CLIFFORD MEDICAL GROUP LIMITED 祈福醫療集團有限公司

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

Application Proof of

CLIFFORD MEDICAL GROUP LIMITED祈福醫療集團有限公司

(the “Company”)

(incorporated in the Cayman Islands with limited liability)

WARNING

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

This Application Proof is in draft form. The information contained in it is incomplete and is subject to change whichcan be material. By viewing this document, you acknowledge, accept and agree with the Company, its sponsor, advisersor 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 Kongand not for any other purposes. No investment decision should be based on the information contained in thisdocument;

(b) the publication of this document or supplemental, revised or replacement pages on the Exchange’s website doesnot give rise to any obligation of the Company, its sponsor, advisers or members of the underwriting syndicate toproceed with an offering in Hong Kong or any other jurisdiction. There is no assurance that the Company willproceed with the offering;

(c) the contents of this document or supplemental, revised or replacement pages may or may not be replicated in fullor 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 timeto time in accordance with the Listing Rules;

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

(f) this document must not be regarded as an inducement to subscribe for or purchase any securities, and no suchinducement 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 suchapplication be accepted;

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

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

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

If an offer or an invitation is made to the public in Hong Kong in due course, prospective investors are reminded tomake their investment decisions solely based on the Company’s prospectus registered with the Registrar of Companiesin Hong Kong, copies of which will be distributed to the public during the offer period.

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

Clifford Medical Group Limited祈福醫療集團有限公司

(Incorporated in the Cayman Islands with limited liability)

[REDACTED]

Number of [REDACTED] : [REDACTED] Shares (subject to [REDACTED])Number of [REDACTED] : [REDACTED] Shares (subject to [REDACTED])Number of [REDACTED] : [REDACTED] Shares (subject to [REDACTED]

and [REDACTED])[REDACTED] : [REDACTED]Nominal value : HK$0.01 per Share

Stock code : [•]Sole Sponsor

[REDACTED]

[REDACTED]

Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take noresponsibility for the contents of this document, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever forany loss howsoever arising from or in reliance upon the whole or any part of the contents of this document.

A copy of this document, having attached thereto the documents specified in “Documents delivered to the Registrar of Companies in Hong Kong and available on display– Documents delivered to the Registrar of Companies in Hong Kong” in Appendix VI to this document, has been registered with the Registrar of Companies in HongKong as required by Section 342C of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong). The Securities andFutures Commission, The Stock Exchange of Hong Kong Limited and the Registrar of Companies in Hong Kong take no responsibility as to the contents of thisdocument or any other documents referred to above.

[REDACTED] should consider carefully all the information set out in this document and, in particular, should consider and evaluate the matters discussed in the sectionheaded “Risk factors” in this document before [REDACTED] in relation to our Company.

The [REDACTED] will not be more than HK$[REDACTED] and is currently expected to be not less than HK$[REDACTED]. The [REDACTED] may, whereconsidered appropriate, based on the level of interest expressed by prospective professional, institutional and [REDACTED] during a [REDACTED], and with theconsent of our Company, reduce the [REDACTED] range below that stated in this document at any time prior to the morning of the last day for lodging applicationsunder the [REDACTED]. In such case, our Company will, as soon as practicable following the decision to make such reduction, and in any event not later than themorning of the day which is the last day for lodging applications under the [REDACTED], cause to be published on the website of the Stock Exchange atwww.hkexnews.hk and our Company’s website at www.cliffordmedgroup.com the notice of such change. For further information, please refer to the sections headed“[REDACTED]” and “[REDACTED]” in this document.

The final [REDACTED] is expected to be fixed by agreement between the [REDACTED] and our Company on the [REDACTED], which is expected to be on or around[REDACTED] and, in any event, not later than [REDACTED].

If, for any reason, the final [REDACTED] is not agreed by [REDACTED] between the [REDACTED] and our Company, the [REDACTED] will not becomeunconditional and will lapse.

The [REDACTED] have not been and will not be registered under the [REDACTED] and may not be [REDACTED], except pursuant to [REDACTED] and inaccordance with any applicable [REDACTED]. The [REDACTED] outside the [REDACTED] in offshore transactions in reliance on [REDACTED].

The obligations of the [REDACTED] under the [REDACTED] are subject to termination by the [REDACTED] if certain grounds for termination arise prior to[REDACTED]. Such grounds are set out in the section headed “[REDACTED]” in this document. Should the [REDACTED] terminate the obligations of the[REDACTED] under the [REDACTED] in accordance with its terms, the [REDACTED] will not become unconditional and will lapse.

[REDACTED]

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

IMPORTANT

[REDACTED]

[REDACTED]


IMPORTANT

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EXPECTED TIMETABLE

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EXPECTED TIMETABLE

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[REDACTED]


EXPECTED TIMETABLE

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EXPECTED TIMETABLE

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IMPORTANT NOTICE TO [REDACTED]

This document is issued by our Company solely in connection with the [REDACTED]and the [REDACTED] and does not constitute an [REDACTED] to sell or a solicitation of

[REDACTED] any [REDACTED] other than the [REDACTED]. This document may not be

used for the purpose of, and does not constitute, [REDACTED] or a solicitation of

[REDACTED] in any other jurisdiction or in any other circumstances. No action has been

taken to permit [REDACTED] of the [REDACTED] or the distribution of this document in

any jurisdiction other than Hong Kong. The distribution of this document and the

[REDACTED] of the [REDACTED] in other jurisdictions are subject to restrictions and may

not be made except as permitted under the applicable [REDACTED] of such jurisdictions

pursuant to registration with or authorisation by the relevant [REDACTED].

You should rely only on the information contained in this document and the

[REDACTED] to make your [REDACTED]. We have not authorised anyone to provide you

with information that is different from what is contained in this document. Any information or

representation not included in this document must not be relied on by you as having been

authorised by us, the Sole Sponsor, the [REDACTED], the [REDACTED], the

[REDACTED], [REDACTED], any of our or their respective directors or any other persons

or parties involved in the [REDACTED].

Page

EXPECTED TIMETABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i

CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v

SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [12]

GLOSSARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [32]

FORWARD-LOOKING STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [37]

RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [39]

WAIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES . . . . . . . [66]

INFORMATION ABOUT THIS DOCUMENT AND THE [REDACTED] . . . . . . . . . . [68]

DIRECTORS, SENIOR MANAGEMENT AND PARTIES INVOLVEDIN THE [REDACTED] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [72]


CONTENTS

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Page

CORPORATE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [77]

INDUSTRY OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [79]

REGULATORY OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [90]

HISTORY, REORGANISATION AND DEVELOPMENT . . . . . . . . . . . . . . . . . . . . . . [110]

BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [129]

RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS . . . . . . . . . . . . . [229]

CONNECTED TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [244]

DIRECTORS AND SENIOR MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [282]

SUBSTANTIAL SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [301]

SHARE CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [303]

FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [308]

FUTURE PLANS AND USE OF [REDACTED] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [402]

[REDACTED] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [411]

STRUCTURE AND CONDITIONS OF THE [REDACTED] . . . . . . . . . . . . . . . . . . . [423]

[REDACTED] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [435]

APPENDIX I — ACCOUNTANT’S REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1

APPENDIX II — UNAUDITED PRO FORMA FINANCIAL INFORMATION . II-1

APPENDIX III — PROPERTY VALUATION REPORT . . . . . . . . . . . . . . . . . . . . III-1

APPENDIX IV — SUMMARY OF THE CONSTITUTION OF THECOMPANY AND CAYMAN ISLANDSCOMPANIES LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-1

APPENDIX V — STATUTORY AND GENERAL INFORMATION . . . . . . . . . . V-1

APPENDIX VI — DOCUMENTS DELIVERED TO THE REGISTRAROF COMPANIES IN HONG KONG ANDAVAILABLE ON DISPLAY . . . . . . . . . . . . . . . . . . . . . . . . . VI-1


CONTENTS

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This summary aims at giving you an overview of the information contained in thisdocument. Because this is a summary, it does not contain all the information that may beimportant to you. You should read this document in its entirety before you decide to[REDACTED] in the [REDACTED]. There are risks associated with any [REDACTED].Some of the particular risks in [REDACTED] are set out in the section headed “RiskFactors” in this document. You should read that section carefully before you decide to[REDACTED] in the [REDACTED]. Various expressions used in this summary are definedin the section headed “Definitions” in this document.

Your attention should be drawn to the fact that, as part of the Reorganisation, ourCompany acquired the Hospital Group on 23 August 2021 and further acquired theHealthcare Group on 20 December 2021, which led to the combination of the HealthcareGroup with the Hospital Group under our Company, which is controlled by Ms. Wendy Man.Immediately before and after the Reorganisation, the companies now comprising the Group,engaging in the Hospital Business and Healthcare and Pharmaceutical Business, were underthe common control of Ms. Wendy Man. Accordingly, the Reorganisation is regarded as abusiness combination under common control, and the historical financial information of ourGroup has been prepared using the principles of merger accounting. The historical financialinformation of our Group has been prepared by including the historical financial informationof the companies engaged in the Hospital Business for the entire Track Record Period, andHealthcare and Pharmaceutical Business since 29 December 2020, the date when the HospitalBusiness and Healthcare and Pharmaceutical Business first came under the common controlof Ms. Wendy Man. Accordingly, (having taken into consideration that the effect of suchcombination for the two days from 30 to 31 December 2020 is considered to be insignificant)the historical results of operations of our Group for FY2019 and FY2020 and the financialcondition of our Group as of 31 December 2019 included only those of the Hospital Groupalone, and do not include those of the Healthcare Group; whereas the historical results ofoperations of our Group for FY2021 and the financial condition of our Group as of 31December 2020 and 2021 include those of the Hospital Group and the Healthcare Group. Fordetails of the Reorganisation in preparation for the [REDACTED], please refer to the sectionheaded “History, Reorganisation and Development – Reorganisation” in this document. Tocomply with the applicable regulations and disclosure requirements, as well as to presentmaterial information necessary to assess the financial impact of the combination of theHealthcare Group and the Hospital Group, this document includes consolidated auditedhistorical financial information of the Healthcare Group for FY2019 and PE2020 (i.e. theperiod from 1 January 2020 to 29 December 2020) (please refer to “III. Additional FinancialInformation of the Healthcare and Pharmaceutical Business for the Pre-acquisition Period”of the Accountant’s Report in Appendix I to this document).

OVERVIEWWe are an integrated medical and healthcare services provider based in the PRC, and we

have over 20 years of proven track record in the healthcare industry. We primarily engage in theoperation of Guangdong Clifford Hospital and certain ancillary healthcare facilities including (i)a postnatal care centre, (ii) an elderly care service centre, (iii) a dental clinic and (iv) five retailpharmacies in Guangdong Province, the PRC. With a wide range of healthcare facilitiesintegrated under Guangdong Clifford Hospital, our Group provides comprehensive medical andhealthcare services under the “Medical + Care model” (醫養模式).

We operate our hospital business through Guangdong Clifford Hospital, which is afor-profit private traditional Chinese medicine and Western medicine integrated hospital (中西醫結合醫院), i.e. Chinese and Western Medicine Hospital, located in Panyu, Guangzhou. Since theinception of our Group in the early 2000s, we aspire to build an international medical institutionunder the “Clifford” brand for providing high-quality medical and healthcare services, which arerecognised by international standards in terms of patient care, public health and hospitalmanagement systems. With our Group’s commitment and effort, shortly after the commencementof its business in 2001, our Hospital has become accredited in 2003 by the Joint CommissionInternational (JCI), which is recognised worldwide as one of the highest benchmarks for qualityand safe healthcare services. According to the F&S Report, our Hospital is the first hospital inthe PRC and the second hospital in Asia to become accredited by the JCI. After 20 years ofdevelopment, we believe Guangdong Clifford Hospital has continued to provide highly regarded


SUMMARY

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medical and healthcare services, and has become one of the leading private general hospitals inthe PRC, as evidenced by, among other things, the following:

➢ our Hospital has since 2003 been holding the JCI-accreditation (reviewed generally ona three-year term) up to 2025; according to the F&S Report, our Hospital is thesecond largest JCI-accredited private general hospital in the PRC in terms of revenuein 2020;

➢ our Hospital had been rated as a Grade A Class III (三級甲等) Chinese MedicineHospital in 2008 (being the highest classification of Chinese Medicine Hospitals) andhas subsequently been rated as a Grade A Class III Chinese and Western MedicineHospital (being the highest classification of Chinese and Western Medicine Hospitals)since 2021, both of which were issued by the Traditional Chinese Medicine Bureau ofGuangdong Province (廣東省中醫藥局);

➢ according to the F&S Report, our Hospital is the largest for-profit private generalhospital in both the Greater Bay Area and Guangdong Province in terms of registeredbeds in 2021; and

➢ during the Track Record Period, our Hospital had over 3,400,000 out-patient visits andover 92,000 in-patient visits, respectively; as of 31 December 2021, our Hospital had2,100 registered beds and 1,352 beds in operation.

Located in Panyu, Guangzhou, our Hospital primarily serves patients in GuangdongProvince and its vicinity. It is strategically positioned to service a wider geographic region incentral and southern China, in particular, the Greater Bay Area. During the Track Record Period,majority of our Hospital’s patients reside in Guangdong Province and the Greater Bay Area,while other patients primarily reside in other provinces in or around central and southern China.

We aspire to establish our Group and the “Guangdong Clifford Hospital” and “CliffordHealth” (祈福醫療) brands as a patient-centric and quality-focused comprehensive medical andhealthcare services provider under the “Medical + Care” model. Complementing the medicalservices rendered by Guangdong Clifford Hospital, our Group provides a wide spectrum ofancillary healthcare services, including rendering of postpartum healthcare services by CliffordPostnatal Care Centre (祈福月子中心), elderly care services by Clifford Elderly Care forResidents (祈福居民護老服務), dental care services provided by Clifford Dental Clinic (祈福口腔門診部) and sales of pharmaceutical products (by way of both wholesale to pharmaceuticaldistributors and retail sales at our Clifford Xinda Pharmacies (祈福新大藥房)).COMPETITIVE STRENGTHS

We believe that the following competitive strengths allow us to capitalise on the growthpotential of healthcare industry:

➢ We have established the “Guangdong Clifford Hospital” and “Clifford Health” (祈福醫療) brands as a high-quality medical and healthcare services provider

➢ Readily available Phase II Building for rapid expansion of our Hospital➢ Our Group provides comprehensive medical and healthcare services under the

“Medical + Care” model, creating synergy and improving our overall healthcareservices

➢ Experienced medical professionals➢ Experienced and dedicated management team

STRATEGIESWe strive to further strengthen our position as an integrated medical and healthcare services

provider in the PRC by providing comprehensive healthcare services in the PRC. To achievethese goals, we plan to implement the following business strategies.

➢ Continuing to expand our Hospital operations through organic growth➢ Expanding our Clifford healthcare network by establishing additional ancillary

healthcare facilities in Guangdong Province


SUMMARY

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➢ Solidifying the reputation of our Guangdong Clifford Hospital in the Greater Bay Areaby exporting our healthcare management systems and further strengthening ourhealthcare services

➢ Improving our technology infrastructures to enhance patient care➢ Expanding through selective mergers and acquisitions

OUR BUSINESS MODELOur businesses consists of (i) the hospital business segment, which can be classified into

in-patient hospital services, out-patient hospital services (including physical examinationservices), sales of pharmaceutical products at our Hospital’s pharmacy after provision ofin-patient or out-patient hospital services and ancillary services related to hospital operation and(ii) the healthcare and pharmaceutical business segment, which can be classified into theprovision of healthcare services (including postpartum healthcare services, elderly care servicesand dental care services) and sales of pharmaceuticals (including wholesale to pharmaceuticalsdistributors and retail sales at our pharmacies).

The table below sets for the revenue of our Group and the Healthcare Group for the yearsindicated:

FY2019 FY2020 FY2021(RMB’000) (RMB’000) (RMB’000)

Our Group(note) 1,083,013 864,708 1,206,239

FY2019 PE2020(RMB’000) (RMB’000)

The Healthcare Group(note) 332,724 223,851Note: For FY2019 and FY2020 (or PE2020), the respective revenue of our Group and the Healthcare Group

included inter-group sales between each other (such as sales of pharmaceuticals by the Healthcare Groupto our Group).

Information of business segment and revenue streamsThe following table sets forth the breakdown by business segments and revenue streams of

the revenue of our Group for the years indicated:

FY2019 FY2020 FY2021(RMB’000) % (RMB’000) % (RMB’000) %

The hospital business segment– Out-patient hospital services 303,967 28.1 316,246 36.6 471,533 39.1– In-patient hospital services 474,571 43.8 347,870 40.2 399,741 33.1– Sales of pharmaceuticals 298,022 27.5 195,470 22.6 254,505 21.1– Ancillary services related to hospital

operation 6,453 0.6 5,122 0.6 12,149 1.0

Sub-total 1,083,013 100.0 864,708 100.0 1,137,928 94.3

The healthcare and pharmaceuticalbusiness segment

– Postpartum healthcare services – – – – 24,267 2.0– Elderly care services – – – – 8,624 0.7– Dental care services – – – – 4,051 0.4– Sales of pharmaceuticals – – – – 31,369 2.6

Sub-total – – – – 68,311 5.7

Total 1,083,013 100.0 864,708 100.0 1,206,239 100.0


SUMMARY

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The following table sets forth the breakdown of the gross profit and gross profit margin ofeach segment for the periods indicated:

FY2019 FY2020 FY2021

Grossprofit

Grossprofit

marginGrossprofit

Grossprofit

marginGrossprofit

Grossprofit

margin(RMB’000) % (RMB’000) % (RMB’000) %

The hospital business segment– Out-patient hospital services 125,132 27.6 127,097 30.8 232,914 38.7– In-patient hospital services 128,846 20.7 69,362 15.5 120,505 23.0– Ancillary services related to hospital

operation (2,492) (38.6) (3,848) (75.1) 3,126 25.7

The healthcare and pharmaceuticalbusiness segment

– Postpartum healthcare services – – – – 9,806 40.4– Elderly care services – – – – 3,763 43.6– Dental care services – – – – (78) (1.9)– Sales of pharmaceuticals – – – – 12,277 39.1

Key Operating Data of our HospitalThe following table sets forth certain key information of our Hospital for the periods

indicated:

FY2019 FY2020 FY2021

Number of beds in operation(1) 1,352 1,352 1,352Effective service capacity(2) (bed-days) 396,755 396,755 396,755In-patient visits(3) 40,091 23,258 29,139In-patient bed-days(4) (days) 318,804 201,664 243,860ALOS(5) (days) 8.0 8.7 8.4Utilisation rate(6) (%) 80.4% 50.8% 61.5%Average spending per in-patient visit(7)

(RMB) 15,560 19,208 17,992Out-patient visits(8) 1,197,513 798,169 1,414,388

– Out-patient clinic visits 1,099,800 692,458 970,878– Physical examination visits (individual

patients) 26,245 46,374(9) 345,309(9)

– Physical examination visits (grouppatients) 71,468 59,337 98,201

Average spending per out-patient visit(7)

(RMB) 378 517 425Number of in-patient surgeries performed 23,514 21,400 26,348Number of day surgeries performed 21,165 17,202 23,867Notes:1. It represents the maximum number of beds available for our Hospital’s clinical services as of the end of

the relevant period, which includes regular beds, fold-up beds, care beds, beds that are sterilised andrepaired and out-of-service beds due to expansion or overhaul.

2. It represents the estimated in-patient service capacity during the given period, calculated as the beds inoperation of the relevant period multiplied by the number of days in such period taking into account thenumber of beds in operation are not instantly available to our in-patient, due to, among other factors: (i)beds reserved and hence unavailable for instant usage, due to relevant rules and regulations regardingmedical treatment requirements and reservation for unexpected emergency demands; (ii) beds have to bedisinfected and sanitised before they are made available for new in-patients; and (iii) beds undermaintenance and repair works.

3. It represents the total number of in-patients in our Hospital during the relevant period.4. It represents the actual number of beds occupied by our in-patients on each day (but not taking into

account beds which are occupied by in-patients on their date of discharge) aggregated over the course ofthe relevant period.


SUMMARY

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5. It represents the average number of days an in-patient stays in our Hospital, calculated as the totalin-patient bed-days (representing the hospitalisation days of all in-patient visits) of the relevant perioddivided by the total in-patient visits during the period.

6. It represents the percentage of instantly available beds in operation occupied by in-patients during thegiven period, which serves as an indicator of the utilisation of beds in operation, calculated as thein-patient bed-days during such period dividing by the effective service capacity during such period, andmultiplied by 100%.

7. It represents the average spending per in-patient visit (or out-patient visit), calculated as the sum of therevenue from in-patient hospital services (or out-patient hospital services (including physical examinationservices)) of our Hospital and the sale of pharmaceutical products after provision of the relevant hospitalservices dividing by the number of in-patient visits (or out-patient visits) of our Hospital, whereapplicable.

8. It represents the total number of out-patients (i.e. patients not hospitalised overnight or patients underinward observation (留院觀察)) in our Hospital.

9. The substantial increase in the number of individual patient visits in FY2020 and FY2021 was due to asignificant increase in demand for COVID-19 nucleic acid tests under our physical examination centre,which brought in 21,810 and 318,599 visits for the years ended 31 December 2020 and 2021, respectively.

OUR CUSTOMERS AND SUPPLIERSDuring the Track Record Period, our customers primarily consisted of (i) patients at our

Hospital; (ii) individual customers of our ancillary healthcare services at Clifford Postnatal CareCentre, Clifford Elderly Care for Residents and Clifford Dental Clinic; and (iii) individual retailcustomers and wholesale industry customers of our pharmaceutical supply business. During theTrack Record Period, our top five customers in aggregate contributed to approximately 0.8%,1.2% and 2.3% of our revenue, respectively, during the Track Record Period.

For customers of our Hospital, while we provide healthcare services directly to individualpatients/customers, we receive payments for healthcare services provided by our Hospitalprimarily from (i) social insurance programmes; (ii) patients who finance their medicaltreatments themselves (and/or commercial insurance policyholders who are subsequentlyreimbursed by commercial insurance providers); (iii) commercial insurance providers whodirectly settle medical bills for patients (who are commercial insurance policyholders); and (iv)business corporations who purchase employee healthcare services from us. The following tablesets forth breakdown of our revenue attributable to our in-patient and out-patient hospitalservices contributed by patients covered by social insurance programmes and not covered bysocial insurance programmes, respectively, for the years indicated:

FY2019 FY2020 FY2021

Amount

% of revenueof our hospital

services Amount


services Amount


services(RMB’000) % (RMB’000) % (RMB’000) %

Revenue from patients covered by socialinsurance programme:– Revenue attributable to social insurance

programmes 273,748 25.4 205,628 23.9 262,704 23.4– Revenue from co-payments from patients 154,684 14.4 105,756 12.3 151,147 13.4

Sub-total 428,432 39.8 311,384 36.2 413,851 36.8

Revenue from patients not covered by socialinsurance programme:

– Self-pay customers 624,082 58.0 528,452 61.5 677,153 60.1– Commercial insurance providers 6,546 0.6 4,351 0.5 8,154 0.7– Corporate customers 17,500 1.6 15,399 1.8 26,621 2.4

Sub-total 648,128 60.2 548,202 63.8 711,928 63.2

Total 1,076,560 100.0 859,586 100.0 1,125,779 100.0


SUMMARY

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As our Hospital is a Medical Insurance Designated Institution, part of our patients rely onpublic medical insurance programmes, including Urban Employees Medical InsuranceProgramme, Urban and Rural Residents Medical Insurance Programme and Rural MedicalInsurance Programme, to settle all or part of their medical bills. For patients covered by socialinsurance programmes, we follow pricing guidelines stipulated by relevant local authoritiesand/or pricing catalogs.

We procure pharmaceuticals, medical consumables and medical equipment from qualifiedsuppliers selected having regard to (among other factors) their product offerings, quality,pricing, service, overall track record, and reputation. We require our suppliers to hold andmaintain requisite licenses and permits to operate their business (such as business licensesand/or the pharmaceutical supply licence (藥品經營許可證)). During the Track Record Period,our top five suppliers in aggregate accounted for approximately 77.9%, 77.4% and 46.0% of ourtotal purchase of the respective years.

During the Track Record Period, to the best knowledge and belief of our Directors, therehave been occasions where our top five suppliers have also purchased medical services of ourHospital (such as physical examination services for their employees) and/or procuredpharmaceuticals from our Group, making them our customers as well, or vice versa. For furtherdetails, please refer to the section headed “Business – Overlapping of customers and suppliers”in this document.COMPETITION

The medical services market in the PRC is highly fragmented and competitive withnumerous participants. According to the F&S Report, there were 965 private hospitals inGuangdong Province in 2020, and it is expected to grow at a CAGR of 7.0% and reach 1,366 in2025. For more details on the competitive landscape and our market position, please refer to thesection headed “Industry Overview – Overview of Healthcare Services Market in GuangdongProvince – Competitive Landscape of Private General Hospitals in Guangdong, Greater Bay Areaand China Market” in this document.CONTINUING CONNECTED TRANSACTIONS

Our Group has entered into certain transactions which would constitute continuingconnected transactions under Chapter 14A of the Listing Rules after the [REDACTED],including (i) certain partially exempted continuing connected transactions and (ii) exemptedcontinuing connected transaction which has a term of more than three years. Further particularsabout such transactions together with the application for a waiver from strict compliance withthe relevant requirements under Chapter 14A of the Listing Rules are set out in the sectionheaded “Connected Transactions” in this document.RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS

Immediately following completion of the [REDACTED] and the [REDACTED], andwithout taking into account of any Shares which may be allotted and issued pursuant to theexercise of the [REDACTED] and any options which have been or may be granted under the[REDACTED] Share Option Scheme and the Share Option Scheme, International Health BVIwill directly hold and be entitled to exercise voting rights of [REDACTED]% of the issuedshare capital of our Company. International Health BVI is directly and wholly owned by Ms.Wendy Man, a non-executive Director and the Chairman. For the purpose of the Listing Rules,Ms. Wendy Man and International Health BVI are considered as the Controlling Shareholders ofour Company as of the Latest Practicable Date and upon the [REDACTED]. For details of ourhistory and our Controlling Shareholders, please refer to the section headed “Relationship withour Controlling Shareholders” in this document.[REDACTED] SHARE OPTION SCHEME

Our Company has formally adopted the [REDACTED] Share Option Scheme on [•]. Thepurpose of the [REDACTED] Share Option Scheme is to recognise and reward the contributionof certain Directors, senior management, employees and former employees of our Group to thegrowth and the development of our Group and [REDACTED]. As of the Latest Practicable Date,[REDACTED] Share Options to subscribe for an aggregate of [REDACTED] Shares had beengranted by our Company to a total of 40 grantees under the [REDACTED] Share OptionScheme, none of which has been exercised by the grantees. A summary of the principal terms ofthe [REDACTED] Share Option Scheme is set out in paragraph 3.5 of Appendix V –


SUMMARY

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“Statutory and General Information – [REDACTED] Share Option Scheme” to this document.Any exercise of the options to be granted under the [REDACTED] Share Option Scheme in thefuture will result in a dilution in the shareholding of our Shareholders and may result in adilution in the earnings per Share and net asset value per Share, for further details, please referto the section headed “Risk Factors – Risks relating to our Business and Industry – Issue of newShares under the Share Option Schemes will have a dilution effect and may affect ourprofitability” in this document.SUMMARY HISTORICAL FINANCIAL INFORMATION

The tables below include, for the periods indicated, selected financial data derived from ourconsolidated statements of profit or loss and comprehensive income, the details of which are setforth in Appendix I, and these should be read in conjunction with the financial statements inAppendix I, including the related notes.Summary Consolidated Statements of Profit or Loss and Other Comprehensive Income


Revenue 1,083,013 864,708 1,206,239Cost of sales (831,527) (672,097) (823,926)

Gross profit 251,486 192,611 382,313Selling expenses (7,022) (5,758) (36,606)Administrative expenses (99,863) (95,581) (130,870)Net impairment losses on financial assets (48) (291) (220)Other income 17,064 24,548 10,460Other (losses)/gains – net (6,879) 17,455 2,126

Operating profit 154,738 132,984 227,203Finance costs – net (53,928) (68,962) (51,525)

Profit before income tax 100,810 64,022 175,678Income tax expenses (24,724) (11,416) (44,530)

Profit for the year attributable to ownersof the Company 76,086 52,606 131,148

Other comprehensive income attributable toowners of the CompanyItems that may be reclassified to profit or

loss– Exchange differences on translation of

foreign operations 187 (982) (1,142)

Total comprehensive income attributableto owners of the Company for the year 76,273 51,624 130,006

Summary Consolidated Statements of Financial Position

As of 31 December2019 2020 2021

(RMB’000) (RMB’000) (RMB’000)

Current assets 819,004 967,673 548,516Non-current assets 1,419,029 1,387,824 1,367,741Current liabilities 889,737 856,176 698,875Non-current liabilities 1,046,185 1,101,946 698,547Net current (liabilities)/assets (70,733) 111,497 (150,359)


SUMMARY

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The significant fluctuations in our Group’s net current liabilities/assets as of 31 December2019, 2020 and 2021 were primarily attributable to the gradual settlement of amount due to/fromrelated parties in contemplation of the [REDACTED]. As of the Latest Practicable Date, all ofthe amount due to/from related parties have been fully settled.

For the reasons stated above, we recorded net current liabilities of approximately RMB70.7million and RMB150.4 million, respectively as of 31 December 2019 and 2021. For moredetails, please refer to note 2.1.2 of the Accountant’s Report in Appendix I to this document andthe section headed “Risk Factors – Risks Relating to Our Business and Industry – We recordednet current liabilities during the Track Record Period, which may expose us to liquidity risk, andsuch positions may recur after the [REDACTED]” in this document. After the Track RecordPeriod, our Group has obtained an aggregate committed banking facilities of RMB505.9 million,all of which remained unutilised as of the Latest Practicable Date.Summary Consolidated Statements of Cash Flows


Net cash generated from operating activities 103,476 234,836 371,377Net cash (used in)/generated from investing

activities (297,293) (88,334) 328,805Net cash generated/(used in) from financing

activities 238,311 (118,099) (425,367)

Net increase/decrease in cash and cashequivalents 44,494 28,403 274,815

Cash and cash equivalents at beginning ofthe year 80,292 124,295 156,160

Exchange (loses)/gains on cash and cashequivalents (491) 3,462 61

Cash and cash equivalents at end of year 124,295 156,160 431,036

KEY FINANCIAL RATIOS

As of/For the year ended 31 December2019 2020 2021

Current ratio(1) 0.9 time 1.1 times 0.8 timesQuick ratio(2) 0.9 time 1.1 times 0.7 timesGearing ratio(3) 427.4% 324.6% 183.0%Debt to equity ratio(4) 6.4 times 4.9 times 2.7 timesInterest coverage(5) 2.6 times 1.8 times 3.7 timesReturn on total assets(6) 3.4% 2.2% 6.8%Return on equity(7) 25.2% 13.2% 25.3%Gross profit margin(8) 23.2% 22.3% 31.7%Net profit margin(9) 7.0% 6.1% 10.9%Notes:1. Current ratio equals to total current assets divided by total current liabilities as of the end of each year.2. Quick ratio equals to total current assets less inventories divided by total current liabilities as of the end of

each year.3. Gearing ratio equals to interest-bearing liabilities divided by total equity as of the end of each year.4. Debt to equity ratio equals to total liabilities divided by total equity as of the end of each year.5. Interest coverage equals to profit before net finance costs and income tax expenses for the respective year

divided by finance costs for the respective year.6. Return on total assets equals to profit for the respective year divided by total assets as of the end of each

year multiplied by 100%.7. Return on equity equals to profit for the respective year divided by total equity as of the end of each year

multiplied by 100%.


SUMMARY

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8. Gross profit margin is calculated based on the gross profit divided by the revenue for the respective yearmultiplied by 100%

9. Net profit margin is calculated based on the profit divided by the revenue for the respective yearmultiplied by 100%

RECENT DEVELOPMENT AND NO MATERIAL ADVERSE CHANGESubsequent to the Track Record Period and up to the Latest Practicable Date, our business

operations had remained stable. For the two months ended 28 February 2022, our Hospital hadover 290,000 out-patient visits and over 4,000 in-patient visits (with over 34,000 in-patientbed-days). Our Hospital typically experiences fewer patient visits around Chinese New Yearholiday in January or February. Please refer to the section headed “Business – Seasonality” formore details.Recent Resurgence of Regional COVID-19 Outbreaks

Since 1 January 2022 up to the Latest Practicable Date, certain areas across the PRC hassuffered from some regional outbreaks of COVID-19 variants including Delta and Omicron virusvariants. In response, local governments in the affected areas imposed various restrictions onbusiness and social activities, including city lockdowns, restrictions on travel and otheremergency quarantines. Since 1 January 2022 and up to the Latest Practicable Date, there wereno city lockdowns or travel restrictions implemented by the local government in GuangzhouCity.

During the Track Record Period, (i) as a result of confirmed cases of COVID-19 at ourHospital, all of our Hospital’s out-patient hospital services were suspended from 7 February2020 to 12 March 2020, and during such period, the in-patient hospital services also suspendedthe admission of new patients; (ii) as required by the local government, the stomatology,ophthalmology, ENT, children health and rehabilitation disciplines and physical examinationservices of our Hospital suspended their operations during 7 February 2020 to 19 March 2020and Clifford Dental Clinic suspended their operations during 7 February 2020 to 17 April 2020,all of which has been functioning normally since the expiry of such suspension up to the LatestPracticable Date. For further details, please refer to the section headed “Business – Impact ofCOVID-19 Outbreak” in this document.

Having considered the above and there has been no confirmed cases since suspension ofour Hospital’s services in March 2020 and up to the Latest Practicable Date, our Directorsbelieve that there has been no material adverse effect on the operations of our Hospital or ourancillary healthcare facilities since 1 January 2022 up to the Latest Practicable Date.

We are closely monitoring the development of the COVID-19 pandemic and continuouslyevaluating any potential impact on our business, results of operations and financial condition.However, as the COVID-19 pandemic remains an evolving situation, there is great uncertainty asto the future development of the disease. For risks relating to potential future outbreak ofCOVID-19, please refer to the section headed “Risk Factors — The recent outbreak of the NovelCoronavirus Disease 2019 (COVID-19) and another wave of outbreak caused by Delta, Omicronor other virus variants in the future may have a material adverse effect on our business, resultsof operation, financial condition and prospects” in this document.No Material Adverse Change

Our Directors confirm that, as of the date this document, save as the expenses inconnection with the [REDACTED], and share-based payments in connection with[REDACTED] share options granted pursuant to [REDACTED] share options scheme as set outin paragraph 3.5 of “Statutory and General Information – [REDACTED] Share Option Scheme”in Appendix V to this document, there has been no material adverse change in our financial ortrading position or prospects since 31 December 2021, and there had been no events since 31December 2021 which would materially affect the information shown in our consolidatedfinancial statements included in the Accountant’s Report.[REDACTED] EXPENSES

Our [REDACTED] expenses represent professional fees, [REDACTED] and other feesincurred in connection with the [REDACTED].

Assuming an [REDACTED] of HK$[REDACTED] per [REDACTED] (being the[REDACTED] of the indicative [REDACTED] range between HK$[REDACTED] and HK$[REDACTED]) and assuming that the [REDACTED] is not exercised, we estimate that our[REDACTED] expenses will be approximately RMB[REDACTED] (including (i)[REDACTED] of approximately RMB[REDACTED], and (ii) [REDACTED] related expenses


SUMMARY

– 9 –

of approximately RMB[REDACTED], which consist of fees and expenses of legal advisors andReporting Accountant of approximately RMB[REDACTED] and other fees and expenses ofapproximately RMB[REDACTED]), accounting for [REDACTED]% of the [REDACTED] fromthe [REDACTED]. For FY2021, we incurred approximately RMB[REDACTED] as[REDACTED] expenses, of which RMB[REDACTED] will be capitalised upon the[REDACTED], and the remaining RMB11.1 million was charged to our consolidated statementsof profit or loss and other comprehensive income for FY2021. We expect to incur additional[REDACTED] expenses of approximately RMB[REDACTED], of which RMB[REDACTED] isexpected to be charged to our consolidated statements of profit or loss and other comprehensiveincome for FY2022, and RMB[REDACTED] will be capitalised upon the [REDACTED]. Weemphasise that the amount of the [REDACTED] expenses, which is non-recurring in nature, is acurrent estimate for reference only and the final amount to be recognised in the consolidatedfinancial statements of our Group for FY2022 is subject to adjustment based on audit andpossible changes in variables and assumptions.FUTURE PLANS AND [REDACTED]

The aggregate [REDACTED] of the [REDACTED] (after deduction of [REDACTED]payable by us in connection with the [REDACTED] and assuming an [REDACTED] ofHK$[REDACTED], being the [REDACTED] of the indicated range of the [REDACTED] ofHK$[REDACTED] to HK$[REDACTED], and assuming the [REDACTED] is not exercised)will be approximately HK$[REDACTED]. Our Directors intend to apply the [REDACTED]from the [REDACTED] as follows:

(i) approximately [REDACTED]%, or HK$[REDACTED], of the [REDACTED] fromthe [REDACTED] will be used to expand our Hospital operations;

(ii) approximately [REDACTED]%, or HK$[REDACTED], of the [REDACTED] fromthe [REDACTED] will be used to finance part of the capital expenditure portion ofthe costs and expenses for the expansion of our Clifford healthcare network;

(iii) approximately [REDACTED]%, or HK$[REDACTED], of the [REDACTED] fromthe [REDACTED] will be used to organise international medical conferences tofacilitate medical knowledge exchange and promote our brand and corporate image;

(iv) approximately [REDACTED]%, or HK$[REDACTED], of the [REDACTED] fromthe [REDACTED] will be used to improve our technology infrastructures to enhancepatient care;

(v) approximately [REDACTED]%, or HK$[REDACTED], of the [REDACTED] fromthe [REDACTED] will be used to expand our business by acquiring hospitals; and

(vi) approximately [REDACTED]%, or HK$[REDACTED], of the [REDACTED] fromthe [REDACTED] will be used for our general working capital.

For further details of our future plans and use of [REDACTED], please refer to the sectionheaded “Future Plans and Use of [REDACTED]” in this document.DIVIDENDS

During the Track Record Period, we declared dividends of approximately RMB4.2 millionfor FY2021 only, and such dividends have been paid out as of the Latest Practicable Date. Aftercompletion of the [REDACTED], our Shareholders will be entitled to receive dividends that wedeclare. The payment of any dividends will be at the discretion of our Directors and will dependupon our future operations and earnings, capital requirements and surplus, general financialcondition, contractual restrictions and other factors that our Directors deem relevant. Theforegoing, including our dividend distribution record, should not be viewed as a reference orbasis to determine the level of dividends that may be declared or paid by us in the future. Thereis no guarantee or representation or indication that our Directors must or will recommend andthat our Group must or will pay dividends or declare and pay dividends at all. For further detail,please refer to the section headed “Financial Information – Dividends” in this document.


SUMMARY

– 10 –

SUMMARY OF MATERIAL RISK FACTORSThe major risks involved in our business operation are: (i) ongoing regulatory reforms in

the PRC are unpredictable, and changes in the PRC regulatory regime for the medical andhealthcare services industry, particularly changes in healthcare reform policies, could have amaterial adverse effect on our business operations and future expansion; (ii) our Group operatesin a heavily regulated industry and we incur ongoing compliance costs as well as face penaltiesfor non-compliance; (iii) we derive most of our revenue from our Hospital, and our revenue andprofitability would be significantly and adversely affected if we fail to successfully operate ourhospital; (iv) the recent outbreak of the COVID-19 and another wave of outbreak caused byDelta, Omicron or other virus variants in the future may have a material adverse effect on ourbusiness, results of operation, financial condition and prospects; and (v) our business dependssignificantly on the strength of our reputation, any negative publicity about us, our Hospital, ourindustry or the private hospital industry could harm the brand recognition of us or our Hospitaland trust in our services, which could result in a material adverse impact on our business andprospects. For more details, please refer to the section headed “Risk Factors” in this document.PROPERTY VALUATION

The Property Valuation Report from AVISTA Valuation Advisory Limited, an independentproperty valuer, set out in Appendix III to this document, sets out details of our selectiveproperty interests as of 31 December 2021. The property valuer is of the opinion that the totalmarket value of our selective property interests as of 31 December 2021 was RMB978.8 million.Please refer to Appendix III to this document for further details.[REDACTED] STATISTICS

Based on theminimum

[REDACTED] ofHK$[REDACTED]per [REDACTED]

Based on themaximum

[REDACTED] ofHK$[REDACTED]per [REDACTED]

[REDACTED] of the Shares [REDACTED] [REDACTED]Unaudited pro forma adjusted consolidated net

tangible assets of our Group per Share [REDACTED] [REDACTED]Notes:(1) All statistics in this table are based on the assumption that the [REDACTED] is not exercised and without taking

into account any additional Shares to be issued upon the exercise of the options granted under the [REDACTED]Share Option and any options which may be granted under the Share Option Scheme.

(2) The [REDACTED] is calculated based on [REDACTED] Shares expected to be in issue immediately followingcompletion of the [REDACTED] and the [REDACTED] (assuming that the [REDACTED] is not exercised andwithout taking into account any additional Shares to be issued upon the exercise of the options granted under the[REDACTED] Share Option and any options which may be granted under the Share Option Scheme).

(3) The unaudited pro forma adjusted consolidated net tangible assets per Share is calculated after making theadjustments referred to Appendix II to this document and on the basis of a total of [REDACTED] Shares inissue immediately following completion of the [REDACTED] and the [REDACTED] (assuming that the[REDACTED] is not exercised and without taking into account any additional Shares to be issued upon theexercise of the options granted under the [REDACTED] Share Option and any options which may be grantedunder the Share Option Scheme).


SUMMARY

– 11 –

In this document, the following expressions shall have the meanings set out below unless

the context requires otherwise.

“AIC” Administration authorities for industry and commerce (工商行政管理機關) in the PRC or, where the context sorequires, the State Administration for Industry andCommerce of the PRC (中華人民共和國國家工商行政管理總局) or its delegated authority at provincial, municipalor other local level

“Articles” or “Articles ofAssociation”

the articles of association of our Company (as amendedfrom time to time), a summary of which is set out inAppendix IV to this document

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

“Audit Committee” the audit committee of the Board

“Board”, “Board of Directors” or“our Board”

the board of Directors

“business day” any day (other than a Saturday, Sunday or public holidayin Hong Kong or days on which a tropical cyclonewarning no. 8 or above or a “black rainstorm warningsignal” is hoisted in Hong Kong at any time between9:00 a.m. and 5:00 p.m.) on which licensed banks in HongKong are generally open for business

“BVI” the British Virgin Islands

“BVI Intermediate Holdco” or“Skill Plus”

Skill Plus Global Limited (能加環球有限公司), a companyincorporated under the laws of BVI on 29 March 2018with limited liability and a direct wholly owned subsidiaryof our Company as of the Latest Practicable Date

“CAGR” compound annual growth rate

[REDACTED]


DEFINITIONS

– 12 –

[REDACTED]

“CG Code” the Corporate Governance Code set out in Appendix 14 tothe Listing Rules


DEFINITIONS

– 13 –

“China” or “PRC” or the “People’sRepublic of China”

the People’s Republic of China which, for the purposes ofthis document only, excludes Hong Kong, Macau andTaiwan

“China Chest Pain Centres QCReport 2019”

China Chest Pain Centres Quality Control Report (2019)(中國胸痛中心質控報告2019) jointly issued by the ChinaAlliance of Chest Pain Centers (中國胸痛中心聯盟),China Cardiovascular Association (中國心血管健康聯盟)and the Chest Pain Professional Committee of the ChineseMedical Doctor Association (中國醫師協會胸痛專業委員會)

“Clifford Biotech” Guangzhou City Clifford Biotechnology Company Limited(廣州市祈福生物科技有限公司), a company establishedunder the laws of the PRC on 20 September 2016 withlimited liability, it is a direct wholly owned subsidiary ofFit All and hence a connected person of our Company asof the Latest Practicable Date. For the reasons set out inthe section headed “Relationship with our ControllingShareholders” in this document, Clifford Biotech isexcluded from our Group in the process of Reorganisation

“Clifford Elderly Care forResidents”

an ancillary healthcare facility of our Group principallyengaged in rendering elderly care services, which adoptsthe business name of “Clifford Care Home” in Englishand “祈福護老公寓” in Chinese

“Clifford Health Service Centre” Guangzhou City Panyu District Clifford CommunityHealth Service Centre (廣州市番禺區祈福社區衛生服務站), a private non-enterprise entity which was establishedin the PRC on 3 December 2020 by our Hospital (as itssole organiser (舉辦者))

“Clifford ML Group” the group of companies comprising Clifford ModernLiving and its subsidiaries, which are connected personsof our Company

“Clifford Modern Living” Clifford Modern Living Holdings Limited, a companyincorporated in the Cayman Islands, whose issuedordinary shares are listed on the Stock Exchange (stockcode: 3686) and whose ultimate controlling shareholder isMs. Wendy Man


DEFINITIONS

– 14 –

“Clifford TM” Clifford Trade Mark Limited, a company incorporatedunder the laws of BVI on 3 June 2003 with limitedliability and a member of the Private Group, whoseultimate controlling shareholder is Ms. Wendy Man’sSpouse

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

“Companies Act” the Companies Act, Cap. 22 (Act 3 of 1961, asconsolidated and revised) of the Cayman Islands asamended, supplemented or otherwise modified from timeto time

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

“Companies (Winding Up andMiscellaneous Provisions)Ordinance” or “COWUMPO”

the Companies (Winding Up and MiscellaneousProvisions) Ordinance (Chapter 32 of the Laws of HongKong), as amended, supplemented or otherwise modifiedfrom time to time

“Company” or “our Company” Clifford Medical Group Limited (祈福醫療集團有限公司),an exempted company incorporated in the Cayman Islandswith limited liability on 23 July 2021

“Connected Person(s)” or“connected person(s)”

has the meaning ascribed to it under the Listing Rules

“Consultation BVI Co” or“Profit Garden”

Profit Garden International Limited (利園國際有限公司),a company incorporated under the laws of BVI on 10August 2007 with limited liability and an indirect whollyowned subsidiary of our Company as of the LatestPracticable Date

“Consultation HK Co” Easy Cloud Investments Limited (富曉投資有限公司), acompany incorporated under the laws of Hong Kong on 3April 2013 with limited liability and an indirect whollyowned subsidiary of our Company as of the LatestPracticable Date


DEFINITIONS

– 15 –

“Consultation PRC Co” Guangzhou City Clifford Medical Consultation CompanyLimited (廣州市祈福醫療顧問有限公司), a companyestablished under the laws of the PRC on 5 August 2021with limited liability and an indirect wholly ownedsubsidiary of our Company as of the Latest PracticableDate

“Controlling Shareholder(s)” has the meaning ascribed to it under the Listing Rules andin the context of our Company, collectively refers to Ms.Wendy Man and International Health BVI

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

“COVID-19” a viral respiratory disease caused by a novel strain ofcoronavirus, which has been declared by World HealthOrganization as a pandemic on 11 March 2020

“CSRC” the China securities Regulatory Commission (中國證券監督管理委員會)

“Deed of Indemnity” the deed of indemnity dated [•] 2022 and made by ourControlling Shareholders in favour of our Company andits subsidiaries in respect of taxation and otherindemnities details of which are set out to in paragraph4.1 under Appendix V to this document

“Deed of Non-competition” the deed of non-competition and other undertakings dated[•] 2022 and made by our Controlling Shareholders infavour of our Company, which contains certainnon-compete undertakings and other undertaking given infavour of our Company, further details of which are setout in the section headed “Relationship with ourControlling Shareholders” in this document

“Dental Care BVI Co” or“Ruby Allied”

Ruby Allied Limited (紅聯有限公司), a companyincorporated under the laws of BVI on 8 December 2017with limited liability and an indirect wholly ownedsubsidiary of our Company as of the Latest PracticableDate

“Dental Care HK Co” Sunny Home Investment Limited (新家園投資有限公司),a company incorporated under the laws of Hong Kong on24 November 2016 with limited liability and an indirectwholly owned subsidiary of our Company as of the LatestPracticable Date


DEFINITIONS

– 16 –

“Dental Care PRC Co” or“GZ Clifford Dental Clinic”

Guangzhou City Clifford Dental Clinic Company Limited(廣州市祈福口腔門診部有限公司), a company establishedunder the laws of the PRC on 16 May 2017 with limitedliability and an indirect wholly owned subsidiary of ourCompany as of the Latest Practicable Date

“Dental Care WFOE” Guangzhou City Clifford Dental Health MedicalInvestment Company Limited (廣州市祈福口腔健康醫療投資有限公司), a company established under the laws ofthe PRC on 7 September 2021 with limited liability andan indirect wholly owned subsidiary of our Company as ofthe Latest Practicable Date

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

“EIT” enterprise income tax

“Elderly Home PRC Co” or“GZ Clifford Elderly Home”

Guangzhou City Clifford Elderly Home Company Limited(廣州市祈福護老公寓有限公司, formerly named 廣州市祈福護老院有限公司), a company established under the lawsof the PRC on 10 October 2009 with limited liability andan indirect wholly owned subsidiary of our Company as ofthe Latest Practicable Date

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

“Fit All” Fit All Investments Limited (萬適投資有限公司), acompany incorporated under the laws of Hong Kong on 2July 2015 with limited liability, it is a direct whollyowned subsidiary of Sino Stream and hence a connectedperson of our Company as of the Latest Practicable Date

“FRC” Financial Reporting Council

“F&S” or “Frost & Sullivan” Frost & Sullivan (Beijing) Inc., Shanghai Branch Co., anindustry research consultant commissioned by us toprepare the F&S Report and an Independent Third Party

“F&S Report” or“Frost & Sullivan Report”

the industry research report prepared by Frost & Sullivan

“foreign currency(ies)” currencies other than the functional currency of ourCompany


DEFINITIONS

– 17 –

“FY” a financial year of our Company ended or ending 31December

“GDP” gross domestic product

[REDACTED]

“Greater Bay Area” or “GBA” Guangdong-Hong Kong-Macau Greater Bay Area, beingthe integrated economic and business hub covering citiessuch as Hong Kong, Macau and cities in the PRC such asGuangzhou, Huizhou, Shenzhen, Zhuhai, Foshan,Zhongshan, Dongguan, Jiangmen and Zhaoqing

“Greater Bay Area OutlineDevelopment Plan”

the Outline Development Plan for the Guangdong-HongKong-Macao Greater Bay Area (《粵港澳大灣區發展規劃綱要》) promulgated by the Central Committee of theChinese Communist Party and the State Council inFebruary 2019

[REDACTED]

“Group”, “our Group”, “we” or“us”

our Company and our subsidiaries or, where the contextso requires in respect of the period before our Companybecame the holding company of our present subsidiaries,the entities which carried on the business of the presentGroup at the relevant time

“Guangdong Clifford Hospital” or“our Hospital”

Guangdong Clifford Hospital Company Limited (廣東祈福醫院有限公司), a company established under the laws ofthe PRC on 20 June 2012 with limited liability and anindirect wholly owned subsidiary of our Company as ofthe Latest Practicable Date

“Health Consultation PRC Co” Guangzhou City Clifford Health Consultation CompanyLimited (廣州市祈福健康諮詢有限公司), a companyestablished under the laws of the PRC on 15 March 2017with limited liability and an indirect wholly ownedsubsidiary of our Company as of the Latest PracticableDate


DEFINITIONS

– 18 –

“Healthcare and PharmaceuticalBusiness”

rendering of postpartum healthcare services, elderly careservices, dental care services and sales of pharmaceuticalproducts (by way of both wholesale to pharmaceuticaldistributors and retail sales at our pharmacies) andancillary businesses, all of which are principal businessesof our Group

“Healthcare BVI Co” or“Fortune Faith”

Fortune Faith Enterprises Limited (福信企業有限公司), acompany incorporated under the laws of BVI on 29November 2011 with limited liability and an indirectwholly owned subsidiary of our Company as of the LatestPracticable Date

“Healthcare Group” our PRC subsidiaries that are principally engaged inHealthcare and Pharmaceutical Business, includingPostpartum Care PRC Co, Medical Equipment PRC Co,Elderly Home PRC Co, Dental Care WFOE, HealthConsultation PRC Co, Medical Inv Consultation PRC Co,Dental Care PRC Co, Medical Examination PRC Co,Pharmacy (Xinda) PRC Co, Pharmacy (Mingdu) PRC Co,Pharmaceuticals PRC Co, Consultation PRC Co and theirrespective BVI and Hong Kong investment holdingcompanies

“Healthcare HK Co” Rosy Corporate Limited (佳舫有限公司), a companyincorporated under the laws of Hong Kong on 20December 2011 with limited liability and an indirectwholly owned subsidiary of our Company as of the LatestPracticable Date

“Healthcare Intermediate Holdco”or “Best Sun Treasure”

Best Sun Treasure Limited (日寶有限公司), a companyincorporated under the laws of BVI on 12 November 2021with limited liability and a direct wholly owned subsidiaryof our Company as of the Latest Practicable Date

[REDACTED]


DEFINITIONS

– 19 –

“HK Trademark Assignment” the trademark assignment deed dated 7 March 2022 andentered into between Clifford TM (as assignor) andHospital HK Co (as assignee), pursuant to which CliffordTM has agreed to assign to Hospital HK Co all its rights,title, benefits and interests regarding one trademarkregistered in Hong Kong, further details of which are setout in the section headed “Relationship with ourControlling Shareholders – Assignment and Licensing ofCertain Trademarks owned by the Private Group” in thisdocument

“HKASs” Hong Kong Accounting Standards

“HKFRSs” Hong Kong Financial Reporting Standards

“HKICPA” Hong Kong Institute of Certified Public Accountants

[REDACTED]

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

[REDACTED]

“Hong Kong dollars”, “HKdollars”, “HK$”, “HKD” or“cents”

Hong Kong dollars, the lawful currency of Hong Kong

“Hospital Group” our PRC subsidiaries that are principally engaged inhospital operation and ancillary businesses, includingHospital Medical Management PRC Co, HospitalManagement PRC Co and our Hospital and their BVI andHong Kong investment holding companies

“Hospital HK Co” or “LightSparkling”

Light Sparkling Limited (迎安有限公司), a companyincorporated under the laws of Hong Kong on 15September 1972 with limited liability and an indirectwholly owned subsidiary of our Company as of the LatestPracticable Date


DEFINITIONS

– 20 –

“Hospital Management PRC Co” Guangzhou City Clifford Corporate ManagementCompany Limited (廣州市祈福企業管理有限公司), acompany established under the laws of the PRC on 26April 2010 with limited liability and an indirect whollyowned subsidiary of our Company as of the LatestPracticable Date

“Hospital Medical ManagementPRC Co”

Guangzhou City Clifford Medical Management CompanyLimited (廣州市祈福醫療管理有限公司), a companyestablished under the laws of the PRC on 7 August 2006with limited liability and an indirect wholly ownedsubsidiary of our Company as of the Latest PracticableDate

“Independent Third Party(ies)” any individual(s) or entity(ies) who, as far as ourDirectors are aware, is/are not connected person of ourCompany within the meaning ascribed to it in the ListingRules

“INED(s)” independent non-executive Director(s) of our Company

“International Health BVI” International Health Medical Group Limited (國際健康醫療集團有限公司), a company incorporated under the lawsof BVI on 22 July 2021 with limited liability, which wasdirectly wholly owned by Ms. Wendy Man as of the LatestPracticable Date, and is holding 100% of the total issuedshare capital of our Company as of the Latest PracticableDate, and is a Controlling Shareholder

[REDACTED]


DEFINITIONS

– 21 –

[REDACTED]

“Issuing Mandate” the general unconditional mandate granted to ourDirectors by our Shareholders in relation to the issue ofnew Shares, further information on which is set forth inparagraph 1.3 under Appendix V to this document

“Latest Practicable Date” 17 March 2022, being the latest practicable date for thepurpose of ascertaining certain information in thisdocument 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 StockExchange, as amended, supplemented or otherwisemodified from time to time

“Main Board” or “main board” the Main Board of the Stock Exchange

“MCA” the Ministry of Civil Affairs of the PRC (中華人民共和國民政部)


DEFINITIONS

– 22 –

“Medical Equipment PRC Co” or“GZ Clifford MedicalEquipment”

Guangzhou City Clifford Medical Equipment CompanyLimited (廣州市祈福醫療器械有限公司), a companyestablished under the laws of the PRC on 7 April 2005with limited liability and an indirect wholly ownedsubsidiary of our Company as of the Latest PracticableDate

“Medical Examination BVI Co” or“Billion Express”

Billion Express International Limited (億迅國際有限公司), a company incorporated under the laws of BVI on 23August 2007 with limited liability and an indirect whollyowned subsidiary of our Company as of the LatestPracticable Date

“Medical Examination HK Co” Fortune Number Investments Limited (祈福福成投資有限公司, formerly named Fortune Number InvestmentsLimited (江西福成投資有限公司)), a companyincorporated under the laws of Hong Kong on 21December 2010 with limited liability and an indirectwholly owned subsidiary of our Company as of the LatestPracticable Date

“Medical Examination PRC Co” Guangdong Clifford Medical Examination TechnologyCompany Limited (廣東祈福醫學診斷技術有限公司), acompany established under the laws of the PRC on 17December 2020 with limited liability and an indirectwholly owned subsidiary of our Company as of the LatestPracticable Date

“Medical Inv Consultation PRCCo”

Guangzhou City Clifford Medical Investment ConsultationCompany Limited (廣州市祈福醫療投資諮詢有限公司), acompany established under the laws of the PRC on 18April 2017 with limited liability and an indirect whollyowned subsidiary of our Company as of the LatestPracticable Date

“Memorandum” or “Memorandumof Association”

the memorandum of association of our Company (asamended from time to time), a summary of which is setout in Appendix IV to this document

“MHRSS” the Ministry of Human Resources and Social Security ofthe PRC (中華人民共和國人力資源和社會保障部)

“MOF” the Ministry of Finance of the PRC (中華人民共和國財政部)


DEFINITIONS

– 23 –

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

“Ms. Wendy Man” Ms. MAN Lai Hung (孟麗紅女士), one of our ControllingShareholders, a non-executive Director and the Chairmanof the Board

“Ms. Wendy Man’s Spouse” Mr. PANG Lun Kee Clifford (彭磷基先生), the spouse ofMs. Wendy Man

“Ms. Zhang” or “Dr. Zhang” Dr. ZHANG Tao (張濤女士), an executive Director andthe chief executive officer of our Group

“NATCM” the National Administration of Traditional ChineseMedicine of the PRC (中華人民共和國國家中醫藥管理局)

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

“NHC” the National Health Commission of the PRC (中華人民共和國國家衛生健康委員會), formerly the National Healthand Family Planning Commission of the PRC (中華人民共和國衛生和計劃生育委員會) (or the NHFPC) and theMinistry of Health of the PRC (中華人民共和國衛生部)(or the MOH)

“NHSA” the National Healthcare Security Administration of thePRC (中華人民共和國國家醫療保障局)

“NMPA” the National Medical Products Administration (國家藥品監督管理局), formerly the China Food and DrugAdministration (國家食品藥品監督管理總局) or theCFDA

“Nomination Committee” the nomination committee of the Board

“NPC” the National People’s Congress of the PRC (中華人民共和國全國人民代表大會)

[REDACTED]


DEFINITIONS

– 24 –

[REDACTED]

“PE2020” the period commencing from 1 January 2020 and ended 29December 2020

“Pharmaceuticals BVI Co” or“Million Leads”

Million Leads Limited (萬利有限公司), a companyincorporated under the laws of BVI on 5 January 2012with limited liability and an indirect wholly ownedsubsidiary of our Company as of the Latest PracticableDate

“Pharmaceuticals HK Co” Green Castle Investments Limited (仟達投資有限公司), acompany incorporated under the laws of Hong Kong on 9January 2012 with limited liability and an indirect whollyowned subsidiary of our Company as of the LatestPracticable Date

“Pharmaceuticals PRC Co” Guangzhou City Clifford Pharmaceuticals CompanyLimited (廣州市祈福醫藥有限公司), a companyestablished under the laws of the PRC on 17 July 2006with limited liability and an indirect wholly ownedsubsidiary of our Company as of the Latest PracticableDate


DEFINITIONS

– 25 –

“Pharmacy (Mingdu) PRC Co” Guangzhou City Clifford Mingdu Pharmacy CompanyLimited (廣州市祈福名都藥房有限公司), a companyestablished under the laws of the PRC on 2 March 2018with limited liability and was deregistered on 27 August2021, and during the said period was a directly whollyowned subsidiary of Pharmacy HK Co

“Pharmacy (Xinda) PRC Co” or“GZ Clifford Xinda Pharmacy”

Guangzhou City Clifford Xinda Pharmacy CompanyLimited (廣州市祈福新大藥房有限公司), a companyestablished under the laws of the PRC on 31 July 2017with limited liability and an indirect wholly ownedsubsidiary of our Company as of the Latest PracticableDate

“Pharmacy BVI Co” or“Golden Honesty”

Golden Honesty Limited (金誠有限公司), a companyincorporated under the laws of BVI on 21 April 2009 withlimited liability and an indirect wholly owned subsidiaryof our Company as of the Latest Practicable Date

“Pharmacy HK Co” Fortune Lead Investments Limited (綽隆投資有限公司), acompany incorporated under the laws of Hong Kong on 16June 2011 with limited liability and an indirect whollyowned subsidiary of our Company as of the LatestPracticable Date

“Postpartum Care BVI Co” or“Mountain Boom”

Mountain Boom Limited (山盛有限公司), a companyincorporated under the laws of BVI on 18 July 2011 withlimited liability and an indirect wholly owned subsidiaryof our Company as of the Latest Practicable Date

“Postpartum Care HK Co” Value King Investments Limited (立隆投資有限公司), acompany incorporated under the laws of Hong Kong on 29August 2011 with limited liability and an indirect whollyowned subsidiary of our Company as of the LatestPracticable Date

“Postpartum Care PRC Co” Guangzhou City Clifford Maternal and Infant CareServices Company Limited (廣州市祈福母嬰護理服務有限公司), a company established under the laws of thePRC on 16 January 2012 with limited liability and anindirect wholly owned subsidiary of our Company as ofthe Latest Practicable Date

“PRC Legal Adviser” GFE Law Office, the legal advisers to our Company as tothe laws of the PRC


DEFINITIONS

– 26 –

“PRC Trademark LicenceAgreement”

the trademark licence agreement dated 7 February 2022and entered into between Clifford TM (as licensor) andour Group (as licensee), pursuant to which Clifford TMhas agreed to grant an exclusive licence to our Group touse certain trademarks registered in the PRC from 7February 2022 to 6 February 2032, further details ofwhich are set out in the section headed “ConnectedTransactions – Exempted Continuing ConnectedTransactions – 3. PRC Trademark Licence Agreement” inthis document

“PRC Trademark TransferAgreements”

the three trademark transfer agreements all dated 29November 2021 (one of which was supplemented by asupplemental agreement dated 7 February 2022) andseparately entered into between Clifford TM (astransferor) and three members of our Group (each as atransferee in the respective agreement), pursuant to whichClifford TM has agreed, among other things, to transfercertain trademarks registered in the PRC to our Group,further details of which are set out in the section headed“Relationship with our Controlling Shareholders –Assignment and Licensing of Certain Trademarks ownedby the Private Group” in this document

“[REDACTED] Share OptionScheme”

the [REDACTED] option scheme formally adopted by ourCompany on [•] 2022, further details of which aresummarised in paragraph 3.5 under Appendix V to thisdocument

“[REDACTED] Share Option(s)” Option(s) granted under the [REDACTED] Share OptionScheme

[REDACTED]

“Private Group” such companies where 30% or more of their respectiveissued share capital/registered capital are owned by Ms.Wendy Man’s Spouse from time to time


DEFINITIONS

– 27 –

[REDACTED]

“Remuneration Committee” the remuneration committee of the Board

“Reorganisation” the corporate reorganisation of our Group in preparationfor the [REDACTED], details of which are set out in thesection headed “History, Reorganisation and Development– Reorganisation” in this document

“Repurchase Mandate” the general unconditional mandate granted to ourDirectors by our Shareholders in relation to the repurchaseof our Shares, further information on which is set forth inparagraph 1.3 under Appendix V to this document

“RMB” or “Renminbi” Renminbi, the lawful currency of China


DEFINITIONS

– 28 –

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

“SAIC” State Administration of Industry and Commerceof the PRC (中華人民共和國國家工商行政管理總局),subsequently renamed as the State Administration forMarket Regulation of the PRC (中華人民共和國國家市場監督管理總局)

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

“SCNPC” the Standing Committee of the NPC (中華人民共和國全國人民代表大會常務委員會)

“SFC” or “Securities FuturesCommission”

the Securities and Futures Commission of Hong Kong

“SFO” or “Securities and FuturesOrdinance”

the Securities and Futures Ordinance (Chapter 571 of theLaws of Hong Kong), as amended, supplemented orotherwise modified from time to time

“Share(s)” ordinary share(s) of HK$0.01 each in the share capital ofour Company

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

“Share Option Scheme” the share option scheme conditionally adopted by ourCompany on [•], further details of which are summarisedin paragraph 3.6 under Appendix V to this document

“Sino Stream” Sino Stream Limited (華川有限公司), a companyincorporated under the laws of BVI on 28 October 2016with limited liability, it is indirect wholly owned by Ms.Wendy Man and hence a connected person of ourCompany as of the Latest Practicable Date

[REDACTED]

“Sole Sponsor” or “ZhongtaiCapital”

Zhongtai International Capital Limited (中泰國際融資有限公司), a corporation licensed under the SFO to conductType 1 (dealing in securities) and Type 6 (advising oncorporate finance) regulated activities


DEFINITIONS

– 29 –

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

[REDACTED]

“Stock Exchange” The Stock Exchange of Hong Kong Limited

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

“Substantial Shareholder(s)” has the meaning ascribed to it under the Listing Rules, forthe purpose of this document, refers to the entities and/orpersons disclosed in the section headed “SubstantialShareholders” in this document or, where the context sorequires, any one of them

“Takeovers Code” the Hong Kong Code on Takeovers and Mergers and ShareBuy-backs issued by the SFC, as amended, supplementedor otherwise modified from time to time

“Track Record Period” the period which comprises FY2019, FY2020 and FY2021and, unless stated otherwise, in such sequence

[REDACTED]

“United States” or “U.S.” the United States of America

“US$” or “U.S. dollar(s)” or“USD”

United States dollars, the lawful currency of the UnitedStates

“VAT” value-added tax


DEFINITIONS

– 30 –

“WM Non-Healthcare Group” such companies where 30% or more of their respectiveissued share capital/registered capital are owned by Ms.Wendy Man (other than our Group and Clifford MLGroup) from time to time

“%” per cent

Unless otherwise specified, all references to any shareholding in our Company in thisdocument assumes no allotment or issue of any Shares upon the exercise of any options whichhave been or may be granted under the [REDACTED] Share Option Scheme or the ShareOption Scheme or the exercise of the [REDACTED].

The English translation of the PRC entities, enterprises, nationals, facilities, regulations inChinese or another language included in this document is for identification purposes only. Tothe extent there is any inconsistency between the Chinese names of the PRC entities, enterprises,nationals, facilities, regulations and their English translations, the Chinese names shall prevail.

Unless expressly stated or otherwise required by the context, all data contained in thisdocument are as of the Latest Practicable Date.

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


DEFINITIONS

– 31 –

This glossary contains explanations of certain terms and definitions used in this

document in connection with our Group and its business. The terms and their meanings may

not correspond to standard industry meanings or usage of those terms.

“acupuncture” a component of traditional Chinese medicine that involvesthe insertion of thin needles into the body

“ALOS” average length of stay, refers to the average number ofdays an in-patient stay in our Hospital; equals to theaggregated hospitalisation days of all in-patient visitsduring a specific period divided by the total in-patientvisits during such period

“anorectal” a branch of medicine that deals with matters associatedwith the anus and rectum

“associate-chief doctor” the second professional rank for doctors (副主任醫師) inour Hospital; an associate-chief doctor may superviseattending and resident doctors, direct research work of aspecific field, and typically handle complex medial cases

“attending doctor” the third professional rank for doctors (主治醫師) in ourHospital; an attending doctor may supervise residentdoctors and typically undertake medical treatment,teaching, research and disease prevention work

“beds in operation” beds in operation represents the maximum number of bedsavailable for clinical services offered by a medicalinstitution as of a particular date, which includes regularbeds, fold-up beds, care beds, beds that are beingsterilised and repaired, and out-of-service beds due toexpansion or overhaul

“cardiovascular” a branch of medicine that deals with diseases andabnormalities of the heart

“chief doctor” the highest professional rank for doctors (主任醫師) inour Hospital; a chief doctor is generally in charge of aspecific clinical department


GLOSSARY

– 32 –

“Chinese and Western MedicineHospital”

traditional Chinese medicine and western medicineintegrated hospital (中西醫結合醫院), a hospital thatprovides treatments of both traditional Chinese medicineand western medicine and it is classified as generalhospital (綜合醫院)

“Chinese Medicine Hospital” traditional Chinese medicine hospital (中醫醫院), ahospital that primarily provides the treatment of Chinesemedicine and it is classified as general hospital

“CT” computed tomography, a technique that uses X-rays tomake detailed pictures of the structures inside the body

“dermatology” a branch of medicine that deals with conditions involvingskin

“effective service capacity” the estimated in-patient service capacity during a specificperiod, calculated as the beds in operation of the relevantperiod multiplied by the number of days in such periodtaking into account the number of beds in operation arenot instantly available to our in-patient, due to, amongother factors: (i) beds reserved and hence unavailable forinstant usage, due to relevant rules and regulationsregarding medical treatment requirements and reservationfor unexpected emergency demands; (ii) beds have to bedisinfected and sanitised before they are made availablefor new in-patients; and (iii) beds under maintenance andrepair works

“emergency” a branch of medicine concerned with the prompt diagnosisand treatment of injuries or trauma or sudden illness,including providing medical and surgical care to patientsarriving at the hospital in need of immediate care

“endocrinology” a branch of medicine that deals with diseases related tohormones and glands

“gastroenterology” a branch of medicine which deals with disorders of thestomach and intestines

“general surgery” a branch of medicine concerned with a broad spectrum ofdiseases that may require surgical treatment

“GFA” gross floor area


GLOSSARY

– 33 –

“gynecology” a branch of medicine that deals with the diseases androutine physical care of the reproductive system of women

“in-patient” a patient who receives healthcare services at a hospitaland is hospitalised overnight or for an indeterminateperiod of time

“in-patient bed-days” with respect to any given period, the actual number ofbeds occupied by our in-patients on each day (but nottaking into account beds which are occupied by in-patientson their date of discharge) aggregated over the course ofthe relevant period

“in-patient visits” the total number of in-patients in a hospital during aspecific period

“internal medicine” a branch of medicine dealing with the diagnosis andnon-surgical treatment of diseases, especially of internalorgan systems

“JCI” the Joint Commission International, an affiliate of theJoint Commission on Accreditation of HealthcareOrganization (JCAHO) for accreditation of medicalinstitution outside the United States

“Medical Insurance DesignatedMedical Institution(醫保定點醫療機構)”

healthcare institutions designated by the relevant localmedical insurance authority as ones that are eligible forpublic medical insurance coverage for patients covered byUrban Employees Medical Insurance Programme, UrbanResidents Medical Insurance Programme and RuralMedical Insurance Programme

“neonatology” a branch of medicine that deals with the development,complications and disorders of newborn infants

“nephrology” medical discipline that focuses on kidney diseases andtreatments

“neurology” a branch of medicine that deals with the anatomy,functions, and organic disorders of nerves and the nervoussystem

“neurosurgery” a branch of medicine that deals with surgeries performedon the nervous system


GLOSSARY

– 34 –

“obstetrics” a branch of medicine that deals with the care of womenduring pregnancy, childbirth, and the recuperative periodfollowing delivery

“oncology” a branch of medicine that deals with tumors, includingstudy of their development, diagnosis, treatment, andprevention

“ophthalmology” a branch of medicine that deals with disorders anddiseases of the eye

“otolaryngology” or “ENT” a branch of medicine that deals with conditions of the ear,nose and throat region; sometimes also referred to as ENT

“orthopedics” a branch of medicine that focuses on injuries and diseasesof the musculoskeletal system, which includes bones,joints, ligaments, tendons, muscles and nerves

“OTC drugs” over-the-counter medicine

“out-patient” a patient who receives healthcare services at a hospital butis not hospitalised overnight or a patient under inwardobservation (留院觀察)

“out-patient visits” the total number of out-patients (i.e. patients nothospitalised overnight or patients under inwardobservation) in a hospital during a specific period

“pediatrics” a branch of medicine that deals with the medical care ofinfants, children and adolescents

“physical examination” the clinical examination of individuals for signs of diseaseand healthcare advisory services

“psychiatry” a branch of medical science that deals with mental,emotional and behavioural disorders

“registered beds” the number of beds that are registered in a medicalinstitution’s practising license


GLOSSARY

– 35 –

“resident doctor” the entry professional rank for doctors (住院醫師) in ourHospital; a resident doctor must have a medical degreeand a practise license, and may undertake basic tasks suchas patient’s medical record preparation and practisemedicine under the supervision of attending doctors orother superiors

“respiratory medicine” a branch of medicine that deals with diseases anddisorders of the respiratory system

“Rural Medical InsuranceProgramme”

New Rural Cooperative Medical Insurance Programme (新型農村合作醫療制度), a voluntary medical insuranceprogram covering the rural population

“sq.m.” square metre(s)

“stomatology” a branch of medicine that deals with diseases anddisorders of the mouth

“Urban and Rural ResidentsMedical Insurance Programme”

Urban and Rural Resident Basic Medical InsuranceProgram (城鄉居民基本醫療保險制度), a voluntarymedical program implemented in certain provincesintegrating previous Urban Residents Medical InsuranceProgramme and Rural Medical Insurance Programme

“Urban Employees MedicalInsurance Programme”

Urban Employees Basic Medical Insurance Programme (城鎮職工基本醫療保險制度), a mandatory medicalinsurance program covering urban employees and retireesin the PRC

“Urban Residents MedicalInsurance Programme”

Urban Residents Basic Medical Insurance Programme (城鎮居民基本醫療保險制度), a voluntary medical insuranceprogramme covering students, adolescents and childrenand other non-formal employment urban residents who arenot covered by the Urban Employees Medical InsuranceProgramme in the PRC

“urology” a branch of medicine that focuses on the urinary tractsand on the reproductive system of males


GLOSSARY

– 36 –

This document contains certain forward-looking statements and information relating to usand our subsidiaries that are based on the beliefs of our management as well as assumptionsmade by and information currently available to our management. When used in this document,the words “aim”, “anticipate”, “believe”, “consider”, “could”, “estimate”, “expect”, “forecast”,“going forward”, “intend”, “may”, “ought to”, “plan”, “predict”, “project”, “propose”, “seek”,“should”, “will”, “would”, “wish” and similar expressions and the negative thereof, as theyrelate 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 materialise or may change.These statements are subject to certain risks, uncertainties and assumptions, including the otherrisk factors as described in this document. You are strongly cautioned that reliance on anyforward-looking statements involves known and unknown risks and uncertainties. The risks anduncertainties faced by our Company which could affect the accuracy of forward-lookingstatements include, but are not limited to, the following:

➢ general political and economic conditions, including those related to PRC;

➢ any changes to regulatory and operating conditions in the industry, in PRC and in thespecific markets in which we operate our businesses;

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

➢ future developments, trends and conditions in the industry, in PRC and in the specificmarkets in which we operate our strategic businesses;

➢ the actions and developments of our competitors;

➢ our business operations and prospects;

➢ our strategies, plans, objectives and goals;

➢ our ability to successfully implement our business plans and strategies;

➢ our dividend policy; and

➢ all other risks and uncertainties described in the section headed “Risk Factors” in thisdocument.


FORWARD-LOOKING STATEMENTS

– 37 –

Subject to the requirements of, the applicable laws or the Listing Rules, we do not intendto update or otherwise revise by way of public announcement the forward-looking statements inthis document, whether as a result of new information, future events or otherwise. As a result ofthese and other risks, uncertainties and assumptions, the forward-looking events andcircumstances 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. Allforward-looking statements in this document are qualified by reference to this cautionarystatement.

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


FORWARD-LOOKING STATEMENTS

– 38 –

You should carefully consider the following information about risks, together with the

other information contained in this document, before you decide to [REDACTED]. If any of

the circumstances or events described below actually arises or occurs, our business, results of

operations, financial condition and prospects would likely suffer. In any such case, the

[REDACTED] could decline, and you may [REDACTED]. This document also contains

forward-looking information that involves risks and uncertainties. Our actual results could

differ materially from those anticipated in these forward looking statements as a result of

many factors, including the risks described below and elsewhere in this document.

RISKS RELATING TO OUR BUSINESS AND INDUSTRY

Ongoing regulatory reforms in the PRC are unpredictable. Changes in the PRC regulatoryregime for the medical and healthcare services industry, particularly changes in healthcarereform policies, could have a material adverse effect on our business operations and futureexpansion

The PRC regulatory regime governing the medical and healthcare services industry isundergoing reform, and new regulations and policies may be promulgated from time to time. Itis uncertain what impact these new regulations and policies would have on our business,competitiveness, operations and corporate structure. In recent years, the PRC governmentlaunched a new healthcare reform plan to ensure that every citizen can has access to affordablebasic healthcare services. In pursuit of these policy objectives, the PRC government hasimplemented extensive regulations and policies to address the affordability, accessibility andquality of healthcare services, medical insurance coverage, distribution of pharmaceuticalproducts and reform of public hospitals and gradually reduced regulatory hurdles for establishingand investing in private hospitals.

Our business operations and future expansion are largely driven by the PRC government’sregulations and policies, which may change significantly and are beyond our control. There canbe no assurance that the PRC government will not impose additional or more stringent laws orregulations on healthcare services or foreign investments, or strengthen and tighten supervisionand management of medical institutions including hospitals, in particular, private hospitals, orimplement stricter or more comprehensive regulations on the distribution of pharmaceuticalproducts, medical equipment and medical consumables. Depending on the priorities of the PRCgovernment and the regulatory regime with respect to foreign investment control at any giventime, and the development of the PRC healthcare system, future regulatory changes may affectpublic hospital reform, limit private or foreign investments in healthcare service industry, changereimbursement rates for medical and healthcare services provided to publicly insured patients, orimplement additional price control on medical services. Any of these events could have amaterial and adverse impact on our business, financial condition, results of operations, prospectsand future growth.


RISK FACTORS

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Our Group operates in a heavily regulated industry and we incur ongoing compliance costsas well as face penalties for non-compliance

The operations of our Hospital and our ancillary healthcare facilities are subject to variouslaws and regulations at the national and local levels. These laws and regulations mainly relate tothe licensing and operation of medical institutions, the licensing and practising scope of medicalpersonnel, the pricing and procurement of pharmaceuticals and medical devices, the use andsafety management of medical devices, the quality and pricing of medical services,environmental protection, anti-corruption and anti-bribery, the handling of malpractice and theconfidentiality, maintenance and security of patients’ medical records. The above list of certainregulated areas is not exhaustive. For more details, please refer to the section headed“Regulatory Overview” in this document.

If we fail to obtain or maintain any licenses or permits required for our operations, or arefound to be non-compliant with any applicable laws or regulations, we may face penalties, fines,suspension of operations or even revocation of operating licenses, depending on the nature of thefindings, any of which could materially and adversely affect our business, financial conditionand results of operations.

Our Hospital and our ancillary healthcare facilities are subject to periodic license or permitrenewal requirements and inspections by various PRC government agencies and departments theprovincial, municipal and county level. For a list of the major licenses or permits held by ourGroup for our operation and their respective effective and expiration dates, please refer to thesection headed “Business – Licences, Permits and Certificates” in this document. If we fail torenew any major licence, permit or certificate, our operations at our Hospital or our ancillaryhealthcare facilities could be interrupted or suspended and we may face penalties, in which caseour business, financial condition and results of operations may be materially and adverselyaffected.

We derive most of our revenue from our Hospital, and our revenue and profitability wouldbe significantly and adversely affected if we fail to successfully operate our hospital

During the Track Record Period, our revenue derived from our Hospital’s operationsamounted to approximately RMB1,083.0 million, RMB864.7 million and RMB1,137.9 million,respectively, representing approximately 100%, 100% and 94.3% of our total revenue for therespective years. As a result, we may be particularly sensitive to any adverse developments withrespect to our Hospital. Our revenue is highly dependent on our brand recognition, acceptance inthe communities in which we operate, changes in local demographic trends, our ability to attractpatients, our ability to attract and retain well-known and respected doctors, our ability to offerdesired and efficient services, and our ability to develop advanced treatment practices andcompete effectively with other hospitals. Our inability to attract patients and to increase revenuefrom both in-patient and out-patient services may have a material adverse effect on our business,financial condition and results of operations.


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The recent outbreak of the Novel Coronavirus Disease 2019 (COVID-19) and another waveof outbreak caused by Delta, Omicron or other virus variants in the future may have amaterial adverse effect on our business, results of operation, financial condition andprospects

The recent outbreak of COVID-19 has endangered the health of people in China andsignificantly disrupted travel and local economy. Due to patients who are not in severeconditions may prefer not to visit hospitals or to temporarily delay treatment for non-urgentmedical conditions and surgeries, as compared with 2019, the number of in-patient andout-patient visits of our Hospital decreased by approximately 42.0% and 33.3%, respectively,during 2020. Since the situation is rapidly evolving throughout the world, it is uncertain whenand whether COVID-19 could be contained. In addition, the lack of immunity among thecommunity to COVID-19 may expose people in China to another wave of outbreak. In particular,the recent emergence of the Delta and Omicron virus variants, COVID-19 virus variants which issignificantly more infectious than its predecessors, has created more uncertainties for ourbusiness operations under the COVID-19 pandemic. In addition, as confirmed COVID-19patients had previously stayed in our Hospital, as required by the relevant government policies,all of our Hospital’s out-patient hospital services were suspended from 7 February 2020 to 12March 2020. However, part or even all of our operations could be disrupted or even temporarilyclosed again in the future if the outbreak of COVID-19 further escalates. We could also facesanctions, fines and claims against us if we fail to provide sufficient protection to our medicalprofessionals during their treatment of COVID-19 patients. All of these factors could have amaterial adverse effect on our business, results of operation, financial condition and prospects.

Our business depends significantly on the strength of our reputation. Any negative publicityabout us, our Hospital, our industry or the private hospital industry could harm the brandrecognition of us or our Hospital and trust in our services, which could result in a materialadverse impact on our business and prospects

Our reputation is critical to our success in China’s healthcare industry. We believe that oursuccess and continued growth depend on the public perception of our reputation and our abilityto maintain and enhance it.

Many factors which are important to maintain and enhance our reputation are beyond ourcontrol. Such factors include, among others, our ability to effectively control the quality andconsistency of the services performed by our doctors and other medical professionals, and tomonitor the service performance of such personnel as we continue to expand; our ability to offera comfortable, convenient and consistently reliable patient experience; and our ability to enhanceour reputation and our brand awareness among existing and potential patients through variousbranding and marketing, promotional and community outreach activities.


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Negative publicity involving us, our Hospital or the private hospital industry maymaterially and adversely harm the reputation of us or our Hospital, and therefore our businessand prospects. Such negative publicity may result in increasing cost, diversion of management’sattention, and governmental investigations or other forms of scrutiny, which may adverselyimpact our business and results of operation.

We depend on the services of our management team and other key personnel, and ourresults of operation could be harmed if our Hospital and ancillary healthcare facilities areunable to attract and retain highly qualified doctors and other medical professionals

Our success depends heavily on the continuing services of our executive Directors andsenior management team who are responsible for overseeing our day-to-day business operations,and as a result may be unable or unwilling to continue their employment with us. For details ofthe information of our executive Directors and senior management team, please refer to thesection head “Directors and Senior Management” of this document. If we fail to retain oursenior management team, we might not be able to replace them in a timely manner, at acceptablecosts or at all, and our business and ability to execute our strategy may be materially andadversely affected.

Our performance and operation also depend substantially on our ability to attract and retainexperienced doctors and other medical professionals in the fields and regions relevant to ourgrowth plans. We compete for these personnel with other healthcare services providers and facelimited availability of qualified candidates. The recruitment of doctors is highly competitive inthe PRC. We may not be successful in competing with other hospitals for the recruitment orretention of doctors. Whilst we have not experienced substantial difficulties in attracting andretaining qualified and experienced doctors in the past, we cannot assure you that we will notexperience such issues in the future.

Our success also depends in part upon the ability of our Group to recruit and retain othermedical professionals, including nurses, pharmacists and medical technicians, and on our abilityto train and manage these medical professionals. In addition to the highly competitive market forrecruiting medical professionals, it has become increasingly costly to recruit and retain them inrecent years, and we expect such costs to continue to increase in the future. For the three yearsended 31 December 2021, our employee benefit expenses (including our Directors’ emoluments)were RMB343.3 million, RMB270.5 million and RMB396.7 million, respectively. We expectsuch costs to continue to increase in the future, which may adversely affect our profitability. Ifwe were unable to attract or retain doctors, other medical professionals or hospitaladministrators and managers as required, we may not be able to maintain the quality of ourservices and grow the capacity of our hospital, which may have a material adverse effect on ourbusiness, financial condition, results of operations and prospects.

Even if we are able to recruit and retain quality doctors and other medical professionals,we may not be able to manage our employees properly. In particular, the practising activities ofdoctors and nurses are strictly regulated under PRC laws and regulations. Doctors and nurseswho practise at medical institutions are required to hold practising licences and are only


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permitted to practise within the scope of their licences and at specific medical institutions atwhich their licences are registered. In practice, it may take a period of time for doctors andnurses to transfer their licences from one medical institution to another or to add anothermedical institution to their permitted practising institutions. We cannot assure you that any ofour personnel transferred from a different hospital or any potential personnel to be hired by ourHospital will complete the transfer of their licences and the related government procedures ontime, if at all, or that our doctors and nurses will not practise outside the permitted scope oftheir respective licences. Our failure to properly manage the employment of our doctors andnurses may subject us to administrative penalties against our Hospital including rectificationorders, fines, or, in the worst case scenario, revocation of our medical institution practisinglicense, any of which could materially and adversely affect our business, results of operationsand prospects.

If the PRC government imposes additional price controls on medical services,pharmaceuticals, medical equipment and medical consumables, our revenues may beadversely affected

The Notice on the Implementation of Market Adjusted Prices in Healthcare Services byNon-Public Medical Institutions (《關於非公立醫療機構醫療服務實行市場調節價有關問題的通知》), which was promulgated by the NDRC, the NHFPC and the MHRSS on 25 March 2014,required the price of healthcare services provided by non-public medical institutions to besubject to market level. Non-public medical institutions which are for-profit in nature may setthe price of services provided by their medical institutions at their own discretion, but the pricemust be determined reasonably according to the principles of fairness, legality, honesty andcredibility and the price level must be a relatively stable level of a certain period of time.

The Notice Regarding the Opinion on Facilitating the Pharmaceutical Pricing Reform (關於印發推進藥品價格改革意見的通知), which were promulgated by the NDRC, the NHFPC, theCFDA, the MOFCOM and other three departments on 4 May 2015, set forth that from 1 June2015, except for narcotic drugs and Class I psychotropic drugs, the restrictions on the prices ofthe drugs that were subject to government pricing were cancelled.

As our Hospital is a Medical Insurance Designated Institution, part of our patients rely onpublic medical insurance programmes, including Urban Employees Medical InsuranceProgramme and Urban and Rural Residents Medical Insurance Programme (which integrated theprevious Urban Residents Medical Insurance Programme and Rural Medical InsuranceProgramme), to settle all or part of their medical bills. For patients covered by social insuranceprogrammes, we are required to follow pricing guidelines stipulated by relevant local authoritiesand/or pricing catalogs. Also, as certain of our retail pharmacies are medical insurancedesignated retail pharmacies, we may only sell certain pharmaceuticals at the retail prices, whichare listed in certain catalogs promulgated by government authorities, to patients covered bysocial insurance programmes. For details, please refer to the section headed “Business – Pricingand Pricing Control – Healthcare services of and pharmaceuticals sold by our Hospital”.


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We are affected by government price controls on the pharmaceutical products and medicalservices that we provide. Our profitability is susceptible to fluctuations in the cost ofpharmaceuticals, medical equipment and medical consumables which are subject to factorsbeyond our control. Any change in the pricing regime that applies to healthcare serviceproviders, such as reductions in the price ceilings on pharmaceutical products and medicalservices provided by our Hospital, may have a material adverse effect on our results ofoperations, cash flows, financial condition and prospects. Furthermore, we may not be able toanticipate and react to changes in medical supply costs by changing service offerings oradjusting service fees in the future, or we may be unable to pass these cost increases onto ourcustomers, which could materially and adversely affect our margins and results of operations.

We experienced fluctuation in prices for our healthcare services

The prices of our healthcare services are determined based on various factors, including butnot limited to positioning of our services, operating costs, market conditions, local consumerpurchasing power and competitors’ pricing of similar services. For further details of our pricing,please refer to the section headed “Business – Pricing and Pricing Control” in this document.

During the Track Record Period, our revenue contributed by healthcare services (includingpostpartum healthcare services, elderly care services and dental care services) amounted toapproximately RMB36.9 million for FY2021 only, representing approximately 3.1% of our totalrevenue for FY2021.

As the prices of our healthcare services are subject to fluctuation due to a number offactors, many of which are outside of our control, any price cuts or decreasing trend of ouraverage prices may materially and adversely affect our financial condition and results ofoperation.

We recorded net current liabilities during the Track Record Period, which may expose us toliquidity risk, and such positions may recur after the [REDACTED]

As of 31 December 2019 and 2021, we recorded net current liabilities of approximatelyRMB70.7 million and RMB150.4 million, respectively, and we may have net current liabilities inthe future. For details, please refer to the section headed “Financial Information – Discussion ofselected items from Consolidated Balance Sheets – Net current liabilities/assets” in thisdocument. A net current liabilities position may expose us to the risk of shortfalls in liquidity.Our future liquidity, the payment of trade and other payables, our capital expenditure plans andthe repayment of our outstanding debt obligations as and when they become due will primarilydepend on our ability to maintain adequate cash generated from operating activities and adequateexternal financing. We may have net current liabilities in the future, which may limit ourworking capital for the purpose of operations or capital for our expansion plans and materiallyand adversely affect our business, financial condition and results of operations.


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Unauthorised use of our intellectual properties by third parties, and the expenses incurredin protecting our intellectual property rights, may materially and adversely affect ourbusiness and competitive position

We consider our intellectual properties are crucial business assets, key to customer loyaltyand essential to our future growth. The success of our business depends substantially upon ourcontinued ability to use our brand, trade names and trademarks to increase brand recognition andto further develop our brand. For details of our intellectual property rights, please refer to thesections headed “Business – Intellectual property” and paragraph 2.2 under Appendix V –“Statutory and General Information” in this document.

We rely on the trademark and other intellectual property laws, confidentiality agreementswith our employees to protect our proprietary rights. Nevertheless, these afford only limitedprotection and it can be difficult and expensive to scrutinise and restrict unauthorised use ofintellectual property that we own or are entitled to use. Moreover, the level of protection forintellectual property rights and the enforcement of the relevant laws and regulations providedunder PRC law may be inadequate. Infringement of our intellectual property rights by thirdparties, and the expenses incurred in protecting our intellectual property rights, may materiallyand adversely affect our business, financial condition and results of operations.

Our failure to protect confidential information of our patients/customers, employees andthird parties or our information technology systems against security breaches, any actual orperceived failure by us or third parties to comply with applicable data protection laws andregulations or privacy policies could harm our business, financial condition and results ofoperations

During the course of our business as a medical and healthcare service provider, we collectand use medical records of our patients and/or customers. Doctors and other medicalprofessionals are required by the codes of professional conduct applicable to them not todisclose medical or personal information of patients to any third party without the patient’sconsent, except in certain specific circumstances. In the PRC, hospitals are subject to a numberof laws and regulations governing patient data privacy, including the PRC Civil Code (《中華人民共和國民法典》), the Personal Information Protection law of the PRC (《中華人民共和國個人信息保護法》) and Provision on the Administration of Medical Records in Medical Institutions(《醫療機構病歷管理規定》). These laws and regulations prohibit medical and healthcare serviceproviders from providing patients’ medical records to a third party without due authorisationfrom the patients or for purposes other than medical care, education or study and or under therequest of specific government authorities. We rely on certain internal control measures that ourGroup have in place to ensure doctors and other medical professionals to abide by the relevantlaws, but there can be no assurance that the confidentiality policies and measures can completelyprevent leakage of the patients’ medical or personal information or prevent such informationfrom being used for an improper purpose. Any breach of confidentiality obligations towards thepatients could expose us, our Hospital, the doctors and other medical professionals to potentialliabilities, such as claims or litigation, which may have an adverse impact on our reputation.


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In addition to the medical records, we also collect and use personal data such as addresses,phone numbers and other information from our patients and/or customers, employees and thirdparties, all of which are stored and processed in our information technology systems. Despiteour Group’s internal control measures, we cannot exclude the possibility that our data securitymeasures may be breached due to employee error, malfeasance, system errors or vulnerabilities,or otherwise. Outside parties may also attempt to fraudulently or otherwise wrongfully induceemployees to disclose sensitive information in order to gain access to the data we collect. Whilewe have taken steps to protect the confidential information that we have access to, our datasecurity measures could be breached. As techniques used to sabotage or obtain unauthorisedaccess to systems change frequently and generally are not recognised until sometime after theyare launched against a target, we may be unable to anticipate these attacks or to implementadequate preventive measures. Any accidental or wilful security breaches or other unauthorisedaccess to our systems and platforms could cause confidential customer and other third partyinformation to be leaked and used for unlawful purposes. Security breaches or unauthorisedaccess to confidential information could also expose us to liability related to the loss of theinformation, time-consuming and expensive litigation and negative publicity. If securitymeasures are breached because of third-party action, employee error, malfeasance or otherwise,or if design flaws in our technology infrastructure are exposed and exploited, our reputation andbrand could be severely damaged and we could incur significant liability which may have amaterial adverse impact on our business, financial condition and results of operations.

Laws and regulations related to cyber security are relatively new and evolving in the PRC,and their interpretation and enforcement involve significant uncertainties. The evolving PRCregulations regarding (i) data collection, usage and transfer; and (ii) cyber security may lead tofuture restrictions and the establishment of new regulatory agencies, and we may bear more legalresponsibilities and compliance costs, which may have an adverse effect on our prospects. On 10June 2021, the SCNPC issued the Data Security Law of the PRC (《中華人民共和國數據安全法》) (the “Data Security Law”), which became effective on 1 September 2021. The DataSecurity Law provides for a security review procedure for the data processing activities that mayaffect national security. On 28 December 2021, the Cyberspace Administration of China andother twelve PRC regulatory authorities jointly promulgated the Measures for CybersecurityReview (2021 Version) (《網絡安全審查辦法(2021年版)》) (the “CSR Measures”) which cameinto effect on 15 February 2022. The CSR Measures requires that if a Critical InformationInfrastructure Operator anticipates that its procurement of network products and services or aNetwork Platform Operator conducting data processing activities affect or may affect nationalsecurity it shall be subject to cybersecurity review by the Cybersecurity Review Office. Inaddition, Network Platform Operators possessing personal information of more than 1 millionusers that seek for listing in a foreign country are obliged to apply for a cybersecurity review bythe Cybersecurity Review Office. Furthermore, on 14 November 2021, the CyberspaceAdministration of China published a discussion draft of Regulations on the Administration ofCyber Data Security (Draft for Comments) (《網絡數據安全管理條例(徵求意見稿)》) (the “DraftRegulations”), which regulates the specific requirements in respect of the data processingactivities conducted by data processors through internet in the view of personal data protection,important data safety, data cross-broader safety management and obligations of internet platformoperators. As advised by our PRC Legal Adviser, we may be classified as data processors under


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the Draft Regulations and shall comply with the relevant requirements under the DraftRegulations after its official adoption (assuming if it is implemented in its current form).Furthermore, the Draft Regulations not only reiterates that a data processor which processespersonal information of more than one million persons and is applying for listing in foreigncountries should apply for the cybersecurity review, but also specifically requires that if the[REDACTED] by a data processor affects or may affect national security, the data processorshall apply for cybersecurity review in accordance with the relevant PRC laws and regulations.Please refer to the section headed “Regulatory Overview – Laws and Regulations related toInformation Security” for further information. As advised by our PRC Legal Adviser, substantialuncertainties exist with respect to the interpretation and applicability of the CSR Measures,especially the criteria for the determination of the risks that “affect or may affect nationalsecurity” based on the factors set out in Article 10 of the CSR Measures, we cannot preclude thepossibility that the risk factors may apply to us and we may need to conduct cybersecurityreview. The Draft Regulations were released for public comment only and its operativeprovisions and the anticipated adoption or effective dates may be subject to change withsubstantial uncertainty. It also remains uncertain whether the future regulatory changes wouldimpose additional restrictions on companies like us. We cannot predict the impact of the CSRMeasures and the Draft Regulations, if any, at this stage, and we will closely monitor and assessany development in the rule-making process. If the enacted version of the Draft Regulationsmandates clearance of cybersecurity review and other specific actions to be completed bycompanies like us, we face uncertainties as to whether such clearance can be timely obtained, orat all. If we are not able to comply with the cybersecurity and data privacy requirements in atimely manner, or at all, we may be subject to government enforcement actions andinvestigations, fines, penalties, suspension of our non-compliant operations, or revocation of ourbusiness licenses and permits, among other sanctions, which could materially and adverselyaffect our business and results of operations.

If our Hospital fails to properly manage the employment or conduct of doctors and othermedical professionals, our Hospital may be subject to penalties, fines, loss of licences, or anorder to cease practice, which could materially and adversely affect our business

We are subject to PRC laws, rules and regulations relating to healthcare fraud and risks inrelation to actions taken by us or our employees that constitute violations of PRC laws, rulesand regulations. Any failure by us to comply with these laws, rules and regulations, oreffectively manage our employees in this regard, could severely damage our reputation andmaterially and adversely affect our business, financial condition, results of operations andprospects. Failure to properly manage the employment or conduct of doctors and other medicalprofessionals may subject our Hospital to administrative penalties, fines, loss of licences, or anorder to cease practice, any of which could materially and adversely affect our business andreputation.


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Non-performance, substandard and delayed performance, legal non-compliance andunavailability of our outsourcing/dispatched labour may adversely affect our operation andprofitability

During the Track Record Period, our Group had entered into labour outsourcing/dispatchedarrangements with third party service providers for the security and cleaning of our Hospital andthe provision of our elderly care service. We cannot assure you that the quality of workscompleted by the outsourcing/dispatched labour assigned by such third party service providerscan always meet our customers’ requirements. Our outsourcing/dispatched labour arrangementsexpose us to risks such as non-performance, substandard and delayed performance by ouroutsourcing/dispatched labour, for which we may not be able to rectify the substandard works orengage another outsourcing/dispatched labour in time or at all. Any material non-performance,substandard performance or delayed performance of our outsourcing/dispatched labour couldresult in deterioration of our service quality, which could in turn damage our reputation, andpotentially expose us to liability under PRC laws and regulations.

Our outsourcing/dispatched labour arrangements are required to comply with the relevantlaws, rules and regulations. If our outsourcing/dispatched labour violate any laws, rules orregulations, we may be subject to prosecutions by the relevant authorities, our operations may bedisturbed, and our financial position may be adversely affected. In addition, we cannot assureyou that we can secure suitable outsourcing/dispatched labour as and when required or obtainacceptable fees and terms of service with our outsourcing/dispatched labour. In such event, ouroperation and profitability may be adversely affected.

Any failure to remain eligible for public medical insurance coverage, and any non-paymentor delayed payment from our patients or PRC public medical insurers, could materiallyand adversely affect our revenue and results of our operations

In the PRC, each province maintains a list of Medical Insurance Designated MedicalInstitutions that are eligible for public medical insurance coverage for the patients who visitsuch hospitals. For these hospitals, patients could arrange for payment or claim reimbursementthrough public medical insurance programmes. Whether a healthcare institution is a MedicalInsurance Designated Medical Institution could affect its acceptance among potential patients.As of the Latest Practicable Date, our Hospital was a Medical Insurance Designated MedicalInstitution and eligible for public medical insurance coverage. During the Track Record Period,our revenue attributable to patients covered by social insurance programmes amounted toapproximately RMB428.4 million, RMB311.4 million and RMB413.9 million, respectively,representing 39.8%, 36.2% and 36.8% of our total revenue contributed by our in-patient andout-patient hospital services in the same periods, respectively. There can be no assurance thatour Hospital will remain eligible for this coverage in the future. Factors that may adverselyimpact our eligibility include, but are not limited to, governmental policy towards privatehospitals, a decline in the quality of the services hospitals provide or a loss of a significantnumber of medical professionals. If our Hospital is excluded from public medical insurancecoverage for any reason, we may experience a decline in patient volume. The exclusion frompublic medical insurance coverage may also result in delays of payment or eventual


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non-payment of medical fees owed to our Hospital, which may adversely affect our results ofoperations and financial condition.

We may not be able to maintain our revenue and profitability as we operate in a highlycompetitive industry

China’s healthcare services industry is becoming increasingly competitive as the demandfor medical and healthcare services grows and Chinese consumers are offered greater choices inproviders. We compete with other public and private general hospitals and, to some extent,specialty hospitals, in particular those located in Guangdong Province. According to the F&SReport, our Hospital is the largest for-profit private general hospital in both the Greater BayArea and Guangdong Province in terms of registered beds in 2021. In the geographical areas inservice which we operate, there are other hospitals and medical institutions, such as publichospitals, private hospitals, health stations, community health clinics, which in many casesprovide services comparable to those which our Hospital offers or expects to offer. New orexisting competitors may provide services similar to our Hospital, and may offer greaterconvenience, broader services, newer or better facilities, more specialised medical professionals,better reputation in the community, or cheaper pricing. We cannot assure you that we will beable to successfully compete against new or existing competitors, and changes in the competitivelandscape may result in price reduction, reduced profitability or loss of market share, any ofwhich could have a material adverse effect on our business, results of operations and prospects.

Our revenue has been heavily dependent on, our operations in Guangdong Province. Assuch, we are especially sensitive to the local conditions and changes in GuangdongProvince, such as with respect to its economy, laws and regulations

During the Track Record Period, we derived majority of our revenue from operations inGuangdong Province. Going forward, we expect that a large part of our revenue will remaindependent on our operations in Guangdong Province. As a result, we are highly sensitive to theregulatory, economic, public health, environmental and competitive conditions in GuangdongProvince. Any outbreaks of epidemic disease in Guangdong Province could significantly disruptour operations. Furthermore, natural disaster or other catastrophic events that are likely tohappen in Guangdong Province, such as fire, drought, typhoons, flood, outages of criticalutilities, transportation disruptions or terrorist attacks, may damage or limit our ability tooperate our Hospital and require significant repair. Furthermore, significant changes in the lawsand regulations governing the healthcare industry in Guangdong Province, such as those inrelation to the medical professional licensing system, qualification and compliance requirementsfor medical institutions, may have a material effect on our business operations. Any negativeevent in Guangdong Province may have a material adverse effect on our business, financialcondition and results of operations.


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If we are unable to effectively identify expansion opportunities or carry out our expansionstrategies, our business, financial condition, results of operations and prospects may beadversely affected

Our growth strategy depends on our ability to expand our Group’s healthcare serviceofferings and acquire hospitals or establish additional ancillary healthcare facilities. We may notbe able to achieve future growth and expansion at a desirable speed. Our growth is affected by anumber of factors, including the overall regulatory environment and competitive landscape ofChina’s healthcare service industry, our brand recognition, the reputation and profitability of ourHospital and our ancillary healthcare facilities and our financial resources.

We plan to acquire hospitals in the future. We may not be able to identify suitablecandidates to acquire ownership interests in. Even if we are able to identify suitable candidates,such acquisitions or expansions are capital intensive, time-consuming and difficult. We may failto negotiate commercially acceptable terms or to secure the necessary financing. Moreover,complying with various PRC legal requirements and regulatory approval processes for acquiringhospitals may be time-consuming and cause us to incur additional costs. In addition, we may notbe able to successfully integrate newly acquired hospitals with our existing network or achievethe synergies and other benefits we expect from such expansion.

The rapid growth of the healthcare service industry in China may attract more domestic andinternational market entrants, which may increase the difficulties for us to invest in or acquirehospitals. Many of our competitors may be more established and have longer operating historyand greater financial resources than we do. Moreover, our competitors may have greaterfinancial, marketing, management and technological resources. Therefore, we may not be able tosuccessfully pursue our acquisition strategy, which will adversely affect our future growth andresults of operations.

Furthermore, our plans to expand beyond our current markets are subject to variousgeographic challenges, including those relating to our lack of familiarity with the cultures andeconomic conditions of these new regions and our lack of brand recognition and reputation insuch regions. All of these factors may materially and adversely affect our future growth andtherefore our business, financial condition and results of operations.

Our business strategies and future plans may not materialise and may expose our Group tobusiness and financial risks

Our business strategies and future plans as set out in the sections headed “Business –Strategies” and “Future Plans and Use of [REDACTED]” represent the targets, objectives, andfuture plans of our Group. Such targets, objectives, and future plans are by their nature subjectto uncertainties and risks and our Group’s actual course of business may vary from our businessstrategies and future plans as set out in this document, depending on whether all the assumptionswill hold true and whether new circumstances will arise in the future. As such, there can be noguarantee that the future plans of our Group will materialise or that our business strategies willbe successfully implemented. Further, we cannot give assurance that our resources


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will be adequate to support our future growth. Failure to execute our expansion plans andstrategies effectively may lead to increased costs and reduced profitability, which could in turnhave a material adverse effect on our business, financial condition and results of operations.

The nature of our business exposes us to professional and other liabilities

We are exposed to potential liabilities that are inherent to the provision of healthcareservices. We are subject to potential claims and legal actions which are inherent to theprovisions of healthcare services. Particularly, we rely on the doctors and other medicalprofessionals of our Hospital to make proper clinical decisions regarding the diagnosis andtreatment of their patients. Any incorrect clinical decision on the part of doctors and othermedical professionals, or any failure by our Hospital to properly manage the clinical activitiesmay result in unsatisfactory outcomes of treatment, patient injury or even death. Whilst ourHospital has been subject to a limited number of claims in the past, we cannot assure you that itwill not be subject to claims in the future. For the reason that each of the material medicaldisputes were covered by the medical liability insurance, during the Track Record Period and upto the Latest Practicable Date, no compensation was paid by our Group to our patients and/ortheir families in relation to such claims (or not subsequently reimbursed under the medicalliability insurance). Any losses and liabilities incurred by us or a successful claim made againstour Hospital or any claims that are not fully covered by our insurance could have a materialadverse effect on our results of operations and financial condition. In addition, such claimscould be costly to defend and may divert management’s attention and resources away from ourbusiness operations and may cause negative publicity against us and harm to our reputation,which could decrease our patient volumes.

We have entered into medical liability insurance policies to cover claims against us. Whilewe believe such insurance coverage is commensurate with our business nature and risk profile,we cannot assure you that our insurance policies will insure us fully against all risks and lossesthat may arise. In addition, our insurance policies are subject to annual review by our insurers,and we may not be able to renew these policies on similar or otherwise acceptable terms, if atall. If we were to incur a serious uninsured loss or a loss that significantly exceeded the limitsof our insurance policies, our business, financial condition or results of operations would bematerially and adversely affected.

We may become subject to product liability claims, which could cause us to incursignificant expenses

We are exposed to risks involved in the marketing, distribution and sales of pharmaceuticalin the PRC. Claims, customer complaints or administrative penalties may arise if any of ourproducts are deemed or proven to be unsafe, ineffective or defective, or they are found tocontain illicit substances. In addition, in the event that any use or misuse of the products wedistribute results in personal injury or death, product liability claims may be brought against usfor damages. If we are unable to defend ourselves against such claims, among other things, wemay be subject to civil liabilities for physical injury, death or other losses caused by ourproducts, to criminal liabilities, and to the revocation of our business licenses. In addition, we


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may be required to suspend sales or cease sales of the relevant products, which could materiallyand adversely affect our business, financial condition and results of operation.

Seasonal fluctuations in revenue at our Hospital may impact our results of operations

We have experienced and expect to continue to experience seasonal fluctuations in ourrevenue and profitability due to changes in patient volumes. Our Hospital typically experiencefewer patient visits around Chinese New Year holiday in January or February. As such, anycomparison of sales and results of operations between different periods within a single financialyear for our Group may not be meaningful and should not be relied upon as indicators of ourGroup’s performance. Please refer to the section headed “Business – Seasonality” for moredetails.

Our operations are susceptible to fluctuation in the cost of pharmaceuticals and medicalconsumables, which could adversely affect our margins and results of operations

Our profitability is susceptible to fluctuation in the cost of pharmaceuticals and medicalconsumables. In particular, during the Track Record Period, cost of pharmaceutical andconsumables accounted for 36.8%, 32.9% and 26.1% of our revenue, please refer to the sectionheaded “Financial Information – Significant Factors affecting our Results of Operations andFinancial Condition” for the sensitivity analysis relating to the effect of the fluctuation of thecost of pharmaceuticals and consumables. The availability and prices of pharmaceuticals andmedical consumables can fluctuate and are subject to various factors beyond our control,including supply, demand, general economic conditions and governmental regulations, each ofwhich may affect our procurement costs or cause a disruption in our supply. We may not be ableto anticipate and react to changes in medical supply costs by changing service offerings oradjusting service fees in the future, or we may be unable to pass these cost increases onto ourcustomers, which could materially and adversely affect our margins and results of operations.

Our operation and prospects may be adversely affected by epidemic, natural disasters,terrorist attacks and political unrest

Our business is subject to general economic and social instabilities in China and around theworld. Our operations involve the treatment of patients with a variety of infectious diseases.Previously healthy or uninfected individuals may contract infectious diseases during their staysor visits at our Hospital or ancillary healthcare facilities. This may result in significant claimsfor damages against us and, as a result of medical overage, damage of our reputation. Anylarge-scaled outbreak of epidemic in cities where we operate could infect our employees andthus significantly reduce the service capacity at our Hospital or ancillary healthcare facilities,and may lead to limitations on the activities of our facilities as a result of quarantines, closingof our facilities partially or in full for sterilisation, which may reduce utilisation of our facilitiesand adversely affect our reputation.


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In addition, natural disasters, acts of God, terrorist attacks and political unrest beyond ourcontrol may adversely affect the economy, infrastructure and people’s livelihoods. Certainlocations are under the threat of floods, typhoons, earthquakes, sandstorms, snowstorms, fires,droughts, or epidemics such as Middle East Respiratory Syndrome (MERS), Ebola, Severe AcuteRespiratory Syndrome (SARS), H5N1 avian flu and human swine flu (Influenza A or H1N1).Past occurrences of epidemics and natural disasters, depending on their scale, have causeddifferent degrees of damage to the economies in general. A recurrence of SARS, an outbreak ofany other epidemics, a natural disaster or a terrorist attack, especially in the cities where wehave operations, may materially disrupt our healthcare facilities on which we rely or may requireus to make additional capital expenditures. The occurrence of a natural disaster, act of God,epidemic, terrorist attack or political unrest may adversely affect our business, financialcondition and results of operations.

Our failure to comply with the applicable anti-corruption laws may subject us toinvestigations, sanctions or fines, which may harm our reputation and materially andadversely affect our business, results of operations and prospects

We operate in the healthcare service sector in China which poses risks of anti-corruptionviolations and the PRC government has recently increased its anti-bribery efforts to reduceimproper payments received by doctors, medical professionals and staff in connection withpharmaceutical purchases and healthcare services provision. There is no assurance that ourpolicies and procedures will effectively prevent any and all non-compliance with the PRCanti-corruption laws arising from actions taken by the individual doctors, medical professionalsand staff without our knowledge. We cannot assure you that our management and staff will fullycomply with anti-corruption regulations at all times, or that our management will be able todetect and identify all instances of bribery involving our doctors, medical professionals and staffin connection with pharmaceutical purchases and healthcare services provision. We may also besubject to adverse publicity based on false allegations of bribery or corruption by individualdoctors, or general staff. In the event that any bribery incident involving our management oremployees materialises, we may be subject to investigations, sanctions or fines, and ourreputation could be significantly harmed by any negative publicity stemming from such incidentsor any penalties levied against us arising from them, which may have a material adverse effecton our business, financial operations, results of operations and prospects.

The appraisal values of our properties may be different from their actual realisable valuesand are subject to uncertainty or change

The Property Valuation Report set out in Appendix III to this document with respect to theappraised values of our properties is based on various assumptions, which are subjective anduncertain in nature. Certain of the assumptions used by the property valuer in reaching theappraised values of our properties may be inaccurate. Hence, the appraised values of ourproperties should not be taken as their actual realisable values or a forecast of their realisablevalues. Unexpected changes to our properties and to the national and local economic conditionsmay affect the values of these properties. You should not place undue reliance on such valuesattributable to these properties as appraised by the property valuer.


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RISKS RELATING TO THE PRC

The PRC’s economic, political and social conditions, as well as regulatory policies, willsignificantly affect financial markets in China, as well as our liquidity, access to capital andability to operate our business

Substantially all of our business operations are conducted in China. Accordingly, ourbusiness, results of operations, financial condition and prospects are subject to economic,political and legal developments in China. China’s economy differs from the economies ofdeveloped countries in many respects, including the degree of government involvement, level ofdevelopment, growth rate, control of foreign exchange and allocation of resources. While thePRC economy has experienced significant growth in the past years, growth has been unevenacross different regions and economic sectors. The PRC government has implemented variousmeasures to encourage economic development and guide the allocation of resources. Some ofthese measures benefit the overall PRC economy, but may negatively affect us. For example, ourbusiness, financial condition and results of operations may be materially and adversely affectedby government control over capital investments or changes in tax regulations applicable to us. Ifthe business environment in China deteriorates, our business in China may also be materiallyand adversely affected.

It is also unclear whether PRC economic policies will be effective in stimulating growth,and the PRC government may not be effective in creating stable economic growth in the future.Although China’s economy has grown significantly in the past decade, that growth may notcontinue and any slow-down may have a negative effect on our business. The growth of theChinese economy has slowed down in recent years. The slowdown in the economic growth ofChina could lead to a reduction in our patients’ disposable income and a reduction in demand forour services, which could materially and adversely affect our business, financial condition,results of operations and prospects.

Our operations are currently concentrated in Guangdong Province. As of the LatestPracticable Date, we operated our Hospital and certain ancillary healthcare facilities including(i) a postnatal care centre, (ii) an elderly care service centre, (iii) a dental clinic and (iv) fiveretail pharmacies in Guangdong Province. The concentration of our business in GuangdongProvince exposes us to geographical concentration risks relating to this region. A significanteconomic downturn or a growth rate lower than expectation in Guangdong Province or changesin local regulatory regime may have a significant adverse impact on the financial condition ofour patients and other customers and on their ability to benefit from our services.

A severe or prolonged downturn in the Chinese or global economy could materially andadversely affect our business and financial condition

COVID-19 has had a severe and negative impact on the Chinese and the global economies.Whether this will lead to a prolonged downturn in the economy is still unknown. Even beforethe outbreak of the COVID-19, the global macro-economic environment was facing numerouschallenges. The growth rate of the Chinese economy had been slowed down in recent years.


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There is considerable uncertainty over the long-term effects of the expansionary monetary andfiscal policies which had been adopted by the central banks and financial authorities of some ofthe world’s leading economies, including the United States and China, even before 2020. Unrest,terrorist threats and the potential for war in the Middle East and elsewhere may increase marketvolatility across the globe. There have also been concerns about the relationship between Chinaand other countries, including the surrounding Asian countries, which may potentially haveeconomic effects. In particular, there is significant uncertainty about the future relationshipbetween the United States and China with respect to trade policies, treaties, governmentregulations and tariffs. Economic conditions in China are sensitive to global economicconditions, as well as changes in domestic economic and political policies and the expected orperceived overall economic growth rate in China. Any severe or prolonged slowdown in theglobal or Chinese economy may materially and adversely affect our business, results ofoperations and financial condition.

Compliance with PRC advertising laws, rules and regulations may be difficult, and failureto comply could subject us to government sanctions

We are obligated under PRC laws, rules and regulations to monitor our advertising contentto comply with applicable laws. According to the Administrative Measures on MedicalAdvertisement (醫療廣告管理辦法) which was promulgated in 1993 and revised in 2006 by theMOH (衛生部) and the SAIC, our hospital must apply for and obtain a medical advertisementexamination certificate before publishing a medical advertisement. Violation of these regulationsmay result in penalties against the hospital, including rectification, orders, warnings, suspensionof operations, revocation of relevant permits to engage in the provision of specific medicalservices, and the revocation of the hospital’s Medical Institution Practising Licence. In addition,if any medical institution tamper with the content of the medical advertisement examinationcertificate to publish advertisement, the competent authority may revoke its medicaladvertisement examination certificate and refuse to accept any applications from such medicalinstitution for advertisement examination for a period of one year. In addition, if a specialgovernment review is required, we must confirm that such review has been performed and theapproval has been obtained before we publish the advertisement. For advertising content relatedto certain types of products and services, such as health food, veterinary drugs, pesticides,pharmaceuticals and medical equipment, we are required to confirm that the advertisers havecompleted filings with local authorities and/or obtained all requisite government approvals.

Whilst we endeavor to comply with PRC advertising laws, rules and regulations, we cannotguarantee that we would not inadvertently become non-compliant with relevant advertising laws,rules and regulations in the future. Any violations of these laws, rules and regulations maysubject us to governmental penalties, impair our brand and adversely impact our financialcondition and results of operations.


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Our business may be adversely affected by the introduction of new laws or changes toexisting laws by the PRC government and uncertainties regarding interpretation andenforcement of the PRC laws and regulations

Our business and operations in the PRC are governed by the legal system of the PRC. ThePRC legal system is a codified system with written laws, regulations, circulars andadministrative directives. Unlike common law jurisdictions, prior court decisions in China canbe cited as reference but with limited precedential value. Accordingly, the outcome of disputeresolutions may not be as consistent or predictable as compared to other more developedjurisdictions and it may be difficult to obtain swift and equitable enforcement of the laws in thePRC, or to obtain enforcement of a judgement by a court of another jurisdiction.

The PRC government has made significant progress in promulgating laws and regulationsrelated to economic affairs and matters, such as corporate organisation and governance, foreigninvestments, commerce, taxation and trade. However, many of these laws and regulations arerelatively new and there is a limited volume of published decisions. Therefore, there areuncertainties involved in their implementation and interpretation, which might not be asconsistent and predictable as in other jurisdictions.

For example, two draft regulations relating to [REDACTED], namely the Provisions of theState Council on the Administration of Overseas Securities Offering and Listing by DomesticCompanies (Draft for Comments) (《國務院關於境內企業境外發行證券和上市的管理規定(草案徵求意見稿)》) and Administrative Measures for the Filing of Overseas Securities Offering andListing by Domestic Companies (Draft for Comments) (《境內企業境外發行證券和上市備案管理辦法(徵求意見稿)》), were released on 24 December 2021 for public comments. Pursuant to suchdraft regulations, domestic PRC companies that apply for [REDACTED] are required to,amongst others, file and report to the CSRC. Uncertainties exist regarding the final form ofthese regulations as well as the interpretation and implementation thereof after promulgation.

In addition, the PRC legal system is based in part on government policies andadministrative rules that may have retroactive effect. Consequently, we may not be aware of anyviolation of these policies and rules until some time after such violation has occurred.Furthermore, the legal protection available to you under these laws, rules and regulations may belimited. Any litigation or regulatory enforcement action in the PRC may be protracted and couldresult in substantial costs and diversion of resources and management’s attention.

We face foreign exchange risk, and fluctuations in exchange rates could have an adverseeffect on our business and [REDACTED]

The value of the Renminbi has been under pressure of appreciation in recent years. Due tointernational pressures on the PRC to allow more flexible exchange rates for the Renminbi, theeconomic situation and financial market developments in the PRC and abroad and the balance ofpayments situation in the PRC, the PRC government has decided to proceed further with reformof the Renminbi exchange rate regime and to enhance the Renminbi exchange rate flexibility.


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Any appreciation or depreciation in the value of the Renminbi or other foreign currenciesthat our operations are exposed to will affect our business in different ways. In addition, changesin foreign exchange rates may have an impact on the value of, and any dividends payable on, theShares in Hong Kong dollars. In such events, our business, financial condition, results ofoperations and growth prospects may be materially and adversely affected.

Current Chinese regulations on loans provided by, and foreign direct investment by, anoffshore holding company to Chinese companies may delay or prevent us from using the[REDACTED] from the [REDACTED] to fund our business operations in China

Any loans or capital contributions that we, as an offshore entity, make to our PRCsubsidiaries that are foreign-invested enterprises, including with the [REDACTED] of the[REDACTED], are subject to PRC laws, rules and regulations. Foreign-invested enterprisesmust register with SAFE or its local counterpart in order to obtain shareholder loans from theforeign investors. The aggregate amount of these foreign loans must not exceed statutory limits.Furthermore, the foreign-invested enterprises must register with SAFE or its local counterpartfor repayment of the foreign loans. In addition, foreign investors must register with the SAIC orits local counterpart and report investment information to the MOFCOM or its local counterpartto make capital contributions to the foreign-invested enterprises. We cannot assure you that wecan obtain the required government registrations and/or acceptance of the report on a timelybasis, or at all, with respect to loans or capital contributions that we may make to our Chinesesubsidiaries. If we fail to obtain registrations and/or acceptance of the report, our ability to usethe [REDACTED] from the [REDACTED] to fund our operations in China would be negativelyaffected, which would materially and adversely affect our liquidity and ability to expand ourbusiness.

We may be subject to PRC income taxes on our worldwide income if we are treated as aPRC resident enterprise under the EIT law

We are a holding company incorporated under the laws of the Cayman Islands. Pursuant tothe EIT Law, dividends generated after 1 January 2008 and payable by a foreign-investedenterprise in China to its foreign investors are subject to a 10% withholding tax, unless any suchforeign investor’s jurisdiction of incorporation has a tax treaty with China that provides for adifferent withholding arrangement. Substantially all of our income may come from dividends wereceive, directly or indirectly, from our wholly-owned PRC subsidiaries.

Furthermore, under the EIT Law and its implementation rules, an enterprise establishedoutside China with “de facto management body” within China is considered a PRC residententerprise and will be subject to the enterprise income tax on its worldwide income at the rate of25%. The implementation rules to the EIT Law define the term “de facto management body” as“body that has material and overall management and control over the manufacturing andbusiness operations, personnel and human resources, finances and treasury, and acquisition anddisposition of properties and other assets of an enterprise”. The SAT issued the Notice on Issuesabout Identifying Chinese-Controlled Offshore Enterprises as PRC Resident Enterprises inaccordance with Criteria for Determining De Facto Management Body (關於境外註冊中資控股


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企業依據實際管理機構標準認定為居民企業有關問題的通知) and the Administrative Measureson the Corporate Income Tax of Chinese-Controlled Offshore Incorporated Resident Enterprises(Trial) (境外註冊中資控股居民企業所得稅管理辦法(試行)) in April 2009 and July 2011,respectively, which set out certain criteria for specifying what constitutes a “de factomanagement body” in respect of enterprises that are established offshore by PRC enterprises.However, we are not aware of any offshore holding company with a corporate structure similarto ours that has been deemed a PRC resident enterprise by the PRC tax authorities. Accordingly,we do not believe that our Company or any of our overseas subsidiaries should be treated as aPRC resident enterprise.

If we were considered a PRC resident enterprise for tax purposes, we may be required towithhold a 10% withholding tax from dividends we pay to our Shareholders that are non-PRCresident enterprises. Furthermore, non-PRC resident enterprise Shareholders may be subject to a10% PRC tax on gains realised on the sale or other disposition of our Shares, if the source ofsuch income is within China. It is possible that our non-PRC individual Shareholders would besubject to PRC taxes (generally at a rate of 20%) on dividends or gains obtained by suchnon-PRC individual shareholders in the event we are determined to be a PRC resident enterprise.

PRC governmental control on the convertibility of Renminbi may affect the value of your[REDACTED]

The PRC government imposes controls on the convertibility of Renminbi into foreigncurrencies and, in certain cases, the remittance of currency out of China. Substantially all of ourincome are received in Renminbi and shortages in the availability of foreign currencies mayrestrict our ability to pay dividends or other payments, or otherwise satisfy our foreign currencydenominated obligations, if any. Under existing PRC foreign exchange regulations, payments ofcurrent account items, including profit distributions, interest payments and expenditures fromtrade-related transactions, can be made in foreign currencies without prior approval from SAFE,by complying with certain procedural requirements. Approval from appropriate governmentauthorities is required where Renminbi is to be converted into foreign currency and remitted outof China to pay capital expenses such as the repayment of loans denominated in foreigncurrencies. The PRC government may, at its discretion, impose restrictions on access to foreigncurrencies for current account transactions and if this occurs in the future, we may not be able topay dividends in foreign currencies to our Shareholders.

Our business, financial condition and results of operations could be adversely affected byPRC labor laws and regulations

On 29 June 2007, the NPC promulgated the Labor Contract Law of the PRC, which becameeffective on 1 January 2008 and amended on 28 December 2012. On 18 September 2008, theState Council passed the relevant implementation regulations. The Labor Contract Law is aimedto provide employees greater protections with respect to establishing and terminatingemployment relationships. For example, the Labor Contract Law and its implementationregulations require employers to enter into written contracts with their employees, and if anemployer fails to enter into a written contract with an employee within one month but less than


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one year after commencement of employment, the employer is required to pay the employeedouble its salary every month until a written contract is entered into. In addition, the LaborContract Law calls for implementation of open-ended contracts rather than fixed-term contractsunder certain circumstances. In particular, an employer shall enter into an open-ended contractwith an employee upon the third consecutive renewal of the employment contract unlessotherwise requested by the employee. As a result, the Labor Contract Law limits our discretionin the hiring and termination processes and could in turn affect our labor costs and ourprofitability.

Uncertainties in the PRC legal system could have an adverse effect on our business and ourShareholders

Our business and operations are conducted in China and governed by the PRC laws, rulesand regulations. The PRC legal system is a civil law system based on written statutes where,unlike common law systems, decided legal cases have limited value as precedent. In the late1970s, the PRC government began to promulgate a comprehensive system of laws andregulations governing economic matters. The overall effect of legislation over the past fourdecades has significantly increased the protections afforded to various forms of foreign orprivate-sector investments in China. Our PRC subsidiaries and our hospital are subject to variousPRC laws, rules and regulations generally applicable to companies in China. Since these laws,rules and regulations are relatively new and the PRC legal system continues to rapidly evolve,the interpretations of many laws, rules and regulations are not always uniform and enforcementof these laws, rules and regulations involve uncertainties. Moreover, the PRC legal system isbased in part on government policies and administrative rules that may have retroactive effect.As a result, we may not be aware of any violations by us until sometime after the violation. Thelegal protections available to us under these laws, rules and regulations may be limited. Inaddition, any litigation or regulatory enforcement action in China may be protracted and couldresult in significant costs to us and a diversion of our resources and management attention. Wecannot predict future developments in the PRC legal system or the effects of such developments.

It may be difficult to effect service of process outside China or enforce judgments obtainedfrom non-PRC courts in China

We are a company incorporated under the laws of the Cayman Islands, we conduct ouroperations in China and substantially all of our assets are located in China. In addition, most ofour Directors and members of senior management reside and substantially all of their respectiveassets are located in China. As a result, it may be difficult to effect service of process outsideChina upon most of our Directors and members of senior management. A judgment of a court ofanother jurisdiction may be reciprocally recognised or enforced in China if that jurisdiction hasa treaty with China or if judgments of the PRC courts have been recognised before in thatjurisdiction, subject to the satisfaction of any other requirements. China does not have treatiesproviding for the reciprocal recognition and enforcement of judgments of courts with the UnitedStates, the United Kingdom and most other western countries. In addition, Hong Kong does nothave an arrangement for the reciprocal enforcement of judgments with the United States. As a


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result, it may be difficult for you to enforce against us or our Directors or members of seniormanagement in China any judgments obtained from non-PRC courts.

Payment of dividends is subject to restrictions under PRC law

Under PRC law, dividends may be paid only out of distributable profit. Distributable profitare our net profit as determined under PRC GAAP or HKFRSs, whichever is lower, less anyrecovery of accumulated losses and appropriations to statutory and other reserves that we arerequired to make. As a result, we may not have sufficient or any distributable profit to enable usto make dividend distributions to our Shareholders, including periods in which we are profitable.Any distributable profit not distributed in a given year are retained and available for distributionin subsequent years.

Moreover, because the calculation of distributable profit under PRC GAAP is different fromthe calculation under HKFRSs in certain respects, our operating subsidiaries may not havedistributable profit as determined under PRC GAAP, even if they have profit for that year asdetermined under HKFRSs, or vice versa. Accordingly, we may not receive sufficientdistributions from our subsidiaries. Failure by our operating subsidiaries to pay us dividendscould negatively impact our cash flow and our ability to make dividend distributions to ourShareholders, including periods in which we are profitable.

RISKS RELATING TO OUR SHARES AND THE [REDACTED]

There is no existing public market for [REDACTED], and their liquidity and market pricemay fluctuate

[REDACTED] have not been [REDACTED] in any public market before the completion ofthis [REDACTED]. The [REDACTED] may differ significantly from the [REDACTED] andmay not serve as an indicator of the [REDACTED] in the future. We have applied for the[REDACTED] of and permission to [REDACTED]. The [REDACTED], however, does notguarantee that an [REDACTED] for our Shares will develop, or if it does develop, that it willbe sustainable following the [REDACTED] or that the [REDACTED] will not decline belowthe [REDACTED] after the [REDACTED].

In addition, the [REDACTED] may be subject to significant volatility in responses tovarious factors, including, among others, the variations in our revenue, earnings and cash flow,unexpected business interruptions resulting from natural disasters or power shortages, regulatorydevelopments in China affecting us, our customers and patients or our competitors, investors’perception of us and of the investment environment in Asia, including Hong Kong and China,developments in China healthcare market, changes in pricing made by us or our competitors, thedepth and liquidity of the market for our Shares, additions to or departures of our key personnelor senior management, release or expiry of lock-up or other transfer restrictions on our Shares,sales or anticipated sales of additional Shares, changes in analysts’ estimates of our financialperformance and the general economic, political, financial and social developments in China andin the global economy.


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Moreover, shares of other companies listed on the Stock Exchange with significantoperations and assets in China have experienced price volatility in the past, and it is possiblethat our Shares may be subject to changes in price not directly related to our performance.

You may experience immediate dilution and may experience further dilution if we issueadditional Shares in the future

In the future, our capabilities and business may be expanded by our Group throughacquisition, joint venture and strategic partnership with parties who can add value to ourGroup’s business. Additional equity funding after the [REDACTED] may be required by ourGroup and the equity interests of our Shareholders will be diluted should our Company issue[REDACTED] to finance future acquisitions, joint ventures and strategic partnerships andalliances. In addition, [REDACTED] and issuing additional Shares in the future may beconsidered by our Group to the extent that our ordinary Shares are issued upon the exercise ofShare options which may be granted in the future. In this regard, if we issue additional Shares inthe future at a price which is lower than the net tangible book value per Share, you mayexperience further dilution in the net tangible asset book value per Share.

Issue of new Shares under the Share Option Schemes will have a dilution effect and mayaffect our profitability

We adopted the [REDACTED] Share Option Scheme and have conditionally adopted theShare Option Scheme. Any exercise of the options to be granted under the [REDACTED] ShareOption Scheme and/or Share Option Scheme in the future will result in a dilution in theshareholding of our Shareholders and may result in a dilution in the earnings per Share and netasset value per Share. Under the HKFRS, the costs of share options to be granted under the[REDACTED] Share Option Scheme and Share Option Scheme will be charged to our Group’sconsolidated statements of comprehensive income over the vesting period by reference to thefair value as at the date of grant of the share options. As a result, our profitability and financialresults may be adversely affected.

Future sales of substantial amounts of our Shares in the public market may materially andadversely affect the prevailing [REDACTED]

Except for the Shares issued in the [REDACTED] and the [REDACTED], our Companyhas agreed with the [REDACTED], the Sole Sponsor and the [REDACTED] not to, amongothers, sell or issue any of our Shares or securities convertible into or exchangeable for ourShares during the period beginning from the date of this document and continuing through thedate which is six months from the [REDACTED], except with the prior written consent of the[REDACTED]. Further, our Shares held by our Controlling Shareholders are subject to certainlock-up undertakings for periods commencing on the date of this document and up to 12 monthsafter the [REDACTED]. The [REDACTED] may, in its sole and discretion, waive or terminatethese restrictions. For details of the restrictions that may apply to the future sales of our Shares,


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see the section headed “[REDACTED]” in this document. After these restrictions lapse, the[REDACTED] may decline as a result of sales of substantial amounts of [REDACTED], theissuance of the [REDACTED], or the perception that such sales or issuances may occur. Thismay also materially and adversely affect our ability to raise capital in the future at a time and ata price we deem appropriate.

The price of [REDACTED] may fall before [REDACTED] begins due to the time lagbetween pricing and [REDACTED]

The [REDACTED] will be determined on the [REDACTED]. The [REDACTED] will notcommence [REDACTED] on the Stock Exchange until the [REDACTED]. [REDACTED] maynot be able to [REDACTED] or otherwise [REDACTED] in [REDACTED] during this periodbetween the [REDACTED] and the [REDACTED]. Accordingly, holders of our Shares bear therisk that the prices of our Shares could fall before [REDACTED] begins and may be lower thanthe [REDACTED] due to adverse market conditions or other adverse developments which mayoccur between the [REDACTED] and the [REDACTED].

There is uncertainty with respect to if and when we will pay dividends in the future

During the Track Record Period, we declared dividends of approximately RMB4.2 millionfor FY2021 only. We cannot assure you that dividends will be declared or paid in the future. Adecision to declare or pay any dividends and the amount of dividends is subject to the discretionof the Board, depending on, among other considerations, our operations, earnings, cash flowsand financial position, operating and capital expenditure requirements, our strategic plans andprospects for business development, our constitutional documents and applicable law. For moredetails on our dividend policy, see “Financial Information – Dividends” in this document. Inaddition, as a holding company, our ability to declare future dividends will depend on theavailability of dividends, if any, received from our operating subsidiaries. The calculation of ouroperating subsidiaries’ profit under applicable accounting standards differs in certain aspectsfrom the calculation under HKFRS. Accordingly, we may not have sufficient or any profits toenable us to make dividend distributions to our Shareholder in the future, even if our HKFRSfinancial statements indicate that our operations have been profitable.

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

Our management may utilise the [REDACTED] from the [REDACTED] in ways you maynot agree with or that do not yield a favorable return to our Shareholders. We plan to use the[REDACTED] from the [REDACTED], including but not limited to expanding our Hospitaloperations, expanding our Clifford healthcare network, acquiring hospitals and other generalcorporate purposes. For more details, see “Future Plans and Use of [REDACTED] – Use of[REDACTED]” in this document. However, our management will have discretion as to theactual application of our [REDACTED]. You are entrusting your funds to our management,whose judgment you must depend on, for the specific uses we will make of the [REDACTED]from this [REDACTED].


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Our Controlling Shareholder has significant influence over our Company and her interestsmay not be aligned with the interests of our other Shareholders

Immediately following completion of the [REDACTED] and the [REDACTED], andwithout taking into account of any Shares which may be allotted and issued pursuant to theexercise of the [REDACTED] and any options which have been or may be granted under the[REDACTED] Share Option Scheme and the Share Option Scheme, our Controlling Shareholderwill, through her voting power at the Shareholders’ meetings and her position on the Board, havesignificant influence over our business and affairs, including decisions in respect of mergers orother business combinations, acquisition or disposition of assets, issuance of additional shares orother equity securities, timing and amount of dividend payments, amendment to ourMemorandum and Articles of Association and our management. Our Controlling Shareholdermay not act in the best interests of our minority Shareholders. In addition, without the consentof our Controlling Shareholder, we could be prevented from entering into transactions that couldbe beneficial to us. This concentration of ownership may also discourage, delay or prevent achange in control of our Company, which could deprive our Shareholders of an opportunity toreceive a premium for the Shares as part of a sale of our Company and may significantly reducethe price of our Shares.

