Nanjing Sinolife United : (1) FINAL RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 31 DECEMBER 2020; AND (2) SUPPLEMENTAL ANNOUNCEMENT - DISCLOSEABLE TRANSACTION IN RELATION TO DISPOSAL OF SUBSIDIARY

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

NANJING SINOLIFE UNITED COMPANY LIMITED*

南 京 中 生 聯 合 股 份 有 限 公 司

(A joint stock limited liability company incorporated in the People's Republic of China)

(Stock Code: 3332)

1. FINAL RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 31 DECEMBER 2020;

AND

1. SUPPLEMENTAL ANNOUNCEMENT - DISCLOSEABLE TRANSACTION IN RELATION TO
   DISPOSAL OF SUBSIDIARY

FINANCIAL HIGHLIGHTS

• Revenue decreased by approximately 8.1% to RMB296.5 million (2019: RMB322.6 million).
• Gross profit increased by approximately 8.9% to RMB170.7 million (2019: RMB156.8 million).
• Loss for the Year was approximately RMB49.6 million (2019: Loss of RMB194.7 million).
• Loss per share was RMB5.24 cents (2019: Loss per share RMB20.57 cents).
• The Board does not recommend the payment of any final dividend (2019: Nil) for the
  Year or any special dividend (2019: Nil).

FINAL RESULTS

The board (the "Board") of directors (the "Directors") of Nanjing Sinolife United Company Limited* 南京中生聯合股份有限公司 (the "Company ") is pleased to announce its

consolidated final results of the Company and its subsidiaries (the "Group") for the year ended 31 December 2020 (the "Year") together with the comparative figures for the year ended 31 December 2019 which are as follows:

• For identification purpose only

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CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the year ended 31 December

		2020		2019
	Notes	RMB'000	RMB'000
Revenue	4	296,525		322,613
Cost of sales		(125,821)	(165,775)
Gross profit		170,704		156,838
Other income and gains	4	12,735		8,673
Selling and distribution expenses		(132,898)	(185,436)
Administrative expenses		(77,571)	(85,187)
Finance costs		(1,275)	(3,601)
Other expenses		(15,857)	(72,841)
Loss before tax		(44,162)	(181,554)
Income tax expense	6	(5,443)	(13,104)
Loss for the year		(49,605)	(194,658)

Other comprehensive (loss)/income

Other comprehensive (loss)/income that may be

• reclassified to profit or loss in subsequent
• periods, after tax:

Exchange differences on translation of
foreign operations	(231)	2,153

Other comprehensive income that will not be

reclassified to profit or loss in
subsequent periods, after tax:
Gains on property revaluation		1,049		101
Total comprehensive loss for the year		(48,787)	(192,404)
Loss attributable to:
Owners of the parent		(49,605)	(194,658)
Total comprehensive loss attributable to:
Owners of the parent		(48,787)	(192,404)
		RMB	RMB
Loss per share attributable to
ordinary equity holders of the parent:
- Basic and diluted	8	(5.24) cents	(20.57) cents

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December

			2020	2019
		Notes	RMB'000		RMB'000
Non-current assets
Property, plant and equipment		108,363	154,966
	Investment properties		40,608	2,630
	Right-of-use assets		19,514	28,880
	Goodwill	9	34,491	43,413
	Other intangible assets		24,751	30,361
	Deferred tax assets		9,830	12,763
	Other non-current assets		176	5,454
Total non-current assets		237,733	278,467
Current assets
	Inventories	10	83,145	89,751
	Trade receivables	11	33,040	44,400
Prepayments, deposits and other receivables		14,431	17,434
	Tax recoverable		2,995	3,462
	Pledged deposits		1,271	1,685
Cash and cash equivalents		77,116	107,521
Total current assets		211,998	264,253
Total assets		449,731	542,720
Current liabilities
	Trade payables	12	16,185	13,495
Other payables and accruals		42,999	59,318
	Interest-bearing bank borrowings		-	27,500
	Lease liabilities		4,777	6,256
	Tax payables		6,445	6,545
Total current liabilities		70,406	113,114
Net current assets		141,592	151,139
Total assets less current liabilities		379,325	429,606

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED)

As at 31 December

		2020	2019
		RMB'000		RMB'000
Non-current liabilities
	Lease liabilities	8,686	13,013
	Deferred tax liabilities	7,499	4,715
	Provision	777	728
Total non-current liabilities	16,962	18,456
Net assets	362,363	411,150
Equity
Equity attributable to owners of the parent
	Share capital	94,630	94,630
	Other reserves	267,733	316,520
Total equity	362,363	411,150

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2020

1. CORPORATE AND GROUP INFORMATION

The Company is a joint stock limited liability company established in the People's Republic of China (the "PRC"). The address of its registered office is 30/F, Deji Building, 188 Chang Jiang Road, Xuanwu District, Nanjing, Jiangsu Province, the PRC.

