Core Viewpoint - Kanghua Medical (03689.HK) expects to report a profit of approximately RMB 32 million to RMB 33 million for the six months ending June 30, 2025, compared to a loss of about RMB 24.7 million for the same period ending June 30, 2024 [1] Financial Performance - The anticipated profit is primarily attributed to the sale of a 55% stake in Kangxin Hospital, which is expected to generate a gain of approximately RMB 19.5 million [1] - The financial performance of Kangxin Hospital has been removed from the group's consolidated financial statements following the sale, as it had been recording losses in previous years [1] Equity Accounting - The remaining 45% stake in Kangxin Hospital will be accounted for using the equity method, with an expected share of losses amounting to approximately RMB 18.4 million for the six months ending June 30, 2025 [1] - The losses from the remaining 55% stake will not be included in the group's financial performance for the mid-2025 period, resulting in a net positive impact on the group's financial results compared to the previous comprehensive accounting of Kangxin Hospital's losses [1]

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依賴該等內容而引致的任何損失承擔任何責 任。 廣東康華醫療集團股份有限公司 GUANGDONG KANGHUA HEALTHCARE GROUP 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：3689） 盈利預告 本 公 告 乃 廣 東 康 華 醫 療 集 團 股 份 有 限 公 司（「本公司」，連 同 其 附 屬 公 司 統 稱「本 集 團」）根 據 香 港 聯 合 交 易 所 有 限 公 司 證 券 上 市 規 則（「上市規則」）第13.09(2)(a)條 及香港法例第571章證券及期貨條例第XIVA部 項 下 之 內 幕 消 息 條 文 而 作 出。 本 公 司 仍 在 落 實 二 零 二 五 年 中 期 業 績。本 公 告 所 載 資 料 僅 基 於 董 事 會 對 本 集 團 二 零 二 五 年 中 期 之 未 經 審 核 綜 合 管 理 賬 目（未 ...

廣東康華醫療集團股份有限公司 GUANGDONG KANGHUA HEALTHCARE GROUP CO., LTD.* （於中華人民共和國註冊成立的股份有限公司） 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之內容概不 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之任何損失承擔任何責 任。 執 行 董 事： 王君揚先生 （主 席） 陳旺枝先生 （行 政 總 裁） 王偉雄先生 （副 主 席） 王愛勤女士 （股份代號：3689） 獨 立 非 執 行 董 事： 陳可冀醫生 陳星能先生 林小玲女士 董事會會議召開日期 廣 東 康 華 醫 療 集 團 股 份 有 限 公 司（「本公司」）董 事 會（「董事會」）謹 此 宣 佈，本 公 司 將 於 二 零 二 五 年 八 月 二 十 九 日（星 期 五）舉 行 董 事 會 會 議，藉 以（其 中 包 括）考 慮及批准本公司及其附屬公司於截至二零二五年六月三十日止六個月之中期 業 績 及 其 發 佈，以 及 考 慮 派 付 中 期 股 ...

FF301 股份發行人及根據《上市規則》第十九B章上市的香港預託證券發行人的證券變動月報表 截至月份: 2025年7月31日 狀態: 新提交 致：香港交易及結算所有限公司 公司名稱: 廣東康華醫療集團股份有限公司 呈交日期: 2025年8月1日 I. 法定/註冊股本變動 | 1. 股份分類 | 普通股 | 股份類別 | H | | | 於香港聯交所上市 (註1) | | 是 | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 證券代號 (如上市) | 03689 | 說明 | H股 | | | | | | | | | | 法定/註冊股份數目 | | | 面值 | | | 法定/註冊股本 | | | 上月底結存 | | | 84,394,000 | RMB | | | 1 RMB | | 84,394,000 | | 增加 / 減少 (-) | | | | | | | RMB | | | | 本月底結存 | | | 84,394,000 | RMB | | | 1 RMB | | 84,394,000 | | 2. 股份分類 | ...

Company Overview - Guangdong Kanghua Medical Group Co., Ltd. was established in 2002 and is a leading private for-profit hospital operator in China, focusing on hospital services, rehabilitation, and pharmaceutical sales [4] - The company operates two general hospitals in Dongguan, namely Kanghua Hospital and Renkang Hospital, and a cardiovascular specialty hospital in Chongqing [4] - Kanghua Hospital is one of the first private for-profit general hospitals in China to receive a three-level A rating from the National Health Commission [4] Financial Performance - As of December 31, 2024, Kanghua Medical achieved total revenue of 2.056 billion yuan, a year-on-year increase of 0.68% [2] - The net profit attributable to shareholders was 15.337 million yuan, a significant decrease of 87.33% year-on-year [2] - The gross profit margin stood at 15.66%, with a debt-to-asset ratio of 46.66% [2] Market Position and Valuation - Currently, there are no institutional investment ratings for Kanghua Medical [3] - The company's price-to-earnings (P/E) ratio is 35.33, ranking 42nd in the healthcare equipment and services industry, which has an average P/E ratio of -2.12 [3] - Other companies in the industry have significantly lower P/E ratios, such as Giant Medical Holdings at 0.37 and Jingjiu Medical at 0.38 [3] Strategic Focus - The company aims to enhance its core medical competencies and promote the development of specialized medical fields, thereby improving diagnostic capabilities and inter-disciplinary collaboration [4] - Kanghua Medical has expanded its influence in the private healthcare sector in China through strategic acquisitions, including the purchase of Anhui Hualin Rehabilitation Medical Group [4] - Future plans include optimizing medical resource allocation and accelerating the expansion of its medical network in the Chinese healthcare market [4]

Financial Performance - Revenue for the year ended December 31, 2024, increased by 0.7% to RMB 2,055,670,000 compared to RMB 2,041,858,000 in 2023[10] - Gross profit decreased by 11.7% to RMB 321,873,000, with a gross profit margin of 15.7%, down from 17.8% in the previous year[10] - Profit before taxation fell by 58.9% to RMB 63,055,000, while profit for the year dropped by 88.5% to RMB 10,473,000[10] - Adjusted EBITDA decreased by 21.2% to RMB 229,636,000 from RMB 291,309,000 in 2023[10] - Basic earnings per share decreased by 87.3% to 4.6 RMB cents, down from 36.2 RMB cents in the previous year[10] - The Group recorded a consolidated profit of RMB10.5 million, a significant year-on-year decrease of 88.5% compared to RMB91.0 million last year[27] - Revenue from the Group's self-owned hospitals decreased by 2.6% to RMB1,838.5 million, down from RMB1,887.9 million in the previous year[28] - The Group's Adjusted EBITDA decreased by 21.2% to RMB229.6 million, down from RMB291.3 million in the previous year, indicating solid core operations despite external factors[40] - The Group's total gross profit was RMB 321.9 million, a year-on-year decrease of 11.7% from RMB 364.4 million, with the overall gross margin declining to 15.7% from 17.8%[190] Revenue Breakdown - Revenue from cardiovascular related disciplines was RMB 258,977,000 in 2024, compared to RMB 271,010,000 in 2023[15] - Revenue from the rehabilitation and other healthcare services segment recorded revenue of RMB 128.4 million in 2024, down 9.1% from RMB 141.2 million in 2023[129] - Revenue from elderly healthcare services amounted to RMB12.9 million, a year-on-year increase of 1.5%, accounting for 0.6% of total revenue[176] - Revenue from haemodialysis services amounted to RMB75.8 million, accounting for 3.7% of total revenue, as this segment was newly acquired in January 2024[175] - Revenue from physical examination services dropped significantly to RMB107.2 million, a decrease of 29.6% year-on-year, representing 5.2% of total revenue[170] - Revenue from VIP healthcare services fell to RMB 95.0 million in 2024, representing a year-on-year decrease of 4.9%[127] - Revenue from rehabilitation hospitals and other healthcare services decreased by 26.4% to RMB 54.4 million in 2024, down from RMB 73.9 million in 2023[136] Operational Metrics - The number of outpatient visits in 2024 was 63.1 