[I. Important Notice](index=3&type=section&id=I.%20Important%20Notice) [1.1 Statement on Authenticity of Quarterly Report by Board of Directors, Supervisory Board, Directors, Supervisors, and Senior Management](index=3&type=section&id=1.1%20Statement%20on%20Authenticity%20of%20Quarterly%20Report%20by%20Board%20of%20Directors,%20Supervisory%20Board,%20Directors,%20Supervisors,%20and%20Senior%20Management) The company's Board of Directors, Supervisory Board, and senior management guarantee the truthfulness, accuracy, and completeness of this unaudited Q1 2017 report, assuming full legal responsibility - Company management ensures the truthfulness, accuracy, and completeness of this quarterly report and assumes legal responsibility[4](index=4&type=chunk) - The company's Q1 2017 report is unaudited[4](index=4&type=chunk) [II. Company Profile](index=3&type=section&id=II.%20Company%20Profile) [2.1 Key Financial Data](index=3&type=section&id=2.1%20Key%20Financial%20Data) In Q1 2017, the company achieved operating revenue of **33.0768 million yuan**, a year-on-year increase of **13.38%**, while net profit attributable to shareholders of the listed company was **-3.1650 million yuan**, with losses expanding year-on-year; total assets at period-end were **578.1337 million yuan**, a **16.25%** decrease from the end of the prior year, and net cash flow from operating activities was **-33.4236 million yuan** Key Financial Data for Q1 2017 | Indicator | Current Period | Prior Year Same Period | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue (Yuan) | 33,076,790.86 | 29,174,589.95 | 13.38% | | Net Profit Attributable to Shareholders of Listed Company (Yuan) | -3,165,002.47 | -1,788,115.60 | N/A | | Net Cash Flow from Operating Activities (Yuan) | -33,423,590.90 | -32,786,913.50 | N/A | | Basic EPS (Yuan/Share) | -0.04 | -0.03 | N/A | | **Indicator** | **End of Current Period** | **End of Prior Year** | **Period-end vs. Year-start Change (%)** | | Total Assets (Yuan) | 578,133,711.35 | 690,343,149.99 | -16.25% | | Net Assets Attributable to Shareholders of Listed Company (Yuan) | 391,803,345.00 | 394,970,957.82 | -0.80% | - During the reporting period, non-recurring gains and losses amounted to **1.3062 million yuan**, primarily from government grants[8](index=8&type=chunk) [2.2 Total Number of Shareholders, Top Ten Shareholders, and Top Ten Circulating Shareholders (or Unrestricted Shareholders) at Period-End](index=4&type=section&id=2.2%20Total%20Number%20of%20Shareholders,%20Top%20Ten%20Shareholders,%20and%20Top%20Ten%20Circulating%20Shareholders%20(or%20Unrestricted%20Shareholders)%20at%20Period-End) As of the end of the reporting period, the company had **8,336** shareholders, with the top ten shareholders holding a relatively high combined stake, including the largest shareholder Weng Kang holding **24.66%**, and some top ten shareholders having pledged shares - As of the end of the reporting period, the company had **8,336** shareholders[10](index=10&type=chunk) Top Five Shareholders' Shareholding Information | Shareholder Name | Shareholding Percentage (%) | Number of Shares Held at Period End | Number of Restricted Shares | Pledged or Frozen Status | | :--- | :--- | :--- | :--- | :--- | | Weng Kang | 24.66 | 19,728,000 | 19,728,000 | Pledged 12,000,000 | | WI Harper INC Fund VI Ltd | 13.25 | 10,602,000 | 10,602,000 | None | | JAFCO ASIA TECHNOLOGY FUND IV | 11.40 | 9,120,000 | 9,120,000 | None | | Suzhou Maidi Meichuang Investment Management Co., Ltd. | 6.52 | 5,214,000 | 5,214,000 | Pledged 2,924,600 | | Wang Jianhua | 6.46 | 5,166,000 | 5,166,000 | Pledged 3,655,700 | [III. Significant Events](index=5&type=section&id=III.%20Significant%20Events) [3.1 Significant Changes and Reasons for Key Financial Statement Items and Indicators](index=5&type=section&id=3.1%20Significant%20Changes%20and%20Reasons%20for%20Key%20Financial%20Statement%20Items%20and%20Indicators) During the reporting period, significant financial changes included a **63.59%** decrease in cash due to investments and debt repayment, a **75.44%** reduction in long-term borrowings, a **52.50%** decline in operating costs from product mix shifts, and increases of **34.85%** and **50.38%** in selling and administrative expenses respectively, driven by market and R&D activities - Cash and cash equivalents decreased by **63.59%** from the