Financial Performance - The company achieved a revenue of RMB 1,052.0 million for the year ended December 31, 2022, representing a growth of 38.2% compared to RMB 761.4 million in 2021[9]. - Gross profit for the same period was RMB 636.4 million, an increase of 27.5% from RMB 499.2 million in 2021[8]. - Net profit reached RMB 204.8 million, marking a significant increase of 121.1% from RMB 92.6 million in the previous year[9]. - The company achieved a sales revenue of RMB 1,052.0 million in 2022, an increase of 38.2% year-on-year, and a net profit of RMB 204.8 million, up 121.1% year-on-year[25]. - Revenue from hip and knee implant products reached RMB 921.4 million in 2022, representing a growth of 44.7% compared to the previous year[26]. - The revenue from customized products and services increased by 101.3% year-on-year, totaling RMB 47.0 million in 2022[32]. - Sales revenue from overseas markets grew by 27.2% to RMB 165.7 million, while domestic sales in China increased by 40.4% to RMB 886.3 million[56]. - The company reported a significant increase in revenue for the year ending December 31, 2022, with audited financial statements reflecting strong performance[109]. Dividend and Shareholder Information - The company plans to pay a final dividend of HKD 0.06 per share for the year ended December 31, 2022[10]. - The company intends to distribute a final dividend of HKD 0.06 per share for the year ended December 31, 2022, up from HKD 0.025 in 2021, subject to shareholder approval[125]. - As of December 31, 2022, the total reserves available for distribution to equity shareholders amounted to RMB 1,027.6 million[134]. Market Position and Strategy - The domestic business revenue accounted for a significant portion of total sales, with a market share exceeding 90% in provincial hospitals[20]. - The company won the largest bid volume in the national joint implant procurement, enhancing its market share in the orthopedic industry[25]. - The company aims to enhance its market share in the mid-to-high-end market while consolidating its position in the mass market through advanced technology and professional services[42]. - The company plans to continue expanding its market presence, particularly in orthopedic surgeries, following the rapid growth in surgical volumes due to the implementation of volume-based procurement policies[115]. Product Development and Innovation - The company has obtained 6 new Class III medical device registrations, bringing the total to 72, enhancing its product offerings[20]. - The company has accumulated over 650 patents, ranking among the top three in the national invention patent list for specialized and innovative small giant enterprises in the medical device sector[20]. - The company has developed a digital surgical navigation system for hip joint replacement, marking its entry into the orthopedic surgical navigation and robotics field[33]. - The company launched multiple new products in 2022, including the first domestic high-crosslinked, dual-system knee joint unicompartmental replacement system and the first 3D printed total hip joint product in China[40]. - The company is committed to promoting digital orthopedic technology commercialization and exploring new biomaterials in collaboration with research institutions[42]. Operational Efficiency and Cost Management - The cost of sales for the year was RMB 415.6 million, an increase of 58.5% from RMB 262.3 million in 2021, primarily due to higher sales volume[57]. - Gross profit for the year was RMB 636.4 million, up 27.5% from RMB 499.2 million in 2021, with a gross margin of 60.5%, down from 65.6% in the previous year[58]. - The implementation of the volume-based procurement policy has led to increased demand for the company's products, offsetting price declines due to competitive bidding[22]. Research and Development - The company is actively involved in research and development of orthopedic implants, with a dedicated research center led by a director with over 10 years of experience in the field[102]. - The company conducted over 40 academic activities in 2022, training more than 300,000 doctors, focusing on complex and revision surgery techniques for hip and knee joints[43]. - The company plans to further commercialize 3D printing products, expanding their application in small joints, spine, and trauma fields[42]. Corporate Governance and Management - The company emphasizes corporate governance and sustainable development, with independent directors like Jiang Zhiwu, who has over 20 years of experience in accounting and auditing[92]. - The company has a strong board of directors with members possessing extensive experience in healthcare and finance, including Dr. Wang Guowei, who has over 10 years of experience in the medical industry[90]. - The management team is committed to strategic planning and operational efficiency to drive growth and profitability in the competitive healthcare sector[89]. - The company has made strategic appointments in its human resources department to strengthen its management capabilities across subsidiaries[106][107]. Employee and Training Initiatives - The company emphasizes employee training and development, investing resources in continuous education programs to enhance skills and knowledge[118]. - The group employed 1,034 employees as of December 31, 2022, with total employee compensation expenses amounting to RMB 206.0 million, slightly up from RMB 204.5 million for the year ended December 31, 2021[77]. Financial Position and Assets - As of December 31, 2022, the group had cash and cash equivalents of RMB 625.8 million, with total current assets net worth increasing to RMB 1,629.0 million from RMB 1,444.9 million as of December 31, 2021[67][68]. - The group had no outstanding bank loans or other borrowings as of December 31, 2022, resulting in a capital debt ratio of 0%[73]. - The company has no outstanding borrowings as of December 31, 2022, indicating a strong financial position[129]. Risks and Challenges - The company acknowledges the potential risks associated with COVID-19, which may impact hospital surgical volumes in early 2023[114].

