Shanghai Hanyu Medical Technology Co., Ltd.* 上海捍宇醫療科技股份

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Application Proof of Shanghai Hanyu Medical Technology Co., Ltd.* 上海捍宇醫療科技股份有限公司 (the “Company”) (A joint stock company incorporated in the People’s Republic of China with limited liability)

WARNING

The publication of this Application Proof is required by The Stock Exchange of Hong Kong Limited (the “Exchange”)/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 Stock Exchange of Hong Kong Limited;

(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;

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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.

* For identification purpose only This document is in draft form, incomplete 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

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

Shanghai Hanyu Medical Technology Co., Ltd.* 上海捍宇醫療科技股份有限公司 (A joint stock company incorporated in the People’s Republic of China with limited liability)

[REDACTED] Number of [REDACTED] under the : [REDACTED] H Shares (subject to the [REDACTED] [REDACTED]) Number of [REDACTED] : [REDACTED] H Shares (subject to adjustment) Number of [REDACTED] : [REDACTED] H Shares (subject to adjustment and the [REDACTED]) Maximum [REDACTED] : HK$[REDACTED] per H Share, plus brokerage of 1%, SFC transaction levy of 0.0027% and the Stock Exchange trading fee of 0.005% (payable in full on application in Hong Kong dollars and subject to refund) Nominal value : RMB1.00 per H Share [REDACTED] :[●]

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* For identification purpose only

[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. IMPORTANT

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– 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 us 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 security other than the [REDACTED] offered by this document pursuant to the [REDACTED]. This document may not be used for the purpose of making, and does not constitute, an offer or invitation in any other jurisdiction or in any other circumstances. No action has been taken to permit a [REDACTED] of the [REDACTED] in any jurisdiction other than Hong Kong and no action has been taken to permit the distribution of this document in any jurisdiction other than Hong Kong. The distribution of this document for 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 authorization by the relevant securities regulatory authorities or an exemption therefrom.

You should rely only on the information contained in this document and the [REDACTED] to make your investment decision. The [REDACTED] is made solely on the basis of the information contained and the representations made in this document. We have not authorized anyone to provide you with information that is different from what is contained in this document. Any information or representation not contained nor made in this document must not be relied on by you as having been authorized by us, the Joint Sponsors, the [REDACTED], the [REDACTED] and the [REDACTED], the [REDACTED], any of our or their respective directors, officers, employees, agents or representatives of any of them or any other parties involved in the [REDACTED].

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Expected Timetable ...... [i]

Contents ...... [iv]

Summary ...... [1]

Definitions ...... [18]

Glossary of Technical Terms ...... [29]

Forward-looking Statements ...... [36]

Risk Factors ...... [38]

–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

Waivers from Strict Compliance with the Listing Rules and Exemptions from the Companies (Winding Up and Miscellaneous Provisions) Ordinance ...... [87]

Information about this document and the [REDACTED] ...... [94]

Directors, Supervisors and Parties involved in the [REDACTED] ...... [100]

Corporate Information ...... [104]

Industry Overview ...... [106]

History, Development and Corporate Structure ...... [118]

Business ...... [147]

Regulatory Overview ...... [193]

Relationship with Our Single Largest Shareholder Group...... [214]

Directors, Supervisors and Senior Management ...... [217]

Substantial Shareholders ...... [232]

Share Capital ...... [235]

Financial Information ...... [240]

Future Plans and [REDACTED]...... [272]

[REDACTED] ...... [274]

Structure of the [REDACTED]...... [288]

How to Apply for [REDACTED] ...... [299]

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

Appendix II – [REDACTED]...... II-1

Appendix III – Taxation and Foreign Exchange ...... III-1

Appendix IV – Summary of Principal Legal and Regulatory Provisions . . IV-1

Appendix V – Summary of the Articles of Association ...... V-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. CONTENTS

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

Appendix VII – Documents Delivered to the Registrar of Companies in Hong Kong and Available for Inspection ...... VII-1

–vi– This document is in draft form, incomplete 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. This summary is not complete, so you should read it together with the more detailed data and financial data contained in other chapters of this document. As this is a summary, it does not contain all the data that may be important to you. You should read this document in its entirety carefully before making an investment decision. There are risks associated with any investment. In particular, we are a Biotech Company. In view of our failure to comply with rule 8.05(1), (2) or (3) of the Listing Rules, we seek to be [REDACTED] on the Main Board of the Stock Exchange under Chapter 18A of the Listing Rules. [REDACTED] involves specific challenges, risks and uncertainties. Details are set out in the section headed “Risk Factors” in this document. You should make an investment decision after considering these factors.

OVERVIEW

We are a medtech company dedicated to the research, development and commercialization of innovative medical devices in the field of structural heart diseases with an established leadership position in the transcatheter mitral valve (TMV) market in China. Our Core Product, ValveClamp, is expected to become the first domestic-developed TMV device and the world’s first transapical edge-to-edge TMV repair (TMVr) device to be commercially launched, according to Frost & Sullivan. Leveraging our experience in the development of ValveClamp, we have ventured into the broader structural heart disease treatment and monitoring field and are establishing a diversified product pipeline. The table below summarizes our product portfolio as of the Latest Practicable Date.

Product Treatment Pathways Prototype Animal Study/ FIM Confirmatory Commercial Category Indication(s) Products and Principles Early Design Iteration Type Test ClinicalTrial Clinical Trial Registration Rights Upcoming Milestones

Transapical Commercial launch in ValveClamp Confirmatory Trial Patient Enrolment Completed (Note)(N Global edge-to-edge repairr 2023 1Q

Percutaneous FIM clinical trial MR ValveClasp Global edge-to-edge repair initiation in 2021 3Q Valve Repair Transatrial FIM clinical trial ValveClose Global mitral annuloplasty initiation in 2023

Percutaneous FIM clinical trial TR ValveClasp-T Global edge-to-edge repair initiation in 2022 2Q

Other Heart Percutaneous atrial FIM clinical trial ASD ReAces (Note)(N Global Repair septal defect closure initiation in 2021 3Q

Percutaneous valve MR ValveNeo-M Global replacement

Valve Percutaneous valve TR ValveNeo-T Global Replacement replacement

Percutaneous valve AR ValveCare Global replacement

Hypertension/ Nerve regulation via HyPulse electric impulse Global Heart Failure stimulation of carotid sinus Electrophysiology Monitoring cardiac electric Arrhythmia/ and hemodynamic CardioMcare Global Heart Failure parameters using a wearable external equipment

Core Product

Abbreviations: MR, mitral regurgitation; TR, tricuspid regurgitation; ASD, atrial septal defect; AR, aortic regurgitation.

Note: The early medical concept was originated from Zhongshan Hospital, from which we acquired the relevant intellectual properties. See “Business – ValveClamp – Our Core Product – Collaboration with Zhongshan Hospital” for details.

–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

OUR CORE BUSINESS MODEL

Our core business model is to in-house research and develop, manufacture and commercialize innovative medical devices in the field of structural heart diseases. To complement our in-house research and development efforts, we also collaborate with third party medical institutions on the origination of early medical concepts through our acquisition of relevant intellectual property rights from such medical institutions. We then translate and materialize the medical concept into a clinical-stage innovative medical device. We acquired a patent and a patent-in-application from Zhongshan Hospital in relation to our Core Product ValveClamp and our product candidate ReAces, respectively. For further details, please refer to paragraphs headed “Business – Research and Development – Collaboration with Zhongshan Hospital” in this document. Other than ValveClamp and ReAces, all our product candidates are developed in-house.

To continuously strengthen and diversify our product portfolio across the entire structural heart disease area, we intend to identify unmet clinical needs and expedite the bench-to- bedside process through our strong medical translation capabilities and deep-rooted relationship with leading KOLs and PIs. In addition, based on our deep understanding of structural heart diseases, we have extended our product pipeline into the field of pet heart interventional medical devices, marching into the global pet medical market with broad industry prospects.

VALVECLAMP – OUR CORE PRODUCT

ValveClamp is a TMVr product that adopts the edge-to-edge repair method to treat MR. We developed ValveClamp based on the real-world clinical needs and feedback in China jointly with Zhongshan Hospital. The edge-to-edge repair method is characterized by smaller wounds and improved safety compared with the conventional surgery, and is suitable for patients who are elderly, weak, seriously ill or who have multiple complications and higher surgical risk. According to Frost & Sullivan, the edge-to-edge method is clinically proven and the most widely used method in the field of TMV.

ValveClamp is a class III medical device under the classification criteria of the NMPA. We completed an exploratory first-in-human (FIM) clinical trial of ValveClamp in January 2019 with a 100% procedural success rate, and initiated the confirmatory clinical trial for ValveClamp in February 2019. According to Frost & Sullivan, ValveClamp was the first domestic TMV product to enter into the confirmatory clinical trial. As of the Latest Practicable Date, we had completed the patient enrolment (102 subjects) for the confirmatory clinical trial of ValveClamp and had completed follow-up evaluations for over 50% of the subjects. It is expected that ValveClamp will be registered and marketed in the first quarter of 2023 as the world’s first transapical edge-to-edge TMVr product and the first commercialized domestic TMV product in China.

–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

Currently, seven types of TMV repair and replacement products have been approved around the world. Among these, only MitraClip from Abbott, which adopts the edge-to-edge repair technique, has been approved in each of Europe, the United States and China. As of the Latest Practicable Date, MitraClip had accumulated over 100,000 cases globally, providing stronger clinical validation for the edge-to-edge technique than any other TMV technique. Further, the edge-to-edge technique is the only TMVr technique recommended by clinical guidelines including 2017 European Society of Cardiology/European Association for Cardio- Thoracic Surgery (ESC/EACTS) guidelines in Europe and 2020 American College of Cardiology/American Heart Association (ACC/AHA) guidelines in the United States. ValveClamp, while adopting the edge-to-edge technique, accesses the mitral valve via the transapical pathway, which is a shorter pathway and enables easier operation than the transfemoral pathway of other TMVr devices. The unique transapical pathway feature shortens the learning curve of operators, enabling both cardiothoracic surgeons and cardiologists to perform the operation. In particular, the catheter operation time in a ValveClamp procedure averages only 26.8 minutes, which is significantly shorter than the two to four hours generally required for transfemoral edge-to-edge TMVr devices according to Frost & Sullivan. In addition, the operation can be performed with the assistance of ultrasound only and without the use of digital subtraction angiography (DSA), thus lowering the infrastructure requirements and avoiding the intraoperative radiation exposure of patients and operators in the case of transfemoral interventional devices.

ValveClamp won the Best Innovation Award at the International Conference of Innovation in Cardiovascular System (ICI) in December 2018, and was granted the Special Review Qualification for Innovative Medical Devices in September 2020, being the first TMV product to receive such qualification.

We have formulated a global commercialization strategy for ValveClamp. We expect the application for the CE Mark for ValveClamp to be submitted in 2021 and approved in 2023. We plan to prioritize the European market while exploring and penetrating the Southeast Asian markets leveraging the CE Mark. In addition, we are also evaluating market opportunities for ValveClamp in other countries such as Japan, the United States, Australia and Israel. With ValveClamp’s clinically validated edge-to-edge repair technique, operational advantages and efficacy as proven in the FIM clinical trial, we will strive to capture the significant growth potential of the global TMV market.

For further details, please refer to the paragraph headed “Business – ValveClamp – Our Core Product” in this document.

–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

COMPETITION

Addressable Market

We focus on the structural heart disease market that is vast, fast growing and severely under-penetrated, especially in China, due to the lack of effective and affordable interventional therapies. According to Frost & Sullivan, there were approximately 213.2 million patients with valvular heart diseases worldwide in 2019, causing 2.6 million deaths. In the same year, MR, the most prevalent valvular heart disease, had a record number of moderate-to-severe cases of 96.7 million and 10.6 million globally and in China, respectively. The large-scale epidemiological investigation of MR is quite limiting in China so far. According to the epidemiological investigation in the United States, patients with severe MR take up about 30% of the moderate to severe patients. The standard treatment for patients with severe MR is to replace or repair the mitral valve under cardiopulmonary bypass with thoracotomy requiring cardiac arrest. The high procedural risks associated with conventional surgery leaves a large number of patients untreatable. In 2019, less than 1% of moderate-to-severe MR patients in China received surgical treatment. Compared to conventional surgery, TMVr procedure eliminates the need for cardiac arrest or cardiopulmonary bypass, thereby significantly lowers procedural risks and reduces the operative wound to 2 to 4cm. Benefiting from its patient-friendly feature and other advantages over the conventional surgery, TMVr is expected to unlock the significant growth potential in the vast but under-penetrated MR treatment market in China. According to Frost & Sullivan, the global TMVr devices market is estimated to grow to US$5.4 billion by 2030 at a CAGR of 20.5% from 2019 to 2030, while the China TMVr devices market is estimated to grow to RMB5.0 billion by 2030, at a CAGR of 65.9% from 2021 (estimated first year of TMVr commercialization in China) to 2030.

Competitive Landscape

Currently, seven types of TMV repair and replacement products have been approved around the world. Among these, only MitraClip from Abbott, which adopts the edge-to-edge repair technique, has been approved in each of Europe, the United States and China. Among all globally approved and marketed TMV devices, only Tendyne from Abbott is used for TMVR. The following table sets out approved TMV products globally.

Transcatheter Mitral Valve Repair and Replacement Products

CARILLON NeoChord Product Tendyne MitraClip Mitral Contour DS1000 Cardioband PASCAL MPAS Implant System Transcatheter Mitral Valve Repair and Replacement Products

FDA Approval _ 2013 _ _ _ _ _

CE Mark 2020 2008 2009 2012 2015 2019 2016

NMPA Approval _ 2020 _ _ _ _ _

Replacement Edge to Edge Indirect Approach (High or Extreme Chordal Repair Direct Annuloplasty Edge to Edge Repair Direct Annuloplasty Repair Annuloplasty risk) Transfemoral & Right internal Transfemoral & 1 Transapical Transapical Transfemoral & Transseptal Transfemoral Access Transseptal jugular vein Transseptal

Source: Company websites, Frost & Sullivan Analysis

–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

Currently in China, other than the only approved TMV device MitraClip, there are six TMV devices undergoing clinical trials, including four for repair and two for replacement, as shown in the table below.

Intended Use Manufacturer Product Technique Access Trial Stage

Confirmatory Hanyu Medical ValveClamp Edge-to-edge repair Transapical Clinical Trial (enrolment completed)

Mainly chordal Confirmatory Repair MitralStitch Transapical implantation Clinical Trial Valgen MedTech Dragon Fly Edge-to-edge repair Transfemoral FIM

NewMed ValveClip-M Edge-to-edge repair Transfemoral FIM planned

Transcatheter mitral NewMed Mi-thos Transapical FIM valve replacement Replacement Shanghai Yixin Medical Transcatheter mitral MitraFix Transapical FIM Device Co., Ltd. valve replacement

Source: Company websites, Frost & Sullivan Analysis

MitraClip is the only TMV device marketed in China as of the Latest Practicable Date. The following table sets forth certain information on the commercialization of MitraClip in China.

Product Name MitraClip System1

NMPA Approval Date June 15, 2020

Approved Indication2 Percutaneous reduction of significant symptomatic MR (MR≥3+) due to a primary abnormality.

Terminal Price RMB350,000 (Hunan Province, Guangxi Province)3

Medical Insurance Status/reimbursement Not included coverage

Addressable Market TMVr

Technologies Transfemoral and transseptal edge-to-edge TMVr

Notes:

1. MitralClip is the only TMVr product that have been approved by NMPA up to now, so there is no comparable product launched in China that may affect its pricing.

2. The NMPA approved indication for MitraClip is the TMVr for severe primary MR. Considering that there is no official clinical guideline for MR treatment in China, so the recommendation on “line of treatment” has not formed consensus yet.

–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

3. The available public terminal price so far is only disclosed by Medical Consumables Proposed Internet Publication (Batch 17) (醫用耗材擬掛網公示(第十七批)) in Hunan Province, and Notice on the Publication of High-value Medical Consumables Sunshine Procurement on Internet (關於公示高值醫用耗材陽光採購掛網產品目錄(第一批)的通知) in Guangxi Province.

For further details, please refer to “Industry Overview” and “Business” in this document.

RESEARCH AND DEVELOPMENT

We have set up a R&D team with extensive experience covering the core R&D and commercialization processes of innovative medical devices such as clinical medicine, engineering, materials science, product development, quality control and production process amplification. As of the Latest Practicable Date, we had 38 R&D team members.

Leveraging our in-house R&D capabilities and medical translation capabilities, we have established R&D relationships with top hospitals and experts in the industry to promote the continuous innovation and import substitution with Chinese medical devices. In such collaboration, the hospitals and experts are mainly responsible for identifying clinical needs and providing feedback and guidance, while we are responsible for analysing key manufacturing techniques, core components, and core materials for product development, and translating medical concepts into industrial implementation. Under this model, we can quickly identify unmet clinical needs in the market and collect clinical feedback, study technical routes with potentially wide clinical application, and promote product finalization and clinical verification.

We have established a technology system that covers the entire process of structural heart disease interventional devices from the early R&D stage to commercial-scale manufacturing, and have formed nine core technologies, all of which are independently developed by us. Our nine core technologies enable us to carry out prototyping and product iteration in-house, thereby accelerating our R&D process. For further details, please refer to the paragraph headed “Business – Research and Development” in this document.

INTELLECTUAL PROPERTY

As of the Latest Practicable Date, we had 30 patents in China, including 8 invention patents and 22 utility models. As of the same day, we also had 26 pending patent applications in China, including 20 invention patents and 6 utility models. We have also filed for a PCT patent and have obtained one patent in Japan. For details, please refer to “Business – Intellectual Property Rights” in this document.

There are certain risks related to our intellectual property rights. For example, we may not be able to obtain, maintain and enforce patent, trademark, trade secret and other intellectual property protection and regulatory exclusivity for our drug candidates. We also cannot ascertain that we do not infringe, misappropriate or otherwise violate the patents, trademarks, trade secrets or other intellectual property rights of third parties, and successful defend against any claims by third parties.

–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

During the Track Record Period and up to the Latest Practicable Date, we were not involved in any material proceedings in respect of intellectual property right infringement claims against us or initiated by us. The Joint Sponsors have discussed with our management and our intellectual property counsel on whether there are any instances of infringement of third parties intellectual property rights by us, and have also reviewed the due diligence report on our intellectual property rights prepared by our intellectual property counsel. As far as our Directors are aware, there had not been any instances of infringement of third parties’ intellectual property rights by us as of the Latest Practicable Date. However, there are risks if we fail to protect our intellectual property rights in the future. For details, please refer to the paragraphs headed “Risk Factors – Risks Relating to Our Intellectual Property Rights” in this document.

COLLABORATION WITH THIRD PARTIES

Collaboration with Zhongshan Hospital

Zhongshan Hospital is a renowned Class-3A general hospital located in Shanghai with over 2,000 beds and an independent third party of the Company. We have established a long-term collaboration relationship with Zhongshan Hospital. In such collaboration, we and Zhongshan Hospital jointly develop the early medical concepts for innovative products. We then negotiate with Zhongshan Hospital to acquire the relevant intellectual property rights and translate and materialize the medical concept into a clinical-stage innovative medical device.

After the acquisition of the ValveClamp Patent, we translated the medical concept of ValveClamp and materialized it into a clinical-stage innovative medical device. We performed model design, prototype iteration, animal study and type test, and sponsored the subsequent FIM and confirmatory clinical trials of ValveClamp. Zhongshan Hospital participated in the clinical trials as one of the clinical sites but otherwise no longer hold any commercial interest or right in ValveClamp. Based on our R&D work on ValveClamp, we have obtained additional patents solely in our name.

In addition to ValveClamp, the medical concept of ReAces was also initially developed by Zhongshan Hospital, from which we acquired the relevant patent-in-application, carried out medical translation and applied for additional patents solely in our name.

For further details, please refer to the paragraph headed “Business – Research and Development – Collaboration with Zhongshan Hospital” 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

Cooperations with CROs and SMOs

We engage leading CROs and SMOs to manage, carry out and support our clinical trials. We select CROs and SMOs based on a variety of factors such as professional qualifications and experience, past cooperation with clinical trial institutions, business reputation and professional experience of their employees. We typically enter into agreements with the CROs or SMOs for each clinical research project. Our CROs or SMOs must comply with our plan and applicable laws, regulations and guidelines to ensure the integrity and authenticity of clinical trials and research.

MANUFACTURING

We manufacture all our products by ourselves. We have established a manufacturing base with a production capacity of approximately 6,000 sets per year in accordance with GMP standards and plan to appy for ISO13485 quality management system certification, laying the foundation for our current clinical trial medical devices and future commercial production.

We plan to continuously advance the development of our Xinzhuang R&D and manufacturing base with an area of 10,000 square meters, with a preliminary designed annual production capacity of 100,000 sets, laying the groundwork for the mass production of ValveClamp and other clinical products after approval. We expect to start the construction of the base by the end of 2021, and commence its operation by the end of 2023. We will continue to proceed with the construction of the base, upgrade the infrastructure, and enhance the level of automation to improve production efficiency. For further details, please refer to the paragraph headed “Business – Manufacturing” in this document.

OUR CUSTOMERS AND SUPPLIERS

As of the Latest Practicable Date, we had not commercialized any of our pipeline products. We did not record any revenue in 2019 and recorded revenue of RMB0.5 million in 2020 from providing pet treatments and general healthcare services to pets. Such revenue was mainly generated from diversified individual customers. As our pipeline products have not been commercialized, the main purpose of raw material procurement is to meet the needs of R&D operations. The main raw materials we source include PET polyester braid, PET coating, catheter sheath, implantable PEEK and transvalvular ball. For 2019 and 2020, purchases from our five largest suppliers amounted to RMB14.8 million and RMB7.0 million, respectively, representing 48.9% and 23.6% of our total purchases for the same periods, respectively; purchases from our largest supplier amounted to RMB9.0 million and RMB3.4 million, respectively, representing 29.6% and 11.3% of our total purchases for the same periods, respectively. For further details, please refer to the paragraph headed “Business – Raw Materials and Suppliers” in this document.

–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

COMPETITIVE STRENGTHS

We believe that our success is attributable to the following strengths that distinguish us from our competitors:

• Clinically proven TMV technique well positioned to address significant unmet clinical need in China

• Front-running domestic TMV device poised to revolutionize the MR treatment paradigm in China

• Synergistic product portfolio in the field of structural heart diseases

• Integrated capabilities that enables continuous and rapid innovation

• Visionary management team supported by sophisticated investors with rich industry resources

BUSINESS STRATEGIES

We plan to leverage our strengths to implement our business strategies in the following areas.

• Rapidly advance the R&D and commercialization of ValveClamp, ValveClasp, ReAces and other products under research

• Focus on the cardiovascular field and promote the development of both structural heart diseases interventional devices and electrophysiological products

• Accelerate overseas product registration to advance our international strategies

• Further strengthen R&D capabilities and explore potential cooperation opportunities

• Increase production capacity and achieve economies of scale

RELATIONSHIP WITH OUR SINGLE LARGEST SHAREHOLDER GROUP

As of the Latest Practicable Date, Mr. Dai and his acting-in-concert persons, being Ms. Yang, Anji Ruzhe and Anji Qiyue, held a total of 23,143,799 Shares, or 28.98% of the issued share capital of the Company as of the Latest Practicable Date, which will represent [REDACTED] of the issued share capital of the Company immediately after the completion of the [REDACTED] (assuming the [REDACTED] is not exercised). Therefore, Mr. Dai, Ms. Yang, Anji Ruzhe and Anji Qiyue collectively will be considered as our Single Largest Shareholder Group after the [REDACTED]. For further details of our single largest Shareholder, please see the section headed “Relationship with Our Single Largest Shareholder Group” in this document.

–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

OUR PRE-[REDACTED] INVESTORS

Since the establishment of the Company, we have undergone several rounds of pre-[REDACTED] investments and transfer of Shares among Pre-[REDACTED] Investors. Our broad and diverse base of Pre-[REDACTED] Investors consists of Sophisticate Investors. For further details, please see the paragraph headed “History, Development and Corporate Structure – Information about Our Pre-[REDACTED] Investors” in this document.

SUMMARY OF KEY FINANCIAL INFORMATION

The summary of historical financial information set out below is extracted from and should be read in conjunction with the consolidated audited financial statements (together with the accompanying notes) set out in the Accountant’s Report at Appendix I to this document and the information set out in “Financial Information” in this document. Our financial information has been prepared in accordance with IFRSs.

Summary of the Consolidated Statements of Profit or Loss and Other Comprehensive Income

The following table contains a summary of the consolidated income statement for the periods indicated:

For the year ended December 31, 2019 2020 RMB’000 RMB’000

Revenue – 490 Cost of sales – (888) Gross profit – (398)

Other income and gains 7,411 19,836 Selling and distribution expenses (401) (899) Administrative expenses (11,353) (81,944) Research and development expenses (29,393) (32,069) Other expenses (108) (25) Finance costs (14,289) (33,486)

Loss before tax (48,133) (128,985) Income tax expense – –

Loss for the year (48,133) (128,985)

–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. SUMMARY

During the Track Record Period, we made no profit and recorded a net loss. Our net loss during the Track Record Period was mainly attributable to significant R&D expenses. In addition, our net loss is also attributable to our other operating costs, such as administrative expenses and financing costs. We expect to continue to incur net losses in the near future as we strive to step up R&D operations, continuously develop product candidates, seek regulatory approval for product candidates and commercialize product candidates. For the years ended December 31, 2019 and 2020, our Core Product, ValveClamp, incurred R&D expenses of RMB26.5 million and RMB24.8 million, respectively, representing 90.1% and 77.3% of the total R&D expenses, respectively. For details, please refer to “Financial Information – Discussion of Certain Items in the Consolidated Statements of Profit or Loss and Other Comprehensive Income”.

We expect to incur an increased amount of operating expenses for at least the next several years as we further our pre-clinical research, continue the clinical development of, seek regulatory approval for and manufacture, our product candidates and add personnel necessary to operate our business. Subsequent to the [REDACTED], we expect to incur costs associated with operating as a public company. We expect that our financial performance will fluctuate from period to period due to the development status of our product candidates, regulatory approval timeline and commercialization of our product candidates after approval.

Summary of Consolidated Statement of Financial Position

The following table contains a summary of the consolidated statement of financial position as of the dates indicated:

For the year ended December 31, 2019 2020 RMB’000 RMB’000

Non-current assets 31,460 34,259 Current assets 220,434 483,266 Total current liabilities 7,233 74,751 Net current assets 213,201 408,515 Total non-current liabilities 338,409 11,957 Net (liabilities)/assets (93,748) 430,817

As at December 31, 2019, we recorded net liabilities of RMB93.7 million, mainly due to the redemption liabilities on ordinary shares of RMB326.8 million. As of December 31, 2020, we recorded net assets of RMB430.8 million, mainly due to a significant increase in the cash and cash equivalents, which was mainly attributable to the funds obtained from our Series D financing. For details of our Series D financing and redemption liabilities on ordinary shares, please refer to “History, Development and Corporate Structure – Our History Development – The Company” and Note 24 to the Accountants’ Report included in Appendix I to this document.

–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. SUMMARY

Summary of Consolidated Statements of Cash Flows

For the year ended December 31, 2019 2020 RMB’000 RMB’000

Net cash flows used in operating activities (34,403) (33,675) Net cash flows (used in)/from investing activities (173,248) 153,789 Net cash flows from financing activities 197,226 287,384

Net (decrease)/increase in cash and cash equivalents (10,425) 407,498

Cash and cash equivalents at beginning of year 12,286 1,861 Cash and cash equivalents at end of year 1,861 409,359

Our net cash flows used in operating activities was RMB34.4 million and RMB33.7 million for the years ended December 31, 2019 and 2020, respectively. Our net operating cash outflows were mainly due to significant R&D expenses incurred during the Track Record Period. We monitored our cash and cash equivalents and maintained them at the levels that we believe are appropriate to fund our operations and mitigate the impact of cash flow fluctuations.

As our business grows and develops, we expect to generate additional net cash from our operations by generating revenue from sales of our product candidates upon approval. In light of our net operating cash outflows throughout the Track Record Period, we plan to improve our position by (i) fast-tracking the commercialization of our product candidates to generate revenues from product sales; (ii) taking comprehensive measures to effectively control costs and operating expenses, including primarily R&D expenses and administrative expenses; (iii) improving the efficiency of our working capital management; (iv) successfully conducting [REDACTED] to obtain [REDACTED]; and (v) seeking additional funding through public or private offerings, debt financing, partnering and licensing arrangements or other sources as necessary. Going forward, we believe that we will be able to meet our liquidity requirements through a combination of bank balances and cash, bank borrowings and funding from the net [REDACTED]ofthe[REDACTED]. As of December 31, 2020, we had the cash and cash equivalents of RMB409.4 million. Having considered the financial resources available to our Group, including cash and cash equivalents, internally generated funds and the estimated net [REDACTED] from the [REDACTED], the Directors believe that we have sufficient working capital to cover at least 125% of our costs, including R&D expenses, administrative expenses, selling and distribution expenses and other operating costs, for at least the next 12 months from the date of the document.

–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. SUMMARY

Our cash burn rate is defined as our average monthly (i) net cash spent on operating activities; (ii) capital expenditures; and (iii) lease payments. Assuming a future average monthly cash burn rate of approximately 5.4 times the 2020 level, (which is primarily based on the difference between the average monthly burn rate in 2020 and the prospective burn rate based on the average monthly net cash used in operating activities, capital expenditure and lease payments in 2021 March to 2022 June), we estimate that our cash and cash equivalents as of February 28, 2021 will be sufficient to maintain our financial capacity for approximately 19 months or, if also taking into account the estimated net [REDACTED] from the [REDACTED] (based on the lowest of the indicative [REDACTED] price range), will be sufficient to maintain our financial viability for at least 5 years. We will continue to closely monitor working capital and, if necessary, expect to proceed with the next round of financing with a minimum buffer of 12 months.

KEY FINANCIAL RATIOS

The following table sets out the components of our key financial ratio as at the dates indicated.

As of December 31 2019 2020

Current ratio(1) 30.5 6.5

(1) Current ratio represents current assets divided by current liabilities as of the same date.

For a detailed discussion of our key financial ratio, please see “Financial information – Key Financial Ratio”.

STATISTICS OF [REDACTED]

The statistics in the table below are based on the following assumptions: (i) the [REDACTED] has been completed and the [REDACTED] shares in the [REDACTED] have been issued; and (ii) the [REDACTED] has not been exercised:

Based on the Based on the [REDACTED] [REDACTED] per share of per share of HK$[REDACTED] HK$[REDACTED]

Market capitalization of our Shares(1) HK$[REDACTED] HK$[REDACTED] Unaudited adjusted net tangible assets per share(2) HK$[REDACTED] HK$[REDACTED]

(1) The market value of the shares is based on the assumption that [REDACTED] shares will be issued and outstanding immediately after the completion of the [REDACTED].

–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. SUMMARY

(2) The unaudited adjusted net tangible asset value per share is calculated on the basis of [REDACTED] shares issued and does not include any shares that may be issued after the exercise of the [REDACTED]. For the purpose of this unaudited [REDACTED] statement of adjusted net tangible assets, the balances stated in RMB are converted into HK$ at the rate of RMB0.84077 to HK$1.00.

FUTURE PLANS AND USE OF [REDACTED]

We estimate that we will receive net [REDACTED] from the [REDACTED]of approximately HK[REDACTED] million after deducting the [REDACTED] fees and expenses payable by us in the [REDACTED], assuming no [REDACTED] is not exercised and an [REDACTED] of HK$[REDACTED] per [REDACTED], being the mid-point of the indicative [REDACTED] range of HK$[REDACTED] to HK$[REDACTED] per Share in this document.

We intend to use the net [REDACTED] we will receive from this [REDACTED] for the following purposes, subject to changes in light of our evolving business needs and changing market conditions:

• approximately [REDACTED]% of the net [REDACTED], or approximately HK$[REDACTED] million, is expected to be allocated to our Core Product, ValveClamp;

• approximately [REDACTED]% of the net [REDACTED], or approximately HK$[REDACTED] million, is expected to be allocated to other product candidates in our product pipeline;

• approximately [REDACTED]% of the net [REDACTED], or approximately HK$[REDACTED] million, will be used to fund the expansion of our product portfolio through strategic acquisitions and equity investment, partnerships or license-in, among others, in the field of structural heart disease and electrophysiology; and

• approximately [REDACTED]% of the net [REDACTED], or approximately HK$[REDACTED] million, is expected to be used for working capital and general corporate purposes.

Please refer to “Future Plans and Use of [REDACTED]” for further details.

DIVIDENDS

During the Track Record Period, no dividends were paid or declared by the Company. At present, we expect to retain all future earnings for our business operations and expansion, and do not have any dividend policy to declare or pay any dividends in the near future.

[REDACTED]

–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. SUMMARY

[REDACTED] of approximately RMB[REDACTED] million will be charged to profit or loss after the Track Record Period, and approximately RMB[REDACTED] million will be deducted from the share premium. The [REDACTED] are expected to represent approximately [REDACTED]% of the gross [REDACTED]ofthe[REDACTED], assuming an [REDACTED] of HK$[REDACTED] per [REDACTED] (being the mid-point of the indicative [REDACTED] range) and the [REDACTED] is not exercised. The [REDACTED] above are the latest practicable estimate for reference only, and the actual amount may differ from this estimate.

IMPACT OF THE COVID-19 PANDEMIC

Since early 2020, a growing number of countries and regions around the world have experienced an outbreak of the novel coronavirus (“COVID-19”), a highly contagious disease known to cause respiratory illness. Significant rises in COVID-19 cases have been reported since then, causing governments around the world to implement unprecedented measures such as city lockdowns, travel restrictions, quarantines and business shutdown. The spread of COVID-19 continues to affect China, where we conduct business and engage in preclinical studies and clinical trials, as well as certain other countries and regions that are part of our supply chain.

To protect our employees, we required all of our employees to work remotely in late January and February 2020. We officially resumed normal on-site operations, including our in-house R&D and other activities, in March 2020. Although the COVID-19 pandemic has caused some delays in our operations, such as the patient enrolment process of the confirmatory clinical trial of ValveClamp in China in early 2020, we believe that in 2020 and early 2021, the impact of the COVID-19 pandemic on our business was relatively limited due to the following reasons:

• The number of daily new infections and suspected COVID-19 cases in China has declined substantially since mid-February 2020, and mass lockdown measures in low-risk cities were lifted in early March 2020. Social distancing measures have been gradually lifted and hospitals have gradually resumed full services.

• We continued to make progress in our confirmatory clinical trial of ValveClamp in 2020 and early 2021. As of the Latest Practicable Date, we had completed the patient enrolment (102 subjects) for the confirmatory clinical trial of ValveClamp and had completed follow-up evaluations for over 50% of the subjects.

• The COVID-19 pandemic did not have a material effect on the supply of our raw materials. As we did not have any commercialized product and was conducting only one clinical trial in 2020 and early 2021, we only purchased a relatively small quantity of raw materials. During the same period, our raw material supplies were generally sufficient to support our operations, and we did not encountered any shortage of raw materials that would have a significant adverse impact on our operations.

–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. SUMMARY

• The COVID-19 pandemic did not have a material effect on services provided to us by third parties, in particular CROs and SMOs. With respect to the confirmatory clinical trial of ValveClamp, we maintained regular communications with our CROs and SMOs on matters such as trial progress and management, which in turn continued to discharge their contractual obligations to us..

• We have adopted measures to mitigate the impact of the COVID-19 outbreak on our business operations, financial results and prospects, and maintain a safe and hygienic working environment in our offices and manufacturing facilities. For example, after we resumed on-site operations, we have provided our staff with protective equipment (masks, sanitation and sterilization supplies, and thermometers), required all staff to self-quarantine after travel or if feeling unwell, limited in-person meetings and non-essential travel, sterilized our premises daily, and monitored the health conditions of our employees.

It is uncertain when and whether COVID-19 will be contained globally. The above analysis is made by our management based on currently available information concerning COVID-19. We cannot guarantee you that the COVID-19 outbreak will not further escalate or have a material adverse effect on our results of operations, financial position or prospects. For details, please refer to “Risk Factors – Risks Relating to Our Operations – Our operations and business plans may be adversely affected by the COVID-19 pandemic”. We are constantly monitoring the COVID-19 outbreak situation as well as various regulatory and administrative measures adopted by local governments to prevent and control the pandemic. We will continue to monitor and evaluate any impact of the COVID-19 outbreak on us and adjust our precautionary measures according to the latest developments of the outbreak.

RECENT DEVELOPMENT AND NO MATERIAL ADVERSE CHANGES

In January 2021, we entered into an investment agreement (the “Investment Agreement”) with Shanghai Xinzhuang Industrial Park Economic and Technology Development Co., Ltd (上海市莘莊工業區經濟技術發展有限公司) regarding our future investment (the “Xinzhuang Investment”) in Xinzhuang Industrial Park (莘莊工業區) for our Xinzhuang manufacturing base. According to the Investment Agreement, we committed to invest RMB150 million as a land use right investment and fixed assets investment in Xinzhuang Industrial Park. Xinzhuang manufacturing base will cover an area of approximately 10,000 square meters, which is expected to commence operation by the end of 2023. The Xinzhuang Investment is subject to our entering into a land transfer agreement with the relevant government authority within one year from entering into the Investment Agreement.

Save as disclosed above, the Directors confirm that up to the date of this document, there has been no material adverse change in our financial or trading position since December 31, 2020 (being the date on which the latest audited consolidated financial information of our Group was prepared) and there is no event since December 31, 2020 which would materially affect the information presented in the consolidated financial statements included in the Accountants’ Report in Appendix I to this document.

–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. SUMMARY

RISK FACTORS

We are a biotechnology company seeking to list on the Main Board of the Stock Exchange in accordance with Chapter 18A of the Listing Rules. Our operations and the [REDACTED] involve certain risks and uncertainties, some of which are beyond our control and may affect your decision to invest in us and/or the value of your investment. For details of our risk factors, please refer to the section headed “Risk Factors”, we strongly recommend that you read the full text before investing in Shares. In any such case, the market price of the shares may fall, and firstly all or part of the investment may be lost. Some of the main risks we face include:

• We have incurred net losses since our inception and may incur net losses for the foreseeable future, and you may lose substantially all your investments in us given the high risks involved in the medical device business.

• Our future growth depends substantially on the success of our product candidates. If we are unable to successfully complete clinical development, obtain regulatory approval and commercialize our product candidates successfully, or if we experience significant delays in doing so, our business will be materially and adversely affected.

• If clinical trials of our product candidates fail to demonstrate safety and efficacy to the satisfaction of regulatory authorities or do not otherwise produce positive results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates.

• If we do not introduce new products in a timely manner, our products may become obsolete and our operating results may suffer.

• The manufacture of our products is highly complex and subject to strict quality controls. If we or any of our suppliers or logistics partners encounters manufacturing, logistics, or quality problems, including as a result of natural disasters, our business could suffer.

• If we fail to increase our production capacity as planned, our business prospects could be materially and adversely affected.

• We have not accumulated experience in sales and marketing activities, and we may not be able to build, expand or integrate our in-house sales and marketing team successfully.

• If we are unable to obtain and maintain patent protection for our product candidates through intellectual property rights, or if the scope of such intellectual property rights obtained is not sufficiently broad, third parties may compete directly against us.

• There has been no prior public market for our Shares and there can be no assurance that an active market would develop, and the price and trading volume of our Shares may be volatile.

–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

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

“Articles of Association” the articles of association of the Company adopted on March 24, 2021, which will become effective upon the [REDACTED], as amended from time to time, a summary of which is set out in Appendix V to this document;

“associates” has the meaning ascribed to it under the Listing Rules;

“Board” or “Board of Directors” the board of Directors of our Company;

“Business Day” or any day (other than a Saturday, Sunday or public holiday “business day” in Hong Kong and any day on which tropical cyclone warning no. 8 or above or a black rainstorm warning signal is hoisted in Hong Kong) on which banks in Hong Kong are generally open for normal banking business;

“CAGR” compound annual growth rate;

[REDACTED]

–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

“China” or the “PRC” the People’s Republic of China, but for the purpose of this document and for geographical reference only and except where the context requires, references in this document to “China” and the “PRC” do not include Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan;

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

“CNIPA” the China National Intellectual Property Administration (國家知識產權局);

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

“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”, “our Company”, Shanghai Hanyu Medical Technology Co., Ltd. (上海捍 “we” or “us” 宇醫療科技股份有限公司), a joint stock company incorporated in the PRC with limited liability on December 3, 2020, or, where the context requires, its predecessor (as the case may be);

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

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

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

“Core Product” has the meaning ascribed to it in Chapter 18A of the Listing Rules; for the purposes of this document, our Core Product refers to ValveClamp;

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

–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

“CSRC” China Securities Regulatory Commission (中國證券監督管理委員會), a regulatory body responsible for the supervision and regulation of the PRC national securities markets;

“Director(s)” or “our Directors” the director(s) of our Company;

“Domestic Share(s)” ordinary share(s) in the share capital of our Company, with a nominal value of RMB1.00 each, which is/are subscribed for and paid up in Renminbi by PRC natural persons or entities established under PRC laws;

“EIT Law” the Enterprise Income Tax Law of the PRC (中華人民共和國企業所得稅法), as amended, supplemented or otherwise modified from time to time;

“Extreme Conditions” extreme conditions caused by a super typhoon as announced by the government of Hong Kong;

“Frost & Sullivan” Frost & Sullivan (Beijing) Inc., Shanghai Branch Co., an independent market, research and consulting company;

[REDACTED]

“Group”, “the Group”, our Company and all of our subsidiaries or, where the “our Group”, “we” or “us” context so requires, in respect of the period before our Company became the holding company of its present subsidiaries, the businesses operated by such subsidiaries or their predecessors (as the case may be);

“Guangdong Hanyu” Guangdong Hanyu Medical Technology Co., Ltd. (廣東捍宇醫療科技有限公司), a limited company established in the PRC on December 21, 2020, and a wholly–owned subsidiary of the Company;

“HK$” or “Hong Kong dollars” Hong Kong dollars and cents respectively, the lawful “HK dollars” or “cents” currency of Hong Kong;

“IFRS” International Financial Reporting Standards;

–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]

“Hong Kong” the Hong Kong Special Administrative Region of the PRC;

[REDACTED]

“Hongyu Medical” Shanghai Hongyu Medical Technology Corporation Limited (上海竑宇醫療科技有限公司), a limited company established in the PRC on July 5, 2019 and a subsidiary of the Company;

“H Share(s)” each, to be subscribed for and traded in Hong Kong dollars overseas listed foreign shares in our ordinary share capital with a nominal value of RMB1.00 and [REDACTED] on the Stock Exchange;

[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

“Independent Third Party(ies)” an individual or a company which, to the best of our Directors’ knowledge, information and belief, having made all reasonable enquiries, is not a connected person of the Company within the meaning of the Listing Rules;

[REDACTED]

“Joint Sponsors” China International Capital Corporation Hong Kong Securities Limited and Citigroup Global Markets Asia Limited;

–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

“Latest Practicable Date” April 7, 2021, being the latest practicable date for the purpose of ascertaining certain information in this document prior to its publication;

[REDACTED]

“Listing Committee” the Listing Committee of the Stock Exchange;

[REDACTED]

“Listing Rules” the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, as amended, supplemented or otherwise modified 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 the Growth Enterprise Market of the Stock Exchange;

“Mandatory Provisions” the Mandatory Provisions for Articles of Association of Companies to be Listed Overseas (到境外上市公司章程必備條款), as promulgated by the State Council Securities Commission and the State Restructuring Commission on August 27, 1994 and became effective on the same date, as the same may be amended and supplemented or otherwise modified from time to time;

“Mr. Dai” Mr. Dai Yufeng (戴宇峰), Chairman of our Board, an executive Director, the general manager of our Company and a member of the Single Largest Shareholder Group;

“Ms. Yang” Ms. Yang Huixian (楊惠仙), an executive Director and a member of the Single Largest Shareholder Group;

“MOFCOM” Ministry of Commerce of the PRC (中華人民共和國商務部) or its predecessor, the Ministry of Foreign Trade and Economic Cooperation of the PRC (中華人民共和國對外貿易經濟合作部);

“NDRC” the National Development and Reform Commission of the PRC (中華人民共和國國家發展和改革委員會);

–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

“NEEQ” the National Equities Exchange and Quotations Co., Ltd., a PRC over-the-counter system for trading shares of public companies;

“NMPA” National Medical Products Administration (國家藥品監督管理局) and its predecessor, the China Food and Drug Administration (國家食品藥品監督管理總局), including its sub-division, such as the Center for Medical Device Evaluation (國家藥品監督管理局醫療器械技術審評中心);

“Nuoqiang Medical” Shanghai Nuoqiang Medical Technology Corporation Limited (上海諾強醫療科技有限公司), a limited company established in the PRC on May 31, 2018 and a wholly-owned subsidiary of the Company;

[REDACTED]

–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

“PBOC” the People’s Bank of China (中國人民銀行), the central bank of the PRC;

“PRC Company Law” the Company Law of the PRC (中華人民共和國公司法), as amended and adopted by the Standing Committee of the Tenth National People’s Congress on October 27, 2005 and effective on January 1, 2006, which was lasted amended and became effective on October 26, 2018, as amended, supplemented or otherwise modified from time to time;

“PRC Legal Advisor” Jia Yuan Law Offices, our legal advisor as to PRC laws;

“PRC Securities Law” the Securities Law of the PRC (中華人民共和國證券法), as enacted by the 6th meeting of the 9th Standing Committee of the NPC on December 29, 1998 and became effective on July 1, 1999, as amended, supplemented or otherwise modified from time to time;

“Pre-[REDACTED] the investments in the Company made by the Investment(s)” Pre-[REDACTED] Investors, details of which are set out in the section headed “History, Development and Corporate Structure” in this document;

“Pre-[REDACTED] Investor(s)” Panmao Shanghai, Taiyu Investment, Med-Fine Fund, Taige Yingke, Ganzhou Biyuewu, LYZZ Capital, Yunfeng Capital, Anji Qulv, Yingke Jiyun, Wuhu Chending, Orient Securities Fuxiang, Huzhou Jingxin, Tibet Longmaide, Xiamen Yuhui, IN Capital, Yingke Shenghui, Transform and Upgrade Fund, Xi’an Taiming, Shanghai Jinci, Ruihua Capital, Pingxiang Yuhua, Orient Securities Guanlan, Langma No. 26, Langma No. 29, Octagon Fund, Beijing Hetang, Hangzhou Hetang, Suqian Lingdao, Xiamen Qianshan, Suzhou Luanbu, Jiaxing Chunxiang, Yifang Huida, Shanghai Jiedao, and Ganzhou Jiaomujiao, details of whose investments in our Company are set out in the section headed “History, Development and Corporate Structure” in this document;

[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]

“QIBs” a qualified institutional buyer within the meaning of Rule 144A;

“R&D” research and development;

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

“RMB” or “Renminbi” Renminbi, the lawful currency of the PRC;

“Rule 144A” Rule 144A under the U.S. Securities Act;

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

“SAIC” the 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);

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

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

“SFC” the Securities and Futures Commission of Hong Kong;

“Share(s)” shares in the share capital of our Company, with a nominal value of RMB1.00 each, comprising our Unlisted Shares and our H Shares;

“Shareholder(s)” holder(s) of our Shares;

“SHMPA” Shanghai Medical Products Administration (上海市藥品監督管理局)

–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. DEFINITIONS

“Single Largest Shareholder Mr. Dai, Ms. Yang, Anji Ruzhe and Anji Qiyue, Group” collectively;

“Sophisticated Investor(s)” has the meaning ascribed to it under the Guidance Letter HKEX-GL-92-18 issued by the Stock Exchange;

“Special Regulations” Special Regulations of the State Council on the Overseas Offering and Listing of Shares by Joint Stock Limited Companies (國務院關於股份有限公司境外募集股份上市的特別規定), promulgated by the State Council on August 4, 1994;

[REDACTED]

“State Council” State Council of the PRC (中華人民共和國國務院);

“Stock Exchange” the Stock Exchange of Hong Kong Limited;

“subsidiary(ies)” has the meaning ascribed thereto in section 15 of the Companies Ordinance;

“substantial shareholder(s)” has the meaning ascribed to it under the Listing Rules;

“Supervisor(s)” supervisor(s) of our Company;

“Supervisory Board” the board of Supervisors of our Company;

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

“Track Record Period” the period comprising the years ended December 31, 2019 and 2020;

[REDACTED]

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

“Unlisted Share(s)” Domestic Share(s) and/or Unlisted Foreign Share(s);

–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. DEFINITIONS

“Unlisted Foreign Share(s)” ordinary share(s) issued by our Company, with a nominal value of RMB1.0 each, which is/are subscribed for and paid for in a currency other than Renminbi, held by foreign investors and not listed on any stock exchange;

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

“U.S. Securities Act” the United States Securities Act of 1933, as amended and supplemented or otherwise modified from time to time, and the rules and regulations promulgated thereunder;

“VAT” Value Added Tax;

[REDACTED]

“Xinyu Pet Hospital” Shanghai Xinyu Pet Hospital Corporation Limited (上海心宇寵物醫院有限公司), a limited company established in the PRC on September 29, 2019, and a subsidiary of the Company;

“Zhongshan Hospital” Zhongshan Hospital affiliated to Fudan University.

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.

For ease of reference, the names of the PRC laws and regulations, governmental authorities, institutions, natural persons or other entities (including certain of our subsidiaries) have been included in the document in both the Chinese and English languages and in the event of any inconsistency, the Chinese versions shall prevail. English translations of official Chinese names are for identification purpose only.

–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

This glossary contains explanations of certain technical terms used in this document in connection with our Company and our business. Such terminology and meanings may not correspond to standard industry meanings or usages of those terms.

“ACE inhibitors” angiotensin-converting-enzyme inhibitors, a class of medication used primarily for the treatment of high blood pressure and heart failure

“air embolism” a blood vessel blockage caused by one or more bubbles of air or other gas in the circulatory system

“aortic regurgitation” or “AR” a condition where the aortic valve is not able to close completely, causing a backflow of blood from the aorta into the left ventricle during diastole

“aortic valve” the valve that prevents blood flowing back from aorta to left ventricle

“ARBs” angiotensin receptor blockers, a group of pharmaceuticals that bind to and inhibit the angiotensin II receptor type 1 (AT1) and thereby block the arteriolar contraction and sodium retention effects of renin–angiotensin system

“arrhythmia” also known as cardiac arrhythmia or heart arrhythmia, is a group of conditions in which the heartbeat is irregular, too fast, or too slow

“atrial fibrillation” an arrhythmia characterized by the rapid and irregular beating of the atrial chambers of the heart

“atrial septal defect” or a defect in the septum between the heart’s two upper “ASD” chambers (atria). This defect allows oxygen-rich blood to leak into the oxygen-poor blood chambers in the heart

“beta blockers” a class of medications that are predominantly used to manage abnormal heart rhythms, and to protect the heart from a second heart attack after a first heart attack

–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. GLOSSARY OF TECHNICAL TERMS

“cardiology” a branch of medicine that deals with the disorders of the heart as well as some parts of the circulatory system. The field includes medical diagnosis and treatment of congenital heart defects, coronary artery disease, heart failure, valvular heart disease and electrophysiology

“cardiomyopathy” a group of diseases caused by various etiologies, which lead to myocardium pathological changes, and then lead to cardiac hypertrophy, dilation, fibrosis and other pathological changes

“cardiopulmonary bypass” or a technique in which a machine temporarily takes over “CPB” the function of the heart and lungs during the open-heart surgery, maintaining the circulation of blood and the oxygen content of the patient’s body

“CE Mark” an administrative marking that indicates conformity with health, safety, and environmental protection standards for products sold within the European Economic Area (EEA)

“cobalt-chromium-nickel” a metal alloy of cobalt, chromium and nickel

“complication” an unfavorable evolution of a disease, health condition or medical treatment

“CRO” contract research organization, a company that provides support to the pharmaceutical, biotechnology, and medical device industries in the form of research services outsourced on a contract basis

“DSA” digital subtraction angiography, a fluoroscopy technique used in interventional radiology to clearly visualize blood vessels in a bony or dense soft tissue environment

“ECG” electrocardiography, the process of producing an electrocardiogram (ECG or EKG). It is a graph of voltage versus time of the electrical activity of the heart using electrodes placed on the skin

–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. GLOSSARY OF TECHNICAL TERMS

“edge-to-edge repair” An edge-to-edge repair refers to the application of a clip at the site of the regurgitant jet, between the facing free margins of the anterior and posterior leaflets, creating a “double-orifice” valve without residual prolapse of one or both leaflets to reduce MR. Used in TMVr, it inflicts minimal trauma and is considered very safe

“electrophysiology” the science of elucidating, diagnosing, and treating the electrical activities of the heart. The term is usually used in a clinical context to describe studies of such phenomena by invasive (intracardiac) catheter recording of spontaneous activity as well as of cardiac responses to programed electrical stimulation (PES)

“EMA” the European Medicines Agency

“endocarditis” an inflammatory disease caused by the direct invasion of the endocardium by pathogenic microorganisms

“ethics committee” a committee composed of medical, pharmacy and other background personnel whose responsibility is to ensure that the rights and safety of subjects are protected by independently reviewing, consenting to, and following up on the review of trial protocols and related documents, and obtaining and documenting the methods and materials used for informed consent of subjects. The composition and all activities of this committee should not be interfered with or influenced by the organization and conduct of clinical trials

“FDA” The United States Food and Drug Administration, a federal agency of the Department of Health and Human Services

“first-in-human” or “FIM” the first test on human subjects of an investigational medicinal product developed and assessed through in- vitro or animal study

“GCP” good clinical practice, an international ethical and scientific quality standard for the performance of a clinical trial on medicinal products involving humans

–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. GLOSSARY OF TECHNICAL TERMS

“GMP” good manufacturing practices, the aspect of quality assurance that ensures that medicinal products are consistently produced and controlled to the quality standards appropriate to their intended use and as required by the product specification

“heart failure” when the heart is unable to pump sufficiently to maintain blood flow to meet the body tissues’ needs for metabolism

“heart valve” a one-way valve that normally allows blood to flow in only one direction through the heart

“herpes zoster” also known as zoster, is a viral disease characterized by a painful skin rash with blisters in a localized area

“infective endocarditis” an infection of the inner surface of the heart, usually the valves. Signs and symptoms may include fever, small areas of bleeding into the skin, heart murmur, feeling tired, and low red blood cell count

“ISO Class” method of assessing level of cleanliness against a specification for a cleanroom or clean zone

“JACC: Cardiovascular a peer-reviewed sub-specialty medical journal published Intervention” by Elsevier for the American College of Cardiology

“KOLs” acronym for Key Opinion Leaders who are doctors that influence their peers’ medical practice, including but not limited to prescribing behavior

“mitral regurgitation” or a condition where the mitral valve is not able to close “MR” completely, causing a backflow of blood from the left ventricle into the left atrium during ventricular systole

“mitral stenosis” or the thickening and stiffening of the mitral valve leaflets “MS” and the narrowing of their opening obstructing the flow of blood from the left atrium to the left ventricle

“mitral valve” the valve that prevents the blood in left ventricle from flowing back to left atrium

“mmHg” millimeter of mercury, a unit of measure for atmospheric pressure

–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. GLOSSARY OF TECHNICAL TERMS

“nitinol” nickel titanium, a metal alloy of nickel and titanium, where the two elements are present in roughly equal atomic percentages

“NT-proBNP” N-terminal (NT)-pro hormone BNP (NT-proBNP), a non- active prohormone that is released from the same molecule that produces BNP. Both BNP and NT-proBNP are released in response to changes in pressure inside the heart

“NYHA” New York Heart Association

“PEEK” Medical implant grade polyetheretherketone

“PET” Polyethylene terephthalate

“prolapse” a condition in which organs fall down or slip out of place

“pulmonary hypertension” a hemodynamic and pathophysiological condition, which means a rise in pulmonary artery pressure beyond a certain threshold can lead to right heart failure. It can be an independent disease, a complication, or a syndrome

“pulmonary valve” the valve locates between the right ventricle and the pulmonary artery, which inhibits the blood from the pulmonary artery regurgitate to the right ventricle

“radiology” the medical discipline that uses medical imaging to diagnose and treat diseases within the bodies of animals, including humans

“regurgitation” reverse flow of blood caused by insufficient valve closure due to functional or organic diseases of the heart valve

“SAP” systems applications and products in data processing

“single-arm detachment” the detachment of one side of the clamping arms of the valve clamp from the valve leaflet

“SMO” site management organization, an organization that provides clinical trial related services to medical device companies having adequate infrastructure and staff to meet the requirements of the clinical trial protocol

–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. GLOSSARY OF TECHNICAL TERMS

“SOPs” standard operating procedure, a set of step-by-step instructions compiled by an organization to help workers carry out routine operations. SOPs aim to achieve efficiency, quality output and uniformity of performance, while reducing miscommunication and failure to comply with industry regulations

“structural heart disease” any structural abnormalities of the heart and any diseases related to the structure of heart and great vessels, except for coronary artery diseases and cardiac electrical diseases. Structural heart diseases in a narrow definition refer to the pathophysiological changes of the heart caused by structural changes of the heart, including valvular heart diseases, congenital heart diseases and cardiomyopathy, among others

“TAVI” transcatheter aortic heart valve implantation, a catheter- based technique to implant a new aortic valve in a minimally invasive procedure that does not involve open- chest surgery to correct severe aortic stenosis

“TMV” transcatheter mitral valve

“TMV repair” or “TMVr” transcatheter mitral valve repair, a catheter-based technique to repair the mitral valve in an interventional procedure that does not involve open-chest surgery

“TMV replacement” or “TMVR” transcatheter mitral valve replacement, a catheter-based technique to implant a new mitral valve in an interventional procedure that does not involve open-chest surgery

“thrombus” colloquially called a blood clot, is the final product of the blood coagulation step in hemostasis

“transapical” An access approach used in interventional procedures such as TMVr, with the apical as the entry point of the repair device

“transcatheter annuloplasty” An transcatheter annuloplasty typically involves the implantation of a device surrounding the mitral valve, called an annuloplasty device, which contracts to reduce annular dilation, facilitate leaflet coaptation and aid to re-establish mitral valve function

–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. GLOSSARY OF TECHNICAL TERMS

“transfemoral” An access approach used in interventional procedures such as TMVr or TAVI, with the femoral vessel as the entry point of the new valve or repair device. The femoral vessel is accessed in the groin without an incision but with a needle, catheter and long wires allowing access to the diseased valve. The delivery system is then placed over the long wires into the proper position and the new valve is deployed with the aid of X-rays and an echocardiogram

“tricuspid regurgitation” or a condition where the tricuspid valve is not able to close “TR” completely, causing a backflow of blood from the right ventricle to the right atrium during systole

“tricuspid valve” the valve that prevents the blood in right ventricle from flowing back to right atrium

“ultrasound” a diagnostic imaging technique, or therapeutic application of ultrasound. It is used to create an image of internal body structures such as tendons, muscles, joints, blood vessels, and internal organs. Its aim is often to find a source of a disease or to exclude pathology

“valvular heart disease” due to congenital dysplasia or other diseases, anatomical or functional abnormalities of the heart valve and its accessory structures are caused, resulting in acute or chronic stenosis and/or insufficient closure of single or multiple valves

–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. FORWARD-LOOKING STATEMENTS

We have included in this document forward-looking statements. Statements that are not historical facts, including statements about our intentions, beliefs, expectations or predictions for the future, are forward-looking statements.

This document contains certain forward-looking statements and information relating to our Company and our subsidiaries that are based on the beliefs of our management as well as assumptions made by and information currently available to our management. When used in this document, the words “aim,” “anticipate,” “believe,” “could,” “expect,” “going forward,” “intend,” “may,” “ought to,” “plan,” “project,” “seek,” “should,” “will,” “would” and the negative of these words and other similar expressions, as they relate to our Group or our management, are intended to identify forward- looking statements. Such statements reflect the current views of our management with respect to future events, operations, liquidity and capital resources, some of which may not materialize or may change. These statements are subject to certain risks, uncertainties and assumptions, including the other risk factors as described in this document. You are strongly cautioned that reliance on any forward-looking statements involves known and unknown risks and uncertainties. The risks and uncertainties our Company facing, which could affect the accuracy of forward-looking statements include, but are not limited to, the following:

• the timing of initiation and completion and the progress of our product design and research programs;

• our ability to advance our products, and the successful completion of clinical trials;

• the approval, pricing and potential reimbursement of our products;

• the commercialization progress of our products;

• future developments, trends and conditions in the industry and markets in which we operate;

• our strategies, plans, objectives and goals and our ability to successfully implement these strategies, plans, objectives and goals;

• our ability to control or reduce costs;

• our ability to identify and integrate suitable collaboration targets;

• our business prospects;

• general economic conditions;

–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. FORWARD-LOOKING STATEMENTS

• changes to regulatory and operating conditions in the industry and markets in which we operate;

• our financial condition and performance;

• our capital expenditure plans;

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

• capital market developments;

• the actions and developments of our competitors;

• our dividend policy;

• certain statements in the sections headed “Business” and “Financial Information” in this document with respect to trends in prices, operations, margins, overall market trends, and risk management; and

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

Subject to the requirements of applicable laws, rules and regulations, we do not have any and undertake no obligation to update or otherwise revise the forward-looking statements in this document, whether as a result of new information, future events or otherwise. As a result of these and other risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this document might not occur in the way we expect or at all. Accordingly, you should not place undue reliance on any forward-looking information. All forward-looking statements in this document are qualified by reference to the cautionary statements in this section.

In this document, statements of or references to our intentions or those of our Directors are made as of the date of this document. Any such information may change in light of future developments.

–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

Investment in our Shares involves significant risks. You should carefully consider all of the information in this document, including the risks and uncertainties described below, as well as our financial statements and the related notes, and the section headed “Financial Information”, before making an investment in our Shares. Our business, financial conditions and results of operation and growth prospects could be materially and adversely affected by any of these risks and uncertainties. The trading price of our Shares could decline due to any of these risks, and you may lose all or part of your investment. Additional risks and uncertainties not presently known to us, or not expressed or implied below, or that we deem immaterial, could also harm our business, financial condition and results of operations.

These factors are contingencies that may or may not occur, and we are not in a position to express a view on the likelihood of any such contingency occurring. The information given is as of the Latest Practicable Date unless otherwise stated, which will not be updated after the date hereof, and is subject to the cautionary statements in the section headed “Forward-looking Statements” in this document.

RISKS RELATING TO OUR BUSINESS

Risks Relating to Our Product Candidates

We have incurred net losses since our inception and may incur net losses for the foreseeable future, and you may lose substantially all your investments in us given the high risks involved in the medical device business.

Investment in medical device development is highly speculative. It entails substantial upfront capital expenditures and significant risk that a product candidate will fail to gain regulatory approval or become commercially viable. We continue to incur significant expenses related to our ongoing operations. As a result, we recorded net losses of RMB48.1 million and RMB129.0 million for the years ended December 31, 2019 and 2020, respectively. Substantially all of our operating losses were resulted from costs incurred in connection with R&D activities and administration.

We expect to incur net losses in the near future, and the losses may increase as we expand our development of, and seek regulatory approvals for, our product candidates, and commercialize our products. Research, development and commercialization of innovative medical devices typically involve lengthy and expensive process and takes many years to complete. In addition, we will start incurring costs associated with being a [REDACTED] company in Hong Kong after the [REDACTED]. We will also incur costs in support of our growth. The amount of our future net losses will depend, in part, on the number and scope of our product development programs and the associated costs of those programs, the cost of commercializing any approved products, our ability to generate revenues and the timing and amount of milestone events and other payments we make or receive with arrangements with third parties. If any of our product candidates fails in clinical trials or does not gain regulatory approval, or if approved, fails to obtain market acceptance, we may never become profitable. Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods. Our failure to become and remain profitable would decrease the value of our Company and could impair our ability to raise funds, maintain our R&D activities, expand our business or continue our operations.

–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 future growth substantially depends on the success of our product candidates. If we are unable to successfully complete clinical development, obtain regulatory approval and commercialize our product candidates successfully, or if we experience significant delays in doing so, our business will be materially and adversely affected.

Our business substantially depends on the successful development, regulatory approval and commercialization of our product candidates for the treatment of valvular heart disease, which are still in clinical development or design stage, in particular, our Core Product, ValveClamp, and other product candidates we may develop in the future. Clinical development is lengthy and expensive with uncertain outcome. We may fail in one or many clinical trials at any stage and could face major setbacks in the course of such trials or procedures even though the results of trials at early stage are promising. In addition, there can be significant variability in safety and/or efficacy results between different trials of the same product candidate due to numerous factors, such as changes in trial procedures set forth in protocols, differences in the size and type of the patient population, and the rate of dropout among clinical trial participants. We have invested a significant portion of our efforts and financial resources in the development of our existing product candidates. We incurred R&D costs of RMB29.4 million and RMB32.1 million for the years ended December 31, 2019 and 2020, respectively. We expect that huge and increasing expenses will continued to be incurred in respect of our product candidates. Whether we can generate profit from our operating activities largely depends on the successful commercialization of our product candidates. The success of our product candidates will depend on several factors, including but not limited to:

• successful enrolment in, and completion of, clinical trials, as well as completion of preclinical studies;

• favorable safety and efficacy data from our clinical trials and other studies;

• receipt of regulatory approvals;

• establishing commercial manufacturing capabilities, either by building facilities ourselves or making arrangements with third-party manufacturers;

• the performance by any third parties we may retain in a manner that complies with our protocols and applicable laws and that protects the integrity of the resulting data;

• obtaining and maintaining patent, trade secret and other intellectual property protection and regulatory exclusivity;

• ensuring we do not infringe, misappropriate or otherwise violate the patent, trade secret or other intellectual property rights of third parties;

• successfully launching our product candidates, if and when approved;

• obtaining favorable governmental and private medical reimbursement for our products, if and when approved;

• competition with other medical devices for valvular heart disease; and

• continued acceptable safety profile following regulatory approval.

–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

If we do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays or be unable to obtain approval for and/or to successfully commercialize our product candidates, which would materially harm our business and we may not be able to generate sufficient revenues and cash flows to continue our operations. Moreover, we will focus our investment in R&D projects and product candidates in respect of valvular heart diseases due to our limited resources in finance and management, as a result, we may abandon or delay other business opportunities for our product candidates that are proven to have greater commercial potential in future. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities.

If we encounter difficulties in enrolling patients in our clinical trials, our clinical development activities could be delayed or otherwise adversely affected.

The timely completion of clinical trials in accordance with their protocols depends, among other things, on our ability to enroll a sufficient number of patients who remain in the trial until its conclusion. We may experience difficulties in patient enrolment in our clinical trials for a variety of reasons, including:

• the size and nature of the patient group;

• the patient eligibility criteria defined in the protocol;

• the size of the study population required for analysis of the trial’s primary endpoints;

• the trial design;

• our ability to recruit clinical trial investigators with the appropriate competencies and experience;

• the patients’ perceptions as to the potential advantages and side effects of product candidates compared with other available products, product candidates or therapies; and

• the risk that patients enrolled in clinical trials may drop out or fail to return for post-treatment follow-up at a higher rate than anticipated.

Our clinical trials will likely compete with other clinical trials for product candidates that are in the same therapeutic areas as our product candidates. This competition will reduce the number and types of patients available to us, because some patients who might have opted to enroll in our trials may instead opt to enroll in a trial being conducted by our competitors. Because the number of qualified clinical investigators and clinical trial sites is limited, we expect to conduct some of our clinical trials at the same clinical trial sites that some of our competitors use, which will reduce the number of patients who are available for our clinical trials at such clinical trial sites. Even if we are able to enroll a sufficient number of patients

–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 in our clinical trials, delays in patient enrolment may result in increased costs or may affect the timing or outcome of the planned clinical trials, which could prevent completion of these trials and adversely affect our ability to advance the development of our product candidates.

If clinical trials of our product candidates fail to demonstrate safety and efficacy to the satisfaction of regulatory authorities or do not otherwise produce positive results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates.

Before obtaining regulatory approval for the sale of our product candidates, we must conduct extensive clinical trials to demonstrate the safety and efficacy of our product candidates in humans. We may experience numerous unexpected events during, or as a result of, clinical trials that could delay or prevent our ability to receive regulatory approval or commercialize our product candidates, including but not limited to:

• regulators, institutional review boards, or IRBs, or ethics committees may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site;

• our inability to reach agreements on acceptable terms with prospective CROs and hospitals as trial centers, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and hospitals as trial centers;

• manufacturing issues, including problems with manufacturing, supply quality, or obtaining sufficient quantities of a product candidate for use in a clinical trial;

• clinical trials of our product candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials, suspend or terminate product development programs;

• the number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrolment may be insufficient or slower than we anticipate or patients may drop out at a higher rate than we anticipate;

• our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all;

• we might have to suspend or terminate clinical trials of our product candidates for various reasons, including a finding of a lack of clinical response or other unexpected characteristics or a finding that participants are being exposed to unacceptable health risks;

–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

• regulators, IRBs or ethics committees may require that we or our investigators suspend or terminate clinical research or not rely on the results of clinical research for various reasons, including non-compliance with regulatory requirements;

• the cost of clinical trials of our product candidates may be greater than we anticipate; and

• the supply or quality of our product candidates, companion diagnostics or other materials necessary to conduct clinical trials of our product candidates may be insufficient or inadequate.

If we are required to conduct additional clinical trials or other testing of our product candidates beyond those that we currently contemplate, if we are unable to successfully complete clinical trials of our product candidates or other testing, if the results of these trials or tests are not positive or are only modestly positive or if they raise safety concerns, we may (i) be delayed in obtaining regulatory approval for our product candidates; (ii) not obtain regulatory approval at all; (iii) obtain approval for modified or narrowed indications; (iv) have the product removed from the market after obtaining regulatory approval; (v) be subject to additional post-marketing testing requirements; (vi) be subject to restrictions on how the product is distributed or used; or (vii) be unable to obtain reimbursement for use of the product.

If we experience delays in the completion of, or the termination of, a clinical trial of any of our product candidates, the commercial prospects of that product candidate will be harmed, and our ability to generate product sales revenues from any of those product candidates will be delayed. In addition, any delays in completing our clinical trials will increase our costs, slow down our product candidate development and approval process, and jeopardize our ability to commence product sales and generate related revenues for that candidate. Any of these occurrences may harm our business, financial condition and prospects significantly.

If we do not introduce new products in a timely manner, our products may become obsolete and our operating results may suffer.

Heart valve disease medical treatment device industry is characterized by technological changes, frequent new product introductions, and evolving industry standards. Without the timely introduction of new and improved products, our products could become technologically obsolete or more susceptible to competition and our revenue and operating results would suffer. Even if we develop new or improved products, our ability to market them could be limited by the need for regulatory clearance, restrictions imposed on approved indications, entrenched patterns of clinical practice, uncertainty over third-party reimbursement, or other factors. We devote significant financial and other resources to our R&D activities. We incurred R&D costs of RMB29.4 million and RMB32.1 million for the years ended December 31, 2019 and 2020, respectively. The R&D process is lengthy and entails considerable uncertainty. Products we are currently developing may not complete the development process or obtain the regulatory or other approvals required to market such products in a timely manner or at all. Our competitors may apply for marketing approvals for medical device with the same intended use as our

–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 product candidates in China or other countries. The ability of relevant departments such as NMPA to simultaneously review multiple sales applications for the same type of innovative medical device may be restricted.

As a result, we may be unable to maintain or enhance our market share or achieve our targeted market share in this industry. Even if successfully developed and subsequently approved by regulatory authorities, our product candidates may face competition based on their safety and efficacy, the timing and scope of the regulatory approvals, the availability and cost of supply, marketing and sales capabilities, reimbursement coverage, price, patent position and other factors. Our commercial opportunities could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer severe adverse events, or are less expensive than any products that we commercialize or may develop. As a result, our products may become obsolete overtime and we may lose our market share.

Technical innovations often require substantial time and investment before we can determine their commercial viability. We may not have the financial resources necessary to fund all of these projects. In addition, even if we are able to successfully develop new or improved products, they may not produce revenue in excess of the costs of development or achieve the desired financial return, and they may be rendered obsolete or less competitive by changing customer preferences or the introduction by our competitors of products with newer technologies or features or other factors.

We may not be successful in developing, enhancing or adapting to new technologies and methodologies.

We must keep pace with new technologies and methodologies to maintain our competitive position. We must continue to invest significant amounts of human and capital resources to develop or acquire technologies that will allow us to enhance the scope and quality of our clinical trials. We intend to continue to enhance our technical capabilities in research, development and manufacturing, which are lengthy and expensive. We cannot assure you that we will be able to develop, enhance or adapt to new technologies and methodologies, successfully identify new technological opportunities, develop and bring new or enhanced products to market, obtain sufficient or any patent or other intellectual property protection for such new or enhanced products, or obtain the necessary regulatory approvals in a timely and cost-effective manner, or, if such products are introduced, that those products will achieve market acceptance. Any failure to do so could harm our business and prospects.

–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

Risks Relating to Extensive Government Regulations

All material aspects of the research, development and commercialization of our products are heavily regulated.

All jurisdictions in which we conduct our research, development and commercialization activities regulate these activities in great depth and detail. We focus our activities in the major market of China and may expand our market overseas. These geopolitical areas all have strict regulation on medical devices, and in doing so they employ broadly similar regulatory strategies, including regulation of product development, approval, manufacturing, sales and marketing and distribution of medical devices. However, there are differences in the regulatory regimes in different regions, which makes regulatory compliance more complex and costly for companies like us that plan to operate in each of these regions.

The process of obtaining regulatory approvals and compliance with appropriate laws and regulations require substantial time and financial resources. Failure to comply with the applicable requirements at any time during the product development process, approval process, or after approval, may subject an applicant to administrative or judicial sanctions. These sanctions could include a regulator’s refusal to approve pending applications, withdrawal of an approval, license revocation, a clinical hold, voluntary or mandatory product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties. The failure to comply with these regulations could have a material adverse effect on our business, financial condition and prospects.

Changes in regulatory requirements and guidance may also occur, and we may need to amend clinical trial protocols submitted to applicable regulatory authorities to reflect these changes. Amendments may require us to resubmit clinical trial protocols to IRBs or ethics committees for reexamination, which may impact the costs, timing or successful completion of a clinical trial.

The process to develop, obtain regulatory approval for and commercialize medical device product candidates is long, complex and costly both inside and outside China. Even if our product candidates were to successfully obtain approval from the regulatory authorities, any approval might significantly limit the approved indications for use, or require that precautions, contraindications or warnings be included on the product labeling, or require expensive and time-consuming post-approval clinical trials or surveillance as conditions of approval. Following an approval for commercial sale of our product candidates, certain changes to the product, such as changes in manufacturing processes and additional labeling claims, may be subject to additional review and approval by the NMPA and/or comparable regulatory authorities. Regulatory approvals for any of our product candidates may also be withdrawn. If we are unable to obtain regulatory approval for our product candidates in one or more jurisdictions, or any approval contains significant limitations, our target market will be reduced and our ability to realize the full market potential of our product candidates will be harmed. Furthermore, we may not be able to obtain sufficient funding or generate sufficient revenue and cash flows to continue the development of any other product candidate in the future.

–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

Undesirable adverse events caused by our product candidates could interrupt, delay or halt clinical trials, delay or prevent regulatory approval, limit the commercial profile of an approved label, or result in significant negative consequences following any regulatory approval.

Undesirable adverse events caused by our product candidates could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the NMPA or other comparable regulatory authority, or could result in limitations or withdrawal following approvals. If results of our trials reveal a high and unacceptable severity or prevalence of adverse events, our trials could be suspended or terminated and the NMPA or other comparable regulatory authorities could order us to cease further development of, or deny approval of, our product candidates.

Adverse events have been reported in our clinical trials which could affect patient recruitment or the ability of enrolled subjects to complete the trial, and could result in potential product liability claims. Any of these occurrences may harm our reputation, business, financial condition and prospects significantly. In this document and from time to time, we disclose clinical results for our product candidates, including the occurrence of adverse events and serious adverse events. Each such document speaks only as of the date of the data cutoff used in such document, and we undertake no duty to update such information unless required by applicable law.

Our product candidates and future products will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated problems with our product candidates.

Our product candidates that are approved by the regulators are and will be subject to ongoing regulatory requirements with respect to manufacturing, labeling, packaging, storage, advertising, promotion, sampling, record-keeping, conducting post-market studies, submission of safety, efficacy, and other post-market information, and other requirements of regulatory authorities in China and/or other countries.

Manufacturers and manufacturing facilities are required to comply with extensive regulatory requirements from the NMPA and/or other comparable authorities. As such, we are and will be subject to continual review and inspections by the regulators in order to assess our compliance with applicable laws and requirements and adherence to commitments we made in any application materials with the NMPA or other authorities. Accordingly, we must continue to devote time, money and effort in all areas of regulatory compliance.

–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

The regulatory approvals that we receive for our product candidates are and may be subject to limitations on the indicated uses for which our product may be marketed. The approvals we obtain may also be subject to other conditions which may require potentially costly post-marketing testing and surveillance to monitor the safety and efficacy of our product candidates. Such limitations and conditions could adversely affect the commercial potential of our products.

The NMPA or comparable regulatory authorities may seek to impose a consent decree or withdraw marketing approval if we fail to maintain compliance with these ongoing regulatory requirements or if problems occur after the product reaches the market. Later discovery of previously unknown problems with our product candidates or with our manufacturing processes may result in revisions to the approved labeling or requirements to add new safety information; imposition of post-market studies or clinical studies to assess new safety risks; or imposition of distribution restrictions or other restrictions. Other potential consequences include, among other things:

• restrictions on the marketing or manufacturing of our products, withdrawal of the product from the market, or voluntary or mandatory product recalls;

• fines, untitled or warning letters, or holds on clinical trials;

• refusal by the NMPA or comparable regulatory authorities to approve pending applications or supplements to approved applications filed by us or suspension or revocation of license approvals or withdrawal of approvals;

• product seizure or detention, or refusal to permit the import or export of our product candidates;

• a severe decrease in the demand for, and sales of, the relevant products;

• we could be sued and held liable for harm caused to subjects or patients; and/or

• injunctions or the imposition of civil or criminal penalties.

The NMPA and other regulatory authorities strictly regulate the marketing, labeling, advertising and promotion of products placed on the market. Products may be promoted only for their approved indications and for use in accordance with the provisions of the approved label. The NMPA and other regulatory authorities actively enforce the laws and regulations prohibiting the promotion of off-label uses, and any company that is found to have improperly promoted off-label uses may be subject to significant liability. The policies of the NMPA and other regulatory authorities may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates. We cannot predict the likelihood, nature or extent of governmental policies or regulations that may arise from future legislation or administrative actions in China or abroad, where the regulatory environment is constantly evolving. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are unable to maintain regulatory compliance, we may lose any regulatory approval that we have obtained and we may not achieve or sustain profitability.

–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

If our product candidates and new products are not produced in compliance with the quality standards required under applicable laws, our business and reputation could be harmed, and our revenue and profitability could be materially and adversely affected.

Our production and manufacturing processes are required to meet certain quality standards. We have established internal quality control policies and adopted standardized operating procedures in order to prevent quality issues with respect to our products and operation processes. For further details of our internal quality control policies, see “Business – Quality Control.” Despite our quality control policies and procedures, we cannot eliminate the risk of product defects or failure. Quality defects may fail to be detected or remediated as a result of a number of factors, many of which are outside of our control, including:

• manufacturing errors;

• technical or mechanical malfunctions in the manufacture process;

• human error or malfeasance by our quality control personnel;

• tampering by third parties; and/or

• quality issues with the raw materials we produce or purchase.

In addition, failure to detect quality defects in our product candidates or new products or to prevent such defective products from being delivered to end-users could result in patient injury or death, product recalls or withdrawals, license revocation or regulatory fines, product liabilities or other problems that could seriously harm our reputation and business, expose us to liability, and materially and adversely affect our revenue and profitability.

Recently enacted and future legislation may increase the difficulty and cost for us to obtain regulatory approval of and commercialize our product candidates and affect the prices we may obtain.

In China and some other jurisdictions, a number of legislative and regulatory changes and proposed changes regarding healthcare could prevent or delay regulatory approval of our product candidates, restrict or regulate post-approval activities and affect our ability to profitably sell any product candidates for which we obtain regulatory approval. In recent years, there have been and will likely continue to be efforts to enact administrative or legislative changes to healthcare laws and policies, including measures which may result in more rigorous coverage criteria and downward pressure on the price that we receive for any approved product. Any reduction in reimbursement from government programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize our products.

–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

Legislative and regulatory proposals have been made to expand post-approval requirements and restrict sales and promotional activities for medical devices. We cannot be sure whether additional legislative changes will be enacted, or whether NMPA regulations, guidance or interpretations will be changed, or what the impact of such changes on the regulatory approvals of our product candidates, if any, may be. For example, the Regulations on the Supervision and Administration of Medical Device was passed at the executive meeting of the State Council on December 21, 2020; and the revised draft amendment to the Regulations on the Supervision and Administration of Medical Devices was (the “Draft Amendment”) passed and will be officially promulgated on June 1, 2021, the requirements of clinical trials, sales and regulation would be changed. The impact of these more specific requirements and whether it will adversely affect the registration of our product candidates with NMPA is yet to be observed.

We are subject to stringent privacy laws, information security policies and contractual obligations related to data privacy and security, and we may be exposed to risks related to our management of the medical data of subjects enrolled in our clinical trials and other personal or sensitive information.

We routinely receive, collect, generate, store, process, transmit and maintain medical data, treatment records and other personal details of the subjects enrolled in our clinical trials, along with other personal or sensitive information. As such, we are subject to the relevant local, national and international data protection and privacy laws, directives regulations and standards, as well as contractual obligations that apply to the collection, use, retention, protection, disclosure, transfer and other processing of personal data in the various jurisdictions in which we operate and conduct our clinical trials. These data protection and privacy law regimes continue to evolve and may result in ever-increasing public scrutiny and escalating levels of enforcement and sanctions and increased costs of compliance. Failure to comply with any of these laws could result in enforcement action against us, including fines, imprisonment of company officers and public censure, claims for damages by customers and other affected individuals, damage to our reputation and loss of goodwill, any of which could have a material adverse effect on our business, financial condition, results of operations or prospects.

Data protection and privacy laws and regulations generally require clinical trial sponsors and operators and their personnel to protect the privacy of their enrolled subjects and prohibit unauthorized disclosure of personal information. If such institutions or personnel divulge the subjects’ private or medical records without their consent, they will be held liable for damage caused thereby. The personal information of patients or subjects for our clinical trials is highly sensitive and we are subject to strict requirements under the applicable privacy protect regulations in the relevant jurisdictions. Whilst we have adopted security policies and measures to protect our proprietary data and patients’ privacy, privacy leakage incidents might not be avoided due to hacking activities, human error, employee misconduct or negligence or system breakdown. We also cooperate with third parties including hospitals, CROs and other third-party contractors and consultants for our clinical trials and operations. Any leakage or abuse of patient data by our third-party partners may be perceived by the patients as a result

–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 of our failure. In particular, certain industry-specific laws and regulations may affect the collection and transfer of personal data in China, including The Interim Measures for the Administration of Human Genetic Resources (《人類遺傳資源管理暫行辦法》) and the implementation guidelines issued by the Ministry of Science and Technology and Ministry of Health. It is possible that these laws and regulations may be interpreted and applied in a manner that is inconsistent with our clinical trial practices, potentially resulting in the confiscation of human genetic resources samples and associated data and administrative fines. Furthermore, any change in such laws and regulations could affect our ability to use medical data and subject us to liability for the use of such data for previously permitted purposes. Any failure or perceived failure by us to prevent information security breaches or to comply with privacy policies or privacy-related legal obligations, or any compromise of information security that results in the unauthorized release or transfer of personally identifiable information or other patient data, could cause our customers to lose trust in us and could expose us to legal claims.

Complying with all applicable laws, regulations, standards and obligations relating to data privacy, security, and transfers may cause us to incur substantial operational costs or require us to modify our data processing practices and processes. Non-compliance could result in proceedings against us by data protection authorities, governmental entities or others, including class action privacy litigation in certain jurisdictions, which would subject us to significant fines, penalties, judgments and negative publicity. In addition, if our practices are not consistent or viewed as not consistent with legal and regulatory requirements, including changes in laws, regulations and standards or new interpretations or applications of existing laws, regulations and standards, we may become subject to audits, inquiries, whistleblower complaints, adverse media coverage, investigations, loss of export privileges, severe criminal or civil sanctions and reputational damage. Any of the foregoing could have a material adverse effect on our competitive position, business, financial conditions, results of operations and prospects.

Risks Relating to Manufacture and Supply of our Product Candidates

Damage to, destruction of or interruption of production at our manufacturing facilities, or delays in completing our new manufacturing facilities could delay our development plans or commercialization efforts.

Our principal manufacturing facilities are located at our manufacturing base in Minhang, Shanghai, China. Our facilities may be harmed or rendered inoperable by physical damage from fire, floods, earthquakes, typhoons, tornadoes, power loss, telecommunications failures, break-ins and similar events. If our manufacturing facilities or the equipment are damaged or destroyed, we may not be able to quickly or inexpensively replace our manufacturing capacity or replace it at all. In the event of a temporary or protracted damage of the facilities or equipment, we might not be able to transfer manufacturing to a third party. Even if we could transfer manufacturing to a third party, the shift would likely be expensive and time- consuming, particularly since the new facility would need to comply with the necessary regulatory requirements and we would need regulatory agency approval before selling any products manufactured at that facility. Such an event could delay our clinical trials or reduce

–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 our product sales. Any interruption in manufacturing operations at our manufacturing facilities could result in our inability to satisfy the demands of our clinical trials or commercialization. Any disruption that impedes our ability to manufacture our product candidates or future products in a timely manner could materially harm our business, financial condition and operating results.

We have purchased insurance for our assets. However, our insurance coverage may not reimburse us, or may not be sufficient to reimburse us, for any expenses or losses we may suffer. We may be unable to meet our requirements for our product candidates if there were a catastrophic event or failure of our manufacturing facilities or processes.

The manufacture of our products is highly complex and subject to strict quality controls. If we or any of our suppliers or logistics partners encounters manufacturing, logistics, or quality problems, including as a result of natural disasters, our business could suffer.

The manufacture of many of our products is highly complex and subject to strict quality controls, due in part to rigorous regulatory requirements. In addition, quality is extremely important due to the serious and costly consequences of a product failure. Problems can arise during the manufacturing process for a number of reasons, including equipment malfunction, failure to follow protocols and procedures, raw material problems, software problems, or human error. Furthermore, if contaminants are discovered in our supply of our product candidates or in the manufacturing facilities, such manufacturing facilities may need to be closed for an extended period of time to investigate and remedy the contamination. Stability failures and other issues relating to the manufacture of our product candidates could occur in the future. Although closely managed, disruptions can occur during implementation of new equipment and systems to replace aging equipment, as well as during production line transfers and expansions. As we expand into new markets, we may face unanticipated surges in demands for our products which could strain our production capacity. If these problems arise or if we otherwise fail to meet our internal quality standards or those of the NMPA or other applicable regulatory body, which include detailed record-keeping requirements, our reputation could be damaged, we could become subject to a safety alert or a recall, we could incur product liability and other costs, product approvals could be delayed, and our business could otherwise be adversely affected.

If we fail to increase our production capacity as planned, our business prospects could be materially and adversely affected.

We may need to increase or scale up the production capacity and utilization rate to supply our products in sufficient volumes to meet market demand. Advances in manufacturing techniques may render our facilities and equipment inadequate or obsolete, and therefore we may also need to develop advanced manufacturing techniques and process controls in order to fully utilize our facilities Also, we may need to employ more task personnel to enhance our production capacity. If we are unable to do so, or if the process to do so is delayed, or if the

–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 cost of this scale up is not economically feasible for us or we cannot find a third-party supplier, we may not be able to supply our products in a sufficient quantity to meet future demand, which would limit our development and commercialization activities and our opportunities for growth.

We are planning to expand our production capacities by adding new manufacturing facilities in Xinzhuang, Minhang, Shanghai. New manufacturing facilities are intended to be used for manufacturing our product candidates upon approval. Changes in the manufacturing process or procedure, including a change in the location where the product is manufactured, require prior review by regulatory authorities and/or approval of the manufacturing process and procedures in accordance with applicable requirements. This review may be costly and time-consuming and could delay or prevent the launch of a product. The new facility will also be subject to pre-approval inspection. In addition, we have to demonstrate that the products made at the new facility are equivalent to the products made at the former facility and thus satisfying the relevant product requirements, which are costly and time consuming. Regulatory authorities may also require clinical testing as a way to prove equivalency, which would result in additional costs and delay.

Our ability to successfully implement our expansion plan is subject to a number of risks, including our ability to obtain the requisite permits, licenses and approvals for the construction and operation of the new production lines, the risk of construction delays, as well as our ability to timely recruit sufficient qualified staff to support the increase in production capacity. Consequently, there can be no assurance that we will be able to increase our overall production capacity or develop advanced manufacturing techniques and process controls in the manner we contemplate, or at all. In the event we fail to increase our production capacity or develop advanced manufacturing techniques and process controls, we may not capture the expected growth in demand for our products, or to successfully commercialize new products, each of which could materially and adversely affect our business prospects. Moreover, our plans to increase our production capacity require significant capital investment, and the actual costs of our expansion plan may exceed our original estimates, which could materially and adversely affect the realization of expected return on our expenditures.

There can be no assurance that our existing and future production facilities will produce products in sufficient volumes in the event of any significant change in market demand. In such event, we may have to engage third parties to produce a portion of such products. Consequently, we are exposed to the risks of increased pricing for our sub-contracted production and that the third parties may not manufacture products meeting our specifications or in sufficient volumes to meet market demand. As a result, our sales volumes and margins for the relevant products could be materially and adversely affected.

–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

Fluctuations in prices of our raw materials may have a material adverse effect on us.

We rely on our suppliers for our business, which exposes us to risks associated with fluctuations in prices of raw materials, and reductions in the availability of raw materials may disrupt our operations. Raw materials we use for our manufacturing process primarily include PET polyester braid, PET coating, catheter sheath, and implantable PEEK and transvalvular ball. During the Track Record Period, our principal raw materials were generally available and sufficient for our demands, and the price of our principal raw materials from our suppliers was not affected by outbreak of COVID-19. However, we cannot assure you that this will continue to be the case in the future. The prices of PET polyester braid, PET coating, catheter sheath, and implantable PEEK and transvalvular ball or other raw materials may be affected by a number of factors, including market supply and demand, the PRC or international environmental and regulatory requirements, natural disasters and the PRC and global economic conditions. A significant increase in the costs of raw materials may increase our cost of sales and negatively affect our profit margins and, more generally, our business, financial conditions, results of operation and prospects.

We may experience supply interruptions that could harm our ability to manufacture products.

We purchase certain materials and components used in the manufacture of our products from external suppliers, and we purchase certain supplies from fixed sources for reasons of quality assurance, cost effectiveness, availability, or constraints resulting from regulatory requirements. We also imported materials from foreign suppliers. Our main suppliers of raw materials such as implantable PEEK are located in Germany.

General economic conditions could adversely affect the financial viability of our suppliers, resulting in their inability to provide materials and components used in the manufacture of our products. While we work closely with suppliers to monitor their financial viability, assure continuity of supply, and maintain high quality and reliability, these efforts may not be successful. In addition, due to the rigorous regulations and requirements of the NMPA and/or foreign regulatory authorities regarding the manufacture of our products (including the need for approval of any change in supply arrangements), we may have difficulty establishing additional or replacement sources in a timely manner or at all if the need arises. Certain suppliers may also choose to no longer provide service to medical device companies due to the high amount of requirements and regulation. Although we consider alternative supplier options, we typically do not pursue regulatory qualifications of alternative sources due to the strength of our existing supplier relationships and the time and expense associated with our internal validation process. A change in suppliers could require significant effort or investment in circumstances where the items supplied are integral to product performance or incorporate unique technology, and the loss of any existing supply contract could have a material adverse effect on us. A reduction in, or lack of availability of, raw materials or interruptions in the supply chain may also impact our profitability to the extent that we are required to pay higher prices for, or are unable to secure adequate supplies of, the necessary raw materials.

–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 Commercialization of Our Products

We face intensive competition, which may result in others discovering, developing or commercializing competing products before or more successfully than we do.

The development and commercialization of new products is highly competitive. We face competition from major medical devices producers in valvular heart diseases area worldwide. There are several multi-national and domestic companies having valvular heart diseases medical devices at or near commercial stage, or pursuing the development and undergoing clinical trials of medical device targeting the valvular heart diseases, especially mitral regurgitation and tricuspid regurgitation. Potential competitors also include academic institutions, government agencies and other public and private research organizations that conduct research, seek patent protection and establish collaborative arrangements for research, development, manufacturing and commercialization.

Our commercial opportunities could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer severe adverse events, are more convenient or are less expensive than our product candidates or any products that we may develop. Our competitors may also be applying for marketing approvals in China or other countries for medical device products with the same intended use as our product candidates. The ability of the relevant authorities, such as NMPA, to concurrently review multiple marketing applications for the same type of innovative medical device may be limited. When our product and its competing products are subject to the NMPA’s concurrent review, the NMPA’s schedule may be affected, and the registration process of our product may be prolonged. Moreover, our competitors may obtain approval from the NMPA, FDA or other comparable regulatory authorities for their products more rapidly than we do, which could result in our competitors establishing a strong market position before we are able to enter the market and/or slow our regulatory approval. Many of the companies against which we are competing have significantly greater financial resources and expertise in R&D, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than we do. Mergers and acquisitions in the medical device industries may result in even more resources being concentrated among a small number of our competitors. Smaller and other early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These third parties compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs. Our business and results of operations will suffer if we fail to compete effectively.

–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

We have not accumulated experience in sales and marketing activities, and we may not be able to build, expand or integrate our in-house sales and marketing team successfully.

Our product candidates are all under R&D stage, and there are no commercialized products. We have not accumulated experience in launching and commercializing our product candidates and sales and marketing of our products, including building a commercial team, conducting a comprehensive market analysis, obtaining licenses and approvals, or managing distributors and sales team for our product candidates. As a result, our ability to successfully commercialize our product candidates may involve more inherent risks, take longer and cost more than it would if we were a company with sufficient experience in launching product candidates.

The success of our sales and marketing efforts depends on our ability to attract, motivate and retain qualified and professional employees in our sales and marketing team who have, among other things, the sufficient expertise in structural heart diseases areas and are able to communicate effectively with medical professionals. Furthermore, since we expect to launch new products in the near future, we expect to hire additional employees with relevant medical device experience and knowledge to support our sales and marketing efforts. However, competition for experienced sales and marketing personnel is intense. If we are unable to attract, motivate and retain a sufficient number of qualified sales and marketing personnel to support our business, our business and results of operations may be negatively affected.

There is no guarantee that we will succeed in expanding and deepening hospital penetration after obtaining approvals for our product candidates.