thousand, compared to 74.3 thousand in 2023[14] - The total number of inpatient visits increased to 76,968, representing a year-on-year increase of 3.5%, while the average spending per inpatient visit decreased by 2.8% to RMB 14,114.3[90] - The total number of surgical operations increased to 53,871, representing a year-on-year increase of 12.0%[90] - The total number of outpatient visits decreased to 1,499,016, representing a year-on-year decrease of 2.0%, while average spending per outpatient visit increased by 0.4% to RMB 430.2[90] - The number of haemodialysis procedures performed in 2024 exceeded 118,000, up from 90,000 in 2023[60] - The average length of stay at the Renkang Nursing Home decreased to 113.2 days in 2024 from 118.2 days in 2023, with an average bed utilization rate of 91.0%[145] Strategic Initiatives - The company aims to navigate challenges in the healthcare industry through its strategy of "Precision healthcare, Efficient Management and Sincere Service"[17] - The Group plans to strengthen the development of key specialties and enhance high-end healthcare services to meet rising patient expectations[44] - Future strategies include standardizing medical insurance and enhancing infection control and nursing quality management[45] - The Group aims to achieve accreditation as a five-star elderly care institution for Renkang Elderly Care Centre, focusing on service quality improvement[39] - The Group's strategy includes expanding the "Kanghua" brand in the Greater Bay Area, leveraging synergies from the acquisition of the Kanghua Haemodialysis Group[84] Market Trends and Challenges - The overall economic development in China remained steady, with GDP reaching RMB134.9 trillion, representing a year-on-year increase of 5.0% at constant price[24] - The healthcare market in China is moving towards greater efficiency and accessibility, driven by digital transformation and an aging population[22] - The Group faces challenges due to intensified national policy reforms and a decrease in post-COVID-19 related demand[23] - The healthcare industry is undergoing comprehensive reforms aimed at improving accessibility and affordability, including price transparency and value-based care[24] - Recent policy reforms and tightened social insurance payments are expected to continue impacting revenue growth negatively[170] Cost and Expenses - Staff-related costs increased by 7.4%, attributed to higher salary levels and a shortage of qualified professionals[184] - Administrative expenses rose by approximately 14.3% to RMB 277.1 million from RMB 242.4 million, mainly driven by an increase in administrative staff costs to RMB 99.5 million, up from RMB 84.1 million, reflecting an 18.2% year-on-year increase[199] - Finance costs surged by 96.0% to RMB 23.6 million from RMB 12.1 million, influenced by a one-off charge related to unamortised bank arrangement fees and the full repayment of a major bank loan[200] - The increase in rental expenses and property management expenses was approximately 13.4%, rising to RMB 26.6 million from RMB 23.4 million[199] Acquisitions and Investments - The Group completed the acquisition of a 70% equity interest in Dongguan Kanghua Haemodialysis Healthcare Investment Management Co., Ltd., enhancing its haemodialysis services[58] - The acquisition of the haemodialysis services business is expected to impact financial performance positively in the long term[187] - As of December 31, 2024, the total investment in the Kanghua Qingxi Healthcare Complex amounted to approximately RMB 229.2 million[158]

Financial Performance - Revenue increased by 0.7% to RMB 2,055.7 million compared to RMB 2,041.9 million in 2023[4] - Profit decreased by 88.5% to RMB 10.5 million from RMB 91.0 million in 2023[4] - Profit attributable to owners decreased by 87.3% to RMB 15.3 million from RMB 121.1 million in 2023[4] - Adjusted EBITDA decreased by 21.2% to RMB 229.6 million from RMB 291.3 million in 2023[4] - Basic earnings per share decreased by 87.3% to RMB 0.046 from RMB 0.362 in 2023[4] - The group recorded a consolidated profit of RMB 10.5 million, down 88.5% from RMB 91.0 million in the previous year, primarily due to a decline in revenue from self-owned hospitals[63] - Adjusted EBITDA for 2024 was RMB 229,636,000, down from RMB 291,309,000 in 2023, indicating a decline of approximately 21.2%[125] Dividends - The board proposed a final dividend of RMB 0.15 per share, compared to no dividend in 2023[4] - The company proposed a final dividend of RMB 0.15 per share for the year ending December 31, 2024, totaling approximately RMB 50,159,000, compared to no dividend in 2023[28] - The board has proposed a final dividend of RMB 0.15 per share for the year ending December 31, 2024, subject to shareholder approval[169] Assets and Liabilities - Non-current assets increased to RMB 1,631.1 million from RMB 1,529.5 million in 2023[7] - Current liabilities increased to RMB 873.6 million from RMB 766.7 million in 2023[7] - Total assets less current liabilities increased to RMB 1,867.9 million from RMB 1,858.3 million in 2023[7] - Cash and cash equivalents decreased to RMB 242.6 million from RMB 305.2 million in 2023[7] - Non-current liabilities increased to RMB 405,610,000 in 2024 from RMB 360,760,000 in 2023, representing an increase of approximately 12.4%[8] - Total equity decreased to RMB 1,462,347,000 in 2024 from RMB 1,497,527,000 in 2023, reflecting a decline of about 2.3%[8] - The company's net assets stood at RMB 1,462,347,000 in 2024, down from RMB 1,497,527,000 in 2023, indicating a decrease of approximately 2.3%[8] - The company's total equity attributable to owners increased slightly to RMB 1,439,522,000 in 2024 from RMB 1,424,185,000 in 2023, showing a growth of about 1.1%[8] Revenue Segments - Hospital services generated revenue of RMB 1,838,532,000 in 2024, compared to RMB 1,887,888,000 in 2023, indicating a decrease of about 2.6%[21] - The blood dialysis services segment reported revenue of RMB 75,770,000 in 2024, marking the introduction of this service following the acquisition of Dongguan Kanghua Dialysis Medical Investment Management Co., Ltd.