Prospectus AK HK1789

IMPORTANT
IMPORTANT: If you are in any doubt about the contents of this prospectus, you should seek independent professional advice.
AK MEDICAL HOLDINGS LIMITED

愛康醫療控股有限公司
(Incorporated in the Cayman Islands with limited liability)
GLOBAL OFFERING
Number of Offer Shares : 250,000,000 Shares (subject to the Over-
Allotment Option)
Number of International Placing Shares : 225,000,000 Shares (subject to adjustment and
the Over-Allotment Option)
Number of Hong Kong Offer Shares : 25,000,000 Shares (subject to adjustment)
Maximum Offer Price : HK$2.00 per Offer Share plus brokerage of
1.0%, SFC transaction levy of 0.0027% and
Stock Exchange trading fee of 0.005%
(payable in full on application in Hong Kong
dollars and subject to refund)
Nominal value : HK$0.01 per Share
Stock code : 1789
Sole Sponsor, Sole Global Coordinator and Sole Bookrunner
Joint Lead Managers
Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no
responsibility for the contents of this prospectus, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever
for any loss whatsoever arising from or in reliance upon the whole or any part of the contents of this prospectus.
A copy of this prospectus, having attached thereto the documents specified in Appendix V—“Documents Delivered to the Registrar of Companies and
Available for Inspection” to this prospectus, has been registered by the Registrar of Companies in Hong Kong as required by Section 342C of the Companies
(Winding Up and Miscellaneous Provisions) Ordinance. The Securities and Futures Commission and the Registrar of Companies in Hong Kong take no
responsibility for the contents of this prospectus or any other document referred to above.
Please see “Risk Factors” for a discussion of certain risks that you should consider before investing in the Shares. The Offer Price is expected to be fixed
by agreement between the Sole Global Coordinator (on behalf of the Underwriters) and us on the Price Determination Date. The Price Determination Date
is expected to be on or around Wednesday, December 13, 2017 and, in any event, not later than Tuesday, December 19, 2017. The Offer Price will be not
more than HK$2.00 and is currently expected to be not less than HK$1.66, unless otherwise announced. If, for any reason, the Offer Price is not agreed by
Tuesday, December 19, 2017 between the Sole Global Coordinator (on behalf of the Underwriters) and us, the Global Offering will not proceed.
Applications for Hong Kong Offer Shares must pay, on application, the maximum Offer Price of HK$2.00 for each Offer Share, together with a 1% brokerage
fee, 0.0027% SFC transaction levy and 0.005% Stock Exchange trading fee, subject to refund if the Offer Price should be lower than HK$2.00 as finally
determined.
The Sole Global Coordinator (on behalf of the Underwriters) may, with our consent, reduce the number of Offer Shares being offered under the Global Offering
and/or the indicative Offer Price range at any time on or prior to the morning of the last day for lodging applications under the Hong Kong Public Offering.
In such case, notices of the reduction in the number of Offer Shares and/or the indicative Offer Price range will be published in the South China Morning Post
(in English) and the Hong Kong Economic Times (in Chinese) not later than the morning of the last day for lodging applications under the Hong Kong Public
Offering. For more details, see “Structure of the Global Offering” and “How to Apply for the Hong Kong Offer Shares”.
The obligations of the Hong Kong Underwriters under the Hong Kong Underwriting Agreement to procure applications to subscribe or purchase, or to
subscribe or purchase, the Hong Kong Offer Shares, are subject to termination by the Sole Global Coordinator (on behalf of the Underwriters) if certain
grounds arise prior to 8:00 a.m. on the Listing Date. Such grounds are set out in “Underwriting”. It is important that you refer to that section for further details.
The Offer Shares have not been and will not be registered under the U.S. Securities Act and may not be offered or sold, pledged or transferred within the
United States or to, or for the account or benefit of, U.S. persons, except in transactions exempt from, or not subject to, the registration requirements of the
U.S. Securities Act. The Offer Shares are being offered and sold solely to QIBs as defined in Rule 144A pursuant to an exemption from registration under
the U.S. Securities Act and outside the United States in offshore transactions in reliance on Regulation S.
December 7, 2017
EXPECTED TIMETABLE(1)
Hong Kong Public Offering commences and

WHITE and YELLOW Application Forms available from (2) . . . . . . . . . . . . . . . . . . 9:00 a.m. on
Thursday, December 7, 2017
Latest time to complete electronic applications under

HK eIPO White Form service through the designated
website www.hkeipo.hk(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11:30 a.m. on
Tuesday, December 12, 2017
Application lists open (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11:45 a.m. on

Latest time to lodge WHITE and YELLOW

Application Forms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12:00 noon on
Latest time to complete payment of

HK eIPO White Form applications by effecting
Internet banking transfer(s)
or PPS payment transfer(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12:00 noon on
Latest time to give electronic application instructions

to HKSCC (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12:00 noon on
Application lists close (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12:00 noon on

Expected Price Determination Date (5) . . . . . . . . . . . . . . . . . . . .Wednesday, December 13, 2017
Announcement of:
• Offer Price;
• the level of applications in the Hong Kong Public Offering;
• the level of indications of interest in the International Placing; and
• the basis of allotment of the Hong Kong Public Offering
is expected to be published in South China Morning Post (in English)

and Hong Kong Economic Times (in Chinese) on or before . . . . . . . . . . . . . . . . . . . .Tuesday,
December 19, 2017
A full announcement of the Hong Kong Public Offering

containing the information above will be published
on the website of the Stock Exchange at www.hkexnews.hk(6)
and our website at www.ak-medical.net(6) from . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Tuesday,
December 19, 2017
—i—
Results of allocations in the Hong Kong Public Offering

will be available at www.tricor.com.hk/ipo/result with a
“search by ID” function from . . . . . . . . . . . . . . . . . . . . . . . . . . . .Tuesday, December 19, 2017
Dispatch of share certificates in respect of

wholly or partially successful applications on . . . . . . . . . . . . . . .Tuesday, December 19, 2017
Dispatch of HK eIPO White Form e-Auto refund payment

instructions/refund cheques in respect of wholly or
partially unsuccessful applications on(7)(8)(9) . . . . . . . . . . . . . . . .Tuesday, December 19, 2017
Dealings in Shares on the Stock Exchange expected to

commence at 9:00 a.m. on . . . . . . . . . . . . . . . . . . . . . . . . . . .Wednesday, December 20, 2017
Notes:
(1) Unless otherwise stated, all times and dates refer to Hong Kong local times and dates. Details of the structure of
the Global Offering, including its conditions, are set out in “Structure of the Global Offering” in this prospectus.
(2) You will not be permitted to submit your application through the designated website at www.hkeipo.hk after 11:30
a.m. on the last day for submitting applications. If you have already submitted your application and obtained a
payment reference number from the designated website prior to 11:30 a.m., you will be permitted to continue the
application process (by completing payment of application monies) until 12:00 noon on the last day for submitting
applications, when the application lists close.
(3) If there is a “black” rainstorm warning or a tropical cyclone warning signal number 8 or above in force in Hong Kong
at any time between 9:00 a.m. and 12:00 noon on Tuesday, December 12, 2017, the application lists will not open
and close on that day. For more details, please see “How to Apply for the Hong Kong Offer Shares—10. Effect of
Bad Weather on the Opening of the Application Lists”. If the application lists do not open and close on Tuesday,
December 12, 2017 or if there is a tropical cyclone warning signal number 8 or above or a “black” rainstorm warning
signal in force in Hong Kong that may affect the dates mentioned in “Expected Timetable”, an announcement will
be made by us in such event.
(4) Applicants who apply for Hong Kong Offer Shares by giving electronic application instructions to HKSCC should
refer to “How to Apply for the Hong Kong Offer Shares—6. Applying by Giving Electronic Application Instructions
to HKSCC via CCASS” in this prospectus.
(5) We expect to determine the Offer Price by agreement with the Sole Global Coordinator (on behalf of the
Underwriters) on the Price Determination Date. The Price Determination Date is expected to be on or about
Wednesday, December 13, 2017, and in any event no later than Tuesday, December 19, 2017. If, for any reason,
the Offer Price is not agreed between the Sole Global Coordinators (on behalf of the Underwriters) and us by
Tuesday, December 19, 2017, the Hong Kong Public Offering and the International Placing will not proceed.
Notwithstanding that the Offer Price may be fixed at below the maximum Offer Price of HK$2.00 per Share payable
by applicants for Hong Kong Offer Shares under the Hong Kong Public Offering, applicants for the Hong Kong Offer
Shares are required to pay, on application, the maximum Offer Price of HK$2.00 for each Share, together with the
brokerage fee of 1.0%, a Stock Exchange trading fee of 0.005% and a SFC transaction levy of 0.0027% but will be
refunded the surplus application monies as provided for in “How to Apply for the Hong Kong Offer Shares” in this
prospectus.
(6) None of the websites or any of the information contained on the website forms part of this prospectus.
(7) Share certificates for the Offer Shares will become valid certificates of title at 8:00 a.m. on Wednesday, December
20, 2017, provided that (i) the Global Offering has become unconditional in all respects and (ii) neither of the
Underwriting Agreements has been terminated in accordance with its terms.
(8) e-Auto refund payment instructions/refund cheques will be issued in respect of wholly or partially unsuccessful
applications pursuant to the Hong Kong Public Offering and also in respect of wholly or partially successful
applications in the event that the final Offer Price is less than the price payable per Offer Share on application. Part
of the applicant’s Hong Kong Identity Card number or passport number, or, if the application is made by joint
applicants, part of the Hong Kong Identity Card number or passport number of the first-named applicant, provided
by the applicant(s) may be printed on the refund cheque, if any. Such data would also be transferred to a third party
for refund purposes. Banks may require verification of an applicant’s Hong Kong Identity Card number or passport
number before cashing the refund cheque. Inaccurate completion of an applicant’s Hong Kong Identity Card number
or passport number may lead to delays in encashment of, or may invalidate, the refund cheque.
— ii —
(9) Applicants who have applied on WHITE Application Forms or HK eIPO White Form for 1,000,000 or more Hong
Kong Offer Shares under the Hong Kong Public Offering and have provided all required information in their
applications may collect refund cheques (where applicable) and/or Share certificates (where applicable) in person
from our Hong Kong Share Registrar, Tricor Investor Services Limited, at Level 22, Hopewell Centre, 183 Queen’s
Road East, Hong Kong between 9:00 a.m. to 1:00 p.m. on Tuesday, December 19, 2017. Applicants being
individuals who opt for personal collection may not authorize any other person to make collection on their behalf.
Applicants being corporations who opt for personal collection must attend through their authorized representatives
bearing letters of authorization from their corporation stamped with the corporation’s chop. Both individuals and
authorized representatives of corporations must produce, at the time of collection, evidence of identity acceptable
to the Hong Kong Share Registrar.
Applicants who have applied on YELLOW Application Forms for 1,000,000 or more Hong Kong Offer Shares under
the Hong Kong Public Offering may collect their refund cheques, if any, in person but may not elect to collect their
share certificates as such share certificates will be deposited into CCASS for the credit of their designated CCASS
participants’ stock accounts or CCASS Investor Participant stock accounts, as appropriate. The procedures for
collection of refund cheques for YELLOW Application Form applicants are the same as those for WHITE Application
Form applicants.
Applicants who apply for Hong Kong Offer Shares by giving electronic application instructions to HKSCC should
refer to “How to Apply for the Hong Kong Offer Shares—14. Despatch/Collection of Share Certificates and Refund
Monies—Personal Collection—(iv) If you apply via Electronic Application Instructions to HKSCC” in this
prospectus for details. Uncollected share certificates and refund cheques will be dispatched by ordinary post, at the
applicants’ risk, to the addresses specified in the relevant applications. Further information is set out in “How to
Apply for the Hong Kong Offer Shares—13. Refund of Application Monies” and “How to Apply for the Hong Kong
Offer Shares—14. Despatch/Collection of Share Certificates and Refund Monies” in this prospectus.
The above expected timetable is a summary only. If there is a “black” rainstorm warning or
a tropical cyclone warning signal number 8 or above in force in Hong Kong at any time
between 9:00 a.m. and 12:00 noon on Tuesday, December 12, 2017, the application lists will
not open and close on that day. Please refer to “How to Apply for the Hong Kong Offer
Shares—10. Effect of Bad Weather on the Opening of the Application Lists” in this
prospectus. You should refer to “Structure of the Global Offering” and “How to Apply for
the Hong Kong Offer Shares” in this prospectus for details of the structure of the Global
Offering, including the conditions of the Global Offering, and the procedures for
application for the Hong Kong Offer Shares.
— iii —
CONTENTS
This prospectus is issued by our Company solely in connection with the Hong Kong
Public Offering and the Hong Kong Offer Shares and does not constitute an offer to sell
or a solicitation of an offer to buy any security other than the Hong Kong Offer Shares
offered by this prospectus pursuant to the Hong Kong Public Offering. This prospectus
may not be used for the purpose of, and does not constitute, an offer or invitation in any
other jurisdiction or in any other circumstances. No action has been taken to permit a
public offering of the Offer Shares in any jurisdiction other than Hong Kong, and no
action has been taken to permit the distribution of this prospectus in any jurisdiction
other than Hong Kong. The distribution of this prospectus and the offering and sale of
the Offer Shares in other jurisdictions are subject to restrictions and may not be made
except as permitted under the applicable securities laws of such jurisdictions pursuant
to registration with or authorization by the relevant securities regulatory authorities or
an exemption therefrom.
You should rely only on the information contained in this prospectus and the
Application Forms to make your investment decision. We have not authorized anyone to
provide you with information that is different from what is contained in this prospectus.
Any information or representation not made in this prospectus must not be relied on by
you as having been authorized by us, the Sole Sponsor, the Sole Global Coordinator, the
Sole Bookrunner, the Joint Lead Managers, the Underwriters, any of their respective
directors or any other person or party involved in the Global Offering.
Page
Expected Timetable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Forward-Looking Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Waivers from Strict Compliance with the Listing Rules . . . . . . . . . . . . . . . . . . . . . . . 61
Information about this Prospectus and the Global Offering . . . . . . . . . . . . . . . . . . . . 65
Directors and Parties Involved in the Global Offering . . . . . . . . . . . . . . . . . . . . . . . . 69
Corporate Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Industry Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
History, Reorganization and Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
— iv —
CONTENTS
Our Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
Relationship with our Controlling Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178
Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183
Directors and Senior Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228
Substantial Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241
Share Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243
Future Plans and Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 248
Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250
Structure of the Global Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 260
How to Apply for the Hong Kong Offer Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 269
Appendix I — Accountants’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
Appendix II — Unaudited Pro Forma Financial Information . . . . . . . . . . . . . . . II-1
Appendix III — Summary of the Constitution of the Company and

Cayman Companies Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-1
Appendix IV — Statutory and General Information . . . . . . . . . . . . . . . . . . . . . . IV-1
Appendix V — Documents Delivered to the Registrar of Companies and

Available for Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1
—v—
SUMMARY
This summary aims to give you an overview of the information contained in this
prospectus. As it is a summary, it does not contain all the information that may be important to
you. You should read the whole document before you decide to invest in the Offer Shares.
OVERVIEW
We are the first and only medical device company that has commercialized the application
of 3D-printing technology in orthopedic joint and spine replacement implants in China,
commanding a leading position in the Chinese orthopedic joint implant market. We design,
develop, produce and market orthopedic implants, with a focus on hip and knee replacement
implants. Our products include orthopedic joint implants for primary surgeries as well as those
specifically designed for revision surgeries for the replacement, repair or enhancement of an
implant or component from a previous procedure. We also market orthopedic products produced
by third parties as a distributor to complement our product offerings to customers.
Our Industry and Market Position
The general orthopedic implant market consists of three major segments: trauma implants,
spine replacement implants and orthopedic joint implants. According to Frost & Sullivan, the
orthopedic joint implant market was the second largest segment of China’s general orthopedic
implant market in 2016 by both surgery volume and revenue. The orthopedic joint implant market
mainly consists of the hip and knee replacement implant sectors. The orthopedic joint implant
market grew the fastest among the three segments at a CAGR of 14.5% in terms of surgery
volume and 13.9% in terms of revenue from 2012 to 2016. The spine replacement implant market
also outgrew the industry average, representing a CAGR of 14.0% in terms of surgery volume and
13.6% in terms of revenue from 2012 to 2016. China’s orthopedic joint implant market and spine
replacement implant market are projected to further grow to RMB7.8 billion and RMB5.1 billion in
terms of revenue, respectively, in 2021, representing a CAGR of 13.7% and 9.5%, respectively,
between 2016 and 2021.
We market our products under the brand name of “AK Medical” (“愛康”), which was the
bestselling brand of orthopedic joint implants in China by sales volume in 2016, according to Frost
& Sullivan. “AK Medical” (“愛康”) was also the bestselling domestic orthopedic joint implant brand
by revenue in 2016. In 2016, we had a market share of 14.3% in terms of sales volume and 6.0%
in terms of revenue in the orthopedic joint implant market in China. We had a larger market share
in terms of sales volume than revenue because products of international brands generally have
higher ex-factory prices than those of domestic brands.
Our Product Portfolio and Services
We design, develop, produce and market orthopedic implants, with a focus on hip and knee
replacement implants. In addition, we rolled out our 3D-printed spinal interbody cages and
artificial vertebral bodies in 2016, thereby entering into the spine replacement implant market. We
also market orthopedic products produced by third parties as a distributor to complement our
product offerings to our customers.
The following table sets forth a breakdown of our revenue by product type for the periods
indicated:
Year ended December 31, Six months ended June 30,

2014 2015 2016 2016 2017
% of % of % of % of % of
Amount total Amount total Amount total Amount total Amount total
(unaudited)
(in thousands of RMB, except percentages)
Off-the-shelf products
Knee replacement implants . . . . 45,566 30.7% 60,567 29.4% 83,008 30.7% 35,418 30.7% 47,417 29.2%
Hip replacement implants(1) . . . . 92,734 62.5 132,692 64.4 158,871 58.7 69,062 59.9 94,594 58.2
3D-printed products(2) . . . . . . . – – 1,060 0.5 12,131 4.5 3,004 2.6 9,777 6.0
Third party orthopedic products . . . 9,013 6.1 9,148 4.4 10,785 4.0 5,292 4.6 6,893 4.2
—1—
SUMMARY

2014 2015 2016 2016 2017
(unaudited)
Others(3) . . . . . . . . . . . . . 965 0.7 2,697 1.3 5,982 2.2 2,571 2.2 3,836 2.4
Total . . . . . . . . . . . . . . . 148,278 100.0% 206,164 100.0% 270,777 100.0% 115,347 100.0% 162,517 100.0%
(1) Excluding 3D-printed hip replacement implants.

(2) Including our 3D-printed hip replacement implants, spinal interbody cages and artificial vertebral bodies.
(3) Others include primarily surgical instruments and medical irrigators.
We developed and introduced our personalized 3D Accurate Construction Technology

solutions, or “3D ACT solutions”, in July 2014 to help our products penetrate more hospitals. Our
3D ACT solutions assist surgeons in simulating and planning for implant surgeries, simplify
surgical processes, offer personalized surgical instruments and pre-surgery selected implants and
improve patients’ recovery experience significantly. Our 3D ACT solutions integrate our
proprietary Physician-Technician Interaction Platform, or “PTIP”, which is currently provided as a
complimentary service, with our technologies for producing 3D-printed and/or off-the-shelf
surgical instruments and implant products, from which we generate revenue. See “Our
Business—Our Product Portfolio and Services—3D ACT Solutions”.
We offer a comprehensive range of products including 50 CFDA-approved medical devices.

Among our 26 Class III medical devices, 24 are orthopedic joint implant products and two are
spine replacement implants. Our product lines cover off-the-shelf products and 3D-printed
products for primary, revision and reconstruction surgeries, being the most comprehensive in the
orthopedic joint implant market among domestic brands in China. As compared to off-the-shelf
products, 3D-printed products, which during the Track Record Period constituted a small portion
of our sales, can match the complexity of natural joints, allowing for better biological fusion of
bones and prosthesis, which is particularly suitable for patients who are physically active. Both our
off-the-shelf products and 3D-printed products are regulated by the CFDA and are subject to
similar requirements for obtaining CFDA approval. As of the Latest Practicable Date, our three
CFDA-approved 3D-printed products included 3D-printed hip replacement implants, 3D-printed
spinal interbody cages and 3D-printed artificial vertebral bodies, all of which were the only
CFDA-approved 3D-printed orthopedic implant products in China, and we also had four pipeline
3D-printed products that were in the process of undergoing CFDA registration, including
3D-printed knee replacement implants, 3D-printed spine replacement implants, personalized
3D-printed cervical fusion and personalized 3D-printed pelvic prosthesis.
Customers, Sales and Distribution
During the Track Record Period, most of our revenue was derived from our sales in China.
Consistent with the market practice in China, we sell our products primarily to third party
distributors across China, which in turn resell our products either directly to hospitals in their
designated territories with our authorization or to sub-distributors for ultimate sales to hospitals.
We also directly sell a portion of our products to hospitals through our wholly-owned
subsidiary which holds the medical device business certificate. We mainly maintain these direct
sales to establish and maintain direct relationships with certain key end hospital customers and
—2—
SUMMARY
surgeons. The following table sets forth a breakdown of our revenue by sales channel for the
periods indicated:
Six months ended

Year ended December 31, June 30,
2014 2015 2016 2016 2017
(unaudited)
Distributors . . . . . . . . . . . . 138,827 93.6% 195,654 94.9% 256,879 94.9% 110,103 95.5% 156,322 96.2%
Direct sales (through distributor
subsidiary) . . . . . . . . . . . 9,451 6.4 10,510 5.1 13,898 5.1 5,244 4.5 6,195 3.8
Total . . . . . . . . . . . . . . . 148,278 100.0% 206,164 100.0% 270,777 100.0% 115,347 100.0% 162,517 100.0%
The following table sets forth a breakdown of our revenue by geographical regions for the
periods indicated:
Six months ended

2014 2015 2016 2016 2017
(unaudited)
China
North China(1) . . . . . . . . . . 47,094 31.8% 61,039 29.6% 77,432 28.6% 30,747 26.7% 45,561 28.0%
East China(2) . . . . . . . . . . 44,002 29.7 61,633 29.9 67,301 24.9 27,206 23.6 38,240 23.5
South China(3) . . . . . . . . . . 7,053 4.8 10,555 5.1 11,161 4.1 5,666 4.9 11,582 7.1
Central China(4) . . . . . . . . . 30,601 20.6 36,214 17.6 46,086 17.0 25,602 22.2 31,093 19.1
West China(5) . . . . . . . . . . 19,446 13.1 33,779 16.4 57,269 21.1 23,271 20.2 32,755 20.2
Overseas(6) . . . . . . . . . . . 82 0.1 2,944 1.4 11,528 4.3 2,855 2.5 3,286 2.0
Total . . . . . . . . . . . . . . 148,278 100.0% 206,164 100.0% 270,777 100.0% 115,347 100.0% 162,517 100.0%
(1) Including the municipalities of Beijing and Tianjin, the provinces of Liaoning, Jilin, Heilongjiang, Hebei, Shanxi and
the autonomous region of Inner Mongolia.
(2) Including the municipality of Shanghai, the provinces of Shandong, Jiangsu, Anhui, Zhejiang and Fujian.
(3) Including the provinces of Guangdong and Hainan, and the autonomous region of Guangxi.
(4) Including the provinces of Jiangxi, Henan, Hunan and Hubei.
(5) Including the municipality of Chongqing, the provinces of Sichuan, Yunnan, Guizhou, Shaanxi, Gansu and Qinghai,
and the autonomous regions of Xinjiang and Ningxia.
(6) During the Track Record Period, we exported our products to 27 overseas jurisdictions through overseas
distributors, including the United Kingdom, India, Mali, Ecuador, Kenya, the United States, South Korea, Thailand,
Turkey, Indonesia, Pakistan, the United Arab Emirates, Fiji, Chile, Paraguay, Morocco, Singapore, the Philippines,
Mozambique, Burkina Faso, Greece, Hong Kong, Nigeria, Argentina, Brazil, Malaysia and Guatemala. As of June
30, 2017, our overseas distributors covered 15 overseas jurisdictions as we did not export our products to the United
Kingdom, Mali, Ecuador, Kenya, the United States, Thailand, Turkey, Paraguay, Morocco, Mozambique, Burkina
Faso and Hong Kong in the six months ended June 30, 2017.
In 2014, 2015, 2016 and the six months ended June 30, 2016 and 2017, our total revenue
derived from our top five customers, which includes four distributors and one direct hospital
customer, were RMB28.5 million, RMB34.3 million, RMB42.3 million, RMB21.5 million and
RMB25.3 million, respectively, representing 19.2%, 16.7%, 15.6%, 18.6% and 15.6% of our
revenue. In 2014, 2015, 2016 and the six months ended June 30, 2016 and 2017, our revenue
derived from our single largest customer were RMB7.2 million, RMB9.2 million, RMB12.4 million,
RMB5.2 million and RMB7.9 million, respectively, representing 4.9%, 4.5%, 4.6%, 4.5% and 4.9%
of our revenue.
—3—
SUMMARY
We have an extensive and growing nationwide distribution network. As of June 30, 2017, we
had 650 distributors for our products, covering all of the provinces, municipalities and autonomous
regions in China and 15 overseas jurisdictions. The following table sets forth the movements in the
number of our distributors for the periods indicated:
Six months
ended
2014 2015 2016 2017
Distributors at the beginning of the period . . . . . 416 553 609 637
Addition of new distributors. . . . . . . . . . . . . . . 147 69 38 19
Termination of distributors . . . . . . . . . . . . . . . (10) (13) (10) (6)
Net increase/(decrease) in distributors . . . . . . . 137 56 28 13
Distributors at the end of the period . . . . . . . . . 553 609 637 650
As of December 31, 2014, 2015 and 2016 and as of June 30, 2017, our distribution network
covered over 1,600, 1,800, 2,000 and 3,000 hospitals in China, respectively. Some of our
distributors engage sub-distributors of their own. We believe our distributors engage sub-
distributors mainly to expand their sales network to hospitals that are not yet covered by their own
sales. In general, we do not enter into direct contractual relationships with sub-distributors.
For sales to our distributors, we have set a nationwide standard price, which we determine
after taking into account the successful bidding price for sales to the relevant hospitals, the market
positioning and target customers of the specific products, the prevailing market price of similarly
positioned products, and our costs and overall profit margin. When we and our distributors are
required to participate in a public tender process for the right to sell certain products to hospitals
and medical institutions, the price of such products is determined by the public tender processes.
See “Our Business—Customers, Sales and Distribution—Pricing” for details.
Research and Development
We had an internal R&D team consisting of 42 members as of the Latest Practicable Date.
Our chief engineer has over seven years’ experience in the application of 3D-printing technologies
to orthopedic products. Our director of research center has over 10 years of R&D experience in
orthopedic implants. As of the Latest Practicable Date, our R&D activities had yielded 36 invention
patents, 140 utility patents and two patents under the PCT. We also had 134 pending invention
patents, 77 pending utility patents and six pending patent applications filed under the PCT. We
had obtained 26 CFDA registration certificates for Class III medical devices. We also have eight
on-going applications for registration approval by CFDA or its local counterpart.
Our R&D capabilities help us build our robust product pipeline. As of the Latest Practicable
Date, we had four products, including two hip replacement implants, one knee replacement
implant and one spine replacement implant, in the post-clinical trial stage, one 3D-printed knee
replacement implant in the clinical trial stage and one 3D-printed spine replacement implant
pending pre-clinical trial approval. From 2018 to 2020, we plan to launch six new products,
including 3D-printed knee replacement implants. See “Business—Product Pipeline”.
—4—
SUMMARY
Production Facilities
Our production facilities are located in Beijing, China. Our production facilities occupy a total
gross floor area of 5,321 sq. m. We design, develop and produce all our surgical instruments and
orthopedic implants in-house in our production facilities, other than certain production procedures
for certain products, such as surgical instruments which we outsource to third parties.
The production capacity for our knee replacement implants amounted to 7,800 sets, 21,000
sets, 28,000 sets, and 14,000 sets in 2014, 2015, 2016 and the six months ended June 30, 2017,
respectively, which remained stable after 2015 when we automated certain production
procedures. Our utilization rate for our knee replacement implants reached 112.6%, 63.5%, 73.7%
and 77.6% for the same periods, respectively. The increase after 2015 was primarily driven by an
increase in our sales volume. The production capacity for our off-the-shelf hip replacement
implants amounted to 56,000 set, 58,000 sets, 74,000 sets and 37,000 sets in 2014, 2015, 2016
and the six months ended June 30, 2017, respectively. Driven by an increase in our sales volume,
the utilization rate for our off-the-shelf hip replacement implants represented an increasing trend,
reaching 56.8%, 83.3%, 87.1% and 80.1% in the same periods, respectively. See “Our
Business—Production—Production Facilities” for details.
In order to grow our business, we are in the process of expanding our production capacity
by constructing the Changzhou Facilities, which will be located in the Changzhou Xitaihu Industry
Park, Changzhou, Jiangsu Province, China. The Changzhou Facilities is expected to occupy a
total gross floor area of 42,666 sq.m upon completion. We plan to produce all of our off-the-shelf
products including orthopedic implants and surgical instruments at the Changzhou Facilities. After
we relocate the production of all of our off-the-shelf products to the Changzhou Facilities, we plan
to dedicate our existing production facilities in Beijing to the R&D and production of 3D-printed
products. We expect that part of the Changzhou Facilities will have the necessary equipment
installed and be ready for production by the second half of 2018. See “Our
Business—Production—Changzhou Facilities”.
Raw Materials and Suppliers
The principal raw materials for our orthopedic implants include titanium alloy, cobalt-
chromium-molybdenum alloy and ultra-high molecular weight polyethylene materials and certain
product components such as ceramic heads. We purchase most of our raw materials from China,
except ceramic heads and certain raw materials for our ML femoral stems, which we purchase
from Germany and the United Kingdom, respectively.
In 2014, 2015, 2016 and the six months ended June 30, 2016 and 2017, purchases from our
top five suppliers were RMB26.2 million, RMB47.8 million, RMB34.0 million, RMB14.3 million and
RMB31.4 million, respectively, representing 71.6%, 62.2%, 44.7%, 40.2%, and 51.2% of our total
purchases, respectively. In 2014, 2015, 2016 and the six months ended June 30, 2016 and 2017,
purchases from our single largest supplier were RMB13.2 million, RMB16.2 million, RMB11.5
million, RMB3.7 million and RMB11.4 million, respectively, representing 36.2%, 21.1%, 15.1%,
10.4%, and 18.6% of our total purchases, respectively.
—5—
SUMMARY
Inventory Management
Our inventories include raw materials, work-in-progress and finished products. Similar to
other orthopedic implant companies, our products have a relatively long production cycle.
Therefore, we strive to maintain a robust inventory management policy to ensure sufficient raw
materials for production and sufficient finished goods to meet customer demands in a timely
manner without destabilizing our liquidity. In general, we keep a finished goods inventory level of
two to six months depending on different types of products. Based on this inventory level and our
estimated sales volume, we procure raw materials taking into account the production cycle of each
product. In order to improve our inventory management, we began using an ERP system in July
2014 to better align our material procurement, production, warehousing and delivery process with
outstanding and estimated purchase orders from our customers. The following table sets forth our
inventories turnover days for the periods indicated:
Six months
ended
2014 2015 2016 2017
(1)
Inventories turnover days . . . . . . . . . . . . . . 257 265 276 274
(1) The inventories turnover days are calculated by dividing the arithmetic mean of the opening and ending balance of
inventories in that period by cost of sales for the corresponding period and then multiplying by the days of the
relevant period.
We aim to maintain effective inventory management and control our inventories turnover
days within 280 days. Our inventories turnover days were 257 days in 2014, 265 days in 2015 and
276 days in 2016. The increases in the turnover days resulted from (1) our launch of new products
in 2015 and 2016, which required us to build up an initial inventory level and (2) the increased
inventory levels of raw materials which we expected to experience a price rise. Our inventories
turnover days were 274 days in the six months ended June 30, 2017, reflecting our enhanced
efforts to control our inventories and the growth of our revenue, partially offset by inventories
maintained in Changzhou Facilities for experiment and product development purposes.
COMPETITIVE STRENGTHS
We believe that the following competitive strengths have contributed to our success and
differentiated us from our competitors, and will continue to drive our success:
• we have proven medtech innovation capabilities, having introduced the revolutionary

personalized 3D ACT solutions to the Chinese orthopedic implant market;
• we are a leader in the fast-growing orthopedic joint implant market in China and
enjoying strong brand name recognition among surgeons;
• we have strong R&D capabilities driven by 3D-printing technologies;
• we are well-positioned to benefit from the import substitution trend of the orthopedic
joint implant market in China;
• we have an extensive nationwide distribution network which is supported by a strong
sales and marketing team; and
• we have an experienced and dedicated management team and our founder and
chairman, Mr. Li, has extensive clinical experience in and insightful knowledge of
orthopedic practices in China.
—6—
SUMMARY
OUR STRATEGIES
We strive to become a world-class innovative medtech company and continue to offer

personalized solutions and implant products to surgeons and patients. In particular, we plan to
implement the following strategies:
• further ramp up the application of our personalized 3D ACT solutions in both high-end
and mass markets to further drive the growth of our product sales, broaden our product
portfolio, and enhance customer stickiness;
• expanding the breadth of our product portfolio into newly-captured orthopedic product
market sectors; and
• explore strategic acquisition and alliance opportunities.
SELECTED HISTORICAL FINANCIAL INFORMATION
You should read the summary historical consolidated financial statements set forth below in
conjunction with our consolidated financial statements included in Appendix I—“Accountants’
Report” to this prospectus, together with the accompanying notes, which have been prepared in
accordance with IFRS. The summary historical financial statements as of and for the years ended
December 31, 2014, 2015, 2016 and six months ended June 30, 2017 are derived from our
audited consolidated financial statements, including the notes thereto, set forth in Appendix
I—“Accountants’ Report” to this prospectus. The unaudited consolidated statements of profit or
loss for the six months ended June 30, 2016 are derived from our unaudited consolidated financial
statements set forth in Appendix I—“Accountants’ Report” to this prospectus.
Consolidated Statements of Profit or Loss

2014 2015 2016 2016 2017
Amount revenue Amount revenue Amount revenue Amount revenue Amount revenue
(unaudited)
(in thousands of RMB, except for percentages)
Revenue . . . . . . . 148,278 100.0% 206,164 100.0% 270,777 100.0% 115,347 100.0% 162,517 100.0%
Cost of sales . . . . . (46,933) (31.7) (64,108) (31.1) (83,466) (30.8) (35,470) (30.8) (50,814) (31.3)
Gross profit . . . . . 101,345 68.3 142,056 68.9 187,311 69.2 79,877 69.2 111,703 68.7
Other income. . . . . 1,778 1.2 823 0.4 793 0.3 368 0.3 1,854 1.1
Selling and
distribution
expenses . . . . . . (17,416) (11.7) (28,782) (14.0) (36,229) (13.4) (14,098) (12.2) (19,660) (12.1)
General and
administrative
expenses . . . . . . (12,377) (8.3) (22,262) (10.8) (38,115) 14.1 (20,180) (17.5) (18,276) (11.2)
Research and
development
expenses . . . . . . (15,539) (10.5) (18,878) (9.2) (20,390) 7.5 (8,266) (7.2) (17,929) (11)
Operating profit . . 57,791 39.0 72,957 35.4 93,370 34.5 37,701 32.7 57,692 35.5
Net finance income . 2,506 1.7 2,994 1.5 1,657 0.6 988 0.9 478 0.3
Profit before tax . . 60,297 40.7 75,951 36.8 95,027 35.1 38,689 33.5 58,170 35.8
Income tax expense. (8,576) (5.8) (11,044) (5.4) (17,701) (6.5) (5,467) (4.7) (8,120) (5.0)
Profit . . . . . . . . . 51,721 34.9% 64,907 31.5% 77,326 28.6% 33,222 28.8% 50,050 30.8%
—7—
SUMMARY
We grew rapidly during the Track Record Period. In 2014, 2015, 2016 and the six months
ended June 30, 2016 and 2017, our revenue amounted to RMB148.3 million, RMB206.2 million,
RMB270.8 million, RMB115.3 million and RMB162.5 million, respectively. We generate our
revenue primarily from the sales of our off-the-shelf products and partially from our 3D-printed
products. In 2014, 2015, 2016 and the six months ended June 30, 2016 and 2017, our revenue
generated from sales of off-the-shelf products, consisting of knee replacement implants and hip
replacement implants was RMB138.3 million, RMB193.3 million, RMB241.9 million, RMB104.5
million and RMB142.0 million, accounting for 93.3%, 93.7%, 89.3%, 90.6% and 87.4% of our total
revenue, respectively.
We launched our first 3D-printed product in August 2015. In 2015, 2016 and the six months
ended June 30, 2016 and 2017, our revenue generated from sales of our 3D-printed products was
RMB1.1 million, RMB12.1 million, RMB3.0 million and RMB9.8 million, accounting for 0.5%, 4.5%,
2.6% and 6.0% of our total revenue, respectively. See “Financial Information—Consolidated
Statements of Profit or Loss” for more details.
Consolidated Statements of Financial Position
As of
As of December 31, June 30,
2014 2015 2016 2017
(in thousands of RMB)
Non-current assets
Property, plant and equipment . . . . . . . . . . . . . 29,528 48,908 69,837 88,918
Intangible assets . . . . . . . . . . . . . . . . . . . . . 1,820 5,947 6,571 9,131
Deferred tax assets . . . . . . . . . . . . . . . . . . . 4,174 4,877 6,670 8,372
Other non-current assets . . . . . . . . . . . . . . . . 88 45 — —
Total non-current assets . . . . . . . . . . . . . . . 35,610 59,777 83,078 106,421
Current assets
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . 34,720 58,400 67,805 84,848
Trade receivables . . . . . . . . . . . . . . . . . . . . 18,975 43,330 66,757 66,131
Bills receivable . . . . . . . . . . . . . . . . . . . . . . 5,073 14,531 14,773 23,590
Deposits, prepayments and other receivables . . . 5,108 7,618 12,525 13,209
Available-for-sale financial assets . . . . . . . . . . . 70,000 — — —
Cash and cash equivalents . . . . . . . . . . . . . . . 43,161 100,094 160,597 165,628
Total current assets . . . . . . . . . . . . . . . . . . 177,037 223,973 322,457 353,406
Current liabilities
Trade payables . . . . . . . . . . . . . . . . . . . . . . 14,691 29,408 33,740 43,974
Accruals and other payables . . . . . . . . . . . . . . 16,530 45,021 31,195 45,876
Current tax . . . . . . . . . . . . . . . . . . . . . . . . . 2,707 5,875 8,917 11,382
Deferred revenue . . . . . . . . . . . . . . . . . . . . . 15,373 18,033 21,922 22,209
Provisions . . . . . . . . . . . . . . . . . . . . . . . . . 1,764 2,482 3,260 4,027
Total current liabilities . . . . . . . . . . . . . . . . . 51,065 100,819 99,034 127,468
Net current assets . . . . . . . . . . . . . . . . . . . 125,972 123,154 223,423 225,938

Total assets less current liabilities. . . . . . . . . 161,582 182,931 306,501 332,359
Non-current liabilities . . . . . . . . . . . . . . . . .
Deferred income . . . . . . . . . . . . . . . . . . . . . 5,631 5,993 8,208 7,892
Deferred tax liabilities . . . . . . . . . . . . . . . . . . – – 3,900 3,900
Total non-current liabilities. . . . . . . . . . . . . . 5,631 5,993 12,108 11,792
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . 155,951 176,938 294,393 320,567
Capital and reserves

Share capital. . . . . . . . . . . . . . . . . . . . . . . . 34,000 55,556 1 1
Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . 121,951 121,382 294,392 320,566
Total equity attributable to owners of the
Company . . . . . . . . . . . . . . . . . . . . . . . . 155,951 176,938 294,393 320,567
—8—
SUMMARY
We had net trade receivables of RMB19.0 million, RMB43.3 million, RMB66.8 million and
RMB66.1 million as of December 31, 2014, 2015 and 2016 and June 30, 2017, respectively, which
were receivables from our customers for sales of our products. The significant increase between
December 31, 2014 and 2015 was mainly due to an increase in our business scale, and because
we granted credit periods to more qualified distributors and longer credit periods to some of our
other distributors to attract competent distributors so that we could maintain and expand our
distribution network and enter into new markets. The increase between 2015 and 2016 was mainly
due to (1) an increase in our business scale and (2) revolving credit granted to several qualified
distributors covering provinces in Southern China where we intend to strengthen our market
presence.
Our inventories increased from RMB34.7 million as of December 31, 2014 to RMB58.4
million as of December 31, 2015, to RMB67.8 million as of December 31, 2016, and to RMB84.8
million as of June 30, 2017, primarily due to (1) the increase in our sales volume and (2) our
launch of various new products. We are generally required to build up an initial inventory level for
new products for future sales, which leads to a higher ratio of inventory level to sales volume for
new products than existing products. We had property, plant and equipment of RMB29.5 million,
RMB48.9 million, RMB69.8 million and RMB88.9 million as of December 31, 2014, 2015, 2016 and
June 30, 2017, respectively. The increases of property, plant and equipment during the Track
Record Period related primarily to our continuing expansion of production capacity of our existing
production facilities, as well as purchases of new equipment for producing 3D-printed products
and R&D purposes.See “Financial Information—Analysis of Selected Consolidated Balance Sheet
Items” for more details.
Summary Consolidated Statements of Cash Flows
Six months
Year ended December 31, ended June 30,
2014 2015 2016 2016 2017
(unaudited)
Net cash generated from
operating activities . . . . . . . . . . . . . 51,092 36,302 69,643 5,676 56,479
Net cash (used in)/generated
from investing activities . . . . . . . . . . (16,020) 44,462 (27,166) (18,816) (26,901)
Net cash (used in)/generated
from financing activities. . . . . . . . . . (30,600) (23,911) 14,037 45,491 (23,403)
Net increase in cash and cash
equivalents . . . . . . . . . . . . . . . . . 4,472 56,853 56,514 32,351 6,175
See “Financial Information—Liquidity and Capital Resources” for details.
Key Financial Ratios
As of
and for the
six months
ended
As of and for the year ended December 31, June 30,
2014 2015 2016 2017
Gross margin . . . . . . . . . . . . . . . . . . . . . . . 68.3% 68.9% 69.2% 68.7%
Return on equity(1) . . . . . . . . . . . . . . . . . . . . 35.6% 39.0% 32.8% N/A
Return on assets(2) . . . . . . . . . . . . . . . . . . . . 26.5% 26.2% 22.4% N/A
Current ratio(3) . . . . . . . . . . . . . . . . . . . . . . . 346.7% 222.2% 325.6% 277.3%
(1) Return on equity is calculated by dividing (i) profit by (ii) the average of the beginning and end balance of total equity
attributable to owners of our Company of a given period and multiplying by 100.0%.
(2) Return on assets is calculated by dividing (i) profit by (ii) the average of the beginning and end balance of total
assets of a given period and multiplying by 100.0%.
(3) Current ratio is calculated by dividing (i) current assets by (ii) current liabilities at the end of the period and
multiplying by 100.0%.
—9—
SUMMARY
The following table sets forth a breakdown of the sales volume and average selling price of
our major products for the periods indicated:

2014 2015 2016 2016 2017
Average Average Average Average Average
Sales Selling Sales Selling Sales Selling Sales Selling Sales Selling
Volume(1) Price Volume(1) Price Volume(1) Price Volume(1) Price Volume(1) Price
(sets) (RMB) (sets) (RMB) (sets) (RMB) (sets) (RMB) (sets) (RMB)
Knee replacement products . . . . 8,920 5,108 11,887 5,095 17,105 4,853 7,051 5,023 9,424 5,032
Hip replacement products . . . . . 37,475 2,475 44,652 2,972 57,650 2,756 24,666 2,800 28,941 3,269
(2) (2) (2) (2)
3D-printed products . . . . . . . . . – 214 2,842 730 2,441
(1) Sales volume represents the number of sets of our off-the-shelf knee and hip replacement products and pieces of
our 3D-printed products sold, respectively.
(2) Our Directors are of the view that it is not meaningful to illustrate the average selling price of our 3D-printed
products, as the prices of our 3D-printed products vary significantly.
During the Track Record Period, the average selling prices of our products varied due
primarily to changes to our product mix. In particular, new products generally have a higher selling
price than comparable existing products. Consequently, launching new products had a positive
impact on our average selling price. In 2014, 2015, 2016 and the six months ended June 30, 2016
and 2017, the average selling price for our knee replacement implants was RMB5,108, RMB5,095,
RMB4,853, RMB5,023 and RMB5,032 per set, respectively. In the same periods, the average
selling price for our off-the-shelf hip replacement implants was RMB2,475, RMB2,972, RMB2,756,
RMB2,800 and RMB3,269 per set, respectively. Such fluctuation in the average selling price of our
off-the-shelf knee and hip replacement implants was primarily driven by the introduction of new
products to our product portfolio.
The following table sets forth a breakdown of revenue and gross margin by feature of our
products for the periods indicated:

2014 2015 2016 2016 2017
Gross Gross Gross Gross Gross
Revenue Margin Revenue Margin Revenue Margin Revenue Margin Revenue Margin
(in thousands of RMB, except percentage)
Knee replacement
implants
For primary surgeries. 41,098 68.5% 56,346 73.1% 77,159 71.6% 32,730 72.6% 43,993 73.1%
For revision
surgeries . . . . . 4,468 76.1 4,221 73.3 5,850 76.9 2,688 77.8 3,424 82.1
Hip replacement
implants
For primary surgeries. 41,039 71.9 51,788 73.4 68,740 71.9 30,120 69.9 38,015 71.8
For revision
surgeries . . . . . 11,235 78.1 14,215 80.9 18,329 81.8 8,640 80.1 10,785 84.2
Common
components(1) . . . 40,460 66.3 66,689 61.9 71,801 60.9 30,302 61.0 45,794 60.2
3D-printed products
Hip replacement
implants . . . . . . . – N/A 1,060 87.3 11,490 82.6 3,004 84.6 7,710 81.6
Spine replacement
implants . . . . . . . – N/A – N/A 641 97.8 – N/A 2,067 95.9
Third-party orthopedic
products . . . . . . . . 9,013 46.0 9,149 51.7 10,785 46.7 5,292 55.2 6,893 40.9
Others(2) . . . . . . . . 965 59.8 2,696 50.7 5,982 71.5 2,571 83.0 3,836 45.2
Total . . . . . . . . . . 148,278 68.3% 206,164 68.9% 270,777 69.2% 115,347 69.2% 162,517 68.7%
(1) Common components are components that can be used for both primary surgeries and revision surgeries.
(2) Others primarily represent surgical instruments and medical irrigators.
— 10 —
SUMMARY
During the Track Record Period, gross margin of our off-the-shelf products was generally
affected by our product mix. In particular, off-the-shelf products for revision surgeries generally
had a higher gross margin than orthopedic joint implants for primary surgeries during the Track
Record Period, as they generally required more precision in the development and production.
During the Track Record Period, gross margin of common components of off-the-shelf hip
replacement implants was lower than the other types of off-the-shelf hip replacement implants.
This was mainly because a majority of our common components were introduced prior to the Track
Record Period and thus were priced lower.
Our 3D-printed products had a much higher gross margin as compared to other products.
Our 3D-printed products are generally priced higher than their off-the-shelf counterparts because
(1) there are no other comparable 3D-printed products in the Chinese market, which renders a
competitive advantage allowing us to command higher selling prices; and (2) the higher average
unit cost of producing them as 3D-printing machines are generally more expensive than our
production equipment for off-the-shelf products. As a result, the gross margin of our 3D-printed
products were relatively high during the Track Record Period. However, since our 3D-printed
products have only recently been launched, their sales volume was relatively low during the Track
Record Period. As a result, our 3D-printed products did not have a significant impact on our overall
gross margin.
RECENT DEVELOPMENTS
In August 2017 and October 2017, our Board declared dividends of U.S. dollar equivalent of
RMB11.0 million and RMB39.0 million, respectively, both of which had been paid in full before the
Listing.
In the nine months ended September 30, 2017, our unaudited revenue increased by 42.6%
to RMB247.7 million from RMB173.7 million in the same period in 2016. The increase was driven
by a growth in sales volume of all our main product categories, namely off-the-shelf knee and hip
replacement implants and, to a lesser extent, 3D-printed products. In the nine months ended
September 30, 2017, our unaudited gross profit increased by 41.8% to RMB170.9 million from
RMB120.5 million in the same period in 2016, which was in line with our revenue growth. Our
gross profit margin remained stable, being 69.0% and 69.4% in the nine months ended September
30, 2017 and 2016, respectively.
The financial information for the nine months ended September 30, 2017 as mentioned
above is derived from our unaudited interim financial information for the nine months ended
September 30, 2017, which has been reviewed by our reporting accountants, KPMG, in
accordance with the International Standard on Review Engagements 2410 “Review of Interim
Financial Information Performed by the Independent Auditor of the Entity” issued by the
International Auditing and Assurance Standards Board.
After due and careful consideration, our Directors confirm that, up to the date of this
prospectus, other than as set forth above, there has been no material adverse change in our
financial and trading position or prospects since June 30, 2017, and there is no event since June
30, 2017 which could materially affect the information shown in our audited consolidated financial
statements, including the notes thereto, set forth in Appendix I—“Accountants’ Report” to this
prospectus.
OUR SHAREHOLDING STRUCTURE
Immediately after completion of the Capitalization Issue and the Global Offering (without
taking into account any Shares that may be allotted and issued upon exercise of the Over-
Allotment Option or the options granted or to be granted under the Pre-IPO Share Option Scheme
or the Share Option Scheme), our Company will be owned as to 59.52825% in aggregate by
Ximalaya and Summer, 6.74325% by Suntop and 1.22850% by Sanbao.
— 11 —
SUMMARY
Ximalaya is owned as to 50% by Mr. Li, who is the chief executive officer of our Company,
an executive Director, the chairman of our Board, and as to 50% under the Family Trust. The
Family Trust was established by Mr. Li as settlor, with Trident Trust acting as the trustee. The
beneficiaries of the Family Trust are Mr. Li and certain of his family members. Trident Trust holds
100% of the issued share capital of Rainbow Holdings, which holds 50% of the issued share
capital of Ximalaya.
Summer is wholly owned by Ms. Zhang Bin, who is the spouse of Mr. Li. Ms. Zhang Bin is an
executive Director and a senior vice president of our Company. Accordingly, each of Ximalaya,
Summer, Trident Trust, Rainbow Holdings, Mr. Li and Ms. Zhang Bin will be our Controlling
Shareholders upon the Listing.
Suntop is wholly owned by Mr. Zhang Chaoyang, an executive Director and a senior vice
president of our Company. Sanbao is owned as to 30.22% by Ms. Zhao Xiaohong, an executive
Director and the chief financial officer of our Company, 19.23% by Mr. Qi Yajun, the general
manager of the sales department of AK Medical Beijing, 8.24% by Ms. Wang Caimei, the director
of research center of AK Medical Beijing, 8.24% by Mr. Liu Aiguo, a vice general manager of AK
Medical Beijing and 1.65% by Mr. Zhang Weiping, the chief engineer of AK Medical Beijing.
PRE-IPO INVESTOR
OrbiMed Asia, being our pre-IPO investor, subscribed for 10,000 Series A Preferred Shares
(each convertible into one Ordinary Share pursuant to its terms) in our Company, representing
10% of the total number of Shares in issue as at the Latest Practicable Date on an as-converted
basis, at an aggregate consideration of RMB140,000,000. The consideration under the Pre-IPO
Investment was fully settled and received by us on February 29, 2016. See “History,
Reorganization and Development—Pre-IPO Investment”.
PRE-IPO SHARE OPTION SCHEME
We conditionally adopted the Pre-IPO Share Option Scheme on November 17, 2017. As of
the Latest Practicable Date, options to subscribe for an aggregate of 36,000,000 Shares were
conditionally granted by our Company under the Pre-IPO Share Option Scheme. If all options
granted under the Pre-IPO Share Option Scheme which remained outstanding as at the Latest
Practicable Date are exercised and that 1,036,000,000 Shares, comprising 1,000,000,000 Shares
to be in issue immediately after the Global Offering and the Capitalization Issue and 36,000,000
Shares to be issued upon the exercise of all the options granted under the Pre-IPO Share Option
Scheme which remained outstanding as at the Latest Practicable Date, were deemed to have
been in issue, but not taking into account any Shares which may be allotted and issued upon the
exercise of the Over-Allotment Option or any option which may be granted under the Share Option
Scheme, this would have a dilutive effect of approximately 3.47% on the shareholding and the
earnings per Share of our Shareholders. See Appendix IV—“Statutory and General
Information—Other Information—15. Share Option Schemes—B. Pre-IPO Share Option Scheme”
to this Prospectus.
LISTING EXPENSES
We have incurred professional and other fees in connection with the Listing. In accordance
with the relevant accounting standards, Listing related fees that are directly attributable to
issuance of new Shares are recorded as prepaid expenses, which will be deducted from equity
upon the Listing. The remaining Listing related fees are charged to statements of profit or loss. We
expect that the total amount of Listing related expenses, including underwriting commission and
incentive fee, will be approximately RMB59.5 million, assuming the mid-point of the Offer Price
range stated in this prospectus. Of such expenses, RMB32.5 million are expected to be charged
to our consolidated statements of profit or loss. Of this RMB32.5 million, RMB21.3 million was
recognized as general and administrative expenses during the Track Record Period and the
balance amount of RMB11.2 million is expected to be recognized in 2017.
— 12 —
SUMMARY
DIVIDENDS
We declared dividends of RMB30.6 million, RMB118.0 million, RMB30.1 million and

RMB23.1 million in 2014, 2015 and 2016 and six months ended June 30, 2017, respectively, all
of which had been paid as of the Latest Practicable Date. However, we do not have a specific
dividend policy or a predetermined dividend payout ratio. The determination to pay dividends in
the future will be made at the direction of our Board and will be based on our profits, cash flows,
financial condition, capital requirements and other conditions that our Board deems relevant. The
payment of dividends may be limited by other legal restrictions and agreements that we may enter
into in the future.
NO MATERIAL ADVERSE CHANGE
Of our total Listing expenses, we expect RMB11.2 million will be recognized as general and
administrative expenses in 2017, assuming the mid-point of the Offer Price range stated in this
prospectus. After due and careful consideration, and taking into account our Listing expenses that
would be recognized as general and administrative expenses in 2017, our Directors confirm that
there has not been any material adverse change in our financial, operational or trading position
since June 30, 2017 and up to the date of this prospectus.
OFFERING STATISTICS
Offer size : Initially 25.0% of the enlarged issued share capital of our Company
(subject to the Over-Allotment Option)
Offering structure : Initially 10.0% for the Hong Kong Public Offering (subject to
adjustment) and 90.0% for the International Placing (subject to
adjustment and the Over-Allotment Option)
Over-Allotment Option : Up to 15.0% of the number of Offer Shares initially available under
the Global Offering
Offer Price per Share : HK$1.66 to HK$2.00 per Offer Share
Based on an Based on an
Offer Price of Offer Price of
HK$1.66 per HK$2.00 per
Offer Share Offer Share
Our Company’s market capitalization upon completion of
the Global Offering(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$1,660 million HK$2,000 million
Unaudited pro forma adjusted net tangible asset per Share(3) . . . . . . . . . HK$0.72 HK$0.80
(1) All statistics in the table are based on the assumption that the Over-Allotment Option is not exercised.
(2) The calculation of market capitalization is based on 1,000,000,000 Shares expected to be in issue immediately upon
completion of the Global Offering assuming the Over-Allotment Option is not exercised.
(3) The unaudited pro forma adjusted net tangible asset value per Share is calculated after making the adjustments
referred to in Appendix II—“Unaudited Pro Forma Financial Information” to this prospectus.
USE OF PROCEEDS
The following table sets forth the estimate of net proceeds from the Global Offering which we
are expected to receive after deduction of underwriting commission, incentive fee and estimated
expenses payable by us in connection with the Global Offering:
Assuming the Assuming the
Over-Allotment Over-Allotment
Option is not Option is
exercised exercised in full
(in millions of Hong Kong dollars)
Assuming an Offer Price of HK$1.83 per Offer Share (being the
mid-point of the Offer Price range stated in this prospectus) . . . . . . . . . 386.5 451.7
high end of the Offer Price range stated in this prospectus) . . . . . . . . . 426.9 498.2
low end of the Offer Price range stated in this prospectus) . . . . . . . . . 346.2 405.3
— 13 —
SUMMARY
We intend to use the net proceeds of the Global Offering for the following purposes:
• approximately 41.0% will be primarily used for the construction of the Changzhou
Facilities, and, to a lesser extent, upgrading our existing facilities in Beijing and
acquisition of new equipment for both the Changzhou Facilities and our existing
facilities in Beijing. The current designed annual production capacity of the Changzhou
Facilities is 150,000 sets of off-the-shelf orthopedic joint implants, representing
approximately 1.5 times of our annualized production capacity for off-the-shelf
orthopedic joint implants based on the six months ended June 30, 2017. We expect to
reach this capacity by 2021. We aim to increase the production capacity of 3D-printed
products by 33.3% by the end of 2018. See “Our Business—Production” for details;
• approximately 21.0% will be used in connection with the development and upgrade of
our 3D-printed products and PTIP, including primarily funding the R&D of 3D-printed
products, including the next generation of our existing 3D-printed products, procuring
3D-printing machines and relevant devices for R&D, and upgrading the data processing
software, the instant messaging applications and the data base to enhance the
efficiency of our PTIP, through which we can enhance the brand recognition of our 3D
ACT solutions among hospitals and surgeons and expand its application into other
orthopedic product market sectors such as bone tumor and maxillofacial sectors. See
“Our Business—Our Strategies—Further ramp up the application of our personalized
3D ACT solutions in both high-end and mass markets to further drive the growth of our
product sales, broaden our product portfolio, and enhance customer stickiness” for
details;
• approximately 15.0% will be used for other R&D activities, including funding the
development of off-the-shelf orthopedic products, including new generation of off-the-
shelf orthopedic joint implants and spine replacement implants, as well as other
off-the-shelf orthopedic products such as trauma and oral orthopedic products. See
“Our Business—Our Strategies—Expanding the breadth of our product portfolio into
newly-captured orthopedic product market sectors” for details;
• approximately 15.0% will be used for funding potential acquisitions and developing
strategic alliances that could complement our existing product portfolio, technology and
business growth. In particular, we plan to target companies that have CFDA registration
certificates or related technologies for products that we do not currently produce but
plan to develop in select areas. As of the Latest Practicable Date, we had considered
several potential targets in Europe but discussion remained preliminary and we had not
entered into any agreements or understanding. See “Our Business—Our
Strategies—Explore strategic acquisition and alliance opportunities” for details; and
• approximately 8.0% will be used for general corporate purposes.
The above allocation of the proceeds will be adjusted on a pro-rata basis if the Offer Price
is fixed at a higher or lower level compared to the mid-point of the estimated Offer Price range.
To the extent that the net proceeds from the Global Offering are not immediately used for the
above purposes and to the extent permitted by applicable laws and regulations, we may allocate
part or all of the proceeds to short-term interest-bearing deposits or money market instruments
with authorized financial institutions or licensed banks.
We will issue an appropriate announcement if there is any material change to the above
proposed use of proceeds.
RISK FACTORS
There are certain risks and uncertainties relating to an investment in our Shares. These risks
include primarily: (1) risks relating to laws, rules and regulations applicable to the orthopedic
implant market in China; (2) risks relating to our ability to develop and commercialize new
products and solutions; (3) risks relating to our distribution network; and (4) risks relating to
competition. See “Risk Factors”.
— 14 —
DEFINITIONS
Unless the context otherwise requires, the following expressions have the following
meanings in this prospectus. Certain other terms are explained in the section headed
“Glossary” in this prospectus.
“AIC” Administration of Industry and Commerce (工商行政管理機關)

in China or, where the context so requires, State
Administration of Industry and Commerce of China (中華人民
共和國工商行政管理總局) or its delegated authority at
provincial, municipal or other local level
“AK Medical Beijing” Beijing AK Medical Co., Ltd* (北京愛康宜誠醫療器材有限公司)

(formerly known as 北京愛康宜誠醫療器材股份有限公司), a
company established under the Chinese laws on May 8, 2003
and owned as to 90% by AK Medical HK and 10% by Bright
AK HK
“AK Medical Beijing Capital a capital increase agreement dated July 30, 2015 entered into
Increase Agreement” among Mr. Li, Mr. Zhang Chaoyang, Ms. Zhang Bin, Ms. Zhao
Xiaohong, Ms. Li Huijiang, Ms. Wang Caimei, Ms. Liu Aiguo,
Mr. Qi Yajun, Mr. Zhang Weiping and Bright AK HK on the
terms as more particularly set out in “History, Reorganization
and Development—Pre-IPO Investment—Introduction” and
“History, Reorganization and Development—
Reorganization—(2) Stage 1 of the Pre-IPO Investment and
Capital Increase of AK Medical Beijing”
“AK Medical BVI” AK Medical Investments Limited (愛康醫療投資有限公司), a

company incorporated with limited liability under the laws of
BVI on July 21, 2015 and wholly owned by our Company
“AK Medical Changzhou” ITI Medical Co. Ltd.* (天衍醫療器材有限公司), a company

established under the Chinese laws with limited liability on
March 28, 2016 and wholly owned by AK Medical HK
“AK Medical HK” AK Medical International Limited (愛康醫療國際有限公司), a

company incorporated with limited liability under the laws of
Hong Kong on July 28, 2015 and wholly owned by AK Medical
BVI
“AK Medical XMKS” Beijing Ximai Kesi Medical Device Limited* (北京西麥克斯醫療
器械有限公司), a company established under the Chinese
laws with limited liability on July 24, 2007 and wholly owned
by AK Medical Beijing
“Application Form(s)” WHITE Application Form(s), YELLOW Application Form(s)

and GREEN Application Form(s) or, where the context so
requires, any of them
— 15 —
DEFINITIONS
“Articles” or “Articles of the second amended and restated articles of association of

Association” our Company, as amended from time to time, a summary of
which is set out in the Appendix III to this prospectus
“Board” or “Board of Directors” the board of directors of our Company
“Bright AK HK” Bright AK Limited (formerly known as OrbiMed Asia AK

Limited), a company incorporated with limited liability under
the laws of Hong Kong on July 7, 2015 and wholly owned by
AK Medical BVI
“Business Day” any day (other than Saturday, Sunday or public holiday) on
which banks in Hong Kong are generally open for business
“BVI” the British Virgin Islands
“CAGR” compound annual growth rate
“Capitalization Issue” the issue of Shares to be made upon capitalization of certain

sums standing to be the credit of the share premium account
of our Company as referred to in Appendix IV—“Information
About Our Company—3. Resolutions in writing of our
Shareholders passed on November 17, 2017” to this
prospectus
“Cayman Islands Companies the Companies Law, Cap. 22 (Law 3 of 1961) of the Cayman
Law” or “Companies Law” Islands, as amended from time to time
“CCASS” The Central Clearing and Settlement System established and

operated by HKSCC
“CCASS Clearing Participant” a person admitted to participate in CCASS as a direct

participant or a general clearing participant
“CCASS Custodian Participant” a person admitted to participate in CCASS as a custodian

participant
“CCASS Investor Participant” a person admitted to participate in CCASS as an investor

participant who may be an individual or joint individuals or a
corporation
“CCASS Participant” a CCASS Clearing Participant, a CCASS Custodian

Participant or a CCASS Investor Participant
“CFDA” China Food and Drug Administration (中國國家食品藥品監督管

理總局)
— 16 —
DEFINITIONS
“Changzhou Facilities” our production facilities that are to be constructed inside of

Changzhou Xitaihu Industry Park, Changzhou, Jiangsu
Province, China
“China” or “the PRC” the People’s Republic of China excluding, for the purpose of
this prospectus, Hong Kong, the Macau Special
Administrative Region of China and Taiwan
“China-based orthopedic joint orthopedic joint implant companies with their headquarters
implant company” located in China
“Companies Ordinance” the Companies Ordinance (Chapter 622 of the Laws of Hong
Kong), as amended, supplemented or otherwise modified
from time to time
“Companies (Winding Up and the Companies (Winding Up and Miscellaneous Provisions)

Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong), as
Ordinance” amended or supplemented or otherwise modified from time to
time
“Company” or “our Company” or AK Medical Holdings Limited (愛康醫療控股有限公司), the

“AK Medical” holding company of our Group after the Reorganization and
the listing vehicle for the Listing, which is an exempted
company with limited liability incorporated on July 17, 2015 in
the Cayman Islands and the Shares of which are to be listed
on the Main Board of the Stock Exchange
“Controlling Shareholder(s)” has the meaning ascribed to it in the Listing Rules and, unless
the context requires otherwise, collectively refers to
Ximalaya, Summer, Trident Trust, Rainbow Holdings, Mr. Li
and Ms. Zhang Bin
“CSRC” China Securities Regulatory Commission (中國證券監督管理

委員會)
“Deed of Indemnity” the deed of indemnity dated November 17, 2017 executed by
Ximalaya, Summer, Mr. Li and Ms. Zhang Bin in favor of our
Company (for itself and as trustee for the benefit of each of its
subsidiaries) on the terms as more particularly set out in
Appendix IV—“Statutory and General Information—Other
Information—16. Estate duty, tax and other indemnity”
“Deed of Non-competition” the deed of non-competition dated November 17, 2017

executed by Ximalaya, Summer, Rainbow Holdings, Mr. Li
and Ms. Zhang Bin in favor of our Company on the terms as
more particularly set out in “Relationship with our Controlling
Shareholders—Non-Compete Undertakings”
— 17 —
DEFINITIONS
“Director(s)” the director(s) of our Company
“EIT” Enterprise Income Tax
“ERP” Enterprise Resource Planning System
“Family Trust” LZY Trust, a discretionary trust established by Mr. Li as settlor

and the beneficiaries of which are Mr. Li and certain of his
family members
“Frost & Sullivan” Frost & Sullivan (Beijing) Inc., Shanghai Branch Co. (弗若斯特
沙利文(北京)諮詢有限公司上海分公司), a consulting firm that
provides market research and analysis
“General Mandate” the general mandate granted to our Directors by our

Shareholders in relation to the issue of new Shares, further
information on which is set forth in the paragraph under
“Appendix IV—Statutory and General Information—Further
information about our Group—3. Resolutions in writing of our
Shareholders passed on November 17, 2017” in this
prospectus
“Global Offering” the Hong Kong Public Offering and the International Placing
“Group”, “our Group”, our Company and our subsidiaries or, where the context so
“we” or “us” requires in respect of the period before our Company became
the holding company of our present subsidiaries, the entities
which carried on the business of the present Group at the
relevant time
“HK$” Hong Kong dollars, the lawful currency of Hong Kong
“HK eIPO White Form” the application for Hong Kong Offer Shares to be issued in the
applicant’s own name by submitting applications online
through the designated website of HK eIPO White Form
Service Provider, www.hkeipo.hk
“HK eIPO White Form Service the HK eIPO White Form service provider designed by our
Provider” Company as specified on the designated website at
www.hkeipo.hk
“HKSCC” Hong Kong Securities Clearing Company Limited
“HKSCC Nominees” HKSCC Nominees Limited, a wholly-owned subsidiary of

HKSCC
“Hong Kong” the Hong Kong Special Administrative Region of China
— 18 —
DEFINITIONS
“Hong Kong Offer Shares” the 25,000,000 Shares being initially offered for subscription
in the Hong Kong Public Offering, subject to adjustment as
described in “Structure of the Global Offering—Pricing and
Allocation” in this prospectus
“Hong Kong Public Offering” the offer of the Hong Kong Offer Shares for subscription by
the public in Hong Kong
“Hong Kong Share Registrar” Tricor Investor Services Limited
“Hong Kong Underwriters” the underwriters of the Hong Kong Public Offering listed in
“Underwriting—Hong Kong Underwriters” in this prospectus
“Hong Kong Underwriting the underwriting agreement dated December 5, 2017, relating
Agreement” to the Hong Kong Public Offering and entered into among the
Sole Global Coordinator, the Hong Kong Underwriters, our
Company, Mr. Li, Ms. Zhang Bin, Ximalaya and Summer
“IAS” the International Accounting Standards
“IASB” the International Accounting Standards Board
“IFRS” International Accounting Standards, International Financial

Reporting Standards, amendments and the related
interpretations issued by the IASB
“independent third party(ies)” any individual(s) or entity(ies) who, as far as our Directors are
aware, is/are not connected persons of our Company within
the meaning ascribed to it in the Listing Rules
“international orthopedic joint orthopedic joint implant companies with their headquarters
implant companies” located outside of China
“International Placing” the placing of the International Placing Shares at the Offer
Price outside the United States in offshore transactions in
reliance on Regulation S and in the United States solely to
QIBs as defined in Rule 144A pursuant to an exemption from
resignation under U.S. Securities Act
“International Placing Shares” the 225,000,000 Shares being initially offered in the
International Placing together with, where relevant, any
additional Shares which may be issued by our Company
pursuant to the exercise of the Over-Allotment Option, subject
to adjustment as described in “Structure of the Global
Offering—Pricing and Allocation” in this prospectus
— 19 —
DEFINITIONS
“International Underwriter(s)” the international underwriter(s) of the International Placing

who is/are expected to enter into the International
Underwriting Agreement as purchaser(s) on or around the
Price Determination Date
“International Underwriting the underwriting agreement relating to the International

Agreement” Placing, which is expected to be entered into among our
Company, the Sole Global Coordinator, Mr. Li, Ms. Zhang Bin,
Ximalaya, Summer and the International Underwriters,
among other parties
“Joint Lead Managers” Goldman Sachs (Asia) L.L.C. and Guotai Junan Securities
(Hong Kong) Limited
“Latest Practicable Date” November 27, 2017, being the latest practicable date prior to
the printing of this prospectus for the purpose of ascertaining
certain information contained in this prospectus
“Letter Agreement” the letter agreement dated February 26, 2016 entered into
among our Company, AK Medical BVI, AK Medical HK, AK
Medical Beijing, AK Medical XMKS, Mr. Li, Ximalaya, Ms.
Zhang Bin, Mr. Zhang Chaoyang, Suntop, Summer, Sanbao
and OrbiMed Asia to amend certain term of the Series A
Preferred Share Purchase Agreement, as more particularly
set out in “History, Reorganization and Development—Pre-
IPO Investment”
“Listing” listing of the Shares on the Main Board of the Stock Exchange
“Listing Committee” the listing committee of the Stock Exchange
“Listing Date” the date, expected to be on or about December 20, 2017 on

which the Shares are listed on the Stock Exchange and from
which dealings in the Shares are permitted to commence on
the Stock Exchange
“Listing Rules” the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited, as amended, supplemented
or otherwise modified from time to time
“Memorandum of Association” or the second amended and restated memorandum of

Memorandum” association of our Company, as amended from time to time
“Medical Device Procurement a medical device procurement list issued by the relevant
List” government authorities in the respective provinces,
municipalities and regions in China and hospitals must
procure medical devices which are on this list through tender
established by the relevant government authorities
— 20 —
DEFINITIONS
“MOFCOM” the Ministry of Commerce of China (中華人民共和國商務部), or

where the context so requires, its counterparts at the local
levels
“MOH” the National Health and Family Planning Commission of

China (中華人民共和國衞生和計劃生育委員會), formerly known
as the Ministry of Health of China (中華人民共和國衞生部)
prior to March 5, 2013
“Mr. Li” Mr. Li Zhijiang (李志疆先生), the chief executive officer of our
Company, an executive Director and the chairman of our
Board. Mr. Li is also the spouse of Ms. Zhang Bin and the
brother-in-law of Mr. Zhang Chaoyang, each an executive
Director and a senior vice president of our Company
“Offer Price” the final price per Offer Share in Hong Kong dollars (exclusive
of brokerage of 1.0%, SFC transaction levy of 0.0027% and
Stock Exchange trading fee of 0.005%)
“Offer Shares” the Hong Kong Offer Shares and the International Placing
Shares
“OrbiMed Asia” OrbiMed Asia Partners II L.P., an exempted limited

partnership registered under the laws of the Cayman Islands
on June 10, 2013, further details of which are set out in
“History, Reorganization and Development—Pre-IPO
Investment—Summary of Material Terms—Name and
Information of the Pre-IPO Investor”
“Ordinary Shares” ordinary share(s) in the share capital of our Company of

HK$0.01 each
“Over-Allotment Option” the option expected to be granted by our Company to the

International Underwriters, exercisable by the Sole Global
Coordinator (on behalf of the International Underwriters) in
whole or in part, for one time or more, at any time during the
30-day period from the last date for lodging applications
under the Hong Kong Public Offering, pursuant to which our
Company may be required to allot and issue up to an
aggregate of 37,500,000 Shares (representing approximately
15% of the number of Offer Shares initially available under
the Global Offering) at the Offer Price to, among other things
(such as effecting the permitted stabilizing actions as set out
in “Structure of the Global Offering—Stabilization”), cover
over-allocations in the International Placing, if any, details of
which are described in the section headed “Structure of the
Global Offering—Over-Allotment Option” in this prospectus
— 21 —
DEFINITIONS
“PBOC” the People’s Bank of China (中國人民銀行), the central bank of

the PRC
“PCT” Patent Cooperation Treaty
“PRC Legal Advisor” Jingtian & Gongcheng, the legal advisor to our Company as to
PRC law
“Pre-IPO Investment” the pre-IPO investment in our Group made by OrbiMed Asia
and completed on February 29, 2016 pursuant to the Pre-IPO
Investment Transaction Documents, as more particularly set
out in “History, Reorganization and Development—Pre-IPO
Investment—Introduction”
“Pre-IPO Investment the shareholders agreement dated February 29, 2016 entered
Shareholders Agreement” into among our Company, AK Medical BVI, AK Medical HK,
AK Medical Beijing, AK Medical XMKS, Mr. Li, Ximalaya, Ms.
Zhang Bin, Mr. Zhang Chaoyang, Suntop, Summer, Sanbao
and OrbiMed Asia on the terms as more particularly set out in
“History, Reorganization and Development—Pre-IPO
Investment—Introduction”
“Pre-IPO Investment the Pre-IPO Investment Framework Agreement, Series A

Transaction Documents” Preferred Share Purchase Agreement, Letter Agreement and
Pre-IPO Investment Shareholders Agreement
“Pre-IPO Share Option Scheme” the pre-IPO share option scheme conditionally adopted by
our Company on November 17, 2017, the principal terms of
which are summarized in Appendix IV—“Statutory and
General Information—Other Information—15. Share Option
Schemes—B. Pre-IPO Share Option Scheme” to this
Prospectus
“Price Determination Date” the date, expected to be on or about December 13, 2017, on
which the Offer Price will be determined and, in any event, not
later than December 19, 2017
“QIB” a qualified institutional buyer as defined in Rule 144A
“Rainbow Holdings” Rainbow Holdings Limited, a company incorporated with

limited liability under the laws of BVI on July 11, 2017 and
wholly owned by Trident Trust
“Regulation S” Regulation S under the U.S. Securities Act
— 22 —
DEFINITIONS
“Reorganization” the reorganization of our Group’s corporate and shareholding

structure in preparation for the Listing, details of which
are set out in “History, Reorganization and
Development—Reorganization”
“Repurchase Mandate” the general mandate granted to our Directors by our

Shareholders in relation to the repurchase of our Shares,
further information on which is set forth in Appendix IV—
“Statutory and General Information—Information about Our
Company—3. Resolutions in writing of our Shareholders
passed on November 17, 2017” to this prospectus
“RMB” or “Renminbi” the lawful currency of China
“Rule 144A” Rule 144A under the U.S. Securities Act
“SAFE” or “State Administration the State Administration of Foreign Exchange of China (中華
of Foreign Exchange” 人民共和國國家外匯管理局), a Chinese governmental agency
responsible for matters relating to foreign exchange
administration, including local branches, when applicable
“Sanbao” Sanbao Limited (三寶有限公司), a company incorporated with

owned as to 30.22% by Ms. Zhao Xiaohong, an executive
Director and the chief financial officer of our Company, 8.24%
by Ms. Wang Caimei, 8.24% by Ms. Liu Aiguo, 19.23% by Mr.
Qi Yajun and 1.65% by Mr. Zhang Weiping, each a senior
management member of our Company, and 32.42% by Ms. Li
Huijiang, the sister of Mr. Li
“SAT” or “State Administration of the State Administration of Taxation (中華人民共和國國家稅務

Taxation” 總局), a Chinese governmental agency responsible for the
matters of taxation administration in the nationwide
“SCNPC” The Standing Committee of the National People’s Congress

(全國人民代表大會常務委員會), a permanent institution for the
National People’s Congress
“Series A Preferred Share(s)” preferred share(s) in the share capital of our Company of
HK$0.01 each issued to and held by OrbiMed Asia with the
rights ascribed in the articles of association of our Company
in force prior to the adoption of the Articles and the Pre-IPO
Investment Shareholders Agreement
— 23 —
DEFINITIONS
“Series A Preferred Share the series A preferred share purchase agreement dated
Purchase Agreement” December 18, 2015 (as amended by the Letter Agreement)
entered into among our Company, AK Medical BVI, AK
Medical HK, AK Medical Beijing, AK Medical XMKS, Mr. Li,
Ximalaya, Ms. Zhang Bin, Mr. Zhang Chaoyang, Suntop,
Summer, Sanbao and OrbiMed Asia on the terms as more
particularly set out in “History, Reorganization and
Development—Pre-IPO Investment” and “History,
Reorganization and Development—Reorganization—(6)
Stage 2 of the Pre-IPO Investment and Transfer of 100% of
Shares of Bright AK HK to AK Medical BVI”
“SFC” the Securities and Futures Commission of Hong Kong
“SFO” the Securities and Futures Ordinance (Chapter 571 of the

Laws of Hong Kong), as amended, supplemented or
otherwise modified from time to time
“Share Option Scheme” the share option scheme conditionally adopted by our
Company on November 17, 2017 and effective upon the
Listing, the principal terms of which are summarized in
Appendix IV—“Statutory and General Information—Other
Information—15. Share Option Schemes—A. Share Option
Scheme” to this Prospectus
“Shareholders” holders of Shares
“Shares” Ordinary Shares and Series A Preferred Shares, and upon

completion of the Global Offering, Ordinary Shares
“Sole Bookrunner”, “Sole Global Goldman Sachs (Asia) L.L.C.

Coordinator” or “Sole
Sponsor”
“Stabilizing Manager” Goldman Sachs (Asia) L.L.C.
“Stock Borrowing Agreement” the stock borrowing agreement expected to be entered into
between the Stabilizing Manager or its affiliate and Ximalaya
on or about the Price Determination Date as further described
in “Structure of the Global Offering—Stock Borrowing
Arrangement”
“Stock Exchange” The Stock Exchange of Hong Kong Limited
— 24 —
DEFINITIONS
“Summer” Summer Limited (神瑪有限公司), a company incorporated with

wholly owned by Ms. Zhang Bin, our executive Director and a
senior vice president of our Company, the spouse of Mr. Li
and the sister of Mr. Zhang Chaoyang, who is also our
executive Director and a senior vice president of our
Company
“Suntop” Suntop Limited (陽峰有限公司), a company incorporated with

wholly owned by Mr. Zhang Chaoyang, our executive Director
and a senior vice president of our Company, the brother-in-
law of Mr. Li and the brother of Ms. Zhang Bin, who is also our
executive Director and a senior vice president of our
Company
“Track Record Period” the period of three financial years ended December 31, 2016
and the six months ended June 30, 2017
“Trident Trust” Trident Trust Company (HK) Limited (恒泰信託（香港）有限公

司), a company incorporated with limited liability on July 21,
2011 and registered as a trust company on November 17,
2011 under the laws of Hong Kong, being the trustee of the
Family Trust
“Underwriter(s)” the Hong Kong Underwriter(s) and the International

Underwriter(s)
“Underwriting Agreements” the Hong Kong Underwriting Agreement and the International
Underwriting Agreement
“U.S.” or “United States” the United States of America
“U.S. Securities Act” the United States Securities Act of 1933, as amended
“US$” United States dollars, the lawful currency of the United States
“Ximalaya” Ximalaya Limited (喜馬拉亞有限公司), a company

incorporated with limited liability under the laws of BVI on July
13, 2015 and owned as to 50% by Mr. Li and as to 50% by
Rainbow Holdings
In this prospectus, the terms “associate”, “close associate”, “connected person”, “core
connected person”, “connected transaction”, “controlling shareholder”, “subsidiary” and
“substantial shareholder” shall have the meanings given to such terms in the Listing Rules, unless
the context otherwise requires.
* the English translations of Chinese entities are for identification purposes only
— 25 —
GLOSSARY
This glossary contains definitions of certain terms used in this prospectus in connection
with us and our business. Some of these may not correspond to standard industry definitions.
“3D” three-dimensional
“3D ACT solutions” 3D Accurate Construction Technology solutions, personalized

solutions the Company developed and introduced in July
2014 to assist surgeons in simulating and planning for implant
surgeries
“3D-imaging” the process of generating visual 3D representations of the

interior of a body for clinical analysis and medical intervention
“3D-modeling” the process of developing a virtual representation of the 3D

surface of an object using specialized computer software
“3D-printed” or “3D-printing” the production process of generating a physical object from a

3D digital model, typically by laying down many successive
thin layers of a material using a 3D-printing machine
“3D-printed products” products produced using 3D-printing technologies
“CE Marking” a mandatory conformity marking for certain products sold

within the European Economic Area, which is a
manufacturer’s declaration that the product complies with the
essential requirements of the relevant European health,
safety and environmental protection legislation
“GDP” gross domestic product
“GMP” the Good Manufacturing Practice for Medical Devices issued

by CFDA
“high-end market” the market targeting orthopedic surgeries performed by Class

III hospitals in major cities
“ISO” International Organization for Standardization
“ISO13485” the international standard in respect of Medical Devices —

Quality Management Systems — Requirements for regulatory
purposes revised by ISO in 2003, an independent quality
management system specially designed for the medical
device industry
“ISO9001” a set of core standards in quality management included in

ISO9000 standards, which was initiated by ISO in 1994 and
formulated by the Quality Management and Quality
Assurance Technical Committee of ISO
— 26 —
GLOSSARY
“mass market” the market targeting orthopedic surgeries performed by

hospitals of Class II or lower levels or in small cities or rural
areas
“off-the-shelf products” the standard, mass-produced orthopedic products that are of

pre-determined shapes and sizes
“primary surgery” a surgery that replaces the natural joint of a patient with an
implant
“PTIP” Physician-Technician Interaction Platform, a platform where

technicians work with surgeons to analyze data obtained from
medical imaging technologies and construct 3D images and
3D models to provide surgeons with detailed information
through virtual simulation and physical modeling of individual
patients
“R&D” research and development
“revision surgery” a follow-up surgery for the replacement or repair of an implant

or repair of defected bone parts after a primary surgery
“sq. m” square meter
“surgical guide” a custom-made template that matches a patient’s unique

anatomy precisely, which surgeons use during orthopedic
surgeries to position orthopedic joint implants
“surgical instrument” an instrument used by surgeons to perform surgeries,

including a surgical guide
— 27 —
FORWARD-LOOKING STATEMENTS
This prospectus contains certain forward-looking statements and information relating to our
Company and our subsidiaries that are based on the beliefs of our management as well as
assumptions made by and information currently available to our management. When used in this
prospectus, the words “aim”, “anticipate”, “believe”, “could”, “expect”, “going forward”, “intend”,
“may”, “ought to”, “plan”, “project”, “seek”, “should”, “will”, “would” and the negative of these words
and other similar expressions, as they relate to us or our management, are intended to identify
forward-looking statements. Such statements reflect the current views of our management with
respect to future events, operations, liquidity and capital resources, some of which may not
materialize or may change. These statements are subject to certain risks, uncertainties and
assumptions, including the other risk factors as described in this prospectus. You are strongly
cautioned that reliance on any forward-looking statements involves known and unknown risks and
uncertainties. The risks and uncertainties facing our Company which could affect the accuracy of
forward-looking statements include, but are not limited to, the following:
• our business and prospects;
• future developments, trends and conditions in the healthcare services industry and the
orthopedic implant market;
• our business strategies and various measures and initiatives to implement and achieve
these strategies;
• general economic, political and business conditions in China and other markets in
which we operate;
• changes to the regulatory and enforcement environment of China and general outlook
and competitive landscape in the industries and markets in which we operate;
• the effects of the global financial markets and economic crisis;
• our ability to develop new products and obtain CFDA registrations for the new products;
• changes to our current expansion strategy, including our ability to expand our
production facilities and capabilities;
• our ability to reduce costs;
• our dividend policy;
• the amount and nature of, and potential for, future development of our business;
• capital market developments;
• the actions and developments of our competitors; and
• change or volatility in interest rates, foreign exchange rates, equity prices, volumes,
operations, margins, risk management and overall market trends.
— 28 —
FORWARD-LOOKING STATEMENTS
Subject to the requirements of applicable laws, rules and regulations, we do not have any
and undertake no obligation to update or otherwise revise the forward-looking statements in this
prospectus, whether as a result of new information, future events or otherwise. As a result of these
and other risks, uncertainties and assumptions, the forward-looking events and circumstances
discussed in this prospectus might not occur in the way we expect or at all.
Accordingly, you should not place undue reliance on any forward-looking information. All
forward-looking statements in this prospectus are qualified by reference to the cautionary
statements in this section.
In this prospectus, statements of or references to our intentions or those of our Directors are
made as of the date of this prospectus. Any such information may change in light of future
developments.
— 29 —
RISK FACTORS
You should carefully consider the following information about risks, together with the other
information contained in this prospectus, including our consolidated financial statements and
related notes, before you decide to buy our Shares. If any of the circumstances or events
described below actually arises or occurs, our business, financial condition, results of
operations and prospects could be materially and adversely affected. In any such case, the
market price of our Shares could decline, and you may lose all or part of your investment.
RISKS RELATING TO OUR BUSINESS
We are required to complete CFDA registration processes for our orthopedic implants,
which are costly, lengthy and uncertain, before they can be commercialized. Failure to
obtain, maintain or renew the required CFDA registrations for our products in a timely
manner could significantly disrupt our business and materially and adversely affect our
business, financial condition and results of operations.
Our orthopedic implants are subject to extensive regulation in China. To produce and sell our
products, we are required to obtain and renew CFDA registrations for Class II and Class III
medical devices. The CFDA registration process is costly, lengthy and uncertain. In particular, we
are required to conduct, at our own expense, adequate and well-controlled clinical trials, and
provide the CFDA with clinical data that demonstrates the efficacy and safety of our orthopedic
implants. The duration of a clinical trial generally varies substantially with the type, complexity,
novelty and intended use of the product. In our experience, clinical trials for our orthopedic
implants typically span 20 to 30 months, but could take longer. In particular, it took more than three
years for us to complete the clinical trial process for our 3D-printed hip replacement implant. The
process may be delayed or need to be repeated for various reasons, such as negative or
inconclusive results. Our clinical trials may be suspended at any time if we or the regulatory
authorities believe the patients participating in our studies are exposed to unacceptable health
risks.
Product testing may fail at any stage of the clinical trial. Success in preclinical testing and
early clinical trials does not guarantee success in subsequent clinical trials, and interim results of
trials may not accurately indicate final results. It is not unusual for companies to suffer significant
setbacks in advanced clinical trials, even after receiving promising results in earlier trials.
Preclinical and clinical data can be interpreted in different ways, which could delay, limit or prevent
further testing or regulatory approval.
We cannot control whether planned clinical trials will begin on time or whether any of our
clinical trials will be completed on schedule, or at all. Our product development costs would likely
increase if we encounter delays in testing or obtaining approvals or if we need to perform more
or a larger scale of clinical trials than planned. If the delays are significant, the commercial
prospects for some of our medical device products will be harmed, which will adversely affect the
results of operations in our business. Our business may also be adversely affected if the product
under development fails to receive approval for commercial sale after we have invested significant
time and costs in the clinical trial process.
— 30 —
RISK FACTORS
CFDA registration certificates, if obtained, must be renewed every five years. The renewal
process can be lengthy. According to the approval guidance for renewal applications relating to
domestically manufactured Class III medical device registration certificates published by the
CFDA, it normally takes 128 business days from the submission of an application to the delivery
of the approval, which primarily consists of three phases: (1) no more than 90 business days to
review the renewal application subject to the sufficiency and satisfaction of the application
documents, (2) no more than 20 business days to deliberate and reach a decision, and (3) no
more than 10 additional business days to issue the renewed registration certificate. However,
during the first phase, the CFDA may find it necessary to engage external experts to review the
application or request supplemental materials from the applicant, the time required for which is not
counted toward the 90 business day deadline and varies case by case. Therefore, this process
usually takes a longer time in practice. According to Frost & Sullivan, generally, the average time
required to renew the registration certificate of a Class III medical device which has no material
change ranges from 180 days to one year. If the CFDA decides not to grant the approvals for
renewal, we will not be able to manufacture and sell the related products, which would materially
and adversely affect our business, financial condition and results of operations.
We operate in a competitive industry. If we are unable to continue to develop new products

and technologies in a timely manner, or if our new products do not perform as well as
expected in the market, the demand for and average price of our products may decrease,
which may materially and adversely affect our business, financial condition and results of
operations.
Our products are subject to intense competition. In addition, the purchase of medical
devices, including our products, by government owned or controlled hospitals are generally
subject to a public tender process run by the relevant local governments from time to time. See
“Regulation—Tender Processes for Medical Devices” for details. In particular, the requirement for
participating in the public tender process often results in the bidding price for a specific product
decreasing over time, therefore our products generally are subject to price pressure. As the
corresponding manufacturing, labor and raw material costs of our products do not decrease at the
same rate as the average selling price, the profit margin for our products generally decreases over
time.
As a result, we make significant investments in research and development to modify and

improve the safety and efficacy of our products in order to maintain or improve the average selling
price and the overall profitability of our product portfolio. Our success depends substantially on
our ability to anticipate industry trends and to identify, develop and market new and advanced
products that meet our customers’ demands in a timely manner. However, we cannot assure you
that we will always be able to promptly and effectively respond to emerging market trends by
improving our product portfolio in a timely and effective manner, or that the launch of our new
products will always be commercially successful. Developing and commercializing new products
is time consuming. Typically, it takes at least one to two years to develop an orthopedic product
and another three to five years to complete CFDA registration. In addition, we may experience
delays or setbacks at any stage of the product development, manufacturing, clinical trials or
product registration. We may not be able to successfully market our new products or our end
customers may not be receptive to our new products. Our competitors may be able to launch new
products earlier than us, or our end customers may prefer their products, which may result in price
reductions or reduced margins or loss of market share for our products, or may lead to our
products becoming obsolete or non-competitive. When our products become less marketable or
obsolete due to either our inability to develop new products or poor performance of our new
products in the market, we may be required to recognize an impairment provision on our
inventories, which could materially and adversely affect our business, results of operations and
financial condition.
— 31 —
RISK FACTORS
To respond to price pressure, we also need to control our production costs by increasing the
efficiency of our manufacturing processes, efficiently managing our raw material use and
improving production yields in order to increase or maintain sustainable profit margins of our new
products. If we are unable to successfully design, manufacture and market new products in time
or at all, or if we fail to effectively control our production costs, our results of operations and
financial condition would be materially and adversely affected.
If our 3D ACT solutions or 3D-printed products do not generate expected returns in a timely
manner, we may not be able to recoup our related capital expenditure, and R&D and sales
and marketing expenses on time or at all, and our results of operations and business
prospects could suffer.
We have been developing our 3D ACT solutions and 3D-printed products since 2009 and
have incurred significant R&D and sales and distribution expenses for their development.
However, there is no assurance that it will generate expected returns, as returns are affected by
various factors, including overall market conditions, Chinese governmental policies, customers’
preferences or other factors that are beyond our control. Moreover, the market demand may not
be as strong as we expect. There may be latent defects or risks that are uncovered at a later stage
which could affect the success of our 3D ACT solutions or 3D-printed products. Under such
circumstances, we may not be able to recoup all or any of our related capital expenditure or R&D
and sales and marketing expenses we have invested and will continue to invest in the
commercialization process, and our business prospects could suffer.
If our sales volume does not grow as we expect or we encounter any delays or challenges
as a result of a failure to obtain permits, licenses or product registration certificates or
other operational risks, our investments in the Changzhou Facilities may materially and
adversely affect our results of operations and financial condition.
The current designed annual production capacity of the Changzhou Facilities is 150,000 sets
of off-the-shelf orthopedic joint implants, representing approximately 1.5 times of our annualized
production capacity for off-the-shelf orthopedic joint implants based on the six months ended June
30, 2017. We expect to reach this capacity by 2021. We plan to gradually move the production of
and eventually produce all of our off-the-shelf products including orthopedic implants and surgical
instruments at the Changzhou Facilities. See “Our Business—Production—Changzhou Facilities”.
However, customer demand for our products and the number of sales orders we receive may be
affected by various factors, including the overall market condition, Chinese governmental policies,
customers’ preferences, the effect of import substitution or other factors that are beyond our
control. If customer demand for our products and the number of sales orders we receive do not
increase as we expect, we may encounter overcapacity.
In addition, we need to obtain production permits and relevant product registration

certificates from the CFDA and other authorities in China or their respective provincial
counterparts before we can commence production at the Changzhou Facilities. We may not be
able to obtain them in a timely manner or at all, which would prevent us from, or lead to a material
delay in, commencing our operations.
We also need to recruit local workers to complete the construction of and commence the
production in the Changzhou Facilities. We require a large number of workers with various skills
and expertise. Given the specialty of our business, we may not be able to recruit sufficient workers
in a timely manner, or at all, which may prevent us from, or lead to a material delay in,
commencing the operations of the Changzhou Facilities.
— 32 —
RISK FACTORS
Furthermore, one of the reasons that we decided to construct the Changzhou Facilities and
to relocate all of our production of off-the-shelf products to the Changzhou Facilities is that the
Changzhou Xitaihu Industry Park has a developed healthcare and medical device industry supply
chain for off-the-shelf products, which can give us easy access to suppliers such as providers of
molds and coating used in the production process of our off-the-shelf products and manufacturers
of surgical instruments to be used in conjunction with our off-the-shelf products. If there is change
of circumstances in this respect, we may incur extra cost to gain access to similar resources.
We have already invested substantial resources and plan to incur additional capital
expenditures with respect to the Changzhou Facilities. A low utilization rate for the Changzhou
Facilities as a result of our overcapacity and/or challenges or delays in obtaining relevant permits,
licenses or product registration certificates or hiring sufficiently skilled workers and/or the change
in the availability of resources provided by the healthcare and medical device supply chain for
off-the-shelf in Changzhou Xitaihu Industry Park would materially and adversely affect our results
of operations and financial condition.
Failure to expand our distribution network, maintain or renew relationships with our
distributors or to ensure the productivity of our distributors would have a material adverse
effect on our business, results of operations, financial condition and prospects.
We rely on our distribution network to market our products to hospitals. As of June 30, 2017,
we had 650 distributors. We compete for competent distributors with other China-based
orthopedic joint implant companies that may have greater financial resources or offer better
commercial terms to distributors than we do. Therefore, if we seek to expand our distribution
network as our business grows, there is no assurance we will be able to find sufficient competent
distributors in the relevant markets, or enter into distribution agreements on commercially
acceptable terms, or at all. In addition, we generally enter into distribution agreements with terms
of one year. If we fail to maintain good relationships with our existing distributors, or if our
competitors offer higher quality products or more favorable terms to distributors than us, we may
not be able to renew the distribution agreements with our distributors on commercially acceptable
terms, or at all. In addition, the implementation of the “two-invoice system” or similar systems in
the medical device field, which is at an early stage, may result in the consolidation of our existing
distributors, which may have unexpected negative impact on our distribution network, for
example, the reduction of the number of distributors, the increased bargaining powers of each
distributor, among others.
In addition, a decline in our distributors’ performance would lead to a decline in the

productivity of our distribution network and could have a negative effect on our revenue.
Therefore, we review the performance of our distributors from time to time, and seek to retain
more competent distributors to raise the overall performance of our distribution network. However,
due to the intense competition for distributors, we may not be able to do so, and our competitors
may require their distributors to enter into exclusive distribution agreements such that their
distributors would be restricted from selling our products.
Consequently, any disruption to our distribution network, including our failure to form
relationships or renew our existing distribution agreements could negatively affect our ability to
effectively sell our products and would materially and adversely affect our business, results of
operations, financial condition and prospects.
— 33 —
RISK FACTORS
Moreover, in order to expand our distribution network, we may have to offer commercial
terms that are more favorable to distributors. For example, starting from 2015, in order to better
compete with our competitors in attracting competent distributors, we granted credit periods to
more qualified distributors and longer credit periods to some of our other distributors. As a result,
our trade receivables turnover days increased from 38 days in 2014 to 55 days in 2015 and further
to 74 days in 2016 and 75 days in the six months ended June 30, 2017. If our trade receivables
turnover days continue to grow in the future due to further competition for competent distributors,
our financial condition may deteriorate, and we will be subject to higher credit risks as a result.
We have limited control over the operations and actions of our distributors. We do not have
contractual relationships with most of our sub-distributors, and do not have written
distribution agreements with certain of our distributors. Therefore, our efforts to manage
these distributors and sub-distributors may not be effective.
All of our distributors are independent third parties, although we have certain Former
Employee Distributors. See “Our Business—Customers, Sales and Distribution—Distribution
Network” for more details. Therefore, our ability to manage the activities of our distributors is
limited. We enter into distribution agreements with most of our distributors and mainly rely on
these distribution agreements to govern our relationships with distributors, including their
compliance with laws, rules, regulations and our policies. As such, our distributors may take one
or more of the following actions, any of which could have a material adverse effect on our
business, prospects and reputation:
• breaching our agreements with them, including by selling products that have expired, or
by selling products to hospitals outside their designated territories or to hospitals other
than their designated hospitals;
• failing to adequately promote our products;
• failing to provide proper training, surgical instruments and services to our end-users;
• failing to maintain the requisite licenses or otherwise failing to comply with applicable
regulatory requirements when selling our products; or
• violating anti-corruption, anti-bribery, competition or other laws and regulations of China

or other countries.
Any violation or alleged violation by distributors of our distribution agreements or any

applicable laws and regulations could result in the erosion of our goodwill, a decrease in the
market value of our brand and an unfavorable public perception about the quality of our products,
resulting in a material adverse effect on our business, financial condition, results of operations and
prospects.
We generally do not enter into written distribution agreements with distributors whose annual
sales are less than RMB0.1 million as these distributors are not active and only order our products
on an ad hoc basis. Therefore, our control over their activities is even more limited. In addition,
some of our distributors on-sell our products to sub-distributors engaged by them. As we do not
engage these sub-distributors directly or maintain contractual relationships with most of these
sub-distributors, we mainly rely on our distributors to manage and control their sub-distributors’
activities in accordance with the terms of our distribution agreements with our distributors. See
“Our Business—Customers, Sales and Distribution—Distribution Network”. As a result, we have
— 34 —
RISK FACTORS
even less control over the activities of sub-distributors with whom we have no written distribution
agreements. There is no assurance that the sub-distributors will comply with the geographical
restrictions we have agreed with our distributors, distribute only to authorized hospitals or comply
with other policies under our distribution agreements. Furthermore, we cannot assure you that we
will be able to identify or correct all the sub-distributors’ practices that are detrimental to our
business in a timely manner or at all, which may adversely affect the sales of our products. As we
have no contractual arrangement with these sub-distributors, we would have no direct recourse
against them if their conduct causes harm to our business or reputation.
Furthermore, to better manage our distribution network, starting from 2016, we have added
a provision to all new and renewed distribution agreements requiring our distributors to (1) ensure
that the sub-distributors they engage also comply with the terms of our distribution agreements
and (2) provide a monthly written report detailing the types and quantities of our products sold to
hospitals, inventory levels and local market conditions. As of the Latest Practicable Date, we had
renewed the distribution agreements with most of our distributors. However, we cannot assure you
that all of our distributors will comply with such requirements or that we can successfully enforce
such agreements without negatively affecting our business. As a result, we may not be able to
effectively manage our distributors and distribution network as we intend to with our new
distribution agreements.
If our bids during the public tender process are not successful, our business may be
adversely affected.
Our bids during the public tender process may not be successful and our products may not
be chosen for a number of reasons, including where: (1) our prices are not competitive, (2) our
orthopedic implants fail to meet the technical or quality requirements imposed by the hospitals or
are less clinically effective than competing products, (3) our reputation is adversely affected by
unforeseeable events or (4) our service quality or any other aspect of our operation fails to meet
the relevant requirements. If we fail to bid successfully during the public tender process, we will
not be able to sell our products to hospitals, which will in turn negatively impact our sales volume
and hinder our ability to expand our distribution network. These will cause our business to suffer
and our results of operations will be materially and adversely affected as a result.
We may not be able to maintain or renew all the permits, licenses and certificates required
for our business, and if we fail any inspections, examinations, audits or reviews by the
relevant regulatory authorities, our results of operations and reputation could be materially
and adversely affected and we may be subject to fines or other enforcement actions.
In addition to CFDA registration certificates, orthopedic product companies and distributors

in China are also required to obtain certain permits and licenses from various Chinese government
authorities, including production permits (醫療器械生產許可證) and medical device business
certificates (醫療器械經營許可證). See “Regulation—Production Permit” and “Regulation—Permit
for Medical Device Operation Enterprises” for details. We have obtained all required permits and
licenses. However, these permits and licenses are subject to periodic renewals and/or
reassessments by the relevant government authorities and the standards of these renewals or
reassessments may change from time to time. We have not been subject to non-renewal or
conditional renewal in any of our material permits, license or certifications during the Track Record
Period and as of the Latest Practicable Date, but there can be no assurance that authorities will
approve these renewal applications in the future. Any failure by us to obtain the necessary
renewals and otherwise maintain all licenses, permits and certifications necessary to carry on our
business at any time could severely disrupt our business, which could have a material adverse
— 35 —
RISK FACTORS
effect on our business, financial condition and results of operations. Moreover, if, as a result of any
change in the interpretation or implementation of existing laws and regulations or the
implementation of new laws and regulations, we are required to obtain additional permits, licenses
or certificates, we cannot assure you that we will be successful in obtaining these permits,
licenses or certificates in a timely fashion or at all.
In addition, our manufacturing facilities and our products are subject to regular inspections,
examinations, audits or reviews by the relevant government authorities as part of the process of
maintaining or renewing the various permits, licenses and certificates required for our business.
In the event that any of our products or facilities fail any inspections, examinations, audits or
reviews, we may be ordered to suspend or cease production and sales of such products and be
subject to fines, which will in turn adversely affect our business, profitability and reputation. For
example, CFDA’s quality control regulations cover our production facilities and equipment, as well
as the methods and documentation of production, quality control, quality assurance, labeling and
packaging of our products, which the CFDA enforces through document reviews and on-site
inspections. If we fail a quality system review or inspection or if any corrective action plan is
considered to be insufficient, our manufacturing process could be delayed or suspended.
Our failure to develop, maintain and enhance our brand name and reputation may materially
and adversely affect the level of market recognition of, and trust in, our products.
Brand recognition and reputation are critical to our success. We believe that our brand name
“AK Medical” (“愛康”) and trademarks such as “ ”, “ ” and “ ” are well
recognized by Chinese hospitals and surgeons, and have gained trust among patients. Our ability
to develop, maintain and enhance the image and recognition of our brand name and trademarks
depends largely on our ability to remain as a leader in the orthopedic joint implant market in China.
Our brand promotion efforts may be expensive and may fail to effectively promote our brand or
generate additional sales.
Our brand name, reputation and product sales could be adversely affected if, for example:
• our products fail to be recognized by hospitals, surgeons and patients;
• our products malfunction or contain defects;
• we provide poor or ineffective customer service;
• we are subject to product liability claims;
• there are counterfeit products purporting to be our products;
• our employees or distributors engage in improper or illegal conduct, whether or not

authorized by us; or
• we, or our products, are associated with negative publicity, whether founded or
unfounded.
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RISK FACTORS
Our products are subject to intense competition with domestic and international
competitors. Our failure to compete successfully could materially and adversely affect our
business, financial condition, results of operations and prospects.
The orthopedic implant market in China is highly competitive. We face competition from both
domestic and international competitors across most of our product lines. In general, we face
pricing competition from domestic competitors, and competition on product quality and brand
recognition from international competitors. In particular, some of our competitors have:
• greater financial and other resources;
• a greater variety of products;
• brands and products that are better received by surgeons who recommend products to
patients;
• greater pricing flexibility;
• more extensive R&D and technical capabilities;
• patent portfolios that may impede our business strategies;
• stronger brand recognition;
• more extensive distribution networks; or
• better support in terms of technical training or surgical instruments provided.
We may be unable to offer products similar to, or more desirable than, those offered by our
competitors, and we may not be able to market our products as effectively as our competitors or
otherwise respond successfully to competitive pressures. In addition, our competitors may be able
to offer discounts on competing products as part of a “bundle” of non-competing products and
services that they sell to customers, and we may not be able to profitably match those discounts.
Furthermore, our competitors may develop technologies and products that are more effective
than those we currently offer or that render our products obsolete or uncompetitive. In addition,
the timing of the introduction of competing products into the market could affect the market
acceptance and market share of our products. Our failure to compete successfully could materially
and adversely affect our business, financial condition, results of operations and prospects.
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RISK FACTORS
If our employees, distributors or sub-distributors engage in bribery or corrupt practices or

other improper conduct, we may be subject to liability and our reputation and business
could be harmed. Additionally, any challenges to or investigations into our practices under
these laws could generate negative publicity and could be costly to respond to, and thus
could harm our business.
We could be liable for actions taken by our employees, distributors or sub-distributors that
violate anti-bribery, anti-corruption and other related laws and regulations in China or other
countries. The government authorities may seize the products involved in any illegal or improper
conduct engaged in by our employees, distributors or sub-distributors. We may be subject to
claims, fines or suspension of our operations. Our brand and reputation, our sales activities or the
price of our Shares could be adversely affected if our Company is associated with any negative
publicity as a result of illegal or improper actions, or allegations of illegal or improper actions,
taken by our employees, distributors or sub-distributors.
It is also possible that the Chinese government or other government authorities in countries
where we sell our products could adopt new or different regulations affecting the way in which
medical devices are sold to address bribery, corruption or other concerns. Although we are not
aware of any such new or different regulations in this regard being adopted in China or our other
principal markets, any such new or different regulations could possibly increase the costs incurred
by us, our distributors and their sub-distributors in selling our products or impose restrictions on
sales and marketing activities, which could in turn increase our costs. As we currently depend
substantially on distributors and their sub-distributors for the sale of our products, any misconduct
by our distributors or their sub-distributors or changes in the regulatory environment regarding the
sale of medical devices could have a material adverse impact on our business, financial condition
and results of operations.
If we fail to maintain relationships with certain key suppliers at commercially acceptable

terms, or at all, we may not be able to maintain our product quality at reasonable cost, or
at all.
The key raw materials of our products include titanium alloy, cobalt-chromium-molybdenum
alloy, and ultra-high molecular weight polyethylene. In 2014, 2015, 2016 and the six months ended
June 30, 2016 and 2017, our costs of materials were RMB26.7 million, RMB43.7 million, RMB53.9
62.6% and 70.9%, respectively, of our total cost of sales in the same periods. According to Frost
& Sullivan, the historical prices of the above-mentioned raw materials have generally increased in
China in recent years, as a result of the increasing demand for orthopedic implants, and a
slow-growing trend will continue for the next few years. As a result, our production volume and
production costs depend on our ability to source quality key raw materials at competitive prices.
We procure our raw materials mainly from reputable and large suppliers, and generally do not
enter into long-term supply agreements.
If we are unable to obtain raw materials in the quantities or at the quality or price that we
require, our production volume, product quality and profit margins may be adversely affected. Raw
materials used in our production are subject to price volatility caused by external conditions, such
as market supply and demand, commodity price fluctuations, fluctuations in transportation costs,
changes in governmental policies and natural disasters. Various factors could lead to significant
fluctuation in the prices of our key raw materials. We cannot assure you that our raw material cost
will not increase significantly in the future, or that we could pass any increased raw material costs
along to our customers. As a result, any significant price increase of our raw materials may have
an adverse effect on our profitability and results of operations.
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RISK FACTORS
Furthermore, we depend on a limited number of key suppliers. Purchases from our top five
suppliers were RMB26.2 million, RMB47.8 million, RMB34.0 million, RMB14.3 million and
RMB31.4 million, respectively, representing 71.6%, 62.2%, 44.7%, 40.2% and 51.2% of our total
purchases in 2014, 2015, 2016 and the six months ended June 30, 2016 and 2017, respectively.
Although we believe that we have a good relationship with our key suppliers, we cannot assure
you that we can maintain these relationships or be able to continue to source relevant raw
materials from them at all times. If our current key suppliers decide to terminate their business
relationships with us or terminate their own businesses, or if the raw materials supplied by our
current suppliers fail to meet our standard, or if our current supplies of raw materials are
interrupted for any reason, qualified suppliers may not be readily available or be available at
reasonable prices and we may not be able to easily replace suppliers in a timely manner. For
example, as a result of our largest supplier of cobalt-chromium-molybdenum in 2015 going out of
business, we had to incur time and resources to source additional suppliers to secure sufficient
supply of quality raw materials. See “Business—Raw Materials and Suppliers” for details. These
factors may materially and adversely affect our business and financial results.
In particular, we rely on one supplier for ceramic heads (the “Ceramic Head Supplier”).
Ceramic head is one of the several types of femoral head we provided as a part of total hip
systems and an important component of our orthopedic joint implants with highly crosslinked
polyethylene friction interface. See “Business—Raw Materials and Suppliers” for details. To the
best of our knowledge, the Ceramic Head Supplier is the only major supplier of ceramic heads in
the world. Therefore, we may be at a disadvantage when negotiating prices and other terms of the
supply agreement with this supplier. If the Ceramic Head Supplier becomes unable or unwilling to
continue to supply ceramic heads to us directly, we would have to incur time and additional costs
to procure ceramic heads from the downstream distributors of the Ceramic Head Supplier. If the
ceramic heads we currently purchase from the Ceramic Head Supplier become no longer
available in the market, we would be forced to cease the production of the products using the
ceramic heads because currently there are no readily available alternative suppliers that can
produce ceramic heads of the same specification at comparable quality. In such case, our
operations might be interrupted or delayed and our business and financial results might be
adversely affected.
We are subject to credit risk of our customers, and our inability to collect on our trade
receivables from our customers may have a material adverse effect on our business
operations and financial condition.
We sell our products primarily to third party distributors across China, which in turn resell our
products either directly to hospitals in their designated territories with our authorization or to
sub-distributors for ultimate sales to hospitals. For some large distributors with whom we have a
long-term relationship, we grant a credit period ranging from one to six months. These distributors
are owed amounts from hospitals and sub-distributors, who are in turn owed amounts from
ultimate customers, hospitals. We also directly sell a portion of our products to hospitals through
our wholly-owned subsidiary which holds a medical device business certificate. Our sales to
hospitals are generally made on credit terms longer than those granted to our distributors. As of
December 31, 2014, 2015 and 2016 and June 30, 2017, we had trade receivables (before
deducting allowance for doubtful debts) of RMB19.9 million, RMB44.7 million, RMB68.8 million
and RMB70.5 million, respectively, of which 29.2%, 20.9%, 23.7% and 20.9%, respectively, were
derived from our five largest customers. As a result, we may be exposed to credit risk. Our sales
and marketing employees monitor and manage our distributors to make sure they comply with our
distribution agreements, including payment terms, and take efforts to collect the amounts due
from our hospital customers. However, we cannot assure you that we can properly assess and
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RISK FACTORS
respond in a timely manner to changes in their credit profile. Our distributors and hospital
customers may experience financial difficulties, which could negatively impact our ability to collect
the amount due to us. Such adverse financial conditions may negatively affect the length of time
that it will take us to collect associated trade receivables or impact the likelihood of ultimate
collection, and the effect on us could be material and have an adverse effect on our business,
financial condition and results of operations.
Granting credit periods to more distributors and longer credit periods to distributors may
lead to longer trade receivables turnover days, which may adversely affect our liquidity
position and financial condition.
From time to time we grant credit periods of one to six months to qualified distributors who
have a good credit history. In 2015, as part of our business initiative to attract competent
distributors to expand our distribution network and enter into new markets, we began to grant
credit periods to more qualified distributors and/or longer credit periods to some of our other
distributors in order to compete with our main domestic competitors. We also granted revolving
credit to qualified distributors covering provinces in Southern China where we intend to strengthen
our market presence. Our qualified distributors to whom we granted credit periods increased from
72 as of December 31, 2014 to 100 as of June 30, 2017. This increase and our grants of longer
credit periods to some of our other distributors led to our trade receivables turnover days
increasing from 38 days in 2014 to 55 days in 2015 and further to 74 days in 2016 and 75 days
in the six months ended June 30, 2017. See “Financial Information—Analysis of Selected
Consolidated Balance Sheet Items—Trade Receivables” for details. Our continuous efforts to
expand our distribution network and attract competent distributors may result in longer trade
receivables turnover days in the future, which may in turn adversely affect our liquidity position
and financial condition.
Failure to manage our inventory would materially and adversely affect our financial
condition, results of operations and cash flows.
We, similar to other orthopedic implant companies, have a relatively high level of inventory,
primarily due to the long production cycle of our products and the need to maintain a
comprehensive portfolio of our orthopedic implants in stock to meet our distributors’ demand and
to ensure timely product delivery. In 2014, 2015, 2016 and the six months ended June 30, 2017,
our inventory turnover days were 257 days, 265 days, 276 days and 274 days, respectively. As our
inventories are subject to impairment if their net realizable value falls before we sell them, a high
inventory level would subject us to significant risk of impairment if there is a significant decrease
in the net realizable value of our raw materials, work-in-progress, or finished goods within a short
period of time. Any unexpected change in circumstances, such as a shift in market demand,
decline in selling price, or default by or loss of a customer, could materially and adversely affect
the net realizable value of our inventories. In addition, although our distribution agreements do not
allow our distributors to exchange their unsold products, in practice, we generally entertain
exchange requests on a voluntary basis to maintain a good relationship with our distributors, so
long as the products to be exchanged are in marketable condition and can be resold. If we
entertain the requests of our distributors to exchange similar products within a short period of
time, we may have high inventory level of certain types or sizes of particular products, which could
materially and adversely affect the effectiveness of our inventory management and thus our
results of operations.
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RISK FACTORS
Furthermore, as we will not be able to recoup our cash paid for raw materials during the
production process until the finished products are sold to customers and the purchase price is
settled, our business is subject to significant working capital requirements given the high inventory
level and inventory turnover days. To manage our inventory level, we implemented certain
measures. See “Our Business—Inventory Management”. However, we cannot assure you that
these measures will be effective and our inventory level will decrease in the future. If our inventory
level increases further in the future, our financial condition and cash flow could be materially and
adversely affected.
Unauthorized use of our brand name by third parties may adversely affect the value of our
brand name, reputation and business; legal actions including litigation to enforce our
rights to our brand name may involve significant costs and divert of our resources.
We conduct our business under the “AK Medical” (“愛康”) brand. We regard our brand name
as critical to our success. Unauthorized use of our brand name by third parties may adversely
affect the value of our brand name, our business and reputation, including the perceived quality
and reliability of our products. We rely on trademark law and agreements with our distributors to
protect the value of our brand name. As of the Latest Practicable Date, we had 20 registered
trademarks in China and Hong Kong and one pending trademark application in Hong Kong. We
may be unable to prevent unauthorized use of our brand name by third parties. In certain
circumstances, litigation may be necessary to protect our brand name. However, as the validity,
enforceability and scope of protection of trademarks in China are uncertain and still evolving, we
may not prevail in such litigations. Furthermore, litigation could also result in substantial costs and
diversion of our resources, which could disrupt our business as well as materially and adversely
affect our results of operations.
If we are unable to effectively protect our proprietary technologies, our competitive

position could be harmed.
Our success relies largely on our proprietary technologies. Therefore, effective protection of
our intellectual property, including patents and proprietary know-how, is critical to maintaining our
competitive position. As of the Latest Practicable Date, we had 36 invention patents, 140 utility
patents, two patents under the PCT and 26 CFDA registration certificates for Class III medical
devices. We also had 134 pending invention patents, 77 pending utility patents, six pending patent
applications filed under the PCT and eight on-going applications for registration approval by CFDA
or its local counterpart.
We also rely on trade secrets, proprietary know-how and other non-patentable technology,
which we seek to protect through confidentiality agreements and non-competition agreements
with employees, our research partners and any third parties who may access our proprietary
information. We also rigorously control access to our proprietary technology and information. For
the details of our R&D cooperation with academic and clinical institutions, see “Our
Business—Research and Development—R&D Approach and Process”. We cannot assure you
that these confidentiality agreements will not be breached, or that our employees or research
partners have not disclosed, or will not disclose, any of our trade secrets, proprietary know-how
or other non-patentable technology to our competitors or other third parties. We may not have
adequate remedies for any breach, and cannot assure you that our trade secrets, proprietary
know-how and other non-patentable technology will not be otherwise become known to, or be
independently developed by, our competitors.
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RISK FACTORS
Intellectual property protection may not be sufficient in China or other countries in which we
operate. Confidentiality agreements may be breached by counterparties, and there may not be
adequate remedies available to us for any breach. Accordingly, we may not be able to effectively
protect our intellectual property rights or to enforce our contractual rights in China or elsewhere.
In addition, policing any unauthorized use of our intellectual property is difficult, time-consuming
and costly and the steps we have taken may be inadequate to prevent the misappropriation of our
intellectual property. In the event that we resort to litigation to enforce our intellectual property
rights, such litigation could result in substantial costs and a diversion of our managerial and
financial resources. We cannot assure you that we will prevail in such litigation. Any failure to
protect or enforce our intellectual property rights could have a material adverse effect on our
If third parties claim that we infringe their intellectual property rights, we may incur
liabilities and financial penalties and may have to redesign or discontinue distributing any
affected products.
Companies in the orthopedic implant market routinely seek intellectual property protection
for their products, and many of our international competitors have large patent portfolios.
Companies in our industry also use intellectual property litigation to gain a competitive advantage.
We face the risk of claims that we have infringed on third parties’ intellectual property rights.
Determining the validity and scope of intellectual property rights for technologies used in
orthopedic implants involves complex scientific and legal issues, so the resolution of an
infringement claim can be very uncertain. In addition, our efforts to identify and avoid infringing
third parties’ intellectual property rights may not always be effective. We have employees who
have previously worked for one or more of our competitors. We cannot assure that these
employees have not used, or will not use in the future, their previous employer’s proprietary
know-how or trade secrets in their work for us. Any claim of intellectual property infringement
against us, even without merit, could:
• be expensive and time-consuming to defend;
• result in us being required to pay significant damages to third parties;
• cause us to cease making or selling products that incorporate the challenged

intellectual property;
• require us to redesign, reengineer or rebrand our products, if feasible;
• require us to enter into licensing agreements and make loyalty payments in order to
produce our products, the terms of which may not be commercially acceptable to us;
• divert the attention of our management; or
• result in hospitals terminating, deferring or limiting their purchase of our relevant

products until resolution of the litigation.
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RISK FACTORS
We are exposed to potential product liability claims and our insurance coverage only
extends to some of our products and may be inadequate to protect us from all the liabilities
we may incur.
We are exposed to product liability for our products. In China, medical devices are classified
by the CFDA as Class I, Class II or Class III based on the risk to the human body. AII of our
orthopedic implants are classified as Class III. This classification represents the highest risk to the
human body and requires the highest level of supervision to ensure safety and effectiveness.
We may be subject to product liability claims if our products have latent quality issues. As
some of our key products were developed relatively recently, latent defects or risks may not have
been identified at the current stage. We began our operations in 2003, launched our first product
in 2004, and introduced our 3D-printed products only recently in 2015 and 2016. There is no
assurance that our products have no latent quality issues or disadvantages that are not
discernible or foreseeable as of the Latest Practicable Date. Our products might prove to be less
effective than they currently appear to be or even prove to be defective to a certain extent at a later
stage.
In addition, even if our products do not have latent defects, claims may arise from different
stages of treatment which are beyond our control. A surgeon using our products during a surgery
may adopt inappropriate treatments during or after the surgery, and patients may not follow the
surgeons’ advice for rehabilitation. In these cases, the patients may still initiate legal proceedings
against us, and the hospitals and surgeons may claim, with or without merit, that our products
have latent defects. These proceedings could be time-consuming and expensive to defend and
may have a material adverse impact on our business, financial condition and results of operations.
We maintained product liability insurance for our products during the Track Record Period.
As of the Latest Practicable Date, our product liability insurance policies in connection with our
orthopedic implants covered up to RMB80,000 per incident and RMB2.0 million per policy year.
However, we currently do not have any product liability insurance for our products sold overseas.
Furthermore, if, for any reason, our current insurance policy ceases to cover any of our orthopedic
implants, we may not be able to obtain a comparable policy to replace it, or any policy at all. In
addition, the annual aggregate of the insurance coverage may be insufficient to protect us from
all the related claims against us. If a product liability claim or series of claims brought against us
is for uninsured liabilities or in excess of our insurance coverage and we are ultimately held liable
for such claim or series of claims, our business, results of operations or financial condition will be
materially and adversely affected.
The discontinuation of any of the preferential tax treatments or the financial incentives
currently available to us could reduce our profitability.
In 2008, AK Medical Beijing, one of the subsidiaries of our Company, obtained a “High and
New Technology Enterprise Certificate” (高新技術企業證書) issued by Beijing Municipal Science
and Technology Commission (北京市科學技術委員會), Beijing Municipal Finance Bureau (北京市財
政局), Beijing Municipal Office, State Administration of Taxation (北京市國家稅務局) and Beijing
Local Taxation Bureau (北京市地方稅務局). As a result of obtaining the “High and New Technology
Enterprise Certificate”, AK Medical Beijing is subject to Chinese EIT at a tax rate of 15%, instead
of the 25% that is typically applicable, from 2008 to 2017. In August 2017, AK Medical Beijing
extended its qualification as a High and New Technology Enterprise to 2020.
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RISK FACTORS
The qualification as a High and New Technology Enterprise is subject to review by the
relevant Chinese authorities every three years. We cannot assure you that AK Medical Beijing will
be qualified and be able to maintain and renew such qualification in the future. Failure to maintain
or renew such qualification may prevent us from benefiting from the relevant enterprise
preferential income tax policies, in which event we would be subject to the normal enterprise
income tax rate of 25%, which may adversely affect our profit.
Our future success depends on our ability to retain members of our management team and
other key personnel and to attract, retain and motivate qualified personnel.
Our future success depends on the continued service of the key members of our senior
management. In particular, one of our founders and the chairman of the Board, Mr. Li, has over
20 years of clinical and orthopedic industry related experience. His 11 years of experience in the
surgical department of a hospital have helped him develop a high-level perspective and
awareness of the industry’s development. Our executive Director and senior vice president, Ms.
Zhang Bin, has over 20 years of experience in the medical industry. Before joining our Group, Ms.
Zhang worked as a physician and CT diagnosis radiologist. Our executive Director and senior vice
president, Mr. Zhang Chaoyang, is one of our founders and has over 10 years of experience in the
orthopedic medical device industry. Our director of research center, Dr. Wang Caimei, has over 10
years of R&D experience in orthopedic implants and oversees the management of our research
center. Our executive Director and chief financial officer, Ms. Zhao Xiaohong, has over 10 years
of experience in financial management and analysis, and worked at Ernst & Young for five years
before joining us. She is a qualified Certified Public Accountant and is a member of the Association
of International Accountants. The expertise, industry experience and contributions of our
executive Directors and other members of our senior management are crucial to our success. If
we lose any of our key management members and are unable to recruit and retain replacement
personnel with equivalent qualifications or talents in a timely manner, the growth of our business
could be adversely affected.
Our success also depends on our ability to attract and retain qualified and skilled
management, technical, R&D, sales and marketing, healthcare services and other personnel. We
cannot assure you that we will be able to attract, hire and retain sufficient personnel for our
business. Our Company also cannot guarantee that any shortages in qualified and skilled
personnel will not increase our staff costs as the competition for these individuals could cause us
to offer higher compensation and other benefits in order to attract and retain them and
consequently materially and adversely affect our financial condition and results of operations.
We face risks associated with the real properties that we lease for our production, which
may force us to relocate from such facilities.
As of June 30, 2017, we leased 11 premises from independent third parties with a total gross
floor area of 8,983 sq. m in China. Among the properties we leased, the lessor of a property with
a gross floor area of 1,621 sq. m (the “Habatun Property”) has not obtained the relevant property
ownership certificate. The relevant property is located on a parcel of land collectively-owned by
the Habatun Village, Changping District, Beijing, China (the “Collectively-Owned Land”) which
is designated for agricultural use and has not been approved by the relevant government
authorities for commercial construction use (the “Lease Defect”). The Collectively-Owned Land
was leased by the villagers committee of Habatun Village (the “Villagers Committee”) to Beijing
Yanxu Industry and Trade Co., Ltd. (北京燕旭工貿有限公司) (the “Habatun Lessor”), which
subsequently constructed the Habatun Property and sub-leased it to us.
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RISK FACTORS
With regard to the Habatun Property, our PRC Legal Advisor has advised us that, due to the
Lease Defect, our lease agreement with the Habatun Lessor to lease the Habatun Property may
be terminated by a competent government authority and we may be required to vacate the
Habatun Property. See “Our Business—Properties—Leased Properties”.
If we are required to relocate from the Habatun Property, it could disrupt our operations and
adversely affect our business, financial condition and results of operations. In such an event, we
plan to (1) outsource the production of surgical instruments to certain manufacturers in Beijing or
(2) if we consider it more desirable, relocate the production to a leased production site in
Changzhou, China (the “Backup Facilities”). If we end up relocating the production to the Backup
Facilities, we would need to recruit local production workers to work at the Backup Facilities,
which is expected to take two months. During this period, to continue our production, we would
offer each worker currently working in the Habatun Property a subsidy of RMB1,000 per month to
relocate to the Backup Facilities. These workers would be transported to our other production
facilities in Beijing after we recruit enough workers for production at our Backup Facilities. We
estimate that the total cost for relocation is RMB0.1 million, including (1) the transportation fees
for production workers, (2) the cost to relocate production equipment, fixtures, raw materials and
work-in-progress and (3) the subsidy to be paid to the production workers from the Habatun
Property to work at the Backup Facilities.
We are subject to risks relating to disruption in the operations of our production facilities
or the construction process of the Changzhou Facilities. We will not be insured against all
potential losses and could be seriously harmed by natural disasters, catastrophes or
sabotage.
Our business activities involve substantial investments in production facilities. We have