Physicians and hospitals play important roles in recommending and deciding what products to be used. Physician and hospital receptiveness to our products depends on our ability to convince them as to the distinctive characteristics, advantages, safety and cost effectiveness of our products as compared to our competitors’ products, as well as to provide demonstrations on the proper application of our products. If our product candidates (upon commercialization) are not widely accepted by physician and hospitals, we may not be able to effectively market our product candidates upon commercialization. As we currently do not have any commercialized products, physicians require more time to learn to use our product candidates proficiently in the future, which may affect our ability to sell our products. Encouraging physicians to dedicate the time and energy necessary to become proficient in the use of our products remains challenging, and we may not be successful in these efforts. If physicians are not properly trained, they may misuse or ineffectively use our products. If we are unable to attract a sufficient number of qualified sales personnel to support our hospital penetration strategy, sales volumes or margin of our future products may be adversely affected and we may be unable to extend our hospital coverage and deepen our market penetration as contemplated. This may also result in unsatisfactory patient outcomes, patient injury, negative publicity or lawsuits against us, any of which could have a significant adverse effect on our reputation, business, financial condition, results of operations and prospects. We also rely on

–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 trained physicians to advocate the benefits of our products in the marketplace. If we do not receive support from such physicians, other physicians and hospitals may not use our products, and our results of operations may be adversely affected.

Our future sales may be affected by the level of medical insurance reimbursement for patients using our products.

Our ability to commercialize our products will depend in part on the extent to which reimbursement for our products and related treatments will be available to hospitals and other medical institutions ordering these product for use by their patients. In the absence of medical insurance coverage for the use of our product candidates upon commercialization, patients may choose alternative treatment methods, and hospitals may recommend such alternative treatments, which would reduce demand for our products and our sales which could in turn materially and adversely affect our business, financial condition and results of operation. Furthermore, we may need to lower the prices of our products in order to have them included in the medical insurance reimbursement list, and such price cut and reimbursement may not necessarily lead to increase in our sales and our results of operations may be adversely affected.

Risks Relating to Our Intellectual Property Rights

If we are unable to obtain and maintain patent protection for our product candidates through intellectual property rights, or if the scope of such intellectual property rights obtained is not sufficiently broad, third parties may compete directly against us.

Our success depends in large part on our ability to protect our proprietary technology and product candidates from competition by obtaining, maintaining and enforcing our intellectual property rights, including patent rights. We seek to protect the technology and product candidates that we consider commercially important by filing patent applications in the PRC and other countries, relying on trade secrets or medical regulatory protection or employing a combination of these methods. This process is expensive and time-consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. We may also fail to identify patentable aspects of our R&D output before it is too late to obtain patent protection. As a result, we may not be able to prevent competitors from developing and commercializing competitive products in all such fields and territories.

Patents may be invalidated or may be deemed invalid and patent applications may not be granted for a number of reasons, including known or unknown prior deficiencies in the patent application or the lack of novelty of the underlying invention or technology. We may also fail to identify patentable aspects of our R&D output in time to obtain patent protection. Although we enter into non-disclosure and confidentiality agreements or include such provisions in our relevant agreements with parties who have access to confidential or patentable aspects of our R&D output, such as our employees, consultants, advisors and other third parties, any of these parties may breach such agreements and disclose such output before a patent application is filed, jeopardizing our ability to seek patent protection. In addition, publications of discoveries

–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 in the scientific literature often lag behind the actual discoveries. Patent applications in China and other jurisdictions are typically not published until 18 months after filing, or in some cases, not at all. Under the Patent Law of the PRC (中華人民共和國專利法) promulgated by the Standing Committee of the NPC, as amended, invention patent applications are maintained in confidence until their publication at the end of 18 months from the filing date. The publication of discoveries in the scientific or patent literature frequently occurs substantially later than the date on which the underlying discoveries were made and the date on which patent applications were filed. Therefore, we cannot be certain that we were the first to make the inventions claimed in our patents or pending patent applications or that we were the first to file for patent protection of such inventions.

Furthermore, the PRC and, recently, the United States have adopted the “first-to-file” system under which whoever first files a patent application will be awarded the patent if all other patentability requirements are met. Under the first-to-file system, even after reasonable investigation we may be unable to determine with certainty whether any of our products, processes, technologies, inventions, improvement and other related matters have infringed upon the intellectual property rights of others, because such third party may have filed a patent application without our knowledge while we are still developing that product, and the term of patent protection starts from the date the patent was filed, instead of the date it was issued. Therefore, the validity of issued patents, patentability of pending patent applications and applicability of any of them to our programs may be lower in priority than third-party patents issued on a later date if the application for such patents was filed prior to ours and the technologies underlying such patents are the same or substantially similar to ours. In addition, we may be involved in claims and disputes of intellectual property infringement in other jurisdictions. In addition, under PRC patent law, any organization or individual that applies for a patent in a foreign country for an invention or utility model accomplished in China is required to report to the CNIPA, for confidentiality examination. Otherwise, if an application is later filed in China, the patent right will not be granted.

The coverage claimed in a patent application can be significantly reduced before the patent is issued, and its scope can be reinterpreted after issuance. Even if patent applications we license or own currently or in the future are to be issued as patents, they may not be issued in a form that will provide us with any meaningful protection, prevent competitors or other third parties from competing with us, or otherwise provide us with any competitive advantage. In addition, the patent position of medical device companies generally is highly uncertain, involves complex legal and factual questions, and has been the subject of much litigation in recent years. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain.

The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our patents may be challenged in the courts or patent offices in the PRC and other countries. We may be subject to a third-party pre-issuance submission of prior art to the CNIPA or other related intellectual property offices, or become involved in post-grant proceedings such as opposition, derivation, revocation and re-examination, or inter parties review, or interference proceedings or similar proceedings in foreign jurisdictions challenging

–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 our patent rights or the patent rights of others. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate our patent rights, allow third parties to commercialize our technology, products or product candidates and compete directly with us without payment to us, or result in our inability to manufacture or commercialize product candidates without infringing, misappropriating or otherwise violating third-party patent rights. Moreover, we may have to participate in interference proceedings declared by the CNIPA or other related intellectual property offices to determine priority of invention or in post-grant challenge proceedings, such as oppositions in a foreign patent office, that challenge the priority of our invention or other features of patentability of our patents and patent applications. Such challenges may result in loss of patent rights, loss of exclusivity, or in patent claims being narrowed, invalidated, or held unenforceable, which could limit our ability to stop others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of our technology and product candidates. Such proceedings also may result in substantial costs and require significant time from our scientists, experts and management, even if the eventual outcome is favorable to us. Consequently, we do not know whether any of our technologies, products or product candidates will be protectable or remain protected by valid and enforceable patents. Our competitors or other third parties may be able to circumvent our patents by developing similar or alternative technologies or products in a non-infringing manner.

Furthermore, although various extensions may be available, the life of a patent and the protection it affords is limited. Even if we successfully obtain patent protection, we may face competition for any approved product candidates once the patent life has expired for the product. The issued patents and pending patent applications, if issued, for our product candidates are expected to expire on various dates, as stated in the “Business – Intellectual Property” in this document. Upon the expiration of our issued patents or patents that may issue from our pending patent applications, we will not be able to assert such patent rights against potential competitors and our business and results of operations may be adversely affected.

Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such product candidates might expire before or shortly after such product candidates are commercialized. As a result, our patents and patent applications may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours. Moreover, some of our patents and patent applications may in the future be co-owned with third parties. If we are unable to obtain an exclusive license to any such third-party co-owners’ interest in such patents or patent applications, such co-owners may be able to license their rights to other third parties, including our competitors, and our competitors could market competing products and technology. In addition, we may need the cooperation of any such co-owners of our patents in order to enforce such patents against third parties, and such cooperation may not be provided to us. Any of the foregoing could have a material adverse effect on our competitive position, business, financial conditions, results of operations and prospects.

–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

We may not be able to protect our intellectual property rights.

Filing, prosecuting, maintaining and defending patents on product candidates in all countries throughout the world could be prohibitively expensive for us, and our intellectual property rights in some countries can have a different scope and strength from those in some other countries. In addition, the laws of certain countries do not protect intellectual property rights to the same extent as the laws of certain other countries do. Consequently, we may not be able to prevent third parties from practicing our inventions in all countries, or from selling or importing medical products made using our inventions in and into certain jurisdictions. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and further, may export otherwise infringing products to certain jurisdictions where we have patent protection but where enforcement rights are not as strong as those in certain other countries. These products may compete with our product candidates and our patent rights or other intellectual property rights may not be effective or adequate to prevent them from competing. As of the Latest Practicable Date, we owned 30 patents as well as 26 pending patent applications in China, as well as other oversea patents and patent applications, any of which may be the subject of a governmental or third-party objection, which could prevent the maintenance or issuance of the same. If we are unsuccessful in obtaining trademark protection for our primary brands or domain names for our operations, we may be required to change our brand names or domain names, which could materially adversely affect our business. Moreover, as our products mature, our reliance on our trademarks to differentiate us from our competitors will increase, and as a result, if we are unable to prevent third parties from adopting, registering or using trademarks and trade dress that infringe, dilute or otherwise violate our trademark rights, our business could be materially adversely affected.

Many companies have encountered significant problems in protecting and defending intellectual property rights in certain jurisdictions, including China. The legal systems of some countries do not favor the enforcement of patents, trade secrets and other intellectual property, particularly those relating to products, which could make it difficult in those jurisdictions for us to stop the infringement or misappropriation of our patents or other intellectual property rights, or the marketing of competing products in violation of our proprietary rights.

We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop.

–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. RISK FACTORS

We may become involved in lawsuits to protect or enforce our intellectual property, which could be expensive, time consuming and unsuccessful. Our patent rights relating to our product candidates could be found invalid or unenforceable if being challenged in court or before the CNIPA or courts or related intellectual property agencies in other jurisdictions.

Competitors may infringe our patent rights or misappropriate or otherwise violate our intellectual property rights. To counter infringement or unauthorized use, litigation may be necessary in the future to enforce or defend our intellectual property rights, to protect our trade secrets or to determine the validity and scope of our own intellectual property rights or the proprietary rights of others. This can be expensive and time consuming. Any claims that we assert against perceived infringers could also provoke these parties to assert counterclaims against us alleging that we infringe their intellectual property rights. Many of our current and potential competitors have the ability to dedicate substantially greater resources to enforce and/or defend their intellectual property rights than we can. Accordingly, despite our efforts, we may not be able to prevent third parties from infringing upon or misappropriating our intellectual property. An adverse result in any litigation proceeding could put our patents, as well as any patents that may issue in the future from our pending patent applications, at risk of being invalidated, held unenforceable or interpreted narrowly. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, some of our confidential information could be compromised by disclosure during this type of litigation. Defendant counterclaims alleging invalidity or unenforceability are commonplace, a third party can assert invalidity or unenforceability of a patent on numerous grounds. Third parties may also raise similar claims before administrative bodies in China or abroad, even outside the context of litigation. Such proceedings could result in revocation or amendment to our patents in such a way that they no longer cover and protect our products or product candidates. The outcome following legal assertions of invalidity and unenforceability is unpredictable. With respect to the validity of our patents, for example, we, our patent counsel, and the patent examiner could be unaware of invalidating prior art during prosecution. If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability, we would lose at least part, and perhaps all, of the patent protection on our products or product candidates. Such a loss of patent protection could have a material adverse impact on our business.

If third parties claim that we infringe upon their intellectual property rights, we may incur liabilities and financial penalties and may have to redesign or discontinue selling the affected product.

The medical device industry is litigious with respect to patents and other intellectual property rights. Companies operating in our industry routinely seek patent protection for their product designs, and many of our principal competitors have large patent portfolios. Companies in the medical device industry have used intellectual property litigation to gain a competitive advantage. Whether a product infringes a patent involves an analysis of complex legal and factual issues, the determination of which is often uncertain. We face the risk of claims that we have infringed on third parties’ intellectual property rights in the countries where we operate, principally China. In addition, a number of our employees have previously

–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. RISK FACTORS worked for one or more of our competitors. There can be no assurance that such employees have not used, or will not use in the future, their previous employers’ proprietary know-how or trade secrets in their work for us, which could result in litigation against us. Prior to developing major new products, we evaluate existing intellectual property rights. However, our competitors may also have filed for patent protection which is not as yet a matter of public knowledge or claim trademark rights that have not been revealed through our searches of relevant public records. Our efforts to identify and avoid infringing on third parties’ intellectual property rights may not always be successful. Any claims of patent or other intellectual property infringement, regardless of their merit, could:

• be expensive and time-consuming to defend;

• require us to pay substantial damages to third parties;

• forbid us from making or selling products that incorporate the challenged intellectual property;

• require us to redesign, reengineer or rebrand our products, if feasible;

• require us to enter into royalty or licensing agreements in order to obtain the right to use a third party’s intellectual property, which agreements may not be available on terms acceptable to us or at all;

• divert the attention of our management; or

• result in hospitals and physicians terminating, deferring or limiting their purchase of the affected products until resolution of the litigation.

In addition, new patents obtained by our competitors could threaten a product’s continued life in the market even after it has already been introduced.

Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment, and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.

Periodic maintenance fees on any issued patent are due to be paid to the CNIPA and other patent agencies in several stages over the lifetime of the patent. The CNIPA and various governmental patent agencies require compliance with a number of procedural, documentary, fee payment, and other similar provisions during the patent application process. Although an inadvertent lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, non-compliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Non-compliance events that could result in abandonment or lapse of a patent or

–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. RISK FACTORS patent application include failure to respond to official actions within prescribed time limits, non-payment of fees, and failure to properly legalize and submit formal documents. In any such event, our competitors might be able to enter the market, which would have a material adverse effect on our business.

Changes in patent law could diminish the value of patents in general, thereby impairing our ability to protect our product candidates.

Depending on decisions by the NPC and the CNIPA, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future. There could also be changes in the laws of other jurisdictions that may impact the value of our patent rights or our other intellectual property rights. For example, the United States has enacted and is currently implementing wide-ranging patent reform legislation. Recent United States Supreme Court rulings have narrowed the scope of patent protection available in certain circumstances and weakened the rights of patent owners in certain situations. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents once obtained, if any. In addition, the patent position of medical device enterprises is generally highly uncertain, involving complex legal and practical issues, and has become the cause of many litigation in recent years. Therefore, the issuance, scope, validity, enforceability and commercial value of our patents are highly uncertain.

If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed. We may be subject to claims that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.

In addition to our issued patent and pending patent applications, we rely on trade secrets, including unpatented know-how, technology and other proprietary information, to maintain our competitive position and to protect our product candidates. We seek to protect these trade secrets, in part, by entering into non-disclosure and confidentiality agreements or include such undertakings in the agreement with parties that have access to them, such as our employees, collaborators and other third parties. We also enter into confidentiality agreements with our R&D personnel that includes undertakings regarding assignment of inventions and discoveries. However, any of these parties may breach such agreements and disclose our proprietary information, and we may not be able to obtain adequate remedies for such breaches. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret can be difficult, expensive and time-consuming, and the outcome is unpredictable. If any of our trade secrets were lawfully obtained or independently developed by a competitor, we would have no right to prevent them from using that technology or information to compete with us and our competitive position would be harmed.

Furthermore, a number of our employees, including our senior management, were previously employed at other medical device companies, including our competitors or potential competitors. Some of these employees, including each member of our senior management, may

–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. RISK FACTORS have had executed proprietary rights, non-disclosure and non-competition agreements in connection with such previous employment. Although we have internal policies in place governing the use of proprietary information or know-hows, we may be subject to claims that we or these employees have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such employee’s former employer. We are not aware of any material threatened or pending claims related to these matters or concerning the agreements with our senior management, but in the future litigation may be necessary to defend against such claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management.

In addition, while we typically require our employees involved in the development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who in fact develops intellectual property that we regard as our own, which may result in claims by or against us related to the ownership of such intellectual property. If we fail in prosecuting or defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights. Even if we are successful in prosecuting or defending against such claims, litigation could result in substantial costs and be a distraction to our management and scientific personnel.

RISKS RELATING TO OUR FINANCIAL POSITION AND NEED FOR ADDITIONAL CAPITAL

We will need to obtain additional financing to fund our operations and we had net cash outflows from our operating activities during the Track Record Period. If we are unable to obtain that financing, we may be unable to complete the development and commercialization of our product candidates.

Our product candidates will require completion of clinical development, regulatory review, significant marketing efforts and substantial investment before they can provide us with product sales revenue. Our operations have consumed substantial amounts of cash since inception. Our operating activities used net cash of RMB34.4 million and RMB33.7 million for the year ended December 31, 2019 and 2020, respectively. We cannot assure you that we will be able to generate positive cash flows from operating activities in the future. Our liquidity and financial condition may be materially and adversely affected by negative net cash flows, and we cannot assure you that we will have sufficient cash from other sources to fund our operations. If we resort to other financing activities to generate additional cash, we will incur financing costs and we cannot guarantee that we will be able to obtain the financing on terms acceptable to us, or at all, and if we raise funds by issuing further equity securities, your interest in our Company may be diluted. If we continue to have negative operating cash flows in the future, our liquidity and financial condition may be materially and adversely affected.

–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. RISK FACTORS

We expect to continue to spend substantial amounts on R&D, advancing the clinical development of our product candidates, and launching and commercializing any product candidates for which we receive regulatory approval, including building our own commercial organization to address China and other markets. Our existing cash and cash equivalents may not be sufficient to enable us to complete all development or commercially launch all of our current product candidates for the anticipated indications and to invest in additional programs. Accordingly, we will require further funding through public or private offerings, debt financing, collaboration and licensing arrangements or other sources. We cannot assure you that our financial resources will be adequate to support our operations. Our future funding requirements will depend on many factors, including:

• the progress, timing, scope and costs of our clinical trials, including the ability to timely enroll patients in our planned and potential future clinical trials;

• the outcome, timing and cost of regulatory approvals of our product candidates;

• the number and characteristics of product candidates that we may develop;

• the cost of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;

• selling and marketing costs associated with any existing or future product candidates that may be approved, including the cost and timing of expanding our marketing and sales capabilities;

• the terms and timing of any potential future collaborations, licensing or other arrangements that we may establish;

• cash requirements of any future acquisitions and/or the development of other product candidates;

• the cost and timing of development and completion of commercial-scale internal or outsourced, if any, manufacturing activities; and/or

• our headcount growth and associated costs.

Adequate additional funding may not be available to us on acceptable terms, or at all. If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our R&D programs or future commercialization efforts.

–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. RISK FACTORS

We have historically received government grants and subsidies for our R&D activities and we may not receive such grants or subsidies in the future.

We have historically received government grants for compensation of expenditure arising from research and clinical trials activities, awards for the development of new medical devices and capital expenditure incurred on certain projects. For the years ended December 31, 2019 and 2020, we received government grants of RMB3.3 million and RMB13.6 million, respectively. For further details of our government grants, please refer to the paragraph headed “Financial Information – Discussion of Certain Items in the Consolidated Statements of Profit or Loss and Other Comprehensive Income – Other Income and Gains” in this document. Our eligibility for government grants is dependent on a variety of factors, including the assessment of our improvement on existing technologies, relevant government policies, the availability of funding at different granting authorities and the R&D progress made by other peer companies. In addition, the policies according to which we historically received government grants may be halted by the relevant government entities at their sole discretion. There is no assurance that we will continue to receive such government grants or receive similar level of government grants, or at all, in the future.

Raising additional capital may cause dilution to our Shareholders, restrict our operations or require us to relinquish rights to our technologies or product candidates.

We may seek additional funding through a combination of equity offerings, debt financings, collaborations and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a holder of our Shares. The incurrence of additional indebtedness or the issuance of certain equity securities could result in increased fixed payment obligations and could also result in certain additional restrictive covenants, such as limitations on our ability to incur additional debt or issue additional equity, limitations on our ability to acquire or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. In addition, issuance of additional equity securities, or the possibility of such issuance, may cause the market price of our Shares to decline. In the event that we enter into collaborations or licensing arrangements in order to raise capital, we may be required to accept unfavorable terms, including relinquishing or licensing to a third party on unfavorable terms our rights to technologies or product candidates that we otherwise would seek to develop or commercialize ourselves or potentially reserve for future potential arrangements when we might be able to achieve more favorable terms.

Share-based payments may cause shareholding dilution to our existing Shareholders and have a material and adverse effect on our financial performance.

We adopted the share award scheme for the benefit of our directors and employees to incentivize and reward the eligible persons who have contributed to the success of our Company. For the years ended December 31, 2019 and 2020, we incurred equity-settled share award expenses for our directors and employees of nil and RMB56.8 million, respectively. To

–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. RISK FACTORS further incentivize our directors and employees to contribute to us, we may grant additional share-based compensation in the future. Issuance of additional Shares with respect to such share-based payment may dilute the shareholding percentage of our existing Shareholders. Expenses incurred with respect to such share-based payment may also increase our operating expenses and therefore have a material and adverse effect on our financial conditions.

RISKS RELATING TO OUR OPERATIONS

We have a limited operating history, which may make it difficult to evaluate our current business and predict our future performance.

We were established in December 2016. Our operations to date have focused on business planning, raising capital, establishing our intellectual property portfolio, conducting preclinical studies and clinical trials of our product candidates and the commercialization of our products. We have not yet commenced commercial manufacturing of our products. We have only generated insignificant revenue from pet treatments and pet medical and health service during the Track Record Period. Our limited operating history, particularly in light of the rapidly evolving valvular heart disease field, may make it difficult to evaluate our current business and reliably predict our future performance. We may encounter unforeseen expenses, difficulties, disputes, delays and other known and unknown factors. If we do not address these risks and difficulties successfully, our business will suffer.

Our operations and business plans may be adversely affected by the COVID-19 pandemic.

Since early 2020, a growing number of countries and regions around the world have encountered an outbreak of COVID-19 or Novel Coronavirus Pneumonia, a highly contagious disease known to cause respiratory illness. On March 11, 2020, the World Health Organization announced the COVID-19 outbreak a pandemic. The spread of COVID-19 continues to affect Mainland China, where we conduct our business and engage in substantial pre-clinical studies and clinical trials. It is difficult to predict the impact that COVID-19 will have on our business or our industry. Our business, including our existing and future clinical and pre-clinical trials, as well as our ability to continue to manage it effectively, could be impacted by the current pandemic or future continuance or reoccurrence of COVID-19 in numerous ways, including but not limited to: (i) delay in subjects enrolment for our clinical trials; (ii) delay or interruption of the supply of the resources for our clinical trials due to the travel restrictions or other disease containment measures of affected cities; (iii) requirements for us to quarantine certain of our employees or facilities or take extra security precautions for our operations, which may result in higher costs; (iv) lowered demand by hospitals for our products, as many patients rescheduled their visits to hospitals to avoid cross-infections; (v) diversion of medical resources required for our clinical trials for the treatment of patients with COVID-19; (vi) temporary closure or flexible working hours of competent regulatory authorities, such as drug administration and registration authorities, which may delay regulatory submissions and required approvals of our product candidates, and could cause us to incur additional costs and affect our ability to carry out our operations as planned.

–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. RISK FACTORS

The full effects of the current COVID-19 pandemic or future outbreaks on our business or our industry will depend on a number of factors outside our control, including the extent to which the current pandemic continues to spread, particularly in China, and the level of the medical resources needed to treat COVID-19 patients in China and other countries, as well as the impact of COVID-19 on our employees, subject participating in our clinical trials, the personnel necessary to continue our clinical trials and our CROs, and such effects could be material. Furthermore, we cannot predict when the COVID-19 outbreak will become completely under control and we cannot guarantee that the COVID-19 outbreak will not worsen. Having considered that the past occurrences of epidemics, depending on their scale, have caused different degrees of damage to the national and local economies in China, the COVID-19 outbreak and any other public health crisis in China especially in the cities where we have presence, may result in material disruptions to our operations, which in turn may materially and adversely affect our financial condition and results of operations.

Our future success depends on our ability to retain key personnel in our R&D team, and executives and to attract, hire, retain and motivate qualified personnel and highly skilled personnel.

Our business and growth depend on the continuous service of our senior management, the products under research by our R&D team and future products to be promoted by sales and marketing team. We have signed formal employment agreements with our employees, but these agreements do not prevent them from terminating their employment relationship with us at any time. We have not purchased key person insurance for any of our senior executives or other employees. The resignation of any of these personnel may hinder us from achieving our R&D, development, and commercialization goals.

The turnover of our senior executives or other key employees may prevent us from achieving our research, development and commercialization goals and severely undermine our ability to successfully implement business strategies.

In addition, changing senior executives or key employees may be difficult and time-consuming due to the limited number of people in our industry with extensive skills and experiences required for successful development, regulatory approval obtainment and product commercialization. The competition of recruiting talents from a limited talent pool is fierce, and given that many medical device companies are competing for similar type of personnel, we may not stand a chance of hiring, training, retaining, or motivating these key personnel on acceptable terms.

We are also in face of competitions from universities and research institutions for hiring R&D and clinical personnel. If we are unable to continue to attract and retain high-quality personnel, our ability to pursue growth strategies will be restricted.

–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. RISK FACTORS

We rely on third parties to carry out part of clinical trial work. Provided that these third parties fail to fulfill their contractual obligations or complete the work on schedule, we may not be able to obtain regulatory approvals for the product candidates or be unable to successfully commercialize such product candidates, which may lead to material impairment to our business.

In light of our industrial practice, we have engaged and plan to continue to engage third parties (including leading academic institutions, hospitals, clinics, experienced physicians and CRO/SMOs) to assist us in designing, implementing and monitoring our preclinical research and conducting clinical trials. If such third parties with which we contract for preclinical research and clinical trials do not perform in an acceptable manner, or if we suffer setbacks in such preclinical research or clinical trials, we may be unable to develop and successfully commercialize our product candidates as anticipated. Therefore, we have less control over the quality, time, cost, and ability to recruit trial subjects than when we conduct these trials with complete independence. If we are unable to maintain or enter into agreements with these third parties on terms that are beneficial to us, or if any contractual relationship we enter is terminated, we may not be able to recruit patients in a timely manner or conduct trials in the expected manner; and development of the product candidates involved in such agreements will also be seriously delayed.

In addition, there is no guarantee that these third parties will devote sufficient time and resources to our research or act in accordance with the requirements and meet the expected deadlines by their contractual obligations or document clinical trial data in accordance with our future research products or regulatory requirements (including clinical, experimental laboratory and production guidelines). Due to our reliance on these third parties, if they fail to act in accordance with the contractual arrangements, it may result in delays or failure to complete these researches. If these third parties fail to complete their work on schedule, fail to timely convey any regulatory information to us, fail to comply with research plan, or fail to act in accordance with regulatory requirements or agreements we have entered into with them, or their performances are substandard or impair their activities and/or the quality and/or accuracy of data obtained, the incoming clinical trials of our product candidates may be postponed, delayed or terminated, or the data obtained from such researches may be subject to denial or failure in obtaining approval by applicable regulatory agencies (such as the NMPA and EMA), resulting in an increase in the cost and time for development of related product candidates. If any pre-clinical research or clinical trial of our product candidates are affected due to any of the above causes, we will not be able to meet our expected development or commercialization deadlines, which in turn will impose substantial adverse impact on our business and prospects.

–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. RISK FACTORS

If we engage in acquisitions or strategic partnerships, this may increase our capital requirements, cause us to incur debt or assume contingent liabilities, and subject us to other risks.

We may evaluate multiple acquisitions and strategic partnerships from time to time, including licensing or acquiring complementary products, intellectual property, technology, or business. Any completed, ongoing, or potential acquisition or strategic partnership may bring forth many risks, including:

• Increase of operating expenses and cash demands;

• Bearing additional debt or contingent/unforeseeable liabilities;

• Issuance of equity securities;

• Assimilating the business, intellectual property, and products of acquired company, including difficulties associated with integrating new staff;

• Diverting our management’s attention from existing product projects and plans of seeking for strategic mergers or acquisitions;

• Uncertainties in retention of key employees, the loss of key personnel and our ability to maintain key business relationships;

• The risks and uncertainties associated with the other party to the transaction, including the prospects and regulatory approvals of that party and its existing product candidates; and/or

• Our inability to generate enough revenue from the acquired technology and/or products to achieve our acquisition goals, and to offset the related acquisition and maintenance costs.

In addition, if we undertake acquisitions, we may issue diluted securities, assume or incur debt obligations, give rise to a large amount of one-time expenditure and acquire intangible assets that may incur large amounts of amortization expenses in the future.

If we fail to be efficient in expanding our overseas business, the company prospects may be adversely affected.

We will seek product registration in overseas markets (including Japan, the United States, Australia and Israel etc.). However, our limited experiences in overseas markets may expose us to risks and uncertainties, including the risks related to:

• Dealing with regulatory systems, regulatory agencies and government policies that may be very different from China or that we may not be familiar with;

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• A plenty of time may be spent in obtaining registration and approval to sell our products in other countries (especially in developed countries);

• Some emerging markets where we are building our brand awareness may lack the necessary resources;

• Commercializing products in new markets with limited operating experience and no sales and marketing foundation;

• Some physicians in the new market may lack the knowledge in performing interventional surgery for heart valve diseases, and therefore we may need to provide product training to improve their awareness and recognition of our products and related procedures;

• Distributing, commercializing, and marketing our products through overseas partners or distributors;

• Product liability lawsuits arising from marketing and sales of products in overseas markets and regulatory review and processing costs incurred by such procedures, and our ability to obtain insurance to fully protect us from any liability arising therefrom;

• Unexpected changes in tariffs, trade barriers and regulatory requirements;

• Economic weakness and inflation;

• Difficulties in effectively enforcing contract provisions in local jurisdictions;

• Compliance with taxation, employment, immigration, and labor laws for employees traveling abroad;

• The impact of applicable foreign tax structures and potential adverse tax consequences;

• Currency fluctuations that may lead to operating expense increase and revenue decrease;

• Workforce uncertainties and labor unrest; and

• Business interruption caused by geopolitical actions (including war and terrorism), sanctions or natural disasters (including earthquakes, volcanoes, typhoons, floods, hurricanes, and fires).

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We may be subject to product liability lawsuits that could cause us to incur substantial liabilities.

We face inherent risks of product liability as a result of the clinical testing and any future commercialization of our product candidates. For example, we may be prosecuted if our product candidates can cause harm or are perceived to cause harm or are regarded unsuitable during clinical testing, production and future marketing or sales. Any of these product liability claims may include allegations of production defects, design defects, failure to raise warnings, negligence, strict liability, or breach of warranty regarding the inherent hazards of medical device products. Claims can also be made under applicable consumer protection laws. If we are unable to successfully defend our own interests in product liability claim or obtain compensation from our partners, we may assume primary responsibility or be required to restrict the commercialization of our product candidates. Even defense could be successful, it requires a lot of financial and management resources. Regardless of the merits or eventual outcome, a liability claim may lead to:

• Decline in demand for our products;

• Damage to our reputation;

• Dropout of patients from the clinical trials who are unable to continue the clinical trials;

• Initiation of investigations by regulators;

• Expenses incurred in defending relevant litigation;

• A diversion of attention of our management’s time and resources;

• Substantial compensation to participants or enrolled patients in our clinical trials, product recalls, withdrawals of labeling, or marketing or promotional restrictions;

• Loss of revenue;

• Insufficiency of any available insurance and our capital resources;

• Inability to commercialize any product candidates; and/or

• A decline in our Share price.

If we fail to maintain adequate product liability insurance at an acceptable cost, potential product liability claims may hinder or prevent the commercialization of our product candidates. We currently do not hold any product liability insurance protection, and we may not be able to purchase the insurance at a reasonable cost or an amount sufficient to cover any liability that may arise, or we may not be able to purchase additional insurance at a reasonable cost or

–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. RISK FACTORS alternative insurance, or simply cannot make the purchase. Our insurance policies may also contain various disclaimers, and we may be subject to product liability claims that we have not insured. We may be required to pay any amount that exceeds our insurance coverage or is beyond the scope of the insurance coverage as determined by the court or negotiated in a settlement, and we may not have or cannot obtain sufficient capital to pay such amount. Even if our agreement with any future partner entitles us to obtain an indemnity to cover the loss, the indemnity may not be available or sufficient should any claim arise.

If we become subject to litigations, legal or contract disputes, government investigations or administrative proceedings, it may divert the attention of the management, and incur substantial costs and liabilities.

We may from time to time become subject to various litigations, legal or contract disputes, investigations or administrative proceedings and penalties from the daily business, including but not limited to, various disputes or claims with or from our suppliers, customers, contractors, business partners and other third parties we engaged for our business operations and administrative penalties by relevant authorities. The lawsuits, legal or contract disputes, investigations or administrative proceedings that are being processed may divert the attention of the management and consume their time and other resources of us. In addition, any similar claims, disputes or lawsuits involving us or our employees may incur damages or liabilities as well as legal and other costs, and may cause a distraction to our management. Furthermore, any lawsuit, legal or contract dispute, investigation or administrative proceeding that is initially insignificant may escalate and become material due to multiple factors such as the arguments and circumstances of the cases, the possibility of losing the case, the amount involved, and the parties involved. If any verdict or award is made against us or if we settle with any third party, we may have to pay a large amount of money for compensation, assume other liabilities, be subject to fines or penalties or even suspend or terminate the relevant business projects. In addition, any negative publicity arising from litigations, legal or contract disputes, investigations or administrative proceedings may damage our reputation and adversely affect our brand and product image. As a result, our business, financial condition and results of operations may be materially and adversely affected.

We may directly or indirectly be subject to applicable anti-kickback, false claim laws, physician payment transparency laws, fraud and abuse of law or similar healthcare and security laws and regulations in China and other jurisdictions, which may expose us to criminal sanctions, civil penalties, contract damages, reputation damages, reduced profit and future earnings.

Healthcare providers, physicians, and other personnel play a primary role in the recommendation and prescription of any products for which we have obtained regulatory approval. Our business is subject to applicable anti-kickback, false claim laws, physician payment transparency laws, fraud and abuse laws or similar healthcare and security laws and regulations in China (including but not limited to the Criminal Law of the People’s Republic of China, Regulations on the Supervision and Administration of Medical Devices, and the Administration Measures for the Registration of Medical Devices). Such laws may affect

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(among others) the sales, marketing and education plans proposed by us. In addition, we may be subject to the patient privacy laws and regulations. Any violation of fraud and abuse laws may be subject to criminal and/or civil sanctions, including penalties, fines, and/or exclusion or suspension from governmental healthcare programs, and prohibition of signing contracts with the Chinese government.

Neither the Chinese government nor the Chinese courts has provided definitive guidance on the applicability of laws against fraud and abuse with regard to our business. The law enforcement agencies are paying increasing attention to the implementation of such laws. According to such laws, some of our practices may be questioned. The work of ensuring that our business arrangements with third parties comply with the applicable healthcare laws and regulations will involve substantial costs. Government agencies could conclude that our business practices may not comply with the current or future laws, regulations, or case law involving applicable to fraud and abuse or other healthcare laws and regulations. If any such actions are taken against us and we fail to defend ourselves or assert our rights, such actions may have a significant impact on our business, including the imposition of civil, criminal and administrative penalties, damages, disgorgement, fines, possible exclusion from participation in government healthcare programs, contractual damages, reputational damages, reduced profits and future earnings, and curtailment of our operations, any of which may adversely affect our business operation capacity and operating performance. In addition, we are subject to laws equivalent to the above healthcare laws in other jurisdictions, some of which may have a broader scope and may be applicable to healthcare services reimbursed by any sources (not only government payers (including private insurance companies)). The requirements for compliance with such regulations are ambiguous and we may be punished if we fail to comply with the regulations of the applicable laws.

If it is found that any physicians or other suppliers or entities doing business with us fail to comply with the applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusion from government funded healthcare programs, and may adversely affect our business.

If we fail to comply with the applicable anti-bribery laws, our reputation may be damaged, and we may be punished and incur significant expenses, which may have a significant adverse impact on our business, financial condition and operating performance.

We need to comply with anti-bribery law in multiple jurisdictions, particularly in China. With the expansion of our business, the applicability of the applicable anti-bribery law to our business has also increased. Our procedures and controls to monitor the compliance with anti-bribery law may not protect us from reckless or criminal acts of our employees or agents. If we fail to comply with the applicable anti-bribery law due to intentional or unintentional behaviors of ourselves or others, our reputation may be damaged, and we may be subject to criminal or civil penalties, other sanctions, and/or incur significant expenses, which may have a significant adverse impact on our business, including our financial condition, operating performance, cash flow and prospect.

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If we fail to comply with the environmental, health and safety laws and regulations, we may be subject to fines or penalties, or incur costs, which may cause a significant adverse impact on the success of our business.

We must comply with multiple environmental, health and safety laws and regulations, including laws and regulations governing laboratory procedures and handling, use, storage, treatment and disposal of hazardous materials and wastes. Our business involves the use of hazardous and flammable materials, including chemicals. Our business may also produce hazardous waste. Generally, we will enter into contracts with third parties to dispose of these substances and wastes. We cannot eliminate the risk of pollution or injury caused by these materials. If we cause pollution or injury by using harmful materials, we may assume liability for any loss arising therefrom, and any liability may exceed our resources. We may also incur substantial costs related to civil or criminal fines and penalties.

Although we have purchased employment injury insurance to cover the costs and expenses incurred by our employees who may be injured by using or exposure to hazardous materials, the insurance may not provide adequate coverage against potential liabilities. We have not insured against environmental liability or toxic infringement claims that may be made against us due to our storage, use or disposal of biological or hazardous materials.

In addition, we may need to bear substantial costs for the compliance with the current or future environmental, health and safety laws and regulations. Such current or future laws and regulations may impair our R&D, development or production. Failure to abide by such laws and regulations may also lead to substantial fines, penalties or other sanctions.

We may face risks related to our management of the medical data of subjects enrolled for clinical trials.

Our clinical trials routinely collect and maintain medical data, treatment records and other personal information of enrolled subjects. The laws and regulations of different jurisdictions where we conduct clinical trials usually require the initiators and operators of clinical trials and their staff to protect the privacy of the enrolled subjects and prohibit unauthorized disclosure of personal information. Corresponding institutions and staff will be responsible for the losses caused by disclosing the privacy or medical records of the subjects without consent. We have taken measures to maintain the confidentiality the medical records and personal data of subjects enrolled in our clinical trials, including encrypting relevant information in our information technology system to prevent relevant information from being accessed without proper authorization, and formulating internal regulations requiring our employees to keep the medical records of subjects confidential. However, due to human errors, employee malfeasance or system breakdown, these measures may not always be effective.

In addition, we often invite experts from third-party organizations to work with our employees and enrolled subjects during our clinical trials. We also cooperate with third parties (including the main researchers of clinical trials, hospitals, CROs and SMOs). We cannot guarantee that the relevant persons will always abide by our data privacy measures. Any

–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. RISK FACTORS leakage or abuse of patient data by our third-party partners may be perceived by the patients as a result of our failure. Our failure or perceived failure to prevent information security breaches, to comply with privacy policies or privacy-related legal obligations, or any compromise of information security resulting in unauthorized release or transfer of personally identifiable information or other patient data may cause customers to lose trust in us and may expose us to legal claims. Although we have made efforts to ensure compliance with applicable privacy laws and regulations in different jurisdictions, we may not be capable of adjusting our internal policies in a timely manner and our failure to comply with applicable laws and regulations may also lead to regulatory enforcement actions against us. Moreover, any changes in relevant laws and regulations may affect our ability to use medical data and subject us to liability for the use of data for previously approved purposes. If the medical records and personal data of the subjects are not kept confidential, or the use of medical data is restricted, or legal liability is incurred due to the use of medical data, it may have a significant adverse impact on our business, financial condition and operating results.

Our internal IT systems may fail or have security breaches.

Despite the implementation of security measures, our internal IT systems are vulnerable to damage from computer viruses and unauthorized access. Although to our knowledge we have not experienced any material system failure or security breaches to date, if such an event were to occur and cause interruption in our operations, it could result in material disruption of our development programs and business operations.

In the ordinary course of our business, we collect and store sensitive data, including, among others things, legally protected patient health data, personally identifiable data about our employees, intellectual property and proprietary business data. These applications and data encompass a wide variety of critical business data, including R&D data, commercial data, and business and financial data. Because information system, networks and other technologies are crucial to many of our operating activities, shutdowns or service disruptions at our Company or vendors that provide information systems, networks or other services to us pose increasing risks. Such disruptions may be caused by events such as computer hacking, phishing attacks, ransomware, dissemination of computer viruses, worms and other destructive or disruptive software, denial of service attacks and other malicious activity; as well as power outages, natural disasters (including extreme weather), terrorist attacks or other similar events. Such events could have an adverse impact on us and our business, including loss of date and damage to equipment and data. In addition, system redundancy may be ineffective or inadequate, and our disaster recovery planning may not be sufficient to cover all eventualities. Significant events could result in disruption of our operations, damage to our reputation or loss of revenues. In addition, we may not have adequate insurance coverage to compensate for any losses associated with such events.

We could be exposed to risks arising from misappropriation, misuse, leakage, falsification or intentional or accidental release or loss of information maintained in the information systems and networks of our Company and our vendors, including personal data of our employees and patients, and company and our vendors confidential data. Furthermore, external

–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. RISK FACTORS parties may attempt to penetrate our systems or those of our vendors or deceptively induce our personnel or personnel of our vendors to disclose sensitive information in order to gain access to our data and/or systems. Like other companies, we occasionally experienced and will continue to experience, threats to our data and systems, including malicious codes and viruses, phishing and other cyber-attacks. The number and complexity of these threats will continue to increase over time. If there is a serious intrusion into our or our vendors’ information technology systems, the market’s perception of the effectiveness of our security measures could be damaged, and our reputation and credibility could be damaged. We may need to expend significant amounts of money and other resources to repair or replace information systems or networks. In addition, we could be subject to regulatory actions and/or claims made by individuals and groups in private litigation due to privacy issues related to data collection and use practices and other data privacy laws and regulations, including claims for misuse or inappropriate disclosure of data and unfair or deceptive practices. Although we develop and maintain systems and controls designed to prevent these incidents from occurring, and we have procedures to identify and mitigate threats, the development and maintenance of these systems, controls and procedures is costly and requires ongoing monitoring and updating as technology changes and efforts to overcome security measures become increasingly complex. Moreover, despite our efforts, the possibility of these events cannot be eliminated entirely.

If we or parties on whom we rely fail to maintain the necessary licenses for the development and production of our products, our ability to conduct business could be materially impaired.

We are required to obtain, maintain and renew various permits, licences and certificates to develop and produce our products, and to provide pet treatments and pet medical and health service. Third parties (such as research institutions, distributors and vendors) that we may rely on to develop, produce, promote, sell and distribute our products are subject to similar requirements. We and the third parties we rely on are also subject to regular inspections, examinations, inquiries or audits by the regulatory authorities, and the adverse results of such inspections, examinations, inquiries or audits may lead to losses or non-renewal of relevant permits, licences and certificates. In addition, the criteria used in the application or renewal of audit permits, licences and certificates may change from time to time, and there is no guarantee that we or the third parties we rely on will be able to meet the new criterias that may be implemented to obtain or renew the necessary permits, licences and certificates. Many of such permits, licences and certificates are material to the operation of our business, and our ability to conduct our business may be seriously impaired if we or the parties we rely on fail to maintain or renew material permits, licences and certificates. Furthermore, if the interpretation or implementation of existing laws and regulations changes, or new regulations come into effect, requiring us or the parties we rely on to obtain any additional permits, licences or certificates that were not previously required to operate business, there is no guarantee that we or the parties we rely on will successfully obtain such permits, licences or certificates.

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Business disruptions could seriously harm our future revenue and financial condition and increase our costs and expenses.

Our operations, and those of our vendors and other business partners, could be subject to natural or man-made disasters, health epidemic, or business interruptions, for which we are predominantly self-insured. The occurrence of any of these business disruptions could seriously harm our and our partners’ operations and financial condition and increase our and their costs and expenses. Our ability to obtain supplies for our product candidates could be disrupted if the operations of these vendors are affected by a man-made or natural disaster, health epidemic, or other business interruption. Damage or extended periods of interruption to our corporate, development, research or manufacturing facilities due to fire, natural disaster, health epidemic, power loss, communications failure, unauthorized entry or other events could cause us to cease or delay development or commercialization of some or all of our product candidates. For example, the recent outbreak of COVID-19 could significantly affect our industry and cause temporary suspension of projects and shortage of labor and raw materials, which would severely disrupt our operations and have a material adverse effect on our business, financial condition and results of operations. Our operations could also be disrupted if any of our employees or employees of our distributors, vendors and other business partners was suspected of contracting or contracted COVID-19, since this could require us and our distributors, vendors and other business partners to quarantine some or all of these employees and disinfect facilities used for operations.

Although we maintain insurance policies that cover losses arising from accidents and natural disasters in respect of our machinery, equipment and other fixed assets in our research and manufacturing facilities, our insurance might not cover all losses under such circumstances and our business may be seriously harmed by such delays and interruption.

Our insurance coverage may not completely cover the risks related to our business and operations.

Our operations are subject to hazards and risks associated with our research and manufacturing operations, which may cause significant harm to persons or damage to properties. We maintain different types of insurance policies, including maintaining of insurance to cover our assets and losses caused by accidents in clinical trials. For more details, please see “Business – Insurance.” However, there is no assurance that our insurance policies will be adequate to cover all losses incurred. Losses incurred and associated liabilities may have a material adverse effect on our results of operation if such losses or liabilities are not covered by our insurance policies.

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Negative publicity and allegations involving us, our Shareholders, Directors, officers, employees and business partners may affect our reputation and, as a result, our business, financial condition and results of operations may be negatively affected.

We, our Shareholders, Directors, officers, employees and business partners may be subject to negative media coverage and publicity from time to time. Such negative coverage in the media and publicity could threaten the perception of our reputation. In addition, to the extent our employees and business partners were incompliant with any laws or regulations, we may also suffer negative publicity or harm to our reputation. As a result, we may be required to spend significant time and incur substantial costs in response to allegations and negative publicity, and may not be able to eliminate them to the satisfaction of our investors and customers.

RISKS RELATED TO DOING BUSINESS IN CHINA

The medical device industry in China is highly regulated and such regulations are subject to change which may affect approval and commercialization of our product candidates.

We conduct operations mainly in China. The medical device industry in China is subject to comprehensive government regulation and supervision, encompassing the approval, registration, manufacturing, packaging, licensing and marketing of new devices. In recent years, the regulatory framework in China regarding the medical device industry has undergone significant changes, and we expect that it will continue to undergo significant changes. Any such changes or amendments may result in increased compliance costs on our business or cause delays in or prevent the successful development or commercialization of our product candidates in China and reduce the benefits we believe are available to us from developing and manufacturing medical devices for valvular heart diseases in China.

The political relationships between China and other countries may affect our business operations.

During the Track Record Period, we purchased raw materials for our products from certain overseas suppliers in countries including Germany. We may also engage in cross-border sales of our products between China and the overseas in the future. Our business is therefore subject to constantly changing international economic, regulatory, social and political conditions, and local conditions in those foreign countries and regions. Tensions and political concerns between China and the relevant foreign countries or regions may adversely affect our business, financial condition, results of operations, cash flows and prospects.

China’s political relationships with those foreign countries and regions may affect the prospects of our relationship with third parties. There can be no assurance that our existing or potential service providers or collaboration partners will not alter their perception of us or their preferences as a result of adverse changes to the state of political relationships between China and the relevant foreign countries or regions.

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Furthermore, we rely on certain overseas suppliers to obtain raw materials for our products. In the event that China and/or the United States impose import tariffs, trade restrictions or other trade barriers affecting the importation of such components or raw materials, we may not be able to obtain a steady supply of necessary components or raw materials at competitive prices, and our business and operations may be materially and adversely affected.

Our products may be subject to punitive tariffs or other trade barriers, if we engage in cross-border sales between the United States and China. The governments may impose such tariff or even restrict the sales of our products in the future. Any increase in the tariff or trade restrictions will increase our costs and may adversely affect our sales of products in the global market.

Changes in the political and economic policies of the PRC government may materially and adversely affect our business, financial condition and results of operations and may result in our inability to sustain our growth and expansion strategies.

Due to our extensive operations in China, our business, results of operations, financial condition and prospects may be influenced to a significant degree by economic, political, legal and social conditions in China. China’s economy differs from the economies of developed countries in many respects, including with respect to the amount of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources.

While the PRC economy has experienced significant growth over the past 30 years, growth has been uneven across different regions and among various economic sectors of China. The PRC government has implemented various measures to encourage economic development and guide the allocation of resources. Some of these measures may benefit the overall PRC economy, but may have a negative effect on us. For example, our financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations that are currently applicable to us. In addition, in the past the PRC government implemented certain measures, including interest rate increases, to control the pace of economic growth. These measures may cause decreased economic activity in China, which may adversely affect our business and results of operation. More generally, if the business environment in China deteriorates from the perspective of domestic or international investment, our business in China may also be adversely affected.

There are uncertainties regarding the interpretation and enforcement of PRC laws, rules and regulations.

The majority of our operations are conducted in China, and are governed by PRC laws, rules and regulations. The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions may be cited for reference but have limited precedential value.

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In 1979, the PRC government began to promulgate a comprehensive system of laws, rules and regulations governing economic matters in general. The overall effect of legislation over the past three decades has significantly enhanced the protections afforded to various forms of foreign investment in China. However, China has not developed a fully integrated legal system, and recently enacted laws, rules and regulations may not sufficiently cover all aspects of economic activities in China or may be subject to significant degrees of interpretation by PRC regulatory agencies. In particular, because these laws, rules and regulations are relatively new and often give the relevant regulator significant discretion in how to enforce them, and because of the limited number of published decisions and the non-binding nature of such decisions, the interpretation and enforcement of these laws, rules and regulations involve uncertainties and can be inconsistent and unpredictable. In addition, the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or at all, and which may have a retroactive effect. As a result, we may not be aware of our violation of these policies and rules until after the occurrence of the violation.

Additionally, the reform of the medical device approval system in 2017 may face implementation challenges. The timing and full impact of such reforms is uncertain and could prevent us from commercializing our product candidates in a timely manner. In addition, any administrative and court proceedings in China may be protracted, resulting in substantial costs and diversion of resources and management attention. Since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy than in more developed legal systems. These uncertainties may impede our ability to enforce the contracts we have entered into and could materially and adversely affect our business, financial condition and results of operations.

You may experience difficulty in effecting service of legal process, enforcing foreign judgments or bringing original actions in China or Hong Kong based on foreign laws against us, our Directors and senior management.

We are incorporated under the laws of the PRC, and all of our assets are located in the PRC. In addition, a majority of our Directors, Supervisors and senior management personnel reside within the PRC, and substantially all of their assets are located within the PRC. As a result, it may not be possible to effect service of process within the United States or elsewhere outside the PRC upon our Directors, Supervisors and senior management personnel, including with respect to matters arising under the United States federal securities laws or applicable state securities laws.

On July 14, 2006, the Supreme People’s Court of the PRC and the government of Hong Kong Special Administrative Region entered into 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* (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) (the “Arrangement”). Under the Arrangement, where any

–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. RISK FACTORS designated PRC court or any designated Hong Kong court has made an enforceable final judgment requiring payment of money in a civil or commercial case under a choice of court agreement in writing, any party concerned may apply to the relevant PRC court or Hong Kong court for recognition and enforcement of the judgment. A choice of court agreement in writing is defined as any agreement in writing entered into between parties after the effective date of the Arrangement in which a Hong Kong court or a PRC court is expressly selected as the court having sole jurisdiction for the dispute. Therefore, it is not possible to enforce a judgment rendered by a Hong Kong court in the PRC if the parties in dispute have not agreed to enter into a choice of court agreement in writing. Although the Arrangement became effective on August 1, 2008, the outcome and effectiveness of any action brought under the Arrangement remain uncertain. In addition, the PRC has not entered into a treaty for the reciprocal recognition and enforcement of court judgments with the United States, the United Kingdom, Japan and most other western countries, and Hong Kong has no arrangement for the reciprocal enforcement of judgments with the United States. As a result, recognition and enforcement in the PRC or Hong Kong of judgment of a court in the United States or any other jurisdictions mentioned above in relation to any matter that is not subject to a binding arbitration provision may be difficult or impossible.

We are a PRC enterprise and we are subject to PRC tax on our global income, and the dividends payable to investors and gains on the sale of our Shares by our investors are subject to PRC tax.

As a PRC-incorporated company, under applicable PRC tax laws, we are subject to a tax of 25% on our global income. Under applicable PRC tax laws, regulations and statutory documents, non-PRC resident individuals and enterprises are subject to different tax obligations with respect to dividends received from us or gains realized upon the sale or other disposition of our Shares.

Non-PRC individuals are generally subject to PRC individual income tax under the Individual Income Tax Law of the PRC (中華人民共和國個人所得稅法) with respect to PRC source income or gains at a rate of 20% unless specifically exempted by the tax authority of the State Council or reduced or eliminated by an applicable tax treaty. We are required to withhold related tax from dividend payments. Pursuant to applicable regulations, domestic non-foreign-invested enterprises issuing shares in Hong Kong may generally, when distributing dividends, withhold individual income tax at the rate of 10%. However, withholding tax on distributions paid by us to non-PRC individuals may be imposed at other rates pursuant to applicable tax treaties (and up to 20% if no tax treaty is applicable) if the identity of the individual holder of H shares and the tax rate applicable thereto are known to us. There is uncertainty as to whether gains realized upon disposition of H shares by non-PRC individuals are subject to PRC individual income tax.

Non-PRC resident enterprises that do not have establishments or premises in the PRC, or that have establishments or premises in the PRC but their income is not related to such establishments or premises are subject to PRC EIT at the rate of 10% on dividends received from PRC companies and gains realized upon disposition of equity interests in the PRC

–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. RISK FACTORS companies pursuant to the EIT Law and other applicable PRC tax regulations and statutory documents, which may be reduced or eliminated under special arrangements or applicable treaties between the PRC and the jurisdiction where the nonresident enterprise resides. Pursuant to applicable regulations, we intend to withhold tax at a rate of 10% from dividends paid to non-PRC resident enterprise holders of our Shares (including [REDACTED]). Non-PRC resident enterprises that are entitled to be taxed at a reduced rate under an applicable income tax treaty will be required to apply to the PRC tax authorities for a refund of any amount withheld in excess of the applicable treaty rate, and payment of such refund will be subject to the PRC tax authorities’ verification. As of the Latest Practicable Date, there were no specific rules on how to levy tax on gains realized by nonresident enterprise holders of H shares through the sale or transfer by other means of H shares.

Payment of dividends is subject to restrictions under PRC law and regulations.

Under PRC law and regulations, we may only pay dividends out of distributable profits. Distributable profits are our after-tax profits, less any recovery of accumulated losses and appropriations to statutory and other reserves that we are required to make. As a result, we may not have sufficient or any distributable profit to enable us to make dividend distributions to our Shareholders, including in periods for which our financial statements indicate we are profitable. Any distributable profit not distributed in a given year is retained and available for distribution in subsequent years.

Moreover, our operating subsidiaries in the PRC may not have distributable profit as determined under PRC GAAP. Accordingly, we may not receive sufficient distributions from our subsidiaries for us to pay dividends. Failure by our operating subsidiaries and joint ventures to pay us dividends could adversely impact our ability to make dividend distributions to our Shareholders and our cash flow, including periods in which we are profitable.

Restrictions on currency exchange may limit our ability to utilize our revenue effectively.

The PRC government imposes controls on the convertibility of RMB into foreign currencies and, in certain cases, the remittance of currency out of China. We cannot assure you that we will have sufficient foreign exchange to meet our foreign exchange requirements. The RMB is currently convertible under the “current account,” which includes dividends, trade and service-related foreign exchange transactions, but not under the “capital account,” which includes foreign direct investment and loans, including loans we may secure from our onshore subsidiaries. Currently, we may purchase foreign currency for settlement of “current account transactions,” including payment of dividends to us, without the approval of SAFE by complying with certain procedural requirements. However, the relevant PRC governmental authorities may limit or eliminate our ability to purchase foreign currencies in the future for current account transactions. Any insufficiency of foreign exchange may restrict our ability to obtain sufficient foreign exchange for dividend payments to Shareholders or to satisfy other foreign exchange requirements. Foreign exchange transactions under the capital account remain subject to limitations and require approvals from, or registration with, SAFE and other relevant PRC governmental authorities. This could affect our ability to obtain foreign currency through debt or equity financing.

–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. RISK FACTORS

Governmental control of currency conversion, and restrictions on the remittance of Renminbi into and out of China, may adversely affect the value of your investment.

The Renminbi is not currently a freely convertible currency, as the PRC Government imposes controls on the convertibility of Renminbi into foreign currencies and in certain cases, the remittance of currency out of China. A substantial majority of our future revenue is expected to be denominated in Renminbi and we will need to convert Renminbi into foreign currencies for the payment of dividends, if any, to holders of our H Shares. Shortages in the availability of foreign currency may restrict our ability to remit sufficient foreign currency to pay dividends or other payments, or otherwise satisfy our foreign currency denominated obligations.

Under China’s current foreign exchange control system, foreign exchange transactions under the current account conducted by us, including the payment of dividends, do not require advance approval from SAFE, but we are required to present relevant documentary evidence of such transactions and conduct such transactions at designated foreign exchange banks within China that have the licenses to carry out foreign exchange business. Approval from appropriate government authorities is required where Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC Government may also at its discretion restrict access in the future to foreign currencies for current account transactions. Since 2015, in response to China’s declining foreign currency reserves, the PRC Government has placed increasingly stringent restrictions on the convertibility of the Renminbi into foreign currencies. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to our Shareholders. Further, there is no assurance that new regulations will not be promulgated in the future that would have the effect of further restricting the remittance of Renminbi into or out of China.

RISKS RELATED TO THE [REDACTED]

There has been no prior public market for our Shares and there can be no assurance that an active market would develop, and the price and trading volume of our Shares may be volatile.

Prior to this [REDACTED], there has been no public market for our Shares. The [REDACTED] for our [REDACTED] was the result of negotiations among us and the [REDACTED] (for themselves and on behalf of the [REDACTED]), and the [REDACTED] may differ significantly from the market price for our Shares following this [REDACTED]. We have applied for [REDACTED] of and permission to deal in our [REDACTED]onthe Stock Exchange. On April 30, 2018, the Stock Exchange adopted new rules under Chapter 18A of the Listing Rules, or Chapter 18A. Chapter 18A permits for the first time [REDACTED]on the Stock Exchange of pre-revenue, loss making Biotech Companies such as us. As required by Chapter 18A, our stock marker [●]-B includes the letter “B” to denote we are a Biotech Company [REDACTED] pursuant to Chapter 18A.

–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. RISK FACTORS

A[REDACTED] on the Stock Exchange, however, does not guarantee that an active and liquid trading market for the Shares will develop, or if it does develop, that it will be sustained following the [REDACTED], or that the market price of the Shares will not decline following the [REDACTED]. In addition, the trading price and trading volume of the Shares may be subject to significant volatility in responses to various factors, including:

• our financial results;

• unexpected business interruptions resulting from natural disasters or power shortages;

• major changes in our key personnel or senior management;

• changes in laws and regulations in China;

• our inability to compete effectively in the market;

• our inability to obtain or maintain regulatory approval for our operations;

• fluctuations in stock market prices and volume;

• changes in analysts’ estimates of our financial performance;

• political, economic, financial and social developments in China and Hong Kong and in the global economy; and

• involvement in material litigation.

Biotech Companies listed under Chapter 18A are generally viewed as being early stage and significantly riskier than those companies traditionally listed on the Stock Exchange. The trading market for Biotech Companies (including the depth and liquidity for that market) may take time to develop and could be subject to significant adverse changes. Our shares and the shares of other Biotech Companies could be subject to significant volatility unrelated to company specific performance or corporate developments. For example, adverse announcements by another unrelated Chapter 18A Biotech Company could adversely affect the trading price of the Shares. Moreover, shares of other companies listed on the Stock Exchange with significant operations and assets in China have experienced price volatility in the past, and it is possible that our Shares may be subject to changes in price not directly related to our performance.

–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. RISK FACTORS

The price and trading volume of our Shares may be volatile, which could lead to substantial losses to investors.

The price and trading volume of our Shares may fluctuate significantly due to various factors beyond our control, including the general market conditions of the securities in Hong Kong and elsewhere in the world. In particular, the business and performance and the market price of the shares of other companies engaging in similar business may affect the price and trading volume of our Shares. In addition to market and industry factors, the price and trading volume of our Shares may be highly volatile for specific business reasons, such as the results of clinical trials of our product candidates, the results of our applications for approval of our product candidates, regulatory developments affecting our industry, healthcare, health insurance and other related matters, fluctuations in our revenue, earnings, cash flows, investments and expenditures, relationships with our suppliers, movements or activities of key personnel, or actions taken by competitors.

There will be a gap of several days between pricing and trading of our Shares, and the price of our Shares when trading begins could be lower than the [REDACTED].

The initial price to the public of our Shares sold in the [REDACTED] is expected to be determined on the [REDACTED]. However, the Shares will not commence trading on the Hong Kong Stock Exchange until they are delivered, which is expected to be not more than five Business Days after the [REDACTED]. As a result, investors may not be able to sell or otherwise deal in the Shares during that period. Accordingly, holders of our Shares are subject to the risk that the price of the Shares when trading begins could be lower than the [REDACTED] as a result of adverse market conditions or other adverse developments that may occur between the time of sale and the time trading begins.

Future sales or perceived sales of a substantial number of our Shares in the public market following the [REDACTED] may have a material adverse effect on the price of our Shares and our ability to raise additional capital in the future, and may result in dilution of your shareholding.

Prior to the [REDACTED], there has not been a public market for our Shares. Future sales or perceived sales by our existing Shareholders of our Shares after the [REDACTED] could result in a significant decrease in the prevailing market price of our Shares. Only a limited number of the Shares currently outstanding will be available for sale or issuance immediately after the [REDACTED] due to contractual and regulatory restrictions on disposal and new issuance. Nevertheless, after these restrictions lapse or if they are waived, future sales of significant amounts of our Shares in the public market or the perception that these sales may occur could significantly decrease the prevailing market price of our Shares and our ability to raise equity capital in the future.

–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. RISK FACTORS

We cannot assure you that we will declare and distribute any amount of dividends in the future.

There can be no assurance that we will declare and pay dividends because the declaration, payment and amount of any future dividends are subject to the discretion of our Directors, depending on, among other considerations, our operations, earnings, cash flows and financial position, operating and capital expenditure requirements, our strategic plans and prospects for business development, our constitutional documents and applicable law. For more details on our dividend policy, please refer to the paragraph headed “Financial Information – Dividend” in this document.

We cannot make fundamental changes to our business without the consent of the [REDACTED].

On April 30, 2018, the Hong Kong Stock Exchange adopted new rules under Chapter 18A of the Rules Governing the Listing of Securities on the Stock Exchange. Under these rules, without the prior consent of the [REDACTED], we will not be able to effect any acquisition, disposal or other transaction or arrangement or a series of acquisitions, disposals or other transactions or arrangements, which would result in a fundamental change in our principal business activities as set forth in this document. As a result, we may be unable to take advantage of certain strategic transactions that we might otherwise choose to pursue in the absence of Chapter 18A. Were any of our competitors that are not [REDACTED] on the Stock Exchange to take advantage of such opportunities in our place, we may be placed at a competitive disadvantage, which could have a material adverse effect on our business, financial condition and results of operations.

We have significant discretion as to how we will use the net [REDACTED] of the [REDACTED], and you may not necessarily agree with how we use them.

Our management may spend the net [REDACTED] from the [REDACTED] in ways with which you may not agree or which do not yield a favorable return to our Shareholders. We plan to use the net [REDACTED] from the [REDACTED] for the following purposes:

• the ongoing and planned R&D and commercialization of, and the expansion of manufacturing capacities for, our product pipeline;

• expansion of our product portfolio through strategic acquisitions and equity investment, partnerships or license-in, among others; and

• general working capital.

For details, see the section headed “Future Plans and Use of [REDACTED]”.

However, our management will have discretion as to the actual application of our net [REDACTED]. You are entrusting your funds to our management, whose judgment you must depend on, for the specific uses we will make of the net [REDACTED] from this [REDACTED].

–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. RISK FACTORS

Facts, forecasts and statistics in this document relating to the structural heart disease, heart valve and mitral valve interventional device industry may not be fully reliable.

The facts, forecasts and statistics in this document relating to the structural heart disease, heart valve and mitral valve interventional device industry in and outside China are derived from various sources that we believe are reliable, including official government publications as well as a report prepared by Frost & Sullivan that we commissioned. However, we cannot guarantee the quality or reliability of these sources. Neither we, the [REDACTED], the Joint Sponsors, the [REDACTED] nor our or their respective affiliates or advisers have verified the facts, forecasts and statistics nor ascertained the underlying economic assumptions relied upon in those facts, forecasts and statistics obtained from these sources. Due to possibly flawed or ineffective collection methods or discrepancies between published information and factual information and other problems, the industry statistics in this document may be inaccurate and you should not place undue reliance on it. We make no representation as to the accuracy of such facts, forecasts and statistics obtained from various sources. Moreover, these facts, forecasts and statistics involve risk and uncertainties and are subject to change based on various factors and should not be unduly relied upon.

You should read the entire document carefully, and we strongly caution you not to place any reliance on any information contained in press articles or other media regarding us or the [REDACTED].

Subsequent to the date of this document but prior to the completion of the [REDACTED], there may be press and media coverage regarding us and the [REDACTED], which may contain, among other things, certain financial information, projections, valuations and other forward-looking information about us and the [REDACTED]. We have not authorized the disclosure of any such information in the press or media and do not accept responsibility for the accuracy or completeness of such press articles or other media coverage. We make no representation as to the appropriateness, accuracy, completeness or reliability of any of the projections, valuations or other forward-looking information about us. To the extent such statements are inconsistent with, or conflict with, the information contained in this document, we disclaim responsibility for them. Accordingly, prospective investors are cautioned to make their investment decisions on the basis of the information contained in this document only and should not rely on any other information.

You should rely solely upon the information contained in this document, the [REDACTED] and any formal announcements made by us in Hong Kong in making your investment decision regarding our Shares. We do not accept any responsibility for the accuracy or completeness of any information reported by the press or other media, nor the fairness or appropriateness of any forecasts, views or opinions expressed by the press or other media regarding our Shares, the [REDACTED] or us. We make no representation as to the appropriateness, accuracy, completeness or reliability of any such data or publication. Accordingly, prospective investors should not rely on any such information, reports or publications in making their decisions as to whether to invest in our [REDACTED]. By applying to purchase our Shares in the [REDACTED], you will be deemed to have agreed that you will not rely on any information other than that contained in this document and the [REDACTED].

–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. WAIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES AND EXEMPTIONS FROM THE COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS) ORDINANCE

In preparation for the [REDACTED], our Company has sought and [has been granted] the following waivers from strict compliance with the relevant provisions of the Listing Rules and the following exemption from compliance with the Companies (Winding Up and Miscellaneous Provisions) Ordinance.

WAIVER IN RELATION TO MANAGEMENT PRESENCE IN HONG KONG

Pursuant to Rule 8.12 and Rule 19A.15 of the Listing Rules, we must have sufficient management presence in Hong Kong. This normally means that at least two of our executive Directors must be ordinarily resident in Hong Kong.

Our management, business operations and assets are primarily located outside Hong Kong. The principal management headquarters of our Group are primarily based in the PRC. Our Company considers that our Group’s management is best able to attend to its functions by being based in PRC. Our executive Directors currently are not, and will not be, ordinarily resident in Hong Kong after the [REDACTED] of our Company. The Directors consider that relocation of our executive Directors to Hong Kong would be burdensome and costly for our Company, and employment of additional executive Directors who are ordinarily resident in Hong Kong may not be in the best interests of our Company and the Shareholders as a whole. As such, we do not have and, in the foreseeable future, will not have, sufficient management presence in Hong Kong for the purposes of satisfying the requirements under Rules 8.12 and 19A.15 of 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 the requirements under Rules 8.12 and 19A.15 of the Listing Rules, provided our Company must implement the following arrangements:

(a) we have appointed two authorized representatives in accordance with Rule 3.05 of the Listing Rules, who will act as our principal channel of communication with the Stock Exchange. Mr. Dai and Mr. Au-Yeung Wai Ki, Joseph are the two authorized representatives appointed by us. Mr. Au-Yeung Wai Ki, Joseph is ordinarily resident in Hong Kong. Each of the authorized representatives will be available to meet with the Stock Exchange in Hong Kong within a reasonable time frame upon the request of the Stock Exchange, and will be readily contactable by telephone, facsimile and email;

(b) as and when the Stock Exchange wishes to contact our Directors on any matters, each of the authorized representatives has the means to contact all of our Directors (including the independent non-executive Directors) promptly at all times;

(c) although our executive Directors are not ordinarily residents in Hong Kong, each Director possesses or is able to apply for valid travel documents to visit Hong Kong and is able to meet with the Stock Exchange within a reasonable time frame when required;

–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. WAIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES AND EXEMPTIONS FROM THE COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS) ORDINANCE

(d) we have appointed Somerley Capital Limited as our compliance advisor pursuant to Rule 3A.19 of the Listing Rules, who will have access at all times to our authorized representatives, Directors and senior management, and will act as an additional channel of communication between the Stock Exchange and us; and

(e) we have provided the Stock Exchange with the contact details of each Director (including their respective mobile phone number, office telephone number and e-mail address).

If there is any change in our authorized representatives, Directors and/or compliance advisor, our Company will inform the Stock Exchange as soon as practicable pursuant to the Listing Rules.

WAIVER IN RELATION TO JOINT COMPANY SECRETARIES

Pursuant to Rule 8.17 of the Listing Rules, the issuer must appoint a company secretary who satisfies the requirements under Rule 3.28 of the Listing Rules. According to Rule 3.28 of the Listing Rules, the issuer must appoint as its company secretary an individual who, by virtue of his/her academic or professional qualifications or relevant experience, is, in the opinion of the Stock Exchange, capable of discharging the functions of company secretary.

Pursuant to Note 1 to Rule 3.28 of the Listing Rules, the Stock Exchange considers the following academic or professional qualifications to be acceptable:

(a) a member of The Hong Kong Institute of Chartered Secretaries;

(b) a solicitor or barrister as defined in the Legal Practitioners Ordinance; or

Pursuant to Note 2 to Rule 3.28 of the Listing Rules, in assessing whether the individual has “relevant experience”, the Stock Exchange will consider the following:

(a) the person’s length of employment with the Company and other listed companies and the roles he or she played;

(b) the person’s familiarity with the Listing Rules and other relevant law and regulations, including the Securities and Futures Ordinance, the Companies Ordinance, the Companies (Winding Up and Miscellaneous Provisions) Ordinance and the Takeovers Code;

(c) relevant training taken and/or to be taken in addition to the minimum requirement of taking not less than fifteen hours of relevant professional training in each financial year under Rule 3.29 of the Listing Rules; and

(d) the professional qualifications in other jurisdictions.

–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. WAIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES AND EXEMPTIONS FROM THE COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS) ORDINANCE

We have appointed Ms. Li Lingyi and Mr. Au-Yeung Wai Ki, Joseph as our Company’s joint company secretaries. Mr. Au-Yeung Wai Ki, Joseph is an associate member of the Hong Kong Institute of Certified Public Accountants (A08401) and a fellow member of the Association of Chartered Certified Accountants, and therefore meets the qualification requirements under Note 1 to Rule 3.28 of the Listing Rules and is in compliance with Rule 8.17 of the Listing Rules. However, Ms. Li Lingyi does not possess the qualifications as set out in Rule 3.28 of the Listing Rules. We believe the knowledge and experience of Ms. Li Lingyi in financial management and corporate development affairs and her familiarity with the business of our Group will be sufficient for her to discharge her duties as a joint company secretary. Accordingly, our Directors consider that Ms. Li Lingyi is a suitable individual to act as a joint company secretary, and such appointment would be in the best interest of our Company and the Group in terms of corporate governance. For further details on the biographies of Ms. Li Lingyi and Mr. Au-Yeung Wai Ki, Joseph, please refer to the paragraph headed “Directors, Supervisors and Senior Management – Joint Company Secretaries” in this document.

Accordingly, we have applied to the Stock Exchange for, and the Stock Exchange [has granted] us, a waiver from strict compliance with the requirements under Rules 3.28 and 8.17 of the Listing Rules. Pursuant to HKEX-GL108-20, the conditions of granting such waiver are: (i) Ms. Li Lingyi must be assisted by Mr. Au-Yeung Wai Ki, Joseph, who possesses the qualifications and experience as required under Rule 3.28 of the Listing Rules and (ii) the waiver will be valid for a period of three years from the [REDACTED]. If Mr. Au-Yeung Wai Ki, Joseph ceases to provide the relevant assistance or if there are material breaches of the Listing Rules by our Company, such waiver will be revoked immediately. Prior to the expiry of the three-year period, we will reassess the qualifications and experience of Ms. Li Lingyi and whether on-going assistance from Mr. Au-Yeung Wai Ki, Joseph is required. We will liaise with the Stock Exchange to enable it to assess whether Ms. Li Lingyi, having benefited from the assistance of Mr. Au-Yeung Wai Ki, Joseph for the preceding three years, will have acquired the skills necessary to carry out the duties of a company secretary and the relevant experience within the meaning of Note 2 to Rule 3.28 of the Listing Rules so that a further waiver will not be necessary.

EXEMPTION FROM COMPLIANCE WITH PARAGRAPH 27 OF PART I AND PARAGRAPH 31 OF PART II OF THE THIRD SCHEDULE TO THE COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS) ORDINANCE

Section 342(1)(b) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance provides that all prospectuses are required to include the matters specified in Part I of the Third Schedule to the Companies (Winding Up and Miscellaneous Provisions) Ordinance and the reports specified in Part II of the Third Schedule to the Companies (Winding Up and Miscellaneous Provisions) Ordinance.

–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. WAIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES AND EXEMPTIONS FROM THE COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS) ORDINANCE

According to paragraph 27 of Part I of the Third Schedule to the Companies (Winding Up and Miscellaneous Provisions) Ordinance, a company is required to include in its document a statement as to the gross trading income or sales turnover (as the case may be) of the company during each of the three financial years immediately preceding the issue of the document, including an explanation of the method used for the computation of such income or turnover, and a reasonable breakdown between the more important trading activities.

According to paragraph 31 of Part II of the Third Schedule to the Companies (Winding Up and Miscellaneous Provisions) Ordinance further requires a company to include in its document a report by the auditor with respect to (i) the profits and losses of the company and (ii) the assets and liabilities of the company in respect of each of the three financial years immediately preceding the issue of the document.

Pursuant to Section 342A(1) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance, the SFC may issue, subject to such conditions (if any) as the SFC thinks fit, a certificate of exemption from compliance with the relevant requirements under the Companies (Winding Up and Miscellaneous Provisions) Ordinance if, having regard to the relevant circumstances, the SFC considers that such exemption will not prejudice the interest of the investing public and compliance with any or all of such requirements would be irrelevant or unduly burdensome, or is otherwise unnecessary or inappropriate.

Rule 4.04(1) of the Listing Rules requires that the consolidated results of the Group in respect of each of the three financial years immediately preceding the issue of the document be included in the accountant’s report to the document.

Rule 18A.03(3) of the Listing Rules requires that a biotech company must have been in operation in its current line of business for at least two financial years prior to listing under substantially the same management. Rule 18A.06 of the Listing Rules requires that a biotech company must comply with Rule 4.04 of the Listing Rules modified so that references to “three financial years” or “three years” in Rule 4.04 shall instead reference to “two financial years” or “two years”, as the case may be.

In compliance with the abovementioned requirements under the Listing Rules, the accountant’s report of our Company set out in Appendix I to this document has been prepared to cover the two financial years ended December 31, 2020.

–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. WAIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES AND EXEMPTIONS FROM THE COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS) ORDINANCE

As such, in respect of the requirements of paragraph 27 of Part I and paragraph 31 of Part II of the Third Schedule to the Companies (Winding Up and Miscellaneous Provisions) Ordinance that the accountant’s report covering the full three financial years immediately prior to the issue of this document, the Joint Sponsors have applied on behalf of our Company to the SFC for a certificate of exemption from strict compliance with Section 342(1)(b) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance on the following grounds:

(a) our Company is primarily engaged in the R&D, application and commercialization of biotech products, and falls within the scope of biotech company as defined under Chapter 18A of the Listing Rules. Our Company will comply with other [REDACTED] conditions applicable to a Chapter 18A company;

(b) as of the Latest Practicable Date, our Company has not yet commercialized any products, and therefore did not generate any revenue from sales of products. For details on major financing activities conducted by us since our incorporation (including our Pre-[REDACTED] Investments), please refer to the section headed “History, Development and Corporate Structure” in this document.

(c) notwithstanding that the financial results set out in this document are only for the two financial years ended December 31, 2020 in accordance with Chapter 18A of the Listing Rules, other information required to be disclosed under the Listing Rules and the requirements under the Companies (Winding Up and Miscellaneous Provisions) Ordinance has been adequately disclosed in this document pursuant to the relevant requirements;

(d) given that our Company is only required to disclose its financial results for each of the two financial years ended December 31, 2020 in accordance with Chapter 18A of the Listing Rules and preparation of the financial results for the year ended December 31, 2018 would require additional work to be performed by our Company and its auditors, as such strict compliance with section 342(1)(b) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance in relation to the requirements of paragraph 27 of Part I and paragraph 31 of Part II of the Third Schedule to the Companies (Winding Up and Miscellaneous Provisions) Ordinance would be unduly burdensome for our Company; and

(e) the accountants’ report covering the two financial years ended December 31, 2020, together with other disclosure in this document, has already provided the potential investors with adequate and reasonable up-to-date information in the circumstances to form a view on the track record of our Company, and all information which is necessary for the investing public to make an informed assessment of the business, assets and liabilities, financial position, management and prospects has been included in this document. Therefore, the exemption will not prejudice the interest of the investing public.

–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. WAIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES AND EXEMPTIONS FROM THE COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS) ORDINANCE

A certificate of exemption [has been] granted by the SFC pursuant to section 342A of the Companies (Winding up and Miscellaneous Provisions) Ordinance in relation to the exemption from strict compliance with section 342(1)(b) in relation to paragraph 27 of Part I and paragraph 31 of Part II of the Third Schedule to the Companies (Winding Up and Miscellaneous Provisions) Ordinance, on the condition that the particulars of the exemption being set forth in this document.

WAIVER IN RELATION TO THE AVAILABILITY OF COPIES OF THE DOCUMENT IN PRINTED FORM

Our Company has adopted a fully electronic application process for the [REDACTED] and we will not provide printed copies of this document or printed copies of any [REDACTED] to the public in relation to the [REDACTED]. Our [REDACTED] has implemented enhanced measures to support [REDACTED], including increasing its server capacity and making available a telephone hotline to answer investors’ queries in connection with the fully electronic application process. For details of the telephone hotline and the application process, see “How to Apply for [REDACTED].”

We will publish a formal notice of the [REDACTED] on the official websites of the Hong Kong Stock Exchange and our Company and in selected English and Chinese local newspapers describing the fully electronic application process including the available channels for share subscription and the enhanced support provided by our [REDACTED] in relation to the [REDACTED] and reminding investors that no printed prospectuses or [REDACTED] will be provided. We will also issue a press release to highlight the available electronic channels for share subscription, and advertise through the [REDACTED] the electronic method for subscription of the [REDACTED].

We have applied for, and the Hong Kong Stock Exchange [has granted] us, a waiver from strict compliance with the requirements under Rule 12.04(3), Rule 12.07 and Rule 12.11 of the Listing Rules in respect of the availability of copies of the document in printed form based on our specific and prevailing circumstances.

WAIVER IN RELATION TO THE PUBLIC FLOAT REQUIREMENTS

Rule 8.08(1) of the Listing Rules requires that there must be an open market in the securities for which [REDACTED] is sought and that a sufficient public float of an issuer’s listed securities must be maintained.

–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. WAIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES AND EXEMPTIONS FROM THE COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS) ORDINANCE

We have applied to the Stock Exchange, and the Stock Exchange [has granted] us, a waiver that the minimum public float requirement under Rule 8.08(1)(a) be reduced and the minimum percentage of our H Shares (being the securities for which [REDACTED]onthe Stock Exchange is sought) from time to time held by the public to be the highest of:

(a) 15% of the total issued share capital of our Company;

(b) such percentage of H Shares to be held by the public immediately after completion of the [REDACTED] (assuming the [REDACTED] is not exercised); or

The above waiver is subject to the condition that our Company makes appropriate disclosure of the lower prescribed percentage of public float in the document and our Company will confirm sufficiency of public float in its successive annual reports after the [REDACTED]. In the event that the public float percentage falls below the minimum percentage prescribed by the Stock Exchange, we will take appropriate steps to ensure that the minimum percentage of public float prescribed by the Stock Exchange is complied with.

–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. INFORMATION ABOUT THIS DOCUMENT AND THE [REDACTED]

[REDACTED]

–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. INFORMATION ABOUT THIS DOCUMENT AND THE [REDACTED]

[REDACTED]

–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. INFORMATION ABOUT THIS DOCUMENT AND THE [REDACTED]

[REDACTED]

–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. INFORMATION ABOUT THIS DOCUMENT AND THE [REDACTED]

[REDACTED]

–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. INFORMATION ABOUT THIS DOCUMENT AND THE [REDACTED]

[REDACTED]

–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. INFORMATION ABOUT THIS DOCUMENT AND THE [REDACTED]

[REDACTED]

–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. DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE [REDACTED]

DIRECTORS

NAME ADDRESS NATIONALITY

EXECUTIVE DIRECTORS

Mr. Dai Yufeng (戴宇峰) Building No. 27, Chengshi Tianyuan Chinese Canglang District Suzhou, Jiangsu Province the PRC

Ms. Yang Huixian (楊惠仙) No. 768 Qinzhou South Road Chinese Xuhui District Shanghai the PRC

Ms. Gu Yanyan (顧彥彥) No. 12 Longjin East Chinese Fifth Community Huoying Street Changping District Beijing the PRC

NON-EXECUTIVE DIRECTOR

Mr. Chen Chen (陳琛) Room 2C, Block A Chinese No. 6 Gongyuan West Street Dongcheng District Beijing the PRC

INDEPENDENT NON-EXECUTIVE DIRECTORS

Dr. Yang Jiayu (陽佳余) No. 94 Weijin Road Chinese Nankai District Tianjin the PRC

Mr. Yu Liqiang (俞立強) Minghu Garden, Shigang Road Chinese Xinghu Street Suzhou Industrial Park Suzhou, Jiangsu Province the PRC

– 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. DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE [REDACTED]

NAME ADDRESS NATIONALITY

Ms. Ni Hong (倪虹) Room 17B, Shouson Hill Chinese No. 9-19 Shouson Hill Road Deep Water Bay Hong Kong

SUPERVISORS

Mr. Wu Zheng (吳正) No. 2, Lane 1388 Chinese Yungu Road Jiading District Shanghai the PRC

Mr. Xu Libo (徐立波) Unit B, Building No. 26 Chinese Hutang Xinchengyu Garden Wujin District Changzhou, Jiangsu Province the PRC

Mr. Li Tao (李濤) No. 2, Lane 45 Chinese Tongle Road, Dongjing Town Songjiang District Shanghai the PRC

For biographical details and relevant information of the Directors and Supervisors, please refer to the section headed “Directors, Supervisors and Senior Management” in this document.

– 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. DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE [REDACTED]

PARTIES INVOLVED IN THE [REDACTED]

Joint Sponsors China International Capital Corporation Hong Kong Securities Limited 29/F, One International Finance Centre 1 Harbour View Street Central Hong Kong

Citigroup Global Markets Asia Limited 50/F, Champion Tower 3 Garden Road Central Hong Kong

[REDACTED]

Legal Advisors to our Company As to Hong Kong and United States laws: Herbert Smith Freehills 23rd Floor Gloucester Tower 15 Queen’s Road Central Hong Kong

As to PRC laws: Jia Yuan Law Offices 32F, Building S1 The Bund Finance Center No. 600, Zhongshan No. 2 Road (E) Huangpu District Shanghai PRC

– 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. DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE [REDACTED]

Legal Advisors to the Joint Sponsors and As to Hong Kong and United States laws: the [REDACTED] O’Melveny & Myers 31/F, AIA Central 1 Connaught Road Central Hong Kong

As to PRC laws: Zhong Lun Law Firm 23-31/F, South Tower of CP Center 20 Jin He East Avenue Chaoyang District Beijing the PRC

Auditors and Reporting Accountants Ernst & Young Certified Public Accountants Registered Public Interest Entity Auditor 22nd floor, CITIC Tower 1 Tim Mei Avenue Central Hong Kong

Industry Consultant Frost & Sullivan (Beijing) Inc., Shanghai Branch Co. Room 1018, Tower B No. 500 Yunjin Road Xuhui District, Shanghai the PRC

[REDACTED]

– 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. CORPORATE INFORMATION

Registered Office, Headquarters and Building No.14 Principal Place of Business in the PRC No.1288, Zhongchun Road Minhang District Shanghai the PRC

Principal Place of Business in Hong Kong Room 1903-4 Floor 19, Hong Kong Trade Centre 161 Des Voeux Road Central Hong Kong

Company’s Website http://www.hanyumedical.com/ (information on this website does not form part of this document)

Joint Company Secretaries Ms. Li Lingyi (李靈怡) Building No.14 No.1288, Zhongchun Road Minhang District Shanghai the PRC

Mr. Au-Yeung Wai Ki, Joseph (歐陽偉基) Room 1903-4 Floor 19, Hong Kong Trade Centre 161 Des Voeux Road Central Hong Kong (a certified public accountant in Hong Kong, associate member of the Hong Kong Institute of Certified Public Accountants and a fellow member of the Association of Chartered Certified Accountants)

Authorized Representatives Mr. Dai Yufeng (戴宇峰) Building No.14 No.1288, Zhongchun Road Minhang District Shanghai the PRC

Mr. Au-Yeung Wai Ki, Joseph (歐陽偉基) Room 1903-4 Floor 19, Hong Kong Trade Centre 161 Des Voeux Road Central Hong Kong

– 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. CORPORATE INFORMATION

Audit Committee Ms. Ni Hong (Chairman) Mr. Yu Liqiang Dr. Yang Jiayu

Remuneration and Appraisal Committee Mr. Yu Liqiang (Chairman) Dr. Yang Jiayu Mr. Chen Chen

Nomination Committee Mr. Dai Yufeng (Chairman) Mr. Yu Liqiang Dr. Yang Jiayu

Compliance Advisor Somerley Capital Limited 20th Floor, China Building 29 Queen’s Road Central Hong Kong

[REDACTED]

Principal Bank China Minsheng Bank Shanghai Yixian Branch No. 1686, Kongjiang Road Yangpu District Shanghai the PRC

– 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. INDUSTRY OVERVIEW

The data and statistics included in this section and other sections of the document are extracted from various official government publications, accessible open market research data sources and data sources of other independent suppliers. In addition, we have appointed Frost & Sullivan to prepare an independent industry report on the [REDACTED], namely Frost & Sullivan Report. We believe that the data sources in this section are appropriate sources of such data and that we have taken reasonable care to extract and republish the data. We have no reason to believe that the data is false or misleading, or that the omission of any facts renders the data false or misleading. Nevertheless, the Company, the Joint Sponsors, any of their respective directors, employees, agents or advisers or any other person or party (other than Frost & Sullivan) involved in the [REDACTED] have not independently verified such data and have not made any statement as to the accuracy of such data. Some of the data and statistics contained in this section are not necessarily consistent with other data and statistics prepared inside and outside China. In view of this, investors are urged not to rely unduly on the data (including statistics and estimates) contained in this section or similar data contained in other sections of the document. After reasonable enquiry, we acknowledge that no adverse changes have been made to the market information since the date of Frost & Sullivan Report which might withhold, contradict or affect the data contained in this section in any material way.

OVERVIEW OF STRUCTURAL HEART/VALVULAR DISEASES MARKETS

Broadly speaking, structural heart diseases refer to any structural abnormalities of the heart and any diseases related to the structure of heart and great vessels, except for coronary artery diseases and cardiac electrical diseases. Structural heart diseases in a narrow definition refer to the pathophysiological changes of the heart caused by structural changes of the heart, including valvular heart diseases, congenital heart diseases and cardiomyopathy, among others. The diagnosis and treatment of structural heart diseases have developed rapidly over the past decades, making it an important subdivision of cardiovascular diseases.

Valvular heart diseases are a subcategory of heart disease caused by stenosis or insufficient closure of the heart valves. The following diagram shows different types of valvular heart diseases.

Major Diseases 1 Aortic Valve • Aortic Stenosis 1 • Aortic Regurgitation 2 Pulmonary Valve • Pulmonic Stenosis • Pulmonic Regurgitation Valvular Heart 3 Disease Type 3 2 • Mitral Stenosis Mitral Valve • Mitral Regurgitation

4 • Tricuspid Stenosis Tricuspid Valve • Tricuspid Regurgitation 4

Source: Literature review, Frost & Sullivan Analysis

– 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. INDUSTRY OVERVIEW

Of all valvular heart diseases, mitral regurgitation (MR) and aortic stenosis (AS) are the most common types, and the prevalence rate of MR is about 4 times that of AS. At present, the treatment methods available for valvular heart diseases mainly include:

• Medication, which relieves symptoms by reducing the load on heart, but does not address the fundamental mechanism of the disease;

• Conventional surgery, which remains the standard of care for valvular heart diseases, but is highly invasive and risky, with high mortality and complication rates in the high-risk population;

• Minimally invasive valve surgery, which reduces postoperative pain and enables faster recovery, but still necessitates opening the heart and cardiac arrest, thus failing to reduce the incidences of mortality and complications; and

• Interventional therapy, which has been widely applied in clinical practices in recent years in recognition of its advantageous features – minimal invasion, less pain and quicker recovery.

The prevalence of valvular heart diseases is expected to grow on a global scale. In light of the aging population, interventional therapy, with its minimally-invasive nature, is promised with great market potential.

OVERVIEW OF MR TREATMENT MARKET

The mitral valve is located in the conjunction of the left atrium and the left ventricle. When the mitral valve opens, it fills the left ventricle with blood from the left atrium. When the left ventricle contracts, the mitral valve closes so that the pumped blood only flows into the aorta without returning into the left atrium. An incomplete closure of mitral valve can cause some blood to leak back into the left atrium, known as mitral regurgitation (MR). MR is the most common form of structural heart diseases, and may lead to serious complications if untreated.

– 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. INDUSTRY OVERVIEW

The number of moderate to severe MR patients worldwide increased at a CAGR of 1.8% from 2015 to 2019, and is expected to increase further to 122.0 million worldwide by 2030. The number of patients with moderate to severe MR worldwide is shown below:

Global Prevalence of Moderate to Severe MR, 2015-2030E

Period CAGR

2015-2019 1.8% 2019-2024E 1.9% 2024E-2030E 2.3%

150

122.0 Million 119.3 113.9 116.6 120 108.6 111.2 103.9 106.2 99.9 101.5 95.1 96.7 98.3 90.0 91.8 93.5

0 2015 2016 2017 2018 2019 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E

Source: Frost & Sullivan Report

China’s population is aging faster than the global average, and so is its number of moderate to severe MR patients, with a CAGR of 2.5% from 2015 to 2019, which is expected to reach 13.4 million by 2030. The number of patients with moderate to severe MR in China is shown below:

China Prevalence of Moderate to Severe MR, 2015-2030E

Period CAGR

2015-2019 2.5% 2019-2024E 2.3% 2024E-2030E 2.0%

15 Million 13.4 12.8 13.1 12.3 12.6 11.9 12.1 11.4 11.7 12 11.1 10.6 10.8 10.0 10.3 9.6 9.8

0 2015 2016 2017 2018 2019 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E

Source: Frost & Sullivan Report

The large-scale epidemiological investigation of MR is quite limiting in China so far. According to the epidemiological investigation in the United States, patients with severe MR take up about 30% of the moderate to severe patients.

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Overview of MR Therapeutic Schemes

MR treatment methods mainly include medication, surgical treatment and interventional treatment. For different types of patients with different subtypes and symptoms, the features, recommended levels and clinical evidence-based support of the three treatments are different, as shown below:

Treatment method Summary Guideline (2020 ACC/AHA)

Medication For primary MR, there is no In symptomatic or asymptomatic patients specific drug for the time with severe primary MR and left being, and medication is mainly ventricular (LV) systolic dysfunction prescribed for the purpose of (Stages C2 and D) in whom surgery is not relieving symptoms. possible or must be delayed, guideline- directed medical therapy (GDMT) for For secondary MR, medication systolic dysfunction is reasonable. Class of serves as first-line treatment recommendation (COR): IIa; level of and a preparation for all other evidence (LOE): B treatment methods, but the efficacy of medication for Patients with chronic severe secondary MR secondary MR is very limited. (Stages C and D) and heart failure (HF) with reduced LV ejection fraction (LVEF) should receive standard GDMT for HF. COR: I; LOE: A

Surgical Surgical treatment is the golden In symptomatic patients with severe primary treatment standard for MR intervention MR (Stage D), mitral valve intervention is with recommendation and recommended irrespective of LV systolic enough evidence-based clinical function. COR: I; LOE: B study. In asymptomatic patients with severe primary MR and LV systolic dysfunction (LVEF Յ60%, LV end-systolic diameter Ն40 mm) (Stage C2), mitral valve surgery is recommended. COR: I; LOE: B

Interventional In patients with primary severe In severely symptomatic patients (NYHA treatment MR and prohibitive surgical class III or IV) with primary severe MR risk, transcatheter edge-to-edge and high or prohibitive surgical risk, TEER repair (TEER) is reasonable. is reasonable if mitral valve anatomy is favorable for the repair procedure and In patients with chronic severe patient life expectancy is at least 1 year. secondary MR, TEER is COR: IIa; LOE: NA recommended when patients are eligible. In patients with chronic severe secondary MR related to LV systolic dysfunction (LVEF <50%) who have persistent symptoms (NYHA class II, III, or IV) while on optimal GDMT for HF (Stage D), TEER is reasonable in patients with appropriate anatomy as defined on TEE and with LVEF between 20% and 50%, LVESD Յ70 mm, and pulmonary artery systolic pressure Յ70 mmHg. COR: IIa; LOE: B-R

Source: Frost & Sullivan Report

– 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. INDUSTRY OVERVIEW

Overview of TMV Therapy Options

Transcatheter mitral valve (TMV) therapy is a catheter-based technique to repair or replace the mitral valve in an interventional procedure that does not involve open-chest surgery. The TMV therapy adopts the same principle as the surgical treatment, and is suitable for patients with moderate to severe MR who cannot tolerate conventional surgery. The therapy options include TMV repair (TMVr), which repairs the mitral valve, and TMV replacement (TMVR), which implants a new mitral valve. A comparison between the two therapy options is shown in the table below:

TMVR TMVr

(1) Relatively more invasive with greater (1) Minimally invasive, high safety. risk. Available data indicate a higher postoperation mortality rate. (2) Six products received CE Mark, one of which also received FDA and (2) Only one product received CE NMPA approval (MitraClip). certification to date. Most of the other products are in the early stage of (3) Well-validated by clinical evidence exploration and R&D. and more than 100,000 cases worldwide have been treated with (3) Low number of implants and lack of TMV edge-to-edge repair technique. large-scale evidence-based data. (4) TMV edge-to-edge repair technique (4) It has not been recommended by was recommended by 2017 authoritative guidelines. ESC/EACTS in Europe and 2020 ACC/AHA in the United States.

Source: Frost & Sullivan Report

–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. INDUSTRY OVERVIEW

The main access pathways for TMV treatment include transapical and percutaneous pathways (currently, it mainly refers to the transfemoral approach). A comparison between the two pathways is shown in the table below:

Percutaneous Transapical

(1) Less invasive, better tolerated by (1) The short distance from the device’s patients, suitable for patients with poor approach incision to the mitral valve cardiac function, multiple pre-existing allows the delivery system to be complications and who have undergone easily coaxial with the autogenous conventional surgeries. valve. The position and direction of the device can be directly controlled, allowing more direct mechanical transmission and hand feeling, and enabling easier operation

(2) During the operation, real-time image (2) Image guidance using ultrasound guidance is required with DSA, eliminates the need for DSA and leading to certain X-ray irradiation avoids X-ray exposure for both for patients and operators. patients and operators.

