雍禾医疗(02279) - 2024 - 中期财报

Company Profile Yonghe Medical Group is a leading one-stop hair medical service provider in China, expanding its market presence and leveraging technology for industry leadership - The Group is a leading hair medical service provider in China, offering one-stop services including hair transplantation, medical hair care, routine maintenance, and other related services[2][3] - Through the acquisition of Svenson's mainland China business and Hairmax's Hong Kong business, the Group expanded its operations beyond mainland China[2][4] - Established a joint hair laboratory with Peking University People's Hospital to promote research and application of standardized diagnostic and treatment processes for hair loss diseases[2][4] - Actively promotes the adoption of new technologies such as data application and analysis, artificial intelligence services, and online services to enhance core competitiveness[2][5] Corporate Information This section provides essential corporate details, including board composition, committee members, key contacts, and listing information for Yonghe Medical Group - The Board of Directors comprises 3 executive directors (including Mr. Zhang Yu, Chairman and CEO), 1 non-executive director, and 3 independent non-executive directors[6] - The Audit Committee is chaired by Mr. Chan Ping Kwan, the Remuneration Committee by Mr. Chan Ping Kwan, and the Nomination Committee by Mr. Zhang Yu[6] - The Company's stock code is 02279, listed on the Stock Exchange on December 13, 2021[9] Financial Highlights Revenue grew 8.7% to RMB 900.2 million, gross profit increased 13.2% to RMB 529.4 million, and net loss significantly narrowed to RMB 138.6 million for the six months ended June 30, 2024 Financial Highlights for the Six Months Ended June 30, 2024 | Metric | June 30, 2024 (RMB '000) | June 30, 2023 (RMB '000) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue from contracts with customers | 900,203 | 827,807 | 8.7% | | Gross Profit | 529,437 | 467,598 | 13.2% | | Loss before income tax | (146,699) | (256,428) | -42.8% | | Loss for the period | (138,648) | (226,191) | -38.7% | | Gross Profit Margin | 58.8% | 56.5% | 2.3pp | | Net Loss Margin | -15.4% | -27.3% | 11.9pp | Financial Position (as at period-end) | Metric | June 30, 2024 (RMB '000) | December 31, 2023 (RMB '000) | Change (%) | | :--- | :--- | :--- | :--- | | Total Assets | 2,086,797 | 2,444,561 | -14.6% | | Total Equity | 801,818 | 942,251 | -14.9% | | Total Liabilities | 1,284,979 | 1,502,310 | -14.4% | | Cash and Cash Equivalents | 533,780 | 603,215 | -11.6% | Management Discussion and Analysis This section analyzes the Group's business performance, strategic adjustments, and financial position, detailing revenue growth, narrowed losses, and future plans for efficiency, service quality, and digital transformation Business Review The Group, a leading hair medical service provider, expanded its brand matrix and network, serving 74,748 patients with an 8.7% revenue increase and improved gross profit margin - As of June 30, 2024, the Group operates 72 hair transplantation medical institutions in 68 cities nationwide, and 9 Svenson hair care institutions in Beijing, Shanghai, Guangzhou, and Shenzhen[11][12] - During the reporting period, the total number of patients served reached 74,748[11][12] Overview of Group Revenue, Gross Profit, and Gross Profit Margin | Metric | June 30, 2024 (RMB million) | June 30, 2023 (RMB million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 900.2 | 827.8 | 8.7% | | Gross Profit | 529.4 | 467.6 | 13.2% | | Gross Profit Margin | 58.8% | 56.5% | 2.3pp | Hair Transplantation Business Hair transplantation revenue grew 5.0% to RMB 672.9 million, driven by a 3.4% increase in patients and a 31.1% rise in 'Yongxiang' service patients Hair Transplantation Business Revenue and Proportion | Metric | June 30, 2024 (RMB '000) | June 30, 2023 (RMB '000) | YoY Change (%) | Proportion of Total Revenue (%) | | :--- | :--- | :--- | :--- | :--- | | Hair transplantation medical service revenue | 672,885 | 640,798 | 5.0% | 74.8% | - Deepened the implementation of a 'fixed-price' strategy, clarifying service costs and committing to precise control throughout the process to ensure high-quality professional services[19][21] - Launched the 'Good Doctors Nearby' national tour to break geographical barriers