The Group is principally engaged in the manufacture and sale of nutritional supplements and health food products in the PRC, Australia and New Zealand.

1. BASIS OF PREPARATION
   These financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards ("HKFRSs") (which include all Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards ("HKASs") and Interpretations) issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA"), accounting principles generally accepted in Hong Kong and the disclosure requirements of the Hong Kong Companies Ordinance. They have been prepared under the historical cost convention, except for investment properties which have been measured at fair value. These financial statements are presented in Renminbi ("RMB") and all values are rounded to the nearest thousand except when otherwise indicated.
2. CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES
   The Group has adopted the Conceptual Framework for Financial Reporting 2018 and the following revised HKFRSs for the first time for the current year's financial statements.

Amendments to HKFRS 3

Amendments to HKFRS 9,

• HKAS 39 and HKFRS 7 Amendment to HKFRS 16

Amendments to HKAS 1 and HKAS 8

Definition of a Business

Interest Rate Benchmark Reform COVID-19 Related Rent Concessions

• (early adopted)
  Definition of Material

Except for the amendment to HKFRS 16 described below, the adoption of these revised standards did not have any material effect on the financial performance and position of the Group.

Amendment to HKFRS 16 provides a practical expedient for lessees to elect not to apply lease modification accounting for rent concessions arising as a direct consequence of the COVID-19 pandemic. The practical expedient applies only to rent concessions occurring as a direct consequence of the pandemic and only if (i) the change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change; (ii) any reduction in lease payments affects only payments originally due on or before 30 June 2021; and (iii) there is no substantive change to other terms and conditions of the lease. The amendment is effective for annual periods beginning on or after 1 June 2020 with earlier application permitted and shall be applied retrospectively.

During the Year, certain monthly lease payments for the leases of the Group's plant and machinery have been reduced or waived by the lessors upon reduction in the scale of production as a result of the COVID-19 pandemic and there are no other changes to the terms of the leases. The Group has early adopted the amendment on 1 January 2020 and elected not to apply lease modification accounting for all rent concessions granted by the lessors as a result of the COVID-19 pandemic during the Year. Accordingly, a reduction in the lease payments arising from the rent concessions of RMB210,000 has been accounted for as a variable lease payment by derecognising part of the lease liabilities and crediting to the corresponding right-of-use assets for the Year.

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2.3 ISSUED BUT NOT YET EFFECTIVE HONG KONG FINANCIAL REPORTING STANDARDS

The Group has not applied the following new and revised HKFRSs, that have been issued but are not yet effective, in these financial statements.

Amendments to HKFRS 3	Reference to the Conceptual Framework2
Amendments to HKFRS 9, HKAS 39,	Interest Rate Benchmark Reform - Phase 21
HKFRS 7, HKFRS 4 and HKFRS 16
Amendments to HKFRS 10 and	Sale or Contribution of Assets between an Investor and
HKAS 28 (2011)	its Associate or Joint Venture4
HKFRS 17	Insurance Contracts3
Amendments to HKFRS 17	Insurance Contracts3, 6
Amendments to HKAS 1	Classification of Liabilities as Current or Non-current3, 5
Amendments to HKAS 1	Disclosure of Accounting Policies 3
Amendments to HKAS 8	Definition of Accounting Estimates3
Amendments to HKAS 16	Property, Plant and Equipment: Proceeds before Intended Use2
Amendments to HKAS 37	Onerous Contracts - Cost of Fulfilling a Contract2
Annual Improvements to HKFRSs	Amendments to HKFRS 1, HKFRS 9, Illustrative Examples
2018-2020	accompanying HKFRS 16, and HKAS 412

• Effective for annual periods beginning on or after 1 January 2021
  2 Effective for annual periods beginning on or after 1 January 2022 3 Effective for annual periods beginning on or after 1 January 2023
  4 No mandatory effective date yet determined but available for adoption
  5 As a consequence of the amendments to HKAS 1, Hong Kong Interpretation 5 Presentation of Financial Statements - Classification by the Borrower of a Term Loan that Contains a Repayment on Demand Clause was revised in October 2020 to align the corresponding wording with no change in conclusion
  6 As a consequence of the amendments to HKFRS 17 issued in October 2020, HKFRS 4 was amended to extend the temporary exemption that permits insurers to apply HKAS 39 rather than HKFRS 9 for annual periods beginning before 1 January 2023

The Group is in the process of making an assessment of the impact of these new and revised HKFRSs upon initial application. The Group expects that the adoption of the new and revised HKFRSs will have no significant financial effect on the Group's results of operations and financial position.