(3) Relatively long operation time. (3) Shorter operation time.

(4) Operation procedures are more (4) Shorter learning curve, easy for the complex, requiring higher technical operators to master the surgical requirements and Sharper learning method. curve for the operators.

Source: Frost & Sullivan Report

Some of the patients may not be suitable for the transfemoral vein approach due to factors such as hemadostenosis, atrial septal thickening or presence of foreign body or small left atrium that causes difficulty in curving the transmission system, in which case transapical therapy is the only option.

– 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. INDUSTRY OVERVIEW

Technical Classification of TMVr Therapeutic Devices

At present, the main approaches of MR interventional repair include valve annulus repair, valve leaflet repair and chordae tendineae repair. The corresponding interventional methods include transcatheter annuloplasty, edge-to-edge repair and chordae tendineae repair. Among these methods, edge-to-edge repair represents the relatively mainstream method. In terms of TMV technique itself, the diversity of mitral valve lesions (anatomical diversity of valve annulus, leaflet and adjacent areas) makes various interventional repair/replacement have their own unique characteristics and scope of indications, as shown in the following table.

Object of repair

Chordae Leaflet Annulus tendineae

Technique Leaflet Repair Annulus Repair Chordae tendineae Repair

• Transcatheter direct annuloplasty Procedure • Edge-to-edge repair • Transcatheter chordal (clipping/clamping) • Transcatheter indirect implantation annuloplasty

Primary MR Indication Secondary MR Primary MR Secondary MR

• Indirect transcatheter • MitraClip (Abbott) annuloplasty: Catrillon Representative products • PASCAL (Edwards) (Catrillon Dimensions) • NeoChord DS1000 • ValveClamp (Hanyu Medical) • Direct transcatheter (NeoChord) • DragonFly (Valgen Medtech) annuloplasty: Cardioband (Edwards), MPAS (Mitralign)

Source: Frost & Sullivan Analysis

Development Trends in China’s TMV Treatment Industry and Growth Drivers

The TMV treatment industry in China is expected to grow significantly in the future for the following reasons:

Growing needs for interventional therapy: Despite large number of MR patients in China, there are disproportionately fewer diagnoses, treatment and surgeries. Unmet clinical needs is the biggest driving force in the market for MR treatment. A large number of patients with severe MR are elderly people with high or prohibitive surgical risk, resulting in increased demand for TMV therapy.

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Improvement in diagnosis and patient evaluation: In 2019, experts in radiology and echocardiology jointly published China’s first expert consensus on MR, detailing for the first time the echocardiographic guidance for edge-to-edge TMVr, making interventional therapy more accessible for MR treatment. Improvement in diagnosis and patient evaluation of MR will help the process of selecting patients suitable for interventional treatment, benefiting patients and stimulating TMV therapy market.

New technologies and device approval: In June 2020, Abbott’s MitraClip became the first TMV product to be marketed in mainland China. Domestic products of the same type are still in clinical trials or early development stages. However, as technologies continue to make breakthroughs, future innovative products will continue to be approved. With more marketed products, TMV therapy will become more universal and accessible, driving the market to grow.

Favorable Policies and Increasing Investment: With more policies like the “Green Channel” for innovative medical devices by the NMPA encouraging innovative medical devices introduced and implemented, development and commercialization of technologically advanced medical devices such as TMV devices are made easier. Interventional therapy has been a major investment interest. As part of the therapeutic field, TMV treatment is poised to attract investment and gain support.

TMVr Market Size Globally and in China

The number of TMVr procedures performed worldwide increased from 10,700 in 2015 to 22,100 in 2019, representing a CAGR of 19.8%, and is expected to rise further to 59,900 in 2024 and 144,000 in 2030, representing a CAGR of 22.1% from 2019 to 2024 and a CAGR of 15.8% from 2024 to 2030. The number of TMVr procedures worldwide is shown in the figure below:

Historical and predicted number of TMVr procedures worldwide, 2015-2030E

Period CAGR 144.0 2015-2019 19.8% 129.1 2019-2024E 22.1% 114.3 2024-2030E 15.8% 99.9 86.1 Thousand 72.4 59.9 47.4 36.0 28.1 22.1 23.8 15.3 17.1 10.7 13.6

2015 2016 2017 2018 2019 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E

Source: Frost & Sullivan Report

–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. INDUSTRY OVERVIEW

The number of TMVr procedures performed in China is expected to grow from 300 in 2021 to 10,000 in 2025, representing a CAGR of 151.3%, and is expected to increase further to 30,900 in 2030. The CAGR from 2025 to 2030 is 25.4%. The number of TMVr procedures in China is shown in the figure below:

Predicted number of TMVr procedures in China, 2021E-2030E

Period CAGR 30.9 2021E-2025E 151.3% 27.8 2025-2030E 25.4% 24.1 20.0 Thousand 15.3

10.0 5.4 2.3 0.3 0.8

2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E

Source: Frost & Sullivan Report

The global market size for TMVr devices grew from $333.0 million in 2015 to $698.9 million in 2019, representing a CAGR of 20.4%, and is expected to grow further to 5,449.5 million in 2030. The market size of TMVr devices worldwide is shown in the figure below:

Historical and predicted market size of TMVr devices worldwide, 2015-2030E

Period CAGR 5,449.5 2015-2019 20.4% 4,841.5 2019-2024E 23.1% 4,231.0

2024-2030E 18.4% 3,619.4

3,027.9 Million USD 2,461.4 1,978.3 1,543.3 1,166.0 898.6 698.9 758.7 479.5 540.7 333.0 424.2

2015 2016 2017 2018 2019 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E

Source: Frost & Sullivan Report

–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. INDUSTRY OVERVIEW

The year 2021 is expected to witness the commercialization of TMVr in China. The market size for TMVr devices in China is expected to grow from RMB52.5 million in 2021 to RMB1,669.2 million in 2025, representing a CAGR of 137.5%, and is expected to increase further to RMB4,988.2 million in 2030. The CAGR from 2025 to 2030 is 24.5%. The market size of TMVr devices in China is shown in the figure below:

Predicted market size of TMVr devices in China, 2021E-2030E

4,988.2 Period CAGR 4,505.2 2021E-2025E 137.5% 3,927.0 2025-2030E 24.5% 3,276.0

Million RMB 2,544.5

1,669.2

912.8 421.4 52.5 157.5

2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E

Source: Frost & Sullivan Report

Competitive Landscape

Globally, there are seven TMV devices that have obtained FDA/CE approval. Of these devices, only one, the Abbott MitraClip, has been approved in China for edge-to-edge TMVr. Other devices approved for TMV include Cardiac Dimensions’ Catrillon, NeoChord’s NeoChord DS1000, Edwards’ Cardioband and PASCAL and Mitralign’s MPAS Implant. Abbott’s Tendyne is the only device approved for TMVR. It obtained the CE mark in 2020.

Transcatheter Mitral Valve Repair and Replacement Products

CARILLON NeoChord Product Tendyne MitraClip Mitral Contour DS1000 Cardioband PASCAL MPAS Implant System Transcatheter Mitral Valve Repair and Replacement Products

FDA Approval _ 2013 _ _ _ _ _

CE Mark 2020 2008 2009 2012 2015 2019 2016

NMPA Approval _ 2020 _ _ _ _ _

Note: 1. Standardized access for the corresponding approach; 2. Last updated: December 20, 2020

Source: FDA, NMPA, Frost & Sullivan Analysis

–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. INDUSTRY OVERVIEW

Currently in China, there are six TMV devices undergoing clinical trials, including four for repair and two for replacement, as shown in the table below.

Intended Use Manufacturer Product Technique Access Trial Stage

Confirmatory Hanyu Medical ValveClamp Edge-to-edge repair Transapical Clinical Trial (enrolment completed)

Mainly chordal Confirmatory Valgen MedTech MitralStitch Transapical implantation Clinical Trial Repair DragonFly Edge-to-edge repair Transfemoral FIM

NewMed ValveClip-M Edge-to-edge repair Transfemoral FIM planned

Transcatheter mitral NewMed Mi-thos Transapical FIM valve replacement Replacement Shanghai Yixin Medical Transcatheter mitral MitraFix Transapical FIM Device Co., Ltd. valve replacement

Source: Company websites, Frost & Sullivan Analysis

The following table sets out certain clinical trial results of MitraClip based on public information.

Clinical Trial Data Comparison of MitraClip

Efficacy Safety Number of Acute Average Percentage Patients Procedural Device of Patients Major Trial Name Received Success/APS, 12 Month Procedure Using >1 Adverse TMVr % Effectiveness Time Clips Effect Rate Rate (MR≤2+) at 30 Days

EVEREST I 107 74% 66% 9.0% 146 min 29.0%

EVEREST II 184 NA 55% 15.0% NA NA

EVEREST II High Risk 78 96% 53.8% 26.9% NA NA Study FDA SSED Prohibitive 302 98% 61.4% 12.3% 118.8min 61.6% Risk DM2 Notes:

(1) Based on public information.

(2) FDA SSED: FDA Summary of Safety and Effective Data.

Source: Literature Review, Frost & Sullivan Analysis

–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. INDUSTRY OVERVIEW

Frost & Sullivan Report

In connection with the [REDACTED], we have engaged Frost & Sullivan, an independent third party, to prepare a report on the interventional medical device markets in China and abroad. Frost & Sullivan, founded in 1961, is an independent global market research and consulting firm headquartered in the United States. Services offered by Frost & Sullivan include market evaluation, competitive benchmark test and strategic and market planning for all trades and professions. We have agreed to pay a total of RMB0.86 million for the compilation of the Frost & Sullivan Report. The payment is not dependent on our successful [REDACTED] or the results of the Frost & Sullivan Report. Other than the Frost & Sullivan Report, we have not commissioned any other industry report for the [REDACTED]. We have included certain data in the document from the Frost & Sullivan Report because we believe that such data will help potential investors understand the markets in which we run business. Frost & Sullivan prepares its reports based on the data from its internal databases, independent third-party reports and publicly available data from well-known industry bodies. Frost & Sullivan will contact companies operating in the relevant industries to collect and synthesize data on markets, prices and other relevant information when necessary.

Frost & Sullivan collects and reviews the data collected with due care and believes that the underlying assumptions (including those related to future projections) used in the preparation of the Frost & Sullivan Report are factual, correct and not misleading. Frost & Sullivan has analyzed the data independently, but the accuracy of the conclusions depends to a large extent on the accuracy of the data collected. The market forecasts in the commissioned report are based on the following main assumptions: (i) The overall social, economic and political environment at home and abroad is expected to remain stable throughout the forecast period; (ii) In the next decade, the economic and industrial development of China and the world is likely to maintain steady growth; (iii) There will be no extreme force majeure or industrial regulations that have a dramatic or fundamental impact on the market. The research made by Frost & Sullivan may have been influenced by the accuracy of such assumptions and the selection of primary and secondary sources. Unless otherwise indicated, all data and projections contained in this section are extracted from the Frost & Sullivan Report.

–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, DEVELOPMENT AND CORPORATE STRUCTURE

OVERVIEW

The Company was established in the PRC as a limited liability company on December 22, 2016 by Mr. Dai, being an executive Director, and Ms. Yang, being an executive Director. For the biographical details of Mr. Dai and Ms. Yang, please refer to the section headed “Directors, Supervisors and Senior Management” in this document. After a series of share transfers and capital injections, the Company was converted into a joint stock company with limited liability and renamed as “Shanghai Hanyu Medical Technology Co., Ltd. (上海捍宇醫療科技股份有限公司)”. In March 2021, the registered capital of the Company was increased and there has been no change of share capital since then.

MILESTONES OF DEVELOPMENT

The following table sets forth the key milestones of our development:

Year Key Milestones and Achievements

December 2016 We were established as a limited liability company in the PRC under the name of “Shanghai Hanyu Medical Technology Corporation Limited (上海捍宇醫療科技有限公司)”.

April 2017 We obtained an exclusive license and purchase option regarding the ValveClamp Patent.

July 2018 We launched an exploratory first-in-human (FIM) clinical trial for ValveClamp.

December 2018 We acquired the patent on ValveClamp.

January 2019 We completed the exploratory FIM clinical trial for ValveClamp with a procedural success rate of 100%.

February 2019 We commenced a prospective confirmatory clinical trial for ValveClamp.

September 2020 ValveClamp was granted the Special Review Qualification for Innovative Medical Devices.

December 2020 We were converted into a joint stock company with limited liability and renamed as “Shanghai Hanyu Medical Technology Co., Ltd. (上海捍宇醫療科技股份有限公司)”.

March 2021 The confirmatory clinical trial for ValveClamp completed enrolment of all subjects.

–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, DEVELOPMENT AND CORPORATE STRUCTURE

OUR SUBSIDIARIES

The principal business activities of our subsidiaries and the dates of their establishment and opening are as follows:

Date of Place of Principal business establishment and Percentage of Name of subsidiary incorporation activities opening our ownership

Nuoqiang Medical PRC No commencement of May 31, 2018 100% actual operations as of the Latest Practicable Date

Guangdong Hanyu PRC Manufacturing of December 21, 2020 100% medical devices and R&D

Hongyu Medical PRC Manufacturing of July 5, 2019 60.3% medical devices for pets

Xinyu Pet Hospital PRC Diagnosis and September 29, 2019 Xinyu Pet treatment for pets Hospital is held as to 100% by Hongyu Medical.

OUR HISTORY DEVELOPMENT

The Company

The Company was established in the PRC as a limited liability company on December 22, 2016 by Mr. Dai, being an executive Director, and Ms. Yang, being an executive Director, with a registered capital of RMB500,000. Each of Mr. Dai and Ms. Yang held 50% equity interest in the Company.

The Company has undergone several capital increases and equity transfers since its inception to raise funds for its business development and introduce new shareholders. The major changes in the shareholding of the Company are set out below:

1. Capital Increase in December 2016

On December 28, 2016, the Company and Guan Jingwei (管經緯) entered into a capital increase agreement, pursuant to which, Guan Jingwei subscribed for the additional Company’s registered capital of RMB135,600 by contributing RMB500,000. The consideration for the aforesaid capital increase was determined after arm’s length negotiations with reference to the then status of the business development of the Company. Guan Jingwei served as a Supervisor of the Company from March 2017 to December 2020. After completion of the capital increase,

–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, DEVELOPMENT AND CORPORATE STRUCTURE the equity interest of the Company was held by Mr. Dai, Ms. Yang and Guan Jingwei as to 39.33%, 39.33% and 21.34%, respectively. The Company obtained the updated business license in respect of the aforesaid capital increase on December 29, 2016.

2. Equity Transfer and Capital Increase in March 2017 and July 2017 (“Angel Round Financing”)

On January 10, 2017, the Company, Mr. Dai, Ms. Yang and Guan Jingwei entered into an equity transfer and capital increase agreement with Shihezi Taiyu Equity Investment Partnership (Limited Partnership) (石河子市泰譽股權投資合夥企業(有限合夥)) (“Taiyu Investment”), pursuant to which Guan Jingwei transferred 10% equity interest in the Company to Taiyu Investment for a consideration of RMB600,000, and Taiyu Investment subscribed for the additional Company’s registered capital of RMB79,500 by contributing RMB5,400,000. The consideration for the aforesaid equity transfer and capital increase was determined after arm’s length negotiations with reference to the then status of the business development of the Company. The Company obtained the updated business license in respect of the aforesaid equity transfer and capital increase on July 26, 2017. Upon the completion of the aforesaid equity transfer and capital increase, the Company was held as to 34.96% by Mr. Dai, 34.96% by Ms. Yang, 10.07% by Guan Jingwei, and 20.01% by Taiyu Investment.

3. Equity Transfer and Capital Increase in September 2017

On May 27, 2017, Suzhou Yiyuan Med-Fine Pharmaceutical Venture Capital Partnership (Limited Partnership) (蘇州一元幂方醫藥創業投資合夥企業(有限合夥)) (“Med-Fine Fund”) and Taizhou Yongda Med-Fine Investment Center (Limited Partnership) (泰州永達幂方投資中心(有限合夥)) (“Taizhou Med-Fine”) entered into an investment agreement with the Company, Mr. Dai, Ms. Yang, Guan Jingwei and Taiyu Investment. Pursuant to the investment agreement, Mr. Dai transferred 2.5% equity interest in the Company to Med-Fine Fund at the consideration of RMB1.75 million, and Ms. Yang transferred 0.99% and 0.51% equity interest in the Company to Med-Fine Fund and Taizhou Med-Fine respectively, at the respective consideration of RMB694,068 and RMB355,932; Med-Fine Fund and Taizhou Med-Fine made capital injection of RMB7,855,932 and RMB1,144,068 to the Company to subscribe for the additional Company’s registered capital of RMB62,212 and RMB9,060, respectively. The consideration for the aforesaid equity transfer and capital increase was determined after arm’s length negotiations with reference to the then status of the business development of the Company.

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On July 15, 2017, Tibet Longmaide Equity Investment Center (Limited Partnership) (西藏龍脈得股權投資中心(有限合夥)) (“Tibet Longmaide”) entered into a capital increase agreement with Mr. Dai, Ms. Yang, Guan Jingwei, Taiyu Investment, Med-Fine Fund, Taizhou Med-Fine and other relevant parties, pursuant to which Tibet Longmaide subscribed for 5.4286% equity interest in the Company at the consideration of RMB5.70 million. The consideration for the aforesaid capital increase was determined after arm’s length negotiations with reference to the then status of the business development of the Company.

The Company obtained the updated business license in respect of the aforesaid equity transfer and capital increase on September 14, 2017. Upon the completion of the aforesaid series of equity transfer and capital increase in 2017, the shareholding structure of the Company was as set forth below:

Registered Shareholding Name of Shareholders Share Capital Percentage (RMB) (%)

Mr. Dai 232,123 27.92 Ms. Yang 239,274 28.78 Guan Jingwei 72,040 8.66 Taiyu Investment 143,060 17.20 Med-Fine Fund 87,180 10.48 Taizhou Med-Fine 12,696 1.53 Tibet Longmaide 45,139 5.43

Total 83.1512 100.00

4. Capital Increase in April 2018 and Equity Transfer in May 2018 and June 2018

In January 18, 2018, to reward the contributions made by Mr. Dai and Ms. Yang to the Company since its establishment, the general meeting of the Company resolved to approve Anji Ruzhe Enterprise Management Co., Ltd. (安吉如哲企業管理有限公司) (“Anji Ruzhe”) (formerly known as Shanghai Ruzhe Enterprise Management Co., Ltd. (上海如哲企業管理有限公司) (“Shanghai Ruzhe”)), the shareholders of which are Mr. Dai and Ms. Yang, to subscribe for the additional Company’s registered capital of RMB50,940 at par value. The Company obtained the updated business license in respect of the aforesaid capital increase on April 12, 2018. Upon the completion of the aforesaid capital increase, the Company was held as to 26.30% by Mr. Dai, 27.11% by Ms. Yang, 8.16% by Guan Jingwei, 16.21% by Taiyu Investment, 9.88% by Med-Fine Fund, 1.44% by Taizhou Medfine, 5.12% by Tibet Longmaide, and 5.77% by Anji Ruzhe.

On February 8, 2018, Mr. Dai, Ms. Yang and Anji Ruzhe entered into an equity transfer agreement, pursuant to which, Mr. Dai transferred 0.5499% equity interest in the Company to Anji Ruzhe at the consideration of RMB4,853 (being at par value), and Ms. Yang transferred 0.5499% equity interest in the Company to Anji Ruzhe at the consideration of RMB4,853

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(being at par value). The Company obtained the updated business license in respect of the aforesaid equity transfer on May 28, 2018. Upon the completion of the aforesaid equity transfer, the Company was held as to 25.75% by Mr. Dai, 26.56% by Ms. Yang, 8.16% by Guan Jingwei, 16.21% by Taiyu Investment, 9.88% by Med-Fine Fund, 1.44% by Taizhou Medfine, 5.12% by Tibet Longmaide, and 6.87% by Anji Ruzhe.

On June 19, 2018, Mr. Dai and Ms. Yang entered into an agreement with Taiyu Investment, Med-Fine Fund, Taizhou Medfine, Tibet Longmaide and Anji Ruzhe, pursuant to which, Mr. Dai transferred 0.4240% equity interest in the Company to Tibet Longmaide at the consideration of RMB472,500, and transferred 0.0472% equity interest in the Company to Anji Ruzhe at the consideration of RMB416; Ms. Yang transferred 0.4240% equity interest in the Company to Tibet Longmaide at the consideration of RMB472,500, 1.0176% equity interest in the Company to Taiyu Investment at nil consideration, 1.3324% equity interest in the Company to Med-Fine Fund at nil consideration, 0.1940% equity interest in the Company to Taizhou Medfine at nil consideration and 0.48% equity interest in the Company to Anji Ruzhe at the consideration of RMB4,235. The consideration for the aforesaid equity transfer and capital increase was determined after arm’s length negotiations with reference to the then status of the business development of the Company. The Company filed the aforesaid equity transfer with the competent administration for market regulation on June 25, 2018. Upon the completion of the aforesaid equity transfer, the Company was held as to 25.28% by Mr. Dai, 23.12% by Ms. Yang, 8.16% by Guan Jingwei, 17.23% by Taiyu Investment, 11.21% by Med-Fine Fund, 1.63% by Taizhou Medfine, 5.96% by Tibet Longmaide, and 7.40% by Anji Ruzhe.

5. Equity Transfer and Capital Increase in September 2018 (“Series A+ Financing”)

On January 26, 2018, Jiangsu Jiequan Lize Health Industry Venture Capital Fund (Limited Partnership) (江蘇疌泉醴澤健康產業創業投資基金(有限合夥)) (“LYZZ Capital”) and Hangzhou Chuanghe Select Venture Capital Partnership (Limited Partnership) (杭州創合精選創業投資合夥企業(有限合夥)) (“Hangzhou Chuanghe”) entered into an investment agreement with the Company and its Shareholders, pursuant to which each of Mr. Dai and Ms. Yang transferred 0.50% equity interest in the Company to LYZZ Capital at the consideration of RMB1.08 million, and Taiyu Investment transferred 1.1668% equity interest in the Company to LYZZ Capital at the consideration of RMB2,520,330 and 1.8332% equity interest in the Company to Hangzhou Chuanghe at the consideration of RMB3,959,670; the Company obtained the capital injection of RMB18,959,670 from LYZZ Capital, and RMB16,040,330 from Hangzhou Chuanghe, to subscribe for the additional Company’s registered capital of RMB61,967 and RMB52,425 respectively. The consideration for the aforesaid equity transfer and capital increase was determined after arm’s length negotiations with reference to the then status of the business development of the Company. The Company obtained the updated business license in respect of the aforesaid equity transfer and capital increase on September 13, 2018. Upon the completion of the aforesaid capital increase, the Company was held as to 21.94% by Mr. Dai, 20.02% by Ms. Yang, 7.23% by Guan Jingwei,12.60% by Taiyu Investment, 9.93% by Med-Fine Fund, 1.45% by Taizhou Med-Fine, 5.28% by Tibet Longmaide, 6.55% by Anji Ruzhe, 8.13% by LYZZ Capital, and 6.88% by Hangzhou Chuanghe.

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6. Capital Increase in December 2018 (“Series B Financing”)

In December 2018, LYZZ Capital, Pingtan Taige Yingke Venture Capital Partnership (Limited Partnership) (平潭泰格盈科創業投資合夥企業(有限合夥)) (“Taige Yingke”), Beijing Hetang International Health Venture Capital Partnership (Limited Partnership) (北京荷塘國際健康創業投資合夥企業(有限合夥)) (“Beijing Hetang”), Hangzhou Hetang Innovative Equity Investment Partnership (Limited Partnership) (杭州荷塘創新股權投資合夥企業(有限合夥)) (“Hangzhou Hetang”) and Nantong Changtao IN Capital Investment Partnership (Limited Partnership) (南通長濤約印股權投資合夥企業(有限合夥)) (“IN Capital”) entered into a capital increase agreement with the Company and its Shareholders. Pursuant to the capital increase agreement, the Company obtained the capital injection of RMB25.00 million from LYZZ Capital, RMB35.00 million from Taige Yingke, RMB10.00 million from Beijing Hetang, RMB10.00 million from Hangzhou Hetang and RMB20.00 million from IN Capital, for subscription for additional Company’s registered capital of RMB45,311, RMB63,436, RMB18,124, RMB18,124, and RMB36,249 respectively. The consideration for the aforesaid capital increase was determined after arm’s length negotiations with reference to the then status of the business development of the Company. The Company obtained the updated business license in respect of the aforesaid capital increase on December 29, 2018. Upon the completion of the aforesaid series of equity transfer and capital increase in 2018, the shareholding structure of the Company was as set forth below:

Registered Shareholding Name of Shareholders Share Capital Percentage (RMB) (%)

Mr. Dai 218,700 18.56 Ms. Yang 199,582 16.94 Guan Jingwei 72,040 6.12 Taiyu Investment 125,567 10.66 Med-Fine Fund 98,938 8.40 Taizhou Med-Fine 14,408 1.22 Tibet Longmaide 52,623 4.47 Anji Ruzhe 65,297 5.54 LYZZ Capital 126,398 10.73 Hangzhou Chuanghe 68,602 5.82 Taige Yingke 63,436 5.38 Beijing Hetang 18,124 1.54 Hangzhou Hetang 18,124 1.54 IN Capital 36,249 3.08

Total 1,178,088 100.00

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7. Equity Transfer in July 2019

On May 28, 2019, Nantong Orient Securities Fuxiang Equity Investment Center (Limited Partnership) (南通東證富象股權投資中心(有限合夥)) (“Orient Securities Fuxiang”) and Zhejiang Zheshang Transform and Upgrade Fund of Funds Partnership (Limited Partnership) (浙江浙商轉型升級母基金合夥企業(有限合夥)) (“Transform and Upgrade Fund”) entered into an equity transfer agreement with the Company and its other Shareholders. Pursuant to the equity transfer agreement, Taizhou Med-Fine transferred 1.2230% equity interest in the Company to Orient Securities Fuxiang at the consideration of RMB7,949,491, and Tibet Longmaide transferred 2.50% equity interest in the Company to the Transform and Upgrade Fund at the consideration of RMB16.25 million. The consideration for the aforesaid equity transfer was determined after arm’s length negotiations with reference to the then status of the business development of the Company. The Company obtained the updated business license in respect of the aforesaid equity transfer on July 2, 2019. Upon the completion of the aforesaid equity transfer, the Company was held as to 18.56% by Mr. Dai, 16.94% by Ms. Yang, 6.12% by Guan Jingwei, 10.66% by Taiyu Investment, 8.40% by Med-Fine Fund, 1.97% by Tibet Longmaide, 5.54% by Anji Ruzhe, 10.73% by LYZZ Capital, 5.82% by Hangzhou Chuanghe, 5.38% by Taige Yingke, 1.54% by Beijing Hetang, 1.54% by Hangzhou Hetang, 3.08% by IN Capital, 1.22% by Orient Securities Fuxiang, and 2.50% by Transform and Upgrade Fund.

8. Equity Transfer and Capital Increase in August 2019 (“Series C Financing”)

On July 8, 2019, Panmao (Shanghai) Investment Center (L.P.) (磐茂(上海)投資中心(有限合夥)) (“Panmao Shanghai”) entered into an equity transfer and capital increase agreement with the Company and its Shareholders. Pursuant to the equity transfer and capital increase agreement, Panmao Shanghai acquired Guan Jingwei’s share in the Company’s registered capital of RMB23,562 at the consideration of RMB18.00 million, Taiyu Investment’s share in the Company’s registered capital of RMB23,562 at the consideration of RMB18.00 million, Hangzhou Chuanghe’s share in the Company’s registered capital of RMB35,343 at the consideration of RMB27.00 million, and made capital injection of RMB150 million to the Company to subscribe for additional Company’s registered capital of RMB176,713. The consideration for the aforesaid equity transfer and capital increase was determined after arm’s length negotiations with reference to the then status of the business development of the Company. The Company obtained the updated business license in respect of the aforesaid equity transfer and capital increase on August 5, 2019. Upon the completion of the aforesaid series of equity transfer and capital increase in 2019, the shareholding structure of the Company was as set forth below:

Registered Shareholding Name of Shareholders Share Capital Percentage (RMB) (%)

Mr. Dai 218,700 16.14 Ms. Yang 199,582 14.73 Guan Jingwei 48,478 3.58 Taiyu Investment 102,005 7.53 Med-Fine Fund 98,938 7.30 Tibet Longmaide 23,171 1.70

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Registered Shareholding Name of Shareholders Share Capital Percentage (RMB) (%)

Anji Ruzhe 65,297 4.82 LYZZ Capital 126,398 9.33 Hangzhou Chuanghe 33,259 2.45 Taige Yingke 63,436 4.68 Beijing Hetang 18,124 1.34 Hangzhou Hetang 18,124 1.34 IN Capital 36,249 2.68 Orient Securities Fuxiang 14,408 1.06 Transform and Upgrade Fund 29,452 2.17 Panmao Shanghai 259,180 19.13

Total 1,354,801 100.00

9. Equity Transfer and Capital Increase in July 2020

On July 6, 2020, Mr. Dai, Ms. Yang, Panmao Shanghai, Xiamen Yuhui Phase II Venture Capital Partnership (Limited Partnership) (廈門馭薈貳期創業投資合夥企業(有限合夥)) (“Xiamen Yuhui”), Xiamen Qianshan Med-Fine Equity Investment Partnership (Limited Partnership) (廈門千杉幂方股權投資合夥企業(有限合夥)) (“Xiamen Qianshan”), Nantong Orient Securities Guanlan Equity Investment Center (Limited Partnership) (南通東證觀瀾股權投資中心(有限合夥)) (“Orient Securities Guanlan”), Beijing Hetang and Hangzhou Hetang entered into a series of equity transfer agreements. Pursuant to the aforesaid agreements, Ms. Yang would transfer 1.75% equity interest in the Company to Panmao Shanghai at the consideration of RMB24.50 million, 0.6563% equity interest in the Company to Xiamen Yuhui at the consideration of RMB9.1876 million, 0.2187% equity interest in the Company to Xiamen Qianshan at the consideration of RMB3.0629 million and 0.8750% equity interest in the Company to Orient Securities Guanlan at the consideration of RMB12.2495 million; Beijing Hetang would transfer 0.6689% equity interest in the Company to Panmao Shanghai at the consideration of RMB9.3643 million; and Hangzhou Hetang would transfer 0.6689% equity interest in the Company to Mr. Dai at the consideration of RMB9.3643 million. The consideration for the aforesaid equity transfer was determined after arm’s length negotiations with reference to the then status of the business development of the Company. The Company obtained the updated business license in respect of the aforesaid equity transfers on July 13, 2020. Upon the completion of the aforesaid equity transfer, the Company was held as to 16.81% by Mr. Dai, 11.23% by Ms. Yang, 3.58% by Guan Jingwei, 7.53% by Taiyu Investment, 7.30% by Med-Fine Fund, 1.71% by Tibet Longmaide, 4.82% by Anji Ruzhe, 9.33% by LYZZ Capital, 2.45% by Hangzhou Chuanghe, 4.68% by Taige Yingke, 0.67% by Beijing Hetang, 0.67% by Hangzhou Hetang, 2.68% by IN Capital, 1.06% by Orient Securities Fuxiang, 2.17% by Transform and Upgrade Fund, 21.55% by Panmao Shanghai, 0.66% by Xiamen Yuhui, 0.22% by Xiamen Qianshan, and 0.88% by Orient Securities Guanlan.

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On July 19, 2020, Anji Qiyue Enterprise Management Center (Limited Partnership) (安吉啟悅企業管理合夥企業(有限合夥)) (“Anji Qiyue”), our employee incentive platform, entered into a capital increase agreement with the Company and its shareholders, pursuant to which, Anji Qiyue made capital injection of RMB32.50 million to the Company to subscribe for additional Company’s registered capital of RMB71,305. The capital increase was made for purpose of employee incentive, and was therefore at preferential price. The Company obtained the updated business license in respect of the aforesaid equity transfer and capital increase on July 31, 2020. Upon the completion of the aforesaid capital increase, the Company was held as to 15.97% by Mr. Dai, 10.67% by Ms. Yang, 3.40% by Guan Jingwei, 7.15% by Taiyu Investment, 6.94% by Med-Fine Fund, 1.62% by Tibet Longmaide, 4.58% by Anji Ruzhe, 8.86% by LYZZ Capital, 2.33% by Hangzhou Chuanghe, 4.45% by Taige Yingke, 0.63% by Beijing Hetang, 0.64% by Hangzhou Hetang, 2.54% by IN Capital, 1.01% by Orient Securities Fuxiang, 2.07% by Transform and Upgrade Fund, 20.47% by Panmao Shanghai, 0.62% by Xiamen Yuhui, 0.21% by Xiamen Qianshan, 0.83% by Orient Securities Guanlan, and 5.00% by Anji Qiyue.

10. Equity Transfer and Capital Increase in August 2020 (Series D Financing)

On July 30, 2020, 13 investors entered into an equity transfer and capital increase agreement with the Company and its Shareholders in respect of equity transfer and capital increase, the details of which are as follows:

• Ganzhou Biyuewu Equity Investment Partnership (Limited Partnership) (贛州畢月烏股權投資合夥企業(有限合夥)) (“Ganzhou Biyuewu”) acquired 0.0682% equity interest in the Company held by the Transform and Upgrade Fund, 0.5829% equity interest in the Company held by Mr. Dai and 1.6216% equity interest in the Company held by LYZZ Capital at the consideration of RMB1.5010 million, RMB12.8235 million and RMB35.6755 million, respectively, and made capital injection of RMB50.00 million to the Company to subscribe for the additional Company’s registered capital of RMB25,466;

• Panmao Shanghai acquired 0.6511% equity interest in the Company held by Mr. Dai and 1.6216% equity interest in the Company held by LYZZ Capital at the consideration of RMB14.3245 million and RMB35.6755 million, respectively, and made capital injection of RMB50.00 million to the Company to subscribe for the additional Company’s registered capital of RMB25,466;

• Wuhu Chending No. 2 Investment Management Partnership (Limited Partnership) (蕪湖晨鼎二號投資管理合夥企業(有限合夥)) (“Wuhu Chending”) acquired 0.3581% equity interest in the Company held by Mr. Dai, 0.7649% equity interest in the Company held by LYZZ Capital and 0.1270% equity interest in the Company held by Hangzhou Chuanghe at the consideration of RMB7.8785 million, RMB16.8274 million and RMB2.7941 million, respectively, and made capital injection of RMB27.50 million to the Company to subscribe for the additional Company’s registered capital of RMB14,006;

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• Langma No. 26 (Shenzhen) Venture Capital Center (Limited Partnership) (朗瑪二十六號(深圳)創業投資中心(有限合夥)) (“Langma No. 26”) acquired 0.1302% equity interest in the Company held by Mr. Dai and 0.3243% equity interest in the Company held by Hangzhou Chuanghe at the consideration of RMB2.8649 million and RMB7.1351 million, respectively, and made capital injection of RMB10.00 million to the Company to subscribe for the additional Company’s registered capital of RMB5,093;

• Langma No. 29 (Shenzhen) Venture Capital Center (Limited Partnership) (朗瑪二十九號(深圳)創業投資中心(有限合夥)) (“Langma No. 29”) acquired 0.0405% equity interest in the Company held by Mr. Dai, 0.0897% equity interest in the Company held by Guan Jingwei and 0.3243% equity interest in the Company held by Hangzhou Chuanghe at the consideration of RMB0.892 million, RMB1.9729 million and RMB7.1351 million, respectively, and made capital injection of RMB10.00 million to the Company to subscribe for the additional Company’s registered capital of RMB5,093;

• Orient Securities Fuxiang acquired 0.1954% equity interest in the Company held by Guan Jingwei and 0.4865% equity interest in the Company held by Hangzhou Chuanghe at the consideration of RMB4.2973 million and RMB10.7027 million, respectively, and made capital injection of RMB15.00 million to the Company to subscribe for the additional Company’s registered capital of RMB7,640;

• Xiamen Yuhui acquired 0.1278% equity interest in the Company held by the Transform and Upgrade Fund, 0.1465% equity interest in the Company held by Mr. Dai and 0.2371% equity interest in the Company held by Hangzhou Chuanghe at the consideration of RMB2.8125 million, RMB3.2230 million and RMB5.2145 million, respectively, and made capital injection of RMB11.25 million to the Company to subscribe for the additional Company’s registered capital of RMB5,730;

• Xiamen Qianshan acquired 0.0426% equity interest in the Company held by the Transform and Upgrade Fund, 0.0488% equity interest in the Company held by Mr. Dai and 0.0790% equity interest in the Company held by Hangzhou Chuanghe at the consideration of RMB0.9375 million, RMB1.0743 million and RMB1.7382 million, respectively, and made capital injection of RMB3.75 million to the Company to subscribe for the additional Company’s registered capital of RMB1,910;

• Suzhou Luanbu acquired 0.0568% equity interest in the Company held by the Transform and Upgrade Fund, 0.0651% equity interest in the Company held by Mr. Dai and 0.1053% equity interest in the Company held by Hangzhou Chuanghe at the consideration of RMB1.25 million, RMB1.4324 million and RMB2.3176 million, respectively, and made capital injection of RMB5.00 million to the Company to subscribe for the additional Company’s registered capital of RMB2,547;

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• Jiaxing Chunxiang Equity Investment Partnership (Limited Partnership) (嘉興春享股權投資合夥企業(有限合夥)) (“Jiaxing Chunxiang”) acquired 0.0651% equity interest in the Company held by Guan Jingwei and 0.1621% equity interest in the Company held by Hangzhou Chuanghe at the consideration of RMB1.4324 million and RMB3.5676 million, respectively, and made capital injection of RMB5.00 million to the Company to subscribe for the additional Company’s registered capital of RMB2,547;

• Zibo Yingke Jiyun Venture Capital Partnership (Limited Partnership) (淄博盈科吉運創業投資合夥企業(有限合夥)) (“Yingke Jiyun”) acquired 0.3261% equity interest in the Company held by the Transform and Upgrade Fund, 0.3907% equity interest in the Company held by Mr. Dai, and 0.6469% equity interest in the Company held by LYZZ Capital at the consideration of RMB7.1739 million, RMB8.5947 million and RMB14.2314 million, respectively, and made capital injection of RMB30.00 million to the Company to subscribe for the additional Company’s registered capital of RMB15,280;

• Xi’an Taiming Equity Investment Partnership (Limited Partnership) (西安泰明股權投資合夥企業(有限合夥)) (“Xi’an Taiming”) acquired 0.1954% equity interest in the Company held by Guan Jingwei and 0.4865% equity interest in the Company held by Hangzhou Chuanghe at the consideration of RMB4.9273 million and RMB10.7027 million, respectively, and made capital injection of RMB15.00 million to the Company to subscribe for the additional Company’s registered capital of RMB7,640;

• Zibo Yingke Shenghui Venture Capital Partnership (Limited Partnership) (淄博盈科聖輝創業投資合夥企業(有限合夥)) (“Yingke Shenghui”) acquired 0.1740% equity interest in the Company held by the Transform and Upgrade Fund, 0.2083% equity interest in the Company held by Mr. Dai and 0.3450% equity interest in the Company held by LYZZ Capital at the consideration of RMB3.8261 million, RMB4.5838 million and RMB7.5901 million, respectively, and made capital injection of RMB16.00 million to the Company to subscribe for the additional Company’s registered capital of RMB8,149.

The consideration for the aforesaid equity transfer and capital increase was determined after arm’s length negotiations with reference to the then status of the business development of the Company. The Company obtained the updated business license in respect of the aforesaid equity transfer and capital increase on August 27, 2020. Upon the completion of the aforesaid equity transfer and capital increase, the Company was held as to 12.26% by Mr. Dai, 9.80% by Ms. Yang, 2.62% by Guan Jingwei, 6.57% by Taiyu Investment, 6.37% by Med-Fine Fund, 1.49% by Tibet Longmaide, 4.21% by Anji Ruzhe, 3.55% by LYZZ Capital, 4.09% by Taige Yingke, 0.58% by Beijing Hetang, 0.58% by Hangzhou Hetang, 2.33% by IN Capital, 2.05% by Orient Securities Fuxiang, 1.17% by Transform and Upgrade Fund, 22.53% by Panmao Shanghai, 1.41% by Xiamen Yuhui, 0.47% by Xiamen Qianshan, 0.76% by Orient Securities

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Guanlan, 4.59% by Anji Qiyue, 3.73% by Ganzhou Biyuewu, 2.05% by Wuhu Chending, 0.75% by Langma No. 26, 0.75% by Langma No. 29, 0.37% by Suzhou Luanbu, 0.37% by Jiaxing Chunxiang, 2.24% by Yingke Jiyun, 1.12% by Xi’an Taiming, and 1.19% Yingke Shenghui.

11. Equity Transfer in November 2020

On October 26, 2020, a series of equity transfer agreements were entered into among Guan Jingwei, Med-Fine Fund, IN Capital, Anji Qulv Initiation Enterprise Management Partnership (Limited Partnership) (安吉曲率驅動企業管理合夥企業(有限合夥)) (“Anji Qulv”), Huzhou Jingxin Equity Investment Partnership (Limited Partnership) (湖州景鑫股權投資合夥企業(有限合夥)) (“Huzhou Jingxin”) and Shanghai Jinci Enterprise Management Center (Limited Partnership) (上海錦詞企業管理中心(有限合夥)) (“Shanghai Jinci”), pursuant to which, Guan Jingwei transferred 0.3280% equity interest in the Company to Huzhou Jingxin at the consideration of RMB10.00 million and transferred 2.2932% equity interest in the Company held by him to Anji Qulv at the consideration of RMB38.984 million; Med-Fine Fund transferred 1.6402% equity interest in the Company to Huzhou Jingxin at the consideration of RMB50.00 million; and IN Capital transferred 0.9841% equity interest in the Company to Shanghai Jinci at the consideration of RMB30.00 million. The consideration for the aforesaid equity transfer was determined after arm’s length negotiations with reference to the then status of the business development of the Company.

The Company obtained the updated business license in respect of the aforesaid equity transfer on November 23, 2020. Upon the completion of the aforesaid series of equity transfer and capital increase in 2020, the shareholding structure of the Company was as set forth below:

Registered Shareholding Name of Shareholders Share Capital Percentage (RMB) (%)

Mr. Dai 190,364 12.26 Ms. Yang 152,164 9.80 Taiyu Investment 102,005 6.57 Med-Fine Fund 73,472 4.73 Tibet Longmaide 23,171 1.49 Anji Ruzhe 65,297 4.21 LYZZ Capital 55,093 3.55 Taige Yingke 63,436 4.09 Beijing Hetang 9,062 0.58 Hangzhou Hetang 9,062 0.58 IN Capital 20,969 1.35 Orient Securities Fuxiang 31,772 2.05 Transform and Upgrade Fund 18,107 1.17 Panmao Shanghai 349,829 22.53 Xiamen Yuhui 21,914 1.41 Xiamen Qianshan 7,305 0.47

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Registered Shareholding Name of Shareholders Share Capital Percentage (RMB) (%)

Orient Securities Guanlan 11,854 0.76 Anji Qiyue 71,305 4.59 Ganzhou Biyuewu 57,878 3.73 Wuhu Chending 31,832 2.05 Langma No.26 11,575 0.75 Langma No.29 11,575 0.75 Suzhou Luanbu 5,788 0.37 Jiaxing Chunxiang 5,788 0.37 Yingke Jiyun 34,727 2.24 Xi’an Taiming 17,364 1.12 Yingke Shenghui 18,521 1.19 Huzhou Jingxin 30,559 1.97 Anji Qulv 35,605 2.29 Shanghai Jinci 15,280 0.98

Total 1,552,673 100.00

12. Capital Increase in March 2021 (“Series D+ Financing”)

On March 4, 2021, Hainan Yunfeng Capital Center (Limited Partnership) (海南雲鋒基金中心(有限合夥)) (“Yunfeng Capital”), Tibet Ruihua Capital Management Co., Ltd. (西藏瑞華資本管理有限公司) (“Ruihua Capital”), Yifang Huida Venture Capital (Guangdong) Partnership (Limited Partnership) (易方慧達創業投資(廣東)合夥企業(有限合夥)) (“Yifang Huida”), Pingxiang Yuhua Information Technology Partnership (Limited Partnership) (萍鄉宇鏵信息技術合夥企業(有限合夥)) (“Pingxiang Yuhua”), Suqian Lingdao Mandala Enterprise Management Partnership (Limited Partnership) (宿遷領道曼陀羅企業管理合夥企業(有限合夥)) (“Suqian Lingdao”), Ganzhou Jiaomujiao Equity Investment Partnership (Limited Partnership) (贛州角木蛟股權投資合夥企業(有限合夥)) (“Ganzhou Jiaomujiao”), Shanghai Jiedao Venture Capital Partnership (Limited Partnership) (上海傑道創業投資合夥企業(有限合夥)) (“Shanghai Jiedao”), Octagon Investments Master Fund LP (“Octagon Fund”), the Company and its Shareholders entered into a capital increase agreement. Pursuant to the capital increase agreement, Yunfeng Capital, Ruihua Capital, Yifang Huida, Pingxiang Yuhua, Suqian Lingdao, Ganzhou Jiaomujiao, Shanghai Jiedao and Octagon Fund would make capital injection of RMB200.00 million, RMB65.00 million, RMB20.00 million, RMB55.00 million, RMB35.00 million, RMB10.00 million, RMB20.00 million and RMB50.00 million (Octagon Fund made the contribution with equivalent US dollars), respectively to the Company to subscribe for the additional Company’s registered capital of RMB2,142,875, RMB696,429, RMB214,286, RMB589,286, RMB375,000, RMB107,143, RMB214,286 and RMB535,714. The consideration for the aforesaid capital increase was determined after arm’s length negotiations with reference to the then status of the business development of the Company.

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The Company obtained the updated business license in respect of the aforesaid capital increase on March 8, 2021. Upon the completion of the aforesaid capital increase, the shareholding structure of the Company was as set forth below:

Number of Shareholding Name of Shareholders Shares Percentage (%)

Mr. Dai 9,195,305 11.51 Mr. Yang 7,350,099 9.20 Panmao Shanghai 16,898,069 21.16 Taiyu Investment 4,927,229 6.17 Med-Fine Fund 3,548,977 4.44 Anji Qiyue 3,444,302 4.31 Anji Ruzhe 3,154,093 3.95 Taige Yingke 3,064,200 3.84 Ganzhou Biyuewu 2,795,727 3.50 LYZZ Capital 2,661,201 3.33 Yunfeng Capital 2,142,857 2.68 Anji Qulv 1,719,857 2.15 Yingke Jiyun 1,677,446 2.10 Wuhu Chending 1,537,606 1.93 Orient Securities Fuxiang 1,534,708 1.92 Huzhou Jingxin 1,476,116 1.85 Tibet Longmaide 1,119,247 1.40 Xiamen Yuhui 1,058,529 1.33 IN Capital 1,012,882 1.27 Yingke Shenghui 894,635 1.12 Transform and Upgrade Fund 874,637 1.09 Xi’an Taiming 838,747 1.05 Shanghai Jinci 738,082 0.92 Ruihua Capital 696,429 0.87 Pingxiang Yuhua 589,286 0.74 Orient Securities Guanlan 572,593 0.72 Langma No.26 559,116 0.70 Langma No.29 559,116 0.70 Octagon Fund 535,714 0.67 Beijing Hetang 437,729 0.55 Hangzhou Hetang 437,729 0.55 Suqian Lingdao 375,000 0.47 Xiamen Qianshan 352,859 0.44 Suzhou Luanbu 279,582 0.35 Jiaxing Chunxiang 279,582 0.35 Yifang Huida 214,286 0.27 Shanghai Jiedao 214,286 0.27 Ganzhou Jiaomujiao 107,143 0.13

Total 79,875,001 100.00

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As advised by our PRC Legal Advisor, the Company has complied with applicable laws and regulations of the PRC and obtained the necessary approvals or consents in respect of the aforementioned changes in the Company’s shareholding.

Please refer to the paragraph below headed “– Corporate Structure – Corporate Structure Immediately Before Completion of the [REDACTED]” for information on the shareholding structure of the Company as of the Latest Practicable Date.

Acting-In-Concert Agreement

To ensure the stability of ownership and business development of the Company, Mr. Dai and Ms. Yang entered into an acting-in-concert agreement on December 5, 2020. It was confirmed in the acting-in-concert agreement that Mr. Dai, Ms. Yang, Anji Qiyue and Anji Ruzhe has acted in concert since the establishment of the Company. Pursuant to the acting-in-concert agreement, Ms. Yang has confirmed that she has and will continue to adopt exactly the same decisions as Mr. Dai when she exercises her voting rights at the Board meeting and the general meetings of the Company; during the period when Mr. Dai and Ms. Yang hold equity interests in Anji Ruzhe and Anji Qiyue, they will procure Anji Ruzhe and Anji Qiyue to adopt exactly the same decisions as Mr. Dai when exercising voting rights at the general meetings of the Company; on matters that are required to be decided by the Shareholders in the day-to-day operations of the Company, Ms. Yang will adopt exactly the same decisions as Mr. Dai.

Our Subsidiaries

Nuoqiang Medical

Nuoqiang Medical is a limited liability company established in the PRC on May 31, 2018 with a registered capital of RMB1,130,000. As of the Latest Practicable Date, it has not yet commenced actual business operation.

100% equity interest in Nuoqiang Medical was owned by Ji Jianzhong (季建忠), being an independent third party of the Company, at the time of its inception. In order to facilitate our business development, the Company entered into an equity transfer agreement with Ji Jianzhong, supplemented by a supplemental agreement dated October 13, 2020 among the Company, Ji Jianzhong and Nuoqiang Medical, pursuant to which the Company acquired the entire equity interests in Nuoqiang Medical from Ji Jianzhong at a consideration of RMB6,000,000 determined after arm’s length negotiation with reference to the registered capital of Nuoqiang Medical. Nuoqiang Medical obtained the updated business license in respect of the aforesaid acquisition on April 16, 2019. Accordingly, Nuoqiang Medial became our wholly-owned subsidiary.

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Guangdong Hanyu

Guangdong Hanyu is a limited liability company established in the PRC on December 21, 2020 with a registered capital of RMB5,000,000. It is principally engaged in manufacturing of medical devices and R&D. Guangdong Hanyu has been wholly owned by the Company since its inception.

Hongyu Medical

Hongyu Medical is a limited liability company established in the PRC on July 5, 2019 with a registered capital of RMB15,873,017. It is primarily engaged in the manufacturing of medical devices for pets. 80% and 20% equity interest in Hongyu Medical was held by our Company and Anji Zhuoyuan Enterprise Management Consulting Partnership (Limited Partnership) (安吉卓源企業管理諮詢合夥企業(有限合夥)), respectively, at the time of its inception.

As of the Latest Practicable Date, the equity interest of Hongyu Medical was held as to 60.3%, 13.5%, 10%, 7.2%, 4.5% and 4.5% by the Company, Panmao Shanghai, Anji Wanyu Enterprise Management Partnership (Limited Partnership) (安吉萬域企業管理合夥企業(有限合夥)) (“Anji Wanyu”), Orient Securities Fuxiang, LYZZ Capital and Anji Ruida Enterprise Management Partnership (Limited Partnership) (安吉瑞達企業管理合夥企業(有限合夥)) (“Anji Ruida”), respectively.

Xinyu Pet Hospital

Xinyu Pet Hospital is a limited liability company established in the PRC on September 29, 2019 with a registered capital of RMB5,000,000. It is primarily engaged in diagnosis and treatment for pets. Xinyu Pet Hospital has been wholly-owned by Hongyu Medical since its inception.

EMPLOYEE INCENTIVE SCHEME

In recognition of the contributions of our employees and to incentivize them to further promote our development, we have established Anji Qiyue, a limited partnership in the PRC, as our employee shareholding platform, the details of which are set out below.

Anji Qiyue was established as a limited partnership in the PRC on July 9, 2020 with Anji Huaze Medical Technology Co., Ltd. (安吉華澤醫療科技有限公司) (“Anji Huaze”) as its general partner, and 100% of equity interest in Anji Huaze was held by Mr. Dai as of the Latest Practicable Date.

On July 19, 2020, Anji Qiyue entered into a capital increase agreement with the Company and its Shareholders, pursuant to which, it was agreed that Anji Qiyue shall contribute RMB32,500,000 in cash to the Company, of which RMB71,305 would be credited to registered capital, while the remaining amount of RMB32,428,695 would be credited to capital reserve, which was determined with reference to the then paid-up registered capital of the Company. The additional registered capital was fully paid on October 28, 2020. As of the Latest Practicable Date, Anji Qiyue held 4.31% equity interest in the Company.

– 133 – PRINCIPAL TERMS OF THE PRE-[REDACTED] INVESTMENTS headed section the with conjunction in read be must information the that document. and this change to of subject cover and the incomplete form, on draft “Warning” in is document This

The following table summarizes the principal terms of the Pre-[REDACTED] Investments: STRUCTURE CORPORATE AND DEVELOPMENT HISTORY,

Series D+ Angel Round Financing Financing Series A+ Financing Series B Financing Series C Financing Series D Financing

Cost per Share (in RMB) (1) 0.48 3.88 9.43 10.45 39.87 99.45

Corresponding approximate post-event valuation60,000,000 of our305,000,000 650,000,000 1,200,000,000 3,000,000,000 7,455,000,000 (2) Company (in RMB)

Date(s) of agreement(s) January 10, 2017 January 26, 2018 December 26, 2018July 30, July 2020 8, 2019March 4, 2021

Approximate amount of total consideration6,000,000 (in RMB) 43,640,000 100,000,000 150,000,000 500,000,000 455,000,000

Date on which the investment was fullyJanuary settled 20, 2017 February 8, 2018 January 15, 2019 August 8, 2019 December 8, 2020 March 11, 2021 3 – 134 –

(1) [REDACTED] [REDACTED][REDACTED][REDACTED][REDACTED][REDACTED][REDACTED]

Lock-up Subject to a lock-up period of 12 monthsREDACTED following] the pursuant [ to Company Law of the PRC.

Basis for determination of considerationThe consideration for each roundREDACTED of Pre-[] Investments was determined based on arm’s length negotiation after taking into consideration the timingREDACTED of the Pre-[ ] Investments and the status of business development of the Company.

Use of proceeds and whether the proceedsWe are utilized fully proceeds for the principal business of our Group, including but not limited to, R&D activities, manufacturing and commercialization utilized of our Core Product, the growth and expansion of our Company’s business and general working capital purposes. As of the Latest Practicable Date, approximately 17.11% of the net proceedsREDACTED from the] Investments Pre-[ has been utilized.

Strategic meaningREDACTED of Pre-[ Investments] toAt the time of carrying out Pre-[REDACTED] Investments, our Directors were of the view that our Group could benefit from the additional the Group capital that would be provided by the investmentsREDACTED of] Pre-[ Investors and the knowledge and experience of the Pre-[REDACTED] Investors. Notes: headed section the with conjunction in read be must information the that document. and this change to of subject cover and the incomplete form, on draft “Warning” in is document This

(1) The cost per Share was adjusted with reference to the conversion of our Company from a limited liability company to a joint stock company with limited liability in December 2020. The discount to the [REDACTED] was calculated based on the [REDACTED] of HK$[REDACTED] per Share, being the mid-point of the STRUCTURE CORPORATE AND DEVELOPMENT HISTORY, [REDACTED] range.

(2) The fluctuation of the corresponding post-money valuation mainly resulted from the progress of research and development of our products, the general market prospects and our business plan. For instance, the FIM human clinical trial of ValveClamp was completed in China in 2018, being the year when the investment agreement for Series A+ Financing and the capital increase agreement for Series B Financing were entered into, with a 100% procedural success rate; the confirmatory clinical trial of ValveClamp was launched in 2019, being the year when the equity transfer and capital increase agreement for Series C Financing was entered into; ValveClamp was granted the Special Review Qualification for Innovative Medical Devices in 2020, being the year when the capital increase agreement for Series D Financing was entered into; the confirmatory clinical trial of ValveClamp completed enrolment of all subjects in early 2021, around the same time when the capital increase agreement for Series D+ Financing was entered into. Based on the [REDACTED] of HK$[REDACTED] per Share, being the mid-point of the [REDACTED] range, our market value upon [REDACTED] is expected to be HK$[REDACTED] million. With reference to the valuation of peer companies listed on the Stock Exchange at the time of Series D+ Financing and [REDACTED], increase from our post-money valuation of Series D+ Financing to our market value upon [REDACTED] was due to, among others, (i) the additional milestones the Company achieved and expects to achieve, which would further increase the Company’s valuation, such as the completion of the enrolment and device implantation of all patents in the pre-market confirmatory clinical trial of ValveClamp as of the Latest Practicable Date, and the expected registration and marketing of ValveClamp in the first quarter of 2023, for details of which please refer to the section headed “Business” of this document; (ii) upon [REDACTED], the Company will have access to additional capital which will further facilitate the development of the Company as well as the R&D and commercialization of our products; (iii) the [REDACTED] will increase the shareholder base and the share liquidity of the Company; (iv) the Company shall comply with the continuing obligations after [REDACTED] which will increase the transparency of the Company and optimize the corporate governance of the Company, thereby strengthening the public recognition of the Company’s value. 3 – 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. HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE

The table below sets out the details of the shareholding of our Pre-[REDACTED] Investors:

Shareholding Shareholding upon the upon the completion of completion of the the Shareholding [REDACTED] [REDACTED] as of the (assuming the (assuming the Latest [REDACTED] [REDACTED] Number of Practicable is not is fully Shareholders Shares Date exercised) exercised) (%) (%) (%)

Panmao Shanghai 16,898,069 21.16 [REDACTED][REDACTED] Taiyu Investment 4,927,229 6.17 [REDACTED][REDACTED] Med-Fine Fund 3,548,977 4.44 [REDACTED][REDACTED] Taige Yingke 3,064,200 3.84 [REDACTED][REDACTED] Ganzhou Biyuewu 2,795,727 3.50 [REDACTED][REDACTED] LYZZ Capital 2,661,201 3.33 [REDACTED][REDACTED] Yunfeng Capital 2,142,857 2.68 [REDACTED][REDACTED] Anji Qulv(Note) 1,719,857 2.15 [REDACTED][REDACTED] Yingke Jiyun 1,677,446 2.10 [REDACTED][REDACTED] Wuhu Chending 1,537,606 1.93 [REDACTED][REDACTED] Orient Securities Fuxiang 1,534,708 1.92 [REDACTED][REDACTED] Huzhou Jingxin 1,476,116 1.85 [REDACTED][REDACTED] Tibet Longmaide 1,119,247 1.40 [REDACTED][REDACTED] Xiamen Yuhui 1,058,529 1.33 [REDACTED][REDACTED] IN Capital 1,012,882 1.27 [REDACTED][REDACTED] Yingke Shenghui 894,635 1.12 [REDACTED][REDACTED] Transform and Upgrade Fund 874,637 1.09 [REDACTED][REDACTED] Xi’an Taiming 838,747 1.05 [REDACTED][REDACTED] Shanghai Jinci 738,082 0.92 [REDACTED][REDACTED] Ruihua Capital 696,429 0.87 [REDACTED][REDACTED] Pingxiang Yuhua 589,286 0.74 [REDACTED][REDACTED] Orient Securities Guanlan 572,593 0.72 [REDACTED][REDACTED] Langma No. 26 559,116 0.70 [REDACTED][REDACTED] Langma No. 29 559,116 0.70 [REDACTED][REDACTED] Octagon Fund 535,714 0.67 [REDACTED][REDACTED] Beijing Hetang 437,729 0.55 [REDACTED][REDACTED] Hangzhou Hetang 437,729 0.55 [REDACTED][REDACTED] Suqian Lingdao 375,000 0.47 [REDACTED][REDACTED] Xiamen Qianshan 352,859 0.44 [REDACTED][REDACTED] Suzhou Luanbu 279,582 0.35 [REDACTED][REDACTED] Jiaxing Chunxiang 279,582 0.35 [REDACTED][REDACTED] Yifang Huida 214,286 0.27 [REDACTED][REDACTED]

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Shanghai Jiedao 214,286 0.27 [REDACTED][REDACTED] Ganzhou Jiaomujiao 107,143 0.13 [REDACTED][REDACTED]

Total 56,731,202 71.02 [REDACTED][REDACTED]

Note: The general partner of Anji Qulv is Yu Peng (余鵬). Guan Jingwei, a previous Shareholder of the Company since December 2016, was a nominee Shareholder of Yu Peng, and Yu Peng bore the obligation to pay for the capital contribution to the Company. In November 2020, Guan Jingwei transferred the Shares in the Company to Anji Qulv and ceased to be a Shareholder of the Company, thus terminating the nominee shareholding arrangement.

Special Rights of Pre-[REDACTED] Investors

The Pre-[REDACTED] investors were granted certain special rights, including, among others, pre-emptive right, first-right-of-refusal, redemption rights, anti-dilution right and the right of prior consent to certain corporate acts. The redemption rights were terminated by March 15, 2021, whereas all other special rights ceased to be exercisable prior to or immediately upon the submission of the application for the [REDACTED] unless such application is withdrawn, rejected, or returned. None of the special rights shall survive the [REDACTED].

Compliance with Interim Guidance and Guidance Letters

On the basis that (i) the consideration for the Pre-[REDACTED] Investments was settled more than 28 clear days before the date of our first submission of the [REDACTED]tothe Stock Exchange in relation to the [REDACTED]; and (ii) the special rights granted to the Pre-[REDACTED] Investors ceased to be exercisable immediately upon the submission of the [REDACTED] application unless the [REDACTED] application is withdrawn, rejected, or returned, and none of the special rights shall survive the [REDACTED], the Joint Sponsors confirm that the investments by the Pre-[REDACTED] Investors are in compliance with the Guidance Letter HKEX-GL29-12 issued on January 2012 and updated in March 2017 by the Stock Exchange and the Guidance Letter HKEX-GL43-12 issued in October 2012 and updated in July 2013 and in March 2017 by the Stock Exchange.

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INFORMATION ABOUT OUR PRE-[REDACTED] INVESTORS

Our Pre-[REDACTED] Investors include certain Sophisticated Investors such as Panmao Shanghai. The background information of our Pre-[REDACTED] Investors is set out below:

1. Panmao Shanghai

Panmao Shanghai is a limited partnership established in the PRC, which is owned by a group of institutions and individuals. Panmao Shanghai’s general partner is Shanghai Pannuo Enterprise Management Service Co., Ltd. (上海磐諾企業管理服務有限公司), which is a wholly-owned subsidiary of CITIC Private Equity Funds Management Co., Ltd. (中信產業投資基金管理有限公司), which is in turn held as to 35% by CITIC Securities Company Limited (中信證券股份有限公司) (Stock code: 06030.HK, 600030.SH). Panmao Shanghai is a Sophisticated Investor for the purpose of paragraph 3.2(g) of Guidance Letter HKEX-GL92-18 issued by the Stock Exchange. As of the Latest Practicable Date, the registered share capital of Panmao Shanghai was RMB10.201 billion, and according to Panmao Shanghai, the assets under its management amount to around RMB12.088 billion. Apart from the investment in the Company, Panmao Shanghai also invested in other healthcare companies, including Beijing Chunlizhengda Medical Instruments Co., Ltd. (北京市春立正達醫療器械股份有限公司) and Huaxia Eye Hospital Group Co., Ltd. (華廈眼科醫院集團股份有限公司).

2. Taiyu Investment

Taiyu Investment is a limited partnership established in the PRC, which is owned by a group of institutions and individuals. Taiyu Investment’s general partner is Hangzhou Yuding Equity Investment Management Partnership (Limited Partnership) (杭州煜鼎股權投資管理合夥企業(有限合夥)), the general partner of which is Hangzhou Taiyu Investment Consulting Co., Ltd. (杭州泰煜投資諮詢有限公司). Apart from the investment in the Company, Taiyu Investment also invested in other healthcare companies.

3. Med-Fine Fund

Med-Fine Fund is a limited partnership established in the PRC, which is owned by a group of institutions. Med-Fine Fund’s general partners are Shanghai Med-Fine Asset Management Co., Ltd. (上海幂方資產管理有限公司) and Med-Fine Capital Management (Beijing) Co., Ltd. (幂方資本管理(北京)有限公司), which are ultimately controlled by Zhou Yujian (周玉建), who is an independent third party of the Company. Apart from the investment in the Company, Med-Fine Fund also invested in other healthcare companies including Immvira Bioscience Inc. and Suzhou MagAssist Medical Technology Co., Ltd. (蘇州心擎醫療技術有限公司).

4. Taige Yingke

Taige Yingke is a limited partnership established in the PRC, which is owned by a group of professional investment institutions and individuals. Taige Yingke’s general partner is Yingke Innovation Asset Management Co., Ltd. (盈科創新資產管理有限公司), which is ultimately controlled by Qian Mingfei (錢明飛), who is an independent third party of the Company. Apart from the investment in the Company, Taige Yingke also invested in other healthcare companies.

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5. Ganzhou Biyuewu

Ganzhou Biyuewu is a limited partnership established in the PRC, which is owned by a group of professional investment institutions and individuals. Ganzhou Biyuewu’s general partner is Shanghai Hehong Jinghui Equity Investment Management Co., Ltd. (上海合弘景暉股權投資管理有限公司), which is ultimately controlled by Wang Hui (王暉), who is an independent third party of the Company.

6. LYZZ Capital

LYZZ Capital is a limited partnership established in the PRC, which is owned by a group of institutions. LYZZ Capital’s general partner is Jiangsu Lize Investment Management Co., Ltd. (江蘇醴澤投資管理有限公司), which is ultimately controlled by Zhu Yong (朱勇), who is an independent third party of the Company. Apart from the investment in the Company, LYZZ Capital also invested in other healthcare companies.

7. Yunfeng Capital

Yunfeng Capital is a limited liability partnership established in the PRC. As of March 30, 2021, all of Yunfeng Capital’s partners are institutions. Yunfeng Capital’s general partner is Hainan Yunfeng Enterprise Management Center (Limited Partnership) (海南雲鋒企業管理中心 (有限合夥)), which is ultimately controlled by Wang Yulian (王育蓮), being an independent third party of the Company.

8. Anji Qulv

Anji Qulv is a limited partnership established in the PRC. Anji Qulv is owned by Yu Peng (余鵬) (acting as general partner) and Yu Maomao (余毛毛) (acting as limited partner) as to 99.99% and 0.01%, respectively. Yu Peng is the Company’s former Director and ceased to serve as a Director of the Company in December 2020.

9. Yingke Jiyun

Yingke Jiyun is a limited partnership established in the PRC, which is owned by a group of professional investment institutions. Yingke Jiyun’s general partner is Yingke Innovation Asset Management Co., Ltd. (盈科創新資產管理有限公司), which is ultimately controlled by Qian Mingfei (錢明飛), who is an independent third party of the Company. Apart from the investment in the Company, Yingke Jiyun also invested in other healthcare companies.

10. Wuhu Chending

Wuhu Chending is a limited partnership established in the PRC, which is owned by a group of institutions and individuals. Wuhu Chending’s general partner is Wuhu Yuanyou Investment Management Co., Ltd. (蕪湖元祐投資管理有限公司), which is controlled by Shen Dongri (申東日) and Shen Jinhua (申今花), who are independent third parties of the Company.

– 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. HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE

11. Orient Securities Fuxiang

Orient Securities Fuxiang is a limited partnership established in the PRC, which is owned by a group of professional investment institutions and individuals. Orient Securities Fuxiang’s general partner is Orient Securities Capital Investment Co., Ltd. (上海東方證券資本投資有限公司), which is controlled by Orient Securities Company Limited (東方證券股份有限公司) (stock code: 03958.HK, 600958.SH). Orient Securities Company Limited is an independent third party of the Company. Apart from the investment in the Company, Orient Securities Fuxiang also invested in other healthcare companies.

12. Huzhou Jingxin

Huzhou Jingxin is a limited partnership established in the PRC. Huzhou Jingxin is owned by Shandong Yizhou Energy Co., Ltd. (山東沂州能源股份有限公司) (acting as limited partner) and Li Xinyan (李新燕) (acting as general partner) as to 99.7% and 0.3%, respectively, each being an independent third party of the Company. Apart from the investment in the Company, Huzhou Jingxin also invested in other healthcare companies.

13. Tibet Longmaide

Tibet Longmaide is a limited partnership established in the PRC, which is owned by a group of professional investment institutions and individuals. Tibet Longmaide’s general partner is Beijing Anlong Investment Advisory Center (Limited Partnership) (北京安龍投資顧問中心(有限合夥)), which is controlled by Liu Ying (劉穎), being an independent third party of the Company. Apart from the investment in the Company, Tibet Longmaide also invested in other healthcare companies.

14. Xiamen Yuhui

Xiamen Yuhui is a limited partnership established in the PRC, which is owned by a group of professional investment institutions and individuals. Xiamen Yuhui’s general partner is Hefang Niuyang (Xiamen) Equity Investment Fund Management Co., Ltd. (合方牛揚(廈門)股權投資基金管理有限公司), which is controlled by Peng Zhenqing (彭振慶), being an independent third party of the Company.

15. IN Capital

IN Capital is a limited partnership established in the PRC, which is owned by a group of professional investment institutions and individuals. IN Capital’s general partner is Shenzhen IN Dazheng Investment Management Partnership (Limited Partnership) (深圳約印大正投資管理合夥企業(有限合夥)), which is ultimately controlled by Zheng Yufen (鄭玉芬), being an independent third party of the Company. Apart from the investment in the Company, IN Capital also invested in other healthcare companies.

– 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. HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE

16. Yingke Shenghui

Yingke Shenghui is a limited partnership established in the PRC, which is owned by a group of professional investment institutions. Yingke Shenghui’s general partner is Yingke Innovation Asset Management Co., Ltd. (盈科創新資產管理有限公司), which is ultimately controlled by Qian Mingfei (錢明飛), being an independent third party of the Company.

17. Transform and Upgrade Fund

Transform and Upgrade Fund is a limited partnership established in the PRC owned by a group of professional investment institutions. Transform and Upgrade Fund’s general partner is Zhejiang Zheshang Innovest Capital Management Co., Ltd. (浙江浙商創新資本管理有限公司), being an independent third party of the Company.

18. Xi’an Taiming

Xi’an Taiming is a limited partnership established in the PRC owned by a group of professional investment institutions and individuals. Xi’an Taiming’s general partner is Ningbo Zeyi Investment Management Partnership (limited partnership) (寧波澤亦投資管理合夥企業 (有限合夥)), which is ultimately controlled by Liu Junjun (劉軍軍), being an independent third party of the Company.

19. Shanghai Jinci

Shanghai Jinci is a limited partnership established in the PRC owned by a group of individuals. Shanghai Jinci’s general partner is Zhao Zhenwei (趙鎮威), who is an independent third party of the Company.

20. Ruihua Capital

Ruihua Capital is a limited liability company established in the PRC owned by a group of individuals. Ruihua Capital is ultimately controlled by Zhang Jianbin (張建斌), who is an independent third party of the Company.

21. Pingxiang Yuhua

Pingxiang Yuhua is a limited liability partnership established in the PRC owned by Zhang Hua (張華) (acting as general partner) and Sha Wangyang (沙汪洋) (acting as limited partner) as to 50% each, both being independent third parties of the Company.

– 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. HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE

22. Orient Securities Guanlan

Orient Securities Guanlan is a limited partnership established in the PRC owned by Orient Securities Capital Investment Co., Ltd. (上海東方證券資本投資有限公司) (acting as general partner) and You Feihuang (尤飛煌) (acting as limited partner) as to 3.91% and 96.09%, respectively. Orient Securities Capital Investment Co., Ltd. is controlled by Orient Securities Company Limited (東方證券股份有限公司) (stock code: 03958.HK, 600958.SH), which is an independent third party of the Company.

23. Langma No. 26

Langma No. 26 is a limited partnership registered in the PRC. Langma No. 26 is owned by a general partner, being Everest Venture Capital Management Co., Ltd. (朗瑪峰創業投資有限公司), and a group of individuals as limited partners. Everest Venture Capital Management Co., Ltd is a professional investment institution, ultimately controlled by Xiao Jiancong (肖建聰), being an independent third party of the Company.

24. Langma No. 29

Langma No. 29 is a limited partnership registered in the PRC. Langma No. 29 is owned by a general partner, being Everest Venture Capital Management Co., Ltd. (朗瑪峰創業投資有限公司), and a group of individuals as limited partners. Everest Venture Capital Management Co., Ltd is a professional investment institution, ultimately controlled by Xiao Jiancong, being an independent third party of the Company.

25. Octagon Fund

Octagon Fund is an exempted limited partnership formed under the laws of the Cayman Islands and operating as a private investment fund. Octagon Investments GP LLC, being an independent third party of the Company, is the general partner of Octagon Fund, which manages capital on behalf of global institutions such as university endowments, non-profit foundations, family offices, pension funds and established asset managers.

26. Beijing Hetang

Beijing Hetang is a limited partnership established in the PRC owned by a group of professional investment institutions and individuals. Beijing Hetang’s general partner is Beijing Hetang International Health Venture Capital Management Co., Ltd. (北京荷塘國際健康創業投資管理有限公司), which is ultimately controlled by Yang Hongru (楊宏儒), being an independent third party of the Company. Apart from the investment in the Company, Beijing Hetang also invested in other healthcare companies.

27. Hangzhou Hetang

Hangzhou Hetang is a limited partnership established in the PRC owned by a group of professional investment institutions and individuals. Hangzhou Hetang’s general partner is Hangzhou Heqing Investment Management Co., Ltd. (杭州荷清投資管理有限公司), being an independent third party of the Company. Apart from the investment in the Company, Hangzhou Hetang also invested in other healthcare companies.

– 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. HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE

28. Suqian Lingdao

Suqian Lingdao is a limited liability partnership established in the PRC owned by a group of institutions and individuals. Suqian Lingdao’s general partner is Nanjing Lingyu Equity Investment Co., Ltd. (南京領域股權投資有限公司), which is controlled by Sun Yurong (孫玉蓉), being an independent third party of the Company.

29. Xiamen Qianshan

Xiamen Qianshan is a limited partnership established in the PRC owned by a group of professional investment institutions and individuals. Xiamen Qianshan’s general partner is Xiamen Qianshan Yunfan Asset Management Co., Ltd. (廈門千杉雲帆資產管理有限公司), which is ultimately controlled by Lin Huiqi (林慧奇), being an independent third party of the Company. Apart from the investment in the Company, Xiamen Qianshan also invested in other healthcare companies.

30. Suzhou Luanbu

Suzhou Luanbu is a limited partnership established in the PRC owned by Sun Xiaoping (孫小平) (acting as limited partner) and Shanghai Nuojin Asset Management Co., Ltd. (上海諾瑾資產管理有限公司) (acting as general partner) as to 99.98% and 0.02% respectively. Shanghai Nuojin Asset Management Co., Ltd. is ultimately controlled by Han Baoshi (韓寶石), who is an independent third party of the Company.

31. Jiaxing Chunxiang

Jiaxing Chunxiang is a limited partnership established in the PRC owned by a group of institutions and individuals. Jiaxing Chunxiang’s general partner is Jiaxing Chunhui Equity Investment Management Partnership (Limited Partnership) (嘉興春惠股權投資管理合夥企業 (有限合夥)), which is ultimately controlled by Bi Lei (畢磊), being an independent third party of the Company. Apart from the investment in the Company, Jiaxing Chunxiang also invested in other medical and health companies.

32. Yifang Huida

Yifang Huida is a limited liability partnership established in the PRC owned by a group of institutions and individuals. Yifang Huida’s general partner is Creedfont Capital Management Co., Ltd. (凱利易方資本管理有限公司), which is ultimately controlled by Yan Xiangjun (嚴祥軍), being an independent third party of the Company.

33. Shanghai Jiedao

Shanghai Jiedao is a limited liability partnership established in the PRC owned by Shanghai Yunjia Business Consulting Co., Ltd. (上海韻嘉商務諮詢有限公司) (acting as general partner) and Chen Xiewen (陳協文) (acting as limited partner) as to 1% and 99% respectively. Shanghai Yunjia Business Consulting Co., Ltd. is ultimately controlled by Chen Xiewen, who is an independent third party of the Company.

– 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. HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE

34. Ganzhou Jiaomujiao

Ganzhou Jiaomujiao is a limited liability partnership established in the PRC owned by Shanghai Hehong Jinghui Equity Investment Management Co., Ltd. (上海合弘景暉股權投資管理有限公司) (acting as general partner), Fuzhou Taihong Jinghui Equity Investment Partnership (Limited Partnership) (福州泰弘景暉股權投資合夥企業(有限合夥)) (acting as limited partner) and Zhuhai Taihong Jinghui Equity Investment Partnership (Limited Partnership) (珠海泰弘景暉股權投資合夥企業(有限合夥)) (acting as limited partner) as to 0.2%, 59.88% and 39.92%, respectively. Shanghai Hehong Jinghui Equity Investment Management Co., Ltd. is ultimately controlled by Wang Hui (王暉), who is an independent third party of the Company.

PUBLIC FLOAT

The 79,875,001 Shares held by our Shareholders as of the Latest Practicable Date, representing approximately 100% of our total issued Shares as of the Latest Practicable Date, or approximately [REDACTED]% of our total issued Shares upon [REDACTED] (assuming the [REDACTED] is not exercised), or approximately [REDACTED]% of our total issued Shares (assuming the [REDACTED] is exercised in full), will not be considered as part of the public float for the purpose of Rule 8.08 of the Listing Rules as the Shares are Unlisted Shares which will not be converted into H Shares and listed following the completion of the [REDACTED].

Mr. Dai, Ms. Yang, Anji Qiyue, Anji Ruzhe (collectively as the Single Largest Shareholder Group) and Panmao Shanghai are core connected persons of the Company, and will remain core connected persons of the Company upon completion of the [REDACTED]. Therefore, the 40,041,868 Shares held by Mr. Dai, Ms. Yang, Anji Qiyue, Anji Ruzhe and Panmao Shanghai as of the Latest Practicable Date, representing approximately 50.13% of our total issued Shares as of the Latest Practicable Date, or approximately [REDACTED]% of our total issued Shares upon [REDACTED] (assuming the [REDACTED] is not exercised), or approximately [REDACTED]% of our total issued Shares upon [REDACTED] (assuming the [REDACTED] is exercised in full), will not be considered as part of the public float for the purpose of Rule 8.08 of the Listing Rules after [REDACTED].

Immediately upon completion of the [REDACTED], assuming that (i) [REDACTED]H Shares are issued and sold in the [REDACTED]; (ii) the [REDACTED] is not exercised; and (iii) [REDACTED] Shares are issued and outstanding upon completion of the [REDACTED], based on an [REDACTED] of HK$[REDACTED] per Share (being the low-end of the indicative [REDACTED] range), our issued Shares with a market capitalization of no less than HK$[REDACTED] million will be held by public, substantially over HK$375 million in accordance with Rule 18A.07 of the Listing Rules.

– 144 – CORPORATE STRUCTURE headed section the with conjunction in read be must information the that document. and this change to of subject cover and the incomplete form, on draft “Warning” in is document This ITR,DVLPETADCROAESTRUCTURE CORPORATE AND DEVELOPMENT HISTORY, Corporate Structure Immediately Before Completion of the [REDACTED]

The following chart sets forth the shareholding and corporate structure of the Group as of the Latest Practicable Date:

Persons acting in concert 21.16% 6.17% 4.44% 3.84% 3.50% 3.33% 2.68% 2.15% 2.10% 21.66% 11.51%(total shareholding: 28.98%) 9.20% Panmao Shanghai Taiyu Investment Med-Fine Fund Taige Yingke Ganzhou Biyuewu LYZZ Capital Yunfeng Capital Anji Qulv Yingke Jiyun Other Mr. Dai Ms. Yang Shareholders(2)

100.00%

Anji Huaze 73.30% General Partner 1.00% 26.70%

4 – 145 – Anji Qiyue Anji Ruzhe

4.31% 3.95% Our Company

100.00% 60.3% 100.00%

Nuoqiang Medical Hongyu Medical(1) Guangdong Hanyu

100.00% Xinyu Pet Hospital

Note:

(1) As of the Latest Practicable Date, Panmao Shanghai, Anji Wanyu, Orient Securities Fuxiang, LYZZ Capital and Anji Ruida held 13.5%, 10%, 7.2%, 4.5% and 4.5% equity interest of Hongyu Medical, respectively, among which Anji Wanyu and Anji Ruida are ultimately controlled by Mr. Dai, and Panmao Shanghai is a substantial Shareholder of the Company. Orient Securities Fuxiang and LYZZ Capital are also Shareholders of the Company.

(2) As of the Latest Practicable Date, the Company was held as to 1.93% by Wuhu Chending, 1.92% by Orient Securities Fuxiang, 1.85% by Huzhou Jingxin, 1.40% by Tibet Longmaide, 1.33% by Xiamen Yuhui, 1.27% by IN Capital, 1.12% by Yingke Shenghui, 1.09% by Transform and Upgrade Fund, 1.05% by Xi’an Taiming, 0.92% by Shanghai Jinci, 0.87% by Ruihua Capital, 0.74% by Pingxiang Yuhua, 0.72% by Orient Securities Guanlan, 0.70% by Langma No. 26, 0.70% by Langma No. 29, 0.67% by Octagon Fund, 0.55% by Beijing Hetang, 0.55% by Hangzhou Hetang, 0.47% by Suqian Lingdao, 0.44% by Xiamen Qianshan, 0.35% by Suzhou Luanbu, 0.35% by Jiaxing Chunxiang, 0.27% by Yifang Huida, 0.27% by Shanghai Jiedao, and 0.13% by Ganzhou Jiaomujiao. Corporate Structure Immediately After Completion of the [REDACTED] headed section the with conjunction in read be must information the that document. and this change to of subject cover and the incomplete form, on draft “Warning” in is document This

The following chart sets forth the shareholding and corporate structure of the Group immediately after the completion of the [REDACTED] STRUCTURE CORPORATE AND DEVELOPMENT HISTORY, (assuming the [REDACTED] is not exercised):

Persons acting in concert [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]% (total shareholding: [REDACTED]%) [REDACTED]% Mr. Dai Ms. Yang Other Panmao Taiyu Med-Fine Taige Ganzhou LYZZ Capital Yunfeng Anji Yingke Shareholders of H Shareholders Shanghai Investment Fund Yingke Biyuewu Capital Qulv Jiyun Unlisted Shares(2) 100.00%

Anji Huaze 73.30% General Partner 1.00% 26.70%

Anji Qiyue Anji Ruzhe 4 – 146 –

[REDACTED]% [REDACTED]% Our Company

100.00% 60.3% 100.00%

Nuoqiang Medical Hongyu Medical(1) Guangdong Hanyu

100.00% Xinyu Pet Hospital

Note:

(2) Immediately after the completion of the [REDACTED] (assuming the [REDACTED] is not exercised), the Company will be held as to [REDACTED]% by Wuhu Chending, [REDACTED]% by Orient Securities Fuxiang, [REDACTED]% by Huzhou Jingxin, [REDACTED]% by Tibet Longmaide, [REDACTED]% by Xiamen Yuhui, [REDACTED]% by IN Capital, [REDACTED]% by Yingke Shenghui, [REDACTED]% by Transform and Upgrade Fund, [REDACTED]% by Xi’an Taiming, [REDACTED]% by Shanghai Jinci, [REDACTED]% by Ruihua Capital, [REDACTED]% by Pingxiang Yuhua, [REDACTED]% by Orient Securities Guanlan, [REDACTED]% by Langma No. 26, [REDACTED]% by Langma No. 29, [REDACTED]% by Octagon Fund, [REDACTED]% by Beijing Hetang, [REDACTED]% by Hangzhou Hetang, [REDACTED]% by Suqian Lingdao, [REDACTED]% by Xiamen Qianshan, [REDACTED]% by Suzhou Luanbu, [REDACTED]% by Jiaxing Chunxiang, [REDACTED]% by Yifang Huida, [REDACTED]% by Shanghai Jiedao, and [REDACTED]% by Ganzhou Jiaomujiao. This document is in draft form, incomplete 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

Transapical Commercial launch in ValveClamp Confirmatory Trial Patient Enrolment Completed (Note) Global edge-to-edge repairr 2023 1Q

Percutaneous FIM clinical trial MR ValveClasp Global edge-to-edge repair initiation in 2021 3Q Valve Repair Transatrial FIM clinical trial ValveClose Global mitral annuloplasty initiation in 2023

Percutaneous FIM clinical trial TR ValveClasp-T Global edge-to-edge repair initiation in 2022 2Q

Other Heart Percutaneous atrial FIM clinical trial ASD ReAces (Note) Global Repair septal defect closure initiation in 2021 3Q

Percutaneous valve MR ValveNeo-M Global replacement

Valve Percutaneous valve TR ValveNeo-T Global Replacement replacement

Percutaneous valve AR ValveCare Global replacement

Core Product

Abbreviations: MR, mitral regurgitation; TR, tricuspid regurgitation; ASD, atrial septal defect; AR, aortic regurgitation.

Our Core Product, ValveClamp, adopts the most well-validated and widely used edge-to-edge repair technique for mitral regurgitation (MR). ValveClamp was the first domestic TMV product to enter the confirmatory clinical trial, which was initiated in February 2019. As of the Latest Practicable Date, we had completed the patient enrolment (102 subjects) for the confirmatory clinical trial of ValveClamp, and had completed follow-up evaluations for over 50% of the subjects. We completed an exploratory first-in-human (FIM) clinical trial of ValveClamp in January 2019 with a 100% procedural success rate. It was granted the Special Review Qualification for Innovative Medical Devices in September 2020, being the first domestic TMV product to receive such qualification. Capitalizing on such qualification, ValveClamp is expected to be registered and marketed in China in the first quarter of 2023. ValveClamp won the Best Innovation Award at the International Conference of Innovation in Cardiovascular System (ICI) in December 2018.

– 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

We focus on the structural heart disease market that is vast, fast growing and severely under-penetrated, especially in China, due to the lack of effective and affordable interventional therapies. According to Frost & Sullivan, there were approximately 213.2 million patients with valvular heart diseases worldwide in 2019, causing 2.6 million deaths. In the same year, MR, the most prevalent valvular heart disease, had a record number of moderate-to-severe cases of 96.7 million and 10.6 million globally and in China, respectively. The large-scale epidemiological investigation of MR is quite limiting in China so far. According to the epidemiological investigation in the United States, patients with severe MR take up about 30% of the moderate to severe patients. The standard treatment for patients with severe MR is to replace or repair the mitral valve under cardiopulmonary bypass with thoracotomy requiring cardiac arrest. The high procedural risks associated with conventional surgery leave a large number of patients untreatable. In 2019, less than 1% of moderate-to-severe MR patients in China received surgical treatment. Compared to conventional surgery, TMVr procedure eliminates the need for cardiac arrest or cardiopulmonary bypass, thereby significantly lowers procedural risks and reduces the operative wound to 2 to 4cm. Benefiting from its patient-friendly feature and other advantages over the conventional surgery, TMVr is expected to unlock the significant growth potential in the vast but under-penetrated MR treatment market in China. According to Frost & Sullivan, the global TMVr devices market is estimated to grow to US$5.4 billion by 2030, representing a CAGR of 20.5% from 2019 to 2030, while the China TMVr devices market is estimated to grow to RMB5.0 billion by 2030, representing a CAGR of 65.9% from 2021 (estimated first year of TMVr commercialization in China) to 2030.

Currently, seven types of TMV repair and replacement products have been approved around the world. Among these, only MitraClip from Abbott, which adopts the edge-to-edge repair technique, has been approved in each of Europe, the United States and China. As of the Latest Practicable Date, MitraClip had accumulated over 100,000 cases globally, providing stronger clinical validation for the edge-to-edge technique than any other TMV technique. Further, the edge-to-edge technique is the only TMVr technique recommended by clinical guidelines including 2017 ESC/EACTS in Europe and 2020 ACC/AHA in the United States. ValveClamp, while adopting the edge-to-edge technique, accesses the mitral valve via the transapical pathway, which is a shorter pathway and enables easier operation than the transfemoral pathway of other TMVr devices. The unique transapical pathway feature shortens the learning curve of operators, enabling both cardiothoracic surgeons and cardiologists to perform the operation. In particular, the catheter operation time in a ValveClamp procedure averages only 26.8 minutes, which is significantly shorter than the two to four hours generally required for transfemoral edge-to-edge TMVr devices according to Frost & Sullivan. In addition, the operation can be performed with the assistance of ultrasound only and without the use of DSA, thus lowering the infrastructure requirements and avoiding the intraoperative radiation exposure of patients and operators in the case of transfemoral interventional devices.

– 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

We generally perform the research and development of our product candidates in-house. We may also collaborate with medical institutions to jointly develop the early medical concepts for innovative products. For ValveClamp, the medical concept was originated from Zhongshan Hospital, which obtained a patent based on such medical concept. We have obtained certain contractual rights regarding such patent in April 2017 and acquired such patent in December 2018. We translated the medical concept of ValveClamp and materialized it into a clinical-stage innovative medical device. We performed model design, prototype iteration, animal study and type test, and sponsored the subsequent FIM and confirmatory clinical trials for ValveClamp. Zhongshan Hospital participated in the clinical trials as one of the clinical sites but otherwise no longer hold any commercial interest or right in ValveClamp. Based on our R&D work on ValveClamp, we have obtained additional patents solely in our name. In addition to ValveClamp, the medical concept of ReAces was also initially developed by Zhongshan Hospital, from which we acquired the relevant patent-in-application, carried out medical translation and applied for additional patents solely in our name. Other than ValveClamp and ReAces as described above, we developed all our other product candidates in-house.

We have independently developed and continuously enhanced our proprietary core technologies to cover the full medical device life cycle from early design to process development and commercial-scale production. We have established nine core technologies, including: (1) the design and manufacturing technology for precisely controlled steerable catheter; (2) preparation technology of super-elastic nickel-titanium alloy; (3) material science technology of super anti-fatigue performance; (4) polymer coating technology; (5) PEEK material precision machining technology; (6) precision processing and manufacturing technology of cobalt-chromium-nickel alloy; (7) ultra-low-power human signal acquisition and processing technology; (8) optimized bioprosthetic valve treatment technology; and (9) titanium-nickel wire weaving and shaping technology. We plan to rely on our own technologies to continuously enrich our product pipeline and speed up the commercialization of our product candidates.

COMPETITIVE STRENGTHS

We believe that our success is attributable to the following strengths that distinguish us from our competitors:

Clinically proven TMV technique well positioned to address significant unmet clinical need in China

There is significant unmet clinical demand in China’s MR market. According to Frost & Sullivan, there were approximately 10.6 million moderate to severe patients affected by MR in China in 2019. If not treated effectively, severe MR can lead to a series of potentially

– 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 life-threatening complications, including pulmonary arterial hypertension, atrial fibrillation and heart failure. At present, the standard treatments for MR in China mainly comprise medication and surgical treatment, both of which come with significant limitations:

• Medication such as ACE inhibitors, ARBs and beta blockers cannot fundamentally reverse abnormal cardiac structural changes, rendering it ineffective for patients with severe regurgitation, while sometimes causing serious side effects such as low blood pressure and electrolyte disturbance; and

• Surgical treatment requires thoracotomy, heart arrest and cardiopulmonary bypass. The high risks of valve surgery make it unsuitable for patients with underlying diseases and poor physical conditions. Moreover, in China, the number of surgeons and medical institutions capable of performing valve surgery is extremely limited. According to Frost & Sullivan, only about 42,000 MR surgeries were performed in China in 2019.

Emerging interventional therapies offer significant competitive advantages over medication and conventional surgeries, promising long-term survival benefits for patients: (i) Similar to conventional surgeries, interventional therapy reduces MR through repair or replacement of the mitral valve, and can fundamentally resolve cardiac structural changes compared to medication; (ii) Interventional therapies do not require cardiac arrest or cardiopulmonary bypass, and are therefore safer and less invasive than conventional surgeries, making them suitable for a wide array of patients, including those with pre-existing conditions and poor body functions.

Among MR interventional therapies, edge-to-edge TMVr is the most well-validated and the most widely used therapy in practice according to Frost & Sullivan. Edge-to-edge TMVr has become the preferred technique of TMV therapy in the world with more than 100,000 cases performed globally.

Our ValveClamp, adopting an edge-to-edge TMVr approach, with its domestic first-mover advantage and product features, is expected to address the unmet clinical needs of MR treatment in China.

Front-running domestic TMV device poised to revolutionize the MR treatment paradigm in China

Our Core Product, ValveClamp, is the first domestic TMV product to enter the confirmatory clinical trial. As of the Latest Practicable Date, we had completed the patient enrolment (102 subjects) for the confirmatory clinical trial of ValveClamp and had completed follow-up evaluations for over 50% of the subjects. ValveClamp is expected to receive NMPA approval in the first quarter of 2023, and become the first domestic-developed TMV device and the world’s first transapical edge-to-edge TMVr device to be commercially-launched, according to Frost & Sullivan.

ValveClamp has demonstrated its clinical feasibility and benefits in the FIM trial and subsequent long term follow-up, bringing significant survival benefits to patients. In this FIM trial of 12 elderly patients with high risk of conventional surgery and severe MR, ValveClamp achieved a 100% procedural success rate, with only a single clamp implanted in each case. Immediate postoperative ultrasound showed that the MR grade of all patients was reduced to 1+ or below, versus 1 case of 3+ and 11 cases of 4+ prior to the operation. The average device procedure time was 26.8 minutes, the 12-month effectiveness rate (MRՅ2+) was 91.7% and the major AE rate at 30 days was 0%.

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ValveClamp demonstrates a number of unique advantages:

• Short transapical pathway and easy operation. ValveClamp is expected to become the world’s first edge-to-edge TMVr product adopting the short transapical pathway. It can be operated without the need to steer the delivery system or puncture the atrial septum as required in a transfemoral TMV procedure. The position of the clamp can be adjusted by simply swinging the delivery sheath outside the body without the need for steering the sheath. The catheter operation time averages only 26.8 minutes. The easy operation shortens the learning curve of medical practitioners.

• Unique clamping design with optimized effect. ValveClamp’s unique design allows the upper and lower clamping arms to be axially free to separate, making it easier to capture and clamp the valve leaflets even with a wider space between such leaflets. The large capturing range ensures secure clamping with low possibility of device dislodgement over time. Its contraction working mechanism leads to a double-pinch effect pulling the leaflets, thereby further enlarging the capturing range. The optimized effect significantly reduces the need for multiple clamps in a single patient or procedure, thereby further simplifying the procedure and shortening the operation time.

• Cost-effective production. ValveClamp can be manufactured in a cost-effective manner with quality assurance due to its simplified product structure and delivery system as a result of its short transapical access pathway. The cost-effective production is conducive to commercial promotion at a competitive price after its registration. We believe that the potential price advantage of ValveClamp will translate into expeditious NRDL inclusion and commercial adoption, benefiting the mass MR patient pool without imposing significant economic burdens.

• Low infrastructure requirement. While transfemoral TMV procedures necessitate X-ray fluoroscopy and the configuration of expensive DSA devices, the ValveClamp procedure can be performed only with the assistance of ultrasound. This allows the procedure to be performed in the general operating rooms of hospitals, while patients and operators can avoid the exposure to radiation from DSA radiography.

