澳华内镜：2023Annual Environmental,Social and Governance(ESG)Report

2023 Annual Environmental, Social and

Governance Report

Shanghai Aohua Endoscopy Co.,Ltd.

2023 Annual Environmental, Social and Governance Report 丨 CONTENTS

MESSAGE FROMTHE MANAGEMENT TEAM 3

ABOUT THE REPORT 4

KEY PERFORMANCE REPORTFOR 2023 5

WELCOME TO AOHUA 7

About Aohua 8Company Introduction 9Development History 10Company Honors andQuali?cations 11Brand Strength 12

SUSTAINABILITYMANAGEMENT 13Stakeholders 14Materiality Assessment 15

CORPORATE GOVERNANCE 16

Protection of investor rights 17Protection of intellectualproperty 19

CONTENTS

0507

0406081012

0911INNOVATION AND ENTERPRISE 20

Research andDevelopment Mission 21Product Function Innovation 22Expansion of Application Fields 24Medical Design Innovation 26

FULFILLING

RESPONSIBILITIES 28

Early Cancer Prevention 29

Rural Support 31

Charitable Donation 32

Global Communication 33

QUALITY UNBOUNDED

PURSUING EXCELLENCE 34

Ensure Quality 35

Enhance International Service

Quality 36

Compliant and E?cient

Procurement 37

PEOPLE-ORIENTEDWIN-WIN FUTURE 39Protecting EmployeeRights and Interests 40Fostering EmployeeCareer Growth 41Protecting Employee Health 42

POLLUTION REDUCTIONAND CARBON REDUCTION 43

EnvironmentalManagement System 44

APPENDIX 45

Since its inception in 1994, Aohua Endoscopy has wit-nessed the passage of thirty years in the blink of an eye.Amidst the ebb and flow of light and shadow, the spiritof Aohua remains steadfast, unwavering and resolute,progressing from adversity to breakthroughs, steadilyadvancing into vast territories both domestic and inter-national. Riding on the tide of China's rise, we are com-mitted to pursuing the light, always guided by our mis-sion to make endoscopy diagnosis and treatment moreefficient and intelligent. We remain focused, innovative,and continuously learning, starting from clinical practice,grounding ourselves in technological innovation, andcontinuously enhancing product performance.The year 2023 presents both challenges and opportuni-ties. The global situation is fraught with turbulence andregional conflicts persist. Simultaneously, the globaltechnological innovation has entered an unprecedent-edly active period, with breakthroughs in artificial intel-ligence bringing expectations for further technologicaladvancements, yet also heralding a future of increaseduncertainty. Amidst this era of transformative change,our steadfast commitment to innovation, resilience, andcourage in facing challenges remains unchanged. Weseize opportunities, push forward with unwavering de-termination, and promote the vigorous development ofthe company.

This year, the company has increased investment intechnical research and development, focusing on clinicalfeedback to continuously improve production tech-nology and research innovation capabilities, graduallyenhancing the core competitiveness and brand influenceof our products. In order to further meet the diversifieddemands of the market and expand our domestic marketshare, the company has embraced "innovation" as thekeyword, integrating innovation with professionalism,and successively launching a series of new products suchas the AQ-200 Elite endoscopy system, various types offine endoscopes, duodenoscopes, optical magnificationendoscopes, and bifocal endoscopes, achieving productdiversification and providing doctors with more conven-ient and comprehensive endoscopy solutions, playingan active role in optimizing and integrating medicalresources. This year, as we deepen our core technology,we actively participate in industry exchanges, strengthenclinical transformation with endoscopy experts, promotethe advancement of clinical procedures, and work withgovernments and medical institutions at all levels toraise public awareness of early cancer screening, furtherachieving the goal of early diagnosis and treatment.As a participant in the field of medical and health, wehave always been concerned about the developmentof human health, translating innovation into clinical di-agnosis and treatment, and looking globally to expand

overseas markets, providing the world with superiorperformance products that meet the needs of hospitalsat all levels, and injecting Chinese strength into theaccessibility of medical services and the developmentof cutting-edge diagnostic and treatment technologiesglobally. We adhere to the sustainable development con-cept of "environmental protection, health, energy saving,and safety," seeking common growth of environmentaland economic benefits, making environmental protec-tion and energy conservation an important part of thecompany's sustainable development strategy, taking ac-tive actions to create a low-carbon and environmentallyfriendly production and operation model, reducing theimpact of production and operation processes on theenvironment, attaching importance to the optimizationof energy consumption structure, actively using cleanenergy, adopting new green transportation models,advocating green office initiatives, and creating a greenoperation environment.In the future, we will continue to adhere to the vision of"becoming a globally influential endoscopy brand," anduse excellent business performance to repay sharehold-ers and give back to society, fulfilling the obligations ofa listed company steadfastly. We will not forget our orig-inal intention, shoulder corporate social responsibility,and continue to adhere to the sustainable developmentstrategy, promote and improve the ESG development

MESSAGE FROM THE MANAGEMENT TEAM

2023 Annual Environmental, Social and Governance Report 丨 MESSAGE FROM THE MANAGEMENT TEAM

concept, deepen the organic integration of corporatestrategy and social responsibility, promote the green andhigh-quality development of enterprises, work hand inhand with shareholders, governments, employees, sup-pliers and partners, customers, and other stakeholders,to compose a green chapter together.

Report Introduction

The“2023 Environmental, Social and Governance Re-port” (hereinafter referred to as “this Report”) is thefirst Environmental, Social, and Governance (ESG) reportissued by Shanghai Aohua Endoscopy Co., Ltd., aimedat objectively and truthfully disclosing the company’smanagement strategies, practices, and achievementsin the field of sustainable development in environmen-tal, social, and governance to shareholders, investors,employees, customers, government, partners, and thepublic.

Writing BasisThis report is mainly prepared in accordance with the"Listing Rules of the Science and Technology InnovationBoard of the Shanghai Stock Exchange" and the GlobalReporting Initiative (GRI) Sustainability Reporting Stand-ards (GRI Standards), aiming to continuously enhancethe transparency of the company's sustainable develop-ment-related information disclosure and respond to theconcerns of various stakeholders about the company'sESG management and performance.

Abbreviations

Reporting PeriodReport Release Cycle: This report is an annual report.Reporting Period: From January 1, 2023, to December 31,2023. To enhance the comparability and completenessof the report content, some content appropriately tracesback to previous years.Report Approval

This report was approved for release by the Board ofDirectors of the company on April 29, 2024. The Boardof Directors of the company commits to supervise thecontent of the report and ensure that there are no falserecords or misleading statements, and takes responsibil-ity for the truthfulness, accuracy, and completeness ofthe content.

Scope of the ReportThis report covers Shanghai Aohua Endoscopy Co., Ltd.,its subsidiaries, branches, and directly affiliated insti-tutions, unless otherwise specified, consistent with thescope of the annual report.

Report AccessThis report is published in both Simplified Chinese andEnglish versions. In case of any discrepancy in under-standing, the Simplified Chinese version shall prevail. Tosupport environmental protection, this report is releasedin electronic format and can be accessed and download-ed from the Shanghai Stock Exchange website (www.sse.com.cn).We welcome readers to contact us through the followingchannels. Your opinions will help us further improve thisreport and enhance the ESG performance of the company.Telephone: 021-54303731Email: ir@aohua.comAddress: No. 66, Lane 133, Guangzhong Road, MinhangDistrict, Shanghai, Aohua Endoscopy BuildingReport DisclosureThe data and cases in this report mainly come from thecompany's official documents and statistical reports,and have been reviewed by relevant departments. Thecurrency amounts mentioned in this report are denom-inated in RMB. Several numbers and percentage figuresin this report have been rounded, so the total shown insome tables may not necessarily be the sum of the afore-mentioned numbers.

AbbreviationsReferenceThe company, Aohua Endoscopy, Aohua, WeShanghai Aohua Endoscopy Co.,Ltd.

2023 Annual Environmental, Social and Governance Report 丨 ABOUT THE REPORT

ABOUT THE REPORT

KEY PERFORMANCE REPORT FOR 2023

52.2952.29

52.2652.26361.42361.42

167.04167.04

During the reporting period, the company actively ex-panded its marketing network both domestically andinternationally, broadening its coverage of hospitals atall levels and comprehensively enhancing its brand influ-ence. Meanwhile, the company further increased invest-ment in research and development, leveraging its oper-ational advantages in research, technology, and qualityto continuously refine and upgrade products. This en-sured the consistent delivery of satisfactory endoscopicsolutions to customers, garnered increased recognitionfrom the clinical end, and consequently achieved steadygrowth in the company's main business. This, in turn,drove the healthy growth of various financial indicators.During the reporting period, the company focused on itscore business with a direction of "specialization and in-novation," continuously enhancing product capabilities.The company emphasized research and development,making sustained investments to strengthen endoscopictechnology research and promote product iteration andupgrades to drive technological innovation. Since thelaunch of the AQ-300 series, the company has contin-uously iterated the series based on clinical feedback,enriching the variety of compatible endoscopes and en-hancing product competitiveness and recognition.

