Nanjing Vishee Medical Technology Co., Ltd. – 2020 Interim Report Summary

Original Title: NanjingVISHEE MedicalNanjing Vishee Medical Technology Co., Ltd. 2020 Semi-Annual Report Summary

Nanjing Vishee Medical Technology Co., Ltd.

Company Code: 688580 Company Abbreviation: VISHEE

  2020

Summary of the Semi-Annual Report

I. Important Notice

1 This summary of the semi-annual report is derived from the full text of the semi-annual report. To gain a comprehensive understanding of the Company’s operating results, financial position, and future development plans, investors should carefully read the full text of the semi-annual report on media designated by the China Securities Regulatory Commission (CSRC), such as the website of the Shanghai Stock Exchange.

2. Significant Risk Warnings

The Company has detailed in this report the various risks it may face during its production and operations, as well as the corresponding countermeasures. Please review.

Please refer to “II. Risk Factors” under “Section 4: Discussion and Analysis of Operating Performance.” Investors are advised to be aware of investment risks.

3. The Board of Directors, the Supervisory Committee, and the directors, supervisors, and senior management of the Company hereby guarantee that the contents of this semi-annual report are true, accurate, and complete, with no false records, misleading statements, or material omissions, and shall bear individual and joint legal liability.

4. All directors of the company attended the board meeting

5. This semi-annual report is unaudited

6. Profit distribution plan or capital reserve-to-share capital conversion plan for the reporting period, as reviewed and approved by the Board of Directors

None

7. Existence of Significant Matters Such as Special Corporate Governance Arrangements

□ Applicable √ Not applicable

II. Basic Company Information

2.1 Company Profile

Company Stock Profile

√Applicable □Not applicable

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Company Depositary Receipts Profile

□ Applicable √ Not applicable

Contact Person and Contact Information

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2.2 Key Financial Data of the Company

Unit: CNY Currency: RMB

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2.3 Shareholding Structure of the Top Ten Shareholders

Unit: Share

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2.4 Table of the Top Ten Holders of Domestic Depository Receipts

□ Applicable √ Not applicable

2.5 Total Number of Preference Shareholders and Details of the Top Ten Preference Shareholders as of the End of the Reporting Period

□ Applicable √ Not applicable

2.6 Changes in Controlling Shareholder or Actual Controller

□ Applicable √ Not applicable

2.7 Status of Corporate Bonds Not Yet Due and Overdue Unpaid

□ Applicable √ Not applicable

III. Discussion and Analysis of Operational Performance

3.1 Discussion and Analysis of Operational Performance

In the first half of 2020, under the leadership of the Board of Directors, the Company continued to promote the steady development of its core business in accordance with the development plan and budget/final account guidelines formulated at the beginning of the year. During the reporting period, the Company actively responded to changes in the domestic epidemic situation and economic environment, as well as evolving regulatory trends in the medical device industry. By fully leveraging its comprehensive advantages in R&D innovation, procurement and production, quality control, academic promotion, and after-sales service, the Company strengthened product iteration and brand promotion, enhanced the flexibility of its R&D and marketing systems, advanced the lean management of operational processes and the standardization of internal controls, and carried out initiatives for corporate culture and talent pipeline development. These efforts continuously improved market recognition of its products and built the Company’s core competitiveness.

As of the end of the reporting period, the Company’s total assets amounted to RMB 371.8021 million, and the net assets attributable to shareholders of the listed company stood at RMB 253.0248 million. The Company maintained high-quality assets and a sound financial position. In the first half of 2020, the Company achieved operating revenue of RMB 157.0265 million, representing a year-on-year increase of 12.07%; the net profit attributable to shareholders of the listed company was RMB 53.6351 million, a year-on-year increase of 25.23%. The net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses was RMB 48.9632 million, representing a year-on-year increase of 19.74%.

During the reporting period, the Company’s key initiatives were implemented as follows:

(1) Optimize the sales network system and flexibly conduct academic promotion activities

The Company continues to expand its nationwide sales network, with core distributors as the mainstay, and strengthens extensive and stable partnerships with hundreds of distributors across China. It constantly improves its product marketing network system, providing comprehensive training, technical support, and organizational management for distributors and their market promotion activities. The Company enhances distributor access management, establishes scientific and reasonable performance assessment thresholds, maintains operational order, and ensures that distributors conduct business activities in compliance with laws and regulations.