and promote equitable distribution of quality medical resources[19][21] Key Operating Data for Hair Transplantation Medical Services | Metric | June 30, 2024 | June 30, 2023 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Number of patients receiving hair transplantation medical services | 29,272 | 28,304 | 3.4% | | Average spending per hair transplantation patient (RMB) | 22,987 | 22,640 | 1.5% | | Number of patients receiving 'Yongxiang' services | 1,700 | 1,297 | 31.1% | Medical Hair Care Business Medical hair care revenue surged 25.3% to RMB 215.2 million, driven by a 21.9% increase in patients and a 29.0% package repurchase rate Medical Hair Care Business Revenue and Proportion | Metric | June 30, 2024 (RMB '000) | June 30, 2023 (RMB '000) | YoY Change (%) | Proportion of Total Revenue (%) | | :--- | :--- | :--- | :--- | :--- | | Medical hair care service revenue | 215,176 | 171,684 | 25.3% | 23.9% | - Established 'Svenson Medical Hair Care Centers' through 'shop-in-shop' and independent store models, offering professional diagnosis and customized treatment services[24][25] Key Operating Data for Medical Hair Care Services | Metric | June 30, 2024 | June 30, 2023 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Number of patients receiving medical hair care services | 49,683 | 40,758 | 21.9% | | Average spending per medical hair care patient (RMB) | 4,331 | 4,212 | 2.8% | | Repurchase Rate | 29.0% | 26.4% | 2.6pp | Business Progress The Group strategically adjusted operations, enhancing cost control, optimizing efficiency, and upgrading medical service quality to lead the industry into Hair Transplantation 3.0, while collaborating for innovation Yonghe Hair Transplantation Medical Institutions by Development Stage (as of June 30, 2024) | Development Stage | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Mature Institutions | 52 | 47 | | Developing Institutions | 12 | 12 | | New Institutions | 8 | 16 | | Total | 72 | 75 | Svenson Independent Stores by City (as of June 30, 2024) | City | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Shenzhen | 4 | 6 | | Guangzhou | 2 | 4 | | Shanghai | 2 | 2 | | Beijing | 1 | 1 | | Subtotal | 9 | 13 | | Total (all institutions) | 81 | 88 | Effective Cost Control Significantly Improves Operational Efficiency The Group enhanced operational efficiency through strategic cost control, prudent clinic integration, and innovative service models, including opening 4 new institutions and closing 11 others - Implemented strategic adjustments to strengthen cost control mechanisms, optimize operational efficiency, and enhance profitability potential[28] - Prudently executed the strategy of integrating new and old clinics, and appropriately extended the market observation period for new establishments[28] - Launched the 'Beijing, Shanghai, Guangzhou Famous Doctors National Tour' project and promoted value-added services like 'cross-clinic, cross-city surgical support' to optimize medical resource allocation[28] - Opened two new Yonghe Hair Transplantation medical institutions and two Svenson clinics, while closing five Yonghe Hair Transplantation medical institutions and six Svenson clinics to control costs and enhance operational efficiency[28] Deepening Medical Service Quality to Lead Industry Development The Group upgraded its 'Good Doctor + Good System' strategy, leading Hair Transplantation 3.0 with a 1,503-strong medical team and collaborations to enhance service quality and R&D - Underwent a 'Good Doctor + Good System' brand strategy upgrade, leading the industry into the Hair Transplantation 3.0 era[30][32] - Provided more comprehensive and personalized medical services through systematic upgrades across five dimensions: diagnosis, transplantation, aesthetics, hair care, and comfort[30][32] Professional Medical Team Composition (as of June 30, 2024) | Category | Number of People | | :--- | :--- | | Total Professional Team | 1,503 | | Doctors | 282 | | Nurses | 1,125 | | Other Medical Professionals | 96 | - Signed strategic cooperation agreements with multiple excellent pharmaceutical companies to deepen collaboration in hair loss prevention and hair transplantation, exploring an innovative 'R&D-Production-Sales-Application' model[34][35] Advancing Refined Marketing Strategies to Enhance Brand Value The Group enhanced brand value through refined