We are a Cayman Islands company and, because judicial precedent regarding the rights ofshareholders is more limited under the laws of the Cayman Islands than other jurisdictions,you may have difficulties in protecting your Shareholder rights

Our corporate affairs are governed by our Memorandum and Articles and by the CompaniesAct and common law of the Cayman Islands. The rights of Shareholders to take legal actionagainst our Directors and us, actions by minority Shareholders and the fiduciary responsibilitiesof our Directors to us under Cayman Islands law are to a large extent governed by the commonlaw of the Cayman Islands. The common law of the Cayman Islands is derived in part fromcomparatively limited judicial precedent in the Cayman Islands as well as from English commonlaw, which has persuasive, but not binding, authority on a court in the Cayman Islands. The lawsof the Cayman Islands relating to the protection of the interests of minority shareholders differin some respects from those established under statutes and judicial precedent in existence in thejurisdictions where minority Shareholders may be located. For more details, see “Summary ofthe Constitution of the Company and Cayman Islands Company Law” of Appendix IV to thisdocument.

As a result of all of the above, minority Shareholders may have difficulties in protectingtheir interests under the laws of the Cayman Islands through actions against our management,Directors or Controlling Shareholder, which may provide different remedies to minorityShareholders when compared to the laws of the jurisdiction such shareholders are located in.


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RISKS RELATING TO STATEMENTS IN THIS DOCUMENT

There are uncertainties and risks associated with forward-looking statements

This document contains certain statements and information that are “forward-looking” anduses forward-looking terminology such as “aim” “expect,” “believe,” “intend,” “can”, “goingforward”, “could,” “anticipate,” “estimate,” “should”, “plan”, “potential”, “project”, “seek”,“would” and “will”. Those statements include, among other things, the discussion of our growthstrategy and expectations concerning our future business, operations, liquidity and capitalresources. [REDACTED] are cautioned that any forward-looking statements are subject touncertainties and that, although we believe the assumptions on which the forward-lookingstatements are based are reasonable, any or all of these assumptions could also be incorrect. Theuncertainties in this regard include, but are not limited to, those identified in this section, manyof which are not within our control. In light of these and other uncertainties, the inclusion offorward-looking statements in this document should not be regarded as representations by us thatour plans or objectives will be achieved, and [REDACTED] should not place undue reliance onsuch forward-looking statements. We do not undertake any obligation to update publicly orrelease any revisions of any forward-looking statements in this document, whether as a result ofnew information, future events or otherwise.

There can be no guarantee as to the accuracy of facts and other statistics contained in thisdocument with respect to the economies and the industry in which we operate

Our Group has derived certain facts and other statistics in this document relating to themedical and healthcare industry and the global economy from various government publicationsand organisations that it believes to be reliable. While our Group believes that such facts andstatistics are appropriate sources for such information, and our Directors have taken reasonablecare in the reproduction of the information and have no reason to believe that such informationis false or misleading or that any fact has been omitted that would render such information falseor misleading, they have not been prepared or independently verified by our Group, the SoleSponsor or any member of our Group’s or their respective affiliates or advisers. Therefore, ourGroup makes no representation as to the accuracy of such facts and statistics, which may not beconsistent with other information compiled within or outside the PRC or available from othersources. Such facts and other statistics include the facts and statistics contained in this section,the sections headed “Summary”, “Industry overview” and “Business” in this document. Due topossibly flawed or ineffective sampling or discrepancies between published information andmarket practices or other reasons, such facts and statistics may be inaccurate or may not becomparable to official statistics and you should not place undue reliance on them. Accordingly,you should consider carefully how much weight or importance you should attach to or place onsuch facts or statistics.


RISK FACTORS

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

There could be press articles, media coverage and/or research analyst reports regarding usand the [REDACTED], which could include certain financial information, financial projections,industry comparisons, and/or other information about us and the [REDACTED] that do notappear in this document. We do not accept any responsibility for any such press articles, mediacoverage or research analyst reports or the accuracy or completeness or reliability of any suchinformation. We make no representation as to the appropriateness, accuracy, completeness orreliability of any such information or publication. We have not authorised the disclosure of anysuch information in the press, media or research analyst report. To the extent that any suchinformation appearing in publications other than this document is inconsistent or conflicts withthe information contained in this document, we disclaim it and accordingly, you should not relyon any such 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 [REDACTED]regarding our Shares. We do not accept any responsibility for the accuracy or completeness ofany information reported by the press or other media, nor the fairness or appropriateness of anyforecasts, 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, [REDACTED] shouldnot rely on any such information, reports or publications in making their decisions as to whetherto [REDACTED]. By applying to [REDACTED], you will be deemed to have agreed that youwill not rely on any information other than that contained in this document and the[REDACTED].


RISK FACTORS

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In preparation for the [REDACTED], we have sought the following waivers from strictcompliance with the relevant provisions of the Listing Rules:

WAIVER FROM STRICT COMPLIANCE WITH RULE 8.12 OF THE LISTING RULES

Rule 8.12 of the Listing Rules provides that [REDACTED] on the Stock Exchange musthave a sufficient management presence in Hong Kong, which normally means that at least two ofits executive directors must be ordinarily resident in Hong Kong. Since the core business, majorassets and operations of our Group are primarily located in PRC, all of our executive Directorsare currently and will, in the foreseeable future, continue to be ordinarily resident in PRC afterthe [REDACTED]. The principal management headquarters and senior management of ourCompany are also primarily based in the PRC. Our Company considers that our Group’smanagement is able to attend to its functions best by being based in the PRC.

We have applied to the [REDACTED] for and the [REDACTED] a waiver from strictcompliance with the management presence requirements under Rule 8.12 of the Listing Rules.

In order to ensure that regular communication is effectively maintained between the StockExchange and our Company, we will put in place the following measures:

(a) pursuant to Rule 3.05 of the Listing Rules, we have appointed two authorisedrepresentatives, namely Ms. Wendy Man (a non-executive Director) and Mr. Yu DingHim Anthony (the Company Secretary of our Company), to act as our principalchannel of communication with the Stock Exchange. Ms. Wendy Man and Mr. Yu DingHim Anthony are ordinarily resident in Hong Kong. Each of the authorisedrepresentatives shall be available to meet with the Stock Exchange within a reasonabletime frame upon the request of the Stock Exchange, and will also be accessible bytelephone, facsimile and electronic means to promptly deal with enquiries from theStock Exchange. Our Company will inform the Stock Exchange promptly in respect ofany change in our authorised representatives or the contact details of any of them;

(b) each of the authorised representatives has means to contact all Directors promptly atall times as and when the Stock Exchange wishes to contact them for any matters.Each of them is authorised to communicate on behalf of our Company with the StockExchange. Each of our Directors, authorised representatives and the companysecretary has provided his/her mobile and office contact phone numbers and emailaddress (if those contact details are available) to the Stock Exchange, should the StockExchange find it necessary to contact any of them;

(c) those Directors who are not ordinarily resident in Hong Kong have confirmed thatthey possess or can apply for valid travel documents to visit Hong Kong and are ableto meet with the relevant officers of the Stock Exchange within a reasonable period oftime when required;


WAIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES

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(d) each Director has confirmed that, in the event that he or she expects to travel or beout of office, he or she will provide the phone number of the place of his or heraccommodation or other means of communications to our authorised representatives;

(e) pursuant to Rule 3A.19 of the Listing Rules, we have appointed Zhongtai InternationalCapital Limited to act as our compliance adviser for the period commencing on the[REDACTED] and ending on the date on which we comply with Rule 13.46 of theListing Rules in respect of our financial results for the first full financial year afterthe [REDACTED]. The compliance adviser will act as an additional channel ofcommunication with the Stock Exchange; and

(f) our Company will maintain a principal place of business in Hong Kong.

WAIVER FROM STRICT COMPLIANCE WITH CHAPTER 14A OF THE LISTINGRULES

Our Group has entered into certain transactions which would constitute continuingconnected transactions under Chapter 14A of the Listing Rules after the [REDACTED],including (i) certain partially exempted continuing connected transactions and (ii) exemptedcontinuing connected transaction which has a term of more than three years. Further particularsabout such transactions together with the application for a waiver from strict compliance withthe relevant requirements under Chapter 14A of the Listing Rules are set out in “Connectedtransactions” in this document, which includes (a) a waiver from strict compliance withannouncement requirement for the partially exempted continuing connected transactions; and (b)a waiver from strict compliance with the requirement to have a fixed term of not more than threeyears.


WAIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES

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[REDACTED]


INFORMATION ABOUT THIS DOCUMENT AND THE [REDACTED]

– 68 –

[REDACTED]



– 69 –

[REDACTED]



– 70 –

[REDACTED]



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DIRECTORS

Name Residential Address Nationality

Executive Directors

ZHANG Tao (張濤) Room 1908, Block 82nd Street of Urban Dynamic GardenClifford EstatesPanyu DistrictGuangzhou, PRC

Chinese

OU Junwen (區俊文) Room 1601, Block 6TianhujuClifford EstatesZhongcun StreetPanyu DistrictGuangzhou, PRC

Chinese

ZHAO Hui (趙暉) Room 301No. 81 Clifford Celebrity Third StreetZhongcun StreetPanyu DistrictGuangzhou, PRC

Chinese

ZHUANG Lei (莊磊) Room 304, Block 1Urban Dynamic GardenClifford EstatesZhongcun StreetPanyu DistrictGuangzhou, PRC

Chinese

Non-executive Director

MAN Lai Hung (孟麗紅) House CStanley Crest5 Stanley Beach RoadStanleyHong Kong

Chinese


DIRECTORS, SENIOR MANAGEMENT AND PARTIES INVOLVED IN THE [REDACTED]

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INEDs

KO Wing Man (高永文) Flat D, 15/F, Tower 10One Beacon HillNo. 1 Beacon Hill RoadKowloon Tong, KowloonHong Kong

Chinese

DOE Julianne Pearl (杜珠聯) 8/F, Block 2AClovelly Court12 May Road, Mid-LevelsHong Kong

Australian

HUNG Lo Shan Lusan (熊璐珊) Flat 4, 1/F, Block BGreenville Gardens14-17 Shiu Fai TerraceHong Kong

Chinese

Senior Management

YU Ding Him Anthony (余定謙) Flat A, 28/FBlock 6, Park CentralTseung Kwan OHong Kong

Chinese

QIN Likui (覃黎葵) Room 401No. 9 Moonlight Gallery Third StreetClifford EstatesZhongcun StreetPanyu DistrictGuangzhou, PRC

Chinese

LIU Feng (劉峰) Room 2405, Building 1Zhengtai PlazaNo. 168, Wushan Avenue WestShiqiao Street, Panzhou DistrictGuangzhou, PRC

Chinese

CAI Qichun (蔡綺純) Room 704No. 15, Bai Tao StreetHaizhu DistrictGuangzhou, PRC

Chinese



– 73 –

LIU Yunsong (劉云松) Room 1004, Tower T5Fuli Junhu HuatingNo. 23 Chengang RoadLiwan DistrictGuangzhou, PRC

Chinese

WU Changyou (吳長有) Room 504, Block 8No. 52, Clifford CelebrityThird StreetZhongcun Street, Panyu DistrictGuangzhou, PRC

Chinese

For detailed information on our Directors and senior management, please refer to thesection headed “Directors and Senior Management” in this document.



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PARTIES INVOLVED IN THE [REDACTED]

Sole Sponsor Zhongtai International Capital Limited19/F, Li Po Chun Chambers189 Des Voeux Road CentralCentralHong Kong

[REDACTED]

Legal advisers to our Company As to Hong Kong law

Chiu & Partners40/F, Jardine House1 Connaught PlaceCentralHong Kong

As to PRC law

GFE Law OfficeUnits 3409–3412Guangzhou CTF Finance CenterNo. 6, Zhujiang Road EastZhujiang New TownGuangzhouPRC

As to Cayman Islands law

Conyers Dill & Pearman29th FloorOne Exchange Square8 Connaught PlaceCentralHong Kong

Legal advisers to the Sole Sponsor,the [REDACTED]

As to Hong Kong law

Wan & Tang23/F, Somptueux Central52 Wellington StreetCentralHong Kong



– 75 –

As to PRC law

Zhong Lun Law Firm23/F, R&F Center10 Huaxia RoadZhujiang New TownTianhe District, GuangzhouGuangdong 510623PRC

Reporting accountant and auditor PricewaterhouseCoopersCertified Public Accountants

Registered Public Interest Entity Auditor

22/F, Prince’s BuildingCentralHong Kong

Independent industry consultant Frost & Sullivan (Beijing) Inc., ShanghaiBranch Co.Room 1018, Tower BGreenland Hui CentreNo. 500 Yunjin RoadXuhui DistrictShanghaiPRC

Property Valuer AVISTA Valuation Advisory Limited23rd Floor, Siu On CentreNo. 188 Lockhart RoadWanchaiHong Kong

Compliance adviser Zhongtai International Capital Limited19/F, Li Po Chun Chambers189 Des Voeux Road CentralCentralHong Kong

[REDACTED]



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Registered office Cricket Square, Hutchins DriveP.O. Box 2681Grand Cayman, KY1-1111Cayman Islands

Principal place of business in HongKong

Suite 4018, 40th Floor, Jardine House1 Connaught PlaceCentral, Hong Kong

Headquarters and principal place ofbusiness in the PRC

Guangdong Clifford HospitalNo. 1 and 3 Hongfu RoadPanyu District, Guangzhou CityGuangdong Province, PRC

Company’s website address www.cliffordmedgroup.com(information contained in this website does not

form part of this document)

Company secretary YU Ding Him Anthony (余定謙)member of HKICPA, CPA Australia and CIMA

Flat A, 28/FBlock 6, Park CentralTseung Kwan OHong Kong

Authorised representatives MAN Lai Hung (孟麗紅)House CStanley Crest5 Stanley Beach RoadStanleyHong Kong

YU Ding Him Anthony (余定謙)Flat A, 28/FBlock 6, Park CentralTseung Kwan OHong Kong

Audit Committee HUNG Lo Shan Lusan (熊璐珊)(Chairman)DOE Julianne Pearl (杜珠聯)KO Wing Man (高永文)

Remuneration Committee KO Wing Man (高永文) (Chairman)MAN Lai Hung (孟麗紅)HUNG Lo Shan Lusan (熊璐珊)


CORPORATE INFORMATION

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Nomination Committee MAN Lai Hung (孟麗紅) (Chairman)KO Wing Man (高永文)DOE Julianne Pearl (杜珠聯)

[REDACTED]

Principal bankers Bank of ChinaNo. 3, Yingfu RoadClifford EstatesPanyu DistrictGuangzhou CityPRC

Agricultural Bank of China (Binfenhui Branch)One of No. 11Fuhua RoadZhongcun StreetPanyu DistrictGuangzhou CityPRC


CORPORATE INFORMATION

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The information and statistics set out in this section and other sections of this documentwere extracted from different official government publications, available sources from publicmarket research and other sources from independent suppliers, and from the independentindustry report prepared by Frost & Sullivan. We engaged Frost & Sullivan to prepare theFrost & Sullivan Report, an independent industry report, in connection with the[REDACTED]. The information from official government sources has not been independentlyverified by us, the Sole Sponsor, the [REDACTED], any of their respective directors andadvisers, or any other persons or parties involved in the [REDACTED], except Frost andSullivan, and no representation is given as to its accuracy. Accordingly the information fromofficial government sources contained herein may not be accurate and should not be undulyrelied upon

SOURCE AND RELIABILITY OF INFORMATION

We commissioned Frost & Sullivan, an independent market research company, to conductan analysis of, and to produce a report on the private healthcare service market in China.Founded in 1961, Frost & Sullivan is an independent global consulting firm based in the UnitedStates, and offers industry research, market strategies and provides growth consulting on avariety of industries. The information from Frost & Sullivan disclosed in this document isextracted from the Frost & Sullivan Report, a report commissioned by us for a fee ofRMB600,000, and is disclosed with the consent of Frost & Sullivan.

In compiling and preparing the research report, Frost & Sullivan conducted primaryresearch including interviews with industry experts and participants and secondary researchwhich involved reviewing the statistics published by the government official statistics, industrypublications, annual reports and data based on its own database. Frost & Sullivan also adoptedthe following primary assumptions while making projections on the healthcare services market,including private medical services market, the elderly care services market, the postnatal caremarket in China: (i) the growth of the economy is likely to maintain at a steady rate in China inthe next five years; (ii) the key growth drivers mentioned in this section are likely to continuedriving the growth of the private healthcare services market from 2022 to 2025; and (iii) there isno force majeure or industry regulation that will undramatically or dramatically affect any ofsuch market.

Save as disclosed otherwise, all the data and forecasts contained in this section are derivedfrom the Frost & Sullivan Report. Our Directors confirm that after taking reasonable care, thesources of information used in this section, which are extracted from the Frost & SullivanReport, are reliable and not misleading as Frost & Sullivan is an independent professionalmarket research agency with extensive experience, and there is no material adverse change in theoverall market information since the date of the Frost & Sullivan Report that would materiallyqualify, contradict or have an impact on such information.

OVERVIEW OF HEALTHCARE SERVICES MARKET IN CHINA

Healthcare services mainly consist of medical services which are dedicated to theprevention, diagnosis, and treatment of disease, illness, injury or dysfunction. Other healthcareservices include elderly care services, postnatal care services and similar healthcare services, aswell as the prevention and control of infectious disease. In the past few years, the acceleratedaging population resulting in increasing population with chronic diseases and rising per capitadisposable income have contributed to the robust growth of the demand for healthcare servicesin China.

As the main sector of healthcare service market, the medical services market in China haswitnessed an upward trend, increasing from RMB3.3 trillion in 2016 to RMB4.9 trillion in 2020,with a CAGR of 10.1%. The government has promulgated a number of policies, including theHealthy China 2030 Plan and the 14th Five-Year Plan, which call for continuous improvementand vigorous development in the medical service system. The market size of medical services inChina is expected to reach RMB7.2 trillion in 2025.


INDUSTRY OVERVIEW

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Healthcare Service Providers in China

Hospitals are the major providers of medical services in China, providing diagnostic andtreatment services for patients. Based on the nature of ownership, hospitals can be classified intopublic hospitals and private hospitals. Promoted by initiatives to support the development ofprivate medical institutions, private hospitals in China have exhibited a strong growth in the pastfew years. The number of private hospitals increased from 16,432 in 2016 to 23,524 in 2020,representing a CAGR of 9.4%. During the same period, the proportion of private hospitalsincreased from 56.4% to 66.5% of total hospitals. The number of private hospitals is expected toreach 31,213 in 2025, accounting for approximately 72.9% of total hospital market.

Driven by the rapid growth of the number of private hospitals and the improvingmanagement level of private hospitals, the market size of private hospitals in China has grownfrom RMB251.4 billion in 2016 to RMB478.0 billion in 2020, and is forecasted to reachRMB962.2 billion in 2025.

Market size of hospitals in China, 2016–2025E

PeriodPublic

HospitalsPrivate

HospitalsTotal

Hospitals

CAGR 16–20 8.4% 17.4% 9.4%

CAGR 21E–25E 9.0% 14.8% 9.8%

Public hospitals Private hospitals

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

Unit: RMB Billion

2,546.9 2,805.2 3,158.8 3,214.6 3,568.2 3,925.0 4,297.9 4,663.25,036.3251.4 319.1 383.8

437.9 478.0554.5

641.0737.1

844.0962.2

2,578.4 2,866.03,189.0 3,596.7 3,692.6

4,122.74,566.0

5,035.05,507.2

5,998.5

2,327.0

Source: NHC, Frost & Sullivan Analysis

The following table sets forth the key metrics of private hospitals in China in 2020:

Private Hospitals

Number of beds in operation 2,040.6 ThousandBeds occupancy rate 57.3%Out-patient visits 530.0 MillionAverage spending per out-patient visit RMB346.5In-patient visits 35.2 MillionAverage spending per in-patient visit RMB7,476.3Source: NHC, Frost & Sullivan Analysis

In terms of service scope and function, hospitals in China can be categorized into generalhospital and specialty hospital. General hospital refers to the hospital which can provide thediagnosis and treatment of a variety of diseases. Specialty hospital refers to the hospitals withonly one or a few medical specialties.

In terms of diagnosis and treatment method, hospitals in China can be categorized intoWestern medicine hospitals, Chinese medicine hospital, Chinese and Western medicine hospitaland minority medicine hospitals. Chinese medicine hospitals are medical institutions that offerboth traditional and western medicine/treatment with more traditional Chinese modality focusedas compared to other types of hospitals. Chinese and Western medicine hospitals are medicalinstitutions that treat patients with diverse modalities based on fusion of useful theory andexperience from traditional Chinese medicines and western medicines. Clifford Hospital is the


INDUSTRY OVERVIEW

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only Grade A Class III private Chinese and Western medicine general hospital in GuangdongProvince and the Greater Bay Area in 2021.

In addition, hospitals in China are ranked into three classes (Class I, II and III) and withineach class, there are three sub-grades (Grade A, B and C). Class III Grade A hospitals are thehighest-ranked hospitals in China, while county-level hospitals are mostly Class I hospital,mainly serving patients in rural areas. The majority of the medical resource are concentrated inhospitals of higher classes (usually Class III) and economically developed areas. With theimplementation of hierarchical medical treatment system (分級診療體系), health institutions atvarious classes receive patients on the basis of the degree and urgency of the diseases they have.The hierarchical medical treatment system is regarded as a key to solving the problem ofinsufficient and unbalanced medical resources in many areas. It has become an effective meansto achieve the rational allocation of existing medical resources, which will play an importantrole in the sustainable development of public health in China. In 2020, there were 2,996 ClassIII hospitals in China. Class III private hospitals increased from 151 in 2015 to 408 in 2020 witha CAGR of 22%. The following table sets forth a breakdown of number of public and privatehospitals by classes in China in 2020:

Public Hospitals Private HospitalsNumber % Number %

Class-III hospitals 2,588 21.8 408 1.7Class-II hospitals 5,833 49.1 4,571 19.4Class-I hospitals 2,267 19.1 9,985 42.4Unrated 1,182 10.0 8,560 36.5

Total 11,870 100.0 23,524 100.0


In order to further enhance the competitive strength, several hospitals in China arecommitted to providing better quality medical services by standardising operational proceduresand improving patient safety with a patient-oriented approach. Therefore, these hospitals beganto apply for JCI certification.

JCI (Joint Commission International) is an affiliate of the Joint Commission onAccreditation of Healthcare Organizations that accredits medical institutions outside the UnitedStates. JCI accreditation is a widely renowned medical institution evaluation standard in theworld, which is also a medical institution evaluation system recognized by the payment systemof international commercial medical insurance institutions. JCI accreditation is notgovernment-mandated and it focuses on patient safety, satisfactory medical service quality andsocial benefit indicators of services. As of 22 February 2022, there are 610 JCI-accreditedmedical institutions worldwide. Due to the difficulty in obtaining the approval and incurrence ofhigh cost in upgrading the infrastructure and internal controls of the hospital to pursue JCIcertification, only 41 hospitals in mainland China have passed JCI certification as at the latestpracticable date. Among 41 JCI-accredited hospitals, 37 of them are private hospitals accountedfor 0.16% of all private hospitals in PRC. Our hospital was the first hospital in China, andsecond hospital in Asia that accredited by JCI.

OVERVIEW OF THE HEALTHCARE SERVICES IN GREATER BAY AREA

The Guangdong-Hong Kong-Macao Greater Bay Area, also known as the Greater Bay Area(GBA), consists of nine cities and two special administrative regions in southern China. Itincludes nine prefecture-level cities of Guangdong Province: Guangzhou, Shenzhen, Zhuhai,Foshan, Dongguan, Zhongshan, Jiangmen, Huizhou and Zhaoqing and the two specialadministrative regions, Hong Kong and Macau. Other than the cities located in Guangzhou asmentioned above, the healthcare service system in Hong Kong is derived from the Britishmedical service system which can be divided into public and private sectors. The publichospitals provide the Hong Kong population with equitable access to quality healthcare servicesat very affordable charges highly subsidised by the government. Healthcare services from privatehospitals are not subsidised (except for certain institutional or day-time long-term medical andnursing care) and patients have to bear the full cost for using them. While the healthcare service


INDUSTRY OVERVIEW

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system in Macau is a continuation of previous medical system from Portuguese-Macao period.There are three private hospitals and only one public hospital in Macau, which is subordinate tothe Macau Health Bureau.

The Greater Bay Area is the economic center of southern China, with a resident populationof 85.4 million, a regional GDP of RMB11.5 trillion and a per capita GDP of RMB134,775.4.Hong Kong and Macau are among the most economically developed regions in China, with percapita GDP of USD46,323.9 (RMB319,616.1) and USD39,403.1 USD (RMB271,865.9)respectively. Among municipalities directly under the Central Government and prefecture-levelcities, Shenzhen, Zhuhai and Guangzhou ranked 5th, 9th and 12th with per capita GDP ofRMB159,309.1, RMB145,645.2 and RMB135,047.2 respectively. The higher economic levelprovides strong support for the construction of medical infrastructure, as well as releasing thedemand for high-quality medical services, promoting the continuous improvement of the medicalstandards in the Greater Bay Area.

In 2020, the elderly population over the age of 60 in the Greater Bay Area has reached 9.6million, accounting for 11.1% of the total population. The elderly population of Hong Kong,Macau, Jiangmen, Zhaoqing and Guangzhou accounted for 27%, 19.9%, 18.3%, 16.4%, and11.4%, respectively, of the total population. There are 4 cities in the Greater Bay Area where thepopulation over 65 years old accounts for more than 10%, include Hong Kong, Macau, Jiangmenand Zhaoqing. The aging population leads to a high population base for chronic diseases, whichwill subsequently increase the demand for medical services.

The Outline of Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area(《粵港澳大灣區發展規劃綱要》) sets out the development objective of “shaping a healthy Bayarea and strengthening medical cooperation” to encourage private capital to participate in theoperation of hospitals. It will promote close cooperation of quality medical and health resources,support health service providers in Hong Kong and Macao to set up medical institutions in theform of sole proprietorship, joint venture, or cooperation, and develop regional medicalconsortia and regional medical centers in the nine cities in the Pearl River Delta. At the sametime, the development plan strengthens the exchanges between Hong Kong and Macao and theMainland in terms of medical talents, biopharmaceuticals, clinical and academic aspects, andencourage medical personnel from Hong Kong and Macao to conduct academic exchanges andshort-term private practice in the nine PRD cities.

OVERVIEW OF HEALTHCARE SERVICE MARKET IN GUANGDONG PROVINCE

Guangdong province has a good foundation for the development of private medicalservices. With the support of favorable government policies, continuous investment in healthcareis expected to increase at the Greater Bay Area, allowing private hospitals to continue to expand,and the medical service quality of private hospitals will be gradually improved. As the integrateddevelopment of the Greater Bay Area continues, social insurance will be able to applyinterchangeably within the Greater Bay Area, creating a more convenient medical system forlocal residents.

The number of private hospitals in Guangdong Province increased from 634 in 2016 to 965in 2020. It is expected to reach 1,366 in 2025, with a CAGR of 7.0%. As the number of privatehospitals in Guangdong Province continued to grow, the market size of private hospitals inGuangdong Province has seen an upward trend in the past five years. In the future, along withthe continuous improvement in the management capability of private hospitals, attraction ofincreasing medical talents, the revenue of private hospitals is expected to reach RMB67.9 billionin 2025, with a CAGR of 14.7%.


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Market size and forecast of Hospitals in Guangdong Province, 2016–2025E

PeriodPublic

HospitalsPrivate

HospitalsTotal

Hospitals

CAGR 16–20 6.1% 14.8% 6.9%

CAGR 21E–25E 8.7% 14.7% 9.5%

Public hospitals Private hospitals

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

Unit: billion RMB

227.8 245.2 268.0 255.2 284.0 308.7 336.4 364.3 396.219.623.8

28.132.9 34.1

39.245.6

52.459.9

67.9

221.2251.6 273.3

300.9 289.3323.2

354.2388.8

424.2464.2

201.6


From 2016 to 2020, percentage of personnel expenditure out of total hospital expendituresin Guangdong Province increased from 34.0% to 40.3%. The average annual salary of hospitalstaff increased from RMB161,586 in 2016 to RMB227,023 in 2020 and is expected to grow at aCAGR of 8.1 % from 2021 to 2025.

Annual salary of hospital staff in Guangdong Province, 2016–2025E

Period CAGR

2016–2020 8.9%

2021E–2025E 8.1%

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

161,586180,637

196,296221,450

227,023246,774

267,750289,706

312,882337,287

Unit: RMB

Source: Frost & Sullivan Analysis

Key Drivers for the Growth and Development of Guangdong Province and the Greater BayArea Healthcare Service Market

Strong economic strength of the Guangdong Province and the Greater Bay Area:Guangdong is the province with the strongest economy in China, with a GDP exceeding 12trillion. The Greater Bay Area is the economic center of southern China, with a residentpopulation of 85.4million, a regional GDP of RMB11.5 trillion and a per capita GDP ofRMB134,775.4. Hong Kong and Macau are among the most economically developed regions inChina, with per capita GDP of USD46,323.9 (RMB319,616.1) and USD39,403.1 USD(RMB271,865.9) respectively. Among municipalities directly under the Central Government andprefecture-level cities, Shenzhen, Zhuhai and Guangzhou ranked 5th, 9th and 12th with percapita GDP of RMB159,309.1, RMB145,645.2 and RMB135,047.2 respectively. The highereconomic level provides strong support for the construction of medical infrastructure, as well as


INDUSTRY OVERVIEW

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releasing the demand for high-quality medical services, promoting the continuous improvementof the medical standards in the Greater Bay Area.

Aging Population in Guangdong Province and the Greater Bay Area: As of September30, 2020, there were 14.8 million people over the age of 60 with household registration inGuangdong Province, accounting for about 15.3% of the total household registration population.In 2020, the elderly population over the age of 60 in the Greater Bay Area has reached 9.6million, accounting for 11.1% of the total population. The elderly population of Hong Kong,Macau, Jiangmen, Zhaoqing and Guangzhou accounted for 27%, 19.9%, 18.3%, 16.4%, and11.4%, respectively, of the total population. There are 4 cities in the Greater Bay Area where thepopulation over 65 years old accounts for more than 10%, include Hong Kong, Macau, Jiangmenand Zhaoqing. The aging population leads to a high population base for chronic diseases, whichwill subsequently increase the demand for medical services.

Increasing Healthcare Expenditure in Guangdong Province and the Greater Bay Area:The healthcare expenditures of the Greater Bay Area are leading in the country and continues togrow. In 2020, the healthcare expenditure in Guangdong Province was RMB631.3 billion; thehealthcare expenditure of Hong Kong in 2019/20 was HKD189.6 billion (RMB168.7 billion), thehealth expenditure of Macau in 2020 was MOP8.9 billion (RMB7.7 billion). High healthcareexpenditure implies that the region has great demand for high-quality medical services.

Promotion of government policies: In order to optimize of medical resources in theGreater Bay Area and to accomplish the integrated development of high-quality medical servicesin Hong Kong, Macau and mainland China, the government has issued relevant policies tosupport the development of the healthcare service market in the Greater Bay Area. For example,the Outline of Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area《粵港澳大灣區發展規劃綱要》, Several Measures to Accelerate the Cross-border Connection ofMedical Services《關於加快推動醫療服務跨境銜接的若干措施》, Guangdong-Hong Kong-MacaoGreater Bay Area Pharmaceutical and Medical Device Regulatory Innovation and DevelopmentWork Plan 《粵港澳大灣區藥品醫療器械監管創新發展工作方案》, and so on. With theencouragement of the national and local governments, the high-quality medical resources in theGreater Bay Area will be fully promoted, and the development of private hospitals in the GreaterBay Area will usher in great opportunities.

Key Entry Barries

Affluent capital investment: The economy of the Greater Bay Area is well developed, as aresult, the cost of land, commodity prices and labor costs are relatively higher. New marketentrants need to put in affluent capital investment to acquire land, build hospitals, hire staff, andpurchase equipment. At the same time, in order to build diversified clinical departments anddepartments with advantages, a large amount of capital investment is required. New marketentrants take an average of 5-8 years to achieve profitability.

Lack of professional management team: Private hospitals have attracted a large amountof private capital, and a large amount of funds has rapidly increased the total value of privatehospitals. For investors who pursue high return on capital, high-quality hospital management andbright hospital operating performance can directly increase the hospital’s market value.Managing the target hospital and enhancing its value has become the most important thing ofinvestors. Hospital management is a comprehensive procedure and requires professionalmanagement team, which is also an entry barrier for new entrants.

Difficulty in obtaining qualification as private hospitals: The process of obtaining allnecessary licenses, certificates and permits to establish and operate a private hospital iscomplicated and time-consuming. The relevant guidelines and rules may change during theprocess, which could negatively affect the establishment of new private hospitals or transfer ofownership in public hospitals.


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Competitive Landscape of Private General Hospitals in Guangdong, Greater Bay Area andChina Market

Ranking of Top 5 For-Profit Private General Hospital in Guangdong Province by RegisteredBeds, 2021

Name of HospitalNumber of

Registered Beds

1 Clifford Hospital 廣東祈福醫院 2,1002 Dongguan Tungwah Hospital 東莞東華醫院 1,8803 Dongguan Kanghua Hospital 東莞康華醫院 1,8004 Foshan Fosun Chancheng Hospital 佛山復星禪誠醫院 1,2005 Shantou Chaonan Minsheng Hospital 汕頭潮南民生醫院 1,000

Ranking of Top 5 For-Profit Private General Hospital in Greater Bay Area by RegisteredBeds, 2021


Registered Beds

1 Clifford Hospital 廣東祈福醫院 2,1002 Dongguan Tungwah Hospital 東莞東華醫院 1,8803 Dongguan Kanghua Hospital 東莞康華醫院 1,8004 Foshan Fosun Chancheng Hospital 佛山復星禪誠醫院 1,2005 St. Teresa’s Hospital 聖德肋撒醫院 1,050

Ranking of Top 5 For-Profit Private General Hospital in Guangdong Province by Number ofBeds in Operation, by 2021


Registered Beds

1 Dongguan Tungwah Hospital 東莞東華醫院 1,7002 Dongguan Kanghua Hospital 東莞康華醫院 1,6503 Clifford Hospital 廣東祈福醫院 1,3524 Foshan Fosun Chancheng Hospital 佛山複星禪誠醫院 1,2005 Shantou Chaonan Minsheng Hospital 汕頭潮南民生醫院 8005 The Third Affiliated Hospital of G.D.P.U.

廣東藥科大學附屬第三醫院(廣州新市醫院)800

Ranking of Top 5 For-Profit Private General Hospital in Greater Bay Area by Number of Bedsin Operation, by 2021


Registered Beds

1 Dongguan Tungwah Hospital 東莞東華醫院 1,7002 Dongguan Kanghua Hospital 東莞康華醫院 1,6503 Clifford Hospital 廣東祈福醫院 1,3524 Foshan Fosun Chancheng Hospital 佛山複星禪誠醫院 1,2005 St. Teresa’s Hospital 聖德肋撒醫院 1,000


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Ranking of Top 5 For-Profit Private General Hospital in Guangdong Province, by Revenue,2020

Name of Hospital

Revenue(million RMB)

20201 Foshan Fosun Chancheng Hospital 佛山復星禪誠醫院 1,649.02 Dongguan Tungwah Hospital 東莞東華醫院 1,585.43 Dongguan Kanghua Hospital 東莞康華醫院 1,357.34 Clifford Hospital 廣東祈福醫院 864.75 Shantou Chaonan Minsheng Hospital 汕頭潮南民生醫院 768.4

Ranking of Top 5 For-Profit Private General Hospital in Greater Bay Area, by Revenue, 2020

Name of Hospital


20201 Foshan Fosun Chancheng Hospital 佛山復星禪誠醫院 1,649.02 Dongguan Tungwah Hospital 東莞東華醫院 1,585.43 Dongguan Kanghua Hospital 東莞康華醫院 1,357.34 Clifford Hospital 廣東祈福醫院 864.75 The Third Affiliated Hospital of G.D.P.U. 廣東藥科大學附

屬第三醫院 (廣州新市醫院)604.6

Ranking of Top 15 For-Profit Private General Hospitals by Revenue in China, by 2020

Name of Hospital


20201 Foshan Fosun Chancheng Hospital 佛山復星禪誠醫院 1,649.02 Dongguan Tungwah Hospital 東莞東華醫院 1,585.43 Dongguan Kanghua Hospital 東莞康華醫院 1,357.34 Suqian Hospital of Nanjing Drum Tower Hospital Group

南京鼓樓醫院集團宿遷市人民醫院1,224.6

5 Xianyang Hospital of Yan’an University 延安大學咸陽醫院 1,169.66 Jilin Guowen Hospital 吉林國文醫院 1,100.07 Zhejiang University Mingzhou Hospital 寧波明州醫院 1,000.08 Nanjing Benq Medical Center 南京明基醫院 998.19 Beijing United Family Hospital Co., Ltd. 北京和睦家醫院 969.110 Huaibei Miners General Hospital 淮北礦工總醫院 918.111 Wanbei Coal-Electricity Group General Hospital

皖北煤電集團總醫院902.5

12 Clifford Hospital 廣東祈福醫院 864.713 Affiliated Aoyang Hospital of Jiangsu University

江蘇大學附屬澳洋醫院858.0

14 Nanshi Hospital of Nanyang 河南大學附屬南石醫院 831.815 Suzhou Kowloon Hospital 蘇州九龍醫院 806.8

Ranking of Top 5 JCI Accredited Private General Hospital by Revenue in China, by 2020

Name of Hospital


20201 Beijing United Family Hospital Co., Ltd. 北京和睦家醫療 969.12 Clifford Hospital 廣東祈福醫院 864.73 Affiliated Aoyang Hospital of Jiangsu University

江蘇大學附屬澳洋醫院858.0

4 Shanghai United Family Hospital Inc. 上海和睦家醫院 627.05 Sunshine Union Hospital 陽光融和醫院 586.3Source: Frost & Sullivan analysis


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OVERVIEW OF POSTNATAL CARE SERVICES MARKET IN GUANGDONG PROVINCE

Postnatal care services refer to services rendered for both new mothers and newborns afterdelivery, usually at a postnatal care center. The aim of such centers is to provide professionalhealthcare services to both mothers and newborns. In terms of operational model, postnatal carecenters can be classified as hotel-style, hospital-affiliated, independent and apartment-style.Hospital-affiliated postnatal care centers are often seen at private hospitals. Such centers havethe advantages of convenient access to medical support.

Driven by the increasing demand for postnatal care services, the market size of postnatalcare centers in Guangdong Province increased from RMB2,142.8 million in 2016 to RMB3,826.2million in 2020. In the future, as the penetration rate of postnatal care centers continue toincrease, and the demand for high-quality postnatal care services expand, the market is expectedto continue to grow and reach RMB6,615.5 million in 2025.

Market Size of Postnatal Care Centers in Guangdong Province, 2016–2025E

Period CAGR

2016–2020 15.6%

2021E–2025E 11.3%

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

2,142.8

2,955.43,262.3

3,842.4 3,826.24,303.6

4,773.35,317.7

5,943.2

6,615.5Unit: RMB million


Key Drivers

➢ Number of newborns in Guangdong Province is leading in China: postnatal care servicesare mostly regional with target customers often reside in surrounding areas; therefore, thenumber of newborns decides the fundamental demand for the services in GuangdongProvince. From 2015 to 2019, number of newborns in Guangdong Province increased from1.2 million to 1.4 million, being one of the highest in China. In 2019, the percentage ofnewborns in Guangdong Province accounts for 9.8% out of total newborns in China. Highernumber of newborns creates a large target population, which can further generate moredemand for postnatal care services.

➢ Consumption upgrade stimulate the demand for high-quality services: With the rapideconomic development and increasing per capita disposable income, residents inGuangdong Province have recorded higher expenditure on health. Young parents tend topursue high-quality postnatal care services while higher quality requires higher costs. Withmore acceptance of postnatal care centers and better ability to afford such services, thedemand for high-quality postnatal care services will increase accordingly, generating moreeconomic profit.

OVERVIEW OF ELDERLY CARE SERVICES MARKET IN CHINA

Elderly care services refer to services provided for the elderly to meet the needs andrequirements of the elderly at various stages and improve their life, health, and safety. Based onservice providers and service method, elderly care services can be classified into in-homeelderly care services, hospital-affiliated, community elderly care services and institutionalelderly care services. Usually, community, institutional and hospital-affiliated elderly careservices are carried out in the form of a elderly care apartment or a elderly care centre.


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The elderly over 65 years old are the main targets of the elderly care service industry. Thenumber of the elderly in China has been increasing year by year, and the proportion of theelderly population has continued to rise. It is expected that the target group of the elderly careservice industry will further expand in the future, and the market demand will grow. The StateCouncil recently issued the “14th Five-Year Plan for the Development of the National AgingCause and Elderly Care Service System”. In the plan, there will be more than 9 million beds forelderly care services in 2025, and the proportion of nursing beds in elderly care institutions willreach 55%. The demographic structure in China will release a huge demand for elderly careservices in the future. Coupled with the shortage of supplies in elderly care services in bothHong Kong and Macau, it is expected that the market size of elderly care service market in theGreater Bay Area will grow at a rapid pace, reaching RMB34.8 billion by 2025.

Market Size of Elderly Care Services in Greater Bay Area, 2016–2025E

Period CAGR

2016–2020 9.5%

2021E–2025E 9.2%

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

15.517.2

19.020.9

22.324.5

26.829.2

31.934.8Unit: RMB billion


The elderly care service industry in China is one of the crucial industries that has obtainedcontinuous encouragement and support from the government. The General Office of the StateCouncil, the Ministry of Civil Affairs, and other administrative agencies have successivelyissued a number of favorable policies to promote the healthy development of elderly care serviceindustry.

Key Drivers

Key drivers of the continuous development of elderly care services market include:

➢ China population is aging and the market demand expands: The elderly over 65 yearsold are the main targets of the elderly care service industry. In recent years, thenumber of the elderly in China has been increasing year by year and the proportionamong the total population has continued to rise. In the past five years, the number ofpeople over 65 in China has increased from 150.4 million in 2016 to 190.6 million in2020, an increase of 26.7%. As of the end of 2020, the percentage of people over 65in the total population has reached 13.5%, an increase of 2.7% over 2016. It isexpected that the target group of the elderly care service industry will further expandin the future, and the market demand will grow.


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➢ Supportive policies to drive the rapid development of the market: The rising rate ofaging has prompted the government to issue a series of supportive policies for theelderly care service industry. The government has issued the “14th Five-Year Plan forthe Development of the National Aging Industry Development and Elderly CareService System” 《”十四五”國家老齡事業發展和養老服務體系規劃》 to guide thedevelopment of the elderly care industry before 2025. The plan proposes to improvethe infrastructure of elderly health service institutions, and by 2025, the total numberof elderly beds in China will reach the goal of more than 9 million.

OVERVIEW OF RETAIL PHARMACY MARKET IN GUANGDONG PROVINCE

In recent years, Guangdong Province has implemented a series of incentive policies tofurther propel the development of local pharmaceutical industry. As of June 2021, GuangdongProvince has a total of 54,277 retail pharmacies, making it the largest pharmaceutical retailmarket in the country. Revenue generated by the retail pharmacy market in Guangdong Provinceincreased from RMB32.1 billion in 2016 to RMB51.2 billion in 2020, representing a CAGR of12.4%. The retail pharmacy market in Guangdong Province is expected to see a rapid growthduring the forecast period, reaching RMB84.3 billion in 2025 with a CAGR of 10.7% from 2021to 2025.

Retail Pharmacy Market in Guangdong Province, 2016–2025E

Period CAGR

2016–2020 12.4%

2021E–2025E 10.7%

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

32.137.4

42.346.9

51.256.1

61.768.1

75.684.3Unit: RMB billion



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LAWS AND REGULATIONS RELATED TO FOREIGN INVESTMENT

Foreign-invested enterprises in the PRC must follow all the applicable PRC laws andregulations and must not engage in activities detrimental to China’s public interest.

i. The Foreign Investment List

Foreign investment in the PRC is principally governed by the Catalogue of Industries forEncouraging Foreign Investment (2020 Version) (鼓勵外商投資產業目錄(2020年版)) (the “2020Encouraged Catalogue”), which promulgated by the NDRC and the MOFCOM on 27 December2020 and became effective on 27 January 2021, and the Special Administrative Measures(Negative List) for the Access of Foreign Investment (2021 Version) (外商投資准入特別管理措施(負面清單)(2021年版)) (the “2021 Negative List”), which jointly promulgated by the NDRCand the MOFCOM on 27 December 2021 and became effective on 1 January 2022. Industrieslisted therein shall be classified into three categories: encouraged, restricted and prohibited.Foreign investment can be made directly in an encouraged industry by setting up a whollyforeign-owned enterprise. For restricted industries, foreign investment may be allowed, butsubject to the relevant governmental departments approvals, and in some cases, limited to equityor contractual joint ventures to which Chinese parties are required to hold the majority interestsin such joint ventures. Foreign investors shall not be allowed to invest in industries in theprohibited category. Any industry not listed in the 2021 Negative List or the 2020 EncouragedCatalogue is generally deemed to be permitted and open to foreign investment, unless otherwiserestricted or prohibited by laws and regulations.

ii. Laws and Regulations on the Foreign-invested Enterprise

On 15 March 2019, the NPC promulgated the Foreign Investment Law of the PRC (《中華人民共和國外商投資法》), and on 26 December 2019, the State Council promulgated theImplementation Regulations of the Foreign Investment Law of the PRC (《中華人民共和國外商投資法實施條例》) (collectively, the “Foreign Investment Law”), which both came into forceon 1 January 2020. The Foreign Investment Law sets out the definitions of foreign investmentand the framework for promotion, protection and administration of foreign investment activities.

Subject to the Foreign Investment Law, the organizational forms, organization structuresand activities guidelines of foreign invested enterprises shall be governed by the provisions ofthe Company Law of the PRC (《中華人民共和國公司法》) and the Law of the PartnershipEnterprise of the PRC (《中華人民共和國合夥企業法》). The foreign invested enterprises,established in accordance with the Sino-foreign Equity Joint Ventures Law of the PRC (《中華人民共和國中外合資經營企業法》), the Wholly Foreign-owned Enterprise Law of the PRC (《中華人民共和國外資企業法》) and the Sino-foreign Cooperative Joint Ventures Law of the PRC (《中華人民共和國中外合作經營企業法》) before the effective date of Foreign Investment Law, mayretain their original organizational forms within five years after the Foreign Investment Lawtakes effect.


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On 30 December 2019, the MOFCOM and the State Administration for Market Regulationjointly promulgated the Measures on Reporting of Foreign Investment Information (《外商投資信息報告辦法》), Foreign investors carrying out investment activities in the PRC directly orindirectly shall submit investment information to the commerce administrative authorities.

LAWS AND REGULATIONS RELATED TO MEDICAL INSTITUTION

i. Regulations on the Reform of Medical Institution

The Opinions of the Central Committee of the Communist Party and the State Council onPromoting Further Reform of the Healthcare System (《中共中央、國務院關於深化醫藥衛生體制改革的意見》) (the “Opinions”), which was promulgated on 17 March 2009, encouraging andguiding private capital to invest in medical and health care business, promoting the developmentof non-public medical and health institutions, and forming a medical system with diversifiedinvestment entities and diversified investment methods.

The Several Opinions about Encouraging and Guiding the Healthy Development of PrivateInvestment (《國務院關於鼓勵和引導民間投資健康發展的若干意見》), which was promulgatedby the State Council on 7 May 2010, and came into effect on the same day, requires the people’sgovernments of all provinces, autonomous regions and municipalities directly under the CentralGovernment, all ministries and commissions of the State Council, and all authorities directlyunder the State Council to comply with the following opinions: (i) Encourage private capital toparticipate in the development of medical business, support the use of private capital in buildingmedical institutions such as various hospitals, community health service institutions,sanatoriums, outpatient departments, clinics and health centers (stations), participate in thesystemic reform and restructuring of public hospitals, support private medical institutions inproviding public health services, basic medical services and designated medical insuranceservices, implement tax policy in relation to NMIs in a practical manner, encourage a reasonableflow of medical personnel resources to private medical institutions, ensure that private medicalinstitutions receive treatment equal to that of public hospitals in terms of the introduction oftalent, job appraisal and scientific research; and (ii) Strengthen the regulations of variousmedical institutions in aspects such as medical quality, medical conduct, and fee standards, andpromote the healthy development of private medical institutions.

On 26 November 2010, the NDRC, the MOH, the MOF, the MOFCOM and the MHRSSjointly promulgated the Notice on Further Encouraging and Guiding the Establishment ofMedical Institutions by Social Capital (《關於進一步鼓勵和引導社會資本舉辦醫療機構意見》)(the “Notice”). The Notice sets out the following measures with respect to expanding the scopefor social capital to set up medical institutions. Social capital is permitted and encouraged to beinvested in the establishment of various medical institutions. Social capital may be applied forestablishing and operating either for-profit medical institutions (the “PMIs”) or not-for-profitmedical institutions (the “NMIs”) according to its purposes. Priority shall be given to qualifiedsocial capital when adjusting or increasing medical and health care resources. The scope ofpractice for non-public medical institutions is reasonably determined. Overseas capital isallowed to be invested in medical institutions in the PRC. The restrictions on equity proportion


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of overseas capital invested in domestic medical institutions will be lifted step by step. Theapproval procedures for medical institutions by overseas capital are simplified and standardized.

Several Opinions on Accelerating the Development of Medical Institutions with SocialCapital (《國家衛生和計劃生育委員會、國家中醫藥管理局關於加快發展社會辦醫的若干意見》),which was promulgated on 30 December 2013 by NHC and the NATCM, stipulates the policiesthat support the development of private-invested medical institutions, including the (i) gradualrelaxation of investment in medical institutions by foreign capital; (ii) relaxation of requirementsfor service sectors, allowing social capital’s investment in the areas which are not explicitlyprohibited; (iii) relaxation of requirements for the deployment and use of large-scale medicalequipment in private medical institutions; (iv) improvement of supporting policies for thedevelopment of private medical institutions in aspects such as medical insurance and pricecontrol; and (v) acceleration of the approval processing regarding the establishment andoperation of private medical institutions.

Guiding opinion on Innovating the Investment and Financing Mechanisms in Key Areas andEncouraging Social Investment (《國務院關於創新重點領域投融資機制鼓勵社會投資的指導意見》) (the “2014 Opinion”), which was promulgated on 26 November 2014 by the State Council,encourages the investment of social capital in certain key sectors. The 2014 Opinion stipulatesthat the PRC government will continue to (i) promote the restructuring of eligible public medicalinstitutions with the participation of social capital; (ii) encourage social capital’s participation inhealthcare sector by means such as sole proprietorship, joint ventures, cooperative ventures,joint operation and leasing; (iii) improve the implementation of preferential tax policies onNMIs and the reduction or exemption policies of administrative and institutional fees on theconstructions of PMIs or NMIs; and (iv) implement the same price policy with regard to theutilization of electricity, water, gas and heat by both public and private medical institutions, andrelax the price control over the services provided by the private medical institutions.

ii. Regulations on the Classification of Medical Institution

The Opinions on Implementing Classification Administration of Urban Medical Institutions(《關於城鎮醫療機構分類管理的實施意見》), jointly promulgated by the MOH, the NATCM, theMOF and the State Planning Commission of the PRC on 18 July 2000 and came into effect on 1September 2000, provides that medical institutions in the PRC are mainly identified as PMIs andNMIs, and NMIs is further divided into public NMIs and private NMIs. NMIs and PMIs shall beclassified based on their business objectives, service purposes and implementation of variousfinancial, taxation, pricing and accounting policies.

According to the Basic Standards for Medical Institutions (For Trial Implementation) (《醫療機構基本標準(試行)》) which was promulgated on 2 September 1994 and last revised on 5December 2011, and the Interim Measures for the Assessment of Hospitals (《醫院評審暫行辦法》) and the Interim Measures for the Assessment of Chinese Medicine Hospitals (《中醫醫院評審暫行辦法》), hospitals in the PRC can be graded into three classes (Class I, II and III) withregard to their medical practice conditions, including but not limited to, the amount of registeredbeds, treatment departments, personnel, properties, equipment as well as completeness of their


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internal rules and regulations. The assessment of hospitals includes periodic assessment andirregular key inspections. The periodic assessment of traditional Chinese medicine hospitals(including hospitals of integrated traditional Chinese and western medicine) was conducted bytraditional Chinese medicine administrative department at provincial level for every four years,and the outcome of such assessment can be classified as grade A (excellent)(甲等), grade B(good)(乙等) and grade C (failure)(不合格). As a result, the highest level of a hospital is aGrade A Class III Hospital (三級甲等醫院).

iii. Regulations on the Not-for-profit Medical Institution

Interim Regulations on the Management of Registration for Private Non-enterprise Entities(《民辦非企業單位登記管理暫行條例》) promulgated and implemented by the State Council on25 October 1998 and Interim Measures for the Registration for Private Non-enterprise Entities(《民辦非企業單位登記暫行辦法》) promulgated on 28 December 1999 and amended on 27December 2010 by the MCA provide that the establishment of private non-enterprise entitiesshall be subject to the review and approval of the competent authority for the activities that suchentities engage in and be registered in accordance with relevant requirements. Such privatenon-enterprise entities may not engage in profit-making operational activities, and the incomelegally obtained from activities provided in its articles of association shall only be used inactivities provided therein. The activities which private non-enterprise entities engaged in violateother laws and regulations shall be dealt with by the relevant state organs in accordance with thelaw or even subject to registration revocation. Any private non-enterprise entity engages inactivities without registration shall be banned by the registration authority and be confiscated itsillegal property, and if a crime is constituted, criminal responsibility shall be borne; or if it doesnot constitute a crime, public security management penalty shall be imposed in accordance withthe law.

iv. Regulations on the Internet Hospital

On 17 July 2018, the NHC and the NATCM jointly promulgated the Measures for theAdministration of Internet Hospitals (Trial) (《互聯網醫院管理辦法(試行)》), and the stateimplements access management for internet hospitals pursuant to the Administrative Regulationson Medical Institutions (《醫療機構管理條例》) and its Implementation Measures (《醫療機構管理條例實施細則》). Where a physical medical institution builds an information platform on itsown or in cooperation with a third-party institution, and uses physicians registered in itsinstitution and other medical institutions to conduct Internet diagnosis and treatment activities, itshall apply for an Internet hospital as its second name. Furthermore, physicians can only providefollow-up treatment services through Internet hospitals for patients that have been diagnosedwith certain common diseases or chronic diseases, unless the patients are in physical hospitalsand the physicians in the physical hospital invites other physicians to provide diagnosis servicesthrough Internet hospital.


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v. Regulations on the Principal License of Medical Institutions

(a) The Medical Institution Practising Certificate

The Administrative Measures on Medical Institutions (《醫療機構管理條例》), whichwas promulgated on 26 February 1994 by the State Council, came into effect on 1September 1994 and amended on 6 February 2016, and the Implementation Rules of theAdministrative Measures on Medical Institutions (《醫療機構管理條例實施細則》), whichwas promulgated by the MOH on 29 August 1994 and last amended on 21 February 2017,stipulate that the establishment of a medical institution by any entity or individual must bereviewed and approved by health administrative departments of people’s governments at orabove the county level and obtain the medical institution practising certificate.

The Administrative Measures for Verification of Medical Institutions (For TrialImplementation) (《醫療機構校驗管理辦法(試行)》), which was promulgated by the MOHand came into effect on 15 June 2009, stipulates that the medical institution practisingcertificate is subject to periodic examinations and verifications by registration authorities,and may be canceled if such medical institution fails to pass the examination.

(b) The License for Radiotherapy

According to Administrative Measures on the Radiotherapy (《放射診療管理規定》),which was promulgated by the MOH on 24 January 2006 and amended on 19 January 2016by NHFPC, medical institutions shall apply for the licenses for radiotherapy issued by thecompetent activities health administrative authorities prior to carrying out radiodiagnosisand radiotherapy. The license for radiotherapy and the medical institution practisingcertificate shall be verified at the same time.

(c) The Practising License of Maternal and Infant Health Care Technology Service

According to the Law of PRC on Maternal and Infant Healthcare (《中華人民共和國母嬰保健法》), which was promulgated by the SCNPC and on 27 October 1994 and lastamended on 4 November 2017 and its Implementation Measures (《中華人民共和國母嬰保健法實施辦法》), medical institutions providing services such as premarital medicalexamination, genetic disease diagnosis and prenatal diagnosis, ligation operations andoperations for termination of gestation must be approved by health administrativeauthorities at various levels and obtain relevant certificates in accordance with relevantlaws and regulations.


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(d) the Seal Card for Purchasing Narcotic Drugs and the Psychotropic Drugs ofCategory I

According to the Regulations on the Control of Narcotic Drugs and PsychotropicDrugs (《麻醉藥品和精神藥品管理條例》), which was promulgated by the State Council on3 August 2005 and last amended on 6 February 2016, any medical institution using narcoticdrugs and the psychotropic drugs of category I shall be subject to the approval of therelevant authority, and obtain the seal card for purchasing narcotic drugs and thepsychotropic drugs of category I.

(e) The License for Deployment of Large-scale Medical Equipment

Pursuant to the Administrative Measures on the Deployment and Use of Large-scaleMedical Equipment (For Trial Implementation) (《大型醫用設備配置與使用管理辦法(試行)》) jointly promulgated by the NHC and NMPA on 22 May 2018 and came into effect onthe same date, and Large-scale Medical Equipment Allocation and Management Catalogue(2018) (《大型醫用設備配置許可管理目錄(2018年)》) (“the Equipment Catalogue”)promulgated by the NHC on 29 March 2018, the state carries out the classified andhierarchical allocation plan and the license management for large-scale medical equipmentaccording to the Equipment Catalogue.

(f) The Licenses for Radiation Safety

According to Regulations on the Safety and Protection of Radioisotopes and Radiationemitting Devices (《放射性同位素與射線裝置安全和防護條例》), which was promulgatedby the State Council on 14 September 2005 and last amended on 2 March 2019, andMeasures for Administration of the Safety Licensing of Radioactive Isotopes andRadioactive Equipment (《放射性同位素與射線裝置安全許可管理辦法》), which waspromulgated by the State Environment Protection Administration on 18 January 2006 andlast amended on 4 January 2021, any entity engages in activities of production, sale, anduse of radioactive isotopes and radial equipment within the territory of PRC shall obtainthe radiation safety licenses.

(g) Radioactive Drugs Use Permits

According to the Measures for the Administration of Radioactive Drugs (《放射性藥品管理辦法》) promulgated by the State Council on 13 January 1989 and last amended on 1March 2017, medical institutions shall obtain the radioactive drugs use permits issued bythe province, autonomous region, or municipality drug administration authorities beforepurchasing and selling the radioactive drugs. Medical institutions without such permits arenot allowed to use radioactive drugs clinically.


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(h) Medical Institution Preparation Permit

According to the Drug Administration Law of PRC (《藥品管理法》) (promulgated bythe SCNPC on 20 September 1984, last amended on 26 August 2019 and the latestamendment became effective on 1 December 2019) and its Implementation Rules (《藥品管理法實施條例》) (promulgated by the State Council on 4 August 2002, last amended on 2March 2019 and the latest amendment became effective on the same date) (collectively, the“Drug Administration Laws”), any medical institution engaging in preparing drugpreparations shall obtain a medical institution preparation permit issued by the relevantdrug administrative department. Drug preparation prepared by medical institutions shall notbe sold on the market, and shall be subject to the approval by relevant drug administrativedepartment and obtain the preparation approval number, unless otherwise specified by thelaws for the preparation of traditional Chinese medicine preparations.

vi. Regulations on the Medical Accidents

Pursuant to the PRC Civil Code (《中華人民共和國民法典》) which was promulgated by theNPC on 28 May 2020 and became effective on 1 January 2021, if a patient suffers damage in thecourse of diagnosis and treatment and the medical institution or its medical personnel are atfault, the medical institution shall bear the liability for compensation.

The Regulations on Handling Medical Incidents (《醫療事故處理條例》), which waspromulgated on 4 April 2002 and came into effect on 1 September 2002, further provides a legalframework and specific regulations regarding the prevention, identification, compensation andpenalties of or relating to cases involving personal injury to patients caused by medicalinstitutions or medical personnel due to malpractice. According to the degree of the injuriescaused to the patient, medical accidents are classified into four levels. In the event of a medicalaccident, the medical institution shall report to the local health administrative department inaccordance with the regulations. The local health administrative department shall, according tothe level and the circumstances of medical accident, issue a warning or under seriouscircumstances, order the medical institution to suspend operation within a time limit forrectification until the original issuing department revoke its practice license, and the responsiblemedical personnel shall be held criminally liable, or administrative or disciplinary action in casenot yet to constitute a criminal penalty. Moreover, the compensation for medical accidents shallbe paid by the responsible medical institution and shall be settled in one lump sum.

vii. Regulations on the Personnel Qualifications

Pursuant to the Law on Physicians of the PRC (《中華人民共和國醫師法》), the Notice onCertain Opinions on Promoting and Standardizing Multi-site Practice of Physicians (《關於印發推進和規範醫師多點執業的若干意見的通知》), and the Regulations on Nurses (《護士條例》),the medical institution shall employ the physicians who have obtain the physician practicecertificates to engage in medical practice services, and the nurses who have obtain the practicecertificates to offer nursing services. In addition, clinical physicians, dentists and Chinesemedicine physicians are permitted for practising at multiple sites.


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Pursuant to the Interim Provisions for the Administration of Physician’s Going Out forConsultation (《醫師外出會診管理暫行規定》) which is promulgated by the on 30 April 2005 andbecame effective on 1 July 2005, the physician shall be approved by the medical institutionwhere he/her registered before carrying out diagnosis and treatment activities within his/herpractising scope for a certain patient of another medical institution. Where a medical institutionintends to invite a physician from another medical institution (hereinafter referred to as theconsulting medical institution) to consult, it is necessary to send a written invitation letter to theconsulting medical institution. And the consultation fees should be paid to the consultingmedical institution, not to the physician himself.

LAWS AND REGULATIONS RELATED TO THE MEDICAL DEVICES OPERATIONENTERPRISE

According to the Regulations on Supervision of Medical Devices (《醫療器械監督管理條例》) which was promulgated by the State Council on 4 January 2000 and was last amended on 9February 2021 and the last amendment was came into force on 1 June 2021, China adoptsclassified administration over medical devices. The medical devices, according to their degree ofrisk, are classified into Class I medical devices, Class II medical devices and Class III medicaldevices.

Pursuant to the Measures for the Supervision and Administration of Medical DevicesOperation (《醫療器械經營監督管理辦法》), promulgated on 30 July 2014 and amended on 17November 2017, an enterprise engaged in the operation of medical devices shall have businesspremises and storage conditions suitable for the operation scale and scope, and shall have aquality control department or personnel suitable for the medical devices it operates. Anenterprise engaged in the operation of Class II medical devices shall file with the drugsupervision and administration department at municipal level for a record, while an enterpriseengaged in the operation of Class III medical devices shall apply for a business operation licenseof medical devices to the drug supervision and administration department at municipal level.

According to the Good Operation Practice for Medical Devices (《醫療器械經營質量管理規範》)which was promulgated by the CFDA on 12 December 2014 and came into effect on thesame date, medical device operation enterprises shall adopt effective quality control measures inthe procurement, inspection and acceptance, storage, sales, transportation, and after-sales serviceof medical devices to ensure the quality and safety of products in the course of businessoperations.

LAWS AND REGULATIONS RELATED TO PHARMACEUTICAL OPERATIONENTERPRISE

The Drug Administration Laws regulate all entities or individuals engaging in research,manufacture, operation, use, supervision and management of drugs within the PRC.


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According to the Drug Administration Laws, any individual or entity engage inpharmaceutical wholesale and/or pharmaceutical retail business shall be subject to the approvalof competent drug administration department, and obtain the pharmaceutical supply license. Nopharmaceutical operation, including pharmaceutical wholesale and pharmaceutical retailbusiness, is permitted without obtaining the pharmaceutical supply license.

The Good Supply Practice for Drugs (2016 revised edition) (《藥品經營質量管理規範》(2016年修訂)), promulgated on 13 July 2016 by the CFDA, and became effective on thesame date) (the “GSP”) comprises a set of detailed standard guidelines governing the operationof drugs, which includes organizational structure and quality management duties, staffqualifications, quality management system documents, facilities and equipment, calibration andvalidation, computer systems, purchase, acceptance, storage and maintenance, delivery,transportation and distribution, etc.

Pursuant to the Drug Administration Laws, the Measures for the Administration ofPharmaceutical Supply License (《藥品經營許可證管理辦法》) and the Administrative Measuresfor the Registration of Practising Physicians (《執業藥師註冊管理辦法》), the pharmaceuticalwholesale enterprise shall employ a certain number of licensed pharmacists who have obtain thelicensed pharmacist registration certificate, while the pharmaceutical retail enterprise shallemploy pharmaceutical technical personnel whose qualifications have been certified inaccordance with law.

LAWS AND REGULATIONS RELATED TO THE ELDERLY CARE INSTITUTIONS

Pursuant to the Measures for the Administration of Elderly Care Institutions (《養老機構管理辦法》) promulgated by the MCA on 1 September 2020 and became effective on 1 November2020, the establishment of a for-profit elderly care institution shall be registered with competentmarket regulatory authority. Moreover, A for-profit elderly care institution shall, within tenworking days after admitting the elderly therein, undergo recordation formalities with the civilaffairs department of the people’s government at the county level where its service place islocated.

LAWS AND REGULATION RELATED TO FOOD OPERATION

According to the Food Safety Law of the PRC(《中華人民共和國食品安全法》) which waspromulgated by the SCNPC and last amend on 29 April 2021 and the Administrative Measuresfor Food Operation Licensing (《食品經營許可管理辦法》) promulgated by the CFDA on 31August 2015 and amended on 17 November 2017, those who engage in food sales and cateringservices activities shall obtain a food operation licenses within the PRC. If any individual orentity engaged in food operation business without licensing, the food safety supervision andmanagement department shall confiscate the illegal income and items, and impose a fine.


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LAWS AND REGULATIONS RELATED TO THE PRICE CONTROL

According to the Notice of Issues Related to the Implementation of Market PriceAdjustment by Non-Public Medical Institutions (《關於非公立醫療機構醫療服務實行市場調節價有關問題的通知》) promulgated on 25 March 2014 by NDRC, the NHFPC and the MHRSS, theprice of healthcare services provided by non-public medical institutions to be set with referenceto the market level. Non-public medical institutions which are for-profit in nature may set theprice list for their healthcare services at their own discretion. Non-public medical institutionswhich are non-profit in nature shall set the price list for their healthcare services according tothe National Standard Price List of Healthcare Services (《全國醫療服務價格項目規範》).

According to the Opinions on Promoting the Reform regarding the Pricing ofPharmaceuticals (《關於印發推進藥品價格改革意見的通知》) promulgated on 4 May 2015, thepricing scheme of pharmaceuticals shall be reformed from the following perspectives: (i)pharmaceuticals within the coverage of Basic Medical Insurance (the “BMI”). The authority incharge of BMI shall, together with relevant governmental departments, formulate regulationswith respect to the procedures, standards and methods for the formulation of the paymentstandards for pharmaceuticals within the coverage of BMI and explore an effective priceformation mechanism therefor; (ii) patent pharmaceuticals and pharmaceuticals of exclusiveproduction. A transparent, fair and multilateral negotiation mechanism for the price formationshall be established; (iii) blood products not included in the national Reimbursed Drug List andpharmaceuticals for planned immunization of centralized procurement by the government, freenational AIDS antiviral treatment drugs, and contraceptives. The price shall be formed throughbidding or negotiation; (iv) narcotic drugs and Class I psychotropic substances. The producerprice ceiling and the retail price ceiling shall still apply; (v) other pharmaceuticals. The producerand operator of pharmaceuticals other than the above-mentioned may determine the price byitself. On 26 November 2019, the NHSA promulgated the Opinions on Good Management ofCurrent Drug Prices (《關於做好當前藥品價格管理工作的意見》), which provides that the priceof narcotic drugs and Class I psychotropic substances originally announced by the NDRC wouldbe uniformly adjusted on a transitional basis.

LAWS AND REGULATIONS RELATED TO INFORMATION SECURITY

On 10 June 2021, the SCNPC issued the Data Security Law of the PRC (《中華人民共和國數據安全法》) (the “Data Security Law”), which became effective on 1 September 2021.According to the Data Security Law, China has established data classification and gradingprotection system, data security emergency response mechanism as well as data security reviewsystem. Processors of data shall establish a sound data security management system throughoutthe whole process, organize data security education and training, and take correspondingtechnical measures and other necessary measures to ensure data security, in accordance with theprovisions of laws and regulations. To carry out data processing activities by making use of theInternet or any other information network, the aforesaid obligations for data security protectionshall be performed on the basis of the graded protection system for cyber security. Violation ofthe provisions of Data Security Law may result in penalties against the entity, including


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warnings, rectification orders, fines, suspension of operations, revocation of business licenses oreven subject to criminal liabilities.

The NHFPC issued the Measures for the Administration of Population Health Information(for Trial Implementation) (《人口健康信息管理辦法(試行)》) (the “Health InformationMeasures”) on 5 May 2014, which, became effective on the same date. According the HealthInformation Measure, population health information refers to the basic population information,medical and health service information and other population health information generated byvarious medical and health planning service institutions in the process of service andmanagement in accordance with national laws and regulations and work responsibilities. Thecollection, use and management of population health information by the aforesaid institutionsshould be in accordance with the provisions of laws and regulations, follow the principles ofmedical ethics, ensure information security and protect personal privacy.

According to the Internet Diagnosis and Treatment Management methods (《互聯網診療管理辦法》) and the Administrative Measures for the Graded Protection of Information Security(《信息安全等級保護管理辦法》), medical institutions carrying out Internet diagnosis andtreatment activities should implement the third grade of information security protection to theirinformation systems. Medical institutions operate or use information systems at or above thesecond grade shall go through the recordation formalities with the local public security organs.If the medical institutions fail to do so, the public security organs may issue rectification orders,warnings and reports to the higher authorities.

On 14 November 2021, the Cyberspace Administration of China publicly solicited opinionson the Regulations on the Administration of Cyber Data Security (Draft for Comments) (《網絡數據安全管理條例(徵求意見稿)》) (the “Draft Regulations”). According to the DraftRegulations, data processors shall, in accordance with relevant state provisions, apply forcybersecurity review when carrying out the following activities: (1) the merger, reorganizationor separation of Internet platform operators that have acquired a large number of data resourcesrelated to national security, economic development or public interests, which affects or mayaffect national security; (2) data processors that handle the personal information of more thanone million people intends to be listed in a foreign country; (3) the data processor intends to belisted in Hong Kong, which affects or may affect national security; (4) other data processingactivities that affect or may affect national security.

On 28 December 2021, twelve government departments jointly promulgated the Measurefor Cyber Security Review (《網絡安全審查辦法》) (the “CSR Measures”), which came intoeffect on 15 February 2022. If a critical information infrastructure operator purchases networkproducts and services or an online platform operator conducts data processing, either of whichaffects or may affect national security, a cybersecurity review shall be carried out according tothe CSR Measures. Also, the online platform operator that handles the personal information ofmore than one million people intends to be listed in a foreign country must report to the CyberSecurity Review Office for cybersecurity review.


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LAWS AND REGULATION RELATED TO PRODUCT LIABILITIES AND CONSUMERSPROTECTION

In accordance with the Product Quality Law of the PRC (《中華人民共和國產品質量法》)(the “Product Quality Law”) promulgated by the SCNPC on 22 February 1993 and was lastamended on 29 December 2018, both the manufacturer and the seller shall be responsible for thequality of products. For the unqualified product stipulated in the Product Quality Law, the sellershall be responsible for repair, replacement or refund, and if such product has caused anydamage to the consumer who purchased the product, the seller shall compensate for the relevantloss. After repair, replacement, refund or compensation by the seller according to the ProductQuality Law, if the liability is on the part of the manufacturer or other seller supplying suchproducts, the seller is entitled to claim from such manufacturer or supplier for its loss. If thedefective product causes damage to other person and/or property, the injured party may seekcompensation from either the producer or the seller. Where the product defect is caused by theproducer, the seller may, after paying compensation, claim against the producer for the same.Where the product defect is caused by the seller, the producer may, after paying compensation,claim against the seller for the same. Also, the seller shall be liable for compensation if it failsto indicate neither the producer nor the supplier of such defective products.

According to the Law of the PRC on the Protection of the Rights and Interests ofConsumers (《中華人民共和國消費者權益保護法》) was promulgated by the SCNPC on 31October 1993 and last amended on 25 October 2013, the rights and interests of consumerspurchasing and using commodities or receiving services for daily consumption shall beprotected. All business operators shall ensure that the goods or services they provide meet therequirements for the protection of personal and property safety. If the business operatorsdiscover that the goods or services provided by them are defective and endanger personal andproperty safety, they should immediately report to the relevant administrative department andinform consumers, and take measures to prevent further damage from arising. In extremesituations, business operators may be subject to criminal liability if their goods or services leadto the death or injuries of customers or other third parties.

LAWS AND REGULATION RELATED TO FIRE PREVENTION

In accordance with the Fire Prevention Law of the PRC (《中華人民共和國消防法》)promulgated by the SCNPC on 29 April 1998, last amended on 29 April 2021 and the latestamendment became effective on the same date (the “Fire Prevention Law”), the fire preventiondesign or construction of a construction project must conform to the national fire preventiontechnical standards. Any construction project that is subject to a fire prevention design under thenational fire prevention technical standards for project construction shall implement the fireprevention design review and acceptance system. No construction commencement permit orconstruction commencement approval report shall be given for the construction projects eitherfor which the prevention design has not been approved or which are considered unqualified afterthe review, nor shall such construction entity commence their construction. Upon completion ofa construction project, according to the requirements of the Fire Prevention Law, such projectmust go through an acceptance check on fire prevention by, or filed with, the relevant housing


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and urban-rural development authorities. No construction project subject to the acceptance checkon fire prevention may be put into use before it is accepted by the relevant housing andurban-rural development authorities.

Furthermore, according to the Fire Prevention Law, before a public gathering place is putinto use or opens for business, the owner or using entity shall apply to the fire and rescuedepartment for fire prevention safety inspection.

LAWS AND REGULATION RELATED TO ENVIRONMENT PROTECTION

The principal laws and regulations governing environment protection in the PRC includethe Environmental Protection Law of the PRC (《中華人民共和國環境保護法》), the AtmosphericPollution Prevention and Control Law of the PRC (《中華人民共和國大氣污染防治法》), theWater Pollution Prevention and Control Law of the PRC (《中華人民共和國水污染防治法》), thePrevention and Control of Solid Wastes Pollution Law of the PRC (《中華人民共和國固體廢物污染環境防治法》), the Prevention and Control of Noise Pollution Law of the PRC (《中華人民共和國環境噪聲污染防治法》), the Environment Impact Assessment Law of the PRC (《中華人民共和國環境影響評價法》), the Regulations on the Administration of Construction ProjectEnvironmental Protection (《建設項目環境保護管理條例》), the Interim Measures for theCompletion Inspections of Environment Protection Facilities of Construction Projects(《建設項目竣工環境保護驗收暫行辦法》). According to these laws and regulations, the construction entity,depending on the environmental impact a construction project has, shall submit an environmentimpact assessment report, statement or registration form to competent environmental protectionauthorities for approval before commencement. Upon the completion of the construction projectto which the environment impact assessment report or statement is applied, the constructionentity shall undertake self-inspections of the environmental protection facilities of suchconstruction project. In addition, the entities subject to the pollutant discharge permitmanagement shall discharge pollutants according to the requirements of pollutant dischargepermit, and shall not discharge pollutants without such permit.

The Regulations on the Management of Medical Waste (《醫療廢物管理條例》),promulgated by the State Council on 16 June 2003 and further amended and came into effect on8 January 2011, and the Implementation Measures for the Management of Medical Waste ofMedical and Health Institutions (《醫療衛生機構醫療廢物管理辦法》), promulgated by the MOHon 15 October 2003 and came into effect on the same day, stipulate that healthcare institutionsmust categorise the medical waste in accordance with the Classified Catalogue of Medical Waste(《醫療廢物分類目錄》) for management purpose and timely deliver medical waste to a medicalwaste disposal entity approved by the environmental protection administrative department at orabove the county level for centralized disposal.


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The Administrative Measures for the Licensing of Discharge of Urban Sewage into theDrainage Network (《城鎮污水排入排水管網許可管理辦法》), which was promulgated by theMinistry of Housing and Urban-rural Development on 22 January 2015 and came into effect on 1March 2015, provides that enterprises, institutions and individual industrial and commercialhouseholds engaging in industry, construction, catering and medical activities and dischargingsewage into the urban drainage network must apply for and obtain licenses for urban drainage.

LAWS AND REGULATION RELATED TO OCCUPATIONAL HAZARDS

According to the Law of the PRC on the Prevention and Control of Occupational Diseases(《中華人民共和國職業病防治法》) which was promulgated by the SCNPC on 27 October 2001and last amended on 29 December 2018, the employer shall create the working environment andcondition that comply with the national occupation sanitation standard for its employees, andadopt measures to secure the employee’s occupational sanitation protection. Where hazardousfactors of occupational diseases as listed in the Classification Catalog of Occupational Hazards(《職業病危害因素分類目錄》) exist in the workplace of the employer, the employer shall timelyand truthfully declare such hazards items to the local public health authority for supervision. Ifthe employer fails to declare in accordance with law, the public health authority may order it forrectification within a time limit, issue a warning and impose a fine ranging from RMB50,000 toRMB100,000.

LAWS AND REGULATION RELATED TO MEDICAL ADVERTISING

The Advertisement Law of the PRC (《中華人民共和國廣告法》) (“The AdvertisementLaw”), which was promulgated by the SCNPC on 27 October 1994, came into effect on 1February 1995, and last revised on 29 April 2021, provides that advertisements shall not containfalse statements and be deceitful or misleading to consumers. Advertisements legally required toreceive censorship, including those that are relating to medical treatment, pharmaceuticals andmedical devices, shall be reviewed by relevant authorities in accordance with relevant laws andregulations before being published. The Advertisement Law further stipulates that anyadvertisement for medical treatment, pharmaceuticals or medical devices shall not contain: (i)any assertion or guarantee for efficacy and safety; (ii) any statement on cure rate or effectiverate; (iii) any comparison with the efficacy and safety of other pharmaceuticals or medicaldevices or with other medical institutions; (iv) any use of endorsements or testimonials; or (v)other items as prohibited by laws and administrative regulations.

The Administrative Measures on Medical Advertisement (《醫療廣告管理辦法》), which waspromulgated in 1993 and jointly revised by the SAIC and the NHC on 10 November 2006 andcame into effect on 1 January 2007, requires that medical advertisement shall be reviewed byrelevant health authorities and obtain a Medical Advertisement Review Certificate (醫療廣告審查證明) before being released by a medical institution.


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REGULATIONS RELATED TO FOREIGN EXCHANGE CONTROLS

The PRC government imposes controls on the convertibility of Renminbi into foreigncurrencies and, in certain cases, the remittance of foreign currency out of the PRC. The SAFE isresponsible for administering all matters relating to foreign exchange, including the enforcementof the PRC foreign exchange control regulations.

The principal regulations governing foreign currency exchanges in the PRC are the ForeignExchange Administration Regulations of the PRC (《中華人民共和國外匯管理條例》) which waspromulgated by the State Council on 29 January 1996, and which became effective on 1 April1996 and was subsequently amended on 14 January 1997 and 5 August 2008, and the Regulationon the Administration of Foreign Exchange Settlement, Sale and Payment (《結匯、售匯及付匯管理規定》) which was promulgated on 20 June 1996 and became effective on 1 July 1996.

Under these existing PRC foreign exchange control regulations, all international paymentsand transfers are classified into current account items and capital account items. Foreigncurrency payments under current account items by domestic institutions, including payments forimports and exports of goods and services and payments of income and current transfers intoand outside the PRC must be either paid with their own foreign currency with validdocumentation or with the foreign currency purchased from financial institutions. Foreigncurrency income under current account items may be retained or sold to financial institutions.Foreign currency payments under capital account items include cross-border transfers of capital,direct investments, securities investments, derivative products and loans, and must be made outof a domestic institution’s own foreign currency with valid documentation or be made withforeign currency purchased from any financial institution. The payments of current account itemscan be made in foreign currencies without the prior approval from the SAFE, by complying withcertain procedural requirements. However, payments under the capital account items are subjectto significant foreign exchange controls and require the prior approval from the SAFE or theregistration with the SAFE or its designated banks.

Pursuant to the Circular of the SAFE on Further Simplifying and Improving the DirectInvestment-related Foreign Exchange Administration Policies (《國家外匯管理局關於進一步簡化和改進直接投資外匯管理政策的通知》) (the “SAFE Circular No.13”), which was promulgatedon 13 February 2015 and came into effect from 1 June 2015, the foreign exchange registrationunder domestic direct investment and foreign exchange registration under overseas directinvestment are directly reviewed and handled by banks in accordance with the SAFE CircularNo.13, and the SAFE and its branches shall indirectly regulate the foreign exchange registrationvia banks.


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On 23 October 2019, SAFE promulgated the Notice on Further Promoting the Facilitationof Cross-border Trade and Investment (《國家外匯管理局關於進一步促進跨境貿易投資便利化的通知》) (the “SAFE Circular No.28”), which came into force on the same day. SAFE CircularNo.28 cancels the restriction on domestic equity investment made with capital funds bynon-investment foreign-invested enterprises, expands the pilot program for facilitation ofdomestic payment under capital account, and relaxes the restriction on settlement and use offoreign exchange funds under capital account, etc..

LAWS AND REGULATIONS RELATED TO TAX

i. Enterprise Income Tax

According to the Enterprise Income Tax Law of the PRC (《中華人民共和國企業所得稅法》), promulgated by the NPC on 16 March 2007, amended by the SCNPC respectively on 24February 2017 and 29 December 2018 and which came into effect on 29 December 2018, and itsImplementation Regulations (《中華人民共和國企業所得稅法實施條例》) promulgated by theState Council on 6 December 2007, amended on 23 April 2019 and which became effective onthe same date (collectively, the “EIT Law”), enterprises are classified into resident enterprisesand non-resident enterprises. Enterprises, which are incorporated in the PRC or which areincorporated pursuant to the foreign laws with their “de facto management bodies” located in thePRC, are deemed “resident enterprise” and subject to an enterprise income tax rate of 25% ontheir global income. Non-resident enterprises are subject to (i) an enterprise income tax rate of25% on their income generated by their establishments or places of business in the PRC and itsincome derived outside the PRC which are effectively connected with their establishments orplaces of business in the PRC; (ii) an enterprise income tax rate of 10% on their income derivedfrom the PRC but not connected with its establishments or places of business located in thePRC; and (iii) non-resident enterprises without an establishment or place of business in the PRCare subject to an enterprise income tax of 10% on their income derived from the PRC.

ii. Withholding Income Tax

Pursuant to the EIT Law, dividends generated after 1 January 2008 and payable by aforeign invested enterprise in the PRC to its foreign investors are subject to a 10% withholdingincome tax, unless otherwise provided in the tax treaty concluded between the PRC and suchforeign investor’s jurisdiction of incorporation.

Pursuant to the Arrangement between the Mainland of China and the Hong Kong SpecialAdministrative Region for the Avoidance of Double Taxation and the Prevention of FiscalEvasion with respect to Taxes on Income (《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》) (the “Tax Treaty”) concluded on 21 August 2006, the applicablewithholding income tax payable by a PRC resident company which pays the dividends to a HongKong resident enterprise shall be not more than 5% of the total amount of dividends where abeneficial owner is an enterprise directly holding at least 25% capital of such PRC company, andin other cases, such applicable withholding income tax shall be not more than 10% of the totalamount of dividends.


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On 14 October 2019, SAT promulgated the Announcement of the Administrative Measureson Entitlement of Non-resident Taxpayers to Tax Treaty Benefits (《國家稅務總局關於發佈〈非居民納稅人享受協定待遇管理辦法〉的公告》) (the “SAT Announcement No.35”), which cameinto force on 1 January 2020. According to the SAT Announcement No.35, non-residenttaxpayers enjoying its tax treaty benefits shall adopt the method of “self-assessment, claim bydeclaration and retention of the relevant materials for review”. Where a non-resident taxpayerdeems that it is eligible for tax treaty benefits through self-assessment, it may, at the time offiling tax return or making withholding declaration by a withholding agent, enjoy tax treatybenefits, and simultaneously compile and retain the relevant materials for review, and be subjectto follow-up administration by the tax authorities.

iii. Value-added Tax

As our PRC subsidiary is taxpayer of value added tax, we are hence subject to the valueadded tax laws and regulations. Pursuant to the Interim Regulations of the PRC on Value AddedTax (《中華人民共和國增值稅暫行條例》) which was last amended on 19 November 2017 and itsimplementation regulations, all entities or individuals in the PRC engaged in the sale of goods,the supply of processing services, repairs and replacement services, and the import of goods arerequired to pay value-added tax (the “VAT”). VAT payable is calculated as “output VAT” minus“input VAT”. The VAT rate for the sale of goods or service, the lease of tangible movableproperty and the import of goods is 17%. In certain limited circumstances, the applicable VATrate is 11%, 6% or nil, depending on the product and service type.

Pursuant to the Notice of the MOF and the SAT on Adjusting Value-added Tax Rates (《財政部、稅務總局關於調整增值稅稅率的通知》), which was jointly issued by the MOF and SATon 4 April 2018 and became effective from 1 May 2018, VAT taxpayer who engages in taxablesales or import of goods and originally applies the tax rate of 17% and 11%, is subject to a VATtax rate of 16% and 10% respectively. According to the Notice of the MOF, the SAT and theGeneral Administration of Customs on Deepening the Policies Related to Value-Added TaxReform (《財政部、稅務總局、海關總署關於深化增值稅改革有關政策的公告》) issued on 20March 2019 and implemented on 1 April 2019, pursuant to which the tax rate of 16% and 10%applicable to the VAT taxpayers who engage in taxable sales or import of goods are adjust to13% and 9% respectively.


REGULATORY OVERVIEW

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LAWS AND REGULATIONS RELATED TO EMPLOYMENT AND SOCIAL SECURITY

i. Labour Law

The Labour Law of the PRC (《中華人民共和國勞動法》), which was passed by the SCNPCon 5 July 1994, came into effect on 1 January 1995, and was amended on 27 August 2009 and29 December 2018 respectively, provides that employees are entitled to gain equal opportunitiesin employment, choose occupations, receive labour remuneration, have rest days and holidays,acquire protection of occupational safety and healthcare, enjoy social insurance and welfare, etc.Employers must establish and improve the system for occupational safety and healthcare,provide training on occupational safety and healthcare to employees, comply with nationaland/or local regulations on occupational safety and healthcare, and provide necessary labourprotective supplies to employees.

ii. Labour Contract Law

The Labour Contract Law of the PRC (《中華人民共和國勞動合同法》) which was passedby the SCNPC on 29 June 2007, came into effect on 1 January 2008, and was amended on 28December 2012, and the Implementation Regulations on the Labour Contract Law of the PRC(《中華人民共和國勞動合同法實施條例》), which was promulgated by the State Council on 18September 2008, and came into effect on the same day (collectively, “the Labour ContractLaw”), provide that the labour contracts must be executed in order to establish the labourrelationship between employers and employees. The employer and employee shall fully performtheir respective obligations in accordance with the terms set forth in the labour contract.

iii. Social Insurance

Pursuant to the Social Insurance Law of the PRC (中華人民共和國社會保險法) which waspromulgated by the SCNPC on 28 October 2010 and became effective on 1 July 2011 and wasamended on 29 December 2018, and other relevant regulations, the employers are required tocontribute, for their employees, to a number of social insurance funds, including funds for basicpension insurance, unemployment insurance, basic medical insurance, work-related injuryinsurance and maternity insurance. If an employer fails to do so, the relevant social insuranceauthorities shall order the employer to make the outstanding social insurance contributionswithin a prescribed time limit, and may impose additional late payment fees and a fine on theemployer.

iv. Housing Provident Funds

Pursuant to the Regulations on the Administration of Housing Provident Funds (《住房公積金管理條例》) which were promulgated by the SCNPC on 3 April 1999 and became effective on3 April 1999, and as amended on 24 March 2002 and on 24 March 2019, the employers shall gothrough housing provident funds registration with the local housing provident fundadministration center and open housing provident fund accounts for its employees in the bank.Failure to comply with the above-mentioned registration and accounts opening procedures, an


REGULATORY OVERVIEW

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employer may be ordered to handling the same within a time limit. If an employer fails tohandle the same within prescribed time limit, it shall be imposed a penalty ranging fromRMB10,000 to RMB50,000. Also, the employers are required to make contribution to housingprovident funds for their employees. Where an employer fails to pay up housing provident fundswithin time limit, the housing provident fund administration center shall order it to make fullpayment in certain period of time, and if the employer still fails to do so, the housing providentfund administration center may apply to the court for enforcement of the unpaid amount.

LAWS AND REGULATIONS RELATED TO INTELLECTUAL PROPERTY

i. Copyright

According to the Copyright Law of the PRC (《中華人民共和國著作權法》) which waspromulgated by the SCNPC on 7 September 1990 and last amended on 11 November 2020 andits Implementation Rules (《中華人民共和國著作權法實施條例》) (collectively, the “CopyrightLaw”), works of Chinese citizen, entities or other organisations, whether published or not, shallenjoy copyright in accordance with the Copyright Law. The protection term of the publicationright where the work belongs to entity shall be fifty years, expiring on 31 December of thefiftieth year after the first publication of such work. However, any such work that has not beenpublished within fifty years after the completion of its creation shall no longer be protected bythe Copyright Law. A copyright shall subsist from the date of completion of the creation of awork.

ii. Trademark

According to the Trademark Law of the PRC (《中華人民共和國商標法》) (the “TrademarkLaw”) which was promulgated by the SCNPC on 23 August 1982 and last amended on 23 April2019 and its Implementation Rules (《中華人民共和國商標法實施條例》), the validity period of aregistered trademark in the PRC is 10 years from the date of registration. Where the registrantintends to continue to use the registered trademark beyond the expiration of the validity period,an application for renewal of registration shall be made within 12 months before the saidexpiration. Where no application has been filed within the said period, a grace period of sixmonths will be allowed. If no application has been filed by the expiration of the grace period,the registered trademark shall be deregistered.

iii. Patent

The Patent Law of the PRC (《中華人民共和國專利法》) (the “Patent Law”) waspromulgated by the SCNPC on 12 March 1984, last amended on 17 October 2020 and the latestamendment came into effect on 1 June 2021. The Patent Law aims to protect and encourageinvention, foster applications of invention and promote the development of science andtechnology. A patent is valid for a term of 20 years in the case of an invention and a term of tenyears in the case of a utility model and design, starting from the application date. The patenteeshall pay an annual fee from the year in which the patent is granted, and if the patentee fails todo so, the patent shall be terminated before the expiration of its duration.


REGULATORY OVERVIEW

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iv. Domain Name

Pursuant to the Administrative Measures on Internet Domain Names (《互聯網域名管理辦法》), which was promulgated by the Ministry of Industry and Information Technology of thePRC (the “MIIT”) on 24 August 2017 and became effective on 1 November 2017, domain nameowners are required to register their domain names and the MIIT is in charge of theadministration of PRC internet domain names. The domain name services follow a “first apply,first register” principle. Applicants for registration of domain names shall provide their true,accurate and complete domain name registration information of the domain name holder such asthe identity information, etc.


REGULATORY OVERVIEW

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OVERVIEW

We are an integrated medical and healthcare services provider based in the PRC, and wehave over 20 years of proven track record in the healthcare industry. We primarily engage in theoperation of Guangdong Clifford Hospital and certain ancillary healthcare facilities, including (i)a postnatal care centre, (ii) an elderly care service centre, (iii) a dental clinic and (iv) five retailpharmacies in Guangdong Province, the PRC. All of our principal operating subsidiaries areestablished in the PRC. Brief details of these principal operating subsidiaries are set out in theparagraph headed “Our Group” in this section below.

Apart from these principal PRC operating subsidiaries, our Group also has companiesincorporated in the Cayman Islands, BVI and Hong Kong. As of the Latest Practicable Date, allof such subsidiaries are investment holding companies.

Establishment of our Hospital

Our history traces back to 2001, when we obtained all necessary approvals to commencebusiness under the name of Guangzhou University of Chinese Medicine and Clifford Hospital(廣州中醫藥大學祈福醫院, “GUCM Clifford Hospital”) as a for-profit private medicalinstitution (民營營利性醫療機構). GUCM Clifford Hospital was established jointly byGuangzhou Clifford Estates (Panyu) Limited (廣州市番禺祈福新邨房地產有限公司, “CliffordEstates Ltd”) and Guangzhou University of Chinese Medicine (廣州中醫藥大學) (“GUCM”)pursuant to a cooperation agreement (“Clifford-GUCM Cooperation Agreement”) dated 30December 1999. Pursuant to the Clifford-GUCM Cooperation Agreement, among others, (i)Clifford Estates Ltd shall enjoy all property rights and all management rights of GUCM CliffordHospital; (ii) GUCM shall be entitled to reasonable management power and shall be paidconsultation fees; and (iii) after Clifford Estates Ltd has recovered the working capitalpreviously provided, Clifford Estates Ltd and GUCM shall be entitled to 70% and 30% of theprofit after tax of GUCM Clifford Hospital. Throughout the years, we had used the names“Guangzhou University of Chinese Medicine and Clifford Hospital (廣州中醫藥大學祈福醫院)”and “Guangdong Clifford Hospital (廣東祈福醫院)”.

At the time of establishment of GUCM Clifford Hospital, Clifford Estates Ltd held 100% ofthe interest in GUCM Clifford Hospital and was the de facto owner of GUCM Clifford Hospital,and all of the then interest of GUCM Clifford Hospital was contributed by Clifford Estates Ltdutilising its own financial resources. Clifford Estates Ltd is a limited liability company and wasthen indirectly owned as to 51% by Ms. Wendy Man’s Spouse and 49% by independent thirdparties during the period from 2001 to 2010.


HISTORY, REORGANISATION AND DEVELOPMENT

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Subsequent to a series of transfers in November 2010, GUCM Clifford Hospital was held asto 51% by Hospital Management PRC Co, 44% by Guangzhou Panyu Panfa Investment Co., Ltd.(廣州市番禺番發投資有限公司) (“GZ Pangyu Panfa”) and 5% by Guangzhou Panyu EstatesJoint Development Co., Ltd. (廣州市番禺區房地產聯合開發總公司) (“GZ Panyu Estates JointDevelopment”). At the time of the transfers, Hospital Management PRC Co was indirectlywholly owned by Ms. Wendy Man’s Spouse, and GZ Pangyu Panfa and GZ Panyu Estates JointDevelopment were independent third parties.

On 21 December 2011, through Southern United Assets & Equity Exchange (南方聯合產權交易中心) as property rights trading institution (產權交易機構), GZ Pangyu Panfa and GZPanyu Estates Joint Development agreed to transfer 44% and 5% of the interest in GUCMClifford Hospital to Hospital Management PRC Co at the respective considerations ofapproximately RMB87.03 million and RMB9.89 million, under two separate property rightstransaction contracts (產權交易合同). The considerations were determined having regard to thenet asset value of GUCM Clifford Hospital as of 30 June 2011 based on the assessment of anindependent valuer and taking into account the interest being transferred. Such considerationswere fully settled in December 2011 and November 2012 in cash respectively. After thetransfers, Hospital Management PRC Co owned the entire interest in GUCM Clifford Hospital.At the time of the transfers, Hospital Management PRC Co was indirectly wholly owned by Ms.Wendy Man’s Spouse.

Since the establishment of GUCM Clifford Hospital and up to June 2012, Ms. WendyMan’s Spouse has indirectly controlled the majority or all of the interest of GUCM CliffordHospital.

In response to the regulatory trend encouraging the registration of medical institutions withthe relevant authorities, Hospital Management PRC Co (which held the entire interest of GUCMClifford Hospital) completed filing with Guangzhou Industrial and Commercial AdministrationPanyu Branch (廣州市工商行政管理局番禺分局) for the establishment of our Hospital in June2012. Since the establishment of our Hospital and up to December 2020, Ms. Wendy Man’sSpouse has remained the ultimate beneficial owner of our Hospital.

After our Hospital having obtained a business licence, the Clifford-GUCM CooperationAgreement was terminated by mutual agreement between Clifford Estates Ltd and GUCM.Subsequently in January 2020, our Hospital has ceased to use the name of “GuangzhouUniversity of Chinese Medicine and Clifford Hospital (廣州中醫藥大學祈福醫院)” and itscurrent name of “Guangdong Clifford Hospital (廣東祈福醫院)” has since remained as the onlyname of our Hospital.

In December 2020, Ms. Wendy Man acquired the entire equity interest of BVI IntermediateHoldco (which is the then ultimate holding company of our Hospital) from Ms. Wendy Man’sSpouse. Upon completion of such acquisition, Ms. Wendy Man became the ultimate beneficialowner of our Hospital. For further details of the acquisition of BVI Intermediate Holdco, pleaserefer to the paragraph headed “Reorganisation – 1. Acquisition of Hospital HK Co and itssubsidiaries (including our Hospital) by Ms. Wendy Man” in this section below.



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Establishment of other PRC operating subsidiaries

Certain PRC operating subsidiaries of our Group, namely, Health Consultation PRC Co,Medical Inv Consultation PRC Co, Dental Care PRC Co, Pharmacy (Xinda) PRC Co, Pharmacy(Mingdu) PRC Co, Medical Examination PRC Co and Consultation PRC Co, were established byMs. Wendy Man (via companies ultimately and wholly owned by Ms. Wendy Man), using herpersonal financial resources, as of their respective establishments.

Certain PRC operating subsidiaries of our Group, namely, Postpartum Care PRC Co andElderly Home PRC Co were established by Ms. Wendy Man’s Spouse (via companies ultimatelyand wholly owned by Ms. Wendy Man’s Spouse), using his personal financial resources.

As for the remaining PRC operating subsidiaries, namely, each of Pharmaceuticals PRC Coand Medical Equipment PRC Co, was owned as to 90% by Guangzhou Clifford PropertyManagement Co., Ltd. (廣州祈福物業管理有限公司) (“Clifford Property Management”) and10% by a then employee of Clifford Property Management as of their respective establishmentsto allow for administrative and operational efficiency. Clifford Property Management was whollyand beneficially owned by Ms. Wendy Man’s Spouse via his wholly owned subsidiaries.

In late 2013, the entire registered capital in each of Postpartum Care PRC Co, ElderlyHome PRC Co, Pharmaceuticals PRC Co and Medical Equipment PRC Co became wholly andbeneficially owned by Ms. Wendy Man (via Business Favour Limited and its wholly ownedsubsidiaries), as a result of a series of acquisitions using her personal financial resources.

MILESTONES

Set out below are the key milestones of the development of our Group:

Time Milestone

2001 GUCM Clifford Hospital was established for engaging in the provision ofmedical services

2003 We were first given accreditation by the Joint Commission International,and subsequently our Hospital has remained to be a JCI-accredited entity byrenewals for seven times up to 2025

2006 Pharmaceuticals PRC Co was established for engaging in the wholesale ofpharmaceutical products

2008 We were rated as a Grade A Class III Chinese Medicine Hospital byTraditional Chinese Medicine Bureau of Guangdong Province (廣東省中醫藥局), being the highest classification of TCM hospitals



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Time Milestone

2009 Clifford Elderly Care for Residents was established to provide elderly careservices

2012 Clifford Postnatal Care Centre was established to provide postpartumhealthcare services

Our Hospital was established by Hospital Management PRC Co

2015 Our Hospital was recognised as a Baby Friendly Hospital (愛嬰醫院) by theNational Health and Family Planning Commission

2017 Phase II of our Hospital was opened

Our first retail pharmacy, Clifford Xinda Pharmacy (located at ourHospital’s area), commenced operations

2018 Our Hospital was accredited as a China Chest Pain Center (中國胸痛中心)in Guangdong Province by the Chinese Society of Cardiology (中華醫學會心血管病學分會), China Cardiovascular Association (中國心血管健康聯盟),China Chest Pain Center Accreditation Working Committee (中國胸痛中心認証工作委員會) and the Headquarter of Chest Pain Centers (胸痛中心總部)

2019 The Chest Pain Center of our Hospital obtained the highest score and rankedthe first in the PRC among the chest pain centers of standard hospitals,according to the China Chest Pain Centres QC Report 2019

Clifford Dental Clinic commenced its business in providing generaldentistry services

2020 Our Hospital was selected as an emergency vaccination site to provideCOVID-19 vaccination services by the Prevention Team of the Headquartersfor the Prevention and Control of COVID-19 in Panyu District GuangzhouCity (廣州市番禺區新型冠狀病毒肺炎疫情防控指揮部防治組)

2021 Our Hospital was rated as a Grade A Class III Chinese and WesternMedicine Hospital by Traditional Chinese Medicine Bureau of GuangdongProvince (廣東省中醫藥局), being the highest classification of Chinese andWestern Medicine hospitals

Our Hospital established the Clifford Elderly Nursing Centre (which is oneof our Hospital’s discipline of our Hospital) targeted at providing healthcareand caretaking services for elderly patients



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Our Company

Our Company was incorporated on 23 July 2021 in the Cayman Islands as an exemptedcompany with limited liability. As part of the Reorganisation, our Company became the holdingcompany of our Group. Please refer to the paragraph headed “Reorganisation” in this sectionbelow.

Our Group

As of the Latest Practicable Date, our Group comprised our Company, nine BVI companies,eight Hong Kong companies and 14 PRC companies, and all of our BVI companies and HongKong companies are investment holding companies. The following table contains brief details ofour Company and all our operating subsidiaries in the PRC as of the Latest Practicable Date:

EntityDate ofincorporation

Place ofincorporation

Amount of registeredcapital/ authorised

share capital

Amount of paid upcapital (or, where

applicable number ofissued shares)

Equityinterest

attributableto our Group Principal activities

Our Company 23 July 2021 CaymanIslands

HK$380,000 HK$10 N/A Investment holding

Our Hospital 20 June 2012 PRC RMB150.0 million RMB150.0 million 100% Hospital operation

Postpartum Care PRCCo

16 January 2012 PRC RMB1.0 million RMB1.0 million 100% Provision ofpostpartumhealthcare services

Elderly Home PRCCo

10 October 2009 PRC RMB1.0 million RMB1.0 million 100% Provision of elderlycare services

Medical EquipmentPRC Co

7 April 2005 PRC RMB500,000 RMB500,000 100% Procurement ofmedical equipment

Dental Care PRC Co 16 May 2017 PRC RMB5.3 million RMB5.3 million 100% Provision of dentalcare services

Medical ExaminationPRC Co

17 December 2020 PRC RMB5.0 million RMB1.0 million(Note)

100% Provision ofdisinfectionefficacy and generaltesting solutions

Pharmacy (Xinda)PRC Co

31 July 2017 PRC RMB1.3 million RMB1.3 million 100% Retail pharmacyoperation



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EntityDate ofincorporation

Place ofincorporation

Amount of registeredcapital/ authorised

share capital

Amount of paid upcapital (or, where

applicable number ofissued shares)

Equityinterest

attributableto our Group Principal activities

Pharmaceuticals PRCCo

17 July 2006 PRC RMB500,000 RMB500,000 100% Wholesale ofpharmaceuticalproducts

Consultation PRC Co 5 August 2021 PRC RMB1.0 million Nil(Note)

100% Provision of hospitalmanagementconsultancyservices

Note: According to the respective articles of association of the following subsidiaries, their respective registeredcapital is provided to be fully paid before the dates set out at the last column of the following table:

Name ofsubsidiary

Amount ofregistered capital

Amount of paid-up capital as of theLatest Practicable Date

Prescribed datefor payment ofthe remainingbalance of theunpaid registeredcapital

MedicalExaminationPRC Co

RMB5.0 million RMB1.0 million 30 November 2049

Consultation PRCCo

RMB1.0 million Nil 31 July 2051

For brief details of our subsidiaries incorporated in BVI and Hong Kong, please refer toparagraph 1.6 under Appendix V – “Statutory and General Information – 1. Further Informationabout our Group – 1.6 Information about our Group’s Members Incorporated in BVI or HongKong” in this document.



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CHANGE OF GROUP STRUCTURE DURING THE TRACK RECORD PERIOD

The corporate structure of our Company, our subsidiaries and some of the companies thenbeneficially owned by Ms. Wendy Man and Ms. Wendy Man’s Spouse (some of which wouldbecome our subsidiaries) as of 1 January 2019 is as follows:

Chart 1

Ms. Wendy Man

Ms. Wendy Man’s Spouse

BVI Intermediate Holdco(BVI)

Postpartum Care BVI Co(BVI)

Healthcare BVI Co(BVI)

Sino Stream(BVI)

Fit All(Hong Kong)

Clifford Biotech(PRC)

Health Consultation PRC Co(PRC)

Medical Inv ConsultationPRC Co(PRC)

Dental Care PRC Co(PRC)

Healthcare HK Co(Hong Kong)

Medical Equipment PRC Co(PRC)

Postpartum Care HK Co(Hong Kong)

Postpartum Care PRC Co(PRC)

Hospital Medical ManagementPRC Co(PRC)

Hospital ManagementPRC Co(PRC)

Our Hospital (Note)(PRC)

Hospital HK Co(Hong Kong)

100%

Polly Faith Limited(BVI)

100%

99.999% 0.001%

100%

100%

100%

100%

100%

100%

Elderly Home PRC Co(PRC)

100%

100%

100%

100%

100%

100% 100%

100% 100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

Business Favour(BVI)

Medical Examination BVI Co(BVI)

Pharmacy BVI Co(BVI)

Pharmacy HK Co(Hong Kong)

Pharmacy (Xinda) PRC Co(PRC)

Pharmacy (Mingdu) PRC Co(PRC)

Pharmaceuticals BVI Co(BVI)

Consultation BVI Co(BVI)

Certain members of WMNon-Healthcare Group

Offshore

Onshore

Consultation HK Co(Hong Kong)

Pharmaceuticals HK Co(Hong Kong)

Pharmaceuticals PRC Co(PRC)

Medical Examination HK Co

(Hong Kong)

Evergold Limited(Cayman Islands)

Elland Holdings Limited(BVI)

100%

100%

100%

100%

Establishment of New Subsidiaries

During the Track Record Period, the following new subsidiaries were set up in the PRC inconnection with expansion or growth of our operation and business:

(i) Medical Examination PRC Co (a limited liability company) was established (byMedical Examination HK Co) in December 2020 to engage in the provision ofdisinfection efficacy and general testing solutions; and

(ii) Consultation PRC Co (a limited liability company) was established (by ConsultationHK Co) in August 2021 to engage in the provision of hospital managementconsultancy services.



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Deregistration of our subsidiaries

During the Track Record Period, one of our subsidiaries, Pharmacy (Mingdu) PRC Co wasengaged in the operation of a retail pharmacy (“Mingdu Pharmacy”), while all the other retailpharmacies of our Group have been operated by Pharmacy (Xinda) PRC Co. Considering ourGroup’s strategy of expanding our retail pharmacy network and to consolidate the operation andmanagement of all our retail pharmacies under Pharmacy (Xinda) PRC Co, we proceeded withthe merger of Pharmacy (Mingdu) PRC Co with Pharmacy (Xinda) PRC Co in August 2021,such that Mingdu Pharmacy became operated by Pharmacy (Xinda) PRC Co (Clifford MingduBranch) (廣州市祈福新大藥房有限公司祈福名都分公司).

For the purpose of completing the registration procedures for the merger, Mingdu Pharmacysuspended its operation from June 2021 to August 2021. By a merger agreement dated 25 August2021 entered into between Pharmacy (Mingdu) PRC Co and Pharmacy (Xinda) PRC Co(“Merger Agreement”), Pharmacy (Xinda) PRC Co shall assume all of the assets and debts ofboth Pharmacy (Mingdu) PRC Co and Pharmacy (Xinda) PRC Co after the merger and therelevant filing is completed.

As a result of the merger, Pharmacy (Mingdu) PRC Co was deregistered in August 2021,and its original business which was then operated under the name of Mingdu Pharmacy has sincethen become operated by Pharmacy (Xinda) PRC Co. The registered capital of Pharmacy (Xinda)PRC Co increased from RMB1 million to RMB1.3 million. As of the Latest Practicable Date, allof our retail pharmacies has been centrally operated and managed under Pharmacy (Xinda) PRCCo.

Change in registered capital of our subsidiaries

During the Track Record Period and up to the Latest Practicable Date, our PRC subsidiariesunderwent the following changes in their registered capital:

(a) Health Consultation PRC Co

As of 1 January 2019, Health Consultation PRC Co had a registered capital ofRMB0.5 million and it was then wholly-owned by Clifford Biotech.

On 14 July 2020, a shareholder’s resolution of Health Consultation PRC Co waspassed to increase its registered capital from RMB0.5 million to RMB7 million by way ofadditional cash contribution by Clifford Biotech, its then sole equity-holder. The relevantfiling with the Guangzhou Panyu Administration for Market Regulation (廣州市番禺區市場監督管理局) (“Panyu AMR”) was completed on 15 July 2020. Clifford Biotech made suchadditional cash contribution from its own financial resources and the entirety of the cashcontribution was fully paid up on 30 September 2020.



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(b) Medical Inv Consultation PRC Co

As of 1 January 2019, Medical Inv Consultation PRC Co had a registered capital ofRMB0.5 million and it was wholly-owned by Health Consultation PRC Co.

On 16 July 2020, a shareholder’s resolution of Medical Inv Consultation PRC Co waspassed to increase its registered capital from RMB0.5 million to RMB6.9 million by way ofadditional cash contribution by Health Consultation PRC Co, its sole equity-holder. Therelevant filing with Panyu AMR was completed on 17 July 2020. Medical Inv ConsultationPRC Co made such additional cash contribution using its own financial resources and theentirety of the cash contribution was fully paid up on 30 September 2020.

(c) Dental Care PRC Co

As of 1 January 2019, Dental Care PRC Co had a registered capital of RMB4.3million and it was wholly-owned by Medical Inv Consultation PRC Co.

On 2 July 2020, a shareholder’s resolution of Dental Care PRC Co was passed toincrease its registered capital from RMB4.3 million to RMB5.3 million by way ofadditional cash contribution by Medical Inv Consultation PRC Co, its sole equity-holder.The relevant filing with Panyu AMR was completed on 3 July 2020. Dental Care PRC Comade such additional cash contribution from its own financial resources and the entirety ofthe cash contribution was fully paid up on 30 September 2020.

(d) Pharmacy (Xinda) PRC Co

As of 1 January 2019, Pharmacy (Xinda) PRC Co had a registered capital of RMB1million and it was wholly-owned by Pharmacy HK Co.

On 25 August 2021, a shareholder’s resolution of Pharmacy (Xinda) PRC Co waspassed to increase its registered capital from RMB1 million to RMB1.3 million by way ofmerger with Pharmacy (Mingdu) PRC Co. The relevant filing with Panyu AMR wascompleted on 27 August 2021. The increase in registered capital of RMB0.3 million waspreviously fully paid by the then shareholder of Pharmacy (Mingdu) PRC Co, and wasassumed by Pharmacy (Xinda) PRC Co pursuant to the Merger Agreement.

Save and except for the steps involved in the Reorganisation (including the acquisition ofHospital HK Co and its subsidiaries (including our Hospital)), during the Track Record Periodand up to the Latest Practicable Date, our Group did not conduct any material acquisitions ordisposal.



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Change in issued capital and/or owners of our Company

Our Company was incorporated on 23 July 2021.

At the time of incorporation of our Company, the initial authorised share capital of ourCompany was HK$380,000 divided into 38,000,000 Shares of HK$0.01 each. On 23 July 2021(i.e. the date of its incorporation), one subscriber Share (which had been allotted and issued,credited as fully paid up, to an officer of the secretarial company of our Company) wastransferred to International Health BVI (which was solely owned by Ms. Wendy Man).Immediately following completion of the above transfer, our Company was solely owned byInternational Health BVI.

As part of the Reorganisation, the issued capital of our Company underwent the followingchanges:

(i) on 23 August 2021, for the purpose of settling the consideration for the acquisition ofthe entire issued share capital of BVI Intermediate Holdco (with our Hospital beingone of its subsidiaries) by our Company, our Company allotted and issued 749 Shares,credited as fully paid, to International Health BVI; and

(ii) on 20 December 2021, our Company allotted and issued 250 Shares, credited as fullypaid, to International Health BVI for the purpose of settling the aggregateconsideration for the acquisition of the entire issued share capital in HealthcareIntermediate Holdco by our Company.

Following completion of the above Share issues, International Health BVI has remained asthe sole Shareholder of our Company holding 1,000 Shares in our Company.

Conditional on the share premium account of our Company being credited as a result of the[REDACTED], our Directors are authorised to [REDACTED] standing to the credit of the sharepremium account of our Company by applying that sum in paying up in full at par[REDACTED] Shares for allotment and issue to International Health BVI, on the assumptionthat its name appears in the register of members of our Company at close of business on [•].

It is contemplated that immediately after [REDACTED], on the assumption that[REDACTED]% of the entire issued shares of our Company was enlarged by the [REDACTED]being issued by our Company under the [REDACTED] (without taking into account any Shareswhich may be issued upon the exercise of the [REDACTED], and the options which have beenor may be granted under the [REDACTED] Share Option Scheme or the Share Option Scheme)will be held by the public, the Shares to be held by International Health BVI will representapproximately [REDACTED]% of the entire issued Shares of our Company. The Shares to beallotted and issued pursuant to such [REDACTED] shall rank pari passu in all respects with thethen existing Shareholder(s).



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See paragraph 1.2 under Appendix V – “Statutory and General Information – 1.2 Changesin the share capital in our Company” to this document for further details of the changes in ourCompany’s share capital.

REORGANISATION

The corporate structure of our Group and our subsidiaries as of 20 December 2020immediately prior to our Reorganisation is as follows:

Chart 2

100%

Medical Examination PRC Co(PRC)

Ms. Wendy Man



Sino Stream(BVI)

Fit All(Hong Kong)

Clifford Biotech(PRC)










Our Hospital (note)(PRC)


Ms. Wendy Man’s spouse

Polly Faith Limited(BVI)


100%

100%

100%

100%

100%


100%

100% 100%

100% 100%

100%

100%100%

100%

100%

100%

100%

100%

100%

100% 100%

0.001%99.999%

100%

100%

100%

Business Favour Limited(BVI)





Pharmacy (Mingdu) PRC Co(PRC)



Certain members of WMNon-Healthcare Group

Offshore

Onshore





(Hong Kong)

Evergold Limited(Cayman Islands)

Elland Holdings Limited(BVI)

100%

100%

100%

100% 100% 100% 100%100%

Note: In December 2020, our Hospital, as the sole organiser (舉辦者), established Clifford Health Service Centre(a PRC private non-enterprise entity), a non-profit medical and healthcare service entity to engage in theprovision of medical services for charitable purpose.

1. Acquisition of Hospital HK Co and its subsidiaries (including our Hospital) byMs. Wendy Man

(a) Transfer of Hospital HK Co to BVI Intermediate Holdco

By instruments of transfer and the related bought and sold notes both dated 21December 2020, Ms. Wendy Man’s Spouse and Polly Faith Limited (a companywholly-owned by Ms. Wendy Man’s Spouse) transferred 159,999 shares and one (1)share of Hospital HK Co to BVI Intermediate Holdco at the respective considerationsof HK$239,426,500 and HK$1,500. Such considerations were determined based on thefair value of the shareholder’s equity of Hospital HK Co (and its subsidiaries, whichincluded Hospital Medical Management PRC Co, Hospital Management PRC Co andour Hospital) attributable to the equity interest in Hospital HK Co as of 30 September2020 (“September 2020 Valuation”), being RMB210,390,000, as indicated in avaluation report issued by an independent valuer. The consideration for the transfer of



– 120 –

159,999 shares in Hospital HK Co was fully settled by a promissory note (“Skill Plus’Promissory Note”) issued by BVI Intermediate Holdco to Ms. Wendy Man’s Spouseon 21 December 2020; and the consideration for the transfer of one (1) share inHospital HK Co was fully settled by cash on 8 March 2022. Following completion ofthe above transfers, Hospital HK Co was solely owned by BVI Intermediate Holdco(then wholly owned by Ms. Wendy Man’s Spouse), and in such connection, each ofHospital HK Co, Hospital Medical Management PRC Co, Hospital Management PRCCo and our Hospital became a wholly-owned subsidiary of BVI Intermediate Holdco.

(b) Acquisition of BVI Intermediate Holdco by Ms. Wendy Man

By an instrument of transfer and a deed of assignment both dated 29 December2020, Ms. Wendy Man’s Spouse (i) transferred the entire issued share capital of BVIIntermediate Holdco and (ii) assigned the outstanding amount of HK$239,426,500 (asrecorded under the Skill Plus’ Promissory Note) to Ms. Wendy Man at the aggregateconsideration of HK$239,428,000. Such consideration was determined based on theSeptember 2020 Valuation, and it is therefore equivalent to the total consideration forthe acquisition of Hospital HK Co by BVI Intermediate Holdco in the previous step.For the purpose of settling such consideration, Ms. Wendy Man issued a promissorynote for the amount of HK$239,428,000 to Ms. Wendy Man’s Spouse (“Ms. WendyMan’s Promissory Note”) on 29 December 2020. As a result of the above assignment,the Skill Plus’ Promissory Note was cancelled. For family wealth planning purpose, on29 December 2020, Ms. Wendy Man and Ms. Wendy Man’s Spouse entered into a deedof waiver, pursuant to which Ms. Wendy Man’s repayment obligations under Ms.Wendy Man’s Promissory Note was fully waived. Following the completion of theabove transfers, Ms. Wendy Man became the sole owner of BVI Intermediate Holdco,and in such connection, she also became the ultimate beneficial owner of each ofHospital HK Co, Hospital Medical Management PRC Co, Hospital Management PRCCo and our Hospital.

2. Incorporation of our Company

On 23 July 2021, our Company was incorporated in the Cayman Islands as anexempted company with limited liability. Its initial authorised share capital wasHK$380,000 divided into 38,000,000 Shares of HK$0.01 each. On 23 July 2021 (i.e. thedate of its incorporation), one subscriber Share was allotted and issued, credited as fullypaid up, to an officer of the secretarial company of our Company; such share wastransferred to International Health BVI (which was solely owned by Ms. Wendy Man) onthe same date. Upon completion of the above transfer, our Company was solely owned byInternational Health BVI.



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3. Acquisition of BVI Intermediate Holdco by our Company

By an instrument of transfer dated 23 August 2021, our Company acquired the entireissued share capital of BVI Intermediate Holdco from Ms. Wendy Man for a considerationof HK$239,428,000, which was determined based on the September 2020 Valuation. For thepurpose of settling such consideration, on 23 August 2021, our Company allotted andissued 749 Shares (credited as fully paid) to International Health BVI, under the directionand order of Ms. Wendy Man. Upon completion of the above transfer, our Company becamethe ultimate holding company of each of BVI Intermediate Holdco and its then subsidiaries(namely, Hospital HK Co, Hospital Medical Management PRC Co, Hospital ManagementPRC Co and our Hospital), and International Health BVI remained as the sole Shareholderof our Company holding 750 Shares.

4. Exclusion of Clifford Biotech

Clifford Biotech is a company indirectly wholly-owned by Ms. Wendy Man, ourControlling Shareholder. Clifford Biotech is at business planning stage and is expected toengage in biotechnology-related research and development in the future. As of the LatestPracticable Date, it has not yet commenced any business. Considering that CliffordBiotech’s anticipated business is clearly delineated from our Group’s businesses and therisks and uncertainties involved, our Directors consider it is not in the best interest of ourCompany and its Shareholders as a whole to include Clifford Biotech in our Group for thepurpose of the [REDACTED]. For details of the reasons for the exclusion of CliffordBiotech from our Group, please refer to the section headed “Relationship with ourControlling Shareholders – Delineation of Business and Competition” in this document.

For the purpose of excluding Clifford Biotech while retaining its subsidiaries(including Health Consultation PRC Co, Medical Inv Consultation PRC Co and Dental CarePRC Co (which is principally engaged in the provision of dental care services)) in ourGroup, our Group underwent the following steps:

(i) on 3 August 2021, Business Favour Limited (a BVI company indirectly andwholly owned by Ms. Wendy Man) acquired the entire issued share capital inDental Care BVI Co (and its subsidiary Dental Care HK Co, both Dental CareBVI Co and Dental Care HK Co are investment holding companies) fromClifford Development Company Limited (a BVI company then indirectly andwholly owned by Ms. Wendy Man’s Spouse), at a nominal consideration ofUS$1;

(ii) on 7 September 2021, Dental Care HK Co established Dental Care WFOE in thePRC with registered capital of RMB5 million. As of the Latest Practicable Date,the registered capital of Dental Care WFOE has been fully paid up;



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(iii) pursuant to an agreement dated 16 September 2021, Dental Care WFOE agreed toacquire from Clifford Biotech the entire registered capital in Health ConsultationPRC Co (together with its subsidiaries, namely, Medical Inv Consultation PRCCo and Dental Care PRC Co), at the consideration of RMB4,395,900. Suchconsideration was determined based on the fair value of the shareholder’s equityof Health Consultation PRC Co as of 30 June 2021, being RMB4,395,900, asindicated in a valuation report issued by an independent valuer. Theconsideration for the transfer was fully settled by cash on 29 December 2021.The acquisition of Health Consultation PRC Co was completed on 22 September2021, and the relevant filing with Panyu AMR was completed on 22 September2021; and

(iv) upon completion, Business Favour Limited (through Dental Care BVI Co, DentalCare HK Co and Dental Care WFOE) held the entire equity interest in each ofHealth Consultation PRC Co, Medical Inv Consultation PRC Co and Dental CarePRC Co.

5. Acquisition of other BVI companies (which hold the remaining PRC subsidiariesof our Group) by Healthcare Intermediate Holdco

On 12 November 2021, Healthcare Intermediate Holdco was incorporated in the BVIwith authorised share capital of US$50,000 divided into 50,000 ordinary shares having apar value of US$1 each. As of the date of incorporation of Healthcare Intermediate Holdco,Business Favour Limited was its sole shareholder holding one (1) share having a par valueof US$1 in Healthcare Intermediate Holdco.

By the respective instruments of transfer all dated 17 December 2021, HealthcareIntermediate Holdco acquired from Business Favour Limited the entire issued share capitalin each of the following BVI companies (“BVI Target Companies”, which hold theremaining PRC subsidiaries of our Group through certain HK intermediate companies) atthe respective considerations as set out below:

BVI Target CompanyPRC subsidiaries of our Group then indirectlyhold by the relevant BVI Target Company

(a) Consideration(b) Manner and date of payment

(a) Postpartum Care BVI Co Postpartum Care PRC Co (a) HK$10,000(b) On 17 December 2021, Healthcare

Intermediate Holdco allotted and issuedone (1) share to Business Favour Limitedfor the purpose of settling suchconsideration



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BVI Target CompanyPRC subsidiaries of our Group then indirectlyhold by the relevant BVI Target Company

(a) Consideration(b) Manner and date of payment

(b) Healthcare BVI Co (1) Medical Equipment PRC Co(2) Elderly Home PRC Co

(a) HK$25,140,000(b) On 17 December 2021, Healthcare

Intermediate Holdco allotted and issued30 shares to Business Favour Limited forthe purpose of settling such consideration

(c) Dental Care BVI Co (1) Dental Care WFOE(2) Health Consultation PRC Co(3) Medical Inv Consultation PRC Co(4) Dental Care PRC Co

(a) HK$19,870,000(b) On 17 December 2021, Healthcare


(d) Medical ExaminationBVI Co

Medical Examination PRC Co (a) HK$10,000(b) On 17 December 2021, Healthcare


(e) Pharmacy BVI Co Pharmacy (Xinda) PRC Co (a) HK$3,480,000(b) On 17 December 2021, Healthcare

Intermediate Holdco allotted and issuedfour (4) shares to Business FavourLimited for the purpose of settling suchconsideration

(f) Pharmaceuticals BVI Co Pharmaceuticals PRC Co (a) HK$32,040,000(b) On 17 December 2021, Healthcare


(g) Consultation BVI Co Consultation PRC Co (a) HK$10,000(b) On 17 December 2021, Healthcare




– 124 –

The respective consideration for the acquisition of each of the BVI Target Companieswas determined based on the total net asset value of each of the BVI Target Company andits respective subsidiaries as of 31 December 2020 (based on the respective managementaccounts of such BVI Target Company and its subsidiaries for the year ended 31 December2020 (or a nominal consideration, if its total net asset value is negative)). For the purposeof settling such considerations, on 17 December 2021, Healthcare Intermediate Holdcoallotted and issued an aggregate of 99 shares to Business Favour Limited. Upon completionof the above transfers, the BVI Target Companies were directly owned by HealthcareIntermediate Holdco, and Business Favour remained as the sole shareholder of HealthcareIntermediate Holdco holding a total of 100 shares in Healthcare Intermediate Holdco.

6. Acquisition of Healthcare Intermediate Holdco (which holds the BVI TargetCompanies) by our Company

On 20 December 2021, our Company acquired from Business Favour Limited theentire issued share capital in Healthcare Intermediate Holdco at a consideration ofHK$80,560,000, which was determined based on the aggregated total net asset value as of31 December 2020 of all of each of the BVI Target Companies (together with theirrespective subsidiaries) held by Healthcare Intermediate Holdco (based on the respectivemanagement accounts of each of the BVI Target Company and its respective subsidiariesfor the year ended 31 December 2020). Such consideration is equivalent to the totalconsideration for the acquisition of all of the BVI Target Companies by HealthcareIntermediate Holdco in the previous step. On 20 December 2021, such consideration wassettled by way of the allotment and issue of 250 Shares by our Company to InternationalHealth BVI, under the direction and order of Business Favour Limited.

Immediately following the completion of the above transfer:

(i) Healthcare Intermediate Holdco was directly owned by our Company (togetherwith the BVI Target Companies) and, as a result, our Company became theultimate holding company of each of the PRC subsidiaries as held by the BVITarget Companies; and

(ii) International Health BVI remained as the sole shareholder of our Company,holding a total of 1,000 Shares.

7. Assignment and grant of licenses regarding trademarks used by our Group

In the past, certain trademarks used by members of our Group were registered underthe name of Clifford TM, for administrative convenience reasons.



– 125 –

As part of the Reorganisation:

(a) certain trademarks registered in the PRC currently used by our Group or relevantto our current businesses (but which are not used by the Private Group) weretransferred by Clifford TM to our Group without consideration pursuant to thePRC Trademark Transfer Agreements;

(b) a trademark registered in Hong Kong currently used by our Group or relevant toour current businesses (but which are not used by the Private Group) weretransferred by Clifford TM to Hospital HK Co at a nominal consideration ofHK$1; and

(c) certain trademarks registered in the PRC have been licenced by Clifford TM toour Group (on an exclusive basis) for a term of 10 years up to 6 February 2032without consideration pursuant to the PRC Trademark Licence Agreement.

Please refer to the section headed “Relationship with our Controlling Shareholders –Assignment and Licensing of Certain Trademarks owned by the Private Group” in this documentfor further details of the trademark transfer agreements/trademark assignment deed as mentionedin paragraphs (a) and (b) above and the section headed “Connected Transaction – ExemptedContinuing Connected Transactions – 3. PRC Trademark Licence Agreement” in this documentfor further details of the trademark licence agreement as mentioned in paragraph (c) above.

Upon completion of the Reorganisation in December 2021, our Company became theholding company of our Group. Our PRC Legal Adviser advised that in all material aspects, allour Reorganisation steps were legal and valid, and all requisite approvals, permits and licensesrequired for each stage of Reorganisation within the PRC have been obtained and all thenecessary filings and registration have been effected.

Our Hospital was established and registered with Guangzhou Industrial and CommercialAdministration Panyu Branch on 20 June 2012 and Hospital HK Co indirectly held 100% equityinterests of our Hospital through Hospital Medical Management PRC Co and HospitalManagement PRC Co, and such corporate structure of our Hospital has remained unchangeduntil the completion of our Reorganisation. We completed the registration with competentadministration of industry and commerce in respect of the establishment of our Hospital in June2012.

Our PRC Legal Adviser consulted Guangzhou Panyu District Science and TechnologyIndustry and Information Technology Bureau (廣州市番禺區科技工業商務和信息化局), which isa competent authority for foreign investment, and the above bureau is of the view that suchinvestment by a re-investment company of a foreign-invested company is regarded asre-investment by domestic enterprises and therefore the Special Administrative Measures(Negative List) for the Access of Foreign Investment is not applicable. Further, our PRC LegalAdviser and the legal adviser as to PRC laws of the Sole Sponsor also conducted face-to-face



– 126 –

interviews with Guangzhou Municipal Health Commission (廣州市衛生健康委員會) (the“Health Commission”), Guangzhou Panyu Health Bureau (廣州市番禺區衛生健康局) (“HealthBureau”) and the Traditional Chinese Medicine Bureau of Guangdong Province (廣東省中醫藥局), which are competent authorities of the regulatory body relating to our healthcare andhospital-related operations, and the Health Commission, Health Bureau and the TraditionalChinese Medicine Bureau of Guangdong Province confirmed that our Hospital is administratedas a domestic funded medical institution. And the Health Bureau also confirmed that DentalCare PRC Co and Clifford Health Service Centre are administrated as a domestic funded medicalinstitutions. Based on the above, our PRC Legal Adviser are of the view that the legalformalities carried out for such establishment and investments are legal and valid, and each of(i) Hospital HK Co indirectly holding 100% equity interests of our Hospital and (ii) Dental CareHK Co indirectly holding 100% equity interests of Dental Care PRC Co and Hospital HK Coindirectly holding Clifford Health Service Centre through our Hospital are not in violation of therelevant PRC regulations in relation to the restriction of the foreign investment in medicalinstitutions.

Our PRC Legal Adviser also advised that as Ms. Wendy Man (being the ultimate beneficialowner) is not a PRC domestic resident, it is unnecessary for her to effect registration under theSAFE Circular No. 37.

The corporate structure of our Group and our subsidiaries immediately after theReorganisation but before completion of the [REDACTED] is as follows:

Chart 3

Consultation PRC Co(PRC)

100%


100%

Medical Examination PRC Co(PRC)

Ms. Wendy Man




Dental Care BVI Co(BVI)

Dental Care HK Co(Hong Kong)

Dental Care WFOE(PRC)










Our Hospital (note)(PRC)


100% 100%

100%

100%

100%

100%

100%


100%

100%

100%

100%

100%

100% 100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

Healthcare Intermediate Holdco(BVI)






Offshore

Onshore





(Hong Kong)

Our Company(Cayman Islands)

International Health BVI(BVI)

100%

100%

100%

Note: Please refer to the note set out in “– Chart 2”.



– 127 –

Chart 4

The corporate structure of our Group and our subsidiaries immediately followingthe completion of the [REDACTED] and the [REDACTED] (without taking intoaccount any Shares which may be allotted and issued pursuant to the exercise of the[REDACTED] and any options which have been or may be granted under the[REDACTED] Share Option Scheme or the Share Option Scheme) will be as follows:

[REDACTED]



– 128 –

OVERVIEW

We are an integrated medical and healthcare services provider based in the PRC, and wehave over 20 years of proven track record in the healthcare industry. We primarily engage in theoperation of Guangdong Clifford Hospital and certain ancillary healthcare facilities including (i)a postnatal care centre, (ii) an elderly care service centre, (iii) a dental clinic and (iv) five retailpharmacies in Guangdong Province, the PRC. With a wide range of healthcare facilitiesintegrated under Guangdong Clifford Hospital, our Group provides comprehensive medical andhealthcare services under the “Medical + Care model” (醫養模式).

We operate our hospital business through Guangdong Clifford Hospital, which is afor-profit private traditional Chinese medicine and Western medicine integrated hospital (中西醫結合醫院), i.e. Chinese and Western Medicine Hospital, located in Panyu, Guangzhou. Since theinception of our Group in the early 2000s, we aspire to build an international medical institutionunder the “Clifford” brand for providing high-quality medical and healthcare services, which arerecognised by international standards in terms of patient care, public health and hospitalmanagement systems. With our Group’s commitment and effort, shortly after the commencementof its business in 2001, our Hospital has become accredited in 2003 by the Joint CommissionInternational (JCI), which is recognised worldwide as one of the highest benchmarks for qualityand safe healthcare services. According to the F&S Report, our Hospital is the first hospital inthe PRC and the second hospital in Asia to become accredited by the JCI. After 20 years ofdevelopment, we believe Guangdong Clifford Hospital has continued to provide highly regardedmedical and healthcare services, and has become one of the leading private general hospitals inthe PRC, as evidenced by, among other things, the following:

➢ our Hospital has since 2003 been holding the JCI-accreditation (reviewed generally ona three-year term) up to 2025; according to the F&S Report, our Hospital is thesecond largest JCI-accredited private general hospital in the PRC in terms of revenuein 2020;

➢ our Hospital had been rated as a Grade A Class III (三級甲等) Chinese MedicineHospital in 2008 (being the highest classification of Chinese Medicine Hospitals) andhas subsequently been rated as a Grade A Class III Chinese and Western MedicineHospital (being the highest classification of Chinese and Western Medicine Hospitals)since 2021, both of which were issued by the Traditional Chinese Medicine Bureau ofGuangdong Province (廣東省中醫藥局);

➢ according to the F&S Report, our Hospital is the largest for-profit private generalhospital in both the Greater Bay Area and Guangdong Province in terms of registeredbeds in 2021; and

➢ during the Track Record Period, our Hospital had over 3,400,000 out-patient visits andover 92,000 in-patient visits, respectively; as of 31 December 2021, our Hospital had2,100 registered beds and 1,352 beds in operation.


BUSINESS

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Located in Panyu, Guangzhou, our Hospital primarily serves patients in GuangdongProvince and its vicinity. It is strategically positioned to service a wider geographic region incentral and southern China, in particular, the Greater Bay Area. During the Track Record Period,majority of our Hospital’s patients reside in Guangdong Province and the Greater Bay Area,while other patients primarily reside in other provinces in or around central and southern China.

The Greater Bay Area is the economic center of southern China, with a resident populationof 85.4 million, a regional GDP of RMB11.5 trillion and a per capita GDP of RMB134,775.4.Among municipalities directly under the Central Government and prefecture-level cities,Shenzhen, Zhuhai and Guangzhou ranked 5th, 9th and 12th with per capita GDP ofRMB159,309.1, RMB145,645.2 and RMB135,047.2 respectively. The higher economic levelprovides strong support for the construction of medical infrastructure, as well as releasing thedemand for high-quality medical services, promoting the continuous improvement of the medicalstandards in the Greater Bay Area. In 2020, the elderly population over the age of 60 in theGreater Bay Area reached 9.6 million, accounting for 11.1% of its total population, while theelderly population of Hong Kong, Macau, Jiangmen, Zhaoqing and Guangzhou accounted for27%, 19.9%, 18.3%, 16.4%, and 11.4% of their respective total population. The aging populationin the Greater Bay Area leads to a high population base for chronic diseases, which willsubsequently increase the demand for medical services. The healthcare expenditures of theGreater Bay Area are leading in the PRC and it continues to grow. The healthcare expendituresof the Greater Bay Area are leading in the country and continues to grow. In 2020, thehealthcare expenditure in Guangdong Province was RMB631.3 billion; the healthcareexpenditure of Hong Kong in 2019/20 was HKD189.6 billion (RMB168.7 billion), the healthexpenditure of Macau in 2020 was MOP8.9 billion (RMB7.7 billion). High healthcareexpenditure implies that the region has great demand for high-quality medical services.

Following our motto “With Doctors’ Benevolence, We Care for Lives” (醫者仁心，關愛生命), we strive to provide high-quality, reasonably-priced, efficient and safe medical andhealthcare services to our patients and customers, by utilising the essence of western medicine,and Traditional Chinese medicine. We aim to build Guangdong Clifford Hospital into afirst-class modernised Chinese and Western Medicine hospital in the PRC which connected withthe world, by building a first-class team of medical professionals, maintaining prestigiousreputation, improving our management systems, cultivating high-quality service system, in orderto build the best medical and healthcare model with traditional Chinese medicine and westernmedicine characteristics.

We aspire to establish our Group and the “Guangdong Clifford Hospital” and “CliffordHealth” (祈福醫療) brands as a patient-centric and quality-focused comprehensive medical andhealthcare services provider under the “Medical + Care” model. Complementing the medicalservices rendered by Guangdong Clifford Hospital, our Group provides a wide spectrum ofancillary healthcare services, including rendering of postpartum healthcare services by CliffordPostnatal Care Centre (祈福月子中心), elderly care services by Clifford Elderly Care forResidents (祈福居民護老服務), dental care services provided by Clifford Dental Clinic (祈福口腔門診部) and sales of pharmaceutical products (by way of both wholesale to pharmaceuticaldistributors and retail sales at our Clifford Xinda Pharmacies (祈福新大藥房)).


BUSINESS

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Our Group(note) 1,083,013 864,708 1,206,239

FY2019 PE2020(RMB’000) (RMB’000)

The Healthcare Group(note) 332,724 223,851

Note: For FY2019 and FY2020 (or PE2020), the respective revenue of our Group and the Healthcare Groupincluded inter-group sales between each other (such as sales of pharmaceuticals by the Healthcare Groupto our Group).

