in the Historical Financial Information, the Group has the following subsequent events:

(i) Pursuant to the resolution of the shareholders passed on [•], inter-alia, the authorised share capital of the Company was increased from US$50,000 to US$100,000,000 by the creation of additional 9,995,000,000 shares of US$0.01 each and the [REDACTED] (as defined below) was conditionally approved.

(ii) Pursuant to the resolutions in writing of the Company’s shareholders passed on [•], subject to the share premium account of the Company being credited as a result of the [REDACTED] of the Company’s shares, the Company were authorised to allot and issue a total of [REDACTED] shares of US$0.01 each to the existing shareholders, credited as fully paid at par by way of [REDACTED] of the sum of US$[REDACTED] standing to be credit of the share premium account of the Company (the “[REDACTED]”) and the shares to be allotted and issued pursuant to this resolution shall carry the same rights as all shares in issue (save for the right to participate in the [REDACTED]).

(iii) In response of the COVID-19 pandemic in 2020, the relevant government authorities have imposed certain quarantine and distancing measures. At the date of this report, the management of the Group does not expect those events or measures would have any significant adverse impact to the financial position of the Group and the application of going concern basis for the preparation of the Historical Financial Information.

34. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared in accordance with IFRSs and/or other applicable financial reporting standards for the Company or any of its subsidiaries in respect of any period subsequent to 31 December 2020.

– I-64 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX II UNAUDITED [REDACTED] FINANCIAL INFORMATION

The information set forth in this appendix does not form part of the Accountants’ Report prepared by Mazars CPA Limited, Certified Public Accountants, Hong Kong, the reporting accountants of the Company, as set forth in Appendix I to this document, and is included herein for information purposes only. The unaudited [REDACTED] financial information should be read in conjunction with the section headed “Financial Information” in this document and the Accountants’ Report set forth in Appendix I to this document.

A. UNAUDITED [REDACTED] STATEMENT OF ADJUSTED COMBINED NET TANGIBLE ASSETS

The unaudited [REDACTED] statement of adjusted combined net tangible assets of the Group is prepared in accordance with Rule 4.29 of the Listing Rules and with reference to Accounting Guideline 7 “Preparation of [REDACTED] Financial Information for inclusion in Investment Circulars” issued by the Hong Kong Institute of Certified Public Accountants for illustrative purposes only, and is set out below to illustrate the effect of the [REDACTED] on the combined net tangible assets of the Group attributable to owners of the Company at 31 December 2020 as if the [REDACTED] had taken place on that date and is prepared based on the audited combined net tangible assets of the Group attributable to owners of the Company at 31 December 2020 derived from the Accountants’ Report as set out in Appendix I to this document and adjusted as indicated below.

This unaudited [REDACTED] statement of adjusted combined net tangible assets of the Group has been prepared for illustrative purposes only and because of its hypothetical nature, it may not give a true picture of the financial position of the Group at 31 December 2020 or at any future dates following the [REDACTED].

Unaudited Unaudited Audited combined [REDACTED] [REDACTED] net tangible assets adjusted combined adjusted combined attributable to net tangible assets net tangible assets owners of the Estimated attributable to attributable to Company at [REDACTED] from owners of the owners of the 31 December 2020 the [REDACTED] Company Company per Share (Note 1) (Note 5) (Note 2) (Note 5) (Note 5) (Note 3) (Note 5) RMB’000 HK$’000 RMB’000 HK$’000 RMB’000 HK$’000 RMB HK$

Based on the [REDACTED] of HK$3.45 per [REDACTED] 440,983 529,665 [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]

Based on the [REDACTED] of HK$5.55 per [REDACTED] 440,983 529,665 [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]

– II-1 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX II UNAUDITED [REDACTED] FINANCIAL INFORMATION

NOTES TO THE UNAUDITED [REDACTED] STATEMENT OF ADJUSTED COMBINED NET TANGIBLE ASSETS

1. The audited combined net tangible assets of the Group attributable to owners of the Company at 31 December 2020 is based on the audited combined net assets attributable to owners of the Company at 31 December 2020 of approximately RMB440,983,000, extracted from the Group’s combined financial information included in the Accountants’ Report as set out in Appendix I to this document.

2. The estimated [REDACTED] from the [REDACTED] are based on [REDACTED] new Shares and the indicative [REDACTED] of HK$[REDACTED] and HK$[REDACTED] per [REDACTED], respectively, after deduction of relevant estimated [REDACTED] commissions and fees and other related expenses payable by the Company and excluding approximately RMB[REDACTED] [REDACTED] which has been accounted for prior to 31 December 2020. The estimated [REDACTED] have not taken into account any Shares which may be allotted and issued upon exercise of any options which may be granted under the Share Option Scheme or any Shares which may be allotted and issued or repurchased by the Company pursuant to the general mandates given to the Directors.

3. The calculation of the [REDACTED] adjusted combined net tangible assets of the Group attributable to owners of the Company per Share is based on [REDACTED] Shares expected to be in issue after the completion of the [REDACTED] and the [REDACTED]. It has not taken into account any Shares which may be allotted and issued upon exercise of any options which may be granted under the Share Option Scheme or any Shares which may be allotted and issued or repurchased by the Company pursuant to the general mandates given to the Directors.

4. No adjustment has been made to reflect any trading result or other transactions of the Group entered into subsequent to 31 December 2020.

5. These amounts are converted from Renminbi to Hong Kong dollars or Hong Kong dollars to Renminbi at an exchange rate of RMB to HK$1.2011. No representation is made that Renminbi/Hong Kong dollars amount have been, could have been or may be converted to Hong Kong dollars/Renminbi at that rate or at all.

– II-2 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX II UNAUDITED [REDACTED] FINANCIAL INFORMATION

The following is the text of a report received from the independent reporting accountants of the Company, Mazars CPA Limited, Certified Public Accountants, Hong Kong, in respect of the Group’s unaudited [REDACTED] financial information prepared for the purpose of incorporation in this document.

[REDACTED]

– II-3 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX II UNAUDITED [REDACTED] FINANCIAL INFORMATION

[REDACTED]

– II-4 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX II UNAUDITED [REDACTED] FINANCIAL INFORMATION

[REDACTED]

– II-5 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX III [REDACTED]

Unless otherwise defined, terms used in this appendix shall have the same meanings as those defined in the sections headed “Definitions” and “History, Reorganisation and Corporate Structure” in this document.

[REDACTED] BY DR. YEE WU

Set forth below are the steps which were taken by Dr. Yee Wu, our [REDACTED], towards making the [REDACTED] to our Company:

Transfer of equity interest in Shandong Anyuan

On 20 April 2020, Leap Profit and Mr. Zou entered into an equity transfer agreement pursuant to which, 1.00% of the total equity interest in Shandong Anyuan was transferred from Mr. Zou to Leap Profit, at the consideration of RMB4.75 million. As advised by our PRC Legal Advisers, the aforesaid transaction has been properly and legally completed and settled on 28 May 2020 and all necessary regulatory approvals have been obtained in accordance with PRC laws and regulations.

Leap Profit was incorporated in Hong Kong on 2 August 2019 as a company limited by shares. Since its incorporation, Leap Profit had been wholly owned by Perfect Force (BVI), a company incorporated in the BVI under the laws of the BVI as a BVI business company which was wholly owned by Dr. Yee Wu at the time of the said transfer of equity interest of Shangdong Anyuan.

Subsequent to the above transfer of equity interest, the ownership structure of Shandong Anyuan was as follows:

Approximate percentage Capital of equity Name of equity owners contribution interest held (RMB)

Mr. Zou 48,004,778 41.38% Mr. Zou Siyuan 27,978,000 24.12% Peng Anyuan Investment 13,449,289 11.59% Ms. Ma Liangping 9,602,874 8.28% Kai Anyuan Investment 4,604,600 3.97% Ms. Chen Fang 3,300,000 2.84% Mr. Xie Shiyu(Note) 2,320,000 2.00% Ms. Yang Yamei(Note) 2,320,320 2.00% Mr. Yu Hao 2,200,000 1.90% Leap Profit 1,160,000 1.00% Ms. Luo Mingxiu 1,060,459 0.91%

Total: 116,000,000 100%

– III-1 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX III [REDACTED]

Note: On 15 June 2020, Mr. Xie Qiang passed away. Mr. Xie Shiyu, the son of Mr. Xie Qiang, inherited 2% out of the 4% of the equity interest in Shandong Anyuan previously jointly owned by Mr. Xie Qiang and Ms. Yang Yamei as husband and wife.

Share Swap

On 23 September 2020, our Company and Dr. Yee Wu entered into a share swap agreement, pursuant to which our Company allotted and issued 1,160 Shares to Topwealth, a company wholly owned by Dr. Yee Wu in exchange of which Dr. Yee Wu transferred the entire issued share capital of Perfect Force (BVI) to our Company.

Upon completion of the abovesaid shares swap in relation to the shares in Topwealth and Perfect Force (BVI) on 23 September 2020, the shareholding of our Company was as follows:

Approximate Number of percentage of Name of Shareholders Shares shareholding

Good Standard 48,023 41.40% Easy Express 27,978 24.12% Keen Champ 9,603 8.28% Sheen World 6,908 5.96% Allied Earn 4,887 4.21% Qiangsheng 4,640 4.00% Rich Great 3,300 2.84% Glory Best 2,239 1.93% Super Wise 2,200 1.90% Nice Well 2,159 1.86% Bright Trend 1,557 1.34% Topwealth 1,160 1.00% Giant World 1,061 0.91% Mighty Power 285 0.25%

Total: 116,000 100%

Details of the [REDACTED] are as follow:

Name of the [REDACTED] Dr. Yee Wu

Amount of consideration RMB4.75 million

– III-2 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX III [REDACTED]

Basis of determination of the The aforesaid consideration was determined as a consideration result of arm’s length negotiations between the parties by reference to an independent accountants’ report on Shandong Anyuan’s net asset value as at 31 December 2019.

Payment date 28 May 2020

Effective cost per Share HK$2.19

Effective discount to mid-point of [REDACTED] % the indicative [REDACTED] range

[REDACTED] Not applicable as the consideration was paid to Mr. Zou and our Group did not receive any of the proceeds from the [REDACTED].

Approximate percentage of 1.00% shareholding in Shandong Anyuan immediately after the [REDACTED]

Approximate percentage of [REDACTED]% shareholding in our Company immediately after the [REDACTED]

Strategic benefits to the Company Our Directors are of the view that the [REDACTED] is beneficial to our Group as it can assist us in broadening our shareholder base and international customer base.

Special rights Dr. Yee Wu is not entitled to any special rights under the [REDACTED].

Lock-up Dr. Yee Wu is not subject to any lock-up under the [REDACTED].

– III-3 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX III [REDACTED]

[REDACTED] float As Dr. Yee Wu is not a core connected person of our Company and the [REDACTED] was not financed directly or indirectly by any core connected person of our Company, the shareholding of Dr. Yee Wu (through Topwealth) in our Company will be counted as part of the [REDACTED] float for the purpose of Rule 8.08 of the Listing Rules.

Information regarding Dr. Yee Wu

Topwealth is an investment holding company incorporated in the BVI and is wholly owned by Dr. Yee Wu. Dr. Yee Wu has more than 10 years of experience in the financial industry. She had served as the director of ASA Securities Limited in Hong Kong which mainly provides clients with securities brokerage service. Dr. Yee Wu focused on business development, operation management and strategy planning functions in past years. In or around 2019, Dr. Yee Wu started to explore investment opportunities in our Group and Dr. Yee Wu reached an agreement and concluded her investment in our Group as described above.

Dr. Yee Wu became acquainted with Mr. Zou through a mutual friend in Hong Kong during August 2019. During the occasion, Dr. Yee Wu and Mr. Zou discussed the potential investment in the Company. Between October 2019 and April 2020, further discussions, investigations and on-site visit had been made by Dr. Yee Wu, whom then had a better idea as to the Group’s products, operations of the Group and prospects.

Save as disclosed above, to the best knowledge, information and belief of our Directors, Dr. Yee Wu does not have any other relationship with our Group, our Shareholders, our Directors, our senior management, any connected persons of our Company and any of their respective associates. Our Directors believe that Dr. Yee Wu decided to [REDACTED] in our Group as she was optimistic about the business prospect and potential growth of our Group in the sea cucumber industry. Dr. Yee Wu has not been and is not involved in the management and daily operation of our Group.

Compliance with interim guidance

The Sole Sponsor has confirmed that the terms of the [REDACTED] are in compliance with (i) the Guidance Letter HKEx-GL-29-12 issued by the Stock Exchange in January 2012 and as updated in March 2017; and (ii) the Guidance Letter HKEx-GL43-12 issued by the Stock Exchange in October 2012 and as updated in July 2013 and March 2017.

– III-4 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX IV PROPERTY VALUATION REPORT

The following is the text of a letter, summary of values and valuation certificates, prepared for the purpose of incorporation in this document received from Jones Lang LaSalle Corporate Appraisal and Advisory Limited, an independent valuer, in connection with its valuation as at 28 February 2021 of the property interests of the Group.

Jones Lang LaSalle Corporate Appraisal and Advisory Limited 7th Floor, One Taikoo Place 979 King’s Road, Quarry Bay, Hong Kong tel +852 2846 5000 fax +852 2169 6001 Company Licence No.: C-030171

仲量聯行企業評估及咨詢有限公司香港鰂魚涌英皇道979號太古坊一座7樓電話 +852 2846 5000 傳真 +852 2169 6001 公司牌照號碼：C-030171

[REDACTED]

The Board of Directors Anyuan Marine Breeding Company Limited

Yaqian Village, Chaoshui Town Economic & Technological Development Area, Yantai City Shandong Province The PRC

Dear Sirs,

In accordance with your instructions to value the properties in which Anyuan Marine Breeding Company Limited (the “Company”) and its subsidiaries (hereinafter together referred to as the “Group”) have interests in the People’s Republic of China (the “PRC”), we confirm that we have carried out inspections, made relevant enquiries and searches and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market values of the property interests as at 28 February 2021 (the “valuation date”).

Our valuation is carried out on a market value basis. Market value is defines as “the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently, and without compulsion”.

Due to the nature of the buildings and structures of the properties which are held and occupied by the Group in the PRC and the particular location in which they are situated, there are unlikely to be relevant market comparables sales readily available, the property interests have been valued by the cost approach with reference to their depreciated replacement cost.

–IV-1– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX IV PROPERTY VALUATION REPORT

Depreciated replacement cost is defined as “the current cost of replacing an asset with its modern equivalent asset less deductions for physical deterioration and all relevant forms of obsolescence and optimization.” It is based on an estimate of the market value for the existing use of the land, plus the current cost of replacement of the improvements, less deductions for physical deterioration and all relevant forms of obsolescence and optimization. In arriving at the value of the land portion, reference has been made to the sales evidence as available in the locality. The depreciated replacement cost of the property interest is subject to adequate potential profitability of the concerned business. In our valuation, it applies to the whole of the complex or development as a unique interest, and no piecemeal transaction of the complex or development is assumed.

We have attributed no commercial value to the property nos. 2 and 3 which erect on the leased land parcels. However, for reference purpose, we have provided our opinion of the depreciated replacement cost of the buildings and structures by adopting the cost approach.

Our valuation has been made on the assumption that the seller sells the property interests in the market without the benefit of a deferred term contract, leaseback, joint venture, management agreement or any similar arrangement, which could serve to affect the values of the property interests.

No allowance has been made in our report for any charge, mortgage or amount owing on any of the property interests valued nor for any expense or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the properties are free from encumbrances, restrictions and outgoings of an onerous nature, which could affect their values.

In valuing the property interests, we have complied with all requirements contained in Chapter 5 and Practice Note 12 of the Rules Governing the Listing of Securities issued by the Stock Exchange of Hong Kong Limited; RICS Valuation – Global Standards published by the Royal Institution of Chartered Surveyors; the HKIS Valuation Standards published by the Hong Kong Institute of Surveyors, and the International Valuation Standards issued by the International Valuation Standards Council.

We have relied to a very considerable extent on the information given by the Group and have accepted advice given to us on such matters as tenure, planning approvals, statutory notices, easements, particulars of occupancy, lettings, and all other relevant matters.

We have been shown a copy of Real Estate Title Certificate and other official plans relating to the property interests and have made relevant enquiries. Where possible, we have examined the original documents to verify the existing title to the property interests in the PRC and any material encumbrance that might be attached to the property interests or any tenancy amendment. We have relied considerably on the advice given by the Company’s PRC legal advisers – Grandlex & PMT (Qianhai) Law Firm, concerning the validity of the property interests in the PRC.

–IV-2– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX IV PROPERTY VALUATION REPORT

We have not carried out detailed measurements to verify the correctness of the areas in respect of the properties but have assumed that the areas shown on the title documents and official site plans handed to us are correct. All documents and contracts have been used as reference only and all dimensions, measurements and areas are approximations. No on-site measurement has been taken.

We have inspected the exterior and, where possible, the interior of the properties. However, we have not carried out investigation to determine the suitability of the ground conditions and services for any development thereon. Our valuation has been prepared on the assumption that these aspects are satisfactory. Moreover, no structural survey has been made, but in the course of our inspection, we did not note any serious defect. We are not, however, able to report whether the properties are free of rot, infestation or any other structural defect. No tests were carried out on any of the services.

Inspection of the properties was carried out in June 2020 by Ms. Lissy Li who is a qualified China Real Estate Appraiser has 7 years’ experience in the property valuation in the PRC.

We have had no reason to doubt the truth and accuracy of the information provided to us by the Group. We have also sought confirmation from the Group that no material factors have been omitted from the information supplied. We consider that we have been provided with sufficient information to arrive an informed view, and we have no reason to suspect that any material information has been withheld.

Unless otherwise stated, all monetary figures stated in this report are in Renminbi (RMB).

We are instructed to provide our opinion of value as per the valuation date only. It is based on economic, market and other conditions as they exist on, and information made available to us as of, the valuation date and we assume no obligation to update or otherwise revise these materials for events in the time since then. In particular, the outbreak of the Novel Coronavirus (COVID-19) since declared Global Pandemic on the 11 March 2020 has caused much disruption to economic activities around the world. As of the report date, China’s economy is experiencing gradual recovery and it is anticipated that disruption to business activities will steadily reduce. We also note that market activity and market sentiment in this market sector remain stable. However, we remain cautious due to uncertainty for the pace of global economic recovery in the midst of the outbreak which may have future impact on the real estate market. Therefore, we recommend that you keep the valuation of these properties under frequent review.

–IV-3– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX IV PROPERTY VALUATION REPORT

Our valuation is summarized below and the valuation certificates are attached.