We have established close cooperation and long-term relationships with KOLs, PIs and hospitals through clinical trials, procedural technique training and guidance, academic conferences and symposiums, and R&D collaborations in relation to ValveClamp. As of the Latest Practicable Date, we were conducting clinical trials in 12 industry-leading hospitals. Leveraging our domestic first-mover advantage and deep collaboration with both cardiothoracic surgeons and cardiologists, we plan to quickly cultivate medical practitioners’ habit of using ValveClamp through academic promotion and further strengthen practitioners’ stickiness to ValveClamp and increase switching costs for operators and hospitals.

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Synergistic product portfolio in the field of structural heart diseases

We are building and advancing a diversified and synergistic product pipeline that includes five transcatheter heart repair products, three transcatheter valve replacement products and two electrophysiological products, enabling us to offer comprehensive medical solutions encompassing both treatment and monitoring in the field of structural heart diseases.

With the successful development experience of ValveClamp, we aim to rapidly advance the development of other transcatheter heart repair products, each with its own strengths:

• ValveClasp is a percutaneous (transfemoral-septal) mitral valve edge-to-edge repair device developed in-house that inherits the characteristics of the large capturing range of ValveClamp and adopts an optimized delivery system. ValveClasp will complement the use of ValveClamp in cardiology to provide patients with more comprehensive MR solutions. Preclinical animal study of ValveClasp has been completed and it is expected to enter into a FIM clinical trial in the third quarter of 2021. ValveClasp-T is developed based on ValveClasp for the treatment of tricuspid regurgitation and is currently in the prototype iteration stage. We plan to initiate a FIM clinical trial of ValveClasp-T in the second quarter of 2022.

• ValveClose is a TMV annuloplasty device developed in-house. Its valve annulus molding repair approach is complementary to the edge-to-edge repair. The two therapies can be used in combination to provide a more comprehensive and effective treatment solution for patients with MR due to a variety of cardiac structural changes. As of the Latest Practicable Date, ValveClose was in the prototype iteration stage. We plan to initiate a FIM clinical trial of ValveClose in 2023.

• ReAces is a next-generation cardiac septal defect occluder device developed in collaboration with Zhongshan Hospital. It is a minimally invasive percutaneous device with low operational risk and improved patient compliance. ReAces uses significantly less metal components than conventional septal defect occluder devices, thus materially reducing the potentially harmful nickle release associated with the metal frame. As of the Latest Practicable Date, the preclinical animal study of ReAces had been completed. We plan to initiate a FIM clinical trial of ReAces in the third quarter of 2021.

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Our product candidates in the area of electrophysiology include the following:

• HyPulse is a carotid sinus stimulation device that uses electrical impulses to stimulate the carotid sinus nerves, and the resulting nervous reflex to regulate the function of the heart and blood vessels for the treatment of hypertension and heart failure.

• CardioMcare is a wearable electrocardiography (ECG) and hemodynamic monitoring patch device that is designed to monitor ECG and hemodynamic parameters to assist in the management of arrhythmias and heart failure that are often associated with structural heart diseases.

We believe that our extensive product pipeline will help us fully capture the huge market potential in the field of structural heart diseases and provide sustained momentum for our future growth.

Integrated capabilities that enables continuous and rapid innovation

We have built integrated capabilities covering the entire cycle of medical device development from R&D and manufacturing to commercialization. Utilizing these capabilities, we strive to timely identify unmet clinical needs in the market and accelerate translational research and product iteration, thus quickly bring innovative and cost-effective medical solutions to under-served structural heart disease areas.

• R&D: As of the Latest Practicable Date, we had established an R&D team consisting of 38 members, 42.1% of whom had a master’s degree or above. Our core R&D personnel all have rich industry experience, and have successfully led the development of various products. Our nine core technologies enable us to carry out prototyping and product iteration in-house, thereby accelerating our R&D process in a cost-effective manner. We also further strengthened our R&D capabilities through collaboration with renowned medical institutions and industry KOLs. Such collaboration enables us to obtain first-hand feedback on unmet clinical needs and medical concepts for innovative devices tailored for those needs.

• Manufacturing: The manufacturing process and technology of interventional devices are relatively complex and require interdisciplinary specialties across the fields of medical, engineering and materials sciences, among others. To uphold and enhance the physical properties, chemical properties and biological compatibility of our product candidates, we developed proprietary core technologies for production process, such as design and manufacturing technology for precisely controlled steerable catheter, preparation technology of super-elastic nickel-titanium alloy and precision processing and manufacturing technology of cobalt-chromium-nickel alloy. Our proprietary production processes will facilitate further reduction of production costs and commercialization at competitive prices once our products are launched in the market.

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Our GMP-compliant manufacturing facilities in Minhang has an annual capacity of approximately 6,000 sets of transcatheter devices. Our Xinzhuang manufacturing facilities with an annual capacity of about 100,000 sets of transcatheter devices, is expected to commence operations by the end of 2023 and progressively ramp up its production.

• Commercialization: Relying on the unique competitive advantages of ValveClamp and its leading market position as the most advanced domestic TMV device under development, we have established long-term relationships with top hospitals, PIs and KOLs in China in the field of structural heart diseases. Upon ValveClamp’s approval for marketing, our relevant clinical personnel may naturally join our medical science liaison team. Leveraging their strong relationships with physicians, deep understanding of our products and academic background, ValveClamp will be able to penetrate target markets in an expeditious manner.

Visionary management team supported by sophisticated investors with rich industry resources

Under the leadership of our founder, Chairman and General Manager Mr. Dai Yufeng, we have built a management team with foresights, industry experience, rich resources and strong execution capability. Our core management team members have complementary expertise and backgrounds to continuously position us at the forefront of industry competition. Among our management team members:

• Our founder, Chairman and General Manager, Mr. Dai Yufeng, is an experienced clinician and successful serial entrepreneur with rich expertise in the translation of medical concepts into innovative medical products;

• Our Deputy General Manager, Ms. Gu Yanyan, is mainly responsible for our clinical development. She has more than 15 years of experience in the medtech industry, and has successfully led the clinical development and commercialization of multiple products including coronary stent, surgical prosthetic ring and surgical biological valve;

• Mr. Tang Yushen, our CTO, is responsible for the development of our electrophysiological products. He has over 15 years of industry experience and served as a senior product manager at MicroPort and successively served as senior engineer, technical leader, team leader and R&D manager at Boston Scientific. He has rich experience in the R&D of implantable neuromodulation, cardiac rhythm management devices and wearable medical equipment; and

• Ms. Li Lingyi, our CFO, has more than 17 years of experience in accounting, investment and corporate finance at various companies and firms, including Deloitte and PricewaterhouseCoopers.

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Since our establishment, we have attracted strong financial and strategic support from healthcare specialist investors including CITIC Private Equity Funds Management Co., Ltd and Yunfeng Capital. Our investors have consistently provided us with deep industry insights and resources that enabled our rapid business and clinical development.

BUSINESS STRATEGIES

We plan to leverage our strengths to implement our business strategies in the following areas.

Rapidly advance the R&D and commercialization of ValveClamp, ValveClasp, ReAces and other product candidates

Our Core Product, ValveClamp, has completed the enrolment of all subjects in March 2021 for its confirmatory clinical trial. It is expected to complete the subject-out and follow-up visits in the first quarter of 2022, followed by product registration and launch in the first quarter of 2023. Our product, ValveClasp, has finished preclinical animal study and is expected to enter the FIM clinical trial in the third quarter of 2021. In addition, another major product candidate, ReAces occluder device, is expected to start FIM clinical trial in the third quarter of 2021 followed by product registration and launch in 2023.

We intend to further expand our commercial infrastructures in preparation for the commercialization of our Core Product ValveClamp, ValveClasp, ReAces and other product candidates. We have established cooperation relationships with 12 top Class-3A hospitals nationwide, and are planning to strengthen and expand these relationships to solidify our position as an industry leader. In the future, we plan to further improve the awareness of TMV therapy in China among hospitals, physicians and patients by continuing to strengthen our relationships with industry KOLs and enhance academic promotion, starting with cities where we have existing relationships with hospitals. Moreover, we plan to make full use of ValveClamp’s domestic first-mover advantage and competitive strengths to (i) rapidly expand to more hospitals in first tier and second tier cities, which will benefit a wider population of MR patients in China; and (ii) build our distribution network.

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Focus on the cardiovascular field and promote the development of both structural heart diseases interventional devices and electrophysiological products

Drawing on our experience in the development of TMV devices, we plan to continuously identify unmet clinical needs and collect clinical feedback in the cardiovascular field, explore technologies with wide clinical application and facilitate product model design and clinical validation. Through such efforts, we will strive to achieve a broader product and business blueprint in the whole structural heart diseases field, while promoting the parallel development of electrophysiological products.

While advancing our existing product pipeline at full speed, we will continue to focus on the R&D in the structural heart diseases field, including mitral, tricuspid, aortic and atrial septal defects, to consolidate our leadership position and drive long-term growth.

We plan to leverage our successful development experience in the mitral valve field and research and development progress of our existing product candidates in the electrophysiological field including HyPulse and CardioMcare, to continue to actively promote the in-house development of other electrophysiological products, including pulsed field ablation (PFA) of atrial fibrillation and implantable cardiac monitor (ICM).

Accelerate overseas product registration to advance our international strategies

Our goal is to become an enterprise with strong influence in the cardiovascular field. Our Core Product, ValveClamp, is an innovative product with a global prospect. As of the Latest Practicable Date, we had filed a PCT patent application regarding ValveClamp and had obtained a patent in Japan.

We plan to initiate the application for CE Mark in Europe in the second half of 2021. We plan to prioritize the European market while also explore Southeast Asian markets leveraging the CE Mark. We are also evaluating market opportunities for ValveClamp in other countries such as Japan, the United States, Australia and Israel and plan to further pursue our overseas product registration in these countries.

Further strengthen R&D capabilities and explore potential cooperation opportunities

We plan to continue to focus on proprietary R&D and innovation of interventional technologies and develop our pipeline products such as transfemoral mitral valve products. Meanwhile, we will actively pursue strategic cooperation to broaden our product portfolio in form of acquisitions, partnerships, in-licensing arrangements or equity investments, among others. Our deep industry insight and extensive know-how enable us to proactively identify innovative technologies or opportunities with great clinical potential, so as to complement our R&D capabilities in the field of structural heart diseases interventional devices and electrophysiological products. We also intend to recruit talented R&D personnel to improve our R&D strength. Leveraging our close connection with Chinese top tier hospitals, our R&D team is able to better capture the trend of clinical practice, which in turn assists our product evolution.

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Increase production capacity and achieve economies of scale

We plan to continue to develop our Xinzhuang manufacturing base, which occupies an area of approximately 10,000 square meters, with the aim of reaching an initially designed capacity of 100,000 sets per annum, so as to lay down a solid foundation for the commercial mass production of ValveClamp and other product candidates upon approval. We expect to start construction of the base by the end of 2021, commence its operation by the end of 2023 and progressively ramp up its production. We will make sustained efforts to promote the construction of the base, upgrade the infrastructures and maximize the level of automation to achieve higher production efficiency. We expect the construction of the new manufacturing base and expansion of our manufacturing capacity to enable us to achieve economies of scale.

OUR PRODUCT PORTFOLIO

As of the Latest Practicable Date, our product pipeline included five innovative repair medical devices for MR, tricuspid regurgitation and atrial septal defects, three innovative replacement medical devices for MR, tricuspid and aortic regurgitation, and two electrophysiological products. In addition, based on our deep understanding of structural heart diseases, we have extended our product pipeline into the field of pet heart interventional medical devices, marching into the global pet medical market with broad industry prospects. The table below summarizes our product portfolio as of the Latest Practicable Date.

Transapical Commercial launch in ValveClamp Confirmatory Trial Patient Enrolment Completed (Note) Global edge-to-edge repairr 2023 1Q

Percutaneous FIM clinical trial MR ValveClasp Global edge-to-edge repair initiation in 2021 3Q Valve Repair Transatrial FIM clinical trial ValveClose Global mitral annuloplasty initiation in 2023

Percutaneous FIM clinical trial TR ValveClasp-T Global edge-to-edge repair initiation in 2022 2Q

Other Heart Percutaneous atrial FIM clinical trial ASD ReAces (Note) Global Repair septal defect closure initiation in 2021 3Q

Percutaneous valve MR ValveNeo-M Global replacement

Valve Percutaneous valve TR ValveNeo-T Global Replacement replacement

Percutaneous valve AR ValveCare Global replacement

Core Product

Abbreviations: MR, mitral regurgitation; TR, tricuspid regurgitation; ASD, atrial septal defect; AR, aortic regurgitation.

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OUR CORE BUSINESS MODEL

VALVECLAMP – OUR CORE PRODUCT

Product Structure

ValveClamp consists of a delivery system, a transvalvular device and a mitral valve clamp. The mitral valve clamp has upper arms, lower arms and an enclosed ring, and is the key part to achieve edge-to-edge repair of mitral valve. ValveClamp has two sets of arms that can

– 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 be separated and closed with the adjustable distance of 0-20mm, and the two sets of arms maintain coaxality at all times. This unique clamping method increases the valve capture space, making it easier for operators to capture and clamp the valve, thereby simplifying the operation with no limit imposed on patients’ valve prolapse gap.

Sketch of Mitral Valve Clamp

(a) Upper arms (b) Lower arms (c) Clamp (d) Closed clamp

The delivery system mainly includes a 16F catheter sheath, a dilator, a loader, a transporter and a pusher. Such delivery system is mainly used to transport the mitral valve clamp to the mitral valve through the apex and finally enable it to clamp the mitral valve.

Sketch of Delivery System

The transvalvular device consists of a main body and a rod. It helps the delivery system pass through the valve orifice.

Sketch of Transvalvular Device

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Working Mechanism

MR is a common heart valve disease caused by poor anastomosis of the anterior and posterior leaflets of the mitral valve due to organic or functional changes in the mitral valve leaflets, annulus, papillary muscles or chordae. In the case of mild MR, clinical symptoms may be absent for a long period of time. As the disease progresses and the left ventricle expands, MR worsens and then results in symptoms. Severe MR can cause left ventricular hypertrophy and dilation, eventually leading to systolic dysfunction and heart failure. The pressure of the left atrium also increases due to regurgitation, which is likely to lead to atrial fibrillation and pulmonary hypertension.

Normal mitral valve Regurgitated mitral valve

The principle of transcatheter edge-to-edge repair treatment is derived from conventional surgery. In surgical repair, the edge-to-edge repair technique is simple and unique. The free edges of the anterior leaflet and the posterior leaflet of the mitral valve are sutured together to bring the poorly closed mitral valve together and eliminate the gap between the two leaflets during systole, thereby reducing MR. In addition, when the mitral valve opens, the large mitral valve orifice becomes two small ones, without affecting the opening of the mitral valve. Designed following the principles of conventional surgery, ValveClamp adopts the method of transcatheter procedure and implants a clamp to clamp the free edges of the anterior and posterior leaflets of the mitral valve. The effect is similar to that of surgical edge-to-edge repair.

The mitral valve clamp in the ValveClamp system applies the principle of mechanical clamping. The upper clamping angle is greater than that of the lower clamping, and the upper and lower clamping arms are fitted with oblique teeth, so that they will produce a firm clamping force when they are fitted to prevent the valve tissue from slipping off between the clamping arms. When the upper and lower clamping arms are retracted into the enclosed ring, they are brought closer to the midline, and the valve tissue is then also moved closer to the midline, further strengthening the clamping force between the clamping arms.

The mitral valve clamp is made of shape-memory nickel-titanium alloy, which enables its transcatheter implantation into the human body. The upper and lower clamping arms in vitro can be closed and retracted into the sheath outside the body. After reaching the targeted position, the mitral valve clamp is pushed out of the sheath, and the upper and lower clamping arms stretch out automatically.

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Operational Procedure

A. The device is delivered to the left atrium.

B. The device is adjusted to the appropriate position, and the lower clamping arms are placed just under the leaflets, while the upper clamping arms remain in the left atrium.

C. The upper clamping arms are pulled back to capture the leaflets, and then the closed ring is moved forward to cover the ventricular end of the clamping arms, making them close to each other.

D. The device is released.

ValveClamp demonstrates a number of unique advantages:

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Collaboration with Zhongshan Hospital

The medical concept of ValveClamp was originated from Zhongshan Hospital, which obtained a patent (the “ValveClamp Patent”) based on such medical concept. We have obtained an exclusive license and purchase option regarding the ValveClamp Patent in April 2017 and acquired the ValveClamp Patent in December 2018 by a patent transfer agreement entered into between Zhongshan Hospital and our Company (the “ValveClamp Patent Agreement”). According to the ValveClamp Patent Agreement, (i) Zhongshan Hospital shall transfer all rights of the ValveClamp Patent to us, deliver the relevant documents to us and cease to have any right of the ValveClamp Patent; (ii) we shall pay a lump sum cash consideration of RMB5.0 million to Zhongshan Hospital; (iii) Zhongshan Hospital warrants that the ValveClamp Patent does not have defects such as limitation by any property right, pledge or another existing patent; and (iv) after the completion of the transfer, any relevant intellectual property arising from the further transfer of, improvement on and production regarding the ValveClamp Patent shall belong to the Company.

Summary of Clinical Trial Results

Confirmatory Clinical Trial

In order to evaluate the safety and efficacy of ValveClamp, we launched a prospective multi-centre confirmatory clinical trial in 12 leading Class-3A hospitals across China in February 2019 with 102 patients to be enrolled. As of the Latest Practicable Date, patient enrolment and the device implantation had all been completed and we had completed follow-up evaluations for over 50% of the patients.

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The study is a prospective, multi-centre, single-arm objective performance criteria (OPC), controlled trial. Primary endpoints: efficacy at 360 days after operation, where efficacy is defined as no death, no reoperation of mitral valve and MRՅ2. Secondary endpoints: efficacy immediately after operation, at 30 days, 90 days and 180 days after operation, where efficacy is defined the same as above.

As of the Latest Practicable Date, follow-up evaluation for the patients enrolled in this confirmatory clinical trial were underway, and authoritative and reliable clinical trial data and statistics were not yet available.

FIM Clinical Trial

In July 2018, we launched a multi-centre exploratory clinical trial in three leading Class-3A hospitals in China to evaluate the safety and efficacy of ValveClamp and establish the standard procedure for the ValveClamp. The clinical trial enrolled 12 patients in total, and was completed in January 2019. It demonstrated that ValveClamp is safe and effective for primary MR patients. Relevant study findings were published in JACC Cardiovasc Interv.2019; 12(23): 2441-2443.

Trial Design

Objective: To preliminarily explore the safety and feasibility of ValveClamp; to preliminarily validate the ValveClamp operation process; to establish a standard, safe and complete operation procedure; and to provide safety and efficacy data on which subsequent confirmatory trial can be based.

Primary endpoints: efficacy at 90 days after operation, where efficacy is defined as no death, no reoperation of heart valve, MR<3+

Secondary endpoints: efficacy immediately after operation and at 30 days after operation.

Parameters of safety assessment: Death, single-arm detachment, device dislodgement, device-related embolism, air embolism, infective endocarditis, pericardial haemorrhage, valve damage, thromboembolism, rehospitalisation due to heart failure, other adverse events.

A total of 12 patients were enrolled in the trial, all of whom were elderly, at a high risk for conventional surgery, and with severe MR.

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Core Baseline Characteristics of Patients (n = 12)

Gender Male: 4; Female: 8 Age (year) 73.79 ± 5.84 Regurgitation grade 0+ 0 1+ 0 2+ 0 3+ 1 4+ 11 Maximum mitral regurgitation area (cm2) 15.10 ± 6.51 MR vena contract width (mm) 8.03 ± 1.11 Prolapse position A1A2 1 A2 5 A2P2 1 P2 4 P2, P3 1 Prolapse width (mm) 10.70 ± 2.57 Left ventricular ejection fraction (%) 67.93 ± 4.21 Left ventricular end-diastolic diameter (mm) 53.63 ± 4.25 Left ventricular end-systolic diameter (mm) 32.88 ± 3.59

Details of Operation

Definition of successful procedure: The device is successfully delivered, released and implanted, and the delivery system is successfully withdrawn from the body; the implanted clamp is placed at a correct anatomical position; the implanted clamp has reached its expected efficacy (MR < 3+).

The catheter operation time averages 26.8 minutes, and no circulatory support was performed on patients. The device valve clamp was successfully implanted for all patients, with only one clamp used in each case for each patient. The ultrasound examination conducted immediately after operation showed that the MR grading for all patients was 1+ or below.

The analysis results of postoperative immediate echocardiographic examination are shown as follows.

Echographic Parameters at Baseline

Mitral regurgitation grade 0+ 1 1+ 11 2+ 0 3+ 0 4+ 0 Maximum mitral regurgitation area (cm2) 1.46 ± 1.20 MR vena contract width (mm) 2.11 ± 0.94 Left ventricular ejection fraction (%) 64.90 ± 6.01 Left ventricular end-diastolic -diameter (mm) 50.80 ± 5.57 Left ventricular end-systolic diameter (mm) 32.50 ± 4.01

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Analysis on Efficacy Endpoints

Primary endpoints:

Analysis results of procedural success rate at 90 days after operation

Number of deaths 0 Number of cases with valve-related surgery 0 Number of cases with MR grade Ն 3+ 0 Number of cases with successful procedure at 90 days after operation 12 (100%)

Secondary endpoints:

Analysis results of procedural success rate

Number of cases with immediate procedural success 12 (100%) Number of cases with procedural success at 30 days after operation 12 (100%)

Analysis results of NYHA heart function classification for postoperative follow-up NYHA heart function Discharged from 30 days after 90 days after classification hospital operation operation

I 244 II788 III 3 0 0 IV000

Analysis results of brain natriuretic peptide test results for postoperative follow-up Discharged from 30 days after 90 days after NT-proBNP hospital operation operation

Normal 0 1 2 Abnormal, but with no clinical significance 4 4 6 Abnormal, but with clinical significance 8 7 4

Analysis on Safety Results

During the trial, no device-related adverse event (AE) or device defects-related serious AE (SAE) (such as device dislodgement, embolism and transfer to surgery) occurred. 11 AEs unrelated to the device were reported, including four SAEs. The AEs in this trial were mainly caused by procedural stress response. SAEs include poor local wound healing, herpes zoster, hypothyroidism, abnormal blood coagulation and community-acquired pneumonia. Among the SAEs, poor local wound healing is related to the surgery, and herpes zoster is possibly related to the surgery.

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30 days after 90 days after operation operation Analysis of adverse events (± 7 days) (± 15 days)

Death 0 0 Device dislodgement 0 0 Single-arm detachment 0 0 Embolism 0 0 Re-hospitalization due to heart failure/heart disease 0 0 Infective endocarditis 0 0

Conclusion on Clinical Trial

The results demonstrated that ValveClamp can effectively alleviate MR, and is comparable to or better than other similar products in terms of clinical efficacy indicators. The cardiac function of clinical trial subjects was improved immediately after operation and continued to improve throughout the follow-up visit period.

The trial also clearly proves the safety of ValveClamp. 90 days after the surgery, there were no occurrence of death, single-arm detachment, device dislodgement, embolism, infective endocarditis, pericardial haemorrhage, valve damage, thromboembolic events, or re- hospitalization due to heart failure or other device-related AEs among the subjects. The incidence of complications is lower than that of other similar products.

Market Opportunity and Competition

According to Frost & Sullivan, the total number of patients with moderate to severe MR worldwide increased from 90.0 million in 2015 to 96.7 million in 2019, and is expected to reach 122.0 million by 2030. The number of patients with moderate to severe MR in China increased from 9.6 million in 2015 to 10.6 million in 2019, and is expected to reach 13.4 million by 2030. The large-scale epidemiological investigation of MR is quite limiting in China so far. According to the epidemiological investigation in the United States, patients with severe MR take up about 30% of the moderate to severe patients. The standard treatment for patients with severe MR is to replace or repair the mitral valve under cardiopulmonary bypass and thoracotomy, with a high surgical risk that leaves a large number of patients untreatable. In 2019, less than 1% of patients in China received surgical treatment for MR. Compared to conventional surgery, TMVr procedure eliminates the need for cardiac arrest or cardiopulmonary bypass, thereby significantly lowers procedural risks and reduces the operative wound to 2 to 4cm. Benefiting from these advantages over the conventional surgery, TMVr is expected to unlock the significant growth potential in the vast but under-penetrated MR treatment market. According to Frost & Sullivan, the global TMVr devices market is estimated to grow to US$5.4 billion by 2030 at a CAGR of 20.5% from 2019 to 2030, while the China TMVr devices market is estimated to grow to RMB5.0 billion by 2030, at a CAGR of 65.9% from 2021 (estimated first year of TMVr commercialization in China) to 2030.

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Currently, seven types of TMV repair and replacement products have been approved around the world. Among these, only one edge-to-edge product, MitraClip from Abbott, has been approved in all of Europe, the United States and China. Among all globally approved and marketed TMV devices, only Tendyne from Abbott is used for TMVR. The following table sets out approved TMV products globally.

Transcatheter Mitral Valve Repair and Replacement Products

CARILLON NeoChord Product Tendyne MitraClip Mitral Contour DS1000 Cardioband PASCAL MPAS Implant System Transcatheter Mitral Valve Repair and Replacement Products

FDA Approval _ 2013 _ _ _ _ _

CE Mark 2020 2008 2009 2012 2015 2019 2016

NMPA Approval _ 2020 _ _ _ _ _

Source: Company websites, Frost & Sullivan Analysis

Intended Use Manufacturer Product Technique Access Trial Stage

Confirmatory Hanyu Medical ValveClamp Edge-to-edge repair Transapical Clinical Trial (enrolment completed)

Mainly chordal Confirmatory Repair MitralStitch Transapical implantation Clinical Trial Valgen MedTech Dragon Fly Edge-to-edge repair Transfemoral FIM

NewMed ValveClip-M Edge-to-edge repair Transfemoral FIM planned

Transcatheter mitral NewMed Mi-thos Transapical FIM valve replacement Replacement Shanghai Yixin Medical Transcatheter mitral MitraFix Transapical FIM Device Co., Ltd. valve replacement

Source: Company websites, Frost & Sullivan Analysis

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MitraClip is the only TMV device marketed in China as of the Latest Practicable Date. The following table sets forth certain information on the commercialization of MitraClip in China.

Product Name MitraClip System1

NMPA Approval Date June 15, 2020

Approved Indication2 Percutaneous reduction of significant symptomatic MR (MR≥3+) due to a primary abnormality.

Terminal Price RMB350,000 (Hunan Province, Guangxi Province)3

Medical Insurance Status/reimbursement Not included coverage

Addressable Market TMVr

Technologies Transfemoral and transseptal edge-to-edge TMVr

Note:

1. MitralClip is the only TMVr product that have been approved by NMPA up to now, so there is no comparable product launched in China that may affect its pricing.

Development Plan

In February 2019, we commenced a prospective confirmatory clinical trial for ValveClamp. As of the Latest Practicable Date, patient enrolment and device implantation had been completed for this clinical trial. ValveClamp is expected to obtain NMPA approval and launch in China in the first quarter of 2023. It is expected to be the first domestic TMV product commercially launched in China and the world’s first transapical edge-to-edge TMVr device to be launched.

We plan to submit the CE Mark application in 2021, with the NMPA approval expected in the first quarter of 2023. We will then launch the product in Europe in 2023 and also explore the Southeast Asian markets leveraging the CE Mark obtained. We are also evaluating the potential registration of ValveClamp in other countries such as Japan, the United States, Australia and Israel.

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Material Communication with the NMPA

In July 2018, we launched a multi-centre exploratory clinical trial of ValveClamp, which was completed in January 2019. In February 2019, we commenced the confirmatory clinical trial on ValveClamp. ValveClamp was recognized as an innovative medical device by the NMPA in September 2020, and is thereby eligible for the fast-track review and approval.

In March 2021, we held a meeting with SHMPA. In such meeting, SHMPA confirmed that (i) the FIM clinical trial of ValveClamp formed a key part of the relevant product registration; (ii) the FIM clinical trial of ValveClamp also formed a key part of the Company’s application for the Special Review Qualification for Innovative Medical Devices in September 2020; (iii) we had fully complied with regulatory procedures regarding our conducting the FIM clinical trial and confirmatory clinical trial of ValveClamp; and (iv) it had no objection to our conducting the confirmatory clinical trial of ValveClamp.

Apart from those mentioned above, we have not conducted any important regulatory communications on ValveClamp with the NMPA, and we are not aware of any material concern from the NMPA in connection with ValveClamp.

WE MAY NOT BE ABLE TO ULTIMATELY DEVELOP AND MARKET OUR VALVECLAMP SUCCESSFULLY.

OTHER MAJOR PRODUCT CANDIDATES

1. ValveClasp (percutaneous mitral valve clamp system)

Leveraging our experience from the development of ValveClamp, we developed ValveClasp, a percutaneous mitral valve clamp system, to compliment the use of ValveClamp in cardiology to provide patients with more comprehensive MR solutions. ValveClasp, while adopting the transfemoral pathway, inherits ValveClamp’s technical concept of maximizing capturing range with an optimized delivery system for operational convenience.

ValveClasp is a class III medical device under the classification criteria of the NMPA. As of the Latest Practicable Date, we had completed the preclinical animal study for ValveClasp. We plan to initiate a FIM clinical trial of ValveClasp in the third quarter of 2021.

Product features include:

• Minimally invasive pathway: ValveClasp is delivered through the transfemoral pathway;

• Large capturing range: Adhering to ValveClamp’s technical concept of maximizing capturing range, ValveClasp’s optimized structural design of the clamp increases the capturing range, which is expected to reduce the need for multiple clamps in the same procedure, thereby reducing operation time and complications; and

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• Easy operation: The optimized design of the delivery system enables simple steering and convenient operation of the device. The operating handle is also ergonomically designed.

WE MAY NOT BE ABLE TO ULTIMATELY DEVELOP AND MARKET OUR VALVECLASP SUCCESSFULLY.

2. ValveClose (transcatheter mitral annuloplasty system)

ValveClose is a set of TMV annuloplasty device and delivery system independently developed by us. The annuloplasty repair approach adopted by ValveClose and the edge-to- edge repair approach adopted by ValveClamp are two complementary approaches of TMVr. ValveClose places the annuloplasty patch through trans-precordial punctures, and then tightens the annuloplasty patch through the operation of delivery system to reduce the mitral annular dimensions, thus reducing MR. The convenient operation of ValveClose leads to relatively short operation time. ValveClose is a class III medical device under the classification criteria of the NMPA. As of the Latest Practicable Date, ValveClose was in the prototype iteration stage. We plan to initiate a FIM clinical trial of ValveClose in 2023.

WE MAY NOT BE ABLE TO ULTIMATELY DEVELOP AND MARKET OUR VALVECLOSE SUCCESSFULLY.

3. ValveClasp-T (percutaneous tricuspid valve edge-to-edge repair system)

With ValveClasp serving as the prototype, we developed ValveClasp-T by modifying the ValveClasp delivery system. Same as ValveClasp, ValveClasp-T adopts the edge-to-edge repair technique, which is supported by the most substantial clinical evidence in the field of tricuspid valve interventional devices. It accesses the right atrium through transfemoral punctures, and delivers the clamp to complete the clamping of tricuspid valve leaflets. ValveClasp-T is a class III medical device under the classification criteria of the NMPA. As of the Latest Practicable Date, ValveClasp-T was in the prototype iteration stage. We plan to initiate a FIM clinical trial of ValveClasp-T in the second quarter of 2022.

WE MAY NOT BE ABLE TO ULTIMATELY DEVELOP AND MARKET OUR VALVECLASP-T SUCCESSFULLY.

4. ReAces (novel atrial septal defect occlusion device)

ReAces is our next-generation atrial septal defect occluder with proprietary intellectual property rights and special functions. Applying widely-adopted materials and manufacturing technique, it closes the atrial septal defect through minimally invasive transfemoral pathway. The novel and special structural design of ReAces allows it to use significantly less metal components than conventional septal defect occluder devices, thus materially reduce the potentially harmful nickle release associated with the metal frame. The medical concept of ReAces was initially developed by Zhongshan Hospital, from which we acquired the relevant

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WE MAY NOT BE ABLE TO ULTIMATELY DEVELOP AND MARKET OUR REACES SUCCESSFULLY.

5. ValveNeo-M (percutaneous mitral valve replacement system)

ValveNeo-M is a percutaneous mitral valve replacement device independently developed by us. It delivers the artificial valve through the transfemoral pathway to the mitral valve, and uses a special anchor design to fix it on the mitral valve annulus to complete the mitral valve replacement. ValveNeo-M uses a short stent and special anchor structure to avoid obstruction of the left ventricular outflow tract. ValveNeo-M is a class III medical device under the classification criteria of the NMPA. As of the Latest Practicable Date, ValveNeo-M was in prototype iteration stage.

WE MAY NOT BE ABLE TO ULTIMATELY DEVELOP AND MARKET OUR VALVENEO-M SUCCESSFULLY.

6. ValveNeo-T (percutaneous tricuspid valve replacement system)

ValveNeo-T is developed by modifying the size and shape of ValveNeo-M, which served as the prototype. ValveNeo-T delivers the artificial valve stent to the tricuspid valve via percutaneous pathway, and adopts a special anchor design to fix it on the tricuspid valve annulus to complete the tricuspid valve replacement. ValveNeo-T is a class III medical device under the classification criteria of the NMPA. As of the Latest Practicable Date, ValveNeo-T was in early design stage. Product features include:

• Transfemoral implantation design for minimal invasion; and

• A special anchor structure reduces the inner diameter of valve stent and, by extension, the size of the delivery system.

WE MAY NOT BE ABLE TO ULTIMATELY DEVELOP AND MARKET OUR VALVENEO-T SUCCESSFULLY.

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7. ValveCare (percutaneous aortic valve replacement system)

ValveCare is a percutaneous aortic valve replacement device independently developed by us specifically for aortic regurgitation. It delivers the artificial valve stent to aortic valve via percutaneous pathway, and adopts a special anchor design to fix it on the aortic valve annulus to complete the aortic valve replacement. ValveCare is a class III medical device under the classification criteria of the NMPA. As of the Latest Practicable Date, ValveCare was in early design stage. Product features include:

• Transfemoral implantation design for minimal invasion; and

• A special anchor structure for treatment of aortic regurgitation.

WE MAY NOT BE ABLE TO ULTIMATELY DEVELOP AND MARKET OUR VALVECARE SUCCESSFULLY.

8. HyPulse (carotid sinus stimulator)

HyPulse is a carotid sinus stimulation device independently developed by us. By stimulating the carotid baroreceptors, it triggers the nervous system that regulates hemodynamics to treat hypertension and heart failure. The main component of the carotid sinus stimulator is a stimulation generator and a stimulation electrode lead. The generator circuit includes a signal processing module, a logic control module, a pulse sending module and a power supply module. The electrodes are used to deliver stimulation pulses to the carotid sinus. HyPulse is a class III medical device under the classification criteria of the NMPA. As of the Latest Practicable Date, HyPulse was in prototype iteration stage. Product features include:

• Small size and lightweight;

• Compatible with 1.5T & 3.0T MRI; and

• Rechargeable design significantly enhances its service life.

WE MAY NOT BE ABLE TO ULTIMATELY DEVELOP AND MARKET OUR HYPULSE SUCCESSFULLY.

9. CardioMcare (Wearable electric and hemodynamic parameters monitoring equipment)

CardioMcare is a wearable electric and hemodynamic parameters monitoring equipment independently developed by ourselves. It can monitor various important indicators such as ECG, blood pressure and oxygen saturation non-invasively, for use of intra-operative and postoperative monitoring in humans and pets.

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CardioMcare collects signals through external sensors, converts them into various required parameters through analogue signal calculation and processing, stores and reanalyses them, before supplying them to users through screen display. CardioMcare is a class II medical device under the classification criteria of the NMPA. As of the Latest Practicable Date, CardioMcare was in prototype iteration stage. Its main features are:

• Non-invasive application and wearing, convenient for clinical use;

• Providing real-time parameters for complete retrospective analysis; and

• Simultaneous recording of multiple parameters to provide more comprehensive and accurate parameters.

WE MAY NOT BE ABLE TO ULTIMATELY DEVELOP AND MARKET OUR CARDIOMCARE SUCCESSFULLY.

MEDICAL DEVICE PRODUCTS FOR PETS

Our subsidiary Hongyu Medical is our R&D and commercialisation platform for pet medical devices. Benefiting from our extensive clinical R&D experience, Hongyu Medical has formed a product portfolio for the treatment of structural heart diseases in pets, as follows:

V-Clamp

V-Clamp is designed for MR of small- and medium-sized pet canines through miniaturizing ValveClamp. It provides apical mitral valve edge-to-edge repair. Small and medium-sized pet canines have small blood vessels. According to Frost & Sullivan, V-clamp is the only TMVr product in the world for the treatment of MR in pet canines that has realized clinical application. In December 2020, a paper was published in Frontiers in Veterinary Science concluding that V-Clamp device is effective at reducing the severity of MR in canines with naturally occurring myxomatous valve disease (doi:10.3389/fvets.2020.597879). Currently, V-Clamp is not subject to regulatory approval. As of the Latest Practicable Date, we had started to promote and sell this product on a trial basis. We plan to continue to expand the trial sales channels.

V-Closer

V-Closer is a transprecordial valve annuloplasty device used to reduce the dimensions of mitral valve orifice and enhance mitral valve coaptation for the purpose of reducing regurgitation. Pet mitral valve is fragile and functional regurgitation is commonly seen. The device adopts a transatrium pathway and does not damage the valve leaflets, making the procedure much safer. Regulatory approval is not required for this product currently. As of the Latest Practicable Date, we had completed the initial validation of the safety and efficacy of the product through animal study. We plan to launch trial sales of V-Closer in 2022.

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Pet multifunctional ECG monitoring system

This product is a monitoring system that fulfils multiple functions such as ECG monitoring and body temperature monitoring, and performs monitoring through wearable physical sensors. It is suitable for pets with high comfort level; it has many functions and is cost-effective, and can reduce the human resource cost for pet medical monitoring. As of the Latest Practicable Date, we were testing and verifying the performance of the product. We plan to start the trial sales of the product by the end of 2021.

RESEARCH AND DEVELOPMENT

Our R&D team is led by the following members of our management team:

Leveraging our in-house R&D capabilities and medical translation capabilities, we have established long-term relationships with top hospitals and experts in the industry to promote the continuous innovation and import substitution with Chinese medical devices. In such collaboration, the hospitals and experts are mainly responsible for identifying clinical needs and providing feedback and guidance, while we are responsible for analysing key manufacturing techniques, core components, and core materials for product development, and translating medical concepts into industrial implementation. Under this model, we can quickly identify unmet clinical needs in the market and collect clinical feedback, study technical routes with potentially wide clinical application, and promote product finalization and clinical verification.

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The following table sets out our nine core technologies:

No. Technology Technical features Related products

1 Design and • We have a complete set of R&D, manufacturing and ValveClasp manufacturing verification lines equipped with precisely controlled ValveClasp-T technology steerable sheaths including sheath weaving technology, ValveNeo for precisely extrusion molding technology and composite molding ValveCare controlled technology; and steerable catheter • The technology can also be used to design and manufacture delivery sheaths for our subsequent mitral/tricuspid valve replacement and pet mitral valve treatment products.

2 Preparation • Preparation of highly elastic and robust material that can ValveClamp technology of be repeatedly compressed without deformation. ValveClasp super-elastic Implantable products made from it can be put into a ValveClasp-T nickel- smaller sheath. After reaching the designated position, the ValveNeo titanium alloy product unfolds into the designed shape; and ValveClose ValveCare • With excellent anti-corrosion characteristic, the product can be effective for a long time in the patient’s body, effectively extending the service life of implantable products.

3 Material science • It has appropriate clamping force to ensure that implantable ValveClamp technology of products such as clamping or replacement devices that ValveClasp super anti- have been mechanically worn for a long time will not fall ValveClasp-T fatigue off after clamping the valve, and at the same time ensure ValveNeo performance that the risk and difficulty of the operation are under ValveClose control; ValveCare

• It has super anti-fatigue performance to ensure that implantable products that have been mechanically worn for a long time, e.g. clamping or replacement devices, will not break or fall off in the body. For example, ValveClamp, which has adopted this technology, has undergone 400 million fatigue tests at the China Institute for Food and Drug Control, which proved that it can withstand at least 400 million cycles with the clamp structure remaining intact and fracture-free.

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No. Technology Technical features Related products

4 Polymer coating • After the product with polymer coating is implanted, it ValveClamp technology stimulates the natural growth of endothelial cells, thereby ValveClasp making the implanted product endothelial, ensuring that ValveClasp-T the product will not hinder the natural flow of blood, and ValveNeo patients do not need to take anticoagulant drugs; ValveCare ReAces • It reduces the risk of thrombosis and embolism in patients caused by the implantation of consumables; and

• It further improves the robustness and anti-fatigue performance of the implanted product, and reduces the risk of product fracture.

5 PEEK material • The fully automatic, precision machining technology of ValveClamp precision CNC precision automatic lathe is used in combination V-Clamp machining with precision micro-drilling technology to ensure the technology production stability of closed loop products.

6 Precision • Various clamp systems composed of precision ValveClasp processing cobalt-chromium-nickel alloy parts, with precision ValveClasp-T and structure, high strength, suitable surface roughness manufacturing and other desirable characteristics; and technology of cobalt- • The locking device has super elasticity and good anti- chromium- fatigue performance. nickel alloy

7 Ultra-low-power • Ultra-low-power bio-analog signal acquisition and CadioMcare human signal processing module to monitor cardiac events; and HyPulse acquisition and • Through signal multi-processing, it can accurately detect processing abnormal heartbeat (bradycardia, tachycardia, atrial technology fibrillation and atrial flutter) events.

8 Optimized • It adopts a unique fixation and anti-calcification treatment ValveNeo-M bioprosthetic process, which not only retains the biocompatibility of ValveNeo-T valve conventional bioprosthetic valves, but also achieves ValveCare treatment enhanced anti-calcification effect, increasing the service technology life of the valve.

9 Titanium-nickel • The occluder net is woven with a single nitinol wire to ReAces wire weaving reduce the number of rivets; and ValveClamp and shaping technology • The surface of nitinol wire has been treated to create an isolating membrane on it, reducing the precipitation of nickel ions

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Collaboration with Zhongshan Hospital

According to the ValveClamp Patent Agreement:

(i) Zhongshan Hospital shall transfer all rights of the ValveClamp Patent to us, deliver the relevant documents to us and cease to have any right of the ValveClamp Patent;

(ii) we shall pay a lump sum cash consideration of RMB5.0 million to Zhongshan Hospital;

(iii) Zhongshan Hospital warrants that the ValveClamp Patent does not have defects such as limitation by any property right, pledge or another existing patent; and

(iv) After the completion of the transfer, any relevant intellectual property arising from the further transfer of, improvement on and production regarding the ValveClamp Patent shall belong to the Company.

In addition to ValveClamp, the medical concept of ReAces was also initially developed by Zhongshan Hospital, from which we acquired the relevant patent-in-pplication, carried out medical translation and applied for additional patents solely in our name.

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Cooperation with clinical trial institutions

The NMPA has a list of hospitals approved by it as clinical trial centres, and we can select hospitals from the list to carry out our clinical trials. The main factors that we consider when selecting the institutions include academic attainments, expertise, and the resources available for performing the experiment.

We prepare clinical trial protocols according to GCP standards, which describe in detail the purpose of clinical trials, the risks involved, overall design, test methods and procedures, and submit them to the ethics committees of each institution. Before approval, the ethics committee may require us to modify the clinical trial protocols or other documents. Once the protocols are approved, any subsequent revisions must be reviewed and approved by the ethics committee, and clinical trials must be conducted in strict compliance with the approved protocols.

We typically enter into an agreement with the institution for each clinical trial. According to the agreement, every participating institution shall be responsible for conducting clinical trials, collecting data, and issuing trial reports at the end of each trial in strict compliance with the protocols. The lead institution prepares a general clinical trial report based on the trial reports prepared by all the participating institutions. We make payments according to the agreed schedule and the hospital’s service items. According to the agreement, we own all relevant intellectual property rights and results of the trial. Each participating hospital has the right to use the test results to publish academic papers or participate in academic activities with our consent.

As of the Latest Practicable Date, we had collaborated with 12 clinical trial centres, all of which are leading Class-3A hospitals in China, to conduct the prospective multi-centre confirmatory clinical trials of ValveClamp.

Cooperations with CROs and SMOs

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According to the relevant agreements, the CROs are responsible for recruiting test subjects in strict compliance with the test plans, carrying out, managing and monitoring the implementation of the tests in each clinical trial centre, collecting and storing data of the test subjects and preparing corresponding statistical reports during the trial. We provide necessary materials and data to CROs and SMOs and make payments in accordance with the payment schedule of the agreements. We own all the intellectual property rights of clinical researches, while CROs and SMOs are required to keep all non-public data of clinical researches strictly confidential, and return relevant materials to us at the end of the agreement period.

Relationships with PIs and KOLs

The PI with whom we collaborate include Academicians of the Chinese Academy of Sciences and leading structural heart disease specialists. Our team demonstrates our products face-to-face with doctors. We believe that these relationships allow us to obtain practical feedback and insights from frontline clinicians. This helps us understand the clinical needs and consider such clinical needs when we develop new product candidates and upgrade existing products, so as to improve the functions and competitiveness of our products after commercialisation. We also actively participate in academic activities and industry conferences in the cardiovascular industry organized by PIs and KOLs to demonstrate our R&D capabilities and products. We think this is an important opportunity for us to increase market awareness of our products, including pipeline products, and to improve the public’s awareness of our brand.

MANUFACTURING

We have established a complete production control process and rigorously enforce a set of standard operation specifications (SOPs) during the production process. During the production process, our quality department participates in the whole process and conducts quality inspections in each core link of production to monitor and adjust the production process and ensure that each component of the product meets the relevant quality standards; and collects product prototypes and conducts prototype tests to check whether they conform to quality standards. For finished products, quality control procedures have also been established and enforced. The quality control team conducts final checks on each batch of finished products before the products can be delivered and used for clinical research.

Since we have not yet launched any product, we have not yet started large-scale commercial production, and product manufacturing is mainly used for clinical trials and research. We coordinate the production capacity according to the clinical trial enrolment plan and schedule.

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Once a product is launched, we will guide the formulation of the production plan based on the principle of fixed production by sales and appropriate stocking. The production department will formulate production plans based on monthly sales forecasts and current inventory level, and maintain a reasonable inventory of finished products.

Manufacturing Process

The manufacturing process of our ValveClamp products mainly involves the following steps:

Clamp system: upper and lower arms Clamp system: closed ring

Cutting: Heat treatment: Polishing the Laser welding: Laser marking: Passivation: Closed ring: Cut the Put the upper and surfaces: Weld the clamp Laser marking Passivate the Process PEEK nickel-titanium lower arms into Polish the surfaces with the steel provides products arms separately materials into according to the the shaping mold of upper and sleeve of the with unique closed ring design to form for heat treatment lower arms push rod serial numbers frame the upper and and shaping separately lower arms prototypes

Delivery system Transvalvular device

Delivery pipe: Connector: Handle: Shaft: Straddle ball: Cleaning and Cleaning and Process stainless After cutting the Assemble the Process stainless Knit the nickel- coating: coating: steel pipe into nickel-titanium handle according steel bars into titanium wire into Laminate the Laminate the conveying pipe rod into shape, to the design rods a mesh, and shape arms after closed ring after according to the perform surface it to form a straddle cleaning cleaning design treatment to ball after heat form a connection treatment

Delivery system assembly Transvalvular device assembly Arms assembly

Assembly: After cleaning and assembling, they are internally packaged, and then sent to a third party for sterilization. After sterilization analysis, they are externally packaged, and they stored in warehouse after passing quality inspection.

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Facilities

The machines that we use to manufacture products mainly include turning-milling composite CNC machine tools, CND precision automatic lathes (precision digital-controlled machine tool), wire-cut electrical discharge machining, fiber laser marking machines and slow-moving wire-cutting machines. We source the machines from multiple suppliers, so that we can purchase production machines from alternative suppliers. We have implemented a comprehensive machinery maintenance policy. During the Track Record Period, we did not face any major or long-term mechanical interruptions due to equipment or mechanical failures. As of the Latest Practicable Date, all our machinery is owned by us. We generally replace or upgrade our machinery at the end of its useful life. For details on the depreciation method of our machinery, please refer to the note 2 of Appendix I to this document.

SALES, DISTRIBUTION AND MARKETING

Currently, our pipeline products are still in the R&D stage and have not generated revenue. After the products are launched, we will leverage the domestic first-mover advantages, clinical advantages and competitive pricing of the products, and market the products through self-operated and distributor channels to hospitals in first- and second-tier cities that are capable of performing cardiology and cardiac procedures. Furthermore, we will step up efforts to include the products in the medical insurance reimbursement programs, and adapt marketing strategies to changes in the market’s competition environment, so as to maintain market competitiveness.

We will mainly adopt the promotion model of academic promotion, deliver the clinical advantages of our products to the market through large-scale education for KOLs, and cultivate procedural habits among doctors. Before our products enter the market, we will establish a commercial promotion team with extensive experience and academic background, and by organizing academic conferences and forums, we will increase the acceptance and recognition of mitral valve edge-to-edge repair and ValveClamp among medical practitioners.

We also plan to conduct adequate market research to acquire an understanding of the clinical development and data of competing products currently available, or expected to be released, on the market, and formulate differentiated marketing strategies based on the clinical advantages of our products.

In terms of product pricing, we will develop a competitive pricing strategy based on the affordability to Chinese patients and the prices of competing products, and further reduce the financial burden on patients by gaining access to medical insurance reimbursement and carrying out commercial insurance cooperation regarding our products.

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OUR CUSTOMERS

RAW MATERIALS AND SUPPLIERS

As our pipeline products have not been commercialised, the main purpose of our raw material procurement is to meet the needs of R&D operations. The main raw materials we source include PET polyester braid, PET coating, catheter sheath, implantable PEEK and transvalvular ball. We purchase some of the raw materials from overseas suppliers. For example, we purchase implantable PEEK from a supplier in Germany.

We have established a complete set of procurement processes, procurement standards and supplier management system in accordance with GMP standards. We have set up a procurement department to manage procurement activities. Our production department and R&D department are responsible for making purchase applications for the required items. Our procurement department is mainly responsible for the procurement management of raw materials, consumables, tools, spare parts, fixed assets and outsourcing services required for product manufacturing and R&D. Our quality control department is responsible for the inspection on purchased goods and services. The financial department is responsible for reviewing and supervising the procurement budget and payment of funds. Our procurement department regularly re-evaluates qualified suppliers.

Our procurement department collaborates with the R&D department, manufacturing department and the quality control department to review the qualifications of major raw material suppliers. As our pipeline products have not yet been commercialized, we purchase small amount of raw material samples based on the need of the research projects, and conduct inspections after obtaining the raw material samples in accordance with the technical requirements on raw materials of the research projects.

Only after the purchased raw materials pass the inspections, a supplier can be included in our qualified supplier list. The procurement department and the quality control department conduct annual review of the suppliers in the qualified supplier list at the beginning of each year. We assess the performance of our qualified suppliers on criteria such as quality of supplies, service and timeliness of delivery.

For 2019 and 2020, purchases from our five largest suppliers amounted to RMB14.8 million and RMB7.0 million, respectively, representing 48.9% and 23.6% of our total purchases for the same periods, respectively; purchases from our largest supplier amounted to RMB9.0 million and RMB3.4 million, respectively, representing 29.6% and 11.3% of our total purchases for the same periods, respectively. To the best knowledge of our Directors, during the Track Record Period, none of our Directors, their respective close associates and our existing Shareholders who owned more than 5% of our issued share capital had any interest of our five largest suppliers.

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The table below sets forth the details of our five largest suppliers during the Track Record Period:

For the year ended December 31, 2019

% in total Supplier Major products purchased Purchase amount purchases (RMB thousand)

Supplier A Construction design and 8,960 29.6% decoration Supplier B Site leasing 2,314 7.6% Supplier C R&D equipment 1,230 4.1% Supplier D Clinical trial service 1,180 3.9% Supplier E R&D service on animal studies 1,131 3.7%

Total 14,815 48.9%

For the year ended December 31, 2020

% in total Supplier Major products purchased Purchase amount purchases (RMB thousand)

Supplier F Site leasing 3,354 11.3% Supplier B R&D service on animal studies 1,103 3.7% Supplier E Construction design and 896 3.0% decoration Supplier G Site leasing 822 2.8% Supplier H Construction design and 807 2.8% decoration

6,982 23.6%

INVENTORY

As we have not yet started commercial production, our inventory primarily consists of pet medicine and consumables for our pet treatments and pet medical and health service. We regularly monitor our inventories to reduce the risk of overstocking and strive to maintain optimal inventory levels for near-term use. During the Track Record Period, we did not experience any material shortage of inventory.

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As of December 31, 2019 and 2020, our inventories amounted to RMB0.09 million and RMB0.2 million, respectively.

QUALITY CONTROL

Quality control and quality assurance are crucial for us, and we endeavor to ensure the quality of our operations through a comprehensive quality management system, which was formulated in accordance with the GMP standard as required by the NMPA, covering substantially every aspect of our operations including product design, supply chain and manufacturing, among others.

We have established a comprehensive set of quality control and quality assurance procedures to monitor our manufacturing process to ensure it to comply with relevant regulatory requirements and our internal quality requirements. We select our suppliers based on a strict set of criteria and we regularly conduct supplier audits which include documentation inspection and/or on-site inspection on such qualified suppliers to make sure our requirements are being consistently met. Key steps of our manufacturing process must be conducted in cleanrooms that comply with the classification of ISO Class 7 cleanness standards.

We regularly review facilities, equipment, manufacturing processes and production parameter to ensure that our processes, methods, programs and equipment work properly. In addition, we have a monitor system that can provide real-time monitoring of our manufacturing environment, especially special requirements such as humidity, temperature and differential pressure. We conduct inspection on raw materials in accordance with our quality management standards. Our product candidates are subject to strict inspection and test before sale. We require responsible personnel for each manufacturing step to keep records on inspection results and we also conduct a final review on related inspection and test records to determine whether a specific product can be released for sale. Products that do not meet our quality standards are treated in accordance with the product quality control procedures.

COMPETITION

We operate in a rapidly changing market, resulting from technological advances and scientific discoveries. While we believe our robust R&D capabilities provide us with competitive advantages, we face potential competition with major international medical device companies as well as domestic medical device companies which are developing heart valve disease solutions. We compete primarily based on the clinical performance of our product candidates, our ability to commercialize products, R&D capabilities and brand recognition. For further details of our major competitors, see “– Our Product Portfolio” and “Industry Overview.”

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INTELLECTUAL PROPERTY RIGHTS

As a medical device company focusing on innovative solutions for valvular heart diseases, intellectual property rights are crucial to our business and we are committed to developing and protecting our intellectual property rights. As of the Latest Practicable Date, we had 30 patents in China, including 8 invention patents and 22 utility models. As of the same day, we also had 26 pending patent applications in China, including 20 invention patents and 6 utility models. To facilitate our strategy to enter overseas markets, we also have one patent in Japan. During the Track Record Period and up to the Latest Practicable Date, we were not involved in any material proceedings in respect of, and we had not received notice of any material claims of infringement of, any intellectual property rights that are threatened or pending, in which we may be a claimant or a respondent. For details, please refer to “Appendix VI – Statutory and General Information – B. Further Information about the Business of our Company – 2. Our intellectual property rights”.

The following table sets forth the material patents and patent applications of our Core Product ValveClamp as of the Latest Practicable Date.

Place of Registered Application Expiration No. Patent No. Description Patent type registration owner Inventors date date

1 CN201610594219.8 A type of valve Invention China The Company PAN Wenzhi(Note), CHENG 2016-7-26 2036-7-26 clamp Leilei, ZHOU Daxin, and GE Junbo 2 CN201710977079.7 A type of valve Invention China The Company DAI Yufeng, YANG Huixian, 2017-10-19 2037-10-19 clamp LUO Peng, and PAN Bingyue 3 CN201720639742.8 A type of Utility China The Company DAI Yufeng, YANG Huixian, 2017-6-2 2027-6-2 transvalvular model LUO Peng, and LI Tao device 4 CN201721350727.8 A type of valve Utility China The Company DAI Yufeng, YANG Huixian, 2017-10-19 2027-10-19 clamp and system model LUO Peng, PAN Bingyue with adjustable and LI Tao clamping position 5 CN201821825067.9 A type of valve Utility China The Company DAI Yufeng, LUO Peng, PAN 2018-11-3 2028-11-3 clamp with anti- model Bingyue and LI Tao falling device 6 CN201721404701.7 A type of valve Utility China The Company DAI Yufeng, YANG Huixian, 2017-10-27 2027-10-27 clamp system model PAN Bingyue, LUO Peng, and LI Tao 7 CN201811304833.1 A type of valve Invention China The Company DAI Yufeng, LUO Peng, PAN 2018-11-3 N/A clamp with anti- application Bingyue and LI Tao falling device 8 CN201711027566.3 A type of valve Invention China The Company DAI Yufeng, YANG Huixian, 2017-10-27 N/A clamp system application PAN Bingyue, LUO Peng, and LI Tao 9 CN201710977041.X A type of valve Invention China The Company DAI Yufeng, YANG Huixian, 2017-10-19 N/A clamp with application LUO Peng, PAN Bingyue, adjustable and LI Tao clamping position

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Place of Registered Application Expiration No. Patent No. Description Patent type registration owner Inventors date date

10 CN201710408380.6 A type of Invention China The Company DAI Yufeng, YANG Huixian, 2017-6-2 N/A transvalvular application LUO Peng, and LI Tao device 11 CN201910722155.9 A type of valve Invention China The Company DAI Yufeng, PAN Bingyue, 2019-8-6 N/A clamping device ZHOU Daxin, GE Junbo and its clamping system 12 CN201921263270.6 A type of valve Utility China The Company DAI Yufeng, PAN Bingyue, 2019-8-6 2029-8-6 clamp device and model ZHOU Daxin, GE Junbo its clamping system 13 CN201820877942.1 Connection Utility China The Company DAI Yufeng, LUO Peng, PAN 2018-6-7 2028-6-7 installation model Bingyue, LI Tao applied on mitral valve clamp device 14 PCT/CN2018/099618 A type of valve Invention PCT The Company DAI Yufeng, YANG Huixian, 2018-8-9 N/A clamp PAN Bingyue, LUO Peng, and LI Tao 16313139 U.S. 2018-12-15 N/A 18819251.2 EU 2018-12-25 N/A 2019-520626 Japan 2019-4-11 2039-4-11 3078412 Canada 2020-4-3 N/A 2018353184 Australia 2020-4-2 N/A 10-2020-7009633 Korea 2020-4-2 N/A 11202003275X Singapore 2020-4-13 N/A 2020112900 Russia 2020-4-3 N/A 273797 Israel 2020-4-2 N/A 2001002182 Thailand 2020-4-17 N/A 202017021210 India 2020-5-20 N/A 2006887.0 U.K. 2020-5-11 N/A

Note: Mr. Pan Wenzhi is the husband of Ms. Yang Huixian, a substantial shareholder of our Company.

Our product candidates other than ValveClamp are all in relatively early stages of development. Therefore, we have not obtained any material patent on these product candidates. The following table sets forth the material patent applications in relation to our products other than ValveClamp as of the Latest Practicable Date, all of which were filed in China.

Registered Application No. Patent No. Description Patent type owner Inventors date Product

1 CN202011051160.0 A type of clamp with Invention The Company DAI Yufeng, PAN Bingyue, 2020-9-29 ValveClasp expandable arms WANG Zhijie 2 CN202022194917.3 A type of clamp with Utility model The Company DAI Yufeng, PAN Bingyue, 2020-9-29 ValveClasp expandable arms WANG Zhijie 3 CN202010928853.7 A type of valve clamp Invention The Company DAI Yufeng, YANG Huixian, 2020-9-7 ValveClasp PAN Bingyue, SUN Chao 4 CN202021929354.1 A type of valve clamp Utility model The Company DAI Yufeng, YANG Huixian, 2020-9-7 ValveClasp PAN Bingyue, SUN Chao

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Registered Application No. Patent No. Description Patent type owner Inventors date Product

5 CN202011305940.3 A type of delivery Invention The Company DAI Yufeng, PAN Bingyue, 2020-11-19 ValveClasp system for valve SUN Chao clamp 6 CN202022688141.0 A type of delivery Utility model The Company DAI Yufeng, PAN Bingyue, 2020-11-19 ValveClasp system for valve SUN Chao clamp 7 CN201910099070.X Annuloplasty device Invention Nuoqiang DAI Yufeng, PAN Bingyue 2019-1-31 ValveClose Medical 8 CN201810799367.2 Transatrial Invention Nuoqiang JI Jianzhong, XIONG Chuping 2018-7-19 ValveClose annuloplasty system Medical and its usage 9 CN202011311123.9 A type of annuloplasty Invention Hongyu DAI Yufeng, PAN Bingyue, 2020-11-20 ValveClose device and its Medical WANG Zhijie implantation method 10 CN202011314457.1 A type of Invention The Company DAI Yufeng, WANG Zhijie, 2020-11-20 ValveNeo-M bioprosthetic valve LI Tao 11 CN202022719208.2 A type of Utility model The Company DAI Yufeng, WANG Zhijie, 2020-11-20 ValveNeo-M bioprosthetic valve LI Tao

The actual protection afforded by a patent varies on a claim-by-claim and country-by- country basis and depends upon many factors, including the type of patent, the scope of its coverage, the availability of any patent term extensions or adjustments, the availability of legal remedies in a particular country and the validity and enforceability of the patent. We cannot provide any assurance that patents will issue with respect to any of our owned or licensed pending patent applications or any such patent applications that may be filed in the future, nor can we provide any assurance that any of our owned or licensed issued patents or any such patents that may be issued in the future will be commercially useful in protecting our product candidates and methods of manufacturing the same.

As of the Latest Practicable Date, we were not involved in any proceedings in respect of, and we had not received notice of any claims of infringement of, any intellectual property rights that may be threatened or pending, in which we may be a claimant or a respondent. Please refer to the paragraph headed “Statutory and General Information – B. Further Information about the Business of the Company – 2. Our Intellectual Property Rights” in Appendix VI to this document for further information.

HEALTH, SAFETY, SOCIAL AND ENVIRONMENTAL ISSUES

We are subject to various health, safety, social and environmental laws and regulations and our operations are regularly inspected by local government authorities. We believe we have adequate policies ensuring compliance with all health, safety, social and environmental protection regulations.

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We have obtained the necessary waste emission permits for waste generated during business operations. We engage third-party waste treatment service providers to collect and treat dangerous chemicals involved and hazardous waste produced in our operations.

We have adopted and maintained a series of rules, standard operating procedures and measures to maintain a healthy and safe work environment for our employees. We have introduced relevant internal policies to ensure the safe storage and disposal of flammable and corrosive materials used in our production processes. We also have appropriate safety equipment and instruments in place. According to our safety management protocols, all of our employees are required to receive safety trainings.

Our Directors consider that the annual cost of compliance with the applicable health, safety, social and environmental laws and regulations was not material during the Track Record Period and we do not expect the cost of such compliance to be material going forward.

During the Track Record Period and up to the Latest Practicable Date, we complied with the relevant environmental and occupational health and safety laws and regulations in all material aspects and we did not have any incidents or complaints which had a material and adverse effect on our business, financial condition or results of operations during the period.

EMPLOYEES

As of the Latest Practicable Date, we have hired 85 full-time employees, all based in China. The following table sets out the number of full-time employees by function as of the Latest Practicable Date.

Number of Function employees Percentage

Management, finance, administration and others 47 55.3% Research and development 27 31.8% Quality control and supervision 5 5.9% Clinical trial and registration 6 7.1%

Total 85 100%

In 2019 and 2020, the total employee benefit expenses of our Group (mainly including salary, bonus and welfares, as well as shared-based compensation expenses) were RMB10.4 million and RMB74.4 million, respectively.

We recruit employees based on a number of factors such as our needs and expansion plans, and the candidates’ work experience and educational background. We usually hire through recruitment websites, referrals and campus recruitment events. We provide employees

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In compliance with the relevant PRC labor laws, we enter into individual employment contracts with our employees covering matters such as terms, wages, bonuses, employee benefits, workplace safety, confidentiality obligations and grounds for termination. In addition, we are required under PRC law to make contributions to statutory employee benefit plans (including pension plans, medical insurance, work-related injury insurance, unemployment insurance, maternity insurance and housing funds) at certain percentages of our employees’ salaries, including bonus and allowances, up to a maximum amount specified by the local government.

We are also subject to safety laws and regulations of the PRC. For a description of these laws and regulations, please see “Regulatory Overview – Other laws and regulations – Production Safety” in this document. We have implemented various internal occupational health and safety procedures to maintain a safe work environment, including adopting protective measures at our production facilities, inspecting our equipment and facilities regularly to identify and address safety hazards, and providing regular training to our employees on safety awareness. As of the Latest Practicable Date, no labor union was established among our employees.

We believe that the benefits, working environment and development opportunities we offer to our employees have contributed to good employee relations and employee retention. During the Track Record Period and up to the Latest Practicable Date, we were not subject to any material claims, lawsuits, penalties or administrative actions relating to non-compliance with occupational health and safety laws or regulations, and had not experienced any strikes, industrial actions or material labor disputes.

PROPERTY

As of the Latest Practicable Date, we occupied properties with an aggregate gross floor area of approximately 5,509.11 square meters in Shanghai, Beijing and Guangzhou in connection with our business operations. These properties are leased from third parties and used for non-property activities as defined under Rule 5.01(2) of the Listing Rules. We mainly use these properties as premises for our R&D and production, warehouses and offices.

As of the Latest Practicable Date, we had not completed lease registration of some lease agreements with the relevant regulatory authorities. According to PRC law, the non-registration of lease agreements will not affect the validity of such lease agreements, but the relevant local housing administrative authorities can require us to complete registrations within a specified timeframe and we may be subject to a fine between RMB1,000 and RMB10,000 per lease for any delay in making these registrations. As of the Latest Practicable Date, we were not subject to any penalties arising from the non-registration of lease agreements. During the Track Record Period, we did not experience any dispute arising out of our leased properties.

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INSURANCE

We maintain insurance policies that we consider to be in line with market practice and adequate for our business. For example, we maintain insurance policies that cover our assets and losses arising from accidents in clinical trials. Our Directors consider that our existing insurance coverage is sufficient for our present operations and in line with the industry practice in China. During the Track Record Period, we had not made, or been the subject of, any material insurance claims. For details, see “Risk Factors – Risks Relating to Our Operations – Our insurance coverage may not completely cover the risks related to our business and operations.”

LICENSES AND PERMITS

We are required to obtain various licenses and permits from government authorities as required under PRC laws and regulations. As of the Latest Practicable Date, we had obtained all requisite licenses and permits that are material for our operations, which all remained in full effect. We will also apply for registration certificates once our product candidates are ready to be marketed. We intend to apply for renewal of the below key licenses prior to their respective expiry dates.

Licenses/permits No. Valid until Issued by

Permit for Device Operation Permit January 21, Shanghai Minhang Medical Device issued by Shanghai 2026 District Market Operation Minhang District Supervision and Enterprise Market Supervision and Administration Bureau Administration Bureau No. 20210006 Animal Diagnosis Animal Diagnosis and January 1, Agriculture and Rural and Treatment Treatment License 2023 Committee of Minhang License (Min) No. 0001 District, Shanghai

LEGAL PROCEDURES AND REGULATORY COMPLIANCE

We may become a party to legal, arbitral or administrative proceedings arising in the ordinary course of business. Our Directors confirmed that, as of the Latest Practicable Date, none of the legal, arbitral or administrative proceedings to which we were a party, individually or in aggregate, would have a material and adverse effect on our business, financial condition or results of operations, and they were not aware of any potential or threatened legal, arbitral or administrative proceedings to which we would be named as a party. Our Directors further confirmed that none of our Directors or senior management personnel was personally involved in any of these legal, arbitral or administrative proceedings.

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As advised by our PRC Legal Advisor, during the Track Record Period and as of the Latest Practicable Date, there were no breaches or violations of applicable PRC laws and regulations that would have a material and adverse impact on our business or results of operation taken as a whole.

INTERNAL CONTROL AND RISK MANAGEMENT

It is the responsibility of the Board of Directors to ensure that we maintains sound and effective internal controls to safeguard the Shareholders’ investment and our Group’s assets at all times. We have adopted a series of internal control policies and procedures designed to achieve effective and efficient operations, reliable financial reporting and compliance with applicable laws and regulations. Primary measures of our internal control system include the following:

• We have set up an audit committee to assist the Board of Directors in providing independent opinions on the effectiveness of our financial reporting procedures, internal control and risk management systems, supervising audit procedures, and performing other duties and responsibilities designated by the Board of Directors. The audit committee consists of three members, namely Ms. Ni Hong, who serves as chairman of the committee, Mr. Yu Liqiang and Dr. Yang Jiayu. For details of their qualifications and experience, please see “Directors, Supervisors and Senior Management” in this document.

• Our internal audit department is responsible for identifying and assessing major risks in all aspects of operation and supervising the rectification of internal control deficiencies. In order to formalize risk management across our Group and set a common level of transparency and risk management performance, the internal audit department will (i) collect information about risks relating to our operation or functions; (ii) conduct risk assessments, including the identification, prioritization, measurement and categorization of all key risks that could potentially affect the fulfillment of our objectives, and establish an uniform risk assessment criteria; (iii) continuously monitor the key risks relating to our operations or functions; (iv) implement appropriate risk responses when necessary; and (v) develop and maintain appropriate mechanisms to promote the application of our risk management framework.

• We have adopted various policies to ensure compliance with the Listing Rules, including but not limited to corporate governance, connected transactions, notifiable transactions, inside information, and securities transactions by the Directors.

• We have appointed Somerley Capital Limited as our compliance advisor to advise our Directors and management team on matters related to the Listing Rules until the end of the first fiscal year after the [REDACTED].

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• We have engaged a PRC law firm to advise us on and keep us abreast with PRC laws and regulations. We will continue to arrange various training to be provided by external legal advisors from time to time when necessary and/or any appropriate accredited institution to update our Directors, supervisors senior management and relevant employees on the latest applicable laws and regulations.

We have engaged an internal control consultant to review the effectiveness of our internal controls associated with our major business processes, identify deficiencies and improvement opportunities, provide recommendations on remedial actions and review the implementation status of these remedial actions. During the review process of our internal control consultant, certain internal control matters were identified and we have adopted corresponding internal control measures to improve on these matters. We have adopted the recommendations made by the internal control consultant and our internal control consultant has completed the follow-up procedures on our internal control system with regard to those actions taken by us and have not identified any material deficiencies in our internal control system.

In addition, as part of our risk management measures, we have implemented specific measures against corruption and bribery. We require our employees, especially those involved in procurement and other business functions which are more susceptible to bribery and corruptions, to abide by our compliance requirements, and make necessary representations and warranties to the Company. We have established a system of supervision that allows complaints and reports to be submitted to management regarding non-compliant behavior of our employees and external customers and suppliers.

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REGULATORY OVERVIEW

We conduct business mainly in China, and our major source of income is also China. Therefore, relevant Chinese laws and regulations applicable to the medical device industry are most relevant to our business.

Participants in the Chinese medical device industry must comply with a large number of laws and regulations and are extensively regulated by the Chinese government. These laws and regulations cover the production, sales, labor employment, intellectual property and other fields of medical device businesses. The main regulatory agency of China’s medical device industry is the National Medical Products Administration (hereinafter referred to as the “NMPA”) and its branch regulatory agencies in various regions. In March 2018, the institutional reform plan of the State Council, which was adopted at the first meeting of the 13th National People’s Congress, decided to dissolve the China Food and Drug Administration (hereinafter referred to as the “CFDA”), and established the NMPA to assume the responsibilities of the original CFDA.

Laws and Regulations Related to Medical Devices

Supervision and Classification of Medical Devices

According to the Regulations on the Supervision and Administration of Medical Devices (《醫療器械監督管理條例》) (“Regulations on Medical Devices”) promulgated by the State Council on February 9, 2021 and will take effect on June 1, 2021, the Drug Administration Department under the State Council is responsible for the supervision and administration of medical devices nationwide; the relevant departments under the State Council are responsible for the supervision and regulation related to medical devices within the limits of their respective functions and duties. The departments responsible for drug supervision and regulation under local people’s governments at or above the county level are responsible for the supervision and administration of medical devices in their administrative areas; the relevant departments under local people’s governments at or above the county level are responsible for the supervision and regulation related to medical devices within the limits of their respective functions and duties.

China implements classified administration of medical devices according to the degree of risk of medical devices.

Class I includes medical devices that have low risks and require the implementation of routine management to ensure their safety and effectiveness.

Class II includes medical devices that have moderate risks and require strict control and management to ensure their safety and effectiveness.

Class III includes medical devices that have high risks and require special measures for strict control and management to ensure their safety and effectiveness.

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To evaluate the risk level of a medical device, factors such as intended purpose, structural characteristics and use method of the medical device should be considered.

Class I medical devices are subject to product filing-based administration, and Class II and Class III medical devices are subject to product registration-based administration.

The registrant and filer of medical devices shall tighten up the quality management of the whole life cycle of the medical devices, and shall be responsible for the safety and effectiveness of the medical devices in the entire process of development, production, operation, and use in accordance with the law.

As of the Latest Practicable Date, our Class III medical device products are still in the stage of clinical trials.

Registration and Filing of Medical Device Products

According to the Measures for the Administration of Medical Device Registration (《醫療器械註冊管理辦法》) promulgated by the CFDA on July 30, 2014 and effective on October 1, 2014, as regards the filing of Class I medical devices in China, the filer shall submit the data filed to the CFDA’s municipal branches. The filing of Class II medical devices in China shall be reviewed by the CFDA branches at various levels of provinces, autonomous regions, and municipalities directly, and a medical device registration certificate shall be issued after approval. Class III medical devices are reviewed by the headquarter of the CFDA, and a medical device registration certificate will be issued after approval.

No clinical trials are required for the filing of Class I medical devices. To apply for the registration of Class II and Class III medical devices, clinical trials should be conducted. The catalog of medical devices exempt from clinical trials is formulated, adjusted and published by the NMPA.

Clinical trials of Class III medical devices that have a higher risk to humans shall be approved by the NMPA. The catalog of Class III medical devices subject to clinical trial approval is formulated, adjusted and published by the NMPA.

As regards Class II and Class III medical devices that have been registered, in the event of a change in the contents stated in the medical device registration certificate and its attachments, the registrant shall apply to the original registration department for registration changes and submit the application materials in accordance with relevant requirements.

In the event of a change in the product name, model, specification, structure and composition, scope of application, technical requirements of the products, production address of imported medical devices, etc., the registrant shall apply to the original registration department for modification of the licensing items.

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The medical device registration certificate is valid for 5 years. If the medical device registration certificate expires and needs to be renewed, the registrant shall apply to the NMPA for the renewal of the registration 6 months before the expiration of the medical device registration certificate, and submit the application materials in accordance with relevant requirements.

According to the Medical Device Regulations, the registration and filing of medical device products shall be subject to clinical evaluation; however, if one of the following conditions is met, clinical evaluation can be exempted:

(1) The working mechanism is clear, the design is finalized, the production process is fully-established, the medical devices of the same variety that have been launched into the market have been used in clinical applications for many years without any record of serious adverse events, and the device is used for conventional purposes;

(2) It can be proved that the medical device is safe and effective through non-clinical evaluation;

(3) The safety and effectiveness of the medical device can be proved by analyzing and evaluating the data obtained from the clinical trial or clinical use of medical devices of the same type.

The catalog of medical devices exempt from clinical trials was formulated, adjusted and published by the CFDA. As regards products that are not included in the catalog of medical devices exempt from clinical trials, if it can be proved that the medical devices are safe and effective through analysis and evaluation of the data obtained from the clinical trials or clinical use of medical devices of the same type, the applicant can provide an explanation and submit relevant supporting materials when applying for registration.

As of the Latest Practicable Date, our Class III medical device products are still in the stage of clinical trials.

Production License for Medical Devices

In accordance with the Medical Device Regulations and the Measures for the Supervision and Administration of Medical Devices Production (《醫療器械生產監督管理辦法》) promulgated by the NMPA and revised and entered into force on November 17, 2017 (the “Production Measures”), production activities of medical devices shall meet the following conditions:

(1) Having the production site, environmental conditions, production equipment and professional and technical personnel suitable for the medical devices to be produced;

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(2) Having institutions or full-time inspectors and inspection equipment that can conduct quality inspections on the medical devices to be produced;

(3) Having a management system to ensure the quality of medical devices;

(4) Having the after-sales service capabilities that are suitable for the medical devices to be produced;

(5) Meeting the requirements specified in the product development and production process documents.

Enterprises engaged in the production of Class I medical devices shall be filed with the department responsible for drug supervision and regulation under the people’s government at the municipal level where the enterprises are located, and the filing shall be completed after submitting the relevant materials that meet the requirements of the Medical Device Regulations. Enterprises engaged in the production of Class II and Class III medical devices shall apply for a production license to the department responsible for drug supervision and regulation under the people’s government at various levels of province, autonomous region, or municipality where the enterprises are located and submit relevant data that meets the requirements of the Medical Device Regulations and the registration certificate of the medical device to be produced.

The License for Medical Device Production is valid for 5 years. If the License for Medical Device Production expires, the medical device manufacturer should submit the application for renewal of License for Medical Device Production to the original issuing authority 6 months before the expiration date.

Where the production conditions of medical devices change and no longer meet the requirements of the regulations on quality management of medical devices, the medical device registrant, filer, and entrusted manufacturer shall immediately take corrective measures; if the safety and effectiveness of the medical device may be affected, the production activities shall be stopped immediately, and the situation shall be reported to the original production licensing or production filing authority.

As of the Latest Practicable Date, our Class III medical device products are still in the stage of clinical trials.

Production Quality Management of Medical Devices

According to the Regulations on Production Quality Management of Medical Devices (《醫療器械生產質量管理規範》) promulgated by the CFDA on December 29, 2014 and effective on March 1, 2015 (the “Regulations on Production Quality Management”), medical device manufacturers should comply with the requirements of the Regulations on Production Quality Management in the process of design and development, production, sales and after-sales service of medical devices. Specifically, they should establish a management

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According to the Notice on Printing and Distributing 4 Guiding Principles including the Guidelines for On-site Inspection of Production Quality Management Practices of Medical Devices (《關於印發<醫療器械生產質量管理規範現場檢查指導原則>等4個指導原則的通知》) promulgated by the CFDA on September 25, 2015 and effective on the same day (the “Guiding Principles”), during the on-site inspection of medical device registration and the on-site inspection of production licenses (including changes), the inspection team shall issue suggestions and conclusions on the on-site inspection in accordance with the guidelines. The suggestions and conclusions are divided into three cases of “inspection passed”, “inspection not passed” and “re-inspection after rectification”. In various supervision and inspections, if key items are found to be non-compliant, or only general items are found to be non-compliant, which may have a direct impact on product quality, the enterprise shall be required to stop production for rectification; if only general items are found to be non-compliant, which does not directly affect the product quality, the enterprise shall be required to make rectification within a time limit. The supervisory authority shall review the suggestions and conclusions and on-site inspection data submitted by the inspection team and issue the final inspection results.

The inspection team conducted several on-site inspections on our quality management practices of medical device production during the Track Record Period, and the suggested conclusion issued by the inspection team was “inspection passed”. According to the on-site inspection of the production quality management conducted by the competent authority, during the Track Record Period, we have met the requirements of the production quality management regulations in all major and substantive aspects. During the Track Record Period, we have not yet started the commercial production of our products.

Quality Management Specifications for Clinical Trial of Medical Devices

The Quality Management Specifications on Clinical Trial of Medical Devices (《醫療器械臨床試驗質量管理規範》) jointly promulgated by the CFDA and the National Health and Family Planning Commission on March 1, 2016 and took effect on June 1, 2016 covers the entire process of clinical trials of medical devices, including the design, implementation, monitoring, verification, and inspection of clinical trials, as well as data collection, recording, analysis, summary, and reports. The departments of the CFDA and the National Health and Family Planning Commission are the competent departments for administration of clinical trials of medical devices. An information notification mechanism for quality management of

– 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. REGULATORY OVERVIEW clinical trial of medical devices shall be established to tighten up the clinical trial approval for Class III medical devices and medical devices that are included in the national catalog of large-scale medical equipment under configuration management, and the notification of corresponding data and information about clinical trial supervision and regulation shall also be enhanced. To conduct clinical trials of medical devices, the institution or organization that initiates, manages, and provides financial support for clinical trials shall have sufficient scientific basis and clear trial objectives. The initiator should organize the formulation of scientific and reasonable clinical trial plan in accordance with the category, risk, and expected use of the experimental medical devices; pre-clinical research of experimental medical devices should be completed before clinical trials are carried out, and sufficient experimental medical devices shall be prepared. The initiator, clinical trial institutions and investigators should sign a written agreement; at the same time, protection of the rights and interests of subjects should be fully realized. Medical device manufacturers are responsible for initiating, applying, organizing, and monitoring clinical trials, and are responsible for the authenticity and reliability of clinical trials. As regards new products that have not been approved for marketing at home or abroad, and of which the safety and performance have not been medically proven, a small sample feasibility test should be included when the clinical trial plan is designed. After the safety is initially confirmed, the sample size can be determined according to statistical requirements and then the follow-up clinical trials can be carried out.

Overseas clinical trials of medical devices

According to the Technical Guidelines for Accepting Data from Overseas Clinical Trials of Medical Devices (《接受醫療器械境外臨床試驗數據技術指導原則》) promulgated by the CFDA on January 10, 2018 and effective on the same day, overseas clinical trials should be conducted in countries (regions) in which clinical trial quality management are carried out and the Chinese regulatory requirements for clinical trials of medical devices (including in vitro diagnostic reagents) are met. If there is a difference between the clinical trial quality management document that the clinical trial complies with and the Specifications on Quality Management Clinical Trial of Medical Devices (《醫療器械臨床試驗質量管理規範》) (Good Clinical Practice (GCP)), the difference should be explained in detail, and it should be fully proved that the difference does not affect the authenticity, scientificness, reliability and traceability of the research results, and the rights and interests of subjects can be protected. Applicants and clinical trial institutions shall accept the supervision and inspection of the headquarter of the CFDA.

Overseas clinical trial data should be true, scientific, reliable, and traceable. Applicants should provide complete trial data, and no screening is allowed. Applicants should ensure that the purpose of clinical trials carried out overseas is appropriate, the trial design is scientific and reasonable, the trial conclusions are clear, the rights and interests of subjects are protected, and the risks that other personnel may suffer are prevented.

– 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. REGULATORY OVERVIEW

Business License of Medical Devices

According to the Measures for the Supervision and Administration of Medical Device Operation (《醫療器械經營監督管理辦法》) promulgated by the CFDA on November 17, 2017 and effective on the same day, the management of medical device operations is classified according to the degree of risk of medical devices. License and filing are not required to operate business of Class I medical devices, while Class II medical devices are subject to filing management, and Class III medical devices are subject to licensing management. Enterprises engaged in the business of Class III medical devices should also have a computer information management system that meets the requirements for quality management of medical device business to ensure that the products they operate can be traced back. Enterprises engaged in the operation of Class I and Class II medical devices are encouraged to establish a computer information management system that meets the requirements for quality management of medical device operations. The enterprises engaged in Class III medical device operations shall establish a self-inspection system of quality management, and conduct a full-project self- inspection in accordance with the requirements of the Specifications on Operating Quality and Management of Medical Devices, and submit an annual self-inspection report to the local CFDA branch before the end of each year. Enterprises engaged in medical device business shall not operate medical devices that have not been registered or filed, do not have qualified certification documents, or whose certification documents have outdated or lapsed or have been revoked.

The Medical Device Operation Permit we currently hold covers Class II and Class III medical devices, and the permit is within the validity period.

Special Review Procedures for Innovative Medical Devices

The General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly promulgated the Opinions on Deepening the Reform of the Review and Approval System and Encouraging the Innovation of Drugs and Medical Devices (《關於深化審評審批制度改革鼓勵藥品醫療器械創新的意見》) (the “Innovation Opinions”) on October 8, 2017 to encourage the research and development of new drugs and innovative medical devices. Priority in regulatory review and approval will be given to new drugs and innovative medical devices that are supported by major national science and technology projects and national key R&D plans, as well as new drugs and innovative medical devices that are carried out by the National Clinical Medical Research Center and approved by the management department of the Center. At the same time, the state will give full play to the role of the enterprise as the main body of innovation, encourage pharmaceutical and medical device companies to increase R&D investment, enhance the research and development of new products and the continued research of products already on the market and continue to improve the production process.

– 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. REGULATORY OVERVIEW

According to the Special Review Procedures for Innovative Medical Devices (《創新醫療器械特別審查程序》) promulgated by the NMPA on November 2, 2018 and effective on December 1, 2018 (the “Special Review Procedures”), the medical device review that meets the following circumstances is applicable to the special review procedure:

(1) The applicant, through the technological innovation activities led by him/her, has legally obtained patent rights for the core technology and inventions of products in China, or has obtained invention patent rights or the right to use them in China through legal transfers, and the application time for special review of innovative medical devices is no more than 5 years prior to the patent authorization and announcement date; or the application for the core technology invention patent has been published by the Patent Administration Department under the State Council, and a search report has been issued by the Patent Search and Consultation Center under the State Intellectual Property Office, which indicates that the core technology solution of the product is novel and creative.

(2) The applicant has completed the preliminary research of the product and has an essentially finalized product, the research process is true and controlled, and the research data is complete and traceable.

(3) The main working principle or mechanism of the product is the first of its kind in China, and the performance or safety of the product is fundamentally improved compared with similar products. The product uses international leading technology and has significant value for clinical applications.

The medical device inspection agency shall give priority to the inspection of innovative medical devices and issue an inspection report when conducting inspections. The Medical Device Technology Evaluation Center of NMPA shall give priority to the technical review of innovative medical devices for which the registration application has been accepted; after the technical review, the NMPA shall give such products priority during administrative approval.

Two-Invoice System

On December 26, 2016, eight government departments including the CFDA issued the Notice on the Implementation Opinions on the Launching of the Two-Invoice System (Trial) in the Drug Purchase of Public Medical Institutions (《關於在公立醫療機構藥品採購中推行兩票制的實施意見(試行)的通知》) (the “Notice”). According to the Notice, the two-invoice system means that a pharmaceutical manufacturer issues an invoice to a circulation company, and the circulation company issues an invoice to a medical institution. The two-invoice system is gradually implemented in the drug procurement of public medical institutions, and other medical institutions are also encouraged to implement the two-invoice system in drug procurement. Pilot provinces (regions, cities) for public hospital reform and pilot cities for comprehensive medical reform should take the lead in implementing the two-invoice system and other regions are also encouraged to implement the two-invoice system. Specifically, in the areas where the two-invoice system is implemented in drug procurement by public medical

– 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. REGULATORY OVERVIEW institutions, the implementation of the two-invoice system is a prerequisite when the centralized purchasing agency prepares procurement documents. As regards drugs purchased through bidding, the qualifications of the drug manufacturer shall be reviewed, and the drug manufacturer shall directly bid for the procurement. Pharmaceutical companies participating in the centralized procurement of drugs must undertake to implement the two-invoice system in their bid documents, otherwise the bid will be invalid; for other procurement methods to purchase drugs, the relevant requirements of the two-invoice system must also be specified in the procurement contract.

On March 5, 2018, National Health and Family Planning Commission together with five other central government departments jointly issued the Circular on Consolidating the Achievements of Eliminating Compensational Drug Sales and Continuously Deepening the Comprehensive Reform of Public Hospitals (《關於鞏固破除以藥補醫成果持續深化公立醫院綜合改革的通知》), which deepened the reform of pricing methods for medical services, and further expand the scope and quantity of fees charged by disease types and service units. It optimizes and standardizes existing medical service price items, accelerates the review of new medical service price items, and promotes the research and development and application of new medical technologies. For the same high-value medical consumables with small quality differences and similar prices, it explores the implementation of packaged charges for medical services, and set a unified medical service price. It Continues to deepen reforms in the field of pharmaceutical consumables, implements classified and centralized procurement of high-value medical consumables, and gradually implements the “two-invoice system” for the purchase and sale of high-value medical consumables.

On July 19, 2019, the General Office of the State Council issued the Notice on Printing and Distributing the Reform Plan for Governing High-value Medical Consumables (《關於印發<治理高值醫用耗材改革方案>的通知》) to improve the price formation mechanism and reduce the bubble prices of high-value medical consumables, standardize medical service behavior, strictly control the unreasonable use of high-value medical consumables, encourage local governments to reduce the circulation of high-value medical consumables through the two-invoice system and other methods based on actual conditions, and promote the open and transparent purchase and sales behavior.

Regulations Related to Medical Device Advertising

The State Administration for Market Regulation (SAMR) promulgated the Interim Measures for the Review and Administration of Advertisements for Drugs, Medical Devices, Health Foods, and Formulas for Special Medical Purposes (《藥品、醫療器械、保健食品、特殊醫學用途配方食品廣告審查管理暫行辦法》) on December 24, 2019, which took effect on March 1, 2020 (the “Interim Measures for Advertisements”). SAMR is responsible for organizing and guiding the review of advertisements for drugs, medical devices, health foods and formula foods for special medical purposes. The market supervision and regulation departments and drug supervision and regulation departments of various provinces, autonomous regions, and municipalities directly under the Central Government are responsible for the review of advertisements for drugs, medical devices, health foods and formula foods for

– 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. REGULATORY OVERVIEW special medical purposes. No advertisements for medicines, medical devices, health foods and formula foods for special medical purposes may be published without review. Advertisements for drugs, medical devices, health foods and formula foods for special medical purposes should be true and legal, and must not contain false or misleading content; specifically, the content of medical device advertisements should be based on the registration certificate or filing certificate, and the registered or filed product manual approved by the drug regulatory authority. Medical device advertisements that involve the name, scope of application, mechanism of action or structure and composition of the medical devices shall not exceed the scope stipulated in the registration certificate or filing certificate, or the scope of the product specification for registration or filing.

National Medical Insurance Program

According to the Decision on Establishing a Basic Medical Insurance System for Urban Employees (《關於建立城鎮職工基本醫療保險制度的決定》) issued by the State Council on December 14, 1998, the State Council decided to reform the medical insurance system for urban employees nationwide. All employers in cities and towns, including enterprises (state-owned enterprises, collective enterprises, foreign-invested enterprises, private enterprises, etc.), government agencies, institutions, social organizations, private non- enterprise organizations and their employees must participate in the basic medical insurance program. The basic medical insurance contributions are paid jointly by the employer and the employees. According to the Notice on Opinions on Establishing a New Rural Cooperative Medical System (《關於建立新型農村合作醫療制度意見的通知》) issued by the General Office of the State Council on January 16, 2003, China launched a new rural cooperative medical system to provide farmers in selected areas with medical insurance and then the medical insurance has since covered the whole country. On July 10, 2007, the State Council promulgated the Guiding Opinions of the State Council on the Pilot Program of Basic Medical Insurance for Urban Residents (《國務院關於開展城鎮居民基本醫療保險試點的指導意見》). According to it, urban residents (rather than urban employees) in the pilot areas can voluntarily join the basic medical insurance program for urban residents. On March 6, 2015, the General Office of the State Council promulgated the Outline of Planning for National Medical and Health Service System (2015-2020) (《全國醫療衛生服務體系規劃綱要(2015-2020年)》) which aims to establish a basic medical and health care system and achieve the basic establishment of a basic medical and health system covering urban and rural residents in 2020.

On January 3, 2016, the State Council issued the Opinions of the State Council on Integrating the Basic Medical Insurance System for Urban and Rural Residents (《國務院關於整合城鄉居民基本醫療保險制度的意見》), aiming to integrate the basic medical insurance program for urban residents and the new rural cooperative medical system, and establishing a unified basic medical insurance system for urban and rural residents that covers all urban and rural residents except migrant workers who participate in the basic medical insurance for urban employees and those with flexible employment.

– 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. REGULATORY OVERVIEW

With regard to the reimbursement of medical devices and diagnostic tests, the Ministry of Labor and Social Security and other five government departments issued the Notice on Printing and Distributing the “Opinions on Management of Diagnosis and Treatment Items for Basic Medical Insurance of Urban Workers, Scope of Medical Service Facilities and Payment Standard” (《關於印發<城鎮職工基本醫療保險診療項目管理、醫療服務設施範圍和支付標準意見>的通知》), which stipulated the scope of diagnosis and medical equipment and diagnostic tests, and stipulated that part of the expenses can be paid by the basic medical insurance program. The Ministry of Labor and Social Security is responsible for organizing the formulation of the scope of the diagnosis and treatment items covered by the basic medical insurance, and the exclusion method is adopted to separately stipulate the scope of the diagnosis and treatment items that are not paid by the basic medical insurance and the scope of the diagnosis and treatment items for which the basic medical insurance pays part of the cost. For the detailed scope and rate of reimbursement for medical devices and medical services (including diagnostic tests and reagents), the local policies of each province must be complied with.

Reform Plan for High-value Medical Consumables

On July 19, 2019, the General Office of the State Council promulgated the Notice on Printing and Distributing the Reform Plan for Governance of High-Value Medical Consumables (《關於印發<治理高值醫用耗材改革方案>的通知》) (the “Notice of High-value Medical Consumables”). High-value medical consumables refer to the medical consumables that directly act on the human body, have strict safety requirements, have a large amount of clinical use, are relatively expensive, and have a heavy burden on the general people. The Notice of High-value Medical Consumables has covered a series of reform plans for the management of high-value medical consumables, including adopting an unified coding system and information platform, implementing medical insurance access and dynamic adjustment of catalogs, improving classified and centralized procurement methods, eliminating additional costs for medical consumables, formulating the policy for medical insurance payment to improve the price formation mechanism and reduce the bubble prices of high-value medical consumables; at the same time, the state regulates medical service behaviors and strictly controls the unreasonable use of high-value medical consumables; improves the supervision and regulation mechanism and strictly investigates and deals with violations of laws and regulations.

Certificate for Export Sales of Medical Device Products

According to the Regulations on the Administration of Certificate for Export Sales of Medical Device Products (《醫療器械產品出口銷售證明管理規定》) promulgated by the CFDA on June 1, 2015 and effective on September 1, 2015, if the medical device product registration certificate and production license have been obtained in China, or the medical device product record and production record have been processed, the CFDA can issue a Certificate for Export Sales of Medical Device Products to the relevant manufacturer. The

– 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. REGULATORY OVERVIEW effective date of the Certificate for Export Sales of Medical Device Products shall not be later than the deadline for the first arrival of the various certificates submitted by the enterprise in the application materials, and the maximum shall not exceed 2 years.

Recall of Medical Devices

According to the Measures for the Administration of Medical Device Recalls (《醫療器械召回管理辦法》) promulgated by the CFDA on January 25, 2017 and effective on May 1, 2017, medical device manufacturers, as the main body responsible for controlling and eliminating product defects, shall take the initiative to recall defective products. According to the severity of medical device defects, recalls of medical devices are divided into:

(1) Level I recall: the use of the medical device may or has caused serious health hazards;

(2) Level II recall: the use of the medical device may or has caused temporary or reversible health hazards;

(3) Level III recall: the medical device is less likely to cause harm but still needs to be recalled.

Medical device manufacturers should determine the level of recall based on specific conditions and systematically design and organize the implementation of a recall plan based on the level of recall and the sales and use of medical devices; it shall release product recall information to the public, and immediately submit the report form on recall event of the medical device to the CFDA branch in local province, autonomous region, or municipality, and the CFDA branch that approved the product registration or handled the filing, and submit the investigation and evaluation report and recall plan to the CFDA branch in local province, autonomous region, or municipality, and the CFDA branch that approved the product registration or handled the filing within 5 working days for the purpose of recording.

