R

Arrail Group Limited(Incorporated in the British Virgin Islands with limited liability
and continued in the Cayman Islands)

Stock Code: 6639

2022/23

Environmental, Social and Governance ReportManagement Message

Contents
I.

II.

III.

IV.

ABOUT THIS REPORT

2

Reporting scope2

AND OPERATION COMPLIANCE

Information sources

2(I)

Compliance and risk management

22

Reporting language

2

(II)

Privacy protection and information

23

Preparation reference

3

Report access

3

(III)

ABOUT ARRAIL GROUP

4

(IV)

Supplier management

24

(V)

Practice of integrity

26

(I)

Company profile

4

(II)

Governance structure

5

V.

STRENGTHENING MANAGEMENT

22

securityVI.

Advertising and brand management

24

PROMOTING GREEN OPERATION28

SUSTAINABILITY MANAGEMENT

7(I)

Responding to climate change

28

(I)

Statement of the Board of Directors

7

(II)

Enhancing emissions management

30

(II)

ESG concept and management

8

(III)

Optimizing resource utilization

34

(III)

Stakeholder communication

9

(IV)

Environmental targets

37

(IV)

Materiality analysis

10

IMPROVING MEDICAL SERVICE QUALITY 11

VII

CARING FOR EMPLOYEES AND SOCIETY 40(I)

Protecting employees’ rights and40interests(I)

Improving medical quality standards

11

(II)

Ensuring medical safety

14

(II)

Helping employees grow

42

(III)

Enhancing service quality

15

(III)

Care for physical and mental health

47

(IV)

Responding to patients’ demands

16

(IV)

Building a beautiful homeland

49

(V)

Leading the development of the17

industry

Appendix

54

Index table of the Stock Exchange’s ESG

54

Reporting Guide
Index table of the SASB Standard

62

ARRAIL GROUP LIMITEDESG Report 2023

1

I. About This Report
Arrail Group Limited (hereinafter “the Company”), its subsidiaries and VIE Entities (hereinafter “the Group” or“we”) publish the Environmental, Social and Governance Report (hereinafter “ESG Report” or “this report”)
for the year 2022/2023 to objectively and fairly describe our Environment, Social and Governance (“ESG”)
concept, practices and key achievements. It is advised to read the contents relating to governance together
with the Corporate Governance Report in the Group’s annual report for the year 2022/2023.

REPORTING SCOPE
This report covers the period from April 1, 2022 to March 31, 2023 (hereinafter “the current year”) andmay include matters beyond the period to maintain the continuity of information. During the current year,
our clinics and hospitals offered a diverse range of professional and customized dental services. This reportsummarizes the performance of the Group in respect of corporate social responsibility, covering the above
principal operating activities. Considering the small scale of the denture production factory of the Group,
which accounts for only 2% of the operating revenue, this report covers the Company, its subsidiaries and
VIE Entities except for the denture production factory, and all amounts of currency involved in this report isdenominated in Renminbi (“RMB”).

INFORMATION SOURCES
The information in this report is obtained from the Group’s relevant internal statistical reports, company’s
documents and reports, stakeholder surveys and interviews, etc. Emission and energy indicators are counted
and calculated in accordance with national regulations or international standards.

REPORTING LANGUAGE
This report is published in both Chinese and English. In case of any inconsistency between the two versions,the Chinese version shall prevail.

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ARRAIL GROUP LIMITEDESG Report 2022/23

I. About This Report

PREPARATION REFERENCE
This report is prepared in accordance with the Environmental, Social and Governance Reporting Guide(the “ESG Reporting Guide”) set out in Appendix 27 to the Rules Governing the Listing of Securities (the“Listing Rules”) on the Stock Exchange of Hong Kong Limited (the “Stock Exchange”), and with reference
to the SASB Standards, and discloses content and data relating to ESG issues pursuant to the principles ofmateriality, quantitative, balance and consistency as well as the “comply or explain” provisions in the Guide.
“Materiality”: In preparing this report, the Company has identified key stakeholders and key ESG issues of
their concern, and made targeted disclosure according to the materiality of these issues.
“Quantitative”: In this report, the key performance indicators (KPIs) in respect of environment and social
are shown in the form of quantitative data, and the measurement standards, methods, hypothesis and/or
calculation tools, source of conversion coefficient for the KPIs are explained in their respective places.
“Balance”: This report presents the Group’s ESG performance in an objective and unbiased manner,
avoiding selections, omissions, or presentation formats that may inappropriately influence the decisions or
judgements by the report reader.
“Consistency”: Unless otherwise stated, the KPIs and statistical methods disclosed in this report areconsistent with those in the Environmental, Social and Governance Report for the year 2021/2022 of theGroup.

REPORT ACCESSThis report is available on the website of the HKEX (https://www.hkexnews.hk) and the Investor Relations
page of the Group’s official website (http://arrailgroup.vislan.com). If you have any suggestions or comments
regarding the ESG management of Arrail Group, please contact us by email at ir@arrailgroup.com.

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II. About Arrail Group(I)

COMPANY PROFILE

Since its establishment in 1999, the Group has been offering a diverse range of professional and personalized
dental services spanning general dentistry, orthodontics and implantology. At present, the Group directly
operates 123 dental hospitals and clinics in 15 cities across China, with 1,442 dental chairs and 914 fulltime dentists. We strive to provide one-stop, professional, and high-quality dental services that cover thefull lifecycle of our patients. In addition, we are committed to promoting the “Arrail Way” by following ourstandardized procedures and actively implementing our 5S initiatives, giving each of our patients a healthy
and confident smile. The Group was listed on the main board of the Stock Exchange (Stock Code: 6639) on
March 22, 2022.
We have served patients in more than 9.40 million visits in the past ten years and developed a growing andloyal customer base. Besides, we have been instrumental in raising public and consumer awareness of theimportance of dental care and good oral hygiene in China. We have grown into a leading dental services
group in China, and have established a nationwide footprint. The Group operates both Arrail Dental, a leading
premium dental services brand, and Rytime Dental, a middle-end dental services brand. We have formulated
a dual-brand strategy with our Arrail Dental and Rytime Dental brands to offer clear and distinctive value
propositions to patients of different economic and geographic background.

Arrail Dental
Arrail Dental is a leading premium dental
services brand in China and targets
affluent patients with high purchasing
power and greater lifetime value,
primarily in Tier-1 cities. We operate 52
clinics under the Arrail Dental brand, andmost of the clinics are located at primecommercial locations and Class A officebuildings, known for the excellent qualityof bespoke services.

Rytime Dental
Rytime Dental targets middle-classc o n s u m e r s p r i m a r i l y i n T i e r -1 a n d
key Tier-2 cities across a broader
geographic reach, offering high-quality
dental services at more affordable
prices. We operate 9 hospitals and 62
clinics under the Rytime Dental brand,most of which are located in densely
populated residential areas, attracting
substantial patient flow by offering abroad spectrum of dental specialties.

Since our inception, we have been committed to cultivating a client-centric and service-oriented culture
and incorporate our key values of “integrity, professionalism and being a good person” into our day-to-day
operation, so as to provide “proper treatment” for each of our patients. We firmly believe that our cohesive
corporate culture plays a significant role in ensuring the scalability of our business model and the consistencyof our service quality, and is the pillar of our success. We also believe that our corporate culture enables ourdentists and other staff to collaborate effectively and provide professional service to our patients, and enables
us to strengthen long-term and trusting relationships with our patients, dentists and business partners.

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ARRAIL GROUP LIMITEDESG Report 2022/23

II. About Arrail GroupThe Group is committed to being a responsible corporate citizen, and joining hands with various stakeholders
to build sustainable development pathways. We absorb talents with an open mind, care for our employees,
and pursue the unity of the Group’s development and employees’ self-actualization. We are committed toenvironmental protection and energy conservation to create green and low-carbon workplaces and medical
environment on all fronts. We promote medical technology innovation to lead the industry improvements
through our own development. In addition, with diversified charitable initiatives, we strive to do business forgood and drive the common sustainable development of the whole society and the whole industry with ourown long-term development.

(II)

GOVERNANCE STRUCTURE

The Board of Directors of the Group comprises seven members – four executive directors and three
independent non-executive directors, with different appropriate skills, knowledge and experience. The Grouphas established three committees under the Board pursuant to the laws and regulations of China and theregulations and corporate governance practice requirements under the Hong Kong Listing Rules, namely the
Audit Committee, Remuneration Committee and Nomination Committee.
Name

GenderPosition

Audit

Remuneration

Nomination

Committee

Committee

Committee

–

–

–

–

–

–

–

–

–

–

–

–

√

√

√

√

√

(Chairman)(Chairman)√√

Executive director,
ZOU Qifang

Malechairman of the Board andchief executive officer

Qin Jessie XIN

FemaleExecutive director andchief financial officer
Executive director, chief

ZHANG Jincai

Male

medical officer, andgeneral manager ofhospitals and clinics

ZOU Jianlong
LIU Xiaomei
Michelle

Male
FemaleSUN Jian

Male

ZHANG Bang

Male

Executive director and vicepresident
Independent non-executive
director
Independent non-executive
director
Independent non-executive
director√√(Chairman)

The Board has formulated a board diversity policy (the “Board Diversity Policy”) to achieve a sustainable
and balanced development of the Group. We recognize the benefits of diversity in Board members and see
increasing diversity at the Board level as an essential element in maintaining our competitive advantage. We
consider skills and industry experience, region, background, race, gender and other qualities when appointing
directors, and leverage diversity to grow our business.

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5

II. About Arrail GroupThe Nomination Committee will review annually the structure, size and composition of the Board and,
where appropriate, make recommendations on changes to the Board to complement the Group’s corporate
strategy. In relation to reviewing and assessing the Board composition and the nomination of directors, weconsider board diversity from a number of aspects, including but not limited to gender, age, cultural andeducational background, professional qualifications, skills, knowledge, industry and regional experience andlength of services.
The diversity perspective of the Board is closely related to the business development of the Group. We willcontinue to refer to the Board Diversity Policy when appointing Board members based on performance, andtake steps to promote gender diversity at all levels of the Group, including but not limited to the Board andthe management levels. We will actively identify female individuals suitably qualified to become the Board
members, in an effort to achieve the target of 40% female representation in the Board. To further ensure
gender diversity of our Board in a long run, the Group will continue to identify female individuals with a diverse
range of skills, experience and knowledge in different fields, and maintain a list of such female individuals
who possess qualities to become the Board members, which will be reviewed by the Nomination Committee
quarterly, thereby developing a pipeline of potential successors to the Board to promote gender diversity of
the Board.

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ARRAIL GROUP LIMITEDESG Report 2022/23

III. Sustainability Management(I)

STATEMENT OF THE BOARD OF DIRECTORSThe Board of Directors of the Group is the top responsible and decision-making body for ESG matters, andit takes overall responsibility for the formulation and supervision of the Group’s ESG strategy. The Boardof Directors values the ESG governance and is committed to pursuing the harmonious development of theenterprise with society and nature.
Oversight of ESG matters: The Board of Directors incorporates ESG matters in the Group’s governancestructure and participates in the end-to-end ESG governance and disclosure. The Board of Directors is
responsible for setting the ESG management agenda, assessing and determining the Group’s ESG risks, andevaluating and reviewing the results of ESG work in the previous year.
ESG management principle and strategy: The Group incorporates ESG governance requirements indaily management system, continuously evaluates performance through internal review of completion of
ESG practice, prioritizes and manages ESG-related issues and internal and external risks in conjunction withmacro policy analysis and communication with stakeholders, and reports to the Board of Directors to clarify
ESG governance priorities and management principle and strategy, continuously improving and promoting theimplementation and optimization of ESG practice.
Review of ESG targets: The Board of Directors continues to strengthen its supervision and involvement in
the Group’s ESG governance. For the year 2022/2023, management reported to the Board of Directors on
the Group’s ESG development direction for the next year and the future, covering review of the achievementof ESG targets in the previous year, the ESG targets for the next phase, opportunities and challenges arisingfrom climate change, and the Group’s measures.
This report was reviewed and approved by the Group’s Board of Directors on June 27, 2023.

Board of Directors of Arrail Group Limited
June 27, 2023

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III. Sustainability Management(II)ESG CONCEPT AND MANAGEMENT

ESG MANAGEMENT STRATEGY
As one of China’s leading dental service providers, we deeply understand the significance of ESG
management to the long-term sustainable development of the Group. The Group is committed to achieving ahigh level of ESG performance and strives to protect the interests of shareholders and investors while actively
fulfilling corporate social responsibility and enhancing corporate sustainability.
We actively identify and strictly comply with relevant national and regional laws and regulations, integrate
ESG concept into our business operations and management, to achieve business objectives while reducing
negative impact on the environment. We also strengthen our management foundation, enhance technology
innovation, adhere to low-carbon operations, protect the rights and interests of our employees, develop highquality talent team and build reliable partnerships with suppliers, thereby improving the quality of medical
services. Meanwhile, we are committed to being a responsible corporate citizen, doing business for good
through various beneficence initiatives, and working with stakeholders to create sustainable value.
ESG MANAGEMENT STRUCTURE
We have established a multi-level, cross-department, and top-down ESG management system to help
the Group achieve effective ESG management. The Board of Directors is responsible for setting the ESG
management agenda, including making relevant decisions and monitoring the Group’s ESG performance.
We have also built an ESG management team comprising staff from relevant departments to implement theGroup’s ESG strategies and policies. Meanwhile, we have organized ESG capability trainings for the Board of
Directors and relevant staff to enrich their ESG knowledge and support ESG-related practice.
Board ofDirectors

ESG Working Team

Administration
Department

8ComplianceDepartment

IT & System
Development
Department

ARRAIL GROUP LIMITEDESG Report 2022/23

Finance
Department

Procurement
Department

MedicalDepartment

Nursing
Department

Customer
Service Center

Human
Resources
Department

Arrail Academy

Engineering
Department

Business
Division of
Arrail Dental

Business
Division of
Rytime Dental

III. Sustainability Management(III) STAKEHOLDER COMMUNICATION
We communicate with stakeholders via various channels to understand their demands and take their opinions
as important reference to guide the ESG work. Based on our business characteristics and the results of ourcommunication with key stakeholders, we have listed the key ESG issues of concern to the key stakeholders
as well as the main communication and feedback channels.
Main communication andfeedback channels

Key stakeholders

Key ESG issues of concern

Governments andregulatory authorities

Medical and service quality
Labor standards
Protection of patients’ rights andinterests
Protection of intellectual property rights
Anti-corruption

Information disclosure
Official correspondence
Onsite inspection
Regulatory meeting
Questionnaire

Shareholders andinvestors

Medical and service quality
Climate change
Protection of intellectual property rights
Management of complaints anddisputes
Anti-corruption

Shareholders’ meeting
Information disclosure (annual
reports and interim reports,
performance announcements,
corporate HKEX announcements,
investor relations pages, etc.)
Questionnaire

Employees, directors, andsenior management

Employment
Staff health and safety
Staff development and training
Labor standards
Use of resources
Climate change
Anti-corruption

Staff opinion survey
Staff internal communication
meeting
Corporate internal announcements
Questionnaire

Patients and consumers

Protection of patients’ rights andinterests
Promotion of industry development
Medical and service quality
Environment and natural resources
Community investment

Patient satisfaction survey andfollow-up visit
Daily operation/communication
Complaint and feedback channels
Questionnaire

Suppliers and business
partners

Supply chain management
Anti-corruption
Emissions

Supplier management system
Industry exchange
Questionnaire

Media

Community investment
Management of complaints anddisputes
Promotion of industry development

Performance release conference
Press release communication

Local residents
and public welfareorganizations

Medical and service quality
Emissions
Use of resources
Environment and natural resources
Community investment

Community activities
Public welfare activities
Daily operation/communication
Questionnaire

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III. Sustainability Management(IV) MATERIALITY ANALYSIS
To identify key areas of ESG practices and meet the needs of stakeholders, we obtain stakeholders’ opinions
and expectations on ESG issues through questionnaires, meetings, in-depth interviews, etc. Based on the
feedback, we have identified 16 ESG-related issues and formulated an analysis matrix of ESG material issues
for the year 2022/2023.

