Financial Performance - The company reported total revenue of RMB 1,596.3 million for the fiscal year ending December 31, 2023, representing a 7.5% increase compared to RMB 1,484.9 million in 2022[20]. - Net profit attributable to shareholders reached RMB 85.9 million, a turnaround from a loss of RMB 24.2 million in 2022, with a return on equity of 7.0%[20]. - For the fiscal year 2023, the group achieved revenue of RMB 1,596.3 million, a 7.5% increase from 2022, with self-operated hospital revenue rising by 8.7% to RMB 1,485.2 million[25]. - The gross profit margin for self-operated hospitals improved to 25.4% in 2023, up from 23.9% in 2022, leading to an overall gross profit increase of 16.5% to RMB 411.1 million[25]. - The company's net profit for the year 2023 reached RMB 86,931,608, a significant recovery from a net loss of RMB 10,968,839 in 2022, marking a turnaround of over 800%[132]. - Operating profit increased to RMB 101,451,680 in 2023, compared to RMB 16,391,934 in 2022, reflecting a growth of approximately 518%[130]. - Basic earnings per share for the year 2023 were both RMB 1.15, recovering from a loss of RMB 0.32 per share in 2022[134]. Revenue Sources - The operating revenue from self-owned hospitals was RMB 1,485.2 million, an increase of 8.7% from RMB 1,366.8 million in the previous year[20]. - The group’s self-operated hospital billing revenue reached RMB 1,537.4 million, a 7.9% increase driven by higher outpatient and inpatient visits[30]. - The total inpatient revenue was RMB 1,319.1 million, an increase from RMB 1,218.3 million in 2022[33]. - Outpatient billing revenue was RMB 218.3 million, up 5.6% year-over-year, attributed to a 5.0% decrease in outpatient visits and an 11.2% increase in average spending per visit[35]. - Other medical-related business revenue was RMB 105.8 million, with non-hospital drug and medical device sales contributing RMB 64.4 million[39]. Cost and Expenses - The total cost of revenue for self-owned hospitals increased to RMB 1,107.9 million, a growth of 6.5% compared to 2022, primarily due to a 7.7% increase in costs related to drug sales and an 11.6% rise in employee benefits and expenses[38]. - Research and development expenses amounted to RMB 32.5 million, a decrease of 1.7% from 2022, representing 2.2% of the group's self-owned hospital operating revenue[49]. - The group's management expenses were RMB 213.0 million, an increase of 3.5% year-over-year, with management expenses accounting for 14.3% of self-owned hospital operating revenue[53]. - Financial expenses netted RMB 41.5 million, a decrease of RMB 2.9 million from 2022, with borrowing interest expenses down by 9.1% due to lower bank loan rates[56]. Assets and Liabilities - Total assets increased to RMB 3,047.7 million as of December 31, 2023, from RMB 2,637.8 million in 2022[11]. - The company's total liabilities increased to RMB 801,130,416 in 2023, compared to RMB 657,446,340 in 2022, which is an increase of approximately 21.8%[140]. - The company's debt-to-asset ratio increased to 53.8% as of December 31, 2023, compared to 49.7% as of December 31, 2022, mainly due to the increase in bank loans[92]. - Accounts receivable increased by 9.8% to RMB 420.4 million as of December 31, 2023, up from RMB 382.8 million in 2022, attributed to higher operating income from self-owned hospitals[64]. Cash Flow - Cash generated from operating activities was RMB 265.0 million, compared to RMB 227.2 million in 2022[11]. - Net cash used in investing activities was RMB 215.0 million, primarily due to investments in property, plant, and equipment totaling RMB 179.7 million[76]. - Cash flow from operating activities generated CNY 265,033,237 in 2023, compared to CNY 227,220,564 in 2022, marking an increase of approximately 16.6%[143]. - Cash flow from investing activities showed a net outflow of CNY 215,017,085 in 2023, an improvement from a net outflow of CNY 273,615,413 in 2022[145]. Strategic Initiatives - The company is focusing on enhancing mental health services and expanding its elderly care segment in response to increasing demand and supportive government policies[13]. - The company has implemented a regional management model that has shown positive effects, particularly in the Taizhou and Haixi regions, with stable growth in self-owned hospitals[21]. - The group acquired 51% stakes in Loudi Kangning Hospital and Dongkou Lening Hospital, as well as controlling interest in Chengdu Yining Hospital, enhancing its strategic network in the mental health sector[22]. - The company plans to address the losses from Beijing and Shenzhen hospitals due to high property costs through comprehensive strategies[21]. Shareholder Information - The company proposed a final cash dividend of RMB 3 per 10 shares, totaling RMB 22,380,090, which represents 26.0% of the net profit attributable to shareholders for the reporting period[100]. - The total cash dividend for the 2023 interim and proposed final dividends combined is RMB 29,840,120, accounting for 34.7% of the net profit attributable to shareholders[100]. - No shareholders waived or agreed to waive any dividends as of December 31, 2023[105]. Compliance and Governance - The audit committee, consisting of independent non-executive directors, reviewed the financial performance and confirmed compliance with applicable accounting standards[108]. - The company has complied with all corporate governance code provisions during the reporting period[109]. - There were no significant post-reporting period events that could impact the financial statements[113].

Financial Performance - As of June 30, 2023, the net cash generated from operating activities was RMB 113.6 million, primarily driven by a net profit of RMB 48.7 million[9]. - The company's net profit for the current period is RMB 48,729,232.07, an increase of 10.3% compared to RMB 44,220,737.73 in the previous period[88]. - Revenue for the current period is RMB 176,204,799.00, down 5.9% from RMB 185,800,099.09 in the previous period[89]. - The total comprehensive loss for the period was RMB 8,676,844.29, contrasting with a total comprehensive income of RMB 1,835,676.60 in the previous year[118]. - The net loss for the six months ended June 30, 2023, was RMB 8,676,844.29, compared to a net profit of RMB 1,835,676.60 for the same period in 2022, reflecting a significant decline in profitability[117]. Employee Compensation and Workforce - The total employee compensation, including salaries and other benefits, amounted to approximately RMB 291.5 million for the six-month period ending June 30, 2023, compared to RMB 245.3 million for the same period in 2022, reflecting an increase of 18.8%[16]. - As of June 30, 2023, the group had a total of 4,652 employees, an increase from 4,381 employees as of December 31, 2022, indicating a growth of 6.2%[16]. Assets and Liabilities - As of June 30, 2023, total assets amounted to RMB 2,744,232,688.19, an increase from RMB 2,637,787,406.99 as of December 31, 2022, representing a growth of approximately 4.05%[76][78]. - Total liabilities amounted to RMB 1,361,682,980.62, compared to RMB 1,311,884,788.16, showing an increase of approximately 3.8%[78]. - Current liabilities totaled RMB 447,512,463.78, increasing from RMB 379,289,146.65, indicating a rise of about 18.0%[112]. - Long-term borrowings decreased to RMB 352,830,000.00 from RMB 391,010,000.00, a reduction of about 9.8%[78]. Cash Flow - The cash outflow from changes in working capital was RMB 33.5 million during the reporting period[9]. - Cash flow from operating activities is RMB 53,706,408.36, a significant improvement from a negative cash flow of RMB -70,878,195.20 in the previous period[96]. - Cash flow from investment activities resulted in a net outflow of RMB 119,121,752.63, an improvement from a net outflow of RMB 164,454,134.91 in the previous period[121]. - Cash flow from financing activities generated a net inflow of RMB 9,790,257.54, down from RMB 194,881,073.75 in the prior period, indicating a decrease in financing activity[121]. Share Capital and Dividends - The company plans to issue a maximum of 2,460,000 shares under the equity incentive plan, representing 3.30% of the total share capital as of the mid-term report date[50]. - The company anticipates that the proposed interim dividend will be distributed no later than November 30, 2023, pending shareholder approval at the upcoming extraordinary general meeting[62]. - As of June 30, 2023, the company had issued a total of 74,600,300 shares, consisting of 55,260,000 domestic shares and 19,340,300 H shares[44]. Governance and Compliance - The company has adopted the standard code as the code of conduct for securities trading by its directors and supervisors, ensuring compliance from January 1 to June 30, 2023[59]. - The company aims to enhance its corporate governance structure and establish a long-term incentive mechanism to attract and motivate professional management talent[48]. - The company has maintained consistent accounting policies in its mid-term financial statements compared to those used in the 2022 annual financial statements[60]. Investments and Financial Assets - The balance of other non-current financial assets remained stable at RMB 631 million as of June 30, 2023, unchanged from December 31, 2022[6]. - The company's long-term equity investments were valued at RMB 762,632,193.31, an increase from RMB 741,962,585.53, indicating a growth of about 2.8%[81]. - The company has not authorized any significant investments or acquisitions of capital assets as of the date of this interim report[11]. Taxation and Regulatory Matters - The company’s tax rates include a corporate income tax rate of 15% for Wenzhou Kangning Hospital Co., Ltd. and Zhejiang Jieling Health Technology Co., Ltd., and 20% for Yiwu Kangning Hospital Management Co., Ltd.[198].

