Huayi Tencent Entertainment : Announces 2022 Annual Results Revenue Sharply Quadrupled Increasing to HK$1.69 Billion

Press Release For Immediate Release

HUAYI TENCENT ENTERTAINMENT COMPANY LIMITED

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 419)

Huayi Tencent Entertainment Announces 2022 Annual Results

Revenue Sharply Quadrupled Increasing to HK$1.69 Billion * ****

The Forward-looking New Market Development of Internet Healthcare Services Business has been Well-established and

Accounted for 85% of Total Revenue

Results Highlights:

• • Huayi Tencent's revenue for the year ended 31 December 2022 amounted to approximately HK$1.69 billion, representing a more than 4 times increase compared to approximately HK$328 million for the prior year. These were mainly attributable to the Group's internet healthcare services businesses, "Echartnow" and "Meerkat Health".

• • Given the internet healthcare market has been growing rapidly in recent years and it shows the huge potential growth of the industry, the Group flexibly adjusted its strategies to respond the changes and focused on its internet healthcare services business. It has acquired "Echartnow" and formed "Meerkat Health" and successfully grasped the market opportunities since 2021.

• • The Group's internet healthcare services business has already been well-established. "Echartnow" and "Meerkat Health" have become the major sources of revenue of the Group, with revenues of HK$606 million and HK$824 million respectively, together accounting for 85% of the total revenue. Through these two businesses, the Group has successfully established its market coverage regarding internet healthcare and enhanced its footprint in smart healthcare services, which remains a new market to be charted.

• • "Echartnow" has provided all-rounded digital transformation solutions to pharmaceutical companies. In the coming year, "Echartnow" has been planned to launch "Cistanche project management platform", a self-developed digitised management system product, to deeply professionalise their service, as well as reduce costs and increase profits.

• • Revenue of healthcare consumption business in "Meerkat Health" has been largely increased by 35 times to HK$808 million compared with the same period

of last year. In the coming year, "Meerkat Health" has been planned to work with pharmaceutical companies to build its own controlled sales channels for drugs and healthcare products, aiming to build a new branding system and an internet-based distribution network to further increase profits.

(29 March, 2023, Hong Kong) Huayi Tencent Entertainment Company Limited ("Huayi Tencent Entertainment", the "Company"; Stock code: 419; together with its subsidiaries collectively known as the "Group") is pleased to announce its annual results for the year ended 31 December 2022 ("FY2022").

Two Internet Healthcare Services Businesses Accounted for 85% of Total Revenue

During FY2022, the Group recorded a significant increase in total revenue of HK$1.69 billion, a sharp increase of more than 4 times compared to approximately HK$328 million for FY2021, which is mainly attributable to the Group's internet healthcare services businesses, "Echartnow" and "Meerkat Health". Since the Group launched its strategic plan of expanding into the areas of internet pharmaceutical and healthcare services in the PRC in 2021, it has been actively engaged in the upfront investment, such as acquiring "Echartnow" and forming a joint venture "Meerkat Health", then have quickly become the Group's core businesses in 2022. The overall layout is now largely complete, with its internet healthcare services business becoming well-established and successfully positioned to take the lead in the industry.

"Echartnow" and "Meerkat Health" have grown rapidly and have become major sources of revenue of the Group in the year, with revenues of HK$606 million and HK$824 million respectively, together accounting for approximately 85% of the total revenue. Through these two digitalised healthcare services platforms, the Group has successfully established its market coverage regarding internet healthcare and enhanced its footprint in smart healthcare services, which remains a new market charted.

"Echartnow", a platform for online prescription, circulation and marketing of pharmaceutical products

The Group has acquired "Echartnow", a platform for online prescription, circulation and marketing of pharmaceutical products since April 2021. The total operating revenue of ''Echartnow'' amounted to approximately HK$606 million in FY2022 (2021: HK$36.15 million), with major revenue streams including online drug prescription and circulation service and digital marketing service.