During the Track Record Period, our revenue amounted to approximately RMB1,083.0million, RMB864.7 million and RMB1,206.2 million, respectively. The decrease in our revenuein FY2020 was primarily due to the decrease of patient visits and in-patient bed-days in 2020 asa result of the outbreak of COVID-19. And the increase in revenue in FY2021 was primarily dueto (i) the gradual recovery of our business from the impact of the COVID-19 outbreak and (ii)the revenue contributed by the Healthcare Group being combined with our Group since 29December 2020.

The following table sets forth the breakdown by business segments and revenue streams ofthe revenue of our Group for the years indicated:


The hospital business segment– Out-patient hospital services 303,967 28.1 316,246 36.6 471,533 39.1– In-patient hospital services 474,571 43.8 347,870 40.2 399,741 33.1– Sales of pharmaceuticals 298,022 27.5 195,470 22.6 254,505 21.1– Ancillary services related to

hospital operation 6,453 0.6 5,122 0.6 12,149 1.0

Sub-total 1,083,013 100.0 864,708 100.0 1,137,928 94.3


BUSINESS

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The healthcare andpharmaceutical businesssegment– Postpartum healthcare services – – – – 24,267 2.0– Elderly care services – – – – 8,624 0.7– Dental care services – – – – 4,051 0.4– Sales of pharmaceuticals – – – – 31,369 2.6

Sub-total – – – – 68,311 5.7

Total 1,083,013 100.0 864,708 100.0 1,206,239 100.0

COMPETITIVE STRENGTHS

We believe that the following competitive strengths allow us to capitalise on the growthpotential of healthcare industry.

We have established the “Guangdong Clifford Hospital” and “Clifford Health” (祈福醫療)brands as a high-quality medical and healthcare services provider

International and national accreditation

Since our establishment, we have always adhered to our mission of providing high-qualitymedical and healthcare services, which are recognised by international standards in terms ofpatient care, public health and hospital management systems. Shortly after the commencement ofour hospital business in 2001, our Hospital has become accredited in 2003 by the JointCommission International (JCI), which is recognised worldwide as one of the highestbenchmarks for quality and safe healthcare services. According to the F&S Report, our Hospitalis the first hospital in the PRC and the second hospital in Asia to become accredited by the JCI.Our Hospital has since 2003 been holding the JCI-accreditation (reviewed generally on athree-year basis) up to 2025.

In the PRC, our Hospital has also been rated as a Grade A Class III Chinese and WesternMedicine Hospital since 2021, and it had previously been rated as a Grade A Class III ChineseMedicine Hospital since 2008 by the Traditional Chinese Medicine Bureau of GuangdongProvince.


BUSINESS

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Our Hospital’s market position is also evidenced by the following industry rankings basedon the F&S Report, our Hospital is:

➢ the largest for-profit private general hospital in both the Greater Bay Area andGuangdong Province in terms of registered beds in 2021;

➢ the second largest JCI-accredited private general hospital in the PRC and the fourthlargest and 12th largest for-profit private general hospital in Guangdong Province (andthe Greater Bay Area) and the PRC, respectively, all in terms of revenue in 2020;

➢ the third largest for-profit private general hospital in both the Greater Bay Area andGuangdong Province in terms of beds in operation in 2021; and

➢ the fourth largest for-profit private general hospital in the Guangdong Province interms of number of out-patients in 2020.

Highly regarded medical capabilities of our Hospital

After 20 years of development, the medical capabilities of our Hospital are highly regardedin the healthcare industry, as evidenced by, among other things, the following:

➢ Our Hospital was accredited with (i) two National Administration of TraditionalChinese Medicine Key Discipline Development Projects (國家中醫藥管理局重點專科建設項目) in pediatrics (兒科) and psychiatry (神志病科(心理科)) accredited by theNational Administration of Traditional Chinese Medicine of the PRC in 2012; (ii) oneGuangdong Provincial Key Traditional Chinese Medicine Discipline (廣東省中醫重點專科) in orthopedics (骨傷科) in 2019 and six Guangdong Provincial Key TraditionalChinese Medicine Disciplines, namely, nephrology (腎病科(腎內科)), gynecology (婦科), oncology (腫瘤科), cardiology (心病科(心內科)), endocrinology (內分泌科) andneurology (腦病科(神經內科)) in 2018, all of which were accredited by the TraditionalChinese Medicine Bureau of Guangdong Province; and (iii) three disciplines (namely,orthopedics (骨傷科), gastroenterology (脾胃病科(消化內科))) and pulmonary disease(respiratory) (肺病科(呼吸內科)) were listed on the Development Project List of KeyTraditional Chinese Medicine Specialty in Guangzhou City (2020–2022) (廣州市中醫重點專科(2020–2022)建設項目名單) in 2019, accredited by Guangzhou MunicipalHealth Commission (廣州市衛生健康委員).

➢ In 2009, our Hospital’s oncology (腫瘤科) and pediatrics (兒科) was accredited asGuangdong Provincial Famous Discipline of Traditional Chinese Medicine (廣東省中醫名科) by the People’s Government of Guangdong Province (廣東省人民政府).

➢ Based on the China Chest Pain Centres Quality Control Report (2019) (中國胸痛中心質控報告 2019), the Chest Pain Centre of our Hospital obtained the highest score andranked the first in the PRC amongst the chest pain centres of standard hospitals.


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➢ Our Hospital is recognised by the Chinese Association of Chinese Medicine (中華中醫藥學會) as a National Research Centre of Traditional Chinese Medicine for BreastDisease Prevention and Treatment (全國中醫乳腺病防治研究中心).

Brand and reputation-led continuous growth

Our “Guangdong Clifford Hospital” and “Clifford Health” brands continue to be recognisedby our customers in Guangdong Province and central and southern China. During the TrackRecord Period, majority of our Hospital’s patients reside in Guangdong Province and the GreaterBay Area. To meet the needs of high-end foreign customers with international medical insurance,our International Health Management Centre (國際健康管理中心) provides various types ofnon-medical services to suit our foreign patients, such as assisting them in handling applicationswith international insurers through their local counterparts.

Notwithstanding the outbreak of Novel Coronavirus Disease 2019 (COVID-19), we did notstop providing treatment and care to our patients. Our Hospital proactively participates incontrol and prevention measures to combat COVID-19 and serves the community, with thestrong medical capabilities and reputation of our Hospital, our Hospital had been designated bythe Prevention Team of the Headquarters for the Prevention and Control of COVID-19 in PanyuDistrict Guangzhou City (廣州市番禺區新型冠狀病毒肺炎疫情防控指揮部防治組) as anemergency vaccination site to provide COVID-19 vaccination services for the neighbourhood inDecember 2020, and our Hospital had been designated by the Vaccination Implementation andMedical Treatment Team of the COVID-19 Vaccination Leading Group of Guangdong Province(廣東省新冠病毒疫苗接種工作領導小組疫苗接種實施和醫療救治組) as a vaccination site toprovide such services to foreigners and residents of Hong Kong, Macau and Taiwan, being theonly such vaccination site in Panyu.

As our brand continues to embrace high-quality medical and healthcare services, theserecognitions will enhance our position to expand our market share and capture new businessopportunities. Capitalising on our brand and existing clientele, our Hospital plans to expand itsservice offerings to aesthetic medical services and assisted reproductive services. As of theLatest Practicable Date, our Hospital is taking preparatory steps for the expected establishmentof its aesthetical medicine and assisted reproductive disciplines, including but not limited toentering into a reproductive medicine alliance cooperation agreement with the University ofHong Kong-Shenzhen Hospital (香港大學深圳醫院) for its supervision and training andexchange arrangements of our Hospital’s medical professionals. For further details of theexpected service offerings of aesthetic medical services, please refer to the paragraph headed“Our Medical Services – Other tailored services delivered at our Hospital – Aesthetic medicalservices” in this section.


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Readily available Phase II Building for rapid expansion of our Hospital

Our Hospital mainly comprises the Phase I Building which was opened in 2002 and thePhase II Building which was opened in 2017. As of 31 December 2021, our Hospital primarilyconsisted of (i) the Phase I Building with 19 storeys and a GFA of approximately 59,000 sq.m.;and (ii) the Phase II Building with 29 storeys and a GFA of approximately 180,000 sq.m.. Wehave reserved a certain portion of the Phase II Building for expansion of our operationalcapacity, which can be put into use after procurement of necessary medical equipment andfurniture and formation of medical teams within a short time frame. As no further constructionis necessary, our Group is not expected to incur substantial capital expenditure in relation tosuch expansion plan. As of 31 December 2021, our Hospital had 1,352 beds in operation (whichrepresents the maximum number of beds available for our Hospital’s clinical services offered toour patients), which is below 65% of our 2,100 registered beds that our Hospital canaccommodate.

With the advantage of readily available space, our Hospital is capable of growing rapidly ata relatively low cost in response to the growing demand for medical services in the PRC.Capitalising on our Hospital’s medical capabilities, existing clientele and medical resources, weplan to utilise the Phase II Building of our Hospital to establish 5 new disciplines and 14 newsub-disciplines (under existing key disciplines) and expand 2 existing key disciplines, whichinvolves adding up to approximately 750 beds in operation to our Hospital’s operationalcapacity. For further details of the expansion of our Hospital’s operational capacity, please referto the paragraph headed “Strategies – Continue to expand our Hospital operations throughOrganic Growth” in this section.

Our Group provides comprehensive medical and healthcare services under the “Medical +Care” model, creating synergy and improving our overall healthcare services

We are an integrated medical and healthcare services provider in the PRC, and ouroperations cover (i) comprehensive medical services provided by our Hospital, (ii) postpartumhealthcare services provided by Clifford Postnatal Care Centre (祈福月子中心); (iii) elderly careservices provided by Clifford Elderly Care for Residents (祈福居民護老服務); (iv) dental careservices provided by Clifford Dental Clinic (祈福口腔門診部); and (v) sales of pharmaceuticalproducts at our retail pharmacies under the brand of Clifford Xinda Pharmacies (祈福新大藥房)and wholesale to pharmaceutical distributors. All of such facilities are located within GuangdongProvince, and we enjoy leverage on our combined expertise and resources. We believe that ourintegrated medical and healthcare model brings about significant business synergy, expandsexisting business streams and creates new business opportunities.

As an integrated medical and healthcare services provider, we believe we can offer ourcustomers a wide spectrum of healthcare services to cater for a wider bandwidth of marketdemand. By providing professional healthcare services whilst being considerate of our patients’various needs, we believe our patients will select us as their preferred healthcare serviceprovider. Our Hospital has been and will continue to serve as a solid foundation with abundantmedical resources and medical training, supporting the operations of our ancillary healthcare


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services. During the Track Record Period, our Hospital from time to time refers potentialcustomers (a significant portion of whom were patients of our Hospital, in need of ancillaryhealthcare services) to Clifford Postnatal Care Centre and Clifford Elderly Care for Residents.Our Hospital also enhances our reputation and confidence with our existing customers as well aspotential customers for our ancillary healthcare facilities, which distinguishes us from otheroperators of postnatal care centres, elderly care service centre, dental clinics or retailpharmacies. We believe that our commitment to serve the community by providing free or withdiscount medical assistance (through our Hospital and Clifford Health Service Centre) andeducation seminars, not only benefit the needed but also promote the brand awareness andreputation of our Hospital and our ancillary healthcare facilities.

Our Group has also been able to benefit from the economy of scale, as we centraliseprocurement of pharmaceuticals, medical consumables and medical equipment for our variousbusinesses. Centralised and bulk procurement enhances our bargaining power to a certain extent.Further, we believe that by leveraging our experience in the healthcare services industry and ourmedical resources, we are able to offer a more comprehensive scope of medical and healthcareservices at competitive prices, while providing our customers with streamlined processes andsatisfying experience.

Experienced Medical Professionals

We believe our experienced and stable medical professionals are key to providinghigh-quality healthcare services. As of 31 December 2021, our Hospital had 1,236 medicalprofessionals, including 421 doctors, of which 32 were chief doctors, 98 were associate-chiefdoctors and 291 were other doctors and 815 other medical professionals.

Our doctors possess extensive experience and are qualified medical professionalsspecialised in their respective fields. As of 31 December 2021, our doctors had on averagearound 13 years of working experience, and our chief doctors had on average over 20 years ofworking experience.

Our Hospital has established research and teaching collaborations with various institutionsin the PRC such as Jinan University (暨南大學), Guangzhou University of Chinese Medicine (廣州中醫藥大學) and the Third Affiliated Hospital of Sun Yat-Sen University (中山大學附屬第三醫院). In 2014, our Hospital and Jinan University have jointly established the “Jinan UniversitySchool of Medicine – Guangdong Clifford Hospital Transformational Medical Research Centre(暨南大學醫學院-廣東祈福醫院轉化醫學研究中心)” to facilitate the joint research initiative,which primarily focuses on new treatments and therapies. In 2018, our Hospital and JinanUniversity entered into a framework agreement, pursuant to which the parties agreed to makearrangements for our Hospital to be recognised as a non-administered affiliated hospital (非直屬附屬醫院) of Jinan University. In addition, our Hospital partnered with Guangzhou University ofChinese Medicine, Qilu Medical University (齊魯醫藥學院), Xiangtan Medicine & HealthVocational College (湘潭醫衛職業技術學院), Guangzhou Huaxia Vocational College (廣州華夏職業學院) and Yiyang Medical College (益陽醫學高等專科學校) to provide internship and


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placement opportunities for their students. We believe that these collaborations enhance ourprofile in the healthcare industry and help us attract top quality medical professionals, and toidentify potential talent and recruit them early on.

Experienced and Dedicated Management Team

We are led by an experienced and stable management team, which has extensive experiencein the healthcare industry. Our executive Directors and senior management team have on averageover 14 years of work experience in the healthcare industry. Dr. Zhang, an executive Directorand the chief executive officer of our Group, has over 27 years of experience in the healthcareindustry. Dr. Zhang joined our Hospital in 2001, shortly after it had commenced businesses, andshe has been a deputy medical superintendent (副院長) of our Hospital since 2008, and she iscurrently the medical superintendent (院長) of our Hospital. Our other executive Directors alsopossess a range of 16 to 28 years of experience in the healthcare industry, yielding an average ofapproximately 22 years among them. Four of our executive Directors (including Dr. Zhang (themedical superintendent of our Hospital) and Dr. Ou Junwen, Dr. Zhuang Lei and Dr. Zhao Hui(all holding chief doctor qualifications)) and five members of our senior management (includingtwo chief doctors and two associate-chief doctors) are doctors practising in our Hospital. Theoverall management and operation of our Hospital is overseen by its executive council (the“Hospital Executive Council), which is responsible for making major decisions regarding allessential aspects of our Hospital, including approving implementation plans, development plansof our Hospital, establishment of new disciplines, introduction and procurement medicalequipment, medical training plans and medical research projects. The Hospital ExecutiveCouncil is led by Dr. Zhang (an executive Director and the chief executive officer of our Group)as the chairperson, and its members include Ms. Wendy Man and Dr. Ou Junwen (both of whichare members of our Board).

We believe that with our management team’s in-depth knowledge of hospital operations andfirst-hand experience of working with medical professionals, our Group will be able to improvecontinuously the quality of our hospital and healthcare operations. Under the leadership of ourmanagement team, we believe that our Group will achieve progressive expansion through theformulation of effective business strategies, exploration of potential opportunities in thehealthcare industry and other business opportunities to maximise our Shareholders’ value.


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STRATEGIES

We strive to further strengthen our position as an integrated medical and healthcare servicesprovider in the PRC by providing comprehensive healthcare services in the PRC. To achievethese goals, we plan to implement the following business strategies.

Continue to expand our Hospital operations through Organic Growth

We expect to accommodate anticipated growing demand for the healthcare services throughmaximising our existing capacity and expanding our service capabilities. As of 31 December2021, our Hospital primarily consisted of the Phase I Building with a GFA of approximately59,000 sq.m. and the Phase II Building with a GFA of approximately 180,000 sq.m. Currently, acertain portion of the Phase II Building have been reserved for optimising our operationalcapacity and providing healthcare services for in-patients, and will add up to approximately 750additional beds in operation to our Hospital. Taking into account the unutilised space availableas stated above, our Hospital is expected to be able to increase its beds in operation up to amaximum of 2,100.

Capitalising on our Hospital’s medical capabilities, existing clientele and medicalresources, our plan primarily include (i) establishing sub-disciplines (亞科室) under our existingkey disciplines (such as our pediatrics discipline (兒科), orthopedics (骨傷科), neurology (腦病科(神經內科)) and rehabilitation centre (康復中心); (ii) expanding our current VIP centre (whichis currently operated as a general medical service centre for our VIP in-patients and out-patients)by branching out to establish VIP Postpartum (貴賓月子科), VIP Cardiovascular (貴賓心血管內科), VIP Intensive Care (貴賓重症科) and VIP Oncology (貴賓腫瘤科) sub-disciplines; and (iii)establishing new disciplines and expanding existing key disciplines to provide customisedhealthcare services to cater for the specific needs of individual patients. We plan to utilise thePhase II Building of our Hospital to expand our operation capacity and existing healthcareservices by establishing 5 new disciplines and 14 new sub-disciplines and expand 2 existing keydisciplines, which involves adding up to approximately 750 beds in operation to our Hospital’soperational capacity, in order to solidify our industry leading position as one of the leadingprivate general hospitals in the PRC and to differentiate ourselves from our competitors.

We plan to use approximately HK$[REDACTED] of the [REDACTED] from the[REDACTED] for such purpose. For details of our Hospital’s expansion plan and the relevantimplementation plan, please refer to the section headed “Future Plans and Use of[REDACTED]” in this document.

Expanding our Clifford healthcare network by establishing additional ancillary healthcarefacilities in Guangdong Province

As of the Latest Practicable Date, our ancillary healthcare facilities include (i) a postnatalcare centre, (ii) an elderly care service centre, (iii) a dental clinic and (iv) five retail pharmaciesin Guangdong Province. During the Track Record Period, the revenue contributed by healthcareservices (including postpartum healthcare services, elderly care services and dental care


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services) approximately RMB22.4 million and RMB24.9 million to the Healthcare Group forFY2019 and FY2020, respectively, and approximately RMB36.9 million to our Group forFY2021, representing a CAGR of approximately 28.3% from 2019 to 2021. Along with thedevelopment plan for the medical and healthcare industry under the Greater Bay Area OutlineDevelopment Plan, we expect that demand for our ancillary healthcare services will also growcontinuously.

During the Track Record Period and up to the Latest Practicable Date, both our CliffordPostnatal Care Centre and Clifford Elderly Care for Residents did not provide residentialservices. According to the F&S Report, driven by increasing number of newborns andconsumption upgrade in Guangdong Province, the demand for postpartum healthcare services isanticipated to grow and revenue from postnatal care centres in Guangdong Province is projectedto grow at a CAGR of approximately 11.3% from 2021 to 2025; as for elderly care services,propelled by ongoing aging population and supportive government policies, the demand forelderly care services is anticipated to grow steadily and revenue from the elderly care servicesmarket in the Greater Bay Area is projected to grow by a CAGR of approximately 9.2% fromRMB24.5 billion in 2021 to RMB34.8 billion in 2025. In view of the growing demand forpostpartum healthcare services and elderly care services, we intend for both Clifford PostnatalCare Centre and Clifford Elderly Care for Residents to provide residential services in the future.By expanding the operational capacities of our ancillary healthcare facilities and increasing ourservice sites, we believe that we can better serve our customers and will in turn broaden ourpatient and revenue base.

In response to the growing demand for healthcare services in the PRC, we believe that theestablishment of new clinics, health management centres and retail pharmacies not only allow usto expand our reach to more patients in need of healthcare services, but also enable us to betterallocate our medical resources for the community. Our new clinics will be supervised byspecialists in western medicine and traditional Chinese medicine from our Hospital to provideconsultation services and treatments for patients suffering from common diseases, which aresupported by our retail pharmacies. Our health management centres will provide physicalexamination services for monitoring the medical conditions of our patients. Such preliminarycommunity healthcare services allow for the early recognition and assessment of patients’condition and reduce unnecessary delay of treatment, patients with emergency or severe medicalconditions can then be transferred to our Hospital for specialised treatments and/or surgeries.

To capture the anticipated business growth and increase our market share, we plan toestablish new ancillary healthcare facilities, including two elderly care centres, one postnatalcare centre, three dental clinics, five retail pharmacies, five western and traditional Chinesemedicine clinics (中西醫診所), two health management centres and one aesthetic medical centre,all of which are expected to be in the Guangdong Province. We estimate that the total costs andexpenses for the establishment of new ancillary healthcare facilities will involve: (i) anestimated capital expenditure of approximately RMB[REDACTED] (equivalent to


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HK$[REDACTED]), of which approximately HK$[REDACTED] will be financed by the netproceeds from the [REDACTED] and the remaining portion will be financed by internalresources of our Group; and (ii) an estimated annual working capital for the day-to-dayoperations of the new ancillary healthcare facilities (which will also be financed by internalresources of our Group). As of the Latest Practicable Date, we had not yet implemented theabove expansion plan and no expenditure had been incurred by us for such plan. For details ofexpansion plan of our Clifford healthcare network and the relevant implementation plan, pleaserefer to the section headed “Future Plans and Use of [REDACTED]” in this document.

Solidifying the reputation of our Guangdong Clifford Hospital in the Greater Bay Area byexporting our healthcare management systems and further strengthening our healthcareservices

In February 2019, the Greater Bay Area Outline Development Plan (《粵港澳大灣區發展規劃綱要》) was promulgated, which (among other things) put forward the development goal of“shaping a healthy bay area and strengthening medical cooperation”. The Greater Bay AreaOutline Development Plan pointed out that a series of favourable policies will be implemented(i) to foster close cooperation in quality medical and healthcare resources; (ii) to deepencooperation in the field of Chinese medicine; (iii) to strengthen the joint nurturing of andexchanges among medical and healthcare talents, and to encourage medical and medicalprofessionals from Hong Kong and Macau to visit the nine Pearl River Delta (PRD)municipalities (including Guangzhou) for academic exchanges and short-term private practice;(iv) to study the provision of land-based cross-boundary transfer services for non-emergency andnon-critically ill patients; and (v) to promote the integration of medical and elderly care, anddevelop regional demonstration bases for healthy ageing.

Our Hospital is the largest for-profit private general hospital in both the Greater Bay Areaand Guangdong Province in terms of registered beds in 2021, according to the F&S Report. Thehigh quality of our Hospital’s medical and healthcare services is also evidenced by the JCIaccreditation and its Grade A Class III Chinese and Western Medicine Hospital rating. Locatedin Guangzhou City, our Hospital primarily serves patients in Guangdong Province and itsvicinity. It is also strategically positioned to service a wide geographic region in central andsouthern China, in particular, the Greater Bay Area. During the Track Record Period, majority ofour Hospital’s patients reside in Guangdong Province and the Greater Bay Area, while otherpatients primarily reside in other provinces in or around central and southern China. We believethat cross-boundary demand for our healthcare services, in particular, healthcare servicesprovided by our Hospital and elderly care services, will continue to grow as a result of thefavourable policies to be implemented under the Greater Bay Area Outline Development Plan.

Exporting our quality healthcare management system through consultancy services

JCI, or the Joint Commission International, is an affiliate of the Joint Commission onAccreditation of Healthcare Organizations (JCAHO) that accredits medical institutions outsidethe United States. JCI accreditation is a widely renowned medical institution evaluation standardin the world, which is also a medical institution evaluation system recognized by the payment


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system of international commercial medical insurance institutions. JCI accreditation is notgovernment-mandated and it focuses on patient safety, satisfactory medical quality and socialbenefit indicators of services. As of 22 February 2022, there are 610 JCI-accredited medicalinstitutions worldwide. Due to the difficulty in obtaining the approval and incurrence of highcost in upgrading the infrastructure and internal controls of the hospital to pursue JCIcertification, only 41 hospitals in mainland China have passed JCI certification as at the LatestPracticable Date. Among 41 JCI-accredited hospitals, 37 of them are private hospitals accountedfor 0.16% of all private hospitals in PRC.

We first received JCI accreditation in 2003, being the first hospital in the PRC receivingJCI accreditation, according to the F&S Report. Our Hospital’s JCI accreditation has continuedto be renewed for seven times up to 2025. We believe that by strict adherence to the JCIstandards for over 20 years, our Hospital has established effective management system to ensurethe quality and efficiency of our healthcare services and the safety of our patients, which earnsus a strong reputation and confidence among our customers and in the healthcare industry.

Leveraging on our experience in obtaining and maintaining JCI accreditation, we haveestablished Consultation PRC Co in August 2021 with a view of assisting other hospitals infollowing the JCI standards with an aim of achieving JCI accreditation. We believe that our newconsultation business can further bolster our “Guangdong Clifford Hospital” and “CliffordHealth” brands and our Group as a quality healthcare group to attract, retain and developmedical professionals and clientele. It can also serve as an extra source of revenue to maximiseour Shareholders’ interests.

Organising international medical conferences

With a view to facilitating knowledge exchange and promoting our brand, our Hospitalorganises and participates in academic conferences and seminars, which promotes theinformation exchange for our medical professionals and valuable training and developmentopportunities. Such initiatives not only further our medical knowledge, but also contributetowards maintaining our standing and brand as an innovative and resourceful healthcare groupand our Group’s corporate image amongst our potential customers, medical institutions andmedical professionals. In addition, enhancement of our profile in the healthcare industry canhelp us attract and recruit top quality medical professionals. In view of the above advantages,we intend to hold the international medical conferences as a platform for international expertswith different specialty to share latest developments in the healthcare industry.

We plan to use approximately HK$[REDACTED] of the [REDACTED] from the[REDACTED] for such purpose. For details of our plans to organise international medicalconference, please refer to the section headed “Future Plans and Use of [REDACTED]” in thisdocument.


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Continue to recruit, train and retain high-calibre medical professionals

High-calibre medical professionals are key to our success. We intend to strengthen ourintegrated human resources management system to further enhance the recruitment, training andretention of high-calibre medical professionals. We will continue to leverage our relationshipwith collaborating education institutions to source entry level medical professionals. We willalso utilise other recruitment channels such as professional medical talent recruiting agenciesand internal referrals to attract experienced medical professionals in order to strengthen ourexisting disciplines and support our expansion plans.

In addition to regular training at our Hospital, we intend to continue to send selecteddoctors, nurses and other medical professionals to our collaborating institutions to receiveadditional training. We also plan to increase our communications and collaborations with leadinginstitutions and experts in different medical areas to improve our diagnostic, treatment andresearch capabilities. In addition, in order to better retain and incentivise our medicalprofessionals, we will continue to enhance our performance-based compensation and reviewsystem to reward and promote service excellence. Leveraging the renowned specialists from ourhigh calibre medical professional team, we aim to boost our brand recognition and reputationand attract more patients.

Improving our technology infrastructures to enhance patient care

Driven by “Internet + healthcare” related policies and the continued advancement oftechnology, and accelerated by the COVID-19 outbreak, participants in the healthcare industryhave become increasingly focused on their digitalisation strategies. To capture the opportunitiesin the emerging “Internet + healthcare” industry, our Hospital established its online hospitalservices under the name of Clifford Hospital Online Hospital (祈福醫院互聯網醫院) in late2020. As of the Latest Practicable Date, our online hospital services primarily include (i) onlineconsultation via video conference with our doctors and prescription renewal services forfollow-up patients (覆診病人) with chronic diseases and minor or common diseases; (ii)pre-consultation preliminary assessment of a new patient’s conditions and recommendation ofsuitable discipline for formal offline (i.e. face-to-face) consultation; and (iii) makingappointment for general consultation or consultation with a specific discipline of our Hospital.We believe that our existing online hospital services enables our medical professionals to attendto more patients and improves the efficiency and availability of our healthcare services.

We plan to build a community health monitoring system to further enhance our reach andquality of patient care. The community health monitoring system will consist mainly of: (i)health monitoring devices to be equipped by our patients for real-time monitoring of their bloodpressure, blood sugar level and other health indicators; (ii) central observation panel collectingdata from the health monitoring devices; and (iii) community health monitoring software. Suchsystem allows our medical professionals to observe and assess the conditions of multiple patientssimultaneously, which, we believe, will be most conducive for patients requiring constantobservation (such as monitoring the conditions for foetuses and elderly patients with chronicdisease) as our emergency services will be available for them on irregular signs.


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The community health monitoring system, together with our healthcare network of clinics, healthmanagement centres and retail pharmacies, significantly reduces unnecessary delay of treatmentfor and hence health risks of our patients.

We plan to use approximately HK$[REDACTED] of the [REDACTED] from the[REDACTED] for such purposes. For details of our plans for the community healthcaremonitoring system and the relevant implementation plan, please refer to the section headed“Future Plans and Use of [REDACTED]” in this document.

Expanding through selective mergers and acquisitions

With our foothold in Guangdong Province, where our “Guangdong Clifford Hospital” and“Clifford Health” brands are well known, we plan to expand our hospital network in the PRC tofoster our market position and to enlarge the geographic coverage of our services. We intend toaccelerate our expansion through selective mergers with and by acquisitions of appropriatehospitals, in particular those located in regions where healthcare resources are scarce and qualityhealthcare services is under strong demand.

We prefer to give acquisition priority to hospitals that provide high-quality medical andhealthcare services, and which are rated as Grade A Class II or as a Grade A Class I. Weanticipate that suitable targets will be small and medium sized hospitals. When identifyingacquisition targets, we will take into account a comprehensive range of factors, includinggeographical location, demographic trends, financial and operation performance, maturity ofoperation, acquisition cost, licensing status, past compliance, experience of medicalprofessionals, post-acquisition growth potential and prospects, synergy potential with ourexisting hospital(s) and integration feasibility. We believe with our experienced managementteam, and its proven track record in operating our Hospital, which is JCI-accredited and ratedGrade A Class III, and our highly standardised operating protocols, we will be able to integrateacquired hospitals into our Group in a cost-efficient manner. As of the Latest Practicable Date,we had not yet identified any specific acquisition target or entered into any term sheet ordefinitive agreement for the acquisition of any hospitals.

After the completion of any such acquisitions, we plan to effectively integrate the acquiredhospitals into our Clifford healthcare network. We also plan to re-brand these acquired hospitalsto bring them in line with our Hospital’s standards by leveraging our past experience in hospitaloperation and management; we will also share our medical resources, hospital managementsystems, research capabilities, medical personnel and employment information with them. Webelieve such integration and expansion will allow our patients to enjoy more accessiblehealthcare services and increase the attractiveness of our future Clifford healthcare network as awhole. We plan to use approximately HK$[REDACTED] of the [REDACTED] from the[REDACTED] for such purpose. For details of our Hospital’s expansion plans by acquiringhospitals, please refer to the section headed “Future Plans and Use of [REDACTED]” in thisdocument.


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OUR BUSINESS

Our business primarily consists of hospital operation business, which is complemented byvarious healthcare services, including postpartum healthcare services, elderly care services,dental care services and sales of pharmaceutical products (including wholesale topharmaceuticals distributors and retail sales at our pharmacies).



Our Group(note) 1,083,013 864,708 1,206,239

FY2019 PE2020(RMB’000) (RMB’000)



During the Track Record Period, our revenue amounted to approximately RMB1,083.0million, RMB864.7 million and RMB1,206.2 million, respectively. The decrease in our revenuein FY2020 was primarily due to the decrease of patient visits and in-patient bed-days in 2020 asa result of the outbreak of COVID-19. And the increase in revenue in FY2021 was primarily dueto (i) the gradual recovery of our business from the impact of the COVID-19 outbreak and (ii)the revenue contributed by the Healthcare Group being combined with our Group since 29December 2020.


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Sub-total 1,083,013 100.0 864,708 100.0 1,137,928 94.3


Sub-total – – – – 68,311 5.7

Total 1,083,013 100.0 864,708 100.0 1,206,239 100.0

Hospital Operation Business

We operate our hospital operation business through Guangdong Clifford Hospital which is afor-profit private Chinese and Western Medicine Hospital located in Panyu, Guangzhou. Shortlyafter the commencement of its business in 2001, our Hospital has become accredited in 2003 bythe Joint Commission International (JCI), which is recognised worldwide as one of the highestbenchmarks for quality and safe healthcare services. According to the F&S Report, our Hospitalis the first hospital in the PRC and the second hospital in Asia to become accredited by the JCI.Our Hospital is also the second largest JCI-accredited private hospital in the PRC in terms ofrevenue in 2020 according to the F&S Report. Apart from international recognition by the JCI,our Hospital has also been rated as a Grade A Class III Chinese and Western Medicine Hospitalsince 2021, and it had previously been rated as a Grade A Class III Chinese Medicine Hospitalsince 2008 by the Traditional Chinese Medicine Bureau of Guangdong Province, being thehighest classification of Chinese and Western Medicine Hospitals and Chinese MedicineHospitals respectively. Located in Panyu, our Hospital primarily serves patients in GuangdongProvince and its vicinity, it is also strategically positioned to service a wide geographic region in


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central and southern China, in particular, the Greater Bay Area. During the Track Record Period,majority of our Hospital’s patients reside in Guangdong Province and the Greater Bay Area,while other patients primarily reside in other provinces in or around central and southern China.

As of 31 December 2021, our Hospital provides a wide spectrum of general healthcareservices with 42 disciplines, consisting of 12 general internal medicine disciplines (內科), 11surgical disciplines (外科), 2 obstetrics and gynecology-related disciplines (婦產科相關), 3child-related disciplines (兒科相關), 2 medical technology disciplines (醫技科室) and 12 otherdisciplines, of which the key disciplines include obstetrics (產科), gynecology (婦科), pediatrics(兒科), oncology (腫瘤科), cardiology (心病科(心內科)), neurology (腦病科(神經內科)),Rehabilitation Centre (康復中心), gastroenterology (脾胃病科(消化內科)), pulmonary disease(respiratory) (肺病科(呼吸內科)), orthopedics (骨傷科) and ENT (耳鼻喉科). Our Hospitalexcels in many disciplines, in particular, it was accredited with (i) two National Administrationof Traditional Chinese Medicine Key Discipline Development Projects (國家中醫藥管理局重點專科建設項目) in pediatrics (兒科) and psychiatry (神志病科(心理科)) accredited by theNational Administration of Traditional Chinese Medicine of the PRC in 2012; (ii) oneGuangdong Provincial Key Traditional Chinese Medicine Discipline (廣東省中醫重點專科) inorthopedics (骨傷科) in 2019 and six Guangdong Provincial Key Traditional Chinese MedicineDisciplines, namely, nephrology (腎病科(腎內科)), gynecology (婦科), oncology (腫瘤科),cardiology (心病科(心內科)), endocrinology (內分泌科) and neurology (腦病科(神經內科)) in2018, all of which were accredited by the Traditional Chinese Medicine Bureau of GuangdongProvince; and (iii) three disciplines (namely, orthopedics (骨傷科), gastroenterology (脾胃病科)and pulmonary disease (respiratory) (肺病科(呼吸內科))) were listed on the Development ProjectList of Key Traditional Chinese Medicine Specialty in Guangzhou City (2022–2022) (廣州市中醫重點專科(2020–2022)建設項目名單) in 2019, accredited by Guangzhou Municipal HealthCommission.

Ancillary Healthcare services

Complementing the medical services by Guangdong Clifford Hospital, our Group alsoprovides a wide range of healthcare services under the “Clifford” brand, including (i) postpartumhealthcare services provided by Clifford Postnatal Care Centre (祈福月子中心); (ii) elderly careservices provided by Clifford Elderly Care for Residents (祈福居民護老服務); and (iii) dentalcare services provided by Clifford Dental Clinic (祈福口腔門診部). Capitalising on thesehealthcare facilities, all of which are located in Guangdong Province and in close proximity toour Hospital, our Group provides comprehensive medical and healthcare services under the“Medical + Care” model.


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Postpartum healthcare services

Commencing its business in 2012, Clifford Postnatal Care Centre focuses on providingdoor-to-door postpartum and newborn healthcare services to postpartum mothers and newbornbabies. Our postpartum healthcare services consist of (i) postpartum healthcare and recovery; (ii)dietary and nutrition; and (iii) door-to-door postpartum doula service, while newborn healthcareservices consist of two main areas including (a) health care; and (b) intellect development. Aswe do not provide residential services, Clifford Postnatal Care Centre sends postpartum doulas,care takers and/or medical professionals (including doctors from our Hospital) to the residenceoccupied by mothers and newborns (usually located in the vicinity of Clifford Postnatal CareCentre or within Clifford Estates (祈福新邨)) in order to provide postpartum and newbornhealthcare services.

Elderly Care Services

Commencing its business in 2009, Clifford Elderly Care for Residents focuses on theprovision of door-to-door elderly care services to the elderly, including the professional nursingand caretaking services, general healthcare services. Similar to the operation of CliffordPostnatal Care Centre, Clifford Elderly Care for Residents does not provide residential services,elderly care services are provided by sending medical professionals (including doctors from ourHospital) to the residence occupied by our customers (usually located in the vicinity of CliffordPostnatal Care Centre or within Clifford Estates).

Apart from the elderly care services provided by Clifford Elderly Care for Residents, ourHospital has established the Clifford Elderly Nursing Centre as one of its disciplines in January2021, which focuses on the provision of all-rounded medical and nursing services aimed atelderly in-patients recovering from surgeries or suffering from disability, chronic diseases ormental disorders at our Hospital.

Leveraging on the medical resources of our Hospital, Clifford Elderly Care for Residentsprovides comprehensive medical and healthcare services for the elderly under the “Medical +Elderly Care” (醫療 + 養老) model.

Dental Care Business

Our Group’s healthcare services include oral examination and general dentistry servicesprovided through Clifford Dental Clinic.

Sales of Pharmaceutical Products

Our pharmaceutical product distribution business consist of (i) the operation of retailpharmacies, under the brand of Clifford Xinda Pharmacies (祈福新大藥房), primarily engagingin the sales of pharmaceutical products to individual consumers; and (ii) supply chain business,where we act as a wholesaler and sell pharmaceutical products to other industry customers. Asof the Latest Practicable Date, we operate five retail pharmacies, all of which are located in theGuangdong Province.


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OUR HOSPITAL

Exterior of our Hospital

Lobby of the Phase II Building

Operating Theatre

VIP Centre

The Pediatrics Department


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We operate Guangdong Clifford Hospital, which is the first hospital in the PRC and thesecond hospital in Asia to become accredited by the Joint Commission International, accordingto the F&S Report. Our Hospital is also, according to the F&S Report, the largest for-profitprivate general hospital in both the Greater Bay Area and Guangdong Province in terms ofregistered beds in 2021. In the PRC, our Hospital has also been rated as a Grade A Class IIIChinese and Western Medicine Hospital since 2021, and it had previously been rated as a GradeA Class III Chinese Medicine Hospital since 2008 by the Traditional Chinese Medicine Bureauof Guangdong Province.

Geographic location

Our Hospital is located at Panyu District of Guangzhou City. Our Hospital is within closeproximity to Guangzhounan Railway Station (廣州南站), which is a major transportation hubconnecting us with major cities in the Greater Bay Area, including Hong Kong, Shenzhen,Jiangmen and Zhaoqing, via the national high-speed rail network, including theGuangzhou-Shenzhen-Hong Kong Express Rail Link. We believe that we benefit from the largepopulation and the fast-growing healthcare service market of the Greater Bay Area andGuangdong Province, and our location provides us with a large potential customer base for ourfuture and continuous growth. During the Track Record Period, majority of our Hospital’spatients reside in Guangdong Province and the Greater Bay Area, while other patients primarilyreside in other provinces in or around central and southern China.

Operational capacity

As of 31 December 2021, our Hospital had 1,352 beds in operation, 1,236 medicalprofessionals (consisting of 421 doctors and 815 other medical professionals) and it primarilyconsisted of the Phase I Building with a GFA of 59,000 sq.m. and the Phase II Building with aGFA of 180,000 sq.m.. Our Hospital provides a full spectrum of general healthcare services with42 disciplines, consisting of 12 general internal medicine disciplines (內科), 11 surgicaldisciplines (外科), 2 obstetrics and gynecology-related disciplines (婦產科相關), 3 child-relateddisciplines (兒科相關), 2 medical technology disciplines (醫技科室) and 12 other disciplines.


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The following table sets forth certain key information of our Hospital for the yearsindicated:

FY2019 FY2020 FY2021

Revenue (RMB’000) 1,083,013 864,708 1,137,928Cost of sales (RMB’000) 831,527 672,097 781,383Gross profit (RMB’000) 251,486 192,611 356,545Gross profit margin (%) 23.2% 22.3% 31.3%

In-patient hospital servicesNumber of registered beds(1) 2,100 2,100 2,100Number of beds in operation(2) 1,352 1,352 1,352Effective service capacity(3)

(bed-days) 396,755 396,755 396,755In-patient visits(4) 40,091 23,258 29,139In-patient bed-days(5) (days) 318,804 201,664 243,860ALOS(6) (days) 8.0 8.7 8.4Utilisation rate(7) (%) 80.4% 50.8% 61.5%Average spending per visit(8) (RMB) 15,560 19,208 17,992Revenue(9) (RMB’000) 623,814 446,736 524,257Cost of sales (RMB’000) 494,968 377,374 403,752Gross profit (RMB’000) 128,846 69,362 120,505Gross profit margin (%) 20.7% 15.5% 23.0%

Out-patient hospital servicesOut-patient visits(10) 1,197,513 798,169 1,414,388

– Out-patient clinic visits 1,099,800 692,458 970,878– Physical examination visits

(individual patients) 26,245 46,374(11) 345,309(11)

– Physical examination visits

(group patients)(12) 71,468 59,337 98,201Average spending per visit(8) (RMB) 378 517 425Revenue(9) (RMB’000) 452,746 412,850 601,522Cost of sales (RMB’000) 327,614 285,753 368,608Gross profit (RMB’000) 125,132 127,097 232,914Gross profit margin (%) 27.6% 30.8% 38.7%

Surgical operationsNumber of in-patient surgeries

performed 23,514 21,400 26,348Number of days surgeries performed 21,165 17,202 23,867


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Notes:

1. It represents the number of beds that were registered in our Hospital’s Medical Institution PractisingLicence as of the end of the relevant period.

2. It represents the maximum number of beds available for our Hospital’s clinical services as of the end ofthe relevant period, which includes regular beds, fold-up beds, care beds, beds that are sterilised andrepaired and out-of-service beds due to expansion or overhaul.

3. It represents the estimated in-patient service capacity during the relevant period, calculated as the beds inoperation of the relevant period multiplied by the number of days in such period taking into account thenumber of beds in operation are not instantly available to our in-patient, due to, among other factors: (i)beds reserved and hence unavailable for instant usage, due to relevant rules and regulations regardingmedical treatment requirements and reservation for unexpected emergency demands; (ii) beds have to bedisinfected and sanitised before they are made available for new in-patients; and (iii) beds undermaintenance and repair works.

4. It represents the total number of in-patients in our Hospital during the relevant period.

5. It represents the actual number of beds occupied by our in-patients on each day (but not taking intoaccount beds which are occupied by in-patients on their date of discharge) aggregated over the course ofthe relevant period.

6. It represents the average number of days an in-patient stays in our Hospital, calculated as the totalin-patient bed-days (representing the hospitalisation days of all in-patient visits) of the relevant perioddivided by the total in-patient visits during the period.

7. It represents the percentage of instantly available beds in operation occupied by in-patients during therelevant period, which serves as an indicator of the utilisation of beds in operation, calculated as thein-patient bed-days during such period dividing by the effective service capacity during such period, andmultiplied by 100%.


9. It represents the revenue of in-patient hospital services/out-patient hospital services (including physicalexamination services) of our Hospital and the sale of pharmaceutical products after provision of therelevant hospital services, where applicable.


11. The substantial increase in the number of individual patient visits in FY2020 and FY2021 was due to asignificant increase in demand for COVID-19 nucleic acid tests under our physical examination centre,which brought in 21,810 and 318,599 visits for the years ended 31 December 2020 and 2021, respectively.

12. Group patients primarily include designated persons (such as employees) of business corporations, which

purchased our Group’s physical examination services.


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Key recognitions

Since its commencement of operation in 2001, our Hospital has continued to provide highlyregarded medical and healthcare services and has become one of the leading private generalhospitals in the PRC, as evidenced by the following:

➢ our Hospital has since 2003 been holding JCI-accreditation (reviewed generally on athree-year term) up to 2025; according to the F&S Report, our Hospital is the firsthospital in the PRC and the second hospital in Asia to become accredited by the JCI;our Hospital is also the second largest JCI-accredited private general hospital in thePRC in terms of revenue in 2020;

➢ our Hospital has been rated as a Grade A Class III Chinese and Western MedicineHospital since 2021, and it had previously been rated as a Grade A Class III ChineseMedicine Hospital since 2008 by the Traditional Chinese Medicine Bureau ofGuangdong Province, by fulfilling a stringent set of criteria through its comprehensiveand high quality healthcare services, experienced medical professionals, high standardof clinical governance and patient care management, advanced facilities and medicalresearch and teaching capabilities;

➢ our Hospital’s market position shown by the following industry rankings according tothe F&S Report:

(i) the largest for-profit private general hospital in both the Greater Bay Area andGuangdong Province in terms of registered beds in 2021;

(ii) the fourth largest and 12th largest for-profit private general hospital inGuangdong Province (and the Greater Bay Area) and the PRC, respectively, interms of revenue in 2020;

(iii) the third largest for-profit private general hospital in both the Greater Bay Areaand Guangdong Province in terms of beds in operation in 2021; and

(iv) the fourth largest for-profit private general hospital in the Guangdong Province interms of number of out-patients in 2020.

➢ our Hospital was accredited with (i) two National Administration of TraditionalChinese Medicine Key Discipline Development Projects (國家中醫藥管理局重點專科建設項目) in pediatrics (兒科) and psychiatry (神志病科(心理科)) accredited by theNational Administration of Traditional Chinese Medicine of the PRC in 2012; (ii) oneGuangdong Provincial Key Traditional Chinese Medicine Discipline (廣東省中醫重點專科) in orthopedics (骨傷科) in 2019 and six Guangdong Provincial Key TraditionalChinese Medicine Disciplines, namely, nephrology (腎病科(腎內科)), gynecology (婦科), oncology (腫瘤科), cardiology (心病科(心內科)), endocrinology (內分泌科) andneurology (腦病科(神經內科)) in 2018, all of which were accredited by the Traditional


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Chinese Medicine Bureau of Guangdong Province; and (iii) three disciplines (namely,orthopedics (骨傷科), gastroenterology (脾胃病科(消化內科)) and pulmonary disease(respiratory) (肺病科(呼吸內科))) were listed on the Development Project List of KeyTraditional Chinese Medicine Specialty in Guangzhou City (2022–2022) (廣州市中醫重點專科(2020–2022)建設項目名單) in 2019, accredited by Guangzhou MunicipalHealth Commission;

➢ In 2009, our Hospital’s oncology (腫瘤科) and pediatrics (兒科) was accredited asGuangdong Provincial Famous Discipline of Traditional Chinese Medicine (廣東省中醫名科) accredited by the People’s Government of Guangdong Province;

➢ The Chest Pain Centre of our Hospital provides emergency care to patients withcardiovascular conditions, and it was recognised as a national-grade chest pain centresin Guangdong Province by the China Chest Pain Centre (中國胸痛中心) in 2018.Based on the China Chest Pain Centres QC Report 2019, jointly issued by the ChinaAlliance of Chest Pain Centers (中國胸痛中心聯盟), the Chinese CardiovascularAssociation (中國心血管健康聯盟) and China Pain Professional Committee of theChinese Medical Doctor Association (中國醫師協會胸痛專業委員會), the Chest PainCentre of our Hospital obtained the highest score and ranked the first in the PRCamong over 1,000 chest pain centres of standard hospitals;

➢ our Hospital is recognised as a National Research Centre of Traditional ChineseMedicine for Breast Disease Prevention and Treatment (全國中醫乳腺病防治研究中心) by the Chinese Association of Chinese Medicine (中華中醫藥學會);

➢ our Hospital is recognised by as a Medical Insurance Designated Medical Institution(醫保定點醫療機構), for which patients could arrange for payment or claimreimbursement through public medical insurance programmes.


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Equipment

With an aim to provide high-quality healthcare services to our patients, our Hospital isequipped with advanced equipment to provide diagnostic and treatment support for and asrequired by various disciplines. For illustrative purpose only, our equipment include, amongothers:

Equipment UsagesPurchase cost(RMB million) Year of installation

CyberKnife(射波刀)

CyberKnife treatments is an advancestereotactic radiosurgery equipment(放射外科治療設備), which cangenerally be used for treatment oftumours located at moot body parts.By way of emitting a targeted,high-dose beam of radiation with highaccuracy at the tumour, treatmentefficiency is enhanced whilst reducingside-effects as a minimal amount oftissue is being affected.

50.7 Expected to beinstalled in 2022

Medical linearaccelerator(LINAC)

It is widely used for treatment of varioustypes of tumours radiation treatmentsfor treatment of cancers. It delivershigh energy x-rays or electron rays toat the tumour with the assistance ofimaging tools. Its advantages includehigh dose rate, good conformity shortduration of irradiation, largeirradiation, uniform and stable dosage.

30.0 2018

256-slice spiralcomputedtomography (CT)scanner

It is primarily used to detect small andmicro tumors in early stages

15.5 2019

3.0T magneticresonance imaging(MRI)

It can be used in imaging examination ofall parts in human body, especially forbrain and facial features, spine andspinal canal, heart and great vessels,joints, parenchymal organs in abdomen(such as liver, spleen, pancreas andkidney) and various other lesions.

11.0 2020

Positron EmissionTomography-ComputedTomography(PET-CT)

It is primarily used to detectpathological changes of cancer cells inearly stages and assess the spread ofcancer cells. It can also be used todiagnose cardiovascular and cranialnerve diseases, such as primary braintumors, Alzheimer’s disease andepilepsy.

N/A (note) 2019

Note: Our Hospital has entered into a PET-CT Unit cooperation agreement with a medical equipment provider(an Independent Third Party), pursuant to which the parties agreed that the provider shall deliver andinstall the PET-CT device at our Hospital’s PET-CT Unit for its operation, and in consideration for suchusage, the parties shall be entitled to the profit derived from the use of the PET-CT device based on theprescribed percentage as set out in the agreement.


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OUR MEDICAL SERVICES

Our disciplines

Medical services provided by our Hospital can be divided into 5 main categories: (i)general internal medicine disciplines (內科) that are generally dealing with the prevention,diagnosis and treatment of internal diseases; (ii) surgical disciplines (外科) that are generallydealing with treatments involving surgeries; (iii) obstetrics and gynecology related disciplines(婦產科相關) that focus on gynecology diseases and medical services to mothers (duringpregnancy, childbirth and postpartum period); (iv) child-related disciplines (兒科相關) that focuson medical services to newborn and infants; (v) medical technology disciplines (醫技科室) thatprovide technical support to other disciplines through a wide array of diagnosis and treatmentsinvolving specialised techniques and medical equipment. The following table sets forth anoverview of the disciplines of our Hospital as of the Latest Practical Date:

General internal medicine disciplines (內科)1. Cardiology (心病科(心內科))2. Endocrinology (內分泌科)3. Gastroenterology (脾胃病科(消化內科))4. Hemodialysis Unit (血液透析室)5. Intensive Care Unit6. Nephrology (腎病科(腎內科))7. Neurology (腦病科(神經內科))8. Oncology (腫瘤科)9. Psychiatry (神志病科(心理科))10. Pulmonary Disease (Respiratory)

(肺病科(呼吸內科))11. Radiotherapy (放療科)12. Rehabilitation Centre (康復中心)

(including rehabilitation (康復科),acupuncture (針灸科) and naprapathy(推拿科))

Surgical disciplines (外科)1. Anorectal (肛腸科病)2. Dermatology (皮膚科)3. General Surgery (普外科)4. Interventional Treatment (介入科)5. Neurosurgery (神經外科)6. Ophthalmology (眼科)7. Orthopedics (骨傷科)8. Otolaryngology (ENT) (耳鼻喉科)9. Stomatology (口腔科)10. Thoracic and Breast (胸肺乳腺外科)11. Urology (泌尿外科)

Obstetrics and gynecology relateddisciplines (婦產科相關)

1. Gynecology (婦科)2. Obstetrics (產科)

Child-related disciplines (兒科相關)1. Children Health and Rehabilitation

(兒童保健康復科)2. Neonatology Ward (新生兒病房)3. Pediatrics (兒科)

Medical technology disciplines (醫技科室)1. Endoscopy Unit (消化內鏡室)2. Positron emission tomography–computed

tomography (PET-CT) Unit

Others1. Clifford Elderly Nursing Centre

(祈福護老中心)2. Dietetics (營養科)3. Emergency (急診科)4. Infectious Disease (感染性疾病科)5. International Health Management Centre

(國際健康管理中心)6. Ozone Therapy (三氧科)7. Preventive Treatment (治未病科)8. Special Diagnosis (特診科)9. Thermal Therapy (熱療科)10. Vaccination (疫苗接種科)11. VIP Centre (general services)

(貴賓中心(綜合科))


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Revenue contribution from our Hospital’s healthcare services

The following table sets forth a breakdown of the revenue of our Hospital bydisciplines/services (based on our Group’s internal record) during the Track Record Period:


1. Obstetrics (產科) 126,298 11.7 83,240 9.7 96,180 8.52. Oncology (腫瘤科) 97,077 9.0 84,492 9.8 95,402 8.53. Physical Examination Services 47,734 4.4 39,992 4.7 83,616 7.44. Cardiology (心病科(心內科)) 66,536 6.2 46,473 5.4 48,230 4.35. Gynecology (婦科) 55,474 5.2 42,512 4.9 47,277 4.26. Pediatrics (兒科) 72,018 6.7 35,198 4.1 46,522 4.17. Orthopedics (骨傷科) 58,515 5.4 44,354 5.2 45,005 4.08. Otolaryngology (ENT) (耳鼻喉

科) 40,120 3.7 31,318 3.6 40,494 3.69. Intensive Care Unit 35,830 3.3 34,817 4.1 40,015 3.610. Neurology (腦病科(神經內科)) 46,898 4.4 27,406 3.2 38,086 3.411. Rehabilitation Centre (康復中心)

(including rehabilitation (康復科), acupuncture (針灸科) andnaprapathy (推拿科)) 36,830 3.4 26,430 3.1 37,317 3.3

12. Gastroenterology (脾胃病科(消化內科)) 43,062 4.0 30,217 3.5 37,235 3.3

13. Stomatology (口腔科) 31,175 2.9 26,336 3.1 35,815 3.214. Pulmonary Disease (Respiratory)

(肺病科(呼吸內科)) 43,765 4.1 29,119 3.4 34,892 3.115. Endocrinology (內分泌科) 38,408 3.6 24,930 2.9 30,694 2.716. General Surgery (普外科) 30,149 2.8 18,123 2.1 28,939 2.617. Emergency (急診科) 34,717 3.2 26,856 3.1 28,767 2.618. Nephrology (腎病科(腎內科)) 32,126 3.0 20,569 2.4 20,926 1.919. Thoracic and Breast (胸肺乳腺

外科) 13,029 1.2 15,159 1.8 20,898 1.920. Neonatology Ward (新生兒病房) 25,914 2.4 15,887 1.8 19,184 1.7

Other disciplines/services 100,885 9.4 156,158 18.1 250,285 22.1

Total 1,076,560 100.0 859,586 100.0 1,125,779 100.0

Note: The increase in the revenue contributed by the Physical Examination Services in FY2021 was primarilydue to the general public becoming more health cautious after the COVID-19 outbreak.


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Highlights of our Hospital’s services

The following table sets forth details of our key services and their highlights:

Key healthcareservices Description Highlights

Obstetrics and Gynecology related disciplines (婦產科相關)

Obstetrics (產科) Equipped with antenatal area (產前區),delivery room, baby-friendly area and VIParea, the Obstetrics Department providesmedical and healthcare services andtreatments within the scope of perinatalmedicine (圍產醫學), includingcomprehensive prenatal, delivery andpostpartum services. Throughout theyears, the Obstetrics Departmentencourages natural childbirth, as supposedto Cesarean delivery, and it is capable oftreating difficult and critical cases such aspregnancy-induced hypertension, heartdisease relating to pregnancy, GestationalDiabetes Mellitus (妊娠糖尿病),postpartum hemorrhage and placentaaccrete. The Obstetrics Department alsoprovides consultation services for the careand treatment of high risk pregnantwomen and emergency and critical care inobstetrics. The Obstetrics Department isalso capable of performing externalcephalic version (ECV) (臀位外倒轉術),which is a procedure used to turn a fetusfrom a breech position or side-lyingposition into a head-down position beforelabour begins, making it possible for avaginal birth.

➢ The Obstetrics Department is thelargest discipline of our Hospital interms of revenue in FY2019 andFY2021, revenue contributed by theObstetrics Department amounted toapproximately RMB126.3 million,RMB83.2 million and RMB96.2million for the three years ended 31December 2021, representing 11.7%,9.7% and 8.5% of the total revenue ofour Hospital contributed by itsdisciplines/services for the respectiveyears.

➢ Our Hospital was recognised as BabyFriendly Hospital (愛嬰醫院) by theNational Health and Family PlanningCommission in 2015.

Gynecology (婦科) The Gynecology Department is dividedinto general out-patient division, specialistout-patient division, traditional Chinesemedicine out-patient division andreproductive medicine division, and it isequipped with family planning operatingtheatre, treatment room (includingtraditional Chinese treatment room andimmunotherapy treatment room),observation rom and VIP room. We haveestablished a standardised diagnosis andtreatment system for commongynecological diseases and infertilityconditions, adolescence andperimenopausal uterine bleeding, thediagnosis and treatment of cervicalcancers and endometrial/uterine cancers,and gynecologic oncology. We havedeveloped gynecological surgicaltreatment system with focus on minimallyinvasive procedures, such as laparoscopy,hysteroscopy, and colposcopy.

➢ The Gynecology Department wasaccredited as a National Administrationof Traditional Chinese Medicine KeyDiscipline Development Project by theNational Administration of TraditionalChinese Medicine of the PRC in 2018.


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Child-related disciplines (兒科相關)

Pediatrics (兒科)(supported by ourneonatology ward(新生兒病房) andchildren health andrehabilitationdiscipline (兒童保健康復科))

The Pediatrics Department has beenestablished since our Hospital commencedits operations in 2001. Through years ofdevelopment, the Pediatrics Departmentactively introduces advance medicalequipment and technology, it utilises theessence of western medicine, traditionalChinese medicine and natural therapy toprovide treatment for children’s diseasesrelating to respiratory, digestive, urinary,endocrine, hematologic malignancies,rheumatic and nervous system, and itspecialises in treating asthma and growthand development conditions in children.

The Pediatrics Department is equippedwith a central patient monitoring system,which is used to monitor simultaneouslythe heart rate, respiration rate, bloodpressure, body temperature, oxygen andcarbon dioxide pressure of our patients.The Pediatrics Department is alsoequipped with diagnostic instruments,including microelectrolyte detector (微量電解質檢測儀), micro blood glucosemeter (微量血糖儀), transcutaneous biletester (經皮測膽儀) and transcutaneousoxygen meter (經皮測氧儀).

The Pediatrics Department is supported byour Children Health and RehabilitationDiscipline (兒童保健康復科), whichprimarily provides treatment for autism,language disorder, mental retardation,movement disorder, pediatric cerebralpalsy and other disabilities in children. Itis equipped with sports therapy room,language therapy room, sensoryintegration therapy room, sand table gameroom, spa room, parent-child interactionroom, psychological evaluation room andother facilities and equipment.

➢ The Pediatrics Department wasaccredited as a National Administrationof Traditional Chinese Medicine KeyDiscipline Development Project (國家中醫藥管理局重點專科建設項目) bythe National Administration ofTraditional Chinese Medicine of thePRC in 2012.

➢ It was also accredited as a GuangdongProvincial Famous Discipline ofTraditional Chinese Medicine (廣東省中醫名科) accredited by the People’sGovernment of Guangdong Province in2009.

➢ The Pediatrics Department wasaccredited as the Best ClinicalDiscipline of Chinese MedicineHospitals in the PRC in 2018 (2018年中國中醫醫院最佳臨床型專科) byAsclepius Healthcare Ltd. (艾力彼醫院管理研究中心).


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Medical disciplines (內科)

Oncology (腫瘤科) The Oncology Department providesdiagnosis and treatment of various cancersin different stages. As a Chinese andWestern Medicine Hospital, we provide awide range of treatments including regularwestern medicine treatments (e.g.radiotherapy and chemotherapy) andtraditional Chinese medicine treatments(e.g. acupuncture and use of Chinesemedicine). We also promote greencomprehensive treatment (綠色綜合療法)for cancers, which focuses on minimisingthe damage to the patient’s immunesystem, and natural therapy, whichincludes thermal therapy, detoxificationand ozone treatment. With thecollaboration of laboratory of immunology(免疫實驗室), we are able to obtaingenetic and immune assessment on ourpatients, as a basis to formulateindividualised and efficient treatmentplans with minimum side-effects.

The Oncology Department is equippedwith various advanced surgical andtreatment equipment, includingphotodynamic particle knife (光動力粒子刀) (for providing photodynamic therapy),CyberKnife (advanced stereotacticradiosurgery equipment generally used fortreatment of tumours located at most bodyparts), medical linear accelerator (LINAC)(直線加速器) and endogeny thermaltherapy system (內生場熱療治療系統), toprovide diverse treatments to our patients.

➢ The Oncology Department is thesecond largest discipline in FY2019and FY2021 and the largest disciplineof our Hospital in terms of revenue inFY2020, revenue contributed by theOncology Department amounted toapproximately RMB97.1 million,RMB84.5 million and RMB95.4million, representing 9.0%, 9.8% and8.5% of the total revenue of ourHospital contributed itsdisciplines/services for the respectiveyears.

➢ The Oncology Department wasaccredited as a Guangdong ProvincialKey Traditional Chinese MedicineDiscipline (廣東省中醫重點專科) bythe Traditional Chinese MedicineBureau of Guangdong Province in2018.

➢ It had also been accredited as aGuangdong Provincial FamousDiscipline of Traditional ChineseMedicine accredited by the People’sGovernment of Guangdong Province in2009.

➢ Our Hospital was designated asNational Research Centre ofTraditional Chinese Medicine forBreast Disease Prevention andTreatment (全國中醫乳腺病防治研究中心). In 2007, our Hospital was alsodesignated as National ContinuingEducation Base of Traditional ChineseMedicine for Clinical Prevention andTreatment of Tumors (全國中醫腫瘤臨床防治繼續教育基地) by the ChineseAssociation of Chinese Medicine.


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Cardiology(心病科(心內科))

The Cardiology Department focuses onthe treatment of various heart diseases,including heart failure, hyperlipidemia,hypertension, myocarditis,thromboembolism, with the combined useof western medicine and traditionalChinese medicine. Our doctors at theCardiology Department are also capableof advanced treatments for complexcoronary artery disease, includingcoronary angiogram (CAG) (冠狀動脈造影術), percutaneous coronary intervention(PCI) and intra-aortic balloon pumpcounterpulsation (IABPC) treatment.

To shorten the time for treating urgentheart disease patients, we established ourChest Pain Centre in 2017. It wasrecognised as a national-grade chest paincentre in 2018.

The Cardiology Department also has adedicated cardiac intervention centre (心臟介入中心), providing 24-hour servicesfor patients with acute myocardialinfarction, in order for them to receivetreatment without having to be firstadmitted to the Emergency Department.Such arrangement shortens the waitingtime before treatment.

➢ The Cardiology Department wasaccredited as a Guangdong ProvincialKey Traditional Chinese MedicineDiscipline by the Traditional ChineseMedicine Bureau of GuangdongProvince in 2018.

➢ Our Chest Pain Centre, establishedjointly by the Cardiology Departmentand the Emergency Department, wasrecognised as a national-grade chestpain centre in Guangdong Province bythe China Chest Pain Centre (中國胸痛中心) in 2018. Based on the ChinaChest Pain Centres QC Report 2019,the Chest Pain Centre of our Hospitalobtained the highest score and rankedthe first in the PRC among over 1,000chest pain centres of standardhospitals.

Neurology(腦病科(神經內科))

The Neurology Department has beenestablished since our Hospital commencedits operations in 2001, and it is dedicatedto treatment of diseases relating todisorder of nervous system, such astreatment of cerebrovascular disease,central nervous system infection,demyelinating disease (脫髓鞘疾病),neurodegenerative disease and epilepsy.The Neurology Department is supportedby cerebral angiography (腦血管造形術)and interventional treatment.

The Neurology Department is equippedwith advance diagnostic equipment,including 3.0T magnetic resonanceimaging (MRI), color Dopplerechocardiography (CDE) equipment,Philips 64-slice spiral computedtomography (CT) scanner, equipment fordigital subtraction angiography (DSA),electromyography (EMG) andelectroencephalogram (EEG).

➢ The Neurology Department wasaccredited as a Guangdong ProvincialKey Traditional Chinese MedicineDiscipline by the Traditional ChineseMedicine Bureau of GuangdongProvince in 2018.


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Rehabilitation Centre(康復中心)

The Rehabilitation Centre includesrehabilitation (康復科), acupuncture(針灸科) and naprapathy (推拿科).The Rehabilitation Centre utilises exercisetherapy, occupational therapy, languagetherapy, physical therapy, orthopedicbrace therapy as the main rehabilitationmethods, and combines with naturaltherapies such as traditional Chineseacupuncture, naprapathy techniques,thermal therapy and ozone treatment.The Rehabilitation Centre cooperates withour other disciplines to achieve“neurology – rehabilitation integration”(神經 – 康復一體化), “respiratory –rehabilitation integration” (呼吸 – 康復一體化), “oncology – rehabilitationintegration” (腫瘤 – 康復一體化),“intensive care – rehabilitationintegration” (重症 – 康復一體化) and“orthopedics – rehabilitation integration”(骨科 – 康復一體化), we mainly focus ontreatment of limb dysfunction, neck,shoulder, waist and leg pain caused byvarious neurological diseases, orthopedicdiseases, cardiopulmonary, endocrine andmetabolic diseases, cardiopulmonarydysfunction, swallowing and speechdysfunction, stroke/traumatic brain injuryrehabilitation, sports injury rehabilitation,cardiopulmonary rehabilitation, spinalcord injury rehabilitation, postoperativerehabilitation of joints, core strengthtraining, and rehabilitation treatment ofsoft tissue sprains, cervical spondylosis,lumbar disc herniation, knee joint disease,frozen shoulder, tennis elbow,tenosynovitis and other diseases.

➢ The Rehabilitation Centre is also aclinical and medical research anddevelopment unit with clinical,education, research and developmentand information research functions.


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Gastroenterology(脾胃病科(消化內科))

The Gastroenterology Department hasbeen established since our Hospitalcommenced its operations in 2001, and itis dedicated to treatment of diseasesrelating to the digestive system and itsdisorders, including gastrointestinaldiseases, and hepatobiliary and pancreaticdiseases. Our doctors at theGastroenterology Department are capableof performing painless gastroscopy andcolonoscopy and providing relevanttreatments, including endoscopic foreignbody retrieval, diagnosis and treatment ofstomach and colorectal cancer, endoscopicresection of early gastrointestinal tumors,endoscopic treatment of gastrointestinalhemorrhages, and advanced treatments,including submucosal tunnelingendoscopic resection (STER) (經口經隧道內鏡下腫瘤摘除術) and peroralendoscopic myotomy (POEM) (經口內鏡下肌切開術) for treating achalasia (賁門失弛緩症).

Diagnosis and treatments at ourGastroenterology Department is assistedby advanced equipment, includingOlympus gastroscopes (奧林巴斯胃腸鏡),esophagogastroduodenoscope (十二指腸鏡), capsule endoscope (膠囊內視鏡) and14C and 13C Helicobacter pylori analyser(幽門螺旋桿菌測定儀).

➢ The Gastroenterology Department waslisted on the Development Project Listof Key Traditional Chinese MedicineSpecialty in Guangzhou City(2020–2022) (廣州市中醫重點專科(2020–2022) 建設項目名單) in 2019,accredited by Guangzhou MunicipalHealth Commission.

Pulmonary Disease(Respiratory)(肺病科(呼吸內科))

The Respiratory Department is dedicatedto providing high-quality treatment andtherapy to our patients utilising advancedwestern medical technology andtraditional Chinese methods. TheRespiratory Medicine Department isdivided into out-patient division,in-patient ward, bronchoscopy room,pulmonary function examination room,pulmonary rehabilitation centre,snoring-related diseases treatmentdivision.

The Respiratory Department typicallyprovides diagnosis for pulmonaryfunctions and bronchoscopy and alsotreatment, therapy and rehabilitation forrespiratory diseases and conditionsaffecting respiration, including acuterespiratory failure and chronic obstructivepulmonary disease (COPD).

➢ The Respiratory Department alsoprovides traditional Chinese medicineand treatments for our patients, inparticular for curing coughing, lungdistension, asthma and lung carbuncle.


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Surgical disciplines (外科)

Orthopedics(骨傷科)

The Orthopedics Department providestreatments and therapies for traumaticfracture, joint damage, spinal cord injury,amputation and replantation oflimbs/digits, and bone tumors. Typicalsurgical operations include jointreplacement surgeries, reconstructivesurgeries of tissues, bones and joints dueto injuries or diseases, and surgicaltreatments of spinal diseases and injuries.In addition, the Orthopedics Departmentdesigns and provides personalisedtraditional Chinese medicine rehabilitationtreatment for patients before surgeries andduring recovery from surgeries.

➢ The Orthopedics Department (骨傷科)is accredited as a GuangdongProvincial Key Traditional ChineseMedicine Discipline by the TraditionalChinese Medicine Bureau ofGuangdong Province in 2019.

➢ The Orthopedics Department was listedon the Development Project List ofKey Traditional Chinese MedicineSpecialty in Guangzhou City(2020–2022) in 2019, accredited byGuangzhou Municipal HealthCommission.

ENT(耳鼻喉頭科)

The ENT Department provides prevention,diagnosis, treatment and healthcareservices of diseases relating to ENT, headand neck, pediatric ENT and snoring.

With advanced equipment for examinationand operation, our ENT Departmentperforms various types of regularoperations and minimally invasivetreatments (including functional sinusendoscopy), minimally invasive sinussurgery, anterior and vidian nerveblockade, low-temperature plasmaablation, horizontal and vertical half orfull laryngectomy for laryngeal cancer,uvula pharyngeal soft palate shapingsurgery, microsurgery with the support oflaryngoscope; middle ear and inner earmicrosurgery, nasal skull base and lateralskull base minimally invasive surgery,hearing reconstruction surgery, Ménière’sdisease related surgery.

We also provide partial atomisationtreatment of ENT, physical therapy ofvarious specialists and immunotherapy ofallergic diseases. The ENT Departmenthas a full-featured high-end hearing centredivided into single-wall sound shieldingroom, double-wall sound shielding room,and electro-acoustic shielding room.

➢ The ENT Department is equipped withadvanced STORZ ultra-high-definitionendoscopy system, imported electroniclaryngoscope system, low temperatureplasma system and integratedendoscope cleaning room.


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Other tailored services delivered at our Hospital

Our VIP healthcare services

In addition to the general hospital and healthcare services to our patients, our Hospitaloffers premium VIP in-patient and out-patient services with a view to capturing the needs of theaffluent population in the Greater Bay Area. Our Hospital adopts the “dual protection” approach,in which each VIP patient is assigned at least a specialist doctor in the relevant discipline and isfurther supported by a team of medical professionals, who are accessible on a 24-hour,seven-day-a-week basis. Upon our patient’s request, our Hospital arranges medical experts toattend our Hospital for consultation, treatment or surgeries. Our VIP patients also enjoy otherservices provided by our International Health Management Centre (國際健康管理中心) asfurther stated below.

Our foreign patients healthcare services and our International Health Management Centre

With a view to capturing the needs of high-end foreign customers with internationalmedical insurance and our VIP patients, our International Health Management Centre providesvarious types of non-medical services to suit our foreign patients, such as handling applicationswith international insurers (through their local counterparts), consultation regarding extension ofvisas and other hospitality services, attending to dietary requests and transportation needs and24-hour translation services. Our medical insurance service department assists insured foreignpatients in directly communicating with the insurers’ counterparts and issuing translated medicalreports and other documents for their approval.

Online hospital (互聯網醫院) services

To capture the opportunities in the emerging “Internet + healthcare” industry, our Hospitalhas established its online hospital services under the name of Clifford Hospital Online Hospital(祈福醫院互聯網醫院) in late 2020. Our online hospital services primarily include (i) onlineconsultation via video conference with our doctors and prescription renewal services forfollow-up patients (覆診病人) with chronic diseases and minor or common diseases; (ii)pre-consultation preliminary assessment of a new patient’s conditions and recommendation ofsuitable discipline for formal offline (i.e. face-to-face) consultation; and (iii) makingappointment for general consultation or consultation with a specific discipline of our Hospital.Through our online hospital platform, potential customers may conduct a self-assessment of theirhealth and obtain basic healthcare knowledge. We believe that our online hospital services, as anadditional channel to our healthcare services, will help to expand the customer base of ourHospital.


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Aesthetic medical services

As of the Latest Practicable Date, our Hospital is taking preparatory steps for theestablishment of the aesthetic medical discipline, which is expected to commence operationsonce the requisite filing and approval procedures are duly completed. We currently expect thatthe service offerings of our Aesthetic Medical Department primarily include (i) aesthetic surgeryservices (such as eye surgery, breast surgery, lipoplasty (fat transfer), rhinoplasty, linearshaping); (ii) minimally-invasive aesthetic services (such as injection of dermal fillers); and (iii)aesthetic dermatology services (such as mesotherapy, picosecond laser, microneedle therapysystem, laser hair removal, photo rejuvenation and thermage).

MANAGEMENT AND OPERATION OF OUR HOSPITAL

We have implemented standardised management and operational procedures across ourHospital to ensure patient safety and high-quality medication management, which are consistentwith the JCI standards. Our Hospital is managed through different aspects including, medicalconsultation procedures, medical treatment and quality control, management of each discipline,nursing, proper usage and maintenance of medical equipment, medical records, medical researchand clinical education, infection control, sanitation and hygiene, patient safety and service,human resources and finance.

The overall management and operation of our Hospital is overseen by the HospitalExecutive Council, which is responsible for making major decisions regarding all essentialaspects of our Hospital, including approving implementation plans, development plans of ourHospital, establishment of new disciplines, introduction and procurement medical equipment,medical training plans and medical research projects. The Hospital Executive Council is led byDr. Zhang (an executive Director and the chief executive officer of our Group) as thechairperson, and its members include Ms. Wendy Man and Dr. Ou Junwen (both of which aremembers of our Board). We also conduct regular evaluations and reviews of the performances ofeach discipline and our medical professionals and compliance of our operational procedures andprotocols.

In addition to the Hospital Executive Council, we have established various committees forthe management of different aspects of our Hospital, including the following key committees:

➢ Hospital Management Committee (醫院管理委員會) – responsible for assisting theHospital Executive Council by supervising the implementation of its decisions andassessment of their effectiveness;

➢ Quality Improvement and Safety Management Committee (質量改進與安全管理委員會) – responsible for the supervising the overall healthcare quality and safetyimprovement plan of our Hospital; the analysis of material defects on quality or safetycontrol reported by each department/discipline, including conducting root-causeanalysis and formulating rectification measures for medical disputes and near-misssituations;


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➢ Medical Quality and Safety Management Committee (醫療質量與安全管理委員會) –responsible for managing healthcare quality and providing supervision and guidanceon medical safety of our Hospital supervising the implementation of various principalmedical systems and investigating, discussing and handling medical dispute oraccidents by various departments;

➢ Nursing Quality and Safety Management Committee (護理質量與安全管理委員會) –responsible for managing nursing quality of our Hospital, conducting regular qualityanalysis to identify quality management issues; formulating improvement plans andorganising quality surveys and inspections; and conducting regular training for nursingstaff and supervising the overall nursing quality control in each discipline/department;

➢ Pharmacy Administration and Pharmacotherapeutics Committee (藥事管理與藥物治療學委員) – responsible for implementing applicable laws, regulations and standardsrelating to pharmacy management; establishing pharmaceuticals selection system andformulating catalogues for prescriptions, monitoring rational use of pharmaceuticals,analysing and evaluating pharmaceutical risks and adverse pharmaceutical reactions toprovide guidance; supervising and guiding the clinical use and management ofnarcotic drugs, psychotropic drugs and radioactive drugs; conducting trainings formedical professionals on rational use of pharmaceuticals; and conducting annualreview of the selection, procurement, storage, prescription, use and monitor ofpharmaceuticals;

➢ Medical Equipment Safety Management Committee (醫療器械安全管理委員會) –responsible for supervision of the procurement, installation, inspection, safe operationand maintenance of medical equipment and reviewing relevant policies;

➢ Hospital Infection Control Committee (醫院感染控制委員會) – responsible forimplementing applicable laws, regulations and standards relating to infectionmanagement; formulating policies and procedures for the prevention and control ofinfections; and overall monitor of infection prevention and control management,including assessing the key disciplines/departments, key procedures and risk factorsinvolved and formulating preventive measures; and

➢ Hospital Medical Records Quality Management Committee (醫院病案質量管理委員會)– responsible for managing the medical records of patients and ensuring that medicalstaff consistently adhere to the standards and conventions required in the preparationof such medical records, including regular review of medical records prepared bydoctors.


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OUR DOCTORS AND MEDICAL PROFESSIONALS

Our Hospital’s quality of healthcare services and competitiveness depend on our ability torecruit and retain doctors and other medical professionals possessing relevant qualifications andexperience. We place a great emphasis on the recruitment, continued training and retention ofour doctors and other medical professionals.

In the PRC, licensed doctors are subject to periodic assessment of their professional skills,achievements and professional ethics by institutions or organisations authorised by the publichealth department in the PRC. We categorise doctors into four professional qualification ranks,which are, from the lowest to the highest rank: (i) junior qualification for resident doctors (住院醫師) who must hold a medical degree, and typically undertake entry-level tasks such aspatients’ medical records preparation and practise under the supervision of attending doctors orother superiors; (ii) qualification for attending doctors (主治醫師) who may supervise residentdoctors and typically undertake routine clinical treatments, teaching, research and diseasesprevention tasks; and (iii) qualification for associate-chief doctors (副主任醫師) who maysupervise attending and resident doctors, direct research work of a specific discipline, andtypically undertake complex and rare clinical treatments; and (iv) chief doctors (主任醫師) whotypically command the highest level of medical capability in a specific discipline and aregenerally the head of a clinical practice. The following table sets forth (i) the number of ourdoctors by professional ranks and the number of other medical professionals (all of which areour employees) and (ii) the number of visiting specialist doctors (not being our employees) as ofthe dates indicated:

As of 31 DecemberAs of the Latest

PracticableDate2019 2020 2021

Employees of ourGroup

Chief doctors 42 35 32 31Associate-chief doctors 113 105 98 98Attending doctors 196 185 190 190Resident doctors 83 82 101 101Other medical

professionals(1) 816 771 815 804

Visiting specialistdoctors(2)

Chief doctors 21 28 36 31Associate-chief doctors 22 29 30 17Attending doctors and

resident doctors 8 10 10 7


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Notes:

1. Other medical professionals include licensed nurses, pharmacists and medical technicians.

2. We invite visiting specialist doctors to our Hospital from time to time to give consultancy advice orservices on a regular basis. They usually enter into services agreements with us, and hence they do nothave a direct employment relationship with us.

Our primary channel of recruiting doctors and other medical professionals include collegerecruitment, referrals and recruitment agencies. Our research and teaching collaborations withvarious universities help us attract top quality medical professionals, and identify potential talentand recruit them. We conduct background searches on the candidates to be recruited to ensurethey possess the required working experience and qualifications for the relevant positions. Webelieve we provide our medical professionals with competitive compensation packages andcontinued medical education opportunities. The human resources department of our Hospitalmonitors the qualification registration and licensing records on a continuing basis to ensure thatall our doctors and medical professionals comply with all applicable requirements under PRClaws and regulations. During the Track Record Period and up to the Latest Practicable Date, wedid not encounter any material complaints or penalties in relation to our medical professionalspractising beyond the scope of their respective fields. As of 31 December 2021, the averagenumber of years of working experience of (i) our doctors is around 13, (ii) our chief doctors isover 20, and (iii) our licensed nurses is over 10.

Additionally, we invite visiting specialist doctors (such as multi-site doctors) to ourHospital from time to time to give consultancy advice or services on a regular basis, havingregard to their specialised techniques and experiences in their disciplines and/or for providingguidance and assistance in building and strengthening relevant disciplines of our Hospital,including but not limited to providing relevant trainings to our medical professionals. They mayalso be invited, from other third party hospitals or medical institutions. They usually enter intoservices agreements (instead of employment contracts) with us, and hence they do not have adirect employment relationship with us, and their remuneration is usually paid based on thelength of their visits, and the remuneration rate is determined by their the agreed scope ofduties, seniority, relevant experience and industry reputation.


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We provide training and education programmes to our doctors and other medicalprofessionals to maintain our high quality services. During the Track Record Period, we werevisited by medical professionals from various medical institutions for consultation sessions atour Hospital, and such visits provided continuous learning and collaboration opportunity for ourmedical professionals. We also sent medical professionals to other medical institutions fortraining.

During the Track Record Period, we had a relatively team of medical professionals, thefollowing table sets for the turnover rate of our medical professionals for the years indicated:

FY2019 FY2020 FY2021

Turnover rate(note):– Doctors 13% 15% 14%– Other medical professionals 15% 15% 14%

Note: Turnover rate is calculated by dividing the total number of doctors/ other medical professionals whoresigned during the period by the sum of (i) the total number of doctors/ other medical professionals at theend of such period and (ii) the total number of doctors/ other medical professionals who resigned duringthe period.


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PATIENT SERVICES

To ensure the quality and cost-effectiveness of our healthcare services, we have developedand implemented standardised healthcare service procedures and continuously review ourprocesses for potential improvement. The treatment processes of our healthcare services can begenerally divided into two categories: (i) out-patient hospital services; and (ii) in-patienthospital services.

Out-patient Treatment Process

Out-patient hospital services refer to the treatment of patients who are not hospitalisedovernight or patients under inward observation (留院觀察). Out-patient surgeries involve minoror intermediate procedures that are less invasive and are sometimes performed without the needfor overnight hospitalisation. The following diagram sets forth an overview of the treatmentprocess of our out-patient healthcare services:

Discharge

Out-patient Visits

Triage System

PreliminaryAssessment at

Nurse Workstation

Consultation withOut-patient Doctor

Consultation with Doctor Emergency

Department

Admission to IsolationWard and Further

Examination

Fever Out-patient Clinic

If follow-up visitsare required

Patients showing

signs of fever

Patients in need of

urgent medical attention

Out-patientRegistration

Receive clinicaltreatment

Out-patient treatmentcomplete

Cashier

Receive diagnosisand examination

Receive out-patientsurgery

Hospitalisation(see “In-patient

Treatment Process”)

Obtainprescription

Obtain drugs frompharmacy

Consultation withClinic Doctor

EmergencyRegistration

First-aid Treatment


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In-patient Treatment Process

In-patient hospital services refer to the treatment of patients who are hospitalised overnightor for an indeterminate period of time, usually several days or weeks, subject to the patients’conditions and recovery. The following diagram sets forth an overview of the treatment processof our in-patient healthcare services:

In-patient Visit

Payment

Out-patient

Discharge

In-patient Registration

Nurses and doctorswork closely with

each other

Execution ofdoctor’s orders

In-patient treatmentprocess completed

Receive laboratorydiagnosis

Receive clinicalexamination

Obtain drugsfrom pharmacy

Receive surgery atoperating theatre

Receive clinicaltreatment

- Admission of patient into relevant discipline- Record doctor’s orders- Verify doctor’s orders - Relocate patient to a different ward if necessary- Discharge of patient when appropriate

Nurses

- Monitor patients’ conditions from time to time- Give doctor’s orders on:

➢ clinical examination➢ laboratory diagnosis➢ prescription➢ clinical treatment➢ surgery

Doctors

Patient Complaints Management

We have implemented a standardized customer complaint management to ensure that ourpatients’ feedbacks are promptly and comprehensively collected, our patients’ concerns are fullyaddressed, and our Hospital’s healthcare services and process are continuously improved to ourpatients’ satisfaction. Our patients may lodge a complaint by mail, telephone, email, via ourWeChat public accounts, or in person at the customer services department in our Hospital.Generally, we explain the complaint process to complainants and direct patients complaints to behandled by the department of medical administration (醫務部, “DMA”). The DMA is responsiblefor conducting detailed investigation and root-cause analysis, performing in-depth fact-finding,overseeing and managing the complaint processes, coordinating and communicating with theparties involved and accurately recording all relevant findings and formulating the appropriatereplies to the complainants. Generally, we handled our Hospital’s patient complaints accordingto our performance pledge.


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We have also implemented procedures for handling medical disputes and accidents whichare required to be followed by all our departments and staff. Any material incident which hascaused or may cause injury, death or any other serious consequences shall immediately bereported to the DMA, which shall investigate the incidents. The DMA is responsible forpreserving relevant evidence and offering our patients and/or their families an explanation, andtry to solve the disputes amicably. Although we have adopted preventive measures, we cannotcompletely eliminate the inherent risks related to medical procedures. For details of our medialdisputes and accidents, please refer to the paragraph headed “Legal Proceedings and Compliance– Medical Disputes” in this section.

Customer Information Security

The PRC laws and regulations generally require medical institutions to protect the privacyof their patients or customers, and prohibit unauthorised disclosure of personal information. Wehave implemented an information and personal data protection policy to ensure that our staff canstrictly process information relating to our patients in compliance with the relevant laws andregulations.

Upon our patients’ first visit to our Hospital, our staff at the registration will explain tothem the terms of our healthcare services and our use of personal information statement, andensure that they agree with such terms before receiving any healthcare services at our Hospital.In general, except for the disclosure of personal information to PRC governmental authorities asrequired under relevant laws and regulations, the use of personal information is restricted topurposes strictly relevant to the provision of our healthcare services, such as verifying theidentity of the patient. All patients’ records shall be numbered and properly stored in designatedand secured area. Patients’ records can only be accessed by the responsible doctor or nurse. Awritten request must be submitted to our Hospital when a patient intends to obtain a copy of hismedical record and we will only release the relevant record after our designated officer hasverified his identity. The patient must also sign an acknowledgement letter upon receiving thecopy of his medical record. In general, no medical record can be disseminated to any other thirdparties, including the family members of the patient (except for guardians of minors), withoutthe proper authorisation from the patient.

In addition to the aforementioned measures, we also pay close attention to the security ofpersonal information stored in our Hospital’s Electronic Medical Record (EMR) System. Wegrant appropriate access rights of our EMR System to our staff, according to their work andresponsibilities, and they are prohibited from disclosing their account information or password toany other third parties, including other staff in our Hospital. To safeguard our patients’ medicalrecords and personal data, our staff are required to log off the system when they leave theirworking spaces. The medical records stored in our EMR System are protected by regularback-ups. We also update our information technology equipment from time to time to raise thesecurity level and improve efficiency.


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During the Track Record Period and up to the Latest Practicable Date, we did notexperience any breach of patient confidential information or any other patient informationrelated incidents which could cause a material adverse effect on our business, financial conditionor results of operations.

ANCILLARY HEALTHCARE SERVICES

Complementing the medical services delivered by Guangdong Clifford Hospital, our Groupalso provides (i) postpartum healthcare services; (ii) elderly care services; and (iii) dental careservices under the “Clifford” brand.

During the Track Record Period, our revenue contributed by these ancillary healthcareservices contributed approximately RMB36.9 million for FY2021 only, representingapproximately 3.1% of our total revenue for FY2021.

Postpartum healthcare services


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Clifford Postnatal Care Centre provides door-to-door postpartum and newborn healthcareservices to postpartum mothers and newborn babies. We offer postpartum healthcare packagedesigned for mothers and newborns from three days up to three months after birth, whichprimarily include the following services:

➢ postpartum healthcare services to postpartum mother: (i) postpartum rehabilitation andbeauty services provided by a professional team, consisting of medical professionalsin obstetrics (產科), traditional Chinese medicine and nutrition disciplines andbeautician; (ii) dietary and nutrition services, by providing nutritionally balancedpostpartum meals jointly designed by nutritionists, traditional Chinese medicinedoctors and chefs; (iii) general healthcare and nursing services, including acupunctureand detoxification; and (iv) new mother nursing training services.

➢ postpartum healthcare services to newborns: (i) basic healthcare services, includingvisits by pediatric (兒科) medical professionals, feeding and bathing services; and (ii)senses and intellect development trainings.

As we do not provide residential services, Clifford Postnatal Care Centre sends postpartumdoulas, care takers and/or medical professionals (including doctors from our Hospital) to theresidence occupied by mothers and newborns (usually located in the vicinity of CliffordPostnatal Care Centre or within Clifford Estates) in order to provide postpartum and newbornhealthcare services. Regarding the leasing of properties within Clifford Estates, save and exceptfor the referral of our customers to the Clifford Estates, our Group is not involved in the leasingtransaction between our customers and the Clifford Estates or the payment or collection of anyrentals.

During the Track Record Period, our revenue contributed by postpartum healthcare servicescontributed approximately RMB24.3 million for FY2021 only, representing approximately 2.0%of our total revenue for FY2021. The following table sets forth a summary of the basicinformation of Clifford Postnatal Care Centre as of the Latest Practicable Date:

Clifford Postnatal Care Centre

Address 1st and 2nd Floor, Block 9, SecondKuaihuo Street of Urban Dynamic Garden,Clifford Estates, Zhongcun Street, PanyuDistrict, Guangzhou City, GuangdongProvince, PRC

Year of commencement of operations 2012

Approximate fee range for postpartumhealthcare package (RMB)

RMB6,300 to RMB98,000 (depending onlength and scope of services provided)


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Clifford Postnatal Care Centre

Average spending per pair of mothersand newborns (RMB)– FY2019 36,606– FY2020 41,482– FY2021 38,828

Postpartum healthcare service days (days)(1)

– 2019 9,220– 2020 9,882– 2021 16,547

Note: It represents the number of pairs of mothers and newborns who received our postpartum healthcareservices on each day aggregated over the course of the relevant period.

As of 31 December 2021, we employed 17 postpartum doulas, who provide postpartumhealthcare services to customers of Clifford Postnatal Care Centre.

Elderly Care Services

We operate Clifford Elderly Care for Residents to provide elderly care services, which isstrategically located in the vicinity or inside our Hospital. Leveraging on the medical resourcesof our Hospital, Clifford Elderly Care for Residents provides comprehensive medical andhealthcare services for the elderly under the “Medical + Elderly Care” (醫療 + 養老) model.

During the Track Record Period, our revenue contributed by elderly care servicescontributed approximately RMB8.6 million for FY2021 only, representing approximately 0.7%of our total revenue for FY2021. The following table sets forth a summary of the basicinformation of Clifford Elderly Care for Residents as of the Latest Practicable Date:

Clifford Elderly Carefor Residents

Address 1st Floor, Block 10, Second Kuaihuo Streetof Urban Dynamic Garden, Clifford Estates,Zhongcun Street, Panyu District,Guangzhou City, Guangdong Province, PRC

Year of commencement of operations 2009

Approximate range of monthly fee (RMB) Elderly care service fee (withoutaccommodation)(1): 4,500 to 22,300


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Clifford Elderly Carefor Residents

Average spending per customer (RMB) Elderly care service fee (withoutaccommodation)(1):

– FY2019 82,863– FY2020 94,560– FY2021 118,133

Elderly care service days (days)(2)

– 2019 15,365– 2020 19,858– 2021 21,008

Notes:

1. For customers of Clifford Elderly Care for Residents, we charge an elderly care service fee depending onthe scope of services (in particular the level of nursing services) provided by our Group, and such servicefee is exclusive of any accommodation related expenses as Clifford Elderly Care for Residents did notprovide any residential services.

2. It represents the number of customers who received our elderly care services on each day aggregated overthe course of the relevant period.

Depicted below are pictures of Clifford Elderly Care for Residents:


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Clifford Elderly Care for Residents provides a wide range of door-to-door elderly careservices, including (i) professional nursing and care-taking services; and (ii) nutritionalmanagement. Depending on the needs of our customers (such as their mobility and self-carecapabilities), we offer different levels of nursing services, such as regular care, semi-care, fullcare, special care, one-to-one dedicated care. Our customers also enjoy 24-hour care-on-call (平安鐘) service, daily visits by professional medical team of our Hospital and ongoing monitor ofcustomers condition. Similar to the operation of Clifford Postnatal Care Centre, Clifford ElderlyCare for Residents does not provide residential services, elderly care services are provided bysending medical professionals (including doctors from our Hospital) to the residence occupiedby our customers (usually located in the vicinity of Clifford Postnatal Care Centre or withinClifford Estates). Likewise, our Group is only involved in the referral of our customers toClifford Estates.

As of 31 December 2021, we employed a team of medical professional comprising 8 nursesand 19 care workers (and an extra care worker with labour dispatch arrangement with ourGroup) who provided elderly care and healthcare services to our residents.

Apart from the elderly care services provided by Clifford Elderly Care for Residents, ourHospital has established the Clifford Elderly Nursing Centre as one of its disciplines in January2021, which focuses on the provision of all-rounded medical and nursing services aimed atelderly in-patients recovering from surgeries or suffering from disability, chronic diseases ormental disorders at our Hospital. In-patients of Clifford Elderly Nursing Centre enjoy diagnosisand consultation services from the wide spectrum of disciplines of our Hospital. In this way,Clifford Elderly Nursing Centre combines elderly care with medical care, nursing and recoveryservices. We aim to build Clifford Elderly Nursing Centre into a transitional hub, which bridgesthe gap between medical institutions and traditional elderly care homes.

Dental Care Business

Commencing its business in 2019, Clifford Dental Clinic provides to the residents in thenearby neighbourhood general dentistry services, including oral examination, treatment planning,panoramic radiography, cone-beam computed tomography, periodontal treatment, preventive andconservative dentistry, dental implant, crown and bridge, endodontics, prosthodontics, oralsurgery and paedodontics services.

Depicted below are pictures of Clifford Dental Clinic:


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The following table sets forth a summary of the basic information of Clifford Dental Clinicas of the Latest Practicable Date:

Clifford Dental Clinic

Address No. 14 & 16, Clifford Celebrity FourthStreet, Panyu District, Guangzhou CityGuangdong Province, the PRC

Average consultancy fee charged for eachcustomer for a visit or session (RMB)– FY2019 1,037– FY2020 1,039– FY2021 1,736

As of 31 December 2021, Clifford Dental Clinic employed 1 dentist and 4 dentalhygienists.

During the Track Record Period, our revenue contributed by dental care servicescontributed approximately RMB4.1 million for FY2021 only, representing approximately 0.3%of our total revenue for FY2021.

SALES OF PHARMACEUTICAL PRODUCTS

Our pharmaceutical product distribution business consist of the operation of retailpharmacies and wholesale business. Our customers are classified into (i) individual customerswho make purchases from our retail pharmacies, and (ii) industry customers which makepurchases from our wholesale business.


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To complement the pharmacy of our Hospital, our retail pharmacy business focuses on thesales of OTC drugs, prescription drugs, medical consumables (including face masks) andnon-drug healthcare and wellness products.

During the Track Record Period, our revenue contributed by sales of pharmaceuticals(including retail and wholesale) contributed approximately RMB31.4 million for FY2021 only,representing approximately 2.6% of our total revenue for FY2021.

Retail pharmacy business

The first retail pharmacy under the brand of Clifford Xinda Pharmacies (祈福新大藥房)was established in the Hospital area in 2017. As of 31 December 2020 and 2021 and as of theLatest Practicable Date, we operated 3, 5 and 5 pharmacies in the Guangdong Province.

Set out below are pictures of Clifford Xinda Pharmacies:


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Amongst the retail pharmacies operated by our Group during the Track Record Period, onlyone of them (“Mingdu Pharmacy”), was operated by Pharmacy (Mingdu) PRC Co, while all theother retail pharmacies have been operated by Pharmacy (Xinda) PRC Co. Considering ourGroup’s strategy of expanding our retail pharmacy network and to consolidate the operation andmanagement of all our retail pharmacies under Pharmacy (Xinda) PRC Co, we proceeded withthe merger of Pharmacy (Mingdu) PRC Co with Pharmacy (Xinda) PRC Co in August 2021,such that Mingdu Pharmacy became operated by Pharmacy (Xinda) PRC Co Clifford MingduBranch (廣州市祈福新大藥房有限公司祈福名都分公司). For the purpose of completing theregistration procedures of Mingdu Pharmacy and the completion of the acquisition, MingduPharmacy’s operations were temporarily suspended from 21 June 2021 to 1 August 2021. Duringthe Track Record Period and up to the Latest Practicable Date, save and except for thetemporary suspension of Mingdu Pharmacy’s business as stated above, none of our retailpharmacies closed down since their respective dates of establishment. For details of the mergerof Pharmacy (Mingdu) PRC Co and its subsequent deregistration, please refer to the sectionheaded “History, Reorganisation and Development – Change of Group Structure during the TrackRecord Period – Deregistration of our subsidiaries” in this document.

Wholesale business

In our wholesale business, we act as wholesaler and sell primarily pharmaceutical productsto industry customers, consisting mainly of pharmaceutical product distributors. We profit fromthe price difference between our selling price and purchase costs. Except for narcotic drugs andClass I psychotropic drugs which are subject to maximum factory prices and maximum retailprices set by the NDRC and/or the NHSA, we generally set the prices of our products based onproduct category, market demand and competition, procurement price and marketing strategy.Typically, we enter into pharmaceutical products framework supply agreements with our


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customers, the salient terms of which generally include the products to be supplied, relevantspecifications and quality standard, delivery and inspection arrangements, settlement and creditterms.

OTHER ACTIVITIES AND FUNCTIONS OF OUR GROUP

Apart from our revenue-generating business operations, we also undertake variousnon-revenue-generating activities, including the following:

Medical Research

We actively encourage medical professionals from multi-disciplines to undertake medicalresearch initiatives in conjunction with their practice, which in turn may improve our collectiveknowledge in the medical domain and ultimately the way our patients may be treated. From timeto time, our medical professionals publish research findings on scientific or medical journals,including Journal of General Surgery for Clinicians (Electronic Version) (《臨床普外科電子雜誌》), China Medicine and Pharmacy (《中國醫藥科學》), China Practical Medicine (《中國實用醫藥》) and Chinese Journal of Integrated Nursing (《中西醫結合護理》).

Our Hospital has established research and teaching collaborations with various medical oreducational institutions in the PRC, such as Jinan University (暨南大學), Guangzhou Universityof Chinese Medicine (廣州中醫藥大學) and the Third Affiliated Hospital of Sun Yat-SenUniversity (中山大學附屬第三醫院). In 2014, our Hospital and Jinan University have jointlyestablished the “Jinan University School of Medicine – Guangdong Clifford HospitalTransformational Medical Research Centre (暨南大學醫學院-廣東祈福醫院轉化醫學研究中心)”to facilitate the joint research initiative, which primarily focuses on new treatments andtherapies, and any intellectual properties rights relating to the relevant research findings shall bejointly owned by our Hospital and Jinan University. In 2018, our Hospital and Jinan Universityentered into a framework agreement, pursuant to which the parties agreed to make arrangementsfor our Hospital to be recognised as a non-administered affiliated hospital (非直屬附屬醫院) ofJinan University. In 2021, our Hospital entered into a reproductive medicine alliance cooperationagreement (生殖醫學專科聯盟合作協議) with the University of Hong Kong-Shenzhen Hospital(香港大學深圳醫院) (the “HKU-Shenzhen Hospital”), pursuant to which the parties agreed thatthe HKU-Shenzhen Hospital shall provide supervision and suggest treatment plans for patientswith infertility disorders to our Hospital, and that our Hospital shall be able to send its medicalprofessionals to HKU-Shenzhen Hospital for training and exchange. We believe thesecollaborations allow us to study, learn and integrate (to the extent appropriate) best practicesinto the clinical practices of our Hospital.


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Medical Education

We are also dedicated in teaching and training activities to cultivate talents for the medicalindustry. For instance our Hospital partnered with Guangzhou University of Chinese Medicine,Qilu Medical University (齊魯醫藥學院), Xiangtan Medicine & Health Vocational College (湘潭醫衛職業技術學院), Guangzhou Huaxia Vocational College (廣州華夏職業學院) and YiyangMedical College (益陽醫學高等專科學校) to provide clinical internship and apprenticeshipopportunities to students in various disciplines and pharmacy.

Social Contribution

As part of our corporate social responsibility, we provide free or discounted medicalassistance and education seminars. To benefit the underserved communities in the society, wearrange for multi-disciplinary medical professionals to perform community visits to provide freeor discounted medical assistance from time to time. In late 2020, we established the CliffordHealth Service Centre, a non-profit medical and healthcare service entity, with the aim to servethe community. Our Hospital also organises education seminars designed to equip citizens fromthe neighbourhood with basic healthcare knowledge for preventing common diseases and forseeking timely medical assistance upon discovery of relevant symptoms.

IMPACT OF COVID-19 OUTBREAK

Since late 2019, the outbreak of a novel strain of coronavirus causing coronavirus disease2019 (COVID-19) has become widespread in the PRC and around the world. On 11 March 2020,the World Health Organization announced the COVID-19 outbreak a pandemic. The spread ofCOVID-19 continues to affect the PRC, where our Hospital and our ancillary healthcarefacilities are located.

Measures implemented by us in response to the outbreak of COVID-19

Since the outbreak of COVID-19, our Group has implemented various measures to ensurethe health and safety of our patients, our staff and their families. Our Hospital has alsoimplemented extra measures to provide care for patients who are diagnosed to be (or may be)infected with COVID-19. These measures include, among others:

➢ our Hospital has established the Leading Committee for the Prevention and Control ofCOVID-19 for the overall supervision and monitor of prevention policies andmeasures, promotion of COVID-19 related information and vaccination administrationworks of our Hospital;

➢ enhancing our Hospital’s infectious disease control and prevention by setting up (i) adesignated fever out-patient clinic for the purpose of detecting patients with fever andother symptoms of COVID-19, and performing COVID-19 nucleic acid tests and/oradmitting patients to isolation ward for further examination (if necessary) and (ii) thevaccination department for providing COVID-19 vaccination services to the public;


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➢ restricting family visits of our Hospital by limiting the number of family visitors andrequiring all visitors to wear face masks during the visit;

➢ measuring body temperature for every visitor upon entry to our Hospital (recentmedical history of patients regarding infectious diseases will also be checked) and ourancillary healthcare facilities and screening all patients with symptoms of fever;

➢ regularly cleaning and properly disinfecting common areas through our Hospital(which are more frequent for high risk areas, such as the fever out-patient clinic, theisolation ward, operation theatres and delivery rooms) and our ancillary healthcarefacilities;

➢ cancelling or rescheduling group activities within our Hospital and our ancillaryhealthcare facilities; and

➢ constantly providing training to our staff in relation to the prevention of COVID-19and ensuring the sufficiency of face masks, medical gloves and other personalprotective equipment.

Our treatment of COVID-19 patients

Since the beginning of 2020 and up to the Latest Practicable Date, the fever out-patientclinic of our Hospital had six confirmed cases of COVID-19. Such confirmed COVID-19patients had been kept at the negative-pressure isolation ward of our Hospital. As required bythe local government, we transferred all confirmed COVID-19 patients to another hospital whichwas designated by the local government to provide treatment and healthcare services to patientswho are diagnosed to be (or may be) infected with COVID-19. Since the last confirmedCOVID-19 patient was transferred out of our Hospital and up to the Latest Practicable Date, ourHospital had not reported any new confirmed COVID-19 cases.

For 2020 and 2021, the vaccination department of our Hospital administered over 410,000doses of COVID-19 vaccinations. The individuals who received COVID-19 vaccinations fromour Hospital include those who came from mainland China, Hong Kong, Macau or othercountries.

Our treatment of other patients

Since the outbreak of COVID-19, save as disclosed below, our Hospital has beencontinuously providing treatment and care to our other patients.

As confirmed COVID-19 patients had previously stayed in our Hospital, as required by therelevant government policies, all of our Hospital’s out-patient hospital services were suspendedfrom 7 February 2020 to 12 March 2020. During such period, the in-patient hospital servicesalso suspended the admission of new patients. Upon proper disinfection throughout our Hospitaland hygiene assessment by relevant governmental authorities, most departments of our Hospital


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have resumed services (except for the stomatology, ophthalmology, ENT, children health andrehabilitation disciplines and our physical examination services which was further suspendedduring 7 February 2020 to 19 March 2020 as required by the local government) since 13 March2020 and has been functioning normally since then. During the Track Record Period, save asdisclosed above, no patients staying in our Hospital were moved out to other hospitals as aresult of the COVID-19 outbreak.

Provision of other healthcare services

As part of the effort to control and prevent COVID-19 and as required by the relevantgovernment policies:

➢ the operation of Clifford Dental Clinic was temporarily suspended during the periodfrom 7 February 2020 to 17 April 2020;

➢ having adopted the prevention and control measures in response to the COVID-19outbreak as stated above (such as visit restrictions), Clifford Postnatal Care Centreand Clifford Elderly Care for Residents have maintained their operations; and

➢ there was no suspension of our pharmaceutical retail and wholesale business.

For further details of the impact of the COVID-19 outbreak on the financial performance ofour healthcare services and sales of pharmaceuticals, please refer to “Financial Information –Financial Information of the Healthcare Group – Description of key components of ConsolidatedStatements of Comprehensive Income of the Healthcare Group” in this document.

Impact of the COVID-19 outbreak

Our medical professionals

Since the outbreak of COVID-19, our Group has not experienced any significantinterruption in the operation of our Hospital or ancillary healthcare facilities. We designatedmedical professionals to the fever out-patient clinic and the vaccination department in order toensure the sufficiency of manpower to respond to the evolving situation. We also providedadequate personal protective equipment and took a series of measures to protect our staff fromcontaminating COVID-19.

Our supply chain

During the Track Record Period, we had not experienced any material disruption orshortage of supplies of pharmaceuticals, medical consumables and medical equipment or anymaterial suspension or termination of other services provided by third-party suppliers since theCOVID-19 outbreak, and our suppliers had resumed normal operations as of the LatestPracticable Date.


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Our business and financial performance

After the outbreak of COVID-19, we witnessed a decrease in the number of in-patient andout-patient visits and surgeries performed for 2020. During FY2020, the number of in-patientand out-patient visits, in-patient surgeries and day surgeries performed of our Hospital decreasedby approximately 42.0%, 33.3%, 9.0% and 18.7%, respectively, as compared to FY2019. As aresult, our Group’s revenue and profit decreased by approximately 20.2% and 30.9%,respectively, for FY2020, as compared to FY2019.

As evidenced by the increase by the significant increase in our revenue contributed by thehospital business segment of approximately 31.6% for FY2021, which contributed to asignificant portion of the increase in our total revenue of approximately 39.5% for FY2021, ascompared to FY2020. During FY2021, the number of in-patient and out-patient visits, in-patientsurgeries and day surgeries performed also increased by approximately 25.3%, 77.2%, 23.1%and 38.7%, respectively, as compared to FY2020. Therefore, our Directors believe that theadverse operational and financial impact caused by the outbreak mentioned above wastemporary.

However, the extent to which the COVID-19 outbreak impacts our business, results ofoperations and financial condition will depend on many factors beyond our control, including theextent of resurgences of the disease and its variants, as well as control and prevention measuresto be taken by governmental authorities. It is uncertain when and whether COVID-19 could becontained globally. In particular, the recent emergence of the Omicron virus variant, aCOVID-19 virus variant which is significantly more infectious than its predecessors, has createdmore uncertainties for our business operations under the COVID-19 pandemic. We are closelymonitoring impact of COVID-19 outbreak on our operation and financial performance, and weplan to continue to implement measures necessary to ease the impact of the outbreak. While wecontinue to assess the impact of the COVID-19 outbreak, we are unable to accurately predict thefull impact of COVID-19. We cannot assure you that the COVID-19 pandemic will not furtherescalate or have a material adverse effect on our results of operations, financial condition orprospects. Our operations may also be adversely affected if any of our medical professionals andstaff, or employees of our suppliers and other business partners were suspected of contracting orcontracted COVID-19. For more details, please refer to the section headed “Risk Factors – Risksrelating to our Business and Industry – The recent outbreak of the Novel Coronavirus Disease2019 (COVID-19) and another wave of outbreak caused by Delta, Omicron or other virusvariants in the future may have a material adverse effect on our business, results of operation,financial condition and prospects” in this document.


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MARKETING AND PROMOTION

We primarily rely on social media (including WeChat public accounts and TikTok accountsof our Hospital and our ancillary healthcare facilities) for releasing information regarding ourhealthcare services and healthcare-related knowledge. Our representatives also visit variouscommercial insurance providers with a view to seeking strategic partnerships with them. Further,we believe that our assistance to the underserved communities in the society (by way of free ordiscounted medical assistance and education seminars) not only benefit the needed but alsopromote our brand awareness and reputation.

For the Track Record Period, our marketing and promotion expenses amounted toapproximately RMB0.9 million, RMB0.2 million and RMB0.4 million, respectively.

SEASONALITY

We experience seasonal fluctuations in our results of operations. Our Hospital generallyexperiences fewer patient visits in January or February of each year due to the effect of theChinese New Year holiday. As such, any comparison of sales and results of operations betweendifferent periods within a single financial year for our Group may not be meaningful and shouldnot be relied upon as indicators of our Group’s performance.

PROCUREMENT AND SUPPLIES

We centralise the procurement of pharmaceuticals, medical consumables and medicalequipment and other non-medical supplies for the operation of our Hospital and other healthcarebusinesses. In order to benefit from economy of scale, we aggregate the needs of our Hospitaland other healthcare businesses to collectively negotiate with our suppliers for bulk purchase,where practicable, which improves our bargaining power. During the Track Record Period, theprocurement costs for pharmaceuticals and medical consumables in aggregate accounted forapproximately 48.0%, 42.3% and 38.3% of our total cost of sales, respectively.


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The following flowchart illustrates our standard procurement process of pharmaceuticals,medical consumables and medical equipment of our Hospital and our other healthcarebusinesses:

Suppliersmake

delivery

Suppliersmake

delivery

Our Hospital

Regular

procurement

Procurement of

new pharmaceuticals

or medical equipment

Centralised

procurement

Other healthcare

businesses

Inspection of delivery

Inspection of delivery by Pharmacy Department,Materials and Assets Management Department or

Equipment Department

Selection of suppliers approved bythe management of our Hospital

Procurement requests approved bythe management of our Hospital

Procurementdepartment makes

order with suppliers

Procurement departmentfinalises terms of supplywith approved suppliers

and enter intosupply agreement.

Procurement departmentseek price inquiries and

report to the management of our Hospital

Submission ofprocurement requests

from otherhealthcare businesses

Approved by PM Committees

PNM Departments Approved by PNM Departments

Procurement request submitted by doctors or medical professionals


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For regular procurement of customary pharmaceuticals, medical consumables and medicalequipment, the procurement requests are made by the Pharmacy Department (藥學部), theNursing Department (護理部) and the Materials and Assets Management Department (物資資源管理部) (collectively, the “PNM Departments”) for approval by the management of ourHospital directly. For procurement of new pharmaceuticals, medical consumables and medicalequipment, their needs are first reported by the doctors or medical professionals of therequesting discipline to the PNI Departments. And the procurement requests shall first byapproved by the Pharmacy Committee (藥室委員會) and the Medical Machinery and EquipmentCommittee (醫療機械和設備委員會) (collectively, the “PM Committees”), respectively, beforethey are finally approved by the management of our Hospital.

All procurement orders are collected and centrally processed by our Group’s procurementdepartment. Price inquiries will be sent to at least three suppliers for each type ofpharmaceuticals, medical consumables and medical equipment to be procured. The procurementdepartment then submits the list of suppliers, together with price quotations, for the approval ofthe management of our Hospital. After obtaining such approval, the procurement departmentfinalises the terms of supply and will arrange for the supply agreements to be made with theapproved suppliers. Following the orders being placed by our procurement department,pharmaceuticals, medical consumables and medical equipment will be delivered directly to ourHospital or our ancillary healthcare facilities for inspection. For our Hospital, inspections ofpharmaceuticals, medical consumables and medical equipment are performed by our PharmacyDepartment, Materials and Assets Management Department or Equipment Department (設備部),respectively, to ensure quality control (including expiration dates, packaging, product descriptionand other quality indicators). If our inspection discovers expired or defective products, we returnthem to manufacturers or the distributors pursuant to the relevant term of the supply agreements.During the Track Record Period, we did not encounter any quality issues or receive anydefective products that would have a material adverse effect on our business, financial conditionor results of operations.

We procure pharmaceuticals, medical consumables and medical equipment from qualifiedsuppliers selected having regard to (among other factors) their product offerings, quality,pricing, service, overall track record, and reputation. We require our suppliers to hold andmaintain requisite licenses and permits to operate their business (such as business licensesand/or the pharmaceutical supply licence (藥品經營許可證)). Our procurement department is incharge of selecting qualified suppliers, which are then finally approved by the management ofour Hospital. Our procurement department regularly obtains feedbacks from our disciplines toensure the quality and delivery standards, which will form the basis of its review and assessmentof suppliers for updating the list of qualified suppliers. Suppliers who do not meet our supplystandards or requirements will be removed from the list and will not be considered for furtherprocurement. For each type of supplies needed, we usually have more than one supplier toensure that sufficient inventories and also our bargaining power. As of the Latest PracticableDate, we did not rely on any single supplier for any of our major pharmaceuticals, medicalconsumables and medical equipment. During the Track Record Period, we did not experienceany shortage of supplies that could materially or adversely affect our business, financialcondition or results of operations.


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Except for procurement of medical equipment on a one-off basis, we typically enter intosupply agreements with our suppliers on an annual basis. We generally do not enter into anylong-term agreements with our suppliers. The terms of the supply contracts vary depending ondifferent types of supplies. For large medical equipment, the suppliers usually provide awarranty period during which the suppliers will provide maintenance service. The prices of thesupplies are negotiated between our procurement department and the suppliers. During the TrackRecord Period, we did not experience significant fluctuation in the prices of our supplies. Webelieve we generally have a good working relationship with all of our suppliers. We typicallyhave a credit term of 1 to 3 months for pharmaceuticals and 1 to 1.5 months for medicalconsumables. In terms of medical equipment, we typically make prepayments for a portion ofthe purchase price and subsequently pay for a substantial portion of the purchase price afterinstallation and inspection of medical equipment, and settle the rest of the purchase price uponor after expiration of warranty period pursuant to the terms of the relevant contracts. Dependingon the type of medical equipment purchased, the warranty period typically ranges from one tothree years.

Except for narcotic drugs and Class I psychotropic drugs, which are still subject tomaximum factory prices and maximum retail prices set by the NDRC and/or the NHSA,pharmaceutical suppliers are generally entitled to set the wholesale prices of their products.However, when sold to medical institutions in the PRC, the wholesale prices of thosepharmaceuticals on the price control list may not exceed the “bidding prices” or other priceceilings set by the relevant government authority. Consequently, consistent with industrypractice, we are subject to such price controls when we purchase pharmaceuticals from oursuppliers.


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During the Track Record Period, our top five suppliers in aggregate accounted forapproximately 77.9%, 77.4% and 46.0% of our total purchase of the respective years. Our largestsupplier accounted for approximately 66.3%, 59.3% and 18.7%, respectively, of our totalpurchase during the Track Record Period. The following table sets forth certain information ofour top five suppliers during the Track Record Period:

Rank Supplier’s name

Connectedperson(Y/N)

Product typesupplied

Appropriateyears ofbusiness

relationshipwith our

GroupAmount of

purchase% of total

purchase(RMB’000) (%)

For FY2019

1 Members of the HealthcareGroup(1)

N/A(1)Pharmaceuticals,

medicalconsumables andmedicalequipment

N/A(1) 298,888 66.3

2 Supplier A(2) N Labouroutsourcing andpropertymanagementservices

2 15,984 3.6

3 Supplier B(3) N Pharmaceuticalsand medicalconsumables

9 12,037 3.2

4 Supplier C(4) N Medicalconsumables

6 11,055 2.5

5 Supplier D(3) N Pharmaceuticaland medicalconsumables

9 10,831 2.4

Sub-total 348,795 77.9

Total 450,608 100.0


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GroupAmount of

purchase% of total


For FY2020

1 Members of the HealthcareGroup(1)

N/A(1) Pharmaceuticals,medicalconsumables andmedicalequipment

N/A(1) 199,702 59.3


2 30,462 9.1

3 Supplier D(3) N Pharmaceuticalsand medicalconsumables

9 14,379 4.3

4 Supplier C(4) N Medicalconsumables

6 8,129 2.4

5. Supplier E(3) N Pharmaceuticalsand medicalconsumables

6 7,709 2.3

Sub-total 260,381 77.4

Total 336,624 100.0


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GroupAmount of

purchase% of total


For FY2021

1 Supplier D(3) N Pharmaceuticalsand medicalconsumables

9 71,114 18.7


2 38,084 10.0

3 Supplier B(3) N Pharmaceuticalsand medicalconsumables

9 37,451 9.9

4 Supplier F(6) N Testing services 9 16,010 4.2

5 Supplier E(3) N Pharmaceuticalsand medicalconsumables

6 12,092 3.2

Sub-total 174,751 46.0

Total 379,878 100.0

Notes:

1. During the Track Record Period and up to the Latest Practicable Date, our Group centralised procurementof pharmaceuticals, medical consumables and medical equipment for our various businesses, and suchprocurement function has been undertaken by Pharmaceuticals PRC Co and Medical Equipment PRC Co(both of which are members of the Healthcare Group). In such connection, Pharmaceuticals PRC Co andMedical Equipment PRC Co directly procure pharmaceuticals, medical consumables and medicalequipment from third-party suppliers, and subsequently sell such pharmaceuticals, medical consumablesand medical equipment to members of the Hospital Group and the Healthcare Group. As a result, beforethe combination of the Healthcare Group with our Group on 29 December 2020, both Pharmaceuticals PRCCo and Medical Equipment PRC Co were classified as suppliers of our Group for FY2019 and FY2020;after such combination, they ceased to be suppliers of our Group.


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2. Supplier A is a company that engages in the provision of human resources solutions and propertymanagement services.

3. Each of Supplier B, Supplier D and Supplier E is a company that engages in sales of pharmaceuticals andmedical consumables.

4. Supplier C is a company that engages in sales of medical consumables.

5. Supplier F is a company that engages in the provision of various physical and health examination services.

To the best knowledge of our Directors, none of our Directors and their respective closeassociates or any of our Shareholders holding more than 5% of the number of issued shares ofour Company as of the Latest Practicable Date has any interest in any of our top five suppliersduring the Track Record Period.

CUSTOMERS

During the Track Record Period, our customers primarily consisted of (i) patients at ourHospital; (ii) individual customers of our ancillary healthcare services at Clifford Postnatal CareCentre, Clifford Elderly Care for Residents and Clifford Dental Clinic; and (iii) individual retailcustomers and wholesale industry customers of our pharmaceutical supply business. Based onthe information supplied, our individual customers are typically resident in the GuangdongProvince and the Greater Bay Area. The wholesale industry customers of our pharmaceuticalsupply business are typically pharmaceuticals distributors.

During the Track Record Period, our top five customers in aggregate contributed toapproximately 0.8%, 1.2% and 2.3% of our revenue, respectively, during the Track RecordPeriod. Our largest customer (being companies under the control of Ms. Wendy Man and/or Ms.Wendy Man’s Spouse accounted for approximately 0.3%, 0.5% and 1.4%, respectively, of ourtotal revenue during the Track Record Period. To the best knowledge of our Directors, save for(i) the provision of medical services (including physical examination services for employees,healthcare training services and sales of pharmaceuticals) to our largest customer (beingcompanies under the control of Ms. Wendy Man and/or Ms. Wendy Man’s Spouse) and (ii) theprovision of medical services to Ms. Wendy Man’s Spouse (a connected person of our Company)which accounted for approximately 0.1%, 0.2% and 0.2%, respectively, of our revenue duringthe Track Record Period, none of our Directors and their respective close associates or any ofour Shareholders holding more than 5% of the number of issued shares of our Company as ofthe Latest Practicable Date has any interest in any of our top five customers during the TrackRecord Period.


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Customers of our Hospital

While we provide healthcare services directly to individual patients/customers, we receivepayments for healthcare services provided by our Hospital primarily from (i) social insuranceprogrammes; (ii) patients who finance their medical treatments themselves (and/or commercialinsurance policyholders who are subsequently reimbursed by commercial insurance providers);(iii) commercial insurance providers who directly settle medical bills for patients (who arecommercial insurance policyholders); and (iv) business corporations who purchase employeehealthcare services from us. The following table sets forth breakdown of our revenue attributableto our in-patient and out-patient hospital services contributed by patients covered by socialinsurance programmes and not covered by social insurance programmes, respectively, for theyears indicated:

FY2019 FY2020 FY2021

Amount


services Amount


services Amount


services(RMB’000) % (RMB’000) % (RMB’000) %

Revenue from patients covered by socialinsurance programme:– Revenue attributable to social insurance

programmes(1) 273,748 25.4 205,628 23.9 262,704 23.4– Revenue from co-payments from

patients(2) 154,684 14.4 105,756 12.3 151,147 13.4

Sub-total 428,432 39.8 311,384 36.2 413,851 36.8

Revenue from patients not covered by socialinsurance programme:– Self-pay customers(3) 624,082 58.0 528,452 61.5 677,153 60.1– Commercial insurance providers(4) 6,546 0.6 4,351 0.5 8,154 0.7– Corporate customers(5) 17,500 1.6 15,399 1.8 26,621 2.4

Sub-total 648,128 60.2 548,202 63.8 711,928 63.2

Total 1,076,560 100.0 859,586 100.0 1,125,779 100.0

Notes:

1. It represents revenue attributable to social insurance programmes deriving from payments directly settledby social insurance management governmental authorities.


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2. It represents revenue attributable to the portion of payments financed by patients covered by socialinsurance programme, these include: (a) patients who are required by relevant social insurance regulationsto finance a certain portion of their medical treatments and/or pharmaceuticals (which are within the scopeof pharmaceuticals and treatments covered by social insurance programmes) and (b) patients who finance acertain portion of their medical treatments and/or pharmaceuticals, which are not within the scope ofpharmaceuticals and treatments covered by social insurance programmes.

3. It includes (a) patients who finance all of their medical bills themselves (i.e. without relying on socialinsurance programmes) and (b) patients (who are commercial insurance policyholders) who settle theirmedical bills themselves (and are subsequently reimbursed by the commercial insurance providersaccording to the relevant commercial insurance policy).

4. It represents commercial insurance providers who directly settle the medical bills for the patients (who arecommercial insurance policyholders) according to the relevant commercial insurance policy.

5. It represents business corporations, which purchased our Group’s healthcare services, such as physicalexamination, for their designated persons, normally being their employees.

Our patients’ self-pay portion of the medical expenses is generally paid on the day ofdischarge. The settlement cycle for direct settlement under designated social insuranceprogrammes will normally take 30 to 90 days for the application, process and settlement withthe relevant governmental authorities, while the settlement cycle for direct settlement bycommercial insurance providers ranges from 15 to 45 days after the end of each month. Thesettlement cycle for our corporate customers is typically 7 to 45 days after we issue an invoice.

Social insurance programmes

As our Hospital is a Medical Insurance Designated Institution, part of our patients rely onpublic medical insurance programmes to settle all or part of their medical bills. For the threeyears ended 31 December 2021, our revenue attributable to patients covered by social insuranceprogrammes amounted to approximately RMB428.4 million, RMB311.4 million and RMB413.9million, respectively, accounting for 39.8%, 36.2% and 36.8% of our total revenue contributedby our in-patient and out-patient hospital services for the respective years. There are no specificrules or regulations limiting the amount which our Group could receive from such socialinsurance programs in a given year. However, social insurance programs may reject claims forreimbursement from time to time if certain medicines we prescribed or medical treatments weprovided to patients are deemed as out of coverage after review. During the years ended 31December 2019 and 2020, we failed to receive reimbursements from social insurance programswhich was recognised as reduction of revenue of approximately RMB2.6 million and RMB0.1million respectively, for which we have treated as a reduction of revenue (for FY2021,applications for reimbursements from social insurance programmes were still being processed bythe relevant governmental authorities as of the Latest Practicable Date). As of the LatestPracticable Date, we had not received any administrative notice that the Medical InsuranceDesignated Institution status of our Hospital will be terminated or will not be renewed.


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Commercial insurance policyholders

Commercial insurance providers typically maintain a list of “designated” hospitals that theyhave approved as appropriate providers of medical services. Generally, their clients will only bereimbursed for treatments from hospitals included in such list. Our Hospital is included on thelist of “designated” hospitals of a number of commercial insurance providers. Depending on theterms of the relevant commercial insurance policy, (i) their clients (i.e. commercial insurancepolicyholders) may first settle medical bills with us on the day of discharge, and then separately(or subsequently) claim for reimbursements from their commercial insurance providers or (ii) thecommercial insurance providers may directly settle the medical bills for their clients. In caseswhere payments were first made by commercial insurance policyholders, such payments wereclassified under the “self-pay” category in the payer source table above. As we are not generallyinvolved in such settlement process, we are unable to ascertain the amount of payments frompatients who are funded by such commercial insurance providers.

Corporate customers

During the Track Record Period, we have provided medical services or physicalexamination services to over 300 corporate customers for each year primarily for the provisionof medical services or physical examination services to their employees. Depending on thepayment terms as set contained in the respective service agreements, (i) service receivers maysettle the medical bills/physical examination fees on the date of discharge or (ii) our corporatecustomers may directly settle the medical bills/physical examination fees with us. In cases werepayments were made by the service receivers, such payments were classified under the“self-pay” category in the payer source table above.

Customers of ancillary healthcare services

Customers of our ancillary healthcare services include: (i) mothers and newborns of ourpostpartum healthcare services offered by Clifford Postnatal Care Centre; (ii) elderly of CliffordElderly Care for Residents; and (iii) patients of Clifford Dental Clinic, all of which areindividual customers. During the Track Record Period, our revenue contributed by theseancillary healthcare services contributed approximately RMB36.9 million for FY2021 only,representing approximately 3.1% of our total revenue for FY2021.

Customers of pharmaceutical supply business

During the Track Record Period, the revenue contributed by sales of pharmaceuticals(including wholesale to pharmaceuticals distributors and retail sales at our pharmacies)amounted to approximately RMB31.4 million for FY2021 only, representing approximately 2.6%of our Group’s total revenue for FY2021.


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OVERLAPPING OF CUSTOMERS AND SUPPLIERS

During the Track Record Period, to the best knowledge and belief of our Directors, therehave been occasions where our top five suppliers have also purchased medical services of ourHospital (such as physical examination services for their employees), engaged our Hospital forhealthcare training services and/or procured pharmaceuticals from our Group, making them ourcustomers as well, or vice versa. There were 2, 2 and 4 overlapping customer-suppliers for thethree years ended 31 December 2021, respectively, among which one of them, being Supplier A,was one of our top five suppliers during the Track Record Period (for the background and theproducts/services supplied to our Group, please refer to the paragraph headed “Procurement andSuppliers” in this section). As for our top five customers during the Track Record Period, threeof them were overlapping customer-suppliers, including (i) our largest customer for each ofFY2019, FY2020 and FY2021 (being companies under the control of Ms. Wendy Man and/orMs. Wendy Man’s Spouse which are connected persons of our Group); and (ii) two customerswhich are engaged in wholesale of pharmaceuticals and sales of medical consumables andmedical equipment.

The table below sets for the total sales, the percentage of sales, the relevant cost of salesand the gross profit margin attributable to all the overlapping customers-suppliers during theTrack Record Period:

Overlapping customer-supplier Products/services procured FY2019 FY2020 FY2021

1. Supplier A Medical services

– Sales (percentage sales to our Group’srevenue)

RMB82,000 (Lessthan 0.1%)

RMB94,000 (Lessthan 0.1%)

RMB233,000(Less than

0.1%)

– Notional cost of sales(1) RMB59,000 RMB65,000 RMB143,000

– Gross profit margin 27.6% 30.8% 38.7%


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Overlapping customer-supplier Products/services procured FY2019 FY2020 FY2021

2. Companies under the control ofMs. Wendy Man and/or Ms.Wendy Man’s Spouse

(a) Medical services


RMB3,219,000(0.3%)

RMB4,184,000(0.5%)

RMB11,343,000(0.1%)

– Notional cost of sales(1) RMB2,329,000 RMB2,896,000 RMB6,951,000

– Gross profit margin 27.6% 30.8% 38.7%

(b) Sales of pharmaceuticals


– – RMB322,000(Less than

0.1%)

– Notional cost of sales(1) – – RMB196,000

– Gross profit margin – – 39.1%

(c) Healthcare training services


– RMB462,000(0.1%)

RMB4,660,000(0.4%)

– Notional cost of sales(1) – RMB359,000 RMB3,200,000

– Gross profit margin – 22.3% 31.3%

3. Customer A(2) Sales of pharmaceuticals


– – RMB4,725,000(0.4%)

– Notional cost of sales(1) – – RMB2,876,000


4. Customer B(2) Sales of pharmaceuticals


– – RMB1,948,000(0.2%)

– Notional cost of sales(1) – – RMB1,186,000


Notes:

1. As our total cost of sales cannot be apportioned to transactions with each particular overlappingcustomer-supplier, this represents the notional cost of sales for the products/services procured by theoverlapping customer-supplier, calculated as the sales to the relevant overlapping customer-suppliermultiplied by the actual gross profit margin of the relevant revenue stream for the relevant year, and hasbeen prepared for illustrative purpose only.

2. Despite Customer A and Customer B are engaged in wholesale of pharmaceuticals and sales of medicalconsumables and medical equipment, it is the market norm of the pharmaceutical distribution industry forwholesale distributors to procure different types of pharmaceuticals from each other to suit theircustomers’ demands.


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Our Directors are of the view that the sales to overlapping customers-suppliers areinsignificant to our Group’s performance as a whole. Our Directors have confirmed that all ofour transactions with our customers-suppliers during the Track Record Period were conducted inthe ordinary course of business under normal commercial terms and on arm’s length basis.

PRICING AND PRICING CONTROL

Medical services of and pharmaceuticals sold by our Hospital

Pursuant to the currently applicable PRC laws and regulations, for-profit private hospitalsare generally entitled to setting the prices of medical services at their discretion. However, if amedical institution is a Medical Insurance Designated Medical Institution, it may only chargefees for provision of medical services in accordance with the pricing guidelines set by therelevant local healthcare administrative authorities and public medical insurance providers. Suchpricing guidelines stipulate the range of medical service fees that can be charged for patientscovered by public medical insurance programs. Medical institutions without such designation arenot subject to these pricing restrictions, and are entitled to set medical service fees based ontheir cost structures, market demand and other factors.

As our Hospital is a Medical Insurance Designated Institution, part of our patients rely onpublic medical insurance programmes, including Urban Employees Medical InsuranceProgramme and Urban and Rural Residents Medical Insurance Programme (which integrated theprevious Urban Residents Medical Insurance Programme and Rural Medical InsuranceProgramme), to settle all or part of their medical bills. For patients covered by social insuranceprogrammes, we follow pricing guidelines stipulated by relevant local authorities and/or pricingcatalogs.

For medical services not covered by the pricing guidelines, we charge our fees or set theselling prices by taking into account the prices set by other public and private hospitals in thelocal market for the provision of similar medical services.

The pricing scheme of pharmaceuticals has been reformed pursuant to the Opinions onPromoting the Reform regarding the Pricing of Pharmaceuticals (《關於印發推進藥品價格改革意見的通知》) promulgated on 4 May 2015. Please refer to the section headed “RegulatoryOverview – Laws and Regulations Related to the Price Control” in this document for details.Under these regulatory changes, effective from 1 June 2015, the PRC government will no longerfix selling prices or impose price ceilings for pharmaceutical products except for certainspecialty drugs. However, as our Hospital is a Medical Insurance Designated Medical Institution,we may only sell pharmaceuticals to patients covered by social insurance programmes at theretail prices listed in certain catalogs promulgated by government authorities. Such retail pricesare determined according to the supplier’s bidding prices in the centralised pharmaceuticalprocurement process for public hospitals in Guangdong Province.

Healthcare services of our ancillary healthcare facilities

As a private provider of postpartum healthcare services, elderly care services and dentalcare services, we are permitted to set the prices of our healthcare services at our own discretion.The prices of our healthcare services are primarily based on positioning of our services,operating costs, market conditions, local consumer purchasing power and competitors’ pricing ofsimilar services.


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Our pharmaceutical supply business

Except for narcotic drugs and Class I psychotropic drugs, which are still subject tomaximum factory prices and maximum retail prices set by the NDRC and/or the NHSA, we aregenerally entitled to set the wholesale and retail prices of our products at our pharmacies andsales to industry customers at our discretion. The prices of our products are primarily based onproduct category, market demand and competition, procurement price and marketing strategy.Product prices are subsequently adjusted as market condition changes. However, as certain ofour retail pharmacies are medical insurance designated retail pharmacies (社會醫療保險定點零售藥店), we may only sell certain pharmaceuticals at the retail prices, which are listed in certaincatalogs promulgated by government authorities, to patients covered by social insurance.

INFORMATION TECHNOLOGY SYSTEMS

Our clinical information technology mainly includes the followings:

Hospital Information System (HIS): The HIS is used by us in daily operations at ourHospital by managing, among others, out-patientregistrations, in-patient admission, staffing of ourmedical professionals and billing history.

Electronic Medical Record (EMR)System:

The EMR System is used by us in the creation,storage and organization of the medical histories ofour in-patients and out-patients.

Picture Archiving andCommunications System (PACS):

The PACS is an image storage and transfer system, itis used by us to obtain, storage, management andprocess digital information (such as X-ray, computedtomography (CT), ultrasonic and MRI scans) fromour medical equipment. The PACS is used by usalong with our ultrasonic information system,endoscopy information system and radiologyinformation system.

Laboratory Information System(LIS):

The LIS manages laboratory requests and results, andissues reports and bills for our laboratory services.

Pregnancy Information System(PIS):

The PIS is a long distance health monitoring systemused by us to monitor the conditions of foetuses,such that our medical professionals may alert thepregnant mothers (or their family members) in caseof irregular signs.


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INTELLECTUAL PROPERTY

We place emphasis on the protection and administration of intellectual property rights, asthey are the key components to our strong brand recognition and form an integral part of ourbusinesses. In connection with our businesses, we own most trademarks or (as the case may be)we are licenced to use the intellectual property rights relevant to our businesses. We will seektrademark registration for our brands or marks from time to time, when our managementdetermines that it is competitively advantageous and cost effective for us to do so.

We entered into (i) the PRC Trademark Transfer Agreements with Clifford TM on 29November 2021, pursuant to which Clifford TM has agreed, among other things, to transfercertain trademarks registered in the PRC as set out therein to our Group; (ii) the HK TrademarkAssignment with Clifford TM on 7 March 2022, pursuant to which Clifford TM has agreed toassign to Hospital HK Co all its rights, title, benefits and interests regarding one trademarkregistered in Hong Kong as set out therein; and (iii) the PRC Trademark Licence Agreementwith Clifford TM on 7 February 2022, pursuant to which Clifford TM has agreed to grant anexclusive licence to our Group to use certain trademarks registered in the PRC as set out thereinfrom 7 February 2022 to 6 February 2032.

As of the Latest Practicable Date, our material intellectual property rights included (i) 31registered trademarks, seven registered patents and seven registered domain names in the PRC,and (ii) one registered trademark in Hong Kong. Among the 32 registered trademarks, oneregistered trademark was assigned to us under the HK Trademark Assignment, 13 registeredtrademarks were transferred to us under the PRC Trademark Transfer Agreements and fourregistered trademarks were licenced to us on an exclusive basis under the PRC TrademarkLicence Agreement. For details of our material intellectual property rights currently used by us,including trademarks, patents and domain names, please refer to paragraph 2.2 under AppendixV – “Statutory and General Information” to this document.

During the Track Record Period and up to the Latest Practicable Date, we were not engagedin or threatened with any claim for any material infringement of any intellectual property rights,whether as a claimant or as a defendant. Our Directors believe that we have taken reasonablemeasures to prevent infringement of our intellectual property rights.


