HUTCHMED (China) Limited Condensed Consolidated Balance Sheets as of

HUTCHMED (China) Limited

HUTCHMED (China) Limited

Condensed Consolidated Balance Sheets

(in US$'000, except share data)

The accompanying notes are an integral part of these interim unaudited condensed

consolidated financial statements.

HUTCHMED (China) Limited

Condensed Consolidated Statements of Operations

(Unaudited, in US$'000, except share and per share data)

The accompanying notes are an integral part of these interim unaudited condensed

consolidated financial statements.

HUTCHMED (China) Limited

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited, in US$'000)

The accompanying notes are an integral part of these interim unaudited condensed

consolidated financial statements.

HUTCHMED (China) Limited

Condensed Consolidated Statements of Changes in Shareholders' Equity

(Unaudited, in US$'000, except share data in '000)

The accompanying notes are an integral part of these interim unaudited condensed

consolidated financial statements.

HUTCHMED (China) Limited

Condensed Consolidated Statements of Cash Flows

(Unaudited, in US$'000)

The accompanying notes are an integral part of these interim unaudited condensed

consolidated financial statements.

NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Nature of Business

HUTCHMED (China) Limited (formerly Hutchison China MediTech Limited) (the "Company") and its subsidiaries (together the "Group") are principally engaged in researching, developing, manufacturing and marketing pharmaceutical products. The Group and its equity investees have research and development facilities and manufacturing plants in the People's Republic of China (the "PRC") and sell their products mainly in the PRC, including Hong Kong. In addition, the Group has established international operations in the United States of America (the "U.S.") and Europe.

As at March 31, 2021, the Group had accumulated losses of US$456,742,000, primarily due to its spending in drug research and development activities. The Group regularly monitors current and expected liquidity requirements to ensure that it maintains sufficient cash balances and adequate credit facilities to meet its liquidity requirements in the short and long term. As at March 31, 2021, the Group had cash and cash equivalents of US$346,133,000, short-term investments of US$49,939,000 and unutilized bank borrowing facilities of US$69,359,000. Short-term investments comprised of bank deposits maturing over three months. The Group's operating plan includes the continued receipt of dividends from certain of its equity investees. Dividends received from equity investees for the three months ended March 31, 2020 and 2021 were US$28,270,000 and US$30,513,000 respectively.

Based on the Group's operating plan, the existing cash and cash equivalents, short-term investments and unutilized bank borrowing facilities are considered to be sufficient to meet the cash requirements to fund planned operations and other commitments for at least the next twelve months (the look-forward period used), and it is appropriate for the Group to prepare the unaudited condensed consolidated financial statements on a going concern basis.

2. Summary of Significant Accounting Policies

Principles of Consolidation and Basis of Presentation

The interim unaudited condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America ("U.S. GAAP") for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The interim unaudited condensed consolidated financial statements have been prepared on the same basis as the annual audited consolidated financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments necessary for the fair statement of results for the periods presented, have been included. The results of operations of any interim period are not necessarily indicative of the results of operations for the full year or any other interim period.

The comparative year-end condensed balance sheet data was derived from the annual audited consolidated financial statements, but is condensed to the same degree as the interim condensed balance sheet data.

The interim unaudited condensed consolidated financial statements and related disclosures have been prepared with the presumption that users have read or have access to the annual audited consolidated financial statements for the preceding fiscal year.

The preparation of interim unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the interim unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

3. Cash and Cash Equivalents

The weighted average effective interest rate on bank deposits for the year ended December 31, 2020 and the three months ended March 31, 2021 was 1.12% per annum and 0.78% per annum respectively.

Certain cash and bank balances denominated in RMB, US$ and were deposited with banks in the PRC. The conversion of these balances into foreign currencies is subject to the rules and regulations of foreign exchange control promulgated by the PRC government.

4. Short-term Investments

Note: The weighted average effective interest rate on bank deposits for the year ended December 31, 2020 and the three months ended March 31, 2021 was 1.06% per annum and 0.31% per annum respectively (with maturities ranging from 91 to 180 days).