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3. OPERATING SEGMENT INFORMATION

1. Reportable segments
   The Group determines its operating segments based on the reports reviewed by the chief operating decision maker that are used to make strategic decisions. For management purposes, the Group operates in one business unit based on its products, and has one reportable segment which is the manufacture and sale of nutritional supplements and the sale of packaged health food products in the PRC, Australia and New Zealand.
2. Geographical information
   Most of the Group companies are domiciled in the PRC and the majority of the non-current assets are located in the PRC, New Zealand and Australia. The Group's revenue from external customers is primarily derived in the PRC, New Zealand and Australia.
   The following is an analysis of the Group's revenue from its major markets:

	2020	2019
	RMB'000		RMB'000
PRC	190,808	202,653
New Zealand	92,274	107,075
Australia	4,227	6,380
Vietnam	1,334	842
Other countries	7,882	5,663
	296,525	322,613

1. Non-currentassets

	2020	2019
	RMB'000		RMB'000
PRC	161,264	172,191
New Zealand	31,742	43,582
Australia	230	1,064
	193,236	216,837

The non-current assets information above is based on the locations of the assets and excludes goodwill, deferred tax assets and other non-current assets.

1. Information about major customers
   No revenue from transactions with a single external customer amounted to 10% or more of the Group's revenue for the Year (2019: Nil).

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4. REVENUE, OTHER INCOME AND GAINS

Revenue represents the net invoiced value of goods sold, after allowances for returns and trade discounts, and the value of services rendered during the Year.

An analysis of revenue, other income and gains is as follows:

	2020	2019
	RMB'000		RMB'000
Type of goods or services
Sale of goods	296,456	322,454
Rendering of services	69	159
Total revenue from contracts with customers	296,525	322,613
Timing of revenue recognition
Goods or services transferred at a point in time	296,525	322,613
Total revenue from contracts with customers	296,525	322,613

The following table shows the amounts of revenue recognised in the current reporting period that were included in the contract liabilities at the beginning of the reporting period and recognised from performance obligations satisfied in previous periods:

	2020	2019
	RMB'000		RMB'000
Revenue recognised that was included in contract liabilities
at the beginning of the reporting period:
Sale of goods	7,386	7,957
	2020	2019
	RMB'000		RMB'000
Other income and gains
Government grants*	8,302	3,333
Reversal of provision of trade receivables	1,537	663
Rental income	1,071	64
Bank interest income	689	2,895
Fair value gains on investment properties	679		-
Foreign exchange differences, net	440	1,539
Others	17	179
	12,735	8,673

• Various government grants have been received for the Group's contribution to the development of the local economy. There are no unfulfilled conditions or contingencies relating to these grants.

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5. LOSS BEFORE TAX

The Group's loss before tax is arrived at after charging/(crediting):

			2020		2019
		Note	RMB'000	RMB'000
Cost of inventories sold		119,269		162,481
Depreciation of property, plant and equipment		13,214		12,841
Depreciation of right-of-use assets		5,908		6,737
Lease payments not included in the measurement
	of lease liabilities		650		5,368
Amortisation of intangible assets*		2,806		3,667
Auditor's remuneration		2,380		2,580
Research and development expenses		5,176		3,538
Changes in fair value of investment properties		(679)	-
Employment benefit expense (excluding directors',
supervisors' and chief executive's remuneration):
	Wages and salaries		63,029		71,672
	Pension scheme contributions		2,128		4,282
	Other benefits		3,481		6,432
Foreign exchange differences, net		(440)	(1,539)
Impairment loss of goodwill**	9	8,993		34,798
Impairment loss of other intangible assets**		2,738		36,066
Reversal of provision of trade receivables		(1,537)	(663)
Write-down of inventories to net realisable value***		6,552		3,294
Bank interest income		(689)	(2,895)
Government grants		(8,302)	(3,333)
Loss on disposal of items of property, plant and equipment		3,888		49

• The amortisation of intangible assets for the year is included in "Selling and distribution expenses" and "Administrative expenses" in the consolidated statement of profit or loss and other comprehensive income.

• The impairment of goodwill and other intangible assets is included in "Other expenses" in the consolidated statement of profit or loss and other comprehensive income.
• The write-down of inventories to net realisable value for the year is included in "Cost of sales" in the consolidated statement of profit or loss and other comprehensive income.