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EMPLOYEES

We had 1,918 full-time employees as of 31 December 2021. As of the Latest PracticableDate, our Group had a total of 1,909 employees, most of which are located in the PRC. Thefollowing table sets forth a breakdown of the number of our employees by function as of 31December 2021 and as of the Latest Practicable Date:

FunctionAs of 31 December

2021As of the LatestPracticable Date

Number of

employees %

Number of

employees %

General staffSenior Management 10 0.5% 11 0.6%Finance and accounting 2 0.1% 1 0.1%IT and administration 1 0.1% 1 0.1%Risk management – – 1 0.1%

Subtotal 13 0.7% 14 0.7%

Our HospitalManagement and administration 145 7.6% 155 8.1%Logistics 184 9.6% 182 9.5%Finance and accounting 16 0.8% 14 0.7%Medical professionals 1144 59.6% 1132 59.4%Healthcare practitioners 55 2.9% 51 2.7%

Subtotal 1544 80.5% 1,534 80.4%

Other businesses(note)

Management and administration 56 2.9% 59 3.1%Logistics 144 7.5% 145 7.6%Procurement 16 0.8% 15 0.8%Finance and accounting 20 1.0% 19 1.0%Medical professionals 92 4.8% 92 4.8%Healthcare practitioners 33 1.7% 31 1.6%

Subtotal 361 18.8% 361 18.9%

Total 1,918 100.0% 1,909 100.0%

Notes:Employees of other businesses represents employees employed by members of our Group (other than ourHospital) for our Group’s other businesses, including rendering of postpartum healthcare services andelderly care services, dental care business and sales of pharmaceutical products.


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We believe the quality of our healthcare services largely depends on the quality of ourmedical professionals. We have implemented recruitment, remuneration and training policies inorder to uphold the quality of our medical professionals. For further details of our medicalprofessionals, please refer to the paragraph headed “Our Doctors and Medical Professionals” inthis section.

According to the PRC Labour Law (《中華人民共和國勞動法》) and the Labour ContractLaw of PRC (《中華人民共和國勞動合同法》), we are required to enter into labour contractswith individual workers we hired. The wages we paid to our employees and workers cannot belower than the local minimum wage standards specified by the government from time to time.We are also required to make severance payments to an employee when the term of his/heremployment contract expires, unless the employee voluntarily terminates the contract orvoluntarily rejects an offer to renew the contract in circumstances where the conditions offeredby the employer are the same as or better than those stipulated in the existing contract.

As required by relevant PRC laws and regulations, we participate in various employeesocial insurance plans and contributions to housing provident fund for our employees that areadministered by local government agencies, including housing provident fund, pension, medicalinsurance, maternity insurance, employment injury insurance and unemployment insurance.During the Track Record Period, we failed to set up housing provident fund accounts for certainemployees in time and failed to make sufficient contributions of social insurance and housingprovident fund for certain employees, but we had not been penalised or received any notificationfrom the relevant governmental authorities imposing any penalties in relation to such violations,nor experience any material labour dispute with our employees. Subsequently, our Group hasrectified such non-compliance incidents by setting up the housing provident fund accounts for allour eligible PRC employees and contributing sufficient housing provident fund and socialinsurance for all our eligible PRC employees since July 2021. Our PRC Legal Adviser hasfurther conducted interviews with Guangzhou Housing Provident Funds Management Centre (廣州市住房公積金管理中心), the Guangzhou City Panyu District Zhongcun Tax Office of the StateAdministration of Taxation of the PRC (國家稅務總局廣州市番禺區鐘村稅務所) and the SocialInsurance Fund Management Office of the Guangzhou City Panyu District Human Resources andSocial Security Bureau (廣州市番禺區人力資源和社會保障局社會保險基金管理辦公室), allbeing the competent governmental authorities to be interviewed as advised by our PRC LegalAdviser, respectively. As advised by our PRC Legal Adviser, given the prevailing practice andthe replies received during the above interviews with the corresponding competent authorities,the likelihood that we are subject to collection of all historical arrears and any material penaltiesdue to such non-compliance is remote. Save for the aforesaid non-compliance incidents, our PRCLegal Adviser has further advised us that, we have complied with the applicable laws andregulations relating to labour and employee benefit plans in all material aspects during the TrackRecord Period. We believe that our senior management and employees will continue to maintaingood relationships with each other. For further details, please refer to the section headed“Regulatory Overview – Laws and Regulations Related to Employment and Social Security” inthis document.


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PROPERTIES

We occupy certain properties in the PRC in connection with our business operations. Theseproperties are used for non-property activities as defined under Rule 5.01(2) of the ListingRules. They mainly include premises for (i) our Hospital and our ancillary healthcare facilities;(ii) storage and warehouse; (iii) staff dormitory; and (iv) offices.

As of the Latest Practicable Date, we maintained the relevant real property ownershipcertificates (不動產權證書) (the new combined certificate for both land use right and buildingownership right for properties erected thereon for (i) the land use rights with respect to 2 parcelsof land located in Panyu District, Guangzhou City in the PRC and (ii) the building ownershipright of the premises (including the Old Wing of our Hospital, the Phase I Building, the Phase IIBuilding, radiology centre, dormitory and carpark of our Hospital, with the total gross floor areaamounted to approximately 276,000 sq.m.) erected on the parcels of land. Amongst suchproperties, the Phase II Building (together with the carpark located inside), with a total grossfloor area of approximately 180,000 sq.m., had a carrying amount above 15% of ourconsolidated total assets as of 31 December 2021. Please refer to the Property Valuation Reportset out in Appendix III to this document for further details.

Owned Properties

Our PRC Legal Adviser is of the view that we have obtained the proper real propertyownership certificates for the aforementioned land and buildings, and we are entitled to use allparcels of land mentioned above and we legally own all of our buildings.


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Leased Properties

As of the Latest Practicable Date, we leased 31 premises in the PRC mainly used for (i)operation of our ancillary healthcare facilities, including our Clifford Postnatal Care Centre,Clifford Care Home, Clifford Dental Clinic and retail pharmacies; (ii) storage and warehouse;(iii) staff dormitory; and (iv) offices. Apart from that, our Hospital (as lessor) leased certainproperties to some PRC operating subsidiaries of our Group for carrying on their businesses. Asadvised by our PRC Legal Adviser, the lease agreements are lawful, valid and binding on eachof the parties to the lease agreements. The following table sets out a summary of the premisesleased by us as at the Latest Practicable Date:

(a) Independent Third Party lessors

No.Location ofLand/Premises

Use ofproperty Lessor Lessee Area Duration of lease

Monthlyrent

(approx.

sq.m.) (RMB)

1. Room 2107(101),15 Fuhua Road,Zhongcun Street,Panyu District,Guangzhou (廣州市番禺區鐘村街福華路15號2107室(101))

Office GuangzhouCaishengFinance andTaxationServicesCompanyLimited(廣州市財盛財稅服務有限公司)(“GuangzhouCaisheng”)

HospitalMedicalManagementPRC Co

20 1 January 2021 to31 July 2025

1,000

2. Room 2108(102),15 Fuhua Road,Zhongcun Street,Panyu District,Guangzhou(廣州市番禺區鐘村街福華路15號2108室(102))

Office GuangzhouCaisheng

HospitalManagementPRC Co

20 1 January 2021 to31 July 2025

1,000


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(b) Lessors who are connected persons of our Company



Monthlyrent

(approx.

sq.m.) (RMB)

1. Room 301, No. 81,Clifford CelebrityThird Street,Zhongcun Street,Panyu District,Guangzhou (廣州市番禺區鐘村街祈福名家三街81號301房)

Staffdormitory

GuangzhouClifford RealEstateManagementCompanyLimited (廣州市祈福地產經營管理有限公司)(“Clifford RealEstateManagement”)

OurHospital

113 1 January 2022 to31 December2022

3,800

2. Room 302, No. 51Clifford CelebritySeventh Street,Zhongcun Street,Panyu District,Guangzhou (廣州市番禺區鐘村街祈福名家七街51號302房)

Staffdormitory

Clifford RealEstateManagement

OurHospital

94 1 August 2021 to31 July 2022

2,800


Staffdormitory


OurHospital

95 1 August 2021 to31 July 2022

2,800


Staffdormitory


OurHospital

77 1 August 2021 to31 July 2022

2,560


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Monthlyrent

(approx.

sq.m.) (RMB)


Staffdormitory


OurHospital

70 1 August 2021 to31 July 2022

2,560


Staffdormitory


OurHospital

70 1 August 2021 to31 July 2022

2,560

7. Room 301–304, Room306–310, Room 401,Room 403–407, Room409–410, Room 502,504–507, 509–510,Room 601–603,605–610, Room701–710), No. 52Clifford CelebrityThird Street,Zhongcun Street,Panyu District,Guangzhou (廣州市番禺區鐘村街祈福名家三街52號301–304、306–310房、401、403–407、409–410房、502、504–507、509–510房、601–603、605–610房、701–710房)

Staffdormitory


OurHospital

3,348 1 January 2022 to31 December2022

128,700


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Monthlyrent

(approx.

sq.m.) (RMB)


Staffdormitory


Dental CarePRC Co


2,500


Staffdormitory


Dental CarePRC Co


2,500


Staffdormitory


MedicalEquipmentPRC Co


2,200


Staffdormitory


OurHospital

113 1 August 2021 to31 July 2022

3,040


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Monthlyrent

(approx.

sq.m.) (RMB)


Staffdormitory


OurHospital


3,500

13. Room 3003, Block 8,Yihu Residence, YihuStreet, Qifu NewVillage, ZhongcunStreet, Panyu District,Guangzhou (廣州市番禺區鐘村街祈福新邨倚湖居倚湖街8座3003房)

Staffdormitory

Guangzhou YihuPropertyCompanyLimited (廣州市倚湖物業有限公司)

HospitalManagementPRC Co

75 27 October 2020to 30 November2023

2,400

14. Nanhai CliffordEcologicalTechnology CreativeBuilding A, NanhaiIndustrial Park,Danzao Town, NanhaiDistrict, Foshan City(佛山市南海區丹灶鎮南海工業園區南海祈福生態科技創意大廈A)

Preparationandstorage ofChineseherbalmedicine

Foshan NanhaiClifford HomeFurnishingIndustryCompanyLimited(佛山市南海祈福家居實業有限公司)

OurHospital

6,015 1 July 2019 to30 June 2024

48,123

15. 4th Floor, WarehouseBuilding, CliffordEstates, ZhongcunStreet, Panyu District,Guangzhou (廣州市番禺區鐘村街祈福新邨倉儲樓四樓)

Warehouse Clifford EstatesLtd

MedicalEquipmentPRC Co

288 1 October 2019 to30 September2024

1,100


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Monthlyrent

(approx.

sq.m.) (RMB)

16. 4th Floor, WarehouseBuilding, CliffordEstates, ZhongcunStreet, Panyu District,Guangzhou (廣州市番禺區鐘村街祈福新邨倉儲樓四樓)

Warehouse Clifford EstatesLtd

PharmaceuticalsPRC Co


4,000

17. Room 402, 501, 503,604, No. 52, CliffordCelebrity ThirdStreet, ZhongcunStreet, Panyu District,Guangzhou(廣州市番禺區鐘村街祈福名家三街52號402、501、503、604房)

Staffdormitory


PharmaceuticalsPRC Co


16,100

18. A portion of No. 12 andNo. 14 CliffordCelebrity FourthStreet, ZhongcunStreet, Panyu District,Guangzhou(廣州市番禺區鐘村街祈福名家四街12、14號之一)

Retailpharmacy

GuangzhouClifford WonderWorldCommercialReal EstateManagementCompanyLimited(廣州市祈福繽紛世界商業地產經營管理有限公司)(“CliffordWonder WorldEstates”)

Pharmacy(Xinda)PRC Co(BinfenhuiBranch)

129 18 August 2020 to17 November2023

24,830


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Monthlyrent

(approx.

sq.m.) (RMB)

19. The whole first floor ofBlock 10,Second KuaihuoStreet of UrbanDynamic Garden,Clifford Estates,Zhongcun Street,Panyu District,Guangzhou City(廣州市番禺區鐘村街祈福新邨都市活力花園快活2街10座一樓整層)

OperationofCliffordCareHome

GuangzhouCliffordColourful WorldInternationalApartmentCo., Ltd.(廣州市祈福繽紛世界國際公寓有限公司)(“CliffordWonder WorldApartment”)

ElderlyHomePRC Co

151 1 March 2022 to31 March 2024

27,800

20. A101, A103, A201,A203, A206, A207,A208, Block 9,Second KuaihuoStreet of UrbanDynamic Garden,Clifford Estates,Zhongcun Street,Panyu District,Guangzhou City(廣州市番禺區鐘村街祈福新邨都市活力花園快活2街9座之A101、A103、A201、A203、A206、A207、A208)

OperationofCliffordPostnatalCareCentre

Clifford WonderWorldApartment

PostpartumCare PRCCo

664 1 March 2022 to31 March 2024

85,360

21. Two portions of No. 14and No. 16 CliffordCelebrity FourthStreet, ZhongcunStreet, Panyu District,Guangzhou(廣州市番禺區鐘村街祈福名家四街14號之二、16號)

Operationof dentalclinic

Clifford WonderWorld Estates

Dental CarePRC Co

131 1 February 2017to 30 June 2022

53,826


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Monthlyrent

(approx.

sq.m.) (RMB)

22 Room 217C, Building 7and 8, DynamicGarden Clubhouse,Kuaihuo SecondStreet, CliffordEstates UrbanDynamic Garden,Zhongcun Street,Panyu District,Guangzhou City(廣州市番禺區鐘村街祈福新邨都市活力花園快活2街7、8座活力花園會所自編217C室)

Office Guangzhou PanyuClifford EstatesResort ClubCo., Ltd.(廣州市番禺祈福新邨渡假俱樂部有限公司)

ConsultationPRC Co

6 19 July 2021 to18 July 2022

200

23. Room 1908 (101),No. 15, Fuhua Road,Zhongcun Street,Panyu District,Guangzhou(廣州市番禺區鐘村街福華路15號1908(101))

Office GuangzhouCliffordBusiness CentreOperationCentreManagementCo., Ltd. (廣州市祈福商務中心經營管理有限公司)

HealthConsultationPRC Co

31 1 March 2022 to28 February2025

2,701

24. No. 50, Jinfu Road,Zhongcun Street,Panyu District,Guangzhou (廣州市番禺區鐘村街晉福路50號)

Retailpharmacy

GuangzhouGuanduProperty Co.,Ltd. (廣州市冠都物業有限公司)(“GuangzhouGuandu”)

Pharmacy(Xinda)PRC Co(CliffordMingduBranch)

107 9 December 2021to 31 December2026

7,523


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Monthlyrent

(approx.

sq.m.) (RMB)

25. Room 1706, Block 10,No. 30, Jinfu Road,Zhongcun Street,Panyu District,Guangzhou(廣州市番禺區鐘村街晉福路30號10座1706房)

Staffdormitory

GuangzhouGuandu

OurHospital

91 24 December2021 to 23December 2022

4,000

26. Shop No. 3, The FirstResidents Clubhouse,Clifford Estates,Zhongcun Street,Panyu District,Guangzhou(廣州市番禺區鐘村街祈福新邨住客第一會所第3號鋪)

Retailpharmacy

廣州市廣利物業有限公司GuangzhouGuangliPropertyCo., Ltd.(“GuangzhouGuangli”)

Pharmacy(Xinda)PRC Co(CliffordCulturalClubBranch)

65 1 February 2021to 31 January2031

4,852

27. Shop No. 5, The FirstResidents Clubhouse,Clifford Estates,Zhongcun Street,Panyu District,Guangzhou(廣州市番禺區鐘村街祈福新邨住客第一會所第5號鋪)

Retailpharmacy

GuangzhouGuangli

Pharmacy(Xinda)PRC Co(CliffordCulturalClubBranch)

46 1 February 2021to 31 January2031

3,383

28. Room 1003, Block 11,No. 30, Jinfu Road,Zhongcun Street,Panyu District,Guangzhou(廣州市番禺區鐘村街晉福路30號11座1003房)

Staffdormitory

GuangzhouGuandu

OurHospital


4,000


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Monthlyrent

(approx.

sq.m.) (RMB)

29. Shop 2 of NiwotaConvenience Store,Mid-levels Clubhouse,Clifford Estates,Zhongcun Street,Panyu District,Guangzhou City(廣州市番禺區鐘村街祈福新邨半山會所你我他便利店內鋪2)

Retailpharmacy

GuangzhouClifford TradingCo., Ltd. (廣州市祈福貿易有限公司)

Pharmacy(Xinda)PRC Co(CliffordMid-levelsClubhouseBranch)

115 15 October 2021to 31 December2024

5,500

Based on the above, (i) we leased a premise from Clifford Trading (a connectedperson of our Company) (item 29 under paragraph (b) above) under a pharmacy tenancyagreement and (ii) we leased 28 premises from the Private Group under a master tenancyagreement, for further details of the pharmacy tenancy agreement and the master tenancyagreement, please refer to “Connected Transactions – Our One-Off Connected Transaction”and “Connected Transactions – Our Continuing Connected Transactions – ContinuingConnected Transactions which are exempted from circular and the independentshareholders’ approval requirements – 3. Master Tenancy Agreement (Tenant) (leasing ofproperty by Private Group to our Group)” in this document.

As of the Latest Practicable Date, 6 of the lease agreements had not been registered withthe relevant local housing authorities. As advised by our PRC Legal Adviser, the relevantauthorities may require us to complete the registration within a specified timeframe and if wefail to do so, the relevant authorities may impose a fine up to RMB10,000 on each party for eachlease agreement on us but the validity of the lease agreements and our use of such propertieswill not be affected by such non-registration.

COMPETITION

The medical service industry in the PRC has witnessed a strong growth in the past fewyears. According to the F&S Report, the medical services market increased from RMB3.3trillion in 2016 to RMB4.9 trillion in 2020, with a CAGR of 10.1%, and it is expected to growfurther at a CAGR of 7.9% from 2021, reaching RMB7.2 trillion in 2025. Promoted bygovernment policies to support the development of private medical sector, the private hospitalshave exhibited a rapid growth in the past few years. Private hospitals have also been playing adominant role in the medical services market. According to the F&S Report, the number ofhospitals increased from 29,140 in 2016 to 35,394 in 2020, representing a CAGR of 5.0%, whilethe number of private hospitals increased from 16,432 in 2016 to 23,524 in 2020, representing aCAGR of 9.4%, and it is expected that the number of private hospitals will grow at a CAGR of5.9% and reach 31,213 in 2025. According to the F&S Report, our Hospital is the largestfor-profit private general hospital in both the Greater Bay Area and Guangdong Province interms of registered beds in 2021.


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The medical services market in the PRC is highly fragmented and competitive withnumerous participants. According to the F&S Report, there were 965 private hospitals inGuangdong Province in 2020, and it is expected to grow at a CAGR of 7.0% and reach 1,366 in2025. As of 31 December 2020, our Hospital had 1,352 beds in operation, which represents lessthan 0.03% and 0.3% of the approximately 5.1 million and 0.5 million of the respective totalbeds in operation of hospital in the PRC and Guangdong Province as of 31 December 2020.According to the F&S Report, the key competitive factors include strong hospital managementcapability and clinical discipline ability, renowned doctors and experts team and high-quality.We generally compete with other public and private general hospitals in particular those with aClass III rating and/or JCI-accreditation. For more details on the competitive landscape and ourmarket position, please refer to the section headed “Industry Overview – Overview of HealthcareServices Market in Guangdong Province – Competitive Landscape of Private General Hospitalsin Guangdong, Greater Bay Area and China Market” in this document.

INSURANCE

We maintain medical liability insurance (醫療責任保險), which covers medical claimsagainst us for both our Hospital and our dental clinic. The table below sets out the details of thecurrently valid medical liability insurance policies of our Hospital as of the Latest PracticableDate:

Insured entitiesDate of commencementfor current coverage

Date of expiry forcurrent coverage

Maximumamount of

currentcoverage in

aggregate

Maximumamount of

currentcoverage

per claim(RMB) (RMB)

Our Hospital 1 January 2022 31 December 2022 5,000,000 1,000,000

We believe that our current medical liability insurance coverage is adequate, taking intoaccount (i) the market norm of the private hospital industry in the PRC; (ii) the operation scaleof our Hospital; and (iii) historical medical liability claims against us. However, we cannotassure you that we will have sufficient insurance coverage for all of our medical liabilities thatmay arise in our business operations. Please refer to the section headed “Risk Factors – RisksRelating to Our Business and Industry – The nature of our business exposes us to professionaland other liabilities” in this document for further details.

Apart from the medical liability insurance, we also maintain public liability insurance (公眾責任保險), work safety liability insurance (安全生產責任保險), machinery breakdown insurance(機器損壞保險) and property insurance (covering damage to or loss of our Hospital’s buildings,machinery and equipment and other properties) for our Hospital.


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As for other businesses of our Group, we also maintain public liability insurance for ourpostnatal care centre (covering personal injury and property loss caused by the provision ofpostpartum healthcare services), elderly service institution liability insurance (養老機構責任保險) for our elderly care service centre, and public liability insurance and property insurance forvarious members of our Group. During the Track Record Period and up to the Latest PracticableDate, we did not made any significant claims under these insurance policies. We believe ouroverall insurance coverage for our Group as of the Latest Practicable Date was at a levelconsistent with the industry norm.

HEALTH AND SAFETY MATTERS

We are subject to various PRC laws, rules and regulations with respect to health and safety,including hospital sanitation, prevention of medical accidents and disease control. For furtherdetails, please refer to the section headed “Regulatory Overview” in this document.

We are committed to complying with applicable PRC regulatory requirements, preventingand reducing various hazards and risks associated with our operations, and ensuring the healthand safety of the patients and employees of our hospital and surrounding communities.

Government Regulations and Inspections

The NHC has promulgated numerous rules and regulations to regulate medical professionalsand standards for healthcare services. These rules and regulations apply to multiple aspects ofhealthcare services and provide detailed procedures for medical professionals to follow,including requirements for a hospital to implement core procedures to ensure healthcare servicequality. These include proper procedures for initial diagnosis, consultation, ward inspection,discussion of complicated cases, pre-operation discussions, discussion of death cases, medicalrecord keeping, care of critically ill patients and shift relief system. We are subject toinspections by relevant government authorities, which review healthcare services provided byour hospital to determine areas that can be further improved, including the implementation of therelevant rules and procedures.

During the Track Record Period, we had not been notified of any material non-complianceof the relevant core procedures, nor had we been found of any other material violations duringthe inspections conducted by the respective government authorities, the clearance of which is aprerequisite for our hospital to renew its licenses. We did not receive any written notice ofmaterial findings or recommendations from the latest inspections by relevant governmentauthorities.


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Quality Control over healthcare services

To ensure that our Hospital consistently delivers high quality healthcare services that meetor exceed the standards mandated by applicable laws, rules and regulations, we have establisheda comprehensive quality control system. The system primarily includes the following measures:

➢ Clinical governance committees. We have established various clinical governancecommittees at our Hospital to assess risks through our Hospital and to identify,analyse and learn from medical disputes or complaints. and to ensure the healthcarequality of our Hospital and safety of our patients, including (i) the QualityImprovement and Safety Management Committee responsible for supervising theoverall healthcare quality and safety improvement plan of our Hospital and (ii) theMedical Quality and Safety Management Committee responsible for managing thehealthcare quality and providing supervision and guidance on medical safety of ourHospital. For further details of the management and quality control of our Hospital,please refer to the paragraph headed “Management and Operation of Our Hospital” inthis section.

➢ Training Programmes. We provide training and education programmes that aredesigned both to familiarize our professionals with all core procedures of providinghealthcare services and to provide the opportunities for these professionals to mastertheir specific disciplines, such as inviting specialist doctors to our Hospital forspecialised trainings.

➢ Medical verification system. We require our employees to strictly verify patientinformation before dispersing prescription drugs, performing of surgeries, bloodtransfusion and sample collection and delivering laboratory and medical reports.

➢ Patient complaints management. We take a proactive approach towards our patients’feedbacks and complaints, which are followed up with detailed investigation andanalysis, prompt follow-up and comprehensive record keeping.

Anti-bribery and corruption risk management

We maintain a zero-tolerance policy towards the acceptance of any form of bribes bymedical professionals, staff and hospital management and we have implemented a set ofanti-corruption policies and procedures. The design and implementation of our anti-corruptionpolicies and procedures are overseen by the management and the discipline inspectiondepartment of our Hospital. We have also established whistleblower programs, including variouschannels for reports of corruption, and strict investigation and multi-tier review mechanisms.Any employee found in breach of our anti-corruption policies faces termination of employmentor other disciplinary measures, and we will also terminate our business relationship with anysupplier found in breach of their anti-corruption undertakings towards us. Our Hospital has alsoimplemented medical verification system to assess and verify the reasonableness ofpharmaceutical prescriptions. Any irregularities that could indicate instances of prescription


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abuse or corruption are immediately reported to the management for further action. In addition,our employees take part in professional integrity and anti-corruption trainings on a regular basis,and receive periodic updates on the latest anti-corruption issues as and when such issues arise.We had no material non-compliances against the anti-corruption policies during the TrackRecord Period.

ENVIRONMENTAL, SOCIAL AND CORPORATE GOVERNANCE

We give high regard for environment protection, and are committed to promoting corporatesocial responsibility and sustainable development. Therefore, we seek to integrate these corevalues into our business operation by the adoption of a comprehensive policy on environmental,social and corporate governance responsibilities (the “ESG Policy”) in accordance with theListing Rules. The ESG Policy sets forth our corporate social responsibility objectives andprovides guidance on practising corporate social responsibility in our daily operations.

Set forth below are examples of our ESG Policy in different aspects:

➢ Environmental protection:

We are subject to various PRC laws, rules and regulations concerning health, safetyand environmental matters, such as medical sanitation, reduction of occupationalhazards in hospitals, prevention of medical accidents, disease control, and disposal ofmedical waste and discharge of waste water, pollutants and radioactive substances. Fordetails of the relevant PRC laws and regulations, please refer to the section headed“Regulatory Overview – Laws and Regulations Related to Environment Protection” inthis document. We are committed to complying with the PRC regulatory framework,and preventing and reducing the hazards and risks involved in our businesses. Wehave established polices including (i) handling procedures of hazardous andnon-hazardous waste, especially for disposing medical waste and the storage ofpharmaceutical drugs; (ii) establishing key performance index for our emissionsincluding medical waste and water pollutants; (iii) efficient use of resources includingwater and electricity; and (iv) training in relation to compliance of relevantenvironmental laws and regulations. Before its discharge, wastewater is first treated atour wastewater treatment tank to reduce pollutants, the level of which is monitors byrelevant governmental authorities via sensor installed to the tank. During the threeyears ended 31 December 2021, our cost of compliance with environmental protectionrules and regulations, comprising (i) pollution discharge fee; and (ii) depreciation ofpollution discharge facilities, including a new energy electricity generator, screwchilling facilities and direct drinking water supply facilities, was approximatelyRMB2.9 million, RMB3.6 million and RMB3.9 million, respectively. We expect suchcompliance cost to increase in the future in line with the growth and expansion of ourbusiness. In addition to our effort to comply with the relevant environmental laws andregulations, to better protect the environment, we have adopted a series of measures toreduce the consumption of energy. For example, we inform our staff members to turnoff the lights during lunch hours and after office hours, so that lights are only onwhen it is necessary. Moreover, all electrical appliances should be off when they arenot in use. Besides, we also have adopted a wide range of measures to lessen the useof water, including checking on water taps and pipes to avoid unnecessary leakage,installation


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of water-efficient fittings, and promotion of the awareness of water scarcity issuesamong our employees in order for them to use water wisely. We will continue toclosely monitor and control the wastewater and radioactive substances discharged on aregular basis to ensure that they are controlled in accordance with the relevantnational or local environmental standards.

➢ Occupational safety:

We value the importance of maintaining a safe, healthy and efficient workenvironment for all of our employees. Our employees are required to abide byoccupational health and safety regulations in the PRC, as well as our safety and healthguidelines. In order to provide a safe working environment, we set out a series ofwork safety measures in the staff manual for our staff to follow. In addition, weprovide our employees with occupational safety updates to enhance their awareness ofsafety issues. We believe that we were in compliance with health and work safetyrequirements in all material respects during the Track Record Period and up to theLatest Practicable Date.

Our Directors confirm that during the Track Record Period, no material work placeaccidents or work-related injuries occurred at any of our Hospital or our ancillaryhealthcare service centres or clinics, that had a material adverse effect on ourbusiness, results of operations and prospects.

➢ Employee trainings:

We place significant emphasis on employee trainings and development. For details ofthe training and education programmes provided to our doctors and medicalprofessionals, please refer to the paragraph headed “Our Doctors and MedicalProfessionals” in this section.

➢ Social responsibility:

We care about our social responsibility and providing support for the underservedcommunities in the society. We organise free or discounted medical assistance andeducation seminar to serve the community. For further details of our socialcontribution activities, please refer to the paragraph headed “Other Activities andFunctions of our Group – Social contribution” in this section.

➢ Treatments of hazardous and non-hazardous waste:

As a medical and healthcare service provider, we would generate medical wastesduring our operation. For all medical waste including hazardous waste andnon-hazardous waste, we make use of the qualified packing bags to pack and collectvarious medical wastes by category, and store them in a recycle case at the designated


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temporary storage point of medical waste. Medical wastes will be then properlycollected, stored and disposed of by qualified environmental service suppliers. Besidesmedical waste, another major non-hazardous waste produced by our business activitiesis paper consumed for administrative purposes. We encourage our employees to reducepaper consumption whenever possible, and work towards a paperless environment.According to our business nature, the other key performance index for our emissionsincludes Nitrogen Oxides (NOx), Sulphur Oxides (SOx), Particulate Matters (PM) andthe greenhouse gas. NOx, SOx and PM are generated from the use of our Group’svehicles. The greenhouse gas emissions of various scopes are respectively generatedfrom the fuel consumption of vehicles of our Group (Scope 1), power consumption(Scope 2), water consumption, wastewater discharge, waste disposed at landfill andpaper consumption (Scope 3) during business operation. Currently, our Group onlyhad 21 vehicles, and thus no material NOx, SOx, PM and greenhouse gas emissions(Scope 1) are generated.

Our Board has the collective responsibility for establishing, adopting and reviewing thevision, policies and target of our ESG Policy, and evaluating, determining and addressing ourESG-related risks regularly. Our Board may assess or engage external consultants to evaluate ourrisks in these regards and will take necessary improvement measures to mitigate identified risks.

As advised by our PRC Legal Adviser, during the Track Record Period, our Group has notbeen in violation to any applicable laws and regulations with regard to environmental protectionwhich have a material adverse effect on our business, financial condition or results ofoperations.

AWARDS AND RECOGNITIONS

We believe our high-quality and patient-oriented services have earned us a strongreputation among the patients, customers and industry peers alike. The following table sets forththe major awards and achievements given to our Group:

Receivingentity Year Award/ Accreditation Awarding Organisation

Our Hospital 2021 The 2020 OutstandingEnterprise Brand in theBay Area of China(2020 中國灣區企業優秀品牌)

GD-HK-MAC Greater Bay AreaEconomic & Cultural PromotionAssociation (廣州市粵港澳大灣區經濟文化促進會), Guangdong Radioand Television Pearl River Channel(廣東廣播電視台珠江頻道),Asia-Pacific Innovation EconomicResearch Institute of Guangdong(廣東亞太創新經濟研究院) andGuangdong Nanyue IndustrialDevelopment Research Institute(廣東省南粵產業發展研究院)


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2021 Rated as a Grade A ClassIII Chinese and WesternMedicine Hospital

Traditional Chinese Medicine Bureauof Guangdong Province

2020 Designated emergencyvaccination site toprovide COVID-19vaccination services

Prevention Team of the Headquartersfor the Prevention and Control ofCOVID-19 in Panyu DistrictGuangzhou City (廣州市番禺區新型冠狀病毒肺炎疫情防控指揮部防治組)

2019 Advanced Member Entity(先進會員單位)

Guangdong Medical IndustryAssociation (廣東省醫療行業協會)

2015 The 2015 Most ValuablePrivate Hospital in thePRC (2015年全國最具價值民營醫院)

Chinese Hospital Association PrivateHospital Branch (中國醫院協會民營醫院管理分會), the editorialdepartment of the Chinese Journal ofMedical Management Sciences (中國醫療管理科學雜誌) and ChinaAssociation of Medical EquipmentPrivate Hospital EquipmentManagement Branch (中國醫學裝備協會民營醫院裝備管理分會)

2015 Baby Friendly Hospital(愛嬰醫院)

The National Health and FamilyPlanning Commission

2009 Famous TraditionalChinese MedicineHospital (中醫名院)under the GuangdongProvince StrengtheningProject of TraditionalChinese MedicineDevelopment (廣東省建設中醫藥強省項目)

People’s Government of GuangdongProvince (廣東省人民政府)

2008 Rated as a Grade A ClassIII Chinese MedicineHospital

Traditional Chinese Medicine Bureauof Guangdong Province


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2007 National ContinuingEducation Base ofTraditional ChineseMedicine for ClinicalPrevention andTreatment of Tumors(全國中醫腫瘤臨床防治繼續教育基地)

The Chinese Association of ChineseMedicine (中華中醫藥學會)

2005 The 2004 Most RelianceMainland ChinaMedical Institution forHong Kong Citizens(香港市民最信賴的內地醫療機構)

The Chinses Medical EditorialDepartment of Ta Kung Pao (大公報中華醫療編輯部) and NanfangNewspaper Net (南方報業網)

2004 Guangzhou DesignatedMedical Institution forForeigners (廣州市涉外醫療定點機構)

Guangzhou Municipal Bureau of Health(廣州市衛生局)

2003–2025 Accredited by the JCI(renewed for seventimes up to 2025)

Joint Commission International

Ourpostnatalcare centre

2021 PRC Postnatal ClubhousePublic Praise Award (全國月子會所口碑獎)

2021 Boao Forum for Mother and Baby(2021博鰲全球母嬰產業發展論壇)

2020 2020 Guangdong QualityPostnatal Centre (2020年廣東優質月子中心)

Guangzhou Daily Newspaper Group(廣州日報報業集團), GuangzhouHousekeeping Industry Association(廣州市家政行業協會) andGuangdong Postnatal Centre Alliance(廣東省月子中心聯盟)


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LICENCES, PERMITS AND CERTIFICATES

The healthcare industry in the PRC is highly regulated. We are required to obtain variouslicences, approvals and permits for our operations. For details of the regulatory requirements,please refer to the section headed “Regulatory Overview – Laws and Regulations related toMedical Institution”, “Laws and Regulations related to the Medical Devices OperationEnterprise” and “Laws and Regulations related to Pharmaceutical Operation Enterprise” in thisdocument. As advised by our PRC Legal Adviser, we held all material requisite licences,approvals, permits and certificates for our business operations during the Track Record Periodand up to the Latest Practicable Date. The following table sets forth the material licences orpermits held by our Group for our operation:

Licence, permit orcertificate Entity Issuing authority

Effectivedate

Expirationdate

Medical InstitutionPractising Licence(醫療機構執業許可證)

Our Hospital Guangzhou MunicipalHealth Commission(廣州市衛生健康委員會)

3 April 2019 29 April2029

GZ Clifford Dental Clinic Guangzhou Panyu HealthBureau (廣州市番禺區衛生健康局)

26 June 2018 25 June 2023

Clifford Health ServiceCentre

Guangzhou Panyu HealthBureau

30 October2020

29 October2025

Maternal and InfantHealthcare TechnicalServices PractisingLicence (母嬰保健技術服務執業許可證)

Our Hospital Guangzhou Panyu HealthBureau

1 January2021

31 December2023

Radiation TreatmentLicence(放射診療許可證)

Our Hospital Health Commission ofGuangdong Province(廣東省衛生健康委員會)

2 April 2021 N/A

GZ Clifford Dental Clinic Guangzhou Panyu HealthBureau

22 June 2021 N/A

Radiation Safety Licence(輻射安全許可證)

Our Hospital Department ofEnvironmental Protectionof Guangdong Province(廣東省環境保護廳)

18 December2019

6 July 2022


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Effectivedate

Expirationdate

GZ Clifford Dental Clinic Guangzhou MunicipalEcological EnvironmentBureau (廣州市生態環境局)

9 July 2021 27 January2024

License for the Use ofRadioactive Drugs(放射性藥品使用許可證)

Our Hospital Guangdong MedicalProducts Administration(廣東省藥品監督管理局)(“Guangdong MPA”)

8 May 2020 7 May 2025

Pharmaceutical PreparationCertificate for Medicalinstitution (醫療機構製劑許可證)

Our Hospital Guangdong MPA 1 December2020

30 November2025

Pharmaceutical SupplyLicense (藥品經營許可證)

Pharmaceuticals PRC Co Guangdong MPA 4 December2019

3 December2024

Pharmacy (Xinda) PRC Co Guangzhou PanyuAdministration forMarket Regulation (廣州市番禺區市場監督管理局) (“Panyu AMR”)

13 October2020

15 November2022

Pharmacy (Xinda) PRC Co(Binfenhui Branch) (繽紛匯分公司)

Panyu AMR 11 December2020

11 December2025

Pharmacy (Xinda) PRC Co(Clifford Cultural ClubBranch) (祈福文化俱樂部分公司)

Panyu AMR 25 March2021

25 March2026

Pharmacy (Xinda) PRC Co(Clifford Mingdu Branch)(祈福名都分公司)

Panyu AMR 6 January2022

6 July 2026

Pharmacy (Xinda) PRC Co(Clifford Mid-levelsClubhouse Branch) (祈福半山會所分公司)

Panyu AMR 3 December2021

3 December2026


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Effectivedate

Expirationdate

Certificate of Good SupplyPractice forPharmaceutical Products(藥品經營質量管理規範認證證書)

Pharmaceuticals PRC Co Guangdong Food and DrugAdministration (廣東省食品藥品監督管理局)(“Guangdong FDA”)

1 November2019

31 October2024

Pharmacy (Xinda) PRC Co Guangzhou Municipal Foodand Drug Administration(廣州市食品藥品監督管理局)

7 March2018

6 March2023

Food Operation Licence(食品經營許可證)

Our Hospital Guangzhou Panyu Food andDrug Administration (廣州市番禺區食品藥品監督管理局) (“Panyu FDA”)

11 December2017

10 December2022

Pharmaceuticals PRC Co Panyu FDA 27 December2017

26 December2022

Pharmacy (Xinda) PRC Co Panyu AMR 28 August2020

19 November2022

Pharmacy (Xinda) PRC Co(Binfenhui Branch)

Panyu AMR 24 November2020

23 November2025

Pharmacy (Xinda) PRC Co(Clifford Cultural ClubBranch)

Panyu AMR 23 March2021

22 March2026

Pharmacy (Xinda) PRC Co(Clifford Mingdu Branch)(祈福名都分公司)

Panyu AMR 2 July 2021 1 July 2026

GZ Clifford Elderly Home Panyu AMR 19 October2021

18 October2026

Medical Devices OperationPermit (醫療器械經營許可證)

GZ Clifford MedicalEquipment

Guangzhou Administrationfor Market Regulation(廣州市市場和監督管理局)

14 September2021

5 September2024


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In addition to the above licences, we also held other licences relevant to our businessoperations, such as License for the Allocation of Large Medical Equipment of Category B (乙類大型醫用設備配置許可證) and Registration Certificate for Class II Medical Devices Operation(第二類醫療器械經營備案憑證).

As advised by our PRC Legal Adviser, all material licences and permits required for ouroperations are valid and effective and have not been revoked as of the Latest Practicable Date.We renew our licences and permits from time to time to comply with the relevant PRC laws andregulations. To the best knowledge and belief of our Directors, there is no material legalimpediment for us to renew such licences or permits.

LEGAL PROCEEDINGS AND COMPLIANCE

Medical Disputes

Due to the nature of the healthcare industry and the inherent risks in providing treatmentsto patients, we are subject to legal proceedings and claims that arise in the ordinary course ofbusiness, which primarily include medical disputes brought by our patients and/or their familiesagainst us. As a result, we are exposed to risks of medical disputes that we cannot entirelyeliminate. Please refer to the section headed “Risk factors – Risks Relating to our Business andIndustry – The nature of our business exposes us to professional and other liabilities.” in thisdocument for further details.

As part of our risk management and internal control procedures, our medical professionalsare responsible to ensure that our patients are being informed of any known inherent risks andobtain their signed consents before conducting relevant treatments or procedures. Medicaldisputes may generally be resolved through judicial, administrative or mediation proceedings orthrough private negotiation and settlement. However, our patients and/or their families maychoose to seek claims against us through legal proceedings if initial negotiation to reach asettlement fails.

During the Track Record Period and up to the Latest Practicable Date, we did notexperience any material medical disputes that could cause a material adverse effect on ourbusiness, financial condition or results of operations.

Our Hospital maintains medical liability insurance (醫療責任保險), which covers medicalclaims against us. Please refer to the paragraph headed “Insurance” in this section for furtherdetails.


BUSINESS

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Medical disputes

We regard material medical disputes as disputes arising from our Hospital’s treatment orprocedure that either involved a patient’s fatality or resulted in monetary compensation ofRMB100,000 or more. During the Track Record Period and up to the Latest Practicable Date,there were 7 cases of material medical disputes, among which 4 had been settled as of the LatestPracticable Date. For the reason that each of the material medical disputes were covered by themedical liability insurance, during the Track Record Period and up to the Latest PracticableDate, no compensation was paid by our Group to our patients and/or their families in relation tosuch claims (or not subsequently reimbursed under the medical liability insurance).

Material medical disputes settled

The following table sets forth the details of material medical disputes settled during theTrack Record Period and up to the Latest Practicable Date:

NumberDispute settlementdate

Method ofsettlement Background of dispute

Compensationclaimed

1. March 2019 Litigation Peritonitis (腹膜炎) caused byinjury during colonoscopy

RMB120,000

2. October 2020 Litigation Patient fatality due tointracerebral hemorrhage(腦出血)

RMB674,000

3. November 2020 Litigation Patient fatality due tomyocardial infarction(心肌梗塞)

RMB210,000

4. December 2020 Litigation Newborn fatality due torespiratory failure

RMB487,000


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Ongoing medical disputes

As of the Latest Practicable Date, we had 3 on-going material medical disputes, details ofwhich are set forth in the following table:

Number

Approximate dateof providingtreatment/procure Background of dispute

Estimatedmaximumexposure Current status(RMB)

1. October 2016 Delayed diagnosis of leginjury caused by trafficaccident

RMB127,000 Pending paymentdetails for

settlement ofcompensation

2. October 2020 Patient fatality due torespiratory failure

RMB1.1 million Pending judgment

3. March 2021 Patient fatality due to acutecardiac insufficiency(急性心功能障礙)

RMB376,000 Pending judgment

We will continue to monitor the development of our on-going material medical disputes andtry to minimise any potential adverse effect on our Group. Based on the latest status of theon-going medical disputes, we estimate that the aggregate maximum exposure in relation to ouron-going material medical disputes will not exceed RMB1.7 million. During the Track RecordPeriod and up to the Latest Practicable Date, we had not been penalised or received anynotification from the relevant government authorities imposing any penalties with respect to themedical disputes, and we were not aware of any revocation of the practicing certificates of ourdoctors as a result of the medical disputes. Our Directors are of the view that none of ouron-going medical disputes (individually or aggregate) would have any material adverse effect onour business, results of operations or prospects.

Legal Compliance

According to our PRC Legal Adviser, during the Track Record Period and up to the LatestPracticable Date, we had not been and were not involved in any non-compliance incidents thatled to fines, enforcement actions or other penalties that could, individually or in the aggregate,have a material adverse effect on our business, financial condition or results of operations. OurDirectors are of the view that, we had complied, in all material respects, with all relevant lawsand regulations in the jurisdictions we operate in during the Track Record Period and up to theLatest Practicable Date.


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OUR CONTROLLING SHAREHOLDERS

Immediately following completion of the [REDACTED] and the [REDACTED], andwithout taking into account of any Shares which may be allotted and issued pursuant to theexercise of the [REDACTED] and any options which have been or may be granted under the[REDACTED] Share Option Scheme and the Share Option Scheme, International Health BVIwill directly hold and be entitled to exercise voting rights of [REDACTED]% of the issuedshare capital of our Company. International Health BVI is directly and wholly owned by Ms.Wendy Man, a non-executive Director and the Chairman. For the purpose of the Listing Rules,Ms. Wendy Man and International Health BVI are considered as the Controlling Shareholders ofour Company as of the Latest Practicable Date and upon the [REDACTED].

Ms. Wendy Man is a director and the ultimate controlling shareholder of Clifford ModernLiving, whose issued ordinary shares are listed on the Stock Exchange (stock code: 3686). TheClifford ML Group is principally engaged in the provision of six main service segments:property management services, renovation and fitting-out services, retail services, off-campustraining services, information technology services and ancillary living services (which consistsof property agency services, employment placement agency services and laundry services).Certain transactions were entered into between our Group and the Clifford ML Group during theTrack Record Period, and some of such transactions are expected to continue in the future, asdisclosed in the section headed “Connected Transactions” in this document.

Information on Ms. Wendy Man’s Spouse and the Private Group

The spouse of Ms. Wendy Man is Mr. Pang Lun Kee Clifford. He is a close associate ofMs. Wendy Man. He is also the ultimate controlling shareholder of the Private Group, and assuch members of the Private Group are also close associates of Ms. Wendy Man.

Ms. Wendy Man’s Spouse has been actively engaged in the business of propertydevelopment and property investment in the PRC since the 1990s. As of the Latest PracticableDate, the principal activities of the Private Group include (i) property development, (ii) propertyinvestment and operation of service apartments, (iii) hotel investment and management, (iv)education, (v) landscape design, construction and maintenance, and (vi) pharmaceuticalmanufacturing and pharmaceutical or biotechnology-related research and development. Forfurther details regarding the Private Group’s engagement in pharmaceutical orbiotechnology-related businesses, please refer to the paragraph headed “Delineation of Businessand Competition – Delineation of Business” in this section.

As for our Group, Ms. Wendy Man’s Spouse contributed to and helped with the founding ofour Hospital, Postpartum Care PRC Co, Elderly Home PRC Co, Pharmacy PRC Co and MedicalEquipment PRC Co. As a founder of our Group, Ms. Wendy Man’s Spouse is currently servingas the honorary medical superintendent (榮譽院長) of our Hospital, who would, from time totime, provide support to our Group by participating in the branding and marketing of our Group,including attending charitable events and accepting interviews by the press. For further details ofthe relationship between our Group and Ms. Wendy Man’s Spouse, please refer to the sectionheaded “History, Reorganisation and Development – Overview – Establishment of our Hospital”in this document.

Save for the transactions entered or to be entered into between our Group and the PrivateGroup as disclosed in the section headed “Connected Transactions” in this document and otherthan his capacity of being the spouse of Ms. Wendy Man (and thus the deemed interest arising asa spouse of Ms. Wendy Man), as of the Latest Practicable Date, Ms. Wendy Man’s Spouse didnot hold any interest in our Group.


RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS

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Our Controlling Shareholders and Directors confirm that, save as disclosed in this section,none of them or their respective close associates has any interest in a business (apart from thatof our Group) which competes or is likely to compete, directly or indirectly, with our business,which would require disclosure under Rule 8.10 of the Listing Rules.

DELINEATION OF BUSINESS AND COMPETITION

Business of our Group

Our Group is principally engaged in (i) the provision of medical and healthcare servicesthrough the operation of our Hospital and certain ancillary healthcare facilities (includingClifford Postnatal Care Centre, Clifford Elderly Care for Residents and Clifford Dental Clinic)and (ii) sales of pharmaceutical products (by way of both wholesale to pharmaceuticaldistributors and retail sales at our pharmacies) (collectively, the “Group Businesses”).

Delineation of Business

Save and except for our Group, none of our Controlling Shareholders, Directors or theirrespective close associates (including Ms. Wendy Man’s Spouse and the Private Group) has anyinterest in any business involving in (a) the provision of medical or healthcare services or (b)wholesale or retail sales of pharmaceutical products.

Notwithstanding the above, as of the Latest Practicable Date, Ms. Wendy Man (and herclose associates, including Ms. Wendy Man’s Spouse and the Private Group) directly orindirectly engage in other businesses outside of our Group, which included the followingpharmaceutical or biotechnology-related businesses (the “Excluded Pharmaceutical andBiotechnology Businesses”):

Name Ownership

Directorship heldby our Directorand/or therelevantControllingShareholders andtheir closeassociates Principal business

Excluded Pharmaceutical and Biotechnology Businesses in the PRC

(i) Guangzhou CityCliffordPharmaceuticalPractice CompanyLimited (廣州市祈福藥業有限公司)(“Clifford TCM”)

Wholly owned by AceOption Limited(a Hong Kongcompany which isindirectly andwholly owned byMs. Wendy Man)

N/A Not yet commenced business.

Clifford TCM is taking preparatorysteps to engage in in manufacturingtraditional Chinese herbalmedicines, by way of establishingor acquiring necessary productionfacilities. It is expected thatClifford TCM will only be able tocommence business in 2023 at theearliest.



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Name Ownership

Directorship heldby our Directorand/or therelevantControllingShareholders andtheir closeassociates Principal business

(ii) Guangzhou CityCliffordBiotechnologyCompany Limited(廣州市祈福生物科技有限公司)(i.e. CliffordBiotech)

Wholly owned by FitAll InvestmentsLimited (a HongKong companywhich is indirectlyand wholly ownedby Ms. Wendy Man)

N/A Not yet commenced business.

Clifford Biotech is at businessplanning stage and is expected toengage in biotechnology-relatedresearch and development in thefuture. It is expected that CliffordBiotech will only be able tocommence business in 2023 at theearliest.

(iii) Guangzhou ZhongkeClifford Stem CellResearch CompanyLimited (廣州中科祈福幹細胞研究有限公司)(“Clifford-ZK StemCell”)

Wholly owned byHuang Liming(黃麗明)(an employee of thePrivate Group)

Ms. Wendy Man’sSpouse is thesole director

Not yet commenced business.

Clifford-ZK Stem Cell is at businessplanning stage, it is expected toengage in stem cell-related researchand development in the future. It isexpected that Clifford-ZK StemCell will only be able to commencebusiness in 2023 at the earliest.

Excluded Pharmaceutical and Biotechnology Businesses outside the PRC

(iv) OrthomolecularMedisearchLaboratories Pty.Ltd. (a companyincorporated inAustralia)(“OML Australia”)

Owned as to:– 60% by Top

CosmosInvestmentsLimited (a BVIcompany which isindirectly andwholly owned byMs. Wendy Man);and

– 40% by FairbankWoods Pty. Ltd. (anIndependent ThirdParty)

Ms. Wendy Man’sSpouse is adirector

Located in Australia, OML Australiais principally engaged inmanufacturing of pharmaceuticalproducts.



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Our Directors, including our INEDs, are of the view that the Group Businesses are clearlydelineated from the Excluded Pharmaceutical and Biotechnology Businesses and there is nomaterial competition between our Group and the Excluded Pharmaceutical and BiotechnologyBusinesses for the following reasons:

(1) Different business model

According to the F&S Report, along the value chain of pharmaceutical distribution inthe PRC, upstream manufacturers manufacture pharmaceutical products, which aredistributed by distributors (who are mainly responsible for sales and logistic arrangements)to lower-tier distributors and different downstream point-of-sale terminals (consistingprimarily of hospitals, pharmacies and primary medical institutions in the PRC). The GroupBusinesses involve, among others, (i) the sale of pharmaceutical products at our Hospital’spharmacy after provision of the relevant hospital services and (ii) general sales ofpharmaceutical products (by way of both wholesale to pharmaceutical distributors and retailsales at our pharmacies). As such, our Group positions itself as a midstream distributor (forour wholesale business) and downstream point-of-sale terminal operator (for our retailssales to individuals at our retail pharmacies and our patients at our Hospital’s pharmacy) inthe pharmaceutical distribution industry.

Among the Excluded Pharmaceutical and Biotechnology Businesses:

➢ OML Australia is an Australia-based pharmaceutical manufacturer;

➢ Clifford TCM is expected to engage in manufacturing of traditional Chineseherbal medicine in the PRC; and

➢ Clifford Biotech and Clifford-ZK Stem Cell are planning to engage inbiotechnology or stem cell-related research and development.

Differing from our Group’s pharmaceutical sales business, OML Australia is (andClifford TCM is expected to become) an upstream manufacturer of pharmaceuticalproducts.

(2) Different licensing requirements and applicable laws

Our Group is required to hold the Pharmaceutical Supply License (藥品經營許可證) inorder to engage in its pharmaceutical supply business, and we are subject to the regulationsapplicable to pharmaceutical operation enterprises as set out in the section headed“Regulatory Overview – Laws and Regulations related to Pharmaceutical OperationEnterprise” in this document.



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In contrast, in order for Clifford TCM to engage in the pharmaceutical manufacturingbusiness in the PRC, it is required to obtain and hold the Pharmaceutical ProductionLicense (藥品生產許可證), and PRC pharmaceutical manufacturers are generally subject to(in addition to the Drug Administration Laws) the Measures on the Supervision and Administration ofthe Manufacture of Drugs (《藥品生產監督管理辦法》) and the Good Manufacturing Practice forDrugs (2010 revised edition) (《藥品生產質量管理規範》(2010年修訂版)). As for OML Australia(an Australian pharmaceutical products manufacturer), it is subject to applicable Australianlaws and regulations relating to the manufacturing of pharmaceutical products and relevantlicensing requirements.

As of the Latest Practicable Date, our Group did not hold (and we do not plan toapply for) the Pharmaceutical Production License (藥品生產許可證).

Reasons for exclusion

Based on the above, the supply and costs mechanisms, intensity of competition,management expertise required, and prospects and risks involved in our Group’spharmaceutical supply business are substantially different from those involved in thepharmaceutical manufacturing business of OML Australia.

As for Clifford TCM, Clifford Biotech and Clifford-ZK Stem Cell, they are still in thestage of business planning and/or preparation, and they have not commenced business as ofthe Latest Practicable Date. In particular, for Clifford Biotech and Clifford-ZK Stem Cell,the research and development initiatives to be undertaken are subject to risks anduncertainties, and may not be profitable. Substantial investment costs, time and resourceswill also be incurred for implementing their respective business development plans, whichmay or may not ultimately mature.

Therefore, our Directors consider that it is not in the best interest of our Company andits Shareholders as a whole to include the Excluded Pharmaceutical and BiotechnologyBusinesses in our Group for the purpose of the [REDACTED].

DEED OF NON-COMPETITION

Non-compete undertakings given by Controlling Shareholders

In order to limit actual or potential competition between our Group and our ControllingShareholders, our Controlling Shareholders have entered into the Deed of Non-competition infavour of our Company on [•] 2022, pursuant to which:

(i) each of our Controlling Shareholders has confirmed, represented and warranted to usthat, other than such Controlling Shareholder’s interest in our Group, currently suchControlling Shareholder, her/its close associates and/or companies controlled by suchControlling Shareholder is/are neither engaged, nor interested in the Group Businessesin the PRC and any other country or jurisdiction, and other business activities engaged



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by us as our principal business from time to time (including those business activitiesto be engaged by us as disclosed in the section headed “Business – Strategies” in thisdocument) (the “Restricted Activity”), and each of them further undertakes to us that,other than her/its interest in our Group, and subject to certain exceptions as set outbelow, such Controlling Shareholder shall not and shall procure that her/its closeassociates and such entities at any time during the Relevant Period (as defined below)not to engage or interest in, the Restricted Activity (other than through our Group) (ineach case whether for such Controlling Shareholder’s own account or for that of anyperson, firm or company (other than any member of our Group) and whether throughthe medium of any company which is its close associate (for which purpose there shallbe aggregated with such Controlling Shareholder’s shareholding or ability to exercisecontrol the shares held or controlled by any of such Controlling Shareholder’s closeassociates) or as principal, shareholder, partner, director, employee, consultant, agentor otherwise and whether for profit, reward or otherwise (“Relevant Capacity”)), orany part thereof, or participate or hold any equity interest or is otherwise interested inany company or entity or firm which is principally engaged in the Restricted Activity,which in each case directly or indirectly, competes or may compete with our business;

(ii) each of our Controlling Shareholders has, among other matters, unconditionally andirrevocably undertaken to us on a joint and several basis that, such ControllingShareholder shall, and shall procure that her/its close associates and/or companiescontrolled by such Controlling Shareholder (other than our Group) at any time duringthe Relevant Period not in any Relevant Capacity directly or indirectly, alone orjointly with another person, in any form be interested, involved, engaged in or assistor support any third party in the operation of, or invest, participate, acquire or holdany right or interest in any business (other than our Group) or is about to be engagedin any business (other than our Group) which is the same or similar to that carried onby our Group and/or which competes or may compete directly or indirectly with thebusiness currently and from time to time engaged by our Group (including but notlimited to the Restricted Activity).

Exceptions for our Controlling Shareholders to participate in Restricted Activity

Notwithstanding the undertakings given under the Deed of Non-competition, (i) suchrestricted undertakings do not apply to our Group or any associated companies of our Company,and (ii) any of our Controlling Shareholders and their respective close associates are entitled toinvest, participate and be engaged in any Restricted Activity or any project or businessopportunity, regardless of value, which (a) are the direct or indirect investments of the relevantControlling Shareholder and/or her/its close associates in any member of our Group or suchassociated companies, and/or (b) any other companies which the relevant ControllingShareholder together with her/its close associates does not hold more than 5% interest and doesnot participate in the management of such company and at all times there is a holder (or aconcert group of holders) of such shares or securities holding (together, where appropriate, withits close associate(s)) a larger percentage of the shares or securities of such company than ourControlling Shareholder and her/its close associate(s) together hold.



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Relevant Period

For the purpose of the Deed of Non-competition, the “Relevant Period” means the periodcommencing from the [REDACTED] and shall expire on the earlier of the dates below:

(i) the date on which our Controlling Shareholders and their respective close associates(individually or taken as a whole) cease to own at least 30% of the then issued sharecapital of our Company directly or indirectly or cease to be the controllingshareholders of our Company for the purpose of the Listing Rules and do not havepower to control our Board and there is at least one other Shareholder (or a concertgroup of Shareholders) holding more Shares than our Controlling Shareholders andtheir close associates then taken together; and

(ii) the date on which our Shares cease to be [REDACTED].

Rights for new business opportunities relating to the Restricted Activities

Each of our Controlling Shareholders has undertaken under the Deed of Non-competitionthat if, at any time during the Relevant Period, our Controlling Shareholders, her/its closeassociates and/or companies controlled by such Controlling Shareholder (other than our Group),become aware of, notice, are recommended or provided with any new business opportunity thatrelates to the Restricted Activity, such Controlling Shareholder shall, and shall procure thather/its close associates and/or companies controlled by such Controlling Shareholder (other thanour Group), first refer such new business opportunity (including the information in relationthereto) to our Company (including our INEDs) within a reasonable period of time. And in theevent that: (a) we decide to take up the opportunity, each of our Controlling Shareholders willand will procure her/its close associate(s) to use their respective reasonable endeavours toprocure that such new business opportunity is first offered to our Group on terms and conditionsno less favorable than those offered to our Controlling Shareholders or their respective closeassociates; (b) the opportunity have been offered or made available to our Group and rejected byour Board after steps of careful scrutiny and approval from our Board will have been taken, ourControlling Shareholders and /or their respective close associates is entitled to invest, participateand be engaged in such new business opportunity, regardless of value.

First right of refusal regarding new business to be engaged in by our Group

Pursuant to the Deed of Non-competition, our Controlling Shareholders have, jointly andseverally, granted first right of refusal to our Group for acquiring from the relevant ControllingShareholder and/or her/its close associates any new business (not being the Restricted Activity),including the Excluded Pharmaceutical and Biotechnology Businesses, then engaged or investedby such Controlling Shareholder and/or her/its close associates, which rights may be exercisableby us at any time when we engage or start engaging in any such business.



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Undertakings relating to non-solicitation, intellectual property rights and use of ourGroup’s information

For the purpose of ensuring that our Company shall be able to enjoy the full benefit of thebusiness and goodwill of our Group, each of our Controlling Shareholders furtherunconditionally and irrevocably undertaken to us on a joint and several basis that, suchControlling Shareholder shall, and shall procure that her/its close associates and/or companiescontrolled by such Controlling Shareholder (other than our Group):

(i) not, without prior consent from our Company, disclose to any person, or make use ofany information pertaining to the business, accounts or finances of our Group, or anyof our clients’, suppliers’ or customers’ transactions or affairs, which may, or mayhave come to her/its knowledge in her/its capacity as a shareholder and/or a Director(as the case may be) for any purpose and shall use such Controlling Shareholder’s bestendeavours to prevent the publication or disclosure of such information; and

(ii) at any time during which securities of our Company are [REDACTED] and for solong as our Controlling Shareholders and/or their respective close associates directlyor indirectly hold, whether individually or taken together, 30% or more of the issuedshares in our Company or are regarded as the controlling shareholders of ourCompany under the Listing Rules and for a period of two years thereafter, in anyRelevant Capacity:

(A) not directly or indirectly solicit, interfere with, employ or endeavour to enticeaway from any member of our Group any person who, to such ControllingShareholder’s knowledge, is now, or has during the 12 months preceding the dateof the Deed of Non-competition been, a client, customer, supplier or employee ofour Group for employment by or otherwise dealing with such ControllingShareholder or her/its close associates (excluding our Group); and/or

(B) not, other than for the purpose of conducting business of or relating to ourGroup, at any time, use the name or trading style of any member of our Group,or any trademarks, patents or logos or device or intellectual property rightssimilar in appearance to those of any member of our Group, in the PRC, HongKong or any other part of the world, or represent such Controlling Shareholder ascarrying on or continuing or being connected with any member of our Group orour business for any purposes whatsoever.



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Undertakings by our Controlling Shareholders to provide information etc

Each of our Controlling Shareholders has also undertaken under the Deed ofNon-competition that such Controlling Shareholder shall:

(i) provide or procure the provision to us and/or our Directors (including our INEDs)from time to time all information necessary for the annual review by our INEDs withregard to the compliance of the terms of the Deed of Non-competition by the relevantControlling Shareholder and her/its close associates;

(ii) allow our Directors, their respective representatives and the auditors of our Group tohave sufficient access to the records of the relevant Controlling Shareholder andher/its close associates to ensure their compliance with the terms and conditions underthe Deed of Non-competition;

(iii) issue an annual declaration to our Company on compliance with the terms of the Deedof Non-competition, setting out therein such Controlling Shareholder’s interests (ifany) in any projects or business opportunities (and including any changes thereof) andconsenting to the disclosure of such declaration in our annual reports or theannouncements published by our Company regarding the decisions of our INEDs onmatters referred to in the Deed of Non-competition;

(iv) supply to our Company upon signing of the Deed of Non-competition with full andaccurate details of any business or interest (if any) which the relevant ControllingShareholder and/or her/its close associates have or may have which competes or maycompete with the business from time to time carried on by our Group and any otherconflicts of interests (if any) which the relevant Controlling Shareholder has or mayhave with our Group and whether the relevant Controlling Shareholder and/or her/itsclose associates intend or do not intend to inject such business or interest into ourGroup;

(v) at any time during which the Shares of our Company are [REDACTED] and for solong as the relevant Controlling Shareholder and/or her/its close associates areregarded, whether individually or taken together, as controlling shareholders of ourCompany within the meaning of the Listing Rules, notify our Company forthwith ofany changes of the details and information referred to in paragraph (iv) above so as toenable our Company to disclose (if so required by the Stock Exchange or pursuant tothe Listing Rules) such information by way of an announcement and include suchinformation in such circulars, annual reports, half-year reports and/or quarterly reportsrequired to be issued by our Company pursuant to the Listing Rules;



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(vi) procure any Director from time to time nominated by the relevant ControllingShareholder:

(a) to disclose to our Company upon signing of the Deed of Non-competition and atany time during which the Shares of our Company are [REDACTED] full andaccurate details of any business or interest (if any) which such Director and/orhis/her close associates have or may have which competes or may compete withthe business from time to time carried on by our Group and any other conflicts ofinterest (if any) which such Director has or may have with our Group;

(b) to notify our Company forthwith of any changes of the details and informationreferred to in paragraph (vi)(a) above, including any such business or interestacquired by such Director and/or his/her close associates after the [REDACTED]so as to enable our Company to, if so required by the Stock Exchange orpursuant to the Listing Rules, disclose such information by way of anannouncement and include such information in such circulars, annual reports,half-year reports and/or quarterly reports required to be issued by our Companypursuant to the Listing Rules.

Our Controlling Shareholders acknowledge that and, if so required by our Company,procure such Director(s) referred to in paragraph (vi) above to acknowledge that the informationsupplied to our Company pursuant to paragraphs (iv), (v) and/or (vi) above will or may bedisclosed by our Company in this document, circulars, reports, announcements and otherstatements to the Stock Exchange and/or any regulatory authorities and their respective officersand employees from time to time issued by our Company and that such disclosure is required byour Company in order to comply with the requirements of the Stock Exchange and/or otherregulatory bodies.

Corporate governance measures for the implementation of the Deed of Non-competition

In order to properly manage any potential or actual conflict of interests between us and ourControlling Shareholders in relation to compliance and enforcement of the Deed ofNon-competition, we have adopted the following corporate governance measures:

(a) the INEDs would review, at least on an annual basis, the compliance with andenforcement of the terms of the Deed of Non-competition by our ControllingShareholders and if any, the options, pre-emptive rights or first rights of refusalsprovided by our Controlling Shareholders and/or their respective close associates ontheir existing or future competing businesses. Such options, pre-emptive rights or firstrights of refusals relate to any business which our Group may engage in the future;



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(b) our Company shall disclose decisions with basis on matters reviewed by the INEDsrelating to non-compliance and enforcement of the Deed of Non-competition(including whether to take up the options, pre-emptive rights or first rights of refusals)either through annual report, or by way of announcement and/or other documentsissued or published by our Company as required under the Listing Rules;

(c) our Company shall disclose in the corporate governance report of the annual reportson how the terms of the Deed of Non-competition are complied with and enforced;

(d) in the event that any of our Directors and/or their respective close associates hasmaterial interest in any matter to be deliberated by our Board in relation tocompliance and enforcement of the Deed of Non-competition or other proposedtransactions in which such Directors and/or their respective close associates havematerial interest, such Director(s) may not vote on the resolutions of our Boardconsidering and approving the matter and shall not be counted towards the quorum forthe voting pursuant to the applicable provisions in the Articles; and

(e) where the advice from independent professional, such as that from financial adviser, isreasonably requested by our Directors (including the INEDs), the appointment of suchindependent professional will be made at our Company’s expenses.

Our Directors consider that the above corporate governance measures are sufficient tomanage any potential conflict of interests between our Controlling Shareholders and theirrespective close associates and our Group and to protect the interests of our Shareholders, inparticular, the minority Shareholders.

INDEPENDENCE FROM OUR CONTROLLING SHAREHOLDERS

Save as disclosed in this section and “Connected Transactions” in this document, ourDirectors do not expect that there will be any other significant transactions between our Groupand our Controlling Shareholders upon or shortly after the [REDACTED]. Our Group is capableof carrying on our business independently from and does not place undue reliance on ourControlling Shareholders, taking into consideration the following factors:

Management independence

Our Board comprises four executive Directors, one non-executive Director and threeINEDs. Our senior management team comprises five members. As of the Latest Practicable Date,none of our Directors or members of senior management serves as directors in any of theExcluded Pharmaceutical and Biotechnology Businesses.



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We believe that our Board, as a whole, together with our senior management team, is ableto perform the managerial roles in our Group independently from our Controlling Shareholdersafter the [REDACTED] for the following reasons:

➢ our executive Directors do not hold any directorships in the Excluded Pharmaceuticaland Biotechnology Businesses or the Controlling Shareholders (or their closeassociates);

➢ each of our Directors is aware of his/her fiduciary duties as a Director, which require(among other things) that he/she acts for the benefit and in the best interests of ourCompany and does not allow any conflict between his/her duties as a Director andhis/her personal interest;

➢ if there is a potential conflict of interest arising out of any transaction to be enteredinto between our Group and our Directors or their respective close associates, theinterested Director(s) shall abstain from voting at the relevant board meetings of ourCompany in respect of such transactions and shall not be counted in the quorum;

➢ apart from our executive Directors who oversee the daily operations of our Group, wehave an independent management team to carry out the business decisions of ourGroup and to perform all essential management functions without unduly requiring thesupport of our Controlling Shareholders. Our INEDs have sufficient and competentindustry knowledge and experience, and will bring independent judgment to thedecision making process of our Board, taking into account the advice of the seniormanagement of our Group;

➢ none of our member of senior management hold any directorships in the ExcludedPharmaceutical and Biotechnology Businesses or the Controlling Shareholders (ortheir close associates); and

➢ our Company has established internal control mechanisms to identity connectedtransactions to ensure that our Shareholders or Directors with conflicting interested ina proposed transaction will abstain from voting on the relevant resolutions.

Business independence

Save for the related party transactions disclosed in note 30 of the accountant’s report setout in Appendix I to this document and the connected transactions disclosed in “ConnectedTransactions” in this document, there were no material business dealings between our Group andour Controlling Shareholders or their respective close associates during the Track Record Period.



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During the Track Record Period and up to the Latest Practicable Date, our Group and ourControlling Shareholders did not have any common or shared facilities or resources. Save asdisclosed in the sections headed “Business – Procurement and Supplies” and “ConnectedTransactions” in this document, neither our Controlling Shareholders nor any of their respectiveclose associates is a supplier or an intermediary for our Group’s supplies. We have independentaccess to our customers. Our Directors believe that our Group has not unduly relied on ourControlling Shareholders or their respective close associates to carry on its business during theTrack Record Period.

Financial independence

During the Track Record Period, we principally financed our operations through acombination of paid-up capital and retained earnings. We also obtained borrowings from ourControlling Shareholders and their respective close associates. As at the year-end during theTrack Record Period:

(a) RMB337.6 million, RMB323.8 million and RMB117.2 million were respectivelyborrowed by us from our Controlling Shareholders and their respective closeassociates; and

(b) our loans and borrowings of RMB1,162.0 million, RMB1,189.3 million and nil weresecured by guarantees and/or collaterals given by our Controlling Shareholders ortheir respective close associates.

As of the Latest Practicable Date, all loans, advances and balances due to and from ourControlling Shareholders and their respective close associates have been fully settled. Allsecurity and guarantees provided by them in connection with our Group’s borrowings have beenfully released as of the Latest Practicable Date.

Save as mentioned above, our source of funding is independent from our ControllingShareholders and none of our Controlling Shareholders or their respective close associatesfinanced our operations during the Track Record Period.

During the Track Record Period and up to the Latest Practicable Date, we had independentfinancial and accounting and internal control systems, independent treasury function forreceiving cash and making payments and we had independent access to third party financing.Our Group is capable of making financial decisions according to our own business needs. OurDirectors also believe that we are able to obtain financing independent from our ControllingShareholders and their respective close associates.

Our Group does not rely on our Controlling Shareholders and/or their respective closeassociates by virtue of their provision of financial assistance.



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Operational independence

Our Group holds relevant licenses, qualifications and permits required for conducting theGroup Businesses (as defined term). Our Group has sufficient capital, facilities and employees tooperate our business independently from our Controlling Shareholders and their close associates.Our Group also has independent access to our customers and our own independent managementteam to carry out our business and operations, including business development, marketing andsales operations, which will operate separately and independently from our ControllingShareholders. Such management team comprises professional medical practitioner who haveconsiderable experience in the healthcare industry. Our Group does not rely on referral ofbusiness opportunities from our Controlling Shareholders, and the management team of ourGroup will be able to seek business opportunities for our Group. Our Group is able to continueto operate independently from our Controlling Shareholders.

ASSIGNMENT AND LICENSING OF CERTAIN TRADEMARKS OWNED BY THEPRIVATE GROUP

In the past, certain trademarks used by members of our Group were registered under thename of Clifford TM, for administrative convenience reasons. In order to rationalise thecommercial relationship between our Group and the Private Group after the [REDACTED], aspart of the Reorganisation the following trademark transfer agreements/trademark assignmentdeed and trademark licence agreement were entered into:

(a) by three trademark transfer agreements (i.e. PRC Trademark Transfer Agreements) alldated 29 November 2021 and separately entered into between Clifford TM (astransferor) and three members of our Group (being our Hospital, Medical EquipmentPRC Co and Pharmaceuticals PRC Co, as transferee), certain trademarks registered inthe PRC which are currently used by our Group or relevant to our current businesses(but which are not used by the Private Group) were transferred by Clifford TM to ourGroup without consideration (a supplemental trademark transfer agreement dated 7February 2022 was entered into between Clifford TM and our Hospital to revise thelist of trademarks transferred under the respective trademark transfer agreement);

(b) by a trademark assignment deed (i.e. HK Trademark Assignment) dated 7 March 2022and entered into between Clifford TM (as assignor) and Hospital HK Co (as assignee),all rights, titles, benefits and interests regarding a trademark registered in Hong Kongwhich is currently used by our Group or relevant to our current businesses (but whichare not used by the Private Group) was assigned by Clifford TM to Hospital HK Co ata nominal consideration of HK$1; and



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(c) by a trademark licence agreement (i.e. PRC Trademark Licence Agreement) dated 7February 2022 and entered into between Clifford TM (as licensor) and three membersof our Group (being our Hospital, Postpartum Care PRC Co and Elderly Home PRCCo, as licensees), Clifford TM granted to the licensees an exclusive license to use (fora term of 10 years up to 6 February 2032) certain trademarks registered in the PRCwithout consideration; Clifford TM also granted to the licensees the right tosub-license the relevant trademarks to any of (aa) their parent companies orsubsidiaries; (bb) entities or units (including subsidiaries, branches or privatenon-enterprise entities) under such parent companies or subsidiaries; or (cc)companies or subordinate enterprises or units which are operated by the licenseesunder any entrustment arrangements for their use.

As the transactions contemplated under the PRC Trademark Licence Agreement asmentioned in paragraph (c) above constitute continuing connected transactions of ourCompany under the Listing Rules upon the [REDACTED], further details of suchtrademark licence agreements are set out in the section headed “Connected Transactions –Exempted Continuing Connected Transactions – 3. PRC Trademark Licence Agreement” inthis document.

Details of the trademarks transfer/assigned under the trademark transferagreements/trademark assignment deed or licensed under the trademark licence agreement, whichare material to our Group’s business, are set out in paragraph 2.2(a) under appendix V –“Statutory and General Information” to this document.



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OUR ONE-OFF CONNECTED TRANSACTION

We have entered into the following transaction with a connected person of our Company ona one-off basis, thereby constituting one-off connected transaction of our Group under Chapter14A of the Listing Rules.

Pharmacy Tenancy Agreement (leasing of property by Clifford ML Group to our Group)

Description of and reasons for the transaction:

Guangzhou Clifford Trading Co., Ltd. (廣州市祈福貿易有限公司) (a member of theClifford ML Group) (as landlord) has entered into a tenancy agreement with Pharmacy (Xinda)PRC Co (Clifford Mid-levels Clubhouse Branch) (a branch of Pharmacy (Xinda) PRC Co, amember of our Group) (as tenant) during the Track Record Period (the “Pharmacy TenancyAgreement”).

Under the Pharmacy Tenancy Agreement, Pharmacy (Xinda) PRC Co (Clifford Mid-levelsClubhouse Branch) has leased a premise (the “Leased Pharmacy”) from the Clifford ML Grouplocated inside the Mid-levels Clubhouse of Clifford Estates, Zhongcun Street, Panyu District,Guangzhou City, with a total leasable area of approximately 115 sq.m for its operation of one ofour retail pharmacies, at a monthly rent of approximately RMB6,000 determined on an arm’slength basis with reference to prevailing market rates of similar properties in the vicinity, andfor a fixed term from 15 October 2021 to 31 December 2024.

Having taken into account the general range of prevailing market rates in a location similarto that of the Leased Pharmacy, our Directors consider that the Pharmacy Tenancy Agreementhas been entered into on normal commercial terms or better (as defined under the Listing Rules)and in the ordinary and usual course of business of our Group, which terms are fair andreasonable and are in the interests of our Group and our Shareholders as a whole as reflectedfrom the valuation result of AVISTA Valuation Advisory Limited (the “Property Valuer”).

Relationship between parties:

Ms. Wendy Man is a non-executive Director, the chairman of the Board and our ControllingShareholder and therefore a connected person of our Company under Rule 14A.07(1) of theListing Rules. As of the Latest Practicable Date, Ms. Wendy Man is the ultimate controllingshareholder (as defined under the Listing Rules) of Clifford Modern Living, as she owned,directly or indirectly, more than 30% of the issued share capital of Clifford Modern Living. Assuch, each of Clifford Modern Living and its subsidiaries (including Guangzhou Clifford TradingCo., Ltd.) are regarded as associates of Ms. Wendy Man, and hence connected persons of ourCompany pursuant to Rule 14A.12(1)(c) of the Listing Rules.


CONNECTED TRANSACTIONS

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Listing Rules implications:

In accordance with Hong Kong Financial Reporting Standard (HKFRS) 16 “Leases”, ourGroup recognised addition of right-of-use asset relating to the Pharmacy Tenancy Agreementwith total leased GFA of approximately 115 sq. m. for the operation of one of our retailpharmacies which amounted to approximately RMB0.4 million in total on our Group’sconsolidated statements of comprehensive income for FY2021. For the purpose of Chapter 14Aof the Listing Rules, the transactions contemplated under the Pharmacy Tenancy Agreement willbe regarded as a as a one-off acquisition of capital asset. Accordingly, the reporting,announcement, annual review and independent shareholders’ approval requirements regardingcontinuing connected transactions in Chapter 14A of the Listing Rules will not be applicable tothe transactions contemplated under the Pharmacy Tenancy Agreement.

OUR CONTINUING CONNECTED TRANSACTIONS

We have entered into a number of continuing agreements and arrangements with theconnected persons of our Company in our ordinary and usual course of business. Thesetransactions will continue after the [REDACTED], thereby constituting continuing connectedtransactions of our Company under the Listing Rules. Brief details of these continuing connectedtransactions are set out below:

TransactionName of connectedperson

Relationship withour Company

Nature oftransaction Term Wavier sought

Exempted continuing connected transactions1. Master tenancy

agreement between ourGroup and CliffordModern Living

Clifford ModernLiving (for itselfand on behalf ofcertain members ofthe Clifford MLGroup)

Ms. Wendy Man isthe ultimatecontrollingshareholder ofClifford ModernLiving

Leasing of propertyby our Group

From 1 January 2022to 31 December2024

N/A

2. Tenancy agreementsbetween our Group andClifford Health ServiceCentre

Clifford HealthService Centre

Our Hospital is thesole organiser ofClifford HealthService Centre andit is classified asan associate of ourGroup

Leasing of propertyby our Group

From (a) 1 March2022 to 31 July2023; (b) 1 April2021 to 31 March2023; and (c) 1April 2021 to 31March 2023

N/A



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3. PRC Trademark LicenceAgreement between ourGroup and Clifford TM

Clifford TM Ms. Wendy Man’sSpouse is theultimatecontrollingshareholder ofClifford TM

Granting of licenceto our Group touse certaintrademarks

Ten years from7 February 2022 to6 February 2032

Requirement as tosetting a term notexceeding threeyears

4. Pharmaceuticals supplyframework agreementsbetween our Group andeach of:

(a) Clifford ModernLiving;

(b) Guangzhou CliffordEstates (Panyu)Limited (廣州市番禺祈福新邨房地產有限公司) (“CliffordEstates Ltd”); and

(c) Foshan NanhaiClifford (GoldenLake) HotelCompany Limited(佛山市南海祈福仙湖酒店有限公司)(“Clifford XianhuHotel”)

(a) Clifford ModernLiving (for itselfand on behalf ofits subsidiaries)

(b) Clifford EstatesLtd (for itselfand on behalf ofcertain membersof the PrivateGroup)

(c) Clifford XianhuHotel (for itselfand on behalf ofcertain membersof the WMNon-HealthcareGroup)

(a) Please see item1 above

(b) Ms. WendyMan’s Spouse isthe ultimatecontrollingshareholder ofClifford EstatesLtd (and thePrivate Group)

(c) Ms. Wendy Manis the ultimatecontrollingshareholder ofClifford XianhuHotel (and theWMNon-HealthcareGroup)

Supply ofpharmaceuticalsand medicalconsumables byour Group

Not more than 3years from the[REDACTED] to31 December 2024

N/A



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Partially exempted continuing connected transactions1. Physical examination

services frameworkagreements between ourGroup and

(a) Clifford ModernLiving;

(b) Clifford Estates Ltd;and

(c) Clifford XianhuHotel

(a) Clifford ModernLiving (for itselfand on behalf ofits subsidiaries)

(b) Clifford EstatesLtd (for itselfand on behalf ofcertain membersof the PrivateGroup)

(c) Clifford XianhuHotel (for itselfand on behalf ofcertain membersof the WMNon-HealthcareGroup)

Please see item 4 of“Exemptedcontinuingconnectedtransactions”above

Provision of physicalexaminationservices by ourGroup


Reporting andannouncementrequirements

2. Master compositeservices agreementbetween our Group andClifford Modern Living

Clifford ModernLiving (for itselfand on behalf ofcertain members ofthe Clifford MLGroup)

Please see item 1 of“Exemptedcontinuingconnectedtransactions”above

Provision of livingservices,engineering andmaintenanceservices andtelecommunicationservices to ourGroup

From1 January 2022to 31 December2024


3. Master tenancyagreement between ourGroup and CliffordEstates Ltd

Clifford Estates Ltd(for itself and onbehalf of certainmembers of thePrivate Group)

Ms. Wendy Man’sSpouse is theultimatecontrollingshareholder ofClifford EstatesLtd

Leasing of propertyto our Group





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EXEMPTED CONTINUING CONNECTED TRANSACTIONS

We set out below details of the exempted continuing connected transactions for our Group,which are fully exempted from independent shareholders’ approval, annual review and alldisclosure requirements under Chapter 14A of the Listing Rules.

1. Master Tenancy Agreement (Landlord) (leasing of property by our Group to CliffordML Group)

Our Company (for itself and on behalf of the other members of our Group) (as landlord)and Clifford Modern Living (for itself and on behalf of its subsidiaries) (as tenant) entered intoa master tenancy agreement (the “Master Tenancy Agreement (Landlord)” or the “MTA(Landlord)”) dated 29 October 2021, pursuant to which our Group agreed to lease certainproperties to the Clifford ML Group on and subject to the respective terms and conditionscontained therein. Under the Master Tenancy Agreement (Landlord), individual members of ourGroup (as landlords) and individual members of the Clifford ML Group have entered or willenter into individual tenancy agreements with specific terms and conditions governing theleasing of individual properties. The MTA (Landlord) has a term of three years commencingfrom 1 January 2022 to 31 December 2024.


Please refer to the paragraph headed “Our One-off Connected Transaction – PharmacyTenancy Agreement (leasing of property by Clifford ML Group to our Group) – Relationshipbetween parties” in this section for details of the relationship between our Group and theClifford ML Group.

Reasons for the transactions:

The Clifford ML Group is principally engaged in the provision of six main servicesegments: property management services, renovation and fitting-out services, retail services,off-campus training services, information technology services and ancillary living services(which consists of property agency services, employment placement agency services and laundryservices). During the Track Record Period, the Clifford ML Group leased certain properties fromour Group for its operation of, amongst other, convenience stores within our Hospital under theformer master tenancy agreement dated 21 October 2016 (as supplemented by two supplementalagreements dated 28 April 2017 and 18 October 2018) and entered into between our Group andthe Clifford ML Group (among other parties) for a term of ten years ending 31 December 2025.Our Group and the Clifford ML Group entered into the Master Tenancy Agreement (Landlord) toreplace such master tenancy agreement in regulating the leasing of properties by our Group tothe Clifford ML Group.



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As of the Latest Practicable Date, only one individual tenancy agreement has been enteredinto between the respective members of our Group and the Clifford ML Group with respect toone premise (the “Relevant Property”) with a total gross floor area of 91 sq. m. located withinPhase I Building of our Hospital. The Relevant Property has been used by the Clifford MLGroup for the operation of a convenience store. Our Directors are of the view that it is in theinterest of our Group to enter into the Master Tenancy Agreement (Landlord) for the purpose ofbenefiting customers of our Hospital and deriving reasonable rental income from the propertiesowned by our Group.

Major terms of the transaction:

The principal terms of the Master Tenancy Agreement (Landlord) are summarised below:

Date: 29 October 2021

Parties: (1) Our Company (for itself and on behalf of the other propertyowners which are members of our Group) (as landlord);

(2) Clifford Modern Living (for itself and on behalf of itssubsidiaries) (as tenant)

Term: Three years commencing from 1 January 2022 to 31 December2024

Premises to be leasedunder the MTA(Landlord):

Under the MTA (Landlord), the Clifford ML Group agreed tolease from our Group the Relevant Property with a total grossfloor area of 91 sq. m. located within Phase I Building of ourHospital in Panyu district of Guangdong Province, the PRC.

With respect to the properties leased under MTA (Landlord),individual members of our Group (as landlords) and individualmembers of the Clifford ML Group (as tenants) have entered orwill enter into individual tenancy agreements which prescribespecific lease terms and conditions (including rental, paymentmethod and other terms). The terms of such individual tenancyagreements shall be consistent with those of the MTA (Landlord).

As of the Latest Practicable Date, only one individual tenancyagreement has been entered into between the respective membersof our Group and the Clifford ML Group with respect to RelevantProperty.



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If any of the individual tenancy agreements expires before 31December 2024 (being the expiry date of the MTA (Landlord)),the Clifford ML Group is entitled to renew such individualtenancy agreement with the relevant landlord (being a member ofour Group) by giving three months’ written notice, subject to thecompliance with the prevailing applicable provisions of theListing Rules.

Use: The Relevant Property has been used by the Clifford ML Groupfor the operation of a convenience store

Rent: The annual rentals receivable by our Group from the Clifford MLGroup under the existing individual tenancy agreement in relationto the Relevant Property have been determined with reference tothe range of prevailing market rates for the Relevant Property asof 31 December 2020 based on the valuation results of anindependent property valuer contained in a fair rent letter and ourmanagement’s assessment of the prevailing market rates forFY2021. The annual rental receivable by our Group shall beincreased by an amount not exceeding the lower of (i) 7% (whichis determined with reference to the GDP growth rate of the PRCduring 2010 to 2020); and (ii) the prevailing GDP growth rate ofthe PRC in the immediately preceding year.

The annual rentals in respect of the premises to be leased by ourGroup to the Clifford ML Group under MTA (Landlord) weredetermined after arm’s length negotiations between the relevantparties with reference to the prevailing market rates of localproperties in the neighbourhood with a similar scale and qualityand subject to the internal control measures of both groups. Theprevailing market rates of local properties are determined withreference to:

(i) quotations of one or more similar comparable propertiesowned by Independent Third Parties in the neighbouring areaprovided by independent estate agency;

(ii) the terms of at least one existing tenancy agreement enteredinto between our Group (as landlord) and Independent ThirdParty(ies) (as tenant) in relation to premises located near ornext to the subject premises; and

(iii) (where items (i) and (ii) are not available or applicable) atleast two quotations provided by our Group to IndependentThird Party(ies).



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After collecting available data and market information (includingquotations from Independent Third Parties), the Clifford MLGroup compares such information to decide whether the quotationoffered by our Group is no less favourable than those given bythe Independent Third Party estate agency and whether the leaseterms are fair and reasonable. Future increments will bedetermined based on the GDP growth rates of the PRC (subject toa cap of 7% per annum).

Changes in leasedpremises:

Where there are any changes in leased premises arising from or inconnection with the business development of Clifford ML Group,the parties may revise the list of premises to be leased by theClifford ML Group by way of entering into supplementalagreements or memoranda to record such changes. To the extentthat (i) the relevant changes (or cumulative changes) do not resultin the respective annual caps for the relevant year for each of ourGroup and the Clifford ML Group being exceeded, and (ii) themanner of determining the rentals of such premises being made incompliance with the terms of the MTA (Landlord), such changeswill be considered as immaterial (unless the Stock Exchange orthe majority of the independent non-executive directors of ourCompany or those of Clifford Modern Living consider otherwise).If any of the changes are considered to be material, these changeswill take effect conditional upon the applicable requirementsunder the Listing Rules being complied with.

First right of refusal: Pursuant to the MTA (Landlord), our Company (for itself and onbehalf of the other property owners which are members of ourGroup) has granted first right of refusal to Clifford ModernLiving (for itself and on behalf of its subsidiaries), such that atany time during the term of the MTA (Landlord), if any relevantlandlord(s) intends to sell, assign or transfer any premises leasedby the Clifford ML Group (as tenants) under the MTA (Landlord),such premises shall be first offered to the Clifford ML Group forpurchase at a fair and reasonable price to be determined based onthe valuation of an independent valuer.

The first right of refusal shall be exercisable at the sole discretionof the Clifford ML Group. If the Clifford ML Group chooses toexercise the first right of refusal, completion of the relevant saleand purchase of the premises concerned shall be made conditionalupon our Group and the Clifford ML Group having complied withthe prevailing applicable requirements of the Listing Rules.



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Historical transaction amount:

During the Track Record Period, the historical annual rental receivable by our Groupregarding the leasing of the Relevant Property under the former master tenancy agreement wereapproximately RMB0.1 million, RMB0.1 million and RMB0.1 million.

Annual caps and basis of determination:

Our Directors estimate that the annual rental receivable by our Group regarding the leasingof the Relevant Property under the Master Tenancy Agreement (Landlord) for each of the threeyears ending 31 December 2024 will be as follows:

FY2022 FY2023 FY2024(RMB million) (RMB million) (RMB million)

Annual caps for total rentalreceivable by our Group 0.1 0.1 0.1

In determining the above annual caps, our Directors have considered generally:

(a) the existing annual rentals under the relevant individual tenancy agreement of theRelevant Property and the historical unit rental regarding the leasing of the RelevantProperty; and

(b) the expected growth of the unit rental or the expected GDP growth rates for the threeyears ending 31 December 2024.


For each of the three years ending 31 December 2024, the annual cap for the annual rentalsreceivable by our Group regarding the leasing of the Relevant Property under the MasterTenancy Agreement (Landlord) is less than HK$3 million and the highest applicable percentageratio is less than 5%. Therefore, the MTA (Landlord) and the transaction contemplatedthereunder constitute de minimis transactions under Rule 14A.76(1) of the Listing Rules and aretherefore fully exempt from the independent shareholders’ approval, annual review and alldisclosure requirements.



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Our Directors’ views:

Having taken into account the general range of prevailing market rates in a location similarto that of the Relevant Property and the pricing policy in determining the annual rentals, ourDirectors consider that the continuing connected transactions contemplated under the MasterTenancy Agreement (Landlord) have been conducted on normal commercial terms, are fair andreasonable and in the interests of our Group and our Shareholders as a whole, and that theproposed annual caps for the continuing connected transactions contemplated under the MasterTenancy Agreement (Landlord) are fair and reasonable as reflected from the valuation results ofan independent valuer.

2. Tenancy agreements (leasing of properties by our Group to Clifford Health ServiceCentre)

Our Hospital (as lessor) has entered into three separate tenancy agreements (the “CliffordHealth Service Centre Tenancy Agreements”) with Clifford Health Service Centre (as tenant),including:

(a) a tenancy agreement dated 1 March 2022 regarding the leasing of a premise located atthe Old Wing of our Hospital (with a total gross area of approximately 400 sq.m.) forClifford Health Service Centre’s operations of providing medical services forcharitable purposes at a monthly rent of approximately RMB24,000 for a term from 1March 2022 to 31 July 2023;

(b) a tenancy agreement dated 22 April 2021 regarding the leasing of a room located atone of the dormitory buildings of our Hospital (with a total gross area ofapproximately 30 sq.m.) for use as staff dormitory at a monthly rent of approximatelyRMB1,000 for a term from 1 April 2021 and 31 March 2023; and

(c) a tenancy agreement dated 22 April 2021 regarding the leasing of four rooms locatedat another dormitory building of our Hospital (with a total gross area of approximately100 sq.m.) for use as staff dormitory at a monthly rent of approximately RMB4,000for a term from 1 April 2021 and 31 March 2023.

The monthly rents of which were determined on an arm’s length basis with reference toprevailing market rates of similar properties in the vicinity.



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Under the articles of association of Clifford Health Service Centre, our Hospital is entitledto nominate one of three members (理事) to the executive council (理事會). For such reason,Clifford Health Service Centre is classified as an associate of our Group under the Accountant’sReport (instead of a subsidiary of our Group). Considering the above influence of our Group onthe management of Clifford Health Service Centre, the transactions contemplated under theClifford Health Service Centre Tenancy Agreement are classified as related parties transactions,please refer to note 30 of the Accountant’s Report in Appendix I to this document for furtherdetails.

As stated in the paragraph headed “Our One-off Connected Transaction – PharmacyTenancy Agreement (leasing of property by Clifford ML Group to our Group) – Relationshipbetween parties” in this section, Ms. Wendy Man (a non-executive Director, the chairman of theBoard and our Controlling Shareholder) is a connected person of our Company under Rule14A.07(1) of the Listing Rules. As of the Latest Practicable Date, Ms. Wendy Man (throughInternational Health BVI) owned more than 30% of the issued share capital of our Company,which in turn owns the entire equity interest in our Hospital (being an indirect wholly ownedsubsidiary of our Company). As stated above, our Hospital is capable of exerting influence onthe management of Clifford Health Service Centre by way of nominating a member of itsexecutive council. As such, Clifford Health Service Centre is regarded as an associate of Ms.Wendy Man, and hence a connected person of our Company pursuant to Rule 14A.12(1)(c) ofthe Listing Rules.

Reasons for the transaction:

During the Track Record Period, Clifford Health Service Centre leased the relevantproperties under the Clifford Health Service Centre Tenancy Agreement for its operations ofproviding medical services to the community for charitable purposes and staff dormitory. OurDirectors are of the view that it is in the interest of our Group to enter into the Clifford HealthService Centre Tenancy Agreements for the purpose of our Hospital’s social contribution andmarketing and promotion and deriving reasonable rental income from the properties owned byour Group.


During the Track Record Period, the historical annual rental receivable by our Group underthe Clifford Health Service Centre Tenancy Agreements were approximately nil, RMB50,000 andRMB0.2 million.



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Our Directors estimate that the annual rental receivable by our Group regarding the leasingof the properties under the Clifford Health Service Centre Tenancy Agreements for each of thetwo years ending 31 December 2023 will be as follows:

FY2022 FY2023(RMB million) (RMB million)

Aggregate annual caps for total rental receivable byour Group 0.4 0.3


(a) the existing annual rentals receivable by our Group under the Clifford Health ServiceCentre Tenancy Agreements; and

(b) the GDP growth rates of the PRC and the expected GDP growth rates for the twoyears ending 31 December 2023.


For each of the two years ending 31 December 2023, the aggregate annual cap for theannual rentals receivable by our Group regarding the leasing of the properties under the CliffordHealth Service Centre Tenancy Agreements is less than HK$3 million and the highest applicablepercentage ratio is less than 5%. Therefore, the Clifford Health Service Centre TenancyAgreements and the transaction contemplated thereunder constitute de minimis transactionsunder Rule 14A.76(1) of the Listing Rules and are therefore fully exempt from the independentshareholders’ approval, annual review and all disclosure requirements.


Having taken into account the view of the general range of prevailing market rates in alocation similar to that of the properties leased under the Clifford Health Service Centre TenancyAgreements, our Directors consider that the continuing connected transactions contemplatedunder the Clifford Health Service Centre Tenancy Agreements have been conducted on normalcommercial terms, are fair and reasonable and in the interests of our Group and our Shareholdersas a whole, and that the proposed annual caps for the continuing connected transactionscontemplated under the Clifford Health Service Centre Tenancy Agreements are fair andreasonable as reflected from the valuation results of the Property Valuer.



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3. PRC Trademark Licence Agreement

The PRC Trademark Licence Agreement dated 7 February 2022 was entered into betweenClifford TM (as licensor) and three members of our Group (being our Hospital, Postpartum CarePRC Co and Elderly Home PRC Co, as licensees). Pursuant to such agreement, Clifford TMagreed to grant to the licensees an exclusive licence to use certain trademarks registered in thePRC (“Licenced Trademarks”), which are currently used by our Group or relevant to ourcurrent businesses, without consideration. The PRC Trademark Licence Agreement is for a termof 10 years up to 6 February 2032 (subject to renewal of the respective trademarks). Under thePRC Trademark Licence Agreement, Clifford TM also granted to the licensees the right tosub-license the relevant trademarks to any of (aa) their parent companies or subsidiaries; (bb)entities or units (including subsidiaries, branches or private non-enterprise entities) under suchparent companies or subsidiaries; or (cc) companies or subordinate enterprises or units which areoperated by the licensees under any entrustment arrangements for their use.


As stated in the paragraph headed “Our One-off Connected Transaction – PharmacyTenancy Agreement (leasing of property by Clifford ML Group to our Group) – Relationshipbetween parties” in this section, Ms. Wendy Man (a non-executive Director, the chairman of theBoard and our Controlling Shareholder) is a connected person of our Company under Rule14A.07(1) of the Listing Rules. As of the Latest Practicable Date, Ms. Wendy Man’s Spouse isthe ultimate controlling shareholder (as defined under the Listing Rules) of Clifford TM, as heowned, directly or indirectly, more than 30% of the issued share capital of Clifford TM. Assuch, Clifford TM is regarded as an associate of Ms. Wendy Man, and hence connected personsof our Company pursuant to Rule 14A.12(1)(c) of the Listing Rules.


Our Group has been using the Licenced Trademarks in the business of our Group over theyears in relation to the provision of medical and healthcare services which are marketed, soldand/or rendered by our Group, and for the related marketing and promotion activities. We intendto continue to use, after [REDACTED], the Licenced Trademarks in such connection because (i)the Licenced Trademarks are considered by our Company to be necessary to our business toalign brand image and/or to promote our goods and services; and (ii) a longer duration of thelicence term will allow a greater degree of stability and continuity to our business. Our Directorsare of the view that it is normal business practice for trademark licence agreement of this type tobe of a term exceeding three years. The Sole Sponsor, having reviewed the relevant informationand the terms of the PRC Trademark Licence Agreement, is of the view that it is in the interestof our Company and Shareholders as a whole for the PRC Trademark Licence Agreement to havea term exceeding three years.



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No historical figures during the Track Record Period are available for the licence ofLicenced Trademarks.


As the licence to use the Licenced Trademarks was granted to our Group withoutconsideration, the transactions contemplated under the PRC Trademark Licence Agreementconstitute de minimis transactions under Rule 14A.76(1) of the Listing Rules and are thereforefully exempt from the independent shareholders’ approval, annual review and all disclosurerequirements.


Based on the above and after reviewing the terms of the PRC Trademark LicenceAgreement, our Directors consider that the continuing connected transactions contemplatedunder the PRC Trademark Licence Agreement have been conducted on normal commercial terms,are fair and reasonable and in the interests of our Group and our Shareholders as a whole.

4. Pharmaceuticals Supply Framework Agreements

To govern the terms and conditions for the supply of pharmaceuticals and medicalconsumables by our Group to the following purchasers, the following pharmaceuticals supplyframework agreements (all dated [•] 2022) were entered into:

(i) our Company (for itself and on behalf of our subsidiaries) (as suppliers) and CliffordModern Living (for itself and on behalf of its subsidiaries) (as purchasers) enteredinto a pharmaceuticals supply framework agreement (“PSFA No. 1”);

(ii) our Company (for itself and on behalf of our subsidiaries) (as suppliers) and CliffordEstates Ltd (for itself and on behalf of certain members of the Private Group) (aspurchasers) entered into a pharmaceuticals supply framework agreement (“PSFA No.2”); and

(iii) our Company (for itself and on behalf of our subsidiaries) (as suppliers) and CliffordXianhu Hotel (for itself and on behalf of certain members of the WM Non-HealthcareGroup) (as purchasers) entered into a pharmaceuticals supply framework agreements(“PSFA No. 3”, together with PSFA No. 1 and PSFA No. 2, collectively the“Pharmaceuticals Supply Framework Agreements”),

pursuant to which our Group agreed to supply pharmaceuticals and medical consumables tothe purchasers, all for a term of not more than 3 years from the [REDACTED] to 31December 2024, on and subject to the respective terms and conditions contained therein.



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The principal terms of PSFA No. 2 and PSFA No. 3 are essentially similar to those of PSFANo.1, which are set out below.



Ms. Wendy Man is a non-executive Director, the chairman of the Board and our ControllingShareholder, and hence Ms. Wendy Man’s associates are connected persons of our Companyunder Rule 14A.07 of the Listing Rules. As at the Latest Practicable Date, the ultimatecontrolling shareholder of the Private Group (including Clifford Estates Ltd) is Ms. WendyMan’s Spouse, while that of the WM Non-Healthcare Group (including Clifford Xianhu Hotel) isMs. Wendy Man. As such, both the Private Group (including Clifford Estates Ltd) and the WMNon-Healthcare Group (including Clifford Xianhu Hotel) are associates of Ms. Wendy Man, andhence connected persons of our Company under the Listing Rules.


During the Track Record Period, as part of its principal business, our Group suppliedpharmaceuticals and medical consumables to (a) Clifford ML Group; (b) Private Group; and (c)WM Non-Healthcare Group such as first aid boxes or medical supplies provided for office useand/or use of their employees. Our Directors consider that the entering into of thePharmaceuticals Supply Framework Agreements is in our Group’s usual and ordinary course ofbusiness.


The principal terms of the PSFA No. 1 are summarised below, the principal terms of PSFANo. 2 and PSFA No. 3 are essentially similar to those of PSFA No.1:

Date: [•] 2022

Parties: (1) Our Company (for itself and on behalf of oursubsidiaries) (as suppliers);

(2) Clifford Modern Living (for itself and onbehalf of its subsidiaries) (as purchasers)

Term: Not more than three years commencing from the[REDACTED] to 31 December 2024



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Goods to be supplied by ourGroup:

Pharmaceuticals and medical consumables

Under the Pharmaceuticals Supply FrameworkAgreements, individual members of our Group (assuppliers) and individual members of Clifford MLGroup (as purchasers) have entered or will enter intoindividual pharmaceuticals supply agreements withspecific terms and conditions governing includingbut not limited to (i) the types of pharmaceuticalsand medical consumables to be supplied; (ii) thequantities and unit purchase price of thepharmaceuticals and medical consumables to besupplied; (iii) payment term and settlement method;and (iv) delivery, shipping and packaging terms. Theterms of such individual pharmaceuticals supplyagreements shall be consistent with those of thePharmaceuticals Supply Framework Agreements.

Pricing policy: Purchase prices of the pharmaceuticals and medicalconsumables supplied by our Group are determinedthrough arm’s length negotiation and having regardto (a) price guidelines on pharmaceutical productsaccording to the relevant rules and regulationsimposed by the PRC government authorities; and (b)the comparable market prices (including the terms ofpharmaceuticals supply agreements entered intobetween our Group (as suppliers) and IndependentThird Parties (as purchasers).

Quality control: The quality and packaging of the pharmaceuticalssupplied by our Group shall comply with the qualitystandard guidelines according to the relevant rulesand regulations imposed by the PRC governmentauthorities.



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During the Track Record Period, the historical amount in relation to provision ofpharmaceuticals and medical consumables to the following parties:

FY2019 FY2020 FY2021(RMB) (RMB) (RMB)

Clifford ML Group – – 10,300Private Group – – 23,000WM Non-Healthcare Group – – 4,600

Total – – 37,900


The following table sets out the proposed annual caps in respect of the transactionscontemplated under each of the Pharmaceuticals Supply Framework Agreements for each ofFY2022, FY2023 and FY2024:

FY2022 FY2023 FY2024(RMB) (RMB) (RMB)

Expected sale to Clifford ML Groupunder PSFA No.1 21,000 21,000 21,000

Expected sale to Private Group underPSFA No.2 33,000 33,000 33,000

Expected sale to WM Non-HealthcareGroup under PSFA No.3 6,000 6,000 6,000

Total proposed annual caps 60,000 60,000 60,000


(a) the historical transaction amount paid by Clifford ML Group, Private Group and WMNon-Healthcare Group to our Group;

(b) the estimated amount of pharmaceuticals and medical consumables our Group expectsto supply to Clifford ML Group, Private Group and WM Non-Healthcare Group; and



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(c) the current trends of market price of the same, similar or alternative pharmaceuticalsand medical consumables.


As stated above, each of the Clifford ML Group (including Clifford Modern Living), thePrivate Group (including Clifford Estates Ltd) and the WM Non-Healthcare Group (includingClifford Xianhu Hotel) are connected persons of our Company under the Listing Rules.Accordingly, the entering into of the Pharmaceuticals Supply Framework Agreements constitutescontinuing connected transactions of our Company under Chapter 14A of the Listing Rules.

Pursuant to Rule 14A.81 of the Listing Rules, the transactions contemplated under PSFANo. 1, PSFA No. 2 and PSFA No. 3 are aggregated as if they were one transaction, on the basisthat (i) all of them involve the supply of pharmaceuticals and medical consumables by ourGroup, which are of similar nature and (ii) the respective receiving parties, namely, the CliffordML Group, Private Group and WM Non-Healthcare Group, are all connected persons (as definedunder the Listing Rules) of our Company and all of them are associates of Ms. Wendy Man.

For each of the three years ending 31 December 2024, the aggregate amount of the annualcaps under the Pharmaceuticals Supply Framework Agreements is less than HK$3 million andthe highest applicable percentage ratio is less than 5%. Therefore, the Pharmaceuticals SupplyFramework Agreements and the transaction contemplated thereunder constitute de minimis

transactions under Rule 14A.76(1) of the Listing Rules and are therefore fully exempt from theindependent shareholders’ approval, annual review and all disclosure requirements.


After reviewing the terms of the Pharmaceuticals Supply Framework Agreements, ourDirectors consider that the continuing connected transactions contemplated under thePharmaceuticals Supply Framework Agreements have been conducted on normal commercialterms, are fair and reasonable and in the interests of our Group and our Shareholders as a whole,and that the proposed annual caps for the continuing connected transactions contemplated underthe Pharmaceuticals Supply Framework Agreements are fair and reasonable.

CONTINUING CONNECTED TRANSACTIONS WHICH ARE EXEMPTED FROMCIRCULAR AND THE INDEPENDENT SHAREHOLDERS’ APPROVAL REQUIREMENTS

We set out below details of the partially exempted continuing connected transactions forour Group, which are exempted from circular and independent shareholders’ approvalrequirements under Chapter 14A of the Listing Rules.



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1. Physical Examination Services Framework Agreements

To govern the terms and conditions for the provision of physical examination services byour Group to the following receiving parties, the following physical examination servicesframework agreements (all dated [•] 2022) were entered into:

(i) our Company (for itself and on behalf of our subsidiaries) (as service providers) andClifford Modern Living (for itself and on behalf of its subsidiaries) (as receivingparties) entered into a physical examination services framework agreement (“PESANo. 1”);

(ii) our Company (for itself and on behalf of our subsidiaries) (as service providers) andClifford Estates Ltd (for itself and on behalf of certain members of the Private Group)(as receiving parties) entered into a physical examination services frameworkagreement (“PESA No. 2”); and

(iii) our Company (for itself and on behalf of our subsidiaries) (as service providers) andClifford Xianhu Hotel (for itself and on behalf of certain members of the WMNon-Healthcare Group) (as receiving parties) entered into a physical examinationservices framework agreement (“PESA No. 3”, together with PESA No. 1 and PESANo. 2, collectively the “Physical Examination Services Framework Agreements”),

pursuant to which our Group agreed to provide annual physical examination services to theemployees of the receiving parties, all for a term of not more than 3 years from the[REDACTED] to 31 December 2024, on and subject to the respective terms and conditionscontained therein.

The principal terms of PESA No. 2 and PESA No. 3 are essentially similar to those ofPESA No.1, which are set out below.


Please refer to (i) the paragraph headed “Our One-off Connected Transaction – PharmacyTenancy Agreement (leasing of property by Clifford ML Group to our Group) – Relationshipbetween parties” in this section for details of the relationship between our Group and theClifford ML Group and (ii) the paragraph headed “Exempted Continuing Connected Transactions– 4. Pharmaceuticals Supply Framework Agreements – Relationship between parties” in thissection for details of the relationship between our Group and the Private Group (includingClifford Estates Ltd) and the WM Non-Healthcare Group (including Clifford Xianhu Hotel).



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During the Track Record Period, as part of its principal business, our Group providedannual physical examination services to the employees of (a) Clifford ML Group; (b) PrivateGroup; and (c) WM Non-Healthcare Group as employee welfare. Our Directors consider that theentering into of the Physical Examination Services Framework Agreements is in our Group’susual and ordinary course of business.


The principal terms of the PESA No. 1 are summarised below, the principal terms of PESANo. 2 and PESA No. 3 are essentially similar to those of PESA No.1:

Date: [•] 2022

Parties: (1) Our Company (for itself and on behalf of our subsidiaries)(as service providers);

(2) Clifford Modern Living (for itself and on behalf of itssubsidiaries) (as receiving parties)

Term: Not more than three years commencing from the [REDACTED]to 31 December 2024

Services to beprovided by ourGroup:

Physical examination services

Under the Physical Examination Services Framework Agreements,individual members of our Group (as service providers) andindividual members of Clifford ML Group (as receiving parties)have entered or will enter into individual physical examinationservices agreements with specific terms and conditions governingincluding but not limited to (i) the combination and items of thephysical examinations services provided; (ii) the quantities andservice fees of the physical examinations services provided; (iii)payment term and settlement method; and (iv) time and venue ofthe physical examination services. The terms of such individualphysical examination services agreements shall be consistent withthose of the Physical Examination Services FrameworkAgreements.



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Pricing policy: Service fees of the physical examinations services provided byour Group are determined through arm’s length negotiation andhaving regard to the comparable market service fees (includingthe terms of physical examination services agreements enteredinto between our Group (as service providers) and IndependentThird Parties (as receiving parties)).

Physical examinationsservices:

The physical examinations services provided by our Group shallcomply with the medical service standards and the medicalequipment and testing reagents used in the process of the physicalexaminations shall comply with the quality standard guidelinesaccording to the relevant rules and regulations imposed by thePRC.


During the Track Record Period, the total service fees incurred by the receiving parties inrespect of the provision of physical examination services by our Group to the following parties:


Clifford ML Group 1.0 0.9 1.2Private Group 3.2 4.1 11.3(note)

WM Non-Healthcare Group 0.4 0.6 0.4

Total 4.6 5.6 12.9

Note: The fees incurred by Private Group for FY2021 included one-off procurement of physical examinationservices for buyers of properties launched by the Private Group in FY2021.



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The following table sets out the proposed annual caps in respect of the transactionscontemplated under each of the Physical Examination Services Framework Agreements for eachof FY2022, FY2023 and FY2024:


Expected sale to Clifford ML Groupunder PESA No.1 0.3 0.3 0.4

Expected sale to Private Group underPESA No.2 4.6 5.0 5.5

Expected sale to WM Non-HealthcareGroup under PESA No.3 0.4 0.4 0.5

Total proposed annual caps 5.3 5.7 6.4


(a) the historical transaction amount paid by Clifford ML Group, Private Group and WMNon-Healthcare Group to our Group (but taking no account of the one-off procurementby the Private Group in FY2021); and

(b) the estimated amount of physical examinations services our Group expects to provideto Clifford ML Group, Private Group and WM Non-Healthcare Group.


As stated above, each of the Clifford ML Group (including Clifford Modern Living), thePrivate Group (including Clifford Estates Ltd) and the WM Non-Healthcare Group (includingClifford Xianhu Hotel) are connected persons of our Company under the Listing Rules.Accordingly, the entering into of the Physical Examination Services Framework Agreementsconstitutes continuing connected transactions of our Company under Chapter 14A of the ListingRules.

Pursuant to Rule 14A.81 of the Listing Rules, the transactions contemplated under PESANo. 1, PESA No. 2 and PESA No. 3 are aggregated as if they were one transaction, on the basisthat (i) all of them involve the provision of physical examinations services by our Group, whichare of similar nature and (ii) the respective receiving parties, namely, the Clifford ML Group,Private Group and WM Non-Healthcare Group, are all connected persons (as defined under theListing Rules) of our Company and all of them are associates of Ms. Wendy Man.



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For each of the three years ending 31 December 2024, the aggregate amount of the annualcaps under the Physical Examination Services Framework Agreements exceeds 0.1% but allapplicable percentage ratios (other than the profits ratio) are less than 5% on an annual basis.Therefore, the Physical Examination Services Framework Agreements and the transactioncontemplated thereunder will be subject to the reporting, annual review and announcementrequirements but are exempt from the independent shareholders’ approval requirement underChapter 14A of the Listing Rules.


After reviewing the terms of the Physical Examination Services Framework Agreements,our Directors consider that the continuing connected transactions contemplated under thePhysical Examination Services Framework Agreements have been conducted on normalcommercial terms, are fair and reasonable and in the interests of our Group and our Shareholdersas a whole, and that the proposed annual caps for the continuing connected transactionscontemplated under the Physical Examination Services Framework Agreements are fair andreasonable.

2. Master Composite Services Agreement

Clifford Modern Living (for itself and on behalf of its subsidiaries) (as service providers)and our Company (for itself and on behalf of the other members of our Group) (as receivingparties) entered into a master composite services agreement (“Master Composite ServicesAgreement” or “MCSA”) dated 29 October 2021, pursuant to which the Clifford ML Groupagreed to provide the following services (collectively, the “composite services”) to therespective receiving parties for a term of three years ending 31 December 2024: (a) procurement,property management, laundry, resident support and maintenance, employment placement agencyservices and property agency services (collectively, “living services”); (b) engineering andmaintenance services (relating to information technology, security systems and hardware andsoftware integration); and (c) telecommunication services, on and subject to the respective termsand conditions contained therein.





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As disclosed in the paragraph headed “Exempted Continuing Connected Transactions – 1.Master Tenancy Agreement (Landlord) (leasing of property by our Group to Clifford ML Group)– Reasons for the transactions” in this section, the Clifford ML Group is a living servicesprovider principally engaged in the provision of, among other services, composite services.During the Track Record Period, under the former master composite services agreement(“Former Master Composite Services Agreement”) dated 18 October 2018 entered intobetween Clifford ML Group, the Private Group and certain members of our Group for a term ofthree years ended 31 December 2021, our Group’s business activities and development (inparticular, the operation and development of our Hospital and our ancillary healthcare facilities)in our Group’s ordinary course of business have been supported by Clifford ML Group’scomposite services. Considering our Group’s continuing demand for Clifford ML Group’scomposite services, our Group has entered into the Master Composite Services Agreement toreplace the former master composite services agreement to regulate the provision of thecomposite services to our Group for a term of three years ending 31 December 2024.


The principal terms of the Master Composite Services Agreement are summarised below:

Date: 29 October 2021

Parties: (1) Clifford Modern Living (for itself and on behalf of itssubsidiaries) (as service providers);

(2) Our Company (for itself and on behalf of the other membersof our Group) (as receiving parties)

Term: Three years commencing from 1 January 2022 to 31 December2024

Services to beprovided by CliffordML Group:

(a) living services, i.e. procurement, property management,laundry, resident support and maintenance, employmentplacement agency services and property agency services;

(b) engineering and maintenance services (mainly relating toinformation technology, security systems and hardware andsoftware integration); and

(c) telecommunication services



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Pricing policy:

The pricing policy applicable to services provided under the Master Composite ServicesAgreement follows that applicable to transactions of similar nature or types which are applicableto services rendered by Clifford ML Group. Such pricing policy is summarised below:

(i) Procurement Purchase prices of relevant products provided by the Clifford MLGroup are determined (a) through arm’s length negotiation andhaving regard to the comparable market prices (including theterms of procurement service agreement entered into between theClifford ML Group (as service provider) and at least oneIndependent Third Party (as receiving parties) with similarpurchase volume); or (b) if item (a) is not available, based on thetrading cost (including purchase price and other costs) of therelevant products plus a premium of approximately 5% to 10%(the administrative and miscellaneous expenses incurred in theprocess is generally around 1% to 2% of the trading cost), toensure that the terms offered by the Clifford ML Group shall be(i) no more favourable than those available to Independent ThirdParties and (ii) no less favourable than those available to ourGroup from Independent Third Parties (“Mutually FairArrangement”), but in any event at terms no less favourable thanthose offered to the Clifford ML Group by Independent ThirdParty.

(ii) Propertymanagementservices

The Clifford ML Group determines the property management feebased on the regulations promulgated by the PRC governmentwith reference to the prices charged by the Clifford ML Group (asservice provider) to at least two Independent Third Parties (asreceiving parties) in the neighbourhood to ensure that the pricesoffered by the Clifford ML Group to our Group shall be (i) nomore favourable than those available to Independent Third Partiesand (ii) in compliance with the Mutually Fair Arrangement, but inany event at terms no less favourable than those offered to theClifford ML Group by Independent Third Party.



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(iii) Laundry Laundry service fee is determined by the relevant parties througharm’s length negotiation, with reference to the laundry servicefees charged by the Clifford ML Group (as service provider) to atleast one Independent Third Party (as receiving party) for servicesof a similar nature in the neighbourhood to ensure that the termsoffered by the Clifford ML Group to our Group shall be (i) nomore favourable than those available to Independent Third Partiesand (ii) in compliance with the Mutually Fair Arrangement, but inany event at terms no less favourable than those offered to theClifford ML Group by Independent Third Party.

(iv) Resident support In respect of renovation and property fitting services, the pricesare determined by relevant parties on arm’s length basis, havingregard to (i) the nature and value of the relevant services renderedby Clifford ML Group; (ii) the actual costs and expenses incurredplus a mark-up ranging from approximately 30% to 45% which isdetermined with reference to the service fees that the Clifford MLGroup (as service provider) charges Independent Third Parties(most of whom are local residents), to ensure that the termsoffered by the Clifford ML Group to our Group shall be no morefavourable than those available to Independent Third Parties; (iii)the renovation and property fitting service fees charged by at leastone Independent Third Party services provider for services of asimilar nature in the neighbourhood, to ensure that the termsoffered by the Clifford ML Group are in compliance with theMutually Fair Arrangement, but in any event at terms no lessfavourable than those offered to the Clifford ML Group byIndependent Third Party.

In respect of the home cleaning services, the prices aredetermined by relevant parties on arm’s length basis withreference to:

(a) the prices offered by the Clifford ML Group (as serviceprovider) to at least one Independent Third Party (most ofwhom are local residents) (The prices offered by the CliffordML Group are readily available market information madeknown to (among others) unrelated third party users andpotential users. The prices offered by the Clifford ML Groupto our Group shall be no more favourable than prices ofsimilar services offered by the Clifford ML Group toIndependent Third Parties); and



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(b) the home cleaning service fees charged by at least oneIndependent Third Party services provider for services of asimilar nature in the neighbourhood to ensure that the termsoffered by the Clifford ML Group are in compliance with theMutually Fair Arrangement, but in any event at terms no lessfavourable than those offered to the Clifford ML Group byIndependent Third Party.

(v) Employmentplacement agencyservices

The prices are determined by relevant parties on arm’s lengthbasis having regard to the type of care helper which is fixed withreference to the prices charged by the Clifford ML Group (asservice provider) to at least one Independent Third Party (asreceiving party) for providing services of a similar nature in theneighbourhood to ensure that the prices offered by the CliffordML Group to our Group are (i) no more favourable than thoseavailable to Independent Third Parties employment placementagencies and (ii) in compliance with the Mutually FairArrangement, but in any event at terms no less favourable thanthose offered to the Clifford ML Group by Independent ThirdParty.

(vi) Property agencyservices

The property agency fees are determined by relevant parties onarm’s length basis with reference to the historical fees charged bythe Clifford ML Group (as service provider) to at least oneIndependent Third Party (as receiving party) in the neighbourhoodwith a similar scale and quality to ensure that the fees offered bythe Clifford ML Group to our Group are (i) no more favourablethan those available to Independent Third Parties and (ii) incompliance with the Mutually Fair Arrangement, but in any eventat terms no less favourable than those offered to the Clifford MLGroup by Independent Third Party.

(vii) Engineering andmaintenance

The prices are generally determined by relevant parties on aproject-by-project basis through tendering process, having regardto the nature and complexity of the projects and the actual costsand expenses incurred for procurement of materials, staffremuneration and other service fees payable to third parties, plusa mark-up ranging from approximately 10% to 45%, which isdetermined with reference to tendering specifications of eachproject and service fees that the Clifford ML Group (as serviceprovider) charges against Independent Third Parties (as receivingparties).



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After receiving the tendering specifications of the engineeringprojects, members of the tendering team would analyse andcalculate the costs involved (including estimated manpower,qualified persons (e.g. engineers or other experts) and materials tobe used), complexity of the engineering services involved andestimated project duration. The Clifford ML Group will thencompare the profitability of the projects with (a) the engineeringworks of similar size and complexity provided to otherIndependent Third Parties and (b) the engineering works ofsimilar size and complexity provided by other Independent ThirdParties, and the Clifford ML Group will review such profitestimate to ensure that the terms to be charged to our Group are(i) no more favourable than those charged to Independent ThirdParties and (ii) in compliance with the Mutually FairArrangement, but in any event at terms no less favourable thanthose offered to the Clifford ML Group by Independent ThirdParty. The mark-up range for Clifford ML Group’s engineeringservice fees charged against Independent Third Parties isapproximately 10% to 45%; and the mark-up range forengineering service fees charged by Independent Third Partyservices providers is approximately 10% to 45%.

In respect of maintenance services, the prices are determined byrelevant parties on arm’s length basis with reference to (i) theprices offered by the Clifford ML Group (as service provider) tothe Independent Third Parties (as receiving parties), which hastaken into account the nature and complexity of the maintenanceservices to be provided, costs and expenses of the equipment andspare parts required for the maintenance services, staffremuneration and estimated duration and frequency ofmaintenance services required and (ii) the prices offered byIndependent Third Party services providers. The prices to becharged to our Group shall be (a) no more favourable than pricesof similar services charged by the Clifford ML Group toIndependent Third Parties and (b) in compliance with theMutually Fair Arrangement, but in any event at terms no lessfavourable than those offered to the Clifford ML Group byIndependent Third Party. The percentage range of maintenanceservice fees charged for relevant engineering service contract sumprovided to Independent Third Parties is approximately 3% to15%; for the provision of similar maintenance services byIndependent Third Party services providers, the percentage rangeof maintenance service fees charged for relevant engineeringservice contract sum is approximately 3% to 15%.



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(viii) Telecommunication The prices, which the Clifford ML Group charges receivingparties on a monthly basis, are determined by relevant parties onarm’s length basis having regard to the actual costs and expensesincurred, plus a mark-up ranging from approximately 10% to40%, which is determined with reference to (i) Clifford MLGroup’s policy on the service fees that the Clifford ML Groupcharges or will charge the Independent Third Parties and (ii) theservice fees charged by Independent Third Party servicesproviders, but in any event at terms no less favourable than thoseoffered to the Clifford ML Group by Independent Third Party.


During the Track Record Period, the historical service fees incurred by our Group under theformer master composite services agreement were approximately RMB13.2 million, RMB9.1million and RMB14.3 million.


Our Directors estimate that the annual service fee payable by our Group in respect of thetransactions contemplated under the Master Composite Services Agreement for each of the threeyears ending 31 December 2024 will be as follows:


Annual caps for total service feespayable by our Group 17.0 21.7 27.2


(a) the historical service fees incurred by our Group;

(b) the volume of living services, engineering and maintenance services andtelecommunication services required by our Group for the operation of our Hospitaland ancillary healthcare facilities;

(c) the additional volume of living services, engineering and maintenance services andtelecommunication services required by our Group in connection with our expansionplans, in particular, the expansion of our Hospital’s operations, the details of whichare set out in the section headed “Future Plans and Use of [REDACTED]”; and

(d) the expected annual growth rate of approximately 7%, which is estimated withreference to the GDP growth rate of the PRC during 2010 to 2020.



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For each of the three years ending 31 December 2024, the annual caps for the annualservice fee payable by our Group in respect of transactions contemplated under the MCSAexceeds 0.1% but all applicable percentage ratios (other than the profits ratio) are less than 5%on an annual basis. Therefore, the MCSA and the transactions contemplated thereunder will besubject to the reporting, annual review and announcement requirements but are exempt from theindependent shareholders’ approval requirement under Chapter 14A of the Listing Rules.


After reviewing the terms of the Master Composite Services Agreement, our Directorsconsider that the continuing connected transactions contemplated under the Master CompositeServices Agreement have been conducted on normal commercial terms, are fair and reasonableand in the interests of our Group and our Shareholders as a whole, and that the proposed annualcaps for the continuing connected transactions contemplated under the Master CompositeServices Agreement are fair and reasonable.

3. Master Tenancy Agreement (Tenant) (leasing of property by Private Group to ourGroup)

Clifford Estates Ltd (for itself and on behalf of the other property owners which aremembers of the Private Group) (as landlord) and our Company (for itself and on behalf of thecertain members of our Group) (as tenant) entered into a master tenancy agreement (the “MasterTenancy Agreement (Tenant)” or the “MTA (Tenant)”) dated [•] 2022, pursuant to whichClifford Estates Ltd agreed to lease certain properties to our Group on and subject to therespective terms and conditions contained therein. Under the Master Tenancy Agreement(Tenant), individual members of the Private Group (as landlords) and individual members of ourGroup (as tenants) have entered or will enter into individual tenancy agreements with specificterms and conditions governing the leasing of individual properties. The MTA (Tenant) has aterm of not more than 3 years commencing from the [REDACTED] to 31 December 2024.


Please refer to the paragraph headed “Exempted Continuing Connected Transactions – 4.Pharmaceuticals Supply Framework Agreements – Relationship between parties” in this sectionfor details of the relationship between our Group and the Private Group.



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The Private Group is principally engaged in the businesses of (among others) propertydevelopment, property investment, hotel investment and management and education in the PRC.As of the Latest Practicable Date, 28 individual tenancy agreements have been entered intobetween the respective members of our Group and the Private Group with respect to 28 premises(collectively the “Leased Properties”) with a total gross floor area of approximately 13,000 sq.m. located in Guangdong Province. The Leased Properties have been used by our Group for (i)operation of our ancillary healthcare facilities, including our postnatal care centre, elderly careservice centre, dental clinic and retail pharmacies; (ii) storage and warehouse; (iii) staffdormitory; and (iv) offices.

As our Group’s businesses have been carried out or situated at the Leased Properties, it isconsidered appropriate (in terms of cost, time and operational stability) to continue leasing suchproperties from the Private Group. In addition, relocating any of the Leased Properties will alsoincur unnecessary expenses. Accordingly, our Directors considered that the entering into of theMaster Tenancy Agreement (Tenant) is fair and reasonable in order to avoid any materialdisruptions in our Group’s operations.


The principal terms of the Master Tenancy Agreement (Tenant) are summarised below:

Date: [•] 2022

Parties: (1) Clifford Estates Ltd (for itself and on behalf ofthe other property owners which are membersof the Private Group) (as landlord);

(2) our Company (for itself and on behalf of thecertain members of our Group) (as tenant);

Term: Not more than three years commencing from the[REDACTED] to 31 December 2024

Premises to be leased under theMTA (Tenant):

Under the MTA (Tenant), our Group will lease fromthe Private Group premises with a total gross floorarea of approximately 13,000 sq. m. (under theexisting individual tenancy agreements) located inGuangdong Province.

Pursuant to the MTA (Tenant), our Group is entitledto lease additional premises from the Private Groupin accordance with its business plans.



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With respect to the properties leased or expected tobe leased under MTA (Tenant), individual membersof the Private Group (as landlords) and individualmembers of our Group (as tenants) have entered orwill enter into individual tenancy agreements whichprescribe specific lease terms and conditions(including rental, payment method and other terms).The terms of such individual tenancy agreementsshall be consistent with those of the MTA (Tenant).

As of the Latest Practicable Date, 28 individualtenancy agreements have been entered into betweenthe respective members of our Group and the PrivateGroup with respect to Leased Properties.

If any of the individual tenancy agreements expiresbefore 31 December 2024 (being the expiry date ofthe MTA (Tenant)), our Company is entitled to renewsuch individual tenancy agreement with the relevantlandlord (being a member of the Private Group) bygiving three months’ written notice, subject to thecompliance with the then applicable provisions of theListing Rules.

Use: The Leased Properties have been used by our Groupfor (i) operation of our ancillary healthcare facilities,including our postnatal care centre, elderly careservice centre, dental clinic and retail pharmacies;(ii) storage and warehouse; (iii) staff dormitory; and(iv) offices.



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Rent: The annual rentals payable by our Group under theexisting individual tenancy agreements in relation tothe Leased Properties have been determined withreference to the general range of prevailing marketrates for the Relevant Property as of 31 December2021. As for the annual rentals to be payable by ourGroup under the new individual tenancy agreementsin relation to the additional premises expected to beleased from the Private Group, our Group agreed toengage an independent valuer to issue fair rent letter(before the execution of the new individual tenancyagreements) as reference for determining the relevantannual rentals payable. The annual rental payable byour Group shall be increased by an amount notexceeding the lower of (i) 7% (which is determinedwith reference to the GDP growth rate of the PRCduring 2010 to 2020); and (ii) the prevailing GDPgrowth rate of the PRC in the immediately precedingyear.

The annual rentals in respect of the LeasedProperties were determined after arm’s lengthnegotiations between the relevant parties withreference to the prevailing market rates of localproperties in the neighbourhood with a similar scaleand quality and subject to the internal controlmeasures of our Group and of the Private Group. Theprevailing market rates of local properties aredetermined with reference to:

(i) quotations of one or more similar comparableproperties owned by Independent Third Partiesin the neighbouring area provided byindependent estate agency;

(ii) the terms of at least one existing tenancyagreement entered into between the PrivateGroup (as landlord) and Independent ThirdParty(ies) (as tenant) in relation to premiseslocated near or next to the subject premises; and



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(iii) (where items (i) and (ii) are not available orapplicable) at least two quotations provided bythe Private Group to Independent ThirdParty(ies).

After collecting available data and marketinformation (including quotations from IndependentThird Parties), our Group compares such informationto decide whether the quotation offered by thePrivate Group is no less favourable than those givenby the Independent Third Party estate agency andwhether the lease terms are fair and reasonable.Future increments will be determined based on theGDP growth rates (subject to a cap of 7% perannum).

Changes in leased premises: Where there are any changes in leased premisesarising from or in connection with the businessdevelopment of our Group, the parties may revise thelist of premises to be leased by the Private Group byway of entering into supplemental agreements ormemoranda to record such changes. To the extentthat (i) the relevant changes (or cumulative changes)do not result in the annual cap for the relevant yearfor our Group being exceeded, and (ii) the manner ofdetermining the rentals of such premises being madein compliance with the terms of the MTA (Tenant)),such changes will be considered as immaterial(unless the Stock Exchange or the majority of theindependent non-executive directors of our Companyconsider otherwise). If any of the changes areconsidered to be material, these changes will takeeffect conditional upon the applicable requirementsunder the Listing Rules being complied with.



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During the Track Record Period, the historical annual rental payable by our Groupregarding the leasing of the Leased Properties under the existing individual tenancy agreementsand the addition of right-of-use assets are set out below:


Historical annual rental payable byour Group under the existingindividual tenancy agreements 2.4 3.2 5.9

Addition of right-of-use assets 3.1 0.1 1.2


According to Hong Kong Financial Reporting Standard (HKFRS) 16 “Leases”, our Group isrequired to recognise a right-of-use asset and a lease liability, which are measured at the presentvalue of the remaining lease payments, discounted using the lessee’s incremental borrowing ratein the year of entering into the leases where our Group acts as a lessee. Pursuant to therequirements of the Listing Rules, as the transactions contemplated under the Master TenancyAgreement (Tenant) will be recognised as the acquisitions of right-of-use assets, our Group isrequired to set annual caps on the total value of right-of-use assets relating to the leases to beentered into by our Group as a lessee for each of FY2022, FY2023 and FY2024 under theMaster Tenancy Agreement (Tenant).

The following table sets out the proposed annual caps, which represent the total value ofright-of-use assets relating to the leases to be entered into by our Group under the MasterTenancy Agreement (Tenant), for FY2022, FY2023, and FY2024:


Annual caps for MTA (Tenant) (Note) 13.4 1.8 0.6

Note: The proposed annual caps represent the total value of the right-of-use assets for FY2022, which takes intoaccount the addition of the right-of-use assets in relation to new leases to be entered into by our Group orrenewal of existing leases upon their expiry under the MTA (Tenant) during each of FY2022, FY2023 andFY2024.



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(a) the existing annual rentals under the relevant individual tenancy agreement of theLeased Properties (which are expected to be renewed at their expiry);

(b) the gross floor area of premises to be leased from the Private Group under the MasterTenancy Agreement (Tenant);

(c) the market rent and the range of monthly rental of the premises to be leased under theMaster Tenancy Agreement (Tenant) based on the prevailing market conditions and therental level of similar properties in the vicinity;

(d) the value of our Group’s rights to use the underlying leased asset for the lease termwhich is initially measured on present value basis and calculated by discounting thenon-cancellable lease payments for each lease to be entered into under the MasterTenancy Agreement (Tenant), using the incremental borrowing rate as the discountrate; and

(e) the expected growth of the unit rental or the prevailing GDP growth rate of the PRC,whichever is lower.


For the year ending 31 December 2022, the highest applicable percentage ratios of theannual caps (which represent the total value of right-of-use assets relating to the new leases tobe entered or renewal of existing leases) under the Master Tenancy Agreement (Tenant) exceeds0.1% but all applicable percentage ratios (other than profits ratio) are less than 5% on an annualbasis, the Master Tenancy Agreement (Tenant) and the transactions contemplated thereunder willbe subject to the reporting, annual review and announcement requirements under Chapter 14A ofthe Listing Rules.


Having taken into account the view of the general range of prevailing market rates for theLeased Properties and the pricing policy in determining the annual rentals, our Directorsconsider that the continuing connected transactions contemplated under the Master TenancyAgreement (Tenant) have been conducted on normal commercial terms, are fair and reasonableand in the interests of our Group and our Shareholders as a whole, and that the proposed annualcaps for the continuing connected transactions contemplated under the Master TenancyAgreement (Tenant) are fair and reasonable as reflected from the valuation result of the PropertyValuer.



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INTERNAL CONTROL

In order to ensure the terms under continuing connected transactions are fair and reasonableand on normal commercial terms or better, our Company has adopted the following internalcontrol procedures:

➢ our Company has adopted and implemented a management system on connectedtransactions. Under such system, the Audit Committee is responsible for conductingreviews on compliance with relevant laws, regulations, our Company’s policies andthe Listing Rules in respect of the continuing connected transactions. In addition, theAudit Committee and the finance department are responsible for evaluating the termsunder the relevant agreements for the continuing connected transactions, in particular,the fairness of the pricing policies and annual caps under each agreement;

➢ our INEDs will review the continuing connected transactions every year and confirmin the annual report whether the transactions have been entered into: (1) in theordinary and usual course of business of our Group; (2) on normal commercial termsor better; and (3) the terms of the relevant agreements for the continuing connectedtransactions are fair and reasonable and in the interests of our Shareholders as awhole;

➢ our auditors will report on the continuing connected transactions every year andprovide a letter to the Board, confirming whether anything has come to their attentionthat causes them to believe that the continuing connected transactions: (1) have notbeen approved by the Board; (2) are not, in all material respects, in accordance withthe relevant pricing policies of our Group; (3) are not entered into, in all materialrespects, in accordance with the relevant agreements for the continuing connectedtransactions; and (4) have exceeded the relevant annual caps; and

➢ when considering any renewal or revisions to the relevant agreement of the continuingconnected transactions after the [REDACTED], the interested Directors andShareholders shall abstain from voting on the resolutions to approve such transactionsat board meetings or shareholders’ general meetings (as the case may be), and ourINEDs and Shareholders (as the case may be) have the right to consider if the termsof the relevant agreements of the continuing connected transactions (including theproposed annual caps) are fair and reasonable, and on normal commercial terms and inthe interests of our Company and our Shareholders taken as a whole.



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CONFIRMATION FROM THE SOLE SPONSOR

The Sole Sponsor, having reviewed the relevant information and historical figures (whereapplicable) relating to the partially exempted continuing connected transactions, and conducteddue diligence on such transactions, are of the view that: (i) the partially exempted continuingconnected transactions are and will be entered into in our Group’s ordinary and usual course ofbusiness on normal commercial terms or better, and are fair and reasonable and in the interest ofour Company and our Shareholders as a whole; and (ii) the proposed annual caps for thesetransactions are fair and reasonable and in the interest of our Company and our Shareholderstaken as a whole.

Our Directors confirm that, for all partially exempted continuing connected transactions tobe entered into by our Group (if any), our Company will comply with the applicable ListingRules, unless a separate application for waiver is made for the dispensation with the applicableannouncement, circular and/or independent shareholders’ approval requirements under Chapter14A of the Listing Rules.

APPLICATION FOR WAIVER

Waiver from the reporting and announcement requirements

As the partially exempted continuing connected transactions disclosed above (i) areexpected to be carried out on a continuing basis and will extend over a period of time after[REDACTED] and (ii) have been fully disclosed in this document such that [REDACTED] willparticipate in the [REDACTED] on an informed basis having taken into account suchdisclosure, our Directors consider that strict compliance with the reporting and announcementrequirements for the partially exempted continuing connected transactions under the ListingRules would be impractical and would impose unnecessary administrative costs on our Company.Accordingly, pursuant to Rule 14A.105 of the Listing Rules, we have applied for, and the[REDACTED], a waiver from strict compliance with the reporting and announcementrequirements for the partially exempted continuing connected transactions once [REDACTED]in respect of such continuing connected transactions. We will, however, comply at all times withthe other applicable provisions under Chapter 14A of the Listing Rules in respect of suchcontinuing connected transactions.