Financial Performance - The group's inpatient revenue for the period was RMB 637.8 million, an increase of 8.4% compared to the same period in 2022, driven by a 6.8% increase in inpatient bed days[12]. - Total revenue for the six months ended June 30, 2023, was RMB 777.9 million, an increase of 5.4% compared to RMB 738.3 million for the same period in 2022[40]. - Revenue from self-operated hospitals reached RMB 728.7 million, up RMB 54.6 million or 8.0% year-on-year, primarily driven by growth in several hospitals[46]. - The group’s total revenue for the first half of 2023 was RMB 777.9 million, an increase of 5.4% compared to RMB 738.3 million in the same period last year[69]. - The operating income from self-owned hospitals was RMB 728.7 million, reflecting a growth of 6.7% year-on-year[71]. - The net profit attributable to shareholders was RMB 43.8 million, representing a 12.8% increase from RMB 38.8 million in the previous year[75]. - The gross profit margin for self-owned hospitals decreased to 24.9% from 26.5% in the same period last year[75]. - The group recorded a decrease in accounts receivable turnover days to 91 days, compared to 90 days in the previous year[61]. - The total comprehensive income attributable to shareholders of the parent company for the first half of 2023 was RMB 43,750,058, compared to RMB 48,729,233 in 2022, indicating a decline of 10.1%[136]. Operational Metrics - As of June 30, 2023, the group owned 30 hospitals, an increase from 29 as of December 31, 2022, with total operational bed capacity rising to 10,578 beds from 9,688 beds[3]. - The average daily expenditure per inpatient bed increased by 1.5%, while the inpatient revenue accounted for 85.7% of total operating revenue from owned hospitals[12]. - Outpatient revenue reached RMB 106.4 million, reflecting a 5.4% increase year-over-year, attributed to an 11.4% rise in outpatient visits[23]. - The total number of outpatient visits was 250,648, up from 225,032 in the previous year[11]. - The proportion of treatment and general medical service revenue increased to 78.9% of self-operated hospital revenue, up from 78.6% in the same period last year[47]. - The group's self-owned hospital billing revenue for the period was RMB 744.2 million, an increase of 7.9% compared to the same period in 2022, driven by an increase in outpatient and inpatient visits[78]. - Revenue from treatment and general medical services was RMB 587.2 million, up from RMB 542.0 million in the same period last year, representing an increase of 8.3%[79]. Expenses and Costs - Operating expenses increased to RMB 547.5 million, a rise of 9.0% compared to the same period in 2022, mainly due to increased employee benefits and expenses related to the growth in drug sales[49]. - Total operating costs for the six months ended June 30, 2023, were RMB 724,044,724, an increase of 6.5% from RMB 680,267,108 in 2022[124]. - Employee compensation for the period was approximately RMB 291.5 million, compared to RMB 245.3 million for the same period last year, indicating a year-over-year increase of 18.8%[90]. - Financial expenses decreased to RMB 20,159,634 in the first half of 2023 from RMB 21,648,129 in 2022, a reduction of 6.9%[124]. Cash Flow and Financial Position - Net cash generated from operating activities was RMB 113.6 million, significantly higher than RMB 56.0 million for the same period in 2022[38]. - The company reported a net increase in cash and cash equivalents of RMB 4.3 million, compared to an increase of RMB 86.4 million in the same period last year[38]. - The company's cash flow from operating activities showed a significant increase, reflecting improved operational efficiency and cash management strategies[136]. - Cash inflow from operating activities for the six months ended June 30, 2023, was $949,990,763, an increase of 33.6% compared to $710,947,438 in 2022[153]. - The ending balance of cash and cash equivalents as of June 30, 2023, was $262,868,905, a decrease from $275,180,571 in 2022[155]. - The total assets as of June 30, 2023, amounted to RMB 2,744.2 million, an increase from RMB 2,637.8 million at the end of 2022[69]. - The total liabilities increased to RMB 1,361.7 million from RMB 1,311.9 million at the end of 2022[69]. - The company's equity attributable to shareholders increased to RMB 1,242,977,776 as of June 30, 2023, from RMB 1,201,584,945 at the end of 2022, marking a growth of 3.4%[132]. Strategic Initiatives - The group has established a special fund to assist impoverished mental health patients in collaboration with charitable organizations[3]. - The group actively engaged in social responsibility initiatives, including partnerships with medical institutions to enhance mental health services in remote areas[3]. - The group plans to propose an interim dividend distribution date no later than November 30, 2023, pending shareholder approval[93]. - The company plans to implement an equity incentive plan to motivate senior management and key technical personnel[110]. - The company plans to expand its market presence through strategic acquisitions and new product launches in the upcoming quarters[145]. - Research and development efforts are focused on innovative technologies aimed at enhancing product offerings and customer experience[145]. - The company anticipates a positive outlook for the next fiscal year, with projected revenue growth driven by increased demand and market expansion strategies[145].

Medical Services and Operations - In 2022, the group dispatched a total of 12,172 medical personnel in 1,107 batches, conducting over 3.266 million nucleic acid tests[22]. - The group acquired 100% equity of Leqing Yining Hospital and controlling interest in Jinyun Shuning Hospital, further expanding its market coverage in the elderly medical sector[28]. - The group established Wenzhou Ouhai Yining Elderly Hospital, which officially commenced operations during the reporting period[28]. - The group actively participated in the government's pandemic response, providing efficient medical services and free medication to COVID-19 patients, receiving high recognition from the public[22]. - The group is leveraging the aging population trend to increase its elderly health service offerings while continuing to deepen its focus on mental health services[28]. - The group is focused on the development of a multi-supply public service framework in the healthcare sector, encouraging social forces to participate in service provision[26]. - The company operates a network of medical institutions focused on psychiatric specialty services and elderly rehabilitation services across multiple regions in China[142]. - The company is actively expanding its market presence in Zhejiang Province, particularly in the mental health and elderly care sectors, as part of its strategy to enhance service offerings[195]. - The group maintained strong resilience in its self-owned hospital business in 2022, with mature hospitals showing stable growth[200]. - The number of self-owned hospitals increased to 29 as of December 31, 2022, up from 27 on December 31, 2021[200]. - The total number of operational beds rose to 9,688 as of December 31, 2022, compared to 8,728 on December 31, 2021[200]. - The relocation of Cangnan, Qingtian, and Yongjia hospitals to new sites led to further business volume release[200]. - Some growth-phase hospitals experienced stable development, with significant year-on-year growth in medical business for several hospitals[200]. - The performance of certain growth-phase hospitals was temporarily pressured by the pandemic and medical insurance policies, but core growth drivers remained unchanged[200]. - Advanced management teams were introduced to adjust the operational management models of Beijing Yining Hospital and Hangzhou Yining Hospital, resulting in improved performance[200]. - The group operates an independent internet hospital, Yining Psychological Internet Hospital, as part of its 29 self-owned hospitals[200]. Financial Performance - The company achieved a revenue of RMB 1,484.9 million in 2022, an increase of 14.4% compared to 2021, with hospital operation revenue contributing RMB 1,366.8 million, up 13.6%[32]. - The gross profit margin for self-operated hospitals decreased to 23.9% in 2022 from 25.4% in 2021, while overall gross profit increased to RMB 352.9 million, a rise of 7.3%[32]. - The net profit attributable to shareholders was RMB -24.2 million, but after excluding one-time impacts, the adjusted net profit was RMB 41.1 million[32]. - The net cash generated from operating activities was RMB 227.2 million, reflecting a growth of 17.2% from RMB 193.9 million in 2021[32]. - The company’s self-operated hospital billing revenue reached RMB 1,425.0 million, a 15.9% increase from 2021, driven by an increase in outpatient and inpatient visits[34]. - Inpatient billing revenue was RMB 1,218.3 million, up 15.6% year-on-year, with inpatient bed days increasing by 13.0%[38]. - The proportion of inpatient billing revenue to total self-operated hospital billing revenue was 85.5% in 2022, slightly down from 85.7% in 2021[38]. - The total revenue from treatment and general medical services was RMB 1,119,887 thousand, representing a 16.4% increase from RMB 962,408 thousand in 2021[60]. - The total revenue from drug sales was RMB 305,118 thousand, which is a 14.0% increase from RMB 267,588 thousand in 2021[60]. - The company's financial performance and key performance indicators are detailed in the annual report[172]. Research and Development - The company has obtained 42 software copyrights and 3 invention patents as part of its digital business development efforts[30]. - The company is focusing on the mental health sector, exploring innovative models for product development and user operations[30]. - The group is committed to enhancing the quality of healthcare personnel training and expanding the scale of registered nurses and physicians in short supply[26]. - Research and development expenses totaled RMB 33.0 million, an 18.1% increase from RMB 28.0 million in 2021, representing 2.4% of the group's self-owned hospital operating revenue[75]. - The company is actively promoting the transformation of scientific research achievements and has made significant progress in various major projects related to mental health[51]. Governance and Compliance - The group plans to further refine its corporate governance structure and establish long-term incentive mechanisms to attract and motivate professional management talent[108]. - The company has complied with all relevant national and local laws and regulations in its business operations[145]. - The company has complied with applicable rules, laws, and industry standards without any known violations during the reporting period[163]. - The company has not entered into any management contracts for its entire business or main business during the reporting period[184]. - The company has received no invitations from controlling shareholders for significant transactions during the reporting period[185]. Employee and Talent Development - The group actively focuses on medical talent training and development, establishing an "in-hospital teaching" base to enhance employee professional quality[122]. - The company had a total of 4,196 full-time employees as of December 31, 2022, compared to 3,661 employees in 2021[92]. Cash Flow and Investments - The net cash used in investing activities was RMB 273.6 million, mainly due to the purchase of property, plant, and equipment totaling RMB 236.9 million[87]. - The net cash generated from financing activities was RMB 116.2 million, significantly higher than RMB 33.8 million in 2021[100]. - The company's operating income was RMB 8.6 million, a decrease of RMB 3.3 million compared to 2021, mainly due to a reduction in relocation compensation[96]. - The company's income tax expense decreased to RMB 26.6 million, down 51.5% from RMB 54.8 million in 2021[96]. - As of December 31, 2022, accounts receivable balance was RMB 382.8 million, a 22.8% increase from RMB 311.8 million as of December 31, 2021, primarily due to increased operating income from self-owned hospitals[83]. - As of December 31, 2022, accounts payable increased to RMB 85.8 million from RMB 69.2 million as of December 31, 2021[84]. Incentive Plans - The equity incentive plan has granted a total of 2,460,000 incentive shares, representing 3.2976% of the company's total issued share capital as of the report date[107]. - The grant price for the incentive shares is set at RMB 10.47 per share, aimed at promoting company development and protecting shareholder interests[118]. - The equity incentive plan's lock-up period for granted shares is 48 months, starting from the date of grant[113]. - The incentive shares granted to participants are subject to a lock-up period during which they cannot be transferred, pledged, or disposed of in any other way[132]. - The rights associated with the granted incentive shares, such as dividend rights and voting rights, are not restricted by the lock-up period[132]. Market and Customer Relations - The total revenue contribution from the largest customer and the top five customers was 1.2% and 3.5% of the total revenue, respectively, for the year ended December 31, 2022[168]. - The company has no reliance on major customers due to the unique nature of its psychiatric hospital business and high patient mobility[168]. - The company reported a total of approximately RMB 3.9 million in charitable donations and other contributions during the reporting period[170]. Assets and Liabilities - The company's total liabilities increased to RMB 1,311.9 million in 2022 from RMB 1,097.7 million in 2021, representing a rise of 19.5%[192]. - The group's asset-liability ratio increased to 49.7% as of December 31, 2022, compared to 46.2% as of December 31, 2021, mainly due to the increase in bank borrowings[127]. - The present value of lease payments under irrevocable lease agreements, excluding amounts due within one year, was RMB 171.4 million as of December 31, 2022[103]. - The group has no contingent liabilities or guarantees that would significantly impact its financial position or operations as of December 31, 2022[102].

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其準確性 或完整性亦不發表任何聲明，並明確表示，概不對因本公告全部或任何部份內容而產生或因倚 賴該等內容而引致的任何損失承擔任何責任。 截至2022年12月31日止年度業績公告 1 引言 1.1 溫州康寧醫院股份有限公司（「本公司」）之董事會（「董事會」）欣然宣佈本公司 連同其附屬公司（合稱「本集團」或「我們」）截至2022年12月31日止財政年度 「本報告期」）之合併全年業績，連同上一個財政年度（截至2021年12月31日 止財政年度）的數字比較。 1.2 本集團於本報告期的財務報表（「財務報表」）乃按中國企業會計準則編製。 1.3 報告期間，本集團存在前期會計差錯更正需追溯的若干事項，已對2021年的 財務數據進行相應重述，詳情請見本公告「重大事項－前期會計差錯更正」一 節。 ...