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6. INCOME TAX EXPENSE

The amounts of income tax expense in the consolidated statement of profit or loss and other comprehensive income represent:

		2020	2019
		RMB'000		RMB'000
Current
	- PRC	23	998
	- New Zealand	55	175
Overprovision in prior years	-	(941)
		78	232
Deferred	5,365	12,872
Total tax expense for the year	5,443	13,104

One of the Group's subsidiaries obtained the Certificate of High and New Technology Enterprise in 2019 and was approved by the tax authorities to enjoy the preferential tax rate of 15%. Except for the aforementioned subsidiary, the income tax of the Company and its subsidiaries established in the PRC are subject to the statutory rate of 25% of the assessable profits as determined in accordance with the relevant income tax rules and regulations of the PRC. New Zealand Income tax is calculated at 28% of the assessable profits of the subsidiaries operating in New Zealand. Australia Income tax is calculated at 30% of the assessable profits of the subsidiary operating in Australia.

7. DIVIDENDS

2020 2019

RMB'000 RMB'000

Dividends approved and paid	-		-

The Board has resolved not to declare any final dividend for the year ended 31 December 2020 (2019: Nil).

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8. LOSS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE PARENT

The calculation of the basic loss per share amount is based on the loss for the Year attributable to ordinary equity holders of the parent, and the weighted average number of ordinary shares of 946,298,370 (2019: 946,298,370) in issue during the year.

The Group had no potentially dilutive ordinary shares in issue during the years ended 31 December 2020 and 2019.

The calculation of basic loss per share is based on:

	2020		2019
	RMB'000	RMB'000
Loss
Loss attributable to ordinary equity holders of the	(49,605)
parent used in the basic loss per share calculation	(194,658)
	2020		2019
Shares
Weighted average number of ordinary shares for the	946,298,370
purpose of the basic loss per share calculation		946,298,370

9. GOODWILL

		2020		2019
		RMB'000	RMB'000
At 1 January	148,719
	Cost		147,715
	Accumulated impairment	(105,306)	(70,446)
Cost at 1 January, net of accumulated impairment	43,413		77,269
Impairment during the year	(8,993)	(34,798)
Exchange realignment	71		942
Cost at 31 December, net of accumulated impairment	34,491		43,413
Cost at 31 December
148,820
Cost		148,719
Accumulated impairment	(114,329)	(105,306)
Net carrying amount	34,491		43,413
10. INVENTORIES
		2020		2019
		RMB'000	RMB'000
Raw materials	23,518		19,924
Work-in-progress	1,432		2,231
Finished goods	57,557		62,643
Goods merchandise	638		4,953
		83,145		89,751

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11. TRADE RECEIVABLES
	2020		2019
	RMB'000	RMB'000
Trade receivables	35,539		48,724
Impairment	(2,499)	(4,324)
	33,040		44,400

In general, the entities in the Group have no credit period granted to the retail customers, and invoices would be due once they have been issued. The credit period offered by the Group to its distributors is generally 30 to 90 days, and the credit term granted to TV shopping platforms is 30 days. Overdue balances are reviewed regularly by senior management. In view of the aforementioned and the fact that the Group's trade receivables relate to a large number of diversified customers, there is no significant concentration of credit risk. The Group does not hold any collateral or other credit enhancements over its trade receivable balances. Trade receivables are non-interest-bearing.

An ageing analysis of trade receivables as at the end of the reporting period, based on the invoice date and net of loss allowance, is as follows:

	2020	2019
	RMB'000		RMB'000
Within 1 month	20,883	17,106
Over 1 month but within 3 months	9,480	15,293
Over 3 months but within 1 year	1,941	11,444
Over 1 year	736	557
	33,040	44,400

12. TRADE PAYABLES

An ageing analysis of the trade payables as at the end of the reporting period, based on the invoice date, is as follows:

	2020	2019
	RMB'000		RMB'000
Within 1 month	7,103	4,487
Over 1 month but within 3 months	6,109	4,760
Over 3 months but within 1 year	2,223	2,477
Over 1 year	750	1,771
	16,185	13,495

The trade payables are non-interest-bearing and the credit terms are normally between 30 and 90 days.

- 12 -

MANAGEMENT DISCUSSION AND ANALYSIS

Business Review

In 2020, the Group continued to implement its established development strategy and focused on the Good Health brand, vigorously enhanced the growth of the maternity and child series products under the Good Health brand in the PRC's market, continued to diversify its various sales channels including distributors and e-commerce platforms, and strengthened the marketing of the Good Health brand series products. Because of the decrease of sales in TV shopping platforms, the Group recorded revenue for the Year of approximately RMB296.5 million, representing a decrease of approximately 8.1% as compared to approximately RMB322.6 million in 2019. As the Group's strategic adjustments have achieved initial results in 2020, the Group recorded a loss of approximately RMB49.6 million for the Year, representing a significant decrease of approximately 74.5% as compared to a loss of approximately RMB194.7 million in 2019.

