Shanghai Haohai Biological Technology : ANNOUNCEMENT OF PRELIMINARY ANNUAL RESULTS FOR THE YEAR 2019

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Shanghai Haohai Biological Technology Co., Ltd.*

上海昊海生物科技股份有限公司

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

(Stock code: 6826)

ANNOUNCEMENT OF PRELIMINARY ANNUAL RESULTS FOR THE

YEAR 2019

This announcement is made by Shanghai Haohai Biological Technology Co., Ltd.* (the "Company", together with its subsidiaries, the "Group") in accordance with Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) and Rule 13.09 and Rule 13.10B of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited to provide shareholders of the Company and the public with the financial information of the Company. This announcement is also published on the website of the Shanghai Stock Exchange simultaneously.

The key financial data for the year ended 31 December 2019 (the "Reporting Period"), as set out in this announcement, is prepared by the Group in accordance with the China Accounting Standards for Business Enterprises and constitutes preliminary accounting data which has not been audited, while the final audited results should be those to be disclosed in the 2019 annual report of the Company. Potential investors and shareholders of the Company are advised to pay attention to the underlying investment risks.

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1. KEY FINANCIAL DATA AND INDICATORS FOR THE YEAR ENDED 31 DECEMBER 2019

	Unit: RMB0' 000, unless otherwise specified
	For the year	For the year
	ended	ended
	31 December	31 December	Change
Item	2019	2018	(%)
Revenue	160,433.39	155,845.27	2.94
Operating profit	43,537.95	52,653.98	-17.31
Profit before tax	43,434.88	52,518.49	-17.30
Net profit attributable to owners of
the parent	37,077.88	41,454.04	-10.56
Net profit attributable to owners of
the parent after deduction of non-recurring
profit or loss	35,745.00	37,608.53	-4.96
Basic earnings per share (RMB/share)	2.27	2.59	-12.36
			Decrease by
			2.91 percentage
Weighted average return on net assets (%)	9.26	12.17	points
	As at	As at
	31 December	31 December	Change
Item	2019	2018	(%)
Total assets	617,613.60	443,635.26	39.22
Total equity attributable to ordinary
equity holders of the parent	545,477.96	361,150.97	51.04
Share capital	17,784.53	16,004.53	11.12
Net assets per share attributable to ordinary
equity holders of the parent (RMB/share)	30.67	22.57	35.89

Notes:

1. The above comparative figures are the same as certain audited figures of the Company as at the end of 2018 prepared in accordance with the China Accounting Standards for Business Enterprises, and disclosed in the prospectus of initial public offering of the Company for listing on the Sci-Tech Innovation Board of the Shanghai Stock Exchange.
2. The above financial figures and indicators are based on the figures in the consolidated financial statements of the Company.

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1. INFORMATION ON THE OPERATION RESULTS AND FINANCIAL CONDITION
   Operation and Financial Condition and Factors Affecting Operation Results during the Current Reporting Period
   For the Reporting Period, the Group recorded revenue of RMB1,604.3339 million, representing an increase of approximately 2.94% year-on-year, and profit before tax of RMB434.3488 million, representing a decrease of approximately 17.30% year-on-year. The net profit attributable to owners of the parent amounted to RMB370.7788 million, representing a decrease of approximately 10.56%, and the net profit attributable to owners of the parent after deduction of non-recurring profit or loss amounted to RMB357.4500 million, representing a decrease of approximately 4.96%. As at the end of the Reporting Period, the Group had total assets of RMB6,176.1360 million, representing an increase of approximately 39.22% from the beginning of the Reporting Period, and total equity attributable to ordinary equity holders of the parent of RMB5,454.7796 million, representing an increase of approximately 51.04% from the beginning of the Reporting Period.
   During the Reporting Period, the principal business of the Group retained its growth momentum. Sales revenue from major products such as sodium hyaluronate injection, rhEGF for external use and intraocular lens grew steadily. However, the sales revenue of HA dermal filler products of the Group, which has higher gross profit, was lower as compared with 2018 because of the industry consolidation in medical aesthetic market and an increase in competitive products launching in the market. As a result, although the total revenue of Group managed to maintain moderate growth as compared with 2018, there was a reduction in the overall profit margin. Further, the Group increased its R&D investment in ophthalmic and medical aesthetic products, leading to a substantial increase in R&D expense by over 20% as compared with 2018. In addition, during the Reporting Period, the difference of RMB9.9819 million between the transaction premium and goodwill arising from the acquisition of ODC Industries by Contamac Holdings Limited, a subsidiary of the Company, was recognized directly as one-off investment loss on acquisition of equity interests. The said development brought reduction in both of the Group's total profit and net profit attributable to owners of the parent during the Reporting Period.

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Explanation for Items with over 30% Change in the Table above

As at the end of the current Reporting Period, the Group's total assets increased by approximately 39.22% from the beginning of the Reporting Period. It was mainly due to the initial public offering of 17.80 million new shares of the Company during the Reporting Period. The net proceeds from the offer amounted to RMB1,529.2688 million and there was a substantial increase in cash proceeds of the Company.

During the Reporting Period, the Group's total equity attributable to ordinary equity holders of the parent and net assets per share attributable to ordinary equity holders of the parent increased by approximately 51.04% and 35.89%, respectively since the beginning of the Reporting Period, which were mainly attributable to the initial public offering of the Company's new shares during the Reporting Period, which brought an increase in share premium of RMB1,511.4688 million and an increase in retained profits due to earned profits attributable to owners of the parent of RMB370.7788 million by the Group during the Reporting Period.

By order of the Board

Shanghai Haohai Biological Technology Co., Ltd.*

Hou Yongtai

Chairman

Shanghai, the PRC

27 February 2020

As at the date of this announcement, the executive directors of the Company are Dr. Hou Yongtai, Mr. Wu Jianying, Ms. Chen Yiyi and Mr. Tang Minjie; the non-executive directors of the Company are Ms. You Jie and Mr. Huang Ming; and the independent non-executive directors of the Company are Mr. Chen Huabin, Mr. Shen Hongbo, Mr. Zhu Qin and Mr. Wong Kwan Kit.

• For identification purpose only

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