YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED INTERIM REPORT
中期報告 2020
CONTENTS
Corporate Information | 2 |
Management Discussion and Analysis | 4 |
Other Information | 11 |
Interim Condensed Consolidated Statement of | 20 |
Profit or Loss | |
Interim Condensed Consolidated Statement of | 21 |
Comprehensive Income | |
Interim Condensed Consolidated Statement of | 22 |
Financial Position | |
Interim Condensed Consolidated Statement of | 24 |
Changes in Equity | |
Interim Condensed Consolidated Statement of | 26 |
Cash Flows | |
Notes to Interim Condensed Consolidated | 28 |
Financial Statements |
CORPORATE INFORMATION
EXECUTIVE DIRECTORS
Mr. Hartono James
(Chairman and Chief Executive Officer) Ms. Wang Ying
Ms. Wang Hong (Chief Financial Officer)
Mr. Chan Chung Man (Chief Operating Officer)
INDEPENDENT NON-EXECUTIVE DIRECTORS
Dr. Hu Yiming
Mr. Tirtamarta Karsono (Kwee Yoe Chiang)
Mr. Sutikno Liky
AUDIT COMMITTEE
Dr. Hu Yiming (Chairman)
Mr. Tirtamarta Karsono (Kwee Yoe Chiang)
Mr. Sutikno Liky
NOMINATION COMMITTEE
Mr. Sutikno Liky (Chairman)
Mr. Tirtamarta Karsono (Kwee Yoe Chiang)
Dr. Hu Yiming
REMUNERATION COMMITTEE
Mr. Tirtamarta Karsono (Kwee Yoe Chiang) (Chairman)
Dr. Hu Yiming
Mr. Sutikno Liky
COMPANY SECRETARY
Mr. Ng Chit Sing
AUTHORIZED REPRESENTATIVES
Ms. Wang Hong
Mr. Ng Chit Sing
INDEPENDENT AUDITORS
Ernst & Young
Certified Public Accountants
22/F, Citic Tower
1 Tim Mei Avenue
Central
Hong Kong
REGISTERED OFFICE
Cricket Square
Hutchins Drive
P.O. Box 2681
Grand Cayman KY1-1111
Cayman Islands
PRINCIPAL PLACE OF BUSINESS IN HONG KONG
Rooms 802-804, 8/F
Kin Wing Commercial Building 24-30 Kin Wing Street
Tuen Mun New Territories Hong Kong
PRINCIPAL PLACE OF BUSINESS IN SHANGHAI
Room 805, Block 2
No. 58 Shen Jian Dong Lu
Min Hang District
Shanghai
PRC
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LEGAL ADVISERS
As to PRC law
Jin Mao P.R.C. Lawyers
19/F, Sail Tower
266 Han Kou Road
Shanghai 200001
PRC
As to Cayman Islands law
Conyers Dill & Pearman (Cayman) Limited
Cricket Square
Hutchins Drive
P.O. Box 2681
Grand Cayman KY1-1111
Cayman Islands
PRINCIPAL BANKERS
Bank of Communications Shanghai
Tianyaoqiao Road Sub-branch
Bank of China Gaoxin Sub-branch
Guangxi Beibu Gulf Bank Gaoxin Sub-branch
CORPORATE INFORMATION
PRINCIPAL SHARE REGISTRAR AND TRANSFER OFFICE
Codan Trust Company (Cayman) Limited
Cricket Square
Hutchins Drive
P.O. Box 2681
Grand Cayman KY1-1111
Cayman Islands
HONG KONG BRANCH SHARE REGISTRAR AND TRANSFER OFFICE
Link Market Services (Hong Kong) Pty Limited Suite 1601, 16/F, Central Tower
28 Queen's Road Central Hong Kong
(appointed on 17 February 2020)
Tricor Investor Services Limited Level 54
Hopewell Centre
183 Queen's Road East Hong Kong
(ceased on 17 February 2020)
STOCK CODE
2393
COMPANY WEBSITE
http://www.yestarcorp.com
Interim Report 2020 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | 3 |
MANAGEMENT DISCUSSION AND ANALYSIS
ABOUT YESTAR HEALTHCARE
Yestar Healthcare Holdings Company Limited ("Yestar" or the "Company", together with its subsidiaries, the "Group") is one of the largest distributors and service providers of In Vitro Diagnostic ("IVD") products in the Peoples Republic of China (the "PRC"). The Group principally engages in the distribution of IVD products in cities of Beijing, Shanghai, Guangzhou and Shenzhen, and in provinces of Anhui, Fujian, Guangdong, Hainan, Hunan, Jiangsu, Hebei and the autonomous region Inner Mongolia. The Group also manufactures medical films (used in X-Ray, Magnetic Resonance Imaging (MRI) and Computer Tomography (CT-scan) etc.) for Fujifilm in the PRC and manufactures, markets and sells dental film and medical dry film products under the house brand "Yes!Star".
BUSINESS OVERVIEW
New Brands Introduction to Complete Our Product Offering in Mass Market
Under the introduction of the Hierarchical Medical System in the PRC, Yestar has been actively opening up channels of the lower-tier hospitals in the past few years, which has laid a solid foundation for us to introduce a greater variety of products and services. In the first half of 2020, Yestar has successfully introduced two IVD brands to our product line. The first one is a domestic brand and the other one is a Japanese brand. The Group will distribute their thrombus testing products, which are complementary to our existing Roche Diagnostic lines while provide a broader product options for our mass market customers.