The company adheres to standardized governance andefficient communication, aiming to create long-term andsustainable value for customers, shareholders, employ-ees, and society. Leveraging the continued efforts onproducts like AQ-300, the company's brand influence isgradually enhancing, driving steady growth in operatingincome. Meanwhile, net profit, sales expenses, manage-ment expenses, and R&D expenses have all shown anincreasing trend, essentially matching the company'srevenue growth trajectory.

The operating income

Research and Development Investment

Net profit attributable to shareholdersof the listed company

Net profit attributable to shareholders of the listed com-pany excluding non-recurring gains and losses

Year-on-year growthYear-on-year growth

Year-on-year growthYear-on-year growth

million yuan

million yuan

million yuan

million yuan

%

%%

%

Economic indicators

678.08

147.00

57.85

44.49

2023 Annual Environmental, Social and Governance Report 丨 KEY PERFORMANCE REPORT FOR 2023

Environmental Indicators

Water Consumption

Energy Consumption

Water Consumption Intensity

Energy Consumption Intensitytons

GJ

tons/million RMB

GJ/million RMB

11,424.61

8,774.41

16.8516.85

12.9412.94

2023 Annual Environmental, Social and Governance Report 丨 KEY PERFORMANCE REPORT FOR 2023

WELCOME TO

AOHUA

In 1994, Aohua Endoscopy embarked on its journey, growing against the wind.As we witness the era, we are also witnessed by it.With self-reliance in technology as our proposition and innovation as our goal, Ao-hua has always focused on the field of endoscopy and is committed to promotingthe popularization and innovation of medical technology. Through continuous highinvestment in research and development, implementation of high-quality talent

training plans, and the implementation of digital and intelligent management mod-els, Aohua is striving to create a new highland for the development of the endoscopyfield.

About Aohua

MISSIONMake endoscopy diagnosis and treatment moree?cient and intelligent

VISIONBecome a global enterprise, advancing endoscopiccare for all

VALUECustomer FirstContinuous innovationSustained GrowthResults-Oriented

Company Introduction

Aohua Endoscopy Co., Ltd. is a high-tech enterprise that specializes in the R&D, production,and sales of video endoscopic equipment.Our products, which focus on endoscopy diagnosis and treatment, include 4K UHD endos-copy systems, optical magnification endoscopes, gastrointestinal endoscopes, laryngo-scopes, and bronchoscopes. Our products are widely used in clinical departments such asgastroenterology, ENT, pulmonology, the emergency room, and the ICU. Through long-termtechnological innovation, we have achieved breakthroughs in multiple key technologies,continuously promoting accurate diagnosis and cutting-edge scientific research.For more details, please visit our official website and official WeChat platform.Official website: www.aohua.com

FacebookTwitterYoutube

Development History

199420102017

2021

20052013

20182022

2016

20192023

Founding of Aohua in ShanghaiLaunched VME-2800

adaptable to videobronchoscope and ENT endoscope

Acquired an endoscopic accessoriesmanufacturer in Changzhou

Became a Public listed companySSE STAR A Stock 688212

Launched China’s 1stvideo endoscopy system

Launched optical imageenhancement technology - CBI

Launch full high definition endoscopysystem AQ-200Setup a sales and service center in EU

Launch 4K ultra high definitionendoscopy system AQ-300

Acquired an endoscopic accessoriesmanufacturer in Hangzhou

New Head Quarter in ShanghaiLaunched first ultra-thin endoscope,

with a distal tipdiameter of only 1.8mm

Company Honors and Quali?cations

National Level Quali?cations

High-Tech Enterprise (First recognized in 2008)National Specialized, Refined, Unique, and New "Little Giant" Enterprise (First recognized in 2021)National Intellectual Property Advantage Enterprise (First recognized in 2023)

Provincial Level Quali?cationsShanghai Municipal "Specialized, Refined, Unique, and New" Small and Medium-sized Enterprise (First recognized in 2018)Shanghai Municipal Science and Technology Little Giant (First recognized in 2018)Shanghai Municipal Enterprise Technology Center (First recognized in 2022)Shanghai Municipal Design Innovation Center (First recognized in 2022)Shanghai Municipal Patent Work Demonstration Enterprise (First recognized in 2023)2023 Shanghai Municipal Biomedical Digital Transformation Pioneer EnterpriseDeputy Director Unit of Shanghai Medical Device Industry Association

Forging a High Ground in Medical EquipmentIntellectual Property

Brand Strength

Corporate AwardsShanghai Science and Technology Award - Technological Progress Award2019 Shanghai "Best Case of Enterprise Technological Innovation" Award (Shanghai Federation of Industry and Commerce)2020 National Federation of Industry and Commerce Innovative and Growth-Oriented Private Enterprises (Ranked 107th nation-wide) (General Office of the All-China Federation of Industry and Commerce)2021 Excellent Brand in the Chinese Medical Endoscope Industry (Organized by China Advanced Medical Equipment Conference,China Endoscopy Conference Committee, Endoscopy Expert Committee)2023 China Endoscopy Annual Selection "Top Ten Endoscopy Brand Enterprises" (Organized by the China Endoscopy ConferenceCommittee and the Endoscopy Expert Committee)2023 Global "Future Industry Star Contest" Future Industry Trend Award (Project Team)Product AwardsShanghai Biomedical "New Excellent Medical Devices" Product Catalog (Endoscope LED Cold Light Source)2015 Shanghai High-tech Achievement Transformation Project (VME-98S Upper Digestive Tract Electronic Endoscope)2016 Shanghai High-tech Achievement Transformation Project (VRL-Q30 Nasopharyngeal Electronic Endoscope)2017 Shanghai Innovation Product Recommendation Catalog (AQ-100 Spectral Electronic Endoscope)2019 Shanghai Innovation Product Recommendation Catalog (AQ-200 High-Definition Electronic Gastroscopy)2022 Shanghai Second Batch of Innovative Product Recommendation Catalog (AC-1 Integrated Endoscope System)2022 Excellent Domestic Medical Equipment List (AQ-100 Spectral Electronic Endoscope)2022 Excellent Domestic Medical Equipment List (AQ-200 High-Definition Electronic Gastroscopy)2023 Shanghai High-tech Achievement Transformation Project (HD-CL1I HDCL1L Electronic Colonoscope)2023 Shanghai High-tech Achievement Transformation Project (AQL-200L Endoscope LED Cold Light Source)2023 Shanghai First Batch of Innovative Product Recommendation Catalog (AQ-300 Ultra-High Definition System)

Industrial Design Awards2015 iF Design Award (ALD)2015 China Design Red Star Award (Carbon Dioxide Insuffla-tion Pump)2016 Red Dot Award (AQ-200)2016 Red Dot Award (AEP-200)2017 China Design Red Star Award (Endoscope Handle)2018 Red Dot Award (Equine Airway Exercise Endoscopy)2019 Good Design Award (AQ-200)2019 Good Design Award (FHD-GT200)2020 iF Design Award (AC-1)2020 iF Design Award (HD-GT1)2020 China Design Red Star Award (Quick Sampler)2021 iF Design Award (Mobile Bronchoscopy System)2021 Red Dot Award (AC-1)2021 Red Dot Award (AQ-300)2021 Red Dot Award (UHD)2021 Red Dot Award (ALD)2023 iF Design Award (Aoxiaobao- INTELLIGENT ENDOSCOPYASSISTANCE SYSTEM)2023 Shanghai Design 100+ (AQ-300)

Patents

National and Provincial Enterprise Qualifications

Honorary Awards

As a leading domestic medical device company, we embrace the mission of "Makeendoscopy diagnosis and treatment more efficient and intelligent," continuouslydelving into the endoscopy industry, and accumulating rich industry and technicalexperience. Building upon this foundation, we integrate the concept of sustainabledevelopment into our strategy and operations, striving to promote both enterprisedevelopment and contribute to social welfare.

The Board of Directors of our company assumes the ultimate responsibility forAohua Endoscopy's ESG management and reporting, ensuring the effectiveness ofESG management through regular supervision and review. Our management teamreports regularly to the Board of Directors on the implementation and progress ofESG-related work, ensuring that the Board's ESG decisions are translated into spe-cific projects and implemented at the operational level by various key functionaldepartments.

SUSTAINABILITYMANAGEMENT

StakeholdersOur key stakeholders include government and regulatoryagencies, shareholders and investors, customers, suppli-ers and partners, employees, communities, and media.We consider the identification, communication, andengagement of stakeholders as an integral part of ourcompany's sustainable development strategy.By establishing efficient communication mechanismsand diverse communication methods, we maintain regu-lar interaction and communication with all stakeholders.We actively integrate the expectations and demands ofstakeholders into the company's development, providingsustainable development impetus.