Yours faithfully, For and on behalf of Jones Lang LaSalle Corporate Appraisal and Advisory Limited Eddie T. W. Yiu MRICS MHKIS RPS (GP) Senior Director

Note: Eddie T.W. Yiu is a Chartered Surveyor who has 27 years’ experience in the valuation of properties in Hong Kong and the PRC as well as relevant experience in the Asia-Pacific region.

–IV-4– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX IV PROPERTY VALUATION REPORT

SUMMARY OF VALUES

Property interests held and occupied by the Group in the PRC

Market value in existing state as at 28 February No. Property 2021 RMB

1 A feeds production factory 14,825,000 No. 568, Yaqian Village, Chaoshui Town, Yantai City, Shandong Province, the PRC (餌料廠)

2 A sea cucumber breeding factory No commercial located at northeastern side of the feeds value production factory, Yaqian Village, Chaoshui Town, Yantai City, Shandong Province, the PRC (總廠)

3 A sea cucumber breeding factory No commercial located at northwestern side of the feeds value production factory, Yaqian Village, Chaoshui Town, Yantai City, Shandong Province, the PRC (實驗廠)

Total 14,825,000

–IV-5– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX IV PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Property interests held and occupied by the Group in the PRC

Market value in Particulars of existing state as at No. Property Description and tenure occupancy the valuation date RMB

1. A feeds production The property comprises a parcel of land with As at the valuation 14,825,000 factory a site area of approximately 15,480 sq.m. date, the property No. 568 Yaqian and 4 buildings erected thereon which were was occupied by the Village Chaoshui completed in 2013. Group for Town Yantai City production, storage Shandong Province The 4 buildings of the property have a total and ancillary The PRC (餌料廠) gross floor area (“GFA”) of approximately purposes. 6,624.65 sq.m. including a cold storage, a workshop and 2 ancillary buildings.

The land use rights of the property have been granted for a term expiring on 22 October 2052 for industrial use.

Notes:

1. The property is located at Yantai Economic and Technological Development Area. It closes to the coast and G228 Highway, and it is about 7 kilometers away from Yantai Penglai International Airport. There are mainly factory complexes and aquaculture facilities in the vicinity of the property.

2. Pursuant to a Real Estate Title Certificate – Lu (2021) Yan Tai Shi Kai Bu Dong Chan Quan Di No. 0005497, 2 buildings with a total GFA of approximately 6,407 sq.m. are owned by Shandong Anyuan Marine Breeding Co., Limited (“Shandong Anyuan”, 山東安源種業科技有限公司, a wholly-owned subsidiary of the Company). The relevant land use rights of a parcel of land with a site area of approximately 15,480 sq.m. have been granted to Shandong Anyuan for a term expiring on 22 October 2052 for industrial use.

3. For the remaining 2 buildings with a total GFA of approximately 217.65 sq.m., we have not been provided with any title certificate.

4. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following:

a. Shandong Anyuan has legally obtained the land use rights of the parcel of land and the building ownership rights of the buildings mentioned in note 2. Shandong Anyuan is entitled to occupy, use, lease, mortgage, transfer and dispose of the land use rights and the buildings mentioned in note 2;

b. Shandong Anyuan has constructed the 2 buildings mentioned in note 3 and can occupy, use and earn income from such buildings;

–IV-6– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX IV PROPERTY VALUATION REPORT

c. Shandong Anyuan has not obtained the construction permits of the 2 buildings mentioned in note 3 and can not obtain title certificates for these buildings, according to relevant PRC laws, Shandong Anyuan may subject to a penalty or be asked to demolish the buildings for absence of those permits/certificates. However, according to the confirmation of relevant competent authorities, there is low possibility for Shandong Anyuan to receive penalty or be asked to demolish the buildings due to the absence of relevant construction permits and it is less likely to have a significant adverse impact on Shandong Anyuan’s business and operating; and

d. the property is subject to a mortgage. Shandong Anyuan should obtain the written consent of the mortgagee before leasing, gifting, transferring, remortgaging or disposing of the property in other ways during the guarantee period.

5. In the valuation of the property, we have relied on the aforesaid legal opinion and attributed no commercial value to the 2 buildings mentioned in note 3 without any title certificate. However, for reference purpose, we are of the opinion that the depreciated replacement cost of the buildings as at the valuation date would be RMB165,000.

–IV-7– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX IV PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Market value in Particulars of existing state as at No. Property Description and tenure occupancy the valuation date RMB

2. A sea cucumber The property comprises 38 sea cucumber As at the valuation No commercial breeding factory breeding sheds together with various date, the property value located at ancillary buildings and structures completed was occupied by the northeastern side of in various stages between 2003 and 2019. Group for sea the feeds cucumber breeding production factory The sea cucumber breeding sheds and purpose. Yaqian Village ancillary buildings have a total gross floor Chaoshui Town area of approximately 81,313.64 sq.m. The Yantai City structures mainly include sand filtration Shandong Province pools, water tanks, wells, drying field, roads The PRC (總廠) and boundary walls.

The property is erected on 2 parcels of leased land.

Notes:

1. Pursuant to a Land Lease Contract dated 1 May 2012 entered into between the Committee of Yaqian Village (as the lessor) and Shandong Anyuan Aquaculture Co., Limited. (山東安源水產有限公司), which has changed its name to Shandong Anyuan Marine Breeding Co., Limited (“Shandong Anyuan”, 山東安源種業科技有限公司,a wholly-owned subsidiary of the Company) (as the lessee), the land use rights of a parcel of land with a site area of 315.8 mu (approximately 210,534.39 sq.m.) were leased to the lessee for a term of 20 years expiring on 30 April 2032 at an annual rent of RMB157,900.

2. Pursuant to a Land Lease Contract dated 1 May 2016 entered into between the Committee of Yaqian Village (as the lessor) and Shandong Anyuan (as the lessee), the land use rights of a parcel of land with a site area of 24.495 mu (approximately 16,330.08 sq.m.) were leased to the lessee for a term of 16 years expiring on 30 April 2032 at an annual rent of RMB12,247.50.

3. For the buildings of the property which are erected on the leased land, we have not been provided with any title certificate.

–IV-8– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX IV PROPERTY VALUATION REPORT

4. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following:

a. the Land Lease Contract mentioned in note 1 has come into effect according to relevant the PRC laws and regulations and is binding on both parties. Shandong Anyuan has obtained the contracted rural land use rights, and the lessor would not recover or adjust the relevant land during the contracted period;

b. due to the incompleted procedure of signing the Land Lease Contract mentioned in note 2, there may exist risks that the contract being terminated and Shangdong Anyuan may not be allowed to lease, occupy and use the leased land. However, the incompleted procedure is less likely to have a significant adverse impact on Shandong Anyuan’s business and operating; and

c. according to the information provided by the Company, the construction plan of the property has been filed in the Land and Resources Bureau of Penglai City.

5. In the valuation of this property, we have attributed no commercial value to the property due to the leased land nature. However, for reference purpose, we are of the opinion that the depreciated replacement costs of the buildings and structures of the property as at the valuation date would be RMB48,213,000.

–IV-9– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX IV PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Market value in Particulars of existing state as at No. Property Description and tenure occupancy the valuation date RMB

3. A sea cucumber The property comprises 9 sea cucumber As at the valuation No commercial breeding factory breeding sheds together with various date, the property value located at ancillary buildings and structures completed was occupied by the northwestern side in various stages between 2011 and 2014. Group for sea of the feeds cucumber breeding production factory The sea cucumber breeding sheds and and testing Yaqian Village ancillary buildings have a total gross floor workshops purposes. Chaoshui Town area of approximately 16,845.72 sq.m. The Yantai City structures mainly include sand filtration pool Shandong Province and purification pool. The PRC (實驗廠) The property is erected on a parcel of leased land.

Notes:

1. Pursuant to a Land Lease Contract dated 1 May 2012 entered into between the Committee of Yaqian Village (as the lessor) and Shandong Anyuan Aquaculture Co., Limited. (山東安源水產有限公司), which has changed its name to Shandong Anyuan Marine Breeding Co., Limited (“Shandong Anyuan”, 山東安源種業科技有限公司,a wholly-owned subsidiary of the Company) (as the lessee), the land use rights of a parcel of land with a site area of 69.94 mu (approximately 46,626.9 sq.m.) were leased to the lessee for a term of 20 years expiring on 30 April 2032 at an annual rent of RMB34,970. As confirmed by the Company, the actual site area of the leased land is 45.028 mu (approximately 30,018.82 sq.m.) as at the valuation date.

2. For the buildings of the property which are erected on the leased land, we have not been provided with any title certificate.

3. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following:

b. according to the information provided by the Company, the construction plan of the property has been filed in the Land and Resources Bureau of Penglai City.

4. In the valuation of this property, we have attributed no commercial value to the property due to the leased land nature. However, for reference purpose, we are of the opinion that the depreciated replacement costs of the buildings and structures of the property as at the valuation date would be RMB22,266,000.

– IV-10 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

Set out below is a summary of certain provisions of the Memorandum and Articles of Association of the Company and of certain aspects of Cayman company law.

The Company was incorporated in the Cayman Islands as an exempted company with limited liability on 21 November 2019 under the Companies Act, Cap. 22 (Act 3 of 1961, as consolidated and revised) of the Cayman Islands (the “Companies Act”). The Company’s constitutional documents consist of its Memorandum of Association (the “Memorandum”) and its Articles of Association (the “Articles”).

1. MEMORANDUM OF ASSOCIATION

(a) The Memorandum states, inter alia, that the liability of members of the Company is limited to the amount from time to time unpaid on such member’s shares and that the objects for which the Company is established are unrestricted (including acting as an investment company), and that except as prohibited or limited by the Companies Act, the Company shall have full power and authority to carry out any object and shall have and be capable of from time to time and at all times exercising any and all of the powers at any time or from time to time exercisable by a natural person or body corporate and in view of the fact that the Company is an exempted company that the Company will not trade in the Cayman Islands with any person, firm or corporation except in furtherance of the business of the Company carried on outside the Cayman Islands.

(b) The Company may by special resolution alter its Memorandum with respect to any objects, powers or other matters specified therein.

2. ARTICLES OF ASSOCIATION

The Articles were conditionally adopted on [•] 2021 with effect from the [REDACTED]. The following is a summary of certain provisions of the Articles:

(a) Shares

(i) Classes of shares

The share capital of the Company consists of ordinary shares.

–V-1– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

(ii) Variation of rights of existing shares or classes of shares

Subject to the Companies Act, if at any time the share capital of the Company is divided into different classes of shares, all or any of the special rights attached to the shares or any class of shares may (unless otherwise provided for by the terms of issue of that class) be varied, modified or abrogated either with the consent in writing of the holders of not less than three-fourths in nominal value of the issued shares of that class or with the sanction of a special resolution passed at a separate general meeting of the holders of the shares of that class. To every such separate general meeting the provisions of the Articles relating to general meetings will mutatis mutandis apply, but so that the necessary quorum (other than at an adjourned meeting) shall be two persons holding or representing by proxy not less than one-third in nominal value of the issued shares of that class and at any adjourned meeting two holders present in person or by proxy (whatever the number of shares held by them) shall be a quorum. Every holder of shares of the class shall be entitled to one vote for every such share held by him.

Any special rights conferred upon the holders of any shares or class of shares shall not, unless otherwise expressly provided in the rights attaching to the terms of issue of such shares, be deemed to be varied by the creation or issue of further shares ranking pari passu therewith.

(iii) Alteration of capital

The Company may by ordinary resolution of its members:

(i) increase its share capital by the creation of new shares;

(ii) consolidate all or any of its capital into shares of larger amount than its existing shares;

(iii) divide its shares into several classes and attach to such shares any preferential, deferred, qualified or special rights, privileges, conditions or restrictions as the Company in general meeting or as the directors may determine;

(iv) subdivide its shares or any of them into shares of smaller amount than is fixed by the Memorandum; or

(v) cancel any shares which, at the date of passing of the resolution, have not been taken and diminish the amount of its capital by the amount of the shares so cancelled.

–V-2– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

The Company may reduce its share capital or any capital redemption reserve or other undistributable reserve in any way by special resolution.

(iv) Transfer of shares

All transfers of shares may be effected by an instrument of transfer in the usual or common form or in a form prescribed by The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) or in such other form as the board may approve and which may be under hand or, if the transferor or transferee is a clearing house or its nominee(s), by hand or by machine imprinted signature or by such other manner of execution as the board may approve from time to time.

Notwithstanding the foregoing, for so long as any shares are listed on the Stock Exchange, titles to such listed shares may be evidenced and transferred in accordance with the laws applicable to and the rules and regulations of the Stock Exchange that are or shall be applicable to such listed shares. The register of members in respect of its listed shares (whether the principal register or a branch register) may be kept by recording the particulars required by Section 40 of the Companies Act in a form otherwise than legible if such recording otherwise complies with the laws applicable to and the rules and regulations of the Stock Exchange that are or shall be applicable to such listed shares.

The instrument of transfer shall be executed by or on behalf of the transferor and the transferee provided that the board may dispense with the execution of the instrument of transfer by the transferee. The transferor shall be deemed to remain the holder of the share until the name of the transferee is entered in the register of members in respect of that share.

The board may, in its absolute discretion, at any time transfer any share upon the principal register to any branch register or any share on any branch register to the principal register or any other branch register.

The board may decline to recognise any instrument of transfer unless a fee (not exceeding the maximum sum as the Stock Exchange may determine to be payable) determined by the Directors is paid to the Company, the instrument of transfer is properly stamped (if applicable), it is in respect of only one class of share and is lodged at the relevant registration office or registered office or such other place at which the principal register is kept accompanied by the relevant share certificate(s) and such other evidence as the board may reasonably require to show the right of the transferor to make the transfer (and if the instrument of transfer is executed by some other person on his behalf, the authority of that person so to do).

–V-3– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

The registration of transfers may be suspended and the register closed on giving notice by advertisement in any newspaper or by any other means in accordance with the requirements of the Stock Exchange, at such times and for such periods as the board may determine. The register of members must not be closed for periods exceeding in the whole thirty (30) days in any year.

Subject to the above, fully paid shares are free from any restriction on transfer and free of all liens in favour of the Company.

(v) Power of the Company to purchase its own shares

The Company is empowered by the Companies Act and the Articles to purchase its own shares subject to certain restrictions and the board may only exercise this power on behalf of the Company subject to any applicable requirements imposed from time to time by the Stock Exchange.

Where the Company purchases for redemption a redeemable share, purchases not made through the market or by tender must be limited to a maximum price determined by the Company in general meeting. If purchases are by tender, tenders must be made available to all members alike.

The board may accept the surrender for no consideration of any fully paid share.

(vi) Power of any subsidiary of the Company to own shares in the Company

There are no provisions in the Articles relating to ownership of shares in the Company by a subsidiary.

(vii) Calls on shares and forfeiture of shares

The board may from time to time make such calls upon the members in respect of any monies unpaid on the shares held by them respectively (whether on account of the nominal value of the shares or by way of premium). A call may be made payable either in one lump sum or by installments. If the sum payable in respect of any call or instalment is not paid on or before the day appointed for payment thereof, the person or persons from whom the sum is due shall pay interest on the same at such rate not exceeding twenty per cent. (20%) per annum as the board may agree to accept from the day appointed for the payment thereof to the time of actual payment, but the board may waive payment of such interest wholly or in part. The board may, if it thinks fit, receive from any member willing to advance the same, either in money or money’s worth, all or any part of the monies uncalled and unpaid or installments payable upon any shares held by him, and upon all or any of the monies so advanced the Company may pay interest at such rate (if any) as the board may decide.

–V-4– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

If a member fails to pay any call on the day appointed for payment thereof, the board may serve not less than fourteen (14) clear days’ notice on him requiring payment of so much of the call as is unpaid, together with any interest which may have accrued and which may still accrue up to the date of actual payment and stating that, in the event of non-payment at or before the time appointed, the shares in respect of which the call was made will be liable to be forfeited.

If the requirements of any such notice are not complied with, any share in respect of which the notice has been given may at any time thereafter, before the payment required by the notice has been made, be forfeited by a resolution of the board to that effect. Such forfeiture will include all dividends and bonuses declared in respect of the forfeited share and not actually paid before the forfeiture.

A person whose shares have been forfeited shall cease to be a member in respect of the forfeited shares but shall, notwithstanding, remain liable to pay to the Company all monies which, at the date of forfeiture, were payable by him to the Company in respect of the shares, together with (if the board shall in its discretion so require) interest thereon from the date of forfeiture until the date of actual payment at such rate not exceeding twenty per cent. (20%) per annum as the board determines.

(b) Directors

(i) Appointment, retirement and removal

At each annual general meeting, one third of the Directors for the time being (or if their number is not a multiple of three, then the number nearest to but not less than one third) shall retire from office by rotation provided that every Director shall be subject to retirement at an annual general meeting at least once every three years. The Directors to retire by rotation shall include any Director who wishes to retire and not offer himself for re-election. Any further Directors so to retire shall be those who have been longest in office since their last re-election or appointment but as between persons who became or were last re-elected Directors on the same day those to retire will (unless they otherwise agree among themselves) be determined by lot.

Neither a Director nor an alternate Director is required to hold any shares in the Company by way of qualification. Further, there are no provisions in the Articles relating to retirement of Directors upon reaching any age limit.

–V-5– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

The Directors have the power to appoint any person as a Director either to fill a casual vacancy on the board or as an addition to the existing board. Any Director appointed to fill a casual vacancy shall hold office until the first general meeting of members after his appointment and be subject to re-election at such meeting and any Director appointed as an addition to the existing board shall hold office only until the next following annual general meeting of the Company and shall then be eligible for re-election.

A Director may be removed by an ordinary resolution of the Company before the expiration of his period of office (but without prejudice to any claim which such Director may have for damages for any breach of any contract between him and the Company) and members of the Company may by ordinary resolution appoint another in his place. Unless otherwise determined by the Company in general meeting, the number of Directors shall not be less than two. There is no maximum number of Directors.

The office of director shall be vacated if:

(aa) he resigns by notice in writing delivered to the Company;

(bb) he becomes of unsound mind or dies;

(cc) without special leave, he is absent from meetings of the board for six (6) consecutive months, and the board resolves that his office is vacated;

(dd) he becomes bankrupt or has a receiving order made against him or suspends payment or compounds with his creditors;

(ee) he is prohibited from being a director by law; or

(ff) he ceases to be a director by virtue of any provision of law or is removed from office pursuant to the Articles.

The board may appoint one or more of its body to be managing director, joint managing director, or deputy managing director or to hold any other employment or executive office with the Company for such period and upon such terms as the board may determine and the board may revoke or terminate any of such appointments. The board may delegate any of its powers, authorities and discretions to committees consisting of such Director or Directors and other persons as the board thinks fit, and it may from time to time revoke such delegation or revoke the appointment of and discharge any such committees either wholly or in part, and either as to persons or purposes, but every committee so formed must, in the exercise of the powers, authorities and discretions so delegated, conform to any regulations that may from time to time be imposed upon it by the board.