MARKET OVERVIEW
The first half of 2020 was a difficult and challenging period for many businesses around the world. The outbreak of COVID-19 in the PRC in early 2020 had plunged many cities in still. 24 provinces and regions activated the "Level I Public Health Emergency Response" and travel restrictions, including Beijing, Shanghai, Guangdong, Hunan, Zhejiang, Hubei and Anhui. Hospital services in these regions had seen significant impacts on regular services such as outpatient clinics, special clinics as well as some emergency treatment were limited to spare resources for COVID-19 treatments. The disruption of clinical routines led to the decrease in many commonly performed in vitro diagnostic testing and screening, which in turn slowed down the consumption of IVD reagents and related consumables. Medical film products on the other hand had seen a stable demand as CT scan was the primary screening tool for COVID-19 suspected cases.
Continued to Provide Professional Products and Services During COVID-19
Yestar has always put customers' needs as our top priority and has demonstrated professional services during the COVID-19 outbreak. Machine accuracy is the key of reliable IVD testing. In order to ensure the smooth performance of IVD departments in the hospitals during the special period, the Company had continued to offer 24/7 hotline and on-site services to p r o v i d e i m m e d i a t e s u p p o r t a n d m a c h i n e maintenance. Full set of protective gears were provided to technicians and supporting staff for on-site machine checkup. In addition, Yestar also launched 84 Disinfectant and medical disposal masks under our house brand in February and March respectively to help combat the pandemic. Our medical masks were exported to various countries, namely the United States, Japan, Singapore and Indonesia. Our dedication in providing services during the special period and our swift execution capability to launch new products are showcases of our solid management and resources allocation system.
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MANAGEMENT DISCUSSION AND ANALYSIS
Improved Financial Position with Strategic Acquisition
Due to the adverse macro situation caused by COVID-19, the Group has placed a strong emphasis on cash generation to improve working capital flow. Specifically, the Group improved its inventory turnover to speed up cash conversion and also enhanced its collection efficiency, lowering trade receivable by 17.2% from approximately RMB1,560.6 million as at 31 December 2019 to approximately RMB1,292.5 million as at 30 June 2020 despite the challenging environment for its downstream clients. Riding on the Group's excellent and agile management skill, net cash generated from operating activities recorded a significant increase for the six months ended 30 June 2020, which laid a solid foundation for future opportunities.
Apart from operational improvement, the Group also implemented inorganic measure to strengthen its overall financial position. Yestar entered into a share transfer agreement on 27 March 2020 to acquire 20% of Guangzhou Hongen Medical Diagnostic Technologies Company Limited ("Hongen") through the disposal of tissue diagnostic business of Hongen at a consideration of RMB77 million. The substantial shareholder of Hongen has a close relationship with the Group and remained 10% equity interest for future collaboration. The acquisition of Hongen has reduced the Group's liabilities and increased its equities, allowing the Company to maintain a healthy financial position.
RESULTS OVERVIEW
During the six months ended 30 June 2020, regular services in hospital and medical clinics had been put on hold to direct resources to combat COVID-19. As a result, the overall demand for IVD reagents and consumables was decreased and subsequently led to the decrease in revenue by 29.9% year-on-year ("yoy") to RMB1,602.3 million (six months ended 30 June 2019: RMB2,287.1 million). Gross profit also dropped by 55.1% yoy to RMB287.7 million (six months ended 30 June 2019: RMB640.5 million), with gross profit margin stood at 18.0% (six months ended 30 June 2019: 28.0%), representing a decline of 10.0p.p.
Selling and distribution expenses decreased slightly by 1.8% yoy to RMB118.5 million (six months ended 30 June 2019: RMB120.6 million). Administrative expenses and finance cost remained stable at RMB167.7 million and RMB64.5 million respectively (six months ended 30 June 2019: RMB172.0 million and RMB64.0 million). An impairment of financial assets of RMB7.5 million and impairment loss on goodwill and other intangible assets in various subsidiaries of the Company for an aggregate amount of RMB724.6 million were recorded for the six months ended 30 June 2020. Thus, the Group recorded for the first time since its listing in 2013 a loss attributable to owners of the parent of RMB640.3 million (six months ended 30 June 2019: RMB142.0 million). Net loss margin was at 39.96% (six months ended 30 June 2019: net profit margin was at 6.2%). Basic loss per share was amounted to RMB27.05 cents (six months ended 30 June 2019: basic earning per share at RMB5.91 cents). The board of directors (the "Board") has resolved not to declare any interim dividend for the Period (six months ended 30 June 2019: Nil).
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MANAGEMENT DISCUSSION AND ANALYSIS
Medical Business - 92.2% of Overall Revenue
During the six months ended 30 June 2020, the Group recorded stable orders for medical imaging products for testing purpose. However, as the demand for IVD consumables decreased, the Group recorded a segment revenue of RMB1,477.2 million (six months ended 30 June 2019: RMB2,052.3 million), representing a drop of 28.0% yoy. Segment gross profit margin also dropped 11.2p.p. to approximately 18.1% (six months ended 30 June 2019: 29.3%).