marketing, clarifying its 'Hair Transplantation 3.0' positioning, utilizing data-driven multi-channel strategies, and improving private domain user operations for increased loyalty - Clarified the new positioning for the 'Hair Transplantation 3.0 era', emphasizing medical service quality, innovative hair transplantation systems, and patient experience to enhance consumer trust and loyalty[36][37] - Adopted multi-channel, multi-touchpoint integrated marketing, utilizing data analysis and precise targeting to control marketing costs while improving conversion rates[37][38] - Improved the standardized private domain user operation management system, forming closed-loop marketing through WeChat Work, mini-programs, and official accounts, and strengthening post-operative follow-up services to enhance customer loyalty[37][38] Adhering to Technological Innovation and Continuously Promoting Intelligent Development The Group drives intelligent development through digital innovation, piloting the 'Hefan' system for electronic archives, integrating AI robots for faster online consultations, and automating scalp health assessments - The independently developed operation management system 'Hefan' has been piloted in various clinics, covering all process links and achieving 'full lifecycle electronic archives' to enhance business efficiency and customer experience[39] - Integrated AI robot tools into online consultation services, increasing the initial interaction response speed by 85%[39] - Leveraged image model algorithms to automate scalp health assessment, including follicle count and hair diameter analysis, generating instant reports, shortening diagnosis time, and supporting personalized treatment[39] Future Outlook The Group anticipates continued market growth, focusing on cost efficiency, refined operations, enhanced service capabilities, and digital transformation to maintain industry leadership and achieve sustainable growth - Anticipates continuous growth in demand for hair loss treatment and care, and the Group will seize market opportunities to achieve sustainable, virtuous cycle growth[40] - The Group will adhere to technology-driven innovation, accelerate its digital transformation, and continuously optimize operational efficiency and enhance medical service capabilities[52][53] Cost Reduction and Efficiency Improvement, Refined Operation of Medical Institutions The Group will enhance operational efficiency and reduce costs through a refined, data-driven system, lean management, optimized network distribution, and digital transformation of human resources and supply chain - Continues to advance a refined operation system, guided by data-driven and process optimization, to ensure resource efficient utilization and effective cost control[40] - Implements a lean management strategy, introduces advanced data analysis tools, optimizes the distribution network of hair transplantation and care institutions, and strengthens cross-clinic collaboration[40] - Focuses on talent development and management, enhancing the digitalization and automation of human resource management, optimizing workflows, and reducing labor and management costs[40] - Continuously promotes innovative management in various clinics, building 'smart clinics', leveraging data analysis and artificial intelligence technology to enhance the precision and responsiveness of medical services, and optimizing the supply chain management system[41][43] Continuously Enhancing Operational and Medical Service Capabilities The Group will enhance operational and medical service capabilities by improving service levels, deepening the 'Good Doctor + Good System' strategy, introducing advanced technologies, building a patient-centric multi-channel system, and strengthening compliance and risk control - Promotes differentiated services based on regional market characteristics and establishes rigorous assessment mechanisms to ensure continuous improvement in medical service quality[42][44] - Deepens the 'Good Doctor + Good System' strategy, introduces advanced technologies and equipment, and plans to promote 3D simulated hair transplantation design and intelligent hair transplantation surgery[42][45] - Advances the construction of a patient-centric multi-channel medical service system, integrating online and offline resources to enhance the customer's full lifecycle service