Shanghai Fosun Pharmaceutical : ANNOUNCEMENT (1) PROPOSED ADOPTION OF THE 2021 RESTRICTED SHARE INCENTIVE SCHEME (DRAFT) AND (2) CONNECTED TRANSACTIONS

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

ɪऎూ݋ᔼᖹ€ණྠٰ΅Ϟࠢʮ̡

Shanghai Fosun Pharmaceutical (Group) Co., Ltd.*

(a joint stock limited company incorporated in the People's Republic of China with limited liability)

(Stock Code: 02196)

ANNOUNCEMENT

(1) PROPOSED ADOPTION OF THE 2021 RESTRICTED SHARE

INCENTIVE SCHEME (DRAFT)

AND

(2) CONNECTED TRANSACTIONS

PROPOSED ADOPTION OF THE 2021 RESTRICTED SHARE INCENTIVE SCHEME (DRAFT)

The Board is pleased to announce that, on 12 March 2021, the Board approved the proposed adoption of the 2021 Restricted Share Incentive Scheme (Draft). The 2021 Restricted Share Incentive Scheme shall become effective upon approval of the Shareholders at the general meeting, A Share class meeting and H Share class meeting of the Company.

HONG KONG LISTING RULES IMPLICATIONS

The 2021 Restricted Share Incentive Scheme does not constitute a share option scheme under Chapter 17 of the Hong Kong Listing Rules. As the Restricted Shares are proposed to be granted to connected persons of the Company under the 2021 Restricted Share Incentive Scheme, therefore, they will constitute non-exempt connected transactions of the Company, which are subject to reporting, announcement and independent shareholder's approval requirements under Chapter 14A of the Hong Kong Listing Rules. An Independent Board Committee will be established by the Company to advise the independent Shareholders in respect of the grant of the Restricted Shares to the participants who are connected persons of the Company. The Company will also appoint an independent financial adviser to advise the Independent Board Committee and the independent Shareholders in respect of the grant of the Restricted Shares to the Participants who are connected persons of the Company.

GENERAL MEETING, CLASS MEETINGS AND CIRCULAR

General meeting, A Share class meeting and H Share class meeting will be convened for Shareholders to consider and, if thought fit, approve, among others, the proposed adoption of the 2021 Restricted Share Incentive Scheme and the proposed grant of Restricted Shares to connected persons of the Company. A circular containing, among other things, (i) terms of the 2021 Restricted Share Incentive Scheme, (ii) a letter to the Independent Board Committee and independent Shareholders from the independent financial advisor, which contains the opinion of the independent financial advisor on the Company's proposed grant plan to the Participants who are connected persons; (iii) the recommendation of the Independent Board Committee as to whether to approve the Company's proposed grant plan to the Participants who are connected persons; and (iv) the notices convening the general meeting the H Share class meeting, will be despatched to the Shareholders as soon as practicable after the date of general meeting and class meetings are determined.

PROPOSED ADOPTION OF 2021 RESTRICTED SHARE INCENTIVE SCHEME (DRAFT)

The Board is pleased to announce that, on 12 March 2021, the Board approved the proposed adoption of the 2021 Restricted Share Incentive Scheme (Draft). The 2021 Restricted Share Incentive Scheme shall become effective upon approval of the shareholders at the general meeting, A Share class meeting and H Share class meeting of the Company. The principal terms of the 2021 Restricted Share Incentive Scheme are summarised below:

I. PURPOSE OF THE INCENTIVE SCHEME

In order to further improve the corporate governance structure of the Group, promote the establishment and improvement of the incentive mechanism of the Company, fully mobilize the enthusiasm, sense of responsibility and mission of the Directors, senior management personnel, middle management personnel and core personnel, effectively align the interests of the Shareholders, the Group with the individual interests of the Participants to focus on and work collectively for the long-term development of the Group, the Incentive Scheme is formulated in accordance with the requirements under the Company Law, Securities Law, Administrative Measures and other relevant laws, regulations, regulatory documents and the Articles of Association.

II. SHARE INCENTIVE METHOD AND SOURCE OF TARGET SHARES

The incentive tool of the Incentive Scheme is Restricted Shares and the source of such Shares is from the issuance of A Shares to the Participants.

III. NUMBER OF RESTRICTED SHARES TO BE GRANTED

A number of up to 2,407,200 Restricted Shares are proposed to be granted to the Participants under the Incentive Scheme, the target shares in relation thereto represents approximately 0.094% of the total share capital of the Company of 2,562,898,545 Shares as at the date of the announcement on the Incentive Scheme. Specifically, a number of 2,286,800 Restricted Shares will be granted underthe First Grant representing approximately 0.089% of the total share capital of the Company of 2,562,898,545 Shares as at the date of the announcement on the Incentive Scheme; and a number of 120,400 Restricted Shares will be reserved for further grant representing approximately 0.005% of the total share capital of the Company of 2,562,898,545 Shares as at the date of the announcement of the Incentive Scheme. The reserved portion represents approximately 5% of the total Restricted Shares to be granted thereunder. The total number of Restricted Shares granted to a Participant under the Incentive Scheme does not exceed 1% of the total share capital of the Company as at the date of the announcement on the Incentive Scheme.

IV. THE SCOPE OF THE PARTICIPANTS AND THEIR RESPECTIVE SHARES TO BE

GRANTED

(I). Basis for determining the Participants

• 1. Legal basis for determining the Participants

  The Participants of the Incentive Scheme are determined in accordance with the Company Law, the Securities Law, the Administrative Measures and the requirements under other relevant laws, regulations, regulatory documents and the Articles of Associations and the actual situation of the Company.

• 2. Positions held by the Participants in the Company

  The Participants under the Incentive Scheme shall include the Directors (other than independent non-executive Directors), senior management personnel, middle management personnel, core technology (business) personnel and core cadres of the Company as considered by the Board having made contribution directly to the overall business performance and sustainable development of the Group.

(II).Participants to be covered

The total number of Participants proposed at the First Grant under the Incentive Scheme is 88, representing 0.27% of the total employees of the Company as at 31 December 2020, which comprising:

• 1. the executive Director, senior management personnel;

• 2. middle management personnel, core technology (business) personnel;

• 3. core cadres having made contribution directly to the overall business performance and sustainable development of the Group.

The detailed list of Participants and their respective allocation shall be determined by the Board and reviewed by the supervisory committee, subject to the relevant procedures in the event of approval at the general meeting, A Share class meeting and H Share class meeting is required.

None of the Participant under the Incentive Scheme is an independent non-executive Director, supervisor, Shareholder individually or collectively holding more than 5% of the Shares or actual controller and their respective spouse, parents or children.

The Director and senior management personnel of the Company among the above Participants were elected at the general meetings of the Company or hired by the Board. All Participants must be employed or hired by the Company or its Subsidiaries during the term of the Incentive Scheme and at the time of grant thereunder.

The Participants for the reserved shares to be granted shall be determined within 12 months from the date on which the Incentive Scheme is considered and approved at the general meeting, A Share and H Share class meetings of the Company. Following the proposals from the Board, issue of clear opinions by the independent non-executive Directors and the supervisory committee of the Company as well as issue of professional opinions and legal opinions by the legal advisers, the Company shall promptly and accurately disclose the relevant information on such Participants on the designated website pursuant to the relevant requirements. The reserved entitlements shall become invalid where the Participants for the Reserved Grant are not determined after 12 months from the aforesaid date. The basis for determining the Participants of the Reserved Grant shall be ascertained with reference to the basis of the First Grant.