During the six months ended 30 June 2020, the Group has introduced two new brands into its distribution platform. As the hospitals have been gradually resuming operations since the second quarter 2020, the Group will increase marketing resources on these new products in the second half of 2020.
Non-medical Business - 7.8% of Overall Revenue
Apart from the medical business segment, non-medical business of the Group mainly consists of manufacturing, marketing, distribution and sale of Fujifilm color photographic paper (professional and minilab) as well as industrial imaging products (NDT x-ray films and PWB films) in the PRC. The Group also manufactures, markets and sells NDT x-ray film under the house brand "Yes!Star". This segment faces a stable demand in the market and hence has generated stable cash flow for the Group in the previous years.
Suffered from the lockdown of cities, the demand of photographic paper dropped significantly. During the six months ended 30 June 2020, revenue of non-medical businesses was RMB125.1 million (six months ended 30 June 2019: RMB234.8 million), decreased by approximately 46.7% yoy. Yet, as the sole distributor of Fujifilm colour photographic paper in the PRC, the Group will continue to maintain its business and enhance its close collation with Fujifilm, in order to tap into future opportunities.
OUTLOOK
The PRC's IVD market is likely to reach approximately US$ 17.6 Billion by 2026, according to the 'China In-Vitro Diagnostics (IVD) Market, Size, Share, Trends, Regulations, Reimbursement & Key Players Analysis - Forecast to 2026' report published in March 2020 by iGATE Research. The growth is driven by the its gradually aging population which leads to a spike in chronic diseases including diabetes, heart disease, cancers and etc. As Chinese consumers are now willing to pay more on healthcare due to rising disposable income per capita, more IVD products will be needed for disease prevention.
Meanwhile, Yestar, as one of the largest distributors in the PRC with a comprehensive distribution platform, will adopt the following strategies to continue driving its growth by serving its customers and medical consumables players.
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MANAGEMENT DISCUSSION AND ANALYSIS
Network Expansion and New Product Introduction for Organic Growth
The Group will continue to diversity and expand its network among all tiers of hospitals and medical institutions. As more resources has been redirecting to the lower tier hospitals under the hierarchical medical system, the Group has been actively diversifying its distribution network from top-tier hospitals to lower tier hospitals. As Yestar's distribution platform grows deeper and further, the Group will continue to utilize its network by introducing various high-end products to cater the specific needs of different tiers hospitals. This can secure the Group's order volume of medical consumable products in the long run. In the upcoming year, the Group will focus on promoting the newly-introduced thrombus testing products in order to expand its revenue stream.
Enhance Its Value-added Services
Apart from upgrading its logistics hub into training centres, the Group will continue to extend its value-added services scope in order to increase customers' stickiness. For instance, the Group will collaborate with Roche to provide visualization of test processes and offer real-time mobile information to hospital staff for service income, which should greatly improve efficiency and user experience through digital transformation. Further, Yestar will continue to strengthen its presales and post-sales services, encompassing upstream needs such as hospital automation labs design which will improve efficiency, to downstream services such as 24/7 hotline and machine maintenance.
Strengthen Collaboration With Upstream Strategic Partners
Riding on its excellent value-added services, the Group has developed a close relationship with hospitals which helps to obtain user feedback, patient demographics, diseases trend and etc. The Group will then assist its strategic partners to analyze these market data for their further research and development. With better and customized products, upstream partners will be able to offer better products with higher margin, and in turn, having more resources to support the distribution of its products.
Despite the slowdown caused by the pandemic in the first half of 2020, the Group remains confident in its long term business outlook, and will strive for market growth by implementing the aforesaid strategies. Together with its enhanced and healthy financial position, Yestar will carry on creating values along the industry chain while bringing fruitful results to its shareholders.
FINANCIAL REVIEW
Liquidity and financial resources
The Group practised product financial management for the six months ended 30 June 2020. The Group finances its daily operation through a combination of internally-generated funds from operation and borrowings. Riding on the improvement on its inventory turnover and strategic collection policy, the Group maintained a strong and sound financial position during the Period. As at 30 June 2020, the Group had a cash and cash equivalents of approximately RMB708.6 million (31 December 2019: approximately RMB546.2 million). The increase in cash and cash equivalents were mainly attributable to the net cash generated from operating activities during the Period.
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MANAGEMENT DISCUSSION AND ANALYSIS
The total interest-bearing bank loans and other borrowings of the Group as at 30 June 2020 was approximately RMB1,707.1 million (31 December 2019: approximately RMB1,680.5 million). Except for the Senior Notes which are denominated in USD, all borrowings of the Group are principally dominated in Chinese Yuan ("RMB"), which is the presentation currency of the Group.
The Group has secured bank loans of approximately RMB174.7 million (31 December 2019: 266.4 million) and an unsecured bank loan of approximately RMB118.2 million (31 December 2019: 30.5 million).
Selling and Distribution Expenses
The Group's selling and distribution expenses decreased slightly by about 1.8% from approximately RMB120.6 million for the six months ended 30 June 2019 to approximately RMB118.5 million for the Period, and accounted for approximately 5.3% and 7.4%, respectively, the Group's revenue for the respective reporting periods. The decrease in selling and distribution expenses were mainly attribution to the holding on most of marketing and traveling activities during the Period as the outbreak of COVID-19.