Waiver from the requirements to set a term for the PRC Trademark Licence Agreement

We have applied to the [REDACTED] for, and the [REDACTED], in respect of the PRCTrademark Licence Agreement, a waiver from strict compliance with the requirements to set aterm not exceeding three years under Rule 14A.52 of the Listing Rules.



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OVERVIEW

The following table sets forth certain information in respect of our Directors:

Name Age Position/TitleDate of joiningour Group

Date ofbecominga Director Roles and responsibilities

ZHANG Tao (張濤) 50 ExecutiveDirector, chiefexecutiveofficer andmedicalsuperintendent(院長) of ourHospital

October 2001 March 2022 Planning our business anddevelopment strategies,overall management ofour Group’s businesses,and daily managementand administration,formulating key businessstrategies of ourHospital and ancillaryhealthcare facilities

OU Junwen (區俊文) 42 ExecutiveDirector

May 2005 March 2022 Making major businessdecisions, planning anddevelopment of ourGroup

ZHAO Hui (趙暉) 51 ExecutiveDirector

January 2019 March 2022 Making major businessdecisions, planning anddevelopment of ourGroup

ZHUANG Lei (莊磊) 51 ExecutiveDirector

August 2018 March 2022 Making major businessdecisions, planning anddevelopment of ourGroup

MAN Lai Hung(孟麗紅)

62 Chairman andnon-executiveDirector

September 2013 July 2021 Planning the business anddevelopment strategiesof our Group


DIRECTORS AND SENIOR MANAGEMENT

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Date ofbecominga Director Roles and responsibilities

KO Wing Man (高永文) 64 INED [•] 2022 [•] 2022 Participating in meetingsof the Board to bring anindependent judgementon issues which arematerial to our Group asand when required;taking the lead wherepotential conflicts ofinterest arise andserving on the AuditCommittee,RemunerationCommittee andNomination Committee(as the case may be).

DOE Julianne Pearl(杜珠聯)

59 INED [•] 2022 [•] 2022 Same as above.

HUNG Lo Shan Lusan(熊璐珊)

55 INED [•] 2022 [•] 2022 Same as above.

The following table sets forth certain information in respect of our senior management:


Date ofbecoming amember of theseniormanagement Roles and responsibilities

YU Ding Him Anthony(余定謙)

37 Chief financialofficer andcompanysecretary

November 2020 November 2020 Overseeing the financialand accounting mattersof our businesses andfinancial planning of ourGroup, as well ascompany secretarialmatters



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QIN Likui (覃黎葵) 47 Head of theEndoscopyUnit of ourHospital

June 2008 July 2018 Overseeing the EndoscopyUnit of our Hospital,and supervising themedical quality andsafety, qualityimprovement, nursingquality and pharmacyadministration of ourGroup

LIU Feng (劉峰) 41 Deputy head ofEndocrinologyDepartment ofour Hospital

August 2012 June 2014 Overseeing EndocrinologyDepartment of ourHospital, andsupervising the medicalquality and safety,quality improvement,nursing quality andpharmacy administrationof our Group

CAI Qichun (蔡綺純) 49 Head ofOncologyDepartment ofour Hospital

June 2018 June 2018 Overseeing the OncologyDepartment of ourHospital, andsupervising the medicalquality and safety,quality improvement,nursing quality andpharmacy administrationof our Group

LIU Yunsong (劉云松) 49 Head ofIntensive CareUnit of ourHospital

May 2018 May 2018 Overseeing the IntensiveCare Unit of ourHospital, andsupervising the medicalquality and safety,quality improvement,nursing quality andpharmacy administrationof our Group



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WU Changyou (吳長有) 66 Head andconsultant ofthe ClinicalExperimentResearchCentre of ourHospital

January 2020 January 2020 Overseeing medicalresearch and medicaleducation of ourHospital and themanagement of theClinical ExperimentResearch Centre of ourHospital

DIRECTORS

Our Board is responsible for and has general powers for managing and leading ourbusiness. Our Board consists of four executive Directors, one non-executive Director and threeINEDs.

Executive Directors

Dr. ZHANG Tao (張濤醫生), aged 50, is an executive Director, the chief executive officerof our Group and the medical superintendent of our Hospital. She is primarily responsible forplanning our business and development strategies, overall management of our Group’sbusinesses, and daily management and administration, formulating key business strategies of ourHospital and ancillary healthcare facilities. Dr. Zhang was appointed as a Director on 1 March2022 and was re-designated as an executive Director on even date.

Dr. Zhang has over 27 years of experience in the medical and healthcare industry. Dr.Zhang obtained the qualification from the Traditional Chinese Medicine Bureau of GuangdongProvince (廣東省中醫藥局) as a practising doctor in our Hospital. Dr. Zhang joined our Groupin October 2001. She served as an attending doctor and an assistant in the department of medicaladministration of our Hospital from October 2001 to August 2003. She also served as deputyhead of the department of medical administration of our Hospital from September 2003 toNovember 2008. She served as a deputy medical superintendent (副院長) and the deputy generalmanager of our Hospital from December 2008 to August 2021. She has also been serving as themanager of our Hospital since its incorporation in June 2012, and the medical superintendent ofour Hospital and one of its directors since August 2021. She is currently also serving as thechairperson of our Hospital Executive Council, which is responsible for making major decisionsregarding all essential aspects of our Hospital, including approving implementation plans,development plans of our Hospital, establishment of new disciplines, introduction andprocurement medical equipment, medical training plans and medical research projects.



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Dr. Zhang has been serving as a manager of various subsidiaries of our Group, includingDental Care PRC Co since May 2017, Postpartum Care PRC Co since September 2020, MedicalEquipment PRC Co since July 2021, Medical Examination PRC Co since December 2020,Pharmacy (Xinda) PRC Co since August 2020, Pharmaceuticals PRC Co since July 2021 andConsultation PRC Co since August 2021.

Dr. Zhang graduated from an undergraduate course in clinical medicine (臨床醫學) fromJiamusi Medical School (佳木斯醫學院) (subsequently grouped with other schools to formJiamusi University (佳木斯大學)), the PRC, in July 1994. She subsequently graduated from apostgraduate course specialising in clinical medicine (internal medicine) (臨床醫學(內科學)), atJinan University (暨南大學), the PRC, in December 2012.

Prior to joining our Group, Dr. Zhang served as a trainee doctor from October 1994 toAugust 1995, a doctor from August 1995 to September 2000 and an attending doctor fromNovember 2000 at the Harbin Railway Center Hospital (哈爾濱鐵路中心醫院).

Dr. Zhang was appointed as a member of the second session of the committee of theChinese Hospital Association Traditional Chinese Medicine Hospitals Branch (中國醫院協會中醫醫院分會) and a member of the fifth session of the committee of the Chinese HospitalAssociation Private Hospitals Branch (中國醫院協會民營醫院分會), both in November 2020. InDecember 2020, Dr. Zhang was appointed as the vice-chairperson, a standing member and amember of the tenth session of the executive council (理事會) of the Guangdong ProvinceHospital Association (廣東省醫院協會).

Dr. Ou Junwen (區俊文醫生), aged 42, is an executive Director. She is primarilyresponsible for making major business decisions, planning and development of our Group. Dr.Ou was appointed as a Director on 1 March 2022 and was re-designated as an executive Directoron even date.

Dr. Ou has over 16 years of experience in the medical and healthcare industry. Dr. Ouobtained the qualification from the Traditional Chinese Medicine Bureau of Guangdong Provinceas a practising doctor in our Hospital. Dr. Ou joined our Group in May 2005 as a nutritionist inour Hospital. In June 2006, She was promoted to become the deputy head of the DieteticsDepartment (營養科) of our Hospital, and further as the head of the Dietetics Department andthe head of the Preventive Treatment Department (治未病科) in September 2014. Dr. Ou has alsobeen serving as an associate-chief doctor of the centre of oncology and the special assistant tothe medical superintendent (院長特別助理) since February 2018, and the head of theInternational Health Management Centre of our Hospital since May 2021. She is currently alsoserving as a member of the Hospital Executive Council, and she is responsible for the overalloperation and daily management of the International Health Management Centre and the centreof oncology of our Hospital.



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She obtained a Bachelor of Medicine degree in clinical medicine from the First MilitaryMedical University (第一軍醫大學) (now renamed as Southern Medical University (南方醫科大學)), the PRC, in June 2003. She was awarded a Master of Medical Science degree in humannutrition by the University of Sheffield, the United Kingdom, in November 2004. Subsequently,she was awarded a Doctor of Medicine degree in traditional Chinese medicine and healthpreservation (中醫養生學) from the Guangzhou University of Chinese Medicine (廣州中醫藥大學), the PRC, in December 2017.

Dr. Zhao Hui (趙暉醫生), aged 51, is an executive Director. He is primarily responsiblefor making major business decisions, planning and development of our Group. Dr. Zhao wasappointed as a Director on 1 March 2022 and was re-designated as an executive Director oneven date.

Dr. Zhao has over 28 years of experience in the medical and healthcare industry. Dr. Zhaoobtained the qualification from the Traditional Chinese Medicine Bureau of Guangdong Provinceas a practising doctor in our Hospital. Dr. Zhao joined our Group in January 2019 and he hasbeen serving as the head of the Anaesthesiology Department (which manages and co-ordinatesoverall anaesthesia services to serve all our disciplines) of our Hospital since then. He alsoserved as the head of the department of medical administration of our Hospital from March 2020to October 2020.

Dr. Zhao obtained a Bachelor of Medicine degree in July 1993, a Master of Medicinedegree in anaesthesiology in July 1998, and a Doctor of Medicine degree in anaesthesiology inJune 2009 from the Fourth Military Medical University of the People’s Liberation Army (中國人民解放軍第四軍醫大學) (subsequently restructured and now renamed as the Air Force MedicalUniversity of the People’s Liberation Army (中國人民解放軍空軍軍醫大學)) (“Air ForceMedical University”), the PRC.

Prior to joining our Group, Dr. Zhao served in the Second Affiliated Hospital of the FourthMilitary Medical University (第四軍醫大學第二附屬醫院) as a trainee doctor, doctor, attendingdoctor and associate-chief doctor in the department of anaesthesiology from July 1993 toOctober 2013 and also served as a deputy head in the same department from October 2013.

Dr. Zhuang Lei (莊磊醫生), aged 51, is an executive Director. He is primarily responsiblefor making major business decisions, planning and development of our Group. Dr. Zhuang wasappointed as a Director on 1 March 2022 and was re-designated as an executive Director oneven date.

Dr. Zhuang has over 17 years of experience in the medical and healthcare industry. Dr.Zhuang obtained the qualification from the Traditional Chinese Medicine Bureau of GuangdongProvince as a practising doctor in our Hospital. Dr. Zhuang joined our Group in August 2018and has since been serving as the head of the Ultrasonography Department (which manages andco-ordinates overall ultrasound services to serve all our disciplines) in our Hospital.



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Dr. Zhuang obtained a Bachelor of Medicine degree in clinical medicine in July 1994, aMaster of Medicine degree in radiology and nuclear medicine (影像醫學與核醫學) in July 1999,and a Doctor of Medicine degree in radiology and nuclear medicine in June 2002 from the AirForce Medical University, the PRC.

Prior to joining our Group, Dr. Zhuang engaged in post-doctorate research work in theclinical medicine discipline of the Huazhong University of Science and Technology (華中科技大學) from December 2002 to December 2004. Subsequently, he served in the Urumqi GeneralHospital of Lanzhou Military Region (蘭州軍區烏魯木齊總醫院) as an attending doctor in theDiagnostic Radiography Department (醫學影像科) from April 2004, an associate-chief doctorand the head of Special Diagnosis Department (特診科) from November 2011, and a chief doctorand the head of the Special Diagnosis Department from October 2015.


Ms. MAN Lai Hung (孟麗紅女士), aged 62, is the Chairman of our Board and anon-executive Director. She is primarily responsible for planning the business and developmentstrategies of our Group. Ms. Man obtained a Bachelor of Business Administration degree fromThe Chinese University of Hong Kong in December 1982.

Ms. Man is currently serving as a member of the Hospital Executive Council, which wasresponsible for making major decisions regarding all essential aspects of our Hospital. She hasalso served as the chairperson of the Hospital since August 2021. Ms. Man is currently a directorof all of our BVI and Hong Kong investment holding subsidiaries. She is also currently adirector of certain of our PRC operating subsidiaries, including but not limited to PostpartumCare PRC Co, Dental Care PRC Co and Pharmacy (Xinda) PRC Co.

Ms. Man is currently a member of the 13th National Committee of the Chinese People’sPolitical Consultation Conference (中國人民政治協商會議第十三屆全國委員會), a standingmember of the 14th Beijing Women’s Federation Executive Committee (北京市婦女聯合會第十四屆執行委員會) in June 2019, the honorary chairperson of the Hong Kong Guangdong YouthAssociation (香港廣東青年總會) in December 2019, an executive vice chairperson and executivedirector of the 3rd executive committee of the Hong Kong Federation of GuangzhouAssociations (香港廣州社團總會) in July 2021, a senior member of The Hong Kong Institute ofDirectors (香港董事學會) in January 2017, a consultant of Our Hong Kong Foundation (團結香港基金) in December 2019, the chairperson of the 11th executive council of the GuangzhouForeign Investment Enterprises Chamber of Commence (廣州外商投資企業商會) in November2020 and a vice-chairperson of the 16th executive committee of the Guangzhou Federation ofIndustry and Commerce (General Chamber of Commerce) (廣州市工商業聯合會(總商會)) inFebruary 2022.



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Ms. Man was awarded the Fourth Outstanding Entrepreneur Social Responsibility Award(第四屆傑出企業家社會責任獎) by The Mirror (鏡報) in March 2015, the 2015 OutstandingEntrepreneur Award for Corporate Social Responsibility (2015企業社會責任傑出企業家獎) byXinhuanet (新華網) in December 2015, the 2018 Greater Bay Area Outstanding FemaleEntrepreneur (2018年度大灣區傑出女企業家) jointly by the Hong Kong Small and MediumEnterprises Association (香港中小型企業聯合會) and Metro Finance (新城財經台) in 2018. Shealso received the certificate of Honorary Citizen of Guangzhou (廣州市榮譽市民) by ThePeople’s Government of Guangzhou Municipality (廣州市人民政府) in November 2018 and thehonorary title of Fighting COVID-19 National Women Red Flag Bearer (抗擊新冠肺炎全國三八紅旗手) by the All-China Women’s Federation (中華全國婦女聯合會) in September 2020, andwas awarded the 2021 Outstanding Business Woman Leader Award (2021傑出商界女領獎) byHong Kong Commercial Daily (香港商報) in December 2021.

Since October 2018, Ms. Man has been serving as an executive director of Clifford ModernLiving, a company whose shares are listed on the Main Board of the Stock Exchange(stock code: 3686).

Ms. Wendy Man is the sole shareholder of International Health BVI, one of our ControllingShareholders directly holding [REDACTED] Shares, representing approximately[REDACTED]% of the total issued share capital of our Company immediately followingcompletion of the [REDACTED] (taking no account of any Shares which may be issuedpursuant to the exercise of the [REDACTED] and any options which have been or may begranted under the [REDACTED] Share Option Scheme or the Share Option Scheme).

INEDs

Dr. KO Wing Man (高永文醫生), aged 64, was appointed as an INED of our Companywith effect from [•] 2022.

Dr. Ko obtained the Bachelor of Medicine and Bachelor of Surgery (MBBS) from TheUniversity of Hong Kong in November 1981. He was admitted to the fellowship of the RoyalCollege of Surgeons of Edinburgh in January 1986. He was elected as a fellow of the HongKong Academy of Medicine in the specialty of Orthopaedic Surgery in December 1993.

Dr. Ko served as the Secretary for Food and Health of the Government of the Hong KongSpecial Administrative Region from July 2012 to June 2017. Dr Ko has been an orthopaedicsurgeon at Dr. Ko Wing Man Clinic (高永文醫生診所) since August 2017.

Dr. Ko is currently a member of the 13th National Committee of the Chinese People’sPolitical Consultation Conference (中國人民政治協商會議第十三屆全國委員會). Dr. Ko wasawarded the Bronze Bauhinia Star in Hong Kong in 2008 and the Gold Bauhinia Star in HongKong in 2017.



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Dr. Ko was an independent non-executive director of Bamboos Health Care HoldingsLimited (百本醫護控股有限公司) (whose shares are listed on the Main Board of the StockExchange with stock code: 2293) from August 2018 to August 2021, and has been anindependent non-executive director of The People’s Insurance Company (Group) of ChinaLimited (中國人民保險集團股份有限公司) (whose shares are listed on the Main Board of theStock Exchange with stock code: 1339) since May 2018.

Ms. Doe Julianne Pearl (杜珠聯女士), aged 59, was appointed as an INED of ourCompany with effect from [•] 2022.

Ms. Doe was awarded a degree of Bachelor of Laws and the Postgraduate Certificate inLaws by The University of Hong Kong November 1984 and in July 1985 respectively. Ms. Doealso obtained a Master of Law degree from the University of Cambridge, the United Kingdom,in June 1986. Ms. Doe was admitted as a solicitor of the then Supreme Court of Hong Kong(currently known as the High Court of Hong Kong) in September 1988 and a solicitor of theSupreme Court of England in April 1991. She also enrolled as a solicitor and barrister of theSupreme Court of the Australian Capital Territory in June 1991.

Ms. Doe served as a partner from January 2011 to December 2021 and has been serving asa senior consultant since January 2022 at Dentons Hong Kong LLP (previously named BrandtChan & Partners and SNR Denton).

Ms. Doe serves as a member of the Standing Committee on Company Law Reform of theHong Kong Government since February 2020. Ms. Doe was admitted as a fellow of the HongKong Institute of Directors in April 2004 and a member of the Professional Services AdvisoryCommittee of the Hong Kong Trade Development Council from April 2019 to March 2021. Ms.Doe is currently a vice president of the Hong Kong Federation of Women Lawyers.

Since December 2014, Ms. Doe has been serving as an independent non-executive directorof SiS Mobile Holdings Limited (新龍移動集團有限公司) (whose shares are listed on the MainBoard of the Stock Exchange with stock code: 1362).

Ms. HUNG Lo Shan Lusan (熊璐珊女士), aged 55, was appointed as an INED of ourCompany with effect from [•] 2022.

Ms. Hung obtained a Bachelor of Commerce degree in accounting from the University ofNew South Wales, in Australia, in April 1988. She completed the Women’s DirectorshipProgramme and the Board Directorship Program at The University of Hong Kong in June 2013and July 2013 respectively.



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Ms. Hung has 35 years of experience in accounting, tax and strategic planning. Ms. Hungserved as an accountant at Weston, Woodley & Robertson from March 1987 to March 1990. Sheworked at Ernst & Young from May 1990 to June 1993 and left the firm as a deputy manager.Ms. Hung joined Grant Thornton from November 1993 to April 2002 and left the firm as apartner. Ms. Hung served as a director of the Institute of Chartered Accountants in Australia(currently known as the Chartered Accountants Australia and New Zealand) from January 2003to September 2005. She was the president of the Association of Women Accountants in HongKong from 2013 to 2015. Since March 2002, Ms. Hung has been serving as a director of HigumaConsulting Limited.

Ms Hung was admitted to membership of Chartered Accountants in Australia and NewZealand in April 1990 and was advanced to Fellow in June 2000. She was admitted as anassociate member in December 1991 and as a fellow of the Hong Kong Society of Accountants(currently known as the Chartered Accountants Australia and New Zealand) since November1999. She was admitted as a fellow of the Taxation Institute of Hong Kong in September 2010,and has been a registered certified tax adviser between 2010 to 2019 and a registered charteredtax adviser since 2020. Ms. Hung is currently a member of the 12th Shandong Committee of theChinese People’s Political Consultative Conference (中國人民政治協商會議第十二屆山東省委員會) and a member of the executive committee of the Fourteenth Beijing Women’s Federation.

Since May 2018, Ms. Hung has been serving as an independent non-executive director ofLH Group Limited (敘福樓集團有限公司) (whose shares are listed on the Main Board of theStock Exchange with stock code: 1978).

General

Save as disclosed above, there is no other information relating to our Directors that needsto be disclosed under the requirements under Rule 13.51(2) of the Listing Rules.

Save as disclosed above, none of our Directors:

(i) held any other positions in our Company or other members of our Group as of theLatest Practicable Date;

(ii) had any other relationship with any Directors, senior management of our Company orSubstantial Shareholders or Controlling Shareholders as of the Latest Practicable Date;

(iii) held any other directorships in listed public companies in the three years prior to theLatest Practicable Date; and

(iv) is a director or an employee of a company which has an interest or short position inthe Shares and underlying Shares of our Company.



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As of the Latest Practicable Date, except for such interests of (i) Ms. Wendy Man in theShares which are disclosed above and in paragraph 3.1 under Appendix V – “Statutory andGeneral Information” to this document and (ii) all our Directors (except all INEDs) who areholders of [REDACTED] Share Options (further details of which are set out in paragraph 3.5 ofAppendix V – “Statutory and General Information – [REDACTED] Share Option Scheme” tothis document), each of our Directors did not have any interest in the Shares within the meaningof Part XV of the SFO.

Subject to and as disclosed in the section headed “Relationship with our ControllingShareholders” in this document, each of our Directors has confirmed that none of them isengaged in, or interested in any business (other than our Group) which, directly or indirectly,competes or may compete with our business.

Each of our executive Directors and non-executive Director has entered into a servicecontract with our Company for an initial term of three years commencing from [•] 2022.

Save as disclosed above, to the best of the knowledge, information and belief of ourDirectors after having made all reasonable enquiries, there was no other matter with respect tothe appointment of our Directors that needs to be brought to the attention of our Shareholdersand there was no information relating to our Directors that is required to be disclosed pursuantto Rule 13.51(2)(h) to (v) of the Listing Rules as of the Latest Practicable Date.

SENIOR MANAGEMENT AND COMPANY SECRETARY

Mr. Yu Ding Him Anthony (余定謙先生), aged 37, was appointed as the chief financialofficer and the company secretary of our Company on 1 March 2022, and he is primarilyresponsible for overseeing the financial and accounting matters of our businesses and financialplanning of our Group, as well as company secretarial matters of our Group.

Mr. Yu joined our Group in November 2020 and has been a financial consultant of HospitalManagement PRC Co since then.

Mr. Yu obtained a Bachelor of Commerce degree in April 2009 by the University of SouthAustralia, Australia. He obtained a certificate of membership as a certified public accountant andbecame a fellow member from the Hong Kong Institute of Certified Public Accountants in May2014 and July 2021 respectively and was admitted a member of CPA Australia in January 2013.Mr. Yu was also admitted as an associate of the Chartered Institute of Management Accountantsin March 2013 and a member of the Institute of Internal Auditors Hong Kong Limited in August2020.



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Mr. Yu has over 13 years of experience in accounting and finance areas. Mr. Yu joined EricC.K. Fok & Co., an accounting firm, from March 2009 as an auditor-junior and left the said firmin December 2010 as an auditor-senior. In January 2011, Mr. Yu joined BDO Limited (the HongKong member firm of a global accounting network BDO International Limited) as an associate 2in the assurance department, and subsequently left the firm in January 2014 as a seniorassociate.

From January 2014 to July 2014, Mr. Yu was the deputy chief financial officer of FlyingFinancial Service Holdings Limited, a company mainly engaged in the provision of integratedfinancial services and whose shares are listed on GEM of the Stock Exchange (stock code:8030). Mr. Yu joined the Private Group as a financial manager in July 2014. Mr. Yu served as acompany secretary of Clifford Modern Living (whose shares are listed on the Main Board of theStock Exchange (stock code: 3686)) from January 2016 to December 2019 and as the chieffinancial officer from December 2018 to December 2019.

Dr. Qin Likui (覃黎葵醫生), aged 47, is the head of the Endoscopy Unit of our Hospitaland he is primarily responsible for supervising the medical quality and safety, qualityimprovement, nursing quality and pharmacy administration of our Group.

Dr. Qin has over 13 years of experience in the medical and healthcare industry. Dr. Qinobtained the qualification from the Traditional Chinese Medicine Bureau of Guangdong Provinceas a practising doctor in our Hospital. Dr. Qin joined our Group in June 2008. Dr. Qin served asa doctor from June 2008 to December 2012 and an assistant to head of the GastroenterologyDepartment (脾胃病科(消化內科)) from January 2013 to June 2018. He has been serving as thehead of the Endoscopy Unit (消化內鏡室) of our Hospital since July 2018.

Dr. Qin obtained a Bachelor of Medicine in traditional Chinese medicine and a Master ofMedicine degree in clinical medicine from the Guangxi Medical School of Traditional ChineseMedical (廣西中醫學院), the PRC, in June 2002 and in June 2008, respectively.

Dr. LIU Feng (劉峰醫生), aged 41, the deputy head of the Endocrinology Department ofour Hospital, and he is primarily responsible for supervising the medical quality and safety,quality improvement, nursing quality and pharmacy administration of our Group.

Dr. Liu obtained the qualification from the Guangdong Provincial Department of HumanResources and Social Security (廣東省人力資源和社會保障廳) as an associate-chief doctor ofinternal traditional Chinese medicine (中醫內科副主任中醫師). Dr. Liu joined our Group inAugust 2012. He served as an attending doctor at the department of medical administration ofour Hospital from August 2012 to August 2013 and an assistant to head of EndocrinologyDepartment (內分泌科) from September 2013 to May 2014. He has been serving as a deputyhead of the Endocrinology Department of our Hospital since June 2014.



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Dr. Liu obtained a Bachelor of Medicine in traditional Chinese medicine from the LiaoningMedical School of Traditional Chinese Medical (遼寧中醫學院) (currently known as theLiaoning University of Traditional Chinese Medicine (遼寧中醫藥大學)), the PRC, in July 2005.He obtained a Master of Clinical Medicine degree in clinical fundamentals in traditional Chinesemedicine (中醫臨床基礎) and a Doctor of Clinical Medicine degree from the GuangzhouUniversity of Chinese Medicine, the PRC, in June 2008 and June 2012 respectively.

Dr. Liu was elected as a council member of the 4th Board of Specialty Committee ofDiabetes of World Federation of Chinese Medicine Societies (世界中醫藥學會聯合會) fromSeptember 2017 to September 2021. He has also been serving as the standing member of thestanding member of the Fourth Committee of the Endocrinology Professional Committee ofGuangdong Province Traditional Chinese Medicine and Western Medicine Integrated Association(廣東省中西醫結合學會內分泌專業委員會) since November 2020.

Dr. Cai Qichun (蔡綺純醫生), aged 49, is the head of the Oncology Department of ourHospital and she is primarily responsible for supervising the medical quality and safety, qualityimprovement, nursing quality and pharmacy administration of our Group.

Dr. Cai obtained the qualification from the Traditional Chinese Medicine Bureau ofGuangdong Province as a practising doctor in our Hospital. Dr. Cai joined our Group in June2018. Dr. Cai served as the academic leader of the Oncology Department of our Hospital fromJune 2018, and she has also been serving as the head of the Oncology Department of ourHospital since August 2018.

Dr. Cai obtained a Bachelor of Medicine degree in clinical medicine from ZhongshanUniversity of Medicine (中山醫科大學) (subsequently restructured and now renamed as SunYat-sen University (中山大學)), the PRC, in June 1996. Subsequently, she obtained a Master ofClinical Medicine and a Doctor of Clinical Medicine degree from Sun Yat-sen University in June2005 and in June 2012 respectively.

Prior to joining our Group, Dr. Cai served as an attending doctor in the OncologyDepartment (Internal IV) of Guangdong General Hospital (廣東省人民醫院) from November2012.

Dr. Liu Yunsong (劉云松醫生), aged 49, is the head of the Intensive Care Unit of ourHospital and he is primarily responsible for supervising the medical quality and safety, qualityimprovement, nursing quality and pharmacy administration of our Group.

Dr. Liu has over 26 years of experience in the medical and healthcare industry. Dr. Liuobtained the qualification from the Traditional Chinese Medicine Bureau of Guangdong Provinceas a practising doctor in our Hospital. Dr. Liu joined our Group in May 2018 and he has beenserving as the head of the Intensive Care Unit in our Hospital since then.



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Dr. Liu obtained a Master of Medicine degree in surgery (外科學) from the First MilitaryMedical University (第一軍醫大學) (now renamed as the Southern Medical University (南方醫科大學)), the PRC, in October 2000 respectively. Dr. Liu also obtained a Doctor of ClinicalMedicine degree from the Southern Medical University (南方醫科大學), the PRC, in June 2014.

Prior to joining our Group, Dr. Liu served as trainee doctor and subsequently a doctor ingeneral surgery in The 158th Hospital of the People’s Liberation Army of the PRC (中國人民解放軍第一五八醫院) from July 1995. He also served as an attending doctor in the intensive careunit and an associate chief doctor of the Guangzhou Military Region Guangzhou GeneralHospital (廣州軍區廣州總醫院) from December 2001 and from December 2012 respectively.

Mr. Wu Changyou (吳長有先生), aged 66, is the head and consultant of the ClinicalExperiment Research Centre of our Hospital, and he is primarily responsible for overseeing themedical research and medical education of our Hospital and the management of the ClinicalExperiment Research Centre of our Hospital.

Mr. Wu has over 25 years of experience in medical research. Mr. Wu joined our Group inJanuary 2020 and has since been the head and a consultant of the Clinical Experiment ResearchCentre (臨床實驗研究中心) of our Hospital.

Mr. Wu obtained a Ph. D. in Biomedical Sciences from the Université de Montréal, Canada,in October 1993.

Prior to joining our Group, Mr. Wu also joined the Laboratory of Clinical Investigation ofthe National Institute of Allergy and Infectious Diseases of the U.S. Department of Health andHuman Services from January 1997 and served as a staff scientist in the Cellular ImmunologySection at the Vaccine Research Center of the National Institutes of Health under the U.S.Department of Health and Human Services from December 2000.

Mr. Wu received the 9th Chinese Society for Immunology Distinguished Scholar Award (第九屆中國免疫學會傑出學者獎) from the Chinese Society for Immunology in October 2019 andthe Special Contribution Award (特別貢獻獎) of the Guangdong Society of Immunology (廣東省免疫學者) in December 2020. Mr. Wu has been serving as a professor in Sun Yat-Sen Universitysince January 2003.

Save as disclosed above, none of our senior management members and company secretaryheld any directorships in listed public companies in the three years prior to the LatestPracticable Date.



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Human Resources

Our Company maintains good employee relations. Our Company has not experienced anysignificant problems with the recruitment or retention of experienced employees. In addition, ourCompany has not suffered from any material disruption of normal business operations as a resultof labour disputes or strikes. The remuneration payable to our employees includes salaries andallowances.

As of the Latest Practicable Date, we had 1,909 employees, most of whom are located inPRC. Please refer to the section headed “Business – Employees” in this document for details ofbreakdown of our employees by function.

Benefits and social insurance

As required by the PRC regulations on social insurance, our Group participates in variousemployee social insurance plans and contributions to housing provident fund for our employeesthat are administered by local government agencies, including housing provident fund, pension,medical insurance, maternity insurance, employment injury insurance and unemploymentinsurance.

For the three years ended 31 December 2021, our Group accrued (i) staff’s salaries, wagesand bonuses in the sum of approximately RMB301.5 million, RMB241.5 million and RMB327.1million respectively; (ii) contributions to pension scheme expenses in the sum of approximatelyRMB10,0 million, RMB0.8 million and RMB20.3 million, respectively; (iii) and other employeebenefits (mainly including housing benefits, other social insurance, and employee welfares) inthe sum of approximately RMB31.7 million, RMB28.2 million and RMB49.4 million,respectively.

Remuneration Policy

The aggregate amounts of remuneration of our Directors for the three years ended 31December 2021 were approximately RMB2.9 million, RMB3.1 million and RMB3.6 million,respectively. Details of the arrangement for remuneration are set out in note 32 to theAccountant’s Report in Appendix I to this document. Under such arrangement and pursuant tothe Directors’ service agreements and letters of appointment referred to in paragraph 3.2 underAppendix V – “Statutory and general information” to this document, the aggregate amount ofDirectors’ fee and other emoluments payable to our Directors for the year ending 31 December2022 is estimated to be approximately RMB4.5 million, excluding any discretionary bonuses.

Our Directors and senior management receive compensation in the form of salaries andwages, share-based compensation expense, allowances and benefits in kind and employer’scontribution to retirement benefit plan. Our Company also reimburses them for expenses whichare necessarily and reasonably incurred for providing services to our Company or executing theirfunctions in relation to its operations. Our Company regularly reviews and determines theremuneration and compensation packages of our Directors and senior management.



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After [REDACTED], the Remuneration Committee will review and determine theremuneration and compensation packages of our Directors and senior management with referenceto salaries paid by comparable companies, time commitment and responsibilities of our Directorsand performance of our Group. During the Track Record Period, no remuneration was paid byour Company to, or received by, our Directors as an inducement to join or upon joining ourCompany.

[REDACTED] SHARE OPTION SCHEME

Our Company has formally adopted the [REDACTED] Share Option Scheme on [•]. Thepurpose of the [REDACTED] Share Option Scheme is to recognise and reward the contributionof certain Directors, senior management, employees and former employees of our Group to thegrowth and the development of our Group and the [REDACTED]. As of the Latest PracticableDate, [REDACTED] Share Options to subscribe for an aggregate of [REDACTED] Shares hadbeen granted by our Company to a total of 40 grantees under the [REDACTED] Share OptionScheme, none of which has been exercised by the grantees. A summary of the principal terms ofthe [REDACTED] Share Option Scheme is set out in paragraph 3.5 of Appendix V – “Statutoryand General Information – [REDACTED] Share Option Scheme” to this document.

BOARD COMMITTEES

The Audit Committee, Remuneration Committee, and Nomination Committee wereapproved to be established by resolutions passed by our Board on [•]. The membership of suchcommittees is as follows:

Name of DirectorAudit

CommitteeRemuneration

CommitteeNominationCommittee


Ms. Man Lai Hung N/A Member Chairman

INED

Mr. Ko Wing Man Member Chairman MemberMs. Doe Julianne Pearl Member N/A MemberMs. Hung Lo Shan Lusan Chairman Member N/A



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Each of the above committees has written terms of reference. The functions of the abovethree committees are summarised as follows:

Audit Committee

Our Audit Committee has written terms of reference in compliance with Code D.3 of theCG Code as set out in Appendix 14 to the Listing Rules. The primary duties of the AuditCommittee are mainly to make recommendations to the Board on the appointment and dismissalof the external auditor, review the financial statements and material and provide advice inrespect of financial reporting, risk management and oversee the internal control systems of ourCompany.

Remuneration Committee

Our Remuneration Committee has written terms of reference in compliance with Code E.1of the CG Code. The primary functions of the Remuneration Committee are to makerecommendation to the Board on the overall remuneration policy and the structure relating to allDirectors and senior management of our Group; to review performance-based remuneration andensure none of our Directors determine their own remuneration.

Nomination Committee

Our Nomination Committee has written terms of reference in compliance with Code B.3 ofthe CG Code. The primary functions of the Nomination Committee are to review the structure,size and composition (including the skills, knowledge and experiences) of the Board at leastannually and make recommendation to the Board on any proposed changes to the Board tocomplement our Company’s corporate strategy; to identify individuals suitably qualified aspotential board members and select or make recommendations to the Board on the selection ofindividuals nominated for directorships; to assess the independence of INEDs; and to makerecommendations to the Board on the appointment or re-appointment of Directors and successionplanning of Directors, in particular that of our Chairman and the chief executive officer.

Diversity

Our Company has adopted a board diversity policy that sets out the approach to achievingdiversity of members on our Board. We recognise and embrace the benefits of having a diverseBoard and view diversity at the Board level, including gender diversity, as an essential elementin maintaining our competitive edge and enhancing our ability to attract, retain and motivateemployees. In reviewing and assessing suitable candidates to serve on our Board as Directors,our Nomination Committee will consider a number of aspects, including gender, age, culturaland educational background, professional qualifications, skills, knowledge, and industry andregional experience.



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We recognise the particular importance of gender diversity. Our Board currently compriseseight Directors, including five female Directors. We have taken and will continue to take stepsto promote and enhance gender diversity at all levels of our Group, including but withoutlimitation at our Board and senior management levels. It is our objective to maintain anappropriate balance of gender diversity with reference to the stakeholders’ expectation andinternational and local recommended best practices.

The Nomination Committee will discuss half-yearly and when necessary, agree onmeasurable objectives for achieving diversity in our Board, including gender diversity, asrecommendations proposed to our Board for adoption. Our Board will review theserecommendations on a half-yearly basis (or on a more frequent basis), and make appropriateappointments to our Board to achieve diversity, subject to the availability of suitable candidatesand the business needs of our Group at the relevant time.

CORPORATE GOVERNANCE

Our Directors recognise the importance of incorporating elements of corporate governancein the management structures and internal control of our Group in order to achieveaccountability.

Our Company has adopted the provisions stated in the CG Code as set forth in Appendix 14to the Listing Rules. Our Board has a balanced composition of executive Directors,non-executive Director and INEDs, allowing the Board to effectively exercise independentjudgment.

Our Directors are aware that we are expected to comply with the CG Code upon and after[REDACTED]. Any deviation from the CG Code should be carefully considered and disclosedin the interim and annual report. We will continue to comply with the CG Code to protect thebest interests of our Shareholders upon and after [REDACTED].

COMPLIANCE ADVISER

We have appointed Zhongtai International Capital Limited as our compliance adviserpursuant to Rule 3A.19 of the Listing Rules. Pursuant to Rule 3A.23 of the Listing Rules, thecompliance adviser will advise us on, among other matters, the following:

(a) (before its publication) any regulatory announcement, circular or financial report;

(b) a transaction is contemplated, which might be a notifiable or connected transaction orwill involve Share issues and Share repurchases;

(c) where our Company proposes to use the [REDACTED] of the [REDACTED] in amanner different from that set out in this document or where our business activities,development or results deviate from any forecast, estimate, or other information inthis document; and



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(d) where the Stock Exchange makes any inquiry of us under Rule 13.10 of the ListingRules.

The term of appointment of our compliance adviser will commence on the [REDACTED]and will end on the date of dispatch of our annual report in respect of our financial results forthe first full financial year commencing after the [REDACTED]. Such appointment may besubject to extension by mutual agreement.



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So far as is known to any Director or chief executive of our Company as of the date of thisdocument and immediately following the completion of the [REDACTED] and the[REDACTED] and without taking into account any Shares which may be issued pursuant to theexercise of the [REDACTED] or any options which have been or may be granted under the[REDACTED] Share Option Scheme or the Share Option Scheme, the following persons (otherthan a Director or chief executive of our Company – see paragraph 3.1(a) under Appendix V –“Statutory and General Information” to this document for further details) will have an interestand/or short position in the Shares or the underlying Shares which would fall to be disclosed toour Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV ofthe SFO, or are, directly or indirectly, interested in 10% or more of the issued voting shares ofany other member of our Group:

Long Positions in Shares of our Company

As at the date ofthis document

Immediately after the[REDACTED] andthe [REDACTED]

Name of ShareholderNature ofinterest/Capacity

Number ofShares

Approximatepercentage ofshareholding

in ourCompany

Number ofShares


in ourCompany

(Note 1)

International HealthBVI

Beneficialowner

1,000 100% [REDACTED] [REDACTED]%

Ms. Wendy Man Interest in acontrolledcorporation(Note 2)


Ms. Wendy Man’sSpouse

Interest ofSpouse(Note 3)


Notes:

1. The calculation for the percentage of interest in our Company is based on the total number of[REDACTED] Shares in issue immediately following the completion of the [REDACTED] and assumingthat the [REDACTED] is not exercised and without taking into account any Shares which may be issuedupon the exercise of any options granted or to be granted under [REDACTED] Share Option Scheme andthe Share Option Scheme.


SUBSTANTIAL SHAREHOLDERS

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2. International Health BVI is solely owned by Ms. Wendy Man, our Chairman and a non-executive Director.By virtue of the SFO, Ms. Wendy Man is deemed to be interested in the same parcel of Shares in whichInternational Health BVI is interested.

For details of the [REDACTED] Share Options granted to Ms. Wendy Man, please refer to paragraph 3.5under Appendix V – “Statutory and General Information – [REDACTED] Share Option Scheme” to thisdocument.

3. Ms. Wendy Man’s Spouse is the spouse of Ms. Wendy Man. By virtue of the SFO, Ms. Wendy Man’sSpouse is deemed to be interested in the same parcel of Shares in which Ms. Wendy Man is interested.

Saved as disclosed above, so far as is known to any Director or chief executive of ourCompany, no person (other than a Director or chief executive of our Company) has an interest orshort position in the Shares and underlying Shares which would fall to be disclosed to ourCompany and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of theSFO, or are, directly or indirectly, interested in 10% or more of the issued voting shares of anyother member of our Group as of the date of this document and once the Shares are listed on theStock Exchange.


SUBSTANTIAL SHAREHOLDERS

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SHARE CAPITAL

The following is a summary of the authorised and issued share capital of our Companyimmediately before and after the completion of the [REDACTED]:

1. Prior to the [REDACTED]

Number HK$

Authorised share capital:

38,000,000 Shares 380,000

Issued and to be issued and fully paid or credited as fully paid:

1,000 Shares 10

2. Immediately after the completion of the [REDACTED]

Immediately after the completion of the [REDACTED] and assuming that the[REDACTED] is not exercised, the authorised and issued share capital of our Company will beas follows:

Number HK$


[100,000,000,000] Shares [1,000,000,000]


1,000 Shares in issue 10[REDACTED] Shares to be issued pursuant to the

[REDACTED][REDACTED]

[REDACTED] Shares to be issued pursuant to the[REDACTED]

[REDACTED]

[REDACTED] Total [REDACTED]


SHARE CAPITAL

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Immediately after the completion of the [REDACTED] and the [REDACTED] is exercisedin full, the authorised and issued share capital of our Company will be as follows:

Number HK$


[100,000,000,000] Shares [1,000,000,000]





[REDACTED]

[REDACTED] Shares to be issued pursuant to the exercise of the[REDACTED]

[REDACTED]


The above table assumes the [REDACTED] becomes unconditional and the issue of Sharespursuant to the [REDACTED] is made as described herein. It does not take into account anyShares which may be issued upon the exercise of options which have been or may be grantedunder the [REDACTED] Share Option Scheme or the Share Option Scheme or of any Shareswhich may be allotted and issued or repurchased by our Company under the general mandatesfor the allotment and issue or repurchase of Shares granted to our Directors.

[REDACTED]


SHARE CAPITAL

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RANKING

The [REDACTED] and the Shares which may be issued under the [REDACTED] or uponthe exercise of any options which have been or may be granted under the [REDACTED] ShareOption Scheme or the Share Option Scheme will rank equally with all of the Shares now in issueor to be issued, and will qualify for all dividends or other distributions declared, made or paidon the Shares after the date of this document, except for entitlement under the [REDACTED].

SHARE OPTION SCHEME

Our Company has conditionally adopted the Share Option Scheme. A summary of theprincipal terms of the Share Option Scheme is set out in paragraph 3.6 under Appendix V –“Statutory and General Information” to this document.

[REDACTED] SHARE OPTION SCHEME

On [•], we adopted the [REDACTED] Share Option Scheme. Under which certainDirectors, senior management, employees and former employees of our Group have been grantedoptions prior to the [REDACTED] to subscribe Shares. The principal terms of the[REDACTED] Share Option Scheme and particulars of the options granted are set out inparagraph 3.5 under Appendix V – “Statutory and General Information – [REDACTED] ShareOption Scheme” to this document.

CIRCUMSTANCES UNDER WHICH GENERAL MEETING AND CLASS MEETING AREREQUIRED

Pursuant to the Companies Act and the terms of the Memorandum and the Articles, ourCompany may from time to time by ordinary resolution of shareholders (i) increase its capital;(ii) consolidate and divide its capital into shares of larger amount; (iii) divide its shares intoseveral classes; (iv) subdivide its shares into shares of smaller amount; and (v) cancel any shareswhich have not been taken. In addition, our Company may subject to the provisions of theCompanies Act reduce its share capital or share capital redemption reserve by its shareholderspassing a special resolution. For details, see “Summary of the Constitution of the Company andCayman Islands Company Law – 2. Articles of Association – (c) Alteration of capital” underAppendix IV to this document.

Pursuant to the Companies Act and the terms of the Memorandum and the Articles, all orany of the special rights attached to the shares or any class of shares may be varied, modified orabrogated either with the consent in writing of the holders of not less than three-forth in nominalvalue of the Companies Act issued shares of that class or with the sanction of special resolutionpassed at a separate general meeting of the holders of the shares of that class. For details, see“Summary of the Constitution of the Company and Cayman Islands Company Law – 2. Articlesof Association – (d) Variation of rights of existing shares or classes of shares” under AppendixIV to this document.


SHARE CAPITAL

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Further, our Company will also hold general meetings from time to time as may be requiredunder the Articles, a summary of which is set out in the section headed “Summary of theConstitution of the Company and Cayman Islands Company Law” under Appendix IV in thisdocument.

GENERAL MANDATE TO ISSUE SHARES

Subject to the [REDACTED] becoming unconditional, our Directors have been granted theIssuing Mandate to allot, issue and deal in a total number of Shares of not more than theaggregate of:

(i) 20% of the total number of Shares in issue immediately following completion of the[REDACTED] and the [REDACTED], but excluding any Shares which may be issuedupon the exercise of the [REDACTED] and any option which have been or may begranted under the [REDACTED] Share Option Scheme or the Share Option Scheme;and

(ii) the total number of our Shares repurchased by our Company (if any) pursuant to theRepurchase Mandate.

The Issuing Mandate does not apply to situations where our Directors allot, issue or deal inShares by way of a rights issue, scrip dividend schemes or similar arrangements providing forthe allotment and issue of Shares in lieu of the whole or in part of any dividend in accordancewith the Articles, or pursuant to the exercise of any subscription or conversion rights attachingto any warrants or any securities which are convertible into Shares, or pursuant to the exerciseof any options which have been or may be granted under the [REDACTED] Share OptionScheme or the Share Option Scheme, or under the [REDACTED] or upon the exercise of the[REDACTED]. Our Directors may, in addition to the Shares which they are authorised to issueunder the Issuing Mandate, allot, issue and deal in Shares pursuant to a rights issue, the exerciseof subscription rights attaching to any warrants of our Company, scrip dividends or similararrangements or the exercise of any options that may be granted under the Share Option Schemeor any other option scheme or similar arrangement for the time being adopted.

The Issuing Mandate will expire upon the earliest occurrence of any of the following:

➢ at the conclusion of our next annual general meeting;

➢ on the date by which our next annual general meeting is required by the Articles orany applicable laws to be held; or

➢ when the authority given to our Directors is revoked or varied by an ordinaryresolution passed by our Shareholders in general meeting.


SHARE CAPITAL

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For further details of the Issuing Mandate, please see paragraph 1.3 under Appendix V –“Statutory and General Information” to this document.

GENERAL MANDATE TO REPURCHASE SHARES

Subject to the [REDACTED] becoming unconditional, our Directors have been granted theRepurchase Mandate to exercise all the powers of our Company to repurchase Shares with anaggregate number of Shares of not more than 10% of the total number of Shares in issueimmediately following completion of the [REDACTED], but excluding any Shares that may beissued upon the exercise of the [REDACTED] and any option that have been or may be grantedunder the [REDACTED] Share Option Scheme and the Share Option Scheme.

The Repurchase Mandate only relates to repurchases made on the [REDACTED], or on anyother [REDACTED] (and which is recognised by the SFC and the Stock Exchange for thispurpose), and which are made in accordance with all applicable laws and regulations and theListing Rules. A summary of the relevant requirements under the Listing Rules is set out inparagraph 1.8 under Appendix V – “Statutory and General Information” to this document.

The Repurchase Mandate will expire upon the earliest occurrence of any of the following:

➢ at the conclusion of our next annual general meeting;

➢ on the date by which our next annual general meeting is required by the Articles orany applicable laws to be held; or

➢ when the authority given to our Directors is revoked or varied by an ordinaryresolution passed by our Shareholders in general meeting.

For further details of the Repurchase Mandate, see paragraph 1.3 under Appendix V – “Statutoryand General Information” to this document.


SHARE CAPITAL

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Your attention should be drawn to the fact that, as part of the Reorganisation, ourCompany acquired the Hospital Group on 23 August 2021 and further acquired theHealthcare Group on 20 December 2021, which led to the combination of the HealthcareGroup with the Hospital Group under our Company, which is controlled by Ms. Wendy Man.Immediately before and after the Reorganisation, the companies now comprising the Group,engaging in the Hospital Business and Healthcare and Pharmaceutical Business, were underthe common control of Ms. Wendy Man. Accordingly, the Reorganisation is regarded as abusiness combination under common control, and the historical financial information of ourGroup has been prepared using the principles of merger accounting. The historical financialinformation of our Group has been prepared by including the historical financial informationof the companies engaged in the Hospital Business for the entire Track Record Period, andHealthcare and Pharmaceutical Business since 29 December 2020 (the “Common ControlCombination”), the date when the Hospital Business and Healthcare and PharmaceuticalBusiness first came under the common control of Ms. Wendy Man. Accordingly, (having takeninto consideration that the effect of the Common Control Combination for the two days from30 to 31 December 2020 is considered to be insignificant) the historical results of operationsof our Group for FY2019 and FY2020 and the financial condition of our Group as of 31December 2019 included only those of the Hospital Group alone, and do not include those ofthe Healthcare Group; whereas the historical results of operations of our Group for FY2021and the financial condition of our Group as of 31 December 2020 and 2021 include those ofthe Hospital Group and the Healthcare Group. For details of the Reorganisation inpreparation for the [REDACTED], please refer to the section headed “History,Reorganisation and Development – Reorganisation” in this document.

You should read the following discussion and analysis in conjunction with our financialinformation as of and for the years ended 31 December 2019, 2020 and 2021, including thenotes thereto, including in the Accountant’s Report in Appendix I to this document. We haveprepared the financial information included in the Accountant’s Report in accordance withHKFRSs.

To comply with the applicable regulations and disclosure requirements, as well as topresent material information necessary to assess the financial impact of the combination ofthe Healthcare Group and the Hospital Group, this document includes consolidated auditedhistorical financial information of the Healthcare Group for FY2019 and the period ended 29December 2020 (i.e. PE2020) (please refer to “III. Additional Financial Information of theHealthcare and Pharmaceutical Business for the Pre-acquisition Period” of the Accountant’sReport in Appendix I to this document).

The following discussion and analysis may contain forward-looking statements thatreflect our current views with respect to future events and financial performance. Thesestatements are based on our assumptions and analysis in light of our experience andperception of historical trends, current conditions and expected future developments, as wellas other factors we believe are appropriate under the circumstances. However, whether actualoutcomes and developments will meet our expectations and predictions depends on a numberof risks and uncertainties. In evaluating our business, you should carefully consider theinformation provided in the section headed “Risk Factors” in this document.


FINANCIAL INFORMATION

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OVERVIEW

We are an integrated medical and healthcare services provider based in the PRC, and wehave over 20 years of proven track record in the healthcare industry. We primarily engage in theoperation of Guangdong Clifford Hospital and certain ancillary healthcare facilities including (i)a postnatal care centre, (ii) an elderly care service centre, (iii) a dental clinic and (iv) five retailpharmacies in Guangdong Province, the PRC. With a wide range of healthcare facilitiesintegrated under Guangdong Clifford Hospital, our Group provides comprehensive medical andhealthcare services under the “Medical + Care model” (醫養模式).

We operate our hospital business through Guangdong Clifford Hospital, which is afor-profit private traditional Chinese medicine and Western medicine integrated hospital (中西醫結合醫院). i.e. Chinese and Western Medicine Hospital, located in Panyu, Guangzhou. With ourGroup’s commitment and effort to build an international medical institution under the “Clifford”brand for providing high-quality medical and healthcare services, shortly after thecommencement of its business in 2001, our Hospital has become accredited in 2003 by the JointCommission International (JCI), which is recognised worldwide as one of the highestbenchmarks for quality and safe healthcare services. According to the F&S Report, our Hospitalis the first hospital in the PRC and the second hospital in Asia to become accredited by the JCI.

We aspire to establish our Group and the “Guangdong Clifford Hospital” and “CliffordHealth” (祈福醫療) brands as a patient-centric and quality-focused comprehensive medical andhealthcare services provider under the “Medical + Care” model. Complementing the medicalservices rendered by Guangdong Clifford Hospital, our Group provides a wide spectrum ofancillary healthcare services, including rendering of postpartum healthcare services by CliffordPostnatal Care Centre (祈福月子中心), elderly care services by Clifford Elderly Care forResidents (祈福居民護老服務), dental care services provided by Clifford Dental Clinic (祈福口腔門診部) and sales of pharmaceutical products (by way of both wholesale to pharmaceuticaldistributors and retail sales at our Clifford Xinda Pharmacies (祈福新大藥房)).



Our Group(note) 1,083,013 864,708 1,206,239

FY2019 PE2020(RMB’000) (RMB’000)





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BASIS OF PRESENTATION

Our Group’s hospital operation business (including out-patient services and in-patientservices) and ancillary services related to hospital operation (such as vehicle parking services)(the “Hospital Business”) was mainly conducted by the Hospital Group. Various healthcare andpharmaceutical businesses (including the rendering of postpartum healthcare services, elderlycare services, dental care services, and the wholesale and retail of pharmaceutical products) (i.e.Healthcare and Pharmaceutical Business, together with the Hospital Business is referred to asthe “[REDACTED] Business”) were mainly conducted by the Healthcare Group.

Our Company has not been involved in any other business prior to the recapitalisation (asstated below) and do not meet the definition of a business. The transfer of the Hospital Businessto Ms. Wendy Man from Ms. Wendy Man’s Spouse in December 2020 and further to ourCompany in August 2021 is merely a recapitalisation of the Hospital Business, and did notchange its business substance and key management. Accordingly, the assets, liabilities andresults of the Hospital Business were recognised and measured at the carrying values for theentire Track Record Period presented for the purpose of the Accountant’s Report.

Immediately before and after the Reorganisation, the companies now comprising our Group,engaging in the Hospital Business and the Healthcare and Pharmaceutical Business, were underthe common control of Ms. Wendy Man. Accordingly, the Reorganisation is regarded as abusiness combination under common control, and for the purpose of the Accountant’s Report, thehistorical financial information of our Group has been prepared using the principles of mergeraccounting, as prescribed in Hong Kong Accounting Guideline 5 “Merger Accounting forCommon Control Combinations” issued by the HKICPA. The historical financial information ofour Group has been prepared by including the historical financial information of the companiesengaged in the Hospital Business for the entire Track Record Period, and the Healthcare andPharmaceutical Business since 29 December 2020, the date when the Hospital Business and theHealthcare and Pharmaceutical Business first came under the common control of Ms. WendyMan. Inter-company transactions, balances and unrealised gains/losses on transactions betweengroup companies are eliminated on consolidation.

Our Group’s historical financial information has been prepared in accordance with theHKFRSs issued by HKICPA.

Historical financial information of the Healthcare Group

As part of the Reorganisation, our Company acquired the Hospital Group on 23 August2021 and further acquired the Healthcare Group on 20 December 2021, which led to thecombination of the Healthcare Group with the Hospital Group under our Company, which iscontrolled by Ms. Wendy Man. Immediately before and after the Reorganisation, the companiesnow comprising our Group, engaging in the Hospital Business and Healthcare andPharmaceutical Business, were under the common control of Ms. Wendy Man. Accordingly, theReorganisation is regarded as a business combination under common control, and the historicalfinancial information of our Group has been prepared using the principles of merger accounting.



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For details, please refer to the section headed “History, Reorganisation and Development –Reorganisation” in this document. Therefore, (having taken into consideration that the effect ofthe Common Control Combination for the two days from 30 to 31 December 2020 wasconsidered to be insignificant) (i) our Group’s historical financial information for FY2019 andPE2020 does not include the financial information of the Healthcare Group, whereas our Group’shistorical financial information for FY2021 includes the financial information of both theHospital Group and the Healthcare Group; and (ii) our Group’s consolidated balance sheet as of31 December 2019 includes only the assets, liabilities and equity of the Hospital Group, whereasour Group’s consolidated balance sheets as of 31 December 2020 and 2021 include the assets,liabilities and equity of both the Hospital Group and the Healthcare Group.

To comply with the requirements of Rule 4.05A of the Listing Rules, as well as to presentmaterial information necessary for [REDACTED] to assess the impact of the acquisition of theHealthcare Group on our Group, this document includes (i) the consolidated audited historicalfinancial information of the Healthcare Group for FY2019 and PE2020 (please refer to “III.Additional Financial Information of the Healthcare and Pharmaceutical Business for thePre-acquisition Period” of the Accountant’s Report in Appendix I to this document); and (ii)description of key components of the consolidated statements of comprehensive income of theHealthcare Group for FY2019 and PE2020 and discussion of selected items from consolidatedbalance sheets of the Healthcare Group as of 31 December 2019 and 29 December 2020 (pleaserefer to the section headed “Financial Information for the Healthcare Group”).

SIGNIFICANT FACTORS AFFECTING OUR RESULTS OF OPERATIONS ANDFINANCIAL CONDITION

Our financial condition and results of operations have been, and are expected to continue tobe, affected by the following factors:

Healthcare and medical market conditions in the PRC

We derive substantially all of our revenue from medical and healthcare services providedby our Hospital (operated under the Hospital Group) and our ancillary healthcare facilities(operated under the Healthcare Group). During the Track Record Period, (i) our revenueattributable to the Hospital Group was approximately RMB1,083.0 million, RMB864.7 millionand RMB1,137.9 million during the Track Record Period, respectively, representingapproximately 100.0%, 100.0% and 94.3% of our total revenue for the respective years and (ii)our revenue attributable to the Healthcare Group was approximately RMB68.3 million forFY2021 only, representing approximately 5.7% of our total revenue for FY2021. As a result, ourresults of operations and financial conditions are significantly affected by medical andhealthcare market conditions in the PRC.

According to the F&S Report, driven by a growing yet aging population, increasingprevalence rate of chronic disease and rising per capita disposable income, the total healthcareexpenditure in the PRC grew from RMB4.6 trillion in 2016 to RMB7.2 trillion in 2020,representing a CAGR of 11.9% and is expected to further grow to RMB12.6 trillion in 2026.



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In the PRC, the aging population, urbanisation, social life pressure and environmentalpollution all lead to the increase in the prevalence of various chronic disease. In addition, thewell-educated middle class are more health conscious and take the initiate to seek qualityhealthcare services. These factors result in increasing demand for healthcare services. However,due to the limited medical resources and overloaded patient visits, the current medicalinstitutions in the PRC, especially public hospitals, cannot meet the medical needs of thepatients. Therefore, private hospital has become a fast growing segment in the overall hospitalmarket in the PRC in light of the strong demand. If such growth continues, it may have positiveeffect on our revenue growth and results of operations.

Regulatory policies and medical insurance programmes in the PRC

Our business is subject to high level of regulation and supervision at the national, regionaland local levels. In recent years, governmental policies and official plans aimed at encouraginghealthcare infrastructure development and improving access to healthcare services have beenenacted. This includes China’s healthcare reform for the establishment of universal healthcarecoverage of essential healthcare services for all of its citizens. At present, the public medicalinsurance system has three basic components: Urban Employees Basic Medical InsuranceProgramme (城鎮職工基本醫療保險制度), Urban Residents Basic Medical Insurance Programme(城鎮居民基本醫療保險制度) and New Rural Cooperative Medical Insurance Programme (新型農村合作醫療保險制度). To further improve insurance coverage and achieve a universal healthcoverage for urban and rural residents, the PRC government started the process to integrate NewRural Cooperative Medical Insurance Programme with Urban Residents Basic Medical InsuranceProgramme in 2016. Since the integration of New Rural Cooperative Medical InsuranceProgramme and Urban Residents Basic Medical Insurance Programme (under the Urban andRural Residents Medical Insurance Programme), the PRC government has been continuouslyincreasing funding for and expanding coverage under the new insurance regime. According tothe F&S Report, PRC expenditures for medical insurance programmes increased from RMB1,077billion in 2016 to RMB2,250 billion in 2020.

If a medical institution is a Medical Insurance Designated Medical Institution (醫保定點醫療機構), patients could arrange for payment or claim reimbursement through public medicalinsurance programmes. For the three years ended 31 December 2021, the revenue attributable topatients covered by social insurance programmes amounted to approximately RMB428.4 million,RMB311.4 million and RMB413.9 million, respectively, accounting for approximately 39.8%,36.2% and 36.8% of our total revenue contributed by our in-patient and out-patient hospitalservices for the respective years. Therefore, whether a medical institution is a Medical InsuranceDesignated Medical Institution could affect its acceptance to potential patients.

As of the Latest Practicable Date, our Hospital was a Medical Insurance DesignatedMedical Institution. Whether it can remain to be a Medical Insurance Designated MedicalInstitution could affect our results of operations.



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JCI-accreditation and Grade A Class III rating of our Hospital

The healthcare services market in the PRC is highly fragmented and competitive withnumerous participants. Promoted by government policies to support the development of privatemedical sector, the private hospitals have exhibited a rapid growth in the past few years.According to the F&S Report, there were 965 private hospitals in Guangdong Province in 2020,and it is expected to grow at a CAGR of 7.0% and reach 1,366 in 2025; and the number of ClassIII hospitals in Guangdong Province grew from 149 in 2015 to 231 in 2020, representing aCAGR of 9.2%.

We believe that our success and continued growth depend on the public perception of ourreputation, which is sustained by, in particular, our high-quality medical and healthcare servicesproven by international and national accreditations. Our Hospital has since 2003 been holdingthe JCI-accreditation (reviewed generally on a three-year term) up to 2025; according to theF&S Report, our Hospital is the second largest JCI-accredited private general hospital in thePRC in terms of revenue in 2020. Also, our Hospital had been rated as a Grade A Class III (三級甲等) Chinese Medicine Hospital in 2008 (being the highest classification of Chinese MedicineHospitals), and has subsequently been rated as a Grade A Class III Chinese and WesternMedicine Hospital (being the highest classification of Chinese and Western Medicine Hospitals)since 2021. We generally compete with other public and private general hospitals, in particularthose with a Class III rating and/or JCI-accreditation.

In case our Hospital fails to maintain the JCI-accreditation or fails to continue to be ratedas a Grade A Class III hospital, it could adversely our competitive edge, our ability to attractquality medical professionals, and it could materially and adversely harm the reputation of us orour Hospital. And we may not be able to sustain a stable growth in our business, and our resultsof operations may be adversely affected.

Our pricing

Pursuant to the currently applicable PRC laws and regulations, for-profit private hospitalsare generally entitled to setting the prices of healthcare services at their own discretion.However, if a medical institution is a Medical Insurance Designated Medical Institution, it mayonly charge fees for provision of certain designated medical services in accordance with thepricing guidelines set by the relevant local healthcare administrative authorities and publicmedical insurance providers. Such pricing guidelines stipulate the range of medical service feesthat can be charged for patients covered by public medical insurance programs.

However, in order to maintain our market position and competitive edge, for basic services,pharmaceuticals and medical consumables that are generally available at public or non-for-profithospitals, we may price them similar to such hospitals providing services of comparable quality.For the reason that pricing at public and non-profit hospitals in the PRC is primarily affected byregulatory pricing control, social insurance programmes and reimbursement limits, these factorsmay in turn exert an influence on our pricing.



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Outbreak of COVID-19 and patient visits

Our Hospital’s revenue depends primarily on the number of patient visits, in-patientbed-days and average spending per patient visit. During the Track Record Period, our revenueamounted to approximately RMB1,083.0 million and RMB864.7 million and RMB1,206.2million, respectively. The decrease in our revenue in FY2020 was primarily due to the decreaseof patient visits and in-patient bed-days in 2020 as a result of, among others, the outbreak ofCOVID-19, and the subsequent increase in our revenue in FY2021 was primarily due to thegradual recovery of our business from the impact of the COVID-19 outbreak. The followingtable sets forth the number of patient visits, in-patient bed-days, surgeries performed andaverage spending per patient visit for the years indicated:

FY2019 FY2020 FY2021

In-patient visits 40,091 23,258 29,139In-patient bed-days (days) 318,804 201,664 243,860Number of in-patient surgeries

performed 23,514 21,400 26,348Average spending per in-patient visit

(RMB) 15,560 19,208 17,992

Out-patient visits 1,197,513 798,169 1,414,388Number of day surgeries performed 21,165 17,202 23,867Average spending per out-patient

visit (RMB) 378 517 425

During 2020, due to the COVID-19 outbreak, we witnessed temporary delay of treatmentfor non-urgent medical conditions and surgeries of our in-patients and temporary delay oftreatment for out-patients with mild symptoms, which in turn affected the matrix of ourHospital’s in-patient visits, in-patient bed-days, surgeries performed and average spending pervisit. Any significant change in customer behavior or preference could have a material adverseeffect on our business, results of operations, financial condition and prospects.

Our expansion plans

The scale of our operations has a significant impact on our revenue because theenhancement of our Hospital’s capacity and service capabilities and the expansion of ourhealthcare network help us attract more patients/customers. Our future growth depends upon ourability to further expand our business. We have plans to expand our business, including (i)expanding our Hospital operations by capitalising on its Phase II Building; (ii) expanding ourClifford healthcare network by establishing additional ancillary healthcare facilities inGuangdong Province; and (iii) expanding our hospital network through selective mergers withand acquisitions of appropriate hospitals, please refer to the section headed “Future Plans andUse of [REDACTED]” in this document for further details. Our ability to expand our businesswill be affected by a number of factors, including: (i) changes to the PRC healthcare policies



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and regulations; (ii) the reputation of our Hospital, our ancillary healthcare facilities and ourmedical professionals; (iii) our financial resources; and (iv) the ability to improve our financialand operational performance.

Our expansion may require us to make upfront investments, which could impact ourliquidity. Our ability to manage our expanded operation in a cost-efficient manner determineswhether and how quickly we can recover our investment, which may materially affect ourrevenue and profitability.

Ability to control our costs and expenses

During the Track Record Period, cost of pharmaceuticals and consumables represented thelargest component of our cost of sales, which accounted for 48.0%, 42.3% and 38.4% of our costof sales for the respective years. The use of pharmaceuticals and medical consumables forms akey aspect of many of our medical treatment procedures.

As a result, we expect that cost of sales relating to cost of pharmaceuticals andconsumables will continue to be our most significant costs and expenses going forward,particularly in light of our Group’s expansion plans. Our ability to effectively control such costsand expenses may materially affect our profitability.

The table below sets forth a sensitivity analysis illustrating the hypothetical changes in ourgross profit margin for the three years ended 31 December 2021, respectively, if the purchaseprice of pharmaceuticals and consumables was 5%, 10% and 20% higher or lower, assumingother factors affecting our gross profit remained the same:

FY2019 FY2020 FY2021% % %

Gross profit margin 23.2 22.3 31.7Purchase price of pharmaceuticals

and consumables+/–5% +/–1.8 +/–1.6 +/–1.3+/–10% +/–3.7 +/–3.3 +/–2.6+/–20% +/–5.5 +/–4.9 +/–3.9

SIGNIFICANT ACCOUNTING POLICIES

We have identified certain accounting policies that are significant to the preparation of theconsolidated historical financial information of our Group for the Track Record Period. We havealso made certain accounting judgments and assumptions in the process of applying ouraccounting policies. When reviewing the consolidated historical financial information of ourGroup for the Track Record Period, you should take into account (i) our significant accountingpolicies; (ii) the judgment and assumptions affecting the application of such policies; and (iii)the sensitivity of reported results to changes in conditions and assumptions. The following



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discussion provides information on our significant accounting policies. Our significantaccounting policies, judgments and estimates, which are important for an understanding of ourfinancial conditions and results of operations, are set forth in more details in note 2 and note 4of the Accountant’s Report in Appendix I to this document.

Revenue recognition

Our revenue is primarily derived from providing hospital and other healthcare services andsales of pharmaceuticals to customers.

Revenues are recognised when, or as, the control of the goods or services is transferred tothe customer. Depending on the terms of the contract and the laws applicable, control of thegoods and services may be transferred over time or at a point in time. Control of the goods andservices is transferred over time if our performance:

➢ provides all of the benefits received and consumed simultaneously by the customer;

➢ creates and enhances an asset that the customer controls as we perform; or

➢ does not create an asset with an alternative use to us and we have an enforceable rightto payment for performance completed to date.

If control of the goods and services transfers over time, revenue is recognised over theperiod of the contract by reference to the progress towards complete satisfaction of thatperformance obligation. Otherwise, revenue is recognised at a point in time when the customerobtains control of the goods and services.

The progress towards complete satisfaction of performance obligation, depending on thenature of the good and service to be transferred, is measured based on one of the followingmethods that best depicts our performance in satisfying the performance obligation:

➢ direct measurements of the value of individual services transferred by us to thecustomer; or

➢ our efforts or inputs to the satisfaction of the performance obligation.

The following is a description of the accounting policy for our principal revenue streams.

Revenue from medical services is recognised when the related services have been renderedand includes out-patient and in-patient services.



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(a) Out-patient services

For out-patient services, the patient normally receives out-patient treatment which containsvarious treatment components. Out-patient services contain more than one performanceobligations, including (i) provision of consultation and medical treatment services and (ii) saleof pharmaceuticals. Both (i) provision of consultation and medical treatment services and (ii)sale of pharmaceuticals for which the control of services or pharmaceuticals is transferred at apoint in time, and revenue is recognised when the customer obtains the control of the completedservices or pharmaceuticals and we have satisfied our performance obligations with present rightto payment and the collection of the consideration is probable.

(b) In-patient services

For in-patient services, the customers normally receive in-patient treatment which containsvarious treatment components. In-patient service contains more than one performanceobligations, including (i) provision of consultation and medical treatment services; (ii) provisionof in-patient healthcare services and (iii) sale of pharmaceuticals.

For revenue from in-patient services for which control of services or pharmaceuticals istransferred at a point in time, revenue is recognised when the customer obtains the control of thecompleted services or pharmaceuticals and we have satisfied our performance obligations withpresent right to payment and the collection of the consideration is probable.

(c) Ancillary services related to hospital operation

Ancillary services related to hospital operation mainly comprise provision of vehicleparking services and healthcare training services provided to external customers, thecorresponding revenue is recognised over the service period when customers simultaneouslyreceive the services and consume the benefits provided by our performance as we perform.

(d) Sales of pharmaceuticals

We sell pharmaceuticals through wholesale and retail channels. Revenue frompharmaceutical sales is recognised at a point in time when control of the inventory hastransferred, being when the inventory is delivered to the customers, the customers have fulldiscretion to use the inventory, and there is no unfulfilled obligation that could affect thecustomers’ acceptance of the inventory.

(e) Healthcare services

Revenue from the provision of healthcare services, which include postpartum health careservices, elderly care services and dental care services, is recognised over the service periodwhen customers simultaneously receive the services and consume the benefits provided by ourperformance as we perform.



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Property, plant and equipment

Property, plant and equipment are stated at historical cost less depreciation andaccumulated impairment. Historical cost includes expenditure that is directly attributable to theacquisition of the items.

Subsequent costs are included in the asset’s carrying amount or recognised as a separateasset, as appropriate, only when it is probable that future economic benefits associated with theasset will flow to our Group and the cost of the item can be measured reliably. The carryingamount of the replaced part is derecognised. All other repairs and maintenance are charged tothe consolidated statements of comprehensive income during the periods in which they areincurred.

Depreciation is calculated using the straight-line method to allocate their cost, net of theirresidual values, over their estimated useful lives (or in the case of leasehold improvements andcertain leased plant and equipment, the shorter lease term) as follows:

Buildings and facilities 10–50 yearsMedical equipment 5–10 yearsOffice equipment and furniture 3–5 yearsDecoration Shorter of remaining lease term or 5 yearsRight-of-use for lands 50 yearsRight-of-use for properties Shorter of remaining lease term or estimated useful life

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, ateach reporting date. An asset’s carrying amount is written down immediately to its recoverableamount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposal are determined by comparing the proceeds with the carryingamounts. These are included in the profit or loss.

Construction-in-progress represents buildings and facilities and decoration underconstruction and is stated at cost less accumulated impairment losses, if any. Cost includes thecosts of construction and acquisition and capitalised borrowing costs. No provision fordepreciation is made on construction-in-progress until such time as the relevant assets arecompleted and ready for intended use. When the assets concerned are available for use, the costare transferred to relevant categories of property, plant and equipment and depreciated inaccordance with the policy as stated above. The carrying amount of construction-in-progress iswritten down immediately to its recoverable amount if the asset’s carrying amount is greaterthan its estimated recoverable amount.



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Investments and other financial assets

Classification

We classify our financial assets in the following measurement categories:

➢ those to be measured subsequently at fair value (either through other comprehensiveincome, or through profit or loss), and

➢ those to be measured at amortised cost.

The classification depends on the entity’s business model for managing the financial assetsand the contractual terms of the cash flows.

For financial assets measured at fair value, gains and losses will either be recorded in profitor loss or other comprehensive income. For investments in debt instruments, this will depend onthe business model in which the investment is held.

We reclassify debt investments when and only when its business model for managing thoseassets changes.

Recognition and derecognition

Regular way purchases and sales of financial assets are recognised on trade-date, the dateon which our Group commits to purchase or sell the asset. Financial assets are derecognisedwhen the rights to receive cash flows from the financial assets have expired or have beentransferred and our Group has transferred substantially all the risks and rewards of ownership.

Measurement

At initial recognition, our Group measures a financial asset at its fair value plus, in thecase of a financial asset not at fair value through profit or loss, transaction costs that are directlyattributable to the acquisition of the financial asset. Transaction costs of financial assets carriedat fair value through profit or loss are expensed in profit or loss.

Financial assets with embedded derivatives are considered in their entirety whendetermining whether their cash flows are solely payment of principal and interest.



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Debt instruments

Subsequent measurement of debt instruments depends on our Group’s business model formanaging the asset and the cash flow characteristics of the asset. There are three measurementcategories into which our Group classifies its debt instruments:

➢ Amortised cost:

Assets that are held for collection of contractual cash flows where those cash flowsrepresent solely payments of principal and interest are measured at amortised cost.Interest income from these financial assets is included in finance income using theeffective interest rate method. Any gain or loss arising on derecognition is recogniseddirectly in profit or loss and presented in other gains/(losses) together with foreignexchange gains and losses. Impairment losses are presented as separate line item inthe statement of profit or loss.

➢ Fair value through other comprehensive income (FVOCI):

Assets that are held for collection of contractual cash flows and for sale, where theassets’ cash flows represent solely payments of principal and interest, are measured atFVOCI. Movements in the carrying amount are taken through other comprehensiveincome (OCI), except for the recognition of impairment gains or losses, interestrevenue and foreign exchange gains and losses which are recognised in profit or loss.When the financial asset is derecognised, the cumulative gain or loss previouslyrecognised in OCI is reclassified from equity to profit or loss and recognised in othergains/(losses) – net. Interest income from these financial assets is included in financeincome using the effective interest rate method. Foreign exchange gains and losses arepresented in other gains/(losses) – net and impairment expenses in other expenses.

➢ Fair value through profit or loss:

Assets that do not meet the criteria for amortised cost or FVOCI are measured at fairvalue through profit or loss. A gain or loss on a debt investment that is subsequentlymeasured at fair value through profit or loss and is not part of a hedging relationshipis recognised in profit or loss and presented net in the consolidated statements ofcomprehensive income within other gains/(losses) – net in the period in which itarises.

Trade and other receivables

Our trade receivables are amounts due from customers and governments’ social insuranceschemes for hospital and healthcare services rendered and pharmaceutical sales in the ordinarycourse of business. If collection of trade receivables is expected in one year or less (or in thenormal operating cycle of the business if longer), they are classified as current assets. If not,they are presented as non-current assets.



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Trade and other receivables are recognised initially at fair value and subsequently measuredat amortised cost using the effective interest method, less provision for impairment.

Inventories

Our inventories are stated at the lower of cost and net realisable value. Cost is determinedusing the first-in first-out method. Net realisable value is the estimated selling price in theordinary course of business, less applicable variable selling expenses.

Current and deferred income tax

Our income tax expense or credit for the period is the tax payable or recoverable on thecurrent period’s taxable income based on the applicable income tax rate for each jurisdictionadjusted by changes in deferred tax assets and liabilities attributable to temporary differencesand to unused tax losses.

Current income tax

The current income tax charge is calculated on the basis of the tax laws enacted orsubstantively enacted at the reporting dates in the countries where our subsidiaries operate andgenerate taxable income. Management periodically evaluates positions taken in tax returns withrespect to situations in which applicable tax regulation is subject to interpretation andestablishes provisions where appropriate on the basis of amounts expected to be paid to the taxauthorities.

Deferred income tax

Inside basis differences

Deferred income tax is recognised, using the liability method, on temporary differencesarising between the tax bases of assets and liabilities and their carrying amounts in the historicalfinancial information. However, deferred tax liabilities are not recognised if they arise from theinitial recognition of goodwill, the deferred income tax is not accounted for if it arises frominitial recognition of an asset or liability in a transaction other than a business combination thatat the time of the transaction affects neither accounting nor taxable profit or loss. Deferredincome tax is determined using tax rates (and laws) that have been enacted or substantivelyenacted by the end of each reporting period and are expected to apply when the related deferredincome tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised only to the extent that it is probable that futuretaxable profit will be available against which the temporary differences can be utilised.



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Outside basis differences

Deferred income tax liabilities are provided on taxable temporary differences arising frominvestments in subsidiaries, except for deferred income tax liability where the timing of thereversal of the temporary difference is controlled by our Group and it is probable that thetemporary difference will not reverse in the foreseeable future.

Deferred income tax assets are recognised on deductible temporary differences arising frominvestments in subsidiaries only to the extent that it is probable the temporary difference willreverse in the future and there is sufficient taxable profit available against which the temporarydifference can be utilised.

Offsetting

Deferred income tax assets and liabilities are offset when there is a legally enforceableright to offset current tax assets against current tax liabilities and when the deferred income taxassets and liabilities relate to income taxes levied by the same taxation authority on either thetaxable entity or different taxable entities where there is an intention to settle the balances on anet basis.



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DESCRIPTION OF KEY COMPONENTS OF CONSOLIDATED STATEMENTS OFCOMPREHENSIVE INCOME

The following table sets forth the consolidated statements of comprehensive income of ourGroup for the years ended 31 December 2019, 2020 and 2021 as extracted from the Accountant’sReport as set out in Appendix I to this document:


Revenue 1,083,013 864,708 1,206,239Cost of sales (831,527) (672,097) (823,926)

Gross profit 251,486 192,611 382,313Selling expenses (7,022) (5,758) (36,606)Administrative expenses (99,863) (95,581) (130,870)Net impairment losses on financial

assets (48) (291) (220)Other income 17,064 24,548 10,460Other (losses)/gains – net (6,879) 17,455 2,126

Operating profit 154,738 132,984 227,203Finance costs – net (53,928) (68,962) (51,525)

Profit before income tax 100,810 64,022 175,678Income tax expenses (24,724) (11,416) (44,530)

Profit for the year attributable toowners of the Company 76,086 52,606 131,148

Other comprehensive incomeattributable to owners of theCompanyItems that may be reclassified to

profit or loss

– Exchange differences ontranslation of foreign operations 187 (982) (1,142)

Total comprehensive incomeattributable to owners of theCompany for the year 76,273 51,624 130,006



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Revenue

During the Track Record Period, our revenue amounted to approximately RMB1,083.0million, RMB864.7 million and RMB1,206.2 million, respective. The decrease in our revenue inFY2020 was primarily due to the decrease of patient visits and in-patient bed-days in 2020 as aresult of the outbreak of COVID-19. And the increase in revenue in FY2021 was primarily dueto (i) the gradual recovery of our business from the impact of the COVID-19 outbreak and (ii)the revenue contributed by the Healthcare Group being combined with our Group since 29December 2020.





Sub-total 1,083,013 100.0 864,708 100.0 1,137,928 94.3


Sub-total – – – – 68,311 5.7

Total 1,083,013 100.0 864,708 100.0 1,206,239 100.0

➢ The hospital business segment of our Group mainly represented operations of ourHospital, which can be categorised into four revenue streams: (i) in-patient hospitalservices; (ii) out-patient hospital services (including physical examination services);(iii) sales of pharmaceutical products at our Hospital’s pharmacy after provision ofin-patient or out-patient hospital services; and (iv) ancillary services related tohospital operation.



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In-patient hospital services refer to treatment of patients who are hospitalisedovernight or for an indeterminate period of time, usually several days or weeks,subject to the patients’ conditions and recovery. Out-patient hospital services refer tothe treatment of out-patients (i.e. patients not hospitalised overnight or patients underinward observation), and the medical examination of individuals for signs of diseasesand health advisory services. Ancillary services related to hospital operation includesvehicle parking at our Hospital and healthcare training services provided by ourHospital.

During the Track Record Period, our revenue contributed by the hospital businesssegment amounted to approximately RMB1,083.0 million, RMB864.7 million andRMB1,137.9 million, respectively, representing approximately 100.0%, 100.0% and94.3% of our total revenue for the respective years.

➢ The healthcare and pharmaceutical business segment of our Group mainly representedoperations of the Healthcare Group, which can be categorised into two revenuestreams: (i) provision of healthcare services (including postpartum healthcare services,elderly care services and dental care services) and (ii) sales of pharmaceuticals(including wholesale to pharmaceuticals distributors and retail sales at ourpharmacies).

As the Healthcare Group has been combined with our Group since 29 December 2020,during the Track Record Period, our revenue contributed by the healthcare andpharmaceutical business segment amounted to approximately RMB68.3 million forFY2021 only, representing approximately 5.7% of our total revenue for FY2021.

The Hospital Business Segment

The following table sets forth the breakdown of our Group’s revenue by (i) out-patienthospital services (including revenue contributed by our out-patient hospital services, physicalexamination services and sales of pharmaceutical products at our Hospital’s pharmacy afterprovision of out-patient hospital services) and (ii) in-patient hospital services (including revenuecontributed by our in-patient hospital services and sales of pharmaceutical products at ourHospital’s pharmacy after provision of in-patient hospital services):


Out-patient hospital services 452,746 42.1 412,850 48.0 601,522 53.4In-patient hospital services 623,814 57.9 446,736 52.0 524,257 46.6

Total 1,076,560 100.0 859,586 100.0 1,125,779 100.0



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The following table sets forth the breakdown of the gross profit and gross profit margin ofeach revenue stream of the hospital business segment for the years indicated:

FY2019 FY2020 FY2021

Gross profitGross profit

margin Gross profitGross profit



Treatments and general hospitalservices 253,978 23.6 196,459 22.9 353,419 31.4

– Out-patient hospital services (2)

(including physicalexamination) 125,132 27.6 127,097 30.8 232,914 38.7

– In-patient hospital services 128,846 20.7 69,362 15.5 120,505 23.0Ancillary services related to

hospital operation (2,492) (38.6) (3,848) (75.1) 3,126 25.7

Notes:

1. The gross profit margin of each revenue stream is calculated as the revenue of each revenue streamdeducted by cost of sales directly attributable to the particular revenue stream and indirect cost of sales(primarily include employee benefits expenses, depreciation of property, plant and equipment, repair andmaintenance expenses, testing fee and property management expenses) which are allocated to theindividual revenue streams based on the proportion of revenue of the individual revenue stream.

2. The gross profit attributable to physical examination services (which is grouped under our out-patienthospital services) amounted to approximately RMB34.6 million, RMB27.8 million and RMB53.7 millionfor the three years ended 31 December 2021, respectively, and the gross profit margin was approximately72.5%, 69.6% and 64.2% for the respective years.

In respect of out-patient hospital services

Our revenue from out-patient hospital services (including revenue contributed by ourout-patient hospital services, physical examination services and sales of pharmaceutical productsat our Hospital’s pharmacy after provision of out-patient hospital services) amounted toapproximately RMB452.7 million, RMB412.9 million and RMB601.5 million for the three yearsended 31 December 2021, respectively, representing approximately 41.8%, 47.7% and 49.9% ofour total revenue for the respective years:

➢ Our revenue from out-patient hospital services decreased by approximately RMB39.9million or 8.8% to approximately RMB412.9 million in FY2020 from RMB452.7million in FY2019, primarily due to (i) the outbreak of COVID-19 during 2020causing the temporary delay of treatment for patients with mild symptoms (輕症病人)and (ii) the temporary suspension of our out-patient hospital services from 7 February2020 to 12 March 2020, which brought about (a) a decrease in the number ofout-patients visit of about 33.3% from approximately 1.2 million in 2019 to 0.8million in 2020 and (b) a decrease in the number of day surgeries performed of about18.7% from approximately 21,000 in 2019 to 17,000 in 2020, which was partially



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offset by an increase in the average spending per out-patient visit of approximately36.8% from approximately RMB378 in 2019 to RMB517 in 2020 as a result of theaforesaid temporary delay.

The gross profit margin of out-patient hospital services increased from 27.6% inFY2019 to 30.8% in FY2020, which was primarily due an increase in averagespending per out-patient visit as a result of temporary delay of treatment for patientswith mild symptoms which led to the rate of decrease in revenue contributed byout-patient hospital services being lower than the rate of cost of sales incurred.

➢ Our revenue from out-patient hospital services significantly increased byapproximately RMB188.7 million or 45.7% to RMB601.5 million in FY2021 fromRMB412.9 million in FY2020, primarily due to (i) the gradual recovery of ourbusiness from the impact of the COVID-19 outbreak and (ii) our efforts todiversifying our revenue sources by establishing new disciplines, which brought about(a) a significant increase in the number of out-patients visit of about 77.2% fromapproximately 0.8 million in 2020 to 1.4 million in 2021 and (b) a significant increasein the number of day surgeries performed of about 38.7% from approximately 17,000in 2020 to 24,000 in 2021, coupled with (iii) the substantial increase in revenuecontributed by our physical examination services of 109.1% from approximatelyRMB40.0 million in FY2020 to approximately RMB83.6 million in FY2021 as thegeneral public has become more health cautious after the COVID-19 outbreak, whilethe average spending per out-patient visit slightly decreased by approximately 17.8%from approximately RMB517 in 2020 to RMB425 in 2021.

The gross profit margin of out-patient hospital services further increased from 30.8%in FY2020 to 38.7% in FY2021 primarily due to the significant growth of our physicalexamination services (which had a higher gross profit margin than our otherout-patient hospital services, i.e. over 60%) in FY2021.

In respect of in-patient hospital services

Our revenue from in-patient hospital services (including revenue contributed by ourin-patient hospital services and sales of pharmaceutical products at our Hospital’s pharmacyafter provision of in-patient hospital services) amounted to approximately RMB623.8 million,RMB446.7 million and RMB524.3 million for the three years ended 31 December 2021,respectively, representing approximately 57.6%, 51.7% and 43.5% of our total revenue for therespective years:

➢ Our revenue from in-patient hospital services decreased by approximately RMB177.1million or 28.4% to RMB446.7 million in FY2020 from RMB623.8 million inFY2019, primarily due to the outbreak of COVID-19 during 2020 causing thetemporary delay of treatment for non-urgent medical conditions and surgeries of ourin-patients, which brought about (i) a decrease in the number of in-patient visit ofabout 42.0% from approximately 40,000 in 2019 to 23,000 in 2020 and (ii) a decrease



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in the number of in-patient bed-days of about 36.7% from approximately 319,000 in2019 to 202,000 in 2020, which was partially offset by an increase in the averagespending per in-patient visit of approximately 23.4% from approximately RMB15,560in 2019 to RMB19,208 in 2020 as a result of the aforesaid temporary delay.

The gross profit margin of in-patient hospital services decreased from 20.7% inFY2019 to 15.5% in FY2020 as the rate of decrease in revenue contributed byin-patient hospital services was higher than the rate of decrease in our cost of salesallocated to in-patient hospital services, as a substantial portion of such cost of sales(in particular, employee benefits expenses and depreciation of our Hospital’s medicalequipment and premises) are fixed.

➢ Our revenue from in-patient hospital services significantly increased by approximatelyRMB77.5 million or 17.4% to RMB524.3 million in FY2021 from RMB446.7 millionin FY2020, primarily due to the gradual recovery of our business from the impact ofthe COVID-19 outbreak, which brought about (i) an increase in the number ofin-patient visits of about 25.3% from approximately 23,000 in 2020 to 29,000 in 2021and (ii) an increase in the number of in-patient bed-days of approximately 20.9% fromapproximately 202,000 in 2020 to 244,000 in 2021, while the average spending perin-patient visit slightly decreased by approximately 6.3% from approximatelyRMB19,208 in 2020 to RMB17,992 in 2021.

The gross profit margin of in-patient hospital services increased from 15.5% inFY2020 to 23.0% in FY2021 as our cost of sales allocated to in-patient hospitalservices remained relatively stable, as a substantial portion of such cost of sales arefixed.

In respect of ancillary services related to hospital operation

Our revenue from ancillary services related to hospital operation amounted toapproximately RMB6.5 million, RMB5.1 million and RMB12.1 million for the three years ended31 December 2021, respectively, representing approximately 0.6%, 0.6% and 1.0% of ourGroup’s total revenue for the respective years:

➢ Our revenue from ancillary services related to hospital operation decreased byapproximately RMB1.3 million or 20.6% to RMB5.1 million in FY2020 from RMB6.5million in FY2019, primarily due to the decrease in vehicle parking fees as lesspatients, their relatives and/or visitors visited our Hospital in FY2020 as a result ofthe COVID-19 outbreak.

➢ Our revenue from ancillary services related to hospital operation increased byapproximately RMB7.0 million or 137.2% to RMB12.1 million in FY2021 fromRMB5.1 million in FY2020, primarily due to (i) the increase in healthcare trainingservices provided by our Hospital primarily due to the increased health cautiousnessafter the COVID-19 outbreak and (ii) the increase in vehicle parking fees as a resultof the recovery of our Hospital’s business.



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The gross profit margin of ancillary services related to hospital operation are negativefor FY2019 and FY2020 for the reason that a large portion of the cost of salesallocated to such services (in particular, depreciation of our Hospital’s premises) arefixed.

Key operating information of our Hospital

The following table sets forth our revenue contributed by patients covered by socialinsurance programmes and not covered by social insurance programmes, respectively, for theyears indicated:

FY2019 FY2020 FY2021

Amount

% ofrevenue of

our hospitalservices Amount

% ofrevenue of

our hospitalservices Amount

% ofrevenue of

our hospitalservices

(RMB’000) % (RMB’000) % (RMB’000) %

Revenue from patients covered bysocial insurance programme:– Revenue attributable to social

insurance programmes(1) 273,748 25.4 205,628 23.9 262,704 23.4– Revenue from co-payments from

patients(2) 154,684 14.4 105,756 12.3 151,147 13.4

Sub-total 428,432 39.8 311,384 36.2 413,851 36.8

Revenue from patients not covered bysocial insurance programme:– Self-pay customers(3) 624,082 58.0 528,452 61.5 677,153 60.1– Commercial insurance providers(4) 6,546 0.6 4,351 0.5 8,154 0.7– Corporate customers(5) 17,500 1.6 15,399 1.8 26,621 2.4

Sub-total 648,128 60.2 548,202 63.8 711,928 63.2

Total 1,076,560 100.0 859,586 100.0 1,125,779 100.0

Notes:

1. It represents revenue attributable to social insurance programmes deriving from payments directly settledby social insurance management governmental authorities.



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2. It represents revenue attributable to the portion of payments financed by patients covered by socialinsurance programme, these include: (a) patients who are required by relevant social insurance regulationsto finance a certain portion of their medical treatments and/or pharmaceuticals (which are within the scopeof pharmaceuticals and treatments covered by social insurance programmes) and (b) patients who finance acertain portion of their medical treatments and/or pharmaceuticals, which are not within the scope ofpharmaceuticals and treatments covered by social insurance programmes.

3. It includes (a) patients who finance all of their medical bills themselves (i.e. without relying on socialinsurance programmes) and (b) patients (who are commercial insurance policyholders) who settle theirmedical bills themselves (and are subsequently reimbursed by the commercial insurance providersaccording to the relevant commercial insurance policy).

4. It represents commercial insurance providers who directly settle the medical bills for the patients (who arecommercial insurance policyholders) according to the relevant commercial insurance policy.

5. It represents business corporations, which purchased our Group’s healthcare services, such as physicalexamination, for their designated persons, normally being their employees.

The revenue contributed by patients covered (or not covered) by social insuranceprogrammes were generally in line with the fluctuation of our revenue during the Track RecordPeriod, and the portion of revenue attributed to patients covered (or not covered) by socialinsurance programmes were relatively stable.

The following table sets forth certain key information of the in-patient hospital services andout-patient hospital services of the hospital business segment for the years indicated:

FY2019 FY2020 FY2021

In-patient visits(1) 40,091 23,358 29,139In-patient bed-days(2) (days) 318,804 201,664 243,860Number of in-patient surgeries

performed 23,514 21,400 26,348Average spending per in-patient

visit(3) (RMB) 15,560 19,208 17,992Out-patient visits(4) 1,197,513 798,169 1,414,388Number of day surgeries performed 21,165 17,202 23,867Average spending per out-patient

visit(3) (RMB) 378 517 425

Notes:

1. It represents the total number of in-patients in our Hospital during the relevant period.

2. It represents the actual number of beds occupied by our in-patients on each day (but not taking intoaccount beds which are occupied by in-patients on their date of discharge) aggregated over the course ofthe relevant period.



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The Healthcare and Pharmaceutical Business Segment

The following table sets forth the breakdown of the gross profit and gross profit margin ofeach revenue stream of the healthcare and pharmaceutical business segment for the yearsindicated:

FY2019 FY2020 FY2021





Healthcare services 13,491 36.5– Postpartum healthcare

services – – – – 9,806 40.4– Elderly care services – – – – 3,763 43.6– Dental care services – – – – (78) (1.9)Sales of pharmaceuticals – – – – 12,277 39.1

Our revenue from healthcare services (including postpartum healthcare services, elderlycare services and dental care services) amounted to approximately RMB36.9 million for FY2021only, representing approximately 3.1% of our Group’s total revenue for FY2021, as theHealthcare Group has been combined with our Group since 29 December 2020.

Our revenue from sales of pharmaceuticals amounted to approximately RMB31.4 millionfor FY2021 only, representing approximately 2.6% of our Group’s total revenue for FY2021, asthe Healthcare Group has been combined with our Group since 29 December 2020.

For details of the analysis of the fluctuations of the revenue contribution of each ofpostpartum healthcare services, elderly care services, dental care services and sales ofpharmaceuticals to the Healthcare Group for FY2019 and PE2020, respectively, please refer tothe paragraph headed “Financial Information of the Healthcare Group – Description of keycomponents of the Combined Statements of Comprehensive Income of the Healthcare Group –Revenue” in this section.



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Cost of sales

Our cost of sales primarily consisted of employee benefits expenses, cost of pharmaceuticaland consumables and depreciation of property, plant and equipment and other costs. Other costsprimarily include miscellaneous expenses, utilities and repair and maintenance expenses. For thethree years ended 31 December 2021, our cost of sales amounted to approximately RMB831.5million, RMB672.1 million and RMB823.9 million, respectively, accounting for approximately76.8%, 77.7% and 68.3% of our total revenue for the respective years.

The following table sets forth the components of our cost of sales for the years indicated:


Employee benefits expenses 290,064 34.9 233,877 34.8 316,608 38.4Cost of pharmaceutical and

consumables 398,945 48.0 284,384 42.3 315,270 38.3Depreciation of property,

plant and equipment 71,009 8.5 90,113 13.4 99,410 12.1Others 71,509 8.6 63,723 9.5 92,638 11.2

Total 831,527 100.0 672,097 100.0 823,926 100.0

Gross profit

The following table sets forth the gross profit and gross profit margin of our Group for theyears indicated:

FY2019 FY2020 FY2021





Our Group 251,486 23.2 192,611 22.3 382,313 31.7



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Selling expenses

Our selling expenses primarily consisted of employee benefits expenses, travelling,entertainment, vehicle and office expenses, depreciation of fixed assets, utilities and other costs.For the three years ended 31 December 2021, our selling expenses amounted to approximatelyRMB7.0 million, RMB5.8 million and RMB36.6 million, respectively, accounting forapproximately 0.6%, 0.7% and 3.0% of our total revenue for the respective years.

The following table sets forth the components of our selling expenses for the yearsindicated:


Employee benefits expenses 5,287 75.3 5,016 87.1 34,260 93.6Travelling, entertainment,

vehicle and office expenses 423 6.0 187 3.2 811 2.2Depreciation of fixed assets 296 4.2 269 4.7 683 1.9Utilities 100 1.4 74 1.3 221 0.6Others 916 13.1 212 3.7 631 1.7

Total 7,022 100.0 5,758 100.0 36,606 100.0



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Administrative expenses

Our administrative expenses primarily consisted of employee benefits expenses,depreciation of fixed assets, property management expenses, outsourcing labour costs,[REDACTED] expenses, repair and maintenance expenses, bank charges and other costs. Forthe three years ended 31 December 2021, our administrative expenses amounted toapproximately RMB99.9 million, RMB95.6 million and RMB130.9 million, respectively,accounting for approximately 9.2%, 11.1% and 10.8% of our total revenue for the respectiveyears.

The following table sets forth the components of our administrative expenses for the yearsindicated:


Employee benefits expenses 47,923 48.0 31,633 33.1 45,874 35.0Depreciation of fixed assets 19,415 19.4 19,094 20.0 17,914 13.7Property management

expenses 6,715 6.7 15,172 15.9 16,509 12.6Outsourcing labour costs 6,972 7.0 15,290 16.0 15,290 11.7[REDACTED] expenses – – – – 11,105 8.5Repair and maintenance

expenses 2,164 2.2 2,401 2.5 6,111 4.7Bank charges 4,557 4.6 4,388 4.6 4,962 3.8Others 12,117 12.1 7,603 7.9 13,104 10.0

Total 99,863 100.0 95,581 100.0 130,870 100.0

Since the second half of 2019, our Group had gradually outsourced staff of our Hospital’ssecurity and cleaning department and relevant property management services to third partyservice providers, such that our management can channel its efforts and resources to focusing onimproving the quality of our medical and healthcare services and enhancing our competitiveness.As a result, there was (i) an increase in outsourcing labour costs of approximately RMB8.3million to approximately RMB15.3 million in FY2020 from RMB7.0 million in FY2019 and (ii)an increase in property management expenses of approximately RMB8.5 million toapproximately RMB15.2 million in FY2020 from RMB6.7 million in FY2019, which is partiallyoffset by a decrease in employee benefits expenses of approximately RMB16.3 million toapproximately RMB31.6 million in FY2020 from RMB47.9 million in FY2019.



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Other income

Our other income primarily consisted of interest income from loans to related parties andrental income. For the three years ended 31 December 2021, our other income amounted toapproximately RMB17.1 million, RMB24.5 million and RMB10.5 million, respectively.

The following table sets forth a breakdown of our other income for the years indicated:


Interest income from loans torelated parties 6,833 40.0 13,806 56.2 5,238 50.1

Rental income 4,147 24.4 3,607 14.7 3,856 36.9Management related services 5,735 33.6 5,813 23.7 751 7.2Government grants 349 2.0 1,322 5.4 615 5.8

Total 17,064 100.0 24,548 100.0 10,460 100.0

Our rental income was generated from the leasing of part of our Hospital’s premises torelated parties and third parties. For the three years ended 31 December 2021, our rental incomeamounted to approximately RMB4.1 million, RMB3.6 million and RMB3.9 million, respectively,accounting for approximately 24.4%, 14.7% and 36.9% of our other income for the respectiveyears.

Our income from management related services represented service fees receivable by ourGroup for providing administrative services to related parties and third parties. For the threeyears ended 31 December 2021, our income from management related services amounted toapproximately RMB5.7 million, RMB5.8 million and RMB0.8 million, respectively, accountingfor approximately 33.6%, 23.7% and 7.2% of our other income for the respective years.



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Other losses or gains – net

Our other losses or gains primarily consisted of fair value losses or gains on investmentproperties and exchange losses or gains. For FY2019, we recognised other losses ofapproximately RMB6.9 million, while, in FY2020 and FY2021, we recognised other gains ofapproximately RMB17.5 million and RMB2.1 million, respectively.

The following table sets forth a breakdown of our other losses or gains for the yearsindicated:


Fair value (losses)/gains oninvestment properties (4,673) 660 630

Exchange (losses)/gains – net (2,256) 15,319 694Acceptance of donations from third

parties – 1,527 200Compensation received from

contractor – – 310Others 50 (51) 292

Total (6,879) 17,455 2,126

Fair value (losses)/gains on investment properties represents the fair value losses or gainsas a result of the valuation of our investment properties, being part of our Hospital’s premisesthat were used by us for leasing to related parties and/or third parties.

Acceptance of donations from third parties primarily consist of donations of COVID-19prevention supplies to our Group.



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Finance income and costs

Our finance income primarily represented interest income of bank deposits. Our financecosts primarily consisted of interest expenses for bank borrowings and loans from relatedparties. The following table sets forth a breakdown of our finance income and costs for the yearsindicated:


Finance income:Interest income of bank deposits 5,474 5,312 8,865Others – – 331

Total finance income 5,474 5,312 9,196

Finance costs:Interest expenses for lease liabilities (256) (206) (318)Interest expenses for bank

borrowings (56,556) (72,825) (60,403)Interest expenses for loans from

related parties (2,590) (1,243) –

Total finance cost (59,402) (74,274) (60,721)

Finance costs – net (53,928) (68,962) (51,525)

Income tax expenses

Our income tax expenses consisted of current income tax and deferred income tax. OurGroup is subject to income tax on an individual legal entity basis on profits arising in or derivedfrom the tax jurisdiction in which companies comprising our Group domicile or operate. For thethree years ended 31 December 2021, our income tax expenses amounted to approximatelyRMB24.7 million, RMB11.4 million and RMB44.5 million, respectively, and our effective taxrate was approximately 24.5%, 17.8% and 25.3% for the respective years. Our effective tax ratesin each year were affected by the profit contribution from our subsidiaries which were subject todifferent tax rates. The provision for current income tax is based on the statutory rate of PRCenterprise income tax of 25%.



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Our effective tax rate for FY2020 was lower than 25%, mainly due to the recognition ofexchange gains of approximately RMB15.3 million generated by the restricted cash held by aHong Kong subsidiary of our Group, which is not subject to Hong Kong income tax. Restrictedcash were deposits for standby letter of credit, which were made by such Hong Kong subsidiaryfor security of borrowings of certain PRC subsidiaries. Our Group’s effective tax rate forFY2021 was slightly higher than 25% mainly due to (i) the reduction of restricted cash (andhence any potential exchange gains, which is not subject to Hong Kong income tax) asmentioned above as a result of the cessation of the restricted cash deposit arrangements and (ii)[REDACTED] expenses incurred by our Company which is not deductible for tax purpose. Forfurther details on reconciliation between income tax expenses and accounting profits atapplicable at applicable tax rates, please refer to note 12(b) of the Accountant’s Report inAppendix I to this document.

Profit for the year and net profit margin

The following table sets forth the profit for the year and net profit margin of our Group forthe years indicated:

FY2019 FY2020 FY2021Profit for

the yearNet profit

marginProfit for

the yearNet profit

marginProfit for

the yearNet profit


Our Group 76,086 7.0 52,606 6.1 131,148 10.9

RESULTS OF OPERATIONS

FY2021 compared to FY2020

Revenue

Our revenue increased by approximately RMB341.5 million or 39.5% to approximatelyRMB1,206.2 million for FY2021 from RMB864.7 million for FY2020. The increase wasprimarily due to (i) the gradual recovery of our business from the impact of the COVID-19outbreak which brought about an increase in our revenue from out-patient hospital services byapproximately RMB188.7 million to approximately RMB601.5 million in FY2021 fromRMB412.9 million in FY2020 and an increase in our revenue from in-patient hospital servicesby approximately RMB77.5 million to approximately RMB524.3 million in FY2021 fromRMB446.7 million in FY2020; and (ii) the Common Control Combination which led to theinclusion of the revenue contributed by the Healthcare Group to our Group for FY2021, whichcomprises revenue from healthcare services of approximately RMB36.9 million and revenuefrom sales of pharmaceuticals of approximately RMB31.4 million. For details of the fluctuationof the revenue and gross profit margin of each revenue stream of our Group, please refer to theparagraph headed “Description of key components of Consolidated Statements of ComprehensiveIncome – Revenue” in this section.



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Cost of sales

Our costs of sales increased by approximately RMB151.8 million or 22.6% toapproximately RMB823.9 million for FY2021 from RMB672.1 million for FY2020. The increasewas primarily due to (i) an increase in employee benefits expense of approximately RMB82.7million to approximately RMB316.6 million for FY2021 from RMB233.9 million for FY2020which was due to the increase of our employees in 2021 (in particular, for the healthcare andpharmaceutical business segment as a result of the opening of two new retail pharmacies in2021) and the increase of bonus primarily to employees of the Hospital Group as a result of therecovery of our Hospital’s performance from the COVID-19 outbreak and (ii) an increase in costof pharmaceuticals and consumables of approximately RMB30.9 million to approximatelyRMB315.3 million for FY2021 from RMB284.4 million for FY2020, which is in line with ourrevenue trend.

Gross profit and gross profit margin

Our gross profit significantly increased by approximately RMB189.7 million or 98.5% toapproximately RMB382.3 million for FY2021 from RMB192.6 million for FY2020 and our grossprofit margin increased from 22.3% for FY2020 to 31.7% for FY2021. The increase wasprimarily due to (i) the increase in the gross profit margin of out-patient hospital services from30.8% for FY2020 to 38.7% for FY2021 driven by the significant growth of physicalexamination services (which had a higher gross profit margin than our other out-patient hospitalservices, i.e. over 60%) in FY2021 and (ii) the Common Control Combination which led to theinclusion of the healthcare services and sales of pharmaceuticals of the Healthcare Group (whichgenerally have higher gross profit margins, i.e. over 35% except for dental care services) to ourGroup for FY2021.

Selling expenses

Our selling expenses significantly increased by approximately RMB30.8 million or 535.7%to approximately RMB36.6 million for FY2021 from RMB5.8 million for FY2020. The increasewas primarily due to the Common Group Combination which led to the inclusion of the sellingexpenses contributed by the Healthcare Group, primarily consisting of employee benefitsexpenses for our sales of pharmaceuticals business.


Our administrative expenses increased by approximately RMB35.3 million or 36.9% toapproximately RMB130.9 million for FY2021 from RMB95.6 million for FY2020. The increasewas primarily due to (i) an increase in employees benefits expenses of approximately RMB14.2million to approximately RMB45.9 million for FY2021 from RMB31.6 million for FY2020 as aresult of the increase in our administrative staff, the increase of bonus in 2021 and reduction ofsocial insurance allowances (which were previously available in 2020); (ii) an increase in[REDACTED] expenses of approximately RMB11.1 million in FY2021; and (iii) an increase in



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repair and maintenance expenses in connection with maintenance fee for our Group’s software ofapproximately RMB3.7 million to approximately RMB6.1 million for FY2021 from RMB2.4million for FY2020.

Other income

Our other income decreased by approximately RMB14.1 million or 57.4% to approximatelyRMB10.5 million for FY2021 from RMB24.5 million for FY2020. The decrease was primarilydue to (i) a decrease in interest income from loans to related parties of approximately RMB8.6million to approximately RMB5.2 million for FY2021 from RMB13.8 million for FY2020 as aresult of settlement of loans to related parties in contemplation of the [REDACTED]; and (ii) adecrease income from management related services fees of approximately RMB5.1 million toapproximately RMB0.8 million for FY2021 from RMB5.8 million for FY2020 due to a reductionin such services offered by our Group.

Other gains – net

Our other net gains decreased by approximately RMB15.3 million or 87.8% toapproximately RMB2.1 million for FY2021 from RMB17.5 million for FY2020. The decreasewas primarily due to a decrease in the exchange gains of approximately RMB14.6 million toapproximately RMB0.7 million for FY2021 from RMB15.3 million for FY2020.

Finance costs – net

Our net finance costs decreased by approximately RMB17.4 million or 25.3% toapproximately RMB51.5 million for FY2021 from RMB69.0 million for FY2020. The decreasewas primarily due to (i) a decrease in interest expense from bank borrowings of approximatelyRMB12.4 million to approximately RMB60.4 million in FY2021 from RMB72.8 million inFY2020 as a result of the decrease in principal amount of our bank borrowings and (ii) anincrease in interest income of bank deposits of approximately RMB3.6 million to approximatelyRMB8.9 million in FY2021 from RMB5.3 million in FY2020.

Income tax expenses

Our income tax expenses increased by approximately RMB33.1 million or 290.1% toapproximately RMB44.5 million for FY2021 from RMB11.4 million for FY2020, primarily dueto an increase in our profit before taxation. Our effective income tax rate in FY2020 andFY2021 were 17.8% and 25.3%, respectively, the increase was primarily due to (i) the cessationof the restricted cash deposit arrangement leading to the reduction of restricted cash (and henceany potential exchange gains, which is not subject to Hong Kong income tax) in FY2021 and (ii)[REDACTED] expenses incurred by our Company amounted to approximately RMB11.1 millionwhich is not deductible for tax purpose.



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As a result of the foregoing, our profit for the year increased by approximately RMB78.5million or 149.3% to approximately RMB131.1 million for FY2021 from RMB52.6 million forFY2020. Our net profit margin was 6.1% and 10.9% in FY2020 and FY2021, respectively, andsuch increase was in line with the increase in our gross profit margin.

FY2020 compared to FY2019

Revenue

Our revenue decreased by approximately RMB218.3 million or 20.2% to approximatelyRMB864.7 million for FY2020 from RMB1,083.0 million for FY2019. The decrease wasprimarily due to the outbreak of COVID-19 which brought about (i) a decrease in our revenuefrom in-patient hospital services by approximately RMB177.1 million to approximatelyRMB446.7 million in FY2020 from RMB623.8 million in FY2019; and (ii) a decrease in ourrevenue from out-patient hospital services by approximately RMB39.9 million to approximatelyRMB412.9 million in FY2020 from RMB452.7 million in FY2019. For details of the fluctuationof the revenue and gross profit margin of each revenue stream of our Group, please refer to theparagraph headed “Description of key components of Consolidated Statements of ComprehensiveIncome – Revenue” in this section.

Cost of sales

Our cost of sales decreased by approximately RMB159.4 million or 19.2% to approximatelyRMB672.1 million for FY2020 from RMB831.5 million for FY2019. The decrease was primarilydue to (i) a decrease in cost of pharmaceutical and consumables of approximately RMB114.6million to approximately RMB284.4 million in FY2020 from RMB398.9 million in FY2019which is in line with the decrease in the patient visits of our Hospital as a result of theCOVID-19 outbreak and the sales of pharmaceuticals; and (ii) a decrease in employee benefitsexpenses of approximately RMB56.2 million to approximately RMB233.9 million in FY2020from RMB290.1 million in FY2019 which was due to the reduction of bonus as a result of theperformance of our Hospital in FY2020.

Gross profit and gross profit margin

Our gross profit decreased by approximately RMB58.9 million or 23.4% to approximatelyRMB192.6 million for FY2020 from RMB251.5 million for FY2019 and our gross profit margindecreased from 23.2% for FY2019 to 22.3% for FY2020. The decrease was primarily due to therate of decrease in revenue being higher than the rate of decrease in our cost of sales, inparticular, for in-patient hospital services (the gross profit margin of which decreased from20.7% for FY2019 to 15.5% for FY2020) as a substantial portion of the relevant cost of sales (inparticular, employee benefit expenses of our Hospital’s relatively stable frontline headcount anddepreciation of our Hospital’s medical equipment and premises) are fixed.



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Selling expenses

Our selling expenses decreased by approximately RMB1.3 million or 18.0% toapproximately RMB5.8 million for FY2020 from RMB7.0 million for FY2019. The decrease wasprimarily due to (i) a decrease in marketing and promotion expenses of approximately RMB0.7million to approximately RMB0.2 million in FY2020 from RMB0.9 million in FY2019 asreflected in other expenses due to greater reduction of marketing and promotional activities byour Group after the outbreak of COVID-19; and (ii) a decrease in employee benefits expenses ofapproximately RMB0.3 million to approximately RMB5.0 million in FY2020 from RMB5.3million in FY2019 which was due to the reduction of bonus as a result of the performance of ourHospital in FY2020.


Our administrative expenses slightly decreased by approximately RMB4.3 million or 4.3%to approximately RMB95.6 million for FY2020 from RMB99.9 million for FY2019, whichremained relatively stable.

Other income

Our other income increased by approximately RMB7.5 million or 43.9% to approximatelyRMB24.5 million for FY2020 from RMB17.1 million for FY2019. The increase was primarilydue to an increase in interest income from loans to related parties of approximately RMB7.0million to approximately RMB13.8 million in FY2020 from RMB6.8 million in FY2019 due tothe increase in the principal amount of the indebtedness extended to related parties duringFY2020.

Other losses or gains – net

Our other net losses increased by approximately RMB24.3 million to other net gains ofapproximately RMB17.5 million for FY2020 from other net losses of approximately RMB6.9million for FY2019. The increase was primarily due to (i) our Group recognised fair value losseson investment properties in FY2019 of approximately RMB4.7 million (in the anticipation of theoutbreak of COVID-19 in late 2019 and early 2020) based on the valuation of an independentproperty valuer, which was subsequently revised in FY2020; and (ii) our Group recognised netexchange gains of approximately RMB15.3 million in FY2020, mainly due to the effect of thedepreciation of RMB against HK$ on the restricted cash of our Group in the amount ofRMB198.7 million, which was deposited by our Group in Hong Kong dollars.



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Finance costs – net

Our net finance costs increased by approximately RMB15.0 million or 27.9% toapproximately RMB69.0 million for FY2020 from RMB53.9 million for FY2019. The increasewas primarily due to an increase in interest expense for bank borrowings of approximatelyRMB16.3 million to approximately RMB72.8 million in FY2020 from RMB56.6 million inFY2019 as a result of the increase in the principal amount of our bank borrowings.

Income tax expenses

Our income tax expenses decreased by approximately RMB13.3 million or 53.8% toapproximately RMB11.4 million for FY2020 from RMB24.7 million for FY2019, primarily dueto a decrease in our profit before taxation. Our effective income tax rate in FY2019 and FY2020were 24.5% and 17.8%, respectively, and the decrease was primarily due to the recognition ofexchange gains of approximately RMB15.3 million generated by the restricted cash held by aHong Kong subsidiary of our Group, which is not subject to Hong Kong income tax.


As a result of the foregoing, our profit for the year decreased by approximately RMB23.5million or 30.9% to approximately RMB52.6 million for FY2020 from RMB76.1 million forFY2019. Our net profit margin was 7.0% and 6.1% in FY2020 and FY2021, respectively, andsuch decrease was in line with the decrease in our gross profit margin.



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DISCUSSION OF SELECTED ITEMS FROM CONSOLIDATED BALANCE SHEETS

The table below sets forth selected information from our consolidated balance sheets as ofthe respective dates indicated, which have been extracted from the Accountant’s Report as setout in Appendix I to this document:

As of 31 December2019 2020 2021

(RMB’000) (RMB’000) (RMB’000)

Total current assets 819,004 967,673 548,516Total non-current assets 1,419,029 1,387,824 1,367,741

Total assets 2,238,033 2,355,497 1,916,257

Total current liabilities 889,737 856,176 698,875Total non-current liabilities 1,046,185 1,101,946 698,547

Total liabilities 1,935,922 1,958,122 1,397,422

Net assets 302,111 397,375 518,835

Total equity 302,111 397,375 518,835

Total equity and liabilities 2,238,033 2,355,497 1,916,257



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Net current liabilities/assets

The following table sets forth the breakdown of our current assets and current liabilities asof the respective dates indicated:

As of 31 DecemberAs of

31 January20222019 2020 2021

(RMB’000) (RMB’000) (RMB’000) (RMB’000)(unaudited)

Current assetsInventories 34,526 42,989 37,612 40,242Trade and other receivables and

prepayments 523,960 559,871 79,868 100,724Restricted cash 136,223 208,653 – –Cash and cash equivalents 124,295 156,160 431,036 392,590

Total current assets 819,004 967,673 548,516 533,556

Current liabilitiesTrade and other payables 633,222 604,338 359,057 325,637Contract liabilities 3,983 8,289 8,675 7,878Current income tax liabilities 7,423 5,076 19,623 2,337Lease liabilities 2,909 3,373 2,620 4,068Bank borrowings 242,200 235,100 308,900 316,400

Total current liabilities 889,737 856,176 698,875 656,320

Net current (liabilities)/assets (70,733) 111,497 (150,359) (122,764)

We recorded net current liabilities of approximately RMB70.7 million and net currentassets of approximately RMB111.5 million as of 31 December 2019 and 2020, respectively, theincrease in our Group’s net current assets of approximately RMB182.2 million was primarilyattributable to the combined effect of (i) an increase in restricted cash of approximatelyRMB72.4 million, such restricted cash were deposits for standby letter of credit; (ii) a decreasein trade and other payables of approximately RMB28.9 million primarily due to the settlement ofa substantial portion of amounts due to related parties (leading to a decrease in amount due torelated parties of approximately RMB14.9 million) in 2020 in contemplation of the[REDACTED] and a decrease in payables for construction project of approximately RMB14.6million as a result of the progressive completion of construction and renovation works of ourHospital’s premises; (iii) an increase in trade and other receivables and prepayments ofapproximately RMB35.9 million, primarily due to the Common Control Combination, which ledto the inclusion of the Healthcare Group’s trade and other receivables of approximatelyRMB161.9 million as of 29 December 2020 (out of which approximately RMB79.6 millionrepresented amounts due from the Hospital Group to the Healthcare Group and was eliminatedafter the Common Control Combination) in our Group’s trade and other receivables andprepayments; and (iv) an increase in cash and cash equivalents of approximately RMB31.9million.



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We recorded net current assets of approximately RMB111.5 million and net currentliabilities of approximately RMB150.4 million as of 31 December 2020 and 2021, respectively,the decrease in our Group’s net current assets of approximately RMB261.9 million was primarilyattributable to the combined effect of (i) the continued settlement of a substantial portion ofamounts due from related parties (leading to a decrease in amounts due from related parties ofapproximately RMB481.8 million) and amounts due to related parties (leading to a decrease inamounts due to related parties of approximately RMB203.6 million) in 2021; (ii) an increase inthe current portion of bank borrowings of approximately RMB73.8 million due to certain portionof the non-current portion of bank borrowings becoming repayable within one year (while thetotal bank borrowings of our Group (including current and non-current portion) decreased fromapproximately RMB1,282.3 million as of 31 December 2020 to RMB944.1 million as of 31December 2021); and (iii) a decrease of restricted cash of approximately RMB208.7 million as aresult of the cessation of the restricted cash deposit arrangements, which was partially offset by(a) an increase in cash and cash equivalents of approximately RMB274.9 million primarily dueto the release of the restricted cash and (b) a decrease in payables for construction projects ofapproximately RMB24.2 million primary due to (1) the progressive completion of constructionand renovation works of our Hospital’s premises and (2) the settlement of remaining paymentafter the expiration of warranty period under the relevant construction contracts.

We recorded net current liabilities of approximately RMB122.8 million as of 31 January2022, the decrease of the balance of net current liabilities of approximately RMB27.6 millionsince 31 December 2021 was primarily attributable to the combined effect of (i) a decrease intrade and other payables of approximately RMB33.4 million primarily due to a decrease inaccrued payroll as a result of the settlement of bonuses payable to our staff; (ii) an increase intrade and other receivables and prepayments of approximately RMB20.9 million primarily due tothe delay in application to relevant governmental authorities regarding settlement through socialinsurance programmes as a result of the Chinese New Year holiday; (iii) a decrease in currentincome tax liabilities of approximately RMB17.3 million primarily due to the settlement ofoutstanding taxes for the fourth quarter of 2021, which was partially offset by a decrease in cashand cash equivalents of approximately of RMB38.4 million.

Based on the above, the significant fluctuations in our Group’s net current liabilities/assetsas of 31 December 2019, 2020 and 2021 were primarily attributable to the gradual settlement ofamount due to/from related parties in contemplation of the [REDACTED] and an increase in thecurrent portion of bank borrowings. As of the Latest Practicable Date, all of the amount dueto/from related parties have been fully settled, we also had an aggregate committed bankingfacilities of RMB505.9 million, all of which remained unutilised as of the Latest PracticableDate.

For the reasons stated above, we recorded net current liabilities of approximately RMB70.7million and RMB150.4 million, respectively as of 31 December 2019 and 2021. For moredetails, please refer to note 2.1.2 of the Accountant’s Report in Appendix I to this document andthe section headed “Risk Factors – Risks Relating to Our Business and Industry – We recordednet current liabilities during the Track Record Period, which may expose us to liquidity risk, andsuch positions may recur after the [REDACTED]” in this document. We plan to improve our netcurrent liabilities position through maintaining sufficient cash inflow from operating activitiesand replacing our short-terms borrowings with (where possible) long-term bank borrowings inthe future.



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As of 31 December 2019, 2020 and 2021, the net book amount of our property, plant andequipment was approximately RMB1,342.6 million, RMB1,322.2 million and RMB1,310.6million, respectively, and primarily consisted of buildings and facilities, medical equipment andright-of-use for lands.

The table below sets forth the balance of our property, plant and equipment as of therespective dates indicated:

Buildingsand

facilitiesMedical

equipment

Officeequipment

andfurniture Decoration

Constructionin progress

Right-of-use for

lands

Right-of-use for

properties Total(RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000)

As of 1 January 2019:Cost 1,041,888 150,126 40,855 30,925 90,021 161,896 4,659 1,520,370Accumulated depreciation (81,550) (62,168) (22,713) (7,227) – (32,140) – (205,798)

Net book amount 960,338 87,958 18,142 23,698 90,021 129,756 4,659 1,314,572

FY2019:Additions – 61,341 13,739 1,065 40,134 – 3,107 119,386Transfer from construction in progress 83,333 – – 22,676 (106,009) – – –Disposals (477) (86) (42) – – – – (605)Depreciation charge (45,096) (22,550) (8,434) (8,086) – (4,036) (2,518) (90,720)

Net book amount as of 31 December 2019 998,098 126,663 23,405 39,353 24,146 125,720 5,248 1,342,633

FY2020:Additions 699 46,388 2,407 2,414 22,335 – 156 74,399Combination of subsidiaries – 2,223 1,516 2,587 126 – 4,093 10,545Transfer from investment properties 4,530 – – – – – – 4,530Transfer from construction in progress 3,434 325 – 24,733 (28,492) – – –Disposals – (110) (51) – – – (298) (459)Depreciation charge (48,048) (30,881) (9,708) (13,971) – (4,036) (2,832) (109,476)


FY2021:Additions – 26,383 3,883 1,083 73,767 – 1,606 106,722Transfer from construction in progress 693 14,580 – 10,561 (25,834) – – –Disposals – (113) (126) – – – – (239)Depreciation charge (48,936) (36,293) (7,556) (17,921) – (4,036) (3,265) (118,007)




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Our building and facilities represent primarily our Hospital’s premises located in Panyudistrict, Guangzhou City, the PRC owned by our Group. As of 31 December 2019, 2020 and2021, the net book amount of our building and facilities amounted to approximately RMB998.1million, RMB958.7 million and RMB910.5 million, respectively. The net book amount of ourbuilding and facilities decreased by approximately RMB39.4 million or 3.9% fromapproximately RMB998.1 million as of 31 December 2019 to RMB958.7 million as of 31December 2020, which was mainly due to depreciation charge of approximately RMB48.0million recorded for FY2020, and was partially offset by transfer from investment properties ofapproximately RMB4.5 million due to the re-classification of our investment properties (whichrepresent premises leased by our Hospital to Pharmacy (Xinda) PRC Co. (a member of theHealthcare Group) to our property, plant and equipment as a result of the Common ControlCombination. The net book amount of our building and facilities decreased by approximatelyRMB48.2 million or 5.0% from approximately RMB958.7 million as of 31 December 2020 toRMB910.5 million as of 31 December 2021, which was mainly due to depreciation charge ofapproximately RMB48.9 million recorded for FY2021.

Our medical equipment represent medical equipment owned and utilised by our Hospitaland our ancillary healthcare facilities. As of 31 December 2019, 2020 and 2021, the net bookamount of our medical equipment was approximately RMB126.7 million, RMB144.6 million andRMB149.2 million, respectively. The net book amount of our medical equipment increased byapproximately RMB17.9 million or 14.2% from approximately RMB126.7 million as of 31December 2019 to RMB144.6 million as of 31 December 2020, which was due to acquisition ofnew medical equipment of approximately RMB46.4 million, and was partially offset bydepreciation charge of approximately RMB30.9 million recorded for FY2020. The net bookamount of our medical equipment increased by approximately RMB4.6 million or 3.2% fromapproximately RMB144.6 million as of 31 December 2020 to RMB149.2 million as of 31December 2021, which was mainly due to (i) acquisition of new medical equipment ofapproximately RMB26.4 million and (ii) transfer from construction in progress in recognition ofthe completion of construction works to disinfection facilities of our Hospital of approximatelyRMB14.6 million, and was partially offset by depreciation charge of approximately RMB36.3million recorded for FY2021.

Our right-of-use for lands represents our land use right in the land where our Hospital islocated. As of 31 December 2019, 2020 and 2021, the net book amount of our right-of-use assetsin respect of land use rights was approximately RMB125.7 million, RMB121.7 million andRMB117.6 million. The net book amount of our right-of-use for lands decreased byapproximately RMB4.0 million or 3.2% from approximately RMB125.7 million as of 31December 2019 to RMB121.7 million as of 31 December 2020, which was due to depreciationcharge of approximately RMB4.0 million recorded for FY2020. The net book amount of ourright-of-use for lands decreased by approximately RMB4.0 million or 3.3% from approximatelyRMB121.7 million as of 31 December 2020 to RMB117.6 million as of 31 December 2021,which was mainly due to depreciation charge of approximately RMB4.0 million recorded forFY2021.



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Inventories

Our inventories primarily consisted of pharmaceuticals and medical consumables. Weactively monitor the sales performance and inventory level, and make our sales and purchaseplans periodically, to minimise the risk of inventory shortage or accumulation. We have alsoestablished inventory management system that monitors each stage of the warehousing process.We record our inventories at the lower of cost and net realisable value.

The following table sets forth our inventory balances as of the respective dates indicated:

As of 31 December2019 2020 2021

(RMB’000) (RMB’000) (RMB’000)

Pharmaceuticals 24,678 30,134 27,785Medical consumables 8,929 12,058 9,182Low value consumables 919 797 645

Total 34,526 42,989 37,612

As of 31 December 2019, 2020 and 2021, our inventories amounted to approximatelyRMB34.5 million, RMB43.0 million and RMB37.6 million, respectively.

➢ Our inventory balances increased by approximately RMB8.5 million fromapproximately RMB34.5 million as of 31 December 2019 (which only took intoaccount inventory of the Hospital Group) to RMB43.0 million as of 31 December2020 (which took into account the inventory of both the Hospital Group and theHealthcare Group). The increase was primarily due to the combination of the HospitalGroup and the Healthcare Group.

➢ Our Group’s inventory balances decreased by approximately RMB5.4 million fromapproximately RMB43.0 million as of 31 December 2020 to RMB37.6 million as of31 December 2021. The decrease was primarily due to the elimination of the pricingdifference on the inventories sold by the Healthcare Group to the Hospital Group as aresult of the Common Control Combination.

The following table sets forth our inventory turnover days for the years indicated:

FY2019 FY2020 FY2021

Inventory turnover days(note) 14.8 21.0 17.9

Note: The inventory turnover days are equal to average inventory (inventory at the beginning of the yearplus inventory at the end of the year divided by two) divided by cost of sales for the year and

multiplied by 365 days for the relevant year.



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For the three years ended 31 December 2021, our inventory turnover days were 14.8 days,21.0 days and 17.9 days, respectively:

➢ Our inventory turnover days increased from 14.8 days in FY2019 to 21.0 days inFY2020, primarily due to the combination of the Healthcare Group into our Group asa result of the Common Control Combination.

➢ Our inventory turnover days decreased from 21.0 days in FY2020 to 17.9 days inFY2021, which was mainly attributable to the elimination of the pricing difference onthe inventories sold by the Healthcare Group to the Hospital Group as a result of theCommon Control Combination.

(Our inventory turnover days for FY2020 is calculated by dividing the average inventory ofFY2020 (which took into account the inventory level of only the Hospital Group for thebeginning of FY2020, but the inventory level of both the Hospital Group and the HealthcareGroup at the end of FY2020) by the cost of sales of the Hospital Group of FY2020 (withouttaking into account the cost of sales of the Healthcare Group, and also without the eliminationof the inter-group transactions between the Hospital Group and the Healthcare Group).)

As of 31 January 2022, 69.4% of our inventories as of 31 December 2021 had beensubsequently utilised/sold.

Trade and other receivables and prepayments

Trade receivables

The following table sets forth our trade receivables net of allowance for impairment as ofthe respective dates indicated:

As of 31 December2019 2020 2021

(RMB’000) (RMB’000) (RMB’000)

Trade receivables:– third parties 75,367 60,809 65,908– related parties 3,108 3,819 1,639

78,475 64,628 67,547Less: allowance for impairment of

trade receivables (82) (370) (399)

Trade receivables – net 78,393 64,258 67,148



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Our trade receivables during the Track Record Period mainly reflected payments due fromsocial insurance programmes. We normally grant credit period of 60 days to corporate customersin relation to the provision of physical examination services. Payments settled through socialinsurance programmes will normally take 30 to 90 days for the application, processing andsettlement with the relevant governmental authorities.

As of 31 January 2022, approximately RMB23.3 million or 34.5%, of our trade receivablesoutstanding as of 31 December 2021 was subsequently settled.

As of 31 December 2019, 2020 and 2021, our trade receivables amounted to approximatelyRMB78.4 million, RMB64.3 million and RMB67.1 million, respectively.

➢ Our trade receivables decreased by approximately RMB14.1 million fromapproximately RMB78.4 million as at the end of FY2019 to RMB64.3 million as atthe end of FY2020, primarily due to a decrease in our revenue from our in-patient andout-patient hospital services, as a result of the outbreak of COVID-19.

➢ Our trade receivables slightly increased by approximately RMB2.9 million fromapproximately RMB64.3 million as at the end of FY2019 to RMB67.1 million as atthe end of FY2021, such increase was driven by the significant increase out-patientvisits and surgeries performed of our Hospital in 2021 brought about by the gradualrecovery of our business from the impact of the COVID-19 outbreak, the effect ofwhich was reduced by the increased effort on the part of our management to collectoutstanding trade receivables.

The following table sets for the aging analysis of our trade receivables as of the respectivedates indicated:

As of 31 December2019 2020 2021

(RMB’000) (RMB’000) (RMB’000)

Within 90 days 72,180 56,011 58,98091 to 180 days 4,726 3,462 3,852181 to 360 days 1,320 3,881 2,9291 to 2 years 193 1,179 1,522Over 2 years 56 95 264

Total 78,475 64,628 67,547

For the three years ended 31 December 2021, our provision for trade receivablesimpairment was approximately RMB0.1 million, RMB0.4 million and RMB0.4 million,respectively.



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The following table sets forth our trade receivables turnover days for the years indicated:

FY2019 FY2020 FY2021

Trade receivables turnover days(note) 22.8 30.1 19.9

Note: The trade receivables turnover days are equal to average trade receivables (trade receivables at thebeginning of the year plus trade receivables at the end of the year divided by two) divided by total revenuefor the year and multiplied by 365 days for the relevant year.

For the three years ended 31 December 2021, our trade receivables turnover days were 22.8days, 30.1 days and 19.9 days, respectively:

➢ Our trade receivable turnover days increased from 22.8 days in FY2019 to 30.1 daysin FY2020, primarily due to prolonged settlement period with social insuranceprogrammes along with the decreasing revenue trend amid the COVID-19 outbreak in2020.

➢ Our trade receivable turnover days decreased from 30.1 days in FY2020 to 19.9 daysin FY2021, which was primarily due to the increase in revenue from patients notcovered by social insurance programmes, in particular, the revenue generated fromself-pay customers, who are normally required to settle the medicals bills before werender medical services or before their discharge.

(Our trade receivable turnover days for FY2020 is calculated by dividing the average tradereceivables of FY2020 (which took into account the trade receivables of only the Hospital Groupfor the beginning of FY2020, but the trade receivables of both the Hospital Group and theHealthcare Group at the end of FY2020) by the total revenue of the Hospital Group of FY2020(without taking into account the total revenue of the Healthcare Group and also without theelimination of the inter-group transactions between the Hospital Group and the HealthcareGroup).)



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Other receivables

The following table sets forth our other receivables net of allowance for impairment as ofthe respective dates indicated:

As of 31 December2019 2020 2021

(RMB’000) (RMB’000) (RMB’000)

Other receivables:– amounts due from related parties 433,953 482,312 472– deposits 3,076 3,108 20– others 2,314 4,983 3,663

439,343 490,403 4,155Less: allowance for impairment of

other receivables (4) (7) (198)

Other receivables – net 439,339 490,396 3,957

As of 31 December 2019, 2020 and 2021, our other receivables amounted to approximatelyRMB439.3 million, RMB490.4 million and RMB4.0 million, respectively.

➢ Our other receivables slightly increased by approximately RMB51.1 million fromapproximately RMB439.3 million as at the end of FY2019 to RMB490.4 million as atthe end of FY2020, primarily due to the Common Control Combination, which led tothe inclusion of the Healthcare Group’s other receivables of approximately RMB117.7million as of 29 December 2020 (primarily consisted of amounts due from relatedparties of approximately RMB116.1 million as of 29 December 2020, out of whichapproximately RMB79.6 million represented amounts due from the Hospital Group tothe Healthcare Group and was eliminated after the Common Control Combination) inour Group’s other receivables.

➢ Our other receivables substantially decreased by approximately RMB486.4 millionfrom approximately RMB490.4 million as at the end of FY2020 to RMB4.0 million asat the end of FY2021, primarily due to a decrease in amounts due from related partiesof approximately RMB481.8 million as a result of the settlement of a substantialportion of amounts due from related parties in 2021 in contemplation of the[REDACTED].



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Prepayments

The following table sets forth our prepayments as of the respective dates indicated:

As of 31 December2019 2020 2021

(RMB’000) (RMB’000) (RMB’000)

Prepayments:– prepayments to third-party

suppliers 32,779 26,308 12,492– prepayments to related-party

suppliers 3,198 1,541 357– prepayments for [REDACTED]

expenses – – 3,333

35,977 27,849 16,182Less: prepayments – non-current

portion (29,749) (22,632) (7,419)

Prepayments – current potion 6,228 5,217 8,763

Our prepayments primarily consisted of prepayments for purchase of inventories andmedical equipment. As of 31 December 2019, 2020 and 2021, our prepayments amounted toapproximately RMB36.0 million, RMB27.8 million and RMB16.2 million, respectively.

➢ Our prepayments decreased by approximately RMB8.1 million from approximatelyRMB36.0 million as at the end of FY2019 to RMB27.8 million as at the end ofFY2020, primarily due to the decrease in prepayment of medical equipment as a resultof re-classification of prepayment into fixed assets upon the installation of suchmedical equipment.

➢ Our prepayments decreased by approximately RMB11.7 million from approximatelyRMB27.8 million as at the end of FY2020 to RMB16.2 million as a the end ofFY2021, primarily due to a decrease in prepayments to third-party suppliers ofapproximately RMB13.8 million as a result of further re-classification of prepaymentinto fixed assets upon the installation of such medical equipment, which was partiallyoffset by an increase in prepayments for expenses in relation to the preparation for the[REDACTED] of approximately RMB3.3 million.



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Trade and other payables

Trade payables

The following table sets forth our trade payables as of the respective dates indicated:

As of 31 December2019 2020 2021

(RMB’000) (RMB’000) (RMB’000)

Trade payables:– third parties 27,245 68,738 58,573– related parties 40,388 5,427 1,491

Total 67,633 74,165 60,064

During the Track Record Period and up to the Latest Practicable Date, our Groupcentralised procurement of pharmaceuticals, medical consumables and medical equipment for ourvarious businesses, and such procurement function has been undertaken by Pharmaceuticals PRCCo and Medical Equipment PRC Co (both of which are members of the Healthcare Group). Insuch connection, Pharmaceuticals PRC Co and Medical Equipment PRC Co directly procurepharmaceuticals, medical consumables and medical equipment from third-party suppliers, andsubsequently sell such pharmaceuticals, medical consumables and medical equipment tomembers of the Hospital Group and the Healthcare Group. As a result, from our Group’s and theHealthcare Group’s perspective:

➢ As of 31 December 2019 (i.e. before the combination of the Hospital Group with ourGroup), the balance of subsequent sales of pharmaceuticals, medical consumables andmedical equipment by Pharmaceuticals PRC Co and Medical Equipment PRC Co tothe Hospital Group were recognised as trade payable to related parties (and in the caseof Healthcare Group, trade and other receivables from related parties).