As regards the implementation of Level I recall, the announcement on recall of medical devices should be published on the website of the CFDA and that of the main central media; for the implementation of Level II and Level III recall, the announcement on recall of medical devices should be published on the website of the CFDA branches at the levels of province, autonomous region, and municipality. The recall announcement published on the website of the CFDA branches at the levels of province, autonomous region, and municipality shall be linked to the website of the CFDA.

– 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. REGULATORY OVERVIEW

Gathering, Collection and Filing of Human Genetic Resources

The Interim Measures for the Management of Human Genetic Resources (《人類遺傳資源管理暫行辦法》) promulgated by the General Office of the State Council on June 10, 1998 set out rules for the protection and use of human genetic resources in China. Pursuant to the Service Guide for Administrative Licensing of Gathering, Collection, Deal, Export and Exit Approval of Human Genetic Resources of Human genetic resources (《人類遺傳資源採集、收集、買賣、出口、出境審批行政許可事項服務指南》) promulgated by the Ministry of Science and Technology in July 2015 and the Notice on the Implementation of the Administrative License for the Gathering, Collection, Deal, Export and Exit of Human Genetic Resources (《關於實施人類遺傳資源採集、收集、買賣、出口、出境行政許可的通知》) promulgated by the Ministry of Science and Technology in August 2015, foreign investment sponsors who gather and collect human genetic resources through clinical trials should file a record with the China Human Genetic Resources Management Office through an online system. The Ministry of Science and Technology promulgated the Notice on Optimizing the Administrative Examination and Approval Process of Human Genetic Resources (《關於優化人類遺傳資源行政審批流程的通知》) in October 2017, which has simplified the approval process for the gathering and collection of human genetic resources for the listing of drugs in China.

Pursuant to the Regulations on the Management of Human Genetic Resources of the PRC (《中華人民共和國人類遺傳資源管理條例》) issued by the State Council on May 28, 2019 and effective on July 1, 2019, the state supports the rational use of human genetic resources for scientific research, development of the biomedical industry, improvement of diagnosis and treatment technology, improvement of China’s ability to guarantee biosafety and improvement of the level of people’s health. Foreign organizations, individuals and institutions established or actually controlled by them shall not gather or preserve Chinese genetic resources in China, or provide Chinese genetic resources to foreign countries. In addition, the gathering, preservation, utilization and external provision of Chinese genetic resources shall conform to ethical principles and conduct ethical review in accordance with relevant regulations.

Other Laws and Regulations

Regulations Related to Labor and Social Security

According to the Labor Law of the People’s Republic of China (《中華人民共和國勞動法》) promulgated by the Standing Committee of the National People’s Congress on July 5, 1994 and revised and effective on December 29, 2018, the Labor Contract Law of the People’s Republic of China (《中華人民共和國勞動合同法》), which was revised by the Standing Committee of the National People’s Congress on December 28, 2012 and became effective on July 1, 2013, and the Regulations for the Implementation of the Labor Contract Law of the People’s Republic of China (《中華人民共和國勞動合同法實施條例》), employers shall strictly abide by national standards and provide workers with relevant training to ensure that workers enjoy labor rights and perform labor obligations. The employers and the employees

– 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. REGULATORY OVERVIEW shall sign a written labor contract. The labor contract can be divided into fixed-term labor contract, unfixed-term labor contract, and labor contract for completing certain tasks. The wage paid by employer to employee shall not be lower than the local standard of minimum wage.

According to the Social Insurance Law of the People’s Republic of China (《中華人民共和國社會保險法》) promulgated by the Standing Committee of the National People’s Congress on October 28, 2010, which was revised and became effective on December 29, 2018, the Regulations on the Administration of Housing Provident Funds (《住房公積金管理條例》) revised by the State Council and entered into force on March 24, 2019, and the Interim Regulations on the Collection of Social Insurance Premiums (《社會保險費徵繳暫行條例》) revised by the State Council and entered into force on March 24, 2019, Chinese companies should pay contributions to basic pension insurance, unemployment insurance, maternity insurance, work-related injury insurance, basic medical insurance and housing provident fund for their employees according to the statutory payment base and payment ratio. If the relevant payment is not paid in full and on time to the relevant local administrative agency, the employer may be ordered to make up the gap or pay a fine.

Production Safety

According to the Safety Production Law of the People’s Republic of China (《中華人民共和國安全生產法》) revised by the Standing Committee of the National People’s Congress on August 31, 2014 and effective on December 1, 2014, companies must (i) meet the work safety conditions stipulated by the Safety Production Law of the People’s Republic of China (《中華民共和國安全生產法》) and other relevant laws, administrative regulations, national standards and industry standards, (ii) improve the work safety accountability system and work safety rules and regulations, and (iii) promote the construction of work safety standardization to ensure safe production. Entities that do not have the conditions for safe production shall not engage in production and business activities.

The main person in charge of an enterprise is fully responsible for its work safety. An enterprise with more than one hundred employees shall set up an institution for management of work safety or designate full-time staff for management of work safety. The management personnel of the enterprise in charge of work safety shall conduct regular inspections of the work safety status according to the production and operation characteristics of the enterprise; the safety problems found during the inspection shall be dealt with immediately; if they cannot be dealt with, they shall be reported to the relevant person in charge in a timely manner, who shall then tackle the problems promptly. The inspection and handling should be truthfully recorded. Enterprises and institutions shall educate their employees on work safety, and truthfully inform them of the dangerous factors, preventive measures and emergency response measures that exist in the workplaces and positions. In addition, enterprises must provide employees with personal protective equipment that meets national or industry standards, and supervise and train employees to use the equipment.

– 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. REGULATORY OVERVIEW

Regulations Related to Intellectual Property

Trademark

The Trademark Law of the People’s Republic of China (《中華人民共和國商標法》), which was revised by the Standing Committee of the National People’s Congress on April 23, 2019 and entered into force on November 1, 2019, and the Regulations for the Implementation of the Trademark Law of the People’s Republic of China (《中華人民共和國商標法實施條例》) revised by the State Council on April 29, 2014 and entered into force on May 1, 2014 provides for the application, review and approval, renewal, alteration, transfer, use, and invalidity cases of trademark registration, and protects the trademark registrant’s right to exclusive use of trademark. According to the above-mentioned laws and regulations, the validity period of a registered trademark is 10 years, starting on the day when the registration is approved. If the valid period of a registered trademark has expired and further use is required, the renewal procedures must be completed in accordance with the regulations within 12 months before the expiration date. If the procedures cannot be completed within the time limit, it can be extended further for six months. The validity period of each renewal of registration is 10 years, starting on the date of expiration of the previous validity period of the trademark. A trademark registrant can authorize others to use his or her registered trademark by entering into a trademark license contract.

Patent

According to the Patent Law of the People’s Republic of China (《中華人民共和國專利法》), which was revised by the Standing Committee of the National People’s Congress on October 17, 2020 and will take effect on June 1, 2021, and the Regulations for the Implementation of the Patent Law of the People’s Republic of China (《中華人民共和國專利法實施細則》), which was revised by the State Council on January 9, 2010 and entered into force on February 1, 2010, invention-creations refer to inventions, utility models and designs. Inventions refer to new technical solutions proposed for products, methods or improvements. Utility model refers to a new technical solution suitable for practical use proposed for the shape, structure or combination of the product. Design patents refer to a new design that is esthetically pleasing and suitable for industrial applications based on the overall or partial shape, pattern, or combination of the product, as well as the combination of color, shape, and pattern. The term of patent right for inventions is 20 years, the term of patent right for utility models is 10 years, and the term of patent right for designs is 15 years. All the terms of patent right start on the date of filing.

Invention-creation that is mainly accomplished by executing the task of an organization or using the material and technical conditions of the organization is a service invention- creation. The right to apply for a patent for a service invention-creation belongs to the organization. After the application is approved, the organization becomes the patentee. The organization may dispose of the right to apply for patents and patent rights for its service invention-creations in accordance with the law, and promote the implementation and application of related inventions and creations. The organization to which the patent right is

– 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. REGULATORY OVERVIEW granted shall reward the inventor or designer of a service invention-creation; after the invention-creation patent is implemented, it shall pay the inventor or designer a reasonable remuneration based on the scope of its promotion and application and the economic benefits obtained therefrom. The state encourages organizations, to which patent rights are granted, to implement property rights incentives by adopting methods such as stock rights, options, and dividends, so that inventors or designers can reasonably share the benefits of innovation.

According to the Copyright Law of the People’s Republic of China (《中華人民共和國著作權法》), which was revised by the Standing Committee of the National People’s Congress on November 11, 2020 and will take effect on June 1, 2021, for the works of Chinese citizens, legal persons or unincorporated organizations, which are original intellectual achievements in literary, artistic and scientific fields and can be expressed in a certain form, regardless of whether they are published or not, the owners enjoy the copyright in accordance with the Copyright Law. Copyright includes a series of personal and property rights such as the right to publish, authorize, modify, protect the integrity of the work, and make copies.

According to the Measures for the Registration of Computer Software Copyright (《計算機軟件著作權登記辦法》) promulgated by the National Copyright Administration on February 20, 2002, the Computer Software Protection Regulations (《計算機軟件保護條例》) revised by the State Council on January 30, 2013 and entered into force on March 1, 2013, the National Copyright Administration is in charge of software copyright registration and management across the country, and the China Copyright Protection Center is recognized as the software registration agency. The China Copyright Protection Center will grant registration certificates to computer software copyright applicants who conform to the Measures for Registration of Computer Software Copyright (《計算機軟件著作權登記辦法》) and the Regulations on Computer Software Protection (《計算機軟件保護條例》).

Domain Name

In accordance with the provisions of the Administrative Measures for Internet Domain Names (《互聯網域名管理辦法》) promulgated by the Ministry of Industry and Information Technology on August 24, 2017 and became effective on November 1, 2017, to establish domain name root servers and domain name root server operation entities, domain name registration management entities, and domain name registration service entities in China, permission shall be obtained from the Ministry of Industry and Information Technology or the communications administration authority of the provinces, autonomous regions, or municipalities directly under the Central Government in accordance with regulations. The domain name registration service shall be conducted following the principle of “first-apply, first-register”. The Notice of the Ministry of Industry and Information Technology on Regulating the Use of Domain Names in Internet Information Services (《工業和信息化部關

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於規範互聯網信息服務使用域名的通知》) promulgated by the Ministry of Industry and Information Technology on November 27, 2017 and effective on January 1, 2018 provides for the obligations of information service providers and other entities to fight terrorism and maintain network security.

Regulations Related to Corporate Income Tax

According to the Enterprise Income Tax Law of the People’s Republic of China (《中華人民共和國企業所得稅法》) revised and entered into force on December 29, 2018 by the Standing Committee of the National People’s Congress, and the Regulations for the Implementation of the Enterprise Income Tax Law of the People’s Republic of China (《中華人民共和國企業所得稅法實施條例》) revised and entered into force on April 23, 2019 by the State Council, an enterprise established in accordance with the law in China or established in accordance with the laws of foreign countries (regions) but whose actual management organization is in China is a resident enterprise. A resident enterprise shall be subject to corporate income tax at a tax rate of 25% based on its income derived from domestic and foreign sources. As regards industries and projects whose development is encouraged by the state, preferential corporate income tax is granted; high-tech enterprises that the state needs to support are levied at a reduced corporate income tax rate of 15%.

Regulations Related to Product Liability and Consumer Protection

According to the Product Quality Law of the People’s Republic of China (《中華人民共和國產品質量法》) revised and entered into force on December 29, 2018 by the Standing Committee of the National People’s Congress, producers and sellers shall establish and improve internal systems for product quality management, and strictly implement job quality specifications, quality accountability, and corresponding assessment methods. Producers and sellers shall bear the responsibility for product quality in accordance with the law.

The market regulation department of the State Council is in charge of the supervision of national product quality. The relevant departments under the State Council are responsible for product quality supervision within the limits of their respective functions and duties.

The quality of products shall be qualified, and substandard products shall not be used as qualified products. Industrial products that may endanger human health and personal and property safety must meet the national standards and industry standards that protect human health as well as personal and property safety; where such national standards and industry standards have not been formulated, the minimum requirements for ensuring human health as well as personal and property safety must be met. The production and sale of industrial products that do not meet the standards and requirements for the protection of human health and personal and property safety are prohibited. The producers and sellers who produce and sell defective, outdated, and invalid products, products with forged origin and quality marks, products adulterated, faked as genuine, shoddy or substandard products etc. shall undertake compensation liability, may be confiscated of illegal income, revoked business license and

– 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. REGULATORY OVERVIEW imposed with a fine, and may be liable for criminal liability in serious cases. If the product is defective due to the fault of the producer or seller, causing damage to the person or the property of others, the producer or seller shall be liable for compensation.

According to the Civil Code of the People’s Republic of China (《中華人民共和國民法典》) promulgated by the National People’s Congress on May 28, 2020 and effective on January 1, 2021, if a patient suffers damages due to defects of medicines, disinfection products, medical equipment or unqualified blood transfusion, the patient may request compensation from the holder of marketing license of the medicine, manufacturer, blood provider, or medical institution. If a patient requests compensation from a medical institution, the medical institution has the right to recover the compensation from the responsible drug marketing license holder, manufacturer, and blood supplier after making compensation to the patient.

Regulations Related to Foreign Investment

According to the Company Law of the People’s Republic of China (《中華人民共和國公司法》), which was revised by the Standing Committee of the National People’s Congress on October 26, 2018, there are two types of companies established in China: limited liability companies and joint stock limited companies, both of which have the status of a legal person. The liability of shareholders of limited liability companies and joint stock limited companies is limited to the amount of capital contributions or shares subscribed by the shareholders. The Company Law of the People’s Republic of China also applies to foreign-invested enterprises. If foreign investment laws have other regulations, those regulations also apply.

The Special Administrative Measures (Negative List) for the Access of Foreign Investment (2020) (2020 Edition) (《外商投資準入特別管理措施(負面清單)(2020年版)》, the “Negative List”) was promulgated by the National Development and Reform Commission and the Ministry of Commerce on June 23, 2020 and became effective on July 23, 2020. The Negative List sets out the restrictive measures in a unified manner, such as the requirements on shareholding percentages and management, for the access of foreign investments, and the industries that are prohibited for foreign investment. The Negative List covers 12 industries, and any field not falling in the Negative List shall be administered under the principle of equal treatment to domestic and foreign investment.

According to the Measures for Reporting Foreign Investment Information (《外商投資信息報告辦法》) jointly promulgated by the Ministry of Commerce and the State Administration for Market Regulation on December 30, 2019 and taking effect on January 1, 2020, foreign investors and foreign-invested enterprises should submit investment information in a timely manner following the principles of truthfulness, accuracy and completeness, and must not submit false or misleading reports, nor have major omissions in such reports. If a foreign-invested enterprise invests (including multi-level investment) and establishes an enterprise in China, after it registers and files with the market supervision department and submits the annual report information, the relevant information will be transmitted by the market supervision department to the competent commercial authority, and the abovementioned enterprises do not need to submit information separately.

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According to the Foreign Investment Law of the People’s Republic of China (中華人民共和國外商投資法》) promulgated on March 15, 2019 and took effect on January 1, 2020 (the “Foreign Investment Law”), the state implements a pre-entry national treatment program plus a negative list-based administration system for foreign investment. Pre-entry national treatment means that the treatment enjoyed by foreign investors and their investments at the stage of investment access is not less than that enjoyed by domestic investors and their investments; the negative list refers to the regulations on special access management that the state provides for foreign investment in specific fields. The state grants national treatment to foreign investment beyond the negative list.

Foreign investors are not allowed to invest in the areas where foreign investment is prohibited according to the Negative list. In the areas where foreign investment is restricted according to the Negative list, foreign investors should meet the conditions stipulated in the Negative list. The fields beyond the Negative list shall be managed in accordance with the principle of consistency between domestic and foreign investment. The state establishes a reporting system for foreign investment information. Foreign investors or foreign-invested enterprises shall submit investment information to the competent commerce department through the enterprise registration system and the publicity system of enterprise credit information.

Foreign-invested enterprises carrying out production and business activities in China shall abide by laws and administrative regulations on labor protection and social insurance, handle taxation, accounting, foreign exchange, etc. related matters in accordance with laws, administrative regulations and relevant state regulations, and accept supervision and inspection by relevant competent authorities in accordance with the law.

The state supports foreign-invested enterprises to participate in government procurement activities through fair competition in accordance with the law. Products and services provided by foreign-invested enterprises shall be treated equally during government procurement in accordance with the law in China.

The state does not impose expropriation on the investment of foreign investors. Under special circumstances, the state may expropriate or requisite the investment of foreign investors in accordance with the law for the purpose of public interest. Expropriation and requisition shall be carried out in accordance with legal procedures, and fair and reasonable compensation shall be given in a timely manner.

From January 1, 2020, the Foreign Investment Law replaced the Law of the People’s Republic of China on Chinese-Foreign Joint Ventures (《中華人民共和國中外合資經營企業法》), the Law of the People’s Republic of China on Chinese-Foreign Cooperative Enterprises (《中華人民共和國中外合作經營企業法》) and the Law of the People’s Republic of China on Foreign-funded Enterprises (《中華人民共和國外資企業法》), becoming the legal basis for foreign investment in China. On December 26, 2019, the State Council promulgated the Regulations for the Implementation of the Foreign Investment Law of the People’s Republic of China (《中華人民共和國外商投資法實施條例》), which took effect on January 1, 2020 and

–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. REGULATORY OVERVIEW replaced the Regulations on the Implementation of the Joint Venture Law (《中華人民共和國中外合資經營企業法實施條例》), the Interim Provisions on the Duration of Joint Ventures of Sino-foreign Equity Joint Ventures (《中外合資經營企業合營期限暫行規定》), the Detailed Rules for the Implementation of the Law of the People’s Republic of China on Foreign-funded Enterprises (《中華人民共和國外資企業法實施細則》), the Detailed Rules for the Implementation of the Law of the People’s Republic of China on Sino-foreign Cooperative Enterprises (《中華人民共和國中外合作經營企業法實施細則》).

Regulations Relating to the H Share Full Circulation

“Full circulation” means listing and circulating on the Stock Exchange of the domestic unlisted shares of an H-share listed company (“H-share listed company”), including unlisted domestic shares held by domestic shareholders prior to overseas listing, unlisted domestic shares additionally issued after overseas listing, and unlisted shares held by foreign shareholders. On November 14, 2019, CSRC announced the Guidelines for the “Full Circulation” Program for Domestic Unlisted Shares of H-share Listed Companies (《H股公司境內未上市股份申請“全流通”業務指引》 (“Guidelines for the ‘Full Circulation’”).

According to the Guidelines for the “Full Circulation”, shareholders of domestic unlisted shares may determine by themselves through consultation the amount and proportion of shares, for which an application will be filed for circulation, provided that the requirements laid down in the relevant laws and regulations and set out in the policies for state-owned asset administration, foreign investment and industry regulation are met, and the corresponding H-share listed company may be entrusted to file the said application for “full circulation”. To file an application for “full circulation”, an H-share listed company shall file the application with the CSRC according to the administrative licensing procedures necessary for the “examination and approval of public issuance and listing (including additional issuance) of shares overseas by a joint stock company”. After the application for “full circulation” has been approved by the CSRC, an H-share listed company shall submit a report on the relevant situation to the CSRC within 15 days after the registration with the China Securities Depository and Clearing Corporation Limited (“CSDC”) of the shares related to the application has been completed.

On December 31, 2019, CSDC and Shenzhen Stock Exchange (“SZSE”) jointly announced the Measures for Implementation of H-share “Full Circulation” Business (《H股“全流通”業務實施細則》) (“Measures for Implementation”). The businesses of cross-border transfer registration, maintenance of deposit and holding details, transaction entrustment and instruction transmission, settlement, management of settlement participants, services of nominal holders, etc. in relation to the H-share “full circulation business”, are subject to the Measures for Implementation.

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In order to fully promote the reform of H-shares “full circulation” and clarify the business arrangement and procedures for the relevant shares’ registration, custody, settlement and delivery, CSDC has promulgated the Circular on Issuing the Guide to the Program for Full Circulation of H-shares (《關於發布的通知》) in February 2020, which specified the business preparation, account arrangement, cross-border share transfer registration and overseas centralized custody, etc. In February 2020, CSDC (Hong Kong) also promulgated the Guide to the Program for Full Circulation of H-shares (《中國證券登記結算 (香港)有限公司H股“全流通”業務指南》) to specify the relevant escrow, custody, agent service of CSDC (Hong Kong), arrangement for settlement and delivery and other relevant matters.

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SUMMARY

As of the Latest Practicable Date, Mr. Dai and his acting-in-concert persons, being Ms. Yang, Anji Ruzhe (formerly known as Shanghai Ruzhe) and Anji Qiyue, held a total of 23,143,799 Shares, or 28.98% of the issued share capital of the Company as of the Latest Practicable Date, which will represent [REDACTED]% of the issued share capital of the Company immediately after the completion of the [REDACTED] (assuming the [REDACTED] is not exercised). Therefore, Mr. Dai, Ms. Yang, Anji Ruzhe and Anji Qiyue collectively will be considered as our Single Largest Shareholder Group after the [REDACTED].

For the biographical details of Mr. Dai and Ms. Yang, please refer to the section headed “Directors, Supervisors and Senior Management” in this document. For further information about the acting-in-concert arrangements among Mr. Dai, Ms. Yang, Anji Ruzhe and Anji Qiyue, please refer to the section headed “History, Development and Corporate Structure” in this document.

COMPETITION

As of the Latest Practicable Date, none of our Single Largest Shareholder Group, our Directors or their respective close associates had any interest in any business which competes or is likely to compete, either directly or indirectly with our Group’s business which would require disclosure under Rule 8.10 of the Listing Rules.

INDEPENDENCE OF OUR BUSINESSES

After considering the following factors, the Directors are of the view that we are independent from the Single Largest Shareholder Group after the [REDACTED].

Operational Independence

Our Company has full rights to make all decisions on, and to carry out, our own business operations independently. We hold the licenses, intellectual properties, R&D facilities through direct ownership and qualifications necessary to carry on our current business. We have sufficient capital, facilities, technology and employees to operate the business independently from the Single Largest Shareholder Group. We have access to third parties independently from and not connected with the Single Largest Shareholder Group for sources of suppliers and customers.

Based on the above, the Directors believe that we operate independently from the Single Largest Shareholder Group.

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Management Independence

The management and operational decisions of the Company are made collectively by the Board. The Board consists of three executive Directors, one non-executive Director and three independent non-executive Directors. Other than Mr. Dai and Ms. Yang, none of our Directors, Supervisors or senior management members serves as directors, supervisors or senior management members in any close associates of the Single Largest Shareholder Group.

Our Directors are of the view that our other Directors possess the relevant experiences to ensure the normal operation of the Board. We further believe that our Directors and members of the senior management are able to perform their roles in our Company in managing our business independently from the Single Largest Shareholder Group for the following reasons:

• as part of the preparation for the [REDACTED], we have followed the [REDACTED] Rules to prepare the Articles of Association. Specifically, our Articles of Association stipulate that: when the Directors, Supervisors, general managers and other senior management perform their duties, they must uphold the principles of good faith, and should not place themselves in a position where there may be conflicts between their interests and duties undertaken; unless otherwise approved by the Stock Exchange, the Directors shall not vote on any resolutions of the Board to approve contracts or arrangements or any other related proposals in which they or any of their close associates have substantial interests; when determining if the quorum for meeting is satisfied, the related Directors shall not be counted. If any transaction carried out by the Group results in conflict of interests, all the Directors with conflicting interests shall abstain from voting in respect of such transaction, and they shall not be counted toward the quorum for Board meetings;

• our independent non-executive Directors have extensive experience in different areas. We believe that they will be able to exercise their independent judgment and will be able to provide impartial opinions in the decision-making process of our Board to protect the interests of our Shareholders;

• each of our Directors is aware of his or her fiduciary duties as a director, which require, among other things, that he or she acts for our Company’s best interests and he or she must not allow any conflict between his or her duties as a Director and his or her personal interests; and

• where a general meeting is held to consider a proposed transaction in which the Single Largest Shareholder Group has a material interest, the Single Largest Shareholder Group shall abstain from voting on the resolutions and shall not be counted towards the quorum for the voting.

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Financial Independence

We possess our own financial management system, and can operate independently from the Single Largest Shareholder Group from a financial point of view. In addition, we can obtain third party financing without relying on any guarantee or pledge provided by the Single Largest Shareholder Group. As of the Latest Practicable Date, there is no loan, advance and balances payable to or receivable from the Single Largest Shareholder Group, and the Single Largest Shareholder Group has not provided any pledge or guarantee regarding the borrowing of the Group.

Corporate Governance Measures

Our Directors believe that there are adequate corporate governance measures in place to manage the potential conflict of interests between the Single Largest Shareholder Group and our Group and to safeguard the interests of our Shareholders as a whole for the following reasons:

• Mr. Dai and Ms. Yang have undertaken that they will not, and will procure the company/companies controlled by it not to, directly or indirectly carry out any business which poses competition against the business carried out by any member of the Group;

• the transaction to be carried out by the Group and the Single Largest Shareholder Group shall conform to relevant provisions of the Articles of Association and the Listing Rules, including (where applicable) provisions on reporting, annual reporting, announcement and approval of the independent shareholders (if applicable); and

• we have appointed Somerley Capital Limited as our compliance advisor, who will provide advice and guidance to us in respect of compliance with the applicable laws and the Listing Rules including various requirements relating to directors’ duties and corporate governance.

Based on the above, our Directors are satisfied that sufficient corporate governance measures have been put in place to manage conflicts of interest that may arise between our Company and the Single Largest Shareholder Group, and to protect our minority Shareholders’ interests after the [REDACTED].

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BOARD OF DIRECTORS

Our Board consists of seven Directors, comprising three executive Directors, one non-executive Director and three independent non-executive Directors. Our Board is responsible and has general powers for the management and operation of our Company. The Directors are appointed with a term of three years, eligible for re-election at the end of the term. The table below sets out certain information in respect of the members of the Board.

Date of appointment as Date of joining Roles and Name Age Position Director our Group responsibilities

Mr. Dai Yufeng 40 Chairman of our December 22, December 22, Overall management, (戴宇峰) Board and 2016 2016 business and executive strategies of our Director Group

Ms. Yang 39 Executive Director March 7, 2017 December 22, Overall management, Huixian 2016 business and (楊惠仙) strategies of our Group

Ms. Gu Yanyan 44 Executive Director September 13, June 1, 2017 Management of (顧彥彥) 2018 clinical needs, medical support, clinical pharmacology, registration compliance, drug safety, clinical research and statistics of our Group

Mr. Chen Chen 37 Non-executive August 5, 2019 August 5, 2019 Responsible for (陳琛) Director overseeing Board affairs and providing strategic advice and guidance on our Group’s affairs

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Date of appointment as Date of joining Roles and Name Age Position Director our Group responsibilities

Ms. Yang Jiayu 41 Independent November 27, November 27, Providing independent (陽佳余) non-executive 2020 2020 advice and Director judgment to our Board

Mr. Yu Liqiang 40 Independent November 27, November 27, Providing independent (俞立強) non-executive 2020 2020 advice and Director judgment to our Board

Ms. Ni Hong 48 Independent March 24, 2021 March 24, 2021 Providing independent (倪虹) non-executive advice and Director judgment to our Board

Executive Directors

Mr. Dai Yufeng (戴宇峰), aged 40, was appointed as a Director and the Chairman of the Board of Directors on December 22, 2016 and March 7, 2017, respectively, and was re-designated as an executive Director on March 9, 2021. He has been the general manager of the Company since December 2016. Mr. Dai is mainly responsible for the overall management, business and strategies of our Group. He has an in-depth understanding of medical device industry, corporate management and investment and has accumulated extensive experience in the daily operation and management of our Group. Mr. Dai has served as an executive director and the general manager of Anji Huaze Medical Technology Co., Ltd. (安吉華澤醫療科技有限公司) since June 2019. He has served as the general manager of Anji Ruzhe Enterprise Management Co., Ltd. (安吉如哲企業管理有限公司), (formerly known as Shanghai Ruzhe Enterprise Management Co., Ltd. (上海如哲企業管理有限公司)) since December 2017.

Mr. Dai obtained his bachelor’s degree in clinical medicine from Soochow University in the PRC in July 2004.

Ms. Yang Huixian (楊惠仙), aged 39, was appointed as a Director on March 7, 2017 and was re-designated as an executive Director on March 9, 2021. She has been the office director of the Company since January 2017. Ms. Yang is mainly responsible for the overall management, business and strategies of our Group. She has extensive experience in corporate management and has accumulated extensive experience in the daily operation and management of our Group. Ms. Yang has served as an executive director of Anji Ruzhe Enterprise Management Co., Ltd. since December 2017. From December 2016 to March 2017, Ms. Yang served as a Supervisor of the Company. From July 2007 to June 2017, Ms. Yang successively served as a junior editor, intermediate editor and director assistant of Shanghai Technology Education Publishing House (上海科技教育出版社).

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Ms. Yang obtained her bachelor’s degree in science from Minnan Normal University in the PRC in July 2004. Ms. Yang obtained her master’s degree in education from East China Normal University in the PRC in July 2007.

Ms. Gu Yanyan (顧彥彥), aged 44, was appointed as a Director on September 13, 2018 and was re-designated as an executive Director on March 9, 2021. She has been the deputy general manager of the Company since September 2020. Ms. Gu is mainly responsible for the management of clinical needs, medical support, clinical pharmacology, registration compliance, drug safety, clinical research and statistics of our Group. She has more than 10 years of experience in registration, quality management system, as well as technical treatment and R&D of valvular heart. From June 2017 to June 2019, Ms. Gu served as the deputy general manager of the Company. From June 2012 to June 2017, Ms. Gu served as the registration quality clinical director of KingstronBio (Changshu) Co., Ltd. (金仕生物科技(常熟)有限公司). From November 2006 to March 2010, Ms. Gu served as the registration manager of Essen Technology (Beijing) Co., Ltd. (易生科技(北京)有限公司). From 2005 to October 2006, Ms. Gu worked at Beijing Allgens Medical Science & Technology Co., Ltd. (北京奧精醫藥科技有限公司).

Ms. Gu obtained her bachelor’s degree in chemical engineering from Nanjing University of Chemical Engineering (currently known as Nanjing Tech University) in the PRC in June 1999.

Non-executive Director

Mr. Chen Chen (陳琛), aged 37, was appointed as a Director on August 5, 2019 and was re-designated as a non-executive Director on March 9, 2021. Mr. Chen is mainly responsible for overseeing Board affairs and providing strategic advice and guidance on our Group’s affairs. He has 10 years of experience in business consulting and investment management industry.

Since September 2020, Mr. Chen has been a principal of Beijing Panmao Investment Management Co., Ltd. (北京磐茂投資管理有限公司). From January 2019 to August 2020, Mr. Chen served as a principal of Tianjin Panmao Enterprise Management Limited Liability Partnership (天津磐茂企業管理合夥企業(有限合夥)). From July 2015 to December 2018, Mr. Chen worked at Shanghai Panxin Equity Investment Management Limited (上海磐信股權投資管理有限公司) as senior investment manager. Before joining the investment management industry, Mr. Chen served as a consultant at the Shanghai branch of Bain & Company from October 2009 to August 2013.

Mr. Chen currently also serves as a director of several other companies, including Shanghai MicroPort MedBot (Group) Co., Ltd. (上海微創醫療機器人(集團)股份有限公司) since September 2020, Acotec Scientific Co., Ltd. (北京先瑞達醫療科技有限公司) since December 2018 and Spectrum Dynamics Medical Group Limited since March 2018.

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Mr. Chen obtained his bachelor’s degree of engineering in electronic information engineering from Shanghai Jiao Tong University in the PRC in July 2005. Mr. Chen obtained his master’s degree in economics from Shanghai Jiao Tong University in the PRC in March 2009 and his Master of Business Administration degree from the University of Chicago in the U.S. in June 2015.

Independent Non-executive Directors

Dr. Yang Jiayu (陽佳余), aged 41, was appointed as a Director on November 27, 2020 and was re-designated as an independent non-executive Director on March 9, 2021. Dr. Yang is mainly responsible for providing independent advice and judgment to our Board. She has more than 14 years of experience in finance. Since November 2019, Dr. Yang has been an independent director of Shanghai Allist Pharmaceuticals Co., Ltd. (上海艾力斯醫藥科技股份有限公司, a company listed on the Science and Technology Innovation Board of the Shanghai Stock Exchange (stock code: 688578)). Since April 2015, Dr. Yang has been an associate professor in the School of Finance of Nankai University. From December 2008 to April 2015, Dr. Yang was an associate professor in the School of Economics of Nankai University. From July 2006 to April 2015, Dr. Yang taught in the School of Economics of Nankai University.

Dr. Yang obtained her bachelor’s degree in economics from the School of Business Administration of Hunan University in the PRC in July 2000. Dr. Yang obtained her master’s degree in economics from Hunan University in the PRC in July 2003. Dr. Yang obtained her doctorate degree in economics from Hunan University in the PRC in July 2006.

Mr. Yu Liqiang (俞立強), aged 40, was appointed as a Director in November 27, 2020 and was re-designated as an independent non-executive Director on March 9, 2021. Mr. Yu is mainly responsible for providing independent advice and judgment to our Board. He has more than 17 years of experience in neurology. From December 2016 to date, Mr. Yu has been an associate chief physician in The First Affiliated Hospital of Soochow University. From September 2004 to December 2016, Mr. Yu served as a clinician doctor in The First Affiliated Hospital of Soochow University. Mr. Yu is also a member of the Tenth Youth Committee of the Neurology Branch of the Jiangsu Medical Association (江蘇省醫學會第十屆神經病學分會青年委員會委員), a youth member of the Chinese Society of Microcirculation Neurodegenerative Diseases Committee (中國微循環學會神經變性病專業委員會青年委員), a youth member of the Brain-Heart Simultaneous Treatment Committee under Jiangsu Association of Integrative Medicine (江蘇省中西醫結合學會腦心同治專業委員會青年委員), and a member of Neurology Group under Rare Disease Branch of the Jiangsu Medical Association (江蘇省醫學會罕見病學分會神經病學組成員).

Mr. Yu obtained his bachelor’s degree in clinical medicine from the School of Medicine of Soochow University in the PRC in June 2004 and his master’s degree in neurology from the School of Medicine of Soochow University in the PRC in June 2011.

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Ms. Ni Hong (倪虹), aged 48, was appointed as a Director on March 24, 2021 and re-designated as an independent non-executive Director on March 24, 2021. Ms. Ni is mainly responsible for providing independent advice and judgment to our Board.

Ms. Ni has more than 20 years of experience in corporate finance and capital market activities. Ms. Ni has been an independent director of Zhihu Inc., a company listed on New York Stock Exchange (ticker symbol: ZH) since March 2021, an independent director of Ucloudlink Group, Inc., a company listed on Nasdaq (ticker symbol: UCL) since June 2020, a non-executive director of Cogobuy Group, a company listed on the Stock Exchange (stock code: 400) since June 2020, an independent non-executive director of Digital China Holdings Limited, a company listed on the Stock Exchange (stock code: 861) since September 2010, and an independent director and audit committee chairman of ATA Creativity Global (formerly known as ATA Inc.), a company listed on Nasdaq (ticker symbol: AACG) since January 2008.

Previously, Ms. Ni served as an executive director of Cogobuy Group from March 2015 to June 2020, an independent director of JA Solar Holdings, Co. Ltd., a company listed on Nasdaq (ticker symbol: JASO) from August 2009 to July 2018, and a director of ATA Online (Beijing) Education Technology Co., Limited, a company formerly listed on NEEQ (stock code: 835079) from July 2015 to August 2018. Ms. Ni was the chief financial officer and director of Viewtran Group, Inc., a company formerly listed on Nasdaq (ticker symbol: VIEW), from August 2004 to January 2008 and from January 2008 to early 2009 served as its vice chairman. In her earlier career, Ms. Ni worked as a practicing attorney at Skadden, Arps, Slate, Meagher & Flom LLP in New York and Hong Kong, specializing in corporate finance. Prior to that, Ms. Ni worked at Merrill Lynch’s investment banking division in New York.

Ms. Ni obtained her bachelor’s degree in applied economics from Cornell University in the U.S. in May 1994 and her Juris Doctor degree from the University of Pennsylvania in the U.S. in May 1998. Ms. Ni was admitted to the New York bar in May 1999.

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SUPERVISORS

The table below sets out certain information in respect of our Supervisors.

Date of appointment as Date of joining Name Age Position Supervisor our Group Roles and responsibilities

Mr. Wu 38 Chairman of the November 27, August 27, 2020 Supervising the Board and Zheng Supervisory 2020 senior management (吳正) Committee members in performing their duties for the Company

Mr. Xu Libo 36 Supervisor November 27, December 22, Supervising the Board and (徐立波) 2020 2016 senior management members in performing their duties for the Company

Mr. Li Tao 32 Supervisor November 27, February 28, Supervising the Board and (李濤) 2020 2017 senior management members in performing their duties for the Company

Mr. Wu Zheng (吳正), aged 38, was appointed as the Chairman of Supervisory Committee on November 27, 2020. Mr. Wu is mainly responsible for supervising the Board and senior management members in performing their duties for the Company. He has extensive experience in investment and finance. Since September 2019, Mr. Wu worked at Biomedicine Branch of Yingke Asset (盈科資本生物醫藥部). From August 2020 to December 2020, Mr. Wu served as a Director of the Company. From July 2015 to September 2019, he worked at Shanghai Rolling Stones Investment Management Co., Ltd. (上海滾石投資管理有限公司). From July 2014 to June 2015, Mr. Wu worked at Shanghai Donghongqiao Financial Holdings Co., Ltd. (上海東虹橋金融控股集團有限公司). From July 2009 to June 2014, Mr. Wu worked at AIA Asset Management Center.

Mr. Wu obtained his Master of Business Administration degree (in-service education) from Zhongnan University of Economics and Law in the PRC in December 2010.

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Mr. Xu Libo (徐立波), aged 36, was appointed as a Supervisor on November 27, 2020 and was appointed as the manager of medical purchasing department in January 2020. Mr. Xu is mainly responsible for supervising the Board and senior management members in performing their duties for the Company. He has extensive experience in medical device industry. From December 2016 to December 2019, Mr. Xu served as the purchase officer of the Company.

Mr. Xu graduated from Yixing Heqiao Vocational High School in the PRC in July 2003, majoring in machining technology.

Mr. Li Tao (李濤), aged 32, was appointed as a Supervisor on November 27, 2020. Mr. Li is mainly responsible for supervising the Board and senior management members in performing their duties for the Company. He has more than 7 years of experience in structural heart disease medical device industry. From February 2017 to date, Mr. Li served as the production supervisor of the Company responsible for coordinating production management and assignments scheduling. From January 2012 to February 2017, Mr. Li served as a technician in the production department of Shanghai Shape Memory Alloy Material Co., Ltd. (上海形狀記憶合金材料有限公司) responsible for coordinating production management and assignments scheduling.

Mr. Li graduated from Jingzhou Institute of Technology in the PRC in June 2009, majoring in mechanical engineering.

OTHER DISCLOSURE PURSUANT TO RULE 13.51(2) OF THE LISTING RULES

Save as disclosed above and in this document, each of our Directors and Supervisors has confirmed that he or she (1) did not hold other long positions or short positions in the Shares, underlying Shares and debentures of our Company or any associated corporation (within the meaning of Part XV of the SFO) as of the Latest Practicable Date; (2) had no other relationship with any Directors, Supervisors, senior management or substantial shareholders of our Company as of the Latest Practicable Date; (3) did not hold any other directorships in any public companies with securities listed on any securities market in Hong Kong and/or overseas during the three years prior to the Latest Practicable Date; and (4) there are no other matters concerning the appointments of our Directors and Supervisors that are required to be brought to the attention of our Shareholders and the Stock Exchange or shall be disclosed pursuant to Rules 13.51(2)(h) to (v) of the Listing Rules.

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SENIOR MANAGEMENT

The table below sets out certain information regarding our senior management:

Date of appointment as senior Date of joining Roles and Name Age Position management our Group responsibilities

Mr. Dai Yufeng 40 General manager December 22, December 22, Responsible for (戴宇峰) 2016 2016 strategies and operational management of the Company

Ms. Gu Yanyan 44 Deputy general November 27, June 1, 2017 Responsible for (顧彥彥) manager 2020 clinical management of the Company

Mr. Tang Yushen 41 Chief technology March 15, 2021 October 19, 2020 Responsible for R&D (唐瑜珅) officer management of the Company

Ms. Li Lingyi 40 Chief financial January 18, 2021 January 18, 2021 Responsible for (李靈怡) officer and financial joint company management of the secretary Company

Mr. Dai Yufeng (戴宇峰) is an executive Director and the general manager of the Company. Please refer to the paragraph headed “– Executive Directors” in this section for further details of his biography.

Ms. Gu Yanyan (顧彥彥) is an executive Director and the deputy general manager of the Company. Please refer to the paragraph headed “– Executive Directors” in this section for further details of her biography.

Mr. Tang Yushen (唐瑜珅), aged 41, was appointed as the chief technology officer of the Company on March 15, 2021 and mainly responsible for R&D management of the Company. Mr. Tang has more than 10 years of experience in research and development in medical device industry.

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From May 2019 to May 2020, Mr. Tang served as the senior product manager at Shanghai Shenyi Medical Technology Co., Ltd. (上海神奕醫療科技有限公司). From March 2012 to April 2019, Mr. Tang worked at BSC Medical Device Technology (Shanghai) Co., Ltd. (波科醫療器械技術(上海)有限公司). From July 2010 to February 2012, Mr. Tang worked at BSC Int’l Medical Trade (Shanghai) Co., Ltd. (波科國際醫療貿易(上海)有限公司).

Mr. Tang obtained his master’s degree in engineering from Shanghai Jiao Tong University in the PRC in December 2010.

Ms. Li Lingyi (李靈怡), aged 40, was appointed as the chief financial officer of the Company on January 18, 2021 and mainly responsible for financial management of the Company. Ms. Li has more than 17 years of experience in accounting, investment and corporate finance. From June 2016 to December 2020, Ms. Li served as the chief financial officer of Tee Young Media and Communication Co., Ltd. (上海天湧影視傳媒股份有限公司), a company listed on NEEQ (stock code: 832133). From March 2013 to March 2015, Ms. Li served as the chief financial officer of Yunnan Boxin Real Estate Development Co., Ltd. (雲南博欣房地產開發有限公司). From March 2011 to March 2013, Ms. Li served as the chief financial officer of Junfa Real Estate Co., Ltd. (俊發集團有限公司) (formerly known as Yunnan Junfa Real Estate Co., Ltd. (雲南俊發房地產有限責任公司)). From November 2006 to March 2011, Ms. Li worked at PricewaterhouseCoopers Consultants (Shenzhen) Limited, Shanghai Branch. From August 2003 to November 2006, Ms. Li worked at Deloitte Touche Tohmatsu Certified Public Accountants LLP.

Ms. Li obtained her bachelor’s degree in accounting from the Central University of Finance and Economics in the PRC in July 2003 and her master’s degree in Business Administration (MBA) from Sofia University in the U.S. in September 2019. Ms. Li has been a member of the Chinese Institute of Certified Public Accountants since April 2007.

JOINT COMPANY SECRETARIES

Ms. Li Lingyi (李靈怡), aged 40, was appointed as one of our joint company secretaries on April 7, 2021. Ms. Li is also a member of senior management of our Company. Please refer to the paragraph headed “– Senior Management” in this section for her biographical details.

Mr. Au-Yeung Wai Ki, Joseph (歐陽偉基), aged 57, was appointed as one of our joint company secretaries on March 9, 2021.

Mr. Au-Yeung Wai Ki, Joseph has been an associate member of the Hong Kong Institute of Certified Public Accountants (A08401) since 1994 and a fellow member of the Association of Chartered Certified Accountants. Mr. Au-Yeung has more than 21 years of experience in finance and accounting. He founded W.K. Au Yeung & Co. in 1998. He initially served as the company secretary of Changan Minsheng APLL Logistics Co., Ltd. (重慶長安民生物流股份有限公司), an automobile supply chain management service provider listed on the Stock Exchange (stock code: 1292), from June 1, 2009 to July 18, 2013. Subsequently, he served as a joint company secretary for that company from July 18, 2013 to June 30, 2016. He currently serves as a joint company secretary and authorized representative of Newborn Town Inc. (赤子城科技有限公司), a mobile application developer and mobile advertising platform service provider listed on the Main Board of the Stock Exchange (stock code: 9911), and an authorized representative of Great Wall Motor Company Limited, one of China’s largest SUV manufacturers which is listed on the Main Board of the Stock Exchange (stock code: 2333) and Shanghai Stock Exchange (stock code: 601633).

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BOARD COMMITTEES

In accordance with the relevant PRC laws, regulations, the Articles of Association and the corporate governance practice prescribed in the Listing Rules, we have formed three board committees, namely, the audit committee of the Board (the “Audit Committee”), the remuneration and appraisal committee of the Board (the “Remuneration and Appraisal Committee”), and the nomination committee of the Board (the “Nomination Committee”).

Audit Committee

Our Company has established an Audit Committee with written terms of reference in compliance with Rule 3.21 of the Listing Rules and paragraph C.3 and paragraph D.3 of the Corporate Governance Code as set out in Appendix 14 of the Listing Rules. The Audit Committee consists of Ms. Ni Hong, Mr. Yu Liqiang and Dr. Yang Jiayu. The chairman of the Audit Committee is Ms. Ni Hong and she is our independent non-executive Director with related financial management expertise as required under Rules 3.10(2) and 3.21 of the Listing Rules. The main duties of the Audit Committee include but are not limited to:

• monitoring and evaluating the work of the external auditor;

• supervising the implementation of the internal audit system of our Company;

• being responsible for the communications among the management level of the company, the internal and external audits;

• reviewing and commenting on the financial reports of our Company;

• examining the financial reporting system, risk management and internal control systems of our Company;

• making recommendations to our Company on the appointment, reappointment and removal of the external auditor;

• performing daily management duties and implementing control on connected transactions; and

• performing such other duties determined by the Board.

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Remuneration and Appraisal Committee

Our Company has established the Remuneration and Appraisal Committee with written terms of reference in compliance with Rule 3.25 of the Listing Rules and paragraph B.1 of the Corporate Governance Code. The Remuneration and Appraisal Committee consists of Mr. Yu Liqiang, Dr. Yang Jiayu and Mr. Chen Chen, and is chaired by Mr. Yu Liqiang. The main duties of the Remuneration and Appraisal Committee include but are not limited to:

• formulating remuneration policies for Directors and senior management in accordance with the respective scope of work, responsibilities and significance of Directors and senior management and remuneration levels of similar positions in other companies within the same industry;

• making recommendations to the Board on the establishment of a formal and transparent procedure for developing remuneration policies;

• monitoring the operation of remuneration system of our Company for the Directors and senior management;

• assessing the fulfillment of duties of Directors and senior management of our Company and appraising their annual performance; determining or making recommendations to the Board, with delegated responsibility, the remuneration packages of individual Directors and senior management;

• reviewing and approving compensation payable to Directors and senior management for any loss or termination of office or appointment to ensure that it is consistent with contractual terms and is otherwise fair and not excessive;

• reviewing and managing the share incentive scheme(s) of our Company, including determining the scope of the eligible participants and conditions of a grant and auditing the exercise conditions; and

• performing such other duties determined by the Board.

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Nomination Committee

Our Company has established a Nomination Committee with written terms of reference in compliance with paragraph A.5 of the Corporate Governance Code. The Nomination Committee consists of Mr. Dai, Mr. Yu Liqiang, and Dr. Yang Jiayu, and is chaired by Mr. Dai. The main duties of the Nomination Committee include but are not limited to:

• making recommendations to the Board on its size and composition to complement the Company’s business operation and shareholding structure;

• reviewing and making recommendations on the selection criteria and procedures for Directors and senior management;

• identifying individuals suitably qualified to become Directors and senior management and selecting or making recommendations to the Board on the selection of individuals nominated for directorships or senior management positions;

• reviewing the structure, size and composition (including skills, knowledge and experience) of the Board at least annually and making recommendations on any proposed changes to the Board to complement our Company’s corporate strategy;

• assessing the independence of independent non-executive Directors; and

• performing such other duties determined by the Board.

CORPORATE GOVERNANCE

Mr. Dai is the Chairman of the Board and general manager of our Company. Mr. Dai has extensive experience in the medical device industry, and has been the general manager of our Company since its initial period of development and has been responsible for the overall management of our Group since. Although holding both positions of Chairman and general manager will deviate from Code Provision A.2.1 of the Corporate Governance Code as set out in Appendix 14 to the Listing Rules, the Board is of the view that Mr. Dai’s holding of both positions will be conducive to ensuring consistency in the leadership of our Company and more effective and efficient in the overall strategic planning of the Company. The balance of power and authorization in the operation of the Board is ensured, and the Board is constituted by diversified talents with extensive experience. The current Board comprises one non-executive Director, three independent non-executive Directors and three executive Directors. Therefore, its composition is highly independent.

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DIVERSITY OF THE BOARD

The Company has adopted the diversity policy for the Board to enhance the efficiency of the Board and maintain a high standard of corporate governance. According to this policy, we intend to select candidates of the Board by considering a number of factors, including but not limited to gender, age, cultural and education background, race, professional experience, skills, knowledge and length of service, to realize the diversity of the Board. The ultimate decision of appointment to the Board will be made based on the achievements and contributions made by the selected candidates to the Board.

The Board comprised three male members and four female members, among them, four directors are below 40 years old, three directors are between the age of 41 and 50. The Company has reviewed the members, structure and composition of the Board and is of the view that the structure of the Board is reasonable, the Directors have extensive experiences and skills in various aspects and fields and are able to maintain high standards in the operation of the Company.

The Nomination Committee is responsible for reviewing the diversity of the Board. After [REDACTED], the Nomination Committee will supervise and assess the implementation status of the diversity policy of the Board from time to time to ensure its continued effectiveness, and we will disclose the implementation status of the diversity policy of the Board in our annual corporate governance report, including the implementation of the diversity policy of the Board against any measurable target, and the progress of realizing such target. We will also continue to adopt measures to promote the gender diversity at all levels in the Company.

PRINCIPAL TERMS OF EMPLOYMENT CONTRACT

We usually enter into (i) employment contracts, and (ii) confidentiality and non- competition agreements with members of the senior management and other key employees. The principal terms of such contracts and agreements signed by us with the senior management and other key employees are set out below:

Confidentiality

• Scope of confidential information. Employees must keep our commercial secrets and any confidential information designated as secret information in secret, such confidential information includes but not limited to documents, materials, figures, plans and inside information of the Company owned, possessed or involved by the Company.

• Duty of confidentiality. Employees are prohibited from disclosing, communicating, reporting, releasing, transmitting, transferring or providing through other means any confidential information of the Company and information we have confidentiality obligations to third parties to any third parties (including employees who have no knowledge of such secret information). Employees must be reasonable and prudent in performing their confidentiality obligations, and shall not remove any secret

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information from our Company and the relevant company properties. After employees have terminated their employment with our Company or at our request, the employees must return to our Company all the documents, drawings, records or any other recording means containing our secret information.

• Confidential period. The obligation of confidentiality must continue to be effective after the termination of employment between the employee and the Company, until the secret information is (i) disclosed by the Company to public; or (ii) provided to the public without violating the aforesaid obligation on the part of the employee.

Non-competition clause

• Non-competition obligations during the employment period. During the employment period in the Company, unless prior consent has been obtained, the employees shall not engage in or accept employment to operate any businesses with the same or similar products produced or operated or services provided by the Company. Employees shall not invest in or voluntarily engage in any business with the same or similar products produced or operated or services provided by the Company.

• Non-competition obligations after expiration of the employment period. Unless otherwise agreed, employees are subject to confidentiality obligations permanently after termination of employment until the secret information has been declared not confidential by the Company or such information actually has been released to the public.

Compensation for breach of contract

• If an employee has breached the duty of confidentiality, the Company is entitled to claim compensation for all economic losses resulting from the breach; if an employee has breached the deed of non-competition, the Company is entitled to claim a certain liquidated amount as determined after taking into consideration the original non-competition compensation payable to the employee.

COMPLIANCE ADVISOR

We have appointed Somerley Capital Limited as our compliance advisor pursuant to Rule 3A.19 of the Listing Rules. According to Rule 3A.23 of the Listing Rules, the compliance advisor will advise us in the following circumstances:

• before the publication of any announcement, circular or financial report as required by the regulatory authority or applicable laws;

• when we propose to conduct any transaction which may be deemed as a notifiable or connected transaction, including issuance of shares and repurchase of shares, pursuant to Chapter 14 and Chapter 14A of the Listing Rules;

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• when we propose to use the [REDACTED] from the [REDACTED] for purposes which are different from those as set out in this document, or our business activities, development or results have deviated from any forecast, estimation or other information contained in this document; and

• when we are inquired by the Stock Exchange on unusual movements of prices and trading volume or other questions pursuant to Rule 13.10 of the Listing Rules.

The term of appointment commences from the [REDACTED] and ends on the day when the annual report on the financial results of the first complete financial year after the [REDACTED] is released by us.

REMUNERATION OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT

The Company makes remuneration payment to executive Directors, Supervisors and members of senior management (who are also employees of the Company) in the form of salaries, allowances, discretionary bonus and benefits in kind. Independent non-executive Directors receive remuneration based on their duties, including acting as a member or chairman of the Board committees. We have adopted a market-oriented and incentive-driven remuneration structure for employees and implemented a multi-level appraisal system focused on performance and management targets.

For the two years ended December 31, 2019 and 2020, the total amount of remuneration (including salaries, emoluments, pensions, discretionary bonus, share-based compensation and other benefits) paid to the Directors and the Supervisors were approximately RMB3.5 million and RMB56.2 million, respectively.

It is estimated that remuneration and benefits in kind equivalent to approximately RMB12.9 million in aggregate will be paid and granted to our Directors and Supervisors by us in respect of the financial year ending December 31, 2021 under arrangements in force at the date of this document.

For the two years ended December 31, 2019 and 2020, the total amount of remuneration paid to the five highest paid individuals of the Group (excluding Directors and Supervisors) were approximately RMB0.6 million and RMB1.6 million, respectively.

During the Track Record Period, none of our Directors and Supervisors or the five highest paid individuals were paid or had received any remuneration as an inducement for them to join our Group or as a reward after joining our Group, or as a compensation for loss of office during the Track Record Period. In addition, none of the Directors has waived any remuneration during the same period.

Save as disclosed above, during the Track Record Period, our Company or any of our subsidiaries had not made any payment or payment of other payable amounts to the Directors and Supervisors or the five highest remuneration individuals of the Group.

Please refer to Note 10 and 11 in the Accountants’ Report as set out in Appendix I to this document for further information on the remuneration of the Directors and Supervisors and the relevant information about the individuals with the highest remuneration.

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Immediately following the completion of the [REDACTED] (and assuming the [REDACTED] is not exercised), our share capital will comprise 79,875,001 Unlisted Shares (including 79,339,287 Domestic Shares and 535,714 Unlisted Foreign Shares) and [REDACTED] H Shares, representing approximately [REDACTED]% and [REDACTED]% of the total share capital of our Company, respectively. So far as our Directors are aware, immediately following the completion of the [REDACTED] (and assuming the [REDACTED] is not exercised), the following persons will have an interest or a short position in our Shares or underlying Shares of our Company which would be required to be disclosed to us and the Hong Kong Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or, who is, directly or indirectly, interested in 5% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of our Company:

Approximate Approximate Approximate Approximate percentage of percentage of percentage of percentage of shareholding in shareholding in shareholding in shareholding in Number of the relevant the total share the relevant the total share Shares to be class of capital of the class of capital of the directly or Shares as of Company as of Shares after Company after Class of Shares to indirectly held the Latest the Latest the the be held after the after the Practicable Practicable [REDACTED](3) [REDACTED](4) Name of Shareholder Nature of Interest [REDACTED] [REDACTED] Date(1) (%) Date(2) (%) (%) (%)

Mr. Dai(5) Beneficial owner and Domestic Shares 23,143,799 28.98 28.98 [REDACTED][REDACTED] interest of a controlled corporation Ms. Yang(5) Beneficial owner and Domestic Shares 23,143,799 28.98 28.98 [REDACTED][REDACTED] interest of a controlled corporation CITIC Securities Company Interest of a controlled Domestic Shares 16,898,069 21.16 21.16 [REDACTED][REDACTED] Limited (中信證券股份有 corporation 限公司)(6) CITIC Private Equity Funds Interest of a controlled Domestic Shares 16,898,069 21.16 21.16 [REDACTED][REDACTED] Management Co., Ltd (中 corporation 信產業投資基金管理有限公司)(6) Shanghai Pannuo Enterprise Interest of a controlled Domestic Shares 16,898,069 21.16 21.16 [REDACTED][REDACTED] Management Service corporation Co., Ltd. (上海磐諾企業管理服務有限公司)(6) Pannuo Shanghai(6) Beneficial owner Domestic Shares 16,898,069 21.16 21.16 [REDACTED][REDACTED] Qian Mingfei Interest of a controlled Domestic Shares 5,636,281 7.06 7.06 [REDACTED][REDACTED] (錢明飛)(7) corporation Yingke Innovation Asset Interest of a controlled Domestic Shares 5,636,281 7.06 7.06 [REDACTED][REDACTED] Management Co., Ltd. corporation (盈科創新資產管理有限公司)(7) Hangzhou Tigermed Interest of a controlled Domestic Shares 4,927,229 6.17 6.17 [REDACTED][REDACTED] Consulting Co., Ltd. corporation (杭州泰格醫藥科技股份有限公司)(8) Ji Tianrong Interest of a controlled Domestic Shares 4,927,229 6.17 6.17 [REDACTED][REDACTED] (紀添榮)(8) corporation

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Hangzhou Taiyu Investment Interest of a controlled Domestic Shares 4,927,229 6.17 6.17 [REDACTED][REDACTED] Consulting Co., Ltd. corporation (杭州泰煜投資諮詢有限公司)(8) Hangzhou Yuding Equity Interest of a controlled Domestic Shares 4,927,229 6.17 6.17 [REDACTED][REDACTED] Investment Management corporation Partnership (Limited Partnership) (杭州煜鼎股權投資管理合夥企業 (有限合夥))(8) Taiyu Investment(8) Beneficial owner Domestic Shares 4,927,229 6.17 6.17 [REDACTED][REDACTED]

Notes:

(1) Domestic Shares and Unlisted Foreign Shares are treated as the same class of Shares. The calculation was based on the total number of 79,875,001 Unlisted Shares (including 79,339,287 Domestic Shares and 535,714 Unlisted Foreign Shares) as of the Latest Practicable Date.

(2) The calculation was based on the 79,875,001 total issued Shares as of the Latest Practicable Date.

(3) Domestic Shares and Unlisted Foreign Shares will be treated as the same class of Shares upon completion of the [REDACTED]. The calculation was based on the total number of 79,875,001 Unlisted Shares (including 79,339,287 Domestic Shares and 535,714 Unlisted Foreign Shares) upon completion of the [REDACTED].

(4) The calculation was based on the [REDACTED] total issued Shares after the [REDACTED] (assuming the [REDACTED] is not exercised).

(5) After the completion of the [REDACTED], Mr. Dai will directly hold 9,195,305 Domestic Shares, and Ms. Yang will directly hold 7,350,099 Domestic Shares. After the completion of the [REDACTED], Anji Qiyue will directly hold 3,444,302 Domestic Shares. Anji Qiyue is a limited partnership established in the China, which is managed by Anji Huaze Medical Technology Co., Ltd. (安吉華澤醫療科技有限公司) (as its general partner) which is in turn wholly-owned by Mr. Dai. Therefore, Mr. Dai is deemed to be interested in the Shares held by Anji Qiyue. After the completion of the [REDACTED], Anji Ruzhe will hold 3,154,093 Domestic Shares. Anji Ruzhe is a limited liability company established in the China. As of the Latest Practicable Date, Anji Ruzhe was held as to 73.30% by Mr. Dai and 26.70% by Ms. Yang, thus Mr. Dai is deemed to be interested in the Shares held by Anji Ruzhe. On December 5, 2020, Mr. Dai and Ms. Yang entered into an acting-in-concert agreement, therefore, Mr. Dai and Ms. Yang are deemed to be interested in the Shares held by one another. For further details, please refer to the section headed “History, Development and Corporate Structure” in this document.

(6) As of the Latest Practicable Date, Shanghai Pannuo Enterprise Management Service Co., Ltd. is the general partner of Panmao Shanghai. CITIC Private Equity Funds Management Co., Ltd. held 100% equity interests of Shanghai Pannuo Enterprise Management Service Co., Ltd. CITIC Securities Company Limited holds 35% equity interest in CITIC Private Equity Funds Management Co., Ltd. Therefore, Shanghai Pannuo Enterprise Management Service Co., Ltd., CITIC Private Equity Funds Management Co., Ltd. and CITIC Securities Company Limited are deemed to be interested in the Shares held by Panmao Shanghai.

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(7) As of the Latest Practicable Date, Yingke Innovation Asset Management Co., Ltd. was the general partner of Taige Yingke, Yingke Jiyun and Yingke Shenghui, and controlled by Qian Mingfei. Therefore, Yingke Innovation Asset Management Co., Ltd. and Qian Mingfei are deemed to be interested in the Shares held by Taige Yingke, Yingke Jiyun and Yingke Shenghui. After the completion of the [REDACTED], Taige Yingke, Yingke Jiyun and Yingke Shenghui will hold 3,064,200 Domestic Shares, 1,677,446 Domestic Shares and 894,635 Domestic Shares of the Company, respectively.

(8) As of the Latest Practicable Date, Hangzhou Yuding Equity Investment Management Partnership (Limited Partnership) was the general partner of Taiyu Investment. Hangzhou Taiyu Investment Consulting Co., Ltd. is the general partner of Hangzhou Yuding Equity Investment Management Partnership (Limited Partnership). Hangzhou Tigermed Consulting Co., Ltd. is the controlling shareholder of Hangzhou Taiyu Investment Consulting Co., Ltd. and Ji Tianrong held 44% shares of Hangzhou Taiyu Investment Consulting Co., Ltd. Therefore, Hangzhou Yuding Equity Investment Management Partnership (Limited Partnership), Hangzhou Taiyu Investment Consulting Co., Ltd., Hangzhou Tigermed Consulting Co., Ltd. and Ji Tianrong are deemed to be interested in the Shares held by Taiyu Investment.

Save as disclosed in this document, the Directors are not aware of any other person who will, immediately following completion of the [REDACTED] have an interest or a short position in our Shares or underlying Shares of our Company which would be required to be disclosed to us and the Hong Kong Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or, who is, directly or indirectly, interested in 5% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of our Company.

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On the Latest Practicable Date, the registered capital of the Company was RMB79,875,001, consisting of 79,875,001 Unlisted Shares with a nominal value of RMB1.00 each.

Immediately following the completion of the [REDACTED] (assuming the [REDACTED] has not been exercised), the total issued share capital of the Company will be:

Approximate Percentage of Number the Issued Details of the Shares of Shares share capital

Domestic Shares 79,339,287 [REDACTED]% Unlisted Foreign Shares 535,714 [REDACTED]% H Shares to be issued under the [REDACTED][REDACTED][REDACTED]% Total [REDACTED] 100%

Immediately following the completion of the [REDACTED] (assuming the [REDACTED] has been fully exercised), the total issued share capital of the Company will be:

Approximate Percentage of Number the Issued Details of the Shares of Shares share capital

Domestic Shares 79,339,287 [REDACTED]% Unlisted Foreign Shares 535,714 [REDACTED]% H Shares to be issued under the [REDACTED][REDACTED][REDACTED]% Total [REDACTED] 100%

TYPES AND STATUS OF THE SHARES

After the completion of the [REDACTED], we will have two types of shares: H Shares as one class, whereas Domestic Shares and Unlisted Foreign Shares (both being the Unlisted Shares) together as another class. The Unlisted Shares and H Shares are ordinary shares of the share capital of the Company. However, the H Shares generally may not be subscribed for by, or traded between, legal or natural persons of the PRC, other than certain qualified domestic institutional investors in the PRC, qualified PRC investors under the Shanghai-Hong Kong Stock Connect and the Shenzhen-Hong Kong Stock Connect, and other persons who are entitled to hold the H Shares pursuant to relevant PRC laws and regulations or upon approval by any competent authorities.

– 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. SHARE CAPITAL

Unlisted Shares and H Shares are regarded as different classes of shares under our Articles of Association. The differences between the two classes of shares and provisions on class rights, the dispatch of notices and financial reports to Shareholders, dispute resolution, registration of Shares on different registers of Shareholders, the method of share transfer and appointment of dividend receiving agents are set out in the Articles of Association and summarised in “Appendix V – Summary of the Articles of Association”. The rights conferred on any class of Shareholders may not be varied or abrogated unless approved by a special resolution of the general meeting of Shareholders and by the holders of Shares of that class at a separate meeting. The circumstances which shall be deemed to be a variation or abrogation of the rights of a class are listed in “Appendix V – Summary of the Articles of Association”. However, the procedures for approval by separate classes of Shareholders shall not apply (i) where we issue, upon approval by a special resolution of the Shareholders in a general meeting, either separately or concurrently once every 12 months, not more than 20% of each of our existing issued Unlisted Shares and H Shares; (ii) where our plan to issue Unlisted Shares and H Shares at the time of its establishment is implemented within 15 months from the date of approval by the securities regulatory authorities under the State Council; and (iii) where the conversion of Unlisted Shares for listing and trading on the Hong Kong Stock Exchange as H Shares has been approved by the securities authorities under the State Council.

Further information about circumstances under which general meeting and class meeting are required are set out in the Articles of Association and summarised in “Appendix V – Summary of the Articles of Association” in this document.

Except for the differences above, Unlisted Shares and H Shares will however rank pari passu with each other in all other respects and, in particular, will rank equally for all dividends or distributions declared, paid or made after the date of this document. All dividends in respect of the H Shares are to be paid by us in Hong Kong dollars or in the form of H Shares.

CONVERSION OF OUR UNLISTED SHARES INTO H SHARES

After the completion of the [REDACTED], the Company will have two types of ordinary shares (i.e. H Shares as one class, whereas Domestic Shares and Unlisted Foreign Shares (both being the Unlisted Shares) together as another class).

According to the provisions of the securities regulatory authority of the State Council and the Articles of Association of the Company, the Unlisted Shares can be converted into H Shares, and such converted shares can be [REDACTED] and traded on offshore securities exchanges, but the conversion, [REDACTED] and trading of such converted shares must be approved by the securities regulatory authority of the State Council. In addition, such conversion, [REDACTED] and trading shall comply with the regulations of any internal approval procedures, and shall fully comply with the regulations specified by the securities regulatory authority of the State Council, as well as the regulations, rules and procedures of the relevant offshore securities exchanges.

– 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. SHARE CAPITAL

If any of the Unlisted Shares are to be converted, [REDACTED] and traded as H Shares on the Stock Exchange, such conversion, the approvals of the relevant PRC regulatory authorities, including CSRC, and the approval of the Stock Exchange are necessary. Based on the procedures for the conversion of Unlisted Shares into H Shares as set forth below, we may apply for the [REDACTED] of all or any portion of the Unlisted Shares on the Stock Exchange as H Shares in advance of any proposed conversion to ensure that the conversion process can be completed promptly upon notice to the Stock Exchange and delivery of Shares for entry on the H Share register. As the [REDACTED] of additional Shares after the [REDACTED]on the Stock Exchange is ordinarily considered by the Stock Exchange to be a purely administrative matter, it does not require such prior application for [REDACTED] at the time of our [REDACTED] in Hong Kong. No Shareholder voting is required for the conversion of such Shares or the [REDACTED] and trading of such converted Shares on an overseas stock exchange. Any application for [REDACTED] of the converted shares on the Stock Exchange after our initial [REDACTED] is subject to prior notification by way of announcement to inform our Shareholders and the public of any proposed conversion.

Registration on our H Share register will be conditional on: (a) our [REDACTED] lodging with the Stock Exchange a letter confirming the proper entry of the relevant H Shares on the H Share register and the due dispatch of H Share certificates, and (b) the admission of the H Shares to trade on the Stock Exchange in compliance with the Listing Rules, the General Rules of [REDACTED] and the [REDACTED] Operational Procedures in force from time to time. Until the converted shares are re-registered on our H Share register, such Shares would not be [REDACTED] as H Shares. The relevant procedural requirements for the conversion of Unlisted Shares into H Shares are as follows:

• The holder of Unlisted Shares shall obtain the requisite approval of the CSRC or the relevant securities regulatory authorities of the State Council for the conversion of all or part of its Unlisted Shares into H Shares.

• The holder of Unlisted Shares shall issue to us a removal request in respect of a specified number of Shares attaching the relevant documents of title.

• Subject to our Company being satisfied with the authenticity of the documents and with the approval of our Board, we would then issue a notice to our [REDACTED] with instructions that, with effect from a specified date, our [REDACTED]isto issue the relevant holders with H Share certificates for such specified number of Shares.

• The relevant Unlisted Shares will be withdrawn from the Unlisted Shares register and re-registered on our H Share register maintained in Hong Kong on the condition that:

– our [REDACTED] lodges with the Stock Exchange a letter confirming the proper entry of the relevant Shares on the H Share register and the due dispatch of share certificates; and

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– the admission of the H Shares (converted from the Unlisted Shares) to trade in Hong Kong [REDACTED] and the general rules of [REDACTED] and [REDACTED] Operational Procedures in force from time to time.

• Upon completion of the conversion, the shareholding of the relevant holder of Unlisted Shares on our Share register will be reduced by such number of Unlisted Shares converted and the number of H Shares in the H Share register will correspondingly increase by the same number of Shares.

• We will comply with the Listing Rules to inform Shareholders and the public by way of an announcement of such fact not less than three days prior to the proposed effective date.

ISSUED SHARES TRANSFERRED BEFORE THE [REDACTED]

According to the Company Law of PRC, the shares issued before the [REDACTED]of the Company are prohibited from being transferred within one year from the [REDACTED].

REGISTRATION OF THE SHARES NOT LISTED IN ANY OVERSEAS STOCK EXCHANGE

According to the Notice of Centralised Registration and Deposit of Non-overseas Listed Shares of Companies Listed on an Overseas Stock Exchange (《關於境外上市公司非境外上市股份集中登記存管有關事宜的通知》) issued by the CSRC, an overseas [REDACTED] company is required to register its domestic shares with the China Securities Depository and Clearing Corporation Limited within 15 business days upon [REDACTED] and provide a written report to the CSRC regarding the centralised registration and deposit of the domestic shares as well as the [REDACTED] and [REDACTED] of H shares.

RESTRICTIONS ON TRANSFER OF SHARES BY THE DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT

The Directors, Supervisors and senior management of the Company shall report their equity interests in the Company and any changes in their equity interests. The shares transferred by the Directors, Supervisors and senior management each year during their terms of office shall not exceed 25% of the total number of shares in the Company held by them respectively. The Shares that the aforesaid persons held in our Company are proscribed from being transferred within one year from the date on which the Shares are [REDACTED] and traded on a stock exchange, nor within half a year after they leave their positions in our Company. Please refer to the Articles of Association of our Company for other restrictions on the transfer of our Shares held by our Directors, Supervisors and senior management in “Appendix V – Summary of the Articles of Association” in this document.

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SHAREHOLDERS’ GENERAL MEETINGS AND CLASS MEETINGS

For details of the circumstances under which Shareholders’ general meetings and class meetings shall be convened, please refer to “Appendix V – Summary of the Articles of Association” and “Appendix IV – Summary of Principal Legal and Regulatory Provisions”.

– 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. FINANCIAL INFORMATION

You should read the following discussion and analysis in conjunction with our consolidated financial statements, included in the Accountant’s Report in Appendix I to this document, together with the accompanying notes. Our consolidated financial statements have been prepared in accordance with IFRSs, which may differ in material aspects from generally accepted accounting principles in other jurisdictions. You should read the entire Accountant’s Report and not merely rely on the information contained in this section.

The following discussion and analysis contain forward-looking statements that reflect our current views with respect to future events and financial performance. These statements are based on assumptions and analysis made by us in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate under the circumstances. However, whether actual outcomes and developments will meet our expectations and predictions depends on a number of risks and uncertainties over which we do not have control. Please refer to “Forward-looking Statements” and “Risk Factors” for details.

OVERVIEW

Leveraging our experience in the development of ValveClamp, we have ventured into the broader structural heart disease treatment and monitoring field establishing a diversified product pipeline. As of the Latest Practicable Date, our product pipeline included five innovative repair medical devices for MR, tricuspid regurgitation and atrial septal defects, three innovative replacement medical devices for MR, tricuspid and aortic regurgitation, and two electrophysiological products. In addition, based on our deep understanding of structural heart diseases, we have extended our product pipeline into the field of pet heart interventional medical devices, marching into the global pet medical market with broad industry prospects.

We have generated net losses each year since inception. For the years ended December 31, 2019 and 2020, our net loss amounted to RMB48.1 million and RMB129.0 million, respectively. We expect to continue to incur net losses in the near future as we strive to step up R&D operations, continuously develop product candidates, seek regulatory approval for product candidates and commercialize product candidates. After its [REDACTED], we expect to incur additional costs associated with operating as a public company. Given the development status of our product candidates, the timeline for regulatory approvals and the commercialization of our product candidates, we expect our financial performance to fluctuate on a quarterly and annual basis.

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BASIS OF PREPARATION

Our Company was incorporated in the PRC on December 22, 2016 as a limited liability company. On December 3, 2020, our Company was converted into a joint stock company with limited liability under the Company Law of the PRC. For details, please refer to the paragraph headed “History, Development and Corporate Structure – Our History Development – the Company” in this document. During the Track Record Period, our Company and our main subsidiaries were principally engaged in the R&D of transcatheter valve repair medical devices and with one subsidiary in pet treatment business.

Our historical financial information includes the financial information of our Company and our subsidiary for the Track Record Period. A subsidiary is an entity (including a structured entity), directly or indirectly, controlled by our Company. The financial statements of our subsidiaries are prepared for the same Track Record Period as our Company, using consistent accounting policies. Profit or loss and each component of other comprehensive income are attributed to the owners of the parent of our Group, and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of our Group are eliminated in full on consolidation. Our historical financial information has been prepared in accordance with the IFRSs, which comprise all standards and interpretations approved by the International Accounting Standards Board (“IASB”). All IFRSs issued at December 31, 2020 and effective for annual periods beginning on June 1, 2020 as well as the amendment to IFRS 16 Covid-19 Related Rent Concessions, together with the relevant transitional provisions, have been early adopted by our Group in the preparation of the historical financial information throughout the Track Record Period.

KEY FACTORS AFFECTING OUR RESULTS OF OPERATIONS

Our results of operations have been and are expected to continuously be affected by a number of factors, many of which may be beyond our control. A discussion of the key factors is set out below.

Growth and Competitive Landscape of TMV Medical Device Market

We believe that financial results and future growth are dependent on the overall growth of the Chinese market of medical devices for valvular heart diseases and our competitiveness in this market.

– 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. FINANCIAL INFORMATION moderate-to-severe MR patients in China received surgical treatment. Compared to conventional surgery, TMVr procedure eliminates the need for cardiac arrest or cardiopulmonary bypass, thereby significantly lowers procedural risks and reduces the operative wound to 2 to 4cm. Benefiting from its patient-friendly feature and other advantages over the conventional surgery, TMVr is expected to unlock the significant growth potential in the vast but under-penetrated MR treatment market in China. According to Frost & Sullivan, the global TMVr devices market is estimated to grow to US$5.4 billion by 2030, representing a CAGR of 20.5% from 2019 to 2030, while the China TMVr devices market is estimated to grow to RMB5.0 billion by 2030, representing a CAGR of 65.9% from 2021 (estimated first year of TMVr commercialization in China) to 2030. For more details, please refer to “Industry Overview”.

In addition, changes in the competitive landscape of the TMV market in China and worldwide will also affect our operating results. Currently, seven types of TMV repair and replacement products have been approved around the world. Among these, only MitraClip from Abbott, which adopts the edge-to-edge repair technique, has been approved in each of Europe, the United States and China. As of the Latest Practicable Date, MitraClip had accumulated over 100,000 cases globally, providing stronger clinical validation for the edge-to-edge technique than any other TMV technique. Further, the edge-to-edge technique is the only TMVr technique recommended by clinical guidelines including 2017 ESC/EACTS in Europe and 2020 ACC/AHA in the United States. ValveClamp, while adopting the edge-to-edge technique, accesses the mitral valve via the transapical pathway, which is a shorter pathway and enables easier operation than the transfemoral pathway of other TMVr devices. However, the faster-than-expected development of potential competitors or their products may affect our market position and demand for our products, which in turn may affect our operating results.

With ValveClamp’s clinically validated edge-to-edge repair technique, operational advantages and efficacy as proven in the FIM clinical trial, we will strive to capture the significant growth potential of the global TMV market.

Our Ability to Successfully Develop Product Candidates and Commercialize Existing Products

Our business and results of operations depend on our ability to successfully develop and commercialize product candidates. Our Core Product, ValveClamp, is the first domestic TMV product to enter the confirmatory clinical trial. As of the Latest Practicable Date, we had completed the patient enrolment (102 subjects) for the confirmatory clinical trial of ValveClamp and had completed follow-up evaluations for over 50% of the subjects. ValveClamp is expected to receive NMPA approval in the first quarter of 2023, and become the first domestic-developed TMV device and the world’s first transapical edge-to-edge TMVr device to be commercially-launched, according to Frost & Sullivan. We are building a diversified and synergistic product pipeline that includes five transcatheter heart repair products, three transcatheter valve replacement products and two electrophysiological products, enabling us to offer comprehensive medical solutions encompassing both treatment and monitoring in the field of structural heart diseases. Whether our product candidates can demonstrate favorable safety and efficacy clinical trial results, and whether we can obtain the requisite regulatory approvals for our product candidates in time, are crucial for our business

– 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. FINANCIAL INFORMATION and results of operations. As of the Latest Practicable Date, all our product candidates were at the development stage. See “Business – Our Product Portfolio” for more information on the status of our product candidates.

The commercial success of our products (if approved) depends upon the degree of market acceptance of each product, particularly among hospitals and physicians. Physicians’ and hospitals’ receptiveness to our products in turn depends on, among others, our ability to convince them as to the distinctive characteristics, advantages, safety and cost effectiveness of our products relative to conventional surgical products and our competitors’ products. If our products are not widely accepted by physicians and hospitals, we may not be able to recover the significant investments we made in developing product candidates.

After the products are launched, we will leverage the domestic first-mover advantages, clinical advantages and competitive pricing of the products, and market the products through self-operated and distributor channels to hospitals in first- and second-tier cities that are capable of performing cardiology and cardiac procedures. Furthermore, we will step up efforts to include the products in the medical insurance reimbursement programs, and adapt marketing strategies to changes in the market’s competition environment, so as to maintain market competitiveness. Our ability to successfully develop and commercialize new products in the manner we contemplate and to achieve the sales we expect is expected to be subject to a number of risks, details of which are set forth in “Risk Factors” in this document.

Cost Structure

Our results of operations are significantly affected by cost structure, which currently and primarily comprise of R&D expenses and administrative expenses.

Since inception, we have focused resources on R&D activities, including pre-clinical studies and clinical trials and activities related to regulatory filings for our product candidates. Our R&D expenses primarily consist of staff costs, third-party contracting costs, depreciation and amortization and materials and consumables. For the years ended December 31, 2019 and December 31, 2020, our R&D expenses amounted to RMB29.4 million and RMB32.1 million, respectively. We intend to continue to advance the development of product candidates, and as a result, the R&D expenses are expected to continue to be a major component of our operating expenses. Clinical product development involves a lengthy and expensive process with an uncertain outcome. See “Risk Factors – Risks Relating to Our Product Candidates” in this document for further details.

Our administrative expenses consist primarily of staff costs, professional service fees, depreciation and amortization and others. We expect our administrative expenses (excluding the impact of share-based compensation expenses) to increase in the future to support our development efforts and commercialization activities with respect to our product candidates, if approved.

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We expect our cost structure to evolve as we continue to develop and expand our business. With the continuous development and expanding of our product pipeline as well as the gradual commercialization of our product pipeline, we expect to incur additional costs in relation to our R&D, manufacturing, sales and marketing, among others. We also anticipate relevant increase in the legal, compliance, accounting, insurance, and investor and public relations expenses associated with being a public company in Hong Kong.

Funding for Our Operations

During the years ended December 31, 2019 and 2020, we funded our operations primarily through equity financing. Going forward, with the commercialization of our product candidates, we expect to fund our operations in part with revenue generated from product sales. However, with the continuing expansion of our business and development of product candidates, we may acquire further funding through public or private equity offerings, debt financing and other sources. Any changes in our ability to fund business operations will affect our cash flow and results of operation.

SIGNIFICANT ACCOUNTING POLICIES, JUDGMENTS AND ESTIMATES

Our discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with all applicable IFRS. The preparation of these financial statements requires us to make judgments, estimates and assumptions that affect the application of policies and the reported amounts of assets, liabilities, costs and expenses. We review our estimates and judgments on an ongoing basis, and our actual results may differ from those estimates. Our estimates and related assumptions are based on historical experience and a number of other factors that are considered reasonable under the circumstances, the results of which form the basis for making judgments about the book value of assets and liabilities that are not known from other sources of data.

The most critical accounting policies, judgments and estimates are summarized as below. For the description of our significant accounting policies, judgments and estimates, please refer to Note 2.3 and Note 3 to the Accountants’ Report set out in Appendix I to this document.

Significant Accounting Policies

Research and development costs

During the Track Record Period, all research costs were charged to the consolidated statements of profit or loss as incurred.

Expenditure incurred on projects to develop new products is capitalized and deferred only when we can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete

– 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 the project and the ability to measure reliably the expenditure during the development. Product development expenditure which does not meet these criteria is expensed when incurred. During the Track Record Period, all development costs incurred were charged to the consolidated statement of profit or loss.

Investment and other financial assets

Initial recognition and measurement

Financial assets are classified, at initial recognition, as subsequently measured at amortized cost, fair value through other comprehensive income, and fair value through profit or loss.

The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and our Group’s business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which our Group has applied the practical expedient of not adjusting the effect of a significant financing component, our Group initially measures a financial asset at its fair value, plus in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which our Group has applied the practical expedient are measured at the transaction price determined under IFRS 15 in accordance with the policies set out for “Revenue recognition” below.

In order for a financial asset to be classified and measured at amortized cost or fair value through other comprehensive income, it needs to give rise to cash flows that are solely payments of principal and interest (“SPPI”) on the principal amount outstanding. Financial assets with cash flows that are not SPPI are classified and measured at fair value through profit or loss, irrespective of the business model.

Our Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. Financial assets classified and measured at amortized cost are held within a business model with the objective to hold financial assets in order to collect contractual cash flows, while financial assets classified and measured at fair value through other comprehensive income are held within a business model with the objective of both holding to collect contractual cash flows and selling. Financial assets which are not held within the aforementioned business models are classified and measured at fair value through profit or loss.

All regular way purchases and sales of financial assets are recognized on the trade date, that is, the date that our Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace.

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Subsequent measurement

The subsequent measurement of financial assets depends on their classification as follows:

Financial assets at amortized cost (debt instruments)

Financial assets at amortized cost are subsequently measured using the effective interest method and are subject to impairment. Gains and losses are recognized in profit or loss when the asset is derecognized, modified or impaired.

Our Group’s financial assets at amortized cost include cash and cash equivalents, time deposits, and other receivables included in prepayments, other receivables and other assets.

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value recognized in the consolidated statement of profit or loss.

Derecognition of financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized (i.e., removed from our Group’s consolidated statement of financial position) when:

• the rights to receive cash flows from the asset have expired; or

• our Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a “pass-through” arrangement; and either (a) our Group has transferred substantially all the risks and rewards of the asset, or (b) our Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When our Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if, and to what extent, it has retained the risk and rewards of ownership of the asset. When it has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, our Group continues to recognize the transferred asset to the extent of our Group’s continuing involvement. In that case, our Group also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that our Group has retained.

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Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that our Group could be required to repay.

Government grants

Government grants are recognized 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 recognized as income on a systematic basis over the periods that the costs, for which it is intended to compensate, are expensed.

Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to our Group with no future related costs are recognized in profit or loss in the period in which they become receivable.

Where the grant relates to an asset, the fair value is credited to a deferred income account and is released to profit or loss over the expected useful life of the relevant asset by equal annual installments and released to profit or loss by way of a reduced depreciation charge.

Revenue recognition

Revenue from contracts with customers

Revenue from contracts with customers is recognized when control of goods or services is transferred to the customers at an amount that reflects the consideration to which our Group expects to be entitled in exchange for those goods or services.

When the consideration in a contract includes a variable amount, the amount of consideration is estimated to which our Group will be entitled in exchange for transferring the goods or services to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognized will not occur when the associated uncertainty with the variable consideration is subsequently resolved.

When the contract contains a financing component which provides the customer with a significant benefit of financing the transfer of goods or services to the customer for more than one year, revenue is measured at the present value of the amount receivable, discounted using the discount rate that would be reflected in a separate financing transaction between our Group and the customer at contract inception. When the contract contains a financing component which provides our Group with a significant financial benefit for more than one year, revenue recognized under the contract includes the interest expense accreted on the contract liability under the effective interest method. For a contract where the period between the payment by the customer and the transfer of the promised goods or services is one year or less, the transaction price is not adjusted for the effects of a significant financing component, using the practical expedient in IFRS 15.

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During the Track Record Period, our Group’s revenue was only derived from providing pet treatments and pet medical and health service.

Revenue from providing pet treatments and pet medical and health service is recognized at the point in time when the service has been rendered to customers.

Other income

Interest income is recognized on an accrual basis using the effective interest method by applying the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, when appropriate, to the net carrying amount of the financial asset.

Share-based payments

We operate a share award scheme for the purpose of providing incentives and rewards to eligible participants who contribute to the success of our Group’s operations. Employees (including directors) of our Group receive remuneration and rewards in the form of share-based payments, whereby employees render services as consideration for equity instruments (“equity-settled transactions”).

The cost of equity-settled transactions with employees is measured by reference to the fair value at the date at which they are granted. The cost of equity-settled transactions with non-employees is measured by reference to the fair value of the services they provided unless the fair value of the equity instruments granted is more reliably determinable. The fair value of the shares is determined by an external valuer using a backsolve method. Further details of the method are given in Note 28 to the Accountants’ Report set out in Appendix I to this document.

The cost of equity-settled transactions is recognized in expense, together with a corresponding increase in equity, over the period in which the service conditions are fulfilled. The cumulative expense recognized for equity-settled transactions at the end of each of the Track Record Period until the vesting date reflects the extent to which the vesting period has expired and our Group’s best estimate of the number of equity instruments that will ultimately vest. The charge or credit to profit or loss for a period represents the movement in the cumulative expense recognized as at the beginning and end of that period.

Service conditions are not taken into account when determining the grant date fair value of awards, but the likelihood of the conditions being met is assessed as part of our Group’s best estimate of the number of equity instruments that will ultimately vest.

For awards that do not ultimately vest because service conditions have not been met, no expense is recognized.

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Significant Judgments and Estimates

Research and development expenses

Research and development expenses incurred on our Group’s medical device product pipelines are capitalized and deferred only when our Group can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, our Group’s intention to complete and our Group’s ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the pipeline and the ability to measure reliably the expenditure during the development. Research and development expenses which do not meet these criteria are expensed when incurred. Determining the amounts to be capitalized requires management to make assumptions regarding the expected future cash generation of the assets, discount rates to be applied and the expected period of benefits. All expenses incurred for research and development activities were regarded as research expenses and therefore were expensed when incurred.

Acquisition of a subsidiary that is not a business

IFRS 3 requires an entity to determine whether a transaction or event is a business combination which requires that the assets acquired and liabilities assumed constitute a business. In January 2019, we entered into a share purchase agreement with an independent third party to acquire 100% equity interests of Nuoqiang Medical and RMB6,000,000 was paid right after the agreement signed. The transaction was completed on January 16, 2019. Nuoqiang Medical was an early development stage company and had only one patent registered in July 2018. Neither development nor clinical trials were being performed by Nuoqiang Medical and our Group determined that activities and assets of Nuoqiang Medical didn’t constitute a business on the acquisition date. The transaction was then accounted for as an asset acquisition.

Recognition of deferred tax assets

Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profits will be available against which the losses can be utilized. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and level of future taxable profits together with future tax planning strategies. Further details are contained in Note 12 to the Accountants’ Report set out in Appendix I to this document.

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Impairment of non-financial assets (other than goodwill)

We assess whether there are any indicators of impairment for all non-financial assets (including the right-of-use assets) at the end of each of the Track Record Period. Non-financial assets are tested for impairment when there are indicators that the carrying amounts may not be recoverable. An impairment exists when the carrying value of an asset or a cash-generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The calculation of the fair value less costs of disposal is based on available data from binding sales transactions in an arm’s length transaction of similar assets or observable market prices less incremental costs for disposing of the asset. When value in use calculations are undertaken, management must estimate the expected future cash flows from the asset or cash-generating unit and choose a suitable discount rate in order to calculate the present value of those cash flows.

Useful lives of property, plant and equipment

Our Group determines the estimated useful lives and related depreciation charges for its property, plant and equipment. This estimate is based on the historical experience of the actual useful lives of property, plant and equipment of similar nature and functions. Our Group will increase the depreciation charge where useful lives are less than previously estimated lives.

Share-based payments

Our Group has set up several employee incentive platforms for our directors and our Group’s employees. The fair value of the restricted shares or shares are determined by the equity allocation model at the grant dates. Valuation techniques are certified by an independent valuer before being implemented for valuation and are calibrated to ensure that outputs reflect market conditions. Some inputs, such as the discount rate for lack of marketability (“DLOM”), risk-free interest rate, volatility and dividend yield rate require management estimates. Management estimates and assumptions are reviewed periodically and are adjusted if necessary. Should any of the estimates and assumptions change, it may lead to a change in the fair value to be recognised in profit or loss. Further details are contained in Note 28 to the Accountants’ Report set out in Appendix I to this document.

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DISCUSSION OF CERTAIN ITEMS IN THE CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

The following table sets forth a summary of the consolidated statements of profit or loss and other comprehensive income for the periods indicated. The historical results presented below are not necessarily indicative of the results that may be expected in any future periods.

For the year ended December 31, 2019 2020 RMB’000 RMB’000

Revenue – 490 Cost of sales – (888)

Gross profit – (398)

LOSS BEFORE TAX (48,133) (128,985) Income tax expense – –

LOSS FOR THE YEAR (48,133) (128,985)

TOTAL COMPREHENSIVE INCOME FOR THE YEAR (48,133) (128,985)

Revenue

We did not generate any revenue in 2019. For the year ended December 31, 2020, we recorded a revenue of RMB0.5 million, all of which was derived from providing pet treatments and pet medical and health service.

Cost of Sales

We did not incur any cost of sales in 2019. For the year ended December 31, 2020, we recorded cost of sales of RMB0.9 million, all of which were related to the provision of pet treatments and pet medical and health service, and primarily included staff costs, costs of materials, and depreciation and amortization.

Gross Profit

Our gross profit is our revenue less cost of sales. We did not record any gross profit in 2019. For the year ended December 31, 2020, our gross profit was RMB(0.4) million.

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Other Income and Gains

Other income and gains include (i) government grants, primarily including subsidies and incentives received from local governments to support R&D activities and business operations; (ii) bank interest income; and (iii) gain on financial assets at fair value through profit or loss (“financial assets at FVTPL”), which is interest generated from our purchases of wealth management products issued by commercial banks. The following table sets forth the components of other income and gains for the periods indicated.

For the year ended December 31, 2019 2020 RMB’000 RMB’000

Other income Government grants 2,301 11,451 Bank interest income 28 1,163 Others – 1

Gains Gain on financial assets at FVTPL 5,062 7,221 Gain on lease termination 20 –

7,411 19,836

Selling and Distribution Expenses

Selling and distribution expenses primarily consist of (i) staff costs, primarily including salaries, bonuses and benefits for sales and marketing personnel; and (ii) marketing expenses, primarily including expenses related to marketing activities such as travel expenses and exhibitions expenses. The following table sets forth the components of our selling and distribution expenses for the periods indicated.

For the year ended December 31, 2019 2020 RMB’000 % RMB’000 %

Staff costs 67 16.7 471 52.4 Marketing expenses 334 83.3 428 47.6

Total 401 100.0 899 100.0

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Administrative Expenses

Administrative expenses primarily consist of (i) staff costs, primarily including salaries, bonuses and share-based compensation expenses; (ii) professional service fees related to financing and legal services; (iii) utilities and office expenses; and (iv) depreciation and amortization. The following table sets forth the components of administrative expenses for the periods indicated.

For the year ended December 31, 2019 2020 RMB’000 % RMB’000 %

Staff costs 6,247 55.0 69,747 85.1 – Other staff costs 6,247 55.0 13,375 16.3 – Share-based compensation expenses – – 56,372 68.8 Professional service fees 608 5.4 4,393 5.4 Utilities and office expenses 2,978 26.2 5,087 6.2 Depreciation and amortization 1,276 11.2 2,512 3.1 Others 244 2.2 205 0.2

Total 11,353 100.0 81,944 100.0

Research and Development expenses

R&D expenses primarily consist of (i) staff costs, primarily including salaries, bonuses and staff benefits for R&D personnel and share-based compensation expenses; (ii) third party contracting costs, primarily including payments to CROs and clinical trial centers and testing expenses incurred in the R&D of product candidates; (iii) materials and consumables; and (iv) depreciation and amortization. The following table sets forth the components of R&D expenses for the periods indicated.

For the year ended December 31, 2019 2020 RMB’000 % RMB’000 %

Staff costs 6,346 21.6 9,760 30.4 – Other staff costs 6,346 21.6 9,316 29.0 – Share-based compensation expenses – – 444 1.4 Third party contracting costs 8,545 29.1 8,586 26.8 Materials and consumables 1,533 5.2 5,620 17.5 Depreciation and amortization 3,569 12.1 3,843 12.0 Others(1) 9,400 32.0 4,260 13.3

Total 29,393 100.0 32,069 100.0

(1) Primarily include information and license fees, travel expenses and other miscellaneous R&D-related expenses.

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For the years ended December 31, 2019 and 2020, our Core Product, ValveClamp, incurred R&D expenses of RMB26.5 million and RMB24.8 million, respectively, representing 90.1% and 77.3% of the total R&D expenses, respectively.

Finance Costs

Finance costs primarily consist of (i) interest on redemption liabilities on ordinary shares, see “History, Development and Corporate Structure – Our History Development – The Company” and Note 24 to the Accountants’ Report included in Appendix I to this document for details of the redemption liabilities on ordinary shares; and (ii) interest on lease liabilities arising from the adoption of IFRS 16 during the Track Record Period. The following table sets forth the components of our finance costs for the periods indicated.

For the year ended December 31, 2019 2020 RMB’000 RMB’000

Interest on redemption liabilities on ordinary shares 13,560 32,815 Interest on lease liabilities 729 671

14,289 33,486

Income Tax Expense

During the Track Record Period, members of our Group were incorporated and operated in mainland China. No provision for Mainland China income tax has been provided for at a rate of 25% pursuant to the EIT Law of the PRC and the respective regulations, as our Group has no estimated assessable profits. During the Track Record Period, we did not record any income tax expense.