–V-6– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

(ii) Power to allot and issue shares and warrants

Subject to the provisions of the Companies Act and the Memorandum and Articles and to any special rights conferred on the holders of any shares or class of shares, any share may be issued (a) with or have attached thereto such rights, or such restrictions, whether with regard to dividend, voting, return of capital, or otherwise, as the Directors may determine, or (b) on terms that, at the option of the Company or the holder thereof, it is liable to be redeemed.

The board may issue warrants or convertible securities or securities of similar nature conferring the right upon the holders thereof to subscribe for any class of shares or securities in the capital of the Company on such terms as it may determine.

Subject to the provisions of the Companies Act and the Articles and, where applicable, the rules of the Stock Exchange and without prejudice to any special rights or restrictions for the time being attached to any shares or any class of shares, all unissued shares in the Company are at the disposal of the board, which may offer, allot, grant options over or otherwise dispose of them to such persons, at such times, for such consideration and on such terms and conditions as it in its absolute discretion thinks fit, but so that no shares shall be issued at a discount to their nominal value.

Neither the Company nor the board is obliged, when making or granting any allotment of, offer of, option over or disposal of shares, to make, or make available, any such allotment, offer, option or shares to members or others with registered addresses in any particular territory or territories being a territory or territories where, in the absence of a registration statement or other special formalities, this would or might, in the opinion of the board, be unlawful or impracticable. Members affected as a result of the foregoing sentence shall not be, or be deemed to be, a separate class of members for any purpose whatsoever.

(iii) Power to dispose of the assets of the Company or any of its subsidiaries

There are no specific provisions in the Articles relating to the disposal of the assets of the Company or any of its subsidiaries. The Directors may, however, exercise all powers and do all acts and things which may be exercised or done or approved by the Company and which are not required by the Articles or the Companies Act to be exercised or done by the Company in general meeting.

–V-7– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

(iv) Borrowing powers

The board may exercise all the powers of the Company to raise or borrow money, to mortgage or charge all or any part of the undertaking, property and assets and uncalled capital of the Company and, subject to the Companies Act, to issue debentures, bonds and other securities of the Company, whether outright or as collateral security for any debt, liability or obligation of the Company or of any third party.

(v) Remuneration

The ordinary remuneration of the Directors is to be determined by the Company in general meeting, such sum (unless otherwise directed by the resolution by which it is voted) to be divided amongst the Directors in such proportions and in such manner as the board may agree or, failing agreement, equally, except that any Director holding office for part only of the period in respect of which the remuneration is payable shall only rank in such division in proportion to the time during such period for which he held office. The Directors are also entitled to be prepaid or repaid all travelling, hotel and incidental expenses reasonably expected to be incurred or incurred by them in attending any board meetings, committee meetings or general meetings or separate meetings of any class of shares or of debentures of the Company or otherwise in connection with the discharge of their duties as Directors.

Any Director who, by request, goes or resides abroad for any purpose of the Company or who performs services which in the opinion of the board go beyond the ordinary duties of a Director may be paid such extra remuneration as the board may determine and such extra remuneration shall be in addition to or in substitution for any ordinary remuneration as a Director. An executive Director appointed to be a managing director, joint managing director, deputy managing director or other executive officer shall receive such remuneration and such other benefits and allowances as the board may from time to time decide. Such remuneration may be either in addition to or in lieu of his remuneration as a Director.

The board may establish or concur or join with other companies (being subsidiary companies of the Company or companies with which it is associated in business) in establishing and making contributions out of the Company’s monies to any schemes or funds for providing pensions, sickness or compassionate allowances, life assurance or other benefits for employees (which expression as used in this and the following paragraph shall include any Director or past Director who may hold or have held any executive office or any office of profit with the Company or any of its subsidiaries) and ex-employees of the Company and their dependents or any class or classes of such persons.

–V-8– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

The board may pay, enter into agreements to pay or make grants of revocable or irrevocable, and either subject or not subject to any terms or conditions, pensions or other benefits to employees and ex-employees and their dependents, or to any of such persons, including pensions or benefits additional to those, if any, to which such employees or ex-employees or their dependents are or may become entitled under any such scheme or fund as is mentioned in the previous paragraph. Any such pension or benefit may, as the board considers desirable, be granted to an employee either before and in anticipation of, or upon or at any time after, his actual retirement.

The board may resolve to capitalise all or any part of any amount for the time being standing to the credit of any reserve or fund (including a share premium account and the profit and loss account) whether or not the same is available for distribution by applying such sum in paying up unissued shares to be allotted to (i) employees (including directors) of the Company and/or its affiliates (meaning any individual, corporation, partnership, association, joint-stock company, trust, unincorporated association or other entity (other than the Company) that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with, the Company) upon exercise or vesting of any options or awards granted under any share incentive scheme or employee benefit scheme or other arrangement which relates to such persons that has been adopted or approved by the members in general meeting, or (ii) any trustee of any trust to whom shares are to be allotted and issued by the Company in connection with the operation of any share incentive scheme or employee benefit scheme or other arrangement which relates to such persons that has been adopted or approved by the members in general meeting.

(vi) Compensation or payments for loss of office

Pursuant to the Articles, payments to any Director or past Director of any sum by way of compensation for loss of office or as consideration for or in connection with his retirement from office (not being a payment to which the Director is contractually entitled) must be approved by the Company in general meeting.

(vii) Loans and provision of security for loans to Directors

The Company must not make any loan, directly or indirectly, to a Director or his close associate(s) if and to the extent it would be prohibited by the Companies Ordinance (Chapter 622 of the laws of Hong Kong) as if the Company were a company incorporated in Hong Kong.

–V-9– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

(viii) Disclosure of interests in contracts with the Company or any of its subsidiaries

A Director may hold any other office or place of profit with the Company (except that of the auditor of the Company) in conjunction with his office of Director for such period and upon such terms as the board may determine, and may be paid such extra remuneration therefor in addition to any remuneration provided for by or pursuant to the Articles. A Director may be or become a director or other officer of, or otherwise interested in, any company promoted by the Company or any other company in which the Company may be interested, and shall not be liable to account to the Company or the members for any remuneration, profits or other benefits received by him as a director, officer or member of, or from his interest in, such other company. The board may also cause the voting power conferred by the shares in any other company held or owned by the Company to be exercised in such manner in all respects as it thinks fit, including the exercise thereof in favour of any resolution appointing the Directors or any of them to be directors or officers of such other company, or voting or providing for the payment of remuneration to the directors or officers of such other company.

No Director or proposed or intended Director shall be disqualified by his office from contracting with the Company, either with regard to his tenure of any office or place of profit or as vendor, purchaser or in any other manner whatsoever, nor shall any such contract or any other contract or arrangement in which any Director is in any way interested be liable to be avoided, nor shall any Director so contracting or being so interested be liable to account to the Company or the members for any remuneration, profit or other benefits realised by any such contract or arrangement by reason of such Director holding that office or the fiduciary relationship thereby established. A Director who to his knowledge is in any way, whether directly or indirectly, interested in a contract or arrangement or proposed contract or arrangement with the Company must declare the nature of his interest at the meeting of the board at which the question of entering into the contract or arrangement is first taken into consideration, if he knows his interest then exists, or in any other case, at the first meeting of the board after he knows that he is or has become so interested.

A Director shall not vote (nor be counted in the quorum) on any resolution of the board approving any contract or arrangement or other proposal in which he or any of his close associates is materially interested, but this prohibition does not apply to any of the following matters, namely:

(aa) any contract or arrangement for giving to such Director or his close associate(s) any security or indemnity in respect of money lent by him or any of his close associates or obligations incurred or undertaken by him or any of his close associates at the request of or for the benefit of the Company or any of its subsidiaries;

– V-10 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

(bb) any contract or arrangement for the giving of any security or indemnity to a third party in respect of a debt or obligation of the Company or any of its subsidiaries for which the Director or his close associate(s) has himself/themselves assumed responsibility in whole or in part whether alone or jointly under a guarantee or indemnity or by the giving of security;

(cc) any contract or arrangement concerning an offer of shares or debentures or other securities of or by the Company or any other company which the Company may promote or be interested in for subscription or purchase, where the Director or his close associate(s) is/are or is/are to be interested as a participant in the underwriting or sub-underwriting of the offer;

(dd) any contract or arrangement in which the Director or his close associate(s) is/are interested in the same manner as other holders of shares or debentures or other securities of the Company by virtue only of his/their interest in shares or debentures or other securities of the Company; or

(ee) any proposal or arrangement concerning the adoption, modification or operation of a share option scheme, a pension fund or retirement, death, or disability benefits scheme or other arrangement which relates both to Directors, his close associates and employees of the Company or of any of its subsidiaries and does not provide in respect of any Director, or his close associate(s), as such any privilege or advantage not accorded generally to the class of persons to which such scheme or fund relates.

The board may meet for the despatch of business, adjourn and otherwise regulate its meetings as it considers appropriate. Questions arising at any meeting shall be determined by a majority of votes. In the case of an equality of votes, the chairman of the meeting shall have an additional or casting vote.

(d) Alterations to constitutional documents and the Company’s name

The Articles may be rescinded, altered or amended by the Company in general meeting by special resolution. The Articles state that a special resolution shall be required to alter the provisions of the Memorandum, to amend the Articles or to change the name of the Company.

–V-11– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

(e) Meetings of members

(i) Special and ordinary resolutions

A special resolution of the Company must be passed by a majority of not less than three-fourths of the votes cast by such members as, being entitled so to do, vote in person or, in the case of such members as are corporations, by their duly authorised representatives or, where proxies are allowed, by proxy at a general meeting of which notice has been duly given in accordance with the Articles.

Under the Companies Act, a copy of any special resolution must be forwarded to the Registrar of Companies in the Cayman Islands within fifteen (15) days of being passed.

An ordinary resolution is defined in the Articles to mean a resolution passed by a simple majority of the votes of such members of the Company as, being entitled to do so, vote in person or, in the case of corporations, by their duly authorised representatives or, where proxies are allowed, by proxy at a general meeting of which notice has been duly given in accordance with the Articles.

(ii) Voting rights and right to demand a poll

Subject to any special rights or restrictions as to voting for the time being attached to any shares, at any general meeting on a poll every member present in person or by proxy or, in the case of a member being a corporation, by its duly authorised representative shall have one vote for every fully paid share of which he is the holder but so that no amount paid up or credited as paid up on a share in advance of calls or installments is treated for the foregoing purposes as paid up on the share. A member entitled to more than one vote need not use all his votes or cast all the votes he uses in the same way.

At any general meeting a resolution put to the vote of the meeting is to be decided by way of a poll save that the chairman of the meeting may in good faith, allow a resolution which relates purely to a procedural or administrative matter to be voted on by a show of hands in which case every member present in person (or being a corporation, is present by a duly authorized representative), or by proxy(ies) shall have one vote provided that where more than one proxy is appointed by a member which is a clearing house (or its nominee(s)), each such proxy shall have one vote on a show of hands.

– V-12 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

If a recognised clearing house (or its nominee(s)) is a member of the Company it may authorise such person or persons as it thinks fit to act as its representative(s) at any meeting of the Company or at any meeting of any class of members of the Company provided that, if more than one person is so authorised, the authorisation shall specify the number and class of shares in respect of which each such person is so authorised. A person authorised pursuant to this provision shall be deemed to have been duly authorised without further evidence of the facts and be entitled to exercise the same powers on behalf of the recognised clearing house (or its nominee(s)) as if such person was the registered holder of the shares of the Company held by that clearing house (or its nominee(s)) including, where a show of hands is allowed, the right to vote individually on a show of hands.

Where the Company has any knowledge that any shareholder is, under the rules of the Stock Exchange, required to abstain from voting on any particular resolution of the Company or restricted to voting only for or only against any particular resolution of the Company, any votes cast by or on behalf of such shareholder in contravention of such requirement or restriction shall not be counted.

(iii) Annual general meetings and extraordinary general meetings

The Company must hold an annual general meeting of the Company every year within a period of not more than fifteen (15) months after the holding of the last preceding annual general meeting or a period of not more than eighteen (18) months from the date of adoption of the Articles, unless a longer period would not infringe the rules of the Stock Exchange.

Extraordinary general meetings may be convened on the requisition of one or more shareholders holding, at the date of deposit of the requisition, not less than one-tenth of the paid up capital of the Company having the right of voting at general meetings. Such requisition shall be made in writing to the board or the secretary for the purpose of requiring an extraordinary general meeting to be called by the board for the transaction of any business specified in such requisition. Such meeting shall be held within 2 months after the deposit of such requisition. If within 21 days of such deposit, the board fails to proceed to convene such meeting, the requisitionist(s) himself/herself (themselves) may do so in the same manner, and all reasonable expenses incurred by the requisitionist(s) as a result of the failure of the board shall be reimbursed to the requisitionist(s) by the Company.

– V-13 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

(iv) Notices of meetings and business to be conducted

An annual general meeting must be called by notice of not less than twenty-one (21) clear days and not less than twenty (20) clear business days. All other general meetings must be called by notice of at least fourteen (14) clear days and not less than ten (10) clear business days. The notice is exclusive of the day on which it is served or deemed to be served and of the day for which it is given, and must specify the time and place of the meeting and particulars of resolutions to be considered at the meeting and, in the case of special business, the general nature of that business.

In addition, notice of every general meeting must be given to all members of the Company other than to such members as, under the provisions of the Articles or the terms of issue of the shares they hold, are not entitled to receive such notices from the Company, and also to, among others, the auditors for the time being of the Company.

Any notice to be given to or by any person pursuant to the Articles may be served on or delivered to any member of the Company personally, by post to such member’s registered address or by advertisement in newspapers in accordance with the requirements of the Stock Exchange. Subject to compliance with Cayman Islands law and the rules of the Stock Exchange, notice may also be served or delivered by the Company to any member by electronic means.

All business that is transacted at an extraordinary general meeting and at an annual general meeting is deemed special, save that in the case of an annual general meeting, each of the following business is deemed an ordinary business:

(aa) the declaration and sanctioning of dividends;

(bb) the consideration and adoption of the accounts and balance sheet and the reports of the directors and the auditors;

(cc) the election of directors in place of those retiring;

(dd) the appointment of auditors and other officers; and

(ee) the fixing of the remuneration of the directors and of the auditors.

– V-14 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

(v) Quorum for meetings and separate class meetings

No business shall be transacted at any general meeting unless a quorum is present when the meeting proceeds to business, but the absence of a quorum shall not preclude the appointment of a chairman.

The quorum for a general meeting shall be two members present in person (or, in the case of a member being a corporation, by its duly authorised representative) or by proxy and entitled to vote. In respect of a separate class meeting (other than an adjourned meeting) convened to sanction the modification of class rights the necessary quorum shall be two persons holding or representing by proxy not less than one-third in nominal value of the issued shares of that class.

(vi) Proxies

Any member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint another person as his proxy to attend and vote instead of him. A member who is the holder of two or more shares may appoint more than one proxy to represent him and vote on his behalf at a general meeting of the Company or at a class meeting. A proxy need not be a member of the Company and is entitled to exercise the same powers on behalf of a member who is an individual and for whom he acts as proxy as such member could exercise. In addition, a proxy is entitled to exercise the same powers on behalf of a member which is a corporation and for which he acts as proxy as such member could exercise as if it were an individual member. Votes may be given either personally (or, in the case of a member being a corporation, by its duly authorised representative) or by proxy.

(f) Accounts and audit

The board shall cause true accounts to be kept of the sums of money received and expended by the Company, and the matters in respect of which such receipt and expenditure take place, and of the property, assets, credits and liabilities of the Company and of all other matters required by the Companies Act or necessary to give a true and fair view of the Company’s affairs and to explain its transactions.

The accounting records must be kept at the registered office or at such other place or places as the board decides and shall always be open to inspection by any Director. No member (other than a Director) shall have any right to inspect any accounting record or book or document of the Company except as conferred by law or authorised by the board or the Company in general meeting. However, an exempted company must make available at its registered office in electronic form or any other medium, copies of its books of account or parts thereof as may be required of it upon service of an order or notice by the Tax Information Authority pursuant to the Tax Information Authority Act of the Cayman Islands.

– V-15 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

A copy of every balance sheet and profit and loss account (including every document required by law to be annexed thereto) which is to be laid before the Company at its general meeting, together with a printed copy of the Directors’ report and a copy of the auditors’ report, shall not less than twenty-one (21) days before the date of the meeting and at the same time as the notice of annual general meeting be sent to every person entitled to receive notices of general meetings of the Company under the provisions of the Articles; however, subject to compliance with all applicable laws, including the rules of the Stock Exchange, the Company may send to such persons summarised financial statements derived from the Company’s annual accounts and the directors’ report instead provided that any such person may by notice in writing served on the Company, demand that the Company sends to him, in addition to summarised financial statements, a complete printed copy of the Company’s annual financial statement and the directors’ report thereon.

At the annual general meeting or at a subsequent extraordinary general meeting in each year, the members shall appoint an auditor to audit the accounts of the Company and such auditor shall hold office until the next annual general meeting. Moreover, the members may, at any general meeting, by special resolution remove the auditor at any time before the expiration of his terms of office and shall by ordinary resolution at that meeting appoint another auditor for the remainder of his term. The remuneration of the auditors shall be fixed by the Company in general meeting or in such manner as the members may determine.

The financial statements of the Company shall be audited by the auditor in accordance with generally accepted auditing standards which may be those of a country or jurisdiction other than the Cayman Islands. The auditor shall make a written report thereon in accordance with generally accepted auditing standards and the report of the auditor must be submitted to the members in general meeting.

(g) Dividends and other methods of distribution

The Company in general meeting may declare dividends in any currency to be paid to the members but no dividend shall be declared in excess of the amount recommended by the board.

The Articles provide dividends may be declared and paid out of the profits of the Company, realised or unrealised, or from any reserve set aside from profits which the directors determine is no longer needed. With the sanction of an ordinary resolution dividends may also be declared and paid out of share premium account or any other fund or account which can be authorised for this purpose in accordance with the Companies Act.

– V-16 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

Except in so far as the rights attaching to, or the terms of issue of, any share may otherwise provide, (i) all dividends shall be declared and paid according to the amounts paid up on the shares in respect whereof the dividend is paid but no amount paid up on a share in advance of calls shall for this purpose be treated as paid up on the share and (ii) all dividends shall be apportioned and paid pro rata according to the amount paid up on the shares during any portion or portions of the period in respect of which the dividend is paid. The Directors may deduct from any dividend or other monies payable to any member or in respect of any shares all sums of money (if any) presently payable by him to the Company on account of calls or otherwise.