[19] - The revenue from rehabilitation and other medical services was RMB 128,449,000 in 2024, a decrease from RMB 141,243,000 in 2023, representing a decline of approximately 9.0%[21] - The hospital services segment generated revenue of RMB 1,838.5 million, a decrease of 2.6% from RMB 1,887.9 million in 2023, with a slight decline of 0.9% in overall patient visits[64] - The rehabilitation and other medical services segment recorded revenue of RMB 128.4 million, down 9.1% from RMB 141.2 million in 2023, mainly due to a decrease in patient admissions and average spending[65] Operational Metrics - Total inpatient visits increased to 76,968, a year-on-year increase of 3.5% compared to 74,337 in 2023[69] - Average expenditure per inpatient decreased to RMB 14,114.3, a year-on-year decrease of 2.8% from RMB 14,523.2 in 2023[69] - Overall bed utilization rate rose to 74.3%, up from 71.9% in 2023 due to the increase in inpatient numbers[69] - Total outpatient visits decreased to 1,499,016, a year-on-year decrease of 2.0% from 1,530,169 in 2023[69] - Total health check visits increased to 181,661, a year-on-year increase of 7.1% from 169,651 in 2023[69] - Total surgical procedures increased to 53,871, a year-on-year increase of 12.0% from 48,105 in 2023[69] Employee Costs - The total employee costs rose to RMB 691,120,000 in 2024, up from RMB 635,071,000 in 2023, representing an increase of approximately 8.8%[26] - The total employee cost for the reporting period, excluding directors' remuneration, is approximately RMB 686.6 million, compared to RMB 631.8 million in 2023[163] - The group has a total of 4,320 full-time employees as of December 31, 2024, an increase from 3,946 in 2023[163] Investments and Acquisitions - The company agreed to acquire 70% of Kanghua Hemodialysis Group for RMB 7,700,000, completed on January 9, 2024, with recognized goodwill amounting to RMB 114,224,000[48] - The group plans to sell 55% of its stake in Kangxin Hospital for RMB 34.9 million, with the sale agreement signed on January 9, 2025[134] - The group has classified Kangxin Hospital's assets and liabilities as held for sale as of December 31, 2024[133] Financial Position - The group continues to maintain a strong financial position with sufficient liquidity to meet operational funding needs for at least the next twelve months[137] - The group’s debt-to-equity ratio as of December 31, 2024, is 15.7%, down from 21.3% in 2023[162] Future Outlook - The company aims to expand its "big health" business model in response to the rapidly aging population in China, which presents substantial growth potential in the healthcare sector[59] - The group plans to enhance healthcare accessibility by increasing community health centers and strengthening telemedicine, particularly in rural and underserved areas[97] - By 2030, China's medical expenditure is expected to reach RMB 20.5 trillion, with the board maintaining an optimistic outlook for the healthcare industry in 2025 despite recent challenges[96] Compliance and Governance - The audit committee has reviewed the annual performance for the fiscal year ending December 31, 2024, confirming compliance with applicable accounting standards[174] - The preliminary announcement of the consolidated financial statements for the year ending December 31, 2024, has been verified by the auditors, ensuring consistency with the audited financial figures[175] - The company expresses gratitude to the management team and employees for their contributions and to shareholders and business partners for their continued support[177]

[Financial Highlights](index=4&type=section&id=Financial%20Highlights) The company reported a slight revenue decrease and net loss in H1 2024, with adjusted EBITDA declining Key Financial Performance for H1 2024 | Metric | Six Months Ended June 30, 2024 (RMB thousands) | Six Months Ended June 30, 2023 (RMB thousands) | Period-over-Period Change | | :--- | :--- | :--- | :--- | | **Revenue** | 984,518 | 987,498 | -0.3% | | **Gross Profit** | 146,399 | 170,994 | -14.4% | | **Gross Profit Margin** | 14.9% | 17.3% | -2.4pp | | **(Loss)/Profit Before Tax** | (3,100) | 59,081 | N/A | | **(Loss)/Profit for the Period** | (24,657) | 29,366 | N/A | | **(Loss)/Profit Attributable to Owners of the Company** | (19,542) | 50,655 | N/A | | **Adjusted EBITDA** | 91,339 | 129,227 | -29.3% | | **(Loss)/Earnings Per Share – Basic (RMB cents)** | (5.8) | 15.1 | N/A | - In H1 2024, inpatient visits increased by **8.5%** to **38,000**, outpatient visits by **5.4%** to **758,000**, and health check-up visits by **11.6%** to **86,000**[8](index=8&type=chunk)[22](index=22&type=chunk) - Cardiovascular, Internal Medicine, and Obstetrics & Gynecology were the top three revenue-contributing departments, collectively accounting for **38.7%** of hospital service revenue[8](index=8&type=chunk)[29](index=29&type=chunk) [Management Discussion and Analysis](index=6&type=section&id=Management%20Discussion%20and%20Analysis) The company's H1 2024 revenue slightly decreased to RMB 985 million, resulting in a net loss of RMB 24.7 million, driven by various operational and fair value losses [Business Review and Outlook](index=6&type=section&id=BUSINESS%20REVIEW%20AND%20OUTLOOK) Despite new acquisitions, the group's total revenue slightly decreased by 0.3% to RMB 985 million in H1 2024, resulting in a comprehensive loss of RMB 24.7 million [Overall Business Overview](index=6&type=section&id=Business%20Overview%20for%20the%20six%20months%20ended%2030%20June%202024) In H1 2024, the group's comprehensive revenue slightly decreased by 0.3% to RMB 984.5 million, turning from profit to a comprehensive loss of RMB 24.7 million 2024 H1 Performance Overview | Metric | Amount (RMB millions) | Year-over-Year Change | | :--- | :--- | :--- | | **Comprehensive Revenue** | 984.5 | -0.3% | | **Comprehensive (Loss)/Profit** | (24.7) | Turned to loss | | **Adjusted EBITDA** | 91.3 | -29.3% | - The loss during the reporting period was primarily due to: (i) a general decrease in revenue from self-owned hospitals; (ii) the newly acquired hemodialysis business, acquired in January 2024, remaining in a loss-making state; (iii) continued losses from Kangxin Hospital; and (iv) a fair value loss of approximately **RMB 11.4 million** from an investment in a fund[11](index=11&type=chunk)[12](index=12&type=chunk) - Revenue performance varied across business segments: hospital services revenue decreased by **4.4%**, rehabilitation services by **1.7%**, elderly healthcare services grew by **18.6%**, and the newly acquired hemodialysis services contributed **RMB 37.1 million** in revenue[13](index=13&type=chunk)[14](index=14&type=chunk)[15](index=15&type=chunk)[18](index=18&type=chunk) [Hospital Services](index=9&type=section&id=Hospital%20Services) Hospital services revenue decreased by 4.4% to RMB 881 million, driven by lower average patient expenditure despite increased inpatient and outpatient visits Key Operating Data for Hospital Services Segment | Metric | H1 2024 | H1 2023 | Change | | :--- | :--- | :--- | :--- | | **Inpatient Visits** | 37,979 | 35,012 | +8.5% | | **Average Expenditure Per Inpatient (RMB)** | 13,765.0 | 15,635.9 | -12.0% | | **Outpatient Visits** | 757,695 | 718,641 | +5.4% | | **Average Expenditure Per Outpatient (RMB)** | 421.4 | 434.7 | -3.1% | | **Health Check-up Visits** | 85,350 | 77,376 | +11.6% | | **Average Expenditure Per Health Check-up (RMB)** | 448.0 | 788.7 | -43.2% | Revenue Performance by Hospital (RMB millions) | Hospital | H1 2024 Revenue | Year-over-Year Change | | :--- | :--- | :--- | | Kanghua