Materiality to external stakeholders

High
A1: Emissions
A2: Use of resources
A3: Environment and natural resources
A4: Climate change
B1: Employment
B2: Health and safety
B3: Development and training
B4: Labor standards
B5: Supply chain management
B6-1: Product responsibility: Medical service quality
B6-2: Product responsibility: Management ofcomplaints and disputes
B6-3: Product responsibility: Protection ofpatients’ rights and interests
B6-4: Product responsibility: Promotion ofindustry development
B6-5: Product responsibility: Protection of
intellectual property rights
B7: Anti-corruption
B8: Community investment

Low
Low

Materiality to the Group’s development

High

The Group has identified issues with high materiality, which are “B6-3 Product responsibility: Protectionof patients’ rights and interests”, “B3 Development and training”, “B8 Community investment”, “B6-1
Product responsibility: Medical service quality”, “B6-2 Product responsibility: Management of complaints
and disputes”, “B2 Health and safety” and “B5 Supply chain management”; issues with medium materiality,
including “A1 Emissions”, “A2 Use of resources”, “A3 Environment and natural resources”, “B6-5 Productresponsibility: Protection of intellectual property rights”, “B6-4 Product responsibility: Promotion of industry
development”, “B1 Employment”, “B4 Labor standards” and “B7 Anti-corruption”; and relevant issues,
including “A4 Climate change”. We will address each of these issues in different sections of this report.

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ARRAIL GROUP LIMITEDESG Report 2022/23

IV. Improving Medical Service Quality
Upholding the mission of “to give each of our patients a healthy and confident smile”, the Group is committed
to providing high-quality medical services and pleasant patient experience. We always adhere to highstandards of medical service quality, providing customers with high-quality experience. Specifically, we
actively solve problems for patients and protect rights and interests of customers; strengthen independent
innovation and lead the industry improvements; improve management efficiency via digital means, keep
optimizing medical services; and strive to achieve our vision of “becoming a world-leading dental group”.

Inside of the dental clinics(I)

IMPROVING MEDICAL QUALITY STANDARDSThe Group operates in strict compliance with the Civil Code of the People’s Republic of China , theRegulations on Handling Medical Malpractice , the Administrative Measures for the Clinical Applicationof Medical Technologies , the Provisions on the Administration of Radiological Diagnosis and Treatment ,the Measures for the Supervision and Administration of Pharmaceuticals in Medical Institutions (for Trial

Implementation) , the Law on Medical Practitioners of the PRC and other laws and regulations. In addition,
the Group has formulated internal policies such as the Code of Practice for Dental Clinical Technologies ,the Online Expert Consultation System of Arrail Group , the Expert Committee Duties of Arrail Group and theRegulations on Medical Quality Management . The Group has also established clear compliance guidelines andstandard operating procedures for medical quality control, and implements a series of medical quality control
measures such as medical red line management, consultation and multidisciplinary specialty cooperation
for complex cases, specialty case grading and doctor grading, etc., to ensure medical quality and provide
professional medical services to patients.

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IV. Improving Medical Service Quality

MEDICAL RED LINE MANAGEMENT SYSTEM
Medical red line management is an important process for the Group to prevent medical risks and ensure
medical service quality. The management system specifies procedures such as medical records writing,treatment item information collection, and infection control, and triggers a prompt mechanism if relevant
medical service standards are not met. Besides, a three-tier inspection system (clinic self-inspection, regional
review and random inspection by the Group) has been implemented to ensure quality improvement andsupervision in the whole process of diagnosis and treatment. To ensure completeness of the patients’ profiles
that are important for diagnosis and differential diagnosis, the system notifies the doctors of the required
annexation to the medical records, such as X-ray and CT requirements, informed consent requirements andoral photography requirements, attaching importance to the necessity of doctors’ preoperative notificationand patients’ right to informed consent. In the event of mistakes and omissions in the medical records, themedical and compliance departments will promptly inform the dentists and the mandatory “pre-operation
verification” will again ask the dentist to confirm the nature and method of the treatment before commencing
the operation, thus ensuring the safety and compliance of treatment, as well as providing a basis for
subsequent diagnosis and achieving medical quality monitoring and medical error prevention.

[Case: “Medical quality coefficient” inspection system]
For the year 2022/2023, besides the medical red line management system, the Groupestablished the stricter “medical quality coefficient” inspection system. Based on 7
dental sub-specialties, 12 quality inspection items were added, including preoperative,
intraoperative, and postoperative stages, such as preoperative, intraoperative, andpostoperative imaging data, preoperative examination and treatment of related diseases, andtracking of long-term postoperative outcomes. In addition, the three-tier (clinic, regional and
the Group) inspections and regional cross-clinic inspections were conducted every month.
The scores of these inspections were linked to the performance evaluation of doctors, clinic
directors and regional directors. By doing so, the Group managed medical quality before
treatment, thus improving the tracking and monitoring of medical quality and minimizing the
medical risks.

GRADING SYSTEM FOR SPECIALTY CASES AND DOCTORSThe Group grades doctors by seniority, and specialty cases by complexity, so that doctors are assigned
based on the diagnosis and treatment needs of cases at a corresponding level. If the complexity of the caseis beyond the doctor’s level, the Group will arrange a consultation with senior doctors to ensure medical
quality and safety.

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ARRAIL GROUP LIMITEDESG Report 2022/23

IV. Improving Medical Service Quality

CONSULTATION SYSTEM FOR COMPLEX CASES
Dental clinics are generally small with a limited number of doctors and inadequate experts in various
disciplines. To address this issue, the Group organizes weekly multidisciplinary discussions and consultations
to formulate treatment plans for complex cases on a regional basis, so as to improve the medical quality of
the Group’s dental institutions.
We have established a mechanism that requires all dental institutions to hold 100% consultations for complex
cases, consisting of consultation process and supervision process. The consultation process is as follows:

The clinic conducts consultations forfollow-up complex cases every day

The clinic conducts consultations forfirst-visit complex cases every day

The clinic conducts one consultation
per week for complex cases handledwithin a week

If a case is too complex to behandled by doctors of a clinic, theclinic will involve directors of related
specialties such as the regional
implantology director andorthodontics director in the
consultation, or the Regional Medical
Director will organize relevant experts
for consultations

If a case is too complex to behandled by doctors within a region,
the Group experts will be involved in
the consultation

The supervision process is as follows:

Consultation
records

Phasedsummaries

Reportingto theregional
director

Randominspection
by theregional
director

Reportingto theGroup

Randominspection
by theGroup

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IV. Improving Medical Service Quality(II)

ENSURING MEDICAL SAFETY

The Group has developed a proactive reporting mechanism for adverse events to ensure medical safety. To
strengthen the management of adverse events and enhance patients’ safety awareness, we implement a nonpunitive system, adhere to the principle of confidentiality, and encourage staff to report such events. Adverse
events are classified into four levels based on severity. Mandatory reporting is required for severe Class I andClass II events and the clinic, the Regional Medical Director, the Regional Quality Control Director and the
Medical Committee of the Group are required to be informed within 24 hours. The Regional Medical Director
will report the event and relevant response plans to the Group in a timely manner at the daily morning
meeting, and submit the event report later. The medical staff should report the less serious Class III andClass IV events to the clinic director immediately when an adverse event occurs. After confirming the report,
the clinic director will fill in a standardized form and report to the Regional Medical Director and Regional
Quality Control Director on a monthly basis. Then, the regional summary and analysis will be reported to theMedical Committee of the Group. The Group conducts quarterly training for all doctors on adverse events,
shares prevention measures and continuously follows up on the problem resolution to achieve closed-loop
management, ensure medical safety and promote continuous improvement in medical quality.
To avoid medication risks, the Group strictly abides by laws and regulations such as the Regulation on

the Administration of Narcotic Drugs and Psychotropic Drugs , the Measures for the Administration of
Prescriptions , and the Regulations on the Administration of Narcotic Drugs and Class I Psychotropic
Drugs in Medical Institutions . For controlled substances such as narcotic drugs, psychotropic drugs andother dependence-producing drugs, the Group has formulated a series of internal policies such as the

Accountability System for Management Targets of Narcotic Drugs and Class I Psychotropic Drugs , theSpecial Inspection System for Narcotic Drugs and Class I Psychotropic Drugs , and the Procurement andAcceptance System for Narcotic Drugs and Class I Psychotropic Drugs . In addition, the Group has set up
relevant organs to manage narcotic drugs and psychotropic drugs, and introduced a “five special” system(namely adopting special management, special lockers, special account books, special prescriptions andspecial registers). These organs involve departments such as medical management, pharmacy, nursing,and security, and are equipped with responsible and professional staff in the daily management of narcotic
drugs and Class I psychotropic drugs. Based on the specific process, a three-tier model has been adopted
to manage narcotic drugs and psychotropic drugs: (1) Warehousing acceptance and management of drug
storage, (2) drug requisition and distribution management of pharmacies, and (3) drug reserve managementof wards, so as to ensure the sound management of drugs in procurement, requisition and distribution. In
addition, the regional security departments are responsible for the safety inspection of drug storage facilities
and equipment, night patrol and security at hospitals, and handling problems and events relating to the use
and management of narcotic drugs and psychotropic drugs, such as damage reporting, loss, and theft, thus
enabling closed-loop whole-process management and ensuring the safe storage and use of controlled drugs.

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IV. Improving Medical Service Quality

To ensure drug safety, the Group has formulated the Drug and Device Management System . According to theregulations, the procurement of drugs and devices must undergo acceptance checks on the product name,specifications, quantity, approval number, production batch number, manufacturer’s registered trademark,expiration date, appearance quality, packaging situation, purchase price, and other items. Only after all items
are qualified can they be accepted and stored; Those that do not meet the specified requirements shallnot be purchased or used. Secondly, the storage of drugs should be regularly inspected and counted, andnecessary measures such as refrigeration, antifreeze, moisture-proof, insect and rodent prevention should
be taken to ensure the quality of drugs. The Group prohibits the use of drugs and medical devices that havenot been legally registered, have no qualification certificates, have expired, become invalid, or have been
eliminated. For imported drugs and medical devices, there should be Chinese instructions and labels. For
oral anesthesia drugs and emergency drugs, they must be managed by dedicated personnel at each clinic,
with dedicated areas and records established. They should be used strictly according to prescriptions andregularly counted to fully ensure medication safety.

(III) ENHANCING SERVICE QUALITY
Our brand was originally founded to provide reliable and premium dental services for patients, whileservice quality control and medical quality control complement each other. We are committed to constantly
following the standardized procedures and actively implementing our 5S initiatives (Sort, Straighten, Sweep,Standardize, and Sustain), to deliver one-stop dental healthcare services that cover the full lifecycle of ourpatients from babies to the elderly.
The Group has developed a comprehensive patient relationship management system and deployed software
solutions to handle patient appointment and registration. New patients can fill out a comprehensive medical
history questionnaire through the software. The questionnaire is uploaded to our cloud-based system that
automatically synchronizes the relevant information such as the examination result, the treatment plan, theauxiliary examination and the consent confirmation, enabling our dentists to undertake appropriate treatment
planning. Powered by our digitalization capabilities, we can analyze patient treatments history and use tools
to maintain the patient visit stream and send appointment reminders to patients for regular treatments (suchas dental cleaning) and electronic notifications on relevant service offerings, which allow us to further enhancepatient experience.

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IV. Improving Medical Service Quality[Case: Safeguarding patients’ right to know]
The Group has displayed the outpatient price list at a conspicuous position in the clinic hallas required by the health inspection bureau, enabling patients to be fully aware of the priceat a glance before undergoing surgical treatment. Before any surgeries, all patients must sign
an informed consent forms (ICF) according to red line inspection requirements. In the ICF,
surgical details, including the price are introduced to dual safeguard the patients’ right toknow.