Whenever the board or the Company in general meeting has resolved that a dividend be paid or declared on the share capital of the Company, the board may further resolve either (a) that such dividend be satisfied wholly or in part in the form of an allotment of shares credited as fully paid up, provided that the shareholders entitled thereto will be entitled to elect to receive such dividend (or part thereof) in cash in lieu of such allotment, or (b) that shareholders entitled to such dividend will be entitled to elect to receive an allotment of shares credited as fully paid up in lieu of the whole or such part of the dividend as the board may think fit.

The Company may also upon the recommendation of the board by an ordinary resolution resolve in respect of any one particular dividend of the Company that it may be satisfied wholly in the form of an allotment of shares credited as fully paid up without offering any right to shareholders to elect to receive such dividend in cash in lieu of such allotment.

Any dividend, interest or other sum payable in cash to the holder of shares may be paid by cheque or warrant sent through the post addressed to the holder at his registered address, or in the case of joint holders, addressed to the holder whose name stands first in the register of the Company in respect of the shares at his address as appearing in the register or addressed to such person and at such addresses as the holder or joint holders may in writing direct. Every such cheque or warrant shall, unless the holder or joint holders otherwise direct, be made payable to the order of the holder or, in the case of joint holders, to the order of the holder whose name stands first on the register in respect of such shares, and shall be sent at his or their risk and payment of the cheque or warrant by the bank on which it is drawn shall constitute a good discharge to the Company. Any one of two or more joint holders may give effectual receipts for any dividends or other moneys payable or property distributable in respect of the shares held by such joint holders.

Whenever the board or the Company in general meeting has resolved that a dividend be paid or declared the board may further resolve that such dividend be satisfied wholly or in part by the distribution of specific assets of any kind.

– V-17 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

All dividends or bonuses unclaimed for one year after having been declared may be invested or otherwise made use of by the board for the benefit of the Company until claimed and the Company shall not be constituted a trustee in respect thereof. All dividends or bonuses unclaimed for six years after having been declared may be forfeited by the board and shall revert to the Company.

No dividend or other monies payable by the Company on or in respect of any share shall bear interest against the Company.

(h) Inspection of corporate records

Pursuant to the Articles, the register and branch register of members shall be open to inspection for at least two (2) hours during business hours by members without charge, or by any other person upon a maximum payment of HK$2.50 or such lesser sum specified by the board, at the registered office or such other place at which the register is kept in accordance with the Companies Act or, upon a maximum payment of HK$1.00 or such lesser sum specified by the board, at the office where the branch register of members is kept, unless the register is closed in accordance with the Articles.

(i) Rights of minorities in relation to fraud or oppression

There are no provisions in the Articles relating to rights of minority shareholders in relation to fraud or oppression. However, certain remedies are available to shareholders of the Company under Cayman Islands law, as summarised in paragraph 3(f) of this Appendix.

(j) Procedures on liquidation

A resolution that the Company be wound up by the court or be wound up voluntarily shall be a special resolution.

Subject to any special rights, privileges or restrictions as to the distribution of available surplus assets on liquidation for the time being attached to any class or classes of shares:

(i) if the Company is wound up and the assets available for distribution amongst the members of the Company shall be more than sufficient to repay the whole of the capital paid up at the commencement of the winding up, the excess shall be distributed pari passu amongst such members in proportion to the amount paid up on the shares held by them respectively; and

– V-18 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

(ii) if the Company is wound up and the assets available for distribution amongst the members as such shall be insufficient to repay the whole of the paid-up capital, such assets shall be distributed so that, as nearly as may be, the losses shall be borne by the members in proportion to the capital paid up, or which ought to have been paid up, at the commencement of the winding up on the shares held by them respectively.

If the Company is wound up (whether the liquidation is voluntary or by the court) the liquidator may, with the authority of a special resolution and any other sanction required by the Companies Act divide among the members in specie or kind the whole or any part of the assets of the Company whether the assets shall consist of property of one kind or shall consist of properties of different kinds and the liquidator may, for such purpose, set such value as he deems fair upon any one or more class or classes of property to be divided as aforesaid and may determine how such division shall be carried out as between the members or different classes of members. The liquidator may, with the like authority, vest any part of the assets in trustees upon such trusts for the benefit of members as the liquidator, with the like authority, shall think fit, but so that no contributory shall be compelled to accept any shares or other property in respect of which there is a liability.

(k) Subscription rights reserve

The Articles provide that to the extent that it is not prohibited by and is in compliance with the Companies Act, if warrants to subscribe for shares have been issued by the Company and the Company does any act or engages in any transaction which would result in the subscription price of such warrants being reduced below the par value of a share, a subscription rights reserve shall be established and applied in paying up the difference between the subscription price and the par value of a share on any exercise of the warrants.

3. CAYMAN ISLANDS COMPANY LAW

The Company is incorporated in the Cayman Islands subject to the Companies Act and, therefore, operates subject to Cayman Islands law. Set out below is a summary of certain provisions of Cayman company law, although this does not purport to contain all applicable qualifications and exceptions or to be a complete review of all matters of Cayman company law and taxation, which may differ from equivalent provisions in jurisdictions with which interested parties may be more familiar:

(a) Company operations

As an exempted company, the Company’s operations must be conducted mainly outside the Cayman Islands. The Company is required to file an annual return each year with the Registrar of Companies of the Cayman Islands and pay a fee which is based on the amount of its authorised share capital.

– V-19 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

(b) Share capital

The Companies Act provides that where a company issues shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount of the value of the premiums on those shares shall be transferred to an account, to be called the “share premium account”. At the option of a company, these provisions may not apply to premiums on shares of that company allotted pursuant to any arrangement in consideration of the acquisition or cancellation of shares in any other company and issued at a premium.

The Companies Act provides that the share premium account may be applied by the company subject to the provisions, if any, of its memorandum and articles of association in (a) paying distributions or dividends to members; (b) paying up unissued shares of the company to be issued to members as fully paid bonus shares; (c) the redemption and repurchase of shares (subject to the provisions of section 37 of the Companies Act); (d) writing-off the preliminary expenses of the company; and (e) writing-off the expenses of, or the commission paid or discount allowed on, any issue of shares or debentures of the company.

No distribution or dividend may be paid to members out of the share premium account unless immediately following the date on which the distribution or dividend is proposed to be paid, the company will be able to pay its debts as they fall due in the ordinary course of business.

The Companies Act provides that, subject to confirmation by the Grand Court of the Cayman Islands (the “Court”), a company limited by shares or a company limited by guarantee and having a share capital may, if so authorised by its articles of association, by special resolution reduce its share capital in any way.

There is no statutory restriction in the Cayman Islands on the provision of financial assistance by a company to another person for the purchase of, or subscription for, its own or its holding company’s shares. Accordingly, a company may provide financial assistance if the directors of the company consider, in discharging their duties of care and acting in good faith, for a proper purpose and in the interests of the company, that such assistance can properly be given. Such assistance should be on an arm’s-length basis.

– V-20 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

(d) Purchase of shares and warrants by a company and its subsidiaries

A company limited by shares or a company limited by guarantee and having a share capital may, if so authorised by its articles of association, issue shares which are to be redeemed or are liable to be redeemed at the option of the company or a shareholder and the Companies Act expressly provides that it shall be lawful for the rights attaching to any shares to be varied, subject to the provisions of the company’s articles of association, so as to provide that such shares are to be or are liable to be so redeemed. In addition, such a company may, if authorised to do so by its articles of association, purchase its own shares, including any redeemable shares. However, if the articles of association do not authorise the manner and terms of purchase, a company cannot purchase any of its own shares unless the manner and terms of purchase have first been authorised by an ordinary resolution of the company. At no time may a company redeem or purchase its shares unless they are fully paid. A company may not redeem or purchase any of its shares if, as a result of the redemption or purchase, there would no longer be any issued shares of the company other than shares held as treasury shares. A payment out of capital by a company for the redemption or purchase of its own shares is not lawful unless immediately following the date on which the payment is proposed to be made, the company shall be able to pay its debts as they fall due in the ordinary course of business.

Shares purchased by a company is to be treated as cancelled unless, subject to the memorandum and articles of association of the company, the directors of the company resolve to hold such shares in the name of the company as treasury shares prior to the purchase. Where shares of a company are held as treasury shares, the company shall be entered in the register of members as holding those shares, however, notwithstanding the foregoing, the company is not be treated as a member for any purpose and must not exercise any right in respect of the treasury shares, and any purported exercise of such a right shall be void, and a treasury share must not be voted, directly or indirectly, at any meeting of the company and must not be counted in determining the total number of issued shares at any given time, whether for the purposes of the company’s articles of association or the Companies Act.

A company is not prohibited from purchasing and may purchase its own warrants subject to and in accordance with the terms and conditions of the relevant warrant instrument or certificate. There is no requirement under Cayman Islands law that a company’s memorandum or articles of association contain a specific provision enabling such purchases and the directors of a company may rely upon the general power contained in its memorandum of association to buy and sell and deal in personal property of all kinds.

Under Cayman Islands law, a subsidiary may hold shares in its holding company and, in certain circumstances, may acquire such shares.

– V-21 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

(e) Dividends and distributions

The Companies Act permits, subject to a solvency test and the provisions, if any, of the company’s memorandum and articles of association, the payment of dividends and distributions out of the share premium account. With the exception of the foregoing, there are no statutory provisions relating to the payment of dividends. Based upon English case law, which is regarded as persuasive in the Cayman Islands, dividends may be paid only out of profits.

No dividend may be declared or paid, and no other distribution (whether in cash or otherwise) of the company’s assets (including any distribution of assets to members on a winding up) may be made to the company, in respect of a treasury share.

(f) Protection of minorities and shareholders’ suits

The Courts ordinarily would be expected to follow English case law precedents which permit a minority shareholder to commence a representative action against or derivative actions in the name of the company to challenge (a) an act which is ultra vires the company or illegal, (b) an act which constitutes a fraud against the minority and the wrongdoers are themselves in control of the company, and (c) an irregularity in the passing of a resolution which requires a qualified (or special) majority.

In the case of a company (not being a bank) having a share capital divided into shares, the Court may, on the application of members holding not less than one fifth of the shares of the company in issue, appoint an inspector to examine into the affairs of the company and to report thereon in such manner as the Court shall direct.

Any shareholder of a company may petition the Court which may make a winding up order if the Court is of the opinion that it is just and equitable that the company should be wound up or, as an alternative to a winding up order, (a) an order regulating the conduct of the company’s affairs in the future, (b) an order requiring the company to refrain from doing or continuing an act complained of by the shareholder petitioner or to do an act which the shareholder petitioner has complained it has omitted to do, (c) an order authorising civil proceedings to be brought in the name and on behalf of the company by the shareholder petitioner on such terms as the Court may direct, or (d) an order providing for the purchase of the shares of any shareholders of the company by other shareholders or by the company itself and, in the case of a purchase by the company itself, a reduction of the company’s capital accordingly.

Generally claims against a company by its shareholders must be based on the general laws of contract or tort applicable in the Cayman Islands or their individual rights as shareholders as established by the company’s memorandum and articles of association.

– V-22 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

(g) Disposal of assets

The Companies Act contains no specific restrictions on the power of directors to dispose of assets of a company. However, as a matter of general law, every officer of a company, which includes a director, managing director and secretary, in exercising his powers and discharging his duties must do so honestly and in good faith with a view to the best interests of the company and exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

(h) Accounting and auditing requirements

A company must cause proper books of account to be kept with respect to (i) all sums of money received and expended by the company and the matters in respect of which the receipt and expenditure takes place; (ii) all sales and purchases of goods by the company; and (iii) the assets and liabilities of the company.

Proper books of account shall not be deemed to be kept if there are not kept such books as are necessary to give a true and fair view of the state of the company’s affairs and to explain its transactions.

An exempted company must make available at its registered office in electronic form or any other medium, copies of its books of account or parts thereof as may be required of it upon service of an order or notice by the Tax Information Authority pursuant to the Tax Information Authority Act of the Cayman Islands.

(i) Exchange control

There are no exchange control regulations or currency restrictions in the Cayman Islands.

(j) Taxation

Pursuant to the Tax Concessions Act of the Cayman Islands, the Company has obtained an undertaking:

(1) that no law which is enacted in the Cayman Islands imposing any tax to be levied on profits, income, gains or appreciation shall apply to the Company or its operations; and

(2) that the aforesaid tax or any tax in the nature of estate duty or inheritance tax shall not be payable on or in respect of the shares, debentures or other obligations of the Company.

The undertaking for the Company is for a period of twenty years from 4 March 2021.

– V-23 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

The Cayman Islands currently levy no taxes on individuals or corporations based upon profits, income, gains or appreciations and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to the Company levied by the Government of the Cayman Islands save for certain stamp duties which may be applicable, from time to time, on certain instruments executed in or brought within the jurisdiction of the Cayman Islands. The Cayman Islands are a party to a double tax treaty entered into with the United Kingdom in 2010 but otherwise is not party to any double tax treaties.

(k) Stamp duty on transfers

No stamp duty is payable in the Cayman Islands on transfers of shares of Cayman Islands companies except those which hold interests in land in the Cayman Islands.

(l) Loans to directors

There is no express provision in the Companies Act prohibiting the making of loans by a company to any of its directors.

(m) Inspection of corporate records

The notice of registered office is a matter of public record. A list of the names of the current directors and alternate directors (if applicable) is made available by the Registrar of Companies for inspection by any person on payment of a fee. The register of mortgages is open to inspection by creditors and members.

Members of the Company have no general right under the Companies Act to inspect or obtain copies of the register of members or corporate records of the Company. They will, however, have such rights as may be set out in the Company’s Articles.

(n) Register of members

An exempted company may maintain its principal register of members and any branch registers at such locations, whether within or without the Cayman Islands, as the directors may, from time to time, think fit. The register of members shall contain such particulars as required by Section 40 of the Companies Act. A branch register must be kept in the same manner in which a principal register is by the Companies Act required or permitted to be kept. The company shall cause to be kept at the place where the company’s principal register is kept a duplicate of any branch register duly entered up from time to time.

– V-24 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

There is no requirement under the Companies Act for an exempted company to make any returns of members to the Registrar of Companies of the Cayman Islands. The names and addresses of the members are, accordingly, not a matter of public record and are not available for public inspection. However, an exempted company shall make available at its registered office, in electronic form or any other medium, such register of members, including any branch register of members, as may be required of it upon service of an order or notice by the Tax Information Authority pursuant to the Tax Information Authority Act of the Cayman Islands.

(o) Register of Directors and Officers

The Company is required to maintain at its registered office a register of directors and officers which is not available for inspection by the public. A copy of such register must be filed with the Registrar of Companies in the Cayman Islands and any change must be notified to the Registrar within thirty (30) days of any change in such directors or officers.

(p) Beneficial Ownership Register

An exempted company is required to maintain a beneficial ownership register at its registered office that records details of the persons who ultimately own or control, directly or indirectly, 25% or more of the equity interests or voting rights of the company or have rights to appoint or remove a majority of the directors of the company. The beneficial ownership register is not a public document and is only accessible by a designated competent authority of the Cayman Islands. Such requirement does not, however, apply to an exempted company with its shares listed on an approved stock exchange, which includes the Stock Exchange. Accordingly, for so long as the shares of the Company are listed on the Stock Exchange, the Company is not required to maintain a beneficial ownership register.

– V-25 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

(q) Winding up

A company may be wound up (a) compulsorily by order of the Court, (b) voluntarily, or (c) under the supervision of the Court.

The Court has authority to order winding up in a number of specified circumstances including where the members of the company have passed a special resolution requiring the company to be wound up by the Court, or where the company is unable to pay its debts, or where it is, in the opinion of the Court, just and equitable to do so. Where a petition is presented by members of the company as contributories on the ground that it is just and equitable that the company should be wound up, the Court has the jurisdiction to make certain other orders as an alternative to a winding-up order, such as making an order regulating the conduct of the company’s affairs in the future, making an order authorising civil proceedings to be brought in the name and on behalf of the company by the petitioner on such terms as the Court may direct, or making an order providing for the purchase of the shares of any of the members of the company by other members or by the company itself.

A company (save with respect to a limited duration company) may be wound up voluntarily when the company so resolves by special resolution or when the company in general meeting resolves by ordinary resolution that it be wound up voluntarily because it is unable to pay its debts as they fall due. In the case of a voluntary winding up, such company is obliged to cease to carry on its business (except so far as it may be beneficial for its winding up) from the time of passing the resolution for voluntary winding up or upon the expiry of the period or the occurrence of the event referred to above.

For the purpose of conducting the proceedings in winding up a company and assisting the Court therein, there may be appointed an official liquidator or official liquidators; and the court may appoint to such office such person, either provisionally or otherwise, as it thinks fit, and if more persons than one are appointed to such office, the Court must declare whether any act required or authorised to be done by the official liquidator is to be done by all or any one or more of such persons. The Court may also determine whether any and what security is to be given by an official liquidator on his appointment; if no official liquidator is appointed, or during any vacancy in such office, all the property of the company shall be in the custody of the Court.

– V-26 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

As soon as the affairs of the company are fully wound up, the liquidator must make a report and an account of the winding up, showing how the winding up has been conducted and how the property of the company has been disposed of, and thereupon call a general meeting of the company for the purposes of laying before it the account and giving an explanation thereof. This final general meeting must be called by at least 21 days’ notice to each contributory in any manner authorised by the company’s articles of association and published in the Gazette.

(r) Reconstructions

There are statutory provisions which facilitate reconstructions and amalgamations approved by a majority in number representing seventy-five per cent. (75%) in value of shareholders or class of shareholders or creditors, as the case may be, as are present at a meeting called for such purpose and thereafter sanctioned by the Court. Whilst a dissenting shareholder would have the right to express to the Court his view that the transaction for which approval is sought would not provide the shareholders with a fair value for their shares, the Court is unlikely to disapprove the transaction on that ground alone in the absence of evidence of fraud or bad faith on behalf of management.

(s) Take-overs

Where an offer is made by a company for the shares of another company and, within four (4) months of the offer, the holders of not less than ninety per cent. (90%) of the shares which are the subject of the offer accept, the offeror may at any time within two (2) months after the expiration of the said four (4) months, by notice in the prescribed manner require the dissenting shareholders to transfer their shares on the terms of the offer. A dissenting shareholder may apply to the Court within one (1) month of the notice objecting to the transfer. The burden is on the dissenting shareholder to show that the Court should exercise its discretion, which it will be unlikely to do unless there is evidence of fraud or bad faith or collusion as between the offeror and the holders of the shares who have accepted the offer as a means of unfairly forcing out minority shareholders.

(t) Indemnification

Cayman Islands law does not limit the extent to which a company’s articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Court to be contrary to public policy (e.g. for purporting to provide indemnification against the consequences of committing a crime).