Affected by the pandemic, professional medical equipment exhibitions and specialized academic annual conferences were canceled. To better serve clinical customers, the company conducted various small-scale academic promotion activities while strictly implementing epidemic prevention and control measures, and held multiple medical exchange sessions through online channels. During the reporting period, special salons on magneto-electrical combination therapy and postpartum rehabilitation became the most important promotional formats, significantly enhancing the local brand awareness of the company’s products. Going forward, the company will adopt more flexible strategies in response to the evolving pandemic situation, combining online promotion with offline coverage. It will continue to organize highly targeted thematic academic activities in key markets, implement on-site clinical training for key accounts, participate in national-level specialized brand annual conferences, the China International Medical Equipment Fair (CMEF), and selected provincial medical device exhibitions, and hold corporate brand conferences in compliance with epidemic prevention and control requirements.

(II) Strengthen the Construction of R&D Platforms and Implement Innovation Incentive Mechanisms

Leveraging the R&D system platform built upon its Product Center and R&D Center, the Company has conducted comprehensive research and analysis on multiple aspects, including target markets, societal demand for products, business growth requirements, competitive advantages, existing market technologies and the Company’s current technological capabilities, product development trends, as well as resource allocation and economic benefits. Starting from formulating specific design requirements for products, and relying on electrical stimulation, magnetic stimulation, electrophysiology, and rehabilitationRobotand other professional technical teams to complete product design, validation, registration, and patent application. The cross-departmental R&D system ensures from the source that the company’s product development is guided by actual market demands, combining the latest industry technology trends, end-user feedback, and competitive product analysis to determine the company’s product development strategy.

The Company integrates market demand analysis into its product design philosophy, adhering to the goal of developing and designing products that offer more pronounced rehabilitation effects, cater to a broader patient population, provide greater wearing convenience, and ensure safer and more reliable usage, thereby ensuring strong market competitiveness upon successful development. To encourage R&D enthusiasm and enhance R&D capabilities among relevant personnel, the Company has implemented an R&D incentive and performance assessment mechanism. Project team members are evaluated based on multiple factors, including project progress, completion quality, complexity, degree of innovation, and market feedback. Corresponding rewards and penalties are administered based on assessment results, motivating employees to demonstrate courage in innovation and willingness to assume significant responsibilities during the R&D process.

(3) Strengthen quality system control to ensure the stability of supply chain processes

The Company strictly adheres to the requirements of the quality management system, aims to improve management efficiency, and emphasizes the training of quality technical personnel. It comprehensively implements and promotes the quality control system, establishes a scientific, standardized, and continuously improving quality management mechanism, ensures the implementation of quality policies and the comprehensive achievement of quality objectives, maintains the effective operation of the quality management system, thereby comprehensively enhancing production and quality management levels.

The Company has established a dynamic coordination mechanism centered on demand forecasting, inventory management, and supplier evaluation to ensure the timely and efficient flow of components and raw materials required for production, thereby achieving precise product delivery timelines. Meanwhile, it continuously develops a tiered pool of alternative suppliers for key components to optimize supplier structure and enhance supply chain stability. In response to delivery risks for electronic components triggered by the pandemic, the Company’s Supply Chain Center promptly identified these risks and completed strategic stockpiling, ensuring price stability and timely delivery of electronic components.

The Company employs key performance indicator (KPI) control in its operational management, establishing a series of KPIs particularly in production management, material management, customer technical support, and equipment performance. These indicators cover numerous aspects including quality, efficiency, cost, and safety. The Company tracks the performance of these indicators on a monthly, quarterly, and annual basis, and conducts internal discussions based on statistical results and customer feedback to formulate improvement requirements and optimization directions for the KPIs. During the reporting period, the Company’s operations continued to maintain a high standard, with key metrics such as manufacturing defect rate, on-time product delivery rate, and material cost control all remaining at favorable levels.

(4) Implementing Talent Development Strategy to Support Company Business Growth

Talent is the core competitive advantage driving corporate development. The Company places high importance on talent development and cultivation, striving to align its talent strategy more closely with business growth. During the reporting period, the Company’s talent management advanced toward the goals of greater standardization, stability, and efficiency.

