On June 28th, Gelonhui Boillhealthcare (01246.HK) announced that during the preparation of the comprehensive financial statements for the year ending March 31, 2024, it was found that the bank account of Shanghai Baoxian Industrial Co., Ltd. (Shanghai Baoxian) was frozen due to Shanghai Fengxian Greenland Small Loan Co., Ltd. (the borrower) applying for property preservation to the Fengxian District People's Court of Shanghai. The reason was that it violated the guarantee clause dated March 14, 2023, entered into by Shanghai Baoxian (together with Boillhealthcare Holding Group Co., Ltd., Qiu Dongfang and Huang Jian as guarantors collectively) for the borrower as the beneficiary, and the guarantee was intended to ensure that Shanghai Guzhen Industrial Co., Ltd. (the borrower) fulfills its repayment obligation under the loan agreement dated March 14, 2023, between the borrower and the lender.

During the preparation of the comprehensive financial statements for that year, the company found that Shanghai Baoxian had signed a guarantee as the beneficiary for the borrower, providing guarantees for the repayment obligations of the borrower under the loan agreement with a maximum amount of RMB 55 million.

Shanghai Baoxian is an indirect non-wholly-owned subsidiary of the Company. The Company is seeking legal advice on the aforementioned judgment and the freezing of Shanghai Baoxian's bank account, and will continue to assess the impact of legal proceedings and the freezing of bank accounts on the group's business operations. In addition, Boill International Limited and Liyao Investment Limited (which are ultimately controlled by Mr. Qiu and are the Company's main shareholders, together holding approximately 52.33% of the Company's issued share capital) have agreed to compensate the Company for any actual losses it may suffer if Shanghai Baoxian needs to pay any amount to the borrower for legal proceedings.