relied to date on our production facilities located at Changping, Beijing, China for the production
of our products, and we are planning to construct the Changzhou Facilities to expand our
production capacity. These facilities could be materially damaged by natural disasters such as
floods, tornados, typhoons, hurricanes and earthquakes or by sabotage. We could incur uninsured
losses and liabilities arising from such events, including damage to our reputation, and/or suffer
material losses in operational capacity, which could have a material adverse impact on our
If we fail to successfully identify, acquire or complete acquisitions, fail to successfully

realize the anticipated benefits of our past and potential future acquisitions or investments
or fail to successfully integrate any acquired employees, businesses or products, our
growth and prospects may be adversely affected.
We plan to actively seek suitable opportunities for strategic acquisition or cooperation in the
orthopedic product market to grow our business, expand our product and service offerings and
strengthen our market position. Our ability to grow through acquisitions depends upon our ability
to identify and complete suitable acquisitions as well as our ability to obtain the necessary
financing and any required governmental or third party consents, approvals and permits in a timely
manner. Even if we complete acquisitions, we may experience:
• unidentified issues not discovered in the due diligence process, such as hidden
liabilities and legal contingencies;
• difficulties in integrating any acquired companies, technologies, personnel or products

into our existing business;
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RISK FACTORS
• challenges in procuring and allocating resources to fund our expansion;
• failure to achieve the intended objectives or benefits, or to generate sufficient revenue

to recover the costs and expenses, of an acquisition or expansion plan;
• difficulties in implementing management and internal control mechanisms that timely

and adequately respond to our expanded scope of operations;
• diversion of resources and management attention from our existing business;
• increased costs resulting from acquisitions including incurrence of legal liabilities,

potential write-offs related to the impairment of goodwill and amortization expenses
related to intangible assets;
• the cost of and difficulties in integrating acquired businesses and managing a larger
business; and
• difficulties in retaining key employees of the acquired business who are essential to
managing the acquired business.
If after the acquisition we offer products that are significantly different from our existing
products or enter a new market, the foregoing risks may increase because of our limited
experience in the new market. Our failure to address these risks successfully may have a material
and adverse effect on our financial condition, results of operations and prospects.
Failure of our information technology systems could disrupt our operations.
Our information technology systems play a significant part in our operations. We rely on our
information technology systems to effectively manage accounting and financial functions, order
entry, tracking fulfilment, and our research and development data. Our information technology
systems are vulnerable to (1) damage or interruptions from earthquakes, fire, flood and other
natural disasters, (2) attacks from computer viruses or hackers, power loss, and (3) computer
system, Internet, telecommunications or data network failure. The failure of our information
technology systems to perform as we anticipate could disrupt our business and product
development and could result in decreased sales and increased overhead costs, all of which could
materially and adversely affect our business, financial condition and results of operations.
Any negative publicity against us, regardless of its veracity, could materially and adversely
affect our business.
The value of our brand name largely depends on the market’s subjective perception and
could be damaged by isolated incidents. Any negative incident or negative publicity concerning us,
our products or our management, regardless of its veracity, could harm our brand image and
diminish the trust from our customers and the market, which could in turn result in decreased sales
of our products and materially and adversely affect our business.
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RISK FACTORS
RISKS RELATING TO THE INDUSTRY
The orthopedic implant market in China is highly regulated, the compliance with which may
be costly. Any failure to comply with such regulations may render us subject to penalties,
fines, governmental sanctions, proceedings and/or suspension or revocation of our
licenses or permits to conduct our business.
The orthopedic implant market in China is highly regulated. We are governed by various
local, regional and national regulatory regimes in all aspects of our operations, ranging from
manufacturing, clinical trials, productions registration, distribution to pricing, and are subject to
various licensing, certification and registration requirements. We are also subject to
environmental protection, safety and health laws and regulations. See “Regulation” for details.
Failure to comply with these regulations may result in penalties, fines, governmental sanctions,
proceedings and/or suspension or revocation of our licenses or permits to conduct our business.
Non-compliance may also result in being ordered to suspend or cease production, being subject
to penalties of up to three times the value of the products manufactured and being subject to
confiscation of income derived from such manufacturing activity. Given the number and
complexity of these regulations, compliance may be difficult and may cost us significant financial
and other resources in setting up efficient compliance and monitoring systems. In addition, these
regulations are constantly evolving. The legal framework, licensing and certification and
registration requirements and enforcement trends in China’s orthopedic implant market may
change, and there is no assurance that we will be successful and timely in responding to such
changes. Any such changes may result in increased compliance costs, which would adversely
affect our business, financial condition and results of operations.
If the Chinese government, public insurers or third party payers do not provide sufficient
coverage and reimbursement for the use of our products, our revenue and growth
prospects could be adversely affected.
The market demand for, and our ability to sell, medical devices, including our orthopedic
implants, largely depend on the availability of adequate reimbursements from the national health
insurance system and private medical insurance or third party payers in China. Surgeons and
patients generally rely on these sources to reimburse all or part of the costs and fees associated
with the use of the medical devices and operations performed to implant these devices. China has
a complex medical insurance system that is currently undergoing reform. The governmental
insurance coverage and reimbursement level for treatments using new medical devices is subject
to significant uncertainties and varies among different geographic regions and products. In
addition, the Chinese government may change, reduce or eliminate the government insurance
coverage and reimbursement level currently available for treatments using our products.
Furthermore, there have been and may continue to be proposals from legislators and
regulators and third party payers to lower medical costs. Legislators, regulators and third party
payers may attempt to control costs by authorizing fewer elective surgical procedures or by
requiring the use of the least expensive devices available. These cost-control methods also
potentially limit the amount which third party payers may be willing to pay for medical devices. The
continuing efforts of third party payers, whether governmental or commercial, to contain or reduce
these costs, combined with closer scrutiny of such costs, could restrict our customers’ ability to
obtain adequate coverage and reimbursement from these third party payers. The cost
containment measures in China could harm our business by adversely affecting the demand for
our products or the price at which we can sell our products. If national or provincial government
authorities in China decide to reduce the coverage or reimbursement levels for our products,
patients may opt for or be forced to resort to other products or alternative treatment methods, and
this would materially and adversely affect our revenue and growth prospects.
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RISK FACTORS
Aspects of the impending healthcare reform in China may adversely affect our business. If
the Chinese government decides to impose stronger price controls over our products, our
results of operations would be materially and adversely affected.
The Chinese government has approved in principle a healthcare reform plan to address the
affordability of healthcare services, the rural healthcare system and healthcare service quality in
China. The healthcare reform covers various sectors of medical services, including the use of
implantable medical devices. In recent years, the Chinese government announced a series of
healthcare reform plans, among others, to establish a universal healthcare framework and to
ensure that basic healthcare services are accessible to Chinese nationals. As part of this trend,
the MOH and other relevant government authorities issued notices relating to the administration
of the public tender processes used by hospitals for selecting their suppliers for medical devices
and their procurement price.
The NDRC published on its website and sought public consultation on the Opinions on
Strengthening the Monitoring and Administration of the Pricing of Implantable Medical Devices
(《關於加強植(介)入醫療器械價格監測和管理的意見》), or the Pricing Opinions in July, 2006. The
Pricing Opinions proposed to impose a maximum price premium of 25.0% to 50.0% between the
price charged by manufacturers to distributors and the ultimate retail price charged by hospitals
to patients for the implantable medical devices on the NDRC’s monitoring list. The Pricing
Opinions also proposed to require manufacturers or importers of such implantable medical
devices to report to the relevant pricing authority in China the prices offered to distributors and
clarify the reason for subsequent price increases upon the request of the pricing authority. The
Pricing Opinions are still pending and have not been promulgated to date. The ultimate retail
prices of our products to patients compared to the prices we charge our distributors currently may
be higher than the maximum price premium proposed under the Pricing Opinions. Once the
Pricing Opinions is promulgated, we may not be able to find sufficient qualified distributors to sell
our products due to decreased distributor margins, and we may be subject to significant pricing
pressure on our products. This may result in an adverse effect on our gross margin, our business,
profitability, and results of operations.
The Chinese government continued to express a focus on the pricing regulation of

implantable medical devices. In the Implementation Plan for the Recent Priorities of the Health
Care System Reform (2009 — 2011) (醫療衛生體制改革近期重點實施方案(2009 — 2011)), issued
by the State Council in March 2009, the Chinese government proposed to regulate the use of
implantable medical devices by public hospitals. In addition, the Opinion on the Reform of
Pharmaceuticals and Healthcare Service Pricing Structures (改革藥品和醫療服務價格形成機制的意
見) jointly issued in November 2009 by the NDRC, the MOH and the Ministry of Human Resources
and Social Security, aims to regulate the price of implantable medical devices by restricting the
margins in distribution channels and publishing market price data.
Furthermore, in furtherance of the healthcare reform, the Chinese government announced a

pilot program to implement a “two-invoice” system which generally limits the distribution to a single
level of distributors for the sale of pharmaceutical products from manufacturers to public hospitals.
See “Regulation—The Two-Invoice System”. During the Track Record Period and up to the Latest
Practicable Date, the implementation of the “two-invoice system” had not resulted in any material
effect on our financial condition and results of operations because the demand for our products
from ultimate users were not affected. We cannot assure you that such system will not also extend
to the medical device field. We expect that if more provinces begin implementing similar systems
for medical devices, our current multi-layer distribution network would be reorganized: our existing
distributors may consolidate to a certain extent, and certain existing distributors may become
service providers to provide services ancillary to the use of our products in surgeries. These
changes may have a positive effect on our gross margin, as there would be less levels of
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RISK FACTORS
distributors, and we may incur additional expenses in engaging service providers to provide
customer services that are now provided by sub-distributors. These changes may also have a
negative impact, as there would be a smaller pool of distributors, thereby increasing the
bargaining power of distributors. As the implementation of the “two-invoice system” is at an early
stage, the interpretation and enforcement of similar systems in the medical device field have been
evolving and are subject to uncertainty. Therefore, we are unable to predict how the business
models will evolve in different provinces of China, and whether and how that will affect our results
of operations in the future.
The Chinese government may announce further steps towards the regulation of implantable
medical devices or implement the proposals described above. In such circumstances, we may
incur additional expenses or costs to comply with the new requirements. Moreover, if we fail to
comply with the proposed new requirements when they become effective, we may be subject to
confiscation of illegal gains and a fine. Under severe cases, operations may be suspended for
rectification and the AIC may revoke the business licenses of those who seek excessive profits
through violating pricing laws and regulations. All of these events could materially and adversely
affect our business, financial condition, results of operations and prospects.
There may not be a significant import substitution effect in the orthopedic joint implant
market in China as we expect, or at all.
According to Frost & Sullivan, in 2016, 53.3% of orthopedic joint implant surgeries used
imported products. The Chinese government has introduced policies to encourage the use of
products produced in China over imported products. See “Industry Overview—Import Substitution
with Domestic Products”. As a result, we expect that domestically produced products will continue
to increase their market shares relative to imported products in China. However, the significance
of an import substitution effect in the orthopedic joint implant market in China is subject to various
factors that are beyond our control. For example, in general, the portfolios of domestically
produced products may not be as comprehensive as imported products, which may adversely
affect the willingness of hospitals and surgeons to replace imported products with products
produced in China like ours. In addition, imported products have a competitive edge in the
high-end market due to their high product quality and embedded advanced technology. Products
produced in China may not be comparable in terms of quality and our technology may not be able
to produce the same effect as an imported product in every aspect. Therefore we may not be able
to replace imported products in all cases or at all. Furthermore, we cannot assure you that the
policy and the insurance reimbursement plan that are favorable to medical devices produced in
China will remain unchanged in future. Without those policies and plans, patients would not be
incentivized to choose our products over imported ones.
If the supply of qualified surgeons that can perform surgical operations in China does not
increase at the rate we expect, or at all, the demand for our products may not grow as
expected and our business and prospects may be materially and adversely affected.
Historically, China has a limited number of qualified surgeons compared to developed

countries. Therefore, the demand for orthopedic joint implants in China depends on the number
of qualified and seasoned surgeons in China. Although there are socio-economic factors that drive
the growth of the orthopedic joint implant market in China as set forth in “Industry Overview—The
Orthopedic Joint Implant Market in China”, if the supply of qualified and seasoned surgeons in
China does not grow as expected, there would not be sufficient capacity in China to fulfil the
demand for orthopedic surgeries, which in turn would materially and adversely affect our business
and prospects.
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RISK FACTORS
There may be corrupt practices in the healthcare industry in China, which may place us at
a competitive disadvantage if our competitors engage in such practices.
There may be corrupt practices in the healthcare industry in China. For example, in order to
secure more orders, our competitors or their respective agents or distributors may influence
surgeons, hospital personnel or other decision-makers in ways that violate anti-corruption laws of
China. As competition persists and intensifies in our industry, we may lose potential customers or
sales if our competitors engage in such practices or other illegal activities.
RISKS RELATING TO CONDUCTING BUSINESS IN CHINA
China’s political, economic and social conditions could affect our business, results of
operations, financial condition and prospects, and adverse developments in China’s
economy or an economic slowdown in China may reduce the demand for our products and
services and have a material adverse effect on our business, results of operations,
financial condition and prospects.
We conduct most of our business in China, and substantially all of our assets and operations
are located, and substantially all of our revenue is derived from our operations, in China.
Accordingly, our business, financial position, results of operations and prospects are subject to the
political, economic and legal developments in China. The Chinese economy differs from the
economies of most developed countries in many respects, including government involvement,
level of development, growth rate, control of foreign exchange and allocation of resources.
Although China’s economy has been transitioning from a planned economy to a more
market-oriented economy for more than three decades, a substantial portion of productive assets
in China are still owned by the Chinese government. The Chinese government also has significant
oversight over the economic growth of China by allocating resources, regulating payments of
foreign currency-denominated obligations, setting monetary policies and granting preferential
treatments to particular industries or companies. Although the Chinese government has
implemented economic reform measures with a view to introducing market forces and establishing
sound corporate governance systems and modern management systems in business enterprises
in recent years, such economic reform measures may be adjusted, modified or applied
inconsistently from industry to industry or across different regions of the country. As a result, we
may not necessarily benefit from such measures.
The Chinese government has the power to implement macroeconomic control measures
affecting its economy. Macroeconomic measures adopted by the Chinese government to stimulate
economic growth may not be effective in sustaining the current growth of the Chinese economy.
In addition, if any macroeconomic measures reduce the disposable income of the overall
population, such measures may have a material adverse effect on our business, results of
operations, financial condition and prospects.
Although China has been one of the world’s fastest growing economies in recent years as
measured by GDP growth, China may not be able to sustain such a high growth rate. For example,
the GDP growth rate of China decreased from 9.5% in 2011 to 6.9% in 2015 and 6.7% in 2016.
China’s GDP growth rate may continue to decline. The global economy may continue to
deteriorate in the future and continue to have an adverse impact on China’s economy. Any
significant slowdown in the Chinese economy could have a material adverse effect on our
business and operations, in particular:
• During a period of economic slowdown, there is a greater likelihood that more patients
may not be able to afford the self-funded portion of an orthopedic implant surgery and
may choose not to have the surgery if they have a choice, which would in turn materially
reduce our profit;
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RISK FACTORS
• We may not be able to raise additional capital on favorable terms, or at all; and
• Trade and capital flows may further contract as a result of protectionist measures
introduced in certain markets, which could cause a further slowdown in economies and
materially and adversely affect our business and prospects.
In addition, the Chinese stock market has been volatile in the past few years. The significant
government involvement in the stock market, including suspending the IPO process and
introducing and suspending the “circuit breaker” mechanism within a week, has brought further
uncertainties to the market. This has had and may continue to have an adverse impact on
investors’ confidence in the capital markets in China. Moreover, concerns over liquidity issues,
geopolitical issues, the availability and cost of credit and the unemployment rate have resulted in
adverse market conditions in China, which may materially and adversely affect our business,
results of operations, financial condition and prospects.
Furthermore, factors such as consumer, corporate and government spending, business

investment levels, capital market volatility and inflation all affect the business and economic
environment, the growth of the Chinese orthopedic implant market and ultimately, the profitability
of our business. Our labor and other costs may also increase due to pressure from inflation.
Government control of currency conversion and future fluctuations in Renminbi exchange

rates could have a material adverse effect on our business, results of operations, financial
condition and prospects, and may reduce the value of, and dividends payable on, our
Shares in foreign currency terms.
Our revenue and expenses are substantially denominated in Renminbi, which is currently not
a freely convertible currency. A portion of the revenue must be converted into other currencies in
order to meet our foreign currency obligations. For example, we will need to obtain foreign
currency to make payments of declared dividends, if any, on our Shares.
Under China’s existing foreign exchange regulations, following the completion of the Global
Offering, we will be able to make current account foreign exchange transactions, including paying
dividends in foreign currencies without prior approval from the SAFE. However, in the future, the
Chinese government may take measures, at its discretion, to restrict access to foreign currencies
for capital account and current account transactions under certain circumstances. If such
measures are implemented, we may not be able to pay dividends in foreign currencies to holders
of our Shares. Foreign exchange transactions under our capital account are subject to significant
foreign exchange controls and require the SAFE’s approval. These limitations could affect our
ability to obtain foreign exchange through offshore financing.
The value of the Renminbi against the Hong Kong dollar and the U.S. dollar and other
currencies fluctuates, and is subject to changes resulting from government policies (including
those of the Chinese government) and depends to a large extent on domestic and international
economic and political developments as well as supply and demand in the local market. From
1994 to July 2005, the official exchange rate for the conversion of Renminbi to the U.S. dollar was
generally stable. In July 2005, the Chinese government changed its policy of pegging the value
of Renminbi to the U.S. dollar. Under the current policy, the Renminbi is pegged against a basket
of currencies, determined by the PBOC, against which it can rise or fall within stipulated ranges
against different currencies each day. This change in policy has resulted in an appreciation of the
value of the Renminbi against the U.S. dollar of approximately 24.6% from July 21, 2005 to June
30, 2015. From July 2008 to June 2010, the Renminbi traded within a narrow range against the
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RISK FACTORS
U.S. dollar. In April 2012, the PBOC expanded the floating range of Renminbi against the U.S.
dollar in the inter-bank spot foreign exchange market from 0.5% to 1.0% and further expanded it
to 2.0% in March 2014. In August 2015, the PBOC announced that the mid-point exchange rate
for the floating range of the Renminbi against the U.S. dollar will be determined based on market
maker submissions that take into account the Renminbi-U.S. dollar exchange rate at the previous
day’s closing of the inter-bank spot foreign exchange market, the supply and demand dynamics
and the movements of other major currencies. The Renminbi depreciated against the U.S. dollar
by 6.7% by June 2017 following this August 2015 announcement by the PBOC. With an increased
floating range of the Renminbi’s value against foreign currencies and a more market-oriented
mechanism for determining the mid-point exchange rates, the Renminbi may further appreciate or
depreciate significantly in value against the Hong Kong dollar and the U.S. dollar or other foreign
currencies in the long-term, depending on the fluctuation of the basket of currencies against which
it is currently valued, or it may be permitted to enter into a full float, which may also result in a
significant appreciation or depreciation of the Renminbi against the U.S. dollar or other foreign
currencies. We cannot assure you that the Renminbi will not experience significant appreciation
or depreciation against the U.S. dollar or other foreign currencies in the future.
Our proceeds from the Global Offering will be denominated in Hong Kong dollars. As a result,
any appreciation of the Renminbi against the U.S. dollar, the Hong Kong dollar or any other foreign
currencies may result in a decrease in the value of our foreign currency-denominated assets and
our proceeds from the Global Offering. Conversely, any depreciation of the Renminbi may
adversely affect the value of, and any dividends payable on our Shares in foreign currencies.
There are limited instruments available for us to reduce our foreign currency risk exposure at
reasonable cost in China, and we have not utilized, and may not in the future utilize, any such
instrument. Furthermore, we are also currently required to obtain SAFE’s approval before
converting significant sums of foreign currencies into Renminbi. All of these factors could
materially and adversely affect our business, results of operations, financial condition and
prospects, and could reduce the value of, and dividends payable on, our Shares in foreign
currency terms.
Uncertainties with respect to the Chinese legal system could have a material adverse effect
on our business and operations.
Our business and operations are primarily conducted in China and are governed by
applicable Chinese laws, rules and regulations. China’s legal system is based on written statutes
and their interpretation by the Supreme People’s Court. Prior court decisions may be cited for
reference, but have limited weight as precedents. Since the late 1970s, the Chinese government
has significantly enhanced China’s legislation and regulations to provide protection to various
forms of foreign investments in China. However, China has not developed a fully integrated legal
system, and recently enacted laws, rules and regulations may not sufficiently cover all aspects of
economic activity in China. As many of these laws, rules and regulations are relatively new, and
because of the limited volume of published decisions, the interpretation and enforcement of these
laws, rules and regulations involve uncertainties and may not be as consistent and predictable as
in other jurisdictions. In addition, China’s legal system is based in part on government policies and
administrative rules that may have a retroactive effect. As a result, we may not be aware of our
violations of these policies and rules until some time after the violation. Furthermore, the legal
protection available to us under these laws, rules and regulations may be limited. Any litigation or
regulatory enforcement action in China may be protracted and may result in substantial costs and
the diversion of resources and management attention, which in turn could have a material adverse
effect on our financial condition and results of operations.
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RISK FACTORS
You may experience difficulties in effecting service of legal process and enforcing
judgments or bringing original actions in China or Hong Kong based on foreign laws
against us and our Directors and management.
Substantially all of our assets and a substantial portion of the assets of our Directors are
located in China. It may not be possible for investors to effect service of process upon us or those
persons in China. China has not entered into treaties or arrangements providing for the
recognition and enforcement of judgments made by courts of most other jurisdictions. On July 14,
2006, Hong Kong and China entered into the Arrangement on Reciprocal Recognition and
Enforcement of Judgments in Civil and Commercial Matters by the Courts of the Mainland and of
the Hong Kong Special Administrative Region Pursuant to Choice of Court Agreements Between
Parties Concerned (《最高人民法院關於內地與香港特別行政區法院相互認可和執行當事人協議管轄的
民商事案件判決的安排》) (the “Arrangement”), pursuant to which a party with an enforceable final
court judgment rendered by any designated people’s court of China or any designated Hong Kong
court requiring payment of money in a civil and commercial case according to a written choice of
court agreement, may apply for recognition and enforcement of the judgment in the relevant
people’s court of China or Hong Kong court. A written choice of court agreement is defined as any
agreement in writing entered into between parties after the effective date of the Arrangement in
which a Hong Kong court or a Chinese court is expressly designated as the court having sole
jurisdiction for the dispute. Therefore, it may not be possible to enforce a judgment rendered by
a Hong Kong court in China if the parties in the dispute did not agree to enter into a choice of court
agreement in writing. As a result, it may be difficult or impossible for investors to effect service of
process against certain of our assets or Directors in China in order to seek recognition and
enforcement of foreign judgments in China.
We may be deemed to be a Chinese tax resident under the Enterprise Income Tax Law and
our global income may be subject to Chinese corporate withholding tax under the
Enterprise Income Tax Law.
We are a holding company incorporated under the laws of the Cayman Islands and indirectly
hold interests in our Chinese operating subsidiaries. Pursuant to the Enterprise Income Tax Law
of China (《中華人民共和國企業所得稅法》) and the Regulation on the Implementation of the
Enterprise Income Tax Law of China (《中華人民共和國企業所得稅法實施條例》), or collectively the
EIT Law, dividends payable by a foreign-invested enterprise to its foreign corporate investors who
are not deemed a Chinese resident enterprise are subject to a 10% withholding tax, unless such
foreign investor’s jurisdiction of incorporation has a tax treaty with China that provides for a
different withholding tax arrangement.
The EIT Law provides that if an enterprise incorporated outside China has its “de facto
management bodies” within China, such enterprise would generally be deemed a “Chinese
resident enterprise” for tax purposes and be subject to an EIT rate of 25.0% on its global income.
“De facto management body” is defined as the body that has actual overall management and
control over the business, personnel, accounts and properties of an enterprise. In April 2009, the
SAT, promulgated a circular to clarify the certain criteria for the determination of the “de facto
management bodies” for foreign enterprises controlled by Chinese enterprises. These criteria
include: (1) the enterprise’s senior management personnel and department who are responsible
for managing the day-to-day production and operation perform their obligations primarily in China;
(2) decisions relating to the enterprise’s financial and human resource matters are made or
subject to approval by organizations or personnel in China; (3) the enterprise’s primary assets,
accounting books and records, company seals, and board and shareholders’ meeting minutes are
located or maintained in China; and (4) 50% or more of voting board members or senior
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RISK FACTORS
executives of the enterprise habitually reside in China. According to these regulations, we may be
regarded as a Chinese resident enterprise by Chinese tax authorities and pay Chinese EIT at a
rate of 25.0% for all of our global income. In addition, the “de facto management bodies”
determination is based on the principle of substance over form. The SAT further issued
administrative rules in July 2011 and January 2014 regarding administrative procedures for
recognizing Chinese resident enterprise status of a Chinese-invested company registered abroad.
According to the foregoing SAT circulars, a Chinese-invested company registered abroad

could either apply for the Chinese resident enterprise status with the competent Chinese tax
authorities in the place where its major Chinese investor is located and the application will be
subject to approval by competent Chinese tax authorities, or be recognized as a Chinese resident
enterprise by competent Chinese tax authorities. In this regard, there are uncertainties regarding
whether a Chinese-invested company registered abroad would be treated as a Chinese resident
enterprise before obtaining the relevant approval from competent Chinese tax authorities, and
there have been no official implementation rules regarding the determination of the “de facto
management bodies” for foreign enterprises which are not controlled by Chinese enterprises
(including companies like ourselves).
Therefore, it remains unclear how the Chinese tax authorities will treat a case such as ours.
We intend to take the position that we, as legal entities organized outside the PRC, are not
deemed a Chinese resident enterprise. However, since the Chinese tax authorities may reach a
different conclusion, we cannot assure you that we will not be considered a Chinese resident
enterprise for Chinese EIT purposes and be subject to the uniform 25.0% EIT rate on our global
income. In addition, although the EIT Law provides that dividend payments between qualified
Chinese resident enterprises are exempt from enterprise income tax, due to the relatively short
history of the EIT Law, it remains unclear as to the detailed qualification requirements for this
exemption and whether dividend payments by our China-incorporated subsidiaries to us will meet
such qualification requirements even if we are considered as a Chinese resident enterprise for tax
purposes.
Failure by the Shareholders or beneficial owners who are Chinese residents to make any
required applications and filings pursuant to regulations relating to offshore investment
activities by Chinese residents may prevent us from distributing profits and could expose
us and our Chinese resident Shareholders to liability under the Chinese laws.
The Circular on Relevant Issues concerning Foreign Exchange Administration of Overseas

Investment and Financing and Return Investments Conducted by Domestic Residents through
Overseas Special Purpose Vehicles (《關於境內居民通過特殊目的公司境外投融資及返程投資外匯管
理有關問題的通知》) (“SAFE Circular No. 37”), which was promulgated by SAFE and became
effective on July 14, 2014, requires a domestic institution or individual resident (“Domestic
Resident”) to file a “Registration Form of Overseas Investments Contributed by Domestic
Individual Residents” and register with the local SAFE branch before he or she contributes assets
or capital to an offshore special purpose vehicle (“Offshore SPV”) that is directly established or
indirectly controlled by the Domestic Resident for the purpose of offshore investment and
financing, utilizing assets or interests (onshore or offshore) legally held by the Domestic Resident.
Following the initial registration, the Domestic Resident is also required to register with the local
SAFE branch any major change in respect of the Offshore SPV, including, among other things, any
major change of the Offshore SPV’s Domestic Resident shareholder, name of the Offshore SPV,
term of operation, or any increase or reduction of the Offshore SPV’s registered capital, share
transfer or swap, and merger or division. Failure to comply with the registration procedures of
SAFE Circular No. 37 may result in penalties, including the imposition of restrictions on the ability
of the Offshore SPV’s Chinese subsidiary to distribute dividends to its overseas parent.
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RISK FACTORS
As SAFE Circular No. 37 was recently promulgated, it remains unclear how this regulation
and any future related legislation will be interpreted, amended and implemented by the relevant
Chinese government authorities. As of the Latest Practicable Date, to the best of our knowledge,
our Domestic Resident Shareholders with offshore investments in us (including Mr. Li, Mr. Zhang
Chaoyang, Ms. Zhang Bin, Ms. Zhao Xiaohong, Ms. Li Huijiang, Ms. Wang Caimei, Ms. Liu Aiguo,
Mr. Qi Yajun and Mr. Zhang Weiping) had registered their offshore investments with the SAFE
Beijing Branch (國家外匯管理局北京外匯管理局) in accordance with the SAFE Circular No. 37. Mr.
Li also completed the registration as required under the SAFE Circular No. 37 in relation to a share
transfer of his offshore SPV. However, we may not at all times be fully informed of the identities
of all our Shareholders who are Domestic Residents and we do not have control over our
Shareholders. As such, we cannot assure you that all of our Domestic Resident beneficial owners
will comply with SAFE’s regulations. Any failure by our Domestic Resident Shareholders to
register with SAFE or update SAFE’s records, or the failure of future Shareholders who are
Domestic Residents to comply with the registration requirements may result in penalties and the
prohibition of payments to offshore parents from capital reductions, share transfers or liquidations
of our Chinese subsidiaries and could materially adversely affect our ownership structure,
acquisition strategy, business operations and ability to make dividend payments to the
Shareholders.
Dividends payable by us to our foreign investors and gains on the sale of our Shares may
become subject to withholding taxes under Chinese tax laws.
We intend to take the position that we, as legal entities organized outside the PRC, are not
deemed a Chinese resident enterprise. However, under the EIT Law, we may in the future be
deemed a Chinese resident enterprise by the Chinese tax authorities for tax purposes. As such,
we may be required to withhold Chinese income tax on capital gains realized from sales of our
Shares and dividends distributed to Shareholders, as such income may be regarded as income
from “sources within China”. In this case, our foreign corporate Shareholders who are not deemed
Chinese resident enterprises may become subject to a 10% withholding income tax under the EIT
Law, unless any such foreign corporate Shareholder is qualified for a preferential withholding rate
under a tax treaty. If the Chinese tax authorities deem us as a Chinese resident enterprise,
Shareholders who are not Chinese tax residents but seek to enjoy preferential tax rates under
relevant tax treaties will need to apply to the Chinese tax authorities to seek approval for
recognition of eligibility for such benefits in accordance with the Circular of the State
Administration of Taxation on Printing and Issuing the Administrative Measures for Non-resident
Individuals and Enterprises to Enjoy the Treatment Under Taxation Treaties (關於印發非居民企業
享受稅收協定待遇管理辦法(試行)的通知) (“Circular 124”), issued on August 24, 2009 and effective
from October 1, 2009. The preferential tax rate does not automatically apply. With respect to
dividends, the beneficial ownership tests under the Circular on Interpretation and Determination
of Beneficial Owner under Tax Treaties (關於如何理解和認定稅收協定中“受益所有人”的通知) issued
by the State Administration of Taxation (the “Circular 601”) will also apply. If determined to be
ineligible for treaty benefits, such a Shareholder would become subject to higher Chinese tax
rates on dividends of our Shares. In such circumstances, the value of such foreign Shareholders’
investment in our Shares sold in the Global Offering may be materially and adversely affected.
On February 3, 2015, the State Administration of Taxation of China issued the Public
Announcement on Several Issues Concerning Enterprise Income Tax for Indirect Transfer of
Assets by Non-Resident Enterprises (《關於非居民企業間接轉讓財產企業所得稅若干問題的公告》)
(“Circular 7”), which replaced certain provisions in the Notice on Strengthening the Administration
of Enterprise Income Tax on on-Resident Enterprises (《關於加強非居民企業股權轉讓企業所得稅管
理的通知》). Circular 7 provided comprehensive guidelines relating to, and also heightened the
Chinese tax authorities’ scrutiny over, indirect transfers by a non-resident enterprise of assets
(including equity interests) of a Chinese resident enterprise (the “Chinese Taxable Assets”).
— 55 —
RISK FACTORS
For example, Circular 7 provides that where a non-resident enterprise transfers Chinese
Taxable Assets indirectly by disposing of equity interests in an overseas holding company directly
or indirectly holding such Chinese Taxable Assets, Chinese tax authorities may disregard the
existence of the overseas holding company and re-characterize the nature of the indirect transfer
of Chinese Taxable Assets as a direct transfer of Chinese Taxable Assets, if such transfer is
deemed to have been conducted for the purposes of avoiding Chinese EIT and without any other
bona fide commercial purpose.
Except as provided in Circular No. 7, transfers of Chinese Taxable Assets under the following
circumstances will be automatically deemed as having no bona fide commercial purpose, and are
subject to Chinese enterprise income tax: (1) more than 75% of the value of the overseas
enterprise is derived directly or indirectly from Chinese Taxable Assets; (2) more than 90% of the
total assets (cash excluded) of the overseas enterprise are directly or indirectly composed of
investment in China at any time during the year prior to the indirect transfer of the Chinese Taxable
Assets, or more than 90% of the income of the overseas enterprise is directly or indirectly from
China during the year prior to the indirect transfer of the Chinese Taxable Assets; (3) the overseas
enterprise and its subsidiaries directly or indirectly hold the Chinese Taxable Assets and have
registered with the relevant authorities in the host countries (regions) in order to meet the local
legal requirements in relation to organization forms, yet prove to be inadequate in their ability to
perform their intended functions and withstand risks as their alleged organization forms suggest;
or (4) the tax from the indirect transfer of Chinese Taxable Assets payable abroad is lower than
the tax in China that may be imposed on the direct transfer of such Chinese Taxable Assets.
Although Circular 7 contains certain exemptions, it is unclear whether any exemptions under
Circular 7 will be applicable to the transfer of our Shares or to any future acquisition by us outside
of China involving Chinese Taxable Assets, or whether the Chinese tax authorities will reclassify
such transaction by applying Circular 7. Therefore, the Chinese tax authorities may deem any
transfer of our Shares by our Shareholders that are non-resident enterprises, or any future
acquisition by us outside of China involving Chinese Taxable Assets, to be subject to the foregoing
regulations, which may subject our Shareholders or us to additional Chinese tax reporting
obligations or tax liabilities.
During the Track Record Period, we have taken some corporate restructuring steps,
including the transfer of an equity interest in AK Medical Beijing to AK Medical HK in preparation
for the Listing. See “History, Reorganization and Development” for details. These corporate
restructuring steps taken by us may be subject to Circular 7. In particular, there is a risk that the
relevant transfer of equity may be considered by the relevant Chinese tax authority as having no
“reasonable commercial purpose” and thus subject to the EIT law. However, it is currently unclear
how the relevant Chinese tax authorities will implement or enforce Circular 7.
Natural disasters, epidemics, acts of war or terrorism or other factors beyond our control
in the future may have a material adverse effect on our business operations, results of
operations and financial condition.
Natural disasters, epidemics, acts of war or terrorism or other factors beyond our control may
adversely affect the economy, infrastructure and livelihood of the people in the regions we conduct
our business. These regions may be under the threat of typhoons, tornados, snow storms,
earthquakes, floods, droughts, power shortages or failures, or are susceptible to epidemics, such
as Severe Acute Respiratory Syndrome, avian influenza, H1N1 influenza, H5N1 influenza, H7N9
influenza or Middle East respiratory syndrome, potential wars or terrorist attacks, riots,
disturbances or strikes. Serious natural disasters may result in a tremendous loss of lives and
— 56 —
RISK FACTORS
injury and destruction of assets and disrupt our business and operations. Severe communicable
disease outbreaks could result in a widespread health crisis that could materially and adversely
affect business activities in the affected regions, which could therefore materially affect our
operations. Acts of war or terrorism, riots or disturbances may also injure or cause deaths to our
employees, and disrupt our business network and operations. Any of these factors and other
factors beyond our control could have an adverse effect on the overall business environment,
cause uncertainties in the regions where we conduct business, cause our business to suffer in
ways that we cannot predict and materially and adversely impact our business, financial condition
and results of operations.
RISKS RELATING TO THE GLOBAL OFFERING AND OUR SHARES
There is no existing public market for our Shares and their liquidity and market price may
fluctuate.
Prior to the Global Offering, there has been no public market for our Shares. We cannot
assure you that an active trading market for our Shares will develop and be sustained following
the Global Offering. In addition, the initial issue price range for our Shares was the result of
negotiations between our Company and the Sole Global Coordinator, and the Offer Price may
differ significantly from the market price of our Shares following the completion of the Global
Offering. We have applied for the listing of and permission to deal in our Shares on the Stock
Exchange. The Listing on the Stock Exchange, however, does not guarantee that an active trading
market for our Shares will develop, or if it does develop, that it will be sustainable following the
Global Offering or that the market price of our Shares will not decline after the Global Offering.
Furthermore, the price and trading volume of our Shares may be volatile. The following
factors, among others, may cause the market price of our Shares after the Global Offering to vary
significantly from the Offer Price, some of which are beyond our control:
• variations in our revenue, earnings and cash flow;
• unexpected business interruptions resulting from natural disasters or power shortages;
• major changes in our key personnel or senior management;
• our inability to obtain or maintain regulatory approval for our operations;
• our inability to compete effectively in the market;
• political, economic, financial and social developments in China and Hong Kong and in
the global economy;
• fluctuations in stock market prices and volume;
• changes in analysts’ estimates of our financial performance; and
• involvement in material litigation.
— 57 —
RISK FACTORS
Our Controlling Shareholders have substantial influence over our Company and their
interests may not be aligned with the interests of other Shareholders.
Immediately following completion of the Global Offering (without taking into account any
Shares which may be allotted and issued upon exercise of the Over-Allotment Option or the
options granted or to be granted under the Pre-IPO Share Option Scheme or the Share Option
Scheme), our Controlling Shareholders will collectively beneficially own 59.52825% of the issued
share capital of our Company. For details of our Controlling Shareholders, see “Relationship with
Our Controlling Shareholders”. Therefore, our Controlling Shareholders have substantial
influence over our business, including matters relating to our management and policies and
decisions regarding mergers, expansion plans, business consolidation, the sale of all or
substantially all of our assets, the election of directors and other significant corporate actions. This
concentration of ownership may discourage, delay or prevent a change in control of our Company,
which could deprive other Shareholders of an opportunity to receive a premium for their Shares
as part of a sale of our Company and might reduce the price of our Shares. In addition, the
interests of our Controlling Shareholders may differ from the interests of our other Shareholders.
It is possible that our Controlling Shareholders may exercise their substantial influence over us
and cause us to enter into transactions or take, or fail to take, other actions or make decisions
which conflict with the best interests of our other Shareholders.
Future issuances or sales, or perceived issuances or sales, of substantial amounts of our

Shares in the public market could materially and adversely affect the prevailing market
price of our Shares and our ability to raise capital in the future.
The market price of our Shares could decline as a result of future sales of substantial
amounts of our Shares or other securities relating to our Shares in the public market, including by
our Controlling Shareholders, or the issuance of new Shares by us, or the perception that such
sales or issuances may occur. Future sales, or perceived sales, of substantial amounts of our
Shares could also materially and adversely affect our ability to raise capital in the future at a time
and at a price favorable to us, and our Shareholders may experience dilution in their holdings
upon the issuance or sale of additional securities in the future.
The market price of our Shares when trading begins could be lower than the Offer Price.
The initial price to the public of our Shares sold in the Global Offering is expected to be
determined on or about Wednesday, December 13, 2017 and in any event, not later than Tuesday,
December 19, 2017. However, the Shares will not commence trading on the Stock Exchange until
they are delivered, which is expected to be the fifth Business Day after the Price Determination
Date. As a result, investors may not be able to sell or otherwise deal in the Shares during that
period. Accordingly, Shareholders are subject to the risk that the price of the Shares when trading
begins could be lower than the Offer Price as a result of adverse market conditions or other
adverse developments that may occur between the time of sale and the time trading begins.
— 58 —
RISK FACTORS
Future financing may cause a dilution in your shareholding or place restrictions on our
operations.
We may raise additional funds in the future to finance the expansion of our capacity, the
enhancement of our research and development capabilities, the development of our operations,
acquisitions or strategic partnerships. If additional funds are raised through the issuance of our
new equity or equity-linked securities other than on a pro rata basis to existing Shareholders, the
percentage ownership of such Shareholders in us may be reduced, and such new securities may
confer rights and privileges that may take priority over those conferred by the Shares.
Alternatively, if we meet such funding requirements by way of additional debt financing, we may
have restrictions placed on us through such debt financing arrangements which may:
• limit our ability to pay dividends or require us to seek consent for the payment of
dividends;
• increase our vulnerability to general adverse economic and industry conditions;
• require us to dedicate a substantial portion of our cash flows from operations to service
our debt, thereby reducing the availability of our cash flow to fund capital expenditure,
working capital requirements and other general corporate needs; and
• limit our flexibility in planning for, or reacting to, changes in our business and our
industry.
Potential investors will experience immediate and substantial dilution as a result of the
Global Offering.
Potential investors will pay a price per Share in the Global Offering that substantially exceeds
the per Share value of our tangible assets after subtracting our total liabilities as of June 30, 2017.
Therefore, purchasers of our Shares in the Global Offering will experience a substantial
immediate dilution in pro forma net tangible assets, and our existing Shareholders will receive an
increase in the pro forma adjusted net tangible assets per Share on their Shares. As a result, if
we were to distribute our net tangible assets to the Shareholders immediately following the Global
Offering, potential investors would receive less than the amount they paid for their Shares. See
Appendix II—“Unaudited Pro Forma Financial Information”. In addition, holders of our Shares may
experience a further dilution of their interest if the Sole Global Coordinator (on behalf of the
International Underwriter) exercises the Over-Allotment Option.
We cannot assure you that we will declare and distribute any amount of dividends in the
future and dividends distributed in the past may not be indicative of our dividend policy in
the future.
In 2014, 2015, 2016 and the six months ended June 30, 2017, we declared dividends of
RMB30.6 million, RMB118.0 million, RMB30.1 million and RMB23.1 million, respectively, all of
which had been paid as of the Latest Practicable Date. In August 2017 and October 2017, our
Board declared dividends of U.S. dollar equivalent of RMB11.0 million and RMB39.0 million,
respectively, both of which had been paid in full before the Listing. We cannot assure you that
dividends will be declared or paid in the future. A decision to declare or pay any dividends and the
amount of dividends is subject to the discretion of our Directors, depending on, among other
considerations, our operations, earnings, cash flows and financial position, operating and capital
expenditure requirements, our strategic plans and prospects for business development, our
— 59 —
RISK FACTORS
constitutional documents and applicable law. For more details on our dividend policy, please see
“Financial Information—Dividends”. In addition, as a holding company, our ability to declare future
dividends will depend on the availability of dividends, if any, received from our operating
subsidiaries. The calculation of our operating subsidiaries’ profit under applicable accounting
standards differs in certain aspects from the calculation under IFRS. Accordingly, we may not have
sufficient or any profits to enable us to make dividend distributions to our Shareholder in the
future, even if our IFRS financial statements indicate that our operations have been profitable.
We cannot guarantee the accuracy of facts, forecasts and other statistics obtained from
official governmental sources or other sources contained in this prospectus.
Certain facts, statistics and data contained in this prospectus relating to China, Hong Kong,
the orthopedic implant market, the medical device industry and the healthcare industry have been
derived from various official government publications or other third party reports we generally
believe to be reliable. We have taken reasonable care in the reproduction or extraction of the
official government publications or other third party reports for the purpose of disclosure in this
prospectus and have no reason to believe that such information is false or misleading or that any
fact has been omitted that would render such information false or misleading. However, we cannot
guarantee the quality or reliability of such source materials. They have not been prepared or
independently verified by us, the Sole Sponsor, the Sole Global Coordinator, the Sole Bookrunner,
the Joint Lead Managers, the Hong Kong Underwriters or any of their respective affiliates or
advisors and, therefore, we make no representation as to the accuracy of such statistics, which
may not be consistent with other information compiled within or outside China and Hong Kong.
Due to possibly flawed or ineffective collection methods or discrepancies between published
information and market practice, such statistics in this prospectus may be inaccurate or may not
be comparable to statistics produced with respect to other economies. Furthermore, we cannot
assure you that they are stated or compiled on the same basis or with the same degree of
accuracy as the case may be in other jurisdictions. In all cases, you should give due consideration
as to how much weight or importance they should attach to or place on such facts.
You should read the entire prospectus carefully, and we strongly caution you not to place
any reliance on any information contained in press articles and/or other media regarding
us, our business, our industry or the Global Offering.
There may have been prior to the publication of this prospectus, and there may be
subsequent to the date of this prospectus but prior to the completion of the Global Offering, press
and/or media regarding us, our business, our industries and the Global Offering. None of us, the
Sole Sponsor, the Sole Global Coordinator, the Sole Bookrunner, the Joint Lead Managers, the
Underwriters or any other person involved in the Global Offering has authorized the disclosure of
information about the Global Offering in any press or media and none of these parties accepts any
responsibility for the accuracy or completeness of any such information or the fairness or
appropriateness of any forecasts, views or opinions expressed by the press and/or other media
regarding our Shares, the Global Offering, our business, our industry or us. We make no
representation as to the appropriateness, accuracy, completeness or reliability of any such
information, forecasts, views or opinions expressed in any such publications. To the extent that
such statements, forecasts, views or opinions are inconsistent or conflict with the information
contained in this prospectus, we disclaim them. Accordingly, you are cautioned to make your
investment decisions on the basis of the information contained in this prospectus only and should
not rely on any other information.
— 60 —
WAIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES
In preparation for the Global Offering, we have sought the following waivers from strict
compliance with the requirements under certain provisions of the Listing Rules.
MANAGEMENT PRESENCE
Pursuant to Rule 8.12 of the Listing Rules, we must have sufficient management presence
in Hong Kong. This usually means that at least two of our executive Directors must be ordinarily
resident in Hong Kong. Given that our principal business operations, assets and production
facilities are located, managed and conducted in China, and all of our executive Directors and
senior management predominately reside in China, we do not and, in the foreseeable future, will
not have sufficient management presence in Hong Kong for the purpose of satisfying the
requirement under Rule 8.12 of the Listing Rules.
Accordingly, we have applied to the Stock Exchange for, and the Stock Exchange has
granted, a waiver from strict compliance with the requirement under Rule 8.12 of the Listing Rules
subject to the following conditions:
(a) we have appointed two authorized representatives pursuant to Rule 3.05 of the Listing
Rules, who will act as our principal channel of communication with the Stock Exchange
and ensure that we will comply with the Listing Rules at all times. The two authorized
representatives are Ms. Zhang Bin (our executive Director) and Ms. Han Yu (one of our
joint company secretaries). In addition, Ms. Li Yan Wing Rita (one of our joint company
secretaries) who is a Hong Kong permanent resident, has been appointed as an
alternate authorized representative to each of Ms. Zhang Bin and Ms. Han Yu. Our
authorized representatives will be readily contactable by telephone, facsimile and email
and will be available to meet with the Stock Exchange on reasonable notice as and
when required and will be able to contact our Directors promptly at all times as and
when the Stock Exchange wishes to contact our Directors on any matters;
(b) each of our Directors (including our non-executive Director and our independent
non-executive Directors) holds valid travel documents and will be available to travel to
Hong Kong to meet with the Stock Exchange within a reasonable timeframe upon
request. Each of them will be readily contactable by telephone, facsimile and email, and
is authorized to communicate on our behalf with the Stock Exchange;
(c) each of our authorized representatives (i) has provided her office phone number, mobile
phone number, facsimile number and email address to the Stock Exchange; and (ii) will
be able to contact our Directors and the other authorised representative promptly by
telephone, facsimile and email at all times as and when the Stock Exchange wishes to
contact our Directors on any matters. The mobile phone numbers, residential phone
numbers, office phone numbers, fax numbers and e-mail addresses of all our Directors,
authorised representatives and the joint company secretaries have also been provided
to the Stock Exchange;
— 61 —
(d) we have appointed Guotai Junan Capital Limited as our compliance advisor pursuant to
Rule 3A.19 of the Listing Rules to act as our additional channel of communication with
the Stock Exchange for a period commencing on the Listing Date and ending on the
date on which we distribute the annual report for the first full financial year after the
Listing Date in accordance with Rule 13.46 of the Listing Rules. Our compliance advisor
will have access at all times to the authorized representatives, Directors, our senior
management and other officers of our Company to ensure that it is in a position to
provide prompt responses to any queries or requests from the Stock Exchange;
(e) to further enhance communication between the Stock Exchange, our authorized
representatives and our Directors, we have implemented a policy whereby (i) each
Director will provide, where available, his/her mobile phone number, residential phone
number, facsimile number and email address to our authorized representatives; (ii) in
the event that a Director expects to travel and be out of office, he/she will have to
provide the phone number of the place of his accommodation or other means of
communications to our authorized representatives; and (iii) all Directors will provide,
where available, their mobile phone numbers, office phone numbers, facsimile numbers
and email addresses to the Stock Exchange;
(f) meetings between the Stock Exchange and our Directors could be arranged through our
authorized representatives or our compliance advisor, or directly with our Directors
within a reasonable timeframe; and
(g) our Company will also appoint other professional advisors (including legal advisors and
accountants) after the Listing to assist our Company in dealing with any queries or
questions raised by the Stock Exchange and to ensure efficient communication with the
Stock Exchange.
Our Company will inform the Stock Exchange promptly in respect of any change in our
authorized representatives and/or compliance advisor.
APPOINTMENT OF JOINT COMPANY SECRETARIES
Pursuant to Rule 8.17 of the Listing Rules, we must appoint a company secretary who
satisfies Rule 3.28 of the Listing Rules. According to Rule 3.28 of the Listing Rules, we must
appoint an individual as our company secretary who, by virtue of his/her academic or professional
qualifications or relevant experience, is, in the opinion of the Stock Exchange, capable of
discharging the functions of company secretary.
Note 1 to Rule 3.28 of the Listing Rules sets out the academic and professional qualifications
considered to be acceptable by the Stock Exchange:
(a) a member of The Hong Kong Institute of Chartered Secretaries;
(b) a solicitor or barrister (as defined in the Legal Practitioners Ordinance (Chapter 159 of
the Laws of Hong Kong)); and
(c) a certified public accountants (as defined in the Professional Accountants Ordinance
(Chapter 50 of the Laws of Hong Kong)).
— 62 —
Note 2 to Rule 3.28 of the Listing Rules sets out the factors that the Stock Exchange
considers when assessing an individuals relevant experience:
(a) length of employment with the issuer and other issuers and the roles he played;
(b) familiarity with the Listing Rules and other relevant law and regulations including the
SFO, the Companies Ordinance, the Companies (Winding Up and Miscellaneous
Provisions) Ordinance, and the Takeovers Code;
(c) relevant training taken and/or to be taken in addition to the minimum requirements
under Rule 3.29 of the Listing Rules; and
(d) professional qualifications in other jurisdictions.
Our Company has appointed Ms. Han Yu as one of its joint company secretaries. Ms. Han
joined our Group in September 2015 and worked as the senior financial analysis manager of AK
Medical Beijing until December 31, 2015. She has become the secretary to the board of directors
of AK Medical Beijing since January 1, 2016 and has been assisting with company secretarial
matters of our Group, such as maintenance of statutory registers, completion and filing of
statutory forms and board resolutions, and arranging of board meetings. She is familiar with both
the board and corporate governance practices of our Company. See “Directors and Senior
Management” for further details of Ms. Han. However, Ms. Han does not possess the specified
qualifications required by Rule 3.28 of the Listing Rules. Given the important role of the company
secretary in the corporate governance of a listed issuer, particularly in assisting the listed issuer
as well as its directors in complying with the Listing Rules and other relevant laws and regulations,
we have made the following arrangements:
(a) Ms. Han will endeavor to attend and our Company will ensure Ms. Han to have access
to relevant training courses to enable her to familiarize herself with the Listing Rules
and the duties required of a company secretary of a Hong Kong listed company,
including briefing on the latest changes to the applicable Hong Kong laws and
regulations and the Listing Rules organized by our Company’s Hong Kong legal advisor
on an invitation basis and seminars organized by the Stock Exchange for listed issuers
from time to time;
(b) we have appointed Ms. Li Yan Wing Rita, who meets the requirements under Note 1 to
Rule 3.28 of the Listing Rules, as the other joint company secretary to also work closely
with and provide assistance to Ms. Han for the discharge of her duties as a company
secretary for an initial period of three years commencing from the Listing Date so as to
enable Ms. Han to acquire the relevant experience (as required under Note 2 to Rule
3.28 of the Listing Rules) to discharge the duties and responsibilities as our company
secretary; during which period, Ms. Li will inform Ms. Han on a timely basis of the
amendment and supplement to the Listing Rules and any new or amended laws,
regulations or codes applicable to our Company, and latest changes to applicable Hong
Kong laws and regulations and the Listing Rules. In addition, our Company will
endeavor to arrange Ms. Han to have sufficient training through attending relevant
external seminars and/or training courses;
(c) prior to the expiry of the three-year period, the qualifications and experience of Ms. Han
will be re-evaluated. Ms. Han is expected to demonstrate to the Stock Exchanges
satisfaction that she, having had the benefit of Ms. Li’s assistance for three years, would
then have acquired the relevant experience within the meaning of Note 2 to Rule 3.28
of the Listing Rules; and
— 63 —
(d) Ms. Han will continue to be assisted by the compliance advisor of our Company,
particularly in relation to the Hong Kong corporate governance practices and
compliance issues, and the Hong Kong legal advisor of our Company, on matters
concerning our Company’s on-going compliance with the Listing Rules and the
applicable laws and regulations.
We have applied to the Stock Exchange for, and the Stock Exchange has granted, a waiver
from strict compliance with the requirements of Rule 3.28 and Rule 8.17 of the Listing Rules
preliminarily determined for an initial period of three years from the Listing Date, provided that Ms.
Li is engaged as a joint company secretary to provide assistance to Ms. Han during such period.
Upon the expiry of the initial three-year period, the qualifications of Ms. Han will be re-evaluated
to determine whether the requirements as stipulated in Note 2 to Rule 3.28 of the Listing Rules
can be satisfied. In the event that Ms. Han has obtained the relevant experience under Note 2 to
Rule 3.28 of the Listing Rules at the end of the said initial three-year period, the above joint
company secretaries arrangement would no longer be necessary.
— 64 —
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
DIRECTORS’ RESPONSIBILITY STATEMENT
This prospectus, for which the Directors collectively and individually accept full responsibility,
includes particulars given in compliance with the Companies (Winding Up and Miscellaneous
Provisions) Ordinance, the Securities and Futures (Stock Market Listing) Rules (Chapter 571V of
the Laws of Hong Kong) and the Listing Rules for the purpose of giving information with regard
to us. The Directors, having made all reasonable enquiries, confirm that, to the best of their
knowledge and belief, the information contained in this prospectus is accurate and complete in all
material respects and not misleading or deceptive, and there are no other matters the omission
of which would make any statement herein or this prospectus misleading.
THE HONG KONG PUBLIC OFFERING AND THIS PROSPECTUS
This prospectus is published solely in connection with the Hong Kong Public Offering, which
forms part of the Global Offering. For applicants under the Hong Kong Public Offering, this
prospectus and the Application Forms set forth the terms and conditions of the Hong Kong Public
Offering.
The Hong Kong Offer Shares are offered solely on the basis of the information contained and
representations made in this prospectus and the Application Forms and on the terms and subject
to the conditions set out herein and therein. No person is authorized to give any information in
connection with the Global Offering or to make any representation not contained in this
prospectus, and any information or representation not contained herein must not be relied upon
as having been authorized by our Company, the Sole Sponsor, the Sole Global Coordinator, the
Sole Bookrunner, the Joint Lead Managers, the Underwriters, any of their respective directors,
agents, employees or advisors or any other party involved in the Global Offering.
The Listing is sponsored by the Sole Sponsor and the Global Offering is managed by the Sole
Global Coordinator. The Hong Kong Public Offering is fully underwritten by the Hong Kong
Underwriters subject to the terms and conditions of the Hong Kong Underwriting Agreement, with
one of the conditions being that the Offer Price is agreed between our Company and the Sole
Global Coordinator (for itself and on behalf of the Hong Kong Underwriters). The International
Placing is expected to be fully underwritten by the International Underwriters subject to the terms
and conditions of the International Underwriting Agreement, which is expected to be entered into
on or about the Price Determination Date. Further information about the Underwriters and the
underwriting arrangements is set forth in “Underwriting” in this prospectus.
Neither the delivery of this prospectus nor any offering, sale or delivery made in connection
with the Shares should, under any circumstances, constitute a representation that there has been
no change or development reasonably likely to involve a change in our affairs since the date of
this prospectus or imply that the information contained in this prospectus is correct as of any date
subsequent to the date of this prospectus.
PROCEDURE FOR APPLICATION FOR HONG KONG OFFER SHARES
The procedures for applying for the Hong Kong Offer Shares are set forth in “How to Apply
for the Hong Kong Offer Shares” in this prospectus and in the Application Forms.
— 65 —
STRUCTURE AND CONDITIONS OF THE GLOBAL OFFERING
Particulars of the structure of the Global Offering, including its conditions, are set forth in
“Structure of the Global Offering” in this prospectus.
RESTRICTIONS ON OFFERS AND SALES OF SHARES
Each person acquiring the Hong Kong Offer Shares under the Hong Kong Public Offering will
be required to, or be deemed by his acquisition of Offer Shares to, confirm that he is aware of the
restrictions on offers of the Offer Shares described in this prospectus.
No action has been taken to permit a public offering of the Offer Shares or the general
distribution of this prospectus and/or the Application Forms in any jurisdiction other than in Hong
Kong. Accordingly, this prospectus may not be used for the purposes of, and does not constitute,
an offer or invitation in any jurisdiction or in any circumstances in which such an offer or invitation
is not authorized or to any person to whom it is unlawful to make such an offer or invitation. The
distribution of this prospectus and the offering of the Offer Shares in other jurisdictions are subject
to restrictions and may not be made except as permitted under the applicable securities laws of
such jurisdictions and pursuant to registration with or authorization by the relevant securities
regulatory authorities or an exemption therefrom.
APPLICATION FOR LISTING OF THE SHARES ON THE STOCK EXCHANGE
We have applied to the Listing Committee for the listing of, and permission to deal in, the
Shares in issue and to be issued pursuant to the Global Offering (including any Shares which may
be issued pursuant to the exercise of the Over-Allotment Option).
Except as disclosed in this prospectus, no part of our equity or debt securities is listed on or
dealt in on any other stock exchange and no such listing or permission to list is being sought.
COMMENCEMENT OF DEALINGS IN THE SHARES
Dealings in the Shares on the Stock Exchange are expected to commence on Wednesday,
December 20, 2017. The Shares will be traded in board lots of 2,000 Shares each. The stock code
of the Shares will be 1789.
SHARES WILL BE ELIGIBLE FOR ADMISSION INTO CCASS
If the Stock Exchange grants the listing of, and permission to deal in, the Shares and we
comply with the stock admission requirements of HKSCC, the Shares will be accepted as eligible
securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the Listing
Date or any other date as determined by HKSCC. Settlement of transactions between participants
of the Stock Exchange is required to take place in CCASS on the second Business Day after any
trading day.
All activities under CCASS are subject to the General Rules of CCASS and CCASS
Operational Procedures in effect from time to time.
Investors should seek the advice of their stockbroker or other professional advisor for details
of the settlement arrangement as such arrangements may affect their rights and interests. All
necessary arrangements have been made to enable the Shares to be admitted into CCASS.
— 66 —
OVER-ALLOTMENT OPTION AND STABILIZATION
For details of the arrangements relating to the Over-Allotment Option and stabilization, see
“Structure of the Global Offering—Over-Allotment Option” and “Structure of the Global
Offering—Stabilization”.
PROFESSIONAL TAX ADVICE RECOMMENDED
You should consult your professional advisors if you are in any doubt as to the taxation
implications of subscribing for, purchasing, holding or disposing of, or dealing in, the Shares or
exercising any rights attaching to the Shares. We emphasize that none of our Company, the Sole
Sponsor, the Sole Global Coordinator, the Sole Bookrunner, the Joint Lead Managers, the
Underwriters, any of our or their respective directors, officers or representatives or any other
person involved in the Global Offering accepts responsibility for any tax effects or liabilities
resulting from your subscription, purchase, holding or disposing of, or dealing in, the Shares or
your exercise of any rights attaching to the Shares.
REGISTER OF MEMBERS AND STAMP DUTY
All Shares issued pursuant to applications made in the Global Offering will be registered on
our Company’s register of members to be maintained by Tricor Investor Services Limited, the
Hong Kong Share Registrar. Dealings in our Shares registered on our Company’s register of
members in Hong Kong will be subject to Hong Kong stamp duty. The stamp duty is charged to
each of the seller and purchaser at the ad valorem rate of 0.1% of the consideration for, or (if
greater) the value of, the Shares transferred. In other words, a total of 0.2% is currently payable
on a typical sale and purchase transaction of the Shares. In addition, a fixed duty of HK$5 is
charged on each instrument of transfer (if required).
EXCHANGE RATE CONVERSION
Unless otherwise specified, amounts denominated in RMB and Hong Kong dollars have been
translated into other currencies in this prospectus, for the purpose of illustration only, at
RMB0.8438: HK$1.0000 (set by the PBOC for foreign exchange transactions prevailing on the
Latest Practicable Date).
No representation is made that any amounts in RMB or Hong Kong dollars were or could
have been or could be converted into each other at such rates or any other exchange rates on
such date or any other date.
NUMBER OF DISTRIBUTORS
Unless otherwise specified, distributor entities that are related parties to our knowledge are
considered one distributor for the purpose of calculating the number of our distributors,
determination of the single largest customer and top five customers, and the revenue derived from
them.
— 67 —
ROUNDING
Certain amounts and percentage figures included in this prospectus have been subject to
rounding adjustments. Accordingly, figures shown as totals in certain tables may not be an
arithmetic aggregation of the figures preceding them.
LANGUAGE
If there is any inconsistency between this English prospectus and the Chinese translation of
this English prospectus, this English prospectus shall prevail. If there is any inconsistency
between the names of any of the entities mentioned in this English prospectus which are not in
the English language and their English translations, the names in their respective original
languages shall prevail.
OTHERS
Unless otherwise specified, all references to any shareholdings in our Company following the
completion of the Global Offering assume that the Over-Allotment Option is not exercised.
— 68 —
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
DIRECTORS
Name Address Nationality
Executive Directors
Li Zhijiang (李志疆) Flat 6, Biexiafang Chinese

Xin Xin Xiao Zhen
Huairou District
Beijing 101400
China
Zhang Bin (張斌) Flat 6, Biexiafang Chinese

Xin Xin Xiao Zhen
Huairou District
Beijing 101400
China
Zhang Chaoyang (張朝陽) Room 3-2108 Chinese

Dujingyuan
Mudanyuan
Haidian District
Beijing
China
Zhao Xiaohong (趙曉紅) Lingxiuxinguigu Chinese

No 2 Xi’erqixi Road
Haidian District
Beijing
China
Non-executive Directors
Li Wenming (李文明) 1-1202, 12th Floor, Building 20 Chinese

Beiyuan Jiayuan Moliyuan
Chaoyang District
Beijing China
Wang David Guowei (王國瑋) 27 Tyler Rd United States

Lexington
MA 02420
United States
— 69 —
Name Address Nationality
Independent non-executive
Directors
Dang Gengting (黨耕町) No. 5, 10/F Chinese

Building 6
No. 49 Huayuanbei Road
Haidian District
Beijing
China
Kong Chi Mo (江智武) Flat 5, 3/F Chinese

43 Tung Chau Street
Kowloon
Hong Kong
Li Shu Wing David (李澍榮) Room H, 30/F. Chinese

Block One
Vianni Cove
33 Tin Kwai Road
Tin Shui Wai, N.T.
Hong Kong
Please see the section headed “Directors and Senior Management” for further information.
— 70 —
PARTIES INVOLVED IN THE GLOBAL OFFERING
Sole Sponsor Goldman Sachs (Asia) L.L.C.

68th Floor, Cheung Kong Center
2 Queen’s Road Central
Hong Kong
Sole Global Coordinator and Goldman Sachs (Asia) L.L.C.

Sole Bookrunner 68th Floor, Cheung Kong Center
Hong Kong
Joint Lead Managers Goldman Sachs (Asia) L.L.C.

68th Floor, Cheung Kong Center
Hong Kong
Guotai Junan Securities (Hong Kong)

Limited
26/F-28/F, Low Block, Grand Millennium Plaza
Hong Kong
Legal advisors to our Company As to Hong Kong and U.S. laws:

Mayer Brown JSM
16th-19th Floors
Prince’s Building
10 Charter Road
Central
Hong Kong
As to Chinese law:
Jingtian & Gongcheng
34th Floor, Tower 3
China Central Place
77 Jianguo Road
Chaoyang District
Beijing 100025
China
As to Cayman Islands law:

Conyers Dill & Pearman
Cricket Square
Hutchins Drive
PO Box 2681
Grand Cayman KY1-1111
Cayman Islands
— 71 —
Legal advisors to the Sole As to Hong Kong and U.S. laws:

Sponsor and the Sullivan & Cromwell (Hong Kong) LLP
Underwriters 28th Floor
Nine Queen’s Road Central
Hong Kong
As to Chinese law:
Commerce & Finance Law Offices
6th Floor, NCI Tower
A12 Jianguomenwai Avenue
Beijing
China
Auditors and reporting KPMG

accountants Certified Public Accountants
8th Floor
Prince’s Building
10 Chater Road
Central
Hong Kong
Receiving bank Standard Chartered Bank (Hong Kong)

Limited
15th Floor, Standard Chartered Tower
388 Kwun Tong Road
Kwun Tong
Kowloon, Hong Kong
Compliance advisor Guotai Junan Capital Limited

27th Floor, Low Block
Grand Millennium Plaza
Hong Kong
Industry consultant Frost & Sullivan (Beijing) Inc.,

Shanghai Branch Co.
Room 1018, Tower B
No. 500 Yunjin Road
Xuhui District
Shanghai
China
— 72 —
CORPORATE INFORMATION
Registered office Conyers Trust Company (Cayman) Limited

Cricket Square
Hutchins Drive
PO Box 2681
Grand Cayman, KY1-1111
Cayman Islands
Headquarters and principal 10 Baifuquan Road

place of business in China Changping District Science
and Technology Park
Beijing
China
Principal place of business in Level 54, Hopewell Centre

Hong Kong 183 Queen’s Road East
Hong Kong
Joint Company Secretaries Ms. Han Yu (韓鈺)

1-3-403, No. 2 Zhongtao Alley
Dongcheng District
Beijing
China
Ms. Li Yan Wing Rita (李昕穎), FCIS, FCS(PE)

Flat B, 25/F
High Park
51 Boundary Street
Mongkok
Hong Kong
Authorized representatives Ms. Zhang Bin (張斌)

Ms. Li Yan Wing Rita ( 李昕穎) as her
alternate
Flat 6, Biexiafang
Xin Xin Xiao Zhen
Huairou District
Beijing 101400
China
Ms. Han Yu (韓鈺)

Ms. Li Yan Wing Rita ( 李昕穎) as her
alternate
1-3-403, No. 2 Zhongtao Alley
Dongcheng District
Beijing
China
— 73 —
Audit committee Mr. Kong Chi Mo (江智武) (Chairman)

Mr. Li Shu Wing David (李澍榮)
Mr. Li Wenming (李文明)
Remuneration committee Mr. Li Shu Wing David (李澍榮) (Chairman)

Mr. Kong Chi Mo (江智武)
Mr. Li Zhijiang (李志疆)
Nomination committee Mr. Li Zhijiang (李志疆) (Chairman)

Mr. Li Shu Wing David (李澍榮)
Mr. Dang Gengting (黨耕町)
Principal share registrar and Conyers Trust Company (Cayman) Limited

transfer office Cricket Square
Hutchins Drive
P.O. Box 2681
Grand Cayman KY1-1111
Cayman Islands
Hong Kong branch share Tricor Investor Services Limited

registrar and transfer office Level 22, Hopewell Centre
183 Queen’s Road East
Hong Kong
Principal bankers Agricultural Bank of China

No. 10, Baifuquan Road
Changping District
Beijing
China
Bank of China
No. 57 Nanhuan Road
Changping District
Beijing
China
Bank of Communications
103-1, 1F, Tower 2, No. 29
North Third Ring Middle Road
Xicheng District
Beijing
China
East West Bank

Suite 1108
11/F Two IFC
8 Finance Street
Hong Kong
— 74 —
The Hongkong and Shanghai Banking

Corporation Limited
HSBC Main Building
1 Queen’s Road
Central
Hong Kong
Company website address www.ak-medical.net(1)
(1) The information contained on the website of our Company does not form part of this prospectus.
— 75 —
INDUSTRY OVERVIEW
The information presented in this section, including certain facts, statistics and data, is
derived from various official government publications and other publications and from the
market research report prepared by Frost & Sullivan, which was commissioned by us, unless
otherwise indicated. We believe that these sources are appropriate for such information and we
have taken reasonable care in extracting and reproducing such information. Therefore, we
have no reason to believe that such information is false or misleading in any material respect
or that any fact has been omitted that would render such information false or misleading in any
material respect. However, the information has not been independently verified by our
Company, the Sole Sponsor, the Sole Global Coordinator, the Sole Bookrunner, the Joint Lead
Managers, the Underwriters, any of our or their respective directors, officers or representatives
or any other person involved in the Global Offering and no representation is given as to its
accuracy. The information and statistics may not be consistent with other information and
statistics compiled within or outside of China.
SOURCE OF INFORMATION
In connection with the Global Offering, we have commissioned Frost & Sullivan, an
independent third party, to conduct an analysis of, and to report on, China’s medical device and
orthopedic implant market. The report we commissioned, or the Frost & Sullivan Report, has been
prepared by Frost & Sullivan independent of our influence. The fee payable to Frost & Sullivan for
preparing the Frost & Sullivan Report is RMB1,070,000, which we consider reflects market rates
for similar services. Frost & Sullivan is an independent global market research and consulting
company which was founded in 1961 and is based in the United States. Services provided by
Frost & Sullivan include market assessments, competitive benchmarking, and strategic and
market planning for a variety of industries. We have included certain information from the Frost &
Sullivan Report in this prospectus because we believe this information facilitates an
understanding of this market for potential investors. Frost & Sullivan has been covering the
Chinese market from its offices in China since the 1990’s.
The Frost & Sullivan Report that we commissioned includes information on China’s medical
device and orthopedic implant markets, and certain segments and other market and economic
data, which have been quoted in this prospectus. Frost & Sullivan’s independent research was
undertaken through both primary and secondary research obtained from various sources within
China. Primary research involved interviews with leading industry participants and distributors in
the Chinese orthopedic implant market, China Association for Medical Devices Industry, other
research agencies affiliated with the Chinese government, and other experts related to the
business of our Company. Secondary research involved reviewing company reports, independent
research reports and data based on Frost & Sullivan’s own research database and government
database. In compiling and preparing the Frost & Sullivan Report, Frost & Sullivan has adopted
the following assumptions: (1) China’s economy is likely to grow at a steady rate in the next
decade; (2) China’s social, economic and political environment is likely to remain stable in the
forecast period, which ensures the stable and healthy development of the medical device and
orthopedic implant industries; and (3) there will be no wars or large scale disasters during the
forecast period.
Except as otherwise noted, all the data and forecast in this section are derived from the Frost
& Sullivan Report. Our Directors confirm that, after taking reasonable care, there is no adverse
change in the market information that would qualify, contradict or have a material impact on such
information since the date of the Frost & Sullivan Report.
— 76 —
INDUSTRY OVERVIEW
THE HEALTHCARE SERVICES MARKET IN CHINA
China’s total healthcare expenditure grew to RMB4,097.5 billion, or 6.1% of its GDP, in 2015
from RMB2,434.6 billion, or 5.0% of its GDP, in 2011, representing a CAGR of 13.9%. Frost &
Sullivan projects that China’s total healthcare expenditure will reach RMB6,281.8 billion, or 6.9%
of its GDP, in 2020, representing a CAGR of 8.9% from 2015 to 2020. The following chart sets forth
China’s total historical and projected healthcare expenditure for the periods indicated:
RMB (Billion) % of GDP

8,000 8.0%
6.7% 6.8% 6.9%
6.4% 6.6% 7.0%
7,000 6.1% 6,281.8
5.4% 5.6% 5,868.8 6.0%
6,000 5.3% 5,447.5
5.0%
5,026.2
5,000 4,605.9 5.0%
4,097.5
4,000 3,531.2 4.0%
3,166.9
3,000 2,434.6 2,811.9 3.0%
2,000 2.0%
1,000 1.0%
0 0.0%
2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E
National Healthcare Expenditure National Healthcare Expenditure as a Percentage of GDP
China’s total healthcare expenditure from 2011 to 2015 grew the fastest among the 12
countries with the largest GDP in the world in terms of both total healthcare expenditure and per
capita healthcare expenditure. However, on a per capita healthcare expenditure basis, China’s
healthcare industry is still underdeveloped compared to that of developed countries. China had a
per capita total healthcare expenditure of only RMB2,980.8 in 2015. Furthermore, according to
Frost & Sullivan, fueled by a rapidly aging population, the Chinese healthcare industry is
experiencing a customer demographic shift that could provide immense opportunities for
healthcare service providers.
THE GENERAL ORTHOPEDIC IMPLANT MARKET IN CHINA
The general orthopedic implant market consists of three major segments: trauma implants,
spine replacement implants and orthopedic joint implants. The orthopedic joint implant market was
the second largest segment of China’s general orthopedic implant market in 2016 by both surgery
volume and revenue. It is second only to the trauma implant market. Moreover, the orthopedic joint
implant market grew the fastest among the three segments at a CAGR of 14.5% in terms of
surgery volume and 13.9% in terms of revenue from 2012 to 2016. The spine replacement implant
market also outgrew the industry average, representing a CAGR of 14.0% in terms of surgery
volume and 13.6% in terms of revenue from 2012 to 2016.
The surgery volume for orthopedic implants in China grew from approximately 1.7 million in
2012 to 2.9 million in 2016, representing a CAGR of 13.8%, and is expected to grow to 4.7 million
by 2021, representing a CAGR of 10.2% between 2016 and 2021. The following chart sets forth
a breakdown of the historical and projected surgery volume and CAGR of China’s general
orthopedic implant market divided into the three major market sectors.
— 77 —
INDUSTRY OVERVIEW
CAGR
5,000,000 4,719,229 2012-2016 2016-2021

4,500,000 4,292,716
983,023
13.8% 10.2%
3,888,583
4,000,000 863,284
3,508,290
3,500,000 3,190,166
745,891
779,580
14.5% 13.8%
646,268
2,899,707 711,945
3,000,000 2,614,128
572,703 649,585
514,924 585,211 14.0% 10.5%
2,500,000 2,305,442 473,000 528,646
1,995,221 421,957 473,697
2,000,000 1,727,332 350,221
428,685
13.6% 9.1%
374,725
299,334 325,000
1,500,000 280,172 2,493,107 2,717,487 2,956,626
2,276,810
1,911,086 2,088.817
1,000,000 1,508,760 1,712,443
1,320,000
1,147,826
500,000
–
2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E 2021E
Trauma Spine Joint
Source: Frost & Sullivan Report
Between 2012 and 2016, the general orthopedic implant market in China grew from
approximately RMB7.4 billion to RMB12.3 billion in terms of revenue , representing a CAGR of
13.5%, and is expected to grow to RMB20.3 billion in 2021, representing a CAGR of 10.6%
between 2016 and 2021, according to Frost & Sullivan. Specifically, the market of orthopedic joint
implants for the treatment of bone tumor is expected to grow from RMB143.5 million in 2016 to
RMB325.7 million in 2021 at a CAGR of 17.8%, with the spine replacement implant market in
China expected to grow from RMB3.2 billion in 2016 to RMB5.1 billion in 2021 at a CAGR of 9.5%
and trauma implant market expected to grow from RMB5.0 billion in 2016 to RMB7.5 billion in
2021 at a CAGR of 8.5%. Additionally, the dental prosthetics market is expected to grow from
RMB8.6 billion in 2016 to RMB18.8 billion in 2021, representing a CAGR of 17.0%.
THE ORTHOPEDIC JOINT IMPLANT MARKET IN CHINA
Market Size and Growth
The orthopedic joint implant market mainly consists of the hip and knee replacement implant
sectors. China’s orthopedic joint implant market grew from approximately RMB2.4 billion in 2012
to RMB4.1 billion in 2016, representing a CAGR of 13.9%, and is projected to further grow to
RMB7.8 billion in 2021, representing a CAGR of 13.7% between 2016 and 2021. The following
chart sets forth the historical and projected orthopedic joint implant market size in China by sector:
CAGR
RMB (Million) 2012-2016 2016-2021

9,000.0
7,780.0 13.9% 13.7%
8,000.0
6,893.6
7,000.0
6,077.8
6,000.0 5,266.7 4,489.3
4,646.8 21.7% 18.7%
5,000.0 3,804.5
4,097.1 3,197.0
4,000.0 3,634.1 2,642.2
3,301.6 2,224.3
2,808.8 1,901.2
3,000.0 2,433.1 1,657.1
1,455.4
1,094.6
2,000.0 865.7 3,089.1 3,290.7 8.8% 8.4%
2,624.5 2,880.7
1,977.0 2,196.0 2,422.4
1,714.2 1,846.2
1,000.0 1,567.4
–
2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E 2021E
Hip Joint Knee Joint
— 78 —
INDUSTRY OVERVIEW
The following chart sets forth the historical and projected orthopedic joint implant surgery
volume in China by sector:
CAGR
2012-2016 2016-2021
1,200,000
14.5% 13.8%
983,023
1,000,000
863,284
800,000 745,891 24.4% 20.8%

646,268 525,936
572,703 436,099
600,000 514,924 348,879
473,000 282,037
421,957 237,006 9.8% 8.1%
400,000 299,334
350,221 183,626
204,668
156,797
109,444
85,524
457,088
200,000 310,256 335,697 364,231 397,012 427,185
265,160 289,374
213,810 240,777
–
2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E 2021E
Hip Joint Knee Joint
Primary and Revision Surgeries
A primary surgery replaces a patient’s natural joint with an implant. Patients who have
undergone primary surgeries may need to go through revision surgeries to replace or repair an
implant or repair defective bone parts. According to Frost & Sullivan, the primary barriers to entry
in the revision surgeries market include: the relatively higher technological requirements as
compared to those of the primary surgery market, the requirement for more precision in the design
and development of the orthopedic joint implants, and user adhesiveness to surgical instruments
and existing established brands. As the bone and tissue structures of patients who need to have
revision surgeries have already been reduced due to their primary surgeries, and can therefore
provide less guidance in positioning and support, the design and development of orthopedic joint
implants for revision surgeries require more precision and the production of these implants
requires materials with better compatibility with bones, better durability, and the use of more
advanced bone interface technologies. As a result, patients and surgeons are particularly keen on
choosing reliable and established brands for revision surgeries. This further incentivizes surgeons
to use the most commonly used brands of orthopedic joint implants and surgical instruments with
which they are familiar. As such, revision surgeries generally result in a higher profit margin for
orthopedic joint implant companies than primary surgeries. Frost & Sullivan projected that joint
revision surgeries for total knee and total hip replacement implants as a percentage of total
orthopedic joint implant surgeries will increase from 5.6% in 2016 to 11.2% in 2021. This growth
is partially driven by the first batch of primary joint surgery patients in China who are starting to
require revision surgeries. As revision surgeries require a higher degree of precision, 3D-printing,
which allows for a greater level of precision than other more traditional products, is expected to
serve as one of the main technologies for revision surgeries moving forward. See “—Overview of
3D Printing and Its Application in China’s Orthopedic Implant Market”.
— 79 —
INDUSTRY OVERVIEW
The volume of primary orthopedic joint implant surgeries in China grew from 283,293 in 2012
to 486,088 in 2016, representing a CAGR of 14.5%, and is expected to grow to 872,960 by 2021,
representing a CAGR of 12.4% between 2016 and 2021. The volume of revision surgeries grew
from 16,041 in 2012 to 28,836 in 2016, representing a CAGR of 15.8%, and is expected to grow
to 110,064 by 2021, representing a CAGR of 30.7% between 2016 and 2021. The following chart
sets forth the historical and projected orthopedic joint implant surgery volume in China, divided
into primary and revision surgeries:
CAGR
2012-2016 2016-2021
1,200,000
14.5% 13.8%
983,023
1,000,000
863,284 110,064
78,281 15.8% 30.7%

800,000 745,891
646,268 56,521
572,703 42,819
600,000 514,924 33,795
473,000
28,836
421,957 25,609 872,960
400,000 350,221 22,906 785,003
299,334 19,025 689,370
16,041 538,907
603,449 14.5% 12.4%
447,391 486,088
200,000 331,196
399,050
283,293
–
2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E 2021E
Primary Surgeries
Revision Surgeries
Average Ex-factory Price of Orthopedic Joint Implants
According to Frost & Sullivan, the average ex-factory price of both imported and domestically
produced orthopedic joint implants generally remained stable from 2012 to 2016. During the same
period, imported orthopedic joint implants had a higher average ex-factory price than domestically
produced products. The following chart sets forth the historical average ex-factory price of hip
replacement implants and knee replacement implants, respectively, in China, divided into
domestically produced implants and imported implants:
RMB/set RMB/set
14,000 14,000
11,844.8 11,827.2 11,653.0 11,450.0 12,138.7 12,056.0 11,933.0 11,730.0
11,460.0 11,723.0
12,000 12,000
10,000 10,000
8,000 8,000
6,000 6,000 4,911.7 4,871.3 4,842.6 4,800.5 4,806.0
4,000 2,923.7 2,911.0 2,901.5 2,898.0 2,908.0 4,000
2,000 2,000
– –
2012 2013 2014 2015 2016 2012 2013 2014 2015 2016
Average ex-factory price for domestically produced hip replacement implants Average ex-factory price for domestically produced knee replacement implants
Average ex-factory price for imported hip replacement implants Average ex-factory price for imported knee replacement implants
— 80 —
INDUSTRY OVERVIEW
Key Drivers of the Orthopedic Joint Implant Market in China
According to Frost & Sullivan, the orthopedic joint implant market in China is expected to
continue to grow rapidly in the next few years. Future growth of the orthopedic joint implant market
in China is expected to be primarily driven by (1) a growing number of patients, (2) greater access
to orthopedic joint implant surgery, (3) improved affordability of orthopedic joint implant surgery
and (4) product innovation.
• Growing number of patients: An aging population and lifestyle changes in China have
led to a rapid increase in the incidence of joint disorders, requiring orthopedic joint
implants and lifelong maintenance. According to the National Bureau of Statistics of
China, approximately 150.0 million people were 65 years old or above in 2016,
representing 10.9% of the total population in China, and Frost & Sullivan projected this
number to grow to 194.2 million by 2021, representing 13.8% of the population at the
time. In addition, changes in lifestyle have contributed to increased obesity rates,
which, along with lack of regular exercise, are factors in developing joint disorders.
• Greater access to orthopedic joint implant surgery: According to the latest policy issued
by the Ministry of Health of China, qualified county-level hospitals are permitted to
conduct orthopedic joint implant surgeries. According to the Opinions on
Implementation of Comprehensively Promoting the Full-Scale Reform of County-Level
Public Hospitals (《國務院辦公廳關於全面推開縣級公立醫院綜合改革的實施意見》)
issued by the General Office of State Council in 2015, the government intends to
significantly improve the clinical competency of county-level hospitals on treating
complicated cases, so that more patients could receive treatment in local medical
institutions by 2017. In addition, the number of qualified orthopedists in hospitals in
China increased from 36,053 in 2011 to 49,376 in 2015. As a result of these policies and
trends, orthopedic joint implant surgeries have become more accessible to patients.
• Improved affordability of orthopedic joint implant surgery: In light of China’s continued

economic growth, the average income level in China has increased substantially in
recent years. At the same time, the Chinese government has expanded public medical
insurance coverage and increased reimbursement rates for orthopedic joint implants,
especially for domestically produced products. As a result, orthopedic joint implant
surgeries have become more affordable.
• Product innovation: Innovations in advanced materials, fixation technologies and

product designs increase the efficiency of implantation and address unmet clinical
demands, which would drive market demand. In addition, innovative orthopedic joint
implants command higher prices, which also drive growth of the market.
— 81 —
INDUSTRY OVERVIEW
Entry Barriers in the Orthopedic Joint Implant Market in China
According to Frost & Sullivan, there are primarily four entry barriers in China’s orthopedic
joint implant market:
• R&D capability: Since orthopedic joint implants are Class III medical devices subject to
stringent regulatory standards on safety and effectiveness, and involve multi-
disciplinary knowledge and technologies, strong R&D capabilities are necessary to
develop the products. Existing players continuously invest in improving their products,
which are difficult for new entrants to match.
• Regulatory environment: Orthopedic joint implants are heavily regulated by the Chinese
government, requiring significant time and effort to obtain approvals or comply with
various regulations. See “Regulation” for details.
• Distribution channel: According to Frost & Sullivan, players in the orthopedic joint
implant market rely significantly on the distributorship sales model. To distribute
orthopedic joint implants, distributors must obtain approval from regulatory authorities
and provide specialized after-sales services to hospitals. As a result, new entrants need
a significant amount of time to establish relationships with an effective network of
distributors, hampering their ability to access the market.
• Brand recognition: Surgeons are more willing to use orthopedic joint implants from
familiar brands that have been proven safe and effective. A well-known brand with a
reliable reputation may take years of effort and investment to build.
Competitive Landscape
According to Frost & Sullivan, our brand “AK Medical” (“愛康”) is the bestselling brand of
orthopedic joint implants in China by sales volume in 2016 and the bestselling domestic
orthopedic joint implant brand in China by revenue in 2016.
The following table sets forth the top brands in China’s orthopedic joint implant market in
terms of sales volume in 2016:
Rank Brand Sales volume (1) Market Share (%) Type of brand
1 . . . . . . . . . . . . . AK Medical 73,691 14.3 Domestic
2 . . . . . . . . . . . . . Brand A 56,370 10.9 International
3 . . . . . . . . . . . . . Brand B 55,097 10.7 International
4 . . . . . . . . . . . . . Brand C 53,845 10.5 International
5 . . . . . . . . . . . . . Brand D 52,553 10.2 Domestic
6 . . . . . . . . . . . . . Brand E 47,052 9.1 International
7 . . . . . . . . . . . . . Brand F 26,997 5.2 International
8 . . . . . . . . . . . . . Brand G 22,082 4.3 Domestic
(1) Representing the total number of sets of off-the-shelf joint implants and pieces of 3D-printed joint implants sold in
China.
— 82 —
INDUSTRY OVERVIEW
The following table sets forth the top brands in China’s orthopedic joint implant market in
terms of revenue in 2016:
Revenue (1)
Rank Brand (RMB million) Market Share (%) Type of brand
1 . . . . . . . . . . . . . Brand A 698.5 17.0 International
2 . . . . . . . . . . . . . Brand B 602.9 14.7 International
3 . . . . . . . . . . . . . Brand C 588.0 14.4 International
4 . . . . . . . . . . . . . Brand D 554.6 13.5 International
5 . . . . . . . . . . . . . Brand E 293.2 7.2 International
6 . . . . . . . . . . . . . AK Medical 245.2 6.0 Domestic
7 . . . . . . . . . . . . . Brand F 203.4 5.0 International
8 . . . . . . . . . . . . . Brand G 196.2 4.8 Domestic
(1) Representing the revenue derived from sales in China.
The primary reason that we had a larger market share in terms of sales volume than revenue
is because products of international brands generally have higher ex-factory prices than those of
domestic brands. In 2016, our “AK Medical” (“愛康”) was the bestselling brand of orthopedic joint
implants in China by sales volume. In the same year, “AK Medical” (“愛康”) was also the
bestselling domestic orthopedic joint implant brand and ranked sixth overall in China by revenue.
The top five brands in China by revenue in 2016 were all international brands.
OVERVIEW OF 3D-PRINTING AND ITS APPLICATION IN CHINA’S ORTHOPEDIC IMPLANT

MARKET
3D-printing refers to the computer-controlled process of joining, fusing or depositing

materials, such as plastic, metal, ceramics, powders, and liquids. Traditional manufacturing
technology is limited in its ability to fit products to individual needs. The application of 3D-printing
technologies in the orthopedic implant market makes producing customized and complex products
possible. An example of the limitation of off-the-shelf products can be found in the treatment for
bone tumors, which afflicts nearly 28,000 new patients each year in China. As the areas of disease
of the patients often have unique sizes and shapes, the current treatment methods for bone
tumors have their limitations. Traditional implants are of limited sizes and shapes, which would
generally require extensive bone and tissue removal. Implants with replaceable ready-made
components offer more choices in sizes and shapes than traditional products but still would not
fit the patients’ areas of disease precisely. Customized implants produced with non-3D-printed
methods ensure proper fit but the production cost is relatively high. 3D-printing technologies
address such deficiencies as it could produce complex and customized implants using a computer
controlled production process based on the 3D model of each patient’s pathological area,
ensuring perfect fit and reducing production cost. 3D-printed products also have an advantage in
the revision surgery market. As the patients receiving revision surgeries already have their bone
and tissue structures reduced from the primary surgery, their residuals can provide less guidance
in positioning and support in the revision surgery. Therefore, traditional methods of treatment
often fall short of delivering an orthopedic product that could meet the surgeons’ and the patients’
need for precision.
— 83 —
INDUSTRY OVERVIEW
Our Position in the Market
There are four different and interconnecting services relating to surgical solutions involving
3D-printing technologies, namely (1) 3D-imaging and 3D-modeling, (2) formation of 3D-printed
models and patient-specific surgical plans, (3) production of 3D-printed surgical instruments, such
as surgical guides and (4) production of 3D-printed orthopedic implants. According to Frost &
Sullivan, we are the only company that provides one-stop orthopedic surgical solutions integrating
all four services in China. See “Our Business—Our Product Portfolio and Services—3D ACT
Solutions”. The following table sets forth a brief overview of the scope of services provided by
certain orthopedic implant companies in relation to surgical solutions involving 3D-printing
technologies globally:
Providing 3D-
printed models Producing
and developing Producing 3D- 3D-printed joint
3D-imaging and patient-specific printed surgical replacement
3D-modeling surgical plans instruments implants
AK Medical . . . . . . . . . . . . . . . . . ✔ ✔ ✔ ✔
Auto desk, Inc. . . . . . . . . . . . . . . . ✔
Stratasys, Ltd. . . . . . . . . . . . . . . . ✔ ✔
Materialise NV . . . . . . . . . . . . . . . ✔ ✔ ✔
ConforMIS, Inc. . . . . . . . . . . . . . . . ✔ ✔ ✔
Stryker Corporation . . . . . . . . . . . . ✔
Favorable Government Policies on 3D-Printing
The Chinese government has promulgated a series of policies to encourage the development
of 3D-printing technologies and their potential application in medical devices in China. In 2013, the
3D-printing industry was designated as a focus industry for development by the Ministry of
Science and Technology of China. Although 3D-printed products used for medical purposes are
subject to the CFDA approval, the Notice on Special Examination and Approval Procedures for
Innovative Medical Devices (Trial) (創新醫療器械特別審批程序(試行)的通知) issued in February
2014 has streamlined and simplified the registration process for 3D-printed products. “Made in
China 2025” initiative (中國製造2025), the Chinese government’s initiative to comprehensively
upgrade Chinese industry also highlighted 3D-printing as a priority sector. Under the 13th
Five-Year National Science and Technology Innovation Plan, domestic enterprises are
encouraged to develop medical devices like biomedical materials including 3D printing materials
and medical implants. Additionally, the 13th Five-Year National Strategic Emerging Industry
Development Plan maps out a combination of steps involving the development of innovative
medical devices and construction of mobile healthcare and telehealth systems as well as
reformation of industry regulation to promote the development of the Chinese Smart Healthcare
Industry. Moreover, the Chinese government promulgated the “Health China 2030,” which initiated
further reform with a focus on accelerating the approval process for innovative or urgently-needed
medical devices, and published an implementation plan to further develop 3D-printing
technologies and applications in 2016.
— 84 —
INDUSTRY OVERVIEW
IMPORT SUBSTITUTION WITH DOMESTIC PRODUCTS
Imported products have a larger market share than domestically produced products in the
orthopedic joint and spine replacement implant market in China. According to Frost & Sullivan, by
volume, the market share of domestically produced orthopedic joint implants and spine
replacement implants in 2016 was 46.7% and 56.8%, respectively. In particular, imported products
had a much larger market share of 68.8% in the knee replacement implant sector, compared to
that of 43.0% in the hip replacement implant sector, in China in 2016. This is mainly because the
design and production of knee replacement implants have a higher technological entry barrier
than hip replacement implants and international orthopedic implant companies generally have
stronger R&D capabilities and longer product track records and therefore enjoy a technological
advantage over China-based orthopedic implant companies in the design and production of knee
replacement implants. In addition, compared to China-based orthopedic implant companies,
international companies generally have more integrated and effective marketing plans.
The Chinese government has instituted policies to encourage the use of medical devices
produced in China over imported products. According to Frost & Sullivan, capped reimbursements
(such as in Beijing, Luoyang and Shanghai) and variable-rate deductibles (such as in Ningbo and
Wuhan) are two medical insurance policies commonly adopted by local governments, and in both
cases, patients using orthopedic implants produced in China enjoy a higher reimbursement rate
(which differs from city to city) than those using imported products. In addition, in many regions
in China the New Rural Medical Insurance System in which rural residents in China are eligible
to participate only reimburses patients using orthopedic implants produced in China. Medical
insurance reimbursements are paid directly to the relevant medical institutions. Therefore, the
higher the reimbursement rate, the less the patients have to pay for the medical treatment they
receive. The following table sets forth the current reimbursement percentages for domestic
products and imported products in certain cities in China:
Reimbursement as percentage
of total costs(1)
City Domestic Imported
Beijing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50-55% 25-30%
Shanghai . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70-75% 65-70%
Ningbo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75-80% 60-65%
Luoyang . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65-70% 45-50%
Wuhan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55-60% 40-45%
(1) Reimbursement rates are calculated for employees covered by Urban Employee Basic Insurance System.
According to Frost & Sullivan, domestically produced trauma implants and coronary stents
accounted for market share of 85.2% and 72.6% in 2016, respectively, implying a large room for
other domestically produced products to capture. In both the hip and knee replacement implant
sectors, domestically produced products are gaining market share against imported products. The
market share of domestically produced orthopedic joint implants increased from 44.1% in 2012 to
46.7% in 2016. The market share of domestically produced hip replacement implants increased
from 50.6% in 2012 to 57.0% in 2016 and is projected to continue to increase to 62.2% in 2021
by surgery volume, according to Frost & Sullivan. The market share of domestically produced
knee replacement implants increased from 27.9% in 2012 to 31.2% in 2016 and is projected to
continue to increase to 37.5% in 2021 by surgery volume.
— 85 —
INDUSTRY OVERVIEW
HISTORICAL PRICES OF MAJOR RAW MATERIALS
Major raw materials used in orthopedic implants include titanium alloy, cobalt-chromium-
molybdenum alloy and ultra-high molecular weight polyethylene materials. Fluctuations in prices
of raw materials affect the cost structure, product pricing and profitability of orthopedic implant
companies. According to Frost & Sullivan, the historical prices of titanium alloy, cobalt-chromium-
molybdenum alloy and ultra-high molecular weight polyethylene have generally increased in
China in recent years, as a result of the increasing demand for orthopedic implants. Due to the
sufficient supply of raw materials in China market, their prices have not increased considerably in
the past few years. A slow-growing trend will continue for the next few years.
The price of titanium alloy fluctuated slightly between RMB1,069 per kilogram and RMB1,124
per kilogram during 2012 and 2016. The following chart sets forth the historical prices of titanium
alloy for the years indicated:
RMB/kilogram
1,200.0
1,124.3
1,112.3 1,111.0 1,110.0
1,100.0
1,069.3
1,000.0
2012 2013 2014 2015 2016
The price of cobalt-chromium-molybdenum alloy fluctuated between RMB937 per kilogram to

RMB1,059 per kilogram during 2012 and 2016. The following chart sets forth the historical prices
of cobalt-chromium-molybdenum alloy for the years indicated:
RMB/kilogram
1,100.0 1,059.2
1,036.9 1,034.1 1,034.0
1,000.0
937.0
900.0
800.0
2012 2013 2014 2015 2016
— 86 —
INDUSTRY OVERVIEW
The price of ultra-high molecular weight polyethylene materials increased from RMB1,643
per kilogram in 2012 to RMB2,035 per kilogram in 2016. The following chart sets forth the
historical prices of ultra-high molecular weight polyethylene materials for the years indicated:
RMB/kilogram
2,500.0
2,125.4
2,035.0
2,000.3
2,000.0
1,801.9
1,642.7
1,500.0
2012 2013 2014 2015 2016
— 87 —
REGULATION
This section sets forth a summary of certain aspects of Chinese laws, rules and regulations,
which are relevant to our business and operations in China.
CLASSIFICATION OF MEDICAL DEVICES
Pursuant to the Regulations on Supervision of Medical Devices (《醫療器械監督管理條例》)

promulgated by the State Council of China and became effective on April 1, 2000, which was
amended on March 7, 2014 and May 4, 2017 and the last amendment came into force on May 4,
2017, China adopts classified administration over medical devices based on the invasiveness of,
and risks associated with, each medical device. Class I medical devices are those with relatively
low risks whose safety and effectiveness can be guaranteed through routine administration. Class
II medical devices are those devices with moderate risks whose safety and effectiveness need to
be ensured with strict control and administration. Class III medical devices are those devices with
relatively high risks and need special measures for strict control and administration to ensure
safety and effectiveness.
Our orthopedic implants are classified as Class III medical devices, and our surgical
instruments are Class II medical devices.
MEDICAL DEVICE REGISTRATION CERTIFICATE
Pursuant to the Administrative Measures for the Medical Devices Registration (《醫療器械註
冊管理辦法》）promulgated by CFDA on July 30, 2014 and became effective on October 1, 2014,
producers engaging in the production of Class I medical devices are required to file with the
relevant food and drug administrative authorities at city level. Production of Class II medical
devices is subject to the inspection and approval of the drug administrative authorities at the
provincial level, and the grant of product registration certificates. Production of Class III medical
devices is subject to the inspection and approval and the grant of product registration certificates
by the CFDA. The medical device registration certificate is valid for five years and the holder of
which shall apply for extension within six months prior to its expiration. Generally, clinical trial is
necessary for the production of Class II and Class III medical devices. Clinical trial is not required
under any of the following circumstances:
a) Medical devices with detailed operation mechanism, fixed design and mature
production technology, and the same types of medical devices in the market have no
record of severe adverse events after years of clinical application, and there are no
changes on their ordinary usage;
b) medical devices that are proven to be safe and effective through non-clinical evaluation;
c) medical device that are proven to be safe and effective through clinical trials conducted
on the same types of medical devices or through analytical evaluation on information
obtained from clinical application.
The catalog of medical devices exempted from clinical trials shall be formulated, updated and
published by the CFDA. CFDA approval for clinical trial of a Class III medical device is necessary
where the clinical trials could pose relatively high risks to human bodies. The catalog of Class III
medical devices whose clinical trials are subject to examination and approval shall be formulated,
updated and published by the CFDA.
— 88 —
REGULATION
PRODUCTION PERMIT
Pursuant to the Regulations on Supervision of Medical Devices (《醫療器械監督管理條例》),

in addition to the required product registration certificates, a producer must obtain a medical
device production license from the relevant level of CFDA before commencing the production of
Classes II and Class III medical devices. In general, AIC and/or its local branches will not issue
a business license to a producer of Classes II and III medical devices before it obtains a medical
device production license. Accordingly, a producer will not be able to commence any business
operations without a medical device production license. The medical device production license is
valid for five years. Where the period of validity for the license needs to be extended upon expiry,
the procedures for such extension shall be handled in accordance with the provisions of relevant
laws on administrative licensing. Any changes to the contents or particulars stated in the
production permit must be reported to the CFDA or its relevant local counterparts. Pursuant to
Regulations on Supervision of Medical Devices, if any of the contents stated in the product
registration certificate is changed, an application for modification or re-registration of the product
registration certificate must be filed with the CFDA or its relevant local counterparts. If there are
non-substantive changes of the registered Class II and Class III medical devices which do not
affect their safety and effectiveness, registrants shall report to the original registration authorities
for records.
Pursuant to the Regulations on Supervision of Medical Devices and the Administrative

Measures for the Supervision of the Production of Medical Devices (《醫療器械生產監督管理辦
法》) promulgated by CFPA on July 30, 2014 and became effective on October 1, 2014, the
establishment of an enterprise engaging in the production of Class I medical devices needs
record-filing with the drug administrative authorities at prefecture-level cities. Meanwhile, the
establishment of an enterprise engaging in the production of Class II and Class III medical devices
is subject to the examination and approval by the drug administration authorities at provincial
level, and obtaining a medical device production license. Accordingly, a producer will not be able
to commence any business operations without making a filing or obtaining a medical device
production license.
GOOD MANUFACTURING PRACTICE FOR MEDICAL DEVICES
CFDA promulgated Administrative Measures for Inspection of Good Manufacturing Practice

for Medical Devices (《醫療器械生產質量管理規範》) on December 29, 2014, which became
effective on March 1, 2015. The two relevant standards, namely Appendix on Implantable Medical
Devices (《醫療器械生產質量管理規範附錄植入性醫療器械》) and Appendix on Sterilized Medical
Devices (《醫療器械生產質量管理規範附錄無菌醫療器械》) were issued on December 16, 2009,
which became effective on January 1, 2011.
Pursuant to the Administrative Measures for Inspection of Good Manufacturing Practice for
Medical Devices, Pharmaceutical Certification Management Center of the CFDA (“Certification
Management Center”) was appointed by the CFDA to conduct quality control inspection of the
production of certain Class III medical devices with high risks. For the production of the other
Class III medical devices and Class II medical devices, the provincial-level drug administrative
authorities are responsible for the quality control inspection. They are also responsible for the
inspection formalities on the control of reporting information regarding the quality control
inspection of the production of certain high risks Class III medical devices, and the daily
supervision and administration of the quality control system of the medical devices production
enterprises within their respective administrative regions. Medical devices production enterprises
will receive “Notice on the Inspection Results of the Good Manufacturing Practice for Medical
— 89 —
REGULATION
Devices” issued by the CFDA and provincial level drug administrative authorities after inspections,
and the possible results of such inspections are “passed”, “reassessment after rectification” and
“failed”. The validity period of “Notice on the Inspection Results of the Good Manufacturing
Practice for Medical Devices”, if obtained, is four years, and an enterprise shall re-apply for
inspection prior to the end of such validity period.
PERMIT FOR MEDICAL DEVICE OPERATION ENTERPRISES

and the Administrative Measures for Supervision of the Operation of Medical Devices (《醫療器械
經營監督管理辦法》), enterprises engaging in the operations of Class I medical devices are not
required to obtain approval or submit a filing. Enterprises engaging in the operations of Class II
medical devices are required to file with food and drug administrative authorities at the city level
in which the enterprises operate. Enterprises engaging in the operations of Class III medical
devices shall apply to the food and drug administrative authorities at the level of city divided into
districts in which the enterprises operate for the operation permits.
The term of validity of the permit for medical device operation is five years. Production
enterprises of medical devices which continue to engage in the operation of medical devices shall
submit applications to the drug administrative authorities which issued the original permit for
extension of the permit for medical device operation enterprises at least six months prior to its
expiry.
Medical devices production enterprises engaging in the sale of self-produced products are
not required to obtain the permit for medical device operation enterprises.

and pursuant to the Administrative Measures for Supervision of the Operation of Medical Devices
(《醫療器械經營監督管理辦法》), any entity that intends to engage in business operations of
medical devices shall satisfy all of the following requirements: (1) it shall have a quality
management agency or quality management personnel suitable to its business scope and scale,
and such quality management personnel shall have obtained relevant professional academic
credentials or titles recognized by the State; (2) it shall have premises for business and storage
purposes that are appropriate for its business scope and scale; (3) it shall guarantee storage
conditions that are commensurate with its business scope and scale, but is not required to set up
any storage warehouse if it entrusts other medical device operators to keep all of its medical
devices into storage; (4) it shall have in place appropriate quality management systems that are
commensurate with the medical devices operated; and (5) it shall have capacities in professional
guidance, technical training and after-sales service that are commensurate with the medial
devices operated, or shall have agreed with relevant agencies to receive their technical support.
An enterprise engaging in business operations of Class III medical devices shall also have in
place the computer information management system that meets certain quality management
requirements on the business operations of medical devices to ensure the traceability of the
products it sells.
— 90 —
REGULATION
MEDICAL INSURANCE
The Notice of Opinion on the Diagnosis and Treatment Management, Scope and Payment
Standards of Medical Service Facilities Covered by the National Urban Employees Basic Medical
Insurance Scheme (Lao She Bu Fa [1999] No. 22) (《關於印發城鎮職工基本醫療保險診療項目管
理、醫療服務設施範圍和支付標準意見的通知) (勞社部發 [1999] 22號)》) prescribes the coverage of
diagnosis and treatment where part of the fees is paid through the basic medical insurance
scheme. The basic medical insurance scheme shall cover “artificial organs and materials
implanted within human body, including pacemakers, joint prosthesis, intraocular lens,
intravascular stents”. Our orthopedic implants are categorized as medical materials by the basic
medical insurance scheme. According to the current medical insurance scheme in China, the
medical fees incurred by patients who have medical insurance will be paid to medical institutions
such as hospitals in two portions. Part of the medical fees will be settled by the social insurance
management institutions with the State Basic Medical Insurance Funds (“SBMIF”) pursuant to
Rule 29 of the Insurance Law of China (《中華人民共和國社會保險法》), while the remaining will be
directly paid to the medical institutions by individuals. The labor protection administration
department of each district shall prescribe their own specific ratio of the fees to be paid by the
patients. The proportion of reimbursement for medical insurance varies in different parts of China,
and such portion of medical fees will be settled directly by the social insurance management
institutions with hospitals. Therefore, patients will not be required to make subsequent claims
against the insurance institutions.
The settlement of medical fees by social insurance management institutions with hospitals
are generally governed by relevant policies of the different parts of China stipulated based on
actual local circumstances. Generally, settlement by the social insurance management institutions
with hospitals are made on a monthly basis, and the medical institutions shall file the applications
for the settlement of medical fees incurred in the previous month accompanied with related
materials to the social insurance management institutions before a specified date every month.
While social insurance management institutions shall generally complete the review within 15 to
30 working days, and make the payment upon completion of review, certain particular regions
such as Chengdu make settlements on a quarterly basis. In addition, the method of payment for
medical insurance fees varies from place to place in China.
TENDER PROCESSES FOR MEDICAL DEVICES
We are subject to the regulations on centralized procurement processes. On June 21, 2007,
MOH issued the Notice on Further Strengthening the Administration of Centralized Procurement
of Medical Devices (《衛生部關於進一步加強醫療器械集中採購管理的通知》), which requires that all
non-profit medical institutions under all levels of government and state-owned enterprises
participate in the centralized procurement. Public tendering shall be the principal method of
centralized procurement.
On November 9, 2009, the National Development and Reform Commission (“NDRC”) , the
MOH and the Ministry of Human Resources and Social Security jointly issued the Notice of
Opinion on Reform of Pricing System of Pharmaceuticals and Medical Services (《關於印發改革
藥品和醫療服務價格形成機制的意見的通知》), pursuant to which NDRC will strengthen its
intervention in the pricing of high-valued medical devices (especially medical implants), limit the
profit margins of the supply chain, and periodically announce market price information of medical
devices.
— 91 —
REGULATION
On December 17, 2012, the MOH and five other relevant government authorities issued the
Administrative Norms on Centralized Procurement of High Value Medical Consumables (for Trial
Implementation) (《高值醫用耗材集中採購工作規範(試行)》) to implement the centralized
procurement of online high value medical devices (including our orthopedic joint products) which
is government-led and is conducted by each province (district and municipality). Each provincial
(district or municipal) government is responsible for the establishment of an online regulatory
platform for the procurement of medical devices, while public medical institutions as well as
operation and production enterprises of medical devices shall purchase through such
procurement platform, in order to establish an unified platform and to implement centralized
regulation. Each province (district and municipality) is responsible for formulating and preparing
a centralized procurement list of high-value medical devices with its administrative region,
implementing public tenders and invitational tenders of the medical devices listed on the
centralized procurement list as well as conducting procurement in other means stipulated in the
Chinese laws and regulations. After the procurement prices are determined, public medical
institutions within the relevant regions shall conduct procurement strictly in accordance with the
bidding prices. Pursuant to the Tender and Bidding Law (《中華人民共和國招標投標法》) which
became effective on January 1, 2000, and the Regulation on the Implementation of the Tender and
Bidding Law of China (《中華人民共和國招標投標法實施條例》) which came into effect on February
1, 2012 and was amended on March 1, 2017, the amendment became effective on March 1, 2017,
the tender process of medical devices procurement primarily include announcements of tender
invitations, preparation and issuance of tender documents, submission of bids made by suppliers,
tender opening and tender evaluation, confirmation of successful bidder, issuance of confirmation
letter, signing of contract and filing for a record. After the confirmation of the suppliers, the
tenderer shall enter into a written contract in accordance with the tender document with the
successful bidder. The successful bidder shall not enter into other agreements which will be
contrary to the substantive content of the contract.
The government agencies in charge of centralized procurement in each province,

autonomous region and municipality are also responsible for producing the catalogs of centralized
procurement, which are effective within their respective jurisdictions. Each province may also
explore and set its own methods of centralized procurement based on local practices.
BIOMEDICAL RESEARCH INVOLVING HUMAN
The MOH is in charge of the administration of the ethical review of biomedical research
involving human in the nationwide and regulates the activities of biomedical research involving
human. Pursuant to the Measures for the Ethical Review of Biomedical Research Examination
(《涉及人的生物醫學研究倫理審查辦法》) promulgated by the MOH on October 12, 2016, which
became effective on December 1, 2016, the biomedical research involving human includes
conducting experimental studies by applying new medical technologies or new medical
productions to human body, in which case the medical institutions engaged in the biomedical
research involving human shall, (1) as the management body, take responsibilities for the
examination of such biomedical research (2) establish an ethical committee and (3) take effective
measures to procure the ethical committee the conduct the ethical review independently.
— 92 —
REGULATION
THE TWO-INVOICE SYSTEM
In order to implement the Guiding Opinions on Improving the Centralized Drug Procurement
for Public Hospitals of the General Office of the State Council (《國務院辦公廳關於完善公立醫院藥
品集中採購工作的指導意見》, the 2016 List of Major Tasks in Furtherance of the Healthcare and
Pharmaceutical Reforms (《深化醫藥衛生體制改革2016年重點工作任務》) issued by the General
Office of the State Council on April 21, 2016 required that the “two-invoice system” (兩票制) (i.e.
one invoice between the pharmaceutical manufacturer and the pharmaceutical distributor, and the
other invoice between the pharmaceutical distributor and the hospital) should be promoted in pilot
provinces involved in the comprehensive medical reform program. On December 26, 2016, the
Implementing Opinions on Carrying Out the Two-Invoice System for Drug Procurement among
Public Medical Institutions (for Trial Implementation) (《關於在公立醫療機構藥品採購中推行“兩票
制”的實施意見(試行)》(the “Circular”) was issued by eight central government departments,
including CFDA. The Circular requires public medical institutions to implement the “two-invoice
system” for drug procurements gradually and encourage other medical institutions to promote the
same so that such system can be promoted in full swing nationwide in 2018.
Although the Circular does not require medical institutions to implement the “two-invoice
system” for medical device procurements, there has been certain provincial authorities promoting
similar systems for medical devices. For example in Shaanxi, pursuant to the Circular on
Implementation of Two-Invoice System for Drugs and Medical Consumables among Public
Medical Institutions in Shannxi Province (《關於在全省公立醫療機構實行藥品和醫用耗材“兩票制”的
通知》(陝醫改辦發【2017】4號)) jointly issued by eight governmental departments, including
Shaanxi Health and Family Planning Commission and, Shaanxi Food and Drug Administration
effective from March 14, 2017, the “two-invoice system” is implemented for drug and medical
consumables procurements by public medical institutions from January 1, 2017 in Shannxi
Province with a transition period ending on June 30, 2017 to ensure smooth implementation, while
other medical institutions are encouraged to promote the system for drug and medical
consumables procurement. In Shaanxi province, the “two-invoice system” shall also be
implemented to the following 13 categories of high value medical consumables, namely, vascular
intervention, orthopedic implants, neurosurgery department, structural heart disease, non-
vascular intervention, pacemaker, electrophysiology, anastomat, extracorporeal circulation and
blood purification, artificial tissue and organ, hernia repair, oral cavity and ophthalmology.
According to the Circular on Implementation of Two-Invoice System for the Drugs and
Medical Consumables 《關於藥品和醫用耗材推行“兩票制”有關事項的通知》(青衛藥械 [2017]5號)
issued by the Qinghai Health and Family Planning Commission, Qinghai explicitly implements the
“two-invoice system” to drugs and medical devices. The invoice management of the purchase and
sales of drugs and medical devices shall be strictly implemented by initiating from the invoice, a
way of source control, to ensure the “two-invoice system” being put into force. The drug and
medical device production and circulation enterprise which reject to implement the “two-invoice
system” shall be punished seriously, and enrolled in the bad records. Where the circumstance is
serious, the bidding and distribution qualification will be cancelled.
Pursuant to the Circular on Further Combating Activities of Defrauding Medical Insurance

Fund and Infringement the Patients Interests《關於進一步打擊騙取醫療保障基金和侵害患者權益行
為的通知》(閩醫保 [2016] 8號) issued by the Fujian Medical Insurance Management Committee,
the drugs and medical consumables (import) suppliers and (import) production enterprises or the
drugs and medical consumables distribution enterprises reject to implement the “two-invoice
system”, falsely make out VAT receipts, engage in money laundering by issuing receipt, shall be
enrolled in the “black list”.
— 93 —
REGULATION
EXPORT REGISTRATION
CFDA maintains a registration system for the export of medical devices. Medical devices
manufacturers, including China domestic companies and foreign-invested enterprises, must
obtain export registration certificates from the CFDA before exporting any medical device.
Pursuant to the “Rules on the Application and Issuance of Medical Device Exporting Certificate”
(《醫療器械產品出口證明申辦規定》) promulgated by the CFDA on January 6, 1996, CFDA shall
represent the Chinese Government to conduct inspections of safety and legality of the products
manufactured by domestic enterprises (including the PRC enterprises, sino-foreign equity joint
ventures and foreign-owned enterprises) in accordance with the spirit of the Notice of Guo Ban Fa
[94] No. 66 of the State Council, and to grant Exporting Certificate in accordance with the
international conventions so as to prove that such products have obtained legitimate production
permit within Chinese territory.
LAWS RELATING TO WHOLLY FOREIGN-OWNED ENTERPRISE
The establishment procedures, examination and approval procedures, registered capital

requirement, foreign exchange restriction, accounting practices, taxation and labor matters of a
wholly foreign-owned enterprise are governed by the Wholly Foreign-owned Enterprise Law of
China (《中華人民共和國外資企業法》) (“Wholly Foreign-owned Enterprise Law”), which was
promulgated by the SCNPC and effective as of April 12, 1986, amended on October 31, 2000 and
September 3, 2016, and the Implementation Rules for the Wholly Foreign-owned Enterprise Law
(《中華人民共和國外資企業法實施細則》), which was promulgated by the Ministry of Foreign
Economic Relations and Trade (“MFERT”) on December 12, 1990 and amended on April 12, 2001
and February 19, 2014 by the State Council. According to the Wholly Foreign-owned Enterprise
Law and its Implementation Rules, the establishment of wholly foreign-owned enterprises shall be
subject to the examination and approval by the MOFCOM or the Chinese Government at the level
of province, autonomous region, municipality directly under the central Chinese Government,
municipality separately listed on the State plan or special economic zone, as authorized by the
State Council, which will issue a certificate of approval in respect thereof. Where the
establishment of wholly foreign-owned enterprises does not involve the implementation of special
access administrative measures prescribed by the state, the establishment of wholly foreign-
owned enterprises are subject to record-filing management. Profits and other legal rights and
interests obtained by foreign investors in China shall be protected by Chinese laws, and legitimate
profits, other lawful income and post-liquidation funds received by foreign investors from the
wholly foreign-owned enterprises may be remitted abroad.
Investment in China conducted by foreign investors and foreign-owned enterprise shall

comply with the Guidance Catalog of Industries for Foreign Investment (2017 Version) (《外商投
資產業指導目錄(2017年修訂)》, which was jointly issued by the MOFCOM and the NDRC in 2002,
as amended in 2004, 2007, 2011, 2015 and 2017. The current effective Foreign Investment
Catalog was issued on June 28, 2017, and came into force on July 28, 2017. The Catalog contains
specific provisions guiding market access of foreign capital, stipulating in detail the areas of entry
pertaining to the categories of encouraged foreign-invested industries, restricted foreign invested
industries and prohibited foreign investment industries. Any industry not listed in the Catalog or
any encouraged foreign-invested industry listed in the Catalog is a permitted industry. According
to the Guidance Catalog of Industries for Foreign Investment (2017 Version), our business
activities that our Group engaged in or are associated with do not fall within the prohibited or the
restricted category, which are classified under permitted industry.
— 94 —
REGULATION
The Provisions on Mergers and Acquisition of Domestic Enterprises by Foreign Investors

(《關於外國投資者併購境內企業的規定》) (“M&A Rules”), which was jointly promulgated by
MOFCOM, CSRC, the State-owned Assets Supervision and Administration Commission of the
State Council, State Administration of Taxation, State Administration of Industry and Commerce
and SAFE on August 8, 2006, became effective on September 8, 2006 and was amended on June
22, 2009, governs, among other things, the purchase and subscription by foreign investors of
equity interests in a domestic enterprise, and the purchase and operation by foreign investors of
the assets and business of a domestic enterprise. An offshore special purpose vehicle (the “SPV”)
is defined under the M&A Rules as an offshore entity directly or indirectly controlled by Chinese
individuals or enterprises for the purpose of an overseas listing, and the main assets of which are
the rights and interests in affiliated domestic enterprises. Under the M&A Rules, if a SPV intends
to merge with or acquire any domestic enterprise affiliated with such Chinese individuals or
enterprises that control the SPV, the proposed merger or acquisition shall be submitted to the
MOFCOM for approval. The M&A Rules also require a SPV to obtain an approval from the CSRC
prior to the listing and trading of its securities on an overseas stock exchange.
ENVIRONMENTAL PROTECTION LAWS
We are subject to Chinese environmental protection laws and regulations promulgated by

State and local government concerning environmental protection regarding construction projects;
use, discharge and disposal of toxic and hazardous materials; and discharge and disposal of
waste water, solid waste and waste gases and industrial noise.
Pursuant to the Chinese Environmental Protection Law (《中華人民共和國環境保護法》)

(“Environmental Protection Law”) which was promulgated by the SCNPC on and became
effective as of December 26, 1989, and amended on April 24, 2014 and came into force on
January 1, 2015, all enterprises and institutions which discharge pollutants shall adopt measures
to prevent and control pollution and damage to the environment from waste gas, waste water,
waste residues, medical waste, dust, malodorous gases, radioactive substances, noise, vibration,
ray radiation and electromagnetic radiation generated in the course of production, construction or
other activities. Pollution prevention and control facilities of a construction project shall be
simultaneously designed, constructed and put into operation with the principal part of the
construction project. Enterprises that manufacture, store, transport, sell, use or dispose of
chemicals and materials containing radioactive substances shall comply with the relevant State
regulations to prevent environmental pollution. The relevant authorities are authorized to impose
various types of penalties on the persons or entities in violation of the environmental regulations,
including fines, restriction or suspension of operation, shut-down, detention of office-in-charge,
etc.
According to the Regulations on Urban Drainage and Sewage Treatment (《城鎮排水與污水

處理條例》) which was promulgated by the State Council on October 2, 2013 and became effective
as of January 1, 2014, enterprises, institutions and individual businesses engaging in industrial,
construction, catering, medical and other activities shall apply to competent urban drainage
authorities for collecting the permit of discharging sewage into drainage pipe networks before
discharging sewage into urban drainage facilities. According to the Measures for the
Administration of Licenses for Urban Sewage Discharge into Drainage Networks (《城鎮污水排入
排水管網許可管理辦法》) which was promulgated by the Ministry of Housing and Urban-Rural
Development (“MHURD”) on January 22, 2015 and became effective as of March 1, 2015,
drainage entities shall discharge sewage pursuant to the drainage type, total amount, time limit,
position and number of drainage outlets and item and density of discharged pollutants as provided
in the drainage permit.
— 95 —
REGULATION
PRODUCT QUALITY AND CONSUMER PROTECTION LAWS
Product Quality
According to the Product Quality Law of China (《中華人民共和國產品質量法》) (“Product

Quality Law”) which was promulgated by the SCNPC on February 22, 1993, became effective as
of September 1, 1993 and amended on July 8, 2000 and August 27, 2009, and the last amendment
of which became effective as of August 27, 2009, and the Regulations on Quality Responsibility
for Industrial Products (《工業產品質量責任條例》) which was promulgated by the State Council on
April 5, 1986 and became effective as of July 1, 1986, manufacturers are liable for the quality of
products that they produce. The quality of a product must be inspected and proved to be
conformed to the standards. Industrial products which may be hazardous to health or safety of
human life and property must be in compliance with national and industrial standards
safeguarding the health and safety of human life and property; in the absence of such national or
industrial standards, such products must meet the requirements for safeguarding the health and
safety of human life and property.
The principal legal provisions governing product liability are set out in the Product Quality
Law. The Product Quality Law is applicable to all activities of production and sale of any product
within the Chinese territory, and the manufacturers and sellers shall be liable for product quality
in accordance with the Product Quality Law. According to the Product Quality Law, consumers or
other victims who suffer personal injury or property losses due to product defects may demand
compensation from the manufacturer as well as the seller. Where the responsibility for product
defects lies with the manufacturer, the seller shall, after settling compensation, have the right to
recover such compensation from the manufacturer, and vice versa. Violations of the Product
Quality Law may result in the imposition of fines. In addition, the seller or the manufacturer may
be ordered to suspend operation and its business license may be revoked. Criminal liability may
be incurred in serious cases.
Consumer Protection
The principal legal provisions for the protection of consumer interests are set out in the
Consumer Protection Law of China (《中華人民共和國消費者權益保護法》) (“Consumer
Protection Law”), which was promulgated by the SCNPC on October 31, 1993, became effective
as of January 1, 1994 and amended on August 27, 2009 and October 25, 2013, and the last
amendment of which became effective as of March 15, 2014. According to the Consumer
Protection Law, the rights and interests of the consumers who buy, use commodities or receive
services for the purposes of daily consumption are protected and all manufacturers and sellers
involved must ensure that the products and services will not cause damage to persons and
properties. Violations of the Consumer Protection Law may result in the imposition of fines. In
addition, the business operator may be ordered to suspend operations and its business license
may be revoked. Criminal liability may be incurred in serious cases.
Other Continuing Regulations
a) Administrative Measures for Inspection of Good Manufacturing Practice for Medical

Devices requires manufacturers to create, implement and follow certain design,
procurement, production management, quality control, sales, monitoring and other
quality assurance procedures;
— 96 —
REGULATION
b) Pursuant to Medical Device Recall Management Measures (《醫療器械召回管理辦法》)

issued by the CFDA on January 25, 2017 and became effective on May 1, 2017,
manufacturers of medical devices shall immediately decide to make a voluntary recall
when a defective product was found in defect investigation; and
c) CFDA and its relevant local counterparts impose general prohibition against promoting
products for unapproved uses.
INTELLECTUAL PROPERTY LAWS
Trademark Law
According to the Trademark Law of China (《中華人民共和國商標法》) which was

promulgated by the SCNPC on August 23, 1982, became effective as of March 1, 1983 and
amended on February 22, 1993, October 27, 2001 and August 30, 2013, and the last amendment
of which became effective on May 1, 2014, any natural person, legal person or other organization
that needs to obtain the exclusive right to use a trademark for its goods or services during
production and business operations shall apply for trademark registration with the Trademark
Office (“TMO”). The principle of good faith shall be upheld in the application for trademark
registration and in the use of trademarks. The users of a trademark shall be responsible for the
quality of their goods bearing that trademark. A trademark registrant that changes, without
authorization of the TMO, the registered trademark, the name or address of the registrant or other
registration items during the use of the registered trademark shall be ordered to make correction
within the prescribed time period by the relevant local administration for industry and commerce,
and the TMO shall cancel its registered trademark if it fails to make correction by the prescribed
deadline.
Patent Law
According to the Patent Law of China (《中華人民共和國專利法》) which was promulgated by

the SCNPC on March 12, 1984, became effective on April 1, 1985 and amended on September
4, 1992, August 25, 2000 and December 27, 2008, and the last amendment of which became
effective as of October 1, 2009, the State Intellectual Property Office under the State Council is
responsible for receiving, examining and approving patent applications. A patentable invention or
utility model must meet three conditions: novelty, inventiveness and practical applicability. Patents
cannot be granted for scientific discoveries, rules and methods for intellectual activities, methods
used to diagnose or treat diseases, animal and plant breeds or substances obtained by means of
nuclear transformation or designs used primarily for the identification of pattern, color or the
combination of the two on printed flat works. A patent is valid for a term of 20 years in the case
of an invention and a term of 10 years in the case of a utility model or design, starting from the
application date. A third party user must obtain consent or a proper license from the patent owner
to use the patent except for certain specific circumstances provided by law. Otherwise, the use will
constitute an infringement of the patent rights.
— 97 —
REGULATION
LABOR AND SOCIAL PROTECTION
According to the Labor Contract Law of China (《中華人民共和國勞動合同法》) which was

promulgated by the SCNPC on June 29, 2007 and became effective as of January 1, 2008 and
amended on December 28, 2012, and the amendment of which became effective as of July 1,
2013, employment contracts shall be concluded in writing if employment relationships are to be
or have been established between enterprises or institutions and the employees. Enterprises and
institutions are forbidden to force the employees to work beyond the statutory time limit and
employers shall pay employees for overtime work in accordance with national regulations. In
addition, the wages shall not be lower than local standards on minimum wages and shall be paid
to the employees timely.
According to the Chinese Labor Law (《中華人民共和國勞動法》) which was promulgated by

the SCNPC on July 5, 1994 and became effective as of January 1, 1995 and amended on August
27, 2009, and the amendment of which became effective as of August 27, 2009, enterprises and
institutions shall establish and improve their system of work place safety and sanitation, strictly
abide by State rules and standards on work place safety, educate laborers of labor safety and
sanitation in China. Labor safety and sanitation facilities shall comply with national standards. The
enterprises and institutions shall provide laborers with work place safety and sanitation conditions
which are in compliance with State stipulations and relevant articles of labor protection.
Pursuant to the Social Insurance Law of China (《中華人民共和國社會保險法》) effective from

July 1, 2011, and the Housing Fund Regulation (《住房公積金管理條例》) which was amended and
became effective on March 24, 2002, employers in China shall provide their employees with
welfare schemes including pension insurance, medical insurance, unemployment insurance,
maternity insurance, occupational injury insurance and housing fund.
TAXATION LAWS
Enterprise Income Tax Law
The Enterprise Income Tax Law of China (《中華人民共和國企業所得稅法》) (“EIT Law”),

which was adopted and promulgated by the National People’s Congress (“NPC”) on March 16,
2007 and became effective as of January 1, 2008 and amended on February 24, 2017, and the
amendment of which became effective as of February 24, 2017, imposes a uniform income tax
rate of 25% on all enterprises in China (including foreign-invested enterprises). In order to clarify
some of the provisions of the EIT Law, the Regulations on the Implementation of the Corporate
Income Tax Law of China (《中華人民共和國企業所得稅法實施條例》) (“Implementation Rules”)
were promulgated by the State Council on December 6, 2007 and became effective as of January
1, 2008.
According to the EIT Law and the Implementation Rules, certain high and new technology
enterprises which have proprietary intellectual property rights and simultaneously meet the
prescribed requirements as stipulated in the Implementation Rules and other relevant regulations
are permitted to enjoy a reduced EIT rate of 15%.
— 98 —
REGULATION
Value Added Tax Law
Pursuant to the Interim Regulations on Value-added Tax of China (《中華人民共和國增值稅暫

行條例》) (“VAT Regulations”) which was promulgated by the State Council on December 13,
1993, became effective as of January 1, 1994 and further amended on November 10, 2008 and
February 6, 2016, and the last amendment of which became effective on February 6, 2016, all
units and individuals engaging in the sale of goods, provision of processing, repair and fitting
services, and importation of goods within the territory of China are taxpayers of value-added tax
(“VAT”), and shall pay VAT in accordance with the VAT Regulations. According to the VAT
Regulations, a VAT tax rate at 13% or 17% applies to the Chinese enterprises unless otherwise
exempted or reduced according to the VAT Regulations and other relevant regulations. We
currently are subject to the VAT tax rate of 17%.
The Circular on Value-Added Tax and Consumption Tax Policies on Exported Goods and
Services (《關於出口貨物勞務增值稅和消費稅政策的通知》), which was jointly promulgated by the
SAT and the MOF on May 25, 2012 and became effective retrospectively as of January 1, 2011,
provides for certain VAT exemption, deduction and refund policies: when a manufacturing
enterprise is exporting self-produced goods or deemed self-produced goods, or providing
outbound processing, repair and fitting services, the relevant VAT shall be exempted, the
corresponding input VAT amount shall be deducted from the payable VAT and the remaining
portion of such input VAT after the deduction shall be refunded.
CUSTOMS REGULATIONS
According to the Customs Law of China (《中華人民共和國海關法》), which was promulgated

by the SCNPC on January 22, 1987, became effective as of July 1, 1987 and amended on July
8, 2000, June 29, 2013, December 28, 2013 and November 7, 2016, the import of goods
throughout the period from the time of arrival in the territory of China to the time of customs
clearance, the export of goods throughout the period from the time of declaration to the customs
to the time of departure from the territory of China, and the transit, transshipment and
through-shipment goods throughout the period from the time of arrival in the territory of China to
the time of departure from the territory of China shall be subject to customs control.
According to the Provisions of the Customs of China on the Administration of Registration of

Customs Declaration Entities (《中華人民共和國海關報關單位註冊登記管理規定》), which was
promulgated by the General Administration of Customs (“GAC”) and became effective as of March
13, 2014, consignors and consignees of imported and exported goods shall undergo customs
declaration entity registration formalities with their respective local customs in accordance with
the applicable provisions.
— 99 —
REGULATION
FOREIGN EXCHANGE REGULATIONS
The Circular of the State Administration of Foreign Exchange on Reforming the Management
Approach regarding the Settlement of Foreign Exchange Capital of Foreign-invested Enterprises
(《國家外匯管理局關於改革外商投資企業外匯資本金結匯管理方式的通知》), which was promulgated
by the SAFE on March 30, 2015 and became effective as of June 1, 2015, adopts the approach
of discretional foreign exchange settlement, under which the foreign exchange capital in the
capital account of a foreign-invested enterprise for which the foreign-invested enterprise has
obtained confirmation by the local SAFE branches regarding the rights and interests of monetary
contribution (or the book-entry registration of monetary contribution by the banks) can be settled
at the banks based on the actual operation needs of such foreign-invested enterprise. The capital
in Renminbi obtained by the foreign-invested enterprise from the discretionary settlement of
foreign exchange capital shall be managed under the account pending for foreign exchange
settlement payment. The proportion of discretionary settlement of foreign exchange capital is
temporarily determined as 100%, subject to the adjustment of the SAFE.
Pursuant to the Circular on Relevant Issues concerning Foreign Exchange Administration of

Overseas Investment and Financing and Return Investments Conducted by Domestic Residents
through Overseas Special Purpose Vehicles (《國家外匯管理局關於境內居民通過特殊目的公司境外
投融資及返程投資外匯管理有關問題的通知》) (“SAFE Circular No. 37”), promulgated by SAFE and
which became effective on July 4, 2014, a Chinese resident, including a Chinese resident natural
person or a Chinese legal person, must register with the local SAFE branch before he or she
contributes the assets or its equity interests in a special purpose vehicle for the purpose of
conducting investment or financing; and following the initial registration, the Chinese resident is
also required to register with the local SAFE branch for any major change, in respect of the
Overseas SPV, including, among other things, a change of a Chinese resident natural person
shareholder, name or operating period, or a material event, such as change in share capital of a
Chinese resident legal person, merger or split. Pursuant to SAFE Circular No. 37, failure to comply
with these registration procedures may result in penalties, including the imposition of restrictions
on the ability of the Overseas SPV’s Chinese subsidiary to distribute dividends to its overseas
parent.
— 100 —
HISTORY, REORGANIZATION AND DEVELOPMENT
OUR HISTORY
The founding of our Group
The history of our Group can be traced back to 2003 when Mr. Li, Mr. Zhang Chaoyang and
Mr. Liu Nannan, a business partner of Mr. Li, established AK Medical Beijing to engage in the
business of sales and technical development of medical devices using their personal funds from
previous employment and previous business activities. At the time of the establishment of AK
Medical Beijing, each of Mr. Li, Mr. Zhang Chaoyang and Mr. Liu Nannan held 80%, 10% and 10%
of the equity interests in AK Medical Beijing, respectively.
Mr. Liu Nannan subsequently disposed of all his equity interests to certain independent third
parties and ceased to be involved in the operation of AK Medical Beijing in early 2007 due to
personal reasons while Mr. Li and Mr. Zhang Chaoyang have continued their involvement with our
Group. As of the Latest Practicable Date, Mr. Li is the chairman of our Board, an executive
Director, our Chief Executive Officer and one of our Controlling Shareholders while Mr. Zhang
Chaoyang is an executive Director and a senior vice president of our Company. Please see
“Directors and Senior Management” for the background and industry experience of Mr. Li and Mr.
Zhang Chaoyang. As of the Latest Practicable Date, Mr. Liu Nannan was an independent third
party.
OUR MILESTONES
The following is a summary of our Group’s key development milestones:
Year Events
2003 . . . . . . . . . AK Medical Beijing was established in China.
2004 . . . . . . . . . Our first generation of knee replacement implant “AK KNEE” series were launched.
2005 . . . . . . . . . Our first generation of hip replacement implant “A” series were launched.
2007 . . . . . . . . . Our second generation of hip replacement implant “M” series were launched.
2008 . . . . . . . . . Our second generation of knee replacement implant “JPX” series were launched.
2009 . . . . . . . . . Our hip replacement implant for revision surgeries “AK-MR”, “AK-SR” and “AK-SL” series had
been launched in turn since 2009.
2012 . . . . . . . . . Our first generation of knee replacement implant for revision surgeries “ACCK” was launched.
Our third generation of knee replacement implant “A3” series were launched.
2013 . . . . . . . . . We obtained the Beijing Food and Drug Administration registration certificate for our 3D-printed
surgical guide.
2014 . . . . . . . . . We launched our “3D ACT” solutions, which offers personalized solutions to assist surgeons in
simulating and planning for implant surgeries.
2015 . . . . . . . . . We obtained the CFDA registration certificate for our 3D-printed hip implant product, the first 3D-
printed metal orthopedic implant in China that has been tested by clinical trials.
We launched our CFDA-approved hip replacement implant with the fourth generation composite
ceramics-highly crosslinked polyethylene friction interface and we were the first China-based
orthopedic joint implant company obtaining such approval according to the CFDA.
We were recognized as the Engineering Technology Research Center for 3D Printing Orthopedic
Application (3D打印骨科應用工程技術研究中心) by Beijing Municipal Science and Technology
Commission (北京市科學技術委員會).
2016 . . . . . . . . . We obtained the CFDA registration certificates for 3D-printed artificial vertebral bodies and
spinal interbody cages, and entered into the spine replacement implant market.
2017 . . . . . . . . . We entered into a five-year strategic cooperation with Peking University Third Hospital and
strengthened our capabilities in 3D-printed replacement implants.
— 101 —
CORPORATE DEVELOPMENT
The following describes the corporate history of our Company and our subsidiaries.
Our Company
Our Company was incorporated in the Cayman Islands as an exempted company with limited
liability on July 17, 2015 with an initial authorized share capital of HK$380,000 divided into
38,000,000 Shares of HK$0.01 each. It is the holding company of our subsidiaries and its principal
business activity is investment holding. As of the Latest Practicable Date, the allotted and issued
Shares in our Company were held, assuming all Series A Preferred Shares are converted into
Ordinary Shares, as to 78.021% by Ximalaya, 10% by OrbiMed Asia, 8.991% by Suntop, 1.638%
by Sanbao and 1.350% by Summer. See “—Reorganization—(1) Incorporation of the Offshore
Holding Vehicles—Incorporation of Our Company”, “—Reorganization—(4) Subscription of
Shares in Our Company”, “—Reorganization—(5) Reclassification and Re-designation of Ordinary
Shares and Series A Preferred Shares in Our Authorized Share Capital” and
“—Reorganization—(6) Stage 2 of the Pre-IPO Investment and Transfer of 100% of Shares of
Bright AK HK to AK Medical BVI” for further details regarding the changes in the authorized and
issued share capital of our Company.
As a result of the Reorganization, our Company indirectly holds all the equity interests in our
subsidiaries, which are principally engaged in designing, developing, producing and marketing
orthopedic implants and related products, with a focus on hip and knee replacement implants. See
“—Reorganization” for further details.
Our BVI and Hong Kong Subsidiaries
AK Medical BVI
AK Medical BVI was incorporated in BVI with limited liability on July 21, 2015 and was
authorized to issue a maximum of 50,000 shares of US$1.00 each. AK Medical BVI is an
investment holding company which directly holds all the issued shares in AK Medical HK and
Bright AK HK.
As a result of the Reorganization, AK Medical BVI became wholly owned by our Company.
See “—Reorganization—(1) Incorporation of the Offshore Holding Vehicles—Incorporation of the
Intermediate Holding Companies of Our Group” for further details.
AK Medical HK
AK Medical HK was incorporated in Hong Kong on July 28, 2015 as a limited liability
company, the share capital of which is in the total amount of HK$1 with one issued ordinary share.
AK Medical HK is an investment holding company which directly holds 90% of the equity interests
in AK Medical Beijing.
As a result of the Reorganization, AK Medical HK became wholly owned by AK Medical BVI.