Financial Performance - The company achieved a revenue of RMB 1,052.0 million for the year ended December 31, 2022, representing a growth of 38.2% compared to RMB 761.4 million in 2021[2] - Gross profit for the same period was RMB 636.4 million, an increase of 27.5% from RMB 499.2 million in the previous year[2] - Net profit surged to RMB 204.8 million, marking a significant increase of 121.1% from RMB 92.6 million in 2021[2] - Basic and diluted earnings per share were both RMB 0.18, compared to RMB 0.08 in the prior year[3] - The total comprehensive income for the year was RMB 228.0 million, up from RMB 74.2 million in 2021[4] - The company reported a profit before tax of RMB 240,290 thousand for 2022, compared to RMB 108,559 thousand in 2021, representing a 121.1% increase[20] - The total revenue before tax for 2022 was RMB 240,290,000, a significant increase from RMB 108,559,000 in 2021, marking a growth of 121.1%[29] - Basic earnings per share rose to RMB 204,772,000 in 2022, compared to RMB 92,619,000 in 2021, reflecting an increase of 120.5%[30] Dividend and Equity - The company plans to distribute a final dividend of HKD 0.06 per share for the year ended December 31, 2022[3] - The company proposed a final dividend of HKD 0.06 per share for 2022, up from HKD 0.025 per share in 2021, which translates to a total of RMB 59,800,000 compared to RMB 22,805,000 in the previous year[34] - The company's total equity attributable to shareholders rose to RMB 2,243.8 million as of December 31, 2022, compared to RMB 2,031.6 million in 2021[9] Assets and Liabilities - Non-current assets increased to RMB 709.1 million in 2022 from RMB 670.9 million in 2021[5] - Current assets included trade receivables of RMB 467.1 million, up from RMB 388.0 million in the previous year[6] - The total assets of the company as of December 31, 2022, were RMB 2,774,492 thousand, an increase from RMB 2,605,284 thousand in 2021[20] - Cash and cash equivalents totaled RMB 625.8 million as of December 31, 2022, an increase from RMB 952.6 million at the end of 2021[70] - As of December 31, 2022, the company had no outstanding bank loans or other borrowings, resulting in a debt-to-equity ratio of 0%[75] Revenue Breakdown - Revenue from hip joint replacement implants was RMB 654,999 thousand in 2022, up 39.4% from RMB 469,493 thousand in 2021[15] - Revenue from knee joint replacement implants increased by 59.2% to RMB 266,415 thousand in 2022 from RMB 167,385 thousand in 2021[15] - The company’s external customer revenue from China was RMB 886,318 thousand in 2022, a 40.5% increase from RMB 631,131 thousand in 2021[23] - The company’s external customer revenue from other countries was RMB 165,729 thousand in 2022, up 27.2% from RMB 130,310 thousand in 2021[23] - Total revenue from domestic sales in China was RMB 886.3 million, a growth of 40.4% from RMB 631.1 million in 2021, while overseas sales reached RMB 165.7 million, up 27.2% from RMB 130.3 million[61] Cost and Expenses - In 2022, the cost of inventory increased to RMB 426,461,000 from RMB 276,214,000 in 2021, representing a growth of 54.4%[26] - Cost of sales increased by 58.5% to RMB 415.6 million in 2022 from RMB 262.3 million in 2021, primarily due to increased sales volume[62] - Research and development expenses were RMB 110.9 million in 2022, a slight decrease of 1.9% from RMB 113.1 million in 2021[67] - Total employee compensation expenses, including director remuneration, amounted to RMB 206.0 million for the year ended December 31, 2022, slightly up from RMB 204.5 million in the previous year[75] Market and Product Development - The company continues to focus on the design, development, production, and marketing of orthopedic implants and related products[10] - The company successfully won bids for all four categories of joint implants in the national volume-based procurement, securing the largest bid amount among all brands[40] - The implementation of volume-based procurement led to an average price drop of over 80% for hip and knee implants, but increased sales volume compensated for the price decline[40] - The company is focusing on enhancing production efficiency while ensuring product quality in response to the new pricing system[40] - The company is developing a customized orthopedic solution platform leveraging 3D printing technology to meet diverse clinical needs[44] - The company has established collaborations with key hospitals for the development and promotion of customized orthopedic products[44] - The company launched multiple new products in 2022, including the first domestic high-crosslinked, dual-system knee unicompartmental replacement system, enhancing its product line[48] Innovation and Technology - The company has a total of 192 invention patents and 424 utility model patents as of December 31, 2022, indicating strong innovation capabilities[45] - The 3D printing technology was further developed, with the introduction of the ICOS customization process and the registration of 3D printed osteotomy guides, providing surgical positioning solutions[45] - The Visual Treatment Solution (VTS) system was launched, integrating 3D printing and visualization technology to assist in complex hip replacement surgeries[48] Academic and Community Engagement - The company conducted over 40 academic events, training more than 300,000 doctors, enhancing its academic brand in the medical community[49] - The company continues to promote academic projects and digital technology applications in the medical field, aiming to strengthen its leadership in hip and knee product solutions[47]

Financial Performance - The company achieved a revenue of RMB 531.2 million for the first half of 2022, representing an 18.7% increase compared to the same period last year[7]. - Gross profit for the same period was RMB 338.5 million, reflecting a 9.8% growth year-on-year[7]. - Net profit attributable to equity shareholders was RMB 126.0 million, marking a 13.1% increase from the previous year[7]. - The basic and diluted earnings per share were both RMB 0.11, up from RMB 0.10 in the prior year[7]. - Revenue from hip and knee joint products reached RMB 456 million for the six months ended June 30, 2022, representing a year-on-year increase of 16.1%[11]. - Revenue from spinal and trauma implant products was RMB 45.3 million for the six months ended June 30, 2022, reflecting a year-on-year increase of 24.6%[12]. - Revenue from spinal and trauma implants reached RMB 453 million for the six months ended June 30, 2022, a 24.6% increase from RMB 364 million for the same period in 2021[20]. - Other revenue, including customized implants and surgical value-added services, was RMB 299 million, significantly up 62.7% from RMB 184 million year-on-year[21]. - Total revenue from China was RMB 467.6 million, a 23.2% increase compared to RMB 379.6 million in the same period last year, while overseas sales decreased by 6.5% to RMB 63.6 million[22]. - The company reported a profit before tax of RMB 149,454,000 for the six months ended June 30, 2022, compared to RMB 131,612,000 for the same period in 2021, reflecting a growth of 13.5%[59]. Market Position and Strategy - The implementation of national volume-based procurement has reduced policy risks and enhanced industry development certainty[9]. - The company has increased its market share in joint products by leveraging its innovative capabilities, particularly in 3D printing technology[9]. - The number of surgeries using the company's products in hospitals has significantly increased, compensating for the decline in ex-factory prices due to procurement policies[9]. - The company aims to transform from a product provider to a systematic technology enterprise, focusing on continuous innovation and market leadership[10]. - The company is committed to becoming a world-leading brand while sharing development results with shareholders, customers, and society[10]. - The company plans to leverage its R&D and product advantages to capture market share from the national volume-based procurement policy, which is expected to accelerate industry consolidation[16]. Product Development and Innovation - The company has obtained two Class III medical device registration certificates for 3D printed customized products from the National Medical Products Administration[13]. - The company is focusing on innovative and clinically urgent new technologies and products, particularly in 3D customized products and services[12]. - The company has launched various new products, including a 3D-printed bone filler and a high-crosslinked knee joint replacement system, enhancing its product line and market presence[16]. - The company has initiated multi-center clinical studies for its 3D hip preservation product, collaborating with 28 provincial hospitals to gather usage data[16]. - The company has developed a 3D printed adjustable artificial cone and achieved clinical application in the first half of 2022[12]. Operational Expansion - The total signed procurement volume for hip and knee joint implants was approximately 538,000 sets, with the company securing about 81,000 sets, ranking first among all brands[11]. - The company has expanded its coverage to 3,497 hospitals, with 953 being newly added hospitals[11]. - The company has established a digital orthopedic business and a biomaterials segment, integrating preoperative planning systems and robotic assistance for surgeries[14]. Employee and Shareholder Engagement - The company launched a long-term equity incentive plan in March 2022 to enhance employee motivation and creativity[9]. - The company issued 8,582,362 stock options and 838,784 shares under its stock option and incentive plans as of March 31, 2022[34]. - The company paid dividends of RMB 23,991 thousand during the reporting period, compared to RMB 36,830 thousand in the previous period, reflecting a decrease of approximately 34.9%[48]. Financial Position and Cash Flow - Cash and cash equivalents stood at RMB 484.9 million as of June 30, 2022, compared to RMB 948.3 million at the end of 2021, with total current assets increasing to RMB 1,530.6 million[29][30]. - The net cash generated from operating activities for the six months ended June 30, 2022, was RMB 214,786 thousand, a significant increase compared to RMB 4,694 thousand for the same period in 2021[50]. - The company incurred a net cash outflow from investing activities of RMB 207,561 thousand for the six months ended June 30, 2022, compared to RMB 143,113 thousand for the same period in 2021, representing an increase in cash outflow of approximately 45%[50]. - As of June 30, 2022, the company's net assets amounted to RMB 2,140,136 thousand, an increase from RMB 2,031,551 thousand as of December 31, 2021, representing a growth of approximately 5.35%[48]. Governance and Compliance - The company has adhered to all applicable provisions of the corporate governance code in Appendix 14 of the listing rules, except for the separation of roles between the Chairman and CEO, which are both held by Mr. Li Zhiqiang[122]. - The audit committee, consisting of two independent non-executive directors and one non-executive director, has reviewed the interim financial report for the six months ending June 30, 2022, and found it to be in accordance with applicable accounting standards[123]. - The interim financial report for the six months ending June 30, 2022, has been reviewed by KPMG in accordance with the relevant review standards[124].