Financial Performance - For the first half of 2022, the company reported operating revenue of RMB 738,305,000, an increase of 21.5% compared to RMB 607,737,000 in the same period of 2021[20]. - The profit before tax for the first half of 2022 was RMB 63,331,000, up from RMB 53,745,000 in the first half of 2021, representing an increase of 17.5%[20]. - The net profit attributable to shareholders for the first half of 2022 was RMB 38,788,000, compared to RMB 35,003,000 in the same period of 2021, reflecting an increase of 7.9%[20]. - The net profit for minority shareholders in the first half of 2022 was RMB 5,433,000, significantly higher than RMB 1,235,000 in the same period of 2021[20]. - The total gross profit for the group reached RMB 197.8 million, an increase of 28.8% compared to the same period in 2021[51]. - The gross profit margin for self-owned hospitals was 26.5%, compared to 25.6% for the same period in 2021, with overall gross profit increasing to RMB 197.8 million, a growth of 28.8%[25]. - The gross margin for the group increased to 26.8%, compared to 25.3% for the same period in 2021[51]. - The revenue from pharmaceutical sales for the six months ended June 30, 2022, was RMB 147,586,000, a 15.0% increase from RMB 128,280,000 in the previous year[175]. Assets and Liabilities - Total assets as of June 30, 2022, were RMB 2,693,723,000, an increase from RMB 2,377,968,000 as of December 31, 2021[20]. - The company’s total liabilities increased to RMB 1,339,418,000 as of June 30, 2022, compared to RMB 1,106,880,000 at the end of 2021[20]. - The company’s total equity as of June 30, 2022, was RMB 1,354,305,000, up from RMB 1,271,088,000 at the end of 2021[20]. - Accounts receivable increased to RMB 422.1 million, a 35.4% growth compared to RMB 311.8 million as of December 31, 2021[83]. - The group's bank borrowings increased to RMB 783.4 million from RMB 553.2 million as of December 31, 2021, due to new borrowings of RMB 317.5 million[85]. - The asset-liability ratio slightly increased to 49.7% from 46.5% as of December 31, 2021, mainly due to the increase in bank borrowings[92]. Operational Highlights - The group achieved revenue of RMB 738.3 million, an increase of 21.5% compared to the same period in 2021, with self-owned hospital operating revenue at RMB 683.1 million, up 21.7%[25]. - The number of outpatient visits increased to 225,032, a rise of 26.5%, with outpatient revenue reaching RMB 101.0 million, up 29.5% compared to the previous year[46]. - The group expanded its self-owned hospitals to 30, including one independent internet hospital, with total operational beds increasing to 9,558[22]. - The group reported a significant increase in billing income from self-owned hospitals to RMB 689.6 million, up RMB 111.6 million from the previous year, driven by growth in several hospitals and new acquisitions[42]. - The inpatient billing revenue was RMB 588.6 million, a 17.7% increase year-on-year, attributed to a 14.4% growth in inpatient bed days[65]. Expenses and Costs - The cost of self-owned hospital services increased to RMB 502.1 million, up from RMB 417.6 million in the previous year, with significant rises in employee benefits and medical supplies[47]. - The management expenses for the group were RMB 94.9 million, reflecting a 24.8% increase compared to the previous year[54]. - The total management expenses rose to RMB 94.9 million from RMB 76.1 million in the same period of 2021, driven by increased employee benefits and professional service fees[73]. - The group's self-owned hospital revenue cost increased to RMB 502.1 million, a 20.2% increase compared to the same period in 2021[68]. - Total finance costs increased to RMB 21.65 million, compared to RMB 17.24 million in the previous year, representing a rise of 25.0%[100]. Strategic Initiatives - The company is committed to its long-term development strategy of "Centennial Kangning" amidst ongoing healthcare payment reforms[21]. - The group plans to enhance its healthcare service capabilities and establish a multi-level, diversified healthcare service network, focusing on mental health and elderly care[23]. - The group aims to deepen the integration of industry, academia, and research to promote the development of advantageous disciplines and improve talent cultivation mechanisms[23]. - The group is actively exploring new business areas such as social psychological services and clinical trials for drugs/devices[23]. - The group is focusing on the mental health and elderly medical industries, aligning with the ongoing "Healthy China" initiative and the aging society trend[173]. Employee and Governance - The group’s total number of employees increased to 4,245 from 3,661 as of December 31, 2021, reflecting a growth of 16.0%[112]. - The average employee compensation was RMB 115.6 thousand per year, compared to RMB 98.1 thousand in the same period last year, indicating a rise of 17.9%[112]. - The company has established an equity incentive plan to motivate senior management and core technical personnel, approved at the 2017 annual general meeting[125]. - The board believes that the company has complied with all provisions of the corporate governance code during the reporting period[162]. - The company has implemented measures to control insider information disclosure to minimize the number of individuals with access to such information[156].

Financial Performance - The company's operating revenue for 2021 was RMB 1,297.43 million, an increase of 31.2% compared to RMB 989.01 million in 2020[7] - The profit before tax for 2021 was RMB 95.70 million, up from RMB 74.32 million in 2020[7] - Net profit attributable to shareholders for 2021 was RMB 44.05 million, a decrease from RMB 55.77 million in 2020[7] - The total liabilities as of December 31, 2021, were RMB 1,106.88 million, an increase from RMB 955.55 million in 2020[7] - The company achieved a total revenue of RMB 1,297.4 million in 2021, representing a 31.2% increase compared to 2020, with self-operated hospital revenue at RMB 1,202.8 million, up 28.6%[26] - The gross profit margin for self-operated hospitals improved to 25.4% in 2021 from 25.0% in 2020, with overall gross profit increasing to RMB 329.0 million, a growth of 26.6%[26] - Net profit attributable to shareholders decreased by 21.0% to RMB 44.0 million in 2021 compared to the previous year[26] - The total billing revenue for self-owned hospitals reached RMB 1,230.0 million, an increase of RMB 251.5 million or 25.7% compared to 2020, driven by growth in several hospitals and acquisitions[33] - The gross profit for self-owned hospitals increased by 20.2% to RMB 332.9 million, attributed to an increase in inpatient bed days and average spending per bed day[33] - Inpatient billing revenue was RMB 1,053.7 million, up 24.8% year-on-year, with inpatient bed days increasing by 22.3%[36] - Outpatient billing revenue rose by 31.7% to RMB 176.3 million, driven by a 45.3% increase in outpatient visits[36] Assets and Liabilities - Total assets as of December 31, 2021, were RMB 2,377.97 million, compared to RMB 2,161.28 million in 2020[7] - As of December 31, 2021, accounts receivable increased by 38.4% to RMB 311.8 million, reflecting growth in operating revenue[67] - As of December 31, 2021, the group had no investment properties, down from RMB 107.8 million as of December 31, 2020[69] - Other non-current financial assets increased to RMB 65.8 million as of December 31, 2021, from RMB 57.4 million as of December 31, 2020, reflecting a fair value increase of RMB 8.4 million[70] - Right-of-use assets rose to RMB 257.4 million as of December 31, 2021, up from RMB 232.6 million as of December 31, 2020, due to new lease agreements adding RMB 24.8 million[71] - Accounts payable decreased to RMB 69.2 million as of December 31, 2021, from RMB 72.0 million as of December 31, 2020[74] Operational Expansion - The number of medical institutions operated by the company increased from 24 at the end of 2020 to 27 at the end of 2021[11] - The number of operational beds increased from 7,438 at the end of 2020 to 8,728 at the end of 2021[11] - In 2021, the group expanded its hospital network to 27 hospitals, up from 24 in 2020, with a total of 8,728 operational beds, an increase from 7,438 beds in the previous year[19] - The group reported significant growth in its newly established hospitals, with rapid business scale growth compared to the same period last year[19] - The group successfully integrated acquired hospitals, including Wenzhou Cining Hospital and Changchun Kanglin Psychological Hospital, contributing positively to overall performance during the reporting period[19] - The group is actively developing the elderly rehabilitation medical sector, having acquired Pingyang Chang Geng Yining Hospital and established Cangnan Yining Nursing Center[20] Strategic Initiatives - The company aims to expand its influence in the mental health sector, aligning with national health strategies[9] - The group is focusing on the construction of key projects, including new hospital buildings and renovation projects, to accumulate development momentum for high-quality growth[20] - The group is exploring new business development paths through the construction of an "Internet Mental Health Platform" and integration with upstream pharmaceutical businesses[20] - The group is committed to improving medical service capabilities to meet diverse patient needs, especially in the context of increasing mental health issues[14] - The group is responding to national health strategies aimed at improving mental health services and community rehabilitation systems[15] Governance and Compliance - The company has complied with relevant laws and regulations, including the Mental Health Law and the Basic Medical and Health Promotion Law of the People's Republic of China[102] - The company has complied with the corporate governance code and maintained the minimum public float as required by Hong Kong listing rules[160][161] - The financial statements for the year ended December 31, 2021, were audited by Lixin CPA, following the resignation of PwC due to unresolved audit concerns[164] - The company appointed Lixin as its auditor on January 30, 2022, to fill the temporary vacancy left by PwC until the next annual general meeting[166] - The supervisory board has effectively monitored the company's major policies and decisions, ensuring compliance with relevant laws and regulations[173] - The board consists of seven members, including two executive directors, two non-executive directors, and three independent non-executive directors, in compliance with Hong Kong listing rules[177] Human Resources - Employee compensation for the year was approximately RMB 443.3 million, up from RMB 339.1 million in 2020, with an average salary of RMB 123.6 thousand per year[92] Risks and Challenges - The company faces risks including high public medical insurance payment amounts, a shortage of professional medical personnel, and the potential inability to renew necessary business licenses[24] - The health sector is expected to see significant growth opportunities, driven by increased public awareness of mental health and an aging population, despite facing challenges from economic uncertainties and healthcare reforms[25] Shareholder Information - The company reported a total of 74,600,300 shares issued as of December 31, 2021, comprising 55,260,000 domestic shares and 19,340,000 H shares[131] - Mr. Guan Weili holds 18,350,250 domestic shares, representing approximately 40.07% of the domestic shares and 29.68% of the total issued share capital[131] - Ms. Wang Lianyue also holds 3,794,500 domestic shares, equivalent to approximately 40.07% of the domestic shares and 29.68% of the total issued share capital[131] - Ms. Wang Hongyue owns 3,984,350 domestic shares, which is about 10.46% of the domestic shares and 7.76% of the total issued share capital[131] - Mr. Xu Yongji holds 4,540,000 domestic shares, accounting for approximately 8.22% of the domestic shares and 6.09% of the total issued share capital[131]

