Financial Performance - Total revenue in 2023 decreased by 32.2% year-over-year due to a significant reduction in COVID-related business, but the decline was lower than the industry average[7] - Revenue dropped by 32.2% to RMB 3,297.8 million in 2023 compared to RMB 4,860.6 million in 2022[14] - Net profit for the year fell by 61.7% to RMB 262.3 million in 2023 from RMB 684.9 million in 2022[14] - Revenue for the year ended December 31, 2023, was RMB 3,297.8 million, a decrease of 32.2% compared to RMB 4,860.6 million in 2022, primarily due to a significant decline in demand for COVID-19-related services[25] - Sales cost for 2023 was RMB 1,863.7 million, a decrease of 37.1% from RMB 2,964.4 million in 2022, consistent with the decline in revenue due to reduced COVID-19 testing volumes[26] - Gross profit for 2023 was RMB 1,434.1 million, compared to RMB 1,896.2 million in 2022, with the gross margin increasing to 43.5% from 39.0% due to lower raw material costs, cost control measures, and a shift to higher-margin specialized tests[27] - Net profit decreased by 61.7% to RMB 262.3 million in 2023, compared to RMB 684.9 million in 2022[35] - Revenue for 2023 decreased to RMB 3,297,828 thousand from RMB 4,860,613 thousand in 2022, a decline of 32.2%[158] - Gross profit for 2023 was RMB 1,434,107 thousand, down from RMB 1,896,165 thousand in 2022, a decrease of 24.4%[158] - Net profit attributable to owners of the parent company for 2023 was RMB 234,885 thousand, a significant drop from RMB 680,793 thousand in 2022, a decrease of 65.5%[158] - Total comprehensive income for 2023 was RMB 218,173 thousand, compared to RMB 604,451 thousand in 2022, a decrease of 63.9%[159] - Basic earnings per share for 2023 were RMB 0.34, down from RMB 1.04 in 2022, a decrease of 67.3%[159] Business Growth and Expansion - Excluding COVID-related business, the company's regular business revenue grew by over 15% year-over-year in 2023, with specialty testing revenue increasing by more than 40%[7] - Compared to 2019, the company's total revenue in 2023 increased by over 90%, and the number of customers grew by more than 40%[7] - The company expanded its independent medical laboratory network from 33 to 36 labs by the end of 2023[15] - Specialized testing revenue in areas such as blood, oncology, infections, and maternal-fetal health grew by over 40% in 2023[16] - Collaborative business revenue increased by more than 50% year-over-year in 2023[16] - The number of testing items offered by the company grew from approximately 1,800 in 2018 to over 4,000 by the end of 2023[15] - The company is focusing on expanding into underserved markets and leveraging AI technology to enhance operational efficiency and market responsiveness[8] Operational Efficiency and Innovation - The company's gross margin remained industry-leading, supported by cost control, operational efficiency improvements, and strategic investments in high-growth potential businesses[7] - 20 out of 36 medical laboratories achieved ISO 15189 accreditation, maintaining a leading position in the industry[7] - The company launched a new laboratory information system (LIS) in Jinan, improving report review and generation efficiency by nearly 10 times[7] - AI technology was fully applied in pathology slide reading, driving digital innovation in operations and management[7] - The company completed the development of a new LIS system and upgraded multiple digital platforms in 2023[16] - The integration of big data and AI is transforming the clinical testing industry, improving diagnostic accuracy, reliability, and operational efficiency[23] Environmental and Social Responsibility - The company achieved an annual emission reduction target of 1-3%, demonstrating its commitment to environmental sustainability[7] - The company made charitable donations totaling RMB 1.8 million from the date of listing to December 31, 2023[75] Strategic Partnerships and Market Position - The company's strategic partnership with Guardant Health resulted in the successful launch of liquid biopsy companion diagnostic products in China in September 2023[7] - The company was included in the Hang Seng Composite Index, Stock Connect, and MSCI Index in 2023[16] - The company's top five customers accounted for less than 8% of total revenue for the year ended December 31, 2023[74] - The company's top five suppliers accounted for less than 30% of total purchases