Cooperation Agreement in Relation to Restructuring of Pangang Xichang Hospital

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GENERTEC UNIVERSAL MEDICAL GROUP COMPANY LIMITED 通用環球醫療集團有限公司

(Incorporated in Hong Kong with limited liability) (Stock Code：2666)

DISCLOSEABLE AND CONNECTED TRANSACTION COOPERATION AGREEMENT IN RELATION TO RESTRUCTURING OF PANGANG XICHANG HOSPITAL

THE COOPERATION AGREEMENT

Reference is made to the announcement of the Company dated 31 January 2019 in relation to restructuring of Pangang Group General Hospital and Pangang Group Chengdu Hospital.

The Board is pleased to announce that on 25 January 2021 (after trading hours), Hospital Investment Co., Ltd. and Xichang New Steel entered into the Cooperation Agreement in connection with the formation of the Joint Venture. Pursuant to the Cooperation Agreement, the total investment of the Joint Venture is approximately RMB345.9 million, of which Hospital Investment Co., Ltd. will contribute approximately RMB176.4 million with cash, and Xichang New Steel will contribute approximately RMB169.5 million with 100% equity of the Target Company, which is the promoter of Pangang Xichang Hospital. Upon completion of the Transaction, the registered capital of the Joint Venture will be held by Hospital Investment Co., Ltd. and Xichang New Steel as to 51% and 49%, respectively.

LISTING RULES IMPLICATIONS

The highest applicable percentage ratio under Rule 14.07 of the Listing Rules in respect of the Transaction on a standalone basis is more than 1% but less than 5%. However, more than one

1 of the applicable percentage ratios in respect of the Transaction, when aggregated with the Previous Transaction which was entered into on 31 January 2019 and has not been completed as of the date of this announcement, are more than 5% but none of them is 25% or more. Therefore, the Transaction, when aggregated with the Previous Transaction, constitutes a discloseable transaction of the Company under the Listing Rules and is subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

As of the date of this announcement, (i) Pangang Group directly and indirectly holds approximately 46.7% equity interest in Sichuan Huankang (a subsidiary of the Company), and (ii) Xichang New Steel is a wholly-owned subsidiary of Pangang Group, thus Xichang New Steel is a connected person of the Company at the subsidiary level under Rule 14A.07 of the Listing Rules. Therefore, the Transaction constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules.

Under Rule 14A.101 of the Listing Rules, since (1) Xichang New Steel is a connected person of the Company at the subsidiary level, (2) the Board has approved the Transaction; and (3) the independent non-executive Directors have confirmed that (i) the terms of the Cooperation Agreement are fair and reasonable; (ii) the Cooperation Agreement is on normal commercial terms; and (iii) the Cooperation Agreement is in the interests of the Company and its shareholders as a whole, the Cooperation Agreement is subject to the reporting and announcement requirements, and is exempt from the circular, independent financial advice and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

WARNING

As the implementation of the Cooperation Agreement is subject to various terms and conditions, the Cooperation Agreement and the Transaction may or may not proceed at all or in a timely manner. Shareholders and potential investors should exercise caution when dealing in the Shares.

2 INTRODUCTION

Reference is made to the announcement of the Company dated 31 January 2019 in relation to restructuring of Pangang Group General Hospital and Pangang Group Chengdu Hospital.

THE COOPERATION AGREEMENT

The principal terms of the Cooperation Agreement are summarized as below:

Date

25 January 2021

Parties

(1) Hospital Investment Co., Ltd., and

(2) Xichang New Steel

As of the date of this announcement, Hospital Investment Co., Ltd., Pangang Group and Pangang Mining (a subsidiary of Pangang Group) directly holds 53.30%, 46.26% and 0.44% equity interest, respectively, in Sichuan Huankang (a subsidiary of the Company). Xichang New Steel is a wholly-owned subsidiary of Pangang Group.

Capital Contribution

Pursuant to the Cooperation Agreement, the total investment to be made into the Joint Venture is approximately RMB345.9 million, of which Hospital Investment Co., Ltd. will contribute approximately RMB176.4 million with cash, and Xichang New Steel will contribute approximately RMB169.5 million with 100% equity of the Target Company. Upon completion of the Transaction, the registered capital of the Joint Venture will be held by Hospital Investment Co., Ltd. and Xichang New Steel as to 51% and 49%, respectively.

Within ten business days after the Joint Venture obtains its business license, Xichang New Steel will make its capital contribution to the Joint Venture, including completing the registration of the 100% equity interest of the Target Company under the name of the Joint Venture, transferring the operation and management right of the Target Company and completing other procedures. 3 Within ten business days after Xichang New Steel completes all of its capital contribution obligation under the Cooperation Agreement, Hospital Investment Co., Ltd. will make its one-off cash contribution to the Joint Venture.