beginning of the year, primarily used for purchasing **70 million yuan** in wealth management products and repaying **71.1624 million yuan** in bank loans[12](index=12&type=chunk) - Long-term borrowings and non-current liabilities due within one year decreased by **75.44%** and **74.37%** respectively from the beginning of the year, primarily due to repayment of bank loans[13](index=13&type=chunk)[14](index=14&type=chunk) - Operating costs decreased by **52.50%** year-on-year, mainly because projects accepted in the current period primarily consisted of higher-margin self-developed software and operation and maintenance services[14](index=14&type=chunk) - Selling expenses and administrative expenses increased by **34.85%** and **50.38%** year-on-year respectively, primarily due to increased market promotion, R&D expenses, employee compensation, and depreciation[14](index=14&type=chunk) - Cash paid for debt repayment increased by **351.52%** year-on-year, mainly for repaying bank loans[16](index=16&type=chunk) [3.2 Analysis and Explanation of Progress, Impact, and Solutions for Significant Matters](index=6&type=section&id=3.2%20Analysis%20and%20Explanation%20of%20Progress,%20Impact,%20and%20Solutions%20for%20Significant%20Matters) During the reporting period, the company had no significant matters requiring disclosure, no overdue unfulfilled commitments, and no forecast of cumulative net profit being a loss or undergoing significant changes from the beginning of the year to the end of the next reporting period - No significant matter progress, overdue unfulfilled commitments, or earnings warnings required disclosure during the reporting period[17](index=17&type=chunk)[18](index=18&type=chunk) [IV. Appendix](index=8&type=section&id=IV.%20Appendix) [4.1 Financial Statements](index=8&type=section&id=4.1%20Financial%20Statements) This appendix includes the company's unaudited consolidated and parent company financial statements for Q1 2017, comprising the balance sheet, income statement, and cash flow statement [Consolidated Balance Sheet](index=8&type=section&id=Consolidated%20Balance%20Sheet) As of March 31, 2017, the company's total assets were **578.1337 million yuan**, a **16.25%** decrease from the beginning of the year; total liabilities were **186.3304 million yuan**, a **36.92%** decrease; and total equity attributable to parent company owners was **391.8033 million yuan**, a slight decrease of **0.80%**, with asset decline mainly due to reduced cash and cash equivalents, and liability decline mainly due to debt repayment Key Items from Consolidated Balance Sheet (Unit: Yuan) | Item | Period-end Balance | Year-start Balance | | :--- | :--- | :--- | | Total Assets | 578,133,711.35 | 690,343,149.99 | | Total Liabilities | 186,330,366.35 | 295,372,192.17 | | Total Equity Attributable to Parent Company Owners | 391,803,345.00 | 394,970,957.82 | [Parent Company Balance Sheet](index=10&type=section&id=Parent%20Company%20Balance%20Sheet) As of March 31, 2017, the parent company's total assets were **587.9175 million yuan**, total liabilities were **216.0793 million yuan**, and total owner's equity was **371.8381 million yuan**, with trends largely consistent with the consolidated statements Key Items from Parent Company Balance Sheet (Unit: Yuan) | Item | Period-end Balance | Year-start Balance | | :--- | :--- | :--- | | Total Assets | 587,917,454.47 | 698,382,228.50 | | Total Liabilities | 216,079,332.45 | 324,881,539.26 | | Total Owner's Equity | 371,838,122.02 | 373,500,689.24 | [Consolidated Income Statement](index=12&type=section&id=Consolidated%20Income%20Statement) In Q1 2017, the company achieved total operating revenue of **33.0768 million yuan**, a **13.38%** year-on-year increase, but due to increased total operating costs (especially selling and administrative expenses), operating profit was **-8.9922 million yuan**, and net profit attributable to parent company owners was **-3.1650 million yuan**, an expansion of loss compared to **-1.7881 million yuan** in the prior year Key Items from Consolidated Income Statement (Unit: Yuan) | Item | Current Period Amount | Prior Period Amount | | :--- | :--- | :--- | | I. Total Operating Revenue | 33,076,790.86 | 29,174,589.95 | | II. Total Operating Costs | 42,465,415.97 | 40,595,095.80 | | III. Operating Profit | -8,992,207.30 | -11,420,505.85 | | V. Net