See “—Reorganization—(1) Incorporation of the Offshore Holding Vehicles—Incorporation of the
Intermediate Holding Companies of Our Group” for further details.
— 102 —
Bright AK HK
Bright AK HK was incorporated in Hong Kong on July 7, 2015 as a limited liability company,
the initial share capital of which was in the total amount of HK$10,000 with 100 issued ordinary
shares held by OrbiMed Asia as of its incorporation. Bright AK HK is an investment holding
company which directly holds 10% of the equity interests in AK Medical Beijing.
On February 26, 2016, a board resolution of Bright AK HK was passed whereby OrbiMed
Asia, the then sole shareholder of Bright AK HK, confirmed and agreed to make a capital
contribution by way of capitalizing an aggregate sum of HK$16,650,000 (equivalent to
approximately RMB13,991,597) due by Bright AK HK to OrbiMed Asia at the time. The capital
contribution was satisfied by way of a set-off of such loan without allotment and issue of any new
shares. Such entire amount was credited to the share capital of Bright AK HK. As a result of the
above capital contribution and as of the Latest Practicable Date, the share capital of Bright AK HK
was in the total amount of HK$16,660,000.
As a result of the Reorganization, Bright AK HK became wholly owned by AK Medical BVI.

See “—Pre-IPO Investment” and “—Reorganization—(6) Stage 2 of the Pre-IPO Investment and
Transfer of 100% of Shares of Bright AK HK to AK Medical BVI” for further details.
Our Chinese Subsidiaries
AK Medical Beijing
AK Medical Beijing was established in China on May 8, 2003 as a limited liability company
with an initial registered capital of RMB1,000,000. AK Medical Beijing is principally engaged in
designing, developing, producing and marketing orthopedic implants and related products.
As of January 1, 2014, the commencement date of the Track Record Period, the registered
capital of AK Medical Beijing had been increased to RMB34,000,000 which was held by Mr. Li, Mr.
Zhang Chaoyang, Liang Chuan, Mr. Yin Keqiang, Ms. Zhang Bin, Ms. Li Huijiang, Ms. Zhao
Xiaohong, Mr. Qi Yajun, Ms. Wang Caimei, Ms. Liu Aiguo and Mr. Zhang Weiping as to 78.11%,
9.99%, 7%, 2.34%, 1.5%, 0.29%, 0.29%, 0.15%, 0.15%, 0.15% and 0.03%, respectively.
Mr. Yin Keqiang was an independent third party as of the Latest Practicable Date and
disposed of all of his 2.34% equity interest in AK Medical Beijing in January 2014. For further
details regarding Liang Chuan, see “—Investment and Divestment by Liang Chuan”.
The registered capital of AK Medical Beijing was further increased from RMB34,000,000 to
RMB50,000,000, from RMB50,000,000 to RMB55,555,555, and from RMB55,555,555 to
RMB100,000,000 pursuant to the shareholders’ resolutions of AK Medical Beijing passed on
March 31, 2015, July 30, 2015 and December 23, 2015, respectively.
As a result of the Reorganization, AK Medical Beijing became an indirect wholly-owned

subsidiary of our Company held as to 90% by AK Medical HK and 10% by Bright AK HK. See
“—Reorganization—(3) Transfer of 90% of Equity Interests in AK Medical Beijing to AK Medical
HK” for further details.
Our PRC Legal Advisor confirms that the registered capital of AK Medical Beijing in the
amount of RMB100,000,000 has been fully paid up.
— 103 —
AK Medical XMKS
AK Medical XMKS was established in China on July 24, 2007 as a limited liability company
with an initial registered capital of RMB500,000. AK Medical XMKS is principally engaged in sales
of orthopedic implant products.
On December 16, 2009, AK Medical Beijing entered into an equity transfer agreement with
each of the then shareholders of AK Medical XMKS, Mr. Li and Mr. Li Lijun, the brother of Mr. Li
and an ex-employee of AK Medical Beijing, pursuant to which Mr. Li and Mr. Li Lijun agreed to
transfer 80% and 20% of the equity interests in AK Medical XMKS to AK Medical Beijing at the
consideration of RMB400,000 and RMB100,000, respectively. Such consideration was
determined with reference to the then registered capital of AK Medical XMKS. The aforesaid
transfer was registered by the competent Chinese government authority on December 28, 2009.
As a result of the aforesaid transfer, AK Medical XMKS became a wholly-owned subsidiary of AK
Medical Beijing.
Our PRC Legal Advisor confirms that the registered capital of AK Medical XMKS in the
amount of RMB500,000 has been fully paid up.
AK Medical Changzhou
AK Medical Changzhou was established in China on March 28, 2016 as a limited liability
company with a registered capital of US$12,500,000. AK Medical Changzhou is principally
engaged in producing and marketing orthopedic implants and related products. AK Medical
Changzhou is wholly owned by AK Medical HK, our wholly-owned subsidiary.
The registered capital of AK Medical Changzhou was increased from US$12,500,000 to

US$13,200,000 pursuant to the shareholders’ resolutions of AK Medical Changzhou passed on
December 20, 2016.
Our PRC Legal Advisor confirms that the registered capital of AK Medical Changzhou in the
amount of US$1,545,582 has been paid up.
INVESTMENT AND DIVESTMENT BY LIANG CHUAN
Investment
On April 30, 2010, a shareholders’ resolution of AK Medical Beijing was passed to convert AK
Medical Beijing from a limited liability company into a joint stock limited liability company pursuant
to the Chinese laws and regulations and its name was changed from 北京愛康宜誠醫療器材有限公
司 to 北京愛康宜誠醫療器材股份有限公司, with a registered capital of RMB13,000,000 divided into
13,000,000 shares of nominal value of RMB1.00 each.
In contemplation of the A-Share Listing Application (as defined below) by AK Medical Beijing,
a pre-IPO investor in AK Medical Beijing was introduced. For further details of the A-Share Listing
Application, see “—Application for Listing of A Shares”. On May 26, 2010, a capital increase and
subscription agreement (the “Liang Chuan Investment Agreement”) was entered into between
AK Medical Beijing, Beijing Liang Chuan Investment Consulting Limited (“Liang Chuan”) and the
then shareholders of AK Medical Beijing, namely Mr. Li, Mr. Zhang Chaoyang and Mr. Yin Keqiang.
Liang Chuan invested RMB21,000,000 into AK Medical Beijing to obtain 1,444,444 shares of
nominal value of RMB1.00 each, representing 10% of its enlarged registered capital of
RMB14,444,444 at the time.
— 104 —
The consideration of RMB21,000,000 was determined after arm’s length negotiation between
the parties and with reference to the then financial condition and business prospect of AK Medical
Beijing. Such consideration was fully paid up by June 23, 2010.
On July 17, 2010, the shareholders of AK Medical Beijing passed a resolution to capitalize
the amount of RMB19,555,556 in the share premium account of AK Medical Beijing and
accordingly 19,555,556 shares at nominal value of RMB1.00 each were issued and allotted
pro-ratedly to all the shareholders of AK Medical Beijing. As a result, Liang Chuan was issued and
alloted with 1,955,556 shares at a nominal value of RMB1.00 each and held 3,400,000 shares,
representing 10% of its enlarged registered capital of RMB34,000,000 at the time. The average
investment price paid by Liang Chuan was approximately RMB6.18 per share. The proceeds from
the investment by Liang Chuan were used for general corporate purposes and have been fully
utilized.
Liang Chuan, a limited liability company established under the Chinese laws, was principally
engaged in investment consulting at the relevant time. Liang Chuan was owned by Ms. Liu
Hongyan as to 50%, Mr. Liu Shibin as to 30% and Mr. Liu Jiang as to 20% at the material time.
Each of Liang Chuan and its beneficial owners was an independent third party as of the Latest
Practicable Date.
Special Rights
Under the Liang Chuan Investment Agreement, the following special rights were granted by
AK Medical Beijing to Liang Chuan:
Director appointment right: Liang Chuan was entitled to appoint one director to the board of
directors of AK Medical Beijing, which shall comprise 5 directors.
Information right: Liang Chuan has the right to receive AK Medical Beijing’s financial reports
and other information regarding its operation, business and financial condition.
Pre-emptive right: Liang Chuan has a right of first refusal to purchase up to a pro rata share
of any new securities to be issued by AK Medical Beijing (other than any new securities to be
issued to the management of AK Medical Beijing of not more than 3% of the total enlarged
registered capital).
Adjustments of Shareholding
At or around the fourth quarter of 2010, AK Medical Beijing was in the process of formulating
an employee share award scheme to reward and recognize the contribution of certain key
employees including senior management members of AK Medical Beijing.
After various arm’s length commercial negotiations among the then shareholders of AK
Medical Beijing, taking into account of (i) the comparatively low valuation of AK Medical Beijing
enjoyed by Liang Chuan at the time of its investment by reference to the expected valuation to be
achieved upon the A-Share Listing (as defined below) in view of the business prospect of AK
Medical Beijing; (ii) the benefit to Liang Chuan as a shareholder in incentivising the key employees
by way of the share award scheme; and (iii) the harmony among the shareholders of AK Medical
Beijing, Liang Chuan agreed to make a contribution to the said employee share award scheme by
disposing of 3% shareholding interest in AK Medical Beijing to each of Mr. Wu Boyang as to
— 105 —
0.15%, Mr. Yang Ning as to 0.29%, Ms. Wang Caimei as to 0.15%, Mr. Zhang Weiping as to 0.03%,
Ms. Zhao Xiaohong as to 0.29%, Mr. Qi Yajun as to 0.15%, Ms. Li Huijiang as to 0.29%, Ms. Liu
Aiguo as to 0.15% and Ms. Zhang Bin as to 1.50% at the consideration of RMB200,000,
RMB400,000, RMB200,000, RMB40,000, RMB400,000, RMB200,000, RMB400,000,
RMB200,000 and RMB2,040,000, respectively. Each of the above transferees, who were senior
management members of AK Medical Beijing at the relevant time, entered into an equity transfer
agreement with Liang Chuan on various dates between January 8, 2011 to January 20, 2011 for
the above transfers.
The average disposal price by Liang Chuan was RMB4.00 per share. Such disposal price
was settled on various dates between January 13, 2011 to January 25, 2011. Although the average
disposal price was lower than the average investment price of Liang Chuan of RMB6.18 per share,
such consideration was determined after arm’s length commercial negotiations between the
parties. After making the aforesaid contribution, Liang Chuan’s average investment price was
adjusted from approximately RMB6.18 per share to approximately RMB7.11 per share,
representing an increase of approximately 15%. The aforesaid transfers were approved by the
general meeting of shareholders on January 20, 2011.
Divestment
As the A-Share Listing Application was aborted by AK Medical Beijing, Liang Chuan decided
to divest its investment in AK Medical Beijing.
On March 12, 2014, Liang Chuan and Mr. Li entered into an equity transfer agreement,
pursuant to which Liang Chuan agreed to dispose of 4% shareholding interest in AK Medical
Beijing to Mr. Li at the consideration of RMB13,299,100. The average disposal price by Liang
Chuan was approximately RMB9.78 per share, which was higher than Liang Chuan’s average
investment price of approximately RMB7.11 per share and represented an investment gain of
approximately 37.55% (without taking into account of the dividend received).
In arriving at the above disposal price, the parties took into account of the following factors:
(i) the original investment amount for this 4% shareholding interest of approximately
RMB9,668,600 (at RMB7.11 per Share); (ii) the premium in the amount of RMB3,630,500
represented by the difference between the disposal price and the original investment amount; (iii)
the total amount of dividend of approximately RMB2,284,800 paid by AK Medical Beijing to Liang
Chuan attributable to this 4% shareholding interest for the period from the time of its investment
and up to March 2014; (iv) Liang Chuan had been holding this 4% shareholding interest for
approximately 3.5 years from the time of its investment and the expected investment return for
such period; and (v) Mr. Li, being a founder, the chairman and the single largest shareholder of
AK Medical Beijing, was the best choice for Liang Chuan at the relevant time as a buyer, in view
of Mr. Li’s sufficient financial resource and knowledge of the business prospect of AK Medical
Beijing as compared to other independent third parties. The disposal price of RMB9.78 per share
was arrived at after due consideration of these factors and after arm’s length commercial
negotiations and was considered by the parties as fair and reasonable having regard to the then
financial condition and business prospect of AK Medical Beijing. Such consideration was settled
on April 1, 2014. The aforesaid transfer was approved by the general meeting of shareholders on
March 12, 2014.
— 106 —
On June 30, 2015, Liang Chuan and Ms. Liu Hongyan entered into an equity transfer
agreement, pursuant to which, Liang Chuan agreed to dispose of 3% shareholding interest in AK
Medical Beijing to Ms. Liu Hongyan at the consideration of RMB7,000,000, which was settled on
July 22, 2015. The average disposal price by Liang Chuan was approximately RMB6.86 per share,
which was lower than Liang Chuan’s average investment price of approximately RMB7.11 per
share and represented a discount of 3.52% (without taking into account of the dividend received).
Ms. Liu Hongyan was the sole shareholder, chairman and legal representative of Liang Chuan at
the relevant time.
The above transaction was effected between related parties, namely Liang Chuan and Ms.
Liu Hongyan, who was the sole shareholder, chairman and legal representative of Liang Chuan at
the relevant time. To our best knowledge, the transaction was a transfer between two related
parties and a lower disposal price was agreed between the said related parties. None of the
members of our Group and none of our Directors, senior management or their respective
associates was involved in this transfer of 3% shareholding interest in AK Medical Beijing. The
aforesaid transfer was approved by the general meeting of shareholders on June 30, 2015.
On July 6, 2015, pursuant to an equity transfer agreement, Ms. Liu Hongyan agreed to
dispose of 3% shareholding interest in AK Medical Beijing to each of Mr. Li as to 2.24%, Ms. Li
Huijiang as to 0.30%, Ms. Zhao Xiaohong as to 0.26% and Mr. Qi Yajun as to 0.20% at the
consideration of RMB31,360,000, RMB4,200,000, RMB3,640,000 and RMB2,800,000,
respectively. The average disposal price by Ms. Liu Hongyan was approximately RMB41.18 per
share, which was higher than Liang Chuan’s average investment price of approximately RMB7.11
per share and represented an investment gain of 479.18% (without taking into account of the
dividend received).
Such consideration was determined after an arm’s length negotiation between Ms. Liu
Hongyan and Mr. Li and other shareholders with reference to (i) the original investment amount
for this 3% shareholding interest of Liang Chuan of approximately RMB7,251,400 (at RMB7.11 per
share); (ii) the average disposal price of the entire 7% shareholding interest of Liang Chuan in AK
Medical Beijing of approximately RMB23.23 per share (without taking into account of the
contribution of 3% shareholding interest by Liang Chuan to the employee share award scheme in
2011 and the transfer of shareholding interest in AK Medical Beijing from Liang Chuan to Ms. Liu
Hongyan); (iii) the total amount of dividend of approximately RMB3,753,600 paid by AK Medical
Beijing to Liang Chuan attributable to this 3% shareholding interest for the period from the time
of its investment and up to July 2015; (iv) the projected earnings of the Group for 2015; (v) the
price to earnings ratios for other comparable companies; (vi) the financial resources available to
Mr. Li and the other shareholders; and (vii) the then financial condition and business prospect of
AK Medical Beijing. The parties believed that the disposal price for this 3% shareholding interest
in AK Medical Beijing had given Liang Chuan a decent investment return. The consideration was
settled on various dates between July 15, 2015 to October 12, 2015. The aforesaid transfers were
approved by the general meeting of shareholders on July 6, 2015. Following the completion of the
above transfers, Liang Chuan has ceased to be a shareholder of AK Medical Beijing and Liang
Chuan no longer enjoys any of the special rights afforded to it under the Liang Chuan Investment
Agreement. As a result, AK Medical Beijing was owned as to 86.69% by Mr. Li, 9.99% by Mr.
Zhang Chaoyang, 1.50% by Ms. Zhang Bin, 0.59% by Ms. Li Huijiang, 0.55% by Ms. Zhao
Xiaohong, 0.35% by Mr. Qi Yajun, 0.15% by Ms. Wang Caimei, 0.15% by Ms. Liu Aiguo and 0.03%
by Mr. Zhang Weiping.
— 107 —
On July 9, 2015, AK Medical Beijing passed a shareholders’ resolution to convert AK Medical

Beijing from a joint stock limited liability company into a limited liability company into pursuant to
the Chinese laws and regulations and its name was changed from 北京愛康宜誠醫療器材股份有限
公司 to 北京愛康宜誠醫療器材有限公司.
The aggregate consideration of Liu Hongyan’s disposal of 3% shareholding interest in AK

Medical Beijing was RMB42,000,000, which translates to a valuation of AK Medical Beijing at
RMB1,400,000,000. AK Medical Beijing is a wholly-owned subsidiary of the Company, the revenue
of which in 2015 was RMB198.6 million and represented more than 96% (including RMB3.76
million intra-group sales, being revenue from AK Medical XMKS, which represented approximately
2%) of the revenue of the Group in 2015. On the same day when the equity transfer agreement
with respect to the aforesaid disposal was entered into, OrbiMed Asia entered into the Pre-IPO
Investment Framework Agreement to subscribe for new Shares of the Company representing 10%
of the enlarged share capital of the Company for RMB140,000,000, which translates to a
post-money valuation of the Company at RMB1,400,000,000. It should be noted that having
regard to the net profits of the Group as of December 31, 2015 of approximately RMB64,907,000,
RMB1,400,000,000 represents approximately 21.6 times of AK Medical Beijing’s 2015 earnings.
The following table summarizes details of the aforesaid disposal and the Pre-IPO
Investment:
Implied Post- Implied Pre-

money Equity money Equity
Entity % shares Consideration Value (Note 2) Value (Note 3)
A B (RMB) = B/A (RMB) = (B/A) – B (if
B is
consideration
for newly
issued shares)
(RMB)
AK Medical 3% 1.40 billion 1.40 billion
The Disposal . . Beijing (Note 1) 42.0 million (Note 4) (Note 4)
10% of the
The Pre-IPO enlarged share 1.40 billion 1.26 billion
Investment . . The Company capital 140.0 million (Note 5) (Note 5)
Notes:
1. For illustrative purpose only, the 3% equity interest in AK Medical Beijing represented 2.7% of the issued
share capital of the Company as if enlarged by the Pre-IPO Investment (if it were not disposed), which is worth
RMB37,800,000 (RMB1.4 billion × 2.7%) only, if calculated by using the valuation of the Company after the
completion of the Pre-IPO Investment. Accordingly, Mr. Li and other shareholders admitted that when
compared to the Pre-IPO Investment, they paid a premium of approximately RMB4.2 million to Liu Hongyan
for the 3% equity interest in AK Medical Beijing.
2. A pre-money valuation is a term widely used in private equity or venture capital industries, referring to the
valuation of a company or asset prior to an investment or financing. If an investment adds cash to a company,
the company will have different valuations before and after the investment. The pre-money valuation refers
to the company’s valuation before the investment.
3. A post-money valuation is the value of a company after an investment has been made. This value is equal
to the sum of the pre-money valuation and the amount of new equity.
4. By referring to the meanings of the pre-money valuation and the post-money valuation above, in the
course of the aforesaid disposal, no new money was injected, accordingly, the pre-money valuation and the
post-money valuation were the same.
5. The post-money valuation, being RMB1.40 billion, equals to the sum of the pre-money valuation, being
RMB1.26 billion, and the investment, being RMB140 million.
— 108 —
Liu Hongyan and OrbiMed Asia are parties independent of each other. The negotiations of
Liu Hongyan’s disposal of 3% shareholding interest in AK Medical Beijing were held separately
and independently of OrbiMed Asia’s negotiation with the Company on the terms of the Pre-IPO
Investment.
The disposal price agreed with Liu Hongyan was reached after an arm’s length negotiation
between herself and Mr. Li and other shareholders as stated above. The parties did not consider
at the time (and it was not Liu Hongyan’s concern) whether RMB1,400,000,000 represented a
pre-money or post-money valuation.
The Company’s negotiation with OrbiMed Asia also took place on an arm’s length basis as
stated in “—Pre-IPO Investment—Summary of Material Terms”. The Company agreed that
OrbiMed Asia shall subscribe for its new shares representing 10% of the enlarged share capital
for RMB140,000,000.
The Company is of the view that the difference between the disposal price of Liu Hongyan’s
disposal of 3% shareholding interest in AK Medical Beijing and the subscription price for the
Pre-IPO Investment is insignificant. At the time the Company negotiated the valuation of the
Group with OrbiMed Asia, it was on the basis that RMB140,000,000 was to be paid on a
post-money valuation basis, i.e. the pre-money valuation of the Group would be
RMB1,260,000,000.
This translates to Mr. Li and other shareholders paying a premium of approximately RMB4.2
million (= (RMB1.40 billion – RMB1.26 billion) x 3%) for Liu Hongyan’s shares in AK Medical
Beijing over the pre-money valuation of the Group in respect of OrbiMed Asia’s investment.
APPLICATION FOR LISTING OF A SHARES
On March 29, 2011, AK Medical Beijing filed with the CSRC an application (the “A-Share
Listing Application”) for listing of its shares on the ChiNext Board of the Shenzhen Stock
Exchange (the “A-Share Listing”), which was sponsored by a sponsor institution duly licensed in
China (the “A-Share Sponsor”), to raise capital. The CSRC formally accepted the A-Share Listing
Application for review on April 6, 2011 and AK Medical Beijing received comments from the CSRC
on June 7, 2011. In addition to certain comments that requested AK Medical Beijing to elaborate
the disclosure in the draft prospectus submitted to CSRC in connection with the A-Share Listing
Application, in which no material corporate governance, internal control or legal compliance
concern was involved, the CSRC queried (1) the background and underlying reason for the sale
of shares in AK Medical Beijing by Liang Chuan, a shareholder of AK Medical Beijing at the time,
to nine individuals in January 2011 at a price lower than its original subscription price in June
2010, (2) the non-compliance with respect to our lease of collectively-owned land for tool
manufacturing in Yanxu Industry and Trade Park, Habatun, Changping District, Beijing, and (3) the
reason for the use of a financial manager’s personal bank accounts to receive a small portion of
payments made by our distributors between 2009 and 2011. See “History, Reorganization and
Development—Investment and Divestment By Liang Chuan—Adjustments of Shareholding” for
further details on the sales of shares by Liang Chuan in 2011, “Our Business—
Properties—Leased Properties” for further details on the lease of collectively-owned land and
“Our Business—Internal Control” for further details on the use of individual’s bank accounts. AK
Medical Beijing submitted responses on January 30, 2012 and supplemental information in
relation to the updated financial information subsequently. The CSRC raised no further written
comments or enquiries thereafter.
— 109 —
In the second half of 2011, AK Medical Beijing improved its internal control over cash
management and financial reporting by terminating the practice of using a financial manager’s
personal bank accounts to receive a small portion of payments from distributors instead of the
bank account of AK Medical Beijing. The practice of using personal bank accounts of employees
to receive payments from distributors was completely terminated prior to the Track Record Period.
AK Medical Beijing had been monitoring its internal control procedures to ensure the effectiveness
of the improved internal control over cash management and financial reporting. Considering the
then market condition and in order to leave sufficient time for validating the improved internal
control, AK Medical Beijing submitted an application to the CSRC to withdraw the A-Share Listing
Application on April 13, 2012. The A-Share Listing Application was not rejected or returned by the
CSRC.
On April 26, 2012, the CSRC issued a notification to AK Medical Beijing (the “CSRC
Notification”) to terminate the review process of the A-Share Listing Application on the basis of
the voluntary withdrawal of the A-Share Listing Application by AK Medical Beijing. AK Medical
Beijing’s engagement with each advisor for the A-Share Listing Application ceased following the
withdrawal of the A-Share Listing Application. Each of the A-Share Sponsor and the reporting
accountants involved in the A-Share Listing Application has confirmed to our Company that it had
no disagreement with AK Medical Beijing or any other advisor that was involved in the A-Share
Listing Application, and that no matter would be required to be brought to the attention of our
Company with respect to the withdrawal of the A-Share Listing Application and the CSRC
Notification.
With respect to the foregoing CSRC comments, as:
(i) the material background and reason for the sale of shares in AK Medical Beijing by
Liang Chuan to nine individuals in January 2011 have been disclosed in this prospectus;
(ii) the non-compliance with respect to our lease of collectively-owned land for tool
manufacturing in Yanxu Industry and Trade Park, Habatun, Changping District, Beijing
and the relevant risk have been disclosed in this prospectus, and we have also
formulated a contingency plan which is disclosed in this prospectus;
(iii) the reason for the use of a financial manager’s personal bank accounts to receive a
small portion of payments made by our distributors between 2009 and 2011 have been
disclosed in this prospectus; and
(iv) we have ceased to use personal bank accounts of employees to receive payments from
distributors since the termination of the practice prior to the Track Record Period. Based
on the Sole Sponsor’s due diligence investigations on this practice of using personal
bank accounts during the Track Record Period, including discussions with us and our
internal control consultant and reviewing documents and reports with respect to our
internal control measures, the Sole Sponsor is of the view that we have established
reasonable internal procedures, systems and controls in this regard,
the Sole Sponsor confirms that nothing has come to its attention that any of the abovementioned
CSRC comments has not been properly addressed or rectified by us. On this basis, the Sole
Sponsor confirms that nothing has come to its attention from the A-Share Listing Application that
might materially and adversely affect our Company’s suitability for the Listing or the accuracy of
the information disclosed in this prospectus.
— 110 —
PRE-IPO INVESTMENT
Introduction
On July 6, 2015, in view of the business prospects of our Group, OrbiMed Asia entered into
the Pre-IPO Investment Framework Agreement with AK Medical Beijing, AK Medical XMKS and
the shareholders of AK Medical Beijing at the time, including Mr. Li, Mr. Zhang Chaoyang, Ms.
Zhang Bin, Ms. Li Huijiang, Ms. Zhao Xiaohong, Mr. Qi Yajun, Ms. Wang Caimei, Ms. Liu Aiguo and
Mr. Zhang Weiping, pursuant to which OrbiMed Asia agreed to effect the following:
(a) Stage 1: subscribe at the consideration of the U.S. dollars equivalent of

RMB14,000,000 for the increase of AK Medical Beijing’s registered capital in the
amount of RMB5,555,555 (with the balance being contributed to the capital reserve of
AK Medical Beijing); and
(b) Stage 2: subscribe for the Series A Preferred Shares representing 10% of the issued
share capital of our Company on a fully converted basis at an aggregate consideration
to be paid in the form of (i) cash contribution to our Company in the U.S. dollar
equivalent of RMB126,000,000; and (ii) transfer of 100% of the shares in Bright AK HK
held by OrbiMed Asia to AK Medical BVI.
OrbiMed Asia, our Group and our then Shareholders entered into the Pre-IPO Investment
Transaction Documents to give effect to the foregoing, including (1) the AK Medical Beijing Capital
Increase Agreement dated July 30, 2015 to give effect to Stage 1 of the Pre-IPO Investment, (2)
the Series A Preferred Share Purchase Agreement dated December 18, 2015 to give effect to
Stage 2 of the Pre-IPO Investment, and (3) the Pre-IPO Investment Shareholders Agreement
dated February 29, 2016.
For further details of the AK Medical Beijing Capital Increase Agreement and the Series A
Preferred Share Purchase Agreement, see “—Reorganization—(2) Stage 1 of the Pre-IPO
Investment and Capital Increase of AK Medical Beijing”, “—Reorganization—(5) Reclassification
and Re-designation of Ordinary Shares and Series A Preferred Shares in Our Authorized Share
Capital” and “—Reorganization—(6) Stage 2 of the Pre-IPO Investment and Transfer of 100% of
Shares of Bright AK HK to AK Medical BVI”.
On February 26, 2016, OrbiMed Asia, our Group and our then Shareholders entered into the
Letter Agreement to remove a condition precedent to the closing of the Pre-IPO Investment,
namely Ximalaya to advance a shareholder’s loan in the amount of RMB80,000,000 to our Group,
as additional time was required for Ximalaya to arrange the funding for such shareholder’s loan.
See “—Reorganization—(3) Transfer of 90% of Equity Interests in AK Medical Beijing to AK
Medical HK” for further details.
— 111 —
Summary of Material Terms
The following table sets forth a summary of the material terms of the Pre-IPO Investment:
Name and Information of the : OrbiMed Asia, which is an exempted limited partnership
Pre-IPO Investor registered under the laws of the Cayman Islands. The
general partner of OrbiMed Asia is OrbiMed Asia GP II,
L.P., whose general partner is OrbiMed Advisors II
Limited, of which none of its shareholders held 10% or
more of its shares. OrbiMed Asia focuses on medical and
healthcare investments and the limited partners include
OrbiMed Healthcare Investments Trust, Asian
Development Bank, Cathay Life Insurance Co., Ltd.,
Merck Global Health Innovation Fund, LLC and NEIPF,
LP. Apart from its shareholding in our Company and
apart from Dr. Wang David Guowei, our non-executive
Director, who is one of the directors and one of the
shareholders (holding less than 10% shareholding) in
OrbiMed Advisors II Limited, OrbiMed Asia is an
independent third party and has no other relationship
with our Group or any core connected person of our
Company.
Number of Series A : 10,000

Preferred Shares
subscribed
Amount of consideration : U.S. dollar equivalent of RMB140,000,000 (i.e.

paid US$21,561,872.3)
Basis of determination of the : Based on an arm’s length negotiation between the

consideration parties after taking into consideration the assessed
value of the Company, the projected earnings of the
Group for 2015, the price to earnings ratio for other
comparable companies, the size of OrbiMed Asia’s
investment, the Company’s intention to introduce a
well-known financial investor in the medtech field and the
fact that the monies have been paid to the Company by
the financial investor, the financial information of our
Group, the timing of the subscription and the illiquidity of
our Shares as a private company when the Series A
Preferred Share Purchase Agreement was entered into.
Date of payment of full : February 29, 2016

consideration
— 112 —
Cost per Share paid under : Approximately HK$2.24, calculated on the basis of
the Pre-IPO Investment 75,000,000 Shares to be held by OrbiMed Asia upon
completion of the Capitalization Issue and the Global
Offering (without taking into account any Shares which
may be allotted and issued upon exercise of the Over-
Allotment Option or the options granted or to be granted
under the Pre-IPO Share Option Scheme or the Share
Option Scheme)
Premium to the Offer Price : Approximately 22.40%, calculated on the basis of the
Offer Price of HK$1.83, the mid-point of the proposed
range of the Offer Price
Use of proceeds and whether : The proceeds from the Pre-IPO Investment have been
they have been fully and will be used for (i) construction of the Changzhou
utilized Facilities; (ii) purchase of 3D-printing machines; (iii)
expansion of production capacity by purchase of
production facilities; (iv) purchase of R&D equipment
and software; (v) Listing expenses; and (vi) general
working capital for our Group. As of the Latest
Practicable Date, the proceeds have not been fully
utilized.
Strategic benefits : Our Directors are of the view that our Company could
benefit from the additional capital provided by OrbiMed
Asia’s investment in our Company and the our Company
could also leverage OrbiMed Asia’s network, knowledge
and experience in the medical industry.
Shareholding upon Listing : 7.5% (without taking into account any Shares which may
be allotted and issued upon exercise of the Over-
Allotment Option or the options granted or to be granted
under the Pre-IPO Share Option Scheme or the Share
Option Scheme)
Lock-up : Our Shares held by OrbiMed Asia are subject to a

lock-up period of 12 months from the Listing Date.
Public float : Our Shares held by OrbiMed Asia are considered as part
of the public float for the purposes of Rule 8.08 of the
Listing Rules as (i) OrbiMed Asia is not a core connected
person of our Company; (ii) the acquisition/subscription
of OrbiMed Asia’s shareholding interest in our Company
has not been financed directly or indirectly by any core
connected person of our Company; and (iii) OrbiMed
Asia is not accustomed to take instructions from a core
connected person in relation to the acquisition, disposal,
voting or other disposition of securities of our Company
registered in its name or otherwise held by it.
Special Rights
The Series A Preferred Shares held by OrbiMed Asia will be automatically converted into
Ordinary Shares prior to the Listing. Together with such conversion, the following special rights,
which have been granted to OrbiMed Asia pursuant to the Pre-IPO Investment Shareholders
— 113 —
Agreement and the articles of association of our Company in force prior to the adoption of the
Articles, will be terminated upon the completion of the Global Offering:
Voting right Series A Preferred Shares carry voting rights equal to such
number of Ordinary Shares as convertible on the date the
vote is to be taken.
Put option If our Company fails to complete an initial public offering

before December 31, 2018, OrbiMed Asia shall have the
option to request Mr. Li to purchase up to all the outstanding
Series A Preferred Shares held by OrbiMed Asia at the issue
price of such Series A Preferred Shares plus a simple annual
interest of 8%.
Director appointment right Subject to certain shareholding requirements of OrbiMed

Asia, it is entitled to appoint one director to our Board and the
board of directors of any company within our Group.
Veto rights Certain corporate actions of our Company require the

approval of the holders of at least a majority of the Series A
Preferred Shares or the Director appointed by the holders of
the Series A Preferred Shares. Such actions include, among
others, (a) enacting or modifying any employee share
incentive plan; (b) borrowing any money or obtaining any
financial facilities in a significant amount except pursuant to
trade facilities obtained from banks or other financial
institutions in the ordinary course of business; (c) making any
significant investment or incurring any significant
commitment; (d) altering or changing the rights, preferences
or privileges of our Shareholders; (e) selling or disposing a
substantial part of the undertaking, goodwill or the assets of
our Group; (f) increasing or decreasing the size of our Board;
(g) approving or modifying terms of transactions involving the
interest of any director or shareholder of our Group, including
the making of loans or advances, provision of guarantee,
indemnity or security for any indebtedness of any director or
shareholder of our Group.
Pre-emptive right OrbiMed Asia has a right of first refusal to purchase up to a

pro rata share of any new securities (other than certain
excepted issuances, such as new securities issuance under
employee share incentive schemes and the Global Offering,
among others) which our Company may propose to issue.
Information and inspection OrbiMed Asia has the rights to receive our Company’s
rights financial information, budgets and information regarding our
Group, as well as the rights to visit our Group’s site to inspect
its facilities and properties and examine its books and
records.
— 114 —
Right of first refusal If any holder of our Ordinary Shares (the “Transferring
Shareholder”) proposes to sell or transfer any of its equity
securities of our Company (the “Offered Shares”), our
Company has the right of first refusal to purchase all or part
of the Offered Shares, failing which OrbiMed Asia shall have
the right of first refusal to purchase all or part of the Offered
Shares on the terms and conditions stated in the transfer
notice given by the Transferring Shareholder.
Right of co-sale If we and OrbiMed Asia do not elect to exercise their

respective rights of first refusal as to the Offered Shares,
OrbiMed Asia has the right to participate in the sale of the
Offered Shares by the Transferring Shareholder on the terms
and conditions set forth in the transfer notice given by the
Transferring Shareholder.
Liquidation preference Prior and in preference to any distribution to the holders of

Ordinary Shares, OrbiMed Asia shall be entitled to receive an
amount equivalent to 100% of the issue price of the Series A
Preferred Shares and any declared but unpaid dividends on
such Series A Preferred Shares.
Conversion rights The Series A Preferred Shares are convertible into Ordinary
Shares with an initial conversion ratio of 1:1 prior to the
Listing, which is subject to adjustments to be made to
preserve the conversion rights against dilution in dilutive
events, including share split, subdivision or combination,
distribution of dividends or other distribution, capital
reorganization, share reclassification, or consolidation,
merger or amalgamation of the Company with or into another
entity.
Sole Sponsor’s confirmation
The Sole Sponsor considers that the Pre-IPO Investment by OrbiMed Asia is in compliance
with the “Interim Guidance on Pre-IPO Investments”, “Guidance on Pre-IPO Investments” and
“Guidance on Pre-IPO Investments in Convertible Instruments” issued by the Listing Committee
in January 2012 (updated in March 2017), October 2012 (updated in July 2013 and March 2017)
and October 2012 (updated in March 2017), respectively, for reasons that: (i) the relevant
consideration under the Pre-IPO Investment was fully and irrevocably settled and received by us
on February 29, 2016, which was more than 28 clear days before the date of the first submission
of the first listing application form to the Stock Exchange in relation to the Listing; (ii) all the special
rights that were granted to OrbiMed Asia in the Pre-IPO Investment will be terminated upon the
completion of the Global Offering; and (iii) there will be no conversion price when all Series A
Preferred Shares are converted into Ordinary Shares and our Company or our Controlling
Shareholders does not have the obligation to buy back the Series A Preferred Shares held by
OrbiMed Asia at any time other than if our Company fails to complete an initial public offering by
December 31, 2018.
— 115 —
REORGANIZATION
The following chart sets forth our Group’s corporate and shareholding structure immediately
prior to the Reorganization:
Zhang Zhang Li Zhao Wang Liu Zhang

Mr. Li Qi Yajun
Chaoyang Bin Huijiang Xiaohong Caimei Aiguo Weiping
86.69% 9.99% 1.50% 0.59% 0.55% 0.35% 0.15% 0.15% 0.03%
AK Medical Beijing
(Established in China)
100%
AK Medical XMKS
In order to prepare for the Listing, we underwent the Reorganization which involved the
following steps:
(1) Incorporation of the Offshore Holding Vehicles
Incorporation of Our Company
Our Company was incorporated as an exempted company under the laws of the Cayman
Islands with limited liability on July 17, 2015. On the date of incorporation, the initial subscriber of
our Company, an independent third party, transferred the one issued Share of HK$0.01 each in
our Company at nil consideration to Ximalaya, and an additional 9,999 Shares of HK$0.01 each
in our Company were allotted and issued as nil-paid, among which 8,668, 150, 999 and 182
Shares were allotted and issued to Ximalaya, Summer, Suntop and Sanbao, respectively.
Accordingly, our Company was held as to 86.69% by Ximalaya, 1.50% by Summer, 9.99% by
Suntop and 1.82% by Sanbao. The aforesaid transfer and subscriptions were fully settled and paid
on February 26, 2016 and the aforesaid nil-paid shares were credited as fully-paid at par on
February 26, 2016.
Incorporation of the Intermediate Holding Companies of Our Group
AK Medical BVI
In preparing for the Listing, AK Medical BVI was incorporated under the laws of BVI with
limited liability on July 21, 2015 and is authorized to issue 50,000 shares of US$1.00 each. One
share was allotted and issued to our Company on the date of incorporation as fully paid.
AK Medical HK
In preparing for the Listing, AK Medical HK was incorporated under the laws of Hong Kong
with limited liability on July 28, 2015. One share in the amount of HK$1.00 was subscribed by AK
Medical BVI on the date of incorporation.
— 116 —
(2) Stage 1 of the Pre-IPO Investment and Capital Increase of AK Medical Beijing
As part of the Pre-IPO Investment, on July 30, 2015, Mr. Li, Mr. Zhang Chaoyang, Ms. Zhang
Bin, Ms. Zhao Xiaohong, Ms. Li Huijiang, Ms. Wang Caimei, Ms. Liu Aiguo, Mr. Qi Yajun, Mr.
Zhang Weiping and Bright AK HK entered into the AK Medical Beijing Capital Increase Agreement,
pursuant to which Bright AK HK subscribed for 10% of the equity interests in AK Medical Beijing
at the subscription price of US$ equivalent of RMB14,000,000. The subscription price was paid on
October 8, 2015, of which RMB5,555,555 was contributed to the registered capital of AK Medical
Beijing and RMB8,444,445 was contributed to the capital reserve of AK Medical Beijing.
Such subscription price was determined with reference to a valuation report issued by an
independent Chinese valuer with regards to the net asset value of AK Medical Beijing on July 15,
2015 and was settled on October 8, 2015. As a result, the registered capital of AK Medical Beijing
was increased from RMB50,000,000 to RMB55,555,555. The aforesaid capital increase was
registered by the competent Chinese government authority on August 20, 2015. For further details
of the Pre-IPO Investment, see “—Pre-IPO Investment”.
Immediately following completion of the aforesaid capital increase, AK Medical Beijing was
held as to 78.021%, 8.991%, 1.350%, 0.531%, 0.495%, 0.315%, 0.135%, 0.135%, 0.027% and
10% by Mr. Li, Mr. Zhang Chaoyang, Ms. Zhang Bin, Ms. Li Huijiang, Ms. Zhao Xiaohong, Mr. Qi
Yajun, Ms. Wang Caimei, Ms. Liu Aiguo, Mr. Zhang Weiping and Bright AK HK, respectively.
(3) Transfer of 90% of Equity Interests in AK Medical Beijing to AK Medical HK
On October 19, 2015, Mr. Li, Mr. Zhang Chaoyang, Ms. Zhang Bin, Ms. Li Huijiang, Ms. Zhao
Xiaohong, Mr. Qi Yajun, Ms. Wang Caimei, Ms. Liu Aiguo and Mr. Zhang Weiping (the “Existing
Onshore Shareholders”) as transferors entered into an equity transfer agreement with AK
Medical HK as transferee, pursuant to which the transferors transferred 78.021%, 8.991%,
1.350%, 0.531%, 0.495%, 0.315%, 0.135%, 0.135% and 0.027% (i.e. a total of 90%) of the equity
interests in AK Medical Beijing to AK Medical HK at the consideration of RMB64,757,430,
RMB7,462,530, RMB1,120,500, RMB440,730, RMB410,850, RMB261,450, RMB112,050,
RMB112,050 and RMB22,410, respectively.
Such consideration was determined with reference to the net asset value of AK Medical
Beijing in the unaudited management accounts of AK Medical Beijing on September 30, 2015. The
aforesaid transfer was registered by the competent Chinese government authority on November
17, 2015.
Immediately following the registration of the aforesaid transfer, AK Medical Beijing was held
as to 90% by AK Medical HK and 10% by Bright AK HK.
The aggregate consideration of the aforesaid transfer in the amount of RMB74,700,000 had
been settled by April 7, 2016 and was funded by shareholder’s loans advanced by Ximalaya to our
Company on various dates between March 10, 2016 and April 7, 2016. On April 13, 2016,
Ximalaya executed a deed of waiver in favor of our Company, pursuant to which Ximalaya
unconditionally and irrevocably waived, released and discharged the repayment of shareholder’s
loans advanced from Ximalaya to our Company in an aggregate amount of RMB74,700,000 and
any claim regarding such repayment.
— 117 —
The aforesaid step in the Reorganization was conducted primarily to flip the Existing
Onshore Shareholders offshore to hold equity in the Company. Approximately the US dollar
equivalent of RMB80,000,000 was estimated to be the funding required by the Company for the
acquisition of the 90% equity interest in AK Medical Beijing (OrbiMed Asia having injected
RMB14,000,000 into AK Medical Beijing for 10% equity interest via Bright AK HK, being part of the
Pre-IPO Investment). As the aforesaid step in the Reorganization was to facilitate the flipping of
the Existing Onshore Shareholders to hold the equivalent proportion of Shares (having taken into
account OrbiMed Asia’s investment) of the Company, the aforesaid step in the Reorganization was
structured in a form of share transfer for cash consideration rather than a share exchange, the
latter of which would require the approval of MOFCOM and such approval is rarely granted in
practice. Under the Pre-IPO Investment, the cash needed to facilitate the aforesaid step in the
Reorganization was agreed to be funded by the Existing Onshore Shareholders, rather than
funded by the Pre-IPO Investment. Accordingly, Mr. Li agreed, on behalf of all the Existing
Onshore Shareholders, to bridge the funding needs for this transaction by advancing such funds
in US dollars to the Company. However, as such funds needed to be offshore funds, Mr. Li had to
source such funds through an offshore banking facility, which at the time of the closing of the
Pre-IPO Investment, was not yet ready and available. OrbiMed Asia and the Company therefore
agreed to waive such advancement as a condition precedent and closed the Pre-IPO Investment
to accommodate the then timetable of the proposed Listing of the Company. RMB74,700,000 was
finally determined as the aggregate consideration for the 90% equity interest held by the Existing
Onshore Shareholders under the equity transfer agreement and the US dollar equivalent
(US$11,551,412.12) was subsequently advanced to the Company between March 10, 2016 and
April 7, 2016 by Mr. Li via Ximalaya. The funds were then injected to AK Medical HK which then
used such funds to acquire the 90% equity interest of the Existing Onshore Shareholders.
Mr. Li via Ximalaya agreed to waive the Company’s obligation to repay the advancement as
this was in substance a capital contribution to the Group by the Existing Onshore Shareholders
and represented a “bridge” for the funds needed to complete the group reorganization. When the
Existing Onshore Shareholders sold their 90% equity interest to AK Medical HK, the cash they
received from such sale amounted to RMB74,700,000, all of which were received by Mr. Li. Save
as the above, the Company confirmed that there was not any other side arrangements in relation
to this shareholder’s loan.
(4) Subscription of Shares in our Company
In order to rationalize the shareholding structure of our Company in preparation for Stage 2
of the Pre-IPO Investment, on February 26, 2016, each of Ximalaya, Suntop, Sanbao and Summer
subscribed 69,352, 7,992, 1,456 and 1,200 Shares of HK$0.01 each in our Company at par value.
The aforesaid subscriptions were fully paid on February 26, 2016. The subscription was in
proportion to each shareholder of our Company’s then shareholding.
Immediately following completion of the aforesaid subscriptions, our Company was held as
to 86.69% by Ximalaya, 1.5% by Summer, 9.99% by Suntop and 1.82% by Sanbao, respectively.
— 118 —
(5) Reclassification and Re-designation of Ordinary Shares and Series A Preferred Shares
in Our Authorized Share Capital
To prepare for Stage 6 of the Reorganization, the authorized share capital of our Company,
namely HK$380,000 divided into 38,000,000 Shares of HK$0.01 each, was reclassified and
re-designated into 37,990,000 Ordinary Shares with par value of HK$0.01 each and 10,000 Series
A Preferred Shares with par value of HK$0.01 each pursuant to the resolutions in writing of our
Shareholders passed on February 29, 2016. The 90,000 issued Shares held by Ximalaya, Suntop,
Sanbao and Summer remained Ordinary Shares.
Immediately following completion of the aforesaid creation, two classes of Shares, namely
37,990,000 Ordinary Shares of HK$0.01 each and 10,000 Series A Preferred Shares of HK$0.01
each were created in the authorized share capital of our Company.
(6) Stage 2 of the Pre-IPO Investment and Transfer of 100% of Shares of Bright AK HK to
AK Medical BVI
As part of the Pre-IPO Investment, on December 18, 2015, our Company, AK Medical BVI,
AK Medical HK, AK Medical Beijing, AK Medical XMKS, Mr. Li, Ximalaya, Ms. Zhang Bin, Mr.
Zhang Chaoyang, Suntop, Summer, Sanbao and OrbiMed Asia entered into the Series A Preferred
Share Purchase Agreement, pursuant to which OrbiMed Asia subscribed 10,000 Series A
Preferred Shares of HK$0.01 each (each convertible into one Ordinary Share pursuant to its
terms) in our Company at an aggregate consideration of RMB140,000,000. Among such
consideration, the US$ equivalent of RMB126,000,000 was settled in cash as subscription money
to our Company, of which RMB60,000,000 was settled on December 22, 2015 and
RMB66,000,000 was settled on February 29, 2016, and the remaining RMB14,000,000 was
settled by the transfer of all the 100 shares in Bright AK HK held by OrbiMed Asia to AK Medical
BVI on February 29, 2016. The transfer of the aforesaid shares in Bright AK HK was completed
on the same date. For further details, including the basis for determining the consideration, of the
Pre-IPO Investment, see “—Pre-IPO Investment”.
Immediately following completion of the aforesaid subscription and transfer, (i) our Company,
on an as-converted basis, was held as to 78.021% by Ximalaya, 10% by OrbiMed Asia, 8.991%
by Suntop, 1.638% by Sanbao and 1.350% by Summer, respectively, and (ii) Bright AK HK was
wholly owned by AK Medical BVI.
(7) Establishment of the Family Trust
On July 10, 2017, Mr. Li, as settlor, established the Family Trust with Trident Trust acting as
trustee. Rainbow Holdings was incorporated on July 11, 2017 by Trident Trust to hold assets and
properties under the Family Trust. The purpose of the Family Trust is for estate planning of Mr. Li
and his family. Pursuant to the deed of settlement regarding the Family Trust, Trident Trust holds
assets and properties under the Family Trust for the benefit of Mr. Li and certain of his family
members. Mr. Li is the protector of the Family Trust and retains control of the Family Trust.
Pursuant to a deed of gift dated August 11, 2017, Mr. Li transferred one share in Ximalaya,
representing 50% of the issued share capital of Ximalaya, to Trident Trust for nil consideration and
Trident Trust transferred such one share in Ximalaya to Rainbow Holdings. Accordingly, 50% of
the issued share capital in Ximalaya is held under the Family Trust by Trident Trust for the benefit
of Mr. Li and certain of his family members. Mr. Li remains the sole director of Ximalaya.
— 119 —
The following chart sets forth the corporate and shareholding structure of the Group
immediately after the completion of the Reorganization:
Trident Trust Li Qi Liu

Huijiang(5) Yajun(7) Aiguo(7)
100%
Zhang Zhao Wang Zhang

Rainbow Holdings Mr. Li(1) Zhang Bin(1)
Chaoyang(4) Xiaohong(6) Caimei(7) Weiping(7)
50% 50% 100% 32.42% 30.22% 19.23% 8.24% 8.24% 1.65% 100%
Ximalaya OrbiMed Asia(2),(3)

Suntop Sanbao Summer
(Incorporated in BVI) (Incorporated in
(Incorporated in BVI) (Incorporated in BVI) (Incorporated in BVI)
Cayman Islands)
78.021% 10.000% 8.991% 1.638% 1.350%
Our Company
(Incorporated in Cayman Islands)
100%
AK Medical BVI
(Incorporated in BVI)
100% 100%
Bright AK HK AK Medical HK
(Incorporated in Hong Kong) (Incorporated in Hong Kong)
10% 90% 100%
AK Medical Beijing(8) AK Medical Changzhou(9)

(Established in China) (Established in China)
100%
AK Medical XMKS
(1) Ms. Zhang Bin, one of our Controlling Shareholders, an executive Director and a senior vice president of our
Company, is the spouse of Mr. Li, one of our Controlling Shareholders, the chairman of our Board, an executive
Director and the chief executive officer of our Company.
(2) For further details regarding OrbiMed Asia, see “—Pre-IPO Investment—Summary of Material Terms—Name and
Information of the Pre-IPO Investor”.
(3) The shareholding percentage of each Shareholder is calculated on the assumption that all Series A Preferred
Shares held by OrbiMed Asia are converted into Ordinary Shares prior to the Listing pursuant to the terms in the
Pre-IPO Investment Shareholders Agreement and the articles of association of our Company in force prior to the
adoption of the Articles.
(4) Mr. Zhang Chaoyang, an executive Director and a senior vice president of our Company, is the brother of Ms. Zhang
Bin and the brother-in-law of Mr. Li.
(5) Ms. Li Huijiang is the sister of Mr. Li and the sister-in-law of Ms. Zhang Bin.
(6) Ms. Zhao Xiaohong is an executive Director and the chief financial officer of our Company.
(7) Each of Ms. Wang Caimei, Ms. Liu Aiguo, Mr. Zhang Weiping and Mr. Qi Yajun is a senior management member of
our Group.
(8) AK Medical Beijing has four branches. For further details regarding such branches, see “Information About Our
Company—6. Further information about the establishment of our Chinese subsidiaries” in Appendix IV to this
prospectus.
(9) AK Medical Changzhou was established in China on March 28, 2016 as limited liability company. For further details
regarding AK Medical Changzhou, see “—Corporate Development—Our Chinese Subsidiaries—AK Medical
Changzhou”.
CAPITALIZATION ISSUE AND GLOBAL OFFERING
Conditional upon the share premium account of our Company being credited as a result of
the Global Offering, our Company will capitalize all or a portion, as the case may be, of the
balance of the share premium account and apply such sum in paying up in full at nominal value
a total of 749,900,000 Shares, for allotment and issue to the existing shareholders of our
Company. Immediately after the Global Offering and Capitalization Issue (without taking into
account any Shares which may be issued upon exercise of the Over-Allotment Option or any
Scheme), the existing shareholders of our Company and the public holders of Shares will hold
75% and 25%, respectively, of the enlarged issued share capital of our Company.
— 120 —
The following chart sets forth the corporate and shareholding structure of our Group
immediately following completion of the Global Offering and Capitalization Issue (without taking
into account any Shares which may be issued upon exercise of the Over-Allotment Option or any
Scheme):
Trident Trust Li Qi Liu

Huijiang(5) Yajun(7) Aiguo(7)
100%
Zhang Zhao Wang Zhang

Rainbow Holdings Mr. Li(1) Zhang Bin(1)
Chaoyang(4) Xiaohong(6) Caimei(7) Weiping(7)
50% 50% 100% 32.42% 30.22% 19.23% 8.24% 8.24% 1.65% 100%
Ximalaya OrbiMed Asia(2),(3)

Suntop Sanbao Summer Other public
(Incorporated in BVI) (Incorporated in
(Incorporated in BVI) (Incorporated in BVI) (Incorporated in BVI) Shareholders
Cayman Islands)
58.51575% 7.50000% 6.74325% 1.22850% 1.01250% 25.00000%
Our Company
(Incorporated in Cayman Islands)
100%
AK Medical BVI
(Incorporated in BVI)
100% 100%
Bright AK HK AK Medical HK
(Incorporated in Hong Kong) (Incorporated in Hong Kong)
10% 90% 100%
AK Medical Beijing(8) AK Medical Changzhou(9)

(Established in China) (Established in China)
100%
AK Medical XMKS
(1) Ms. Zhang Bin, one of our Controlling Shareholders, an executive Director and a senior vice president of our
Company, is the spouse of Mr. Li, one of our Controlling Shareholders, the chairman of our Board, an executive
Director and the chief executive officer of our Company.
(2) For further details regarding OrbiMed Asia, see “—Pre-IPO Investment—Summary of Material Terms—Name and
Information of the Pre-IPO Investor”.
(3) The shareholding percentage of each Shareholder is calculated on the assumption that all Series A Preferred
Shares held by OrbiMed Asia are converted into Ordinary Shares prior to the Listing pursuant to the terms in the
Pre-IPO Investment Shareholders Agreement and the articles of association of our Company in force prior to the
adoption of the Articles.
(4) Mr. Zhang Chaoyang, an executive Director and a senior vice president of our Company, is the brother of Ms. Zhang
Bin and the brother-in-law of Mr. Li.
(5) Ms. Li Huijiang is the sister of Mr. Li and the sister-in-law of Ms. Zhang Bin.
(6) Ms. Zhao Xiaohong is an executive Director and the chief financial officer of our Company.
(7) Each of Ms. Wang Caimei, Ms. Liu Aiguo, Mr. Zhang Weiping and Mr. Qi Yajun is a senior management member of
our Group.
(8) AK Medical Beijing has four branches. For further details regarding such branches, see “Information About Our
Company—6. Further information about the establishment of our Chinese subsidiaries” in Appendix IV to this
prospectus.
(9) AK Medical Changzhou was established in China on March 28, 2016 as limited liability company. For further details
regarding AK Medical Changzhou, see “—Corporate Development—Our Chinese Subsidiaries—AK Medical
Changzhou”.
Chinese Regulatory Requirements
In relation to all the transfers of equity interests, investments and increases in registered
capital in our subsidiaries established in China as described in this section, our PRC Legal Advisor
confirms that all necessary regulatory approvals from the Chinese authorities have been obtained
and all relevant Chinese laws and regulations have been complied with.
— 121 —
THE RULES ON THE MERGERS AND ACQUISITIONS OF DOMESTIC ENTERPRISES BY

FOREIGN INVESTORS IN CHINA
According to the Provisions Regarding Mergers and Acquisitions of Domestic Enterprises by

Foreign Investors (《關於外國投資者併購境內企業的規定》) (the “M&A Rules”) jointly issued by the
MOFCOM, the State-owned Assets Supervision and Administration Commission of the State
Council (國務院國有資產管理監督委員會), the SAT, the CSRC, State Administration of Industry and
Commerce and the SAFE on August 8, 2006 and effective as of September 8, 2008 and amended
in June 2009, where a domestic company, enterprise or natural person intends to acquire
its/his/her related domestic company in the name of an offshore company which it/he/she lawfully
established or controls, the acquisition shall be subject to the examination and approval of the
MOFCOM, and where a domestic company or natural person holds an equity interest in a
domestic company through an offshore special purpose company, any overseas listing of that
special purpose company shall be subject to approval by the CSRC.
According to the Guiding Handbook on Access Administration of Foreign Investment (Version

2008) (Shang Zi Fu Zi [2008] No. 530) (《外商投資准入管理手冊》(2008年版)), the M&A Rules do
not apply mutatis and mutandis to equity transfers of an established foreign-invested enterprise
by the domestic party to foreign parties, regardless of any affiliated relationships among such
parties and whether or not the foreign parties are the original shareholders or new investors. The
domestic company referred to in the M&A Rules refers to a domestic-invested enterprise.
As advised by our PRC Legal Advisor, at the relevant time of the Reorganization, AK Medical
Beijing was a sino-foreign equity joint venture enterprise. The Reorganization involved an
acquisition of equity interest in a sino-foreign equity joint venture enterprise. Hence, the
Provisions on Mergers and Acquisition of Domestic Enterprises by Foreign Investors (《關於外國
投資者併購境內企業的規定》） jointly promulgated by the MOFCOM, the CSRC, the State-owned
Assets Supervision and Administration Commission of the State Council, the State Administration
of Taxation, the State Administration of Industry and Commerce and the SAFE on August 8, 2006
which took effective on September 8, 2006 and was amended on June 22, 2009, is not applicable
and approval from the MOFCOM, the CSRC or other Chinese government authorities for the
Listing is not required.
SAFE REGISTRATION IN CHINA
On July 4, 2014, the SAFE issued the Circular of the State Administration of Foreign
Exchange on the Administration of Foreign Exchange Involved in Overseas Investment, Financing
and Round-trip Investment Conducted by Chinese Mainland Residents via Special-purpose
Companies (Hui Fa [2014] No. 37) (《關於境內居民通過特殊目的公司境外投融資及返程投資外匯管理
有關問題的通知》） (the “SAFE Circular No. 37”). According to the SAFE Circular No. 37, with
respect to a registered special purpose vehicle, any changes made to the Chinese residency of
its individual shareholders, its name, term of operation or other basic information, or other material
information, such as the increase or reduction of capital contribution or transfer, or swap of equity
by any shareholder, or merger or de-merger of such registered special purpose vehicle, the
shareholders shall promptly re-register such changes with the competent foreign exchange
authority.
— 122 —
As confirmed by our PRC Legal Advisor, in relation to the incorporation of Ximalaya, Suntop,
Sanbao and Summer as investment vehicles, Mr. Li, Mr. Zhang Chaoyang, Ms. Li Huijiang, Ms.
Zhao Xiaohong, Mr. Qi Yajun, Ms. Wang Caimei, Ms. Liu Aiguo, Mr. Zhang Weiping, Ms. Zhang
Bin, all of whom are Chinese citizens, completed the process of registration required under SAFE
Circular No.37 on November 2, 2015. In addition, as confirmed by our PRC Legal Advisor, in
relation to the transfer of share in Ximalaya from Mr. Li to Trident Trust on August 11, 2017, i.e.
a change in the shareholding in Ximalaya, registration as required under SAFE Circular No.37 was
completed on September 26, 2017 in compliance with Chinese laws and regulations.
As confirmed by our PRC Legal Advisor, we have obtained and completed all requisite
approvals and/or registrations in all material aspects from the relevant Chinese authorities in
respect of the Reorganization, and the Reorganization has, in all material aspects, complied with
the applicable laws and regulations in China.
— 123 —
OUR BUSINESS
OVERVIEW
implants. We also rolled out our 3D-printed spinal interbody cages and artificial vertebral bodies
in 2016, thereby entering into the spine replacement implant market. We market our products
under the brand name of “AK Medical” (“愛康”), which was the bestselling brand of orthopedic joint
implants in China by sales volume in 2016, according to Frost & Sullivan. “AK Medical” (“愛康”)
was also the bestselling domestic orthopedic joint implant brand in China by revenue in 2016. Our
products include orthopedic joint implants for primary surgeries as well as those specifically
designed for revision surgeries for the replacement, repair or enhancement of an implant or
component from a previous procedure. Our three 3D-printed products are the first and only
CFDA-approved 3D-printed orthopedic implant products in China. We also market orthopedic
products produced by third parties as a distributor to complement our product offerings to
customers.
We developed and introduced our personalized 3D Accurate Construction Technology

solutions, or “3D ACT solutions”, in July 2014 to help our products penetrate more hospitals. Our
3D ACT solutions assist surgeons in simulating and planning for implant surgeries, simplify
surgical processes, offer personalized surgical instruments and pre-surgery selected implants and
improve patients’ recovery experience significantly. Our 3D ACT solutions integrate our
proprietary Physician-Technician Interaction Platform, or “PTIP”, which is currently provided as a
complimentary service, with our technologies for producing 3D-printed and/or off-the-shelf
surgical instruments and implant products, from which we generate revenue.
We sell our products mainly through our distribution network which covers all the provinces,
municipalities and autonomous regions in China. As of June 30, 2017, we had 650 distributors.
Our extensive distribution network gives us access to a large customer base around China,
enabling our products to be distributed in a cost-effective manner. We also sell a portion of our
products directly to hospitals through our subsidiary which holds the medical device business
certificate. This allows us to establish and maintain direct relationships with surgeons and collect
clinical data and feedback more conveniently from them, which helps us design new and improved
products, and form new strategies to adjust to market demands. In 2014, 2015, 2016 and the six
months ended June 30, 2016 and 2017, we sold 37,475, 44,652, 57,650, 24,666 and 28,941 sets
of off-the-shelf hip replacement implants, respectively, 8,920, 11,887, 17,105, 7,051 and 9,424
sets of knee replacement implants, and nil, 214, 2,842, 730 and 2,441 pieces of 3D-printed
products, respectively.
We produce our products through our production facilities in Beijing. Our production facilities
in Changzhou are in the preparatory stage for construction. We design, develop and produce all
our surgical instruments and orthopedic implants in-house in our production facilities, other than
certain production procedures for certain products which we outsource to third parties. Our
production plants are equipped with machines and equipment owned by us, including 3D-printing
machinery for producing implant products, personalized surgical instruments, computerized
numerical controlled machine tools, surface processing equipment and other equipment for each
stage of the production process.
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OUR BUSINESS
ended June 30, 2016 and 2017, our revenue amounted to RMB148.3 million, RMB206.2 million,
RMB270.8 million, RMB115.3 million and RMB162.5 million, respectively, representing a CAGR of
35.1% from 2014 to 2016. In the same periods, we had gross profit of RMB101.3 million,
RMB142.1 million, RMB187.3 million, RMB79.9 million and RMB111.7 million, respectively,
representing a CAGR of 36.0% from 2014 to 2016.
COMPETITIVE STRENGTHS
We believe that the following competitive strengths have contributed to our success and
differentiated us from our competitors, and will continue to drive our success:
We have proven medtech innovation capabilities, having introduced the revolutionary

personalized 3D ACT solutions to the Chinese orthopedic implant market.
We are a medical device company with proven medtech innovation capabilities. We are the
first and only company in China that has commercialized the application of 3D-printing technology
in orthopedic joint and spine replacement implants in China. We have also developed and
introduced the personalized 3D ACT solutions, which assist surgeons in simulating and planning
for implant surgeries, simplify surgical processes, offer personalized surgical instruments and
pre-surgery selected implants and improve patients’ recovery experience significantly. Our 3D
ACT solutions integrate our proprietary Physician-Technician Interaction Platform, or “PTIP”, with
our technologies for producing 3D-printed and/or off-the-shelf surgical instruments and implant
products. Our PTIP comprises access to our large and growing database of 3D clinical data where
our technicians produce 3D images based on 2D images of the patients’ affected bone areas using
specialized software and transform them into 3D-printed models. With close interaction between
our technicians and the surgeons, whose patients may have varying needs and who may have
different surgery habits, our PTIP helps the surgeons formulate surgery plans. To complete our 3D
ACT solution offering, we assist surgeons and their patients in selecting the appropriate implant
products and surgical instruments for the particular surgeries, and produce personalized surgical
instruments where needed. As our 3D-printed or our off-the-shelf products will be used for such
surgeries, we will provide models of such bone areas to the surgeon for pre-surgery preparation
and practice. The following chart illustrates how our 3D ACT solutions work:
Images Implants
Pre-surgery
selected
implants**
CT/MRI Surgery Precision
3D-imaging and
scanning* simulation and implants and
modeling
planning surgeries*
Personalized
instruments**
PTIP
Database of
3D clinical
Data collection & support data Data collection & support
* conducted by doctors in hospitals.
** we offer 3D-printed or off-the-shelf instruments and implants to be used in conjunction with our 3D ACT
solutions.
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OUR BUSINESS
3D ACT solutions consist of the following stages:
• PTIP: Our technicians first analyze data collected from CT or MRI scanning using
specialized software, and construct 3D images and 3D models to provide surgeons with
detailed information through virtual simulation and physical modeling for individual
patients. Surgeons and technicians will then have access to precedent cases in our
database of 3D clinical data for reference, and will closely interact with each other to
simulate and plan for the surgeries at hand. As the surgeries will be well-simulated and
the surgery plans will be personalized through our PTIP, the surgical instruments and
the type and size of implants can be accurately determined prior to the surgery, as
opposed to the conventional procedure where they are determined during the surgery,
complex surgeries can be simplified. As of June 30, 2017, over 2,000 surgical plans had
been made through our PTIP.
• Database of 3D clinical data: When surgeries are simulated and planned through our
PTIP, our database collects clinical data including 3D images, 3D models and other
clinical data. By benefitting from the shared experiences of other surgeries and
surgeons through access to our vast database of past cases, surgeons do not need to
rely solely on their own prior experience when planning for precision surgeries. As of the
Latest Practicable Date, our database had collected clinical data from more than 2,000
surgical cases, which is equivalent to the experience of a seasoned surgeon.
• Personalized surgical instruments: According to the surgical plans, the surgeons may
select our 3D-printed or off-the-shelf surgical instruments for the surgeries. If 3D-
printed surgical instruments are used, our technicians will use cutting-edge 3D-printing
technologies to produce personalized surgical instruments, such as surgical guides,
that match each patient’s unique anatomy, which reduces the need for bone, tissue and
cartilage removal.
• Pre-surgery selected implants: Depending on the results of the 3D-imaging, modeling

and planning, the needs of the patient as well as the surgeons’ surgery habits, the
surgeons and patients can select, on an informed basis, our 3D-printed or off-the-shelf
products, or a combination of both, for the surgeries. Our 3D ACT solutions also allow
surgeons to select the type and size of orthopedic products that best match each
patient’s unique anatomy before the surgery, which simplifies the surgery process and
greatly reduces the need for surgeons to remove patients’ bones, tissues and cartilage
to accommodate the implant.
— 126 —
OUR BUSINESS
Our personalized 3D ACT solutions offer the following benefits to patients, surgeons and
hospitals which we believe revolutionalize the way in which orthopedic surgeons perform
surgeries:
• For patients: As our PTIP helps surgeons simulate surgeries, surgeons can better
inform their patients of the surgical procedures and possible outcomes of the surgeries
prior to the surgeries. This allows patients to have better-informed expectations. In
addition, with the help of 3D-imaging and 3D-modeling, surgical procedures become
faster and more accurate and therefore less time under anesthetic and less pain for
patients. Our personalized surgical instruments match each patient’s unique anatomy,
reducing the need for bone, tissue and cartilage removal, thereby improving the
patients’ recovery experiences significantly.
• For surgeons: Our PTIP, supported by our database of 3D clinical data, reduces the
amount of clinical experience required for surgeons to plan and perform implant
surgeries in a fast and accurate manner. Personalized surgical guides and implants
also improve the accuracy of implant alignments compared to off-the-shelf products,
thereby reducing the difficulty level of the surgery, reducing surgeons’ learning curve
and enhancing the post-op intactness of the implants.
• For hospitals: With the help of PTIP, hospitals located in regions with limited medical
resources and few experienced orthopedic surgeons would be in a position to perform
surgeries of a high difficulty level by less experienced surgeons. The feature of our PTIP
that visualizes surgical plans helps hospitals train sufficiently qualified but less
experienced orthopedic surgeons. It also facilitates patients’ understanding of the
surgical plans and thus improves the communications between hospitals and patients.
Also, our personalized solutions achieve greater precision in surgery, thereby reducing
patients’ recovery time from surgeries, and shortening patients’ hospital stays. In
addition, by increasing the efficiency and precision of surgical simulation and planning,
our PTIP simplifies surgical procedures and improves turnaround times in the operating
rooms.
For our 3D ACT solutions, we only charge for our off-the-shelf or 3D-printed products, and
currently our PTIP is provided as a complimentary service. We currently do not have a plan to
charge extra fee for the usage of our PTIP itself in the near future. Given the advantages of our
PTIP and its integration with our products, offering our 3D ACT solutions helps our products
penetrate more hospitals, particularly high-end hospitals with substantial orthopedic surgery
practices. In the six months ended June 30, 2017, our products were sold to 3,370 hospitals,
among which 1,054 were Class III hospitals and 258 used our 3D ACT solutions, compared to
1,615 hospitals in 2014, among which 319 were Class III hospitals and 36 used our 3D ACT
solutions.
We are a leader in the fast-growing orthopedic joint implant market in China and enjoying
strong brand name recognition among surgeons.
We are a leader in the orthopedic joint implant market in China, marketing our products under
the brand name of “AK Medical” (“愛康”), the bestselling brand of orthopedic joint implants in China
by sales volume in 2016, according to Frost & Sullivan. “AK Medical” (“愛康”) is also the
bestselling domestic orthopedic joint implant brand in China by revenue in 2016. In 2016, we had
a market share of 14.3% in terms of sales volume and 6.0% in terms of revenue in the orthopedic
joint implant market in China. In particular, “AK Medical” (“愛康”) is the leading brand of orthopedic
joint implants in each of the hip and knee replacement implant sectors in terms of both sales
volume and revenue in 2016.
— 127 —
OUR BUSINESS
We offer a comprehensive range of products including 50 CFDA-approved medical devices.

Among our 26 Class III medical devices, 24 are orthopedic joint implant products and two are
spine replacement implants. Our product lines cover off-the-shelf products and 3D-printed
products for primary, revision and reconstruction surgeries, being the most comprehensive in the
orthopedic joint implant market among domestic brands in China.
In addition, we believe our products are on par with those of major international orthopedic
joint implant companies in terms of product portfolio and processing and production technologies.
In particular:
• Friction interface: According to CFDA, we are the first China-based orthopedic joint
implant company that has CFDA-approved orthopedic joint implant products with the
fourth generation composite ceramics-highly crosslinked polyethylene friction interface.
A sound friction interface could greatly reduce the amount of its potential wear debris
and osteolysis, and therefore minimizes the risk of aseptic loosening of the implant. The
fourth generation composite ceramics-highly crosslinked polyethylene friction interface
has a low wear rate, and has been proven by clinical results to greatly improve the
longevity of orthopedic joint implants. It is one of the friction interfaces adopted by major
international orthopedic joint implant companies for high-end orthopedic joint implants.
• Bone interface technology: After seven years of R&D, in August 2015, we launched our
CFDA-approved 3D-printed hip replacement implant with trabecular structure that
applies cutting-edge 3D-printing precision construction technology. As of the Latest
Practicable Date, our 3D-printed products with trabecular structure were the only
CFDA-approved 3D-printed orthopedic implant products in China. Trabecular structure
bone interfaces have relatively high friction and high porosity, which improve biological
fixation and the longevity of orthopedic joint implants.
• Advanced production process: We are committed to employing advanced production

processes to enhance our product quality. For example, we employ the latest electron
beam melting method to produce our 3D-printed hip replacement implant with
trabecular structure in one piece, instead of the traditional coating technology.
• Strengths in high-end markets: Backed by our high product quality and advanced
technologies, our presence is particularly strong in the high-margin sectors of the
orthopedic joint implant market, such as revision and reconstruction surgeries. Revision
surgeries generally have a higher profit margin for orthopedic joint implant companies
than primary surgeries, since they require more precision in the development and
production of implants. Our market share in the revision joint replacement implant
market in China grew from 20.0% in 2014 to 23.1% in 2015 and further to 26.1% in
2016.
Leveraging our position as a leader in the Chinese market in terms of market share, range
of product offerings and technology, our brand name is widely recognized and trusted in the
orthopedic joint implant market by hospitals, surgeons and patients. During the Track Record
Period, we had sold more than 216,000 sets of orthopedic joint implants in China and overseas.
In general, surgeons tend to choose orthopedic products from the same brand as the surgical
instruments with which they are familiar with operating, thereby creating a path dependent effect.
As more of our products are used, more surgeons will become familiar with our brand of surgical
instruments and related products and solutions. Our large sales volume therefore increases the
user adhesiveness of our products and is a significant competitive advantage for our sales of
existing and future products. Furthermore, we expect that, over time, we will be able to further
increase our brand name recognition and path dependent effect on our current and future
customers, thereby solidifying our position as a market leader in the future.
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OUR BUSINESS
We have strong R&D capabilities driven by 3D-printing technologies.
Our strong R&D capabilities are the cornerstones of our leading position in the orthopedic
joint implant market in China. As of the Latest Practicable Date, we had 36 invention patents, 140
utility patents and two patents under the PCT. We also had 134 pending invention patents, 77
pending utility patents and six pending patent applications filed under the PCT. We have obtained
26 CFDA registration certificates for Class III medical devices. We also have eight on-going
applications for registration approval by CFDA or its local counterpart.
We began designing, developing, producing and marketing knee and hip replacement
implants under our own brand name more than 13 years ago, and we have developed a
comprehensive range of products to meet patients’ varying needs in response to patients’ different
types and stages of diseases. Our precision production capabilities we employ in designing and
producing knee and hip replacement implants, our strong R&D capabilities and our broad portfolio
of knee and hip replacement implants allow us to further penetrate the high end market. Our
internal R&D capabilities are further reinforced by our cooperation with academic and research
institutes on fundamental and theoretical research, as well as with renowned hospitals directly on
joint R&D projects.
Since 2009, we have been spearheading the industry trend of pursuing customization and
precise construction of orthopedic products by developing products with trabecular structure by
applying 3D-printing technologies. Today, our first-mover advantage and rich experience in
3D-printing technologies for hip, knee and spine replacement implants allow us to quickly capture
new markets, as we can apply our R&D achievements to address patients’ demands in other
orthopedic product sectors. As of the Latest Practicable Date, our 3D-printed hip replacement
implant and our 3D-printed spine replacement implants were the only 3D-printed orthopedic
implants approved by the CFDA. Also, we, from time to time, provide personalized 3D-printed
implants upon receiving ad hoc requests from hospitals free of charge. These personalized
3D-printed implants were used in the treatment of specific rare cases as part of the relevant
surgeons’ biomedical research involving human as approved by the ethical committees of the
hospitals or healthcare institutions where such research studies were carried out. In 2014, 2015,
2016 and the six months ended June 30, 2017, there were four, 20, 31 and 24 such cases,
respectively, including the first-ever pelvic tumor operation in the world, the first-ever elbow
operations in the world, as well as wrist, knee, shoulder, ankle and maxillofacial operations. Our
PRC Legal Advisor has advised us that the use of our personalized 3D-printed implants in the
treatment of above-mentioned rare cases is in compliance with the relevant PRC laws, regulations
and rules relating to biomedical research involving human.
Our R&D capabilities help us build our robust product pipeline. As of the Latest Practicable
Date, we had four products, including two hip replacement implants, one knee replacement
implant and one spine replacement implant, in the post-clinical trial stage, one 3D-printed knee
replacement implant in the clinical trial stage and one 3D-printed spine replacement implant
pending pre-clinical trial approval. From 2018 to 2020, we plan to launch six new products,
including our 3D-printed knee replacement implants. See “—Product Pipeline”.
We are well-positioned to benefit from the import substitution trend of the orthopedic joint
implant market in China.
The Chinese government has instituted policies to encourage the use of medical devices
produced in China over imported products. According to Frost & Sullivan, in 2016, 53.3% of
orthopedic joint implants surgeries used imported products, which generally have a competitive
edge in high-end markets in China. To effectively compete with imported products in the high-end
market and take advantage of the import substitution trend, the quality of domestically produced
products needs to be comparable to that of imported products.
— 129 —
OUR BUSINESS
Our R&D capabilities enable us to design and develop quality products which are on par with
those of leading international companies that target the high-end sectors of the orthopedic implant
market, such as our orthopedic joint and spine replacement implants with trabecular structure, and
our revision surgery products which have high precision requirements for orthopedic joint
implants. Our strong presence in these high-end markets that have historically been dominated by
imported products places us in a strong position to benefit from the import substitution trend in
China.
In addition, we cooperate with renowned hospitals in China on joint R&D projects, from which
we obtain first-hand feedback from surgeons on their clinical experience and needs. Through
these initiatives, we have the leverage to develop and refine our products that are tailored for
Chinese surgeons’ and patients’ clinical needs, which gives us a competitive edge over imported
products. For example, as a result of a joint research project between us and seven clinical
experts from renowned hospitals in China, we rolled out our latest A3 Total Knee Replacement
product in 2012. Notably, under our five-year strategic cooperation with Peking University Third
Hospital, which has a reputable spinal practice, Peking University Third Hospital provided
valuable feedback from clinical experience which contributed to our development of our two
3D-printed spine replacement implants. We believe cooperation with reputable hospitals not only
promotes our brand name recognition, but also allows us to leverage on such hospital’s reputation
and recognition among other surgeons and hospitals to endorse our products, in particular those
with practices in the high-end markets, who tend to use imported orthopedic joint implants and are
interested in sourcing high-end domestic orthopedic joint implants in the future.
Moreover, high-end hospitals in China, such as Class III hospitals, are the main customers
of imported orthopedic joint implants. Due to our high product quality, our penetration in Class III
hospitals is higher than our overall penetration. As such, we are well-positioned to benefit from the
import substitution trend.
We have an extensive nationwide distribution network which is supported by a strong sales

and marketing team.
We sell our products mainly through distributors, but also engage in direct sales to hospitals.
We have established a growing nationwide distribution network, covering all the provinces,
municipalities and autonomous regions in China. As of June 30, 2017, we had 650 distributors.
Our extensive distribution network enables us to reach a diverse customer base. The
extensive coverage of the distributors’ sales networks makes our products readily available to end
users nationwide, and allows us to interact with and respond to a wide range of end users’
expectations in a more effective, flexible and timely manner. Our direct sales to hospitals enable
us to establish and maintain direct relationships with surgeons, keeping us close to the frontline
of medical practice and the application of our products. It allows us to collect clinical data and
feedback from surgeons, which helps us design new and improved products, and form new
strategies to adjust to market demands.
We have a dedicated sales and marketing team of 121 members as of the Latest Practicable
Date which manages our distributors and conducts direct sales to end users. 56.2% of the
members of the sales and marketing team have educational backgrounds in clinical medicine,
bio-engineering, pharmacy or other related areas. With their relevant experience and knowledge,
our sales and marketing team can effectively provide professional support and guidance on the
use of our orthopedic implants, creating additional value to our customers, and discuss with them
their feedbacks and relevant clinical data for potential improvements on our products.
— 130 —
OUR BUSINESS
We have an experienced and dedicated management team and our founder and chairman,
Mr. Li, has extensive clinical experience in and insightful knowledge of orthopedic
practices in China.
We have an experienced, dedicated and stable management team, whose abundant industry
knowledge and technical and management expertise have contributed to our successful
development so far. Our management team has a profound understanding of the industry. One of
our founders and the chairman of the Board, Mr. Li, has over 20 years of clinical and orthopedic
industry related experience. His 11 years of experience in the surgical department of a hospital
have helped him develop a high-level perspective and awareness of the industry’s development.
Our executive Director and senior vice president, Ms. Zhang Bin, has over 20 years of experience
in the medical industry. Before joining our Group, Ms. Zhang worked as a physician and CT
diagnosis radiologist. Our executive Director and senior vice president, Mr. Zhang Chaoyang, is
one of our founders and has over 10 years of experience in the orthopedic medical device
industry. Our director of research center, Dr. Wang Caimei, has over 10 years of R&D experience
in orthopedic implants and oversees the management of our research center. Our executive
Director and chief financial officer, Ms. Zhao Xiaohong, has over 10 years of experience in
financial management and analysis, and worked at Ernst & Young for five years before joining us.
She is a qualified Certified Public Accountant and is a member of the Association of International
Accountants. See “Directors and Senior Management”. The average tenure of our senior
management is over five years. Our Chairman, executive Directors, chief engineer and chief
financial officer have been working together at our Group for the last five years. We believe that,
with the extensive experience and profound understanding of the industry, our management team
will help us sustain our growth and achieve greater success in the future.
OUR STRATEGIES

personalized solutions and implant products to surgeons and patients. In particular, we plan to
implement the following strategies:
Further ramp up the application of our personalized 3D ACT solutions in both high-end and
mass markets to further drive the growth of our product sales, broaden our product
portfolio, and enhance customer stickiness.
We plan to further ramp up the application of our personalized 3D ACT solutions to drive the
growth of our product sales and enhance customer stickiness. According to Frost & Sullivan,
personalized orthopedic surgical solutions are becoming a trend in the high-end orthopedic
product market, or surgeries performed by Class III hospitals in major cities. Comparatively, in
mass market targeting hospitals of lower classes or in small cities and rural areas, the introduction
of personalized orthopedic surgical solutions are in an initial stage. In addition, according to the
“Health China 2030” Plan issued by the State Council of the PRC, the government will proactively
promote technological advancements in smart healthcare over the next 15 years. As our 3D ACT
solutions provide solutions tailored for each individual case, we believe ramping up the application
of our 3D ACT solutions to both high-end and mass markets will position us to benefit from this
trend, and in turn drive the growth of our product sales and enhance customer stickiness.
— 131 —
OUR BUSINESS
Our 3D ACT solutions will facilitate surgeons in surgery planning in a more effective and
efficient manner when our database of 3D clinical data covers a broader spectrum of cases. When
we first introduced our 3D ACT solutions, we were selective on the application of 3D ACT solutions
and focusing only on high-end markets, such as reconstruction and revision surgeries to maximize
the value of 3D ACT solutions to customers of our high-end products. This is because we primarily
market our products to high-end market by highlighting their advanced technologies and building
our reputation among influential surgeons and hospitals, which allows us to charge a high
premium, while we compete in mass market by price-performance ratio, charging lower prices
than the counterparts produced by international brands. In 2014, 2015, 2016 and the six months
ended June 30, 2017, 97, 312, 473 and 1,205 surgeries have been performed using our 3D ACT
solutions, respectively. Considering that our 3D ACT solutions have been rolled out for
approximately three years, and that our database has collected 3D clinical data from more than
2,000 surgeries, we intend to ramp up the application of our 3D ACT solutions in both the high-end
and mass markets.
We plan to further ramp up the application mainly through word-of-mouth marketing by

hospitals and surgeons who have used our 3D ACT solutions to other hospitals and surgeons, and
our sales and marketing team. Specifically, we plan to launch marketing campaigns and provide
training programs to surgeons to introduce the innovative features of our 3D ACT solutions and
promote the general awareness of the benefits of personalized orthopedic surgical solutions. We
also intend to work with hospitals and surgeons on publishing case studies on the successful
application of our personalized orthopedic surgical solutions in well-known industrial periodicals.
Capitalizing on the growing underlying 3D clinical data in our database and proprietary
3D-printing technologies, we plan to expand the application of our 3D ACT solutions into other
orthopedic sectors. In the long run, we also plan to further develop value-added services,
including analyzing 3D-imaging data, formulating surgical plans via our PTIP system and
providing 3D-printed models of areas of disease, personalized surgical instruments and 3D-
printed orthopedic implants. This would not only distinguish ourselves from our competitors, but
would also enhance our brand recognition and increase our revenue base.
Expanding the breadth of our product portfolio into newly-captured orthopedic product
market sectors.
We believe there is significant potential for growth in the spinal and other orthopedic product
markets sectors, such as bone tumor, trauma, oral and maxillofacial orthopedic products.
We also believe our extensive experience in hip and knee replacement implants, R&D
capabilities and extensive customer base make us well-positioned to further expand our market
presence in the spine replacement implant market and capture the opportunities in other
orthopedic product market sectors. The technologies involved and the relevant production
procedures for orthopedic joint implants are transferrable to other orthopedic products.
Leveraging our advanced 3D-printing technologies, we expect to capture various opportunities in
the substitution of off-the-shelf products by 3D-printed products in the areas to which our
technologies cater. In particular, with our capability for precision construction, our strategy is to
begin with high-margin and high-growth products with high technology requirement when entering
into a new market.
In addition, the successful integration of our PTIP with our 3D-printing technologies to
develop our 3D ACT solutions set the foundation for the effective development and
commercialized application of our personalized orthopedic products, which we believe would
further improve the offerings we have under our 3D ACT solutions. Personalized spine
replacement implants, bone tumor implants, post-trauma bone defects revision implants, oral and
maxillofacial orthopedic products could bring immense benefits to the surgeons, patients and
hospitals that off-the-shelf products cannot offer. For this reason, we believe we could achieve
similar success within these orthopedic product market sectors without having to overhaul our
business model or production process.
— 132 —
OUR BUSINESS
We have a dedicated team focusing on the development of premium spinal, bone tumor,
post-trauma bone defects, oral and maxillofacial orthopedic products, and have built up our
product pipeline. We aim to launch two additional spine replacement implants for the treatment of,
including but not limited to, post-trauma bone defects and bone tumors by 2020.
Explore strategic acquisition and alliance opportunities.
We actively seek suitable opportunities for strategic acquisitions or alliances in the

orthopedic product market in China and overseas to grow our business, expand our product and
service offerings, strengthen our R&D and strengthen our market position. We believe there are
ample acquisition and alliance opportunities that could complement our existing product portfolio,
technology and business growth. In particular, we plan to target companies that have CFDA
registration certificates or related technologies for products that we do not currently produce but
plan to develop, such as bone tumor, trauma, oral and maxillofacial orthopedic products. We are
also looking for targets offering CFDA-registered off-the-shelf spine products to be used in
conjunction with our 3D-printed spinal interbody cages and artificial vertebral bodies, thus to
achieve synergies. We also take into account the size of potential target in our selection and
believe that targets valued at US$50 million or less best fit our business scale. We will also
consider acquiring or collaborating with other orthopedic implant companies whether in China or
overseas if their growth prospects, product pipeline and profitability are sufficiently attractive. As
of the Latest Practicable Date, we had considered several potential targets in Europe but
discussions remain preliminary and we had not entered into any agreements or understanding,
whether formal or informal, to acquire any potential target or entered into any strategic alliance
with other parties.
OUR PRODUCT PORTFOLIO AND SERVICES
We design, develop, produce and market orthopedic implants and related products, with a
focus on hip and knee replacement implants. In addition, we developed and rolled out our spinal
interbody cages and artificial vertebral bodies in 2016. We also market and distribute orthopedic
products produced by third parties where those third-party products complement our product
offerings to our customers. The following table sets forth a breakdown of our revenue by product
type for the periods indicated:

2014 2015 2016 2016 2017
(unaudited)
Knee replacement implants . . . . 45,566 30.7% 60,567 29.4% 83,008 30.7% 35,418 30.7% 47,417 29.2%
Hip replacement implants(1) . . . . 92,734 62.5 132,692 64.4 158,871 58.7 69,062 59.9 94,594 58.2
3D-printed products(2) . . . . . . . – – 1,060 0.5 12,131 4.4 3,004 2.6 9,777 6.0
Third party orthopedic products . . . 9,013 6.1 9,148 4.4 10,785 4.0 5,292 4.6 6,893 4.2
Others(3) . . . . . . . . . . . . . 965 0.7 2,697 1.3 5,982 2.2 2,571 2.2 3,836 2.4
Total . . . . . . . . . . . . . . . 148,278 100.0% 206,164 100.0% 270,777 100.0% 115,347 100.0% 162,517 100.0%
(2) Including our 3D-printed hip replacement implants, spinal interbody cages and artificial vertebral bodies.
(3) Others include primarily surgical instruments and medical irrigators.
— 133 —
OUR BUSINESS
3D-Printed Products
We believe 3D-printing technologies will redefine orthopedic implants and surgeries. By

applying 3D-printing technologies, we can produce complicated orthopedic implants.
3D-printing is a precise production technology that can produce orthopedic implants that
match the complexity of natural joints, allowing for better biological fusion of bones and
prosthesis, which is particularly suitable for patients who are physically active. For example, an
orthopedic implant with trabecular structure is generally considered to have better biological
fixation compared to an orthopedic implant without trabecular structure. This is due to the high
porosity of trabecular structure which allows for easy bone ingrowth around and with the porous
surfaces. 3D-printing technologies can increase porosity by controlling the structure and surface
of an orthopedic implant to an extent that traditional production methods cannot. We employ the
latest electron beam melting method in our 3D-printing production process.
Both our off-the-shelf products and 3D-printed products are regulated by the CFDA and are
subject to similar requirements for obtaining CFDA approval. We currently have three types of
CFDA-approved 3D-printed products, including 3D-printed hip replacement implants, 3D-printed
spinal interbody cages and 3D-printed artificial vertebral bodies, being the first and only
3D-printed orthopedic implants approved by the CDFA as of the Latest Practicable Date. In August
2015, our 3D-printed hip replacement implant was approved by the CFDA. It is used with highly
crosslinked polyethylene liner, ceramic head and biologically fixed femoral stem to form an
integrated prosthetic hip system. We launched our first spine replacement implant in August 2016.
Our spine replacement implants include spinal interbody cages and artificial vertebral bodies, both
of which are 3D-printed products with similar elasticity modulus as cancellous bone providing
biocompatibility and primary stability. Our spine replacement implants are primarily used for
treatment of spinal tumors, spinal tuberculosis, degenerative spinal diseases and trauma.
In addition, we have 3D-printed surgical instruments that are used in conjunction with our
implant products in surgeries as an integral part of our personalized 3D ACT solutions. The
following graphics illustrate our 3D-printed products and 3D-printed surgical instruments.
3D-printed hip replacement implants 3D-printed surgical instruments
Acetabular cup
Cutting block
Augment
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3D-printed spine replacement implants
Spinal interbody cages
Artificial vertebral bodies
3D-printing is a computer-controlled production process, which forms an object with

successive layering of materials in accordance with a 3D model or other electronic data source.
Therefore, 3D-printing could create objects of almost any shape and can match a patient’s unique
anatomy. Our current 3D-printed products are not produced based on specific individual patient’s
anatomy. Similar to our off-the-shelf and 3D-printed products, personalized 3D-printed implants
are subject to CFDA approval and similar requirements thereunder. We are still awaiting CFDA
approval for our personalized implants and accordingly, we have not yet produced or marketed on
a commercial basis, personalized 3D-printed implants.
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Off-the-Shelf Products
Hip Replacement Implants
We offer a comprehensive range of off-the-shelf hip replacement implants. They are total hip
systems which replace both the head of the femur and the socket portion of the pelvis
(acetabulum) of natural hips. Our hip replacement implants are primarily used for treatment of
osteoarthritis, rheumatoid arthritis and other diseases. Our off-the-shelf hip replacement implants
cover primary surgeries and revision surgery implants. Different parts of hip replacement implants
are combined as a hip replacement implants system. The following graphics illustrate an example
of hip replacement implants system for primary and revision surgeries, respectively.
Primary surgery
Acetabular cup
Liner
Femoral head
Femoral stem
Revision surgery
Acetabular cup
Liner
Femoral head
Femoral stem
Our off-the-shelf hip replacement implants primarily include: MP biological femoral stem, ML
biological femoral stem, ACP cemented femoral stem, SR biological femoral stem, MR biological
femoral stem, SL biological femoral stem, CL biological femoral stem, acetabular prosthesis,
metal femoral head, ceramic head, bipolar hip rebuild system-cup form and hip rebuild
system-ring form.
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Knee Replacement Implants
We have over 13 years of experience in designing and developing our own knee replacement
implants for primary surgeries, revision surgeries and complicated cases. Our knee replacement
implants for primary surgeries are total knee systems that generally include a femoral condylar,
a patella, a tibial insert and a tibial tray. Our knee replacement implants for revision surgeries
generally include femoral condylar, a tibial insert, a tibial tray and certain extension stems. They
are primarily used for treatment of osteoarthritis, rheumatoid arthritis and other diseases. The
following graphics illustrate an example of knee replacement implants system for primary and
revision surgeries, respectively.
Primary surgery
Femoral condylar
Tibial insert
Tibial tray
Revision surgery
Extension stem
Femoral condylar
Tibial insert
Tibial tray
Extension stem
Our knee replacement implants primarily include: A3 Total Knee Replacement, JPX Total
Knee Replacement, ACCK Revision Total Knee Replacement, and A3 GT Total Knee
Replacement.
3D ACT Solutions
We developed and introduced our innovative personalized 3D ACT solutions in July 2014. In
traditional clinical practice, surgeons rely on very limited information obtained from medical
imaging technology and choose the size and shape of the orthopedic implants from a limited
selection of off-the-shelf products during the surgical process. During surgeries, surgeons rely on
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their experience to cut, remove and fix bones, tissues and cartilage to fit the patients’ unique
anatomy to the implants, rather than modeling the implants to fit the patients. Our 3D ACT
solutions integrate our PTIP with our technologies to produce 3D-printed and/or off-the-shelf
surgical instruments and implant products, which provides surgeons the appropriate solutions in
surgery planning and execution. With the support of our large and growing database of 3D clinical
data, our 3D ACT solutions can map out patients’ unique anatomy using 3D-imaging and
3D-modeling technologies, print models of the affected bone areas using 3D-printing machines,
transfer data to surgeons’ computers, help surgeons and patients to choose the most suitable
orthopedic implants, design precise surgical plans and generate surgical simulations. After the
surgical plan is finalized, we will provide the 3D-models of the patient’s affected bone area,
produce personalized surgical instruments, such as surgical guides, and 3D-models of the joint
implants to be used for the surgery, all with our 3D-printing machines, allowing surgeons to
practice before the actual surgeries take place. Our 3D ACT solutions are well-received by the
medical community. Hospitals participating in the system increased from 36 in 2014 to 258 in the
six months ended June 30, 2017. Of the 258 hospitals, 165 were Class III hospitals, covering 26
provinces, municipalities and autonomous regions in China.
PTIP
Our PTIP primarily consists of software platforms featuring in image processing and
transmission and instant messaging applications that facilitate the communication between
surgeons and our technicians, integrated with our clinical database and data analysis software.
Currently, our PTIP is provided as a complimentary service as a part of our personalized 3D ACT
solutions, and we do not have a plan to charge extra fee for the usage of our PTIP itself in the near
future. Our technicians first analyze data collected from CT or MRI scanning using specialized
software, and construct 3D images and 3D models to provide surgeons with detailed information
through virtual simulation and physical modeling for individual patients. The following diagram
illustrates the principal stages of our PTIP:
Surgeon activities Interactions Technician activities
CT or MRI Analyze data using specialized

scan of area of disease 3D reverse imaging software
Analyze data and images
Prepare 3D virtual
image/model
Multiple interactions
and discussions to
simulate the surgery and
refine the surgical plan
Personalized surgical plans
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• 3D-imaging and 3D-modeling: The use of our 3D ACT solutions starts when the surgeon
orders a standard CT or MRI scan of the patient’s area of disease and transmits the
images through our PTIP platform to our technicians. Using specialized computer
software, our technicians analyze these images with the surgeon and generate a 3D
virtual simulation to map the articular surfaces of the joint and construct the imaging
data into a 3D model of the joint, presenting the surgeon with a virtual representation
of the patient’s area of disease. The illustrations below provide an example of
converting scanned image to a 3D image through our PTIP.
Scanned image 3D imaging and modeling
• Printing a model: To facilitate the surgeon’s study of the area of disease and his
communication with the patient, we may produce a model of the patient’s area of
disease as desirable based on the 3D model we generated using our 3D-printing
machines. The following picture provides an example, which is a 3D-printed model of a
patient’s defective knee.
• Formulating a personal surgical plan and surgical simulations: In our database of 3D

clinical data, surgeons and our technicians can search similar precedent cases, discuss
the surgical plan, including the exact surgical steps to be taken and the specifications
and measurements of the personalized surgical instruments, such as surgical guides,
that will be used in the surgery and run surgical simulations. As the surgeries have been
well-simulated and formulated through our PTIP, the surgeons can more easily and
more quickly complete the actual surgical procedures. This is partially because the
model and size of the surgical instruments and implants can be accurately determined
prior to the surgery, as opposed to the conventional procedure where they are
determined during the surgery. Furthermore, the 3D images, 3D models and other
clinical data available in our database enable the surgeons and technicians to leverage
experience from past cases recorded in the database. The following picture illustrates
the simulation of a hip replacement implant surgery.
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3D model of pelvis
Acetabular cup
Distribution of Third Parties’ Orthopedic Products
As a complement to our product portfolio, during the Track Record Period, we also sold and
distributed in China third-party orthopedic products, including hip replacement implant, bone
cement and rotating platforms for knee replacement implants. Bone cement and rotating platform
products are frequently used by our customers together with our own products. By entering into
these arrangements with the relevant third parties, we are able to provide our customers with more
comprehensive product offerings. In 2014, 2015, 2016 and the six months ended June 30, 2016
and 2017, our revenue from distributing third party orthopedic products were RMB9.0 million,
RMB9.1 million, RMB10.8 million, RMB5.3 million and RMB6.9 million, respectively, representing
6.1%, 4.4%, 4.0%, 4.6% and 4.2% of our revenue, respectively.
PRODUCT PIPELINE
As of the Latest Practicable Date, we had four products, including two hip replacement
implants, one knee replacement implant and one spine replacement implant, in the post-clinical
trial stage, one 3D-printed knee replacement implant in the clinical trial stage and one 3D-printed
spine replacement implant pending pre-clinical trial approval. From 2018 to 2020, we plan to
launch six new products, including our 3D-printed knee replacement implants. The following table
sets forth certain information about these products:
Expected
Product name Application Current status Feature launch date
Hip Prosthesis- Suitable for hip Trial Mental acetabula with First quarter
Biological Acetabular replacements for the completed; coating sintering of 2018
System . . . . . . . . . . . treatment of (1) ready to file titanium beads
noninflammatory application for
degenerative joint CFDA Combinations of cup
diseases, including registration and liners providing
osteoarthritis and various interface
avascular necrosis;
(2) rheumatoid
arthritis; (3) functional
deformity correction;
(4) nonunion of
proximal femur
(including femoral
head); (5) femoral
neck fracture and (6)
femoral
intertrochanteric
fractures
AK Combined Suitable for primary Application for Modular rotating Fourth quarter
Replacement System . and revision CFDA hinge knee prosthesis 2018
surgeries for registration
treatment of bone filed; in
defects of knee joints process of
resulting from bone providing
tumors or other supplemental
causes materials
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Expected
Product name Application Current status Feature launch date
Vertebral Plate Suitable for Application for Made of pure titanium Fourth quarter
Fixation Plate . . . . . . laminoplasty for the CFDA material with filling 2018
treatment of spinal registration blocks of electron
stenosis caused by filed; pending beam melting
ossification of approval production additions
posterior longitudinal
ligament or
developmental spinal
stenosis, among
others
Hip Prosthesis- Suitable for hip Trial Coating sintering of First quarter
Biological Femoral replacements for the completed; titanium beads 2019
Stem . . . . . . . . . . . . treatment of (1) ready to file
noninflammatory application for Mini design to
degenerative joint CFDA preserve relatively
diseases, including registration large amount of bone
osteoarthritis and mass
avascular necrosis;
(2) rheumatoid
arthritis; (3) functional
deformity correction;
(4) nonunion of
proximal femur
(including femoral
head); (5) femoral
neck fracture and (6)
femoral
intertrochanteric
fractures
TMK Knee Prosthesis. Suitable for (1) Clinical trial 3D-printed 2019
sophisticated primary
surgeries and (2)
revision surgeries for
treatment of severe
bone defects of knee
joints
Self-Stabilizing Plate for bone Pending pre- 3D-printed 2020

Artificial Vertebral ingrowth suitable for clinical trial Self-locking
Body . . . . . . . . . . . . treatment of (1) bone approval Reduced need for
tumors; (2) fractures; bone, tissue and
(3) biomechanical cartilage removal
integrity restoration
after resection of
vertebra or vertebral
bodies; (4) loss of
vertebral heights
resulting from
damages to vertebral
bodies; (5)
pseudoarthrosis and
(6) previous fusion
failures
Similar to our off-the-shelf and 3D-printed products, personalized 3D-printed implants are
subject to CFDA approval and similar requirements thereunder. However, as of the Latest
Practicable Date, the CFDA has not approved any personalized orthopedic implants and we are
unable to predict when our personalized 3D-printed implants will obtain CFDA approval in China.
Accordingly, we do not have any visibility on when we will be able to commercialize the production
and sale of personalized 3D-printed implants.
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RESEARCH AND DEVELOPMENT
We believe our success is largely attributable to our strong R&D capabilities and our
continued commitment to R&D efforts. These efforts have contributed to our ability to continuously
develop and bring to market new products and have played a key role in our rapid growth. We
actively work on developing new products and production technologies and upgrading existing
products and services. In 2014, 2015, 2016 and the six months ended June 30, 2016 and 2017,
our R&D expenses were RMB15.5 million, RMB18.9 million, RMB20.4 million, RMB8.3 million and
RMB17.9 million, respectively, representing 10.5%, 9.2%, 7.5%, 7.2% and 11.0% of our revenue,
respectively.
We had an internal R&D team consisting of 42 members as of the Latest Practicable Date.
As of the Latest Practicable Date, average work experience of our internal R&D team members
with us was 4.6 years. Over 85.7% of our internal R&D team members had educational
backgrounds in related areas such as mechanical engineering, healthcare and medicine,
mechanics and material science, 76.2% had undergraduate or higher educational backgrounds
and 42.9% had graduate or higher educational backgrounds as of the Latest Practicable Date.
Furthermore, ten out of 42 members of our internal R&D team have engineer qualifications and
two have mechanic qualification. In addition, our chief engineer has over seven years’ experience
in the application of 3D-printing technologies to orthopedic products. Our director of research
center has over 10 years of R&D experience in orthopedic implants.
We are committed to recruiting new talent to join our R&D team. We attend campus
recruitment events on a regular basis to recruit qualified outstanding graduates. We also seek to
hire R&D personnel with experience in the relevant fields. We attract new R&D talent by offering
competitive compensation packages, career development opportunities and trainings designed to
enhance their skills and technical knowledge.
In January 2017, we entered into a five-year framework agreement (the “Framework

Agreement”) with Peking University Third Hospital regarding our strategic cooperation in the
research and application of orthopedic products. The cooperation aims at facilitating the utilization
of the products and patents resulting from previous joint research projects and supporting the
on-going joint research projects relating to 3D-printed orthopedic implants. Pursuant to the
Framework Agreement, we committed to invest RMB10 million in the five-year period from 2017
to 2021 to (i) set up a special fund for the theoretic and clinical research of the medical application
of 3D-printing technology; (ii) facilitate the utilization of the products and patents resulting from
previous joint research projects; and (iii) support the ongoing joint research projects related to
3D-printed orthopedic implants. We will be the sole proprietor of any CFDA-approved products
(including the registration certificates and relevant revenue) attributed to the above joint research
projects.
As of the Latest Practicable Date, our R&D activities had yielded 36 invention patents, 140
utility patents and two patents under the PCT. We also had 134 pending invention patents, 77
pending utility patents and six pending patent applications filed under the PCT. We had obtained
26 CFDA registration certificates for Class III medical devices. We also have eight on-going
applications for registration approval by CFDA or its local counterpart.
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R&D Model
We are broadening our offerings in each of our product categories and exploring new
technologies with possible applications in multiple areas. We carefully select the direction of our
R&D efforts and potential new products based on the following:
• Industry conferences: We regularly attend international conferences on the orthopedic

product market and orthopedic medical practices to stay abreast of industry trends. This
puts us at the forefront of recent developments in the relevant fields and allows us to
adjust our R&D strategies in accordance with industry trends.
• Feedback from surgeons: We also actively collect feedback and data from surgeons at
our hospital customers and look for ways to potentially improve the functionalities of our
products. We believe this is an effective way to quickly respond to the changing
demands of our end customers. Leveraging our large sales volume, extensive hospital
coverage and a track record that spans over 13 years, we have established a database
that has extensive data on Chinese patients based on feedback and data collected from
surgeons, including those derived from pre-surgery planning, surgeries and post-ops
monitoring.
• Our own experience: With our long and successful track record in the orthopedic
implant market, we have accumulated extensive experience and technical know-how
relevant to our business. Our senior management and R&D team members are industry
experts and have a solid grasp on industry trends based on which they design our R&D
strategies.
R&D Approach and Process
To maximize the effectiveness of our R&D efforts, we adopt different approaches for
designing and developing different products. For self-conducted R&D, our R&D process includes:
• Initial design: At the initial stage of our development of a brand new product, we focus
on utilizing our experiences and technical know-how from similar products to form the
basic design and functionalities of the new products. The key at this stage of
development is to design and develop a prototype for clinical trial and for registration
with CFDA and government authorities in overseas markets.
• Product Enhancement: Once we have designed a product prototype and have obtained
governmental approval for production and sale, we focus on improving the
functionalities of the product. These product enhancement activities are often carried
out throughout the life of such product. At this stage, we rely heavily on the joint efforts
between our R&D team and external experts including surgeons at our hospital
customers and industry experts in the following areas:
• Data collection: Surgeons have first-hand experience using our products on

patients and are our direct and primary source for collecting clinical data. Our
sales and marketing team is responsible for liaising with surgeons for data
collection from surgeries and post-ops monitoring, which our R&D team will
carefully study for potential areas of improvement.
• Discussion with surgeons: To fully understand their surgical demands, our sales
and marketing team conducts periodic discussions with surgeons at our hospital
customers and seek their feedback on our products and potential areas of
improvement. They relay this information to our R&D team to improve and upgrade
our products.
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• Consulting industry experts: We have established a network of 15 external

industry experts, who we regularly consult for product development. They provide
us with valuable advice on industry trends and how we could develop and improve
our products to meet changing market demands.
The diagram below illustrates the process for our self-conducted R&D:
Initial design
Verification test
Shape and model test
Prototype
(1)
Product
design stage
Clinical trial
CFDA approval
Product
Data collected from enhancement
Feedback from surgeons Industry experts’ input
surgeons
Improve and upgrade
(1) Clinical trial is required for product enhancement if there is any material modification to the product.
To supplement our self-conducted R&D, we strategically select certain fields that we believe
represent the future of the orthopedic product market and have significant growth potential for joint
R&D with academic and clinical institutions. These joint R&D activities often involve fundamental
and significant changes to our existing products. We enter into cooperation agreements with our
research partners typically for a term of one to five years. Under the terms of the cooperation
agreements, we are primarily responsible for the funding of the research, overall planning and
management and provision of materials, equipment and facilities, and our research partners are
primarily responsible for conducting R&D in accordance with our specifications. The relevant
cooperation agreements generally set forth the ownership allocation of intellectual property
created from the cooperation. For the most significant joint R&D cooperations we have entered
into, such as those with respect to 3D-printed hip replacement implants and the software for the
PTIP, we were entitled under the relevant cooperation agreements to own the relevant intellectual
property rights. Under the relevant cooperation agreements with our research partners, we are not
required to share with our research partners the profits earned by us as a result of the research
results with our research partners.
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PRODUCTION
Production Process
The following diagram illustrates the production process for our major products:
Metal parts
Surface
Shaping Flaw detecting
treatment
Inspect and
prepare metal, Assemble metal
Labeling and Radiation
alloy and and Cleaning and Warehousing
Polyethylene engraving serial sterilization
polyethylene polyethylene packaging
numbers
materials parts
Shaping
• Shaping: Using precision lathing, milling and machining to shape the parts
• Flaw detecting: Using fluorescent flaw detectors to detect microcracks
• Surface treatment: Using sandblasting, hydroxyapatite coating or microporous to treat

the surface
3D-Printed Products
Design and Inspect and

produce prepare metal, Data and Machine Cleaning and Radiation
products with alloy and equipment 3D-printing processing of Warehousing
packaging sterilization
3D ACT polyethylene preparation parts
solutions materials
• Data and equipment preparation: Preparing and inputting the 3D-modeling data into the
3D-printing machine
• 3D-printing: Using the latest electron beam melting method to produce 3D-printed
products in one piece and form trabecular structure, if necessary
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Production Facilities
Our production facilities are located in Beijing, China. Our production facilities occupy a total
gross floor area of 5,321 sq. m. We design, develop and produce all our surgical instruments and
orthopedic implants in-house in our production facilities, other than certain production procedures
for certain products, such as surgical instruments which we outsource to third parties. The
following table sets forth our production capacity, production volume and utilization rate of our
off-the-shelf products for the periods indicated:
Knee Hip
Replacement Replacement
Implants Implants (5) Total
(1)(2)
Year ended December 31, 2014 . . . . Production capacity 7,800 56,000 63,800
Production volume (1) 8,783 31,785 40,568
Utilization rate (3) 112.6% (4) 56.8% 63.6%
Year ended December 31, 2015 . . . . Production capacity (1)(2) 21,000 58,000 79,000
Production volume(1) 13,340 48,293 61,633
Utilization rate(3) 63.5% 83.3% 78.0%
Year ended December 31, 2016 . . . . Production capacity (1)(2) 28,000 74,000 102,000
Six months ended June 30, 2017 . . . Production capacity (1)(2) 14,000 37,000 51,000
(1) As our standard off-the-shelf orthopedic implant products are produced in the form of components, which are
subsequently assembled by the hospitals, the production capacity and production volume are based on those of the
core components of the off-the-shelf implant products. The core component for off-the-shelf hip and knee
replacement implants are femoral stems and femoral condyle, respectively.
(2) The production capacity for off-the-shelf hip replacement implants is calculated based on production for 16 hours
a day, being the standard operating hours for equipment used for producing off-the-shelf hip replacement implants,
and 250 working days per year, or 125 working days per six months, respectively. For knee replacement implants,
before 2015, certain key production processes for femoral condyle were not automated, and therefore the
production capacity for knee replacement implants for 2014 was calculated based on production for eight hours a
day, being the standard working hours of our workers, and 250 working days a year. We acquired certain equipment
in 2015 and automated part of these production processes. Therefore, the production capacity for knee replacement
implants for 2015, 2016 and the six months ended June 30, 2017 was calculated based on production for eight hours
a day for workers and 16 hours a day, being the standard operating hours for equipment used for producing knee
replacement implants, for equipment and 250 working days per year, or 125 working days per six months,
respectively.
(3) Representing the percentage of the production volume to production capacity during the period.
(4) The utilization rate for knee replacement implants in 2014 exceeded 100.0% due to increasing market demand
which resulted in our production workers working overtime from time to time.
(5) The calculation does not include production capacity for 3D-printed hip replacement implants.
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The following table set forth our production capacity, production volume and utilization rate
of our 3D-printed products for the period indicated:
Hip replacement
implant (3)
Year ended December 31, 2015 . . . . . . . . . . . . Production capacity(1)(2) 3,000
Production volume 1,363
Utilization rate 45.4%
Year ended December 31, 2016 . . . . . . . . . . . . Production capacity(1)(2) 6,000