Hospital | 732.2 | -4.3% | | Renkang Hospital | 114.4 | -1.3% | | Kangxin Hospital | 34.2 | -14.6% | - Despite a slight 0.1% decrease in total surgeries year-over-year, the volume of complex Grade III and IV surgeries reached **11,561** cases, an increase of **13.6%**, indicating an improvement in medical service quality and capability[31](index=31&type=chunk) [VIP Special Services](index=13&type=section&id=VIP%20Special%20Services) Total VIP special services revenue decreased by 13.2% to RMB 79.5 million, primarily due to declines in VIP medical services and reproductive medicine VIP Special Services Revenue Breakdown (RMB thousands) | Service Type | H1 2024 | H1 2023 | Change | | :--- | :--- | :--- | :--- | | **VIP Medical Services** | 53,474 | 61,027 | -12.4% | | **Reproductive Medicine** | 14,465 | 18,039 | -19.8% | | **Plastic and Aesthetic Surgery** | 2,373 | 2,206 | +7.6% | | **Laser Treatment** | 9,191 | 10,293 | -10.7% | | **Total** | **79,503** | **91,565** | **-13.2%** | [Rehabilitation and other Healthcare Services](index=14&type=section&id=Rehabilitation%20and%20other%20Healthcare%20Services) Rehabilitation and other healthcare services revenue decreased by 1.7% to RMB 59.7 million, with rehabilitation hospitals declining while rehabilitation centers grew - The segment's total revenue was **RMB 59.7 million**, a year-over-year decrease of **1.7%**[37](index=37&type=chunk) - Revenue from rehabilitation hospitals and other medical services decreased by **11.7%** to **RMB 28.3 million**, mainly due to the suspension of hemophilia services and new DRG regulations, while rehabilitation center services and other services revenue increased by **9.4%** to **RMB 31.4 million**, primarily driven by pediatric rehabilitation business[40](index=40&type=chunk)[41](index=41&type=chunk) [Haemodialysis services segment](index=15&type=section&id=Haemodialysis%20services%20segment) The newly acquired hemodialysis services segment contributed RMB 37.1 million in revenue in H1 2024, operating 13 centers and showing strong patient flow despite initial losses - The group completed the acquisition of a **70%** equity interest in Kanghua Hemodialysis Group in January 2024, with this business segment generating **RMB 37.1 million** in revenue during the reporting period[43](index=43&type=chunk)[44](index=44&type=chunk) - As of the reporting date, the group operates **13** hemodialysis centers, serving over **780** regular patients, with over **56,000** procedures performed in H1 2024, an increase of over **36.0%** year-over-year[43](index=43&type=chunk) - Although this segment is currently in a loss-making state, the Board anticipates it will enhance profitability and efficiency, bringing long-term positive returns to the company[44](index=44&type=chunk) [Elderly Healthcare Services](index=16&type=section&id=Elderly%20Healthcare%20Services) Elderly healthcare services revenue increased by 18.6% to RMB 7 million, driven by increased occupancy and average spending at Renkang Nursing Home - Elderly healthcare services segment revenue was **RMB 7 million**, an **18.6%** year-over-year increase, primarily due to increased patient admissions[18](index=18&type=chunk)[46](index=46&type=chunk) - Renkang Nursing Home has a total of **108** beds, with **138** patient visits during the reporting period, representing a **15%** year-over-year increase[46](index=46&type=chunk) [Industry Outlook and Strategy](index=17&type=section&id=Industry%20Outlook%20and%20Strategy) The group is focusing on enhancing medical quality, strengthening informatization, building a high-end brand, accelerating smart hospital development, and personnel training amidst China's deepening healthcare reforms - China's healthcare reform is rapidly advancing, with DRG/DIP payment reform requiring coverage of all eligible medical institutions by the end of 2025, setting higher standards for private medical institutions[47](index=47&type=chunk)[49](index=49&type=chunk) - The group plans to seize industry opportunities by implementing the "Comprehensive Medical Quality Improvement Action Plan," strengthening information technology, building the Kanghua brand focusing on VIP services, accelerating smart hospital construction, and enhancing personnel training[52](index=52&type=chunk) [Future Plans for Material Investments and Capital Assets](index=18&type=section&id=Future%20Plans%20for%20Material%20Investments%20and%20Capital%20Assets) The group is progressing with the Kanghua Qingxi Branch construction, a comprehensive healthcare project for elderly and rehabilitation patients, with Phase I expected to be operational by July 2025 - The Kanghua Qingxi Branch project has a total construction area exceeding **130,000 square meters**, planning for **500** inpatient beds and approximately **800** nursing and rehabilitation beds[54](index=54&type=chunk) - Phase I of the project is expected to complete its main structure by the end of 2024, interior decoration by June 2025, and commence operations in July 2025, with a total investment of approximately **RMB 215.9 million** as of the end of the reporting period[54](index=54&type=chunk) [Financial Review](index=19&type=section&id=FINANCIAL%20REVIEW) In H1 2024, the group's total revenue slightly decreased by 0.3% to RMB 984.5 million, gross profit declined by 14.4% to RMB 146.4 million, and the company reported a net loss of RMB 24.7 million [Segment Revenue](index=19&type=section&id=Segment%20Revenue) Hospital services revenue decreased by 4.4% to RMB 881 million, accounting for 89.5% of total revenue, primarily due to lower average patient expenditure Segment Revenue and Gross Profit (H1 2024, RMB thousands) | Segment | Revenue | Cost of Revenue | Gross Profit | Gross Profit Margin | | :--- | :--- | :--- | :--- | :--- | | **Hospital Services** | 880,750 | (747,958) | 132,792 | 15.1% | | **Rehabilitation and other Healthcare Services** | 59,708 | (49,449) | 10,259 | 17.2% | | **Haemodialysis Services** | 37,092 | (36,906) | 186 | 0.5% | | **Elderly Healthcare Services** | 6,968 | (3,806) | 3,162 | 45.4% | | **Total** | **984,518** | **(838,119)** | **146,399** | **14.9%** | - The decrease in hospital services revenue was mainly attributed to a decline in revenue from key departments and reduced average patient expenditure across all service products, despite an increase in patient visits, with the decrease in average expenditure linked to lower payment rates under the DIP model and tighter social security payment quotas[62](index=62&type=chunk) [Cost of Revenue](index=22&type=section&id=Cost%20of%20Revenue) Total cost of revenue increased by 2.6% to RMB 838 million, with hospital services costs slightly decreasing, while employee-related costs rose due to salary increases and acquisitions - The cost of revenue for the hospital services segment decreased by **1.7%** year-over-year