Sanai Health Industry : RESULTS OF INTERNAL CONTROL REVIEW

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.

Sanai Health Industry Group Company Limited

三 愛 健 康 產 業 集 團 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1889)

RESULTS OF INTERNAL CONTROL REVIEW

Reference is made to the regulatory news release published by The Stock Exchange of Hong Kong Limited (the ''Stock Exchange'') on 3 September 2020 (the ''News Release'') and the announcement dated 17 September 2020, 22 December 2020 and 10 February 2021 of Sanai Health Industry Group Company Limited (the ''Company'', and together with its subsidiaries, the ''Group'') in relation to the appointment of internal control adviser, results of internal control review and completion of director training (the ''Announcements'').

INTERNAL CONTROL REVIEW REPORT

As part of the remedial measures required by the Stock Exchange set out in the News Release to improve the internal control system, the Company has appointed Zhonghui Anda Risk Services Limited as the independent professional adviser of the Company on 17 September 2020 (the ''Adviser'') to conduct a thorough review of and make recommendations to improve the Company's internal control system (the ''Internal Control Review''). The purpose of the Internal Control Review is to review and improve the internal control system designed and implemented by the Company's management to ensure compliance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ''Listing Rules'').

On 22 December 2020, the Company provided the Stock Exchange with a written report of the Internal Control Review with recommendations of the Internal Control Adviser. Draft reports were provided to the Stock Exchange on 23 March 2021, 23 April 2021 and 4 May 2021 respectively. According to the finalized version of the draft report, the outstanding internal control issues, proposed date and implementation to be adopted by the Company are summarized as follows:

- 1 -

1. Issue of annual reports and results announcements Internal control deficiencies
   As at the year ended 31 December 2019, the Group fails to meet the requirements of Rules 13.49(1) and 13.46(2)(a) of the Listing Rules that the annual results announcement and annual report for the year 2019 should be published within the specified period after the end of the year 2019.
   As at the period ended 30 June 2020, the Group fails to meet the requirements of Rules 13.49(6) and 13.48(1) of the Listing Rules that the interim results announcement and interim report for the year 2020 should be published within the specified period after the end of the period 30 June 2020.
   Remedial actions to be taken
   Following the change of auditors with effect from 23 February 2021, the newly appointed auditors is currently conducting the audit process for the Group's consolidated financial statements for the year ended 31 December 2019 and the period ended 30 June 2020. Sufficient time is required for the new auditors to complete the audit work. The Company and the new auditors proposed the publication of annual results announcement and annual reports for the year ended 31 December 2019 and the publication of interim results announcement and interim report for the period ended 30 June 2020 on or before 30 June 2021.
2. Insurance for valuable fixed assets Internal control deficiencies
   No insurance was purchased for the valuable fixed assets by several subsidiaries of the Company in the PRC.
   Remedial actions to be taken
   The Company is now obtaining the insurance quotation from insurance companies and propose to be obtained on or before 14 May 2021, and will discuss and consider whether it is cost effective to buy the relevant insurance.
3. Product/services compensation liability and relevant insurance management Internal control deficiencies
   No medical product/services compensation liability insurance was purchased by several subsidiaries of the Company that the principal activities including production, development and sales of pharmaceutical products and provision of genetic testing and molecular diagnostic services.

- 2 -

Remedial actions to be taken

The Company is now obtaining the insurance quotation from insurance companies and proposed to be obtained on or before 14 May 2021, and will discuss and consider whether it is cost effective to buy the relevant insurance.

1. Social Insurance Fund and Housing Provident Fund Internal control deficiencies
   Two subsidiaries of the Company in the PRC did not follow the calculation basis that average monthly actual wages of the previous year should be adopted to calculate and pay the social and housing provident fund fees in accordance with the ''Social Security Law of the People's Republic of China'' and the ''Management Regulations of the People's Republic of China on Housing Provident Fund''.
   Remedial actions to be taken
   The management of the Company are aware of the laws and regulations now and will review regularly the amendments to the relevant laws and regulations. The management will follow the calculation basis required to pay the social and housing provident fund fees from June 2021.
2. Financial analysis and variance analysis Internal control deficiencies
   No financial analysis and variance analysis was prepared so that it is difficult for the Board of Directors to compare with the annual financial budget and analyze the financial performance of the subsidiaries.
   Remedial actions to be taken

The financial budget of the Company for the year 2021 was already prepared and provided for the Advisor's review. The quarterly financial analysis and variance analysis for the first quarter of the year 2021 is now under process and will complete on or before 28 May 2021.

The Company is implementing those outstanding internal control procedures and policies to ensure that the Company's internal control complies with the Listing Rules.

The Company will provide the Stock Exchange with the Advisor's written report on the Company's full implementation of the Advisor's recommendation by 5 July 2021.

- 3 -

CONTINUED SUSPENSION OF TRADING

At the request of the Company, trading in the shares of the Company on the Stock Exchange has been suspended with effect from 9:00 a.m. on Friday, 24 January 2020 and will remain suspended until the Company fulfills the Resumption Conditions.

Shareholders and potential investors of the Company are advised to exercise caution when dealing in the shares of the Company.

By order of the Board

Sanai Health Industry Group Company Limited

Chen Chengqing

Chairman

Hong Kong, 11 May 2021

As at the date of this announcement, the Board comprises five executive directors, namely, Mr. Chen Chengqing (Chairman), Mr. Gao Borui, Mr. Yuan Chaoyang, Professor Zhang Rongqing and Mr. She Hao, one non-executive director, namely, Mr. Xiu Yuan and two independent non-executive directors, namely, Professor Zhu Yi Zhun and Mr. Khor Khie Liem, Alex.

- 4 -