(IV) RESPONDING TO PATIENTS’ DEMANDS
We establish a customer service center with a dedicated quality control team and have formulated system
documents such as the Customer Service Center Quality Control Standards and the Arrail Call-Centre-

Consultation and the Appointment Process . We promptly respond to customer inquiries and feedback,and improve and monitor customer service quality management to improve the patient experience fromall aspects. Furthermore, we adopt customer relationship management (CRM) system and develop acomprehensive membership program to offer a variety of benefits and exclusive member events to ourpatient, enhancing the overall patient experience.
The system automatically sends satisfaction survey message to each patient after medical treatment andreminds the clinic service of any SMS reply with a score below 5, who will then follow up in time andconduct satisfaction statistics, to further optimize the service process. Meanwhile, each region will set up
a Chat Group for customer satisfaction and complaint communication to ensure that customer complaints
are learned and solved at the first instance. We analyze customer complaints and share excellent practices
at fixed period, to help employees learn from and sort out cases, and to place them into the service caserepository in order to gather experience. Every quarter, the Group employs third-party research company toact as mysterious customers to supervise the customer service quality from all aspects.
The Group receives customer inquiries and complaints through “400” customer service hotline, official online
services and WeChat Official Account. In response to possible patient complaints and medical disputes, theGroup has established internal systems such as the China Customer Service Center Complaint Handling
Process and Rules . Public opinion monitoring personnel will solve customer complaints according to theComplaint Acceptance and Handling Process of Arrail Group at the first instance. Complex cases will be
discussed, analyzed and resolved at the senior level and all complaints and processes will be recorded in the
Customer Compliant Summary Form to be truly customer-centric, continuously improving service quality andenhancing customer satisfaction.

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IV. Improving Medical Service Quality

The customer
makes acomplaint
through “400”customer
service hotline.
Customer
service staff
records thecomplaint indetail.

Start

The

complaint isrecorded in
the systemandescalatedthrough thesystem to theregionalcustomer
service staff.

Customer service
staff immediately
contacts thecustomer to learn
about the details
and coordinate s
resources toassist thecustomer to solve
the problem.

The staff
records thecommunication
process andresults into thesystem.

The clinic
analyzes thecomplaint anddevelops
detailed
improvement
measures.

End

Customer service center compliant handling process
For the year 2022/2023, the Group received 131 customer complaints through “400” customer service
hotline, 30 of which resulting in refunds, accounting for 0.002% of the total customer for the year, of whichapproximately 70% were service-related and 30% were related to medical effectiveness, with an overall
complaint resolution rate of 100%.

(V)

LEADING THE DEVELOPMENT OF THE INDUSTRY

The Group is one of the few platform-based dental services providers with meaningful scale in China. We
have standardized operating procedures systems and robust digital infrastructure, and work with partners
to continuously improve our independent innovation capabilities, ensuring to make breakthroughs in service
quality, patient experience, and operational efficiency and leading the development of the industry.
UPGRADING DIGITAL MANAGEMENT
We continue to accumulate and analyze digital information from our day-by-day business activities, explore
upgrades to our digital infrastructure, constantly seek ways to embrace digitalization into our dental network,
to further improve our operational knowledge and efficiency, reduce operational risks, and improve service
quality.
The trend of dental clinical technologies is the “painless, minimally invasive and precise”. To achieve minimallyinvasive and precise, the Group adopts a wide range of digital technologies and microtechnique in various
dental clinical areas, including iTero oral scanning and digital orthodontics, digital guide plate and navigation
technology for oral implantology, chairside CAD/CAM digital restoration technology, root canal microtechniqueand tooth preparation microtechnique, etc.
In terms of daily operation, the Group has developed the SaaS System. The SaaS System has made it mucheasier and faster for our dentists and staff to attend to daily operational and administrative matters such asscheduling client appointments, purchasing materials and supplies, monitoring inventory level, organizing
medical records, and maintaining client relationship. Meanwhile, we can also quickly manage the new
established and acquired clinics together under a unified standard to strengthen the Group’s operational
efficiency and modernize the enterprise operations. To further improve the management capabilities of digital
operations, we have upgraded the underlying architecture of the business system by upgrading the multi-data
warehouse underlying storage engine, optimizing the iterative upgrade of task execution performance andscheduling framework, and enhancing the workflow arrangement and centralized control capabilities, whichhelps improve the data retrieval efficiency and interface stability, and enhances the system’s control over theunderlying data.

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IV. Improving Medical Service Quality

In terms of customer service, the Group has also strengthened digital management, and established acustomer label and portrait system in dimensions such as customer attributes, channels, appointmentcomplaints, and follow-up status. We have tailored consultation and service plans based on labels andportraits at different stages of customer appointments, diagnosis and treatment, and follow-up visits,
effectively improving service efficiency and effectiveness.
In terms of medical service, the Group has launched the electronic medical record (EMR) system, whichenables to set EMR template to raise the standardization level of diagnosis and treatment and facilitates
quality control & assessment, greatly improving the efficiency of online telemedicine.
STRENGTHENING INDEPENDENT INNOVATION
In addition to improving our health care and service quality, we are committed to working with our suppliers
and other partners to enhance our independent innovation capabilities and respond to the “painless, minimallyinvasive and precise” trend of dental clinical technologies. We adopt a wide range of digital technologies andmicrotechnique in various dental clinical areas, including intraoral laser scanning and digital orthodontics,
digital guide plate and navigation technology for oral implantology, chairside computer-aided design andmanufacturing (CAD/CAM) digital restoration technology, root canal microtechnique and tooth preparation
microtechnique. The Group also actively participates in industry exchanges & seminars, carries out online/
offline public welfare livestreaming, and is committed to promoting the Group’s innovative technologies
across the industry, constantly improving industrial norms, leading the development of the industry anddemonstrating corporate responsibility.

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ARRAIL GROUP LIMITEDESG Report 2022/23

IV. Improving Medical Service Quality[Case: Digital Technology Development Summit Forum on Stomatology]
The rapid development of digital technology in stomatology has led to revolutionarychanges in the dental clinical diagnosis and treatment technology that results in an overall
improvement in the clinical diagnosis and treatment ability and level of stomatology. Under
such a background, the Group held a series of academic activities themed on “Digital
Technology Development Summit Forum on Stomatology (Online)” from August 24 to August
26, 2022. A total of 14 experts and scholars from inside and outside the Group were invited
to exchange views on “implantology”, “orthodontics” and “cloud platform”. This Forum waslive-streamed across the Internet, attracting 4,000+ doctors, with total popularity of nearly
40 thousand and thumbs-up of 4,300+. This Forum has expanded the influence of ourdigital technology in the industry, effectively promoted the application of digital technology
inside and outside the Group, and improved the comprehensive level of the digital team, thestandardization and influence of Arrail Group in digital clinical technology.

EMPOWERING THE INDUSTRY DEVELOPMENTThe Group has made its technical knowledge and skills training resources available to dentists across thecountry by continuing to build online knowledge sharing and teaching platforms and organizing academic
exchange forums for the whole industry and society. The Group is committed to empowering more dentists
in China to constantly improve people’s oral health, and contribute to the sustainable development of
the industry. For the year 2022/2023, we teamed up with “FRIDAY”, the first digital and intelligent oral
medical platform in China and leveraged on our unique strengths in medical technology, customer service
and operation management, to empower the industry and help oral medical institutions break through thedevelopment bottleneck.

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19

IV. Improving Medical Service Quality[Case: Industry empowerment – FRIDAY digital and intelligent oral medical platform]
On February 23, 2023, “FRIDAY”, the first digital and intelligent oral medical platform in
China, was officially released at the Dental South China International Expo. The Platform
gathers 100+ industry experts and senior doctors of Arrail Academy, 1,000+ hours of highquality courses and seminars on complex cases, empowering dentists to improve theirabilities in all aspects.
The Platform, leveraging on digital technologies, can effectively enable oral medical
institutions to break through the development bottleneck. As a large-scale high-quality
dental chain in China, Arrail Group has been receiving attention and recognition in theindustry for its unique advantages in medical technology, customer service and operation
management. FRIDAY is designed to provide one-stop solutions for oral medical institutions& entrepreneurial dentists based on the proven and replicable experience of Arrail Groupfor more than 20 years and leveraged on digital and intelligence platform’s advantages
in connection, empowerment and innovation. The Platform connects high-quality leading
enterprises of upstream and downstream industries and covers the full life cycle of clinic
management.

FRIDAY, the digital and intelligent oral medical platform

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IV. Improving Medical Service Quality[Case: Arrail Summit Forum on New Progress in Oral Implantology]
On February 22, 2023, the Arrail Summit Forum on New Progress in Oral Implantology was
successfully concluded in Guangzhou. Themed on “New Progress, New Start”, the Forum
invited nearly 20 authoritative dental experts & scholars in China to join the super instructor
team. The Forum, based on an unprecedentedly strong academic lineup, is aimed at
guiding hundreds of stomatological professionals to understand the frontier of the discipline,
broaden their academic horizons and strengthen innovative thinking through ideologicalcollision and professional interpretation from different perspectives and dimensions. Experts
and professors conducted in-depth discussions around the hot spots and focuses of
implantology. Moreover, focusing on the latest research and practices of digital technology,
they led hundreds of dental professionals to interpret the achievements of cutting-edge
scientific research in multiple levels and dimensions from the aspects of difficult caseanalysis, technology application and diagnosis and treatment effects, and share clinicalexperience, creating a wonderful ideological and academic feast for dentists present.

Arrail Summit Forum on New Progress in Oral Implantology

ARRAIL GROUP LIMITEDESG Report 2022/23

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V. Strengthening Management andOperation ComplianceCentering on the management foundation of legal and compliance operation, the Group has set up a risk
control system and continued to strengthen the information security, practice of integrity, advertising andintellectual property management, and supplier management. In addition to compliance with applicable laws
& regulations, we constantly improve internal policies, optimize the operation and management structure, andcontinuously enhance the technical level and management ability of operation safety, as well as development
and training of compliance policies, in an effort to realize our long-term and sustainable development andachieve our vision of “to become a world-leading dental service group”.

(I)

COMPLIANCE AND RISK MANAGEMENT

In strict compliance with the Administrative Measures on Medical Institutions , the Administrative Measures

for the Examination of Medical Institutions , the Law on the Promotion of Basic Medical Care, Hygiene and
Health and other laws & regulations relating to the operation of medical institutions, the Group formulatesinternal systems such as the Arrail Administrative Measures for Three-tier Inspection of Compliance Checklist ,the Medical Point Inspection Manual of the Compliance Department and the Guidelines for Self-Inspection of

Medical Institutions , the Policy on Reporting External Inspection Opinions to Compliance Department within
24 Hours to keep improving the construction of the compliance operation system.
The Group adopts multi-compliance assurance mechanisms to fully avoid compliance risks, such as a threetier inspection policy of “monthly self-inspection by management at all levels in all clinics/hospitals + audit byfunctional departments of the Group + unannounced inspections by the Compliance Department”. The Boardof Directors is responsible for approving and reviewing the above inspections, and assigning specialized staff
to monitor the implementation of compliance measures.
Tier-I inspection
Management at all levels in allclinics/hospitals carries out monthly
self-inspection according to thecompliance checklist and reports all
inspection results in a timely manner
through the system, without any
omission or delays.

Tier-II inspection
The Group’s Medical Department
and other relevant departments
review the tier-I inspection monthly,report the results, and check thetier-I inspection results against thechecklist.

Tier-III inspection
The Compliance Department is
responsibleforreviewingtheimplementation of the tier-I and tier-II
inspections, carrying out unannounced
inspections
accordingtothecompliance checklist.

For the year 2022/2023, we conducted 67 Tier-III compliance unannounced inspections, covering 67 clinics
and hospitals. We fully seize every opportunity for compliance inspection and conduct on-site compliance
operation learning. Meanwhile, we regularly provide directors, senior management and front-line employeeswith training and updates on laws & regulations related to operation compliance, to identify concerns andissues related to any potential non-compliance. Moreover, we intensify the standardization of risk control
policies and give full play to assessment and monitoring of significant risks, to effectively improve the abilityof law-based operation and risk-resistance, and continuously follow the corporate values of “integrity,
professionalism and being a good person”.

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V. Strengthening Management and Operation Compliance(II)

PRIVACY PROTECTION AND INFORMATION SECURITY

We always believe that privacy protection and information security are the fundamental premises to win thetrust of patients and other stakeholders. We strictly stick to the Cybersecurity Law of the People’s Republic ofChina , the Data Security Law of the People’s Republic of China , the Personal Information Protection Law of
the People’s Republic of China , the Law of the People’s Republic of China on Electronic Signature and otherexternal laws & regulations related to information security, and formulate a series of internal security policies
such as the IT Code of Conduct for Employees of Arrail Group , as well as a standardized management
process for account permissions. In the verification process of system changes, we have predicted thepotential information disclosure risks in the original system, and modified the information presentation format
that may disclose user privacy, to gradually reduce potential privacy disclosure and information security risks.
In terms of information security management, we adopt the following data security measures andtechnologies to prevent potential data security risks.

Data encryption
Use Secure Sockets Layer technology
to encrypt and desensitise data, toprotect data generated from business
operations from being intercepted
and/or tampered with.

Data system upgrade

Restricted data accessRegularly follow up the iteration ofprotective capability of cloud platform,
upgrade the cloud security protection
portal, and utilize the next generation
firewall (NGFW) to guard against
cyber-attacks, hackers and othersecurity threats.

Based on the overall IT infrastructure,
employees can only access patients’
data upon the patients' authorization,and the access permission tosensitive information and medical
records is limited to specificauthorized personnel.

Data back-up
Regularly back up patients’ medical
records to safeguard the security ofpatient information and data integrityof our system.

Additional preventive measures
Formulate plans to engage thirdparty institutions specialising in data
security to provide training for the IT
Department.