to **RMB 748 million**, primarily due to reduced drug and consumable costs from lower business volume, partially offset by increased staff costs and rental expenses[68](index=68&type=chunk) - During the reporting period, drugs, medical consumables, and staff costs accounted for **25.9%**, **25.8%**, and **34.2%** of total cost of revenue, respectively (compared to **26.7%**, **26.4%**, and **33.2%** in the same period of 2023)[73](index=73&type=chunk) [Gross Profit and Gross Profit Margin](index=23&type=section&id=Gross%20Profit%20and%20Gross%20Profit%20Margin) The group's total gross profit decreased by 14.4% to RMB 146.4 million, with the overall gross profit margin declining from 17.3% to 14.9% - Total gross profit was **RMB 146.4 million**, a year-over-year decrease of **14.4%**[74](index=74&type=chunk) - The overall gross profit margin decreased from **17.3%** in the same period last year to **14.9%**[74](index=74&type=chunk) [Other Income](index=24&type=section&id=Other%20Income) Other income remained stable at approximately RMB 21.2 million, with a decrease in structured deposit investment income offset by increases in clinical trial and bank interest income - Total other income was **RMB 21.2 million**, a slight year-over-year decrease of **0.1%**[77](index=77&type=chunk) - Key changes include: a decrease in structured deposit investment income to **RMB 4.1 million** (H1 2023: **RMB 6.4 million**), and an increase in clinical trial and related income to **RMB 7.3 million** (H1 2023: **RMB 5.3 million**)[77](index=77&type=chunk) [Other Expenses, Gains and Losses](index=24&type=section&id=Other%20Expenses,%20Gains%20and%20Losses) This item recorded a net loss of RMB 9.9 million, primarily due to an RMB 11.4 million unrealized fair value loss from an investment fund, partially offset by net exchange gains - A net loss of **RMB 9.9 million** was recorded, compared to a net gain of **RMB 1.1 million** in the same period last year[79](index=79&type=chunk) - The main reason was a fair value loss of **RMB 11.4 million** on financial assets at fair value through profit or loss (H1 2023: gain of **RMB 1.7 million**)[79](index=79&type=chunk) [Administrative Expenses](index=25&type=section&id=Administrative%20Expenses) Administrative expenses increased by 11.8% to RMB 140.5 million, driven by higher staff costs due to salary increases and acquisitions, as well as increased rental and property management fees - Administrative expenses amounted to **RMB 140.5 million**, an **11.8%** year-over-year increase[85](index=85&type=chunk) - Reasons for the increase include: (i) higher administrative staff costs due to general salary increases and the acquisition of the hemodialysis business; (ii) increased rental and property management fees; and (iii) higher repair and maintenance and other administrative expenses[85](index=85&type=chunk) [Finance Costs](index=26&type=section&id=Finance%20Costs) Finance costs significantly increased by 168.2% to RMB 17.1 million, primarily due to a one-off recognition of unamortized bank arrangement fees upon repayment of a major bank loan - Finance costs were **RMB 17.1 million**, a year-over-year increase of **168.2%**[86](index=86&type=chunk) - The surge in costs was mainly due to the one-off recognition of approximately **RMB 11.7 million** in remaining unamortized bank arrangement fees upon the full repayment of a major bank loan[86](index=86&type=chunk) [(Loss)/Profit for the Period](index=26&type=section&id=%28Loss%29%2FProfit%20for%20the%20Period) The group recorded a loss of RMB 24.7 million for the period, compared to a profit of RMB 29.4 million in the prior year, with loss attributable to owners of the company at RMB 19.5 million (Loss)/Profit for the Period (RMB millions) | Metric | H1 2024 | H1 2023 | | :--- | :--- | :--- | | **(Loss)/Profit for the Period** | (24.7) | 29.4 | | **(Loss)/Profit Attributable to Shareholders** | (19.5) | 50.7 | [Adjusted EBITDA](index=27&type=section&id=Adjusted%20EBITDA) Adjusted EBITDA decreased by 29.3% to RMB 91.3 million, indicating stable core business operations despite the decline, as it excludes non-core operating items Adjusted EBITDA Reconciliation (RMB thousands) | Item | H1 2024 | H1 2023 | | :--- | :--- | :--- | | **(Loss)/Profit Before Tax** | (3,100) | 59,081 | | Add: Finance Costs | 17,061 | 6,361 | | Add: Depreciation and Amortization | 75,078 | 72,970 | | **EBITDA** | **89,039** | **138,412** | | Add: Fair Value Loss/(Gain) on Financial Assets | 11,400 | (1,718) | | Less: Investment Income | (4,075) | (6,384) | | Less: Exchange (Gain)/Loss | (1,815) | 493 | | Less: Bank and Other Interest Income | (3,210) | (1,576) | | **Adjusted EBITDA** | **91,339** | **129,227** | [Financial Position](index=29&type=section&id=FINANCIAL%20POSITION) As of June 30, 2024, the group's total assets were RMB 2.65 billion, with net assets of RMB 1.43 billion, while net current assets decreased to RMB 188 million [Property, Plant and Equipment, Right-of-use assets and Deposits Paid for Acquisition of Property, Plant and Equipment](index=29&type=section&id=Property,%20Plant%20and%20Equipment,%20Right-of-use%20assets%20and%20Deposits%20Paid%20for%20Acquisition%20of%20Property,%20Plant%20and%20Equipment) During the reporting period, the group spent RMB 24.9 million on property, plant, and equipment and RMB 29.2 million on construction in progress, with additional assets recognized from subsidiary acquisitions - During the reporting period, the group incurred **RMB 24.9 million** in expenditures for property, plant and equipment, and **RMB 29.2 million** for construction in progress[102](index=102&type=chunk) - Due to the acquisition of subsidiaries, new property, plant and equipment of **RMB 30.9 million** and new right-of-use assets of **RMB 36.1 million** were recognized[104](index=104&type=chunk) [Accounts and Other Receivables](index=30&type=section&id=Accounts%20and%20Other%20Receivables) Accounts receivable increased to RMB 312 million, extending the turnover days from 43.5 to 52.3, primarily due to increased receivables from social security funds and corporate clients, and new acquisitions - Accounts receivable increased from **RMB 257 million** to **RMB 312 million**, with average turnover days extending from **43.5** days to **52.3** days[107](index=107&type=chunk) - The increase in accounts receivable was mainly due to higher balances from social security funds, other government departments, and certain corporate clients, as well as the impact of the hemodialysis business acquisition[107](index=107&type=chunk) [Accounts and Other Payables and Provision](index=32&type=section&id=Accounts%20and%20Other%20Payables%20and%20Provision) Total accounts and other payables and provisions increased to RMB 689 million, with accounts payable rising to RMB 367 million due to the hemodialysis business acquisition - Total accounts and other payables and provisions increased from **RMB 660 million** to **RMB 689 million**[110](index=110&type=chunk) - Accounts payable increased to **RMB 367 million** (end of 2023: **RMB 317 million**), primarily impacted by the acquisition of the hemodialysis business[110](index=110&type=chunk) [Net Current Assets and Net Assets](index=33&type=section&id=Net%20Current%20Assets%20and%20Net%20Assets) As of June 30, 2024, the group's net current assets significantly decreased to RMB 188.1 million from RMB 328.8 million, and net assets also reduced to RMB 1,427.2 million Asset Status (RMB millions) | Metric | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Net Current Assets** | 188.1 | 328.8 | | **Net Assets** | 1,427.2 | 1,497.5 | [Liquidity and Capital Resources](index=33&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The group's financial position remains sound, but liquidity has tightened, with cash and equivalents decreasing to RMB 106 million and increased net cash outflows from investing and financing activities [Financial Resources](index=33&type=section&id=Financial%20Resources) As of the period end, the group held RMB 106 million in cash and equivalents, RMB 65.1 million in time deposits, and RMB 387 million in financial assets at fair value through profit or loss Key Financial Resources (RMB millions) | Item | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Cash and Cash Equivalents** | 105.9 | 305.2 | | **Time Bank Deposits** | 65.1 | 63.4 | | **Financial Assets at Fair Value Through Profit or Loss** | 387.0 | 383.4 | [Cash Flow Analysis](index=35&type=section&id=Cash%20Flow%20Analysis) Net cash inflow from operating activities decreased by 22.0% to RMB 48.8 million, while investing activities turned to a net outflow of RMB 49.8 million, and financing activities' net outflow expanded to RMB 198 million Cash Flow Statement Summary (RMB thousands) | Item | H1 2024 | H1 2023 | | :--- | :--- | :--- | | **Net Cash Flow from Operating Activities** | 48,783 | 62,571 | | **Net Cash Flow (Used in)/From Investing Activities** | (49,824) | 18,351 | | **Net Cash Used in Financing Activities** | (198,102) | (60,406) | | **Net (Decrease)/Increase in Cash and Cash Equivalents** | (199,143) | 20,516 | [Significant Investment, Acquisition and Disposal](index=36&type=section&id=Significant%20Investment,%20Acquisition%20and%20Disposal) The group completed the acquisition of a 70% equity interest in Kanghua Hemodialysis Group for RMB 7.7 million on January 9, 2024, resulting in RMB 114.2 million in goodwill - On January 9, 2024, the company completed the acquisition of a **70%** equity interest in Kanghua Hemodialysis Group for a consideration of **RMB 7.7 million**[126](index=126&type=chunk) - This acquisition generated goodwill of **RMB 114.2 million**, primarily reflecting the acquired entity's employee team, established network of outpatient centers, and potential synergies[129](index=129&type=chunk)[297](index=297&type=chunk) [Use of Proceeds from the Initial Public Offering](index=37&type=section&id=USE%20OF%20PROCEED%20FROM%20THE%20INITIAL%20PUBLIC%20OFFERING) As of June 30, 2024, RMB 422 million of the IPO net proceeds of approximately RMB 783 million has been utilized, with RMB 361 million remaining for future business expansion, facility upgrades, and potential M&A IPO Proceeds Usage and Utilization (RMB millions) | Purpose | Intended Use Amount | Utilized as of June 30, 2024 | Unutilized Amount | | :--- | :--- | :--- | :--- | | **Business Expansion and Facility Upgrades** | 352.1 | 134.7 | 217.4 | | **Expansion of Hospital Management Operations** | 78.3 | 0 | 78.3 | | **Selective Mergers and Acquisitions** | 273.9 | 208.8 | 65.1 | | **Working Capital and Others** | 78.3 | 78.3 | 0 | | **Total** | **782.6** | **421.8** | **360.8** | [Indebtedness](index=39&type=section&id=INDEBTEDNESS) The group's secured bank loan balance significantly decreased to RMB 69 million due to a major loan repayment, funded partly by an advance from the controlling company, leading to a reduced gearing ratio of 4.8% - Secured bank loans decreased from **RMB 319 million** at the end of 2023 to **RMB 69 million**, as the loan related to Kangxin Hospital Phase II project was fully repaid[141](index=141&type=chunk) - To repay the bank loan, the group received an advance of **RMB 177 million** from its direct controlling company, Kanghua Group, at an annual interest rate of **3.7%**, due within two years[144](index=144&type=chunk) - As of the period end, the group's gearing ratio (total interest-bearing bank loans / total equity) significantly decreased to **4.8%** from **21.3%** at the end of 2023[156](index=156&type=chunk) [Employees, Remuneration Policies and Training Schemes](index=43&type=section&id=EMPLOYEES,%20REMUNERATION%20POLICIES%20AND%20TRAINING%20SCHEMES) As of June 30, 2024, the group had 4,231 full-time employees, with total employee-related costs increasing by 7.9% to approximately RMB 336 million - As of June 30, 2024, the group's total number of full-time employees was **4,231**, higher than **3,946** at the end of 2023[158](index=158&type=chunk) - Employee-related costs (excluding remuneration for directors, supervisors, and senior management) for the reporting period were approximately **RMB 336.3 million**, an increase from **RMB 311.6 million** in the same period last year[158](index=158&type=chunk) [Corporate Governance Highlights](index=44&type=section&id=Corporate%20Governance%20Highlights) The company's interim results and report have been reviewed by the audit committee and external auditor, with no interim dividend recommended [Interim Dividend](index=45&type=section&id=INTERIM%20DIVIDEND) The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2024, consistent with the prior year's policy - The Board does not recommend the payment of an interim dividend for 2024[162](index=162&type=chunk) [Review of Interim Report](index=45&type=section&id=REVIEW%20OF%20INTERIM%20REPORT) The group's 2024 interim results and report have been reviewed by the company's audit committee and external auditor, Tianzhi Hong Kong Certified Public Accountants Limited - The company's audit committee has reviewed this interim report[165](index=165&type=chunk) - The company's auditor has reviewed the interim financial information in accordance with Hong Kong Standard on Review Engagements 2410[165](index=165&type=chunk) [Other Information](index=47&type=section&id=Other%20Information) This section details the interests of directors, supervisors, and chief executive in the company's securities [Directors', Supervisors' and Chief Executive's Interests in Securities](index=47&type=section&id=DIRECTORS%27,%20SUPERVISORS%27%20AND%20CHIEF%20EXECUTIVE%27S%20INTERESTS%20IN%20SECURITIES) As of June 30, 2024, Chairman Mr. Wang Junyang held 66.54% of the company's total share