Company Information [Company Basic Information and Organizational Structure](index=2&type=section&id=Company%20Basic%20Information%20and%20Organizational%20Structure) This section outlines Wenzhou Kangning Hospital Co., Ltd.'s registration, board, committees, secretaries, representatives, auditors, legal counsel, offices, H-share registrar, stock code, website, and investor relations, noting recent changes in non-executive directors and supervisors - The Board of Directors includes executive, non-executive, and independent non-executive directors, and has established an Audit Committee, Nomination Committee, Remuneration Committee, and Strategy and Risk Management Committee[5](index=5&type=chunk) - On April 30, 2021, Mr. Lin Lijun resigned as a non-executive director and a member of the Strategy and Risk Management Committee; on September 9, 2021, Mr. Yang Yang resigned as a non-executive director and a member of the Audit Committee, and Ms. Huang Jingou resigned as a shareholder representative supervisor[6](index=6&type=chunk) - The Company's H-share stock code is **2120**, and its website is www.knhosp.cn[7](index=7&type=chunk) Financial Highlights [Key Financial Data and Indicators](index=5&type=section&id=Key%20Financial%20Data%20and%20Indicators) For the six months ended June 30, 2021, the company achieved significant growth in operating revenue and net profit, with increases in total assets and equity, reflecting robust financial performance Key Financial Data for the Six Months Ended June 30 (RMB in thousands) | Indicator | 2021 (Unaudited) | 2020 (Unaudited) | Change Rate (%) | | :------------------------- | :--------------- | :--------------- | :-------------- | | Operating Revenue | 622,811 | 465,150 | 33.9% | | Profit Before Income Tax | 57,665 | 39,404 | 46.3% | | Income Tax Expense | (16,522) | (10,503) | 57.3% | | Net Profit | 41,143 | 28,901 | 42.3% | | Net Profit Attributable to Shareholders of the Company | 42,913 | 36,410 | 17.9% | | Loss Attributable to Minority Shareholders | (1,770) | (7,509) | -76.4% | Key Balance Sheet Data (RMB in thousands) | Indicator | June 30, 2021 (Unaudited) | December 31, 2020 (Audited) | Change Rate (%) | | :------------------------- | :------------------------ | :-------------------------- | :-------------- | | Total Assets | 2,410,867 | 2,274,908 | 6.0% | | Total Liabilities | 1,038,771 | 960,485 | 8.1% | | Total Equity | 1,372,096 | 1,314,423 | 4.4% | | Equity Attributable to Shareholders of the Company | 1,287,559 | 1,186,459 | 8.5% | | Minority Interests | 84,537 | 127,964 | -33.9% | Management Discussion and Analysis [Business Review and Outlook](index=6&type=section&id=Business%20Review%20and%20Outlook) In H1 2021, the Group's self-owned hospital business grew steadily despite the pandemic, expanding hospital count and operating beds through various models, while actively pursuing industry chain layout and business transformation in internet mental health, child/adolescent psychological services, and elderly rehabilitation - As of June 30, 2021, the Group's self-owned hospitals increased to **25** (including 1 independent internet hospital), with operating beds rising to **8,328**, up from 24 hospitals and 7,483 beds at the end of 2020[10](index=10&type=chunk) - The Group enhanced its "Internet Mental Health Platform," accelerating online-offline service integration; innovated social psychological services, exploring child and adolescent mental health models; and strengthened elderly rehabilitation medical layout with multiple projects under construction[11](index=11&type=chunk) - Looking ahead, the Group will focus on public health needs, respond to national policies, cultivate Zhejiang's grassroots medical service market, and strengthen talent development in mental health and elderly rehabilitation for sustainable growth[12](index=12&type=chunk) [Financial Review](index=7&type=section&id=Financial%20Review) During the reporting period, the Group achieved substantial growth in revenue and gross profit, improved gross margin for self-owned hospitals, and increased net profit attributable to shareholders, demonstrating strong profitability - The Group's revenue reached **RMB 622.8 million**, a **33.9% year-on-year increase**[13](index=13&type=chunk) - Self-owned hospital operating revenue was **RMB 576.4 million**, a **31.3% year-on-year increase**[13](index=13&type=chunk) - Self-owned hospital gross margin increased to **27.5%** (2020: 26.3%), driving overall gross profit growth of **31.5% to RMB 168.7 million**[13](index=13&type=chunk) - Net profit attributable to the Company's shareholders was **RMB 42.9 million**, a **17.9% year-on-year increase**[13](index=13&type=chunk) [Revenue and Cost of Revenue](index=8&type=section&id=Revenue%20and%20Cost%20of%20Revenue) The Group's revenue primarily stems from self-owned hospital operations, other medical-related businesses, and real estate, with all segments showing growth, notably real estate due to investment property disposal Total Revenue Breakdown (RMB in thousands) | Revenue Source | 2021 (Unaudited) | 2020 (Unaudited) | Change Rate (%) | | :----------------------------- | :--------------- | :--------------- | :-------------- | | Self-Owned Hospital Operating Revenue | 576,419 | 438,886 | 31.3% | | Other Medical-Related Business Revenue | 27,023 | 19,116 | 41.4% | | Real Estate Business Revenue | 19,369 | 7,148 | 171.0% | | **Total Revenue** | **622,811** | **465,150** | **33.9%** | [Self-Owned Hospital Operating Revenue and Cost of Revenue](index=9&type=section&id=Self-Owned%20Hospital%20Operating%20Revenue%20and%20Cost%20of%20Revenue) Self-owned hospital operating revenue, primarily from treatment, general medical services, and drug sales, grew due to increased inpatient and outpatient services, with cost of revenue rising due to higher drug/consumable and employee benefit expenses Self-Owned Hospital Operating Revenue, Cost, and Gross Profit Breakdown (RMB in thousands) | Indicator | 2021 (Unaudited) | 2020 (Unaudited) | Change Rate (%) | | :------------------------------- | :--------------- | :--------------- | :-------------- | | **Treatment and General Medical Services** | | | | | Revenue | 448,139 | 337,751 | 32.7% | | Cost of Revenue | 295,524 | 237,419 | 24.5% | | Gross Profit | 152,615 | 100,332 | 52.1% | | **Drug Sales** | | | | | Revenue | 128,280 | 101,135 | 26.8% | | Cost of Revenue | 122,123 | 86,044 | 41.9% | | Gross Profit | 6,157 | 15,091 | -59.2% | | **Total Self-Owned Hospitals** | | | | | Revenue | 576,419 | 438,886 | 31.3% | | Cost of Revenue | 417,647 | 323,463 | 29.1% | | Gross Profit | 158,772 | 115,423 | 37.6% | Self-Owned Hospital Inpatient and Outpatient Operating Data | Indicator | 2021 (Unaudited) | 2020 (Unaudited) | Change Rate (%) | | :------------------------------- | :--------------- | :--------------- | :-------------- | | **Inpatient** | | | | | Number of Inpatient Beds at Period End | 8,328 | 6,853 | 21.5% | | Inpatient Days | 1,315,493 | 1,030,392 | 27.7% | | Total Inpatient Revenue (RMB in thousands) | 498,407 | 378,831 | 31.6% | | **Outpatient** | | | | | Outpatient Visits | 177,881 | 125,852 | 41.3% | | Total Outpatient Revenue (RMB in thousands) | 78,012 | 60,055 | 29.9% | - Inpatient revenue slightly increased to **86.5%** of self-owned hospital operating revenue, while outpatient revenue slightly decreased to **13.5%**[23](index=23&type=chunk) - Self-owned hospital cost of revenue increased by **29.1%**, mainly driven by higher expenses for drugs and consumables (**+33.1%**), employee benefits and expenses (**+33.2%**), and depreciation of right-of-use assets (**+23.5%**)[27](index=27&type=chunk) [Other Medical-Related Business Revenue](index=12&type=section&id=Other%20Medical-Related%20Business%20Revenue) Other medical-related business revenue, including medical equipment sales, non-hospital drug sales, social psychological services, and IT, increased to RMB 27.0 million, with significant contributions from non-hospital drug and medical equipment sales - Other medical-related business revenue was **RMB 27.0 million**, with non-hospital drug and medical equipment sales revenue at **RMB 16.3 million**, a significant increase from **RMB 5.8 million** in the same period of 2020[28](index=28&type=chunk) [Real Estate Business Revenue](index=12&type=section&id=Real%20Estate%20Business%20Revenue) Real estate business revenue, comprising property leasing and sales, significantly increased to RMB 19.4 million, primarily due to sales revenue from the disposal of investment properties - Real estate business revenue increased to **RMB 19.4 million** (2020: RMB 7.1 million), mainly due to **RMB 16.0 million** in sales revenue from the disposal of Wenzhou Guoda investment properties[29](index=29&type=chunk) [Gross Profit and Gross Margin](index=13&type=section&id=Gross%20Profit%20and%20Gross%20Margin) During the reporting period, the Group's total gross profit and self-owned hospital business gross profit both increased, while the overall gross margin slightly decreased due to a decline in drug sales gross margin, despite an improvement in treatment and general medical services gross margin - The Group's total gross profit reached **RMB 168.7 million**, a **31.5% year-on-year increase**; self-owned hospital business gross profit reached **RMB 158.8 million**, a **37.6% year-on-year increase**[30](index=30&type=chunk) Gross Margin Breakdown by Business | Business | 2021 (Unaudited) | 2020 (Unaudited) | Change (Percentage Points) | | :------------------------------- | :--------------- | :--------------- | :------------------------- | | Treatment and General Medical Services | 34.1% | 29.7% | +4.4 | | Drug Sales | 4.8% | 14.9% | -10.1 | | Self-Owned Hospital Business | 27.5% | 26.3% | +1.2 | | Real Estate and Other Businesses | 21.3% | 47.1% | -25.8 | | Overall Gross Margin | 27.1% | 27.6% | -0.5 | [Taxes and Surcharges](index=13&type=section&id=Taxes%20and%20Surcharges) During the reporting period, the Group's taxes and surcharges amounted to RMB 2.2 million, remaining largely consistent with the prior year - Taxes and surcharges were **RMB 2.2 million** (2020: RMB 2.0 million)[31](index=31&type=chunk) [Selling