Meanwhile, in strict compliance with the Methods for Identifying the Illegal Collection and Use of Personal

Information by Apps , the Information Security Technology: Personal Information Security Specification(GB/T 35273-2020) and other relevant rules and regulations, we have developed the “5i5ya” client applet,in which various privacy policies and information security management measures are strictly implemented.
While strengthening the digitization of patient diagnosis and treatment and the Group’s operations, we always
adhere to customer privacy protection and minimize information security risks. During the current year,
the Group also launched the EMR system, which enabled permission division to fundamentally protect thepatients’ privacy.
In addition, the Group regularly evaluates its data protection and security measures in accordance withinternationally recognized standards. The Group has obtained certifications of ISO27001 Information
Security Management System, ISO27701 Privacy Information Management System and ISO22301 BusinessContinuity Management System for its operation management SaaS system, and has passed the Graded
Information System Security Protection Level III certification, further enhancing the capability and vision forthe construction of enterprise information security architecture.
ARRAIL GROUP LIMITEDESG Report 2022/23

23

V. Strengthening Management and Operation Compliance(III) ADVERTISING AND BRAND MANAGEMENTThe Group attaches great importance to advertising management and intellectual property protection.
In terms of advertising and publicity management, we strictly comply with the Advertisement Law of thePeople’s Republic of China , the Measures for the Administration of Medical Advertisements , and the Interim
Measures for the Administration of Internet Advertisements , and have developed the Practice Guide forAdvertising Activities in the New Environment , the Guidelines for the Specifications and Regulations on the
Use of Advertisements/Materials/VI of Arrail Group, the Administrative Measures for the Review of External
Publicity Materials of Arrail Group and other internal systems, so as to ensure the authenticity and legitimacyof external publicity materials and effectively safeguard users’ rights and interests.
In terms of intellectual property management, we strictly abide by the Patent Law of the People’s Republic ofChina , the Copyright Law of the People’s Republic of China , the Regulations on the Protection of Computer
Software and other laws & regulations related to intellectual property. By applying for software copyrightcertificates, signing R&D non-disclosure agreements and using other means, the Group effectively protects its
own intellectual property rights and ensures that it does not infringe the intellectual property rights of others.
In terms of trademark management, we strictly implement the regulations on trademark management and use
in accordance with the Trademark Law of the People’s Republic of China , and require relevant staff to learn
the latest laws and regulations in time to ensure the timeliness and compliance of the trademarks used.
For the year 2022/2023, we conducted a special inspection on the validity period of advertising review,
involving 123 institutions of the Group, and results were all compliant. During the current year, the Group did
not experience any material violation of laws and regulations related to advertising publicity, trademarks, andintellectual property rights.

(IV) SUPPLIER MANAGEMENT
In strict compliance with the Regulations on the Supervision and Administration of Medical Devices and
the Quality Management Standards for Medical Device Operation , the Group undertakes the procurement,
acceptance, storage, sales, transportation, and after-sales of medical devices, formulates the supplier quality
management standards, defines the graded supplier management system, and puts forward corresponding
management standards for the contracting, performance supervision, continuous improvement, risk
assessment and exit mechanism of suppliers.
Our suppliers mainly include suppliers of human resources services, dental equipment, consumables, anddental supplies (including medicines, dentures, surgical materials, dental instruments, and consumables).
To ensure the stability of supply chain and strengthen supply chain management, we adopt centralized
procurement and a platform-based and digital management system. In daily procurement, local suppliers
are given priority, and denture processing factories are required to establish new factories near our clinics,
and implant suppliers are required to provide consignment services. Through these efforts, we simplify the
procurement procedures and transportation processes, striving to minimize the impact of carbon emissions
on the environment during the procurement process.

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V. Strengthening Management and Operation Compliance

The Group has formulated a strict access mechanism for new suppliers, clarified the criteria for supplierselection, access, and evaluation. In addition, we have developed a supplier selection matrix, which evaluates
suppliers comprehensively from the 4 dimensions of cost, technical level, delivery cycle and after-sales
services, making sure to choose the most appropriate suppliers. At the same time, in the process of supplieraccess and evaluation, we fully consider their environmental and social risks, check their materials forenvironmental protection, safety and nontoxicity, and strictly investigate the employment of child labor, safety
management of production sites, and control over production emissions and important processes. Suppliers
that do not meet the requirements will be rejected.

[Case: Ensuring supply safety and reassuring patients]
For removable orthodontic appliance, we prioritize environmentally friendly and healthy
orthodontic brands, such as the recently purchased TrioClearTM product, which uses highquality raw materials imported from Germany and does not contain harmful bisphenol A
components. It is 100% recyclable and has good green and environmental performance.
Meanwhile, we require suppliers to provide the product’s safety test report, in which theresults of biocompatibility test, cytotoxicity test, skin sensitization test, oral mucosa irritation
test, subacute systemic toxicity test, bacterial reversion mutation test, micronucleus test
and chromosome aberration test must be up to standards, so as to secure patients’ quality
medical service experience.

For suppliers in the pool, we implement a classified management and assessment system and focus on Class
A suppliers, including centralized purchase suppliers and top 20 suppliers in terms of purchase amounts. We
classify and assess suppliers regularly by seven categories of implantology, orthodontics, periosteum/bone
meal, bracket, image, dental chair and oral scan, and force timely improvement requirements for deficiencies
in their quality, compliance, environmental protection, safety, etc. We will remove the suppliers that still failto meet the standards after 6 consecutive months of improvement from the list of suppliers. At the sametime, we conduct an annual risk assessment for existing suppliers, and consider taking measures such as
observation, reduction of orders and replacement for suppliers who have product recalls, medical safety
accidents, environmental accidents, and impairment of employees’ rights and interests.
In addition, we encourage and supervise suppliers to supply environmentally-friendly products (such as BPAfree braces, etc.), and urge suppliers to improve processes, for example minimizing packaging, to achievesignificant reductions in carbon emissions. In addition, we also have clear environmental requirements
for the decoration materials of newly opened stores. To be specific, we require to use materials with anenvironmental rating of E0 for ceiling blockboard, high-density board and cabinet substrate, and conduct
sampling inspection at the proportion of 10%. For fireproof glass partition, we require suppliers to provide
the certification report of fire protection grade A and China Certification Center for Fire Products Ministry of
Public Security (CCCF) certification. We put forth such efforts to reduce environmental and social risks in the
supply chain, and strive to achieve mutual benefit and win-win with partners to realize green and sustainable
development.

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25

V. Strengthening Management and Operation Compliance

KPI: SUPPLIERS
By geographical region

Number of suppliers(the year 2022/2023)

China

18

Europe10

United States

6South Korea

5

Japan

1

1.

Considering that most suppliers of consumables are highly fluid, the statistics only cover Class A suppliers.

(V)

PRACTICE OF INTEGRITYThe Group adheres to the operating principle of integrity and establishes a clean and healthy culture. The
Group strictly complies with the Civil Code of the People’s Republic of China , the Criminal Law of thePeople’s Republic of China , the Anti-Unfair Competition Law of the People’s Republic of China , the AntiMoney Laundering Law of the People’s Republic of China , the Interim Provisions on Banning Commercial
Bribery and other relevant laws & regulations. Moreover, we have formulated the Arrail Integrity Convention ,the Employee Manual of Arrail Group , the Letter of Commitment to Integrity of Arrail Employees , the Letterof Commitment to Integrity of Suppliers and Construction Parties and other internal management policies toregulate improper practices such as abusing power for personal gains, striving to create a clean and uprightworking environment.
We have zero tolerance for all forms of corruption and fraud, and encourage all employees and business
partners to report any concerns of existing or potential fraud. The Group has a clear and open whistleblowing
channel, namely a whistleblowing mailbox, to ensure that whistleblowing information can be delivered
promptly and accurately. We will conduct a thorough investigation into the real-name whistleblowing content
and treat the employees involved sternly upon verification.

Arrail whistleblowing mailbox
fanfubai@arrailgroup.com

We also require all board members and employees to complete the publicity and training on code of businessconduct and integrity every year, aiming at strengthening integrity publicity and urging managers at all levels
to lead the team to work in a clean environment and comprehensively raising employees’ awareness of
integrity in work.

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ARRAIL GROUP LIMITEDESG Report 2022/23

V. Strengthening Management and Operation Compliance[Case: Conducting anti-corruption training and establishing an honest andupright environment]
From April 14 to April 23, 2023, we organized all employees to attend an online integrity
training, and the training contents covered modules such as “General Principles of Integrity”,“Definition and Treatment of Non-compliance and Violations”, “Conflicts of Interests”,“Guidelines for Business Contacts” and “Case Study”. A total of 957 management employees
signed the Letter of Commitment to Integrity of Arrail Employees . The training effectively
improved employees’ understanding of laws, regulations and internal policies related to anticorruption and enhanced their awareness of integrity.

[Case: Annual integrity training for senior executives and directors]
On March 7, 2023, we carried out an offline integrity training for all senior executives
and directors. A total of 72 employees attended the training, and all of them signed theCompliance Certificate of Arrail’s Anti-corruption Policy , including all 7 directors (3 of them
are independent directors) in service.

During the current year, there were no concluded lawsuits regarding corrupt practices related to the Group or
its employees.

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27

VI. Promoting Green Operation
The Group actively responds to national and industry guidelines on environmental protection through reducing
pollutant emissions, optimizing resource utilization, implementing the concept of environmental protection,energy conservation and emission reduction in the healthcare services and corporate operations. Besides, theGroup also identifies and responds to possible climate change risks. Meanwhile, we proactively promote andadvocate the green and low-carbon lifestyle by encouraging our employees, suppliers, and other stakeholders
to reduce carbon emissions in their daily operations, thereby raising public awareness of environmental
protection and low-carbon to safeguard our green home and help achieve the national strategy of “carbon
peaking by 2030, carbon neutrality by 2060”.

(I)

RESPONDING TO CLIMATE CHANGE

Climate change is altering the global ecosystem and natural environment, while having a profound impact onsocio-economic and business development. The Group actively follows the trend of global climate change
and incorporates climate change mitigation and adaptation into its ESG management as a vital component.
For the year 2022/2023, the Group actively identified and assessed the possible impact of physical risks
and transformation risks on its business development with reference to the classification of Task Force on
Climate-related Financial Disclosure (TCFD), and took proactive measures to avoid the impact of climatechange on its business operations and explore new business opportunities.
To proactively address the impact of climate change, the Group has identified climate change risks andcountermeasures in the context of its actual operations:
TRANSITION RISKS:
SourceDescription

Our responses

Policies and laws••

The government and regulatory

Conduct environmental and climate

authorities may implement

due diligence during operations tomore stringent environmental

ensure compliance of operational

protection-related laws, regulations
and policies in the future, which may

process;•

Actively communicate withincrease the Group’s environmental

shareholders with climate change

compliance costs.

as an important issue, and carry out
relevant training for all employees via
Arrail Academy.

Technology•

The task of low-carbon
transformation in terms of energy
saving and consumption reductionis arduous, and the overall energy
efficiency level needs to be improved,
which will increase the Group’stransformation costs.

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ARRAIL GROUP LIMITEDESG Report 2022/23•

Accelerate the procurement ofenvironmental equipment and assets.

VI. Promoting Green Operation

SourceDescription

Our responses

Market••

The level of energy consumption of

Actively reduce the traditional

products will attract more attention

porcelain casting process, andin the market, which will lead todevelop digital processes such as

decreased demand for products with

cutting and printing instead.

high carbon emission intensity.
Reputation•

Stakeholders are increasingly•

concerned about the Group’s
performance in relation to green andSpeed up the Group’s low-carbon
transformation;•

Establish a green and low-

low-carbon development and climate

carbon corporate image, such aschange addressing, and any deviationencouraging employees to travelfrom expectations may affect thein a green way by public transport,

Company’s reputation and image.

reducing vehicle usage rate.

PHYSICAL RISKS:
SourceDescription

Acute risks

The increased frequency of natural

Our responses

disasters such as floods, heavy rains andsnowstorms and typhoons may cause•

adverse situations such as disruptionof the supply chain of medicines andmedical equipment, inaccessibility of

the climate authorities;•

Set up emergency plans, including

patients to hospitals, and losses ofcontingency plans for major

goods and properties, thus threatening

catastrophic weather, and those for

the Group’s ordinary course of business.
Chronic risks

Pay close attention to forecasts ofextreme weather events provided by

The Group’s operating costs will rise,such as increase in power consumption

shortage of medical supplies;•

Develop alternative policies forcustomer diagnosis and treatment.

for store operations and logistics andtransportation costs.

ARRAIL GROUP LIMITEDESG Report 2022/23

29

VI. Promoting Green Operation

OPPORTUNITIES:
SourceDescription

Our responses

Resource efficiency

Decrease in the use of energy and•

Formulate energy-saving and water-water resources will enable the Group’ssaving management measuresbusinesses to operate at a lower costand achieve the target of energy

and enhance the Group’s reputation.

conservation and emission reduction
year by year;•

Select products and suppliers
that are more energy efficient andenvironmentally-friendly.

Products andAs global climate change intensifies,

services

customers are increasingly inclined to

strategies based on customer

use environmentally-friendly products or

strategies and needs to reinforce

services. The Group’s initiatives in low

competitive advantages.

•

Develop environmental management

carbon emissions can therefore bring us
a competitive advantage.

(II)

ENHANCING EMISSIONS MANAGEMENTThe Group strictly complies with the Environmental Protection Law of the People’s Republic of China , theLaw of the People’s Republic of China on the Prevention and Control of Atmospheric Pollution , the Law of
the People’s Republic of China on the Prevention and Control of Water Pollution , the Soil Pollution Prevention
and Control Law of the People’s Republic of China , the Law of the People’s Republic of China on thePrevention and Control of Environmental Pollution by Solid Waste and other relevant laws and regulations. In
addition, the Group has formulated various policies, such as the Hazardous Waste Management System , theEmergency Response Plan for Environmental Emergencies and the System for Environmental Risk Prevention
and Control and Emergency Response Measures . The Group strengthens management on pollutants
and hazardous waste emissions, thus reducing the negative impact of the Company’s operations on theecological environment. For the year 2022/2023, the Group was not subject to any administrative penalties orrelated litigation because of environmental pollution.
AIR EMISSIONS MANAGEMENTThe Group’s air emissions, mainly dust generated during store construction, have a limited impact on theenvironment. The specific management measures for dust generated during the construction process
are clearly stipulated in the Environmental Management Measures for Arrail Group’s Engineering Projects
formulated by the Group, including: designated staff are responsible for spraying water to reduce dust at theconstruction site; the construction waste sorting devices shall be enclosed and transported to designatedlocations, so that no dust, spillage or on-site burning occurs; the dust removal equipment shall be installedat the construction site where necessary to avoid direct discharge into the atmosphere, etc. For the year
2022/2023, the Group adopted centralized processing and preventive measures for works generating
heavy dust during store decoration, thus further reducing dust pollution. Moreover, 80% of finished furnitureand stone materials were sourced centrally. In addition, the Group sorts out the waste generated in store
decoration, and recycles reusable scraps, while delivering the non-recyclable to waste processing centers.