– V-27 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

(u) Economic Substance Requirements

Pursuant to the International Tax Cooperation (Economic Substance) Act, 2018 of the Cayman Islands (“ES Act”) that came into force on 1 January 2019, a “relevant entity” is required to satisfy the economic substance test set out in the ES Act. A “relevant entity” includes an exempted company incorporated in the Cayman Islands as is the Company; however, it does not include an entity that is tax resident outside the Cayman Islands. Accordingly, for so long as the Company is a tax resident outside the Cayman Islands, including in Hong Kong, it is not required to satisfy the economic substance test set out in the ES Act.

4. GENERAL

Conyers Dill & Pearman, the Company’s special legal counsel on Cayman Islands law, have sent to the Company a letter of advice summarising certain aspects of Cayman Islands company law. This letter, together with a copy of the Companies Act, is available for inspection as referred to in the paragraph headed “Document Delivered to the Registrar of Companies and Available for Inspection – B. Document available for inspection” in this document. Any person wishing to have a detailed summary of Cayman Islands company law or advice on the differences between it and the laws of any jurisdiction with which he is more familiar is recommended to seek independent legal advice.

– V-28 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX VI STATUTORY AND GENERAL INFORMATION

A. FURTHER INFORMATION ABOUT OUR GROUP

1. Incorporation of our Company

Our Company was incorporated in the Cayman Islands under the Companies Act as an exempted company with limited liability on 21 November 2019 and its registered office is located at Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands. Our Company has established its principal place of business in Hong Kong at Unit D, 35/F, Montery Plaza, 15 Chong Yip Street, Kwun Tong, Kowloon, Hong Kong and was registered with the Registrar of Companies in Hong Kong as a non-Hong Kong company under Part 16 of the Companies Ordinance on 29 May 2020. Mr. Sio Chin Tat, our company secretary, has been appointed as the authorised representative of our Company for the acceptance of service of process and notices on behalf of our Company in Hong Kong.

As our Company was incorporated in the Cayman Islands, its operations are subject to the Companies Act and our constitutional documents comprising the Memorandum and Articles. A summary of certain parts of our constitutional documents and relevant aspects of the Companies Act is set out in Appendix V to this document.

2. Changes in share capital of our Company

The authorised share capital of our Company as at the date of incorporation was US$50,000 divided into 50,000 shares of par value of US$1.00 each. The following sets out the changes in our Company’s share capital since the date of its incorporation up to the date of this document:

(a) On 21 November 2019, one share of a par value of US$1.00 was allotted and issued as fully paid to an Independent Third Party, which was then transferred to Allied Earn on the same day.

(b) On 20 April 2020, the then sole Shareholder of our Company, Allied Earn, passed a shareholder’s resolution to subdivide the one issued and 49,999 unissued shares with a par value of US$1.00 each of our Company into 100 issued and 4,999,900 unissued Shares with a par value of US$0.01 each, so that thereafter, the authorised share capital of our Company became US$50,000 divided into 5,000,000 Shares with a par value of US$0.01 each.

– VI-1 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX VI STATUTORY AND GENERAL INFORMATION

(c) On the even day, 4,787, 27,978, 2,200, 3,300, 48,023, 6,908, 9,603, 1,061, 4,640, 285, 2,159, 1,557 and 2,239 Shares with a par value of US$0.01 each were allotted and issued as fully paid to Allied Earn, Easy Express, Super Wise, Rich Great, Good Standard, Sheen World, Keen Champ, Giant World, Qiangsheng, Mighty Power, Nice Well, Bright Trend and Glory Best respectively; after the said allotment and issuance of Shares, the aforesaid respective Shareholders held 4,887, 27,978, 2,200, 3,300, 48,023, 6,908, 9,603, 1,061, 4,640, 285, 2,159, 1,557 and 2,239 Shares in our Company and the total issued and unissued Shares of our Company were 114,840 and 4,885,160 respectively.

(d) On 23 September 2020, further 1,160 Shares with a par value of US$0.01 each were allotted and issued as fully paid to Topwealth; after the said allotment and issuance, the total issued and unissued Shares of our Company were 116,000 and 4,884,000 respectively.

(e) On [•], the Shareholders of our Company passed a shareholders’ resolution to increase the authorised share capital of our Company from US$50,000 to US$100,000,000, so that thereafter, the authorised share capital of our Company consist of US$[REDACTED] divided into [REDACTED] Shares with a par value of US$0.01 each.

(f) Pursuant to the same written resolutions of the Shareholders referred to in paragraph (e) above, subject to certain conditions referred to therein, the Directors were authorised to capitalise [REDACTED] standing to the credit of the share premium account of our Company and apply the said sum in paying up in full [REDACTED] Shares at par, such Shares were allotted and issued, credited as fully paid to the then Shareholders of the Company, namely Allied Earn, Easy Express, Super Wise, Rich Great, Good Standard, Sheen World, Keen Champ, Giant World, Qiangsheng, Mighty Power, Nice Well, Bright Trend, Glory Best and Topwealth. Subsequent to the [REDACTED], the Company will have [REDACTED] issued Shares held by the aforesaid Shareholders.

Save as disclosed above, there has been no alteration in the share capital of our Company since its incorporation.

3. Changes in share capital of our subsidiaries

The subsidiaries of our Company are listed in the Accountants’ Report as set out in Appendix I to this document. Save as disclosed in the section headed “History, Reorganisation and Corporate Structure” in this document, there has been no alteration in the share capital of any of the subsidiaries of our Company within the two years immediately preceding the date of this document.

– VI-2 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX VI STATUTORY AND GENERAL INFORMATION

4. Written resolutions of our Shareholders passed on [•]

Pursuant to the written resolutions of the Shareholders of our Company passed on [•], among other things:

(a) the authorised share capital of our Company was increased from US$50,000 divided into 5,000,000 Shares with par value of US$0.01 each to US$[REDACTED] divided into [REDACTED] Shares of US$0.01 each;

(b) our Company approved the adoption of the Memorandum and the conditional adoption of the Articles which will become effective on the [REDACTED];

(c) conditional upon fulfilment of the conditions as stated in the paragraph headed “Structure and Conditions of the [REDACTED] – Conditions of the [REDACTED]” in this document:

(i) the [REDACTED] and the [REDACTED] were approved and our Directors were authorised to allot and issue the [REDACTED] pursuant to the [REDACTED] and such number of Shares as may be allotted and issued pursuant to the exercise of the [REDACTED] to rank pari passu with the then existing Shares in all respects subject to the terms and conditions stated in this document and in the relevant [REDACTED];

(ii) conditional further on the share premium account of our Company being credited as a result of the [REDACTED] or otherwise having sufficient balance, our Directors were authorised to capitalise an amount of US$[REDACTED] standing to the credit of the share premium account of our Company and to apply such amount as to pay up in full at par [REDACTED] Shares for allotment and issue to the persons whose names appeared on the register of members of our Company at the close of business on the date of these resolutions (or as they may direct) in proportion (as nearly as possible without involving fractions) to their then existing shareholdings in our Company, each ranking pari passu in all respects with the then existing issued Shares, and our Directors were authorised to give effect to such capitalisation and distributions and do such things and sign on such documents in relation thereto as they consider appropriate; and

(iii) the rules of the Share Option Scheme (a summary of which is set out in the paragraph headed “D. Share Option Scheme” in this Appendix) were approved and adopted and our Directors were authorised, at their absolute discretion, to grant options to subscribe for Shares under the Share Option Scheme and to allot, issue and deal with Shares pursuant thereto and to take all such steps as they consider necessary or desirable to implement the Share Option Scheme;

– VI-3 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX VI STATUTORY AND GENERAL INFORMATION

(d) a general unconditional mandate was given to our Directors to exercise all powers of our Company to allot, issue and deal with Shares (including the power to grant offers, agreements or options which would or might require the exercise of such powers), provided that the aggregate number of Shares so allotted or agreed to be allotted by our Directors, otherwise than by way of (i) rights issue, (ii) an issue of Shares pursuant to the exercise of the [REDACTED] or the exercise of options which may be granted under the Share Option Scheme or under any other share option scheme of our Company, or (iii) pursuant to any scrip dividend schemes or similar arrangements providing for the allotment and issuance of the Shares in lieu of the whole or part of any dividend in accordance with the Memorandum and the Articles of Association, or (iv) upon the exercise of any subscription or conversion rights attached to any warrants or convertibles of our Company, or (v) issue of Shares under the [REDACTED] or the [REDACTED], shall not exceed the aggregate of (1) 20% of the total number of Shares of our Company in issue immediately following completion of the [REDACTED] and the [REDACTED] but excluding any Shares to be issued upon exercise of the [REDACTED] and any options which may be granted under the Share Option Scheme; and (2) the total number of Shares repurchased by our Company under the Repurchase Mandate as defined in paragraph (e) below, such mandate to remain in effect until the earliest of:

(i) the conclusion of the next annual general meeting of our Company;

(ii) the expiration of the period within which the next annual general meeting of our Company is required by the Memorandum or Articles or the Companies Act or any other applicable laws of the Cayman Islands to be held; or

(iii) the time when such mandate is revoked or varied by an ordinary resolution of our Shareholders in general meeting;

(e) a general unconditional mandate (the “Repurchase Mandate”) was given to our Directors authorising them to exercise all powers of our Company to repurchase on the Stock Exchange or on any other stock exchange on which the Shares may be [REDACTED] and which is recognised by the SFC and the Stock Exchange for this purpose, such number of Shares as will represent up to 10% of the total number of Shares of our Company in issue immediately following completion of the [REDACTED] and the [REDACTED], but excluding any Shares to be issued upon exercise of any options which may be granted under the Share Option Scheme, such mandate shall remain in effect until the earliest of:

(i) the conclusion of the next annual general meeting of our Company;

– VI-4 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX VI STATUTORY AND GENERAL INFORMATION

(iii) the time when such mandate is revoked or varied by an ordinary resolution of our Shareholders in general meeting; and

(f) the general unconditional mandate mentioned in sub-paragraph (d) above was extended by the addition to the number of Shares repurchased by our Company pursuant to the Repurchase Mandate referred to in sub-paragraph (e) above, provided that such extended amount shall not exceed 10% of the total number of Shares of our Company in issue immediately following completion of the [REDACTED] and the [REDACTED].

5. Reorganisation

The companies comprising our Group underwent the Reorganisation in preparation for the [REDACTED]. For information relating to the Reorganisation, please refer to the paragraph headed “History, Reorganisation and Corporate Structure – Reorganisation” in this document.

6. Repurchase of Shares by our Company

This section contains information required by the Stock Exchange to be included in this document concerning the repurchase of Shares by our Company.

(a) Provisions of the Listing Rules

The Listing Rules permit companies whose primary [REDACTED] is on the Stock Exchange to repurchase their securities on the Stock Exchange subject to certain restrictions, the most important of which are summarised below:

(i) Shareholders’ approval

The Listing Rules provide that all proposed repurchases of securities, which must be fully paid up in the case of shares, by a company with a primary [REDACTED] on the Stock Exchange must be approved in advance by an ordinary resolution of the shareholders, either by way of general mandate or by specific approval of a particular transaction.

Note: Pursuant to the written resolutions passed by our then Shareholders on [•], the Repurchase Mandate was given to our Directors authorising them to exercise all powers of our Company to repurchase the Shares as described in the paragraph headed “A. Further information about our Group – 4. Written resolutions of our shareholders passed on [•]” in this Appendix.

– VI-5 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX VI STATUTORY AND GENERAL INFORMATION

(ii) Source of funds

Any repurchase by our Company must be financed out of funds legally available for the purpose in accordance with the Memorandum and Articles, the applicable laws of the Cayman Islands and the Listing Rules. A listed company shall not repurchase its own securities on the Stock Exchange for a consideration other than cash or for settlement otherwise than in accordance with the trading rules of the Stock Exchange as amended from time to time.

Subject to the foregoing, any repurchases by our Company may be made out of profits of our Company, out of the share premium account of our Company, or out of the proceeds of a fresh issue of Shares made for the purpose of the repurchase or, if authorised by the Memorandum and Articles and subject to the Companies Act, out of capital. Any amount of premium payable on the repurchase over the par value of the Shares to be repurchased must be out of profits of our Company’s share premium amount before or at the time the Shares are repurchased, or, subject to the Articles and the Companies Act, out of the capital.

(iii) Core connected persons

The Listing Rules prohibit our Company from knowingly repurchasing the Shares on the Stock Exchange from a core connected person (as defined in the Listing Rules), and a core connected person shall not knowingly sell Shares to our Company on the Stock Exchange.

(iv) Trading restrictions

A listed company is authorised to repurchase on the Stock Exchange or on any other stock exchange recognised by the SFC and the Stock Exchange not exceeding 10% of the number of issued shares or warrants (or such other relevant class of securities, as the case may be) of the said listed company at the date of the resolution granting the general mandate.

A listed company may not make a new issue of shares or announce a proposed new issue of shares for a period of 30 days after any purchase by it of shares, whether on the Stock Exchange or otherwise (other than an issue of securities pursuant to the exercise of warrants, share options or similar instruments requiring the said listed company to issue securities, which were outstanding prior to that purchase of its own securities), without the prior approval of the Stock Exchange.

– VI-6 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX VI STATUTORY AND GENERAL INFORMATION

A listed company is prohibited from repurchasing its own shares on the Stock Exchange if the purchase price is higher by 5% or more than the average closing market price for the five preceding trading days on which its shares were traded on the Stock Exchange.

A listed company is also prohibited from repurchasing its own shares on the Stock Exchange if that repurchase would result in the number of listed securities of that company which are in the hands of the public falling below the relevant prescribed minimum percentage for that company as determined by the Stock Exchange at the time of listing.

A listed company shall not repurchase its own shares on the Stock Exchange at any time after inside information has come to its knowledge until the information is made publicly available. In particular, during the period of one month immediately preceding the earlier of: (i) the date of the board meeting (as such date is first notified to the Stock Exchange in accordance with the Listing Rules) for the approval of that company’s results for any year, half-year, quarterly or any other interim period (whether or not required under the Listing Rules); and (ii) the deadline for that company to announce its results for any year or half-year under the Listing Rules, or quarterly or any other interim period (whether or not required under the Listing Rules), and ending on the date of the results announcement, that listed company may not repurchase its shares on the Stock Exchange, unless the circumstances are exceptional.

(v) Status of repurchased securities

The listing of all repurchased securities (whether on the Stock Exchange or otherwise) shall be automatically cancelled upon repurchase and the certificates of the relevant securities must be cancelled and destroyed. Under the Cayman Islands law, shares repurchased by a Cayman Islands company may be treated as cancelled and, if so cancelled, the amount of the company’s issued share capital shall be reduced by the aggregate nominal value of the repurchased shares accordingly although the authorised share capital of the company will not be taken as reduced.

(vi) Reporting requirements

A listed company must report repurchases of securities on the Stock Exchange or otherwise to the Stock Exchange no later than 30 minutes before the earlier of the commencement of the morning trading session or any pre-opening session on the business day following any day on which such repurchases are made, reporting the total number of shares purchased the previous day, the purchase price per share or the highest and lowest price paid for such purchases, where relevant.

– VI-7 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX VI STATUTORY AND GENERAL INFORMATION

In addition, a listed company’s annual report and accounts are required to include a monthly breakdown of securities repurchased during the financial year under review, showing the number of securities repurchased each month (whether on the Stock Exchange or otherwise), the purchase price per share or the highest and lowest prices paid for all such repurchases and the aggregate price paid for such repurchases. The directors’ report of that company is also required to contain reference to the purchases made during the year and the directors’ reasons for making such purchases.

(b) Exercise of the Repurchase Mandate

On the basis of [REDACTED] Shares in issue immediately after completion of the [REDACTED] and the [REDACTED] and taking no account of any Share to be issued upon the exercise of the [REDACTED] and the exercise of any options which may be granted under the Share Option Scheme, our Directors would be authorised under the Repurchase Mandate to repurchase up to [REDACTED] Shares during the period in which the Repurchase Mandate remains in force.

Our Directors believe that it is in the best interests of our Company and our Shareholders for our Directors to have a general authority from our Shareholders to enable our Company to repurchase Shares in the market. Such repurchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of our Company’s net asset value and/or earnings per Share and will only be made when our Directors believe that such repurchases will benefit our Company and our Shareholders as a whole.

(d) Funding of repurchases

In repurchasing the Shares, our Company may only apply funds legally available for such purpose in accordance with the Companies Law, the Listing Rules and the applicable laws and regulations of the Cayman Islands.

On the basis of the current financial position of our Group as disclosed in this document and taking into account the current working capital position of our Group, our Directors consider that, if the Repurchase Mandate were to be exercised in full, it might have a material adverse effect on the working capital and/or the gearing position of our Group as compared with the position disclosed in the section headed “Financial Information” in this document. However, our Directors do not propose to exercise the Repurchase Mandate to such extent as would, in the circumstances, have a material adverse effect on the working capital requirements of our Company or the gearing levels which in the opinion of our Directors are from time to time appropriate for our Company.

– VI-8 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX VI STATUTORY AND GENERAL INFORMATION

(e) General

None of our Directors nor, to the best of their knowledge having made all reasonable enquiries, any of their respective close associates (as defined in the Listing Rules), has any present intention to sell any Shares to our Company if the Repurchase Mandate is exercised.

Our Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will exercise the Repurchase Mandate in accordance with the Listing Rules, the Memorandum and Articles and the applicable law and regulations from time to time in force in the Cayman Islands.

If as a result of a repurchase of Shares pursuant to the Repurchase Mandate, a Shareholder’s proportionate interest in the voting rights of our Company increases, such increase will be treated as an acquisition for the purpose of the Takeovers Code. In certain circumstances, a Shareholder or a group of Shareholders acting in concert (as defined in the Takeovers Code) depending on the level of increase of our Shareholders’ interest, could obtain or consolidate control of our Company and may become obliged to make a mandatory offer in accordance with Rule 26 of the Takeovers Code as a result of any such increase.

Save as disclosed above, our Directors are not aware of any consequences which may arise under the Takeovers Code as a consequence of any repurchase of Shares if made immediately after the [REDACTED] pursuant to the Repurchase Mandate. At present, so far as is known to the Directors, no Shareholder may become obliged to make a mandatory offer in accordance with Rule 26 of the Takeover Code in the event that our Directors exercise the power in full to repurchase the Shares pursuant to the Repurchase Mandate.

Our Directors will not exercise the Repurchase Mandate if the repurchase would result in the number of Shares which are in the hands of the [REDACTED] falling below 25% of the total number of Shares in issue (or such other percentage as may be prescribed as the minimum [REDACTED] shareholding under the Listing Rules).

No core connected person has notified our Company that he or she has a present intention to sell Shares to our Company, or has undertaken not to do so, if the Repurchase Mandate is exercised.