Expenses](index=13&type=section&id=Selling%20Expenses) During the reporting period, the Group's selling expenses were RMB 4.9 million, with the proportion to self-owned hospital operating revenue remaining stable - Selling expenses were **RMB 4.9 million** (2020: RMB 3.7 million), representing **0.8%** of self-owned hospital operating revenue, consistent with the prior year[32](index=32&type=chunk) [Administrative Expenses](index=14&type=section&id=Administrative%20Expenses) During the reporting period, the Group's administrative expenses increased by 33.5%, primarily due to higher employee benefits, depreciation, and amortization, leading to a slight rise in the ratio of administrative expenses to self-owned hospital operating revenue Administrative Expenses Breakdown (RMB in thousands) | Item | 2021 (Unaudited) | 2020 (Unaudited) | Change Rate (%) | | :------------------------- | :--------------- | :--------------- | :-------------- | | Employee Benefits and Expenses | 42,156 | 35,136 | 19.9% | | Depreciation and Amortization | 8,632 | 5,970 | 44.6% | | Professional Service Fees | 2,845 | 2,406 | 18.2% | | Travel Expenses | 1,226 | 1,468 | -16.5% | | Others | 18,076 | 9,659 | 87.1% | | **Total Administrative Expenses** | **72,935** | **54,639** | **33.5%** | - Administrative expenses accounted for **12.7%** of self-owned hospital operating revenue (2020: 12.4%)[34](index=34&type=chunk) [Research and Development Expenses](index=14&type=section&id=Research%20and%20Development%20Expenses) During the reporting period, R&D expenses surged by 347.6%, primarily due to increased investment in IT software, social psychological service platforms, and internet hospital application development, alongside clinical research incentive policies - R&D expenses were **RMB 11.8 million** (2020: RMB 2.6 million), a **347.6% year-on-year increase**[35](index=35&type=chunk) - R&D expenses as a percentage of self-owned hospital operating revenue increased to **2.0%** (2020: 0.6%)[35](index=35&type=chunk) - The increase was mainly driven by increased investment in IT software, social psychological service platforms, and internet hospital application development, as well as the implementation of clinical research incentive policies at Wenzhou Kangning Hospital[35](index=35&type=chunk) [Finance Costs - Net](index=15&type=section&id=Finance%20Costs%20-%20Net) During the reporting period, net finance costs increased by RMB 5.3 million, primarily due to higher interest expenses from increased bank borrowings and lease liabilities Finance Income and Expenses Breakdown (RMB in thousands) | Item | 2021 (Unaudited) | 2020 (Unaudited) | Change (RMB in thousands) | | :------------------------- | :--------------- | :--------------- | :------------------------ | | Interest Income | 1,684 | 2,454 | -770 | | Exchange (Loss) / Gain | (23) | 125 | -148 | | Borrowing Interest Expense | (11,674) | (9,165) | -2,509 | | Lease Liability Interest Expense | (6,558) | (4,921) | -1,637 | | Others | (548) | (339) | -209 | | **Net Finance Costs** | **(17,119)** | **(11,846)** | **-5,273** | - Net finance costs increased by **RMB 5.3 million**, primarily due to a **RMB 2.5 million increase** in borrowing interest expenses from higher bank loans and a **RMB 1.6 million increase** in lease liability interest expenses[36](index=36&type=chunk) [Investment Income / (Loss)](index=16&type=section&id=Investment%20Income%20%2F%20%28Loss%29) During the reporting period, the Group's investment income was RMB 5.4 million, primarily benefiting from gains generated by the disposal and restructuring of Wenzhou Guoda equity Investment Income / (Loss) Breakdown (RMB in thousands) | Item | 2021 (Unaudited) | 2020 (Unaudited) | Change (RMB in thousands) | | :--------------------------------- | :--------------- | :--------------- | :------------------------ | | Share of Loss of Associates Accounted for Using Equity Method | (755) | (1,020) | 265 | | Gain on Disposal of Long-Term Equity Investment | 6,119 | – | 6,119 | | Interest from Structured Deposits | – | 96 | -96 | | **Total Investment Income** | **5,364** | **(924)** | **6,288** | - Investment income primarily resulted from gains generated by the disposal and restructuring of Wenzhou Guoda equity[39](index=39&type=chunk) [Credit Impairment Losses](index=16&type=section&id=Credit%20Impairment%20Losses) During the reporting period, credit impairment losses decreased to RMB 12.0 million, with its proportion to total revenue declining, while the allowance for doubtful accounts for trade receivables increased - Credit impairment losses decreased to **RMB 12.0 million** (2020: RMB 16.1 million), representing **1.9%** of total revenue (2020: 3.5%)[40](index=40&type=chunk) - As of June 30, 2021, the allowance for doubtful accounts for trade receivables was **RMB 44.2 million**, accounting for **10.6%** of total trade receivables (December 31, 2020: RMB 33.9 million, 9.5%)[40](index=40&type=chunk) [Non-Operating Income (Expenses)](index=17&type=section&id=Non-Operating%20Income%20%28Expenses%29) During the reporting period, the Group's non-operating income remained largely stable, while non-operating expenses decreased, primarily due to reduced donation expenditures Non-Operating Income and Expenses Breakdown (RMB in thousands) | Item | 2021 (Unaudited) | 2020 (Unaudited) | Change (RMB in thousands) | | :------------------------- | :--------------- | :--------------- | :------------------------ | | Government Grants | 297 | 30 | 267 | | Other Non-Operating Income | 308 | 535 | -227 | | **Non-Operating Income** | **605** | **565** | **40** | | Donation Expenses | (973) | (2,627) | 1,654 | | Other Non-Operating Expenses | (1,739) | (408) | -1,331 | | **Non-Operating Expenses** | **(2,712)** | **(3,035)** | **323** | - Non-operating expenses decreased to **RMB 2.7 million**, primarily due to a **RMB 1.7 million reduction** in donation expenditures[41](index=41&type=chunk) [Income Tax Expense](index=17&type=section&id=Income%20Tax%20Expense) During the reporting period, income tax expense increased by 57.3%, with the effective tax rate rising - Income tax expense increased to **RMB 16.5 million** (2020: RMB 10.5 million), a **57.3% year-on-year increase**[42](index=42&type=chunk) - The effective tax rate increased from **26.7%** in the same period of 2020 to **28.7%**[42](index=42&type=chunk) [Financial Position](index=18&type=section&id=Financial%20Position) This section details changes in assets and liabilities at the end of the reporting period, including inventory, trade receivables, disposal of investment properties, increase in right-of-use assets, and changes in accounts payable and other payables [Inventories](index=18&type=section&id=Inventories) As of June 30, 2021, inventory balance slightly increased, primarily comprising drugs in stock and revolving materials - Inventory balance was **RMB 39.1 million** (December 31, 2020: RMB 37.5 million)[43](index=43&type=chunk) [Trade Receivables](index=18&type=section&id=Trade%20Receivables) As of June 30, 2021, the trade receivables balance increased by 16.0%, primarily due to higher self-owned hospital operating revenue, with an improvement in turnover days - Trade receivables balance was **RMB 372.9 million** (December 31, 2020: RMB 321.4 million), a **16.0% increase**[44](index=44&type=chunk) - Trade receivables turnover days improved to **101 days** (2020: 129 days)[45](index=45&type=chunk) [Other Receivables and Prepayments](index=18&type=section&id=Other%20Receivables%20and%20Prepayments) As of June 30, 2021, other receivables and prepayments slightly decreased - Other receivables and prepayments decreased to **RMB 74.8 million** (December 31, 2020: RMB 75.4 million)[46](index=46&type=chunk) [Investment Properties](index=18&type=section&id=Investment%20Properties) As of June 30, 2021, the Group had no investment properties, primarily due to the sale of all equity in Wenzhou Guoda - As of June 30, 2021, the Group had no investment properties (December 31, 2020: RMB 107.8 million), as they were previously held by Wenzhou Guoda, whose entire equity has been sold[47](index=47&type=chunk) [Other Non-Current Financial Assets](index=18&type=section&id=Other%20Non-Current%20Financial%20Assets) As of June 30, 2021, the balance of other non-current financial assets slightly increased, mainly due to the fair value increase of the Jinpu Fund investment - The balance of other non-current financial assets was **RMB 57.7 million** (December 31, 2020: RMB 57.4 million), with a fair value increase of **RMB 0.3 million**, primarily from the Jinpu Fund[48](index=48&type=chunk) [Right-of-Use Assets](index=18&type=section&id=Right-of-Use%20Assets) As of June 30, 2021, right-of-use assets increased, primarily due to newly signed lease contracts - Right-of-use assets increased to **RMB 276.5 million** (December 31, 2020: RMB 227.6 million), mainly due to an **RMB 69.5 million increase** from newly signed lease contracts[49](index=49&type=chunk) [Trade Payables](index=19&type=section&id=Trade%20Payables) As of June 30, 2021, trade payables slightly decreased - Trade payables slightly decreased to **RMB 69.0 million** (December 31, 2020: RMB 69.6 million)[51](index=51&type=chunk) [Contract Liabilities](index=19&type=section&id=Contract%20Liabilities) As of June 30, 2021, contract liabilities increased - Contract liabilities increased to **RMB 14.4 million** (December 31, 2020: RMB 13.0 million)[52](index=52&type=chunk) [Other Payables](index=19&type=section&id=Other%20Payables) As of June 30, 2021, other payables decreased, primarily due to a reduction in payables for equity repurchases - Other payables decreased to **RMB 35.8 million** (December 31, 2020: RMB 76.6 million), mainly due to a **RMB 23.3 million reduction** in payables for equity repurchases[53](index=53&type=chunk) [Liquidity and Capital Resources](index=19&type=section&id=Liquidity%20and%20Capital%20Resources) During the reporting period, the Group's net cash from operating activities significantly increased, net cash used in investing activities decreased, net cash from financing activities slightly declined, and the net increase in cash and cash equivalents substantially improved Consolidated Cash Flow Statement Key Data (RMB in thousands) | Item | 2021 (Unaudited) | 2020 (Unaudited) | Change (RMB in thousands) | | :--------------------------------- | :--------------- | :--------------- | :------------------------ | | Net Cash Generated from Operating Activities | 37,316 | 17,799 | 19,517 | | Net Cash Used in Investing Activities | (60,918) | (76,436) | 15,518 | | Net Cash Generated from Financing Activities | 93,139 | 94,945 | -1,806 | | Net Increase in Cash and Cash Equivalents | 69,515 | 36,424 | 33,091 | [Net Cash Generated from Operating Activities](index=19&type=section&id=Net%20Cash%20Generated%20from%20Operating%20Activities) Net cash generated from operating activities was RMB 37.3 million, primarily driven by net profit, adjustments for credit impairment losses, and asset depreciation/amortization, though working capital changes led to cash outflows - Net cash generated from operating activities was **RMB 37.3 