➢ As of 31 December 2020 and 2021 (i.e. after the combination of the Hospital Groupand the Healthcare Group under our Company), the balance of subsequent sales ofpharmaceuticals, medical consumables and medical equipment by PharmaceuticalsPRC Co and Medical Equipment PRC Co to the Hospital Group were treated asintra-group balances for both the Hospital Group and the Healthcare Group, and henceeliminated when the financial position of our Group as of 31 December 2020 and 2021were prepared.



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Based on the reasons above, our trade payables to related parties as of 31 December 2019primarily consisted of the sales of pharmaceuticals, medical consumables and medical equipmentby Pharmaceuticals PRC and Medical Equipment PRC Co to the Hospital Group. And as a resultof the Common Control Combination, (i) our trade payable to related parties significantlydecreased by approximately RMB35.0 million from approximately RMB40.4 million as at theend of FY2019 to RMB5.4 million as at the end of FY2020, primarily due to the balances ofsales to the Hospital Group being re-classified as intra-group balances and eliminated and (ii)our trade payable to third parties significantly increased by approximately RMB41.5 millionfrom approximately RMB27.2 million as at the end of FY2019 to RMB68.7 million, for thereason that our trade payable to third parties included those of both the Hospital Group and theHealthcare Group as of 31 December 2020. As of 31 December 2020 and 2021, our tradepayables to related parties amounted to approximately RMB5.4 million and RMB1.5 million,respectively, which primarily consisted of balances of services fees payable by our Group toClifford ML Group for composite services provided, please refer to the section headed“Connected Transactions – Our Continuing Connected Transactions – Continuing ConnectedTransactions which are exempted from circular and the independent shareholders’ approvalrequirements – 2. Master Composite Services Agreement” in this document for further details.

Our trade payables to third parties relate to the direct purchase of pharmaceuticals, medicalconsumables and medical equipment from our third-party suppliers by our Group, which arenon-interest bearing. We typically have a credit term of 1 to 3 months for pharmaceuticals andof 1 to 1.5 months for medical consumables. We typically make prepayments for a portion of thepurchase price and subsequently pay for a substantial portion of the purchase price afterinstallation and inspection of medical equipment, and settle the rest of the purchase price uponor after expiration of warranty period pursuant to the terms of the relevant contracts. Dependingon the type of medical equipment purchased, the warranty period typically ranges from one tothree years.

The following table sets for the aging analysis of our trade payables as of the respectivedates indicated:

As of 31 December2019 2020 2021

(RMB’000) (RMB’000) (RMB’000)

Up to 1 year 65,797 72,570 59,7201 to 2 years 1,471 1,458 1402 to 3 years 290 100 141Over 3 years 75 37 63

Total 67,633 74,165 60,064



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As of 31 December 2019, 2020 and 2021, our trade payables amounted to approximatelyRMB67.6 million, RMB74.2 million and RMB60.1 million, respectively.

➢ Our trade payables increased from the end of FY2019 to the end of FY2020, primarilydue to the recognition of bills payable amounted to approximately RMB10.0 millionpayable by our Group to a bank as a result of the Hospital Group settling the paymentfor procurement of supplies by way of a bill of exchange issued by such bank.

➢ Our trade payables decreased from the end of FY2020 to the end of FY2021, primarilydue to the settlement of the abovementioned bills payable.

As of 31 January 2022, approximately RMB40.2 million or 66.9%, of our trade payablesoutstanding as of 31 December 2021 was subsequently settled.

The following table sets forth our trade payables turnover days for the years indicated:

FY2019 FY2020 FY2021

Trade payables turnover days(note) 60.0 38.5 29.7

Note: The trade payables turnover days are equal to average trade payables (trade payables at the beginning ofthe year plus trade payables at the end of the year divided by two) divided by total cost of sales for theyear and multiplied by 365 days for the relevant year.

For the three years ended 31 December 2021, our trade payables turnover days were 60.0days, 38.5 days and 29.7 days, respectively:

➢ Our trade payables turnover days decreased from 60.0 days in FY2019 to 38.5 days inFY2020, which was primarily due the recognition of trade payable amounted toapproximately RMB120.0 million payable by our Group to the Healthcare Group, forwhich the Healthcare Group entered into a factoring arrangement with a bank(regarding such trade payable) to obtain financing, following the termination of thefactoring arrangement in FY2020, the relevant trade payable was settled.

➢ Our trade payables turnover days decreased from 38.5 days in FY2020 to 29.7 days inFY2021, which was primarily due to (i) an increase in our cost of sales duringFY2021 as a result of our increasing revenue contributed by our Hospital due to thegradual recovery of our business from the impact of the COVID-19 outbreak and (ii)the settlement of relevant trade payable as mentioned above.

(Our trade payables turnover days for FY2020 is calculated by dividing the average tradepayables of FY2020 (which took into account the trade payables of only the Hospital Group forthe beginning of FY2020, but the trade payables of both the Hospital Group and the HealthcareGroup at the end of FY2020) by the cost of sales of the Hospital Group of FY2020 (withouttaking into account the cost of sales of the Healthcare Group).)



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Other payables

The following table sets forth our other payables as of the respective dates indicated:

As of 31 December2019 2020 2021

(RMB’000) (RMB’000) (RMB’000)

Other payables:– amounts due to related parties 339,241 324,380 120,768– amounts due to third parties 18,926 15,150 –– payables for construction

projects 61,345 46,703 22,545– interest payables 1,149 564 1,407– deposits 57,741 69,629 81,653– payables for land use right 20,012 20,012 –– accrued payroll 60,923 46,986 61,176– other taxes payables 2,221 2,830 3,184– payables for [REDACTED]

expenses – – 4,104– others 4,031 3,919 4,156

Total 565,589 530,173 298,993

Our other payables primarily consisted of amount due to related parties, payables forconstruction projects, deposits and accrued payrolls.

As of 31 December 2019, 2020 and 2021, the balance of our amounts due to related partiesamounted to approximately RMB339.2 million, RMB324.4 million and RMB120.8 million,respectively. The continued decrease in our amount due to related parties was primarily due tothe continued settlement of amount due to related parties throughout 2020 and 2021 incontemplation of the [REDACTED]. For more details of our amount due to related parties,please refer to the paragraph headed “Discussion of selected items from Consolidated BalanceSheets – Amount due from/(to) related parties” in this section.

Our payables for construction projects represented construction fees payable forconstruction and renovation works performed or to be performed for our Hospital’s premises. Asof 31 December 2019, 2020 and 2021, the balance of our payables for construction projectsamounted to approximately RMB61.3 million, RMB46.7 million and RMB22.5 million,respectively. The continued decrease in our payables for construction projects was primarily dueto the progressive completion of the construction and renovation works performed during 2020and 2021.



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Our deposits represented prepayments by our customers to our Group. As of 31 December2019, 2020 and 2021, the balance of our deposits amounted to approximate RMB57.7 million,RMB69.6 million and RMB81.7 million, respectively. The continued increase in our depositswas primarily due to (i) the receipt of deposit from the governmental authorities to our Hospital(as a Medical Insurance Designated Medical Institution) in 2020 and 2021 as part of the policyto combat COVID-19 outbreak and (ii) a continued increase in deposits made by our patients inrelation to our provision of out-patient services.

Our accrued payroll represented salaries and bonuses payable to our staff. As of 31December 2019, 2020 and 2021, the balance of our accrued payroll amounted to approximatelyRMB60.9 million, RMB47.0 million and RMB61.2 million, respectively. The fluctuation in ouraccrued payroll is in line with the fluctuations in our revenue and our employee benefitsexpenses, which were brought about by the COVID-19 outbreak in 2020 and subsequentrecovery in 2021.

Amount due from/(to) related parties

The following table sets forth our amounts due to or from related parties as of therespective dates indicated:

As of 31 December2019 2020 2021

(RMB’000) (RMB’000) (RMB’000)

Amounts due from related parties:– trade in nature 3,300 4,280 2,111– non-trade in nature 433,761 481,851 –

Amounts due to related parties:– trade in nature (42,027) (5,992) (5,080)– non-trade in nature (337,602) (323,815) (117,179)

Our trade-in-nature amounts due from related parties primarily represented unsettledbalance arising from physical examination services provided by our Hospital to employees ofrelated parties and healthcare training services provided to related parties, which werenon-interest bearing.

Our non-trade in nature amounts due from related parties primarily represented advances torelated parties. Our non-trade in nature amounts due from related parties increased fromapproximately RMB433.8 million as of 31 December 2019 to RMB481.9 million as of 31December 2020, primarily due to the Common Control Combination, which led to the inclusionof the Healthcare Group’s amounts due from related parties of approximately RMB116.1 million,out of which approximately RMB79.6 million represented amounts due from the Hospital Groupto the Healthcare Group and was eliminated after the Common Control Combination in ourGroup. Our non-trade in nature amounts due from related parties significant decreased from



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approximately RMB481.9 million as of 31 December 2020 to nil as of 31 December 2021, as asubstantial portion of our amounts due from related parties were settled in 2021 incontemplation of the [REDACTED]. As of 31 December 2019, 2020 and 2021, amounts ofapproximately RMB69.3 million, RMB431.8 million and nil carried interest rates ranging fromapproximately 4.35% to 6.65%, from approximately 3.50% to 5.46% and nil, respectively, andthe rest of our non-trade in nature amounts due from related parties are non-interest bearing. Allof our non-trade in nature amounts due from related parties are unsecured. Our Directorsconfirm that all non-trade in nature amounts due from related parties have been settled as of the31 December 2021.

Our trade-in-nature amounts due to related parties as of 31 December 2019 primarilyrepresented unsettled balance arising from the purchase of pharmaceuticals, medicalconsumables and medical equipment from Pharmaceuticals PRC Co and Medical Equipment PRCCo to the Hospital Group before the combination of the Hospital Group and the HealthcareGroup. For further details, please refer to the paragraph headed “Discussion of selected itemsfrom Consolidated Balance Sheets – Trade and other payables – Trade payables” in this sectionabove. As for 31 December 2020 and 2021, our trade-in-nature amounts due to related partiesprimarily represented balances of service fees payable by our Group to Clifford ML Group forcomposite services provided. For further details please refer to the section headed “ConnectedTransactions – Continuing Connected Transactions which are exempted from circular and theindependent shareholders’ approval requirements – 2. Master Composite Services Agreement” inthis document.

Our non-trade in nature amounts due to related parties primarily represented advances fromrelated parties. Our non-trade in nature amounts due to related parties decreased fromapproximately RMB337.6 million as of 31 December 2019 to RMB323.8 million as of 31December 2020, which further decreased to RMB117.2 million as of 31 December 2021, whichwas primarily due to the continued settlement of amount due to related parties throughout 2020and 2021 in contemplation of the [REDACTED]. As of 31 December 2019, amounts ofapproximately RMB43.6 million carried interest rate of approximately 4.35%, and the rest of ournon-trade in nature amounts due to related parties are unsecured and have no fixed terms ofrepayment. Our Directors confirm that all non-trade in nature amounts due to related partieshave been settled as of the Latest Practicable Date.



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CONTRACTUAL OBLIGATIONS

Commitments for construction contracts and acquisition of non-current assets

Our Group’s capital expenditure contracted for as of the respective dates indicated belowbut not yet incurred was as follows:

As of 31 December2019 2020 2021

(RMB’000) (RMB’000) (RMB’000)

Purchase of property, plant andequipment(1) 15,360 39,596 11,996

Purchase of intangible assets(2) 2,351 1,469 1,013

Total 17,711 41,065 13,009

Notes:

1. Property, plant and equipment (primarily include medical equipment) we contracted to purchase.

2. Intangible assets (primarily include software and information technology systems) we contracted topurchase).

Lease commitments

As lessee

Our Group had future aggregate minimum lease payments (short-term or low value leases)under non-cancellable operating leases as of the respective dates indicated as follows:

As of 31 December2019 2020 2021

(RMB’000) (RMB’000) (RMB’000)

Up to 1 year 45 186 37



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As lessor

Our Group leases certain investment properties to tenants under operating leases withrentals payable monthly. Arrangement for leasing to external tenants are negotiated for termsranging from 1 year to 8 years.

Our Group had total future minimum rental income expected to be received undernon-cancellable leasing arrangements with our tenants falling due as follows:

As of 31 December2019 2020 2021

(RMB’000) (RMB’000) (RMB’000)

Up to 1 year 2,272 1,410 2,118Over 1 year 1,712 1,001 2,548

Total 3,984 2,411 4,666

LIQUIDITY AND CAPITAL RESOURCES

Overview

During the Track Record Period, our working capital requirements were principallysatisfied by cash generated from our operations and bank borrowings.

Cash Flows

Our principal use of cash has been for funding our business operations. Our main source ofliquidity has been cash generated from our operating activities and debt financing. We currentlyrely on cash generated from our operations and bank borrowings to fund our expansion and otherworking capital requirements.



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The following table summarises key information on our cash flows during the Track RecordPeriod:


Net cash generated from operatingactivities 103,476 234,836 371,377

Net cash (used in)/generated frominvesting activities (297,293) (88,334) 328,805

Net cash generated/(used in) fromfinancing activities 238,311 (118,099) (425,367)

Net increase/decrease in cash andcash equivalents 44,494 28,403 274,815

Cash and cash equivalents atbeginning of the year 80,292 124,295 156,160

Exchange (loses)/gains on cash andcash equivalents (491) 3,462 61

Cash and cash equivalents at endof year 124,295 156,160 431,036

Net cash generated from operating activities

Our cash generated from operating activities consisted primarily of our Group’s profit forthe year, adjusted by income tax paid and non-cash items or non-operating items, such asdepreciation of property, plant and equipment and interest expenses and adjusted by changes inworking capital, such as trade and other receivables and prepayments, and trade and otherpayables.

In FY2021, we recorded net cash generated from operating activities of approximatelyRMB371.4 million, while our Group’s profit before income tax for FY2021 was approximatelyRMB175.7 million. The difference of approximately RMB195.7 million was primarily thecombined effect of (i) non-cash items, including depreciation of property, plant and equipmentof approximately RMB118.0 million; (ii) non-operating items, including interest expenses ofapproximately RMB60.7 million, interest income of approximately RMB14.4 million; (iii) anincrease in trade and other payables of approximately RMB23.6 million; and (iv) a decrease intrade and other receivables and prepayments of approximately RMB15.1 million.



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In FY2020, we recorded net cash generated from operating activities of approximatelyRMB234.8 million, while our Group’s profit become income tax for FY2020 was approximatelyRMB64.0 million. The difference of approximately RMB170.8 million was primarily thecombined effect of (i) non-cash items, including depreciation of property, plant and equipmentof approximately RMB109.5 million; (ii) non-operating items, including interest expenses ofapproximately RMB74.3 million, interest income of approximately RMB19.1 million andunrecognised exchange gains of approximately RMB15.3 million; and (iii) an increase in tradeand other payables of approximately RMB17.1 million; and (iv) a decrease in trade and otherreceivables and prepayments of approximately RMB9.9 million.

In FY2019, we recorded net cash generated from operating activities of approximatelyRMB103.5 million, while our Group’s profit become income tax for FY2019 was approximatelyRMB100.8 million. The difference of approximately RMB2.7 million was primarily thecombined effect of (i) non-cash items, including depreciation of property, plant and equipmentof approximately RMB90.7 million and fair value losses on investment properties ofapproximately RMB4.7 million; (ii) non-operating items, including interest expenses ofapproximately RMB59.4 million, interest income of approximately RMB12.3 million; which ispartially offset by (a) an increase in trade and other receivables and prepayments ofapproximately RMB22.8 million and (b) a decrease in trade and other payables of approximatelyRMB125.9 million.

Net cash generated from or used in investing activities

In FY2021, we recorded net cash inflow amounting to approximately RMB328.8 millionfrom investing activities. The major cash inflow was attributable to repayments of cash advancesby related parties of approximately RMB859.3 million. The major cash outflow was attributableto (i) cash advances to related parties of approximately RMB389.3 million and (ii) purchases ofproperty, plant and equipment of approximately RMB149.3 million.

In FY2020, we recorded net cash outflow amounting to approximately RMB88.3 millionfrom investing activities. The major cash outflow was attributable to (i) cash advances to relatedparties of approximately RMB447.0 million and (ii) purchases of property, plant and equipmentof approximately RMB88.9 million. The major cash inflow was attributable to repayments ofcash advances by related parties of approximately RMB446.9 million.

In FY2019, we recorded net cash outflow amounting to approximately RMB297.3 millionfrom investing activities. The major cash outflow was attributable to (i) cash advances to relatedparties of approximately RMB212.8 million and (ii) purchases of property, plant and equipmentof approximately RMB179.6 million. The major cash inflow was attributable to repayments ofcash advances by related parties of approximately RMB95.6 million.



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Net cash generated from or used in financing activities

In FY2021, we recorded net cash outflow amounting to approximately RMB425.4 millionfrom financing activities. The major cash outflow was attributable to (i) repayments of bankborrowings of approximately RMB435.2 million; (ii) repayment of cash advances from relatedparties of approximately RMB281.8 million; and (iii) interest paid for bank borrowings and leaseliabilities of approximately RMB60.7 million. The major cash inflow was attributable to (i)restricted cash released of approximately RMB209.3 million; (ii) proceeds from bank borrowingsof approximately RMB97.0 million and (iii) cash advances from related parties of approximatelyRMB75.1 million.

In FY2020, we recorded net cash outflow amounting to approximately RMB118.1 millionfrom financing activities. The major cash outflow was attributable to (i) repayments of bankborrowings of approximately RMB365.7 million; (ii) repayment of cash advances from relatedparties of approximately RMB88.2 million; (iii) interest paid for bank borrowings and leaseliabilities of approximately RMB72.5 million; and (iv) restricted cash pledged for borrowings ofapproximately RMB60.6 million. The major cash inflow was attributable to (i) proceeds frombank borrowings of approximately RMB405.0 million and (ii) net of cash acquired from businesscombination under common control (i.e. the Common Control Combination) of approximatelyRMB48.3 million.

In FY2019, we recorded net cash inflow amounting to approximately RMB238.3 millionfrom financing activities. The major cash inflow was attributable to (i) proceeds from bankborrowings of approximately RMB480.0 million; (ii) restricted cash released of approximatelyRMB129.6 million and (iii) cash advances from related parties of approximately RMB76.5million. The major cash outflow was attributable to (i) repayments of bank borrowings ofapproximately RMB292.0 million; (ii) repayment of cash advances from related parties ofapproximately RMB82.6 million; and (iii) interest paid for bank borrowings and lease liabilitiesof approximately RMB55.7 million.

INDEBTEDNESS

Bank Borrowings

As of 31 December 2019, 2020 and 2021, we had (i) total outstanding bank borrowingsguaranteed by companies under the control of Ms. Wendy Man’s Spouse of approximatelyRMB1,162.0 million, RMB1,189.3 million and nil, respectively, and (ii) total outstanding bankborrowings secured by restricted bank deposits of approximately RMB136.2 million, RMB208.7million and nil, respectively. All the above guarantees from our related parties had been releasedand replaced with securities and/or guarantees from our Group as of 31 December 2021. Formore information of the collaterals and guarantees relating to our bank borrowings during theTrack Record Period, please refer to note 24 of the Accountant’s Report in Appendix I to thisdocument. As of 31 January 2022, being the latest practicable date for the purpose of thisindebtedness statement, we had total outstanding bank borrowings of RMB600.0 million securedby pledging of our Group’s properties, and RMB336.9 million guaranteed by our subsidiaries.



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As of the Latest Practicable Date, we had an aggregate committed banking facilities ofRMB505.9 million, all of which was unutilised as of the Latest Practicable Date.

Our Directors confirm that there was no material covenant on any of our outstanding debtand there was no breach of any covenants during the Track Record Period and up to the LatestPracticable Date. Our Directors further confirm that we did not experience any unusual difficultyin obtaining bank and other borrowings, default in payment of bank and other borrowings orbreach of covenants during the Track Record Period and up to the Latest Practicable Date.

Lease Liabilities

We had lease liabilities (including current and non-current lease liabilities) amounted toRMB5.7 million, RMB7.4 million and RMB5.6 million as of 31 December 2019, 2020 and 2021.Our leases of properties generally have leased terms between three to eight years.

The following table sets forth a breakdown of our lease liabilities by current andnon-current portions as of the respective dates indicated:

As of 31 December2019 2020 2021

(RMB’000) (RMB’000) (RMB’000)

Current 2,909 3,373 2,620Non-current 2,760 4,043 2,936

Lease liabilities 5,669 7,416 5,556

The following table sets forth the effective interest rate of the lease liabilities for the yearsindicated:

FY2019 FY2020 FY2021(%) (%) (%)

Effective interest rate 4.79% 4.93% 4.86%

As of 31 January 2022, we had lease liabilities of RMB11.2 million.



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Statement of Indebtedness

Save as disclosed above, during the Track Record Period and up to 31 January 2022, beingthe latest practicable date for the purpose of the indebtedness statement, we did not have anymaterial mortgages, charges, debentures, loan capital, debt securities, loans, bank overdrafts orother similar indebtedness, finance lease or hire purchase commitments, liabilities underacceptances (other than normal trade bills), acceptance credits, which are either guaranteed,unguaranteed, secured or unsecured, or guarantees. Save for the above, our Directors confirmthat there has not been any material change in our indebtedness since 31 January 2022.

CONTINGENT LIABILITIES

Save as disclosed above, as of 31 January 2022, being the latest practicable date for thepurpose of the indebtedness statement, we did not have any loan capital issued and outstandingor agreed to be issued, bank overdrafts, loans or other similar indebtedness, liabilities underacceptances or acceptable credits, debentures, mortgages, charges, hire purchases commitments,guarantees or other material contingent liabilities.

Our Directors confirm that there has not been any material change in our contingentliabilities since 31 December 2021 and up to the Latest Practicable Date.

WORKING CAPITAL

During the Track Record Period, our working capital requirements were principallysatisfied by cash generated from our operations and bank borrowings. We managed our cashflow and working capital by closely monitoring our operations and expansion plans. We alsodiligently review future cash flow requirements and adjust our operation and expansion plans, ifnecessary, to ensure that we maintain sufficient working capital to support our businessoperations and expansion plans.

We recorded net current liabilities of approximately RMB70.7 million and RMB150.4million as of 31 December 2019 and 2021, respectively. For details, please refer to the paragraphheaded “Discussion of selected items from Consolidated Balance Sheets – Net current liabilitiesor assets” in this section and the section headed “Risk Factors – Risks Relating to Our Businessand Industry – We recorded net current liabilities during the Track Record Period, which mayexpose us to liquidity risk, and such positions may recur after the [REDACTED]” in thisdocument. We intended to continue to finance our working capital with cash generated from ouroperations, bank borrowings and [REDACTED] from the [REDACTED]. As of the LatestPracticable Date, we have committed unutilised banking facilities amounting to RMB505.9million.



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Working Capital Confirmation

Taking into account our cash and cash equivalents, our cash generated/to be generated fromoperating activities, our currently available financial resources, including available bankingfacilities, and the [REDACTED] from the [REDACTED], our Directors have confirmed that wehave sufficient working capital for our present requirements for at least the next 12 monthscommencing from the date of this document. Please refer to note 2.1.2 “Going concernassumption” of the Accountant’s Report in Appendix I to this document for details.

KEY FINANCIAL RATIOS

The following table summarises our key financial ratios during the Track Record Period:

As of/For the year ended 31 December2019 2020 2021

Current ratio(1) 0.9 time 1.1 times 0.8 timesQuick ratio(2) 0.9 time 1.1 times 0.7 timesGearing ratio(3) 427.4% 324.6% 183.0%Debt to equity ratio(4) 6.4 times 4.9 times 2.7 timesInterest coverage(5) 2.6 times 1.8 times 3.7 timesReturn on total assets(6) 3.4% 2.2% 6.8%Return on equity(7) 25.2% 13.2% 25.3%Gross profit margin(8) 23.2% 22.3% 31.7%Net profit margin(9) 7.0% 6.1% 10.9%

Notes:

1. Current ratio equals to total current assets divided by total current liabilities as of the end of each year.

2. Quick ratio equals to total current assets less inventories divided by total current liabilities as of the end ofeach year.

3. Gearing ratio equals to interest-bearing liabilities divided by total equity as of the end of each year.

4. Debt to equity ratio equals to total liabilities divided by total equity as of the end of each year.

5. Interest coverage equals to profit before net finance costs and income tax expenses for the respective yeardivided by finance costs for the respective year.

6. Return on total assets equals to profit for the respective year divided by total assets as of the end of eachyear multiplied by 100%.

7. Return on equity equals to profit for the respective year divided by total equity as of the end of each yearmultiplied by 100%.



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8. Gross profit margin is calculated based on the gross profit divided by the revenue for the respective yearmultiplied by 100%

9. Net profit margin is calculated based on the profit divided by the revenue for the respective yearmultiplied by 100%

DISCUSSION OF KEY FINANCIAL RATIOS OF OUR GROUP

Current ratio/Quick ratio

Our current ratio increased from approximately 0.9 as of 31 December 2019 to 1.1 as of 31December 2020 primarily due to (i) an increase in restricted cash of approximately RMB72.4million, such restricted cash were deposits for standby letter of credit; (ii) an increase in tradeand other receivables and prepayments of approximately RMB35.9 million, primarily due to theCommon Control Combination, which led to the inclusion of the Healthcare Group’s trade andother receivables of approximately RMB161.9 million as of 29 December 2020 (out of whichapproximately RMB79.6 million represented amounts due from the Hospital Group to theHealthcare Group and was eliminated after the Common Control Combination) in our Group’strade and other receivables and prepayments; and (iii) a decrease in trade and other payables ofapproximately RMB28.9 million primarily due to (a) the settlement of a substantial portion ofamounts due to related parties (leading to a decrease in amount due to related parties ofapproximately RMB14.9 million) in 2020 in contemplation of the [REDACTED]; (b) a decreasein accrued payroll of approximately RMB13.9 million, which was in line with the decrease inour revenue and our employee benefits expenses for FY2020, which were bought about by theCOVID-19 outbreak in 2020; and (c) a decrease in payables for construction project ofapproximately RMB14.6 million as a result of the progressive completion of construction andrenovation works of our Hospital’s premises.

Our current ratio decreased from approximately 1.1 as of 31 December 2020 to 0.8 as of 31December 2021 primarily due to (i) the continued settlement of a substantial portion of amountsdue from related parties (leading to a decrease in amounts due from related parties ofapproximately RMB481.8 million) and amounts due to related parties (leading to a decrease inamounts due to related parties of approximately RMB203.6 million) in 2021; and (ii) an increasein the current portion of bank borrowings of approximately RMB73.8 million due to certainportion of the non-current portion of bank borrowings becoming repayable within one year.

Gearing ratio

Our gearing ratio decreased from approximately 427.4% as of 31 December 2019 to324.6% as of 31 December 2020 primarily due to (i) the settlement of a substantial portion ofamounts due to related parties (leading to a decrease in amount due to related parties ofapproximately RMB14.9 million) in 2020 in contemplation of the [REDACTED] and (ii) anincrease in equity of approximately RMB95.3 million primarily due to (a) an increase inrestricted cash of approximately RMB72.4 million and (b) an increase in cash and cashequivalents of approximately RMB31.9 million, which was partially offset by an increase in totalbank borrowings of approximately RMB40.3 million.



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Our gearing ratio further decreased from approximately 324.6% as of 31 December 2020 to183.0% as of 31 December 2021 primarily due to (i) a substantial decrease in total bankborrowings of approximately RMB338.2 million and (ii) an increase in equity of approximatelyRMB121.5 million, primarily due to an increase in cash and cash equivalents of approximatelyRMB274.9 million, which was partially offset by the reduction in restricted cash ofapproximately RMB208.7 million.

Debt to equity ratio

Our debt to equity ratio decreased from approximately 6.4 as of 31 December 2019 to 4.9as of 31 December 2020 primarily due to (i) the settlement of a substantial portion of amountsdue to related parties (leading to a decrease in amount due to related parties of approximatelyRMB14.9 million) in 2020 in contemplation of the [REDACTED] and (ii) an increase in equityof approximately RMB95.3 million primarily due to (a) an increase in restricted cash ofapproximately RMB72.4 million and (b) an increase in cash and cash equivalents ofapproximately RMB31.9 million, which was partially offset by an increase in total bankborrowings of approximately RMB40.3 million.

Our debt to equity ratio decreased from approximately 4.9 as of 31 December 2020 to 2.7as of 31 December 2021 primarily due to primarily due to (i) a substantial decrease in total bankborrowings of approximately RMB338.2 million; (ii) a decrease in other payables ofapproximately RMB231.2 million, which was mainly due to the settlement of a substantialportion of amounts due to related parties (leading to a decrease in amounts due to related partiesof approximately RMB203.6 million) in 2021 in contemplation of the [REDACTED]; and (iii)an increase in equity of approximately RMB121.5 million, primarily due to an increase in cashand cash equivalents of approximately RMB274.9 million, which was partially offset by thereduction in restricted cash of approximately RMB208.7 million.

Interest coverage

The interest coverage decreased from approximately 2.6 as of 31 December 2019 to 1.8 asof 31 December 2020 primarily due to (i) a decrease in operation profit (i.e. net profit beforefinance costs and income tax expenses) of approximately RMB21.8 million primarily due to thedecrease of patient visits and in-patient bed-days in 2020 as a result of the outbreak ofCOVID-19; and (ii) an increase in net finance costs of approximately RMB15.0 million, whichwas in line with the increase in bank borrowings.

The interest coverage increased from approximately 1.8 as of 31 December 2020 to 3.7 asof 31 December 2021 primarily due to (i) a substantial increase in operation profit ofapproximately RMB94.2 million primarily due to the gradual recovery of our business from theimpact of the COVID-19 outbreak; and (ii) a decrease in net finance costs of approximatelyRMB17.4 million, which was in line with the decrease in bank borrowings.



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Return on total assets

Our return on total assets decreased from approximately 3.4% as of 31 December 2019 to2.2% as of 31 December 2020 primarily due to (i) a decrease in profit for the year ofapproximately RMB23.5 million (which only took into account profit for the year of theHospital Group, but not the Healthcare Group) primarily due to the decrease of patient visits andin-patient bed-days in 2020 as a result of the outbreak of COVID-19; and (ii) an increase in totalassets of approximately RMB117.5 million, which took into account the total assets of both theHospital Group and the Healthcare Group (as the Healthcare Group has been combined with ourGroup since 29 December 2020).

Our return on total assets increased from approximately 2.2% as of 31 December 2020 to6.8% as of 31 December 2021 primarily due to (i) a substantial increase in profit for the year ofapproximately RMB78.5 million primarily due to the gradual recovery of our business from theimpact of the COVID-19 outbreak; and (ii) a decrease in total assets of approximatelyRMB439.2 million, primarily due to the settlement of a substantial portion of amounts due fromrelated parties (leading to a decrease in amounts due from related parties of approximatelyRMB481.8 million) in 2021 in contemplation of the [REDACTED].

Return on equity

Our return on equity decreased from approximately 25.2% as of 31 December 2019 to13.2% as of 31 December 2020 primarily due to (i) a decrease in profit for the year ofapproximately RMB23.5 million (which only took into account profit for the year of theHospital Group, but not the Healthcare Group) primarily due to the decrease of patient visits andin-patient bed-days in 2020 as a result of the outbreak of COVID-19; and (ii) an increase inequity of approximately RMB95.3 million primarily due to (a) an increase in restricted cash ofapproximately RMB72.4 million and (b) an increase in cash and cash equivalents ofapproximately RMB31.9 million, which was partially offset by an increase in total bankborrowings of approximately RMB40.3 million. Our Group’s equity as of 31 December 2020also took into account the total equity of both the Hospital Group and the Healthcare Group (asthe Healthcare Group has been combined with our Group since 29 December 2020).

Our return on equity increased from approximately 13.2% as of 31 December 2020 to25.3% as of 31 December 2021 primarily due to (i) a substantial increase in profit for the yearof approximately RMB78.5 million primarily due to the gradual recovery of our business fromthe impact of the COVID-19 outbreak; and (ii) an increase in equity of approximatelyRMB121.5 million, primarily due to (a) the continued settlement of a substantial portion ofamounts due from related parties (leading to a decrease in amounts due from related parties ofapproximately RMB481.8 million) and amounts due to related parties (leading to a decrease inamounts due to related parties of approximately RMB203.6 million) in 2021 and (b) asubstantial decrease in total bank borrowings of approximately RMB338.2 million.



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Gross profit margin/Net profit margin

For details on the fluctuation in our gross profit margin during the Track Record Period,please refer to the paragraph headed “Description of key components of Consolidated Statementsof Comprehensive Income – Description of key components of the Consolidated Statements ofComprehensive Income of our Group” in this section.

OFF-BALANCE SHEET ARRANGEMENTS

As of the Latest Practicable Date, our Group had not entered into any off-balance sheettransactions.

TRANSACTIONS WITH RELATED PARTIES

With respect to related parties transactions set out in the Accountant’s Report as set out innote 30 of Appendix I to this document, our Directors have confirmed that related partytransactions during the Track Record Period were conducted on arm’s length and normalcommercial terms and therefore are of the view that our related party transactions during theTrack Record Period would not distort our track record results or make our historical results notreflective of our future performance.

QUALITATIVE AND QUANTITATIVE DISCLOSURE ABOUT MARKET RISK

We are exposed to various types of financial risks in the ordinary course of our business,including market risk (including foreign exchange risk and cash flow and fair value interest raterisk), credit risk and liquidity risk. We did not use derivative financial instruments to hedge ourrisk exposures on changes in foreign currency exchange rates and interest rates during the TrackRecord Period.

Foreign Exchange Risk

Foreign exchange risk arises when future commercial transactions or recognised assets andliabilities are denominated in a currency that is not the group entities’ functional currency.

Our Group principally operates in mainland China with most of the transactions beingsettled in RMB, which is the functional currency of the group entities operated in mainlandChina.



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Our Group also has certain subsidiaries in foreign operations including Hong Kong andBVI, whose functional currencies are Hong Kong dollars. Foreign exchange risk arises from therecognised assets and liabilities and net investments in foreign operations. Currency exposurearising from the net assets of our Group’s foreign operations is managed primarily throughfinancing activities denominated in the relevant foreign currencies. These group entities areexposed to foreign exchange risk of foreign currencies other than their functional currencies,primarily with respect to RMB. Our Group seeks to limit its exposure to foreign currency risk byclosely monitoring and minimising its net foreign currency position.

As at 31 December 2019, 2020 and 2021, the carrying amounts of the Group’s foreigncurrency denominated monetary assets and liabilities at the respective balance sheet dates are asfollows:

FY2019 FY2020 FY2021

Cash and cash equivalents 531 23,972 20,596Restricted cash 120,950 198,655 –

Total 121,481 222,627 20,596

For the three years ended 31 December 2021, if there is a 5% increase/decrease in RMBagainst the relevant currencies, the post-tax profit would have increase/decrease byapproximately RMB4.6 million, RMB8.3 million and RMB0.8 million, respectively.

Cash Flow and Fair Value Interest Rate Risk

Our interest rate risk arises from our borrowings. Borrowings obtained at variable ratesexpose us to cash flow interest rate risk. Borrowings issued at fixed rates expose us to fair valueinterest rate risk. We have not entered into interest rate swap arrangements to hedge against ourexposure to changes in fair values of our borrowings. We will, however, continue to monitorinterest rate risk exposure and will consider hedging significant interest rate risk exposureshould the need arise.

Other than interest-bearing short-term deposits, we have no other significantinterest-bearing assets. Our Directors do not anticipate there is any significant impact tointerest-bearing assets resulting from the changes in interest rates, because the interest rates ofshort-term deposits are not expected to change significantly.



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As of 31 December 2019, 2020 and 2021, our interest-bearing borrowings at floating ratesamounted to approximately RMB982.0 million, RMB1,048.3 million and RMB844.1 million,respectively. For the three years ended 31 December 2021, if the floating interest rate onborrowings had been increased/decreased by 50 basis points with all other variables heldconstant, the post-tax profit would have decreased/increased by approximately RMB3.7 million,RMB3.9 million and RMB3.2 million, respectively, mainly as a result of higher/lower interestexpenses on floating rate borrowings.

Credit Risk

Our Group is exposed to credit risk in relation to our trade and other receivables and cashdeposits at banks. The carrying amount of each class of the above financial assets represents ourmaximum exposure to credit risk in relation to the corresponding class of financial assets.

To manage credit risk in relation to cash deposits at banks, cash deposits are mainly placedwith state-owned financial institutions in the PRC and reputable international financialinstitutions outside the PRC. There has been no recent history of default in relation to thesefinancial institutions.

Our Group, being a provider of hospital and other healthcare services to patients, has ahighly diversified customer base, without any single customer contributing material revenue.However, our Group has concentrated debtors’ portfolio, as the majority of the patients willclaim their medical bills from social insurance programmes. The reimbursement from theseorganisations may take one to twelve months. Our Group has policy in place to ensure theetreatments and medicines prescribed and provided to such insured patients are in line withrespective organisations’ policy, provided fulfilling all ethics and moral responsibilities as ahealthcare provider. Our Group also has controls to closely monitor the patients’ billings andclaim status to minimise the credit risk.

For other receivables, our management makes periodic collective assessment as well asindividual assessment on the recoverability of such receivables based on historical settlementrecords and past experience. Our Directors believe that there is no material credit risk inherentin our Group’s outstanding balance of other receivables.

Liquidity Risk

As of 31 December 2019, we recorded net current liabilities of approximately RMB70.7million. We aim to maintain sufficient cash to meet operating capital requirements. Our primaryuses of capital are to satisfy our working capital and capital expenditure. Our main source ofliquidity has been from cash generated from our operations and bank borrowings. As of 31December 2019, 2020 and 2021, our borrowings with maturity of less than one year wereRMB872.4 million, RMB852.6 million and RMB647.9 million, respectively. Our policy is toregularly monitor current and expected liquidity requirements to ensure we maintain sufficientcash and adequate amount of committed credit facilities to meet our liquidity requirements.



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The table below sets out our financial liabilities grouped into relevant maturity groupingsbased on their contractual maturity dates. The amounts disclosed in the table are the contractualundiscounted cash flows. Balances due within 12 months equal their carrying balances, as theimpact of discounting is not significant.

(all in RMB’000) Less than 1 yearBetween 1 and 2

yearsBetween 2 and 5

years Over 5 years Total

As of 31 December 2019Borrowings 299,123 160,635 545,067 557,767 1,562,592Lease liabilities 3,170 1,332 2,035 – 6,537Trade and other payables

(excluding accruedpayroll and other taxpayables) 570,078 – – – 570,078

872,371 161,967 547,102 557,767 2,139,207

As of 31 December 2020Borrowings 294,167 451,059 731,526 103,434 1,580,186Lease liabilities 3,920 2,743 1,826 – 8,489Trade and other payables


852,609 453,802 733,352 103,434 2,143,197

As of 31 December 2021Borrowings 350,212 157,097 676,800 – 1,184,109Lease liabilities 2,970 1,584 1,256 399 6,209Trade and other payables


647,879 158,681 678,056 399 1,485,015



– 375 –

DISTRIBUTABLE RESERVES

Our Company was incorporated on 23 July 2021, therefore there was no distributablereserves as of 31 December 2021.

DIVIDENDS

During the Track Record Period, we declared dividends of approximately RMB4.2 millionfor FY2021 only, and such dividends have been paid out as of the Latest Practicable Date.

After completion of the [REDACTED], our Shareholders will be entitled to receivedividends that we declare. The payment of any dividends will be at the discretion of ourDirectors and will depend upon our future operations and earnings, capital requirements andsurplus, general financial condition, contractual restrictions and other factors that our Directorsdeem relevant.

Further dividend payments will also depend upon the availability of dividends receivedfrom our operating subsidiaries in the PRC. PRC laws require that dividends be paid only out ofthe net profit calculated according to PRC accounting principles, which differ in many aspectsfrom generally accepted accounting principles in other jurisdictions, including HKFRSs. PRClaws also require our subsidiaries in the PRC to set aside part of their net profit as statutoryreserves, which are not available for distribution as cash dividends. Distributions from ouroperating subsidiaries may also be restricted if they incur debt or losses or in accordance withany restrictive covenants in bank credit facilities or other agreements that we or our subsidiariesmay enter into in the future.

NO ADDITIONAL DISCLOSURE REQUIRED UNDER RULES 13.13 TO 13.19 THELISTING RULES

Our Directors have confirmed that, as of the Latest Practicable Date, there were nocircumstances that would give rise to a disclosure requirement under Rules 13.13 to 13.19 of theListing Rules.



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FINANCIAL INFORMATION OF THE HEALTHCARE GROUP

The following table sets forth the consolidated statements of comprehensive income of theHealthcare Group for the year ended 31 December 2019 (FY2019) and the period ended 29December 2020 (PE2020) as extracted from “III. Additional Financial Information of theHealthcare and Pharmaceutical Business for the Pre-acquisition Period” of the Accountant’sReport in Appendix I to this document:

FY2019 PE2020(RMB’000) (RMB’000)

Revenue 332,724 223,851Cost of sales (253,258) (163,197)

Gross profit 79,466 60,654Selling expenses (26,682) (20,588)Administrative expenses (8,242) (8,627)Other income 5,477 6,720Other gains/(losses) – net 122 (7)

Operating profit 50,141 38,152Finance income/(costs) – net 1,240 (630)

Profit before income tax 51,381 37,522Income tax expenses (14,762) (11,129)

Profit for the year/period 36,619 26,393Other comprehensive income

Items that may be reclassified to profit or loss

– Exchange differences on translation of foreignoperations 795 (794)

Total comprehensive income for the year/period 37,414 25,599



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Description of key components of Consolidated Statements of Comprehensive Income of theHealthcare Group

Revenue

For FY2019 and PE2020 (i.e. the period ended 29 December 2020), the revenue of theHealthcare Group (the businesses of which are classified under the healthcare andpharmaceutical business segment of our Group) was generated primarily from (i) rendering ofhealthcare services (including postpartum healthcare services, elderly care services and dentalcare services); and (ii) sales of pharmaceuticals (including retail sales at our pharmacies,wholesale of pharmaceuticals to third parties and sales to the Hospital Group). For the reasonthat, as part of the Reorganisation, the Common Control Combination took place on 29December 2020, the historical results of operations of the Healthcare Group for FY2021(together with those of the Hospital Group for FY2021) are included in the historical results ofoperations of our Group for FY2021 as set out under the paragraph headed “Description of keycomponents of Consolidated Statements of Comprehensive Income” in this section.

The table below sets forth the breakdown of the Healthcare Group’s revenue by revenuestream for the periods indicated:

FY2019 PE2020(RMB’000) % (RMB’000) %

Healthcare services– Postpartum healthcare services 13,324 4.0 14,933 6.7– Elderly care services 6,712 2.0 7,943 3.5– Dental care services 2,396 0.7 1,988 0.9

Subtotal 22,432 6.7 24,864 11.1

Sales of pharmaceuticals 310,292 93.3 198,987 88.9

The Healthcare Group’s totalrevenue 332,724 100.0 223,851 100.0



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The following table sets forth the gross profit and gross profit margin of each revenuestream of the Healthcare Group for the periods indicated:

FY2019 PE2020



margin(RMB’000) % (RMB’000) %

Healthcare services 7,287 32.5% 8,949 36.0%– Postpartum healthcare services 4,428 33.2% 5,411 36.2%– Elderly care services 2,590 38.6% 3,800 47.9%– Dental care services 269 11.2% (262) (13.2)%Sales of pharmaceuticals 72,179 23.3% 51,705 26.0%

The revenue contributed by healthcare services (including postpartum healthcare services,elderly care services and dental care services) to the Healthcare Group amounted toapproximately RMB22.4 million and RMB24.9 million for FY2019 and PE2020, respectively,representing approximately 6.7% and 11.1% of the Healthcare Group’s total revenue for therespective years:

➢ The revenue contributed by healthcare services increased by approximately RMB2.4million or 10.8% to RMB24.9 million in PE2020 from RMB22.4 million in FY2019,primarily due to (i) an increase in the revenue contributed by postpartum healthcareservices of approximately RMB1.6 million and (ii) an increase in the revenuecontributed by elderly care services of approximately RMB1.2 million, which waspartially offset by a decrease in the revenue contributed by dental care services ofapproximately RMB0.4 million.

The gross profit margin of healthcare services increased from 32.5% in FY2019 to36.0% in PE2020, primarily due to effective cost control measures adopted by theHealthcare Group.

The revenue contributed by postpartum healthcare services to the Healthcare Groupamounted to approximately RMB13.3 million and RMB14.9 million for FY2019 and PE2020,respectively, representing approximately 4.0% and 6.7% of the Healthcare Group’s total revenuefor the respective years:

➢ The revenue contributed by postpartum healthcare services increased by approximatelyRMB1.6 million or 12.1% to approximately RMB14.9 million in PE2020 fromRMB13.3 million in FY2019, primarily due to the enhancement of our postpartumhealthcare services’ quality, which brought about the increase in postpartum healthcareservice days (i.e. the actual number of customers receiving our postpartum healthcareservices on each day aggregated over the course of the relevant period) of about 7.2%from approximately 9,220 days in 2019 to 9,882 days in 2020.



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The gross profit margin of postpartum healthcare services increased from 33.2% inFY2019 to 36.2% in PE2020, primarily due to (i) effective cost control measuresadopted by the Healthcare Group (such as assigning more customers to be served byeach postpartum doula) and (ii) the increase in the average spending per pair ofmothers and newborns.

The revenue contributed by elderly care services to the Healthcare Group amounted toapproximately RMB6.7 million and RMB7.9 million for FY2019 and PE2020, respectively,representing approximately 2.0% and 3.5% of the Healthcare Group’s total revenue for therespective years:

➢ The revenue contributed by elderly care services increased by approximately RMB1.2million or 18.3% to approximately RMB7.9 million in PE2020 from RMB6.7 millionin FY2019, primarily due to the steady growth of the elderly care business of theHealthcare Group, which brought about the increase in elderly care service days (i.e.the actual number of customers receiving our elderly care services on each dayaggregated over the course of the relevant period) of about 29.2% from approximately15,365 days in 2019 to 19,858 days in 2020.

The gross profit margin of elderly care services increased from 38.6% in FY2019 to47.9% in PE2020, primarily due to effective cost control measures adopted by theHealthcare Group (such as assigning more customers to be served by each care taker).

The revenue contributed by dental care services to the Healthcare Group amounted toapproximately RMB2.4 million and RMB2.0 million for FY2019 and PE2020, respectively,representing approximately 0.7% and 0.9% of the Healthcare Group’s total revenue for therespective years:

➢ The revenue contributed by dental care services decreased by approximately RMB0.4million or 17.0% to approximately RMB2.0 million in PE2020 from RMB2.4 millionin FY2019, primarily due to a temporary suspension of our Clifford Dental Clinic’soperation during the period from 7 February 2020 to 17 April 2020 as part of thecontrol and prevention measures to combat COVID-19, as required by the relevantgovernment policies.

The gross profit margin of dental care services decreased from 11.2% in FY2019 to(13.2)% in PE2020, as (i) a significant portion of the relevant costs of sales incurredby the Healthcare Group remained stable for PE2020 for the reason that certain costs,such as employee benefits expenses, are to a large extent fixed and (ii) the extra costsincurred by the Healthcare Group for procuring face masks, medical gloves and otherpersonal protective equipment for the prevention of COVID-19.



– 380 –

The revenue contributed by sales of pharmaceuticals (including retail sales at ourpharmacies, wholesale of pharmaceuticals to third parties and sales to the Hospital Group)amounted to approximately RMB310.3 million and RMB199.0 million for the two years ended31 December 2020, respectively, representing approximately 93.3% and 88.9% of the HealthcareGroup’s total revenue for the respective years:

➢ The revenue contributed by sales of pharmaceuticals decreased by approximatelyRMB111.3 million or 35.9% to approximately RMB199.0 million in PE2020 fromRMB310.3 million in FY2019, primarily due to the decrease in sales to the HospitalGroup, as a result of the decrease in patients of our Hospital brought about by theoutbreak of COVID-19, in PE2020.

The gross profit margin of sales of pharmaceuticals increased from 23.3% in FY2019to 26.0% in PE2020, primarily due to the Healthcare Group’s strict cost control policycontributing to the decrease of the procurement costs of certain medical consumables.

Cost of sales

The cost of sales of the Healthcare Group primarily consisted of cost of pharmaceutical andconsumables, employee benefits expenses (of the staff of our postnatal care centre, elderly careservice centre and dental clinic) and other costs. Other costs primarily include canteen expensesand depreciation of property, plant and equipment. For FY2019 and PE2020, the cost of salesamounted to approximately RMB253.3 million and RMB163.2 million, respectively, accountingfor 76.1% and 72.9% of the Healthcare Group’s total revenue for the respective years.



– 381 –

The following table sets forth the components of the cost of sales of the Healthcare Groupfor the periods indicated:

FY2019 PE2020(RMB’000) % (RMB’000) %

Cost of pharmaceutical andconsumables 235,214 92.9 144,519 88.6

Employee benefits expenses 6,640 2.6 6,883 4.2Canteen expenses 2,898 1.2 3,474 2.1Depreciation of property, plant

and equipment 2,332 0.9 3,173 2.0Taxes and other levies 1,313 0.5 992 0.6Utilities 482 0.2 516 0.3Outsourcing labour costs 367 0.1 684 0.4Others 4,012 1.6 2,956 1.8

Total 253,258 100.0 163,197 100.0

The Healthcare Group’s cost of sales decreased by approximately RMB90.1 million or35.6% to approximately RMB163.2 million for PE2020 from RMB253.3 million for FY2019.The decrease was primarily due to a decrease in cost of pharmaceuticals and consumables ofapproximately RMB90.7 million to approximately RMB144.5 million in PE2020 fromRMB235.2 million in FY2019 which is in line with the decrease in the sales of pharmaceuticalsto the Hospital Group, brought by the decrease in demand as a result of the decrease in patientsof our Hospital caused by the COVID-19 outbreak.

Gross profit

The following table sets forth the gross profit and gross profit margin of the HospitalGroup for the periods indicated:

FY2019 PE2020




The Healthcare Group 79,466 23.9 60,654 27.1



– 382 –

The Healthcare Group’s gross profit decreased by approximately RMB18.8 million or23.7% to approximately RMB60.7 million for PE2020 from RMB79.5 million for FY2019 andthe Healthcare Group’s gross profit margin increased from 23.9% for FY2019 to 27.1% forPE2020. The increase was in line with the increase in the gross profit margins in most of theHealthcare Group’s revenue streams, for the reason of such increase, please refer to theparagraph headed “Financial Information of the Healthcare Group – Description of keycomponents of Consolidated Statements of Comprehensive Income of the Healthcare Group –Revenue” in this section.

Selling and marketing expenses

The selling and marketing expenses of the Healthcare Group primarily consisted ofemployee benefits expenses (of the staff of our pharmaceutical sales business), marketing andpromotion expenses and other costs. Other costs primarily include travelling, entertainment,vehicle and office expenses and utilities. For FY2019 and PE2020, the selling and marketingexpenses amounted to approximately RMB26.7 million and RMB20.6 million, respectively,accounting for 8.0% and 9.2% of the Healthcare Group’s total revenue for the respective years.

The following table sets forth the components of the selling and marketing expenses of theHealthcare Group for the periods indicated:

FY2019 PE2020(RMB’000) % (RMB’000) %

Employee benefits expenses 23,581 88.4 18,734 91.0Marketing and promotion

expenses 1,643 6.2 694 3.4Travelling, entertainment,

vehicle and office expenses 409 1.5 257 1.2Utilities 122 0.5 135 0.7Others 927 3.4 768 3.7

Total 26,682 100.0 20,588 100.0

The Healthcare Group’s selling and marketing expenses decreased by approximatelyRMB6.1 million or 22.8% to approximately RMB20.6 million for PE2020 from RMB26.7million for FY2019. The decrease was primarily due to (i) a decrease in employee benefitsexpenses of approximately RMB4.8 million to approximately RMB18.7 million in PE2020 fromRMB23.6 million in FY2019 which was due to the reduction of bonus as a result of thereduction of our pharmaceutical sales in PE2020 and (ii) a decrease in in marketing andpromotion expenses of approximately RMB0.9 million to approximately RMB0.7 million inPE2020 from RMB1.6 million in FY2019 due to the reduction of marketing and promotionalactivities of the Healthcare Group after the outbreak of COVID-19.



– 383 –


The administrative expenses of the Healthcare Group primarily consisted of consultancyand professional service fees, employee benefits expenses and other costs. For FY2019 andPE2020, the administrative expenses amounted to approximately RMB8.2 million and RMB8.6million, respectively, accounting for 2.5% and 3.9% of the Healthcare Group’s total revenue forthe respective years.

The following table sets forth the components of the administrative expenses of theHealthcare Group in absolute amounts and as percentages of the total administrative expensesfor the periods indicated:

FY2019 PE2020(RMB’000) % (RMB’000) %

Consultancy and professionalservice fees 4,448 54.0 5,072 58.8

Employee benefits expenses 2,162 26.3 1,819 21.1Bank charges 190 2.3 193 2.2Amortisation of intangible

assets 264 3.2 158 1.8Depreciation of property, plant

and equipment 79 0.9 63 0.7Travelling, entertainment,

vehicle and office expenses 58 0.7 58 0.7Others 1,041 12.6 1,264 14.7

Total 8,242 100.0 8,627 100.0

The Healthcare Group’s administrative expenses slightly increased by approximatelyRMB0.4 million or 4.7% to approximately RMB8.6 million for PE2020 from RMB8.2 millionfor FY2019, which was relatively stable.

Other income

The other income of the Healthcare Group primarily consisted of interest income fromloans to related parties. For FY2019 and PE2020, the other income amounted to approximatelyRMB5.5 million and RMB6.7 million, respectively.



– 384 –

The following table sets forth a breakdown of the other income of the Healthcare Group forthe periods indicated:

FY2019 PE2020(RMB’000) % (RMB’000) %

Interest income from loans torelated parties 5,361 97.9 6,349 94.5

Rental income 106 1.9 106 1.6Government grants 10 0.2 199 3.0Management related services – – 66 0.9

Total 5,477 100.0 6,720 100.0

The Healthcare Group’s other income increased by approximately RMB1.2 million or22.7% to approximately RMB6.7 million for PE2020 from RMB5.5 million for FY2019. Theincrease was primarily due to an increase in interest income from loans to related parties ofapproximately RMB1.0 million in FY2019 to approximately RMB6.3 million in PE2020 fromRMB5.4 million due to the increase in the principal amount of the indebtedness extended torelated parties during PE2020.

Other gains or losses – net

The other gains or losses of the Healthcare Group primarily consisted of exchangegains/(losses) and acceptance of donations from third parties. For FY2019, we recognised othergains of approximately RMB0.1 million, while, in PE2020, we recognised other losses ofapproximately RMB7,000.

The following table sets forth a breakdown of the other gains or losses of the HealthcareGroup for the periods indicated:

FY2019 PE2020(RMB’000) (RMB’000)

Exchange gains/(losses) – net 14 76Acceptance of donations from third parties 100 –Others 8 (83)

Total 122 (7)



– 385 –

Finance income and costs

The finance income of the Healthcare Group primarily represented interest income of bankdeposits. The finance costs of the Healthcare Group primarily consisted of interest expenses forbank borrowings and loans from related parties. The following table sets forth a breakdown ofour finance income and costs for the periods indicated:

FY2019 PE2020(RMB’000) (RMB’000)

Finance income:Interest income of bank deposits 617 1,061Others 923 326

Total finance income 1,540 1,387

Finance costs:Interest expenses for lease liabilities (188) (242)Interest expenses for bank borrowings – (1,762)Interest expenses for loans from related parties (112) (13)

Total finance cost (300) (2,017)

Finance income/(costs) – net 1,240 (630)

The Healthcare Group’s net finance income decreased by approximately RMB1.9 million tonet finance costs of approximately RMB0.6 million for PE2020 from net finance income ofapproximately RMB1.2 million for FY2019. The decrease was primarily due to an increase ofinterest expenses for bank borrowings from nil in FY2019 to approximately RMB1.8 million inPE2020.



– 386 –

Income tax expenses

The income tax expenses of the Healthcare Group consisted of current income tax anddeferred income tax. The Healthcare Group is subject to income tax on an individual legal entitybasis on profits arising in or derived from the tax jurisdiction in which companies comprisingthe Healthcare Group domiciles or operates. For FY2019 and PE2020, the income tax expensesof the Healthcare Group amounted to approximately RMB14.8 million and RMB11.1 million,respectively, and the decrease was primarily due to a decrease in our profit before taxation. Andthe effective tax rate was approximately 28.7% and 29.7% for FY2019 and PE2020. Theeffective tax rates in each year or period were affected by the profit contribution from oursubsidiaries which were subject to different tax rates. The provision for current income tax isbased on the statutory rate of PRC enterprise income tax of 25%.

The Healthcare Group’s effective tax rate for FY2019 and FY2020 were higher than 25%mainly due to the withholding tax chargeable on dividends distributed by PRC subsidiaries ofthe Healthcare Group to its overseas shareholder.


The following table sets forth the profit for the year and net profit margin of the Healthcarefor the periods indicated:

FY2019 PE2020Profit for

the yearNet profit

marginProfit for

the yearNet profit


The Healthcare Group 36,619 11.0 26,393 11.8



– 387 –

Description of selected items from the Consolidated Balance Sheets of the HealthcareGroup

The table below sets forth selected information from the consolidated balance sheets of theHealthcare Group as of the respective dates indicated, which have been extracted from “III.Additional Financial Information of the Healthcare and Pharmaceutical Business for thePre-acquisition Period” of the Accountant’s Report in Appendix I to this document:

As of31 December

201929 December

2020(RMB’000) (RMB’000)

Total current assets 595,301 216,418Total non-current assets 13,290 11,104

Total assets 608,591 227,522

Total current liabilities 574,990 181,430Total non-current liabilities 4,024 2,452

Total liabilities 579,014 183,882

Net assets/ (liabilities) 29,577 43,640

Total equity 29,577 43,640

Total equity and liabilities 608,591 227,522



– 388 –

Net current assets

The following table sets forth the breakdown of the current assets and current liabilities ofthe Healthcare Group as of the respective dates indicated:

As of31 December

201929 December

2020(RMB’000) (RMB’000)

Current assetsInventories 6,786 6,135Trade and other receivables and prepayments 486,368 161,939Cash and cash equivalents 102,147 48,344

Total current assets 595,301 216,418

Current liabilitiesTrade and other payables 564,940 170,465Contract liabilities 5,357 4,169Current income tax liabilities 3,396 3,410Lease liabilities 1,297 2,386Bank borrowings – 1,000

Total current liabilities 574,990 181,430

Net current assets 20,311 34,988

As of 31 December 2019 and 29 December 2020, the Healthcare Group recorded netcurrent assets of approximately RMB20.3 million and RMB35.0 million, respectively, and theincrease of approximately RMB14.7 million was primarily attributable to the settlement of asubstantial portion of amount due to related parties (leading to a decrease in amount due torelated parties of approximately RMB383.3 million) and amounts due from related parties(leading to a decrease in amounts due from related parties of approximately RMB329.0 million)in 2020 in contemplation of the [REDACTED], which brought about a decrease in trade andother payables of approximately RMB394.5 million and was partially offset by a decrease intrade and other receivables of approximately RMB324.4 million; which was partially offset by adecrease in cash and cash equivalents of approximately RMB53.8 million.



– 389 –


As of 31 December 2019 and 29 December 2020, the net book amount of the HealthcareGroup’s property, plant and equipment was approximately RMB12.7 million and RMB10.5million, respectively, and primarily consisted of right-of-use for properties, decoration, andmedical equipment.

The table below sets forth the balance of our property, plant and equipment of theHealthcare Group as of the respective dates indicated:

Buildingsand

facilitiesMedical

equipment

Officeequipment


Right-of-useassets for

properties Total(RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000)

As of 1 January 2019:Cost 1,866 7,104 473 2,652 2,786 14,881Accumulated depreciation (64) (5,593) (300) (184) – (6,141)

Net book amount 1,802 1,511 173 2,468 2,786 8,740

FY2019:Additions 449 1,672 – 1,001 3,872 6,994Disposals – (5) – – – (5)Depreciation charge (339) (589) (46) (547) (1,536) (3,057)

Net book amount as of31 December 2019 1,912 2,589 127 2,922 5,122 12,672

PE2020:Additions 177 70 – 628 1,071 1,946Disposals (4) (78) – – – (82)Depreciation charge (445) (578) (31) (837) (2,100) (3,991)

Net book amount as of29 December 2020 1,640 2,003 96 2,713 4,093 10,545



– 390 –

The Healthcare Group’s right-of-use for properties represent mainly the leasing of premisesmainly for the use of operating our ancillary healthcare facilities (by the Healthcare Group),including our postnatal care centre, elderly care service centre, dental clinic and certain retailpharmacies and staff dormitory. As of 31 December 2019 and 29 December 2020, the net bookamount of the Healthcare Group’s right-of-use for properties amounted to approximatelyRMB5.1 million and RMB4.1 million, respectively, the decrease of approximately RMB1.0million or 20.1% was primarily due to depreciation charge of approximately RMB2.1 millionrecorded for PE2020 and was partially offset by an addition of approximately RMB1.1 millionas a result of the leasing of an additional premise by the Healthcare Group for the operation of anew retail pharmacy which was opened in 2020.

The decoration item of the Healthcare Group represent mainly decoration works performedfor the premises leased by the Healthcare Group. As of 31 December 2019 and 29 December2020, net book amount of the Healthcare Group’s decoration amounted to approximatelyRMB2.9 million and RMB2.7 million, respectively, which remained stable.

Inventories

The Healthcare Group’s inventories primarily consisted of pharmaceuticals and medicalconsumables. The Healthcare Group records its inventories at the lower of cost and netrealisable value.

The following table sets forth the Healthcare Group’s inventory balances as of therespective dates indicated:

As of31 December

201929 December

2020(RMB’000) (RMB’000)

Pharmaceuticals 5,161 3,909Medical consumables 1,560 2,155Low value consumables 65 71

Total 6,786 6,135

As of 31 December 2019 and 29 December 2020, the Healthcare Group’s inventoriesamounted to approximately RMB6.8 million and RMB6.1 million, respectively, the decrease ofapproximately RMB0.7 million was in line with the decrease in sales to the Hospital Group inPE2020.



– 391 –

The following table sets forth the inventory turnover days of the Healthcare Group for theyears indicated:

FY2019 PE2020

Inventory turnover days(note) 10.2 14.4

Note: The inventory turnover days are equal to average inventory (inventory at the beginning of the year plusinventory at the end of the year divided by two) divided by cost of sales for the year and multiplied by365 days for the relevant year.

For FY2019 and PE2020, the inventory turnover days were 10.2 days and 14.4 days,respectively, the increase was primarily due to a substantial decrease in cost of sales in PE2020as a result of decline in sales of pharmaceuticals to the Hospital Group brought by theCOVID-19 outbreak in 2020.

Trade and other receivables and prepayments

Trade receivables

The following table sets forth the Healthcare Group’s trade receivables as of the respectivedates indicated:

As of31 December

201929 December

2020(RMB’000) (RMB’000)

Trade receivables:– third parties 1,875 1,146– related parties 37,451 42,772

Total 39,326 43,918

As stated in the paragraph headed “Discussion of selected items from Consolidated BalanceSheets – Trade and other payables – Trade payables” in this section, due to our Group’scentralised procurement of pharmaceuticals, medical consumables and medical equipment for ourvarious businesses, Pharmaceuticals PRC Co and Medical Equipment PRC Co (both of which aremembers of the Healthcare Group) first procure such items from third party suppliers, andsubsequently sell them to members of the Hospital Group and other members of the HealthcareGroup. As a result of the balances of the subsequent sales (which were recognised as relatedparty transactions for the Healthcare Group) to the Hospital Group, the Healthcare Group hasrecognised trade receivables from related parties. The Healthcare Group generally provides acredit period of 30 to 60 days to its wholesale customers.



– 392 –

As of 31 December 2019 and 29 December 2020, the Healthcare Group’s trade receivablesamounted to approximately RMB39.3 million and RMB43.9 million, respectively, the increase ofapproximately RMB4.6 million was primarily due to an increase in the trade receivables fromthe Hospital Group which was mainly attributable to a slight delay in settlement of theoutstanding amount while the settlement period was still within the credit period granted to theHospital Group.

The following table sets for the Healthcare Group’s aging analysis of the trade receivablesas of the respective dates indicated:

As of31 December

201929 December

2020(RMB’000) (RMB’000)

Within 90 days 39,254 43,918

For FY2019 and PE2020, the Healthcare Group did not make any provision for tradereceivables impairment.

The following table sets forth the trade receivables turnover days of the Healthcare Groupfor the years indicated:

FY2019 PE2020

Trade receivables turnover days(note) 120.4 67.9

Note: The trade receivables turnover days are equal to average trade receivables (trade receivables at thebeginning of the year plus trade receivables at the end of the year divided by two) divided by totalrevenue for the year and multiplied by 365 days for the relevant year.

For the two years ended 29 December 2020, the trade receivables turnover days were 120.4days and 67.9 days, respectively, the decrease was primarily due to (i) the recognition of tradereceivables amounted to approximately RMB120.0 million receivable by the Healthcare Groupfrom the Hospital Group, for which the Healthcare Group entered into a factoring arrangementwith a bank (regarding such trade receivable) to obtain financing, following the termination ofthe factoring arrangement in PE2020, the relevant trade receivable was settled; and (ii) adecrease in sale of pharmaceuticals to the Hospital Group.



– 393 –

Other receivables

The following table sets forth the Healthcare Group’s other receivables as of the respectivedates indicated:

As of31 December

201929 December

2020(RMB’000) (RMB’000)

Other receivables:– amounts due from related parties 445,131 116,125– deposits 20 100– others 1,425 1,503

Total 446,576 117,728

As of 31 December 2019 and 29 December 2020, the Healthcare Group’s other receivablesamounted to approximately RMB446.6 million and RMB117.7 million, respectively, thesubstantial decrease in other receivables was primarily due to a decrease in the HealthcareGroup’s amounts due from related parties of approximately RMB329.0 million as a result of thesettlement of a substantial portion of amounts due from related parties in 2020 in contemplationof the [REDACTED].

Prepayments

The following table sets forth the Healthcare Group’s prepayments as of the respectivedates indicated:

As of31 December

201929 December

2020(RMB’000) (RMB’000)

Prepayments:– prepayments to third-party suppliers 413 180– prepayments to related-party suppliers 204 263

617 443Less: prepayments – non-current portion (151) (150)

Prepayments – current potion 466 293



– 394 –

The Healthcare Group’s prepayments primarily consisted of prepayments for purchase ofinventories and medical equipment and prepayments for property rental to a related party.

Trade and other payables

Trade payables

The following table sets forth the Healthcare Group’s trade payables as of the respectivedates indicated:

As of31 December

201929 December

2020(RMB’000) (RMB’000)

Trade payables:– third parties 39,772 31,271– related parties 2,890 2,553

Total 42,662 33,824

The trade payable of the Healthcare Group to third parties relate to purchase ofpharmaceuticals, medical consumables and medical equipment from our third-party suppliers byour Group, which are non-interest bearing. For details of the credit terms offered by such thirdparty suppliers to our Group, please refer to the paragraph headed “Discussion of Selected Itemsfrom Consolidated Balance Sheets – Discussion of selected items from Consolidated BalanceSheets of our Group – Trade and other payables – Trade payables” in this section.

The trade payable of the Healthcare Group to related parties primarily consisted of (i) thebalances of service fees payable by the Healthcare Group to Clifford ML Group for compositeservices provided and (ii) rental payable for the leasing of premise from the Private Group to theHealthcare Group for the operation of our ancillary healthcare facilities.



– 395 –

The following table sets forth the aging analysis of the Healthcare Group’s trade payablesas of the respective dates indicated:

As of31 December

201929 December

2020(RMB’000) (RMB’000)

Up to 1 year 42,642 33,1221 to 2 years 20 702

Total 42,662 33,824

As of 31 December 2019 and 29 December 2020, the Healthcare Group’s trade payablesamounted to approximately RMB42.7 million and RMB33.8 million, respectively, the decreasewas primarily due to a decrease in the Healthcare Group’s trade payable to third parties ofapproximately RMB8.5 million from RMB39.8 million as of 31 December 2019 to RMB31.3million as of 29 December 2020, which is in line with the decrease in sales to the HospitalGroup in PE2020 as a result of the decrease in patient visits and surgeries performed by ourHospital in 2020 brought about by the COVID-19 outbreak.

The following table sets forth the Healthcare Group’s trade payables turnover days for theyears indicated:

FY2019 PE2020

Trade payables turnover days(note) 58.5 85.5

Note: The trade payables turnover days are equal to average trade payables (trade payables at the beginning ofthe year plus trade payables at the end of the year divided by two) divided by total cost of sales for the

year and multiplied by 365 days for the relevant year.

For FY2019 and PE2020, the trade payables turnover days were 58.5 days and 85.5 days,respectively, the increase was primarily due to a substantial decrease in cost of sales in PE2020as a result of decline in sales of pharmaceuticals to the Hospital Group brought by theCOVID-19 outbreak in 2020.



– 396 –

Other payables

The following table sets forth the Healthcare Group’s other payables as of the respectivedates indicated:

As of31 December

201929 December

2020(RMB’000) (RMB’000)

Other payables:– amount due to related parties 513,012 129,674– deposits 64 693– accrued payroll 6,289 4,153– other taxes payables 1,224 1,064– others 1,689 1,057

Total 522,278 136,641

The Healthcare Group’s other payables primarily consisted of amount due to related partiesand accrued payrolls.

As of 31 December 2019 and 29 December 2020, the balance of the Healthcare Group’samount due to related parties amounted to approximately RMB513.0 million and RMB129.7million, respectively. The decrease in the Healthcare Group’s amount due to related parties wasprimarily due to the settlement of amount due to related parties in 2020 in contemplation of the[REDACTED].

The Healthcare Group’s accrued payroll represented salaries and bonuses payable to itsstaff. As of 31 December 2019 and 29 December 2020, the balance of the Healthcare Group’saccrued payroll amounted to approximate RMB6.3 million and RMB4.2 million, respectively.The decrease in the Healthcare Group’s accrued payroll is in line with the decrease in theHealthcare Group’s revenue (and hence a decrease in bonus under employee benefits expenses),which were brought about by the COVID-19 outbreak in 2020.



– 397 –

[REDACTED] EXPENSES

Our [REDACTED] expenses represent professional fees, [REDACTED] and other feesincurred in connection with the [REDACTED].

Assuming an [REDACTED] of HK$[REDACTED] per [REDACTED] (being the[REDACTED] of the indicative [REDACTED] range between HK$[REDACTED] andHK$[REDACTED]) and assuming that the [REDACTED] is not exercised, we estimate that our[REDACTED] expenses will be approximately RMB[REDACTED] (including (i)[REDACTED] of approximately RMB[REDACTED], and (ii) [REDACTED] expenses ofapproximately RMB[REDACTED], which consist of fees and expenses of legal advisors andReporting Accountant of approximately RMB[REDACTED] and other fees and expenses ofapproximately RMB[REDACTED]), accounting for [REDACTED]% of the [REDACTED]. ForFY2021, we incurred approximately RMB[REDACTED] as [REDACTED] expenses, of whichRMB[REDACTED] will be [REDACTED], and the remaining RMB[REDACTED] was chargedto our consolidated statements of profit or loss and other comprehensive income for FY2021. Weexpect to incur additional [REDACTED] expenses of approximately RMB[REDACTED], ofwhich RMB[REDACTED] is expected to be charged to our consolidated statements of profit orloss and other comprehensive income for FY2022, and RMB[REDACTED] will be[REDACTED]. We emphasise that the amount of the [REDACTED] expenses, which isnon-recurring in nature, is a current estimate for reference only and the final amount to berecognised in the consolidated financial statements of our Group for FY2022 is subject toadjustment based on audit and possible changes in variables and assumptions.

UNAUDITED PRO FORMA ADJUSTED NET TANGIBLE ASSETS

[REDACTED]



– 398 –

[REDACTED]



– 399 –

[REDACTED]

RECENT DEVELOPMENT AND NO MATERIAL ADVERSE CHANGE

Subsequent to the Track Record Period and up to the Latest Practicable Date, our businessoperations had remained stable. For the two months ended 28 February 2022, our Hospital hadover 290,000 out-patient visits and over 4,000 in-patient visits (with over 34,000 in-patientbed-days).

Recent Resurgence of Regional COVID-19 Outbreaks

Since 1 January 2022 up to the Latest Practicable Date, certain areas across the PRC hassuffered from some regional outbreaks of COVID-19 variants including Delta and Omicron virusvariants. In response, local governments in the affected areas imposed various restrictions onbusiness and social activities, including city lockdowns, restrictions on travel and otheremergency quarantines. Since 1 January 2022 and up to the Latest Practicable Date, there wereno city lockdowns or travel restrictions implemented by the local government in GuangzhouCity.

During the Track Record Period, (i) as a result of confirmed cases of COVID-19 at ourHospital, all of our Hospital’s out-patient hospital services were suspended from 7 February2020 to 12 March 2020, and during such period, the in-patient hospital services also suspendedthe admission of new patients; (ii) as required by the local government, the stomatology,ophthalmology, ENT, children health and rehabilitation disciplines and physical examinationservices of our Hospital suspended their operations during 7 February 2020 to 19 March 2020and Clifford Dental Clinic suspended their operations during 7 February 2020 to 17 April 2020,all of which has been functioning normally since the expiry of such suspension up to the LatestPracticable Date. For further details, please refer to the section headed “Business – Impact ofCOVID-19 Outbreak” in this document.

Having considered the above and there has been no confirmed cases since suspension ofour Hospital’s services in March 2020 and up to the Latest Practicable Date, our Directorsbelieve that there has been no material adverse effect on the operations of our Hospital or ourancillary healthcare facilities since 1 January 2022 up to the Latest Practicable Date.

We are closely monitoring the development of the COVID-19 pandemic and continuouslyevaluating any potential impact on our business, results of operations and financial condition.However, as the COVID-19 pandemic remains an evolving situation, there is great uncertainty asto the future development of the disease. For risks relating to potential future outbreak ofCOVID-19, please refer to the section headed “Risk Factors – The recent outbreak of the NovelCoronavirus Disease 2019 (COVID-19) and another wave of outbreak caused by Delta, Omicronor other virus variants in the future may have a material adverse effect on our business, resultsof operation, financial condition and prospects” in this document.



– 400 –

No Material Adverse Change

Our Directors confirm that, as of the date this document, save as the expenses inconnection with the [REDACTED] and share-based payments in connection with [REDACTED]share options granted pursuant to [REDACTED] share options scheme as set out in paragraph3.5 of “Statutory and General Information – [REDACTED] Share Option Scheme” in AppendixV to this document, there has been no material adverse change in our financial or tradingposition or prospects since 31 December 2021, and there had been no events since 31 December2021 which would materially affect the information shown in our consolidated financialstatements included in the Accountant’s Report.



– 401 –

FUTURE PLANS

Please refer to the section headed “Business – Strategies” in this document for a detaileddescription of our future plans.

USE OF [REDACTED]

The [REDACTED] of the [REDACTED] will strengthen our capital base and will providefunding for achieving our business strategies and carrying out our future plans as set out in thissection.

The following table sets forth the estimate of [REDACTED] from the [REDACTED]which we are expected to receive after deduction of [REDACTED] and estimated expensespayable by us in connection with the [REDACTED]:

Assuming the[REDACTED]

is notexercised

Assuming the[REDACTED]

is exercisedin full

Assuming an [REDACTED] of HK$[REDACTED] per[REDACTED] (being the [REDACTED] of the[REDACTED] range stated in this document)

ApproximatelyHK$

[REDACTED]

ApproximatelyHK$

[REDACTED]

Assuming an [REDACTED] of HK$[REDACTED] per[REDACTED] (being the high end of the[REDACTED] range stated in this document)

ApproximatelyHK$

[REDACTED]

ApproximatelyHK$

[REDACTED]

Assuming an [REDACTED] of HK$[REDACTED] per[REDACTED] (being the low end of the[REDACTED] range stated in this document)

ApproximatelyHK$

[REDACTED]

ApproximatelyHK$

[REDACTED]

Our Directors intend to apply the [REDACTED] from the [REDACTED] as follows,assuming an [REDACTED] of HK$[REDACTED] per [REDACTED] (being the[REDACTED] of the [REDACTED] range stated in this document) and assuming the[REDACTED] is not exercised:

(i) approximately [REDACTED]%, or HK$[REDACTED], of the [REDACTED] fromthe [REDACTED] will be used to expand our Hospital operations by optimising ouroperational capacity at the Phase II Building of our Hospital to (a) establishsub-disciplines (亞科室) under our existing key disciplines (such as our pediatricsdiscipline (兒科), orthopedics discipline (骨傷科), neurology (腦病科(神經內科)) andrehabilitation centre (康復中心); and (b) expanding our current VIP centre (which iscurrently operated as a general medical service centre for our VIP in-patients andout-patients) by branching out to establish VIP Postpartum (貴賓月子科), VIPCardiovascular (貴賓心血管內科), VIP Intensive Care (貴賓重症科) and VIP


FUTURE PLANS AND USE OF [REDACTED]

– 402 –

Oncology (貴賓腫瘤科) sub-disciplines; and (c) establishing new disciplines andexpanding existing key disciplines to provide customised healthcare services to caterfor the specific needs of individual patients. It would involve adding up toapproximately 750 beds in operation to our Hospital’s operational capacity. Inparticular, we intend to use approximately HK$[REDACTED] to recruit additionalmedical professionals and HK$[REDACTED] to purchase medical equipment andfurniture:

➢ Our Hospital’s expansion plan is set out as follows:

Estimated no. of beds expected to be opened

Discipline Nature2nd half,

20221st half,

20232nd half,

20231st half,

20242nd half,

2024 Total

Medicalprofessionalsexpected to berecruited

1. Pediatrics – Respiratory(兒科–呼吸內科)

Sub-discipline underpediatrics

– – 10 – 10 20 5 doctors and 5nurses

2. Pediatrics – Gastroenterology(兒科 – 消化)



3. Pediatrics – Rehabilitation(兒科 – 康復)



4. Orthopaedics – Spine(脊椎骨科)

Sub-discipline underorthopedics

10 – 10 – 10 30 8 doctors and 8nurses

5. Orthopaedics – Joints(關節骨科)



6. Orthopaedics – Traumatology(創傷骨科)



7. Neurology – Cerebrovascular(腦病科(神經內科)– 腦血管)

Sub-discipline underneurology


8. Rehabilitation – Oncology(腫瘤康復科)

Sub-discipline underrehabilitationcentre (“RC”)

10 – 20 – 20 50 13 doctors, 13nurses and 7medicaltechnicians

9. Rehabilitation – Intensive Care(重症康復科)

Sub-discipline underRC

– 10 10 10 10 40 10 doctors, 10nurses and 5medicaltechnicians



– 403 –



20221st half,

20232nd half,

20231st half,

20242nd half,

2024 Total


10. Rehabilitation – Cardiology(心臟康復科)

Sub-discipline underRC

– 10 10 10 10 40 10 doctors, 10nurses and 5medicaltechnicians

11. VIP Postpartum(貴賓月子科)

VIP sub-disciplines 15 – 15 – 15 45 23 doctors and 23nurses

12. VIP Cardiovascular(貴賓心血管內科)


13. VIP Intensive Care(貴賓重症科)


14. VIP Oncology(貴賓腫瘤科)


15. Hepatology(肝膽科)

New discipline – 10 – 10 – 20 5 doctors and 5nurses

16. Pancreatic(胰腺科)


17. Gastrointestinal(胃腸科)


18. Vascular Disease(血管疾病科)


19. Thyroid(甲狀腺)


20. Pulmonary Disease(Respiratory) Zone II(肺病科(呼吸內科) II區)

Expansion ofexisting discipline




– 404 –



20221st half,

20232nd half,

20231st half,

20242nd half,

2024 Total


21. Nursing Centre Zone II Expansion ofexisting discipline

20 – 30 – 30 80 20 doctors, 20nurses and 10medicaltechnicians

Total: 748 236 doctors, 236nurses and 27medicaltechnicians

➢ In support of the above expansion plan, we intend to purchase the following majorequipment:

Type Unit(s) requiredEstimated cost of

purchase(RMB)

Electronic hospital beds for patients 756 [REDACTED]Adjustable beds for transporting

patients 42 [REDACTED]Automated External Defibrillator (AED) 21 [REDACTED]Disinfection machine 21 [REDACTED]Patient monitoring device 21 [REDACTED]Emergency crash cart 21 [REDACTED]Multi-function nursing trolley 42 [REDACTED]Medical records trolley 21 [REDACTED]Nursing cart 21 [REDACTED]Air disinfection purifier 63 [REDACTED]Electronic balance 21 [REDACTED]Protective goggles 42 [REDACTED]

Total

[REDACTED](equivalent toapproximately

HK$[REDACTED])



– 405 –

(ii) approximately [REDACTED]%, or HK$[REDACTED], of the [REDACTED] fromthe [REDACTED] will be used to finance part of the capital expenditure portion ofthe costs and expenses for the expansion of our Clifford healthcare network, whichinvolves establishing the following new ancillary healthcare facilities in theGuangdong Province:

New ancillaryhealthcare facilities Expected opening date Estimated GFA

Estimated total costs andexpenses

Two elderly care centres 1st half of 2023,1st half of 2024

For each centre:11,000 sq.m. (expected toaccommodate over 150residents)

For each centre:– capital expenditure:

[REDACTED]

– annual working capital:[REDACTED]

One postnatal carecentre

2nd half of 2023 5,000 sq.m. (expected toaccommodate over 50pairs of mothers andnewborns)

Capital expenditure:[REDACTED]

Annual working capital:[REDACTED]

Three dental clinics 1st half of 2023, 2nd half of2023, 1st half of 2024

For each clinic:1,000 sq.m.

For each clinic:– capital expenditure:

[REDACTED]


Five retail pharmacies 2nd half of 2024, 1st half of2023, 2nd half of 2023,1st half of 2024, 2nd halfof 2024

For each pharmacy:300 sq.m.

For each pharmacy:– capital expenditure:

[REDACTED]




– 406 –

New ancillaryhealthcare facilities Expected opening date Estimated GFA

Estimated total costs andexpenses

Five western andtraditional Chinesemedicine clinics (中西醫診所)

2nd half of 2022, 1st half of2023, 2nd half of 2023,1st half of 2024, 2nd halfof 2024

For each clinic: 1,000 sq.m. For each clinic:– capital expenditure:

[REDACTED]


Two health managementcentres

1st half 2023, 1st half 2024 For each centre: 1,000 sq.m. For each centre:– capital expenditure:

[REDACTED]


One aesthetic medicalcentre

1st half 2024 2,000 sq.m. Capital expenditure:[REDACTED]

Annual working capital:[REDACTED]

➢ We estimate that the total costs and expenses for the expansion of our healthcarenetwork (by way of establishing the above new ancillary healthcare facilities)will involve the following:

(a) an estimated capital expenditure (including medical equipment, furnitureand fixtures, information technology set-up and renovation costs) ofapproximately RMB[REDACTED] (equivalent to HK$[REDACTED]) forthe new ancillary healthcare facilities, of which approximatelyHK$[REDACTED] will be financed by the [REDACTED] from the[REDACTED] and the remaining portion will be financed by internalresources of our Group; and



– 407 –

(b) an estimated annual working capital required (including salaries of medicalprofessionals and staff, procurement costs of pharmaceuticals and medicalconsumables, and other daily expense) for the day-to-day operations of thenew ancillary healthcare facilities (which are separately set out in the tableabove), depending on the number of newly recruited medical professionalswhich in turn varies according to the size of each of the new ancillaryhealthcare facilities.

➢ The table below sets for the breakeven period and investment return period of thenew facilities, which are estimated by our Directors based on our experience inestablishing various ancillary healthcare facilities in the past:

Ancillary healthcare facilityBreakevenperiod(1)

Investmentreturn period(2)

Elder care centres 1 to 2 years 2 to 3 years

Postnatal care centre 1 to 2 years 4 to 5 years

Dental clinics 1 to 2 years 4 to 5 years

Retail pharmacies 1 to 2 years 1 to 2 years

Western and traditional Chinesemedicine clinics

1 to 2 years 4 to 5 years

Health management centres 1 to 2 years 3 to 4 years

Aesthetic medical centre 1 to 2 years 1 to 2 years

Notes:

1. Breakeven period is calculated by the first month where the monthly income can make up forthe monthly operating costs since commencement of operation of the relevant ancillaryhealthcare facility.

2. Investment return period is calculated by the first time since the commencement of theoperation of the relevant ancillary healthcare facility where the accumulated net cash inflowscan make up for the total amount of initial investment of the ancillary healthcare facility.

(iii) approximately [REDACTED]%, or HK$[REDACTED], of the [REDACTED] fromthe [REDACTED] will be used to organise international medical conferences tofacilitate medical knowledge exchange and promote our brand and corporate image;



– 408 –

(iv) approximately [REDACTED]%, or HK$[REDACTED], of the [REDACTED] fromthe [REDACTED] will be used to improve our technology infrastructures to enhancepatient care. In particular, we intend to use:

➢ approximately HK$[REDACTED] to build a community health monitoringsystem, which includes (i) procurement of health monitoring devices to beequipped by our patients for real-time monitoring of their blood pressure, bloodsugar level and other health indicators, the specific features of the devices can bedesigned by us and produced by our selected manufacturers to suit our patients’needs; and (ii) development of community health monitoring software for theprocessing and transfer of data and integrating such software with our existinghospital service interface; and

➢ approximately HK$[REDACTED] to recruit additional medical professionals formonitoring the vital health indicators of our patients and provide emergencyservices on irregular signs.

(v) approximately [REDACTED]%, or HK$[REDACTED], of the [REDACTED] fromthe [REDACTED] will be used to expand our business by acquiring hospitals. Weintend to target small and medium sized hospitals that provide high-quality medicaland healthcare services, and which are rated as Grade A Class II or as a Grade A ClassI in the PRC. In evaluating a new acquisition target, we would take into accountfactors such as geographical location, demographic trends, financial and operationperformance, maturity of operation, acquisition price, licensing status, pastcompliance, experience of medical professionals, post-acquisition growth potential andprospects, synergy potential with our existing hospital(s) and integration feasibility. Asof the Latest Practicable Date, we had no specific acquisition plans nor had identifiedany specific acquisition targets; and

(vi) approximately [REDACTED]%, or HK$[REDACTED], of the [REDACTED] fromthe [REDACTED] will be used for our general working capital.



– 409 –

We intend to apply the [REDACTED] as follows:

2nd half 2022 1st half 2023 2nd half 2023 1st half 2024 2nd half 2024 Total(HK$’million) (HK$’million) (HK$’million) (HK$’million) (HK$’million) (HK$’million)

1. Expanding our Hospital’soperational capacity

[REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]

2. Expanding our Cliffordhealthcare network


3. Organising internationalmedical conference


4. Improving online hospitalservices and technologyinfrastructures


5. Acquiring hospitals [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]

6. General working capital [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]

Total [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]

To the extent that the [REDACTED] are not sufficient to fund the purposes describedabove, we intend to fund the balance through a variety of means including cash generated fromour operations, debt financing and/or equity fund raising.

The above allocation of the [REDACTED] will be adjusted on a pro-rata basis if the[REDACTED] is fixed at a higher or lower level compared to the [REDACTED] of theestimated [REDACTED]. Assuming the [REDACTED] was exercised, we intend to apply theadditional [REDACTED] firstly to finance the remaining portion of capital expenditure for theexpansion of our healthcare network, any surplus will then be allocated to the above businessesand projects on a pro-rata basis. To the extent that the [REDACTED] from the [REDACTED]are not immediately used for the above purposes and to the extent permitted by applicable lawsand regulations, we may allocate part or all of the [REDACTED] to short-term interest-bearingdeposits or money market instruments with authorised financial institutions or licensed banks.

To the extent that the [REDACTED] are not immediately applied to the above purposesand to the extent permitted by applicable laws and regulations, we intend to deposit the[REDACTED] into short-term demand deposits with authorised financial institutions and/orlicensed banks as permitted by the relevant laws and regulations. Our PRC Legal Adviser is ofthe view that there is no restriction under the PRC laws which will prohibit our Company fromtransferring the [REDACTED] to be received by our Company from the [REDACTED] to theforeign invested PRC Subsidiaries by the way of capital increase or shareholders’ loan subject tothe approvals, registrations or filings that may be required by the PRC governmental authorities.We will comply with the PRC laws in respect of foreign exchange registration and[REDACTED] remittance.



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[REDACTED]

Undertakings by our Company

In accordance with Rule 10.08 of the Listing Rules, we have undertaken to the StockExchange that (except pursuant to the [REDACTED], the grant of options or exercise of optionsgranted or to be granted under the Share Option Scheme and the [REDACTED] Share OptionScheme) at any time during the period commencing on the date of this document and ending onthe expiry of the six-month period after the [REDACTED], we will not, without the priorconsent of the Stock Exchange and unless in compliance with the requirements of the ListingRules, allot or issue or agree to allot or issue any Shares or other securities convertible intoequity securities of our Company (including warrants or other convertible securities), whether ornot of a class [REDACTED], except in certain circumstances prescribed by Rule 10.08 of theListing Rules.

Undertakings by our Controlling Shareholders

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SOLE SPONSOR’S INDEPENDENCE

The Sole Sponsor satisfies the independence criteria applicable to sponsors set forth inRule 3A.07 of the Listing Rules.

[REDACTED]


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The following is the text of a report set out on pages I-1 to I-3, received from the

Company’s reporting accountant, [PricewaterhouseCoopers], Certified Public Accountants,

Hong Kong, for the purpose of incorporation in this document. It is prepared and addressed to

the directors of the Company and to the Sole Sponsor pursuant to the requirements of HKSIR

200, Accountants’ Reports on Historical Financial Information in Investment Circulars issued by

the Hong Kong Institute of Certified Public Accountants.

[DRAFT]

[To insert the firm’s letterhead]

ACCOUNTANT’S REPORT ON HISTORICAL FINANCIAL INFORMATION TO THEDIRECTORS OF CLIFFORD MEDICAL GROUP LIMITED AND ZHONGTAIINTERNATIONAL CAPITAL LIMITED

Introduction

We report on the historical financial information of Clifford Medical Group Limited (the“Company”) and its subsidiaries (together, the “Group”) set out on pages I-4 to I-94 whichcomprises the consolidated balance sheets as at 31 December 2019, 2020 and 2021, the balancesheet of the Company as at 31 December 2021, and the consolidated statements ofcomprehensive income, the consolidated statements of changes in equity and the consolidatedstatements of cash flows for each of the years ended 31 December 2019, 2020 and 2021 (the“Track Record Period”) and a summary of significant accounting policies and other explanatoryinformation (together, the “Historical Financial Information”). The Historical FinancialInformation set out on pages I-4 to I-94 forms an integral part of this report, which has beenprepared for inclusion in the document of the Company dated [Date] (the “Document”) inconnection with the [REDACTED].

Directors’ responsibility for the Historical Financial Information

The directors of the Company are responsible for the preparation of Historical FinancialInformation that gives a true and fair view in accordance with the basis of presentation andpreparation set out in Notes 1.3 and 2.1 to the Historical Financial Information, and for suchinternal control as the directors determine is necessary to enable the preparation of HistoricalFinancial Information that is free from material misstatement, whether due to fraud or error.

Reporting accountant’s responsibility

Our responsibility is to express an opinion on the Historical Financial Information and toreport our opinion to you. We conducted our work in accordance with Hong Kong Standard onInvestment Circular Reporting Engagements 200, Accountants’ Reports on Historical Financial

Information in Investment Circulars issued by the Hong Kong Institute of Certified PublicAccountants (“HKICPA”). This standard requires that we comply with ethical standards and plan


APPENDIX I ACCOUNTANT’S REPORT

– I-1 –

and perform our work to obtain reasonable assurance about whether the Historical FinancialInformation is free from material misstatement.

Our work involved performing procedures to obtain evidence about the amounts anddisclosures in the Historical Financial Information. The procedures selected depend on thereporting accountant’s judgement, including the assessment of risks of material misstatement ofthe Historical Financial Information, whether due to fraud or error. In making those riskassessments, the reporting accountant considers internal control relevant to the entity’spreparation of Historical Financial Information that gives a true and fair view in accordance withthe basis of presentation and preparation set out in Notes 1.3 and 2.1 to the Historical FinancialInformation in order to design procedures that are appropriate in the circumstances, but not forthe purpose of expressing an opinion on the effectiveness of the entity’s internal control. Ourwork also included evaluating the appropriateness of accounting policies used and thereasonableness of accounting estimates made by the directors, as well as evaluating the overallpresentation of the Historical Financial Information.

We believe that the evidence we have obtained is sufficient and appropriate to provide abasis for our opinion

Opinion

In our opinion, the Historical Financial Information gives, for the purposes of theaccountant’s report, a true and fair view of the financial position of the Company as at 31December 2021, and the consolidated financial position of the Group as at 31 December 2019,2020 and 2021 and of its consolidated financial performance and its consolidated cash flows forthe Track Record Period in accordance with the basis of presentation and preparation set out inNotes 1.3 and 2.1 to the Historical Financial Information.

Report on matters under the Rules Governing the Listing of Securities on The StockExchange of Hong Kong Limited (the “Listing Rules”) and the Companies (Winding Upand Miscellaneous Provisions) Ordinance

Adjustments

In preparing the Historical Financial Information, no adjustments to the UnderlyingFinancial Statements as defined on page I-4 have been made.

Dividends

We refer to note 28 to the Historical Financial Information which states that no dividendshave been paid by Clifford Medical Group Limited in respect of the Track Record Period.



– I-2 –

No statutory financial statements for the Company

No statutory financial statements have been prepared for the Company since its date ofincorporation.

[PricewaterhouseCoopers]Certified Public Accountants

Hong Kong[REDACTED]



– I-3 –

I. HISTORICAL FINANCIAL INFORMATION OF THE GROUP

Preparation of Historical Financial Information

Set out below is the Historical Financial Information which forms an integral part ofthis accountant’s report.

The financial statements of the Group for Track Record Period, on which theHistorical Financial Information is based, were audited by PricewaterhouseCoopers inaccordance with Hong Kong Standards on Auditing issued by the HKICPA (“UnderlyingFinancial Statements”).

The Historical Financial Information is presented in Renminbi (“RMB”) and all valuesare rounded to the nearest thousand (RMB’000) except when otherwise indicated.



– I-4 –

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Year ended 31 December2019 2020 2021

Note RMB’000 RMB’000 RMB’000

Revenue 6 1,083,013 864,708 1,206,239Cost of sales 9 (831,527) (672,097) (823,926)

Gross profit 251,486 192,611 382,313

Selling expenses 9 (7,022) (5,758) (36,606)Administrative expenses 9 (99,863) (95,581) (130,870)Net impairment losses on financial assets 3.1.2 (48) (291) (220)Other income 7 17,064 24,548 10,460Other (losses)/gains – net 8 (6,879) 17,455 2,126

Operating profit 154,738 132,984 227,203Finance costs – net 11 (53,928) (68,962) (51,525)

Profit before income tax 100,810 64,022 175,678Income tax expenses 12 (24,724) (11,416) (44,530)

Profit for the year attributable toowners of the Company 76,086 52,606 131,148

Other comprehensive incomeattributable to owners of theCompany

Items that may be reclassified to profitor loss

– Exchange differences on translation offoreign operations 187 (982) (1,142)

Total comprehensive incomeattributable to owners of theCompany for the year 76,273 51,624 130,006

Earnings per share attributable toowners of the Company (expressedin RMB’000 per share) (note)

– Basic and diluted earnings per share 13 101 70 131

note: The earnings per share presented above have not been taken into account the proposed [REDACTED]pursuant to the resolutions in writing of all shareholders passed on [•] because the proposed [REDACTED]has not become effective as at the date of this report.



– I-5 –

CONSOLIDATED BALANCE SHEETS

As at 31 December2019 2020 2021


AssetsNon-current assetsProperty, plant and equipment 14 1,342,633 1,322,172 1,310,648Investment properties 15 36,020 32,150 32,780Intangible assets 16 9,367 9,512 14,892Prepayments 20 29,749 22,632 7,419Deferred income tax assets 17 1,260 1,358 2,002

Total non-current assets 1,419,029 1,387,824 1,367,741

Current assetsInventories 18 34,526 42,989 37,612Trade and other receivables and

prepayments 20 523,960 559,871 79,868Restricted cash 21 136,223 208,653 –Cash and cash equivalents 21 124,295 156,160 431,036

Total current assets 819,004 967,673 548,516

Total assets 2,238,033 2,355,497 1,916,257

EquityEquity attributable to owners of the

CompanyShare capital 22 – – –*Reserves 23 302,111 397,375 518,835

Total equity 302,111 397,375 518,835

LiabilitiesNon-current liabilitiesBank borrowings 24 999,800 1,047,200 635,200Lease liabilities 25 2,760 4,043 2,936Deferred income tax liabilities 17 43,625 50,703 60,411

Total non-current liabilities 1,046,185 1,101,946 698,547



– I-6 –

As at 31 December2019 2020 2021


Current liabilitiesTrade and other payables 26 633,222 604,338 359,057Contract liabilities 6 3,983 8,289 8,675Current income tax liabilities 7,423 5,076 19,623Lease liabilities 25 2,909 3,373 2,620Bank borrowings 24 242,200 235,100 308,900

Total current liabilities 889,737 856,176 698,875

Total liabilities 1,935,922 1,958,122 1,397,422

Total equity and liabilities 2,238,033 2,355,497 1,916,257

* Amount less than RMB500.



– I-7 –

BALANCE SHEET OF THE COMPANY

As at31 December

2021Note RMB’000

AssetsNon-current assetsInvestments in subsidiaries 1.2 519,488

Current assetsPrepayments 20 3,333Cash and cash equivalents 21 397

Total current assets 3,730

Total assets 523,218

EquityEquity attributable to owners of the CompanyShare capital and premium 22 –*Other reserves 23 520,191Retained earnings (11,105)

Total equity 509,086

LiabilitiesCurrent liabilitiesOther payables 26 14,132

Total equity and liabilities 523,218




– I-8 –

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Attributable to owners of the CompanyShare

capitalOther

reservesRetainedearnings

Totalequity

Note RMB’000 RMB’000 RMB’000 RMB’000(Note 22) (Note 23)

Balance at 1 January 2019 – 7,634 218,204 225,838

Total comprehensive incomefor the year

Profit for the year – – 76,086 76,086Currency translation differences – 187 – 187

– 187 76,086 76,273

Transactions with owners intheir capacity as owners

Appropriation of statutoryreserve – 7,692 (7,692) –

Balance at 31 December 2019 – 15,513 286,598 302,111


Total comprehensive incomefor the year

Profit for the year – – 52,606 52,606Currency translation differences – (982) – (982)

– (982) 52,606 51,624



Effect of business combinationunder common control 2.1.3 – 6,535 37,105 43,640

– 10,007 33,633 43,640




– I-9 –


capitalOther


Totalequity

Note RMB’000 RMB’000 RMB’000 RMB’000(Note 22) (Note 23)


Total comprehensive loss forthe year

Profit for the year – – 131,148 131,148Currency translation differences – (1,142) – (1,142)

– (1,142) 131,148 130,006



Deemed distribution to the thenshareholder of a subsidiary 1.2(d) – (4,396) – (4,396)

Distribution of dividends to thethen shareholder of asubsidiary 28 – – (4,150) (4,150)

– 7,060 (15,606) (8,546)




– I-10 –

CONSOLIDATED STATEMENTS OF CASH FLOWS

Year ended 31 DecemberNote 2019 2020 2021

RMB’000 RMB’000 RMB’000

Cash flows from operating activitiesCash generated from operations 29 98,822 240,341 387,210Income tax paid (247) (10,007) (20,919)Interest received from cash in banks 4,901 4,502 5,086

Net cash generatedfrom operating activities 103,476 234,836 371,377

Cash flows from investing activitiesCash advances to related parties (212,807) (447,012) (389,308)Repayments of cash advances by related parties 95,618 446,939 859,308Interest received from loans to related parties 7,068 3,018 17,089Purchases of property, plant and equipment (179,578) (88,881) (149,293)Proceeds from disposal of property, plant and

equipment 824 261 239Purchases of intangible assets (8,418) (2,659) (9,230)

Net cash (used in)/generated from investingactivities (297,293) (88,334) 328,805

Cash flows from financing activitiesProceeds from bank borrowings 29(b) 480,000 405,000 97,000Repayments of bank borrowings 29(b) (292,000) (365,700) (435,200)Cash advances from related parties 29(b) 76,537 22,184 75,114Repayment of cash advances from

related parties 29(b) (82,589) (88,189) (281,750)Cash advances from third parties 29(b) 195 – –Repayment of cash advances from

third parties 29(b) (15,714) (3,776) (15,150)Interest paid for bank borrowings and lease

liabilities (55,663) (72,467) (60,721)Deemed distribution to the then shareholder of a

subsidiary 1.2(d) – – (4,396)Distribution of dividends to the then shareholder of

a subsidiary 23(b) – – (4,150)Payments for [REDACTED] – – (1,935)



– I-11 –

Year ended 31 DecemberNote 2019 2020 2021

RMB’000 RMB’000 RMB’000

Payments of the principal element of leaseliabilities (2,097) (2,922) (3,466)

Restricted cash released/(pledged) for borrowings 129,642 (60,573) 209,287Business combination under common control, net of

cash acquired 2.1.3 – 48,344 –

Net cash generated from/(used in) financingactivities 238,311 (118,099) (425,367)

Net increase in cash and cash equivalents 44,494 28,403 274,815Cash and cash equivalents at beginning of the year 80,292 124,295 156,160Exchange gains on cash and cash equivalents (491) 3,462 61

Cash and cash equivalents atend of year 21 124,295 156,160 431,036



– I-12 –

II NOTES TO THE HISTORICAL FINANCIAL INFORMATION

1 GENERAL INFORMATION, REORGANISATION AND BASIS OF PRESENTATION

1.1 General information

The Company was incorporated in the Cayman Islands on 23 July 2021 as an exempted company withlimited liability under the Companies Act (Cap. 22, Act 3 of 1961 as consolidated and revised) of the CaymanIslands. The address of the Company’s registered office is Cricket Square, Hutchins Drive, PO Box 2681, GrandCayman, KY1-1111, Cayman Islands.

The Company is an investment holding company. The Company and its subsidiaries (collectively, the“Group”) are principally engaged in (i) hospital operation business, including out-patient services, in-patientservices and ancillary services related to hospital operation such as carpark services (the “Hospital Business”),and (ii) various healthcare and pharmaceutical businesses, including the rendering of postpartum care services,elderly care services, dental care services, and the wholesale and retail of pharmaceutical products (the“Healthcare and Pharmaceutical Business”) in the People’s Republic of China (the “PRC”) (together, the“[REDACTED] Businesses”).

1.2 Reorganisation

The Hospital Business was conducted by Guangdong Clifford Hospital Co., Ltd. (“Clifford Hospital”),which was indirectly and wholly owned by the spouse of Ms. Wendy Man Lai Hung (“Ms. Wendy Man”) from itsestablishment until 29 December 2020. On 29 December 2020, Ms. Wendy Man acquired the entire equityinterests in Clifford Hospital through the acquisition of equity interests in its holding company, Skill Plus GlobalLimited from her spouse and the consideration was effectively waived by her spouse, and she became thecontrolling shareholder of Clifford Hospital. In addition, Ms. Wendy Man controlled the Healthcare andPharmaceutical Business through certain entities. In preparation for the [REDACTED], a group reorganisationwas undertaken by Ms. Wendy Man pursuant to which the companies operating the Hospital Business andHealthcare and Pharmaceutical Business have been transferred to the Company since 23 August 2021 and 20December 2021 respectively (the “Reorganisation”).

Upon completion of the Reorganisation, the Company became the holding company of all companies nowcomprising the Group, and Ms. Wendy Man became the ultimate controlling shareholder of the Group. TheReorganisation mainly involved the following:

(a) On 22 July 2021, International Health Medical Group Limited (“International Health”) wasincorporated in the British Virgin Islands (the “BVI”) and was held 100% by Ms. Wendy Man.

(b) On 23 July 2021, the Company was incorporated in the Cayman Islands and was held 100% byInternational Health.

(c) On 23 August 2021, the Company acquired 100% equity interests in Skill Plus Global Limited(“Skill Plus”) from Ms. Wendy Man by issuance of 749 ordinary shares of the Company toInternational Health as instructed by Ms. Wendy Man.

(d) On 22 September 2021, a subsidiary of the Healthcare and Pharmaceutical Business acquired certaincompanies engaging in dental care services which were under common control by Ms. Wendy Manat a cash consideration of RMB4,396,000.

(e) On 12 November 2021, Best Sun Treasure Limited (“Best Sun”) was incorporated in the BVI byBusiness Favour Ltd (“Business Favour”), which is the holding company of the companies engagedin the Healthcare and Pharmaceutical Business and held by Ms. Wendy Man.

(f) On 17 December 2021, Best Sun acquired 100% equity interests in the companies that were engagedin the Healthcare and Pharmaceutical Business from Business Favour which was settled by theissuance of 99 ordinary shares of Best Sun to Business Favour.



– I-13 –

(g) On 20 December 2021, the Company acquired 100% equity interests in Best Sun from BusinessFavour which was settled by the issuance of 250 ordinary shares of the Company to InternationalHealth as instructed by Business Favour.

Upon completion of the Reorganisation and as at the date of this report, the Company has direct or indirectinterests in the following principal subsidiaries:

Company name

Place and date ofincorporation, kind oflegal entity

Issued andfully paid-upshare capital

Attributable equity interestof the Group

Principalactivities Notes

As at 31 DecemberAs the

date ofreport2019 2020 2021

’000

Directly held:

Skill Plus Global Ltd.能加環球有限公司

BVI,29 March 2018,limited liabilitycompany

HKD– 100% 100% 100% 100% Investmentholdingcompany

(f)

Best Sun Treasure Limited日寶有限公司

BVI,12 November 2021,limited liabilitycompany

USD– NA NA 100% 100% Investmentholdingcompany

(e)

Indirectly held:

Guangzhou Clifford MedicalManagement Co., Ltd.廣州市祈福醫療管理有限公司*

The PRC,7 August 2006,limited liabilitycompany

HKD7,000 100% 100% 100% 100% Investmentholdingcompany

(a)

Guangzhou CliffordEnterprise ManagementCo., Ltd.廣州市祈福企業管理有限公司**

The PRC,26 April 2010,limited liabilitycompany

RMB10,000 100% 100% 100% 100% Investmentholdingcompany

(a)

Guangdong Clifford HospitalCo., Ltd.廣東祈福醫院有限公司**

The PRC,20 June 2012,limited liabilitycompany

RMB150,000 100% 100% 100% 100% Hospitaloperationbusiness

(a)

Guangzhou Clifford MedicalEquipment Co., Ltd.廣州市祈福醫療器械有限公司*


RMB500 NA 100% 100% 100% Sales ofpharmaceuticals

(a)

Guangzhou Clifford NursingApartment Co., Ltd.廣州市祈福護老公寓有限公司**

The PRC,10 October 2009,limited liabilitycompany

RMB1,000 NA 100% 100% 100% Healthcareservices

(b)

Guangzhou Clifford Maternaland Childcare ServiceCo., Ltd.廣州市祈福母嬰護理服務有限公司*

The PRC,16 January 2012,limited liabilitycompany


(c)



– I-14 –

Company name

Place and date ofincorporation, kind oflegal entity

Issued andfully paid-upshare capital

Attributable equity interestof the Group

Principalactivities Notes

As at 31 DecemberAs the

date ofreport2019 2020 2021

’000

Guangdong Clifford MedicalDiagnostic TechnologyCo., Ltd.廣東祈福醫學診斷技術有限公司*

The PRC,17 December 2020,limited liabilitycompany


(d)

Guangzhou Clifford HealthConsulting Co., Ltd.廣州市祈福健康諮詢有限公司**

The PRC,15 March 2017,limited liabilitycompany


(c)

Guangzhou Clifford MedicalInvestment ConsultingCo., Ltd.廣州市祈福醫療投資諮詢有限公司**



(c)

Guangzhou Clifford DentalClinic Co., Ltd.廣州市祈福口腔門診部有限公司**

The PRC,16 May 2017,limited liabilitycompany


(c)

Guangzhou Clifford New BigPharmacy Co., Ltd.廣州市祈福新大藥房有限公司*

The PRC,31 July 2017,limited liabilitycompany

RMB1,300 NA 100% 100% 100% Sales ofpharmaceuticals

(c)

Guangzhou CliffordPharmaceutical Co., Ltd.廣州市祈福醫藥有限公司*

The PRC,17 July 2006,limited liabilitycompany

RMB500 NA 100% 100% 100% Sales ofpharmaceuticals

(c)

Guangzhou Clifford MedicalConsulting Co., Ltd廣州市祈福醫療顧問有限公司*

The PRC,5 August 2021,limited liabilitycompany

HKD– NA NA 100% 100% Healthcareservices

(e)

Guangzhou Clifford DentalHealth Medical InvestmentCo., Ltd廣州市祈福口腔健康醫療投資有限公司*

The PRC,7 September 2021,limited liabilitycompany

RMB5,000 NA NA 100% 100% Healthcareservices

(e)

* Registered as wholly foreign owned enterprises under PRC law.

** Registered as domestic enterprises under the PRC law.

(a) The statutory auditor of these subsidiaries is Guangzhou Yeqin Certified Public Accountants Limited (廣州市業勤會計師事務所有限公司) in the PRC, for the years ended 31 December 2019 and 2020. As at thedate of this report, the audited financial statements for the year ended 31 December 2021 have not beenissued.

(b) The statutory auditor of this subsidiary is Guangzhou Mingxin Certified Public Accountants Limited (廣州明信會計師事務所有限公司) in the PRC, for the years ended 31 December 2019 and 2020. As at the dateof this report, the audited financial statements for the year ended 31 December 2021 have not been issued.



– I-15 –

(c) The statutory auditor of this subsidiary is Guangdong Huijian Certified Public Accountants Limited (廣東惠建會計師事務所有限公司) in the PRC for the year ended 31 December 2019, and Guangzhou AnyiCertified Public Accountants Limited (廣州安億會計師事務所有限公司) in the PRC for the year ended 31December 2020. As at the date of this report, the audited financial statements for the year ended 31December 2021 have not been issued.

(d) The subsidiary was established in 2020. As at the date of this report, the audited financial statements forthe year ended 31 December 2020 and 2021 have not been issued.

(e) These subsidiaries were established in 2021. As at the date of this report, the audited financial statementsfor the year ended 31 December 2021 have not been issued.

(f) This subsidiary is established in 2018. As at the date of this report, the audited financial statements for theyear ended 31 December 2019, 2020 and 2021 have no been issued.

(g) The English name of the indirectly held subsidiaries represents the best effort by the management of theGroup in translating their Chinese names as they do not have an official English name.

1.3 Basis of presentation

The Company has not been involved in any other business prior to the recapitalisation and do not meet thedefinition of a business. The transfer of Skill Plus and its subsidiaries (the “Skill Plus Group”) which engage inthe Hospital Business to Ms. Wendy Man from her spouse in December 2020 and further to the Company inAugust 2021 is merely a recapitalisation of the Skill Plus Group, and did not change its business substance andkey management. Accordingly, the assets, liabilities and results of the Skill Plus Group were recognised andmeasured at the carrying values for the entire Track Record Period presented for the purpose of this accountant’sreport.

Immediately before and after the Reorganisation, the companies now comprising the Group, engaging inthe Hospital Business and the Healthcare and Pharmaceutical Business, were under the common control of Ms.Wendy Man. Accordingly, the Reorganisation is regarded as a business combination under common control, andfor the purpose of this report, the Historical Financial Information has been prepared using the principles ofmerger accounting, as prescribed in Hong Kong Accounting Guideline 5 “Merger Accounting for CommonControl Combinations” issued by the Hong Kong Institute of Certified Public Accountants.

The Historical Financial Information has been prepared by including the historical financial information ofthe companies engaged in the Hospital Business for the entire Track Record Period, and the Healthcare andPharmaceutical Business since 29 December 2020, the date when the Hospital Business and Healthcare andPharmaceutical Business first came under the common control of Ms. Wendy Man.

Inter-company transactions, balances and unrealised gains/losses on transactions between group companiesare eliminated on consolidation.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of the Historical Financial Information are set outbelow. These policies have been consistently applied to all the periods presented, unless otherwise stated.

2.1 Basis of preparation

2.1.1 Historical cost convention

The Historical Financial Information has been prepared in accordance with the Hong Kong FinancialReporting Standards (“HKFRSs”) issued by Hong Kong Institute of Certified Public Accountants(“HKICPA”). The Historical Financial Information has been prepared under the historical cost convention,as modified by the revaluation of investment properties, which are carried at fair value.



– I-16 –

2.1.2 Going concern assumption

As at 31 December 2021, the Group had net current liabilities of RMB150,359,000.

Management closely monitors the Group’s financial performance and liquidity position, and whennecessary, puts in place measures to ensure the Group has sufficient cash to meet its obligations. As at thedate of this report, the Group has obtained facilities of RMB505,900,000 in total from state-owned banks,including (1) a long-term loan agreement signed on 9 March 2022, with credit limit of RMB305,900,000,allowing the Group to draw down until 10 December 2024 and (2) a general facility agreement signed on29 December 2021, with available credit limit of RMB200,000,000, allowing the Group to draw down until27 December 2022.

Also, management has prepared cash flow projections of the Group covering a period of not lessthan twelve months from 31 December 2021 on the basis that (I) the Group will continue to generateoperating cash inflows; and (II) the bank facilities will be continuously available.

The Directors have reviewed the Group’s cash flow projection and have made due enquiries andconsidered the basis and assumptions of management’s projections as described above. The Directors areof the opinion that, taking into account the Group’s historical and future operational performance andoperating cash inflows; and the continuous availability of the bank facilities, the Group will havesufficient financial resources to support its operations and to meet its financial obligations as and whenthey fall due in the coming twelve months from 31 December 2021. Accordingly, the Historical FinancialInformation has been prepared on a going concern basis.

2.1.3 Business combination under common control

On 20 December 2021, the Company acquired the entire issued shares of the companies that wereengaged in the Healthcare and Pharmaceutical Business from a company controlled by Ms. Wendy Man(Note 1.2(g)). The aforesaid acquisition is considered a business combination involving entities undercommon control and has been accounted for using the merger accounting method, in accordance with theguidance set out in Accounting Guideline 5 “Merger Accounting for Common Control Combinations”issued by the HKICPA.

As a result, the financial statement items of the companies engaging in the Healthcare andPharmaceutical Business are included in the consolidated financial statements of the Group as if thecombination had occurred from the date when the Hospital Business and Healthcare and PharmaceuticalBusiness first came under the common control of Ms. Wendy Man on 29 December 2020.

The effect of the combination of the Healthcare and Pharmaceutical Business on the consolidatedstatements of comprehensive income, changes in equity and cash flows for the 2 days from 30 December2020 to 31 December 2020 were considered to be insignificant.



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Details of the purchase consideration and the net asset combined are as follow:

As at29 December

2020RMB’000

Consideration paid and payable –

Recognised amounts of identifiable assets and liabilities arising from thecombination of subsidiaries under the Healthcare and PharmaceuticalBusiness

Property, plant and equipment 10,545Intangible assets 223Deferred income tax assets 186Inventories 6,135Trade and other receivables and prepayments (Note 34(xii)) 162,089Cash and cash equivalents 48,344Lease liabilities (4,838)Trade and other payables (Note 34(xvi)) (170,465)Contract liabilities (4,169)Current income tax liabilities (3,410)Bank borrowings (1,000)

Total identifiable net assets 43,640

Credit to equity of the Group 43,640

Cash inflow arising from combination during the year ended31 December 2020:

Cash and cash equivalents in the subsidiaries combined 48,344Less: total cash considerations –

Cash inflow in the year 48,344



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2.1.4 New and amended standards and interpretation not yet adopted by the Group

The HKICPA has issued the following new standards and amendments to existing standards whichare not yet effective and have not been early adopted by the Group during the Track Record Period:

Effective forannual periods

beginning on orafter

Amendments to HKFRS 3 Update reference to the conceptual framework 1 January 2022

Amendments to HKAS 37 Onerous contracts – costs of fulfilling acontract

1 January 2022

Amendments to HKAS 16 Property, plant and equipment: proceeds beforeintended use

1 January 2022

Annual Improvements Annual improvements to HKFRS standards2018–2020 cycle

1 January 2022

Revised AccountingGuideline 5

Merger accounting for common controlcombination

1 January 2022

Amendments to HKAS 1 Classification of liabilities as current ornon-current

1 January 2023

HKFRS 17 Insurance contracts 1 January 2023

Amendments to HKAS 1and HKFRS PracticeStatement 2

Disclosure of accounting policies 1 January 2023

Amendments to HKAS 8 Definition of accounting estimates 1 January 2023

Amendments to HKAS 12 Deferred tax related to assets and liabilitiesarising from a single transaction

1 January 2023

Hong Kong Interpretation 5(2020)

Presentation of financial statements –classification by the borrower of a term loanthat contains a repayment on demand clause

1 January 2023

Amendments to HKFRS 10and HKAS 28

Sale or contribution of assets between aninvestor and its associate or joint ventures

To be determined

The Group has already commenced an assessment of the impact of these new or revised standardsand amendments. According to the preliminary assessment made by the Group, no significant impact onthe Group’s financial statements is expected when they become effective.



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2.2 Principles of consolidation

2.2.1 Consolidation

A subsidiary is an entity (including a structured entity) over which the Group has control. TheGroup controls an entity when the Group is exposed to, or has rights to, variable returns from itsinvolvement with the entity and has the ability to affect those returns through its power over the entity.Subsidiaries are consolidated from the date on which control is transferred to the Group. They aredeconsolidated from the date that control ceases.

(a) Business combinations

(i) Business combinations under common control

The consolidated financial statements incorporate the financial statement items of thecombining entities or businesses in which the common control combination occurs as if theyhad been consolidated from the date when the combining entities or businesses first cameunder the control of the controlling party.

The net assets of the combining entities or businesses are consolidated using theexisting book values from the controlling party’s perspective. No amount is recognised inrespect of goodwill or excess of acquirer’s interest in the net fair value of acquiree’sidentifiable assets, liabilities and contingent liabilities over cost at the time of commoncontrol combination, to the extent of the continuation of the controlling party’s interest.

The consolidated income statements and the consolidated statements of comprehensiveincome includes the results of each of the combining entities or businesses from the earliestdate presented or since the date when the combining entities or businesses first came underthe common control, where this is a shorter period, regardless of the date of the commoncontrol consolidation.

A uniform set of accounting policies is adopted by those entities. All intra-grouptransactions, balances and unrealised gains on transactions between combining entities orbusiness are eliminated on consolidation.

(ii) Business combinations not under common control

The Group applies the acquisition method to account for business combinations notunder common control. The consideration transferred for the acquisition of a subsidiary is thefair values of the assets transferred, the liabilities incurred to the former owners of theacquiree and the equity interests issued by the Group. The consideration transferred includesthe fair value of any asset or liability resulting from a contingent consideration arrangement.Identifiable assets acquired and liabilities and contingent liabilities assumed in a businesscombination are measured initially at their fair values at the acquisition date. The Grouprecognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis.Non-controlling interests in the acquiree that are present ownership interest and entitle theirholders to a proportionate share of the entity’s net assets in the event of liquidation aremeasured at either fair value or the present ownership interest’s proportionate share of therecognised amounts of acquiree’s identifiable net assets. All other components ofnon-controlling interests are measured at their acquisition date fair value, unless anothermeasurement basis is required by HKFRS.

Acquisition-related costs are expensed as incurred.



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If the business combination is achieved in stages, the acquisition date carrying value ofthe acquirer’s previously held equity interest in the acquiree is re-measured to fair value at theacquisition date. Any gains or losses arising from such re-measurement are recognised inprofit or loss.

Any contingent consideration to be transferred by the Group is recognised at fair valueat the acquisition date. Subsequent changes to the fair value of the contingent considerationthat is deemed to be an asset or liability is recognised in profit or loss. Contingentconsideration that is classified as equity is not remeasured, and its subsequent settlement isaccounted for within equity.

The excess of the consideration transferred, the amount of any non-controlling interestin the acquiree and the acquisition-date fair value of any previous equity interest in theacquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. Ifthe total of consideration transferred, non-controlling interest recognised and previously heldinterest measured is less than the fair value of the net assets of the subsidiary acquired in thecase of a bargain purchase, the difference is recognised directly in profit or loss.

Intra-group transactions, balances and unrealised gains on transactions between groupcompanies are eliminated. Unrealised losses are also eliminated. When necessary, amountsreported by subsidiaries have been adjusted to conform with the Group’s accounting policies.

(b) Changes in ownership interests in subsidiaries without change of control

Transactions with non-controlling interests that do not result in a loss of control are accountedfor as equity transaction - that is, as transactions with equity owners of the subsidiary in theircapacity as owners. The difference between fair value of any consideration paid and the relevantshare acquired of the carrying amount of net assets of the subsidiary is recorded in equity. Gains orlosses on disposal to non-controlling interests are also recorded in equity.

(c) Disposal of subsidiaries

When the Group ceases to have control, any retained interest in the entity is re-measured toits fair value at the date when control is lost, with the change in carrying amount recognised inprofit or loss. The fair value is the initial carrying amount for the purposes of subsequentlyaccounting for the retained interest as an associate, joint venture or financial asset. In addition, anyamounts previously recognised in other comprehensive income in respect of that entity areaccounted for as if the Group had directly disposed of the related assets or liabilities. This maymean that amounts previously recognised in other comprehensive income are reclassified to profit orloss or retained earnings.

2.2.2 Separate financial statements

Investments in subsidiaries are accounted for at cost less impairment. Cost includes directattributable costs of investment. The results of subsidiaries are accounted for by the Company on the basisof dividend received and receivable.

Impairment testing of the investments in subsidiaries is required upon receiving a dividend fromthese investments if the dividend exceeds the total comprehensive income of the subsidiary in the periodthe dividend is declared or if the carrying amount of the investment in the separate financial statementsexceeds the carrying amount of the investee’s net assets including goodwill in the historical financialinformation.



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2.3 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chiefoperating decision-maker (“CODM”). The chief operating decision-maker, who is responsible for allocatingresources and assessing performance of the operating segments, has been identified as the executive directors ofthe Company.

2.4 Foreign currency translation

2.4.1 Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using thecurrency of the primary economic environment in which the entity operates (“the functional currency”).Since the majority of the assets and operations of the Group are located in the PRC, the HistoricalFinancial Information are presented in RMB, which is the Company’s functional and the Group’spresentation currency.

2.4.2 Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange ratesprevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchangegains and losses resulting from the settlement of such transactions and from the translation at period-endexchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profitor loss.

Foreign exchange gains and losses that relate to borrowings are presented in the consolidatedstatements of comprehensive income within finance costs. All other foreign exchange gains and losses arepresented in the consolidated statements of profit or loss and other comprehensive income on a net basiswithin other gains or losses.

2.4.3 Group companies

The results and financial position of all the group entities (none of which has the currency of ahyperinflationary economy) that have a functional currency different from the presentation currency aretranslated into the presentation currency as follows:

(i) assets and liabilities for the consolidated balance sheets presented are translated at the closingrate at the balance sheet dates;

(ii) income and expenses for each statement of comprehensive income are translated at averageexchange rates (unless this is not a reasonable approximation of the cumulative effect of therates prevailing on the transaction dates, in which case income and expenses are translated atthe dates of the transaction); and

(iii) all resulting exchange differences are recognised in other comprehensive income.

2.5 Property, plant and equipment

Property, plant and equipment are stated at historical cost less depreciation and accumulated impairment.Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, asappropriate, only when it is probable that future economic benefits associated with the asset will flow to theGroup and the cost of the item can be measured reliably. The carrying amount of the replaced part isderecognised. All other repairs and maintenance are charged to the consolidated statements of comprehensiveincome during the periods in which they are incurred.



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Depreciation is calculated using the straight-line method to allocate their cost, net of their residual values,over their estimated useful lives or, in the case of leasehold improvements and certain leased plant andequipment, the shorter lease term as follows:

Estimated useful lives

Buildings and facilities 10–50 yearsMedical equipment 5–10 yearsOffice equipment and furniture 3–5 yearsDecoration Shorter of remaining lease

term or 5 yearsRight-of-use for land 50 yearsRight-of-use for properties Shorter of remaining lease

term or estimated useful life

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reportingdate. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carryingamount is greater than its estimated recoverable amount.

Gains and losses on disposal are determined by comparing the proceeds with the carrying amounts. Theseare included in the profit or loss.

Construction-in-progress (the “CIP”) represents buildings and facilities and decoration under constructionand is stated at cost less accumulated impairment losses, if any. Cost includes the costs of construction andacquisition and capitalised borrowing costs. No provision for depreciation is made on CIP until such time as therelevant assets are completed and ready for intended use. When the assets concerned are available for use, thecost are transferred to relevant categories of property, plant and equipment and depreciated in accordance withthe policy as stated above. The carrying amount of CIP is written down immediately to its recoverable amount ifthe asset’s carrying amount is greater than its estimated recoverable amount.

2.6 Investment properties

Investment properties are held for long-term rental yields or for capital appreciation or both, and that arenot occupied by the Group. Investment properties are initially measured at cost, including related transactioncosts and where applicable borrowing costs. After initial recognition, investment properties are carried at fairvalue, representing open market value determined at each reporting date by external valuers. Fair value is basedon active market prices, adjusted, if necessary, for any difference in the nature, location or condition of thespecific asset. If the information is not available, the Group uses alternative valuation methods such as recentprices on less active markets or discounted cash flow projections. Changes in fair values are presented in profitor loss as part of a valuation gain or loss.

2.7 Intangible assets

Intangible assets mainly include computer software. They are initially recognised and measured at costsincurred to acquire and bring them to use. Intangible assets are amortised over their estimated useful lives(generally 5 years based on management’s expectation on the technological lives of the computer software),using the straight-line method which reflects the pattern in which the intangible asset’s future economic benefitsare expected to be consumed.

2.8 Impairment of non-financial assets

Intangible assets that have an indefinite useful life are not subject to amortisation and are tested annuallyfor impairment, or more frequently if events or changes in circumstances indicate that they might be impaired.Other assets that are subject to amortisation are tested for impairment whenever events or changes incircumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for theamount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is thehigher of an asset’s fair value less costs of disposal and value in use. For the purposes of assessing impairment,



– I-23 –

assets are grouped at the lowest levels for which there are separately identifiable cash flows which are largelyindependent of the cash inflows from other assets or groups of assets. Non-financial assets, except for goodwill,that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

2.9 Investments and other financial assets

(a) Classification

The Group classifies its financial assets in the following measurement categories:

• those to be measured subsequently at fair value (either through other comprehensive income,or through profit or loss), and

• those to be measured at amortised cost.

The classification depends on the entity’s business model for managing the financial assets and thecontractual terms of the cash flows.

For financial assets measured at fair value, gains and losses will either be recorded in profit or lossor other comprehensive income. For investments in debt instruments, this will depend on the businessmodel in which the investment is held.

The Group reclassifies debt investments when and only when its business model for managing thoseassets changes.

(b) Recognition and derecognition

Regular way purchases and sales of financial assets are recognised on trade-date, the date on whichthe Group commits to purchase or sell the asset. Financial assets are derecognised when the rights toreceive cash flows from the financial assets have expired or have been transferred and the Group hastransferred substantially all the risks and rewards of ownership.

(c) Measurement

At initial recognition, the Group measures a financial asset at its fair value plus, in the case of afinancial asset not at fair value through profit or loss, transaction costs that are directly attributable to theacquisition of the financial asset. Transaction costs of financial assets carried at fair value through profitor loss are expensed in profit or loss.

Financial assets with embedded derivatives are considered in their entirety when determiningwhether their cash flows are solely payment of principal and interest.

Debt instruments

Subsequent measurement of debt instruments depends on the Group’s business model formanaging the asset and the cash flow characteristics of the asset. There are three measurementcategories into which the Group classifies its debt instruments:

• Amortised cost: Assets that are held for collection of contractual cash flows wherethose cash flows represent solely payments of principal and interest are measured atamortised cost. Interest income from these financial assets is included in financeincome using the effective interest rate method. Any gain or loss arising onderecognition is recognised directly in profit or loss and presented in othergains/(losses) together with foreign exchange gains and losses. Impairment losses arepresented as separate line item in the statement of profit or loss.



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• Fair value through other comprehensive income (FVOCI): Assets that are held forcollection of contractual cash flows and for sale, where the assets’ cash flows representsolely payments of principal and interest, are measured at FVOCI. Movements in thecarrying amount are taken through other comprehensive income (OCI), except for therecognition of impairment gains or losses, interest revenue and foreign exchange gainsand losses which are recognised in profit or loss. When the financial asset isderecognised, the cumulative gain or loss previously recognised in OCI is reclassifiedfrom equity to profit or loss and recognised in other gains/(losses) – net. Interestincome from these financial assets is included in finance income using the effectiveinterest rate method. Foreign exchange gains and losses are presented in othergains/(losses) – net and impairment expenses in other expenses.

• Fair value through profit or loss: Assets that do not meet the criteria for amortised costor FVOCI are measured at fair value through profit or loss. A gain or loss on a debtinvestment that is subsequently measured at fair value through profit or loss and is notpart of a hedging relationship is recognised in profit or loss and presented net in theconsolidated statements of comprehensive income within other gains/(losses) – net inthe period in which it arises.

2.10 Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the consolidated balance sheetswhere the Group currently has a legally enforceable right to offset the recognised amounts and there is anintention to settle on a net basis or realise the asset and settle the liability simultaneously.

2.11 Impairment of financial assets

The Group assesses on a forward-looking basis the expected credit losses associated with its debtinstruments carried at amortised cost. The impairment methodology applied depends on whether there has been asignificant increase in credit risk. Note 3.1.2 details how the Group determines whether there has been asignificant increase in credit risk.

Expected credit losses are a probability-weighted estimate of credit losses (i.e. the present value of allcash shortfalls) over the expected life of the financial assets.

For trade receivables, the Group applies the simplified approach permitted by HKFRS 9, which requiresexpected lifetime losses to be recognised from initial recognition of the assets. The provision matrix isdetermined based on historical observed default rates over the expected life of the trade receivables with similarcredit risk characteristics and is adjusted for forward-looking estimates. At every reporting date the historicalobserved default rates are updated and changes in the forward-looking estimates are analysed.

Impairment on other receivables is measured as either 12-month expected credit losses or lifetime expectedcredit losses, depending on whether there has been a significant increase in credit risk since initial recognition. Ifa significant increase in credit risk of a receivable has occurred since initial recognition, then impairment ismeasured as lifetime expected credit losses.

2.12 Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-infirst-out method. Net realisable value is the estimated selling price in the ordinary course of business, lessapplicable variable selling expenses.



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2.13 Contract assets and contract liabilities

Upon entering into a contract with a customer, the Group obtains rights to receive consideration from thecustomer and assumes performance obligations to transfer goods or provide services to the customer. Thecombination of those rights and performance obligations gives rise to a net asset or a net liability depending onthe relationship between the remaining rights and the performance obligations. The contract is an asset andrecognised as contract assets if the measure of the remaining rights exceeds the measure of the remainingperformance obligations. Conversely, the contract is a liability and recognised as contract liabilities if themeasure of the remaining performance obligations exceeds the measure of the remaining rights.

2.14 Trade and other receivables

Trade receivables are amounts due from customers and governments’ social insurance schemes for hospitaland healthcare services rendered and pharmaceutical sales in the ordinary course of business. If collection oftrade receivables is expected in one year or less (or in the normal operating cycle of the business if longer), theyare classified as current assets. If not, they are presented as non-current assets.

Trade and other receivables are recognised initially at fair value and subsequently measured at amortisedcost using the effective interest method, less provision for impairment.

2.15 Cash and cash equivalents

For the purpose of presentation in the consolidated statement of cash flows, cash and cash equivalentsincludes cash at bank and in hand, and bank term deposits with financial institutions that are readily convertibleto known amounts of cash and which are subject to an insignificant risk of changes in value.

2.16 Share capital

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net oftax, from the proceeds.

2.17 Trade and other payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary courseof business from suppliers. Trade payables are classified as current liabilities if payment is due within one year(or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using theeffective interest method.

2.18 Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings aresubsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and theredemption amount is recognised in profit or loss over the period of the borrowings using the effective interestmethod.

Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to theextent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred untilthe draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility willbe drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of thefacility to which it relates.



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Borrowings are removed from the balance sheet when the obligation specified in the contract isdischarged, cancelled or expired. The difference between the carrying amount of a financial liability that hasbeen extinguished or transferred to another party and the consideration paid, including any non-cash assetstransferred or liabilities assumed, is recognised in profit or loss as finance costs.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defersettlement of the liability for at least 12 months after the reporting period.

2.19 Borrowing costs

General and specific borrowing costs that are directly attributable to the acquisition, construction orproduction of a qualifying asset are capitalised during the period of time that is required to complete and preparethe asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period oftime to get ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditureon qualifying assets is deducted from the borrowing costs eligible for capitalisation.

Other borrowing costs are expensed in the period in which they are incurred.

2.20 Current and deferred income tax

The income tax expense or credit for the period is the tax payable or recoverable on the current period’staxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred taxassets and liabilities attributable to temporary differences and to unused tax losses.

2.20.1 Current income tax

The current income tax charge is calculated on the basis of the tax laws enacted or substantivelyenacted at the reporting dates in the countries where the Company’s subsidiaries operate and generatetaxable income. Management periodically evaluates positions taken in tax returns with respect to situationsin which applicable tax regulation is subject to interpretation. It establishes provisions where appropriateon the basis of amounts expected to be paid to the tax authorities.

2.20.2 Deferred income tax

(i) Inside basis differences

Deferred income tax is recognised, using the liability method, on temporary differencesarising between the tax bases of assets and liabilities and their carrying amounts in the historicalfinancial information. However, deferred tax liabilities are not recognised if they arise from theinitial recognition of goodwill, the deferred income tax is not accounted for if it arises from initialrecognition of an asset or liability in a transaction other than a business combination that at the timeof the transaction affects neither accounting nor taxable profit or loss. Deferred income tax isdetermined using tax rates (and laws) that have been enacted or substantively enacted by the end ofeach reporting period and are expected to apply when the related deferred income tax asset isrealised or the deferred income tax liability is settled.

Deferred income tax assets are recognised only to the extent that it is probable that futuretaxable profit will be available against which the temporary differences can be utilised.

(ii) Outside basis differences

Deferred income tax liabilities are provided on taxable temporary differences arising frominvestments in subsidiaries, except for deferred income tax liability where the timing of the reversalof the temporary difference is controlled by the Group and it is probable that the temporarydifference will not reverse in the foreseeable future.



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Deferred income tax assets are recognised on deductible temporary differences arising frominvestments in subsidiaries only to the extent that it is probable the temporary difference willreverse in the future and there is sufficient taxable profit available against which the temporarydifference can be utilised.

2.20.3 Offsetting

Deferred income tax assets and liabilities are offset when there is a legally enforceable right tooffset current tax assets against current tax liabilities and when the deferred income tax assets andliabilities relate to income taxes levied by the same taxation authority on either the taxable entity ordifferent taxable entities where there is an intention to settle the balances on a net basis.

2.21 Employee benefits

2.21.1 Pension obligations

In accordance with the rules and regulations in the PRC, the employees of the Group based in thePRC participate in various defined contribution retirement benefit plans organised by the relevantmunicipal and provincial governments in the PRC under which the Group and the employees are requiredto make monthly contributions to these plans calculated as a percentage of the employees’ salaries, subjectto certain ceiling. The municipal and provincial governments undertake to assume the retirement benefitobligations of all existing and future retired employees based in the PRC payable under the plansdescribed above. Other than the monthly contributions, the Group has no further obligation for thepayment of retirement and other post-retirement benefits of its employees in the PRC. The assets of theseplans are held separately from those of the Group in an independent fund managed by the PRCgovernment.

The Group also participates in a retirement benefit scheme under the rules and regulations of theMandatory Provident Fund Scheme Ordinance (“MPF Scheme”) for all employees in Hong Kong. Thecontributions to the MPF Scheme are based on minimum statutory contribution requirement of the lower of5% of eligible employees’ relevant aggregate income and Hong Kong Dollars (“HK”) $1,500. The assets ofthis MPF Scheme are held separately from those of the Group in independently administered funds.

The Group’s contributions to these plans are expensed as incurred.