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VI. Promoting Green Operation

WASTEWATER MANAGEMENT
The wastewater generated by the Group mainly includes medical sewage, which is discharged in strict
accordance with the sewage discharge requirements set by the Group. Each hospital or clinic is equippedwith sewage purification equipment, which treats medical sewage to national discharge standards before it isdischarged into municipal pipelines. The sewage treatment equipment is managed by the Group’s designatedstaff. The staff should be familiar with its performance, master maintenance and repair techniques, andregularly inspect the operation of the equipment, so as to identify and remove faults in a timely manner andmake detailed records. Furthermore, the Group invites qualified manufacturers or third parties on a regularbasis to clean sludge and disinfect the sewage treatment equipment, tests microbiological indicators andfecal coliform values before sludge is discharged, and records the conditions of regular disinfection andsludge testing results, so as to ensure that no harm is caused to the environment during the entire treatment
process of medical sewage.
The Group has obtained discharge permits in accordance with national laws and regulations, and thewastewater treatment and control standards are strictly consistent with the wastewater discharge standards
set by the State, such as the Standard for Discharge of Water Pollutants from Medical Institutions, theTechnical Specifications for Hospital Water Treatment Works and the Technical Guideline for Hospital
Wastewater Treatment .
WASTE MANAGEMENT
The non-hazardous solid wastes generated by the Group are mainly domestic wastes; the hazardous wastes
are mainly medical wastes, whose disposal process strictly complies with the Hazardous Waste Management

System formulated by the Group.
The Group has established a strict management system to sort domestic wastes generated in the daily
operations, including: promoting knowledge of domestic waste sorting within the scope of responsibility
and designating employees to guide units and individuals in waste sorting; clarifying the discharge time andlocation of different types of domestic wastes, so as to collect and store them by categories; Domestic waste
is collected and transported by qualified third-party companies through the property management of thebuilding or shopping mall where the operating institution is located.
The Group classifies medical wastes generated from daily operations at source in accordance with theClassified Catalogue of Medical Wastes and the packaging of medical wastes is in line with the requirementsof the Standard of Packaging Bags, Containers and Warning Symbols Specific to Medical Wastes . Eachmedical clinic and hospital has a specialized storage room for medical waste, in which medical waste storageboxes issued by the cooperative qualified transfer company are placed, and the staff seals medical waste in
the storage boxes on time every day. The Group signs a transfer agreement with qualified logistics companies
to ensure that medical wastes are transferred within 48 hours. And at the same time, the responsible staff
will register in detail the kilograms of wastes transferred, the types of medical wastes, the carrier, thereceiver, the license plate number of transfer vehicles, the transfer location and other relevant information for
traceability.

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31

VI. Promoting Green Operation

In terms of waste reduction, the Group strictly controls the output rate of wastes from each clinic. In
accordance with the Notice on Promoting the Management on Domestic Wastes Sorting in Medical and

Health Institutions , infusion bottles (bags) with the infusion tubes removed that have not been contaminatedby patients’ blood, body fluids and excreta, and those with a small amount of remaining diluted common
medicinal solution shall be collected and stored separately and centrally as uncontaminated infusion bottles(bags), and shall not be treated according to the standards for medical wastes, so that the Group cancontinuously improve the management on medical waste reduction. Meanwhile, we encourage hospital
suppliers and manufacturers to design and manufacture product packaging in accordance with national
regulations on clean production, produce packaging that is easy to recycle, dispose or degradable in theenvironment, restrict over-packaging, and reasonably build a product packaging recycling system to reduce
environmental pollution from medical and domestic wastes generated by disposable consumption; we also
encourage our employees to use reusable shopping bags or containers and join the “Clean your plate”
campaign at meal times, so as to effectively push forward waste reduction at source.
NOISE MANAGEMENTThe Group has also formulated a sound management mechanism for noise pollution that may be generated
during the production and construction process to avoid and reduce the adverse impact of noise on theenvironment as much as possible. The specific management measures for noise are clearly stipulated in
the Environmental Management Measures for Arrail Group’s Engineering Projects formulated by the Group,
including: reasonably arranging construction operation hours, strictly distinguishing between daytime andnighttime operations, and reducing noise from noise-generating equipment as much as possible; no honking
for vehicles transporting materials to the construction site; careful handling of materials to prevent loudnoise, especially during nighttime construction operations; strengthening the management on construction
personnel, strictly prohibiting them from entering other areas in spare time and making loud noises, etc.

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VI. Promoting Green Operation

KPI: EMISSIONS
Indicator
Total GHG emissions (Scope 1 and Scope 2) (tonnes carbon dioxide equivalent)
Total GHG emissions per unit area (Scope 1 and Scope 2) (tonnes carbon dioxide
equivalent/square meter)
Direct GHG emissions (Scope 1) (tonnes carbon dioxide equivalent)

The year 2022/2023
5,029.88
0.07
91.19

Petrol

70.82

Diesel

20.37

Indirect GHG emissions (Scope 2) (tonnes carbon dioxide equivalent)
Purchased electricity

4,938.69
4,938.69

Atmospheric pollutant emissions (kilogram)

1.

NOx

100.03SO2

0.46

Wastewater discharge (tonnes)

110,544.36

Total hazardous waste (tonnes)

207.37

Total hazardous waste per unit area (kilogram/square meter)

2.96

Total non-hazardous waste (tonnes)

86.88

Total non-hazardous waste per unit area (kilogram/square meter)

1.15

The key performance indicators of energy and resource cover the administrative office area of the Group, hospitals and clinics in
Beijing, Shanghai, Guangzhou, Chongqing and Chengdu. The remaining parts have not been included, and will be included in thestatistics in due course according to the actual situation in the future;2.

Due to the inclusion of more hospitals and clinics compared to last year, the total and intensity values of greenhouse gas emissions
have significantly increased compared to the previous year;

3.

The GHG inventory includes carbon dioxide, methane, and nitrous oxide, which are mainly derived from purchased electricity,
gasoline, and diesel use. GHG emissions are calculated according to the China Regional Grid Average CO 2 Emission Factors for2011 and 2012 published by the National Center for Climate Change Strategy and International Cooperation and the 2006 IPCC
Guidelines for National Greenhouse Gas Inventories published by the Intergovernmental Panel on Climate Change (IPCC), and arepresented in terms of CO2-equivalent;
4.

Non-hazardous wastes are handed over to waste disposal units, mainly waste paper, discarded office stationery and domestic
waste generated in the office area;

5.

Hazardous wastes are handed over to qualified third-party recyclers for disposal, mainly including waste toner cartridges, waste ink
cartridges, waste batteries, and medical wastes;

6.

The sewage includes domestic sewage as well as wastewater generated by hospitals and clinics.

ARRAIL GROUP LIMITEDESG Report 2022/23

33

VI. Promoting Green Operation(III) OPTIMIZING RESOURCE UTILIZATION
Strictly adhering to the requirements of laws and regulations such as the Energy Conservation Law of thePeople’s Republic of China and the Water Law of the People’s Republic of China , the Group has formulated
policies and other documents for the water and electricity conservation of Rytime Dental and Arrail Dental.
Moreover, the Group actively advocates for green office, implements a number of energy conservation andconsumption reduction measures, constantly optimizes the use of resources, and enhances the efficiencyof resource utilization, so as to achieve energy conservation and carbon reduction as well as continuous
improvement of the ecological environment.
REINFORCING ENERGY CONVERSATION AND CONSUMPTION REDUCTION
To save energy and improve the efficiency of energy consumption in hospitals, clinics, and offices, the Grouphas formulated relevant management practices to give priority to the use of energy-saving equipment. For theyear 2022/2023, in addition to the existing arrangement for energy conservation and emission reduction, theGroup replaced traditional light sources (such as T8 fluorescent lamps, incandescent lamps and quartz lamps)
with those with higher energy and luminous efficiency. Meanwhile, the Building Management System (BMS)
intelligent control system has been adopted initially, which can adjust the indoor lighting intensity according
to the outdoor brightness to greatly reduce energy consumption. In the redecoration and construction of
the new clinic, we are replacing old energy-intensive air conditioners with 100% inverter air conditioners. At
present, we have replaced 60% of equipment with eco-friendly and energy-saving products. In addition, we
have strengthened training on energy conservation, emission reduction and sustainable development, which
has significantly improved employees’ awareness of energy conservation and emission reduction in office andtravel.
Meanwhile, to raise employees’ awareness of energy saving, we have posted energy saving and emission
reduction slogans in all major office areas and near high-power electrical equipment. Furthermore, wehave strengthened the supervision on employees’ electricity consumption in their daily work, requiringthem to actively respond to and follow various energy saving measures developed by the Company. For
example, employees should make full use of natural light during office hours and reduce the use of lighting
equipment; when leaving the office, employees should turn off the lights, cut off the power supply of officeequipment, to avoid waste caused by “lights on all night”; employees should minimize the standby hour ofelectronic equipment by hibernating computers when they are not in use for half an hour, shutting down
office equipment when they are not in use for over an hour and turning off water dispensers after work andwhen they are not in use; employees should take full advantage of natural ventilation in summer, close doors
and windows if air conditioners are used, and set the indoor air conditioning temperature to a more energyefficient 26°C and above; cleaners should make full use of natural light and only turn on the lights of the floor
they are cleaning, and it is forbidden to turn on the lights of the whole building at the same time.

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VI. Promoting Green Operation

In addition to pursuing the concept of energy conservation, the Group also works to appeal for its employees’
decrease in resource consumption. In terms of reducing paper usage, the Group actively promotes theconcept of a paperless office to minimize the amount of paper used and improve the electronic administrative
capabilities of its employees; if paper must be used, internal circulation documents, other than official
documents, are printed on both sides or on used paper from the paper recycling bins, as far as possible.
In terms of reducing commercial vehicle usage, the Group strictly enforces the management system for theuse of commercial vehicles by strengthening rational and scientific vehicle deployment, regularly counting
the mileage and fuel consumption to control the fuel consumption per vehicle, while encouraging travelwith a green footprint such as public transport or walking. The above specific measures have effectively
tightened up the Group’s efforts in energy conservation and consumption reduction, fully reflecting our strong
determination to save electricity and reduce energy consumption.

Posting energy saving slogans and advocating switching off lights timely
SAVING WATER RESOURCESThe Group has formulated the Water and Electricity Saving Policy of Rytime Dental Hospital and otherrelations, clearly specifying measures to save water resources. Moreover, the Group continues to strengthen
the daily maintenance and management of water equipment, and prevent leakage by regularly checking
faucets, to minimize the waste of water resources. In addition, we exert ourselves in raising employees’
awareness of water conservation by posting water-saving slogans on water-using equipment and advocating
employees to practice the green concept of water conservation together.
Decoration

Hospital and clinic

Adopt UPVC pipes andfittings for drainage pipeline
to increase their useful lives
and prevent leak accidents
caused by aging

Replace normal
hand-operated taps with
auto-sensing taps in
hospitals and clinics to
avoid waste of water due tonegligence

Add the leak detectors at
the end of drainage pipes toenable timely leak detection
and maintenanceContinue to promote
direct-drinking water in
office areas, with coveragereaching 80% by the year
2022/2023

Cleaning

Reduce water flushing ofindoor and outdoor
floors, use containers,
such as buckets, to holdwater for washing mops,
and strictly prohibit
washing items withrunning tap water

ARRAIL GROUP LIMITEDESG Report 2022/23

35

VI. Promoting Green Operation

REGULATING GREEN CONSTRUCTION
Strictly complying with construction-related laws, regulations and standards, the Group has formulated theEnvironmental Management Measures for Arrail Group’s Engineering Projects . Moreover, the Group also
actively adopts advanced green materials and processes to ensure the compliance of store construction
with environmental regulations, and minimize impact on environment. The Group strictly reviews andsupervises the standards and sources of engineering materials. Ceramic tiles, paints, panels and flooringmaterials should be in accordance with the environmental protection standards that meet the E0 level. In
addition, the Group actively organizes trainings on construction material management, especially conducting
corresponding research and evaluation on the new material application and technological innovation in thefield of environmental protection, etc. For the year 2022/2023, the Group added detailed requirements forconstruction enclosure, clarifying relevant measures to further reduce dust, classify and recycle waste in store
decoration. By doing so, the Group is resolutely determined to reduce waste and carbon emissions by green
construction.
KPI: USE OF ENERGY AND RESOURCE
Indicator
Total energy consumption (MWh)7,307.29

Total energy consumption per unit area (MWh/square meter)

0.10

Direct energy consumption (MWh)351.87

Petrol276.69Diesel

75.18

Indirect energy consumption (MWh)6,955.41

Purchased electricity

6,955.41

Water consumption (tonnes)

112,044.40

Fresh water
Total water consumption per unit area (tonnes/square meter)1.

The year 2022/2023

112,044.40
1.60

The key performance indicators of energy and resource cover the administrative office area of the Group, hospitals and clinics in
Beijing, Shanghai, Guangzhou, Chongqing and Chengdu. The remaining parts have not been included, and will be included in thestatistics in due course according to the actual situation in the future;2.

Due to the inclusion of more hospitals and clinics in this year’s statistical range compared to last year, the total and intensity valuesof energy consumption have significantly increased compared to the previous year;

3.

36

As the statistical scope for this year does not include processing plants, the packaging material indicators are no longer applicable.

ARRAIL GROUP LIMITEDESG Report 2022/23

VI. Promoting Green Operation(IV) ENVIRONMENTAL TARGETS
We have set environmental targets to better guide the Group’s environmental work, to put our philosophyof environmental protection, energy conservation and emissions reduction into action and to improve ESG
performance.