million**, primarily including **RMB 41.1 million** in net profit, **RMB 12.0 million** in credit impairment loss adjustments, and **RMB 70.1 million** in various asset depreciation and amortization adjustments, while working capital changes resulted in **RMB 92.0 million** in cash outflows[55](index=55&type=chunk) [Net Cash Used in Investing Activities](index=20&type=section&id=Net%20Cash%20Used%20in%20Investing%20Activities) Net cash used in investing activities was RMB 60.9 million, primarily for the acquisition of property, plant, and equipment, including hospital relocation projects and land use rights purchases - Net cash used in investing activities was **RMB 60.9 million**, primarily for the purchase of **RMB 83.5 million** in property, plant, and equipment, including the Qingtian Kangning Hospital and Yongjia Kangning Hospital relocation projects, and land use rights for Linhai Cining Hospital[56](index=56&type=chunk) [Net Cash Generated from Financing Activities](index=20&type=section&id=Net%20Cash%20Generated%20from%20Financing%20Activities) During the reporting period, net cash generated from financing activities amounted to RMB 93.1 million - Net cash generated from financing activities was **RMB 93.1 million**[57](index=57&type=chunk) [Significant Investments, Acquisitions and Disposals](index=20&type=section&id=Significant%20Investments%2C%20Acquisitions%20and%20Disposals) During the reporting period, the Group had no significant investments, acquisitions, or disposals - The Group had no significant investments, acquisitions, or disposals during the six months ended June 30, 2021[58](index=58&type=chunk) [Indebtedness](index=20&type=section&id=Indebtedness) The Group's indebtedness primarily consists of bank borrowings and lease liabilities; during the reporting period, bank borrowing balances increased, with no significant contingent liabilities or asset pledges [Bank Borrowings](index=20&type=section&id=Bank%20Borrowings) As of June 30, 2021, the Group's bank borrowing balance increased, primarily due to new borrowings exceeding repayments - Bank borrowing balance was **RMB 564.6 million** (December 31, 2020: RMB 426.5 million), mainly due to **RMB 283.0 million** in new borrowings and **RMB 144.9 million** in repayments[58](index=58&type=chunk) [Contingent Liabilities](index=20&type=section&id=Contingent%20Liabilities) As of June 30, 2021, the Group had no significant contingent liabilities or guarantees - As of June 30, 2021, the Group had no contingent liabilities or guarantees that would have a significant impact on its financial position or operations[59](index=59&type=chunk) [Pledge of Assets](index=20&type=section&id=Pledge%20of%20Assets) During the reporting period, the Group had no pledge of assets - The Group had no pledge of assets during the reporting period[60](index=60&type=chunk) [Lease Liabilities](index=20&type=section&id=Lease%20Liabilities) As of June 30, 2021, the present value of the Group's lease liabilities was RMB 227.2 million - As of June 30, 2021, the present value of outstanding lease payments under irrevocable lease agreements was **RMB 227.2 million**[61](index=61&type=chunk) [Financial Instruments](index=21&type=section&id=Financial%20Instruments) The Group's financial instruments include trade receivables, other non-current financial assets, other receivables, cash and cash equivalents, bank borrowings, trade payables, and other payables, with management monitoring risks to ensure timely and effective measures - The Group's financial instruments include trade receivables, other non-current financial assets, other receivables, cash and cash equivalents, bank borrowings, trade payables, and other payables[62](index=62&type=chunk) [Exchange Rate Fluctuation Risk](index=21&type=section&id=Exchange%20Rate%20Fluctuation%20Risk) The Group faces exchange rate fluctuation risk between HKD and RMB, managed by closely monitoring rate changes, but no derivative financial instruments were used for hedging during the reporting period - The Group primarily faces exchange rate fluctuation risk between HKD and RMB[63](index=63&type=chunk) - During the six months ended June 30, 2021, the Group did not use any derivative financial instruments to hedge exchange rate risk[63](index=63&type=chunk) [Gearing Ratio](index=21&type=section&id=Gearing%20Ratio) As of June 30, 2021, the Group's gearing ratio slightly increased, primarily due to an increase in bank borrowings - The gearing ratio slightly increased to **43.1%** (December 31, 2020: 41.6%), primarily due to an increase in bank borrowings[64](index=64&type=chunk) [Employees and Remuneration Policy](index=21&type=section&id=Employees%20and%20Remuneration%20Policy) As of June 30, 2021, the Group's employee count and total staff remuneration both increased, with the remuneration policy referencing industry benchmarks and employee performance - As of June 30, 2021, the Group had **3,763 employees** (December 31, 2020: 3,338 employees)[65](index=65&type=chunk) - During the reporting period, total staff remuneration was approximately **RMB 198.1 million** (2020: RMB 149.5 million), with average annual staff remuneration of **RMB 108.2 thousand**[65](index=65&type=chunk) [Share Incentive Scheme](index=22&type=section&id=Share%20Incentive%20Scheme) The Company revised its 2018 share incentive scheme, removing performance assessment requirements and the company's obligation to repurchase unvested incentive shares; as of the reporting date, all 2,460,000 incentive shares have been granted - The Company revised the "Wenzhou Kangning Hospital Co., Ltd. 2018 Share Incentive Scheme," removing performance assessment requirements and the Company's obligation to repurchase unvested incentive shares[68](index=68&type=chunk) - As of the reporting date, the share incentive scheme had 193 actual grantees, with all **2,460,000** proposed incentive shares granted, representing **3.2976%** of the total issued share capital, at a grant price of **RMB 10.47 per share**[69](index=69&type=chunk) Corporate Governance and Other Information [Corporate Governance](index=23&type=section&id=Corporate%20Governance) During the reporting period, the Company complied with the Corporate Governance Code; subsequently, a non-executive director resigned, causing the Audit Committee to fall short of Listing Rules requirements, which the Company will address promptly - The Company complied with all code provisions under the Corporate Governance Code during the reporting period[70](index=70&type=chunk) - On September 9, 2021, Mr. Yang Yang resigned as a non-executive director and a member of the Audit Committee, causing the Audit Committee to no longer comply with Rule 3.21 of the Hong Kong Listing Rules; the Company will appoint a suitable replacement as soon as practicable[70](index=70&type=chunk) [Compliance with Model Code](index=23&type=section&id=Compliance%20with%20Model%20Code) The Company's directors and supervisors complied with the Model Code during the reporting period, maintaining strict control and registration of insiders with access to inside information - Directors and supervisors complied with the requirements of the Model Code during the period from January 1, 2021, to June 30, 2021[71](index=71&type=chunk) - The Company restricted access to inside information to the minimum necessary before public disclosure and registered employees with inside information, prohibiting share dealings during blackout periods[71](index=71&type=chunk) [Accounting Standards](index=23&type=section&id=Accounting%20Standards) The Company has adopted China Accounting Standards for Business Enterprises since the 2017 financial year and complies with the disclosure requirements of the Hong Kong Companies Ordinance - The Company has adopted China Accounting Standards for Business Enterprises since the 2017 financial year, while also complying with the disclosure requirements of the Companies Ordinance (Chapter 622 of the Laws of Hong Kong)[72](index=72&type=chunk) [Accounting Policies](index=24&type=section&id=Accounting%20Policies) These financial statements are prepared in accordance with the Accounting Standards for Business Enterprises and Accounting Standard No. 32 – Interim Financial Reporting issued by the Ministry of Finance of China, with accounting policies consistent with the 2020 annual financial statements - These financial statements are prepared in accordance with the Accounting Standards for Business Enterprises – Basic Standards and specific accounting standards and related regulations issued by the Ministry of Finance[75](index=75&type=chunk) - The accounting policies adopted in these financial statements are consistent with those used by the Group in preparing its 2020 annual financial statements[75](index=75&type=chunk) [Significant Changes in Accounting Policies](index=24&type=section&id=Significant%20Changes%20in%20Accounting%20Policies) The Group has adopted the "Accounting Treatment Provisions for Rent Concessions Related to COVID-19 Pandemic" and "Implementation Guidance for Accounting Standards for Business Enterprises" issued by the Ministry of Finance, with no significant impact on the financial statements - The Group has adopted the "Accounting Treatment Provisions for Rent Concessions Related to COVID-19 Pandemic" and "Implementation Guidance for Accounting Standards for Business Enterprises" issued by the Ministry of Finance in preparing its financial statements, with no significant impact on the financial statements of the Group and the Company[77](index=77&type=chunk) [Audit Committee and Review of Interim Report and Interim Results](index=24&type=section&id=Audit%20Committee%20and%20Review%20of%20Interim%20Report%20and%20Interim%20Results) The Audit Committee has reviewed this interim report and financial information, confirming compliance with applicable accounting standards and disclosure requirements - The Audit Committee has reviewed this interim report and the Group's financial information for the six months ended June 30, 2021, confirming compliance with applicable accounting standards, principles, and regulations, and appropriate disclosures[78](index=78&type=chunk) [Interim Dividend](index=25&type=section&id=Interim%20Dividend) The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2021 - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2021 (2020: nil)[79](index=79&type=chunk) [Purchase, Sale or Redemption of Listed Securities](index=25&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20Listed%20Securities) During the reporting period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - During the reporting period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[79](index=79&type=chunk) [Changes in Directors, Supervisors and Senior Management](index=25&type=section&id=Changes%20in%20Directors%2C%20Supervisors%20and%20Senior%20Management) During the reporting period, there were multiple changes in the Company's directors and supervisors, including changes in the appointments of Mr. Lin Lijun, Mr. Qin Hao, Mr. Yang Yang, and Ms. Huang Jingou - Mr. Lin Lijun resigned as a non-executive director on April 30, 