宏力医疗管理(09906) - 2020 - 中期财报

Company Information Company Basic Information This section outlines Honley Medical Management Group Company Limited's fundamental details, including board members, key locations, auditors, and stock code - The Board of Directors includes Executive Directors (Mr. Qin Yan, Dr. Teng Qingxiao, Mr. Wang Zhongtao), Non-executive Director (Mr. Qin Hongchao), and Independent Non-executive Directors (Mr. Zhao Chun, Mr. Sun Jigang, Mr. Jiang Tianfan)[5] - The Audit Committee is chaired by Mr. Sun Jigang, the Remuneration Committee by Mr. Jiang Tianfan, and the Nomination Committee by Mr. Zhao Chun[5] - The auditor is PricewaterhouseCoopers[5] - The company's stock code is 9906, and its listing date was July 13, 2020[8] Management Discussion and Analysis Market Overview and Outlook This section discusses the significant impact of 2020 healthcare reforms and the COVID-19 pandemic on China's medical services industry, and the Group's strategic responses - Key healthcare reform policies in China in 2020 include medical insurance payment reform, centralized drug procurement, smart hospital construction, and accelerated development of county-level medical alliances[10] - The COVID-19 pandemic severely tested China's healthcare system and will influence hospital survival and development for an extended period[11] - The Group plans to strengthen its medical management system, cultivate key and specialized departments, leverage big data, and comprehensively expand into the broader health sector under policy guidance[11] Business Review In the first half of 2020, the Group's consolidated revenue decreased by 9.8% to RMB 244.7 million due to COVID-19, primarily impacting treatment, general hospital services, and pharmaceutical sales, despite achieving significant progress in hospital development and specialty construction - Consolidated revenue for the first half of 2020 decreased by 9.8% to RMB 244.7 million compared to the same period in 2019, mainly due to reduced revenue from treatment and general hospital services and pharmaceutical sales, attributed to the COVID-19 pandemic[14] Hospital Service Key Operating Data (For the six months ended June 30) | Indicator | 2020 | 2019 | Change % | | :----------- | :--------- | :--------- | :----- | | Outpatient visits | 485,789 | 517,449 | (6.1) | | Average outpatient fee (RMB) | 229.4 | 223.0 | 2.9 | | Inpatient visits | 23,515 | 28,760 | (18.2) | | Average inpatient fee (RMB) | 5,621.8 | 5,367.0 | 4.7 | | Operating beds at period end | 1,500 | 1,500 | – | | Average length of stay (days) | 9.2 | 8.8 | 4.5 | | Surgeries | 4,940 | 6,055 | (18.4) | - Hospital development and specialty achievements include: promotion to a Grade III hospital in January 2020, successful re-evaluation as a Baby-Friendly Hospital; continued operating performance growth in Nephrology and Oncology during the pandemic; and designation as the sole hospital in Changyuan City capable of COVID-19 nucleic acid testing in June 2020[20] - Future revenue-driving strategies include: expanding the Phase I building for increased wards and new radiotherapy services; enhancing interventional cardiology treatment; diversifying obstetrics and gynecology services; and establishing an intravenous admixture center for improved efficiency and safety[22][23][24][25] - Pharmaceutical sales revenue decreased by 3.2% year-on-year to RMB 83.8 million, primarily due to reduced selling prices for certain drugs in accordance with Henan Province standards[29] - Directors anticipate adverse impacts from the COVID-19 pandemic on revenue, financial position, and operating results, but inpatient and outpatient volumes are gradually recovering, and the designated hospital status has enhanced brand recognition and reputation[30] Financial Review In the first half of 2020, the Group's total revenue decreased by 9.8% year-on-year, mainly due to reduced revenue from treatment, general medical services, and pharmaceutical sales impacted by the pandemic, leading to a significant decline in gross profit and margin, and a 60.9% decrease in profit for the period Revenue and Costs In the first half of 2020, total revenue decreased by 9.8% to RMB 244.7 million, primarily due to reduced revenue from treatment, general medical services, and pharmaceutical sales impacted by the pandemic, while sales costs slightly increased, leading to a significant decline in gross profit and margin Revenue Breakdown (For the six months ended June 30) | Revenue Source | 2020 (RMB thousand) | Percentage of Revenue (2020) | 2019 (RMB thousand) | Percentage of Revenue (2019) | | :----------------- | :---------------------- | :------------------------ | :---------------------- | :------------------------ | | Treatment and general medical services | 159,869 | 65.4% | 183,236 | 67.6% | | Pharmaceutical sales | 83,769 | 34.2% | 86,507 | 31.9% | | Hospital management services | 1,015 | 0.4% | 1,390 | 0.5% | | Total | 244,653 | 100.0% | 271,133 | 100.0% | Hospital Revenue Breakdown by Source (For the six months ended June 30) | Revenue Source | 2020 (RMB thousand) | Percentage of Revenue (2020) | 2019 (RMB thousand) | Percentage of Revenue (2019) | | :----------- | :---------------------- | :------------------------ | :---------------------- | :------------------------ | | Inpatient medical services | 132,197 | 54.0% | 154,355 | 56.9% | | Outpatient medical services | 111,441 | 45.6% | 115,388 | 42.6% | | Total | 243,638 | 99.6% | 269,743 | 99.5% | - Total revenue decreased by 9.8% from RMB 271.1 million for the six months ended June 30, 2019, to RMB 244.7 million for the six months ended June 30, 2020, primarily due to reduced revenue from treatment and general hospital services and pharmaceutical sales[33] - Cost of sales increased by 1.0% from RMB 181.0 million for the six months ended June 30, 2019, to RMB 182.9 million for the six months ended June 30, 2020, mainly due to higher pharmaceutical and staff costs, partially offset by reduced consumables costs[37] - Gross profit decreased by 31.5% from RMB 90.1 million to RMB 61.8 million; gross profit margin decreased from 33.2% to 25.2%, mainly due to reduced revenue and relatively fixed cost of sales during the pandemic[38] Expenses and Profit Administrative expenses significantly increased due to listing-related fees, finance costs decreased due to reduced principal of borrowings, and income tax expense substantially declined due to lower profit before tax, resulting in a 60.9% decrease in profit for the period and a net profit margin reduction from 12.6% to 5.5% - Administrative expenses increased by 9.6% from RMB 33.3 million to RMB 36.5 million, primarily due to listing-related expenses rising from RMB 3.1 million to RMB 12.7 million[40] - Net finance costs decreased by 6.0% from RMB 11.3 million to RMB 10.6 million, mainly due to reduced interest expenses from quarterly repayments of other borrowings[43] - Income tax expense decreased by 87.5% from RMB 11.5 million to RMB 1.4 million, primarily due to a reduction in profit before tax[44] Profit for the Period and Net Profit Margin (For the six months ended June 30) | Indicator | First Half of 2020 | First Half of 2019 | Change % | | :--------- | :--------------- | :--------------- | :----- | | Profit for the period | RMB 13.4 million | RMB 34.2 million | (60.9) | | Net profit margin | 5.5% | 12.6% | (7.1)pp | Balance Sheet Items Discussion Net current liabilities decreased due to reduced short-term bank borrowings, inventory declined, trade receivables grew due to medical insurance settlement policies, and other receivables and prepayments increased due to capitalized listing fees; total borrowings decreased, trade payables declined due to reduced business activity, and accruals and other payables rose due to increased listing fees payable - Net current liabilities decreased from RMB 279.2 million as of December 31, 2019, to RMB 243.7 million as of June 30, 2020, primarily due to a reduction in short-term bank borrowings[46] - Inventories decreased by 40.3% from RMB 23.1 million to RMB 13.8 million, mainly because a larger inventory was stocked at year-end in anticipation of the Chinese New Year[47] - Trade receivables balance increased by 95.5% to RMB 33.2 million, primarily due to the settlement policy for trade receivables formulated in the first half of 2020 under the basic medical insurance scheme for urban and rural residents[48] - Other receivables and prepayments increased by RMB 2.4 million to RMB 8.7 million, mainly due to the increase in capitalized listing expenses as the listing process was nearing completion in the first half of 2020[49] - Total borrowings decreased by RMB 19.4 million to RMB 252.3 million, primarily due to repayments of RMB 222.4 million and new borrowings of RMB 203.0 million[50] - Trade payables decreased to RMB 89.3 million, mainly due to reduced purchasing activities resulting from decreased business operations and partial payment of trade payables during the period[51] - Accruals and other payables increased to RMB 91.6 million, primarily due to an increase in listing fees payable to RMB 11.7 million[54] Liquidity and Capital Resources Net cash from operating activities significantly decreased due to lower operating profit and trade receivables settlement, net cash used in investing activities substantially declined due to reduced payments for property, plant, and equipment and related party loans, and