Six months ended June 30, 2017 . . . . . . . . . . . Production capacity (1)(2) 4,500
(1) The production capacity for 3D-printed hip replacement implants is calculated based on production for 21
days per month. In 2015, 2016 and the six months ended June 30, 2017, one, two and three 3D-printing
machine(s), respectively, were used to produce our 3D-printed hip replacement implants.
(2) Representing the percentage of the production volume to production capacity during the period.
(3) The calculation does not include production capacity for our 3D-printed spine replacement implants, the
production volume of which was small during the Track Record Period.
The production capacity for our off-the-shelf hip replacement implants was stable in 2014
and 2015, and increased from 58,000 sets in 2015 to 74,000 sets in 2016 and 37,000 sets in the
six months ended June 30, 2017, primarily because in 2016 (i) we had 14 digital controlled lathes
compared to 13 in 2015 and (ii) we purchased raw materials with higher quality, outsourced the
production of certain products to overseas contractors and optimized our production procedures,
which improved our production efficiency. Driven by an increase in our sales volume, the
utilization rate for our off-the-shelf hip replacement implants increased from 56.8% in 2014 to
83.3% in 2015, and further increased to 87.1% in 2016. Such rate decreased to 80.1% in the six
months ended June 30, 2017, because we reduced the production of products of lower value to
upgrade our product portfolio. The production capacity for our knee replacement implants
increased significantly in 2015 when we automated certain production processes and installed two
five-axis grinding machines to produce femoral condyle. As a result, the utilization rate for our
knee replacement implants decreased from 112.6% in 2014 to 63.5% in 2015. The production
capacity for our knee replacement implants increased from 21,000 sets in 2015 to 28,000 sets in
2016 and 14,000 sets in the six months ended June 30, 2017 because (i) we employed two
additional workers in 2016 and (ii) the two five-axis grinding machines operated more efficiently
after adjustment and testing for production in 2015, and the utilization rate for our knee
replacement implants increased to 73.7% in 2016 and 77.6% in the six months ended June 30,
2017 as a result of an increase in our sales volume. As we expect the demand for our products
to continue to increase, we acquired a parcel of land in Changzhou, Jiangsu Province, China to
construct the Changzhou Facilities to expand our production capacity. See “—Changzhou
Facilities”.
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Our production plants are equipped with machines owned by us, including 3D-printing
machinery for producing personalized surgical instruments, computerized numerical controlled
machine tools, surface processing equipment and other equipment for each stage of our
production process. To our Directors’ best knowledge, the life span of our production machines
and equipment is around 10 years. We procure machines and equipment from time to time as
required, and as of the Latest Practicable Date, most of our major machines and equipment have
been in operation for less than 10 years. Based on our regular inspection and maintenance, our
machines and equipment are in good condition. We did not experience any material or prolonged
interruptions to our production process due to machinery or equipment failure during the Track
Record Period.
Changzhou Facilities
In order to grow our business, we are in the process of expanding our production capacity
by constructing the Changzhou Facilities, which will be located in the Changzhou Xitaihu Industry
Park, Changzhou, Jiangsu Province, China. The Changzhou Facilities is expected to occupy a
total gross floor area of 42,666 sq. m upon completion. We plan to produce all of our off-the-shelf
products including orthopedic implants and surgical instruments at the Changzhou Facilities. After
we relocate the production of all of our off-the-shelf products to the Changzhou Facilities, we plan
to dedicate our existing production facilities in Beijing to the R&D and production of 3D-printed
products. We decided to use the Changzhou Facilities to produce off-the-shelf products and have
the production facilities in Beijing to focus on 3D-printed products primarily because (1) our R&D
resources for 3D-printed products, including experts from renowned hospitals and our internal
R&D staff, are all located in Beijing and are unlikely to be relocated to Changzhou; and (2) the
space required to manufacture 3D-printed products is much less compared to that for off-the-shelf
products, the production of which relies on economy of scale, and the Changzhou Facilities would
be designed to optimize the production efficiency to achieve economy of scale. We expect that
part of the Changzhou Facilities will have the necessary equipment installed and be ready for
production by the second half of 2018.
We entered into an agreement and a supplemental agreement with Changzhou Xitaihu

Industry Park Management Committee (常州西太湖科技產業園管理委員會) (the “Changzhou
Industry Park Committee”) in October 2015, along with a supplemental agreement entered into
in December 2016, with respect to our investments in the Changzhou Facilities. Under the
agreements, we committed to invest US$39.6 million worth of fixed asset investments and working
capital injections. Working capital includes mainly expenses payable to constructors, laborers and
other service providers in relation to the construction of the Changzhou Facilities. The Changzhou
Industry Park Committee has agreed to transfer to us a parcel of land with a gross floor area of
approximately 42,666 sq. m for no more than RMB22.4 million, after fulfilling all regulatory
requirements.
We incurred capital expenditure of RMB5.6 million in total for the Changzhou Facilities, being
the additions of property, plant and equipment of AK Medical Changzhou, in 2016. It is expected
that we will incur capital expenditure of RMB38.7 million in total for the same purpose in 2017. We
plan to construct the Changzhou Facilities in two phases. The first phase of construction of the
Changzhou Facilities is expected to be completed by the first half of 2018 and the capital
expenditure relating to such construction is expected to be RMB65.0 million. The second phase
of construction of the Changzhou Facilities is expected to be completed by 2020 or later and the
capital expenditure relating to such construction is expected to be RMB26.6 million. It is also
expected that we would incur expenditures of RMB46.7 million on procurement of equipment to be
used in the Changzhou Facilities, with expenditures of RMB3.5 million incurred in 2016 on the
additions of plant and machinery of AK Medical Changzhou. Our working capital injection in
relation to the construction of the Changzhou Facilities, being the net cash used in operating
activities of AK Medical Changzhou, was RMB1.9 million in 2016, and is expected to be RMB10.7
million, RMB19.2 million, RMB34.1 million, RMB22.9 million and RMB12.8 million in 2017, 2018,
2019, 2020 and 2021, respectively.
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OUR BUSINESS
A part of the Changzhou Facilities is in the preparatory stage for construction. We are in the
process of applying for the necessary and relevant approvals, permits and licenses in order to
commence expansion. We do not expect any legal impediments to obtaining the relevant
approvals and licenses for the acquisition of the relevant parcel of land and the Changzhou
Facilities.
We decided to construct the new facilities in Changzhou mainly because (1) the cost of land
is much cheaper in Changzhou than in Beijing, (2) the Changzhou local government offered
governmental support, including the provision of rent-free facilities to facilitate the preparation of
our future operations in the Changzhou Facilities for a three-year term, and (3) the Changzhou
Xitaihu Industry Park has a developed healthcare and medical device industry supply chain for
off-the-shelf products, which can give us easy access to suppliers such as providers of molds and
coating used in the production process of our off-the-shelf products and manufacturers of surgical
instruments to be used in conjunction with our off-the-shelf products. For details of the rent-free
lease in Changzhou, see “—Property—Leased Property—Habatun Village Property”.
Our existing production facilities have an annual production capacity of 102,000 sets of
off-the-shelf orthopedic joint implants in 2016. We expect that the Changzhou Facilities will reach
a designed capacity of 150,000 sets of off-the-shelf orthopedic joint implants by 2021. We expect
to reach this increased capacity gradually over time between the second half of 2018 and 2021.
We currently expect the Changzhou Facilities to reach a production capacity of 22,500 sets of
off-the-shelf orthopedic joint implants by the end of 2018. We determine our planned annual
capacity based on the rapid growth of the orthopedic joint implant market in China and the
historical growth of our sales and production volume.
According to Frost & Sullivan, the orthopedic joint implant market is a rapidly growing
industry in China, growing at a CAGR of 13.9% in terms of revenue between 2012 and 2016. This
growth has been driven mainly by China’s growing number of patients, greater access to
orthopedic joint surgery, improved affordability of orthopedic joint surgery and product innovation,
which are expected to continue to be the main drivers for the growth of this market. See “Industry
Overview—The Orthopedic Joint Implant Market in China”. With the addition of the Changzhou
Facilities, we believe we will be able to satisfy the growing demand from our customers, deepen
our cooperation with customers through the development of new products, and improve our ability
to attract and work with new customers. Revenue generated from sales of our off-the-shelf
orthopedic joint implants, consisting of hip replacement implants and knee replacement implants,
increased significantly from RMB138.3 million in 2014 to RMB241.9 million in 2016, representing
a CAGR of 32.3%, which outpaced the growth of the overall orthopedic joint implant market in
China. This was primarily because (1) we are a leading orthopedic joint implant company in China,
and our brand name is widely recognized and trusted in the orthopedic joint implant market, (2)
we have been able to regularly introduce to the market new products, enriching our product
offerings and allowing us to penetrate the high-end sectors of the orthopedic implant market, (3)
we have been able to benefit from the import substitution trend supported by favorable Chinese
government policies in recent years and (4) our 3D ACT solutions enhance the user experience
of surgeons and promotes the sales of our products. Based on the above, we believe we are
well-positioned to achieve a higher growth rate than the overall orthopedic joint implant market in
China. From 2014 to 2016, the production volume of our off-the-shelf orthopedic joint implants
increased from 40,568 sets to 85,058 sets, and the utilization rate of our existing production
facilities for off-the-shelf orthopedic joint implants increased from 63.6% to 83.4%,
notwithstanding that our production capacity increased after we automated more production
procedures. The production volume of our 3D-printed hip replacement implant increased from
1,363 pieces in 2015 to 5,407 pieces in 2016, and the utilization rate of our existing production
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OUR BUSINESS
facilities for 3D-printed hip replacement implant increased from 45.4% to 90.1% despite the one
additional 3D-printing machine we allocated to production in 2016. Based on the above, we
estimate that, without taking into account the Changzhou Facilities, our existing production
facilities will not be able to accommodate demand for our products in the foreseeable future. With
the increased production capacity from the Changzhou Facilities, we will be able to further
increase the sales of our orthopedic joint implants by accepting more purchase orders from an
increasing number of customers.
We currently plan to market and distribute the products to be produced in the Changzhou
Facilities through our existing nationwide distribution network. In addition, during the Track
Record Period, our distributors have increased rapidly from 409 at the beginning of 2014 to 650
as of June 30, 2017. With the expected growth of the Chinese orthopedic joint implant market and
our established position as a market leader and brand recognition, we believe we will be able to
further expand our distribution network as our production capacity increases. We will continue to
work with quality suppliers to secure principal raw materials for production in the Changzhou
Facilities, and ensure that all suppliers satisfy our criteria. We also believe that the main raw
materials used for our production can be sourced in the market. We also plan to adopt the same
quality control system, which has proved successful in the past, for our future production in the
Changzhou Facilities. Going forward, we will continue to recruit qualified quality control personnel
to bolster our quality control team in the Changzhou Facilities. We plan to relocate our production
management personnel from our existing production facilities to the Changzhou Facilities since
we believe they are key to our current production processes and would ensure a smooth transition
to, relocation to, and future production in, the Changzhou Facilities. We plan to recruit production
workers locally and draw experience from our current training programs to prepare them for
production.
Based on the above, our Directors are of the view that (1) our expansion plan is feasible, (2)
there is sufficient demand for the products to be produced at our Changzhou Facilities and (3) we
would be able to successfully manage the growth in our production capacity.
Assuming part of the Changzhou Facilities will have the necessary equipment installed and
be ready for production by the second half of 2018, the demand for our products grows as
expected, the gross margin of our major products remains stable and there are otherwise no
unexpected events that have a material adverse effect on our business, we expect that the first
breakeven year for the Changzhou Facilities, being the first year for which revenue would be at
least equal to operating expenses, to be 2019 or 2020, and the payback period for the Changzhou
Facilities, being the period of time required for the aggregate cash inflows from operating activities
to fully cover the aggregate investment cost, to be 2021 or 2022.
As a result of our expansion plan, we expect that our revenue and our gross profit would
increase as our business grows, assuming that we will be able to increase our sales volume. We
also expect that the increase in production capacity and volume with the establishment of the
Changzhou Facilities will have a positive effect on our gross margin in the long term due to
economies of scale. The additional depreciation of property, plant and equipment and amortization
of leasehold land to be incurred in connection with the Changzhou Facilities is expected to have
a negative impact on our profit. Such additional depreciation is expected to be approximately
RMB3.2 million for the first full year of commercial production based on the aggregate capital
expenditure of RMB95.9 million incurred in 2016, 2017 and 2018. Therefore, our Directors are of
the view that our expansion plan in Changzhou would not have any material adverse impact on
our results of operations in the near term.
We expect to finance the capital expenditure in relation to the acquisition of the relevant
parcel of land and the construction of the Changzhou Facilities with the proceeds from the Pre-IPO
Investment and net proceeds to be received from the Global Offering.
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OUR BUSINESS
Production Outsourcing
We currently outsource surface treatment of certain of our newly developed products, such
as femoral stems and acetabular cups, to two contractors located in the United Kingdom and Italy,
respectively. Producing these products in-house would require new production technologies and
additional equipment. We initially outsourced certain procedures because we did not reach the
appropriate production scale for these new products and have maintained relationships with our
contractors ever since. To ensure product quality, we have carefully chosen our contractors. Our
contractors are internationally renowned and are capable of meeting high-quality standard
requirements. We also outsource the production of certain surgical instruments that are ancillary
products to our orthopedic joint implants to five manufacturers in China. These surgical
instruments are Class I medical devices the production of which does not require our core
production know-how. In accordance with the relevant laws, we are liable to our customer for the
obligations of contractors. We conduct regular inspections on the works of the contractor to
ensure they comply with the relevant laws and regulations.
We have entered into two agreements with our contractor in the United Kingdom to perform
surface treatment for our femoral stems and acetabular cups. Under these agreements, the
contractor carries out surface treatment processes in accordance with our specifications, and
purchases, handles and stores the materials for the surface treatment. If the processed products
do not meet our specifications or if there are any defects, we are entitled to notify the contractor
of such defect and require the contractor to refund any payments made relating to the relevant
products or replace the relevant products within 45 working days, at the cost of the contractor. The
contracting fees payable by us are determined based on the model and the actual number of
products processed. The contractor will issue an invoice to us upon delivery of the processed
products and we make payment within 30 days after the date of the invoice. The initial term of one
agreement is five years, and the initial term of the other agreement is 44 months, both of which
are renewed automatically until either party terminates the agreements by giving the other party
not less than six months’ written notice. In 2015, 2016 and the six months ended June 30, 2017,
purchases from our contractor in the United Kingdom were RMB6.1 million, RMB7.3 million and
RMB11.4 million, respectively.
We have entered into an agreement with our contractor in Italy for surface treatment of some
of our work-in-progress, including femoral stems and acetabular cups. Under this agreement, the
contractor performs the coating process in accordance with our specifications on our work-in-
progress. The contracting fees will be determined based on the quantity of products that the
contractor processes for us. In 2015, 2016 and six months ended June 30, 2017, the fee we paid
to our contractor in Italy amounted to RMB0.3 million, RMB1.2 million and nil, respectively. We
make full payment to the contractor upon completion of the coating process.
As of the Latest Practicable Date, we had maintained a business relationship of three years
with both our contractors in the United Kingdom and Italy.
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OUR BUSINESS
CUSTOMERS, SALES AND DISTRIBUTION
Sales Model
During the Track Record Period, most of our revenue was derived from our sales in China.
We also export our products under our brand name “AK Medical” (“愛康”). In 2014, 2015, 2016 and
the six months ended June 30, 2016 and 2017, our revenue from sales in China were RMB148.2
million, RMB203.2 million, RMB259.2 million, RMB112.5 million and RMB159.2 million,
respectively, representing 99.9%, 98.6%, 95.7%, 97.5% and 98.0% of our total revenue,
respectively. Our products are ultimately sold to hospitals for end consumption by their patients.
These hospitals were mostly Class II and Class III hospitals in China during the Track Record
Period. In 2017, more than 3,000 hospitals in China purchased our products, among which, more
than 2,000 were Class II hospitals and more than 1,000 were Class III hospitals. Consistent with
the market practice in China, we sell our products primarily to third party distributors across China,
which in turn resell our products either directly to hospitals in their designated territories with our
authorization or to sub-distributors for ultimate sales to hospitals. The ownership of products is
transferred to distributors when our products are delivered to their premises and each of them has
accepted the goods. We believe that the current distributorship model gives us access to the
distributors’ large existing customer bases around China, which enables our products to be
distributed in a cost-effective manner whilst allowing us to focus more on our core strength of
product development.
We also directly sell a portion of our products to hospitals through our wholly-owned
subsidiary which holds the medical device business certificate. See “Regulation—Permit for
Medical Device Operation Enterprises” for details of criteria and condition to obtain such
certificate. We mainly maintain these direct sales to establish and maintain direct contact with
certain key end hospital customers and surgeons. It keeps us close to the frontline of medical
practice and the application of our products, enabling us to collect clinical data and feedback from
surgeons, which helps us design new and upgraded products, and form new strategies to adjust
to market demands. However, in order to maintain and expand the coverage of our sales network,
we intend to continue to sell our products mainly through third party distributors. The following
diagram illustrates our sales model as of the Latest Practicable Date.
Our Company
Sales through distributors

Direct sales (through
distributor subsidiary)
Distributors
Sub-distributors
Hospitals
Contractual relationships with us
Contractual relationships between third parties
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OUR BUSINESS
We or our distributors need to participate in a public tender process to sell our products to
the hospitals in the relevant region. During the Track Record Period, we generally participated in
those public tender processes that were within the reach of our distribution network. In 2014,
2015, 2016 and the six months ended June 30, 2017, we were successful in 31, 28, 27 and 14 out
of 32, 29, 28 and 14 tenders, respectively, representing a tender success rate of 96.9%, 96.6%,
96.4% and 100%, respectively.
The following table sets forth a breakdown of our revenue by sales channel for the periods
indicated:
Six months ended

2014 2015 2016 2016 2017
(unaudited)
Distributors . . . . . . . . . . . . 138,827 93.6% 195,654 94.9% 256,879 94.9% 110,103 95.5% 156,322 96.2%
Direct sales (through distributor
subsidiary) . . . . . . . . . . . 9,451 6.4 10,510 5.1 13,898 5.1 5,244 4.5 6,195 3.8
Total . . . . . . . . . . . . . . . 148,278 100.0% 206,164 100.0% 270,777 100.0% 115,347 100.0% 162,517 100.0%
The following table sets forth a breakdown of our revenue by geographical regions for the
periods indicated:
Six months ended
2014 2015 2016 2016 2017
(unaudited)
China
North China(1) . . . . . . . . . . 47,094 31.8% 61,039 29.6% 77,432 28.6% 30,747 26.7% 45,561 28.0%
East China(2) . . . . . . . . . . 44,002 29.7 61,633 29.9 67,301 24.9 27,206 23.6 38,240 23.5
South China(3) . . . . . . . . . . 7,053 4.8 10,555 5.1 11,161 4.1 5,666 4.9 11,582 7.1
Central China(4) . . . . . . . . . 30,601 20.6 36,214 17.6 46,086 17.0 25,602 22.2 31,093 19.1
West China(5) . . . . . . . . . . 19,446 13.1 33,779 16.4 57,269 21.1 23,271 20.2 32,755 20.2
Overseas(6) . . . . . . . . . . . 82 0.1 2,944 1.4 11,528 4.3 2,855 2.5 3,286 2.0
Total . . . . . . . . . . . . . . 148,278 100.0% 206,164 100.0% 270,777 100.0% 115,347 100.0% 162,517 100.0%
(1) Including the municipalities of Beijing and Tianjin, the provinces of Liaoning, Jilin, Heilongjiang, Hebei, Shanxi and
the autonomous region of Inner Mongolia.
(2) Including the municipality of Shanghai, the provinces of Shandong, Jiangsu, Anhui, Zhejiang and Fujian.
(3) Including the provinces of Guangdong and Hainan, and the autonomous region of Guangxi.
(4) Including the provinces of Jiangxi, Henan, Hunan and Hubei.
(5) Including the municipality of Chongqing, the provinces of Sichuan, Yunnan, Guizhou, Shaanxi, Gansu and Qinghai,
and the autonomous regions of Xinjiang and Ningxia.
(6) During the Track Record Period, we exported our products to 27 overseas jurisdictions through overseas
distributors, including the United Kingdom, India, Mali, Ecuador, Kenya, the United States, South Korea, Thailand,
Turkey, Indonesia, Pakistan, the United Arab Emirates, Fiji, Chile, Paraguay, Morocco, Singapore, the Philippines,
Mozambique, Burkina Faso, Greece, Hong Kong, Nigeria, Argentina, Brazil, Malaysia and Guatemala. As of June
30, 2017, our overseas distributors covered 15 overseas jurisdictions as we did not export our products to the United
Kingdom, Mali, Ecuador, Kenya, the United States, Thailand, Turkey, Paraguay, Morocco, Mozambique, Burkina
Faso and Hong Kong in the six months ended June 30, 2017.
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OUR BUSINESS
In 2014, 2015, 2016 and the six months ended June 30, 2016 and 2017, our total revenue
derived from our top five customers, which includes four distributors and one direct hospital
customer, were RMB28.5 million, RMB34.3 million, RMB42.3 million, RMB21.5 million and
RMB25.3 million, respectively, representing 19.2%, 16.7%, 15.6%, 18.6% and 15.6% of our
revenue. In 2014, 2015, 2016 and the six months ended June 30, 2016 and 2017, our revenue
derived from our single largest customer were RMB7.2 million, RMB9.2 million, RMB12.4 million,
RMB5.2 million and RMB7.9 million, respectively, representing 4.9%, 4.5%, 4.6%, 4.5% and 4.9%
of our revenue.
To the best knowledge of our Directors, none of our Directors or their associates holding
more than 5% of our issued share capital or the existing Shareholders had any interests in any of
our top five customers during the Track Record Period. During the Track Record Period, we
generally maintained a stable business relationship with our customers and the average length of
our business relationships with our top five customers as of the Latest Practicable Date was
approximately 6.2 years.
Distribution Network
We have an extensive and growing nationwide distribution network. As of June 30, 2017, we
had 650 distributors for our products, covering all of the provinces, municipalities and autonomous
regions in China and 15 overseas jurisdictions. Our distributors are mostly engaged in the
business of distributing medical devices. Our distributors include large-scale distributors of
medical device and pharmaceutical products with wide coverage in terms of hospitals and
geographical regions, which generally engaged various sub-distributors. We also engaged with
certain small and medium-sized distributors who focused on supplying and providing ancillary
services directly to hospitals in their target geographical regions. To our knowledge, our
sub-distributors are generally small and medium-sized distributors active in relatively small local
markets. The following table sets forth the changes in the number of our distributors for the
periods indicated:
Six months
ended
2014 2015 2016 2017
Distributors at the beginning of the period . . . . . 416 553 609 637
Addition of new distributors. . . . . . . . . . . . . . . 147 69 38 19
Termination of distributors . . . . . . . . . . . . . . . (10) (13) (10) (6)
Net increase/(decrease) in distributors . . . . . . . 137 56 28 13
Distributors at the end of the period . . . . . . . . . 553 609 637 650
During the Track Record Period, the increase in the number of our distributors was mainly
driven by (1) the development of our business and our enhanced marketing efforts such as our
launch of new products that target higher-end or higher-margin sectors, attracting new distributors
with a business focus on the distribution of high-end orthopedic products, and our granting of more
favorable commercial terms to potential distributors, (2) the increased and more favorable brand
recognition among hospitals and surgeons and (3) the general growth of the orthopedic joint
implant market in China.
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OUR BUSINESS
We enter into annual distribution agreements with most of our distributors. During the Track
Record Period, we decided not to renew or terminate our relationships with certain distributors
primarily because they (1) were unable to meet our distribution needs in the relevant region, (2)
failed to maintain their qualifications or licenses for distributing our products and/or (3) went out
of operation. We also seek to enter into distribution agreements with new competent distributors
to expand and optimize our distribution network. During the Track Record Period, there were also
distributors that ceased their operations and therefore terminated their business relationship with
us. As a matter of practice, we have allowed certain distributors to return unsold goods when they
terminated their agreements with us.
As of December 31, 2014, 2015 and 2016 and as of June 30, 2017, our distribution network
covered over 1,600, 1,800, 2,000 and 3,000 hospitals in China, respectively. Some of our
distributors engage sub-distributors of their own. We believe our distributors engage sub-
distributors mainly to expand their sales network to hospitals that are not yet covered by their own
sales. In general, we do not enter into direct contractual relationships with sub-distributors.
To the best of our knowledge, most of our distributors and sub-distributors engaged by our
distributors are independent third parties. However, we sold products to distributors owned or
managed by three of our former employees (the “Former Employee Distributors”) during the
Track Record Period. Revenue from the Former Employee Distributors in 2014, 2015, 2016 and
the six months ended June 30, 2017 were RMB5.9 million, RMB12.8 million, RMB21.1 million and
RMB11.3 million, respectively, representing 4.0%, 6.2%, 7.8% and 6.9% of our revenue,
respectively, comprising revenue from Distributor A of RMB0.9 million, RMB7.9 million, RMB8.9
million and RMB5.5 million, respectively, revenue from Distributor B of RMB4.9 million, RMB4.8
million, RMB5.8 million and RMB1.8 million, respectively, and revenue from Distributor C of nil, nil,
RMB6.5 million and RMB4.0 million, respectively, in the corresponding periods. The sales to the
Former Employee Distributor were on commercial terms negotiated on an arm’s length basis and
are in line with the terms with other distributors. During the Track Record Period, we were not
aware of any conflicts of interests with the Former Employee Distributors. We have identified the
Former Employee Distributors in our distributor management system as an internal control
measure to mitigate potential conflict of interests with them in the future. Furthermore, the Former
Employee Distributors are subject to the same internal control measures applicable to other
distributors, including entering into written distribution agreements in our form with a compliance
undertaking and signing a compliance undertaking to us annually if they are among top 20
distributors in the previous year or their purchase amount in the past six months exceeds RMB2
million. See “—Anti-bribery Compliance”. We are not aware of any employees acting as our
distributors within the duration of their employment.
Selection of distributors
Members of our sales and marketing team constantly seek potential new competent and
financially sound distributors. We also regularly meet and select potential distributors at medical
devices exhibitions or academic conferences and based on referrals from our existing distributors
and customers. We evaluate our potential distributors prior to engaging them and will conduct
periodic reviews of them on an on-going basis. We require all of our distributors to demonstrate
that they have obtained all necessary qualifications and licenses to distribute our products within
their designated territories and have the relevant experience in the local market. We also review
their historical financial performance to evaluate their financial condition. We regularly assess our
distributors through physical inspection, assessment of their financial performance and
investigation as to, among other things, non-compliance with laws and regulations. We believe the
above measures are effective to minimize our exposure to any bribery, corrupt practices or other
improper conduct that could harm our reputation and business.
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OUR BUSINESS
Management of distributors
We authorize our distributors to distribute our products only within their designated territories
and only to hospitals with our authorization to avoid cannibalization among themselves. Members
of our sales and marketing team conduct periodic inspections of our distributors to ensure that our
products are distributed by our distributors within the designated territories, monitor the number
of distributors in any given area and keep track of any potential cannibalization or competition
among our distributors.
During the Track Record Period, our sales and marketing team conducted ad hoc onsite
inspections and routinely requested reports on the inventory levels of our distributors. Starting
from 2016, to better monitor the inventories of our distributors, we have required each of our
distributors to provide us with reports on their inventory levels on a monthly basis and cooperate
with us on our inventory checks. Our Directors are of the view that our sales to distributors during
the Track Record Period reflected genuine market demand rather than an accumulation of
inventory in our distribution channel, and that there was effective management and control over
our distributors and their inventory levels. As a result, we have not encountered any difficulties
with our cash flows during the Track Record Period. As of December 31, 2014, 2015 and 2016 and
as of June 30, 2017, we had trade receivables (before deducting allowance for doubtful debts) of
RMB19.9 million, RMB44.7 million, RMB68.8 million and RMB70.5 million, respectively. During the
Track Record Period, our trade receivables increased mainly due to an increase in our revenue
and credit periods granted to more qualified distributors and longer credit periods granted to some
of our other distributors in order to attract competent distributors, allowing us to maintain and
expand our network and enter into new markets. As of November 27, 2017, RMB43.5 million, or
61.7%, of our trade receivables outstanding as of June 30, 2017 had been settled in cash or bank
acceptance bills. In addition, the majority of our distributors have continuously and routinely
placed purchase orders with us throughout the Track Record Period, reflecting their continued
ability to smoothly sell our products to end customers and maintain a healthy inventory level.
Nothing has come to the Sole Sponsor’s attention that the view of our Directors is unreasonable.
Our sales and marketing employees monitor and manage our distributors to make sure they
comply with our distribution agreements, such as selling our products only in the territories
designated therein. If we discover any non-compliance, we inform the relevant distributor and
request the distributor to rectify the non-compliance within a certain period of time. Our
distributors are required to indemnify us for any losses we incur because of such non-compliance.
We are entitled to terminate the distribution agreements if our distributors breach certain
provisions stipulated in the agreements, such as distributing our products outside the designated
territories.
We impose annual sales targets on some of our large distributors. As of December 31, 2014,
2015, 2016 and June 30, 2017, we had 60, 42, 104 and 69 distributors with annual sales target,
respectively. If these distributors exceed their respective sales targets, they are entitled to
non-cash sales rebates from us, which they can use to purchase our products at a discount in the
future. If such distributors do not meet 70.0% of the relevant sales target, we are entitled to adjust
their designated territories. In 2014, 2015, 2016 and the six months ended June 30, 2016 and
2017, non-cash sales rebates were RMB13.2 million, RMB15.5 million, RMB15.4 million, RMB5.8
million and RMB6.6 million, respectively, representing 8.2%, 7.0%, 5.4%, 4.8% and 3.9% of our
revenue (before deducting the non-cash sales rebates), respectively.
We provide training sessions on product knowledge to our distributors. Our sales and
marketing team also assists our distributors with their sales and marketing efforts. We believe this
helps us nurture mutually beneficial long-term relationships with our distributors.
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OUR BUSINESS
We generally do not enter into any contract with the sub-distributors engaged by our
distributors and we mostly rely on our distributors to monitor and control the sales of their
respective sub-distributors. In our distribution agreements, the distributors are required to obtain
our written consent before engaging any sub-distributors and are responsible for supervising and
managing the sub-distributors they engage. During the Track Record Period, some of the
sub-distributors engaged by our distributors may have made sales outside of the relevant
designated territories or to hospitals without our authorization. Starting from 2016, to better
manage our distribution network, we have added a provision to all new and renewed distribution
agreements requiring our distributors to ensure the sub-distributors they engage also comply with
the terms of our distribution agreements, including not to sell our products outside of the territories
we designate for the relevant distributors or to sell our products to unauthorized hospitals.
Domestic distributors
As of June 30, 2017, we had 632 domestic distributors covering all the provinces,
municipalities and autonomous regions in China. In 2014, 2015, 2016 and the six months ended
June 30, 2016 and 2017, our revenue derived from sales to domestic distributors were RMB138.7
respectively, representing 93.6%, 93.5%, 90.6%, 93.0% and 94.2% of our total revenue,
respectively.
During the Track Record Period, we entered into distribution agreements with most of our
domestic distributors, which include the following principal terms with legal binding effect:
• Term: Our distribution agreements are generally for a term of one year and can be
renewed by mutual consent annually.
• Designated distribution territories: Distributors are not allowed to sell our products
outside their designated territories. We are entitled to revoke authorization for the
distributors to sell our products in their designated areas to authorized hospitals if they
sell our products outside of these designated territories.
• Authorization for sale to hospitals: Distributors are only allowed to sell our products to
hospitals authorized by us.
• Non-competition: Distributors are not allowed to distribute products that compete with
our products.
• Compliance: Distributors are responsible for conducting sales in accordance with the
relevant laws and regulations.
• Minimum purchase amounts: We generally do not enter into written distribution

agreements with distributors whose annual sales are less than RMB0.1 million as these
distributors are not active and only order our products on an ad hoc basis.
• Pricing policies: We sell our products to the distributors according to the prices
specified in the distribution agreements, which we may adjust based on market
conditions. Distributors sell our products to the hospitals at the regional “bidding prices”
agreed with the relevant government. If our distributors engage sub-distributors, they
are free to determine the selling price with their sub-distributors.
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OUR BUSINESS
• Sub-distributors: Distributors are allowed to engage sub-distributors after obtaining our

written consent, and the distributors are responsible for supervising and managing
sub-distributors they engage.
• Packages and trademarks: Distributors may only distribute our products in their original
packages bearing their original trademarks.
• After-sale services: We are responsible for providing certain after-sale services,

including providing trainings to the distributors and end customers on our products and
the relevant technologies.
• Reporting of complaints: Distributors are responsible for reporting to us any complaints

from the hospitals within 48 hours and any accident which may be related to our
products within 24 hours, and cooperate with us in any relevant investigations.
• Product recall: In the event of a product recall, the distributors must provide us with the
inventory and sales record and a list of end customers, and return to us any unsold
products.
• Sales record: Distributors are responsible for sending to us all the records of sales and
hospitals’ implant usage.
• Delivery: We are responsible for arranging delivery of products to the locations

designated by our distributors.
• Product return: Our distributors are only entitled to return products if they are defective
or substandard products. See “—Return and Exchange of Products”.
• Sales target, discounts and sales rebates: We set an annual sales target for some large
distributors. If they exceed the relevant sales target within the specified period, they are
entitled to sales rebates from us that they can use to purchase our products at a
discount in the future. If such distributors do not meet the relevant sales target, we are
entitled to replace them with other distributors in their designated territories.
• Payment and credit periods: For some large distributors with whom we have a long-term
relationship, we grant a credit period ranging from one to six months.
• Termination of agreements: We are entitled to terminate a distribution agreement under

certain situations, including when a distributor fails to pay us.
Starting from 2016, to manage our distribution network, we have added a provision to all new
and renewed distribution agreements requiring our distributors to (1) ensure the sub-distributors
they engage also comply with the terms of our distribution agreements and (2) provide a monthly
written report detailing the types and quantities of our products sold to hospitals, inventory levels
and local market conditions. Ever since then, we have enhanced our efforts in managing our
distribution network. Examples of measures taken include (1) requiring our sales and marketing
personnel to visit and check the inventory status of each of the distributors with our products in
stock on a quarterly basis; and (2) collecting inventory reports from each of the distributors for
which our sales volume exceeded RMB1 million in the previous year biannually.
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Overseas distributors
During the Track Record Period, we sold a small portion of our products to overseas markets
through overseas distributors. In 2014, 2015, 2016 and the six months ended June 30, 2016 and
2017, our revenue derived from our overseas distributors were RMB0.1 million, RMB2.9 million,
RMB11.5 million, RMB2.9 million and RMB3.3 million, respectively, representing 0.1%, 1.4%,
4.3%, 2.5% and 2.0% of our total revenue, respectively. During the Track Record Period, our
overseas distributors covered 27 overseas jurisdictions. We enter into one-off sales contracts with
our overseas distributors from time to time which provide for the type of product, quantity and price
and we generally do not enter into long-term distribution agreements with them. The terms of the
sales contracts with our overseas distributors vary depending on different factors, including the
length of our relationship with the distributors, quantity of orders and potential business
opportunities. We usually require overseas distributors to pay deposits to us after entering into
one-off sales contracts and deliver our products after receiving full payment from distributors.
Direct Sales to Hospitals
In addition to the sales to our distributors, we also sell our products directly to hospitals
through our wholly-owned distributor subsidiary. In 2014, 2015, 2016 and the six months ended
June 30, 2016 and 2017, our total direct sales to hospitals were RMB9.5 million, RMB10.5 million,
RMB13.9 million, RMB5.2 million and RMB6.2 million, respectively, representing 6.4%, 5.1%,
5.1%, 4.5% and 3.8% of our revenue, respectively. All our direct hospital customers are
independent third parties. We sell to direct hospital customers at the relevant “bidding prices”,
which are higher than the prices we sell to distributors, and therefore the gross margins for direct
sales to hospitals are higher than sales to distributors. However, we incur much higher selling and
distributing expenses for direct sales, which our distributors would incur when they distribute our
products. In line with market practice, hospitals do not generally enter into framework sales
agreements with us, and instead confirm and settle sales with us based on the number of
orthopedic products used. We typically grant our direct hospital customers a credit period ranging
from three to 12 months. We are responsible for arranging the delivery of products to our hospital
customers. The title of our products passes to such hospitals upon the actual use of them. We are
responsible for any loss, damage or spoilage in transit.
Marketing
We market and sell our products and services primarily through our internal sales and
marketing team and our independent distribution networks. We also cooperate with key opinion
leaders and external industry experts on sales and marketing initiatives through organizing and
attending promotional conferences and seminars. For example, we invite experts to attend
conferences that we organize to promote and discuss our products and relevant surgical
techniques. We have also jointly set up an advanced seminar on orthopedic implants with
renowned hospitals to promote the relevant surgical techniques on the use of our A3 Total Knee
Replacement and ACCK Revision Total Knee Replacement products. We regularly attend national
and local academic conferences to promote our brand and products.
Currently, our products primarily target the mass market in China. We are also seeking more
opportunities in the middle- to high-end market with new and advanced products. For example,
our orthopedic joint implants for revision surgeries target the high-end market and are mainly sold
to Class III hospitals in China.
As of the Latest Practicable Date, we had a dedicated internal team of 121 industry-
specialized sales and marketing personnel covering all the provinces and municipalities in China.
56.2% of the members of the sales and marketing team have educational backgrounds in clinical
medicine, bio-engineering, pharmacy or other related areas.
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Customer Services
Our sales and marketing team provides our customers with on-going trainings and guidance
on how to use our products, part of which are integrated with our 3D ACT solutions. See
“—Overview” for a description of services we provide to our customers in our 3D ACT Solutions.
We also strive to enhance the user experience by collecting feedback from surgeons and making
relevant improvements to our products. Our customer service team is responsible for handling
customer complaints. We have established a customer service hotline to handle complaints about
our products from our customers. The relevant complaints will be forwarded to our relevant
departments for follow-up. During the Track Record Period, we have not received material
complaints on the quality of our orthopedic implants.
Return and Exchange of Products
Our distributors do not have a right to return products to us unless they are defective or are
substandard. However, from time to time and on a voluntary basis, we allow our distributors to
return their inventory to us to the extent they are resalable if we decide to terminate our
distribution agreements with them. In these circumstances, we generally buy back the products at
the original selling price. During the Track Record Period, there were no product returns due to
product quality.
Similarly, under our distribution agreements, distributors do not have a right to exchange
their unsold products with our other products unless they are defective or are substandard.
However, in practice, we generally entertain requests to exchange unsold products on a voluntary
basis, to maintain the relationship with our distributors, so long as the products to be exchanged
are resellable and such exchange does not have a negative effect on our revenue. Furthermore,
we usually do not provide any warranties for our products other than product quality warranties
and we have not done so during the Track Record Period. There was no product exchange due
to quality defects during the Track Record Period and up to the Latest Practicable Date. In 2014,
2015, 2016 and the six months ended June 30, 2017, the products being exchanged amounted to
RMB8.5 million, RMB11.1 million, RMB10.9 million and RMB11.2 million, respectively, calculated
based on the revenue recognized when the exchanged products were sold to the customers,
which represented approximately 5.7%, 5.4%, 4.0% and 6.9%, respectively, of our revenue. As we
do not accept product exchange that would have a negative effect on our revenue, product
exchanges either have no effect or a positive effect on our revenue during the Track Record
Period. In 2014, 2015, 2016 and the six months ended June 30, 2017, revenue derived from the
excess between the price of the new products purchased and the existing products exchanged by
distributors amounted to RMB19,491, RMB232,093, RMB177,154 and RMB69,100, respectively,
representing approximately 0.01%, 0.11%, 0.07% and 0.04% of our revenue, respectively.
We have implemented internal control measures on product returns and exchanges. Our
sales department first evaluates a request from a distributor for a product return or exchange to
determine whether the request is reasonable. Our finance department also checks the request
against the relevant bills and invoices for the underlying sales. Our quality control personnel will
then examine the relevant products to make sure they are still in marketable condition. If we
cannot resell the products, we would reject the request for product return or exchange unless the
return or exchange is due to a product quality issue.
For the accounting treatment and financial impacts of our sales returns and exchanges, see
“Financial Information—Critical Accounting Policies and Estimates—Sales Returns or
Exchanges”.
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Pricing
Most of our products are on the Medical Device Procurement List. We and our distributors
are required to participate in a public tender process for the right to sell our products on the
Medical Device Procurement List to the hospitals and medical institutions within a particular
region. The price of orthopedic products on the Medical Device Procurement List is determined by
the public tender processes.
For sales to our distributors, we have set a nationwide standard price, which we determine
after taking into account the successful bidding price for sales to the relevant hospitals, the market
positioning and target customers of the specific products, the prevailing market price of similarly
positioned products, and our costs and overall profit margin. We would consider adjusting the
standard price for our products according to the market conditions and competition.
We determine the selling price of the third-party orthopedic products we distribute as an

agent for third parties based on the purchase price we paid, related taxes and expenses and our
overall profit margin.
For our overseas sales, we negotiate with our customers on an arm’s length basis based on
our costs, the specific market condition of each overseas market and our overall profit margin.
See “Financial Information—Factors Affecting Our Financial Condition and Results of

Operations—Healthcare Regulations and Policies in China” for a discussion on pricing and the
average selling price of our products.
RAW MATERIALS AND SUPPLIERS
The principal raw materials for our orthopedic implants include titanium alloy, cobalt-
chromium-molybdenum alloy and ultra-high molecular weight polyethylene materials and certain
product components such as ceramic heads. We purchase most of our raw materials from China,
except ceramic heads and certain raw materials for our ML femoral stems, which we purchase
from Germany and the United Kingdom, respectively. We select our raw material suppliers based
on a number of factors, including their business scale, reputation in the market, equipment
capacity, staff capacity, technical skills and their ability to deliver materials that meet our quality
standards in a timely manner. We have developed stable relationships with all of our key
suppliers. As of the Latest Practicable Date, the average length of our business relationship with
our five largest suppliers was 6.2 years.
To avoid over-reliance on one particular supplier of raw materials, we have maintained at all
times at least two suppliers for each of the following materials during the Track Record Period:
titanium alloy, cobalt-chromium-molybdenum alloy and ultra-high molecular weight polyethylene.
However, we only procure ceramic heads from one supplier (the “Ceramic Head Supplier”),
which, to our best knowledge, is the only major supplier of ceramic heads in the world. Ceramic
head is one of the several types of femoral head we provided as a part of total hip systems and
used in combination with other components. See “—Our Products and Services—Off-the-Shelf
Products—Hip Replacement Implants”. We entered into a supply agreement with the Ceramic
Head Supplier with an indefinite term, which can be terminated by either party upon three-month
prior written notice but no earlier than December 31, 2017. Our purchase from the Ceramic Head
Supplier was RMB45,095, RMB11.2 million, RMB5.9 million and RMB2.7 million, respectively,
representing 0.12%, 14.5%, 7.8% and 4.4% of our total purchase, respectively, in 2014, 2015,
2016 and the six months ended June 30, 2017, respectively. If our supply agreement with the
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Ceramic Head Supplier is terminated, or the Ceramic Head Supplier becomes otherwise unable
or unwilling to continue to supply us directly, we will have to procure ceramic heads of the same
specification from the downstream distributors of the Ceramic Head Supplier. If the ceramic heads
we currently purchase from the Ceramic Head Supplier become no longer available in the market,
we would be forced to cease the production of the products using the ceramic heads. See “Risk
Factors—Risks Relating to Our Business—If we fail to maintain relationships with certain key
suppliers at commercially acceptable terms, or at all, we may not be able to maintain our product
quality at reasonable cost, or at all”. In such case, we will sell the components used to be sold in
combination with ceramic heads with other types of femoral head. Moreover, our revenue derived
from the sales of ceramic heads was nil, RMB11.0 million, RMB7.3 million and RMB6.9 million,
respectively, representing nil, 5.3%, 2.7% and 4.2% of our total revenue in 2014, 2015, 2016 and
six months ended June 30, 2017, respectively. Based on the above, our Directors are of the view
that our overall business operations and financial performance would not be materially and
adversely affected as a result of the disruption in the supply of the ceramic heads.
In 2014, 2015, 2016 and the six months ended June 30, 2016 and 2017, purchases from our
top five suppliers were RMB26.2 million, RMB47.8 million, RMB34.0 million, RMB14.3 million and
RMB31.4 million, respectively, representing 71.6%, 62.2%, 44.7%, 40.2%, and 51.2% of our total
purchases, respectively. In 2014, 2015, 2016 and the six months ended June 30, 2016 and 2017,
purchases from our single largest supplier were RMB13.2 million, RMB16.2 million, RMB11.5
10.4%, and 18.6% of our total purchases, respectively. To the best knowledge of our Directors,
none of our Directors or their associates holding more than 5% of our issued share capital or the
existing Shareholders had any interests in any of our top five suppliers during the Track Record
Period. None of our suppliers are our major customers and vice versa. The following table sets
forth details of our top five suppliers during the Track Record Period:

2014 2015 2016 2017
% of % of % of % of
Rank Supplier Amount total Supplier Amount total Supplier Amount total Supplier Amount total
(unaudited)
1 . . . Supplier A(1) 13,231 36.2% Supplier A 16,179 21.1% Supplier B 11,457 15.1% Supplier G 11,409 18.6%
2 . . . Supplier B(2) 5,426 14.8 Supplier F(6) 11,175 14.5 Supplier G 7,322 9.6 Supplier B 8,919 14.6
3 . . . Supplier C(3) 4,795 13.1 Supplier C 7,622 9.9 Supplier F 5,940 7.8 Supplier D 4,128 6.7
4 . . . Supplier D(4) 1,585 4.3 Supplier B 6,748 8.8 Supplier C 4,931 6.5 Supplier I(9) 3,508 5.7
5 . . . Supplier E(5) 1,148 3.1% Supplier G(7) 6,077 7.9% Supplier H(8) 4,311 5.7% Supplier J(10) 3,426 5.6%
(1) Supplier A primarily engages in the distribution of metal products in North China. It had five years of relationship with
us as of December 31, 2015. We maintained purchase agreements with indefinite terms with Supplier A in 2014 and
2015. Supplier A went out of business in 2016 to our knowledge. See below for details.
(2) Supplier B primarily engages in the distribution of precision castings and raw materials in North China. It had 14
years of relationship with us as of the Latest Practicable Date. We maintained purchase agreements with two-year
terms with Supplier B in 2014, 2015 and 2016, and we entered into a purchase agreement with Supplier B in 2017
with a one-year term.
(3) Supplier C primarily engages in the manufacturing and distribution of forging alloy in North China. It had nine years
of relationship with us as of the Latest Practicable Date. We maintained purchase agreements with indefinite terms
with Supplier C in 2014, 2015 and 2016.
(4) Supplier D primarily engages in the distribution of polyethylene in East China. It had four years of relationship with
us as of the Latest Practicable Date. We maintained purchase agreements with indefinite terms with Supplier D in
2014 and 2017.
(5) Supplier E primarily engages in the manufacturing and distribution of titanium alloy in North China. It had 14 years
of relationship with us as of the Latest Practicable Date. We maintained a purchase agreement with an indefinite
term with Supplier E in 2014.
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(6) Supplier F primarily engages in the manufacturing and distribution of ceramic products overseas. It had six years
of relationship with us as of the Latest Practicable Date. We maintained purchase agreements with indefinite terms
with Supplier F in 2015 and 2016.
(7) Supplier G primarily engages in the manufacturing and distribution of orthopedic joint implants overseas. It had three
years of relationship with us as of the Latest Practicable Date. We maintained purchase agreements with indefinite
terms with Supplier G in 2015, 2016 and 2017.
(8) Supplier H primarily engages in the manufacturing and distribution of bone cement overseas. It had eight years of
relationship with us as of the Latest Practicable Date. We maintained a purchase agreement with a five-year term
with Supplier H in 2016.
(9) Supplier I primarily engages in the manufacturing and distribution of metal material in North China. It had nine years
of relationship with us as of the Latest Practicable Date. We maintained a purchase agreement with a one-year term
with Supplier I in 2017.
(10) Supplier J primarily engages in the manufacturing and distribution of medical appliances in South China. It had one
year of relationship with us as of the Latest Practicable Date. We maintained a purchase agreement with a
three-year term with Supplier J in 2017.
We generally enter into supply agreements with legal binding effect for a term of one to two
years with our suppliers. According to these supply agreements, we and our suppliers generally
determine the price on an annual basis with reference to the type and the market price of raw
materials and related costs to the suppliers such as energy consumption and labor costs. If there
are material changes to these factors, we and the suppliers may adjust the price based on arm’s
length negotiations. Upon delivery, we require our suppliers to provide us with inspection reports
on various respects of the raw materials, such as chemical components and mechanical
performance. If there are any defects to the raw materials, we will be entitled to return the goods.
Our domestic major suppliers typically offer us a credit period ranging from 30 to 180 days. The
overseas supplier that supplies us with the ceramic heads generally requires us to make full
payment before delivery. If there is any material breach of the agreement, the non-breaching party
may terminate the agreement. After December 31, 2017, either party may also terminate the
agreement by giving three-months’ written notice.
We strive to maintain stable relationships with our suppliers. However, our largest supplier
and major supplier of cobalt-chromium-molybdenum alloy in 2014 and 2015, Supplier A, to our
knowledge, went out of business in the second quarter of 2016. Our purchase from Supplier A was
RMB13.2 million and RMB16.2 million in 2014 and 2015 respectively, representing 36.2% and
21.1%, respectively, of our total purchase. In light of the abrupt termination of cobalt-chromium-
molybdenum alloy supply from Supplier A, we increased our purchase from Supplier B and
actively sought other suppliers for this raw material. By the end of 2016, we managed to develop
relationships with four suppliers of cobalt-chromium-molybdenum alloy. Therefore, there was no
material change in our overall raw material cost, our overall price, quality or terms of the purchase
of the raw materials as a result of the termination of relationship with Supplier A. Our Directors are
of the view that the termination of relationship with Supplier A had not resulted and will not result
in any material adverse effect on our business operations or financial performance.
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INVENTORY MANAGEMENT
Our inventories primarily include raw materials, work-in-progress and finished products. As
of December 31, 2014, 2015, 2016 and June 30, 2017, we had inventories of RMB34.7 million,
RMB58.4 million, RMB67.8 million and RMB84.8 million, respectively. We maintain our inventories
of finished products and procure raw materials according to the projected demand from our
hospital customers and distributors and the estimated production time of our products. We check
with our distributors on a monthly basis for their expected demand, and plan our raw material
procurements and production activities accordingly. We typically maintain an inventory level of two
to six months to meet the procurement needs of our distributors and hospital customers.
We deployed an ERP system in 2014 to track inventory levels and to ensure we keep a
reasonable inventory level of raw materials and finished products. The ERP system enables us to
closely monitor our inventory level and make adjustments whenever necessary. We also carry out
periodic physical inventory assessments to verify the accuracy of our ERP database.
QUALITY CONTROL
Product quality is vital to our business, since any potential quality defect may cause
significant risks to patients. As such, we have set up a strict quality control system throughout our
entire production process, encompassing the following stages:
• Raw material quality control: We purchase raw materials only from qualified suppliers
that are selected based on our internal supply management policy. We require our
suppliers to provide quality inspection reports from third party inspectors on selected
crucial raw materials for our production. Our quality control staff will select samples for
inspection from each batch of raw materials upon delivery in accordance with our
internal policy and will inspect them against our quality standard. We maintain records
in relation to inspection of relevant raw materials. We are entitled to return any raw
materials that fail to meet our quality standards.
• Production quality control: We strictly monitor each stage of our production process to
ensure it meets our quality control requirements. Each of our staff in the production line
is required to examine the quality of the goods that are in production when he receives
them from the previous production step. They must not process the goods unless they
meet our quality standards. They are required to examine the goods in-production again
before delivering them to the next production step. Our quality control staff also conduct
routine and ad hoc quality inspections in the production areas and at selected
production stages to detect any potential issues in the production process.
• Finished products quality control: Finished products failing to meet any GMP
requirements are re-processed or scrapped, depending on the actual circumstance.
Re-processed products undergo the same procedure of inspection. Once the products
meet our quality standards, they will be packaged, sterilized and delivered to the quality
control inspectors for final inspection. After the quality control inspectors have
confirmed that the quality standards for each process have been satisfied, they will
collect the inspection paperwork for each process and issue an inspection report.
Our operations comply with the CFDA’s regulations including the regulations regarding
quality management. We have established a quality control system in accordance with ISO9001
and ISO13485, and our products have passed the inspection for GMP certification in 2017.
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As of the Latest Practicable Date, our quality control team had 27 employees. Our quality
control team is responsible for formulating and implementing our quality control policies, and
conducting inspections of raw materials, production processes and finished products to identify
quality defects. Our quality control staff may report quality control issues to the on-site quality
control team or the quality control department, depending on the severity of such issues.
During the Track Record Period and up to the Latest Practicable Date, we had not received
any material complaints about product quality and our products had not been subject to any
material claim, litigation or investigation. In addition, during the Track Record Period and as of the
Latest Practicable Date, there were no product recalls or fatal accidents related to our products.
PRODUCT REGISTRATION
The medical device industry is strictly regulated in China and producers of medical devices
are required to obtain certificates, permits and approvals from the relevant government
authorities. As of the Latest Practicable Date, we had obtained necessary medical device
registration certificates for 50 products from the CFDA. The following diagram illustrates the CFDA
registration procedures:
Main works and timeframe
Testing products at a designated laboratory
4-6 months
Application for approval to conduct clinical trials
3 months
Conducting clinical trials
20-30 months
Application for registration
12-24 months
CFDA evaluates information provided and issues registration certificate
For details about our certificates, permits and approvals required for our operation, see
“Regulation—Classification of Medical Devices”, “Regulation—Medical Device Registration
Certificate” and “Regulation—Production Permit”.
During the Track Record Period, we exported a small portion of our products to 27 overseas
jurisdictions. In 2014, 2015, 2016 and the six months ended June 30, 2016 and 2017, overseas
sales were RMB0.1 million, RMB2.9 million, RMB11.5 million, RMB2.9 million and RMB3.3 million,
respectively, representing 0.1%, 1.4%, 4.3%, 2.5% and 2.0% of our revenue, respectively. Other
than certain overseas sales that are not subject to registration or approval requirements, as of the
Latest Practicable Date, we had obtained all requisite licenses, approvals and certificates to sell
our products in all of the relevant overseas jurisdictions to which we exported our products.
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As of the Latest Practicable Date, except for those disclosed in this prospectus, we had
obtained all requisite licenses, approvals and production certificates for all of our production
facilities and all of such licenses and certificates are within their respective effective periods. We
did not experience any material difficulties in renewing the business licenses and production
certificates of our production facilities during the Track Record Period, and we currently do not
expect to have any material difficulties in renewing such licenses and certificates when they
expire.
INTELLECTUAL PROPERTY
We recognize the importance of intellectual property rights to our business and are
committed to the development and protection of our intellectual property rights. We have
developed a significant portfolio of intellectual property rights to protect our technologies and
products and all the patents necessary to our products are registered under our name. As of the
Latest Practicable Date, we had 36 invention patents, 140 utility patents and two patents under the
PCT. We also had 134 pending invention patents, 77 pending utility patents and six pending patent
applications filed under the PCT. Such patent applications filed under the PCT, if granted, allow
us to seek patent protection in multiple member countries. We have obtained 26 CFDA registration
certificates for Class III medical devices. We conduct our business under the brand name of “AK
Medical” (“愛康”). As of the Latest Practicable Date, we had registered 20 trademarks in China and
Hong Kong and filed one trademark application in Hong Kong. We are also the registered owner
of three domain names.
We have entered into confidentiality agreements and non-competition agreements with our
senior management and certain key members of our R&D team and other employees who have
access to trade secrets or confidential information about our business. Our standard employment
contract, which we used to employ each of our employees, contains a confidentiality clause, under
which we own all the rights to all inventions, technology know-how and trade secrets derived
during the course of such employee’s work.
As of the Latest Practicable Date, we were not involved in any proceedings in respect of, and
we had not received notice of any claims of infringement of, any intellectual property rights that
may be threatened or pending, in which we may be a claimant or a respondent.
See Appendix IV—“Statutory and General Information—Further Information about the

Business of Our Company—10. Intellectual property rights of our Group” to this prospectus for
further information.
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AWARDS AND RECOGNITIONS
The following table sets out a summary of the major awards and recognition we have
received:
Year Name of Award or Recognition Issuing Authority

2015 . . . . . Beijing Municipal Engineering Technology Beijing Municipal Science and Technology
Research Center for 3D- Printing Orthopedic Commission (北京市科學技術委員會)
Application (北京市3D打印骨科應用工程技術
研究中心)
2015 . . . . . Zhongguancun High-tech Enterprise Zhongguancun Science Technology Park
(中關村高新技術企業) Management Committee
(中關村科技園區管理委員會)
2014 . . . . . High-tech Enterprise (高新技術企業) Beijing Municipal Science and Technology
Commission, Beijing Municipal Bureau of Finance,
Beijing Municipal Office of State Administration of
Taxation and Beijing Local Taxation Bureau (北京
市科學技術委員會/北京市財政局/北京市國家稅務局/
北京市地方稅務局)
2014 . . . . . Substation of Zhongguancun Science and National Post-doctor Management Committee
Technology Park Changping District Management Office (全國博士後管委會辦公室)
Committee Post-doctoral Scientific Research
Station (中關村科技園區昌平園管理委員會博士後科
研工作站分站)
2013 . . . . . Science and Technology Research and Beijing Municipal Science and Technology
Development Organization of Beijing Municipal Commission (北京市科學技術委員會)
Enterprises (北京市級企業科技研究開發機構)
2011 . . . . . Beijing Municipal Patent Pilot Unit Beijing Intellectual Property Office
(北京市專利試點單位) (北京市知識產權局)
2009 . . . . . Innovative Pilot Enterprise of Zhongguancun The People’s Government of Beijing Municipality,
Science Park (中關村國家自主創新示範區創新型試 Ministry of Science and Technology of China and
點企業) Chinese Academy of Sciences
(北京市人民政府/中國科學技術部/中國科學院)
COMPETITION
The orthopedic implant market is characterized by rapid product development, technological

advancement and intense competition. We compete against our competitors primarily with respect
to R&D capabilities, brand recognition, product quality, pricing and distribution network. See
“Industry Overview” for details.
According to Frost & Sullivan, we owned the bestselling brand of orthopedic joint implants in
China by sales volume in 2016. Our competitors are mainly international orthopedic joint implant
companies, such as Smith & Nephew plc, Zimmer Holdings, Inc., DePuy Synthes Companies and
Stryker Corporation and the top China-based orthopedic joint implant companies, including
Beijing Chunlizhengda Medical Instruments Co., Ltd. and Shandong Weigao Orthopedic Device
Company Limited. We believe our quality product offerings and our strong R&D capabilities give
us a significant competitive advantage over other China-based orthopedic joint implant
companies, allowing us to design and develop high-end products that rival those of international
orthopedic joint implant companies, such as orthopedic joint implants with trabecular structure.
Some of the international orthopedic joint implant companies have a larger market share in China
than us in terms of revenue but we expect to be able to successfully compete against them by
leveraging favorable government policies which encourage the use of medical devices produced
in China over imported products. See “Industry Overview—Import Substitution with Domestic
Products”.
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INSURANCE
We maintained product liability insurance coverage for our products during the Track Record
Period. As of the Latest Practicable Date, our product liability insurance policies in connection with
our orthopedic implants covered up to RMB80,000 per incident with a cap of RMB2.0 million per
policy year. In 2014, 2015, 2016 and the six months ended June 30, 2017, the expenses we
incurred for our insurance policies amounted to RMB20,000, RMB20,000, RMB45,000 and
RMB45,000, respectively. We carry mandatory motor vehicle insurance for our transportation
vehicles. As we conduct business activities primarily in China, we have not purchased any product
liability insurance for our products sold overseas.
Our Directors believe that our existing insurance policies are in line with industry practices
in China. Although we cannot assure that such insurance will be sufficient to protect us against all
contingencies, we believe that our insurance protection is reasonable in view of the nature and
scope of our operations.
During the Track Record Period, we did not submit any material insurance claims, and we did
not experience any business interruptions which had a material adverse effect on our business or
financial position. See “Risk Factors—Risks Relating to Our Business—We are exposed to
potential product liability claims and our insurance coverage only extends to some of our products
and may be inadequate to protect us from all the liabilities we may incur”.
EMPLOYEES
We strive to build and maintain a strong team of employees. Our recruiting policy
emphasizes the importance of attracting competent employees through a combination of
competitive salary incentives, on-the-job training and opportunities for development. As of the
Latest Practicable Date, we had 345 employees. The following table sets forth a breakdown of our
employees by function as of the Latest Practicable Date:
Function Number % of Total

Sales and marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 35.1%
R&D (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 12.2
Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129 37.4
Management and Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 15.4
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 345 100.0%
(1) Including technicians operating our PTIP.
We believe we have a high-quality work force with specialized industry expertise, with 31.9%
of our employees having undergraduate or higher educational backgrounds and over 10.7%
having graduate or higher educational backgrounds as of the Latest Practicable Date.
We have established a labor union. The labor union is responsible for representing our
employees to handle employment related matters with us and protecting the legal rights of the
employees. According to the relevant Chinese labor union laws and regulation, we are required to
make contributions to the labor union that are equivalent to 2.0% of the total salary for all our
employees. During the Track Record Period and up to the Latest Practicable Date, we have
complied with these laws and regulations. During the Track Record Period, we have not
experienced any strikes or significant labor disputes which have materially affected our
operations.
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OUR BUSINESS
In 2014, 2015, 2016 and the six months ended June 30, 2016 and 2017, we incurred staff
costs of RMB23.0 million, RMB32.2 million, RMB41.0 million, RMB18.4 million and RMB23.9
million, respectively, representing 15.5%, 15.6%, 15.2%, 15.9% and 14.7% of our revenue,
respectively. As of the Latest Practicable Date, all of our employees were based in China.
Training and Development
We place significant emphasis on staff training and development. We invest in continuing

education and training programs to our management staff and other employees to upgrade their
skills and knowledge.
All of our new employees are required to attend orientation and training programs so that
they may better understand our corporate culture, structure and policies, learn about the relevant
laws and regulations, and raise their quality awareness. They also need to undertake trainings and
tests on their relevant skills conducted by the relevant departments and evaluations by the human
resources department. In addition, from time to time, we invite external experts to provide
trainings to our management personnel to improve their relevant knowledge and management
skills.
We place great emphasis on improving the expertise and business management skills of our
senior management. Since 2012, we have been encouraging and sponsoring members of our
senior management to attend training programs such as executive MBA programs and business
administration related training programs at renowned educational institutions, including China
Europe International Business School (中歐商學院), Cheung Kong Graduate School of Business
(長江商學院) and School of Economics and Management Tsinghua University (清華大學經濟管理學
院). As of the Latest Practicable Date, 58.3% of our senior management held a master or higher
degree. We provide our employees with both internal trainings led by our management and
department heads and external trainings by industry experts. Our goal is to ensure that our
employees are armed with sufficient skills and knowledge to be productive in their respective
areas of employment in order to maintain our competitive edge.
Employee Benefits
Our employees’ remuneration comprises salaries, bonuses and employees provident fund
and social security contributions. In accordance with applicable Chinese laws, we have made
contributions to social security insurance funds (including pension plans, medical insurance,
work-related injury insurance, unemployment insurance and maternity insurance) and housing
funds for our employees. We have also purchased accident insurance for our employees in the
sales and marketing team and procurement team. As of the Latest Practicable Date, we had
complied with all statutory social security insurance fund and housing fund obligations applicable
to us under Chinese laws in all material aspects.
PROPERTIES
Owned Properties
As of June 30, 2017, we owned one property in China with an aggregate gross floor area of
2,197.3 sq. m for use as office space and production facilities. We have obtained valid land use
rights and a property ownership certificate in respect of our owned property.
Leased Properties
As of June 30, 2017, we leased 11 premises from independent third parties with a total gross
floor area of 8,983 sq. m in China. These properties are used primarily as production facilities,
warehouses and offices.
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OUR BUSINESS
Habatun Village Property
Of our leased properties, the lessor of one property with a gross floor area of 1,621 sq. m (the
“Habatun Property”) has not obtained the relevant property ownership certificate. We have used
the Habatun Property for the production of surgical instruments, and not for the production of
orthopedic implants. The actual area used for production is around 900 sq. m. The relevant
property is located on a parcel of land collectively-owned by the Habatun Village, Changping
District, Beijing, China (the “Collectively-Owned Land”) which is designated for agricultural use
and has not been approved by the relevant government authorities for commercial construction
use (the “Lease Defect”). The Collectively-Owned Land was leased by the villagers committee of
Habatun Village (the “Villagers Committee”) to Beijing Yanxu Industry and Trade Co., Ltd. (北京
燕旭工貿有限公司) (the “Habatun Lessor”) on February 14, 2004, which subsequently constructed
the Habatun Property and sub-leased it to us.
According to a confirmation letter dated February 29, 2016 issued by the Villagers Committee
and the government of Machikou Town, Changping District:
• the land use rights to the Collectively-Owned Land are owned by the Villagers
Committee;
• the Collectively-Owned Land is designated as rural collectively-owned construction

land; and
• the Habatun Property is leased to us by the Habatun Lessor.
Our PRC Legal Advisor has advised us that the government of Machikou Town is the
competent authority to approve the lease of the Collectively-Owned Land by the Villagers
Committee to the Habatun Lessor for agriculture-related use. However, according to the relevant
laws and regulations of China, the land use right of a collectively-owned land may not be
transferred or leased for non-agricultural construction use. The usage of a parcel of land could be
converted from agricultural to construction use only if approved by the people’s government at the
provincial level. Since the Collectively-Owned Land is designated for agricultural use, the
approval from the people’s government of Beijing municipality is required to convert it to land for
construction use before the Habatun Lessor could construct the Habatun Property and sub-lease
it to us. As the usage of the Collectively-Owned Land has not been so converted, there is a risk
that a competent authority could terminate our lease of the Habatun Property and require us to
vacate the property and relocate.
Our Directors consider the risk of being required to relocate to be remote given that (1) the
People’s Government of Machikou Town, Changping District, Beijing (北京市昌平區馬池口鎮人民政
府), has approved the lease of the Collectively-Owned Land by the Villagers Committee to the
Habatun Lessor and (2) we have been leasing the Habatun Property since 2014 and neither the
Habatun Lessor nor us have received any termination order from a competent government
authority or any challenge from any third party. The original lease expired on March 31, 2017, and
we entered into a new lease agreement with the Habatun Lessor on March 13, 2017 to continue
leasing the Habatun Property until March 31, 2020.
Although we consider the risk of being required to relocate to be remote, we have formulated
contingency plans in the event that we cannot use the Habatun Property due to the Lease Defect
before the Changzhou Facilities are in operation, including (1) outsourcing the production of
surgical instruments to certain manufacturers in China or (2) if we consider it more desirable,
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relocating the production to a leased production site in Changzhou, China. We currently outsource
the production of certain surgical instruments that are ancillary products to our orthopedic implant
products to five manufacturers in China. See “—Production—Production Outsourcing” for details.
Therefore, we believe we would be able to easily outsource the production of the surgical
instruments currently produced in-house at the Habatun Property. In case we decide to continue
to produce these surgical instruments in-house, we are also able to relocate the production
capacity to a leased production site in Changzhou. On December 28, 2015, we entered into a
legally binding lease agreement with Changzhou Binhu Ecology City Construction Company
Limited (常州市濱湖生態城建設有限公司) (the “Backup Facilities Lessor”), an independent third
party, to lease production facilities with a gross floor area of 800 sq. m (the “Backup Facilities”)
for a term of three years from January 1, 2016 to December 31, 2018 on a rent-free basis. The
Backup Facilities Lessor is willing to lease us the Backup Facilities for free because it is
wholly-owned by the State-owned and Collectively-owned Assets Management Office of Wujin
District, Changzhou, and the local government considers our construction of the Changzhou
Facilities and future production to be a boost to the local economy, and will provide us with the
Backup Facilities for free to facilitate our preparation for our future operation in the Changzhou
Facilities. We expect part of our Changzhou Facilities to commence operation by the second half
of 2018, and therefore we will no longer need to lease the Backup Facilities upon expiration of the
rent-free lease period. As of the Latest Practicable Date, we had obtained the relevant certificates
for the production of Class I medical devices and the sales of Class II medical devices for the
facilities we leased from the Changzhou Industry Park Committee. If we are required to relocate
from the Habatun Property, we plan to relocate our production of surgical instruments to the
Backup Facilities. The Backup Facilities is not currently in operation and we could make
arrangements to move our production workers, production equipment, fixture, raw materials and
work-in-progress in the Habatun Property to the Backup Facilities if needed, which would take
about two weeks before the Backup Facilities could start operating.
As advised by our PRC Legal Advisor, according to a confirmation letter issued by

Changzhou Industry Park Committee on April 6, 2016 and the permit of construction planning
obtained for the Backup Facilities, we are entitled to use the Backup Facilities and the lease
agreement we entered into for the lease of the Backup Facilities is legal, valid and binding. In
addition, our Directors confirm that the Backup Facilities have sufficient capacity to accommodate
the production currently being carried out at the Habatun Properties since the actual area used for
production of Habatun Property is of similar size to the Backup Facilities.
In the event that we relocate from the Habatun Property to the Backup Facilities, we plan to
recruit local production workers to work at the Backup Facilities, which is expected to take two
months. During this period, to continue our production, we would offer each worker currently
working in the Habatun Property a subsidy of RMB1,000 per month to be relocated to work at the
Backup Facilities. These workers would be transported to our other production facilities in Beijing
after we recruit enough workers for production at the Backup Facilities. We estimate that the total
cost for relocation is RMB0.1 million, including (1) the transportation fees for production workers,
(2) the cost to relocate production equipment, fixtures, raw materials and work-in-progress and (3)
the subsidy to be paid to the production workers from the Habatun Property to work at the Backup
Facilities. We only use the Habatun Property to produce surgical instruments, which are ancillary
products and in general do not generate revenue. In addition, based on our experience, we
believe we have sufficient inventory of surgical instruments to meet customers’ demands during
the two months of relocation time if needed. As a result, we do not expect that there will be any
loss of revenue if we need to relocate from the Habatun Property, or any delays or failures in
delivering our products to our customers.
Mr. Li has undertaken that, if we are not able to use the Habatun Property to produce surgical
instruments due to the Lease Defect, he shall indemnify our Company for all losses and expenses
that may be incurred in relation to the relocation.
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OUR BUSINESS
Changping Property
We leased a property with a gross floor area of 696.75 sq. m located at Western Portion of
the Second Floor, Xingye Building, No. 10 Baifuquan Road, Changping District Science Park,
Beijing (the “Changping Property”). The lessor, Beijing Boda Xingye Property Management Co.,
Ltd. (北京博達興業物業管理有限責任公司) (the “Changping Lessor”), being a wholly-owned
subsidiary of the property owner, has not provided to us the authorization from the relevant
registered owner to lease the Changping Property to us, because the owner of the Changping
Property was unwilling to accommodate the Changping Lessor’s request. On March 21, 2016, we
completed lease registration procedures for the Changping Property. We have used the
Changping Property as a warehouse to store our finished products.
With regard to the Changping Property, our PRC Legal Advisor has advised us that according
to the relevant laws and regulations, and judicial interpretations, since the Changping Lessor has
not obtained authorization from the owner of the Changping Property, the lease agreement is at
risk of being considered invalid.
Mr. Li has undertaken that, if we are required to relocate from the Changping Property
because the Changping Lessor could not obtain authorization from the owner of the Changping
Property, he will indemnify us for all relevant losses and expenses.
Based on the above, and given that we use the Changping Property as a warehouse, and not
for production, even if we have to vacate the Changping Property, we would not experience any
significant difficulties in finding another suitable property to use as a warehouse and it would not
materially disrupt our operations. The relevant cost of relocation is estimated to be RMB10,000.
Zhengzhou Property
We leased a property with a gross floor area of 181.81 sq. m located at Room 13, 9th Floor,
Building A, Fuguoyuxi Building, North of Zhengbian Road and West of Dongming Road,
Guancheng Hui District, Zhengzhou, Henan, PRC (the “Zhengzhou Property”). We have used the
Zhengzhou Property as a warehouse to store our finished products. The relevant lessor has not
been able to provide the relevant property ownership certificate. According to our PRC Legal
Advisor, the validity of the lease agreement is unclear, and if the relevant lessor is not the title
owner, the lease agreement may be considered invalid. In such an event, we plan to find another
suitable property and vacate the Zhengzhou Property. We currently do not expect to experience
any significant difficulties in finding another suitable property to use for warehouses, and the
relevant cost of relocation would be RMB1,000.
Taiyuan Property
We leased a property with a gross floor area of 205.3 sq. m located at Room 2803, 2804,
2806 and 2807, Building 3, No.16 Chang Feng Eastern Road, Taiyuan, Shanxi, PRC (the “Taiyuan
Property”). We have used the Taiyuan Property for warehouses to store our finished products.
The relevant lessor has not been able to provide the relevant property ownership certificate.
According to our PRC Legal Advisor, the validity of the lease agreement is unclear, and if the
relevant lessor is not the title owner, the lease agreement may be considered invalid. In such an
event, we plan to find another suitable property and vacate the Taiyuan Property. We currently do
not expect to experience any significant difficulties in finding another suitable property to use for
warehouses, and we expect the relevant cost of relocation would be RMB1,000.
Other than the leases disclosed above, there is no title defect with respect to our other leased
property.
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OUR BUSINESS
During the Track Record Period and up to the Latest Practicable Date, we have not incurred
any material losses and have not been subject to any material adverse change due to any of the
above-mentioned defects in our leased properties.
In addition, we have not completed lease registration procedures for nine leased properties
with an aggregate gross floor area of 4,586.71 sq. m. Our PRC Legal Advisor is of the view that,
according to the relevant laws, regulations and judicial interpretations, failure to complete the
registration procedures for a leased property will not affect the validity of the lease agreement, but
a penalty may be imposed by the relevant authorities for absence of lease registration. Our PRC
Legal Advisor also advised that a breach of the lease registration requirement would need to be
rectified within a prescribed period once challenged by the government. Any entity which does not
rectify the breach within the prescribed time limit will be subject to a fine of more than RMB1,000
but less than RMB10,000.
During the Track Record Period and up to the Latest Practicable Date, we have not been
subject to any administrative penalties for failure to register the leases of our leased properties.
Therefore, we consider that the risk that the relevant government authorities would impose the
fine on us for failure to register the leases is remote. As of the Latest Practicable Date, we had
not completed the relevant lease registration procedures for five of our leased properties because
the relevant lessors have refused to cooperate in the registration. For four other leased properties,
we could not complete registration because the relevant lessors could not provide to us the
relevant property ownership certificates for lease registration.
Based on the above, our Directors are of the view that the defects in our leased properties
mentioned above will not individually or collectively have any material adverse effect on our
business.
ANTI-BRIBERY COMPLIANCE
We sell our products to hospitals through distributors. The interactions we have with
hospitals are primarily for the purpose of educating surgeons and nurses through training and
seminars and collecting feedback about our products. We have taken a number of measures to
prevent bribery or kickbacks by our distributors or employees. We have included standard
anti-bribery provisions in our distribution agreements with distributors which require our
distributors to comply with all relevant Chinese anti-bribery laws and regulations. Starting from
2016, we have added to all new and renewed distribution agreements an undertaking from the
distributors that they shall not engage in bribery or kickback arrangements and shall comply with
all the applicable anti-bribery laws and regulations. Under our distribution agreements, if a
distributor breaches this undertaking, we are entitled to terminate the relevant distribution
agreement and the distributor shall indemnify us for all the relevant losses we may incur. Starting
from 2016, we have also required our top 20 distributors in the previous year and other distributors
whose purchase amount in the past six months is more than RMB2 million to sign an undertaking
to us annually that, among other things, they will manage their sub-distributors according to our
requirements, confirm that they have not found any violation by their sub-distributors of any
applicable anti-bribery laws and agree to be directly liable to us for any bribery or other
misconduct committed by their sub-distributors. According to our PRC Legal Advisor, Chinese
anti-bribery laws and regulations prohibit our distributors from making bribes and the distributors
will be liable for any breach of such laws and regulations and we will not be liable for their
breaches as long as we are not aware of such conduct and do not provide, directly or indirectly,
any kind of assistance or support in the process. So far as the Company is aware, none of our
employees or distributors was involved in bribery or kickback arrangements in distributing our
products during the Track Record Period.
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OUR BUSINESS
We also have in place an internal control system to prevent corruption and bribery by our
employees. We have included anti-bribery provisions in our employee handbook and implemented
internal policies on anti-corruption and anti-bribery. Employees who are found to have violated
such internal policies would be subject to various internal disciplinary actions, including
termination of employment and indemnifying relevant losses that we may incur. We provide
regular trainings to our employees on such internal policies and on the applicable anti-corruption
and anti-bribery laws and regulations. We also require our employees to undertake to us in writing
that they will adhere to our internal policies. The audit committee of our Board is responsible for
our anti-corruption and anti-bribery practices. Our management is responsible for routinely
evaluating relevant risks and implementing relevant control mechanisms. We have also set up a
reporting channel for internal and external reporting of briberies by our employees.
To the best knowledge of our Directors, none of our distributors or employees were involved
in any bribery or kickback arrangements during the Track Record Period. Based on the Sole
Sponsor’s due diligence investigations in relation to bribery or kickback arrangements during the
Track Record Period, including discussions with us and our internal control consultant and
reviewing documents and reports with respect to our internal control measures, the Sole Sponsor
is of the view that we have established reasonable internal procedures, systems and controls in
this regard.
ENVIRONMENTAL MATTERS
Our business is subject to state and local environmental laws. Under the State
Environmental Protection Law, the State Environmental Protection Bureau (中華人民共和國環保部)
sets the environmental standards at the national level, while local environmental protection
bureaus may impose more stringent requirements than the national standards. The relevant
Chinese laws and regulations require any entity operating a facility that produces pollutants or
other hazards to incorporate environmental protection measures into its operations and to
establish an environmental protection responsibility system, mandating the adoption of effective
measures to control and properly dispose of waste gases, waste water, waste residue, dust or
other waste materials. New construction, expansion or reconstruction projects and other
installations that directly or indirectly discharge pollutants to the environment are subject to
relevant regulations governing environmental protection for such projects. The facilities for the
prevention and control of pollutants are required to be designated, constructed and put into use
or operation at the same time as the main structure of a construction project.
Our production facilities discharge pollutants such as air pollutants, waste water and solid
wastes. We have established dust treatment and recycling systems which have improved the
working environment and have passed the necessary environmental impact evaluations and
environmental facilities construction completion examinations. To comply with relevant
environmental laws and regulations, we have engaged professional waste management
companies to manage the disposal of hazardous wastes. We have also implemented waste
treatment and disposal procedures with respect to the handling of hazardous wastes, such as
wastes from hazardous chemicals.
In 2014, 2015, 2016 and the six months ended June 30, 2017, our expenses in relation to
environmental compliance matters were approximately RMB50,000, RMB56,000, RMB223,000
and RMB172,000, respectively. We expect our cost of compliance with applicable Chinese
environmental laws, regulations and policies for 2017 will not significantly change from 2016.
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OUR BUSINESS
In 2014, we were fined RMB10,000 by the Environmental Protection Bureau of Changping

District of Beijing Municipality for inappropriate use of our air pollution prevention equipment
during our production process. In addition, although a pollutant discharge permit and a sewage
discharge permit for our production facilities in Changping District, Beijing are required by the law,
our PRC Legal Advisor advised us that, as of the Latest Practicable Date, (i) it was impractical for
us to apply for the pollutant discharge permit because the Environmental Protection Bureau of
Changping District of Beijing Municipality, the competent local government authority for the
pollutant discharge permit for our production facilities in Changping District, Beijing Municipality,
had not promulgated procedures for applying for such permit and (ii) we were not legally required
to obtain the sewage discharge permit because the sewage discharge network around our
production facilities in Changping District, Beijing Municipality were under construction. As of the
Latest Practicable Date, the Environmental Protection Bureau of Changping District of Beijing
Municipality had orally confirmed that we would not be considered to have breached any relevant
laws or regulations or be subject to any fines for not obtaining the pollutant discharge permit. As
of the Latest Practicable Date, we were not subject to any investigations or administrative
penalties as a result of such non-compliance. In addition, as of the Latest Practicable Date, other
than the incident disclosed above, we were not subject to any claims, administrative penalties or
other kinds of legal proceedings in respect of environmental protection and safety.
HEALTH AND WORK SAFETY
We are required to maintain work safety and to protect the occupational health of our
employees under Chinese laws and regulations. In order to ensure that our operations are in
compliance with the applicable laws and regulations, we have established policies and procedures
covering a wide range of areas, such as occupational health, distribution of labor protection
equipment, detection and management of safety risks, management of specialized equipment,
management of potentially dangerous operations and raw materials, management of hazards and
wastes, standardized operations, meetings, inspections, and training and education promoting
safety production, transportation safety, protection of female employees, and accident emergency
reaction plans. In addition, we have implemented measures to address potential risks relating to
health and work safety. These measures include requiring our new employees to complete work
safety training before they commence working at our facilities, conducting continuous employee
training to enhance our employees’ awareness of health and work safety issues, ensuring that all
our employees operating specialized equipment possess the requisite certifications, distributing
protection equipment to our employees in a timely manner, periodically inspecting our operating
facilities, and formulating and implementing procedures to guide our internal departments and
employees to handle work safety incidents appropriately.
During the Track Record Period, we never received any administrative penalties as a result
of the violation of laws and regulations in terms of health and work safety. During the Track Record
Period, we did not experience any material accidents during our production process.
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OUR BUSINESS
LEGAL PROCEEDINGS AND COMPLIANCE
Legal Proceedings
We are involved, from time to time, in legal proceedings arising in the ordinary course of our
operations. A majority of these legal proceedings involve claims initiated by us to recover payment
from our customers. As of the Latest Practicable Date, we were not subject to actual or threatened
material claims or litigations or involved in any material litigation or arbitration proceedings
pending or, to our knowledge, threatened against any of our Directors that could have a material
adverse effect on our business, financial condition or results of operations.
Non-Compliance Matter
During the Track Record Period and up to the Latest Practicable Date, we were not involved
in any material non-compliance incidents. However, in 2014, we were fined RMB10,000 by the
Environmental Protection Bureau of Changping District of Beijing Municipality for inappropriate
use of our air pollution prevention equipment during our production process, which was deemed
an instance of non-compliance with Article 32 of the Beijing Municipality’s Air Pollution Prevention
and Control Regulation (《北京市防治大氣污染條例》). The incident was a result of inadvertent
oversight. We paid the fine and adopted measures to address the issue. The Environmental
Protection Bureau of Changping District of Beijing Municipality conducted a re-examination of our
production facilities on December 1, 2014 and concluded that we have implemented effective
measures to ensure pollutants discharged by us could meet the relevant standards.
We have implemented an internal control system for compliance with local laws and
regulations in both domestic and international markets. The audit committee of our Board is
responsible for overseeing and reviewing our internal control procedures. It shall also review and
monitor our policies and practices on compliance with legal and regulatory requirements. Based
on the Sole Sponsor’s due diligence investigations, including discussions with us and our internal
control consultant and reviewing documents and reports with respect to our internal control
measures, the Sole Sponsor is of the view that we have established reasonable internal
procedures, systems and controls in minimizing the occurrences of non-compliance incidents. The
Sole Sponsor is not aware of any matter that would affect the suitability of our Directors under
Rules 3.08 and 3.09 of the Listing Rules, or that would render us not suitable for listing under Rule
8.04 of the Listing Rules.
RISK MANAGEMENT
We have adopted and implemented a comprehensive risk management policy (“Risk

Management Policy”) since October 30, 2015. According to our Risk Management Policy, our
Board is the top decision-making body regarding risk management, and is responsible for
ensuring: (1) our risks are properly managed and kept to an acceptable level; (2) our financial
statements are true and complete; (3) our operations and management are effective; (4) our
operations and management comply with laws and regulations; and (5) our assets are well-
protected. We have also established a risk management team led by our general manager to
oversee the operation of our risk management system. At the department level, the department
head is responsible for the risk management within each department.
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OUR BUSINESS
Our Risk Management Policy aims to cover all the principal business areas and material
matters in our ordinary cause of operation by adopting the following major steps:
• information collection;
• risk assessment;
• formulation of risk management strategies;
• formulation and implementation of risk management resolutions;
• supervision of risk management; and
• evaluation of risk management.
As of the Latest Practicable Date, we had not identified any material risk in relation to our
business.
INTERNAL CONTROL
Our Directors are responsible for monitoring our internal control system and evaluating its
effectiveness. In accordance with the applicable laws and regulations, we have implemented
measures to establish and maintain our internal control system, including monitoring production
and operational processes and compliance with local laws and regulations in both domestic and
international markets.
During the Track Record Period, our Directors did not identify any material internal control
weaknesses or failures.
Prior to the Track Record Period, and in particular prior to 2012, we had a policy of delivering
our products to distributors generally only upon receipt of full payments. As a result, in order to
fulfil orders that required immediate delivery of products for urgent surgeries, we, prior to 2012,
from time to time used a financial manager’s personal bank account to receive a small portion of
payments from distributors. This was because, among other reasons, that at the time payments
to a company’s bank accounts could only be made during business hours, but payments to an
individual’s bank accounts could be made on a real-time basis. All such payments were promptly
transferred to our bank accounts on a daily basis, and were properly booked as our revenue in
each year. However, in connection with the application for the listing of AK Medical Beijing on the
Shenzhen Stock Exchange in 2011, we improved our internal control over cash management and
financial reporting and terminated this practice in the second half of 2011, and we have not had
this practice since then.
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RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS
Immediately after completion of the Capitalization Issue and the Global Offering (without
taking into account any Shares which may be allotted and issued upon exercise of the
Over-Allotment Option or the options granted or to be granted under the Pre-IPO Share Option
Scheme or the Share Option Scheme), our Company will be owned as to 59.52825% in aggregate
by Ximalaya and Summer.
Ximalaya is owned as to 50% by Mr. Li, who is the chief executive officer of our Company,
an executive Director, the chairman of our Board, and as to 50% under the Family Trust. The
Family Trust was established by Mr. Li as settlor, with Trident Trust acting as the trustee. The
beneficiaries of the Family Trust are Mr. Li and certain of his family members. Trident Trust holds
100% of the issued share capital of Rainbow Holdings, which holds 50% of the issued share
capital of Ximalaya.
Summer is wholly owned by Ms. Zhang Bin, who is the spouse of Mr. Li. Ms. Zhang Bin is an
executive Director and a senior vice president of our Company.
Accordingly, each of Ximalaya, Summer, Trident Trust, Rainbow Holdings, Mr. Li and Ms.
Zhang Bin will be our Controlling Shareholders upon the Listing. See “History, Reorganization and
Development” for further details of the shareholding structure of our Controlling Shareholders.
Trident Trust is registered as a trust company on November 17, 2011 under the Trustee
Ordinance (Chapter 29 of the Laws of Hong Kong) and focuses on providing professional trustee
and related services. Its main business is holding assets and properties on trust as professional
trustee for its clients and does not operate any other business that may directly or indirectly
compete with our business. Rainbow Holdings, Ximalaya and Summer are investment holding
companies incorporated for the purpose of holding assets and properties under the Family Trust,
and interests in our Company, respectively.
Save as disclosed above and except for Trident Trust’s holding of assets and properties on
trust as professional trustee for its clients, as of the Latest Practicable Date, none of our
Controlling Shareholders, any of their respective close associates and our Directors has any
interest in a business, other than our Group’s business, which may, directly or indirectly, compete
with our business and would require disclosure under Rule 8.10 of the Listing Rules.
Dr. Wang David Guowei, our non-executive Director, is one of the directors and one of the
shareholders (holding less than 10% shareholding) in OrbiMed Advisors II Limited, which is the
general partner of OrbiMed Asia GP II, L.P. and in turn the general partner of OrbiMed Asia.
OrbiMed Asia focuses on medical and healthcare investments. Apart from our Group’s business,
OrbiMed Asia did not have interests in any other businesses that may, directly or indirectly,
compete with our business as of the Latest Practicable Date.
NON-COMPETE UNDERTAKINGS
To ensure that competition will not exist in the future, each of Ximalaya, Summer, Mr. Li, Ms.
Zhang Bin and Rainbow Holdings as a covenantor (each a “Covenantor”, and collectively the
“Covenantors”) entered into the Deed of Non-Competition with us, pursuant to which each of the
Covenantors has, among other things, irrevocably and unconditionally undertaken with our
Company (the “Non-Compete Undertakings”) that at any time during the Relevant Period (as
defined below), each of the Covenantors shall not and shall procure that its/his/her close
— 178 —
associates (other than members of our Group) not to, directly or indirectly, engage in, invest in,
participate in, or attempt to participate in, whether on its/his/her own account or with each other
or in conjunction with or on behalf of any person or company, any business in competition with or
likely to be in competition with the existing business activities of our Group (the “Restricted
Businesses”). Trident Trust has not entered into the Deed of Non-Competition even though it is
one of our Controlling Shareholders. Our Directors are of the view that as Trident Trust is only
engaged in providing professional trustee and related services, its main business is holding assets
and properties on trust as professional trustee for its clients and does not operate any other
business that may directly or indirectly compete with our business or hold any assets or properties
or interests as a beneficial owner. Accordingly, its role as trustee to the Family Trust does not pose
any competition to the Restricted Businesses.
For the above purpose, the “Relevant Period” means the period commencing from the
Listing Date and until the earlier of (i) the date on which our Shares cease to be listed on the Stock
Exchange; and (ii) the date on which such Covenantor (together with his/her/its close associates),
whether directly or indirectly cease to be a controlling shareholder of our Company.
The aforesaid undertaking does not apply with respect to the Covenantors’ holding of or
being interested in, directly or indirectly, any shares in any company which conducts or is engaged
in, directly or indirectly, any business in competition with or likely to be in competition with the
existing business carried on by our Group, provided that:
(a) such shares are listed on a recognized stock exchange;
(b) the total number of such shares held by any of the Covenantors and/ or their respective
close associates does not amount to more than 10% of the issued shares of that class
of such company in question; and
(c) any Restricted Businesses conducted or engaged in by such company (and assets
relating thereto) accounts for less than 10% of that company’s consolidated revenue or
consolidated assets (individually or collectively with their respective associates) as
shown in that company’s latest audited accounts.
New Business Opportunity
Each of the Covenantors further undertakes with our Company that, if any new business
opportunity relating to the Restricted Business arises (the “Business Opportunity”):
(i) the Covenantors shall direct to us any such Business Opportunity by serving to our
Company a written notice; and
(ii) such written notice shall include all information together with any documents possessed
by it or its associates in respect of the Business Opportunity to enable our Company to
evaluate the merit of the Business Opportunity and all reasonable assistance as
requested by our Company to enable our Group to secure the Business Opportunity.
Upon receipt of the written notice from the Covenantors, our Group will consider whether it
is in the interest of our Company and our Shareholders as a whole to pursue the Business
Opportunity. For the avoidance of doubt, the Covenantors and their close associates (other than
members of our Group) will not be entitled to pursue the Business Opportunity unless the
Business Opportunity is declined by our Group.
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In addition, it is further provided in the Deed of Non-Competition that if there is any

disagreement between the Covenantors and our Company as to whether any Business
Opportunity shall directly or indirectly compete or lead to competition with the Restricted
Businesses, the matter shall be determined by our independent non-executive Directors whose
decision shall be final and binding.
Indemnity
Each of the Covenantors jointly and severally undertakes to indemnify and keep indemnified
our Group against any damage, loss or liability suffered by our Company or any other member of
our Group arising out of or in connection with any breach of its undertakings and/or obligations
under the Deed of Non-Competition, including any costs and expenses incurred as a result of such
breach provided that the indemnity contained in this clause shall be without prejudice to any other
rights and remedies our Company is entitled to in relation to any such breach, including specific
performance, and all such other things and remedies are hereby expressly reserved by our
Company.
CORPORATE GOVERNANCE MEASURES
Our Company has adopted the following measures to manage the conflict of interests arising
from competing business and to safeguard the interests of our Shareholders:
(a) our independent non-executive Directors will review, on an annual basis, the Deed of
Non-Competition to ensure compliance with the non-compete undertakings by the
Covenantors;
(b) the Covenantors undertake to provide all information requested by our Company which
is necessary for the annual review by our independent non-executive Directors and the
enforcement of the Deed of Non-Competition;
(c) our Company will disclose decisions on matters reviewed by our independent non-
executive Directors relating to compliance and enforcement of the Deed of Non-
Competition in the annual reports of our Company;
(d) the Covenantors will provide confirmation on compliance pursuant to their undertaking
under the Deed of Non-Competition in the annual report of our Company;
(e) our independent non-executive Directors are empowered to engage professional

advisors at our costs for advices on matters relating to any Business Opportunity or if
and when they think necessary in the course of considering connected transactions or
reviewing the compliance with the Deed of Non-Competition;
(f) our Company will disclose in an announcement, its interim and annual report on
decision, with basis, of our independent non-executive Directors to pursue or decline
the Business Opportunity;
(g) our Board will ensure that any material conflict or material potential conflict of interests
involving the Covenantors will be reported to our independent non-executive Directors
as soon as practicable when such conflict or potential conflict is discovered and a board
meeting will be held to review and evaluate the implications and risk exposure of such
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event and will monitor any material irregular business activities. The conflicted
Directors shall be required to absent from participation in the board meetings on which
resolutions with material potential conflicts of interest are discussed;
(h) our Company has appointed Guotai Junan Capital Limited as its compliance advisor,
which will provide advice and guidance to our Group in respect of compliance with the
applicable laws and Listing Rules including various requirements relating to directors’
duties and internal control; and
(i) our Company will observe any transaction that is proposed between our Group and its
connected persons, and will be required to comply with Chapter 14A of the Listing Rules
including, where applicable, the announcement, reporting, annual review and
independent Shareholders’ approval requirements of those rules.
INDEPENDENCE FROM OUR CONTROLLING SHAREHOLDERS
Having considered the matters described above and the following factors, we believe that our
Group is capable of carrying on its business independently from our Controlling Shareholders and
their respective associates after the Global Offering:
Delineation of Business and Non-Competition
Save as disclosed above and except for Trident Trust’s holding of assets and properties on
trust as professional trustee for its clients, as of Latest Practicable Date, none of our Controlling
Shareholders, any of their respective close associates and our Directors has any interest in a
business, other than our Group’s business, which competes or is likely to compete, either directly
or indirectly, with our Group’s business. In addition, the Covenantors have given Non-Compete
Undertakings in favor of our Company. For details, see “—Non-Compete Undertakings” above.
Management Independence
Our Board comprises four executive Directors, two non-executive Directors and three
independent non-executive Directors. Our non-executive Directors and independent non-
executive Directors will not participate in our daily operations. Each of our Directors is aware of
his or her fiduciary duties as a Director which require, among others, that he or she must act for
the benefit and in the best interest of our Company and must not allow any conflict between his
or her duties as a Director and his or her personal interest. If there is any potential conflict of
interest arising out of any transactions to be entered into between our Group and our Directors or
their respective associates, the interested Director shall abstain from voting at the relevant board
meetings of our Company in respect of such transactions and shall not be counted in the quorum.
Mr. Li is an executive Director as well as the sole director of Ximalaya, and Ms. Zhang Bin
is an executive Director as well as the sole director of Summer. Each of Ximalaya and Summer
is a corporate Controlling Shareholder. Since each of Ximalaya and Summer has no business
other than holding its shareholding interests in our Company, our Directors do not consider that
there is any issue in relation to management independence arising from the overlapping of
directors between our Company and Ximalaya, and the overlapping of directors between our
Company and Summer.
Having considered the above factors as well as the Non-Compete Undertakings, our
Directors are satisfied that they are able to perform their roles in our Company independently and
are of the view that they are capable of managing the business of our Company independently
after the Listing.
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Operational Independence
Although our Controlling Shareholders will retain a controlling interest in our Company after
the Listing, our Board has full rights to make all decisions on, and to carry out, its own business
operations independently.
Our Company has our own management team, of which most members are independent of
our Controlling Shareholders. Moreover, our Company (through its subsidiaries) holds all relevant
licenses necessary to carry on its businesses, and has sufficient capital, equipment and
employees to operate its business independently from our Controlling Shareholders.
Our Group has independent access to sources of distributors, customers and suppliers. Our
Group has also established a set of internal control procedures which facilitate the effective
operation of our Group’s business. Our Controlling Shareholders had not shared any common
facilities or resources during the Track Record Period and up to the Latest Practicable Date.
Our Directors currently do not expect that there will be any connected transaction between
our Company and our Controlling Shareholders and their respective associates following the
Listing. Our Company confirms that we will fully comply with Chapter 14A of the Listing Rules if
any connected transaction arises in the future.
Financial Independence
Our Group has its own financial management system, internal control and accounting
systems, accounting and finance department, independent treasury function for cash receipts and
payments and the ability to operate independently from our Controlling Shareholders from a
financial perspective.
Our Directors believe that our Group is capable of obtaining financing from external sources
without reliance on our Controlling Shareholders.
Having considered the above reasons, our Directors are of the view that our Group is capable
of carrying its business independently of our Controlling Shareholders (including any close
associates thereof) after the Listing.
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FINANCIAL INFORMATION
You should read the following discussion and analysis of our financial condition and
results of operations in conjunction with our consolidated financial statements as included in
Appendix I—“Accountants’ Report” to this prospectus, which were prepared in accordance with
IFRS, together with the accompanying notes. The following discussion and analysis include
forward-looking statements that involve risks and uncertainties. Our actual results could differ
materially from those anticipated in these forward-looking statements due to various factors,
including those set forth in “Forward-Looking Statements”, “Risk Factors” and elsewhere in this
prospectus.
OVERVIEW
implants. We also rolled out our 3D-printed spinal interbody cages and artificial vertebral bodies
in 2016, thereby entering into the spine replacement implant market. Our three 3D-printed
replacement implants are the first and only CFDA-approved 3D-printed orthopedic implant
products in China. We also market orthopedic products produced by third parties as a distributor
to complement our product offerings to customers.
We sell our products mainly through our distribution network which covers all the provinces,
municipalities and autonomous regions in China. As of June 30, 2017, we had 650 distributors. We
also sell a portion of our products directly to hospitals through our subsidiary which holds the
medical device business certificate. In 2014, 2015, 2016 and the six months ended June 30, 2016
and 2017, we sold 37,475, 44,652, 57,650, 24,666 and 28,941 sets of off-the-shelf hip
replacement implants, respectively, 8,920, 11,887, 17,105, 7,051 and 9,424 sets of knee
replacement implants, and nil, 214, 2,842, 730 and 2,441 pieces of 3D-printed products,
respectively.
ended June 30, 2016 and 2017, our revenue was RMB148.3 million, RMB206.2 million, RMB270.8
million, RMB115.3 million and RMB162.5 million, respectively, representing a CAGR of 35.1%
from 2014 to 2016. In the same periods, we had a gross profit of RMB101.3 million, RMB142.1
million, RMB187.3 million, RMB79.9 million and RMB111.7 million, respectively, representing a
CAGR of 36.0% from 2014 to 2016.
FACTORS AFFECTING OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The orthopedic implant market in China has grown rapidly since 2011 and, according to Frost
& Sullivan, the industry is expected to continue to grow rapidly in the next few years. Our financial
condition and results of operations benefited from this market trend during the Track Record
Period, and are expected to be significantly affected in the future by the growth or contraction of
the orthopedic implant market in China. See “Industry Overview” for certain factors affecting the
orthopedic implant market in China. In addition, our financial condition and results of operations
in any given period are expected to be affected by the following factors:
• healthcare regulations and policies in China;
• product development and pipeline;
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• expansion of our production capacity;
• product mix;
• expansion of our distribution network; and
• fluctuations in the supply and prices of raw materials.
Healthcare Regulations and Policies in China
The growth of China’s healthcare services industry as a whole and its subsectors is to a large
extent driven by government regulations and policies. In particular, our business is subject to
extensive government regulation and supervision, which affect the supply, demand and pricing of
orthopedic products in China, the competitive environment and the cost of compliance.
For instance, CFDA requires filings or registrations for medical devices, which must be
renewed on a periodic basis. The criteria and time requirements for filing, registration and their
renewal may be updated from time to time, which could significantly affect the resources and time
required for launching our new products and renewing the registration of our existing products.
During the Track Record Period, the increase in our sales volume and the change of average
selling price of our products were partly driven by the launch of new products, which in turn had
a significant impact on our revenue growth and profitability. For example, the 31.3% increase in
our revenue and expansion of our gross margin from 2015 to 2016 were to a significant extent
driven by our launch of new products in the year. Consequently, any significant change in CFDA
registration and renewal requirements could have a material impact on our results of operations
in each period.
The prices of a majority of medical devices, including orthopedic implants sold by us, are
subject to extensive government regulation. We and our distributors need to participate in a public
tender process to sell our products to the hospitals and medical institutions within the region. The
successful bidder sells its products to the hospitals and medical institutions within the region at the
bidding price offered in the bidding document. Consequently, changes in the bidding price can
affect our results of operations. In particular, the requirement for participating in the public tender
process often results in the bidding price for a specific product decreasing over time, therefore our
products generally are subject to price pressure. If the average selling price of our products
decreases, it would adversely affect our revenue and gross margin. However, we plan to continue
to focus on developing and introducing, new products to the market. As new products generally
have a higher selling price and gross margin as compared to older generation products, these
R&D efforts are expected to help us improve our average selling price and overall profitability.
On the other hand, the Chinese government has issued policies which encourage the use of
medical devices produced in China over imported products. The Chinese government also
promotes the technological development of smart healthcare according to the “Health China 2030”
Plan issued by the State Council. See “Industry Overview—Import Substitution with Domestic
Products”. Driven by these favorable government policies, from 2012 to 2016, the market share
of hip and knee replacement implants produced in China increased from 50.6% to 57.0% and from
27.9% to 31.2%, respectively. Leveraging these policies, we have gained market share for all of
our major products, including those for high-end orthopedic implant market sectors such as the
revision surgery market. In 2016, our off-the-shelf hip and knee replacement implants were used
in 7,449 revision surgeries, representing over one quarter of the total number of hip and knee
replacement implants used in revision surgeries in China. In particular, the number of off-the-shelf
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hip replacement implants we sold that were used in hip revision surgeries increased from 4,340
sets in 2014 to 7,087 sets in 2016. We expect that we will be able to continue to benefit from these
favorable policies.
In April 2016, the Chinese government announced a pilot program in certain provinces of
China to implement a “two-invoice” system which generally limits the distribution to a single level
of distributors for the sale of pharmaceutical products from manufacturers to public hospitals. See
“Regulation—The Two-Invoice System”. During the Track Record Period and up to the Latest
Practicable Date, the implementation of the “two-invoice system” had not resulted in any material
effect on our financial condition and results of operations because the demand for our products
from ultimate users were not affected. We expect that if more provinces begin implementing
similar systems for medical devices, our existing distributors may consolidate to a certain extent,
and certain existing distributors may become service providers to provide services ancillary to the
use of our products in surgeries. These changes may have a positive effect on our gross margin,
as there would be less levels of distributors, and we may incur additional expenses in engaging
service providers to provide customer services that are now provided by sub-distributors.
However, because the implementation of the “two-invoice system” is at an early stage, the
interpretations and enforcement of similar systems in the medical device field have been evolving
and are subject to uncertainty. Therefore, we are unable to predict how the business models will
evolve in different provinces of China, and whether and how that will affect our results of
operations in the future.
Product Development and Pipeline
Orthopedic implant companies generally make significant investments in R&D to modify and
improve the safety and efficacy of their products in order to maintain or improve the average
selling price and the overall profitability of their products portfolios. During the Track Record
Period, launching new products helped us (1) increase our overall revenue base as we tapped
higher-end or higher-margin sectors, (2) increase our average selling price as the new products
generally had a higher selling price than existing products and (3) boost the sales of existing
products as the new products were often used in conjunction with our other products in a single
surgery. For example, for off-the-shelf hip replacement implants, we launched various new
products such as ML series in 2015 and CL series in 2017, which increased the average selling
price of our off-the-shelf hip replacement implants, and boosted the sales volume of other
products that are compatible with the new products in the relevant periods. For 3D-printed
products, we launched our 3D-printed hip replacement implants in 2015 and rolled out our
3D-printed spinal interbody cages and artificial vertebral bodies in 2016, which were the only
CFDA 3D-printed orthopedic products approved as of the Latest Practicable Date. They were
generally priced higher and had relatively high gross margins, which further drove the growth of
our revenue and profit. Consequently, we expect that our R&D capabilities to develop a pipeline
of new products would be a main driver of our future growth and expansion of our profit margin.
As of the Latest Practicable Date, we had four products, including two hip replacement implants,
one knee replacement implant and one spine replacement implant, in the post-clinical trial stage,
one 3D-printed knee replacement implant in the clinical trial stage and one 3D-printed spine
replacement implant pending pre-clinical trial approval. From 2018 to 2020, we plan to launch six
new products, including our 3D-printed knee replacement implants.
However, R&D expenses could be material. In 2014, 2015, 2016 and the six months ended
June 30, 2016 and 2017, our R&D expenses were RMB15.5 million, RMB18.9 million, RMB20.4
million, RMB8.3 million and RMB17.9 million, respectively, representing 10.5%, 9.2%, 7.5%, 7.2%
and 11.0% of our revenue, respectively. If we are unable to develop new products that are
successful in the market, we may not be able to recoup our R&D expenses and our profitability
may therefore suffer.
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Expansion of our Production Capacity
As our business scale grows, we would need to expand our production capacity over time to
produce sufficient quantities of our products to meet customer demand. As such, we have in the
past few years increased our production capacity and output. For example, for our off-the-shelf
knee and hip replacement implants, production capacity increased from 63,800 sets in 2014 to
102,000 sets in 2016, while their revenue increased from RMB138.3 million in 2014 to RMB241.9
million in 2016.
In order to ensure our production capacity can meet growing customer demand as well as to
capture growth opportunities and expand our market share, we plan to expand our production
capacity by constructing the Changzhou Facilities. We expect part of the Changzhou Facilities will
have the necessary equipment installed and be ready for production by the second half of 2018.
We expect that the Changzhou Facilities will reach a designed production capacity of 22,500 sets
of off-the-shelf orthopedic joint implants by the end of 2018. See “Our Business—Production—
Changzhou Facilities” for details.
However, expanding our production capacity involves significant capital expenditure, which
may destabilize our liquidity if we are unable to generate sufficient cash flow from operations or
from financing activities. In addition, expanding our production capacity generally results in higher
depreciation expenses in future periods. As a result, if we are not able to maintain a sufficient
utilization rate, or otherwise fail to generate sufficient profit from the expanded production capacity
to offset the increased depreciation expenses, our profitability would suffer from the expansion.
Product Mix
The selling price and gross margin of our different products vary significantly. For example,
among our off-the-shelf products, knee joint implants generally have a higher gross margin than
our hip joint implants. As a result, our product mix in each of the reporting periods would affect our
average selling price and overall gross margin. We expect that our product mix will continue to
affect our overall financial performance. Therefore, we strive to continue to penetrate high-margin
orthopedic product market sectors to build a more comprehensive, diverse and profitable product
mix, such as by focusing on the sales of 3D-printed products and launching customized orthopedic
implants.
Expansion of Our Distribution Network
We generate a majority of our revenue from sales to our distributors. In 2014, 2015, 2016 and
the six months ended June 30, 2016 and 2017, revenue from sales to our domestic distributors
was RMB138.7 million, RMB192.7 million, RMB245.4 million, RMB107.2 million and RMB153.0
million, respectively, representing 93.6%, 93.5%, 90.6%, 93.0% and 94.2% of our total revenue,
respectively. Therefore, our ability to expand our distribution network is critical to the growth of our
business. As of December 31, 2014, 2015, 2016 and June 30, 2017, we had 552, 595, 603 and
632 domestic distributors, respectively. As of the Latest Practicable Date, our distribution network
covered over 3,000 hospitals in all of the provinces, municipalities and autonomous regions in
China. We believe the coverage of our distribution network therefore is key in reaching end
customers nationwide and we seek to further expand our distribution network.
However, as we grow our distribution network, we will inevitably need to compete with our
competitors in attracting competent distributors through both product quality and the favorability
of the terms and conditions of our distribution agreements. Granting more favorable terms and
— 186 —
conditions to our distributors could have an adverse effect on our financial condition. For example,
in 2014, 2015 and 2016 and the six months ended June 30, 2017, we had trade receivable
turnover days of 38 days, 55 days, 74 days and 75 days, respectively. The increase in trade
receivable turnover days was mainly because we granted credits periods to more qualified
distributors and longer credit periods to some of our other distributors to attract competent
distributors so that we could maintain and expand our distribution network and enter into new
markets. We also granted revolving credit to qualified distributors covering provinces in Southern
China where we intend to strengthen our market presence. As we are a leading orthopedic joint
implant company in China and have relatively strong bargaining power, we believe we are
historically more conservative than our main domestic competitors in terms of credit periods
granted to distributors. As a result, we may decide to grant more favorable credit terms to
distributors in the future as we expand our distribution network. See “—Financial Risk
Management and Fair Values of Financial Instruments—Credit Risk” for our policy to manage the
credit risk associated with our credit policy for distributors.
Fluctuations in the Supply and Prices of Raw Materials
Fluctuations in the prices of raw materials affect our cost structure, product pricing and
thereby our profits. Major raw materials used in our products include titanium alloy, cobalt-
chromium-molybdenum alloy and ultra-high molecular weight polyethylene materials. According to
Frost & Sullivan, the historical prices of titanium alloy, cobalt-chromium-molybdenum alloy and
ultra-high molecular weight polyethylene have generally increased in China in recent years, as a
result of the increasing demands for orthopedic joint implants. Due to the sufficient supply of raw
materials in China market, their prices have not increased considerably in the past few years. A
slow-growing trend will continue for the next few years. See “Industry Overview—Historical Prices
of Major Raw Materials”. Cessation in our supply of raw materials would also affect our cost of
sales. We adjust our inventory level accordingly when we expect the prices of certain raw material
prices to rise or fluctuate.
BASIS OF PRESENTATION
During the Track Record Period, our business was conducted through AK Medical Beijing
and its subsidiary. AK Medical Beijing was owned as to 78.021% and controlled by Mr. Li before
the Reorganization. Our Company was incorporated by Mr. Li in the Cayman Islands as an
exempted company with limited liability on July 17, 2015. On July 21, 2015, our Company
incorporated AK Medical BVI as its wholly-owned subsidiary, which in turn incorporated AK
Medical HK as its wholly-owned subsidiary on July 28, 2015. On November 17, 2015, AK Medical
HK acquired a 90.0% equity interest in AK Medical Beijing. On February 29, 2016, AK Medical BVI
acquired all the issued shares of Bright AK HK, which owned the other 10.0% equity interest in AK
Medical Beijing, and as a result our Company became the indirect owner of the entire equity
interest in AK Medical Beijing. See “History, Reorganization and Development—Reorganization”.
AK Medical Beijing was owned by the shareholders in the same proportion before and after the
Reorganization and there was no change in the economic substance of the ownership and
business of AK Medical Beijing. Accordingly, no business combination has occurred and the
Reorganization was accounted for using a principle similar to that for a reverse acquisition as set
forth in IFRS 3, Business Combinations, with AK Medical Beijing treated as acquiror for
accounting purposes. Accordingly, the financial information of our Group for the Track Record
Period has been prepared as a continuation of AK Medical Beijing and the assets and liabilities
of AK Medical Beijing and its subsidiary are recognized and measured at their historical carrying
values prior to the Reorganization. All material intra-group transactions and balances have been
eliminated on consolidation.
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CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our significant accounting policies are set forth in note 2 to our consolidated financial
statements included in Appendix I—“Accountants’ Report” to this prospectus. The preparation of
our consolidated financial statements requires our management to make judgments, estimates
and assumptions that affect the application of policies and the amounts reported in our
consolidated financial statements. These judgments, estimates and assumptions are based on
historical experience and other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making the judgments that are not readily
apparent from other sources. Actual results could differ significantly. We have identified the
following accounting policies as critical to an understanding of our financial condition and results
of operations, because the application of these policies requires significant management
judgments, estimates and assumptions, and the reporting of materially different amounts could
result if different judgments were made or different estimates or assumptions were used.
Revenue Recognition
We recognize revenue when the related risks and rewards of ownership of goods are
transferred to the customers. Accordingly, we generally recognize revenue when our products are
delivered at distributors’ premises and the distributors have accepted the goods and, in the case
of direct sales to hospitals, when the hospital confirms actual use of our products. The amount of
revenue in each reporting period has netted off any accrued sales rebates payable to customers
in the reporting period.
Depreciation
Property, plant and equipment are depreciated on a straight-line basis over their estimated
useful lives, after taking into account the estimated residual value. We review at the end of each
reporting period the estimated useful lives of an asset and its residual value, if any, based on our
historical experience with similar assets and taking into account anticipated technological
changes. The depreciation expense for future periods is adjusted if there are significant changes
from previous estimates.
Impairment of Trade and Other Receivables
We evaluate whether there is any objective evidence that trade and other receivables are
impaired, and estimate allowances for doubtful debts as a result of the inability of the debtors to
make required payments. We base the estimates on the aging of the trade and other receivables
balance, creditworthiness of the customer and historical write-off experience. If the financial
condition of the debtors were to deteriorate, actual write-offs would be higher than estimated.
Net Realizable Value of Inventories
Net realizable value of inventories is the estimated selling price in the ordinary course of
business, less estimated costs to completion and selling expenses. These estimates are based on
the current market condition and the historical experience of manufacturing and selling products
of a similar nature. These estimates could change significantly as a result of changes in customer
preferences and competitor actions. We reassess these estimates at the end of each reporting
period.
— 188 —
Income Tax
We are subject to Chinese EIT, Hong Kong profit tax and Cayman Islands Income Tax.
Judgment is required in determining the provision for income tax. There are transactions in the
ordinary course of business, for which the determination of actual tax amounts is uncertain at the
time of the transactions. Where the final outcome is different from the amounts that were initially
recorded, such differences will impact the income tax and deferred tax provisions in the period in
which such determination is made. Recognition of deferred tax depends on our expectations of
future taxable profit that will be available. Actual utilization may be different.
Sales Returns or Exchanges
Our distribution agreements do not allow our distributors to return or exchange their unsold
products without our consent. However, we, in practice, have accepted certain returns and
exchanges by distributors of our orthopedic implants. We believe that sales exchanges would not
result in any significant outflow of our resources embodying economic benefits. Based on
historical figures, sales returns represent 2.0% of our annual sales. Therefore, we have
recognized revenue with a corresponding provision against revenue for estimated returns of 2.0%
of our annual sales for the relevant period.
For returned products, we recognize revenue after netting off a provision representing the
estimated subsequent sales returns for products sold during the reporting period. In 2014, 2015,
2016 and the six months ended June 30, 2017, our product returns resulted in the recognition of
utilized provisions of RMB1.9 million, RMB1.5 million, RMB2.5 million and RMB1.6 million,
respectively, all of which were unrelated to product quality, representing 1.3%, 0.7%, 0.9% and
1.0% of our total revenue, respectively. See “Our Business—Customers, Sales and
Distribution—Return and Exchange of Products” for our product return policy.
During the Track Record Period, we voluntarily accepted or actively promoted product
exchanges under two situations as set forth below. We only accepted or promoted such
exchanges if we believed the products to be exchanged were resellable. In a situation where a
distributor seeks to exchange the same product for different sizes or expiration dates, we would
normally accept such requests without adjusting our revenue as the selling price of products of
difference sizes or expiration dates are the same. In other situations, we voluntarily encouraged
some of our selected distributors to exchange products of different types or models (1) to promote
new products; and (2) to change the product mix of such distributors to accommodate the local
needs, which we would account for as product returns and purchases of more desirable products,
because we would require these distributors to purchase more desirable products that had an
equal or higher aggregate price than the products exchanged. Any excess between the price of
the new products purchased and the existing products exchanged by the distributor would be
recognized as revenue upon the exchange. In 2014, 2015, 2016 and the six months ended June
30, 2017, revenue derived from such excess amounted to RMB19,491, RMB232,093,
RMB177,154 and RMB69,100, respectively, representing approximately 0.01%, 0.11%, 0.07%
and 0.04% of our revenue, respectively.
— 189 —
R&D Expenditures
Expenditure on research activities is recognized as an expense in the period in which it is

incurred. Expenditure on development activities is capitalized if the product or process is
technically and commercially feasible and we have sufficient resources and intend to complete the
development. The expenditure capitalized includes the costs of materials, direct labor, and an
appropriate proportion of overheads and borrowing costs, where applicable. Capitalized
development expenditures are stated at cost less accumulated amortization and impairment
losses. Other development expenditure is recognized as an expense in the period in which it is
incurred.
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS
The consolidated statements of profit or loss for the years ended December 31, 2014, 2015,
2016 and the six months ended June 30, 2017 set forth below are derived from our audited
consolidated financial statements, including the notes thereto, set forth in Appendix
I—“Accountants’ Report” to this prospectus. The unaudited consolidated statements of profit or
loss for the six months ended June 30, 2016 set forth below are derived from our unaudited
consolidated financial statements set forth in Appendix I—“Accountants’ Report” to this
prospectus. You should read the consolidated statements of profit or loss in conjunction with our
consolidated financial statements included in the Appendix I—“Accountants’ Report” to this
prospectus, together with the accompanying notes, which were prepared in accordance with
IFRS.