Current Ratio
As at 30 June 2020, the Group's current ratio was a p p r o x i m a t e l y 1 . 2 6 ( 3 1 D e c e m b e r 2 0 1 9 : approximately 1.15), based on total current assets of approximately RMB3,099.8 million and total current liabilities of approximately RMB2,457.2 million.
Gearing Ratio
As at 30 June 2020, the Group's gearing ratio was a p p r o x i m a t e l y 6 3 % ( 3 1 D e c e m b e r 2 0 1 9 : approximately 49%), calculated as the total debt which includes the interest-bearing bank loans and other borrowings for an aggregate amount of approximately RMB998.5 million divided by total equity plus total debt for an aggregate amount of approximately RMB1,589.9 million as at the end of June 2020.
Administrative Expenses
The Group's administrative expenses decreased slightly by about 2.5% from approximately RMB172.0 million for the six months ended 30 June 2019 to approximately RMB167.7 million for the Period, and accounted for approximately 7.5% and approximately 10.5%, respectively, of the Group's revenue for the respective reporting periods. Such decrease was due to the reduction of revenue for the Period.
Finance Costs
The Group's finance costs consisted mainly of interest expenses on Senior Notes, bank loan and other borrowings. The aggregate amount of interest incurred was approximately RMB64.5 million (six months ended 30 June 2019: approximately RMB64.0 million) for the Period.
For the Period, interest rates of the interest-bearing loans and Senior Notes ranged from 2.35% to 7.43%, while those for the six months ended 30 June 2019 ranged from 2.10% to 7.43%.
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MANAGEMENT DISCUSSION AND ANALYSIS
Foreign Exchange Exposure
Most of the revenue-generating operations of the Group were transacted in Chinese Yuan which is the presentation currency of the Group. For the Period, the Group was exposed to foreign currency risk arising from the purchasing and Senior Notes in US Dollars.
During the Period, the Group did not enter into any agreement to hedge our currency exposure and will continue to closely monitor its foreign exchange exposure to minimize the exchange risk.
Significant investments held
Except for investment in subsidiaries, the Group did not hold any significant investment in equity interest in any other company during the Period.
Securities Investments
The Group did not have any securities investment in any investee company with a value of 5% or more of the total assets of the Group as at 30 June 2020, which is required to be disclosed under the Listing Rules.
Capital structure
During the Period, there has been no change in capital structure of the Company. The capital of the Company comprises ordinary shares and capital reserves. The Group finances its working capital requirements through a combination of funds generated from operations and bank borrowings.
Employees and Remuneration Policies
As at 30 June 2020, the Group had a total of 1,066 employees (six months ended 30 June 2019: 1,066 employees), including Directors. Total staff costs (including Directors' emoluments) were approximately RMB94.5 million for the Period (six months ended 30 June 2019: approximately RMB98.0 million). Remuneration is determined with reference to market norms and individual employees' performance, qualification and experience.
On top of basic salaries, bonuses may be paid by reference to the Group's performance as well as individual's performance. Other staff benefits include provision of welfare schemes covering pension insurance, unemployment insurance, maternity insurance, injury insurance, medical insurance, and central pension scheme.
Future plans for material investments and capital assets
The Group did not have any other plans for material investments and capital assets as at 30 June 2020.
Material acquisitions and disposals of subsidiaries and affiliated companies
The Group did not have any material acquisitions and disposals of subsidiaries and affiliated companies during the Period.
Interim Report 2020 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | 9 |
MANAGEMENT DISCUSSION AND ANALYSIS
Charges of assets
The shares of Yestar Asia Company Limited and Yestar International (HK) Company Limited, two wholly-owned subsidiaries of the Company, were pledged to the holders of the Senior Notes.
In addition, certain of the Group's bank loans are secured by the pledge of certain of the Group's deposits amounting to RMB40.8 million (31 December 2019: RMB88.8 million).
Contingent liabilities
The Group did not have any material contingent liabilities as at 30 June 2020 (31 December 2019: Nil).
with the share transfer agreement and the agreement of dispute resolution. Upon completion of the performance of the arbitral award, the parties shall no longer have outstanding disputes over the original arbitration matters.
The original arbitration has been resolved and as at the date of this announcement, Yestar Medical's bank deposits amounting to RMB30,077,000 were still frozen by Shanghai Jinshan District People's Court.
Save as disclosed above and up to the date of this announcement, there was no other significant event relevant to the business and financial performance of the Group that has come to the attention of the Directors after the Period.