financing activities shifted from net inflow to net outflow primarily due to loan repayments and dividend payments Consolidated Cash Flow Statement (For the six months ended June 30) | Indicator | 2020 (RMB thousand) | 2019 (RMB thousand) | | :------------------- | :---------------------- | :---------------------- | | Net cash from operating activities | 31,498 | 99,239 | | Net cash used in investing activities | (11,737) | (100,056) | | Net cash flow from financing activities | (39,741) | 34,345 | | Net (decrease)/increase in cash balance | (19,980) | 33,528 | - Net cash generated from operating activities was RMB 31.5 million, a decrease from RMB 99.2 million in the prior period, mainly due to lower operating profit and cash inflows from deferred settlement of trade receivables in the first half of 2019[58] - Net cash used in investing activities decreased from RMB 100.1 million to RMB 11.7 million, primarily due to a RMB 38.7 million reduction in payments for property, plant, and equipment and a RMB 49.4 million decrease in net cash outflow for loans to a related party[59] - Financing activities shifted from a net inflow of RMB 34.3 million in 2019 to a net outflow of RMB 39.7 million in 2020, mainly due to repayments of borrowings and interest totaling RMB 30.7 million and dividend payments to shareholders of RMB 7.2 million[60] Financial Instruments and Risk Management The Group's financial instruments include receivables, cash, borrowings, and payables, facing foreign exchange fluctuation risks without hedging, while its gearing ratio has improved - The Group's financial instruments include trade receivables, other receivables, cash and cash equivalents, bank borrowings, trade payables, and other payables[63] - The Group is exposed to foreign exchange risk, primarily involving fluctuations in HKD and USD against RMB, but did not use any derivative financial instruments to hedge exchange rate risk for the six months ended June 30, 2020[64] - As of June 30, 2020, the gearing ratio (total liabilities divided by total assets) was 64.2%, a decrease from 66.7% as of December 31, 2019[65] Other Information Directors' and Major Shareholders' Interests This report discloses the interests of directors and major shareholders in the company's shares and related shares, with Mr. Qin Yan and Mr. Qin Hongchao and their associates acting in concert, collectively holding a majority stake Directors' Interests in Shares, Underlying Shares, and Debentures of the Company (As of the date of this interim report) | Director Name | Capacity/Nature of Interest | Number of Shares/Underlying Shares Interested In (1) | Approximate Percentage of the Company's Issued Share Capital (1) | | :--------- | :------------------------- | :------------------------------ | :-------------------------------- | | Mr. Qin Yan | Interest in controlled corporation | 310,788,450 (L) | 51.80% | | | Jointly held interest with another person | 133,195,050 (L) | 22.20% | | Mr. Qin Hongchao | Interest in controlled corporation | 133,195,050 (L) | 22.20% | | | Jointly held interest with another person | 310,788,450 (L) | 51.80% | Major Shareholders' Interests in Securities (As of the date of this interim report) | Name/Company Name | Capacity/Nature of Interest | Number of Shares Interested In (1) | Approximate Percentage of the Company's Issued Share Capital (1) | | :------------------ | :------------------------ | :-------------------- | :-------------------------------- | | Sunny Rock | Beneficial owner | 310,788,450 (L) | 51.80% | | | Jointly held interest with another person | 133,195,050 (L) | 22.20% | | Rubrical Investment | Beneficial owner | 133,195,050 (L) | 22.20% | | | Jointly held interest with another person | 310,788,450 (L) | 51.80% | | Ms. Sun Mingyan | Spouse's interest | 443,983,500 (L) | 74.00% | | Ms. Cao Jinming | Spouse's interest | 443,983,500 (L) | 74.00% | - Mr. Qin Yan, Mr. Qin Hongchao, Sunny Rock, and Rubrical Investment are parties acting in concert under a concert party agreement and are deemed to be interested in the combined equity interests of all concert parties[71][77] Share Option Scheme and Global Offering The company conditionally approved and adopted a share option scheme on June 17, 2020, with no options granted as of the reporting date, and completed its global offering on July 13, 2020, issuing 150 million shares for net proceeds of approximately HKD 271.4 million to be used as per the prospectus - The company conditionally approved and adopted a share option scheme on June 17, 2020, but as of the date of this interim report, no share options have been granted, agreed to be granted, exercised, cancelled, or lapsed under the scheme[81][82] - The global offering