(III). Allocation of the Restricted Shares to be granted to the Participants

Subject to the results of the Company's internal announcement of the name and position of the Participants, the allocation of the Restricted Shares under the First Grant of Incentive Scheme among all Participants is set out in the table below:

Proportion

Number of	in the total	Proportion
Restricted	number of	of Restricted	Proportion
Shares to	shares to be	Shares in the	of Restricted
be Granted	granted under	total share	Shares in the
#	Name	Position	(0'000 shares)	First Grant	capital	total A Shares
1.	WU Yifang*	Executive Director,	24.04	10.51%	0.00938%	0.01195%
chairman and chief
executive officer (CEO)
2.	LIU Qiang*	Senior assistance to CEO	13.11	5.73%	0.00512%	0.00652%
3.	WANG Kexin*	Co-president	13.11	5.73%	0.00512%	0.00652%
4.	LI Dongming*	Co-president	13.11	5.73%	0.00512%	0.00652%
5.	GUAN Xiaohui*	Executive president and	13.11	5.73%	0.00512%	0.00652%
chief financial officer
(CFO)
6.	MEI Jingping	Senior vice president	8.74	3.82%	0.00341%	0.00435%
7.	WEN Deyong*	Senior vice president	8.74	3.82%	0.00341%	0.00435%
8.	WANG Donghua	Senior vice president	8.74	3.82%	0.00341%	0.00435%
9.	LI Dongjiu	Senior vice president	8.74	3.82%	0.00341%	0.00435%

Proportion

Number of	in the total	Proportion
Restricted	number of	of Restricted	Proportion
Shares to	shares to be	Shares in the	of Restricted
be Granted	granted under	total share	Shares in the
(0'000 shares)	First Grant	capital	total A Shares
8.74	3.82%	0.00341%	0.00435%
1.75	0.77%	0.00068%	0.00087%
4.37	1.91%	0.00171%	0.00217%
4.37	1.91%	0.00171%	0.00217%
6.56	2.87%	0.00256%	0.00326%
4.37	1.91%	0.00171%	0.00217%
6.56	2.87%	0.00256%	0.00326%
3.50	1.53%	0.00137%	0.00174%
1.75	0.77%	0.00068%	0.00087%
1.75	0.77%	0.00068%	0.00087%
Other middle management personnel and core cadres of the	73.52	32.15%	0.02869%	0.03656%
Group (total: 69)
TOTAL	228.68	100.00%	0.08923%	0.11372%
Note:

#

Name

Position

• 10. FENG Rongli*

• 11. LI Shengli*

• 12. WANG Yao*

  Senior vice president Senior vice president Vice president

• 13. DONG Xiaoxian

• 14. LIU Yi*

• 15. ZHANG Yuejian

• 16. BAO Qingui

• 17. SU Li*

• 18. ZHOU Yong*

  Vice president, secretary to the Board and joint company secretary Vice president Vice president Vice president Assistance to president Executive general manager of human resources department

• 19. KONG Deli

Standing vice president of global R&D centre

*Participants who are connected persons: chief executive, director and/or supervisor of the Company and/or its Subsidiaries.

• 1. The total number of Shares granted or to be granted to a Participant listed above under valid share incentive schemes does not exceed 1% of the Company's current total share capital;

• 2. The total number of target shares under all existing equity incentive schemes of the Company does not exceed 10% of the total share capital of the Company as at the date of the announcement on the Incentive Scheme (i.e. 2,562,898,545 shares);

• 3. Any difference between the figures shown as totals and the sum of the corresponding figures above results from the rounding of the above data.

V. GRANT PRICE AND THE BASIS OF DETERMINATION (I). Grant Price of the Restricted Shares under the First Grant

The Grant Price of the Restricted Shares under the First Grant shall be RMB22.58 per share. Upon fulfilment of grant conditions, each Participant is entitled to purchase the A Shares newly issued to the Participants by the Company at the price of RMB22.58 per share.

(II).Basis for determining the Grant Price of the Restricted Shares under the First Grant

The Grant Price of the Restricted Shares under the First Grant of the Incentive Scheme shall not be less than the nominal value of the Shares, and shall not be less than the higher of the following prices:

• 1. 50% of the average trading price of the A Shares of RMB39.75 per share on the last trading day immediately preceding the date of the announcement of the Incentive Scheme, which is RMB19.88 per share; and

• 2. 50% of the average trading price of the A Shares of RMB45.15 per share on the last 20 trading days immediately preceding the date of the announcement of the Incentive Scheme, which is RMB22.58 per share.

(III). Basis for determining the Grant Price of the Restricted Shares under the Reserved Grant

The grant of the reserved Restricted Shares is subject to the consideration and passing of related resolutions by the Board and the disclosure of related information. If any of the Participants for the Reserved Grant is connected person, the grant shall be made and disclosed in accordance with the requirements and procedures under the Hong Kong Listing Rules.

The grant price of the reserved Restricted Shares shall not be lower than the nominal value of the Shares, and not lower than the higher of the followings:

• 1. 50% of the average trading price of the A Shares on the last trading day immediately preceding the date of the announcement of Board resolutions on the Reserved Grant;

• 2. 50% of the average trading price of the A Shares on the last 20, 60 or 120 trading days immediately preceding the date of the announcement of Board resolutions on the Reserved Grant; and

• 3. the price of the Restricted Shares granted under the First Grant.

VI. TERM, GRANT DATE, LOCK-UP PERIOD, UNLOCKING DATE, RELEVANT SELLING

RESTRICTIONS OF THE INCENTIVE SCHEME

(I). Term

The term of the Incentive Scheme shall be commencing from the completion date of registration of the Restricted Shares under the First Grant and ending on the date of all the Restricted Shares granted to the Participants having unlocked or repurchased and cancelled, the maximum period of which shall not exceed 60 months.

(II).Grant Date

The Incentive Scheme as considered and approved by the Board at the 36th extraordinary meeting of the eighth session of the Board held on 12 March 2021 is subject to approval of the Shareholders at the general meeting, A Share class meeting and H Share class meeting of the Company, and the relevant resolutions having passed by the Board do not constitute a grant of Restricted Shares to Participants under the Incentive Scheme. The Restricted Shares under the Incentive Scheme shall only be granted after the Incentive Scheme is considered and approved by the Shareholders at the general meeting, A Share and H Share class meetings of the Company and, after which, be further formally considered and approved by the Board. The Grant Date shall at that time be determined by the Board. Before the aforementioned procedures are completed, the Company has no right, whether conditionally or unconditionally, to grant any Restricted Shares or any other security interests or make any offer or grant any rights to the Participants. Subject to the completion of the aforementioned procedures, the Company shall grant the Restricted Shares and complete the registration and announcement procedures within 60 days from the date on which the Incentive Scheme is considered and approved at the general meeting, A Share and H Share class meetings of the Company. If the Company fails to complete the above work within 60 days, it shall promptly disclose the reasons and terminate the implementation of the Incentive Scheme, the Restricted Shares which have not been granted shall be lapsed and no further consideration of share incentive plan within 3 months therefrom. Any period during which no grant of entitlements is allowed pursuant to the Administrative Measures and other relevant laws and regulations shall not be counted toward the above mentioned 60-day period.

Notwithstanding the aforementioned stipulations, where a Participant who is a Director or a member of the senior management of the Company reduces his/her shareholding in the Company within 6 months prior to the grant of the Restricted Shares, and provided that, there is no insider dealings having made due investigation, the grant of the Restricted Shares shall be postponed for 6 months from the date of the latest of such shareholding reduction in accordance with the short-term trading requirements under the Securities Law.

The Grant Date must be a trading day of A Shares, and no grant of Restricted Shares shall be taken place during the following period:

• 1. within 30 days prior to the announcement of any periodic results of the Company (within 60 days in the event of annual results), in the event of delay in publication of the periodic results due to special circumstances, such period shall commence from 30 days prior to the original date of publication;

• 2. within 10 days prior to the publication of performance forecast or preliminary performance results;

• 3. during the period that any significant transaction or significant event of the Group is in the process of decision-making until the second trading day following the announcement of such event;

• 4. the period commencing from the date of occurrence of any significant event which may have significant effect on the trading prices of the Company's securities or the date on which relevant decision-making procedures start and ending on the second trading day following the publication in accordance with laws; and

• 5. such other period as stipulate by the CSRC and Shanghai Stock Exchange.

The "significant transaction", "significant event" and "may have significant effect on the trading prices of the Company's securities" as referred to above means any transaction or other significant event is required to be disclosed under the Rules Governing the Listing of Stock on Shanghai Stock Exchange and the listing rules of the stock exchange and relevant laws and regulations of the place where the securities of the Company are listed.

