(Incorporated in Israel with limited liability) Enhancing Quality of Life 2020 Annual Report Sisram Med Stock Code: 1696.HK Contents 2 Financial Summary 3 Chairman’s Statement 5 Chief Executive Officer’s Review 7 Management Discussion and Analysis 24 Report of the Directors 33 Corporate Governance Report 45 Biographical Details of Directors and Senior Management 50 Independent Auditor’s Report 56 Consolidated Statement of Profit or Loss 57 Consolidated Statement of Comprehensive Income 58 Consolidated Statement of Financial Position 59 Consolidated Statement of Changes in Equity 61 Consolidated Statement of Cash Flows 63 Notes to the Financial Statements 135 Environmental, Social and Governance Report 168 Corporate Information 170 Definitions Financial Summary The following is a summary of the published results and assets and liabilities of the Group for the last five financial years prepared on the basis set out in the note below. Results Year ended December 31, 2020 2019 2018 2017 2016 US$’000 US$’000 US$’000 US$’000 US$’000 Operating results Revenue 162,095 173,520 153,919 136,887 118,156 Gross profit 90,301 95,874 82,297 73,197 62,223 Profit before tax 16,662 24,839 22,784 15,821 11,860 Profit for the year 14,680 21,935 21,831 11,049 8,501 Profit attributable to owners of the parent 13,344 20,785 21,831 11,049 8,055 Profitability Gross margin 55.7% 55.3% 53.5% 53.5% 52.7% Net profit margin 9.1% 12.6% 14.2% 8.1% 7.2% Assets and liabilities As at December 31, 2020 2019 2018 2017 2016 US$’000 US$’000 US$’000 US$’000 US$’000 Assets and liabilities Total assets 431,806 392,832 350,075 346,615 279,161 Total liabilities 99,917 67,262 35,975 53,639 238,675 Net assets 331,889 325,570 314,100 292,976 40,486 Cash and bank balances 116,527 107,792 104,530 104,137 41,653 Note: The consolidated results of the Group for the five years ended December 31, 2016, 2017, 2018, 2019 and 2020 and the consolidated assets and liabilities of the Group as at December 31, 2016, 2017, 2018, 2019 and 2020 have been extracted from the published audited consolidated financial statements. The summary above does not form part of the audited consolidated financial statements. 2 Sisram Medical Ltd | Annual Report 2020 Chairman’s Statement Strive ahead, innovate and create breakthroughs in Medical Technology and Digital Industries Time is relative, as Einstein said, and 2020 is a proof of it. In less than 365 days, the world has experienced a turmoil of changes in politics, economics, social life and almost every aspect of human lives. While facing the challenges and difficulties posed by the pandemic, mankind is also accelerating the development of cutting-edge technology igniting the fifth industrial revolution and realizing the “digital age”. 2020 presented many challenges and lessons. We learned from them all – the ones we overcame and grew from, and the ones that changed the course of our operation. In these “moments of truth” we maintained good operation capabilities and launched new products with a keen sense of future industry development. We are becoming digital. Consumers are adapting a digital mindset that will increase their demand and will shape corporates’ offering and marketing strategy in the coming years. There is no longer “you” or “us”, there is “we” – we are selling, and we are buying, we are developing, and we are using. We believe in B2E – business to everyone. 2020 has also placed Medical Technology and Digital in the front seats of this racing car, steering it towards the digital age. Sisram, as a wellness eco-system and Alma, as a medical aesthetics leading player, are operating in a multi-dimensional business mode – designing a comprehensive solution portfolio to answer multiple customer and consumer personas needs across various life (and professional life) events. Sisram Medical Ltd | Annual Report 2020 3 Chairman’s Statement During 2020, we accelerated the work on our two new eco-system building blocks – aesthetic dentistry and personal care. The two new business lines were chosen for their significant growth markers along with the potential synergies with Alma’s operation. Sisram’s vision for the new dental business line is to become a holistic digital workflow service provider, enabling cost-effective and efficient measurement, design and production process for aesthetic dentistry treatments via an on-line (digital) platform, covering all aspects from intra-oral scanning to final dental appliance delivery. The personal care business line is defined as an extension and enhancement of the treatments offered by Alma to the consumers, broadening Sisram’s reach and engagement with the end-user (the consumer). Sisram’s goal for the new personal care business line is to successfully introduce a new consumer brand with strong digital presence. The supporting operation channels that will fully mature by 2022, are planned to offer an on-line, digital community that will combine digital (e-commerce) as well as traditional distribution format based on Alma’s medical channels. 