involved the issuance of 150,000,000 shares at HKD 2.10 per share, with net proceeds of approximately HKD 271.4 million (equivalent to approximately RMB 244 million), intended for use as stated in the prospectus[83][84] - The company's shares commenced trading on The Stock Exchange of Hong Kong Limited on July 13, 2020[84] Corporate Governance and Compliance The company has complied with the Corporate Governance Code since its listing date, with the exception of Mr. Qin Yan holding both Chairman and CEO roles, which the Board believes provides strong and consistent leadership; the Audit Committee has reviewed the interim results and found them to be in compliance with accounting standards - As of the date of this report, at least 25% of the company's total issued share capital is held by the public[85] - The company has complied with all applicable code provisions of the Corporate Governance Code set out in Appendix 14 to the Listing Rules, except for Mr. Qin Yan holding both the roles of Chairman and Chief Executive Officer[88][89] - The Board believes that Mr. Qin Yan's dual role as Chairman and CEO provides strong and consistent leadership for the company, effectively planning and executing business decisions and strategies[89] - The Audit Committee has reviewed the Group's interim results for the six months ended June 30, 2020, and considers them to be prepared in accordance with applicable accounting standards[95] - PricewaterhouseCoopers, the company's independent auditor, has conducted an independent review of the Group's interim financial information for the reporting period[95] Employees and Remuneration Policy As of June 30, 2020, the Group had a total of 1,623 employees, with employee costs for the first half of the year amounting to approximately RMB 73.4 million; remuneration is determined based on qualifications, experience, and performance, with discretionary bonuses tied to performance, financial results, and market conditions - As of June 30, 2020, the total number of employees was 1,623[97] - Employee costs (including directors' remuneration) for the six months ended June 30, 2020, were approximately RMB 73.4 million[97] - Remuneration is determined with reference to qualifications, experience, and job performance, while discretionary bonuses are generally paid based on individual performance, the Group's financial performance for the year, and general market conditions[97] Interim Financial Information Review Report PricewaterhouseCoopers has reviewed Honley Medical Management Group Company Limited's interim financial information for the six months ended June 30, 2020, and found no matters suggesting it was not prepared in all material respects in accordance with Hong Kong Accounting Standard 34 - The auditor is PricewaterhouseCoopers[99] - The review was conducted in accordance with Hong Kong Standard on Review Engagements 2410, which is less in scope than an audit, thus no audit opinion is expressed[100] - The review concluded that nothing has come to the auditor's attention that causes them to believe the Group's interim financial information is not prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting"[101] Interim Condensed Consolidated Statement of Comprehensive Income For the six months ended June 30, 2020, the Group's revenue was RMB 244,653 thousand, with profit for the period at RMB 13,380 thousand, representing a significant decrease from the prior year, and basic and diluted earnings per share of RMB 0.03 Interim Condensed Consolidated Statement of Comprehensive Income (For the six months ended June 30) | Indicator | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--------------- | :---------------------- | :---------------------- | | Revenue | 244,653 | 271,133 | | Cost of sales | (182,889) | (181,001) | | Gross profit | 61,764 | 90,132 | | Operating profit | 25,442 | 56,981 | | Profit before income tax | 14,817 | 45,680 | | Income tax expense | (1,437) | (11,502) | | Profit for the period | 13,380 | 34,178 | | Total comprehensive income | 13,380 | 34,178 | | Basic and diluted earnings per share | 0.03 | 0.08 | Interim Condensed Consolidated Statement of Financial Position As of June 30, 2020, the Group's total assets were RMB 712,755 thousand, total liabilities RMB 457,747 thousand, and total equity RMB 255,008 thousand, with total current liabilities of RMB 399,334 thousand exceeding total current assets of RMB 155,597 thousand, resulting in net current liabilities Interim Condensed Consolidated Statement of Financial Position (As of June 30) | Indicator | 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :--------------- | :---------------------- | :------------------------------------ | | Total non-current