StakeholdersExpectations and DemandsCommunication and ResponseGovernment and regulatory bodies

Compliance operationsEconomic developmentEnvironmental protectionSocial responsibility

Law-abiding operationsCompliant tax paymentEnvironmental management systemPolicy response

Shareholders and investors

Governance structureBusiness performanceInvestor relationsIntellectual property rights

Compliance governanceProfit distributionInformation disclosureProtection of intellectual property rights

Customers

Product qualityQuality serviceInnovative products

Quality and safety management system constructionInternational service managementResearch and development innovation system

Suppliers and partners

TransparencySupplier managementRisk controlWin-win cooperation

Integrity closed-loop managementCompliant and efficient procurementDiversified management measuresIndustry exchange and cooperation

Employees

Rights protectionHealth and safetyTalent acquisition and retentionTraining and development

Legal and compliant employmentSafety management system constructionPerformance setting and long-term incentivesImprovement of training system

Communities and media

Information disclosurePublic communicationSocial responsibility

Proactive information disclosureMedia and public communicationGrassroots assistanceEarly cancer prevention and treatment

Materiality Assessment

Importance to the company

Importance to stakeholders

HighHigh

Very High

Very High

Product Quality and SafetyResearch and DevelopmentInnovationInternational Service QualityEmployee Health and SafetyEarly Cancer Prevention

Risk ManagementIntellectual Property ProtectionEmployee Rights and Bene?tsSupplier ManagementBusiness EthicsEmployee Training and Development

Green OperationsGrassroots Support

Industry DevelopmentInvestor RelationsCompliance GovernanceTalent Acquisition and Retention

Based on the expectations of stakeholders, businessscope, and sustainability status, and referencing sustain-able development issues of excellent peer companies,along with the focus of the capital market, the companyidentified, categorized, and assessed the importanceof ESG substantive issues. Subsequently, a substantiveissue matrix was formed based on the importance of theissues to the company and to stakeholders.

CORPORATEGOVERNANCE

In this rapidly changing global environment, we remain steadfast in our commit-ment to compliance with regulations and the establishment of sound governancemechanisms to ensure alignment between our business activities and the overallinterests of society. By actively promoting sustainable development, Aohua is striv-ing to create a win-win future and looks forward to making positive contributions tosociety and the environment.

Protection of investor rights

Compliance Management

The company has established the shareholders' meet-ing, the board of directors, and the supervisory board,each performing its respective duties in corporate de-cision-making, coordinating operations, and providingeffective checks and balances. As of the end of the re-porting period, the actual state of corporate governancecomplies with the requirements of laws and regulationssuch as the Company Law of the People's Republic ofChina, the Securities Law of the People's Republic ofChina, and the Guidelines for Corporate Governance ofListed Companies. Meanwhile, Aohua Endoscopy contin-uously improves the company's governance structure,establishes a sound internal control system, and ensuresthe company's long-term stable development.

Shareholders' MeetingThe company strictly follows the provisions and require-ments of laws and regulations such as the CompanyLaw of the People's Republic of China, the Rules of theShareholders' Meeting of Listed Companies, the Articlesof Association, and the Rules of Procedure for Sharehold-ers' Meetings, to standardize the convening, holding, andvoting procedures of shareholders' meetings. It treatsall shareholders openly, fairly, and impartially, pays at-tention to and protects the rights and interests of share-holders, and ensures that shareholders can fully enjoyall legitimate rights and interests stipulated by laws andregulations.During this reporting period, the company convened atotal of 5 shareholders' meetings, which deliberated andadopted resolutions on important matters such as therevision of the company's articles of association and re-stricted stock incentive plans.

Board of DirectorsDuring the reporting period, a total of 9 board meet-ings were held. The company has set up nine directors,including four independent directors, accounting for

44.44% of the total number; one female director, ac-

counting for 11.11% of the total number. The numberand composition of the board of directors comply withlegal requirements and the requirements of the Compa-ny's Articles of Association. The convening and holdingprocedures of the board of directors comply with the rel-evant requirements of the company's Rules of Procedurefor the Board of Directors.Furthermore, the board of directors has set up auditcommittees, strategic committees, compensation andassessment committees, and nomination committees,providing consultation and advice for major decisionsof the board of directors, ensuring that the board ofdirectors plays an active role in decision-making andsupervision.During the reporting period, the specializedcommittees held the following meetings: Audit Commit-tee (5 times), Compensation and Assessment Committee(4 times), and Nomination Committee (1 time).

Supervisory Board

The company's supervisory board consists of threesupervisors. In 2023, a total of 8 supervisory board meet-ings were held, with 29 items submitted for deliberation.The company strictly convenes supervisory board meet-ings in accordance with the provisions of the Company'sArticles of Association and the Rules of Procedure for theSupervisory Board. The supervisors fulfill their dutiesconscientiously, attend board meetings and sharehold-ers' meetings, supervise the legality and complianceof the company's production and operation, financialoperations, as well as the responsibilities of the board ofdirectors and management, effectively oversee relatedparty transactions, periodic reports, restricted stockincentives, and the use of raised funds, ensuring the le-gality and compliance of the company's decision-makingand operations.

WELCOME TO AOHUA 丨 SUSTAINABILITY MANAGEMENT 丨 CORPORATE GOVERNANCE 丨 INNOVATION AND ENTERPRISE 丨 FULFILLING RESPONSIBILITIES 丨 QUALITY UNBOUNDED PURSUING EXCELLENCE 丨 PEOPLE-ORIENTED WIN-WIN FUTURE 丨 POLLUTION REDUCTION AND CARBON REDUCTION 丨 APPENDIXShareholder ReturnsThe company's profit distribution plan comprehensivelyconsiders factors such as the industry characteristics, de-velopment stage, capital needs, and future developmentplans of the company. While ensuring the company'snormal operation and long-term development, it alsotakes into account the immediate and long-term inter-ests of the shareholders, which is in line with the compa-ny's operating and development situation.The relevant dividend distribution policy is stipulatedin the company's Articles of Association, which clear-ly defines the basic principles of shareholder returnsplanning, the specific content of shareholder returnsplanning, and the decision-making procedures for profitdistribution. The company strictly implements the profitdistribution plan stipulated in the Articles of Associationand adopts a continuous and stable profit distributionpolicy.Investor RelationsThe company diligently fulfills its obligations for infor-mation disclosure as a listed company to safeguard theright to know of the broad investors. It has designateda secretary of the board of directors specifically respon-sible for information disclosure work, coordinating thecompany's relationship with investors, receiving share-holder visits, answering investor inquiries, strengtheningcommunication with investors, addressing investorconcerns, enhancing investor understanding and trust inthe company, and fully respecting and safeguarding theinterests of the broad investors.

2021 Cash Dividends

Note: The profit distribution plan for the year 2023 is subject to approval by the annual general meeting of shareholders in 2023.

2023 Cash Dividends

25.3340.21million yuanmillion yuan

Performance briefing sessions were held

The reply rate on the e interactive platform

%

Protection of intellectual property

The number of inventionpatent applications

The number of grantedinvention patents

Cumulative intellectualproperty applications

Cumulative intellectualproperty grantsitemsitemsitemsitems16459349236

The list of intellectual property rights obtained as of the end of the reporting period

New additions for the current yearAccumulated totalNumber of applications (count)Number obtained (count)Number of applications (count)Number obtained (count)Invention patents232016459Utility model patents11910198Design patents507166Software copyrights001313Others0000Total3929349236

Aohua Endoscopy regards innovation as its core com-petitive advantage and attaches great importance to theprotection and utilization of intellectual property rights(IPR). The company strictly complies with the laws andregulations such as the Patent Law of the People's Re-public of China and the Trademark Law of the People'sRepublic of China. A hierarchical IPR management organ-izational structure has been established to plan, imple-ment, inspect, and improve IPR management activities.Through system construction, the company standardizesIPR management practices, encourages invention andcreation, strengthens core competitiveness, and providesimportant support for technological innovation and sus-tainable development.In 2020, the company obtained its first Intellectual Prop-erty Management System certification and maintainedthe validity of the certificate through certification reviewsduring the reporting period. It has been honored withtitles such as "National Intellectual Property AdvantageEnterprise" and "Shanghai Patent Demonstration Unit." Asound IPR risk prevention system has been established,with IPR risk identification mechanisms set at key pointsin the entire lifecycle of products, including R&D, sales,and retirement, effectively controlling the IPR risks ofcompany products. During the reporting period, thecompany did not experience any significant IPR disputes.

INNOVATION ANDENTERPRISE

Technological innovation is a vital engine driving advancements in healthcare. Wefirmly believe that by continuously integrating cutting-edge technology with medicalpractices, we can provide patients with safer and more effective treatment solutions.In this era of rapid technological advancement, we are not only actively exploringbreakthroughs, performance enhancements, and application diversity in the field of

endoscopy, but also delving into frontier technologies such as artificial intelligenceand big data analytics. We are committed to contributing our efforts to the globalhealthcare industry.

Research and Development Mission

Innovation Conceptand MechanismIn the path of technological innovation, Aohua has alwayssought steady progress amidst change. Based on marketcompetition, we explore product differentiation advantag-es through innovative thinking; based on clinical needs,we actively seek more efficient and safe solutions.The innovation gene has been deeply embedded in thecorporate DNA of Aohua. Through the integration of pro-duction, learning, research, and medical care, the estab-lishment of key research and development centers, andthe construction of a high-level talent echelon, Aohua hasformed an innovation system that tightly revolves aroundclinical needs, integrating optics, mechanics, electronics,and medicine. Every breakthrough in high-resolution im-age processing, illumination, imaging optics, and high-pre-cision electromechanical drive embodies the utmostinnovation of Aohua. A full range of endoscopic productscovering gastroenterology, respiratory, otolaryngology,hepatobiliary surgery, and urology will continue to propelthe company towards the forefront of technological inno-vation.