2014 2015 2016 2016 2017
Amount revenue Amount revenue Amount revenue Amount revenue Amount revenue
(unaudited)
(in thousands of RMB, except for percentages)
Revenue . . . . . . . 148,278 100.0% 206,164 100.0% 270,777 100.0% 115,347 100.0% 162,517 100.0%
Cost of sales . . . . . (46,933) (31.7) (64,108) (31.1) (83,466) (30.8) (35,470) (30.8) (50,814) (31.3)
Gross profit . . . . . 101,345 68.3 142,056 68.9 187,311 69.2 79,877 69.2 111,703 68.7
Other income. . . . . 1,778 1.2 823 0.4 793 0.3 368 0.3 1,854 1.1
Selling and
distribution
expenses . . . . . . (17,416) (11.7) (28,782) (14.0) (36,229) (13.4) (14,098) (12.2) (19,660) (12.1)
General and
administrative
expenses . . . . . . (12,377) (8.3) (22,262) (10.8) (38,115) (14.1) (20,180) (17.5) (18,276) (11.2)
Research and
development
expenses . . . . . . (15,539) (10.5) (18,878) (9.2) (20,390) (7.5) (8,266) (7.2) (17,929) (11)
Operating profit . . 57,791 39.0% 72,957 35.4% 93,370 34.5% 37,701 32.7% 57,692 35.5%
Net finance income . 2,506 1.7 2,994 1.5 1,657 0.6 988 0.9 478 0.3
Profit before tax . . 60,297 40.7 75,951 36.8 95,027 35.1 38,689 33.5 58,170 35.8
Income tax expense. (8,576) (5.8) (11,044) (5.4) (17,701) (6.5) (5,467) (4.7) (8,120) (5.0)
Profit . . . . . . . . . 51,721 34.9% 64,907 31.5% 77,326 28.6% 33,222 28.8% 50,050 30.8%
— 190 —
Revenue
In 2014, 2015, 2016 and the six months ended June 30, 2016 and 2017, our revenue
amounted to RMB148.3 million, RMB206.2 million, RMB270.8 million, RMB115.3 million and
RMB162.5 million, respectively. We generate our revenue primarily from the sales of our
off-the-shelf products and partially from our 3D-printed products. In 2014, 2015, 2016 and the six
months ended June 30, 2016 and 2017, our revenue generated from sales of off-the-shelf
products, consisting of knee replacement implants and hip replacement implants was RMB138.3
accounting for 93.3%, 93.7%, 89.3%, 90.6% and 87.4% of our total revenue, respectively.
We launched our first 3D-printed product in August 2015. In 2015, 2016 and the six months
ended June 30, 2016 and 2017, our revenue generated from sales of our 3D-printed products was
RMB1.1 million, RMB12.1 million, RMB3.0 million and RMB9.8 million, accounting for 0.5%, 4.5%,
2.6% and 6.0% of our total revenue, respectively.
The following table sets forth a breakdown of our revenue by product type for the periods
indicated:

2014 2015 2016 2016 2017
(unaudited)
Off-the-shelf
Products
Knee replacement
implants . . . . . 45,566 30.7% 60,567 29.4% 83,008 30.7% 35,418 30.7% 47,417 29.2%
Hip replacement
implants(1) . . . . 92,734 62.5 132,692 64.4 158,871 58.7 69,062 59.9 94,594 58.2
3D-printed
products(2) . . . . . – – 1,060 0.5 12,131 4.5 3,004 2.6 9,777 6.0
Third party
orthopedic
products . . . . . . 9,013 6.1 9,149 4.4 10,785 4.0 5,292 4.6 6,893 4.2
Others(3) . . . . . . . 965 0.7 2,696 1.3 5,982 2.2 2,571 2.2 3,836 2.4
Total . . . . . . . . . 148,278 100.0% 206,164 100.0% 270,777 100.0% 115,347 100.0% 162,517 100.0%
(2) Including 3D-printed hip replacement implants, spinal interbody cages and artificial vertebral bodies.
The increase in revenue during the Track Record Period was primarily a result of the growth
in sales volume of our off-the-shelf knee and hip replacement implants and, to a lesser extent,
3D-printed products. The increase in our sales volume was mainly driven by the launch of new
products and the expansion of our distribution network. See “—Factors Affecting Our Financial
Condition and Results of Operations—Product Development and Pipeline” for a discussion on how
the launch of new products affects our results of operations.
— 191 —
Our off-the-shelf products include off-the-shelf knee replacement implants and hip
replacement implants.
In 2014, 2015, 2016 and the six months ended June 30, 2016 and 2017, revenue from sales
of knee replacement implants was RMB45.6 million, RMB60.6 million, RMB83.0 million, RMB35.4
million and RMB47.4 million, respectively, representing 30.7%, 29.4%, 30.7%, 30.7% and 29.2%
of our total revenue, respectively. The increase in revenue from sales of our knee replacement
implants was primarily driven by an increase in sales volume. In 2014, 2015, 2016 and the six
months ended June 30, 2016 and 2017, we sold 8,920, 11,887, 17,105, 7,051 and 9,424 sets of
knee replacement implants, respectively.
In 2014, 2015, 2016 and the six months ended June 30, 2016 and 2017, our revenue from
sales of off-the-shelf hip replacement implants was RMB92.7 million, RMB132.7 million,
RMB158.9 million, RMB69.1 million and RMB94.6 million, respectively, representing 62.5%,
64.4%, 58.7%, 59.9% and 58.2% of our total revenue, respectively. The increase in revenue from
our off-the-shelf hip replacement implants was primarily driven by an increase in sales volume. In
2014, 2015, 2016 and the six months ended June 30, 2016 and 2017, we sold 37,475, 44,652,
57,650, 24,666 and 28,941 sets of off-the-shelf hip replacement implants, respectively.
In 2014, 2015, 2016 and the six months ended June 30, 2016 and 2017, the average selling
price for our knee replacement implants was RMB5,108, RMB5,095, RMB4,853, RMB5,023 and
RMB5,032 per set, respectively. In the same periods, the average selling price for our off-the-shelf
hip replacement implants was RMB2,475, RMB2,972, RMB2,756, RMB2,800 and RMB3,269 per
set, respectively. The fluctuation in the average selling price for our off-the-shelf knee and hip
replacement implants was primarily driven by the introduction of new products to our product
portfolio. As new products generally have higher selling prices than comparable existing products,
the timing for launches and sales volume of our new products in different periods will have a
significant effect on the overall average selling price for our knee and hip replacement implants
in each period. In particular, we launched various new products such as ML series in 2015 and CL
series in 2017, which had higher prices than our existing products and drove the increase in the
average selling price.
3D-Printed Products
We launched our CFDA-approved 3D-printed hip replacement implant in August 2015 and
rolled out our 3D-printed artificial vertebral bodies and spinal interbody cages in August and
September 2016, respectively. In 2015, 2016 and the six months ended June 30, 2016 and 2017,
our revenue from sales of 3D-printed products was RMB1.1 million, RMB12.1 million, RMB3.0
million and RMB9.8 million, respectively. The increase in revenue from sales of our 3D-printed
products was primarily driven by an increase in sales volume. In 2015, 2016 and the six months
ended June 30, 2016 and 2017, we sold 214, 2,842, 730 and 2,441 pieces of 3D-printed products,
respectively. The prices of our 3D-printed products vary significantly. As the commercialization of
3D-printed orthopedic implant products is in an early stage in China, our sales volume grew
quickly during the Track Record Period, and we expect it will continue to grow in a relatively rapid
manner in the near future.
— 192 —
Third Party Orthopedic Products
During the Track Record Period, we, acting as a distributor, also distributed orthopedic
products produced by third parties to complement our own product portfolio. In 2014, 2015, 2016
and the six months ended June 30, 2016 and 2017, our revenue from distributing third party
orthopedic products were RMB9.0 million, RMB9.1 million, RMB10.8 million, RMB5.3 million and
RMB6.9 million, representing 6.1%, 4.4%, 4.0%, 4.6% and 4.2% of our revenue, respectively. As
we sell third party orthopedic products to complement our own product portfolio, we did not, and
do not intend to, further expand such product offerings significantly.
Domestic and Overseas Sales
During the Track Record Period, substantially all of our revenue was generated in China, with
a small percentage generated from overseas sales. The following table sets forth a breakdown of
our revenue by domestic and overseas sales for the periods indicated:

2014 2015 2016 2016 2017
(unaudited)
Domestic . . . . . . . 148,196 99.9% 203,220 98.6% 259,249 95.7% 112,492 97.5% 159,231 98.0%
Overseas . . . . . . . 82 0.1 2,944 1.4 11,528 4.3 2,855 2.5 3,286 2.0
Total . . . . . . . . . 148,278 100.0% 206,164 100.0% 270,777 100.0% 115,347 100.0% 162,517 100.0%
Cost of Sales
In 2014, 2015, 2016 and the six months ended June 30, 2016 and 2017, our cost of sales was
RMB46.9 million, RMB64.1 million, RMB83.5 million, RMB35.5 million and RMB50.8 million,
respectively. Our cost of sales primarily consists of cost of materials, labor cost and production
cost for our self-produced products, and our distribution costs for orthopedic products produced
by third parties. The following table sets forth a breakdown of our cost of sales for the periods
indicated:

2014 2015 2016 2016 2017
(unaudited)
Self-produced
products
Cost of materials . 26,740 57.0% 43,718 68.2% 53,940 64.6% 22,190 62.6% 36,021 70.9%
Labor cost . . . . . 4,918 10.5 5,365 8.4 8,485 10.2 3,806 10.7 4,304 8.5
Production cost . . 10,404 22.2 10,609 16.5 15,288 18.3 7,103 20.0 6,414 12.6
Products produced
by third parties . . 4,871 10.3 4,416 6.9 5,753 6.9 2,371 6.7 4,075 8.0
Total . . . . . . . . . 46,933 100.0% 64,108 100.0% 83,466 100.0% 35,470 100.0% 50,814 100.0%
— 193 —
Cost of materials consists primarily of the cost of (1) raw materials, including mainly titanium
alloy, cobalt-chromium-molybdenum alloy and ultra-high molecular weight polyethylene materials,
(2) third party produced components, including ceramic heads, and (3) fees for outsourcing to
third parties some processing procedures for certain products. The following table sets forth a
breakdown of our cost of materials for the periods indicated:

2014 2015 2016 2016 2017
(unaudited)
Cobalt-chromium-
molybdenum
alloy . . . . . . . . 17,136 64.1% 19,041 43.6% 23,500 43.6% 11,062 49.9% 13,653 37.9%
Titanium alloy . . . . 7,076 26.5 14,589 33.4 22,539 41.8 8,439 38.0 15,317 42.5
Ceramic heads . . . – – 6,610 15.1 3,905 7.2 1,017 4.6 4,147 11.5
Ultra-high molecular
weight
polyethylene
materials . . . . . 1,062 4.0 1,673 3.8 2,111 3.9 922 4.2 1,485 4.1
Others . . . . . . . . 1,466 5.5 1,805 4.1 1,885 3.5 750 3.4 1,419 3.9
Total . . . . . . . . . 26,740 100.0% 43,718 100.0% 53,940 100.0% 22,190 100.0% 36,021 100.0%
The following table sets forth a sensitivity analysis on the impact of changes in raw material
prices on our gross margin and profit during the Track Record Period. A negative/positive number
below indicates a decrease/increase in gross margin and profit for the period where the price of
raw material increases/decreases by 10.0%, assuming the effective income tax rate was 15.0%
throughout the Track Record Period.
Six months ended

2014 2015 2016 2016 2017
Gross Gross Gross Gross Gross
Margin Profit Margin Profit Margin Profit Margin Profit Margin Profit
Cobalt-chromium- -1.2%/ -1,457 -0.9%/ -1,618 -0.8%/ -1,775 -0.8%/ -740 -0.6%/ -846
molybdenum alloy . . (+1.2%) (+1,457) (+0.9%) (+1,618) (+0.8%) (+1,775) (+0.8%) (+740) (+0.6%) (+846)
-0.5%/ -601 -0.7%/ -1,240 -0.9%/ -2,176 -1.0%/ -947 -1.2%/ -1,683
Titanium alloy . . . . . (+0.5%) (+601) (+0.7%) (+1,240) (+0.9%) (+2,176) (+1.0%) (+947) (+1.2%) (+1,683)
-0.3%/ -562 -0.1%/ -332 -0.1%/ -86 -0.3%/ -352
Ceramic heads . . . . – – (+0.3%) (+562) (+0.1%) (+332) (+0.1%) (+86) (+0.3%) (+352)
Ultra-high molecular
weight polyethylene -0.1%/ -90 -0.1%/ -142 -0.1%/ -159 -0.1%/ -62 -0.1%/ -92
materials . . . . . . (+0.1%) (+90) (+0.1%) (+142) (+0.1%) (+159) (+0.1%) (+62) (+0.1%) (+92)
-0.1%/ -124 -0.1%/ -154 -0.1%/ -142 -0.1%/ -50 -0.1%/ -88
Others . . . . . . . . . (+0.1%) (+124) (+0.1%) (+154) (+0.1%) (+142) (+0.1%) (+50) (+0.1%) (+88)
Labor cost consists primarily of compensation and benefits for our production workers.
Production cost consists principally of compensation and benefits for our production management
and quality control personnel, depreciation of production equipment, rent for the production
facilities, cost of supplementary materials and utilities. Cost of products produced by third parties
represents primarily the cost of purchasing the third party orthopedic products.
— 194 —
Gross Profit and Gross Margin
Gross profit represents revenue less cost of sales. In 2014, 2015, 2016 and the six months
ended June 30, 2016 and 2017, we had gross profit of RMB101.3 million, RMB142.1 million,
RMB187.3 million, RMB79.9 million and RMB111.7 million, respectively. The increase in gross
profit in these periods was primarily driven by the growth of our overall business scale which drove
the increase in our revenue. See “—Revenue”.
Gross margin represents gross profit divided by total revenue, expressed as a percentage.
In 2014, 2015, 2016 and the six months ended June 30, 2016 and 2017, our gross margin was
relatively stable, at 68.3%, 68.9%, 69.2%, 69.2% and 68.7%, respectively.
The following table sets forth a breakdown of gross margin by feature of our products for the
periods indicated:
Six months ended

2014 2015 2016 2016 2017
Knee replacement implants
For primary surgeries. . . . . . . . . . 68.5% 73.1% 71.6% 72.6% 73.1%
For revision surgeries . . . . . . . . . 76.1 73.3 76.9 77.8 82.1
Hip replacement implants
For primary surgeries . . . . . . . . . 71.9 73.4 71.9 69.9 71.8
For revision surgeries . . . . . . . . . 78.1 80.9 81.8 80.1 84.2
Common components(1) . . . . . . . . 66.3 61.9 60.9 61.0 60.2
3D-printed products
Hip replacement implants N/A 87.3 82.6 84.6 81.6
Spine replacement implants . . . . . . . N/A N/A 97.8 N/A 95.9
Third-party orthopedic products . . . . . . 46.0 51.7 46.7 55.2 40.9
Others (2) . . . . . . . . . . . . . . . . . . . . 59.8 50.7 71.5 83.0 45.2
Total gross margin . . . . . . . . . . . . . 68.3% 68.9% 69.2% 69.2% 68.7%
(1) Common components are components that can be used for both primary surgeries and revision surgeries.
During the Track Record Period, gross margin of off-the-shelf orthopedic joint implants for
revision surgeries generally had a higher gross margin than orthopedic joint implants for primary
surgeries, as they generally required more precision in the development and production. Gross
margin of our knee replacement implants for primary surgeries increased from 68.5% in 2014 to
71.6% in 2016 and further to 73.1% in the six months ended June 30, 2017. This was mainly due
to an increase in the sales of our A3 Total Knee Replacement products, which had a relatively high
selling price and gross margin, as a percentage of our total sales of knee replacement implants
for primary surgeries. Gross margin of our knee replacement implants for revision surgeries
decreased from 76.1% in 2014 to 73.3% in 2015, and increased to 76.9% in 2016 and further to
82.1% in the six months ended June 30, 2017. The decrease in 2015 was primarily because we
sold more ACCK Revision Total Knee Replacement product overseas in 2015, and our selling
price for overseas sales was generally lower than domestic sales because we did not have to bear
various selling and distribution expenses for overseas sales and therefore were willing to quote
lower prices. During the Track Record Period, gross margin of common components of
off-the-shelf hip replacement implants was lower than the other types of off-the-shelf hip
replacement implants. This was mainly because a majority of our common components were
introduced prior to the Track Record Period and thus were priced lower.
— 195 —
Our 3D-printed products had a much higher gross margin as compared to other products.
Our 3D-printed hip replacement implant had a gross margin of 87.3%, 82.6%, 84.6% and 81.6%
in 2015, 2016 and six months ended June 30, 2016 and 2017. Our 3D-printed spine replacement
implants had gross margin of 97.8% and 95.9% in 2016 and six months ended June 30, 2017. Our
3D-printed products are generally priced higher than their off-the-shelf counterparts because (1)
there are no other comparable 3D-printed products in the Chinese market, which renders a
competitive advantage allowing us to command higher selling prices; and (2) the higher average
unit cost of producing them as 3D-printing machines are generally more expensive than our
production equipment for off-the-shelf products. As a result, the gross margin of our 3D-printed
products were relatively high during the Track Record Period. However, since our 3D-printed
products have only recently been launched, their sales volume was relatively low during the Track
Record Period. As a result, our 3D-printed products did not have a significant impact on our overall
gross margin.
Other Income
The following table sets forth a breakdown of our other income for the periods indicated:
Six months ended

2014 2015 2016 2016 2017
(unaudited)
Government grant . . . . . . . . . . . . . . . . . . 1,649 685 778 376 563
Others . . . . . . . . . . . . . . . . . . . . . . . . . 129 138 15 (8) 1,291
Total . . . . . . . . . . . . . . . . . . . . . . . . . . 1,778 823 793 368 1,854
In 2014, 2015, 2016 and the six months ended June 30, 2016 and 2017, we had other income
of RMB1.8 million, RMB0.8 million, RMB0.8 million, RMB0.4 million and RMB1.9 million,
respectively. Our other income primarily consisted of ad hoc government grants we received from
time to time in the form of subsidies offered to commercial entities whose R&D projects met certain
criteria. A majority of government grants we received during the Track Record Period were for
purpose of subsidizing our R&D projects, which are granted on an on-going basis depending on
the progress of the relevant projects. We expect our outstanding R&D projects to be subsidized
continuously and plan to apply for new government grants for planned R&D projects. In addition,
we leased certain facilities in connection with our Changzhou Facilities on a rent-free basis, which
was accounted for as a non-monetary government grant and recognized at nominal value. For
details of the rent-free facilities in Changzhou, see “Our Business—Property—Leased
Property—Habatun Village Property”.
— 196 —
Selling and Distribution Expenses
The following table sets forth a breakdown of our selling and distribution expenses for the
periods indicated:

2014 2015 2016 2016 2017
Amount Revenue Amount Revenue Amount Revenue Amount Revenue Amount Revenue
(unaudited)
Salary and
compensation . . . 7,266 4.9% 11,292 5.5% 14,531 5.4% 6,764 5.9% 8,192 5.0%
Promotion and
advertising
expenses . . . . . . 3,250 2.2 7,722 3.7 9,522 3.5 2,807 2.4 2,898 1.8
Traveling and
transportation
expenses . . . . . . 3,872 2.6 5,581 2.7 6,838 2.5 2,479 2.1 3,457 2.1
Office expenses . . . 1,366 0.9 1,935 0.9 2,364 0.9 1,041 0.9 2,542 1.6
Others(1) . . . . . . . 1,662 1.1 2,252 1.1 2,974 1.0 1,007 0.9 2,571 1.6
Total . . . . . . . . . 17,416 11.7% 28,782 14.0% 36,229 13.4% 14,098 12.2% 19,660 12.1%
(1) Others primarily include depreciation, communication expenses, service fees for bidding and hospitality expenses
incurred by sales personnel.
In 2014, 2015, 2016 and the six months ended June 30, 2016 and 2017, we incurred selling
and distribution expenses of RMB17.4 million, RMB28.8 million, RMB36.2 million, RMB14.1
million and RMB19.7 million, respectively, representing 11.7%, 14.0%, 13.4%, 12.2% and 12.1%
of our revenue, respectively. Our selling and distribution expenses primarily consist of
compensation and benefits for our sales and marketing personnel, promotion and advertising
expenses such as costs relating to our sales and marketing personnel hosting and attending
industry conferences, traveling and transportation expenses in relation to our sales, office
expenses and other selling and distribution expenses.
— 197 —
General and Administrative Expenses
The following table sets forth a breakdown of our general and administrative expense for the
periods indicated:

2014 2015 2016 2016 2017
(unaudited)
Salary and
compensation . . . 4,643 3.1% 6,523 3.2% 8,021 3.0% 3,417 3.0% 5,857 3.6%
Traveling and
transportation . . . 1,900 1.3 2,855 1.4 2,748 1.0 1,148 1.0 1,731 1.1
Training fees . . . . . 490 0.3 2,183 1.1 105 0.0 19 0.0 161 0.1
Other tax expenses . 1,696 1.1 1,923 0.9 2,631 1.0 1,286 1.1 2,779 1.7
Consultation and
service fees . . . . 1,096 0.7 1,452 0.7 2,387 0.9 1,333 1.2 1,985 1.2
Office expenses . . . 717 0.5 783 0.4 857 0.3 297 0.3 456 0.3
Depreciation . . . . . 552 0.4 686 0.3 1,125 0.4 476 0.4 1,054 0.6
Listing expenses . . . – – 3,303 1.6 17,668 6.5 10,825 9.4 909 0.6
Others(1) . . . . . . . 1,283 0.9 2,554 1.2 2,573 1.0 1,379 1.2 3,344 2.1
Total . . . . . . . . . 12,377 8.3% 22,262 10.8% 38,115 14.1% 20,180 17.5% 18,276 11.2%
(1) Others primarily include rent, hospitality expenses incurred by management personnel, printing expenses and
impairment losses.
In 2014, 2015, 2016 and the six months ended June 30, 2016 and 2017, we incurred general
and administrative expenses of RMB12.4 million, RMB22.3 million, RMB38.1 million, RMB20.2
million and RMB18.3 million, respectively, representing 8.3%, 10.8%, 14.1%, 17.5% and 11.2% of
our revenue, respectively. Our general and administrative expenses consist primarily of
compensation and benefits for our administrative personnel, traveling expenses, training program
fees for our senior management and other personnel, Listing expenses and certain non-income
tax expenses.
— 198 —
Research and Development Expenses
The following table sets forth a breakdown of our R&D expenses for the periods indicated:

2014 2015 2016 2016 2017
(unaudited)
Cost of materials, fuel
and power . . . . . . 7,970 5.4% 8,675 4.2% 5,360 2.0% 2,528 2.2% 3,029 1.9%
Labor cost . . . . . . . 3,193 2.2 4,074 2.0 7,081 2.6 2,746 2.4 3,831 2.4
Cost of experiments
and clinical trials . . 588 0.4 2,479 1.2 3,258 1.2 992 0.9 6,969 4.3
Depreciation . . . . . . 1,412 1.0 1,391 0.7 1,965 0.7 812 0.7 1,839 1.1
Others(1) . . . . . . . . 2,376 1.6 2,259 1.1 2,726 1.0 1,188 1.0 2,261 1.4
Total . . . . . . . . . 15,539 10.5% 18,878 9.2% 20,390 7.5% 8,266 7.2% 17,929 11.0%
(1) Others primarily include fees incurred for patent applications, rent for R&D facilities, traveling expenses for our R&D
personnel and amortization of intangible assets.
In 2014, 2015, 2016 and the six months ended June 30, 2016 and 2017, we incurred R&D
expenses of RMB15.5 million, RMB18.9 million, RMB20.4 million, RMB8.3 million and RMB17.9
million, respectively, representing 10.5%, 9.2%, 7.5%, 7.2% and 11.0% of our revenue,
respectively. Our R&D expenses primarily consist of cost of materials, fuel and power for our
laboratories, compensation and benefits for our R&D personnel, cost of experiments and clinical
trials, and depreciation expenses on R&D equipment. Our R&D expenses depend to a large extent
on the development stages of our R&D projects. For example, if we have many on-going R&D
projects at the experiment and trial stage in the relevant reporting period, we would incur
significant costs for experiments and clinical trials. Despite our continuing investments in our R&D
activities, which resulted in an increase in the absolute amounts of R&D expenses incurred during
the Track Record Period, our R&D expenses as a percentage of revenue decreased from 2014 to
2016, which reflected economies of scale.
— 199 —
Net Finance Income
The following table sets forth a breakdown of our net finance income for the periods
indicated:
Six months ended

2014 2015 2016 2016 2017
(unaudited)
Interest income from bank deposit . . . . 725 1,211 467 140 532
Investment income from available-for-
sale financial assets . . . . . . . . . . . . 1,690 1,123 – – –
Foreign currency exchange gain/(loss). . 91 660 1,190 848 (54)
Total . . . . . . . . . . . . . . . . . . . . . . . 2,506 2,994 1,657 988 478
In 2014, 2015, 2016 and the six months ended June 30, 2016 and 2017, we had net finance
income of RMB2.5 million, RMB3.0 million, RMB1.7 million, RMB1.0 million and RMB0.5 million,
respectively. Our net finance income primarily consists of (1) interest income from our deposits
with banks, (2) investment income from available-for-sale financial assets which are wealth
management products, and (3) gains from foreign currency exchange. See “—Analysis of
Selected Consolidated Balance Sheet Items—Available-for-Sale Financial Assets” for a
discussion on the wealth management products we purchased during the Track Record Period. As
of December 31, 2016 and June 30, 2017, we had no outstanding wealth management products.
Income Tax Expense
The following table sets forth a breakdown of our income tax expense for the periods
indicated:
Six months ended

2014 2015 2016 2016 2017
(unaudited)
Current tax expense . . . . . . . . . . . . . 9,498 11,747 15,594 5,969 9,822
Deferred tax . . . . . . . . . . . . . . . . . . (922) (703) 2,107 (502) (1,702)
Total . . . . . . . . . . . . . . . . . . . . . . 8,576 11,044 17,701 5,467 8,120
Our main operating subsidiary in China, AK Medical Beijing, is registered as a new and high
technology enterprise in China, and therefore was entitled to a preferential income tax rate of
15.0%, compared to the standard EIT rate of 25.0% in China, on its assessable profits during the
Track Record Period. AK Medical Beijing’s preferential tax treatment is valid through October 31,
2017. In August 2017, AK Medical Beijing extended its qualification as a High and New Technology
Enterprise to 2020.
We calculate our income tax provision for our operations in mainland China using the
applicable tax rate on our estimated assessable profits for the year based on existing legislation,
interpretations and practices.
— 200 —
In 2014, 2015, 2016 and the six months ended June 30, 2016 and 2017, our income tax
expenses were RMB8.6 million, RMB11.0 million, RMB17.7 million, RMB5.5 million and RMB8.1
million, respectively. In 2014, 2015 and 2016, our effective income tax rate was 14.2%, 14.5% and
18.6%, respectively. Our effective income tax rate was higher in 2016 due to our PRC subsidiaries’
distributable earnings which are subject to 10% withholding tax when paid to our Company. Our
effective income tax rate remained stable at 14.1% in the six months ended June 30, 2016 and
14.0% in the same period in 2017.
Deferred tax generally arises where there are differences between the tax basis and
accounting basis. In 2014, 2015, 2016 and six months ended June 30, 2016 and 2017, our
deferred tax arose primarily from accrued but unpaid sales rebates to our distributors as of the end
of each reporting period, provisions for impairment of doubtful debts and government grants
received in each reporting period. Sales rebates are netted off from our revenue on an accounting
basis, but are not deductible on a tax basis until they have been settled. Deferred tax assets from
government grants arise when certain government grants, typically those received for asset
purchases, are recognized on an accounting basis over a period of several years but are taxed
upon receipt of the grant. As a result, we recognized deferred tax assets of RMB4.2 million,
RMB4.9 million, RMB6.7 million and RMB8.4 million as of December 31, 2014, 2015 and 2016 and
June 30, 2017, respectively.
Six Months Ended June 30, 2017 Compared to Six Months Ended June 30, 2016
Revenue
Our revenue increased by 40.9% from RMB115.3 million in the six months ended June 30,
2016 to RMB162.5 million for the same period in 2017, primarily due to an increase in sales of our
off-the-shelf knee and hip replacement implants and 3D-printed products.
Revenue from sales of our knee replacement implants increased by RMB12.0 million, or
33.9%, from RMB35.4 million in the six months ended June 30, 2016 to RMB47.4 million for the
same period in 2017. The increase was primarily due to an increase in the sales volume of our
knee replacement implants from 7,051 sets in the six months ended June 30, 2016 to 9,424 sets
in the same period in 2017. The increase in sales volume was primarily attributable to (1) an
expansion of our distribution network, which increased to 650 as of June 30, 2017 from 609 as of
January 1, 2016 and (2) to a lesser extent, the introduction of our A3 GT Knee Replacement
towards the end of 2016. The average selling price of our knee replacement implants remained
stable in the six months ended June 30, 2016 and 2017, at RMB5,023 per set and RMB5,032 per
set, respectively.
Revenue from sales of our off-the-shelf hip replacement implants increased by RMB25.5
million, or 37.0%, from RMB69.1 million in the six months ended June 30, 2016 to RMB94.6 million
for the same period in 2017. The increase was primarily driven by an increase in the sales volume
of our off-the-shelf hip replacement implants from 24,666 sets in the six months ended June 30,
2016 to 28,941 sets in the same period in 2017. The increase in sales volume was mainly a result
of (1) the launch of new products, (2) an expansion of our distribution network, which increased
to 650 as of June 30, 2017 from 609 as of January 1, 2016 and (3) enhanced penetration of
hospitals as our 3D ACT solutions continued to gain recognition. The average selling price of our
off-the-shelf hip replacement implants increased from RMB2,800 per set in the six months ended
June 30, 2016 to RMB3,269 per set in the same period in 2017.
— 201 —
Revenue from sales of 3D-printed products increased significantly from RMB3.0 million in the
six months ended June 30, 2016 to RMB9.8 million in the six months ended June 30, 2017,
primarily due to an increase in sales volume driven by our 3D-printed hip replacement implants
and our 3D-printed artificial vertebral bodies and spinal interbody cages launched in August and
September 2016, respectively.
Revenue from sales of third party orthopedic products increased by RMB1.6 million, or
30.3%, from RMB5.3 million in the six months ended June 30, 2016 to RMB6.9 million for the same
period in 2017 due to an increase in the sales volume driven by certain third party orthopedic joint
implants we started to sell in 2017.
Cost of Sales
Our cost of sales increased by 43.3% from RMB35.5 million in the six months ended June 30,
2016 to RMB50.8 million in the same period in 2017, primarily driven by our sales growth. Cost
of materials increased by 62.3% from RMB22.2 million in the six months ended June 30, 2016 to
RMB36.0 million in the same period in 2017, primarily because the prices of ultra-high molecular
weight polyethylene materials increased in the global market.
As a result of the foregoing, our gross profit increased by 39.8% from RMB79.9 million in the
six months ended June 30, 2016 to RMB111.7 million in the same period in 2017. The increase
in our gross profit was primarily driven by an increase in our revenue.
Our gross margin, which is equal to gross profit divided by revenue, decreased from 69.2%
in the six months ended June 30, 2016 to 68.7% in the same period in 2017. The decrease was
primarily due to changes in our product mix.
Other Income
Other income was RMB0.4 million in the six months ended June 30, 2016 and consisted
primarily of a government grant. Other income was RMB1.9 million in the six months ended June
30, 2017 and consisted primarily of a government grant and a reward from tax authorities for our
payment of individual income tax on behalf of our employees.
Our selling and distribution expenses increased by RMB5.6 million, or 39.5%, from RMB14.1
million in the six months ended June 30, 2016 to RMB19.7 million in the same period in 2017. This
was primarily a result of (1) an increase in the salary and compensation for our sales and
marketing personnel due to an increase in our headcount and an overall increase in employee
wages, (2) an increase in office expenses due to an increase in rent for the newly leased building
mainly used by our sales and marketing personnel and (3) an increase in product samples we
distributed to promote new products.
— 202 —
Our general and administrative expenses decreased by RMB1.9 million, or 9.4%, from
RMB20.2 million in the six months ended June 30, 2016 to RMB18.3 million for the same period
in 2017. This was primarily driven by a decrease in Listing expense by RMB9.9 million partially
offset by increases in (1) salary and compensation by RMB2.4 million due to an increase in our
headcount and an overall increase in employee wages, (2) others by RMB2.0 million primarily due
to an increase in the provision for impairment of doubtful debts, as a result of the additional
provisions of RMB2.3 million for receivables outstanding from two hospitals overdue for a
relatively long term we made in the same period, and (3) other tax expenses by RMB1.5 million
resulting from an increase in withholding tax due to the payment of Listing expenses through an
overseas subsidiary.
R&D expenses increased by RMB9.7 million, or 116.9%, from RMB8.3 million in the six
months ended June 30, 2016 to RMB17.9 million in the same period in 2017. This was primarily
due to (1) an increase in experiment costs by RMB6.0 million relating to our R&D activities under
our cooperation agreements with certain renowned hospitals and fees incurred for clinical trials,
(2) an increase in others by RMB1.1 million due to expenditures for the demonstration and proof
of R&D results in conjunction with patent applications and (3) an increase in depreciation by
RMB1.0 million related to 3D-printing machines for R&D purposes.
Operating Profit
As a result of an increase in gross profit and prudent expense control, our operating profit
increased by 53.0% from RMB37.7 million in the six months ended June 30, 2016 to RMB57.7
million for the same period in 2017.
Net Finance Income
Net finance income decreased from RMB1.0 million in the six months ended June 30, 2016
to RMB0.5 million for the same period in 2017 primarily due to the foreign exchange loss of
RMB0.05 million in the six months ended June 30, 2017 as compared to a foreign currency
exchange gain of RMB0.8 million for the same period in 2016, partially offset by an increase by
RMB0.4 million in interest income from bank deposits due to an increase in our bank deposit
balances.
Profit before Tax
As a result of the foregoing, our profit before tax increased by RMB19.5 million, or 50.4%
from RMB38.7 million in the six months ended June 30, 2016 to RMB58.2 million for the same
period in 2017.
Income Tax Expense
Income tax expense increased by RMB2.7 million, or 48.5%, from RMB5.5 million in the six
months ended June 30, 2016 to RMB8.1 million for the same period in 2017, primarily driven by
an increase in our profit before tax.
Profit
As a result of the foregoing, our profit increased by RMB16.8 million, or 50.7%, from
RMB33.2 million in the six months ended June 30, 2016 to RMB50.1 million for the same period
in 2017.
— 203 —
Year Ended December 31, 2016 Compared to Year Ended December 31, 2015
Revenue
Our revenue increased by 31.3% from RMB206.2 million in 2015 to RMB270.8 million in
2016, primarily due to an increase in sales of both our off-the-shelf knee and hip replacement
implants and, to a lesser extent, sales of our 3D-printed products.
37.1%, from RMB60.6 million in 2015 to RMB83.0 million in 2016. The increase was primarily due
to a significant increase in the total sales volume from 11,887 sets in 2015 to 17,105 sets in 2016.
The increase in the sales volume of our knee replacement implants was primarily attributable to
(1) an expansion of our distribution network, which grew from 609 distributors as of December 31,
2015 to 637 distributors as of December 31, 2016 and (2) the introduction of our A3 GT Knee
Replacement. The average selling price of our knee replacement implants slightly decreased from
RMB5,095 per set in 2015 to RMB4,853 per set in 2016, respectively.
million, or 19.7%, from RMB132.7 million in 2015 to RMB158.9 million in 2016. The increase was
primarily driven by an increase in the total sales volume of our off-the-shelf hip replacement
implants from 44,652 sets in 2015 to 57,650 sets in 2016. The increases in the total sales volume
were mainly a result of (1) an increase in sales volume driven by our high-end hip replacement
implant series launched in late 2015, (2) an expansion of our distribution network, which grew from
609 distributors as of December 31, 2015 to 637 distributors as of December 31, 2016 and (3)
enhanced penetration of hospitals as our 3D ACT solutions continued to gain recognition. The
average selling price of our off-the-shelf hip replacement implants slightly decreased from
RMB2,972 per set in 2015 to RMB2,756 per set in 2016.
Revenue from sales of our 3D-printed products increased significantly from RMB1.1 million
in 2015 to RMB12.1 million in 2016. The increase was primarily driven by an increase of sales of
3D-printed hip replacement implant and the launch of our spinal interbody cages and artificial
vertebral bodies in 2016.
Revenue from sales of third party orthopedic products increased by RMB1.6 million, or
17.9%, from RMB9.1 million in 2015 to RMB10.8 million in 2016 due to an increase in the sales
volume of third party orthopedic joint implants.
Cost of Sales
Our cost of sales increased by 30.2% from RMB64.1 million in 2015 to RMB83.5 million in
2016, primarily driven by the increase in our sales volume. Cost of materials increased by 23.4%
from RMB43.7 million to RMB53.9 million from 2015 to 2016, primarily reflecting the increase in
our overall sales volume.
As a result of the foregoing, our gross profit increased by 31.9% from RMB142.1 million in
2015 to RMB187.3 million in 2016. The increase in our gross profit was primarily driven by an
increase in our revenue.
Our gross margin, which is equal to gross profit divided by revenue, increased from 68.9%
in 2015 to 69.2% in 2016. The increase was primarily driven by the economies of scale we
achieved as our business scale grew.
— 204 —
Other Income
Other income was RMB0.8 million and RMB0.8 million in 2015 and 2016, respectively,
consisting primarily of a government grant of RMB0.7 million and RMB0.8 million, respectively.
Our selling and distribution expenses increased by RMB7.4 million, or 25.9%, from RMB28.8
million in 2015 to RMB36.2 million in 2016. This was primarily a result of (1) an increase in the
salary and compensation for our sales and marketing personnel by RMB3.2 million due to an
increase in our headcount and an overall increase in employee wages and (2) an increase in
promotion and advertising expenses by RMB1.8 million primarily because we enhanced our
efforts to market our new products that were launched in 2016.
Our general and administrative expenses increased by RMB15.9 million, or 71.2%, from
RMB22.3 million in 2015 to RMB38.1 million in 2016. This was primarily driven by (1) Listing
expenses incurred and (2) an overall increase in employee salaries and benefits, partially offset
by a decrease in training expenses.
R&D expenses increased by RMB1.5 million, or 8.0%, from RMB18.9 million in 2015 to
RMB20.4 million in 2016, which reflected the progress of our R&D projects.
Operating Profit
increased by 28.0% from RMB73.0 million in 2015 to RMB93.4 million in 2016.
Net Finance Income
Net finance income decreased from RMB3.0 million in 2015 to RMB1.7 million in 2016
primarily due to (1) a decrease of RMB1.1 million in investment income from available-for-sale
financial assets because we did not reinvest in wealth management products when they matured
in 2015 and (2) a decrease of RMB0.7 million in interest income from bank deposits, partially
offset by an increase of RMB0.5 million in foreign currency exchange gain as a result of our
holdings of U.S. dollar-denominated investments and the appreciation of U.S. dollars against
renminbi.
Profit before Tax
from RMB76.0 million in 2015 to RMB95.0 million in 2016.
Income Tax Expense
Income tax expense increased by RMB6.7 million, or 60.3%, from RMB11.0 million in 2015
to RMB17.7 million in 2016, primarily due to our PRC subsidiaries’ distributable earnings which
are subject to 10% withholding tax when paid to our Company.
— 205 —
Profit
As a result of the foregoing, our profit for the year increased by RMB12.4 million, or 19.1%,
Year Ended December 31, 2015 Compared to Year Ended December 31, 2014
Revenue
Our revenue increased by 39.0% from RMB148.3 million in 2014 to RMB206.2 million in
2015, primarily due to an increase in sales of both our knee and hip replacement implants.
32.9%, from RMB45.6 million in 2014 to RMB60.6 million in 2015. The increase was primarily due
to a significant increase in the total sales volume of our knee replacement implants from 8,920
sets in 2014 to 11,887 sets in 2015. The increase in the sales volume of our knee replacement
implants was primarily attributable to (1) a significant increase in the sales volume of our new A3
Total Knee Replacement products from 5,024 in 2014 to 8,545 in 2015 and (2) an expansion of our
distribution network, which grew from 553 distributors as of the end of 2014 to 609 distributors as
of the end of 2015. The average selling price of our knee replacement implants remained stable
in 2014 and 2015 at RMB5,108 per set and RMB5,099 per set, respectively.
million, or 43.1%, from RMB92.7 million in 2014 to RMB132.7 million in 2015. The increase was
primarily driven by (1) an increase in the total sales volume of our off-the-shelf hip replacement
implants from 37,475 sets in 2014 to 44,652 sets in 2015 and (2) an increase in the average selling
price from RMB2,475 to RMB2,992 per set. The increases in both the total sales volume and the
average sales price were mainly a result of the launch of our 3D-printed hip implant product and
other high-end hip replacement implants including those using ceramic heads, highly crosslinked
polyethylene liner and ML series products. The increase in sales volume was also driven by an
expansion of our distribution network, which grew from 553 distributors as of December 31, 2014
to 609 distributors as of December 31, 2015.
Revenue from sales of third party orthopedic products remained stable in 2014 and 2015.
Cost of Sales
Our cost of sales increased by 36.6% from RMB46.9 million in 2014 to RMB64.1 million in
2015, primarily driven by an increase in our sales volume. Cost of materials increased by 63.5%
from RMB26.7 million to RMB43.7 million from 2014 to 2015, primarily reflecting the increase in
our overall sales volume. Labor cost and production cost increased by 9.1% from RMB4.9 million
to RMB5.4 million and 2.0% from RMB10.4 million to RMB10.6 million, respectively, reflecting the
increase in our overall sales volume, partially offset by the saved production cost associated with
our use of third party manufactured components and our outsourcing to third parties of some
processing procedures for certain products, such as surgical instruments.
As a result of the foregoing, our gross profit increased by 40.2% from RMB101.3 million in
2014 to RMB142.1 million in 2015. The increase in our gross profit was primarily driven by an
increase in our revenue.
— 206 —
Our gross margin, which is equal to gross profit divided by revenue, increased from 68.3%
in 2014 to 68.9% in 2015. The increase was primarily driven by the economies of scale we
achieved as our business scale grew and our launch of 3D-printed hip replacement implants and
high-end off-the-shelf hip replacement implants in 2015.
Other Income
Other income was RMB1.8 million and RMB0.8 million in 2014 and 2015, respectively,
consisting primarily of a government grant of RMB1.6 million and RMB0.7 million, respectively.
Our selling and distribution expenses increased by RMB11.4 million, or 65.3%, from
RMB17.4 million in 2014 to RMB28.8 million in 2015. This was primarily a result of an increase in
promotion and advertising expenses by RMB4.5 million primarily because we enhanced our
efforts to market our new off-the-shelf and 3D-printed hip replacement implants launched in 2015
and an increase in the salary and compensation for our sales and marketing personnel by RMB4.0
million due to an increase in our headcount and an overall increase in employee wages.
Our general and administrative expenses increased by RMB9.9 million, or 79.9%, from
RMB12.4 million in 2014 to RMB22.3 million in 2015. This is primarily driven by (1) Listing
expenses, (2) increases in compensation for our management, (3) training expenses relating to
our management continuing education program, including sending certain members of our senior
management to attend executive MBA programs and (4) an increase in traveling and
transportation expenses.
R&D expenses increased by RMB3.3 million, or 21.5%, from RMB15.5 million in 2014 to
RMB18.9 million in 2015. This was primarily due to an increase in our cost of experiments and
clinical trials for our increased number of on-going R&D projects.
Operating Profit
increased by 26.2% from RMB57.8 million in 2014 to RMB73.0 million in 2015.
Net Finance Income
Net finance income increased from RMB2.5 million in 2014 to RMB3.0 million in 2015
primarily driven by (1) an increase of RMB0.6 million in the foreign currency exchange gain and
(2) an increase of RMB0.5 million in interest income from bank deposits, partially offset by a
decrease of RMB0.6 million in investment income from available-for-sale financial assets which
are wealth management products. All these wealth management products matured in 2015 and we
decided not to reinvest the proceeds into any wealth management products in order to fund
dividend payments and to purchase production equipment, resulting in a decrease in the interest
income from available-for-sale financial assets.
Profit before Tax
— 207 —
Income Tax Expense
Income tax expense increased by RMB2.5 million, or 28.8%, from RMB8.6 million in 2014 to
RMB11.0 million in 2015, primarily driven by an increase in our profit before tax.
Profit
As a result of the foregoing, our profit for the year increased by RMB13.2 million, or 25.5%,
LIQUIDITY AND CAPITAL RESOURCES
Our primary uses of capital are to fund our working capital, R&D activities and expansion of
production. During the Track Record Period, we financed these capital requirements primarily
through cash flows generated from our operating activities and proceeds from the Pre-IPO
Investment in July 2015. After the Listing, we intend to continue to fund our capital requirements
using primarily cash flows generated from our operating activities, and the proceeds from the
Global Offering. We currently do not expect any significant changes in the mix and the relative
costs of our capital resources.
Cash Flows
The following table sets forth our cash flows for the periods indicated:
Six months
Year ended December 31, ended June 30,
2014 2015 2016 2016 2017
(unaudited)
Net cash generated from
operating activities . . . . . . . . . . . . . 51,092 36,302 69,643 5,676 56,479
Net cash (used in)/generated from
investing activities . . . . . . . . . . . . . (16,020) 44,462 (27,166) (18,816) (26,901)
financing activities . . . . . . . . . . . . . (30,600) (23,911) 14,037 45,491 (23,403)
equivalents . . . . . . . . . . . . . . . . . 4,472 56,853 56,514 32,351 6,175
Net Cash Generated from Operating Activities
In the six months ended June 30, 2017, we had net cash generated from operating activities
of RMB56.5 million, which was primarily attributable to profit before tax of RMB58.2 million,
adjusted to reflect primarily (1) an increase in inventories by RMB17.0 million due to the growth
of our business scale, our launch of various new products, of which we needed to build up our
inventory level for future sales, and our stocking up of certain raw materials of which we expected
the price to rise or availability to become limited; and (2) an increase in trade and bill receivables
by RMB10.5 million due primarily to an increase in our revenue. Such adjustments were partially
offset by adjusting for (1) an increase in accruals and other payables of RMB14.7 million due to
accrued employee compensation and Listing expenses, (2) an increase in trade payables by
RMB10.2 million due to the growth of our business scale and (3) non-cash depreciation of
property, plant and equipment of RMB5.2 million relating mainly to the depreciation of our newly
acquired equipment for R&D and production.
— 208 —
In 2016, we had net cash generated from operating activities of RMB69.6 million, which was
primarily attributable to profit before tax of RMB95.0 million, adjusted to reflect primarily (1) an
increase in trade and bills receivables of RMB24.3 million due to an increase in our revenue and
because we granted credit periods to more qualified distributors and longer credit periods to some
of our other distributors to attract competent distributors so that we could maintain and expand our
distribution network and enter into new markets and (2) an increase in inventories of RMB9.4
million due to the growth of our business scale, our launch of various new products, of which we
needed to build up our inventory level for future sales, and our stocking up of certain raw materials
of which we expected the price to rise. Such adjustments were partially offset by adjusting for (1)
non-cash depreciation of property, plant and equipment of RMB7.9 million relating mainly to the
depreciation of our newly acquired equipment for R&D and production; (2) an increase in accruals
and other payables of RMB6.0 million due to accrued employee compensation and Listing
expenses and (3) an increase in trade payables of RMB4.3 million due to the growth of our
business scale.
primarily attributable to profit before tax of RMB76.0 million, adjusted to reflect primarily (1) an
increase in trade and bills receivables of RMB34.3 million due to an increase in our revenue and
distribution network and enter into new markets, (2) an increase in inventories of RMB23.7 million
driven by the growth of our business scale and our launch of various new products including hip
replacement implants that utilize ceramic heads and highly crosslinked polyethylene liner and ML
series products, of which we needed to build up our inventory for future sales and (3) income tax
paid of RMB8.6 million. Such adjustments were partially offset by adjusting for (1) an increase in
trade payables of RMB14.8 million driven by the growth of our business scale, (2) an increase in
accruals and other payables of RMB8.4 million primarily due to accrued employee compensation
and (3) adding back non-cash depreciation of property, plant and equipment of RMB4.6 million
relating mainly to the depreciation of our production facilities, offices and warehouses.
primarily attributable to profit before tax of RMB60.3 million, adjusted to reflect primarily (1)
income tax paid of RMB8.4 million, (2) an increase in trade and bills receivables of RMB8.1 million
primarily due to an increase in our revenue and (3) an increase in inventories of RMB3.3 million
mainly driven by the growth of our business scale. Such adjustments were partially offset by
adjusting for (1) an increase in trade payables of RMB5.5 million primarily driven by the growth of
our business scale and (2) adding back non-cash depreciation of property, plant and equipment
of RMB4.3 million relating mainly to the depreciation of our production facilities, offices and
warehouses.
Net Cash (Used In)/Generated from Investing Activities
Our cash used in and generated from investing activities reflect primarily purchases and
sales of available-for-sale financial assets, purchases of property, plant and equipment, interest
on bank deposits and wealth management products, purchases of other intangible assets and
certain government grants received for asset purchases.
Net cash used in investing activities in the six months ended June 30, 2017 was RMB26.9
million, which was primarily attributable to (1) acquisitions of property, plant and equipment of
RMB24.4 million, which mainly related to the construction of our production facilities and
procurement of equipment for R&D and (2) acquisitions of other intangible assets of RMB3.0
— 209 —
million, which mainly related to our acquisition of patents and CFDA registration certificates to
strengthen our patent portfolio and our prospective products.
Net cash used in investing activities in 2016 was RMB27.2 million, which was primarily
attributable to acquisitions of property, plant and equipment of RMB28.4 million, which mainly
related to the procurement of equipment for R&D and production.
Net cash generated from investing activities in 2015 was RMB44.5 million, which was
primarily attributable to (1) proceeds from sale of and acquisition of available-for-sale financial
assets, which were wealth management products, of RMB165.0 million and RMB95.0 million,
respectively, (2) acquisition of property, plant and equipment of RMB24.4 million, which mainly
related to the purchase of production and R&D equipment and (3) acquisition of other intangible
assets of RMB3.0 million, which was principally related to management and R&D software.
Net cash used in investing activities in 2014 was RMB16.0 million, which was primarily
attributable to (1) acquisition of and proceeds from sale of available-for-sale financial assets,
which were certain wealth management products, of RMB310.0 million and RMB295.0 million,
respectively and (2) acquisition of property, plant and equipment of RMB6.1 million, which mainly
related to the purchase of production and R&D equipment.
Net Cash (Used in)/Generated from Financing Activities
During the Track Record Period, dividends paid to our Shareholders were RMB30.6 million
in 2014, RMB97.9 million in 2015, RMB50.1 million in 2016 and RMB23.1 million in the six months
ended June 30, 2017, respectively. In 2015 and 2016, we received a capital injection in the
amount of RMB74.0 million and RMB66.0 million, respectively, in connection with the Pre-IPO
Investment.
Capital Management
Our capital management objectives are to safeguard our ability to continue as a going
concern in order to provide returns for Shareholders and benefits for other stakeholders and to
maintain an optimal capital structure to enhance Shareholders’ value in the long term.
We actively and regularly review and manage our capital structure to maintain a balance
between the higher Shareholder returns that might be possible with higher levels of borrowings
and the advantages and security afforded by a sound capital position, and make adjustments to
the capital structure in light of changes in economic conditions.
During the Track Record Period, we did not have any interest-bearing debts. Neither our
Company nor any of our subsidiaries are subject to externally imposed capital requirements.
— 210 —
Capital Expenditure
Our capital expenditure was used primarily for acquisitions of production equipment,
construction of production facilities, leasehold improvements, purchases and improvements of IT
systems and capitalization of certain development costs. The following table sets forth our capital
expenditure for the periods indicated:
Six months
ended
For the year ended December 31, June 30,
2014 2015 2016 2017
Additions of:
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,611 30,051 30,441 27,486
During the Track Record Period, we funded our capital expenditure primarily with cash
generated from operating activities and proceeds from the Pre-IPO Investment. See “History,
Reorganization and Development—Pre-IPO Investment” for details of the Pre-IPO Investment.
The significant increase in capital expenditure in 2015 related mainly to acquisitions of new
equipment for production and R&D, including those for 3D-printed products. In the second half of
2017 and the year of 2018, we expect to incur capital expenditure of RMB20.2 million and
RMB51.7 million, respectively, primarily for the expansion of our production capacity and
procurement of equipment and software for R&D activities, subject to future market conditions.
Among the total capital expenditure of RMB47.7 million expected to be incurred in 2017, RMB38.7
million is in connection with the Changzhou Facilities, RMB5.7 million is in connection with the
R&D and production of our 3D-printed products and RMB3.3 million is in connection with the R&D
and production of our other products. We expect to incur additional depreciation of RMB1.8 million
in 2018 as a result of the total capital expenditure in 2017, among which RMB0.9 million is in
connection with the Changzhou Facilities, RMB0.5 million is in connection with the R&D and
production of our 3D-printed products and RMB0.4 million is in connection with the R&D and
production of our other products. We plan to fund our planned capital expenditure in 2017 and
2018 using primarily cash flows generated from our operating activities and net proceeds from the
Global Offerings. We may also use bank borrowings if needed. See “Our
Business—Production—Changzhou Facilities” for our plans for the Changzhou Facilities and
“Future Plans and Use of Proceeds—Use of Proceeds” for the portion of capital expenditure
expected to be funded by the net proceeds from the Global Offering.
— 211 —
Working Capital
We had net current assets of RMB126.0 million, RMB123.2 million, RMB223.4 million,
RMB225.9 million and RMB223.1 million as of December 31, 2014, 2015, 2016, June 30 and
October 31, 2017, respectively. The following table sets forth a breakdown of our current assets
and current liabilities as of the dates indicated:
As of As of
As of December 31, June 30, October 31,
2014 2015 2016 2017 2017
(unaudited)
Current assets
Inventories . . . . . . . . . . . . . . . . . 34,720 58,400 67,805 84,848 94,013
Trade receivables . . . . . . . . . . . . 18,975 43,330 66,757 66,131 96,264
Bills receivable . . . . . . . . . . . . . . 5,073 14,531 14,773 23,590 14,469
Deposits, prepayments and
other receivables . . . . . . . . . . . . 5,108 7,618 12,525 13,209 21,580
Available-for-sale financial assets . . . 70,000 — — — —
Cash and cash equivalents . . . . . . . 43,161 100,094 160,597 165,628 104,013
Total. . . . . . . . . . . . . . . . . . . . 177,037 223,973 322,457 353,406 330,340
Current liabilities
Trade payables . . . . . . . . . . . . . . 14,691 29,408 33,740 43,974 32,483
Accruals and other payables . . . . . . 16,530 45,021 31,195 45,876 41,069
Current tax . . . . . . . . . . . . . . . . . 2,707 5,875 8,917 11,382 7,485
Deferred revenue . . . . . . . . . . . . . 15,373 18,033 21,922 22,209 22,076
Provisions . . . . . . . . . . . . . . . . . 1,764 2,482 3,260 4,027 4,086
Total. . . . . . . . . . . . . . . . . . . . 51,065 100,819 99,034 127,468 107,199
Net current assets . . . . . . . . . . . 125,972 123,154 223,423 225,938 223,141
Taking into account the financial resources available to us, including the expected cash flows
generated from our operations and the estimated net proceeds from the Global Offering, our
Directors are of the opinion that we will have sufficient working capital for our present
requirements for at least the next 12 months from the date of this prospectus. After due
consideration of the foregoing factors and discussions with our management, the Sole Sponsor
has no reason to believe that the Directors’ foregoing belief is unreasonable.
— 212 —
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
The consolidated statements of financial position as of December 31, 2014, 2015, 2016 and
June 30, 2017 set forth below are derived from our consolidated financial statements, including
the notes thereto, set forth in Appendix I—“Accountants’ Report” to this prospectus. You should
read the consolidated statements of financial position in conjunction with our consolidated
financial statements included in the Appendix I—“Accountants’ Report” to this prospectus,
together with the accompanying notes, which were prepared in accordance with IFRS.
As of
2014 2015 2016 2017
Non-current assets
Deferred tax assets . . . . . . . . . . . . . . . . . . . 4,174 4,877 6,670 8,372
Other non-current assets . . . . . . . . . . . . . . . . 88 45 — —
Total non-current assets . . . . . . . . . . . . . . . 35,610 59,777 83,078 106,421
Current assets
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . 34,720 58,400 67,805 84,848
Trade receivables . . . . . . . . . . . . . . . . . . . . 18,975 43,330 66,757 66,131
Bills receivable . . . . . . . . . . . . . . . . . . . . . . 5,073 14,531 14,773 23,590
Deposits, prepayments and other receivables . . . 5,108 7,618 12,525 13,209
Available-for-sale financial assets . . . . . . . . . . . 70,000 — — —
Cash and cash equivalents . . . . . . . . . . . . . . . 43,161 100,094 160,597 165,628
Total current assets . . . . . . . . . . . . . . . . . . 177,037 223,973 322,457 353,406
Current liabilities
Trade payables . . . . . . . . . . . . . . . . . . . . . . 14,691 29,408 33,740 43,974
Accruals and other payables . . . . . . . . . . . . . . 16,530 45,021 31,195 45,876
Current tax . . . . . . . . . . . . . . . . . . . . . . . . . 2,707 5,875 8,917 11,382
Deferred revenue . . . . . . . . . . . . . . . . . . . . . 15,373 18,033 21,922 22,209
Provisions . . . . . . . . . . . . . . . . . . . . . . . . . 1,764 2,482 3,260 4,027
Total current liabilities . . . . . . . . . . . . . . . . . 51,065 100,819 99,034 127,468
Net current assets . . . . . . . . . . . . . . . . . . . 125,972 123,154 223,423 225,938

Total assets less current liabilities. . . . . . . . . 161,582 182,931 306,501 332,359
Non-current liabilities . . . . . . . . . . . . . . . . .
Deferred income . . . . . . . . . . . . . . . . . . . . . 5,631 5,993 8,208 7,892
Deferred tax liability . . . . . . . . . . . . . . . . . . . – – 3,900 3,900
Total non-current liabilities. . . . . . . . . . . . . . 5,631 5,993 12,108 11,792
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . 155,951 176,938 294,393 320,567

Share capital. . . . . . . . . . . . . . . . . . . . . . . . 34,000 55,556 1 1
Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . 121,951 121,382 294,392 320,566
Total equity attributable to owners of the
Company . . . . . . . . . . . . . . . . . . . . . . . . 155,951 176,938 294,393 320,567
— 213 —
ANALYSIS OF SELECTED CONSOLIDATED BALANCE SHEET ITEMS
Property, Plant and Equipment
We had property, plant and equipment of RMB29.5 million, RMB48.9 million, RMB69.8
million and RMB88.9 million as of December 31, 2014, 2015, 2016 and June 30, 2017,
respectively. Our property, plant and equipment include a building for production and office use,
machinery for production and R&D, office equipment, leasehold improvements and construction
in progress.
The increases of property, plant and equipment during the Track Record Period related
primarily to our continuing expansion of production capacity of our existing production facilities, as
well as purchases of new equipment for producing 3D-printed products and R&D purposes.
Intangible Assets
We had intangible assets of RMB1.8 million, RMB5.9 million, RMB6.6 million and RMB9.1
million as of December 31, 2014, 2015 and 2016 and June 30, 2017, respectively. Our intangible
assets consist primarily of software including our ERP system and R&D related software and our
patents. In addition, we capitalized development costs of RMB0.8 million, RMB1.3 million,
RMB0.8 million and RMB0.1 million in 2014, 2015, 2016 and the six months ended June 30, 2017,
respectively, relating to certain R&D projects that have passed the clinical trial stage and were
expected to generate stable cash flows in the future, such as projects relating to 3D-printed
implants products and certain knee products.
Inventories
Our inventories include raw materials, work-in-progress and finished goods. Similar to other
orthopedic implant companies, our products have a relatively long production cycle. Therefore, we
strive to maintain a robust inventory management policy to ensure sufficient raw materials for
production and sufficient finished goods to meet customer demand in a timely manner without
destabilizing our liquidity. In general, we keep a finished goods inventory level of two to six months
depending on different types of products. Based on this inventory level and our estimated sales
volume, we procure raw materials taking into account the production cycle of each product. In
order to improve our inventory management, we began using an ERP system in July 2014 to better
align our raw materials procurement, production, warehousing and delivery process with
outstanding and estimated purchase orders from our customers. The following table sets forth a
breakdown of our inventories as of the dates indicated:
As of
2014 2015 2016 2017
Raw materials . . . . . . . . . . . . . . . . . . . . . . . 10,269 11,156 12,719 15,868
Work-in-progress . . . . . . . . . . . . . . . . . . . . . 7,100 14,188 9,361 11,921
Finished goods . . . . . . . . . . . . . . . . . . . . . . 17,351 33,056 45,725 57,059
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,720 58,400 67,805 84,848
— 214 —
Our inventories increased from RMB34.7 million as of December 31, 2014 to RMB58.4
million as of December 31, 2015, to RMB67.8 million as of December 31, 2016, and to RMB84.8
million as of June 30, 2017, reflecting the growth of our sales volume over the Track Record
Period. Specifically, between December 31, 2014 and 2015, work-in-progress increased by
RMB7.1 million, or 99.8%, and finished goods increased by RMB15.7 million, or 90.5%, which
were driven primarily by us stocking up on our newly-launched products in 2015, and, to a lesser
extent, an increase in our sales volume from 2014 to 2015. However, during the same period, raw
materials remained stable, reflecting the effectiveness of our inventory management. Between
December 31, 2015 and 2016, work-in-progress decreased by RMB4.8 million, or 34.0%, primarily
due to our increased efforts in inventory management. During the same period, finished goods
increased by RMB12.7 million, or 38.3%, which was in line with the increase in sales volume from
2015 to 2016 and launch of new products in 2016. We are generally required to build up an initial
inventory level for new products for future sales, which generally results in a higher ratio of
inventory level to sales volume for new products than existing products. During the same period,
raw materials increased by RMB1.6 million, or 14.0%, primarily reflecting (1) the increase in our
sales volume from 2015 to 2016 and (2) our efforts to stock up on certain raw materials the prices
of which we expected to rise. Between December 31, 2016 and June 30, 2017, raw materials
increased by RMB3.1 million, or 24.8% work-in-progress increased by RMB2.6 million, or 27.3%
and finished goods increased by RMB11.3 million, or 24.8%, and their percentages of the total
inventories remained stable. In the period between June 30, 2017 and November 27, 2017, we
consumed raw materials, work-in-progress and finished goods amounting to RMB10.0 million,
RMB10.4 million and RMB27.2 million, respectively. The following table sets forth our inventories
turnover days for the periods indicated:
Six months
ended
2014 2015 2016 2017
(1)
Inventories turnover days . . . . . . . . . . . . . . 257 265 276 274
(1) The inventories turnover days are calculated by dividing the arithmetic mean of the opening and ending balance of
inventories in that period by cost of sales for the corresponding period and then multiplying by the days of the
relevant period.
We aim to maintain effective inventory management and control our inventories turnover
days within 280 days. Our inventories turnover days were 257 days in 2014, 265 days in 2015 and
276 days in 2016. The increases in the turnover days resulted from (1) our launch of new products
in 2015 and 2016, which required us to build up an initial inventory level and (2) the increased
inventory levels of raw materials of which we expected to experience a price rise. Our inventories
turnover days were 274 days in the six months ended June 30, 2017, reflecting our enhanced
efforts to control our inventories and the growth of our revenue, partially offset by inventories
maintained in Changzhou Facilities for experiment and product development purposes.
Trade Receivables
We had trade receivables of RMB19.9 million, RMB44.7 million, RMB68.8 million and
RMB70.5 million as of December 31, 2014, 2015 and 2016 and June 30, 2017, respectively. After
deducting allowance for doubtful debts, our net trade receivables were RMB19.0 million, RMB43.3
million, RMB66.8 million and RMB66.1 million, respectively, as of the same dates. Our trade
receivables represent receivables from our customers for sales of our products. The following
table sets forth our trade receivables as of the dates indicated:
— 215 —
As of
2014 2015 2016 2017
Trade receivables . . . . . . . . . . . . . . . . . . . . . 19,908 44,719 68,810 70,451
Less: allowance for doubtful debts . . . . . . . . . . (933) (1,389) (2,053) (4,320)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,975 43,330 66,757 66,131
During the Track Record Period, our trade receivables increased mainly due to an increase
in our revenue. In addition, between December 31, 2014 and 2015, our trade receivables
increased by RMB24.4 million, or 128.4%, mainly due to an increase in our business scale, and
distribution network and enter into new markets. We grant credit period to a certain distributor
after evaluating the totality of the length of our relationships, historical payment of our receivables,
hospital coverage and sales capabilities. As a result, the increase in our trade receivables in 2015
outpaced the increase in our revenue. Between December 31, 2015 and 2016, our trade
receivables increased by RMB23.4 million, or 54.1%, mainly due to (1) an increase in our business
scale and (2) revolving credit granted to several qualified distributors covering provinces in
Southern China where we intend to strengthen our market presence. Between December 31, 2016
and June 30, 2017, our trade receivables were generally stable, primarily due to the continued
enforcement of our credit policy on our distributors and reduced direct sales to hospitals that
require a long time to disburse payment. As of November 27, 2017, RMB43.5 million, or 61.7%,
of our trade receivables outstanding as of June 30, 2017 had been settled in cash or bank
acceptance bills. The following table sets forth our trade receivables turnover days for the periods
indicated:
Six months
ended
2014 2015 2016 2017
(1)
Trade receivables turnover days . . . . . . . . . . 38 55 74 75
(1) The trade receivables turnover days are calculated by dividing the arithmetic mean of the opening and ending
balance of trade receivables in that period by revenue for the corresponding period and then multiplying by number
of days in the relevant period.
Our trade receivables turnover days increased from 38 days in 2014 to 55 days in 2015. We
from time to time grant credit periods of one to six months to qualified distributors who have a good
credit history. We believe we are historically more conservative than our main domestic
competitors in terms of credit periods granted to our distributors. In 2015, as part of our business
initiative to attract competent distributors to maintain and expand our distribution network and
enter into new markets, we granted credit periods to more qualified distributors and longer credit
periods for some of our other distributors in order to compete with our main domestic competitors.
As a result, our qualified distributors who were granted credit periods increased from 72 as of
December 31, 2014 to 94 as of December 31, 2015, which drove the increase in our trade
receivables turnover days in 2015. Our trade receivables turnover days increased from 55 days
in 2015 to 74 days in 2016, primarily due to an increase in trade receivables as we granted a
higher credit limit to qualified distributors in line with the growth of our business scale. Our trade
receivables turnover days remained stable at 75 days in the six months ended June 30, 2017.
— 216 —
In order to manage credit risks associated with the increase in our trade receivables turnover
days, we continue to adopt robust measures to ensure the quality of our trade receivables. See
“—Financial Risk Management and Fair Values of Financial Instruments—Credit Risk” for details.
As a result of these measures, our trade receivables due beyond three months, as a percentage
of our total trade receivables, decreased from 8.5% as of December 31, 2014, to 6.1% as of
December 31, 2015, reflecting an improvement in collection. Our trade receivables due beyond
three months as a percentage of our total trade receivables increased to 32.9% as of December
31, 2016, reflecting the increased direct sales to hospitals as a percentage of our total sales
volume, and further increased to 48.6% as of June 30, 2017, primarily because payments from
certain hospitals remained overdue over the period. The following table sets forth an aging
analysis, based on the earlier of invoice date or date of revenue recognition, of our trade
receivables as of the dates indicated:
As of
2014 2015 2016 2017
Current to three months . . . . . . . . . . . . . . . . . 17,357 40,704 44,798 33,982
Three to six months . . . . . . . . . . . . . . . . . . . 239 953 10,460 14,994
Six to 12 months . . . . . . . . . . . . . . . . . . . . . 689 1,164 7,020 15,917
Over 12 months . . . . . . . . . . . . . . . . . . . . . . 690 509 4,479 1,238
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,975 43,330 66,757 66,131
In 2014, 2015, 2016 and the six months ended June 30, 2017, our impairment losses of trade
and other receivables were RMB0.2 million, RMB0.5 million, RMB0.7 million and RMB2.3 million,
respectively, representing only 0.1%, 0.2%, 0.2% and 1.4% of our revenue, respectively. In
addition, we did not write off any uncollectible trade receivables during the Track Record Period.
The following table sets forth the movements of allowance for doubtful debts for the periods
indicated:
Six months
ended
2014 2015 2016 2017
As of January 1 . . . . . . . . . . . . . . . . . . . . . . 713 933 1,389 2,053
Impairment loss recognized . . . . . . . . . . . . . . 220 456 664 2,267
As of period end . . . . . . . . . . . . . . . . . . . . . 933 1,389 2,053 4,320
See “—Critical Accounting Policies and Estimates—Impairment of Trade and Other

Receivables” for our accounting policies relating to impairment losses. The increases in allowance
for doubtful debts in 2014, 2015 and 2016 were primarily driven by the growth of our trade
receivables, which reflected the growth of our business scale and sales volume. In the six months
ended June 30, 2017, our impairment loss increased significantly because we made additional
provisions of RMB2.3 million for receivables outstanding from two hospitals overdue for a
relatively long term.
— 217 —
Bills Receivable
As of December 31, 2014, 2015, 2016 and June 30, 2017, we had bills receivable of RMB5.1
million, RMB14.5 million, RMB14.8 million and RMB23.6 million, respectively. Our bills receivable
represent receivables from our customers in the form of bank acceptance bills. As we granted
credit periods to more qualified distributors and longer credit periods to some of our other
distributors in 2015, we required some of them to provide bank acceptance bills based on their
credit records with us to reduce our credit risk. As a result, our bills receivable increased from
RMB5.1 million as of December 31, 2014 to RMB23.6 million as of June 30, 2017. As of November
27, 2017, RMB17.5 million, or 74.4%, of our bills receivable outstanding as of June 30, 2017 had
been settled in cash or paid to our suppliers to settle our trade payables.
Deposits, Prepayments and Other Receivables
Our deposits, prepayments and other receivables consist primarily of deferred Listing
expenses, prepayments to suppliers for raw materials and equipment, deposits for participating in
the public tender process, deposits for obtaining letters of credit and other receivables. As of
December 31, 2014, 2015, 2016 and June 30, 2017, we had deposits, prepayments and other
receivables of RMB5.1 million, RMB7.6 million, RMB12.5 million and RMB13.2 million,
respectively. The increase in deposits, prepayments and other receivables from December 31,
2014 to December 31, 2015 was primarily due to an increase in deferred Listing expenses of
RMB3.1 million. The increase in deposits, prepayments and other receivables from December 31,
2015 to December 31, 2016 was primarily due to (1) an increase in prepayments to suppliers by
RMB1.7 million, particularly for certain R&D projects and (2) an increase in deferred Listing
expenses. The increase in deposits, prepayments and other receivables from December 31, 2016
to June 30, 2017 was primarily due to an increase in prepayments to suppliers driven by the
increased procurement of certain components for production and materials for a R&D project from
vendors requiring prepayment.
Available-for-Sale Financial Assets
During the Track Record Period, in order to generate returns on our excess cash balance
from operating activities, we from time to time purchased wealth management products from
banks, which we recorded as available-for-sale financial assets. However, in 2015, we decided not
to reinvest the proceeds from matured wealth management products. As of December 31, 2014,
2015, 2016 and June 30, 2017, we had available-for-sale financial assets of RMB70.0 million, nil,
nil and nil, respectively. After the Listing, we do not expect to purchase similar wealth management
products in the near future.
— 218 —
Trade Payables
As of December 31, 2014, 2015, 2016 and June 30, 2017, we had trade payables of
RMB14.7 million, RMB29.4 million, RMB33.7 million and RMB44.0 million, respectively. The
increases in our trade payables during the Track Record Period were primarily due to an increase
in our cost of sales as a result of the growth of our business scale. The following table sets out
an aging analysis of our trade payables as of the dates indicated:
As of
2014 2015 2016 2017
Within three months . . . . . . . . . . . . . . . . . . . 9,857 26,435 25,502 26,121
Over three months but within six months . . . . . . 3,774 2,010 3,436 6,983
Six to 12 months . . . . . . . . . . . . . . . . . . . . . 490 467 4,138 8,888
Over 12 months . . . . . . . . . . . . . . . . . . . . . . 570 496 664 1,982
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,691 29,408 33,740 43,974
Primarily due to the increase in our bargaining power as our procurement scale grew, we
have been able to negotiate better payment terms with our suppliers and therefore our trade
payables turnover days increased over the Track Record Period, partially offset by shorter credit
periods available to us when purchasing from new suppliers and overseas suppliers. The following
table sets forth our trade payables turnover days for the periods indicated:
Six months
ended
2014 2015 2016 2017
(1)
Trade payables turnover days . . . . . . . . . . . . 92 126 138 140
(1) The trade payables turnover days are calculated by dividing the arithmetic mean of the opening and ending balance
of trade payables in that period by cost of sales for the corresponding period and then multiplying by days of the
relevant period.
— 219 —
Accruals and Other Payables
As of December 31, 2014, 2015, 2016 and June 30, 2017, we had accruals and other
payables of RMB16.5 million, RMB45.0 million, RMB31.2 million and RMB45.9 million,
respectively. The following table sets forth a breakdown of our accruals and other payables as of
the dates indicated:
As of
2014 2015 2016 2017
Advances and deposits from customers . . . . . . . 4,531 5,560 6,353 14,699
Other tax payables . . . . . . . . . . . . . . . . . . . . 5,864 21,018 10,497 15,570
Salary and welfare payables . . . . . . . . . . . . . . 5,184 7,600 8,721 8,900
Dividends payable . . . . . . . . . . . . . . . . . . . . — 6,896 — —
Accrued expenses . . . . . . . . . . . . . . . . . . . . 738 3,037 2,426 2,922
Others (1) . . . . . . . . . . . . . . . . . . . . . . . . . . 213 910 3,198 3,785
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,530 45,021 31,195 45,876
(1) Others represent primarily outstanding miscellaneous expenses reimbursable to employees.
Advances and deposits from our customers primarily represent advances made by
customers for purchases of our products. During the Track Record Period, we generally require
advances from distributors other than those with long and sound credit records with us. Other tax
payables are mainly value-added tax payable, which grew in line with the increase of our revenue,
specifically in 2015, and withholding tax payables on dividends. Salary and welfare payables are
accrued and unpaid employee benefits, which are affected by the increase in employee wages
and bonuses, and the increase in number of our employees. We also recorded dividends payable
of RMB6.9 million as of December 31, 2015, which was settled in March 2016.
Deferred Revenue/Income
As of December 31, 2014, 2015, 2016 and June 30, 2017, we had deferred revenue of
RMB15.4 million, RMB18.0 million, RMB21.9 million and RMB22.2 million, respectively. Deferred
revenue represent accrued but unpaid sales rebates to our distributors. The following table set
forth the movement of our deferred revenue as of the dates indicated:
As of
2014 2015 2016 2017
At the beginning of the year/period . . . . . . . . . 14,177 15,373 18,033 21,922
Sales rebates for the year/period . . . . . . . . . . 13,187 15,480 15,434 6,604
Redeemed during the year/period . . . . . . . . . . 11,991 12,820 11,545 6,317
At the end of the year/period . . . . . . . . . . . . . 15,373 18,033 21,922 22,209
— 220 —
Our deferred revenue increased by 17.3% from RMB15.4 million as of December 31, 2014
to RMB18.0 million as of December 31, 2015, primarily because the sales rebates outgrew those
redeemed as a result of our expansion of business and engagement with new distributors. Our
deferred revenue increased by 21.6% to RMB21.9 million as of December 31, 2016 from RMB18.0
million as of December 31, 2015, primarily due to a decrease in sales rebates redeemed during
the year because we started to enforce a stringent policy for our distributors to redeem sales
rebates in 2016. Our deferred revenue remained stable as of June 30, 2017 as compared to
December 31, 2016. As of the same dates, we had deferred income of RMB5.6 million, RMB6.0
million, RMB8.2 million and RMB7.9 million, respectively, reflecting government grants received
but not yet recognized.
Provisions
Provisions were made for sales returns from our distributors, which relate mainly to sales
during the past years. As of December 31, 2014, 2015 and 2016 and June 30, 2017, we had
provisions of RMB1.8 million, RMB2.5 million, RMB3.3 million and RMB4.0 million, respectively.
The increase in our provisions mainly reflected the growth of our business scale.
INDEBTEDNESS
As of December 31, 2014, 2015 and 2016 and June 30, 2017, we did not incur any bank
borrowings or other financial indebtedness. As of the Latest Practicable Date, we did not have any
outstanding unused credit facilities.
Our Directors confirm that we had no material defaults in payment of trade and non-trade
payables and bank borrowings and had not breached any finance covenants during the Track
Record Period.
As of October 31, 2017, being the latest practicable date for our indebtedness statement,
except as disclosed in this prospectus and except for intra-group liabilities, we did not have any
outstanding loan capital or debt securities issued or agreed to be issued, bank overdrafts, loans,
borrowings or other similar indebtedness, liabilities under acceptances (other than normal trade
bills) or acceptance credits, debentures, mortgages, charges, finance leases, hire purchase
commitments, guarantees or other material contingent liabilities. Since October 31, 2017 to the
date of this prospectus, there has not been any material adverse change in our indebtedness
liabilities. Other than as disclosed above, we do not expect to raise material external debt
financing in the near future based on our current business plans.
MATERIAL RELATED PARTY TRANSACTIONS
During the Track Record Period, we had related party transactions with the ultimate
controlling party other than remunerations paid to our directors and senior management in the
ordinary course of business. See note 26 to Appendix I—“Accountants’ Report” for the
remunerations.
In October 2015, the shareholders of AK Medical Beijing at the time, Mr. Li, Mr. Zhang
Chaoyang, Ms. Zhang Bin, Ms. Li Huijiang, Ms. Zhao Xiaohong, Mr. Qi Yajun, Ms. Wang Caimei,
Ms. Liu Aiguo and Mr. Zhang Weiping entered into an agreement to transfer a 90.0% equity
interest in AK Medical Beijing to AK Medical HK for a consideration of RMB74.7 million. The
transaction was settled in April 2016 and was funded by shareholder’s loans advanced by
Ximalaya to the Company. In April 2016, Ximalaya executed a deed of waiver to discharge the
Company’s obligation to repay the aforesaid shareholder’s loan.
— 221 —
COMMITMENTS
The following table sets forth our capital commitments as of the dates indicated:
As of
2014 2015 2016 2017
Contracted for . . . . . . . . . . . . . . . . . . . . . . . 12,861 28,890 3,585 5,500
Authorized but not contracted for . . . . . . . . . . . 380 156,917 154,226 135,774
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,241 185,807 157,811 141,274
Our contracted for capital commitments as of June 30, 2017 and December 31, 2016
represented mainly expenditures to our R&D cooperation with Peking University Third Hospital.
Our contracted for capital commitments as of December 31, 2015 represented mainly
expenditures to purchase new equipment for producing 3D-printed products and a parcel of land
for the construction of the Changzhou Facilities. See “Our Business—Production—Changzhou
Facilities” for details. Our capital commitment contracted for as of December 31, 2014 represented
mainly expenditures to purchase production and R&D equipment. Our authorized but not
contracted for capital commitments as of June 30, 2017 and December 31, 2016 represented
mainly construction expenses for the Changzhou Facilities. Our authorized but not contracted for
capital commitments as of December 31, 2015 represented mainly construction expenses for the
Changzhou Facilities and expenditures to purchase the production equipment to be installed in the
Changzhou Facility.
We lease certain properties for use as production facilities, offices and warehouses under
operating lease agreements with initial leasing terms that typically range from one to five years,
with an option to renew. The following table sets forth our total future minimum lease payments
under non-cancellable operating leases as of the dates indicated:
As of
2014 2015 2016 2017
Within one year . . . . . . . . . . . . . . . . . . . . . . 861 3,032 3,340 6,604
After 1 year but within 5 years. . . . . . . . . . . . . 474 7,778 7,642 10,962
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,335 10,810 10,982 17,566
CONTINGENT LIABILITIES
As of the Latest Practicable Date, we did not have any material contingent liabilities.
— 222 —
KEY FINANCIAL RATIOS
The following table sets forth our key financial ratios as of the dates or for the periods
indicated:
As of
and for the
six months
ended
As of and for the year ended December 31, June 30,
2014 2015 2016 2017
Gross margin . . . . . . . . . . . . . . . . . . . . . . . 68.3% 68.9% 69.2% 68.7%
Return on equity(1) . . . . . . . . . . . . . . . . . . . . 35.6% 39.0% 32.8% N/A
Return on assets(2) . . . . . . . . . . . . . . . . . . . . 26.5% 26.2% 22.4% N/A
Current ratio(3) . . . . . . . . . . . . . . . . . . . . . . . 346.7% 222.2% 325.6% 277.3%
(1) Return on equity is calculated by dividing (i) profit by (ii) the average of the beginning and end balance of total equity
attributable to owners of our Company of a given period and multiplying by 100.0%.
(2) Return on assets is calculated by dividing (i) profit by (ii) the average of the beginning and end balance of total
assets of a given period and multiplying by 100.0%.
(3) Current ratio is calculated by dividing (i) current assets by (ii) current liabilities at the end of the period and
multiplying by 100.0%.
Gross Margin
For details on our gross margin, see “—Consolidated Statement of Profit or Loss—Gross
Profit and Gross Margin”.
Return on Equity
In 2014, 2015 and 2016, our return on equity was 35.6%, 39.0% and 32.8%, respectively. Our
return on equity increased in 2015, mainly driven by a decrease in Shareholders’ equity as a result
of a comparatively large dividend, which was offset, to a lesser extent, by the capital injection we
received in connection with the Pre-IPO Investment. Our return on equity decreased in 2016,
mainly because we received a capital injection of RMB66.0 million in connection with the Pre-IPO
Investment, which increased our Shareholders’ equity.
Return on Assets
In 2014, 2015 and 2016, our return on assets was 26.5%, 26.2% and 22.4%, respectively.
Our return on assets decreased in 2016, primarily because we received a capital injection of
RMB66.0 million in connection with the Pre-IPO Investment, which increased our total assets.
Current Ratio
As of December 31, 2014, 2015 and 2016 and June 30, 2017, our current ratio was 346.7%,
222.2%, 325.6% and 277.3%, respectively. Our current ratio increased in 2016 compared to 2015,
primarily due to a growth in advances and deposits from our customers. Our current ratio as of
December 31, 2015 was lower than that as of December 31, 2014 and 2016, primarily due to the
increase in our current liabilities as a result of an increase in dividends payable and withholding
tax payables on dividends.
— 223 —
OFF-BALANCE SHEET ARRANGEMENTS
As of the Latest Practicable Date, we did not have any material off-balance sheet
arrangements, and had not entered and do not intend to enter into any derivative transactions for
trading purposes.
LISTING EXPENSES
We have incurred professional and other fees with respect to the Listing. In accordance with
the relevant accounting standards, Listing related fees that are directly attributable to the issuance
of new Shares are recorded as prepaid expenses, which will be deducted from equity upon the
Listing. The remaining Listing related fees are charged to statements of profit or loss. We expect
that the total amount of Listing related expenses, including underwriting commission and incentive
fee, will be approximately RMB59.5 million, assuming the mid-point of the Offer Price range stated
in this prospectus. Of such expenses, RMB32.5 million are expected to be charged to our
consolidated statements of profit or loss. Of this RMB32.5 million, RMB21.3 million was
recognized as general and administrative expenses during the Track Record Period and the
balance amount of RMB11.2 million is expected to be recognized in 2017.
FINANCIAL RISK MANAGEMENT AND FAIR VALUES OF FINANCIAL INSTRUMENTS
We are exposed to credit and liquidity risks associated with our ordinary course of business.
Credit Risk
Our credit risk is primarily attributable to cash and cash equivalents, trade receivables, bill
receivables and other receivables. We have a credit policy in place and the exposures to these
credit risks are monitored on an on-going basis.
Our cash and cash equivalents and available-for-sale financial assets are held with banks,
which have sound reputation.
In respect of trade and other receivables, individual credit evaluations are performed on all
customers requiring credit over a certain amount. These evaluations focus on the customer’s past
history of making payments when due and current ability to pay, and take into account information
specific to the customer as well as pertaining to the economic environment in which the customer
operates. We normally require certain customers to pay 30% to 100% deposits upfront and the
remaining trade receivables are normally due within one to six months (three to 12 months for
hospital customers) from the date of billing. Debtors with balances that are more than one year
past due are requested to settle all outstanding balances before any further credit is granted. We
do not obtain collateral from customers.
All bill receivables as at the end of each reporting period are bank acceptance bills with aging
of less than six months.
Our exposure to credit risk is influenced mainly by the individual characteristics of each
customer rather than the industry or country in which the customers operate and therefore
significant concentrations of credit risk primarily arise when we have significant exposure to
individual customers. At the end of the reporting period, 4.6%, 3.7%, 4.6% and 5.5% of the total
trade receivables was due from our largest customer in 2014, 2015, 2016 and the six months
ended June 30, 2017, respectively, and 29.2%, 20.9%, 23.7% and 20.9% was due from the five
largest customers in 2014, 2015, 2016 and the six months ended June 30, 2017, respectively.
— 224 —
The maximum exposure to credit risk is represented by the carrying amount of each financial
assets in the consolidated statements of financial position. We do not provide any other
guarantees which would expose us or our Company to credit risk.
Further quantitative disclosures in respect of our exposure to credit risk arising from trade
receivables and other receivables are set forth in notes 14 and 15 to our consolidated financial
statements included in Appendix I — “Accountants’ Report” to this prospectus.
Liquidity Risk
Each of our Subsidiaries is responsible for their own cash management, including the short
term investment of cash balances and the raising of loans to cover expected cash demands,
subject to approval by our management and Board when the borrowings exceed certain
predetermined levels of authority. We maintain a policy to regularly monitor our liquidity
requirements and compliance with lending covenants, to ensure that we maintain sufficient
reserves of cash and readily realizable marketable securities and adequate committed lines of
funding from financial institutions to meet its liquidity requirements in the short and longer term.
The following table sets forth the remaining contractual maturities of our financial liabilities,
which are based on contractual undiscounted cash outflows and the earliest date we can be
required to pay as of the dates indicated:
Within one
Carrying year or on
amount Total demand
As of December 31, 2014
Trade payables . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,691 14,691 14,691
Accruals and other payables . . . . . . . . . . . . . . . . . . . 11,999 11,999 11,999
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,690 26,690 26,690

Trade payables . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,408 29,408 29,408
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68,869 68,869 68,869

Trade payables . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,740 33,740 33,740
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58,582 58,582 58,582
As of June 30, 2017

Trade payables . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,974 43,974 43,974
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,151 75,151 75,151
DISTRIBUTABLE RESERVES
As of June 30, 2017, the distributable reserves of our Company were RMB155.7 million.
— 225 —
PRO FORMA ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS
The following is an illustrative statement of our unaudited pro forma consolidated net tangible
assets which has been prepared on the basis of the notes set out below for the purpose of
illustrating the effect of the Global Offering as if it had taken place on June 30, 2017. This
statement of unaudited pro forma consolidated net tangible assets has been prepared for
illustrative purposes only and because of its hypothetical nature, it may not give a true picture of
the financial position of our Group had the Global Offering been completed as of June 30, 2017
or at any future dates.
Consolidated Estimated Unaudited pro

net tangible net proceeds forma adjusted
assets of our from the consolidated Unaudited pro forma adjusted
Company as of Global net tangible consolidated net tangible assets
June 30, 2017(i) Offering(ii)(iv) assets(v) per Share(iii)
RMB’000 RMB’000 RMB’000 RMB HK$
Base on the Offer
Price of HK$1.66
per Share . . . . . . . 311,436 292,090 603,526 0.60 0.72
Base on the Offer

Price of HK$2.00
per Share . . . . . . . 311,436 360,227 671,663 0.67 0.80
Notes:
(i) The consolidated adjusted net tangible assets of our Company as of June 30, 2017 is based on the consolidated
net assets of our Company of RMB320,567,000 as of June 30, 2017, less intangible asset of RMB9,131,000
extracted from the Accountants’ Report as set out in Appendix I in this prospectus.
(ii) The estimated net proceeds from the Global Offering are based on the Offer Shares and the estimated Offer Prices
of HK$1.66 and HK$2.00, respectively, being the low-end price and high-end price, after deduction of the
underwriting commission, incentive fee and estimated expenses payable by us of approximately RMB58,087,000
and RMB61,673,000, respectively (excluding approximately RMB21,358,000 listing expenses have been accounted
for prior to June 30, 2017) and does not taken into account any Shares that may be issued upon exercise of
Over-Allotment Option.
(iii) The unaudited pro forma consolidated net tangible assets per Share is arrived at after adjustments for the estimated
net proceeds from the Global Offering payable to our Company as described in note (ii) and on the basis that
1,000,000,000 Shares were in issue assuming that the Global Offering was completed on June 30, 2017 (including
Shares in issue (including Series A Preferred Shares on an as-converted basis) as of the date of this prospectus and
those Shares to be issued pursuant to the Global Offering and the Capitalization Issue) without taking into account
of any Shares which may be offered for sale upon exercise of the Over-Allotment Option or any options granted or
to be granted under the Pre-IPO Share Option Scheme or the Share Option Scheme.
(iv) The estimated net proceeds from the Global Offering and the unaudited pro forma consolidated net tangible assets
per Share is converted into Hong Kong dollars at an exchange rate of HK$1 to RMB0.8438, being the exchange rate
set by PBOC prevailing on November 27, 2017. No representation is made that the Hong Kong dollar amounts have
been, could have been or could be converted to RMB at that rate or at any other rate.
(v) The unaudited pro forma adjusted consolidated net tangible assets does not take into account dividends of U.S.
dollar equivalent to RMB11.0 million and RMB39.0 million declared on August 25, 2017 and October 20, 2017,
respectively. Such dividends had been paid in full before the Listing. Had such dividends been taken into account,
the unaudited pro forma consolidated net tangible assets per Share would be approximately HK$0.66 (assuming an
Offer Price of HK$1.66 per Share) and approximately HK$0.74 (assuming an Offer Price of HK$2.00 per Share),
respectively.
(vi) Except for the dividend declared in note (v), no adjustment has been made to the unaudited pro forma consolidated
net tangible assets to reflect any trading results or other transactions of the Group subsequent to June 30, 2017.
DISCLOSURE REQUIRED UNDER THE LISTING RULES
As of the Latest Practicable Date, except as disclosed in this prospectus, we were not aware
of any circumstances that would give rise to a disclosure required under Rules 13.13 to 13.19 of
the Listing Rules.
— 226 —
DIVIDENDS
We declared dividends of RMB30.6 million, RMB118.0 million, RMB30.1 million and

RMB23.1 million in 2014, 2015 and 2016 and six months ended June 30, 2017, respectively, all
of which had been paid as of the Latest Practicable Date. In August 2017 and October 2017, our
Board declared dividends of U.S. dollar equivalent of RMB11.0 million and RMB39.0 million,
respectively, both of which had been paid in full before the Listing. However, we do not have a
specific dividend policy or a predetermined dividend payout ratio. The determination to pay
dividends in the future will be made at the direction of our Board and will be based on our profits,
cash flows, financial condition, capital requirements and other conditions that our Board deems
relevant. The payment of dividends may be limited by other legal restrictions and agreements that
we may enter into in the future.
RECENT ACCOUNTING PRONOUNCEMENTS
See note 29 to our consolidated financial statements included in Appendix I—“Accountants’

Report” to this prospectus.
NO MATERIAL ADVERSE CHANGE
The Directors have confirmed there has been no material adverse change in our financial,
operational or trading position or prospects since June 30, 2017 and up to the date of this
prospectus.
— 227 —
DIRECTORS AND SENIOR MANAGEMENT
BOARD OF DIRECTORS
Our Board comprises nine members, including four executive Directors, two non-executive
Directors and three independent non-executive Directors. Our Board is responsible and has
general powers for the management and conduct of our business. The table below sets forth
certain information in respect of the members of our Board.
Date of
Date of joining Current Major duties and appointment
Name Age our Group position/title responsibilities as Director
Li Zhijiang 49 May 2003 Chairman, Responsible for the July 17, 2015
(李志疆) Executive Director overall strategic planning
(Spouse of Ms. Zhang and Chief and development of our
Bin and brother-in-law Executive Officer Group
of Mr. Zhang
Chaoyang) . . . . . . .
Zhang Bin 50 December 2009 Executive Director Responsible for the July 17, 2015
(張斌) and Senior Vice overall management and
(Spouse of President operations including
Mr. Li and sister of Mr. management of the
Zhang Chaoyang) . . . capital markets, human
resources and
administrative matters of
our Group
Zhang Chaoyang 48 May 2003 Executive Director Responsible for product July 17, 2015
(張朝陽) and Senior Vice development, planning,
(Brother of Ms. Zhang President construction, operation
Bin and brother-in-law and management of the
of Mr. Li) . . . . . . . . . new production facilities
of our Group
Zhao Xiaohong 40 September 2010 Executive Director Responsible for financial February 29,
(趙曉紅) . . . . . . . . . and Chief management and 2016
Financial Officer accounting affairs of our
Group
Li Wenming 44 May 2010 Non-executive Responsible for April 6, 2016

(李文明) . . . . . . . . . Director providing advice on
strategy and operations
of our Group
Wang David Guowei 56 February 2016 Non-executive Responsible for February 29,
(王國瑋) . . . . . . . . . Director providing advice on 2016
strategy of our Group
Dang Gengting 82 November 2017 Independent Responsible for November 17,

(黨耕町) . . . . . . . . . Non-executive overseeing the 2017
Director management of our
Group independently
— 228 —
Date of
Date of joining Current Major duties and appointment
Name Age our Group position/title responsibilities as Director
Kong Chi Mo 42 November 2017 Independent Responsible for November 17,
(江智武) . . . . . . . . . . Non-executive overseeing the 2017
Group independently
Li Shu Wing David 53 November 2017 Independent Responsible for November 17,
(李澍榮) . . . . . . . . . . Non-executive overseeing the 2017
Group independently
SENIOR MANAGEMENT
Our senior management, together with our executive Directors, are responsible for the
day-to-day management of our business. The table below sets forth certain information in respect
of the senior management of our Group other than those who are our executive Directors.
Date of
appointment
Date of joining Current Major duties and for the
Name Age our Group position/title responsibilities position
Liu Aiguo (劉愛國) . . . . 44 October 2003 Vice General Responsible for July 1, 2012
Manager of AK managing the legal and
Medical Beijing regulatory department of
AK Medical Beijing
Zhang Weiping 66 December 2008 Chief Engineer of Responsible for the December 1,
(張衛平) . . . . . . . . . . AK Medical Beijing technical and R&D 2008
matters of AK Medical
Beijing
Wang Caimei 44 October 2010 Director of Responsible for December 31,

(王彩梅) . . . . . . . . . research center overseeing the 2014
of AK Medical management of the
Beijing research center of AK
Medical Beijing
Han Yu (韓鈺) . . . . . . . 35 September 2015 Joint Company Responsible for capital April 6, 2016
Secretary markets matters and
company secretarial
matters of our Group
Qi Yajun (亓亞軍) . . . . . 44 November 2005 General Manager Responsible for January 1,

of the Sales overseeing the sales 2017
Department of AK activities of AK Medical
Medical Beijing Beijing
Qi Zijuan (齊子娟) . . . . 51 February 2014 General Manager Responsible for January 1,

of the Business overseeing the business 2017
Development development activities of
Department of AK AK Medical Beijing
Medical Beijing
Sun Yanshi 40 August 2013 Director of the Responsible for August 1,

(孫彥實) . . . . . . . . . . Operation overseeing the operation 2017
Management of AK Medical Beijing
Department of AK
Medical Beijing
— 229 —
Date of
appointment
Date of joining Current Major duties and for the
Name Age our Group position/title responsibilities position
Wang Zhengmin 48 October 2013 Director and Responsible for the January 1,
(王政民) . . . . . . . . . . Management management of the 2017
Representative of quality control centre of
the Quality Control AK Medical Beijing
Centre of AK
Medical Beijing
Wang Nannan 39 May 2014 Human Resources Responsible for human January 1,
(王楠楠) . . . . . . . . . . and Administration resources and 2015
Director of AK administrative
Medical Beijing management of AK
Medical Beijing
EXECUTIVE DIRECTORS
Mr. Li Zhijiang (李志疆), aged 49, is the chairman of our Board, the chief executive officer
of our Company and an executive Director, primarily responsible for the overall strategic planning
and development of our Group. He was appointed as a Director on July 17, 2015 and was
designated as the chairman of our Board, the chief executive officer of our Company and an
executive Director on April 6, 2016. Mr. Li is the spouse of Ms. Zhang Bin (張斌), an executive
Director and a senior vice president of our Company, and the brother-in-law of Mr. Zhang
Chaoyang (張朝陽), an executive Director and a senior vice president of our Company.
Mr. Li is one of the founders of our Group and has over 20 years of experience in the clinical
and orthopedic industry. He has been a director of AK Medical BVI, AK Medical HK, Bright AK HK,
AK Medical Beijing and AK Medical XMKS since July 21, 2015, July 28, 2015, March 15, 2016,
May 8, 2003 and November 11, 2009, respectively. He has also been the general manager of AK
Medical Beijing since May, 2003. Prior to establishing our Group in May 2003, Mr. Li worked in the
surgical department of Shougang Kuangshan Hospital (首鋼礦山醫院) in Tangshan, Hebei
Province, China from 1988 to 1999.
Mr. Li completed the Executive MBA Programme and obtained a Master of Business
Administration (MBA) from China Europe International Business School (中歐國際工商學院) in
August 2014. He completed a diploma program in medicine and graduated from Beijing Staff
Medical College (北京職工醫學院) in July 1998.
Ms. Zhang Bin (張斌), aged 50, is an executive Director and a senior vice president of our
Company, primarily responsible for the overall management and operations including
management of the capital markets, human resources and administrative matters of our Group.
She was appointed as a Director on July 17, 2015 and was designated as an executive Director
and a senior vice president of our Company on April 6, 2016. Ms. Zhang is the spouse of Mr. Li,
the chairman of our Board, an executive Director and the chief executive officer of our Company,
and the sister of Mr. Zhang Chaoyang (張朝陽), an executive Director and a senior vice president
of our Company.
— 230 —
Ms. Zhang has over 20 years of experience in the medical industry. She has been a director
of Bright AK HK and AK Medical Beijing since March 15, 2016 and July 30, 2015, respectively. She
has also been a vice general manager of AK Medical Beijing since December 2009. Prior to joining
our Group, Ms. Zhang had served several roles including physician, head of the hospital chief
executive office and radiologist in the CT room of the radiological department in Shougang
Kuangshan Hospital (首鋼礦山醫院) in Tangshan, Hebei Province, China respectively from 1988 to
2002.
Ms. Zhang obtained an Executive Master of Business Administration (EMBA) from the
Shanghai Advanced Institute of Finance of the Shanghai Jiao Tong University (上海交通大學上海
高級金融學院) in December 2016. She completed a diploma program in medicine and graduated
from Shougang College of Health (首都鋼鐵公司衛生學校) in August 1988.
Mr. Zhang Chaoyang (張朝陽), aged 48, is an executive Director and a senior vice president
of our Company, primarily responsible for product development, planning, construction, operation
and management of the new production facilities of our Group. He was appointed as a Director on
July 17, 2015 and was designated as an executive Director and a senior vice president of our
Company on April 6, 2016. Mr. Zhang is brother of Ms. Zhang Bin (張斌), an executive Director and
a senior vice president of our Company, and brother-in-law of Mr. Li, the chairman of our Board,
an executive Director and the chief executive officer of our Company.
Mr. Zhang is one of the founders of our Group and has over 10 years of experience in the
orthopedic medical device industry. He has been a director of AK Medical BVI, AK Medical HK, AK
Medical Beijing and AK Medical Changzhou since July 21, 2015, July 28, 2015, July 30, 2015 and
March 28, 2016, respectively. He has also been a vice general manager of AK Medical Beijing
since May 2003. Prior to joining our Group, Mr. Zhang had served as a vice director of workshop
and a vice president of labor union of Shougang Mining Company Sintering Plant (首鋼礦業公司
燒結廠) from September 1988 to March 2003 respectively.
Mr. Zhang obtained an Executive Master of Business Administration (EMBA) from China
Europe International Business School (中歐國際工商學院) in November 2016. He obtained his
diploma in economics management from the Correspondence Institute of the Party School of the
Central Committee of Communist Party of China (中央黨校函授學院) in June 2001.
Ms. Zhao Xiaohong (趙曉紅), aged 40, is an executive Director and the chief financial officer
of our Company, primarily responsible for financial management and accounting affairs of our
Group. She was appointed as a Director on February 29, 2016 and was designated as an
executive Director and the chief financial officer of our Company on April 6, 2016.
Ms. Zhao has over 10 years of experience in the accounting industry. She has been the
finance director of AK Medical Beijing since September 2010 and served as the operation director
of AK Medical Beijing from December 2014 to December 2016. Prior to joining our Group, she
worked as an auditor in Ernst & Young Hua Ming LLP from August 2004 to September 2009. Ms.
Zhao has been a Certified Public Accountant recognized by the Chinese Institute of Certified
Public Accountants since November 27, 2009 and an associate member of the Association of
International Accountants since February 27, 2015.
— 231 —
Ms. Zhao received her master degree in corporate management from Renmin University of
China (中國人民大學) in June 2004 and her bachelor degree in international corporate
management in Central University of Finance and Economics (中央財經大學) in June 2001.
NON-EXECUTIVE DIRECTORS
Mr. Li Wenming (李文明), aged 44, is a non-executive Director primarily responsible for
providing advice on strategy and operations of our Group. Mr. Li has been an independent director
of AK Medical Beijing since May 2010, and was appointed and designated as a non-executive
Director on April 6, 2016.
Mr. Li has over 10 years of experience in the pharmaceutical and investment industry. Mr. Li
has been a pharmacist registered with CFDA since February 2004. He has been a partner of
Beijing Hejun Consulting Company Limited (北京和君諮詢有限公司), a company principally
engaged in economy and trading consulting, investment consulting and enterprise management
consulting since January 2007. Since March 20, 2015, he has been appointed as an independent
non-executive director of Shandong Xinhua Pharmaceutical Company Limited (山東新華製藥股份
有限公司) (A-share stock code: 756, H-share stock code: 719), a company listed on the Stock
Exchange and the Shenzhen Stock Exchange.
Mr. Li obtained a Master of Business Administration from the Faculty of Management of the
Dalian University of Technology (大連理工大學) in July 2004.
Dr. Wang David Guowei (王國瑋), aged 56, is a non-executive Director primarily responsible
for providing advice on strategy of our Group. He was appointed as a Director on February 29,
2016 and was designated as a non-executive Director on April 6, 2016.
Dr. Wang has over 10 years of experience in the medical industry. Dr. Wang is the senior
managing director of Asia at OrbiMed Advisors LLC, an investment fund with a focus on healthcare
industry, where he has worked from August 2011. Dr. Wang was a director of Response
Biomedical Corp. (Stock Code: RBM), a company listed on the Toronto Stock Exchange, from
October 2011 to May 2015. From April 2006 to July 2011, he served as managing director at WI
Harper Group, responsible for investment activities in life sciences and healthcare areas. From
March 2010 to July 2012, he served on the board of directors of Edan Instruments, Inc. (a
company listed in the Shenzhen Stock Exchange, stock code: 300206), a provider of advanced
electronic medical equipments, where he also served on both the audit committee and strategic
committee.
Dr. Wang received his doctorate in developmental biology from California Institute of
Technology in June 1995. He received his bachelor degree in medicine from Beijing Medical
University (北京醫科大學) (currently known as Peking University Health Science Center (北京大學
醫學部)) in July 1986.
— 232 —
INDEPENDENT NON-EXECUTIVE DIRECTORS
Mr. Dang Gengting (黨耕町), aged 82, is an independent non-executive Director primarily
responsible for overseeing the management of our Group independently. He joined our Group on
November 17, 2017, when he was appointed as an independent non-executive Director.
Mr. Dang has over 40 years of experience in the medical field. From September 1963 to
February 2006, he worked in the Peking University Third Hospital and his last role served was a
professor of Peking University Third Hospital.
Mr. Dang was the chairman of committee of China Orthopedic Association (中華醫學會骨科學
分會) from 1992 to 2000 and honorary chairman from 2000 to 2004. He was the president of the
first committee and honorary president of the second committee of Chinese Association of
Orthopedic Surgeons (中國醫師協會骨科醫師分會).
Mr. Dang received first class Science and Technology Progress Award (教育部科技進步一等
獎) presented by Ministry of Education of the People’s Republic of China in 2003. Mr. Dang
received second class award National Science and Technology Progress Award (國家科學技術進
步二等獎) in 2002.
Mr. Kong Chi Mo (江智武), aged 42, is an independent non-executive Director primarily
Mr. Kong has over 19 years of experience in accounting, auditing, financial management,
corporate finance, investor relations, company secretarial affairs and corporate governance. Mr.
Kong currently holds various positions in the following companies listed on the Main Board of the
Stock Exchange:
Company name Stock code Principal business Appointment date Role

Huazhang 01673, previously Research and May 2013 Independent non-
Technology Holding listed on the development, executive
Limited Growth manufacture and director
Enterprise sale of industrial
Market of the automation and
Stock Exchange sludge treatment
(stock code: products, the
08276) provision of after-
sales service and
wastewater
treatment business
in the PRC
Hengshi Mining 01370 Mining, processing June 2013 Independent non-

Investments and sale of iron ore executive
Limited products and the director
provision of
hospital
management
service in the PRC
Starlight Culture 01159 Entertainment and May 2017 Independent non-

Entertainment gaming business, executive
Group Limited trading of chemical director
(previously known products, energy
as Jimei conservation and
International environmental
Entertainment protection products,
Group Limited) and media and
culture business
— 233 —
Company name Stock code Principal business Appointment date Role

China Vanadium 00893 Mining and ore September 2009 Company
Titano-Magnetite processing, sale of secretary and
Mining Company self-produced authorised
Limited (“China products, trading of representative
Vanadium”) iron products, coals
and steels, and
management of
strategic
investments
Mr. Kong was the executive director and chief financial officer of China Vanadium from
October 2013 to May 2015 and from May 2008 to May 2015 respectively. Mr. Kong was the
independent non-executive director of CAA Resources Limited, a company listed on the Main
Board of the Stock Exchange (stock code: 02112) from April 2013 to August 2017. Mr. Kong
worked at KPMG from October 1999 to December 2007 and was promoted to senior manager
during his term of office. Prior to joining KPMG, Mr. Kong worked as a finance trainee in Hutchison
Telecommunications (Hong Kong) Limited from June 1997 to March 1998, and as an associate in
PricewaterhouseCoopers from March 1998 to October 1999.
Mr. Kong obtained his bachelor degree in business administration from The Chinese
University of Hong Kong in December 1997. Mr. Kong has been a fellow of The Association of
Chartered Certified Accountants since February 2008, a fellow of each of The Hong Kong Institute
of Chartered Secretaries (“HKICS”) and The Institute of Chartered Secretaries and Administrators
(“ICSA”) since February 2012, a member of The Hong Kong Institute of Directors (“HKIoD”) since
May 2010, an ordinary member of Hong Kong Securities and Investment Institute since October
2017 and a full member of Hong Kong Investor Relations Association since November 2017. Mr.
Kong received silver, gold and bronze certificates of merit in continuing professional development
in 2013, 2014 and 2015 respectively from the HKIoD.
Accordingly, taking into account Mr. Kong’s past experiences and qualifications, our
Company takes the view that he is experienced in handling accounting or financial works of our
Company, familiar with the financial statements, internal control and risk management system of
listed companies and has appropriate accounting or related financial management expertise.
Mr. Li Shu Wing David (李澍榮), aged 53, is an independent non-executive Director primarily
Mr. Li has substantial experience in management in the retailing industry and medical
industry. Mr. Li is the sole director of Great Bonus Development Limited, a management consulting
company founded in July 2012. From July 2010 to January 2013, he served as the senior director
of Medtronic Weigao Orthopedic Device Company Limited, specialized in research and
development, production and sale of spine, trauma and joint orthopedic implants. Mr. Li worked
in G2000 (Apparel) Limited, from November 2007 to January 2008. He was the managing director
in Stryker China Limited from July 2001 to 2006.
Mr. Li obtained a Master of Business Administration degree from Chaminade University of

Honolulu in December 1986 and a Bachelor of Business Administration degree from University of
Hawaii at Hilo in May 1986. He attended Stryker Advanced Leadership Academy Program in
Harvard University in March 2005 and INSEAD Hewlett-Packard Management Academy in April
1999.
— 234 —
DIRECTORS INTERESTS
Except as disclosed in this prospectus, each of our Directors: (i) did not hold any other
positions in our Company or other members of our Group as of the Latest Practicable Date; (ii) had
no other relationship with any Directors, senior management or substantial or Controlling
Shareholders as of the Latest Practicable Date; (iii) did not hold any other directorships in any
public companies in Hong Kong and overseas in the three years immediately preceding the date
of this prospectus; and (iv) is not interested in any business apart from our Company’s business,
which competes or is likely to compete, either directly or indirectly, with our Company’s business.
As of the Latest Practicable Date, except as disclosed in Appendix IV—“Statutory and

General Information—Further Information about Directors and Shareholders—12. Directors—(d)
Interests and/or short positions of Directors in the shares, underlying shares or debentures of our
Company and its associated corporations”, each of our Directors did not have any interest in our
Shares within the meaning of Part XV of the SFO.
Except as disclosed herein, to the best of the knowledge, information and belief of our
Directors having made all reasonable enquiries, there was no other matter with respect to the
appointment of our Directors that needs to be brought to the attention of our Shareholders and
there was no information relating to our Directors that is required to be disclosed pursuant to
Rules 13.51(2)(h) to (v) of the Listing Rules as of the Latest Practicable Date.
SENIOR MANAGEMENT
Unless otherwise stated below, none of the members of our senior management has been a
director of a public company the securities of which are listed on any securities market in Hong
Kong or overseas.
Ms. Liu Aiguo (劉愛國), aged 44, is a vice general manager of AK Medical Beijing. Ms. Liu
has over 12 years of experience in the orthopedic medical device industry. She worked in Beijing
Bearing Factory (北京軸承廠) from January 1996 to October 2003. She joined our Group in
October 2003 as the head of production of AK Medical Beijing and was appointed as a vice
general manager of AK Medical Beijing in July 2012, primarily responsible for quality control
management and legal and regulatory affairs of AK Medical Beijing. Since January 2017, her
responsibility has been re-designated to the management of the legal and regulatory department
of AK Medical Beijing.
Ms. Liu has enrolled in the program of Executive Master of Business Administration of
Cheung Kong Graduate School of Business (長江商學院) and received her diploma in information
management and application from Beijing Union University (北京聯合大學) in July 1998.
Mr. Zhang Weiping (張衛平), aged 66, is the chief engineer of AK Medical Beijing, primarily
responsible for technical and R&D matters of AK Medical Beijing. Mr. Zhang has over 7 years of
experience in 3D-printing in orthopedic field. He joined our Group in December 2008 as the chief
engineer of AK Medical Beijing.
Prior to joining our Group, he served as a senior engineer of Beijing Textile Equipment
Institute (北京紡織機械器材研究所). Mr. Zhang received his diploma in knitwear from Tianjin Textile
Institute (天津紡織工學院) (currently known as School of Textiles of Tianjin Polytechnic University
(天津工業大學紡織學院)) in October 1977.
— 235 —
Ms. Wang Caimei (王彩梅), aged 44, is the director of research center of AK Medical Beijing,
primarily responsible for overseeing the management of the research center of AK Medical
Beijing. Ms. Wang has over 10-year R&D experience in orthopedic implants. She joined our Group
in October 2010 as the supervisor of research center of AK Medical Beijing and was promoted to
the director of research center of AK Medical Beijing in December 2014.
Prior to joining our Group, Ms. Wang worked in Baimtec Material Company Limited (北京百
慕航材高科技股份有限公司), a company principally engaged in the research, development and
distribution of high technology products based on aeronautical materials, manufacturing process
and technology, from March 2001 to September 2010.
Ms. Wang received her doctorate in vehicle engineering from China Agricultural University
(中國農業大學) in June 2009.
Ms. Han Yu (韓鈺), aged 35, is one of our joint company secretaries, primarily responsible
for capital markets matters and company secretarial matters of our Group. Ms. Han has over 7
years of experience in the finance industry. She joined our Group in September 2015 as the senior
financial analysis manager of AK Medical Beijing until December 31, 2015. She has become the
secretary to the board of directors of AK Medical Beijing since January 1, 2016. She was
appointed as one of our joint company secretaries on April 6, 2016.
Prior to joining our Group, Ms. Han was a business analyst of Hang Seng Bank in China from
June 2008 to December 2010. She worked at the PBC School of Finance, Tsinghua University (清
華大學五道口金融學院) from June 2014 to August 2015, responsible for curriculum development.
Ms. Han received her master degree in statistics from Yale University in May 2007. She
obtained her bachelor degree in science from University of Victoria in May 2006.
Mr. Qi Yajun (亓亞軍), aged 44, has been the general manager of the sales department of
AK Medical Beijing since January 2017, primarily responsible for managing the sales department
of AK Medical Beijing. Mr. Qi has over 10 years of experience in the healthcare industry. Mr. Qi
joined our Group in November 2005 and served as a regional manager of AK Medical Beijing until
April 2011. He then worked as a marketing manager of AK Medical Beijing from May 2011 to
December 2011, marketing director of AK Medical Beijing from January 2012 to June 2012, and
sales director of AK Medical Beijing from July 2012 to January 2017.
Mr. Qi obtained a diploma in clinical medicine from Inner Mongolia Medical College (內蒙古
醫學院) (currently known as Inner Mongolia Medical University (內蒙古醫科大學)) in July 1999.
Ms. Qi Zijuan (齊子娟), aged 51, has been the general manager of the business development
department of AK Medical Beijing since January 2017, primarily responsible for managing the
business department of AK Medical Beijing. Ms. Qi is experienced in the healthcare industry and
she joined our Group in February 2014. From February 2014 to June 2014 and July 2014 to
December 2014, she was the project director of AK Medical Beijing and the sales director of AK
Medical Beijing, respectively. She acted as the business development director of AK Medical
Beijing from December 2014 to January 2017.
Prior to joining our Group, Ms. Qi worked as the business executive at Stryker (Beijing)
Healthcare Products Company Limited, a manufacturer of medical devices and equipment, from
January 2007. She served as the sales director at Beijing Chunlizhengda Medical Instruments
Co., Ltd. (北京市春立正達醫療器械股份有限公司), a company specialized in medical devices and
listed on the Stock Exchange (stock code: 1858), from 2010 and the vice general manager of
distribution business at Beijing Ruikangdacheng Medical Devices Co., Ltd. (北京瑞康大成醫療器械
有限公司) specialized in medical devices, from 2013, respectively.
— 236 —
Ms. Qi obtained a diploma in psychology from Peking University in December 1989.
Mr. Sun Yanshi (孫彥實), aged 40, has been the director of the operation management
department of AK Medical Beijing since August 2017, primarily responsible for overseeing the
operation of AK Medical Beijing. Mr. Sun has approximately 5 years of experience in the medical
device industry. He joined our Group in August 2013 and served as the assistant to general
manager from August 2013 to December 2013. He then worked as the product strategy director
of AK Medical Beijing from January 2014 to December 2014 and the marketing director of AK
Medical Beijing from December 2014 to August 2017.
Prior to joining our Group, he worked at the medical product department of CeramTec (德國
賽瑯泰克有限公司), a supplier of ceramic materials from 2011 to 2013.
Mr. Sun obtained a master degree in bio-medical engineering from Technische Universität
Berlin in December 2007. He obtained his diploma in automobile engineering from Tsinghua
University in September 2000.
Mr. Wang Zhengmin (王政民), aged 48, has been the director and management
representative of the quality control centre of AK Medical Beijing since January 2017, primarily
responsible for managing the quality control centre of AK Medical Beijing. Mr. Wang has extensive
experience in the production and manufacturing industry. He joined our Group in October 2013.
From October 2013 to June 2014 and July 2014 to December 2015, he was the head of the
corporate system department and head of the production center, respectively.
From June 2003 to March 2006 and from February 2007 to May 2008, he served several
roles including quality manager, production manager and factory head at Beijing TianXinFu
Medical Appliance Co., Ltd. (北京天新福醫療器材有限公司), a company specialized in research,
development, production and sales of medical devices. He also worked at Beijing Heavy Electric
Machinery Factory (北京重型電機廠) as a welding engineer.
Mr. Wang obtained a bachelor degree in welding technology and equipment from Gansu
University of Technology (甘肅工業大學) (currently known as Lanzhou University of Technology (蘭
州理工大學)) in June 1994. Mr. Wang obtained a Welding Engineer Certificate from Beijing
Intermediate Professional Technical Position Appraisal Committee (北京中級專業技術職務評審委員
會) in October 1999.
Ms. Wang Nannan (王楠楠), aged 39, has been the human resources and administration
director of AK Medical Beijing since January 2015, primarily responsible for the human resources
and administrative management of AK Medical Beijing. Ms. Wang has over 5 years of experience
in human resources management. Ms. Wang joined our Group in May 2014 as a senior human
resources manager of AK Medical Beijing.
Prior to joining our Group, Ms. Wang worked as the human resources manager at
Unisplendour Digital Company Limited (紫光數碼有限公司) from January 2006 to October 2011.
From November 2011 to June 2013, Ms. Wang worked as the human resources manager at
Beijing Konruns Pharmaceutical Co., Ltd (北京康辰藥業股份有限公司).
Ms. Wang obtained a bachelor degree in management through a distance learning course
from Renmin University of China in January 2010.
JOINT COMPANY SECRETARIES
Ms. Han Yu (韓鈺) was appointed as a joint company secretary of our Company on April 6,
2016. Please refer to “—Senior Management” above for the biography of Ms. Han.
— 237 —
Ms. Li Yan Wing Rita (李昕穎), aged 51, was appointed as a joint company secretary of our
Company on April 6, 2016. Ms. Li is a director, corporate services of Tricor Services Limited
(“Tricor”), a global professional services provider specializing in integrated business, corporate
and investor services.
Ms. Li has over 20 years of experience in the corporate secretarial field and has been
providing professional corporate services to Hong Kong listed companies as well as multinational,
private and offshore companies. Ms. Li is currently the company secretary of two companies listed
on the Stock Exchange, namely, China Outfitters Holdings Limited 中國服飾控股有限公司 (stock
code: 1146) and Logan Property Holdings Company Limited 龍光地產控股有限公司 (stock code:
3380).
Ms. Li is a Chartered Secretary and a fellow of both the HKICS and the ICSA. She is a holder
of the Practitioner’s Endorsement from HKICS. Ms. Li holds a Bachelor of Arts degree from City
University of Hong Kong.
Prior to joining Tricor, Ms. Li was a senior manager of secretarial department of Ernst &
Young, Hong Kong.
BOARD COMMITTEES
Our Board delegates certain responsibilities to various committees. In accordance with the
Corporate Governance Code set forth in Appendix 14 to the Listing Rules, our Company has
formed three Board committees, namely the Audit Committee, the Nomination Committee and the
Remuneration Committee.
Audit committee
Our Company has established an audit committee with written terms of reference in
compliance with the Listing Rules. The primary duties of the audit committee are to review and
supervise our financial reporting process and internal control and risk management system,
nominate and monitor external auditors and to provide advice and comments to the Board on
matters related to corporate governance.
Our audit committee consists of three members, being Mr. Kong Chi Mo, Mr. Li Shu Wing
David and Mr. Li Wenming. Mr. Kong Chi Mo currently serves as the chairman of our audit
committee.
Remuneration committee
Our Company has established a remuneration committee with written terms of reference in
compliance with the Listing Rules. The primary duties of the remuneration committee are to make
recommendations on the remuneration of our senior management and to recommend members of
the Board.
Our remuneration committee consists of three members, being Mr. Li Shu Wing David, Mr.
Kong Chi Mo and Mr. Li. Mr. Li Shu Wing David currently serves as the chairman of our
remuneration committee.
Nomination committee
Our Company has established a nomination committee with written terms of reference in
compliance with the Listing Rules. The primary duties of the nomination committee are to make
recommendations to our Board regarding candidates to fill vacancies on the Board and/or in
senior management.
— 238 —
Our nomination committee consists of three members, being Mr. Li, Mr. Li Shu Wing David
and Mr. Dang Gengting. Mr. Li currently serves as the chairman of our nomination committee.
COMPENSATION OF DIRECTORS AND SENIOR MANAGEMENT
For each of the three years ended December 31, 2014, 2015 and 2016 and the six months
ended June 30, 2017, the aggregate amount of Directors’ emoluments was approximately
RMB863,000, RMB1,845,000, RMB2,030,000 and RMB1,055,000 respectively.
The aggregate amount of salaries and other emoluments, discretionary bonuses and
retirement scheme contributions, paid by us to the five highest paid individuals of our Group
(including our Directors) for each of the three years ended December 31, 2014, 2015 and 2016
and the six months ended June 30, 2017 was approximately RMB1,425,000, RMB3,124,000,
RMB3,925,000 and RMB2,079,000 respectively.
During the Track Record Period, no remuneration was paid by us to, or receivable by, our
Directors or the five highest paid individuals as inducement to join or upon joining our Company,
or as compensation for loss of office as a director of any member of our Group or of any other
office in connection with the management of the affairs of any member of our Group. In addition,
none of our Directors waived any emolument.
Under the arrangements currently in force, we estimate the aggregate remuneration of our
Directors payable in respect of the financial year ending December 31, 2017 to be approximately
RMB2,460,000 (excluding discretionary bonus).
Except as disclosed above, no other payments were paid, or were payable, by us to our
Directors, or the five highest paid individuals during the Track Record Period.
SHARE OPTION SCHEMES
We conditionally adopted the Pre-IPO Share Option Scheme and conditionally adopted the
Share Option Scheme on November 17, 2017. For details of the Pre-IPO Share Option Scheme
and the Share Option Scheme, please see “Statutory and General Information—Other
Information—15. Share Option Schemes—B. Pre-IPO Share Option Scheme” and “Statutory and
General Information—Other Information—15. Share Option Schemes—A. Share Option Scheme”,
respectively, in Appendix IV to this prospectus.
COMPLIANCE ADVISOR
Our Company has appointed Guotai Junan Capital Limited as our compliance advisor
pursuant to Rule 3A.19 of the Listing Rules. Pursuant to Rule 3A.23 of the Listing Rules, our
Company must consult with and, if necessary, seek advice from the compliance advisor on a
timely basis in the following circumstances:
(1) before the publication of any regulatory announcement, circular or financial report;
(2) where a transaction, which might be a notifiable or connected transaction, is

contemplated including but not limited to share issues and share repurchases;
(3) where our Company proposes to use the proceeds of the Global Offering in a manner
different from that detailed in this prospectus or where the business activities,
developments or results of operations of our Group deviate from any forecast, estimate,
or other information in this prospectus; and
— 239 —
(4) where the Stock Exchange makes an inquiry of our Company concerning unusual
movements in the price or trading volume of our Shares, the possible development of
a false market in our Shares or any other matters set forth in Rule 13.10 of the Listing
Rules.
The term of appointment of the compliance advisor shall commence on the Listing Date and
end on the date on which our Company complies with Rule 13.46 of the Listing Rules in respect
of its financial results for the first full financial year commencing after the Listing Date.
CORPORATE GOVERNANCE CODE
We consider that having Mr. Li acting as both our Chairman and our general manager will
provide a strong and consistent leadership to us and allow for more effective planning and
management for our Group. Pursuant to A.2.1 of Appendix 14 to the Listing Rules, the roles of
chairman and chief executive should be separate and should not be performed by the same
individual. However, in view of Mr. Li’s extensive experience in the industry, personal profile and
critical role in our Group and its historical development, we consider that it is beneficial to the
business prospects of our Group that Mr. Li continues to act as both our Chairman and our general
manger after the Listing.
Except as disclosed above, our Directors consider that, as of the Latest Practicable Date, our
Company has fully complied with the applicable code provisions as set forth in the Corporate
Governance Code as contained in Appendix 14 to the Listing Rules.
— 240 —
SUBSTANTIAL SHAREHOLDERS
So far as our Directors are aware, immediately following the completion of the Capitalization
Issue and the Global Offering (without taking into account any Shares which may be allotted and
issued upon exercise of the Over-Allotment Option or the options granted or to be granted under
the Pre-IPO Share Option Scheme or the Share Option Scheme), the following persons will have
an interest or short position in our Shares or the underlying Shares which would fall to be
disclosed to our Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who
will be, directly or indirectly, interested in 10% or more of the nominal value of any class of share
capital carrying rights to vote in all circumstances at general meetings of any other member of our
Group:
Immediately following the

Capacity/nature As of the date completion of the Capitalization
Name of Shareholder of interest of this prospectus Issue and the Global Offering(1)
Number of Approximate Number of Approximate
Shares or percentage Shares or percentage
securities of securities of
held shareholding held shareholding
Mr. Li (2) . . . . . . . . . . . . . Founder of a 78,021(L) 78.021% 585,157,500(L) 58.51575%
discretionary trust
and interest in a
controlled
corporation
Interest of spouse 1,350(L) 1.350% 10,125,000(L) 1.01250%
Trident Trust(3) . . . . . . . . Trustee of a 78,021(L) 78.021% 585,157,500(L) 58.51575%

discretionary trust
and interest in a
controlled
corporation
Rainbow Holdings (3) . . . . . Interest in a 78,021(L) 78.021% 585,157,500(L) 58.51575%

controlled
corporation
Ximalaya (2), (3) . . . . . . . . Beneficial owner 78,021(L) 78.021% 585,157,500(L) 58.51575%
Ms. Zhang Bin(4) . . . . . . . Interest in a 1,350(L) 1.350% 10,125,000(L) 1.01250%

controlled
corporation
Interest of spouse 78,021(L) 78.021% 585,157,500(L) 58.51575%
Mr. Zhang Chaoyang (5) . . . Interest in a 8,991(L) 8.991% 67,432,500(L) 6.74325%

controlled
corporation
Suntop(5) . . . . . . . . . . . . Beneficial owner 8,991(L) 8.991% 67,432,500(L) 6.74325%
OrbiMed Advisors II Interest in a 10,000(L) 10.000% 75,000,000(L) 7.50000%

Limited(6) . . . . . . . . . . controlled
corporation
OrbiMed Asia GP II, L.P.(6) . Interest in a 10,000(L) 10.000% 75,000,000(L) 7.50000%

controlled
corporation
OrbiMed Asia (6) . . . . . . . . Beneficial owner 10,000(L) 10.000% 75,000,000(L) 7.50000%
— 241 —
Notes:
(1) The letter “L” denotes a person’s long position in our Shares.
(2) Mr. Li directly holds 50% of the issued share capital of Ximalaya, which holds 585,157,500 Shares. Therefore, Mr.
Li is deemed to be interested in Ximalaya’s interest in our Shares pursuant to the SFO. In addition, Mr. Li is the
husband of Ms. Zhang Bin. Therefore, Mr. Li is deemed to be interested in Ms. Zhang Bin’s interest in our Shares
pursuant to the SFO. Mr. Li is also the founder of the Family Trust.
(3) The Family Trust is a discretionary trust established by Mr. Li as settlor, with Trident Trust acting as trustee. The
beneficiaries of the Family Trust are Mr. Li and certain of his family members. Trident Trust holds 100% of the issued
share capital of Rainbow Holdings, which holds 50% of the issued share capital of Ximalaya. Therefore, each of
Trident Trust and Rainbow Holdings is deemed to be interested in Ximalaya’s interest in our Shares pursuant to the
SFO.
(4) Ms. Zhang Bin is the sole shareholder of Summer which holds 10,125,000 Shares. Therefore, Ms. Zhang Bin is
deemed to be interested in Summer’s interest in our Shares pursuant to the SFO. In addition, Ms. Zhang Bin is the
wife of Mr. Li. Therefore, Ms. Zhang Bin is deemed to be interested in Mr. Li’s interest in our Shares pursuant to the
SFO.
(5) Mr. Zhang Chaoyang is the sole shareholder of Suntop which holds 67,432,500 Shares. Therefore, Mr. Zhang
Chaoyang is deemed to be interested in Suntop’s interest in our Shares pursuant to the SFO. Mr. Zhang Chaoyang
is the brother of Ms. Zhang Bin and the brother-in-law of Mr. Li.
(6) Assuming all Series A Preferred Shares are converted into Ordinary Shares on a one-for-one basis prior to the
Listing pursuant to the terms in the Pre-IPO Investment Shareholders Agreement and the articles of association of
the Company in force prior to the adoption of the Articles, OrbiMed Asia shall hold 75,000,000 Ordinary Shares upon
completion of the Capitalization Issue and the Global Offering (without taking into account any Share which may be
allotted and issued upon exercise of the Over-Allotment Option or the options granted or to be granted under the
Pre-IPO Share Option Scheme or the Share Option Scheme). The general partner of OrbiMed Asia is OrbiMed Asia
GP II, L.P., whose general partner is OrbiMed Advisors II Limited. Therefore, each of OrbiMed Asia GP II, L.P. and
OrbiMed Advisors II Limited is deemed to be interested in OrbiMed Asia’s interest in our Shares pursuant to the SFO.
Except as disclosed herein, our Directors are not aware of any person who will, immediately
following completion of the Capitalization Issue and the Global Offering (without taking into
account any Share which may be allotted and issued upon exercise of the Over-Allotment Option
or the options granted or to be granted under the Pre-IPO Share Option Scheme or the Share
Option Scheme), have an interest or short position in our Shares or the underlying Shares which
would fall to be disclosed to our Company under the provisions of Divisions 2 and 3 of Part XV of
the SFO, or will be, directly or indirectly, interested in 10% or more of the nominal value of any
class of share capital carrying rights to vote in all circumstances at general meetings of any other
member of our Group. Our Directors are not aware of any arrangement which may result in a
change of control of our Company at a subsequent date.
— 242 —
SHARE CAPITAL
The authorized share capital of our Company as of the Latest Practicable Date was
HK$380,000 divided into (a) 37,990,000 Ordinary Shares of par value of HK$0.01 each and (b)
10,000 Series A Preferred Shares of par value of HK$0.01 each. The issued share capital of our
Company as of the Latest Practicable Date was (a) 90,000 Ordinary Shares of par value of
HK$0.01 each and (b) 10,000 Series A Preferred Shares of par value of HK$0.01 each.
The following is a description of the authorized share capital of our Company in issue and to
be issued as fully paid or credited as fully paid upon completion of the Capitalization Issue and the
Global Offering:
HK$
Authorized share capital:
2,000,000,000 Shares of HK$0.01 each 20,000,000
Shares 20,000,000
Assuming the Over-Allotment Option is not exercised, the issued share capital of our
Company immediately following the Global Offering will be as follows:
Approximate
percentage of
issued share
capital
HK$ (%)
Issued and to be issued, fully paid or credited as

fully paid, upon completion of the Capitalization
Issue and the Global Offering:
100,000 Shares in issue as of the date of this 1,000 0.01%

prospectus(Note)
749,900,000 Shares to be issued under the Capitalization 7,499,000 74.99%

Issue
250,000,000 Shares to be issued under the Global Offering 2,500,000 25.00%
1,000,000,000 Shares in total 10,000,000 100.00%
Note: It includes 90,000 Ordinary Shares in issue, representing 90% of the entire issued share capital of our Company,
and 10,000 Series A Preferred Shares convertible into 10,000 Ordinary Shares pursuant to the terms in the Pre-IPO
Investment Shareholders Agreement and the articles of association of the Company in force prior to the adoption
of the Articles, representing 10% of the entire issued share capital of our Company.
— 243 —
SHARE CAPITAL
Assuming the Over-Allotment Option is exercised in full, the issued share capital of our
Company immediately following the Global Offering will be as follows:
Approximate
percentage of
issued share
capital
HK$ (%)
Issued and to be issued, fully paid or credited as

fully paid, upon completion of the Capitalization
Issue and the Global Offering:
100,000 Shares in issue as of the date of this 1,000 0.01%

prospectus (Note)
749,900,000 Shares to be issued under the Capitalization 7,499,000 72.28%
Issue
287,500,000 Shares to be issued under the Global Offering 2,875,000 27.71%
including the Over-Allotment Option
1,037,500,000 Shares in total 10,375,000 100.00%
Note: It includes 90,000 Shares in issue, representing 90% of the entire issued share capital of our Company, and 10,000
Series A Preferred Shares convertible into 10,000 Shares pursuant to the terms in the Pre-IPO Investment
Shareholders Agreement and the articles of association of the Company in force prior to the adoption of the Articles,
representing 10% of the entire issued share capital of our Company.
ASSUMPTIONS
The above tables assume that the Global Offering becomes unconditional.
The above tables take no account of (a) Shares which may be allotted and issued upon
exercise of the options granted or to be granted under the Pre-IPO Share Option Scheme or the
Share Option Scheme; or (b) any Shares which may be allotted and issued or repurchased by our
Company pursuant to the General Mandate and the Repurchase Mandate as described below.
RANKING
The Offer Shares and our Shares that may be issued pursuant to exercise of the
Over-Allotment Option and the options granted or to be granted under the Pre-IPO Share Option
Scheme or the Share Option Scheme will rank pari passu in all respects with all other existing
Shares in issue as mentioned in this prospectus, and in particular, will be entitled to all dividends
and other distributions hereafter declared, paid or made on our Shares after the date of this
prospectus except for entitlements under the Capitalization Issue.
— 244 —
SHARE CAPITAL
SHARE OPTION SCHEMES
We conditionally adopted the Pre-IPO Share Option Scheme on November 17, 2017. Under
the Pre-IPO Share Option Scheme, the eligible participants of the scheme, including directors and
full-time employees of our Company or its subsidiaries, may be granted options prior to the Listing
which entitle them to subscribe for our Shares. Further details of the terms of the Pre-IPO Share
Option Scheme and the grantees are summarized in “—Other Information—15. Share Option
Schemes—B. Pre-IPO Share Option Scheme” in Appendix IV to this prospectus.
We conditionally adopted the Share Option Scheme on November 17, 2017. Under the Share
Option Scheme, the eligible participants of the scheme, including directors, full-time employees of
and advisors and consultants to our Company or our subsidiaries may be granted options after the
Listing which entitle them to subscribe for our Shares, when aggregated with options granted
under any other scheme, representing initially not more than 10% of our Shares in issue on the
Listing Date. Further details of the terms of the Share Option Scheme are summarized in “—Other
Information—15. Share Option Schemes—A. Share Option Scheme” in Appendix IV to this
prospectus.
GENERAL MANDATE
Our Directors have been granted a general unconditional mandate to allot, issue and deal
with, otherwise than by way of rights issue, scrip dividend schemes or similar arrangements
providing for allotment of Shares in lieu of the whole or in part of any dividend in accordance with
the Articles, or pursuant to the exercise of the options granted or to be granted under the Pre-IPO
Share Option Scheme or the Share Option Scheme, or under the Capitalization Issue or the
Global Offering or upon the exercise of the Over-Allotment Option, an aggregate number of
Shares not exceeding the sum of (a) 20% of the aggregate number of issued Shares immediately
following completion of the Capitalization Issue and the Global Offering (but excluding any Shares
which may be allotted and issued upon exercise of the Over-Allotment Option or the options
granted or to be granted under the Pre-IPO Share Option Scheme or the Share Option Scheme);
and (b) the aggregate number of Shares which may be repurchased by our Company under the
Repurchase Mandate.
This General Mandate will expire:
(i) at the conclusion of our Company’s next annual general meeting; or
(ii) upon the expiry of the period within which our Company is required by any applicable
law or the Memorandum and Articles of Association to hold its next annual general
meeting; or
(iii) when varied, revoked or renewed by an ordinary resolution of our Shareholders in

general meeting,
whichever occurs first.
For further details of the General Mandate, see “Information about our Company—3.
Resolutions in writing of our Shareholders passed on November 17, 2017” in Appendix IV to this
prospectus.
— 245 —
SHARE CAPITAL
REPURCHASE MANDATE
Our Directors have been granted a general unconditional mandate to exercise all of the
powers of our Company to repurchase Shares with an aggregate number of Shares of not more
than 10% of the aggregate number of issued Shares immediately following completion of the
Capitalization Issue and the Global Offering (but excluding the Shares which may be allotted and
issued upon exercise of the Over-Allotment Option or any options granted or to be granted under
the Pre-IPO Share Option Scheme or the Share Option Scheme).
This Repurchase Mandate relates only to repurchases made on the Stock Exchange or on
any other stock exchange on which our Shares are listed (and which is recognized by the SFC and
the Stock Exchange for this purpose), and which are made in accordance with all applicable laws
and the requirements of the Listing Rules. Further information required by the Stock Exchange to
be included in this prospectus regarding the repurchase of Shares is set out in “– Information
about our Company – 7. Securities repurchase mandate” in Appendix IV to this prospectus.
This Repurchase Mandate will expire:
(i) at the conclusion of our Company’s next annual general meeting; or
(ii) upon the expiry of the period within which our Company is required by any applicable
meeting; or
(iii) when varied, revoked or renewed by an ordinary resolution of our Shareholders in

general meeting,
whichever occurs first.
For further information about this Repurchase Mandate, see “Information about our
Company—3. Resolutions in writing of our Shareholders passed on November 17, 2017” in
Appendix IV to this prospectus.
CIRCUMSTANCES UNDER WHICH GENERAL MEETING AND CLASS MEETING ARE

REQUIRED
Our Company currently has two classes of shares, namely Ordinary Shares and Series A
Preferred Shares. All the Series A Preferred Shares will be automatically converted into Ordinary
Shares prior to the Listing pursuant to the terms in the Pre-IPO Investment Shareholders
Agreement and the articles of association of the Company in force prior to the adoption of the
Articles. Upon the Listing, our Company will have only one class of shares in issue, namely
Ordinary Shares, each of which shall rank pari passu with the other shares.
Pursuant to the Cayman Islands Companies Law and the terms of the Memorandum and the
Articles, our Company may from time to time by ordinary resolution of Shareholders (i) increase
its capital; (ii) consolidate and divide its capital into shares of larger amount; (iii) divide its Shares
into several classes; (iv) sub-divide its Shares into shares of smaller amount; and (v) cancel any
Shares which have not been taken. In addition, our Company may, subject to the provisions of the
Cayman Islands Companies Law, reduce its share capital or any capital redemption reserve or
other undistributable reserve in any way by special resolution. For further details, see “2. Articles
of Association—(a) Shares—(iii) Alteration of capital” in Appendix III to this prospectus.
— 246 —
SHARE CAPITAL
Pursuant to the Cayman Islands Companies Law and the terms of the Memorandum and the
Articles, all or any of the special rights attached to our Shares or any class of our Shares may
(unless otherwise provided for by the terms of issue of that class) be varied, modified or abrogated
either with the consent in writing of the holders of not less than three-fourths in nominal value of
the issued shares of that class or with the sanction of a special resolution passed at a separate
general meeting of the holders of our shares of that class. For further details, see “2. Articles of
Association—(a) Shares—(ii) Variation of rights of existing shares or classes of shares” in
Appendix III to this prospectus.
— 247 —
FUTURE PLANS AND USE OF PROCEEDS
FUTURE PLANS

personalized solutions and implant products to surgeons and patients. See “Our Business—Our
Strategies” for our business strategies.
USE OF PROCEEDS
The following table sets forth the estimate of net proceeds from the Global Offering which we
are expected to receive after deduction of underwriting commission, incentive fee and estimated
expenses payable by us in connection with the Global Offering:
Assuming the Assuming the

Over-Allotment Over-Allotment
Option is not Option is
exercised exercised in full
(in millions of Hong Kong dollars)
mid-point of the Offer Price range stated in this prospectus) . . . . . . . . . 386.5 451.7
high end of the Offer Price range stated in this prospectus) . . . . . . . . . 426.9 498.2
low end of the Offer Price range stated in this prospectus) . . . . . . . . . 346.2 405.3
We intend to use the net proceeds of the Global Offering for the following purposes:
• approximately 41.0% will be primarily used for the construction of the Changzhou
Facilities, and, to a lesser extent, upgrading our existing facilities in Beijing and
acquisition of new equipment for both the Changzhou Facilities and our existing
facilities in Beijing. The current designed annual production capacity of the Changzhou
Facilities is 150,000 sets of off-the-shelf orthopedic joint implants, representing
approximately 1.5 times of our annualized production capacity for off-the-shelf
orthopedic joint implants based on the six months ended June 30, 2017. We expect to
reach this capacity by 2021. We aim to increase the production capacity of 3D-printed
products by 33.3% by the end of 2018. See “Our Business—Production” for details;
• approximately 21.0% will be used in connection with the development and upgrade of
our 3D-printed products and PTIP, including primarily funding the R&D of 3D-printed
products, including the next generation of our existing 3D-printed products, procuring
3D-printing machines and relevant devices for R&D, and upgrading the data processing
software, the instant messaging applications and the data base to enhance the
efficiency of our PTIP, through which we can enhance the brand recognition of our 3D
ACT solutions among hospitals and surgeons and expand its application into other
orthopedic product market sectors such as bone tumor and maxillofacial sectors. See
“Our Business—Our Strategies—Further ramp up the application of our personalized
3D ACT solutions in both high-end and mass markets to further drive the growth of our
product sales, broaden our product portfolio, and enhance customer stickiness” for
details;
— 248 —
FUTURE PLANS AND USE OF PROCEEDS
• approximately 15.0% will be used for other R&D activities, including funding the
development of off-the-shelf orthopedic products, including new generation of off-the-
shelf orthopedic joint implants and spine replacement implants, as well as other
off-the-shelf orthopedic products such as trauma and oral orthopedic products; see “Our
Business—Our Strategies—Expanding the breadth of our product portfolio into newly-
captured orthopedic product market sectors” for details;
• approximately 15.0% will be used for funding potential acquisitions and developing
strategic alliances that could complement our existing product portfolio, technology and
business growth. In particular, we plan to target companies that have CFDA registration
certificates or related technologies for products that we do not currently produce but
plan to develop in select areas. As of the Latest Practicable Date, we had considered
several potential targets in Europe but discussion remained preliminary and we had not
entered into any agreements or understanding. See “Our Business—Our
Strategies—Explore strategic acquisition and alliance opportunities” for details; and
• approximately 8.0% will be used for general corporate purposes.
The above allocation of the proceeds will be adjusted on a pro-rata basis if the Offer Price
is fixed at a higher or lower level compared to the mid-point of the estimated Offer Price range.
To the extent that the net proceeds from the Global Offering are not immediately used for the
above purposes and to the extent permitted by applicable laws and regulations, we may allocate
part or all of the proceeds to short-term interest-bearing deposits or money market instruments
with authorized financial institutions or licensed banks.
We will issue an appropriate announcement if there is any material change to the above
proposed use of proceeds.
— 249 —
UNDERWRITING
HONG KONG UNDERWRITERS
Goldman Sachs (Asia) L.L.C.