RESULTS OF OPERATIONS

Year Ended December 31, 2020 Compared to Year Ended December 31, 2019

Revenue

We did not generate any revenue for the year ended December 31, 2019. For the year ended December 31, 2020, we recorded a revenue of RMB0.5 million from providing pet treatments and pet medical and health service.

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Cost of sales

For the year ended December 31, 2019, we did not incur any cost of sales. For the year ended December 31, 2020, we recorded cost of sales of RMB0.9 million from providing pet treatments and pet medical and health service.

Gross Profit

As a result, our gross profit for the year ended December 31, 2020 was RMB(0.4) million.

Other Income and Gains

Other income and gains increased significantly from RMB7.4 million for the year ended December 31, 2019 to RMB19.8 million for the year ended December 31, 2020. The increase was primarily attributable to (i) an increase in government grants of RMB9.2 million that we recognized in 2020; and (ii) an increase in gains in financial assets at FVTPL of RMB2.2 million as we recorded more dividends from the wealth management products we purchased.

Selling and Distribution Expenses

Selling and distribution expenses increased from RMB0.4 million for the year ended December 31, 2019 to RMB0.9 million for the year ended December 31, 2020. Such increase was mainly attributable to staff costs and marketing and store operating expenses incurred for our pet treatments and pet medical and health service.

Administrative Expenses

Administrative expenses increased from RMB11.4 million for the year ended December 31, 2019 to RMB81.9 million for the year ended December 31, 2020. Such increase was mainly attributable to (i) the addition of RMB56.4 million of share-based compensation expenses, and (ii) an increase in other staff costs, mainly due to the increase in the number and average salary level of administrative staff.

R&D Expenses

R&D expenses increased from RMB29.4 million for the year ended December 31, 2019 to RMB32.1 million for the year ended December 31, 2020. The increase was primarily attributable to (i) an increase in materials and consumables of RMB4.1 million, and (ii) an increase in staff costs of RMB3.4 million, including an increase in share-based compensation expenses of RMB0.4 million and an increase in other staff costs of RMB3.0 million, all of which were related to our increased R&D activities for product candidates; such increases in 2020 was partially offset by a decrease in other R&D expenses incurred in relation to the acquisition of Nuoqiang Medical in 2019, which was recognised as an acquisition of a subsidiary that is not a business, while we recorded no such expense in 2020.

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Other Expenses

Our other expenses decreased from RMB0.1 million for the year ended December 31, 2019 to RMB0.03 million for the year ended December 31, 2020, primarily attributable to our donation of RMB105,000 to a medical foundation in 2019.

Finance Costs

Finance costs increased from RMB14.3 million for the year ended December 31, 2019 to RMB33.5 million for the year ended December 31, 2020, primarily due to an increase in interest of RMB19.3 million arising from the redemption liabilities on ordinary shares.

DISCUSSION OF CERTAIN KEY ITEMS OF THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION

The following table sets forth selected items from our consolidated statement of financial position as of the dates indicated, which are extracted from the accountants’ report included in Appendix I to this document.

As of December 31, 2019 2020 (RMB’000) (RMB’000)

NON-CURRENT ASSETS Property, plant and equipment 17,897 20,340 Right-of-use assets 12,721 11,480 Prepayments, other receivables and other assets 842 2,439

Total non-current assets 31,460 34,259

CURRENT ASSETS Prepayments, other receivables and other assets 5,925 12,156 Financial assets at FVTPL 212,561 21,542 Inventories 87 209 Time deposits – 40,000 Cash and cash equivalents 1,861 409,359

Total current assets 220,434 483,266

CURRENT LIABILITIES Trade payables 2,084 2,153 Lease liabilities 2,418 3,145 Other payables and accruals 2,728 15,190 Contract liabilities 3 496

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As of December 31, 2019 2020 (RMB’000) (RMB’000)

Redemption liabilities on non-controlling interests – 53,767

Total current liabilities 7,233 74,751

NET CURRENT ASSETS 213,201 408,515

TOTAL ASSETS LESS CURRENT LIABILITIES 244,661 442,774

NON-CURRENT LIABILITIES Redemption liabilities on ordinary shares 326,780 – Lease liabilities 10,669 8,870 Deferred income 960 3,087

Total non-current liabilities 338,409 11,957

Net (liabilities)/assets (93,748) 430,817

Inventories

As we have not yet started commercial production, our inventories consist primarily of pet medicines and consumables for our pet treatments and pet medical and health service. We regularly monitor our inventory and strive to maintain optimal inventory levels for near-term intended use. See “Business – Inventory” for more information.

Our inventories increased from RMB0.09 million as of December 31, 2019 to RMB0.2 million as of December 31, 2020, primarily due to the increase in inventory of pet medicines and consumables as we began to generate revenue from the provision of pet treatments and pet medical and health service starting from 2020. Our inventory turnover days (the average of the opening and closing balances of our inventory for the relevant year divided by the cost of sales for the relevant year multiplied by 365 days) for the year ended December 31, 2020 was 60.8 days.

Prepayments, Other Receivables and Other Assets

Our prepayments, other receivables and other assets mainly comprise (i) prepayments for purchase of items of property, plant and equipment, clinical trials, and raw materials; (ii) value added tax recoverable, representing value added tax paid by us on purchases that are deductible against future value added tax payable; and (iii) rental and other deposits. The following table sets forth the components of our prepayments, other receivables and other assets as of the dates indicated.

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As of December 31, 2019 2020 RMB’000 RMB’000

Non-current: Prepayments for purchase of items of property, plant and equipment 257 1,455 Rental deposits 565 963 Other deposits 20 21

842 2,439

Current: Prepayments 1,876 6,460 Other receivables 913 799 Value-added tax recoverable 3,136 4,897

5,925 12,156

The non-current portion of our prepayments, other receivables and other assets increased from RMB0.8 million as of December 31, 2019 to RMB2.4 million as of December 31, 2020, primarily due to increased prepayments for the purchase of machinery and equipment in relation to our R&D activities as a result of the expansion of our product pipeline.

The current portion of our prepayments, other receivables and other assets increased from RMB5.9 million as of December 31, 2019 to RMB12.2 million as of December 31, 2020, primarily due to an increase in our prepayments for clinical trials and raw materials due to the expansion of our product pipeline and our R&D activities.

As of February 28, 2021, RMB2.6 million (representing 21.3% of the current portion of our prepayments, other receivables and other assets as of December 31, 2020) had been subsequently settled.

Financial Assets at FVTPL

Our financial assets at FVTPL as of December 31, 2019 and 2020 reflected our investments in wealth management products issued by PRC commercial banks. The expected returns on such wealth management products ranged from 1.00% to 3.75% per annum. Such wealth management products were redeemable at any time.

We purchased wealth management products as a supplemental means to improve the utilization of our cash on hand on a short-term basis. We intend to purchase low-risk wealth management products with good liquidity for treasury management purpose in the future. We

– 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 have established a set of investment policies and internal control measures to achieve reasonable returns on our investments of wealth management products while mitigating our exposure to investment risks. These policies and measures include: (i) investments shall be made when we have surplus cash that is not required for short-term working capital purposes; (ii) investments shall be made when we have surplus cash that is not required for short-term working capital purposes; (iii) we only purchase low-risk wealth management products issued by creditworthy commercial banks and/or other qualified financial institutions, and in any given period, we invest in products provided by multiple issuers to mitigate concentration risks; (iv) investments exceeding certain thresholds must be approved by our Shareholders or the Board of Directors in accordance with relevant laws and regulations and our Articles of Association; (v) our finance department, subject to the review and approval of our management, is responsible for the overall execution of our investments, including risk assessment. We carry out risk assessment primarily based on the amounts of principal, maturity dates, the underlying assets, the expected rates of return and the review of terms and conditions of the investments.

The decrease in our balance of financial assets at FVTPL from RMB212.6 million as of December 31, 2019 to RMB21.5 million as of December 31, 2020 was primarily a substantial number of our wealth management products purchased in 2019 matured and was redeemed in 2020.

Time Deposits

Our time deposits amounted to RMB40.0 million as of December 31, 2020, representing time deposits with maturity dates over three months placed with certain banks in the PRC, which will mature in the coming financial year. The time deposit rates ranged from 1.95% to 2.00%.

Cash and Cash Equivalents

Our cash and cash equivalents increased from RMB1.9 million as of December 31, 2019 to RMB409.4 million as of December 31, 2020, primarily attributable to (i) the funds we received from our Series D financing, and (ii) the proceeds from the sale of wealth management products.

Trade Payables

Our trade payables primarily consist of trade payables due to clinical research service providers and raw material suppliers. Our trade payables as of December 31, 2019 and 2020 was RMB2.1 million and RMB2.2 million, respectively.

As of February 28, 2021, RMB0.7 million (representing 31.8% of our trade payables as of December 31, 2020) had been subsequently settled.

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Other Payables and Accruals

Our other payables and accruals consist primarily of (i) other tax payable, which primarily consists of withholding tax payable for individual income tax of certain individual shareholders of our Company; (ii) payroll payables; and (iii) other payables. The following table sets forth the components of our other payables and accruals as of the dates indicated.

As of December 31, 2019 2020 RMB’000 RMB’000

Accruals for research and development 46 332 Payroll payables 1,769 3,384 Other tax payable 42 8,347 Other payables 871 3,127

2,728 15,190

Our other payables and accruals increased significantly from RMB2.7 million as of December 31, 2019 to RMB15.2 million as of December 31, 2020, primarily due to (i) an increase in other tax payable of RMB8.3 million, primarily reflecting withholding tax payable received from certain individual shareholders of our Company for their individual income tax associated with us converting into a joint stock company, which was fully settled in January 2021; (ii) an increase in other payables of RMB2.3 million as we recorded more accrued professional service fees, and (iii) an increase in payroll payables of RMB1.6 million, which is in line with the increase in the number of our employees and their salaries.

As of February 28, 2021, RMB13.3 million (representing 87.6% of our other payables as of December 31, 2020) had been subsequently settled.

Deferred Income

Deferred income represents government grants we received from local government agencies to subsidize expenses incurred for research and clinical trial activities and capital expenditures incurred for certain projects, which, when complied with the conditions, will be charged to profit or loss immediately or be allocated to profit or loss over the expected useful life of the related assets. Our deferred income increased from RMB1.0 million as of December 31, 2019 to RMB3.1 million as of December 31, 2020, primarily because we received more government grants of this nature in 2020.

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Redemption Liabilities on Ordinary Shares

As of December 31, 2019, our redemption liabilities on ordinary shares amounted to RMB326.8 million, which represented liabilities arising from the redemption obligations in connection with our several rounds of financing. As of December 31, 2020, the redemption rights associated with these shares have been terminated. For more information on the redemption liabilities on ordinary shares, see Note 24 to the Accountants’ Report included in Appendix I to this document.

Redemption Liabilities on Non-controlling Interests

During the Track Record Period, our redemption liabilities on non-controlling interests represent the put option granted to non-controlling shareholders of Shanghai Hongyu. As of December 31, 2020, our redemption liabilities on non-controlling interests amounted to RMB53.8 million. For details of our redemption liabilities on non-controlling interests, see Note 23 to the Accountants’ Report set out in Appendix I to this document.

LIQUIDITY AND SOURCES OF CAPITAL

Net Current Assets/Liabilities

As of As of December 31, February 28, 2019 2020 2021 RMB’000 RMB’000 RMB’000 (unaudited)

CURRENT ASSETS Prepayments, other receivables and other assets 5,925 12,156 14,978 Financial assets at FVTPL 212,561 21,542 21,347 Inventories 87 209 207 Cash and cash equivalents 1,861 409,359 385,522 Time deposits – 40,000 40,128 Trade receivables – – 29

Total current assets 220,434 483,266 462,211

CURRENT LIABILITIES Trade payables 2,084 2,153 2,082 Lease liabilities 2,418 3,145 3,023 Other payables and accruals 2,728 15,190 8,266 Contract liabilities 3 496 496 Redemption liability on non-controlling interests – 53,767 170,435

Total current liabilities 7,233 74,751 184,302

NET CURRENT ASSETS 213,201 408,515 277,909

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Working Capital

Our cash was primarily used for the R&D of our product candidates and for payments made for the purchases of properties, plants and equipment and staff cost. During the Track Record Period, we financed our working capital requirements primarily through equity financing. We monitored our cash and cash equivalents and maintained them at the levels that we believe are appropriate to fund our operations and mitigate the impact of cash flow fluctuations. As our business grows and develops, we expect to generate additional net cash from our operations by generating revenue from launching new products. Going forward, we believe that we will be able to meet our liquidity requirements through a combination of bank balances and cash, bank borrowings and funding from the net [REDACTED]ofthe [REDACTED]. As of December 31, 2020, we had the cash and cash equivalents of RMB409.4 million.

Having considered the financial resources available to the Group, including cash and cash equivalents, internally generated funds, and the estimated net [REDACTED] from the [REDACTED], the Directors believe that we have sufficient working capital to cover at least 125% of our costs, including R&D expenses, selling expenses, administrative expenses, and other operating costs, for at least the next 12 months from the date of this document.

Cash Flows

The following table sets forth the components of our cash flows for the periods indicated.

For the year ended December 31, 2019 2020 RMB’000 RMB’000

Net cash flows used in operating activities (34,403) (33,675) Net cash flows (used in)/from investing activities (173,248) 153,789 Net cash flows from financing activities 197,226 287,384

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For the year ended December 31, 2019 2020 RMB’000 RMB’000

Net (decrease)/increase in cash and cash equivalents (10,425) 407,498

Cash and cash equivalents at beginning of year 12,286 1,861

Cash and cash equivalents at end of year 1,861 409,359

Since inception, we have generated negative cash flows from operations. The vast majority of our operating cash outflows were attributable to R&D expenses and administrative expenses. In light of our net operating cash outflows throughout the Track Record Period, we plan to improve our position by (i) fast-tracking the commercialization of our product candidates to generate revenues from product sales; (ii) taking comprehensive measures to effectively control costs and operating expenses, including primarily R&D expenses and administrative expenses; (iii) improving the efficiency of our working capital management; (iv) successfully conducting [REDACTED] to obtain [REDACTED]; and (v) seeking additional funding through public or private offerings, debt financing, partnering and licensing arrangements or other sources as necessary.

For the year ended December 31, 2020, our net cash flows used in operating activities was RMB33.7 million, primarily reflecting loss before tax of RMB129.0 million and positive adjustments for non-cash and non-operating items primarily included (i) share-based compensation of RMB56.8 million; (ii) finance costs of RMB33.5 million; and (iii) depreciation of RMB6.6 million. This amount was further adjusted for the positive impact of working capital, which mainly represents (i) an increase in other payables and accruals of RMB12.5 million; and (ii) an increase in deferred income of RMB11.6 million, partially offset by an increase in prepayments, other receivables and other assets of RMB6.2 million.

For the year ended December 31, 2019, our net cash flows used in operating activities was RMB34.4 million, primarily reflecting loss before tax of RMB48.1 million and positive adjustments for non-cash and non-operating items primarily included (i) finance costs of RMB14.3 million; and (ii) depreciation of RMB4.8 million. This amount was further adjusted for the positive impact of working capital, which primarily represents (i) an increase in deferred income of RMB3.2 million; and (ii) an increase in trade payables of RMB1.8 million, partially offset by an increase in prepayments, other receivables and other assets of RMB3.8 million.

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Investing Activities

For the year ended December 31, 2020, our net cash flows from investing activities was RMB153.8 million, which was mainly attributable to (i) proceeds from maturity of financial assets at FVTPL of RMB861.7 million; (ii) purchase of financial assets at FVTPL of RMB663.5 million; and (iii) purchase of time deposits of RMB40.0 million.

For the year ended December 31, 2019, our net cash flows used in investing activities was RMB173.2 million, primarily attributable to (i) purchases of financial assets at FVTPL of RMB540.0 million; and (ii) proceeds from maturity of financial assets at FVTPL of RMB377.0 million.

Financing Activities

For the year ended December 31, 2020, we had net cash flows from financing activities of RMB287.4 million, primarily attributable to proceeds from the issue of series D shares of RMB248.5 million, proceeds on the issue of shares to employee incentive platform of RMB32.5 million, capital contribution by non-controlling shareholders of RMB27.0 million, partially offset by acquisition of interests of a subsidiary from non-controlling shareholders of RMB11.0 million.

For the year ended December 31, 2019, we had net cash flows from financing activities of RMB197.2 million, primarily attributable to proceeds from the issue of series B and series C shares of RMB200.0 million, partially offset by repayments of lease liabilities of RMB2.8 million.

Cash Operating Costs

The following table provides information regarding our cash operating costs for the periods indicated.

For the year ended December 31, 2019 2020 RMB’000 RMB’000

R&D costs R&D costs for Core Product Third party contracting costs (7,603) (8,757) Staff costs (6,432) (10,010) Materials and consumables (1,368) (6,169) Others (9,209) (4,594)

Subtotal (24,612) (29,530)

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For the year ended December 31, 2019 2020 RMB’000 RMB’000

R&D costs for other product candidates Third party contracting costs (591) (766) Staff costs (1,397) (4,178) Materials and consumables (492) (1,837) Others (90) (117)

Subtotal (2,570) (6,898)

Staff costs(1) (3,572) (5,952) Marketing expenses (334) (428) Non-income tax, royalties and other government fees 3,181 11,568 Others(2) (6,496) (2,435)

Total (34,403) (33,675)

(1) Primarily including salaries and bonus for our administrative staff and sales and marketing staff.

(2) Primarily including professional service fees, office and travel expenses.

Debt

As of December 31, 2019 and 2020 and February 28, 2021, we did not have any outstanding mortgages, charges, debentures, other issued debt capital, bank overdrafts, borrowings, promissory notes or other similar indebtedness, any guarantees or other material contingent liabilities other than those disclosed in the table below.

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There have been no material adverse changes in our indebtedness since February 28, 2021 (the latest practicable date for the purposes of the statement of indebtedness), up to the date of this document. The following table sets forth the components of our indebtedness as of the dates indicated.

As of As of December 31 February 28, 2019 2020 2021 RMB’000 RMB’000 RMB’000 (unaudited)

CURRENT LIABILITIES Lease liabilities 2,418 3,145 3,023

NON-CURRENT LIABILITIES Lease liabilities 10,669 8,870 8,942

As of December 31, 2019 and 2020, and as of February 28, 2021, we recorded lease liabilities of RMB13.1 million, RMB12.0 million and RMB12.0 million, respectively, primarily related to properties we lease for office, R&D and vehicles. We recognize lease liabilities for all leases other than short-term leases and leases of low-value assets.

As of December 31, 2019 and 2020 and February 28, 2021, we did not have any interest-bearing bank or other borrowings.

Capital Expenditures

Our capital expenditures for the Track Record Period represent purchases of properties, plants and equipment. The following table sets forth the components of our capital expenditures for the periods indicated.

For the year ended December 31, 2019 2020 RMB’000 RMB’000

Property, plant and equipment 14,283 6,027

We expect that our capital expenditures in 2021 and 2022 will consist primarily of purchases of land and properties, plants and equipment. We plan to use cash at bank and the net [REDACTED] from the [REDACTED] to fund the planned capital expenditures. Please refer to “Future Plans and [REDACTED]” in this document for further details. We may reallocate the funds to be used for capital expenditures in accordance with our ongoing business needs.

– 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

Capital Commitments

As of December 31, 2019 and 2020, outstanding capital commitments related to property, plant and equipment amounted to RMB0.09 million and RMB1.4 million, respectively.

Contingent Liabilities

As at December 31, 2019 and 2020, we did not have any contingent liabilities. We confirm that as of the Latest Practicable Date, we did not have any material changes or arrangements in respect of our contingent liabilities.

Off-balance Sheet Commitments and Arrangements

As of the Latest Practicable Date, we had not entered into any off-balance sheet transactions.

Market and Other Financial Risks

We are exposed to a number of market and other financial risks, including credit risk and liquidity risk. We manage and monitor these risks to ensure that appropriate measures can be implemented in a timely and effective manner. For further details, please refer to Note 34 to the Accountants’ Report set out in Appendix I to this document. The discussion below provides a summary of our market and other financial risks.

The main financial instruments of the Group include cash and cash equivalents. The main purpose of these financial instruments is to raise funds for the Group’s business operations. The Group has a number of other financial assets and liabilities that arise directly from its business operations, such as trade and other payables.

Credit risk

Our Group has no significant concentration of credit risk. The carrying amounts of cash and cash equivalents, other receivables and other assets, and time deposits included in the statement of financial position represent our Group’s maximum exposure to credit risk in relation to its financial assets. At the end of each Track Record Period, cash and cash equivalents were deposited in high-quality banks, and there is no significant credit risk.

– 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

Key Financial Ratios

The following table sets out the components of our key financial ratio as at the dates indicated.

As of December 31 2019 2020

Current ratio(1) 30.5 6.5

(1) Current ratio represents current assets divided by current liabilities as of the same date

Our current ratio decreased from 30.5 as of December 31, 2019 to 6.5 as of December 31, 2020 due to the increase in our current liabilities of RMB67.5 million, which was primarily attributable to the recognition of redemption liabilities on non-controlling interests. For further details, please refer to Note 23 to the Accountants’ Report set out in Appendix I to this document.

Transactions with Related Parties

During the Track Record Period, our transaction with related parties was mainly related to the consideration for the acquisition of 12% equity interest in Hongyu Medical by our Company in October 2020. For further details, please refer to Note 31 to the Accountants’ Report set out in Appendix I to this document.

In the opinion of the Directors, the related party transaction in Note 31 to the Accountants’ Report set out in Appendix I to this document was entered into by the relevant parties in the ordinary course of business on an arm’s length basis and on customary commercial terms. The Directors are also of the opinion that our related party transactions during the Track Record Period do not distort our historical results or render the historical results unrepresentative of future performance.

Dividends

Distributable Reserves

As of December 31, 2020, we did not have any distributable reserves.

– 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

[REDACTED]

Assuming an [REDACTED] of HK$[REDACTED] per [REDACTED], being the mid-point of the indicative [REDACTED] range, the [REDACTED] in connection with the [REDACTED], consisting primarily of [REDACTED] commission and other expenses, are estimated to be approximately RMB[REDACTED], of which nil and nil was charged to profit or loss for the years ended December 31, 2019 and 2020, respectively. We expect the [REDACTED] of approximately RMB[REDACTED] will be charged to profit or loss after the Track Record Period, and approximately [REDACTED] will be deducted from the share premium. The [REDACTED] are expected to represent approximately [REDACTED]% of the gross [REDACTED]ofthe[REDACTED], assuming an [REDACTED]of HK$[REDACTED] per [REDACTED] (being the mid-point of the indicative [REDACTED] range) and the [REDACTED] is not exercised. The [REDACTED] above are the latest practicable estimate for reference only, and the actual amount may differ from this estimate.

[REDACTED]

– 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

[REDACTED]

– 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

No Material Adverse Change

Save as disclosed in this document, the Directors confirm that up to the date of this document, there has been no material adverse change in our financial or trading position since December 31, 2020 (being the date on which the latest audited consolidated financial information of our Group was prepared) and there is no event since December 31, 2020 which would materially affect the information presented in the consolidated financial statements included in the Accountants’ Report in Appendix I to this document.

Disclosure Required under the Listing Rules

The Directors confirm that as of the Latest Practicable Date, there were no circumstances in which a disclosure is required to be made pursuant to Rules 13.13 to 13.19 of the Listing Rules.

– 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. FUTURE PLANS AND [REDACTED]

FUTURE PLANS

For a detailed description of our future plans, see “Business – Business Strategies”.

[REDACTED]

We estimate that we will receive net [REDACTED] from the [REDACTED]of approximately HK$[REDACTED] million after deducting the [REDACTED] fees and expenses payable by us in the [REDACTED], assuming no [REDACTED] is not exercised and an [REDACTED] of HK$[REDACTED] per Share, being the mid-point of the indicative [REDACTED] range of HK$[REDACTED] to HK$[REDACTED] per Share in this document. We intend to use the net [REDACTED] we will receive from this [REDACTED] for the following purposes, subject to changes in light of our evolving business needs and changing market conditions:

• approximately [REDACTED]% of the net [REDACTED], or approximately HK$[REDACTED] million, is expected to be allocated to our Core Product, ValveClamp, as follows:

(i) approximately [REDACTED]% of the net [REDACTED], or approximately HK$[REDACTED] million, will be used for ongoing R&D activities, and product registration, including (a) post-launch follow-up evaluations in relation to the confirmatory clinical trial for ValveClamp; (b) clinical trials and product registration of ValveClamp in overseas markets including among others, Japan, the U.S., Australia and Israel as part of our global strategies; and (c) development projects for product improvement to further upgrade and optimise the features of ValveClamp;

(ii) approximately [REDACTED]% of the net [REDACTED], or approximately HK$[REDACTED] million, will be used for expansion of the manufacturing capacity of ValveClamp, including the addition and upgrade of manufacturing equipment and machines used for the R&D and manufacturing of ValveClamp; and

(iii) approximately [REDACTED]% of the net [REDACTED], or approximately HK$[REDACTED] million, will be used for the sales and marketing activities of ValveClamp in China and overseas in order to expand our sales channels and increase the penetration rate of ValveClamp, including (a) the expansion of our in-house sales and marketing team; and (b) marketing events and campaigns, such as hosting and participating in academic seminars and industry conferences.

• approximately [REDACTED]% of the net [REDACTED], or approximately HK$[REDACTED] million, is expected to be allocated to other product candidates in our product pipeline as follows:

(i) approximately [REDACTED]% of the net [REDACTED], or approximately HK$[REDACTED] million, will be used for the pre-clinical studies and clinical trials of our valve repair and other heart repair products, such as ValveClasp and ReAces;

(ii) approximately [REDACTED]% of the net [REDACTED], or approximately HK$[REDACTED] million, will be used for the pre-clinical studies and clinical trials of our valve replacement products, such as ValveNeo-M, ValveNeo-T and ValveCare;

– 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. FUTURE PLANS AND [REDACTED]

(iii) approximately [REDACTED]% of the net [REDACTED], or approximately HK$[REDACTED] million, will be used for the pre-clinical studies and clinical trials of our electrophysiology products such as HyPulse and CardioMcare;

(iv) approximately [REDACTED]% of the net [REDACTED], or approximately HK$[REDACTED] million, will be used for the expansion of our R&D team and recruitment of R&D personnel; and

(v) approximately [REDACTED]% of the net [REDACTED], or approximately HK$[REDACTED] million, will be used for (a) the expansion of manufacturing capacity for our product candidates, including the purchase of additional machines and equipment; and (b) the commercialization of the product candidates, including building specialized and dedicated sales teams and enhancing academic promotion for the product candidates.

• approximately [REDACTED]% of the net [REDACTED], or approximately HK$[REDACTED] million, is expected to be used for working capital and general corporate purposes.

We estimate that we will receive from the [REDACTED] net [REDACTED], after deducting the [REDACTED] fees and estimated expenses payable by us in connection with the [REDACTED], in the amount as set forth in the following table:

Based on the Based on the Based on the low-end of the mid-point of the high-end of the proposed proposed proposed [REDACTED] [REDACTED] [REDACTED] range of range of range of HK$[REDACTED] HK$[REDACTED] HK$[REDACTED]

Assuming the [REDACTED] Approximately Approximately Approximately is not exercised HK$[REDACTED] HK$[REDACTED] HK$[REDACTED] million million million

Assuming the [REDACTED] Approximately Approximately Approximately is exercised in full HK$[REDACTED] HK$[REDACTED] HK$[REDACTED] million million million

To the extent that the net [REDACTED] from the [REDACTED] (including the net [REDACTED] from the exercise of the [REDACTED]) are either more or less than expected, we will adjust our allocation of the net [REDACTED] for the above purposes on a pro rata basis. We will issue an announcement if there is any material change in the abovementioned [REDACTED].

To the extent that the net [REDACTED] from the [REDACTED] are not immediately used for the above purposes, and to the extent permitted by applicable law and regulations, so long as it is deemed to be in the best interests of the Company, we may deposit such net [REDACTED] into short-term interest-bearing accounts, such as savings accounts or money market funds, with licensed commercial banks or other authorized financial institutions.

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– 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. APPENDIX I ACCOUNTANTS’ REPORT

The following is the text of a report received from our Company’s reporting accountants, Ernst &Young, Certified Public Accountants, Hong Kong, for the purpose of incorporation in the document.

[To insert the firm’s letterhead]

ACCOUNTANTS’ REPORT ON HISTORICAL FINANCIAL INFORMATION TO THE DIRECTORS OF SHANGHAI HANYU MEDICAL TECHNOLOGY CO., LTD. AND CHINA INTERNATIONAL CAPITAL CORPORATION HONG KONG SECURITIES LIMITED AND CITIGROUP GLOBAL MARKETS ASIA LIMITED

Introduction

We report on the historical financial information of Shanghai Hanyu Medical Technology Co., Ltd. (the “Company”) and its subsidiaries (together, the “Group”) set out on pages [I-[●]] to [I-[●]], which comprises the consolidated statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Group for the years ended December 31, 2019 and 2020 (the “Relevant Periods”), and the consolidated statements of financial position of the Group and the statements of financial position of the Company as at December 31, 2019 and 2020 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-[●]] to [I-[●]] forms an integral part of this report, which has been prepared for inclusion in the document of the Company dated [●] 2021 (the “document”) in connection with the initial [REDACTED]ofthe shares of the Company on the Main Board of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).

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 set out in note 2.1 to the Historical Financial Information, and for such internal control as the directors 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 (“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.

– 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

Our work involved performing procedures to obtain evidence about the amounts and disclosures in the Historical Financial Information. The procedures selected depend 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, the reporting accountants consider internal control relevant to the entity’s preparation of the Historical Financial Information that gives a true and fair view in accordance with the basis of preparation set out in note 2.1 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 entity’s internal control. Our work also included evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, 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 and the Company as at December 31, 2019 and 2020 and of the financial performance and cash flows of the Group for each of the Relevant Periods in accordance with the basis of preparation set out in note 2.1 to the Historical Financial Information.

REPORT ON MATTERS UNDER THE RULES GOVERNING THE [REDACTED] 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-[●]] have been made.

Dividends

We refer to note [●] to the Historical Financial Information which states that no dividends have been paid by the Company in respect of the Relevant Periods.

[To insert the firm’s signature] Certified Public Accountants Hong Kong [●] 2021

– 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

I HISTORICAL FINANCIAL INFORMATION

Preparation of Historical Financial Information

Set out below is the Historical Financial Information which forms an integral part of this accountants’ report.

The financial statements of the Group for the Relevant Periods, on which the Historical Financial Information is based, were audited by Ernst & Young in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certified Public Accountants (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-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

CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Year ended Year ended December 31, December 31, Notes 2019 2020 RMB’000 RMB’000

Revenue 5 – 490 Cost of sales – (888)

Gross profit – (398)

Other income and gains 6 7,411 19,836 Selling and distribution expenses (401) (899) Administrative expenses (11,353) (81,944) Research and development expenses (29,393) (32,069) Other expenses 8 (108) (25) Finance costs 9 (14,289) (33,486)

LOSS BEFORE TAX 7 (48,133) (128,985) Income tax expense 12 ––

LOSS FOR THE YEAR (48,133) (128,985)

TOTAL COMPREHENSIVE INCOME FOR THE YEAR (48,133) (128,985)

Attributable to: Owners of the parent (47,992) (123,173) Non-controlling interests 27 (141) (5,812)

(48,133) (128,985)

LOSS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE PARENT

Basic and diluted (RMB) 14 N/A N/A

– 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

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

As at As at December 31, December 31, Notes 2019 2020 RMB’000 RMB’000 NON-CURRENT ASSETS Property, plant and equipment 15 17,897 20,340 Right-of-use assets 16 12,721 11,480 Prepayments, other receivables and other assets 17 842 2,439

Total non-current assets 31,460 34,259

CURRENT ASSETS Prepayments, other receivables and other assets 17 5,925 12,156 Financial assets at fair value through profit or loss (“FVTPL”) 18 212,561 21,542 Inventories 87 209 Time deposits 19 – 40,000 Cash and cash equivalents 19 1,861 409,359

Total current assets 220,434 483,266

CURRENT LIABILITIES Trade payables 20 2,084 2,153 Lease liabilities 16 2,418 3,145 Other payables and accruals 21 2,728 15,190 Contract liabilities 22 3 496 Redemption liabilities on non-controlling interests 23 – 53,767

Total current liabilities 7,233 74,751

NET CURRENT ASSETS 213,201 408,515

TOTAL ASSETS LESS CURRENT LIABILITIES 244,661 442,774

NON-CURRENT LIABILITIES Redemption liabilities on ordinary shares 24 326,780 – Lease liabilities 16 10,669 8,870 Deferred income 25 960 3,087

Total non-current liabilities 338,409 11,957

Net (liabilities)/assets (93,748) 430,817

EQUITY Equity attributable to owners of the parent Share capital 26 – 75,000 Paid-in capital 26 1,355 – Reserves 26 (94,962) 355,817

Non-controlling interests (141) –

Total equity (93,748) 430,817

– I-5 – CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY headed section the with conjunction I in read be APPENDIX must information the that document. and this change to of subject cover and the incomplete form, on draft “Warning” in is document This

Attributable to owners of the parent

Share-based Non- Paid-in Share Other payment Accumulated controlling capital premium* reserve* reserve* losses* Total interests Total equity

(note 26) (note 26) RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

At January 1, 2019 1,087 105,063 – 7,702 (46,247) 67,605 – 67,605 Loss for the year – – – – (47,992) (47,992) (141) (48,133)

- – I-6 – Total comprehensive income for the year – – – – (47,992) (47,992) (141) (48,133)

Issue of series B shares(note 26) 91 49,909 – – – 50,000 – 50,000 Issue of series C CONAT’REPORT ACCOUNTANTS’ shares(note 24) 177 149,823 – – – 150,000 – 150,000 Recognition of redemption liabilities on series A+, series B, series C shares(note 24) – – (313,220) – – (313,220) – (313,220)

At December 31, 2019 1,355 304,795 (313,220) 7,702 (94,239) (93,607) (141) (93,748) hsdcmn si rf om nopeeadsbett hneadta h nomto utb edi ojnto ihtescinheaded section the with conjunction I in read be APPENDIX must information the that document. and this change to of subject cover and the incomplete form, on draft “Warning” in is document This Attributable to owners of the parent Share-based Non- Paid-in Share Share Other Capital paymentAccumulated controlling Total capital capital premium* reserve* reserve* reserve* losses* Total interests equity (note 26) (note 26) (note 26) (note 26) RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

At January 1, 2020 1,355 – 304,795 (313,220) – 7,702 (94,239) (93,607) (141) (93,748) Loss for the year –––––(123,173) – (123,173) (5,812) (128,985)

Total comprehensive income for the year –––––(123,173) – (123,173) (5,812) (128,985)

Capital contribution by non-controlling shareholders ––––12,632 – – 12,632 14,368 27,000 Issue of series D shares(note 24) 127 – 248,373 – – – – 248,500 – 248,500 Recognition of redemption liabilities on - – I-7 – series D shares – – – (248,500) – – – (248,500) – (248,500) Issue of shares to certain employee incentive platforms(note 28) 71 – 32,429 – – 52,777 – 85,277 4,039 89,316 Termination of redemption liabilities on series A+, B, C and D shares (note 24) – – – 602,001 – – – 602,001 – 602,001 Conversion into a joint stock company REPORT ACCOUNTANTS’ (“Capitalisation Issue”)(note 26) (1,553) 75,000 (230,058) – – – 156,611 – – – Change in ownership interests in subsidiaries without change of control(note 27) ––––(8,953) – – (8,953) (2,047) (11,000) Put option granted to non-controlling shareholders(note 23) – – – (43,360) – – – (43,360) (10,407) (53,767)

At December 31, 2020 – 75,000 355,539 (3,079) 3,679 60,479 (60,801)– 430,817 430,817

* These reserve accounts comprise the consolidated reserves of RMB(94,962,000) and RMB355,817,000 in the consolidated statements of financial position as at December 31, 2019 and December 31, 2020, respectively. This document is in draft form, incomplete 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

CONSOLIDATED STATEMENTS OF CASH FLOWS

Year ended Year ended December 31, December 31, Notes 2019 2020 RMB’000 RMB’000

CASH FLOWS FROM OPERATING ACTIVITIES Loss before tax (48,133) (128,985) Adjustments for: Finance costs 9 14,289 33,486 Bank interest income 6 (28) (1,163) Government grants income 6 (2,301) (11,451) Depreciation of property, plant and equipment 15 2,390 3,559 Depreciation of right-of-use assets 16 2,457 3,020 Gain on lease termination 6 (20) – Loss on the disposal of property, plant and equipment 8 –25 Share-based compensation 28 – 56,816 Net gain from changes in fair value of financial assets at FVTPL 6 (5,062) (7,221)

Increase in prepayments, other receivables and other assets (3,847) (6,231) Increase in inventories (87) (122) Increase in other payables and accruals 939 12,462 Increase in trade payables 1,816 69 Increase in contract liabilities 3 493 Increase in deferred income 3,181 11,568

Net cash flows used in operating activities (34,403) (33,675)

– 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

Year ended Year ended December 31, December 31, Notes 2019 2020 RMB’000 RMB’000

CASH FLOWS FROM INVESTING ACTIVITIES Interest received 6 28 1,163 Payments for property, plant and equipment (10,141) (7,225) Payments for rental deposits – (399) Purchase of financial assets at FVTPL (539,900) (663,500) Proceeds from maturity of financial assets at FVTPL 376,983 861,740 Purchase of time deposits with maturity dates over three months (43,000) (40,000) Proceeds from maturity of time deposits with maturity dates over three months 43,000 – Acquisition of a subsidiary (332) – Receipt of rental deposits 34 – Receipt of government grants 80 2,010

Net cash flows (used in)/from investing activities (173,248) 153,789

CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of series B shares 50,000 – Proceeds from issue of series C shares 24 150,000 – Proceeds from issue of series D shares 24 – 248,500 Payments for transaction costs for the issue of shares 24 – (6,094) Proceeds on issue of shares to employee incentive platform 26 – 32,500 Capital contribution by non-controlling shareholders 27 – 27,000 Acquisition of interests of a subsidiary from non-controlling shareholders 27 – (11,000) Repayments of lease liabilities (2,774) (3,522)

Net cash flows from financing activities 197,226 287,384

NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (10,425) 407,498 Cash and cash equivalents at beginning of year 12,286 1,861

CASH AND CASH EQUIVALENTS AT END OF YEAR 1,861 409,359

– 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

STATEMENTS OF FINANCIAL POSITION OF THE COMPANY

As at As at December 31, December 31, Notes 2019 2020 RMB’000 RMB’000

NON-CURRENT ASSETS Property, plant and equipment 15 16,355 15,435 Prepayments, other receivables and other assets 17 618 1,978 Investments in subsidiaries 378 19,378 Right-of-use assets 16 11,952 9,757

Total non-current assets 29,303 46,548

CURRENT ASSETS Prepayments, other receivables and other assets 17 12,016 11,893 Financial assets at FVTPL 18 210,548 20,242 Time deposit 19 – 40,000 Cash and cash equivalents 19 705 389,956

Total current assets 223,269 462,091

CURRENT LIABILITIES Trade payables 20 2,113 2,074 Lease liabilities 16 1,939 1,968 Other payables and accruals 21 2,614 14,878 Derivative financial liabilities – 147

Total current liabilities 6,666 19,067

NET CURRENT ASSETS 216,603 443,024

TOTAL ASSETS LESS CURRENT LIABILITIES 245,906 489,572

NON-CURRENT LIABILITIES Redemption liabilities on ordinary shares 24 326,780 – Lease liabilities 16 10,378 8,410 Deferred income 25 960 3,087

Total non-current liabilities 338,118 11,497

Net (liabilities)/assets (92,212) 478,075

EQUITY Equity attributable to owners of the parent Share capital 26 – 75,000 Paid-in capital 26 1,355 – Reserves 26 (93,567) 403,075

Total equity (92,212) 478,075

– 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

II NOTES TO THE HISTORICAL FINANCIAL INFORMATION

1. CORPORATE INFORMATION

Shanghai Hanyu Medical Technology Co., Ltd. (the “Company”) was incorporated in the People’s Republic of China (“PRC”) on December 22, 2016 as a limited liability company. On December 3, 2020, the Company was converted into a joint stock company with limited liability under the Company Law of the PRC. The registered office of the Company is located at Building 14, 1288 Zhongchun Road, Minhang District, Shanghai, the PRC.

During the Relevant Periods, the Company and its main subsidiaries (together, the “Group”) were principally engaged in the research and development of medical devices of transcatheter valve repair and one subsidiary was engaged in the pet treatments and pet medical and health service business.

As at the date of this report, the Company had direct and indirect interests in its subsidiaries, all of which are private limited liability companies. The particulars of the Company’s subsidiaries are set out below:

Place and Nominal value of date of issued ordinary/ Percentage of equity incorporation/ registered attributable to the Company Name of subsidiaries registration share capital Direct Indirect Principal activities

Shanghai Hongyu Medical PRC RMB15,873,017 60.3% – Manufacturing of Technology Corporation July 5, 2019 medical devices Limited* (a) (“Hongyu for pets Medical”) 上海竑宇醫療科技有限公司

Shanghai Xinyu Pet Hospital PRC RMB5,000,000 – 60.3% Diagnosis and Corporation Limited* (b) September 29, treatment for pets (“Xinyu Pet Hospital”) 2019 上海心宇寵物醫院有限公司

Guangdong Hanyu Medical PRC RMB5,000,000 100.0% – Manufacturing of Technology Co., Ltd.* (c) 21 December medical devices (“Guangdong Hanyu”) 2020 and R&D 廣東捍宇醫療科技有限公司

Shanghai Nuoqiang Medical PRC RMB1,130,000 100.0% – No commencement Technology Co., Ltd.* (c) May 31, of actual (“Nuoqiang Medical”) 2018 operations 上海諾強醫療科技有限公司

(a) The statutory financial statements of Hongyu Medical for the year ended December 31, 2019 prepared under PRC Generally Accepted Accounting Principles (“PRC GAAP”) were audited by Suzhou Changxing Certified Public Accountant’s firm. (蘇州常興會計師事務所).

(b) The statutory financial statements of Xinyu Pet Hospital for the year ended December 31, 2020 prepared under PRC Generally Accepted Accounting Principles (“PRC GAAP”) were audited by Shanghai Pudao Jingshi Certified Public Accountant general partner. (上海普道兢實會計師事務所(普通合夥)).

(c) No audited financial statements have been prepared for these entities since their incorporation as these entities were not subject to any statutory audit requirements under the relevant rules and regulations in the jurisdictions of their incorporation or have not been involved in any significant business transactions.

* The English name of the entity registered in the PRC represents the best efforts made by the management of the Company to directly translate its Chinese name as the entity did not register any official English name. The Company’s subsidiaries are all registered in the PRC as limited liability companies under PRC law.

– 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

2.1 BASIS OF PREPARATION

The Historical Financial Information has been prepared in accordance with International Financial Reporting Standards (“IFRSs”), which comprise all standards and interpretations approved by the International Accounting Standards Board (“IASB”). All IFRSs in issue at December 31, 2020 and effective for annual periods beginning on June 1, 2020 as well as the amendment to IFRS 16 COVID-19-Related Rent Concessions, together with the relevant transitional provisions, have been early adopted by the Group in the preparation of the Historical Financial Information throughout the Relevant Periods.

The Historical Financial Information has been prepared under the historical cost convention except for certain financial instruments which have been measured at fair value at the end of each of the Relevant Periods.

In preparing the Historical Financial Information, the directors of the Company have considered the Group’s sources of liquidity and believe that adequate funding is available to fulfill the Group’s debt obligations and capital expenditure requirements.

The Group incurred losses continually during the Relevant Periods due to the pre-revenue stage of its medical device research and development businesses. In August 2020, the proceeds of RMB248,500,000 as mentioned in note 26 had been fully received, with approximately RMB127,000 and RMB248,373,000 credited to the Company’s paid-in capital and share premium, respectively. In light of the above capital injection of the Group and after taking into account the Group’s operating cash flow needs and capital expenditure spending in the foreseeable future, the directors are of the opinion that the Group shall be able to meet its obligations to settle liabilities and expenses as and when they fall due in the foreseeable future.

Accordingly, the directors of the Company concluded that it is appropriate to prepare the Historical Financial Information on a going concern basis.

Basis of consolidation

The Historical Financial Information includes the financial information of the Company and its subsidiaries for the Relevant Periods. A subsidiary is an entity (including a structured entity), directly or indirectly, controlled by the Company. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee (i.e., existing rights that give the Group the current ability to direct the relevant activities of the investee).

When the Company has, directly or indirectly, less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

(a) the contractual arrangement with the other vote holders of the investee;

(b) rights arising from other contractual arrangements; and

The financial statements of the subsidiaries are prepared for the same Relevant Periods as the Company, using consistent accounting policies. The results of the subsidiaries are consolidated from the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.

Profit or loss and each component of other comprehensive income are attributed to the owners of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control described above. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

If the Group loses control over a subsidiary, it derecognizes (i) the assets (including goodwill) and liabilities of the subsidiary, (ii) the carrying amount of any non-controlling interest and (iii) the cumulative translation differences recorded in equity; and recognizes (i) the fair value of the consideration received, (ii) the fair value of any investment retained and (iii) any resulting surplus or deficit in profit or loss. The Group’s share of components previously recognized in other comprehensive income is reclassified to profit or loss or retained profits, as appropriate, on the same basis as would be required if the Group had directly disposed of the related assets or liabilities.

– 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

2.2 ISSUED BUT NOT YET EFFECTIVE INTERNATIONAL FINANCIAL REPORTING STANDARDS

The Group has not applied the following new and revised IFRSs, that have been issued but are not yet effective, in the Historical Financial Information.

IFRS 17 Insurance Contracts3 Amendments to IAS 1 Classification of Liabilities as Current or Non-current3 Amendments to IFRS 3 Reference to the Conceptual Framework2 Amendments to IAS 16 Property, Plant and Equipment: Proceeds before Intended Use2 Amendments to IAS 37 Onerous Contracts – Costs of Fulfilling a Contract2 Annual Improvements to IFRS Amendments to IFRS 1, IFRS 9, Illustrative Examples Standards 2018-2020 accompanying IFRS 16 and IAS 412 Amendments to IFRS 17 Insurance Contracts3, 5 Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture4 Amendments to IFRS 9, IAS 39, Interest Rate Benchmark Reform – Phase 21 IFRS 7, IFRS 4 and IFRS 16 Amendments to IAS 1 Disclosure of Accounting Policies3 Amendments to IAS 8 Definition of Accounting Estimates3

1 Effective for annual periods beginning on or after January 1, 2021

2 Effective for annual periods beginning on or after January 1, 2022

3 Effective for annual periods beginning on or after January 1, 2023

4 No mandatory effective date yet determined but available for adoption

5 As a consequence of the amendments to IFRS 17 issued in June 2020, IFRS 4 was amended to extend the temporary exemption that permits insurers to apply IAS 39 rather than IFRS 9 for annual periods beginning before 1 January 2023

The Group is in the process of making an assessment of the impact of these new and revised IFRSs upon initial application. So far, the Group considers that these new and revised IFRSs may result in changes in accounting policies and are not expected to have a significant impact on the Group’s results of operations and financial position.

2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Fair value measurement

The Group measures wealthy management products at fair value at the end of each of the Relevant Periods. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible by the Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

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All assets and liabilities for which fair value is measured or disclosed in the Historical Financial Information are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 – based on quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2 – based on valuation techniques for which the lowest level input that is significant to the fair value measurement is observable, either directly or indirectly

Level 3 – based on valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

For assets and liabilities that are recognized in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by reassessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each of the Relevant Periods.

Impairment of non-financial assets

Where an indication of impairment exists, or when annual impairment testing for an asset is required (other than inventories, financial assets and other non-current assets), the asset’s recoverable amount is estimated. An asset’s recoverable amount is the higher of the asset’s or cash-generating unit’s value in use and its fair value less costs of disposal, and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case the recoverable amount is determined for the cash-generating unit to which the asset belongs.

An impairment loss is recognized only if the carrying amount of an asset exceeds its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss is charged to profit or loss in the period in which it arises in those expense categories consistent with the function of the impaired asset.

An assessment is made at the end of each of the Relevant Periods as to whether there is an indication that previously recognized impairment losses may no longer exist or may have decreased. If such an indication exists, the recoverable amount is estimated. A previously recognized impairment loss of an asset other than goodwill is reversed only if there has been a change in the estimates used to determine the recoverable amount of that asset, but not to an amount higher than the carrying amount that would have been determined (net of any depreciation/amortization) had no impairment loss been recognized for the asset in prior years. A reversal of such an impairment loss is credited to profit or loss in the period in which it arises.

Related parties

A party is considered to be related to the Group if:

(a) the party is a person or a close member of that person’s family and 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 a parent of the Group;

(b) the party is an entity where any of the following conditions applies:

(i) the entity and the Group are members of the same group;

(ii) one entity is an associate or joint venture of the other entity (or of a parent, subsidiary or fellow subsidiary of the other entity);

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(iii) the entity and the Group 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;

(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 parent of the entity); and

(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 parent of the Group.

Property, plant and equipment and depreciation

Property, plant and equipment, other than construction in progress, are stated at cost less accumulated depreciation and any 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.

Expenditure incurred after items of property, plant and equipment have been put into operation, such as repairs and maintenance, is normally charged to profit or loss in the period in which it is incurred. In situations where the recognition criteria are satisfied, the expenditure for a major inspection is capitalized in the carrying amount of the asset as a replacement. Where significant parts of property, plant and equipment are required to be replaced at intervals, the Group recognizes such parts as individual assets with specific useful lives and depreciates them accordingly.

Depreciation is calculated on the straight-line basis to write off the cost of each item of property, plant and equipment to its residual value over its estimated useful life. The principal annual rates used for this purpose are as follows:

Lab equipment and machinery 10% Office equipment 19% Motor vehicles 24% Leasehold improvements Over the shorter of the lease terms and 20%

Where parts of an item of property, plant and equipment have different useful lives, the cost of that item is allocated on a reasonable basis among the parts and each part is depreciated separately. Residual values, useful lives and the depreciation methods are reviewed, and adjusted if appropriate, at least at each financial year end.

An item of property, plant and equipment including any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on disposal or retirement recognized in profit or loss in the year the asset is derecognized is the difference between the net sales proceeds and the carrying amount of the relevant asset.

During the Relevant Periods, construction in progress represents leasehold improvements under construction, which are stated at cost less any impairment losses, and are not depreciated. Cost comprises the direct costs of construction during the period of construction. Construction in progress is reclassified to the category of leasehold improvements when completed and ready for use.

Intangible assets (other than goodwill)

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is the fair value at the date of acquisition. The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are subsequently amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at each financial year end.

– 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

Research and development costs

During the Relevant Periods, all research costs were charged to the consolidated statements of profit or loss as incurred.

Expenditure incurred on projects to develop new products is capitalized and deferred only when the Group can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the project and the ability to measure reliably the expenditure during the development. Product development expenditure which does not meet these criteria is expensed when incurred. During the Relevant Periods, all development costs incurred were charged to the consolidated statement of profit or loss.

Leases

The Group assesses at contract inception whether a contract is, or contains, a lease. 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.

Group as a lessee

The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Group recognizes lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.

At inception or on reassessment of a contract that contains a lease component and non-lease components, the Group adopts the practical expedient not to separate non-lease components and to account for the lease component and the associated non-lease components (e.g., property management services for leases of properties) as a single lease component.

(a) Right-of-use assets

Right-of-use assets are recognized at the commencement date of the lease (that is the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and any impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease terms and the estimated useful lives of the assets as follows:

Property, office premises and plant 1.1-8 years Vehicles 4 years

If ownership of the leased asset transfers to the Group by the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.

(b) Lease liabilities

Lease liabilities are recognized at the commencement date of the lease at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for termination of a lease, if the lease term reflects the Group exercising the option to terminate the lease. The variable lease payments that do not depend on an index or a rate are recognized as an expense in the period in which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in lease payments (e.g., a change to future lease payments resulting from a change in an index or rate) or a change in assessment of an option to purchase the underlying asset.

– 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

The Group applies the short-term lease recognition exemption to its short-term leases of buildings (that is those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the recognition exemption for leases of low-value assets to leases of motor vehicles that are considered to be of low value. Lease payments on short-term leases and leases of low-value assets are recognized as an expense on a straight-line basis over the lease term.

Investments and other financial assets

Initial recognition and measurement

Financial assets are classified, at initial recognition, as subsequently measured at amortized cost, fair value through other comprehensive income, and fair value through profit or loss.

The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Group’s business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient of not adjusting the effect of a significant financing component, the Group initially measures a financial asset at its fair value, plus in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient are measured at the transaction price determined under IFRS 15 in accordance with the policies set out for “Revenue recognition” below.

The Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. Financial assets classified and measured at amortized cost are held within a business model with the objective to hold financial assets in order to collect contractual cash flows, while financial assets classified and measured at fair value through other comprehensive income are held within a business model with the objective of both holding to collect contractual cash flows and selling. Financial assets which are not held within the aforementioned business models are classified and measured at fair value through profit or loss.

All regular way purchases and sales of financial assets are recognized on the trade date, that is, the date that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace.

Subsequent measurement

The subsequent measurement of financial assets depends on their classification as follows:

Financial assets at amortized cost (debt instruments)

The Group’s financial assets at amortized cost include cash and cash equivalents, time deposits, and other receivables included in prepayments, other receivables and other assets.

Financial assets at fair value through profit or loss

– 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

Derecognition of financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized (i.e., removed from the Group’s consolidated statement of financial position) when:

• the rights to receive cash flows from the asset have expired; or

• the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a “pass-through” arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if, and to what extent, it has retained the risk and rewards of ownership of the asset. When it has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the Group continues to recognize the transferred asset to the extent of the Group’s continuing involvement. In that case, the Group also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

Impairment of financial assets

The Group recognizes an allowance for expected credit losses (“ECLs”) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

General approach

ECLs are recognized in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12 months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

At the end of each of the Relevant Periods, the Group assesses whether the credit risk on a financial instrument has increased significantly since initial recognition. When making the assessment, the Group compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information that is available without undue cost or effort, including historical and forward-looking information.

The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

Financial assets at amortized cost are subject to impairment under the general approach and they are classified within the following stages for measurement of ECLs except for trade receivables and which apply the simplified approach as detailed below.

Stage 1 – Financial instruments for which credit risk has not increased significantly since initial recognition and for which the loss allowance is measured at an amount equal to 12-month ECLs

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Stage 2 – Financial instruments for which credit risk has increased significantly since initial recognition but that are not credit-impaired financial assets and for which the loss allowance is measured at an amount equal to lifetime ECLs

Stage 3 – Financial assets that are credit-impaired at the reporting date (but that are not purchased or originated credit-impaired) and for which the loss allowance is measured at an amount equal to lifetime ECLs

Simplified approach

For trade receivables and contract assets that do not contain a significant financing component or when the Group applies the practical expedient of not adjusting the effect of a significant financing component, the Group applies the simplified approach in calculating ECLs. Under the simplified approach, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group 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.

Financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

The Group’s financial liabilities include trade payables, other payables and accruals, lease liabilities, redemption liabilities on non-controlling interests, redemption liabilities on ordinary shares.

Subsequent measurement

The subsequent measurement of financial liabilities depends on their classification as follows:

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities designated upon initial recognition as at fair value through profit or loss.

Financial liabilities at amortized cost (loans and borrowings)

After initial recognition, trade payables, other payables and accruals and lease liabilities are subsequently measured at amortized cost, using the effective interest method unless the effect of discounting would be immaterial, in which case they are stated at cost. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the effective interest rate amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The effective interest rate amortization is included in finance costs in the consolidated statement of profit or loss.

Derecognition of financial liabilities

A financial liability is derecognized when the obligation under the liability is discharged or canceled, or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and a recognition of a new liability, and the difference between the respective carrying amounts is recognized in profit or loss.

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Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.

Redemption liabilities on non-controlling interests

The Group granted the non-controlling shareholders put options to request the Group to purchase the equity interests held by the non-controlling shareholders for cash or another financial asset when certain conditions are met. As the Group does not have the unconditional right to avoid delivering cash or another financial asset under the put options, the Group recognized a financial liability at the present value of the estimated future cash outflows of the redemption obligation.

Non-controlling interest continues to be recognised within equity, with changes in the carrying amounting arising from: a) an allocation of the profit or loss for the year; b) a share of changes in appropriate reserves; and c) dividends declared before the end of the relevant periods. At the end of each of the Relevant Periods, the non-controlling interest is then derecognised as if it was acquired at that date.

Any difference between the amount of non-controlling interest derecognised and the redemption liabilities is accounted for within equity. There is no separate accounting for the unwinding of the discount due to the passage of time.

If the option is exercised, the accounting for the put option is updated as mentioned in preceding paragraph, and the redemption liabilities existing at that date is extinguished by the payment of the exercise price. If the option expires unexercised, the position is unwound such that non-controlling interest is recognised at the amount it would have been, as if the put option was not granted.

Redemption liabilities on ordinary shares

For the redeemable ordinary shares issued by the Company as detailed in note 24, financial liabilities are recognized based on the net present value of the redemption amount and debited to equity. Changes of net present value during the relevant periods are recognized in profit or loss. When the redemption rights related to the redeemable ordinary shares are terminated, redemption liabilities on ordinary shares are extinguished and credited to equity.

Inventories

Inventories are stated at the lower of cost and net realizable value. Cost is determined on the first-in, first-out basis. The Group’s inventories are mainly for pet medicines and consumables. Net realizable value is based on estimated selling prices less any estimated costs to be incurred to disposal.

Cash and cash equivalents

For the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise cash on hand, cash at banks and time deposits, are subject to an insignificant risk of changes in value, and form an integral part of the Group’s cash management.

For the purpose of the consolidated statement of financial position, cash and cash equivalents comprise cash on hand and at banks, which are not restricted as to use.

Provisions

A provision is recognized when a present obligation (legal or constructive) has arisen as a result of a past event and it is probable that a future outflow of resources will be required to settle the obligation, provided that a reliable estimate can be made of the amount of the obligation.

When the effect of discounting is material, the amount recognized for a provision is the present value at the end of each of the Relevant Periods of the future expenditures expected to be required to settle the obligation. The increase in the discounted present value amount arising from the passage of time is included in finance costs in profit or loss.

– 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

Income tax

Income tax comprises current and deferred tax. Income tax relating to items recognized outside profit or loss is recognized outside profit or loss, either in other comprehensive income or directly in equity.

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of each of the Relevant Periods, taking into consideration interpretations and practices prevailing in the country in which the Group operates.

Deferred tax is provided, using the liability method, on all temporary differences at the end of each of the Relevant Periods between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognized for all taxable temporary differences, except:

• when the deferred tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• in respect of taxable temporary differences associated with investments in subsidiaries when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary differences, and the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized, except:

• when the deferred tax asset relating to the deductible temporary differences arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• in respect of deductible temporary differences associated with investments in subsidiaries, deferred tax assets are only recognized to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

The carrying amount of deferred tax assets is reviewed at the end of each of the Relevant Periods and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at the end of each of the Relevant Periods and are recognized to the extent that it has become probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of each of the Relevant Periods.

Deferred tax assets and deferred tax liabilities are offset if and only if the Group has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

Government grants

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Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognized in profit or loss in the period in which they become receivable.

Revenue recognition

Revenue from contracts with customers

Revenue from contracts with customers is recognized when control of goods or services is transferred to the customers at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services.

When the consideration in a contract includes a variable amount, the amount of consideration is estimated to which the Group will be entitled in exchange for transferring the goods or services to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognized will not occur when the associated uncertainty with the variable consideration is subsequently resolved.

When the contract contains a financing component which provides the customer with a significant benefit of financing the transfer of goods or services to the customer for more than one year, revenue is measured at the present value of the amount receivable, discounted using the discount rate that would be reflected in a separate financing transaction between the Group and the customer at contract inception. When the contract contains a financing component which provides the Group with a significant financial benefit for more than one year, revenue recognized under the contract includes the interest expense accreted on the contract liability under the effective interest method. For a contract where the period between the payment by the customer and the transfer of the promised goods or services is one year or less, the transaction price is not adjusted for the effects of a significant financing component, using the practical expedient in IFRS 15.

During the Relevant Periods, Group’s revenue was only derived from providing pet treatments and pet medical and health service.

Revenue from providing pet treatments and general heathcare service to pets is recognized at the point in time when the service has been rendered to customers.

Other income

Contract liabilities

A contract liability is recognized when a payment is received or a payment is due (whichever is earlier) from a customer before the Group transfers the related goods or services. Contract liabilities are recognized as revenue when the Group performs under the contract (i.e., transfers control of the related goods or services to the customer).

Share-based payments

The Company operates a share award scheme for the purpose of providing incentives and rewards to eligible participants who contribute to the success of the Group’s operations. Employees (including directors) of the Group receive remuneration and rewards in the form of share-based payments, whereby employees render services as consideration for equity instruments (“equity-settled transactions”).

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The cost of equity-settled transactions is recognized in expense, together with a corresponding increase in equity, over the period in which the service conditions are fulfilled. The cumulative expense recognized for equity-settled transactions at the end of each of the Relevant Periods until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The charge or credit to profit or loss for a period represents the movement in the cumulative expense recognized as at the beginning and end of that period.

Service conditions are not taken into account when determining the grant date fair value of awards, but the likelihood of the conditions being met is assessed as part of the Group’s best estimate of the number of equity instruments that will ultimately vest.

For awards that do not ultimately vest because service conditions have not been met, no expense is recognized.

Other employee benefits

Pension scheme

The employees of the Group which operates in Mainland China are required to participate in a central pension scheme operated by the local municipal government. The Group is required to contribute a certain percentage of its payroll costs to the central pension scheme. The contributions are charged to profit or loss as they become payable in accordance with the rules of the central pension scheme.

Dividends

Final dividends are recognised as a liability when they are approved by the shareholders in a general meeting.

Foreign currencies

The Historical Financial Information is presented in RMB, which is the Company’s functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Foreign currency transactions recorded by the entities in the Group are initially recorded using their respective functional currency rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency rates of exchange ruling at the end of each of the Relevant Periods. Differences arising on settlement or translation of monetary items are recognized in profit or loss.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was measured. The gain or loss arising on translation of a non-monetary item measured at fair value is treated in line with the recognition of the gain or loss on change in fair value of the item (i.e., translation difference on the item whose fair value gain or loss is recognized in other comprehensive income or profit or loss is also recognized in other comprehensive income or profit or loss, respectively).

In determining the exchange rate on initial recognition of the related asset, expense or income on the derecognition of a non-monetary asset or non-monetary liability relating to an advance consideration, the date of initial transaction is the date on which the Group initially recognizes the non-monetary asset or non-monetary liability arising from the advance consideration. If there are multiple payments or receipts in advance, the Group determines the transaction date for each payment or receipt of the advance consideration.

3. SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES

The preparation of the Group’s Historical Financial Information requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and their accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amounts of the assets or liabilities affected in the future.

Judgments

In the process of applying the Group’s accounting policies, management has made the following judgments, apart from those involving estimations, which have the most significant effect on the amounts recognized in the Historical Financial Information:

– 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

Research and development expenses

Research and development expenses incurred on the Group’s medical device product pipelines are capitalized and deferred only when the Group can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, the Group’s intention to complete and the Group’s ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the pipeline and the ability to measure reliably the expenditure during the development. Research and development expenses which do not meet these criteria are expensed when incurred. Determining the amounts to be capitalized requires management to make assumptions regarding the expected future cash generation of the assets, discount rates to be applied and the expected period of benefits. All expenses incurred for research and development activities were regarded as research expenses and therefore were expensed when incurred.

Acquisition of a subsidiary that is not a business

IFRS 3 requires an entity to determine whether a transaction or event is a business combination which requires that the assets acquired and liabilities assumed constitute a business. In January 2019, the Company entered into a share purchase agreement with an independent third party to acquire 100% equity interests of Nuoqiang Medical and RMB6,000,000 was paid right after the agreement signed. The transaction was completed on January 16, 2019. Nuoqiang Medical was an early development stage company and had only one patent registered in July 2018. Neither development nor clinical trials were being performed by Nuoqiang Medical and the Group determined that activities and assets of Nuoqiang Medical didn’t constitute a business on the acquisition date. The transaction was then accounted for as an asset acquisition.

Estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the end of each of the Relevant Periods, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below.

Recognition of deferred tax assets

Impairment of non-financial assets (other than goodwill)

The Group assesses whether there are any indicators of impairment for all non-financial assets (including the right-of-use assets) at the end of each of the Relevant Periods. Non-financial assets are tested for impairment when there are indicators that the carrying amounts may not be recoverable. An impairment exists when the carrying value of an asset or a cash-generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The calculation of the fair value less costs of disposal is based on available data from binding sales transactions in an arm’s length transaction of similar assets or observable market prices less incremental costs for disposing of the asset. When value in use calculations are undertaken, management must estimate the expected future cash flows from the asset or cash-generating unit and choose a suitable discount rate in order to calculate the present value of those cash flows.

Useful lives of property, plant and equipment

The Group determines the estimated useful lives and related depreciation charges for its property, plant and equipment. This estimate is based on the historical experience of the actual useful lives of property, plant and equipment of similar nature and functions. The Group will increase the depreciation charge where useful lives are less than previously estimated lives.

Share-based payments

The Group has set up several employee incentive platforms for the Company’s directors and the Group’s employees. The fair value of the restricted shares or shares are determined by the equity allocation model at the grant dates. Valuation techniques are certified by an independent valuer before being implemented for valuation and are calibrated to ensure that outputs reflect market conditions. Some inputs, such as the discount rate for lack of marketability (“DLOM”), risk-free interest rate, volatility and dividend yield rate require management estimates. Management estimates and assumptions are reviewed periodically and are adjusted if necessary. Should any of the estimates and assumptions change, it may lead to a change in the fair value to be recognised in profit or loss. Further details are contained in note 28.

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4. SEGMENT INFORMATION

Segment information

For the purpose of resource allocation and performance assessment, the Group’s chief executive officer, being the chief operating decision maker, reviews the consolidated results when making decisions about allocating resources and assessing performance of the Group as a whole and hence, the Group has only one reportable segment and no further analysis of this single segment is presented.

Geographical information

The geographical information about revenue is disclosed in note 5(a).

The Group’s non-current assets are all located in the PRC, and accordingly, no further related geographical information of non-current assets is presented.

Information about major customers

There were no revenue derived from sales to a single customer that amounted to more than 10% of the Group’s revenue for the years ended December 31, 2019, and 2020.

5. REVENUE

(a) An analysis of revenue is as follows:

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

Revenue from contracts with customers – 490

Type of goods or services Pet treatments and pet medical and health service – 490

Geographical market Mainland China – 490

Timing of revenue recognition Services and goods transferred at a point in time – 490

(b) Performance obligations

Information about the Group’s performance obligations is summarized below:

The amounts of transaction prices allocated to the remaining performance obligations (unsatisfied or partially unsatisfied) as at December 31 are as follows:

2019 2020 RMB’000 RMB’000

Amounts expected to be recognized as revenue Within one year 3 496

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6. OTHER INCOME AND GAINS

An analysis of other income and gains is as follows:

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

Other income Government grants* 2,301 11,451 Bank interest income 28 1,163 Others –1

Gains Gain on financial assets at FVTPL 5,062 7,221 Gain on lease termination 20 –

Other income and gains 7,411 19,836

* The government grants mainly represent subsidies received from the local governments for the purpose of compensation of expense or capital investments spent on research and clinical trial activities, allowance for new medical device development and funds for talents.

7. LOSS BEFORE TAX

The Group’s loss before tax is arrived at after charging/(crediting):

Year ended December 31, 2019 2020 Notes RMB’000 RMB’000

Depreciation of property, plant and equipment* 15 2,390 3,559 Depreciation of right-of-use assets* 16 2,457 3,020 Research and development costs 29,393 32,069 Government grants 6 (2,301) (11,451) Bank interest income 6 (28) (1,163) Auditor’s remuneration 23 1,321

31,934 27,355

Staff cost (excluding directors’, supervisors’ and chief executive’s remuneration): – Wages and salaries 5,792 9,958 – Pension scheme contributions 443 87 – Equity-settled share award expense – 6,332 – Welfare and Others 630 1,836

* The depreciation of property, plant and equipment, depreciation of right-of-use assets and employee benefit expenses for the Relevant Periods are set out in “Administrative expenses” and “Research and development expenses” in the consolidated statements of profit or loss and other comprehensive income.

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8. OTHER EXPENSES

An analysis of other expenses is as follows:

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

Loss on disposal of property, plant and equipment – 25 Donation 105 – Others 3–

108 25

9. FINANCE COSTS

An analysis of finance costs is as follows:

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

Interest on redemption liabilities on ordinary shares (note 24) 13,560 32,815 Interest on lease liabilities (note 16) 729 671

14,289 33,486

10. DIRECTORS’, SUPERVISORS’ AND CHIEF EXECUTIVE’S REMUNERATION

Directors’, supervisors’ and chief executive’s remuneration for the Relevant Periods, disclosed pursuant to the Listing Rules, section 383(1)(a), (b), (c) and (f) of the Hong Kong Companies Ordinance and Part 2 of the Companies (Disclosure of Information about Benefits of Directors) Regulation, is as follows:

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

Fees: N/A 15

Other emoluments: Salaries, allowances and benefits in kind 1,870 2,936 Performance related bonuses 1,488 2,788 Equity-settled share award expense – 50,484 Pension scheme contributions 157 12

3,515 56,235

During the Relevant Periods, shares were granted to Mr. Dai Yufeng, Ms. Yang Huixian, Ms. Gu Yanyan, Mr. Li Tao and Mr. Xu Libo in respect of their services to the Group, further details of which are set out in note 28 to the Historical Financial Information. The fair value of such awarded shares, which has been recognized in profit or loss over the vesting period, was determined as at the date of grant and the amount included in the Historical Financial Information for the Relevant Periods is set out in the above directors’ and supervisors’ remuneration disclosures.

– 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

Directors

(a) Independent non-executive directors

2019 2020 RMB’000 RMB’000

Mr. Hu Haibin(a) N/A 5 Dr. Yang Jiayu(a) N/A 5 Mr. Yu Liqiang(a) N/A 5

N/A 15

(b) Executive directors, non-executive directors and the chief executive

Salaries, allowances Performance Pension Equity-settled and benefits related scheme share award Total in kind bonuses contributions expense remuneration RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Year ended December 31, 2019

Executive director and Chief executive: Mr. Dai Yufeng 741 705 51 – 1,497

Executive director: Ms. Yang Huixian 633 600 51 – 1,284 Ms. Gu Yanyan 381 120 35 – 536 Mr. Li Tao(b) 115 63 20 – 198

Non-executive directors: Mr. Chen Chen(b) ––––– Ms. Sun Jun(c) ––––– Mr. Ji Tianrong(e) ––––– Mr. Liang Zhanchao(e) ––––– Mr. Yu Peng(e) ––––– Mr. Zhang Yong(e) ––––– Mr. Tang Ke(b) –––––

1,870 1,488 157 – 3,515

Year ended December 31, 2020

Executive directors and Chief executive: Mr. Dai Yufeng 1,254 1,565 4 27,597 30,420

Executive director: Ms. Yang Huixian 997 1,020 4 22,674 24,695 Ms. Gu Yanyan 311 122 – 100 533 Mr. Li Tao(e) 303 68 4 27 402

Non-executive directors: Mr. Chen Chen(b) ––––– Ms. Sun Jun(c) ––––– Mr. Ji Tianrong(e) ––––– Mr. Liang Zhanchao(e) ––––– Mr. Yu Peng(e) –––––

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Mr. Zhang Yong(e) ––––– Mr. Tang Ke(e) ––––– Mr. He Xing(d) ––––– Ms. Wu Zheng(d) –––––

2,865 2,775 12 50,398 56,050

Supervisors

Salaries, allowances Performance Equity-settled and benefits related share award Total in kind bonuses expense remuneration RMB’000 RMB’000 RMB’000 RMB’000

Year ended December 31, 2019 Mr. Guan Jingwei(f) –– ––

Year ended December 31, 2020 Mr. Xu Libo(g) 35 7 59 101 Mr. Li Tao(g) 36 6 27 69 Ms. Wu Zheng(g) –– –– Mr. Guan Jingwei(f) –– ––

71 13 86 170

There was no arrangement under which a director, supervisor or the chief executive waived or agreed to waive any remuneration during the Relevant Periods.

Notes:

(a) Mr. Hu Haibin, Dr. Yang Jiayu and Mr. Yu Liqiang were appointed as independent non-executive directors on November 27, 2020.

(b) Mr. Li Tao, Mr. Chen Chen and Mr. Tang Ke were appointed as directors of the Company on August 5, 2019.

(d) Mr. He Xing and Ms. Wu Zheng were appointed as directors of the Company on August 27, 2020. Mr. He Xing and Ms. Wu Zheng resigned as a director of the Company with effect from December 3, 2020.

(e) Mr. Li Tao, Mr. Ji Tianrong, Mr. Liang Zhanchao, Mr. Yu Peng, Mr. Zhang Yong and Mr. Tang Ke resigned as directors of the Company with effect from December 3, 2020.

(f) Mr. Guan Jingwei resigned as a supervisor of the Company with effect from December 3, 2020.

(g) Mr. Xu Libo, Mr. Li Tao and Ms. Wu Zheng were appointed as supervisors of the Company on November 27, 2020. Mr. Li Tao’s remuneration was RMB272,000 before he was appointed as a director of the Company in 2019. Mr. Xu Libo’s remuneration was RMB397,000 before he was appointed as a supervisor of the Company in 2020.

Subsequent to the end of the Relevant Periods, Mr. Hu Haibin resigned as an independent non-executive director of the Company with effect from March 4, 2021. Ms. Ni Hong was appointed as independent non-executive director of the Company on March 24, 2021.

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11. FIVE HIGHEST PAID EMPLOYEES

The five highest paid employees during the years ended December 31, 2019 and 2020 included four and three directors, respectively, details of whose remuneration are set out in note 10 above. Details of the remuneration for the remaining one and two highest paid employees who are neither a director nor chief executive of the Company during the Relevant Periods are as follows:

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

Salaries, bonuses, allowances and benefits in kind 265 951 Performance related bonuses 306 385 Equity-settled share award expense – 217 Pension scheme contributions 38 6

609 1,559

The number of non-director and non-chief executive highest paid employees whose remuneration fell within the following bands is as follows:

Number of employees Year ended December 31, 2019 2020

Nil to HK$1,000,000 1 1 HK$1,000,001 to HK$2,000,000 – 1

During the Relevant Periods, shares were granted to certain highest paid employees in respect of their contributions and future services to the Group, further details of which are set out in note 28 to the Historical Financial Information. The fair value of such awarded shares, which has been recognized in profit or loss over the vesting period, was determined as at the date of grant and the amount included in the Historical Financial Information for the Relevant Periods is included in the above highest paid employees’ remuneration disclosures.

12. INCOME TAX

The Group’s principal applicable taxes and tax rates are as follows:

(a) No provision for Mainland China income tax has been provided for at a rate of 25% pursuant to the Corporate Income Tax Law of the PRC and the respective regulations (the “CIT Law”), as the Group’s PRC entities are in loss position and have no estimated assessable profits.

(b) A reconciliation of the tax expense applicable to loss before tax at the statutory rate to the tax expense at the effective tax rate is as follows:

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

Loss before tax (48,133) (128,985)

Tax at statutory tax rate of 25% (12,033) (32,246) Expenses not deductible for tax 2,213 15,254 Additional deductible allowance for research and development costs (3,429) (5,145) Deductible temporary differences not recognized 1,155 1,202

Tax losses not recognized (12,094) (20,935)

Tax charge at the Group’s effective tax rate for the year – –

– 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

Deferred tax assets have not been recognized in respect of the following items:

As at December 31, 2019 2020 RMB’000 RMB’000

Unused tax losses 90,703 174,446 Balance of deductible temporary differences 4,862 9,671

95,565 184,117

Deferred tax assets have not been recognized in respect of these losses as it is not considered probable that taxable profits will be available against which the tax losses can be utilized.

The Group has accumulated tax losses of RMB90,703,000 and RMB174,446,000 as at December 31, 2019 and December 31, 2020, respectively. The tax losses in the PRC can be carried forward for five years to offset future taxable profit. The tax losses of the Group will be carried forward and expire in years as follow:

As at December 31, 2019 2020 RMB’000 RMB’000

2022 13,144 13,144 2023 29,184 29,184 2024 48,375 48,375 2025 – 83,743

90,703 174,446

13. DIVIDEND

No dividends have been paid or declared by the Company during Relevant Periods.

14. LOSS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE PARENT

Loss per share information is not presented as its inclusion, for the purposes of this report, is not considered meaningful because the number of ordinary shares as at the end of each of the Relevant Periods is different from the number of ordinary shares immediately after the completion of [REDACTED] of the Group.

15. PROPERTY, PLANT AND EQUIPMENT

The Group

Lab equipment Office and equipment Motor Leasehold Construction machinery and others vehicles improvements in progress Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

December 31, 2019 At January 1, 2019: Cost 879 323 3 1,025 4,056 6,286 Accumulated depreciation (143) (73) (1) (297) – (514)

Net carrying amount 736 250 2 728 4,056 5,772

– 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

Lab equipment Office and equipment Motor Leasehold Construction machinery and others vehicles improvements in progress Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

At January 1, 2019, net of accumulated depreciation 736 250 2 728 4,056 5,772 Additions 3,204 675 652 – 9,752 14,283 Acquisition of a subsidiary that is not a business – 65 – 167 – 232 Depreciation provided during the year (208) (180) (32) (1,970) – (2,390) Transfer – – – 12,750 (12,750) –

At December 31, 2019, net of accumulated depreciation 3,732 810 622 11,675 1,058 17,897

At December 31, 2019: Cost 4,083 1,063 655 13,942 1,058 20,801 Accumulated depreciation (351) (253) (33) (2,267) – (2,904)

Net carrying amount 3,732 810 622 11,675 1,058 17,897

The Group

Lab equipment Office and equipment Motor Leasehold Construction machinery and others vehicles improvements in progress Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

December 31, 2020 At January 1, 2020: Cost 4,083 1,063 655 13,942 1,058 20,801 Accumulated depreciation (351) (253) (33) (2,267) – (2,904)

Net carrying amount 3,732 810 622 11,675 1,058 17,897

At January 1, 2020, net of accumulated depreciation 3,732 810 622 11,675 1,058 17,897 Additions 1,916 501 7 – 3,603 6,027 Disposals – (25) – – – (25) Depreciation provided during the year (554) (230) (125) (2,650) – (3,559) Transfer – – – 4,661 (4,661) –

At December 31, 2020, net of accumulated depreciation 5,094 1,056 504 13,686 – 20,340

At December 31, 2020: Cost 5,999 1,539 662 18,603 – 26,803 Accumulated depreciation (905) (483) (158) (4,917) – (6,463)

Net carrying amount 5,094 1,056 504 13,686 – 20,340

– 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

The Company

Lab equipment Office and equipment Motor Leasehold Construction machinery and others vehicles improvements in progress Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

December 31, 2019 At January 1, 2019: Cost 879 323 3 1,025 4,056 6,286 Accumulated depreciation (143) (73) (1) (297) – (514)

Net carrying amount 736 250 2 728 4,056 5,772

At January 1, 2019, net of accumulated depreciation 736 250 2 728 4,056 5,772 Additions 2,780 660 652 – 8,694 12,786 Depreciation provided during the year (208) (160) (32) (1,803) – (2,203) Transfer – – – 12,750 (12,750) –

At December 31, 2019, net of accumulated depreciation 3,308 750 622 11,675 – 16,355

At December 31, 2019: Cost 3,659 983 655 13,775 – 19,072 Accumulated depreciation (351) (233) (33) (2,100) – (2,717)

Net carrying amount 3,308 750 622 11,675 – 16,355

– 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

Lab equipment Office and equipment Motor Leasehold Construction machinery and others vehicles improvements in progress Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

December 31, 2020 At January 1, 2020: Cost 3,659 983 655 13,775 – 19,072 Accumulated depreciation (351) (233) (33) (2,100) – (2,717)

Net carrying amount 3,308 750 622 11,675 – 16,355

At January 1, 2020, net of accumulated depreciation 3,308 750 622 11,675 – 16,355 Additions 1,393 322 – – 32 1,747 Disposals – (25) – – – (25) Depreciation provided during the year (494) (200) (125) (1,823) – (2,642) Transfer – – – 32 (32) –

At December 31, 2020, net of accumulated depreciation 4,207 847 497 9,884 – 15,435

At December 31, 2020: Cost 5,052 1,280 655 13,807 – 20,794 Accumulated depreciation (845) (433) (158) (3,923) – (5,359)

Net carrying amount 4,207 847 497 9,884 – 15,435

16. LEASES

The Group and the Company as a lessee

During the Relevant Periods, the Group entered into certain long-term lease contracts for buildings and vehicles which generally have lease terms between 1.1 and 8 years. Generally, the Group is restricted from assigning and subleasing the leased assets outside the Group. There is no lease contract that includes extension and termination options and variable lease payments.

(a) Right-of-use assets

The carrying amounts of the Group’s right-of-use assets and the movements during the Relevant Periods are as follows:

The Group

Property, office premises and plant Vehicles Total RMB’000 RMB’000 RMB’000

As at January 1, 2019 13,799 414 14,213 Additions as a result of acquisition of a subsidiary that is not a business 801 – 801 Additions 887 – 887 Lease termination (723) – (723) Depreciation charge (2,287) (170) (2,457)

As at December 31, 2019 12,477 244 12,721

– 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

Property, office premises and plant Vehicles Total RMB’000 RMB’000 RMB’000

As at January 1, 2020 12,477 244 12,721 Additions 1,779 – 1,779 Depreciation charge (2,850) (170) (3,020)

As at December 31, 2020 11,406 74 11,480

The Company

The carrying amounts of the Company’s right-of-use assets and the movements during the Relevant Periods are as follows:

Property, office premises and plant Vehicles Total RMB’000 RMB’000 RMB’000

As at January 1, 2019 13,799 414 14,213 Depreciation charge (2,091) (170) (2,261)

As at December 31, 2019 11,708 244 11,952

Property, office premises and plant Vehicles Total RMB’000 RMB’000 RMB’000

As at January 1, 2020 11,708 244 11,952 Depreciation charge (2,025) (170) (2,195)

As at December 31, 2020 9,683 74 9,757

(b) Lease liabilities

The Group

The carrying amount of lease liabilities and the movements during the Relevant Periods are as follows:

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

Carrying amount at January 1 14,171 13,087 Additions as a result of acquisition of a subsidiary that is not a business 817 – New leases 887 1,779 Accretion of interest recognized during the year 729 671 Payments (2,774) (3,522) Lease termination (743) –

Carrying amount at the end of the year 13,087 12,015

– 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

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

Analyzed into: Current portion 2,418 3,145 Non-current portion 10,669 8,870

The maturity analysis of lease liabilities is disclosed in note 34 to the Historical Financial Information.

The Company

The carrying amount of the Company’s lease liabilities and the movements during the Relevant Periods are as follows:

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

Carrying amount at January 1 14,171 12,317 Accretion of interest recognized during the year 709 608 Payments (2,563) (2,547)

Carrying amount at the end of the year 12,317 10,378

Analyzed into: Current portion 1,939 1,968 Non-current portion 10,378 8,410

The Group

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

Interest on lease liabilities 729 671 Depreciation charge of right-of-use assets 2,457 3,020 Gain on lease termination (20) – Expense relating to short-term leases* – 46

Total amount recognized in profit or loss 3,166 3,737

* Included in “Administrative expenses” and “Research and development expenses” in the consolidated statement of profit or loss and other comprehensive income.

(d) The total cash outflow for leases is set out in note 29 to the Historical Financial Information.

– 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

17. PREPAYMENTS, OTHER RECEIVABLES AND OTHER ASSETS

The Group

As at As at December 31, December 31, 2019 2020 RMB’000 RMB’000

Non-current: Prepayments for purchase of items of property, plant and equipment 257 1,455 Rental deposits 565 963 Other deposits 20 21

842 2,439

Current: Prepayments 1,876 6,460 Other receivables 913 799 Value-added tax recoverable 3,136 4,897

5,925 12,156

The Company

As at As at December 31, December 31, 2019 2020 RMB’000 RMB’000

Non-current: Prepayments for purchase of items of property, plant and equipment 33 1,387 Rental deposits 565 570 Other Deposits 20 21

618 1,978

Current: Prepayments 1,854 6,409 Other receivables 7,217 1,334 Value-added tax recoverable 2,945 4,150

12,016 11,893

The financial assets included in the above balances relate to receivables for which there was no recent history of default and past due amounts. As at the end of each of the Relevant Periods, the loss allowance was assessed to be minimal.

– 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

18. FINANCIAL ASSETS AT FVTPL

The Group

As at As at December 31, December 31, 2019 2020 RMB’000 RMB’000

Wealth management products 212,561 21,542

The Company

As at As at December 31, December 31, 2019 2020 RMB’000 RMB’000

Wealth management products 210,548 20,242

At December 31, 2019 and December 31, 2020, the financial assets at FVTPL represented floating return wealth management products issued by certain banks, with expected return rate from 1.00%-3.75% per annum.

19. TIME DEPOSITS AND CASH AND CASH EQUIVALENTS

Time deposits

The Group

As at As at December 31, December 31, 2019 2020 RMB’000 RMB’000

Time deposits over three months* – 40,000

The Company

As at As at December 31, December 31, 2019 2020 RMB’000 RMB’000

Time deposits over three months* – 40,000

* The time deposits presented above are placed with a bank in the PRC with a term of 6 months to 1 year upon placement. Since the time deposits will mature in the coming financial year, the time deposits are classified as current assets. The time deposit rates ranged from 1.95% to 2.00%.

– 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

Cash and cash equivalents

The Group

As at As at December 31, December 31, 2019 2020 RMB’000 RMB’000

Cash on hand 220 202 Cash at banks 1,641 40,798 Time deposit within three months* – 368,359

Cash and cash equivalents 1,861 409,359

Denominated in: RMB 1,861 409,359

Total cash and bank balances 1,861 409,359

The Company

As at As at December 31, December 31, 2019 2020 RMB’000 RMB’000

Cash on hand 200 200 Cash at banks 505 34,403 Time deposit within three months* – 355,353

Cash and cash equivalents 705 389,956

Denominated in: RMB 705 389,956

Total cash and bank balances 705 389,956

The RMB is not freely convertible into other currencies, however, under Mainland China’s Foreign Exchange Control Regulations and Administration of Settlement, Sale and Payment of Foreign Exchange Regulations, the Group is permitted to exchange RMB for other currencies through banks authorized to conduct foreign exchange business.

Cash at banks earns interest at floating rates based on daily bank deposit rates. The bank balances are deposited with creditworthy banks with no recent history of default.

* The time deposits presented here are placed with certain banks in the PRC with maturity dates within three months on the initial placement date.

– 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

20. TRADE PAYABLES

The Group

As at As at December 31, December 31, 2019 2020 RMB’000 RMB’000

Trade payables 2,084 2,153

An aging analysis of the trade payables as at the end of each of the Relevant Periods, based on the invoice date, is as follows:

As at As at December 31, December 31, 2019 2020 RMB’000 RMB’000

Within 12 months 2,071 2,151 Over 12 months 13 2

2,084 2,153

The Company

As at As at December 31, December 31, 2019 2020 RMB’000 RMB’000

Trade payables 2,113 2,074

An aging analysis of the trade payables as at the end of each of the Relevant Periods, based on the invoice date, is as follows:

As at As at December 31, December 31, 2019 2020 RMB’000 RMB’000

Within 12 months 2,100 2,072 Over 12 months 13 2

2,113 2,074

Trade payables of the Group and the Company are non-interest-bearing and are normally settled within 12 months.

– 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

21. OTHER PAYABLES AND ACCRUAL

The Group

As at As at December 31, December 31, 2019 2020 RMB’000 RMB’000

Accruals for research and development 46 332 Payroll payables 1,769 3,384 Other tax payable* 42 8,347 Other payables 871 3,127

2,728 15,190

The Company

As at As at December 31, December 31, 2019 2020 RMB’000 RMB’000

Accruals for research and development 11 214 Payroll payables 1,769 3,173 Other payables 794 3,162 Other tax payable* 40 8,329

2,614 14,878

Other payables are non-interest-bearing and repayable on demand.

* Amounts included withholding tax payable amount of RMB7,810,000 received from certain individual shareholders of the Company for their individual income tax associated with conversion into a joint stock company of the Company as detailed in note 26. The amounts were subsequently settled to the tax bureau in January 2021.

22. CONTRACT LIABILITIES

The Group

As at As at December 31, December 31, 2019 2020 RMB’000 RMB’000

Amounts received in advance of the rendering of services 3 496

– 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

23. REDEMPTION LIABILITIES ON NON-CONTROLLING INTERESTS

In 2020, Hongyu Medical, a subsidiary of the Company, completed series A financing and issued a total of 3,571,429 series A shares (“Hongyu Series A Shares ”) to “Panmao (Shanghai) Investment Center (Limited Partnership) (磐茂(上海)投資中心(有限合夥)), Jiangsu Jiuquan Lize Health Industry Venture Capital Fund (Limited Partnership) (江蘇疌泉醴澤健康產業創業投資基金(有限合夥)) and ANJI ZHUOYUAN Enterprise Management Consulting Partnership (Limited Liability Partnership) (安吉卓源企業管理諮詢合夥企業(有限合夥))” (“ANJI ZHUOYUAN”) at a total cash consideration of RMB25,000,000.

Significant terms of the shares issued above that will impact the accounting treatment of the Group are outlined below:

Redemption rights held by non-controlling shareholders

Pursuant to the Hongyu Medical Series A Shares share purchase agreement (the “Hongyu Series A Shares SPA”) signed by and between investors of Hongyu Series A Shares and the Company in January 2020, shares of Hongyu Series A Shares shall be redeemable by the Company upon the occurrence of certain contingent events which cannot be controlled by the Company and Hongyu Medical, including (i) regulatory approval of ValveClamp cannot be obtained before December 31, 2022 or June 30, 2023 (if all shareholders of the Company agree to postpone), or (ii) a qualified public offering of the Company in the A share market, Hong Kong Stock Exchange or NASDAQ cannot be completed before December 31, 2025. The price at which shares of Hongyu Series A Shares is redeemed shall be an amount that would give holders of Hongyu Series A Shares a ten percent (10%) internal return rate for its investment in Hongyu Medical plus all accrued but unpaid dividends.

Pursuant to the Hongyu Series A Shares SPA, holders of Hongyu Series A Shares can ask the Company to repurchase the shares of Hongyu Medical held by non-controlling shareholders upon the occurrence of before completion of IPO of the Company, the Company receives a share purchase offer and the valuation of the Company is not less than RMB3,000,000,000 and any holders of the Series A+ Shares, Series B Shares and Series C Shares of the Company exercise drag-along rights to sell the shares they held. The price at which shares of Hongyu Series A Shares are repurchased shall be based on the following formula:

The total repurchase valuation of Hongyu Medical = (The fair value of the Company/RMB1,150 million * RMB95 million).

Presentation and classification

The put option granted to non-controlling shareholders give rise to financial liabilities, which are measured at the present value of the redemption amount, which is the highest of redemption liabilities mentioned in the preceding paragraphs.

24. REDEMPTION LIABILITIES ON ORDINARY SHARES

The Group and the Company

As at As at December 31, December 31, 2019 2020 RMB’000 RMB’000

Series A+ 49,700 – Series B 100,000 – Series C 150,000 – Series D –– Interest payable related to redemption liabilities 27,080 –

326,780 –

– 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

In January and February 2018, the Company issued 114,392 Series A+ ordinary Shares with par value of RMB1.00 per share to investors of series A shares at a cash consideration of RMB35,000,000 or RMB305.97 per share.

In December 2018 and January 2019, the Company issued a total of 181,244 Series B ordinary Shares with par value of RMB1.00 per share (the “Series B Shares”) to investors of Series B Shares at a cash consideration of RMB100,000,000 or RMB551.74 per share.

In July and August 2019, the Company issued a total of 176,713 Series C ordinary Shares with par value of RMB1.00 per share (the “Series C Shares”) to investors of Series C Shares at a cash consideration of RMB150,000,000 or RMB848.83 per share. Pursuant to the Series C Shares share purchase agreement, the definition of holders of series A+ shares (the “Series A+ Shares”) enlarged.

In August 2020, the Company issued a total of 126,567 Series D ordinary Shares with par value of RMB1.00 per share (the “Series D Shares”) to investors of Series D Shares at a cash consideration of RMB248,500,000 or RMB1,963.39 per share.

Significant terms of the newly shares issued above that will impact the accounting treatment of the Company are outlined below:

Redemption rights (effective from July 2019)

Pursuant to the Series C Shares share purchase agreement (the “Series C Shares SPA”) signed by and among investors of Series C Shares, the Company, and other existing investors of the Company in July 2019, shares of Series C Shares, Series B Shares and Series A+ Shares shall be redeemable by the Company upon the occurrence of certain contingent events which cannot be controlled by the Company, including (i) regulatory approval of ValveClamp cannot be obtained before December 31, 2022 or June 30, 2023 (if all share holders of the Company agree to postpone), or (ii) a qualified public offering of the Company in the A share market, Hong Kong Stock Exchange or NASDAQ cannot be completed before December 31, 2025. The price at which shares of Series C Shares, Series B Shares and Series A+ Shares is redeemed shall be an amount that would give holders of Series C Shares, Series B Shares and Series A+ Shares a ten percent (10%) internal return rate for its investment in the Company plus all accrued but unpaid dividends.

Redemption rights (updated in July 2020)

Pursuant to the Series D Shares share purchase agreement (the “Series D Shares SPA”) signed by and among investors of Series D Shares, the Company, and other existing investors of the Company in July 2020, shares of Series D Shares, Series C Shares, Series B Shares and Series A+ Shares shall be redeemable by the Company upon the occurrence of certain contingent events which cannot be controlled by the Company including (i) regulatory approval of ValveClamp cannot be obtained before June 30, 2023, or (ii) a qualified public offering in the A share market, Hong Kong Stock Exchange or NASDAQ cannot be completed before December 31, 2025. The price at which shares of Series D Shares, Series C Shares, Series B Shares and Series A+ Shares is redeemed shall be an amount that would give holders of Series D Shares, Series C Shares, Series B Shares and Series A+ Shares a ten percent (10%) internal return rate for its investment in the Company plus all accrued but unpaid dividends.

Presentation and classification

The redemption obligations give rise to financial liabilities, which are measured at net present value of redemption amount The movements of redemption liabilities during the Relevant Periods are set out below.

– 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

The movements in redemption liabilities on ordinary shares of the Group during the Relevant Periods are as follows:

Interest Series A+ Series B Series C Series D payable Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

At January 1, 2019 –––––– Recognition of redemption liabilities on Series A+ Shares and Series B Shares (a) 49,700 100,000 – – 13,520 163,220 Recognition of redemption liabilities on Series C Shares – – 150,000 – – 150,000 Interest charge ––––13,560 13,560 At December 31, 2019 and January 1, 2020 49,700 100,000 150,000 – 27,080 326,780

Recognition of redemption liabilities on Series D Shares – – – 248,500 – 248,500 Transaction costs – – – (6,094) – (6,094) Interest charge ––––32,815 32,815 Termination of redemption rights (b) (49,700) (100,000) (150,000) (242,406) (59,895) (602,001) At December 31, 2020 ––––––

(a) Pursuant to the Series C Shares SPA, the redemption obligations of the Company were also applicable to holders of Series A+ Shares and Series B Shares. the net present value of redemption amount is recognized as financial liability and debited to equity simultaneously.