2020 changed demand patterns as well. We have witnessed a shift in demand from capital equipment to high ROI consumables products. Consumers “revenge shopping”, a trend observed post lock-down periods driving consumers’ impulse shopping, combined with the ability to “hide” aesthetic procedures under the facial mask, and the permission to perform doctor treatments, including injections during lock-downs, resulted an increased demand for injectables products (dermal facial fillers). With these trends expected to continue in 2021, Sisram made an investment in Tianjin JuveStar. Tianjin JuveStar recently announced the signing of a license agreement with Raziel Therapeutics, for the exclusive commercialization of an exciting injectable product addressing aesthetic indications and additional therapeutic fields, in Mainland China, Hong Kong SAR, Macau SAR and Taiwan, China. Sisram’s injectables line of business is further bolstered with the launch of “Profhilo” skin Bio-remodelling procedure in India, with a first deal signed with Kaya Clinics chain to offer ‘Profhilo’ at its 70 clinics spread across 24 cities in India. I am confident that our solid plans for the near- and long-term future, reinforced by 2020’s experiences and lessons will present a significant growth in Sisram’s revenue in the next reporting period and a successful launch of its new business lines. Appreciation On a closing note, I would like to thank our honorable Board of Directors, our employees and management, our shareholders, our partners and our customers and consumers and wish us all a healthy and prosperous 2021. Liu Yi Chairman 4 Sisram Medical Ltd | Annual Report 2020 Chief Executive Officer’s Review Perpetual Change Practice So much have been said regarding 2020 – being an exceptional year, its implications and how it will shape our future. Thinking of the journey we have all experienced this year, led me to the realization that dealing with change is not enough. We should aim towards ‘perpetual change practice’ as a baseline work method, meaning to address change as a constant element of our operation and learn how to manage it continuously. For us, as a global organization in the medical aesthetics industry, 2020 has presented both an opportunity as well as difficulty. On one hand, with 7 subsidiaries around the world and business operation across more than 90 countries worldwide, the pandemic challenged our cross- organization business results, communication and collaboration efforts. On the other hand, it focused the world’s attention on the medical technology industry and digitalization which promote awareness, attention and new business opportunities for us. 2020 was designated to be the year of our “business infrastructures upgrade” even before the pandemic outbreak. We were fortunate to conceive and launch this plan back in 2019 and exercised it in 2020. The plan encompasses physical and digital infrastructures, including (1) the transition into a new modern and spacious campus to accommodate and excel Sisram’s headquarters activities including R&D, production, logistics and international sales and marketing activities, (2) New, cloud-based information technologies systems to manage human capital, supply chain, logistics, platforms’ IoT and customers data, and (3) Digital Transformation program – this fundamentally futuristic concept has quickly materialized this year, placing heavier challenges and expectations to deliver the change as soon as possible, while simplifying and validating the “why” and “when” questions that are embedded in every new business paradigm implementation. To address the necessity for alternative communication, we have established new communication channels and upgraded the supporting data infrastructure between our global units, creating an even better communication flow and bonding sense based on digital channels and IT tools. Although direct, physical interactions will never be fully replaced, the activities conducted this year brought a spirit of change and a new era of a digital and data driven operation: Operational infrastructure upgrade – a global cloud-based ERP and CRM systems, connecting and aligning activities between the headquarter with direct operations across 4 continents. Human capital cultivation – from knowledge sharing to employees’ training, bonding and celebrations, all activities were shifted to online digital platforms and tools. Sales and marketing departments replaced customers and partners face-to-face meetings with digital meeting spaces, product launches that were previously performed during industry tradeshows, were now conducted via digital arena, with a new inhouse “Alma studio” built to accommodate and broadcast global webinars, sales meetings and product launches. Additional attention was given to digital promotion materials with more demand in sound and motion materials and the development of new social media channels such as TikTok. Sisram Medical Ltd | Annual Report 2020 5 Chief Executive Officer’s Review Clinical – operating long distance clinical studies and ‘online customers trainings’ while laying the foundations to a new array of digital customers’ training.