Significant Event after the Reporting Period
Subsequent to the reporting period and on 7 August 2020, one of the wholly-owned subsidiaries of the Company ("Yestar Medical") and Anbaida Group Companies entered into the share transfer agreement, to purchase the remaining 30% equity interests in each of Anbaida Group Companies in 3 phases by 31 August 2021 at a consideration of RMB675 million. On 7 August 2020, Mr. Li Bin and Mr. Li Changgui ("Mr. Li") and Yestar Medical has entered into an agreement of dispute resolution to resolve the arbitration that Mr. Li filed on 31 October 2019. The agreement of dispute resolution states that (i) Yestar Medical shall pay the remaining 30% equity interests in each of Anbaida Group Companies at the consideration of RMB675 million; (ii) the payment schedule should be followed according to the agreement of dispute resolution in 3 phases; (iii) certain amount of legal fees incurred by Mr. Li and legal fees incurred in connection with the arbitration proceedings will be borne by Yestar Medical; and (iv) there is no further dispute between Yestar Medical and Mr. Li regarding to above mentioned issue. On 14 August 2020, Shanghai International Economics and Trade Arbitration Commission (Shanghai International Arbitration Center) has issued an arbitral award that is consistent
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Impairment of Goodwill and Other Intangible Assets
As at 30 June 2020, the Group performed an impairment test on goodwill and other intangible assets (which included distribution rights and customer relationship) by performing discounted free cash flow forecasts for each of the acquired subsidiaries in previous years. The impairment test is based on the recoverable amount of each cash- generating unit to which the goodwill is allocated and each intangible asset. The recoverable amount has been determined based on a value-in-use calculation using cash flow projections based on financial budgets covering a five-year period.
The assumptions were used to in the value-in-use calculation for each of cash-generating units are 1) budgeted gross margins; 2) discount rates; 3) operating expense rates and 4) long-term growth rate.
Taking into consideration the projection on future results of cash-generating performance and financial results for each of cash-generating unit resulted from the negative impact of COVID-19, the Group recorded an impairment loss on goodwill and other intangible assets for an aggregate amount of approximately RMB447.5 million and RMB277.2 million, respectively, which was due to its lower recoverable amounts in relation to the estimated future business performance and hence the value of the discounted cash flow for each of cash-generating units.
OTHER INFORMATION
Use of Proceeds from Allotment of 230,000,000 Subscription Shares
On 19 December 2018, the Company completed the allotment and issuance of 230,000,000 new shares (the "Subscription Shares") to Fujifilm Corporation at HK$1.79 per share. The Subscription Shares represented approximately 9.56% of the issued shares after the completion of allotment and issuance of the Subscription Shares of the Company. The aggregated gross and net proceeds received from the subscription of 230,000,000 new shares amounted to approximately HK$411.7 million and approximately HK$409.7 million respectively.
The scheduled use of proceeds as disclosed in the announcement of the Company dated 30 November 2018 was based on the best estimation of future market conditions and business strategy of the Group at the time of preparing the announcement, while the net proceeds were applied with consideration of the actual development of business and market. As at the date of this announcement, the Company intends to use the net proceeds as planned as disclosed in the related announcement. The Directors are not aware of any possible material change to the planned use of proceeds from the allotment of the Subscription Shares as at the date of this announcement.
The majority of the unused net proceeds have been placed as interest bearing short-term demand deposits with licensed bank in Hong Kong and the PRC.
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OTHER INFORMATION
As at 30 June 2020, the net proceeds from the allotment of the Subscription Shares have been applied and utilized as follows:
Use of Proceeds from the Subscription
Shares
Total | Actual | Total | |||
remaining | amount | remaining | Amount | ||
net proceeds | utilized | net proceeds | to be utilized | ||
available | for the | available | for the | ||
Amount of | as at | year ended | as at | year ending | |
net proceeds | 1 January | 30 June | 30 June | 31 December | |
Intended use of net proceeds | allocated | 2020 | 2020 | 2020 | 2020 |
HK$ million | HK$ million | HK$ million | HK$ million | HK$ million | |
Possible acquisition to expand market share | 163.88 | 163.88 | - | 163.88 | 163.88 |
Repayment of interest bearing borrowings | |||||
to reduce finance cost | 163.88 | - | - | - | - |
General working capital | 81.94 | 40.97 | 20.97 | 20.00 | 20.00 |
Total | 409.70 | 204.85 | 20.97 | 183.88 | 183.88 |
Subsequent to the reporting period and on 7 August 2020, the Group has utilized all remaining balance of net proceeds of RMB163.88 from the Subscription to acquire 30% equity interests in Shanghai Anbaida Group Companies at consideration of RMB675 million.
Profit Guarantee in relation to acquisition of 70% Equity Interest in Shenzhen De Run Li Jia Company Ltd ("Derunlijia")
Reference is made to (i) the announcement of the Company dated 27 October 2016 in relation to, among others, the acquisition of 70% equity interest in Derunlijia; (ii) the annual report of the Company for the year ended 31 December 2019; and (iii) the announcements of the Company dated 27 March 2020 and 24 April 2020 (the "Announcements") respectively, in relation to, among others, the non- fulfilment of the annual guarantee profit of Derunlijia for the year ended 31 December 2019. Unless
otherwise stated herein, capitalized terms used herein shall have the same meanings as those defined in the Announcements.
As disclosed in the Announcements, as the actual net profit after taxation of Derunlijia for the year ended 31 December 2019 was less than the annual guarantee profit, the vendors of Derunlijia are obliged to compensate and settle the Compensation Amount of approximately RMB9.76 million to the purchaser within 30 days from the issuance of debit note on 27 March 2020 pursuant to the share transfer agreement.
