New Ray Medicine International : UPDATE ON RECENT DEVELOPMENT OF SUSPENSION AND PROFIT WARNING

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New Ray Medicine International Holding Limited

新銳醫藥國際控股有限公司

(Incorporated in Bermuda with limited liability)

(Stock Code: 6108)

UPDATE ON RECENT DEVELOPMENT OF SUSPENSION AND

PROFIT WARNING

This periodic announcement is made by New Ray Medicine International Holding Limited ("Company", together with its subsidiaries, the "Group") pursuant to Rule 13.24A of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited ("Stock Exchange")("Listing Rules"). This announcement is also made pursuant to Rule 13.09(2) of the Listing Rules and the Inside Information Provisions (as defined in the Listing Rules) under Part XIVA of the Securities and Futures Ordinance (Chapter 571, the Laws of Hong Kong).

Reference is made to the announcements of the Company dated 6 October 2017 and 12 January 2018 in relation to, among other matters, the letter dated 6 October 2017 issued by the Securities and Futures Commission of Hong Kong ("SFC") to the Company and the suspension of trading in the Shares ("Suspension"), the announcements of the Company dated 25 May 2018, 4 June 2018, 1 August 2018, 1 November 2018, 1 February 2019, 2 May 2019, 2 August 2019 and 1 November 2019 in relation to the periodic update on the Suspension, as well as the announcements of the Company dated 30 July 2018 and 8 January 2020 in relation to the amendment of the Listing Rules which has come into effect on 1 August 2018 (collectively, referred to as the "Previous Announcements"). Unless defined otherwise, capitalised terms used in this announcement shall have the same meanings as those defined in the Previous Announcements.

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RECENT DEVELOPMENT OF RESUMPTION

As mentioned in the Previous Announcements, the IBC has been established for the purpose of, among other things, conducting an independent investigation into the issues relating to the Acquisitions. Grant Thornton Advisory Services Limited ("Independent Investigator") has been appointed as the independent investigator to the IBC to assist in the investigation. The Independent Investigator is in the progress of preparing its independent investigation report.

The Company has also engaged PKF Hong Kong Limited ("PKF") as its internal control adviser to review the effectiveness of the Group's internal control systems in relation to investment procedure (including mergers and acquisitions and new projects). PKF is in the progress of preparing its report on the Group's internal control systems.

Up to the date of this announcement, the IBC's investigation into the affairs of the Acquisitions is still under progress. The Company is also seeking legal advice to address and resolve the SFC's concerns with the aim of resuming trading in the Shares. The Company intends to make further submission to the SFC in relation to its application for resumption of trading of the Shares. However, the Company is not in a position to disclose the details due to its statutory secrecy obligations under the Securities and Futures Ordinance (Chapter 571, the Laws of Hong Kong). In view of the circumstances, the Company is not in a position to formulate any practicable resumption plan with a clear timeframe at this stage. The Company will continue to seek legal advice with a view to resuming trading of the Shares as soon as practicable.

BUSINESS UPDATE AND PROFIT WARNING

The Directors wish to point out that notwithstanding the Suspension, the Group has been carrying on its businesses as usual and continues to focus on the distribution and trading of pharmaceutical products and the provision of marketing and promotion services in the PRC.

Based on a preliminary review and analysis of the latest available unaudited consolidated financial information of the Company for the year ended 31 December 2019 ("FY 2019"), it is expected that the Group will record a loss for FY 2019 as compared to a net profit attributable to owners of the Company of approximately HK$33.2 million for the year ended 31 December 2018 ("FY 2018"). Such expected turnaround of the Group's financial performance from a profit to a loss was primarily attributable to the following reasons:

1. the significant decrease in revenue and gross profit mainly attributable to the sales decline of the Product due to the suspension of production and sales of the Product during FY 2019. For details of the suspension of production and sales of the Product, please refer to the section headed "Management Discussion and Analysis" in the 2019 interim report of the Company and the announcements of the Company dated 2 May 2019, 7 May 2019 and 1 November 2019;

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1. the absence of a net gain arising from the deemed disposal of interest in WinHealth International Company Limited ("WinHealth International") for FY 2019 (FY 2018: approximately HK$20,672,000); and
2. the decrease in share of profit of associate for FY 2019 as the Group's interest in WinHealth International was diluted upon the allotment and issue of new shares of WinHealth International to other parties in April 2018 and October 2018 respectively. Hence, the Group had ceased to have any significant influence over WinHealth International and the Group's investment in WinHealth International had no longer been classified as interest in associate since 11 October 2018.

The Company is still in the process of preparing and finalising its annual results for FY 2019 ("2019 Annual Results"). The information contained in this announcement is only based on a preliminary assessment made by the Board with reference to the information currently available, which has not been audited or reviewed by the auditors of the Company and may be subject to change. The information may also be subject to adjustment after further review and finalisation of the 2019 Annual Results by the Board. Shareholders and potential investors are advised to refer to the details of the Group's financial performance for FY 2019 to be disclosed in the forthcoming annual results announcement of the Company.

CONTINUED SUSPENSION OF TRADING

Trading in the Shares has been suspended with effect from 9:00 a.m. on 6 October 2017 by the Stock Exchange as directed by the SFC in accordance with Rule 8(1) Direction. As disclosed in the announcement of the Company dated 8 January 2020, the Stock Exchange has withheld exercising its right to delist the Company although trading in the Shares remained suspended on 31 January 2020. As such, trading in the Shares will continue to be suspended until further notice. The Company will endeavour to resume trading in the Shares as soon as practicable.

The Company reminds the Shareholders and potential investors that they should refer to the announcements published on the respective websites of the Stock Exchange and the Company for any information relating to the Group.

The Company will keep the Shareholders and potential investors informed of any material development in connection with the above matters by way of periodic announcements and/or further announcement(s) as and when appropriate. Shareholders and potential investors are advised to exercise caution when dealing in the securities of the Company.

On behalf of the Board

New Ray Medicine International Holding Limited

Liu Yang

Chairman & Executive Director

Hong Kong, 31 January 2020

As of the date of this announcement, the executive Directors are Mr. Liu Yang, Mr. Huo Zhihong and Ms. Wang Qiuqin; and the independent non-executive Directors are Mr. Leung Chi Kin, Ms. Li Sin Ming, Ivy and Mr. Sy Lai Yin, Sunny.

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