Guotai Junan Securities (Hong Kong) Limited
UNDERWRITING AGREEMENT AND EXPENSES
Hong Kong Public Offering
Hong Kong Underwriting Agreement
Pursuant to the Hong Kong Underwriting Agreement dated December 5, 2017 and entered
into among us, the Controlling Shareholders (other than Trident Trust and Rainbow Holdings), the
Sole Global Coordinator and the Hong Kong Underwriters, we are offering initially 25,000,000
Shares (subject to adjustment) for subscription by way of the Hong Kong Public Offering on the
terms and subject to the conditions of this prospectus and the Application Forms at the Offer Price.
Subject to (i) the Listing Committee granting the listing of, and permission to deal in, the
Shares and any Shares to be issued pursuant to the exercise of options granted or to be granted
under the Pre-IPO Share Option Scheme or the Share Option Scheme; (ii) the International
Underwriting Agreement having been signed and becoming unconditional; and (iii) certain other
conditions set forth in the Hong Kong Underwriting Agreement, the Hong Kong Underwriters have
severally agreed to apply or procure applications, on the terms and conditions of this prospectus
and the related Application Forms, for their respective proportions of the Hong Kong Offer Shares
which are being offered but are not taken up under the Hong Kong Public Offering.
Grounds for Termination
The Sole Global Coordinator, for itself and on behalf of the Hong Kong Underwriters, shall
be entitled by notice (in writing) to our Company to terminate the Hong Kong Underwriting
Agreement with immediate effect if prior to 8:00 a.m. on the Listing Date:
(a) there shall develop, occur, exist or come into effect:
(i) any local, national, regional or international event or circumstance in the nature of
force majeure (including any acts of government, declaration of a national or
international emergency or war, calamity, crisis, epidemic, pandemic, outbreak of
disease, economic sanctions, strikes, lock-outs, fire, explosion, flooding,
earthquake, volcanic eruption, civil commotion, riots, public disorder, acts of war,
outbreak or escalation of hostilities (whether or not war is declared), acts of God
or acts of terrorism) in or affecting the Cayman Islands, the BVI, Hong Kong,
China, the United States, the United Kingdom or the European Union (collectively,
the “Relevant Jurisdictions”); or
(ii) any change, or any development involving a prospective change, or any event or
circumstance likely to result in any change or development involving a prospective
change, in any local, national, regional or international financial, economic,
political, military, industrial, fiscal, regulatory, currency, credit or market conditions
(including conditions in the stock and bond markets, money and foreign exchange
markets, the interbank markets and credit markets) in or affecting any Relevant
Jurisdictions; or
— 250 —
UNDERWRITING
(iii) any moratorium, suspension or restriction (including any imposition of or

requirement for any minimum or maximum price limit or price range) in or on
trading in securities generally on the Stock Exchange, the Shanghai Stock
Exchange, the Shenzhen Stock Exchange, the New York Stock Exchange, the
NASDAQ Global Market, or the London Stock Exchange; or
(iv) any general moratorium on commercial banking activities in the Cayman Islands,
Hong Kong (imposed by the Financial Secretary or the Hong Kong Monetary
Authority or other competent authority), China, New York (imposed at Federal or
New York State level or other competent authority), London, or any other Relevant
Jurisdiction, or any disruption in commercial banking or foreign exchange trading
or securities settlement or clearance services, procedures or matters in any
Relevant Jurisdiction; or
(v) any new law, or any change or any development involving a prospective change
or any event or circumstance likely to result in a change or a development
involving a prospective change in (or in the interpretation or application by any
court or other competent authority of) existing laws, in each case, in or affecting
any of the Relevant Jurisdictions; or
(vi) the imposition of sanctions, in whatever form, directly or indirectly, under any
sanction laws or regulations in Hong Kong, China or any other Relevant
Jurisdictions; or
(vii) a change or development involving a prospective change in or affecting taxes or

exchange control, currency exchange rates or foreign investment regulations
(including a material devaluation of the Hong Kong dollar or the Renminbi against
any foreign currencies), or the implementation of any exchange control, in any of
the Relevant Jurisdictions; or
(viii) any litigation or claim of any third party being threatened or instigated against any
member of our Group; or
(ix) a Director or a member of the Group’s senior management named in this

prospectus being charged with an indictable offense or prohibited by operation of
law or otherwise disqualified from taking part in the management or taking
directorship of a company; or
(x) the chairman, the chief executive officer or the chief financial officer of our
Company vacating his or her office; or
(xi) an authority or a political body or organization in any Relevant Jurisdictions

commencing any investigation or other action, or announcing an intention to
investigate or take other action, against any Director; or
(xii) a contravention by any member of our Group of the Listing Rules or applicable
laws; or
(xiii) a prohibition by an authority on our Company for whatever reason from offering,
allotting, issuing or selling any of the Shares (including any additional Shares that
may be issued pursuant to the exercise of the Over-Allotment Option) pursuant to
the terms of the Global Offering; or
— 251 —
UNDERWRITING
(xiv) non-compliance of this prospectus (or any other documents used in connection
with the contemplated offer and sale of the Offer Shares) or any aspect of the
Global Offering with the Listing Rules or any other applicable laws; or
(xv) the issue or requirement to issue by our Company of any supplement or

amendment to this prospectus (or to any other documents issued or used in
connection with the contemplated offer and sale of Shares) pursuant to the
Companies Ordinance or the Companies (Winding Up and Miscellaneous
Provisions) Ordinance or the Listing Rules or any requirement or request of the
Stock Exchange and/or the SFC; or
(xvi) an order or petition for the winding-up of any member of our Group, or any
composition or arrangement made by any member of our Group with our creditors,
or a scheme of arrangement entered into by any member of our Group, or any
resolution for the winding-up of any member of our Group, or the appointment of
a provisional liquidator, receiver or manager over all or part of the material assets
or undertaking of any member of our Group, or anything analogous thereto
occurring in respect of any member of our Group,
which, individually or in the aggregate, in the sole opinion of the Sole Global
Coordinator, (1) has or will have or may have a material adverse effect on the assets,
liabilities, business, general affairs, management, prospects, shareholders’ equity,
profits, losses, results of operations, position or condition, financial or otherwise, or
performance of our Group as a whole; or (2) has or will have or may have a material
adverse effect on the success of the Global Offering or the level of applications under
the Hong Kong Public Offering or the level of interest under the International Placing;
or (3) makes or will make or may make it inadvisable or inexpedient or impracticable for
the Global Offering to proceed or to market the Global Offering; or (4) has or will have
or may have the effect of making any part of the Hong Kong Underwriting Agreement
(including underwriting) incapable of performance in accordance with its terms or
preventing the processing of applications and/or payments pursuant to the Global
Offering or pursuant to the underwriting thereof; or
(b) there has come to the notice of the Sole Global Coordinator:
(i) that any statement contained in any of this prospectus, the post-hearing-
information pack, the Application Forms, the offering circular, the formal notice, the
announcement for adoption of mixed media offer (if any), the preliminary offering
circular, the price determination agreement, the receiving bank agreement, the
registrar agreement, the agreement between our Company and the HK eIPO
White Form Service Provider, and/or in any notices, announcements,
advertisements, communications or other documents issued or used by or on
behalf of our Company in connection with the Hong Kong Public Offering and
certain other documents (collectively, the “Offer Related Documents”) (including
any supplement or amendment thereto) was, when it was issued, or has become,
untrue, incorrect or misleading in any material respect, or that any forecast,
estimate, expression of opinion, intention or expectation contained in any of the
Offer Related Documents (including any supplement or amendment thereto) is not
fair and honest and based on reasonable assumptions; or
— 252 —
UNDERWRITING
(ii) that any matter has arisen or has been discovered which would, had it arisen or
been discovered immediately before the date of this prospectus, constitute a
material omission from any of the Offer Related Documents (including any
supplement or amendment thereto); or
(iii) any material breach of any of the obligations imposed upon any party to the Hong
Kong Underwriting Agreement or the International Underwriting Agreement (other
than upon any of the Hong Kong Underwriters or the International Underwriters);
or
(iv) any event, act or omission which gives or is likely to give rise to any liability of any
of the indemnifying parties as set out in the Hong Kong Underwriting Agreement;
or
(v) any Material Adverse Change as defined under the Hong Kong Underwriting
Agreement; or
(vi) any breach of, or any event or circumstance rendering untrue or incorrect in any
respect, any of the representations, warranties, agreements and undertakings of
our Company and our Controlling Shareholders (other than Trident Trust and
Rainbow Holdings) set out in the Hong Kong Underwriting Agreement; or
(vii) approval by the Listing Committee of the Stock Exchange of the listing of, and
permission to deal in, the Shares to be issued or sold (including any additional
Shares that may be issued or sold pursuant to the exercise of the Over-Allotment
Option) under the Global Offering is refused or not granted, other than subject to
customary conditions, on or before the Listing Date, or if granted, the approval is
subsequently withdrawn, qualified (other than by customary conditions) or
withheld; or
(viii) our Company withdraws any of the Offer Related Documents or the Global
Offering; or
(ix) any person (other than the Sole Sponsor) has withdrawn or is subject to
withdrawing its consent to being named in this prospectus or to the issue of any
of this prospectus, the Application Forms, the formal notice and the announcement
for adoption of mixed media offer (if any); or
(x) a material portion of the orders placed or confirmed in the book-building process
have been withdrawn, terminated or canceled.
— 253 —
UNDERWRITING
UNDERTAKINGS TO THE STOCK EXCHANGE PURSUANT TO THE LISTING RULES
Undertaking by Us
Pursuant to Rule 10.08 of the Listing Rules, we have undertaken to the Stock Exchange that
no further Shares or securities convertible into our equity securities (whether or not of a class
already listed) may be issued by us or form the subject of any agreement to such an issue by us
within six months from the Listing Date (whether or not such issue of Shares or securities will be
completed within such period), except in certain circumstances prescribed by Rule 10.08 of the
Listing Rules.
Undertaking by the Controlling Shareholder
Pursuant to Rule 10.07(1) of the Listing Rules, the Controlling Shareholders have
undertaken to the Stock Exchange that except pursuant to the Global Offering and the
Over-Allotment Option, he or it shall not and shall procure that the relevant registered holder(s)
shall not:
• in the period commencing from the Latest Practicable Date and ending on the date
which is six months from the Listing Date, dispose of, or enter into any agreement to
dispose of or otherwise create any options, rights, interests or encumbrances in respect
of, any of the Shares or securities of our Company in respect of which he or it is shown
by this prospectus to be the beneficial owner; or
• in the period of six months commencing on the date on which the period referred to in
the preceding paragraph expires, dispose of or enter into any agreement to dispose of
or otherwise create any options, rights, interests or encumbrances in respect of, any of
the Shares or securities of our Company referred to in the preceding paragraph if,
immediately following such disposal or upon the exercise or enforcement of such
options, rights, interests or encumbrances, he or it would cease to be the Controlling
Shareholder.
Pursuant to Note 3 to Rule 10.07(1) of the Listing Rules, the Controlling Shareholders have
further undertaken to the Stock Exchange and our Company that, within a period commencing on
the Latest Practicable Date and ending on a date which is 12 months from the Listing Date, he or
it will:
(a) when he or it pledges or charges any Shares or securities of our Company beneficially
owned by him or it in favor of an authorized institution (as defined in the Banking
Ordinance (Chapter 155 of the Laws of Hong Kong)) for a bona fide commercial loan,
immediately inform us of such pledge or charge together with the number of such
Shares or securities of our Company so pledged or charged; and
(b) when he or it receives any indications, either verbal or written, from any pledgee or
chargee that any of the pledged or charged Shares or securities of our Company will be
disposed of, immediately inform us of any such indications.
We have agreed and undertaken to the Stock Exchange that, we shall inform the Stock
Exchange as soon as we have been informed of the above matters (if any) by any of the
Controlling Shareholders and disclose such matters by way of an announcement which is
published in accordance with Rule 2.07C of the Listing Rules as soon as possible.
— 254 —
UNDERWRITING
UNDERTAKINGS PURSUANT TO THE HONG KONG UNDERWRITING AGREEMENT
Undertaking by Us
Pursuant to the Hong Kong Underwriting Agreement, we have undertaken to each of the Sole
Global Coordinator, the Sole Bookrunner, the Hong Kong Underwriters and the Sole Sponsor not
to, and to procure each other member of our Group not to, without the prior written consent of the
Sole Sponsor and the Sole Global Coordinator (on behalf of the Hong Kong Underwriters) and
unless in compliance with the requirements of the Listing Rules, except for the offer and sale of
Offer Shares pursuant to the Global Offering (including pursuant to the Over-Allotment Option, the
Capitalization Issue and the Share Option Scheme) and otherwise pursuant to the Listing Rules,
during the period commencing on the date of the Hong Kong Underwriting Agreement and ending
on and including the date that is six months after the Listing Date (the “First Six-Month Period”):
(a) allot, issue, sell, accept subscription for, offer to allot, issue or sell, contract or agree to
allot, issue or sell, mortgage, charge, pledge, hypothecate, lend, grant or sell any
option, warrant, contract or right to subscribe for or purchase, grant or purchase any
option, warrant, contract or right to allot, issue or sell, or otherwise transfer or dispose
of or create an encumbrance over, or agree to transfer or dispose of or create an
encumbrance over, either directly or indirectly, conditionally or unconditionally, any
Shares or other securities of our Company or any shares or other securities of such
other member of our Group, as applicable, or any interest in any of the foregoing
(including any securities convertible into or exchangeable or exercisable for or that
represent the right to receive, or any warrants or other rights to purchase, any Shares
or any shares of such other member of our Group, as applicable), or deposit any Shares
or other securities of our Company or any shares or other securities of such other
member of our Group, as applicable, with a depositary in connection with the issue of
depositary receipts; or
(b) enter into any swap or other arrangement that transfers to another, in whole or in part,
any of the economic consequences of ownership of any Shares or other securities of
our Company or any shares or other securities of such other member of our Group, as
applicable, or any interest in any of the foregoing (including any securities convertible
into or exchangeable or exercisable for or that represent the right to receive, or any
warrants or other rights to purchase any Shares or any shares of such other member
of our Group, as applicable); or
(c) enter into any transaction with the same economic effect as any transaction specified
in (a) or (b) above; or
(d) offer to, or agree to or announce any intention to effect any transaction specified in (a),
(b) or (c) above,
in each case, whether any of the transactions specified in (a), (b) or (c) above is to be settled by
delivery of Shares or other securities of our Company or shares or other securities of such other
member of our Group, as applicable, or in cash or otherwise (whether or not the issue of such
Shares or other shares or securities will be completed within the First Six-Month Period). In the
event that during the period of six months commencing on the date on which the First Six-Month
Period expires (the “Second Six-Month Period”), our Company enters into any of the
transactions specified in (a), (b) or (c) above or offers to or agrees to or announces any intention
to effect any such transaction, our Company shall take all reasonable steps to ensure that it will
not create a disorderly or false market in the securities of our Company. The Controlling
Shareholders undertake to each of the Sole Global Coordinator, the Hong Kong Underwriters and
the Sole Sponsor to procure our Company to comply with the undertakings in (a).
— 255 —
UNDERWRITING
Undertaking by Controlling Shareholders (other than Trident Trust and Rainbow Holdings)
Each of the Controlling Shareholders (other than Trident Trust and Rainbow Holdings) has
undertaken to each of our Company, the Sole Global Coordinator, the Sole Bookrunner, the Hong
Kong Underwriters and the Sole Sponsor that, without the prior written consent of the Sole
Sponsor and the Sole Global Coordinator (on behalf of the Hong Kong Underwriters) and unless
in compliance with the requirements of the Listing Rules:
(a) he or it will not, at any time during the First Six-Month Period, (i) sell, offer to sell,
contract or agree to sell, mortgage, charge, pledge, hypothecate, lend, grant or sell any
option, warrant, contract or right to purchase, grant or purchase any option, warrant,
contract or right to sell, or otherwise transfer or dispose of or create an encumbrance
over, or agree to transfer or dispose of or create an encumbrance over, either directly
or indirectly, conditionally or unconditionally, any Shares or other securities of our
Company or any interest therein (including any securities convertible into or
exchangeable or exercisable for or that represent the right to receive, or any warrants
or other rights to purchase, any Shares), or deposit any Shares or other securities of our
Company with a depositary in connection with the issue of depositary receipts, or (ii)
enter into any swap or other arrangement that transfers to another, in whole or in part,
any of the economic consequences of ownership of any Shares or other securities of
our Company or any interest therein (including any securities convertible into or
exchangeable or exercisable for or that represent the right to receive, or any warrants
or other rights to purchase, any Shares), or (iii) enter into any transaction with the same
economic effect as any transaction specified in sub-paragraph (a)(i) or (ii) above, or (iv)
offer to or agree to or announce any intention to effect any transaction specified in
sub-paragraph (a)(i), (ii) or (iii) above, in each case, whether any of the transactions
specified in sub-paragraph (a)(i), (ii) or (iii) above is to be settled by delivery of Shares
or other securities of our Company or in cash or otherwise (whether or not the issue of
such Shares or other securities will be completed within the First Six-Month Period);
(b) he or it will not, during the Second Six-Month Period, enter into any of the transactions
specified in sub-paragraph (a)(i), (ii) or (iii) above or offer to or agree to or announce
any intention to effect any such transaction if, immediately following any sale, transfer
or disposal or upon the exercise or enforcement of any option, right, interest or
encumbrance pursuant to such transaction, he or it will cease to be a “controlling
shareholder” (as the term is defined in the Listing Rules) of our Company; and
(c) until the expiry of the Second Six-Month period, in the event that he or it enters into any
of the transactions specified in sub-paragraph (a)(i), (ii) or (iii) above or offer to or
agrees to or announce any intention to effect any such transaction, he or it will take all
reasonable steps to ensure that it will not create a disorderly or false market in the
securities of our Company.
— 256 —
UNDERWRITING
INTERNATIONAL PLACING
International Underwriting Agreement
In connection with the International Placing, it is expected that we and the Controlling
Shareholders (other than Trident Trust and Rainbow Holdings) will enter into the International
Underwriting Agreement with the International Underwriters. Under the International Underwriting
Agreement, the International Underwriters, subject to certain conditions, will agree severally and
not jointly to procure purchasers for, or to purchase, their respective proportions of the
International Placing Shares being offered under the International Placing.
Under the International Underwriting Agreement, it is expected that we will grant to the
International Underwriters the Over-Allotment Option, exercisable by the Sole Global Coordinator
on behalf of the International Underwriters, in whole or in part, for one time or more, at any time
within 30 days from the last day for lodging applications under the Hong Kong Public Offering, to
require us to allot and issue up to an aggregate of 37,500,000 additional Shares, representing in
aggregate not more than approximately 15% of the number of Offer Shares initially available
under the Global Offering, at the Offer Price to cover, among other things (such as effecting the
permitted stabilizing actions as set out in “Structure of the Global Offering—Stabilization”),
over-allocations, if any, in the International Placing.
It is expected that the International Underwriting Agreement may be terminated on similar

grounds as those in the Hong Kong Underwriting Agreement. Potential investors shall be
reminded that if the International Underwriting Agreement is not entered into, the Global Offering
will not proceed.
We have agreed to indemnify the International Underwriters against certain liabilities,

including liabilities under the U.S. Securities Act.
UNDERWRITING COMMISSIONS AND LISTING EXPENSES
The Underwriters will receive an underwriting commission per Offer Share of 3.5% of the
Offer Price from our Company (including Offer Shares sold pursuant to the Over-Allotment
Option). Our Company will pay the Sole Global Coordinator a discretionary incentive fee of up to
1.5% of the Offer Price per Offer Share. For any unsubscribed Hong Kong Offer Shares
reallocated to the International Placing, we will pay an underwriting commission at the rate
applicable to the International Placing and such commission will be paid to the International
Underwriters (but not the Hong Kong Underwriters).
The aggregate underwriting commission and incentive fee, together with the Stock Exchange
listing fees, the SFC transaction levy, the Stock Exchange trading fee, legal and other professional
fees, printing and other expenses relating to the Global Offering, are estimated to be
approximately HK$71.0 million in aggregate (based on an Offer Price of HK$1.83 per Share, being
the mid-point of the Offer Price range stated in this prospectus and the assumption that the
Over-Allotment Option is not exercised) and are to be borne by us.
— 257 —
UNDERWRITING
ACTIVITIES BY SYNDICATE MEMBERS
We describe below a variety of activities that each of the Underwriters of the Hong Kong
Public Offering and the International Placing, together referred to as “Syndicate Members,” may
individually undertake, and which do not form part of the underwriting or the stabilizing process.
When engaging in any of these activities, it should be noted that the Syndicate Members are
subject to restrictions, including the following:
(a) all of them (except for the Stabilizing Manager or its designated affiliate as the
stabilizing manager) must not, in connection with the distribution of the Offer Shares,
effect any transactions (including issuing or entering into any option or other derivative
transaction relating to the Offer Shares), whether in the open market or otherwise, with
a view to stabilizing or maintaining the market price of any of the Offer Shares at levels
other than those which might otherwise prevail in the open market; and
(b) all of them must comply with all applicable laws, including the market misconduct
provisions of the SFO, including the provisions prohibiting insider dealing, false trading,
price rigging and stock market manipulation.
The Syndicate Members and their affiliates are diversified financial institutions with
relationships in countries around the world. These entities engage in a wide range of commercial
and investment banking, brokerage, funds management, trading, hedging, investing and other
activities for their own account and for the accounts of others. In relation to the Shares, those
activities could include acting as agent for buyers and sellers of the Shares, entering into
transactions with those buyers and sellers in a principal capacity, proprietary trading in the
Shares, and entering into over the counter or listed derivative transactions or listed and unlisted
securities transactions (including issuing securities such as derivative warrants listed on a stock
exchange) which have the Shares as their or part of their underlying assets. Those activities may
require hedging activity by those entities involving directly or indirectly, buying and selling the
Shares. All such activity could occur in Hong Kong and elsewhere in the world and may result in
the Syndicate Members and their affiliates holding long and/or short positions in the Shares, in
baskets of securities or indices including the Shares, in units of funds that may purchase the
Shares, or in derivatives related to any of the foregoing.
In relation to issues by the Syndicate Members or their affiliates of any listed securities
having the Shares as their underlying securities, whether on the Stock Exchange or on any other
stock exchange, the rules of the exchange may require the issuer of those securities (or one of
its affiliates or agents) to act as a market maker or liquidity provider in the security, and this will
also result in hedging activity in the Shares in most cases.
All of these activities may occur both during and after the end of the stabilizing period
described under the section headed “Structure of the Global Offering-Stabilization” in this
prospectus. These activities may affect the market price or value of the Shares, the liquidity or
trading volume in the Shares, and the volatility of the Shares’ share price, and the extent to which
this occurs from day to day cannot be estimated.
— 258 —
UNDERWRITING
UNDERWRITERS’ INTEREST IN OUR GROUP
Except as disclosed in this prospectus and the obligations under the Hong Kong Underwriting
Agreement and the International Underwriting Agreement and, if applicable, the Stock Borrowing
Agreement, none of the Underwriters has any shareholding interest in any member of our Group
or any right (whether legally enforceable or not) to subscribe for or to nominate persons to
subscribe for securities in any member of our Group.
SOLE SPONSOR’S INDEPENDENCE
The Sole Sponsor satisfies the independence criteria applicable to sponsor as set out in Rule
3A.07 of the Listing Rules.
— 259 —
STRUCTURE OF THE GLOBAL OFFERING
THE GLOBAL OFFERING
This prospectus is published in connection with the Hong Kong Public Offering as part of the
Global Offering. The Global Offering comprises:
• the Hong Kong Public Offering of 25,000,000 Offer Shares (subject to adjustment as
mentioned below) in Hong Kong as described below under “—the Hong Kong Public
Offering”; and
• the International Placing of 225,000,000 Offer Shares (subject to adjustment and the
Over-Allotment Option as mentioned below) outside the United States in offshore
transactions in reliance on Regulation S, and in the United States solely to QIBs as
defined in Rule 144A pursuant to an exemption from the registration requirements of the
U.S. Securities Act, as described below in “—the International Placing”.
In connection with the Global Offering, it is expected that we will grant the Over-Allotment
Option to the International Underwriters, exercisable by the Sole Global Coordinator on behalf of
the International Underwriters, at any time within 30 days after the last day for lodging applications
under the Hong Kong Public Offering, to require us to allot and issue up to an aggregate of
37,500,000 additional Shares, representing approximately 15.0% of the initial number of Offer
Shares under the Global Offering, at the Offer Price to cover, among other things (such as
effecting the permitted stabilizing actions as set out in “—Stabilization” below), over-allocations,
if any, in the International Placing.
Investors may either:
• apply for the Hong Kong Offer Shares under the Hong Kong Public Offering; or
• apply for or indicate an interest for the International Placing Shares under the
International Placing,
but may not do both.
The 250,000,000 Offer Shares in the Global Offering will represent approximately 25.0% of
our enlarged share capital immediately after the completion of the Global Offering, without taking
into account the exercise of the Over-Allotment Option. If the Over-Allotment Option is exercised
in full, the Offer Shares will represent approximately 27.7% of our enlarged share capital
immediately following the completion of the Global Offering.
References to applications, Application Forms, application or subscription monies, or

procedure for applications relate solely to the Hong Kong Public Offering.
THE HONG KONG PUBLIC OFFERING
We are initially offering 25,000,000 Offer Shares for subscription by the public in Hong Kong
at the Offer Price, representing approximately 10.0% of the total number of Offer Shares initially
available under the Global Offering.
The Hong Kong Public Offering is open to members of the public in Hong Kong as well as to
institutional and professional investors. Professional investors generally include brokers, dealers,
companies (including fund managers) whose ordinary business involves dealing in shares and
other securities and corporate entities that regularly invest in shares and other securities.
— 260 —
Completion of the Hong Kong Public Offering is subject to the conditions as set forth below
in “—Conditions of the Global Offering”.
Allocation
Allocation of Hong Kong Offer Shares to investors under the Hong Kong Public Offering will
be based on the level of valid applications received under the Hong Kong Public Offering. The
basis of allocation may vary depending on the number of Hong Kong Offer Shares validly applied
for by applicants. We may, if necessary, allocate the Hong Kong Offer Shares on the basis of
balloting, which would mean that some applicants may receive a higher allocation than others who
have applied for the same number of Hong Kong Offer Shares and those applicants who are not
successful in the ballot may not receive any Hong Kong Offer Shares.
For allocation purposes only, the total number of the Offer Shares available under the Hong
Kong Public Offering is to be divided equally into two pools:
• Pool A: the Offer Shares will be allocated on an equitable basis to applicants who have
applied for the Offer Shares with an aggregate subscription price of HK$5.0 million or
less (excluding the brokerage fee, the SFC transaction levy and the Stock Exchange
trading fee); and
• Pool B: the Offer Shares will be allocated on an equitable basis to applicants who have
applied for Offer Shares with an aggregate subscription price of more than HK$5.0
million (excluding brokerage, SFC transaction levy and Stock Exchange trading fee).
Investors should be aware that applications in pool A and applications in pool B may receive
different allocation ratios. If the Offer Shares in one (but not both) of the pools are under-
subscribed, the surplus Offer Shares will be transferred to the other pool to satisfy demand in the
pool and be allocated accordingly. For the purpose of this subsection only, the “subscription price”
for the Offer Shares means the price payable on application therefor (without regard to the Offer
Price as finally determined). Applicants can only receive an allocation of Hong Kong Offer Shares
from either pool A or pool B but not from both pools. Multiple or suspected multiple applications
under the Hong Kong Public Offering and any application for more than 12,500,000 Hong Kong
Offer Shares will be rejected.
Reallocation
The allocation of the Offer Shares between the Hong Kong Public Offering and the
International Placing is subject to reallocation under the Listing Rules. In accordance with the
clawback requirements set forth in paragraph 4.2 of Practice Note 18 of the Listing Rules, if the
number of Offer Shares validly applied for under the Hong Kong Public Offering represents (i) 15
times or more but less than 50 times, (ii) 50 times or more but less than 100 times, and (iii) 100
times or more of the number of Hong Kong Offer Shares initially available under the Hong Kong
Public Offering, the Offer Shares will be reallocated to the Hong Kong Public Offering from the
International Placing. As a result of such reallocation, the total number of Hong Kong Offer Shares
will be increased to 75,000,000 Offer Shares (in the case of (i)), 100,000,000 Offer Shares (in the
case of (ii)) and 125,000,000 Offer Shares (in the case of (iii)), representing approximately 30.0%,
40.0% and 50.0% of the Offer Shares initially available under the Global Offering (before any
exercise of the Over-Allotment Option), respectively.
— 261 —
In each case, the additional Offer Shares reallocated to the Hong Kong Public Offering will
be allocated between Pool A and Pool B in equal proportion and the number of Offer Shares
allocated to the International Placing will be correspondingly reduced in such manner as the Sole
Global Coordinator deems appropriate. In addition, the Sole Global Coordinator shall have the
discretion to reallocate Offer Shares from the International Placing to the Hong Kong Public
Offering to satisfy valid applications under the Hong Kong Public Offering.
If the Hong Kong Public Offering is not fully subscribed for, the Sole Global Coordinator has
the authority to reallocate all or any unsubscribed Hong Kong Offer Shares to the International
Placing, in such proportions as the Sole Global Coordinator deems appropriate.
Applications
Each applicant under the Hong Kong Public Offering will be required to give an undertaking
and confirmation in the application submitted by him or her that he or she and any person(s) for
whose benefit he or she is making the application has not applied for or taken up, or indicated an
interest for, and will not apply for or take up, or indicate an interest for, any International Placing
Shares under the International Placing, and such applicant’s application is liable to be rejected if
the said undertaking and/or confirmation is breached and/or untrue (as the case may be) or it has
been or will be placed or allocated International Placing Shares under the International Placing.
The listing of the Offer Shares on the Stock Exchange is sponsored by the Sole Sponsor.
Applicants under the Hong Kong Public Offering are required to pay, on application, the maximum
price of HK$2.00 per Offer Share in addition to the brokerage, the SFC transaction levy and the
Stock Exchange trading fee payable on each Offer Share. If the Offer Price, as finally determined
in the manner described in “—Pricing and Allocation”, is less than the maximum price of HK$2.00
per Offer Share, appropriate refund payments (including the brokerage, the SFC transaction levy
and the Stock Exchange trading fee attributable to the surplus application monies) will be made
to successful applicants, without interest. For more details, see “How to Apply for the Hong Kong
Offer Shares”.
THE INTERNATIONAL PLACING
Number of Offer Shares Initially Offered
We will be initially offering for subscription under the International Placing 225,000,000 Offer
Shares, representing approximately 90.0% of the Offer Shares under the Global Offering and
approximately 22.5% of our enlarged issued share capital immediately after completion of the
Global Offering, assuming the Over-Allotment Option is not exercised.
Allocation
The International Placing will include selective marketing of Offer Shares to institutional and
professional investors and other investors anticipated to have a sizeable demand for our Offer
Shares. Professional investors generally include brokers, dealers, companies (including fund
managers) whose ordinary business involves dealing in shares and other securities and corporate
entities which regularly invest in shares and other securities. Prospective professional,
institutional and other investors will be required to specify the number of the Offer Shares under
the International Placing they would be prepared to acquire either at different prices or at a
particular price. This process, known as “book-building,” is expected to continue up to the Price
Determination Date.
— 262 —
Allocation of the Offer Shares pursuant to the International Placing will be determined by the
Sole Global Coordinator and will be based on a number of factors including the level and timing
of demand, total size of the relevant investor’s invested assets or equity assets in the relevant
sector and whether or not it is expected that the relevant investor is likely to hold or sell its Shares,
after the Listing. Such allocation is intended to result in a distribution of the Offer Shares under
the International Placing on a basis which would lead to the establishment of a solid professional
and institutional shareholder base to the benefit of us and our shareholders as a whole.
The Sole Global Coordinator (on behalf of the Underwriters) may require any investor who
has been offered Offer Shares under the International Placing and who has made an application
under the Hong Kong Public Offering to provide sufficient information to the Sole Global
Coordinator so as to allow them to identify the relevant applications under the Hong Kong Public
Offering and to ensure that they are excluded from any applications of Offer Shares under the
Hong Kong Public Offering.
Reallocation
The total number of Offer Shares to be issued or sold pursuant to the International Placing
may change as a result of the clawback arrangement described in “—The Hong Kong Public
Offering—Reallocation” or the Over-Allotment Option in whole or in part and/or any reallocation of
unsubscribed Offer Shares originally included in the Hong Kong Public Offering.
OVER-ALLOTMENT OPTION
In connection with the Global Offering, it is expected that we will grant the Over-Allotment
Option to the International Underwriters.
Pursuant to the Over-Allotment Option, the International Underwriters have the right,
exercisable by the Sole Global Coordinator on behalf of the International Underwriters in whole or
in part, for one time or more, at any time during the 30-day period from the last date for lodging
applications under the Hong Kong Public Offering, to require our Company to issue up to 15.0%
of the total number of the Offer Shares initially available under the Global Offering at the Offer
Price under the International Placing to cover, among other things (such as effecting the permitted
stabilizing actions as set out in “—Stabilization” below), over-allocations in the International
Placing, if any.
If the Over-Allotment Option is exercised in full, the additional Shares to be issued pursuant
thereto will represent approximately 3.75% of our issued share capital immediately following the
completion of the Global Offering before the issue of such additional Shares. In the event that the
Over-Allotment Option is exercised, an announcement will be made.
STABILIZATION
Stabilization is a practice used by underwriters in some markets to facilitate the distribution

of securities. To stabilize, the Underwriters may bid for, or purchase, the securities in the
secondary market, during a specified period of time, to retard and, if possible, prevent a decline
in the initial public market price of the securities below the Offer Price. Such transactions may be
effected in all jurisdictions where it is permissible to do so, in each case in compliance with all
applicable laws and regulatory requirements, including those of Hong Kong. In Hong Kong, the
price at which stabilization is effected is not permitted to exceed the Offer Price.
— 263 —
In connection with the Global Offering, the Stabilizing Manager, or any person acting for it,
on behalf of the Underwriters, may over-allocate or effect transactions with a view to stabilizing or
supporting the market price of our Shares at a level higher than that which might otherwise prevail
for a limited period after the Listing Date. However, there is no obligation on the Stabilizing
Manager or any persons acting for it, to conduct any such stabilizing action. Such stabilizing
action, if taken, will be conducted at the absolute discretion of the Stabilizing Manager or any
person acting for it and may be discontinued at any time, and is required to be brought to an end
within 30 days of the last day for lodging applications under the Hong Kong Public Offering.
Stabilization action permitted in Hong Kong pursuant to the Securities and Futures (Price
Stabilizing) Rules of the SFO includes (i) over-allocating for the purpose of preventing or
minimizing any reduction in the market price of our Shares, (ii) selling or agreeing to sell our
Shares so as to establish a short position in them for the purpose of preventing or minimizing any
reduction in the market price of our Shares, (iii) purchasing, or agreeing to purchase, our Shares
pursuant to the Over-Allotment Option in order to close out any position established under (i) or
(ii) above, (iv) purchasing, or agreeing to purchase, any of our Shares for the sole purpose of
preventing or minimizing any reduction in the market price of our Shares, (v) selling or agreeing
to sell any Shares in order to liquidate any position established as a result of those purchases, and
(vi) offering or attempting to do anything as described in (ii), (iii), (iv) or (v) above.
Specifically, prospective applicants for and investors in Shares should note that:
• the Stabilizing Manager may, in connection with the stabilizing action, maintain a long
position in the Shares;
• there is no certainty as to the extent to which and the time period for which the
Stabilizing Manager will maintain such a long position;
• liquidation of any such long position by the Stabilizing Manager or any person acting for
it and selling in the open market, may have an adverse impact on the market price of
the Shares;
• no stabilizing action can be taken to support the price of the Shares for longer than the
stabilizing period which will begin on the Listing Date and is expected to expire on
January 11, 2018, being the 30th day after the last day for lodging applications under
the Hong Kong Public Offer. After this date, when no further action may be taken to
support the price of the Shares, demand for the Shares, and therefore the price of the
Shares, could fall;
• the price of any security (including the Shares) cannot be assured to stay at or above
the Offer Price by the taking of any stabilizing action; and
• stabilizing bids or transactions effected in the course of the stabilizing action may be
made at any price at or below the Offer Price, which means that stabilizing bids may be
made or transactions effected at a price below the price paid by applicants for, or
investors in, the Offer Shares.
— 264 —
Our Company will ensure or procure that an announcement in compliance with the Securities
and Futures (Price Stabilizing) Rules of the SFO will be made within seven days of the expiration
of the stabilization period.
Over-Allocation
Following any over-allocation of Shares in connection with the Global Offering, the
Stabilizing Manager or any person acting for it may cover such over-allocations by (among other
methods) exercising the Over-Allotment Option in full or in part, by using Shares purchased by the
Stabilizing Manager or any person acting for it in the secondary market at prices that do not
exceed the Offer Price, or through the stock borrowing arrangement as detailed below or a
combination of these means.
Stock Borrowing Arrangement
To facilitate the settlement of over-allocation in connection with the Global Offering, the
Stabilizing Manager may choose to borrow, whether on its own or through its affiliates, up to
37,500,000 Shares, representing approximately 15% of the Offer Shares (being the maximum
number of Offer Shares which may be issued upon exercise of the Over-Allotment Option), from
Ximalaya, a Controlling Shareholder, pursuant to the Stock Borrowing Agreement which is
expected to be entered into between the Stabilizing Manager or its affiliate and Ximalaya. Such
stock borrowing arrangement under the Stock Borrowing Agreement, if entered into, will not be
subject to the restrictions of Rule 10.07(1)(a) of the Listing Rules provided that the requirements
set out in Rule 10.07(3) of the Listing Rules are complied with.
Such stock borrowing arrangement is fully described in this prospectus and must be for the
sole purpose of covering any short position prior to the exercise of the Over-Allotment Option. The
same number of Offer Shares so borrowed must be returned to Ximalaya or its nominees on or
before the third Business Day following the earlier of (a) the last day on which the Over-Allotment
Option may be exercised, or (b) the day on which the Over-Allotment Option is exercised in full
and all relevant Offer Shares have been issued and allotted by the Company; or (c) such earlier
time as the parties may from time to time agree in writing. No payment will be made to Ximalaya
by the Stabilizing Manager or its agent in relation to such stock borrowing arrangement.
PRICING AND ALLOCATION
The Offer Price is expected to be fixed by agreement between us and the Sole Global
Coordinator (on behalf of the Underwriters), on the Price Determination Date, when market
demand for the Offer Shares will be determined. The Price Determination Date is expected to be
on or around Wednesday, December 13, 2017 (Hong Kong time), and in any event, not later than
Tuesday, December 19, 2017 (Hong Kong time). Prospective investors should be aware that the
Offer Price to be determined on the Price Determination Date may be, but is not expected to be,
lower than the Offer Price range stated in this prospectus.
The Offer Price will not be more than HK$2.00 and is expected to be not less than HK$1.66,
unless otherwise announced by no later than the morning of the last day for lodging applications
under the Hong Kong Public Offer as further explained below. If you apply for the Offer Shares
under the Hong Kong Public Offer, you must pay the maximum Offer Price of HK$2.00 per Offer
Share, plus 1% brokerage fee, 0.0027% SFC transaction levy and 0.005% Stock Exchange
trading fee. This means that for one board lot of 2,000 Shares, you should pay HK$4,040.31 at the
time of your application.
— 265 —
If the Offer Price, as finally determined in the manner described below, is lower than
HK$2.00, we will refund the respective difference, including the brokerage fee, Stock Exchange
trading fee and SFC transaction levy attributable to the surplus application monies. We will not pay
interest on any refunded amounts. For more details, see “How to Apply for the Hong Kong Offer
Shares”.
The International Underwriters will be soliciting from prospective investors indications of

interest in acquiring Offer Shares in the International Placing. Prospective professional and
institutional investors will be required to specify the number of Offer Shares under the
International Placing they would be prepared to acquire either at different prices or at a particular
price. This process, known as “book-building”, is expected to continue up to, and to cease on or
around, the last day for lodging applications under the Hong Kong Public Offering.
The Sole Global Coordinator, on behalf of the Underwriters, may, where considered
appropriate based on the level of interest expressed by prospective professional, institutional and
other investors during a book-building process, and with the consent of our Company, reduce the
number of Offer Shares and/or the indicative Offer Price range below that stated in this prospectus
prior to the morning of the last day for lodging applications under the Hong Kong Public Offering.
In such a case, we will as soon as practicable following the decision to make such reduction and
in any event not later than the morning of the last day for lodging applications under the Hong
Kong Public Offering publish a notice in South China Morning Post (in English), Hong Kong
Economic Journal (in Chinese) of the reduction and posted on the website of the Stock Exchange
(www.hkexnews.hk) and on our website (www.ak-medical.net) (the contents of the website do
not form a part of this prospectus).
Upon issue of such a notice, the revised number of Offer Shares and/or Offer Price range will
be final and conclusive and the Offer Price, if agreed upon by us, will be fixed within such revised
Offer Price range. Before submitting applications for the Hong Kong Offer Shares, applicants
should have regard to the possibility that any announcement of a reduction in the number of Offer
Shares and/or the Offer Price range may not be made until the day which is the last day for lodging
applications under the Hong Kong Public Offering. Such notice will also confirm or revise, as
appropriate, the working capital statement, the Global Offering statistics as currently set out in the
section “Summary”, and any other financial information which may change as a result of such
reduction. In the absence of any such notice so published, the Offer Price, if agreed upon with our
Company and the Sole Global Coordinator (on behalf of the Underwriters) will under no
circumstances be set outside the Offer Price range as stated in this prospectus.
If you have already submitted an application for the Hong Kong Offer Shares before the last
day for lodging applications under the Hong Kong Public Offering, you will not be allowed to
subsequently withdraw your application. However, if the number of Offer Shares and/or the Offer
Price range is reduced, applicants will be notified that they are required to confirm their
applications. If applicants have been so notified but have not confirmed their applications in
accordance with the procedure to be notified, all unconfirmed applications will be deemed
revoked.
The Offer Price, an indication of the level of interest in the International Placing, the basis of
allotment of Offer Shares available under the Hong Kong Public Offering and the Hong Kong
identity card/passport/Hong Kong business registration numbers of successful applicants under
the Hong Kong Public Offering are expected to be made available in a variety of channels in the
manner described in the section “How to Apply for the Hong Kong Offer Shares—14.
Despatch/Collection of Share Certificates and Refund Monies”.
— 266 —
UNDERWRITING ARRANGEMENTS
The Hong Kong Public Offering is fully underwritten by the Hong Kong Underwriters under
the terms of the Hong Kong Underwriting Agreement and is subject to our Company and the Sole
Global Coordinator (on behalf of the Underwriters) agreeing on the Offer Price.
We expect to enter into the International Underwriting Agreement relating to the International
Placing on the Price Determination Date. These underwriting arrangements, and the Hong Kong
Underwriting Agreement and the International Underwriting Agreement, are summarized in the
section “Underwriting”.
CONDITIONS OF THE GLOBAL OFFERING
Acceptance of all applications for Offer Shares is conditional on, among others:
• the Listing Committee granting approval for the listing of, and permission to deal in, the
Shares to be issued pursuant to the Global Offering (including any Shares which may
be issued by us pursuant to the exercise of the Over-Allotment Option and any option
granted or to be granted pursuant to the Pre-IPO Share Option Scheme or the Share
Option Scheme);
• the Offer Price being duly determined;
• the execution and delivery of the International Underwriting Agreement on the Price
Determination Date; and
• the obligations of the Hong Kong Underwriters under the Hong Kong Underwriting
Agreement and the obligations of the International Underwriters under the International
Underwriting Agreement becoming unconditional and not having been terminated in
accordance with the terms of the respective agreements,
in each case on or before the dates and times specified in the Hong Kong Underwriting Agreement
and/or the International Underwriting Agreement, as the case may be (unless and to the extent
such conditions are validly waived on or before such dates and times) and in any event not later
than Wednesday, December 20, 2017.
If, for any reason, the Offer Price is not agreed between our Company and the Sole
Global Coordinator (on behalf of the Underwriters) on or before Tuesday, December 19,
2017, the Global Offering will not proceed.
The consummation of each of the Hong Kong Public Offering and the International Placing
is conditional upon, among other things, each other offering becoming unconditional and not
having been terminated in accordance with its respective terms. If the above conditions are not
fulfilled or waived prior to the times and dates specified, the Global Offering will lapse and the
Stock Exchange will be notified immediately. Notice of the lapse of the Hong Kong Public Offering
will be published by our Company in South China Morning Post (in English), Hong Kong Economic
Journal (in Chinese) and on the website of the Stock Exchange (www.hkexnews.hk) and on our
website (www.ak-medical.net) on the next day following such lapse. In such situation, all
application monies will be returned, without interest, on the terms set forth in the section “How to
Apply for the Hong Kong Offer Shares—14. Despatch/Collection of Share Certificates and Refund
Monies”. In the meantime, all application monies will be held in separate bank account(s) with the
receiving bank or other bank(s) in Hong Kong licensed under the Banking Ordinance (Chapter 155
of the Laws of Hong Kong).
— 267 —
DEALING ARRANGEMENTS
Assuming that the Hong Kong Public Offering becomes unconditional at or before 8:00 a.m.
in Hong Kong on Wednesday, December 20, 2017, it is expected that dealings in our Shares on
the Stock Exchange will commence at 9:00 a.m. on Wednesday, December 20, 2017.
The Shares will be traded in board lots of 2,000 Shares each and the stock code of the
Shares will be 1789.
— 268 —
HOW TO APPLY FOR THE HONG KONG OFFER SHARES
1. HOW TO APPLY
If you apply for Hong Kong Offer Shares, then you may not apply for or indicate an interest
for International Placing Shares.
To apply for Hong Kong Offer Shares, you may:
• use a WHITE or YELLOW Application Form;
• apply online through the designated website of the HK eIPO White Form Service
Provider, referred herein as the “HK eIPO White Form”; or
• give electronic application instructions to HKSCC to cause HKSCC Nominees to

apply for the Hong Kong Offer Shares on your behalf.
None of you or your joint applicant(s) may make more than one application (whether
individually or jointly), except where you are a nominee and provide the required information in
your application.
Our Company, the Sole Global Coordinator, the HK eIPO White Form Service Provider and
their respective agents may reject or accept any application in full or in part for any reason at their
discretion.
2. WHO CAN APPLY
You can apply for Hong Kong Offer Shares on a WHITE or YELLOW Application Form if you
or the person(s) for whose benefit you are applying:
• are 18 years of age or older;
• have a Hong Kong address;
• are not a U.S. person (as defined in Regulation S);
• are outside the United States and will be acquiring the Hong Kong Offer Shares in an
offshore transaction (as defined in Regulation S); and
• are not a legal or natural person of China (except qualified domestic institutional
investors).
If you apply online through the HK eIPO White Form service, in addition to the above, you
must also: (i) have a valid Hong Kong identity card number and (ii) provide a valid e-mail address
and a contact telephone number.
If you are a firm, the application must be in the individual members’ names. If you are a body
corporate, the application form must be signed by a duly authorized officer, who must state his
representative capacity, and stamped with your corporation’s chop.
If an application is made by a person under a power of attorney, the Sole Global Coordinator
may accept it at its discretion and on any conditions it thinks fit, including evidence of the
attorney’s authority.
— 269 —
The number of joint applicants may not exceed four and they may not apply by means of HK
eIPO White Form service for the Hong Kong Offer Shares.
We, the Sole Global Coordinator or the designated HK eIPO White Form Service Provider
(where applicable), or our or their respective agents, have full discretion to reject or accept any
application, in full or in part, without assigning any reason.
Unless permitted by the Listing Rules, you cannot apply for any Hong Kong Offer Shares if
you are:
• an existing beneficial owner of Shares in our Company and/or any its subsidiaries;
• a Director or chief executive officer of our Company and/or any of its subsidiaries;
• an associate (as defined in the Listing Rules) of any of the above;
• a connected person (as defined in the Listing Rules) of our Company or will become a
connected person of our Company immediately upon completion of the Global Offering;
or
• have been allocated or have applied for any International Placing Shares or otherwise
participate in the International Placing.
3. APPLYING FOR HONG KONG OFFER SHARES
Which Application Channel to Use
For Hong Kong Offer Shares to be issued in your own name, use a WHITE Application Form
or apply online through www.hkeipo.hk.
For Hong Kong Offer Shares to be issued in the name of HKSCC Nominees and deposited
directly into CCASS to be credited to your or a designated CCASS Participant’s stock account,
use a YELLOW Application Form or electronically instruct HKSCC via CCASS to cause HKSCC
Nominees to apply for you.
Where to Collect the Application Forms
You can collect a WHITE Application Form and a prospectus during normal business hours
from 9:00 a.m. on Thursday, December 7, 2017 until 12:00 noon on Tuesday, December 12, 2017
from:
• any of the following offices of the Hong Kong Underwriters:
Goldman Sachs (Asia) L.L.C. 68th Floor, Cheung Kong Center

Hong Kong
Guotai Junan Securities 26/F-28/F, Low Block

(Hong Kong) Limited Grand Millennium Plaza
Hong Kong
— 270 —
• any of the following branches of the receiving bank:
Standard Chartered Bank (Hong Kong) Limited

District Branch name Branch address
Hong Kong Island. . . . . . . Des Voeux Road Branch Standard Chartered Bank Building, 4-4A,
Des Voeux Road Central, Central
Wanchai Southorn Branch Shop C2 on G/F and 1/F to 2/F, Lee Wing
Building, No. 156-162 Hennessy Road,
Wanchai
Aberdeen Branch Shop 4A, G/F and Shop 1, 1/F, Aberdeen
Centre Site 5, No.6-12 Nam Ning Street,
Aberdeen
Kowloon . . . . . . . . . . . . Kwun Tong Branch G/F & 1/F One Pacific Centre, 414 Kwun
Tong Road, Kwun Tong
Telford Gardens Branch Shop P9-12, Telford Centre, Telford
Gardens, Tai Yip Street, Kowloon Bay
Mongkok Branch Shop B, G/F, 1/F & 2/F, 617-623 Nathan
Road, Mongkok
Lok Fu Shopping Centre Shop G201, G/F., Lok Fu Shopping Centre
Branch
New Territories . . . . . . . . Maritime Square Branch Shop 308E, Level 3, Maritime Square,
Tsing Yi
Metroplaza Branch Shop No. 175, Level 1, Metroplaza, 223
Hing Fong Road, Kwai Chung
Shatin Plaza Branch Shop No. 8, Shatin Plaza, 21-27 Shatin
Centre Street, Shatin
You can collect a YELLOW Application Form and a copy of this prospectus during normal
business hours from 9:00 a.m. on Thursday, December 7, 2017 until 12:00 noon on Tuesday,
December 12, 2017 from the Depository Counter of HKSCC at 1/F, One & Two Exchange Square,
8 Connaught Place, Central, Hong Kong or from your stockbroker.
Time for Lodging Application Forms
Your completed WHITE or YELLOW Application Form, together with a cheque or a banker’s
cashier order attached and marked payable to “HORSFORD NOMINEES LIMITED — AK Medical
Public Offer” for the payment, should be deposited in the special collection boxes provided at any
of the branches of the receiving bank listed above, at the following times:
• Thursday, December 7, 2017 — 9:00 a.m. to 5:00 p.m.
• Friday, December 8, 2017 — 9:00 a.m. to 5:00 p.m.
• Saturday, December 9, 2017 — 9:00 a.m. to 1:00 p.m.
• Monday, December 11, 2017 — 9:00 a.m. to 5:00 p.m.
• Tuesday, December 12, 2017 — 9:00 a.m. to 12:00 noon
The application lists will be open from 11:45 a.m. to 12:00 noon on Tuesday, December 12,
2017, the last application day or such later time as described in “—10. Effect of Bad Weather on
the Opening of the Application Lists” in this section.
4. TERMS AND CONDITIONS OF AN APPLICATION
Follow the detailed instructions in the Application Form carefully; otherwise, your application
may be rejected.
— 271 —
By submitting an Application Form or applying through the HK eIPO White Form service,
among other things, you:
• undertake to execute all relevant documents and instruct and authorize our Company
and/or the Sole Global Coordinator (or their agents or nominees), as agents of our
Company, to execute any documents for you and to do on your behalf all things
necessary to register any Hong Kong Offer Shares allocated to you in your name or in
the name of HKSCC Nominees as required by the Articles;
• agree to comply with the Companies Ordinance, the Companies (Winding Up and
Miscellaneous Provisions) Ordinance and the Articles;
• confirm that you have read the terms and conditions and application procedures set out
in this prospectus and in the Application Form(s) and agree to be bound by them;
• confirm that you have received and read this prospectus and have only relied on the
information and representations contained in this prospectus in making your application
and will not rely on any other information or representations except those in any
supplement to this prospectus;
• confirm that you are aware of the restrictions on the Global Offering in this prospectus;
• agree that none of our Company, the Sole Global Coordinator, the Sole Sponsor, the
Sole Bookrunner, the Joint Lead Managers, the Underwriters, their respective directors,
officers, employees, partners, agents, advisors and any other parties involved in the
Global Offering is or will be liable for any information and representations not in this
prospectus (and any supplement to it);
• undertake and confirm that you or the person(s) for whose benefit you have made the
application have not applied for or taken up, or indicated an interest for, and will not
apply for or take up, or indicate an interest for, any Offer Shares under the International
Placing nor participated in the International Placing;
• agree to disclose to our Company, the Hong Kong Share Registrar, the receiving bank,
the Sole Global Coordinator, the Sole Sponsor, the Sole Bookrunner, the Joint Lead
Managers, the Underwriters and/or their respective advisors and agents any personal
data which they may require about you and the person(s) for whose benefit you have
made the application;
• if the laws of any place outside Hong Kong apply to your application, agree and warrant
that you have complied with all such laws and none of our Company, the Sole Global
Coordinator, the Sole Sponsor, the Sole Bookrunner, the Joint Lead Managers and the
Underwriters nor any of their respective officers or advisors will breach any law outside
Hong Kong as a result of the acceptance of your offer to purchase, or any action arising
from your rights and obligations under the terms and conditions contained in this
prospectus and the Application Form;
• agree that once your application has been accepted, you may not rescind it because of
an innocent misrepresentation;
• agree that your application will be governed by the laws of Hong Kong;
— 272 —
• represent, warrant and undertake that (a) you understand that the Hong Kong Offer
Shares have not been and will not be registered under the U.S. Securities Act and, prior
to the expiration of the period of 40 days after the commencement of the International
Placing, may not be offered, resold, pledged or transferred within the United States
except in certain transactions in reliance on Rule 144A; (b) you and any person for
whose benefit you are applying for the Hong Kong Offer Shares are outside the United
States (as defined in Regulation S) or are a person described in paragraph (h)(3) of
Rule 902 of Regulation S; and (c) the purchaser is not an “affiliate” (within the meaning
of Regulation S) of our Company or a person acting on the behalf of our Company or
an affiliate of our Company;
• warrant that the information you have provided is true and accurate;
• agree to accept the Hong Kong Offer Shares applied for, or any lesser number allocated
to you under the application;
• authorize our Company to place your name(s) or the name of the HKSCC Nominees, on
our Company’s register of members as the holder(s) of any Hong Kong Offer Shares
allocated to you, and our Company and/or our agents to deposit any share certificate(s)
into CCASS and to send any e-Auto refund payment instructions and/or any refund
cheque(s) to you or the first-named applicant for joint application by ordinary post at
your own risk to the address stated on the application, unless you have chosen to
collect refund cheque(s) in person;
• declare and represent that this is the only application made and the only application
intended by you to be made to benefit you or the person for whose benefit you are
applying;
• understand that our Company and the Sole Global Coordinator will rely on your
declarations and representations in deciding whether or not to make any allotment of
any of the Hong Kong Offer Shares to you and that you may be prosecuted for making
a false declaration;
• (if the application is made for your own benefit) warrant that no other application has
been or will be made for your benefit on a WHITE or YELLOW Application Form or by
giving electronic application instructions to HKSCC or to the HK eIPO White Form
Service Provider by you or by any one as your agent or by any other person; and
• (if you are making the application as an agent for the benefit of another person) warrant
that (a) no other application has been or will be made by you as agent for or for the
benefit of that person or by that person or by any other person as agent for that person
on a WHITE or YELLOW Application Form or by giving electronic application
instructions to HKSCC; and (b) you have due authority to sign the Application Form or
give electronic application instructions on behalf of that other person as their agent.
Additional Instructions for YELLOW Application Form
You may refer to the YELLOW Application Form for details.
— 273 —
5. APPLYING THROUGH THE HK eIPO WHITE FORM SERVICE
General
Individuals who meet the criteria as described in “—2. Who Can Apply” in this section, may
apply through the HK eIPO White Form service for the Offer Shares to be allotted and registered
in their own names through the designated website at www.hkeipo.hk.
Detailed instructions for application through the HK eIPO White Form service are on the
designated website. If you do not follow the instructions, your application may be rejected and may
not be submitted to our Company. If you apply through the designated website, you authorize the
HK eIPO White Form Service Provider to apply on the terms and conditions in this prospectus,
as supplemented and amended by the terms and conditions of the HK eIPO White Form service.
Time for Submitting Applications under the HK eIPO White Form Service
You may submit your application through the HK eIPO White Form Service Provider at
www.hkeipo.hk from 9:00 a.m. on Thursday, December 7, 2017 until 11:30 a.m. on Tuesday,
December 12, 2017 (24 hours daily, except on the last application day) and the latest time for
completing full payment of application monies in respect of such applications will be 12:00 noon
on Tuesday, December 12, 2017 or such later time specified under “—10. Effect of Bad Weather
on the Opening of the Application Lists” in this section.
No Multiple Applications
If you apply by means of the HK eIPO White Form service, once you complete payment in
respect of any electronic application instruction given by you or for your benefit through the HK
eIPO White Form service to make an application for Hong Kong Offer Shares, an actual
application shall be deemed to have been made. For the avoidance of doubt, giving an electronic
application instruction under the HK eIPO White Form service more than once and obtaining
payment reference numbers without effecting full payment in respect of a particular reference
number will not constitute an actual application.
If you are suspected of submitting more than one application through the HK eIPO White
Form service or by any other means, all of your applications are liable to be rejected.
Section 40 of the COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS)

ORDINANCE
For the avoidance of doubt, our Company and all other parties involved in the preparation of
this prospectus acknowledge that each applicant who gives or causes to give electronic
application instructions is a person who may be entitled to compensation under section 40 of
the Companies (Winding Up and Miscellaneous Provisions) Ordinance (as applied by section
342E of the Companies (Winding Up and Miscellaneous Provisions) Ordinance).
— 274 —
6. APPLYING BY GIVING ELECTRONIC APPLICATION INSTRUCTIONS TO HKSCC VIA

CCASS
General
CCASS Participants may give electronic application instructions to apply for the Hong
Kong Offer Shares and to arrange payment of the money due on application and payment of
refunds under their participant agreements with HKSCC and the General Rules of CCASS and the
CCASS Operational Procedures.
If you are a CCASS Investor Participant, you may give these electronic application
instructions through the CCASS Phone System by calling (852) 2979 7888 or through the
CCASS Internet System https://ip.ccass.com (using the procedures in HKSCC’s “An Operating
Guide for Investor Participants” in effect from time to time).
HKSCC can also input electronic application instructions for you if you go to:
Hong Kong Securities Clearing Company Limited

Customer Service Centre
1/F, One & Two Exchange Square
8 Connaught Place, Central
Hong Kong
and complete an input request form.
You can also collect a prospectus from this address.
If you are not a CCASS Investor Participant, you may instruct your broker or custodian who
is a CCASS Clearing Participant or a CCASS Custodian Participant to give electronic
application instructions via CCASS terminals to apply for the Hong Kong Offer Shares on your
behalf.
You will be deemed to have authorized HKSCC and/or HKSCC Nominees to transfer the
details of your application to our Company, the Sole Global Coordinator and our Hong Kong Share
Registrar.
Giving Electronic Application Instructions to HKSCC via CCASS
Where you have given electronic application instructions to apply for the Hong Kong Offer
Shares and a WHITE Application Form is signed by HKSCC Nominees on your behalf:
(i) HKSCC Nominees will only be acting as a nominee for you and is not liable for any
breach of the terms and conditions of the WHITE Application Form or this prospectus;
(ii) HKSCC Nominees will do the following things on your behalf:
• agree that the Hong Kong Offer Shares to be allotted shall be issued in the name
of HKSCC Nominees and deposited directly into CCASS for the credit of the
CCASS Participant’s stock account on your behalf or your CCASS Investor
Participant’s stock account;
• agree to accept the Hong Kong Offer Shares applied for or any lesser number
allocated;
— 275 —
• undertake and confirm that you have not applied for or taken up, will not apply for
or take up, or indicate an interest for, any Offer Shares under the International
Placing;
• (if the electronic application instructions are given for your benefit) declare that
only one set of electronic application instructions has been given for your
benefit;
• (if you are an agent for another person) declare that you have only given one set
of electronic application instructions for the other person’s benefit and are duly
authorized to give those instructions as their agent;
• confirm that you understand that our Company, the Directors and the Sole Global
Coordinator will rely on your declarations and representations in deciding whether
or not to make any allotment of any of the Hong Kong Offer Shares to you and that
you may be prosecuted if you make a false declaration;
• authorize our Company to place HKSCC Nominees’ name on our Company’s

register of members as the holder of the Hong Kong Offer Shares allocated to you
and to send share certificate(s) and/or refund monies under the arrangements
separately agreed between us and HKSCC;
• confirm that you have read the terms and conditions and application procedures
set out in this prospectus and agree to be bound by them;
• confirm that you have received and/or read a copy of this prospectus and have
relied only on the information and representations in this prospectus in causing the
application to be made, save as set out in any supplement to this prospectus;
• agree that none of our Company, the Sole Global Coordinator, the Sole Sponsor,
the Sole Bookrunner, the Joint Lead Managers, the Underwriters, their respective
directors, officers, employees, partners, agents, advisors and any other parties
involved in the Global Offering, is or will be liable for any information and
representations not contained in this prospectus (and any supplement to it);
• agree to disclose your personal data to our Company, our Hong Kong Share
Registrar, the receiving bank, the Sole Global Coordinator, the Sole Sponsor, the
Sole Bookrunner, the Joint Lead Managers, the Underwriters and/or its respective
advisors and agents;
• agree (without prejudice to any other rights which you may have) that once
HKSCC Nominees’ application has been accepted, it cannot be rescinded for
innocent misrepresentation;
— 276 —
• agree that any application made by HKSCC Nominees on your behalf is

irrevocable before the fifth day after the time of the opening of the application lists
(excluding any day which is Saturday, Sunday or public holiday in Hong Kong),
such agreement to take effect as a collateral contract with us and to become
binding when you give the instructions and such collateral contract to be in
consideration of our Company agreeing that it will not offer any Hong Kong Offer
Shares to any person before the fifth day after the time of the opening of the
application lists (excluding any day which is Saturday, Sunday or public holiday in
Hong Kong), except by means of one of the procedures referred to in this
prospectus. However, HKSCC Nominees may revoke the application before the
fifth day after the time of the opening of the application lists (excluding for this
purpose any day which is a Saturday, Sunday or public holiday in Hong Kong) if a
person responsible for this prospectus under Section 40 of the Companies
(Winding Up and Miscellaneous Provisions) Ordinance gives a public notice under
that section which excludes or limits that person’s responsibility for this
prospectus;
• agree that once HKSCC Nominees’ application is accepted, neither that

application nor your electronic application instructions can be revoked, and
that acceptance of that application will be evidenced by our Company’s
announcement of the Hong Kong Public Offering results;
• agree to the arrangements, undertakings and warranties under the participant

agreement between you and HKSCC, read with the General Rules of CCASS and
the CCASS Operational Procedures, for the giving electronic application
instructions to apply for Hong Kong Offer Shares;
• agree that your application, any acceptance of it and the resulting contract will be
governed by the Laws of Hong Kong.
Effect of Giving Electronic Application Instructions to HKSCC via CCASS
By giving electronic application instructions to HKSCC or instructing your broker or

custodian who is a CCASS Clearing Participant or a CCASS Custodian Participant to give such
instructions to HKSCC, you (and, if you are joint applicants, each of you jointly and severally) are
deemed to have done the following things. Neither HKSCC nor HKSCC Nominees shall be liable
to our Company or any other person in respect of the things mentioned below:
• instructed and authorized HKSCC to cause HKSCC Nominees (acting as nominee for
the relevant CCASS Participants) to apply for the Hong Kong Offer Shares on your
behalf;
• instructed and authorized HKSCC to arrange payment of the maximum Offer Price,
brokerage, SFC transaction levy and the Stock Exchange trading fee by debiting your
designated bank account and, in the case of a wholly or partially unsuccessful
application and/or if the Offer Price is less than the maximum Offer Price per Offer
Share initially paid on application, refund of the application monies (including
brokerage, SFC transaction levy and the Stock Exchange trading fee) by crediting your
designated bank account; and
• instructed and authorized HKSCC to cause HKSCC Nominees to do on your behalf all
the things stated in the WHITE Application Form and in this prospectus.
— 277 —
Minimum Purchase Amount and Permitted Numbers
You may give or cause your broker or custodian who is a CCASS Clearing Participant or a
CCASS Custodian Participant to give electronic application instructions for a minimum of
2,000 Hong Kong Offer Shares. Instructions for more than 2,000 Hong Kong Offer Shares must
be in one of the numbers set out in the table in the Application Forms. No application for any other
number of Hong Kong Offer Shares will be considered and any such application is liable to be
rejected.
Time for Inputting Electronic Application Instructions
CCASS Clearing/Custodian Participants can input electronic application instructions at

the following times on the following dates:
• Thursday, December 7, 2017 — 9:00 a.m. to 8:30 p.m. (1)
• Friday, December 8, 2017 — 8:00 a.m. to 8:30 p.m. (1)
• Monday, December 11, 2017 — 8:00 a.m. to 8:30 p.m. (1)
• Tuesday, December 12, 2017 — 8:00 a.m. (1) to 12:00 noon
(1) These times are subject to change as HKSCC may determine from time to time with prior notification to
CCASS Clearing/Custodian Participants.
CCASS Investor Participants can input electronic application instructions from 9:00 a.m.
on Thursday, December 7, 2017 until 12:00 noon on Tuesday, December 12, 2017 (24 hours daily,
except on the last application day).
The latest time for inputting your electronic application instructions will be 12:00 noon on
Tuesday, December 12, 2017, the last application day or such later time as described in “—10.
Effect of Bad Weather on the Opening of the Application Lists” in this section.
No Multiple Applications
If you are suspected of having made multiple applications or if more than one application is
made for your benefit, the number of Hong Kong Offer Shares applied for by HKSCC Nominees
will be automatically reduced by the number of Hong Kong Offer Shares for which you have given
such instructions and/or for which such instructions have been given for your benefit. Any
electronic application instructions to make an application for the Hong Kong Offer Shares
given by you or for your benefit to HKSCC shall be deemed to be an actual application for the
purposes of considering whether multiple applications have been made.
— 278 —
Section 40 of the COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS)

ORDINANCE
For the avoidance of doubt, our Company and all other parties involved in the preparation of
this prospectus acknowledge that each CCASS Participant who gives or causes to give electronic
application instructions is a person who may be entitled to compensation under section 40 of
the Companies (Winding Up and Miscellaneous Provisions) Ordinance as (applied by section
342E of the Companies (Winding Up and Miscellaneous Provisions) Ordinance).
Personal Data
The section of the Application Form headed “Personal Data” applies to any personal data
held by our Company, the Hong Kong Share Registrar, the receiving bank, the Sole Global
Coordinator, the Sole Sponsor, the Sole Bookrunner, the Joint Lead Managers, the Underwriters
and any of their respective advisors and agents about you in the same way as it applies to
personal data about applicants other than HKSCC Nominees.
7. WARNING FOR ELECTRONIC APPLICATIONS
The subscription of the Hong Kong Offer Shares by giving electronic application
instructions to HKSCC is only a facility provided to CCASS Participants. Similarly, the application
for Hong Kong Offer Shares through the HK eIPO White Form service is also only a facility
provided by the HK eIPO White Form Service Provider to public investors. Such facilities are
subject to capacity limitations and potential service interruptions and you are advised not to wait
until the last application day in making your electronic applications. Our Company, our Directors,
the Sole Global Coordinator, the Sole Sponsor, the Sole Bookrunner, the Joint Lead Managers and
the Underwriters take no responsibility for such applications and provide no assurance that any
CCASS Participant or person applying through the HK eIPO White Form service will be allotted
any Hong Kong Offer Shares.
To ensure that CCASS Investor Participants can give their electronic application
instructions, they are advised not to wait until the last minute to input their instructions to the
systems. In the event that CCASS Investor Participants have problems in the connection to
CCASS Phone System/CCASS Internet System for submission of electronic application
instructions, they should either (i) submit a WHITE or YELLOW Application Form, or (ii) go to
HKSCC’s Customer Service Centre to complete an input request form for electronic application
instructions before 12:00 noon on Tuesday, December 12, 2017.
8. HOW MANY APPLICATIONS CAN YOU MAKE
Multiple applications for the Hong Kong Offer Shares are not allowed except by nominees.
If you are a nominee, in the box on the Application Form marked “For nominees” you must
include:
• an account number; or
• some other identification code,
for each beneficial owner or, in the case of joint beneficial owners, for each joint beneficial owner.
If you do not include this information, the application will be treated as being made for your benefit.
— 279 —
All of your applications will be rejected if more than one application on a WHITE or YELLOW
Application Form or by giving electronic application instructions to HKSCC or through HK eIPO
White Form service is made for your benefit (including the part of the application made by HKSCC
Nominees acting on electronic application instructions). If an application is made by an
unlisted company and:
• the principal business of that company is dealing in securities; and
• you exercise statutory control over that company,
then the application will be treated as being for your benefit.
“Unlisted company” means a company with no equity securities listed on the Stock
Exchange. “Statutory control” means you:
• control the composition of the board of directors of the company;
• control more than half of the voting power of the company; or
• hold more than half of the issued share capital of the company (not counting any part
of it which carries no right to participate beyond a specified amount in a distribution of
either profits or capital).
9. HOW MUCH ARE THE HONG KONG OFFER SHARES
The WHITE and YELLOW Application Forms have tables showing the exact amount payable
for Shares.
You must pay the maximum Offer Price, brokerage, SFC transaction levy and the Stock
Exchange trading fee in full upon application for Shares under the terms set out in the Application
Forms.
You may submit an application using a WHITE or YELLOW Application Form or through the
HK eIPO White Form service in respect of a minimum of 2,000 Hong Kong Public Offer Shares.
Each application or electronic application instruction in respect of more than 2,000 Hong Kong
Public Offer Shares must be in one of the numbers set out in the table in the Application Form, or
as otherwise specified on the designated website at www.hkeipo.hk.
If your application is successful, brokerage will be paid to the Exchange Participants, and the
SFC transaction levy and the Stock Exchange trading fee are paid to the Stock Exchange (in the
case of the SFC transaction levy, collected by the Stock Exchange on behalf of the SFC).
For further details on the Offer Price, see the section headed “Structure of the Global
Offering—Pricing and Allocation”.
— 280 —
10. EFFECT OF BAD WEATHER ON THE OPENING OF THE APPLICATION LISTS
The application lists will not open if there is:
• a tropical cyclone warning signal number 8 or above; or
• a “black” rainstorm warning,
in force in Hong Kong at any time between 9:00 a.m. and 12:00 noon on Tuesday, December 12,
2017. Instead they will open between 11:45 a.m. and 12:00 noon on the next Business Day which
does not have either of those warnings in Hong Kong in force at any time between 9:00 am and
12:00 noon.
If the application lists do not open and close on Tuesday, December 12, 2017 or if there is
a tropical cyclone warning signal number 8 or above or a “black” rainstorm warning signal in force
in Hong Kong that may affect the dates mentioned in the section headed “Expected Timetable”,
an announcement will be made in such event.
11. PUBLICATION OF RESULTS
Our Company expects to announce the final Offer Price, the level of indication of interest in
the International Placing, the level of applications in the Hong Kong Public Offering and the basis
of allocation of the Hong Kong Offer Shares on Tuesday, December 19, 2017 in the South China
Morning Post (in English) and the Hong Kong Economic Times (in Chinese) on our Company’s
website at www.ak-medical.net and the website of the Stock Exchange at www.hkexnews.hk.
The results of allocations and the Hong Kong identity card/passport/Hong Kong business
registration numbers of successful applicants under the Hong Kong Public Offering will be
available at the times and date and in the manner specified below:
• in the announcement to be posted on our Company’s website at www.ak-medical.net

and the Stock Exchange’s website at www.hkexnews.hk by no later than 9:00 a.m.,
Tuesday, December 19, 2017;
• from the designated results of allocations website at www.tricor.com.hk/ipo/result

with a “search by ID” function on a 24-hour basis from 8:00 a.m., Tuesday, December
19, 2017 to 12:00, midnight, Monday, December 25, 2017;
• by telephone enquiry line by calling (852) 3691 8488 between 9:00 a.m. and 6:00 p.m.
from Tuesday, December 19, 2017 to Friday, December 22, 2017 (excluding Saturday,
Sunday and Public Holiday);
• in the special allocation results booklets which will be available for inspection during
opening hours from Tuesday, December 19, 2017 to Thursday, December 21, 2017 at
all the designated branches of the receiving bank.
If our Company accepts your offer to subscribe (in whole or in part), which it may do by
announcing the basis of allocations and/or making available the results of allocations publicly,
there will be a binding contract under which you will be required to purchase the Hong Kong Offer
Shares if the conditions of the Global Offering are satisfied and the Global Offering is not
otherwise terminated. Further details, see “Structure of the Global Offering”.
— 281 —
You will not be entitled to exercise any remedy of rescission for innocent misrepresentation
at any time after acceptance of your application. This does not affect any other right you may have.
12. CIRCUMSTANCES IN WHICH YOU WILL NOT BE ALLOTTED OFFER SHARES
You should note the following situations in which the Hong Kong Offer Shares will not be
allotted to you:
(i) If your application is revoked:
By completing and submitting an Application Form or giving electronic application

instructions to HKSCC or to HK eIPO White Form Service Provider, you agree that your
application or the application made by HKSCC Nominees on your behalf cannot be revoked on or
before the fifth day after the time of the opening of the application lists (excluding for this purpose
any day which is Saturday, Sunday or public holiday in Hong Kong). This agreement will take
effect as a collateral contract with our Company.
Your application or the application made by HKSCC Nominees on your behalf may only be
revoked on or before such fifth day if a person responsible for this prospectus under section 40
of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (as applied by section
342E of the Companies (Winding Up and Miscellaneous Provisions) Ordinance) gives a public
notice under that section which excludes or limits that person’s responsibility for this prospectus.
If any supplement to this prospectus is issued, applicants who have already submitted an
application will be notified that they are required to confirm their applications. If applicants have
been so notified but have not confirmed their applications in accordance with the procedure to be
notified, all unconfirmed applications will be deemed revoked.
If your application or the application made by HKSCC Nominees on your behalf has been
accepted, it cannot be revoked. For this purpose, acceptance of applications which are not
rejected will be constituted by notification in the press of the results of allocation, and where such
basis of allocation is subject to certain conditions or provides for allocation by ballot, such
acceptance will be subject to the satisfaction of such conditions or results of the ballot
respectively.
(ii) If our Company or its agents exercise their discretion to reject your application:
Our Company, the Sole Global Coordinator, the HK eIPO White Form Service Provider and
their respective agents and nominees have full discretion to reject or accept any application, or to
accept only part of any application, without giving any reasons.
(iii) If the allotment of Hong Kong Offer Shares is void:
The allotment of Hong Kong Offer Shares will be void if the Listing Committee of the Stock
Exchange does not grant permission to list the Shares either:
• within three weeks from the closing date of the application lists; or
• within a longer period of up to six weeks if the Listing Committee notifies our Company
of that longer period within three weeks of the closing date of the application lists.
— 282 —
(iv) If:
• you make multiple applications or suspected multiple applications;
• you or the person for whose benefit you are applying have applied for or taken up, or
indicated an interest for, or have been or will be placed or allocated (including
conditionally and/or provisionally) Hong Kong Offer Shares and International Placing
Shares;
• your Application Form is not completed in accordance with the stated instructions;
• your electronic application instructions through the HK eIPO White Form service
are not completed in accordance with the instructions, terms and conditions on the
designated website;
• your payment is not made correctly or the cheque or banker’s cashier order paid by you
is dishonored upon its first presentation;
• the Underwriting Agreements do not become unconditional or are terminated;
• our Company or the Sole Global Coordinator believes that by accepting your
application, it or they would violate applicable securities or other laws, rules or
regulations; or
• your application is for more than 50% of the Hong Kong Offer Shares initially offered
under the Hong Kong Public Offering.
13. REFUND OF APPLICATION MONIES
If an application is rejected, not accepted or accepted in part only, or if the Offer Price as
finally determined is less than the maximum Offer Price of HK$2.00 per Offer Share (excluding
brokerage, SFC transaction levy and the Stock Exchange trading fee thereon), or if the conditions
of the Hong Kong Public Offering are not fulfilled in accordance with “Structure of the Global
Offering—Conditions of the Global Offering” in this prospectus or if any application is revoked, the
application monies, or the appropriate portion thereof, together with the related brokerage, SFC
transaction levy and the Stock Exchange trading fee, will be refunded, without interest or the
cheque or banker’s cashier order will not be cleared.
Any refund of your application monies will be made on or before Tuesday, December 19,
2017.
— 283 —
14. DESPATCH/COLLECTION OF SHARE CERTIFICATES AND REFUND MONIES
You will receive one share certificate for all Hong Kong Offer Shares allotted to you under the
Hong Kong Public Offering (except pursuant to applications made on YELLOW Application Forms
or by electronic application instructions to HKSCC via CCASS where the share certificates will
be deposited into CCASS as described below).
No temporary document of title will be issued in respect of the Shares. No receipt will be
issued for sums paid on application. If you apply by WHITE or YELLOW Application Form, subject
to personal collection as mentioned below, the following will be sent to you (or, in the case of joint
applicants, to the first-named applicant) by ordinary post, at your own risk, to the address
specified on the Application Form:
• share certificate(s) for all the Hong Kong Offer Shares allotted to you (for YELLOW
Application Forms, share certificates will be deposited into CCASS as described
below); and
• refund cheque(s) crossed “Account Payee Only” in favor of the applicant (or, in the case
of joint applicants, the first-named applicant) for (i) all or the surplus application monies
for the Hong Kong Offer Shares, wholly or partially unsuccessfully applied for; and/or (ii)
the difference between the Offer Price and the maximum Offer Price per Offer Share
paid on application in the event that the Offer Price is less than the maximum Offer Price
(including brokerage, SFC transaction levy and the Stock Exchange trading fee but
without interest). Part of the Hong Kong identity card number/passport number,
provided by you or the first-named applicant (if you are joint applicants), may be printed
on your refund cheque, if any. Your banker may require verification of your Hong Kong
identity card number/passport number before encashment of your refund cheque(s).
Inaccurate completion of your Hong Kong identity card number/passport number may
invalidate or delay encashment of your refund cheque(s).
Subject to arrangements for dispatch/collection of share certificates and refund monies as

mentioned below, any refund cheques and share certificates are expected to be posted on or
before Tuesday, December 19, 2017. The right is reserved to retain any share certificate(s) and
any surplus application monies pending clearance of cheque(s) or banker’s cashier’s order(s).
Share certificates will only become valid at 8:00 a.m. on Wednesday, December 20, 2017
provided that the Global Offering has become unconditional and the right of termination described
in the “Underwriting” section in this prospectus has not been exercised. Investors who trade
shares prior to the receipt of Share certificates or the Share certificates becoming valid do so at
their own risk.
Personal Collection
(i) If you apply using a WHITE Application Form
If you apply for 1,000,000 or more Hong Kong Offer Shares and have provided all information
required by your Application Form, you may collect your refund cheque(s) and/or share
certificate(s) from the Tricor Investor Services Limited at Level 22, Hopewell Centre, 183 Queen’s
Road East, Hong Kong, from 9:00 a.m. to 1:00 p.m. on Tuesday, December 19, 2017 or such other
date as is notified by us in the newspapers.
— 284 —
If you are an individual who is eligible for personal collection, you must not authorize any
other person to collect for you. If you are a corporate applicant which is eligible for personal
collection, your authorized representative must bear a letter of authorization from your corporation
stamped with your corporation’s chop. Both individuals and authorized representatives must
produce, at the time of collection, evidence of identity acceptable to the Hong Kong Share
Registrar.
If you do not collect your refund cheque(s) and/or share certificate(s) personally within the
time specified for collection, they will be despatched promptly to the address specified in your
Application Form by ordinary post at your own risk.
If you apply for less than 1,000,000 Hong Kong Offer Shares, your refund cheque(s) and/or
share certificate(s) will be sent to the address on the relevant Application Form on or before
Tuesday, December 19, 2017, by ordinary post and at your own risk.
(ii) If you apply using a YELLOW Application Form
If you apply for 1,000,000 Hong Kong Offer Shares or more, please follow the same
instructions as described above. If you have applied for less than 1,000,000 Hong Kong Offer
Shares, your refund cheque(s) will be sent to the address on the relevant Application Form on or
before Tuesday, December 19, 2017, by ordinary post and at your own risk.
If you apply by using a YELLOW Application Form and your application is wholly or partially
successful, your share certificate(s) will be issued in the name of HKSCC Nominees and
deposited into CCASS for credit to your or the designated CCASS Participant’s stock account as
stated in your Application Form on Tuesday, December 19, 2017, or upon contingency, on any
other date determined by HKSCC or HKSCC Nominees.
• If you apply through a designated CCASS participant (other than a CCASS investor
participant)
For Hong Kong Offering Shares credited to your designated CCASS participant’s stock
account (other than CCASS Investor Participant), you can check the number of Hong Kong
Offering Shares allotted to you with that CCASS participant.
• If you are applying as a CCASS investor participant
Our Company will publish the results of CCASS Investor Participants’ applications together
with the results of the Hong Kong Public Offering in the manner described in “—11. Publication of
Results” above. You should check the announcement published by our Company and report any
discrepancies to HKSCC before 5:00 p.m. on Tuesday, December 19, 2017 or any other date as
determined by HKSCC or HKSCC Nominees. Immediately after the credit of the Hong Kong Offer
Shares to your stock account, you can check your new account balance via the CCASS Phone
System and CCASS Internet System.
(iii) If you apply through the HK eIPO White Form Service
If you apply for 1,000,000 Hong Kong Offer Shares or more and your application is wholly or
partially successful, you may collect your Share certificate(s) from Tricor Investor Services Limited
at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong, from 9:00 a.m. to 1:00 p.m.
on Tuesday, December 19, 2017, or such other date as is notified by our Company in the
newspapers as the date of despatch/collection of Share certificates/e-Auto refund payment
instructions/refund cheques.
— 285 —
If you do not collect your Share certificate(s) personally within the time specified for
collection, they will be sent to the address specified in your application instructions by ordinary
post at your own risk.
If you apply for less than 1,000,000 Hong Kong Offer Shares, your Share certificate(s)
(where applicable) will be sent to the address specified in your application instructions on or
before Tuesday, December 19, 2017 by ordinary post at your own risk.
If you apply and pay the application monies from a single bank account, any refund monies
will be despatched to that bank account in the form of e-Auto refund payment instructions. If you
apply and pay the application monies from multiple bank accounts, any refund monies will be
despatched to the address as specified in your application instructions in the form of refund
cheque(s) by ordinary post at your own risk.
(iv) If you apply via Electronic Application Instructions to HKSCC
Allocation of Hong Kong Offer Shares
For the purposes of allocating Hong Kong Offer Shares, HKSCC Nominees will not be treated
as an applicant. Instead, each CCASS Participant who gives electronic application instructions
or each person for whose benefit instructions are given will be treated as an applicant.
Deposit of Share Certificates into CCASS and Refund of Application Monies
• If your application is wholly or partially successful, your share certificate(s) will be issued in
the name of HKSCC Nominees and deposited into CCASS for the credit of your designated
CCASS Participant’s stock account or your CCASS Investor Participant stock account on
Tuesday, December 19, 2017, or, on any other date determined by HKSCC or HKSCC
Nominees.
• Our Company expects to publish the application results of CCASS Participants (and where
the CCASS Participant is a broker or custodian, our Company will include information
relating to the relevant beneficial owner), your Hong Kong identity card number/passport
number or other identification code (Hong Kong business registration number for
corporations) and the basis of allotment of the Hong Kong Public Offering in the manner
specified in “—11. Publication of Results” above on Tuesday, December 19, 2017. You
should check the announcement published by our Company and report any discrepancies to
HKSCC before 5:00 p.m. on Tuesday, December 19, 2017 or such other date as determined
by HKSCC or HKSCC Nominees.
• If you have instructed your broker or custodian to give electronic application instructions
on your behalf, you can also check the number of Hong Kong Offer Shares allotted to you and
the amount of refund monies (if any) payable to you with that broker or custodian.
• If you have applied as a CCASS Investor Participant, you can also check the number of Hong
Kong Offer Shares allotted to you and the amount of refund monies (if any) payable to you
via the CCASS Phone System and the CCASS Internet System (under the procedures
contained in HKSCC’s “An Operating Guide for Investor Participants” in effect from time to
time) on Tuesday, December 19, 2017. Immediately following the credit of the Hong Kong
Offer Shares to your stock account and the credit of refund monies to your bank account,
— 286 —
HKSCC will also make available to you an activity statement showing the number of Hong
Kong Offer Shares credited to your CCASS Investor Participant stock account and the
amount of refund monies (if any) credited to your designated bank account.
• Refund of your application monies (if any) in respect of wholly and partially unsuccessful
applications and/or difference between the Offer Price and the maximum Offer Price per
Offer Share initially paid on application (including brokerage, SFC transaction levy and the
Stock Exchange trading fee but without interest) will be credited to your designated bank
account or the designated bank account of your broker or custodian on Tuesday, December
19, 2017.
15. COMMENCEMENT OF DEALINGS IN THE SHARES
Dealings in the Shares on the Stock Exchange are expected to commence from 9:00 a.m. on
Wednesday, December 20, 2017.
The Shares will be traded in board lots of 2,000 each. The stock code of the Shares is 1789.
16. ADMISSION OF THE SHARES INTO CCASS
If the Stock Exchange grants the listing of, and permission to deal in, the Shares and we
comply with the stock admission requirements of HKSCC, the Shares will be accepted as eligible
securities by HKSCC for deposit, clearance and settlement in CCASS with effect from Listing Date
or any other date HKSCC chooses. Settlement of transactions between Exchange Participants (as
defined in the Listing Rules) is required to take place in CCASS on the second Business Day after
any trading day.
All activities under CCASS are subject to the General Rules of CCASS and CCASS
Operational Procedures in effect from time to time.
Investors should seek the advice of their stockbroker or other professional advisor for details
of the settlement arrangement as such arrangements may affect their rights and interests.
All necessary arrangements have been made enabling the Shares to be admitted into
CCASS.
— 287 —
APPENDIX I ACCOUNTANTS’ REPORT
The following is the text of a report set out on pages I-1 to I-42, received from the Company’s
reporting accountants, KPMG, Certified Public Accountants, Hong Kong, for the purpose of
incorporation in this prospectus.
ACCOUNTANTS’ REPORT ON HISTORICAL FINANCIAL INFORMATION TO THE DIRECTORS

OF AK MEDICAL HOLDINGS LIMITED AND GOLDMAN SACHS (ASIA) L.L.C.
Introduction
We report on the historical financial information of AK Medical Holdings Limited (the

“Company”) and its subsidiaries (together, the “Group”) set out on pages I-4 to I-42, which
comprises the consolidated statements of financial position of the Group as at 31 December 2014,
2015, 2016 and 30 June 2017 and the statements of financial position of the Company as at 31
December 2015, 2016 and 30 June 2017 and the consolidated statements of profit or loss and
other comprehensive income, the consolidated statements of changes in equity and the
consolidated cash flow statements, for each of the years ended 31 December 2014, 2015, 2016
and the six months ended 30 June 2017 (the “Relevant Periods”), and a summary of significant
accounting policies and other explanatory information (together, the “Historical Financial
Information”). The Historical Financial Information set out on pages I-4 to I-42 forms an integral
part of this report, which has been prepared for inclusion in the prospectus of the Company dated
7 December 2017 (the “Prospectus”) in connection with the initial listing of shares of the Company
on the Main Board of The Stock Exchange of Hong Kong Limited.
Directors’ responsibility for Historical Financial Information
The directors of the Company are responsible for the preparation of Historical Financial
Information that gives a true and fair view in accordance with the basis of preparation and
presentation set out in Note 1 to the Historical Financial Information, and for such internal control
as the directors of the Company determine is necessary to enable the preparation of the Historical
Financial Information that is free from material misstatement, whether due to fraud or error.
Reporting accountants’ responsibility
Our responsibility is to express an opinion on the Historical Financial Information and to

report our opinion to you. We conducted our work in accordance with Hong Kong Standard on
Investment Circular Reporting Engagements 200 “Accountants’ Reports on Historical Financial
Information in Investment Circulars” issued by the Hong Kong Institute of Certified Public
Accountants (“HKICPA”). This standard requires that we comply with ethical standards and plan
and perform our work to obtain reasonable assurance about whether the Historical Financial
Information is free from material misstatement.
Our work involved performing procedures to obtain evidence about the amounts and
disclosures in the Historical Financial Information. The procedures selected depend on the
reporting accountants’ judgement, including the assessment of risks of material misstatement of
the Historical Financial Information, whether due to fraud or error. In making those risk
assessments, the reporting accountants consider internal control relevant to the entity’s
preparation of Historical Financial Information that give a true and fair view in accordance with the
— I-1 —
basis of preparation and presentation set out in Note 1 to the Historical Financial Information in
order to design procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control. Our work also included
evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by the directors, as well as evaluating the overall presentation of the Historical
Financial Information.
We believe that the evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Opinion
In our opinion, the Historical Financial Information gives, for the purpose of the accountants’
report, a true and fair view of the Group’s financial position as at 31 December 2014, 2015, 2016
and 30 June 2017 and the Company’s financial position as at 31 December 2015, 2016 and 30
June 2017, and of the Group’s financial performance and cash flows for the Relevant Periods in
accordance with the basis of preparation and presentation set out in Note 1 to the Historical
Review of stub period corresponding financial information
We have reviewed the stub period corresponding financial information of the Group which
comprises the consolidated statement of profit or loss and other comprehensive income, the
consolidated statement of changes in equity and the consolidated cash flow statement for the 6
months ended 30 June 2016 and other explanatory information (the “Stub Period Corresponding
Financial Information”). The directors of the Company are responsible for the preparation and
presentation of the Stub Period Corresponding Financial Information in accordance with the basis
of preparation and presentation set out in Note 1 to the Historical Financial Information. Our
responsibility is to express a conclusion on the Stub Period Corresponding Financial Information
based on our review. We conducted our review in accordance with International Standard on
Review Engagements 2410 “Review of Interim Financial Information Performed by the
Independent Auditor of the Entity” issued by the International Auditing and Assurance Standards
Board (“IAASB”). A review consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review procedures. A review
is substantially less in scope than an audit conducted in accordance with International Standards
on Auditing and consequently does not enable us to obtain assurance that we would become
aware of all significant matters that might be identified in an audit. Accordingly, we do not express
an audit opinion. Based on our review, nothing has come to our attention that causes us to believe
that the Stub Period Corresponding Financial Information, for the purpose of the accountants’
report, is not prepared, in all material respects, in accordance with the basis of preparation and
presentation set out in Note 1 to the Historical Financial Information.
REPORT ON MATTERS UNDER THE RULES GOVERNING THE LISTING OF SECURITIES ON

THE STOCK EXCHANGE OF HONG KONG LIMITED AND THE COMPANIES (WINDING UP
AND MISCELLANEOUS PROVISIONS) ORDINANCE
Adjustments
In preparing the Historical Financial Information, no adjustments to the Underlying Financial

Statements as defined on page I-4 have been made.
— I-2 —
Dividends
We refer to Note 11 to the Historical Financial Information which contains information about
the dividends paid by the Company in respect of the Relevant Periods.
Certified Public Accountants

8th Floor, Prince’s Building
10 Chater Road
Central, Hong Kong
7 December 2017
— I-3 —
HISTORICAL FINANCIAL INFORMATION
Set out below is the Historical Financial Information which forms an integral part of this
accountants’ report.
The consolidated financial statements of the Group for the Relevant Periods, on which the
Historical Financial Information is based, were audited by KPMG Huazhen LLP in accordance with
International Standards on Auditing issued by the IAASB (“Underlying Financial Statements”).
Consolidated statements of profit or loss and other comprehensive income
Six months ended

Year ended 31 December 30 June
Note 2014 2015 2016 2016 2017
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Revenue. . . . . . . . . . . . . . . 4 148,278 206,164 270,777 115,347 162,517
Cost of sales . . . . . . . . . . . . 6 (46,933) (64,108) (83,466) (35,470) (50,814)
Gross Profit . . . . . . . . . . . . 101,345 142,056 187,311 79,877 111,703
Other income . . . . . . . . . . . . 5 1,778 823 793 368 1,854
Selling and distribution
expenses . . . . . . . . . . . . . 6 (17,416) (28,782) (36,229) (14,098) (19,660)
General and administrative
expenses . . . . . . . . . . . . . 6 (12,377) (22,262) (38,115) (20,180) (18,276)
Research and development
expenses . . . . . . . . . . . . . (15,539) (18,878) (20,390) (8,266) (17,929)
Operating Profit. . . . . . . . . . 57,791 72,957 93,370 37,701 57,692
Net financial income . . . . . . . 7 2,506 2,994 1,657 988 478
Profit before tax . . . . . . . . . 6 60,297 75,951 95,027 38,689 58,170
Income tax expense . . . . . . . . 8 (8,576) (11,044) (17,701) (5,467) (8,120)
Profit for the year/period. . . . 51,721 64,907 77,326 33,222 50,050
---------- ---------- ---------- ---------- ----------
Other comprehensive income
Items that are or may be
reclassified subsequently
to profit or loss
Exchange differences on
translation of financial
information of entities outside
mainland China . . . . . . . . . — 80 4,189 1,436 (740)
Other comprehensive
income, net of tax . . . . . . . — 80 4,189 1,436 (740)
---------- ---------- ---------- ---------- ----------
Total comprehensive income . 51,721 64,987 81,515 34,658 49,310
Profit attributable to owners

of the Company . . . . . . . . 51,721 64,987 81,515 34,658 49,310
Total comprehensive income

attributable to owners of
the Company . . . . . . . . . . 51,721 64,987 81,515 34,658 49,310
Earnings per share

(RMB cents)
Basic and diluted . . . . . . . . . 10 7 9 10 4 7
The accompanying notes form part of these financial statements.
— I-4 —
Consolidated statements of financial position
The Group
As at
As at 31 December 30 June
Note 2014 2015 2016 2017
RMB’000 RMB’000 RMB’000 RMB’000
Non-current assets
Property, plant and equipment . . . 12 29,528 48,908 69,837 88,918
Intangible assets . . . . . . . . . . . 13 1,820 5,947 6,571 9,131
Deferred tax assets . . . . . . . . . 21(b) 4,174 4,877 6,670 8,372
Other non-current assets . . . . . . 88 45 — —
35,610 59,777 83,078 106,421
---------- ---------- ---------- ----------
Current assets
Inventories . . . . . . . . . . . . . . . 14 34,720 58,400 67,805 84,848
Trade receivables . . . . . . . . . . . 15 18,975 43,330 66,757 66,131
Bills receivable . . . . . . . . . . . . 15 5,073 14,531 14,773 23,590
Deposits, prepayments and other
receivables . . . . . . . . . . . . . 16 5,108 7,618 12,525 13,209
Available-for-sale financial assets . 17 70,000 — — —
Cash and cash equivalents . . . . . 18 43,161 100,094 160,597 165,628
177,037 223,973 322,457 353,406
---------- ---------- ---------- ----------
Current liabilities
Trade payables . . . . . . . . . . . . 19 14,691 29,408 33,740 43,974
Accruals and other payables . . . . 20 16,530 45,021 31,195 45,876
Current tax . . . . . . . . . . . . . . . 21(a) 2,707 5,875 8,917 11,382
Deferred revenue . . . . . . . . . . . 22 15,373 18,033 21,922 22,209
Provision . . . . . . . . . . . . . . . . 23 1,764 2,482 3,260 4,027
51,065 100,819 99,034 127,468
---------- ---------- ---------- ----------
Net current assets . . . . . . . . . 125,972 123,154 223,423 225,938
---------- ---------- ---------- ----------
Total assets less current

liabilities . . . . . . . . . . . . . . 161,582 182,931 306,501 332,359
---------- ---------- ---------- ----------
Non-current liabilities
Deferred revenue . . . . . . . . . . . 22 5,631 5,993 8,208 7,892
Deferred tax liabilities . . . . . . . . 21(b) – – 3,900 3,900
5,631 5,993 12,108 11,792
---------- ---------- ---------- ----------
NET ASSETS . . . . . . . . . . . . . 155,951 176,938 294,393 320,567

Capital . . . . . . . . . . . . . . . . . 24(a) 34,000 55,556 1 1
Reserves . . . . . . . . . . . . . . . . 24(b) 121,951 121,382 294,392 320,566
Total equity attributable to
owners of the Company . . . . 155,951 176,938 294,393 320,567
— I-5 —
The Company
As at
Note 2015 2016 2017
RMB’000 RMB’000 RMB’000
Current assets
Deposits, prepayments and other receivables . . . . . . 16 7,203 176,786 142,711
Cash and cash equivalents . . . . . . . . . . . . . . . . . . 18 52,752 5,317 17,189
59,955 182,103 159,900
--------- ---------- ----------
Current liabilities
Accruals and other payables . . . . . . . . . . . . . . . . . 1,947 933 4,241
1,947 933 —
--------- ---------- ----------
Net current assets . . . . . . . . . . . . . . . . . . . . . . 58,008 181,170 155,659

Total assets less current liabilities. . . . . . . . . . . . 58,008 181,170 155,659
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . 58,008 181,170 155,659

Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24(a) — 1 1
Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24(b) 58,008 181,169 155,658
Total equity attributable to owners of
the Company . . . . . . . . . . . . . . . . . . . . . . . . . 58,008 181,170 155,659
— I-6 —
Consolidated statements of changes in equity
Share Share Capital Statutory Retained Exchange Total

Note capital premium Reserve reserve profits reserve equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Balance at 1 January 2014 . 34,000 — 21,175 11,334 68,321 — 134,830
for the year. . . . . . . . . . — — — — 51,721 — 51,721
Appropriation to statutory
reserve . . . . . . . . . . . . 24(b) — — — 5,073 (5,073) — —
Dividends declared . . . . . . 11 — — — — (30,600) — (30,600)
Balance at
31 December 2014 and
1 January 2015 . . . . . . . 34,000 — 21,175 16,407 84,369 — 155,951
for the year. . . . . . . . . . — — — — 64,907 80 64,987
Capital injection . . . . . . . . 24(a)(ii) 5,556 60,000 8,444 — — — 74,000
Appropriation to statutory
reserve . . . . . . . . . . . . 24(b) — — — 6,613 (6,613) — —
Transfer from capital reserve. 24(a)(i) 16,000 — (16,000) — — — —
Dividends declared . . . . . . 11 — — — — (118,000) — (118,000)
Balance at
31 December 2015 and
1 January 2016 . . . . . . . 55,556 60,000 13,619 23,020 24,663 80 176,938
for the year. . . . . . . . . . — — — — 77,326 4,189 81,515
Capital injection . . . . . . . . 24(a)(ii) — 66,000 — — — — 66,000
Arising from Reorganisation . 24(a)(iii) (55,555) 14,000 (33,145) (23,020) 23,020 — (74,700)
Waiver of shareholder’s
loans . . . . . . . . . . . . . 24(a)(iii) — — 74,700 — — — 74,700
Dividends declared . . . . . . 11 — (30,060) — — — — (30,060)
Balance at
31 December 2016 . . . . . 1 109,940 55,174 — 125,009 4,269 294,393
Balance at 1 January 2017 . 1 109,940 55,174 — 125,009 4,269 294,393

for the period . . . . . . . . — — — — 50,050 (740) 49,310
Dividends declared . . . . . . 11 — (23,136) — — — — (23,136)
Balance at 30 June 2017 . . 1 86,804 55,174 — 175,059 3,529 320,567
Balance at 1 January 2016 . 55,556 60,000 13,619 23,020 24,663 80 176,938

for the period . . . . . . . . — — — — 33,222 1,436 34,658
Capital injection . . . . . . . . 24(a)(ii) — 66,000 — — — — 66,000
Arising from Reorganisation . 24(a)(iii) (55,555) 14,000 (33,145) (23,020) 23,020 — (74,700)
Waiver of shareholder’s
loans . . . . . . . . . . . . . 24(a)(iii) — — 74,700 — — — 74,700
Balance at 30 June 2016
(Unaudited) . . . . . . . . . 1 140,000 55,174 — 80,905 1,516 277,596
— I-7 —
Consolidated cash flow statements
Six months ended

2014 2015 2016 2016 2017
(Unaudited)
Operating activities
Profit before tax . . . . . . . . . . . . . . . . 60,297 75,951 95,027 38,689 58,170
Adjustments for:
Depreciation of property, plant
and equipment . . . . . . . . . . . . . . 4,276 4,641 7,865 3,316 5,178
Amortisation of intangible assets . . . . 247 449 907 422 588
Amortisation of deferred income . . . . (222) (438) (605) (303) (316)
Net finance income . . . . . . . . . . . . (2,415) (2,334) (467) (140) (532)
Impairment losses on doubtful debts . 220 456 664 437 2,267
Losses on disposal of property,
plant and equipment . . . . . . . . . . 2 62 — — –
62,405 78,787 103,391 42,421 65,355
Changes in:
Inventories . . . . . . . . . . . . . . . . . . (3,290) (23,680) (9,405) (7,954) (17,043)
Trade and bills receivables . . . . . . . (8,099) (34,269) (24,333) (14,782) (10,458)
Deposits, prepayments and other
receivables . . . . . . . . . . . . . . . . (1,417) (2,508) (2,475) (2,771) 66
Pledged bank deposits . . . . . . . . . . 1,530 — — — –
Trade payables . . . . . . . . . . . . . . . 5,462 14,771 4,332 (5,937) 10,180
Accruals and other payables . . . . . . 1,210 8,402 6,017 (126) 14,682
Deferred revenue . . . . . . . . . . . . . 1,196 2,660 3,889 147 287
Provisions . . . . . . . . . . . . . . . . . . 468 718 778 1,113 767
Cash generated from operations . . . . 59,465 44,881 82,195 12,111 63,836
Income tax paid . . . . . . . . . . . . . . . . (8,373) (8,579) (12,552) (6,435) (7,357)
Net cash generated from operating
activities . . . . . . . . . . . . . . . . . . 51,092 36,302 69,643 5,676 56,479
------------ ---------- ------------ --------- ---------
Investing activities
Interest received . . . . . . . . . . . . . . . 2,415 2,334 467 140 532
Development expenditures . . . . . . . . . (714) (1,324) (770) (760) (112)
Acquisition of other intangible assets . . (654) (2,981) (707) (280) (2,958)
Acquisition of property, plant and
equipment . . . . . . . . . . . . . . . . . . (6,063) (24,367) (28,371) (19,546) (24,363)
Acquisition of available-for-sale financial
assets . . . . . . . . . . . . . . . . . . . . (310,000) (95,000) — — —
Proceeds from sale of available-for-sale
financial assets . . . . . . . . . . . . . . . 295,000 165,000 — — —
Government grants received relating to
assets . . . . . . . . . . . . . . . . . . . . 3,996 800 2,215 1,630 —
investing activities . . . . . . . . . . . . (16,020) 44,462 (27,166) (18,816) (26,901)
------------ ---------- ------------ --------- ---------
— I-8 —
Six months ended

2014 2015 2016 2016 2017
(Unaudited)
Financing activities
Dividends paid. . . . . . . . . . . . . . . . . (30,600) (97,911) (50,148) (20,088) (23,136)
Capital injection . . . . . . . . . . . . . . . . — 74,000 66,000 66,000 —
Deemed distribution to the then equity
holders upon the Reorganisation . . . — — (74,700) (74,700) —
Proceeds from loans from shareholder . — — 74,700 74,700 —
Cash paid relating to other financing
activities . . . . . . . . . . . . . . . . . . . — — (1,815) (421) (267)
Net cash (used in)/generate from
financing activities . . . . . . . . . . . . (30,600) (23,911) 14,037 45,491 (23,403)
------------ ---------- ------------ --------- ---------
equivalents . . . . . . . . . . . . . . . . . 4,472 56,853 56,514 32,351 6,175
Cash and cash equivalents at beginning
of year/period . . . . . . . . . . . . . . . . 38,689 43,161 100,094 100,094 160,597
Effect of movements in exchange rates
on cash held . . . . . . . . . . . . . . . . — 80 3,989 2,366 (1,144)
Cash and cash equivalents
at end of year/period . . . . . . . . . . 43,161 100,094 160,597 134,811 165,628
— I-9 —
NOTES TO THE FINANCIAL STATEMENTS
1 BASIS OF PREPARATION AND PRESENTATION OF HISTORICAL FINANCIAL INFORMATION
AK Medical Holdings Limited (the “Company”) was incorporated in Cayman Islands on 17 July 2015 as an exempted
company with limited liability under the Companies Law (2011 Revision) (as consolidated and revised) of the Cayman
Islands.
The Company is an investment holding company and has not carried on any business since the date of its
incorporation save for the group reorganisation mentioned below. The Company and its subsidiaries (together, “the
Group”) are principally engaged in design, develop, produce and market orthopedic joint implants and related products.
Prior to the incorporation of the Company, the Group’s business were conducted through Beijing AKEC Medical Co.,
Ltd. (“AK Medical Beijing”) and its subsidiary. To rationalize the corporate structure in preparation of the listing of the
Company’s shares on The Stock Exchange of Hong Kong Limited, the Group underwent the Reorganisation, as detailed
in the section headed “History, Reorganisation and Development” in the Prospectus. Upon completion of the
Reorganisation, the Company became the holding company of the Group. As AK Medical Beijing was controlled by Mr. Li
Zhijiang before and after the Reorganisation and therefore there were no changes in the economic substance of the
ownership and the business of the Group. The Reorganisation only involved inserting newly formed entities with no
substantive operations as new holding companies of AK Medical Beijing, the former holding company of the Group, during
the Relevant Periods. Accordingly, the Reorganisation has been accounted for using a principle similar to that for a reverse
acquisition with AK Medical Beijing treated as the acquirer for accounting purposes. The Financial Information has been
prepared as a continuation of AK Medical Beijing and the assets and liabilities of AK Medical Beijing and its subsidiary are
recognised and measured at their historical carrying values prior to the Reorganisation. All material intra-group
transactions and balances have been eliminated on consolidation in preparing the Historical Financial Information.
As at the date of this report, no audited financial statements have been prepared for the Company, AK Medical
Investment Limited (“AK Medical BVI”), Bright AK Limited (“Bright AK HK”, formerly known as OrbiMed Asia AK Limited HK)
and AK Medical International Limited (“AK Medical HK”) and as they either have not carried on any business since the date
of incorporation or are investment holding companies and not subject to statutory audit requirements under the relevant
rules and regulations in the jurisdiction of incorporation.
The financial statements of the subsidiaries of the Group for which there are statutory requirements were prepared
in accordance with the relevant accounting rules and regulations applicable to entities in the countries in which they were
incorporated and/or established.
The following list contains details of the company in the Financial Information that is subject to audit during the
Relevant Periods and the name of the respective auditors.
Name of company Financial Period Statutory auditor

AK Medical Beijing . . . . . . . . . . . For the years ended 31 December 立信會計師事務所 (特殊普通合夥)
2014, 2015 and 2016
Beijing XMKS Medical Co., Ltd. For the years ended 31 December 立信會計師事務所 (特殊普通合夥)
(AK Medical XMKS) . . . . . . . . . 2014, 2015 and 2016
ITI Medical Co., Ltd. (AK Medical For the year ended 31 December 常州德豪會計師事務所
Changzhou) . . . . . . . . . . . . . . 2016
At the date of this report, the Company has direct or indirect interests in the following subsidiaries, all of which are
private companies, particulars of which are set out below:
Percentage of equity attributable to Company

Place and
date of Group’s
incorporation/ Registered effective Held by the Held by Principal
Name of company establishment capital interest Company subsidiaries activities
AK Medical BVI . . . . . . BVI 21/07/2015 US$50,000 100% 100% — Investing holding
company
Bright AK HK . . . . . . . Hong Kong HK$10,000 100% — 100% Investing holding

07/07/2015 company
AK Medical HK . . . . . . Hong Kong US$1 100% — 100% Investing holding

28/07/2015 company
— I-10 —
Percentage of equity attributable to Company

Place and
date of Group’s
incorporation/ Registered effective Held by the Held by Principal
Name of company establishment capital interest Company subsidiaries activities
AK Medical Beijing* The PRC RMB100,000,000 100% — 100% Design, develop,
北京愛康宜誠醫療器材 08/05/2003 produce and
有限公司 . . . . . . . . . market
orthopedic joint
implants and
related products
AK Medical XMKS The PRC RMB500,000 100% — 100% Sales of

北京西麥克斯醫療器械 24/07/2007 orthopedic joint
有限公司 . . . . . . . . . implants
products
AK Medical Changzhou The PRC US$13,200,000 100% — 100% Produce and

天衍醫療器材有限公司 . . 28/03/2016 market
orthopedic joint
implants and
related products
*: The English translation of the company names for entities established in the PRC is for reference only.
The official names of the companies established in the PRC are in Chinese.
All companies now comprising the Group have adopted 31 December as their financial year end date.
The Historical Financial Information has been prepared in accordance with all applicable International Financial
Reporting Standards (“IFRSs”) which collective term includes all applicable individual International Financial Reporting
Standards, International Accounting Standards and Interpretations issued by the International Accounting Standards
Board (“IASB”). Further details of the significant accounting policies adopted are set out in Note 2.
The IASB has issued a number of new and revised IFRSs. For the purpose of preparing this Historical Financial
Information, the Group has adopted all applicable new and revised IFRSs to the Relevant Periods, except for any new
standards or interpretations that are not yet effective for the accounting period ended 30 June 2017. The revised and new
accounting standards and interpretations issued but not yet effective for the accounting year beginning 1 January 2017 are
set out in Note 28.
The Historical Financial Information also complies with the applicable disclosure provisions of the Rules Governing
the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).
The accounting policies set out below have been applied consistently to all periods presented in the Historical
The Stub Period Corresponding Financial Information has been prepared in accordance with the same basis of
preparation and presentation adopted in respect of the Historical Financial Information.
2 SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of measurement
The Financial Information is presented in Renminbi (“RMB”), rounded to the nearest thousand, which the functional
currency of the Company is United States dollars (US$). The Company’s primary subsidiaries were incorporated in the
People’s Republic of China (the “PRC”) and the subsidiaries considered RMB as their functional currency. As the operation
of the Group during the Relevant Periods are within the PRC, the Group determined to present these financial statements
in RMB, unless otherwise stated.
The Financial Information is prepared on the historical cost basis.
— I-11 —
(b) Use of estimates and judgments
The preparation of Financial Information in conformity with IFRSs requires management to make judgements,
estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and
expenses. The estimates and associated assumptions are based on historical experience and various other factors that
are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about
carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from
these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the
revision and future periods if the revision affects both current and future periods.
Judgements made by management in the application of IFRSs that have significant effect on the Financial
Information and major sources of estimation uncertainty are discussed in note 2.
(c) Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed, or has rights, to
variable returns from its involvement with the entity and has the ability to affect those returns through its power over the
entity. When assessing whether the Group has power, only substantive rights (held by the Group and other parties) are
considered.
An investment in a subsidiary is consolidated into the consolidated financial statements from the date that control
commences until the date that control ceases. Intra-group balances, transactions and cash flows and any unrealised
profits arising from intra-group transactions are eliminated in full in preparing the consolidated financial statements.
Unrealised losses resulting from intra-group transactions are eliminated in the same way as unrealised gains but only to
the extent that there is no evidence of impairment.
Changes in the Group’s interests in a subsidiary that do not result in a loss of control are accounted for as equity
transactions, whereby adjustments are made to the amounts of controlling and non-controlling interests within
consolidated equity to reflect the change in relative interests, but no adjustments are made to goodwill and no gain or loss
is recognised.
When the Group loses control of a subsidiary, it is accounted for as a disposal of the entire interest in that subsidiary,
with a resulting gain or loss being recognised in profit or loss. Any interest retained in that former subsidiary at the date
when control is lost is recognised at fair value and this amount is regarded as the fair value on initial recognition of a
financial asset or, when appropriate, the cost on initial recognition of an investment in an associate or joint venture.
In the Company’s statement of financial position, an investment in a subsidiary is stated at cost less impairment
losses (see note 2(h), unless the investment is classified as held for sale).
(d) Other investments in debt and equity securities
The Group’s and the Company’s policies for investments in debt and equity securities, other than investments in
subsidiaries, associates and joint ventures, are as follows:
Investments in debt and equity securities are initially stated at fair value, which is their transaction price unless it
is determined that the fair value at initial recognition differs from the transaction price and that fair value is evidenced by
a quoted price in an active market for an identical asset or liability or based on a valuation technique that uses only data
from observable markets. Cost includes attributable transaction costs, except where indicated otherwise below.
The Company did not have any financial assets and financial liabilities at fair value through profit or loss and
held-to-maturity investments in the current or comparative accounting periods.
Investments in securities which do not fall into any of the above categories are classified as available-for-sale
securities. At the end of each reporting period the fair value is remeasured, with any resultant gain or loss being recognised
in other comprehensive income and accumulated separately in equity in the fair value reserve. As an exception to this,
investments in equity securities that do not have a quoted price in an active market for an identical instrument and whose
fair value cannot otherwise be reliably measured are recognised in the statement of financial position at cost less
impairment losses (see note 2(h)). Interest income from debt securities calculated using the effective interest method are
recognised in profit or loss in accordance with the policies set out in note 2(p)(ii), respectively. Foreign exchange gains
and losses resulting from changes in the amortised cost of debt securities are also recognised in profit or loss.
When the investments are derecognised or impaired (see note 2(h)), the cumulative gain or loss recognised in equity
is reclassified to profit or loss. Investments are recognised /derecognised on the date the Group commits to purchase / sell
the investments or they expire.
— I-12 —
(e) Property, plant and equipment
The following items of property, plant and equipment are stated at cost less accumulated depreciation and
impairment losses (see note 2(h)).
The cost of self-constructed items of property, plant and equipment includes the cost of materials, direct labour, the
initial estimate, where relevant, of the costs of dismantling and removing the items and restoring the site on which they
are located, and an appropriate proportion of production overheads and borrowing costs.
Gains or losses arising from the retirement or disposal of an item of property, plant and equipment are determined
as the difference between the net disposal proceeds and the carrying amount of the item and are recognised in profit or
loss on the date of retirement or disposal.
Depreciation is calculated to write off the cost of items of property, plant and equipment, less their estimated residual
value, if any, using the straight line method over their estimated useful lives are as follows:
– Buildings Buildings held for own use which are situated on leasehold land
are depreciated over the shorter of the unexpired term of lease
and their estimated useful lives, being no more than 20 years
after the date of completion
– Leasehold improvements Over the remaining unexpired term of the lease
– Plant and machinery 3-15 years
– Motor vehicles 4-10 years
– Office equipment and furniture 3-5 years
Both the useful life of assets and its residual value, if any, are reviewed annually.
No depreciation is provided in respect of construction in progress.
(f) Intangible assets
Expenditure on research activities is recognised as an expense in the period in which it is incurred. Expenditure on
development activities is capitalised if the product or process is technically and commercially feasible and the Group has
sufficient resources and the intention to complete development. The expenditure capitalised includes the costs of
materials, direct labour, and an appropriate proportion of overheads and borrowing costs, where applicable. Capitalised
development costs are stated at cost less accumulated amortisation and impairment losses (see note 2(h)). Other
development expenditure is recognised as an expense in the period in which it is incurred.
Other intangible assets that are acquired by the Group are stated at cost less accumulated amortisation (where the
estimated useful life is finite) and impairment losses (see note 2(h)). Expenditure on internally generated goodwill and
brands is recognised as an expense in the period in which it is incurred.
Amortisation of intangible assets with finite useful lives is charged to profit or loss on a straight-line basis over the
assets’ estimated useful lives. The following intangible assets with finite useful lives are amortised from the date they are
available for use and their estimated useful lives are as follows:
Software and others 3-10 years