(III). Lock-up Period and unlocking arrangement

The Lock-up Period of the Restricted Shares granted under the Incentive Scheme shall be 12 months, 24 months and 36 months from the relevant completion date of registration of the Restricted Shares under the corresponding grant. The Restricted Shares granted to the Participants under the Incentive Scheme shall not be transferred, pledged or used for repayment of debt during the Lock-up Period.

The unlocking schedule and arrangements for the Restricted Share to be granted under the First Grant are set out below:

Proportion of the unlocked Restricted Shares

Unlocking Period for the Restricted Shares under the First Grant Unlocking Schedule

in the total Restricted Shares to be granted

First Unlocking Period Commencing from the first trading day after 33% expiry of the 12-month period from the date of completion of registration of certain corresponding Restricted Shares under the First Grant and ending on the last trading day of the 24-month period from the date of completion of registration of certain corresponding Restricted Shares under the First Grant

Second Unlocking PeriodCommencing from the first trading day after 33% expiry of the 24-month period from the date of completion of registration of certain corresponding Restricted Shares under the First Grant and ending on the last trading day of the 36-month period from the date of completion of registration of certain corresponding Restricted Shares under the First Grant

Third Unlocking Period Commencing from the first trading day after 34% expiry of the 36-month period from the date of completion of registration of certain corresponding Restricted Shares under the First Grant and ending on the last trading day of the 48-month period from the date of completion of registration of certain corresponding Restricted

Shares under the First Grant

Proportion of the unlocked

Unlocking Period for the Restricted Shares under the Reserved Grant

Unlocking ScheduleRestricted Shares in the total Restricted Shares to be granted

First Unlocking Period Commencing from the first trading day after 33% expiry of the 12-month period from the date of completion of registration of certain corresponding Restricted Shares under the Reserved Grant and ending on the last trading day of the 24-month period from the date of completion of registration of certain corresponding Restricted Shares under the Reserved Grant

Second Unlocking Period

Commencing from the first trading day after 33% expiry of the 24-month period from the date of completion of registration of certain corresponding Restricted Shares under the Reserved Grant and ending on the last trading day of the 36-month period from the date of completion of registration of certain corresponding Restricted Shares under the Reserved Grant

Third Unlocking Period Commencing from the first trading day after 34% expiry of the 36-month period from the date of completion of registration of certain corresponding Restricted Shares under the Reserved Grant and ending on the last trading day of the 48-month period from the date of completion of registration of certain corresponding Restricted Shares under the

Reserved Grant

Proportion of the unlocked

Unlocking Period for the Restricted Shares under the Reserved Grant

Unlocking ScheduleRestricted Shares in the total Restricted Shares to be granted

First Unlocking Period Commencing from the first trading day after 50% expiry of the 12-month period from the date of completion of registration of certain corresponding Restricted Shares under the Reserved Grant and ending on the last trading day of the 24-month period from the date of completion of registration of certain corresponding Restricted Shares under the Reserved Grant

Second Unlocking Period

Commencing from the first trading day after 50% expiry of the 24-month period from the date of completion of registration of certain corresponding Restricted Shares under the Reserved Grant and ending on the last trading day of the 36-month period from the date of completion of registration of certain corresponding Restricted Shares under the Reserved Grant

During the Lock-up Period of the Restricted Shares, the cash dividend in respect of the Restricted Shares granted to the Participants shall be held by the Company and payable to the Participant upon unlocking; and in the event of the Restricted Shares are unable to be unlocked, the corresponding cash divided shall be forfeited by the Company.

During the Unlocking Period, the Company shall deal with the unlocking formalities for the Participants, whose conditions of unlocking have been satisfied. The Restricted Shares held by the Participants who failed to satisfy the unlocking conditions, or failed to apply for unlock the relevant Restricted Shares within the prescribed period as listed above, shall be repurchased by the Company at the repurchase price equal to the Grant Price in accordance with the terms of the Incentive Scheme and cancelled accordingly.

The Shares acquired by the Participants by virtue of holding the Restricted Shares arising from capitalisation issue, bonus issue and share sub-division shall be subject to lock-up provisions in accordance with the Incentive Scheme, and shall not be sold in the secondary market orotherwise transferred. The unlocking period of such Shares is the same as that of the restricted shares. If the Company repurchases the Restricted Shares not yet unlocked, such Shares shall be repurchased at the same time.

(IV). Selling restrictions

The selling restrictions in respect of the Restricted Shares under the Incentive Scheme shall be implemented in accordance with the Company Law, the Securities Law and the relevant laws, regulations, regulatory documents and the Articles of Association, the details of which are as follows:

• 1. Where a Participant is a Director or a member of the senior management of the Company, the number of Shares that may be transferred thereby in each year during his/her term of office shall not exceed 25% of the total number of Shares held thereby as at the end of preceding year; and no transfer of Shares shall be made within 6 months from departure;

• 2. Where a Participant, being a Director or a member of the senior management of the Company, disposes any Shares held thereby within 6 months after acquisition of such Shares or acquire such Shares within 6 months after disposal, the gains arising therefrom shall be accounted to the Company, and the Company shall forfeit all such gains;

• 3. The reduction of shareholding by a Participant shall also be made in compliance with Several Provisions on Reduction in Shareholding by Substantial Shareholders, Directors, Supervisors and Senior Management Personnel of Listed Companies issued by the CSRC, Shanghai Stock Exchange Implementing Rules for the Reduction of Shares by Shareholders, Directors, Supervisors and Senior Executives of Listed Companies and other relevant stock exchange listing rules and the relevant laws and regulations of the place where the Company's shares are listed;

• 4. If, during the term of the Incentive Scheme, there is any amendment to the requirements regarding transfer of shares by a director and a member of the senior management of the Company under the Company Law, the Securities Law and other relevant laws, regulations, regulatory documents and the Articles of Association, such amended requirements thereunder shall apply to the shares transferred by the Participants during the relevant times.

VII.CONDITIONS OF GRANT AND UNLOCKING OF RESTRICTED SHARES

(I). Conditions of grant of Restricted Shares

The Restricted Shares will only be granted to the Participants upon satisfaction of all the following conditions:

• 1. There is no occurrence of any of the following events on the part of the Company:

  • (1) issue of an auditors' report with adverse opinion or which indicates an inability to give opinion by a certified public accountant with respect to the financial report of the Company for its most recent accounting year;

  • (2) issue of an auditors' report with adverse opinion or which indicates an inability to give opinion by a certified public accountant with respect to the internal control of the financial report of the Company for its most recent accounting year;

  • (3) failure to conduct profit distribution in accordance with laws and regulations, the Articles of Association and public undertakings during the last 36 months after listing;

  • (4) prohibition from implementation of a share incentive scheme by laws and regulations; and

  (5) other circumstance as determined by the CSRC.

• 2. There is no occurrence of any of the following events on the part of the Participants:

  • (1) he or she has been determined by any stock exchange as an ineligible person in the last 12 months;

  • (2) he or she has been determined by the CSRC and its delegated agencies as an ineligible person in the last 12 months;

  • (3) he or she has been imposed by the CSRC or its delegated agencies with administrative penalties or measures prohibiting access into the market in the last 12 months due to material non-compliance of laws or regulations;

  • (4) he or she is prohibited from acting as a director or a member of the senior management as required by the Company Law;

  • (5) he or she is prohibited from participating in share incentive schemes of listed companies as required by laws and regulations; and

  • (6) other circumstances as determined by the CSRC.

(II).Unlocking conditions for the Restricted Shares

During the Unlocking Period, the Restricted Shares granted to the Participants may only be unlocked upon satisfaction of all the following conditions:

• 1. There is no occurrence of any of the following events on the part of the Company:

  • (1) issue of an auditors' report with adverse opinion or which indicates an inability to give opinion by a certified public accountant with respect to the financial report of the Company for its most recent accounting year;

  • (2) issue of an auditors' report with adverse opinion or which indicates an inability to give opinion by a certified public accountant with respect to the internal control of the financial report of the Company for its most recent accounting year;

  • (3) failure to conduct profit distribution in accordance with laws and regulations, the Articles of Association and public undertakings during the last 36 months after listing;

  • (4) prohibition from implementation of a share incentive scheme by laws and regulations; and

  (5) other circumstance as determined by the CSRC.