Type of targets

Setting of targets

Target of•emissions

For the year 2024/2025, the Group will reduce per

Progress for the year
2022/2023–

capita GHG emissions from purchased electricity
by 3% compared to the year 2022/2023, byswitching to LED lights, further implementing theEnergy Conservation and Resource Management
System , increasing the use of renewable resources
such as solar energy, promoting computer powersaving modes, and adjusting the temperature of air
conditioners in winter and summer*•

For the year 2025/2026, the Group will increase the

For the year 2022/2023,

proportion of business travel by high-speed railways

the percentage of businessto 50% through methods such as the financial

travel by high-speed

reimbursement policies and regulations governing

railways reached 27%

staff business travel•

Target of waste•

reduction

For the year 2025/2026, the Group will reduce

For the year 2022/2023, thedomestic/global business trips by 30% compared tonumber of domestic/global

the year 2021/2022 by enhancing online meetingsbusiness trips reduced byand communication based on relevant regulations

13% compared to the year

governing staff business travel2021/2022

From the year 2022/2023, the Group will carry

The target has beenout garbage sorting and recycling throughout theachieved

Group and entrust qualified third-party institutes todispose of 100% of hazardous wastes generated
from operations in compliance with regulations••

From the year 2023/2024, the Group will promote

For the year 2022/2023, thedirect-drinking water in office buildings at all

coverage of direct-drinking

operating sites, and purchase less bottled water/water in office buildings atbarreled water in order to reduce the generation of

all operating sites reachedplastic wastes

55%

For the year 2023/2024, the Group will replace

For the year 2022/2023,

100% of plastic garbage bags with biodegradable

the percentage ofones

biodegradable garbage
bags used instead of plastic
ones reached 60%

ARRAIL GROUP LIMITEDESG Report 2022/23

37

VI. Promoting Green Operation

Type of targets

Setting of targets

Target of energy•

efficiency

For the year 2024/2025, the Group will reduce per

Progress for the year
2022/2023–

capita electricity consumption by 3% comparedto the year 2022/2023 by switching to LED lights,
further implementing the Energy Conservation andResource Management System , increasing theuse of renewable resources such as solar energy,
promoting computer power-saving modes, andadjusting the temperature of air conditioners in
winter and summer*••

From the year 2023/2024, the Group plans to

For the year 2022/2023, thecontinue the purchase of renewable energy

Group had not purchased

certificates to offset the electricity consumed inany renewable energy

operations

certificates yet.

For the year 2023/2024, the Group will achieve a

For the year 2022/2023,

100% installation rate of inverter air conditioners

the percentage of inverter

and energy-saving lamps

air conditioners and energysaving lamps reached 80%

Target of water•

efficiency

For the year 2023/2024 and the year 2025/2026,

For the year 2022/2023,

the Group will reduce per capita water consumption

the Group’s adoption rate

by 3% and 15% respectively, compared to the yearof water saving faucets and2021/2022, by adopting water-saving faucets andsanitary ware reached 80%

sanitary ware, increasing reclaimed water circulation
systems and enhancing the implementation of theEnergy Conservation and Resource Management

System•For the year 2024/2025, the Group will achieve a

For the year 2022/2023,

90% replacement rate for old wastewater treatment

the Group replaced 60% offacilities

old wastewater treatment
facilities•

For the year 2023/2024, the Group will achieve an

For the year 2022/2023, the

80% retrofitting rate of electronic valves in drainage

Group installed electronic

piping systems

valves for 100% of drainage
piping systems, completingthe target•

For the year 2023/2024, the Group’s automatic

For the year 2022/2023, thesensor water tap installation rate will reach 100%.

Group’s automatic sensor
water tap installation rate
reached 70%

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ARRAIL GROUP LIMITEDESG Report 2022/23

VI. Promoting Green Operation

Type of targets

Setting of targets

Others•Progress for the year
2022/2023

From the year 2023/2024, the Group will prioritize

For the year 2022/2023,

the LEED-certified buildings when renting/

the Group rented the LEED-

purchasing new workplacescertified building (Gemdale
Matrix Center)*

Due to the expansion of the statistical scope of greenhouse gas emissions in the year 2022/2023 to administrative office areas,
hospitals and clinics in the Beijing, Shanghai, Guangzhou, Chongqing, and Chengdu regions of the Group, compared to the year
2021/2022, we have updated the targets set for the previous year.

ARRAIL GROUP LIMITEDESG Report 2022/23

39

VII. Caring For Employees and Society
The Group regards talents as the main driving force for robust development. With a focus on attracting
talents, the Group provides competitive salaries and benefits, respects and protects the legitimate rights andinterests of each employee, and cares for the occupational health and safety of employees. The Group iscommitted to creating a platform for employees to improve their proficiency and seek long-term development,so as to promote the common development of the enterprise and employees. In the meantime, adhering to
its core philosophy of “integrity, professionalism and being a good person”, the Group actively fulfills its social
responsibilities as a corporate citizen, develops hand in hand with communities and the public, and promotes
the sustainable development of the social healthcare industry with its reliable professionalism and humanistic
care.

(I)

PROTECTING EMPLOYEES’ RIGHTS AND INTERESTSThe Group strictly complies with relevant laws and regulations such as the Labor Law of the People’s

Republic of China , the Social Insurance Law of the People’s Republic of China , the Rules on the Labor
Protection of Female Employees , and the Implementation Measures for Paid Annual Leave for Employeesof Enterprises , and continues to identify and track the latest developments. On this basis, we havedeveloped relevant internal rules and regulations such as the Employee Manual of Arrail Group , which covers
employee remuneration and benefits, promotion and development, working hours, leave management, antidiscrimination and other aspects, striving to provide employees with a fair, impartial, diversified and equal
working environment.
The Group enters into formal labor contracts with the recruits in accordance with the law, and provides themwith basic guarantees such as social insurance and housing fund, as well as competitive remuneration. For
the year 2022/2023, the Group adjusted the policy for dentist commission to offer more fair and reasonable
remuneration for all employees. By doing so, the Group has stuck a balance between the income frommanagement duties and the income from personal performance, ensuring that the commission scheme isin line with the market rates, and yet competitive enough. To design a reasonable and feasible scheme, weestablished a project team and engaged external consultants to do a lot of internal and external surveys,
covering 44 institutions in the first-tier and second-tier cities.
The Employee Manual provides clear rules for resignation, termination and other issues to effectively protect
the legitimate rights and interests of employees. In addition, we respect religious beliefs and encourage
diversity within the Group. We do not tolerate any discrimination based on race, gender, place of origin,age, physical status, etc. At the same time, we value the opinions of our employees and have established asmooth and efficient communication channel for employees. Employees can give feedbacks to the Group’s
management via suggestion box, e-mail, and other online and offline channels.
The Group strictly prohibits the employment of child labor and forced labor. The Human Resources
Department checks the identity documents of the candidates one by one to ensure that the recruits havereached the legal working age and voluntarily participated in labor. In case of any child labor or forced labor,
we will actively take remedial measures, communicate with the labors concerned and their legal guardians,
and make proper arrangements for them according to the law.

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ARRAIL GROUP LIMITEDESG Report 2022/23

VII. Caring For Employees and Society

For the year 2022/2023, the Group did not have any violations of labor-related laws and regulations andinfringement of employees’ rights and interests that had a significant impact on the Group, nor was it subject
to any penalties regarding the protection of employees’ rights and interests.
As at March 31, 2023, the Group had totally 3,665 employees including part-time and internship, with anannual turnover rate of 21%.
KPI: EMPLOYMENT
Indicator

The year 2022/2023
Full-time (including
re-employed retirees)

Total headcount by employment type

Number of employees by gender

Number of employees by age

Total headcount by geographical region

3,409

Part-time

222

Internship

34

Male

675

Female2,990

Aged 30 and below

1,795

Aged 31 to 50

1,614

Aged 51 and above

256

Beijing area

1,150

Non-Beijing area

2,515

KPI: TURNOVER RATE OF EMPLOYEES
Indicator

Unit

The year 2022/2023

Male

%

17

Female%22

Aged 30 and below%

27

Aged 31 to 50%

15

Aged 51 and above%

7

Employee turnover rate by geographical

Non-Beijing area%

20

region*Beijing area%

22

Employee turnover rate by gender*

Employee turnover rate by age**

The turnover rate refers to the voluntary turnover rate of the Group, and does not include part-time employees and interns.

ARRAIL GROUP LIMITEDESG Report 2022/23

41

VII. Caring For Employees and Society(II)

HELPING EMPLOYEES GROWThe Group values the cultivation of talents and regards the development of employees as an important
driving force for corporate development and an important aspect of corporate social responsibility. At thesame time, the growth and development of employees can also effectively stimulate their creativity andspirit of dedication, which continuously promotes the competitiveness of the enterprise. The Group hascustomized career plans for different roles and positions to enhance development, and helps employees invarious positions to improve their career development paths and growth systems, so as to achieve a win-win
situation for the coordinated development of the enterprise and employees.
TALENT DEVELOPMENTThe Group continues to build a high-quality workforce. Through various recruitment channels such as campus
recruitment and website recruitment, the Group actively introduces dental medical and management talentsin the industry, and reserves and fosters new forces. In the process of talent introduction, the Group strictly
abides by the Labor Law of the People’s Republic of China , the Labor Contract Law of the People’s Republicof China , the Rules for the Implementation of the Labor Contract Law of the People’s Republic of China andother laws and regulations and has defined the employee recruitment management system in the Employee

Manual of Arrail Group . For the year 2022/2023, the campus recruitment interview process of the Group has
been comprehensively upgraded, from scattered interviews in various regions in previous years to centralizedinterviews by the Group’s expert group. Candidates who pass the centralized interviews will then undergo reinterviews in various regions. The new interview process not only greatly improves interview efficiency, butalso ensures the quality of candidates.
The Group provides employees with dual channels of professional development and management
development and establishes a clear career development path for employees according to their personal
choices. The Group has put in place a well-established system of assessment, evaluation and mentorshipfor talent cultivation in each specialty, providing each doctor with ample options in different specialties. This
enables doctors with potential and pursuits of clinical skills in their specialties to be identified and trained in atimely manner.
Besides, the Group has set up the “Arrail’s partnership system”, which aims to attract and promote talented
professionals who agree with Arrail’s values and keep in line with the Group’s interests, enable doctors toparticipate more deeply in the operation and management of clinics, improve their subjective initiative, andenhance the performance of clinics. In addition, the Group has established an equity incentive mechanism
to grant equity to the Company’s senior managers and key personnel in key positions. This mechanism
effectively encourages employees to make progress and grow together with the Group. As of March 2023, a
total of 573 employees had been approved by the Board of Directors as grantees of the program.

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ARRAIL GROUP LIMITEDESG Report 2022/23

VII. Caring For Employees and Society

PROFESSIONAL TRAININGThe Group has established a comprehensive and well-developed professional training system that covers
the entire career cycle of every employee. At the onboarding stage, all new employees are required toparticipate in the “orientation training” developed by the Group, which includes general knowledge learningand introduction to different positions such as doctors, nursing, customer service and basic operation.
Arrail Academy and the Group’s dental clinics jointly offer special promotion training programs in different
forms and at different levels to employees who have been serving for one year, so as to help them gradually
improve their professional skills and achieve substantial career development.
We have developed a comprehensive mentorship training system to support the development of new doctors.
This system comprises of an orientation training, followed by two stages of mentorship training, aiming atoffering new doctors with skills and knowledge required for junior attending physicians.

Stage 1: general training

Stage 2: specialty training

During the first six months, ournewly hired doctors will receive’In the next six months, basedon each doctor’s major during

The specialty training lasts for
two years. Newly hired doctors

general training aiming at
equipping them with basic
dental clinical technologies,
and fundamental knowledge
and theories. In addition, they

their graduate study, personal
interest, and the Company’s
needs, they will be designatedas assistants to senior doctors
in general practice and relevant

will participate in clinical work
as official doctors in theirrespective fields and receive
relatedspecialty
training,
includingprofessional

will also receive training on
good customer relationships
and effective doctor-patientcommunication.

specialties such as general,
implantology/restoration,orthodontics,
endodontics,
periodontology, surgery andtheoreticalcourses,
twice-a-weekandonce-a-month seminars oncomplexcases
organized

pediatric
dentistry.
Upon completing the generaltraining and passing theassessment, they will proceed
to the next stage of specialty
training.

respectively by the Group andlocal branches, professional
learning and case discussions.
Furthermore,theycancontinuously improve theirclinical diagnosis and treatment
capabilities under the guidanceof their mentors.

In respect of nursing positions, the orientation training for new nurses requires them to complete theprofessional knowledge learning via the online Arrail Academy platform and pass the exam within two weeksof their employment, and receive offline coaching and guidance according to their major. Meanwhile, in order
to effectively improve the comprehensive quality and oral professional ability of all nurses, we have organizedover 200 online, offline, practical exercises, assessments, technical competitions, and other forms of training
across the country, effectively improving the professional ability of oral nursing personnel to ensure the qualityof clinical medical treatment and nursing.

ARRAIL GROUP LIMITEDESG Report 2022/23

43

VII. Caring For Employees and Society

Nursing Department Training[Case: Training for young doctors in Rytime Dental]
The Group conducted systematic online centralized training for young doctors who haveworked for Rytime brand for less than 5 years and doctors who have been transferredfrom medical assistants. A total of 58 young doctors from Rytime brand attended thistraining, which solved their problems in general practice, strengthened their basic treatment
capabilities, and promoted standardized treatment. Therefore, the quality of medical services
is enhanced and medical risks are prevented. Additionally, the training effectively improved
their abilities in doctor-patient communication and information collection and built a bridge
between young doctors and senior doctors in the team, thus enhancing their interdisciplinary
cooperation capabilities.

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ARRAIL GROUP LIMITEDESG Report 2022/23

VII. Caring For Employees and Society[Case: The Second Star Doctor Training Camp for Children’s Early Orthodontics]
In February 2023, the second Doctor Training Camp for Children’s Early Orthodontics
organized by the Group was successfully concluded. This training camp consists of threemain parts: lectures on early orthodontic knowledge system, case sharing by Arrail doctors
and analysis of offline practical operation. It gathered numerous outstanding lecturers fromboth Arrail Group and ILoveMore medical team. The offline classrooms were packed withparticipants including the Group’s internal doctors and top medical professionals from allover the country. To meet the desire of numerous doctors for cutting-edge knowledge on
early orthodontics, we conducted free and open livestreaming in the knowledge lectures andcase sharing sessions, allowing nearly 20 thousand people across the country to learn online
simultaneously with more than 200 thousand likes and interactions. The comment section
was abuzz with interaction and exchanges among viewers who expressed satisfaction with
the informative and insightful livestreaming courses.