Research and DevelopmentManagementThroughout our growth journey, research and devel-opment have always been the core driving force ofenterprise development. Based on this, the companyhas cultivated a research and development team thatunderstands clinical practice, excels in technical skills,and is proficient in research. Currently, we have formedan efficient and innovative research and developmentsystem with complete functions and a sound structure.Research Organization: Shanghai Research Center -Endoscopy and Equipment Integrated Solutions, BeijingResearch Center - Image Processing Solutions, Wuxi Re-search Center - Clinical Innovation Solutions.Research Process: Strict adherence to medical deviceregulatory requirements and ISO quality system stand-ards, combined with the characteristics of endoscopicproducts, has established a research and developmentprocedural system including the "Product Design andDevelopment Process".Project Management: Based on clinical research, strictcontrol over requirement management, technical explo-ration, product initiation, and system engineering.Industrial Layout: With gastrointestinal endoscopydiagnosis and treatment as the core, actively expandinginto respiratory, otolaryngology, and urology fields.

The total number of company employees

The overall growth compared to the end of last year

As a percentage of the total company workforce

The total number of research and development personnel

%

%

1,092

26.24

21.34

Research Talents

During the reporting period, the company's businessscale continued to grow steadily, and the employee scalealso continued to expand. As of the end of the reportingperiod, the total number of employees reached 1,092,an overall net increase of 227 people compared to theend of last year, representing a 26.24% increase. Amongthem, the company's research and development teamfurther expanded, reaching 233 at the end of the report-ing period, accounting for 21.34% of the total numberof company employees. The main members come fromwell-known universities or research institutes, withprofessional backgrounds covering optics, machinery,automation, electronics, software, medicine, and otherendoscopic equipment-related fields.To further establish and improve the company's long-term incentive and restraint mechanism, attract andretain outstanding talents, fully mobilize the enthusiasmof the company's core team, effectively integrate theinterests of shareholders, company, and core team indi-viduals, and make all parties focus on and promote thecompany's long-term development. In order to maintainthe sustainable development career path of employeesat all levels, the company combines practical situationsto reasonably plan position sequences.

Product Function Innovation

Launching 17 New FineEndoscope Models

When facing numerous pain points such as difficulty inentry, limited selection, and cumbersome operation inthe clinical application of endoscopes, it is the true es-sence of innovation to address them with new technol-ogies and devices. On August 8, 2023, Aohua Endoscopyofficially launched its new products for the year 2023!

The 1.8mm ultra-fine endoscope marks a breakthroughfrom 3.6mm to 1.8mm, overcoming natural material lim-itations and enhancing precise operational capabilities,unlocking endless possibilities. This not only showcasesthe company's innovative capacity but also representsa crucial step in bridging the gap between products andclinical applications.With a 61% larger forceps diameter ratio, it offers a morecomfortable and worry-free diagnostic and therapeuticexperience, breaking through conventional limitationsand delivering a more efficient treatment experience.With comprehensive department coverage and precise

product positioning, including ultra-fine, fine, thera-peutic, high-definition, and high-definition therapeuticscopes, it flexibly meets the diagnostic and therapeuticneeds of various departments.Enhanced image quality and extended visual capabilitiesare achieved through multiple staining modes, facilitat-ing multi-dimensional improvements in image quality.Empowered with robust functionalities, it aids in diag-nosis and treatment by capturing every detail, therebyenhancing work efficiency and reducing operationalfatigue.

WELCOME TO AOHUA 丨 SUSTAINABILITY MANAGEMENT 丨 CORPORATE GOVERNANCE 丨 INNOVATION AND ENTERPRISE 丨 FULFILLING RESPONSIBILITIES 丨 QUALITY UNBOUNDED PURSUING EXCELLENCE 丨 PEOPLE-ORIENTED WIN-WIN FUTURE 丨 POLLUTION REDUCTION AND CARBON REDUCTION 丨 APPENDIXAQ-200 Elite InnovativeEndoscopy SolutionsInnovation is a key driver of medical advancement.Aohua, focusing on "innovation" as its core value, hasofficially launched the new AQ-200 Elite InnovativeEndoscopy Solutions, integrating innovation with exper-tise. The standout feature of the AQ-200 Elite InnovativeEndoscopy Solutions lies in its expanded compatibilityrange, not only applicable in gastroenterology but also inrespiratory, otolaryngology, and hepatobiliary surgery.Gastroenterology: Matching multiple scopesGastroscopes: With diagnostic and therapeutic capabili-ties, gastroscopes play a crucial role in gastroenterology.Optical magnification endoscopes: Equipped with a newgeneration of optical magnification endoscopes, capableof magnifying irregular vascular structures and surfacemicrostructures of lesions without losing detail, therebyenhancing the accuracy of early gastric cancer screening.Duodenoscopes: For ERCP procedures, duodenoscopesoffer robust support. The AQ-200 Elite system, built ontechnological innovation, seamlessly integrates with du-odenoscopes.

New ultra-slim scopes: Versatile applications acrossmultiple departmentsBronchoscopes: Paired with new bronchoscopes, thesystem aids in early diagnosis and treatment of pulmo-nary diseases.Nasopharyngoscopes: Otolaryngology benefits from theexpanded capabilities of the new AQ-200 Elite InnovativeEndoscopy Solutions. With the new nasopharyngoscope,doctors can better observe lesions in the nasal cavityand pharynx.Percutaneous cholangioscopes: In hepatobiliary surgery,the new AQ-200 Elite Innovative Endoscopy Solutionsperfectly integrates with new percutaneous cholangio-scopes, aiding in the detection of biliary system issues.

Powerful functionality for comprehensive perfor-mance enhancements1080P Full HD: The new AQ-200 Elite Innovative Endosco-py Solutions, paired with gastroscopes, achieves 1080PFull HD image quality, enabling clear real-time visualiza-tion and improving diagnostic efficiency.New spectral staining algorithm: Based on optical the-ory, the new system extracts features through a novelalgorithm, enhancing the visual differentiation betweennormal tissue and lesions. With four staining modes(CBI-R, CBI-D, CBI-Q, CBI-M), doctors can identify lesionsmore conveniently and accurately.

The new system not only achieves seamless integrationbetween endoscopes and platforms but also elevatesoverall performance to a higher level, opening up morepossibilities for the medical field.

Expansion of Application Fields

UHD Series Dual FocusEndoscopeInnovation has always been a crucial theme drivingprogress in the field of high-end medical technology.How to break through traditional industry constraintsand achieve breakthroughs in domestically-producedhigh-performance medical equipment?The launch of the UHD series dual-focus endoscope de-veloped independently by Aohua Endoscopy is officiallyannounced, compatible with the 4K ultra-high-definitionendoscope system AQ-300, presenting high-resolutionimage quality. The release of this dual-focus endo-scope once again demonstrates innovation in the fieldof domestically-produced high-performance medicalequipment, heralding a new chapter in the localizationof Chinese national brands and further advancing thedevelopment of digestive endoscopy in China.Empowering clinical practice according to genuineneeds.The birth of domestically produced dual-focusendoscopes not only represents technological innova-tion and progress but also reflects Aohua's ongoing com-mitment to being close to clinical practice and exploringreal needs. In clinical operations, how can a regularendoscope achieve clearer visualization? To effortlesslypresent more clinical details, the Aohua UHD series du-al-focus endoscopes have emerged.

This dual-focus endoscope can be paired with thecompany's independently developed 4K ultra-high-defi-nition endoscope system AQ-300, breaking free fromthe shackles of endoscope pixel limits to present 4K ul-tra-high-definition images. At a resolution of 3840*2160,the dual-focus endoscope can produce real and effectiveimages with up to 5 million pixels, while a wider colorgamut enables endoscopists to see images with colorscloser to what the human eye perceives, reducing visualerrors.One-touch switching for flexible focus adjustment.In clinical applications, the advantages of the dual-fo-cus endoscope are prominent. Endoscopists can easilyswitch between detailed observation of mucosal detailsand overall assessment of distant situations with asimple button press. The uniqueness of the dual-focusendoscope lies in its ability to provide a wider and morecomprehensive range of image information, allowingdoctors to more comprehensively assess disease condi-tions and gain deeper insights into tissue status.Early detection of lesions and treatment of gastrointes-tinal diseases are crucial, especially in cases of tumors,enabling doctors to make diagnoses more quickly. Forroutine endoscopic diagnostic and therapeutic opera-tions such as polypectomy or submucosal injection, thedual-focus endoscope can provide more accurate image

guidance, enabling doctors to solve problems swiftly andaccurately.Continuation of classics with outstanding perfor-mance.This dual-focus endoscope is also equipped withnumerous classic features of Aohua, offering excellentcomprehensive performance comparable to importedendoscopes. Firstly, with the assistance of optical stain-ing CBI function, the UHD series dual-focus endoscopeextracts features through a new algorithm, furtherincreasing the visual differentiation between normaltissues and lesions, with four staining modes available -CBI-R, CBI-D, CBI-Q, and CBI-M - providing endoscopistswith higher clarity for observing gastric mucosal mi-crovessels and more details.