During the Year, the Group continued to adopt the strategies of focusing on the Good Health brand and sales promotion through distributors and e-commerce channels, so as to achieve increasingly higher brand recognition of Good Health brand in the target markets. The Group carried out continuous brand building and promotion mainly through combination of distributors, TV shopping platforms and travel channels, and at the same time by flagship stores on domestic major e-commerce platforms.

During the Year, in order to enhance the market competitiveness of its products and meet the evolving consumer demands, the Group has adopted a market-oriented strategy for research and product development to further strengthen the development of new products. During the Year, the Group has launched a total of 35 new products, including 3 Zhongsheng series products, 7 Hejian series products, 20 Good Health series products and 5 Living Nature series products. The new products mainly comprise children's growth formula goat milk powder, lactase modified milk powder, calcium iron zinc nutrition package, fish collagen peptide solid beverage and olive leaf capsules.

For the PRC's market, the Group has made great effort to develop domestic distribution network and e-commerce platforms during the Year. In terms of e-commerce platforms, the Group continued to cooperate with e-commerce platforms such as Tmall International, JD.com, suning.com, xiaohongshu.com and Health Post.

The Group's overseas diversified sales platforms mainly include international distribution network broadly distributed in countries including the United Kingdom, Germany, Singapore, Vietnam and Thailand, and local large chain pharmacies, health goods supermarkets and tourist souvenir shops in New Zealand and Australia.

- 13 -

FINANCIAL REVIEW

Results

The revenue of the Group for the Year was approximately RMB296.5 million, representing a decrease of approximately 8.1% from approximately RMB322.6 million in 2019. The Group recorded a loss of approximately RMB49.6 million for the Year, as compared to a loss of approximately RMB194.7 million in 2019, representing a decrease of approximately 74.5%. The Company's loss per share was approximately RMB5.24 cents (2019: loss per share of approximately RMB20.57 cents) based on the weighted average number of 946,298,370 (2019: 946,298,370) ordinary shares of the Company in issue for the Year.

Revenue

The revenue of the Group decreased by approximately 8.1% from approximately RMB322.6 million in 2019 to approximately RMB296.5 million for the Year. As of the end of 2020, as a result of the change of sales strategy and the Group reduced its contributions in package fee for sales through TV shopping platforms, the sales of TV shopping channel decreased by 29.4% from approximately RMB95.0 million in 2019 to approximately RMB67.1 million for the Year; and the revenue of online call centres decreased by approximately 20.9% from approximately RMB34.0 million in 2019 to approximately RMB26.9 million for the Year as the Group changed its sales strategy and focused more on distributors and e-commence platforms.

Gross profit

The Group's gross profit increased by approximately 8.9% from approximately RMB156.8 million in 2019 to approximately RMB170.7 million for the Year. The Group's average gross profit margin increased from approximately 48.6% in 2019 to approximately 57.6% for the Year. Such increase in gross profit margin was mainly due to the increase in revenue from sale of the maternity and child series products under the Good Health brand (with relatively higher gross profit margin) through the domestic distribution channels. Accordingly, the overall gross profit margin had been improved during the Year.

Other income and gains

The Group's other income and gains mainly comprised government grants, rental income and reversal of provision of trade receivables, which increased from approximately RMB8.7 million in 2019 to approximately RMB12.7 million for the Year.

- 14 -

Selling and distribution expenses

The Group's selling and distribution expenses decreased by approximately 28.3% from approximately RMB185.4 million in 2019 to approximately RMB132.9 million for the Year, representing approximately 57.5% and 44.8% of the Group's revenue in 2019 and for the Year respectively. Such decrease was mainly due to the decrease in promotion expenses for TV shopping channel for the Year; as the Group reduced advertising and promotion expenses for Living Nature brand in response to the anticipated shadowing effect on advertising caused by COVID-19. In accordance with the strategic deployment of the Group, the Group closed down its domestic outlets whose performance was below expectations and cut down the number of personnel in the online call centres, thus reduced the staff remuneration expenses.

Administrative expenses

The Group's administrative expenses decreased by approximately 8.9% from approximately RMB85.2 million in 2019 to approximately RMB77.6 million for the Year, representing approximately 26.4% and 26.2% of the Group's revenue in 2019 and for the Year respectively. Such decrease was mainly due to the Group closed down its old domestic offline subsidiaries and cut down the number of personnel in the online call centres, thus reduced the administrative staff remuneration expenses.

Impairment of goodwill

The Group recognised an impairment of goodwill of approximately RMB9.0 million for the Year.