Patents 10 years
Capitalised development costs 5 years
Both the period and method of amortisation are reviewed annually.
Intangible assets are not amortised while their useful lives are assessed to be indefinite. Any conclusion that the
useful life of an intangible asset is indefinite is reviewed annually to determine whether events and circumstances continue
to support the indefinite useful life assessment for that asset. If they do not, the change in the useful life assessment from
indefinite to finite is accounted for prospectively from the date of change and in accordance with the policy for amortisation
of intangible assets with finite useful lives as set out above.
(g) Leased assets
An arrangement, comprising a transaction or a series of transactions, is or contains a lease if the Group determines
that the arrangement conveys a right to use a specific asset or assets for an agreed period of time in return for a payment
or a series of payments. Such a determination is made based on an evaluation of the substance of the arrangement and
is regardless of whether the arrangement takes the legal form of a lease.
— I-13 —
(i) Classification of assets leased to the Group
Assets that are held by Group under leases which transfer to the Group substantially all the risks and rewards
of ownership are classified as being held under finance leases. Leases which do not transfer substantially all the
risks and rewards of ownership to the Group are classified as operating leases.
(ii) Operating lease charges
Where the Group has the use of assets held under operating leases, payments made under the leases are
charged to profit or loss in equal instalments over the accounting periods covered by the lease term, except where
an alternative basis is more representative of the pattern of benefits to be derived from the leased asset. Lease
incentives received are recognised in profit or loss as an integral part of the aggregate net lease payments made.
Contingent rentals are charged to profit or loss in the accounting period in which they are incurred.
The cost of acquiring land held under an operating lease is amortised on a straight-line basis over the period
of the lease term except where the property is classified as an investment property or is held for development for
sale.
(h) Impairment of assets
(i) Impairment of investments in debt and equity securities and other receivables
Investments in debt and equity securities and other current and non-current receivables that are stated at cost
or amortised cost or are classified as available-for-sale securities are reviewed at the end of each reporting period
to determine whether there is objective evidence of impairment. Objective evidence of impairment includes
observable data that comes to the attention of the Group about one or more of the following loss events:
– significant financial difficulty of the debtor;
– a breach of contract, such as a default or delinquency in interest or principal payments;
– it becoming probable that the debtor will enter bankruptcy or other financial reorganisation;
– significant changes in the technological, market, economic or legal environment that have an adverse
effect on the debtor;
– a significant or prolonged decline in the fair value of an investment in an equity instrument below its
cost.
If any such evidence exists, any impairment loss is determined and recognised as follows:
– For trade and other current receivables and other financial assets carried at amortised cost, the
impairment loss is measured as the difference between the asset’s carrying amount and the present
value of estimated future cash flows, discounted at the financial asset’s original effective interest rate
(i.e. the effective interest rate computed at initial recognition of these assets), where the effect of
discounting is material. This assessment is made collectively where these financial assets share similar
risk characteristics, such as similar past due status, and have not been individually assessed as
impaired. Future cash flows for financial assets which are assessed for impairment collectively are
based on historical loss experience for assets with credit risk characteristics similar to the collective
group.
If in a subsequent period the amount of an impairment loss decreases and the decrease can be linked
objectively to an event occurring after the impairment loss was recognised, the impairment loss is
reversed through profit or loss. A reversal of an impairment loss shall not result in the asset’s carrying
amount exceeding that which would have been determined had no impairment loss been recognised in
prior years.
For available-for-sale securities, the cumulative loss that has been recognised in the fair value reserve is
reclassified to profit or loss. The amount of the cumulative loss that is recognised in profit or loss is the difference
between the acquisition cost (net of any principal repayment and amortisation) and current fair value, less any
impairment loss on that asset previously recognised in profit or loss.
Impairment losses recognised in profit or loss in respect of available-for-sale equity securities are not
reversed through profit or loss. Any subsequent increase in the fair value of such assets is recognised in other
comprehensive income.
— I-14 —
Impairment losses in respect of available-for-sale debt securities are reversed if the subsequent increase in
fair value can be objectively related to an event occurring after the impairment loss was recognised. Reversals of
impairment losses in such circumstances are recognised in profit or loss.
Impairment losses are written off against the corresponding assets directly, except for impairment losses
recognised in respect of trade debtors and bills receivable included within trade and other receivables, whose
recovery is considered doubtful but not remote. In this case, the impairment losses for doubtful debts are recorded
using an allowance account. When the Group is satisfied that recovery is remote, the amount considered
irrecoverable is written off against trade debtors and bills receivable directly and any amounts held in the allowance
account relating to that debt are reversed. Subsequent recoveries of amounts previously charged to the allowance
account are reversed against the allowance account. Other changes in the allowance account and subsequent
recoveries of amounts previously written off directly are recognised in profit or loss.
(ii) Impairment of other assets
Internal and external sources of information are reviewed at the end of each reporting period to identify
indications that the following assets may be impaired or, except in the case of goodwill, an impairment loss
previously recognised no longer exists or may have decreased:
– property, plant and equipment (other than properties carried at revalued amounts);
– intangible assets; and
– investments in subsidiary in the Company’s statement of financial position.
If any such indication exists, the asset’s recoverable amount is estimated. In addition, for goodwill, intangible
assets that are not yet available for use and intangible assets that have indefinite useful lives, the recoverable
amount is estimated annually whether or not there is any indication of impairment.
– Calculation of recoverable amount
The recoverable amount of an asset is the greater of its fair value less costs of disposal and value in
use. In assessing value in use, the estimated future cash flows are discounted to their present value using
a pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset. Where an asset does not generate cash inflows largely independent of those from other
assets, the recoverable amount is determined for the smallest group of assets that generates cash inflows
independently (i.e. a cash-generating unit).
– Recognition of impairment losses
An impairment loss is recognised in profit or loss if the carrying amount of an asset, or the
cash-generating unit to which it belongs, exceeds its recoverable amount. Impairment losses recognised in
respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated
to the cash-generating unit (or group of units) and then, to reduce the carrying amount of the other assets in
the unit (or group of units) on a pro rata basis, except that the carrying value of an asset will not be reduced
below its individual fair value less costs of disposal (if measurable) or value in use (if determinable).
– Reversals of impairment losses
In respect of assets, an impairment loss is reversed if there has been a favourable change in the
estimates used to determine the recoverable amount. An impairment loss in respect of goodwill is not
reversed.
A reversal of an impairment loss is limited to the asset’s carrying amount that would have been
determined had no impairment loss been recognised in prior years. Reversals of impairment losses are
credited to profit or loss in the year in which the reversals are recognised.
(i) Inventories
Inventories are carried at the lower of cost and net realisable value.
Cost is calculated using the weighted average cost formula and comprises all costs of purchase, costs of conversion
and other costs incurred in bringing the inventories to their present location and condition.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of
completion and the estimated costs necessary to make the sale.
— I-15 —
When inventories are sold, the carrying amount of those inventories is recognised as an expense in the period in
which the related revenue is recognised. The amount of any write-down of inventories to net realisable value and all losses
of inventories are recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of
any write-down of inventories is recognised as a reduction in the amount of inventories recognised as an expense in the
period in which the reversal occurs.
(j) Trade and other receivables
Trade and other receivables are initially recognised at fair value and thereafter stated at amortised cost using the
effective interest method, less allowance for impairment of doubtful debts (see note 2(h)), except where the receivables
are interest-free loans made to related parties without any fixed repayment terms or the effect of discounting would be
immaterial. In such cases, the receivables are stated at cost less allowance for impairment of doubtful debts.
Bills receivable are derecognised if substantially all the risks and rewards of ownership of the bills receivable are
transferred. If substantially all the risks and rewards of ownership of bills receivable are retained, the bills receivable are
continued to be recognised in the statement of financial position.
(k) Trade and other payables
Trade and other payables are initially recognised at fair value. Trade and other payables are subsequently stated
at amortised cost unless the effect of discounting would be immaterial, in which case they are stated at cost.
(l) Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and on hand, demand deposits with banks and other financial
institutions, and short-term, highly liquid investments that are readily convertible into known amounts of cash and which
are subject to an insignificant risk of changes in value, having been within three months of maturity at acquisition.
(m) Employee benefits
Salaries, annual bonuses, paid annual leave, contributions to defined contribution retirement plans and the cost of
non-monetary benefits are accrued in the year in which the associated services are rendered by employees. Where
payment or settlement is deferred and the effect would be material, these amounts are stated at their present values.
Contributions to appropriate local defined contribution retirement schemes pursuant to the relevant labor rules and
regulations in the PRC are recognised as expenses in profit or loss as incurred, except to the extent that they are included
in the cost of inventories not yet recognised as an expense.
(n) Income tax
Income tax for the year comprises current tax and movements in deferred tax assets and liabilities. Current tax and
movements in deferred tax assets and liabilities are recognised in profit or loss except to the extent that they relate to items
recognised in other comprehensive income or directly in equity, in which case the relevant amounts of tax are recognised
in other comprehensive income or directly in equity, respectively.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively
enacted at the end of the reporting period, and any adjustment to tax payable in respect of previous years.
Deferred tax assets and liabilities arise from deductible and taxable temporary differences respectively, being the
differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases.
Deferred tax assets also arise from unused tax losses and unused tax credits.
All deferred tax liabilities, and all deferred tax assets to the extent that it is probable that future taxable profits will
be available against which the asset can be utilised, are recognised. Future taxable profits that may support the recognition
of deferred tax assets arising from deductible temporary differences include those that will arise from the reversal of
existing taxable temporary differences, provided those differences relate to the same taxation authority and the same
taxable entity, and are expected to reverse either in the same period as the expected reversal of the deductible temporary
difference or in periods into which a tax loss arising from the deferred tax asset can be carried back or forward. The same
criteria are adopted when determining whether existing taxable temporary differences support the recognition of deferred
tax assets arising from unused tax losses and credits, that is, those differences are taken into account if they relate to the
same taxation authority and the same taxable entity, and are expected to reverse in a period, or periods, in which the tax
loss or credit can be utilised.
The carrying amount of a deferred tax asset is reviewed at the end of each reporting period and is reduced to the
extent that it is no longer probable that sufficient taxable profits will be available to allow the related tax benefit to be
utilised. Any such reduction is reversed to the extent that it becomes probable that sufficient taxable profits will be
available.
— I-16 —
Additional income taxes that arise from the distribution of dividends are recognised when the liability to pay the
related dividends is recognised.
Current tax balances and deferred tax balances, and movements therein, are presented separately from each other
and are not offset. Current tax assets are offset against current tax liabilities, and deferred tax assets against deferred tax
liabilities, if the Company or the Group has the legally enforceable right to set off current tax assets against current tax
liabilities and the following additional conditions are met:
– in the case of current tax assets and liabilities, the Company or the Group intends either to settle on a net
basis, or to realise the asset and settle the liability simultaneously; or
– in the case of deferred tax assets and liabilities, if they relate to income taxes levied by the same taxation
authority on either:
– the same taxable entity; or
– different taxable entities, which, in each future period in which significant amounts of deferred tax
liabilities or assets are expected to be settled or recovered, intend to realise the current tax assets and
settle the current tax liabilities on a net basis or realise and settle simultaneously.
(o) Provisions and contingent liabilities
Provisions are recognised for other liabilities of uncertain timing or amount when the Group or the Company has a
legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will
be required to settle the obligation and a reliable estimate can be made. Where the time value of money is material,
provisions are stated at the present value of the expenditure expected to settle the obligation.
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated
reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote.
Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future
events are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.
(p) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Provided it is probable that the
economic benefits will flow to the Group and the revenue and costs, if applicable, can be measured reliably, revenue is
recognised in profit or loss as follows:
(i) Sale of goods
Revenue is recognised when goods are delivered at the customers’ premises which is taken to be the point
in time when the customer has accepted the goods and the related risks and rewards of ownership. Revenue
represented the sales value of goods sold less rebates, returns, discounts and value added tax (“VAT”).
Loyalty programme
Revenue is allocated between the loyalty programme and the other components of the sale. The amount
allocated to the loyalty programme is deferred, and is recognised as revenue when the Group has fulfilled its
obligations to supply the discounted products under the terms of the programme or then it is no longer probable that
the sales rebate granted under the programme will be redeemed.
(ii) Interest income
Interest income is recognised as it accrues using the effective interest method.
(iii) Government grants
Government grants are recognised in the statement of financial position initially when there is reasonable
assurance that they will be received and that the Group will comply with the conditions attaching to them. Grants
that compensate the Group for expenses incurred are recognised as income in profit or loss on a systematic basis
in the same periods in which the expenses are incurred. Grants relating to assets are included in non-current
liabilities as deferred income and are credited in the profit and loss on a straight-line basis over the expected useful
lives of the related assets. A non-monetary government grant is recorded at a nominal amount.
— I-17 —
(q) Translation of foreign currencies
Foreign currency transactions during the year are translated at the foreign exchange rates ruling at the transaction
dates. Monetary assets and liabilities denominated in foreign currencies are translated at the foreign exchange rates ruling
at the end of the reporting period. Exchange gains and losses are recognised in profit or loss.
Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated
using the foreign exchange rates ruling at the transaction dates.
The results of foreign operations are translated into RMB at the exchange rates approximating the foreign exchange
rates ruling at the dates of the transactions. Statement of financial position items are translated into RMB at the closing
foreign exchange rates at the end of the reporting period. The resulting exchange differences are recognised in other
comprehensive income and accumulated separately in equity in the exchange reserve.
(r) Related parties
(i) A person, or a close member of that person’s family, is related to the Group if that person:
a. has control or joint control over the Group;
b. has significant influence over the Group; or
c. is a member of the key management personnel of the Group or the Group’s parent.
(ii) An entity is related to the Group if any of the following conditions applies:
a. The entity and the Group are members of the same group (which means that each parent, subsidiary
and fellow subsidiary is related to the others).
b. One entity is an associate or joint venture of the other entity (or an associate or joint venture of a
member of a group of which the other entity is a member).
c. Both entities are joint ventures of the same third party.
d. One entity is a joint venture of a third entity and the other entity is an associate of the third entity.
e. The entity is a post-employment benefit plan for the benefit of employees of either the Group or an
entity related to the Group.
f. The entity is controlled or jointly controlled by a person identified in note 2(r)(i).
g. A person identified in note 2(r)(i) has significant influence over the entity or is a member of the key
management personnel of the entity (or of a parent of the entity).
h. The entity, or any member of a group of which it is a part, provides key management personnel services
to the Group or to the Group’s parent.
Close members of the family of a person are those family members who may be expected to influence, or be
influenced by, that person in their dealings with the entity.
(s) Segment reporting
Operating segments, and the amounts of each segment item reported in the Financial Information, are identified
from the Financial Information provided regularly to the Group’s most senior executive management for the purposes of
allocating resources to, and assessing the performance of, the Group’s various lines of business and geographical
locations.
Individually material operating segments are not aggregated for financial reporting purposes unless the segments
have similar economic characteristics and are similar in respect of the nature of products and services, the nature of
production processes, the type or class of customers, the methods used to distribute the products or provide the services,
and the nature of the regulatory environment. Operating segments which are not individually material may be aggregated
if they share a majority of these criteria.
— I-18 —
3 SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGMENTS
Estimates and judgments are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.
The selection of critical accounting policies, the judgments and other uncertainties affecting application of those
policies and the sensitivity of reported results to changes in conditions and assumptions are factors to be considered when
reviewing the Financial Information. The significant accounting policies are set out in note 2. Other key sources of
estimation uncertainty in the preparation of the Financial Information are as follows:
(a) Depreciation
Property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives, after taking
into account the estimated residual value. The Group reviews at the end of each reporting period the estimated useful lives
of an asset and its residual value, if any, based on the Group’s historical experience with similar assets and taking into
account anticipated technological changes. The depreciation expense for future periods is adjusted if there are significant
changes from previous estimates.
(b) Impairment of trade and other receivables
The Group evaluates whether there is any objective evidence that trade and other receivables are impaired, and
estimates allowances for doubtful debts as a result of the inability of the debtors to make required payments. The Group
bases the estimates on the ageing of the trade and other receivables balance, credit-worthiness of the customer and
historical write-off experience. If the financial condition of the debtors were to deteriorate, actual write-offs would be higher
than estimated.
(c) Net realisable value of inventories
Net realisable value of inventories is the estimated selling price in the ordinary course of business, less estimated
costs to completion and selling expenses. These estimates are based on the current market condition and the historical
experience of manufacturing and selling products of a similar nature. These estimates could change significantly as a
result of changes in customer preferences and competitor actions. Management reassesses these estimates at the end
of each reporting period.
(d) Income tax
The Group is subject to PRC Enterprise Income Tax, Hong Kong profits tax and Cayman Islands Income Tax.
Judgment is required in determining the provision for income tax. There are transactions during the ordinary course of
business, for which calculation of the ultimate tax determination is uncertain. Where the final outcome is different from the
amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period
in which such determination is made. Recognition of deferred tax depends on the management’s expectation of future
taxable profit that will be available. The outcome of their actual utilisation may be different.
(e) Sales return or exchanges
The Group’s distribution agreements do not allow product returns or exchanges without the management’s consent.
However, in practice, the Group has historically accepted certain returns and exchanges by distributors of orthopedic joint
implants. The Group believes that sales exchanges would not result in any significant outflow of the Group’s resources
embodying economic benefits. Based on past experience, the percentage of subsequent returns will be approximately 2%
of annual sales. Therefore, the Group has recognised revenue with a corresponding provision against revenue for
estimated returns with 2% of annual sales for the Relevant Periods.
— I-19 —
4 REVENUE AND SEGMENT INFORMATION
(a) Revenue
The principal activities of the Group are manufacturing and sale of orthopedic joint implants and its complete set of
surgical instrument.
The amount of each significant category of revenue recognised during the years is as follows:
Six months ended

2014 2015 2016 2016 2017
(Unaudited)
Knee replacement implants . . . . . 45,566 60,567 83,008 35,418 47,417

Hip replacement implants . . . . . . 92,734 132,692 158,871 69,062 94,594
3D-printed products . . . . . . . . . — 1,060 12,131 3,004 9,777
Third party orthopedic products . . 9,013 9,149 10,785 5,292 6,893
Others . . . . . . . . . . . . . . . . . . 965 2,696 5,982 2,571 3,836
148,278 206,164 270,777 115,347 162,517
The Group’s customer base is diversified. There was no customer with whom transactions have exceeded 10% of
the Group’s revenue during the years ended 31 December 2014, 2015, 2016 and 6 months ended 30 June 2016 and 2017.
Details of concentrations of credit risk arising from major customers are set out in note 25(a).
(b) Segment information
The Group has one reportable segment, which is manufacturing and sale of orthopedic joint implants.
The Group’s operations, assets and most of the customers are located in the PRC. Accordingly, no geographic
information of revenue, non-current assets and customers is presented.
5 OTHER INCOME
Six months ended

2014 2015 2016 2016 2017
(Unaudited)
Government grant . . . . . . . . . . 1,649 685 778 376 563
Others . . . . . . . . . . . . . . . . . . 129 138 15 (8) 1,291
1,778 823 793 368 1,854
— I-20 —
6 PROFIT BEFORE TAX
Profit before tax is arrived at after charging:
(a) Staff costs
Six months ended

2014 2015 2016 2016 2017
(Unaudited)
Salaries, wages and other
benefits. . . . . . . . . . . . . . . . 21,251 30,048 38,632 17,179 22,540
Contribution to defined
contribution retirement
scheme* . . . . . . . . . . . . . . . 1,719 2,127 2,405 1,184 1,408
22,970 32,175 41,037 18,363 23,948
* Employees of the Group’s PRC subsidiaries are required to participate in a defined contribution retirement
scheme administered and operated by the local municipal governments where the subsidiaries are registered.
The Group’s PRC subsidiaries contribute funds which are calculated on certain percentages of the average
employee salary as agreed by the respective local municipal governments to the scheme to fund the
retirement benefits of the employees.
The Group has no other material obligation for the payment of retirement benefits other than the annual
contributions described above.
(b) Other items
Six months ended

2014 2015 2016 2016 2017
(Unaudited)
Cost of inventories* . . . . . . . . . 54,903 72,783 88,826 37,998 53,843
Amortisation of intangible assets . 247 449 907 422 588
Depreciation of property, plant
and equipment . . . . . . . . . . . 4,276 4,641 7,865 3,316 5,178
Impairment losses of trade and
other receivables . . . . . . . . . . 220 456 664 437 2,267
Operating lease charge . . . . . . . 2,583 3,124 3,648 1,798 3,335
Auditors’ remuneration
– Audit services . . . . . . . . . . . . 61 220 184 75 49
* Cost of inventories includes RMB11,305,000, RMB14,261,000, RMB16,912,000, RMB5,932,000 and

RMB8,988,000.00 in years ended 31 December 2014, 2015 and 2016 and 6 months ended 30 June 2016 and
2017, respectively, relating to staff costs, depreciation and amortisation expenses and operating lease
charges, which are also included in the respective total amounts disclosed separately above.
— I-21 —
7 NET FINANCE INCOME
Six months ended

2014 2015 2016 2016 2017
(Unaudited)
Interest income from bank
deposits . . . . . . . . . . . . . . . 725 1,211 467 140 532
Investment income from
available-for-sale financial
assets . . . . . . . . . . . . . . . . 1,690 1,123 — — —
Foreign currency exchange
gain/(loss) . . . . . . . . . . . . . . 91 660 1,190 848 (54)
2,506 2,994 1,657 988 478
8 INCOME TAX EXPENSE
(a) Amounts recognised in profit or loss
Six months ended

2014 2015 2016 2016 2017
(Unaudited)
Current tax expense – the PRC
Enterprise Income Tax
Provision for the year/period . . . . 9,498 11,747 15,594 5,969 9,822
Deferred tax
Origination and reversal of
temporary differences . . . . . . . (922) (703) 2,107 (502) (1,702)
8,576 11,044 17,701 5,467 8,120
Pursuant to the rules and regulations of the Cayman Islands, the Group is not subject to any income tax in the
Cayman Islands.
The Group has no assessable profit in Hong Kong during the Relevant Periods and is not subject to any Hong Kong
profits tax. Hong Kong profits tax rate during the Relevant Periods is 16.5%. The payments of dividends by Hong Kong
companies are not subject to any Hong Kong withholding tax.
In accordance with the Enterprise Income Tax Law (“Income Tax Law”) of the PRC, enterprise income tax rate for
the Group’s PRC subsidiary during the Relevant Periods is 25%. According to the relevant PRC income tax law, the
Company’s subsidiaries, AK Medical Beijing was certified as a New and High Technology Enterprise in Beijing since 2008,
and is entitled to a preferential income tax rate of 15%, which has been applied for each of the Relevant Periods. The
current certification of New and High Technology Enterprise held by AK Medical Beijing will be expired on 9 August 2020.
According to the New Tax Law and its implementation rules, dividends receivable by non-PRC resident corporate
investors from PRC-residents are subject to withholding tax at 10%, unless reduced by tax treaties or arrangements, for
profit earned since 1 January 2008. AK Medical HK and Bright AK HK were established during 2015 and would be subject
to PRC dividend withholding tax on dividends receivable from their PRC subsidiaries.
— I-22 —
(b) Reconciliation between income tax and accounting profit at applicable tax rates:
Six months ended

2014 2015 2016 2016 2017
(Unaudited)
Profit before tax . . . . . . . . . . . . 60,297 75,951 95,027 38,689 58,170
Tax calculated at statutory tax
rates applicable to profits in the
respective countries . . . . . . . . 15,074 18,988 23,757 9,672 14,543
Tax effect of:
Preferential income tax rates
applicable to subsidiaries . . . (5,893) (7,147) (8,767) (3,745) (5,820)
Expenses not deductible for
tax purpose . . . . . . . . . . . . 220 187 92 32 76
Additional deductible allowance
for research and development
expenses . . . . . . . . . . . . . (825) (984) (1,281) (492) (679)
PRC dividend withholding tax . . – – 3,900 – –
Income tax . . . . . . . . . . . . . . . 8,576 11,044 17,701 5,467 8,120
9 DIRECTORS’ EMOLUMENTS AND INDIVIDUALS WITH HIGHEST EMOLUMENTS
(a) Directors’ emoluments
Directors’ emoluments disclosed pursuant to section 383(1) of the Hong Kong Companies Ordinance and Part 2 of
the Companies (Disclosure of Information about Benefits of Directors) Regulation are as follows:
Salaries,
allowances Retirement
and benefits Discretionary scheme
2014 in kind bonuses contributions Total
RMB’000 RMB’000 RMB’000 RMB’000
Executive directors
Mr. Li Zhijiang (chairman) . . . . . . . . . . . . 195 44 12 251
Ms. Zhang Bin . . . . . . . . . . . . . . . . . . . 111 5 12 128
Mr. Zhang Chaoyang. . . . . . . . . . . . . . . 195 111 12 318
Ms. Zhao Xiaohong. . . . . . . . . . . . . . . . 111 13 12 136
Non-executive director
Mr. Li Wenming . . . . . . . . . . . . . . . . . . 30 — — 30
642 173 48 863
Salaries,
RMB’000 RMB’000 RMB’000 RMB’000
Executive directors
Mr. Li Zhijiang (chairman) . . . . . . . . . . . . 465 240 12 717
Ms. Zhang Bin . . . . . . . . . . . . . . . . . . . 171 72 12 255
Mr. Zhang Chaoyang. . . . . . . . . . . . . . . 333 152 12 497
Ms. Zhao Xiaohong. . . . . . . . . . . . . . . . 237 97 12 346
Mr. Li Wenming . . . . . . . . . . . . . . . . . . 30 — — 30
1,236 561 48 1,845
— I-23 —
Salaries,
RMB’000 RMB’000 RMB’000 RMB’000
Executive directors
Mr. Li Zhijiang (chairman) . . . . . . . . . . . . 743 — 11 754
Ms. Zhang Bin . . . . . . . . . . . . . . . . . . . 244 — 11 255
Mr. Zhang Chaoyang. . . . . . . . . . . . . . . 473 — 11 484
Ms. Zhao Xiaohong. . . . . . . . . . . . . . . . 430 66 11 507
Mr. Li Wenming . . . . . . . . . . . . . . . . . . 30 — — 30
1,920 66 44 2,030
Salaries,
6 months ended 30 June 2016 in kind bonuses contributions Total
RMB’000 RMB’000 RMB’000 RMB’000
Executive directors
Ms. Zhang Bin . . . . . . . . . . . . . . . . . . . 116 — 6 122
Ms. Zhao Xiaohong. . . . . . . . . . . . . . . . 199 49 6 254
Mr. Li Wenming . . . . . . . . . . . . . . . . . . 15 — — 15
931 49 24 1,004
Salaries,
6 months ended 30 June 2017 in kind bonuses contributions Total
RMB’000 RMB’000 RMB’000 RMB’000
Executive directors
Ms. Zhang Bin . . . . . . . . . . . . . . . . . . . 126 — 6 132
Ms. Zhao Xiaohong. . . . . . . . . . . . . . . . 231 45 6 282
Mr. Li Wenming . . . . . . . . . . . . . . . . . . 15 — — 15
986 45 24 1,055
— I-24 —
(b) Five highest paid individuals
During the year ended 2014, 2015, 2016 and 6 months ended 30 June 2016 and 2017, of the five individuals with
the highest emoluments, 2, 3, 3, 3 and 3 are directors whose emoluments are disclosed in note 9(a). The aggregate of the
emoluments in respect of the other 3, 2, 2, 2 and 2 individuals respectively, are as follows:
Six months ended

2014 2015 2016 2016 2017
(Unaudited)
Salaries and other emoluments . . 515 574 1,101 402 626
Discretionary bonuses . . . . . . . . 319 979 1,057 440 535
Retirement scheme contributions . . 22 11 22 5 10
Total . . . . . . . . . . . . . . . . . . . 856 1,564 2,180 847 1,171
Six months ended

2014 2015 2016 2016 2017
(Unaudited)
HK$
Nil-1,000,000 . . . . . . . . . . . . . 3 1 2 2 2
1,000,000-1,500,000 . . . . . . . . . — 1 — — —
10 EARNINGS PER SHARE
The calculation of basic earnings per share during the Relevant Periods is based on the profit for the respective
year/period and on the assumption that 750,000,000 ordinary shares of the Company had been issued throughout the
Relevant Periods comprising 100,000 ordinary shares in issue as at the date of the Prospectus which includes 90,000
ordinary shares and 10,000 preferred shares on an as-converted basis, and 749,900,000 ordinary shares to be issued
pursuant to the capitalisation issue as detailed in the section headed “Share Capital” in the Prospectus.
There were no dilutive potential ordinary shares during the Relevant Periods and, therefore, diluted earnings per
share are the same as the basic earnings per share.
11 DIVIDENDS
During the years ended 31 December 2014 and 2015, dividends of RMB30,600,000, RMB118,000,000 were
declared by AK Medical Beijing to its then shareholders.
During the year ended 31 December 2016 and six months ended 30 June 2017, dividends of RMB30,060,000 and
RMB23,136,000 were declared by the Company. All the dividends have been paid by 30 June 2017.
The rate of dividend and the number of shares ranking for dividends are not presented as such information is not
meaningful having regard to the purpose of the Financial Information.
The directors consider that the dividend payments made during the Relevant Periods are not indicative of the future
dividend policy of the Group.
— I-25 —
12 PROPERTY, PLANT AND EQUIPMENT
Office
equipment
Leasehold Plant and Motor and Construction
Buildings improvements machinery vehicles furniture in progress Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Cost
At 1 January 2014 . . 8,374 2,331 29,371 1,304 1,576 — 42,956
Additions. . . . . . . . — 945 2,561 979 640 1,074 6,199
Disposals . . . . . . . — — — — (42) — (42)
At 31 December
2014 and
1 January 2015 . . 8,374 3,276 31,932 2,283 2,174 1,074 49,113
Additions. . . . . . . . — 1,259 16,530 527 626 6,521 25,463
Transfer . . . . . . . . — — — — — (1,074) (1,074)
Disposals . . . . . . . — — — (438) (178) — (616)
At 31 December
2015 and
1 January 2016 . . 8,374 4,535 48,462 2,372 2,622 6,521 72,886
Additions. . . . . . . . — 4,228 19,935 54 418 4,268 28,903
Transfer . . . . . . . . 766 — 5,849 — — (6,615) —
Disposals . . . . . . . — — (187) — (59) — (246)
At 31 December
2016 and
1 January 2017 . . 9,140 8,763 74,059 2,426 2,981 4,174 101,543
Additions. . . . . . . . — 1,895 326 107 170 21,992 24,490
Transfer . . . . . . . . — — 3,641 — — (3,793) (152)
At 30 June 2017 . . . 9,140 10,658 78,026 2,533 3,151 22,373 125,881
-------- -------- --------- ------- -------- -------- ---------
Accumulated
depreciation
At 1 January 2014 . . (2,009) (1,780) (9,717) (769) (1,033) — (15,308)
Depreciation . . . . . (398) (455) (3,018) (161) (285) — (4,317)
Written back on
disposals . . . . . . — — — — 40 — 40
At 31 December
2014 and
1 January 2015 . . (2,407) (2,235) (12,735) (930) (1,278) — (19,585)
Depreciation . . . . . (398) (484) (3,401) (177) (452) — (4,912)
Written back on
disposals . . . . . . — — — 350 169 — 519
At 31 December
2015 and
1 January 2016 . . (2,805) (2,719) (16,136) (757) (1,561) — (23,978)
Depreciation . . . . . (526) (1,590) (5,083) (184) (536) — (7,919)
Written back on
disposals . . . . . . — — 135 — 56 — 191
At 31 December
2016 and
1 January 2017 . . (3,331) (4,309) (21,084) (941) (2,041) — (31,706)
Depreciation . . . . . (277) (1,117) (3,500) (96) (267) — (5,257)
At 30 June 2017 . . . (3,608) (5,426) (24,584) (1,037) (2,308) — (36,963)
-------- -------- --------- ------- -------- -------- ---------
Net book value:
At 1 January 2014 . . 6,365 551 19,654 535 543 — 27,648
At 31 December
2014 and
1 January 2015 . . 5,967 1,041 19,197 1,353 896 1,074 29,528
At 31 December
2015 and
1 January 2016 . . 5,569 1,816 32,326 1,615 1,061 6,521 48,908
At 31 December
2016 and
1 January 2017 . . 5,809 4,454 52,975 1,485 940 4,174 69,837
At 30 June 2017 . . . 5,532 5,232 53,442 1,496 843 22,373 88,918
Included in the building is a property held for own use situated on long-term leasehold land and located in the PRC.
Construction in progress comprises costs incurred on property, plant and equipment not yet completed and
prepayment for leasehold land at the end of each reporting period.
— I-26 —
13 INTANGIBLE ASSETS
Development
Software Patent costs Total
RMB’000 RMB’000 RMB’000 RMB’000
Cost:
At 1 January 2014 . . . . . . . . . . . . . . . . 603 835 — 1,438
Additions . . . . . . . . . . . . . . . . . . . . . . 191 463 758 1,412
Disposals . . . . . . . . . . . . . . . . . . . . . . — — — —
At 31 December 2014 and
1 January 2015 . . . . . . . . . . . . . . . . . 794 1,298 758 2,850
Additions . . . . . . . . . . . . . . . . . . . . . . 1,963 1,289 1,336 4,588
1 January 2016 . . . . . . . . . . . . . . . . . 2,757 2,587 2,094 7,438
Additions . . . . . . . . . . . . . . . . . . . . . . 767 — 771 1,538
Transfer . . . . . . . . . . . . . . . . . . . . . . . — 1,470 (1,470) —
1 January 2017 . . . . . . . . . . . . . . . . . 3,524 4,057 1,395 8,976
Additions . . . . . . . . . . . . . . . . . . . . . . 477 2,407 112 2,996
Transfer . . . . . . . . . . . . . . . . . . . . . . . 152 — — 152
At 30 June 2017 . . . . . . . . . . . . . . . . . 4,153 6,464 1,507 12,124
------- -------- ------- --------
Accumulated amortisation:
At 1 January 2014 . . . . . . . . . . . . . . . . (404) (376) — (780)
Amortisation . . . . . . . . . . . . . . . . . . . . (75) (175) — (250)
1 January 2015 . . . . . . . . . . . . . . . . . (479) (551) — (1,030)
Amortisation . . . . . . . . . . . . . . . . . . . . (152) (309) — (461)
1 January 2016 . . . . . . . . . . . . . . . . . (631) (860) — (1,491)
Amortisation . . . . . . . . . . . . . . . . . . . . (448) (466) — (914)
1 January 2017 . . . . . . . . . . . . . . . . . (1,079) (1,326) — (2,405)
Amortisation . . . . . . . . . . . . . . . . . . . . (268) (320) — (588)
At 30 June 2017 . . . . . . . . . . . . . . . . . (1,347) (1,646) — (2,993)
------- -------- ------- --------
Net book value:
At 1 January 2014 . . . . . . . . . . . . . . . . 199 459 — 658
1 January 2015 . . . . . . . . . . . . . . . . . 315 747 758 1,820
1 January 2016 . . . . . . . . . . . . . . . . . 2,126 1,727 2,094 5,947
1 January 2017 . . . . . . . . . . . . . . . . . 2,445 2,731 1,395 6,571
At 30 June 2017 . . . . . . . . . . . . . . . . . 2,806 4,818 1,507 9,131
The amortisation charge for the years is included in “General and administrative expenses” and “Research and
development expenses” in the consolidated statements of profit or loss and other comprehensive income.
— I-27 —
14 INVENTORIES
As at
2014 2015 2016 2017
RMB’000 RMB’000 RMB’000 RMB’000
Raw materials . . . . . . . . . . . . . . . . . . . 10,269 11,156 12,719 15,868
Work in progress . . . . . . . . . . . . . . . . . 7,100 14,188 9,361 11,921
Finished goods . . . . . . . . . . . . . . . . . . 17,351 33,056 45,725 57,059
34,720 58,400 67,805 84,848
15 BILLS AND TRADE RECEIVABLES
As at
2014 2015 2016 2017
RMB’000 RMB’000 RMB’000 RMB’000
Bills receivable . . . . . . . . . . . . . . . . . . 5,073 14,531 14,773 23,590
Trade receivables . . . . . . . . . . . . . . . . . 19,908 44,719 68,810 70,451
Less: Allowance for doubtful debts . . . . . . (933) (1,389) (2,053) (4,320)
18,975 43,330 66,757 66,131
(a) Ageing analysis
As at 31 December 2014, 2015, 2016 and 30 June 2017, the ageing analysis of trade receivables based on the
invoice date (or date of revenue recognition, if earlier), is as follows:
As at
2014 2015 2016 2017
RMB’000 RMB’000 RMB’000 RMB’000
Current to 3 months . . . . . . . . . . . . . . . 17,357 40,704 44,798 33,982
3 to 6 months . . . . . . . . . . . . . . . . . . . 239 953 10,460 14,994
6 to 12 months . . . . . . . . . . . . . . . . . . 689 1,164 7,020 15,917
Over 12 months . . . . . . . . . . . . . . . . . . 690 509 4,479 1,238
18,975 43,330 66,757 66,131
The credit terms agreed with customers were normally ranged from 1 month to 6 months from the date of billing. No
interest are charged on the trade receivables. Further details on the Group’s credit policy are set out in note 25(a).
Bills receivable are bank notes received from customer with expiration dates within 6 months.
(b) Impairment of trade debtors
Impairment losses in respect of trade debtors are recorded using an allowance account unless the Group is satisfied
that recovery of the amount is remote, in which case the impairment loss is written off against trade debtors directly (see
note 2(h)(i)).
At 31 December 2014, 2015, 2016 and 30 June 2017, trade debtors of nil, nil, nil and RMB2,309,000 was individually
determined to be impaired. The individually impaired receivable related to a customer that was in financial difficulties and
management assessed that the receivable may not to be recovered. Consequently specific allowance for doubtful debts
of RMB1,399,000 were recognised at 30 June 2017. Except for the individually impaired receivable, the allowances for
doubtful debts were made at each reporting dates based on a collective group basis assessment by aging for debts past
due.
— I-28 —
The movements in the allowance for doubtful debts are as follows:
Six months ended

2014 2015 2016 2016 2017
(Unaudited)
At the beginning of the
year/period . . . . . . . . . . . . . 713 933 1,389 1,389 2,053
Impairment loss recognised . . . . 220 456 664 437 2,267
At the end of the year/period. . . . 933 1,389 2,053 1,826 4,320
(c) Trade receivables that are not impaired
As at
2014 2015 2016 2017
RMB’000 RMB’000 RMB’000 RMB’000
Current and within 3 months . . . . . . . . . . 12,250 25,156 69,655 56,789
16 DEPOSITS, PREPAYMENTS AND OTHER RECEIVABLES
the Group
As at
2014 2015 2016 2017
RMB’000 RMB’000 RMB’000 RMB’000
Prepayments to suppliers . . . . . . . . . . . . 3,250 2,018 3,677 3,289
Deposits . . . . . . . . . . . . . . . . . . . . . . 1,035 1,002 1,051 1,986
Deferred listing expenses . . . . . . . . . . . . — 3,117 4,931 5,198
VAT recoverable. . . . . . . . . . . . . . . . . . — — 800 1,983
Others . . . . . . . . . . . . . . . . . . . . . . . . 823 1,481 2,066 753
5,108 7,618 12,525 13,209
the Company
As at 31 December As at 30 June
2015 2016 2017
RMB’000 RMB’000 RMB’000
Deferred listing expenses . . . . . . . . . . . . . . . . . . . . 2,012 2,285 2,285
Amount due from subsidiaries . . . . . . . . . . . . . . . . . 5,191 173,932 140,426
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 569 —
7,203 176,786 142,711
The above deposits, prepayments and other receivables do not contain impaired assets.
— I-29 —
17 AVAILABLE-FOR-SALE FINANCIAL ASSETS
As at
Note 2014 2015 2016 2017
RMB’000 RMB’000 RMB’000 RMB’000
Wealth management products . . . . . 24(d) 70,000 — — —
Available-for-sale financial assets are wealth management products issued by banks in the PRC with variable
interest rate.
18 CASH AND CASH EQUIVALENTS
the Group
As at
2014 2015 2016 2017
RMB’000 RMB’000 RMB’000 RMB’000
Cash at banks . . . . . . . . . . . . . . . . . . . 43,130 100,009 160,542 165,499
Cash on hand . . . . . . . . . . . . . . . . . . . 31 85 55 129
43,161 100,094 160,597 165,628
the Company
As at 31 December As at 30 June
2015 2016 2017
RMB’000 RMB’000 RMB’000
Cash at banks . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,752 5,317 17,189
19 TRADE PAYABLES
As at 31 December 2014, 2015, 2016 and 30 June 2017, the ageing analysis of trade creditors, based on the invoice
date, is as follows:
As at
2014 2015 2016 2017
RMB’000 RMB’000 RMB’000 RMB’000
Within 3 months. . . . . . . . . . . . . . . . . . 9,857 26,435 25,502 26,121
3 to 6 months . . . . . . . . . . . . . . . . . . . 3,774 2,010 3,436 6,983
6 to 12 months . . . . . . . . . . . . . . . . . . 490 467 4,138 8,888
More than 1 year . . . . . . . . . . . . . . . . . 570 496 664 1,982
14,691 29,408 33,740 43,974
All trade payables are expected to be settled within one year.
— I-30 —
20 ACCRUALS AND OTHER PAYABLES
As at
2014 2015 2016 2017
RMB’000 RMB’000 RMB’000 RMB’000
Advances and deposits from customers . . . 4,531 5,560 6,353 14,699
Other tax payables . . . . . . . . . . . . . . . . 5,864 21,018 10,497 15,570
Salary and welfare payables . . . . . . . . . . 5,184 7,600 8,721 8,900
Dividends payable . . . . . . . . . . . . . . . . – 6,896 — —
Accrued expenses . . . . . . . . . . . . . . . . 738 3,037 2,426 2,922
Others . . . . . . . . . . . . . . . . . . . . . . . . 213 910 3,198 3,785
16,530 45,021 31,195 45,876
All of the accruals and other payables are expected to be settled or recognised as income within one year or are
repayable on demand.
21 INCOME TAX IN THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(a) Current tax in the consolidated statements of financial position represents
As at
2014 2015 2016 2017
RMB’000 RMB’000 RMB’000 RMB’000
At the beginning of the year/period . . . . . . 1,582 2,707 5,875 8,917
Provision for PRC income tax for the
year/period . . . . . . . . . . . . . . . . . . . 9,498 11,747 15,594 9,822
Tax paid. . . . . . . . . . . . . . . . . . . . . . . (8,373) (8,579) (12,552) (7,357)
At the end of the year/period. . . . . . . . . . 2,707 5,875 8,917 11,382
(b) Deferred tax assets and liabilities
(i) The components of deferred tax assets recognised in the consolidated statements of financial position and
the movements during the Relevant Periods are as follows:
Unrealised
profit of Provisions
Deferred tax arising Deferred Government intra-group for sales
from: revenue grant transaction return Others Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2014 . . . . . 2,087 279 137 194 555 3,252
Credited/(charged) to
profit or loss (note 8) . . 165 566 140 71 (20) 922
At 31 December 2014 . . 2,252 845 277 265 535 4,174
At 1 January 2015 . . . . . 2,252 845 277 265 535 4,174

Credited to profit or loss
(note 8) . . . . . . . . . . 377 54 19 107 146 703
At 31 December 2015 . . 2,629 899 296 372 681 4,877
At 1 January 2016 . . . . . 2,629 899 296 372 681 4,877

Credited to profit or loss
(note 8) . . . . . . . . . . 659 332 416 117 269 1,793
At 31 December 2016 . . 3,288 1,231 712 489 950 6,670
At 1 January 2017 . . . . . 3,288 1,231 712 489 950 6,670

Credited/(charged) to
profit or loss (note 8) . . 43 (47) 646 115 945 1,702
At 31 December 2017 . . 3,331 1,184 1,358 604 1,895 8,372
— I-31 —
(ii) The components of deferred tax liabilities recognised in the consolidated statement of financial position and
the movements during the year are as follows:
PRC dividend
Deferred tax arising from: withholding tax
RMB’000
At 1 January 2014, 31 December 2014, 31 December 2015 . . . . . . . . . . . . . . . . –
Charged to profit or loss(note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,900

At 31 December 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,900
At 1 January 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,900

Charged to profit or loss (note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . –
At 30 June 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,900
The above recognised deferred tax assets and liabilities cannot be set off.
(iii) Deferred tax liabilities not recognised
Pursuant to Enterprise Income Tax Law in the PRC and its related regulations, the Group is subject to
withholding tax at 10% (unless reduced by tax treaties/arrangements) on dividends receivable from its PRC
subsidiaries in respect of their profits generated and on distribution of statutory surplus reserve upon
liquidation. As at 30 June 2017, temporary differences relating to the reserves of the Company’s PRC
subsidiaries amounted to RMB188,961,000, comprised retained profit of RMB156,342,000 and statutory
surplus reserve of RMB32,619,000. Except for dividend of RMB39,000,000 in 2016 proposed by AK Medical
Beijing on 28 August 2017, for which deferred tax liability of RMB3,900,000 recognised, no further deferred
tax liabilities were recognised as at 30 June 2017 as the Company controls the dividend policy of these
subsidiaries and it has been determined that retained profit as at 30 June 2017 of these subsidiaries will not
be distributed further in the future, and the Company has no plan to liquidate these subsidiaries in the
foreseeable future.
22 DEFERRED REVENUE/INCOME
As at
2014 2015 2016 2017
RMB’000 RMB’000 RMB’000 RMB’000
Government grant . . . . . . . . . . . . . . . . 5,631 5,993 8,208 7,892
Deferred revenue . . . . . . . . . . . . . . . . . 15,373 18,033 21,922 22,209
21,004 24,026 30,130 30,101
Non-current . . . . . . . . . . . . . . . . . . . . 5,631 5,993 8,208 7,892
Current . . . . . . . . . . . . . . . . . . . . . . . 15,373 18,033 21,922 22,209
Deferred revenue represents sales rebates granted to the customers the right to redeem the rebates through
purchase of the Group’s products at a discount in the future. The deferred revenue is estimated based on the relative fair
value of goods delivered and undelivered, and has taken into account the amount of rebates available to customers that
have not been redeemed and the expected forfeiture rate.
— I-32 —
23 PROVISIONS
As at 31 December 2014, 2015, 2016 and 30 June 2017, provisions are made for sales return.
Sales return
RMB’000
At 1 January 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,296
Additional provisions made . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,330
Provisions utilised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,862)
At 31 December 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,764
At 31 December 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,482
At 31 December 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,260
At 30 June 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,027
The provision for sales return relates mainly to sales during the past years. The provision has been estimated based
on historical sales return data associated with similar products. The Group expects to settle the majority of the liability over
the next year.
24 CAPITAL AND RESERVES
(a) Share capital
The Company was incorporated in the Cayman Islands as an exempted company with limited liability on 17 July
2015.
For the purpose of this Financial Information, the share capital in the consolidated statement of financial position as
at 31 December 2014 represented the issued share capital of AK Medical Beijing, and as at 31 December 2015
represented the aggregate amount of the issued share capital of AK Medical Beijing and the Company. Upon the
completion of the Reorganisation on 29 February 2016, the Company became the holding company of the Group. The
share capital as at 31 December 2016 and 30 June 2017 represented the issued share capital of the Company, being
100,000 shares of HK$0.01 each.
(i) On 31 March 2015, the board of directors of AK Medical Beijing approved the transfer of RMB 16,000,000
capital reserve to share capital.
(ii) As part of Reorganisation, OrbiMed Asia Partners II L.P. (“OrbiMed Asia”) agreed to subscribe for preferred
shares representing 10% of the issued share capital of the Company on a fully converted basis at an
aggregate consideration of US$ equivalent of RMB 140,000,000.
Upon full payment of the above mentioned consideration, 10,000 preferred shares of the Company will be
allotted to OrbiMed Asia. The preferred shares held by OrbiMed Asia will be automatically converted into
ordinary shares with an initial conversion ratio of 1:1 immediately before the completion of the proposed
public offering. According to the terms of the agreement, including the special rights granted to OrbiMed Asia
in respect of the preferred shares, as detailed in the section headed “History, Reorganisation and
Development” in the Prospectus, the preferred shares was treated as equity. Thus, the following consideration
payments by OrbiMed Asia are recorded as capital injections:
In October 2015, OrbiMed Asia injected the US$ 2,200,000 (equivalent to RMB14,000,000) through Bright AK
HK, a company wholly owned by OrbiMed Asia at that time, into AK Medical Beijing to increase its registered
capital in the amount of RMB5,556,000 (with the balance being contributed to the capital reserve of AK
Medical Beijing) in order to facilitate the Reorganisation.
In December 2015, OrbiMed Asia continued to injected US$ 9,257,000 (equivalent to RMB 60,000,000) into
the Company and the amount was recorded in share premium of the Company.
On 29 February 2016, OrbiMed Asia injected the remaining US$10,100,000 (equivalent to RMB66,000,000)
to the Company and all the consideration for preferred share subscription have been paid off by OrbiMed Asia.
— I-33 —
(iii) On 19 October 2015, AK Medical HK entered into an equity transfer agreement with the then shareholders of
AK Medical Beijing to acquire the 90% of the equity interests in AK Medical Beijing with total consideration
of RMB74,700,000. Such consideration had been fully settled by 7 April 2016, and was funded by
shareholder’s loans advanced by the controlling shareholder Ximalaya Limited.
On 13 April 2016, an amount of RMB74,700,000 of shareholder’s loans had been waived by Ximalaya Limited,
and capitalised in capital reserve of the Company.
(b) Reserves
(i) Share premium
Share premium represented the difference between the share capital and the amount of the net proceeds
received from its shareholders of the Company.
(ii) Capital reserve
Capital reserve comprises contributions by the shareholders at the respective dates and balances arising
from transactions with owners in their capacity as the equity owners.
(iii) Statutory reserve
Pursuant to applicable PRC regulations, all PRC subsidiaries of the Group are required to appropriate 10%
of their after-tax profit (after offsetting prior year losses) as determined in accordance with the PRC accounting rules
and regulations, to the statutory reserve until such reserve reaches 50% of the registered capital of each relevant
PRC subsidiary. The transfer to the statutory surplus reserve must be made before distribution of dividends to
shareholders. The statutory reserve can be utilised upon approval by the relevant authorities, to offset accumulated
losses or to increase capital of the subsidiary, provided that the balance after such issue is not less than 25% of its
registered capital.
(iv) Exchange reserve
The exchange reserve comprises exchange differences arising from the translation of the financial statements
of foreign operations. The reserve is dealt with in accordance with accounting policies set out in note 2(q).
(c) Reserves of the Company
Share Capital Retained Exchange

Note premium reserve profits reserve Total
Balance at 31 December 2015
and 1 January 2016 . . . . . . . 60,000 — (2,065) 73 58,008
Total comprehensive income for
the year . . . . . . . . . . . . . . . — — (68) 12,589 12,521
Capital injection . . . . . . . . . . . 24(a)(ii) 66,000 — — — 66,000
Waiver of shareholder’s loans . . 24(a)(iii) — 74,700 — — 74,700
Dividends declared . . . . . . . . . 11 (30,060) — — — (30,060)
Balance at 31 December 2016
and 1 January 2017 . . . . . . . 95,940 74,700 (2,133) 12,662 181,169
Total comprehensive income for
the period . . . . . . . . . . . . . . — — 1,477 (3,852) (2,375)
Dividends declared . . . . . . . . . 11 (23,136) — — — (23,136)
Balance at 30 June 2017 . . . . . 72,804 74,700 (656) 8,810 155,658
At 31 December 2015, 2016 and 30 June 2017, the aggregate amount of reserves available for distribution to equity
shareholders of the Company, as calculated under the Companies Law of the Cayman Islands, was RMB58,008,000,
RMB181,169,000 and RMB155,658,000, respectively.
(d) Capital management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern
in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure
to enhance shareholders’ value in the long term.
— I-34 —
The Group actively and regularly reviews and manages its capital structure to maintain a balance between the
higher shareholder returns that might be possible with higher levels of borrowings and the advantages and security
afforded by a sound capital position, and makes adjustments to the capital structure in light of changes in economic
conditions.
During the Relevant Periods, the Group did not have any interest-bearing debts.
Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.
25 FINANCIAL RISK MANAGEMENT AND FAIR VALUES OF FINANCIAL INSTRUMENTS
Exposure to credit, liquidity, and currency risks arises in the normal course of the Group’s business.
The Group’s exposure to these risks and the financial risk management policies and practices used by the Group
to manage these risks are described below.
(a) Credit risk
The Group’s credit risk is primarily attributable to cash and cash equivalents, trade receivables, bills receivable and
other receivables. The directors have a credit policy in place and the exposures to these credit risks are monitored on an
ongoing basis.
The Group’s cash and cash equivalents and available-for-sale financial assets are held with banks, which have
sound reputation.
In respect of trade and other receivables, individual credit evaluations are performed on all customers requiring
credit over a certain amount. These evaluations focus on the customer’s past history of making payments when due and
current ability to pay, and take into account information specific to the customer as well as pertaining to the economic
environment in which the customer operates. The Group normally requires certain customers to pay 30%-100% deposits
upfront and the remaining trade receivables are normally due within 1 to 6 months from the date of billing. Commercial
customers with past due balances are requested to settle all outstanding balances before any further credit is granted.
Balances from hospitals customers are settled within the period set by the hospitals’ payment policy, within 3 to 12 months.
The Group does not obtain collateral from customers.
All bills receivable as at the end of each reporting period are bank acceptance bills with the aging of less than 6
months.
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer rather
than the industry or country in which the customers operate and therefore significant concentrations of credit risk primarily
arise when the Group has significant exposure to individual customers. At the end of the reporting period, 4.6%, 3.7%,
4.6% and 5.5% of the total trade receivables was due from the Group’s largest customer in 2014, 2015, 2016 and six
months ended 30 June 2017, respectively, and 29.2%, 20.9%, 23.7% and 20.9% was due from the five largest customers
in 2014, 2015, 2016 and six months ended 30 June 2017 respectively.
The maximum exposure to credit risk is represented by the carrying amount of each financial assets in the
consolidated statements of financial position. The Group does not provide any other guarantees which would expose the
Group or the Company to credit risk.
Further quantitative disclosures in respect of the Group’s exposure to credit risk arising from trade receivables and
other receivables are set out in notes 15 and 16.
(b) Liquidity risk
Individual operating entities within the Group are responsible for their own cash management, including the short
term investment of cash surpluses and the raising of loans to cover expected cash demands, subject to approval by
management and directors when the borrowings exceed certain predetermined levels of authority. The Group’s policy is
to regularly monitor its liquidity requirements and its compliance with lending covenants, to ensure that it maintains
sufficient reserves of cash and readily realisable marketable securities and adequate committed lines of funding from
major financial institutions to meet its liquidity requirements in the short and longer term.
— I-35 —
The following tables show the remaining contractual maturities at the respective end of the reporting period of our
financial liability, which are based on contractual undiscounted cash flows and the earliest date the Group can be required
to pay:
Contractual undiscounted cash outflow

Carrying Within 1 year
amount Total or on demand
RMB’000 RMB’000 RMB’000
As at 31 December 2014
Trade payables . . . . . . . . . . . . . . . . . . . . . . . . . . 14,691 14,691 14,691
Accruals and other payables . . . . . . . . . . . . . . . . . . 11,999 11,999 11,999
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,690 26,690 26,690

RMB’000 RMB’000 RMB’000
Trade payables . . . . . . . . . . . . . . . . . . . . . . . . . . 29,408 29,408 29,408
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68,869 68,869 68,869

RMB’000 RMB’000 RMB’000
Trade payables . . . . . . . . . . . . . . . . . . . . . . . . . . 33,740 33,740 33,740
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58,582 58,582 58,582

RMB’000 RMB’000 RMB’000
As at 30 June 2017
Trade payables . . . . . . . . . . . . . . . . . . . . . . . . . . 43,974 43,974 43,974
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,151 75,151 75,151
(c) Currency risk
The Group mainly operates in the PRC and is exposed to foreign currency risk, primarily through sales and
purchases which give rise to receivables, payables and cash balances that are denominated in a foreign currency, i.e., a
currency other than the functional currency of the operations to which the transaction relate. The currencies giving rise to
this risk is primarily US$ and EUR.
As at 31 December 2013 and 2014, the Group did not have any significant assets or liabilities dominated other than
RMB.
— I-36 —
The following table details the Group’s major exposure as at 31 December 2015 and 31 December 2016 to currency
risk arising from assets and liabilities denominated in a currency other than the functional currency of the entity to which
they relate.
Exposure to foreign currencies

(expressed in RMB)
HK$ US$ EUR GBP
RMB’000 RMB’000 RMB’000 RMB’000
Cash and cash equivalents . . . . . . . . . . . 11 9,624 21 —
Trade receivables . . . . . . . . . . . . . . . . . — — 256 —
Trade payables . . . . . . . . . . . . . . . . . . — (1,701) (1,114) (1,375)
11 7,923 (837) (1,375)

(expressed in RMB)
HK$ US$ EUR GBP
RMB’000 RMB’000 RMB’000 RMB’000
Trade receivables . . . . . . . . . . . . . . . . . — — 256 —
Trade payables . . . . . . . . . . . . . . . . . . — (1,701) (1,114) (1,375)
62 41,002 (837) (1,375)

(expressed in RMB)
As at 30 June 2017
HK$ US$ EUR GBP
RMB’000 RMB’000 RMB’000 RMB’000
Trade receivables . . . . . . . . . . . . . . . . . — 2,527 — —
Trade payables . . . . . . . . . . . . . . . . . . — — (734) (2)
18 23,794 (396) (2)
As at 31 December 2015, 31 December 2016 and 30 June 2017, it is estimated that a general increase/decrease
of 5% in foreign exchange rates of US$ to RMB, with all other variables held constant, would have increased/decreased
the Group’s profit after tax and retained profits by approximately RMB337,000, RMB1,743,000 and RMB150,000
respectively.
(d) Fair value measurement
Financial instruments are carried at fair value within a fair value hierarchy that categorises, into three levels, inputs
to valuation technique as used to measure the fair value. The three different levels are as follows:
– level 1: Unadjusted quoted prices in active markets for identical assets or liabilities that the entity can access
at the measurement date.
– level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability,
either directly or indirectly.
– level 3: Unobservable inputs for the asset or liability.
— I-37 —
The following table presents the Group’s assets that are measured at fair value.
Fair value measurements as at

Fair value at
31 December 2014 categorised into
31 December
2014 Level 1 Level 2 Level 3
RMB’000 RMB’000 RMB’000 RMB’000
Recurring fair value measurements
Asset:
Available-for-sale financial assets . . . . . 70,000 — 70,000 —
No asset is measured at fair value as at 31 December 2015 and 2016, and 30 June 2017.
There were no changes in valuation techniques during the Relevant Periods.
Available-for-sale financial assets are measured at costs which approximate their fair values in the consolidated
statements of financial position. The Group benchmarks the costs against fair values of comparable investments as of the
end of each reporting period, and categorised all fair value measures of bank financial products as Level 2 of the fair value
hierarchy because they are valued using directly or indirectly observable inputs in the market place. The carrying amounts
of level 2 instrument for the years ended 31 December 2014 are presented in note 17.
All financial assets are carried at amounts not materially different from their fair value as at 31 December 2014,
2015, 2016 and 30 June 2017.
26 COMMITMENTS
(a) Capital commitments of the Group in respect of construction in progress outstanding as at 31 December 2014,
2015, 2016 and 30 June 2017 not provided for in this Financial Information were as follows:
As at
2014 2015 2016 2017
RMB’000 RMB’000 RMB’000 RMB’000
Contracted for . . . . . . . . . . . . . . 12,861 28,890 3,585 5,500
Authorised but not contracted for . . 380 156,917 154,226 135,774
13,241 185,807 157,811 141,274
(b) As at 31 December 2014, 2015, 2016 and 30 June 2017, the total future minimum lease payments under
non-cancellable operating leases are payable as follows:
As at
2014 2015 2016 2017
RMB’000 RMB’000 RMB’000 RMB’000
Within one year . . . . . . . . . . . . . 861 3,032 3,340 6,604
After 1 year but within 5 years. . . . 474 7,778 7,642 10,962
1,335 10,810 10,982 17,566
The Group leases a number of warehouses and office premises under operating leases. The leases typically
run for an initial period of 1 to 5 years, with an option to renew the leases after that date. Lease payments are usually
increased every year to reflect market rentals. None of the leases includes contingent rentals.
— I-38 —
27 MATERIAL RELATED PARTY TRANSACTIONS
(a) Name and relationship with related parties:
During the Relevant Periods, transactions with the following parties are considered as related party transaction:
Name of Party Relationship with the Group

Mr. Li Zhijiang . . . . . . . . . . . . . . . . . . . . . Executive director, and the ultimate controlling party
Ms. Zhang Bin . . . . . . . . . . . . . . . . . . . . . Executive director, the spouse of Mr. Li Zhijiang
Mr. Zhang Chaoyang. . . . . . . . . . . . . . . . . Executive director
Ms. Zhao Xiaohong. . . . . . . . . . . . . . . . . . Executive director
Mr. Li Wenming . . . . . . . . . . . . . . . . . . . . Non-executive director
Ms. Wang Caimei . . . . . . . . . . . . . . . . . . . Senior management
Mr. Liu Aiguo. . . . . . . . . . . . . . . . . . . . . . Senior management
Mr. Zhang Weiping . . . . . . . . . . . . . . . . . . Senior management
Ms. Han Yu . . . . . . . . . . . . . . . . . . . . . . Senior management
Mr. Qi Yajun . . . . . . . . . . . . . . . . . . . . . . Senior management
Ms. Qi Zijuan . . . . . . . . . . . . . . . . . . . . . Senior management
Mr. Sun Yanshi . . . . . . . . . . . . . . . . . . . . Senior management
Mr. Wang Zhengmin . . . . . . . . . . . . . . . . . Senior management
Ms. Wang Nannan . . . . . . . . . . . . . . . . . . Senior management
Ximalaya Limited . . . . . . . . . . . . . . . . . . . Controlling shareholder
(b) Transactions with the controlling shareholder
On 19 October 2015, the then shareholders of AK Medical Beijing, Mr. Li Zhijiang, Mr. Zhang Chaoyang, Ms. Zhang
Bin, Ms. Li Huijiang, Ms. Zhao Xiaohong, Mr. Qi Yajun, Ms. Wang Caimei, Ms. Liu Aiguo and Mr. Zhang Weiping as
transferors entered into an equity transfer agreement with AK Medical HK as transferee, pursuant to which the transferors
transferred a total of 90% of the equity interests in AK Medical Beijing to AK Medical HK at the consideration of
RMB74,700,000 in total. The aforesaid amount had been settled by 7 April 2016 and was funded by shareholder’s loans
advanced by Ximalaya to the Company on various dates between 10 March 2016 and 7 April 2016.
On 13 April 2016, Ximalaya executed a deed of waiver in favor of the Company, pursuant to which Ximalaya shall
unconditionally and irrevocably waive, release and discharge the repayment of shareholder’s loans advanced from
Ximalaya to the Company in an aggregate amount of RMB74,700,000 and any claim regarding such repayment.
(c) Key management personnel remuneration
Remuneration for key management personnel of the Group, including amounts paid to the Company’s directors as
disclosed in note 8 and certain of the highest paid employees as disclosed in note 9, is as follows:
Six months ended

2014 2015 2016 2016 2017
(Unaudited)
Salaries and other emoluments . . . 1,763 3,057 4,782 2,286 2,449
Discretionary bonuses . . . . . . . . . 627 1,948 1,275 653 720
Retirement scheme contributions . . 111 120 121 62 60
2,501 5,125 6,178 3,001 3,229
Total remuneration is included in “staff costs” (see note 6(a)).
— I-39 —
28 IMMEDIATE AND ULTIMATE CONTROLLING PARTIES
As at 30 June 2017, the directors consider the immediate parent to be Ximalaya Limited and the ultimate controlling
parties of the Group to be Mr. Li Zhijiang. Ximalaya Limited is incorporated in British Virgin Islands and does not produce
financial statements available for public use.
29 POSSIBLE IMPACT OF AMENDMENTS, NEW STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET
EFFECTIVE FOR THE RELEVANT PERIODS
Up to date of issue of the Financial Information, the IASB has issued a number of amendments and new standards
which are not yet effective for the Relevant Period and which have not been adopted in the Financial Information. These
include the following which may be relevant to the Group.
Effective for
accounting periods
beginning on or
after
Annual Improvements to IFRSs 2014-2016 cycle – IFRS 1 First-time Adoption of
International Financial Reporting Standards – IAS 28 Investments in Associates and
Joint Ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 January 2018
Amendments to IFRS 2, Classification and measurement of share-based payment
transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 January 2018
Amendments to IFRS 4, Applying IFRS 9 Financial instruments with IFRS 4 Insurance
contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 January 2018
Amendments to IAS 40, Transfers of investment property . . . . . . . . . . . . . . . . . . . . 1 January 2018
IFRS 9, Financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 January 2018
IFRS 15, Revenue from contracts with customers. . . . . . . . . . . . . . . . . . . . . . . . . 1 January 2018
IFRIC 22, Foreign currency transactions and advance consideration . . . . . . . . . . . . . 1 January 2018
IFRS 16, Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 January 2019
IFRIC 23, Uncertainty over income tax treatments . . . . . . . . . . . . . . . . . . . . . . . . 1 January 2019
IFRS 17, Insurance contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 January 2021
Amendments to IFRS 10 and IAS 28, Sale or contribution of assets between an
investor and its associate or joint venture . . . . . . . . . . . . . . . . . . . . . . . . . . . . To be determined
The Group is in the process of making an assessment of what the impact of these amendments and new standards
is expected to be in the period of initial application. So far the Group has identified some aspects of the new standards
which may have a significant impact on the consolidated financial statements. Further details of the expected impacts are
discussed below. As the Group has not completed its assessment, further impacts may be identified in due course and will
be taken into consideration when determining whether to adopt any of these new requirements before their effective date
and which transitional approach to take, where there are alternative approaches allowed under the new standards.
IFRS 9, Financial instruments
IFRS 9 will replace the current standard on accounting for financial instruments, IAS 39, Financial instruments:
Recognition and measurement. IFRS 9 introduces new requirements for classification and measurement of financial
assets, calculation of impairment of financial assets and hedge accounting. On the other hand, IFRS 9 incorporates without
substantive changes the requirements of IAS 39 for recognition and derecognition of financial instruments and the
classification of financial liabilities. Expected impacts of the new requirements on the Group’s financial statements are as
follows:
Impairment
The new impairment model in IFRS 9 replaces the “incurred loss” model in IAS 39 with an “expected credit
loss” model. Under the expected credit loss model, it will no longer be necessary for a loss event to occur before
an impairment loss is recognised. Instead, an entity is required to recognise and measure expected credit losses
as either 12-month expected credit losses or lifetime expected credit losses, depending on the asset and the facts
and circumstances. This new impairment model may result in an earlier recognition of credit losses on the Group’s
trade and other receivables and other financial assets. However, a more detailed analysis is required to determine
the extent of the impact.
— I-40 —
IFRS 15, Revenue from contracts with customers
IFRS 15 establishes a comprehensive framework for recognising revenue from contracts with customers. HKFRS
15 will replace the existing revenue standards, IAS 18, Revenue, which covers revenue arising from sale of goods and
rendering of services, and IAS 11, Construction contracts, which specifies the accounting for revenue from construction
contracts. The Group is currently assessing the impacts of adopting IFRS 15 on its financial statements. Based on the
preliminary assessment, the Group has identified the following areas which are likely to be affected:
– Sale of goods
As disclosed in Note 2(p)(i), for the sale of orthopedic joint implants and its complete set of surgical
instrument, revenue is currently recognised when the goods are delivered at the customers’ premises, which is
taken to be the point in time when the customer accepts the goods and the related risks and rewards of ownership.
Under IFRS 15, revenue will be recognised when a customer obtains control of the goods.
The adoption of IFRS 15 is unlikely to have a significant impact on the Group’s timing of revenue recognition.
– Sales return
Currently, the Group estimates the level of returns based on past experience and makes an adjustment
against revenue and cost of sales.
The Group expects that the adoption of IFRS 15 will not materially affect how the Group recognises revenue
and cost of sales on sales return. However, the new requirement to recognise separately a return asset for the
products expected to be returned will impact the presentation in the consolidated statement of financial position as
the Group currently adjusts the carrying amounts of inventory for the expected returns, instead of recognising a
separate asset.
The Group plans to elect to use the cumulative effect transition method for the adoption of IFRS 15 and will
recognise the cumulative effect of initial application as an adjustment to the opening balance of equity at 1 January 2018.
As allowed by IFRS 15, the Group plans to apply the new requirements only to contracts that are not completed before
1 January 2018.
The Group is currently performing a detailed assessment of the impact resulting from the application of IFRS 15 and
expects to disclose additional quantitative information before it adopts IFRS 15.
IFRS 16, Leases
Currently the Group classifies leases into finance leases and operating leases and accounts for the lease
arrangements differently, depending on the classification of the lease. During the Relevant Period, all lease contracts are
accounted for as operating leases based on the terms of the lease. The Group enters into these leases as the lessee.
IFRS 16 is not expected to impact significantly on the way that lessors account for their rights and obligations under
a lease. However, once IFRS 16 is adopted, lessees will no longer distinguish between finance leases and operating
leases. Instead, subject to practical expedients, lessees will account for all leases in a similar way to current finance lease
accounting, i.e. at the commencement date of the lease the lessee will recognise and measure a lease liability at the
present value of the minimum future lease payments and will recognise a corresponding “right-of-use” asset. After initial
recognition of this asset and liability, the lessee will recognise interest expense accrued on the outstanding balance of the
lease liability, and the depreciation of the right-of-use asset, instead of the current policy of recognising rental expenses
incurred under operating leases on a systematic basis over the lease term. As a practical expedient, the lessee can elect
not to apply this accounting model to short-term leases (i.e. where the lease term is 12 months or less) and to leases of
low-value assets, in which case the rental expenses would continue to be recognised on a systematic basis over the lease
term.
IFRS 16 will primarily affect the Group’s accounting as a lessee of leases for properties, plant and equipment which
are currently classified as operating leases. The application of the new accounting model is expected to lead to an increase
in both assets and liabilities and to impact on the timing of the expense recognition in the statement of profit or loss over
the period of the lease. At 30 June 2017 the Group’s future minimum lease payments under non-cancellable operating
leases amount to RMB17,566,000 for properties, plant and equipment, the majority of which is payable either between 1
and 5 years after the reporting date or within 1 year. Some of these amounts may therefore need to be recognised as lease
liabilities, with corresponding right-of-use assets, once IFRS 16 is adopted. The Group will need to perform a more detailed
analysis to determine the amounts of new assets and liabilities arising from operating lease commitments on adoption of
IFRS 16, after taking into account the applicability of the practical expedient and adjusting for any leases entered into or
terminated between now and the adoption of IFRS 16 and the effects of discounting.
— I-41 —
The Group is considering whether to adopt IFRS 16 before its effective date of 1 January 2019. However, early
adoption of IFRS 16 is only permitted if this is no earlier than the adoption of IFRS 15. It is therefore unlikely that IFRS
16 will be adopted before the effective date of IFRS 15, being 1 January 2018.
The Group has started an initial assessment of the potential impact on its consolidated financial statements. So far,
the most significant impact identified is that the Group will recognise new assets and liabilities for its operating leases. In
addition, the nature of expenses related to those leases will change as IFRS 16 replaces the straight-line operating lease
expense with a depreciation charge for right-of-use assets and interest expense on lease liabilities. Although the Group
has not yet decided whether it will use the optional exemptions, considering the amount of the future minimum lease
payments for the lease contracts held by the Group as of 30 June 2017 as disclosed above, the Group initially assessed
that lease contracts held as of 30 June would not significantly affect the financial position and performance of the Group
when adopting IFRS 16 on 1 January 2019.
SUBSEQUENT EVENTS
The following significant event took place subsequent to 30 June 2017:
(a) Dividends appropriation
The Board of Directors of the Company declared dividends of U.S. dollar equivalent to RMB11 million and RMB39
million on 25 August 2017 and 20 October 2017, respectively. Such dividends have been paid as of the date of this report.
(b) Capitalisation issue
Pursuant to the written resolutions of the equity shareholders of the Company passed on 17 November 2017, the
authorised share capital of the Company was increased from HK$380,000 to HK$20,000,000 divided into 2,000,000,000
shares, comprising of 1,999,990,000 ordinary shares and 10,000 preferred shares, by the creation of a further
1,962,000,000 ordinary shares.
Conditional upon the conditions set out in note 3(d) of the section headed “Statutory and General Information” in the
Prospectus, subject to the receipt of the conversion notice from OrbiMed Asia, the 10,000 preferred shares should be
converted into 10,000 ordinary shares and the Directors were authorised to capitalise HK$7,499,000 standing to the credit
of the share premium account of the Company by applying such sum in paying up in full at par 749,900,000 shares for
allotment and issue in proportion to holders of shares whose names appear on the register of members of the Company
immediately following the conversion and the shares to be allotted and issued should rank pari passu in all respects with
the shares in issue.
SUBSEQUENT FINANCIAL STATEMENTS
No audited financial statements have been prepared by the Company or any of the companies comprising the Group
in respect of any period subsequent to 30 June 2017. Save as disclosed in the Financial Information, no dividend or
distribution has been declared or made by any companies comprising the Group in respect of any period subsequent to
30 June 2017.
— I-42 —
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
The information set forth in this appendix does not form part of the Accountants’ Report
prepared by KPMG, Certified Public Accountants, Hong Kong, the reporting accountants of the
Company, as set forth in Appendix I in this prospectus, and is included herein for illustrative
purposes only.
The unaudited pro forma financial information should be read in conjunction with the section
headed “Financial Information” in this prospectus and the Accountants’ Report set forth in
Appendix I in this prospectus.
(A) UNAUDITED PRO FORMA CONSOLIDATED NET TANGIBLE ASSETS
The following is an illustrative statement of our unaudited pro forma consolidated net tangible
assets which has been prepared on the basis of the notes set out below for the purpose of
illustrating the effect of the Global Offering as if it had taken place on 30 June 2017. This
statement of unaudited pro forma consolidated net tangible assets has been prepared for
illustrative purposes only and because of its hypothetical nature, it may not give a true picture of
the financial position of our Group had the Global Offering been completed as at 30 June 2017 or
at any future dates.
Consolidated Estimated Unaudited pro

net tangible net proceeds forma adjusted
assets of our from the consolidated Unaudited pro forma adjusted
Company as at Global net tangible consolidated net tangible assets
30 June 2017(i) Offering(ii)(iv) assets(v) per Share(iii)
RMB’000 RMB’000 RMB’000 RMB HK$
Base on the Offer
Price of HK$1.66
per Share . . . . . . . 311,436 292,090 603,526 0.60 0.72
Base on the Offer
Price of HK$2.00
per Share . . . . . . . 311,436 360,227 671,663 0.67 0.80
Notes:
(i) The consolidated net tangible assets of our Company as at 30 June 2017 is based on the consolidated net assets
of our Company of RMB320,567,000 as at 30 June 2017 less intangible asset of RMB9,131,000, extracted from the
Accountants’ Report as set out in Appendix I in this prospectus.
(ii) The estimated net proceeds from the Global Offering are based on the Offer Shares and the estimated Offer Prices
of HK$1.66 and HK$2.00, respectively, being the low-end price and high-end price, after deduction of the
underwriting fees and related expenses payable by us of approximately RMB58,087,000 and RMB61,673,000,
respectively (excluding approximately RMB21,358,000 listing expenses have been accounted for prior to 30 June
2017) and does not taken into account any Shares that may be issued upon exercise of Over-Allotment Option.
(iii) The unaudited pro forma consolidated net tangible assets per Share is arrived at after adjustments for the estimated
net proceeds from the Global Offering payable to our Company as described in note (ii) and on the basis that
1,000,000,000 Shares were in issue assuming that the Global Offering was completed on 30 June 2017 (including
Shares in issue (including Series A Preferred Shares on an as-converted basis) as of the Date of this prospectus
and those Shares to be issued pursuant to the Global Offering and the Capitalisation Issue) without taking into
account of any Shares which may be offered for sale upon exercise of the Over-Allotment Option or any options
granted or to be granted under the Pre-IPO Share Option Scheme or the Share Option Scheme.
(iv) The estimated net proceeds from the Global Offering and the unaudited pro forma consolidated net tangible assets
per Share is converted into Hong Kong dollars at an exchange rate of HK$1 to RMB0.8438, being the exchange rate
set by PBOC prevailing on 27 November 2017. No representation is made that the Hong Kong dollar amounts have
been, could have been or could be converted to RMB at that rate or at any other rate.
(v) The unaudited pro forma adjusted consolidated net tangible assets does not take into account a dividend of U.S.
dollar equivalent to RMB11.0 million and RMB39.0 million declared on 25 August 2017 and 20 October 2017,
respectively. Such dividends had been paid in full before Listing. Had such dividends been taken into account, the
unaudited pro forma consolidated net tangible assets per Share would be approximately HK$0.66 (assuming an
Offer Price of HK$1.66 per Share) and approximately HK$0.74 (assuming an Offer Price of HK$2.00 per Share),
respectively.
(vi) Except for dividends declared in note (v), no adjustment has been made to the unaudited pro forma consolidated
net tangible assets to reflect any trading results or other transactions of the Group subsequent to 30 June 2017.
— II-1 —
(B) INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE

COMPILATION OF PRO FORMA FINANCIAL INFORMATION
The following is the text of a report received from the reporting accountants, KPMG, Certified
Public Accountants, Hong Kong, in respect of the Group’s pro forma financial information for the
purpose in this prospectus.
8th Floor
Prince’s Building
10 Chater Road
Central
Hong Kong
7 December 2017
TO THE DIRECTORS OF AK MEDICAL HOLDING LIMITED
We have completed our assurance engagement to report on the compilation of pro forma
financial information of AK Medical Holding Limited (the “Company”) and its subsidiaries
(collectively the “Group”) by the directors of the Company (the “Directors”) for illustrative purposes
only. The unaudited pro forma financial information consists of the unaudited pro forma statement
of consolidated adjusted net tangible assets as at 30 June 2017 and related notes as set out in
Part A of Appendix II to the prospectus dated 7 December 2017 (the “Prospectus”) issued by the
Company. The applicable criteria on the basis of which the Directors have compiled the pro forma
financial information are described in Part A of Appendix II to the Prospectus.
The pro forma financial information has been compiled by the Directors to illustrate the
impact of the proposed offering of the ordinary shares of the Company (the “Global Offering”) on
the Group’s financial position as at 30 June 2017 as if the Global Offering had taken place at 30
June 2017. As part of this process, information about the Group’s financial position as at 30 June
2017 has been extracted by the Directors from the Group’s historical financial information included
in the Accountants’ Report as set out in Appendix I to the Prospectus.
Directors’ Responsibilities for the Pro Forma Financial Information
The Directors are responsible for compiling the pro forma financial information in accordance
with paragraph 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of
Hong Kong Limited (the “Listing Rules”) and with reference to Accounting Guideline 7 “Preparation
of Pro Forma Financial Information for Inclusion in Investment Circulars” (“AG 7”) issued by the
Hong Kong Institute of Certified Public Accountants (“HKICPA”).
Our Independence and Quality Control
We have complied with the independence and other ethical requirements of the Code of
Ethics for Professional Accountants issued by the HKICPA, which is founded on fundamental
principles of integrity, objectivity, professional competence and due care, confidentiality and
professional behavior.
The firm applies Hong Kong Standard on Quality Control 1 “Quality Control for Firms That
Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services
Engagements” issued by the HKICPA and accordingly maintains a comprehensive system of
quality control including documented policies and procedures regarding compliance with ethical
requirements, professional standards and applicable legal and regulatory requirements.
— II-2 —
Reporting Accountants’ Responsibilities
Our responsibility is to express an opinion, as required by paragraph 4.29(7) of the Listing

Rules on the pro forma financial information and to report our opinion to you. We do not accept
any responsibility for any reports previously given by us on any financial information used in the
compilation of the pro forma financial information beyond that owed to those to whom those
reports were addressed by us at the dates of their issue.
We conducted our engagement in accordance with Hong Kong Standard on Assurance

Engagements (“HKSAE”) 3420 “Assurance Engagements to Report on the Compilation of Pro
Forma Financial Information Included in a Prospectus” issued by the HKICPA. This standard
requires that the reporting accountants plan and perform procedures to obtain reasonable
assurance about whether the Directors have compiled the pro forma financial information in
accordance with paragraph 4.29 of the Listing Rules, and with reference to AG 7 issued by the
HKICPA.
For purpose of this engagement, we are not responsible for updating or reissuing any reports
or opinions on any historical financial information used in compiling the pro forma financial
information, nor have we, in the course of this engagement, performed an audit or review of the
financial information used in compiling the pro forma financial information.
The purpose of pro forma financial information included in an investment circular is solely to
illustrate the impact of a significant event or transaction on unadjusted financial information of the
Group as if the event had occurred or the transaction had been undertaken at an earlier date
selected for purposes of the illustration. Accordingly, we do not provide any assurance that the
actual outcome of events or transactions as at 30 June 2017 would have been as presented.
A reasonable assurance engagement to report on whether the pro forma financial information
has been properly compiled on the basis of the applicable criteria involves performing procedures
to assess whether the applicable criteria used by the Directors in the compilation of the pro forma
financial information provide a reasonable basis for presenting the significant effects directly
attributable to the event or transaction, and to obtain sufficient appropriate evidence about
whether:
• the related pro forma adjustments give appropriate effect to those criteria; and
• the pro forma financial information reflects the proper application of those adjustments
to the unadjusted financial information.
The procedures selected depend on the reporting accountants’ judgement, having regard to
the reporting accountants’ understanding of the nature of the Group, the event or transaction in
respect of which the pro forma financial information has been compiled, and other relevant
engagement circumstances.
The engagement also involves evaluating the overall presentation of the pro forma financial
information.
We believe that the evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
— II-3 —
Our procedures on the pro forma financial information have not been carried out in
accordance with attestation standards or other standards and practices generally accepted in the
United States of America, auditing standards of the Public Company Accounting Oversight Board
(United States) or any overseas standards and accordingly should not be relied upon as if they
had been carried out in accordance with those standards and practices.
We make no comments regarding the reasonableness of the amount of net proceeds from
the issuance of the Company’s shares, the application of those net proceeds, or whether such use
will actually take place as described in the section headed “Future Plans and Use of Proceeds”
in the Prospectus.
Opinion
In our opinion:
(a) the pro forma financial information has been properly compiled on the basis stated;
(b) such basis is consistent with the accounting policies of the Group; and
(c) the adjustments are appropriate for the purposes of the pro forma financial information
as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.
KPMG
Certified Public Accountants
Hong Kong
— II-4 —
APPENDIX III SUMMARY OF THE CONSTITUTION OF
THE COMPANY AND CAYMAN COMPANIES LAW
Set out below is a summary of certain provisions of the Memorandum and Articles of
Association of the Company and of certain aspects of Cayman company law.
The Company was incorporated in the Cayman Islands as an exempted company with limited
liability on 17 July 2015 under the Companies Law, Cap 22 (Law 3 of 1961, as consolidated and
revised) of the Cayman Islands (the “Companies Law”). The Company’s constitutional documents
consist of its Amended and Restated Memorandum of Association (the “Memorandum”) and its
Amended and Restated Articles of Association (the “Articles”).
1. MEMORANDUM OF ASSOCIATION
(a) The Memorandum states, inter alia, that the liability of members of the Company is
limited to the amount, if any, for the time being unpaid on the shares respectively held
by them and that the objects for which the Company is established are unrestricted
(including acting as an investment company), and that the Company shall have and be
capable of exercising all the functions of a natural person of full capacity irrespective of
any question of corporate benefit, as provided in section 27(2) of the Companies Law
and in view of the fact that the Company is an exempted company that the Company will
not trade in the Cayman Islands with any person, firm or corporation except in
furtherance of the business of the Company carried on outside the Cayman Islands.
(b) The Company may by special resolution alter its Memorandum with respect to any
objects, powers or other matters specified therein.
2. ARTICLES OF ASSOCIATION
The Articles were conditionally adopted on 17 November 2017 with effect from the Listing
Date. The following is a summary of certain provisions of the Articles:
(a) Shares
(i) Classes of shares
The share capital of the Company consists of ordinary shares.
(ii) Variation of rights of existing shares or classes of shares
Subject to the Companies Law, if at any time the share capital of the Company is divided into
different classes of shares, all or any of the special rights attached to the shares or any class of
shares may (unless otherwise provided for by the terms of issue of that class) be varied, modified
or abrogated either with the consent in writing of the holders of not less than three-fourths in
nominal value of the issued shares of that class or with the sanction of a special resolution passed
at a separate general meeting of the holders of the shares of that class. To every such separate
general meeting the provisions of the Articles relating to general meetings will mutatis mutandis
apply, but so that the necessary quorum (other than at an adjourned meeting) shall be two persons
holding or representing by proxy not less than one-third in nominal value of the issued shares of
that class and at any adjourned meeting two holders present in person or by proxy (whatever the
number of shares held by them) shall be a quorum. Every holder of shares of the class shall be
entitled to one vote for every such share held by him.
— III-1 —
Any special rights conferred upon the holders of any shares or class of shares shall not,
unless otherwise expressly provided in the rights attaching to the terms of issue of such shares,
be deemed to be varied by the creation or issue of further shares ranking pari passu therewith.
(iii) Alteration of capital
The Company may by ordinary resolution of its members:
(i) increase its share capital by the creation of new shares;
(ii) consolidate all or any of its capital into shares of larger amount than its existing shares;
(iii) divide its shares into several classes and attach to such shares any preferential,
deferred, qualified or special rights, privileges, conditions or restrictions as the
Company in general meeting or as the directors may determine;
(iv) sub divide its shares or any of them into shares of smaller amount than is fixed by the
Memorandum; or
(v) cancel any shares which, at the date of passing of the resolution, have not been taken
and diminish the amount of its capital by the amount of the shares so cancelled.
The Company may reduce its share capital or any capital redemption reserve or other
undistributable reserve in any way by special resolution.
(iv) Transfer of shares
All transfers of shares may be effected by an instrument of transfer in the usual or common
form or in a form prescribed by The Stock Exchange of Hong Kong Limited (the “Stock
Exchange”) or in such other form as the board may approve and which may be under hand or, if
the transferor or transferee is a clearing house or its nominee(s), by hand or by machine imprinted
signature or by such other manner of execution as the board may approve from time to time.
The instrument of transfer shall be executed by or on behalf of the transferor and the
transferee provided that the board may dispense with the execution of the instrument of transfer
by the transferee. The transferor shall be deemed to remain the holder of the share until the name
of the transferee is entered in the register of members in respect of that share.
The board may, in its absolute discretion, at any time transfer any share upon the principal
register to any branch register or any share on any branch register to the principal register or any
other branch register.
The board may decline to recognise any instrument of transfer unless a fee (not exceeding
the maximum sum as the Stock Exchange may determine to be payable) determined by the
Directors is paid to the Company, the instrument of transfer is properly stamped (if applicable), it
is in respect of only one class of share and is lodged at the relevant registration office or registered
office or such other place at which the principal register is kept accompanied by the relevant share
certificate(s) and such other evidence as the board may reasonably require to show the right of
the transferor to make the transfer (and if the instrument of transfer is executed by some other
person on his behalf, the authority of that person so to do).
— III-2 —
The registration of transfers may be suspended and the register closed on giving notice by
advertisement in any newspaper or by any other means in accordance with the requirements of
the Stock Exchange, at such times and for such periods as the board may determine. The register
of members must not be closed for periods exceeding in the whole thirty (30) days in any year.
Subject to the above, fully paid shares are free from any restriction on transfer and free of
all liens in favour of the Company.
(v) Power of the Company to purchase its own shares
The Company is empowered by the Companies Law and the Articles to purchase its own
shares subject to certain restrictions and the board may only exercise this power on behalf of the
Company subject to any applicable requirements imposed from time to time by the Stock
Exchange.
Where the Company purchases for redemption a redeemable share, purchases not made
through the market or by tender must be limited to a maximum price determined by the Company
in general meeting. If purchases are by tender, tenders must be made available to all members
alike.
(vi) Power of any subsidiary of the Company to own shares in the Company
There are no provisions in the Articles relating to ownership of shares in the Company by a
subsidiary.
(vii) Calls on shares and forfeiture of shares
The board may from time to time make such calls upon the members in respect of any monies
unpaid on the shares held by them respectively (whether on account of the nominal value of the
shares or by way of premium). A call may be made payable either in one lump sum or by
installments. If the sum payable in respect of any call or instalment is not paid on or before the
day appointed for payment thereof, the person or persons from whom the sum is due shall pay
interest on the same at such rate not exceeding twenty per cent. (20%) per annum as the board
may agree to accept from the day appointed for the payment thereof to the time of actual payment,
but the board may waive payment of such interest wholly or in part. The board may, if it thinks fit,
receive from any member willing to advance the same, either in money or money’s worth, all or
any part of the monies uncalled and unpaid or installments payable upon any shares held by him,
and upon all or any of the monies so advanced the Company may pay interest at such rate (if any)
as the board may decide.
If a member fails to pay any call on the day appointed for payment thereof, the board may
serve not less than fourteen (14) clear days’ notice on him requiring payment of so much of the
call as is unpaid, together with any interest which may have accrued and which may still accrue
up to the date of actual payment and stating that, in the event of non-payment at or before the time
appointed, the shares in respect of which the call was made will be liable to be forfeited.
If the requirements of any such notice are not complied with, any share in respect of which
the notice has been given may at any time thereafter, before the payment required by the notice
has been made, be forfeited by a resolution of the board to that effect. Such forfeiture will include
all dividends and bonuses declared in respect of the forfeited share and not actually paid before
the forfeiture.
— III-3 —
A person whose shares have been forfeited shall cease to be a member in respect of the
forfeited shares but shall, notwithstanding, remain liable to pay to the Company all monies which,
at the date of forfeiture, were payable by him to the Company in respect of the shares, together
with (if the board shall in its discretion so require) interest thereon from the date of forfeiture until
the date of actual payment at such rate not exceeding twenty per cent. (20%) per annum as the
board determines.
(b) Directors
(i) Appointment, retirement and removal
At each annual general meeting, one third of the Directors for the time being (or if their
number is not a multiple of three, then the number nearest to but not less than one third) shall
retire from office by rotation provided that every Director shall be subject to retirement at an
annual general meeting at least once every three years. The Directors to retire by rotation shall
include any Director who wishes to retire and not offer himself for re-election. Any further Directors
so to retire shall be those who have been longest in office since their last re-election or
appointment but as between persons who became or were last re-elected Directors on the same
day those to retire will (unless they otherwise agree among themselves) be determined by lot.
Neither a Director nor an alternate Director is required to hold any shares in the Company
by way of qualification. Further, there are no provisions in the Articles relating to retirement of
Directors upon reaching any age limit.
The Directors have the power to appoint any person as a Director either to fill a casual
vacancy on the board or as an addition to the existing board. Any Director appointed to fill a casual
vacancy shall hold office until the first general meeting of members after his appointment and be
subject to re-election at such meeting and any Director appointed as an addition to the existing
board shall hold office only until the next following annual general meeting of the Company and
shall then be eligible for re-election.
A Director may be removed by an ordinary resolution of the Company before the expiration
of his period of office (but without prejudice to any claim which such Director may have for
damages for any breach of any contract between him and the Company) and members of the
Company may by ordinary resolution appoint another in his place. Unless otherwise determined
by the Company in general meeting, the number of Directors shall not be less than two. There is
no maximum number of Directors.
The office of director shall be vacated if:
(aa) he resigns by notice in writing delivered to the Company;
(bb) he becomes of unsound mind or dies;
(cc) without special leave, he is absent from meetings of the board for six (6) consecutive
months, and the board resolves that his office is vacated;
(dd) he becomes bankrupt or has a receiving order made against him or suspends payment
or compounds with his creditors;
— III-4 —
(ee) he is prohibited from being a director by law; or
(ff) he ceases to be a director by virtue of any provision of law or is removed from office
pursuant to the Articles.
The board may appoint one or more of its body to be managing director, joint managing
director, or deputy managing director or to hold any other employment or executive office with the
Company for such period and upon such terms as the board may determine and the board may
revoke or terminate any of such appointments. The board may delegate any of its powers,
authorities and discretions to committees consisting of such Director or Directors and other
persons as the board thinks fit, and it may from time to time revoke such delegation or revoke the
appointment of and discharge any such committees either wholly or in part, and either as to
persons or purposes, but every committee so formed must, in the exercise of the powers,
authorities and discretions so delegated, conform to any regulations that may from time to time be
imposed upon it by the board.
(ii) Power to allot and issue shares and warrants
Subject to the provisions of the Companies Law and the Memorandum and Articles and to
any special rights conferred on the holders of any shares or class of shares, any share may be
issued (a) with or have attached thereto such rights, or such restrictions, whether with regard to
dividend, voting, return of capital, or otherwise, as the Directors may determine, or (b) on terms
that, at the option of the Company or the holder thereof, it is liable to be redeemed.
The board may issue warrants conferring the right upon the holders thereof to subscribe for
any class of shares or securities in the capital of the Company on such terms as it may determine.
Subject to the provisions of the Companies Law and the Articles and, where applicable, the
rules of the Stock Exchange and without prejudice to any special rights or restrictions for the time
being attached to any shares or any class of shares, all unissued shares in the Company are at
the disposal of the board, which may offer, allot, grant options over or otherwise dispose of them
to such persons, at such times, for such consideration and on such terms and conditions as it in
its absolute discretion thinks fit, but so that no shares shall be issued at a discount.
Neither the Company nor the board is obliged, when making or granting any allotment of,
offer of, option over or disposal of shares, to make, or make available, any such allotment, offer,
option or shares to members or others with registered addresses in any particular territory or
territories being a territory or territories where, in the absence of a registration statement or other
special formalities, this would or might, in the opinion of the board, be unlawful or impracticable.
Members affected as a result of the foregoing sentence shall not be, or be deemed to be, a
separate class of members for any purpose whatsoever.
(iii) Power to dispose of the assets of the Company or any of its subsidiaries
There are no specific provisions in the Articles relating to the disposal of the assets of the
Company or any of its subsidiaries. The Directors may, however, exercise all powers and do all
acts and things which may be exercised or done or approved by the Company and which are not
required by the Articles or the Companies Law to be exercised or done by the Company in general
meeting.
— III-5 —
(iv) Borrowing powers
The board may exercise all the powers of the Company to raise or borrow money, to
mortgage or charge all or any part of the undertaking, property and assets and uncalled capital of
the Company and, subject to the Companies Law, to issue debentures, bonds and other securities
of the Company, whether outright or as collateral security for any debt, liability or obligation of the
Company or of any third party.
(v) Remuneration
The ordinary remuneration of the Directors is to be determined by the Company in general

meeting, such sum (unless otherwise directed by the resolution by which it is voted) to be divided
amongst the Directors in such proportions and in such manner as the board may agree or, failing
agreement, equally, except that any Director holding office for part only of the period in respect of
which the remuneration is payable shall only rank in such division in proportion to the time during
such period for which he held office. The Directors are also entitled to be prepaid or repaid all
travelling, hotel and incidental expenses reasonably expected to be incurred or incurred by them
in attending any board meetings, committee meetings or general meetings or separate meetings
of any class of shares or of debentures of the Company or otherwise in connection with the
discharge of their duties as Directors.
Any Director who, by request, goes or resides abroad for any purpose of the Company or who
performs services which in the opinion of the board go beyond the ordinary duties of a Director
may be paid such extra remuneration as the board may determine and such extra remuneration
shall be in addition to or in substitution for any ordinary remuneration as a Director. An executive
Director appointed to be a managing director, joint managing director, deputy managing director
or other executive officer shall receive such remuneration and such other benefits and allowances
as the board may from time to time decide. Such remuneration may be either in addition to or in
lieu of his remuneration as a Director.
The board may establish or concur or join with other companies (being subsidiary companies
of the Company or companies with which it is associated in business) in establishing and making
contributions out of the Company’s monies to any schemes or funds for providing pensions,
sickness or compassionate allowances, life assurance or other benefits for employees (which
expression as used in this and the following paragraph shall include any Director or ex-Director
who may hold or have held any executive office or any office of profit with the Company or any of
its subsidiaries) and ex-employees of the Company and their dependents or any class or classes
of such persons.
The board may pay, enter into agreements to pay or make grants of revocable or irrevocable,
and either subject or not subject to any terms or conditions, pensions or other benefits to
employees and ex-employees and their dependents, or to any of such persons, including pensions
or benefits additional to those, if any, to which such employees or ex-employees or their
dependents are or may become entitled under any such scheme or fund as is mentioned in the
previous paragraph. Any such pension or benefit may, as the board considers desirable, be
granted to an employee either before and in anticipation of, or upon or at any time after, his actual
retirement.
(vi) Compensation or payments for loss of office
Pursuant to the Articles, payments to any Director or past Director of any sum by way of
compensation for loss of office or as consideration for or in connection with his retirement from
office (not being a payment to which the Director is contractually entitled) must be approved by the
Company in general meeting.
— III-6 —
(vii) Loans and provision of security for loans to Directors
The Company must not make any loan, directly or indirectly, to a Director or his close
associate(s) if and to the extent it would be prohibited by the Companies Ordinance (Chapter 622
of the laws of Hong Kong) as if the Company were a company incorporated in Hong Kong.
(viii) Disclosure of interests in contracts with the Company or any of its subsidiaries
A Director may hold any other office or place of profit with the Company (except that of the
auditor of the Company) in conjunction with his office of Director for such period and upon such
terms as the board may determine, and may be paid such extra remuneration therefor in addition
to any remuneration provided for by or pursuant to the Articles. A Director may be or become a
director or other officer of, or otherwise interested in, any company promoted by the Company or
any other company in which the Company may be interested, and shall not be liable to account
to the Company or the members for any remuneration, profits or other benefits received by him
as a director, officer or member of, or from his interest in, such other company. The board may also
cause the voting power conferred by the shares in any other company held or owned by the
Company to be exercised in such manner in all respects as it thinks fit, including the exercise
thereof in favour of any resolution appointing the Directors or any of them to be directors or
officers of such other company, or voting or providing for the payment of remuneration to the
directors or officers of such other company.
No Director or proposed or intended Director shall be disqualified by his office from

contracting with the Company, either with regard to his tenure of any office or place of profit or as
vendor, purchaser or in any other manner whatsoever, nor shall any such contract or any other
contract or arrangement in which any Director is in any way interested be liable to be avoided, nor
shall any Director so contracting or being so interested be liable to account to the Company or the
members for any remuneration, profit or other benefits realised by any such contract or
arrangement by reason of such Director holding that office or the fiduciary relationship thereby
established. A Director who to his knowledge is in any way, whether directly or indirectly,
interested in a contract or arrangement or proposed contract or arrangement with the Company
must declare the nature of his interest at the meeting of the board at which the question of entering
into the contract or arrangement is first taken into consideration, if he knows his interest then
exists, or in any other case, at the first meeting of the board after he knows that he is or has
become so interested.
A Director shall not vote (nor be counted in the quorum) on any resolution of the board
approving any contract or arrangement or other proposal in which he or any of his close
associates is materially interested, but this prohibition does not apply to any of the following
matters, namely:
(aa) any contract or arrangement for giving to such Director or his close associate(s) any
security or indemnity in respect of money lent by him or any of his close associates or
obligations incurred or undertaken by him or any of his close associates at the request
of or for the benefit of the Company or any of its subsidiaries;
(bb) any contract or arrangement for the giving of any security or indemnity to a third party
in respect of a debt or obligation of the Company or any of its subsidiaries for which the
Director or his close associate(s) has himself/themselves assumed responsibility in
whole or in part whether alone or jointly under a guarantee or indemnity or by the giving
of security;
— III-7 —
(cc) any contract or arrangement concerning an offer of shares or debentures or other

securities of or by the Company or any other company which the Company may promote
or be interested in for subscription or purchase, where the Director or his close
associate(s) is/are or is/are to be interested as a participant in the underwriting or
sub-underwriting of the offer;
(dd) any contract or arrangement in which the Director or his close associate(s) is/are
interested in the same manner as other holders of shares or debentures or other
securities of the Company by virtue only of his/their interest in shares or debentures or
other securities of the Company; or
(ee) any proposal or arrangement concerning the adoption, modification or operation of a

share option scheme, a pension fund or retirement, death, or disability benefits scheme
or other arrangement which relates both to Directors, his close associates and
employees of the Company or of any of its subsidiaries and does not provide in respect
of any Director, or his close associate(s), as such any privilege or advantage not
accorded generally to the class of persons to which such scheme or fund relates.
(c) Proceedings of the Board
The board may meet for the despatch of business, adjourn and otherwise regulate its
meetings as it considers appropriate. Questions arising at any meeting shall be determined by a
majority of votes. In the case of an equality of votes, the chairman of the meeting shall have an
additional or casting vote.
(d) Alterations to constitutional documents and the Company’s name
The Articles may be rescinded, altered or amended by the Company in general meeting by
special resolution. The Articles state that a special resolution shall be required to alter the
provisions of the Memorandum, to amend the Articles or to change the name of the Company.
(e) Meetings of members
(i) Special and ordinary resolutions
A special resolution of the Company must be passed by a majority of not less than
three-fourths of the votes cast by such members as, being entitled so to do, vote in person or, in
the case of such members as are corporations, by their duly authorised representatives or, where
proxies are allowed, by proxy at a general meeting of which notice has been duly given in
accordance with the Articles.
Under the Companies Law, a copy of any special resolution must be forwarded to the
Registrar of Companies in the Cayman Islands within fifteen (15) days of being passed.
An ordinary resolution is defined in the Articles to mean a resolution passed by a simple

majority of the votes of such members of the Company as, being entitled to do so, vote in person
or, in the case of corporations, by their duly authorised representatives or, where proxies are
allowed, by proxy at a general meeting of which notice has been duly given held in accordance
with the Articles.
— III-8 —
(ii) Voting rights and right to demand a poll
Subject to any special rights or restrictions as to voting for the time being attached to any
shares, at any general meeting on a poll every member present in person or by proxy or, in the
case of a member being a corporation, by its duly authorised representative shall have one vote
for every fully paid share of which he is the holder but so that no amount paid up or credited as
paid up on a share in advance of calls or installments is treated for the foregoing purposes as paid
up on the share. A member entitled to more than one vote need not use all his votes or cast all
the votes he uses in the same way.
At any general meeting a resolution put to the vote of the meeting is to be decided by way
of a poll save that the chairman of the meeting may in good faith, allow a resolution which relates
purely to a procedural or administrative matter to be voted on by a show of hands in which case
every member present in person (or being a corporation, is present by a duly authorized
representative), or by proxy(ies) shall have one vote provided that where more than one proxy is
appointed by a member which is a clearing house (or its nominee(s)), each such proxy shall have
one vote on a show of hands.
If a recognised clearing house (or its nominee(s)) is a member of the Company it may
authorise such person or persons as it thinks fit to act as its representative(s) at any meeting of
the Company or at any meeting of any class of members of the Company provided that, if more
than one person is so authorised, the authorisation shall specify the number and class of shares
in respect of which each such person is so authorised. A person authorised pursuant to this
provision shall be deemed to have been duly authorised without further evidence of the facts and
be entitled to exercise the same powers on behalf of the recognised clearing house (or its
nominee(s)) as if such person was the registered holder of the shares of the Company held by that
clearing house (or its nominee(s)) including, where a show of hands is allowed, the right to vote
individually on a show of hands.
Where the Company has any knowledge that any shareholder is, under the rules of the Stock
Exchange, required to abstain from voting on any particular resolution of the Company or
restricted to voting only for or only against any particular resolution of the Company, any votes
cast by or on behalf of such shareholder in contravention of such requirement or restriction shall
not be counted.
(iii) Annual general meetings
The Company must hold an annual general meeting of the Company every year within a
period of not more than fifteen (15) months after the holding of the last preceding annual general
meeting or a period of not more than eighteen (18) months from the date of adoption of the
Articles, unless a longer period would not infringe the rules of the Stock Exchange.
(iv) Notices of meetings and business to be conducted
An annual general meeting must be called by notice of not less than twenty-one (21) clear
days and not less than twenty (20) clear business days. All other general meetings must be called
by notice of at least fourteen (14) clear days and not less than ten (10) clear business days. The
notice is exclusive of the day on which it is served or deemed to be served and of the day for which
it is given, and must specify the time and place of the meeting and particulars of resolutions to be
considered at the meeting and, in the case of special business, the general nature of that
business.
— III-9 —
In addition, notice of every general meeting must be given to all members of the Company
other than to such members as, under the provisions of the Articles or the terms of issue of the
shares they hold, are not entitled to receive such notices from the Company, and also to, among
others, the auditors for the time being of the Company.
Any notice to be given to or by any person pursuant to the Articles may be served on or
delivered to any member of the Company personally, by post to such member’s registered
address, by advertisement in newspapers in accordance with the requirements of the Stock
Exchange. Subject to compliance with Cayman Islands law and the rules of the Stock Exchange,
notice may also be served or delivered by the Company to any member by electronic means.
All business that is transacted at an extraordinary general meeting and at an annual general
meeting is deemed special, save that in the case of an annual general meeting, each of the
following business is deemed an ordinary business:
(aa) the declaration and sanctioning of dividends;
(bb) the consideration and adoption of the accounts and balance sheet and the reports of the
directors and the auditors;
(cc) the election of directors in place of those retiring;
(dd) the appointment of auditors and other officers;
(ee) the fixing of the remuneration of the directors and of the auditors;
(ff) the granting of any mandate or authority to the directors to offer, allot, grant options over
or otherwise dispose of the unissued shares of the Company representing not more
than twenty per cent (20%) in nominal value of its existing issued share capital; and
(gg) the granting of any mandate or authority to the directors to repurchase securities of the
Company.
(v) Quorum for meetings and separate class meetings
No business shall be transacted at any general meeting unless a quorum is present when the
meeting proceeds to business, but the absence of a quorum shall not preclude the appointment
of a chairman.
The quorum for a general meeting shall be two members present in person (or, in the case
of a member being a corporation, by its duly authorised representative) or by proxy and entitled
to vote. In respect of a separate class meeting (other than an adjourned meeting) convened to
sanction the modification of class rights the necessary quorum shall be two persons holding or
representing by proxy not less than one-third in nominal value of the issued shares of that class.
— III-10 —
(vi) Proxies
Any member of the Company entitled to attend and vote at a meeting of the Company is
entitled to appoint another person as his proxy to attend and vote instead of him. A member who
is the holder of two or more shares may appoint more than one proxy to represent him and vote
on his behalf at a general meeting of the Company or at a class meeting. A proxy need not be a
member of the Company and is entitled to exercise the same powers on behalf of a member who
is an individual and for whom he acts as proxy as such member could exercise. In addition, a
proxy is entitled to exercise the same powers on behalf of a member which is a corporation and
for which he acts as proxy as such member could exercise if it were an individual member. Votes
may be given either personally (or, in the case of a member being a corporation, by its duly
authorised representative) or by proxy.
(f) Accounts and audit
The board shall cause true accounts to be kept of the sums of money received and expended
by the Company, and the matters in respect of which such receipt and expenditure take place, and
of the property, assets, credits and liabilities of the Company and of all other matters required by
the Companies Law or necessary to give a true and fair view of the Company’s affairs and to
explain its transactions.
The accounting records must be kept at the registered office or at such other place or places
as the board decides and shall always be open to inspection by any Director. No member (other
than a Director) shall have any right to inspect any accounting record or book or document of the
Company except as conferred by law or authorised by the board or the Company in general
meeting. However, an exempted company must make available at its registered office in electronic
form or any other medium, copies of its books of account or parts thereof as may be required of
it upon service of an order or notice by the Tax Information Authority pursuant to the Tax
Information Authority Law of the Cayman Islands.
A copy of every balance sheet and profit and loss account (including every document
required by law to be annexed thereto) which is to be laid before the Company at its general
meeting, together with a printed copy of the Directors’ report and a copy of the auditors’ report,
shall not less than twenty-one (21) days before the date of the meeting and at the same time as
the notice of annual general meeting be sent to every person entitled to receive notices of general
meetings of the Company under the provisions of the Articles; however, subject to compliance with
all applicable laws, including the rules of the Stock Exchange, the Company may send to such
persons summarised financial statements derived from the Company’s annual accounts and the
directors’ report instead provided that any such person may by notice in writing served on the
Company, demand that the Company sends to him, in addition to summarised financial
statements, a complete printed copy of the Company’s annual financial statement and the
directors’ report thereon.
At the annual general meeting or at a subsequent extraordinary general meeting in each

year, the members shall appoint an auditor to audit the accounts of the Company and such auditor
shall hold office until the next annual general meeting. The remuneration of the auditors shall be
fixed by the Company in general meeting or in such manner as the members may determine.
— III-11 —
The financial statements of the Company shall be audited by the auditor in accordance with
generally accepted auditing standards which may be those of a country or jurisdiction other than
the Cayman Islands. The auditor shall make a written report thereon in accordance with generally
accepted auditing standards and the report of the auditor must be submitted to the members in
general meeting.
(g) Dividends and other methods of distribution
The Company in general meeting may declare dividends in any currency to be paid to the
members but no dividend shall be declared in excess of the amount recommended by the board.
The Articles provide dividends may be declared and paid out of the profits of the Company,
realised or unrealised, or from any reserve set aside from profits which the directors determine is
no longer needed. With the sanction of an ordinary resolution dividends may also be declared and
paid out of share premium account or any other fund or account which can be authorised for this
purpose in accordance with the Companies Law.
Except in so far as the rights attaching to, or the terms of issue of, any share may otherwise
provide, (i) all dividends shall be declared and paid according to the amounts paid up on the
shares in respect whereof the dividend is paid but no amount paid up on a share in advance of
calls shall for this purpose be treated as paid up on the share and (ii) all dividends shall be
apportioned and paid pro rata according to the amount paid up on the shares during any portion
or portions of the period in respect of which the dividend is paid. The Directors may deduct from
any dividend or other monies payable to any member or in respect of any shares all sums of
money (if any) presently payable by him to the Company on account of calls or otherwise.
Whenever the board or the Company in general meeting has resolved that a dividend be paid
or declared on the share capital of the Company, the board may further resolve either (a) that such
dividend be satisfied wholly or in part in the form of an allotment of shares credited as fully paid
up, provided that the shareholders entitled thereto will be entitled to elect to receive such dividend
(or part thereof) in cash in lieu of such allotment, or (b) that shareholders entitled to such dividend
will be entitled to elect to receive an allotment of shares credited as fully paid up in lieu of the
whole or such part of the dividend as the board may think fit.
The Company may also upon the recommendation of the board by an ordinary resolution
resolve in respect of any one particular dividend of the Company that it may be satisfied wholly
in the form of an allotment of shares credited as fully paid up without offering any right to
shareholders to elect to receive such dividend in cash in lieu of such allotment.
Any dividend, interest or other sum payable in cash to the holder of shares may be paid by
cheque or warrant sent through the post addressed to the holder at his registered address, or in
the case of joint holders, addressed to the holder whose name stands first in the register of the
Company in respect of the shares at his address as appearing in the register or addressed to such
person and at such addresses as the holder or joint holders may in writing direct. Every such
cheque or warrant shall, unless the holder or joint holders otherwise direct, be made payable to
the order of the holder or, in the case of joint holders, to the order of the holder whose name stands
first on the register in respect of such shares, and shall be sent at his or their risk and payment
of the cheque or warrant by the bank on which it is drawn shall constitute a good discharge to the
Company. Any one of two or more joint holders may give effectual receipts for any dividends or
other moneys payable or property distributable in respect of the shares held by such joint holders.
— III-12 —
Whenever the board or the Company in general meeting has resolved that a dividend be paid
or declared the board may further resolve that such dividend be satisfied wholly or in part by the
distribution of specific assets of any kind.
All dividends or bonuses unclaimed for one year after having been declared may be invested
or otherwise made use of by the board for the benefit of the Company until claimed and the
Company shall not be constituted a trustee in respect thereof. All dividends or bonuses unclaimed
for six years after having been declared may be forfeited by the board and shall revert to the
Company.
No dividend or other monies payable by the Company on or in respect of any share shall bear
interest against the Company.
(h) Inspection of corporate records
Pursuant to the Articles, the register and branch register of members shall be open to
inspection for at least two (2) hours during business hours by members without charge, or by any
other person upon a maximum payment of HK$2.50 or such lesser sum specified by the board, at
the registered office or such other place at which the register is kept in accordance with the
Companies Law or, upon a maximum payment of HK$1.00 or such lesser sum specified by the
board, at the office where the branch register of members is kept, unless the register is closed in
accordance with the Articles.
(i) Rights of minorities in relation to fraud or oppression
There are no provisions in the Articles relating to rights of minority shareholders in relation
to fraud or oppression. However, certain remedies are available to shareholders of the Company
under Cayman Islands law, as summarised in paragraph 3(f) of this Appendix.
(j) Procedures on liquidation
A resolution that the Company be wound up by the court or be wound up voluntarily shall be
a special resolution.
Subject to any special rights, privileges or restrictions as to the distribution of available

surplus assets on liquidation for the time being attached to any class or classes of shares:
(i) if the Company is wound up and the assets available for distribution amongst the
members of the Company shall be more than sufficient to repay the whole of the capital
paid up at the commencement of the winding up, the excess shall be distributed pari
passu amongst such members in proportion to the amount paid up on the shares held
by them respectively; and
(ii) if the Company is wound up and the assets available for distribution amongst the
members as such shall be insufficient to repay the whole of the paid-up capital, such
assets shall be distributed so that, as nearly as may be, the losses shall be borne by
the members in proportion to the capital paid up, or which ought to have been paid up,
at the commencement of the winding up on the shares held by them respectively.
— III-13 —
If the Company is wound up (whether the liquidation is voluntary or by the court) the
liquidator may, with the authority of a special resolution and any other sanction required by the
Companies Law divide among the members in specie or kind the whole or any part of the assets
of the Company whether the assets shall consist of property of one kind or shall consist of
properties of different kinds and the liquidator may, for such purpose, set such value as he deems
fair upon any one or more class or classes of property to be divided as aforesaid and may
determine how such division shall be carried out as between the members or different classes of
members. The liquidator may, with the like authority, vest any part of the assets in trustees upon
such trusts for the benefit of members as the liquidator, with the like authority, shall think fit, but
so that no contributory shall be compelled to accept any shares or other property in respect of
which there is a liability.
(k) Subscription rights reserve
The Articles provide that to the extent that it is not prohibited by and is in compliance with the
Companies Law, if warrants to subscribe for shares have been issued by the Company and the
Company does any act or engages in any transaction which would result in the subscription price
of such warrants being reduced below the par value of a share, a subscription rights reserve shall
be established and applied in paying up the difference between the subscription price and the par
value of a share on any exercise of the warrants.
3. CAYMAN ISLANDS COMPANY LAW
The Company is incorporated in the Cayman Islands subject to the Companies Law and,
therefore, operates subject to Cayman Islands law. Set out below is a summary of certain
provisions of Cayman company law, although this does not purport to contain all applicable
qualifications and exceptions or to be a complete review of all matters of Cayman company law
and taxation, which may differ from equivalent provisions in jurisdictions with which interested
parties may be more familiar:
(a) Company operations
As an exempted company, the Company’s operations must be conducted mainly outside the
Cayman Islands. The Company is required to file an annual return each year with the Registrar
of Companies of the Cayman Islands and pay a fee which is based on the amount of its authorised
share capital.
(b) Share capital
The Companies Law provides that where a company issues shares at a premium, whether
for cash or otherwise, a sum equal to the aggregate amount of the value of the premiums on those
shares shall be transferred to an account, to be called the “share premium account”. At the option
of a company, these provisions may not apply to premiums on shares of that company allotted
pursuant to any arrangement in consideration of the acquisition or cancellation of shares in any
other company and issued at a premium.
The Companies Law provides that the share premium account may be applied by the
company subject to the provisions, if any, of its memorandum and articles of association in (a)
paying distributions or dividends to members; (b) paying up unissued shares of the company to
— III-14 —
be issued to members as fully paid bonus shares; (c) the redemption and repurchase of shares
(subject to the provisions of section 37 of the Companies Law); (d) writing-off the preliminary
expenses of the company; and (e) writing-off the expenses of, or the commission paid or discount
allowed on, any issue of shares or debentures of the company.
No distribution or dividend may be paid to members out of the share premium account unless
immediately following the date on which the distribution or dividend is proposed to be paid, the
company will be able to pay its debts as they fall due in the ordinary course of business.
The Companies Law provides that, subject to confirmation by the Grand Court of the Cayman
Islands (the “Court”), a company limited by shares or a company limited by guarantee and having
a share capital may, if so authorised by its articles of association, by special resolution reduce its
share capital in any way.
(c) Financial assistance to purchase shares of a company or its holding company
There is no statutory restriction in the Cayman Islands on the provision of financial

assistance by a company to another person for the purchase of, or subscription for, its own or its
holding company’s shares. Accordingly, a company may provide financial assistance if the
directors of the company consider, in discharging their duties of care and acting in good faith, for
a proper purpose and in the interests of the company, that such assistance can properly be given.
Such assistance should be on an arm’s-length basis.
(d) Purchase of shares and warrants by a company and its subsidiaries
A company limited by shares or a company limited by guarantee and having a share capital
may, if so authorised by its articles of association, issue shares which are to be redeemed or are
liable to be redeemed at the option of the company or a shareholder and the Companies Law
expressly provides that it shall be lawful for the rights attaching to any shares to be varied, subject
to the provisions of the company’s articles of association, so as to provide that such shares are
to be or are liable to be so redeemed. In addition, such a company may, if authorised to do so by
its articles of association, purchase its own shares, including any redeemable shares. However,
if the articles of association do not authorise the manner and terms of purchase, a company
cannot purchase any of its own shares unless the manner and terms of purchase have first been
authorised by an ordinary resolution of the company. At no time may a company redeem or
purchase its shares unless they are fully paid. A company may not redeem or purchase any of its
shares if, as a result of the redemption or purchase, there would no longer be any issued shares
of the company other than shares held as treasury shares. A payment out of capital by a company
for the redemption or purchase of its own shares is not lawful unless immediately following the
date on which the payment is proposed to be made, the company shall be able to pay its debts
as they fall due in the ordinary course of business.
Shares purchased by a company is to be treated as cancelled unless, subject to the

memorandum and articles of association of the company, the directors of the company resolve to
hold such shares in the name of the company as treasury shares prior to the purchase. Where
shares of a company are held as treasury shares, the company shall be entered in the register of
members as holding those shares, however, notwithstanding the foregoing, the company is not be
treated as a member for any purpose and must not exercise any right in respect of the treasury
shares, and any purported exercise of such a right shall be void, and a treasury share must not
— III-15 —
be voted, directly or indirectly, at any meeting of the company and must not be counted in
determining the total number of issued shares at any given time, whether for the purposes of the
company’s articles of association or the Companies Law.
A company is not prohibited from purchasing and may purchase its own warrants subject to
and in accordance with the terms and conditions of the relevant warrant instrument or certificate.
There is no requirement under Cayman Islands law that a company’s memorandum or articles of
association contain a specific provision enabling such purchases and the directors of a company
may rely upon the general power contained in its memorandum of association to buy and sell and
deal in personal property of all kinds.
Under Cayman Islands law, a subsidiary may hold shares in its holding company and, in
certain circumstances, may acquire such shares.
(e) Dividends and distributions
The Companies Law permits, subject to a solvency test and the provisions, if any, of the
company’s memorandum and articles of association, the payment of dividends and distributions
out of the share premium account. With the exception of the foregoing, there are no statutory
provisions relating to the payment of dividends. Based upon English case law, which is regarded
as persuasive in the Cayman Islands, dividends may be paid only out of profits.
No dividend may be declared or paid, and no other distribution (whether in cash or otherwise)
of the company’s assets (including any distribution of assets to members on a winding up) may
be made to the company, in respect of a treasury share.
(f) Protection of minorities and shareholders’ suits
The Courts ordinarily would be expected to follow English case law precedents which permit
a minority shareholder to commence a representative action against or derivative actions in the
name of the company to challenge (a) an act which is ultra vires the company or illegal, (b) an act
which constitutes a fraud against the minority and the wrongdoers are themselves in control of the
company, and (c) an irregularity in the passing of a resolution which requires a qualified (or
special) majority.
In the case of a company (not being a bank) having a share capital divided into shares, the
Court may, on the application of members holding not less than one fifth of the shares of the
company in issue, appoint an inspector to examine into the affairs of the company and to report
thereon in such manner as the Court shall direct.
Any shareholder of a company may petition the Court which may make a winding up order
if the Court is of the opinion that it is just and equitable that the company should be wound up or,
as an alternative to a winding up order, (a) an order regulating the conduct of the company’s affairs
in the future, (b) an order requiring the company to refrain from doing or continuing an act
complained of by the shareholder petitioner or to do an act which the shareholder petitioner has
complained it has omitted to do, (c) an order authorising civil proceedings to be brought in the
name and on behalf of the company by the shareholder petitioner on such terms as the Court may
direct, or (d) an order providing for the purchase of the shares of any shareholders of the company
by other shareholders or by the company itself and, in the case of a purchase by the company
itself, a reduction of the company’s capital accordingly.
— III-16 —
Generally claims against a company by its shareholders must be based on the general laws
of contract or tort applicable in the Cayman Islands or their individual rights as shareholders as
established by the company’s memorandum and articles of association.
(g) Disposal of assets
The Companies Law contains no specific restrictions on the power of directors to dispose of
assets of a company. However, as a matter of general law, every officer of a company, which
includes a director, managing director and secretary, in exercising his powers and discharging his
duties must do so honestly and in good faith with a view to the best interests of the company and
exercise the care, diligence and skill that a reasonably prudent person would exercise in
comparable circumstances.
(h) Accounting and auditing requirements
A company must cause proper books of account to be kept with respect to (i) all sums of
money received and expended by the company and the matters in respect of which the receipt and
expenditure takes place; (ii) all sales and purchases of goods by the company; and (iii) the assets
and liabilities of the company.
Proper books of account shall not be deemed to be kept if there are not kept such books as
are necessary to give a true and fair view of the state of the company’s affairs and to explain its
transactions.
An exempted company must make available at its registered office in electronic form or any
other medium, copies of its books of account or parts thereof as may be required of it upon service
of an order or notice by the Tax Information Authority pursuant to the Tax Information Authority Law
of the Cayman Islands.
(i) Exchange control
There are no exchange control regulations or currency restrictions in the Cayman Islands.
(j) Taxation
Pursuant to section 6 of the Tax Concessions Law (2011 Revision) of the Cayman Islands,
the Company has obtained an undertaking from the Governor-in-Cabinet:
(1) that no law which is enacted in the Cayman Islands imposing any tax to be levied on
profits, income, gains or appreciation shall apply to the Company or its operations; and
(2) that the aforesaid tax or any tax in the nature of estate duty or inheritance tax shall not
be payable on or in respect of the shares, debentures or other obligations of the
Company.
The undertaking for the Company is for a period of twenty years from 11 August 2015.
The Cayman Islands currently levy no taxes on individuals or corporations based upon
profits, income, gains or appreciations and there is no taxation in the nature of inheritance tax or
estate duty. There are no other taxes likely to be material to the Company levied by the
— III-17 —
Government of the Cayman Islands save for certain stamp duties which may be applicable, from
time to time, on certain instruments executed in or brought within the jurisdiction of the Cayman
Islands. The Cayman Islands are a party to a double tax treaty entered into with the United
Kingdom in 2010 but otherwise is not party to any double tax treaties.
(k) Stamp duty on transfers
No stamp duty is payable in the Cayman Islands on transfers of shares of Cayman Islands
companies except those which hold interests in land in the Cayman Islands.
(l) Loans to directors
There is no express provision in the Companies Law prohibiting the making of loans by a
company to any of its directors.
(m) Inspection of corporate records
Members of the Company have no general right under the Companies Law to inspect or
obtain copies of the register of members or corporate records of the Company. They will, however,
have such rights as may be set out in the Company’s Articles.
(n) Register of members
An exempted company may maintain its principal register of members and any branch
registers at such locations, whether within or without the Cayman Islands, as the directors may,
from time to time, think fit. A branch register must be kept in the same manner in which a principal
register is by the Companies Law required or permitted to be kept. The company shall cause to
be kept at the place where the company’s principal register is kept a duplicate of any branch
register duly entered up from time to time.
There is no requirement under the Companies Law for an exempted company to make any
returns of members to the Registrar of Companies of the Cayman Islands. The names and
addresses of the members are, accordingly, not a matter of public record and are not available for
public inspection. However, an exempted company shall make available at its registered office, in
electronic form or any other medium, such register of members, including any branch register of
members, as may be required of it upon service of an order or notice by the Tax Information
Authority pursuant to the Tax Information Authority Law of the Cayman Islands.
(o) Register of Directors and Officers
The Company is required to maintain at its registered office a register of directors and
officers which is not available for inspection by the public. A copy of such register must be filed
with the Registrar of Companies in the Cayman Islands and any change must be notified to the
Registrar within sixty (60) days of any change in such directors or officers.
— III-18 —
(p) Beneficial Ownership Register
An exempted company is required to maintain a beneficial ownership register at its