Financial Performance - Revenue for 2021 decreased by 26.5% to RMB 761.4 million, primarily due to reduced purchases by distributors under the national joint implant volume procurement policy and a provision of RMB 103.8 million for future sales price discounts[4] - Net profit for 2021 dropped significantly by 70.5% to RMB 92.6 million, mainly due to decreased revenue, increased R&D and marketing expenses, and one-time relocation costs[4] - The company achieved sales revenue of RMB 761.4 million and net profit of RMB 92.6 million in 2021, representing a decrease of 26.5% and 70.5% respectively compared to the previous year[10] - Gross profit for 2021 decreased by 30.1% to RMB 499.2 million, reflecting the impact of national joint implant volume-based procurement[24] - Net profit attributable to equity shareholders for 2021 decreased by 70.5% to RMB 92.6 million, impacted by the volume-based procurement policy[24] - Domestic sales revenue decreased by 32.3% to RMB 631.1 million, primarily due to price reductions and a provision of RMB 103.8 million for future sales discounts[33] - Gross profit decreased by 30.1% to RMB 499.2 million, with gross margin dropping to 65.6% from 69.0% due to revenue decline and price discount provisions[35] - Sales revenue for 2021 was RMB 761.4 million, a decrease of 26.5% compared to 2020[66] - Net profit for 2021 was RMB 92.6 million, a decrease of 70.5% compared to 2020[66] Market Share and Procurement - The company achieved a market share of nearly 20% in the Chinese joint market by securing bids for three brands and four product lines in the joint implant volume procurement[8] - The company's three brands and four product series all won bids in the national volume-based procurement, ranking first in hospital-reported demand for surgical volume among all brands[12] - The national volume-based procurement for joint implants covered 306,000 hip joint systems and 232,000 knee joint systems, with a total contracted procurement volume of 538,000 units[12] - The average retail price of joint implants dropped by 82% after the national volume-based procurement[11] - The company's three brands and four product lines all won bids in the national joint implant procurement, securing the maximum surgical volume submitted by hospitals[67] - The implementation of the procurement results by provincial governments remains unclear, potentially affecting the company's market share growth[67] Product Development and Innovation - The company launched the ICOS customized platform, offering tailored implants and surgical planning, simplifying complex surgeries[8] - The company's hip and knee joint replacement diagnostic and treatment technology project won the first prize of Beijing Science and Technology Progress Award[8] - The company successfully launched 3 new products based on 3D printing technology in 2021 and won the first prize of Beijing Science and Technology Progress Award[10] - The company launched a new product for early-stage femoral head necrosis and the TMK knee joint system in 2021, leveraging 3D printing technology[17] - The company established 6 national-level 3D printing customization centers and 8 provincial training centers in 2021, covering nearly 1,300 key hospitals and training over 100,000 customers[19] - The company is the only one in China with 3D printing customized product registration certificates, aiming to increase market share in the mid-to-high-end market[21] - The company plans to leverage its 3D printing customization technology to increase its market share in the mid-to-high-end market and strengthen its leadership position in the mass market in 2022[9] - The company aims to become the world's best innovative and efficient medical enterprise by 2030 and will introduce long-term equity incentives in 2022 to enhance employee motivation and creativity[9] - The proportion of innovative products in the company's overall product portfolio is expected to gradually increase, enhancing profitability[23] - The company plans to strengthen its R&D capabilities and continue launching innovative products to address clinical needs[23] Revenue Breakdown - The company's hip and knee implant business generated revenue of RMB 636.9 million in 2021, a year-on-year decrease of 31.9%[13] - The company's spine and trauma implant business achieved revenue of RMB 79.3 million in 2021, a year-on-year increase of 14.5%[14] - Customized products and services revenue reached RMB 23.3 million in 2021, a year-on-year increase of 303.1%[15] - Hip joint implant revenue decreased by 30.6% to RMB 469.5 million, while knee joint implant revenue decreased by 35.1% to RMB 167.4 million[28] - Spine and trauma implant revenue increased by 14.5% to RMB 79.3 million, driven by the expansion of 3D-printed spine products[29] - Customized products and services revenue surged by 303.1% to RMB 23.3 million, driven by successful entry into multiple top-tier hospitals[30] - Overseas sales grew by 26.4% in 2021, reflecting the company's active expansion into international markets[25] - Overseas sales revenue increased by 26.4% to RMB 130.3 million, driven by market expansion and increased surgical volume[33] R&D and Expenses - R&D expenses increased by 7.7% to RMB 113.1 million, driven by digital bone technology projects and team expansion[39] - The company made a provision of RMB 103.8 million for price discounts on certain primary hip and knee systems due to the expected price reduction from the national volume-based procurement[10] - The company's ICOS products and surgical value-added services achieved significant growth, entering multiple hospitals and contributing to revenue growth[25] Assets and Liabilities - Total assets increased to RMB 2,605.3 million in 2021, up from RMB 2,526.9 million in 2020[7] - Total liabilities rose to RMB 573.7 million in 2021, compared to RMB 484.1 million in 2020[7] - The company's equity totaled RMB 2,031.6 million in 2021, slightly down from RMB 2,042.8 million in 2020[7] - Cash and cash equivalents totaled RMB 948.3 million, including RMB 475.6 million in cash, RMB 361.2 million in structured deposits, and RMB 106.5 million in fixed-term deposits[42] - Total capital expenditure for 2021 was RMB 106.1 million, primarily for production and R&D equipment, patents, and land purchases[45] Dividends and Shareholder Returns - The company proposed a final dividend of 2.5 HK cents per share for the year ended December 31, 2021, down from 4.0 HK cents per share in 2020[5] - The company proposed a final dividend of 2.5 HK cents per ordinary share for the year ended December 31, 2021, compared to 4.0 HK cents in 2020[74] - The total reserves available for distribution to shareholders as of December 31, 2021, were RMB 965.9 million[79] International Market Challenges - The company faced challenges in its international market strategy due to the COVID-19 pandemic and disruptions in the supply chain caused by the joint implant volume procurement policy[8] - The COVID-19 pandemic continues to negatively impact the industry, with occasional outbreaks and tightened control policies potentially reducing hospital surgical volumes[67] Employee and Management - Employee headcount decreased to 908 from 1,019, while total employee compensation increased to RMB 204.5 million due to higher social insurance costs and relocation expenses[50] - The company emphasizes the importance of employee training and development, investing in continuous education and training programs for management and staff[69] - The company provides product knowledge training courses to distributors and assists them in sales and marketing activities[70] - The company organizes and participates in industry and academic seminars to strengthen relationships with key opinion leaders and external industry experts[70] - The company offers 3D ACT solutions to surgeons to help them perform surgeries more effectively[70] - The company collects feedback from surgeons to improve user experience and make product enhancements[70] Corporate Governance and Compliance - The company complied with all relevant environmental laws and regulations as of December 31, 2021[72] - The company complied with all relevant laws and