– VI-9 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX VI STATUTORY AND GENERAL INFORMATION

B. FURTHER INFORMATION ABOUT THE BUSINESS OF OUR GROUP

1. Summary of material contracts

The following contracts (not being contracts entered into in the ordinary course of business) have been entered into by members of our Group within the two years preceding the date of this document and are or may be material:

(a) A share swap agreement entered into between our Company and Dr. Yee Wu dated 23 September 2020;

(b) Deed of Indemnity;

(d) [REDACTED].

2. Intellectual property rights of our Group

(a) Trademarks

As at the Latest Practicable Date, our Group is the owner of the following trademarks which have been registered in the PRC and all of which are registered under the name of Shandong Anyuan:

Registration Date of Trademark Number Class Registration Expiry date

12155266 31 28 July 2014 27 July 2024

12155186 29 28 July 2014 27 July 2024

12155169 29 28 July 2014 27 July 2024

12155144 29 28 July 2014 27 July 2024

12155110 31 28 July 2014 27 July 2024

9826853 31 28 November 2012 27 November 2022

5824241 29 7 May 2010 6 May 2030

– VI-10 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX VI STATUTORY AND GENERAL INFORMATION

As at the Latest Practicable Date, our Group is the owner of the following trademarks which have been registered in Hong Kong and all of which are registered under the name of our Company:

Registration Date of Trademark Number Class Registration Expiry date

305263425 16, 29, 31, 44 5 May 2020 4 May 2030

305217679 16, 29, 31, 44 12 March 2020 11 March 2030

(b) Domain names

As at the Latest Practicable Date, our Group is the owner of the domain names which have been registered in the PRC and all of which are registered under the name of Shandong Anyuan:

No. Domain name Registered date Expiry date

1 山東安源.中國 9 July 2018 9 July 2028 2 安源水產.網址 6 January 2015 6 March 2024 3 蓬安源.網址 6 January 2015 6 May 2024 4 山東安源.網址 1 December 2017 1 December 2027 5 蓬萊海參.網店 15 June 2016 15 June 2026 6 sdanyuan.cn 29 August 2017 29 August 2022 7 planyuan.com 14 April 2010 14 April 2025 8 penganyuan.com 22 October 2008 22 October 2023 9 蓬安源.中國 12 April 2010 12 April 2025 10 蓬安源.cn 12 April 2010 12 April 2025 11 安源水產.中國 29 June 2012 29 June 2027 12 安源水產.cn 29 June 2012 29 June 2027

Note: Information contained in the above website does not form part of this document.

– VI-11 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX VI STATUTORY AND GENERAL INFORMATION

As at the Latest Practicable Date, our Group has registered the following patents which have all been registered in the PRC under the name of Shandong Anyuan:

Authorisation Name of patent Patent no. Type date Expiry date Source

Artificial reef used in the sea ZL200810177526.1 Invention 4 July 2012 17 November By way of cucumber rearing pool and the patent 2028 application method of making artificial reef* (發明專利) (用於刺參養殖池的人工礁及其造礁方法)

Powder feeds for sea cucumbers and ZL201110198939.X Invention 16 January 15 July 2031 By way of their processing method* patent 2013 application (刺參粉末飼料及其加工方法) (發明專利)

A plate heat exchanger and the ZL201110198935.1 Invention 31 July 2013 15 July 2031 By way of application in aquaculture* patent application (一種板式換熱器及 (發明專利) 在海水養殖中的應用)

A method for the cultivation of ZL201110198934.7 Invention 16 January 15 July 2031 By way of broodstock of sea cucumbers* patent 2013 application (一種刺參種參的培育方法) (發明專利)

A method for the breeding of young ZL201110198938.5 Invention 14 November 15 July 2031 By way of sea cucumbers* patent 2012 application (一種刺參苗種繁育方法) (發明專利)

A device for the transfer of plastic ZL201110198941.7 Invention 14 November 15 July 2031 By way of racks for sea cucumbers* patent 2012 application (一種海參倒池裝置) (發明專利)

Geoduck indoor rearing methods and ZL201210167517.0 Invention 7 May 2014 24 May 2032 By way of rearing container (一種象拔蚌室內 patent application 養殖方法與養殖箱) (發明專利)

Selection method of broodstock in the ZL201310322705.0 Invention 21 October 28 July 2033 By way of cross-breeding of sea cucumbers* patent 2015 application (刺參雜交育種中種參的選擇方法) (發明專利)

– VI-12 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX VI STATUTORY AND GENERAL INFORMATION

Authorisation Name of patent Patent no. Type date Expiry date Source

A compound immune enhancer used ZL201210328024.0 Invention 16 December 5 September By way of for young sea cucumbers* patent 2015 2032 application (一種刺參稚幼參用的 (發明專利) 複合免疫增強劑)

Concentration method and device for ZL201210171487.0 Invention 7 May 2014 28 May 2032 By way of keeping golden algae alive* patent application (金藻保活濃縮的方法及其裝置) (發明專利)

Method of inducing sea cucumbers to ZL200910012325.0 Invention 17 April 2013 30 June 2029 By way of produce eggs in vivo* patent assignment (體內誘導刺參產卵的方法) (發明專利)

Sea water shed and method to utilise ZL201611061335.X Invention 17 May 2019 27 November By way of such shed for integrated ecological patent 2036 assignment rearing* (發明專利) (海水大棚以及利用該大棚進行綜合生態養殖的方法)

A cage suitable for the cultivation of ZL201922010822.9 Utility model 24 December 19 November By way of large-size young sea cucumbers* patent 2019 2029 application (一種適用於大規格刺參苗種 (實用新型) 培育的網箱)

A sowing device for the rearing pond ZL201921851469.0 Utility model 30 June 2020 28 October By way of of sea cucumbers* patent 2029 application (一種池塘養殖刺參的投苗裝置) (實用新型)

Save as disclosed above, there are no other trade or service marks, copyrights or other intellectual rights which are material to the business of our Group.

– VI-13 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX VI STATUTORY AND GENERAL INFORMATION

C. FURTHER INFORMATION ABOUT OUR DIRECTORS, MANAGEMENT AND SUBSTANTIAL SHAREHOLDERS

1. Disclosure of interests

(a) Interests of our Directors and chief executive

Immediately following the completion of the [REDACTED] and the [REDACTED], without taking into consideration the Shares which may be issued pursuant to the [REDACTED] and upon the exercise of any option which may be granted under the Share Option Scheme, the interests or short positions of the Directors and chief executive of our Company in the Shares, underlying Shares or debentures of our Company or any of its associated corporations (within the meaning of Part XV of the SFO) which, once the Shares are [REDACTED] on the Stock Exchange, will have to be notified to our Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including any interests and short positions which they are taken or deemed to have under such provisions of the SFO), or which will be required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or which will be required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers contained in the Listing Rules (the “Model Code”) as set out in Appendix 10 of the Listing Rules, to be notified to the Company and the Stock Exchange, will be as follows:

(i) Long position in the Shares

Approximate percentage of Capacity/ Number of shareholding in Name of Director Nature of interest Shares held our Company

Mr. Zou(1) Interest in a controlled [REDACTED] [REDACTED]% corporation, interests held jointly with another person

Mr. Zhang(1) Interest in a controlled [REDACTED] [REDACTED]% corporation, interests held jointly with another person

Mr. Zou Shifang(2) Interest in a controlled [REDACTED] [REDACTED]% corporation

Mr. Liu(3) Interest in a controlled [REDACTED] [REDACTED]% corporation

– VI-14 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX VI STATUTORY AND GENERAL INFORMATION

Approximate percentage of Capacity/ Number of shareholding in Name of Director Nature of interest Shares held our Company

Mr. Wang(4) Interest in a controlled [REDACTED] [REDACTED]% corporation

Notes:

1. Our Company will be held as to approximately [REDACTED]% jointly by Good Standard, Easy Express and Bright Trend immediately following the completion of the [REDACTED] and the [REDACTED] (without taking into account any Shares which may be allotted and issued pursuant to the [REDACTED] and upon the exercise of any options that may be granted under the Share Option Scheme). Good Standard and Easy Express are respectively wholly owned by Mr. Zou and Mr. Zou Siyuan, and Bright Trend is owned as to 96.8% by Mr. Zhang and as to 3.2% by Ms. Liu Shuzhen, who is the spouse of Mr. Zhang, respectively. Pursuant to the Deed of Acting in Concert, each of our Controlling Shareholders has agreed to act in concert and to reach unanimous decisions on the major business, operational, financial and other material matters of our Group. Hence, each of our Controlling Shareholders is deemed to be interested in all the Shares held by our Controlling Shareholders in aggregate by virtue of the SFO.

2. Mr. Zou Shifang directly holds the entire issued share capital of Glory Best and is therefore deemed to be interested in the same number of Shares in which Glory Best is interested.

3. Mr. Liu directly holds the entire issued share capital of Nice Well and is therefore deemed to be interested in the same number of Shares in which Nice Well is interested.

4. Mr. Wang directly holds the entire issued share capital of Mighty Power and is therefore deemed to be interested in the same number of Shares in which Mighty Power is interested.

– VI-15 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX VI STATUTORY AND GENERAL INFORMATION

(ii) Long position in the ordinary shares of associated corporations

Percentage of shareholding in the Name of associated Number of associated Name of Director corporation Capacity share held corporation

Mr. Zou Good Standard Beneficial owner 1 100%

Mr. Zhang(Note) Bright Trend Beneficial owner, 1,557 100% interest of spouse

Mr. Zou Shifang Glory Best Beneficial owner 1 100%

Mr. Liu Nice Well Beneficial owner 1 100%

Mr. Wang Mighty Power Beneficial owner 1 100%

Note: Bright Trend is wholly owned by Mr. Zhang and Ms. Liu Shuzhen, the spouse of Mr. Zhang. By virtue of the SFO, Mr. Zhang is deemed, or taken to be, interested in all the shares in Bright Trend in which Ms. Liu Shuzhen is interested.

– VI-16 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX VI STATUTORY AND GENERAL INFORMATION

(b) Interests disclosable under the SFO and Substantial Shareholders

Approximate percentage of Name of interested Number of shareholding in parties Capacity/Nature of interest Shares held our Company

Mr. Zou Siyuan(1) Interest in a controlled [REDACTED] [REDACTED]% corporation, interests held jointly with another person

Ms. Liu Shuzhen(1) Interest in a controlled [REDACTED] [REDACTED]% corporation, interests held jointly with another person

Good Standard(1) Beneficial owner, interests held [REDACTED] [REDACTED]% jointly with another person

Easy Express(1) Beneficial owner, interests held [REDACTED] [REDACTED]% jointly with another person

Bright Trend(1) Beneficial owner, interests held [REDACTED] [REDACTED]% jointly with another person

Ms. Zhang Chunna(2) Interest of spouse [REDACTED] [REDACTED]%

Ms. Zhou Yufeng(3) Interest of spouse [REDACTED] [REDACTED]%

Ms. Ma Liangping(4) Interest in a controlled [REDACTED] [REDACTED]% corporation

Keen Champ Beneficial owner [REDACTED] [REDACTED]%

Mr. Wang Dong (王棟)(5) Interest of spouse [REDACTED] [REDACTED]%

– VI-17 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX VI STATUTORY AND GENERAL INFORMATION

Notes:

1. Our Company will be held as to approximately [REDACTED]% jointly by Good Standard, Easy Express and Bright Trend immediately following the completion of the [REDACTED] and the [REDACTED] (without taking into account any Shares which may be allotted and issued pursuant to the [REDACTED] and upon the exercise of any options that may be granted under the Share Option Scheme). Good Standard and Easy Express are respectively wholly owned by Mr. Zou and Mr. Zou Siyuan, and Bright Trend will be owned as to 96.8% by Mr. Zhang and as to 3.2% by Ms. Liu Shuzhen, who is the spouse of Mr. Zhang, respectively. Pursuant to the Deed of Acting in Concert, each of our Controlling Shareholders has agreed to jointly control their respective interests in our Company and reach unanimous decisions as to the major business, operational, financial and other material matters of our Group shall be in line with the decision of Mr. Zou and Good Standard, the company wholly owned and controlled by Mr. Zou. Each of our Controlling Shareholders shall exercise their respective voting rights in our Company in the same way. Hence, each of our Controlling Shareholders is deemed to be interested in all the Shares held by our Controlling Shareholders in aggregate by virtue of the SFO.

2. Ms. Zhang Chunna is the spouse of Mr. Zou. By virtue of the SFO, Ms. Zhang is deemed, or taken to be, interested in all the Shares in which Mr. Zou is deemed to be interested.

3. Ms. Zhou Yufeng is the spouse of Mr. Zou Siyuan. By virtue of the SFO, Ms. Zhou is deemed, or taken to be, interested in all the Shares in which Mr. Zou Siyuan is deemed to be interested.

4. Ms. Ma Liangping directly holds the entire issued share capital of Keen Champ and is therefore deemed to be interested in the same number of Shares in which Keen Champ is interested.

5. Mr. Wang Dong is the spouse of Ms. Ma Liangping. By virtue of the SFO, Mr. Wang Dong is deemed, or taken to be, interested in all the Shares in which Ms. Ma Liangping is deemed to be interested.

– VI-18 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX VI STATUTORY AND GENERAL INFORMATION

2. Particulars of service contracts

Each of Mr. Zou, Mr. Zhang, Mr. Zou Shifang, Mr. Liu and Mr. Wang, being all our executive Directors, has entered into a service contract with our Company on [•] for an initial term of three years commencing from the [REDACTED] and continuing thereafter until terminated by either party by giving not less than three months’ notice in writing to the other. Each of our executive Directors is entitled to an annual remuneration set out below, such remuneration to be reviewed annually by our Board.

In addition, each of our executive Directors may be entitled to, if so recommended by the remuneration committee of our Company and approved by our Board at its absolute discretion, a discretionary bonus, the amount of which is determined by our Board, with reference to the operating results of our Group, provided that the relevant executive Director shall abstain from voting and not be counted in the quorum in respect of any resolution of our Board approving the amount of annual remuneration, discretionary bonus and other benefits payable to him.

The basic annual remuneration (subject to annual review and excluding any discretionary bonus) payable to our executive Directors will be as follows:

Annual Name Remuneration (RMB’000)

Mr. Zou 588 Mr. Zhang 492 Mr. Zou Shifang 468 Mr. Liu 468 Mr. Wang 468

The non-executive Director, Mr. Wang Jifa, has entered into a service agreement with our Company on 18 May 2021. The service agreement is for a term of three years commencing from the [REDACTED], which may be terminated by giving at least three months’ notice in writing to the other. The non-executive Director is entitled to an annual remuneration of approximately RMB2.5 million.

Each of Mr. Li Hoi Kwong, Ms. Ng Yau Kuen, Carmen and Mr. Zheng Yongyun, all being our independent non-executive Directors, has signed a letter of appointment with our Company on [•] for an initial term of three years commencing from the [REDACTED] and continuing thereafter subject to a maximum of three years until terminated by either

– VI-19 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX VI STATUTORY AND GENERAL INFORMATION

party by giving not less than one month’s notice in writing to the other. The basic annual remuneration payable to each of our independent non-executive Directors will be as follows:

Annual Name Remuneration (RMB’000)

Mr. Zheng Yongyun 96 Ms. Ng Yau Kuen, Carmen 144 Mr. Li Hoi Kwong 144

Each of our Directors is entitled to reimbursement of all necessary and reasonable out-of-pocket expenses properly incurred in relation to all business and affairs carried out by our Group from time to time or in discharge of his duties to our Group under the service contract.

Save as aforesaid, none of our Directors has or is proposed to have a service contract with our Company or any of its subsidiaries (other than contracts expiring or determinable by our Group within one year without payment of compensation (other than statutory compensation)).

3. Directors’ remuneration

During each of FY2018, FY2019 and FY2020, the aggregate remuneration paid and benefits in kind granted by our Group to our Directors were approximately RMB0.9 million, RMB1.0 million and RMB1.4 million respectively. Under the arrangement presently in force, the aggregate amount of remunerations and benefits in kind granted by our Group to our Directors for the year ending 31 December 2021 is estimated to be approximately RMB2.5 million.

None of our Directors or any past directors of any member of our Group has been paid any sum of money for each of FY2018, FY2019 and FY2020 for (a) the loss of office as director of any member of our Group or of any other office in connection with the management affairs of any member of our Group or (b) as an inducement to join or upon joining any member of our Group.

There has been no arrangement under which a Director has waived or agreed to waive any emoluments for each of FY2018, FY2019 and FY2020.

– VI-20 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX VI STATUTORY AND GENERAL INFORMATION

4. Agency fees or commissions received

Information on the agency fees or commissions received by the [REDACTED] is set out in the paragraph headed “[REDACTED] – [REDACTED] arrangements and expenses – Commission and expenses” in this document.

Save as disclosed in the Accountants’ Report as set out in Appendix I in this document, none of the Directors, or the experts named in the paragraph headed “E. Other information – 9. Qualifications of experts” in this Appendix had received any agency fees, commissions, discounts, brokerages or other special terms in connection with the issue or sale of any capital of any member of our Group within the two years preceding the date of this document.

5. Related party transactions

During the Track Record Period, our Group engaged in the related party transaction as mentioned in Note 28 of the Accountants’ Report as set out in Appendix I to this document.

6. Disclaimers

Save as disclosed in this document:

(a) taking no account of any Shares to be issued pursuant to the [REDACTED] or upon the exercise of any options which may be granted under the Share Option Scheme, our Directors are not aware of any person (not being a Director or chief executive of our Company) who will, immediately following completion of the [REDACTED] and the [REDACTED], have an interest or short position in the Shares, underlying Shares or debentures of our Company or any of its associated corporations (within the meaning of the SFO) which would fall to be disclosed to our Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO or, who is entitled to exercise, or control the exercise of, 10% or more of the voting power at any general meeting of our Company;

– VI-21 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX VI STATUTORY AND GENERAL INFORMATION

(b) taking no account of any Shares to be issued pursuant to the [REDACTED] or upon the exercise of any options which may be granted under the Share Option Scheme, none of our Directors or chief executive of our Company has any interest or short position in the Shares, underlying Shares or debentures of our Company or any of its associated corporations (within the meaning of the SFO) which would have to be notified to our Company and the Stock Exchange under Divisions 7 and 8 of Part XV of the SFO (including any interests and short positions which they are taken or deemed to have under such provisions of the SFO) or would be required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or would be required, pursuant to the Model Code to be notified to our Company and the Stock Exchange, in each case once the Shares are [REDACTED] on the Stock Exchange;

(c) none of the Directors or the experts named in the paragraph headed “E. Other Information – 9. Qualifications of experts” in this Appendix is interested in the promotion of, or in any assets which have been, within the two years immediately preceding the issue of this document, acquired or disposed of by or leased to any member of our Group, or are proposed to be acquired or disposed of by or leased to any member of our Group;

(d) none of the Directors or the experts named in the paragraph headed “E. Other Information – 9. Qualifications of experts” in this Appendix is materially interested in any contract or arrangement subsisting at the date of this document which is significant in relation to the business of our Group taken as a whole;

(e) none of the experts named in the paragraph headed “E. Other Information – 9. Qualifications of experts” in this Appendix has any shareholding in any member of our Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of our Group;

(f) so far as is known to our Directors, none of our Directors, their respective close associates (as defined under the Listing Rules) or Shareholders who are interested in more than 5% of the issued share capital of our Company has any interests in the five largest customers or the five largest suppliers of our Group;

(g) none of our Directors has any existing or proposed service contracts with any member of our Group (excluding contracts expiring or determinable by the employer within one year without payment of compensation (other than statutory compensation)); and

(h) no remuneration or other benefits in kind have been paid by any member of our Group to any Director during the Track Record Period, nor are any remuneration or benefits in kind payable by any member of our Group to any Director in respect of the current financial year under any arrangement in force as at the Latest Practicable Date.