registered office that records details of the persons who ultimately own or control, directly or
indirectly, more than 25% of the equity interests or voting rights of the company or have rights to
appoint or remove a majority of the directors of the company. The beneficial ownership register is
not a public document and is only accessible by a designated competent authority of the Cayman
Islands. Such requirement does not, however, apply to an exempted company with its shares
listed on an approved stock exchange, which includes the Stock Exchange. Accordingly, for so
long as the shares of the Company are listed on the Stock Exchange, the Company is not required
to maintain a beneficial ownership register.
(q) Winding up
A company may be wound up (a) compulsorily by order of the Court, (b) voluntarily, or (c)
under the supervision of the Court.
The Court has authority to order winding up in a number of specified circumstances including
where the members of the company have passed a special resolution requiring the company to be
wound up by the Court, or where the company is unable to pay its debts, or where it is, in the
opinion of the Court, just and equitable to do so. Where a petition is presented by members of the
company as contributories on the ground that it is just and equitable that the company should be
wound up, the Court has the jurisdiction to make certain other orders as an alternative to a
winding-up order, such as making an order regulating the conduct of the company’s affairs in the
future, making an order authorising civil proceedings to be brought in the name and on behalf of
the company by the petitioner on such terms as the Court may direct, or making an order providing
for the purchase of the shares of any of the members of the company by other members or by the
company itself.
A company (save with respect to a limited duration company) may be wound up voluntarily
when the company so resolves by special resolution or when the company in general meeting
resolves by ordinary resolution that it be wound up voluntarily because it is unable to pay its debts
as they fall due. In the case of a voluntary winding up, such company is obliged to cease to carry
on its business (except so far as it may be beneficial for its winding up) from the time of passing
the resolution for voluntary winding up or upon the expiry of the period or the occurrence of the
event referred to above.
For the purpose of conducting the proceedings in winding up a company and assisting the
Court therein, there may be appointed an official liquidator or official liquidators; and the court may
appoint to such office such person, either provisionally or otherwise, as it thinks fit, and if more
persons than one are appointed to such office, the Court must declare whether any act required
or authorised to be done by the official liquidator is to be done by all or any one or more of such
persons. The Court may also determine whether any and what security is to be given by an official
liquidator on his appointment; if no official liquidator is appointed, or during any vacancy in such
office, all the property of the company shall be in the custody of the Court.
— III-19 —
As soon as the affairs of the company are fully wound up, the liquidator must make a report
and an account of the winding up, showing how the winding up has been conducted and how the
property of the company has been disposed of, and thereupon call a general meeting of the
company for the purposes of laying before it the account and giving an explanation thereof. This
final general meeting must be called by at least 21 days’ notice to each contributory in any manner
authorised by the company’s articles of association and published in the Gazette.
(r) Reconstructions
There are statutory provisions which facilitate reconstructions and amalgamations approved
by a majority in number representing seventy-five per cent. (75%) in value of shareholders or
class of shareholders or creditors, as the case may be, as are present at a meeting called for such
purpose and thereafter sanctioned by the Court. Whilst a dissenting shareholder would have the
right to express to the Court his view that the transaction for which approval is sought would not
provide the shareholders with a fair value for their shares, the Court is unlikely to disapprove the
transaction on that ground alone in the absence of evidence of fraud or bad faith on behalf of
management.
(s) Take-overs
Where an offer is made by a company for the shares of another company and, within four (4)
months of the offer, the holders of not less than ninety per cent. (90%) of the shares which are the
subject of the offer accept, the offeror may at any time within two (2) months after the expiration
of the said four (4) months, by notice in the prescribed manner require the dissenting shareholders
to transfer their shares on the terms of the offer. A dissenting shareholder may apply to the Court
within one (1) month of the notice objecting to the transfer. The burden is on the dissenting
shareholder to show that the Court should exercise its discretion, which it will be unlikely to do
unless there is evidence of fraud or bad faith or collusion as between the offeror and the holders
of the shares who have accepted the offer as a means of unfairly forcing out minority
shareholders.
(t) Indemnification
Cayman Islands law does not limit the extent to which a company’s articles of association
may provide for indemnification of officers and directors, except to the extent any such provision
may be held by the Court to be contrary to public policy (e.g. for purporting to provide
indemnification against the consequences of committing a crime).
4. GENERAL
Conyers Dill & Pearman, the Company’s special legal counsel on Cayman Islands law, have
sent to the Company a letter of advice summarising certain aspects of Cayman Islands company
law. This letter, together with a copy of the Companies Law, is available for inspection as referred
to in the paragraph headed “Documents available for inspection” in Appendix V to this prospectus.
Any person wishing to have a detailed summary of Cayman Islands company law or advice on the
differences between it and the laws of any jurisdiction with which he is more familiar is
recommended to seek independent legal advice.
— III-20 —
APPENDIX IV STATUTORY AND GENERAL INFORMATION
INFORMATION ABOUT OUR COMPANY
1. Incorporation of our Company
Our Company was incorporated in the Cayman Islands under the Cayman Islands
Companies Law as an exempted company with limited liability on July 17, 2015.
We have been registered in Hong Kong under Part 16 of the Companies Ordinance as a
non-Hong Kong company on April 5, 2016 and our principal place of business in Hong Kong is at
Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong. In compliance with the
requirements of the Companies Ordinance, Ms. Lo Yee Har Susan and Ms. Li Yan Wing Rita have
been appointed as the authorized representatives in Hong Kong for the acceptance of service of
process and any notice required to be served on our Company in Hong Kong.
Our Company was incorporated in the Cayman Islands and is subject to Cayman Islands law.
Its constitution comprises a memorandum of association and articles of association. A summary
of certain relevant parts of its constitution and certain relevant aspects of Cayman Islands
Companies Law is set out in Appendix III to this prospectus.
2. Changes in share capital of our Company
(a) Changes in our authorized and issued share capital
(i) As of the date of incorporation of our Company on July 17, 2015, our authorized share
capital was HK$380,000 divided into 38,000,000 Shares having a par value of HK$0.01
each.
(ii) On the date of incorporation:
(A) One Share was allotted and issued nil paid to the initial subscriber of our
Company, which was subsequently transferred to Ximalaya at nil consideration on
the same date;
(B) 9,999 Shares of HK$0.01 each in our Company were allotted and issued nil paid,
among which 8,668 Shares were allotted and issued to Ximalaya, 150 Shares
were allotted and issued to Summer, 999 Shares were allotted and issued to
Suntop and 182 Shares were allotted and issued to Sanbao, respectively.
The aforesaid nil-paid Shares were credited as fully paid at par on February 26, 2016.
(iii) On February 26, 2016, 80,000 Shares of HK$0.01 each were allotted and issued fully
paid, among which 69,362 Shares were allotted and issued to Ximalaya, 7,992 Shares
were allotted and issued to Suntop, 1,456 Shares were allotted and issued to Sanbao
and 1,200 Shares were allotted and issued to Summer at par.
(iv) On February 29, 2016, our authorized share capital, namely HK$380,000 divided into
38,000,000 Shares of HK$0.01 each, was reclassified and re-designated into
37,990,000 Ordinary Shares with par value of HK$0.01 each and 10,000 Series A
Preferred Shares with par value of HK$0.01 each pursuant to the resolutions in writing
of our Shareholders passed on February 29, 2016. The 90,000 issued Shares held by
Ximalaya, Suntop, Sanbao and Summer continued to be classified and designated as
Ordinary Shares.
— IV-1 —
(v) On February 29, 2016, 10,000 Series A Preferred Shares of HK$0.01 each were allotted
and issued fully paid to OrbiMed Asia at the consideration of US$ equivalent of
RMB126,000,000.
(vi) On November 17, 2017, the authorized share capital of our Company was further
increased to HK$20,000,000 by the creation of a further 1,962,000,000 Ordinary Shares
pursuant to the resolutions in writing of our Shareholders passed on November 17,
2017.
Immediately after the Capitalization Issue and the Global Offering (without taking into
account any Shares which may be allotted and issued upon exercise of the Over-Allotment Option
Option Scheme), the authorized share capital of our Company will be HK$20,000,000 divided into
2,000,000,000 Shares, of which 1,000,000,000 Shares will be issued, fully paid or credited as fully
paid, and 1,000,000,000 Shares will remain unissued.
Other than pursuant to the exercise of the Over-Allotment Option and any options granted or
to be granted under the Pre-IPO Share Option Scheme or the Share Option Scheme, there is no
present intention to issue any of the authorized but unissued share capital of our Company and,
without the prior approval of the Shareholders in general meeting, no issue of Shares will be made
which would effectively alter the control of our Company.
Except as disclosed herein and in “—Information about Our Company—3. Resolutions in

writing of our Shareholders passed on November 17, 2017” and “—Information about Our
Company—4. Group reorganization” in this Appendix, there has been no alteration in the share
capital of our Company since its incorporation.
(b) Founder shares
Our Company has no founder shares, management shares or deferred shares.
3. Resolutions in writing of our Shareholders passed on November 17, 2017
Written resolutions were passed by our Shareholders on November 17, 2017 pursuant to
which, among other matters:
(a) our Company approved and adopted the Memorandum conditional upon and with effect
from the listing of our Shares on the Stock Exchange on the Listing Date;
(b) our Company approved and adopted the Articles conditional upon and with effect from
the listing of our Shares on the Stock Exchange on the Listing Date;
(c) the authorized share capital of our Company was increased from HK$380,000 to
HK$20,000,000 divided into 2,000,000,000 Shares, comprising of 1,999,990,000
Ordinary Shares and 10,000 Series A Preferred Shares, by the creation of a further
1,962,000,000 Ordinary Shares;
— IV-2 —
(d) conditional on (aa) the Listing Committee of the Stock Exchange granting listing of, and
permission to deal in, the Shares in issue and to be issued as mentioned in this
prospectus; (bb) the Offer Price having been determined; (cc) the execution and
delivery of the Underwriting Agreements on or before the date as mentioned in this
prospectus; and (dd) the obligations of the Underwriters under the Underwriting
Agreements becoming unconditional and not being terminated in accordance with the
terms of the Underwriting Agreements or otherwise, in each case on or before the day
falling 30 days after the date of this prospectus:
(i) subject to the receipt of the conversion notice from the holder of the Series A
Preferred Shares, namely OrbiMed Asia, the conversion of 10,000 Series A
Preferred Shares registered in the name of OrbiMed Asia into 10,000 Ordinary
Shares (the “Conversion”) be and is hereby authorized and approved, and
immediately following the Conversion, the unissued but authorized 10,000 Series
A Preferred Shares be and are hereby redesignated and reclassified as 10,000
Ordinary Shares which shall have all the rights pertaining to the Ordinary Shares
and rank pari passu in all respect with the existing Ordinary Shares in the issued
share capital of the Company and the register of members of the Company shall
be updated accordingly;
(ii) immediately following the Conversion, the authorized share capital of the
Company shall become HK$20,000,000 divided into 2,000,000,000 Ordinary
Shares;
(iii) the Global Offering and the Over-Allotment Option were approved and our
Directors were authorized to allot and issue the Offer Shares pursuant to the
Global Offering and such number of Shares as may be required to be allotted and
issued upon the exercise of the Over-Allotment Option;
(iv) the rules of the Pre-IPO Share Option Scheme, the principal terms of which are set
out in “—Other Information—15. Share Option Schemes—B. Pre-IPO Share
Option Scheme” in this Appendix, were approved and adopted and at our
Directors’ absolute discretion to grant options to subscribe for Shares thereunder
and to allot, issue and deal with Shares pursuant to the exercise of options which
may be granted under the Pre-IPO Share Option Scheme and to take all such
steps as may be necessary, desirable or expedient to implement the Pre-IPO
Share Option Scheme;
(v) the rules of the Share Option Scheme, the principal terms of which are set out in
“—Other Information—15. Share Option Schemes—A. Share Option Scheme” in
this Appendix, were approved and adopted and our Directors were authorized to
approve any amendments to the rules of the Share Option Scheme as may be
acceptable or not objected to by the Stock Exchange, and at our Directors’
absolute discretion to grant options to subscribe for Shares thereunder and to
allot, issue and deal with Shares pursuant to the exercise of options which may be
granted under the Share Option Scheme and to take all such steps as may be
necessary, desirable or expedient to implement the Share Option Scheme;
— IV-3 —
(vi) conditional on the share premium account of our Company being credited as a
result of the Global Offering, our Directors were authorized to capitalize
HK$7,499,000 standing to the credit of the share premium account of our
Company by applying such sum in paying up in full at par 749,900,000 Shares for
allotment and issue to holders of Shares whose names appear on the register of
members of our Company immediately following the Conversion in proportion (as
nearly as possible without involving fractions so that no fraction of a Share shall
be allotted and issued) to their then existing holdings in our Company and so that
the Shares to be allotted and issued pursuant to this resolution should rank pari
passu in all respects with the then existing issued Shares and our Directors were
authorized to give effect to such capitalization;
(vii) a general unconditional mandate was granted to our Directors to exercise all
powers of our Company to allot, issue and deal with, otherwise than by way of
rights issue, scrip dividend schemes or similar arrangements providing for
allotment of Shares in lieu of the whole or in part of any dividend in accordance
with the Articles, or pursuant to the exercise of any options granted or to be
granted under the Pre-IPO Share Option Scheme or the Share Option Scheme, or
under the Global Offering or the Capitalization Issue or pursuant to the exercise of
the Over-Allotment Option, an aggregate number of Shares not exceeding 20% of
the aggregate number of Shares in issue immediately following completion of the
Capitalization Issue and the Global Offering (but excluding any Shares which may
be allotted and issued upon exercise of the Over-Allotment Option and the options
granted or to be granted under the Pre-IPO Share Option Scheme or the Share
Option Scheme) until the conclusion of the next annual general meeting of our
Company, or upon the expiry of the period within which our Company is required
by any applicable law or the Memorandum and Articles of Association to hold its
next annual general meeting, or when it is varied, revoked or renewed by an
ordinary resolution of our Shareholders in general meeting, whichever occurs first;
(viii) a general unconditional mandate (the “Repurchase Mandate”) was granted to our
Directors to exercise all powers of our Company to purchase or repurchase Shares
on the Stock Exchange or another stock exchange on which the securities of our
Company may be listed and recognized by the SFC and the Stock Exchange for
this purpose, with an aggregate number of not exceeding 10% of the number of
Shares in issue immediately following completion of the Global Offering and the
Capitalization Issue (but excluding any Shares which may be allotted and issued
upon exercise of the Over-Allotment Option and the options granted or to be
granted under the Pre-IPO Share Option Scheme or the Share Option Scheme),
until the conclusion of the next annual general meeting of our Company, or upon
the expiry of the period within which our Company is required by any applicable
meeting, or when it is varied, revoked or renewed by an ordinary resolution of our
Shareholders in general meeting, whichever occurs first; and
(ix) the extension of the general mandate to allot, issue and deal with Shares pursuant
to paragraph (vii) above to include the number of Shares which may be purchased
or repurchased pursuant to sub-paragraph (viii) above;
(f) our Company approved the form and substance of each of the service agreements
made between our executive Directors and our Company, and the form and substance
of each of the appointment letters made between each of our non-executive Directors
and independent non-executive Directors with our Company.
— IV-4 —
4. Group reorganization
The companies comprising our Group underwent a reorganization to rationalize our Group’s
structure in preparation for the listing of our Shares on the Stock Exchange. For more details
regarding the Reorganization, please refer to “History, Reorganization and Development” in this
prospectus.
5. Changes in share capital of subsidiaries
The subsidiaries of our Company are listed in the Accountant’s Report set out in Appendix
I to this prospectus.
Except as disclosed in “History, Reorganization and Development” in this prospectus, there

are no changes in the share capital of each of our Company’s subsidiaries within the two years
immediately preceding the date of this prospectus.
6. Further information about the establishment of our Chinese subsidiaries
Our Group has interests in the registered capital of various Chinese subsidiaries. A summary
of the corporate information of such Chinese subsidiaries as of the Latest Practicable Date is set
out as follows:
(a) AK Medical Beijing (Note)
Name of the enterprise: 北京愛康宜誠醫療器材有限公司

(Beijing AK Medical Co., Ltd)
(formerly known as 北京愛康宜誠醫療器材股份有限公司)
Registered address: No. 10 Baifuquan Road, Changping District Science and

Technology Park, Beijing, China
Date of its establishment: May 8, 2003
Economic nature: Wholly foreign-owned enterprise
Registered owners: AK Medical HK (90%) and Bright AK HK (10%)
Registered capital: RMB100,000,000
Attributable interest to our 100%

Group:
Term of operation: August 20, 2015 to August 19, 2045
Note: AK Medical Beijing has four branches, namely, Beijing Aikang Yicheng Medical Device Co., Ltd Henan
Branch* (北京愛康宜誠醫療器材有限公司河南分公司), Beijing Aikang Yicheng Medical Device Ltd Research and
Development Center* (北京愛康宜誠醫療器材有限公司研發中心), Beijing Aikang Yicheng Medical Device Co.,
Ltd Xi’an Branch* (北京愛康宜誠醫療器材有限公司西安分公司) and Beijing Aikang Yicheng Medical Device Co.,
Ltd Taiyuan Branch* (北京愛康宜誠醫療器材有限公司太原分公司).
— IV-5 —
(b) AK Medical XMKS
Name of the enterprise: 北京西麥克斯醫療器械有限公司

(Beijing Ximai Kesi Medical Device Limited*)
Registered address: Room 02, 2nd Floor, No. 10 Baifuquan Road, Changping
District Science and Technology Park, Beijing, China
Date of its establishment: July 24, 2007
Economic nature: Limited liability company (wholly owned by corporate)
Registered owner: AK Medical Beijing
Registered capital: RMB500,000

Group:
Term of operation: July 24, 2007 to July 23, 2027
(c) AK Medical Changzhou
Name of enterprise: 天衍醫療器材有限公司

(ITI Medical Co. Ltd.*)
Registered address: Building D2, Taihu West Medical Properties Incubation

Park, No. 9 Changyang Road, Taihu West Science,
Technology and Properties Park, Changzhou, China
Date of its establishment: March 28, 2016
Economic nature: Limited Liability Company (wholly foreign-owned

enterprise)
Registered owner: AK Medical HK
Registered capital: US$13,200,000

Group:
Term of operation: March 28, 2016 to March 27, 2046
— IV-6 —
7. Securities repurchase mandate
This paragraph includes information required by the Stock Exchange to be included in this
prospectus concerning the repurchase by our Company of its own securities.
(a) Shareholders’ approval
All proposed repurchases of securities (which must be fully paid up in the case of shares) by
a company with a primary listing on the Stock Exchange must be approved in advance by an
ordinary resolution of the shareholders, either by way of general mandate or by specific approval
of a particular transaction.
A resolution in writing was passed by our Shareholders on November 17, 2017, pursuant to
which a general unconditional mandate (i.e. the Repurchase Mandate) was granted to our
Directors authorizing the purchase or repurchase of such number of Shares by our Company on
the Stock Exchange or another stock exchange on which the securities of our Company may be
listed and recognized by the SFC and the Stock Exchange for this purpose, with an aggregate
number of not exceeding 10% of the aggregate number of Shares in issue immediately following
completion of the Global Offering and the Capitalization Issue (but excluding any Shares which
may be allotted and issued upon exercise of the Over-Allotment Option and the options granted
or to be granted under the Pre-IPO Share Option Scheme or the Share Option Scheme), until the
conclusion of the next annual general meeting of our Company, or upon the expiry of the period
within which our Company is required by any applicable law or the Memorandum and Articles of
Association to hold its next annual general meeting, or when it is varied, revoked or renewed by
an ordinary resolution of our Shareholders in general meeting, whichever occurs first (the
“Relevant Period”).
(b) Source of funds
Repurchases must be funded out of funds legally available for the purpose in accordance
with the Memorandum and Articles of Association, the Listing Rules, the Cayman Islands
Companies Law and the applicable laws and regulations of the Cayman Islands. A listed company
may not repurchase its own securities on the Stock Exchange for a consideration other than cash
or for settlement otherwise than in accordance with the trading rules of the Stock Exchange. Under
Cayman Islands laws, any repurchases by our Company may be made out of profits of our
Company, or out of sums standing to the credit of the share premium accounts, or out of the
proceeds of an issue of new Shares made for the purpose of the repurchase or, if authorized by
the Memorandum and Articles of Association and subject to the Cayman Islands Companies Law,
out of capital, and, in the case of any premium payable on the repurchase, out of either or both
of the profits or from sums standing to the credit of its share premium account or, if authorized by
its Memorandum and Articles of Association and subject to the Cayman Islands Companies Law,
out of capital.
(c) Reasons for repurchases
Our Directors believe that the ability to repurchase our Shares is in the best interest of our
Company and our Shareholders as a whole. Such repurchases may, depending on market
conditions and funding arrangements at the time, result in an increase in the net assets and/or
earnings per Share. Our Directors have sought the Repurchase Mandate to give our Company the
flexibility to do so if and when appropriate. The number of Shares to be repurchased on any
occasion and the price and other terms upon which the same are repurchased will be decided by
our Directors at the relevant time, having regard to the circumstances then prevailing and such
repurchases will only be made if our Directors believe that such repurchases will benefit our
Company and our Shareholders as a whole.
— IV-7 —
(d) Funding of repurchases
In repurchasing securities, our Company may only apply funds legally available for such
purpose in accordance with the Memorandum and Articles of Association, the Listing Rules, the
Cayman Islands Companies Law and the applicable laws and regulations of the Cayman Islands.
On the basis of the current financial position of our Group as disclosed in this prospectus and
taking into account the current working capital position of our Group, our Directors consider that,
if the repurchases under the Repurchase Mandate were to be carried out in full at any time during
the Relevant Period, it might have a material adverse impact on the working capital and/or the
gearing position of our Group as compared with the position disclosed in this prospectus.
However, our Directors do not propose to exercise the Repurchase Mandate to such extent as
would, in the circumstances, have a material adverse impact on the working capital and/or the
gearing position of our Group which in the opinion of our Directors are from time to time
appropriate for our Group.
(e) General
The exercise in full of the Repurchase Mandate, on the basis of 1,000,000,000 Shares in
issue immediately after the Global Offering and the Capitalization Issue (but excluding any Shares
which may be allotted and issued upon exercise of the Over-Allotment Option and the options
granted or to be granted under the Pre-IPO Share Option Scheme or the Share Option Scheme),
would result in up to 100,000,000 Shares being repurchased by our Company during the Relevant
Period.
None of our Directors nor, to the best of their knowledge having made all reasonable
enquiries, any of their close associate currently intends to sell any Shares to our Company or our
subsidiaries. No core connected person of our Company has notified our Company that he/she/it
has any present intention to sell Shares to our Company, or has undertaken not to do so if the
Repurchase Mandate is exercised.
Our Directors have undertaken to the Stock Exchange that, so far as the same may be
applicable, they will exercise the Repurchase Mandate in accordance with the Memorandum and
Articles of Association, the Listing Rules, the Cayman Islands Companies Law and the applicable
laws and regulations of the Cayman Islands.
If, as a result of a repurchase of Shares, a Shareholder’s proportionate interest in the voting

rights of our Company increases, such increase will be treated as an acquisition for the purpose
of the Code on Takeovers and Mergers (the “Takeovers Code”). Our Directors are not aware of
any consequences which would arise under the Takeovers Code as a consequence of any
repurchases pursuant to the Repurchase Mandate.
No purchase of Shares has been made by our Company within six months prior to the date
of the prospectus.
Our Directors shall not exercise the Repurchase Mandate if the repurchase would result in
the number of Shares which are in the hands of the public falling below 25% of the total number
of Shares in issue (or such other percentage as may be prescribed as the minimum public
shareholding under the Listing Rules).
— IV-8 —
FURTHER INFORMATION ABOUT THE BUSINESS OF OUR COMPANY
8. Summary of material contracts
The following contracts (not being contracts in the ordinary course of business) have been
entered into by members of our Group within the two years preceding the date of this prospectus
and are or may be material:
(a) the series A preferred share purchase agreement dated December 18, 2015 entered
into among our Company, AK Medical BVI, AK Medical HK, AK Medical Beijing, AK
Medical XMKS, Li Zhijiang, Ximalaya, Zhang Bin, Zhang Chaoyang, Suntop, Summer,
Sanbao and OrbiMed Asia, pursuant to which OrbiMed Asia subscribed for and
purchased, and our Company issued and sold to OrbiMed Asia, 10,000 series A
preferred shares at an aggregate purchase price of RMB140,000,000;
(b) the letter agreement dated February 26, 2016 entered into among our Company, AK
Medical BVI, AK Medical HK, AK Medical Beijing, AK Medical XMKS, Li Zhijiang,
Ximalaya, Zhang Bin, Zhang Chaoyang, Suntop, Summer, Sanbao and OrbiMed Asia to
amend the series A preferred share purchase agreement dated December 18, 2015;
(c) the Shareholders Agreement dated February 29, 2016 entered into among our
Company, AK Medical BVI, AK Medical HK, AK Medical Beijing, AK Medical XMKS, Li
Zhijiang, Ximalaya, Zhang Bin, Zhang Chaoyang, Suntop, Summer, Sanbao and
OrbiMed Asia, pursuant to which OrbiMed Asia was granted with certain rights by,
among others, our Company;
(d) an instrument of transfer and the relevant contract notes both dated February 29, 2016
executed by OrbiMed Asia as transferor and AK Medical BVI as transferee, pursuant to
which OrbiMed Asia transferred 100 ordinary shares in Bright AK HK (formerly known
as OrbiMed Asia AK Limited) to AK Medical BVI at a consideration of RMB14,000,000;
(e) a deed of waiver dated April 13, 2016 executed by Ximalaya in favour of our Company,
pursuant to which Ximalaya irrevocably and unconditionally waived all right and
entitlement to the repayment of the shareholder’s loan in the aggregate amount of
US$11,551,412.12 advanced by Ximalaya to our Company;
(f) the Deed of Non-competition;
(g) the Deed of Indemnity; and
(h) the Hong Kong Underwriting Agreement.
— IV-9 —
9. Exemption from requirement of a property valuation report
For the purpose of Chapter 5 of the Listing Rules, as no single property interest which formed
part of our non-property activities had a carrying amount of 15% or more of our total assets, this
prospectus is not required to include any valuation report of our property interests.
Pursuant to section 6(2) of the Companies (Exemption of Companies and Prospectuses from
Compliance with Provisions) Notice (Chapter 32L of the Laws of Hong Kong), this prospectus is
exempted from compliance with requirements of section 342(1)(b) of the Companies (Winding Up
and Miscellaneous Provisions) Ordinance in relation to paragraph 34(2) of the Third Schedule to
the Companies (Winding Up and Miscellaneous Provisions) Ordinance, which requires a valuation
report with respect to all our Group’s assets in land or buildings.
10. Intellectual property rights of our Group
(a) Invention Patent
As of the Latest Practicable Date, we have registered the following invention patents in China
which are material to our business:
Patent
No. Patent Name Certificate No. Expiry Date Patentee
(Note 1)
1. Tooth spreader 201210001487.6 January 4, 2032 AK Medical
(一種牙齒撐開器) Beijing
2. Portable combined type fixing device for 200910231175.2 December 9, AK Medical

first aid of limb fracture (Note 1) 2029 Beijing
(便攜組合式四肢骨折急救固定裝置)
3. Jawbone restoration 201210488763.6 November 25, AK Medical

(頜骨修復體) 2032 Beijing
4. Support body in expansion fixing whirlbone 201110161673.1 June 15, 2031 AK Medical
(膨脹固定股骨頭內支撐體) Beijing
5. Fusion prosthesis 201110326485.X October 23, AK Medical

(融合假體) 2031 Beijing
6. Knee-joint internal and external rotating 201310749810.2 December 26, AK Medical

angle measurer 2033 Beijing
(膝關節內外旋角度測量器)
7. Combined shoulder joint implant 201310162885.0 May 5, 2033 AK Medical

(組合式肩關節假體) Beijing
8. Jaw repairing stent 201310701577.0 December 17, AK Medical

(頜骨修復支架) 2033 Beijing
9. Tibia tray fatigue test tool 201210431366.5 November 1, AK Medical

(脛骨托疲勞測試工裝) 2032 Beijing
10. Mark scraper for thigh bone far end 201310749775.4 December 26, AK Medical
(股骨遠端劃線器) 2033 Beijing
11. Bone defect repairing device 201310752826.9 December 30, AK Medical

(骨缺失修復裝置) 2033 Beijing
12. Bone and joint prosthesis platform gasket 201510268820.3 May 21, 2035 AK Medical
assembly Beijing
(骨關節假體平臺墊片組件)
— IV-10 —
Patent
13. Hip joint spacer mold 201210239356.1 July 11, 2032 AK Medical
(一種髖關節佔位器模具) Beijing
14. Knee joint prosthesis 201510860651.2 November 29, AK Medical

(膝關節假體) 2035 Beijing
15. Acetabulum prosthesis 201510263241.X May 20, 2035 AK Medical

(髖臼假體) Beijing
16. Femoral prosthesis 201510268796.3 May 21, 2035 AK Medical

(股骨假體) Beijing
17. Compound six-in-one bone cutting plate 201510006758.0 August 30, 2035 AK Medical
(複合型六合一截骨板) Beijing
18. Thighbone size measuring device 201510006759.5 January 6, 2035 AK Medical

(股骨大小測量器) Beijing
19. Tibial plateau assembly 201510233275.4 May 7, 2035 AK Medical

(脛骨平臺組件) Beijing
20. Tibial plateau assembly 201510233996.5 May 7, 2035 AK Medical

(脛骨平臺組件) Beijing
21. Patellar prosthesis 201510236866.7 May 10, 2035 AK Medical

(髕骨假體) Beijing
22. Patella prosthesis 201510276631.0 May 25, 2035 AK Medical

(髕骨假體) Beijing
23. Preartis osteotomy device 201510006732.6 January 6, 2035 AK Medical

(前髁截骨器) Beijing
24. Customized compound bone cutter for 201510006796.6 January 6, 2035 AK Medical
femoral condyle Beijing
(定制型股骨髁複合截骨器)
25. Combined osteotomy guide 201410846559.6 December 30, AK Medical

(組合式截骨手術導板) 2034 Beijing
26. Bone-cutting guide plate 201510267290.0 May 21, 2035 AK Medical

(截骨導板) Beijing
27. Acetabular cup and artificial hip joint 201510272667.1 May 24, 2035 AK Medical
(髖臼杯和人工髖關節) Beijing
28. Surface treatment method of titanium implant 201510276624.0 May 25, 2035 AK Medical
(鈦質種植體的表面處理方法) Beijing
29. Intramedullary broacher handle 201510272408.9 May 24, 2035 AK Medical

(髓腔銼手柄) Beijing
30. Double-metal prosthesis component 201510549958.0 January 6, 2035 AK Medical

(雙金屬假體部件) Beijing
31. Knee joint prosthesis 201510275614.5 May 25, 2035 AK Medical

(膝關節假體) Beijing
32. Acetabulum prosthesis 201510233140.8 May 7, 2035 AK Medical

(髖臼假體) Beijing
Note:
(1) The relevant invention patents were acquired by AK Medical Beijing on June 12, 2014.
— IV-11 —
As of the Latest Practicable Date, we have applied for the registration of the following
invention patents which are material to our business:
Place of
No. Patent Name Application No. Application Date Application Applicant
1. Spinous Metal PCT/CN2012/077255 June 20, 2012 International patent AK Medical
Particle application under Beijing
(棘狀金屬顆粒體) the PCT (Note 1)
2. Adjustable self- 201510006774.X January 7, 2015 China AK Medical

stabilizing type Beijing
artificial sacrum
prosthesis
(可調節自穩型人工
骨假體)
3. High-flexion type 201510022965.5 January 15, 2015 China AK Medical

knee joint Beijing
prosthesis
(一種高屈曲型膝關
節假體)
4. Hip joint prosthesis 201610340768.2 May 19, 2016 China AK Medical

part Beijing
(髖關節假體部件)
5. Low-displacement 201610336177.8 May 20, 2016 China AK Medical

artificial Beijing
intervertebral disc
(低位移人工椎間盤)
6. Soft tissue force 201610466475.9 June 23, 2016 China AK Medical

measuring device Beijing
(軟組織測力裝置)
7. Long bone 201610580624.4 July 21, 2016 China AK Medical

prosthesis Beijing
(長骨骨幹假體)
8. Sputtering target, 201610639742.8 August 5, 2016 China AK Medical

sputtering Beijing
instrument and
prosthetic coating
methods
(濺射靶、濺射儀和
假體塗層方法)
9. Intervertebral disc 201610798612.9 August 31, 2016 China AK Medical

prosthesis Beijing
(椎間盤假體)
10. Femoral condyle 201611088518.0 November 30, 2016 China AK Medical

front bone defect Beijing
filling prosthesis
(股骨髁前臉骨缺損
填充假體)
— IV-12 —
Place of
No. Patent Name Application No. Application Date Application Applicant
11. Acetabulum filling 201611090016.1 November 30, 2016 China AK Medical
prosthesis Beijing
(髖臼填充假體)
12. Osteotomy guide 201611090018.0 November 30, 2016 China AK Medical

plate assembly Beijing
(截骨導板組件)
13. Shoulder 201611259721.X December 30, 2016 China AK Medical

prosthesis Beijing
connectivity
components,
orthodontic
prosthesis and
reverse shoulder
joint prosthesis
(肩關節假體連接組
件、正肩關節假體以
及反肩關節假體)
14. Bone repair 201611260563.X December 30, 2016 China AK Medical

material and Beijing
preparation method
thereof
(骨修復材料及其製
備方法)
15. Sacrum prosthesis PCT/CN2016/089486 July 8, 2016 International patent AK Medical

( 骨修復體) application under Beijing
the PCT (Note 1)
16. Lilac bone fusion PCT/CN2016/089487 July 8, 2016 International patent AK Medical
(髂骨融合體) application under Beijing
the PCT (Note 1)
17. Hip bone PCT/CN2016/089488 July 8, 2016 International patent AK Medical

prosthesis application under Beijing
(髖骨修復體) the PCT (Note 1)
18. Acetabular tumor PCT/CN2016/089489 July 8, 2016 International patent AK Medical

repair and application under Beijing
reconstruction the PCT (Note 1)
system
(髖臼腫瘤修復重建
系統)
19. Artificial vertebrae PCT/CN2016/094396 August 10, 2016 International patent AK Medical
with pedicle application under Beijing
(帶椎弓根的人工椎 the PCT (Note 1)
體)
Note:
(1) The application was made under the PCT, which is an international treaty with more than 145 contracting
states.
— IV-13 —
(b) Utility Model Patent
As of the Latest Practicable Date, we have registered the following utility model patents in
China which are material to our business:
Patent
1. Spiked metal particle 201120223913.1 June 28, 2021 AK Medical
(棘狀金屬顆粒體) Beijing
2. Atlas fusion prosthesis 201120559910.5 December 27, AK Medical

(寰椎融合假體) 2021 Beijing
3. Sacrum artificial prosthesis 201220085287.9 March 7, 2022 AK Medical

( 骨人工假體) Beijing
4. Asymmetric type dental implant 201220227652.5 May 20, 2022 AK Medical

(非對稱型牙種植體) Beijing
5. Adjustable neck of shoulder joint prosthesis 201220341666.X July 11, 2022 AK Medical
(肩關節假體可調頸) Beijing
6. Self-adjusting bone trabecula artificial 201220751509.6 December 25, AK Medical

intervertebral disk 2022 Beijing
(自調型骨小梁人工椎間盤)
7. 3D metal bone trabecula interbody 201520009146.2 January 6, 2025 AK Medical

fusion cage Beijing
(3D金屬骨小梁椎間融合器)
8. Knee joint prosthesis 201520973725.9 November 29, AK Medical

(膝關節假體) 2025 Beijing
9. Hip joint prosthesis part 201620468867.4 May 18, 2026 AK Medical

(髖關節假體部件) Beijing
10. Soft tissue measuring force device 201620634461.9 June 22, 2026 AK Medical
(軟組織測力裝置) Beijing
(c) Design Patent
As of the Latest Practicable Date, we have registered the following design patents in China
which are material to our business:
Patent
1. Intercondylar guide frame 201130201197.2 June 29, 2021 AK Medical
(髁間導向架) Beijing
2. Medical Rinser 201230652800.3 December 25, AK Medical

(醫用沖洗器) 2022 Beijing
— IV-14 —
(d) Trade Mark
As of the Latest Practicable Date, we have registered the following trade marks which are
material to our business:
Registration Validity Place of Registered

No. Trademark No. Period Class Registration Owner
1. 14853599 July 21, 2015 10 (Note 1) China AK Medical
to July 20, Beijing
2025
2. 303396286 May 4, 2015 10 (Note 1) Hong Kong AK Medical

to May 3, Beijing
2025

to May 3, Beijing
2025

to May 3, Beijing
2025
5. 16784034 August 14, 35 (Note 2) China AK Medical

2016 to Beijing
August 13,
2026
6. 16784275 June 14, 2016 44 (Note 3) China AK Medical

to June 13, Beijing
2026
7. 16784284 June 14, 2016 10 (Note 1) China AK Medical

to June 13, Beijing
2026
8. 14847744 July 28, 2015 10 (Note 1) China AK Medical

to July 27, Beijing
2025
9. 14847780A August 7, 10(Note 1) China AK Medical

2015 to Beijing
August 6,
2025
10. 16784155 August 21, 42 (Note 4) China AK Medical

2017 to Beijing
August 20,
2027
— IV-15 —
Registration Validity Place of Registered

No. Trademark No. Period Class Registration Owner
to May 3, Beijing
2025
Note:
(1) The specific goods under class 10 in respect of which the trade mark was registered are surgical, medical,
dental and veterinary apparatus and instruments; artificial limbs, eyes and teeth; orthopedic articles; suture
materials.
(2) The specific goods under class 35 in respect of which the trade mark was registered are advertising; business
management; business administration; office functions.
(3) The specific goods under class 44 in respect of which the trade mark was registered are medical services;
veterinary services; hygienic and beauty care for human beings or animals; agriculture, horticulture and
forestry services.
(4) The specific goods under class 42 in respect of which the trade mark was registered are scientific and
technological services and research and design relating thereto; industrial analysis and research services;
design and development of computer hardware and software.
(e) Domain Name
As of the Latest Practicable Date, we have registered the following domain names which are
material to our business:
No. Domain name Registrant Date of Registration Expiry Date

1. ak2003.com.cn AK Medical Beijing November 26, 2014 November 25, 2019
2. ak-medical.hk AK Medical Beijing June 1, 2015 June 1, 2018
3. ak-medical.net AK Medical Beijing April 30, 2014 April 30, 2018
11. Connected transactions and related party transactions
Except as disclosed in note 27 to the Accountant’s Report, the text of which is set out in
Appendix I to this prospectus, during the two years immediately preceding the date of this
prospectus, our Company has not engaged in any other material connected transactions or
related party transactions.
FURTHER INFORMATION ABOUT DIRECTORS AND SHAREHOLDERS
12. Directors
(a) Disclosure of interests of our Directors
(i) Each of Mr. Li, Ms. Zhang Bin, Mr. Zhang Chaoyang, Ms. Zhao Xiaohong and Dr. Wang
David Guowei is interested in the Reorganization, the Pre-IPO Investment and the
transactions as contemplated under the material contracts as set out in “—Further
Information about the Business of Our Company—8. Summary of material contracts” in
this Appendix.
(ii) Except as disclosed in this prospectus, none of our Directors or their associates were
engaged in any dealings with our Group during the two years preceding the date of this
prospectus.
— IV-16 —
(b) Particulars of Directors’ service contracts
Executive Directors
Each of our executive Directors has entered into a service contract with our Company
for a term of three years commencing from 17 November 2017 until terminated by not less
than three months’ notice in writing served by either party on the other. Each of our executive
Directors is entitled to their respective basic salaries set out below.
The current basic annual salaries of our executive Directors payable under their service
contracts are as follows:
Approximate
annual salary
Name (RMB)
Mr. Li . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 720,000
Mr. Zhang Chaoyang. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 456,000
Ms. Zhang Bin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216,000
Ms. Zhao Xiaohong. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 390,000
Non-executive Directors
Each of our non-executive Directors has been appointed for an initial term of three
years commencing from 17 November 2017 until terminated by either party giving not less
than three months’ written notice to the other. The appointments are subject to the provisions
of the Articles with regard to vacation of office of Directors, removal and retirement by
rotation of Directors. Mr. Li Wenming, a non-executive Director, is entitled to a director’s fee
of HK$180,000 per annum and Dr. Wang David Guowei shall not receive any director’s fee.
Except for the director’s fee, each of our non-executive Directors is not expected to receive
any other remuneration for holding their office as a non-executive Director.
Independent non-executive Directors
Each of our independent non-executive Directors has been appointed for an initial term
of three years commencing from 17 November 2017 until terminated by either party giving
not less than three months’ written notice to the other. The appointments are subject to the
provisions of the Articles with regard to vacation of office of Directors, removal and retirement
by rotation of Directors. Each of our independent non-executive Directors is entitled to a
director’s fee of HK$180,000 per annum. Except for directors’ fees, none of our independent
non-executive Directors is expected to receive any other remuneration for holding their office
as an independent non-executive Director.
Except as aforesaid, none of our Directors has or is proposed to have a service contract
with our Company or any of our subsidiaries other than contracts expiring or determinable by
our employer within one year without the payment of compensation (other than statutory
compensation).
— IV-17 —
(c) Directors remuneration
(i) The aggregate emoluments paid and benefits in kind granted by our Group to our
Directors in respect of the three years ended December 31, 2014, 2015 and 2016 and
the six months ended June 30, 2017 were approximately RMB863,000, RMB1,845,000,
RMB2,030,000 and RMB1,055,000, respectively.
(ii) Under the arrangements currently in force, the aggregate emoluments (excluding
discretionary bonus) payable by our Group to and benefits in kind receivable by our
Directors (including our non-executive Director and our independent non-executive
Directors in their respective capacity as Directors) for the year ending December 31,
2017 are expected to be approximately RMB2,460,000.
(iii) None of our Directors or any past directors of any member of our Group has been paid
any sum of money for the three years ended December 31, 2014, 2015 and 2016 and
the six months ended June 30, 2017 (i) as an inducement to join or upon joining our
Group or (ii) for loss of office as a director of any member of our Group or of any other
office in connection with the management of the affairs of any member of our Group.
(iv) There has been no arrangement under which a Director has waived or agreed to any
emoluments for the three years ended December 31, 2014, 2015 and 2016 and the six
months ended June 30, 2017.
(d) Interests and/or short positions of Directors in the shares, underlying shares or
debentures of our Company and its associated corporations
Immediately after the Capitalization Issue and the Global Offering (without taking into
account any Shares which may be allotted and issued upon exercise of the Over-Allotment Option
Option Scheme), the interests and/or short positions of our Directors and the chief executive of
our Company in the shares, underlying shares or debentures of our Company and its associated
corporations (within the meaning of Part XV of the SFO) which will have to be notified to our
Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including
interests and/or short positions in which they are taken or deemed to have under such provisions
of the SFO) or which will be required, pursuant to section 352 of the SFO, to be entered in the
register referred to therein, or which will be required to be notified to our Company and the Stock
Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers
as set out in Appendix 10 to the Listing Rules, in each case once our Shares are listed, will be as
follows:
(i) our Company
Approximate
percentage of
Capacity/nature Number of interest in our
(Note 1)
Name of Director of interest Shares Company
Mr. Li (Note 2)
. . . . . . . . . . . . . . . . . . Founder of a 585,157,500 (L) 58.51575%
discretionary trust and
interest in a controlled
corporation
Interest of spouse 10,125,000 (L) 1.01250%
— IV-18 —
Approximate
percentage of
Capacity/nature Number of interest in our
(Note 1)
Name of Director of interest Shares Company
Ms. Zhang Bin (Note 3)
. . . . . . . . . . . . Interest of controlled 10,125,000 (L) 1.01250%
corporation
Interest of spouse 585,157,500 (L) 58.51575%
Mr. Zhang Chaoyang (Note 4)

. . . . . . . . Interest of controlled 67,432,500 (L) 6.74325%
corporation
Ms. Zhao Xiaohong (Note 5)

. . . . . . . . . Interest of controlled 12,285,000 (L) 1.22850%
corporation
Beneficial interest 4,000,000 (L) 0.40000%
Notes:
(1) The letter “L” denotes our Directors’ long position in our Shares.
(2) Mr. Li, being the sole director of Ximalaya, directly holds 50% of the issued share capital of Ximalaya, which
holds 585,157,500 Shares. Therefore, Mr. Li is deemed to be interested in Ximalaya’s interest in our Shares
pursuant to the SFO. In addition, Mr. Li is the husband of Ms. Zhang Bin. Therefore, Mr. Li is deemed to be
interested in Ms. Zhang Bin’s interest in our Shares pursuant to the SFO. Mr. Li is also the founder of the
Family Trust.
(3) Ms. Zhang Bin, being the sole director of Summer, is the sole shareholder of Summer which holds 10,125,000
Shares. Therefore, Ms. Zhang Bin is deemed to be interested in Summer’s interest in our Shares pursuant to
the SFO. In addition, Ms. Zhang Bin is the wife of Mr. Li. Therefore, Ms. Zhang Bin is deemed to be interested
in Mr. Li’s interest in our Shares pursuant to the SFO.
(4) Mr. Zhang Chaoyang, being the sole director of Suntop, is the sole shareholder of Suntop which holds
67,432,500 Shares. Therefore, Mr. Zhang Chaoyang is deemed to be interested in Suntop’s interest in our
Shares pursuant to the SFO. Mr. Zhang Chaoyang is the brother of Ms. Zhang Bin and the brother-in-law of
Mr. Li.
(5) Ms. Zhao Xiaohong, being the sole director of Sanbao, holds 30.22% of the issued share capital of Sanbao,
which holds 12,285,000 Shares. Therefore, Ms. Zhao Xiaohong is deemed to be interested in Sanbao’s
interest in our Shares pursuant to the SFO. In addition, Ms. Zhao has been granted with options to subscribe
for 4,000,000 Shares pursuant to the Pre-IPO Share Option Scheme.
(ii) our Company’s associated corporation
Approximate
Name of our percentage
of interest
Company’s Number and in our
associated Capacity/nature class of Company’s
(Note) associated
Name of Director corporation of interest securities corporation
Mr. Li . . . . . . . . . . . . . . . . . . . . . . . . Ximalaya Beneficial 1 ordinary 50%
interest share (L)
Note:
The letter “L” denotes our Director’s long position in the share of our Company’s associated corporation.
— IV-19 —
13. Interest discloseable under the SFO and substantial shareholders
So far as our Directors are aware, immediately after the Capitalization Issue and the Global
Offering (without taking into account any Shares which may be allotted and issued upon exercise
of the Over-Allotment Option or the options granted or to be granted under the Pre-IPO Share
Option Scheme or the Share Option Scheme), other than a Director or chief executive of our
Company whose interests are disclosed under “—12. Directors” above, the following persons will
have an interest or a short position in our Shares or underlying Shares which would fall to be
disclosed to our Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who
will be, directly or indirectly, interested in 10% or more of the nominal value of any class of share
capital carrying rights to vote in all circumstances at general meetings of any other member of our
Group:
Approximate
Capacity/nature Number of percentage of
(Note 1)
Name of Shareholder of interest Shares shareholding
Ximalaya . . . . . . . . . . . . . . . . . . . . Beneficial owner 585,157,500 (L) 58.51575%
Suntop . . . . . . . . . . . . . . . . . . . . . Beneficial owner 67,432,500 (L) 6.74325%
Trident Trust (Note 2) . . . . . . . . . . . . . . Trustee of a 585,157,500 (L) 58.51575%
discretionary trust and
interest in a controlled
corporation
Rainbow Holdings (Note 2)
. . . . . . . . . . . Interest in a controlled 585,157,500 (L) 58.51575%
corporation
OrbiMed Advisors II Limited (Note 3)
. . . . Interest of controlled 75,000,000 (L) 7.50000%
corporation
(Note 3)
OrbiMed Asia GP II, L.P. . . . . . . Interest of controlled 75,000,000 (L) 7.50000%
corporation
OrbiMed Asia (Note 3)
. . . . . . . . . . . . . Beneficial owner 75,000,000 (L) 7.50000%
Notes:
(1) The letter “L” denotes a person’s long position in our Shares.
(2) The Family Trust is a discretionary trust established by Mr. Li as settlor, with Trident Trust acting as trustee.
The beneficiaries of the Family Trust are Mr. Li and certain of his family members. Trident Trust holds 100%
of the issued share capital of Rainbow Holdings, which holds 50% of the issued share capital of Ximalaya.
Therefore, each of Trident Trust and Rainbow Holdings is deemed to be interested in Ximalaya’s interest in
our Shares pursuant to the SFO.
(3) Assuming all Series A Preferred Shares are converted into Ordinary Shares on a one-for-one basis prior to
the Listing pursuant to the terms in the Pre-IPO Investment Shareholders Agreement and the articles of
association of the Company in force prior to the adoption of the Articles, OrbiMed Asia shall hold 75,000,000
Ordinary Shares upon completion of the Capitalization Issue and the Global Offering (without taking into
account any Share which may be allotted and issued upon exercise of the Over-Allotment Option or the
options granted or to be granted under the Pre-IPO Share Option Scheme or the Share Option Scheme). The
general partner of OrbiMed Asia is OrbiMed Asia GP II, L.P., whose general partner is OrbiMed Advisors II
Limited. Therefore, each of OrbiMed Asia GP II, L.P. and OrbiMed Advisors II Limited is deemed to be
interested in OrbiMed Asia’s interest in our Shares pursuant to the SFO.
— IV-20 —
14. Disclaimers
Except as disclosed in this prospectus:
(a) our Directors are not aware of any person (not being a Director or chief executive of our
Company) who immediately after the Capitalization Issue and the Global Offering
(without taking into account any Shares which may be allotted and issued upon exercise
of the Over-Allotment Option or the options granted or to be granted under the Pre-IPO
Share Option Scheme or the Share Option Scheme) will have an interest or a short
position in our Shares and underlying Shares which would fall to be disclosed to our
Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or who will
be, directly or indirectly, interested in 10% or more of the nominal value of any class of
share capital carrying rights to vote in all circumstances at general meetings of any
other member of our Group;
(b) none of our Directors has any interest or short position in any of the shares, underlying
shares or debentures of our Company or its associated corporations (within the
meaning of Part XV of the SFO) which will have to be notified to our Company and the
Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests
and/or short positions in which they are taken or is deemed to have under such
provisions of the SFO) or which will be required, pursuant to section 352 of the SFO, to
be entered in the register referred to therein, or which will be required to be notified to
our Company and the Stock Exchange pursuant to the Model Code for Securities
Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing
Rules, in each case once our Shares are listed;
(c) none of our Directors nor any of the parties listed in “—Other Information—23.
Qualifications of experts” in this Appendix has been interested in the promotion of, or
has any direct or indirect interest in any assets which have been, within the two years
immediately preceding the date of this prospectus, acquired or disposed of by or leased
to our Company or any of the subsidiaries of our Company, or are proposed to be
acquired or disposed of by or leased to our Company or any other member of our Group
nor will any Director apply for the Offer Shares either in his own name or in the name
of a nominee;
(d) none of our Directors nor any of the parties listed in “—Other Information—23.
Qualifications of experts” in this Appendix is materially interested in any contract or
arrangement subsisting at the date of this prospectus which is significant in relation to
business of our Group; and
(e) except in connection with the Underwriting Agreements, none of the parties listed in
“—Other Information—23. Qualifications of experts” in this Appendix:
(i) is interested legally or beneficially in any securities of any member of our Group;
or
(ii) has any right (whether legally enforceable or not) to subscribe for or to nominate
persons to subscribe for securities in any member of our Group.
— IV-21 —
OTHER INFORMATION
15. Share Option Schemes
A. Share Option Scheme
The following is a summary of the principal terms of the Share Option Scheme conditionally
adopted by the written resolutions of the shareholders of our Company passed on November 17,
2017.
(a) Purpose
The Share Option Scheme is a share incentive scheme and is established to recognize
and acknowledge the contributions the Eligible Participants (as defined in paragraph (b)
below) have had or may have made to our Group. The Share Option Scheme will provide the
Eligible Participants an opportunity to have a personal stake in our Company with the view
to achieving the following objectives:
(i) motivating the Eligible Participants to optimize their performance efficiency for the
benefit of our Group; and
(ii) attracting and retaining or otherwise maintaining on-going business relationships

with the Eligible Participants whose contributions are or will be beneficial to the
long-term growth of our Group.
(b) Who may join
Our Board may, at its discretion, offer to grant an option to subscribe for such number
of new Shares as our Board may determine at an exercise price determined in accordance
with paragraph (f) below to the following persons (the “Eligible Participants”):
(i) any full-time or part-time employees, executives or officers of our Company or any
of its subsidiaries;
(ii) any Directors (including non-executive Directors and independent non-executive

Directors) of our Company or any of its subsidiaries;
(iii) any advisors, consultants, suppliers, customers and agents to our Company or any
of its subsidiaries; and
(iv) such other persons who, in the sole opinion of our Board, will contribute or have
contributed to our Group, the assessment criteria of which are:
(aa) contribution to the development and performance of our Group;
(bb) quality of work performed for our Group;
(cc) initiative and commitment in performing his/her duties; and
(dd) length of service or contribution to our Group.
— IV-22 —
(c) Acceptance of an offer of options
An option shall be deemed to have been granted and accepted by the grantee and to
have taken effect when the document constituting acceptance of the option duly signed by
the grantee, together with a remittance in favor of our Company of HK$1.00 by way of
consideration for the grant thereof is received by our Company on or before the relevant
acceptance date. Such payment shall in no circumstances be refundable. Any offer to grant
an option to subscribe for Shares may be accepted in respect of less than the number of
Shares for which it is offered provided that it must be accepted in respect of a board lot for
dealing in Shares on the Stock Exchange or an integral multiple thereof and such number is
clearly stated in the document constituting acceptance of the option. To the extent that the
offer to grant an option is not accepted by any prescribed acceptance date, it shall be
deemed to have been irrevocably declined.
Subject to paragraphs (l), (m), (n), (o) and (p), an option shall be exercised in whole or
in part and, other than where it is exercised to the full extent outstanding, shall be exercised
in integral multiples of such number of Shares as shall represent one board lot for dealing in
Shares on the Stock Exchange for the time being, by the grantee by giving notice in writing
to our Company stating that the option is thereby exercised and the number of Shares in
respect of which it is exercised. Each such notice must be accompanied by a remittance for
the full amount of the exercise price for Shares in respect of which the notice is given.
Within 21 days after receipt of the notice and the remittance and, where appropriate,
receipt of the certificate by the auditors of our Company or the approved independent
financial advisor as the case may be pursuant to paragraph (r), our Company shall allot and
issue the relevant number of Shares to the grantee credited as fully paid and issue to the
grantee certificates in respect of the Shares so allotted.
The exercise of any option shall be subject to our Shareholders in general meeting
approving any necessary increase in the authorized share capital of our Company.
(d) Maximum number of Shares
The maximum number of Shares in respect of which options may be granted (including
Shares in respect of which options, whether exercised or still outstanding, have already been
granted) under the Share Option Scheme and under any other share option schemes of our
Company must not in aggregate exceed 10% of the total number of Shares in issue on the
Listing Date, being 100,000,000 Shares (the “Scheme Limit”), excluding for this purpose
Shares which would have been issuable pursuant to options which have lapsed in
accordance with the terms of the Share Option Scheme (or any other share option schemes
of our Company). Subject to the issue of a circular by our Company and the approval of our
Shareholders in general meeting and/or such other requirements prescribed under the
Listing Rules from time to time, the Board may:
(i) renew this limit at any time to 10% of the Shares in issue (the “New Scheme
Limit”) as of the date of the approval by our Shareholders in general meeting;
and/or
— IV-23 —
(ii) grant options beyond the Scheme Limit to Eligible Participants specifically
identified by our Board. The circular issued by our Company to our Shareholders
shall contain a generic description of the specified Eligible Participants who may
be granted such options, the number and terms of the options to be granted, the
purpose of granting options to the specified Eligible Participants with an
explanation as to how the options serve such purpose, the information required
under Rule 17.02(2)(d) and the disclaimer required under Rule 17.02(4) of the
Listing Rules.
Notwithstanding the foregoing, the Shares which may be issued upon exercise of all
outstanding options granted and yet to be exercised under the Share Option Scheme and
any other share option schemes of our Company at any time shall not exceed 30% of the
Shares in issue from time to time (the “Maximum Limit”). No options shall be granted under
any schemes of our Company (including the Share Option Scheme) if this will result in the
Maximum Limit being exceeded. The maximum number of Shares in respect of which options
may be granted shall be adjusted, in such manner as the auditors of our Company or an
approved independent financial advisor shall certify to be appropriate, fair and reasonable in
the event of any alteration in the capital structure of our Company in accordance with
paragraph (r) below whether by way of capitalization issue, rights issue, sub-division or
consolidation of shares or reduction of capital of our Company but in no event shall exceed
the limit prescribed in this paragraph.
(e) Maximum number of options to any one individual
The total number of Shares issued and which may fall to be issued upon exercise of the
options granted under the Share Option Scheme and any other share option schemes of our
Company (including both exercised, outstanding options and Shares which were the subject
of options which have been granted and accepted under the Share Option Scheme and any
other share option schemes of our Company but subsequently canceled (the “Canceled
Shares”)) to each Eligible Participant in any 12-month period up to the date of grant shall not
exceed 1% of the Shares in issue as of the date of grant. Any further grant of options in
excess of this 1% limit shall be subject to:
(i) the issue of a circular by our Company to our Shareholders containing the identity
of the Eligible Participant, the numbers of and terms of the options to be granted
(and options previously granted to such participant), the information as required
under Rules 17.02(2)(d) and the disclaimer required under 17.02(4) of the Listing
Rules; and
(ii) the approval of our Shareholders in general meeting and/or other requirements
prescribed under the Listing Rules from time to time with such Eligible Participant
and his close associates (or his associates if such Eligible Participant is a
connected person) abstaining from voting. The numbers and terms (including the
exercise price) of options to be granted to such participant must be fixed before
our Shareholders’ approval and the date of the Board meeting at which our Board
proposes to grant the options to such Eligible Participant shall be taken as the date
of grant for the purpose of calculating the exercise price of our Shares. Our Board
shall forward to such Eligible Participant an offer document in such form as our
Board may from time to time determine or, alternatively, documents accompanying
the offer document which state, among other things:
(aa) the Eligible Participant’s name, address and occupation/position;
— IV-24 —
(bb) the date on which an option is offered to an Eligible Participant which must be
a date on which the Stock Exchange is open for the business of dealing in
securities;
(cc) the date upon which an offer for an option must be accepted;
(dd) the date upon which an option is deemed to be granted and accepted in
accordance with paragraph (c);
(ee) the number of Shares in respect of which the option is offered;
(ff) the exercise price and the manner of payment of such price for the Shares on
and in consequence of the exercise of the option;
(gg) the date of the expiry of the option;
(hh) the method of acceptance of the option which shall, unless the Board
otherwise determines, be as set out in paragraph (c); and
(ii) such other terms and conditions (including, without limitation, any minimum
period for which an option shall be held before it can be exercised and/or any
performance targets which must be achieved before the option can be
exercised) relating to the offer of the option which in the opinion of the Board
are fair and reasonable but not being inconsistent with the Share Option
Scheme and the Listing Rules.
(f) Price of Shares
The exercise price of a Share in respect of any particular option granted under the
Share Option Scheme shall be such price as our Board in its absolute discretion shall
determine, except that such price will not be less than the highest of:
(i) the closing price of the Shares as stated in the Stock Exchange’s daily quotation
sheets on the date of grant, which must be a day on which the Stock Exchange is
open for the business of dealing in securities;
(ii) the average of the closing prices of the Shares as stated in the Stock Exchange’s
daily quotation sheets for the five Business Days immediately preceding the date
of grant; and
(iii) the nominal value of a Share.
(g) Granting options to connected persons
Any grant of options to a Director, chief executive or substantial shareholder of our

Company or any of their respective associates is required to be approved by our independent
non-executive Directors (excluding any independent non-executive Director who is the
grantee of the options). If the Board proposes to grant options to a substantial shareholder
or any independent non-executive Director or their respective associates which will result in
the number of Shares issued and to be issued upon exercise of options granted and to be
— IV-25 —
granted (including options exercised, canceled and outstanding) to such person under the
Share Option Scheme and any other share option schemes of our Company in the 12-month
period up to and including the date of such grant:
(i) representing in aggregate over 0.1% of our Shares in issue; and
(ii) having an aggregate value in excess of HK$5 million or such other sum as may be
from time to time provided under the Listing Rules, based on the closing price of
the Shares as stated in the daily quotation sheets of the Stock Exchange at the
date of each grant,
such further grant of options will be subject to the approval of our independent non-executive
Directors as referred to in this paragraph, the issue of a circular by our Company and the
approval of our Shareholders in general meeting on a poll at which at which such proposed
grantees, their associates and all core connected persons of our Company shall abstain from
voting in favor, and/or such other requirements prescribed under the Listing Rules from time
to time.
The circular to be issued by our Company to our Shareholders pursuant to the above
paragraph shall contain the following information:
(i) the details of the number and terms (including the exercise price) of the options to
be granted to each selected Eligible Participant, which must be fixed before our
Shareholders’ meeting and the date of our Board meeting for proposing such
further grant shall be taken as the date of grant for the purpose of calculating the
exercise price of such options;
(ii) a recommendation from our independent non-executive Directors (excluding any

independent non-executive Director who is the grantee of the options) to our
independent Shareholders as to voting;
(iii) the information required under Rule 17.02(2)(c) and (d) and the disclaimer
required under Rule 17.02(4) of the Listing Rules; and
(iv) the information required under Rule 2.17 of the Listing Rules.
(h) Restrictions on the times of grant of Options
An offer of the grant of an option may not be made after inside information has come
to the knowledge of our Company until the information has been announced in accordance
with the Listing Rules. In particular, no options may be granted during the period
commencing one month immediately preceding the earlier of:
(i) the date of our Board meeting (as such date is first notified to the Stock Exchange
under the Listing Rules) for the approving our Company’s results for any year,
half-year, quarterly or other interim period (whether or not required under the
Listing Rules); and
(ii) the deadline for our Company to publish an announcement of the results for any
year or half-year under the Listing Rules, or quarterly or any other interim period
(where our Company has elected to publish them),
and ending on the actual date of publication of the results announcement for such year,
half year, quarterly or interim period (as the case may be).
— IV-26 —
(i) Rights are personal to grantee
An option is personal to the grantee and shall not be transferable or assignable. No

grantee shall in any way sell, transfer, charge, mortgage, encumber or create any interest
(legal or beneficial) in favor of any third party over or in relation to any option or attempt so
to do (except that the grantee may nominate a nominee in whose name those Shares issued
pursuant to the Share Option Scheme may be registered). Any breach of the foregoing shall
entitle our Company to cancel any outstanding options or any part thereof granted to such
grantee.
(j) Time of exercise of option and duration of the Share Option Scheme
An option may be exercised in accordance with the terms of the Share Option Scheme
at any time after the date upon which the option is deemed to be granted and accepted and
prior to the expiry of ten years from that date. The period during which an option may be
exercised will be determined by our Board in its absolute discretion, except that no option
may be exercised more than ten years after it has been granted. No option may be granted
more than ten years after the Listing Date. Subject to earlier termination by our Company in
general meeting or by our Board, the Share Option Scheme shall be valid and effective for
a period of ten years from the Listing Date.
(k) Performance target
A grantee may be required to achieve certain performance targets as our Board may
then specify before any options granted under the Share Option Scheme can be exercised.
(l) Rights on ceasing employment/death
If the grantee of an option ceases to be an Eligible Participant:
(i) by any reason other than death, ill-health, injury, disability or termination of his
relationship with our Company and/or any of its subsidiaries on one of more of the
grounds specified in paragraph (m) below, the option to the extent not already
exercised on the date of such cessation (which date shall be, in relation to a
grantee who is an Eligible Participant by reason of his employment with our Group
or any related entities, the last actual working day with our Group or the related
entity whether salary is paid in lieu of notice or not) shall lapse automatically on the
date of cessation; or
(ii) by reason of death, ill-health, injury or disability (all evidenced to the satisfaction
of our Board) and none of the events which would be a ground for termination of
his relationship with our Group under paragraph (m) has occurred, the grantee or
his personal representative(s) may exercise the option within a period of 12
months (or such longer period as our Board may determine) from the date of
cessation of being an Eligible Participant or death to exercise the options in full (to
the extent not already exercised).
— IV-27 —
(m) Rights on dismissal
If the grantee of an option ceases to be an Eligible Participant on the grounds that he

has been guilty of serious misconduct, or has become insolvent, bankrupt or has made any
arrangements or compromises with his creditors generally, or has been convicted of any
criminal offense involving his integrity or honesty, his option will lapse and not be exercisable
on and after the date of termination of his employment.
(n) Rights on takeover
If a general offer is made to all our Shareholders (or all such Shareholders other than
the offeror and/or any person controlled by the offeror and/or any person acting in concert
with the offeror (as defined in the Takeovers Code)) and such offer becomes or is declared
unconditional during the option period of the relevant option, the grantee of an option shall
be entitled to exercise the option in full (to the extent not already exercised) at any time within
14 days after the date on which the offer becomes or is declared unconditional.
(o) Rights on winding-up
In the event that a notice is given by our Company to its members to convene a general
meeting for the purposes of considering, and if thought fit, approving a resolution to
voluntarily wind-up our Company, our Company shall forthwith give notice thereof to all
grantees and thereupon, each grantee (or his legal personal representative(s)) shall be
entitled to exercise all or any of his options (to the extent not already exercised) at any time
not later than two Business Days prior to the proposed general meeting of our Company
referred to above by giving notice in writing to our Company, accompanied by a remittance
for the full amount of the aggregate exercise price for Shares in respect of which the notice
is given, whereupon our Company shall as soon as possible and, in any event, no later than
the Business Day immediately prior to the date of the proposed general meeting, allot the
relevant Shares to the grantee credited as fully paid.
(p) Rights on compromise or arrangement between our Company and its members or
creditors
If a compromise or arrangement between our Company and its members or creditors is

proposed for the purposes of a scheme for the reconstruction of our Company or its
amalgamation with any other companies, our Company shall give notice to all the grantees
of the options on the same day as it gives notice of the meeting to its members and/or
creditors summoning the meeting to consider such a compromise or arrangement, and
thereupon each grantee shall be entitled to exercise all or any of his options in whole or in
part at any time prior to 12:00 noon (Hong Kong time) on the Business Day immediately
preceding the date of the meeting directed to be convened by the relevant court for the
purposes of considering such compromise or arrangement and if there are more than one
meeting for such purpose, the date of the first meeting.
With effect from the date of such meeting, the rights of all grantees to exercise their
respective options shall forthwith be suspended. Upon such compromise or arrangement
becoming effective, all options shall, to the extent that they have not been exercised, lapse
and determine. If for any reason such compromise or arrangement does not become
effective and is terminated or lapses, the rights of grantees to exercise their respective
options shall with effect from such termination be restored in full (but only upon the extent not
already exercised).
— IV-28 —
(q) Ranking of Shares
Our Shares to be allotted upon the exercise of an option will not carry voting rights until
completion of the registration of the grantee (or such other person nominated by the grantee)
as the holder thereof. Subject to the aforesaid, Shares allotted and issued on the exercise
of options will rank pari passu in all respects with and shall have the same voting, dividend,
transfer and other rights including those arising on liquidation of our Company as attached
to the other fully-paid Shares in issue on the date of issue, except that they will not rank for
any rights for dividend or other distribution declared or recommended or resolved to be paid
or made by reference to a record date falling on or before the date of allotment.
(r) Effect of alterations to capital
In the event of any alteration in the capital structure of our Company whilst any option
may become or remains exercisable, whether by way of capitalization issue, rights issue,
consolidation, subdivision or reduction of capital of our Company, such corresponding
alterations (if any) shall be made in the number of Shares subject to any outstanding options
and/or the exercise price per Share of each outstanding option as the auditors of our
Company or an independent financial advisor shall certify in writing to our Board to be in
their/his opinion fair and reasonable in compliance with Rule 17.03(13) of the Listing Rules
and the note thereto and the supplementary guidance attached to the letter from the Stock
Exchange dated September 5, 2005 to all issuers relating to share option schemes. The
capacity of the auditors of our Company or the approved independent financial advisor, as
the case may be, in this paragraph is that of experts and not arbitrators and their certificate
shall, in the absence of manifest error, be final and conclusive and binding on our Company
and the grantees.
Any such alterations will be made on the basis that a grantee shall have the same
proportion of the equity capital of our Company (as interpreted in accordance with the
supplementary guidance attached to the letter from the Stock Exchange dated September 5,
2005 to all issuers relating to share option schemes) for which any grantee of an option is
entitled to subscribe pursuant to the options held by him before such alteration provided that
no such alteration shall be made if the effect of which would be to enable a Share to be
issued at less than its nominal value. The issue of securities as consideration in a transaction
is not to be regarded as a circumstance requiring any such alterations.
(s) Expiry of option
An option shall lapse automatically and shall not be exercisable (to the extent not
already exercised) on the earliest of:
(i) the date of expiry of the option as may be determined by our Board;
(ii) the expiry of any of the periods referred to in paragraphs (l), (n), (o) or (p);
(iii) the date upon which the scheme of arrangement of our Company referred to in
paragraph (p) becomes effective;
(iv) subject to paragraph (o), the date of commencement of the winding-up of our
Company;
— IV-29 —
(v) the date upon which the grantee ceases to be an Eligible Participant by reason of
such grantee’s termination of his relationship on the grounds that he has been
guilty of serious misconduct, or has become insolvent, bankrupt or has made
arrangements or compromises with his creditors generally, or has been convicted
of any criminal offense involving his integrity or honesty. A resolution of our Board
to the effect that the employment of a grantee has or has not been terminated on
one or more of the grounds specified in this paragraph shall be conclusive; or
(vi) the date upon which our Board shall exercise our Company’s right to cancel the
option at any time after the grantee commits a breach of paragraph (i) above or the
options are canceled in accordance with paragraph (u) below.
(t) Alteration of the Share Option Scheme
The Share Option Scheme may be altered in any respect by resolution of our Board
except that:
(i) any alteration to the advantage of the grantees or the Eligible Participants (as the
case may be) in respect of the matters contained in Rule 17.03 of the Listing
Rules; or
(ii) any material alteration to the terms and conditions of the Share Option Scheme or
any change to the terms of options granted;
shall first be approved by our Shareholders in general meeting provided that if the proposed
alteration shall adversely affect any option granted or agreed to be granted prior to the date
of alteration, such alteration shall be further subject to the grantees’ approval in accordance
with the terms of the Share Option Scheme. The amended terms of the Share Option Scheme
must still comply with Chapter 17 of the Listing Rules and any change to the authority of the
Board in relation to any alteration to the terms of the Share Option Scheme must be approved
by Shareholders in general meeting.
(u) Cancellation of Options
Any cancellation of options granted but not exercised must be approved by the grantees
of the relevant options in writing. For the avoidance of doubt, such approval is not required
in the event that any option is canceled pursuant to paragraph (i).
(v) Termination of the Share Option Scheme
Our Company may by resolution in general meeting or our Board may at any time
terminate the Share Option Scheme and in such event no further option shall be offered but
the provisions of the Share Option Scheme shall remain in force to the extent necessary to
give effect to the exercise of any option granted prior thereto or otherwise as may be required
in accordance with the provisions of the Share Option Scheme.
Options granted prior to such termination but not yet exercised at the time of termination
shall continue to be valid and exercisable in accordance with the Share Option Scheme.
(w) Administration of our Board
The Share Option Scheme shall be subject to the administration of our Board whose
decision as to all matters arising in relation to the Share Option Scheme or its interpretation
or effect (except as otherwise provided therein) shall be final and binding on all parties.
— IV-30 —
(x) Conditions of the Share Option Scheme
The Share Option Scheme is conditional on:
(i) the Listing Committee of the Stock Exchange granting the listing of and permission
to deal in the Shares which may fall to be issued pursuant to the exercise of
options to be granted under the Share Option Scheme;
(ii) the obligations of the Underwriters under the Underwriting Agreement becoming
unconditional (including, if relevant, as a result of the waiver of any such
condition(s) by the Sole Bookrunner (for itself and on behalf of the Underwriters))
and not being terminated in accordance with the terms of the Underwriting
Agreement or otherwise;
(iii) passing of the necessary resolutions by our Shareholders to approve and adopt
the rules of the Share Option Scheme and to authorize our Board to grant options
under the Share Option Scheme and to allot and issue Shares pursuant to
exercise of any options; and
(iv) the commencement of dealings in our Shares on the Stock Exchange.
If the conditions in paragraph (x) above are not satisfied within six calendar months
from the date of approval of the Share Option Scheme by our Shareholders:
(i) the Share Option Scheme shall forthwith determine;
(ii) any option granted or agreed to be granted pursuant to the Share Option Scheme
and any offer of such a grant shall be of no effect; and
(iii) no person shall be entitled to any rights or benefits or be under any obligations
under or in respect of the Share Option Scheme or any option granted thereunder.
(y) Disclosure in annual and interim reports
Our Company will disclose details of the Share Option Scheme in its annual and interim
reports including the number of options, date of grant, exercise price, exercise period and
vesting period during the financial year/period in the annual/interim reports in accordance
with the Listing Rules in force from time to time.
As of the Latest Practicable Date, no option had been granted or agreed to be granted
under the Share Option Scheme.
Application has been made to the Listing Committee of the Stock Exchange for the
listing of, and permission to deal in, the Shares which may fall to be issued pursuant to the
exercise of the options to be granted under the Share Option Scheme, being 100,000,000
Shares in total.
— IV-31 —
B. PRE-IPO SHARE OPTION SCHEME
(a) Introduction
The purpose of the Pre-IPO Share Option Scheme is to recognize the contribution of certain
of our employees, executives and officers made or may have made to the growth of our Group
and/or the Listing. The principal terms of the Pre-IPO Share Option Scheme were approved and
conditionally adopted by resolutions in writing of all our shareholders passed on November 17,
2017 and are substantially the same as the terms of our Share Option Scheme except for the
following principal terms:
(i) the exercise price per Share shall not be less than the par value of such Share. Subject
to the preceding sentence, the Board shall determine the exercise price at its sole
discretion;
(ii) the total number of Shares subject to the Pre-IPO Share Option Scheme is 36,000,000
Shares, representing approximately 3.6% of the issued share capital of our Company
immediately after the Capitalization Issue and the Global Offering (without taking into
account any Shares which may be allotted and issued upon exercise of the Over-
Allotment Option or the options granted or to be granted under the Pre-IPO Share
Option Scheme or the Share Option Scheme);
(iii) the eligible participant under the Pre-IPO Share Option Scheme are the full-time
employees, executives or officers (including executive, non-executive and independent
non-executive Directors) of our Company or the full-time employees of any of the
subsidiaries of the level of manager or above and other full-time employees of our
Company or any of the subsidiaries who, in the sole opinion of the Board, have
contributed or will contribute to our Company and/or any of the subsidiaries;
(iv) the conditions which the Board may in its absolute discretion to consider (including,
without limitation, any minimum period for which an option must be held before it can
be exercised and/or any performance targets which must be achieved before an option
can be exercised) as it may think fit; and
(v) except for the options which have been granted under the Pre-IPO Share Option
Scheme, no further options will be offered or granted under the Pre-IPO Share Option
Scheme, as the right to do so will terminate upon the Listing.
HK$1.00 was payable by each grantee as consideration for grant of the options. Except
administration costs and expenses, our Company is not required to incur other costs or expenses
in respect of the Pre-IPO Share Option Scheme.
Application has been made to the Listing Committee of the Stock Exchange for the listing of
and permission to deal in Shares to be issued pursuant to the exercise of options granted under
the Pre-IPO Share Option Scheme.
— IV-32 —
(b) Outstanding options
As of the date of this prospectus, options to subscribe for an aggregate of 36,000,000 Shares
have been conditionally granted by our Company under the Pre-IPO Share Option Scheme. A total
of 71 eligible participants have been granted options under the Pre-IPO Share Option Scheme.
Under the Pre-IPO Share Option Scheme, options to subscribe for (i) 4,000,000 Shares were
granted to our Director; (ii) 15,600,000 Shares were granted to our senior management; and (iii)
16,400,000 Shares were granted to other employees, respectively.
Below is a list of grantees under the Pre-IPO Share Option Scheme:
Percentage of
Number of issued share
Shares capital of our
under the Company
Position within Exercise options upon
No. Grantee our Group Address price(Note 1) granted Listing (Note 2)
(RMB) (HK$)
Directors/Senior Management of our Group
1. Zhao Executive No.39, 1.12 1.34 4,000,000 0.40%
Xiaohong Director and Aozhoukangdu,
(趙曉紅) chief financial Wangjing North Road,
officer of our Chaoyang District,
Company Beijing, China.
2. Liu Aiguo Vice general Room 204, Unit 1, 1.12 1.34 1,800,000 0.18%
(劉愛國) manager of AK Building 12,
Medical Shuiguanxincun,
Beijing Changping District,
Beijing, China.
3. Han Yu Joint company Room 403, Unit 3, 1.12 1.34 2,600,000 0.26%
(韓鈺) secretary of Building 1,
our Company No.2 Zhongtao Alley,
Dongcheng District,
Beijing, China.
4. Wang Human 25-5-302, 1.12 1.34 1,800,000 0.18%
Nannan resources and South Dongguan
(王楠楠) administration Village,
director of AK Changping District,
Medical Beijing, China.
Beijing
5. Zhang Chief engineer 9-303, 1.12 1.34 800,000 0.08%
Weiping of AK Medical Pan Juyuan,
(張衛平) Beijing Beiyuan Home,
Chaoyang District,
Beijing, China.
6. Wang Caimei Director of 28-1-201, 1.12 1.34 3,000,000 0.30%
(王彩梅) research Area 6 Longjinyuan,
center of AK Huilongguan,
Medical Changping District,
Beijing Beijing, China.
— IV-33 —
Percentage of
under the Company
(RMB) (HK$)
7. Qi Yajun General Room 501, 1.12 1.34 1,500,000 0.15%
(亓亞軍) Manager of Building 10,
the Sales Taipingqiao West
Department of village,
AK Medical Fengtai District,
8. Qi Zijuan General 60-2-206, Hongfuyuan 1.12 1.34 1,800,000 0.18%
(齊子娟) Manager of Residential Zone,
the Business Changping District,
Development Beijing, China.
Department of
AK Medical
Beijing
9. Sun Yanshi Director of the 3-2-1902, 1.12 1.34 1,500,000 0.15%
(孫彥實) operation Building 8,
management Waterfront Street,
department of Qingyuan Road,
AK Medical Chaoyang District,
10. Wang Director and 7-2-1001, 1.12 1.34 800,000 0.08%
Zhengmin management Chongxingjiayuan,
(王政民) representative Shijingshan District,
of the quality Beijing, China.
control centre
of AK Medical
Beijing
Other employees of our Group

11. Ma Shuqin Person-in-charge 5-4-202, Area 2, 1.12 1.34 200,000 0.02%
(馬淑芹) of technology Hexiejiayuan,
department of Huilongguan,
AK Medical Changping District,
12. Gao Wencai Person-in-charge Room 617, Unit 3, 1.12 1.34 200,000 0.02%
(高文才) of the Tap Water Company
production Dormitory,
department of No.46 Baifuquan
AK Medical Road,
Changzhou Changping District,
Beijing, China.
13. Wang Huixin Director of Gate 4, No.4 Waiguan 1.12 1.34 800,000 0.08%
(王慧鑫) overseas sales West Street,
of AK Medical Chaoyang District,
14. Li Jie Director of 3D Room 501, Unit 4, 1.12 1.34 800,000 0.08%
(李傑) reconstruction Building 10,
and major Area East 5,
clients of AK Longjinyuan,
Medical Huilongguan,
Beijing, China.
— IV-34 —
Percentage of
under the Company
(RMB) (HK$)
15. Zhang Shun Product Room 501, Unit 1, 1.12 1.34 300,000 0.03%
(張順) manager of AK Building 3,
Medical Area East 4,
Beijing Longjinyuan,
Huilongguan,
Changping District,
Beijing, China.
16. Xiang Ye Director of sales No.3, 2nd Floor, Unit 1.12 1.34 1,100,000 0.11%
(相冶) of AK Medical 3, Building 10,
Beijing Police District,
No.10-34, Section 3
Longshanjie Road,
Chaoyang,
Liaoning Province,
China.
17. Zhang Wei Director of sales 24th Floor, Unit 1, 1.12 1.34 1,100,000 0.11%
(張偉) of AK Medical Building 16,
Beijing Section 2 Jinyicheng,
Mianfang Road,
Zhongyuan District,
Zhengzhou,
Henan Province,
China.
18. Li Changchun Clinical project No.8, Xi Si Bei Wu 1.12 1.34 800,000 0.08%
(李長春) manager of AK Tiao, Xicheng District,
Medical Beijing, China.
Beijing
19. Zhang Xi Senior manager No.90, 1.12 1.34 300,000 0.03%
(張溪) of AK Medical Zhonglou Bay,
XMKS Dongcheng District,
Beijing, China.
20. Bu Chaodong Project manager Room 201, No.298, 1.12 1.34 300,000 0.03%
(卜朝東) of AK Medical Qianjiazu,
Beijing Luoshi South Road,
Hongshan District,
Wuhan, China.
21. Zhao Meng District manager Room 601, Unit 1, 1.12 1.34 300,000 0.03%
(趙猛) of AK Medical Apartment 3,
Beijing Tianyangcheng
Village, Yanjiao
District,
Hebei, China.
22. Meng District Room 1202, Celebrity 1.12 1.34 200,000 0.02%
Xiangguo manager of AK Times Building,
(孟祥國) Medical East Wuyingshan
Beijing Road,
Tianqiao District,
Jinan, China.
— IV-35 —
Percentage of
under the Company
(RMB) (HK$)
23. Yu Juanjuan Provincial Room 1202, Celebrity 1.12 1.34 200,000 0.02%
(于娟娟) manager of AK Times Building,
Medical East Wuyingshan
Beijing Road,
Tianqiao District,
Jinan, China.
24. Wei Erchuan Senior provincial Building 2, 1.12 1.34 200,000 0.02%
(魏二川) manager of AK Xinlongjiuxi, Jiancai
Medical Road,
Beijing Chenghua District,
Chengdu, China.
25. Wu Qi District manager No. A3, 10th floor, 1.12 1.34 200,000 0.02%
(吳琪) of AK Medical Building 6,
Beijing Wealth Kungkuan,
Baoan District,
Shenzhen, China.
26. Zhang Jie Provincial Building 6, City Gate 1.12 1.34 200,000 0.02%
(張捷) manager of AK Street, Zhengzhou,
Medical Henan Province,
Beijing China.
27. Ma Xiao Provincial Unit 2, Building 5, 1.12 1.34 200,000 0.02%
(馬瀟) manager of AK Section 3 Purple
Medical Garden,
Beijing Intersection of
Zijingshan Road and
East Road,
Zhengzhou, China.
28. Zhang Song Provincial Room 1903, Building 1.12 1.34 200,000 0.02%
(章松) manager of AK 4, Yuntoujingyuan,
Medical West Road, Xishan
Beijing District,
Kunming, Yunnan
Province, China.
29. Zhao Senior provincial Room 3001, Unit 1, 1.12 1.34 200,000 0.02%
Dongdong manager of AK Building 4, Area A
(趙冬冬) Medical Yujingmingdu,
Beijing Intersection of
Dongsheng Street and
Sitong Road,
Erdao District,
Changchun, China.
30. Su Yonglin Project team Room 401, Unit 6, 1.12 1.34 300,000 0.03%
(蘇永琳) leader of AK Building 11, Southern
Medical District of
Beijing Qiangxiuyuan,
Changping District,
Beijing, China.
— IV-36 —
Percentage of
under the Company
(RMB) (HK$)
31. Li Jian Manager of Room 402, Unit 1, 1.12 1.34 500,000 0.05%
(李健) research and Building 31, Area 3
development Changshengyuan,
of AK Medical Changping District,
32. Li Jiandong Manager of tools 2nd Floor, Unit 6, 1.12 1.34 200,000 0.02%
(李建東) engineering No.3 North Gulou
division of AK Street, Changping
Medical District,
33. Liu Kunxi Project team No.168, Xituo Village, 1.12 1.34 300,000 0.03%
(劉昆璽) leader of AK Machikou Town,
34. Yang Xiaojie Project team 6A6, Taoyuan 1.12 1.34 200,000 0.02%
(楊曉傑) leader of AK Apartment, Beiqijia
Medical Town,
Beijing, China.
35. Yan Hui Project team 1-1-302, 1.12 1.34 300,000 0.03%
(閆慧) leader of AK Longxiang Garden,
Medical Asian Sports Village,
Beijing Chaoyang District,
Beijing, China.
36. Wang Lihua Director of No.1103, Building 27, 1.12 1.34 800,000 0.08%
(王立華) maxillofacial South Moshikou
orthopedic Village, Shijingshan
business District, Beijing,
department of China.
AK Medical
Beijing
37. Li Zhenhua Sales director of 9-509, 1.12 1.34 500,000 0.05%
(李振華) spinal Jasmine Garden,
products of AK Beiyuan Jiayuan,
Medical Chaoyang District,
38. Xiao Bo Head of Room 602, Unit 3, 1.12 1.34 200,000 0.02%
(肖波) technical Building 21,
department of South Dongguan
AK Medical Village,
Beijing, China.
39. Cai Lixin Technical No.10, Unit 1, 1.12 1.34 300,000 0.03%
(蔡立新) director of Building 29, South
maxillofacial Dongguan Village,
orthopedic Changping District,
project of AK Beijing, China.
Medical
Changzhou
— IV-37 —
Percentage of
under the Company
(RMB) (HK$)
40. Sun Hongbo Director of 202, No.17, 1.12 1.34 500,000 0.05%
(孫洪波) production of Area 2 Anhuali,
AK Medical Asian Sports Village,
Beijing, China.
41. Mao Production No.185 Houniufang 1.12 1.34 100,000 0.01%
Dongsheng facilities officer Village, Xiaotangshan
(毛東生) of AK Medical Town, Changping
Beijing District, Beijing China.
42. Zhao Yuhui Production No.79, Taiping Street, 1.12 1.34 100,000 0.01%
(趙芋輝) facilities officer Yongning Town,
of AK Medical Yanqing District,
43. Shen Person-in-charge No.296, Dongying 1.12 1.34 100,000 0.01%
Yantong of bone-meal Village, Xingshou
(申艷彤) production Town,
verification Changping District,
project of AK Beijing, China.
Medical
Beijing
44. Wang Lei Quality Room 605, Unit 1, 1.12 1.34 100,000 0.01%
(王蕾) assurance Building 13,
manager of AK Shanyuan Garden,
Medical Baishan Town,
Beijing, China.
45. Wang Donglin Production Room 201, Unit 2, 1.12 1.34 100,000 0.01%
(王東林) merchandising Building 10,
manager of AK Area 1
Medical Changshengyuan,
Beijing, China.
46. Li Weimin Foundation and Room 401, Unit 1, 1.12 1.34 100,000 0.01%
(李衛民) construction Building 13,
team leader Jianmingli Village,
for new Changping District,
production Beijing, China.
facilities of AK
Medical
Changzhou
47. Liu Yanchun Technician of AK Room 412, Unit 4, 1.12 1.34 100,000 0.01%
(劉彥春) Medical No.A2 West Ring
Beijing Road, Changping
District,
Beijing, China.
48. Zheng Xueyi Production No.14, Unit 1, 1.12 1.34 100,000 0.01%
(鄭學藝) facilities officer Building 128,
of AK Medical Manjing Alley,
Beijing Five Street,
Changping District,
Beijing, China.
— IV-38 —
Percentage of
under the Company
(RMB) (HK$)
49. Wu Xian Senior provincial 2405, Block B, 1.12 1.34 200,000 0.02%
(武羨) manager of AK Tonghuamen Tiancai
Medical Building, Xincheng
Beijing District, Xi’an
Municipality, Shaanxi,
China
50. Zhang Jiefei Senior provincial A10, Meihao Yuanjing 1.12 1.34 200,000 0.02%
(張皆非) manager of AK Estate, North 3rd
Medical Road, Zhaogong
Beijing Street, Tiexi District,
Shenyang, China
51. Li Xiaoyong Provincial 20-3-501, Shengshi 1.12 1.34 200,000 0.02%
(李小勇) manager of AK Shoufu, Julu County,
Medical Xingtai, Hebei, China
Beijing
52. Xu Yanpeng Provincial Room 302, Unit 2, 1.12 1.34 200,000 0.02%
(許彥鵬) manager of AK Building 4, Coal
Medical Technology College
Beijing Staff Quarter, Cross
of Xuefu Street and
Wucheng Middle
Road, Xiaodian
District, Taiyuan,
Shanxi, China
53. Wang Wei Provincial Room 2405, 1.12 1.34 200,000 0.02%
(王偉) manager of AK Tonghuamentiancai
Medical Building B, Xincheng
Beijing District, Xi’an
Municipality, China
54. Liang Senior provincial No.5, Chating North 1.12 1.34 200,000 0.02%
Kunsong manager of AK Road, Shiyou Road,
(梁昆松) Medical Daping, Yuzhong
Beijing District, Chongqing,
China
55. Pang Bo Research and Flat 1102, Unit 1, 1.12 1.34 200,000 0.02%
(龐博) development Building 21, Longshan
engineer of AK Huafu, Changping
Medical District, Beijing, China
Beijing
56. Meng Desong Research and Flat 1102, Unit 1, 1.12 1.34 200,000 0.02%
(孟德松) development Building 21, Longshan
engineer of AK Huafu, Changping
Medical District, Beijing, China
Beijing
57. Liang Kun Senior financial 6/F, 504 Pu’an Lane 1.12 1.34 500,000 0.05%
(梁堃) manager of AK East, Fengtai District,
Medical Beijing, China
Beijing
— IV-39 —
Percentage of
under the Company
(RMB) (HK$)
58. Kang Gaiyan Costs manager 501, Unit 4, 1.12 1.34 100,000 0.01%
(康改豔) of AK Medical Building 3,
Beijing 17 Zhongxing Road,
Changping Science
and Technology Park,
Beijing, China
59. Wang Lixia Fees manager of Flat 902, Unit 2, 1.12 1.34 100,000 0.01%
(王麗霞) AK Medical Building 11, Baiquan
Beijing Garden, Machikou
Town, Changping
District, Beijing, China
60. Wei Person-in-charge 23-1003, Juzhen 1.12 1.34 200,000 0.02%
Chongbin of the Estate, Huilongguan
(魏崇斌) fundamental East Avenue,
research Changping District,
department of Beijing, China
AK Medical
Beijing
61. Guo Xiaomin Quality control 101, Unit 2, 1.12 1.34 100,000 0.01%
(郭曉敏) manager of AK Building 20, Qingxiu
Medical Park North,
Beijing, China
62. Sun Yan Logistics No. 102, Baifu Village, 1.12 1.34 100,000 0.01%
(孫妍) manager of AK Machikou Town,
Beijing Beijing, China
63. Lin Administration 402, Unit 5, 1.12 1.34 100,000 0.01%
Chengcheng manager of AK Building 5, Hongye
(林成程) Medical Family Hall, Machikou
Beijing Town, Changping
District, Beijing, China
64. Hao Wei Legal 308, Unit 3, 1.12 1.34 100,000 0.01%
(郝偉) registration Building 2,
manager of AK Caishenmiao Hutong
Medical Estate, Third Street,
Beijing, China
65. Li Li (李麗) Integrated Flat 502, Unit 4, 1.12 1.34 100,000 0.01%
business Building 28,
manager of AK Qingyuanxi Lane,
Medical Huangcun Town,
Beijing Daxing District,
Beijing, China
— IV-40 —
Percentage of
under the Company
(RMB) (HK$)
66. Guan Shujing Tender manager 302, Unit 3, North 1.12 1.34 100,000 0.01%
(管淑靜) of AK Medical Hall, Beijing
Beijing Shougang Company
Limited No. 1 Line
Material Factory,
Zhansimen Road,
Shahe Town,
Changping District,
Beijing, China
67. Sang Qiao Administrative 102, 1/F, Unit 15, 1.12 1.34 200,000 0.02%
(桑翹) staff of AK Zone 1, Xinjiekou
Medical West Lane, Xicheng
Beijing District, Beijing, China
68. Wang Person-in-charge 301, Unit 1, 1.12 1.34 100,000 0.01%
Junshuai of the bone Building 3,
(王俊帥) meal project of Longxinyuan Estate,
AK Medical 3 Baimiao Road,
Beijing, China
69. Ma Jun (馬駿) Assistant to 2002, Unit 2, 1.12 1.34 100,000 0.01%
director of AK Building 23,
Medical Shifang Yuan,
Beijing, China
70. Liu Min (劉敏) Research and 503, Unit 1, 1.12 1.34 100,000 0.01%
development Building 4, Hall 21,
engineer of AK Jingke Court,
Beijing Beijing, China
71. Kang Jianjun Manager of the No. 196 1.12 1.34 100,000 0.01%
(康建軍) equipment Hongsi Street,
safety Chengguan
department Sub-district,
Fangshan District,
Beijing, China
Total: 36,000,000 3.60%
Notes:
1. The exercise price in RMB is disclosed for illustration purpose only.
2. These percentages are calculated on the basis of 1,000,000,000 Shares in issue immediately following completion
of the Global Offering without taking into account any Shares which may be allotted and issued upon exercise of the
Over-Allotment Option or the options granted or to be granted under the Pre-IPO Share Option Scheme or the Share
Option Scheme.
The percentages of shareholding represent the percentages immediately after the

Capitalization Issue and the Global Offering (without taking into account any Shares which may
be allotted and issued upon exercise of the Over-Allotment Option and the options granted or to
be granted under the Pre-IPO Share Option Scheme or the Share Option Scheme). Except as set
out above, no other options have been granted or agreed to be granted by us under the Pre-IPO
Share Option Scheme.
— IV-41 —
Assuming the Over-Allotment Option is not exercised, our shareholding structure before and
after the full exercise of all the options granted under the Pre-IPO Share Option Scheme will be
as follows:
Shareholding structure Shareholding structure

immediately after the immediately after the
Capitalization Issue and the Capitalization Issue and the
Global Offering and before the Global Offering and full
exercise of the options exercise of the options
granted under the Pre-IPO granted under the Pre-IPO
Shareholders Share Option Scheme Share Option Scheme
Approximate
Shares % Shares %
Ximalaya . . . . . . . . . . . . . . . . . . . . . . . . 585,157,500 58.51575% 585,157,500 56.48%
Summer . . . . . . . . . . . . . . . . . . . . . . . . . 10,125,000 1.01250% 10,125,000 0.98%
Suntop . . . . . . . . . . . . . . . . . . . . . . . . . 67,432,500 6.74325% 67,432,500 6.51%
Sanbao . . . . . . . . . . . . . . . . . . . . . . . . . 12,285,000 1.2285% 12,285,000 1.19%
OrbiMed Asia . . . . . . . . . . . . . . . . . . . . . 75,000,000 7.50000% 75,000,000 7.24%
Grantees under the Pre-IPO Share Option
Scheme who are connected persons . . . . . — — 4,000,000 0.39%
Grantees under the Pre-IPO Share Option
Scheme who are not connected persons . . . — — 32,000,000 3.09%
Other Public Shareholders . . . . . . . . . . . . . 250,000,000 25.00000% 250,000,000 24.13%
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000,000 100.00000% 1,036,000,000 100%
We will not permit the exercise of any Pre-IPO Share Option Scheme by any of our
connected persons if, upon such exercise, we would not be able to attain the minimum public float
requirement of the Stock Exchange.
(c) Valuation of the options granted under the Pre-IPO Share Option Scheme
The valuation of options granted under the Pre-IPO Share Option Scheme was conducted
based on the Binomial Model with the following assumptions:
Date of grant June 30, 2017

Estimated share price at the date of grant RMB1.09
Exercise price per share RMB1.12
*Risk free rate throughout option life 3.98% per year
*Expected volatility 44.10% per year
Life of the option 10 years
Expected dividend yield 1.12% per year
The expected suboptimal early exercise multiple for the grantees is assumed to be 2.47
times the exercise price.
* The assumptions above are based on market data as at June 30, 2017, quoted from Bloomberg.
The result of the Binomial Model can be materially affected by changes in the aforesaid
assumptions so an option’s actual value may differ from the estimated fair value of the options due
to limitations of the Binomial Model.
— IV-42 —
The fair value per share of option:
Vesting Period (assuming, among other

things, that the Vesting Conditions are met
in the relevant periods) Grantees
One year after the date of grant. . . . . . . . . . Approximately RMB0.5103
Two years after the date of grant . . . . . . . . . Approximately RMB0.5176
Three years after the date of grant . . . . . . . . Approximately RMB0.5283
Four years after the date of grant . . . . . . . . . Approximately RMB0.5389
(d) Effect on the earnings per Share as a result of the Pre-IPO Share Options
The Shares which may be allotted and issued pursuant to the exercise of all the options
granted under the Pre-IPO Share Option Scheme which remained outstanding as at the Latest
Practicable Date represent approximately 3.6% of the issued share capital of our Company
immediately upon completion of the Capitalization Issue and the Global Offering (without taking
into account of any share which may be allotted and issued pursuant to the exercise of the
Over-Allotment Option or the options granted or to be granted under the Pre-IPO Share Option
Scheme or the Share Option Scheme). If all options granted under the Pre-IPO Share Option
Scheme which remained outstanding as at the Latest Practicable Date are exercised and that
1,036,000,000 Shares, comprising 1,000,000,000 Shares to be in issue immediately after the
Global Offering and the Capitalization Issue and 36,000,000 Shares to be issued upon the
exercise of all the options granted under the Pre-IPO Share Option Scheme which remained
outstanding as at the Latest Practicable Date, were deemed to have been in issue, but not taking
into account any Shares which may be allotted and issued upon the exercise of the Over-allotment
Option or any option which may be granted under the Share Option Scheme, this would have a
dilutive effect of approximately 3.47% on the shareholding and the earnings per Share of our
Shareholders. No further options will be granted under the Pre-IPO Share Option Scheme after
the Listing Date.
(e) Summary of the major terms of the Pre-IPO Share Option Scheme and the offer letter
(i) Purpose
The Pre-IPO Share Option Scheme is a share incentive scheme and is established to
recognize and acknowledge the contributions that the eligible participants (as described in
paragraph (ii) below) have or may have made to our Group. The Pre-IPO Share Option
Scheme will provide the eligible participants with an opportunity to have a personal stake in
our Company with a view to achieving the following objectives:
(aa) motivating the eligible participants to optimize their performance efficiency for the
benefit of our Group; and
(bb) attracting and retaining or otherwise maintaining relationships with the eligible
participants whose contributions are or will be beneficial to the long-term growth
of our Group.
— IV-43 —
(ii) Who may join
The Board may, at its discretion, offer to grant an option to subscribe for such number
of new Shares as the Board may determine at an exercise price set out in paragraph (iv)
below to:
(aa) any full-time employees, executives or officers (including executive, non-executive

and independent non-executive Directors) of our Company;
(bb) the full-time employees of any of our subsidiaries of the level of manager or above;
(cc) other full-time employees of our Company or any of our subsidiaries who, in the
sole opinion of our Board, have contributed or will contribute to our Company
and/or any of our subsidiaries.
(iii) Maximum number of Shares
The maximum number of Shares which may be allotted and issued upon exercise of all
options granted under the Pre-IPO Share Option Scheme which remained outstanding as at
the Latest Practicable Date is 36,000,000 Shares.
(iv) Price of Shares
The exercise price of a Share in respect of any particular option granted under the
Pre-IPO Share Option Scheme shall not be less than the nominal value of such Share.
(v) Rights are personal to grantee
An option is personal to the grantee and shall not be transferable or assignable. No

grantee shall in any way sell, transfer, charge, mortgage, encumber or create any interest
(legal or beneficial) in favor of any third party over or in relation to any option or attempt to
do so.
(vi) Vesting conditions of options, duration of options and duration of the Pre-IPO Share
Option Scheme
The Pre-IPO Share Option Scheme shall commence on the Listing Date and end on the
tenth anniversary of the Listing Date (both dates inclusive) (the “Scheme Period”).
The options granted under the Pre-IPO Share Option Scheme shall be valid for a period
of ten years commencing on the date upon which such options are granted and accepted in
accordance with the rules of the Pre-IPO Share Option Scheme (the “Option Period”).
— IV-44 —
The grantees to whom options have been granted under the Pre-IPO Share Option
Scheme will be entitled to exercise his/her options in the following manner:
(aa) For the purpose of this paragraph:
“Vesting Conditions” means (i) the revenue of our Group as shown in the audited
consolidated financial statements of our Group for the relevant financial year
represents an increase of 30% or more of the revenue of our Group as shown in
the audited consolidated financial statements of our Group for the immediately
preceding financial year (adjusted to exclude the effect of any acquisition by our
Group); (ii) the profit attributed to shareholders as shown in the audited
consolidated financial statements of our Group for the relevant financial year
(adjusted to exclude the effect of the Listing expenses, the options granted, any
withholding tax arising from profit generated by our Group Companies in the PRC
and any acquisition by our Group) represents an increase of 25% or more of the
profit attributes to shareholders as shown in the audited consolidated financial
statements of our Group for the immediately preceding financial year (adjusted to
exclude the effect of the Listing expenses, the options granted any withholding tax
arising from profit generated by our Group Companies in the PRC and any
acquisition by our Group); and (iii) the relevant grantee has passed the annual
performance appraisal scheme established by our Group for the relevant financial
year.
(bb) Options granted to the grantees will vest in four portions and the grantees shall be
entitled to exercise, on the first business day immediately following May 1 of the
relevant year until the end of the Option Period (both days inclusive):
(I) 25% of the total number of options granted when the Vesting Conditions are
met for the first time during the Option Period;
(II) 25% of the total number of options granted when the Vesting Conditions are
met for the second time during the Option Period;
(III) 25% of the total number of options granted when the Vesting Conditions are
met for the third time during the Option Period; and
(IV) 25% of the total number of options granted when the Vesting Conditions are
met for the fourth time during the Option Period.
(cc) Any options granted will lapse if the conditions for exercise under paragraph (bb)
above have not been met within the Option Period.
(dd) The grantees shall enter into service contracts with our Group for a term no less
than four years from the date of grant of the options.
— IV-45 —
(ee) Our Board has the sole and absolute discretion to amend the relevant vesting
conditions of the pre-IPO share options from time to time and the consent from
each grantee has to be obtained prior to any amendment in the event that such
amendment is prejudicial to such grantee.
(ff) During the Option Period, if the grantee terminates its service contract with our
Group under paragraph (dd) above or commits a material breach of any restrictive
covenant in respect of our Group that the grantee is subject to (e.g. a non-
competition undertaking), (i) to the extent not already exercised, the options
granted to such grantee shall lapse automatically and not be exercisable, and (ii)
to the extent already exercised, our Company may demand the grantee to return
any entitlement or interest obtained from the exercise of the options granted.
(vii) Ranking of Shares
Our Shares to be allotted upon the exercise of an option will not carry voting rights until
completion of the registration of the grantee (or such other person nominated by the grantee)
as the holder thereof. Subject to the aforesaid, Shares allotted and issued on the exercise
of options will rank pari passu in all respects with and shall have the same voting, dividend,
transfer and other rights including those arising on liquidation of our Company as attached
to the other fully-paid Shares in issue on the date of issue, except that they will not rank for
any rights for dividend or other distribution declared or recommended or resolved to be paid
or made by reference to a record date falling on or before the date of allotment.
(viii) Effect of alterations to capital
In the event of any alteration in the capital structure of our Company whilst any option
may become or remains exercisable, whether by way of capitalization issue, rights issue,
consolidation, subdivision or reduction of capital of our Company, such corresponding
alterations (if any) shall be made in the number of Shares subject to any outstanding options
and/or the exercise price per Share of each outstanding option as the auditors of our
Company or an independent financial advisor shall certify in writing to our Board to be in
their/his opinion fair and reasonable in compliance with Rule 17.03(13) of the Listing Rules
and the note thereto and the supplementary guidance attached to the letter from the Stock
Exchange dated September 5, 2005 to all issuers relating to share option schemes. The
capacity of the auditors of our Company or the approved independent financial advisor, as
the case may be, in this paragraph is that of experts and not arbitrators and their certificate
shall, in the absence of manifest error, be final and conclusive and binding on our Company
and the grantees.
Any such alterations will be made on the basis that a grantee shall have the same
proportion of the equity capital of our Company (as interpreted in accordance with the
supplementary guidance attached to the letter from the Stock Exchange dated September 5,
2005 to all issuers relating to share option schemes) for which any grantee of an option is
entitled to subscribe pursuant to the options held by him before such alteration provided that
no such alteration shall be made if the effect of which would be to enable a Share to be
issued at less than its nominal value. The issue of securities as consideration in a transaction
is not to be regarded as a circumstance requiring any such alterations.
— IV-46 —
(ix) Expiry of option
An option shall lapse automatically and not be exercisable (to the extent not already
exercised) on the earliest of (among others):
(aa) the date of expiry of the option as may be determined by the Board;
(bb) the date of commencement of the winding-up of our Company in accordance with
the Hong Kong Law;
(cc) the date on which the grantee ceases to be an eligible participant, including the
termination of his/her employment (for any reason other than death, ill-health,
injury or disability);
(dd) the date on which the grantee ceases to be an eligible participant for reasons of
gross negligence, willful misconduct, convicted of a criminal offense or material
breach of any restrictive covenant in respect of our Group that the grantee is
subject to (e.g. a non-competition undertaking); or
(ee) the date on which the Board shall exercise our right to cancel the option in
accordance with paragraph (xi) below.
(x) Alteration of the Pre-IPO Share Option Scheme
The Pre-IPO Share Option Scheme may be altered in any respect by resolution of the
Board except that any material alteration to the terms and conditions of the Pre-IPO Share
Option Scheme or any change to the terms of options granted, shall first be approved by our
Shareholders in general meeting provided that if the proposed alteration shall adversely
affect any option granted or agreed to be granted prior to the date of alteration, such
alteration shall be further subject to the grantees’ approval in accordance with the terms of
the Pre-IPO Share Option Scheme.
(xi) Cancellation of Options
Any cancellation of options granted but not exercised must be approved by the grantees
of the relevant options in writing.
(xii) Termination of the Pre-IPO Share Option Scheme
Our Company may by resolution in general meeting or our Board may at any time
terminate the Pre-IPO Share Option Scheme and in such event the Pre-IPO Share Option
Scheme shall remain in force to the extent necessary to give effect to the exercise of any
option granted prior thereto or otherwise as may be required in accordance with the
provisions of the Pre-IPO Share Option Scheme.
Options granted prior to such termination but not yet exercised at the time of termination
shall continue to be valid and exercisable in accordance with the Pre-IPO Share Option
Scheme.
— IV-47 —
(xiii) Administration of the Board
The Pre-IPO Share Option Scheme shall be subject to the administration of our Board
whose decision as to all matters arising in relation to the Pre-IPO Share Option Scheme or
its interpretation or effect (except as otherwise provided therein) shall be final and binding on
all parties.
(xiv) Disclosure in annual and interim reports
Our Company will disclose details of the Pre-IPO Share Option Scheme in its annual
and interim reports including the number of options, date of grant, exercise price, exercise
period and vesting period during the financial year/period in the annual/interim reports in
accordance with the Listing Rules in force from time to time.
16. Estate duty, tax and other indemnity
Ximalaya, Summer, Mr. Li and Ms. Zhang Bin (the “Indemnifiers”) have entered into the
Deed of Indemnity in favor of our Company (for itself and as trustee for the benefit of each of its
subsidiaries) (being the material contract (g) referred to in “—Further Information about the
Business of Our Company—8. Summary of material contracts” in this Appendix) to provide
indemnities on a joint and several basis, in respect of, among other matters:
(a) any liability for Hong Kong estate duty which might be incurred by any member of our
Group by reason of any transfer of property (within the meaning of sections 35 and 43
of the Estate Duty Ordinance (Chapter 111 of the Laws of Hong Kong) or the equivalent
thereof under the laws of any jurisdiction outside Hong Kong) to any member of our
Group at any time on or before the Listing Date;
(b) any tax liabilities (including all costs, interests, penalties, charges, fines and expenses
incidental or relating to the liability to taxation) on any member of our Group resulting
from or by reference to any income, profits or gains earned, accrued or received (or
deemed to be so earned, accrued or received) on or before the Listing Date or any
transaction, matter, thing, event, act or omission occurring or deemed to occur on or
before such date, whether alone or in conjunction with any other transaction, matter,
thing, event, act, omission or circumstance whenever occurring, and whether or not
such taxation is chargeable against or attributable to any other person, firm or company;
(c) any liability which are suffered by our Group in connection with the incidents of
non-compliance with applicable laws and requirements referred to in “Our
Business—Legal Proceedings and Compliance—Non-Compliance Matter” in this
prospectus; and
(d) any depletion in or reduction in value of its assets or any loss (including all legal costs
and suspension of operation), cost, expenses, damages or other liabilities which any
member of our Group may incur or suffer arising from or in connection with the
Reorganization.
— IV-48 —
The Indemnifiers are under no liability under the Deed of Indemnity in respect of any liability:
(a) to the extent that provision or reserve has been made for the relevant taxation or liability
in the audited consolidated accounts of our Group or the audited accounts of the
relevant member of our Group for an accounting period ended on or before June 30,
2017;
(b) to the extent that such taxation or liability falling on any of the members of our Group
in respect of any accounting period commencing on or after July 1, 2017 and ending on
the Listing Date, where such taxation or liability would not have arisen but for some act
or omission of, or transaction voluntarily entered into by, any member of our Group
(whether alone or in conjunction with some other act, omission or transaction, whenever
occurring) without the prior written consent or agreement of the Indemnifiers, other than
any such act, omission or transaction:
(i) carried out or effected in the ordinary course of business or in the ordinary course
of acquiring and disposing of capital assets on or before the Listing Date; or
(ii) carried out, made or entered into pursuant to a legally binding commitment created
on or before the Listing Date or pursuant to any statement of intention made in this
prospectus; or
(c) to the extent that the relevant taxation or liability arises or is incurred as a result of any
change in the laws, rules or regulations, or the interpretation or practice thereof by any
statutory or government authority in Hong Kong, China or any part of the world,
including but without limitation the Hong Kong Inland Revenue Department, having
retrospective effect coming into force after the date of the Deed of Indemnity or to the
extent that such liability arises or is increased by an increase in rates of taxation,
payments, fines, fees or premium as required by Chinese laws and regulations (as the
case may be) after the date hereof with retrospective effect (except for the imposition
of or an increase in the rate of Hong Kong profits tax or any tax of any part of the world
on the profits of companies for the current or any earlier financial period);
(d) to the extent that the relevant taxation or liability is discharged by another person who
is not a member of our Group and that no member of our Group is required to reimburse
such person in respect of the discharge of the liability; or
(e) to the extent of any provision or reserve made for the relevant taxation or liability in the
audited accounts referred to in (a) above which is finally established to be an
over-provision or an excessive reserve, in which case the liability of the Indemnifiers in
respect of such taxation or liability shall be reduced by an amount not exceeding such
provision or reserve provided that the amount of any such provision or reserve applied
referred to in this paragraph to reduce the liability of the Indemnifiers in respect of the
relevant taxation or liability shall not be available in respect of any such liability arising
thereafter.
— IV-49 —
17. Litigation
As of the Latest Practicable Date, neither our Company nor any of our subsidiaries is
engaged in any litigation or arbitration of material importance and no litigation or claim of material
importance is known to our Directors to be pending or threatened against our Company or any of
our subsidiaries, that would have a material adverse effect on the results of operations or financial
condition of our Company.
18. Preliminary expenses
The preliminary expenses of our Company were approximately HK$12,480 and were paid by
our Company.
19. Promoters
(a) Our Company has no promoter.
(b) Except as disclosed in this prospectus, within the two years preceding the date of this
prospectus, no amount or benefit has been paid or given to the promoters named in
sub-paragraph (a) above in connection with the Global Offering or the related
transactions described in this prospectus.
20. Sole Sponsor’s Independence
The Sole Sponsor satisfies the independence criteria applicable to sponsor as set out in Rule
3A.07 of the Listing Rules.
21. Agency fees or commissions received
The Underwriters will receive a commission of 3.5% of the aggregate Offer Price in respect
of all the Offer Shares. The Sole Sponsor will also receive an aggregate sponsor fee of
US$500,000, which amount shall be deductable from the aforesaid commission, relating to the
Global Offering.
22. Application for Listing of Shares
The Sole Sponsor has made an application on behalf of our Company to the Listing
Committee of the Stock Exchange for the listing of, and permission to deal in, the Shares in issue
and to be issued as mentioned in this prospectus and any Shares which may be issued upon the
exercise of the Over-Allotment Option and any options granted or to be granted under the Pre-IPO
Share Option Scheme or the Share Option Scheme.
All necessary arrangements have been made to enable the securities to be admitted into
CCASS.
— IV-50 —
23. Qualifications of experts
The qualifications of the experts who have given opinions and/or whose names are included
in this prospectus are as follows:
Name Qualification
Goldman Sachs (Asia) L.L.C. . . . . . . . . . . . Licensed under the SFO to conduct type 1 (dealing in
securities), type 4 (advising on securities), type 5 (advising on
futures contracts), type 6 (advising on corporate finance) and
type 9 (asset management) regulated activities under the SFO
Jingtian & Gongcheng . . . . . . . . . . . . . . . . Legal advisor to our Company as to Chinese law
Conyers Dill & Pearman. . . . . . . . . . . . . . . Legal advisor to our Company as to Cayman Islands law
KPMG . . . . . . . . . . . . . . . . . . . . . . . . . . Certified public accountants
Frost & Sullivan . . . . . . . . . . . . . . . . . . . . Industry consultant
24. Consents of experts
Each of the Sole Sponsor, Jingtian & Gongcheng, Conyers Dill & Pearman, KPMG and Frost
& Sullivan has given and has not withdrawn its written consent to the issue of this prospectus with
copies of its reports, valuation, letters or opinions (as the case may be) and the references to its
names or summaries of opinions included herein in the form and context in which they respectively
appear.
25. Binding Effect
This prospectus shall have the effect, if an application is made in pursuance of it, of
rendering all persons concerned bound by all of the provisions (other than the penal provisions)
of sections 44A and 44B of the Companies Ordinance so far as applicable.
26. Taxation of holders of Shares
(a) Hong Kong
Dealings in Shares registered on our Company’s Hong Kong branch register of members will
be subject to Hong Kong stamp duty. The sale, purchase and transfer of Shares are subject to
Hong Kong stamp duty, the current rate of which is 0.2% of the consideration or, if higher, the
value of the Shares being sold or transferred.
Profits from dealings in the Shares arising in or derived from Hong Kong may also be subject
to Hong Kong profits tax.
(b) The Cayman Islands
Under the present Cayman Islands law, transfers and other dispositions of Shares are
exempt from Cayman Islands stamp duty other than in respect of companies that hold an interest
in land in the Cayman Islands.
— IV-51 —
(c) Consultation with professional advisors
Intending holders of Shares are recommended to consult their professional advisors if they
are in any doubt as to the taxation implications of subscribing for, purchasing, holding or disposing
of or dealing in Shares or exercising any rights attaching to them. It is emphasized that none of
our Company, our Directors or the other parties involved in the Global Offering can accept
responsibility for any tax effect on, or liabilities of, holders of Shares resulting from their
subscription for, purchase, holding or disposal of or dealing in Shares or exercising any rights
attaching to them.
27. Miscellaneous
(a) Except as disclosed herein:
(i) within two years preceding the date of this prospectus:
(aa) no share or loan capital of our Company or of any of our subsidiaries has
been issued, agreed to be issued or is proposed to be issued fully or partly
paid either for cash or for a consideration other than cash;
(bb) no commissions, discounts, brokerages or other special terms have been

granted in connection with the issue or sale of any share or loan capital of our
Company or any of our subsidiaries; and
(cc) no commission has been paid or payable for subscribing or agreeing to

subscribe, or procuring or agreeing to procure the subscriptions, for any
shares in our Company or any of our subsidiaries;
(ii) no share or loan capital of our Company or any of our subsidiaries is under option
or is agreed conditionally or unconditionally to be put under option;
(iii) our Group does not have any outstanding convertible debt securities or
debentures;
(b) our Directors confirm that there has been no material adverse change in the financial
or trading position or prospects of our Group since June 30, 2017 (being the date to
which the latest combined financial statements of our Group were made up);
(c) there has not been any interruption in the business of our Group which may have or has
had a significant effect on the financial position of our Group in the 12 months preceding
the date of this prospectus; and
(d) there is no arrangement under which future dividends are waived or agreed to be
waived.
28. Bilingual Prospectus
The English language and Chinese language versions of this prospectus are being published
separately, in reliance upon the exemption provided under section 4 of the Companies Ordinance
(Exemption of Companies and Prospectuses from Compliance with Provisions) Notice (Chapter
32L of the Laws of Hong Kong).
— IV-52 —
APPENDIX V DOCUMENTS DELIVERED TO THE REGISTRAR OF
COMPANIES AND AVAILABLE FOR INSPECTION
1. DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES
The documents attached to a copy of this prospectus and delivered to the Registrar of
Companies in Hong Kong for registration were, amongst other documents, copies of the WHITE,
YELLOW and GREEN application forms, the written consents referred to in “Other
Information—24. Consents of experts” in Appendix IV to this prospectus, and certified copies of
the material contracts referred to in “Further Information about the Business of Our Company—8.
Summary of material contracts” in Appendix IV to this prospectus.
2. DOCUMENTS AVAILABLE FOR INSPECTION
Copies of the following documents will be available for inspection at the offices of Mayer
Brown JSM at 18th Floor, Prince’s Building, 10 Chater Road, Central, Hong Kong, during normal
business hours from 9:00 a.m. up to 5:00 p.m. up to and including the date which is 14 days from
the date of this prospectus:
(a) our Memorandum of Association and the Articles of Association;
(b) the Accountants’ Report from KPMG in respect of the historical financial information of
our Group for the years ended December 31, 2014, 2015 and 2016 and the six months
ended June 30, 2017, the text of which is set out in Appendix I to this prospectus;
(c) the report on the unaudited pro forma financial information of our Group from KPMG,
the text of which is set out in Appendix II to this prospectus;
(d) the combined audited financial statements of our Group for the years ended December
31, 2014, 2015 and 2016 and the six months ended June 30, 2017;
(e) the Cayman Islands Companies Law;
(f) the letter of advice prepared by Conyers Dill & Pearman, our Cayman legal advisor,
summarizing certain aspects of Cayman Islands Companies Law referred to in
Appendix III to this prospectus;
(g) the legal opinions prepared by Jingtian & Gongcheng in respect of certain aspects of
our Group and summary of Chinese laws and regulations relating to our business;
(h) the material contracts referred to in “Further Information about the Business of Our
Company—8. Summary of material contracts” in Appendix IV to this prospectus;
(i) the written consents referred to in “Other Information—24. Consents of experts” in

Appendix IV to this prospectus;
(j) the Share Option Scheme and the Pre-IPO Share Option Scheme;
(k) the service contracts referred to in “Further Information about Directors and
Shareholders—12. Directors” in Appendix IV to this prospectus; and
(l) the Frost & Sullivan Report.
— V-1 —

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IMPORTANT

AK MEDICAL HOLDINGS LIMITED

Joint Lead Managers

Hong Kong Public Offering commences and

Latest time to complete electronic applications under

Application lists open (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11:45 a.m. on

Latest time to lodge WHITE and YELLOW

Latest time to complete payment of

Latest time to give electronic application instructions

Application lists close (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12:00 noon on

Expected Price Determination Date (5) . . . . . . . . . . . . . . . . . . . .Wednesday, December 13, 2017

• the level of applications in the Hong Kong Public Offering;

• the level of indications of interest in the International Placing; and

• the basis of allotment of the Hong Kong Public Offering

is expected to be published in South China Morning Post (in English)

A full announcement of the Hong Kong Public Offering

Results of allocations in the Hong Kong Public Offering

Dispatch of share certificates in respect of

Dispatch of HK eIPO White Form e-Auto refund payment

Dealings in Shares on the Stock Exchange expected to

Waivers from Strict Compliance with the Listing Rules . . . . . . . . . . . . . . . . . . . . . . . 61

Information about this Prospectus and the Global Offering . . . . . . . . . . . . . . . . . . . . 65

Directors and Parties Involved in the Global Offering . . . . . . . . . . . . . . . . . . . . . . . . 69

History, Reorganization and Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101

Our Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124

Relationship with our Controlling Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178

Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183

Directors and Senior Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228

Substantial Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241

Share Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243

Future Plans and Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 248

Structure of the Global Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 260

How to Apply for the Hong Kong Offer Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 269

Appendix I — Accountants’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1

Appendix II — Unaudited Pro Forma Financial Information . . . . . . . . . . . . . . . II-1

Appendix III — Summary of the Constitution of the Company and

Appendix IV — Statutory and General Information . . . . . . . . . . . . . . . . . . . . . . IV-1

Appendix V — Documents Delivered to the Registrar of Companies and

Year ended December 31, Six months ended June 30,

Year ended December 31, Six months ended June 30,

(1) Excluding 3D-printed hip replacement implants.

We developed and introduced our personalized 3D Accurate Construction Technology

We offer a comprehensive range of products including 50 CFDA-approved medical devices.

Customers, Sales and Distribution

Six months ended

Six months ended

Research and Development

Raw Materials and Suppliers

• we have proven medtech innovation capabilities, having introduced the revolutionary

We strive to become a world-class innovative medtech company and continue to offer

SELECTED HISTORICAL FINANCIAL INFORMATION

Consolidated Statements of Profit or Loss

Year ended December 31, Six months ended June 30,

Consolidated Statements of Financial Position

Net current assets . . . . . . . . . . . . . . . . . . . 125,972 123,154 223,423 225,938

NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . 155,951 176,938 294,393 320,567

Capital and reserves

Summary Consolidated Statements of Cash Flows

See “Financial Information—Liquidity and Capital Resources” for details.

Key Financial Ratios