Huayi Tencent Entertainment (00419) announced that on 12 July 2022, the company, Baihai Investment (a wholly-owned subsidiary of the Company), OPCO, MZN, the founding shareholders, Tenghai Health, WFOE and Han Lihui entered into the third Supplementary Agreement of the Capital increase and acquisition Agreement (as supplemented by the second Supplementary Agreement) to amend the balance of the consideration for the payment of the Capital increase.

The capital increase and acquisition of Beijing Dreamtree were completed on April 29th, 2021, which is the completion date, after which the company (through Baihai Investment) owns a stake in OPCO51%. Under the restructuring, the company has become the holder of a 51 per cent stake in the platform company, which controls the target group in a contractual manner through VIE contractual arrangements.

As at the end of April 2022, one year from the completion date, according to the consolidated management accounts submitted by the Target Group in accordance with the Hong Kong Financial reporting Standards, the total revenue of the Target Group has reached RMB 150 million. However, almost all of the relevant income of the target group is generated by the provision of extended services.

Although the total revenue of the Target Group has reached the level of RMB 150 million under the first performance target, however, the revenue structure of the Target Group for the year from the completion date is not mainly due to the provision of original services as envisaged by the parties at the time of the capital increase and acquisition agreement.

The parties to the capital increase and acquisition agreement understand that due to changes in the domestic market environment and the medical policy reform process, it will take longer for the Target Group to develop its business to provide the original services. At the same time, through the development of the business of providing extended services, the Target Group has effectively promoted the development of its business of providing original services.

The company is of the view that the revised arrangement will encourage the founding shareholders to make greater efforts to develop the business of the Target Group, thereby helping to protect and strengthen the Group's commercial interests in the Target Group. These arrangements also demonstrate the company's confidence in the target group's development of online prescription, circulation and marketing of pharmaceutical products.

In addition, the first batch of consideration shares will be allotted and issued in accordance with the General mandate. The company is applying to the listing Committee of the Stock Exchange for approval for the listing and trading of the first batch of consideration shares.