Secondly, the new dual-focus endoscope features3-window illumination, with three window illuminationsystems at the head end providing more uniform and ad-equate illumination, combined with a large field of viewangle to better observe the inspection area, achieving"more even lighting, brighter images." At the same time,this dual-focus endoscope not only delivers excellentimage presentation but also possesses outstandingmanipulation technology. When endoscopists use thelower gastrointestinal endoscope, the dual-focus endo-scope can achieve synchronous transmission, adjustablesoftness and hardness, and flexible bending, providingendoscopists with a more flexible and convenient endo-scope operation mode.

WELCOME TO AOHUA 丨 SUSTAINABILITY MANAGEMENT 丨 CORPORATE GOVERNANCE 丨 INNOVATION AND ENTERPRISE 丨 FULFILLING RESPONSIBILITIES 丨 QUALITY UNBOUNDED PURSUING EXCELLENCE 丨 PEOPLE-ORIENTED WIN-WIN FUTURE 丨 POLLUTION REDUCTION AND CARBON REDUCTION 丨 APPENDIXUHD Series DuodenoscopeAohua's new UHD series duodenoscope meets highstandards in product functionality and quality, servingthe clinical setting better through several innovativefeatures. Given the challenges of ERCP procedures, thenew duodenoscope can be paired with the next-gen-eration 4K ultra-high-definition endoscope system AQ-300, enabling doctors to observe and identify duodenalconditions more clearly, locate the papilla rapidly, andperform subsequent operations efficiently with higherpixel resolution.During ERCP procedures, both physicians and patientsneed exposure to radiation. A larger angulation of theelevator enhances efficiency, making it easier for doctorsto insert accessories accurately and reducing proceduretime. Additionally, a wide field of view angle providesdoctors with a better observation perspective, enablingmore precise treatment. An efficient and safe disinfectionmethod is crucial in clinical practice. Therefore, Aohuahas achieved double innovation in manufacturing pro-cesses and product design.

Disposable distal capAs a disposable consumable, the distal cap significantly reduces the risk of infection associated with reuse. The distalcap is securely attached to the endoscope tip using a double-locking connection method, preventing loosening. Thedestructible detachment method is a new concept introduced by Aohua, preventing reuse from the source and furtherblocking the risk of infection.

Embedded wire in the elevatorBy reducing the contamination range while avoiding therisk of wire abrasion, the embedded wire makes cleaningand disinfection easier.

Medical Design Innovation

EndoMate Wins2023 iF Design AwardAs one of the significant events in the global design com-munity, the 2023 iF Design Award ceremony was held inGermany on the evening of May 15th. Aohua Endoscopy'sintelligent auxiliary diagnostic system, EndoMate washonored with the iF Design Award for its product designand innovative features.

Using clinical scenarios as a benchmark to create anew concept of medical aesthetics, EndoMate is thefirst endoscopy intelligent auxiliary diagnostic systemintroduced by Aohua Endoscopy. While "intelligent assis-tance" technology is not a new topic, mature intelligentassistance products in the medical imaging field are stillrelatively rare. EndoMate with its minimalist and cleandesign concept, starts from the clinical usage scenario.Extensive use of white creates a sense of calmness toalleviate patient anxiety during diagnosis and treatment.Black accents add a high-tech feel and enhance thesense of hierarchy. By ingeniously combining function-ality and artistry, EndoMate seamlessly integrates intomedical spaces. Through meticulous deconstruction,it seamlessly connects medical technology equipmentand clinical environments, creating a sense of boundlessbeauty.As the population afflicted with digestive tract diseasescontinues to grow and medical visits become lengthier,a significant amount of data accumulates in the process.EndoMate, based on a computational model inspiredby the structure of the human brain, excels in uncov-ering the essence behind this wealth of data. Throughintelligent autonomous learning, the assisting systemcontinually evolves. Through extensive case studies andalgorithm training, EndoMate has attained high-precisionlesion alert capabilities, greatly alleviating the workload

of physicians. Equipped with a quality control analysisplatform, the assisting system can also time, score, andprovide prompts for doctors' procedures, assisting themin improving procedural accuracy.As a stable "trainer", EndoMate helps young endos-copists learn and train more efficiently through errorcorrection, quality control, and other means. This accel-erates the accumulation of experience, which is oftentime-consuming for young doctors due to factors suchas equipment limitations, mentorship availability, casevolume, and department size. The intelligentization ofmedical equipment aligns with the country's innovationdevelopment strategy. With the emergence of intelligentdigestive endoscopy system solutions and their gradual

implementation in medical institutions nationwide, En-doMate is expected to empower Chinese endoscopistsand promote Chinese endoscopy on the global stage inthe future.

The AQ-300 was honored aspart of the "Shanghai Design100+" for the year 2023From a small item to an entire city, design plays an in-dispensable role. In October 2023, the AQ-300 4K UltraHD Endoscopy System was selected for the 2022-2023"Shanghai Design 100+" list, showcasing Auscultation'sstrong capabilities in product design.The "Shanghai Design 100+" is a platform for showcas-ing, exchanging, and promoting outstanding designachievements worldwide. Since joining the United Na-

tions' "Creative Cities Network" in 2021, Shanghai has been committed to empowering industrial innovation throughdesign, creating vibrant urban spaces, optimizing public services, enhancing people's quality of life, and building thecity's brand. The "Shanghai Design 100+" continuously selects, showcases, and promotes outstanding design projectsfrom various industries based on these dimensions. This year, it attracted 2542 excellent projects from 18 countries andregions, including China, the United States, France, Italy, and Spain.The AQ-300 4K Ultra HD Endoscopy System, with its unique beauty in medical technology, stood out in the "EmpoweringIndustries" category of the "Shanghai Design 100+" selection, elevating the comfortable diagnostic and treatment expe-rience to new heights.

FULFILLINGRESPONSIBILITIES

In the past few decades, China's healthcare industry has experienced rapid develop-ment, but we cannot ignore the challenges we currently face. With the exacerbationof population aging and the increasing burden of chronic diseases, providing moreefficient, convenient, and humane medical services is a problem we must face andthink about.

The synergy of industry, academia, research, and healthcare is the only way toachieve high-quality development in the industry. Therefore, Aohua actively collab-orates with hospitals and research institutions at home and abroad to explore newmodels, establish new scenarios, and further help improve the endoscopic skills ofgrassroots doctors. By promoting the concept of early cancer screening and preven-tion, we aim to better meet the endoscopic diagnostic and treatment needs of theentire society.

Early Cancer Prevention

The inaugural "Aohua Cup"CBI National Case Competition

Jointly organized by the "Chinese Journal of DigestiveEndoscopy" and Shanghai Aohua Endoscopy Co., Ltd.,aims to provide a platform for young endoscopic doctorsto share clinical diagnostic experience and academic ex-changes. Through the collection, selection, and displayof cases, we hope to not only promote the standardizedapplication of diagnosis and treatment but also furtherimprove the clinical diagnosis and treatment level ofgastrointestinal diseases in China. In 2023, the final ofthe first "Aohua Cup" CBI National Case Competition wassuccessfully held in Shanghai.

The significance of the competition lies not only inacademic presentation but also in the progress of theindustry. The application of Aohua's new generation CBIspectral staining technology has revolutionary signifi-cance for endoscopic doctors. It can reveal early-stagecancers, enhance doctors' observational capabilitiesand diagnostic accuracy, and promote the overall levelof diagnosis and treatment of gastrointestinal diseases.Behind the excellent staining function is also a reflectionof the growing domestic endoscopy industry.The concept of screening for early-stage gastrointestinalcancers is gradually popularizing, which can further drivethe development of China's digestive endoscopy indus-try. Therefore, Aohua is committed to providing a perfectplatform for communication and exchanges to promotethe high-quality development of the national digestiveendoscopy industry.Aohua will invest fully in research and development,deepen clinical practice, strengthen the integration ofmedicine and engineering to enhance technological in-novation and academic exploration, and help Chinese di-gestive endoscopy to reach new heights. Within a stand-ardized training system, domestic endoscopes focus onimproving the professional quality of endoscopic talents,forming an endoscopist training system that meets thediagnosis and treatment needs of the people.