  Upon occurrence of any above listed event, all Restricted Shares granted to the Participant under the Incentive Scheme but not yet unlocked shall be repurchased by the Company at the Grant Price and cancelled accordingly.

• 2. There is no occurrence of any of the following events on the part of the Participants:

  • (1) he or she has been determined by any stock exchange as an ineligible person in the last 12 months;

  • (2) he or she has been determined by the CSRC and its delegated agencies as an ineligible person in the last 12 months;

  • (3) he or she has been imposed by the CSRC or its delegated agencies with administrative penalties or measures prohibiting access into the market in the last 12 months due to material non-compliance of laws or regulations;

  • (4) he or she is prohibited from acting as a Director or a member of the senior management as required by the Company Law;

  • (5) he or she is prohibited from participating in share incentive schemes of listed companies as required by laws and regulations; and

(6) other circumstances as determined by the CSRC.

Upon occurrence of any above listed event on part of a Participant, the Restricted Shares granted to such Participant under the Incentive Scheme but not yet unlocked shall be repurchased by the Company at the Grant Price and cancelled accordingly.

3. Performance appraisal at the Group's level

Under the Incentive Scheme, the performance target of the Group shall be appraised on an annual basis during the 3 financial years from 2021 to 2023, and the appraisal shall be made once in each financial year. The "attributable net profit after deduction of non-recurring profit and loss" (A) or "attributable net profit after deduction of non-recurring profit and loss + R&D expenses" (B) of each appraisal year shall be assessed, and calculate the ratio for unlocking the Restricted Shares at the Group's level in each year based on the above target.

(1) The performance target of the Group (Am and Bm) are as follows:

Unit: RMB billion

Attributable Net profitAttributable Net profit after deduction Note 1 (A)after deduction + R&D expenses Note 1 (B)Target valueIncrease rate compared to

Increase rate

Target value compared toUnlocking PeriodAppraisal year

(Am)

2019

(Bm) 2019

• First Unlocking Period of First Grant/First Unlocking Period of Reserved Grant

  2021

  3.127

  40%

  5.814 36%

• Second Unlocking

  Period of First Grant/Second Unlocking Period of Reserved Grant

  2022

  3.730

  67%

  6.840 60%

• Third Unlocking Period of First Grant/Third Unlocking Period of Reserved Grant

2023

4.467

100%

8.037 88%

Notes:

1. The "attributable net profit after deduction" mentioned above refers to net profit attributable to equity holders of listed company after deduction of non-recurring profit of loss (prepared in accordance with China Accounting Standards for Business Enterprises), and subject to the auditors' report of the relevant financial year, the same as below.

• 2. The "attributable net profit after deduction" for the year 2019 was RMB2.234 billion, and the "attributable net profit after deduction + R&D expenses" for the year 2019 was RMB4.275 billion.

• 3. During the period of appraisal, the R&D expenses incurred in the relevant appraisal year, through a joint venture company set up by the Group carrying out innovative R&D, shall be accounted for in proportion to the interest held by the Group, the same as below.

• 4. The "R&D expenses" shall be calculated based on the auditors' report of the relevant financial year taking into account of the adjustment mechanism under the Incentive Scheme, the same as below.

• 5. During the appraisal period, the Board may be authorised to decide, if thought fit, to exclude the relevant profit and loss where there is material effect resulting from asset restructuring, the same as below.

In the event of the grant of Reserved Shares taking place in 2021, the performance targets for the reserved portion shall be the same as those of the First Grant; and in the event of the grant of Reserved Shares taking place in 2022, the performance targets for the years 2022 and 2023 above shall apply to the performance target for the reserved portion.

(2) With respect to any appraisal year, where any of the trigger values in such year is achieved, the trigger value (An or Bn) = target value Am or Bm Ò 90%, the unlocking percentage ratio shall be determined according to the unlocking scores, the details of which are set out below:

The unlocking score X = (the higher of: "actual value of A/Am" and "actual value of B/Bm") Ò 100

Range of the score (X)	Unlocking percentage ratio (M)
X < 90 scores	0
90 scores ≤ X < 95 scores	80%
95 scores ≤ X < 100 scores	(X/100) %
X ≥ 100 scores	100%

(3) With respect to any appraisal year, where none of the trigger values (An and Bn) of the appraisal indicators is achieved, all corresponding Restricted Shares of the Participants for such year pending unlocking shall not be unlocked, and shall be repurchased by the Company at the Grant Price and cancelled accordingly.

4. Performance appraisal at individual level

Where the performance targets at the Group's level have been achieved, a Participant is only entitled to unlock the Restricted Shares upon achieving the benchmark of "Target Achieved" (GP) or above in his performance appraisal in the relevant appraisal year in accordance with the Company's administrative measures in respect of remuneration and performance appraisal, otherwise, the corresponding Restricted Shares for the relevant appraisal year shall be repurchased by the Company at Grant Price and cancelled accordingly.

(III). Scientificity and reasonableness on the formulation of the appraisal indicators

The appraisal indicators of the Incentive Scheme are categorized into two levels, i.e. performance appraisal at the Group's level and performance appraisal at the individual level.

The performance appraisal indicators at the Group's level are "attributable net profit after deduction" and "attributable net profit after deduction + R&D expenses", which were formulated based on the strategic development planning of the Group and its development phase, and are giving consideration to challenge and realisability.

In addition to the performance appraisal at the Group's level, the Incentive Scheme also contains the individual performance appraisal system, which may serve the purpose of evaluating the Participants' performance accurately and comprehensively. The Company will determine whether a Participant has achieved the unlocking conditions based on the annual appraisal results of the Participants.

Given the above, the appraisal indicators for the Incentive Scheme is all-around and operable, which may serve the appraisal goal for the Incentive Scheme.

VIII. METHODS AND PROCEDURES FOR ADJUSTMENT OF THE INCENTIVE SCHEME

(I). Method of adjustment to the number of Restricted Shares

In the event of any capitalisation issue, bonus issue, sub-division, rights issue or share consolidation of the Company in the period from the date of the announcement on the Incentive Scheme to the completion of registration of Restricted Shares by the Participants, the number of Restricted Shares shall be adjusted accordingly. The adjustment method is as follows:

1. Capitalisation issue, bonus issue, sub-division

Q = Q0 Ò (1 + n)

Where: Q0 represents the number of Restricted Shares before the adjustment; n represents the ratio of increase of share resulting from the issue of shares by capitalisation issue, bonus issue and share split (i.e. the number of shares increased per shareupon capitalisation issue, bonus issue or share split); Q represents the number of Restricted Shares after the adjustment.

• 2. Rights issue

  Q = Q0 Ò P1 Ò (1 + n) Ó (P1 + P2 Ò n)

  Where: Q0 represents the number of Restricted Shares before the adjustment; P1 represents the closing price as at the record date for the rights shares; P2 represents the price of the rights issue; n represents the ratio of the rights issue (i.e. the ratio of the number of shares to be issued under the rights issue to the total share capital of the Company before the rights issue); Q represents the number of Restricted Shares after the adjustment.

• 3. Share consolidation

  Q = Q0 Ò n

  Where: Q0 represents the number of Restricted Shares before the adjustment; n represents the ratio of consolidation of shares (i.e 1 share of the Company in consolidated to n shares); Q represents the number of Restricted Shares after the adjustment.

• 4. Dividend and issue of shares

  Where the Company declares dividend or issue new shares, no adjustment to the number of Restricted Shares.