Profit | -3,165,002.47 | -1,788,115.60 | | Net Profit Attributable to Parent Company Owners | -3,165,002.47 | -1,788,115.60 | [Parent Company Income Statement](index=14&type=section&id=Parent%20Company%20Income%20Statement) In Q1 2017, the parent company achieved operating revenue of **32.5754 million yuan** and a net profit of **-1.6600 million yuan**, significantly narrowing its loss compared to **-4.2000 million yuan** in the prior year Key Items from Parent Company Income Statement (Unit: Yuan) | Item | Current Period Amount | Prior Period Amount | | :--- | :--- | :--- | | I. Operating Revenue | 32,575,384.72 | 28,995,255.64 | | II. Operating Profit | -7,479,598.84 | -14,020,884.02 | | IV. Net Profit | -1,659,957.00 | -4,200,024.24 | [Consolidated Cash Flow Statement](index=15&type=section&id=Consolidated%20Cash%20Flow%20Statement) In Q1 2017, the company's net cash flow from operating activities was **-33.4236 million yuan**, net cash outflow from investing activities was **75.2929 million yuan** due to wealth management product purchases, and net cash outflow from financing activities was **74.2803 million yuan** due to debt repayment, resulting in a net decrease of **182.9968 million yuan** in cash and cash equivalents during the period Consolidated Cash Flow Statement Summary (Unit: Yuan) | Item | Current Period Amount | Prior Period Amount | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | -33,423,590.90 | -32,786,913.50 | | Net Cash Flow from Investing Activities | -75,292,945.15 | -8,770,801.36 | | Net Cash Flow from Financing Activities | -74,280,308.84 | -13,892,232.82 | | Net Increase/Decrease in Cash and Cash Equivalents | -182,996,844.89 | -55,449,947.68 | [Parent Company Cash Flow Statement](index=17&type=section&id=Parent%20Company%20Cash%20Flow%20Statement) In Q1 2017, the parent company's cash flows from operating, investing, and financing activities were all net outflows, amounting to **-25.3314 million yuan**, **-75.2929 million yuan**, and **-81.3679 million yuan** respectively, leading to a net decrease of **181.9922 million yuan** in cash and cash equivalents during the period, consistent with consolidated statement trends Parent Company Cash Flow Statement Summary (Unit: Yuan) | Item | Current Period Amount | Prior Period Amount | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | -25,331,371.93 | -28,114,711.43 | | Net Cash Flow from Investing Activities | -75,292,945.15 | -8,770,801.36 | | Net Cash Flow from Financing Activities | -81,367,874.67 | -18,725,863.26 | | Net Increase/Decrease in Cash and Cash Equivalents | -181,992,191.75 | -55,611,376.05 | [4.2 Audit Report](index=18&type=section&id=4.2%20Audit%20Report) The company explicitly states that this quarterly financial report is unaudited - This quarterly report is unaudited[38](index=38&type=chunk)

Dividend Distribution - The company plans to distribute a cash dividend of 1.75 CNY per 10 shares, totaling 14,000,000 CNY for all shareholders[2]. - The total share capital for the dividend distribution is based on 80,000,000 shares[2]. - In 2016, the company distributed cash dividends amounting to 1.75 RMB per 10 shares, with a total cash dividend of 14,000,000 RMB, representing 30.97% of the net profit attributable to ordinary shareholders[125]. - The company has a cash dividend policy that mandates a minimum of 20% of distributable profits to be paid out as cash dividends when conditions are met[123]. Financial Performance - In 2016, the company reported a revenue of RMB 240,643,007.43, representing a 19.21% increase compared to RMB 201,871,275.48 in 2015[18]. - The net profit attributable to shareholders was RMB 45,205,718.82, up 16.04% from RMB 38,955,976.64 in the previous year[18]. - The company's total assets increased by 58.58% to RMB 690,343,149.99 at the end of 2016, compared to RMB 435,336,908.76 at the end of 2015[18]. - The company's net assets attributable to shareholders rose by 111.63% to RMB 394,970,957.82 from RMB 186,634,584.26 in 2015[18]. - The weighted average return on equity was 21.60% in 2016, down from 23.31% in 2015[19]. - The company achieved operating revenue of CNY 240.64 million, a year-on-year increase of 19.21%[61]. - The total profit reached CNY 49.23 million, reflecting a growth of 8.09% compared to the previous year[61]. - Net profit attributable to shareholders was CNY 45.21 