WELCOME TO AOHUA 丨 SUSTAINABILITY MANAGEMENT 丨 CORPORATE GOVERNANCE 丨 INNOVATION AND ENTERPRISE 丨 FULFILLING RESPONSIBILITIES 丨 QUALITY UNBOUNDED PURSUING EXCELLENCE 丨 PEOPLE-ORIENTED WIN-WIN FUTURE 丨 POLLUTION REDUCTION AND CARBON REDUCTION 丨 APPENDIXBraving the New Heights of Digestive Diagnosis and Treatment

Our country is a high-incidence area for digestive tract tumors, with gastric cancer, esophageal cancer, and colorectal cancer all ranking among the top ten tumors in terms ofincidence. Most patients with malignant digestive tract tumors are already in advanced stages at the time of diagnosis, resulting in poor prognoses for late-stage digestive tractcancers. The burden of disease is heavy, and the prognosis for early and advanced tumors is vastly different. It can be said that the first step in cancer prevention and control isearly screening, which involves screening asymptomatic individuals through routine tests, examinations, or physical check-ups. For a long time, Aohua Endoscopy has cooperatedwith hospitals to organize workshops and hands-on training courses on digestive endoscopy techniques, delving into the construction of the discipline of digestive endoscopy andproviding valuable learning and exchange opportunities for endoscopists, thus jointly promoting the prevention and control of early-stage digestive tract cancers.The First People's Hospital of HangzhouThe company collaborated with the First People's Hospital of Hangzhou to launch the "Early Detection and ESDHigh-level Training Program for Digestive Tract Early Cancer" program, which included in-depth discussions andanalyses on lesion diagnosis, early cancer of the digestive tract, diagnosis of colorectal polyps, clinical applicationof digestive endoscopy, ESD surgical techniques, and case studies. Through practical experience, participants ap-preciated the comfortable operability and high-definition imaging performance of Aohua products, which can meetclinical diagnosis and treatment needs.

Nanjing Drum Tower HospitalThe company collaborated with Nanjing Drum Tower Hospital to hold the "Aohua Academy Nanjing Drum Tower Hos-pital Digestive Endoscopy Techniques Hands-on Training Course." Under a standardized training system, domestical-ly produced endoscopes have always focused on improving the professional quality of digestive endoscopy person-nel and forming an endoscopist training system that meets the needs of the people's medical treatment. Therefore,Aohua is committed to providing a perfect platform for communication and exchange to promote the high-qualitydevelopment of digestive endoscopy across the country.

Rural Support

To promote the overall high-quality development of di-gestive endoscopy diagnosis and treatment capabilities,we aim to extend the achievements of advanced diges-tive specialties to rural support and deliver digestiveendoscopy diagnosis and treatment technologies.

Yunnan Province, Lincang City,Yongde County Hospital ofTraditional Chinese Medicine

In September, a national touring medical team consistingof digestive specialists, policy researchers, and officialsresponsible for institutional reform, along with the direc-tor physician, attending physician, and chief nurse of theLincang City Digestive Specialist Alliance, conducted on-site guidance at grassroots hospitals' gastroenterologydepartments. They established remote medical consul-tations and conducted on-site teaching.

Utilizing the Aohua AQ-300 in the endoscopy room, theyperformed various new techniques such as "endoscopicgastric polypectomy, endoscopic colon polypectomy,endoscopic mucosal resection of the colon," filling thegap in digestive endoscopy technology at grassroots hos-pitals. This initiative enhanced the local medical staff'sproficiency and provided targeted professional guidance,suggestions, and advice. They also shared insights ondiscipline construction, specialty development, digestiveendoscopy diagnosis and treatment, and quality control,addressing various difficult questions comprehensivelyand meticulously.

This grassroots assistance activity covered a wide rangeof topics, closely integrating with clinical work, enhanc-ing connections and exchanges with grassroots medicalinstitutions, and playing an actively catalytic role inimproving the diagnostic and treatment capabilities andquality levels of endoscopy at grassroots hospitals.

Charitable Donation

The gastrointestinal early cancer screening project is notonly a concrete manifestation of the philosophy of "peo-ple first, life first", but also a new starting point for thedevelopment of gastrointestinal early cancer screeningwork. In February 2023, the unveiling ceremony of theGastrointestinal Early Cancer Screening Base and Equip-ment Donation Ceremony was held at the TongchuanCancer Prevention and Control Center in Shaanxi Prov-ince, at the South Hospital of the City People's Hospital.Shanghai Aohua Endoscopy Co., Ltd. donated medical

equipment worth 3.4 million yuan to the Tongchuan City Early Cancer Screening Base through the Municipal Red Cross,to support its construction.The donated medical equipment includes a set of high-definition electronic gastrointestinal endoscopy systems, com-prising one endoscopic image processing center, one endoscopic LED cold light source, two high-definition electronicgastroscopes, two high-definition electronic colonoscopes, one LCD monitor, and one endoscopy-specific trolley, with atotal value of 3.4 million yuan. The use of this equipment will play an important role in the early diagnosis and treatmentof gastrointestinal tumors, maximizing cost savings, improving diagnosis rates, shortening diagnosis and treatmenttimes, and effectively enhancing the level of diagnosis and treatment of gastrointestinal diseases.

North America

South America

Ireland

United States DDW

United States FIME

Ecuador

Europe

Africa

Asia

Turkey

Indonesia

United Arab Emirates

Mongolia

Uzbekistan

Kazakhstan

Korea

Malaysia

Egypt

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Global Communication

QUALITY UNBOUNDEDPURSUING EXCELLENCE

The company maintains strict requirements for quality control. By introducing anintelligent supply chain management system, we have achieved comprehensivemonitoring and management of various aspects such as raw material procure-ment, production processes, and product quality inspection. This managementmodel not only improves production efficiency and reduces costs but also en-sures the stability and consistency of product quality.

Furthermore, we integrate quality management throughout the entire productlifecycle, from product design and raw material selection to production, packag-ing, transportation, and after-sales service, always prioritizing customer needsand product safety. This rigorous quality control is not only a commitment toour customers but also a fulfillment of our own mission.

The company has always prioritized people-oriented in-itiatives, actively pursuing standardized management asits core, and establishing sound operational guidelines.While striving for orderly, efficient, and healthy develop-ment, it also pays attention to societal and human healthdevelopment, aiming for win-win outcomes among thecompany, employees, customers, and investors.Against the backdrop of a corporate culture emphasiz-ing Customer First, Continuous Innovation, SustainedGrowth, and Results-Oriented, the company has alwaysadhered to the principle of "technological innovation,sincere service." We seize opportunities presented bynew technological advancements in the industry, rely onstate-of-the-art scientific production methods, providehigh-quality services to our vast clientele, and offer relia-ble endoscopic solutions to our users.

The company places great emphasis on quality management. Having obtained certifications for quality managementsystems such as ISO 9001:2015 and ISO 13485:2016. It actively expands international business and continuously updatesand refines the procedural documents and regulations within its quality management system. In addition to meetingthe requirements of China's GMP, the quality management system also complies with additional legal regulations incountries such as the EU's MDR, South Korea's KGMP, and Brazil. This ensures the delivery of quality, safe, and effectiveproducts to domestic customers while providing a guarantee for expansion into international markets.The company's quality management system comprises four levels of documents. Quality manual, procedural docu-ments, regulations, and records. Through refined process management, the company has standardized 48 business pro-cesses, including resource management, design and development, production manufacturing, feedback improvement,etc., ensuring high-quality execution results. Over the years, the company has actively employed the PDCA quality cycleto continuously improve business process management, pursuing excellence.The company is committed to providing customers with high-quality products. It sets requirements for high relia-bility and maintainability in product design, continuously innovating and optimizing throughout the design and devel-opment stages, iterating product designs, and ensuring that only qualified products are delivered to customers through

standardized production processes and release approvalprocesses.Shanghai Aohua Endoscopy Co., Ltd. conducts com-prehensive inspections for endoscopic product perfor-mance, sealing, and related imaging functions, achievinga rate of up to

Since its inception, the company has established a prin-ciple of "providing knowledge, skills, dignity, and devel-opment to employees; providing love, service, value, andbenefits to customers." With a commitment to strength-ening management and seeking truth and pragmatism, itcontinuously recruits professional and technically adeptpersonnel, pursuing excellence in quality and efficiency,and continuously learning technical standards and in-dustry best practices to ensure that personnel possesssuperb skills, thereby improving product quality continu-ously.The company adheres to customer-oriented productand technology solutions, with customer satisfactionas the ultimate goal. In the process of development andgrowth, the company will always advocate "innovationconsciousness, service consciousness, and quality con-sciousness," ensuring that the enterprise accumulatespositively in a virtuous cycle.

The composition of Ausmed's quality management systemDecision-making levelQuality manual

Description of the processes required for the qualitymanagement system and their interactions, qualitypolicy, and objectives.Management levelProcedure documents

Procedure for the formation of documents, describingthe implementation process.Operational level

Operational/Regulatory/Policy documents

Work instruction manualExecution levelRecord formsRecord form

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Ensure Quality

Enhance International Service Quality

Aohua adheres to the enterprise vision of "Become aglobal enterprise, advancing endoscopic care for all,"continuously expands its presence in the internationalmarket, and increases investment in international ser-vices to lay a solid foundation for market expansion. Tomeet the diverse needs of different regions, the companygradually establishes a regional service system, formu-lates service policies based on regional characteristics,and adjusts service layouts to enhance market recogni-tion through tailored services.Strict Adherence to Laws and RegulationsWe strictly adhere to ISO 13485:2016, ISO 9001:2015, MDR(EU Medical Device Regulations), quality system-relatedprocedural documents, and management specificationsto establish basic user service systems and processes.We complete customer consultations, handle customerservice complaints, adverse events, and other post-mar-ket regulatory control procedures as required. For theunique characteristics of international market servicework, the company has developed corresponding pol-icies and processes tailored to each location to ensurethe compliance of the product after-sales process, suchas the "International User Service Operations Manage-ment Specification" and the "International Quality PlanProcess."