Additional information in relation to the basis of the determination of the impairment is set out below:

Impairment for goodwill of Living Nature

The recoverable amount of each cash-generating unit ("CGU") has been determined based on a value-in-use calculation using cash flow projections based on financial budgets covering a five-year period approved by senior management of the Group. Cash flows beyond the forecast period are extrapolated using the estimated growth rates stated below.

- 15 -

The key assumptions, long-term growth rates and discount rates used in the value-in-use calculation for each of the CGUs with significant amount of goodwill for the years ended 31 December 2020 and 31 December 2019 are as follows:

Living Nature

for the year ended

31 December

2020 2019

Sales annual growth rate (%)	2%-34%	2%-25%
Gross margin (% of revenue)	62%-64%	68%-69%
Long-term growth rate	2%	2%
Pre-tax discount rate(%)	21.2%	21.6%

The key assumptions on which management of the Group has based its cash flow projections to undertake impairment testing of goodwill are as follows:

1. Budgeted gross margins
   The basis used to determine the value assigned to the budgeted gross margins is the average gross margins achieved in the year immediately before the budget year, increased for expected efficiency improvements, and expected market development.
2. Discount rates
   The discount rates used are before tax and reflect specific risks relating to the relevant units.
3. Long-termgrowth rate
   The long-term growth rates used are based on common industry practice.

The values assigned to the key assumptions on market development of the CGUs, the discount rates and long-term growth rate are consistent with external information sources.

During the Year, the Group recognised an impairment loss of approximately RMB9.0 million in relation to the goodwill of Living Nature CGU (2019: approximately RMB34.8 million in relation to the goodwill of the Hejian CGU), arising from the acquisition of Living Nature, the principal activity of which is the manufacture and sale of Living Nature series cosmetics and skin care products. Due to the effect of COVID-19, the operating performances and the growth rate of the Living Nature CGU were below expectations which resulted in an operating loss.

Accordingly, management of the Group provided for the impairment in the year ended 31 December 2020.

- 16 -

Income tax expense

The Group recorded an income tax expense of approximately RMB5.4 million for the Year and an income tax expense of approximately RMB13.1 million in 2019, primarily resulting from the derecognition of deferred income tax assets recognised in previous years in the Year.

The Group's actual tax rates in 2019 and for the Year were approximately 7.2% and 12.3%, respectively.

Loss for the Year

As a result of the foregoing, compared with a loss of approximately RMB194.7 million for the year ended 31 December 2019, the Group recorded a loss of approximately RMB49.6 million for the Year, representing a significant decrease of approximately 74.5%.

The loss for the Year was mainly due to the following factors:

1. The impact of the outbreak of COVID-19 and the Group's reduction in package fee of TV shopping platforms and the resource input of online call centres resulted in the decrease in sales revenue from TV shopping channels and online call centres.
2. Although the selling and distribution expenses and administrative expenses for the Year decreased by approximately 22.2% to approximately RMB60.2 million as compared with 2019, expenses as a percentage of revenue were still relatively high.
3. At the end of the Year, the Group re-assessed the performance of Living Nature for the Year and in the coming years. As the performance of Living Nature was below the Group's expectation, the Group recognised provision for impairment loss of Living Nature CGU.

LIQUIDITY AND CAPITAL RESOURCES

Cash flow

During the Year, the Group's cash and cash equivalents decreased by approximately RMB30.4 million, which mainly comprised the net cash inflow from operating activities with the amount of RMB16.4 million, net cash outflow used in investing activities with the amount of approximately RMB12.5 million, net cash outflow used in financing activities with the amount of approximately RMB34.1 million and exchange loss of approximately RMB0.2 million.

- 17 -

Inventories

The Group's inventories amounted to approximately RMB83.1 million as at 31 December 2020 (as at 31 December 2019: approximately RMB89.8 million). The Group's inventories include raw materials, work-in-progress, finished goods and goods merchandise. The balance of inventories decreased by approximately 7.5% compared with that as at 31 December 2019. The inventory turnover period was approximately 251 days for the Year (2019: 221 days), increasing by 30 days compared with that of 2019, which was mainly due to the fall of the sales of Living Nature series products as a result of COVID-19 and thus increase in inventory level.

Trade receivables

The Group's trade receivables amounted to approximately RMB33.0 million as at 31 December 2020 (as at 31 December 2019: approximately RMB44.4 million), representing a decrease of approximately RMB11.4 million. The decrease of trade receivables was mainly due to (i) the decrease of sales through TV shopping channel; and (ii) the increase in collection of trade receivables attributable to the enhance in control over trade receivables from distributors by Good Health Products Limited.

Trade payables

The Group's trade payables amounted to approximately RMB16.2 million as at 31 December 2020 (as at 31 December 2019: approximately RMB13.5 million), representing an increase of approximately RMB2.7 million, mainly because the Group fully utilised the credit terms granted by the suppliers this year.