The Company adopts a talent development strategy that integrates selection, utilization, cultivation, and retention, while improving and refining innovation incentive mechanisms to enhance its appeal to scientific and technological innovators. It systematically expands talent acquisition channels through multiple approaches to attract frontline technical professionals with extensive R&D experience in the industry. Furthermore, the Company strengthens collaboration and exchanges with top-tier domestic universities, research institutions, and industry experts to maximize the utilization of external talent resources.

The Company places great emphasis on the professional growth of internal talent. By implementing targeted training programs for new hires and ongoing training for incumbent employees, combined with effective on-the-job practice management and performance appraisal systems, we have established career advancement pathways aligned with employee competencies, thereby fostering a top-down culture of innovation and motivation. We have further refined our professional technical ranking system, cultivating and promoting a cohort of highly skilled, high-performing, and deeply committed professionals across key domains including product development, R&D, and medical affairs. By strengthening training, assessment, and competitive mechanisms in alignment with the Company’s development strategy, we achieve optimal human resource allocation, thereby supporting the sustained and steady growth of our business operations.

3.2 Changes in Accounting Policies, Accounting Estimates, and Accounting Methods Compared to the Previous Accounting Period: Circumstances, Reasons, and Impacts

√Applicable □Not applicable

Pursuant to the Accounting Standards for Business Enterprises No. 14 – Revenue revised by the Ministry of Finance, the current standards for revenue and construction contracts are incorporated into a unified revenue recognition model; the transfer of control replaces the transfer of risks and rewards as the criterion for determining the timing of revenue recognition; each distinct performance obligation contained in a contract is identified, and revenue is recognized separately upon fulfillment of each obligation; clearer guidance is provided on the accounting treatment for contracts involving multiple transaction arrangements; and specific provisions are stipulated for the recognition and measurement of revenue in certain specified transactions (events). This change in accounting policy is made in accordance with the latest accounting standards revised and promulgated by the Ministry of Finance, and it will not have a material impact on the Company’s financial position or operating results.

3.3 During the reporting period, circumstances requiring retrospective restatement due to corrections of significant accounting errors, the correction amounts, reasons, and their impacts.

□ Applicable √ Not applicable

Stock Code: 688580 Stock Abbreviation: VISHEE Announcement No.: 2020-003

Nanjing Vishee Medical Technology Co., Ltd.

Regarding the Change of Registered Capital and Company Type,

Amend the Articles of Association and complete the industrial and commercial registration procedures

Announcement on Change Registration

The Board of Directors and all directors of the Company hereby guarantee that there are no false records, misleading statements, or material omissions in the contents of this announcement, and they shall bear legal liability for the truthfulness, accuracy, and completeness of the information contained herein in accordance with applicable laws.

Nanjing Vishee Medical Technology Co., Ltd. (hereinafter referred to as the “Company”) held the 11th Meeting of the Second Board of Directors on August 25, 2020, at which it reviewed and approved the Proposal on Changing the Company’s Registered Capital and Corporate Type, Amending the Articles of Association, and Handling Industrial and Commercial Change Registration, and authorized relevant personnel to handle matters related to industrial and commercial registration and filing.

Pursuant to the “Proposal on Requesting the Shareholders’ General Meeting to Authorize the Board of Directors to Handle Specific Matters Concerning the Initial Public Offering of RMB Ordinary Shares and Listing on the STAR Market,” which was reviewed and approved at the Company’s Second Extraordinary General Meeting of Shareholders held on September 27, 2019, the Shareholders’ General Meeting has authorized the Company’s Board of Directors, upon completion of the current issuance of RMB ordinary shares, to amend relevant provisions of the Articles of Association in accordance with the issuance circumstances and applicable laws and regulations, and to handle the registration procedures for changes in the Company’s registered capital. In view of the fact that the Board of Directors has obtained such authorization from the Shareholders’ General Meeting, the matters concerning the change in registered capital, change in company type, and amendment of the Articles of Association do not need to be submitted to the Shareholders’ General Meeting for review. The specific details are as follows:

I. Relevant Information on Changes to the Company’s Registered Capital and Corporate Type

Pursuant to the Approval of the China Securities Regulatory Commission on the Registration of the Initial Public Offering of Nanjing Vishee Medical Technology Co., Ltd. (CSRC Permission [2020] No. 1213), the Company publicly issued 17,086,667 Renminbi ordinary shares (A-shares) to the public. Following this issuance, the Company’s registered capital was increased from RMB 51,260,000 to RMB 68,346,667, as verified by Tianheng Certified Public Accountants (Special General Partnership) in their Capital Verification Report (Tianheng Yan Zi [2020] No. 00075), with the share capital accordingly adjusted from RMB 51,260,000 to RMB 68,346,667. Meanwhile, the Company’s shares were listed on the STAR Market of the Shanghai Stock Exchange on July 21, 2020, and its corporate type was changed from “Joint Stock Limited Company (Unlisted)” to “Joint Stock Limited Company (Listed).”