2.21.2 Housing funds, medical insurances and other social insurances

The employees of the Group based in the PRC are entitled to participate in various government-supervised housing funds, medical insurance and other employee social insurance plan. The Groupcontributes on a monthly basis to these funds based on certain percentages of the salaries of theemployees, subject to certain ceiling. The Group’s liability in respect of these funds is limited to thecontributions payable in each period. Contributions to these funds are expensed as incurred.

2.21.3 Short-term obligations

Liabilities for wages and salaries, including non-monetary benefits and accumulated sick leave thatare expected to be settled wholly within 12 months after the end of the period in which the employeesrendered the related service are recognised in respect of employees’ services up to the end of the reportingperiod and are measured at the amounts expected to be paid when the liabilities are settled. The liabilitiesare presented as current employee benefit obligations in the consolidated balance sheet.

2.21.4 Employee leave entitlement

Employee entitlement to annual leave are recognised when they have accrued to employees. Aprovision is made for the estimated liability for annual leave as a result of services rendered by employeesup to each reporting date. Employees entitlement to sick leave and maternity leave are not recognised untilthe time of leave.



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2.21.5 Bonus plan

The expected cost of bonuses is recognised as a liability when the Group has a present legal orconstructive obligation for payment of bonus as a result of services rendered by employees and a reliableestimate of the obligation can be made. Liabilities for bonus plans are expected to be settled within 1 yearand are measured at the amounts expected to be paid when they are settled.

2.22 Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of pastevents, it is probable that an outflow of resources will be required to settle the obligation and the amount can bereliably estimated. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required insettlement is determined by considering the class of obligations as a whole. A provision is recognised even if thelikelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of management’s best estimate of the expenditure required tosettle the present obligation at the end of the reporting period. The discount rate used to determine the presentvalue is a pre-tax rate that reflects current market assessments of the time value of money and the risks specificto the liability. The increase in the provision due to the passage of time is recognised as interest expense.

2.23 Revenue recognition

The Group’s revenue is primarily derived from providing hospital and other healthcare services and salesof pharmaceuticals to customers.

Revenues are recognised when, or as, the control of the goods or services is transferred to the customer.Depending on the terms of the contract and the laws applicable, control of the goods and services may betransferred over time or at a point in time. Control of the goods and services is transferred over time if theGroup’s performance:

• Provides all of the benefits received and consumed simultaneously by the customer;

• Creates and enhances an asset that the customer controls as the Group performs; or

• Does not create an asset with an alternative use to the Group and the Group has an enforceable rightto payment for performance completed to date.

If control of the goods and services transfers over time, revenue is recognised over the period of thecontract by reference to the progress towards complete satisfaction of that performance obligation. Otherwise,revenue is recognised at a point in time when the customer obtains control of the goods and services.

The progress towards complete satisfaction of performance obligation, depending on the nature of the goodand service to be transferred, is measured based on one of the following methods that best depicts the Group’sperformance in satisfying the performance obligation:

• Direct measurements of the value of individual services transferred by the Group to the customer; or

• The Group’s efforts or inputs to the satisfaction of the performance obligation.

The following is a description of the accounting policy for the principal revenue streams of the Group.

Revenue from medical services is recognised when the related services have been rendered and includesout-patient and in-patient services.



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(a) Out-patient services

For out-patient services, the patient normally receives out-patient treatment which contains varioustreatment components. Out-patient services contain more than one performance obligations, including (i)provision of consultation and medical treatment services and (ii) sale of pharmaceuticals. Both (i)provision of consultation services and medical treatment and (ii) sale of pharmaceuticals for which thecontrol of services or pharmaceuticals is transferred at a point in time, and revenue is recognised when thecustomer obtains the control of the completed services or pharmaceuticals and the Group has satisfied itsperformance obligations with present right to payment and the collection of the consideration is probable.

(b) In-patient services

For in-patient services, the customers normally receive in-patient treatment which contains varioustreatment components. In-patient service contains more than one performance obligations, including (i)provision of consultation and medical treatment services and (ii) provision of in- patient healthcareservices and (iii) sale of pharmaceuticals.

For revenue from in-patient services for which control of services or pharmaceuticals is transferredat a point in time, revenue is recognised when the customer obtains the control of the completed servicesor pharmaceuticals and the Group has satisfied its performance obligations with present right to paymentand the collection of the consideration is probable.

(c) Ancillary services related to hospital operation

Ancillary services related to hospital operation mainly comprise provision of vehicle parkingservices and healthcare training services provided to external customers, the corresponding revenue isrecognised over the service period when customers simultaneously receive the services and consume thebenefits provided by the Group’s performance as the Group performs.

(d) Sales of pharmaceuticals

The Group sells pharmaceuticals through wholesale and retail channels. Revenue frompharmaceutical sales is recognised at a point in time when control of the inventory has transferred, beingwhen the inventory is delivered to the customers, the customers have full discretion to use the inventory,and there is no unfulfilled obligation that could affect the customers’ acceptance of the inventory.

(e) Healthcare services

Revenue from the provision of healthcare services which include postpartum care services, elderlycare services and dental care services, is recognised over the service period when customerssimultaneously receive the services and consume the benefits provided by the Group’s performance as theGroup performs.

2.24 Interest income

Interest income on financial assets at amortised cost calculated using the effective interest method isrecognised in the consolidated statement of comprehensive income as “other income”.

Interest income is presented as finance income where it is earned from financial assets that are held forcash management purposes, see Note 11 below.

2.25 Leases

The Group as the lessee:

The Group leases various land and properties. Rental contracts are typically made for a fixed periodof 3 months to 6 years. Lease terms are negotiated on an individual basis and contain a wide range ofdifferent terms and conditions. The lease agreements do not impose any covenants.



– I-30 –

Leases are recognised as a right-of-use asset and a corresponding liability at the date at which theleased asset is available for use by the Group. Each lease payment is allocated between the liability andfinance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constantperiodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset isdepreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis.

Assets and liabilities arising from a lease are initially measured on a present value basis. Leaseliabilities include the net present value of the following lease payments:

• fixed payments (including in-substance fixed payments), less any lease incentives receivable;

• variable lease payment that are based on an index or a rate;

• amounts expected to be payable by the lessee under residual value guarantees.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot bereadily determined, which is generally the case for leases in the Group, the lessee’s incremental borrowingrate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary toobtain an asset of similar value to the right-of-use asset in a similar economic environment with similarterms, security and conditions.

Right-of-use assets are measured at cost comprising the following:

• the amount of the initial measurement of lease liability;

• any lease payments made at or before the commencement date less any lease incentivesreceived;

• any initial direct costs.

Payments associated with short-term leases and leases of low-value assets are recognised on astraight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12months or less. Low-value assets comprise of medical equipment.

The Group as the lessor:

Lease classification is made at the inception date and is reassessed only if there is a leasemodification. A lease is classified as an operating lease if it does not transfer substantially all the risks andrewards incidental to ownership of an underlying asset. If there are variable lease payments and as a resultof which the lessor does not transfer substantially all such risks and rewards, it would be an operatinglease.

Lease income from operating leases where the Group is a lessor is recognised as income on astraight-line basis over the lease term. The respective leased assets are included in the balance sheet basedon their nature.

2.26 Dividend distribution

Dividend distribution to the Company’s shareholders is recognised as a liability in the Historical FinancialInformation in the period in which the dividends are approved by the Company’s shareholders or directors, whereappropriate.

2.27 Government grants

Grants from the government are recognised at their fair value where there is a reasonable assurance thatthe grant will be received and the Group will comply with all attached conditions.



– I-31 –

Government grants relating to costs are deferred and recognised in the consolidated statements ofcomprehensive income over the period necessary to match them with the costs that they are intended tocompensate. Government grants relating to property and equipment, and other non- current assets are included inthe current liabilities and are credited to consolidated statements of comprehensive income on a straight-linebasis over the expected lives of the related assets.

3 FINANCIAL RISK MANAGEMENT

3.1 Financial risk factors

The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchangerisk and cash flow and fair value interest rate risk), credit risk and liquidity risk. The Group’s overall riskmanagement programme focuses on the unpredictability of financial markets and seeks to minimise potentialadverse effects on the Group’s financial performance. Risk management is carried out by the senior managementof the Group.

3.1.1 Market risk

(i) Foreign exchange risk

Foreign exchange risk arises when future commercial transactions or recognised assets andliabilities are denominated in a currency that is not the group entities’ functional currency.

The Group principally operates in Mainland China with most of the transactions being settledin RMB, which is the functional currency of the group entities operated in Mainland China.

The Group also has certain subsidiaries in foreign operations including Hong Kong and theBritish Virgin Islands, whose functional currencies are Hong Kong dollars. Foreign exchange riskarises from the recognised assets and liabilities and net investments in foreign operations. Currencyexposure arising from the net assets of the Group’s foreign operations is managed primarily throughfinancing activities denominated in the relevant foreign currencies. These group entities are exposedto foreign exchange risk of foreign currencies other than their functional currencies, primarily withrespect to RMB. The Group seeks to limit its exposure to foreign currency risk by closelymonitoring and minimizing its net foreign currency position.

As at 31 December 2019, 2020 and 2021, the carrying amounts of the Group’s foreigncurrency denominated monetary assets and liabilities at the respective balance sheet dates are asfollows:


RMB’000 RMB’000 RMB’000

Cash and cash equivalents 531 23,972 20,596Restricted cash 120,950 198,655 –

121,481 222,627 20,596



– I-32 –

The following table shows the sensitivity analysis of a 5% change in RMB against therelevant foreign currencies. The sensitivity analysis includes only foreign currency denominatedmonetary items and adjusts their translation at the year-end for a 5% change in foreign currencyrates. If there is a 5% increase/decrease in RMB against the relevant currencies, the effect ofincrease/(decrease) in the post-tax profit for the year is as follows:


RMB’000 RMB’000 RMB’000

5% appreciation in RMBagainst HK$ 4,556 8,349 772

5% depreciation in RMBagainst HK$ (4,556) (8,349) (772)

(ii) Cash flow and fair value interest rate risk

The Group’s interest-rate risk arises from borrowings. Borrowings issued at variable ratesexpose the Group to cash flow interest-rate risk. Borrowings issued at fixed rates expose the Groupto fair value interest-rate risk. The Group currently has not used any interest rate swap arrangementsbut will consider hedging interest rate risk should the need arise.

Other than interest-bearing short-term bank deposits and amounts due from related parties, theGroup has no other significant interest-bearing assets. The directors of the Company do notanticipate there is any significant impact to interest-bearing assets resulted from the changes ininterest rates, because the interest rates of short-term bank deposits and amounts due from relatedparties are not expected to change significantly.

As at 31 December 2019, 2020 and 2021, bank borrowings of the Group which were bearingat floating rates amounted to approximately RMB982,000,000, RMB1,048,300,000 andRMB844,100,000, respectively. For the years ended 31 December 2019, 2020 and 2021, if thefloating interest rate on borrowings had been increased/decreased by 50 basis points with all othervariables held constant, the post-tax profit would have changed mainly as a result of higher/lowerinterest expenses on floating rate borrowings. Details of post-tax profit changes are as follows:


RMB’000 RMB’000 RMB’000

(Decrease)/increase– Increase by 50 basis points (3,683) (3,931) (3,165)– Decrease by 50 basis points 3,683 3,931 3,165

The interest rates and terms of repayment of borrowings of the Group are disclosed in Note24.

3.1.2 Credit risk

The Group is exposed to credit risk in relation to its trade and other receivables and cash deposits atbanks. The carrying amount of each class of the above financial assets represents the Group’s maximumexposure to credit risk in relation to the corresponding class of financial assets.

(i) Risk management

To manage this risk, cash deposits are mainly placed with state-owned financial institutions inthe PRC and reputable international financial institutions in Hong Kong. There has been no recenthistory of default in relation to these financial institutions.



– I-33 –

The Group’s trade receivables are mainly from providing hospital and other healthcare serviceto customers. The Group, being a provider of hospital and other healthcare service to patients, has ahighly diversified customer base, without any single customer contributing material revenue.However, the Group has concentrated debtor’s portfolio, as the majority of the patients will claimtheir medical bill from public medical insurance program. The reimbursement from theseorganisations may take one to twelve months. The Group has policy in place to ensure thetreatments and medicines prescribed and provided to such insured patients are in line with respectiveorganisations’ policy, provided fulfilling all ethical and moral responsibilities as a healthcareservices provider. The Group also has controls to closely monitor the patients’ billings and claimstatus to minimise the credit risk. The Group generally requires prepayments from patients beforeprovision of services.

For other receivables, management makes periodic collective assessments as well asindividual assessment on the recoverability of such receivables based on historical settlementrecords and past experience. The directors believe that there is no material credit risk inherent in theGroup’s outstanding balance of other receivables.

(ii) Impairment of financial assets

The Group has three types of financial assets that are subject to the expected credit lossmodel:

• cash and cash equivalents and restricted cash

• trade receivables

• other receivables.

Cash and cash equivalents and restricted deposit

While cash and cash equivalents and restricted cash are also subject to the impairmentrequirements of HKFRS 9, the identified impairment loss was immaterial.

Trade receivables

The Group applies the simplified approach to providing for expected credit lossesprescribed by HKFRS 9, which uses a lifetime expected loss allowance for all tradereceivables. To measure the expected credit losses, trade receivables have been grouped basedon shared credit risk characteristics and the days past due. In calculating the expected creditloss rates, the Group considers historical loss rates for each category of receivables andadjusts for forward looking macroeconomic data.

The expected credit losses rates for the third-party trade receivables are determinedaccording to the following provision matrix based on invoice date:

31 December 2019Expected loss

rateGross carrying

amount Loss allowanceRMB’000 RMB’000

Within 1 year 0.06% 75,082 441 to 2 years 7.14% 266 19Over 2 years 100.00% 19 19

75,367 82



– I-34 –


rateGross carrying


Within 1 year 0.06% 59,388 351 to 2 years 8.05% 1,180 94Over 2 years 100.00% 241 241

60,809 370


rateGross carrying


Within 1 year 0.06% 64,122 371 to 2 years 6.44% 1,522 98Over 2 years 100.00% 264 264

65,908 399

Other receivables

Other receivables at amortised cost mainly include amounts due from related partiesand deposits receivables. The directors of the Company have assessed that other receivableshave not had a significant increase in credit risk since initial recognition. The Group assessedand concluded that the counterparties have a low risk of default and a strong capacity to meetcontractual cash flows. Thus, a 12-month expected credit loss approach that results frompossible default event within 12 months of the reporting period of the Group is adopted, andthe directors of the Company have determined the credit risk is immaterial.

3.1.3 Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and cash equivalents. Due tothe dynamic nature of the [REDACTED] Business, the policy of the Group is to regularly monitor theGroup’s liquidity risk and to maintain adequate cash and cash equivalents to meet the Group’s liquidityrequirements.

The table below set out the Group’s financial liabilities grouped into relevant maturity groupingsbased on their contractual maturity dates. The amounts disclosed in the table are the contractualundiscounted cash flows. Balances due within 12 months equal their carrying balances, as the impact ofdiscounting is not significant.

Less than1 year

Between1 and

2 years

Between2 and

5 yearsOver

5 years TotalRMB’000 RMB’000 RMB’000 RMB’000 RMB’000

As at 31 December 2019Borrowings and interests 299,123 160,635 545,067 557,767 1,562,592Lease liabilities 3,170 1,332 2,035 – 6,537Trade and other

payables (a) 570,078 – – – 570,078

872,371 161,967 547,102 557,767 2,139,207



– I-35 –

Less than1 year

Between1 and

2 years

Between2 and

5 yearsOver

5 years TotalRMB’000 RMB’000 RMB’000 RMB’000 RMB’000

As at 31 December 2020Borrowings and interests 294,167 451,059 731,526 103,434 1,580,186Lease liabilities 3,920 2,743 1,826 – 8,489Trade and other

payables (a) 554,522 – – – 554,522

852,609 453,802 733,352 103,434 2,143,197

As at 31 December 2021Borrowings and interests 350,212 157,097 676,800 – 1,184,109Lease liabilities 2,970 1,584 1,256 399 6,209Trade and other

payables (a) 294,697 – – – 294,697

647,879 158,681 678,056 399 1,485,015

Note (a): Trade and other payables excluded accrued payroll and other tax payables.

As at 31 December 2021, the Group had net current liabilities of RMB150,359,000.

Management closely monitors the Group’s financial performance and liquidity position, and whennecessary, puts in place measures to ensure the Group has sufficient cash to meet its obligations. As at thedate of this report, the Group has obtained facilities of RMB505,900,000 in total from state-owned banks,including (1) a long-term loan agreement signed on 9 March 2022, with credit limit of RMB305,900,000,allowing the Group to draw down until 10 December 2024 and (2) a general facility agreement signed on29 December 2021, with available credit limit of RMB200,000,000, allowing the Group to draw down until27 December 2022.

Also, management has prepared cash flow projections of the Group covering a period of not lessthan twelve months from 31 December 2021 on the basis that (I) the Group will continue to generateoperating cash inflows; and (II) the bank facilities will be continuously available.

The Directors have reviewed the Group’s cash flow projection and have made due enquiries andconsidered the basis and assumptions of management’s projections as described above. The Directors areof the opinion that, taking into account the Group’s historical and future operational performance andoperating cash inflows; and the continuous availability of the bank facilities, the Group will havesufficient financial resources to support its operations and to meet its financial obligations as and whenthey fall due in the coming twelve months from 31 December 2021. Accordingly, the Historical FinancialInformation has been prepared on a going concern basis.

3.2 Capital management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a goingconcern in order to provide returns for shareholders and benefits for other stakeholders and to maintain anoptimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid toshareholder, issue new shares or sell assets to reduce debt.



– I-36 –

The Group monitors capital on basis of the gearing ratio. This ratio is calculated as net debt divided bytotal capital. Net debt is calculated as total borrowings and lease liabilities less cash and cash equivalents. Totalcapital includes the capital (including “equity” as shown in the consolidated balance sheets) plus net debt. As at31 December 2019, 2020 and 2021, the gearing ratio of the Group were as follows:

As at 31 December2019 2020 2021

RMB’000 RMB’000 RMB’000

Net debt 1,481,541 1,473,086 639,388Total capital 1,783,652 1,870,461 1,158,223

Gearing ratio 83% 79% 55%

3.3 Fair value estimation

Investment properties of the Group were measured at fair value with details for the fair value estimation asstated in Note 15.

4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

The preparation of the Historical Financial Information requires the use of accounting estimates which, bydefinition, will seldom equal the actual results. Management also needs to exercise judgement in applying the Group’saccounting policies.

Estimates and judgements are continually evaluated. They are based on historical experience and other factors,including expectations of future events that may have a financial impact on the entity and that are believed to bereasonable under the circumstances.

(a) Useful lives of properties, plant and equipment

The estimate of useful lives of property, plant and equipment was made by the management with referenceto the established industry practices, technical assessments made on the durability of the assets, as well as thehistorical magnitude and trend of repair and maintenance expenses incurred by the Group. It could changesignificantly as when the actual useful life is different with the one previously estimated.

(b) Current and deferred income taxes

The Group is subject to income taxes in different jurisdictions. Significant judgement is required indetermining the worldwide provision for income taxes. There are many transactions and calculations for whichthe ultimate tax determination is uncertain. The Group recognises liabilities for anticipated tax audit issues basedon estimates of whether additional taxes will be due. Where the final tax outcome of these matters is differentfrom the amounts that were initially recorded, such differences will impact the current and deferred income taxassets and liabilities in the period in which such determination is made.

For temporary differences which give rise to deferred tax assets, the Group assesses the likelihood that thedeferred income tax assets may be recovered. Deferred tax assets are recognised based on the Group’s estimatesand assumptions that they will be recovered from taxable income arising from continuing operations in theforeseeable future.

5 SEGMENT INFORMATION

The executive directors of the Company are the chief operating decision-makers (the “CODM”) of the Group.The CODM reviews the Group’s internal reporting in order to assess performance and allocate resources. Managementhas determined the operating segments based on these reports.



– I-37 –

The CODM manages the Group’s business from the perspective of different business types of the Group, i.e.hospital services, healthcare services, sales of pharmaceuticals and other services. Before the combination of theHealthcare and Pharmaceutical Business since 29 December 2020, the Group had only one segment, namely theHospital Business segment. Since 29 December 2020, the Group is organised into two segments: the Hospital Businessand the Healthcare and Pharmaceutical Business. Accordingly, segment assets and liabilities are prepared as at 31December 2020 and 2021, segment revenue and results are prepared for the year ended 31 December 2021.

The Company is domiciled in the Cayman Islands while most of the Group’s assets and revenues aresubstantially located in and derived from the PRC, therefore, no geographical segments are presented.

The directors of the Company assess the performance of the operating segments based on a measure of segmentresults, which is a measure of revenue and gross profit of each operating segment.

Segment revenue and gross profit

The segment revenue and results and the reconciliation with profit for the year ended 31 December 2021are as follows:

HospitalBusiness

Healthcareand

PharmaceuticalBusiness Total

RMB’000 RMB’000 RMB’000

Gross Segment revenue 1,138,844 283,170 1,422,014Inter-segment revenue (916) (214,859) (215,775)

Revenue from external customers 1,137,928 68,311 1,206,239

Gross profit 356,545 25,768 382,313

Selling and marketing expenses (36,606)Administrative expenses (130,870)Net impairment losses on financial assets (220)Other income 10,460Other gains – net 2,126Finance costs – net (51,525)Income tax expense (44,530)

Profit for the year 131,148

Gross profit include:Depreciation and amortisation 117,357 4,500 121,857



– I-38 –

The segment assets and liabilities and the reconciliation with total assets and liabilities of the Group as at31 December 2021 are as follows:

HospitalBusiness

Healthcareand


RMB’000 RMB’000 RMB’000

Segment assets 1,439,930 39,956 1,479,886

Unallocated other receivables and prepayments 3,333Deferred income tax assets 2,002Cash and cash equivalents 431,036

Consolidated total assets 1,916,257

Additions to non-current assets (other thanfinancial instruments and deferred income taxassets) 112,984 2,968 115,952

Segment liabilities 1,241,552 53,098 1,294,650

Unallocated other payables and accruals 22,738Current income tax liabilities 19,623Deferred tax liabilities 60,411

Consolidated total liabilities 1,397,422



– I-39 –

The segment assets and liabilities and the reconciliation with total assets and liabilities of the Group as at31 December 2020 are as follows:

HospitalBusiness

Healthcareand


RMB’000 RMB’000 RMB’000

Segment assets 1,855,204 134,122 1,989,326

Deferred income tax assets 1,358Cash and cash equivalents 156,160Restricted Cash 208,653

Consolidated total assets 2,355,497

Additions to non-current assets (other thanfinancial instruments and deferred income taxassets) 77,058 1,977 79,035

Segment liabilities 1,653,645 228,649 1,882,294

Unallocated other payables and accruals 20,049Current income tax liabilities 5,076Deferred tax liabilities 50,703

Consolidated total liabilities 1,958,122

6 REVENUE

(a) Revenue by business line and nature

Years ended 31 December2019 2020 2021

RMB’000 RMB’000 RMB’000

Hospital Business– Out-patient services 303,967 316,246 471,533– In-patient services 474,571 347,870 399,741– Sales of pharmaceuticals 298,022 195,470 254,505– Ancillary services related to hospital operation 6,453 5,122 12,149Healthcare and Pharmaceutical Business– Sales of pharmaceuticals – – 31,369– Healthcare services – – 36,942

Revenue from contracts with customers 1,083,013 864,708 1,206,239



– I-40 –

The Group derives revenue from the transfer of goods and services over time and at a point in time asfollows:


RMB’000 RMB’000 RMB’000

Over time– Ancillary services related to hospital operation 6,453 5,122 12,149– Healthcare services – – 32,891

6,453 5,122 45,040

At a point in time– In-patient services 474,571 347,870 399,741– Out-patient services 303,967 316,246 471,533– Sales of pharmaceuticals 298,022 195,470 285,874– Healthcare services – – 4,051

1,076,560 859,586 1,161,199

Revenue from contracts with customers 1,083,013 864,708 1,206,239

(b) Information about major customers

None of the Group’s customer contributed more than 10% of the Group’s total revenue for the TrackRecord Period.

(c) Contract liabilities

(i) The Group has recognised the following revenue-related contract liabilities:


RMB’000 RMB’000 RMB’000

Hospital Business– Out-patient services 2,679 3,223 2,286– In-patient services 1,304 1,270 1,628Healthcare and Pharmaceutical Business– Sales of pharmaceuticals – 59 26– Healthcare services – 3,737 4,735

Total contract liabilities 3,983 8,289 8,675

As at 1 January 2019, the Group recognised contract liabilities of RMB2,299,000.

(ii) Revenue recognised in relation to contract liabilities:

The following table shows the revenue recognised during the Track Record Period relating tocarried-forward contract liabilities.



– I-41 –


RMB’000 RMB’000 RMB’000

Revenue recognised that was included inthe contract liability balance at thebeginning of the year

Hospital Business– Out-patient services 1,126 2,679 3,223– In-patient services 1,173 1,304 1,270Healthcare and Pharmaceutical Business– Sales of pharmaceuticals – – 59– Healthcare services – – 3,737

Total contract liabilities 2,299 3,983 8,289

All contracts are for periods of one year or less. Hence, the transaction prices allocated to theseunsatisfied performance obligations are not disclosed.

7 OTHER INCOME


RMB’000 RMB’000 RMB’000

Interest income from loans to related parties(Note 30(c)) 6,833 13,806 5,238

Management related services (a) 5,735 5,813 751Rental income 4,147 3,607 3,856Government grants (b) 349 1,322 615

17,064 24,548 10,460

(a) For the years ended 31 December 2019 and 2020, management related services mainly included servicesprovided to the companies under the Healthcare and Pharmaceutical Business (Note 1.2).

(b) Government grants mainly consisted of financial support funds granted by the local governments with nounfulfilled condition.

8 OTHER (LOSSES)/GAINS – NET


RMB’000 RMB’000 RMB’000

Fair value (losses)/gains on investment properties (4,673) 660 630Exchange (losses)/gains – net (2,256) 15,319 694Acceptance of donations from third parties – 1,527 200Compensation received from contractor – – 310Others 50 (51) 292

(6,879) 17,455 2,126



– I-42 –

9 EXPENSES BY NATURE


RMB’000 RMB’000 RMB’000

Cost of pharmaceuticals and consumables 398,945 284,384 315,270Employee benefits expenses (Note 10) 343,274 270,526 396,740Depreciation of property, plant and equipment 90,720 109,476 118,007Utilities 18,335 16,037 19,176Outsourcing labour costs 13,041 20,667 23,303Repair and maintenance expenses 9,721 12,063 15,346Canteen expenses 9,084 6,023 7,632Taxes and other levies 8,682 6,629 9,763Travelling, entertainment, vehicle and office expenses 8,180 5,580 7,507Testing fee 7,426 6,022 19,028Property management expenses 6,715 15,172 16,509Consultancy and professional service fees 7,657 6,935 13,772Greening and cleaning expenses 4,574 4,096 3,765Bank charges 4,557 4,388 4,963Amortisation of intangible assets 1,918 2,737 3,850[REDACTED] expenses – – 11,105Others 5,583 2,701 5,666

938,412 773,436 991,402

10 EMPLOYEE BENEFIT EXPENSES


RMB’000 RMB’000 RMB’000

Salaries, wages and bonuses 301,539 241,513 327,080Contribution to pension scheme expenses (a) 9,992 830 20,264Other employee benefits (b) 31,743 28,183 49,396

343,274 270,526 396,740

(a) Employees in the Group’s PRC subsidiaries are required to participate in a defined contribution retirementscheme administered and operated by the local municipal government. The Group’s PRC subsidiariescontribute funds which are calculated on certain percentage of the average employee salary as agreed bylocal municipal government to the scheme to fund the retirement benefits of the employees.

The decrease in contributions to retirement benefit scheme in the year ended 31 December 2020 comparedto that in the year ended 31 December 2019 was mainly due to the preferential pension compensationpolicy implemented by the local municipal government to relieve negative impact from COVID-19epidemic.

No forfeited contributions were available to reduce the contributions payable in future years at the end ofeach reporting periods.

(b) Other employee benefits mainly include housing benefits, other social insurance, and employee welfares.



– I-43 –

(c) Five highest paid individuals

The five individuals whose emoluments were the highest in the Group included 1, 1, 1 director for theyears ended 31 December 2019, 2020 and 2021, whose emoluments are reflected in the analysis shown in Note32. The emoluments payable to the remaining 4, 4, 4 individuals for the Track Record Period are as follows:


RMB’000 RMB’000 RMB’000

Salaries, wages and bonuses 4,282 3,289 4,416Contribution to pension scheme expenses 24 3 51Other employee benefits 89 171 174

4,395 3,463 4,641

The emoluments fell within the following bands:

Number of individualsYear ended 31 December

2019 2020 2021

Nil – HKD 1,000,000 – 3 –HKD 1,000,001 – HKD1,500,000 4 1 4

4 4 4

11 FINANCE COSTS – NET


RMB’000 RMB’000 RMB’000

Finance income:Interest income of bank deposits 5,474 5,312 8,865Others – – 331

5,474 5,312 9,196

Finance costs:Interest expenses for lease liabilities (256) (206) (318)Interest expenses for bank borrowings (56,556) (72,825) (60,403)Interest expenses for loans from a related party

(Note 30 (c)) (2,590) (1,243) –

(59,402) (74,274) (60,721)

Finance costs – net (53,928) (68,962) (51,525)



– I-44 –

12 INCOME TAX EXPENSE

(a) Income tax expense


RMB’000 RMB’000 RMB’000

Current income tax– PRC corporate income tax 9,528 4,251 35,466

Deferred income tax (Note 17)– PRC corporate income tax 15,196 7,165 9,064

24,724 11,416 44,530

The Group’s principal applicable taxes and tax rates are as follows:

Cayman Islands

Under the prevailing laws of the Cayman Islands, the Company is not subject to tax on income orcapital gains. In addition, no Cayman Islands withholding tax is payable on dividend payments by theCompany to its shareholders.

British Virgin Islands

The Group’s entities incorporated in the British Virgin Islands are not subject to tax on income orcapital gains.

Hong Kong

The Group’s entities incorporated in Hong Kong are subject to Hong Kong profit tax at a rate of16.5%.

PRC corporate income tax (“CIT”)

CIT was made on the estimated assessable profits of the entities within the Group incorporated inthe PRC and was calculated in accordance with the relevant tax rules and regulations of the PRC afterconsidering the available tax refunds and allowances. The statutory CIT rate is 25% for the years ended 31December 2019, 2020 and 2021. Under the relevant regulations of the corporate income tax law, certainsubsidiaries of the Group qualified as small enterprises earning low profits in the PRC are subject to areduced income tax rate of 20% in the respective years.

Withholding tax on undistributed profits

According to the relevant tax rules and regulations of the PRC, distribution to foreign investors ofprofits earned by PRC companies since 1 January 2008 is subject to withholding tax of 5% or 10%,depending on the country of incorporation of the foreign investors’ foreign incorporated immediate holdingcompanies. Unremitted earnings of these subsidiaries as at 31 December 2019, 2020 and 2021 amounted toRMB274,386,000, RMB326,699,000 and RMB442,746,000, respectively. No deferred income tax liabilitieshave been recognised for the withholding tax that would be payable on the unremitted earnings of the PRCsubsidiaries as management expects to reinvest such amount in these subsidiaries in the foreseeable future.



– I-45 –

(b) Numerical reconciliation of income tax expense


RMB’000 RMB’000 RMB’000

Profit before income tax 100,810 64,022 175,678Tax charge at applicable corporate income tax

rate of 25% 25,203 16,006 43,920Tax effects of:Expenses not deductible for tax purposes (a) 573 58 2,461Effect of different tax rates applicable to certain

subsidiaries (574) (180) (909)Additional deduction for the salary of disabled

employees (125) – –Effect of income not subject to income tax (b) (643) (4,885) (1,560)Tax losses for which no deferred income tax

asset was recognised 290 417 618

PRC corporate income tax 24,724 11,416 44,530

(a) Expenses not deductible for tax purposes mainly comprised exchange losses for Hong Kong groupentities and [REDACTED] expenses.

(b) Exchange gains and interest income for Hong Kong group entities are not subject to income tax.

(c) The effective income tax rate was 25%, 18% and 25% for the years ended 31 December 2019, 2020and 2021, respectively. The effective tax rate for the year ended 31 December 2020 was much lowerthan that for the year ended 31 December 2019 and 2021, mainly because of large exchange gainsform Hong Kong group entities in 2020.

13 EARNINGS PER SHARE

(a) Basic earnings per share

Basic earnings per share is calculated by dividing the profit attributable to owners of the Company by theweighted average number of ordinary shares in issue during the respective years. In determining the weightedaverage number of shares in issue during the years ended 31 December 2019 and 2020, the 750 shares, namelythe 1 share issued when incorporation and the 749 shares issued when acquiring the Hospital Businessrespectively during the year ended 31 December 2021 (Note 1.2), were deemed to have been issued on 1 January2019 as if the Company had been incorporated and the acquisition has been completed by then.


Profit attributable to owners of the Company(RMB’000) 76,086 52,606 131,148

Weighted average number of ordinary sharesin issue 750 750 1,000

Basic earnings per share (in RMB’000 per share) 101 70 131

The earnings per share presented above have not been taken into account the proposed [REDACTED]pursuant to the resolutions in writing of the shareholders passed on [•] because the proposed [REDACTED] hasnot become effective as at the date of this report.

The Company had no dilutive potential shares in issue, thus the diluted earnings per share equals the basicearnings per share.



– I-46 –

14 PROPERTY, PLANT AND EQUIPMENT

Buildingsand

facilitiesMedical

equipment

Officeequipment



Right-of-use for

lands

Right-of-use for

properties TotalRMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

At 1 January 2019Cost 1,041,888 150,126 40,855 30,925 90,021 161,896 4,659 1,520,370Accumulated depreciation (81,550) (62,168) (22,713) (7,227) – (32,140) – (205,798)

Net book amount 960,338 87,958 18,142 23,698 90,021 129,756 4,659 1,314,572

Year ended 31 December 2019Opening net book amount 960,338 87,958 18,142 23,698 90,021 129,756 4,659 1,314,572Additions – 61,341 13,739 1,065 40,134 – 3,107 119,386Transfer from construction in progress 83,333 – – 22,676 (106,009) – – –Disposals (477) (86) (42) – – – – (605)Depreciation charge (45,096) (22,550) (8,434) (8,086) – (4,036) (2,518) (90,720)

Closing net book amount 998,098 126,663 23,405 39,353 24,146 125,720 5,248 1,342,633

At 31 December 2019Cost 1,119,574 209,739 54,033 54,666 24,146 161,896 7,766 1,631,820Accumulated depreciation (121,476) (83,076) (30,628) (15,313) – (36,176) (2,518) (289,187)

Net book amount 998,098 126,663 23,405 39,353 24,146 125,720 5,248 1,342,633

Year ended 31 December 2020Opening net book amount 998,098 126,663 23,405 39,353 24,146 125,720 5,248 1,342,633Additions 699 46,388 2,407 2,414 22,335 – 156 74,399Combination of subsidiaries

(Note 2.1.3) – 2,223 1,516 2,587 126 – 4,093 10,545Transfer from Investment properties

(Note 2.1.3) 4,530 – – – – – – 4,530Transfer from construction in progress 3,434 325 – 24,733 (28,492) – – –Disposals – (110) (51) – – – (298) (459)Depreciation charge (48,048) (30,881) (9,708) (13,971) – (4,036) (2,832) (109,476)


At 31 December 2020Cost 1,128,237 256,522 57,077 84,400 18,115 161,896 11,717 1,717,964Accumulated depreciation (169,524) (111,914) (39,508) (29,284) – (40,212) (5,350) (395,792)

Net book amount 958,713 144,608 17,569 55,116 18,115 121,684 6,367 1,322,172



– I-47 –

Buildingsand

facilitiesMedical

equipment

Officeequipment



Right-of-use for

lands

Right-of-use for

properties TotalRMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Year ended 31 December 2021Opening net book amount 958,713 144,608 17,569 55,116 18,115 121,684 6,367 1,322,172Additions – 26,383 3,883 1,083 73,767 – 1,606 106,722Transfer from construction in progress 693 14,580 – 10,561 (25,834) – – –Disposals – (113) (126) – – – – (239)Depreciation charge (48,936) (36,293) (7,556) (17,921) – (4,036) (3,265) (118,007)


As at 31 December 2021Cost 1,128,930 295,349 59,208 96,044 66,048 161,896 13,323 1,820,798Accumulated depreciation (218,460) (146,184) (45,438) (47,205) – (44,248) (8,615) (510,150)

Net book amount 910,470 149,165 13,770 48,839 66,048 117,648 4,708 1,310,648

Depreciation expenses were charged to the following categories in the consolidated statements of comprehensiveincome:


RMB’000 RMB’000 RMB’000

Cost of sales 71,009 90,113 99,410Administrative expenses 19,415 19,094 17,914Selling expenses 296 269 683

90,720 109,476 118,007

As at 31 December 2019, 2020 and 2021, buildings with net book value of nil, nil and RMB629,321,000respectively, was pledged as collateral for the Group’s borrowings (Note 24 (b)).



– I-48 –

15 INVESTMENT PROPERTIES

As at 31 December2019 2020 2021

RMB’000 RMB’000 RMB’000

Opening balance 38,970 36,020 32,150Additions 1,723 – –Transfer to property, plant and equipment – (4,530) –Fair value (losses)/gains on investment properties, net (4,673) 660 630

Closing balance 36,020 32,150 32,780

(a) Rental income of the Group’s investment properties for the years ended 31 December 2019, 2020 and 2021was recognised as “other income” (Note 7).

(b) Investment properties of the Group were measured at fair value with details for the fair value estimation asbelow.

(i) Fair value hierarchy

As at 31 December 2019, 2020 and 2021, as certain significant inputs used in the determination of fairvalue of investment properties are arrived at by reference to significant unobservable market data, the fair valueof all investment properties of the Group are included in level 3 of the fair value measurement hierarchy.

The Group’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at thedate of the event or change in circumstances that caused the transfer. There were no transfers to or out of fairvalue hierarchy levels during the years ended 31 December 2019, 2020 and 2021.

(ii) Valuation processes of the Group

Independent valuations of the Group’s investment properties were performed by an independentprofessionally qualified valuer, to determine the fair value of the investment properties as at 31 December 2019,2020 and 2021. The revaluation gains or losses are included in ‘Other (losses)/gains – net’. For all investmentproperties, their current use equates to the highest and best use.

The Group’s finance department includes a team that reviews the valuations performed by the independentvaluer for financial reporting purposes. This team reports to the senior management of the Group.

At each financial year end, the finance department:

• Verifies all major inputs in the independent valuation report;

• Assesses property valuations movements when compared to the prior year valuation report; and

• Holds discussions with the independent valuer.

(iii) Valuation techniques

Completed investment properties comprise of properties held for rental purpose and fair values aregenerally derived using the income capitalisation method. This method is based on the tenancy agreements as atthe respective valuation dates. The rental income derived within the tenancy agreements are discounted byadopting term yields and the potential reversionary income are discounted by adopting appropriate reversionaryyields for the period beyond the rental period in the tenancy agreements. Potential reversionary income and thereversionary yields are derived from analysis of prevailing market rents and valuer’s interpretation of prevailing



– I-49 –

investor requirements or expectations. The prevailing market rents adopted in the valuation have reference torecent lettings, within the subject properties and other comparable properties.

(iv) Valuation inputs and relationships to fair value

The following table summarises the quantitative information about the significant unobservable inputs usedin recurring level 3 fair value measurements.

As at 31 December2019 2020 2021

RMB’000 RMB’000 RMB’000

Unobservable inputsTerm yield 4.75% 4.75% 4.75%Reversionary yield 5.00% 5.00% 5.00%Monthly rental (RMB/sq.m./month) 29–58 29–60 30–61

Relationship of unobservable inputs to fair value:

• The higher rate of term yield and reversionary yield, the lower the fair value;

• The higher monthly rental, the higher the fair value.

16 INTANGIBLE ASSETS

SoftwareRMB’000

At 1 January 2019Cost 16,818Accumulated amortisation (13,951)

Net book amount 2,867

Year ended 31 December 2019Opening net book amount 2,867Additions 8,418Amortisation charge (1,918)

Closing net book amount 9,367

As 31 December 2019Cost 25,236Accumulated amortisation (15,869)


Year ended 31 December 2020Opening net book amount 9,367Additions 2,659Combination of subsidiaries (Note 2.1.3) 223Amortisation charge (2,737)




– I-50 –

SoftwareRMB’000



Year ended 31 December 2021Opening net book amount 9,512Additions 9,230Amortisation charge (3,850)




Amortisation expenses were charged to the following categories in the consolidated statements of comprehensiveincome:


RMB’000 RMB’000 RMB’000

Cost of sales 1,448 1,837 2,287Administrative expenses 457 882 1,548Selling expenses 13 18 15

1,918 2,737 3,850

17 DEFERRED INCOME TAX

As at 31 December2019 2020 2021

RMB’000 RMB’000 RMB’000

Deferred tax assets– to be realised within 12 months 356 1,096 1,795– to be realised after more than 12 months 904 262 207

1,260 1,358 2,002

Deferred tax liabilities– to be realised within 12 months (5,329) (6,351) (7,655)– to be realised after more than 12 months (38,296) (44,352) (52,756)

(43,625) (50,703) (60,411)



– I-51 –

(i) Deferred tax assets

The movement of deferred tax assets is shown as below:

Allowancefor doubtful

debtsAccruedexpenses

Net impactof

right-of-useassets and

leaseliabilities

Temporarydifference

onunrealised

profit ofintercompany

transactions TotalRMB’000 RMB’000 RMB’000 RMB’000 RMB’000

As at 1 January 2019 9 660 – – 669Credit to profit or loss 12 474 105 – 591

As at 31 December 2019 21 1,134 105 – 1,260

As at 1 January 2020 21 1,134 105 – 1,260Credit/(charged) to profit

or loss 73 (132) (29) – (88)Combination of

subsidiaries(Note 2.1.3) – – 186 – 186

As at 31 December 2020 94 1,002 262 – 1,358

As at 1 January 2021 94 1,002 262 – 1,358Credit/(charged) to profit

or loss 55 (937) (56) 1,582 644

As at 31 December 2021 149 65 206 1,582 2,002



– I-52 –

(ii) Deferred tax liabilities

The movement of deferred tax liabilities is shown as below:

Fair valuechanges ofinvestmentproperties

Temporarydifference of

property,plant and

equipment TotalRMB’000 RMB’000 RMB’000

As at 1 January 2019 (6,399) (21,440) (27,839)Credit /(charged) to profit or loss 1,061 (16,847) (15,786)

As at 31 December 2019 (5,338) (38,287) (43,625)

As at 1 January 2020 (5,338) (38,287) (43,625)Charged to profit or loss (280) (6,798) (7,078)

As at 31 December 2020 (5,618) (45,085) (50,703)

As at 1 January 2021 (5,618) (45,085) (50,703)Charged to profit or loss (342) (9,366) (9,708)

As at 31 December 2021 (5,960) (54,451) (60,411)

18 INVENTORIES

As at 31 December2019 2020 2021

RMB’000 RMB’000 RMB’000

Pharmaceuticals 24,678 30,134 27,785Medical consumables 8,929 12,058 9,182Low value consumables 919 797 645

34,526 42,989 37,612

For the years ended 31 December 2019, 2020 and 2021, the cost of inventories recognised as expenses andincluded in “cost of pharmaceuticals and consumables” amounted to RMB398,945,000, RMB284,384,000 andRMB315,270,000, respectively.



– I-53 –

19 FINANCIAL INSTRUMENTS BY CATEGORY

As at 31 December2019 2020 2021

RMB’000 RMB’000 RMB’000

Financial assetsFinancial assets at amortised cost:Trade and other receivables (excluding prepayments) 517,732 554,654 71,105Restricted cash 136,223 208,653 –Cash and cash equivalents 124,197 156,064 430,940

778,152 919,371 502,045

Financial liabilitiesFinancial liabilities at amortised cost:Trade and other payables (excluding accrued payroll

and other taxes payables) 570,078 554,522 294,697Lease liabilities 5,669 7,416 5,556Bank borrowings 1,242,000 1,282,300 944,100

1,817,747 1,844,238 1,244,353

20 TRADE AND OTHER RECEIVABLES AND PREPAYMENTS

As at 31 December2019 2020 2021

RMB’000 RMB’000 RMB’000

The Group

Trade receivables (Note (a))– Related parties (Note 30(d)) 3,108 3,819 1,639– Third parties 75,367 60,809 65,908

78,475 64,628 67,547Less: allowance for impairment of trade receivables (82) (370) (399)

78,393 64,258 67,148

Other receivables– Amounts due from related parties (Note 30(d)) 433,953 482,312 472– Deposits 3,076 3,108 20– Others 2,314 4,983 3,663

439,343 490,403 4,155Less: allowance for impairment of other receivables (4) (7) (198)

439,339 490,396 3,957



– I-54 –

As at 31 December2019 2020 2021

RMB’000 RMB’000 RMB’000

Prepayments– Prepayments to related-party suppliers (Note 30(d)) 3,198 1,541 357– Prepayments to third-party suppliers 32,779 26,308 12,492– Prepayment for [REDACTED] expenses – – 3,333

35,977 27,849 16,182

Total trade and other receivables and prepayments 553,709 582,503 87,287

Less: prepayments – non-current portion (Note b) (29,749) (22,632) (7,419)

Trade and other receivables and prepayments –current portion 523,960 559,871 79,868

The carrying amounts of the Group’s trade and other receivables were denominated in RMB and approximatedtheir fair values. Trade receivables mainly represent amounts to be claimed from government’s insurance scheme.Details of credit term are set out Note 3.1.2.

(a) As at 31 December 2019, 2020 and 2021, the ageing analysis of the trade receivables based on invoicedate were as follows:

As at 31 December2019 2020 2021

RMB’000 RMB’000 RMB’000

Within 90 days 72,180 56,011 58,98091 to 180 days 4,726 3,462 3,852181 to 360 days 1,320 3,881 2,9291 to 2 years 193 1,179 1,522Over 2 years 56 95 264

78,475 64,628 67,547

(b) The amounts represents prepayments for long-term assets.

The Company

As at31 December

2021RMB’000

Prepayment for [REDACTED] expenses 3,333



– I-55 –

21 CASH AND CASH EQUIVALENTS AND RESTRICTED CASH

(a) Cash and cash equivalents

As at 31 December2019 2020 2021

RMB’000 RMB’000 RMB’000

The Group

Cash at bank and in hand 124,295 156,160 431,036

Cash at banks earns interest at floating rates.

Cash and bank deposits were denominated in the following currencies:

As at 31 December2019 2020 2021

RMB’000 RMB’000 RMB’000

RMB 42,535 146,666 418,510USD – – 8HKD 81,760 9,494 12,518

124,295 156,160 431,036

The Company

As at31 December

2021RMB’000

Cash at bank and in hand 397

Cash and cash equivalents were denominated in the following currencies:

As at31 December

2021RMB’000

HKD 397



– I-56 –

(b) Restricted cash

As at 31 December2019 2020 2021

RMB’000 RMB’000 RMB’000

Bank deposits for standby letter of credit (i) 136,223 208,653 –

Restricted cash were denominated in the following currencies:

As at 31 December2019 2020 2021

RMB’000 RMB’000 RMB’000

RMB 120,950 208,653 –HKD 15,273 – –

136,223 208,653 –

(i) As at 31 December 2019 and 2020, restricted cash represented bank deposits for standby letter ofcredit, which were made by a subsidiary in Hong Kong as security of borrowings of subsidiaries inMainland China.

22 SHARE CAPITAL

The Company was incorporated in the Cayman Islands on 23 July 2021. At the date of incorporation, theauthorised share capital is HKD380,000 comprising 38,000,000 ordinary shares of HKD0.01 each.

Number ofshares

Nominal valueof shares

Equivalent nominal valueof shares

HKD HKD’000 RMB’000

Authorised:As at 23 July 2021 (date of

incorporation) and 31December 2021 38,000,000 0.01 380 316

Issued:As at 23 July 2021 (date of

incorporation) 1 0.01 – –Issuance during the year (Note 1.2) 999 0.01 – –

As at 31 December 2021 1,000 0.01 – –



– I-57 –

23 OTHER RESERVES

The Group

Capitalreserves

Statutoryreserves

Translationdifference Total

RMB’000 RMB’000 RMB’000 RMB’000(Note a) (Note b)

Balance at 1 January 2019 1,402 5,759 473 7,634Currency translation differences – – 187 187Appropriation of statutory reserves – 7,692 – 7,692

Balance at 31 December 2019 1,402 13,451 660 15,513

Balance at 1 January 2020 1,402 13,451 660 15,513Currency translation differences – – (982) (982)Appropriation of statutory reserves – 3,472 – 3,472Business combination under common

control (Note 2.1.3) 7,526 1,254 (2,245) 6,535

Balance at 31 December 2020 8,928 18,177 (2,567) 24,538

Balance at 1 January 2021 8,928 18,177 (2,567) 24,538Currency translation differences – – (1,142) (1,142)Appropriation of statutory reserves – 11,456 – 11,456Deemed distribution to the then

shareholder of a subsidiary(Note 1.2(d)) (4,396) – – (4,396)

Balance at 31 December 2021 4,532 29,633 (3,709) 30,456

(a) Capital reserves

Capital reserves mainly represented accumulated capital contribution from the then shareholders of thegroup companies.

(b) Statutory reserves

In accordance with relevant rules and regulations in the PRC, when declaring dividend, the Group’s PRCsubsidiaries are required to appropriate not less than 10% of their profit after taxation calculated under PRCaccounting rules and regulations to the statutory reserve fund, until the accumulated total of the fund reaches50% of the registered capital of the respective companies. The statutory reserve fund can only be used, uponapproval by the relevant authority, to offset losses brought forward from prior years or to increase the paid-upcapital of respective companies.



– I-58 –

The Company

Year ended31 December

2021RMB’000

At 23 July 2021 (date of incorporation) –Effect of the Reorganisation (i) 520,191

At the end of the year 520,191

(i) The amount represented mainly the excess of the aggregate net asset values of the [REDACTED] Businessover the par value of the Company’s shares issued in exchange pursuant to the Reorganisation.

24 BANK BORROWINGS

As at 31 December2019 2020 2021

RMB’000 RMB’000 RMB’000

Secured bank borrowings– Non-current 999,800 1,047,200 509,000– Current 242,200 235,100 93,500

1,242,000 1,282,300 602,500

Unsecured bank borrowings– Non-current – – 126,200– Current – – 215,400

– – 341,600

1,242,000 1,282,300 944,100

The weighted average effective interest rates per annum at the balance sheet dates were set out as follows:

As at 31 December2019 2020 2021

Bank borrowings 4.79% 4.90% 4.91%

(a) As at 31 December 2019, 2020 and 2021, the Group’s borrowings were repayable as follows:

As at 31 December2019 2020 2021

RMB’000 RMB’000 RMB’000

Within 1 year 242,200 235,100 308,900Between 1 and 2 years 112,200 405,000 130,200Between 2 and 5 years 423,600 558,200 505,000Over 5 years 464,000 84,000 –

1,242,000 1,282,300 944,100



– I-59 –

The Group made early repayment of RMB103,600,000 of certain non-current bank borrowings as of 31December 2020 during the year ended 31 December 2021.

(b) Bank facilities of the Group are guaranteed or secured by:

As at 31 December2019 2020 2021

RMB’000 RMB’000 RMB’000

Guaranteed by companies under the control ofthe spouse of Ms. Wendy Man 1,162,000 1,189,300 –

Secured by restricted bank deposits 136,223 208,653 –Secured by property, plant and equipment of

the Group – – 602,500

1,298,223 1,397,953 602,500

(c) The fair values of borrowings as at 31 December 2019, 2020 and 2021 approximated their carryingamounts, as the impact of discounting was not significant.

(d) As at 31 December 2019, 2020 and 2021, the bank borrowings were all denominated in RMB.

(e) As at 31 December 2019, 2020 and 2021, the Group had unutilised bank facilities of nil, nil andRMB200,000,000, respectively.

25 LEASE LIABILITIES

(a) Amounts recognised in the consolidated balance sheets

As at 31 December2019 2020 2021

RMB’000 RMB’000 RMB’000

Current 2,909 3,373 2,620Non-current 2,760 4,043 2,936

5,669 7,416 5,556

As at 31 December 2019, 2020 and 2021, right-of-use assets were included in property, plant andequipment in the consolidated balance sheets.



– I-60 –

(b) Amounts recognised in the consolidated statements of comprehensive income

As at 31 December2019 2020 2021

RMB’000 RMB’000 RMB’000

Depreciation charge of right-of-use assets– Properties 2,518 2,832 3,265– Land use right 4,036 4,036 4,036

6,554 6,868 7,301

Interest on lease liabilities (included infinance costs – net) 256 206 318

Rental expenses relating to short-term leases(included in cost of sales and administrativeexpense) 238 128 1,128

Cash outflow of rental expenses relating toshort-term leases and the settlement oflease liabilities 2,591 3,256 6,041

26 TRADE AND OTHER PAYABLES

The Group

As at 31 December2019 2020 2021

RMB’000 RMB’000 RMB’000

Trade payables (Note (a))– Related parties (Note 30(d)) 40,388 5,427 1,491– Third parties 27,245 68,738 58,573

67,633 74,165 60,064

Other payables– Amounts due to related parties (Note 30(d)) 339,241 324,380 120,768– Amounts due to third parties 18,926 15,150 –– Payables for construction projects 61,345 46,703 22,545– Interest payables 1,149 564 1,407– Deposits (Note(b)) 57,741 69,629 81,653– Payables for land use rights 20,012 20,012 –– Accrued payroll 60,923 46,986 61,176– Other taxes payables 2,221 2,830 3,184– Payables for [REDACTED] expenses – – 4,104– Others 4,031 3,919 4,156

565,589 530,173 298,993

Trade and other payables 633,222 604,338 359,057



– I-61 –

(a) As at 31 December 2019, 2020 and 2021, ageing analysis of the trade payables based on invoice date wereare follows:

As at 31 December2019 2020 2021

RMB’000 RMB’000 RMB’000

Up to 1 year 65,797 72,570 59,7201 to 2 years 1,471 1,458 1402 to 3 years 290 100 141Over 3 years 75 37 63

67,633 74,165 60,064

(b) Deposits mainly comprise of refundable deposits made by the patients.

As at31 December

2021RMB’000

Payable for [REDACTED] expenses– Subsidiaries 9,558– Third parties 4,107Others 467

14,132

28 DIVIDENDS

Except for intra-group dividends, no dividend has been paid or declared by the companies comprising the Groupduring each of the years ended 31 December 2019 and 2020. A subsidiary of the Healthcare and PharmaceuticalBusiness distributed cash dividends of HKD5,000,000 (equivalent to RMB4,150,000) to its then shareholder before itwas acquired by the Group in 31 December 2021.

No dividend has been paid or declared by the Company since its incorporation.



– I-62 –

29 NET CASH GENERATED FROM OPERATION

(a) Reconciliation from profit before income tax to cash generated from operations:


RMB’000 RMB’000 RMB’000

Profit before income tax 100,810 64,022 175,678Adjustments for:Depreciation of property, plant and equipment

(Note 14) 90,720 109,476 118,007Amortisation of intangible assets (Note 16) 1,918 2,737 3,850Fair value losses/(gains) on investment properties

(Note 15) 4,673 (660) (630)Net impairment losses on financial assets 48 291 220Interest income (Note 7) (Note 11) (12,307) (19,118) (14,434)Interest expenses (Note 11) 59,402 74,274 60,721Unrecognised exchange losses/(gains) (Note 8) 2,256 (15,319) (694)Gains on disposal of property, plant and

equipment (219) (127) –

Operating cash flows before changes inworking capital 247,301 215,576 342,718

Changes in working capital:Inventories (1,512) (2,328) 5,377Trade and other receivables and prepayments (22,754) 9,865 15,080Trade and other payables (125,897) 17,067 23,649Contract liabilities 1,684 161 386

Cash generated from operations 98,822 240,341 387,210



– I-63 –

(b) Net debt reconciliations

Bankborrowings

Leaseliabilities

Amountsdue to

relatedparties –

non-trade

Amountsdue to

thirdparties –

non-trade TotalRMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Balance as at 1 January 2019 1,054,000 4,659 341,064 34,445 1,434,168Non-cash changes– Additions of leases – 3,107 – – 3,107– Accrued interest expenses – 256 2,590 – 2,846Cash flows– Increase 480,000 – 76,537 195 556,732– Decrease (292,000) (2,353) (82,589) (15,714) (392,656)

Balance as at 31 December2019 1,242,000 5,669 337,602 18,926 1,604,197

Balance as at 1 January 2020 1,242,000 5,669 337,602 18,926 1,604,197Non-cash changes– Additions of leases – 156 – – 156– Combination of subsidiaries 1,000 4,838 50,975 – 56,813– Accrued interest expenses – 206 1,243 – 1,449– Early termination of lease

contracts – (325) – – (325)Cash flows– Increase 405,000 – 22,184 – 427,184– Decrease (365,700) (3,128) (88,189) (3,776) (460,793)

Balance as at 31 December2020 1,282,300 7,416 323,815 15,150 1,628,681

Balance as at 1 January 2021 1,282,300 7,416 323,815 15,150 1,628,681Non-cash changes– Additions of leases – 1,606 – – 1,606– Accrued interest expenses – 318 – – 318Cash flows– Increase 97,000 – 75,114 – 172,114– Decrease (435,200) (3,784) (281,750) (15,150) (735,884)

Balance as at 31 December2021 944,100 5,556 117,179 – 1,066,835



– I-64 –

30 RELATED PARTY TRANSACTIONS

The Group

(a) Names and relationships with related parties

Related parties are those parties that have the ability to control, jointly control or exercise significantinfluence over the other party in holding power over the investee; exposure or rights, to variable returns from itsinvolvement with the investee; and the ability to use its power over the investee to affect the amount of theinvestor ‘s returns. Parties are also considered to be related if they are subject to common control or jointcontrol. Related parties may be individuals or other entities.

Save as disclosed elsewhere in this report, the directors of the Company are of the view that the followingparties/companies were related parties that had significant transactions or balances with the Group for the yearsended 31 December 2019, 2020 and 2021:

English Name Chinese Name

Director of the GroupMs. Zhang Tao (Ms. Zhang) 張濤女士

Companies under control of Ms. Wendy ManGuangzhou Kejian Computer Technology Co. Limited* 廣州市科健計算機技術有限公司Guangzhou Fortune Software Limited* 廣州市科進計算機技術有限公司Guangzhou Clifford Trading Limited* 廣州市祈福貿易有限公司Guangzhou Welcome Employment Limited* 廣州市惠爾家職業介紹有限公司Guangzhou Clifford Medical Equipment Co., Ltd.

(“Clifford Medical Equipment”)* (i)廣州市祈福醫療器械有限公司

Guangzhou Clifford Pharmaceutical Co., Ltd.(“Clifford Pharmaceutical”)* (Note i)

廣州市祈福醫藥有限公司

Companies under control of the spouse ofMs. Wendy Man

Guangzhou Guangli Property Co., Ltd.* 廣州市廣利物業有限公司Guangzhou Clifford Wonderland Service Apartment* 廣州市祈福繽紛世界國際公寓有限公司Guangzhou Clifford Wonderland Property Co., Ltd.* 廣州市祈福繽紛世界物業有限公司Guangzhou Clifford Wonderland Real Estate Co., Ltd.* 廣州市祈福繽紛世界置業有限公司Guangzhou Clifford Education Management Co., Ltd.* 廣州市祈福教育管理有限公司Guangzhou Clever Real Estate Co., Ltd.* 廣州市祈樂置業有限公司China Venture Limited 中國創業有限公司Lafe Construction Co. Ltd. 隆輝建築有限公司Pearl Exh & Con Centre Ltd. 明珠會議及展覧中心有限公司Guangzhou Huashan Clifford Hotel Co., Ltd.* 廣州市花山祈福酒店有限公司Clifford Real Estate Agency China Ltd. 祈福地產代理中國有限公司Guangzhou Huadu Clifford Mountain Lake Hotel Co., Ltd.* 廣州市花都祈福山中湖酒店有限公司Clifford Investment Company Limited* 廣州市番禺區祈福社區衛生服務站Guangzhou Clifford Property Management Limited 廣州祈福物業管理有限公司

Companies under significant influence of the spouse ofMs. Wendy Man

Clifford Estates (Panyu) Limited* 廣州市番禺祈福新邨房地產有限公司

A company under control of Ms. ZhangGaoyao Clifford Clinic* 高要祈福診所

An associateGuangzhou City Panyu District Clifford Community Health

Service Centre (“Clifford Health Service Centre”)*(Note ii)

廣州市番禺區祈福社區衛生服務站

* The English name of these entities represents the best effort by the management of the Group intranslating their Chinese names as they do not have an official English name.



– I-65 –

(i) Clifford Medical Equipment and Clifford Pharmaceutical were combined by the Group since 29December 2020 (Note 1.2).

(ii) Clifford Health Service Centre was a non-profit orientated entity which was established in the PRCon 3 December 2020 by the Group.

(b) Key management compensation

Key management includes directors and the senior management of the Group.

The compensation paid or payable to key management for employee services is shown below:


RMB’000 RMB’000 RMB’000

Salaries, wages and bonus 5,109 5,385 7,241Employer’s contribution to retirement benefit

plan 77 7 204Allowances and benefits in kind 285 315 482Share-based compensation expenses – – –

5,471 5,707 7,927

(c) Transactions with related parties

During the Track Record Period, save as disclosed elsewhere in this report, the following is a summary ofthe significant transactions carried out between the Group and its related parties. In the opinion of the directorsof the Company, the related party transactions were carried out in the normal course of business and at termsnegotiated between the Group and the respective related parties.


RMB’000 RMB’000 RMB’000

Transactions to be continued after the[REDACTED]

Provision of hospital services– Ms. Wendy Man 198 1,040 967– The spouse of Ms. Wendy Man 1,162 1,825 2,621– Companies under control of Ms. Wendy Man 1,349 1,530 1,558– Companies under control of the spouse of

Ms. Wendy Man 672 1,617 241– Companies under significant influence of the

spouse of Ms. Wendy Man 2,505 2,500 11,022

5,886 8,512 16,409



– I-66 –


RMB’000 RMB’000 RMB’000

Rental income– Companies under control of Ms. Wendy Man 62 77 69– An associate – 50 162

62 127 231

Sales of goods– Companies under control of Ms. Wendy Man – – 15– Companies under control of the spouse of

Ms. Wendy Man – – 9– Companies under significant influence of the

spouse of Ms. Wendy Man – – 14

– – 38

Purchase of inventories– Companies under control of Ms. Wendy Man

(Note (i)) 300,248 200,299 1,461

Purchase of long-term Assets– Companies under control of Ms. Wendy Man 4,102 2,128 6,703

Purchase of services– Companies under control of Ms. Wendy Man 7,773 6,380 6,108

Addition of right-of-use assets– Companies under control of the spouse of

Ms. Wendy Man 3,107 105 1,248– Companies under control of Ms. Wendy Man – – 358

3,107 105 1,606

(i) For the years ended 31 December 2019 and 2020, purchase of inventories were mainly from CliffordPharmaceutical and Clifford Medical Equipment, subsidiaries under the Healthcare andPharmaceutical Business.



– I-67 –

Transactions to be ceased after the [REDACTED]


RMB’000 RMB’000 RMB’000

Provision of hospital services– Companies under control of

Ms. Wendy Man – 51 1,165– Companies under control of the spouse of

Ms. Wendy Man – 462 –– Companies under significant influence of the

spouse of Ms. Wendy Man – – 4,660– A company under control of

Ms. Zhang – 42 –– An associate – – 63

– 555 5,888

Provision of management related services– Companies under control of

Ms. Wendy Man 3,722 3,947 –– Companies under control of the spouse of

Ms. Wendy Man 1,197 833 –

4,919 4,780 –

Rental income– Companies under control of

Ms. Wendy Man 603 1,061 19– Companies under control of the spouse of

Ms. Wendy Man 146 – –

749 1,061 19

Sales of goods– An associate – – 298

Purchase of long-term Assets– Companies under control of

Ms. Wendy Man 3,638 4,625 206

Purchase of services– Companies under control of the spouse of

Ms. Wendy Man 734 54 901– Companies under significant influence of the

spouse of Ms. Wendy Man 121 104 8

855 158 909

Short-term lease expenses on lease liabilities– Companies under control of

Ms. Wendy Man 120 120 30– Companies under control of the spouse of

Ms. Wendy Man 77 – –

197 120 30



– I-68 –


RMB’000 RMB’000 RMB’000

Interest income from loans to related parties– Companies under control of Ms. Wendy Man 85 1 –– Companies under control of the spouse of

Ms. Wendy Man 6,748 13,804 5,192– An associate – 1 46

6,833 13,806 5,238

Interest expenses for loans froma related party

– A company under control of Ms. Wendy Man 2,590 1,243 –

Guarantee received from related parties– Companies under control of the spouse of

Ms. Wendy Man (Note (i)) 1,162,000 1,189,300 –

(d) Balances with related parties

The Group

As at 31 December2019 2020 2021

RMB’000 RMB’000 RMB’000

Amounts due from related partiesTrade (Note (i))– Companies under control of the spouse of

Ms. Wendy Man 530 2,362 192– Companies under control of Ms. Wendy Man 1,844 876 364– Companies under significant influence of the

spouse of Ms. Wendy Man 926 1,016 1,512– An associate – 26 43

3,300 4,280 2,111

Non-trade (Note (ii))– Companies under control of Ms. Wendy Man 334,858 12,822 –– Companies under significant influence of the

spouse of Ms. Wendy Man 17,006 – –– Companies under control of the spouse of

Ms. Wendy Man 81,897 466,924 –– An associate – 2,105 –

433,761 481,851 –



– I-69 –

As at 31 December2019 2020 2021

RMB’000 RMB’000 RMB’000

Amounts due to related partiesTrade (Note(iii))– Companies under control of Ms. Wendy Man 41,925 3,401 4,693– Companies under significant influence of the

spouse of Ms. Wendy Man 102 25 20– Companies under control of the spouse of

Ms. Wendy Man – 2,566 178

42,027 5,992 5,080

Non-trade (Note (iv))– Ms. Wendy Man – 20,050 18,164– Companies under control of the spouse of

Ms. Wendy Man 195,764 219,579 98,999– Companies under control of Ms. Wendy Man 141,737 84,148 16– Companies under significant influence of the

spouse of Ms. Wendy Man 101 38 –

337,602 323,815 117,179

Prepayments– Companies under control of the spouse of

Ms. Wendy Man 3,198 1,536 345– Companies under control of Ms. Wendy Man – 5 12

3,198 1,541 357

Lease liabilities– Companies under control of the spouse of

Ms. Wendy Man 5,164 6,847 4,897– Companies under significant influence of the

spouse of Ms. Wendy Man 505 249 201

5,669 7,096 5,098

(i) The trade receivables from related parties represented unsettled balance arising from employeephysical examination services and training services provided to related parties by the Group.

(ii) The non-trade amounts due from related parties were unsecured and receivable on demand or basedon contractual agreements.

(iii) The trade payables to related parties as at 31 December 2019 mainly comprised of unsettledpayments for purchase of inventories from related parties, which were combined by the Group as at29 December 2020.



– I-70 –

(iv) The non-trade amounts due to related parties were unsecured and repayable on demand or based oncontractual agreements.

All non-trade payables will be settled before the [REDACTED].

(v) The non-trade amounts due from/to related parties which charge/bear interest were as follows, whilethe rest of non-trade amounts due from/to related parties were interest free.

As at 31 December2019 2020 2021

Amounts due from related partiesBalances charging interest (RMB’000) 69,272 431,823 –Interest rate range 4.35% to 6.65% 3.50% to 5.46% NA

Amounts due to related partiesBalances bearing interest (RMB’000) 43,600 – –Interest rate 4.35% NA NA

31 COMMITMENTS AND CONTINGENT LIABILITIES

(a) Commitments for construction contracts and acquisition of non-current assets

The Group’s capital expenditure contracted for at the end of the year but not yet incurred is as follows:

As at 31 December2019 2020 2021

RMB’000 RMB’000 RMB’000

Purchase of property, plant and equipment 15,360 39,596 11,996Purchase of intangible assets 2,351 1,469 1,013

17,711 41,065 13,009

(b) Lease commitments – as lessee

During the Track Record Period, the Group’s future aggregate minimum lease payments (short- term orlow value leases) under non-cancellable operating leases are as follows:

As at 31 December2019 2020 2021

RMB’000 RMB’000 RMB’000

Up to 1 year 45 186 37



– I-71 –

(c) Lease arrangements – as lessor

Arrangement for leasing to external tenants are negotiated for terms ranging from 1 year to 8 years. As at31 December 2019, 2020 and 2021, the Group had total future minimum rental income expected to be receivedunder non-cancellable leasing arrangements with its tenants falling due as follows:

As at 31 December2019 2020 2021

RMB’000 RMB’000 RMB’000

Up to 1 year 2,272 1,410 2,118Over 1 year 1,712 1,001 2,548

3,984 2,411 4,666

(d) Contingencies

The Group had no material contingent liabilities as at 31 December 2019, 2020, 2021.

32 BENEFITS AND INTERESTS OF DIRECTORS

(a) Directors’ emoluments

The directors received emoluments from the Group (in their role as senior management and employeebefore their appointment as directors) for the years ended 31 December 2019, 2020 and 2021 as follows:

Name FeesSalaries and

wages

Share-basedcompensation

expense

Allowancesand benefits

in kind

Employer’scontribution

to retirementbenefit plan Total

RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Year ended 31 December 2019Executive directors (i)Zhang Tao – 776 – 44 12 832Ou Junwen – 844 – 40 12 896Zhao Hui – 517 – 30 11 558Zhuang Lei – 600 – 40 12 652Non-executive directors (ii)Ms. Wendy Man – – – – – –

– 2,737 – 154 47 2,938

Year ended 31 December 2020Executive directors (i)Zhang Tao – 735 – 44 1 780Ou Junwen – 936 – 44 1 981Zhao Hui – 543 – 41 1 585Zhuang Lei – 666 – 39 1 706Non-executive directors (ii)Ms. Wendy Man – – – – – –

– 2,880 – 168 4 3,052



– I-72 –

Name FeesSalaries and

wages

Share-basedcompensation

expense

Allowancesand benefits

in kind

Employer’scontribution

to retirementbenefit plan Total

RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Year ended 31 December 2021Executive directors (i)Zhang Tao – 832 – 61 26 919Ou Junwen – 1,247 – 61 26 1,334Zhao Hui – 560 – 57 26 643Zhuang Lei – 665 – 55 26 746Non-executive directors (ii)Ms. Wendy Man – – – – – –

– 3,304 – 234 104 3,642

No emoluments have been paid by the Group to the directors as an inducement in join or upon joining theGroup or as compensation for loss of office, and no directors waived or agreed to waive any emoluments duringthe years ended 31 December 2019, 2020 and 2021.

(i) Ms. Zhang Tao, Mr. Ou Junwen, Mr. Zhao Hui and Mr. Zhuang Lei were appointed as the executivedirectors of the Company in March 2022.

(ii) Ms. Wendy Man was appointed as the Company’s non-executive directors in March 2022.

(b) Directors’ retirement and termination benefits

No retirement or termination benefits have been paid to the Company’s directors for the years ended 31December 2019, 2020 and 2021.

(c) Consideration provided to third parties for making available directors’ services

No consideration was provided to third parties for making available directors’ services during the yearsended 31 December 2019, 2020 and 2021.

(d) Information about loans, quasi-loans or other dealings in favour of directors, controlled bodiescorporate by and connected entities with such directors

Save as disclosed in Note 30, no loans, quasi-loans or other dealings were entered into by the Company infavour of directors, controlled bodies corporate by and connected entities with such directors during the yearsended 31 December 2019, 2020 and 2021.

(e) Directors’ material interests in transactions, arrangements or contracts

Save as disclosed in Note 30, no significant transactions, arrangements and contracts in relation to theGroup’s businesses to which the Group was a party and in which a director of the Company had a materialinterest, whether directly or indirectly, subsisted at the end of the years or at any time during the years ended 31December 2019, 2020 and 2021.



– I-73 –

33 IMPACT OF COVID-19 EPIDEMIC

The outbreak of the 2019 Novel Coronavirus (“COVID-19”) starting from January 2020 has broughtunprecedented challenges and uncertainties to the economy. COVID-19 and the consequential social distancing andcontrol measures imposed by the government may affect the number of out-patient clinic visits, physical examinationvisits, in-patient visits, in-patient bed-days as well as the operation of the Group. Since the outbreak of COVID-19, theGroup has been closely monitoring the situation and managing actively to cope with the challenges on the operation ofthe Group. During the Track Record Period, COVID-19 epidemic had brought to adverse impact on the operating resultof the Group for the first half of 2020, but the impact has eased gradually since then as the epidemic has largely beenunder control in the Mainland China.

34 SUBSEQUENT EVENT

(a) [REDACTED] Share Option Plan]

The Company has formally adopted a share option scheme (the “[REDACTED] Share Option Plan”) on[•]. The purpose of the [REDACTED] Share Option Scheme is to recognise and reward the contribution ofcertain directors, senior management, employees and former employees of our Group to the growth and thedevelopment of the Group and [REDACTED].

As at the date of this report, the Company granted share options under the [REDACTED] Share OptionPlan under which the option holders are entitled to acquire an aggregate of [REDACTED] shares of theCompany. All the options under the [REDACTED] Share Option Plan should be exercisable at any timeduring the period (i) commencing on vesting date and (ii) ending on the date falling eight years of the[REDACTED].

(b) Conditional on the share premium account of our Company being credited as a result of the issue of[REDACTED] under the [REDACTED], our Directors are authorised to capitalise an amount ofHKD[REDACTED] standing to the credit of the [REDACTED] of our Company by applying that sum inpaying up in full at par [REDACTED] Shares for allotment and issue to International Health BVI, on theassumption that its name appears in the register of members of our Company at close of business on [•].



– I-74 –

III ADDITIONAL FINANCIAL INFORMATION OF THE HEALTHCARE ANDPHARMACEUTICAL BUSINESS FOR THE PRE-ACQUISITION PERIOD

On 20 December 2021, the Company acquired the entire issued shares of the companiesthat were engaged in the Healthcare and Pharmaceutical Business from a company controlled byMs. Wendy Man. As a result, the financial statement items of the companies engaging in theHealthcare and Pharmaceutical Business are included in the consolidated financial statements ofthe Group as if the combination had occurred from the date when the Hospital Business andHealthcare and Pharmaceutical Business first came under the common control of Ms. WendyMan on 29 December 2020. The following is the financial information of the Healthcare andPharmaceutical Business for the year ended 31 December 2019 and period from 1 January 2020to 29 December 2020.

(a) Consolidated statements of comprehensive income

Note


2019

Period from1 January

2020 to29 December

2020RMB’000 RMB’000

Revenue (i) 332,724 223,851Cost of sales (iv) (253,258) (163,197)

Gross profit 79,466 60,654

Selling expenses (iv) (26,682) (20,588)Administrative expenses (iv) (8,242) (8,627)Other income (iii) 5,477 6,720Other gains/(losses) – net 122 (7)

Operating profit 50,141 38,152Finance income/(costs) – net (vi) 1,240 (630)

Profit before income tax 51,381 37,522Income tax expenses (vii) (14,762) (11,129)

Profit for the year/period 36,619 26,393

Other comprehensive incomeItems that may be reclassified to profit or

loss– Exchange differences on translation of

foreign operations 795 (794)

Total comprehensive income for theyear/period 37,414 25,599



– I-75 –

(b) Consolidated balance sheets

Note

As at31 December

2019

As at29 December

2020RMB’000 RMB’000

AssetsNon-current assetsProperty, plant and equipment (viii) 12,672 10,545Intangible assets (ix) 417 223Prepayments (xii) 151 150Deferred income tax assets (x) 50 186

Total non-current assets 13,290 11,104

Current assetsInventories (xi) 6,786 6,135Trade and other receivables and

prepayments (xii) 486,368 161,939Cash and cash equivalents (xiii) 102,147 48,344

Total current assets 595,301 216,418

Total assets 608,591 227,522

EquityEquity attributable to owners of the

CompanyShare capital (xvii) 500 7,000Reserves (xviii) 29,077 36,640

Total equity 29,577 43,640



– I-76 –

Note

As at31 December

2019

As at29 December

2020RMB’000 RMB’000

LiabilitiesNon-current liabilitiesLease liabilities (xv) 4,024 2,452

Current liabilitiesTrade and other payables (xvi) 564,940 170,465Contract liabilities (ii) 5,357 4,169Current income tax liabilities 3,396 3,410Lease liabilities (xv) 1,297 2,386Bank borrowings (xiv) – 1,000

Total current liabilities 574,990 181,430

Total liabilities 579,014 183,882

Total equity and liabilities 608,591 227,522



– I-77 –

(c) Consolidated statements of changes in equity


capitalOther


Totalequity

RMB’000 RMB’000 RMB’000 RMB’000

(Note

xvii)

(Note

xviii)

Balance at 1 January 2019 – (1,551) 63,883 62,332

Total comprehensive income for theyear

Profit for the year – – 36,619 36,619Currency translation differences – 795 – 795

– 795 36,619 37,414

Transactions with owners in theircapacity as owners

Appropriation of statutory reserve – 413 (413) –Distribution of dividends to the then

shareholder of subsidiaries – – (70,669) (70,669)Injection of capital from the then

shareholder of a subsidiary 500 – – 500

500 413 (71,082) (70,169)

Balance at 31 December 2019 500 (343) 29,420 29,577

Balance at 1 January 2020 500 (343) 29,420 29,577

Total comprehensive income for theperiod

Profit for the period – – 26,393 26,393Currency translation differences – (794) – (794)

– (794) 26,393 25,599



– I-78 –


capitalOther


Totalequity

RMB’000 RMB’000 RMB’000 RMB’000

(Note

xvii)

(Note

xviii)

Transactions with owners in theircapacity as owners

Appropriation of statutory reserve – 672 (672) –Distribution of dividends to the then

shareholder of a subsidiary – – (18,036) (18,036)Injection of capital from the then

shareholder of a subsidiary 6,500 – – 6,500

6,500 672 (18,708) (11,536)

Balance at 29 December 2020 7,000 (465) 37,105 43,640

(d) Consolidated statements of cashflow

Note

Year ended 31December 2019

Periods from 1January 2020 to 29

December 2020RMB’000 RMB’000

Cash flows from operating activitiesCash generated from operations (xix) 189,622 12,575Income tax paid (18,144) (11,251)Interest received from cash in banks 6,902 7,820

Net cash generated from operating activities 178,380 9,144

Cash flows from investing activitiesCash advances to related parties (438,774) (16,484)Repayments of cash advances by related parties 295,693 345,490Interest received from loans to related parties 5,361 6,349Purchases of property, plant and equipment (2,979) (1,018)Proceeds from disposal of property, plant and equipment 5 82Purchases of intangible assets (295) (31)

Net cash (used in)/generated from investing activities (140,989) 334,388



– I-79 –

Note

Year ended 31December 2019

Periods from 1January 2020 to 29

December 2020RMB’000 RMB’000

Cash flows from financing activitiesProceeds from bank borrowings (xix) – 77,900Repayments of bank borrowings (xix) (120,000) (76,900)Cash advances from related parties (xix) 186,436 2,647Repayment of cash advances from related parties (xix) (15,002) (385,964)Dividends paid to the then shareholder of subsidiaries (70,669) (18,036)Capital injection from the then shareholder 500 6,500Interest paid for bank borrowings and lease liabilities (188) (2,004)Payments of the principal element of lease liabilities (1,337) (1,554)

Net cash used in financing activities (20,260) (397,411)

Net increase/(decrease) in cash and cash equivalents 17,131 (53,879)Cash and cash equivalents at beginning of the year (xiii) 85,002 102,147Exchange gains on cash and cash equivalents 14 76

Cash and cash equivalents at end of year/period 102,147 48,344

(i) Revenue


2019


2020 to29 December

2020RMB’000 RMB’000

Sales of pharmaceuticals 310,292 198,987– Healthcare services 22,432 24,864

– Revenue from contracts with customers 332,724 223,851



– I-80 –

The Healthcare and Pharmaceutical Business derives revenue from the transfer ofgoods and services over time and at a point in time as follows:

Overtime– Healthcare services 20,036 22,876

At a point in time– Sales of pharmaceuticals 310,292 198,987– Healthcare services 2,396 1,988

312,688 200,975

Revenue from contracts with customers 332,724 223,851

(ii) Contract liabilities

The Healthcare and Pharmaceutical Business has recognised the followingrevenue-related contract liabilities:

As at31 December

2019

As at29 December

2020RMB’000 RMB’000

– Sales of pharmaceutical products 39 84– Healthcare services 5,318 4,085

5,357 4,169

All contract liabilities were recognised as revenue within one year.



– I-81 –

(iii) Other income


2019


2020 to29 December

2020RMB’000 RMB’000

Interest income from loans to related parties 5,361 6,349Management related services – 66Rental income 106 106Government grants 10 199

5,477 6,720

(iv) Expenses by nature


2019


2020 to29 December

2020RMB’000 RMB’000

Cost of pharmaceuticals and consumables 235,214 144,519Employee benefits expenses 32,383 27,436Depreciation of property, plant and equipment 3,057 3,991Utilities 604 651Outsourcing labour costs 367 684Repair and maintenance expenses 110 166Canteen expenses 2,898 3,474Taxes and other levies 1,313 992Travelling, entertainment, vehicle and office

expenses 720 492Consultancy and professional service fees 4,711 5,436Greening and cleaning expenses 223 205Bank charges 190 193Amortisation of intangible assets 279 225Marketing and promotion expenses 1,643 694Others 4,470 3,254

288,182 192,412



– I-82 –

(v) Employee benefit expenses


2019


2020 to29 December

2020RMB’000 RMB’000

Salaries, wages and bonuses 26,850 23,556Contribution to pension scheme expenses 1,975 136Other employee benefits 3,558 3,744

32,383 27,436

(vi) Finance income/(costs) – net


2019


2020 to29 December

2020RMB’000 RMB’000

Finance income:Interest income of bank deposits 617 1,061Others 923 326

1,540 1,387

Finance costs:Interest expenses for lease liabilities (188) (242)Interest expenses for bank borrowings – (1,762)Interest expenses for loans from a related party (112) (13)

(300) (2,017)

Finance income/(costs) – net 1,240 (630)



– I-83 –

(vii) Income tax expense


2019


2020 to29 December

2020RMB’000 RMB’000

Current income tax– PRC corporate income tax 12,439 8,404– PRC corporate withholding tax 2,373 2,861

Deferred income tax– PRC corporate income tax (50) (136)

14,762 11,129

Numerical reconciliation of income tax expenses:


2019


2020 to29 December

2020RMB’000 RMB’000

Profit before income tax 51,381 37,522

Tax charge at applicable corporate income tax rate of25% 12,845 9,381

Tax effects of:– Expenses not deductible for tax purposes (21) –– Effect of different tax rates applicable to certain

subsidiaries and branches (341) (675)– Effect of income not subject to income tax (246) (594)– Tax losses for which no deferred Income tax asset

was recognised 152 156

12,389 8,268

PRC withholding income tax 2,373 2,861

Income tax expense for the year/period 14,762 11,129



– I-84 –

(viii)Property, plant and equipment

Buildingsand

facilitiesMedical

equipment

Officeequipment


Right-of-use for

properties TotalRMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

At 1 January 2019Cost 1,866 7,104 473 2,652 2,786 14,881Accumulated depreciation (64) (5,593) (300) (184) – (6,141)

Net book amount 1,802 1,511 173 2,468 2,786 8,740

Year ended 31 December2019 1,802 1,511 173 2,468 2,786 8,740

Opening net book amount 449 1,672 – 1,001 3,872 6,994Additions – – – – – –Disposals – (5) – – – (5)Depreciation charge (339) (589) (46) (547) (1,536) (3,057)

Closing net book amount 1,912 2,589 127 2,922 5,122 12,672

At 31 December 2019Cost 2,315 8,771 473 3,653 6,658 21,870Accumulated depreciation (403) (6,182) (346) (731) (1,536) (9,198)

Net book amount 1,912 2,589 127 2,922 5,122 12,672

Period from 1 January 2020to 29 December 2020 1,912 2,589 127 2,922 5,122 12,672

Opening net book amount 177 70 – 628 1,071 1,946Additions – – – – – –Disposals (4) (78) – – – (82)Depreciation charge (445) (578) (31) (837) (2,100) (3,991)

Closing net book amount 1,640 2,003 96 2,713 4,093 10,545

As at 29 December 2020Cost 2,488 8,763 473 4,281 7,729 23,734Accumulated depreciation (848) (6,760) (377) (1,568) (3,636) (13,189)

Net book amount 1,640 2,003 96 2,713 4,093 10,545



– I-85 –

(ix) Intangible assets

SoftwareRMB’000

At 1 January 2019Cost 1,040Accumulated amortisation (639)

Net book amount 401

Year ended 31 December 2019Opening net book amount 401Additions 295Amortisation charge (279)

Closing net book amount 417

As 31 December 2019Cost 1,335Accumulated amortisation (918)

Net book amount 417

Period from 1 January 2020 to 29 December 2020Opening net book amount 417Additions 31Amortisation charge (225)

Closing net book amount 223


Net book amount 223



– I-86 –

(x) Deferred income tax

As at31 December

2019

As at29 December

2020RMB’000 RMB’000

Deferred tax assets:– to be realised after more than 12 months 50 186

(xi) Inventories

As at31 December

2019

As at29 December

2020RMB’000 RMB’000

Pharmaceuticals 5,161 3,909Medical consumables 1,560 2,155Low value consumables 65 71

6,786 6,135



– I-87 –

(xii) Trade and other receivables and prepayments

As at31 December

2019

As at29 December

2020RMB’000 RMB’000

Trade receivables– Related parties (a) 37,451 42,772– Third parties 1,875 1,146

39,326 43,918

Other receivables– Amount due from related parties (b) 445,131 116,125– Deposits 20 100– Others 1,425 1,503

446,576 117,728

Prepayments– Prepayments to related-party suppliers 204 263– Prepayments to third-party suppliers 413 180

617 443

Total trade and other receivables and prepayments 486,519 162,089Less: prepayments – non-current portion (151) (150)

Total trade and other receivables and prepayments –current portion 486,368 161,939

Note (a): The trade receivables from related parties represented unsettled balance arising from sales ofinventories to the Hospital Business, which were unsecured, interest-free and with creditterms from 30 to 60 days.

Note (b): The non-trade balance due from related parties mainly include cash advances to relatedparties, which were secured and receivable on demand, amount of RMB265,545 andRMB5,000 of the balances as at 31 December 2019 and 29 December 2020 bearing an interestrate of 4.35%, respectively, while the rest of the balances due from related parties wereinterest-free.



– I-88 –

As at 31 December 2019 and 29 December 2020, the ageing analysis of the tradereceivables based on invoice date were as follows:

As at31 December

As at29 December

2019 2020RMB’000 RMB’000

Within 90 days 39,326 43,918

(xiii)Cash and cash equivalents

As at31 December

2019

As at29 December

2020RMB’000 RMB’000

Cash at bank and on hand 102,147 48,344

Cash and deposits were denominated in the following currencies:

As at31 December

2019

As at29 December

2020RMB’000 RMB’000

RMB 98,509 42,266HKD 3,638 6,078

102,147 48,344

(xiv) Bank borrowings

As at31 December

2019

As at29 December

2020RMB’000 RMB’000

Unsecured bank borrowings– Current – 1,000



– I-89 –

(xv) Lease liabilities

As at31 December

2019

As at29 December

2020RMB’000 RMB’000

Current 1,297 2,386Non-current 4,024 2,452

5,321 4,838

(xvi) Trade and other payables

As at31 December

2019

As at29 December

2020RMB’000 RMB’000

Trade payables– Related parties (a) 2,890 2,553– Third parties 39,772 31,271

42,662 33,824

Other payables– Amount due to related parties (b) 513,012 129,674– Deposits 64 693– Accrued payroll 6,289 4,153– Other taxes payables 1,224 1,064– Others 1,689 1,057

522,278 136,641

Total trade and other payables 564,940 170,465

Note (a): Trade payables to related parties were unsecured, interest-free and with credit terms rangingfrom 30 to 90 days.

Note (b): The non-trade balances due to related parties mainly include cash advances from the HospitalBusiness, which were unsecured, interest-free and repayable on demand.



– I-90 –

As at 31 December 2019 and 29 December 2020, ageing analysis of the tradepayables based on invoice date were are follows:

As at31 December

2019

As at29 December

2020RMB’000 RMB’000

Up to 1 year 42,642 33,1221 to 2 years 20 702

42,662 33,824

(xvii) Share capital

TotalRMB’000

Balance at 1 January 2019 –*Injection of capital from the then shareholder of a subsidiary (a) 500

Balance at 31 December 2019 500

Balance at 1 January 2020 500Injection of capital from the then shareholder of a subsidiary (a) 6,500

Balance at 29 December 2020 7,000


Note (a): A subsidiary of the Healthcare and Pharmaceutical Business received capital injection ofRMB500,000 and RMB6,500,000 respectively during the year ended 31 December 2019 andthe period from 1 January 2021 to 29 December 2020 from its then shareholder, before it wascombined by the Group.



– I-91 –

(xviii)Other reserves

Capitalreserves

Statutoryreserves

Translationdifference Total

RMB’000 RMB’000 RMB’000 RMB’000

Balance at 1 January 2019 526 169 (2,246) (1,551)Currency translation differences – – 795 795Appropriation of statutory

reserves – 413 – 413

Balance at 31 December 2019 526 582 (1,451) (343)

Balance at 1 January 2020 526 582 (1,451) (343)Currency translation differences – – 794 (794)Appropriation of statutory

reserves – 672 – 672

Balance at 29 December 2020 526 1,254 (2,245) 465



– I-92 –

(xix) Net cash generated from operation

Reconciliation from profit before income tax to cash generated from operation


2019

Periods from1 January2020 to 29December

2020RMB’000 RMB’000

Profit before income tax 51,381 37,522Adjustment for:Depreciation of property, plant and equipment 3,057 3,991Amortisation of intangible assets 279 225Interest income (6,901) (7,736)Interest expenses 300 2,017Unrecognised exchange gains (14) (76)

Operating cash flows before changes in workingcapital 48,102 35,943

Changes in working capital:Inventories 645 651Trade and other receivables and prepayments 134,138 (11,042)Trade and other payables 3,424 (11,789)Contract liabilities 3,313 (1,188)

Cash generated from operations 189,622 12,575



– I-93 –

Net debt reconciliations

Bankborrowings

Leaseliabilities

Amountsdue to

relatedparties –

non-trade TotalRMB’000 RMB’000 RMB’000 RMB’000

Balance as at 1 January2019 120,000 2,786 340,293 463,079

Non-cash changes– Additions of leases – 3,872 – 3,872– Accrued interest expenses – 188 112 300Cash flows– Increase – – 186,436 186,436– Decrease (120,000) (1,525) (15,002) (136,527)

Balance as at 31December 2019 – 5,321 511,839 517,160

Balance as at 1 January2020 – 5,321 511,839 517,160

Non-cash changes– Additions of leases – 1,071 – 1,071– Accrued interest expenses – 242 13 255Cash flows– Increase 77,900 – 2,647 80,547– Decrease (76,900) (1,796) (385,964) (464,660)

Balance as at 29December 2020 1,000 4,838 128,535 134,373

IV. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared for the Company or any of itssubsidiaries in respect of any period subsequent to 31 December 2021 and up to the date of thisreport. Except as disclosed in this report, no dividend or distribution has been declared, made orpaid by the Company or any of its subsidiaries comprising the Group in respect of any periodsubsequent to 31 December 2021.



– I-94 –

The information set out in this appendix does not form part of the Accountant’s Report from

PricewaterhouseCoopers, Certified Public Accountants, Hong Kong, the reporting accountant of

the Company, as set forth in Appendix I to this document, and is included herein for illustrative

purpose only. The unaudited pro forma financial information should be read in conjunction with

the section entitled “Financial Information” in this document and the “Accountant’s Report” set

forth in Appendix I to this document.

A. UNAUDITED PRO FORMA STATEMENT OF ADJUSTED NET TANGIBLE ASSETS

The following unaudited pro forma statement of adjusted net tangible assets of the Groupprepared in accordance with Rule 4.29 of the Listing Rules is for illustrative purposes only, andis set out below to illustrate the effect of the [REDACTED] on the net tangible assets of theGroup attributable to the owners of the Company as of 31 December 2021 as if the[REDACTED] had taken place on 31 December 2021.

This unaudited pro forma statement of adjusted net tangible assets has been prepared forillustrative purposes only and because of its hypothetical nature, it may not give a true picture ofthe consolidated net tangible assets of the Group as at 31 December 2021 or at any future datesfollowing the [REDACTED].

Auditedconsolidatednet tangibleassets of the

Groupattributable tothe owners ofthe Company

as at31 December

2021

Estimated[REDACTED]

from the[REDACTED]

Unaudited proforma adjusted

consolidatednet tangible

assetsattributable tothe owners ofthe Company

as at31 December

2021

Unaudited pro forma adjustedconsolidated net tangible assets

per ShareRMB’000 RMB’000 RMB’000 RMB HK$

(Note 1) (Note 2) (Note 3) (Note 4)

Based on the[REDACTED] ofHK$[REDACTED]per [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]

Based on the[REDACTED] ofHK$[REDACTED]per [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]


APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION

– II-1 –

Notes:

(1) The audited consolidated net tangible assets of the Group attributable to the owners of the Company as at31 December 2021 is extracted from the Accountant’s Report set out in Appendix I to this document,which is based on the audited consolidated net assets of the Group attributable to the owners of theCompany as at 31 December 2021 of approximately RMB[518,835,000], after deducting the Group’sintangible assets attributable to the owners of the Company of approximately RMB[14,892,000] as at 31December 2021.

(2) The estimated [REDACTED] from the [REDACTED] are based on [REDACTED] and the indicative[REDACTED] of HK$[REDACTED] per [REDACTED] and HK$[REDACTED] per [REDACTED],being low and high end of the indicative [REDACTED] range, after deduction of the [REDACTED] andother related expenses payable by the Company (including RMB[11,105,000] that has been charged toprofit or loss up to 31 December 2021).

(3) The unaudited pro forma adjusted consolidated net tangible assets per Share is arrived at after theadjustments referred to in the preceding paragraphs and on the basis that [REDACTED] Shares were inissue assuming that the [REDACTED] have been completed on 31 December 2021 but does not take intoaccount of any Shares which may be allotted and issued by the Company pursuant to the exercise of the[REDACTED], any Shares to be issued upon the exercise of the options granted under the [REDACTED]Share Option Scheme or options which may be granted under the Share Option Scheme]), or any Shareswhich may be allotted and issued or repurchased by the Company pursuant to the general mandates for theissue and allotment or repurchase of Shares granted to the Directors as described in the section headed“Share Capital” in this document.

(4) For the purpose of the unaudited pro forma statement of adjusted net tangible assets, the translation ofRenminbi amounts into Hong Kong dollars was at rate of RMB[0.8112] to HK$1.00. No representation ismade that Renminbi amounts have been, could have been or may be converted to Hong Kong dollars, orvice versa, at that date.

(5) No adjustment has been made to the unaudited pro forma adjusted consolidated net tangible assets toreflect any trading results or other transactions of the Group entered into subsequent to 31 December 2021.



– II-2 –

[REDACTED]



– II-3 –

[REDACTED]



– II-4 –

[REDACTED]



– II-5 –

The following is the text of a letter and a valuation certificate prepared for the purpose ofincorporation in this document received from AVISTA Valuation Advisory Limited, anindependent valuer, in connection with its valuation as at 31 December 2021 of the propertyinterests held by the Group.

[23] March 2022

The Board of DirectorsClifford Medical Group Limited (祈福醫療集團有限公司)Suite 4018, 40th FloorJardine House1 Connaught PlaceCentral, Hong Kong

Dear Sirs/Madams,

INSTRUCTIONS

In accordance with the instructions of Clifford Medical Group Limited (祈福醫療集團有限公司) (the “Company”) for us to carry out the valuation of the property interests (the“Property”) located in the People’s Republic of China (the “PRC”) held by the Company andits subsidiaries (hereinafter together referred to as the “Group”). We confirm that we havecarried out inspection, made relevant enquiries and searches and obtained such furtherinformation as we consider necessary for the purpose of providing you with our opinion of themarket value of the property interests as at 31 December 2021 (the “Valuation Date”).

VALUATION STANDARDS

In valuing the Property, we have complied with all the requirements set out in Chapter 5and Practice Note 12 of the Rules Governing the Listing of Securities issued by The StockExchange of Hong Kong Limited (the “Listing Rules”), the RICS Valuation – Global Standards2020 published by the Royal Institution of Chartered Surveyors (“RICS”) and the InternationalValuation Standards published from time to time by the International Valuation StandardsCouncil.

BASIS OF VALUATION

Our valuation is carried out on a market value basis, which is defined as “the estimatedamount for which an asset or liability should exchange on the valuation date between a willingbuyer and a willing seller in an arm’s length transaction, after proper marketing and where theparties had each acted knowledgeably, prudently and without compulsion”.


APPENDIX III PROPERTY VALUATION REPORT

– III-1 –

VALUATION ASSUMPTIONS

Our valuation of the Property excludes an estimated price inflated or deflated by specialterms or circumstances such as atypical financing, sale and leaseback arrangement, specialconsiderations or concessions granted by anyone associated with the sale, or any element ofspecial value or costs of sale and purchase or offset for any associated taxes.

No allowance has been made in our report for any charges, mortgages or amounts owing onany of the Property valued nor for any expenses or taxation which may be incurred in effecting asale. Unless otherwise stated, it is assumed that the Property are free from encumbrances,restrictions and outgoings of an onerous nature, which could affect its value.

In the course of our valuation of the Property in the PRC, we have assumed thattransferable land use rights in respect of the Property for a specific term at nominal annual landuse fees have been granted and that any premium has already been fully settled. We have reliedon the advice given by the Group and its legal adviser, being GFE Law Office (廣東恒益律師事務所) (the “PRC Legal Adviser”), regarding the title to the Property.

In valuing the Property, we have relied on a legal opinion regarding the property interestsprovided by the PRC Legal Adviser dated [•] (the “PRC Legal Opinion”) which states theGroup has legally obtained the land use rights of the Property. The grantees or the users of theProperty have free and uninterrupted rights to use or to assign the Property for the whole of theunexpired term as granted.

Unless noted in the report, vacant possession is assumed for the Property concerned.

Moreover, we have assumed that the design and construction of the Property are/will be incompliance with the local planning regulations and requirements and had been/would have beenduly examined and approved by the relevant authorities.

In the course of our valuation, unless otherwise stated, we have valued the Property in itsdesignated uses with the understanding that the Property will be used as such (hereafter referredto as “Continued Uses”).

Continued uses assumes the Property will be used for the purposes for which the Propertyare designed and built, or to which it is currently adapted. The valuation on the Property incontinued uses does not represent the amount that might be realised from piecemeal dispositionof the Property in the open market.

No environmental impact study has been ordered or made. Full compliance with applicablenational, provincial and local environmental regulations and laws is assumed. Moreover, it isassumed that all required licences, consents or other legislative or administrative authority fromany local, provincial or national government or private entity or organisation either have been orcan be obtained or renewed for any use which the report covers.



– III-2 –

It is also assumed that all applicable zoning and use regulations and restrictions have beencomplied with unless nonconformity has been stated, defined and considered in the valuationreport. In addition, it is assumed that the utilisation of the land and improvements are within theboundaries of the Property described and that no encroachment or trespass exists, unless noted inthe report.

We have further assumed that the Property was not transferred or involved in anycontentious or non-contentious dispute as at the Valuation Date. We have also assumed that therewas not any material change of the Property in between dates of our inspection and theValuation Date.

VALUATION METHODOLOGY

In valuing the Property in Group I, which are held for investment by the Group, we havevalued by the income approach by taking into account the rental income of the Property derivedfrom the existing leases and/or achievable in the existing market with due allowance for thereversionary income potential of the leases, which have been then capitalized to determine themarket value at an appropriate capitalization rate. Where appropriate, reference has also beenmade to the comparable sales transactions as available in the relevant market.

In valuing the Property in Group II, which are held for owner-occupied by the Group, dueto the nature of the buildings and structures of the Property and particular locations in whichthey are situated, there are no market sales comparables readily available. We have valued theProperty by cost approach with reference to its depreciated replacement cost, which is defined as“the current cost of replacing an asset with its modern equivalent asset less deductions forphysical deterioration and all relevant forms of obsolescence and optimisation”. It is based onan estimation of the market value for the existing use of the land, plus the current cost ofreplacement (reproduction) of the improvements, less deductions for physical deterioration andall relevant forms of obsolescence and optimization.

TITLE INVESTIGATION

We have been provided with copies of documents in relation to the title of the Property inthe PRC. Where possible, we have examined the original documents to verify the existing title tothe Property in the PRC and any material encumbrance that might be attached to the Property orany tenancy amendment. All documents have been used for reference only and all dimensions,measurements and areas are approximate. In the course of our valuation, we have reliedconsiderably on the PRC Legal Opinion given by the PRC Legal Adviser, concerning the validityof title of the property interests in the PRC.



– III-3 –

SITE INVESTIGATION

We have inspected the exteriors and, where possible, the interior of the Property. The siteinspection was carried out on 25 August 2021 by Kakay Chen (Senior Consultant). However, wehave not carried out an investigation on site to determine the suitability of ground conditionsand services for any development thereon. Our valuation has been prepared on the assumptionthat these aspects are satisfactory. We have further assumed that there is no significant pollutionor contamination in the locality which may affect any future developments.

SOURCE OF INFORMATION

Unless otherwise stated, we shall rely to a considerable extent on the information providedto us by the Group or the PRC Legal Adviser or other professional advisers on such matters asstatutory notices, planning approvals, zoning, easements, tenures, completion date of buildings,development proposal, identification of Property, particulars of occupation, site areas, floorareas, matters relating to tenure, tenancies and all other relevant matters.

We have had no reason to doubt the truth and accuracy of the information provided to us bythe Group. We have also sought confirmation from the Group that no material factors have beenomitted from the information supplied. We consider that we have been provided with sufficientinformation to reach an informed view and we have no reason to suspect that any materialinformation has been withheld.

We have not carried out detailed measurements to verify the correctness of the areas inrespect of the Property but have assumed that the areas shown on the title documents andofficial site plans handed to us are correct. All documents and contracts have been used asreference only and all dimensions, measurements and areas are approximations. No on-sitemeasurement has been taken.

LIMITING CONDITION

Wherever the content of this report is extracted and translated from the relevant documentssupplied in Chinese context and there are discrepancies in wordings, those parts of the originaldocuments will take prevalent.



– III-4 –

CURRENCY

Unless otherwise stated, all monetary amounts stated in this report are in Renminbi (RMB).

Our valuation certificate is attached below.

Yours faithfully,For and on behalf of

AVISTA Valuation Advisory Limited

Vincent C B PangMRICS CFA FCPA FCPA Australia

RICS Registered ValuerManaging Director

Notes:Mr. Vincent C B Pang is a member of Royal Institution of Chartered Surveyors (RICS) and a registered valuer ofRICS. He has over 10 years’ experience in the valuation of properties including Hong Kong, the PRC, the U.S.,Canada, East and Southeast Asia including Singapore, Japan and Korea.



– III-5 –

VALUATION CERTIFICATE

Property Description and tenureParticulars ofoccupancy

Market value inexisting state as at31 December 2021

RMB

A hospital buildinglocated at No.3Hongfu Road,Zhongcun Street,Panyu District,Guangzhou City,GuangdongProvince, the PRC

(中國廣東省廣州市番禹區鍾村街鴻福路三號的一座醫院大樓)

The property comprises a 25-storey hospitalbuilding over a 4-storey basement with atotal gross floor area of approximately179,981.73 sq.m.

Portions of the property on the ground floorwith a total gross floor area ofapproximately 1,914.00 sq.m. was held forinvestment (the “Investment Property”)and the remaining with a total gross floorarea of approximately 178,067.73 sq.m. washeld and occupied by the Group (the“Owner-occupied Property”). The propertywas completed in May 2017.

The property is located in Guangzhou City,near the Clifford Estates, withapproximately 8.7km to Guangzhou SouthRailway Station and 59.8km to GuangzhouBaiyun International Airport.

The land use rights of the property havebeen granted for a term expiring on 25April 2050 for healthcare use.

The Investment Propertywith a lettable area of861.00 sq.m. was leasedto 6 tenants for retailsuse as at the ValuationDate. The remainingportion of theInvestment Property wasvacant.

The Owner-occupiedProperty was occupiedby the Group as at theValuation Date forhospital operationpurpose.

978,820,000

Notes:

1. Pursuant to a Real Estate Ownership Certificate – Yue (2021) Guang Zhou Shi Bu Dong Chan Quan Di No.07067162 issued by the Planning and Natural Resources Bureau of Guangzhou City (廣州市規劃和自然資源局),the land use rights for a term expiring on 25 April 2050 for healthcare use and the building ownership of theproperty with a total gross floor area of approximately 179,981.73 sq.m. for healthcare use have been vested inGuangdong Clifford Hospital Company (廣東祈福醫院有限公司).

2. Pursuant to various Tenancy Agreements and Supplementary Agreements, 4 retails units of the InvestmentProperty with a lettable area of approximately 478.00 sq.m. was leased to various independent third parties at atotal monthly rent of RMB57,334 for various terms with the expiry dates between 31 December 2023 and 31 July2024.

3. Pursuant to various Tenancy Agreements and Supplementary Agreements, 2 retails or office units of theInvestment Property with a lettable area of approximately 383.00 sq.m. was leased to various intra-groupcompanies at a total monthly rent of RMB39,702 for various terms with the expiry dates between 31 December2024 and 24 November 2025.

4. Portions of the Investment Property mentioned in Note 2 and 3 were leased for retail and office purposes, whichtechnically do not conform with the property Designated Uses. As advise by the PRC Legal Advisor, the risk ofadministrative penalties being imposed by the relevant government authority is extremely low.



– III-6 –

4. As advised by the Group, the gross floor area of the property is set out as below:

Group Usage Gross Floor Area(sq.m.)

Group I – Property interests held for investment by theGroup in the PRC

Healthcare/Retails 1,914.00Sub-total: 1,914.00

Group II – Property interests held and occupied by theGroup in the PRC

Healthcare 131,827.01Carpark 46,240.72Sub-total: 178,067.73Total: 179,981.73

5. We have been provided with the PRC Legal Opinion, which contains, inter alia, the following:

a. The Group has legally and validly obtained the land use rights and the building ownership of the propertyunder the terms of the Real Estate Ownership Certificate;

b. The Group has the rights to use, to transfer or to pledge the land use rights and the building ownershiplegally for the whole of the unexpired term as granted upon the written consent by the pledgee;

c. The land use rights and the building ownership of the property was pledged to Commercial Bank of ChinaBranch in Guangzhou, South China (中國工商銀行股份有限公司廣州華南支行); and

d. The Tenancy Agreements and Supplementary Agreements mentioned in Note 2 and 3 are legally valid andbinding on each of the parties to the Tenancy Agreements and Supplementary Agreements.

6. Our valuation has been made on the following basis and analysis:

In our valuation of the land use right, we have considered and analysed 4 land sale comparables in the vicinity.The site value of the land sale comparables is ranging from RMB1,640 to RMB2,110 per sq.m. for healthcareuse. The unit rate adopted in the valuation is consistent with the unit rates of the relevant comparables after dueadjustments in terms of location, time and size, etc;

In the course of our valuation of the Investment Property, we have made references to various relevant rentalevidences in the locality which have similar characteristics as the subject property such as nature, use andaccessibility. The adopted unit rents of the comparables are ranging from RMB57.0 to RMB63.3 per sq.m. of perday for retails units on the first floor. The market yields assumed by us is 5.0% for retails units, which isconsistent with the market yield of these property sector in the range of 3.5% to 5.4%;

7. For the purpose of this report, the property is classified into the following groups according to the purpose forwhich it is held, we are of the opinion that the market value of each group as at the Valuation Date in its existingstate is set out as below:

Group

Market value inexisting state asat the Valuation

Date(RMB)

Group I – Property interests held for investment by the Group in the PRC 22,470,000Group II – Property interests held and occupied by the Group in the PRC 956,350,000

Total: 978,820,000



– III-7 –

Set out below is a summary of certain provisions of the memorandum and articles ofassociation of the Company and of certain aspects of Cayman Islands company law.

1. MEMORANDUM OF ASSOCIATION

The memorandum of association provides that the Company’s objects are unrestricted. Theobjects of the Company are set out in Clause 3 of the memorandum of association which isavailable on display on the websites and during the period specified in the paragraph headed“Documents Delivered to the Registrar of Companies and Available on Display – Documents onDisplay” specified in appendix VI to this document. As an exempted company, the Company willnot trade in the Cayman Islands with any person, firm or corporation except in furtherance ofthe business of the Company carried on outside the Cayman Islands.

2. ARTICLES OF ASSOCIATION

The articles of association of the Company (the “Articles”) were adopted on [•]. Thefollowing is a summary of certain provisions of the Articles.

(a) Directors

(i) Power to allot and issue shares

Without prejudice to any special rights or restrictions for the time being attachingto any shares or any class of shares, any share may be issued upon such terms andconditions and with such preferred, deferred or other special rights, or suchrestrictions, whether as regards dividend, voting, return of capital or otherwise, as theCompany may from time to time by ordinary resolution determine (or, in the absenceof any such determination or so far as the same may not make specific provision, asthe Directors may determine) and any preference shares may be issued on terms thatthey are liable to be redeemed upon the happening of a specified event or upon agiven date and either at the option of the Company or at the option of the holder. TheDirectors may issue warrants to subscribe for any class of shares or securities of theCompany on such terms as they may from time to time determine.

All unissued shares in the Company shall be at the disposal of the Directors, whomay offer, allot, grant options over or otherwise dispose of them to such persons, atsuch times, for such consideration and generally on such terms they shall in theirabsolute discretion think fit, but so that no shares shall be issued at a discount.


APPENDIX IV SUMMARY OF THE CONSTITUTION OF THE COMPANYAND CAYMAN ISLANDS COMPANY LAW

– IV-1 –

(ii) Power to dispose of the assets of the Company or any subsidiary

There are no specific provisions in the Articles relating to the disposal of theassets of the Company or any of its subsidiaries although the Directors may exerciseall powers and do all acts and things which may be exercised or done or approved bythe Company and which are not required by the Articles or relevant statutes of theCayman Islands to be exercised or done by the Company in general meeting.

(iii) Compensation or payments for loss of office

Payments to any Director or past Director of any sum by way of compensationfor loss of office or as consideration for or in connection with his retirement fromoffice (not being a payment to which the Director is contractually entitled) must beapproved by the Company in general meeting.

(iv) Loans and the giving of security for loans to Directors

Where the shares of the Company remain listed on the Stock Exchange or on astock exchange in such other territory as the Directors may from time to time decide,the Company may not make, without the approval of, or ratification by, the Companyin general meeting, any loans to, or provide any guarantee, indemnity or security inrespect of any loan to a Director or any of his associates, provided that the Articles donot prohibit the granting of any loan or the provision of any guarantee, indemnity orsecurity (i) to be applied for, or in respect of a liability incurred for any business ofthe Company, (ii) for the purchase by a Director (or the repayment of a loan for hispurchase) of a residence where the amount of the loan, the liability under theguarantee or indemnity or the value of the security does not exceed 80 per cent. of thefair market value of such residence nor 5 per cent. of the consolidated net asset valueof the Company as shown in its latest audited accounts; provided that any such loan ison normal commercial terms and is secured by a legal charge over the residence; or,(iii) of any amount to, or in respect of a liability of, a company in which the Companyhas an equity interest, and the amount of such loan, or the liability assumed by theCompany under such guarantee, indemnity or security, does not exceed itsproportional interest in such company.

(v) Financial assistance to purchase shares of the Company or its holdingscompany

There are no provisions in the Articles relating to the giving by the Company offinancial assistance for the purchase, subscription or other acquisition of shares of theCompany or of its holding company. The law on this area is summarised in paragraph4(b) below.



– IV-2 –

(vi) Disclosure of interests in contracts with the Company or any of its subsidiaries

A Director may hold any other office or place of profit with the Company(except that of an auditor) in conjunction with his office of Director for such periodand upon such terms as the Directors may determine, and may be paid such extraremuneration therefor (whether by way of salary, commission, participation in profitsor otherwise) as the Directors may determine. A Director may be or become a directoror other officer of, or be otherwise interested in, any company promoted by theCompany or any other company in which the Company may be interested, and shallnot be liable to account to the Company or the members for any remuneration, profitor other benefit received by him as a director or officer of or from his interest in suchother company. The Directors may also cause the voting power conferred by the sharesin any other company held or owned by the Company to be exercised in such mannerin all respects as they think fit, including the exercise thereof in favour of anyresolution appointing the Directors or any of them to be directors or officers of suchother company, or voting or providing for the payment of remuneration to thedirectors or officers of such other company. A Director shall not vote or be counted inthe quorum on any resolution of the Directors concerning his own appointment or theappointment of any of his associates as the holder of any office or place of profit withthe Company or any other company in which the Company is interested (including thearrangement or variation of the terms thereof, or the termination thereof).

Subject to the provisions of the Articles, no Director or proposed or intendedDirector shall be disqualified by his office from contracting with the Company, eitherwith regard to his tenure of any office or place of profit or as vendor, purchaser or inany other manner whatsoever, nor will any contract with regard thereto or any othercontract or arrangement in which any Director is in any way interested be liable to beavoided, nor shall any Director so contracting or being so interested be liable toaccount to the Company or the members for any remuneration, profit or other benefitsrealised by any such contract or arrangement by reason of such Director holding thatoffice or the fiduciary relationship thereby established. If to the knowledge of aDirector, he or any of his associates, is in any way, whether directly or indirectly,interested in a contract or arrangement or proposed contract or arrangement with theCompany, he must declare the nature of his or, as the case may be, his associate(s)’interest at the meeting of the Directors at which the question of entering into thecontract or arrangement is first taken into consideration, if he knows his interest orthat of his associates then exists, or in any other case at the first meeting of theDirectors after he knows that he or his associate(s) is or has become so interested.

Save as otherwise provided by the Articles, a Director may not vote (nor becounted in the quorum for the voting) on any resolution of the Directors approvingany contract or arrangement in which he or any of his close associate(s) (as defined in



– IV-3 –

the Articles) is to his knowledge materially interested, and if he does so his vote willnot be counted, but this prohibition will not apply to any of the following matters,namely:

(aa) the giving of any security or indemnity either:

(aaa) to the Director or his close associate(s) in respect of money lent orobligations incurred or undertaken by him or any of them at therequest of or for the benefit of the Company or any of its subsidiaries;or

(bbb) to a third party in respect of a debt or obligation of the Company orany of its subsidiaries for which the Director or his close associate(s)has himself/ themselves assumed responsibility in whole or in part andwhether alone or jointly under a guarantee or indemnity or by thegiving of security;

(bb) any proposal concerning an offer of shares or debentures or other securitiesof or by the Company or any other company which the Company maypromote or be interested in for subscription or purchase where the Directoror his close associate(s) is/are or is/are to be interested as a participant inthe underwriting or sub-underwriting of the offer;

(cc) any proposal or arrangement concerning the benefit of employees of theCompany or its subsidiaries including:

(aaa) the adoption, modification or operation of any employees’ sharescheme or any share incentive or share option scheme under which theDirector or his close associate(s) may benefit; or

(bbb) the adoption, modification or operation of a pension fund orretirement, death or disability benefits scheme which relates to theDirectors, his close associate(s) and employee(s) of the Company orany of its subsidiaries and does not provide in respect of any Director,or his close associate(s), as such any privilege or advantage notgenerally accorded to the class of persons to which such scheme orfund relates;

(dd) any contract or arrangement in which the Director or his close associate(s)is/are interested in the same manner as other holders of shares or debenturesor other securities of the Company by virtue only of his/their interest inshares or debentures or other securities of the Company.



– IV-4 –

(vii) Remuneration

The Directors shall be entitled to receive by way of ordinary remuneration fortheir services such sum as is from time to time determined by the Company in generalmeeting, such sum (unless otherwise directed by the resolution by which it is voted) tobe divided amongst the Directors in such proportions and in such manner as they mayagree, or failing agreement, equally, except that in such event any Director holdingoffice for less than the whole of the relevant period in respect of which theremuneration is paid shall only rank in such division in proportion to the time duringsuch period for which he has held office. The foregoing provisions shall not apply to aDirector who holds any salaried employment or office in the Company except in thecase of sums paid in respect of Directors’ fees. The Directors shall also be entitled tobe repaid all travelling, hotel and other expenses reasonably incurred by themrespectively in or about the performance of their duties as Directors, including theirexpenses of travelling to and from Directors’ meetings, committee meetings or generalmeetings, or otherwise incurred whilst engaged on the business of the Company or inthe discharge of their duties as Directors.

The Directors may grant special remuneration to any Director who performs anyspecial or extra services to or at the request of the Company. Such specialremuneration may be made payable to such Director in addition to or in substitutionfor his ordinary remuneration as a Director, and may be made payable by way ofsalary, commission or participation in profits or otherwise as may be arranged.Notwithstanding the foregoing the remuneration of the managing director, jointmanaging director, deputy managing director or an executive Director or a Directorappointed to any other office in the management of the Company may be fixed fromtime to time by the Directors and may be by way of salary, commission orparticipation in profits or otherwise or by all or any of those modes and with suchother benefits (including pension and/or gratuity and/or other benefits on retirement)and allowances as the Directors may from time to time decide. Such remuneration isin addition to his ordinary remuneration as a Director.

The Directors also have power to establish and maintain or procure theestablishment and maintenance of any contributory or non-contributory pension orsuperannuation funds for the benefit of, or to give or procure the giving of donations,gratuities, pensions, allowances or emoluments to, any persons who are or were at anytime in the employment or service of the Company, or of any company which is asubsidiary of the Company, or is allied or associated with the Company or with anysuch subsidiary company, or who are or were at any time directors or officers of theCompany or of any such other company as aforesaid, and holding or who have heldany salaried employment or office in the Company or such other company, and thespouses, widows, widowers, families and dependants of any such persons and maymake payments for or towards the insurance of any such persons. Any Director



– IV-5 –

holding any such employment or office is entitled to participate in and retain for hisown benefit any such donation, gratuity, pension, allowance or emolument.

(viii) Retirement, appointment and removal

At each annual general meeting, one-third of the Directors for the time being (orif their number is not three or a multiple of three, then the number nearest to but notless than one third) will retire from office by rotation provided that every Directorshall be subject to retirement at least once every three years. The Directors to retire inevery year will be those who have been longest in office since their last election butas between persons who became Directors on the same day those to retire shall (unlessthey otherwise agree between themselves) be determined by lot.

A Director is not required to retire upon reaching any particular age.

The Directors are entitled to attend and speak at all general meetings.

The number of Directors shall not be fewer than one. A Director may be removedby an ordinary resolution of the Company before the expiration of his period of office(but without prejudice to any claim which such Director may have for damages forbreach of any contract of service between him and the Company). Subject to thestatutes and the provisions of the Articles, the Company may from time to time ingeneral meeting by ordinary resolution elect any person to be a Director either to fill acasual vacancy or as an additional Director. In addition, the Directors may appoint anyperson to be a Director either to fill a casual vacancy or as an additional Director butso that the number of Directors so appointed shall not exceed the maximum numberdetermined from time to time by the members in general meeting. Any Director soappointed shall hold office only until the next following annual general meeting of theCompany and shall then be eligible for re-election at the meeting.

The Directors may from time to time entrust to and confer upon the chairman,deputy chairman, managing director, joint managing director, deputy managingdirector or executive director of the Company all or any of the powers of the Directorsthat they may think fit, provided that the exercise of all powers by such Director shallbe subject to such regulations and restrictions as the Directors may from time to timemake and impose. The Directors may delegate any of their powers to committeesconsisting of such member or members of their body and such other persons as theythink fit, and they may from time to time revoke such delegation or revoke theappointment of and discharge any such committees either wholly or in part, and eitheras to persons or purposes, but every committee so formed shall in the exercise of thepowers so delegated conform to any regulations that may from time to time beimposed upon it by the Directors.



– IV-6 –

(ix) Borrowing powers

The Directors may from time to time at their discretion exercise all the powers ofthe Company to raise or borrow or to secure the payment of any sum or sums ofmoney for the purposes of the Company and to mortgage or charge its undertaking,property and uncalled capital or any part thereof. The Directors may raise or securethe payment or repayment of such sum or sums in such manner and upon such termsand conditions in all respects as they think fit and in particular, but subject to theprovisions of the Companies Act, by the issue of debentures, debenture stock, bondsor other securities of the Company, whether outright or as collateral security for anydebt, liability or obligation of the Company or of any third party.

Note: The provisions summarised above, in common with the Articles in general, may be variedwith the sanction of a special resolution of the Company.

(x) Qualification shares

Directors of the Company are not required under the Articles to hold anyqualification shares.

(xi) Indemnity to Directors

The Articles contain provisions that provide indemnity to, among other persons,the Directors from and against all actions, costs, charges, losses, damages andexpenses which they or any of them may incur or sustain by reason of any act done,concurred in or omitted in or about the execution of their duty or supposed duty intheir respective offices or trusts, except such (if any) as they shall incur or sustainthrough their own fraud or dishonesty.

(b) Alterations to constitutive documents

The memorandum of association of the Company may be altered by the Company ingeneral meeting. The Articles may also be amended by the Company in general meeting. Asmore fully described in paragraph 3 below, the Articles provide that, subject to certainexceptions, a special resolution is required to alter the memorandum of association, toapprove any alteration to the Articles and to change the name of the Company.



– IV-7 –

(c) Alterations of capital

The Company may from time to time by ordinary resolution:

(i) increase its share capital;

(ii) consolidate or divide all or any of its share capital into shares of larger orsmaller amount than its existing shares; on any consolidation of fully paid sharesinto shares of larger amount, the Board may settle any difficulty which may ariseas it thinks expedient and in particular (but without prejudice to the generality ofthe foregoing) may, as between the holders of the shares to be consolidated,determine which particular shares are to be consolidated into a consolidatedshare, and if it shall happen that any person shall become entitled to fractions ofa consolidated share or shares, such fractions may be sold by some personappointed by the Directors for that purpose and the person so appointed maytransfer the shares so sold to the purchaser thereof and the validity of suchtransfer shall not be questioned, and so that the net proceeds of such sale (afterdeduction of the expenses of such sale) may either be distributed among thepersons who would otherwise be entitled to a fraction or fractions of aconsolidated share or shares rateably in accordance with their rights and interestsor may be paid to the Company for the Company’s benefit;

(iii) divide its shares into several classes and attach thereto respectively anypreferential, deferred, qualified or special rights, privileges or conditions;

(iv) cancel any shares which at the date of the passing of the resolution have not beentaken or agreed to be taken by any person, and diminish the amount of its sharecapital by the amount of the shares so cancelled;

(v) sub-divide its shares or any of them into shares of smaller amount than is fixedby the memorandum of association, subject nevertheless to the Companies Act,and so that the resolution whereby any shares are sub-divided may determinethat, as between the holders of the shares resulting from such sub-division, oneor more of the shares may have any such preferred or other special rights over, ormay have such deferred rights or be subject to any such restrictions as comparedwith the others as the Company has power to attach to unissued or new shares;

(vi) change the currency of denomination of its share capital; and

(vii) make provision for the issue and allotment of shares which do not carry anyvoting rights.



– IV-8 –

The Company may by special resolution reduce its issued share capital, any capitalredemption reserve fund or other undistributable reserve in any manner authorised andsubject to any conditions prescribed by law. The Company may apply its share premiumaccount in any manner permitted by law.

(d) Variation of rights of existing shares or classes of shares

If at any time the capital is divided into different classes of shares, all or any of thespecial rights (unless otherwise provided for by the terms of issue of that class) attached toany class may, subject to the provisions of the Companies Act, be varied or abrogatedeither with the consent in writing of the holders of not less than three-fourths in nominalvalue of the issued shares of that class or with the sanction of a special resolution passed ata separate meeting of the holders of the shares of that class. To every such separate generalmeeting the provisions of the Articles relating to general meetings will mutatis mutandisapply, save as to the provisions regarding the quorum of meetings, as to which seeparagraph 2(s) below.

(e) Special resolutions – majority required

For so long as any part of the issued capital of the Company remains listed on theStock Exchange, a special resolution of the Company must be passed by a majority of notless than three-fourths of the votes cast by such members as, being entitled so to do, votein person or, in the case of such members as are corporations, by their respective dulyauthorised representatives, or by proxy, at a general meeting of which notice has been dulygiven in accordance with paragraph 2(i) below for further details.

(f) Voting rights

Subject to any special rights, privileges or restrictions as to voting for the time beingattached to any class or classes of shares, at any general meeting on a poll every memberpresent in person (or, in the case of a member being a corporation, by its duly authorisedrepresentative) or by proxy shall have one vote for every share of which he is the holderwhich is fully paid or credited as fully paid (but so that no amount paid or credited as paidon a share in advance of calls or instalments is treated for the foregoing purposes as paidon the share). So long as the shares are listed on the Stock Exchange, where any memberis, under the Listing Rules (as defined in the Articles), required to abstain from voting onany particular resolution or restricted to voting only for or only against any particularresolution, any votes cast by or on behalf of such member (whether by way of proxy or, asthe case may be, corporate representative) in contravention of such requirement orrestriction shall not be counted. On a poll, a member entitled to more than one vote neednot use all his votes or cast all his votes in the same way.



– IV-9 –

At any general meeting a resolution put to the vote of the meeting shall be decided byway of a poll save that in the case of a physical meeting, the chairman of the meeting mayin good faith, allow a resolution which relates purely to a procedural or administrativematter to be voted on by a show of hands in which case every member present in person (orbeing a corporation, is present by a duly authorized representative), or by proxy(ies) shallhave one vote provided that where more than one proxy is appointed by a member which isa clearing house (or its nominee(s)), each such proxy shall have one vote on a show ofhands. Votes (whether on a show of hands or by way of poll) may be cast by such means,electronic or otherwise, as the Directors or the chairman of the meeting may determine.

All shareholders have the right to speak and vote at a general meeting except where ashareholder is required, by the rules of the Stock Exchange, to abstain from voting toapprove the matter under consideration.

Where a shareholder is a clearing house (as defined in the Articles) or a nominee of aclearing house, it may authorise such persons as it thinks fit to act as its representatives atany meeting of the Company or at any meeting of any class of shareholders provided thatthe authorisation shall specify the number and class of shares in respect of which each suchrepresentative is so authorised. Each person so authorised under the provisions of theArticles shall be entitled to exercise the same rights and powers as if such person was theregistered holder of the shares of the Company held by the clearing house (or its nominees)in respect of the number and class of shares specified in the relevant authorisationincluding, where a show of hands is allowed, the right to vote individually on a show ofhands.

(g) Requirements for annual general meetings

The Company must hold an annual general meeting of the Company every financialyear and such general meeting must be held within six (6) months after the end of theCompany’s financial year unless a longer period would not infringe the rules of the StockExchange.

(h) Accounts and audit

The Directors shall cause true accounts to be kept of the sums of money received andexpended by the Company, and the matters in respect of which such receipts andexpenditure take place, and of the property, assets, credits and liabilities of the Companyand of all other matters required by law or are necessary to give a true and fair view of thestate of the Company’s affairs and to show and explain its transactions.

The books of accounts are to be kept at the principal office of the Company or at suchother place as the Directors think fit and shall always be open to the inspection of theDirectors. No member (not being a Director) or other person has any right to inspect anyaccount or book or document of the Company except as conferred by the Companies Act or



– IV-10 –

ordered by a court of competent jurisdiction or authorised by the Directors or by theCompany in general meeting. However, an exempted company shall make available at itsregistered office in electronic form or any other medium, copies of its books of account orparts thereof as may be required of it upon service of an order or notice by the TaxInformation Authority pursuant to the Tax Information Authority Act of the CaymanIslands.

The Directors shall from time to time cause to be prepared and laid before theCompany at its annual general meeting such profit and loss accounts, balance sheets, groupaccounts (if any) and reports and so long as any shares in the Company are listed on theStock Exchange, the accounts of the Company shall be prepared and audited based on thegenerally accepted accounting principles of Hong Kong or the International FinancialReporting Standards or such other standards as the Stock Exchange may permit. Everybalance sheet of the Company shall be signed on behalf of the Directors by two Directorsand a copy of every balance sheet (including every document required by law to becomprised therein or attached or annexed thereto) and profit and loss account which is tobe laid before the Company at its annual general meeting, together with a copy of theDirectors’ report and a copy of the auditors’ report, shall not less than 21 days before thedate of the meeting, be sent to every member of, and every holder of debentures of, theCompany and every other person entitled to receive notices of general meetings of theCompany under the Companies Act or of the Articles. Subject to due compliance with theCompanies Act and the rules of the Stock Exchange, and to obtaining all necessaryconsents, if any, required thereunder and such consents being in full force and effect, suchrequirements shall be deemed satisfied in relation to any person by sending to the person inany manner not prohibited by the Companies Act and instead of such copies, a summaryfinancial statement derived from the Company’s annual financial statements and thedirectors’ report thereon, which shall be in the form and containing the informationrequired by applicable laws and regulation, provided that any person who is otherwiseentitled to the annual financial statements of the Company and the directors’ report thereonmay, if he so requires by notice in writing served on the Company, demand that theCompany sends to him, in addition to a summary financial statement, a complete printedcopy of the Company’s annual financial statement and the directors’ report thereon. If all orany of the shares or debentures of the Company are for the time being (with the consent ofthe Company) listed or dealt in on any stock exchange, there shall be forwarded to suchstock exchange such number of copies of such documents as may for the time being berequired under its regulations or practice.

At the annual general meeting in each year, the members shall appoint one or morefirms of auditors to hold office until the next annual general meeting. Moreover, themembers may, at any general meeting, by ordinary resolution remove the auditors at anytime before the expiration of the term of office and shall by ordinary resolution at thatmeeting appoint another auditor in its place for the remainder of his term. Save asotherwise provided by such provisions the remuneration of the auditors shall be fixed by oron the authority of the Company at each annual general meeting.



– IV-11 –

(i) Notices of meetings and business to be conducted thereat

An annual general meeting shall be called by notice of not less than twenty-one (21)clear days. All other general meetings (including an extraordinary general meeting) must becalled by notice of not less than fourteen (14) clear days. The notice shall specify, (b) savefor an electronic meeting, the place of the meeting and if there is more than one meetinglocation as determined by the Board pursuant to the Articles, the principal place of themeeting (the “Principal Meeting Place”), (c) if the general meeting is to be a hybridmeeting or an electronic meeting, the notice shall include a statement to that effect andwith details of the electronic facilities for attendance and participation by electronic meansat the meeting or where such details will be made available by the Company prior to themeeting, and (d) and particulars of resolutions to be considered at the meeting.

Extraordinary general meetings may be convened on the requisition of one or moreshareholders holding, at the date of deposit of the requisition, not less than one-tenth of thepaid up capital of the Company having the right of voting at general meetings. Suchrequisition shall be made in writing to the board or the secretary for the purpose ofrequiring an extraordinary general meeting to be called by the board for the transaction ofany business or resolution specified in such requisition. Such meeting shall be held within2 months after the deposit of such requisition. If within 21 days of such deposit, the boardfails to proceed to convene such meeting, the requisitionist(s) himself/herself (themselves)may convene a physical meeting at only one location which will be the Principal MeetingPlace, and all reasonable expenses incurred by the requisitionist(s) as a result of the failureof the board shall be reimbursed to the requisitionist(s) by the Company.

(j) Transfer of shares

All transfers of shares must be effected by transfer in writing in the usual or commonform or so long as any shares in the Company are listed on the Stock Exchange, suchstandard form prescribed by the Stock Exchange or in any other form acceptable to theBoard and may be under hand only or, if the transferor or transferee is a clearing house orits nominee(s), by hand, by machine imprinted signature or by such other means ofexecution as the Directors may approve from time to time; and an instrument of transfermust be executed by or on behalf of the transferor and by or on behalf of the transferee andthe transferor shall be deemed to remain the holder of the share until the name of thetransferee is entered in the register of members in respect thereof, provided that theDirectors may in their absolute discretion dispense with the requirement for the productionof a transfer in writing before registering a transfer of a share, and may acceptmechanically executed transfers in any case.

The Directors may, in their absolute discretion, at any time and from time to timetransfer or agree to transfer any share upon the principal register to any branch register orany share on any branch register to the principal register or any other branch register.



– IV-12 –

Unless the Directors otherwise agree, no shares on the principal register shall betransferred to any branch register nor shall shares on any branch register be transferred tothe principal register or any other register. All transfers and other documents of title mustbe lodged for registration and registered, in the case of shares on a branch register, at therelevant registration office and, in the case of shares on the principal register, at thetransfer office for that register.

The Directors may in their absolute discretion and without assigning any reasontherefor, refuse to register any transfer of any shares (not being fully paid shares) to aperson of whom they do not approve and they may refuse to register the transfer of anyshares (not being fully paid shares) on which the Company has a lien. The Directors mayalso refuse to register a transfer of shares (whether fully paid or not) in favour of morethan four persons jointly or any share issued under any share option scheme for employeesupon which a restriction on transfer imposed thereby shall subsist, or where the transfer isto an infant or a person of unsound mind or under other legal disability. If the Directorsrefuse to register a transfer, they must within two months after the date on which thetransfer was lodged with the Company send to the transferor and transferee notice of therefusal and (if the shares concerned are fully paid shares) the reasons(s) for such refusal.

The Directors may, if applicable, decline to recognise an instrument of transfer unlessthe instrument of transfer is properly stamped, is in respect of only one class of share andis lodged at the relevant registration or transfer office accompanied by the relevant sharecertificate(s) and such other evidence as they may reasonably require to show the right ofthe transferor to make the transfer (and if the instrument of transfer is executed by someother person on his behalf, the authority of that person so to do).

The registration of transfers may, on giving notice by advertisement in one Englishand one Chinese newspaper circulating in Hong Kong, be suspended at such times and forsuch periods as the Directors may from time to time determine and either generally or inrespect of any class of shares. The register of members shall not be closed for periodsexceeding in the whole 30 days in any year.

(k) Power for the Company to purchase its own shares

The Articles provide that the power of the Company to purchase or otherwise acquireits shares is exercisable by the Directors upon such terms and conditions as they think fitsubject to the conditions prescribed by the Companies Act.

(l) Power of any subsidiary to own securities in the Company

There are no provisions in the Articles relating to ownership of securities in theCompany by a subsidiary.



– IV-13 –

(m) Dividends and other methods of distribution

The Company in general meeting may declare dividends in any currency but nodividend may exceed the amount recommended by the Directors. The Company may alsomake a distribution out of share premium account subject to the provisions of theCompanies Act.

Unless and to the extent that the rights attached to any shares or the terms of issuethereof otherwise provide, all dividends will be apportioned and paid pro rata according tothe amounts paid or credited as paid on the shares during any portion or portions of theperiod in respect of which the dividend is paid. No amount paid on a share in advance ofcalls will for this purpose be treated as paid on the shares. The Directors may retain anydividends or other moneys payable on or in respect of a share upon which the Company hasa lien, and may apply the same in or towards satisfaction of the debts, liabilities orengagements in respect of which the lien exists. The Directors may deduct from anydividend or bonus payable to any member all sums of money (if any) presently payable byhim to the Company on account of calls, instalments or otherwise.

Whenever the Directors or the Company in general meeting have resolved that adividend be paid or declared on the share capital of the Company, the Directors may furtherresolve either (a) that such dividend be satisfied wholly or in part in the form of anallotment of shares credited as fully paid, provided that the members entitled thereto willbe entitled to elect to receive such dividend (or part thereof) in cash in lieu of suchallotment, or (b) that the members entitled to such dividend will be entitled to elect toreceive an allotment of shares credited as fully paid in lieu of the whole or such part of thedividend as the Directors may think fit.

The Company may also upon the recommendation of the Directors by an ordinaryresolution resolve in respect of any particular dividend of the Company that it may besatisfied wholly in the form of an allotment of shares credited as fully paid withoutoffering any right to members to elect to receive such dividend in cash in lieu of suchallotment.

Whenever the Directors or the Company in general meeting have resolved that adividend be paid or declared the Directors may further resolve that such dividend besatisfied wholly or in part by the distribution of specific assets of any kind.

All dividends, bonuses or other distributions or the proceeds of the realisation of anyof the foregoing unclaimed for one year after having been declared may be invested orotherwise made use of by the Directors for the benefit of the Company until claimed andthe Company shall not be constituted a trustee in respect thereof. All dividends, bonuses orother distributions or proceeds as aforesaid unclaimed for six years after having beendeclared may be forfeited by the Directors and, upon such forfeiture, shall revert to the



– IV-14 –

Company and, in the case where any of the same are securities in the Company, may bere-allotted or re-issued for such consideration as the Directors think fit.