assets | 557,158 | 559,353 | | Total current assets | 155,597 | 165,971 | | Total Assets | 712,755 | 725,324 | | Total equity | 255,008 | 241,628 | | Total non-current liabilities | 58,413 | 38,569 | | Total current liabilities | 399,334 | 445,127 | | Total Liabilities | 457,747 | 483,696 | - As of June 30, 2020, the Group's current liabilities exceeded its current assets by RMB 243,737 thousand[161] Interim Condensed Consolidated Statement of Changes in Equity As of June 30, 2020, equity attributable to owners of the company was RMB 250,816 thousand, non-controlling interests RMB 4,192 thousand, totaling RMB 255,008 thousand in equity, with profit for the period at RMB 13,380 thousand Interim Condensed Consolidated Statement of Changes in Equity (For the six months ended June 30) | Indicator | Share Capital (RMB thousand) | Reserves (RMB thousand) | Retained Earnings (RMB thousand) | Sub-total (RMB thousand) | Non-controlling Interests (RMB thousand) | Total Equity (RMB thousand) | | :--------------- | :---------------- | :---------------- | :-------------------- | :---------------- | :---------------------- | :-------------------- | | Balance at January 1, 2020 | 33 | 166,146 | 71,394 | 237,573 | 4,055 | 241,628 | | Profit for the period | - | - | 13,243 | 13,243 | 137 | 13,380 | | Appropriation to statutory surplus reserve | - | 1,348 | (1,348) | - | - | - | | Balance at June 30, 2020 | 33 | 167,494 | 83,289 | 250,816 | 4,192 | 255,008 | Interim Condensed Consolidated Statement of Cash Flows For the six months ended June 30, 2020, net cash generated from operating activities was RMB 31,498 thousand, net cash used in investing activities was RMB 11,737 thousand, and net cash used in financing activities was RMB 39,741 thousand, resulting in a net decrease in cash and cash equivalents of RMB 19,980 thousand Interim Condensed Consolidated Statement of Cash Flows (For the six months ended June 30) | Indicator | 2020 (RMB thousand) | 2019 (RMB thousand) | | :------------------- | :---------------------- | :---------------------- | | Net cash from operating activities | 31,498 | 99,239 | | Net cash used in investing activities | (11,737) | (100,056) | | Net cash (used in)/from financing activities | (39,741) | 34,345 | | Net (decrease)/increase in cash and cash equivalents | (19,980) | 33,528 | | Cash and cash equivalents at beginning of period | 104,602 | 9,930 | | Cash and cash equivalents at end of period | 84,622 | 43,458 | Notes to the Interim Condensed Consolidated Financial Information 1. General Information Honley Medical Management Group Company Limited, incorporated in the Cayman Islands on January 6, 2016, operates as an investment holding company primarily engaged in owning, operating, and managing hospitals in China, with its ordinary shares listed on the Main Board of the Hong Kong Stock Exchange on July 13, 2020 - The company was incorporated in the Cayman Islands as an exempted company on January 6, 2016[157] - The Group is primarily engaged in the ownership, operation, and management of hospitals in the People's Republic of China[157] - The company's ordinary shares were listed on the Main Board of The Stock Exchange of Hong Kong Limited on July 13, 2020[158] 2. Basis of Presentation and Accounting Policies This interim condensed consolidated financial information is prepared in accordance with Hong Kong Accounting Standard 34 and should be read in conjunction with the annual consolidated financial statements in the company's prospectus; the Group has net current liabilities, but management has taken steps, including listing proceeds and bank financing negotiations, to ensure its ability to continue as a going concern - This interim condensed consolidated financial information has been prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting"[160] - As of June 30, 2020, the Group's current liabilities exceeded its current assets by RMB 243,737 thousand[161] - Management has taken several measures to improve the financial position and alleviate liquidity pressure, including the completion of the listing, which generated net proceeds of approximately RMB 244 million, and negotiations with banks for renewal and additional credit facilities[164][165][166] 3. Segment Reporting For the six months ended June 30, 2020, the Group had only one operating segment, thus no segment information is presented, with the executive directors identified as the chief operating decision makers - The Group had only one operating segment for the six months ended June 30, 2020, and therefore no segment information is presented[170] - The chief operating decision makers have been identified as the executive directors[169] 4. Financial Risk Management The