regulations in China, the UK, the Cayman Islands, and Hong Kong for the year 2021[73] - The company's board of directors includes four executive directors, one non-executive director, and three independent non-executive directors[80] - No significant contracts were in place at the end of or during the year ended December 31, 2021, involving the company or its subsidiaries, and no major contracts were provided by controlling shareholders or their subsidiaries[86] - Non-compete agreements with Himalaya Limited, Shenma Limited, Mr. Li Zhijiang, Ms. Zhang Bin, and Rainbow Holdings Limited were fully complied with during the year ended December 31, 2021[87] - No stock-linked agreements were entered into or remained in effect at the end of the year ended December 31, 2021, that would require the company to issue shares[88] - The company has adopted a diversity policy for the board of directors, considering factors such as gender, age, education, and professional experience[123] - The company has complied with all provisions of the Corporate Governance Code except for provision A.2.1 (re-numbered as C.2.1 from January 1, 2022)[129] - The company has established a written guideline for employee securities trading, with no instances of non-compliance reported[130] - The board of directors held six meetings during the year, with all directors attending all meetings except for one independent non-executive director who attended five out of six[134] - The Chairman and CEO roles are both held by Mr. Li Zhijiang, who is the founder of the group and has extensive industry experience, providing strong and consistent leadership for the company[135] - The company has complied with the requirement to appoint at least three independent non-executive directors, with one possessing appropriate professional qualifications or accounting/financial management expertise[136] - Non-executive directors, including independent non-executive directors, are appointed for a specific term of three years and are eligible for re-election after their term expires[137] - The Board of Directors is responsible for leading and controlling the company, overseeing operations and financial performance, and ensuring effective internal control and risk management systems[137] - All directors have access to comprehensive and timely information and can seek independent professional advice when necessary to fulfill their duties[138] - The company has arranged appropriate directors' and officers' liability insurance to cover potential legal actions arising from the company's business[138] - The Audit Committee, consisting of two independent non-executive directors and one non-executive director, held two meetings in 2021 to review financial performance, internal audit issues, and risk management systems[141] - The Audit Committee met twice with the external auditors during 2021 to discuss significant matters related to financial reporting and internal control systems[141] - The Remuneration Committee consists of three members, including two independent non-executive directors and one executive director, with Dr. Li Shurong serving as the chairman[143] - The Remuneration Committee held one meeting in 2021 to review the company's remuneration policies and structures, as well as the compensation of directors and senior management[144] - In 2021, the company had 1 director earning below RMB 500,000, 6 directors earning between RMB 500,000 and RMB 999,999, and 2 directors earning above RMB 1,000,000[146] - The Nomination Committee is composed of three members, including one executive director and two independent non-executive directors, with Mr. Li Zhijiang serving as the chairman[146] - The Nomination Committee met once in 2021 to review the board's structure, size, and diversity, as well as the independence of independent non-executive directors[147] - The company has adopted a Board Diversity Policy, which outlines methods to achieve board diversity and is available on the company's website[149] - The Nomination Committee is responsible for identifying and selecting qualified candidates for board membership, considering factors such as gender, age, cultural and educational background, and professional experience[149] - The Nomination Committee believes that the board has achieved sufficient diversity and will review the Board Diversity Policy as necessary to ensure its effectiveness[149] - The company has adopted a Director Nomination Policy, which sets out the selection criteria and procedures for director nominations and appointments, aiming to ensure a balanced mix of skills, experience, and diverse perspectives on the board[150] - The company's risk management and internal control systems were deemed effective and adequate for the year ended December 31, 2021, as confirmed by management and reviewed by the Board and Audit Committee[152] - The company paid RMB 3,955 in audit fees to KPMG for the year ended December 31, 2021, with no non-audit services provided[155] - The company has implemented a whistleblowing procedure to allow employees to report concerns about criminal offenses, financial misconduct, or other issues anonymously[152] - The company's internal control team independently reviews the adequacy and effectiveness of risk management and internal control systems, providing results and recommendations to the Audit Committee for improvement[152] - The company has established an insider information policy to ensure fair and timely disclosure of material information to the public in compliance with applicable laws and regulations[152] - The Board reviewed the company's corporate governance policies, training for directors and senior management, and compliance with legal and regulatory requirements for the year ended December 31, 2021[151] - The company's Audit Committee assists the Board in overseeing the design, implementation, and monitoring of risk management and internal control systems[152] - The company has implemented control procedures to prohibit unauthorized access and use of insider information[153] - The company's directors are responsible for preparing the consolidated financial statements for the year ended December 31, 2021, and are not aware of any significant uncertainties that may cast doubt on the company's ability to continue as a going concern[154] - The company's co-company secretaries, Ms. Han Yu and Ms. Li Xinying, received at least 15 hours of relevant professional training during the year ended December 31, 2021, in compliance with Listing Rule 3.29[156] ESG and Sustainability - The company has identified and assessed climate change risks, set environmental goals covering carbon emissions and energy consumption, and implemented energy-saving and safety production actions[163] - The company has a three-level management structure for ESG issues, involving the board of directors, the ESG working group, and functional departments and subsidiaries[165] - The company has implemented a shareholder communication policy to ensure that shareholder opinions and concerns are properly addressed[161] - The company has adopted a dividend policy without a predetermined payout ratio, with dividends subject to the company's financial condition and shareholder approval[161] - The company has completed the identification and assessment of climate change risks and formulated corresponding response measures[163] - The company has established an ESG working group responsible for coordinating daily ESG management, including identifying significant ESG issues and preparing annual ESG reports[164] - The company has set environmental and safety production goals and regularly reviews their achievement, with progress reported to the management and board of directors[163] - The company has conducted a materiality analysis for ESG issues, comparing results with previous years to identify key topics and differences[163] - The company has set a target to reduce carbon emission intensity by 32% by 2030, with a baseline year of 2020, aiming to decrease from 0.044 tons CO2e per 10,000 yuan to 0.030 tons CO2e per 10,000 yuan[176] - In 2021, the company's greenhouse gas emissions per 10,000 yuan of production output were 0.055 tons CO2e, with