(n) Proxies

Any member of the Company entitled to attend and vote at a meeting of the Companyor a meeting of the holders of any class of shares in the Company is entitled to appointanother person as his proxy to attend and vote instead of him. A member who is the holderof two or more shares may appoint more than one proxy to represent him to vote on hisbehalf at a general meeting of the Company or at a class meeting. At any general meeting,votes may be given either personally (or, in the case of a member being a corporation, byits duly authorised representative) or by proxy. Proxies need not be members of theCompany.

A proxy shall be entitled to exercise the same powers on behalf of a member who isan individual and for whom he acts as proxy as such member could exercise. In addition, aproxy shall be entitled to exercise the same powers on behalf of a member which is acorporation and for which he acts as proxy as such member could exercise as if it were anindividual member.

(o) Corporate representatives

A corporate member of the Company entitled to attend and vote at a meeting of theCompany is entitled to appoint any person or persons as its representative to attend andvote on its behalf. A corporate member represented by its representative is deemed to bepresent in person at the relevant meeting and its representative may vote on a poll on anyresolution put at such meeting.

(p) Calls on shares and forfeiture of shares

The Directors may from time to time make such calls as it may think fit upon themembers in respect of any monies unpaid on the shares held by them respectively (whetheron account of the nominal value of the shares or by way of premium) and not by theconditions of allotment thereof made payable at fixed times. A call may be made payableeither in one sum or by instalments. If the sum payable in respect of any call or instalmentis not paid on or before the day appointed for payment thereof, the person or persons fromwhom the sum is due shall pay interest on the same at such rate not exceeding 20 per cent.per annum as the Directors shall fix from the day appointed for the payment thereof to thetime of actual payment, but the Directors may waive payment of such interest wholly or inpart. The Directors may, if they think fit, receive from any member willing to advance thesame, either in money or money’s worth, all or any part of the money uncalled and unpaidor instalments payable upon any shares held by him, and in respect of all or any of themonies so advanced the Company may pay interest at such rate (if any) not exceeding 20per cent. per annum as the Directors may decide.



– IV-15 –

If a member fails to pay any call or instalment of a call on the day appointed forpayment thereof, the Directors may, at any time thereafter during such time as any part ofthe call or instalment remains unpaid, serve a notice on him requiring payment of so muchof the call or instalment as is unpaid, together with any interest which may have accruedand which may still accrue up to the date of actual payment. The notice will name a furtherday (not earlier than the expiration of fourteen days from the date of the notice) on orbefore which the payment required by the notice is to be made, and it will also name theplace where payment is to be made. The notice shall also state that, in the event ofnon-payment at or before the time appointed, the shares in respect of which the call wasmade will be liable to be forfeited.

If the requirements of any such notice are not complied with, any share in respect ofwhich the notice has been given may at any time thereafter, before the payment required bythe notice has been made, be forfeited by a resolution of the Directors to that effect. Suchforfeiture will include all dividends and bonuses declared in respect of the forfeited shareand not actually paid before the forfeiture.

A person whose shares have been forfeited shall cease to be a member in respect ofthe forfeited shares but shall, notwithstanding, remain liable to pay to the Company allmoneys which, at the date of forfeiture, were payable by him to the Company in respect ofthe forfeited shares together with (if the Directors shall in their discretion so require)interest thereon from the date of forfeiture until payment at such rate not exceeding 20 percent. per annum as the Board may prescribe.

(q) Inspection of register of members

For so long as any part of the share capital is listed on the Stock Exchange, anymember may inspect the principal or branch register of the Company maintained in HongKong without charge and require the provision to him of copies or extracts thereof in allrespect as if the Company were incorporated under and is subject to the CompaniesOrdinance (Cap. 622) of the laws of Hong Kong.

(r) Inspection of register of Directors

There are no provisions in the Articles relating to the inspection of the register ofDirectors and Officers of the Company, since the register is not open to inspection (as towhich see paragraph 4(k) below).

(s) Quorum for meetings and separate class meetings

For all purposes the quorum for a general meeting shall be two members present inperson and entitled to vote (or, in the case of a member being a corporation, by its dulyauthorised representative) or by proxy or, for quorum purposes only, two persons appointedby the clearing house as authorised representative or proxy, and entitled to vote. In respect



– IV-16 –

of a separate class meeting convened to sanction the modification of class rights, thenecessary quorum shall not be less than two persons holding or representing by proxyone-third in nominal value of the issued shares of that class and, where such meeting isadjourned for want of quorum, the quorum for the adjourned meeting shall be any twomembers present in person and entitled to vote or by proxy (whatever the number of sharesheld by them).

(t) Rights of the minorities in relation to fraud or oppression

There are no provisions in the Articles relating to rights of minority members inrelation to fraud or oppression. However, certain remedies are available to members of theCompany under Cayman Islands company law as summarised in paragraph 4(e) below.

(u) Procedures on liquidation

A resolution for a court or voluntary winding up of the Company must be passed byway of a special resolution.

If the Company shall be wound up, the surplus assets remaining after payment to allcreditors are to be divided among the members in proportion to the capital paid up on theshares held by them respectively, and if such surplus assets shall be insufficient to repaythe whole of the paid up capital, they are to be distributed so that, as nearly as may be, thelosses shall be borne by the members in proportion to the capital paid up on the shares heldby them respectively, all subject to the rights of any shares issued on special terms andconditions.

If the Company shall be wound up (whether the liquidation is voluntary or by thecourt), the liquidator may, with the sanction of a special resolution, divide among themembers in specie or kind the whole or any part of the assets of the Company and whetherthe assets consist of property of one kind or properties of different kinds and the liquidatormay, for such purposes, set such value as he deems fair upon any one or more class orclasses of property to be divided as aforesaid and may determine how such division is to becarried out as between the members or different classes of members and the memberswithin each class. The liquidator may, with the like sanction, vest any one or more class orclasses of property and may determine how such division shall be carried out as betweenthe members or different classes of members. The liquidator may, with the like sanction,vest any part of the assets in trustees upon such trusts for the benefit of members as theliquidator, with the like sanction, shall think fit, but so that no member shall be compelledto accept any shares or other assets upon which there is a liability.

(v) Untraceable members

The Company may sell the shares of any member if: (i) dividends or otherdistributions have been declared by the Company on at least three occasions during a



– IV-17 –

period of 12 years and these dividends or distributions have been unclaimed on suchshares; (ii) the Company has published an advertisement of its intention to sell such sharesin English and in Chinese in one leading English and (unless unavailable) one leadingChinese newspaper circulating in the territory of the stock exchange on which the ordinaryshare capital of the Company is listed and a period of three months has elapsed since thedate of the first publication of such notice; (iii) the Company has not at any time during thesaid periods of 12 years and three months received any indication of the existence of themember who is the holder of such shares or of a person entitled to such shares by death,bankruptcy or operations of law; and (iv) the Company has notified the stock exchange onwhich the ordinary share capital of the Company is listed of its intention to sell suchshares. The net proceeds of any such sale will belong to the Company and upon the receiptof such net proceeds by the Company, the Company will become indebted to the formerholder of such shares for an amount equal to the amount of such net proceeds.

(w) Stock

The Company may by ordinary resolution convert any fully paid shares into stock, andmay from time to time by like resolution reconvert any stock into fully paid shares of anydenominations. The holders of stock may transfer the same or any part thereof in the samemanner, and subject to the same regulations as and subject to which the shares from whichthe stock arose might prior to conversion have been transferred or as near thereto ascircumstances admit, but the Directors may from time to time, if they think fit, fix theminimum amount of stock transferable and restrict or prohibit the transfer of fractions ofthat minimum, but so that such minimum shall not exceed the nominal amount of the sharesfrom which the stock arose. No warrants to bearer shall be issued in respect of any stock.The holders of stock shall, according to the amount of the stock held by them, have thesame rights, privileges and advantages as regards dividends, participation in assets on awinding-up, voting at meetings, and other matters, as if they held the shares from which thestock arose, but no such privilege of the Company shall be conferred by an amount of stockwhich would not, if existing in shares, have conferred such privilege or advantage. All suchof the provisions of the Articles as are applicable to paid up shares shall apply to stock,and the words “share” and “shareholder” and “member” therein shall include “stock” and“stockholder”.

(x) Other provisions

The Articles provide that, to the extent that it is not prohibited by and is incompliance with the Companies Act, if any rights attaching to any warrants which theCompany may issue after the date of this document shall remain exercisable and theCompany does any act which would result in the subscription price under such warrantsbeing reduced below the par value of a Share, a subscription right reserve shall beestablished and applied in paying up the shortfall between the subscription price and thepar value of a Share on any exercise of the warrants.



– IV-18 –

3. VARIATION OF MEMORANDUM AND ARTICLES OF ASSOCIATION

Subject to the rights of the Company set out in paragraph 2(c) above to amend its capitalby ordinary resolution, the memorandum of association of the Company may be altered by theCompany by special resolution. The Articles state that a special resolution shall be required toalter the provisions of the memorandum of association (subject as provided above) or theArticles or to change the name of the Company. For these purposes, a resolution is a specialresolution if it has been passed by a majority of not less than three-fourths of the votes cast bysuch members of the Company as, being entitled to do so, vote in person or, in the case of suchmembers as are corporations, by their respective duly authorised representatives or, whereproxies are allowed, by proxy at a general meeting of which notice of not less than 21 clear daysand not less than ten (10) clear business days specifying the intention to propose the resolutionas a special resolution has been duly given. Except in the case of an annual general meeting, therequirement of not less than 21 clear days’ notice and not less than ten (10) clear business daysnotice may be waived by a majority in number of the members having the right to attend andvote at the relevant meeting, being a majority together representing not less than 95 per cent. ofthe total voting rights at the meeting of all the members.

4. CAYMAN ISLANDS COMPANY LAW

The Company is incorporated in the Cayman Islands and, therefore, operates subject toCayman Islands law. Set out below is a summary of certain provisions of the Cayman Islandscompany law, although this does not purport to contain all applicable qualifications andexceptions or to be a complete review of all matters of Cayman Islands company law andtaxation, which may differ from equivalent provisions in jurisdictions with which interestedparties may be more familiar.

(a) Share capital

The Companies Act provides that where a company issues shares at a premium,whether for cash or otherwise, a sum equal to the aggregate amount or value of thepremiums on those shares shall be transferred to an account, to be called the “sharepremium account”. The share premium account may be applied by a company subject to theprovisions of its memorandum and articles of association in such manner as the companymay from time to time determine including, but without limitation:

(i) in paying distributions or dividends to members;(ii) in paying up unissued shares of the company to be issued to members of the

company as fully paid bonus shares;

(iii) in redeeming or purchasing its shares as provided in the Companies Act; or



– IV-19 –

(iv) in writing off

(aa) the preliminary expenses of the company; or

(bb) the expenses of, or the commission paid or discount allowed on, any issueof shares or debentures of the company.

No dividend or distribution may be paid to members out of the share premium accountunless immediately following the date of the proposed payment, the company is able to payits debts as they fall due in the ordinary course of business.

A company may issue preference shares and redeemable preference shares.

The Companies Act does not contain any express provisions dealing with the variationof rights of holders of different classes of shares.

(b) Financial assistance to purchase shares of a company or its holding company

There is no statutory restriction in the Cayman Islands against the provision offinancial assistance for the purchase, subscription or other acquisition of its shares, thoughon English common law principles, the directors have a duty to act in good faith for aproper purpose in the best interests of the company, and moreover, there are restrictions onany act which amounts to a reduction of capital. Accordingly, it may, depending on thecircumstances be legitimate for the directors to authorise the provision by a company offinancial assistance for the purchase, subscription or other acquisition of its own shares, orthe shares of its holding company.

(c) Redemption and Purchase of shares and warrants by a company and itssubsidiaries

A company may, if authorised by its articles of associations issue redeemable sharesand, purchase its own shares, including any redeemable shares and the Companies Actexpressly provides that it shall be lawful for the rights attaching to any shares to be varied,subject to the provisions of the company’s articles of association, so as to provide that suchshares are to be or are liable to be so redeemed. Purchases and redemptions may only beeffected out of the profits of the company or the share premium account of the company orout of the proceeds of a fresh issue of shares made for the purpose, or, if so authorised byits articles of association and subject to the provisions of the Companies Act, out of capital.Any premium payable on a redemption or purchase over the par value of the shares to bepurchased must be provided for out of profits of the company or out of the company’s sharepremium account, or, if so authorised by its articles of association and subject to theprovisions of the Companies Act, out of capital. Any purchase by a company of its ownshares may be authorised by its directors or otherwise by or in accordance with theprovisions of its articles. A payment out of capital for a redemption or purchase of a



– IV-20 –

company’s own shares is not lawful unless immediately following the date of the proposedpayment the company is able to pay its debts as they fall due in the ordinary course ofbusiness. Shares purchased by a company shall be treated as cancelled unless, subject to thememorandum and articles of association of the company, the directors of the companyresolve to hold such shares in the name of the company as treasury shares prior to thepurchase. Where shares of a company are held as treasury shares, the company shall beentered in the register of members as holding those shares, however, notwithstanding theforegoing, the company shall not be treated as a member for any purpose and shall notexercise any right in respect of the treasury shares, and any purported exercise of such aright shall be void, and a treasury share shall not be voted, directly or indirectly, at anymeeting of the company and shall not be counted in determining the total number of issuedshares at any given time, whether for the purposes of the company’s articles of associationor the Companies Act. Further, no dividend may be declared or paid, and no otherdistribution (whether in cash or otherwise) of the company’s assets (including anydistribution of assets to members on a winding up) may be made to the company, in respectof a treasury share.

A company is not prohibited from purchasing and may purchase its own subscriptionwarrants subject to and in accordance with the terms and conditions of the relevant warrantinstrument or certificate. There is no requirement under Cayman Islands law that acompany’s memorandum or articles of association contain a specific provision enablingsuch purchases.

Under Cayman Islands law, a subsidiary may hold shares in its holding company andin certain circumstances, may acquire such shares. A company, whether a subsidiary or aholding company, may only purchase its own shares for cancellation if it is authorised to doso in its articles of association.

(d) Dividends and distributions

A company may not pay a dividend, or make a distribution out of share premiumaccount unless immediately following the date on which the payment is proposed to bemade, the company is able to pay its debts as they fall due in the ordinary course ofbusiness.

(e) Protection of minorities

The Cayman Islands courts ordinarily would be expected to follow English case lawprecedents which permit a minority shareholder to commence a representative actionagainst or derivative actions in the name of a company to challenge (a) an act which isultra vires the company or illegal (b) an act which constitutes a fraud against the minorityand the wrong doers are themselves in control of the company, or (c) an irregularity in thepassing of a resolution which requires a qualified (or special) majority.



– IV-21 –

In the case of company (not being a bank) having a share capital divided into shares,the court may, on the application of members holding not less than one-fifth of the sharesof the company in issue, appoint an inspector to examine into the affairs of the companyand to report thereon in such manner as the court shall direct.

Any shareholder of a company may petition the court which may make a winding uporder if the court is of the opinion that it is just and equitable that the company shall bewound up.

Generally, claims against a company by its shareholders must be based on the generallaws of contract or tort applicable in the Cayman Islands or their individual rights asshareholders as established by the memorandum and articles of association of the company.

(f) Management

The Companies Act contains no specific restrictions on the power of directors todispose of assets of a company. However, as a matter of general law, every officer of acompany, which includes a director, managing director and secretary is required, inexercising his powers and discharging his duties must do so honestly and in good faith witha view to the best interests of the company and exercise the care, diligence and skill that areasonably prudent person would exercise in comparable circumstances.

(g) Accounting and auditing requirements

The Companies Act requires a company to cause proper records of accounts to be keptwith respect to (i) all sums of money received and expended by the company and thematters in respect of which the receipt and expenditure takes place; (ii) all sales andpurchases of goods by the company and (iii) the assets and liabilities of the company. Acompany is required to keep such books of account as are necessary to give a true and fairview of the state of the company’s affairs and to explain its transactions.

(h) Exchange control

There are no exchange control regulations or currency restrictions in the CaymanIslands.

(i) Taxation

There are no income, corporation, capital gains or other taxes in effect in the CaymanIslands on the basis of the present legislation. As an exempted company, the Company hasreceived from the Governor-in-Counsel of the Cayman Islands pursuant to the TaxConcessions Act of the Cayman Islands, an undertaking that in the event of any change tothe foregoing, the Company, for a period of 20 years from the date of the grant of theundertaking, will not be chargeable to tax in the Cayman Islands on its income or its



– IV-22 –

capital gains arising in the Caymans Islands or elsewhere and that dividends of theCompany will be payable without deductions of Cayman Islands tax. No capital or stampduties are levied in the Cayman Islands on the issue, transfer or redemption of Shares.

(j) Stamp duty

Certain documents (which do not include contract, notes for the sale and purchase of,or instruments of transfer of, shares in Cayman Islands companies) are subject to stampduty which is generally calculated on an ad valorem basis.

(k) Inspection of corporate records

Neither the members of a company nor the general public have the right to inspect theregister of directors and officers, the minutes, accounts or, in the case of any exemptedcompany, the register of members. However, an exempted company shall make available atits registered office, in electronic form or any other medium, such register of members,including any branch register of members, as may be required of it upon service of an orderor notice by the Tax Information Authority pursuant to the Tax Information Authority Actof the Cayman Islands. The register of members shall contain particulars as required bySection 40 of the Companies Act. The register of mortgages and charges must be kept atthe registered office of the company and must be open to inspection by any creditor ormember at all reasonable times. A copy of the register of Directors must be filed with theRegistrar of Companies in the Cayman Islands and any change must be notified to theRegistrar within thirty (30) days of any change in such directors or officers.

Members of the public have no right to inspect the constitutive documents of acompany but the memorandum and articles of association must be forwarded to anymember of the company upon request. If no articles of association have been registeredwith the Registrar of Companies, each member has the right to receive copies of specialresolutions of members upon request upon payment of a nominal fee.

The location of the registered office of a company is available to the general publicupon request to the Registrar of Companies.

(l) Beneficial Ownership Register

An exempted company is required to maintain a beneficial ownership register at itsregistered office that records details of the persons who ultimately own or control, directlyor indirectly, 25% or more of the equity interests or voting rights of the company or haverights to appoint or remove a majority of the directors of the company. The beneficialownership register is not a public document and is only accessible by a designatedcompetent authority of the Cayman Islands. Such requirement does not, however, apply toan exempted company with its shares listed on an approved stock exchange, which includes



– IV-23 –

the Stock Exchange. Accordingly, for so long as the shares of the Company are listed onthe Stock Exchange, the Company is not required to maintain a beneficial ownershipregister.

(m) Winding up

A company may be wound up by the Cayman Islands court on application presentedby the company itself, its creditors or its contributors. The Cayman Islands court also hasauthority to order winding up in a number of specified circumstances including where it is,in the opinion of the Cayman Islands court, just and equitable that such company be woundup.

A company may be wound up voluntarily when the members so resolve in generalmeeting, or, in the case of a limited duration company, when the period fixed for theduration of the company by its memorandum or articles of association expires, or the eventoccurs on the occurrence of which the memorandum or articles of association provides thatthe company is to be dissolved. In the case of a voluntary winding up, such company isobliged to cease to carry on its business from the time of passing the resolution forvoluntary winding up or upon the expiry of the period or the occurrence of the eventreferred to above. Upon the appointment of a liquidator, the responsibility for thecompany’s affairs rests entirely in his hands and no future executive action may be carriedout without his approval.

Where a resolution has been passed for the voluntary winding up of a company, thecourt may make an order that the winding up should continue subject to the supervision ofthe court with such liberty to creditors, contributors or others to apply to the court as thecourt may think fit.

In the case of a members’ voluntary winding up of a company, the company in generalmeeting must appoint one or more liquidators for the purposes of winding up the affairs ofthe company and distributing its assets. If the liquidator at any time forms the opinion thatsuch company will not be able to pay its debts in full, he is obliged to summon a meetingof creditors.

As soon as the affairs of the company are fully wound up, the liquidator must make upan account of the winding up, showing how the winding up has been conducted and theproperty of the company has been disposed of, and thereupon call a general meeting of thecompany for the purposes of laying before it the account and giving an explanation thereof.This final general meeting requires at least one month’s notice called by Public Notice inthe Cayman Islands or otherwise as the Registrar of Companies may direct.



– IV-24 –

(n) Economic Substance Requirements

Pursuant to the International Tax Cooperation (Economic Substance) Act, 2018 of theCayman Islands (“ES Act”) that came into force on 1 January 2019, a “relevant entity” isrequired to satisfy the economic substance test set out in the ES Act. A “relevant entity”includes an exempted company incorporated in the Cayman Islands as is the Company;however, it does not include an entity that is tax resident outside the Cayman Islands.Accordingly, for so long as the Company is a tax resident outside the Cayman Islands,including in Hong Kong, it is not required to satisfy the economic substance test set out inthe ES Act.

5. GENERAL

Conyers Dill & Pearman, the Company’s legal advisers on Cayman Islands law, have sentto the Company a letter of advice summarising certain aspects of Cayman Islands company law.This letter, together with a copy of the Companies Act, is available on display as referred to inthe paragraph headed “Documents Delivered to the Registrar of Companies and Available onDisplay – Documents on Display” in Appendix VI to this document. Any person wishing to havea detailed summary of Cayman Islands company law or advice on the differences between it andthe laws of any jurisdiction with which he is more familiar is recommended to seek independentlegal advice.



– IV-25 –

1. FURTHER INFORMATION ABOUT OUR GROUP

1.1 Incorporation of our Company

Our Company was incorporated in the Cayman Islands under the Companies Act as anexempted company with limited liability on 23 July 2021 and was registered as a non-HongKong company under Part 16 of the Companies Ordinance on 25 February 2022, and ourprincipal place of business in Hong Kong is at Suite 4018, 40th Floor, Jardine House, 1Connaught Place, Central, Hong Kong. Mr. Yu Ding Him Anthony (company secretary) hasbeen appointed as the authorised representative of our Company for the acceptance ofservice of process and notices in Hong Kong.

As our Company is incorporated in the Cayman Islands, we are subject to the relevantlaws of the Cayman Islands and our constitution comprises the Memorandum of Associationand the Articles. A summary of the relevant aspects of the Cayman Islands company lawand certain provisions of the Articles is set out in Appendix IV to this document.

1.2 Changes in the share capital in our Company

(a) Changes in the authorised and issued share capital

As of the date of incorporation of our Company, our Company had an authorisedshare capital of HK$380,000 divided into 38,000,000 Shares of HK$0.01 each. On 23July 2021 (i.e. the date of its incorporation), one subscriber Share was allotted andissued, credited as fully paid up, to an officer of the secretarial company of ourCompany, and such Share was transferred to International Health BVI on the samedate. The following alterations in the share capital of our Company have taken placesince the date of incorporation up to the date of this document:

(i) on 23 August 2021, our Company allotted and issued 749 Shares toInternational Health BVI at the aggregate subscription price ofHK$239,428,000, for purpose of settlement of (and representing) theconsideration of the acquisition of the entire equity capital of BVIIntermediate Holdco (together with its subsidiaries) (together withPostpartum Care BVI Co, Healthcare BVI Co, Dental Care BVI Co, MedicalExamination BVI Co, Pharmacy BVI Co, Pharmaceuticals BVI Co,Consultation BVI Co and their respective subsidiaries) by our Company;

(ii) on 20 December 2021, our Company allotted and issued 250 Shares toInternational Health BVI at the aggregate subscription price ofHK$80,560,000, for purpose of settlement of (and representing) theconsideration of the acquisition of the entire equity capital of HealthcareIntermediate Holdco by our Company;


APPENDIX V STATUTORY AND GENERAL INFORMATION

– V-1 –

(iii) pursuant to the written resolutions passed by International Health BVI (asthe sole Shareholder of our Company) on [•], among others, the authorisedshare capital of our Company was increased from HK$380,000 (divided into38,000,000 Shares of HK$0.01 each) to HK$[1,000,000,000] (divided into[100,000,000,000] Shares of HK$0.01 each) by the creation of an additionalof [99,962,000,000] Shares of HK$0.01 each, each ranking pari passu withthe Shares then in issue in all respects;

(iv) on [•], International Health BVI (as the sole Shareholder of our Company)resolved that conditional on the [REDACTED] of our Company beingcredited as a result of the [REDACTED], our Directors were authorised to[REDACTED] for allotment and issue to International Health BVI, whosename appeared in the register of members of our Company at close ofbusiness on [•]; and

(v) immediately following completion of the [REDACTED] (without takinginto account any Shares which have been or may be issued upon theexercise of options under the [REDACTED] Share Option Scheme or theShare Option Scheme or the [REDACTED]), [REDACTED] Shares will beissued fully paid or credited as fully paid, and [REDACTED] Shares willremain unissued.

Please refer to the section headed “History, Reorganisation and Development –Change of Group Structure during the Track Record Period – Change in issued capitaland/or owners of our Company” in this document for the details of changes in theshare capital of our Company.

(b) Information as of the Latest Practicable Date and immediately after the[REDACTED]

The following is a description of the authorised and issued share capital of ourCompany immediately prior to and following the completion of the [REDACTED]and the [REDACTED]:

1. Prior to the [REDACTED]

Number HK$


38,000,000 Shares 380,000



– V-2 –

Number HK$


1,000 Shares 10

2. Immediately after the completion of the [REDACTED]

Immediately after the completion of the [REDACTED] and assuming thatthe [REDACTED] is not exercised, the authorised and issued share capital of ourCompany will be as follows:

Number HK$


[100,000,000,000] Shares [1,000,000,000]





[REDACTED]




– V-3 –

Immediately after the completion of the [REDACTED] and assuming thatthe [REDACTED] is exercised in full, the authorised and issued share capital ofour Company will be as follows:

Number HK$


[100,000,000,000] Shares [1,000,000,000]





[REDACTED]

[REDACTED] Shares to be issued pursuant to theexercise of the [REDACTED]

[REDACTED]


The above table assumes the [REDACTED] becomes unconditional and theissue of Shares pursuant to the [REDACTED] is made as described herein. Itdoes not take into account any Shares which have been or may be issued uponthe exercise of options which may be granted under the [REDACTED] ShareOption Scheme or the Share Option Scheme or of any Shares which may beallotted and issued or repurchased by our Company under the general mandatesfor the allotment and issue or repurchase of Shares granted to our Directors.

(c) Founder shares

Our Company has no founder shares, management shares or deferred shares.

Other than pursuant to the exercise of the [REDACTED] and the exercise of anyoptions which have been or may be granted under the [REDACTED] Share OptionScheme and the Share Option Scheme, there is no present intention to issue any sharesof our Company and, without the prior approval of our Shareholders in generalmeeting, no issue of Shares will be made which would effectively alter the control ofour Company.



– V-4 –

Save as disclosed above, there has been no alteration in the share capital of ourCompany since our incorporation up to the date of this document.

1.3 Resolutions in writing of our sole Shareholder passed on [•]

Pursuant to the written resolutions passed by our sole Shareholder on [•], amongothers:

(a) our Company approved and adopted the Memorandum and the Articles insubstitution for and to the exclusion of the then existing memorandum ofassociation and articles of association of our Company with effect from the[REDACTED];

(b) the authorised share capital of our Company was increased from HK$380,000divided into 38,000,000 Shares of HK$0.01 each to HK$[1,000,000,000] dividedinto [100,000,000,000] Shares of HK$0.01 each by the creation of an additionalof [99,962,000,000] Shares of HK$0.01 each, each ranking pari passu with theShares then in issue in all respects;

(c) conditional on all the conditions set out in “Structure and Conditions of the[REDACTED] – Conditions of the [REDACTED]” in this document beingfulfilled:

(i) the [REDACTED] and the grant of the [REDACTED] were approved andour Directors were authorised to allot and issue the [REDACTED] pursuantto the [REDACTED] and such number of Shares as may be required to beallotted and issued upon the exercise of the [REDACTED];

(ii) the rules of the [REDACTED] Share Option Scheme were approved andadopted, and our Directors were authorised to approve any amendments tothe rules of the [REDACTED] Share Option Scheme as may be acceptableor not objected by the Stock Exchange, and at their absolute discretion, togrant options to subscribe for Shares thereunder and conditional on the[REDACTED] the Shares falling to be allotted and issued pursuant to theexercise of the [REDACTED] Share Options (the commencement date ofwhich exercise period is to be determined and notified by our Directors tothe grantees) and to take all such steps as they consider necessary ordesirable to implement the [REDACTED] Share Option Scheme;

(iii) the rules of the Share Option Scheme were approved and adopted and ourDirectors were authorised to approve any amendments to the rules of theShare Option Scheme as may be acceptable or not objected by the StockExchange, and at their absolute discretion, to grant options to subscribe for



– V-5 –

Shares thereunder and to allot, issue and deal with our Shares pursuant tothe exercise of subscription rights attaching to any options granted underthe Share Option Scheme and to take all such actions as they considernecessary or desirable to implement the Share Option Scheme;

(iv) conditional on the share premium account of our Company being credited asa result of the issue of [REDACTED] under the [REDACTED], ourDirectors were authorised to [REDACTED] for allotment and issue to theholders of Shares whose names appear on the register of members of ourCompany at the close of business on [•] (or as they may direct) inproportion (as nearly as possible without involving factions so that nofraction of a share shall be allotted and issued) to their then existingrespective shareholding in our Company and so that the Shares be allottedand issued pursuant to this resolution shall rank pari passu in all respectswith the then existing issued Shares (other than the right to participate inthe [REDACTED]) and our Directors were authorised to give effect to suchcapitalisation;

(v) a general unconditional mandate was given to our Directors to exercise allpowers of our Company to allot, issue and deal with unissued Shares in thecapital of our Company and to make or grant offers, agreements and optionswhich may require the exercise of such powers, otherwise than by way ofrights issue, scrip dividend schemes or similar arrangements providing forallotment of Shares in lieu of the whole or in part of any dividend inaccordance with the Articles of Association, or pursuant to the exercise ofany options which have been or may be granted under the [REDACTED]Share Option Scheme or the Share Option Scheme or other arrangementsregulated by Chapter 17 of the Listing Rules, or under the [REDACTED],or issue of Shares upon exercise of rights of subscription or conversionattaching to any warrants of our Company or any securities which areconvertible into Shares, with an aggregate number of not exceeding the sumof (aa) 20% of the total number of Shares in issue immediately followingcompletion of the [REDACTED] (but excluding (where applicable) anyShares which may be issued pursuant to the exercise of the [REDACTED]or exercise of options that have been or may be granted under the[REDACTED] Share Option Scheme or the Share Option Scheme) and (bb)the number of Shares which may be purchased by our Company pursuant tothe authority granted to our Directors as referred to in sub-paragraph (v)below, until the conclusion of the next annual general meeting of ourCompany, or the date by which the next annual general meeting of ourCompany is required by the Articles of Association or the Companies Act tobe held, or the passing of an ordinary resolution by our Shareholdersrevoking or varying the authority given to our Directors, whichever occursfirst;



– V-6 –

(vi) a general unconditional mandate was given to our Directors to exercise allpowers of our Company to purchase Shares on the Stock Exchange or onany other stock exchange on which the securities of our Company may belisted and recognised by the SFC and the Stock Exchange for this purposeand made in accordance with all applicable laws and regulations and therequirements of the Listing Rules, with an aggregate number of notexceeding 10% of the total number of Shares in issue immediately followingthe completion of the [REDACTED] (but excluding (where applicable) anyShares which may be issued pursuant to the exercise of the [REDACTED]or exercise of options that have been or may be granted under the[REDACTED] Share Option Scheme or the Share Option Scheme) until theconclusion of the next annual general meeting of our Company, or the dateby which the next annual general meeting of our Company is required bythe Articles of Association or the Companies Act to be held, or the passingof an ordinary resolution by our Shareholders revoking or varying theauthority given to our Directors, whichever occurs first; and

(vii) the extension of the general mandate to allot, issue and deal with Shares toinclude the number of Shares which may be purchased or repurchasedpursuant to paragraph (vi) above.

1.4 Reorganisation

Please refer to the section headed “History, Reorganisation and Development –Reorganisation” in this document for details of the Reorganisation in preparation for the[REDACTED].



– V-7 –

1.5 Information about our subsidiaries in PRC

Our Group has the following subsidiaries in PRC, a summary of the corporateinformation of these enterprises as of the Latest Practicable Date is set out as follows:

1. Hospital MedicalManagement PRC Co

2. HospitalManagement PRC Co 3. our Hospital

4. Postpartum CarePRC Co

(i) Full name of company Guangzhou City CliffordMedical ManagementCompany Limited(廣州市祈福醫療管理有限公司)

Guangzhou City CliffordCorporate ManagementCompany Limited(廣州市祈福企業管理有限公司)

Guangdong CliffordHospital CompanyLimited(廣東祈福醫院有限公司)

Guangzhou City CliffordMaternal and InfantCare ServicesCompany Limited(廣州市祈福母嬰護理服務有限公司)

(ii) Date of establishment 7 August 2006 26 April 2010 20 June 2012 16 January 2012

(iii) Economic nature Wholly foreign ownedenterprise

Limited liabilitycompany


Wholly foreign ownedenterprise

(iv) Registered holder(s) Hospital HK Co Hospital MedicalManagement PRC Co

Hospital ManagementPRC Co

Postpartum Care HK Co

(v) Registered capital fully paid up HK$7.0 million RMB10.0 million RMB150.0 million RMB1.0 million

(vi) Term of operation (or, whereapplicable, its expiry date)

From 7 August 2006 to19 July 2036

Long term Long term From 16 January 2012 to16 January 2042

(vii) Equity interest attributable to ourGroup

100% 100% 100% 100%

5. Elderly Home PRCCo

6. Medical EquipmentPRC Co 7. Dental Care WFOE

8. Health ConsultationPRC Co

(i) Full name of company Guangzhou City CliffordElderly HomeCompany Limited(廣州市祈福護老公寓有限公司)

Guangzhou City CliffordMedical EquipmentCompany Limited(廣州市祈福醫療器械有限公司)

Guangzhou City CliffordDental Health MedicalInvestment CompanyLimited (廣州市祈福口腔健康醫療投資有限公司)

Guangzhou City CliffordHealth ConsultationCompany Limited(廣州市祈福健康諮詢有限公司)

(ii) Date of establishment 10 October 2009 7 April 2005 7 September 2021 15 March 2017

(iii) Economic nature Limited liabilitycompany






– V-8 –

5. Elderly Home PRCCo

6. Medical EquipmentPRC Co 7. Dental Care WFOE

8. Health ConsultationPRC Co

(iv) Registered holder(s) Medical Equipment PRCCo

Healthcare HK Co Dental Care HK Co Dental Care WFOE

(v) Registered capital fully paid up RMB1.0 million RMB500,000 RMB5.0 million RMB7.0 million


Long term From 7 April 2005 to7 April 2043

Long term From 15 March 2017 to10 March 2047


100% 100% 100% 100%

9. Medical InvConsultation PRC Co

10. Dental Care PRCCo

11. MedicalExamination PRCCo

12. Pharmacy (Xinda)PRC Co

(i) Full name of company Guangzhou City CliffordMedical InvestmentConsultation CompanyLimited (廣州市祈福醫療投資諮詢有限公司)

Guangzhou City CliffordDental ClinicCompany Limited(廣州市祈福口腔門診部有限公司)

Guangdong CliffordMedical ExaminationTechnology CompanyLimited (廣東祈福醫學診斷技術有限公司)

Guangzhou City CliffordXinda PharmacyCompany Limited(廣州市祈福新大藥房有限公司)

(ii) Date of establishment 18 April 2017 16 May 2017 17 December 2020 31 July 2017

(iii) Economic nature Limited liabilitycompany




(iv) Registered holder(s) Health Consultation PRCCo

Medical Inv ConsultationPRC Co

Medical Examination HKCo

Pharmacy HK Co

(v) Registered capital fully paid up RMB6.9 million RMB5.3 million RMB1.0 million (note) RMB1.3 million


From 18 April 2017 to18 April 2047

From 16 May 2017 to16 May 2047

Long term From 31 July 2017 to31 July 2047


100% 100% 100% 100%



– V-9 –

13. PharmaceuticalsPRC Co

14. Consultation PRCCo

(i) Full name of company Guangzhou City CliffordPharmaceuticalsCompany Limited(廣州市祈福醫藥有限公司)

Guangzhou City CliffordMedical ConsultationCompany Limited(廣州市祈福醫療顧問有限公司)

(ii) Date of establishment 17 July 2006 5 August 2021

(iii) Economic nature Wholly foreign ownedenterprise


(iv) Registered holder(s) Pharmaceuticals HK Co Consultation HK Co

(v) Registered capital fully paid up RMB500,000 Nil (note)


From 17 July 2006 to 13December 2043

Long term


100% 100%

Note: According to the respective articles of association of the following PRC subsidiaries, their respective registeredcapital is provided to be fully paid before the dates set out at the last column of the following table:

Name of subsidiaryAmount of registeredcapital

Amount of paid-upcapital as of the LatestPracticable Date

Prescribed date forpayment of theremaining balance of theunpaid registered capital

Medical ExaminationPRC Co

RMB5.0 million RMB1.0 million 30 November 2049

Consultation PRC Co RMB1.0 million Nil 31 July 2051



– V-10 –

The scope of permitted business as recorded in the business licences of our respectivePRC subsidiaries as of the Latest Practicable Date is set out below:

1. Hospital MedicalManagement PRC Co

Medical equipment leasing services, business management services (except for licensedbusiness operation projects), business management consulting services, productinformation consulting services

2. Hospital ManagementPRC Co

Business management consulting services and product information consulting services

3. our Hospital Medical research and experiment development, health consultation services (excludingdiagnosis and treatment services), rehabilitation assistive device adaptation services,patient escort services, nursing institution services (excluding medical services),maternal and child living care services (excluding medical services), elderly careinstitution services, elderly care services, medical equipment leasing, sales offirst-class medical equipment, sales of second-class medical equipment, sales ofsanitary supplies and disposable medical supplies, conference and exhibitionservices, organising sports performances, organising cultural and artistic exchangeactivities, etiquette services, sales of knitwear, retail of clothing and accessories,retail of shoes and hats, retail of cosmetics, sales of personal hygiene products, salesof glasses (excluding contact lenses), sales of clocks and timing instruments, retailof stationery, retail of sports goods and equipment, retail of arts and crafts andcollectibles (except ivory and its products), sales of toy, leasing of residentialproperties, leasing of non-residential properties, retail of fresh fruit, sales of dailynecessities, sales of groceries, sales of flowers, photography and related services,translation services, typing and copying services, office services, professionalcleaning, caring and disinfection services, special equipment repairs, propertymanagement, human resources services (excluding professional intermediaryactivities and labour dispatch services), parking services, operation of food business(only sales of pre-packaged food), medical services, production of medicines,inspection and testing services, medical beauty services, processing and cookingservices of traditional Chinese herbal medicines, food business operation, retail ofpublications, hairdressing services and sales of infant formula milk powder

4. Postpartum Care PRC Co Maternal and infant living care services (excluding medical services), technicalservices, technology development, technical consultation, technical exchange,technology transfer, technology promotion, fitness and leisure activities, sportshealth services, health consulting services (excluding diagnosis and treatmentservices), housekeeping services, sales of maternal and infant products, sales of dailynecessities, information consulting services (excluding licensed informationconsulting services), healthcare services (non-medical), retail of cosmetics, childcareservices, photos and video production services, beauty services, sales of infantformula milk powder and infant bathing services

5. Elderly Home PRC Co Care services for the elderly and the disabled and labour dispatch services



– V-11 –

6. Medical Equipment PRCCo

Import and export of goods (except for commodities relating to foreign investmentwhich are governed by special management regulations and licensing approvals),operation of non-licensed medical equipment, technology import and export,wholesale of daily utensils and daily groceries, product information consultingservices, conference and exhibition services, operation of licensed type medicalequipment and wholesale of medical diagnosis, monitoring and treatment equipment

7. Dental Care WFOE Business management utilising its own funds for investment activities to engage inhealth consulting services (excluding diagnosis and treatment services)

8. Health Consultation PRCCo

Psychological consulting services (excluding medical activities such as medicalpsychological consulting, medical psychological training and medical psychologicalcounselling, etc.), nutrition and health consulting services, environmental protectiontechnology consulting, exchange services, medical research and experimentaldevelopment, drug research and development, technology research on the clinicaleffectiveness of Chinese and western medicine combination and research anddevelopment of health preservation and technology transfer

9. Medical Inv ConsultationPRC Co

Investment consulting services, investment management services, corporatemanagement services (except for licensed business projects), hospital management,medical equipment leasing services, medical equipment repairs, wholesale andtrading of commodities (except for licensed commodities), retail of commodities(except for licensed commodities), import and export of goods (except for franchisedand controlled commodities) and import and export of technology

10. Dental Care PRC Co In-patient services

11. Medical ExaminationPRC Co

Big data services, data processing services, internet data services, data processing andstorage support services, remote health management services, domestic cargotransportation agencies, medical research and experimental development, technicalservices and technology development, technical consultation, technical exchange,technology transfer and technology promotion, environmental protection consultingservices, medical equipment leasing, environmental protection monitoring, ecologicalresource monitoring, online energy monitoring technology research and development,vector density monitoring and evaluation services, wild animal epidemic diseaseprevention and control monitoring, hospital management, health consulting services(excluding diagnosis and treatment services), sports health services, informationtechnology consulting services, software development, cell technology research anddevelopment and application, radiation monitoring, radioactive pollution monitoring,indoor environment testing, inspection and testing services, internet informationservices, road cargo transportation (excluding dangerous goods), pharmaceuticalproduction, special medical formula food sales, medical services, clinic services,Internet hospital services relying on physical hospitals, stimulants testing



– V-12 –

12. Pharmacy (Xinda) PRCCo

Retail of cosmetics, retail of surgical masks, sales of daily necessities, sales ofsecond-class medical equipment, sales of plastic products, sales of daily woodproducts, sales of leather products, sales of sanitary products and disposable medicalsupplies, sales of first-class medical equipment, medical equipment leasing, sales ofdaily-use masks (non-medical), food business (sales of pre-packaged food), retail ofpharmaceutical, third-class medical equipment business, sales of infant formula milkpowder and sales of healthcare food

13. Pharmaceuticals PRC Co Wholesale of cosmetics, sales of sanitary products and disposable medical supplies,information consulting services (excluding licensed type information consultingservices), conference and exhibition services, food business (sales of pre-packagedfood), import and export of goods, import and export of technology and wholesale ofpharmaceuticals

14. Consultation PRC Co Business management utilising its own funds for investment activities to engage inhealth consulting services (excluding diagnosis and treatment services)

1.6 Information about our Group’s members incorporated in BVI or Hong Kong

Our Group also comprises companies incorporated in BVI or in Hong Kong, all ofwhich act as investment holding companies. A summary of the corporate information ofthese enterprises as of the Latest Practicable Date is set out as follows:

(a) Companies incorporated in BVI:

Relevant BVISubsidiary

Full name ofcompany

Date ofincorporation

Authorised sharecapital andauthorisednumber ofshares

Issuedshare

capitalName of currentshareholder

1. BVI IntermediateHoldco

Skill Plus GlobalLimited(能加環球有限公司)

29 March 2018 US$50,000,50,000 sharesof a singleclass

US$1 Our Company

2. HealthcareIntermediateHoldco

Best Sun TreasureLimited(日寶有限公司)

12 November2021

US$50,000,50,000 sharesof a singleclass

US$100 Our Company

3. Postpartum CareBVI Co

Mountain BoomLimited(山盛有限公司)

18 July 2011 US$50,000,50,000 sharesof a singleclass

US$1 HealthcareIntermediateHoldco



– V-13 –

Relevant BVISubsidiary

Full name ofcompany


Authorised sharecapital andauthorisednumber ofshares

Issuedshare

capitalName of currentshareholder

4. Healthcare BVICo

Fortune FaithEnterprisesLimited(福信企業有限公司)

29 November2011

US$50,000,50,000 sharesof a singleclass


5. Consultation BVICo

Profit GardenInternationalLimited(利園國際有限公司)

10 August 2007 US$50,000,50,000 sharesof a singleclass


6. Dental Care BVICo

Ruby AlliedLimited(紅聯有限公司)

8 December 2017 US$50,000,50,000 sharesof a singleclass


7. MedicalExaminationBVI Co

Billion ExpressInternationalLimited(億迅國際有限公司)

23 August 2007 US$50,000,50,000 sharesof a singleclass


8. Pharmacy BVI Co Golden HonestyLimited(金誠有限公司)

21 April 2009 US$50,000,50,000 sharesof a singleclass


9. PharmaceuticalsBVI Co

Million LeadsLimited(萬利有限公司)

5 January 2012 US$50,000,50,000 sharesof a singleclass


All the above BVI subsidiaries are investment holding companies.



– V-14 –

(b) Companies incorporated in Hong Kong:

Relevant HKSubsidiary

Full name ofcompany


Total numberof issued

shareIssued

share capitalName of currentshareholder

1. Hospital HK Co Light SparklingLimited (迎安有限公司)

15 September1972

160,000 HK$1,600,000 BVI IntermediateHoldco

2. Postpartum CareHK Co

Value KingInvestmentsLimited (立隆投資有限公司)

29 August 2011 1 HK$1 Postpartum CareBVI Co

3. Healthcare HK Co Rosy CorporateLimited (佳舫有限公司)

20 December2011

1 HK$1 Healthcare BVICo

4. Dental Care HKCo

Sunny HomeInvestmentLimited (新家園投資有限公司)

24 November2016

1 HK$1 Dental Care BVICo

5. MedicalExamination HKCo

Fortune NumberInvestmentsLimited (祈福福成投資有限公司)

21 December2010

1 HK$1 MedicalExaminationBVI Co

6. Pharmacy HK Co Fortune LeadInvestmentsLimited (綽隆投資有限公司)

16 June 2011 1 HK$1 Pharmacy BVI Co

7. PharmaceuticalsHK Co

Green CastleInvestmentsLimited (仟達投資有限公司)

9 January 2012 1 HK$1 PharmaceuticalsBVI Co

8. Consultation HKCo

Easy CloudInvestmentsLimited (富曉投資有限公司)

3 April 2013 1 HK$1 Consultation BVICo



– V-15 –

All the above Hong Kong subsidiaries are investment-holding companies.

1.7 Changes in the share capital of our subsidiaries

Identity and brief particulars of subsidiaries of our Company are listed in theAccountant’s Report, the text of which is set out in Appendix I to this document. Apartfrom the alterations disclosed in paragraph 1.2 under this appendix and the section headed“History, Reorganisation and Development – Change in registered capital of oursubsidiaries” in this document, there has been no alteration in the share capital of any ofthe subsidiaries of our Company within the two years immediately preceding the date ofthis document.

1.8 Repurchases by our Company of our own securities

This section includes information required by the Stock Exchange to be included inthe document concerning the repurchase of our Shares by our Company.

(a) Provisions of the Listing Rules

The Listing Rules permit companies with a [REDACTED] on the StockExchange to purchase their shares on the Stock Exchange subject to certainrestrictions, the more important of which are summarised below:

(i) Shareholders’ approval

The Listing Rules provide that all proposed repurchases of shares (whichmust be fully paid in the case of shares) by a company with a [REDACTED] onthe Stock Exchange must be approved in advance by an ordinary resolution,either by way of general mandate or by specific approval of a specifictransaction.

(ii) Source of funds

Repurchases must be funded out of funds legally available for the purposein accordance with the Articles and the laws of the Cayman Islands. OurCompany may not repurchase our own shares on the Stock Exchange for aconsideration other than cash or for settlement otherwise than in accordance withthe trading rules of the Stock Exchange from time to time.

Any repurchases by our Company may be made out of profits or out of theproceeds of a fresh issue of Shares made for the purpose of the repurchase or, ifauthorised by the Articles and subject to the Companies Act, out of capital and,in the case of any premium payable on the repurchase, out of profits of ourCompany or out of our Company’s share premium account before or at the time



– V-16 –

our Shares are repurchased or, if authorised by the Articles and subject to theCompanies Act, out of capital.

(iii) Trading Restrictions

The total number of shares which our Company may repurchase on theStock Exchange is the number of shares representing up to a maximum of 10% ofthe aggregate number of shares in issue. Our Company may not issue orannounce a proposed issue of new securities for a period of 30 days immediatelyfollowing a repurchase whether on the Stock Exchange or otherwise (other thanan issue of securities pursuant to an exercise of warrants, share options or similarinstruments requiring our company to issue securities which were outstandingprior to such repurchase) without the prior approval of the Stock Exchange. Inaddition, our Company is prohibited from repurchasing [REDACTED] on theStock Exchange if the purchase price is higher by 5% or more than the averageclosing market price for the five preceding trading days on which our Shareswere traded on the Stock Exchange. The Listing Rules also prohibit our Companyfrom repurchasing [REDACTED] which would result in the number of the listedsecurities which are in the hands of the public falling below the relevantprescribed minimum percentage as required by the Stock Exchange. OurCompany is required to procure that the broker appointed by it to effect arepurchase of [REDACTED] discloses to the Stock Exchange such informationwith respect to the repurchase as the Stock Exchange may require.

(iv) Status of repurchased shares

All repurchased securities (whether effected on the Stock Exchange orotherwise) will be automatically delisted and the certificates for those securitiesmust be cancelled and destroyed.

(v) Suspension of repurchase

Our Company shall not make any repurchase of [REDACTED] on the StockExchange at any time after inside information has come to its knowledge untilthe information is made publicly available. In particular, during the period of onemonth immediately preceding the earlier of (a) the date of the board meeting (assuch date is first notified to the Stock Exchange in accordance with the ListingRules) for the approval of our Company’s results for any year, half year,quarterly or any other interim period (whether or not required under the ListingRules) and (b) the deadline for publication of an announcement of ourCompany’s results for any year or half-year under the Listing Rules, or quarterlyor any other interim period (whether or not required under the Listing Rules),and ending on the date of the results announcement, we may not repurchase our[REDACTED] on the Stock Exchange other than in exceptional circumstances.



– V-17 –

In addition, the Stock Exchange may prohibit a repurchase of securities on theStock Exchange if a listed company has breached the Listing Rules.

(vi) Reporting requirements

Certain information relating to repurchases of securities on the StockExchange or otherwise must be reported to the Stock Exchange not later than 30minutes before the earlier of the commencement of the morning trading sessionor any pre-opening session on the following business day. In addition, ourCompany’s annual report is required to disclose details regarding repurchases ofsecurities made during the year, including a monthly analysis of the number ofsecurities repurchased, the purchase price per share or the highest and lowestprice paid for all such purchase, where relevant, and the aggregate prices paid.

(vii) Core connected persons

The Listing Rules prohibit our Company from knowingly repurchasing[REDACTED] on the Stock Exchange from a “core connected person” (whichincludes a Director, chief executive or substantial shareholder of our Company orany of our subsidiaries or a close associate of any of them) and a core connectedperson shall not knowingly sell [REDACTED] to our Company.

(b) Reasons for repurchases

Our Directors believe that the ability to repurchase Shares is in the interests ofour Company and our Shareholders. Repurchases may, depending on thecircumstances, result in an increase in the net assets and/or earnings per Share. OurDirectors have sought the grant of a general mandate to repurchase Shares to give ourCompany the flexibility to do so if and when appropriate. The number of Shares to berepurchased on any occasion and the price and other terms upon which the same arerepurchased will be decided by our Directors at the relevant time having regard to thecircumstances then pertaining.

(c) Funding of repurchases and impact on working capital or gearing position

In repurchasing Shares, our Company may only apply funds legally available forsuch purpose in accordance with the Articles, the Listing Rules and the applicablelaws of the Cayman Islands.

There could be a material adverse impact on the working capital or gearingposition of our Company (as compared with the position disclosed in this document)in the event that the Repurchase Mandate were to be carried out in full at any timeduring the share repurchase period.



– V-18 –

Our Directors do not propose to exercise the Repurchase Mandate to such extentas would, in the circumstances, have a material adverse effect on the working capitalrequirements of our Company or the gearing levels which in the opinion of ourDirectors are from time to time appropriate for our Company.

(d) General

The exercise in full of the Repurchase Mandate, on the basis of [REDACTED]Shares in issue immediately following the completion of the [REDACTED] withouttaking into account any Shares which may be issued pursuant to the exercise of the[REDACTED] or any options that have been or may be granted under the[REDACTED] Share Option Scheme or the Share Option Scheme, could accordinglyresult in up to approximately [REDACTED] Shares being repurchased by ourCompany during the period prior to the earliest occurrence of any of the following:

(i) the conclusion of the next annual general meeting of our Company; or

(ii) the date by which the next annual general meeting of our Company isrequired by the Articles of Association or the Companies Act to be held; or

(iii) the passing of an ordinary resolution by our Shareholders revoking orvarying the authority given to our Directors.

None of our Directors or, to the best of their knowledge having made all reasonableenquiries, any of their close associates, has any present intention if the RepurchaseMandate is exercised to sell any Shares to our Company.

Our Directors have undertaken to the Stock Exchange that, so far as the same may beapplicable, they will exercise the Repurchase Mandate in accordance with the Listing Rulesand the applicable laws of the Cayman Islands.

If as a result of a repurchase of Shares pursuant to the Repurchase Mandate, aShareholder’s proportionate interest in the voting rights of our Company increases, suchincrease will be treated as an acquisition for the purposes of the Takeovers Code.Accordingly, a Shareholder or a group of Shareholders acting in concert, depending on thelevel of increase of the Shareholders’ interest, could obtain or consolidate control of ourCompany and may become obliged to make a mandatory offer in accordance with Rule 26of the Takeovers Code as a result of any such increase. Our Directors are not aware of anyconsequence that would arise under the Takeovers Code as a result of a repurchase pursuantto the Repurchase Mandate.

Any repurchase of Shares that results in the number of Shares held by the public beingreduced to less than 25% of the Shares then in issue could only be implemented if theStock Exchange agreed to waive the Listing Rules requirements regarding the public



– V-19 –

shareholding referred to above. It is believed that a waiver of this provision would notnormally be given other than in exceptional circumstances.

No core connected person of our Company has notified our Company that he or shehas a present intention to sell Shares to our Company, or has undertaken not to do so, if theRepurchase Mandate is exercised.

2 FURTHER INFORMATION ABOUT OUR BUSINESS

2.1 Summary of material contracts

The following contracts (not being contracts in the ordinary course of business) havebeen entered into by members of our Group within the two years preceding the date of thisdocument and are or may be material:

(a) an instrument of transfer dated 21 December 2020 entered into between Ms.Wendy Man’s Spouse and Skill Plus, pursuant to which Skill Plus acquired atotal of 159,999 ordinary shares of Light Sparkling from Ms. Wendy Man’sSpouse for a consideration of HK$239,426,500;

(b) an instrument of transfer dated 21 December 2020 entered into between PollyFaith Limited and Skill Plus, pursuant to which Skill Plus acquired one (1)ordinary share of Light Sparkling from Polly Faith Limited for a consideration ofHK$1,500;

(c) an instrument of transfer dated 23 August 2021 entered into between Ms. WendyMan and our Company, pursuant to which our Company acquired the entireissued share capital of Skill Plus from Ms. Wendy Man for a consideration ofHK$239,428,000;

(d) an equity transfer agreement dated 16 September 2021 entered into betweenClifford Biotech and Dental Care WFOE, pursuant to which Dental Care WFOEagreed to acquire the entire registered capital in Health Consultation PRC Cofrom Clifford Biotech for a consideration of RMB4,395,900;

(e) an instrument of transfer dated 17 December 2021 entered into between BusinessFavour and Best Sun Treasure, pursuant to which Best Sun Treasure acquired one(1) ordinary share of Golden Honesty (being its entire issued share capital) fromBusiness Favour for a consideration of HK$3,480,000;

(f) an instrument of transfer dated 17 December 2021 entered into between BusinessFavour and Best Sun Treasure, pursuant to which Best Sun Treasure acquired one(1) ordinary share of Million Leads (being its entire issued share capital) fromBusiness Favour for a consideration of HK$32,040,000;



– V-20 –

(g) an instrument of transfer dated 17 December 2021 entered into between BusinessFavour and Best Sun Treasure, pursuant to which Best Sun Treasure acquired oneordinary share of Fortune Faith (being its entire issued share capital) fromBusiness Favour for a consideration of HK$25,140,000;

(h) an instrument of transfer dated 17 December 2021 entered into between BusinessFavour and Best Sun Treasure, pursuant to which Best Sun Treasure acquired oneordinary share of Mountain Boom (being its entire issued share capital) fromBusiness Favour for a consideration of HK$10,000;

(i) an instrument of transfer dated 17 December 2021 entered into between BusinessFavour and Best Sun Treasure, pursuant to which Best Sun Treasure acquired oneordinary share of Billion Express (being its entire issued share capital) fromBusiness Favour for a consideration of HK$10,000;

(j) an instrument of transfer dated 17 December 2021 entered into between BusinessFavour and Best Sun Treasure, pursuant to which Best Sun Treasure acquired oneordinary share of Profit Garden (being its entire issued share capital) fromBusiness Favour for a consideration of HK$10,000;

(k) an instrument of transfer dated 17 December 2021 entered into between BusinessFavour and Best Sun Treasure, pursuant to which Best Sun Treasure acquired oneordinary share of Ruby Allied (being its entire issued share capital) fromBusiness Favour for a consideration of HK$19,870,000;

(l) an instrument of transfer dated 20 December 2021 entered into between BusinessFavour and our Company, pursuant to which our Company acquired 100 ordinaryshares of Best Sun Treasure (being its entire issued share capital) from BusinessFavour for a consideration of HK$80,560,000;

(m) the PRC Trademark Transfer Agreements, consisting of:

(i) a trademark transfer agreement dated 29 November 2021 entered intobetween Clifford TM (as transferor) and our Hospital (as transferee),pursuant to which Clifford TM has agreed to transfer certain trademarksregistered in the PRC to our Hospital without consideration;

(ii) a supplemental trademark transfer agreement dated 7 February 2022 enteredinto between Clifford TM and our Hospital to revise the list of trademarkstransferred under the trademark transfer agreement stated in paragraph(m)(i) above;



– V-21 –

(iii) a trademark transfer agreement dated 29 November 2021 entered intobetween Clifford TM (as transferor) and Medical Equipment PRC Co (astransferee), pursuant to which Clifford TM has agreed to transfer certaintrademarks registered in the PRC to Medical Equipment PRC Co withoutconsideration; and

(iv) a trademark transfer agreement dated 29 November 2021 entered intobetween Clifford TM (as transferor) and Pharmaceuticals PRC Co (astransferee), pursuant to which Clifford TM has agreed to transfer certaintrademarks registered in the PRC to Pharmaceuticals PRC Co withoutconsideration;

(n) the HK Trademark Assignment dated 7 March 2022 entered into between CliffordTM (as assignor) and Hospital HK Co (as assignee), pursuant to which CliffordTM has agreed to assign to Hospital HK Co all its rights, title, benefits andinterests of one trademark registered in Hong Kong as set out therein at anominal consideration of HK$1;

(o) the PRC Trademark Licence Agreement dated 7 February 2022 entered intobetween Clifford TM (as licensor) and three members of our Group (being ourHospital, Postpartum Care PRC Co and Elderly Home PRC Co, as licensees),pursuant to which Clifford TM granted to the licensees an exclusive license touse (for a term of 10 years up to 6 February 2032) certain trademarks registeredin the PRC without consideration;

(p) the Deed of Non-competition, brief details of which are set out in the sectionheaded “Relationship with our Controlling Shareholders – Deed ofNon-competition” in this document;

(q) the Deed of Indemnity, brief details of which are set out in paragraph 4.1 underthis appendix; and

(r) the [REDACTED].



– V-22 –

2.2 Intellectual property rights of our Group

(a) Trademarks

As of the Latest Practicable Date, our Group was the owner of the followingtrademark:

TrademarkPlace ofregistration

Registrationnumber Class Validity period Owner

PRC 21271057 35 7 November 2018 to 6November 2028

Pharmacy (Xinda) PRCCo













PRC 21266073 35 7 September 2018 to 6September 2028






PRC 51686890 35 21 August 2021 to20 August 2031






– V-23 –







Trademarks assigned under the HK Trademark Assignment

Under the HK Trademark Assignment, Clifford TM agreed to assign toHospital HK Co all its rights, title, benefits and interests regarding the followingtrademark registered in Hong Kong:



Hong Kong 305751856AB 43, 44 21 September 2021 to20 September 2031

Hospital HK Co

Trademarks assigned under the PRC Trademark Transfer Agreements

Under the PRC Trademark Transfer Agreements, Clifford TM agreed totransfer the following trademarks to and in favour of the respective subsidiariesof our Group (pending the approval for the transfers by the Trademark Office ofChina National Intellectual Property Administration (國家知識產權局商標局)):


Registrationnumber Class Validity period

Registered Ownerand Transferee

PRC 3104972 42 28 May 2013 to27 May 2023

Our Hospital

PRC 3104971 44 7 July 2013 to6 July 2023

Our Hospital

PRC 10422915 44 14 April 2014 to13 April 2024

Our Hospital

PRC 7159559 16 14 November 2020 to13 November 2030

Our Hospital



– V-24 –


Registrationnumber Class Validity period

Registered Ownerand Transferee

PRC 7512096 16 28 December 2020 to27 December 2030

Our Hospital

PRC 3278693 40 14 April 2014 to13 April 2024

Our Hospital

PRC 3281500 44 14 October 2013 to13 October 2023

Our Hospital

PRC 6446719 5 28 March 2020 to27 March 2030











Medical EquipmentPRC Co

Trademarks licenced under the PRC Trademark Licence Agreement


Registrationnumber Class Validity period Licensee


Clifford TM

PRC 10141035 44 21 June 2013 to20 June 2023

Clifford TM

PRC 10141082 45 28 February 2013 to27 February 2023

Clifford TM


Clifford TM



– V-25 –

(b) Patents

As of the Latest Practicable Date, our Group were registered proprietors of thefollowing patents (whose places of registration are all in the PRC) which are materialto our business:

No. Name Registered owner TypeRegistrationnumber Application Date

Duration ofvalidity

1. A kind of disposableear, nose & throatendoscopic dressingkit (一次性耳鼻喉內鏡換藥包)

Our Hospital Utility model ZL201821822633.0 6 November 2018 10 years fromapplication date

2. A kind of anti-blockingspray gun (一種防堵噴槍)

Our Hospital Utility model ZL201822110783.5 14 December 2018 10 years fromapplication date

3. A kind of autopsyfixator (一種屍頭解剖固定器)

Our Hospital Utility model ZL201920278566.9 5 March 2019 10 years fromapplication date

4. A kind of autopsyfixator (一種屍頭解剖固定器)

Our Hospital Utility model ZL202020807570.2 14 May 2020 10 years fromapplication date

5. A kind of tympanicmembrane puncturesuction device (一種鼓膜穿刺吸引器)

Our Hospital Utility model ZL202020809172.4 14 May 2020 10 years fromapplication date

6. A kind of nasalendoscopy trainingdevice (一種鼻內鏡訓練設備)

Our Hospital Utility model ZL202121660564.X 21 July 2021 10 years fromapplication date

7. A kind of hook forforeign objects innasal with lightsource (一種帶光源的鼻腔異物釣)

Our Hospital Utility model ZL202122149438.4 7 September 2021 10 years fromapplication date



– V-26 –

As of the Latest Practicable Date, our Group had applied for the registration ofthe following patent in the PRC, registration of which has not yet been granted:

No. NameName ofapplicant Type

Applicationnumber

Date ofapplication

1. A kind of trioxygen activeoil capsule and itspreparation method andapplication (一種三氧活性油軟膠囊及其製備方法與應用)

Our Hospital Invention CN201810786262.3 17 July 2018

(c) Domain Names

As of the Latest Practicable Date, our Group had registered the following domainnames:

No. Domain name Registrant Registration number Expiration datePlace ofregistration

1. cliffordcarehome.com Elderly HomePRC Co

Yue ICP Filing(粵ICP備)2020106790

15 January 2032 PRC

2. clifford-hospital.cn Our Hospital Yue ICP Filing(粵ICP備)12082684-2

17 March 2024 PRC

3. clifford-hospital.org Our Hospital Yue ICP Filing(粵ICP備)12082684-2

26 September2022

PRC

4. clifford-hospital.org.cn Our Hospital Yue ICP Filing(粵ICP備)12082684-2

16 November2031

PRC

5. cliffordbb.com PostpartumCare PRCCo

Yue ICP Filing(粵ICP備)2020128682-1

21 September2025

PRC

6. cliffordhospital.com Our Hospital N/A 7 December 2023 PRC

7. cliffordmedgroup.com Our Hospital N/A 15 March 2032 PRC



– V-27 –

(d) Copyrights

No. Name of copyright Copyright holder Type Date of registrationCopyrightregistration number

1. JCI Chinese Hospital Practice(國際醫院管理標準(JCI)中國醫院實踐)

Our Hospital Text 30 October 2018 Yue Zuo RegistrationNo. (粵作登字)-2018-A-00003313

2. Green ComprehensiveTreatment for Tumours (腫瘤綠色綜合療法)

Our Hospital Text 31 October 2018 Yue Zuo RegistrationNo. (粵作登字)-2018-A-00003342

3. Qincai Furen (芹菜夫人) Postpartum CarePRC Co

Photography 20 November 2014 Yue Zuo RegistrationNo. (粵作登字)-2014-G-00001048

4. Clifford ExaminationInformation ManagementSystem V3.0 (祈福檢驗信息管理系統 V3.0) (Shortname: CLIFFORD-LIS)

Hospital MedicalManagement PRCCo

Computersoftware

25 June 2007 2007SR09189

5. Clifford Physical ExaminationInformation ManagementSystem V3.0 (祈福體檢信息管理系統 V3.0) (Shortname: CLIFFORD-PCIS)

Hospital MedicalManagement PRCCo

Computersoftware

25 June 2007 2007SR09188



– V-28 –

3. FURTHER INFORMATION ABOUT OUR DIRECTORS AND SUBSTANTIALSHAREHOLDERS

3.1 Disclosure of Interests

(a) Interests and short positions of our Directors and the chief executive in theshares, underlying shares or debentures of our Company and our associatedcorporations

As of the date of this document and immediately following the completion of the[REDACTED] and without taking into account any Shares which may be issuedpursuant to the exercise of the [REDACTED] or any options that may be grantedunder the Share Option Scheme, the interests and/or short positions of our Directorsand the chief executive of our Company in the shares, underlying shares anddebentures of our Company or its associated corporations (within the meaning of PartXV of the SFO) which will be required to be notified to our Company and the StockExchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interestsand short positions which they are taken or deemed to have under such provisions ofthe SFO) or will be required, pursuant to section 352 of the SFO, to be entered in theregister kept by our Company referred to in that section, or which will be required,pursuant to the Model Code for Securities Transactions by Directors of Listed Issuersas set out in Appendix 10 to the Listing Rules, to be notified to our Company and theStock Exchange, will be as follows:


Name of Director

Nature ofinterest/Capacity



Number ofShares


Number ofShares


Ms. Wendy Man(Note 1)

Interest in acontrolledcorporation


Note:

1. The said Shares were held in the name of International Health BVI. International Health BVIis wholly owned by Ms. Wendy Man, our Chairman and a non-executive Director. By virtue ofthe SFO, Ms. Wendy Man is deemed to be interested in the same parcel of Shares in whichInternational Health BVI is interested.

2. For details of the [REDACTED] Share Options granted to our Directors (including Dr. Zhang,Dr. Ou Junwen, Dr. Zhao Hui, Dr. Zhuang Lei and Ms. Wendy Man), please refer to paragraph3.5 under this appendix.



– V-29 –

(b) Interests of our Substantial Shareholders

So far as is known to any Director or chief executive of our Company as of thedate of this document, and immediately following the completion of the[REDACTED] and the [REDACTED] and without taking into account any Shareswhich may be issued pursuant to the exercise of the [REDACTED] or any optionsthat may be granted under the Share Option Scheme, the following persons (other thana Director or chief executive of our Company) will have an interest and/or shortposition in the Shares or the underlying Shares which would fall to be disclosed to ourCompany and the Stock Exchange under the provisions of Divisions 2 and 3 of PartXV of the SFO, or are, directly or indirectly, interested in 10% or more of the issuedvoting shares of any other member of our Group:


Name ofShareholder

Nature ofinterest/Capacity



Number ofShares


in ourCompany

Number ofShares


in ourCompany

(Note 1)

InternationalHealth BVI

Beneficialowner


Ms. WendyMan

Interest in acontrolledcorporation(Note 2)


Ms. WendyMan’sSpouse

Interest ofSpouse(Note 3)


Notes:

1. The calculation for the percentage of interest in our Company is based on the total number of[REDACTED] Shares in issue immediately following the completion of the [REDACTED]and assuming that the [REDACTED] is not exercised and without taking into account anyShares which may be issued upon the exercise of any options granted or to be granted under[REDACTED] Share Option Scheme and the Share Option Scheme.



– V-30 –

2. International Health BVI is solely owned by Ms. Wendy Man, our Chairman and anon-executive Director. By virtue of the SFO, Ms. Wendy Man is deemed to be interested inthe same parcel of Shares in which International Health BVI is interested.

For details of the [REDACTED] Share Options granted to Ms. Wendy Man, please refer toparagraph 3.5 under this appendix.

3. Ms. Wendy Man’s Spouse is the spouse of Ms. Wendy Man. By virtue of the SFO, Ms. WendyMan’s Spouse is deemed to be interested in the same parcel of Shares in which Ms. WendyMan is interested.

Save as disclosed above, our Directors are not aware of any other persons whowill, immediately following the completion of the [REDACTED], be directlyinterested in 10% or more of the nominal value of any class of equity capital carryingrights to vote in all circumstances at general meetings of our subsidiaries.

3.2 Directors’ service contracts and letters of appointment

Executive Director

Each of our executive Directors (namely, Dr. Zhang, Dr. Ou Junwen, Dr. ZhaoHui and Dr. Zhuang Lei) has entered into a service contract with our Companypursuant to which he agreed to act as an executive Director for an initial term of threeyears with effect from [•] 2022.

Each of our executive Directors is entitled to a basic salary set out below. Inaddition, our executive Directors are also entitled to a discretionary managementbonus taking into consideration the financial performance of our Group and therelevant Director’s individual contribution to our Group for the financial yearconcerned, provided that the aggregate amount of the bonuses payable to all theexecutive Directors for any financial year of our Company shall not exceed 10% ofthe audited consolidated net profit of our Group (after taxation, minority interests andpayment of such bonuses but before extraordinary or exceptional items) in respect ofthat financial year of our Company. An executive Director may not vote on anyresolution of our Directors regarding the amount of the management bonus payable tohim. The current basic annual salaries of our executive Directors is as follows:

Name Annual salary(HK$)

Dr. Zhang 216,000Dr. Ou Junwen 216,000Dr. Zhao Hui 216,000Dr. Zhuang Lei 216,000



– V-31 –

Non-executive Director and INEDs

Each of our non-executive Director and INEDs has entered into a letter ofappointment with our Company pursuant to which he/she has been appointed for aninitial term of three years commencing from [•] 2022. Our non-executive Director andeach of our INEDs is entitled to a director’s fee of HK$216,000 per annum. Save forDirectors’ fees, none of our non-executive Director or INEDs is expected to receiveany other remuneration for holding their respective offices.

Save as disclosed aforesaid, none of our Directors has or is proposed to have aservice contract with our Company or any of our subsidiaries other than contractsexpiring or determinable by the employer within one year without payment ofcompensation (other than statutory compensation).

3.3 Directors’ remuneration

(a) The aggregate emoluments paid to our Directors by our Group in respect of theTrack Record Period were approximately RMB2.9 million, RMB3.1 million andRMB3.6 million respectively.

(b) Under the arrangements currently in force, the aggregate emoluments (excludingdiscretionary bonus) payable by our Group to and benefits in kind receivable byour Directors (including the INEDs in their respective capacity as Directors) forthe year ending 31 December 2022 will be approximately RMB4.5 million.

(c) None of our Directors or any past directors of any member of our Group hasbeen paid any sum of money for the Track Record Period (i) as an inducement tojoin or upon joining our Company or (ii) for loss of office as a director of anymember of our Group or of any other office in connection with the managementof the affairs of any member of our Group.

(d) There has been no arrangement under which a Director has waived or agreed towaive any emoluments for the Track Record Period.

3.4 Disclaimers

(a) Save as disclosed in paragraph 3.1(a) under this appendix, none of our Directorsor chief executive of our Company has any interests or short positions in theshares, underlying shares and debentures of our Company or its associatedcorporations (within the meaning of Part XV of the SFO) which will be requiredto be notified to our Company and the Stock Exchange pursuant to Divisions 7and 8 of Part XV of the SFO (including interests and short positions which he istaken or deemed to have under such provisions of the SFO) or which will berequired, pursuant to Section 352 of the SFO, to be entered in the register keptby our Company referred to in that section, or which will be required, pursuant



– V-32 –

to the Model Code for Securities Transactions by Directors of Listed Issuers asset out in Appendix 10 to the Listing Rules, to be notified to our Company andthe Stock Exchange, as at the date of this document and once the Shares are[REDACTED];

(b) save as disclosed in paragraph 3.1(b) under this appendix, so far as is known toany Director or chief executive of our Company, no person (other than a Directoror chief executive of our Company) has an interest or short position in the Sharesand underlying Shares which would fall to be disclosed to our Company and theStock Exchange under the provisions of Divisions 2 and 3 of Part XV of theSFO, or is, directly or indirectly, interested in 10% or more of the issued votingshares of any other member of our Group as at the date of this document andonce the Shares are [REDACTED];

(c) save as disclosed in the sections headed “History, Reorganisation andDevelopment” and “Connected Transactions” in this document, none of ourDirectors nor any of the persons listed in paragraph 4.7 below of this appendix isinterested in the promotion of, or in any assets which have been, within the twoyears immediately preceding the issue of this document, acquired or disposed ofby or leased to any member of our Group, or are proposed to be acquired ordisposed of by or leased to any member of our Group;

(d) save as disclosed in the sections headed “History, Reorganisation andDevelopment – Reorganisation”, “Connected Transactions” and “Relationshipwith our Controlling Shareholders” in this document, none of our Directors ismaterially interested in any contract or arrangement with our Group subsisting atthe date of this document which is unusual in its nature or conditions or which issignificant in relation to the business of our Group;

(e) save in connection with the [REDACTED], none of the persons listed inparagraph 4.7 under of this appendix has any shareholding in any member of ourGroup or the right (whether legally enforceable or not) to subscribe for or tonominate persons to subscribe for securities in any member of our Group;

(f) save for the [REDACTED], none of the persons listed in the paragraph 4.7below of this appendix is materially interested in any contract or arrangementsubsisting at the date of this document which is significant in relation to thebusiness of our Group taken as a whole;

(g) save as disclosed in paragraph 3.2 of this appendix, none of our Directors hasentered or has proposed to enter into any service agreements with our Companyor any member of our Group (other than contracts expiring or determinable bythe employer within one year without payment of compensation other thanstatutory compensation);



– V-33 –

(h) save as disclosed in the sections headed “Business – Procurement and Supplies”and “Business – Customers” in this document, so far as is known to ourDirectors, none of our Directors or their close associates or any Shareholder(which to the knowledge of our Directors owns more than 5% of the number ofissued share capital of our Company) has any interest in any of the top fivesuppliers or customers of our Group during the Track Record Period; and

(i) save as disclosed in the section headed “Relationship with our ControllingShareholders” in this document, none of our Directors are interested in anybusiness apart from our Group’s business which competes or is likely to compete,directly or indirectly, with the business of our Group.

3.5 [REDACTED] Share Option Scheme

(a) Summary of terms

The purpose of the [REDACTED] Share Option Scheme is to recognise andreward the contribution of certain Directors, senior management, employees andformer employees of our Group to the growth and development of our Group and[REDACTED]. The principal terms of the [REDACTED] Share Option Schemeadopted by a resolution in writing passed by our then sole Shareholder on [•] aresimilar to the terms of the Share Option Scheme except that:

(i) the classes of eligible participants are different from that provided inparagraph 3.6(a)(ii);

(ii) the subscription price for Shares under the [REDACTED] Share OptionScheme is determined by the Board fixed to be equal to [REDACTED]% ofthe [REDACTED];

(iii) the general scheme limit, the individual limit applicable to each proposedgrantee and the restrictions on grant of options to a connected person asreferred to in paragraphs 3.6(a)(iii)(bb), 3.6(a)(iv) and 3.6(a)(v),respectively, do not apply;

(iv) the rules of the [REDACTED] Share Option Scheme were adoptedunconditionally by a resolution in writing passed by the then soleShareholder on [•], but the exercise of any option granted thereunder isconditional upon the [REDACTED], failing which such options granted andthe [REDACTED] Share Option Scheme shall forthwith lapse;

(v) our Directors may only grant options under the [REDACTED] Share OptionScheme at any time on or before [•];



– V-34 –

(vi) any offer of option made by the Directors under the [REDACTED] ShareOption Scheme shall be open for acceptance for a period from the relevantoffer date and ending on [•]; and

(vii) in the event of a capitalisation of profits or reserves, rights issue,sub-division or consolidation of Shares or reduction of capital of theCompany whilst an option remains exercisable under the [REDACTED]Share Option Scheme, the number or nominal amount of Shares to whichthe [REDACTED] Share Option Scheme or any option relates and/or thesubscription price of the option concerned and/or the number of Sharescomprised in an option granted under the [REDACTED] Share OptionScheme is subject to adjustments on terms similar to that of the ShareOption Scheme as referred to in paragraph 3.6(a)(xxiv) below, except thatsub-paragraph (dd) of paragraph 3.6(a)(xxiv) is not applicable to the[REDACTED] Share Option Scheme and options granted thereunder.

A nominal consideration of HK$1 is payable on acceptance of the grant of each[REDACTED] Share Option.

(b) Present status of the [REDACTED] Share Option Scheme

As of the Latest Practicable Date, the [REDACTED] Share Options to subscribefor an aggregate of [REDACTED] Shares had been granted to certain Directors,senior management and employees and former employee of our Group, representing (i)approximately [REDACTED]% of the issued share capital of the Companyimmediately following completion of the [REDACTED] (but does not take intoaccount any Shares which may fall to be allotted and issued upon the exercise of the[REDACTED] or such [REDACTED] Share Options and any options which may begranted under the Share Option Scheme) and (ii) approximately [REDACTED]% ofthe issued share capital of the Company immediately following completion of the[REDACTED] and assuming that all the [REDACTED] Share Options are exercisedat the same time (but does not take into account any Shares which may fall to beallotted and issued upon the exercise of the [REDACTED] or any options which maybe granted under the Share Option Scheme).

Any exercise of the options granted under the [REDACTED] Share OptionScheme or to be granted under the Share Option Scheme in the future and issuance ofShares thereunder would result in the reduction in the percentage ownership of theShareholders and may result in a dilution in the earnings per Share and net asset valueper Share, as a result of the increase in the number of Shares outstanding after theissuance. The Shares underlying the [REDACTED] Share Options represent about[REDACTED]% of our enlarged share capital as of the [REDACTED] (assumingneither the [REDACTED] nor any of the [REDACTED] Share Options have beenexercised and no Shares have been issued upon the exercise of options granted underthe Share Option Scheme).



– V-35 –

If all the [REDACTED] Share Options are exercised in full, this would have adilutive effect of approximately [REDACTED]% on the percentage of shareholding ofour Shares and a dilutive effect of approximately [REDACTED]% on earnings perShare.

Under the HKFRS, the costs of share options granted to employees under the[REDACTED] Share Option Scheme and the Share Option Scheme will be charged toour Group’s income statement over the vesting period by reference to the fair value atthe date at which the share options are granted. As a result, our Group’s profitabilitymay be adversely affected.

A breakdown of the grant of the [REDACTED] Share Options by category ofgrantees is set out below:

Category of granteesNumber of

grantees

Number ofunderlying

Shares underthe

[REDACTED]Options

Directors (including executive andnon-executive Directors) 5 [REDACTED]

Senior management of our Group andcompany secretary of our Company 6 [REDACTED]

Existing employees of our Group 28 [REDACTED]Former employee of our Group 1 [REDACTED]

Save as disclosed above, no options have been granted or will be granted underthe [REDACTED] Share Option Scheme.

Under the [REDACTED] Share Option Scheme, the exercise price of all[REDACTED] Share Options shall be [REDACTED]% of the [REDACTED], andshall be exercisable at any time during the period (i) commencing on the vesting dateand (ii) ending on the date falling eight (8) years of the [REDACTED]. For furtherdetails, please refer to the paragraph head “[REDACTED] Share Option Scheme” inthis section below.

The grantees who are connected persons of our Company (including all executiveDirectors) have undertaken to the Company, the Stock Exchange and the Sole Sponsorthat they will not exercise the [REDACTED] Share Options to such extent that theShares held by the public Shareholders will fall below 25% of the issued share capitalof our Company.

Application has been made to the [REDACTED] pursuant to the exercise of the[REDACTED] Share Options.



– V-36 –

(c) Outstanding [REDACTED] Share Options

Particulars of the outstanding [REDACTED] Share Options which have beengranted under the [REDACTED] Share Option Scheme as at the Latest PracticableDate are set out below:

Name of grantee(Position withinour Group)(Note 1) Address

ExercisePrice

Number ofoutstanding

Shares underthe

[REDACTED]Share Option

Scheme

Vesting status of the[REDACTED] ShareOptions

Period ofexerciseof[REDACTED]ShareOptions

Percentage ofenlarged

issued sharecapital of

our Companyafter full

exercise of the[REDACTED]Share Options

(Note 2)

DirectorsDr. Zhang Tao (張濤)

(Executive Directorand chief executiveofficer of ourGroup)

Room 1908, Block 82nd Street ofUrban Dynamic GardenClifford EstatesPanyu DistrictGuangzhou, PRC

See Note 3 [REDACTED] Will be vested on thebusiness day immediatelyafter two (2) years afterthe [REDACTED]

See Note 4 [REDACTED]

[REDACTED] Will be vested on thebusiness day immediatelyafter four (4) years afterthe [REDACTED]

[REDACTED]

[REDACTED] Will be vested on thebusiness day immediatelyafter six (6) years afterthe [REDACTED]

[REDACTED]

[REDACTED] [REDACTED]

Dr. Ou Junwen (區俊文) (ExecutiveDirector)

Room 1601, Block 6Tianhuju CliffordEstates Zhongcun StreetPanyu DistrictGuangzhou, PRC




[REDACTED]


[REDACTED]




– V-37 –


ExercisePrice


Shares underthe


Scheme







(Note 2)

Dr. Zhao Hui (趙暉)(ExecutiveDirector)

Room 301No. 81 CliffordCelebrity Third StreetZhongcun StreetPanyu DistrictGuangzhou, PRC




[REDACTED]


[REDACTED]


Dr. Zhuang Lei (莊磊)(ExecutiveDirector)

Room 304, Block 1Urban Dynamic GardenClifford EstatesZhongcun StreetPanyu DistrictGuangzhou, PRC




[REDACTED]


[REDACTED]


Ms. Wendy Man(Chairman andnon-executiveDirector)

House CStanley Crest5 Stanley Beach RoadStanleyHong Kong




[REDACTED]


[REDACTED]




– V-38 –


ExercisePrice


Shares underthe


Scheme







(Note 2)

Senior ManagementYu Ding Him

Anthony (余定謙)(Chief financialofficer andcompany secretary)

Flat A, 28/FBlock 6, Park CentralTseung Kwan OHong Kong




[REDACTED]


[REDACTED]


Liu Yunsong (劉云松)(Head of IntensiveCare of ourHospital

Room 1004, Tower T5Fuli Junhu HuatingNo. 23 Chengang RoadLiwan DistrictGuangzhou, PRC




[REDACTED]


[REDACTED]


Cai Qichun (蔡綺純)(Head of OncologyDepartment of ourHospital)

Room 704No. 15, Bai Tao StreetHaizhu DistrictGuangzhou, PRC




[REDACTED]


[REDACTED]




– V-39 –


ExercisePrice


Shares underthe


Scheme







(Note 2)

Qin Likui (覃黎葵)(Head of theEndoscopy Unit ofour Hospital)

Room 401No. 9 MoonlightGallery Third StreetClifford EstatesZhongcun StreetPanyu DistrictGuangzhou, PRC




[REDACTED]


[REDACTED]


Wu Zhangyou(吳長有)(Head andconsultant of theClinicalExperimentResearch Centre)

Room 504, Block 8, No.52, Clifford CelebrityThird Street, ZhongcunStreet, Panyu District,Guangzhou, PRC




[REDACTED]


[REDACTED]


Liu Feng (劉峰)(Deputy head ofEndocrinologyDepartment of ourHospital)

Room 2405, Building 1Zhengtai PlazaNo. 168, WushanAvenue WestShiqiao StreetPanzhou DistrictGuangzhou, PRC




[REDACTED]


[REDACTED]




– V-40 –


ExercisePrice


Shares underthe


Scheme







(Note 2)

Existing employees ofour Group

Zhou Yingling(周穎玲)(Supervisor of theGeneral InternalMedicinedisciplines of ourHospital)

Room 401, Block 1,Haitang Pavilion,Huachengyuan, ErshaIsland, Yuexiu District,Guangzhou, PRC




[REDACTED]


[REDACTED]


Jian Zhixiang(簡志祥)(Supervisor of theSurgicaldisciplines of ourHospital)

No. 13, Country GardenWest 18th Road,Country GardenNeighborhoodCommittee, BeijiaoTown, Shunde District,Foshan City, PRC




[REDACTED]


[REDACTED]


Ling Biping (淩碧萍)(Financial directorof our Hospital)

Room 1007, Block 11,Yihuwan, CliffordEstates, Panyu District,Guangzhou, PRC




[REDACTED]


[REDACTED]




– V-41 –


ExercisePrice


Shares underthe


Scheme







(Note 2)

Xiang Jiyun (向繼雲)(Head of thebusinessdevelopmentdepartment of ourHospital)

Room 3001, No. 21,Huayang QingjumingRoad, Tianhe District,Guangzhou, PRC




[REDACTED]


[REDACTED]


Yang Lan (楊蘭)(Head of NursingDepartment of ourHospital)

Room 2202, No. 32,No. 32, CliffordCelebrity Third Street,Clifford Estates, PanyuDistrict, Guangzhou,PRC




[REDACTED]


[REDACTED]


Zuo Tiantian (左田田)(Supervisor ofElderly Home PRCCo)

Room 03, 1st Floor, No.13, Yuemingxuan 5thStreet, Clifford Estates,Panyu District,Guangzhou, PRC




[REDACTED]


[REDACTED]




– V-42 –


ExercisePrice


Shares underthe


Scheme







(Note 2)

Niu Lihua (牛麗華)(Head of thequality controldepartment of ourHospital)

Room 1404, Block 2,3rd Street, ShengcuiHuating, Regal Hills,No. 232, ShiguangRoad, Donghuan Street,Panyu District,Guangzhou, PRC




[REDACTED]


[REDACTED]


Shi Aihong (施愛紅)(Head of thefinance departmentof our Hospital)

Room 701, Block 4,Huajiang, LijiangGarden, Luopu Street,Panyu District,Guangzhou, PRC




[REDACTED]


[REDACTED]


Zheng Yanru (鄭彥如)(Head of thedepartment ofmedical insuranceof our Hospital)

No. 110, Haibin Road,Binhai Garden, NanhaiDistrict, Guangzhou,PRC




[REDACTED]


[REDACTED]




– V-43 –


ExercisePrice


Shares underthe


Scheme







(Note 2)

Jiang Chunlin(蔣春林)(Head ofgynecology andobstetrics centre ofour Hospital)

Room 703, Block 2,Second Kuaihuo Streetof Urban DynamicGarden, CliffordEstates, Panyu District,Guangzhou, PRC




[REDACTED]


[REDACTED]


Sui Zhen (隋珍)(Head of theObstetricsDepartment of ourHospital)

Room 2302, Block 14,Guilan MountainGarden, Shunde CountryGarden, ShundeDistrict, Foshan City,PRC




[REDACTED]


[REDACTED]


Liao Dongxia(廖東霞)(Deputy head ofthe ObstetricsDepartment of ourHospital)

Room 09, 20th Floor,Block 3, XiaofengGarden, CliffordEstates, ZhongcunStreet, Panyu District,Guangzhou, PRC




[REDACTED]


[REDACTED]




– V-44 –


ExercisePrice


Shares underthe


Scheme







(Note 2)

Hong Zhangjiang(洪長江)(Head of theCardiologyDepartment of ourHospital)

Room 708, Block 8, No.52, Clifford CelebrityThird Street, ZhongcunStreet, Panyu District,Guangzhou, PRC




[REDACTED]


[REDACTED]


Dong Ying (董瀅)(Head of theStomatologyDepartment of ourHospital)

Room 03, 4th Floor,No. 6, Yuemingxuan 5thStreet, Clifford Estates,Guangzhou, PRC




[REDACTED]


[REDACTED]


Zhang Zhongping(張忠平)(Head of theRehabilitationDepartment underthe RehabilitationCentre of ourHospital)

No. 18, Fuhua Road,Clifford Estates, PanyuDistrict, Guangzhou(No. C18, 5th Street ofClifford Estates), PRC




[REDACTED]


[REDACTED]




– V-45 –


ExercisePrice


Shares underthe


Scheme







(Note 2)

Lu Yong (盧勇)(Head of theEmergencyDepartment of ourHospital)

Room 301, Building 79,No. 111 Liuhua Road,Yuexiu District,Guangzhou, PRC




[REDACTED]


[REDACTED]


Shi Lingbo (石淩波)(Head of PhysicalExaminationServicesDepartment of ourHospital)

Room 08, 5th Floor,No. 7, 8th Street,Shanquanju, CliffordEstates, ZhongcunStreet, Panyu District,Guangzhou, PRC




[REDACTED]


[REDACTED]


Tong Qingsong(童慶松)(Human resourcesmanager of ourHospital)

Room 509, No. 5, Yard,No. 13 ShiliugangRoad, Chigang, HaizhuDistrict, Guangzhou,PRC




[REDACTED]


[REDACTED]




– V-46 –


ExercisePrice


Shares underthe


Scheme







(Note 2)

Yin Hui (尹輝)(Manager ofinformationmanagementdepartment of ourHospital)

Room 703, Building 8,Binfenhui, CliffordEstates, Panyu District,Guangzhou, PRC




[REDACTED]


[REDACTED]


Zhou Meifang(周美芳)(Director ofcustomer servicedepartment of ourHospital)

Room 1203, YingfengPavilion, CliffordEstates, Panyu District,Guangzhou, PRC




[REDACTED]


[REDACTED]


Deng Heng (鄧恒)(Brand promotionmanager of ourHospital)

No. 6, Lvyi Garden 6thStreet, Clifford Estates,Panyu District,Guangzhou, PRC




[REDACTED]


[REDACTED]




– V-47 –


ExercisePrice


Shares underthe


Scheme







(Note 2)

Yang Qinnan (楊秦南)(Deputy head ofCardiologyDepartment of ourHospital)

No. 508, Block 06,Cuiyun MountainGarden, South ChinaCountry Garden,Nancun Town, PanyuDistrict, Guangzhou,PRC




[REDACTED]


[REDACTED]


Zhang Xinting(張欣婷)(Deputy head ofthe RehabilitationDepartment underthe RehabilitationCentre of ourHospital)

Floor A4, No. 32, Lvyi12th Street, CliffordEstates, Panyu District,Guangzhou, PRC




[REDACTED]


[REDACTED]


Gong Wei (龔偉)(Head of theRadiotherapyDepartment of ourHospital)

Room 0804, BuildingJ6, No. 801, DongfengEast Road, YuexiuDistrict, Guangzhou,PRC




[REDACTED]


[REDACTED]




– V-48 –


ExercisePrice


Shares underthe


Scheme







(Note 2)

Zhao Zhendong(趙震東)(Head of PhysicalExaminationServicesDepartment)

Room 1503, Building29, No. 13, CenturyNorth Third Street,Jinbi Century Garden,Huangpu District,Guangzhou, PRC




[REDACTED]


[REDACTED]


Li Zhi (李智)(Manager ofgeneral operationsand head of theoffice of ourHospital)

23C, Block 4, East LakeRoyal Garden, No. 1Yongsheng Shangsha,Donghu Road, YuexiuDistrict, Guangzhou,PRC




[REDACTED]


[REDACTED]


Liao Qiulin (廖秋林)(Head ofPathologyDepartment of ourHospital)

No. 111 Liuhua Road,Yuexiu District,Guangzhou, PRC




[REDACTED]


[REDACTED]




– V-49 –


ExercisePrice


Shares underthe


Scheme







(Note 2)

Du Jing (杜靜)(Manager ofPostpartum CarePRC Co)

Building 3, EvergrandeOasis, Yuelai SouthRoad, Zhongshan City,Guangdong – 2302,PRC




[REDACTED]


[REDACTED]


Former employee ofour Group

Gong Caixia (龔彩霞)(Former employeeof our Hospital)

Guangzhou PanyuDistrict Hewan Property(HaiyiGarden)-GuangzhouHaiyi ChuangzhanProperty (Area)-Hai BoXuan-1-3H B, PRC




[REDACTED]


[REDACTED]


Notes:

1. Each grantee, upon accepting the [REDACTED] Share Options, is deemed to have undertakento the Company that he/she will comply with all applicable laws, legislation and regulations(including all applicable exchange control, fiscal and other laws to which he/she is subject) inconnection with the acceptance of the grant of his/her option, the holding and exercise ofhis/her option in accordance with the rules of the [REDACTED] Share Option Scheme, theallotment and issue of Shares to him/her upon the exercise of his/her option and the holdingof such Shares.

2. These percentages are calculated on the basis of [REDACTED] Shares in issue immediatelyfollowing completion of the [REDACTED] and assuming that all [REDACTED] ShareOptions have been exercised in full but does not take into account any Shares which may fallto be allotted and issued upon the exercise of the [REDACTED] or any options which may begranted under the Share Option Scheme.



– V-50 –

3. Under the [REDACTED] Share Option Scheme, the exercise price per Share which is subjectof all [REDACTED] Share Options shall be 90% of the [REDACTED].

4. All [REDACTED] Share Options shall be exercisable at any time during the period (i)commencing on the vesting date and (ii) ending on the date falling eight (8) years of the[REDACTED].

Assuming that the [REDACTED] is not exercised, the shareholding structure ofthe Company before and after the full exercise of all the options granted under the[REDACTED] Share Option Scheme will be as follows:

Shareholding structureimmediately after completion

of the [REDACTED] (assumingthe [REDACTED] is not

exercised and no option hasbeen granted under the ShareOption Scheme) but before theexercise of any options grantedunder the [REDACTED] Share

Option Scheme



exercised and no option hasbeen granted under the Share

Option Scheme) and fullexercise of all the options

granted under the[REDACTED] Share Option

SchemeNo. of

underlyingShares under

the[REDACTED]Share Options

Percentageshareholding

No. ofunderlying

Shares underthe

[REDACTED]Share Options


DirectorsZhang Tao (張濤) [REDACTED] [REDACTED] [REDACTED] [REDACTED]Ou Junwen (區俊文) [REDACTED] [REDACTED] [REDACTED] [REDACTED]Zhao Hui (趙暉) [REDACTED] [REDACTED] [REDACTED] [REDACTED]Zhuang Lei (莊磊) [REDACTED] [REDACTED] [REDACTED] [REDACTED]Ms. Wendy Man [REDACTED] [REDACTED] [REDACTED] [REDACTED]

Senior managementYu Ding Him Anthony

(余定謙) [REDACTED] [REDACTED] [REDACTED] [REDACTED]Qin Likui (覃黎葵) [REDACTED] [REDACTED] [REDACTED] [REDACTED]Liu Feng (劉峰) [REDACTED] [REDACTED] [REDACTED] [REDACTED]Cai Qichun (蔡綺純) [REDACTED] [REDACTED] [REDACTED] [REDACTED]Liu Yunsong (劉云松) [REDACTED] [REDACTED] [REDACTED] [REDACTED]Wu Zhangyou (吳長有) [REDACTED] [REDACTED] [REDACTED] [REDACTED]



– V-51 –




Option Scheme






SchemeNo. of




No. ofunderlying

Shares underthe



Existing employees of ourGroup

Zhou Yingling (周穎玲) [REDACTED] [REDACTED] [REDACTED] [REDACTED]Jian Zhixiang (簡志祥) [REDACTED] [REDACTED] [REDACTED] [REDACTED]Ling Biping (淩碧萍) [REDACTED] [REDACTED] [REDACTED] [REDACTED]Xiang Jiyun (向繼雲) [REDACTED] [REDACTED] [REDACTED] [REDACTED]Yang Lan (楊蘭) [REDACTED] [REDACTED] [REDACTED] [REDACTED]Zuo Tiantian (左田田) [REDACTED] [REDACTED] [REDACTED] [REDACTED]Niu Lihua (牛麗華) [REDACTED] [REDACTED] [REDACTED] [REDACTED]Shi Aihong (施愛紅) [REDACTED] [REDACTED] [REDACTED] [REDACTED]Zheng Yanru (鄭彥如) [REDACTED] [REDACTED] [REDACTED] [REDACTED]Jiang Chunlin (蔣春林) [REDACTED] [REDACTED] [REDACTED] [REDACTED]Sui Zhen (隋珍) [REDACTED] [REDACTED] [REDACTED] [REDACTED]Liao Dongxia (廖東霞) [REDACTED] [REDACTED] [REDACTED] [REDACTED]Hong Zhangjiang (洪長江) [REDACTED] [REDACTED] [REDACTED] [REDACTED]Dong Ying (董瀅) [REDACTED] [REDACTED] [REDACTED] [REDACTED]Zhang Zhongping (張忠平) [REDACTED] [REDACTED] [REDACTED] [REDACTED]Deng Heng (鄧恒) [REDACTED] [REDACTED] [REDACTED] [REDACTED]Yang Qinnan (楊秦南) [REDACTED] [REDACTED] [REDACTED] [REDACTED]Lu Yong (盧勇) [REDACTED] [REDACTED] [REDACTED] [REDACTED]Shi Lingbo (石淩波) [REDACTED] [REDACTED] [REDACTED] [REDACTED]Tong Qingsong (童慶松) [REDACTED] [REDACTED] [REDACTED] [REDACTED]Yin Hui (尹輝) [REDACTED] [REDACTED] [REDACTED] [REDACTED]Zhou Meifang (周美芳) [REDACTED] [REDACTED] [REDACTED] [REDACTED]Zhang Xinting (張欣婷) [REDACTED] [REDACTED] [REDACTED] [REDACTED]Gong Wei (龔偉) [REDACTED] [REDACTED] [REDACTED] [REDACTED]Zhao Zhendong (趙震東) [REDACTED] [REDACTED] [REDACTED] [REDACTED]Li Zhi (李智) [REDACTED] [REDACTED] [REDACTED] [REDACTED]Liao Qiulin (廖秋林) [REDACTED] [REDACTED] [REDACTED] [REDACTED]Du Jing (杜靜) [REDACTED] [REDACTED] [REDACTED] [REDACTED]



– V-52 –




Option Scheme






SchemeNo. of




No. ofunderlying

Shares underthe



Former employee of ourGroup

Gong Caixia (龔彩霞) [REDACTED] [REDACTED] [REDACTED] [REDACTED]

Total [REDACTED] [REDACTED] [REDACTED] [REDACTED]

Effect on the earnings per share as a result of the [REDACTED] Share Options

The Shares underlying the [REDACTED] Share Options represent about[REDACTED]% of our enlarged share capital as of the [REDACTED](assuming all [REDACTED] Share Options have not been exercised at all and noShares have been issued upon the exercise of options granted under the ShareOption Scheme). If all the [REDACTED] Share Options are exercised in full,this would have a dilutive effect on our Shareholders of approximately[REDACTED]% and a dilutive effect of approximately [REDACTED]% onearnings per Share.

3.6 Share Option Scheme

(a) Summary of terms

The following is a summary of the principal terms of the Share Option Schemeconditionally adopted by a resolution in writing of our Sole Shareholder passed on [•]:

(i) Purpose of the scheme

The purpose of the Share Option Scheme is to enable our Group to grantoptions to selected participants as incentives or rewards for their contribution toour Group. Our Directors consider the Share Option Scheme, with its broadenedbasis of participation, will enable our Group to reward the employees, our



– V-53 –

Directors and other selected participants for their contributions to our Group.Given that our Directors are entitled to determine any performance targets to beachieved as well as the minimum period that an option must be held before anoption can be exercised on a case by case basis, and that the exercise price of anoption cannot in any event fall below the price stipulated in the Listing Rules orsuch higher price as may be fixed by our Directors, it is expected that grantees ofan option will make an effort to contribute to the development of our Group soas to bring about an increased market price of the Shares in order to capitalise onthe benefits of the options granted.

(ii) Who may join

Our Directors may at any time within a period of ten years commencingfrom the date of adoption of the Share Option Scheme, at its absolute discretion,in accordance with the provisions of the Share Option Scheme and the ListingRules make an offer to any person belonging to any of the following classes ofparticipants (“Eligible Participant”), to take up options to subscribe for Shares:

(aa) any employee (“Eligible Employee”) (whether full-time or part-timeincluding any executive director but excluding any non-executivedirector) of our Company, any of our subsidiaries or any entity(“Invested Entity”) in which any member of our Group holds anequity interest;

(bb) any non-executive directors (including INEDs) of our Company, any ofour subsidiaries or any Invested Entity;

(cc) any supplier of goods or services to any member of our Group or anyInvested Entity;

(dd) any customer of any member of our Group or any Invested Entity;

(ee) any person or entity that provides research, development or othertechnological support to any member of our Group or any InvestedEntity;

(ff) any shareholder of any member of our Group or any Invested Entity orany holder of any securities issued by any member of our Group or anyInvested Entity;

(gg) any adviser (professional or otherwise) or consultant to any area ofbusiness or business development of any member of our Group or anyInvested Entity; and



– V-54 –

(hh) any other group or classes of participants who have contributed or maycontribute by way of joint venture, business alliance or other businessarrangement to the development and growth of our Group;

and, for the purposes of the Share Option Scheme, the offer for the grant ofoption may be made to any company wholly owned by one or more personsbelonging to any of the above classes of participants.

For avoidance of doubt, the grant of any options by our Company for thesubscription of Shares or other securities of our Group to any person who fallswithin any of the above classes of participants shall not, by itself, unless ourDirectors otherwise determine, be construed as a grant of option under the ShareOption Scheme.

The eligibility of any of the above class of participants to an offer for thegrant of any option shall be determined by our Directors from time to time on thebasis of our Directors’ opinion as to his contribution to the development andgrowth of our Group.

(iii) Maximum number of the Shares available for subscription

(aa) The maximum number of Shares which may be allotted and issuedupon the exercise of all outstanding options granted and yet to beexercised under the Share Option Scheme and any other share optionscheme adopted by our Group must not in aggregate exceed 30% of theshare capital of our Company in issue from time to time.

(bb) The total number of the Shares which may be allotted and issued uponthe exercise of all options (excluding, for this purpose, options whichhave lapsed in accordance with the terms of the Share Option Schemeand any other share option scheme of our Group) to be granted underthe Share Option Scheme and any other share option scheme of ourGroup must not in aggregate exceed 10% of the Shares in issue on the[REDACTED] (“General Scheme Limit”) (such 10% being[REDACTED] Shares, assuming that the [REDACTED] is notexercised).

(cc) Subject to (aa) above but without prejudice to (dd) below, ourCompany may seek approval of the Shareholders in general meeting torefresh the General Scheme Limit provided that the total number ofShares which may be allotted and issued upon exercise of all optionsto be granted under the Share Option Scheme and any other shareoption scheme of our Group must not exceed 10% of the Shares inissue as at the date of approval of the refreshed limit and, for thepurpose of calculating the refreshed limit, options (including those



– V-55 –

outstanding, cancelled, lapsed or exercised in accordance with theShare Option Scheme and any other share option scheme of our Group)previously granted under the Share Option Scheme and any other shareoption scheme of our Group will not be counted. The circular sent byour Company to the Shareholders shall contain, among otherinformation, the information required under Rule 17.02(2)(d) of theListing Rules and the disclaimer required under Rule 17.02(4) of theListing Rules.

(dd) Subject to (aa) above and without prejudice to (cc) above, ourCompany may seek separate Shareholders’ approval in general meetingto grant options beyond the General Scheme Limit or, if applicable, therefreshed limit referred to in (cc) above to participants specificallyidentified by our Company before such approval is sought. In suchevent, our Company must send a circular to the Shareholderscontaining a generic description of the specified participants, thenumber and terms of options to be granted, the purpose of grantingoptions to the specified participants with an explanation as to how theterms of the options serve such purpose and such other informationrequired under Rule 17.02(2)(d) of the Listing Rules and the disclaimerrequired under Rule 17.02(4) of the Listing Rules.

(iv) Maximum entitlement of each participant

The total number of Shares issued and which may fall to be issued upon theexercise of the options granted under the Share Option Scheme and any othershare option scheme of our Group (including both exercised and outstandingoptions) to each grantee in any 12-month period shall not exceed 1% of theissued share capital of our Company for the time being (“Individual Limit”).Any further grant of options in excess of the Individual Limit in any 12-monthperiod up to and including the date of such further grant must be separatelyapproved by the Shareholders in general meeting of our Company with suchgrantee and his close associates (or his associates if the grantee is a connectedperson) abstaining from voting. Our Company must send a circular to theShareholders, containing the information required under the Listing Rules. Thenumber and terms (including the exercise price) of options to be granted must befixed before the approval of the Shareholders and the date of the Board meetingfor proposing such further grant should be taken as the date of grant for thepurpose of calculating the exercise price under note (1) to Rule 17.03(9) of theListing Rules.



– V-56 –

(v) Grant of options to our Directors, chief executive or Substantial

Shareholders of our Company or their respective associates

(aa) Any offer for the grant of options under the Share Option Scheme to aDirector, chief executive or Substantial Shareholder of our Company orany of their respective associates must be approved by INEDs(excluding INED who or whose associates is the proposed grantee ofthe options).

(bb) Where any grant of options to a Substantial Shareholder or an INED orany of their respective associates would result in the Shares issued andto be issued upon exercise of all options already granted and to begranted (including options exercised, cancelled and outstanding) tosuch person in the 12-month period up to and including the date ofsuch grant:

(i) representing in aggregate over 0.1% of the Shares in issue; and

(ii) having an aggregate value, based on the closing price of theShares at the date of each offer for the grant, in excess of HK$5million;

such further grant of options must be approved by Shareholders ingeneral meeting. Our Company must send a circular to theShareholders, containing such information are required under theListing Rules. The grantee, his associates and all core connectedpersons of our Company must abstain from voting in favour at suchgeneral meeting, except that any connected person may vote againstthe relevant resolution at the general meeting provided that hisintention to do so has been stated in the circular. Any vote taken at themeeting to approve the grant of such options must be taken on a poll.

Any change in the terms of options granted to a Substantial Shareholder oran INED or any of their respective associates must be approved by theShareholders in general meeting.

(vi) Time of acceptance and exercise of option

An option may be accepted by a participant within 21 days from the date ofthe offer for the grant of the option.

An option may be exercised in accordance with the terms of the ShareOption Scheme at any time during a period to be determined and notified by ourDirectors to each grantee, which period (“Option Period”) may commence fromthe date of the offer for the grant of options is made, but shall end in any event



– V-57 –

not later than 10 years from the date of the offer for the grant of the optionsubject to the provisions for early termination thereof. Unless otherwisedetermined by our Directors and stated in the offer for the grant of options to agrantee, there is no minimum period required under the Share Option Scheme forthe holding of an option before it can be exercised.

(vii) Performance targets

Unless our Directors otherwise determined and stated in the offer for thegrant of options to a grantee, a grantee is not required to achieve anyperformance targets before any options granted under the Share Option Schemecan be exercised.

(viii) Subscription price for the Shares and consideration for the option

The subscription price for the Shares under the Share Option Scheme shallbe a price determined by our Directors, but shall not be less than the highest of(i) the closing price of the Shares as stated in the Stock Exchange’s dailyquotations sheet for trade in one or more board lots of the Shares on the date ofthe offer for the grant of the option, which must be a business day; (ii) theaverage closing price of Shares as stated in the Stock Exchange’s dailyquotations for the five business days immediately preceding the date of the offerfor the grant of the option; and (iii) the nominal value of a Share.

A nominal consideration of HK$1 is payable on acceptance of the grant ofan option.

(ix) Ranking of the Shares

(aa) The Shares allotted and issued upon the exercise of an option will besubject to all the provisions of the Articles of Association of ourCompany for the time being in force and will rank pari passu in allrespects with the then fully paid Shares in issue on the date on whichthe option is duly exercised or, if that date falls on a day when theregister of members of our Company is closed, the first day of there-opening of the register of members (the “Exercise Date”) andaccordingly will entitle the holders thereof to participate in alldividends or other distributions paid or made on or after the ExerciseDate other than any dividend or other distribution previously declaredor recommended or resolved to be paid or made if the record datetherefor shall be before the Exercise Date. A Share allotted and issuedupon the exercise of an option shall not carry voting rights until thename of the grantee has been entered on the register of members of ourCompany as the holder thereof.



– V-58 –

(bb) Unless the context otherwise requires, references to “Shares” in thecontext of the Share Option Scheme include references to shares in theordinary equity share capital of our Company of such nominal amountas shall result from a subdivision, consolidation, re-classification orreconstruction of the share capital of our Company from time to time.

(x) Restrictions on the time of the offer for the grant of options

No offer for grant of options shall be made after inside information hascome to our Company’s knowledge until we have announced the information. Inparticular, during the period commencing one month immediately preceding theearlier of (aa) the date of the Board meeting (as such date is first notified to theStock Exchange in accordance with the Listing Rules) for the approval of ourCompany’s results for any year, half-year, quarterly or any other interim period(whether or not required under the Listing Rules), and (bb) the deadline for ourCompany to publish an announcement of its results for any year, half-year,quarterly or any other interim period (whether or not required under the ListingRules) and ending on the date of the results announcement (covering any periodof delay in publishing the results announcement), no offer for the grant ofoptions may be made.

Our Directors may not make any offer for the grant of options to aparticipant who is a Director during the periods or times in which Directors areprohibited from dealing in Shares pursuant to Model Code for SecuritiesTransactions by Directors of Listed Issuers prescribed by the Listing Rules orany corresponding code or securities dealing restrictions adopted by ourCompany.

(xi) Period of the Share Option Scheme

The Share Option Scheme will remain in force for a period of 10 years(“Termination Date”) commencing on the date on which the Share OptionScheme is adopted.

(xii) Rights on ceasing employment

If the grantee of an option is an Eligible Employee and ceases to be anEligible Employee for any reason other than death, ill-health or retirement inaccordance with his contract of employment or the termination of hisemployment on one or more of the grounds referred to in sub-paragraph (xiv)below before exercising his option in full, the option (to the extent not alreadyexercised) will lapse on the date of cessation and shall not be exercisable unlessour Directors otherwise determine in which event the grantee may exercise theoption (to the extent not already exercised) in whole or in part in accordancewith the provisions of the Share Option Scheme within such period as our



– V-59 –

Directors may determine following the date of such cessation, which will betaken to be the last day on which the grantee was at work with our Group or theInvested Entity whether salary is paid in lieu of notice or not.

(xiii) Rights on death, ill-health or retirement

If the grantee of an option is an Eligible Employee and ceases to be anEligible Employee by reason of his death, ill-health or retirement in accordancewith his contract of employment before exercising the option in full, his personalrepresentative(s), or, as appropriate, the grantee may exercise the option (to theextent not already exercised) in whole or in part in accordance with theprovisions of the Share Option Scheme within a period of 12 months followingthe date of cessation of employment which date shall be the last day on whichthe grantee was at work with our Group or the Invested Entity whether salary ispaid in lieu of notice or not or such longer period as our Directors maydetermine.

(xiv) Rights on dismissal

If the grantee of an option is an Eligible Employee and ceases to be anEligible Employee by reason of a termination of his employment on the groundsthat he has been guilty of persistent or serious misconduct, or has committed anyact of bankruptcy or has become insolvent or has made any arrangements orcomposition with his creditors generally, or has been convicted of any criminaloffence (other than an offence which in the opinion of our Directors does notbring the grantee or our Group or the Invested Entity into disrepute), his option(to the extent not already exercised) will lapse automatically on the date ofcessation to be an Eligible Employee.

(xv) Rights on breach of contract

If in respect of a grantee other than an Eligible Employee, our Directorsshall at their absolute discretion determine that (aa) (1) the grantee or hisassociate has committed any breach of any contract entered into between thegrantee or his associate on the one part and our Group or any Invested Entity onthe other part; or (2) the grantee has committed any act of bankruptcy or hasbecome insolvent or is subject to any winding-up, liquidation or analogousproceedings or has made any arrangement or composition with his creditorsgenerally; or (3) the grantee could no longer make any contribution to the growthand development of our Group by reason of the cessation of its relations with ourGroup or by other reason whatsoever; and (bb) the option granted to the granteeunder the Share Option Scheme shall lapse as a result of any event specified insub-paragraph (1), (2) or (3) above, his option will lapse automatically on thedate on which our Directors have so determined.



– V-60 –

(xvi) Rights on a general offer or a scheme of arrangement

If a general or partial offer, whether by way of take-over offer, sharere-purchase offer, or scheme of arrangement or otherwise in like manner is madeto all the holders of Shares, or all such holders other than the offeror and/or anyperson controlled by the offeror and/or any person acting in association orconcert with the offeror, our Company shall use all reasonable endeavours toprocure that such offer is extended to all the grantees on the same terms, mutatismutandis, and assuming that they will become, by the exercise in full of theoptions granted to them, Shareholders. If such offer becomes or is declaredunconditional or such scheme of arrangement is formally proposed toShareholders of our Company, a grantee shall be entitled to exercise his option(to the extent not already exercised) to its full extent or to the extent specified inthe grantee’s notice to our Company in exercise of his option in accordance withthe provisions of the Share Option Scheme at any time thereafter and up to theclose of such offer (or any revised offer) or the record date for entitlementsunder such scheme of arrangement, as the case may be. Subject to the above, anoption will lapse automatically (to the extent not exercised) on the date whichsuch offer (or, as the case may be, revised offer) closed or the relevant date forentitlements under such scheme of arrangement, as the case may be.

(xvii) Rights on winding up

In the event of a resolution being proposed for the voluntary winding-up ofour Company during the Option Period, the grantee may, subject to theprovisions of all applicable laws, by notice in writing to our Company at anytime not less than two business days before the date on which such resolution isto be considered and/or passed, exercise his option (to the extent not alreadyexercised) either to its full extent or to the extent specified in such notice inaccordance with the provisions of the Share Option Scheme and our Companyshall allot and issue to the grantee the Shares in respect of which such granteehas exercised his option not less than one business day before the date on whichsuch resolutions is to be considered and/or passed whereupon he shallaccordingly be entitled, in respect of the Shares allotted and issued to him in theaforesaid manner, to participate in the distribution of the assets of our Companyavailable in liquidation pari passu with the holders of the Shares in issue on theday prior to the date of such resolution. Subject thereto, all options thenoutstanding shall lapse and determine on the commencement of the winding-upof our Company.



– V-61 –

(xviii) Grantee being a company wholly owned by Eligible Participants

If the grantee is a company wholly owned by one or more EligibleParticipants:

(aa) sub-paragraphs (xii), (xiii), (xiv) and (xv) shall apply to the granteeand to the options granted to such grantee, mutatis mutandis, as if suchoptions had been granted to the relevant Eligible Participant, and suchoptions shall accordingly lapse or fall to be exercisable after theevent(s) referred to in sub-paragraphs (xii), (xiii), (xiv) and (xv) shalloccur with respect to the relevant Eligible Participant; and

(bb) the options granted to the grantee shall lapse and determine on the datethe grantee ceases to be wholly owned by the relevant EligibleParticipant provided that our Directors may in their absolute discretiondecide that such options or any part thereof shall not so lapse ordetermine subject to such conditions or limitations as they mayimpose.

(xix) Adjustments to the subscription price

In the event of a capitalisation issue, rights issue, subdivision orconsolidation of Shares or reduction of capital of our Company whilst an optionremains exercisable, such corresponding adjustment (if any) certified by theauditors for the time being of or an independent financial adviser to ourCompany as fair and reasonable will be made to the number or nominal amountof Shares comprised in an option or which remains comprised in an Option or towhich the Share Option Scheme or any option(s) relates (so far as unexercised)and/or the option price of the option concerned, provided that (i) any adjustmentsshall give a grantee the same proportion of the issued share capital of ourCompany to which he was entitled prior to such alteration; (ii) the issue ofShares or other securities of our Group as consideration in a transaction may notbe regarded as a circumstance requiring adjustment; (iii) no adjustment shall bemade the effect of which would be to enable a Share to be issued at less than itsnominal value; (iv) notwithstanding (i) above, any adjustments as a result of anissue of securities with a price-dilutive element, such as a rights issue, open offeror capitalisation issue, should be based on a scrip factor similar to the one usedin accounting standards in adjusting the earnings per share figures and any suchadjustment shall comply with the supplementary guidance on Rule 17.03(13) ofthe Listing Rules as set out in the letter issued by the Stock Exchange dated 5September 2005; and (v) any adjustment must be made in compliance with theListing Rules and such applicable rules, codes, guidance notes and/orinterpretation of the Listing Rules from time to time promulgated by the StockExchange. In addition, in respect of any such adjustments, other than anyadjustment made on a capitalisation issue, such auditors or independent financial



– V-62 –

adviser must confirm to our Directors in writing that the adjustments satisfy therequirements of the relevant provision of the Listing Rules.

(xx) Cancellation of options

Subject to the provisions of the Share Options Scheme and Chapter 17 ofthe Listing Rules, any cancellation of options granted but not exercised must besubject to the prior written consent of the relevant grantee and the approval ofour Directors.

When our Company cancels any option granted to a grantee but notexercised and issues new option(s) to the same grantee, the issue of such newoption(s) may only be made with available unissued options (excluding theoptions so cancelled) within the General Scheme Limit or the new limitsapproved by the Shareholders pursuant subparagraphs (iii) (cc) and (dd) above.

(xxi) Termination of the Share Option Scheme

Our Company may by resolution in general meeting at any time terminatethe Share Option Scheme and in such event no further options shall be offeredbut in all other respects the provisions of the Share Option Scheme shall remainin force to the extent necessary to give effect to the exercise of any options (tothe extent not already exercised) granted prior to the termination or otherwise asmay be required in accordance with the provisions of the Share Option Scheme.Options (to the extent not already exercised) granted prior to such terminationshall continue to be valid and exercisable in accordance with the Share OptionScheme.

(xxii) Rights are personal to the grantee

An option is personal to the grantee and shall not be transferable orassignable and no grantee shall in any way sell, transfer, charge, mortgage,encumber or otherwise dispose of or create any interest whatsoever in favour ofany third party over or in relation to any option or enter into any agreements soto do.

(xxiii) Lapse of option

The Option Period in respect of any option shall terminate automaticallyand that an option (to the extent not already exercised) shall lapse automaticallyon the earliest of:

(aa) the expiry of the Option Period in respect of such option;



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(bb) the expiry of the periods or dates referred to in paragraph (xii), (xiii),(xiv), (xv), (xvi), (xvii) and (xviii); and

(cc) the date on which our Directors exercise our Company’s right to cancelthe option by reason of a breach of paragraph (xxii) above by thegrantee.

(xxiv) Miscellaneous

(aa) The Share Option Scheme is conditional on the [REDACTED], suchnumber of Shares representing the General Scheme Limit to be allottedand issued pursuant to the exercise of any options which may begranted under the Share Option Scheme.

(bb) Provisions of the Share Option Scheme as to the definitions of“Eligible Participants”, “grantee”, “Option Period” and “TerminationDate” and the terms and conditions of the Share Option Schemerelating to the matters set out in Rule 17.03 of the Listing Rules shallnot be altered to the advantage of grantees of the options except withthe prior approval of the Shareholders in general meeting.

(cc) Any alterations to the terms and conditions of the Share OptionScheme which are of a material nature or any change to the terms ofoptions granted must be approved by the Shareholders in generalmeeting, except where the alterations take effect automatically underthe existing terms of the Share Option Scheme.

(dd) The terms of the Share Option Scheme and any amended terms of theShare Option Scheme or the options shall comply with the relevantrequirements of Chapter 17 of the Listing Rules.

(ee) Any change to the authority of our Directors or the schemeadministrators in relation to any alteration to the terms of the ShareOption Scheme shall be approved by the Shareholders in generalmeeting.

(b) Present status of the Share Option Scheme

(i) Application for approval

Application has been made to the [REDACTED] to be issued within theGeneral Scheme Limit pursuant to the exercise of any options which may begranted under the Share Option Scheme.



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(ii) Grant of options

As at the date of this document, no options have been granted or agreed tobe granted under the Share Option Scheme.

(iii) Value of options

Our Directors consider it inappropriate to disclose the value of optionswhich may be granted under the Share Option scheme as if they had been grantedas at the Latest Practicable Date. Any such valuation will have to be made on thebasis of certain option pricing model or other methodology, which depends onvarious assumptions including, the exercise price, the exercise period, interestrate, expected volatility and other variables. As no options have been granted,certain variables are not available for calculating the value of options. OurDirectors believe that any calculation of the value of options as at the LatestPracticable Date based on a number of speculative assumptions would not bemeaningful and would be misleading to investors.

(iv) Compliance with Listing Rules

The Share Option Scheme complies with Chapter 17 of the Listing Rules.

4. OTHER INFORMATION

4.1 Estate duty, tax and other indemnities

Our Controlling Shareholders (the “Indemnifiers”) have entered into the Deed ofIndemnity with and in favour of our Company (for itself and as trustee for each of itspresent subsidiaries) (being the material contract (q) referred to in paragraph 2.1 under thisappendix) to provide indemnities on a joint and several basis, in respect of, among othermatters:

(a) any liability for Hong Kong estate duty which might be incurred by any memberof our Group by reason of any relevant transfer of property (within the meaningof sections 35 and 43 of the Estate Duty Ordinance (Chapter 111 of the Laws ofHong Kong) or the equivalent thereof under the laws of any jurisdiction outsideHong Kong) to any member of our Group at any time on or before the[REDACTED]; and

(b) tax liabilities (including all actual fines, penalties, liabilities, costs, charges,expenses and interests relating to taxation) which might be payable by anymember of our Group in respect of any income, profits, gains earned, accrued,received on or before [REDACTED], or any transactions, events, matters orthings entered into or occurring on or before the [REDACTED],



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whether alone or in conjunction with any other circumstances wheneveroccurring and whether or not such tax liabilities are chargeable against orattributable to any other person, firm, company or corporation.

The Indemnifiers are under no liability under the Deed of Indemnity in respect of anytaxation:

(a) to the extent that provision or reserve has been made for such taxation in theaudited accounts of any member of our Group for any accounting period up to 31December 2021 (“Accounts Date”); or

(b) to the extent that such taxation or liability for such taxation falling on any of themembers of our Group in respect of their accounting periods commencing on thecalendar day immediately after the Accounts Date and ending on the[REDACTED], where such taxation or liability would not have arisen but forsome act or omission of, or transaction voluntarily entered into by any memberof our Group (whether alone or in conjunction with some other act, omission ortransaction, whenever occurring) without the prior written consent or agreementof the Indemnifiers, other than any such act, omission or transaction carried out,made or entered into pursuant to a legally binding commitment created on orbefore the Accounts Date or pursuant to any statement of intention made in thisdocument; or

(c) to the extent that such taxation liabilities or claim arise or are incurred as a resultof the imposition of taxation as a consequence of any retrospective change in thelaw, rules and regulations or the interpretation or practice thereof by the HongKong Inland Revenue Department or the taxation authority of PRC, or any otherrelevant authority (whether in Hong Kong or PRC or any other part of the world)coming into force after the date of the Deed of Indemnity or the extent such aclaim or liability arises or is increased by an increase in rates of taxation afterthe date of the Deed of Indemnity with retrospective effect; or

(d) to the extent that any provision or reserve made for taxation in the auditedaccounts of any member of our Group up to the Accounts Date which is finallyestablished to be an over-provision or an excessive reserve in which case theIndemnifiers’ liability (if any) in respect of such taxation shall be reduced by anamount not exceeding such provision or reserve, provided that the amount of anysuch provision or reserve applied pursuant to this paragraph to reduce theIndemnifiers’ liability in respect of taxation shall not be available in respect ofany such liability arising thereafter.

Under the Deed of Indemnity, the Indemnifiers have also undertaken to jointly andseverally indemnify each member of our Group against any costs and expenses arising fromany non-compliance of such member on or before the [REDACTED] and from anydepletion in or reduction in value of assets or any loss (including all legal costs and



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suspension of operation), cost, expenses, damages or other liabilities which such member ofour Group may incur or suffer arising form or in connection with the implementation of theReorganisation.

Pursuant to the Deed of Indemnity, the Indemnifiers have on a joint and several basisundertaken to indemnify each member of our Group, among other indemnities against:

(a) any costs, claims, damages, expenses, losses, penalties, liabilities, actions andproceedings which any member of our Group may incur, suffer, accrue, directlyor indirectly, from any act of any member of our Group arising from or inconnection with any non-compliance of any member of our Group on or before[REDACTED], including but not limited to the non-compliances as disclosed inthis document or all litigation, arbitration, claims, counter-claims, actions,complaints, demands, judgments and/or legal proceedings by or against any ofthe members of our Group which was issued, accrued and/or arising from any actof any of any member of our Group at any time on or before [REDACTED];

(b) any penalty which may be imposed on any member of our Group, or any costs,expenses and losses which such member of our Group may suffer in connectionwith such penalty, due to such member’s failure to duly make all relevant filingsor reports and supply all other information required to be supplied to anyrelevant PRC governmental authority, or to observe any laws, regulations or rulesin the PRC in this regard;

(c) any loss, liability, damages, claims, fines, penalties, orders, expenses and costs orloss of profits, benefits or other commercial advantages suffered by any memberof our Group as a result of or in connection with:

(i) the title of any of the properties owned by, leased to or otherwise occupiedby the members of our Group in the PRC (“PRC Properties”) not beinggood and/or marketable or being subject to encumbrances (including withoutlimitation the absence of building ownership certificate(s) of any of thePRC Properties as at the [REDACTED]);

(ii) the relocation of any office by such member of our Group arising from or inconnection with the lack of relevant title certificates or documents by anymember of our Group or the lessor or, if applicable the lessors’ registrationdefault in relation to the lease agreements to the extent that damages, if any,recovered from the relevant lessor are inadequate to cover the related costsof such member;

(iii) such member’s failure to obtain the relevant building ownership certificatesand/or other title certificates of any of the PRC Properties (including butnot limited to relocation costs, operating losses, penalties and rental



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difference between new lease and the existing ones incurred or suffered byany member of our Group as a result of any disputes as to the member’srights to lease and/or use any of the properties for its business operations);

(iv) (aa) any actual or potential litigation, claim, action, prosecution, arbitration,mediation, alternative dispute resolution or other similar proceedings and/or(bb) any dispute with any person(s) relating to any of the events referred toin paragraphs (i) to (iii) above.

The indemnity given in connection with paragraphs (a) and (b) above and othernon-compliance incidents provided in the Deed of Indemnity shall not apply to anycosts and expenses associated with any of the claims for such non-compliances to theextent of any provision being made in the financial statements of the relevant memberof our Group up to the Accounts Date.

The provisions contained in the Deed of Indemnity are conditional on theconditions stated in the section headed “Structure and Conditions of the[REDACTED] – Conditions of the [REDACTED]” in this document being fulfilledor, to the extent permitted, waived by the relevant party. If such conditions are notfulfilled or, to the extent permitted, waived on or before the date falling 30 days fromthe date of this document, or such later date as the parties under the Deed ofIndemnity may agree, the Deed of Indemnity shall become null and void and cease tohave effect.

Our Directors have been advised that no material liability for estate duty underthe laws of the Cayman Islands or BVI is likely to fall on our Group.

4.2 Sponsor

The Sole Sponsor has made an application on behalf of our Company to the[REDACTED], the Shares in issue and to be issued pursuant to the [REDACTED] and anyShares which may be issued upon the exercise of options under the [REDACTED] ShareOption Scheme, the Share Option Scheme and the [REDACTED].

The Sole Sponsor satisfies the independence criteria applicable to sponsors as set outin Rule 3A.07 of the Listing Rules.

Our Company agreed to pay the Sole Sponsor a fee of approximately HK$5.5 millionto act as the sole sponsor to our Company in relation to the [REDACTED].

4.3 Litigation

As at the Latest Practicable Date, no member of our Group is engaged in anylitigation, arbitration or claim of material importance, and no litigation, arbitration or claimof material importance is known to our Directors to be pending or threatened by or against



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our Group member, that would have a material adverse effect on our results of operationsor financial condition of our Group.

4.4 Preliminary expenses

The preliminary expenses of our Company are estimated to be approximatelyUS$5,615 and are payable by our Company.

4.5 Promoters

Our Company has no promoter for the purpose of the Listing Rules. Within the twoyears immediately preceding the date of this document, no cash, securities or other benefithas been paid, allotted or given nor are any proposed to be paid, allotted or given to anypromoters in connection with the [REDACTED] and the related transactions described inthis document.

4.6 Agency fees or commissions received

Except as disclosed in the section headed “[REDACTED]” in this document, nocommissions, discounts, brokerages or other special terms have been granted in connectionwith the issue or sale of any capital and/or debenture of any member of our Group withinthe two years immediately preceding the date of this document.

4.7 Qualification of experts

The qualifications of the experts who have given opinion and/or whose names areincluded in this document are as follows:

Name Qualifications

Zhongtai International CapitalLimited

a corporation licenced under the SFO andpermitted to carry out Type 1 (dealing insecurities) and Type 6 (advising on corporatefinance) regulated activities (as defined in theSFO)

PricewaterhouseCoopers Certified Public Accountants under ProfessionalAccountants Ordinance (Cap. 50) andRegistered Public Interest Entity Auditor underFinancial Reporting Council Ordinance (Cap.588)

AVISTA Valuation AdvisoryLimited

Independent property valuer



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Name Qualifications

Conyers Dill & Pearman Cayman Islands attorneys-at-law

GFE Law Office Qualified PRC lawyers

Frost & Sullivan (Beijing) Inc.,Shanghai Branch Co.

Independent industry consultant

4.8 Consents of experts

Each of the experts referred to in paragraph 4.7 under this appendix has given and hasnot withdrawn its consent to the issue of this document with the inclusion of its reportsand/or letter and/or legal opinion (as the case may be) and reference to its name included inthe form and context in which it is respectively appears.

4.9 Binding effect

This document shall have the effect, if an application is made in pursuance hereof, ofrendering all persons concerned bound by all of the provisions (other than the penalprovisions) of Sections 44A and 44B of the COWUMPO insofar as applicable.

4.10 Taxation of holders of Shares

(a) Hong Kong

Dealings in Shares registered on our Company’s Hong Kong branch register ofmembers will be subject to Hong Kong stamp duty. The sale, purchase and transfer ofShares are subject to Hong Kong stamp duty, the current rate of which is 0.26% of theconsideration or, if higher, the value of the Shares being sold or transferred.

Profits from dealings in the Shares arising in or derived from Hong Kong mayalso be subject to Hong Kong profits tax.

(b) Cayman Islands

Under the present Cayman Islands law, there is no stamp duty payable in theCayman Islands on transfer of Shares.

(c) Consultation with professional advisors

Intending holders of our Shares are recommended to consult their professionaladvisers if they are in any doubt as to the taxation implications of subscribing for,purchasing, holding or disposing of or dealing in our Shares or exercising any rightsattaching to them. It is emphasised that none of our Company, our Directors or the



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other parties involved in the [REDACTED] can accept responsibility for any taxeffect on, or liabilities of holders of Shares resulting from their subscription for,purchase, holding or disposal of or dealing in Shares or exercising any rights attachingto them.

4.11 Miscellaneous

(a) Within the two years immediately preceding the date of this document:

(i) no share or loan capital of our Company or any of our subsidiaries has beenissued or agreed to be issued fully or partly paid either for cash or for aconsideration other than cash, save as disclosed in the section headed“History, Reorganisation and Development” in this document;

(ii) no share or loan capital of our Company or any of our subsidiaries is underoption or is agreed conditionally or unconditionally to be put under optionother than pursuant to the Share Option Scheme or the [REDACTED] ShareOption Scheme;

(iii) neither our Company nor any of our subsidiaries has issued or agreed toissue any founders shares, management shares, deferred shares or anydebentures;

(iv) no commission has been paid or payable (except [REDACTED]) forsubscription, agreeing to subscribe, procuring subscription or agreeing toprocure subscription of any Shares;

(v) none of the equity and debt securities of our Company is listed or dealt within any other stock exchange nor is any listing or permission to deal being orproposed to be sought; and

(vi) our Company has no outstanding convertible debt securities.

(b) Our principal register of members will be maintained by our [REDACTED],[REDACTED], in the Cayman Islands and our Hong Kong register of memberswill be maintained by our [REDACTED] in Hong Kong, [REDACTED]. Unlessour Directors otherwise agree, all transfer and other documents of title of Sharesmust be lodged for registration with and registered by the [REDACTED] andmay not be lodged in the Cayman Islands. All necessary arrangements have beenmade to enable the Shares to be admitted to [REDACTED].



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(c) Our Directors confirm that up to the date of this document, there has been nomaterial adverse change in the financial or trading position or prospects of ourGroup since 31 December 2021 (being the date to which the latest auditedconsolidated financial statements of our Group were made up).

(d) No company within our Group is presently listed on any stock exchange ortraded on any trading system.

(e) Our Directors have been advised that, under Cayman Islands law, the use of aChinese name by our Company does not contravene the Companies Act.

(f) There has not been any interruption in the business of our Group which may haveor has had a significant effect on the financial position of our Group in the 12months preceding the date of this document.

4.12 Bilingual document

The English language and Chinese language versions of this document are beingpublished separately, in reliance upon the exemption provided in section 4 of theCompanies (Exemption of Companies and Prospectuses from Compliance with Provisions)Notice (Chapter 32L of the Laws of Hong Kong).



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1. DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES IN HONGKONG

The documents attached to a copy of this document and delivered to the Registrar ofCompanies in Hong Kong for registration were, amongst other documents, copies of the[REDACTED], the written consents referred to in paragraph 4.8 under “Appendix V – Statutoryand general information” to this document, and certified copies of the material contracts referredto in paragraph 2.1 under “Appendix V – Statutory and General Information” to this document.

2. DOCUMENTS ON DISPLAY

Copies of the following documents will be published on the Stock Exchange’s website atwww.hkexnews.hk and our Company’s website at www.cliffordmedgroup.com during a periodof 14 days from the date of this document:

(a) our Memorandum of Association and Articles of Association;

(b) the Accountant’s Report from PricewaterhouseCoopers, on the historical financialinformation of our Group for each of the years ended 31 December 2019, 2020 and2021, the text of which is set out in Appendix I to this document;

(c) the report on the unaudited pro forma financial information of our Group fromPricewaterhouseCoopers, the text of which is set out in Appendix II to this document;

(d) the audited consolidated financial statements of our Group for each of the years ended31 December 2019, 2020 and 2021;

(e) the property valuation report prepared by AVISTA Valuation Advisory Limited, thetext of which is set out in Appendix III to this document;

(f) the letter of advice prepared by Conyers Dill & Pearman summarising certain aspectsof the Cayman Islands company law referred to in Appendix IV to this document;

(g) the Companies Act;

(h) the legal opinion prepared by GFE Law Office in respect of certain aspects of ourGroup and the property interests of our Group in the PRC and summary of PRC lawsand regulations relating to our business;

(i) the industry research report prepared by Frost & Sullivan;

(j) the material contracts referred to in paragraph 2.1 under “Appendix V – Statutory andgeneral information” to this document;


APPENDIX VI DOCUMENTS DELIVERED TO THE REGISTRAR OFCOMPANIES AND AVAILABLE ON DISPLAY

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(k) the written consents referred to in paragraph 4.8 under “Appendix V – Statutory andGeneral Information” to this document;

(l) the rules of the Share Option Scheme;

(m) the rules of the [REDACTED] Share Option Scheme;

(n) the full list of grantees who have been granted [REDACTED] Share Options tosubscribe for Shares under the [REDACTED] Share Option Scheme, containing allthe particulars required under paragraph 10 of Part 1 of the Third Schedule to theCOWUMPO and Rule 17.02(1)(b) and paragraph 27 of Appendix 1A of the ListingRules; and

(o) the service contracts and appointment letters referred to in paragraph 3.2 under“Appendix V – Statutory and General Information” to this document.


APPENDIX VI DOCUMENTS DELIVERED TO THE REGISTRAR OFCOMPANIES AND AVAILABLE ON DISPLAY

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CLIFFORD MEDICAL GROUP LIMITED 祈福醫療集團有限公司

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Transcript of CLIFFORD MEDICAL GROUP LIMITED 祈福醫療集團有限公司