Group faces various financial risks, including market risks (foreign exchange and cash flow interest rate risks), credit risk, and liquidity risk, with no significant changes in risk management policies or undiscounted contractual cash flows of financial liabilities since year-end - The Group's activities expose it to various financial risks: market risk (including foreign exchange risk and cash flow interest rate risk), credit risk, and liquidity risk[173] - There have been no changes in risk management policies or any significant changes in the undiscounted contractual cash flows of financial liabilities since year-end[174][175] 5. Revenue The Group's revenue primarily derives from providing treatment and general medical services, pharmaceutical sales, and hospital management services, with total revenue for the first half of 2020 amounting to RMB 244,653 thousand Revenue Breakdown (For the six months ended June 30) | Revenue Source | 2020 (RMB thousand) | 2019 (RMB thousand) | | :----------------- | :---------------------- | :---------------------- | | Treatment and general medical services | 159,869 | 183,236 | | Pharmaceutical sales | 83,769 | 86,507 | | Hospital management services | 1,015 | 1,390 | | Total | 244,653 | 271,133 | 6. Expenses by Nature In the first half of 2020, the Group's total expenses were RMB 219,410 thousand, mainly comprising employee benefit expenses, pharmaceutical costs, medical consumables costs, utility expenses, depreciation and amortization, and significantly increased listing-related expenses Expenses by Nature (For the six months ended June 30) | Expense Item | 2020 (RMB thousand) | 2019 (RMB thousand) | | :----------------- | :---------------------- | :---------------------- | | Employee benefit expenses | 73,384 | 72,443 | | Pharmaceutical costs | 67,957 | 64,931 | | Medical consumables costs | 29,686 | 33,423 | | Utilities, maintenance, and office expenses | 15,040 | 21,735 | | Depreciation and amortization | 13,903 | 12,012 | | Listing-related expenses | 12,676 | 3,071 | | Auditor's remuneration | 800 | – | | Other expenses | 5,964 | 6,723 | | Total | 219,410 | 214,338 | 7. Finance Costs Net finance costs for the first half of 2020 were RMB 10,625 thousand, a decrease from the prior year, primarily due to reduced interest expenses on bank and other borrowings, partially offset by interest income Net Finance Costs (For the six months ended June 30) | Item | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--------------- | :---------------------- | :---------------------- | | Interest expense on bank borrowings | 6,719 | 5,764 | | Interest expense on other borrowings | 3,996 | 5,564 | | Interest expense on lease liabilities | 146 | 102 | | Total finance costs | 10,861 | 11,430 | | Interest income | (236) | (129) | | Net finance costs | 10,625 | 11,301 | 8. Income Tax Expense Income tax expense for the first half of 2020 was RMB 1,437 thousand, a significant reduction from the prior year, mainly due to lower profit before tax Income Tax Expense (For the six months ended June 30) | Item | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--------------- | :---------------------- | :---------------------- | | Current income tax | 1,437 | 11,502 | 9. Earnings Per Share Basic earnings per share for the first half of 2020 decreased to RMB 0.03 from RMB 0.08 in the prior year, with diluted earnings per share being the same as basic earnings per share due to the absence of potential dilutive shares Basic Earnings Per Share (For the six months ended June 30) | Indicator | 2020 (Unaudited) | 2019 (Unaudited) | | :--------------- | :-------------------- | :-------------------- | | Profit attributable to owners of the company (RMB thousand) | 13,243 | 33,835 | | Weighted average number of ordinary shares deemed to be in issue (thousand shares) | 450,000 | 445,445 | | Basic earnings per share (RMB) | 0.03 | 0.08 | - As the Group had no potential dilutive shares for the six months ended June 30, 2020, diluted earnings per share were the same as basic earnings per share[186] 10. Dividends The Board of Directors does not recommend the payment of any interim dividend for the six months ended June 30, 2020 - The Board of Directors does not recommend the payment of any interim dividend for the six months ended June 30, 2020[96][186] 11. Property, Plant and Equipment As of June 30, 2020, the net book value of property, plant and equipment was RMB 409,706 thousand, a slight increase from the end of 2019, primarily due to new expenditures and an increase in construction in progress, partially offset by depreciation expenses Net Book Value of Property, Plant and Equipment (As of June 30) | Item | 