[Case: Endodontic specialty training]
In 2022, the Group invited internal specialists from the endodontic specialist committee torecord a complete set of videos for specialty training. The 10 videos not only cover medical
history collection, diagnosis, and the use of microscope and rubber dam, but also include
clinical operational details of each step such as pulp opening technique, root canal orifice
positioning, root canal preparation and filling techniques. Furthermore, the videos also explain
the application of cutting-edge technologies such as the selection of vital pulp preservation
solutions. In addition, these videos are attached with corresponding post-class assessment
questions to reinforce the audience’s learning effectiveness through a closed loop of learningand assessment. From October to December 2022, medical deans from local branches took
the lead in organizing intensive training on the 10 videos for doctors at the regional level.
Over a period of 2 months, they completed the general training of endodontics under Level3, with all of 11,392 participants passing the final examination. In the future, these training
videos will continue to be used in specialty training to benefit more doctors.

ARRAIL GROUP LIMITEDESG Report 2022/23

45

VII. Caring For Employees and Society

The Group has established a scientific and systematic online and offline training mechanism, designed training
contents according to developments in the industry and market with continuous renewal and improvement.
We have developed a powerful online training platform to actively support our employees’ career development
through various forms such as online and offline courses, training, meetings, case presentation and seminars.
The platform has launched a total of 1,528 courses with 8,458 visits and 46 thousand learning hours.
This enables our employees to effectively utilize their spare time for self-study and further improve theirprofessional skills.
To continuously enhance the vocational skills and professional qualities of employees, the Group actively
cooperates with domestic and foreign colleges and universities to conduct training and learning, regularlyorganizes visits and study of elite doctors to the School of Dental Medicine of the University of Pennsylvania,
and strengthens the talent strategic cooperation with Peking University School of Stomatology, West China
School of Stomatology, Shanghai Second Medical University, the Fourth Military Medical University, Wuhan
University and other colleges and universities to cultivate and accept high-quality dental professionals. The
Group also sets up Arrail excellent service scholarship in Peking University School of Stomatology and as ofMarch 31, 2023, a total of RMB291,411 yuan has been donated, covering 154 students.
As of March 31, 2023, a total of 3,665 employees of the Group participated in the training, accounting for100% of the whole workforce, with the average training time per employee of 8.18 hours.
KPI: EMPLOYEE TRAINING
Indicator
Proportion of trainees by gender

Proportion of trainees by employee category

Male staff

100%

Female staff

100%

Dentists

100%

Nursing staff

100%

Customer service staff

100%

General administrative staff

100%

Marketing staff

100%

Average training hours per employee by gender

Male staff

9(hour)

Female staff

8

Dentists

15

Nursing staff

9

Customer service staff

9General administrative staff

8

Marketing staff

9

Average training hours per employee by employee
category (hour)46

The year 2022/2023

ARRAIL GROUP LIMITEDESG Report 2022/23

VII. Caring For Employees and Society(III) CARE FOR PHYSICAL AND MENTAL HEALTHThe Group provides a safe and comfortable workplace for all employees, and promotes a healthy andbalanced working style, so as to safeguard the occupational health and safety of employees. We strictly
abide by the Labor Law of the People’s Republic of China , the Fire Protection Law of the People’s Republicof China , the Law of the People’s Republic of China on Prevention and Control of Occupational Diseases ,the Regulation on Work-Related Injury Insurance and other occupational health and safety related laws andregulations. Besides, we have established a health and safety internal management system for employees.
OCCUPATIONAL HEALTH
To safeguard the health of our employees, we organize annual physical examinations for all employees, sothat they can pay attention to their health status and detect existing and potential health problems in a timely
manner. And at the same time, the Group also values the potential impact of radiological medical equipmenton the health of employees. In the actual operation, in strict compliance with the requirements of radiationrelated regulations, such as the Provisions on the Administration of Radiological Diagnosis and Treatment ,the Regulations on the Safety and Protection of Radioisotopes and Radiation Devices , and the Measures

for the Administration of Safety Licensing for Radioisotopes and Radiation Devices , we are inspected by theenvironmental protection administrative department and other relevant departments as stipulated in related
regulations, and we carry out environmental protection-related procedures such as environmental impact
approval, acceptance and radiation safety licensing in accordance with the law. As a diagnosis and treatment
institution, we have obtained the licenses of diagnosis and treatment technology and medical radiation
institution in accordance with the law to ensure that radiation levels of radiation treatment equipment andradiation workplaces meet relevant national standards.
To better protect occupational health and safety, the Group has established a comprehensive work injury
protection system based on the requirements of relevant laws and regulations, and purchased medical
insurance and work injury insurance for all employees. In case of any work injury, we can ensure that the
injured are treated promptly by adopting a rapid and effective response mechanism. The Group’s number andrate of work-related fatalities occurred for each of the years 2020/2021 to 2022/2023 was all zero. For theyear 2022/2023, the lost days due to work injury was 164.
EMPLOYEE CAREThe Group makes great efforts to create a positive, harmonious and pleasant corporate culture centered on
employees’ actual needs, so as to enhance their sense of integration and identity with the corporate culture.
In addition, the Group actively provides financial and spiritual support to employees with difficulties in their
daily lives, to help them get through tough time. During the holidays, we bring satisfactory gifts and extend
greetings to all employees, and organize warm and joyful festive celebrations. Employees have received
care from the Company and enjoyed the fruits of corporate development owing to their efforts through thesehumanistic cares which convey the Group’s care for them with practices.

ARRAIL GROUP LIMITEDESG Report 2022/23

47

VII. Caring For Employees and Society[Case: Burning My Calories – Arrail National Fitness Month Online Challenge]
To encourage employees to actively participate in sports activities after work and maintain
good health, the Group organized the “Burning My Calories – Arrail National Fitness Month
Online Challenge” from October to November 2022. Participants join the Beginner group(>150kcal), Intermediate group (250kcal), or Advanced group (400kcal) based on their own
situation. During the activity, participants should exercise daily to consume calories no lessthan the target value of their registered groups in their spare time. Participants who exercise
for at least 20 successive days in the activity gain success, and the top three of each groupwill receive generous prizes. A total of 500 employees participated in the activity, with 65
ultimately completing the challenge and 36 persistently exercising for over 21 days. Throughthis activity, employees have developed good exercise habits and actively participated intheir future work and life with good health.

[Case: Arrail Charity Fund to assist employees in difficulties]
For the year 2022/2023, Arrail Group updated the Management Measures for Arrail Charity
Fund to better assist employees with living difficulties. During this year, the Group provided
financial assistance to 5 employees by offering them financial support of RMB60,000 in total,of which the Charity Fund provided RMB30,000 and the Company contributed RMB30,000.
The Group delivers care for its employees with practical actions, and helps those who are indifficulties to quickly get through their hard time for a brighter future.

48

ARRAIL GROUP LIMITEDESG Report 2022/23

VII. Caring For Employees and Society(IV) BUILDING A BEAUTIFUL HOMELAND
Adhering to its core philosophy of “integrity, professionalism and being a good person”, the Group actively
fulfils its social responsibilities as a corporate citizen, and promotes the sustainable development of the social
healthcare industry with its reliable professionalism and humanistic care. For the year 2022/2023, we carriedout a variety of public welfare programs and community activities to fully leverage our advantages as aprofessional dental organization. We combined oral disease diagnosis and treatment with oral health publicity,and integrated daily oral health publicity with centralized publicity. Moreover, we actively carried out charitable
donations, and developed hand in hand with the industry, communities and the public to support sustainable
development of society.
BENEFITING THE PUBLIC WITH HEALTHCAREThe Group is convinced that oral health plays an important role in public health. We always adhere to themission of “serving communities and giving back to society”, and actively organize and carry out publicity
activities related to free clinical services in communities, enterprises and schools. In response to the national
policy, the Group has launched a series of policies that benefit our people to popularize oral health knowledge
and improve the physical quality of our citizens.

ARRAIL GROUP LIMITEDESG Report 2022/23

49

VII. Caring For Employees and Society[Case: Chongqing Rytime’s public welfare activities to build healthy andharmonious communities]
Chongqing Rytime Dental regularly holds activities such as “Little Dentist Experience Camp”,“Oral Public Welfare Lectures for the Elderly”, and oral health salons at various clinics. In thecurrent year, the Group conducted a total of 2,287 community activities and more than 100
in-hospital activities including lectures and free clinical services. We provided free publicity
of oral health knowledge, oral examination, treatment, consultation and other services tocorporate employees and residents in the districts where our hospitals are located, benefiting
a total of 23,996 people.

[Case: Chengdu Rytime’s public welfare activities to benefit special groups
in the region]
In the current year, Chengdu Rytime Dental regularly distributed tens of thousands ofdental coupons online and offline, covering most of the regions, cities, prefectures, andTibetan areas in Sichuan. This helped to alleviate the burden of dental treatment for ordinary
people in Sichuan, benefiting a total of 11,048 people. In addition, Chengdu Rytime joined
hands with multiple labor unions to provide free clinical services, livestream, on-site Q&A,
consultation and examination for corporate employees and retired employees who havemade great contributions to the “third-line construction” of China. This made charitable oral
services available to more than 100 elderly people aged over 60.

CONTRIBUTING TO THE DEVELOPMENT OF COMMUNITIESChengdu Rytime Dental actively fulfills its social responsibilities, builds a charitable oral health system, andwins the trust of the public through continuous charitable programs and free clinical activities, giving backto customers and all sectors of society for their support. In the current year, Chengdu Rytime conducted avariety of activities such as free clinical services in communities, oral examinations and oral health lecturesin primary and secondary schools, and visited government organs, communities, enterprises, and schools to
popularize medical knowledge in 828 sessions of activities. These public welfare activities benefited 16,572
people.

50

ARRAIL GROUP LIMITEDESG Report 2022/23

VII. Caring For Employees and Society

Chengdu Rytime’s Community Welfare Programs
CHARITABLE DONATIONThe road of public welfare never ends since it starts. Since its inception, Arrail Group has always beencommitted to public welfare and actively fulfilled its social responsibilities, making continuous progressin public welfare activities. Starting from 2011, the Group and China Oral Health Foundation have jointly
launched the “Program of Oral Disease Prevention and Treatment for Orphans and Disabled Children”. Asof the end 2022/2023, the program had covered 40,448 people in 52 cities of 23 provinces. In addition,
the Group has established scholarship programs in universities, not only to support students in need andoutstanding students, but also to support teachers and promote scientific research projects, elevating our
public welfare projects from “giving by the fish” to a new stage of “giving by the fishing”.

ARRAIL GROUP LIMITEDESG Report 2022/23

51

VII. Caring For Employees and Society[Case: Arrail Group visited “Guang’ai School” to deliver care to children]Children’s oral health is the cornerstone of lifelong health, but the oral health of special
children is often overlooked. In August 2022, Arrail Group visited Beijing Guang’ai School,
the first public welfare boarding school for street/left-behind children in China, to provide thechildren with oral health education, oral examination, fluoride treatment and other free clinicalservices. On the day of the event, the medical team provided free oral clinical services forall students in an orderly manner. They gently and carefully examined the children’s oral
condition, and patiently explained how to protect teeth, the correct order of brushing teeth,
and other related knowledge, with the aim of helping children develop proper oral healthawareness and behavior, and drawing more public attention on special children.

Arrail Group visited “Guang’ai School” to deliver care to children

52

ARRAIL GROUP LIMITEDESG Report 2022/23

VII. Caring For Employees and Society[Case: “Southwest Medical University • Rytime Stomatological Scholarship”
public welfare project]
In October 2022, Chongqing Rytime officially set up “Southwest Medical University • Rytime
Stomatology Scholarship” in Southwest Medical University, which was jointly donated by
Chongqing Rytime Stomatology Hospital and the manager of Chongqing Rytime in person,and provided targeted funds to Oral medicine School of Southwest Medical University.
The scholarship is divided into five special programs, “Rytime Seedling Cultivation Fund”“Rytime Reward Fund” “Excellent Student Scholarship” “Rytime Excellent Gardener Award”
and “Rytime Difficult Students Scholarship”. These programs are used to reward graduate
students and resident doctors who have won various scientific research and skill competition
awards, graduate students who have both excellent moral character, graduate supervisors
and teaching teachers who have achieved outstanding results in graduate student training
and resident doctor training, as well as poverty-stricken students. The establishment of
the scholarship program has strongly promoted the teaching and scientific research of
the School of Oral medicine of Southwest Medical University, encouraged students to beproactive and diligent in professional research, and demonstrated the spirit of responsibilityof the Group.

“Southwest Medical University • Rytime Stomatological Scholarship” project

ARRAIL GROUP LIMITEDESG Report 2022/23

53

Appendix
INDEX TABLE OF THE STOCK EXCHANGE’S ESG REPORTING GUIDE
Mandatory disclosure

General disclosure andCorresponding

requirements

key performance indicators

reporting location

Governance structure

A statement from the board containing the

SUSTAINABILITY

following elements:

MANAGEMENT –(1) a disclosure of the board’s oversight of ESG

Statement of theissues;Board of Directors(2) the board’s ESG management approachand strategy, including the process used toevaluate, prioritize and manage material ESGrelated issues (including risks to the issuer’s
businesses); and(3) how the board reviews progress madeagainst ESG-related goals and targets with an
explanation of how they relate to the issuer’s
businesses.
Reporting principles

A description of, or an explanation on, the

ABOUT THIS REPORT

application of the following Reporting Principles in
the preparation of the ESG report:(1) Materiality: The ESG report should disclose:(i) the process to identify and the criteria forthe selection of material ESG factors; (ii) if
a stakeholder engagement is conducted, adescription of significant stakeholders identified,
and the process and results of the issuer’s
stakeholder engagement;(2) Quantitative: Information on the standards,
methodologies, assumptions and/or calculation
tools used, and source of conversion factors
used, for the reporting of emissions/energy
consumption (where applicable) should be
disclosed;(3) Consistency: The issuer should disclose in the
ESG report any changes to the methods or KPIs
used, or any other relevant factors affecting ameaningful comparison.
Reporting boundary

A narrative explaining the reporting boundaries of
the ESG report and describing the process used to
identify which entities or operations are included in
the ESG report. If there is a change in the scope,
the issuer should explain the difference and reason
for the change.