Improving User Service SystemUtilizing efficient after-sales management tools, we mon-itor the entire product lifecycle comprehensively, includ-ing complete product information, user information, andmaintenance records, to provide effective data guidancefor user service and timely inspections, maintenance,and spare parts support. Comprehensive maintenancedata reports also provide scientific and effective supportfor product quality improvement.Enhancing Service CapabilityWe establish a complementary user service system con-sisting of technical service centers, authorized dealers,and authorized third-party repair stations according toregional conditions to ensure that all users receive suf-ficient product service support. Regular quarterly repairtraining is conducted to ensure that service organizationsat all levels have sufficient repair capabilities and covernew product and skill promotion through online andirregular on-site training.Service Capability EnhancementWe establish professional communication channelsbetween key departments such as R&D, quality, andproduction. A dedicated technical support team is estab-lished to summarize and organize technical informationrelated to products into usable technical materials, ser-vice notices, and guidance documents for the end-users,

providing the most important technical guarantee for theprofessionalism and effectiveness of the service.Continuous improvement of the training mechanism isthe cornerstone of service team capability. Field servicecapabilities and experience are enhanced through on-site training, and engineers are equipped with sufficientproduct details and troubleshooting and repair capabil-ities through workshop internships. At the same time,cross-departmental cooperative training is organizedto comprehensively improve the professional skills of

service engineers, requiring them not only to completebasic on-site service work but also to master sufficientclinical knowledge, industry background, and technicalprinciples to provide users with more professional andaccurate services.Performance management oriented towards "customersatisfaction" defines the work guidelines of the user ser-vice team. We ensure responses within 24 hours and pro-vide solutions within 72 hours for inquiries, complaints,and suggestions from users worldwide.

Company's Operations in Compliance, Efficient Procure-ment, Risk Management, and Win-Win Cooperation:

Adherence to ComplianceWe consider fairness, openness, transparency, integrity,and honesty as fundamental principles of complianceoperations. We strictly adhere to relevant laws and reg-ulations such as the Civil Code of the People's Republicof China, the Criminal Law of the People's Republic ofChina, and the Anti-Unfair Competition Law. We have es-tablished and enhanced a compliance system, includingthe establishment of an employee handbook to clarifyemployees' business conduct guidelines and ethicalstandards, prohibiting employees' unethical behavior.We have formulated a "Procurement Agreement - An-ti-Commercial Bribery" to manage both employees andsuppliers in terms of professional ethics and businessconduct, providing solid institutional guarantees forthe company's compliance management. Additionally,annual audits confirm the existence of any improper re-lationships or improper benefits between suppliers andthe company to prevent potential compliance operation-al risks.We explicitly advocate against bribery for both employ-ees and suppliers, set up anonymous reporting mailbox-es and other complaint channels within the company,and encourage all employees and stakeholders to report

suspected illegal or irregular activities through compli-ance hotlines, report emails, and other channels. Thiscomprehensive approach ensures effective supervisionof corruption and bribery and ensures that employeesadhere to high ethical standards and principles of hones-ty and trustworthiness. Our compliance policies and sys-tems apply to all employees, and after discovering viola-tions, we implement punishment measures, forming aneffective closed-loop management from top to bottom.Advancing Efficient ProcurementWhile ensuring compliant procurement, we have estab-lished a comprehensive procurement control system,guided by the "Procurement Control Procedure," "Pro-curement Management Specification," and "SupplierManagement Specification," to standardize procurementprocesses and ensure efficient procurement deci-sion-making and execution processes.We recognize that building a high-quality, sustainable,and resilient supply chain is essential for robust businessdevelopment. We have established a comprehensivesupplier management system and incorporated supplierenvironmental and social responsibility into manage-ment requirements, comprehensively enhancing supplychain risk response capabilities. We also strengthencommunication with suppliers to achieve coordinateddevelopment, ensuring business stability and continu-

ous development through the construction of a resilientsupply chain.Enhancing Supplier ManagementTo efficiently conduct procurement activities, we havedeveloped and published a "Supplier ManagementProcedure" to standardize management processes forsupplier selection, qualification certification, monitoringand development, and supplier elimination. During thesupplier admission phase, we organize relevant person-nel from the quality and R&D departments to conductpreliminary evaluations of suppliers, require all suppli-ers to sign a "Supplier Purchase Agreement," and keysuppliers to sign a "Quality Assurance Agreement," andprovide quality-related qualifications or certifications toensure that the materials or services they provide meetour standards. Environmental protection and hazard-ous substance control are also important criteria in ourpreliminary evaluation of suppliers. Given equal condi-tions, we prefer suppliers with relevant environmentalsystem certifications as alternative suppliers. During thereporting period, all key material suppliers we used haveobtained ISO 9001, ISO 13485, or ISO 14001 managementsystem certifications.After establishing a cooperative relationship with sup-pliers, we adopt a classification management principleand conduct regular inspections and visits to suppliers,

conduct quality system and product audits for long-term cooperative suppliers, and conduct inspections forhigh-risk materials to ensure continuous material safetyand improve supply quality. We also emphasize supplierevaluation and assessment, conducting annual evalu-ations of suppliers based on multiple dimensions suchas supply cost, product quality, and delivery timeliness.If suppliers do not meet the company's cooperationrequirements or fail to meet relevant quality, environ-mental, and safety management requirements, we willrequest them to make corrections based on evaluationfeedback, otherwise, we will consider terminating coop-eration.On the basis of ensuring supply quality, we also explicitlyrequire suppliers to fulfill their social responsibilities,incorporating factors such as labor rights, occupation-al health and safety, environmental protection, andbusiness ethics into the supplier's social responsibilitymanagement system. We have signed "Material Suppli-er Environmental and Occupational Health and SafetyAgreements" with key suppliers, aiming to comprehen-sively improve the level of supply chain responsibilityand sustainable development capabilities.

Compliant and E?cient Procurement

Supplier Grading and Classification Management FrameworkSupplier ClassificationCoverage rateEvaluation frequencyA Category100%Annual qualified supplier evaluation and on-site auditB Category100%

Annual qualified supplier evaluation, and based on the evalua-tion results, conduct on-site audits of suppliers as needed.C Category100%Annual qualified supplier evaluationD Category100%Annual qualified supplier evaluation

Supply Chain Risk ManagementAohua Endoscopy places a high priority on supply sta-bility and safety, thoroughly identifying and managingsupply chain risks to continuously provide high-qualityproducts and services to society. To achieve this, wehave established and continuously improved a supplychain risk identification and management system, con-ducting effective monitoring and management of keysupply chain risk elements such as quality, safety, andthe environment. We conduct annual audits of supplierswith supply, quality, and environmental issues and haveformulated a "Supplier Annual Audit Plan."In response to recent global supply chain risks such asproduction interruptions, supply shortages, and de-clining transportation capacity, we have systematicallyundertaken preventive, monitoring, and control meas-ures. We have established a sound "Strategic MaterialDefinition and Control" process to identify materials withpotential supply risks and promptly respond, effective-ly reducing the risk of potential supply interruptions.Additionally, we have developed business continuityplans, adjusting production plans in a timely mannerthrough market dynamic analysis and insights to reducesupply chain uncertainty and ensure stable productionand timely delivery. Over the past three years, throughvarious management measures such as optimizing logis-tics management, adopting diversified transportationschemes, and shipping from multiple production bases,we have ensured the continuity of business operationsand supply stability, guaranteeing stable business growththrough our rapid response capabilities and risk insight.

Collaborative Development for Win-Win CooperationAohua Endoscopy regards suppliers as important part-ners and actively engages in in-depth communicationand cooperation with partners upstream and down-stream in the industry chain, driving the diversifiedproduction, services, and supply of domestic medicalequipment industry from raw materials to componentsand critical core parts. We periodically share industryknowledge and best practices with suppliers and holdconsultations on production and quality issues in sup-plier processes to encourage suppliers to improve theirown management and enhance the quality of materialsupply and services, deepening cooperation with indus-try partners and empowering industry development.Furthermore, we are committed to increasing the pro-portion of localized procurement while ensuring the sta-bility, efficiency, and sustainability of the supply chain,driving the development of the local industrial chain.Over the years, there has been a limited number of man-ufacturers in the domestic industrial chain capable ofproducing key components of high-end medical equip-ment, and the technological reserves upstream anddownstream of the industrial chain are relatively limitedcompared to developed countries. To break the dilemmaof backward technological reserves in the upstream ofthe medical device industrial chain, Ausmed Endoscopy,based on its independent research and development ca-pabilities, has cooperated with domestic manufacturersfor the key components or devices of products, engagingin joint innovation, and has gradually realized localizedproduction and supply.