The amount of the capital contribution to be made by each of Hospital Investment Co., Ltd. and Xichang New Steel was arrived at after arm’s length negotiations among the Parties having taken into account, among others, the expected capital requirements of the Target Company, the valued net assets to be injected, their respective intended equity interest in the Target Company and the relevant PRC laws and regulations. There is no original acquisition cost of the Target Company or Pangang Xichang Hospital to Xichang New Steel as the Target Company was established by Xichang New Steel, and Pangang Xichang Hospital was established by Pangang Group.

Principal Activities of the Joint Venture

After the establishment of the Joint Venture, it will become the sole shareholder of the Target Company, which is the promoter of Pangang Xichang Hospital. The Joint Venture will be primarily engaged in health management, consultancy services in healthcare, caring services and corporate management.

Corporate Governance

The Joint Venture will have a board of five directors, two of which shall be nominated by Xichang New Steel, and three of which will be nominated by Hospital Investment Co., Ltd. The candidate of the chairman of the board of the Joint Venture will be recommended by Xichang New Steel and elected by a majority of the board members of the Joint Venture. The candidates of the general manager and the financial control of the Joint Venture will be recommended by Hospital Investment Co., Ltd. and Xichang New Steel, respectively. In addition, the Joint Venture will have a supervisory committee of three supervisors, one candidate of which will be recommended by Xichang New Steel, one candidate of which will be recommended by Hospital Investment Co., Ltd., and one candidate of which will be elected on employee-representatives’ conference of the Joint Venture. The directors, supervisors and general manager of the Joint Venture will have a term of office of three years subject to re-election.

Financial Information of Pangang Xichang Hospital and Xichang New Steel

As the operating assets to be injected into the Joint Venture by Xichang New Steel, according to Pangang Xichang Hospital’s audited financial information of for the year ended 31 December 2019 and unaudited financial information for the year ended 31 December 2018 prepared in accordance with General Accepted Accounting Principles of the PRC (中國企業會計準則), Pangang Xichang Hospital recorded an annual income of approximately RMB111.5 million and approximately RMB90.8 million for the year ended 31 December 2019 and 2018, respectively. According to the applicable PRC laws, Pangang Xichang Hospital is a not-for-profit legal entity, which is not subject to corporate income tax. Pangang Xichang Hospital recorded a net profit of approximately RMB9.8 million and approximately RMB8.2 million for the year ended 31 December 2019 and 2018, respectively. As of 31 July 2020, the book value of Pangang Xichang Hospital was approximately RMB63.2 million. 4 The Target Company was established by Xichang New Steel in July 2020. As of 31 July 2020, the book value of Xichang New Steel was approximately RMB73.2 million.

REASONS FOR AND BENEFITS OF THE TRANSACTION

Pangang Xichang Hospital was established in 1958, as the only Grade A Class II general hospital in Xichang City, Liangshan Yi Autonomous Prefecture, Sichuan Province and with 300 beds. Pangang Xichang Hospital maintains good operation with continuing increase in its income in recent years and a relatively high level of profit, and it has strong competitiveness and development potential. In the future, Pangang Xichang Hospital will form resource-sharing coalition and achieve management synergy with nearby Universal Medical Pangang General Hospital, Pangang Group Chengdu Hospital, Panzhihua Nineteenth Metallurgical Hospital and other medical institutions, which will help the Group realize the integration and optimization of regional medical resources.

The Company’s decision to cooperate with Xichang New Steel to establish the Joint Venture is in line with the national policies of reform on state-owned enterprises-affiliated hospitals. As a public company controlled by a stated-owned key enterprise with medical and health as its core business, the Company proactively responds to national policies, sticks to the philosophy of benefiting people’s livelihood by quality medical services, and spares no efforts to promote more take-overs of state-owned enterprises-affiliated hospitals, actively building itself into a leading medical and health conglomerate.

To the best of the Directors’ knowledge, information and belief and having made all reasonable enquiries, no Director has a material interest in the Transaction and is required to abstain from voting at the Board meeting approving the Cooperation Agreement and the Transaction.

The Directors (including the independent non-executive Directors) consider that the cooperation will enhance the long-term growth and Shareholders’ value of the Group, strengthen the diversified service portfolio of the Group, and improve the Group’s core competitiveness. The Directors are also of the view that the terms of the Cooperation Agreement are on normal commercial terms, fair and reasonable and in the interest of the Company and the Shareholders as a whole.

GENERAL INFORMATION

The Company

The Company is an integrated healthcare service provider with a focus on the fast-growing healthcare service industry in the PRC. Leveraging its own diversified healthcare resources and strong financial support, the Company has been committed to building up hospitals’ comprehensive strengths in terms of healthcare technology, service quality, operating efficiency as well as managerial capacity.

Hospital Investment Co., Ltd.