II. Details on the Amendment of Certain Articles of the Articles of Association

The Articles of Association (Draft) of Nanjing Vishee Medical Technology Co., Ltd. were reviewed and approved at the Second Extraordinary General Meeting of Shareholders of 2019, held on September 27, 2019. These Articles of Association (Draft) shall take effect from the date of the Company’s initial public offering and listing on the STAR Market.

In view of the fact that the Company has completed this share issuance and its shares were listed on the STAR Market of the Shanghai Stock Exchange on July 21, 2020, in order to further improve the corporate governance structure and better promote standardized operations, and taking into account the actual circumstances of the Company, it is proposed to amend certain provisions of the Articles of Association (Draft) to form the new Articles of Association and handle the registration of changes with the administration for industry and commerce. The specific amendments are as follows:

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Except for the amendments to the aforementioned articles, other provisions of the Articles of Association shall remain unchanged.

The aforementioned changes shall be subject to the final approval by the industrial and commercial registration authority. The revised Articles of Association were disclosed on the same day on the website of the Shanghai Stock Exchange (www.sse.com.cn).

Hereby announced.

Board of Directors of Nanjing Vishee Medical Technology Co., Ltd.

August 26, 2020

Stock Code: 688580 Stock Abbreviation: VISHEE Announcement No.: 2020-004

Nanjing Vishee Medical Technology Co., Ltd.

Announcement on the Resolutions of the Ninth Meeting of the Second Supervisory Board

The Supervisory Board of the Company and all supervisors hereby guarantee that there are no false records, misleading statements, or material omissions in this announcement, and they shall bear legal liability for the truthfulness, accuracy, and completeness of its content in accordance with the law.

I. Convening of the Supervisory Board Meeting

Nanjing Vishee Medical Technology Co., Ltd. (hereinafter referred to as the “Company”) issued the notice for the Ninth Meeting of the Second Session of the Supervisory Board to the supervisors via correspondence on August 14, 2020. The meeting was held in person at the Company’s conference room on August 25, 2020. Presided over by Hu Ping, Chairman of the Supervisory Board, the meeting was attended by all three supervisors entitled to attend. The convening of this meeting complied with the relevant provisions of the Company Law of the People’s Republic of China, the Rules Governing the Listing of Stocks on the STAR Market of the Shanghai Stock Exchange, other applicable laws, administrative regulations, and normative documents, as well as the Articles of Association of Nanjing Vishee Medical Technology Co., Ltd.

II. Deliberations of the Supervisory Board Meeting

(I) Proposal on the Company’s 2020 Semi-Annual Report and Its Summary

Upon review, the Supervisory Board holds that: the preparation and review procedures of the Company’s 2020 Semi-Annual Report comply with the provisions of relevant laws, regulations, and internal rules and regulations such as the Articles of Association; the content and format of the Company’s 2020 Semi-Annual Report conform to relevant requirements and fairly reflect the Company’s financial position, operating results, and other matters for the first half of 2020; during the preparation of the Semi-Annual Report, no violations of confidentiality regulations by personnel involved in the preparation and review of the Semi-Annual Report were identified; all members of the Supervisory Board guarantee that the information disclosed in the Company’s 2020 Semi-Annual Report is true, accurate, and complete, without any false records, misleading statements, or material omissions, and shall bear legal liability for the truthfulness, accuracy, and completeness of its contents in accordance with the law.

Voting Results: 3 votes in favor, 0 votes against, and 0 abstentions.

For detailed information, please refer to the “2020 Semi-Annual Report of Nanjing Vishee Medical Technology Co., Ltd.” and the “Summary of the 2020 Semi-Annual Report of Nanjing Vishee Medical Technology Co., Ltd.” disclosed by the Company on the Shanghai Stock Exchange website (www.sse.com.cn) on the same date.

Hereby announced.

Supervisory Board of Nanjing Vishee Medical Technology Co., Ltd.

August 26, 2020