experience[42][46] - Strengthens compliance management and risk control, improves emergency plans, and ensures patient safety and Group operational stability[47][49] Adhering to Technology-Oriented Operations to Promote Digital and Intelligent Services The Group will accelerate digital transformation by integrating AI models for business processes, piloting 3D simulated hair transplantation, launching an intelligent quality inspection system, and implementing paperless clinics to enhance service and competitiveness - Established a customer-centric full-process service path, introducing intelligent AI models in lead follow-up, deal closing, and post-operative service stages, and completed the pilot of '3D simulated hair transplantation design solutions'[48][50] - Launched an 'intelligent quality inspection system' to enhance quality inspection coverage and efficiency, ensure service quality and consistency, and provide data support for operational decisions[48][51] - Fully launched the 'clinic paperless' project, digitizing customer documents and reports, and improving information security systems to strengthen data privacy protection[48][51] Financial Review The Group's financial performance for the six months ended June 30, 2024, showed an 8.7% revenue increase, 13.2% gross profit growth, and a 38.7% reduction in net loss, driven by cost optimization and reduced capital expenditure - The Group's loss for the period significantly narrowed, and net loss margin improved, primarily due to enhanced operational efficiency and optimized cost and expenses[73][77] - Capital expenditure significantly decreased, reflecting the Group's more prudent approach to its expansion strategy[82][83] - Cash and cash equivalents remained robust, sufficient to support daily operations and future development[74][78] Revenue Revenue increased 8.7% to RMB 900.2 million, with hair transplantation growing 5.0% to RMB 672.9 million and medical hair care growing 25.3% to RMB 215.2 million Revenue Breakdown by Business Line | Business Line | 2024 (RMB '000) | 2024 (%) | 2023 (RMB '000) | 2023 (%) | YoY Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Hair transplantation medical services | 672,885 | 74.8 | 640,798 | 77.4 | 5.0% | | Medical hair care services | 215,176 | 23.9 | 171,684 | 20.7 | 25.3% | | Others | 12,142 | 1.3 | 15,325 | 1.9 | -20.8% | | Total | 900,203 | 100 | 827,807 | 100 | 8.7% | - Hair transplantation business revenue growth was primarily due to a 3.4% increase in patient numbers to 29,272[55][56] - Medical hair care business revenue growth was primarily due to a 21.9% increase in patient numbers to 49,683[57][59] Costs Costs increased to RMB 370.8 million, driven by higher staff costs due to increased revenue and higher amortization and depreciation from more operating medical institutions Cost of Sales and Services Breakdown | Cost Category | 2024 (RMB '000) | 2024 (%) | 2023 (RMB '000) | 2023 (%) | | :--- | :--- | :--- | :--- | :--- | | Staff costs | 142,032 | 38.3 | 140,983 | 39.1 | | Cost of inventories and consumables | 152,677 | 41.2 | 135,846 | 37.7 | | Amortization and depreciation expenses | 50,549 | 13.6 | 58,081 | 16.1 | | Operating related expenses | 19,596 | 5.3 | 17,518 | 4.9 | | Other expenses | 5,912 | 1.6 | 7,781 | 2.2 | | Total | 370,766 | 100 | 360,209 | 100 | - The increase in staff costs was primarily due to the increase in revenue during the reporting period[62][65] - The increase in amortization and depreciation expenses was primarily due to the increased number of medical institutions operating for the six months ended June 30, 2024[62][65] Gross Profit and Gross Profit Margin Gross profit increased 13.2% to RMB 529.4 million, with gross profit margin improving to 58.8% for the six months ended June 30, 2024 Gross Profit and Gross Profit Margin | Metric | June 30, 2024 (RMB million) | June 30, 2023 (RMB million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Gross Profit | 529.4 | 467.6 | 13.2% | | Gross Profit Margin | 58.8% | 56.5% | 2.3pp | Other Income Other income decreased to RMB 0.8 million, primarily due to lower government grants and additional VAT deductions Other Income | Metric | June 30, 2024 (RMB million) | June 30, 2023 (RMB million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Other Income | 0.8 | 1.2 | -33.3% | General and Administrative Expenses General and