(b) In October 2020, supplemental agreements of Series D Shares share purchase agreement was signed by and between the Company and all existing shareholders. Pursuant to supplemental agreements of Series D Shares, the redemption rights of holders of Series D Shares, Series C Shares, Series B Shares and Series A+ Shares were terminated. Accordingly, the carrying amount of financial liabilities of all redemption liabilities on ordinary shares was derecognized upon the termination of the term.

25. DEFERRED INCOME

The Group

As at As at December 31, December 31, 2019 2020 RMB’000 RMB’000

Deferred income* 960 3,087

The Company

As at As at December 31, December 31, 2019 2020 RMB’000 RMB’000

Deferred income* 960 3,087

* Some grants are for capital expenditure incurred for the acquisition of plant and machines. The amounts are deferred and amortized over the estimated useful lives of the respective assets. Other subsidies are generally provided in relation to the research and development activities of the Group. The grants were recognised in profit or loss as other income when the Group complied with the conditions attached to the grants.

– 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

26. SHARE CAPITAL/PAID-IN CAPITAL AND RESERVES

Share capital/Paid-in capital

The Company was incorporated in December 2016 with initial authorized share capital of RMB500,000 divided into 500,000 shares with par value of RMB1 each. For the change of paid-in capital before the Relevant Periods, please refer to the section headed “History, Development and Corporate Structure” in this document.

A summary of movements in the Company’s issued share capital/paid-in capital during the Relevant Periods, is as follows:

Share capital

Total RMB’000

Issued and fully paid as at January 1, 2019 and January 1, 2020 – Issue of ordinary shares upon conversion into a joint stock (d) 75,000

As at December 31, 2020 75,000

Paid-in capital

Total RMB’000

As at January 1, 2019 1,087

Issue of Series B Shares (a) 91 Issue of Series C Shares (b) 177

As at December 31, 2019 and January 1, 2020 1,355

Issue of Series D Shares (c) 127 Issue of shares to an employee incentive platform (note 28) 71 Conversion into a joint stock company (d) (1,553)

As at December 31, 2020 –

Notes:

(a) Pursuant to the share purchase agreement of the Series B Shares, holders of Series B Shares injected capital of RMB50,000,000 into the Company in January 2019, with RMB91,000 and RMB49,909,000 credited to the Company’s paid-in capital and share premium, respectively.

(b) Pursuant to the share purchase agreement of the Series C Shares, holders of Series C Shares injected capital of RMB150,000,000 into the Company in July and August 2019, with RMB177,000 and RMB149,823,000 credited to the Company’s paid-in capital and share premium, respectively.

(c) Pursuant to the share purchase agreement of the Series D Shares, holders of Series D Shares injected capital of RMB248,500,000 into the Company in August 2020, with RMB127,000 and RMB248,373,000 credited to the Company’s paid-in capital and share premium, respectively.

(d) On December 3, 2020, the Company was converted into a joint stock company with limited liability under the Company Law of the PRC. The net assets of the Company under PRC GAAP as of the conversion base date, including paid-in capital, share premium and accumulated losses, amounting to RMB496,235,000 were converted into 75,000,000 share capital at RMB1.00 each. The excess of the net assets converted over the nominal value of the ordinary shares was credited to the Company’s share premium.

– 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

Reserves

Group

The amounts of the Group’s reserves and the movements therein for the Relevant Periods are presented in the consolidated statements of changes in equity.

(a) Share premium

The share premium of the Group represents the difference between the par value of the shares issued and the consideration received.

(b) Other reserve

Other reserve of the Group represents deemed exempted interest payable to shareholders due to the termination of redemption rights as stipulated in note 24 and the excess of the carrying amount of the non-controlling interests acquired over the consideration and the debit amount of present value of the amount payable at the time of redemption of a put option over non-controlling interests.

The share-based payment reserve represents the equity-settled share awards.

Company

Share- based Paid-in Share Other payment Accumulated capital premium reserve reserve losses Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

At January 1, 2019 1,087 105,063 – 7,702 (46,247) 67,605 Loss for the year ––––(46,597) (46,597)

Total comprehensive income for the year ––––(46,597) (46,597)

Issue of Series B Shares (note 24) 91 49,909 – – – 50,000 Issue of Series C Shares (note 24) 177 149,823 – – – 150,000 Recognition of redemption liabilities on Series A+, Series B, Series C shares (note 24) – – (313,220) – – (313,220)

At December 31, 2019 1,355 304,795 (313,220) 7,702 (92,844) (92,212)

– 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

Share- based Paid-in Share Share Other payment Accumulated capital capital premium reserve reserve losses Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

At January 1, 2020 1,355 – 304,795 (313,220) 7,702 (92,844) (92,212) Loss for the year –––––(110,854) (110,854)

Total comprehensive income for the year –––––(110,854) (110,854)

Issue of Series D Shares (note 24) 127 – 248,373 – – – 248,500 Recognition of redemption liabilities on Series D shares – – – (248,500) – – (248,500) Issue of shares to an employee incentive platform (note 28) 71 – 32,429 – 46,640 – 79,140 Termination of redemption liabilities on Series A+, B, C and D Shares (note 24) – – – 602,001 – – 602,001 Conversion into a joint stock company (1,553) 75,000 (230,058) – – 156,611 –

At December 31, 2020 – 75,000 355,539 40,281 54,342 (47,087) 478,075

27. PARTLY-OWNED SUBSIDIARIES WITH MATERIAL NON-CONTROLLING INTERESTS

Details of the Group’s subsidiaries that have material non-controlling interests are set out below:

As at As at December 31, December 31, 2019 2020

Percentage of equity interest held by non-controlling interests 20.00% 39.70%

RMB’000 RMB’000

Loss for the year allocated to non-controlling interests (141) (5,812) Accumulated balances of non-controlling interests at the reporting date (141) –

– 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

The following tables illustrate the summarized consolidated financial information of the above subsidiaries. The amounts disclosed are before any inter-company eliminations:

As at December 31, 2019 RMB’000

Year ended December 31, 2019 Revenue 158 Total expenses (864) Loss for the year (706) Total comprehensive income for the year (706)

As at December 31, 2019 Current assets 3,781 Non-current assets 2,489 Current liabilities 6,686 Non-current liabilities 291

Year ended December 31, 2019 Net cash flows used in operating activities (471) Net cash flows used in investing activities (2,433) Net cash flows from financing activities 6,064

Net increase in cash and cash equivalents 3,160

As at December 31, 2020

Year ended December 31, 2020 Revenue 2,034 Total expenses (20,287) Loss for the year (18,253) Total comprehensive income for the year (18,253)

As at December 31, 2020 Current assets 25,622 Non-current assets 7,062 Current liabilities 6,010 Non-current liabilities 460

Year ended December 31, 2020 Net cash flows used in operating activities (13,471) Net cash flows used in investing activities (4,012) Net cash flows from financing activities 35,000

Net increase in cash and cash equivalents 17,517

Hongyu Medical was established by the Company and ANJI ZHUOYUAN in July 2019. Hongyu Medical issued 8,000,000 and 2,000,000 ordinary shares to the Company and ANJI ZHUOYUAN, respectively at a total consideration of RMB10,000,000. In January 2020, the consideration of RMB20,000,000 was received by Hongyu Medical from ANJI ZHUOYUAN.

In April 2020, as detailed in note 23, Hongyu Medical completed series A financing and issued a total of 3,571,429 Hongyu Series A Shares to non-controlling shareholders at a total cash consideration of RMB25,000,000. The transaction diluted the Company’s indirect equity interest in Hongyu Medical decreased from 80% to 59%.

In October 2020, the Company acquired 12% equity interests in Hongyu Medical from ANJI ZHUOYUAN for a cash consideration of RMB11,000,000 and increase the Company’s direct equity interest in Hongyu Medical increased from 59% to 71%.

In December 2020, after employee incentive schemes were implemented as detailed in note 28, the Company’s direct equity interest in Hongyu Medical decreased from 71% to 60.3%.

– 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

28. SHARE-BASED COMPENSATION

2020 Hanyu Plan

Pursuant to the written resolutions of the shareholders of the Company passed in September 2020, the Company passed a resolution to grant up to 71,305 shares or restricted shares of the Company to certain directors and employees of the Company (the “2020 Hanyu Plan”). The 2020 Hanyu Plan was established to retain certain eligible employees for the continual operation and development of the Group.

Pursuant to the 2020 Hanyu Plan, ANJI QIYUE Enterprise Management Center (Limited Partnership) (安吉啟悅企業管理合夥企業(有限合夥)) (“ANJI QIYUE”), an employee incentive platform established in the PRC, subscribed for 71,305 shares of the Company at RMB455.79 per share for a total consideration of RMB32,500,000.

Under the platform, 53,972 shares were granted to two directors with no service periods or performance target requirements. Remaining shares were granted to one director, two supervisors and certain employees with a five-year vesting period with 20%, 20%, 20%,20% and 20% of total shares vesting on the first, second, third, fourth and fifth anniversary dates, respectively, after completion of [REDACTED] of the Company in future. The weighted average fair value of the shares was determined to be RMB1,307.24 per share (before the Capitalization Issue) and RMB27.06 per share (after Capitalization Issue) as of these grant dates. The fair value of each restricted share or share at the grant date was determined by reference to the fair value of the ordinary shares of the Company.

Details of the granted shares are as follows:

Number of restricted shares Date of grant or shares Subscription price per share

October 22, 2020 to 71,305 RMB455.79 October 28, 2020 (before Capitalization Issue) (before Capitalization Issue) 100,713 RMB9.44 December 29, 2020 (after Capitalization Issue) (after Capitalization Issue)

Set out below are details of the movements of the outstanding restricted shares or shares granted under the 2020 Hanyu Plan throughout the Relevant Periods.

Granted Vested Forfeited Granted Vested during the during the during the during the during the Outstanding Outstanding year before year before year after year after year after at at 1 January Capitalization Capitalization Capitalization Capitalization Capitalization Capitalization 31 December 2020 Issue Issue Issue Issue Issue Issue 2020

Restricted Shares – 71,305 (53,972) 819,916 (100,713) 100,713 – 837,249

Back-solve method was used to determine the underlying equity fair value of the Company and the equity allocation model to determine the fair value of the underlying ordinary shares granted. Key assumptions including the risk-free interest rate, volatility, dividend yield rate and DLOM are required to be determined by the directors of the Company with best estimate.

At grant dates

Risk-free interest rate 3.07% Volatility 38.67% Dividend yield 0% DLOM 20.2%

During the year ended December 31, 2020, share award expenses of RMB46,640,000 related to the 2020 Hanyu Plan were charged to profit or loss.

– 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

2020 Hongyu Plan

Hongyu Medical, a subsidiary of the Company, has also adopted employee incentive schemes to provide incentives for its eligible employees during the Relevant Periods.

Pursuant to the written resolutions of the shareholders of Hongyu Medical passed in November and December 2020, the Company granted up to 2,301,588 shares of Hongyu Medical to certain directors and employees of the Company (the “2020 Hongyu Plan”). The 2020 Hongyu Plan was established to retain certain eligible employees for the continual operation and development of the Group.

Pursuant to the 2020 Hongyu Plan, ANJI RUIDA Enterprise Management Partnership (Limited Liability Partnership) 安吉瑞達企業管理合夥企業(有限合夥) (“ANJI RUIDA”) and ANJI WANYU Enterprise Management Partnership (Limited Liability Partnership) 安吉萬域企業管理合夥企業(有限合夥) (“ANJI WANYU”), two employee incentive platforms established in the PRC, subscribed for 714,286 and 1,587,302 shares of Hongyu Medical at RMB2.58 per share for a total consideration of RMB1,842,000 and RMB4,094,000, respectively.

Under the platforms, the shares were granted to a director and an employee of Hongyu Medical with no service periods or performance target requirement. The weighted average fair value of the shares was determined to be RMB6.98 per share as of these grant dates.

Details of the granted shares are as follows:

Subscription Date of grant Number of shares price per share

December 16, 2020 714,286 RMB2.58 December 30, 2020 1,587,302 RMB2.58

The backsolve method was used to determine the underlying equity fair value of Shanghai Hanyu and the equity allocation model to determine the fair value of the underlying ordinary shares granted. Key assumptions, including the risk-free interest rate, volatility, dividend yield rate and DLOM are required to be determined by the directors of the Company with best estimates. The fair value of each share at the grant date was determined by reference to the fair value of the ordinary shares of Hongyu Medical.

At grant dates

Risk-free interest rate 2.95%-3.09% Volatility 38.80%-38.85% Dividend yield 0% DLOM 20.7%

During the year ended December 31, 2020, share award expenses of RMB10,176,000 related to the 2020 Hongyu Plan were charged to profit or loss.

29. NOTES TO THE CONSOLIDATED STATEMENTS OF CASH FLOWS

(a) Changes in liabilities arising from financing activities

Lease liabilities RMB’000

At January 1, 2019 14,171 Changes from financing cash flows (2,774) Increase arising from acquisition of a subsidiary 817 New leases 887 Interest expense 729 Gains on lease termination (743) Transferred from Equity –

At December 31, 2019 and January 1, 2020 13,087 Changes from financing cash flows (3,522) New leases 1,779 Interest expense 671 Termination of redemption liabilities on Series A+, B, C and D Shares –

At December 31, 2020 12,015

– 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

During the years ended December 31, 2019 and 2020, the total cash outflow for leases included in the consolidated statements of cash flows amounted to RMB2,781,000 and RMB3,674,000, respectively, among which RMB7,000 and RMB152,000 were within operating activities, and RMB2,774,000 and RMB3,522,000 were within financing activities.

30. COMMITMENTS

The Group had the following capital commitments at the end of each of the Relevant Periods:

As at As at December 31, December 31, 2019 2020 RMB’000 RMB’000

Contracted, but not provided for: Purchases of items of property, plant and equipment 91 1,350

31. RELATED PARTY TRANSACTIONS

(a) Names and relationships

Name of related party Relationship with the Group

ANJI ZHUOYUAN Controlled by Mr. Dai Yufeng

(b) Significant related party transactions

Except as disclosed elsewhere in the Historical Financial Information, the Group had the following transactions with related parties during the Relevant Periods.

In October 2020, the Company acquired 12% equity interests in Hongyu Medical from ANJI ZHUOYUAN for a cash consideration of RMB11,000,000, thus increasing the Company’s direct equity interest in Hongyu Medical from 59% to 71%.

The remuneration of directors, supervisors and the chief executive is as follows:

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

Salaries, bonuses, allowances and benefits in kind 3,358 5,724 Pension scheme contributions 157 12 Equity-settled share award expense – 50,484

Total compensation paid to key management personnel 3,515 56,220

Further details of directors’, supervisors’ and the chief executive’s remuneration are set out in note 10 to the Historical Financial Information.

– 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

32. FINANCIAL INSTRUMENTS BY CATEGORY

The carrying amounts of each of the categories of financial instruments as at the end of each of the Relevant Periods are as follows:

The Group

As at December 31, 2019

Financial assets

Financial assets Financial assets at FVTPL at amortized cost RMB’000 RMB’000

Financial assets included in prepayments, other receivables and other assets – 1,498 Wealth management products 212,561 – Cash and cash equivalents – 1,861

212,561 3,359

Financial liabilities

Financial liabilities at amortized cost RMB’000

Trade payables 2,084 Financial liabilities included in other payables and accruals 871 Lease liabilities 13,087

16,042

As at December 31, 2020

Financial assets

Financial assets Financial assets at FVTPL at amortized cost RMB’000 RMB’000

Financial assets included in prepayments, other receivables and other assets – 1,783 Wealth management products 21,542 – Time deposits – 40,000 Cash and cash equivalents – 409,359

21,542 451,142

– 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

Financial liabilities

Financial liabilities at amortized cost RMB’000

Trade payables 2,153 Financial liabilities included in other payables and accruals 481 Lease liabilities 12,015 Redemption liabilities on non-controlling interests 53,767

68,416

33. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS

Fair values

Management has assessed that the fair values of other receivables and other assets, time deposits, cash and cash equivalents, trade payables, lease liabilities (in current portion), other payables and accruals approximate to their carrying amounts largely due to the short term maturities of these instruments. The fair values of the other non-current financial liabilities have been calculated by discounting the expected future cash flows using rates currently available for instruments with similar terms, credit risk and remaining maturities.

The Group’s finance department is responsible for determining the policies and procedures for the fair value measurement of financial instruments. At the end of each of the Relevant Periods, the finance department analyzes the movements in the values of financial instruments and determines the major inputs applied in the valuation. The directors review the results of the fair value measurement of financial instruments periodically for financial reporting.

Fair value hierarchy

The following tables illustrate the fair value measurement hierarchy of the Group’s financial instruments:

Assets measured at fair value:

As at December 31, 2019

Fair value measurement using Quoted prices in Significant Significant active observable unobservable markets Inputs Inputs (Level 1) (Level 2) (Level 3) Total RMB’000 RMB’000 RMB’000 RMB’000

Wealth management products – 212,561 – 212,561

As at December 31, 2020

Fair value measurement using Quoted prices in Significant Significant active observable unobservable markets inputs inputs (Level 1) (Level 2) (Level 3) Total RMB’000 RMB’000 RMB’000 RMB’000

Wealth management products – 21,542 – 21,542

– 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

Set out below is a summary of valuation technique of financial instruments together as at December 31, 2020 and 2019:

Valuation technique

Wealth management products Discounted cash flow – Future cash flows are estimated based on expected return, discounted at a rate that reflects the risk of underlying assets

34. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group’s principal financial instruments comprise cash and cash equivalents. The main purpose of these financial instruments is to raise finance for the Group’s operations. The Group has various other financial assets and liabilities such as trade and other payables, which arise directly from its operations.

The main risks arising from the Group’s financial instruments are credit risk and liquidity risk. The board of directors reviews and agrees policies for managing each of these risks and they are summarized below.

Credit risk

The Group has no significant concentrations of credit risk. The carrying amounts of cash and cash equivalents, other receivables and other assets, and time deposits included in the statements of financial position represent the Group’s maximum exposure to credit risk in relation to its financial assets.

As at the end of each of the Relevant Periods, cash and cash equivalents were deposited in banks of high quality without significant credit risk.

Liquidity risk

In the management of the liquidity risk, the Group monitors and maintains a level of cash and cash equivalents deemed adequate by the management of the Group to finance the operations and mitigate the effects of fluctuations in cash flows.

The maturity profile of the Group’s financial liabilities as at the end of each of the Relevant Periods, based on the contractual undiscounted payments, is as follows:

The Group

As at December 31, 2019 On Less than 3to 1to5 More than demand 3 months 12 months years 5 years Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Trade payable 2,084 ––––2,084 Financial liabilities included in other payables and accruals 871––––871 Redemption liabilities on ordinary shares – – – 435,058 – 435,058 Lease liabilities – 884 2,170 8,933 3,372 15,359

2,955 884 2,170 443,991 3,372 453,372

– 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

As at December 31, 2020 On Less than 3to12 1to5 More than demand 3 months months years 5 years Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Trade payables 2,153 ––––2,153 Financial liabilities included in other payables and accruals 481––––481 Lease liabilities – 1,126 2,577 8,812 1,194 13,709 Redemption liabilities on non- controlling shareholders 53,767 ––––53,767

56,401 1,126 2,577 8,812 1,194 70,110

Capital management

The primary objectives of the Group’s capital management are to safeguard the Group’s ability to continue as a going concern and to maintain healthy capital ratios in order to support its business and maximize shareholders’ value.

The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Group may return capital to shareholders or issue new shares. The Group is not subject to any externally imposed capital requirements. No changes were made in the objectives, policies or processes for managing capital as at the end of each of the Relevant Periods.

35. EVENT AFTER THE RELEVANT PERIODS

In January 2021, the Company signed an investment agreement with Shanghai Xinzhuang Industrial Park Economic and Technology Development Co., Ltd (上海市莘莊工業區經濟技術發展有限公司) related to its future investment in Xinzhuang Industrial Park (莘莊工業區) for a new production base of the Group. According to the investment agreement, the Company committed to invest RMB150,000,000 as land use rights investments and fixed assets investments in Xinzhuang Industrial Park. The new production base will cover an area of about 10,000 square meters, which is expected to be put into use in 2023.

Pursuant to the Series D+ Shares share purchase agreement (the “Series D+ Shares SPA”) signed by and among investors of the Series D+ Shares, the Company, and other existing investors of the Company in March 2021, the Company issued 4,875,001 shares to investors of the Series D+ Shares at a total cash consideration of RMB455,000,000.

In April 2021, Hongyu Medical completed Series A+ financing and issued 1,474,274 shares, 737,137 shares and 245,712 shares to the Company, Panmao (Shanghai) Investment Center (Limited Partnership) (磐茂(上海)投資中心(有限合夥)) and Jiaxin Yuanlai Yuanqi Investment Center (Limited Partnership) (嘉興元徠元啟創業投資合夥企業(有限合夥)), respectively, at a total cash consideration of RMB50,000,000. Simultaneously, Hongyu Medical further issued 964,744 shares to ANJI WANYU at a total cash consideration of RMB2,488,000 for the purpose of employee incentive.

36. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by the Company, the Group or its subsidiary in respect of any period subsequent to December 31, 2020.

– 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 II [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 [REDACTED]

[REDACTED]

– 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 [REDACTED]

[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 [REDACTED]

[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 [REDACTED]

[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 TAXATION AND FOREIGN EXCHANGE

TAXATION OF SECURITY HOLDERS

The PRC Taxation

Taxation on Dividends

Individual Investor

Pursuant to the Individual Income Tax Law of the PRC (《中華人民共和國個人所得稅法》), which was most recently amended on 31 August 2018 and the Implementation Provisions of the Individual Income Tax Law of the PRC (《中華人民共和國個人所得稅法實施條例》), which was most recently amended on 18 December 2018 (hereinafter collectively referred to as the “IIT Law”), individual income such as interests, dividends and bonus are subject to individual income tax levied at a flat rate of 20%. For a foreign individual who is not a resident of the PRC, the receipt of dividends from an enterprise in the PRC is normally subject to individual income tax of 20% unless specifically exempted by the tax authority of the State Council or reduced by relevant tax convention. Pursuant to the Arrangement between the Mainland and the Hong Kong Special Administrative Region on the Avoidance of Double Taxation and the Prevention of Fiscal Evasion (《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》) (hereinafter referred to as the “the Arrangement”), which was signed on 21 August 2006, the Chinese government may levy taxes on the dividends paid by a Chinese company to Hong Kong residents (including natural persons and legal entities) in an amount not exceeding 10% of the total dividends payable by the Chinese company unless a Hong Kong resident directly holds 25% or more of the equity interest in a Chinese company, then such tax shall not exceed 5% of the total dividends payable by the Chinese company. The Fifth Protocol of the Arrangement between the Mainland of China and the Hong Kong Special Administrative Region on the Avoidance of Double Taxation and the Prevention of Fiscal Evasion (《<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>第五議定書》), which came into effect on 6 December 2019, adds a criterion for the qualification of entitlement to enjoy treaty benefits. Notwithstanding other provisions under the Arrangement, the treaty benefits under the criteria shall not be granted in the circumstance where relevant gains, after taking into account all relevant facts and conditions, are reasonably deemed to be one of the main purposes for the arrangement or transactions which will bring any direct or indirect benefits under the Arrangement, except when the grant of benefits under such circumstance is consistent with relevant objective and goal under the Arrangement. The application of the dividend clause of tax agreements is subject to the requirements of PRC tax law and regulation, such as the Notice of the State Administration of Taxation on Issues Concerning the Application of the Dividend Clauses of Tax Agreements (《國家稅務總局關於執行稅收協定股息條款有關問題的通知》).

– 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 TAXATION AND FOREIGN EXCHANGE

Enterprise Investors

In accordance with the Enterprise Income Tax Law of the PRC (《中華人民共和國企業所得稅法》) issued by the NPC on 16 March 2007, implemented on 1 January 2008 and subsequently amended on 24 February 2017 and 29 December 2018 and the Implementation Provisions of the Enterprise Income Tax Law of the PRC (《中華人民共和國企業所得稅法實施條例》) issued by the State Council on December 6, 2007, came into effect on 1 January 2008 and amended on 23 April 2019 (hereinafter collectively referred to as the “CIT Law”), a non-resident enterprise is typically subject to a 10% enterprise income tax on PRC-sourced income (including dividends received from a PRC resident enterprise due to share issue in Hong Kong), if it does not have an establishment or premise in the PRC or has an establishment or premise in the PRC but its PRC-sourced income has no real connection with such establishment or premise. The aforesaid income tax payable by non-resident enterprises is deducted at source with the payer being the withholding agent, which is required to withhold from the amount to be paid to the non-resident enterprise upon each payment or when due. The Circular of the State Administration of Tax on Issues Relating to the Withholding and Remitting of Enterprise Income Tax by PRC Resident Enterprises on Dividends Distributed to Overseas Non-Resident Enterprise Shareholders of H Shares (《國家稅務總局關於中國居民企業向境外H股非居民企業股東派發股息代扣代繳企業所得稅有關問題的通知》), which was issued and implemented by the State Administration of Taxation on 6 November 2008, further clarified that a PRC-resident enterprise must withhold enterprise income tax at a rate of 10% on the dividends of 2008 and onwards that it distributes to overseas non-resident enterprise holders of H shares. The Approval on Enterprise Income Tax on Non-Resident Enterprises for Receiving Dividends from B Shares and Other Stocks (《關於非居民企業取得B股等股票股息徵收企業所得稅問題的批覆》) promulgated and implemented by the State Administration of Taxation on 24 July 2009 further clarified that a PRC-resident enterprise that publicly issues and lists stocks (A shares, B shares and overseas shares) within or outside of the PRC shall, when distributing dividends to shareholders of non-resident enterprises for 2008 and subsequent years, withhold and pay enterprise income tax at a rate of 10%. Non-resident shareholders who are required to enjoy the treatment of tax agreements will follow the relevant provisions of the tax agreement. Pursuant to the Arrangement between the Mainland and the Hong Kong Special Administrative Region on the Avoidance of Double Taxation and the Prevention of Fiscal Evasion (《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》), which was signed on 21 August 2006, the Chinese Government may levy taxes on the dividends paid by a Chinese company to Hong Kong residents (including natural persons and legal entities) in an amount not exceeding 10% of the total dividends payable by the Chinese company unless a Hong Kong resident directly holds 25% or more of the equity interest in a Chinese company, then such tax shall not exceed 5% of the total dividends payable by the Chinese company.

The Fifth Protocol of the Arrangement between the Mainland of China and the Hong Kong Special Administrative Region on the Avoidance of Double Taxation and the Prevention of Fiscal Evasion (《<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> 第五議定書》), which came into effect on 6 December 2019, adds a criterion for the qualification of entitlement to enjoy treaty benefits. Notwithstanding other provisions under

– 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 TAXATION AND FOREIGN EXCHANGE the Arrangement, the treaty benefits under the criteria shall not be granted in the circumstance where relevant gains, after taking into account all relevant facts and conditions, are reasonably deemed to be one of the main purposes for the arrangement or transactions which will bring any direct or indirect benefits under the Arrangement, except when the grant of benefits under such circumstance is consistent with relevant objective and goal under the Arrangement. The application of the dividend clause of tax agreements is subject to the requirements of PRC tax law and regulation, such as the Notice of the State Administration of Taxation on Issues Concerning the Application of the Dividend Clauses of Tax Agreements (《國家稅務總局關於執行稅收協定股息條款有關問題的通知》).

Tax Treaties

Non-PRC resident investors residing in countries or Hong Kong or Macao which have entered into treaties for the avoidance of double taxation with the PRC might be entitled to a reduction of the withholding tax imposed on the dividends received from PRC companies. The PRC currently has entered into avoidance of double taxation treaties or arrangements with a number of countries and regions including Hong Kong, Macau, Australia, Canada, France, Germany, Japan, Malaysia, the Netherlands, Singapore, the United Kingdom and the United States. Non-PRC resident enterprises entitled to preferential tax rates in accordance with the relevant income tax agreements or arrangements are required to apply to the Chinese tax authorities for a refund of the withholding tax in excess of the agreed tax rate, and the refund is subject to approval by the Chinese tax authorities.

Taxation on Share Transfer

VAT and Local Additional Tax

Pursuant to the Notice on Fully Implementing the Pilot Reform for the Transition from Business Tax to Value-added Tax (《關於全面推開營業稅改徵增值稅試點的通知》) (hereinafter referred to as “Document 36”), which was implemented on 1 May 2016, entities and individuals engaged in the services sale in the PRC are subject to VAT, where “engaged in the services sale in the PRC” means that the seller or buyer of the taxable services is located in the PRC. Document 36 also provides that for a general or a foreign VAT taxpayer, transfer of financial products, including transfer of the ownership of marketable securities, shall be subject to VAT at 6% on the taxable revenue (which is the balance of sales price upon deduction of purchase price). However, individuals who transfer financial products are exempt from VAT. According to these regulations, if the holder is a non-resident individual, the PRC VAT on the sale or disposal of H shares is exempted; if the holder is a non-resident enterprise and the H-share buyer is an individual or entity located outside the PRC, the holder is not necessarily required to pay the PRC VAT, but if the H-share buyer is an individual or entity located in China, the holder may be required to pay the PRC VAT. However, due to the lack of clear provisions, the interpretation and application of the foregoing provisions are still uncertain whether the non-Chinese resident enterprises are required to pay the PRC VAT for the disposal of H shares. At the same time, VAT payers are also required to pay urban maintenance and construction tax, education surtax and local education surcharge (hereinafter collectively referred to as “Local Additional Tax”), which shall usually be 12% of the VAT payable (if any).

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Income Tax

Individual Investors

According to the IIT Law and its implementation rules, gains on the transfer of equity interests in the PRC resident enterprises are subject to individual income tax at a rate of 20%.

Pursuant to the Circular on Continuous Exemption of Individual Income Tax on Income of Individuals from the Transfer of Shares (《關於個人轉讓股票所得繼續暫免徵收個人所得稅的通知》) issued by the Ministry of Finance and the State Administration of Tax and came into effect on 20 March 1998, income of individuals from transfer of shares of listed enterprises continue to be exempted from individual income tax from 1 January 1997. According to the Circular on Related Issues Concerning Levying Individual Income Tax on the Income Received by Individuals from the Transfer of Restricted Stocks of Listed Companies (《關於個人轉讓上市公司限售股所得徵收個人所得稅有關問題的通知》) jointly issued by the Ministry of Finance, SAT and CSRC on 31 December 2009 and came into effect on 1 January 2010, individuals’ income from the transfer of shares listed on the Shanghai Stock Exchange and the Shenzhen Stock Exchange shall continue to be exempted from individual income tax, except for the relevant restricted shares as defined in the Supplementary Notice on Issues Concerning Levying Individual Income Tax on the Income Received by Individuals from the Transfer of Restricted Stocks of Listed Companies (《關於個人轉讓上市公司限售股所得徵收個人所得稅有關問題的補充通知》) jointly issued by such departments on 10 November 2010.

As of the Latest Practicable Date, no aforesaid provisions have expressly provided that individual income tax shall be levied from non-Chinese resident individuals on the transfer of shares in PRC resident enterprises listed on overseas stock exchanges. To the knowledge of the Company, Chinese tax authorities do not levy individual income tax on non-Chinese resident individuals for their transfer of shares in PRC resident enterprises listed on overseas stock exchanges.

Enterprise Investors

In accordance with the CIT Law and its implementing rules, a non-resident enterprise is typically subject to enterprise income tax at the rate of a 10% on PRC-sourced income, including gains derived from the disposal of equity interests in a PRC resident enterprise, if it does not have an establishment or premise in the PRC or has an establishment or premise in the PRC but its PRC-sourced income has no real connection with such establishment or premise. Such income tax payable by non-resident enterprises is deducted at source with the payer being the withholding agent, which is required to withhold the income tax from the amount to be paid to the non-resident enterprise upon each payment or when due. Such tax may be reduced or exempted pursuant to relevant tax treaties or agreements on avoidance of double taxation.

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Stamp Duty

Pursuant to the Provisional Regulations of the PRC on Stamp Duty (《中華人民共和國印花稅暫行條例》), which was issued on 1 October 1988 and amended on 8 January 2011 and the Implementation Provisions of Provisional Regulations of the PRC on Stamp Duty (《中華人民共和國印花稅暫行條例施行細則》), which came into effect on 1 October 1988, PRC stamp duty only applies to specific document executed or received within the PRC, having legally binding force in the PRC and protected under the PRC laws, thus the stamp duty imposed on the transfer of shares of PRC listed companies shall not apply to the acquisition and disposal of H shares by non-PRC investors outside of the PRC.

Estate Duty

Under Chinese law, as of the Latest Practicable Date, the Chinese government has not currently imposed estate tax.

PRINCIPAL TAXATION OF THE COMPANY IN THE PRC

Enterprise Income Tax

In accordance with the Enterprise Income Tax Law of the PRC (《中華人民共和國企業所得稅法》) issued and implemented on 29 December 2018 (hereinafter referred to as the “CIT Law”) and the Implementation Provisions of the Enterprise Income Tax Law of the PRC (《中華人民共和國企業所得稅法實施條例》) issued and came into effect on 23 April 2019, the rate of enterprise income tax for domestic and foreign-invested enterprises shall be 25%. Enterprises are divided into resident enterprises and non-resident enterprises. Resident enterprises shall pay enterprise income tax at a rate of 25% on their income derived from within or outside the PRC. If a non-resident enterprise establishes an establishment or premise in the PRC, it shall pay enterprise income tax at a rate of 25% on the income derived from the establishment or premise in the PRC, as well as the income generated outside the PRC that is effectively connected with its establishment or premise.

Value-added Tax

In accordance with the Provisional Regulations of the People’s Republic of China on Value-added Tax (《中華人民共和國增值稅暫行條例》) promulgated by the State Council on 13 December 1993 and amended on 10 November 2008, 6 February 2016 and 19 November 2017 and the Implementing Rules of the Provisional Regulations of the People’s Republic of China on Value-added Tax promulgated by the Ministry of Finance on 25 December 1993 (《中華人民共和國增值稅暫行條例實施細則》) and subsequently amended on 15 December 2008 and 28 October 2011 (collectively, the “VAT Law”), all enterprises and individuals engaged in the sale of goods, the provision of processing, repair and replacement services, the sale of services, intangible assets and real estate, and the import of goods in the PRC are subject to VAT at rates of 0%, 6%, 11% and 17% on the different goods sold and the different services provided by them, unless otherwise stated.

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Pursuant to the Notice on Fully Implementing the Pilot Reform for the Transition from Business Tax to Value-added Tax (《關於全面推開營業稅改徵增值稅試點的通知》), which was promulgated on 23 March 2016 and became effective on 1 May 2016, the transition pilot was enacted in the PRC on a comprehensive scale on 1 May 2016 upon the approval of the State Council.

Pursuant to the Notice on Adjustment of VAT Rates (《關於調整增值稅稅率的通知》) issued by the Ministry of Finance and the State Administration of Taxation on 4 April 2018 and effective on 1 May 2018, the VAT rates of 17% and 11% applicable to taxpayers who engage in VAT taxable sales or import of goods were adjusted to 16% and 10%, respectively.

Pursuant to the Announcement on Policies Relating to the Deepening of VAT Reform (《關於深化增值稅改革有關政策的公告》) issued by the Ministry of Finance, the State Taxation Administration and the General Administration of Customs on 20 March 2019 and effective on 1 April 2019, the VAT rates of 16% and 10% applicable to taxpayers who engage in VAT taxable sales or import of goods were adjusted to 13% and 9%, respectively.

FOREIGN EXCHANGE

The lawful currency of the PRC is Renminbi, which is currently subject to foreign exchange control and cannot be freely converted into foreign currencies. The State Administration of Foreign Exchange (hereinafter referred to as “SAFE”), with the authorization of the People’s Bank of China (hereinafter referred to as “PBOC”), is empowered with the functions of administering all matters relating to foreign exchange, including the enforcement of foreign exchange control regulations.

The Regulations on Foreign Exchange Control of the PRC (《中華人民共和國外匯管理條例》) (the “Foreign Exchange Control Regulations”), issued by the State Council on 29 January 1996 and implemented on 1 April 1996, classify all international payments and transfers into current items and capital items. Most of current items are not subject to the review and approval of the foreign exchange control authorities, except capital items. The Foreign Exchange Control Regulations were subsequently amended and became effective on 14 January 1997 and 5 August 2008, respectively. Under the newly amended Foreign Exchange Control Regulations, the State does not impose restrictions on current international payments and transfers.

The Regulations for the Administration of Settlement, Sale and Payment of Foreign Exchange (《結匯、售匯及付匯管理規定》) promulgated by the PBOC on 20 June 1996 and implemented on 1 July 1996 remove restrictions on convertibility of foreign exchange under current items, while imposing restrictions on foreign exchange transactions under capital account items.

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According to the relevant laws and regulations in the PRC, PRC enterprises (including foreign investment enterprises) which need foreign exchange for current item transactions may, without the approval of the foreign exchange administrative authorities, effect payment through foreign exchange accounts opened at a financial institution operating foreign exchange business or an operating institution operating settlement or sale of foreign exchange, on the strength of valid transaction receipts and proof. Foreign investment enterprises which need foreign exchange for the distribution of profits to their shareholders and PRC enterprises which, in accordance with regulations, are required to pay dividends to their shareholders in foreign exchange may, on the strength of resolutions of the Board of Directors or the general meeting of shareholders on the distribution of profits, effect payment through a foreign exchange account opened at a financial institution operating foreign exchange business or effect exchange and payment via an operating institution operating settlement or sale of foreign exchange.

The State Council promulgated on 23 October 2014 the Decision of the State Council on Matters including Canceling and Adjusting a Batch of Administrative Approval Items (《國務院關於取消和調整一批行政審批項目等事項的決定》), deciding to cancel the approval requirement of the SAFE and its branches for the remittance and settlement of the proceeds raised from the overseas listing of the foreign shares.

The SAFE issued on 26 December 2014 the Notice of the State Administration of Foreign Exchange on Issues Concerning the Foreign Exchange Administration of Overseas Listing (《國家外匯管理局關於境外上市外匯管理有關問題的通知》), according to which, a domestic company shall, within 15 business days from the date of the end of its overseas listing issuance, register the overseas listing with the local SAFE branch office at the place of its establishment; the proceeds from an overseas listing of a domestic company may be remitted to the domestic account or deposited in an overseas account, but the use of the proceeds shall be consistent with the content of the document and other disclosure documents. Domestic companies (except banking financial institutions) shall open a “special foreign exchange account for overseas listing of domestic companies” with a domestic bank for their initial offering (or additional offering) or repurchase business by strength of the registration certificate of overseas listing business, and handle the exchange and transfer of funds for the relevant business.

According to the Notice of the State Administration of Foreign Exchange on Further Simplifying and Improving Policies for the Foreign Exchange Administration of Direct Investment (《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》), which was issued by the SAFE on 13 February 2015 and came into effect on 1 June 2015, two administrative licensing of the confirmation of foreign exchange registration under domestic direct investment and the confirmation of foreign exchange registration under overseas direct investment were removed. The foreign exchange registration under domestic direct investment and overseas direct investment shall be directly examined and handled by banks and SAFE, and its branch offices shall indirectly regulate the foreign exchange registration of direct investment through banks.

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According to the Notice of the State Administration of Foreign Exchange of the PRC on Revolutionizing and Regulating Capital Account Settlement Management Policies (國家外匯管理局關於改革和規範資本項目結匯管理政策的通知) which was promulgated by the SAFE and implemented on 9 June 2016, foreign currency earnings in capital account that relevant policies of “free will” exchange settlement have been explicitly implemented on (including foreign exchange capital funds, foreign debt and the recalling of raised capital by overseas listing) may be subject to foreign exchange settlement in the banks according to actual business needs of the domestic institutions. The tentative percentage of foreign exchange settlement for foreign currency earnings in capital account of domestic institutions is 100%, subject to adjustment of the SAFE in due time in accordance with international revenue and expenditure situations.

On 26 January 2017, the SAFE promulgated the Notice of the State Administration of Foreign Exchange on Further Promoting Foreign Exchange Management Reform and Improving Authentic Compliance Audit (《國家外匯管理局關於進一步推進外匯管理改革完善真實合規性審核的通知》), which further expands the scope of domestic foreign exchange loan settlement, allows domestic foreign exchange loans with the background of goods trade exports to be settled, allows funds under domestic guarantee and foreign loans to be transferred back for domestic use, allows foreign institutions in the Pilot Free Trade Zone to settle foreign exchange accounts within the territory, fully implements foreign lending management in both domestic and foreign currencies, and permits domestic institutions to handle overseas loan extension business, to the extent that the total balance of foreign lending in domestic currency and foreign currency for foreign lending business shall not exceed 30% of the owner’s equity specified in their previous year’s audited financial statements.

– III-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 SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS

PRC LEGAL SYSTEM

The PRC legal system is based on the Constitution of the PRC (《中華人民共和國憲法》) (the “Constitution”, implemented on 4 December 1982 and revised respectively on 12 April 1988, 29 March 1993, 15 March 1999, 14 March 2004 and 11 March 2018) and is made up of written laws, administrative regulations, local regulations, autonomous regulations, separate regulations, rules and regulations of departments under the State Council, rules and regulations of local governments, laws of the special administrative regions, international treaties of which the PRC government is a signatory and other regulatory documents. Court verdicts do not constitute binding precedents. However, they may be used as judicial reference and guidance.

According to the Constitution and the Legislation Law of the PRC (came into effect as of 1 July 2000 and revised on 15 March 2015) (《中華人民共和國立法法》) (the “Legislation Law”), the NPC and the Standing Committee of the NPC are empowered to exercise the legislative power of the State. The NPC has the power to formulate and amend basic laws governing state organs, civil and criminal matters and other matters. The Standing Committee of the NPC formulates and amends laws other than those required to be enacted by the NPC, and supplements and amends any parts of laws enacted by the NPC during the adjournment of the NPC, provided that such supplements and amendments are not in conflict with the basic principles of such laws. The State Council is the highest organ of the PRC administration and has the power to formulate administrative regulations based on the Constitution and laws.

The people’s congresses of provinces, autonomous regions and municipalities and their respective standing committees may formulate local regulations based on the specific circumstances and actual requirements of their own respective administrative areas, provided that such local regulations do not contravene any provision of the Constitution, laws or administrative regulations. The people’s congresses of cities divided into districts and their respective standing committees may formulate local regulations with regards to urban and rural development and management, environmental protection, and historical and cultural protection based on the specific circumstances and actual requirements of such cities, but such local regulations shall conform with the Constitution, laws, administrative regulations, and the relevant local regulations of the relevant provinces or autonomous regions. Local regulations of cities divided into districts will become enforceable after being reported to and approved by the standing committees of the people’s congresses of the relevant provinces or autonomous regions. The standing committees of the people’s congresses of the provinces or autonomous regions review the legality of the local regulations submitted for approval and issues approval within four months if they do not contradict the Constitution, laws, administrative regulations and local regulations of the provinces or autonomous regions. The standing committees of the people’s congresses of the provinces or autonomous regions shall make a decision to deal with the local regulations of the cities divided into districts submitted for approval when they are found to be in conflict with the regulations of the people’s governments of the provinces or autonomous regions. People’s congresses of national autonomous areas have the power to enact autonomous regulations and separate regulations in light of the political, economic and cultural characteristics of the nationality (nationalities) in the areas concerned.

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Ministries and commissions of the State Council, the PBOC, the State Audit Office and the agencies directly under the State Council with administrative functions can formulate departmental regulations within the authority of their respective departments according to laws and administrative regulations and decisions and orders of the State Council. The provisions of the departmental regulations must be matters related to the implementation of laws and administrative regulations and decisions and orders of the State Council. The people’s governments of the provinces, autonomous regions, and municipalities directly under the central government and the cities divided into districts or autonomous prefectures may enact rules, in accordance with laws, administrative regulations and the local regulations of their respective provinces, autonomous regions or municipalities.

According to the Constitution, the power to interpret laws is vested in the Standing Committee of the NPC. According to the Decision of the Standing Committee of the NPC Regarding the Strengthening of Interpretation of Laws (《全國人民代表大會常務委員會關於加強法律解釋工作的決議》) implemented on 10 June 1981, the Supreme People’s Court has the power to give interpretation on the application of laws in court trials. Issues with respect to the application of laws in the procuratorial operations of procuratorates shall be interpreted by the Supreme People’s Procuratorate, and if there is a difference in principle, the interpretation of the Supreme People’s Court and the Supreme People’s Procuratorate shall be reported to the Standing Committee of the National People’s Congress for interpretation or decision. Other legal issues that do not belong to the trial and prosecution work shall be interpreted by the State Council and the competent departments. The State Council and its ministries and commissions are also vested with the power to interpret the administrative regulations and department rules promulgated by them. At the regional level, the power to interpret the local regulations is vested in the regional legislative and administrative organs which promulgate such regulations.

PRC JUDICIAL SYSTEM

Under the Constitution and the PRC Law on the Organization of the People’s Courts (《中華人民共和國人民法院組織法》) (implemented on 1 January 1980 and revised respectively on 2 September 1983, 2 December 1986, 31 October 2006 and 26 October 2018), the PRC judicial system is made up of the Supreme People’s Court, the local people’s courts and specialized people’s courts.

The local people’s courts are comprised of the primary people’s courts, the intermediate people’s courts and the higher people’s courts. The primary people’s courts may have civil, criminal and economic case tribunals, and may establish a number of people’s courts based on the region, population and case situation. The intermediate people’s courts are similar to the primary people’s courts, and may have other specialized courts where necessary. The people’s courts at these two levels are subject to the supervision of the higher people’s courts. The Supreme People’s Court is the highest judicial body in China and supervises the trials of people’s courts at all levels and specialized people’s courts. The Supreme People’s Procuratorate has the right to supervise the judgments and rulings of the people’s courts at all levels that have taken legal effect, and the people’s procuratorates at higher levels have the right to supervise the judgments and rulings of the people’s courts at lower levels that have taken legal effect.

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The people’s courts adopt a system of two-tier trial. The parties may appeal the first instance judgment or ruling made by the local people’s court. The people’s procuratorate may submit a protest to the people’s court at a higher level in accordance with the procedures prescribed by law. If the parties do not file any appeal and the people’s procuratorate does not file a protest within a specified period of time, the judgment or ruling of the people’s court shall be final. The second instance judgments or rulings made by the intermediate people’s court, the high people’s court and the Supreme People’s Court shall be final. A first instance judgment or ruling of the Supreme People’s Court is also a final judgment or ruling. However, if the Supreme People’s Court finds that there are errors in the judgments, rulings and conciliations of the people’s courts at all levels that have taken legal effect, or a higher people’s court finds that there are errors in the judgments, rulings and conciliations made by the people’s courts at lower levels that have taken legal effect, it has the right to bring up the case for trial or instruct the people’s courts at lower levels to retry, or if the presidents of the people’s courts at all levels find that there are errors in the judgments, rulings and conciliations that have taken legal effect in their own courts and consider that they need to be re-tried, they shall submit the case involved to their trial committee for discussion and decision.

The PRC Civil Procedure Law (《中華人民共和國民事訴訟法》) (the “Civil Procedure Law”, implemented on 9 April 1991 and respectively amended on 28 October 2007, 31 August 2012 and 27 June 2017, sets forth the criteria for instituting a civil action, the jurisdiction of the people’s courts, the procedures to be followed for conducting a civil action and the procedures for enforcement of a civil judgment or order. All parties to a civil action conducted within the PRC must comply with the Civil Procedure Law. Generally, a civil case is initially heard by a local court of the place in which the defendant resides. The parties to a contract may, by express agreement, select a judicial court where civil actions may be brought, provided that the judicial court is either the plaintiff’s or the defendant’s domicile, the place of execution or implementation of the contract or the place of the object of the action or the court that is related to the dispute and provided that the provisions regarding the level of jurisdiction and exclusive jurisdiction shall not be violated.

When foreign nationals, stateless persons, foreign enterprises and organizations sue or respond to lawsuits in the people’s courts, they have the same litigation rights and obligations as citizens, legal persons and other organizations of the PRC. If a foreign country’s court limits the litigation rights of PRC citizens and enterprises, the PRC courts may apply the same limitations to the citizens and enterprises of that foreign country. Foreign nationals, stateless persons, foreign enterprises and organizations suing or responding to lawsuits in the people’s courts and needing to appoint lawyers to represent them must appoint Chinese lawyers. According to the international treaties which are concluded by the PRC or in which the PRC participates, or in accordance with the principle of reciprocity, the people’s courts and foreign courts may request each other to serve documents, investigate and obtain evidence, and perform other litigation acts on behalf of each other. The parties must comply with civil judgments and rulings that have taken legal effect. If any party to a civil action refuses to comply with a judgment or ruling made by a people’s court or a ruling made by an arbitral tribunal in the PRC, the other party may, within two years, apply to the people’s court for enforcement of the relevant judgment or ruling, or may apply for a postponement of enforcement or revocation. If, within the prescribed period, the party still fails to comply with the judgment for which the court has issued a permission for enforcement, the court may enforce the enforcement against the party upon the application of the other party.

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When a party requests the people’s court to enforce a judgment or ruling of the people’s court against a party that is not located in the PRC and does not own any property in the PRC, the party may apply directly to a foreign court of competent jurisdiction to recognize and enforce the judgment or ruling. A foreign judgment or ruling may also be recognized and enforced by the people’s court in accordance with international treaties or principles of reciprocity entered into or acceded to by the relevant foreign country in accordance with Chinese enforcement procedures in relation to recognition and enforcement, unless the people’s court considers that recognition or enforcement of the judgment or ruling would violate the PRC’s fundamental principles of law, sovereignty or national security, or would be inconsistent with the social and public interest.

PRC Company Law, the Special Regulations of the State Council on Share Offering and Listing Overseas by Joint-Stock Limited Liability Companies and the Mandatory Provisions of Articles of Association of Companies Listing Overseas

On 29 December 1993, the fifth meeting of the Standing Committee of the Eighth National People’s Congress adopted the PRC Company Law, which came into effect on 1 July 1994, and revised on 25 December 1999, 28 August 2004, 27 October 2005, 28 December 2013 and 26 October 2018 respectively. The latest revision of the PRC Company Law was implemented as of 26 October 2018.

The Special Regulations of the State Council on Share Offering and Listing Overseas by Joint-Stock Limited Liability Companies (《國務院關於股份有限公司境外募集股份及上市的特別規定》; the “Special Regulations”) which were adopted at the twenty-second meeting of the Standing Committee of the State Council on 4 July 1994 were promulgated and carried out on 4 August 1994 and were applicable, to the overseas share subscription and listings of joint stock limited companies.

The Mandatory Provisions of Articles of Association of Companies Listing Overseas (《到境外上市公司章程必備條款》; the “Mandatory Provisions”) which were issued jointly by the former Securities Commission of the State Council and the former State Economic Restructuring Commission on 27 August 1994, stating that the Mandatory Provisions must be incorporated into the articles of association of a joint stock limited company seeking a listing on an overseas stock exchange. As such, the Mandatory Provisions are set out in the Articles of Association of the Company. In this Appendix, the term “company” refers to a joint stock limited company established under the PRC Company Law and which may issue H shares. Set out below is a summary of the major provisions of the PRC Company Law, the Special Regulations and the Mandatory Provisions.

On October 17, 2019, the State Council issued a circular in connection with the adjustments in regulations concerning companies registered in China and listed abroad (《國務院關於調整適用在境外上市公司召開股東大會通知期限等事項規定的批覆》 (effective October 17. 2019), pursuant to which it agreed that companies registered in China and listed abroad shall comply with the PRC Company Law with respect to the notice period, shareholders right to formulate proposals and the procedures for convening a general meeting, and that relevant procedures set forth in Article 20 to Article 22 of the Special Regulations shall no longer apply.

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General

“A joint stock limited company” (the “company”) refers to an enterprise legal person incorporated under the PRC Company Law in the PRC, with independent legal person property, enjoying legal person property right and with its registered capital divided into shares of equal par value. The company is liable to its creditors for an amount equal to the total value of its assets and the liability of its shareholders is limited to the amount of shares subscribed by them.

Incorporation

The company may be incorporated by promotion or subscription. The company shall have more than two persons and less than two hundred persons as promoters, among which more than half of the promoters shall have their domicile in the PRC. If the company is established by way of promotion, its registered capital shall be the total amount of share capital subscribed by all promoters registered with the company registration authority. Before the promoters make contribution in full, it is not allowed to raise shares from others. If the company is established by way of subscription, the registered capital shall be the total amount of paid-up share capital registered with the company registration authority. If laws, administrative regulations and decisions of the State Council otherwise provide for the company’s paid-up registered capital or the minimum registered capital, they shall prevail.

In the case of incorporation by way of promotion, the promoter shall subscribe in writing for the shares provided for in the articles of association and pay the capital contribution in accordance with the provisions of the articles of association. If the capital contribution is made with non-monetary assets, the official formalities for the transfer of ownership of the non-monetary assets shall be completed. If the promoters fail to pay the capital contribution in accordance with the aforementioned provisions, they shall be liable for breach of contract as agreed in the promoter agreement. After the promoters have subscribed the capital contribution as stipulated in the articles of association, the Board of Directors and the Supervisory Board shall be elected, and the Board of Directors shall submit the articles of association and other documents required by laws or administrative regulations to the relevant administration for industry and commerce and apply for registration of establishment.

After the calls on shares are fully paid, the capital must be verified and certified by a capital verification agency established by law. The company’s promoters shall hold the inaugural meeting within 30 days from the date of full payment of shares. The inaugural meeting shall be composed of the promoters and subscribers. If the shares issued are under-subscribed by the deadline specified in the document for the offering of shares, or if the promoters fail to convene the inaugural meeting within 30 days after the issue of shares is fully paid, the subscribers may request the promoters to refund the subscription money paid, plus interest accrued at the bank deposit rate for the same period. The Board of Directors shall apply to the registration authority for registration of the establishment of the company within 30 days after the conclusion of the inaugural meeting. Upon approval of the registration and issuance of the business license by the relevant administration for industry and commerce, the company is formally established and have legal personality.

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The promoters of the company shall:

(1) Be jointly and severally liable for the debts and expenses arising from the establishment if the company cannot be incorporated;

(2) Be jointly and severally liable for the return of the subscription money paid by the subscribers, plus interest accrued on bank deposits for the same period if the company is not incorporated; and

(3) Indemnify the company against any loss suffered by it in the course of its establishment due to the promoters’ negligence.

Share Capital

The promoters may make capital contributions in money or in kind, intellectual property rights or land use rights, and other non-monetary assets that can be valued in money and can be transferred according to law, except for those assets prohibited by law or administrative regulations. If the capital contribution is made with non-monetary assets, the assets to be contributed must be valued in accordance with the provisions of the relevant valuation laws or administrative regulations, and must not be over- or under-valued.

For the issue of the shares, the principles of fairness and impartiality shall be adopted with each share of the same class having the same rights. For the same class of shares issued at the same time, their issue conditions and price shall be the same; for the shares subscribed by any organization or individual, the same price per share will be paid. The offer price of shares may be equal to or higher than, but may not be lower than the par value of the shares.

The company must obtain the approval of the CSRC before offering its shares to the public outside the PRC. Pursuant to the Special Regulations and the Mandatory Provisions, shares issued by the company to foreign investors and listed abroad shall be in the form of registered shares, denominated in RMB and subscribed in a foreign currency. Shares issued to foreign investors (including investors in Hong Kong, Macau and Taiwan) and [REDACTED] in Hong Kong are classified as H shares, while shares issued to investors in the PRC (other than the above-mentioned regions) are called domestic shares. According to the Special Regulations, subject to the approval of the CSRC, the company may agree in the [REDACTED] on reservation of not more than 15% of the total number of foreign shares to be listed outside the PRC in such issuance, in addition to the number of shares to be underwritten. The issuance of the reserved shares is deemed to be part of such issuance. Under the PRC Company Law, when the company issues shares in registered form, it shall maintain a register of shareholders, containing the following information: (1) the name and domicile of each shareholder; (2) the number of shares held by each shareholder; (3) the serial numbers of shares held by each shareholder; and (4) the date on which each shareholder acquired the shares.

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Increase of Share Capital

According to the PRC Company Law, when the company issues new shares, resolutions shall be passed at a general meeting of shareholders according to the articles of association of the company, approving the class and number of the new shares, the issue price of the new shares, the commencement and end of the new share issuance and the class and number of new shares to be issued to existing shareholders.

When a company issues new shares to the public after approval by the CSRC, it must announce the document and financial accounting report of the new share offering and produce a subscription letter. After the new share issuance has been paid up, the modification shall be registered with the company registration authority and an announcement shall be made. When the company issues new shares to increase its registered capital, the subscription of new shares by shareholders shall be made in accordance with the payment provisions related to the subscription for shares upon the establishment of the company.

Reduction of Share Capital

The company may reduce its registered capital in accordance with the following procedures prescribed in the PRC Company Law: (1) it shall prepare a balance sheet and a property list; (2) the reduction of registered capital shall be approved by a general meeting of shareholders; (3) it shall inform its creditors of the reduction in capital within 10 days and publish an announcement on the newspaper within 30 days after the resolution approving the reduction has been passed; (4) creditors may, within 30 days after receiving the notice, or within 45 days of the public announcement if no notice has been received, require the company to pay their debts or provide guarantees covering the debts; (5) it shall apply to the relevant company registration authority for the registration.

Repurchase of Shares

According to the PRC Company Law, the company may not purchase its shares other than for one of the following purposes: (1) to reduce its registered capital; (2) to merge with another company that holds its shares; (3) to grant its shares to employees as an incentive; (4) to purchase its shares from shareholders who are against the resolution regarding the merger or demerger with other companies at a general meeting of shareholders; (5) use of shares for conversion of convertible corporate bonds issued by a listed company; and (6) the share buyback is necessary for a listed company to maintain its value as a company and protect its shareholders’ equity. The purchase of shares on the grounds set out in (1) and (2) above shall require approval by way of a resolution passed at the general meeting of shareholders. For a company’s share buyback under any of the circumstances specified in (3), (5) or (6) above, a resolution of the company’s Board of Directors shall be made by a two-third of directors attending the meeting or above according to the provisions of the company’s articles of association or as authorized by the general meeting of shareholders. Following the purchase of shares in accordance with (1), such shares shall be canceled within 10 days from the date of purchase. The shares shall be assigned or deregistered within six months if the share buyback

– 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 SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS is made under the circumstances specified in either (2) or (4). The shares held in total by a company after a share buyback under any of the circumstances specified in (3), (5) or (6) shall not exceed 10% of the company’s total outstanding shares, and shall be assigned or deregistered within three years.

Listed companies making a share buyback shall perform their obligation of information disclosure according to the provisions of the Securities Law. If the share buyback is made by the listed company under any of the circumstances specified in (3), (5) or (6) hereof, centralized trading shall be adopted publicly. The company shall not accept its shares as the target of pledge rights.

Transfer of Shares

Shares held by shareholders may be transferred according to law. Pursuant to the PRC Company Law, transfer of shares by shareholders shall be carried out at a legally established securities exchange or in other ways stipulated by the State Council. Shareholders shall transfer the registered shares by endorsement or in other ways prescribed in the laws and administrative regulations. After the transfer of registered shares, the company shall enter the name and residence of the transferee in the register of shareholders. Unless otherwise provided by law for the registration of changes in the register of shareholders of a listed company, the registration of changes in the register of shareholders as provided for above shall not be made within 20 days prior to the general meeting of shareholders or within 5 days prior to the base date on which the company decides to distribute dividends. The transfer of bearer shares shall be effective from the date when the shareholder delivers such shares to the transferee. Pursuant to the Mandatory Provisions, no modifications of registration in the register of shareholders caused by transfer of shares shall be carried out within 30 days prior to convening of general meeting of shareholders or five days prior to any base date for determination of dividend distributions.

Under the PRC Company Law, shares held by the promoters shall not be transferred within one year from the inception of the company. Shares already issued by the company before public offering may not be transferred within one year after the shares of the company are listed on the stock exchange. Directors, supervisors and the senior management shall declare to the company their shareholdings in the company and any changes of such shareholdings. They shall not transfer more than 25% of all the shares they hold in the company annually during their tenure. They shall not transfer any shares they hold within one year after the date on which the company is listed on the stock exchange, and during the six months after their resignation from their positions with the company. The company may impose limitations in its articles of association on the transfer by directors, supervisors and the senior management of their shareholdings.

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Shareholders

Under the PRC Company Law, shareholders have the following rights: (1) the right to receive returns on assets, participate in decision-making of major issues and select management; and (2) the right to request the people’s court to revoke any resolution passed at the general meeting of shareholders or a meeting of the Board of Directors convened or voted on in a manner that violates laws, regulations or the articles of association, or any resolution the content of which violates the articles of association, such request to be submitted within 60 days from the date of such resolution; (3) the right to transfer shares according to law; (4) the right to attend or appoint a proxy to attend the general meeting of shareholders and to vote thereat; (5) the right to inspect the company’s articles of association, register of shareholders, counterfoil of debentures, minutes of general meeting of shareholders, resolutions of meetings of the Board of Directors, resolutions of meetings of the Supervisory Board and financial and accounting reports and to make proposals or enquires on the company’s operations; (6) the right to receive dividends in proportion to the number of shares held; (7) in the event of the liquidation of the company, the right to participate in the distribution of residual properties of the company in proportion to the shareholding ratios; and (8) other rights granted by laws, administrative regulations, other regulatory documents and the company’s articles of association.

The obligations of a shareholder include the obligation to pay the subscription moneys in respect of the shares subscribed for, to be liable for the company’s debts and liabilities to the extent of the amount of his or her subscribed shares and any other shareholders’ obligation specified in the company’s articles of association.

General Meetings of Shareholders

The general meeting of shareholders is the organ of authority of the company, which exercises its powers in accordance with the PRC Company Law. The general meeting of shareholders exercises the following powers: (1) to decide on the company’s operational policies and investment plans; (2) to elect or remove the directors and supervisors (other than the representative of the employees of the company) and to decide on matters relating to the remuneration of directors and supervisors; (3) to examine and approve reports of the Board of Directors; (4) to examine and approve reports of the Supervisory Board or supervisors; (5) to examine and approve the company’s plans on annual financial budget and final accounts; (6) to examine and approve the company’s profit distribution plans and loss recovery plans; (7) to decide on any increase or reduction of the company’s registered capital; (8) to decide on the issue of bonds by the company; (9) to decide on issues such as merger, demerger, dissolution and liquidation of the company or change of its corporation form; (10) to amend the company’s articles of association; and (11) other powers as provided for in the articles of association.

According to the PRC Company Law and the Mandatory Provisions, the general meeting of shareholders shall be held once a year and within six months after the end of the previous fiscal year. An extraordinary general meeting of shareholders is required to be held within two months after the occurrence of any of the following: (1) the number of directors is less than

– 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 SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS the number stipulated by the law or less than two thirds of the number specified in the articles of association; (2) the aggregate losses of the company which are not recovered equal one-third of the company’s total paid-in share capital; (3) when shareholders alone or in aggregate holding 10% or more of the company’s shares request the convening of an extraordinary general meeting; (4) whenever the Board of Directors deems necessary; (5) when the Supervisory Board so requests; or (6) other circumstances as provided for in the articles of associations.

Under the PRC Company Law, general meetings of shareholders shall be convened by the Board of Directors, and presided over by the chairman of the Board of Directors. In the event that the chairman is incapable of performing or fails to perform his duties, the meeting shall be presided over by the vice chairman. In the event that the vice chairman is incapable of performing or fails to perform his duties, a director nominated by half or more than half of directors shall preside over the meeting. Where the Board of Directors is incapable of performing or fails to perform its duties of convening the general meeting of shareholders, the Supervisory Board shall convene and preside over such meeting in a timely manner. In case the Supervisory Board fails to convene and preside over such meeting, shareholders alone or in aggregate holding more than 10% of the company’s shares for 90 days consecutively or more may unilaterally convene and preside over such meeting.

Under the PRC Company Law, a notice of the general meeting of shareholders specifying the time and venue of and matters to be considered at the meeting shall be given to all shareholders 20 days before the meeting. Notice of extraordinary general meeting of shareholders shall be given to all shareholders 15 days prior to the meeting. If bearer shares are issued, the date and time and place of the meeting and the matters to be considered shall be announced 30 days prior to the meeting. Shareholders who individually or collectively hold more than 3% of the company’s shares may submit a provisional proposal in writing to the Board of Directors 10 days prior to the general meeting of shareholders; the Board of Directors shall notify the other shareholders of the proposal within two days of receipt and submit the provisional proposal to the general meeting of shareholders for consideration. The content of the provisional proposal must fall within the scope of the general meeting of shareholders and have a clear subject and matter for resolution. The general meeting of shareholders shall not pass any resolution on any matter not specified in the notice. Bearer shareholders who intend to attend the general meeting of shareholders must deposit their stock certificates with the company five days prior to the meeting until the general meeting of shareholders is closed.

Under the PRC Company Law, shareholders present at the general meeting of shareholders have one vote for each share they hold, save that shares held by the company are not entitled to any voting rights.

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Pursuant to the provisions of the articles of association or a resolution of the general meeting of shareholders, the accumulative voting system may be adopted for the election of directors and supervisors at the general meeting of shareholders. Under the cumulative voting system, in the election of directors or supervisors at a general meeting of shareholders, each share shall have the same number of votes as the number of directors or supervisors to be elected, and shareholders may cast all their voting rights on one person when casting their votes.

Pursuant to the PRC Company Law, a resolution at a general meeting of shareholders shall be passed with a majority of the votes held by the shareholders present at the meeting, except that a resolution on the merger, demerger and dissolution of the company, the increase or reduction of the registered share capital, the change of the form of the company or the amendment of the articles of association of the company shall be passed with at least two-thirds of the votes held by the shareholders present at the meeting. If, pursuant to the PRC Company Law and the articles of association, the transfer or acquisition of material assets or the provision of external guarantees by the company is subject to the approval of a resolution passed at a general meeting of shareholders, the Board of Directors shall convene a general meeting of shareholders as soon as possible and the general meeting of shareholders shall vote on the said matters. Shareholders may appoint a proxy to attend the general meeting of shareholders, and the proxy shall submit to the company a power of attorney from the shareholders and shall exercise the voting rights within the scope of the power of attorney. The general meeting of shareholders shall prepare minutes of the meeting in respect of the matters under consideration, and the presiding officer and the directors present at the meeting shall sign the minutes of the meeting. The minutes of the meeting shall be kept together with the signature books and proxy forms of the shareholders present.

In accordance with the Mandatory Provisions, any increase or decrease in share capital, the issuance of any class of shares, warrants or other similar securities and bonds, the demerger, merger, dissolution and liquidation of the company, the amendment of the articles of association and any other matters that may have a significant impact on the company if being resolved by ordinary resolution at a general meeting of shareholders and that must be adopted by way of a special resolution, shall be adopted with a special resolution of the shareholders present at the general meeting of shareholders holding at least two-thirds of the voting rights (including proxies).

The Mandatory Provisions provide that any alteration or abrogation of the class rights of the classified shareholders shall be adopted with a special resolution at a general meeting of shareholders and a class meeting shall be held. For this purpose, holders of domestic shares and H shares are considered as different classes of shareholders.

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Board of Directors

The company shall have a Board of Directors, which shall consist of 5 to 19 members. Members of the Board of Directors may include representatives of the employees of the company, who shall be democratically elected by the company’s staff at the staff representative assembly, general staff meeting or otherwise. The term of a director shall be stipulated in the articles of association, but no term of office shall last for more than three years. Directors may be re-elected. A director shall continue to perform his duties according to laws, administrative regulations and articles of association until a duly re-elected director takes office, if re-election is not conducted in a timely manner upon the expiry of his term of office, or if the resignation of directors results in the number of directors being less than the quorum.

Under the PRC Company Law, the Board of Directors may exercise the following powers: (1) to convene the general meeting of shareholders and report on its work to the general meetings of shareholders; (2) to execute the resolutions passed at the general meetings of shareholders; (3) to decide on the company’s business plans and investment proposals; (4) to formulate the company’s annual financial budget and final accounts plans; (5) to formulate the company’s profit distribution proposals and loss recovery plans; (6) to formulate proposals for the increase or reduction of the company’s registered capital and the issuance of corporate bonds; (7) to prepare plans for the merger, demerger, dissolution and change in the corporation form of the company; (8) to decide on the setup of internal management departments; (9) to appoint and remove the manager of the company and decide on his remuneration, and appoint and remove according to the recommendation of the manager the deputy general manager and the financial officer of the company and decide their remuneration; (10) to formulate the company’s basic management system; and (11) to exercise any other power under the articles of association.

Meetings of the Board of Directors shall be convened at least twice a year. A notice of meeting shall be given to all directors and supervisors 10 days before the meeting. Extraordinary meetings of the Board of Directors may be proposed to be convened by shareholders representing more than 10% of voting rights, more than one-third of the directors or the Supervisory Board. The chairman shall convene and preside over such meeting within 10 days after receiving such proposal. The Board of Directors may separately determine the manner and the time limit for giving notice of the convening of an extraordinary meeting of the Board of Directors. Meetings of the Board of Directors shall be held only if half or more of the directors are present. Resolutions of the Board of Directors shall be passed by more than half of all directors. Each director shall have one vote for resolutions to be approved by the Board of Directors. Directors shall attend meetings of the Board of Directors in person. If a director is unable to attend a meeting of the Board of Directors, he may appoint another director by a written power of attorney specifying the scope of the authorization to attend the meeting on his behalf. The Board of Directors shall prepare minutes regarding its decisions on matters deliberated at the meeting, which shall be signed by the directors in attendance at the meeting.

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If a resolution of the Board of Directors violates the laws, administrative regulations, the articles of association or the resolution of the general meeting of shareholders, and as a result of which the company sustains serious losses, the directors participating in the resolution are liable to compensate the company. However, if it can be proved that a director expressly objected to the resolution when the resolution was voted on, and that such objection was recorded in the minutes of the meeting, such director may be released from that liability.

The PRC Company Law provides that the following persons may not serve as a director: (1) a person who is unable or has limited ability to undertake any civil liabilities; (2) a person who has been convicted of an offense of bribery, corruption, embezzlement or misappropriation of property, or the destruction of socialist market economy order; or who has been deprived of his political rights due to his crimes, in each case where less than five years have elapsed since the date of completion of the sentence; (3) a person who has been a former director, factory manager or manager of a company or an enterprise that has entered into insolvent liquidation and who was personally liable for the insolvency of such company or enterprise, where less than three years have elapsed since the date of the completion of the bankruptcy and liquidation of the company or enterprise; (4) a person who has been a legal representative of a company or an enterprise that has had its business license revoked due to violations of the law and has been ordered to close down by law and the person was personally responsible, where less than three years have elapsed since the date of such revocation; or (5) a person who is liable for a relatively large amount of debts that are overdue.

If the company elects or appoints a director in violation of the foregoing provisions, such election or appointment shall be null and void. If any of the aforementioned circumstances occurs during the term of office of a director, the company shall remove him/her from office.

In addition, the Mandatory Provisions further stipulate other circumstances under which a person may not serve as a director of the company, including: (1) the person is being investigated by the judicial agencies for violation of criminal law, and the case is pending; (2) the person being prohibited to serve leadership in a company pursuant to laws and administrative regulations; (3) the person is not a natural person; and (4) the person is convicted by the competent agencies to have violated the provisions of relevant securities laws, is involved in deceptive or dishonest acts, and the conviction was issued less than five years ago.

In accordance with the PRC Company Law, the Board of Directors shall have a chairman and may have a vice chairman. Chairman and vice chairman will be elected by more than half of all directors of the Board of Directors. The chairman shall convene and preside over the meetings of the Board of Directors and check the execution of the resolutions of the Board of Directors. The vice chairman shall assist the chairman of the Board of Directors. If the chairman of the Board of Directors is unable to perform his duties or fails to perform his duties, the vice chairman shall perform his duties. If the vice chairman is unable to perform his duties or fails to perform his duties, a director shall be jointly elected by more than half of the directors to perform his duties.

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Supervisory Board

The company shall have a Supervisory Board composed of no less than three members. The Supervisory Board is made up of representatives of the shareholders and an appropriate proportion of representatives of the employees of the company. The actual proportion shall be stipulated in the articles of association, provided that the proportion of representatives of the employees shall not be less than one third of the supervisors. Representatives of the employees of the company in the Supervisory Board shall be democratically elected by the employees at the staff representative assembly, general staff meeting or otherwise. The Supervisory Board shall appoint a chairman and may appoint a vice chairman. The chairman and the vice chairman of the Supervisory Board are elected with the approval of more than half of all the supervisors. The directors and senior management may not act concurrently as a supervisor.

According to the Notice of the Overseas Listing Department of CSRC, and the State Commission for Restructuring Economy on the Opinions on Supplementary Amendment to Articles of Associations by Companies to be listed in Hong Kong (《中國證監會海外上市部、國家體改委生產體制司關於到香港上市公司對公司章程作補充修改的意見的函》), the chairman of the Supervisory Board shall be elected by more than two-thirds of all the supervisors. The directors and senior management may not act concurrently as a supervisor.

The chairman of the Supervisory Board shall convene and preside over the meetings of the Supervisory Board. In the event that the chairman of the Supervisory Board is incapable of performing or fails to perform his duties, the vice chairman of the Supervisory Board shall convene and preside over the meetings of the Supervisory Board. In the event that the vice chairman of the Supervisory Board is incapable of performing or fails to perform his duties, a supervisor nominated by more than half of the supervisors shall convene and preside over the meetings of the Supervisory Board.

A supervisor serves a term of office of three years, and may be re-elected upon expiry of the office term. A supervisor shall continue to perform his duties according to laws, administrative regulations and articles of association until a duly re-elected supervisor takes office, if re-election is not conducted in a timely manner upon the expiry of his term of office, or if the resignation of supervisors results in the number of supervisors being less than the quorum. The Supervisory Board exercises the following powers: (1) to review the company’s financial position; (2) to supervise the directors and senior management in performance of their duties and to propose the removal of directors and senior management who have violated laws, regulations, the articles of association or the resolutions of general meeting of shareholders; (3) when the acts of directors and senior management are harmful to the company’s interests, to require correction of those acts; (4) to propose the convening of extraordinary general meetings of shareholders and to convene and preside over the general meetings of shareholders when the Board of Directors fails to perform the duty of convening and presiding over the general meetings of shareholders under the PRC Company Law; (5) to initiate proposals to the general meeting of shareholders; (6) to initiate proceedings against directors and senior management according to the PRC Company Law; (7) other powers specified in the articles of association.

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Supervisors may attend meetings of the Board of Directors as non-voting delegates and make enquiries or proposals in respect of the resolutions of the Board of Directors. The Supervisory Board may initiate investigations into any irregularities identified in the operation of the company and, where necessary, may engage an accounting firm to assist their work at the company’s expense.

Manager and Senior Management

Under the PRC Company Law, a company shall have a manager who shall be appointed or removed by the Board of Directors. At the same time, according to the relevant provisions of the Mandatory Provisions, the manager shall report to the Board of Directors and may exercise the following powers: (1) to be in charge of the production and administration of the company and arrange for the execution of resolutions of the Board of Directors; (2) to arrange for the implementation of the company’s annual business plans and investment proposals; (3) to draft the general administration system of the company; (4) to draft the company’s basic management system; (5) to formulate the company’s detailed rules; (6) to recommend the appointment and dismissal of deputy managers and person in charge of finance; (7) to appoint or dismiss administration officers (other than those required to be appointed or dismissed by the Board of Directors); and (8) other powers conferred by the Board of Directors. The manager shall comply with other provisions of the articles of association concerning his powers. The manager shall attend meetings of the Board of Directors as a non-voting delegate. Unless a manager is also a director, he does not have voting rights at meetings of the Board of Directors. According to the related provisions of the PRC Company Law, senior management refers to the manager, deputy manager(s), person-in-charge of finance, secretary of the Board of Directors (in case of a listed company) and other personnel as stipulated in the articles of association.

Duties of Directors, Supervisors, General Manager and Senior Management

Directors, supervisors and senior management of the company are required under the PRC Company Law to comply with the relevant laws, regulations and the articles of association, and have fiduciary and diligent duties to the company. Directors, supervisors and senior management are prohibited from abusing their powers to accept bribes or other unlawful income and from misappropriating of the company’s properties. At the same time, directors and senior management are prohibited from: (1) misappropriation of the company’s capital; (2) depositing the company’s capital into accounts under their own name or the name of other individuals; (3) loaning the company’s funds to others or providing guarantees in favor of others supported by the company’s assets in violation of the articles of association or without the prior approval of the general meeting of shareholders or Board of Directors; (4) entering into contracts or deals with the company in violation of the articles of association or without the prior approval of the general meeting of shareholders; (5) using their position to procure business opportunities for themselves or others that should have otherwise been available to the company or operating for their own benefits or managing on behalf of others similar to that of the company without the prior approval of the general meeting of shareholders; (6) accepting and possessing commissions paid by a third party for transactions conducted with the company;

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(7) unauthorized divulgence of confidential information of the company; or (8) other acts in violation of their duty of loyalty to the company. Income derived from a director or officer’s violation of the above provisions shall belong to the company.

A director, supervisor or senior management who contravenes any law, administrative regulation or the company’s articles of association when performing his duties resulting in any loss to the company shall be personally liable to the company.

The general meeting of shareholders requires the directors, supervisors or senior management to attend the meeting as non-voting delegates, and the directors, supervisors or senior management shall attend the meeting as non-voting delegates and be questioned by the shareholders. Directors and senior management shall provide all authentic information and data to the Supervisory Board and shall not obstruct the Supervisory Board or the supervisors in the exercise of their duties and responsibilities.

In the event that a director or senior management is found in violation of any laws, administrative regulations or the articles of association when performing his duties and causes damage to the company, shareholders who holds more than 1% of the company’s shares individually or in aggregate for more than 180 consecutive days may request the Supervisory Board in writing to file a lawsuit with the people’s court. If a supervisor is found in violation of any law, administrative regulation or the articles of association of the company in the execution of his duties of the company and causes damage to the company, the aforementioned shareholder may request the Board of Directors in writing to file a lawsuit in the people’s court on his behalf. If the Supervisory Board or Board of Directors refuses to institute legal proceedings after receipt of the aforesaid written request from shareholders, or fails to not institute legal proceedings within 30 days after receipt of the said request, or if the circumstance is urgent or any delay of legal proceedings may incur irrecoverable damage to the interests of the company, the shareholders as specified in the preceding paragraph shall have the right to directly institute legal proceedings in their own names for the interests of the company. In the event that other parties violate the lawful rights and interests of the company resulting in losses to the company, the aforementioned shareholders may file a lawsuit with the people’s court in accordance with the aforementioned provisions. In the event that a director or senior management is found in violation of any laws, administrative regulations or the articles of association and infringes upon the interests of shareholders, the shareholders may also bring a lawsuit to the people’s court.

The Special Regulations and the Mandatory Provisions stipulate that the directors, supervisors, managers and other senior management of the company shall have a duty of good faith to the company and shall faithfully perform their duties and protect the rights and interests of the company, and may not use their positions in the company for personal gains. These duties are set out in detail in the Mandatory Provisions.

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Finance and Accounting

Under the PRC Company Law, a company shall establish financial and accounting systems according to laws, administrative regulations and the regulations of the financial department of the State Council. The company shall at the end of each financial year prepare a financial report which shall be audited by an accounting firm as required by law. The company’s financial and accounting report shall be prepared in accordance with provisions of the laws, administrative regulations and the regulations of the financial department of the State Council. The company shall make its financial and accounting reports available at the company for inspection by the shareholders at least 20 days before the convening of an annual general meeting of shareholders. A stock company that issues shares publicly must also publish its financial and accounting reports.

When distributing each year’s after-tax profits, it shall set aside 10% of its after-tax profits into a statutory reserve (except where the fund of the PRC has reached 50% of its registered capital). If its statutory reserve is not sufficient to make up losses of the previous year, profits of the current year shall be applied to make up losses before allocation is made to the statutory reserve. After allocation of the statutory reserve from after-tax profits, it may, upon a resolution passed at the general meeting of shareholders, allocate discretionary reserve from after-tax profits. The remaining after-tax profits after making up losses and allocation of discretionary statutory reserve shall be distributed in proportion to the shares held by the shareholders, unless otherwise stipulated in the articles of association.

If the general meeting of shareholders or the Board of Directors resolves to distribute profits to the shareholders before the company makes up its losses and withdraws its statutory reserve in violation of the aforementioned provisions, the shareholders must return the profits distributed in violation of the provisions to the company. Shares held by the company shall not be entitled to any distribution of profit.

The premium received through issuance of shares at prices above par value and other incomes required by the financial department of the State Council to be allocated to the capital reserve shall be allocated to the company’s capital reserve. The company’s reserve fund shall be used to make up losses of the company, expand its business operations or increase the capital of the company. However, the capital reserve may not be applied to make up the company’s losses. Upon the conversion of statutory reserve into capital, the balance of the statutory reserve shall not be less than 25% of the registered capital of the company before such conversion. The company shall have no other accounting books except the statutory accounting books. Its assets shall not be deposited in any accounts opened in the name of any individual.

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Appointment and Retirement of Accounting Firms

Pursuant to the PRC Company Law, the appointment or dismissal of an accounting firm responsible for the auditing of the company shall be determined by the general meeting of shareholders or Board of Directors in accordance with provisions of articles of association. The accounting firm should be allowed to make representations when the general meeting of shareholders or Board of Directors vote on the dismissal of the accounting firm. The company should provide authentic and complete accounting evidences, books, financial and accounting reports and other accounting data to the accounting firm it engages without any refusal, withholding and misrepresentation.

The Special Regulations provide that a company shall engage an independent accounting firm that meet the relevant regulations of the State to audit its annual report and review and check other financial reports of the company. The accounting firm’s engagement period shall commence from their appointment at the annual general meeting of shareholders to the end of the next annual general meeting of shareholders.

Distribution of Profits

According to the PRC Company Law, a company shall not distribute profits before losses are covered and the statutory common reserve is drawn. At the same time, the Special Regulations require that dividends and other distributions paid by the company to H share holders shall be declared and calculated in RMB and paid in a foreign currency. Under the Mandatory Provisions, a company shall appoint receiving agents to pay amounts in a foreign currency to shareholders.

Amendments to Articles of Association

According to the PRC Company Law, a resolution to amend the Articles of Association of the Company made at a general meeting of shareholders must be passed with at least two-thirds of the votes held by the shareholders present at the meeting. According to the Mandatory Provisions, the company may amend the articles of association according to laws, administrative regulations and the articles of association. Amendments to the articles of association, which involve the content of the Mandatory Provisions, shall take effect upon approval by the company approval authority authorized by the State Council and the securities regulatory authority under the State Council; if they involve registration matters of the company, they shall be registered with the relevant authorities for modifications according to law.

– IV-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 IV SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS

Dissolution and Liquidation

According to the PRC Company Law, a company shall be dissolved by reason of the following: (1) the term of its operations set down in the articles of association has expired or other events of dissolution specified in the articles of association have occurred; (2) the general meeting of shareholders has resolved to dissolve the company; (3) the company is dissolved by reason of merger or demerger; (4) the business license is revoked; the company is ordered to close down or be dissolved; or (5) the company is dissolved by the people’s court in response to the request of shareholders holding shares that represent more than 10% of the voting rights of all its shareholders, on the grounds that the company suffers significant hardship in its operation and management that cannot be resolved through other means, and the ongoing existence of the company would bring significant losses for shareholders.

In the event of (1) above, it may carry on its existence by amending its articles of association. The amendment of the articles of association in accordance with provisions set out above shall be subject to the approval of more than two thirds of voting rights of shareholders attending a general meeting of shareholders.

Where the company is dissolved in the circumstances described in subparagraphs (1), (2), (4), or (5) above, a liquidation team shall be established within 15 days after the occurrence of the event of dissolution. The members of the company’s liquidation team shall be composed of its directors or the personnel decided by the general meeting of shareholders. If a liquidation team is not established within the stipulated period, creditors may apply to the people’s court and request the court to appoint relevant personnel to form the liquidation team. The people’s court should accept such application and form a liquidation team to conduct liquidation in a timely manner.

The liquidation team shall exercise the following powers during the liquidation period: (1) to handle the company’s assets, and to prepare a balance sheet and an inventory of the assets; (2) to notify creditors or make public announcement; (3) to deal with the company’s outstanding businesses related to liquidation; (4) to pay any tax overdue as well as tax amounts arising from the process of liquidation; (5) to claim credits and pay off debts; (6) to handle the company’s remaining assets after its debts have been paid off; and (7) to represent the company in civil lawsuits.

The liquidation team shall notify the company’s creditors within 10 days after its establishment and issue public notices in newspapers within 60 days. A creditor shall lodge his claim with the liquidation team within 30 days after receiving notification, or within 45 days of the public notice if he did not receive any notification.

A creditor shall state all matters relevant to his creditor rights in making his claim and furnish evidence. The liquidation team shall register such creditor rights. The liquidation team shall not make any debt settlement to creditors during the period of claim. Upon liquidation of properties and the preparation of the balance sheet and inventory of assets, the liquidation team shall draw up a liquidation plan to be submitted to the general meeting of shareholders or

– IV-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 IV SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS people’s court for confirmation. The company’s remaining assets after payment of liquidation expenses, wages, social insurance expenses and statutory compensation, outstanding taxes and debts shall be distributed to shareholders according to their respective shareholdings. It shall continue to exist during the liquidation period, but it cannot engage in any operating activities that are unrelated to the liquidation. The company’s properties shall not be distributed to the shareholders before repayments are made in accordance to the foregoing provisions.

Upon liquidation of the company’s properties and the preparation of the balance sheet and inventory of assets, if the liquidation team becomes aware that the company does not have sufficient assets to meet its liabilities, it must apply to the people’s court for a declaration for bankruptcy. After the company is declared bankrupt by the people’s court, the liquidation team shall hand over all matters relating to the liquidation to the people’s court.

Upon completion of the liquidation, the liquidation team shall submit a liquidation report to the general meeting of shareholders or the people’s court for verification. Thereafter, the report shall be submitted to the company registration authority in order to cancel the company’s registration, and a public notice of its termination shall be issued. Members of the liquidation team are required to discharge their duties honestly and perform the liquidation obligations according to law. Members of the liquidation team shall be prohibited from taking advantage of their powers to accept bribes or other unlawful income and from misappropriating the company’s properties. A member of the liquidation team is liable to indemnify the company and its creditors in respect of any loss arising from his intentional or gross negligence. Where the company is declared bankrupt according to law, the bankruptcy liquidation will be carried out pursuant to laws on the corporate bankruptcy.

Overseas Listing

The company’s shares need to be approved by the CSRC before being [REDACTED] outside the PRC, and the [REDACTED] must be made in accordance with the steps designated by the State Council. According to the Special Regulations, a company may issue shares to investors outside the PRC with the approval of the CSRC, and its shares may be listed outside the PRC. The Board of Directors of a company approved by the CSRC to issue foreign shares and domestic shares listed abroad may make implementation arrangements for separate issues and may implement them separately within fifteen months from the date of approval by the CSRC. In addition, the company shall not issue new shares beyond the issue plan if the shares determined in the issue plan have not been fully raised. If the company needs to adjust the issuance plan, the general meeting of shareholders shall make a resolution and, after approval by the company’s approval department authorized by the State Council, report to the securities commission of the State Council for approval.

– IV-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 IV SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS

Loss of Share Certificates

In the event that the registered shares are stolen, lost or extinguished, the shareholders may request the people’s court to declare such shares invalid following the formalities stipulated in the PRC Civil Procedure Law. After the people’s court declares such shares invalid, the shareholder may apply to the company for replacement of the share certificates. The Mandatory Provisions provide otherwise for the loss of share certificates and H share certificates by shareholders of foreign shares listed outside the PRC, and details of such provisions are set out in the articles of association of the company.

Merger and Demerger

Under the PRC Company Law, in the event of a merger, a merger agreement shall be concluded and the relevant companies must prepare their respective balance sheets and lists of properties. The company is required to notify its respective creditors within 10 days from the date of adoption of the merger resolution and to publish a notice of the merger on the newspapers within 30 days. Creditors have 30 days from the date of receipt of the notice, or 45 days from the date of the announcement if they have not received the notice, to demand the company to settle any outstanding debts or to provide corresponding guarantees.

In the event of a merger, the claims and debts of parties involved in the merger shall be inherited by the surviving company or the newly established company. If the company is demerged, its assets must be divided accordingly, and a balance sheet and a list of properties must be prepared. If the resolution for the demerger of the company is passed, the company shall notify all its creditors within 10 days from the date of passing the said resolution, and shall publish the notice on the newspapers within 30 days. Unless the company has reached a written agreement with its creditors on the settlement of debts before the demerger, the liability for the relevant liabilities before the demerger shall be borne jointly and severally by the company after the demerger.

Changes in business registration matters arising from the merger or demerger of the company shall be registered with the relevant administration for industry and commerce.

Securities Law of the PRC, Regulations and Regulatory Framework

The PRC has promulgated a series of regulations relating to the issuance and trading of shares and information disclosure of companies. In October 1992, the State Council established the securities commission and the CSRC. The securities commission is responsible for coordinating the drafting of securities regulations, formulating securities policies, planning the development of the securities market, guiding, coordinating and supervising all securities- related institutions in the PRC, and administering the CSRC. The CSRC, the regulatory enforcement agency of the securities commission, is responsible for drafting securities market regulations, supervising securities companies, managing public offerings of securities of Chinese companies in the PRC or overseas, regulating the purchase and sale of securities, collecting securities-related statistics and conducting related research and analysis. In April 1998, the State Council merged the abovementioned two departments and reorganized the CSRC.

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On 22 April 1993, the State Council promulgated the Interim Regulations on the Administration of Share Issuance and Trading (《股票發行與交易管理暫行條例》), which regulated the application and approval procedures for relevant public offerings of shares, the issuance and trading of shares, the acquisition of listed companies, the custody, liquidation and transfer of shares, the disclosure of information by listed companies, investigations, penalties and the settlement of disputes.

On 25 December 1995, the State Council promulgated the Special Regulations of the State Council on the Domestic Listing of Foreign Shares by Joint Stock Companies (《國務院關於股份有限公司境內上市外資股的特別規定》). These provisions mainly provide for the issuance, subscription, trading, dividend declaration and other distributions of domestically listed foreign shares, as well as information disclosure of joint stock companies with domestically listed foreign shares.

The Securities Law of the People’s Republic of China (《中華人民共和國證券法》, the “Securities Law”) came into effect on 1 July 1999 and was amended on 28 August 2004, 27 October 2005, 29 June 2013, 31 August 2014 and 28 December 2019 respectively, with the latest amended Securities Act being implemented on 1 March 2020. The Securities Law is the first national securities law in the PRC, which comprehensively regulates the activities of the Chinese securities market. It is divided into 14 chapters and 226 articles, covering the issuance and trading of securities, acquisition of listed companies, the duties of the stock exchanges, securities companies, securities registration and settlement institutions and securities supervision and management institutions. Article 224 of the Securities Law stipulates that domestic enterprises that directly or indirectly issue securities abroad or list their securities for trading abroad shall comply with the relevant regulations of the State Council. Currently, the issuance and trading of securities (including shares) issued outside the PRC are mainly regulated by regulations and rules promulgated by the State Council and the CSRC.

ARBITRATION AND ENFORCEMENT OF ARBITRAL AWARDS

The Standing Committee of the National People’s Congress enacted the Arbitration Law of the People’s Republic of China (Amended in 2017) (《中華人民共和國仲裁法(2017修正)》 ; “China Arbitration Law”) on 31 August 1994, which became effective on 1 September 1995 and was amended on 27 August 2009 and 1 September 2017. The Act applies to, among other things, economic disputes involving foreign parties after the parties have entered into a written agreement to submit the matter for arbitration before an arbitration committee constituted under the China Arbitration Law. The China Arbitration Law provides that, prior to the promulgation of the arbitration rules by the China Arbitration Association, the arbitration committee may make provisional provisions for arbitration in accordance with the Chinese Arbitration Law and the Chinese Civil Procedure Law. If the parties agree to settle disputes via arbitration, the people’s court will refuse to accept any case filed by one party with the people’s court, unless the arbitration agreement is invalid.

– IV-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 IV SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS

The Listing Rules and the Mandatory Provisions require that the articles of association of a Hong Kong listed company contain an arbitration clause, and the Listing Rules require that contracts entered into by the company with each director or supervisor contain an arbitration clause. Under this clause, in the event of a dispute or claim arising between (1) holders of overseas listed foreign shares and the company; (2) holders of overseas listed foreign shares and holders of domestic shares; or (3) holders of overseas listed foreign shares and directors, supervisors or other management of the company based on their rights and obligations under the articles of association, the PRC Company Law or other relevant laws and administrative regulations, in relation to the company’s affairs, the relevant parties shall submit such dispute or claim for arbitration to China International Economic and Trade Arbitration Commission (“CIETAC”) or the Hong Kong International Arbitration Centre (“HKIAC”). Disputes relating to the definition of shareholders and disputes relating to the register of shareholders of a company may be resolved without arbitration. If the party applying for arbitration chooses to arbitrate the dispute or claim at the HKIAC, either party may apply for arbitration in Shenzhen in accordance with the HKIAC Securities Arbitration Rules.

Under the Arbitration Law of the People’s Republic of China (《中華人民共和國仲裁法》) and the Civil Procedure Law of the People’s Republic of China (《中華人民共和國民事訴訟法》), an arbitration award once made shall be final and binding on all parties to the arbitration. If any party fails to comply with the arbitral award, the other party to the award may apply to the people’s court for enforcement of the arbitral award. However, if the arbitration process is illegal (including, but not limited to, the composition of the arbitral tribunal violates the statutory formalities, or the award is not within the scope of the arbitration agreement or the arbitration committee is not authorized to arbitrate), the people’s court may rule not to enforce the arbitral award made by the arbitration committee.

A party seeking to enforce an award of a Chinese foreign-related arbitration institution where the enforced party or its property is not located in the PRC may apply to an overseas court of competent jurisdiction over the relevant enforcement matter for recognition and enforcement of the award. Similarly, Chinese courts may recognize and enforce arbitral awards rendered by overseas arbitral institutions in accordance with the principle of reciprocity or any international convention that the PRC has ratified or to which the PRC is a party.

On 2 December 1986, the Standing Committee of the National People’s Congress adopted a resolution, according to which, the PRC was a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (《承認及執行外國仲裁裁決公約》; “New York Convention”), which was adopted on 10 June 1958. The New York Convention provides that each contracting state shall recognize and enforce all arbitral awards made by another contracting state, but each state reserves the right to refuse enforcement under certain circumstances, including arbitral awards that are contrary to the public policy of that state. Upon the PRC’s accession to the Convention, the Standing Committee of the National People’s Congress also declared that: (1) the PRC would apply the New York Convention only to the recognition and enforcement of arbitral awards made in the territory of another contracting state on the basis of reciprocity; and (2) the New York Convention could apply only to disputes arising from commercial legal relations that are considered contractual or non-contractual

– IV-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 IV SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS under Chinese law. The mutual enforcement of arbitral awards was agreed between the Supreme People’s Courts of Hong Kong and the PRC and the Supreme People’s Court of the PRC adopted the Arrangement on Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region (《關於內地與香港特別行政區相互執行仲裁裁決的安排》; the “Arrangement”) on 18 June 1999, which took effect on 1 February 2000. The Arrangement was made in accordance with the purposes of the New York Convention. Under the Arrangement, awards made by mainland arbitral institutions recognized in Hong Kong may be enforced in Hong Kong and awards made by arbitral institutions in Hong Kong may be enforced in mainland China. A mainland court may refuse to enforce an award made by a Hong Kong arbitral institution if it determines that enforcement of the award in the mainland would be contrary to the public interest of the mainland.