"Echartnow" platform dedicates itself to the establishment of an integrated healthcare platform which covers different user terminals in the industry and offers them different "digitised enterprise operation solutions". The Group has adopted the "pharmaceutical companies driving the whole industry chain" strategy. As of 31 December 2022, the number of pharmaceutical companies that have signed contracts with "Echartnow" platform has sharply increased to 160, with a number of large pharmaceutical companies in the PRC including Qilu Pharmaceutical, Jiangsu HengruiPharmaceuticals, CSPC Pharmaceutical Group etc. The number of pharmacies that have signed contracts and gone online reached 3,402 and the number of drugs listed increased to 191,564. "Echartnow" platform and its related marketing network have already covered more than 37,523 doctors, all of which have registered with their real names, uploaded qualifications, and passed the authentication. The number of patients reached 472,967, including in-hospital patients who visited offline physical hospitals and out-of-hospital patients who were online customers or pharmacy referrals.

Looking forward to 2023, "Echartnow" will continue to develop the healthcare digitalisation industry. Aiming that moving to the intermediate stage of enterprise digitalization, developing digitised project management solutions, also establishing a digitised project operation management system and a private cloud database, to realise the functional advantages of data visualisation, optimisation of operational decisions and optimisation of ROI in the management of pharmaceutical companies, and continue to provide digital operation solutions for pharmaceutical companies throughout the development cycle through online and offline integration.

Starting from the second half of 2022, "Echartnow" gradually began to lay the groundwork for its strategic plan in 2023, building a comprehensive product system to provide professional SaaS products to pharmaceutical companies based on the existing medical services ecosystem. "Cistanche project management platform", a digitised management system product developed by "Echartnow", will help pharmaceutical companies to transform through the supply, demand and ecological channels of digital transformation for compliance; increase the value of their original business by means of digitised compliance; and effectively help partner customers to reduce costs and increase efficiency, solve compliance pain points and accelerate digital transformation.

With the support of the national healthcare policies, the Group will continue to optimise the "Echartnow" whole industry healthcare service ecosystem. Creating more specialist services by connecting more top experts and offline terminal portals to cover a wider range of treatment areas and patients through platform services. By integrating the healthcare services businesses and offline terminal healthcare resources with the "online-offline dual network" model, a closed-loop of internet healthcare services will be created, to achieve the better growth for the Group.

"Meerkat Health", a Smart Healthcare Services Platform

The Group has developed the smart healthcare services business segment through "Meerkat Health" launched in the second half of 2021. During FY 2022, the full year revenue of "Meerkat Health" has been increased substantially by around 36 times to HK$824 million (2021: HK$22.49 million).

"Meerkat Health" has been mainly divided into three major businesses, healthcare consumption, healthcare services, and healthcare management. For healthcare consumption, "Meerkat Health" has built an industry-leading smart supply chain system, covering omnichannel drugs, medical equipment, dietary supplements, nourishing products and other health-related products as well as providing offline self-run and franchised pharmacies with a digital intellectualized solution. During the Financial Year, the healthcare consumption business revenue increased significantly to approximately HK$807 million (2021: HK$22.45 million).

"Meerkat Health" has entered partnerships with nearly 1,400 brands, covering nearly 10,000 product categories, and serving 77,000 customers cumulatively. With the smart supply chain system, "Meerkat Health" plans to work with industry partners to develop a "new controlled sales" model for the third terminal of pharmaceuticals and build its own controlled sales channels for drugs and healthcare products. Under the "new controlled sales" model, "Meerkat Health" will build a new branding system and an internet-based distribution network to reduce costs and increase profits. The project is now steadily progressing and is expected to bring new business growth sources to the Group.

For healthcare services, the core business is the online appointment services for vaccination. With family and preventive medicine as the core, "Meerkat Health" builds a science knowledge and consultation service platform for vaccination, provides diversified health screening, preventive vaccination and antibodies testing products, constructs an online and offline integrated online vaccination appointment service, and provides early screening and preventive healthcare services for its wide range of users.

In the second half of 2022, "Meng Xiao Mei", a self-operated platform built by "Meerkat Health", accumulated over 500,000 users in the first six months of its launch. In terms of e-commerce channels, "Meerkat Health" has opened direct shops in JD, Tmall and other e-commerce channels, and have been able to achieve sales revenue immediately. Benefiting from the above channels, the Gross Merchandise Volume (GMV) of the "Meerkat Health" online appointment services for vaccination in the second half of 2022 grew by more than two times compared to the first half. The relevant business has covered 78 cities in the PRC, including all the first-tier cities of Beijing, Shanghai, Guangzhou and Shenzhen and some second-tier cities, and revenue has been significantly increased to HK$16.04 million (2021: HK$37,000).