capital through controlled corporations, with other executive directors also holding significant interests Major Directors' Shareholdings | Director Name | Share Class | Nature of Interest | Number of Shares | Approximate Percentage of Company's Total Issued Share Capital | | :--- | :--- | :--- | :--- | :--- | | **Mr. Wang Junyang** | Domestic Shares | Interest in controlled corporation | 222,500,000 | 66.54% | | **Mr. Chen Wangzhi** | Domestic Shares | Interest in controlled corporation; spouse's family interest | 27,500,000 | 8.22% | | **Ms. Wang Aiqin** | Domestic Shares | Interest in controlled corporation; spouse's family interest | 27,500,000 | 8.22% | | **Mr. Wang Weixiong** | Domestic Shares | Interest in controlled corporation | 25,000,000 | 7.48% | [Interim Condensed Consolidated Financial Information](index=56&type=section&id=Interim%20Condensed%20Consolidated%20Financial%20Information) This section presents the interim condensed consolidated financial statements, including the statement of profit or loss, financial position, and cash flows [Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=58&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the six months ended June 30, 2024, the group reported revenue of RMB 984.5 million, a gross profit of RMB 146.4 million, and a total loss for the period of RMB 24.7 million H1 2024 Profit or Loss Statement Summary (RMB thousands) | Item | H1 2024 | H1 2023 | | :--- | :--- | :--- | | **Revenue** | 984,518 | 987,498 | | **Gross Profit** | 146,399 | 170,994 | | **(Loss)/Profit Before Tax** | (3,100) | 59,081 | | **Income Tax Expense** | (21,557) | (29,715) | | **(Loss)/Profit for the Period** | (24,657) | 29,366 | | **(Loss)/Profit Attributable to Owners of the Company** | (19,542) | 50,655 | | **Basic (Loss) Per Share (RMB cents)** | (5.8) | 15.1 | [Interim Condensed Consolidated Statement of Financial Position](index=59&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2024, the group's total assets were RMB 2.653 billion, total liabilities RMB 1.225 billion, and total equity RMB 1.427 billion, with non-current assets increasing and current assets decreasing Financial Position Statement Summary (RMB thousands) | Item | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Total Non-Current Assets** | 1,691,938 | 1,529,480 | | **Total Current Assets** | 960,771 | 1,095,506 | | **Total Current Liabilities** | 772,654 | 766,699 | | **Total Non-Current Liabilities** | 452,838 | 360,760 | | **Net Assets** | 1,427,217 | 1,497,527 | | **Total Equity** | 1,427,217 | 1,497,527 | [Interim Condensed Consolidated Statement of Cash Flows](index=62&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) In H1 2024, net cash inflow from operating activities was RMB 48.8 million, while investing and financing activities resulted in net outflows, leading to a net decrease of RMB 199 million in cash and equivalents Cash Flow Statement Summary (RMB thousands) | Item | H1 2024 | H1 2023 | | :--- | :--- | :--- | | **Net Cash from Operating Activities** | 48,783 | 62,571 | | **Net Cash (Used in)/From Investing Activities** | (49,824) | 18,351 | | **Net Cash Used in Financing Activities** | (198,102) | (60,406) | | **Net (Decrease)/Increase in Cash and Cash Equivalents** | (199,143) | 20,516 | | **Cash and Cash Equivalents at End of Period** | 105,920 | 285,016 |

Financial Performance - Revenue for the six months ended June 30, 2024, decreased by 0.3% to RMB 984.5 million compared to RMB 987.5 million for the same period in 2023[1] - The company reported a loss of RMB 24.7 million for the current period, contrasting with a profit of RMB 29.4 million in the same period last year[1] - Loss attributable to owners of the company was RMB 19.5 million, compared to a profit of RMB 50.7 million in the previous year[1] - Adjusted EBITDA decreased by 29.3% to RMB 91.3 million from RMB 129.2 million year-on-year[1] - Basic and diluted loss per share was RMB 5.8 cents, compared to earnings of RMB 15.1 cents per share in the prior period[2] - The total revenue for the six months ended June 30, 2024, was RMB 984.5 million, a slight decrease of 0.1% compared to RMB 987.5 million for the same period in 2023[9] - The group recorded a consolidated loss of RMB 24.7 million, compared to a profit of RMB 29.4 million in the same period last year[45] - Total gross profit decreased to RMB 146.4 million, down 14.4% from RMB 171.0 million, with a gross margin of 14.9% compared to 17.3% in the previous period[76] Revenue Breakdown - Inpatient medical services generated revenue of RMB 522.8 million, down 4.5% from RMB 547.4 million in the previous year[9] - Outpatient medical services revenue increased to RMB 319.3 million, up 2.8% from RMB 312.4 million year-on-year[9] - Revenue from blood dialysis services was RMB 37.1 million, with no prior year comparison available[9] - Revenue from elderly medical services increased to RMB 7.0 million, up 18.6% from RMB 5.9 million in the previous year[9] - The hospital services segment generated revenue of RMB 880.8 million, down 4.4% from RMB 920.9 million in the same period last year[45] - The rehabilitation and related medical services segment recorded revenue of RMB 59.7 million, a decrease of 1.7% compared to RMB 60.7 million in the same period last year[46] - Revenue from special services totaled RMB 79.5 million, representing a decrease of 13.2% compared to RMB 91.6 million in the previous year[55] - Revenue from VIP medical services decreased by 12.4% to RMB 53.5 million, down from RMB 61.0 million in the same period last year[56] Assets and Liabilities - Non-current assets totaled RMB 1,691.9 million as of June 30, 2024, up from RMB 1,529.5 million at the end of 2023[3] - Current assets decreased to RMB 960.8 million from RMB 1,095.5 million at the end of 2023[3] - Total liabilities increased slightly to RMB 772.7 million from RMB 766.7 million at the end of 2023[3] - Accounts receivable increased to RMB 327,597 thousand as of June 30, 2024, from RMB 269,745 thousand as of December 31, 2023[26] - The total amount of accounts receivable and other receivables reached RMB 354,956 thousand as of June 30, 2024, compared to RMB 302,278 thousand as of December 31, 2023[26] - As of June 30, 2024, accounts payable amounted to RMB 366,803,000, an increase of 15.6% from RMB 317,263,000 as of December 31, 2023[32] - The total amount of accounts payable and other payables, including provisions, reached RMB 689,425,000, up from RMB 660,322,000, reflecting a growth of 4.5%[32] Operational Highlights - The company operates four main business segments: hospital services, rehabilitation and other medical services, blood dialysis services, and elderly medical services[10] - The company operates three self-owned hospitals, including Dongguan Kanghua Hospital, recognized as one of the top private general hospitals in China[41] - The