– VI-22 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX VI STATUTORY AND GENERAL INFORMATION

D. SHARE OPTION SCHEME

The following is a summary of the principal terms of the Share Option Scheme conditionally adopted by the written resolutions of the Shareholders of our Company passed on [•]. Our Board has been authorised to determine the grant of an option (an “Option”) to subscribe for Shares under, and pursuant to the terms of, the Share Option Scheme and to determine the grantees, number of Options to be granted to each grantee and the terms and conditions of such grants pursuant to the terms of the Share Option Scheme. The terms of the Share Option Scheme comply with the provisions of Chapter 17 of the Listing Rules.

(a) Purposes of the Share Option Scheme

The purpose of the Share Option Scheme is to recognise and acknowledge the contributions by the Proposed Grantee (as defined in sub-paragraph (b) below) to our Group. By providing them with the opportunity to acquire equity interests in our Company, the Share Option Scheme aims to achieve the following objectives:

(i) attract skilled and experienced personnel, to incentivise them to remain with our Group, and to motivate them to strive for the future development and expansion of our Group; and

(ii) attract and retain or otherwise maintain ongoing business relationships with suppliers and customers whose contributions are or will be beneficial to the long-term growth of our Company.

(b) Who may join

Our Board may, at its absolute discretion, offer to grant an option to subscribe for such number of Shares as our Board may determine to the following persons (collectively, the “Proposed Grantee(s)”):

(i) employees (whether full time or part time, and for the purposes of the Share Option Scheme also include any executive Director, non-executive (including independent non-executive) Director) of our Company or any of its subsidiaries (“Eligible Employee(s)”)

(ii) any advisor, consultant, supplier, customer or agent of our Company or any of its subsidiaries (“Eligible Third Party Contributor(s)”) provided that (1) such Eligible Third Party Contributor(s) provides bona fide services to or conduct business with our Company or any of its subsidiaries; (2) the services provided by or the business with the Eligible Third Party Contributors are not in connection with the offer or sale of securities in any capital-raising transaction of our Company and; (3) such Eligible Third Party Contributor(s), or the services provided or the business conducted, do not directly or indirectly make a market for our Company’s securities,

– VI-23 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX VI STATUTORY AND GENERAL INFORMATION

provided that no document is required to be issued in connection with such grant under the Companies Ordinance or the Companies (Winding Up and Miscellaneous (Provisions)) Ordinance or any other applicable laws. Our Board may in its absolute discretion specify such conditions (if any) as it thinks fit when making such offer to the Proposed Grantees, including, without limitation and notwithstanding sub-paragraph (i) below, as to the performance criteria to be satisfied by the Proposed Grantees and/or our Company before an Option can be exercised.

The total number of Shares which may be issued upon exercise of all Options and any other option scheme involving the issue or grant of options over Shares or other securities by our Company or any of its subsidiaries will not in aggregate exceed 10% of our Shares in issue as at the date of approval of the Share Option Scheme, being [REDACTED] Shares, excluding for this purpose Options lapsed in accordance with the terms of the Share Option Scheme, unless our Company obtains the approval of its Shareholders in accordance with the following:

(i) our Company may seek the approval of its Shareholders in general meeting to refresh the 10% limit such that the total number of Shares which may be issued upon exercise of all Options and any other option scheme involving the issue or grant of options over Shares or other securities by our Company under the limit as refreshed will not exceed 10% of Shares in issue as at the date of approval of the refreshed limit. Options previously granted under the Share Option Scheme or any other option scheme, including options outstanding, cancelled or lapsed in accordance with the relevant option scheme or exercised options, will not be counted for the purpose of calculating the limit to be refreshed;

(ii) our Company may seek separate approval of its Shareholders in general meeting to grant Options which will result in the number of Shares in respect of all the Options granted under the Share Option Scheme and all the options granted under any other option scheme exceeding the 10% limit, provided that such Options are granted only to the Eligible Employees and Eligible Third Party Contributors specifically identified by our Company before the approval of its Shareholders is sought; and

(iii) the maximum number of Shares which may be issued upon the exercise of all outstanding Options granted and yet to be exercised under the Share Option Scheme and any other options granted and yet to be exercised under any other option scheme will not exceed 30% of our Shares in issue from time to time.

– VI-24 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX VI STATUTORY AND GENERAL INFORMATION

(d) Maximum entitlement of each Proposed Grantee

No Option may be granted to any one person such that the total number of Shares issued and to be issued upon the exercise of Options granted and to be granted to such person in any 12-month period up to and including the date of the latest grant exceeds 1% of our Shares in issue of our Company from time to time. Any further grant of Options in excess of this 1% limit will be subject to:

(i) the issue of a circular by our Company containing the identity of the Proposed Grantee, the numbers of and terms of the Options to be granted (and Options previously granted to such Proposed Grantee), the information required under Rule 17.02(2)(d) and the disclaimer required under Rule 17.02(4) of the Listing Rules; and

(ii) the approval of our Shareholders in general meeting and/or other requirements prescribed under the Listing Rules from time to time, and with such Proposed Grantee and his close associates (as defined in the Listing Rules) (or his associates if the Proposed Grantee is a connected person) abstaining from voting. The numbers and terms (including the exercise price) of Options to be granted to such Proposed Grantee must be fixed before the relevant Shareholders’ approval and the date of our Board meeting at which our Board proposes to grant the Options to such Proposed Grantee will be taken as the date of grant for the purpose of calculating the exercise price of our Shares. Our Board will forward to such Proposed Grantee an offer document in such form as our Board may from time to time determine.

(e) Grant of Options to connected persons

The independent non-executive Directors of our Company (excluding any independent non-executive Director of our Company who is a Proposed Grantee) will be required to approve each grant of Options to a Director, chief executive or Substantial Shareholder of our Company or any of their respective associates.

If a grant of Options to a Substantial Shareholder of our Company or an independent non-executive Director, or any of their respective associates, will result in the total number of Shares issued and to be issued upon the exercise of Options granted and to be granted (including Options exercised, cancelled and outstanding) to such person in the 12-month period up to and including the date of such grant:

(i) representing in aggregate over 0.1% of our Shares in issue from time to time; and

(ii) having an aggregate value, based on the closing price of our Shares as stated in the Stock Exchange’s daily quotations sheet at the date of each grant, in excess of HK$5 million,

– VI-25 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX VI STATUTORY AND GENERAL INFORMATION

such further grant of Options will be required to be approved by the Shareholders. Our Company will send a circular to its Shareholders containing such information as is required under the Listing Rules. The Proposed Grantee, his associates and all core connected persons (as defined in the Listing Rules) of our Company, must abstain from voting at such general meeting, and any vote taken at such meeting must be taken on a poll.

(f) Acceptance of an offer of Options

An offer of grant of an Option will be made to any Proposed Grantee in writing (each, an “Offer”) in such form as our Board may from time to time determine, specifying (i) the number of Shares comprised in the Option, (ii) the exercise price, (iii) the period during which the Option may be exercised, (iv) the date by which the Option must be accepted being a date not more than 30 days after the date of the offer, (v) the performance criteria to be satisfied by the Proposed Grantee and/or our Company before an Option can be exercised (if any), (vi) such other terms and conditions of the Offer as may be imposed by our Board as are not inconsistent with the Share Option Scheme, and (vii) requiring the Proposed Grantee, by signing and returning a duplicate of the Offer, to accept the Offer and to undertake to hold the Option on the terms on which it is to be granted and to be bound by the provisions of the Share Option Scheme. The Offer will be personal to the Proposed Grantee concerned and will not be transferable.

An Option will be deemed to have been granted and accepted by and to have taken effect when the duplicate of the offer document duly signed by the Proposed Grantee (the “Grantee(s)”) together with a payment to our Company, as the case may be, of HK$1.00 (or its equivalent in the local currency of any jurisdiction where our Company and/or its subsidiaries, as the case may be, operate) by way of consideration for the grant thereof is received by our Company within the time period specified in the Offer. Such remittance will in no circumstances be refundable and will not be deemed to be a part payment of the exercise price.

Any Offer may be accepted or deemed to have been accepted in part provided that it is accepted in respect of a board lot or an integral multiple thereof and is clearly stated in the duplicate of the offer document comprising the acceptance of the Offer duly signed by the Proposed Grantee. To the extent that the Offer is not accepted within 30 days from the date upon which it is made in the manner indicated in the aforesaid, it will be deemed to have been irrevocably declined.

Upon an Offer being accepted by a Grantee in whole or in part in accordance with the sub-paragraphs aforesaid, an Option in respect of the number of Shares in respect of which the Offer was so accepted will be deemed to have been granted by our Company to such Grantee on the date, which must be a business day, on which the Option is offered to the Grantee (“Option Offer Date”).

– VI-26 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX VI STATUTORY AND GENERAL INFORMATION

(g) Exercise price

The exercise price in respect of any Option will be such price as determined by our Board and notified to any Grantee (subject to any adjustment made pursuant to the sub-paragraph (q)) and must be at least the higher of:

(i) the closing price of our Shares as stated in the Stock Exchange’s daily quotations sheet for a board lot on the Option Offer Date;

(ii) the average closing price of our Shares as stated in the Stock Exchange’s daily quotations sheets for a board lot for the five business days immediately preceding the date of grant; and

(iii) the nominal value of the Share.

(h) Duration of the Share Option Scheme

Subject to sub-paragraph (s) below, the Share Option Scheme will be valid and effective for a period of ten years commencing on the date on which the conditions set out in sub-paragraph (u) below become unconditional, which is expected to be the [REDACTED] (the “Option Period”), after which no further Options will be granted under the Share Option Scheme, but the provisions of the Share Option Scheme will remain in full force and effect to the extent necessary to give effect to the exercise of any Options granted prior thereto or otherwise as may be required in accordance with the provisions of the Share Option Scheme.

(i) Time of vesting and exercise of Options

Unless otherwise determined by our Board and stated in the Offer to a Grantee, no performance criteria are to be satisfied by a Grantee and/or our Company before the exercise of an Option granted to him.

A Grantee may exercise his Option in whole or in part (but, if in part, only in respect of a board lot or any integral multiple thereof) by giving notice in writing to our Company stating that the Option is thereby exercised and specifying the number of Shares to be subscribed. Each such notice must be accompanied by a remittance for the full amount of the aggregate exercise price for our Shares in respect of which the notice is given. Within 30 days after receipt of the notice and the remittance and, where appropriate, receipt of the certificate from the auditors (or an independent financial adviser appointed by our Board) pursuant to sub-paragraph (q) below, our Company will allot and issue the relevant Shares to the Grantee credited as fully paid and issue to the Grantee a share certificate in respect of our Shares so allotted.

– VI-27 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX VI STATUTORY AND GENERAL INFORMATION

Subject to any early vesting of Options pursuant to sub-paragraphs (m)–(o), all Options granted under the Share Option Scheme will be subject to a vesting period of up to ten years to be determined with respect to each Grantee by our Board at the time of grant of the relevant Option and stated in the Offer to a Grantee. In the absence of such requirements, a Grantee is not required to hold an Option for any minimum period before the exercise of an Option granted to him.

(j) Restriction on the time of grant of Options

Our Board will not offer to grant any Option to any Proposed Grantee:

(i) after inside information has come to the knowledge of our Company or a price sensitive event has occurred or a price sensitive matter has been the subject of a decision, until such price sensitive information has been published; or

(ii) during the period commencing one month immediately preceding the earlier of: (1) the date of our Board meeting (as such date is first notified to the Stock Exchange in accordance with the Listing Rules) for the approval of our Company’s results for any year, half-year, quarterly or any other interim period whether or not required under the Listing Rules; and (2) the deadline for our Company to publish an announcement of its results for any year, half-year, quarterly or any other interim period whether or not required under the Listing Rules, and ending on the date of the relevant results announcement.

(k) Ranking of our Shares

Our Shares to be allotted upon the exercise of an Option will not carry voting rights until the name of the Grantee has been duly entered into the register of members of our Company as the holder thereof. Subject to the aforesaid and the Memorandum and Articles, Shares allotted and issued on the exercise of Options will rank pari passu in all respects and will have the same voting, dividend, transfer and other rights (including those arising on a winding up) as are attached to the other fully-paid Shares in issue on the date of exercise, save that they will not rank for any dividend or other distribution declared or recommended or resolved to be paid or made by reference to a record date falling on or before the date of exercise.

(l) Rights are personal to the Grantees

An Option will be personal to the Grantee and not be assignable. Except for the transmission of an Option on the death of a Grantee to his legal personal representatives and nomination of an entity wholly owned by a Grantee to hold his Option on his behalf, a Grantee may not sell, transfer, charge, mortgage, encumber or create any interest in favour of any third party over or in relation to any Option or enter into any agreement to do any of the foregoing. Any breach of the foregoing by the Grantee will entitle our Company to cancel any Option granted to such Grantee (to the extent not already exercised).

– VI-28 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX VI STATUTORY AND GENERAL INFORMATION

(m) Rights on a general offer

If a general offer is made to all our Shareholders (or all such Shareholders other than the offeror and/or any person controlled by the offeror and/or any person acting in association or in concert with the offeror (as defined in the Takeovers Code)), our Company will use its best endeavors to procure that such offer is extended to all the Grantees.

If such offer, having been approved or conducted in accordance with applicable laws and regulatory requirements, becomes effective, or becomes or is declared unconditional, the Grantee will be entitled to exercise the Options up to his entitlement (to the extent not already exercised) in full or any part thereof [at any time thereafter and up to the close of such offer (or the relevant revised offer) or the record date for entitlements under scheme of arrangement, as the case may be. Subject to the above, the Option will lapse automatically on the date which such offer (or the relevant revised offer) is closed or the relevant record date for entitlements under the scheme of arrangement, as the case may be.]

(n) Rights on company reconstructions

If a compromise or arrangement between our Company and its Shareholders or creditors is proposed for the purposes of a scheme for the reconstruction of our Company or its amalgamation with any other companies, our Company will give notice to all the Grantees on the same day as it gives notice of the meeting to its Shareholders or creditors summoning the meeting to consider such a scheme or arrangement and any Grantee will be entitled to exercise all or any of his Options up to his entitlement at any time no later than two business days immediately preceding the date of the meeting directed to be convened by the court for the purposes of considering such compromise or arrangement. Our Company will as soon as possible and, in any event, no later than the business day immediately prior to the date of the proposed meeting, allot the relevant Shares to the Grantee credited as fully paid.

With effect from the date of such meeting, the rights of all Grantees to exercise their respective Options will forthwith be suspended. Upon such compromise or arrangement becoming effective, all Options will, to the extent that they have not been exercised, lapse and terminate. If for any reason such compromise or arrangement is not approved by the court, the rights of the Grantees to exercise their respective Options will with effect from the date of the making of the order by the court be restored in full and will become exercisable (but subject to the other terms of the Share Option Scheme) as if such compromise or arrangement had not been proposed by our Company.

– VI-29 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX VI STATUTORY AND GENERAL INFORMATION

(o) Rights on winding up

In the event a notice is given by our Company to our Shareholders to convene a general meeting for the purpose of considering and, if thought fit, approving the voluntary winding up of our Company, our Company will on the same date as or soon after it dispatches such notice to its Shareholders give notice thereof to all Grantees and each Grantee will be entitled to exercise all or any of his Options (to the extent not already exercised) at any time no later than two business days prior to the proposed general meeting of our Company. Our Company will as soon as possible and, in any event, no later than the business day immediately prior to the date of the proposed general meeting, allot the relevant Shares to the Grantee credited as fully paid.

(p) Lapse of Option

An Option will lapse automatically and not be exercisable (to the extent not already exercised) on the earliest of:

(i) the expiry of the Option Period;

(ii) the expiry of any of the periods referred to in sub-paragraphs (m) to (o) above;

(iii) subject to sub-paragraph (o) above, the date of the commencement of the winding up of our Company;

(iv) the date on which:

1. where the Grantee who is an Eligible Employee, the Grantee ceases to be an Eligible Employee by reason of the summary termination of his employment on any one or more of the grounds that he has been guilty of misconduct, or has been convicted of any criminal offense involving his integrity or honesty or (if so determined by our Board) on any other ground on which an employer would be entitled to summarily terminate his employment at common law or pursuant to any applicable laws or under the Grantee’s service contract with our Company or its relevant subsidiary;

2. where the Grantee is an Eligible Third Party Contributor which is under any contract with our Company or its relevant subsidiary, the date on which such contract is terminated by reason of breach of contract on the part of the Eligible Third Party Contributor;

– VI-30 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX VI STATUTORY AND GENERAL INFORMATION

3. where the Grantee is an Eligible Third Party Contributor, the date on which the Grantee appears either to be unable to pay or have no reasonable prospect to be able to pay debts, or has become insolvent, or has made any arrangement (including a voluntary arrangement) or composition with his creditors generally, or ceases or threatens to cease to carry on his business, or is bankrupted, or has been convicted of any criminal offense involving integrity or honesty, or could no longer make any contribution to the growth and development of our Group by reason of its cessation of its relations with our Group or by any other reason whatsoever;

provided that whether any one or more of the events specified above occur in relation to a Grantee will, in its reasonable opinion, be solely and conclusively determined by our Board;

(v) the date on which the Grantee commits a breach of sub-paragraph (l) above;

(vi) 12 months from the date of the death of the Grantee or the winding up of the Grantee (if not exercised by his legal personal representative);

(vii) in cases where the Option is held by a nominee of the Grantee, the date such nominee ceases to be wholly owned by the relevant Grantee; or

(viii) the date on which the Grantee commits any breach of any terms or conditions attached to the grant of the Option, unless otherwise resolved to the contrary by our Board.