for the year ended December 31, 2023[74] Financial Position and Capital Management - Total assets decreased to RMB 4,553.5 million in 2023 from RMB 4,854.2 million in 2022, a decline of 6.2%[13] - Inventory decreased by 23.0% to RMB 176.6 million in 2023, driven by reduced demand for COVID-19-related services[37] - Trade receivables and bills decreased by 18.4% to RMB 1,515.4 million in 2023, reflecting improved collection efforts[38] - Trade payables and bills decreased by 30.2% to RMB 742.1 million in 2023, consistent with reduced cost of sales[40] - Cash and cash equivalents decreased by 42.9% to RMB 959.4 million in 2023, mainly due to RMB 670.0 million in pledged deposits for refinancing offshore bank loans[45] - Contract liabilities increased by 64.6% to RMB 34.7 million in 2023, driven by business expansion and increased customer prepayments[43] - Total interest-bearing bank loans decreased from RMB 1,136.1 million as of December 31, 2022, to RMB 887.5 million as of December 31, 2023, due to refinancing with RMB-denominated loans[46] - Net cash position increased by 44.1% from RMB 544.5 million as of December 31, 2022, to RMB 784.5 million as of December 31, 2023[46] - Capital expenditures decreased by 44.4% from RMB 297.4 million in 2022 to RMB 165.4 million in 2023, primarily due to reduced demand for COVID-19-related services and decreased purchases of property and equipment[48] - The company's current ratio improved from 1.61 in 2022 to 1.88 in 2023, and the quick ratio increased from 1.52 to 1.78 over the same period[48] - The asset-to-equity ratio decreased significantly from 1.86 in 2022 to 0.49 in 2023[48] Corporate Governance and Leadership - LIM Kooi June has been a non-executive director since December 2020 and serves as the Investment Director of Matou Business Consulting (Shanghai) Co., Ltd. since November 2019[57] - LIM Kooi June holds a Bachelor of Laws with Honors from the University of Nottingham and a Professional Accounting Certificate from the Institute of Chartered Accountants in England and Wales[57] - Ye Lin has been an independent non-executive director since June 2023 and previously served as the COO and Director of I-MAB, a Nasdaq-listed biopharmaceutical company[58] - Ye Lin holds an MBA from Cornell University and a Master's degree in Medical Biophysics from the University of Toronto and the Ontario Cancer Institute[59] - Zhang Wei has been an independent non-executive director since June 2023 and has served as an independent director for multiple public companies, including Biostage, Inc. and Dong-E-E-Jiao Co., Ltd[59] - Zhang Wei holds a Doctor of Clinical Medicine from Peking Union Medical College and a Doctor of Medical Management and Policy from Harvard University[59] - Pan Chao, Senior Vice President since July 2021, oversees the overall management of the company's laboratories[60] - Wang Zhihan, CFO and Senior Vice President since September 2020, is responsible for the company's financial strategy, financial management, and investor relations[60] - Wang Zhihan holds a Bachelor of Medical Science from Boston University, a Doctor of Medicine from Boston University School of Medicine, and an MBA from MIT Sloan School of Management[61] - Chu Jianing, Internal Audit Director and Strategic Intelligence Officer since July 2021, manages internal control, risk management, and operational data analysis[62] - Ge Shun, Vice President and Chief Marketing Officer since February 2023, oversees marketing, special inspections, and customer relations[62] - Ge Shun holds a Bachelor of Clinical Medicine from Jiangsu University and an MBA from Fudan University[62] - Hu Yuanyuan, Vice President since October 2018, supervises the Environmental, Health, and Safety (EHS) governance system[62] - Hu Yuanyuan holds a Bachelor's degree in International Economics and Trade from Jiangxi University of Finance and Economics[63] - Lan Jia, Senior Vice President and Administrative Director, joined the company in January 2021 and has extensive experience in financial management and internal control[64] - Li Dan, National Quality Director, has been with the company since April 2019 and oversees laboratory quality control[64] - Luo Zhen, Vice President, joined in March 2023 and is responsible for the company's digital system construction[64] - Sun Guangtao, Senior Vice President and Operations Director, has been with the company since April 2022 