2021; Mr. Qin Hao was appointed as a non-executive director on June 18, 2021[80](index=80&type=chunk) - Mr. Yang Yang resigned as a non-executive director and a member of the Audit Committee on September 9, 2021; Ms. Huang Jingou resigned as a shareholder representative supervisor on the same day[80](index=80&type=chunk) [Events After the Reporting Period](index=25&type=section&id=Events%20After%20the%20Reporting%20Period) Subsequent to the reporting period, the Company proposed to apply for an A-share offering and signed an investment agreement to acquire 100% equity in Pingyang Changgeng Yining Hospital Co., Ltd - The Board proposed to apply for an A-share offering[82](index=82&type=chunk) - The Company entered into an investment agreement with relevant parties and individuals, conditionally agreeing to acquire **100%** equity in Pingyang Changgeng Yining Hospital Co., Ltd. for a total consideration of **RMB 154.7447 million**[82](index=82&type=chunk) [Changes in Resumes of Directors, Supervisors and Key Executives](index=26&type=section&id=Changes%20in%20Resumes%20of%20Directors%2C%20Supervisors%20and%20Key%20Executives) During the reporting period, there were changes in the resumes of directors, managers, and supervisors of some of the Group's subsidiaries, including Linhai Cining Hospital and Wenzhou Ouhai Yining Rehabilitation Hospital Changes in Key Executive Resumes | Name | Group Member | Position Held | Period in Position | | :--------------- | :--------------------------------- | :----------------------- | :----------------- | | Ms. Zhang Feixue | Linhai Cining Hospital Co., Ltd. | Executive Director and Manager | Since February 2021 | | Mr. Wang Jian | Wenzhou Ouhai Yining Rehabilitation Hospital Co., Ltd. | Chairman | Since March 2021 | | Mr. Jin Weiguang | Cangnan Yining Nursing Center Co., Ltd. | Executive Director and General Manager | Since March 2021 | | Ms. Wang Hongyue | Cangnan Yining Nursing Center Co., Ltd. | Supervisor | Since March 2021 | | Mr. Wang Jian | Hangzhou Yining Medical Equipment R&D Co., Ltd. | Executive Director and General Manager | Since April 2021 | | Mr. Zhou Chaoyi | Chun'an Qiandaohu Kangning Hospital Co., Ltd. | Executive Director and General Manager | Since May 2021 | [Disclosure of Interests](index=27&type=section&id=Disclosure%20of%20Interests) This section discloses the interests and short positions of directors, supervisors, chief executives, and substantial shareholders in the Company's shares as of June 30, 2021 [Securities Interests of Directors, Supervisors and Chief Executives](index=27&type=section&id=Securities%20Interests%20of%20Directors%2C%20Supervisors%20and%20Chief%20Executives) As of June 30, 2021, Mr. Guan Weili, Ms. Wang Lianyue, and Ms. Wang Hongyue held interests in the Company's domestic shares and H-shares, with Mr. Guan Weili and Ms. Wang Lianyue being spouses, and Ms. Wang Hongyue holding interests through controlled corporations Directors' Securities Interests (as of June 30, 2021) | Director Name | Share Type | Nature of Interest | Number of Shares (L) | Total Shares (L) | Approximate Percentage of Class of Shares | Approximate Percentage of Total Share Capital | | :--------------- | :--------- | :----------------- | :------------------- | :--------------- | :---------------------------------------- | :-------------------------------------------- | | Mr. Guan Weili | Domestic | Beneficial Owner | 18,350,250 | 22,144,750 | 40.07% | 29.68% | | | Domestic | Spouse's Interest | 3,794,500 | | | | | Ms. Wang Lianyue | Domestic | Beneficial Owner | 3,794,500 | 22,144,750 | 40.07% | 29.68% | | | Domestic | Spouse's Interest | 18,350,250 | | | | | Ms. Wang Hongyue | Domestic | Beneficial Owner | 3,984,350 | 5,984,350 | 10.83% | 8.02% | | | Domestic | Interest in Controlled Corporation | 2,000,000 | | | | | | H Shares | Beneficial Owner | 309,000 | 309,000 | 1.60% | 0.41% | - Mr. Guan Weili and Ms. Wang Lianyue are spouses and are deemed to have interests in each other's domestic shares under the Securities and Futures Ordinance[88](index=88&type=chunk) - Ms. Wang Hongyue holds interests in the Company's domestic shares through limited partnerships controlled by her as a general partner[88](index=88&type=chunk) [Interests of Substantial Shareholders](index=28&type=section&id=Interests%20of%20Substantial%20Shareholders) As of June 30, 2021, besides directors, supervisors, and chief executives, several institutions and individuals held 5% or more equity interests in the Company, including Defu Fund, GAC Capital, Central Enterprise Poverty Area Industrial Investment Fund, and UBS Group AG Substantial Shareholders' Interests (as of June 30, 2021) | Name | Share Type | Nature of Interest | Number of Shares (L) | Approximate Percentage of Class of Shares | Approximate Percentage of Total Share Capital | | :----------------------------------------- | :--------- | :----------------- | :------------------- | :---------------------------------------- | :-------------------------------------------- | | Guangzhou Defu Equity Investment Partnership (Limited Partnership) | Domestic | Beneficial Owner | 5,384,875 | 9.74% | 7.22% | | Guangzhou Defu Investment Consulting Partnership (Limited Partnership) | Domestic | Interest in Controlled Corporation | 5,384,875 | 9.74% | 7.22% | | GAC Capital Co., Ltd. | Domestic | Interest in Controlled Corporation | 5,384,875 | 9.74% | 7.22% | | Mr. Hou Ming | Domestic | Interest in Controlled Corporation | 5,384,875 | 9.74% | 7.22% | | Mr. Xu Yi | Domestic | Spouse's Interest | 5,984,350 | 10.83% | 8.02% | | Shanghai Tanying Investment Partnership (Limited Partnership) | Domestic | Beneficial Owner | 4,519,003 | 8.18% | 6.06% | | Shanghai Lejin Investment Partnership (Limited Partnership) | Domestic | Interest in Controlled Corporation | 4,519,003 | 8.18% | 6.06% | | Mr. Lin Lijun | Domestic | Interest in Controlled Corporation | 6,506,309 | 11.77% | 8.72% | | Shanghai Shengg Investment Management Co., Ltd. | Domestic | Interest in Controlled Corporation | 6,506,359 | 11.77% | 8.72% | | Qingdao Jinshi Haorui Investment Co., Ltd. | Domestic | Beneficial Owner | 2,780,000 | 5.03% | 3.73% | | Jinshi Investment Co., Ltd. | Domestic | Interest in Controlled Corporation | 2,780,000 | 5.03% | 3.73% | | Central Enterprise Poverty Area Industrial Investment Fund Co., Ltd. | Domestic | Beneficial Owner | 6,666,666 | 12.06% | 8.94% | | Wind Information Co., Ltd. | Domestic | Interest in Controlled Corporation | 3,333,000 | 6.03% | 4.47% | | Shanghai Hehuayuan Enterprise Management Center (Limited Partnership) | Domestic | Interest in Controlled Corporation | 3,333,000 | 6.03% | 4.47% | | Wind Impact Equity Investment (Jiaxing) Partnership (Limited Partnership) | Domestic | Beneficial Owner | 3,333,000 | 6.03% | 4.47% | | Citigroup Inc. | H Shares | Person with Security Interest | 1,345,792 | 6.96% | 1.80% | | OrbiMed Advisors LLC | H Shares | Investment Manager | 1,454,000 | 7.52% | 1.95% | | OrbiMed Capital LLC | H Shares | Investment Manager | 2,150,900 | 11.12% | 2.88% | | OrbiMed Partners Master Fund Limited | H Shares | Beneficial Owner | 1,279,900 | 6.62% | 1.72% | | Prime Capital Management Company Limited | H Shares | Investment Manager | 2,420,019 | 12.51% | 3.24% | | OrbiMed Partners II, L.P. | H Shares | Beneficial Owner | 1,052,000 | 5.44% | 1.41% | | UBS Group AG | H Shares | Interest in Controlled Corporation | 4,035,096 | 20.86% | 5.41% | | Ms. Zou Haili | H Shares | Beneficial Owner | 1,900,000 | 9.82% | 2.55% | Consolidated Balance Sheet [Consolidated Balance Sheet Details](index=31&type=section&id=Consolidated%20Balance%20Sheet%20Details) As of June 30, 2021, the Group's total consolidated assets amounted to RMB 2,410,867,584, an increase of approximately 6.0% from the end of 2020, with both current and non-current assets, total liabilities, and total equity showing corresponding growth Consolidated Balance Sheet Key Data (RMB in Yuan) | Item | June 30, 2021 (Unaudited) | December 31, 2020 (Audited) | Change Rate (%) | | :------------------------- | :------------------------ | :-------------------------- | :-------------- | | **Assets** | | | | | Total Current Assets | 783,768,728 | 640,779,695 | 22.3% | | Total Non-Current Assets | 1,627,098,856 | 1,608,167,752 | 1.2% | | **Total Assets** | **2,410,867,584** | **2,248,947,447** | **7.2%** | | **Liabilities and Equity** | | | | | Total Current Liabilities | 554,168,676 | 599,050,882 | -7.5% | | Total Non-Current Liabilities | 484,602,421 | 335,472,168 | 44.4% | | **Total Liabilities** | **1,038,771,097** | **934,523,050** | **11.2%** | | Total Equity | 1,372,096,487 | 1,314,424,397 | 4.4% | Company Balance Sheet [Company Balance Sheet Details](index=33&type=section&id=Company%20Balance%20Sheet%20Details) As of June 30, 2021, the Company's total assets amounted to RMB 1,709,100,540, an increase of approximately 7.3% from the end of 2020, with both current and non-current assets, total liabilities, and total equity showing corresponding growth Company Balance Sheet Key Data (RMB in Yuan) | Item | June 30, 2021 (Unaudited) | December 31, 2020 (Audited) | Change Rate (%) | | :------------------------- | :------------------------ | :-------------------------- | :-------------- | | **Assets** | | | | | Total Current Assets | 758,962,045 | 730,660,802 | 3.9% | | Total Non-Current Assets | 950,138,495 | 861,368,783 | 10.3% | | **Total Assets** | **1,709,100,540** | **1,592,029,585** | **7.3%** | | **Liabilities and Equity** | | | | | Total Current Liabilities | 360,788,520 | 395,279,629 | -8.7% | | Total Non-Current Liabilities | 156,193,579 | 49,253,124 | 217.1% | | **Total Liabilities** | **516,958,393** | **444,532,753** | **16.3%** | | Total Equity | 1,192,118,441 | 1,147,496,832 | 3.9% | Consolidated Income Statement [Consolidated Income Statement Details](index=35&type=section&id=Consolidated%20Income%20Statement%20Details) For the six months ended June 30, 2021, the Group achieved significant growth in operating revenue and net profit, with a substantial increase in total comprehensive income and a corresponding rise in earnings per share Consolidated Income Statement Key Data (RMB in Yuan) | Item | Six Months Ended June 30, 2021 (Unaudited) | Six Months Ended June 30, 2020 (Unaudited) | Change Rate (%) | | :--------------------------------- | :----------------------------------------- | :----------------------------------------- | :-------------- | | Operating Revenue | 622,811,396 | 465,150,452 | 33.9% | | Operating Profit | 59,771,797 | 41,874,086 | 42.7% | | Total Profit | 57,665,247 | 39,403,983 | 46.3% | | Net Profit | 41,143,150 | 28,901,235 | 42.3% | | Net Profit Attributable to Parent Company Shareholders | 42,913,178 | 36,409,947 | 17.9% | | Total Comprehensive Income | 41,143,150 | 28,901,235 | 42.3% | | Basic Earnings Per Share (RMB) | 0.59 | 0.50 | 18.0% | | Diluted Earnings Per Share (RMB) | 0.59 | 0.50 | 18.0% | Company Income Statement [Company Income Statement Details](index=36&type=section&id=Company%20Income%20Statement%20Details) For the six months ended June 30, 2021, the Company's operating revenue slightly decreased, with a