Foreign exchange exposure

As the Group conducts in-bound transactions principally in RMB and outbound transactions principally in New Zealand dollar and Australian dollar, the Group had not utilised any financial instruments for hedging purposes as at 31 December 2020.

Borrowings and pledge of assets

As at 31 December 2020, the Group did not have any outstanding borrowings or pledge of assets.

Capital expenditure

During the Year, the Group invested approximately RMB2.6 million (2019: approximately RMB25.7 million) for the establishment of research & development centre, plant and equipment.

Capital commitments and contingent liabilities

As at 31 December 2020, the Group did not have material capital commitments (as at 31 December 2019: Nil).

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SUBSEQUENT IMPORTANT EVENT AFTER THE YEAR AND SUPPLEMENTAL INFORMATION IN RELATION TO DISCLOSEABLE TRANSACTION - DISPOSAL OF SUBSIDIARY ("DISPOSAL")

In March 2021, the Company and Zhongke Health Industry Group Co., Limited* (中科健康產 業集團股份有限公司) ("Zhongke") entered into an equity purchase agreement (the "Agreement"), pursuant to which Zhongke has conditionally agreed to acquire 100% equity interest in Shanghai Hejian Nutritional Food Product Company Limited* (上海禾建營養食品 有限公司) ("Hejian"), a company established in the PRC with limited liability and was a wholly-owned subsidiary of the Company immediately before completion of such Disposal ("Completion"), at a consideration of RMB10.0 million to be settled in cash. Please refer to the announcement ("Announcement") of the Company dated 18 March 2021 for further details.

The Board would like to supplement the following additional information to the Announcement. Unless otherwise specified, capitalised terms used herein shall have the same meanings as those defined in the Announcement.

Basis of determination of the consideration

The consideration was determined after arm's length negotiations between the parties to the Agreement with reference to (i) the net asset value as stated in the management accounts of Hejian as at 28 February 2021; and (ii) the expected future benefits to be derived by Zhongke from Hejian's intangible assets, including the online sale licences owned by Hejian and its client network.

Having considered the above factors, the Board (including the independent non-executive Directors) considers that the consideration, which was arrived at after arm's length negotiations, is fair and reasonable and is in the interests of the Company and the shareholders as a whole.

Information on Hejian

Hejian is a limited company established in the PRC and principally engaged in retailing of health food products, mainly the Hejian brand products, via online call centre. As at the date of this announcement and immediately before Completion, Hejian was wholly-owned by the Company.

The management financial information of Hejian for each of the years ended 31 December

2020 and 2019 is as follows:

For the year ended

31 December

2020 2019

RMB'000 RMB'000

Revenue	27,551	35,491
Loss before tax	(9,464)	(82,880)
Loss for the year	(13,558)	(71,065)

• For identification purpose only

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Based on the management accounts of Hejian for the two months ended 28 February 2021, the net assets value of Hejian including the intangible assets arising from the acquisition of Hejian was approximately RMB6.0 million as at 28 February 2021.

Use of proceeds

There will be net proceeds of approximately RMB10.0 million from the Disposal. The Company intends such proceeds to be used for general working capital of the Group.

Financial effect of the Disposal

Upon Completion, Hejian will cease to be a subsidiary of the Company. As such, the financial results of Hejian will no longer be consolidated into those of the Group.

Based on (i) the cash consideration of the Disposal of RMB10.0 million; and (ii) the net asset value of Hejian as at 28 February 2021 of approximately RMB6.0 million; the estimated gain on the Disposal is approximately RMB4.0 million. Shareholders should note that the financial effect set out in the above is for illustrative purpose only. The actual amount of gain or loss as a result of the Disposal to be recorded by the Group will be subject to the review and final audit by the auditor of the Company.

OUTLOOK

The year of 2020 was meant to be extraordinary. In light of the outbreak of COVID-19 at the beginning of the Year, the global economy, the living of the public and ordinary business activities of enterprises have been adversely affected. Facing the unexpected situations, the Group actively responded and maintained ongoing operation of its business and minimised the impact of COVID-19, while the safety and health of the Group's employees is the top priority of the Group. The Group's strategic plan has been focusing on Good Health brand and vigorously developing sales channels for domestic distributors and e-commerce in the recent years, with preliminary results achieved in early 2020. COVID-19 aroused public attention to the health of themselves and their family members, thereby increasing the sales revenue generated from immune products under Good Health brand and maternity and child products.