and manages the group's operations[66] - Wang Chengdong, Vice President and Eastern Region General Manager, has held various positions in the company since July 2011[66] - Zhang Yu, Financial Vice President, joined in July 2021 and is responsible for the group's financial operations[66] - Wang Zhihan and Su Jiamin serve as Joint Company Secretaries, with Su Jiamin bringing over 20 years of experience in corporate secretarial and compliance services[68] Risk Management and Compliance - The company operates in a highly regulated industry and may be adversely affected by uncertainties and changes in Chinese regulations related to the ICL industry[77] - The company faces risks related to competition, regulatory compliance, service quality control, and the ability to retain and acquire new customers[77] - The company's past financial performance may not be indicative of its future results[77] - The company's ability to compete effectively may be impacted if it fails to keep up with industry and technological developments[77] - The company has identified certain leased properties with land defects, which may require relocation and adversely affect its business, financial condition, and operating results[77] - The company's auditor, Ernst & Young, will retire but is eligible and willing to be reappointed, with a resolution to reappoint them to be proposed at the annual general meeting[80] - ZHOU Mintao has been nominated as a non-executive director candidate to fill the vacancy left by LIM Kooi June, who will not seek re-election[82] - ZHOU Mintao holds a Bachelor's degree in Biochemistry and an MBA from Fudan University, with extensive experience in healthcare and business management[83] Shareholder and Investor Relations - The company has maintained a minimum public float of 25% since its listing, as required by the Hong Kong Stock Exchange[76] - No debt securities were issued by the company during the period from the listing date to December 31, 2023[76] - The company has not been involved in any legal proceedings, arbitrations, or administrative litigations that could have a material adverse effect on its business, financial condition, or operating results[76] - The company's distributable reserves amounted to RMB 1,315.2 million as of December 31, 2023[75] - The company's shareholders have the right to request a special general meeting if they hold at least one-tenth of the paid-up share capital with voting rights[150] - The company's annual general meeting provides an opportunity for shareholders to interact with the board and committees, with auditors also available to address audit-related questions[149] Industry Trends and Market Dynamics - The aging population and increased prevalence of chronic diseases are driving higher demand for diagnostic testing, boosting the volume of tests[20] - Hospitals are increasingly outsourcing clinical testing to ICLs due to cost control pressures from healthcare reforms and regulations like the National Medical Security DRG Grouping and Payment Technical Specifications[21] - ICLs benefit from economies of scale, centralized management, and advanced technology adoption, enabling them to offer a wide range of tests at lower costs compared to hospital labs[22] - ICLs are expanding into lower-tier cities to address regional healthcare resource imbalances, providing comprehensive diagnostic services to county and township-level medical institutions[24] - The Chinese government's healthcare reforms, including the promotion of tiered medical systems and increased investment in medical infrastructure, are driving demand for ICL services[19] Financial Reporting and Auditing - The company's financial statements for 2023 were prepared in accordance with International Financial Reporting Standards (IFRS) and reflect a true and fair view of the company's financial position[152] - The company's financial statements were audited by Ernst & Young, who confirmed compliance with Hong Kong auditing standards and independence from the company[152] - The company's expected credit loss model was developed with the participation of external independent valuers, incorporating forward-looking factors to assess customer repayment ability[153] - The company's audit included evaluating the competence, capability, and objectivity of external independent valuers engaged by management[153] - The company's financial statements disclosed detailed