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :--------- | :---------------------- | :------------------------------------ | | Buildings and structures | 132,483 | 134,100 | | Machinery and equipment | 46,165 | 46,939 | | Office equipment and furniture and fixtures | 3,576 | 2,678 | | Motor vehicles | 547 | 641 | | Construction in progress | 226,935 | 222,196 | | Total | 409,706 | 406,554 | 12. Trade Receivables As of June 30, 2020, net trade receivables were RMB 33,207 thousand, a significant increase of 95.5% from the end of 2019, mainly due to the impact of settlement policies under the basic medical insurance scheme for urban and rural residents - As of June 30, 2020, net trade receivables were RMB 33,207 thousand, representing a 95.5% increase from RMB 16,988 thousand as of December 31, 2019[190] - The increase was primarily due to the settlement policy for trade receivables formulated in the first half of 2020 under the basic medical insurance scheme for urban and rural residents[48] 13. Other Receivables, Deposits and Prepayments As of June 30, 2020, current other receivables and prepayments amounted to RMB 8,698 thousand, with a non-current portion of RMB 58,483 thousand, reflecting a significant increase in prepayments for listing expenses Current Other Receivables, Deposits and Prepayments (As of June 30) | Item | 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :--------------- | :---------------------- | :------------------------------------ | | Other receivables | 665 | 1,095 | | Prepayments for utilities | 678 | 1,163 | | Prepayments for listing expenses | 7,355 | 3,999 | | Sub-total | 8,698 | 6,257 | Non-current Prepayments (As of June 30) | Item | 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :--------------- | :---------------------- | :------------------------------------ | | Prepayments for machinery purchases | 10,222 | 11,560 | | Prepayments for construction | 48,261 | 50,000 | | Sub-total | 58,483 | 61,560 | 14. Balances with Related Parties As of June 30, 2020, amounts due from related parties were RMB 220 thousand and amounts due to related parties were RMB 213 thousand, primarily trade-related, with non-trade related payables to related parties reduced to zero Amounts Due From Related Parties (Trade nature, as of June 30) | Related Party | 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :------------------- | :---------------------- | :------------------------------------ | | Guxiang No. 9 | 22 | - | | Henan Honley Yishenghuo Co., Ltd. | 165 | - | | Total | 220 | - | Amounts Due To Related Parties (As of June 30) | Item | 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :--------------- | :---------------------- | :------------------------------------ | | Trade nature | 213 | 621 | | Non-trade nature | - | 7,229 | | Total | 213 | 7,850 | 15. Borrowings As of June 30, 2020, the Group's total borrowings amounted to RMB 252,321 thousand, comprising RMB 55,258 thousand in non-current borrowings and RMB 197,063 thousand in current borrowings, primarily including secured, guaranteed, and other bank borrowings, with certain assets pledged as collateral Total Borrowings (As of June 30) | Item | 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :----------- | :---------------------- | :------------------------------------ | | Non-current borrowings | 55,258 | 33,869 | | Current borrowings | 197,063 | 237,827 | | Total Borrowings | 252,321 | 271,696 | Bank Borrowings Maturity Profile (As of June 30) | Maturity Profile | 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :--------------- | :---------------------- | :------------------------------------ | | Not more than 1 year | 165,000 | 208,000 | | More than 1 year but not more than 2 years | 38,000 | – | | Total | 203,000 | 208,000 | Assets Pledged for Borrowings (As of June 30) | Pledged Assets | 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :----------------------- | :---------------------- | :------------------------------------ | | The Group's property, plant and equipment and investment properties | 61,000 | 23,000 | | Henan Honley Group Co., Ltd.'s property, plant and equipment | - | 55,000 | | Total | 61,000 | 78,000 | Guaranteed Borrowings (As of June 30) | Guarantor | 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :--------------------- | :---------------------- | :------------------------------------ | | The Group | 112,000 | 20,000 | | Henan Honley Group Co., Ltd. and Qin Zili | - | 81,000 | | Henan Pucheng Real Estate Co., Ltd. | - | 29,000 | | Total | 112,000 | 130,000 | - Other borrowings are secured by machinery and equipment with a carrying amount of RMB 49,321 thousand[209] Carrying Amount and Fair Value of Non-current Borrowings (As of June 30) | Item | Carrying