It was no doubt that the huge market for dietary supplements in PRC, people's pursuit of health and ongoing high-standard supervision over such industry by the PRC government created a good external environment for the development of the Group. In 2021, the Group will continue to focus resources on the development of Good Health brand, distributors and e-commerce channels. The Group will accelerate the innovation in the launch and marketing promotion of new products of the maternity and child series under Good Health brand, optimise its supply chain management and improve operational efficiency, so as to enhance its overall profitability.

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HUMAN RESOURCES MANAGEMENT

Quality and dedicated staff is indispensable asset to the Group's success in the competitive market. By providing comprehensive training and corporate culture education periodically, the employees are able to obtain on-going training and development in the nutritional supplements industry. Furthermore, the Group offers competitive remuneration packages commensurated with industry practice and provides various fringe benefits to all employees. The Group reviews its human resources and remuneration policies periodically to ensure they are in line with market practice and regulatory requirements. As at 31 December 2020, the Group employed a work force of 449 employees. The total salaries and related costs for the Year amounted to approximately RMB72.8 million (as at 31 December 2019: approximately RMB86.0 million).

PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES

Neither the Company nor any of its subsidiaries has purchased, redeemed or sold any of the Company's listed securities during the Year.

MODEL CODE FOR SECURITIES TRANSACTIONS

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code") as set out in Appendix 10 to the Rules Governing the Listing of Securities (the "Listing Rules") on The Stock Exchange of Hong Kong Limited (the "Stock Exchange") as the code of conduct for the Directors in their dealings in the Company's securities.

The Company has made specific enquiry with the Directors and all the Directors confirmed that they have complied with the Model Code during the Year.

CODE OF CORPORATE GOVERNANCE PRACTICE

In the opinion of the Directors, the Company has complied with the code provisions of the Corporate Governance Code and Corporate Governance Report (the "CG Code") as set out in Appendix 14 to the Listing Rules during the Year.

AUDIT COMMITTEE

The audit committee of the Company (the "Audit Committee") has been established in compliance with Rules 3.21 and 3.22 of the Listing Rules and with written terms of reference in compliance with the CG Code. The Audit Committee currently comprises three independent non-executive Directors, namely Mr. Zhang Jitong, Ms. Cai Tianchen and Mr. Wang Wei. Ms. Cai Tianchen serves as the chairman of the Audit Committee. The Audit Committee is primarily responsible for the review and supervision of the financial reporting process, and risk management and internal control system. It has reviewed the accounting principles and practices adopted by the Company and the audited final results of the Group for the Year.

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SCOPE OF WORK OF ERNST & YOUNG

The figures in respect of the Group's consolidated statement of profit or loss and other comprehensive income, consolidated statement of financial position and the related notes thereto for the Year as set out in this announcement have been agreed by the Company's auditor, Ernst & Young to the amounts set out in the Group's draft consolidated financial statements for the Year. The work performed by Ernst & Young in this respect did not constitute an assurance engagement in accordance with Hong Kong Standards on Auditing, Hong Kong Standards on Review Engagements or Hong Kong Standards on Assurance Engagements issued by the HKICPA and consequently no assurance has been expressed by Ernst & Young on this announcement.

FINAL DIVIDEND AND SPECIAL DIVIDEND

The Board does not recommend the payment of any final dividend for the Year or any special dividend.

ANNUAL GENERAL MEETING

The annual general meeting of the Company (the "AGM") will be convened on Friday, 11 June 2021. A notice convening the AGM will be published and despatched to the shareholders of the Company in due course.

CLOSURE OF REGISTER OF MEMBERS

For the purpose of determining shareholders who are entitled to attend and vote at the AGM, the register of members of the Company will be closed from Wednesday, 12 May 2021 to Friday, 11 June 2021, both days inclusive, during which no transfer of shares of the Company will be registered. In order to qualify for attending and voting at the AGM or any adjournment thereof, shareholders of the Company's H shares must lodge their share certificates and all the relevant instruments of transfer for registration with the Company's H share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong, by no later than 4:30 p.m. on Tuesday, 11 May 2021.

PUBLICATION OF FINAL RESULTS ANNOUNCEMENT AND ANNUAL REPORT

This final results announcement is published on the website of the Stock Exchange at www.hkexnews.hk and the Company's website at www.zs-united.com. The annual report of the Company for the Year will be despatched to the shareholders of the Company and published on the aforesaid websites in due course.

By order of the Board

Nanjing Sinolife United Company Limited*

Gui Pinghu

Chairman

Nanjing, People's Republic of China, 30 March 2021

As of the date of this announcement, the executive Directors are Mr. Gui Pinghu, Ms. Zhang Yuan and Ms. Zhu Feifei; and the independent non-executive Directors are Mr. Zhang Jitong, Ms. Cai Tianchen and Mr. Wang Wei.

• For identification purpose only

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