corresponding reduction in net profit and total comprehensive income Company Income Statement Key Data (RMB in Yuan) | Item | Six Months Ended June 30, 2021 (Unaudited) | Six Months Ended June 30, 2020 (Unaudited) | Change Rate (%) | | :--------------------------------- | :----------------------------------------- | :----------------------------------------- | :-------------- | | Operating Revenue | 189,532,979 | 193,700,484 | -2.1% | | Operating Profit | 15,321,291 | 28,902,150 | -47.0% | | Total Profit | 15,212,971 | 28,434,255 | -46.5% | | Net Profit | 11,821,483 | 21,836,736 | -45.8% | | Total Comprehensive Income | 11,821,483 | 21,836,736 | -45.8% | Consolidated Cash Flow Statement [Consolidated Cash Flow Statement Details](index=37&type=section&id=Consolidated%20Cash%20Flow%20Statement%20Details) For the six months ended June 30, 2021, the Group's net cash from operating activities significantly increased, net cash used in investing activities decreased, net cash from financing activities slightly declined, and the period-end cash and cash equivalents balance substantially rose Consolidated Cash Flow Statement Key Data (RMB in Yuan) | Item | Six Months Ended June 30, 2021 (Unaudited) | Six Months Ended June 30, 2020 (Unaudited) | Change Rate (%) | | :--------------------------------- | :----------------------------------------- | :----------------------------------------- | :-------------- | | Net Cash Generated from Operating Activities | 37,315,721 | 17,798,747 | 109.7% | | Net Cash Used in Investing Activities | (60,918,009) | (76,436,244) | 20.3% | | Net Cash Generated from Financing Activities | 93,138,579 | 94,945,096 | -1.9% | | Net Increase in Cash and Cash Equivalents | 69,515,256 | 36,424,342 | 90.8% | | Cash and Cash Equivalents at Period End | 269,607,921 | 201,376,292 | 33.9% | Company Cash Flow Statement [Company Cash Flow Statement Details](index=39&type=section&id=Company%20Cash%20Flow%20Statement%20Details) For the six months ended June 30, 2021, the Company's net cash from operating activities turned positive, net cash used in investing activities slightly increased, net cash from financing activities remained high, and the period-end cash and cash equivalents balance significantly rose Company Cash Flow Statement Key Data (RMB in Yuan) | Item | Six Months Ended June 30, 2021 (Unaudited) | Six Months Ended June 30, 2020 (Unaudited) | Change Rate (%) | | :--------------------------------- | :----------------------------------------- | :----------------------------------------- | :-------------- | | Net Cash Generated from Operating Activities | 47,238,761 | (6,595,066) | 816.2% | | Net Cash Used in Investing Activities | (83,891,370) | (82,527,771) | -1.6% | | Net Cash Generated from Financing Activities | 102,277,401 | 92,328,964 | 10.8% | | Net Increase in Cash and Cash Equivalents | 65,603,757 | 3,322,870 | 1873.9% | | Cash and Cash Equivalents at Period End | 183,740,562 | 93,535,076 | 96.4% | Consolidated Statement of Changes in Equity [Consolidated Statement of Changes in Equity Details](index=41&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Equity%20Details) For the six months ended June 30, 2021, the Group's net profit attributable to parent company shareholders and total comprehensive income both increased, capital reserve rose due to share-based payments and reversal of repurchase obligations, while minority interests decreased due to subsidiary disposal Consolidated Statement of Changes in Equity Key Data (RMB in Yuan) | Item | June 30, 2021 (Unaudited) | January 1, 2020 (Audited) | Change (RMB in Yuan) | | :--------------------------------- | :------------------------ | :------------------------ | :------------------- | | Share Capital | 74,600,300 | 74,600,300 | 0 | | Capital Reserve | 814,055,511 | 804,566,529 | 9,488,982 | | Less: Treasury Shares | – | (23,311,144) | 23,311,144 | | Surplus Reserve | 37,300,150 | 36,593,229 | 706,921 | | Retained Earnings | 361,603,198 | 319,396,941 | 42,206,257 | | Total Equity Attributable to Parent Company Shareholders | 1,287,559,159 | 1,211,845,855 | 75,713,304 | | Minority Interests | 84,537,328 | 102,578,542 | -18,041,214 | | Total Equity | 1,372,096,487 | 1,314,424,397 | 57,672,090 | - Net profit was **RMB 41,143,150**, with net profit attributable to parent company shareholders at **RMB 42,913,178**[129](index=129&type=chunk) - The increase in capital reserve was primarily due to the amount of share-based payments recognized in equity and the reversal of treasury shares from the cancellation of repurchase obligations[129](index=129&type=chunk) Company Statement of Changes in Equity [Company Statement of Changes in Equity Details](index=43&type=section&id=Company%20Statement%20of%20Changes%20in%20Equity%20Details) For the six months ended June 30, 2021, the Company's net profit and total comprehensive income increased, and capital reserve rose due to share-based payments and the reversal of repurchase obligations Company Statement of Changes in Equity Key Data (RMB in Yuan) | Item | June 30, 2021 (Unaudited) | January 1, 2020 (Audited) | Change (RMB in Yuan) | | :------------------------- | :------------------------ | :------------------------ | :------------------- | | Share Capital | 74,600,300 | 74,600,300 | 0 | | Capital Reserve | 838,005,588 | 828,516,606 | 9,488,982 | | Less: Treasury Shares | – | (23,311,144) | 23,311,144 | | Surplus Reserve | 37,300,150 | 36,593,229 | 706,921 | | Retained Earnings | 242,212,403 | 231,097,841 | 11,114,562 | | Total Equity | 1,192,118,441 | 1,147,496,832 | 44,621,609 | - Net profit was **RMB 11,821,483**[134](index=134&type=chunk) - The increase in capital reserve was primarily due to the amount of share-based payments recognized in equity and the reversal of treasury shares from the cancellation of repurchase obligations[134](index=134&type=chunk) Notes to Financial Statements [I. Company Overview](index=45&type=section&id=I.%20Company%20Overview) This section outlines Wenzhou Kangning Hospital Co., Ltd.'s establishment history, business nature, listing status, and scope of consolidated financial statements - The Company was established on February 7, 1996, converted to a joint-stock limited company on October 15, 2014, and listed on the Hong Kong Stock Exchange on November 20, 2015[139](index=139&type=chunk)[140](index=140&type=chunk)[141](index=141&type=chunk) - The Group primarily operates psychiatric hospitals, providing comprehensive specialized medical services for patients with mental and psychological disorders[140](index=140&type=chunk) [II. Significant Accounting Policies and Estimates](index=46&type=section&id=II.%20Significant%20Accounting%20Policies%20and%20Estimates) This section explains the basis of preparation for the interim financial statements, adherence to accounting standards, and consistency with the 2020 annual financial statements' accounting policies - These interim financial statements are prepared in accordance with the Accounting Standards for Business Enterprises and Accounting Standard No. 32 – Interim Financial Reporting issued by the Ministry of Finance[144](index=144&type=chunk)[145](index=145&type=chunk) - The accounting policies adopted in these financial statements are consistent with those used by the Group in preparing its 2020 annual financial statements and are prepared on a going concern basis[145](index=145&type=chunk)[146](index=146&type=chunk) [III. Taxation](index=47&type=section&id=III.%20Taxation) This section details the Group's applicable major tax types and rates, including corporate income tax, VAT, urban maintenance and construction tax, education surcharges, property tax, land use tax, and land appreciation tax, along with relevant tax incentives Major Tax Types and Rates | Tax Type | Tax Rate | Tax Base | | :------------------------- | :----------------- | :----------------------------- | | Corporate Income Tax | 15%, 20% or 25% | Taxable Income | | Value-Added Tax | 1%, 3%, 5%, 6% or 13% | Operating Revenue | | Urban Maintenance and Construction Tax | 7% | Based on VAT actually paid | | Education Surcharge | 3% | Based on VAT actually paid | | Local Education Surcharge | 2% | Based on VAT actually paid | | Property Tax | 1.2% or 12% | 70% of original property value or rental income | | Land Use Tax | RMB 5/square meter | Based on land area | | Land Appreciation Tax | 30%-60% | Appreciation Amount | - Some subsidiaries, such as Hangzhou Jeremiah, enjoy a **15%** corporate income tax preferential rate, while some subsidiaries meeting small and micro-profit enterprise criteria enjoy a **20%** preferential rate[151](index=151&type=chunk) - The Group's medical service income is exempt from VAT; some management consulting service income is subject to **6% or 3%** VAT, and drug and equipment sales are subject to **13%** VAT[153](index=153&type=chunk)[154](index=154&type=chunk)[155](index=155&type=chunk) - Some subsidiaries enjoy property tax and urban land use tax exemptions[158](index=158&type=chunk) [IV. Notes to Consolidated Financial Statement Items](index=50&type=section&id=IV.%20Notes%20to%20Consolidated%20Financial%20Statement%20Items) This section provides detailed disclosures on the specific circumstances and changes of each major item in the consolidated financial statements, including assets, liabilities, revenue, costs, expenses, and cash flows [Cash and Bank Balances](index=50&type=section&id=Cash%20and%20Bank%20Balances) As of June 30, 2021, total cash and bank balances increased, with changes in bank deposits and restricted funds Cash and Bank Balances Breakdown (RMB in Yuan) | Item | June 30, 2021 (Unaudited) | December 31, 2020 (Audited) | Change Rate (%) | | :----------------------- | :------------------------ | :-------------------------- | :-------------- | | Cash on Hand | 275,366 | 374,287 | -26.4% | | Bank Deposits | 269,332,555 | 199,718,378 | 34.8% | | Other Cash and Bank Balances | 27,362,636 | 6,406,899 | 327.1% | | **Total** | **296,970,557** | **206,499,564** | **43.8%** | - As of June 30, 2021, **RMB 14,000,000** of bank deposits were restricted funds, serving as project

溫州康寧醫院股份有限公司 Wenzhou Kangning Hospital Co., Ltd. (於中華人民共和國註冊成立的股份有限公司) 股份代號: 2120 202 年 度 報 णण 0 电子医院 ■ ■ ■ ■ M Hill 图 图 图 图 图] 0景看图 中六车み支 IT COLLECTION 目錄 管理層討論與分析6 頁次 公司資料2 財務摘要4 董事長致辭5 董事會報告 23 監事會報告 37 企業管治報告 38 董事、監事及高級管理層 55 審計報告 67 合併資產負債表 75 公司資產負債表 77 合併利潤表 79 公司利潤表 81 合併現金流量表 82 公司現金流量表 84 合併股東權益變動表 86 公司股東權益變動表 88 財務報表附註 90 釋義 204 2 2020 年度報告 溫 州 康 寧 醫 院 股 份 有 限 公 司 劉 寧先生 公司資料 | --- | --- | |-----------------------------------------------------------------------------------|---------------------- ...

溫州康寧醫院股份有限公司 Wenzhou Kangning Hospital Co., Ltd. (於中華人民共和國註冊成立的股份有限公司) 股份代號: 2120 A >>>>>> F >> 2020 中期報告 溫州康寧醫院股份有限公司 2020 中期報告 1 | --- | --- | --- | |--------------------|-------|-------| | | | | | | | | | | | 頁次 | | 公司資料 | | 2 | | 財務摘要 | | 4 | | 管理層討論與分析 | | 5 | | 企業管治及其他資料 | | 24 | | 合併資產負債表 | | 34 | | 公司資產負債表 | | 36 | | 合併利潤表 | | 38 | | 公司利潤表 | | 39 | | 合併現金流量表 | | 40 | | 公司現金流量表 | | 42 | | 合併股東權益變動表 | | 44 | | 公司股東權益變動表 | | 46 | | 財務報表附註 | | 48 | | 釋義 | | 121 | 2 溫州康寧醫院股份有限公司 2020 中期報告 公司資料 | --- | -- ...