For healthcare management, it was transformed in the third quarter of 2022. The business pathway is to contract offline medical institutions to transform and upgrade their body check centres into digital intellectualised health management centres and provide aftercare health management services to users. To date, the "Meerkat Health" digital intellectualised body check services cover 33 hospitals in 19 cities, including grade A tertiary hospitals like Tianjin First Central Hospital, Zhejiang Hospital, Zhejiang Cancer Hospital, Zhejiang Women's Health Care Hospital etc. There is steady progress in the implementation of the business.

Due to the impact of the COVID-19 epidemic, a large number of offline medical institutions suspended their body check services in the second half of the year, resulting in a delayed schedule and reduced revenue, realising a small amount of revenue HK$660,000 (2021: nil). With the adjustment of COVID-19 prevention and control measures from Class A to Class B, the health management business of "Meerkat Health" is expected to gradually return to the right track in 2023.

In the future, "Meerkat Health" will rely on its own and its partners' talent pools, medical resources and brand advantages to further enhance its industry competitiveness andexpand its market scale, continuing forward-looking deployment in the three major businesses of healthcare consumption, healthcare services and healthcare management. In particular, the healthcare consumption business will work with a number of leading companies in the industry to promote a "new controlled sales" model for the third terminal of pharmaceuticals. Healthcare services are expected to continue to grow at a high rate in 2023, and will further develop the market of online appointment services for vaccination in first-tier cities such as Beijing, Shanghai, Guangzhou and Shenzhen, as well as further penetrate into second-tier and third-tier cities. The health management business will enter a strategic partnership with leading internet companies to jointly build a public hospital service system, and it is expected that the digital intellectualised body check services will enter an explosive period of growth.

Entertainment and Media; Healthcare and Wellness Services

For entertainment and media, the Group's only film project, "Moonfall", was released in FY2022. The film was screened on 4 February 2022 in the US and most countries or regions across the globe. It has also been on theatres in the PRC since 25 March 2022. The film nearly grossed equivalent of US$67.3 million worldwide. The PRC's box office revenue grossed approximately RMB158 million, ranking 5th among imported films in the first half of 2022. During 2022, the revenue from the ''Entertainment and Media'' segment amounted to approximately HK$151 million, similar to that of FY2021.

The Group is focusing on the internet healthcare services business, and has confirmed that it will not invest in new films and television projects. The Group is also actively seeking to sell or realise the Group's remaining film and television projects and investments, including its investment in HB Entertainment in South Korea.

For healthcare and wellness services, ''Bayhood No. 9 Club'', a Healthcare and Wellness Service of the Group, is one of the top green health clubs in the PRC. During 2022, the business of ''Bayhood No. 9 Club'' was affected by the epidemic in Beijing and had to suspend its operations. However, due to the strong market demand, operations of ''Bayhood No. 9 Club'' have quickly returned to normal upon service resumption. During FY2022, revenue of ''Bayhood No. 9 Club'' remained stable at approximately HK$ 111 million, remaining at a similar level to FY2021.

Mr. Yuen Hoi Po, Executive Director and Chief Executive Officer of Huayi Tencent Entertainment, said, "2022 was the year the Group came back into action. The PRC Government clearly claimed that supporting the development of internet healthcare, the healthcare digitalisation industry will get the great economic impetus. The Group has seen the right opportunity to transform its business strategy to Internet healthcare. Over the past two years, the results are beginning to emerge. The overall layout of core business, "Echartnow" and "Meerkat Health", is largely completed and the development has been well-established. "Echartnow" will launch a self-developed digitised management system product - "Cistanche project management platform" in the next step, to further provide professional SaaS products to pharmaceutical companies. "Meerkat Health" has outstanding performance in health consumption business this year. It has planned to work with pharmaceutical company so that building its own controlled sales channels for drugs and healthcare products to further