(II).Method of adjustment to the Grant Price of Restricted Shares

In the event that, from the date of the announcement on the Incentive Scheme to the registration of the restricted shares by the participants, any dividend distribution, issue of shares by capitalisation issue, bonus issue, sub-division, rights issue or share consolidation has been made, an adjustment to the grant price of restricted shares shall be made by the Company accordingly. The adjustment method is as follows:

1. Capitalisation issue, bonus issue, sub-division

P = P0 Ó (1 + n)

Where: P0 represents the Grant Price before the adjustment; n represents the ratio of increase of shares resulting from the issue of shares by capitalisation issue, bonus issue and share split; P represents the Grant Price after adjustment

• 2. Rights issue

  P = P0 Ò(P1 + P2 Ò n)Ó [P1 Ò(1 + n)]

  Where: P0 represents the Grant Price before the adjustment; P1 represents the closing price as at the record date for the rights shares; P2 represents the price of the rights issue; n represents the ratio of the rights issue (i.e. the ratio of the number of shares to be issued under the rights issue to the total share capital of the Company before the rights issue); P represents the Grant Price after adjustment.

• 3. Share consolidation

  P = P0 Ó n

  Where: P0 represents the Grant Price before the adjustment; n represents the proportion of a share that may result from consolidation; P represents the Grant Price after adjustment.

• 4. Declaration of dividend

  P = P0-V

  Where: P0 represents the Grant Price before the adjustment; V represents the dividend per share; P represents the Grant Price after adjustment. After adjustment, P must still be a positive figure.

• 5. Issue of shares

  Where the Company issues new shares, no adjustment to the Grant Price of Restricted Shares.

(III). Procedures for adjustment to the Incentive Scheme

The shareholders meeting of the Company shall authorise the Board to adjust the number or the grant price of Restricted Shares for the above reasons. The Company will engage legal advisers to give professional advice to the Board on whether such adjustment is in compliance with the Administrative Measures, the Articles of Association and the Incentive Scheme. After the consideration and approval of the adjustment plan by the Board, the Company shall promptly make announcement on such Board resolutions as well as the legal advice.

IX. PROCEDURES OF IMPLEMENTATION OF THE INCENTIVE SCHEME

(I). Procedures for effectuating the Incentive Scheme

• 1. The remuneration and appraisal committee of the Board shall be responsible for prepare the Incentive Scheme, and submit to the Board for consideration.

• 2. The Board shall consider and approve the Incentive Scheme, any Director who is a proposed Participant or has related relationship shall abstain from voting. The independent non-executive Directors and supervisory committee shall independently opine on matters as to whether the Incentive Scheme may benefit the Group's sustainable development, and whether there is any notifiable damage to the interests of the Company the Shareholders as a whole.

• 3. The Company shall, among others, within 2 business days after the Incentive Scheme is considered and approved by the Board, announce the Board resolutions, the summary of the Incentive Scheme and the opinion of the independent non-executive Directors.

• 4. The Company shall engage legal advisers to issue legal opinion on the Incentive Scheme and announce such legal opinion.

• 5. The Company shall circulate notices convening the general meeting, A Share class meeting and H Share class meeting of the Company.

• 6. The Company shall internally publish the names and the positions of the Participants before the general meeting, the A Share class meeting and the H Share class meeting of the Company are convened through its website or other channels for a period of no less than 10 days. The supervisory committee shall verify the list of the Participants and thoroughly consider opinions from the public. The Company shall publish the opinions of the supervisory committee on the verification and the public opinions in relation to the list of the participants 5 days before the Incentive Scheme is considered at a general meeting, the A Share class meeting and the H Share class meeting of the Company.

• 7. The Company should carry out self-investigation on the trading of shares of the Company by insiders during the 6-month period prior to the announcement on the Incentive Scheme, and make statement as to whether there is any insider dealing.

• 8. The independent non-executive Directors shall solicit proxy voting rights from all Shareholders regarding the Incentive Scheme.

• 9. Where a general meeting, A Share class meeting and H Share class meeting of the Company are convened for considering and approving the Incentive Scheme, voting in person as well as online voting shall be made available. The Company will convene the general meeting, A Share class meeting and H Share class meeting of the Company making available for voting in person and online (note: online voting is only available

for A shareholders of the Company), and the resolutions shall be passed by more than 2/3 of the voting shares held by the Shareholders present at the meetings, respectively. The voting by Directors, supervisors and senior management of the Company, as well as by the Shareholder other than individually or collectively holding more than 5% of the Shares, will be separately counted and disclosed. Shareholders who are proposed Participants or having related relationship with any Participants shall abstain from voting.

10. After the Incentive Scheme has been considered and approved at the general meeting, A

Share class meeting and H Share class meeting of the Company, and the conditions for grant under the Incentive Scheme are satisfied, the Company shall grant the Restricted Shares to the Participants within the prescribed period. According to the authorisation granted at the general meeting, A Share class meeting and H Share class meeting of the Company, the Board shall be responsible for grant, unlocking, repurchase and cancellation of the Restricted Shares.

(II).Procedures for grant of the Restricted Shares

• 1. Upon the consideration and approval of the Incentive Scheme at the general meeting, A Share class meeting and H Share class meeting of the Company, the Board shall determine the Grant Date and announce the same. The Board shall consider whether the conditions of a grant to a Participant as set out in the Incentive Scheme have been satisfied, and the independent non-executive Directors and supervisory committee shall both express their views. The legal advisers shall issue legal opinion on whether the conditions for the grant to Participants are fulfilled or not. The supervisory committee shall verify the list of Participants on the Grant Date of the Restricted Shares and issue their view on such verification.

• 2. If there is any discrepancy between the grant of the Restricted Shares to the Participants and the arrangement of the share Incentive Scheme, the independent non-executive Directors, the supervisory committee and the legal advisers shall all express their views explicitly.

• 3. The Company will duly convene the Board meeting to proceed with the grant to the Participants and complete the registration procedures within 60 days after the Incentive Scheme is considered and approved at the general meeting, A Share class meeting and H Share class meeting of the Company and satisfaction of conditions for the grant of the Restricted Shares. In the event the Company fails to complete the procedures mentioned above within such 60 days, the Incentive Scheme shall be terminated, and the Board shall disclose the reason for such failure timely and shall not be allowed to consider the share incentive plan within the following 3 months. Any period during which no grant of entitlements is allowed pursuant to the Administrative Measures and other relevant laws and regulations shall not be counted toward the above mentioned 60-day period.

• 4. Upon the consideration and approval of the Incentive Scheme at the general meeting, A Share class meeting and H Share class meeting of the Company, the Incentive Scheme shall

be implemented, the Company shall sign an agreement relating to the grant of Restricted Shares in 2021 with each Participant in accordance with the Incentive Scheme; the Board shall deal with the matters relating to the grant of Restricted Shares pursuant to the authorisation granted by the Shareholder at the general meeting, A Share class meeting and H Share class meeting of the Company. The Grant Date must be a trading day of A Shares.

• 5. The Participants shall pay the consideration for subscribing for the Restricted Shares into the account designated by the Company, subject to confirmation by a certified public accountant, otherwise, the Participant shall be deemed as having waived his or her right to subscribe for the Restricted Shares.

• 6. Where a Participant who is a Director or a member of the senior management of the Company reduces his/her shareholding in the Company within 6 months prior to the grant of the Restricted Shares, and provided that, having made due investigation, there is no insider dealings, the grant of the Restricted Shares shall be postponed for 6 months from the date of the latest of such shareholding reduction in accordance with the short-term trading requirements under the Securities Law.

• 7. The Company shall make an application to the Shanghai Stock Exchange first before any entitlements are granted, and the Securities Depository will conduct registration procedure thereof upon confirmation by Shanghai Stock Exchange.

• 8. Upon completion of grant of Restricted Shares, in case of change in the registered capital of the Company, the Company shall complete the registration formalities with the relevant administration for industry and commerce.

(III). Procedures for unlocking the Restricted Shares

• 1. The Company shall confirm whether the Participants satisfy the unlocking conditions before the unlocking date. The Board shall consider whether the unlocking conditions as set out in the Incentive Scheme have been satisfied. The independent non-executive Directors and the supervisory committee shall both express their views explicitly. The legal advisers shall issue legal opinions on whether the conditions for the unlocking by the Participants are fulfilled or not. For the Participants who satisfy the unlocking conditions, the Company shall handle the unlocking at its discretion, and for the Participants who fail to satisfy the unlocking conditions, the Company will repurchase and cancel the Restricted Shares corresponding to the Unlocking Period. The Company shall disclose the implementation thereof timely by way of announcement.