5. Accounts Receivable - Third Parties

Accounts receivable from contracts with customers, net of allowance for credit losses, consisted of the following:

Substantially all accounts receivable are denominated in RMB, US$ and HK$ and are due within one year from the end of the reporting periods. The carrying values of accounts receivable approximate their fair values due to their short-term maturities.

Movements on the allowance for credit losses:

Note: The expected credit loss rate for the three months ended March 31, 2020 and 2021 was approximately 0.2% and 0.3% respectively.

An aging analysis based on the relevant invoice dates is as follows:

Inventories, net of provision for excess and obsolete inventories, consisted of the following:

Leases consisted of the following:

Note: Includes US$2.0 million and US$1.8 million right-of-use asset as at December 31, 2020 and March 31, 2021 respectively, for corporate offices in Hong Kong that are leased through May 2024 in which the contract has a termination option with 3-month advance notice. The termination option was not recognized as part of the right-of-use asset and lease liability as it was uncertain that the Group will exercise such option.

Lease activities are summarized as follows:

Lease contracts are typically within a period of 1 to 8 years. The weighted average remaining lease term and the weighted average discount rate as at March 31, 2020 was 2.76 years and 4.09% respectively. The weighted average remaining lease term and the weighted average discount rate as at March 31, 2021 was 3.21 years and 4.05% respectively.

Future lease payments are as follows:

Note: Excludes future lease payments on a lease not commenced as at March 31, 2021 in the aggregate amount of US$2.8 million.

8. Investments in Equity Investees

Investments in equity investees consisted of the following:

Note: In March 2021, the Group entered into a sale and purchase agreement (the "SPA") with a third party (the "Buyer") to sell its entire investment in HBYS with closing subject to PRC regulatory review. As part of the divestment, the Group is entitled to (a) cash consideration of US$159.1 million, which includes US$15.9 million deposit collected upon the signing of the SPA and the remainder due upon closing and (b) US$52.3 million related to distributions of prior year undistributed profits and a land bonus payment. The amounts to be received under (a) and (b) aggregate to US$211.4 million of which the amounts attributable to the Company are US$169.1 million.

The equity investees are private companies and there are no quoted market prices available for their shares.

Summarized financial information for the significant equity investees HBYS and SHPL, both under Other Ventures segment, is as follows:

(i) Summarized balance sheets

(ii) Summarized statements of operations

Note: The main entities within each of the HBYS and SHPL groups have been granted the High and New Technology Enterprise ("HNTE") status (the latest renewal of this status covers the years from 2020 to 2022). These entities were eligible to use a preferential income tax rate of 15% for the three months ended March 31, 2021 on this basis.

For the three months ended March 31, 2020 and 2021, other equity investees had net income of approximately US$70,000 and US$62,000 respectively.

(iii) Reconciliation of summarized financial information

Reconciliation of the summarized financial information presented to the carrying amount of investments in equity investees is as follows:

The equity investees had the following capital commitments:

Substantially all accounts payable are denominated in RMB and US$ and due within one year from the end of the reporting period. The carrying values of accounts payable approximate their fair values due to their short-term maturities.

An aging analysis based on the relevant invoice dates is as follows:

10. Other Payables, Accruals and Advance Receipts

Other payables, accruals and advance receipts consisted of the following:

Bank borrowings consisted of the following:

The weighted average interest rate for outstanding bank borrowings for the year ended December 31, 2020 and the three months ended March 31, 2021 was 1.89% per annum and 1.14% per annum respectively. The carrying amounts of the Group's bank borrowings were denominated in HK$.

3-year revolving loan facility and 3-year term loan and revolving loan facilities

In November 2018, the Group through its subsidiary, renewed a 3-year revolving loan facility with a bank in the amount of HK$234,000,000 (US$30,000,000) with an interest rate at the Hong Kong Interbank Offered Rate ("HIBOR") plus 0.85% per annum. This credit facility is guaranteed by the Company. As at December 31, 2020 and March 31, 2021, no amount has been drawn from the revolving loan facility.