detailed emissions data provided for the past three years[176] - The company has established a climate change management system, with the board of directors responsible for overseeing climate-related risks and opportunities, and the ESG working group executing quarterly assessments[173] - To address acute physical risks from extreme weather, the company has implemented a natural disaster warning mechanism and strengthened supply chain resilience by diversifying suppliers[174] - The company is actively monitoring and managing greenhouse gas emissions, with plans to consider third-party verification for carbon emissions to enhance scientific accuracy[176] - The company has committed to improving energy efficiency and reducing emissions through measures such as strict control of production, building, and office energy usage[176] - The company has identified market risks related to shifting consumer preferences towards low-carbon products and is addressing this through distributor training and public disclosure of carbon performance[175] - The company has completed acquisitions of JRI Orthopaedics Limited in 2018 and Beijing Libeier Bioengineering Research Institute Co., Ltd. in 2020, expanding its market presence[171] - The company has implemented a unified ESG information collection system since its listing, ensuring consistent ESG data reporting and disclosure[171] - The company has developed a climate risk response strategy, incorporating climate-related financial impacts into future considerations and introducing incentive measures for climate-related issues[173] - Total carbon emissions in 2021 were 4,242.8 tons CO2e, a decrease of 7.6% compared to 2020[177] - Scope 1 (direct) emissions intensity remained stable at 0.004 tons CO2e per 10,000 yuan from 2020 to 2021[177] - Scope 2 (indirect) emissions decreased by 6.8% to 3,911.7 tons CO2e in 2021 compared to 2020[177] - The company achieved 100% compliance rate for pollutant emissions (water, noise, dust, gas, solid waste) in 2021[180] - General solid waste generation in 2021 was 15.6 tons, with an intensity of 0.2 kg per 10,000 yuan of output value[184] - Dust generation intensity in 2021 was 0.1 kg per 10,000 yuan of output value[184] - Hazardous waste liquid generation intensity in 2021 was 1.1 kg per 10,000 yuan of output value[184] - The company obtained ISO14001:2015 environmental management system certification during the reporting period[178] - No major pollution incidents occurred in 2021, maintaining a zero-incident record[180] - The company implemented a comprehensive environmental management system with specific control procedures for different types of waste[182] - Total wastewater discharge in 2021 was 11,435.0 tons, a decrease of 11.8% compared to 2020[185] - Chemical Oxygen Demand (COD) in 2021 was 1,192.7 kg, a significant increase from 346.4 kg in 2020

Financial Performance - For the six months ended June 30, 2021, the company reported revenue of RMB 447.6 million, a decrease of 6.5% compared to RMB 478.9 million in the same period of 2020[4]. - Gross profit for the same period was RMB 308.3 million, down 8.3% from RMB 336.3 million year-on-year[4]. - Net profit for the first half of 2021 was RMB 111.5 million, representing a significant decline of 31.6% from RMB 162.9 million in the previous year[4]. - Revenue from hip joint replacement implants was RMB 243.4 million, a decrease of 10.2% from RMB 271.1 million in 2020[19]. - Revenue from knee joint replacement implants was RMB 108.9 million, down 11.2% from RMB 122.6 million in 2020[19]. - Revenue from spinal and trauma products increased by 109.3% year-on-year, totaling RMB 20.3 million[9]. - Revenue from external customers for orthopedic implants in China reached RMB 408,682,000, a decrease of 9.1% compared to RMB 449,957,000 in the same period last year[52]. - The total comprehensive income for the period was RMB 107,045 thousand, down from RMB 172,011 thousand in the previous year, a decrease of around 37.8%[41]. - The operating profit for the six months ended June 30, 2021, was RMB 128,919 thousand, down from RMB 192,356 thousand in the previous year, indicating a decrease of about 33.0%[41]. - Basic and diluted earnings per share for the six months ended June 30, 2021, were RMB 0.10, down from RMB 0.15 in the same period of 2020, representing a decrease of 33.3%[41]. Product Development and Innovation - The company achieved sales revenue of RMB 64.3 million from its 3D printing products, marking a growth of 6.1% compared to the same period last year[5]. - The company launched a key new product, the 3D printed total knee joint and implant system, which has been used in over 80 surgeries to date[5]. - As of June 30, 2021, the company obtained three new medical device registrations for 3D printed implants, bringing the total to eight approved products[5]. - The company launched the 3D metal printing bio-knee joint product system, becoming the first in China to receive registration for this type of product[11]. - The "Master Plan" project aims to create an integrated platform for innovative products, technology, and customer engagement, enhancing academic exchange and product promotion[11]. - The company plans to continue expanding its product offerings in orthopedic implants and surgical instruments, focusing on innovation and market penetration[48]. Market and Industry Trends - The company anticipates that the national volume-based procurement policy will significantly lower terminal prices for orthopedic products, impacting the industry’s business model[5]. - The overall market for orthopedic products is expected to undergo significant changes due to the new procurement policies, presenting both challenges and opportunities for market share expansion[5]. - The national volume-based procurement will significantly change the competitive landscape and distribution model in the artificial joint industry[7]. - The company anticipates that national volume-based procurement will accelerate industry consolidation, providing opportunities to expand market share[14]. Financial Position and Cash Flow - Cash and cash equivalents as of June 30, 2021, were RMB 541.1 million, down from RMB 956.1 million as of December 31, 2020[31]. - Operating cash flow for the six months ended June 30, 2021, was RMB 4.69 million, significantly lower than RMB 145.88 million for the same period in 2020[45]. - Net cash used in investing activities was RMB 143.11 million, compared to RMB 594.33 million in the previous year, indicating a reduction in investment outflows[45]. - The company reported a foreign exchange loss of RMB 4,438 thousand for the period, compared to a gain of RMB 9,140 thousand in the previous year[41]. Research and Development - Research and development expenses increased by 17.9% to RMB 51.7 million for the six months ended June 30, 2021, compared to RMB 43.9 million in the same period of 2020[28]. - The company is shifting its R&D focus towards complex revision surgeries and early treatment products in response to volume-based procurement pressures[10]. Shareholder Information - The approved interim dividend per ordinary share for the last fiscal year was 4.0 HK cents, down from 7.5 HK cents in 2020, reflecting a decrease of 46.67%[66]. - The company purchased 1,922,000 shares at a total cost of RMB 16,785,000 under the share award plan during the reporting period[68]. - The company’s directors and senior management held a total of 505,157,500 shares, representing approximately 45.29% of the company's equity as of June 30, 2021[75]. - The major shareholders with 5% or more equity include LZY Trust and Bamboo Trust, among others[79]. Compliance and Governance - The audit committee, consisting of independent non-executive directors, reviewed the interim financial report for the six months ending June 30, 2021, and found it to be in accordance with applicable accounting standards[105]. - The interim financial report has been reviewed by KPMG in accordance with the relevant review standards[107]. - The company has adopted the standard code of conduct for securities trading as per the listing rules, confirming compliance by all directors for the six months ending June 30, 2021[104].