However, the Group has not received any Compensation Amount from the Vendors up to the date of this announcement despite repeated requests through internal communication and meeting with the Vendors of Derunlijia.
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Nevertheless, the Group has considered and intend to settle the Compensation Amount through the deduction of accumulated dividend payable or to be paid to the Vendors of Derunlijia. Taking into account the business and financial impact of Derunlijia caused by the outbreak of COVID-19, the Group decided to postpone the settlement of Compensation Amount so as to maintain strong cash flow and liquidity of Derunlijia to face the unforeseeable challenges ahead. The Group will arrange for the settlement of Compensation Amount in full through the retained earnings in Derunlijia once the business operation in Derunlijia resumes to normal with healthy cash flow maintained.
The Company will keep the shareholders and potential investors of the Company informed of any further significant development as and when appropriate.
INTERIM DIVIDEND
The Board has resolved not to declare any interim dividend for the Period (six months ended 30 June 2019: Nil).
SHARE OPTION SCHEME
Pursuant to the written resolutions passed by all the shareholders of the Company on 18 September 2013, the Company has conditionally adopted the Share Option Scheme.
Purpose of the Scheme Option Scheme
The purpose of the Share Option Scheme is to provide the Company with a flexible means of giving incentive to, rewarding, remunerating, compensating and/or providing benefits to the Participants and for such other purposes as our Board may approve from time to time.
OTHER INFORMATION
Participants under the Share Option Scheme
Participants under the Share Option Scheme include the following:
- any director, chief executive or employee (whether full-time or part-time) of each member of our Group;
- any discretionary objects of a discretionary trust established by any director, chief executive or employee (whether full time or part time) of each member of our Group;
- a company beneficially owned by any director, chief executive or employee (whether full time or part time) of each member of our Group;
- any consultant, professional and other adviser to each member of our Group (including their employees, partners, directors or executives or any persons, firms or companies proposed to be appointed for providing such services); and
- any director, chief executive or employee (whether full-time or part-time) of Capital Group Pte. Ltd. and its subsidiaries from time to time.
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OTHER INFORMATION
Principal terms of the Share Option Scheme
The Share Option Scheme was adopted for a period of 10 years commencing from 18 September 2013 and will remain in force until 17 September 2023. The Company may by resolution in general meeting or the Board may at any time terminate the operation of the Share Option Scheme and in such event no further Options will be offered but in all other respects the provisions of the Share Option Scheme shall remain in full force and effect to the extent necessary to give effect to the exercise of any Options granted prior thereto or otherwise as may be required in accordance with the provisions of the Share Option Scheme, and Options which are granted prior to such termination shall continue to be valid and exercisable in accordance with the provisions of the Share Option Scheme and their terms of issue.
The share options are exercisable at any time during period of not more than 10 years from the date of grant, subject to the terms and conditions of the Share Option Scheme, or any conditions stipulated by the Board of Directors.
The subscription price in respect of each Share issued pursuant to the exercise of options granted shall be a price solely determined by the Board and notified to a Participant and shall be at least the highest of:
- the closing price of the Shares as stated in the Stock Exchange's daily quotations sheet on the offer date, which must be a Business Day;
- a price being the average of the closing prices of the Shares as stated in the Stock Exchange's daily quotations sheets for the five business days immediately preceding the offer date; and
- the nominal value of a Share.
An offer must be made on a business day and shall remain open for acceptance by the participant to whom an offer is made for a period from the date of the offer to such date as our Board may determine and specify in the offer Letter (both days inclusive), provided that no such offer shall be open for acceptance after the 10th anniversary from the adoption date or after the Share Option Scheme has been terminated in accordance with the provisions hereof, whichever is earlier.
Upon acceptance of the options, the grantee shall pay HK$1.00 to the Company as consideration for the grant. The acceptance of an offer of the grant of the option must be made within the date as specified in the offer letter issued by the Company. The exercise period of any option granted under the Share Option Scheme shall not be longer than ten years commencing on the date of grant and expiring on the last day of such ten-year period subject to the provisions for early termination as contained in the Share Option Scheme.
An offer shall be deemed to have been accepted by the Grantee and to have taken effect when the duplicate of the Offer Letter comprising acceptance of the offer duly signed by the grantee together with a remittance in favor of our Company of HK$1.00 by way of consideration for the granting thereof is received by our Company within the acceptance period as specified in the offer letter, and the option to which the offer relates shall be deemed to have been granted on the offer date.
The total number of Shares which may be issued upon exercise of all options to be granted under the Share Option Scheme and any other share option scheme of the Company shall not in aggregate exceed 10% of the total number of Shares in issue immediately following completion of the Global Offering but without taking into account any Shares to be issued upon exercise of the over-allotment option, unless the Company obtains an approval from our shareholders in general meeting for refreshing the 10% limit.
14 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | Interim Report 2020 |
As at the date of this report, the number of issued Shares of the Company is 2,362,355,000 Shares and total number of shares issued or to be issued under the Share Option Scheme of the Company is 186,750,000, representing about 7.9% of the existing issued Shares if all the options under the Share Option Scheme have been granted to and duly exercised by eligible persons.
