Shanghai Kindly Medical Instruments : CHANGE IN USE OF UNUTILIZED NET PROCEEDS

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Shanghai Kindly Medical Instruments Co., Ltd.*

上 海 康 德 萊 醫 療 器 械 股 份 有 限 公 司

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

(Stock Code: 1501)

CHANGE IN USE OF UNUTILIZED NET PROCEEDS

Reference is made to (i) the prospectus of Shanghai Kindly Medical Instruments Co., Ltd.* (上海康德萊醫療器械股份有限公司) (the ''Company'' and together with its subsidiaries, the ''Group'') dated October 28, 2019 (the ''Prospectus'') in relation to the Global Offering, (ii) the annual report of the Company for the year December 31, 2019 in relation to use of Net Proceeds, (iii) the announcement of the Company dated July 7, 2020 in relation to the change in use of Net Proceeds (the ''Announcement''), and (iv) the annual results announcement for the year ended December 31, 2020 of the Company dated March 19, 2021 in relation to use of Net Proceeds.

Unless otherwise defined, capitalized terms used in this announcement shall have the same meanings as defined in the Prospectus and the Announcement.

CHANGE IN USE OF UNUTILIZED NET PROCEEDS

As at the date of this announcement, the Company has utilized approximately RMB202.85 million of the Net Proceeds and the unutilized Net Proceeds amounted to RMB594.77 million (the ''Unutilized Net Proceeds'').

Having considered the Group's business needs and efficiency in utilization of the Net Proceeds, the Board resolved on March 31, 2021 to change the use of the Unutilized Net Proceeds designated for ''fund potential strategic investments including acquisition, partnership and license-in'' to ''construction of the Shandong INT Innovative Medical Instruments Industrial Park* (山東瑛泰創新醫療器械產業園)''.

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Set out below is the utilization of the Net Proceeds up to the date of this announcement and the proposed change in use of the Unutilized Net Proceeds:

	Planned use of					Revised
	Net Proceeds	Utilized Net	Unutilized Net	allocation of
	as stated in the	Proceeds up to	Proceeds up to	Unutilized Net
	Announcement	March 31, 2021	March 31, 2021	Proceeds
			(RMB million)
Set up a research and development
center and an additional
production facility in Jiading,
Shanghai	271.99	75.55	196.44	196.44
Purchase additional and replacement
of existing production equipment
and automate production lines	110.07	6.73	103.34	103.34
Expand our distribution network and
coverage, collaborate with local
distributors and intensify our
marketing efforts	69.39		-	69.39		69.39
Fund potential strategic investments
including acquisition, partnership
and license-in	156.33		-	156.33		-
General corporate purposes and fund
our working capital	79.84		79.84		-	-
Zhuhai Derui New Factory Project	110.00	40.73	69.27	69.27
Construction of the Shandong INT
Innovative Medical Instruments
Industrial Park	-		-	-	156.33
Total	797.62		202.85	594.77	594.77

REASONS FOR AND BENEFITS OF THE CHANGE IN USE OF UNUTILIZED NET PROCEEDS

To facilitate strategic development and expansion of manufacturing capacity of the Company, the Company intends to invest in the Shandong INT Innovative Medical Instruments Industrial Park situated in Shandong province, the PRC. The Shandong INT Innovative Medical Instruments Industrial Park will include a R&D incubation base for interventional device products manufacturing and innovation and an academic exchange training center. The construction of the Shandong INT Innovative Medical Instruments Industrial Park will be undertaken by Shandong INT Medical Instruments Co., Ltd.* (山東

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瑛泰醫療器械有限公司), a wholly-owned subsidiary of the Company. The construction is expected to take not more than RMB300 million and will be financed by the re-allocated portion of the Unutilized Net Proceeds and internal resources of the Company.

The Board considers the Shandong INT Innovative Medical Instruments Industrial Park beneficial in strengthening the Group's in-house R&D and manufacturing capacity, and the re-allocation of the Unutilized Net Proceeds would not impede or otherwise adversely affect the Group's product portfolio or business operation. The Board confirms that there is no material change in the business nature of the Group as set out in the Prospectus and considered that the proposed change in the use of the Unutilized Net Proceeds will not have any material adverse impact on the operations of the Group and is in the best interests of the Company and its shareholders as a whole.

By order of the Board

Shanghai Kindly Medical Instruments Co., Ltd.*

上海康德萊醫療器械股份有限公司

Dr. Liang Dongke

Chairman

Shanghai, the PRC

March 31, 2021

As at the date of this announcement, the Board comprises Dr. Liang Dongke and Mr. Wang Cailiang as executive Directors, Mr. Zhang Weixin, Ms. Chen Hongqin and Mr. Fang Shengshi as non-executive Directors, and Mr. Dai Kerong, Mr. Jian Xigao, Dr. Ge Junbo and Mr. Hui Hung Kwan as independent non-executive Directors.

• For identification purposes only

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