company has a total of 13 rehabilitation centers and a vocational training school, focusing on providing special care services for patients with permanent or long-term disabilities[42] - The company is expanding its "large-scale healthcare" business model in response to the aging population in China[43] - The company aims to expand its quality rehabilitation services beyond Guangdong Province, enhancing its service offerings in other regions of China[42] Investments and Acquisitions - The company completed the acquisition of 70% of Kanghua Hemodialysis Group for RMB 7,700,000, with goodwill recognized amounting to RMB 114,224,000[38] - The company acquired properties, plants, and equipment totaling RMB 24,904,000 and incurred construction costs of RMB 29,188,000 to enhance hospital service capabilities and develop new medical facilities[23] - The company has established a fund for investment in healthcare services, biotechnology, and medical devices, with an initial capital of RMB 22,000,000 as of June 30, 2024[31] Cash Flow and Financing - The net cash flow from operating activities for the reporting period was RMB 48.8 million, a decrease of 22.0% compared to RMB 62.6 million for the same period last year, primarily due to worsened EBITDA and losses[98] - The net cash flow used in investing activities was RMB 49.8 million, with significant factors including a net loss of RMB 15.0 million from the acquisition of financial assets and a cash flow of RMB 6.1 million from the acquisition of Kanghua Hemodialysis Group[99] - The net cash flow used in financing activities amounted to RMB 198.1 million, mainly due to new bank loans of RMB 21.8 million and repayment of bank loans totaling RMB 283.4 million[100] - The company has implemented a cash management policy to invest in low-risk financial products to achieve higher interest income without affecting business operations or capital expenditures[102] Corporate Governance and Compliance - The company has adhered to all applicable corporate governance codes during the reporting period[120] - The audit committee has reviewed the interim results for the six months ending June 30, 2024, confirming compliance with applicable accounting standards[121] - The board of directors includes a mix of executive and independent non-executive directors, ensuring diverse oversight[123] - The company expresses gratitude to its management team and employees for their contributions during the reporting period[122]

Financial Performance - Profit for the year increased to RMB 91.0 million in 2023, up from RMB 26.3 million in 2022, representing a growth of 245%[1] - EBITDA for the year reached RMB 308.6 million, compared to RMB 233.8 million in 2022, reflecting a year-over-year increase of 32%[1] - The Group's consolidated profit for the Reporting Period amounted to RMB 91.0 million, representing a year-on-year increase of 246.0% from RMB 26.3 million in 2022[139] - Adjusted EBITDA recorded a year-on-year increase of 35.0% to RMB 291.3 million, up from RMB 215.8 million in 2022[151] - The overall operating margin increased from 14.2% in 2022 to 17.8% for the Reporting Period due to stringent cost control policies[133] Revenue Growth - In 2023, Guangdong Kanghua Healthcare Co., Ltd. reported a revenue of RMB 2,041,858,000, representing a year-on-year increase of 10.6%[102] - The hospital services segment recorded revenue of RMB 1,887.9 million, a year-on-year increase of 9.7%, achieving the highest revenue since 2019[121] - Revenue from cardiovascular related disciplines increased to RMB 271,010,000 in 2023, up from RMB 206,477,000 in 2022, representing a year-on-year growth of 31.2%[90] - Revenue from other clinical disciplines reached RMB 478,540,000 in 2023, compared to RMB 422,933,000 in 2022, marking a growth of 13.2%[90] - Revenue from rehabilitation and other related healthcare services reached RMB 141.2 million, marking a year-on-year increase of 26.4% from RMB 111.7 million in 2022[194] Asset Management - The Group's net assets position was RMB 1,497.5 million as of December 31, 2023, slightly down from RMB 1,514.5 million in 2022[14] - The Group recorded net current assets of RMB 328.8 million in 2023, an increase from RMB 289.6 million in 2022[12] - The Group's finance costs decreased to RMB 12.1 million in 2023 from RMB 15.0 million in 2022, showing improved cost management[1] - The Group's cash management policy includes purchasing investment products to achieve higher interest income without interfering with business operations[28] Investment and Expansion Plans - The group plans to allocate RMB 70.4 million for the expansion of current operations and upgrading hospital facilities by the end of December 31, 2024[22] - An investment of RMB 281.7 million is intended for expanding operating capacity and capabilities in multi-disciplinary specialized treatment and diagnosis by the end of December 31, 2024[22] - The group aims to expand healthcare operations in China through selective mergers and acquisitions, with an allocation of RMB 273.9 million for this purpose by the end of December 31, 2024[22] - The Group's investment strategy includes exploring new potential investment projects and capital market investments to diversify business risk and maximize shareholder value[44] Operational Efficiency - The net cash generated from operating activities was RMB 204.2 million in 2023, a year-on-year decrease of 7.8% compared to RMB 221.4 million in 2022, primarily due to changes in working capital[32] - The Group's total income tax paid during the Reporting Period was RMB 52.1 million, slightly up from RMB 51.6 million in 2022[51] - The net cash flows used in financing activities amounted to RMB 55.6 million, a decrease from RMB 110.9 million in 2022, primarily due to new bank loans raised of RMB 68.2 million[54] Patient Services and Experience - Patient visits increased significantly, with outpatient visits reaching 1,530,200 in 2023, compared to 1,456,100 in 2022[104] - The Group's hospitals have committed increased efforts in marketing and promotion, leading to an increase in inpatient visits following the relaxation of pandemic-related measures[116] - Renkang Hospital is focused on optimizing medical services and enhancing patient experience, with plans to continue improving its medical capabilities and quality standards in 2024[169] Market Trends and Government Support - The healthcare market in China is expected to grow steadily, driven by rising incomes and an aging population, as outlined in the "Healthy China 2030" initiative[108] - The government continues to support private healthcare participation, creating opportunities for innovative service providers to address public healthcare gaps[111] - Regulatory bodies have introduced policies to increase supply and strengthen the public healthcare system to meet basic medical needs[128]