million, up 16.04% year-on-year[61]. Operational Efficiency - The net cash flow from operating activities decreased by 13.26% to RMB 32,558,391.51 from RMB 37,536,097.88 in 2015[18]. - The company generated a cash flow from operating activities of -¥32,786,913.5 in Q1 2016, which improved to ¥58,400,744.26 in Q4 2016, reflecting better operational efficiency[21]. - The company's operating cash flow decreased by 13.26% to CNY 32.56 million, reflecting changes in operational efficiency[66]. Market Position and Growth - By the end of 2016, the company had over 1,000 medical institution clients across 32 provinces in China, including more than 400 top-tier hospitals, demonstrating its market penetration[26]. - The company is positioned within the medical informationization sector, which is experiencing rapid growth due to ongoing healthcare reforms in China[45]. - The company has established a leading market position in clinical information technology, with its products applied in over 1,000 medical institutions across 32 provinces[102]. - The company is positioned to benefit from the significant growth potential in China's healthcare information technology sector, driven by increasing healthcare expenditures and government policies promoting health IT[47]. Research and Development - The company’s R&D expenditure rose by 75.65% to CNY 35.23 million, indicating a strong focus on innovation[66]. - The company has received 11 patent applications during the reporting period, including 5 invention patents[63]. - The company has applied for and obtained 40 software copyrights during the reporting period[87]. - The company is currently developing a digital operating room solution and a digital intensive care unit solution[84]. - The company plans to increase research and development investments in medical big data and artificial intelligence, enhancing its technological capabilities in the healthcare sector[111]. Risk Management - The company has provided a detailed description of major risks related to its operations in the report[4]. - The report includes a forward-looking statement risk declaration, highlighting uncertainties in future plans[3]. - The audit report issued by Zhonghui Accounting Firm is a standard unqualified opinion[4]. Governance and Compliance - The company has maintained a governance structure that ensures clear responsibilities and effective checks and balances among shareholders, the board, and management[182]. - The company did not report any significant differences from the requirements set by the China Securities Regulatory Commission regarding corporate governance[182]. - There were no significant lawsuits or arbitration matters during the reporting period[141]. - The company has not disclosed any major related party transactions during the reporting period[142]. Shareholder Information - The total number of ordinary shares increased from 60,000,000 to 80,000,000, with the proportion of unrestricted circulating shares being 25%[149]. - The company successfully completed a public offering of 20,000,000 shares at a price of RMB 9.69 per share, raising a total of RMB 193.8 million[151]. - The number of ordinary shareholders increased from 9,061 to 12,724 during the reporting period, indicating a significant rise in public interest[156]. - The largest shareholder, Weng Kang, holds 19,728,000 shares, representing 24.66% of the total shares[158]. Employee Information - The total number of employees in the parent company is 511, with a combined total of 643 employees across the parent and major subsidiaries[177]. - The company has 374 employees in research and technical services, 183 in sales, and 83 in management[177]. - The total remuneration for directors, supervisors, and senior management during the reporting period is 3.8066 million yuan[175]. Financial Position - Total assets increased to RMB 690,343,149.99, up from RMB 435,336,908.76, representing a growth of approximately 58.6% year-over-year[196]. - Current assets rose to RMB 460,506,546.32, compared to RMB 252,079,590.54, marking an increase of about 82.6%[196]. - Cash and cash equivalents significantly increased to RMB 287,781,948.97 from RMB 115,496,033.47, reflecting a growth of approximately 149.5%[195]. - Total liabilities amounted to RMB 295,372,192.17, up from RMB 248,702,324.50, indicating an increase of around 18.7%[196].