Amount (RMB thousand) | Fair Value (RMB thousand) | | :------- | :------------------ | :------------------ | | Bank borrowings | 38,000 | 38,107 | | Other borrowings | 17,258 | 18,031 | | Total | 55,258 | 56,138 | 16. Trade Payables and Bills Payable As of June 30, 2020, trade payables were RMB 89,297 thousand and bills payable were RMB 15,037 thousand, totaling RMB 104,334 thousand, a decrease from the end of 2019 Trade Payables and Bills Payable (As of June 30) | Item | 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :----------- | :---------------------- | :------------------------------------ | | Trade payables | 89,297 | 100,006 | | Bills payable | 15,037 | 15,000 | | Total | 104,334 | 115,006 | 17. Accruals, Other Payables and Provisions As of June 30, 2020, total accruals, other payables, and provisions amounted to RMB 91,648 thousand, an increase from the end of 2019, primarily due to a significant rise in listing fees payable Accruals, Other Payables and Provisions (As of June 30) | Item | 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :--------------- | :---------------------- | :------------------------------------ | | Accrued employee benefits | 34,516 | 33,690 | | Patient deposits | 30,183 | 27,333 | | Tax payable and other taxes payable | 2,149 | 2,390 | | Tax payable for plant and equipment | 3,768 | 3,933 | | Interest payable | 1,473 | 1,907 | | Listing fees payable | 16,015 | 4,287 | | Others | 3,544 | 5,491 | | Total | 91,648 | 79,031 | 18. Commitments As of June 30, 2020, capital expenditures contracted but not provided for in the consolidated financial information primarily related to property, plant and equipment, amounting to RMB 77,482 thousand Capital Commitments (Contracted but not provided for, as of June 30) | Item | 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :--------------- | :---------------------- | :------------------------------------ | | Property, plant and equipment | 77,482 | 81,733 | 19. Related Party Transactions The Group engaged in various related party transactions with its controlling shareholders, their close family members, and entities controlled by them, including health check services, property leases, purchase of leasing services and goods, and loans given to/received from related parties - Key related parties include Mr. Qin Yan, Mr. Qin Hongchao, Mr. Qin Zili, Ms. Wang Xianglian, Henan Honley Group Co., Ltd., Henan Hongda Construction Engineering Co., Ltd., Henan Honley Yishenghuo Co., Ltd., Henan Guxiang No. 9 Catering Co., Ltd., Henan Honley School Co., Ltd., and Henan Honley General Aviation Co., Ltd[227] Continuing Transactions with Related Parties (For the six months ended June 30) | Transaction Type | 2020 (RMB thousand) | 2019 (RMB thousand) | | :----------------- | :---------------------- | :---------------------- | | Provision of health check services to related parties | 1 | 103 | | Provision of property leases to related parties | 220 | 220 | | Purchase of leasing services from related parties | 290 | 290 | | Purchase of goods from related parties | 141 | 272 | Loans Given To/From Related Parties (Interest-free, for the six months ended June 30) | Transaction Type | 2020 (RMB thousand) | 2019 (RMB thousand) | | :----------------- | :---------------------- | :---------------------- | | Loans given to related parties | - | (151,093) | | Repayment of related party loans | - | 101,651 | | Borrowings from related parties | - | 91,103 | | Repayments to related parties | - | (129,704) | - As of June 30, 2020, borrowings secured by related party assets and guarantees were zero, compared to RMB 136,000 thousand as of December 31, 2019[235] Key Management Compensation (For the six months ended June 30) | Item | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--------------- | :---------------------- | :---------------------- | | Salaries and wages | 1,630 | 1,686 | | Contributions to pension schemes | 18 | 44 | | Benefits and other expenses | 27 | 34 | | Total | 1,675 | 1,764 | 20. Contingent Liabilities As of the reporting date, the Group had no significant outstanding litigation or material contingent liabilities - As of the reporting date, the Group had no significant outstanding litigation or material contingent liabilities[239] 21. Events After the Reporting Period The company completed its listing on July 13, 2020, issuing 150 million shares through a global offering, raising net proceeds of approximately HKD 271 million (approximately RMB 244 million) - The company completed its listing on July 13, 2020[240] - Through the global offering, 150,000,000 ordinary shares were issued, generating net proceeds of approximately HKD 271 million (equivalent to RMB 244 million)[240]