Financial Performance - For the year ended December 31, 2020, the company reported revenue of RMB 1,035.4 million, an increase of 11.7% compared to RMB 926.7 million in 2019[6] - The net profit for the same period was RMB 314.0 million, reflecting a growth of 17.6% from RMB 267.0 million in 2019[6] - The adjusted net profit, excluding specific non-recurring items, was RMB 322.9 million, which represents a significant increase of 27.0% from RMB 254.1 million in 2019[6] - The gross profit margin for 2020 was 69.0%, slightly down from 69.4% in 2019[6] - For the year ended December 31, 2020, the company achieved a sales revenue of RMB 1,035.4 million, an increase of 11.7% year-on-year, and a net profit of RMB 314.0 million, up 17.6% year-on-year[16] - The company's gross profit for 2020 was RMB 714,532,000, with a gross margin of 69.0%, slightly down from 69.4% in 2019[29] - The net profit attributable to equity shareholders for 2020 was RMB 314,007,000, reflecting a growth of 17.6% from RMB 266,992,000 in 2019[29] - The company anticipates continued implementation of volume-based procurement policies, which may impact pricing in the orthopedic industry[16] Acquisitions and Investments - The company completed the acquisition of all shares of Beijing Libel Bioengineering Research Institute, enhancing its orthopedic product line and supporting its long-term strategic goal of becoming a leader in China's orthopedic field[13] - The company completed the acquisition of Libel for USD 40,200,000, aiming to strengthen its position in the orthopedic market[24] - The acquisition of Libel added 15 Class III registered products to the company's portfolio, with new product launches including 5 spinal products and 4 trauma products[20] - The group acquired 100% equity of Libel, which has been classified as an investment in a subsidiary, and its financial performance has been consolidated into the company's financial statements[53] Research and Development - The company has received approval for two 3D printed customized registration certificates from the Chinese drug regulatory authority, marking a significant advancement in its R&D capabilities[12] - The company plans to leverage its 3D printing technology to expand into smart devices and surgical robots, enhancing its product offerings in the orthopedic sector[13] - The company aims to explore opportunities in other segments of orthopedics and enhance its overseas market presence to increase brand influence[13] - Research and development expenses for the year ended December 31, 2020, were RMB 105.0 million, an increase of 30.4% from RMB 80.5 million for the year ended December 31, 2019, primarily due to continued R&D investments during the pandemic[43] Sales and Market Performance - The company’s sales growth was primarily driven by its established brand image and market leadership in joint products despite the challenges posed by the COVID-19 pandemic[7] - The company's 3D printing products generated sales revenue of RMB 126.2 million in 2020, slightly higher than in 2019, despite the impact of COVID-19 on high-end hospital surgeries[17] - The company’s hip and knee joint products generated revenue of RMB 829.0 million in 2020, reflecting a year-on-year growth of 7.1%[19] - Revenue from hip joint replacement implants was RMB 571.0 million, a growth of 4.9% from RMB 544.4 million in 2019, driven by the brand image established through 3D printing technology[33] - Revenue from knee joint replacement implants reached RMB 258.0 million, up 12.3% from RMB 229.7 million in 2019, attributed to the launch of complex knee surgery solutions[33] - Domestic sales accounted for RMB 932.3 million, a 16.6% increase from RMB 799.6 million in 2019, while overseas sales decreased by 18.9% to RMB 103.1 million[37] Corporate Governance and Management - The company has appointed KPMG as the auditor for the fiscal year ended December 31, 2020[132] - The board of directors consists of at least three independent non-executive directors, representing one-third of the board members, ensuring compliance with listing rules[142] - The audit committee includes two independent non-executive directors and one non-executive director, with Mr. Jiang Zhiwu serving as the chairman[148] - The company has established three committees: the audit committee, the remuneration committee, and the nomination committee, each with clear written terms of reference[147] - The board believes that the leadership of Mr. Li Zhijiang, who serves as both chairman and CEO, provides strong and consistent guidance for the company's strategic planning and business development[142] Environmental, Social, and Governance (ESG) - The company has established an ESG governance structure with the board of directors responsible for ESG strategy and reporting, ensuring effective management and oversight[170] - Aikang Medical aims to reduce its carbon emission intensity by 32% from 0.044 tons CO2 to 0.030 tons CO2 by 2030, using 2020 as the baseline year[189] - The company has implemented a shareholder communication policy to ensure that shareholder opinions and concerns are appropriately addressed[168] - The company has established communication channels with various stakeholders, including government agencies, shareholders, customers, suppliers, and employees, to address their expectations and requirements[175] Employee and Community Engagement - The company trained over 30,000 doctors through online platforms during the pandemic, adapting its marketing strategy to the situation[23] - The company made a total donation of RMB 1,112,000 to support public health and welfare matters in 2020[129] - The company emphasizes the importance of strong relationships with employees, customers, and suppliers for sustainable development[76] Shareholder Information - The company proposed a final dividend of HKD 0.04 per share for the year ended December 31, 2020, down from HKD 0.075 in 2019[82] - The total reserves available for distribution to equity shareholders amounted to RMB 1,082.9 million as of December 31, 2020[86] - The company had no bank loans as of December 31, 2020[84] Risk Management - The board is responsible for reviewing the effectiveness of risk management and internal control systems, which are designed to manage risks rather than eliminate them[158] - The audit committee assists the board in overseeing the design, implementation, and monitoring of risk management and internal control systems[158] - The company has established various risk management procedures and guidelines to define execution authority for key business processes[158]

Financial Performance - For the six months ended June 30, 2020, the company achieved revenue of RMB 479.0 million, representing a 9.4% increase compared to RMB 437.8 million in the same period last year[4] - Gross profit for the same period was RMB 336.3 million, up 10.4% from RMB 304.6 million year-on-year[4] - The net profit for the first half of 2020 was RMB 162.9 million, a significant increase of 25.7% compared to RMB 129.6 million in the previous year[4] - The company reported earnings per share of RMB 0.15, compared to RMB 0.12 in the same period last year[4] - Revenue for the six months ended June 30, 2020, was RMB 478,979 thousand, an increase of 9.5% from RMB 437,783 thousand in the same period of 2019[45] - Gross profit for the same period was RMB 336,323 thousand, representing a gross margin of approximately 70.2%, compared to RMB 304,579 thousand in 2019[45] - Operating profit increased to RMB 192,356 thousand, up 25.7% from RMB 153,014 thousand year-over-year[45] - Net profit for the period was RMB 162,871 thousand, a 25.7% increase from RMB 129,555 thousand in the prior year[45] - Total revenue for the six months ended June 30, 2020, was RMB 478,979 thousand, an increase of 9.4% compared to RMB 437,783 thousand for the same period in 2019[54] Product Revenue - The 3D printing product segment generated sales revenue of RMB 60.5 million, marking an 18.1% increase year-on-year[5] - Revenue from conventional hip and knee joint products reached RMB 393.7 million, reflecting a 7.5% growth compared to the previous year[5] - Revenue from hip joint replacement implants was RMB 271.1 million, a growth of 6.1% compared to RMB 255.5 million in 2019[19] - Revenue from knee joint replacement implants increased by 10.6% to RMB 122.6 million from RMB 110.8 million in 2019[19] - Revenue from 3D printed products reached RMB 60.5 million, marking an 18.1% increase from RMB 51.3 million in the previous year[21] - Revenue from external customers for orthopedic implants in China reached RMB 449,957,000, a 15% increase from RMB 390,825,000 in the same period last year[57] - Total reportable segment revenue was RMB 516,572,000, compared to RMB 459,161,000 in the previous year, reflecting a growth of 12.5%[57] Acquisitions and Investments - The company acquired 100% equity of Beijing Libel Bioengineering Research Institute, enhancing its product line in spine and trauma[5] - The acquisition of Libel contributed RMB 9.7 million in revenue from April 24, 2020, to June 30, 2020, with over 800 hospitals using Libel's spinal and trauma implant products[9] - The company acquired a subsidiary, Libel, for a total consideration of 40,200,000 USD (approximately 284,688,000 RMB) on April 24, 2020, with acquisition-related costs amounting to 1,089,000 RMB[74] - The fair value of identifiable net assets acquired from Libel was assessed at 171,277,000 RMB, resulting in goodwill of 113,411,000 RMB due to expected synergies from the acquisition[75] Cash Flow and Financial Position - As of June 30, 2020, cash and cash equivalents totaled RMB 538.2 million, with total financial resources amounting to RMB 1,063.7 million, up from RMB 498.9 million as of December 31, 2019[32] - Current asset net value increased to RMB 1,376.7 million as of June 30, 2020, from RMB 790.2 million as of December 31, 2019, reflecting an increase of RMB 586.5 million[33] - Operating cash flow for the six months ended June 30, 2020, was RMB 145,875 thousand, up 50.5% from RMB 96,897 thousand in the previous year[50] - Cash and cash equivalents increased significantly to RMB 