54

ARRAIL GROUP LIMITEDESG Report 2022/23

ABOUT THIS REPORTAppendix“Comply or explain”

General disclosure andCorresponding

provisions

key performance indicators

reporting location

A1

General Disclosure:

PROMOTING GREEN

Emissions

Information on:

OPERATION –(a) the policies; andEnhancing emissions(b) compliance with relevant laws andmanagement

Environmental

regulations that have a significant impact
on the issuer
relating to air and greenhouse gas emissions,discharges into water and land, and generationof hazardous and non-hazardous waste.
A1.1 The types of emissions and respective

PROMOTING GREEN

emissions data.

OPERATION –Enhancing emissions
management

A1.2 Direct (Scope 1) and energy indirect

PROMOTING GREEN(Scope 2) greenhouse gas emissions (inOPERATION –tonnes) and, where appropriate, intensity (e.g.

Enhancing emissions

per unit of production volume, per facility).

management

A1.3 Total hazardous waste produced (inPROMOTING GREEN

tonnes) and, where appropriate, intensity (e.g.

OPERATION –per unit of production volume, per facility).

Enhancing emissions
management

A1.4 Total non-hazardous waste produced (inPROMOTING GREEN

tonnes) and, where appropriate, intensity (e.g.

OPERATION –per unit of production volume, per facility).

Enhancing emissions
management

A1.5 Description of emissions target(s) set and

PROMOTING GREEN

steps taken to achieve them.

OPERATION –Environmental targets

A1.6 Description of how hazardous and

PROMOTING GREEN

non-hazardous wastes are handled, and a

OPERATION –description of reduction target(s) set and steps

Enhancing emissions

taken to achieve them.

management

ARRAIL GROUP LIMITEDESG Report 2022/23

55

Appendix“Comply or explain”

General disclosure andCorresponding

provisions

key performance indicators

reporting location

A2

General Disclosure: Policies on efficient use of

PROMOTING GREEN

Use ofresources, including energy, water and other

OPERATION –Resources

raw materials.

Optimizing resource
utilization

A2.1 Direct and/or indirect energy consumption

PROMOTING GREEN

by type (e.g. electricity, gas or oil) in total

OPERATION –(kWh in ’000s) and intensity (e.g. per unit of

Optimizing resource

production volume, per facility).

utilization

A2.2 Water consumption in total and intensity

PROMOTING GREEN(e.g. per unit of production volume, per facility).

OPERATION –Optimizing resource
utilization

A2.3 Description of energy use efficiency

PROMOTING GREEN

target(s) set and steps taken to achieve them.

OPERATION –Optimizing
resource utilization;
Environmental
targets

A2.4 Description of whether there is any issue

PROMOTING GREEN

in sourcing water that is fit for purpose, water

OPERATION –efficiency target(s) set and steps taken to

Optimizing resource

achieve them.

utilization;
Environmental targets

A2.5 Total packaging material used for finished

PROMOTING GREEN

products (in tonnes) and, if applicable, withOPERATION –reference to per unit produced.

Optimizing resource
utilization

A3

General Disclosure: Policies on minimising the

PROMOTING GREEN

The

issuer’s significant impacts on the environment

OPERATION –Environment

and natural resources.

Enhancing emissions

and Natural

management；

Resources

Optimizing resource
utilization
A3.1 Description of the significant impacts

PROMOTING GREEN

of activities on the environment and natural

OPERATION –resources and the actions taken to manage

Enhancing emissions

them.

management；
Optimizing resource
utilization

56

ARRAIL GROUP LIMITEDESG Report 2022/23

Appendix“Comply or explain”

General disclosure andCorresponding

provisions

key performance indicators

reporting location

A4

General Disclosure: Policies on identification

PROMOTING GREEN

Climateand mitigation of significant climate-related

OPERATION –Changeissues which have impacted, and those which

Responding to climate

may impact, the issuer.

changeA4.1 Description of the significant climate-

PROMOTING GREEN

related issues which have impacted, and those

OPERATION –which may impact, the issuer, and the actions

Responding to climate

taken to manage them.

changeB1

General Disclosure:

CARING FOR

Employment

Information on:

EMPLOYEES AND(a) the policies; andSOCIETY – Protecting(b) compliance with relevant laws andemployees’ rights andSocialregulations that have a significant impact

interests

on the issuer
relating to compensation and dismissal,
recruitment and promotion, working hours,
rest periods, equal opportunity, diversity, antidiscrimination, and other benefits and welfare.
B1.1 Total workforce by gender, employment

CARING FOR

type (for example, full- or part-time), age group

EMPLOYEES AND

and geographical region.

SOCIETY – Protecting
employees’ rights andinterests

B1.2 Employee turnover rate by gender, age

CARING FOR

group and geographical region.

EMPLOYEES AND
SOCIETY – Protecting
employees’ rights andinterests

ARRAIL GROUP LIMITEDESG Report 2022/23

57

Appendix“Comply or explain”

General disclosure andCorresponding

provisions

key performance indicators

reporting location

B2

General Disclosure:

CARING FOR

Health andInformation on:

EMPLOYEES AND

Safety(a) the policies; andSOCIETY – Care for(b) compliance with relevant laws andphysical and mental

regulations that have a significant impact

healthon the issuer
relating to providing a safe working
environment and protecting employees fromoccupational hazards.
B2.1 Number and rate of work-related fatalities

CARING FOR

occurred in each of the past three years

EMPLOYEES AND

including the reporting year.

SOCIETY – Care forphysical and mental
health

B2.2 Lost days due to work injury.

CARING FOREMPLOYEES AND
SOCIETY – Care forphysical and mental
healthB2.3 Description of occupational health and

CARING FOR

safety measures adopted, and how they are

EMPLOYEES AND

implemented and monitored.

SOCIETY – Care forphysical and mental
healthB3General Disclosure: Policies on improving

CARING FOR

Development

employees’ knowledge and skills for

EMPLOYEES AND

and Training

discharging duties at work. Description of

SOCIETY – Helping

training activities.

employees growB3.1 The percentage of employees trained by

CARING FOR

gender and employee category (e.g. senior

EMPLOYEES AND

management, middle management).

SOCIETY – Helping
employees growB3.2 The average training hours completed per

CARING FOR

employee by gender and employee category.

EMPLOYEES AND
SOCIETY – Helping
employees grow

58

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Appendix“Comply or explain”

General disclosure andCorresponding

provisions

key performance indicators

reporting location

B4

General Disclosure:

CARING FOR

LabourInformation on:

EMPLOYEES AND

Standards(a) the policies; andSOCIETY – Protecting(b) compliance with relevant laws andemployees’ rights andregulations that have a significant impact

interests

on the issuer
relating to preventing child and forced labor.
B4.1 Description of measures to review

CARING FOR

employment practices to avoid child and

EMPLOYEES AND

forced labour.

SOCIETY – Protecting
employees’ rights andinterests

B4.2 Description of steps taken to eliminate

CARING FOR

such practices when discovered.

EMPLOYEES AND
SOCIETY – Protecting
employees’ rights andinterests

B5

General Disclosure: Policies on managing

STRENGTHENING

Supply Chain

environmental and social risks of the supply

OPERATIONManagement

chain.

COMPLIANCE –Supplier management

B5.1 Number of suppliers by geographical

STRENGTHENING

region.

OPERATIONCOMPLIANCE –Supplier management

B5.2 Description of practices relating to

STRENGTHENING

engaging suppliers, number of suppliers where

OPERATION

the practices are being implemented, and how

COMPLIANCE –they are implemented and monitored.

Supplier management

B5.3 Description of practices used to identify

STRENGTHENING

environmental and social risks along the supply

OPERATION

chain, and how they are implemented and

COMPLIANCE –monitored.

Supplier management

B5.4 Description of practices used to promote

STRENGTHENING

environmentally preferable products and

OPERATION

services when selecting suppliers, and how

COMPLIANCE –they are implemented and monitored.

Supplier management

ARRAIL GROUP LIMITEDESG Report 2022/23

59

Appendix“Comply or explain”

General disclosure andCorresponding

provisions

key performance indicators

reporting location

B6

General Disclosure:

IMPROVING MEDICAL

Product

Information on:

SERVICE QUALITY

Responsibility(a) the policies; and– Ensuring medical(b) compliance with relevant laws andsafety; Enhancing

regulations that have a significant impact

service quality;

on the issuer

Responding torelating to health and safety, advertising,patients’ demands

labelling and privacy matters relating to

STRENGTHENING

products and services provided and methods

OPERATION

of redress.

COMPLIANCE –Advertising andbrand management;
Privacy protection andinformation security

B6.1 Percentage of total products sold or

The Group does notshipped subject to recalls for safety and healthinvolve any situation

reasons.

of total products soldor shipped that are
subject to recalls forsafety and healthreasons.

B6.2 Number of products and service related

IMPROVING MEDICAL

complaints received and how they are dealt

SERVICE QUALITY –with.

Responding topatients’ demands

B6.3 Description of practices relating to

STRENGTHENING

observing and protecting intellectual property

OPERATION

rights.

COMPLIANCE –Advertising and brandmanagement

B6.4 Description of quality assurance process

IMPROVING MEDICAL

and recall procedures.

SERVICE QUALITY –Improving medical
quality standards;
Ensuring medical
safety; Enhancing
service quality

60

ARRAIL GROUP LIMITEDESG Report 2022/23

Appendix“Comply or explain”

General disclosure andCorresponding

provisions

key performance indicators

reporting location

B6.5 Description of consumer data protection

STRENGTHENING

and privacy policies, and how they are

OPERATION

implemented and monitored.

COMPLIANCE –Privacy protection andinformation security

B7

General Disclosure:

STRENGTHENING

Anti-

Information on:

OPERATION

corruption(a) the policies; andCOMPLIANCE –(b) compliance with relevant laws andPractice of integrity

regulations that have a significant impact
on the issuer
relating to bribery, extortion, fraud and money
laundering.
B7.1 Number of concluded legal cases

STRENGTHENING

regarding corrupt practices brought against

OPERATION

the issuer or its employees during the reporting

COMPLIANCE –period and the outcomes of the cases.

Practice of integrity

B7.2 Description of preventive measures and

STRENGTHENING

whistle-blowing procedures, and how they are

OPERATION

implemented and monitored.

COMPLIANCE –Practice of integrity

B7.3 Description of anti-corruption training

STRENGTHENING

provided to directors and staff.

OPERATIONCOMPLIANCE –Practice of integrity

B8

General Disclosure: Policies on community

CARING FOR

Community

engagement to understand the needs of the

EMPLOYEES AND

Investmentcommunities where the issuer operates and to

SOCIETY – Building aensure its activities take into consideration thebeautiful homelandcommunities’ interests.
B8.1 Focus areas of contribution (e.g.

CARING FOR

education, environmental concerns, labour

EMPLOYEES AND

needs, health, culture, sport).

SOCIETY – Building abeautiful homeland

B8.2 Resources contributed (e.g. money or

CARING FORtime) to the focus area.

EMPLOYEES AND
SOCIETY – Building abeautiful homeland

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Appendix

INDEX TABLE OF THE SASB STANDARD
Topic

Accounting metric

Unit ofmeasureCorresponding
Codereportinglocationenergy– Total energy consumed

GJ

HC-DY-PROMOTING

Management– percentage grid electricity%

130a.1GREEN– percentage renewable

OPERATION –Optimizing
resource
utilization

Waste

Total amount of medical waste,t

HC-DY-PROMOTING

Management

percentage%

150a.1

GREEN– incinerated

OPERATION –– recycled or treatedEnhancing– landfilled

emissionsmanagement

Total amount of: (1) hazardous and (2)t

HC-DY-The business ofnonhazardous pharmaceutical waste,%

150a.2the Group does

percentage

not involve the– incinerated

generation of– recycled or treatedwastes– landfilled
Patient

Description of policies and practices

Privacy

to secure customers’ protected health& Electronic

information (PHI) records and other

COMPLIANCE –Healthpersonally identifiable information (PII)

Privacy protection–

HC-DY-STRENGTHENING

230a.2OPERATION

Records

and information
security

Management

Description of policies and practicesof Controlled

to manage the number of prescriptions

Substances

issued for controlled substances–

HC-DY-

IMPROVING

260a.1

MEDICALSERVICEQUALITY –Ensuring medical
safety62

ARRAIL GROUP LIMITEDESG Report 2022/23

Appendix

Topic

Accounting metric

Unit ofmeasureCorresponding
Codereportinglocation

Pricing &Description of policies or initiatives toBilling

ensure that patients are adequately

Transparency

informed about price before undergoing

SERVICEa procedure

QUALITY ––HC-DY-

IMPROVING

270a.1

MEDICAL

Enhancing service
quality
Discussion of how pricing information–

for services is made publicly available

HC-DY-

IMPROVING

270a.2

MEDICALSERVICEQUALITY –Enhancing service
quality

Employee

Description of talent recruitment

Recruitment,

and retention efforts for health care

Development

practitioners–

HC-DY-CARING FOR

330a.2EMPLOYEESAND SOCIETY –& Retention

Protecting
employees’ rights
and interests

ClimateDescription of policies and practices toChangeaddress: (1) the physical risks due to

Impacts on

an increased frequency and intensity of

OPERATION –Human

extreme weather events and (2) changes

Responding to

Health &in the morbidity and mortality rates ofclimate change

Infrastructureillnesses and diseases, associated with–

HC-DY-PROMOTING

450a.1

GREEN

climate change

ARRAIL GROUP LIMITEDESG Report 2022/23

63

R

Arrail Group Limited

瑞 爾 集 團 有 限 公司

（ 於英 屬維 爾 京 群島註 冊成 立 並 於 開曼群島 存 續的 有限公司）(Incorporated in the British Virgin Islands with limited liability
and continued in the Cayman Islands)

股份代號 Stock Code: 6639