administrative expenses decreased to RMB 141.0 million, primarily due to reduced staff costs from personnel optimization and organizational restructuring General and Administrative Expenses Breakdown | Expense Category | 2024 (RMB '000) | 2024 (%) | 2023 (RMB '000) | 2023 (%) | | :--- | :--- | :--- | :--- | :--- | | Staff costs | 97,483 | 69.1 | 119,976 | 68.6 | | Operating related expenses | 9,096 | 6.5 | 14,086 | 8.1 | | Professional and consulting service fees | 9,441 | 6.7 | 8,967 | 5.1 | | Travel and entertainment expenses | 6,757 | 4.8 | 7,734 | 4.4 | | Others | 13,241 | 9.4 | 17,748 | 10.2 | | Total | 140,970 | 100 | 174,861 | 100 | - The decrease in staff costs was primarily due to personnel optimization and organizational restructuring[68][69] Selling and Marketing Expenses Selling and marketing expenses decreased to RMB 462.6 million, primarily due to reduced marketing and promotion expenses from refined marketing strategies Selling and Marketing Expenses Breakdown | Expense Category | 2024 (RMB '000) | 2024 (%) | 2023 (RMB '000) | 2023 (%) | | :--- | :--- | :--- | :--- | :--- | | Marketing and promotion expenses | 322,749 | 69.7 | 345,161 | 69.2 | | Staff costs | 119,716 | 25.9 | 127,148 | 25.5 | | Travel expenses | 5,892 | 1.3 | 8,970 | 1.8 | | Operating related expenses | 3,101 | 0.7 | 5,748 | 1.2 | | Amortization and depreciation expenses | 6,457 | 1.4 | 7,307 | 1.5 | | Others | 4,658 | 1.0 | 4,068 | 0.8 | | Total | 462,573 | 100 | 498,402 | 100 | - The decrease in marketing and promotion expenses was primarily due to the Group's implementation of refined marketing strategies[71][75] Income Tax Credit Income tax credit decreased by 73.4% to RMB 8.1 million, primarily due to reduced deferred income tax recognized for temporary losses Income Tax Credit | Metric | June 30, 2024 (RMB million) | June 30, 2023 (RMB million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Income Tax Credit | 8.1 | 30.2 | -73.4% | - The decrease in income tax credit was primarily due to a decrease in deferred income tax recognized for temporary losses in the current period[72][76] Net Loss and Net Loss Margin Net loss decreased to RMB 138.6 million, with net loss margin improving to 15.4%, driven by enhanced operational efficiency and optimized costs Net Loss and Net Loss Margin | Metric | June 30, 2024 (RMB million) | June 30, 2023 (RMB million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Net Loss | (138.6) | (226.2) | -38.7% | | Net Loss Margin | -15.4% | -27.3% | 11.9pp | - The narrowing of losses was primarily attributable to revenue growth from improved operational efficiency and cost savings from optimized marketing and human resources[73][77] Cash and Cash Equivalents Cash and cash equivalents decreased to RMB 533.8 million, but the Group maintains robust cash flow to support operations and future expansion plans Cash and Cash Equivalents | Metric | June 30, 2024 (RMB million) | December 31, 2023 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Cash and Cash Equivalents | 533.8 | 603.2 | -11.6% | - The Group maintains robust cash flow, fully capable of meeting daily working capital needs and future medical institution expansion plans[74][78] Liquidity and Capital Resources The Group maintains ample liquidity with RMB 533.8 million in cash and cash equivalents and RMB 132.6 million in bank borrowings to support operations and future expansion Liquidity Overview | Metric | June 30, 2024 (RMB million) | December 31, 2023 (RMB million) | | :--- | :--- | :--- | | Cash and Cash Equivalents | 533.8 | 603.2 | | Bank Borrowings | 132.6 | 152.8 | Capital Expenditure Capital expenditure significantly decreased to RMB 18.4 million, primarily allocated to property, plant and equipment, and intangible assets Capital Expenditure Breakdown | Category | June 30, 2024 (RMB '000) | June 30, 2023 (RMB '000) | | :--- | :--- | :--- | | Payments for property, plant and equipment | 13,966 | 107,083 | | Payments for intangible assets | 4,398 | 540 | | Total | 18,364 | 107,623 | Debt Total debt was RMB 904.1 million, mainly bank borrowings of RMB 132.6 million and lease liabilities of RMB 771.4 million, with lease liabilities decreasing from year-end 2023 Debt Breakdown | Category | June 30, 2024 (RMB '000) | December 31, 2023 (RMB '000) | | :--- | :--- | :--- | | Current bank borrowings | 132,628 | 152,816 | | Current lease