538,198 thousand from RMB 276,521 thousand year-over-year[46] - The net cash used in investing activities was RMB 594,329 thousand, significantly higher than RMB 57,070 thousand in the previous year, primarily due to the acquisition of a subsidiary[50] Expenses and Profitability - Research and development expenses increased by 25.0% to RMB 43.9 million, up from RMB 35.1 million in 2019, reflecting continued investment in R&D[29] - Selling and distribution expenses decreased by 25.7% to RMB 62.8 million, down from RMB 84.4 million in 2019, primarily due to reduced market activities during the pandemic[27] - Other income decreased significantly to RMB 0.9 million from RMB 15.5 million in 2019, largely due to a one-time insurance compensation received in the previous year[26] - Income tax expense for the six months ended June 30, 2020, was RMB 34.0 million, representing a growth of 26.4% from RMB 26.9 million for the same period in 2019[31] Shareholder Information - The company declared an interim dividend of 7.5 HK cents per ordinary share for the fiscal year ending June 30, 2020, compared to 3.5 HK cents per share for the same period in 2019, reflecting a 114.3% increase in dividend payout[72] - The company had issued and fully paid ordinary shares totaling 1,113,975,000 shares, an increase from 1,043,345,000 shares as of June 30, 2019, representing a growth of approximately 6.7%[71] - Mr. Li Zhijiang holds 505,157,500 shares, representing 45.35% of the company's equity[85] - Ms. Zhang Bin holds 10,125,000 shares, representing 0.91% of the company's equity[85] - Mr. Zhang Chaoyang holds 58,818,500 shares, representing 5.28% of the company's equity[85] Corporate Governance - The audit committee reviewed the interim financial report for the six months ended June 30, 2020, and found it to be in compliance with applicable accounting standards[96] - The company has adopted the standard code of conduct for securities trading as per the listing rules, and all directors confirmed compliance during the reporting period[95] - The chairman and CEO roles are held by the same individual, Mr. Li Zhijiang, who is a founder of the group and has extensive industry experience[95] Market Conditions - The ongoing centralized procurement of high-value medical consumables is expected to impact the competitive landscape of the orthopedic market[7] - Sales from domestic markets accounted for RMB 432.9 million, a rise of 15.2%, while overseas sales dropped by 25.8% to RMB 46.0 million due to the pandemic[23]

Financial Performance - The company achieved a revenue of RMB 926.7 million for the year ended December 31, 2019, representing a significant increase of 54.3% compared to RMB 600.6 million in 2018[7]. - Gross profit for the same period was RMB 643.3 million, up 57.3% from RMB 408.9 million in 2018[7]. - Net profit for 2019 reached RMB 267.0 million, marking an 84.2% increase from RMB 144.9 million in 2018[7]. - The company reported a basic earnings per share of RMB 0.26, compared to RMB 0.14 in the previous year[7]. - The profit for 2019 was RMB 267.0 million, representing a substantial growth of 84.2% year-on-year[19]. - Total revenue for the year ended December 31, 2019, was RMB 926.7 million, representing a growth of 54.3% compared to RMB 600.6 million in 2018[26]. - The gross profit for 2019 was RMB 643.3 million, reflecting a 57.3% increase from RMB 408.9 million in the previous year[26]. - The net profit attributable to equity shareholders for 2019 was RMB 267.0 million, an increase of 84.2% from RMB 144.9 million in 2018[26]. - Operating profit increased to RMB 315.521 million, a 84.3% rise compared to RMB 171.227 million in the previous year[189]. - Total comprehensive income for the year was RMB 278,603 thousand, significantly higher than RMB 148,283 thousand in 2018, marking an increase of 87.8%[195]. Revenue Breakdown - Revenue from 3D printed products amounted to RMB 123.4 million, reflecting a growth of 76.5% year-on-year[17]. - Sales of hip and knee joint products reached RMB 774.1 million, with a year-on-year growth of 55.7%[18]. - Revenue from hip joint replacement implants was RMB 544.4 million, up 54.7% from RMB 351.9 million in 2018[29]. - Revenue from knee joint replacement implants reached RMB 229.7 million, reflecting a growth of 58.3% from RMB 145.1 million in the previous year[29]. - Revenue from 3D printed products was RMB 123.4 million, a significant increase of 76.5% compared to RMB 69.9 million in 2018[29]. Market Position and Strategy - The company plans to continue expanding its market share by leveraging unique technologies and diverse product offerings[17]. - The orthopedic product market demand has surged due to enhanced medical insurance coverage and tiered diagnosis and treatment[17]. - The company aims to leverage 3D printing technology to expand into other orthopedic segments beyond joint products, positioning itself as a leading brand in the industry[24]. - The company is actively monitoring government policies affecting the medical device industry to adapt and seize growth opportunities[25]. - The company is committed to improving the quality of life for millions of patients and becoming a respected international medical enterprise[18]. Research and Development - Research and development expenses rose to RMB 80.5 million, a 76.6% increase from RMB 45.6 million in the previous year[36]. - The company is committed to technological advancements, particularly in 3D printing for orthopedic applications, with a chief engineer who has over 7 years of experience in this area[59]. - The company has a strong focus on R&D, particularly in orthopedic implants, with a dedicated research center led by a director with over 10 years of experience in the field[59]. - The company actively collaborates with external experts and research institutions to foster innovation and develop new products, including biodegradable metal orthopedic implants[170]. Corporate Governance - The company has a strong governance structure, with independent non-executive directors overseeing management practices and financial reporting[58]. - The board consists of at least three independent non-executive directors, complying with listing rules, ensuring independence and expertise[110]. - The audit committee includes two independent non-executive directors and one non-executive director, overseeing financial reporting and internal controls[114]. - The board is responsible for key matters including policy, strategy, budget, and risk management, delegating daily operations to management[112]. - The company has established a framework for corporate governance to protect shareholder interests and enhance transparency[105]. Environmental, Social, and Governance (ESG) Initiatives - Aikang Medical's ESG report identifies key sustainability issues based on stakeholder feedback and management judgment, ensuring comprehensive coverage of relevant topics[142]. - The company collected 137 valid questionnaires from stakeholders in 2019 to assess their views on ESG-related actions, which will inform future improvements[139]. - The company has established a three-tier management structure for ESG initiatives, involving the board of directors, an ESG working group, and functional departments[136]. - The company emphasizes the importance of stakeholder engagement, with various communication methods established to address their expectations and requirements[138]. - The company invested RMB 280,000 in social welfare activities in 2019, contributing approximately 280 hours of volunteer time[177]. Employee Management and Training - The company emphasizes the importance of employee training and development, investing resources in continuous education and training programs[69]. - The company has established a comprehensive training system, including both internal and external training opportunities for employees[164]. - The company organized a "National Day" sports event in October 2019 to promote team cohesion and employee well-being[163]. - In 2019, the average training hours for male employees was 37 hours, while female employees received an average of 36.2 hours of training[165]. - Senior management personnel had a training participation rate of 93.5% with an average of 19.9 hours of training in 2019[166]. Supply Chain and Procurement - The company has a clear supplier selection and evaluation mechanism, categorizing suppliers into A, B, and C levels based on their importance[173]. - The company had a total of 136 suppliers in 2019, with 62 located in Asia, 70 in Europe, 1 in South America, and 3 in North America[174]. - The company has maintained stable relationships with all major suppliers, selecting them based on various factors including market reputation and timely delivery[70]. - The company has established a transparent and responsible procurement process to ensure the quality and efficiency of its supply chain[173]. Challenges and Risks - The COVID-19 outbreak has led to delays in scheduled surgeries and potential disruptions in the supply chain, affecting the company's operations[68]. - The company anticipates potential adverse impacts on its business due to COVID-19, including delays in joint implant surgeries and possible supply chain disruptions[102]. - The company is focusing on launching competitive new products to address pricing pressures due to potential stricter price controls in the medical device industry[67]. Audit and Compliance - The independent auditor confirmed that the consolidated financial statements fairly reflect the company's financial position as of December 31, 2019[178]. - Revenue recognition is identified as a key audit matter due to its significance as a key performance indicator for the company, with the timing of revenue recognition potentially being manipulated to meet targets or expectations[182]. - The company must ensure that the financial statements are prepared in accordance with International Financial Reporting Standards and the Hong Kong Companies Ordinance[184]. - The auditor evaluates the appropriateness of accounting policies adopted by the company and the reasonableness of accounting estimates and related disclosures[185].