• 2. A Participant may transfer the unlocked Restricted Shares, but the transfer of shares held by the Directors and senior management of the Company shall be in compliance with the requirements of relevant laws, regulations and regulatory documents.

• 3. Before the unlocking of Restricted Shares of the Participants, the Company shall apply to the Shanghai Stock Exchange, and upon confirmation by the Shanghai Stock Exchange, the Securities Depository shall handle the relevant registration and clearing matters.

X. RESPECTIVE RIGHTS AND OBLIGATIONS OF THE COMPANY AND PARTICIPANTS

(I). Rights and obligations of the Company

• 1. The Company shall have the right to construe and execute the Incentive Scheme and shall appraise the performance of the participants based on the requirements under the Incentive Scheme. If a Participant fails to fulfill the unlocking conditions required under the Incentive Scheme, the Company will repurchase and cancel the restricted shares, which have not been unlocked by the Participants, in accordance with the principles under the Incentive Scheme.

• 2. The Company undertakes not to provide loans and financial support in any other forms, including providing guarantee for loans, to the Participants for acquiring the Restricted Shares under the Incentive Scheme.

• 3. The Company shall withhold and pay, on behalf of the Participants, the individual income tax and other tax payment due in accordance with the relevant tax laws and regulations.

• 4. The Company shall discharge its obligations in a timely manner in relation to report and information disclosure under the Incentive Scheme in accordance with the relevant requirements, and shall undertake the relevant information disclosure documents on the Incentive Scheme do not contain false statement, misleading or material omissions.

• 5. The Company shall actively support the Participants who have fulfilled the unlocking conditions to unlock the Restricted Shares in accordance with the relevant requirements including those of the Incentive Scheme, the CSRC, the Shanghai Stock Exchange, the Securities Depository. However, the Company disclaims any liability for losses incurred by the Participants who fail to unlock the Restricted Shares at their own will due to reasons on part of the CSRC, the Shanghai Stock Exchange and the Securities Depository.

• 6. The Company confirms that the eligibility of the Participants under the Incentive Scheme does not represent the right of such Participants to continue to serve the Company and does not constitute a commitment of employment for a fixed term by the Company. The employment relationship between the Company and a Participant is still governed by the employment contract between the parties.

• 7. Other relevant rights and obligations under the laws and regulations.

(II).Rights and obligations of the Participants.

• 1. A Participant shall comply with the requirements of his/her position as stipulated by the Company, and shall work diligently and responsibly, strictly observe professional ethics, and make contribution to the development of the Company.

• 2. The source of funds shall be self-financed by the Participants.

• 3. The Restricted Shares granted to the Participants shall not be transferred or used as guarantee or for repayment of debt.

• 4. Any gains of the Participants generated from the Incentive Scheme are subject to individual income tax and other taxes according to the relevant tax laws and regulations.

• 5. The Participants undertake, where false statements or misleading statements in or material omissions from the information disclosure documents of the Company result in non-compliance with condition of grant of the entitlements, the Participants concerned shall return to the Company all interests gained through the Incentive Scheme calculated from the date when it is confirmed that the relevant information disclosure documents of the Company contain false statement or misleading representations or material omissions.

• 6. Other relevant rights and obligations under the laws and regulations.

XI. PROCEDURES FOR AMENDMENT AND TERMINATION OF THE INCENTIVE SCHEME

(I). Procedures for amendment to the Incentive Scheme

• 1. If the Company intends to amend the Incentive Scheme before it is considered at the general meeting, A Share class meeting and H Share class meeting of the Company, such amendments shall be considered and approved by the Board.

• 2. Except for the relevant matters authorised to the Board by the Shareholders at the general meeting, A Share class meeting and H Share class meeting of the Company, if the Company intends to amend the Incentive Scheme after it is considered at the general meeting, A Share class meeting and H Share class meeting of the Company, such amendments shall be considered and approved by the Shareholders at the general meeting, A Share class meeting and H Share class meeting of the Company, provided that, such amendments shall not result in the following:

  • (1) accelerating the unlocking of the Restricted Shares;

  • (2) reducing the Grant Price.

3. The independent non-executive Directors and supervisory committee shall independently opine on the amended scheme as to whether the Incentive Scheme may benefit the Group's sustainable development, and whether there is any notifiable damage to the interests of the Company the Shareholders as a whole. The legal advisers shall issue legal opinion on the amended scheme as to whether it is in compliance with the Administrative Measures and the relevant laws and regulations, and whether there is any notifiable damage to the interests of the Company the Shareholders as a whole.

(II).Procedures for termination of the Incentive Scheme

• 1. If the Company intends to terminate the implementation of the Incentive Scheme before it is considered at the general meeting, A Share class meeting and H Share class meeting of the Company, such termination shall be considered and approved by the Board.

• 2. If the Company intends to terminate the implementation of the Incentive Scheme after it is considered and approved at the the general meeting, A Share class meeting and H Share class meeting of the Company, such termination shall be considered and approved at the general meeting, A Share class meeting and H Share class meeting of the Company.

• 3. The legal advisers shall issue legal opinion on the termination of the Incentive Scheme as to whether it is in compliance with the Administrative Measures and the relevant laws and regulations, and whether there is any notifiable damage to the interests of the Company the Shareholders as a whole

• 4. If the resolutions on terminating the implementation of the Incentive Scheme have been passed at the general meeting, A Share class meeting and H Share class meeting of the Company, shall not be allowed to consider the share incentive plan within the following 3 months after the announcement of such resolutions.

• 5. Upon termination of the Incentive Scheme, the Restricted Shares not yet unlocked shall be repurchased by the Company, and deal with the same pursuant to the Company Law.

• 6. The Company shall make an application to the Shanghai Stock Exchange first before repurchase of the Restricted Shares, and the Securities Depository will conduct registration procedure thereof upon confirmation by the Shanghai Stock Exchange.

(III). The Incentive Scheme shall be terminated immediately upon occurrence of any of the following events, the Restricted Shares granted to, but not yet unlocked, the Participants shall no longer be unlocked, and the Company shall repurchase and cancel the same:

1. issue of an auditors' report with adverse opinion or which indicates an inability to give opinion by a certified public accountant with respect to the financial report of the Company for its most recent accounting year;

• 2. issue of an auditors' report with adverse opinion or which indicates an inability to give opinion by a certified public accountant with respect to the internal control of the financial report of the Company for its most recent accounting year;

• 3. failure to conduct profit distribution in accordance with laws and regulations, the Articles of Association and public undertakings during the last 36 months after listing;

• 4. prohibition from implementation of a share incentive scheme by laws and regulations; and

• 5. other circumstance as determined by the CSRC.

(IV). Upon occurrence of any of the following events, subject to the extent of situation changed, the

Board, as authorised by Shareholders at the general meeting of the Company, shall determine whether to continuously implement, amend, suspend or terminate the Incentive Scheme, save for any rights to be exercised by the Shareholders under any relevant documents:

• 1. change in control of the Company;

• 2. merger and spin-off of the Company;

• 3. other material changes.

(V). Where false statements or misleading statements in or material omissions from the information disclosure documents of the Company result in non-compliance with conditions of grant or arrangements for unlocking the restrictions, all Restricted Shares which are not yet unlocked shall be repurchased and cancelled by the Company. In respect of the Restricted Shares granted to the Participants which have been unlocked, all the Participants shall return to the Company all interests granted. If the Participants, who are not liable for the abovementioned events, suffer loss as a result of returning the interests, they may claim for damage from the Company or responsible parties in accordance with the arrangements under the Incentive Scheme.

The Board shall recover all the profits gained by the Participants in accordance with the preceding provisions and relevant arrangements under the Incentive Scheme.

(VI). Changes to the individual circumstances of the Participants

1. Upon occurrence of any of the following events in respect of a Participant, the Restricted

Shares granted to such Participant remain unchanged and shall continue to implement the locking and unlocking in accordance with the Incentive Scheme:

• (1) change in position of a Participant, but still within the scope of Participants;

• (2) re-hiring of a Participant after he/she reaches retirement age stipulated by law or the Company.