Through collaborative development and win-win cooper-ation, we are promoting the upgrading and developmentof the industrial chain, consolidating the foundation ofthe industry. Aohua Endoscopy is committed to acceler-ating the coordinated development of local supply chainenterprises comprehensively.

PEOPLE-ORIENTEDWIN-WIN FUTURE

Aohua always adheres to a customer-oriented approach and places a strong em-phasis on human capital, fostering a mutually beneficial future for employees, thecompany, and society.

We consider our employees as the most valuable asset of the company and arecommitted to creating a positive, healthy, and vibrant work environment. Whileencouraging various training, learning, and networking activities, we have also es-tablished a robust promotion mechanism to provide solid support for employees'career development planning. We aspire that in such an environment, everyone cancontinuously enhance their skills and capabilities, maximizing their self-worth.

The company aims to motivate employees to grow to-gether with the company by comprehensively construct-ing a position compensation system and establishing asound medium- to long-term incentive mechanism. Byreviewing various functional position systems and align-ing them with the current compensation levels withinthe company, benchmarking against market compen-sation for similar industry positions, the company hasestablished a position matrix and salary standards forvarious job levels that align with the company's medium-to long-term development goals.Regarding long-term incentives, the company has im-plemented an equity incentive plan to attract and retainoutstanding talent, fully mobilizing the enthusiasm ofthe company's core team. This plan effectively aligns theinterests of shareholders, the company, and individualmembers of the core team, encouraging everyone to fo-cus on and drive the company's long-term development.Based on the company's strategic mid-to-long-term de-velopment goals, each organizational unit's strategic ob-jectives are decoded layer by layer to maintain a high de-gree of alignment between goals and action directions.To break the rigidity of performance goals and execution,the company conducts semi-annual reviews to set, ad-just, and conduct performance discussions with employ-ees, achieving dynamic performance management.

Employee Rights Protection

The company strictly complies with labor-related lawsand regulations, continually refining the Employee Hand-book, which clearly defines guidelines for employeehiring and departure, attendance, compensation, safetyregulations, and other behavioral standards. We strictlyprohibit the employment of child labor and forced labor,implementing various measures during interviews andonboarding to prevent illegal employment practices.

Talent RecruitmentThe company has established a "Company RecruitmentManagement System" to clarify personnel recruitmentmanagement and recruitment processes, enhancingrecruitment efficiency. To meet the company's talentneeds and improve the talent selection mechanism, weconduct recruitment through various channels such ascampus recruitment, social recruitment, and internalreferrals.

Protecting Employee Rights and Interests

Aohua Endoscopy adheres to the core value of "Sus-tained Growth," persistently driving company devel-opment through the enhancement of employee capa-bilities. While maintaining steady business growth, weprioritize the growth of every employee and emphasizethe construction of a talent pipeline. Focusing on bothcompany and employee career development needs,we have established a distinctive talent developmentsystem at Olympus, offering equal and open learningand advancement opportunities for all employees. Thissystem aims to cultivate a professional workforce withsolid expertise, refined management skills, quantitativethinking, and decision-making abilities, thereby promot-ing the company's sustainable development.Training and DevelopmentWe encourage every Aohua employee to continuouslyexplore and diversify their efforts, continuously self-im-proving. We have built a comprehensive training system,providing employees with abundant learning resourcesand encouraging proactive knowledge and experiencesharing among teams to grow together. From new em-ployee onboarding training to leadership training formanagement teams, we organize corresponding trainingcourses in a tiered and graded manner to help employ-ees grow rapidly, enhancing both employee and compa-ny competitiveness and innovation capabilities.

Furthermore, we have established a dual-channel careerdevelopment system for management and professionaltechnical sequences, allowing employees to developthrough multiple channels. This further unleashes corpo-rate vitality and enhances organizational effectiveness.We actively guide employees to plan their career devel-opment direction based on their own strengths and thecontinuous development needs of the company, therebyachieving their career development goals.

During the reporting period, the list of training data for various types of employees

CategoryTraining Coverage RatioAverage Training DurationSegmented by Job Level

Senior Managers2%25.57

Middle Managers3%22.71

Ordinary Employees95%10.14Segmented by Gender

Female Employees37.5%9.53

Male Employees62.5%11.64

During the reporting period, the total duration of em-ployee training was as follows

Employee coverage rate

Average training duration per employee

hours

hours

%

7130.33

60.07

6.53

Fostering Employee Career Growth

We deeply understand that employee health is crucialfor the sustainable development of the company. There-fore, we are committed to establishing and maintaininga safe and healthy working environment to ensure thatemployees can work in good conditions and prevent oc-cupational diseases and accidents.The company has established management systems andprocedures based on the ISO 45001/GB-T 45001 Occupa-tional Health and Safety Management System, clarifyingcommitments to occupational health and safety and

establishing relevant systems and processes to ensureproper operation.The company's occupational health and safety manage-ment system covers all employees, striving to provide ahealthy and safe working environment for all employees.We conduct regular monitoring of occupational hazardsand take necessary measures to improve the working en-vironment based on monitoring and assessment reports.We also conduct regular health checks on employees tomonitor their health status and provide various safety

During the reporting period, there were no work-relatedfatalities in the company

The total number of lost work hours due to work-relatedinjuries during the reporting period

In 2023, a total of various safety training sessions wereconducted

hours

sessions

Protecting Employee Health

and occupational health training to enhance employees'safety awareness.In 2023, a total of approximately 45 training sessionswere conducted, including new employee three-levelsafety training, occupational health training, mechanicaland electrical safety training, and fire safety training.Putting people first and prioritizing employee safety,the company has established a safety managementorganization to prevent production safety accidents. Itoperates standardized safety production and has passedthe third-level safety production standardization certifi-cation. Additionally, a dual prevention mechanism of riskclassification control and hidden danger investigationand governance has been established and implemented.The company fully implements the responsibility systemfor all employees' safety production and practices com-prehensive employee safety management. In 2023, thecompany did not experience any fatal accidents, and thetotal number of lost work hours due to work-related inju-ries was 80 hours.

POLLUTION REDUCTIONAND CARBON REDUCTION

Green development of the enterprise is our long-term goal and relentless pursuit.We firmly believe that only by protecting the environment can we achieve sustain-able development of the enterprise and common prosperity of society. By activelyadvocating the concept of green office and pollution reduction, we are committed tobuilding a sustainable industrial ecosystem.

We are committed to establishing and maintaining anenvironmental management system that complies withnational environmental laws and regulations to effec-tively manage and control the environmental impacts ofour business operations. We strictly adhere to laws andregulations such as the Environmental Protection Law ofthe People's Republic of China, the Air Pollution Preven-tion and Control Law of the People's Republic of China,and the Shanghai Environmental Protection Regulations.We continuously optimize and improve environmentalmanagement policies, procedures, and practices to en-sure that our business operations are conducted withinregulatory frameworks.

To further demonstrate our commitment to environmental management, we have obtained ISO 14001 EnvironmentalManagement System certification. This certification signifies that our environmental management system meets inter-national standards, effectively identifies, monitors, and controls environmental risks, and continuously improves ourenvironmental performance. Through ISO 14001 certification, we not only enhance our management level but alsostrengthen our sense of responsibility and sensitivity to environmental issues.We will continue to focus on the operation and continuous improvement of our environmental management system.Through various measures and practices, we aim to continuously reduce our environmental impact, promote the effi-cient use of resources, and achieve a win-win situation for both economic and environmental benefits. We firmly believethat only by upholding the concept of sustainable development can we achieve our long-term business goals and con-tribute more positive energy to society and the environment.

Environmental Management System

APPENDIX

ContentsGRI Standard DisclosuresMESSAGE FROMTHE MANAGEMENT TEAM

2-11ABOUT THE REPORT2-1, 2-2, 2-3KEY PERFORMANCE REPORT FOR 2023201WELCOME TO AOHUA2-6SUSTAINABILITY MANAGEMENT

2-9, 2-12, 2-13, 2-14, 2-16, 2-29,

3-1, 3-2, 3-3CORPORATE GOVERNANCE

Protection of investor rightsProtection of intellectual property

2-23, 2-24, 2-26, 2-27, 3-3, 205, 206

3-3

ContentsGRI Standard DisclosuresINNOVATION AND ENTERPRISEResearch and Development MissionProduct Function InnovationExpansion of Application FieldsMedical Design Innovation

3-33-33-33-3FULFILLING RESPONSIBILITIESEarly Cancer PreventionRural SupportCharitable DonationGlobal Communication

3-3, 2033-3, 2033-3, 2033-3, 203

ContentsGRI Standard DisclosuresQUALITY UNBOUNDED PURSUINGEXCELLENCEEnsure QualityEnhance International Service QualityCompliant and E?cient Procurement

3-3, 4163-3, 4163-3, 204, 308, 414PEOPLE-ORIENTED WIN-WIN FUTUREProtecting Employee Rights and InterestsFostering Employee Career GrowthProtecting Employee Health

2-3, 2-7, 3-3, 201, 402, 4053-3, 401, 4043-3, 403POLLUTION REDUCTION AND CARBONREDUCTIONEnvironmental Management System3-3

"GRI Sustainability Reporting Standards" Indicator Index