information on expected credit losses for trade receivables and bills receivable in notes 2.4, 3, and 21[153] - Goodwill impairment testing is a key audit matter, with the company's goodwill amounting to RMB 79,802,000, representing 1.8% of total assets[154] - The company conducts annual impairment tests for goodwill based on the recoverable amount of cash-generating units, involving significant judgment and estimates[154] - Management uses an impairment assessment model with key assumptions including estimated revenue growth rate, projected gross margin, terminal growth rate, and pre-tax discount rate[154] - The company's directors are responsible for preparing true and fair consolidated financial statements in accordance with IFRS and Hong Kong Companies Ordinance[155] - The audit committee assists the board in overseeing the financial reporting process[155] - The auditors aim to obtain reasonable assurance that the financial statements are free from material misstatement, whether due to fraud or error[156] - The audit involves evaluating the appropriateness of accounting policies, reasonableness of estimates, and adequacy of disclosures[156] - The auditors assess the company's ability to continue as a going concern and the appropriateness of using the going concern basis[156] - The audit partner for this engagement is Ho Siu Fung from Ernst & Young[157] - The audit report was issued on March 28, 2024[157] Subsidiaries and Business Operations - The company operates 36 self-owned laboratories across China, offering over 4,000 medical diagnostic tests, including 1,700 general tests and 2,300 specialized tests, with 20 laboratories accredited by ISO 15189[71] - The company's subsidiaries are primarily engaged in medical testing services and trading of medical testing equipment in China[166] - The company holds 100% equity in its main subsidiaries, including Hangzhou Adicon Medical Laboratory and Shanghai Adicon Medical Laboratory[167] - Wuhan Adicon Medical Laboratory Co., Ltd. was established on November 24, 2009, with a registered capital of RMB 20,000,000 and is 100% owned by the company[168] - Nanjing Adicon Medical Laboratory Co., Ltd. was established on December 4, 2009, with a registered capital of RMB 20,000,000 and is 100% owned by the company[168] - Changsha Adicon Medical Laboratory Co., Ltd. was established on April 19, 2010, with a registered capital of RMB 20,000,000 and is 100% owned by the company[168] - Chengdu Adicon Medical Laboratory Co., Ltd. was established on June 11, 2010, with a registered capital of RMB 20,000,000 and is 100% owned by the company[168] - Shenyang Adicon Medical Laboratory Co., Ltd. was established on March 16, 2011, with a registered capital of RMB 20,000,000 and is 100% owned by the company[168] - Zhengzhou Adicon Medical Laboratory Co., Ltd. was established on August 8, 2012, with a registered capital of RMB 20,000,000 and is 100% owned by the company[168] - Guangzhou Adicon Medical Laboratory Co., Ltd. was established on August 21, 2013, with a registered capital of RMB 20,000,000 and is 100% owned by the company[168] - Tianjin Adicon Medical Laboratory Co., Ltd. was established on June 3, 2014, with a registered capital of RMB 30,000,000 and is 100% owned by the company[168] - Yunnan Adicon Medical Laboratory Co., Ltd. was established on February 2, 2015, with a registered capital of RMB 20,000,000 and is 100% owned by the company[168] - Qingdao Adicon Medical Laboratory Co., Ltd. was established on May 13, 2019, with a registered capital of RMB 11,666,600 and is 60% owned by the company[169] - The company holds a 70% equity stake in Quzhou Aidi Kang Medical Laboratory with a registered capital of RMB 20,000,000[170] - Shenzhen Aidi Kang Medical Laboratory is 60% owned by the company with a registered capital of RMB 13,333,300[170] - Xiamen Aidi Kang Medical Laboratory has a 51% equity stake held by the company and a registered capital of RMB 30,000,000[170] - Shangrao Aidi Kang Medical Laboratory is 61% owned by the company with a registered capital of RMB 3,625,000[170] - Jiangxi Jince Biotechnology is 61% owned by the company with a registered capital of RMB 8,000,000[170] - Zhengzhou Aidi Kang Medical Laboratory is fully owned by the company with a registered capital of RMB 20,000,000[170] - Suzhou Aidi Kang Medical Laboratory has a 51% equity stake held by the company and a
艾迪康控股(09860) - 2023 - 年度财报