• 2. Upon occurrence of any of the following events in respect of a Participant, the Board may determine the Restricted Shares granted, but not yet unlocked, to the such Participant under the Incentive Scheme shall no longer be unlocked, and the Company shall repurchase and cancel the same at the Grant Price plus interest accrued at the benchmark interest rate for deposit of the same period:

  • (1) internal transfer of a Participant resulting he/she is no longer be eligible for incentive;

  • (2) departure due to reaching the retirement age stipulated by law or the Company;

  • (3) departure or death due to incapacity, whether or not by performing duties;

  • (4) becoming an independent non-executive Director, supervisor or other person not allowed to hold Shares.

• 3. Upon occurrence of any of the following events in respect of a Participant, the Board may determine the Restricted Shares granted, but not yet unlocked, to the such Participant under the Incentive Scheme shall no longer be unlocked, and the Company shall repurchase and cancel the same at the Grant Price:

  • (1) resignation;

  • (2) termination of employment upon expiration of the labour contract or employment agreement without renewal due to personal reason;

  • (3) prohibited from acting as a director or a member of the senior management as required by the Company Law.

• 4. Upon occurrence of any of the following events in respect of a Participant, the Board may determine the Restricted Shares granted, but not yet unlocked, to the such Participant under the Incentive Scheme shall no longer be unlocked, and the Company shall repurchase and cancel the same at the Grant Price. In case of severe event, the Board may, based on the actual situation, take action against such Participant claim for damage suffered by the Group:

  • (1) dismissal due to failure of accomplish performance target;

  • (2) change position due to incompetence for work position, disqualification in performance appraisal, violation of laws, leakage of the Company's confidential information, dereliction of duty or malpractice or any other acts that damage the interests or reputation of the Company.

• 5. other circumstances that are not specified shall be identified by the Board and the consequences shall be determined thereby.

XII. ACCOUNTING TREATMENT FOR THE RESTRICTED SHARES UNDER THE

INCENTIVE SCHEME

In accordance with the requirements of the Accounting Standards for Business Enterprise No. 11-Share based Payments€Άุึࠇ๟ۆୋ11໮ - ٰ΅˕˹', at each balance sheet date within the Lock-up Period, the Company shall revise the number of the Restricted Shares which are expected to be unlocked according to the change in the latest available number of persons eligible to unlock the Restricted Shares, completion of the performance targets and other subsequent information, and recognize the services acquired during such period in relevant costs or expenses and capital reserve at the fair value of the Restricted Shares on the Grant Date.

(I). Accounting treatment

• 1. On the Grant Date

  The share capital and capital reserved shall be recognised according to the status of the grant of the Restricted Shares to the Participants by the Company.

• 2. On each balance sheet date during the Lock-up Period

  Pursuant to the requirements of the accounting standards, the services provided by the staff will be recognised as costs and capital reserves on each balance sheet date during the Lock-up Period.

• 3. On the unlocking date

  On the unlocking date, if the unlocking conditions are fulfilled, the Restricted Shares shall be unlocked; if all or part of the shares are lapsed or cancelled since the same have not been unlocked, such shares will be dealt with pursuant to the accounting standards and relevant requirements.

(II).The fair value of the Restricted Shares and determination method

In accordance with the requirements of the Accounting Standards for Business Enterprise No. 11-Share based Payments€Άุึࠇ๟ۆୋ11 ໮- ٰ΅˕˹'and Accounting Standards for Business Enterprise No. 22-Recognition and Measurement of Financial Instruments€Ά ุึࠇ๟ۆୋ22 ໮- ږፄʈՈᆽႩձࠇඎ', the fair value of the Restricted Shares shall be measured by the Company based on the market price. On the estimation date, the fair value of the shares paid for each Restricted Share = market price of A Shares - the Grant Price, being RMB22.57 (based on the assumption of RMB45.15 per share as the market price on the Grant Date, being the average trading price of A Shares of 20 trading days preceding the date of the announcement on the Incentive Scheme, subject to the actual closing price of A Shares on the Grant Date).

(III). Estimated impact on the operating performance of each of the period due to implementation of the Incentive Scheme

The estimated total cost of First Grant of 2,286,800 Restricted Shares to be granted by the Company is RMB51,613,100, which shall be amortized during the implementation of the Incentive Scheme according to the percentage ratio of the unlocking, and the cost incurred by the Company arising from the Incentive Scheme will be presented in recurring profit and loss.

According to the China Accounting Standards for Business Enterprise, assuming the grant of Restricted Shares under the Incentive Scheme will take place on 1 July 2021, the impact on the accounting cost of each of period due to the implementation of the Incentive Scheme are as follows:

Year

2021

2022

2023

2024

Total

Cost to be amortized (RMB0'000)

1,569.90

2,288.18

1,010.76

292.47

5,161.31

Notes:

• 1. The above figures do not constitute final accounting cost. Other than actual grant date, grant price and number of shares granted that are relating to the actual cost, the number of effective and lapsed entitlements are also relating to the actual cost. Shareholders shall note the possible impact of amortization.

• 2. The above-mentioned impact on operating performance shall be subject to the auditors' report for the relevant year to be issued by the accountant firm.

Based on current conditions, the Company estimates that, without considering the stimulus effects of the Incentive Scheme on the performance of the Company, the amortization of the costs of the Incentive Scheme has an impact on the net profit of each year during the term of the Incentive Scheme but the impact is not significant. Taking into consideration the positive impact of the Incentive Scheme on the development of the Company, it will stimulate the enthusiasm of the management team, improve the operating efficiency, reduce agency costs, the performance improvement of the Company brought by the Incentive Scheme shall far exceed the increase in costs incurred by the Incentive Scheme.

XIII. PRINCIPLES OF REPURCHASE AND CANCELLATION OF RESTRICTED SHARES

(I). Repurchase price

Save and except for any adjustment required to be made to the repurchase price under the Incentive Scheme, the repurchase price for the Restricted Shares to be repurchased by the Company under the Incentive Scheme shall be the Grant Price of the relevant Restricted Shares.

(II).Method for adjustment to the repurchase price

Upon completion of registration of the Restricted Shares granted to the Participants, in case of the Company issues new shares or placing of new shares, and shall repurchase and cancel any Restricted Shares under the Incentive Scheme, the repurchase price shall remain unchanged; and in case of capitalisation issue, bonus issue, subdivision of shares, share consolidation or rights issue and other matters affecting the total share capital or the number of shares of the Company, it shall make adjustments to the repurchase quantity of the restricted shares yet to be unlocked accordingly.

• 1. Capitalisation issue, bonus issue, sub-division

  P = P0 Ó (1 + n)

  Where: P represents the repurchase price of each Restricted Shares after adjustment;

  P0 represents the Grant Price of each Restricted Shares; n represents the ratio of increase of shares resulting from the issue of shares by capitalisation issue, bonus issue and share split (i.e. the number of shares increased per share upon capitalisation issue, bonus issue or share split).

• 2. Share consolidation

  P = P0 Ó n

  Where: P represents the repurchase price of each Restricted Shares after adjustment; P0 represents the Grant Price of each Restricted Shares; n represents the proportion of a share that may result from consolidation (i.e. 1 Share will be consolidated into n Shares).

• 3. Rights issue

  P = P0 Ò(P1 + P2 Ò n)Ó [P1 Ò(1 + n)]

  Where: P represents the repurchase price of each Restricted Shares after adjustment; P0 represents the Grant Price of each Restricted Shares; P1 represents the closing price as at the record date for the rights shares; P2 represents the price of the rights issue; n represents the ratio of the rights issue (i.e. the ratio of the number of shares to be issued under the rights issue to the total share capital of the Company before the rights issue).

• (III). Procedure for adjustment to the repurchase price

  • 1. The Board shall be authorized at the general meeting, A Share class meeting and H Share class meeting of the Company to adjust the repurchase price of Restricted Shares based on the reasons listed above. After adjustment to the repurchase price according to the above provisions, an announcement shall be made in a timely manner.

  • 2. The adjustment to the repurchase price of Restricted Shares for other reasons shall be subject to resolution of the Board and approval at the general meeting, A Share class meeting and H Share class meeting of the Company.