The total number of Shares issued and to be issued upon exercise of the options granted to each Participant (including both exercised and outstanding Options) in any 12-month period shall not exceed 1% of the total number of Shares in issue. Any further grant of options in excess of this 1% limit must be separately approved by the shareholders of the Company in general meeting with such Participant and his associates abstaining from voting.
Where options are proposed to be granted to a substantial Shareholder or an independent non- executive Director or any of their respective associates, and the proposed grant of options will result in the total number of Shares issued and to be issued upon exercise of all options already granted and to be granted (including options exercised, cancelled and outstanding) to such person in the twelve-month period up to and including the date of such grant representing in aggregate over 0.1% of the issued share capital of our Company and having an aggregate value, based on the closing price of the Shares at the date of each grant, in excess of HK$5 million, such grant of options must be subject to the approval of the Shareholders at general meeting. The grantee involved in such proposed grant of options, his associates and all core connected persons of our Company must abstain from voting in such general meeting (except that any such persons may vote against the proposed grant provided that his intention to do so has been stated in the relevant circular to the Shareholders).
OTHER INFORMATION
As at 30 June 2020, no option has been granted by the Company to subscribe for shares of the Company.
DIRECTORS' RIGHTS TO ACQUIRE SHARES OR DEBENTURES
Apart from the aforesaid Share Option Scheme, at no time during the Period was the Company or any associated corporation a party to any arrangement to enable the Directors to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate, and none of the Directors, or their spouses or children under the age 18, had any right to subscribe for the shares in, or debentures of, the Company, or had exercise any such rights.
EQUITY-LINKED AGREEMENTS
Other than the Share Option Scheme, no equity- linked agreements that will or may result in the Company issuing shares or that require the Company to enter into any agreements that will or may result in the Company issuing shares were entered into by the Company during the Period or subsisted at the end of the Period.
DIRECTORS' INTERESTS IN TRANSACTIONS, ARRANGEMENTS AND CONTRACTS
No transactions, arrangements or contracts that is significant in relation to the Group's business to which the Company or any of its subsidiaries was a party and in which a Director or an entity connected with a Director had, directly or indirectly, a material interest subsisted at the end of the Period or at any time during the Period.
RELATED-PARTY TRANSACTIONS
Details of the significant related-party transactions undertaken in the normal course of business are set out in note 17 to the financial statements.
Interim Report 2020 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | 15 |
OTHER INFORMATION
COMPETITION AND CONFLICT OF INTERESTS
Save as disclosed above and except for the interests in the Group, none of the Directors, the controlling shareholders or substantial shareholders of the Company or any of their respective associates has engaged in any business that competes or may compete with the business of the Group or has any other conflict of interests with the Group during the Period.
DIRECTORS' AND CHIEF EXECUTIVES' INTERESTS OR SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES
Up to the date of this report, the interests and short positions of the Directors and chief executives of the Company in the shares, underlying shares and
debentures of the Company or any of its associated corporations (within the meanings of Part XV of the Securities and Futures Ordinance (Chapter 571 of the laws of Hong Kong) (the "SFO")) which were notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which any such director or chief executive is taken or deemed to have under such provision of the SFO) or which were required pursuant to Section 352 of the SFO, to be entered in the register of members of the Company, or which were required, pursuant to standard of dealings by Directors as referred to the Listing Rules, to be notified to the Company and the Stock Exchange were as follows:
Long positions in ordinary shares of the Company
Approximate | |||||||
Interests in ordinary shares | Total interests | Total interests | percentage of | ||||
Personal | Family | Corporate | in ordinary | in underlying | Aggregate | shareholding in | |
Name of director | interests | interests | interests | shares | shares | interests | the Company |
Hartono James 598,662,500- 20,000,000 (Note 1)
Notes:
- 20,000,000 shares were beneficially owned by Amrosia Investments Limited, a company wholly-owned by Mr. Hartono James.
- Out of 618,662,500 shares, 217,520,000 shares are beneficially owned by Mr. Hartono James and had been pledged to a financial institution as pledgee to secure a loan granted to Mr. Hartono James.
618,662,500 | - | 618,662,500 | 26.25% |
(Note 2) |
Save as disclosed above, as at 30 June 2020 and up to the date of this report, none of the Directors and chief executive of the Company had any other interests or short positions in any shares, underlying shares or debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO) which were notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO), or which were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein, or which were required, pursuant to the Listing Rules relating to the required standard of dealings by the directors to be notified to the Company and the Stock Exchange.
16 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | Interim Report 2020 |
SUBSTANTIAL SHAREHOLDERS' INTERESTS AND/OR SHORT POSITION IN SHARES AND UNDERLYING SHARES OF THE COMPANY
So far as is known to the Directors, up to the date of this report, the following persons (not being a Director or chief executive of the Company) who had interests or short positions in the shares or underlying shares of the Company which would fall
OTHER INFORMATION
to be disclosed to the Company under provision of Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the register required to be kept by the Company under Section 336 of the SFO, or who is directly or indirectly interested in 5% or more of any class of issued voting shares carrying rights to vote in all circumstances at general meetings of any member of the Group:
Long positions in the shares of the Company
Approximate | |||
percentage of | |||
Number of | shareholding in | ||
Name of shareholders | Capacity | shares held | the Company |
Hartono Jeane | Beneficial owner |
Hartono Rico | Beneficial owner |
FUJIFILM Corporation* | Beneficial owner |
Li Bin | Beneficial owner |
- FUJIFILM Corporation is a wholly-owned subsidiary of FUJIFILM Holdings Corporation, which is therefore deemed to be interested in the 230,000,000 Shares held by FUJIFILM Corporation under the SFO.