liabilities | 147,608 | 170,044 | | Non-current lease liabilities | 623,825 | 772,693 | | Total | 904,061 | 1,095,553 | - Bank borrowings bear interest at fixed annual rates ranging from 2.9% to 3.4%[85][88] - Total lease liabilities were RMB 771.4 million, a decrease from RMB 942.7 million as of December 31, 2023[86][89] Significant Acquisitions and Disposals The Group had no significant acquisitions or disposals of subsidiaries, associates, or joint ventures, nor any significant investments during the six months ended June 30, 2024 - During the reporting period, the Group did not undertake any significant acquisitions or disposals of any subsidiaries, associates, or joint ventures[90] - As of June 30, 2024, the Group held no significant investments[90] Plans for Future Material Investments or Capital Asset Purchases As of June 30, 2024, the Group had no plans for future material investments or capital asset purchases beyond those disclosed in the prospectus - As of June 30, 2024, the Group had no plans for future material investments or purchases of capital assets, other than those disclosed in the prospectus[91] Pledge of Assets As of June 30, 2024, the Group had no pledge of assets - As of June 30, 2024, the Group had no pledge of assets[91] Gearing Ratio The Group's gearing ratio slightly increased to 16.5% as of June 30, 2024, from 16.2% at December 31, 2023 Gearing Ratio | Metric | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Gearing Ratio | 16.5% | 16.2% | Exchange Rates and Any Related Hedges The Group has no significant foreign currency risk, with most operations and assets denominated in RMB, and monitors foreign exchange risk for potential hedging - The Group has no significant foreign currency risk, with its operations, assets, and liabilities primarily denominated in RMB[91] Foreign Currency Denominated Cash and Cash Equivalents | Metric | June 30, 2024 (RMB million) | December 31, 2023 (RMB million) | | :--- | :--- | :--- | | Foreign currency denominated cash and cash equivalents | 7.5 | 13.2 | Contingent Liabilities As of June 30, 2024, the Group had no significant contingent liabilities - As of June 30, 2024, the Group had no significant contingent liabilities[91] Employees and Remuneration Policy The Group had 3,826 employees, including 1,503 medical professionals, with staff costs decreasing to RMB 371.3 million, and offers competitive remuneration and social security benefits Number of Employees and Staff Costs | Metric | June 30, 2024 | June 30, 2023 | | :--- | :--- | :--- | | Total Employees | 3,826 | N/A | | Professional Medical Team Members | 1,503 | N/A | | Staff Costs (RMB million) | 371.3 | 399.7 | - The Group offers competitive remuneration packages, promotion opportunities, training programs, and a professional working environment, and participates in social security schemes for employees[91] Corporate Governance and Other Information This section details the Group's corporate governance, including code compliance, audit committee functions, changes in global offering proceeds, regulatory adherence, shareholder interests, contractual arrangements, share schemes, and share repurchases Compliance with Corporate Governance Code The Company adheres to high corporate governance standards, with the only deviation being the combined roles of Chairman and CEO, which the Board deems beneficial for management - The Company is committed to high standards of corporate governance and has applied all applicable principles and code provisions of the Corporate Governance Code[92] - Deviated from Code Provision C.2.1 of the Corporate Governance Code, where the roles of Chairman and Chief Executive Officer are combined in Mr. Zhang Yu, which the Board believes benefits Group management[92] Compliance with Model Code for Securities Transactions The Company adopted the Model Code for securities transactions, and all directors confirmed compliance for the six months ended June 30, 2024 - The Company has adopted the Model Code set out in Appendix C3 of the Listing Rules, and directors confirmed compliance[92] Audit Committee The Audit Committee, comprising two independent non-executive directors and one non-executive director, reviews financial information, risk management, internal controls, and external auditor appointments - The Audit Committee comprises two independent non-executive directors