(q) Effect of alteration to capital

In the event of a [REDACTED], rights issue, consolidation or subdivision of Shares or a reduction of the share capital of our Company (other than an issue of Shares as consideration in respect of a transaction to which our Company is a party), while any Option remains exercisable, such corresponding adjustments (if any) will be made to:

(i) the number or nominal amount of Shares, the subject matter of the Option (insofar as it is unexercised); and/or

(ii) the aggregate number of Shares subject to outstanding Options; and/or

(iii) the exercise price of the Options granted (insofar as they are unexercised),

– VI-31 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX VI STATUTORY AND GENERAL INFORMATION

as the auditors (or an independent financial adviser appointed by our Board) will certify in writing to our Board either generally or, if applicable, as regards any particular Grantee, to be in their opinion fair and reasonable, provided that any adjustment will be made on the basis that the proportion of the issued share capital of our Company to which a Grantee is entitled after such adjustment will remain the same, or as nearly as possible the same as that to which he was entitled before such adjustment, but so that no such adjustment will be made the effect of which would be to enable any Share to be issued at less than its nominal value, or to increase the proportion of the issued share capital of our Company for which any Grantee would have been entitled to subscribe had he exercised all the Options held by him immediately prior to such adjustments.

If there has been any alteration in the capital structure of our Company as referred to in the aforesaid, our Company will, upon receipt of a notice from the Grantee, inform him of such alteration and will either inform him of the adjustment to be made pursuant to the certificate of the auditors (or an independent financial adviser appointed by our Board) obtained by our Company for such purpose, or if no such certificate has yet been obtained, inform him of such fact and instruct the auditors (or an independent financial adviser appointed by our Board) to issue a certificate in that regard in accordance with the aforesaid.

(r) Cancellation of Options

Options granted but not exercised or lapsed may be cancelled with the consent of the relevant Grantee upon approval by a resolution of our Board.

Any Grantee whose Options are cancelled pursuant to the aforesaid may be issued new Options in accordance with the provisions of the Share Option Scheme, provided that unissued Options are available under the Share Option Scheme within the limits specified in sub-paragraph (c) above.

(s) Termination of the Share Option Scheme

The Share Option Scheme will expire automatically on the day immediately preceding the tenth anniversary of the date on which the conditions set out in sub-paragraph (u) become unconditional, which is expected to be the [REDACTED]. Our Company may by resolution in general meeting or our Board may at any time terminate the operation of the Share Option Scheme and, in such event, no further Options will be offered but the provisions of the Share Option Scheme will remain in full force in all other respects. All Options complying with the provisions of the Listing Rules which are granted during the life of the Share Option Scheme and remain unexpired immediately prior to such termination will continue to be valid and exercisable in accordance with the terms of the Share Option Scheme.

– VI-32 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX VI STATUTORY AND GENERAL INFORMATION

(t) Alteration of the Share Option Scheme

The Share Option Scheme may be altered in any respect by resolution of our Board except that:

(i) any provisions of the Share Option Scheme relating to the matters set out in rule 17.03 of the Listing Rules cannot be altered to the advantage of the Grantees or Proposed Grantees except with the prior sanction of a resolution of our Shareholders; and

(ii) any change to the authority of our Board or administrators of the Share Option Scheme in relation to any alteration to the terms of the Share Option Scheme will not be made, except with the prior sanction of a resolution of our Shareholders of our Company in general meeting.

Any alterations to the terms and conditions of the Share Option Scheme which are of a material nature or any change to the terms of the Options granted will be subject to the approval of Shareholders save where the alterations take effect automatically under the existing terms of the Share Option Scheme.

The amended terms of the Share Option Scheme and/or the Options must continue to comply with the relevant provisions of the Listing Rules and supplementary guidance on the interpretation of the Listing Rules issued by the Stock Exchange from time to time.

(u) Conditions of the Share Option Scheme

The Share Option Scheme will take effect subject to the passing of the necessary resolution to adopt the Share Option Scheme by our Shareholders and our Board and is conditional upon:

(i) the [REDACTED] Committee granting approval of the [REDACTED] of, and permission to deal in, any Shares to be issued pursuant to the exercise of Options granted under the Share Option Scheme on the Stock Exchange; and

(ii) the commencement of dealings in our Shares on the Stock Exchange.

If any of the above conditions is not satisfied within 12 calendar months from the date of approval of the Share Option Scheme by our Shareholders, the Share Option Scheme will terminate and no person will be entitled to any rights or benefits or be under any obligations under or in respect of the Share Option Scheme.

– VI-33 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX VI STATUTORY AND GENERAL INFORMATION

(v) Administration of our Board

The Share Option Scheme will be subject to the administration of our Board whose decision and interpretation (save as otherwise provided in the Share Option Scheme) will be final and binding on all parties who may be affected thereby.

Our Company will disclose details of the Share Option Scheme in its annual and interim reports including the number of Options, date of grant, exercise price, exercise period and vesting period during the financial year/period in the annual/interim reports in accordance with the Listing Rules in force from time to time.

As at the Latest Practicable Date, no Option had been granted or agreed to be granted under the Share Option Scheme.

Application has been made to the Stock Exchange for the [REDACTED] of, and permission to deal in, our Shares which may fall to be issued pursuant to the exercise of the Options, being [REDACTED] Shares in total.

E. OTHER INFORMATION

1. Estate duty

Our Directors have been advised that no material liability for estate duty is likely to fall on our Company or any of its subsidiaries in the Cayman Islands, the BVI, Hong Kong or the PRC, being jurisdictions in which one or more of the companies comprising our Group were incorporated.

2. Tax and other indemnities

Each of our Controlling Shareholders as indemnifier (each an “Indemnifier”, and collectively the “Indemnifiers”) has entered into the Deed of Indemnity on [•] with and in favour of our Company (for ourselves and as trustee for each of our subsidiaries) pursuant to which the Indemnifiers shall jointly and severally indemnify and keep indemnified each of our Company and our subsidiaries against, among other things, the following:

(a) any liability which is or becomes payable by any member of our Group by virtue of the provisions of sections 35, 42 and 43 of the Estate Duty Ordinance (Chapter 111 of the Laws of Hong Kong) arising from the death of an individual and by reason of any transfer of any property on such individual’s death to any member of our Group on or before the date on which the Deed of Indemnity becomes unconditional;

– VI-34 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX VI STATUTORY AND GENERAL INFORMATION

(b) taxation falling on any of our Company and our subsidiaries resulting from or by reference to any income, profits or gains earned, accrued or received (or deemed to be so earned, accrued or received) on or before the date on which the Deed of Indemnity becomes unconditional or any event occurring or deemed to occur on or before such date whether alone or in conjunction with any other event whenever occurring and whether or not such taxation is chargeable against or attributable to any other person, firm or company including any and all taxation resulting from the receipt by our Company and our subsidiaries of any amount paid by the Indemnifiers under the Deed of Indemnity;

(c) any actions, claims, demands, proceedings, judgements, costs (including legal costs, which shall be indemnified at the time incurred), fees, expenses, penalties, fines, damages, losses and liabilities (including all deductible amount under any insurance policy) suffered or incurred by our Company and/or any of our subsidiaries, directly or indirectly, as a result of or in connection with any litigation, arbitration, claim and/or legal proceedings accrued or arising on or before the date on which the Deed of Indemnity becomes unconditional; and

(d) any losses, claims, actions, payments, charges, demands, liabilities (including all deductible amount under any insurance policy), damages, proceedings, judgments, costs (including but not limited to legal costs, which shall be indemnified at the time incurred), fees, expenses, penalties and fines of whatever nature suffered or incurred by our Company and/or any of our subsidiaries, directly or indirectly, arising from any non-compliance or alleged non-compliance with any applicable laws, rules or regulations by our Company and/or any of our subsidiaries on or before the date on which the Deed of Indemnity becomes unconditional.

The Indemnifiers will, however, not be liable under the Deed of Indemnity for taxation to the extent that, among others:

(a) provision has been made for such taxation in the audited accounts of our Company and our subsidiaries for each of FY2018, FY2019 and FY2020;

(b) where any provision made for taxation in the audited accounts of our Company and our subsidiaries for each of FY2018, FY2019 and FY2020 is finally established to be an over-provision, then the Indemnifiers’ liability (if any) in respect of such taxation, taxation claim or liability shall be reduced by an amount not exceeding such over-provision;

– VI-35 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX VI STATUTORY AND GENERAL INFORMATION

(c) the taxation falling on our Company and our subsidiaries on or after the date on which the Deed of Indemnity becomes unconditional unless liability for such taxation would not have arisen but for any act or omission of our Company or any member of our Group (whether alone or in conjunction with some other act or omission) on or before the date on which the Deed of Indemnity becomes unconditional; or

(d) the taxation arises or is incurred as a consequence of any change in law or the interpretation thereof or practice by the relevant tax authority having retrospective effect coming into force after the date on which the Deed of Indemnity becomes unconditional or any retrospective increase in tax rates coming into force after the date on which the Deed of Indemnity becomes unconditional.

3. Litigation

Save as disclosed in the paragraph headed “Business – Compliance” in this document, as at the Latest Practicable Date, no member of our Group is engaged in any litigation or arbitration of material importance and no litigation or claim of material importance is known to our Directors to be pending or threatened against any member of our Group that would have a material adverse effect on our business, results of operations or financial condition.

4. Sole Sponsor

The Sole Sponsor has made an application on behalf of our Company to the Stock Exchange for the [REDACTED] of, and permission to deal in, the Shares in issue and the Shares to be issued as described in this document and any Shares which may be issued pursuant to the [REDACTED] and upon the exercise of any Options which may be granted under the Share Option Scheme.

The Sole Sponsor satisfies the independence criteria applicable to sponsor as set out in Rule 3A.07 of the Listing Rules.

The Sole Sponsor’s fee in relation to the [REDACTED] is approximately HK$6.0 million, which relates solely to services provided by the Sole Sponsor in the capacity of a sponsor.

5. Promoter

Our Company has no promoter for the purposes of the Listing Rules.

– VI-36 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX VI STATUTORY AND GENERAL INFORMATION

6. Preliminary expenses

The preliminary expenses payable by our Company are estimated to be about HK$45,000.

7. Compliance adviser

Our Company has appointed [VBG Capital Limited] as the compliance advisor upon [REDACTED] in compliance with Rule 3A.19 of the Listing Rules.

8. Taxation of holders of Shares

(a) Hong Kong

Dealings in Shares registered on the Company’s Hong Kong branch register of members will be subject to Hong Kong stamp duty. The sale, purchase and transfer of Shares are subject to Hong Kong stamp duty, the current rate of which is 0.2% of the consideration or, if higher, the value of the Shares being sold or transferred. Dividends paid on Shares will not be subject to tax in Hong Kong and no tax is imposed in Hong Kong in respect of capital gains. Profits from dealings in the Shares arising in or derived from Hong Kong may also be subject to Hong Kong profits tax.

According to Revenue (Stamp Duty) Bill 2021 (the “Bill”) proposed by the government of Hong Kong and published in the Gazette dated 5 March 2021, the rate of stamp duty is proposed to be increased from 0.1% to 0.13% with effect from 1 August 2021. The Bill will take effect if approved by the Legislative Council of Hong Kong.

(b) The Cayman Islands

There is no stamp duty payable in the Cayman Islands on transfers of Shares of the Cayman Islands companies as long as our Company does not hold interests in land in the Cayman Islands.

Intending holders of Shares are recommended to consult their professional advisers if they are in any doubt as to the taxation implications of subscribing for, purchasing, holding or disposing of or dealing in Shares or exercising any rights attaching to them. It is emphasised that none of our Company, our Directors or the other parties involved in the [REDACTED] can accept responsibility for any tax effect on, or liabilities of, holders of Shares resulting from their subscription for, purchase, holding or disposal of or dealing in Shares or exercising any rights attaching to them.

– VI-37 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX VI STATUTORY AND GENERAL INFORMATION

9. Qualifications of experts

The following are the respective qualifications of the experts who have given opinion or advice which is included in this document:

Name Qualification

VBG Capital Limited A corporation licensed by the SFC to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities under the SFO

Conyers Dill & Pearman Cayman Islands attorneys-at-law

Mazars CPA Limited Certified Public Accountant

Grandlex PMT (Qianhai) Law Firm Legal advisers to our Company as to PRC laws

Jones Lang LaSalle Corporate Appraisal Biological assets valuer and property and Advisory Limited valuer

China Insights Industry Consultancy Industry consultant Limited

10. Consents of experts

Each of the experts named in the paragraph headed “E. Other information – 9. Qualifications of experts” in this Appendix has given and has not withdrawn its written consent to the issue of this document with the inclusion of its reports, letters, certificates, opinions and/or references to its name (as the case may be) included in the form and context in which they respectively appear in this document.

11. Binding effect

This document shall have the effect, if an application is made in pursuance of it, of rendering all persons concerned bound by all of the provisions (other than the penal provisions) of sections 44A and 44B of the Companies (Winding Up and Miscellaneous Provisions) Ordinance so far as applicable.

– VI-38 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX VI STATUTORY AND GENERAL INFORMATION

12. Bilingual document

The English language and Chinese language versions of this document are being published separately in reliance upon the exemption provided in section 4 of the Companies (Exemption of Companies and Prospectuses from Compliance with Provisions) Notice (Chapter 32L of the Laws of Hong Kong). In case of any discrepancies between the English language version and the Chinese language version, the English language version shall prevail.

13. Registration procedures

The [REDACTED] of members of our Company will be maintained in the Cayman Islands by [REDACTED] and the [REDACTED] of members of our Company will be maintained in Hong Kong by [REDACTED]. Save where our Directors otherwise agree, all transfers and other documents of title to Shares must be lodged for registration with, and registered by, our Company’s [REDACTED] in Hong Kong and may not be lodged in the Cayman Islands.

14. No material adverse change

Save as disclosed in the paragraph headed “Summary – Recent development and material adverse changes” in this document, our Directors confirm that, up to the date of this document, there has been no material adverse change in our Group’s financial and trading position since 31 December 2020 and there is no event since 31 December 2020 which would materially affect the information shown in the Accountants’ Report as set out in Appendix I to this document.

15. Miscellaneous

(a) Within the two years immediately preceding the date of this document:

(i) save as disclosed in the section headed “History, Reorganisation and Corporate Structure – Reorganisation” in this document, no share or loan capital of our Company or any of its subsidiaries has been issued or agreed to be issued fully or partly paid either for cash or for a consideration other than cash;

(ii) save as disclosed in the paragraph headed “C. Further information about our Directors, management and Substantial Shareholders – 4. Agency fees or commissions received” in this Appendix, no commissions, discounts, brokerages or other special terms have been granted or agreed to be granted in connection with the issue or sale of any capital of our Company or any of our subsidiaries;

– VI-39 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX VI STATUTORY AND GENERAL INFORMATION

(iii) save as disclosed in the paragraph headed “C. Further information about our Directors, management and Substantial Shareholders – 4. Agency fees or commissions received” in this Appendix, no commission has been paid or is payable (except commissions to the [REDACTED]) for subscribing or agreeing to subscribe, or procuring or agreeing to procure subscriptions for any Shares or debentures in the Company or any of its subsidiaries; and

(iv) save as disclosed in the paragraph headed “Related Party Transaction” in Appendix I to this document, none of our Directors or their close associates were engaged in any dealings with our Group.

(b) No founder management, or deferred shares of our Company or any of its subsidiaries have been issued or agreed to be issued;

(c) Save as disclosed in the paragraph headed “D. Share Option Scheme” in this Appendix, no share or loan capital of our Company or any of its subsidiaries is under option or is agreed conditionally or unconditionally to be put under option;

(d) None of the persons whose names are listed in the paragraph headed “E. Other information – 9. Qualifications of experts” in this Appendix:

(i) is interested beneficially or non-beneficially in any shares in any member of our Group; or

(ii) has any right or option (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for any securities in any member of our Group.

(e) None of the equity or debt securities of our Company, if any, is listed or dealt with in any other stock exchange nor is any listing of or permission to deal with the equity or debt securities of our Company is being or proposed to be sought;

(f) There has not been any interruption in the business of our Group which may have or have had a significant effect on the financial position of our Group within 12 months preceding the date of this document.

(g) There are no arrangements in existence under which future dividends are to be or agreed to be waived.

(h) All necessary arrangements have been made to enable the Shares to be admitted into [REDACTED] for clearing and settlement.

(i) Our Group had not issued any debentures nor did it have any outstanding debentures or any convertible debt securities as at the Latest Practicable Date.

– VI-40 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX VII DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES AND AVAILABLE FOR INSPECTION

A. DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES

The documents attached to a copy of this document and delivered to the Registrar of Companies in Hong Kong for registration are (i) a copy of each of the [REDACTED]; (ii) written consents referred to in the paragraph headed “Statutory and General Information – E. Other information – 10. Consents of experts” in Appendix VI to this document; and (iii) a copy of each of the material contracts referred to in the paragraph headed “B. Further Information about Business of our Group – 1. Summary of material contracts” in Appendix [VI] to this document.

B. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the office of Patrick Mak & Tse at Rooms 901–905, 9/F, Wing On Centre, 111 Connaught Road Central, Hong Kong, during normal business hours up to and including the date which is 14 days from the date of this document:

(i) the Memorandum and the Articles;

(ii) the Accountants’ Report from Mazars CPA Limited, the text of which is set out in Appendix I to this document;

(iii) the audited combined financial statements of our Group for the Track Record Period;

(iv) the letter on unaudited [REDACTED] financial information issued by Mazars CPA Limited, the text of which is set out in Appendix II to this document;

(v) the property valuation report prepared by Jones Lang LaSalle Corporate Appraisal and Advisory Limited, the text of which is set out in Appendix IV to this document;

(vi) the letter of prepared by Conyers Dill & Pearman, our legal advisers as to Cayman Islands law, summarising certain aspects of the Cayman Islands Company Law referred to in Appendix V to this document;

(vii) the material contracts referred to in the paragraph “B. Further Information about the business of our Group – 1. Summary of material contracts” in Appendix VI to this document;

(viii) the service contracts and the letters of appointment referred to in the paragraph “C. Further information about our Directors, management and Substantial Shareholders – 2. Particulars of service contracts” in Appendix VI to this document;

(ix) the legal opinion prepared by Grandlex PMT (Qianhai) Law Firm, the legal advisers to our Company as to the laws of the PRC;

– VII-1 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. APPENDIX VII DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES AND AVAILABLE FOR INSPECTION

(x) the written consents referred to in the paragraph “E. Other Information – 10. Consents of experts” in Appendix VI to this document;

(xi) the Companies Act;

(xii) the CIC Report, a summary of which is set forth in the section headed “Industry Overview” in this document;

(xiii) the valuation report relating to biological assets prepared by Jones Lang LaSalle Corporate Appraisal and Advisory Limited referred to in “Financial Information” of this document; and

(xiv) the rules of the Share Option Scheme.

– VII-2 –