• (IV). Procedure of repurchase and cancellation

  • 1. The Company shall promptly convene a Board meeting to consider the repurchase plan and announce in a timely manner.

  • 2. The repurchase by the Company under the Incentive Scheme shall be implemented in accordance with the requirements under Company Law.

  • 3. The Company shall apply to the Shanghai Stock Exchange for completing the formalities of cancellation of the Restricted Shares when implementing the repurchase under the Incentive Scheme, upon the confirmation by Shanghai Stock Exchange, the Company shall complete the formalities for cancellation at the Securities Depository in a timely manner, and make announcement.

INFORMATION ON THE GROUP

The Group is a leading healthcare group in the PRC and primarily engaged in business segments including pharmaceutical manufacturing and R&D, medical devices and medical diagnosis, healthcare services as well as pharmaceutical distribution and retail

REASONS AND BENEFITS OF THE ADOPTION OF THE 2021 RESTRICTED A SHARE INCENTIVE SCHEME

Please refer to the section headed "PURPOSE OF THE INCENTIVE SCHEME" of this announcement for reference.

The 2021 Restricted A Share Incentive Scheme aims to, among others, promote the establishment and improvement of the incentive and restraint mechanism of the Group, fully mobilize the enthusiasm of the Group's Directors, senior management personnel, core management personnel and core operation personnel, effectively align the interests of the Company, Shareholders with the interests of the Participants to focus on the long-term development of the Group and achieve the development goals of the Company. The Board is of the view that the adoption of the 2021 Restricted A Share IncentiveScheme will assist the Company in achieving the aforesaid goals, and that the terms and conditions of the 2021 Restricted A Share Incentive Scheme are on normal commercial terms, fair, reasonable and in the interests of the Company and Shareholders as a whole.

HONG KONG LISTING RULES IMPLICATIONS

The 2021 Restricted Share Incentive Scheme does not constitute a share option scheme under Chapter 17 of the Hong Kong Listing Rules. As the Restricted Shares are proposed to be granted to connected persons of the Company under the 2021 Restricted Share Incentive Scheme, therefore, they will constitute non-exempt connected transactions of the Company, which are subject to reporting, announcement and independent shareholder's approval requirements under Chapter 14A of the Hong Kong Listing Rules. An Independent Board Committee will be established by the Company to advise the independent Shareholders in respect of the grant of the Restricted Shares to the participants who are connected persons of the Company. The Company will also appoint an independent financial adviser to advise the Independent Board Committee and the independent Shareholders in respect of the grant of the Restricted Shares to the Participants who are connected persons of the Company.

GENERAL MEETING, CLASS MEETINGS AND CIRCULAR

General meeting, A Share class meeting and H Share class meeting will be convened for Shareholders to consider and, if thought fit, approve, among others, the proposed adoption of the 2021 Restricted Share Incentive Scheme and the proposed grant of Restricted Shares to connected persons. A circular containing, among other things, (i) terms of the 2021 Restricted Share Incentive Scheme, (ii) a letter to the Independent Board Committee and independent Shareholders from the independent financial advisor, which contains the opinion of the independent financial advisor on the Company's proposed grant plan to the Participants who are connected persons; (iii) the recommendation of the Independent Board Committee as to whether to approve the Company's proposed grant plan to the Participants who are connected persons; (iv) the notices convening the general meeting the H Share class meeting, will be despatched to the Shareholders as soon as practicable after the date of general meeting and class meetings are determined.

DEFINITIONS

In this announcement, the following expressions have the following meaning unless the context otherwise specifies:

"2021 Restricted A Share	2021 restricted a share incentive scheme of the Company (draft)
Incentive Scheme" or
"Incentive Scheme"
"A Share(s)"	the domestic Share(s) of the Company with a nominal value of RMB1
each, which are listed on the Shanghai Stock Exchange and traded in
RMB

"Administrative Measures"	the Administrative Measures on Share Incentives of Listed Companies*
€ɪ̹ʮٰ̡ᛆዧᎸ၍ଣ፬ج
"Articles of Association"	the Articles of Association of Shanghai Fosun Pharmaceutical (Group)
Co., Ltd.* (ɪऎూ݋ᔼᖹ€ණྠٰ΅Ϟࠢʮ̡
"Board"	the board of Directors
"Company"	Shanghai Fosun Pharmaceutical (Group) Co., Ltd.* (ɪऎూ݋ᔼᖹ€ණ
ྠٰ΅Ϟࠢʮ̡), a joint stock company established in the PRC with
limited liability, the H Shares and A Shares of which are listed and
traded on the Main Board of the Hong Kong Stock Exchange and the
Shanghai Stock Exchange, respectively
"Company Law"	the Company Law of the PRC
"connected person(s)"	has the meaning ascribed to it under the Hong Kong Listing Rules
"CSRC"	China Securities Regulatory Commission
"Director(s)"	director(s) of the Company
"First Grant"	the proposed grant of 2,286,800 Restricted Shares to the Participants
pursuant to the Incentive Scheme
"Grant Date"	the date on which the Company grants the Restricted Shares to the
Participants, and the Grant Date must be a trading day of A Shares
"Grant Price"	the price of each Restricted Share granted to the Participants
"Group"	the Company and its Subsidiaries
"H Share(s)"	the overseas listed share(s) of the Company with a nominal value of
RMB1 each, which are listed on the Hong Kong Stock Exchange and
traded in Hong Kong dollars
"Hong Kong"	the Hong Kong Special Administrative Region of the People's Republic
of China
"Hong Kong Listing Rules"	the Rules Governing the Listing of Securities on The Stock Exchange
of Hong Kong Limited
33

"Hong Kong Stock Exchange"	The Stock Exchange of Hong Kong Limited
"Independent Board	the committee formed by all independent non-executive Directors, so
Committee"	as to give advice to independent Shareholders on the plan to grant the
Restricted Shares to Participant(s) who are connected person(s)
"Lock-up Period"	the period during which the Restricted Shares granted to the
Participants under the Incentive Scheme shall not be transferred, used
as security, or for repayment of debts
"Participant(s)"	the eligible person(s) to be granted the Restricted Share(s) under the
Incentive Scheme
"PRC" or "China"	the People's Republic of China, for the purpose of this announcement,
excluding Hong Kong, the Macau Special Administrative Region and
Taiwan area
"R&D"	research and development
"Reserved Grant"	the proposed grant of a number of 120,400 Restricted Shares to the
Participants as reserved portion under the Incentive Scheme
"Restricted Share(s)"	the restricted A Shares to be granted to the Participants according to the
conditions and price stipulated under the Incentive Scheme which are
subject to the Lock-up Period and can only be unlocked and transferred
after the unlocking conditions are satisfied
"RMB"	Renminbi, the lawful currency of the PRC
"Securities Depository"	China Securities Depository and Clearing Corporation Limited,
Shanghai Branch (ʕ਷ᗇՎ೮াഐၑϞࠢப΂ʮ̡ɪऎʱʮ̡)
"Securities Law"	the Securities Law of the PRC
"Shanghai Stock Exchange"	Shanghai Stock Exchange
"Share(s)"	A Share(s) and H Share(s)
"Shareholder(s)"	holder(s) of the Share(s)
"Subsidiary"	has the meaning ascribed to it under the Hong Kong Listing Rules
34

"Unlocking Period"	the period during which the Restricted Shares held by the Participants
can be unlocked and transferred after all the unlocking conditions
prescribed under the Incentive Scheme are satisfied
"%"	per cent
Shanghai, the PRC
14 March 2021

By order of the Board

Shanghai Fosun Pharmaceutical (Group) Co., Ltd.*

Wu Yifang

Chairman

As at the date of this announcement, the executive Director is Mr. Wu Yifang; the non-executive Directors are Mr. Chen Qiyu, Mr. Yao Fang, Mr. Xu Xiaoliang, Mr. Gong Ping, Mr. Pan Donghui and Mr. Zhang Houlin; and the independent non-executive Directors are Mr. Jiang Xian, Dr. Wong Tin Yau Kelvin, Ms. Li Ling and Mr. Tang Guliang.

* for identification purposes only