SUMMARY OF MATERIAL DIFFERENCES BETWEEN HONG KONG AND PRC COMPANY LAW

The Hong Kong law applicable to a company incorporated in Hong Kong is based on the Companies Ordinance and the Companies (Winding Up and Miscellaneous Provisions) Ordinance and is supplemented by common law and the rules of equity that are applicable to Hong Kong. As a joint stock limited company established in the PRC that is seeking a [REDACTED] of shares on the Hong Kong Stock Exchange, the Company is governed by the Company Law and all other rules and regulations promulgated pursuant to the PRC Company Law. Set out below is a summary of certain material differences between Hong Kong company law applicable to a company incorporated in Hong Kong and the PRC Company Law applicable to a joint stock limited company incorporated and existing under the PRC Company Law.

Incorporation

Under Hong Kong company law, a company with share capital, is incorporated by the Registrar of Companies in Hong Kong which issues a certificate of incorporation to the company and the company will acquire an independent corporate existence. A company may be incorporated as a public company or as a private company. Pursuant to the Companies Ordinance, the articles of association of a private company incorporated in Hong Kong shall contain certain preemptive provisions. A public company’s articles of association do not contain such pre-emptive provisions.

Under the PRC Company Law, a joint stock limited company may be incorporated by promotion or subscription. At the same time, Hong Kong law does not prescribe any minimum capital requirement for a Hong Kong company; however, if laws, administrative regulations and decisions of the State Council otherwise provide for the paid-up registered capital or the minimum registered capital of a joint-stock company, such provisions shall apply.

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Share Capital

Under Hong Kong law, the directors of a Hong Kong company may (with the prior approval of the shareholders, if necessary) issue new shares in the company. Under the PRC Company Law, any increase in the registered capital of a company is subject to the approval of the general meeting of shareholders and the relevant Chinese government and regulatory authorities. There is no minimum capital requirement for Hong Kong companies under Hong Kong law.

According to the PRC Company Law, shareholders may make capital contributions in money or in kind, intellectual property rights, land use rights and other non-monetary property that can be valued in money and can be transferred according to law, except for property that cannot be used for capital contributions under laws and administrative regulations. Non- monetary property as capital contribution shall be valued and verified, and shall not be over-valued or under-valued. There are no restrictions on Hong Kong companies under Hong Kong law. There is no such restriction under Hong Kong law for companies incorporated in Hong Kong.

Restrictions on Shareholding and Transfer of Shares

Under PRC law, the Company’s domestic shares denominated and subscribed in RMB may only be subscribed and traded by the government or authorized government departments, PRC legal persons, natural persons, qualified foreign institutional investors or qualified foreign strategic investors. Overseas listed shares denominated in RMB and subscribed in currencies other than RMB may only be subscribed and traded by Hong Kong, Macau, Taiwan or any country and region outside the PRC or by eligible domestic institutional investors. However, eligible institutional investors and individual investors may trade in Hong Kong and Shanghai (or Shenzhen) stocks via the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect.

Under the PRC Company Law, shares held by the promoters shall not be transferred within one year from the inception of the company. Shares already issued by the company before [REDACTED] may not be transferred within one year after the shares of the company are listed on the stock exchange. The directors, supervisors and senior management shall report to the company about their shareholdings and changes thereof and shall not transfer more than 25% of their shares per annum during their terms of office; the shares they hold in the company shall not be transferred within one year after the shares in the company are listed. Within half a year after resignation of the aforesaid persons, they may not transfer shares in the company held by them. The company may impose limitations in its articles of association on the transfer by directors, supervisors and senior management of their shareholdings. There are no restrictions on shareholdings and share transfers under Hong Kong law, except for a six-month lock-up period for the issue of shares by a company and a 12-month lock-up period for the sale of shares by a controlling shareholder.

– IV-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 IV SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS

Financial Assistance for Acquisition of Shares

While the PRC Company Law does not prohibit or restrict a company limited by shares or its subsidiaries from providing financial assistance to assist in the acquisition of shares in itself or in its holding companies, the Mandatory Provisions contain certain restrictions on the provision of such financial assistance by a company and its subsidiaries which are similar to the relevant restrictions in the Hong Kong Companies Law.

Right to Vary Class of Shares

The PRC Company Law, while not making any special provision for changes in the rights of classes of shareholders, provides that the State Council may promulgate provisions relating to other classes of shares. The Mandatory Provisions contain detailed provisions as to how to determine whether a change in the rights of a class of shareholders has occurred or not and regarding the approval procedures that must be followed in this regard. These provisions have been included into the Articles of Association, which are summarized in the Appendix to this document.

Under the Companies Ordinance, the rights attached to a class of shares may not be modified except (i) with the sanction of a special resolution of the holders of the relevant class of shares at a separately convened meeting, (ii) with the consent in writing of the holders of three-fourths in nominal value of the issued shares of the relevant class, or (iii) if the articles of association contain provisions relating to the variation of rights, such provisions shall prevail.

We have incorporated into the Articles of Association provisions protecting the rights of classes of shares in a manner similar to that required under Hong Kong law in accordance with the Hong Kong Listing Rules and the Mandatory Provisions. The Articles of Association define holders of overseas listed shares and domestic listed shares as different classes of shareholders. The special procedures for voting by classified shareholders do not apply to (i) the issuance of A shares and H shares not exceeding 20% of the existing issued A shares and H shares, respectively, separately or simultaneously, within a 12-month period after approval by a special resolution at a general meeting of shareholders; (ii) the implementation of our plan on issuance of A shares and H shares at the time of our establishment within 15 months from the date of approval by the securities regulatory authority under the State Council or within the period specified in the applicable regulations.

– IV-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 IV SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS

Directors, Senior Management and Supervisors

The PRC Companies Law, unlike the Hong Kong Companies Law, does not contain any provisions relating to directors’ declaration of interests in material contracts, restrictions on companies providing certain benefits to directors and guarantees of directors’ liabilities and prohibitions on compensation for loss of office without shareholders’ approval. The Mandatory Provisions provide that all directors, supervisors, managers and other senior management of the company, who are directly or indirectly materially interested in a contract, transaction or arrangement entered into or planned by the company, shall disclose the nature and extent of their interest to the Board of Directors as soon as possible. At the same time, the company shall stipulate in the contracts on compensation matters entered into with the company’s directors and supervisors that when the company is to be acquired, its directors and supervisors shall be entitled to receive compensation or other payments for loss of office or retirement under the conditions approved in advance by the general meeting of shareholders. In addition, directors, supervisors, managers and other senior management of the company are obligated to exercise their rights or perform their duties with the care, diligence and skill that a reasonably prudent person in similar circumstances would exercise as they should.

Supervisory Board

Under the PRC Company Law, the Supervisory Board supervises the conduct of directors and senior management in the execution of their duties to the company. There is no mandatory requirement for the establishment of a Supervisory Board by companies incorporated in Hong Kong. There is no mandatory requirement in Hong Kong for incorporated companies to establish a Supervisory Board. The Mandatory Provisions provide that the supervisors shall faithfully perform their supervisory duties according to laws, administrative regulations and the articles of association of the company.

Derivative Action by Minority Shareholders

Under Hong Kong law, a shareholder may, with leave of the court, bring a derivative action on behalf of a company if a director has committed misconduct against the company. For example, if a director controls a majority of the votes cast at a general meeting of shareholders, leave may be granted, thereby preventing the company from suing the director on its own behalf.

The PRC Company Law provides that if the directors or senior management violate the regulations when performing their duties and cause damage to the company, shareholders of a joint stock company, who individually or collectively hold more than one percent of the company’s shares for more than one hundred and eighty consecutive days may, request the Supervisory Board in writing to file a lawsuit in the people’s court; if the supervisors violate the regulations when performing their duties and cause damage to the company, the aforementioned shareholders may request that the Board of Directors in writing to file a lawsuit with the people’s court. If the Supervisory Board or Board of Directors refuses to institute legal proceedings after receipt of the aforesaid written request, or fails to institute legal proceedings

– IV-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 IV SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS within 30 days after receipt of the said request, or if the circumstance is urgent or any delay of legal proceedings may incur irrecoverable damage to the interests of the company, the shareholders as specified in the preceding paragraph shall have the right to directly institute legal proceedings in their own names for the interests of the company. In addition, if any other person infringes upon the legitimate rights and interests of the company, thereby causing any loss to the company, the foregoing shareholders may institute legal proceedings pursuant to the preceding two paragraphs. The Mandatory Provisions also provide that shareholders may sue the company or other shareholders, directors, supervisors, managers and other senior management of the company in accordance with the articles of association. The prosecution referred to in the preceding paragraph includes filing a lawsuit with a court or applying for arbitration with an arbitration body. In addition, as a condition of the listing of shares on the Hong Kong Stock Exchange, each director and supervisor of a company limited by shares (as proxy) are required to give an undertaking to the company to enable the minority shareholders to take action in the event of default of the directors and supervisors of the company.

Protection of Minorities

Under Hong Kong law, a shareholder of a company incorporated in Hong Kong, who is dissatisfied and complains that the affairs of the company have been conducted in an unfair manner to his detriment, may petition the court for an appropriate order to remedy the unfair prejudice. In addition, under the Companies (Winding Up and Miscellaneous Provisions) Ordinance, a shareholder may seek the winding up of the company on just and equitable grounds. In addition, on the petition of a specified number of shareholders, the financial secretary may appoint inspectors with wide statutory powers to investigate the affairs of companies incorporated or registered in Hong Kong.

Under the PRC Company Law, where the existence of the company will seriously damage the shareholders’ interests since it suffers from serious operation and management difficulties, which cannot be solved in other ways, shareholders of the company holding more than 10% of the voting rights may request the people’s court to dissolve the company. However, the Mandatory Provisions provide that, except for obligations required by law, administrative regulations or the listing rules of the stock exchange on which the company’s shares are listed, a Controlling Shareholder, in exercising his powers as a shareholder, shall not, by exercising his voting rights, relieve a director or supervisor of the duty that he should act in good faith in the best interests of the company; or authorize a director or supervisor to deprive the company (for his own benefit or that of others) of any form of property, including (but not limited to) any opportunity to benefit the company; or approve the directors or supervisors (for their own or others’ benefit) to deprive other shareholders of their personal rights and interests, including (but not limited to) any distribution rights, voting rights.

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Notice of General Meetings of Shareholders

Pursuant to the PRC Company Law, all the shareholders shall be notified of the annual general meeting of shareholders and extraordinary general meetings of shareholders at least 20 days and 15 days prior to the date of the meeting, respectively. According to the Official Reply of the State Council on Adjusting the Provisions Governing Matters Including the Application of the Notice Period for the Convening of Shareholders’ General Meetings by Companies Listed Overseas (《國務院關於調整適用在境外上市公司召開股東大會通知期限等事項規定的批覆》) promulgated by the State Council on October 17, 2019, the notice period for a shareholders’ meeting, the shareholder proposal right, and the procedures for convening a shareholders’ meeting, for those joint stock companies established within the territory of China but listed outside the territory of China, should be governed by the PRC Company Law.

For companies incorporated in Hong Kong, the minimum notice period for the general meeting of shareholders is 14 days. In addition, if the meeting involves deliberation on a resolution requiring special notice, the company must also give notice to its shareholders at least 14 days before the date of the meeting. The notice period for annual general meeting of shareholders is 21 days.

Quorum for General Meetings of Shareholders

Under the Companies Ordinance, unless otherwise provided in the articles of association, the quorum for a general meeting of shareholders must be at least two shareholders. As for companies with only one shareholder, the quorum must be one shareholder. The PRC Company Law does not specify the quorum for the general meeting of shareholders, but according to the Special Regulations and Mandatory Provisions, the company calculates the number of voting shares represented by the shareholders who intend to attend the meeting based on the written responses received twenty days prior to the general meeting of shareholders. If the number of voting shares represented by the shareholders who intend to attend the meeting reaches at least one-half of the total number of voting shares in the company, the company may convene a general meeting of shareholders; if it fails to reach the number, the company shall notify the shareholders of the matters to be considered at the meeting, and the date and place of the meeting again in the form of an announcement within five days, and upon notice of the announcement, the company may convene a general meeting of shareholders.

Under Hong Kong laws, the quorum for a general meeting of shareholders shall be two shareholders unless otherwise provided in the articles of association, except that if the company has only one shareholder, the quorum shall be one shareholder.

Voting

Under the Companies Ordinance, an ordinary resolution may be passed with a simple majority of the votes cast in favor of the resolution by shareholders present in person or by proxy at a general meeting of shareholders, and a special resolution shall be passed with no less than three-fourths of the votes cast in favor of the resolution by shareholders present in person or by proxy at a general meeting of shareholders.

– IV-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 IV SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS

Under the PRC Company Law, a resolution at a general meeting of shareholders must be passed with a majority of the votes held by the shareholders present at the meeting. However, a resolution to amend the Articles of Association, to increase or reduce the registered capital, and a resolution to merge, demerge, dissolve or change the corporation form of the company at a general meeting of shareholders must be passed with at least two-thirds of the votes held by the shareholders present at the meeting.

Under Hong Kong laws, an ordinary resolution is passed with a simple majority of the votes cast in favor of the resolution by shareholders present in person or by proxy at a general meeting of shareholders, and a special resolution shall be passed with no less than three-fourths of the votes cast in favor of the resolution by shareholders present in person or by proxy at a general meeting of shareholders.

Fiduciary Duties

In Hong Kong, Directors have a fiduciary duty to the company, including the duty to act in the interests of the company. In addition, the Companies Ordinance imposes a statutory duty of diligence on directors. Under the Special Regulations, directors, supervisors, managers and other senior management owe a duty of good faith and diligence to the Company.

Financial Disclosure

Under the PRC Company Law, a joint stock limited company is required to make its financial report available at the company for inspection by shareholders 20 days before its annual general meeting of shareholders. A joint stock limited company of which the shares are publicly offered must publish its financial and accounting report.

The Companies Ordinance requires a company incorporated in Hong Kong to send to every shareholder a copy of its financial statements, accountants’ report and directors’ report, which are to be presented before the company at its annual general meeting, no less than 21 days before such meeting. The Companies Ordinance requires a company incorporated in Hong Kong to send financial statements, the auditor’s report and the report of the Board of Directors to each shareholder at least 21 days before the annual general meeting of shareholders, which will be tabled at the company’s annual general meeting of shareholders. A joint stock limited liability company is required under the PRC law to prepare its financial statements in accordance with the PRC GAAP. The Mandatory Provisions also require that a company must, in addition to preparing financial statements following the accounting standards for business enterprises and provisions of the PRC, have its financial statements prepared in accordance with international or overseas accounting standards concerned. Where there are material differences between the financial statements prepared in accordance with the two types of accounting standards, they should be clarified in the notes to the financial statements. In allocating the after-tax profit for the fiscal year in question, the company shall take the after-tax profit result specified in either of two aforementioned financial statements, whichever is smaller. The company publishes financial reports twice per fiscal year, namely an interim financial report within 60 days of the end of the first six months of a fiscal year and an annual financial report within 120 days of the end of the fiscal year.

– IV-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 IV SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS

Information on Directors and Shareholders

Under the PRC Company Law, the shareholders are entitled to inspect the company’s articles of association, register of shareholders, counterfoil of debentures, minutes of general meeting of shareholders, resolutions of meetings of the Board of Directors, resolutions of meetings of the Supervisory Board and financial and accounting reports and to make proposals or enquires on the company’s operations. This is similar to the rights granted to shareholders of Hong Kong companies under the Companies Ordinance.

Receiving Agency

Under the PRC Company Law and Hong Kong law, dividends once declared are debts payable to shareholders. The limitation period for debt recovery action under Hong Kong law is six years, while under the PRC law this limitation period is three years. The Mandatory Provisions require the relevant company to appoint a receiving agent for shareholders of overseas listed foreign shares, to receive on behalf of holders of shares dividends declared and other monies owed by the company in respect of its overseas listed foreign shares.

Corporate Reorganization

A company incorporated in Hong Kong may reorganize itself in various ways, such as by transferring all or part of its business or property to another company in a voluntary winding up under Section 237 of the Companies (Winding Up and Miscellaneous Provisions) Ordinance, or by entering into a court-approved settlement or arrangement between the company and its creditors, or between the company and its shareholders under Section 673 and Division 2 of Part 13 of the Companies Ordinance. In addition, under the Companies Ordinance, wholly-owned subsidiaries within a group may also merge horizontally or merge vertically with the approval of the shareholders. Under PRC laws, a merger, demerger, dissolution or change of the corporation form of a company shall be subject to the approval of the shareholders at a general meeting of shareholders.

Receiving Agent

Under the PRC Company Law and the laws of Hong Kong, dividends, when declared, become a liability payable to shareholders. Under Hong Kong laws, the statute of limitations for claiming repayment of debts is six years, while under PRC law, the statute of limitations is three years. The Mandatory Provisions require the company concerned to appoint a trust company registered under the Trustee Ordinance (《受託人條例》) of Hong Kong, Chapter 29 of Hong Kong laws as a receiving agent to receive on behalf of the holders of the shares the dividends declared and all other sums owed by the company in respect of the shares in question.

– IV-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 IV SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS

Corporate Reorganization

A corporate reorganization of a Hong Kong incorporated company may be carried out in various ways, such as by transferring the whole or part of the business or property of the company to another company in a voluntary winding up under Section 237 of the Companies (Winding Up and Miscellaneous Provisions) Ordinance, or by entering into a compromise or arrangement between the company and its creditors, or between the company and its shareholders under Section 237 and Division 2 of Part 13 of the Companies Ordinance, provided that the relevant reorganization is approved by the court. In addition, under the Companies Ordinance, wholly-owned subsidiaries within a group may also merge horizontally or merge vertically with the approval of the shareholders.

Under PRC law, the merger, demerger, dissolution or change of the corporation form of a company limited by shares requires the approval of the shareholders at a general meeting of shareholders.

Dispute Arbitration

In Hong Kong, disputes between a shareholder and a company incorporated in Hong Kong or its directors may be resolved through legal proceedings in the courts. The Mandatory Provisions provide that such disputes shall be referred to HKIAC or CIETAC for arbitration at the option of the applicant.

Withdrawal of Statutory Reserve

According to the PRC Company Law, when a company distributes its profit after tax for the year, it shall withdraw 10% of the profit and include it in the company’s statutory reserve. If the accumulated statutory reserve is at least 50% of the company’s registered capital, it may not be withdrawn. There is no such requirement under Hong Kong laws.

Remedies of the Company

According to the PRC Company Law, the Controlling Shareholders, de facto controller, director, supervisor and senior management of the company may not use the connected relations to damage the interests of the company. Otherwise, they shall make compensation for the loss incurred to the company, if any. Under the Hong Kong Listing Rules, remedies similar to those provided for under Hong Kong laws (including annulment of relevant contracts and recovery of profits from directors, supervisors or senior management) are set out in the articles of association.

– IV-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 IV SUMMARY OF PRINCIPAL LEGAL AND REGULATORY PROVISIONS

Dividends

Under the relevant PRC laws and regulations, the company is required to withhold and pay tax payable to the relevant tax authorities in respect of dividends or other distributions payable to shareholders under certain circumstances. The statute of limitations for the recovery of debts (including the recovery of dividends declared) is six years under the laws of Hong Kong, and three years under the laws of the PRC. The company shall not exercise the power to forfeit any unclaimed dividends on shares before the expiry of the relevant statute of limitations.

Closure of Register of Shareholders

According to the PRC Company Law and the Mandatory Provisions, no change in the register of shareholders arising from the transfer of shares may be registered within 30 days prior to the general meeting of shareholders, or within five days prior to the base date of the company’s decision to distribute dividends. The Companies Ordinance stipulates that the company may not suspend the registration of the transfer of shares in the register of shareholders for more than 30 days in any given year (which may be extended to 60 days in certain cases).

– IV-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 V SUMMARY OF THE ARTICLES OF ASSOCIATION

DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT

Power to Allocate and Issue Shares

The Articles of Association does not contain clauses that authorize the Board of Directors to allocate or issue shares. According to the needs of operation and development, the Company may increase its registered capital by way of public issue of shares approved by the relevant authorities in accordance with the laws and administrative regulations and by separate resolutions of the general meeting of shareholders. At the same time, the issuance of new shares for capital increase by the Company is approved in accordance with the provisions of the Articles of Association and is carried out in accordance with the procedures stipulated by relevant state laws and administrative regulations.

Power to Dispose Fixed Assets of the Company

When the Board of Directors disposes of fixed assets, if the sum of the expected value of the fixed assets to be disposed of and the value obtained from the fixed assets already disposed of in the four months prior to this proposed disposal exceeds 33% of the value of the fixed assets as shown in the balance sheet recently considered by the general meeting of shareholders, the Board of Directors shall not dispose of or agree to dispose of such fixed assets without the approval of the general meeting of shareholders.

The disposal of fixed assets referred to above includes the act off transferring interests in certain assets, but does not include the act of providing guarantees with fixed assets.

The validity of the transactions carried out by the Company in connection with the disposal of fixed assets shall not be affected by any violation of the relevant provisions of the Articles of Association.

Compensation or Other Payments Received for Loss of Office

The Company shall stipulate in the contracts on compensation matters entered into with the Company’s directors and supervisors that when the Company is to be acquired, its directors and supervisors shall be entitled to receive compensation or other payments for loss of office or retirement under the conditions approved in advance by the general meeting of shareholders. Acquisition of the Company refers to any of the following circumstances:

(I) An offer made by any person to all shareholders; or

(II) An offer is made by any person with a view to the offeror becoming the Controlling Shareholder. The definition of Controlling Shareholder is the same as defined in the Articles of Association.

– 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 ARTICLES OF ASSOCIATION

If the relevant director or supervisor fails to comply with the above provisions, any payment received shall belong to the person who sells the shares for accepting the aforesaid offer. The director or supervisor shall bear all expenses arising from the distribution of such payments to the person in a proportional manner and the expenses shall not be deducted from such amounts.

Loans to Directors, Supervisors or Other Senior Management

The Company shall neither provide the directors, supervisors, general managers or senior management of the Company or its Controlling Shareholder with loans or loan guarantees either directly or indirectly nor provide persons related to the above personnel with loans or loan guarantees.

The provisions of the preceding paragraph shall not apply to the following cases:

(I) The Company provides loans to its subsidiaries or guarantees loans to its subsidiaries;

(II) Where the Company provides loans, loan guarantees or other payments to directors, supervisors, general managers and other senior management of the Company to cover expenses incurred for the purposes of the Company or for the performance of their corporate duties, in accordance with an employment contract approved by the general meeting of shareholders; and

(III) If the normal scope of business of the Company extends to include the provision of loans and loan guarantees, the Company may provide loans and loan guarantees to the relevant directors, supervisors, general managers and other senior management and their associates, provided that the conditions for the provision of loans and loan guarantees shall be normal business conditions.

If the Company provides a loan in violation of the preceding article, the person who receives the money shall immediately repay it, regardless of the terms of the loan.

Loan guarantees provided by the Company in violation of the provisions of the Articles of Association shall not be enforceable by the Company, except for the following cases:

(I) When a loan is made to a person related to a director, supervisor, general manager and other senior management of the Company or its Controlling Shareholder, without the knowledge of the person providing the loan;

(II) Where the collateral provided by the Company has been legally sold by the lender providing the loan to a bona fide purchaser.

– 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 ARTICLES OF ASSOCIATION

The guarantee referred to in the Articles of Association includes the act of the guarantor assuming responsibility or providing property to guarantee the performance of the obligations of the obligor.

Lending Power

The Articles of Association (a) do not contain any specific provisions regarding the manner in which the directors may exercise their borrowing powers (except that the Board of Directors is authorized by the general meeting of shareholders to make proposals for the issuance of corporate bonds); and (b) the issuance of corporate bonds by the Company shall be subject to the adoption of a special resolution by the general meeting of shareholders.

Disclosure of Interests in Contracts with the Company

Directors, supervisors, general managers and other senior management of the Company shall disclose to the Board of Directors as soon as possible the nature and extent of their interest in a contract, transaction or arrangement entered into or planned by the Company in which they have a material interest, whether or not the matter in question would normally require the approval and consent of the Board of Directors.

Subject to Note 1 in Appendix III to the Listing Rules of the Hong Kong Stock Exchange or such exceptions as may be permitted by the Hong Kong Stock Exchange, a director shall not vote on any resolution of the Board of Directors approving a contract or arrangement or any other related proposal in which he or any of his close associates (as defined in the applicable Listing Rules of the Hong Kong Stock Exchange from time to time in force) has a material interest; and the directors concerned shall not be counted for the purpose of determining whether a quorum is present.

Unless an interested director, supervisor, general manager and other senior management of the Company have made a disclosure to the Board of Directors in accordance with the above requirements and the Board of Directors has approved the matter at a meeting at which they are not counted in the quorum and at which they do not vote, the Company shall have the right to rescind such contract, transaction or arrangement except in the case where the other party is a bona fide party who has no knowledge of the breach of their obligations by the relevant director, supervisor, general manager and other senior management.

If a person related to a director, supervisor, general manager and other senior management of the Company has an interest in a contract, transaction or arrangement, the director, supervisor, general manager and other senior management concerned shall also be deemed to have an interest.

– 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 ARTICLES OF ASSOCIATION

Remuneration

The Company shall enter into a written contract with the directors, supervisors and senior management of the Company in respect of remuneration matters, which shall be approved in advance by the general meeting of shareholders or the Board of Directors. The written contract shall include at least the following provisions:

(I) The directors, supervisors and senior management give an undertaking to the Company that they will comply with the Company Law, the Special Regulations, the Articles of Association, the Code on Takeovers and Mergers (《公司收購及合併守則》), the Share Buybacks Code (《股份購回守則》) approved by the SFC (as amended from time to time) and other provisions entered into by the Hong Kong Stock Exchange, and agree that the Company will have the remedies provided for in the Articles of Association, and that such contract and their positions are non-transferable;

(II) The directors, supervisors and senior management undertake to the Company, on behalf of each shareholder, to observe and perform their duties to the shareholders as provided for in the Articles of Association;

(III) The arbitration clause provided for in the Articles of Association. The foregoing compensation matters include:

(I) Remuneration as directors, supervisors or senior management of the Company;

(II) Remuneration as directors, supervisors or senior management of the Company’s subsidiaries;

(III) Compensation for other services rendered for the management of the Company and its subsidiaries; and

(IV) Compensation for the loss of office or retirement of such director or supervisor.

Except in accordance with the aforementioned contracts, directors and supervisors may not sue the Company for the benefits they are entitled to receive as a result of the aforementioned matters.

The Company shall regularly disclose to shareholders the compensation received by directors, supervisors and senior management from the Company.

– 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 ARTICLES OF ASSOCIATION

Appointment, Resignation and Dismissal

None of the following persons shall serve as our director, supervisor, general manager or senior management:

(I) A person who has no civil capacity or has limited civil capacity;

(II) A person who has been imposed penalty for the offense of corruption, bribery, embezzlement, larceny, or disrupting the social economic order and is within five years of the expiry date of punishment or has been deprived of political rights because of this conviction and is within five years of the expiry date of the sentence;

(III) A person who is a former director, factory manager or general manager of a company or enterprise that is bankrupt and liquidated, was personally liable for the bankruptcy of such company or enterprise, and is within three years of the date of completion of bankruptcy and liquidation of such company or enterprise;

(IV) A person who has served as the legal representative of a company or enterprise whose business license was revoked or was ordered to close due to violation of laws, was personally liable, and is within three years of the date on which the business license of such company or enterprise was revoked;

(V) A person who has a relatively large sum of debt, which was not paid at maturity;

(VI) A person who is investigated by the judicial agencies for violation of criminal law and whose case is pending;

(VII) A person who is prohibited to serve leadership in a company pursuant to laws and administrative regulations;

(VIII) A person who is not a natural person;

(IX) A person judged by the competent agencies to have violated the provisions of relevant securities laws, being involved in deceptive or dishonest acts and is within five years of the date on which the judgment was made;

(X) Any other person who is otherwise not eligible under laws or regulations of the place where the Company’s shares are listed.

The validity of actions of the Company’s directors, general manager and other senior management on behalf of the Company to bona fide third parties shall not be affected by any non-compliance in their employment, election or qualification.

– 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 ARTICLES OF ASSOCIATION

The obligations of good faith owed by the directors, supervisors, general manager and other senior management of the Company will not necessarily terminate upon the end of their terms of office, and their obligations to keep the Company’s trade secrets confidential shall remain in effect after the end of their terms of office. The duration of other obligations shall be determined on an equitable basis, depending on the length of time between the time of the event and the departure from office, and the circumstances and conditions under which the relationship with the Company ends.

The liability of directors, supervisors, general managers and other senior management of the Company for breach of a specific obligation may be knowingly discharged by the general meeting of shareholders, except in the cases provided for in Article 59 of the Articles of Association of the Company.

The Company has a Board of Directors, which is accountable to the general meeting of shareholders. The Board of Directors shall consist of seven (7) directors, three (3) of whom shall be independent directors and four (4) of whom shall be non-independent directors. The Board of Directors shall have a chairman. The chairman shall be elected and removed by a majority of all directors for a term of three years and may be re-elected. Directors are not required to hold shares of the Company.

Written notice of the intention to nominate candidates for directors and non-employee representative supervisors and the nominee’s indication of willingness to accept the nomination, as well as relevant written materials on the nominee’s situation, shall be sent to the Company not less than seven (7) days prior to the date of the general meeting of shareholders.

Subject to the relevant laws, regulations and regulatory rules of the place where the Company is listed, if the Board of Directors appoints a new director to fill a casual vacancy on the Board of Directors or to increase the number of seats on the Board of Directors, such appointed director shall hold office only until the next annual general meeting of shareholders of the Company and shall be eligible for re-election at that time.

At least one of the independent directors is a member with appropriate professional qualifications as required by the Hong Kong Listing Rules, or appropriate accounting or related financial management expertize. In addition, at least one of the Company’s independent directors is ordinarily resident in Hong Kong.

Amendments to the Articles of Association

The Company may amend its Articles of Association in accordance with the provisions of the laws, administrative regulations and the Articles of Association. Amendments to the Articles of Association shall be made in accordance with the following procedures:

(I) The Board of Directors shall first adopt a resolution to amend the Articles of Association and prepare amendments to the Articles of Association;

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(II) The Board of Directors shall convene a general meeting of shareholders to vote on the amendment to the Articles of Association by the general meeting of shareholders;

(III) The general meeting of shareholders shall adopt the amendment to the Articles of Association by special resolution;

(IV) The Company reports the amended Articles of Association to the corporate registration authority for the record.

Amendments to the Articles of Association, involving the content of the Mandatory Provisions, shall take effect after being approved by the corporate approval authority authorized by the State Council and the securities commission of the State Council; if they involve matters of company registration, the changes shall be registered in accordance with the law.

ACCOUNTING AND AUDITS

Financial and Accounting Policies

The Company establishes the financial accounting system in accordance with the laws, administrative regulations and the provisions of the relevant state departments. The Company’s fiscal year shall commence on January 1 and end on December 31 of each calendar year. The Company shall prepare financial reports at the end of each fiscal year, which shall be subject to review and verification in accordance with the law. The Company must, in addition to preparing financial statements according to the accounting standards for business enterprises and provisions of the PRC, have its financial statements prepared in accordance with international or overseas accounting standards concerned. Where there are material differences between the financial statements prepared in accordance with the two types of accounting standards, they should be noted in the notes to the financial statements. In allocating the after-tax profit for the fiscal year in question, the Company shall use the lesser of the after-tax profit figures in the two aforementioned financial statements. The Board of Directors shall present to the shareholders at each annual general meeting of shareholders the financial reports prepared by the Company as required by the relevant laws, administrative regulations and regulatory documents issued by local governments and competent authorities.

– 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 ARTICLES OF ASSOCIATION

The Company’s financial report shall be available for shareholders’ inspection at the Company no later than 20 days prior to the annual general meeting of shareholders. Each shareholder of the Company shall have the right to receive the financial report mentioned in the Articles of Association. The financial report in the preceding paragraph shall include the report of the Board of Directors together with the balance sheet (including each document required to be attached by PRC or other laws and administrative regulations) and the profit or loss statement (income statement) or income and expenditure statement (cash flow statement), or (subject to the relevant PRC laws) a summary financial report approved by the Hong Kong Stock Exchange.

The Company shall deliver or send the aforementioned financial report by postage paid mail to each shareholder of overseas listed shares at least 21 days prior to the annual general meeting of shareholders, to the address registered in the register of shareholders. Subject to the laws, administrative regulations, departmental rules and regulations and the relevant regulations of the securities regulatory authority where the Company’s shares are listed, the Company may make announcements (including through the Company’s website).

The Company publishes financial reports prepared under international accounting standards or accounting standards of the [REDACTED] venue overseas twice per fiscal year, namely an interim financial report within 60 days of the end of the first six months of a fiscal year and an annual financial report within 120 days of the end of the fiscal year.

The Company announces results twice in each fiscal year, i.e. interim results within two months after the end of the first six months of each fiscal year and annual results within three months after the end of the fiscal year.

Appointment and Dismissal of Accountants

The Company shall employ an independent accounting firm complying with the relevant regulations of the state to audit its annual report and review and check other financial reports of the Company. The Company’s first accounting firm may be appointed by the inaugural meeting before the first annual general meeting of shareholders, and the term of office of such accounting firm shall terminate at the end of the first annual general meeting of shareholders.

The term of appointment of the accounting firm engaged by the Company shall commence at the end of the Company’s current annual general meeting of shareholders and end at the end of the next annual general meeting of shareholders.

The accounting firm engaged by the Company shall have the following rights:

(I) To inspect the books, records or vouchers of the Company at any time and have the right to request the directors, general manager or other senior management of the Company to provide relevant data and explanations;

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(II) To require the Company to take all reasonable measures to obtain from its subsidiaries such information and explanations as are necessary for the performance of the duties of the accounting firm;

(III) To attend meetings of shareholders, to receive notice of meetings or other information relating to meetings to which any shareholder is entitled, and to speak at any meeting of shareholders on matters involving its capacity as an accounting firm of the Company.

In the event of a vacancy in the position of accounting firm, the Board of Directors may appoint an accounting firm to fill such vacancy prior to the general meeting of shareholders. However, if the Company has other accounting firms in office during the continuance of the vacancy, such accounting firms may still act.

Notwithstanding the terms of the contract entered into between the accounting firm and the Company, the general meeting of shareholders may, by ordinary resolution, decide to dismiss any accounting firm before the expiration of the term of office of such firm. If the accounting firm concerned has a claim against the Company as a result of its dismissal, the right in question shall not be affected thereby.

The compensation of the accounting firm or the manner of determining the compensation shall be decided by the general meeting of shareholders. The remuneration of the accounting firm appointed by the Board of Directors shall be determined by the Board of Directors.

If the Company dismisses or does not renew the appointment of the accounting firm, the accounting firm shall be notified in advance and the accounting firm shall have the right to present its opinion to the general meeting of shareholders. If the accounting firm proposes to resign, it shall explain to the general meeting of shareholders whether the Company has any improper circumstances.

RULES ON GENERAL MEETING OF SHAREHOLDERS

NOTICE AND AGENDA OF GENERAL MEETING OF SHAREHOLDERS

The general meeting of shareholders is divided into annual general meeting of shareholders and extraordinary general meeting of shareholders.

The annual general meeting of shareholders shall be convened once a year and be held within six months of the end of the previous fiscal year.

The extraordinary general meeting of shareholders shall be held when necessary. The Board of Directors shall convene an extraordinary general meeting of shareholders within two months from the date of any of the following circumstances:

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(I) The number of directors falls below the number of directors as required by the Company Law or 2/3 of the number of directors stipulated by the Articles of Association;

(II) The unrecovered losses of the Company amount to 1/3 of the total amount of its paid-up share capital;

(III) It is required by shareholder(s) individually or jointly holding more than 10% equity of the Company;

(IV) When the Board of Directors deems it necessary or when the Board of Supervisors proposes to convene it;

(V) When more than two independent directors propose to convene it;

(VI) Other circumstances stipulated by laws, administrative regulations, departmental rules or the Articles of Association.

In the case of (III), (IV) and (V), the topics of the meeting proposed by the requisitionist shall be included in the agenda of the general meeting of shareholders.

The notice of the general meeting of shareholders shall:

(I) Be made in writing;

(II) Designate the time, place and date of the meeting;

(III) Describe the matters to be discussed at the meeting;

(IV) Provide the shareholders with the data and explanations necessary to enable them to make an informed decision on the matters to be discussed; this principle includes, but is not limited to, that in the event of a proposed merger, share repurchase, capital reorganization or other reorganization of the Company, the specific terms and contracts, if any, of the proposed transaction shall be provided, with a careful explanation of its causes and consequences;

(V) If any director, supervisor, general manager and other senior management have material interests in the matter to be discussed, the nature and extent of the interests should be disclosed; if the matter to be discussed affects such director, supervisor, general manager and other senior management as shareholders differently than it affects other shareholders of the same class, the distinction should be stated;

(VI) Contain the full text of any special resolution to be proposed for adoption at the meeting;

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(VII) State in plain language that a shareholder entitled to attend and vote is entitled to appoint one or more proxies to attend and vote on his or her behalf, and that such proxy need not be a shareholder of the Company;

(VIII) Contain the time and place of delivery of the proxy for voting at the meeting;

(IX) Other matters prescribed by laws, administrative regulations and regulatory documents.

The Company shall convene an annual general meeting of shareholders by giving written notice twenty business days prior to the date of the meeting (excluding the date of giving notice and the meeting), informing all registered shareholders of the matters to be considered at the meeting and the date and place of the meeting by way of announcement. All registered shareholders shall be notified of the extraordinary general meeting of shareholders by way of an announcement fifteen days or ten business days (whichever is longer) before the meeting (excluding the day when the notice is given and the meeting is held).

Unless otherwise provided in the Articles of Association, the notice of the general meeting of shareholders shall be delivered to shareholders (whether or not they have the right to vote at the general meeting of shareholders) by hand or by postage paid mail to the address registered in the register of shareholders or, subject to applicable laws and regulations and the listing rules of the place where the shares of the Company are listed, published on the Company’s website and the websites designated by the Hong Kong Stock Exchange, etc. If an announcement shall be made to shareholders of overseas listed shares in accordance with the Articles of Association, the relevant announcement shall also be published in accordance with the method prescribed by the Listing Rules of the Hong Kong Stock Exchange. For shareholders of domestic shares, notice of the general meetings of shareholders may also be made by way of an announcement.

The announcement referred to in the preceding paragraph shall be published in one or more newspapers designated by the securities authority under the State Council within twenty business days before the annual general meeting of shareholders (excluding the day of giving notice and the meeting) or fifteen days or ten business days before the extraordinary general meeting of shareholders (whichever is longer) (excluding the day of giving notice and the meeting), and upon such announcement, all shareholders of domestic shares shall be deemed to have received notice of the relevant general meeting of shareholders.

The notice of the shareholders’ general meeting issued to the Shareholders of foreign listed shares may be published on the designated website of the Hong Kong Stock Exchange and the website of the Company. Once announced, all foreign listed Shareholders shall be deemed to have received the relevant notice of the general meeting.

– 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 ARTICLES OF ASSOCIATION

Powers of the General Meeting of Shareholders

The general meeting is the authority of power of the Company, and shall exercise the following duties and powers in accordance with the law:

(I) to decide the Company’s operational policies and investment plans;

(II) to elect and change the Directors and Supervisors who are not representatives of the employees and decide on the remunerations of Directors and Supervisors;

(III) to examine and approve reports of the Board of Directors;

(IV) to examine and approve reports of the Supervisory Committee;

(V) to examine and approve the proposed annual financial budgets, final accounts of the Company;

(VI) to examine and approve the profit distribution plans and loss recovery plans of the Company;

(VII) to make resolutions on the increase or reduction of the registered capital of the Company;

(VIII) to make resolutions on the Company’s issue of bonds, any class of shares, warrants and other similar securities;

(IX) to make resolutions on the merger, division, dissolution, liquidation or change in the form of the Company;

(X) to amend the Articles of Association;

(XI) to examine the proposals by the Shareholders severally or jointly holding three percent or more of the voting shares of the Company;

(XII) to make resolutions on the engagement, renewal, or discontinuance of engagement of accounting firms by the Company;

(XIII) to make resolutions on the guarantees that shall be approved by the general meeting of shareholders;

(XIV) to examine the matters relating to the purchases and disposals of the Company’s material assets within one year with an amount exceeding or equal to 30 percent of the Company’s latest audited total assets;

(XV) to examine equity incentive plans;

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(XVI) to examine other matters required to be resolved at the general meeting pursuant to laws, administrative regulations, departmental rules and provisions of the Articles of Association;

(XVII) other matters required by the listing rules of the stock exchange where the Company’s shares are listed.

Resolutions of Shareholders’ General Meetings

The resolution of the general meeting of shareholders includes ordinary resolution and special resolution. The following matters shall be approved by the general meeting of shareholders through ordinary resolutions:

(I) Work report of the Board of Directors and the Supervisory Board;

(II) Plans of earnings distribution and loss make-up schemes drafted by the Board of Directors;

(III) Appointment or dismissal of the members of the Board of Directors and the Supervisory Board (except employee representatives), and their payment and payment methods;

(IV) Annual budget and final account report, balance sheets, income statements and other financial statements;

(V) Other matters other than those approved by special resolution stipulated in the laws, administrative regulations or the Articles of Association.

The following matters shall be approved by special resolution at the general meeting of shareholders:

(I) Increase or decrease of the registered capital, or the issuance of shares, warrants or other quasi-securities;

(II) Issuance of corporate bonds;

(III) Division, merger, dissolution and liquidation of the Company and the change of form of the Company;

(IV) Amendment of the Articles of Association;

(V) Substantial assets acquired or disposed of or security provided for an amount exceeding 30% of the latest audited total assets of the Company within one year;

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(VI) Other matters as required by the laws, administrative regulations and the Articles of Association, and as approved by ordinary resolution of the general meeting of shareholders which are believed could materially affect the Company and need to be approved by special resolution;

(VII) Other matters required by the Listing Rules of the Hong Kong Stock Exchange to be passed by special resolution.

PROXIES

Any shareholder who is entitled to attend and vote at general meeting of shareholders has the right to appoint one or more persons (who may not necessarily be shareholders) as his or her proxy to attend and vote at the meeting in his or her place. Pursuant to the authorization of the shareholder, the proxy may exercise the following rights:

(I) Speak for the shareholder at the general meeting of shareholders;

(II) Demand a poll individually or with others;

Exercise the right to vote by a show of hands or a poll, but the proxy may only exercise the right to vote by a poll when more than one proxy is appointed.

The proxy appointment shall be in writing and shall be signed by the appointor or a person duly authorized in writing. Where the appointor is a legal person, the stamp of the legal person shall be affixed, or signed by its director or a duly authorized agent.

Any power of attorney form sent by the directors to the shareholder for appointing a proxy shall allow the shareholder, according to his or her free will, to instruct the proxy to vote and provide instructions separately for matters to be put to vote on each item on the meeting agenda. The power of attorney shall specify whether the proxy could vote at his or her own will if the shareholder does not provide specific instructions.

In addition to the foregoing, the aforementioned proxy form shall contain the following matters: the number of shares represented by the proxy, the name of the proxy; whether the proxy has the right to vote; whether the proxy has the right to vote on provisional proposals that may be included in the agenda of the general meeting of shareholders; specific instructions on what voting rights to exercise if he/she has the right to vote; the date of issuance and the period of validity. If several persons are proxies, the proxy shall indicate the number of shares represented by each proxy.

The votes of the proxy given pursuant to the terms of the power of attorney shall remain valid notwithstanding the death, loss of capacity of the appointor or revocation of the proxy or of the authority under which the proxy was executed, or the transfer of the shares in respect of which the proxy is given, provided that the Company does not receive written notice concerning such matters before the related meeting is convened.

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Access to the Register of Shareholders

The Company shall establish a register of shareholders and register the following matters:

(I) The name, address (residence), occupation or nature of each shareholder;

(II) The class of shares held by each shareholder and the number thereof;

(III) The amount paid or payable for the shares held by each shareholder;

(IV) The number of shares held by each shareholder;

(V) The date of registration of each shareholder as a shareholder;

(VI) The date each shareholder ceased to be a shareholder.

The register of shareholders shall be sufficient evidence of the shareholder’s ownership of the Company’s shares; except where there is evidence to the contrary.

Subject to compliance with the Articles of Association and all other applicable provisions, upon transfer of the Company’s shares, the name of the transferee of the shares will be included in the register of shareholders as the holder of such shares.

Subject to compliance with the Articles of Association and all other applicable provisions, upon transfer of the Company’s shares, the name of the transferee of the shares shall be included in the register of shareholders as the holder of such shares.

Pursuant to the understanding reached and the agreement entered into between the competent agency in charge of securities of the State Council and the overseas securities regulatory authorities, the Company may keep the original register of the shareholders of the overseas listed foreign shares overseas and entrust an overseas agency to manage it. The original register of the shareholders of the overseas listed foreign shares listed in Hong Kong shall be kept in Hong Kong. The Company shall keep a copy of the register of the holders of the overseas listed foreign shares at our residential address. The overseas entrusted agency shall at all times maintain consistency between the original and copy of the register of the holders of the overseas listed foreign shares. In case of inconsistency between the original and copy of the register of the holders of the overseas listed foreign shares, the original shall prevail. The Company must keep a complete register of shareholders.

The register of shareholders shall include the following:

(I) Register of shareholders kept at our residential address other than those specified in (II) and (III) below;

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(II) Register of the holders of our overseas listed foreign shares kept at the location of the stock exchange where such shares are listed; and

(III) Register of shareholders kept in other locations according to the decision of the Board of Directors as required for the [REDACTED] of the shares.

Different parts of the register of shareholders shall not overlap. The transfer of shares registered in a certain part of the register of shareholders shall not be registered elsewhere in the register of shareholders as long as the shares remain registered. Changes or corrections to the parts of the register of shareholders shall be made in accordance with the laws of the place where the parts of the register of shareholders are kept.

Minority Shareholders’ Rights in the Event of Fraud or Bullying

Apart from the obligations required in laws, administrative regulations, or the listing rules of the stock exchange on which our shares are listed, our Controlling Shareholders shall not make any decision that is detrimental to the interest of all or part of the shareholders on the following issues by exercising his or her shareholder rights:

(I) Releasing the directors and supervisors from the responsibility of acting honestly in the best interest of the Company;

(II) Permitting the directors and supervisors (for their own or others’ interests) to deprive the Company of assets in any form, including, but not limited to, any opportunity that is beneficial to the Company; and

(III) Permitting the directors and supervisors (for their own or others’ interests) to deprive other shareholders of their personal rights and interests, including, but not limited to, any distribution or voting right, but excluding the restructuring of the Company approved at the general meeting of shareholders pursuant to the Articles of Association.

The Controlling Shareholders and de facto controller of the Company may not use the connected relations to damage the interests of the Company. Otherwise, they shall make compensation for the loss incurred to the Company, if any.

A “Controlling Shareholder” for the purpose of the Articles of Association is a shareholder who falls into any of the following conditions:

(I) That person, acting alone or in concert with others, may elect more than half of the directors;

(II) The person, acting alone or in concert with others, may exercise more than 30% of the voting rights of the Company or may control the exercise of more than 30% of the voting rights of the Company;

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(III) The person, acting alone or in concert with others, holds more than 30% of the shares of the Company issued and outstanding;

(IV) The person, acting alone or in concert with others, otherwise controls the Company in a de facto manner.

The “acting in concert” referred to above refers to the act of two or more persons agreeing by agreement (whether oral or written) to obtain voting rights in the Company through any one of them for the purpose of achieving or consolidating control over the Company.

VOTING RIGHTS (GENERAL RIGHTS REGARDING VOTING)

Shareholders (including proxies) shall exercise their voting rights at the general meeting of shareholders by the number of voting shares they represent, and each share shall have one vote. However, shares of the Company held by the Company shall not have voting rights, and such shares shall not be counted as part of the total number of shares with voting rights present at the general meeting of shareholders.

When voting on a poll, shareholders with two or more votes (including proxies) are not required to cast all their votes in favor or against.

When the number of dissenting votes equals the number of supporting votes, regardless of voting by show of hands or ballot, the chairman of the Board of Directors is entitled to one additional vote.

Increase or Decrease of Shares

Upon resolutions adopted at the general meeting of shareholders, the Company may apply any of the following methods to increase its capital based on its needs for operation and development and in accordance with laws and administrative regulations:

(I) Public issue of shares subject to the approval of the relevant authorities;

(II) Non-public offering;

(III) Placing to existing shareholders;

(IV) Distribution of new shares to existing shareholders;

(V) Conversion from capital reserves to share capital;

(VI) Other methods permitted by the relevant laws and administrative regulations or approved by the CSRC.

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The issuance of new shares for capital increase by the Company is approved in accordance with the provisions of the Articles of Association and is carried out in accordance with the procedures stipulated by relevant state laws and administrative regulations.

The Company may reduce its registered capital. To reduce its registered capital, the Company shall abide by the Company Law and other relevant provisions and the procedures set out in the Articles of Association. To reduce its registered capital, the Company must prepare balance sheet and list of property.

Transfer of Shares

Unless otherwise provided by laws, administrative regulations or the listing rules of the place where the Company’s shares are listed, the Company’s fully paid-up shares are not subject to any restrictions on the right of transfer and are freely transferable and free from any liens. The transfer of overseas listed foreign shares listed in Hong Kong is subject to registration with a local stock registrar in Hong Kong as entrusted by the Company. The Company shall not accept its shares as the target of pledge rights.

The shares of the Company held by the promoters may not be transferred within one year after incorporation of the Company. Directors, supervisors and senior management of the Company shall declare to the Company the shares held by them in the Company and the changes therein, and shall not transfer more than 25% of the total number of shares held by them in the Company each year during their term of office. Within half a year after resignation of the aforesaid persons, they may not transfer shares of the Company held by them.

If a director, supervisor, senior management or shareholder holding more than 5% of the Company’s shares sells the Company’s shares held by him/her within 6 months after buying them or buys them again within 6 months after selling them, the resulting proceeds shall belong to the Company, and the Board of Directors of the Company shall recover the proceeds.

If the Board of Directors of the Company does not implement the provisions of the preceding paragraph, the shareholders shall have the right to request the Board of Directors to do so within 30 days. If the Board of Directors of the Company fails to execute the same within the said period, the shareholder shall have the right to file a lawsuit directly with the people’s court in his/her own name for the benefit of the Company.

If the Board of Directors of the Company does not execute the provisions of the first paragraph, the responsible directors shall be jointly and severally liable in accordance with the law.

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Repurchase of Shares

Under any of the following circumstances, the Company may submit to relevant competent authorities for approval to buy back our outstanding issued shares according to the procedures stipulated in the Articles of Association:

(I) Reducing the Company’s registered capital;

(II) Merging with other companies which hold our shares;

(III) Granting shares to the staff of the Company as incentives;

(IV) Requesting the Company to buy back its shares from shareholders who vote against any resolutions adopted at the general meeting of shareholders concerning the merger and division of the Company;

(V) Converting shares into bond issued by the Company which is convertible to shares of the Company upon [REDACTED] of the Company;

(VI) Necessary for the Company to maintain the Company’s value and shareholders’ equity; or

(VII) Other circumstances as permitted by the laws and administrative regulations.

Except for the above-mentioned cases, the Company shall not engage in the sale and purchase of the Company’s shares.

The Company may buy back shares in any of the following ways with the approval of the competent authorities of the State:

(I) Making a comprehensive buyback offer in the same proportion to all shareholders;

(II) Buying back shares through public trading on the securities exchange;

(III) Buying back shares by an agreement outside a stock exchange;

(IV) In other ways approved by the laws, administrative regulations and permitted by CSRC.

Provide Financial Assistance for Acquiring Shares of the Company

Neither the Company nor its subsidiaries shall at any time provide any financial assistance in any way to persons who purchase or propose to purchase shares of the Company. The aforementioned purchasers of the Company’s shares include those who are directly or indirectly obligated by the purchase of the Company’s shares.

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Neither the Company nor its subsidiaries shall at any time provide financial assistance to the aforementioned obligors in any way in order to reduce or release them from their obligations.

The following acts shall not be considered as the aforementioned prohibition of providing any financial assistance:

(I) The financial assistance in question is provided by the Company in good faith for the benefit of the Company and the primary purpose of the financial assistance is not to purchase shares of the Company or the financial assistance is an incidental part of a master plan of the Company;

(II) The Company distributes its property as dividends in accordance with the law;

(III) The distribution of dividends in the form of shares;

(IV) Reduction of registered capital, repurchase of shares, adjustment of shareholding structure, etc. in accordance with the Articles of Association;

(V) The Company provides loans for its normal business activities within the scope of its operations (but it should not result in a reduction of the Company’s net assets, or even if it constitutes a reduction, the financial assistance is charged to the Company’s distributable profits);

(VI) The Company provides money for an employee stock ownership plan (but it should not result in a reduction of the Company’s net assets or, even if it constitutes a reduction, the financial assistance is charged to the Company’s distributable profit).

For the purpose of the above provisions, “financial assistance” includes, but is not limited to:

(I) Gifts;

(II) Guarantees (including acts of the guarantor assuming liabilities or providing properties to ensure that the obligor performs the obligations), compensation (excluding compensation arising from mistakes of the Company), release or waiver of rights;

(III) Provision of loans or signing of contracts whereby the Company performs some obligations before other parties, change of the parties to the loans/contracts as well as the assignment of the rights in the loans/contracts; and

(IV) Financial assistance provided by the Company in any other manner when it is insolvent, has no net assets, or will suffer significant decreases in net assets.

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“Assuming obligations” includes the obligator’s undertaking of obligations by way of concluding a contract or making an arrangement (regardless of whether such contract or arrangement is enforceable or not, or whether the obligations are undertaken individually or jointly with any other persons), or changing his/her financial status in any other manner.

Distribution of Profits

When the Company distributes its profit after tax for the year, it shall withdraw 10% of the profit and include it in the Company’s statutory common reserve fund. If the accumulated statutory common reserve fund is at least 50% of the Company’s registered capital, it may not be withdrawn. If its statutory common reserve fund is not sufficient to make up losses of the previous year, profits of the current year shall be firstly applied to make up losses before allocation is made to the statutory common reserve fund according to the foregoing provision. After the withdrawing the statutory common reserve fund from the after-tax profit by the Company, the discretionary reserve may be withdrawn from the after-tax profit with the approval from the general meeting. The profit after makeup of the loss and withdrawing of the reserves shall be available for distribution by the shareholders and shall be distributed by the Company based on the shareholding proportions of the shareholders pursuant to a resolution of the Company’s general meeting. If the general meeting of shareholders violates the preceding paragraph and distributes profits to shareholders before the Company makes up for losses and withdraws statutory common reserve fund, the shareholders must return the profits distributed in violation of the regulations to the Company. The Company’s shares held by the Company do not participate in the distribution of profits.

Capital reserve includes the following amounts:

(I) Premiums received from the issuance of shares in excess of their face value;

(II) Other income included in the capital reserve as prescribed by the competent financial authorities of the State Council.

The premiums received by the Company from the issuance of shares at a price in excess of the par value of the shares, as well as other income included in the capital reserve as prescribed by the financial department under the State Council, shall be included in the Company’s capital reserve. The Company’s reserve fund shall be applied to make up losses of the Company, expand its productions or operations or increase the capital of the Company. However, the capital reserve fund may not be applied to make up the Company’s losses. Upon the conversion of statutory common reserve fund into capital, the balance of the statutory common reserve fund shall not be less than 25% of the registered capital of the Company before such conversion.

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The Company may distribute dividends in the following forms (or in both forms):

(I) Cash;

(II) Shares.

Calls on Shares and Forfeiture of Shares

A shareholder shall be entitled to interest on any share paid before a call is made, but the holder of a share shall not be entitled to receive any dividend subsequently declared on the prepaid share.

Subject to the relevant PRC laws and regulations, the Company may exercise the power of forfeiture in respect of unclaimed dividends, provided that such power shall not be exercised before the expiry of the relevant period of limitation applicable thereto.

With respect to the exercise of the power to issue warrants to bearer, the Company shall not issue any new warrants in lieu of the lost warrants unless it is satisfied beyond reasonable doubt that the original warrants have been destroyed. The Company shall have the right to sell the shares of shareholders of untraceable foreign listed shares in such manner as the Board of Directors deems fit, subject to the following conditions:

(I) At least 3 dividends shall have been paid in respect of the shares in question during the 12-year period and no dividend shall have been claimed during that period; and

(II) The Company publishes an announcement in one or more newspapers in the place where the Company is listed, after the expiry of the 12-year period, stating its intention to sell the shares and notifies the securities regulatory authority in the place where the Company’s shares are listed.

Alteration to the Rights of Existing Shares or Classes of Shares

The shareholders who hold different kinds of shares are classified shareholders. Class shareholders enjoy rights and assume obligations in accordance with the laws, administrative regulations and the Articles of Association. Apart from the holders of other classified shares, the holders of domestic shares and the holders of overseas listed foreign shares are deemed as different classified shareholders. If the share capital of the Company includes shares without voting rights, the name of such shares shall be added with the words “without voting rights”. If the share capital includes shares with different voting rights, the words “restricted voting rights” shall be added to the name of each class of shares (except for shares with the most favorable voting rights).

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Any proposed change or abrogation of the rights of a class of shareholders by the Company shall be approved by a special resolution at a general meeting of shareholders and by the affected classified shareholders at a general meeting of shareholders convened in accordance with the provisions of Articles 94 to 98 of the Articles of Association, respectively. Changes or abrogation of the rights of classified shareholders due to changes in domestic or foreign laws, administrative regulations and listing rules of the listing venue, as well as decisions made by domestic or foreign regulatory authorities in accordance with the law, do not require the approval of the general meeting of shareholders or the general meeting of classified shareholders. The transfer of all or part of the shares held by domestic shareholders of the Company to overseas investors and listed and traded overseas, or the conversion of all or part of the domestic shares into overseas listed shares and listed and traded on an overseas stock exchange shall not be deemed to be a proposed change or abrogation of the rights of classified shareholders by the Company.

The rights of a classified shareholder shall be deemed as changed or abolished under the following circumstances:

(I) Increase or decrease the number of the classified shares, or increase or decrease the number of classified shares with equal or more voting rights, distribution rights, other privileges than this type of classified shares;

(II) Convert all or part of the classified shares into other classes or convert another class of shares, partly or wholly, into the shares of such class;

(III) Remove or reduce the right of the classified shares to accrued dividends generated or rights to cumulative dividends;

(IV) Reduce or remove a dividend preference or a liquidation preference attached to shares of such class;

(V) Add, remove or reduce the right of the classified shares to convert share rights, options rights, voting rights, transfer rights, and pre-emptive rights, or the right to obtain the securities of the Company;

(VI) Remove or reduce the right of the classified shares to receive funds payable of the Company in specified currencies;

(VII) Create new classified shares entitled to equal or more voting rights, distribution rights, or other privileges than the classified shares;

(VIII) Restrict the transfer or ownership of the classified shares or increase such restrictions;

(IX) Issue subscription or conversion rights for this or other classified shares;

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(X) Increase the rights and privileges of other classes of shares;

(XI) The restructuring plan of the Company may constitute different classes of shareholders to assume responsibilities disproportionately in restructuring; and

(XII) Amend or abolish clauses stipulated in the Articles of Association of the Company.

Whether or not the affected classified shareholders have voting rights at the general meeting of shareholders, in the event of matters described above from (II) through (VIII), (XI) to (XII) of Article 93 of the Articles of Association, they have voting rights at the general meeting of classified shareholders, but the shareholders that have interests at stake shall have no voting rights at the general meeting of classified shareholders.

The resolution of the general meeting of classified shareholders shall be made only by a vote of at least 2/3 of the voting shares present at the general meeting of classified shareholders in accordance with Article 94 of the Articles of Association.

Apart from the holders of other classified shares, the holders of domestic shares and the holders of overseas listed foreign shares are deemed as different classified shareholders. The special procedures for voting by the classified shareholders shall not apply under the following circumstances:

(I) Upon the approval by a special resolution at the general meeting of shareholders, the Company either separately or concurrently issues domestic shares and overseas listed foreign shares once every 12 months, and the number of those domestic shares and overseas listed foreign shares to be issued shall not account for more than 20% of each of its outstanding shares;

(II) The plan to issue domestic shares and overseas listed foreign shares upon the establishment of the Company is completed within 15 months of the date of approval by the securities regulatory authorities of the State Council; and

(III) Upon the approval by the securities regulatory authorities of the State Council, the shareholders of the Company’s domestic shares transfer all or part of their shares to overseas investors and list them for trading on overseas stock exchanges; or all or part of the Company’s issued unlisted shares (including domestic and foreign shares) are converted into overseas listed shares.

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PROCEDURES FOR LIQUIDATION

Under any of the following circumstances, the Company shall be lawfully dissolved and liquidated:

(I) The term of operation set forth in the Articles of Association expires or there are other revocation circumstances stipulated in the Articles of Association;

(II) The general meeting of shareholders adopts a resolution to dissolve the Company;

(III) The Company needs to be dissolved for the purpose of merger or division;

(IV) The business license is revoked, or the Company is ordered to close or be eliminated according to the law;

(V) The Company is ordered to close down in violation of laws and administrative regulations;

(VI) Where the Company encounters significant difficulties in business and management, continuous survival may be significantly detrimental to the interests of the shareholders, and the difficulties may not be overcome through other means, shareholders who hold more than 10% of all voting rights of the Company’s shareholders may request the people’s court to dissolve the Company.

Where the Company is dissolved due to the provisions set forth in (I), (II), (V) or (VII) above, the liquidation team shall be established within 15 days from the date of the event leading to liquidation to commence dissolution. The liquidation team shall consist of the persons determined by the directors or the general meeting of shareholders. In the event the liquidation team is not established to conduct liquidation during such period, the creditors can request the people’s court to appoint relevant personnel to establish the liquidation team for liquidation. In the event that the Company is dissolved in accordance with the provisions set forth in (IV) above, the people’s court shall organize the shareholders, related agencies and professionals to form the liquidation team pursuant to relevant provisions of the law for liquidation. In the event that the Company is dissolved in accordance with the provisions set forth in (VI) of above, the competent authority shall organize the shareholders, related agencies and professionals to form the liquidation team for liquidation.

If the Board of Directors decides to liquidate the Company (except where the Company is liquidated after declaring bankruptcy), the Board of Directors shall state in the notice of the general meeting of shareholders convened for this purpose that the Board of Directors has performed a comprehensive investigation of the status of the Company and believes that the Company is able to pay off all of our debts within 12 months of the commencement of the liquidation. After the resolution to liquidate the Company is adopted by the general meeting of shareholders, the powers of the Board of Directors shall terminate immediately. At the instructions of the general meeting of shareholders, the liquidation team shall at least once a year report at the general meeting of shareholders on the income and expenditure of the liquidation team, progress of the business and liquidation of the Company, and submit a final report at the general meeting of shareholders upon completion of liquidation.

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The liquidation team will exercise the following duties during liquidation:

(I) To liquidate the Company’s property, and respectively prepare balance sheet and list of property;

(II) To notify the creditors and make announcements;

(III) To handle the outstanding business of the Company involved in the liquidation;

(IV) To repay taxes owed and the tax occurring in the process of liquidation in full;

(V) To liquidate claims and debts;

(VI) To handle the remaining property after repaying the Company’s debts; and

(VII) To participate in civil litigations on behalf of the Company.

Within 10 days of the establishment of the liquidation team, the creditors shall be notified and an announcement shall be published in the newspaper within 60 days. The creditors shall declare their claims to the liquidation team within 30 days of the date on which the notice is received or 45 days of the date of announcement if the notice is not received.

OTHER IMPORTANT PROVISIONS FOR PRC ISSUERS OR THE SHAREHOLDERS

General Provisions

The Company is a permanently existing joint stock limited company. The Company’s total assets are divided into equal shares, and the shareholders are liable for the Company to the extent of the shares they have subscribed and the Company is liable for its debts to the extent of all its assets. The Articles of Association of the Company will be legally binding upon the Company’s organizations and behaviors and the rights and obligations between the Company and the shareholders, and those between the shareholders and the shareholders and upon the Company, its shareholders, directors, supervisors and senior management when the Articles of Association enter into force. Each of the foregoing persons may assert rights related to corporate matters in accordance with the Articles of Association. According to the Articles of Association, the shareholders can sue the shareholders; the shareholders can sue the Company; the Company can sue the shareholders; the shareholders can sue the directors, supervisors and senior management of the Company; the shareholders can sue the Company and the Company can sue the shareholders, directors, supervisors and senior management.

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Shareholders

The Company establishes a register of shareholders in accordance with the Company Law and other relevant regulations and the Articles of Association, and the register of shareholders is sufficient evidence to prove that the shareholders hold shares in the Company. Shareholders are entitled to rights and assume obligations pursuant to the classification and ratio of their shares. Shareholder holding the same classified share has the same rights and assumes the same obligations.

The register of shareholders shall be kept at the Company and shareholders shall have the right to inspect it. The Company shall manage the register of shareholders in accordance with the Company Law and other laws and administrative regulations as well as the requirements of relevant regulatory authorities.

The rights of our ordinary shareholders are as follows:

(I) To receive distribution of dividends and other forms of benefits according to the shares held;

(II) To legally require, convene, preside over, participate in or appoint a proxy to participate in and exercise corresponding voting rights at the general meeting of shareholders;

(III) To supervise operational activities of the Company, provide suggestions or submit queries;

(IV) To transfer, grant and pledge the Company’s shares held according to the provisions of the laws, administrative regulations and the Articles of Association;

(V) To obtain relevant information according to the Articles of Association;

1. To obtain the Articles of Association upon payment of costs and fees;

2. The right to inspect and copy, upon payment of a reasonable fee:

(1) The register of all the shareholders;

(2) Personal data of directors, supervisors, managers and other senior management of the Company, including:

(a) Present and former names, aliases;

(b) Principal address (domicile);

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(d) Full-time and all other part-time occupations, positions;

(e) Identification documents and their numbers;

(3) The Company’s share capital;

(4) The latest audited financial statements of the Company, and the reports of the Board of Directors, accountants and Board of Supervisors;

(5) A report on the total par value, number, highest and lowest price of each class of the Company’s own shares repurchased since the previous fiscal year, and all expenses paid by the Company for this purpose;

(6) A copy of the most recent annual inspection report that has been filed with the competent administration for industry and commerce or other competent authority;

(7) Minutes of the general meeting of shareholders (for shareholders’ review only) and special resolutions of the Company;

(8) Stubs of corporate bonds.

The Company shall make documents mentioned in (1) to (7) above except for (2) and other applicable documents available for inspection by members of the public and shareholders of its overseas listed shares free of charge at the Company’s address in Hong Kong as required by the Hong Kong Listing Rules (except for the minutes of the general meeting of shareholders which are for the inspection of shareholders only).

The Company may refuse to provide access and copies of the contents if they relate to the Company’s trade secrets and inside information as well as the personal privacy of the persons concerned.

(VI) To participate in the distribution of the remaining assets of the Company according to the proportion of shares held upon our termination or liquidation;

(VII) To require the Company to acquire the shares from shareholders voting against any resolutions adopted at the general meeting of shareholders concerning the merger and division of the Company;

(VIII) Other rights conferred by laws, administrative regulations, regulations of the authorities or the Articles of Association.

– 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 V SUMMARY OF THE ARTICLES OF ASSOCIATION

Supervisory Board

The Company shall set up a Supervisory Board. It will exercise supervision functions according to laws, administrative regulations and the Articles of Association. The Supervisory Board consists of three supervisors and includes one chairman. The supervisors can be re-elected and re-appointed upon expiration. The chairman of the Supervisory Board shall be elected and dismissed by more than a two-thirds vote of the members of the Supervisory Board.

The Supervisory Board shall consist of shareholder’s representatives and employee’s representatives. The supervisors assumed by the employee representatives shall account for no less than one-third of the Supervisory Board of the Company. The supervisors assumed by the employee representatives shall be elected democratically by the employees’ representative assembly, employees’ general meeting or otherwise.

The Supervisory Board is responsible to the general meeting of shareholders and lawfully exercises the following powers:

(I) Examine the financial standing of the Company;

(II) Supervise the acts of the directors and senior executives in fulfilling duties for the Company and put forward suggestions for dismissing any directors or senior management who are in violation of the laws, administrative regulations, the Articles of Association or resolutions of the general meeting of shareholders;

(III) Require the directors and senior management to take corrective measures when their actions are detrimental to the Company’s interests;

(IV) Verify the financial information such as the financial reports, business reports and profit distribution plans to be submitted by the Board of Directors to the general meeting of shareholders and, should any queries arise, authorize, in the name of the Company, a re-examination by the certified public accountants and practicing auditors;

(V) Propose to convene an extraordinary general meeting of shareholders, and where the Board of Directors fails to perform the duties in relation, to the convening or presiding over of the general meeting of shareholders, to convene and preside over the general meeting of shareholders;

(VI) Submit proposals at the general meeting of shareholders;

(VI) Propose to convene an extraordinary meeting of the Board of Directors;

(VIII) Represent the Company in dealing with directors or institute litigation against directors and senior management in accordance with the provisions of the Company Law;

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(IX) Other powers and duties stipulated in laws and administrative regulations. The supervisors may attend the meetings of the Board of Directors without voting rights.

Secretary of the Board of Directors

The Company shall have one secretary of the Board of Directors. The secretary of the Board of Directors is a senior management of the Company and must be a natural person with the requisite expertize and experience and be appointed or dismissed by the Board of Directors. Main duties of the secretary of the Board of Directors are to:

(I) Ensure that the Company has complete organizational documents and records; to maintain and manage shareholders’ data; and to assist the directors in the day-to-day work of the Board of Directors;

(II) Ensure that the Company prepares and submits reports and documents required by the competent authorities in accordance with the law;

(III) Organize and prepare for the meetings of the Board of Directors and the general meetings of shareholders, preparing meeting materials, arranging relevant meeting services, taking minutes of meetings, ensuring the accuracy of the records, making and keeping meeting documents and records, and taking the initiative to keep track of the implementation of relevant resolutions. To report and make recommendations to the Board of Directors on important issues in implementation;

(IV) Act as a liaison between the Company and the securities regulatory authorities, responsible for organizing the preparation and timely submission of reports and documents required by the regulatory authorities, and for accepting relevant tasks issued by the regulatory authorities and organizing their completion;

(V) Be responsible for coordinating and organizing information disclosure matters of the Company, establishing and improving the system of information disclosure, attending all relevant meetings of the Company involving information disclosure, and being informed of major business decisions and relevant information materials of the Company in a timely manner;

(VI) Ensure that the Company’s register of shareholders is properly established and that those who are entitled to the Company’s relevant records and documents are provided with them in a timely manner;

(VII) To perform other powers and functions granted by the Board of Directors and other powers and functions required by laws and regulations and the stock exchange where the Company’s shares are [REDACTED].

– V-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 V SUMMARY OF THE ARTICLES OF ASSOCIATION

The directors or other senior management of the Company may also serve as the secretary of the Board of Directors of the Company. The accountants of the accounting firm engaged by the Company and the management of the Controlling Shareholder shall not serve as the secretary of the Board of Directors of the Company. When the secretary of the Board of Directors of the Company is concurrently taken by a director, if an act should be performed by the director and the secretary of the Board of Directors of the Company separately, the person who concurrently serves as the director and the secretary of the Board of Directors of the Company shall not perform such act in a dual capacity.

GENERAL MANAGER AND OTHER SENIOR MANAGEMENT PERSONNEL

The Company shall have one general manager, several deputy general managers, several other senior management personnel and one responsible financial officer, all of whom are appointed or dismisses by the Board.

The general manager shall be accountable to the Board and perform the following duties and powers:

(I) to lead the management of production and operation of the Company, and to organize and implement the resolutions of the Board;

(II) to organize and implement the annual operation plan and investment proposal of the Company;

(III) to formulate the Company’s annual financial budgets and final accounting schemes and provide suggestions to the Board;

(IV) to formulate the basic management system of the Company;

(V) to propose the establishment proposal of the internal management departments of the Company;

(VI) (to formulate the basic rules of the Company;

(VII) to propose the Board to appoint or dismiss deputy general manager, responsible financial officer and other senior management personnel of the Company;

(VIII) to appoint or dismiss the management in charge other than appointment or dismissal by the Board;

(IX) to propose to convene an extraordinary Board meeting;

(X) to decide on other matters of the Company as authorized by the Board;

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(XI) to decide on investment, acquisition, disposal or financing projects other than those to be decided by the Board and the general meeting;

(XII) other duties and powers granted by the Articles of Association and the general meeting.

General manager has the right to attend the Board meetings as non-voting observers and the general manager who is not a Director has no voting right.

Settlement of Disputes

The Company shall comply with the following rules governing the settlement of disputes:

(XIII) Whenever there occur any dispute or claim between shareholders of the overseas listed shares and the Company, shareholders of foreign shares and the Company’s directors, supervisors, general manager or other senior management, or shareholders of the overseas listed shares and shareholders of domestic shares regarding the rights or obligations relating to the affairs of the Company conferred or imposed by the Articles of Association, the Company Law or any other relevant laws and administrative regulations, such disputes or claims shall be referred by the relevant parties to arbitration.

Where the aforesaid dispute or claim of rights is referred to arbitration, the entire claim or the dispute as a whole must be referred to arbitration, and any parties who have a cause of action based on the same facts or the claim or whose participation is necessary for the settlement of such dispute or claim, are bound by the award of the arbitration provided that such person is the Company or a shareholder of the Company, a director, a supervisor, general manager or other senior management.

Disputes in relation to the definition of shareholders and disputes in relation to the register of shareholders need not be resolved by arbitration.

(XIV) A claimant may elect for arbitration at either the China International Economic and Trade Arbitration Commission in accordance with its rules or the Hong Kong International Arbitration Centre in accordance with its securities arbitration rules. Once a claimant refers a dispute or claim to arbitration, the other party must submit to the arbitral body so elected by the applicants.

If a claimant elects for arbitration at Hong Kong International Arbitration Centre, any party may request the arbitration to be conducted in Shenzhen in accordance with the Securities Arbitration Rules of the Hong Kong International Arbitration Centre.

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(XV) The laws of the PRC (excluding Hong Kong Special Administrative Region, Macau Special Administrative Region and Taiwan region) are applicable to the arbitration for the disputes or claims of rights referred to in item (I) above, unless otherwise provided in the laws and administrative regulations.

(XVI) The award of an arbitration body shall be final and binding on all parties.

– V-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

A. FURTHER INFORMATION ABOUT THE GROUP

1. Incorporation of the Company

The predecessor of the Company, Shanghai Hanyu Medical Technology Co., Ltd. (上海捍宇醫療科技有限公司), was established as a limited liability company in the PRC on December 22, 2016, with an initial registered capital of RMB500,000. On December 3, 2020, the Company was converted into a joint stock company with limited liability under the PRC Company Law. Therefore, our corporate structure and Articles of Association are governed by the relevant laws and regulations of the PRC. The relevant PRC laws and regulations and a summary of our Articles of Association are set out in Appendix IV and Appendix V to this document, respectively.

Our registered place of business in Hong Kong is at [●] and are registered as a non-Hong Kong company under Part 16 of the Companies Ordinance on [●]. [●] (address: [●]) has been appointed as our authorized representative for the acceptance of service of process and notices in Hong Kong.

2. Changes in the share capital of the Company

As of the date of incorporation of the predecessor of the Company, our registered capital was RMB500,000 and was fully paid up on December 30, 2016. The Company was converted into a joint stock company with limited liability on December 3, 2020 and renamed as Shanghai Hanyu Medical Technology Co., Ltd. (上海捍宇醫療科技股份有限公司). Our registered capital is RMB79,875,001 and is divided into 79,875,001 shares with a nominal value of RMB1.00 each.

Within the two years immediately preceding the date of this document, the following changes were made to the share capital of the Company and its predecessor:

(a) on August 5, 2019, the registered capital of the Company increased from RMB1,178,088 to RMB1,354,801.

(b) on July 31, 2020, the registered capital of the Company increased from RMB1,354,801 to RMB1,426,106.

(d) on December 3, 2020, the Company was converted into a joint stock company with limited liability with a registered capital of RMB75,000,000, including 75,000,000 shares with a nominal value of RMB1.00 each.

(e) on March 8, 2021, the registered capital of the Company increased from RMB75,000,000 to RMB79,875,001.

– 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

Assuming that the [REDACTED] is not exercised, upon completion of the [REDACTED], our issued share capital will be increased to RMB[REDACTED], consisting of 79,339,287 Domestic Shares, 535,714 Unlisted Foreign Shares and [REDACTED]H Shares, which are paid up or recorded as paid up, representing [REDACTED]%, [REDACTED]% and [REDACTED]% of our registered share capital, respectively.

For further details, please refer to the section headed “History, Development and Corporate Structure” in this document. Except as disclosed above, there has been no change in our share capital within the two years immediately preceding the date of this document.

3. Changes in the share capital of our subsidiaries

A summary of the corporate information and the particulars of our subsidiaries are set out in Accountant’s Report in Appendix I to this document. Within the two years immediately preceding the date of this document, the following alteration occurred to the share capital of our subsidiaries:

Hongyu Medical

(a) on August 6, 2020, the registered capital of Hongyu Medical increased from RMB13,571,429 to RMB14,285,715.

(b) on February 26, 2021, the registered capital of Hongyu Medical increased from RMB14,285,715 to RMB15,873,017.

Except as disclosed above, there has been no alteration in the share capital of our subsidiaries within the two years immediately preceding the date of this document.

4. Shareholders’ resolutions of our Company passed on March 24, 2021

Pursuant to the resolutions passed at a duly convened general meeting of our Shareholders on March 24, 2021, the following resolutions (among others) were passed by the Shareholders:

(a) the issue of H Shares with a nominal value of RMB1.00 each by our Company and such H Shares be [REDACTED] on the Stock Exchange;

(b) upon completion of the [REDACTED], approve and adopt the Articles of Association of the Company effective from the [REDACTED] Date, and authorize the Board to amend the Articles of Association of the Company in accordance with any comments from the Stock Exchange and the relevant PRC regulatory authorities; and

(c) authorize the Board to handle all relevant matters relating to (among others) the implementation of the issue of H Shares and the [REDACTED].

5. Restrictions on repurchase

Please refer to Appendix III and Appendix IV to this document for details.

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B. FURTHER INFORMATION ABOUT THE BUSINESS OF OUR COMPANY

1. Summary of material contracts

The following contracts (not being contracts entered into in the ordinary course of business) were entered into by our Group within the two years preceding the date of this document and are or may be material:

(a) the [REDACTED].

2. Our intellectual property rights

As of the Latest Practicable Date, the Company has registered or applied for the registration of the following intellectual property rights which were material to the business of our Group.

Trademarks

As of the Latest Practicable Date, we have registered the following trademarks in the PRC which we considered to be material to our business:

Registration Place Period No. Owner no. of registration Trademarks Class of validity

1. Our Company 38110525 PRC 10 January 21, 2020 to January 20, 2030 2. Our Company 38101357 PRC 10 January 14, 2020 to January 13, 2030 3. Our Company 34529991 PRC 10 August 21, 2019 to August 20, 2029 4. Our Company 34524115 PRC 10 August 21, 2019 to August 20, 2029 5. Our Company 33100362 PRC 10 July 14, 2019 to July 13, 2029 6. Our Company 32970788 PRC 10 May 7, 2019 to May 6, 2029 7. Our Company 32955896 PRC 10 June 7, 2019 to June 6, 2029 8. Our Company 32949715 PRC 10 May 7, 2019 to May 6, 2029

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Registration Place Period No. Owner no. of registration Trademarks Class of validity

9. Our Company 30634283 PRC 10 February 14, 2019 to February 13, 2029 10. Our Company 30623423 PRC 10 February 14, 2019 to February 13, 2029 11. Our Company 45401129 PRC 10 January 14, 2021 to January 13, 2031 12. Our Company 45392734 PRC 10 January 7, 2021 to January 6, 2031 13. Nuoqiang 33175993 PRC 10 July 7, 2019 to Medical July 6, 2029

The number in the “Class” represents the specification of a product or service that has been applied for registration or registered. Detailed specification of the product or service represented by the number in the “Class” are contained in the relevant application form or the registration certificate.

Patents

For a discussion of the details of the material patents and material patent applications by our Company, please refer to the paragraph headed “Business – Intellectual Property Rights” in this document.

Except as stated above, there is no trade or service marks, patents, intellectual property rights or industrial property rights which were material to the business of the Group as of the Latest Practicable Date.

Domain names

As of the Latest Practicable Date, we owned the following domain names which we consider to be material or may be material to our business:

Registration End of No. Owner Domain name date validity period

1. Our Company hanyumedical.com February 17, February 17, 2017 2022 2. Hongyu hongyumedtech.com October 24, October 24, Medical 2019 2022

– 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

C. FURTHER INFORMATION ABOUT DIRECTORS AND SUBSTANTIAL SHAREHOLDERS

1. Disclosure of interests

(a) Interests and short positions of our Directors, Supervisors and chief executives in the Shares, underlying Shares and debentures of the Company and our associated corporations

The following table sets out the interests and short positions of our Directors, Supervisors and chief executive of our Company immediately following completion of the [REDACTED] (without taking into account the H Shares which may be allotted and issued pursuant to the exercise of the [REDACTED]) in our Shares, underlying Shares or debentures of our Company or any of our associated corporations (within the meaning of Part XV of the SFO) which will have to be notified to us and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions in 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 to be notified to us and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers contained in the Listing Rules, once our H Shares are [REDACTED].

For this purpose, the relevant provisions of the SFO will be interpreted as if they were applicable to Supervisors:

(i) Interests and short positions in the Company

Approximate Approximate percentage of percentage of shareholding in shareholding in Name of Class of Shares to Number of Shares the relevant class the total share Directors/Supervisors/ be held after the to be held after of Shares after the capital after the chief executives [REDACTED] Nature of interests the [REDACTED] [REDACTED](1) [REDACTED](2)

Mr. Dai Domestic Shares Interests of a [REDACTED][REDACTED][REDACTED] controlled corporation and beneficial owner Ms. Yang Domestic Shares Interests of a [REDACTED][REDACTED][REDACTED] controlled corporation and beneficial owner

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Notes:

(1) The calculation was based on the percentage of shareholding in the Unlisted Shares of the Company after the [REDACTED].

(2) The calculation was based on the [REDACTED] total issued shares after the [REDACTED] (and assuming the [REDACTED] is not exercised).

(3) After the completion of the [REDACTED], Mr. Dai will directly hold 9,195,305 Domestic Shares, and Ms. Yang will directly hold 7,350,099 Domestic Shares. After the completion of the [REDACTED], Anji Qiyue will directly hold 3,444,302 Domestic Shares. Anji Qiyue is a limited partnership established in the China, which is managed by Anji Huaze Medical Technology Co., Ltd. (安吉華澤醫療科技有限公司) (as its general partner) which is in turn wholly-owned by Mr. Dai. Therefore, Mr. Dai is deemed to be interested in the Shares held by Anji Qiyue. After the completion of the [REDACTED], Anji Ruzhe will hold 3,154,093 Domestic Shares. Anji Ruzhe is a limited liability company established in the China. As of the Latest Practicable Date, Anji Ruzhe was held as to 73.30% by Mr. Dai and 26.70% by Ms. Yang, thus Mr. Dai is deemed to be interested in the Shares held by Anji Ruzhe. On December 5, 2020, Mr. Dai and Ms. Yang entered into an acting-in-concert agreement, therefore, Mr. Dai and Ms. Yang are deemed to be interested in the Shares held by one another. For further details, please refer to the section headed “History, Development and Corporate Structure” of this document.

(ii) Interests and short positions in the associated corporation

Name of Directors/ Supervisors/chief Name of associated Percentage executives corporation holding

Mr. Dai(1) Hongyu Medical(1) 14.5%

Note:

(1) As of the Latest Practicable Date, Hongyu Medical was held as to 10% and 4.5% by Anji Wanyu and Anji Ruida, respectively. Mr. Dai is the general partner of both Anji Wanyu and Anji Ruida, and is therefore deemed to be interested in their equity interest in Hongyu Medical.

(b) Interests of the substantial shareholders in the Shares

Save as disclosed in this document, immediately following the completion of the [REDACTED] and without taking into account any H Shares which may be issued pursuant to the exercise of the [REDACTED], our Directors are not aware of any other person (not being a Director, a Supervisor or chief executive of our Company) who will have an interest or short position in our Shares or the underlying Shares which would fall to be disclosed to us and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who is, directly or indirectly, interested in 10% or more of the issued voting shares of our Company.

– 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

So far as our Directors are aware and save as disclosed in this document, as of the Latest Practicable Date, no persons are, 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 other members of our Group.

2. Particulars of Directors’ and Supervisors’ service contracts

Pursuant to Rules 19A.54 and 19A.55 of the Listing Rules, we have entered into a contract with each of our Directors and Supervisors in respect of, among other things (i) compliance with relevant laws and regulations; (ii) observance of the Articles of Association of the Company; and (iii) provisions on arbitration.

Except as disclosed in the section headed “Directors, Supervisors and Senior Management”, none of our Directors and Supervisors have entered into or proposed to have entered into any service contract with any member of the Group (excluding agreements expiring or determinable by any member of our Group within one year without payment of compensation other than statutory compensation).

3. Remuneration of Directors and Supervisors

The total remuneration paid to our Directors and Supervisors for the two years ended December 31, 2019 and 2020 amounted to approximately RMB3.5 million and RMB56.2 million, respectively.

The total remuneration paid to our five highest paid individuals (excluding Directors and Supervisors) for the two years ended December 31, 2019 and 2020 amounted to approximately RMB0.6 million and RMB1.6 million, respectively.

Under the arrangements currently in force, we estimate that the total fixed remuneration (before tax) payable to Directors and Supervisors will be approximately RMB12.9 million for the year ended December 31, 2021.

During the Track Record Period, no fees were paid by our Group to any of our Directors, Supervisors or the five highest paid individuals as an inducement to join us or as compensation for loss of office, and there has been no arrangement under which a Director or Supervisor has waived or agreed to waive any emoluments.

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4. Disclaimer

Unless otherwise disclosed in this document:

(a) none of our Directors, Supervisors or chief executive of our Company has any interests and short positions in the Shares, underlying Shares and debentures of our Company or any associated corporation (within the meaning of Part XV of the SFO) which will have to be notified to us and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which he/she is 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 to be notified to us and the Stock Exchange, in each case once our Shares are [REDACTED]. For this purpose, the relevant provisions of the SFO will be interpreted as if they applied to the Supervisors;

(b) none of our Directors or Supervisors is aware of any person (not being a Director or chief executive of our Company) who will, immediately following completion of the [REDACTED] (without taking into account any H Shares which may be allotted and issued pursuant to the exercise of the [REDACTED]), have an interest or short position in our Shares or underlying Shares which would fall to be disclosed to us under the provisions of Divisions 2 and 3 of Part XV of the SFO or who is interested, directly or indirectly, in 10% or more of the issued voting shares of any member of our Group;

(c) as far as is known to our Directors, none of our Directors, their respective close associates (as defined under the Listing Rules) or Shareholders holding more than 5% of the number of issued shares of our Company have any interest in any of our Group’s five largest suppliers; and

(d) none of our Directors, Supervisors or any person listed in the “Qualifications of experts” in this Appendix:

(i) interested in our promotion, or in any assets which have been, within two years immediately preceding the date of this document, acquired or disposed of by or leased to us, or are proposed to be acquired or disposed of by or leased to any member of our Group;

(ii) materially interested in any contract or arrangement subsisting at the date of this document which is significant in relation to our business.

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D. 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 our subsidiaries under the laws of the PRC.

2. Litigation

Except as disclosed in this document, as of the Latest Practicable Date, we were not engaged in any litigation, arbitration or claim of material importance and no litigation, arbitration or claim of material importance is known to our Directors to be pending or threatened by or against any member of our Group, that would have a material adverse effect on our Group’s results of operations or financial condition, taken as a whole.

3. Preliminary expenses

As of the Latest Practicable Date, our Company has not incurred material preliminary expenses.

4. Promoters

Save as disclosed in this document, within the two years preceding the date of this document, no cash, securities or other benefit has been paid, allotted or given or is proposed to be paid, allotted or given to any promoter in connection with the [REDACTED] and the related transactions described in this document.

5. Taxation of holders of H Shares

(a) Hong Kong

The sale, purchase and transfer of H Shares registered with our [REDACTED] will be subject to Hong Kong stamp duty. The current rate charged on each of the purchaser and seller is 0.1% of the consideration of or, if higher, of the fair value of our Shares being sold or transferred. For further details in relation to taxation, please refer to Appendix III to this document.

(b) Consultation with professional advisers

Potential investors in the [REDACTED] are urged to consult their professional tax advisers if they are in any doubt as to the taxation implications of subscribing for, purchasing, holding or disposing of or dealing in our H Shares (or exercising rights attached to them). None of us, the Joint Sponsors, the [REDACTED], the [REDACTED], the [REDACTED], or any other person or party involved in the [REDACTED] accept responsibility for any tax effects on, or liabilities of, any person, resulting from the subscription, purchase, holding or disposal of, dealing in or the exercise of any rights in relation to our H Shares.

– 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

6. Application for [REDACTED]

The Joint Sponsors have made an application on behalf of our Company to the Stock Exchange for the [REDACTED] of, and permission to deal in, our H Shares. All necessary arrangements have been made to enable the securities to be admitted into [REDACTED].

7. No material adverse change

Our Directors confirm that, as of the date of this document, there has been no material adverse change in the financial or trading position or prospect of our Group since December 31, 2020 (being the date to which the latest audited consolidated financial statements of our Group were prepared).

8. Qualifications of experts

The qualifications of the experts (as defined under the Listing Rules and the Companies (Winding Up and Miscellaneous Provisions) Ordinance) who have given their opinion and/or advice in this document are as follows:

Name Qualifications

China International Capital Corporation A licenced corporation under the SFO Hong Kong Securities Limited for type 1 (dealing in securities), type 2 (dealing in futures contracts), type 4 (advising on securities), type 5 (advising on futures contracts) and type 6 (advising on corporate finance) of the regulated activities as defined under the SFO

Citigroup Global Markets Asia Limited A licensed corporation to conduct type 1 (dealing in securities), type 2 (dealing in futures contracts), type 4 (advising on securities), type 5 (advising on futures contracts), type 6 (advising on corporate finance) and type 7 (providing automated trading services) of the regulated activities as defined under the SFO

Ernst & Young Certified public accountant Registered public interest entity auditor

Jia Yuan Law Offices PRC legal advisor

Frost & Sullivan (Beijing) Inc., Independent industry consultant Shanghai Branch Co.

– 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 of the Latest Practicable Date, none of the experts named above had any shareholding interest in our Company or any of our subsidiaries 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.

9. Consents

Each of the experts as referred to in the paragraph headed “8. Qualifications of experts” of this Appendix has given and has not withdrawn their respective written consents to the issue of this document with the inclusion of their reports and/or letters (as the case may be) and the references to its name included in the form and context in which it respectively appears.

10. Sponsor’s independence

All of the Joint Sponsors satisfy the independence criteria applicable to sponsors set out in Rule 3A.07 of the Listing Rules.

The Joint Sponsors’ fees payable by us in respect of the Joint Sponsors’ services as sponsors for the [REDACTED] are US$1,000,000.

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.

12. Bilingual document

The English and Chinese language versions of this document are being published separately, in reliance upon the exemption provided under section 4 of the Companies (Exemption of Companies and Prospectuses from Compliance with Provisions) Notice (Chapter 32L of the Laws of Hong Kong).

13. Miscellaneous

Save as otherwise disclosed in this document:

(a) within the two years preceding the date of this document, our Company has not issued nor agreed to issue any share or loan capital fully or partially paid either for cash or for a consideration other than cash;

(b) no Share or loan capital of our Company (if any) is under option or is agreed conditionally or unconditionally to be put under option;

– 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

(d) none of the experts referred to in the paragraph headed “D. Other Information – 8. Qualifications of Experts” of this Appendix has any direct or indirect interest in the promotion of us, or in any assets which have within the two years immediately preceding the date of this document been 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;

(e) none of the experts referred to in the paragraph headed “D. Other Information – 8. Qualifications of Experts” of 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;

(f) none of the equity and debt securities of our Company is listed or dealt in on any stock exchange (other than the Stock Exchange) nor is any [REDACTED]or permission to deal being or proposed to be sought;

(g) our Company has no outstanding convertible debt securities or debentures;

(h) no commission, discount, brokerage commission or other special terms has been granted by the Company in connection with the issue or sale of any capital of our Company within the two years immediately preceding the date of this document;

(i) no commission has been paid or payable by the Company in connection with the subscriptions or agreeing to subscribe for or procuring or agreeing to procure the subscriptions for the Shares of the Company within the two years immediately preceding the date of this document;

(j) there is no arrangement under which future dividends are waived or agreed to be waived;

(k) in case of any discrepancy between the Chinese and English versions of this document and the [REDACTED], the English version shall prevail;

(l) there has been no interruption in our business which may have or have had a significant effect on the financial position in the 12 months preceding the date of this document; and

(m) our Company is a foreign investment joint stock limited company and is subject to the Foreign Investment Law of the PRC.

– 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 VII DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES IN HONG KONG AND AVAILABLE FOR INSPECTION

Documents Delivered to the Registrar of Companies

The documents attached to this document and delivered to the Registrar of Companies in Hong Kong for registration were (i) a copy of the [REDACTED]; (ii) copies of each of the material contracts referred to in the paragraph headed “Appendix VI – Statutory and General Information – B. Further Information about the Business of Our Company – 1. Summary of material contracts” in this document; and (iii) the written consents issued by each of the experts referred to in the paragraph headed “Appendix VI – Statutory and General Information – D. Other information – 8. Qualifications of experts” in this document.

Documents Available for Inspection

Copies of the following documents will be made available for inspection at the office of Herbert Smith Freehills (address: 23rd Floor, Gloucester Tower, 15 Queen’s Road Central, Hong Kong) during normal business hours up to and including the date which is 14 days from the date of this document:

(a) the Articles of Association;

(b) the accountants’ report prepared by Ernst & Young, the text of which is set out in Appendix I to this document;

(c) the audited consolidated financial statements of the Group for each of the two years ended December 31, 2019 and 2020;

(d) the report prepared by Ernst & Young on the Group’s unaudited [REDACTED] financial information, the text of which is set out in Appendix II to this document;

(e) the industry report prepared by Frost & Sullivan (Beijing) Inc., Shanghai Branch Co. as set out in the section headed “Industry Overview” in this document;

(f) the PRC legal opinions issued by Jia Yuan Law Offices, our legal advisor on PRC law, relating to our general matters and property interests;

(g) the material contracts referred to in the paragraph headed “Appendix VI – Statutory and General Information – B. Further Information about the Business of Our Company – 1. Summary of material contracts” in this document;

(h) the service agreements and letters of appointment referred to “Appendix VI – Statutory and General Information – C. Further Information about Directors and Substantial Shareholders – 2. Particulars of Directors’ and Supervisors’ service contracts” in this document;

– 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 IN HONG KONG AND AVAILABLE FOR INSPECTION

(i) the written consents referred to in the paragraph headed “Appendix VI – Statutory and General Information – D. Other Information – 9. Consents” in this document; and

(j) the PRC Company Law, the Special Regulations of the State Council on the Overseas Offering and Listing of Shares by Joint Stock Limited Companies and the Mandatory Provisions for Articles of Association of Companies to be Listed Overseas together with unofficial English translations thereof.

– VII-2 –