Financial Performance - For the fiscal year ended December 31, 2018, the company achieved a revenue of RMB 600.6 million, representing a 61.1% increase compared to RMB 372.7 million in 2017[5]. - The company's net profit for 2018 was RMB 144.9 million, a growth of 37.5% from RMB 105.4 million in 2017[5]. - The gross profit margin for 2018 was 68.1%, down from 70.8% in 2017, while the net profit margin was 24.1%, down from 28.3% in the previous year[5]. - Revenue from hip and knee joint products amounted to RMB 497.1 million in 2018, reflecting a growth of 56.8% year-on-year[14]. - The gross profit for 2018 was RMB 408.9 million, up 55.0% from RMB 263.8 million in 2017[21]. - The company achieved a total revenue of RMB 600.6 million, representing a growth of 61.1% compared to 2017[12]. - The company reported a total comprehensive income for the year of RMB 148.3 million, compared to RMB 102.1 million in the previous year, marking a 45.2% increase[175]. Product Development and Innovation - Revenue from 3D printing products reached RMB 69.9 million in 2018, marking a significant growth of 109.1% compared to the previous year[10]. - The company plans to continue expanding its 3D printing product line and hip and knee joint product business in response to market demand[10]. - The company obtained 30 Class III medical device registration certificates and 3 Class II medical device registration certificates, making it the leading orthopedic company in China in terms of Class III registrations[12]. - The A3 total knee joint from the company received FDA certification, marking it as the first domestically produced joint prosthesis in China to gain such recognition[15]. - The company has established a comprehensive quality management system and received ISO 13485 certification, ensuring strict adherence to product quality regulations[159]. - The company invested significantly in product research and development, focusing on improving product safety and efficacy through innovative technologies[161]. Market Position and Strategy - The company has positioned itself as the first in China to provide 3D printed orthopedic implants, enhancing its market recognition among orthopedic surgeons[10]. - The acquisition of JRI Orthopedics Limited in April 2018 marked a significant step in the company's internationalization process[11]. - The company aims to leverage the opportunities in the Chinese medical device industry and focus on sustainable development to enhance shareholder and customer value[11]. - The company is focused on attracting high-quality management and technical personnel to support rapid growth in the orthopedic industry[61]. - The company emphasizes the importance of retaining key management and skilled personnel to ensure business growth[61]. Corporate Governance - The company has a strong board with members having extensive experience in the medical and investment sectors, including Dr. Wang Guowei and Mr. Li Wenming[48]. - The independent non-executive directors confirmed their independence in accordance with listing rules, reinforcing the board's integrity[109]. - The board is responsible for overseeing the company's operations and financial performance, ensuring effective risk management and internal controls are in place[109]. - The company has implemented a structured process for the appointment and re-election of non-executive directors, ensuring governance standards are upheld[109]. - The audit committee is responsible for reviewing the company's financial reports and internal control systems, ensuring robust governance practices[111]. Environmental, Social, and Governance (ESG) Initiatives - The company has established an ESG management system led by the board, involving various departments to enhance ESG information disclosure[133]. - The company aims to become a respected international medical enterprise, focusing on sustainability in its operations[132]. - The company made donations totaling RMB 1,303,090 in 2018 to support public health and welfare[97]. - The company has implemented a shareholder communication policy to ensure shareholder opinions and concerns are appropriately addressed[131]. - The company emphasizes the importance of balancing, consistency, and quantification in its ESG reporting[144]. Employee and Management Development - The total employee compensation for the year ended December 31, 2018, was RMB 103.4 million, significantly up from RMB 52.0 million for the year ended December 31, 2017, marking an increase of approximately 98.5%[41]. - Employee training participation rate was over 95% across all levels in 2018[156]. - The average safety training hours for frontline employees were 16 hours, while safety management personnel received an average of 24 hours of training in 2018[157]. - The company has established the AK Institute to provide professional education and training services in the orthopedic field, successfully holding 127 training sessions by December 31, 2018[165]. Financial Position and Assets - Total assets as of December 31, 2018, amounted to RMB 1,092.8 million, an increase from RMB 857.6 million in 2017[9]. - The company's net asset value was approximately RMB 841.8 million as of December 31, 2018, compared to RMB 668.0 million as of December 31, 2017, representing an increase of about 26%[38]. - As of December 31, 2018, the company had no outstanding bank loans or other borrowings, resulting in no reported debt-to-asset ratio[39]. - The company reported a credit loss of RMB 443,000 on trade receivables in 2018, a decrease from RMB 3,760,000 in 2017, indicating improved credit management[182]. Compliance and Regulatory Matters - The company has adhered to all relevant laws and regulations in China, the UK, the Cayman Islands, and Hong Kong during 2018[66]. - The company emphasizes the importance of regulatory compliance and quality control in its operations, reflecting its commitment to industry standards[52][55]. - The company received pre-market notification clearance from the FDA for its A3 total knee system in June 2018, marking a breakthrough for domestic knee products in FDA certification[159]. - The company conducted nine on-site supplier audits in 2018, maintaining a supply chain network with 53 suppliers in Asia and seven in Europe[163].