and one non-executive director, with Mr. Chan Ping Kwan as Chairman[94][96] - Its primary responsibilities include reviewing financial information, risk management and internal control systems, the effectiveness of the internal audit function, audit scope, and the appointment of external auditors[94][96] Review of Interim Results and Interim Report The Audit Committee, management, and independent auditor reviewed the unaudited condensed consolidated interim financial information for the six months ended June 30, 2024, in accordance with HK SRE 2410 - The Audit Committee, together with management and the independent auditor, reviewed the unaudited condensed consolidated interim financial information for the six months ended June 30, 2024[95][97] - The unaudited condensed consolidated interim financial information was reviewed by the independent auditor in accordance with Hong Kong Standard on Review Engagements 2410[95][97] Use of Proceeds from Global Offering and Changes in Use of Proceeds The Board twice resolved to change the use of global offering proceeds, reallocating HK$507.0 million (adjusted to HK$500.1 million) to working capital due to reduced R&D costs, completed smart hospital construction, and slower expansion - The net proceeds from the global offering were approximately HK$1,526.2 million[98] - The Board resolved twice, on March 30, 2023, and August 22, 2024, to change the use of the unutilized net proceeds[98][99] Overview of Changes in Use of Proceeds (as of June 30, 2024) | Use of Proceeds | Planned Application Amount (HK$ million) | Unutilized as of December 31, 2023 (HK$ million) | Actual Use as of June 30, 2024 (HK$ million) | Unutilized as of June 30, 2024 (HK$ million) | Revised Unutilized as of August 22, 2024 (HK$ million) | Expected Timeline for Full Utilization | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Expansion and upgrade of existing hair transplantation medical institutions in mainland China | 64.7 | 0 | 0 | 0 | 0 | N/A | | Innovation in products and service items | 222.3 | 149.4 | 18.2 | 131.2 | 88.6 | Before December 2025 | | Investment in R&D, and enhancing service system with cutting-edge technology | 136.1 | 105.0 | 11.5 | 93.5 | 38.2 | Before December 2025 | | Integration of industry resources in China to enhance brand awareness | 378.3 | 282.3 | 0 | 282.3 | 122.3 | Before December 2025 | | Settlement of outstanding balance of acquisition consideration for Hairmax | 0 | 0 | 0 | 0 | 0 | N/A | | Working capital and general corporate purposes | 24.2 | 0 | 0 | 0 | 251.0 | Before December 2025 | | Total | 825.6 | 536.7 | 29.7 | 507.0 | 500.1 | | - Reasons for changes in the use of proceeds include: reduced R&D costs due to collaboration with pharmaceutical companies, decreased data analysis team building costs and substantial completion of smart hospital construction, and slower institutional expansion and temporary suspension of acquisitions of local non-chain hair transplantation institutions due to economic conditions[100][101][102] Compliance with Relevant Laws and Regulations The Group confirms material compliance with relevant laws and regulations, actively rectifying historical non-compliance, ensuring all medical institutions hold licenses, advertisements are certified, properties are defect-free, and surgeries are performed by qualified doctors - The Group has complied in all material respects with relevant laws and regulations significantly affecting its business and operations, with no material non-compliance during the reporting period[105] - All operating medical institutions hold practice licenses[105] - Fire safety control procedures and drainage permit applications for Quanzhou and Lanzhou medical institutions are actively being processed[105] - All medical institutions have obtained medical advertising review certificates from local health authorities when publishing relevant advertisements[105] - All surgeries performed in medical institutions are conducted by or under the supervision of doctors holding medical aesthetic principal qualifications[106][108] Interests and Short Positions of Directors and Chief Executive in Shares, Underlying Shares and Debentures of the Company or its Associated Corporations As of June 30, 2024, directors and the chief executive held long positions in the Company's shares, with Mr. Zhang Yu holding 30.74% and 3.