5 Hospital Investment Co., Ltd. is a company established in the PRC with limited liability in 2015. The principal activity of Hospital Investment Co., Ltd. is investment holding.

Xichang New Steel

Xichang New Steel is a wholly-owned subsidiary of Pangang Group, established in the PRC with limited liability in 2001. The principal activity of Xichang New Steel is metal extraction, processing and manufacturing.

Pangang Group, a state-owned enterprise located in Panzhihua City, Sichuan province, is the largest steel maker in Western China. It is also the largest vanadium product manufacturer in China, and the second largest in the world.

LISTING RULES IMPLICATIONS

The highest applicable percentage ratio under Rule 14.07 of the Listing Rules in respect of the Transaction on a standalone basis is more than 1% but less than 5%. However, more than one of the applicable percentage ratios in respect of the Transaction, when aggregated with the Previous Transaction which was entered into on 31 January 2019 and has not been completed as of the date of this announcement, are more than 5% but none of them is 25% or more. Therefore, the Transaction, when aggregated with the Previous Transaction, constitutes a discloseable transaction of the Company under the Listing Rules and is subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

As of the date of this announcement, (i) Pangang Group directly and indirectly holds approximately 46.7% equity interest in Sichuan Huankang (a subsidiary of the Company) in aggregate, and (ii) Xichang New Steel is a wholly-owned subsidiary of Pangang Group, thus Xichang New Steel is a connected person of the Company at the subsidiary level under Rule 14A.07 of the Listing Rules. Therefore, the Transaction constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules.

WARNING

6 DEFINITIONS

“Board” the board of directors of the Company

“Cooperation Agreement” an agreement entered into between Hospital Investment Co., Ltd. and Xichang New Steel on 25 January 2021 in relation to restructuring of Pangang Xichang Hospital

“Company” Genertec Universal Medical Group Company Limited (通用環球醫療集團有限公司), a company incorporated in Hong Kong with limited liability and the issued shares of which are listed on the main board of the Stock Exchange (stock code: 2666)

“connected person” has the meaning ascribed thereto under the Listing Rules

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

“Group” the Company and its subsidiaries

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

“Hospital Investment Co., Genertec Universal Hospital Investment & Management Ltd.” (Tianjin) Co., Ltd. (通用環球醫院投資管理(天津)有限公司), previously known as Wiseman Hospital Investment Management (Tianjin) Co., Ltd. (融慧濟民醫院投資管理 ( 天津) 有限公司), a wholly-owned subsidiary of the Company established in the PRC in 2015

“Joint Venture” the joint venture company to be established by Hospital Investment Co., Ltd. and Xichang New Steel pursuant to the Cooperation Agreement

“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange (as amended from time to time)

“Pangang Group” Panzhihua Iron and Steel (Group) Company Limited (攀鋼集團有限公司), a state-owned enterprise established in the PRC in October 1989

7 “Pangang Mining” Panzhihua Pangang Group Mining Company (攀鋼集團礦業有限公司 ), a company established in the PRC with limited liability in June 1994

“Parties” Hospital Investment Co., Ltd. and Xichang New Steel

“PRC” the People’s Republic of China, for the purpose of this announcement, excluding Hong Kong, Macau Special Administrative Region of the PRC and Taiwan

“Previous Transaction” the formation of Sichuan Huankang by Hospital Investment Co., Ltd., Pangang Group and Pangang Mining, details of which have been disclosed in the announcement of the Company dated 31 January 2019

“RMB” Renminbi, the lawful currency of the PRC

“Share(s)” the ordinary shares in the issued capital of the Company

“Shareholder(s)” holder(s) of Shares

“Sichuan Huankang” Sichuan Huankang Hospital Management Company Limited (四川環康醫院管理有限公司), a subsidiary of the Company

“Stock Exchange” The Stock Exchange of Hong Kong Limited

“subsidiary” has the meaning ascribed thereto under the Listing Rules

“Target Company” Liangshan Panxin Health Management Company Limited (凉山州攀新健康管理有限公司)

“Transaction” the transaction contemplated under the Cooperation Agreement

“Xichang New Steel” Pangang Group Xichang New Steel Enterprise Co., Ltd. (攀鋼集團西昌新鋼業有限公司)

By order of the Board Genertec Universal Medical Group Company Limited 通用環球醫療集團有限公司 Peng Jiahong Executive Director

Beijing, PRC, 25 January 2021

As of the date of this announcement, the executive Directors are Ms. Peng Jiahong (Vice- chairwoman) and Mr. Yu Gang; the non-executive Directors are Mr. Zhang Yichen (Chairman), Ms. Liu Kun, Mr. Liu Zhiyong, Mr. Liu Xiaoping and Mr. Su Guang; and the independent non- executive Directors are Mr. Li Yinquan, Mr. Chow Siu Lui, Mr. Han Demin and Mr. Liao Xinbo.