Save as disclosed under the sections headed "Directors' and chief executives' interests or short positions in shares, underlying shares and debentures" and "Substantial shareholders' interests and/or short position in shares and underlying shares of the Company" which is discloseable under Divisions 2 and 3 of Part XV of the SFO above, as at 30 June 2020, no other person was individually and/ or collectively entitled to exercise or control the exercise of 5% or more of the voting power at general meeting of the Company and was able, as a practical matter, to direct or influence the management of the Company.
391,870,00016.63%
265,810,00011.28%
230,000,0009.76%
164,600,6006.98%
PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES
The Company was authorized by its shareholders at the annual general meeting held on 10 May 2019 (the "2019 AGM") and held on 22 May 2020 (the "2020 AGM") to repurchase its shares not exceeding 10% of the issued shares of the Company at the date of the 2019 AGM and 2020 AGM respectively until the conclusion of next annual general meeting or the revocation of the resolution for repurchase of shares, whichever is earlier.
Interim Report 2020 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | 17 |
OTHER INFORMATION
During the Period, the Company repurchased its shares on the Stock Exchange in order to reflect the confidence of the Board and the management team in the long-term strategy and growth of the Company as well as to enhance value of the shareholders.
Details of the share repurchased of the Company on the Stock Exchange during the Period are set out as follows:
No. of | Aggregate | |||
repurchased | Consideration per share | consideration | ||
Month/Year of repurchase | shares | Highest | Lowest | paid |
HK$ | HK$ | HK$'000 | ||
January 2020 | 1,850,000 | 1.50 | 1.46 | 2,757 |
March 2020 | 607,500 | 1.25 | 1.19 | 742 |
April 2020 | 2,477,500 | 1.30 | 1.20 | 3,135 |
May 2020 | 4,582,500 | 1.28 | 1.15 | 5,563 |
June 2020 | 4,962,500 | 1.26 | 1.10 | 5,846 |
July 2020 | 1,070,000 | 1.26 | 1.14 | 1,256 |
15,550,000 | 19,299 | |||
All the repurchased shares were cancelled as at the date of this announcement and the issued share capital of the Company was reduced by the nominal value thereof.
Save as disclosed above, neither the Company nor its subsidiaries purchased, sold or redeemed any of the Company's listed securities during the Period.
CODE OF CONDUCT FOR SECURITIES TRANSACTIONS BY DIRECTORS
The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers contained in Appendix 10 to the Listing Rules (the "Model Code") as its own code of conduct for dealing in securities of the Company by the Directors, which is also applicable to its employees who are likely to possess unpublished inside information (the "Relevant Employees").
Specific enquiries have been made with all Directors and Relevant Employees and, all of them have confirmed in writing that they have complied with the required standard set out in the Model Code regarding their securities transactions for the Period.
CORPORATE GOVERNANCE PRACTICES
The Board believes that good corporate governance is one of the areas leading to the success of the Company and balancing the interests of shareholders, customers and employees, and the Board is devoted to ongoing enhancement of the efficiency and effectiveness of such principles and practices.
18 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | Interim Report 2020 |
During the Period, the Board consider that the Company has complied with all the corporate governance codes (the "CG Code") as set out in Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited ("Listing Rules"), save for the following:
Under Code Provision A.2.1 of the CG Code, the roles of the chairman and chief executive officer should be separate and should not be performed by the same individual. The positions of Chairman of the Board and Chief Executive Officer ("CEO") of the Company are both currently carried on by Mr. Hartono James. The Board considers that the structure currently operated by the Company does not undermine the balance of power and authority between the Board and the management. The Board members have considerable experience and qualities which they bring to the Company and the Board believes that it is able to ensure that the balance of power between the Board and the management is not impaired. The Board believes that having the same person performing the roles of both Chairman and CEO does provide the Group with strong and consistent leadership and that, operating in this manner allows for more effective and efficient overall strategic planning of the Group.
UPDATE ON DIRECTOR'S INFORMATION
Pursuant to Rule 13.51B(1) of the Listing Rules, there is no change of Director's information of the Company during the Period and up to the date of this report which is required to be disclosed pursuant to Rule 13.51B(1) of the Listing Rules.
AUDIT COMMITTEE
The audit committee of the Company was established in compliance with Rules 3.21 and 3.22 of the Listing Rules and with written terms of reference in compliance with the relevant CG Code, its revised which are available on the websites of the Company and the Stock Exchange.
OTHER INFORMATION
The responsibility of the audit committee is to assist the Board in fulfilling its audit duties through the review and supervision of the Company's financial reporting system, risk management and internal control systems, and to provide advice and comments to the Board. The members meet regularly with the external auditor and/or the Company's senior management for the review, supervision and discussion of the Company's financial reporting, risk management and internal control systems and ensure that the management has discharged its duty to have an effective risk management and internal control systems.
The audit committee comprises three independent non-executive Directors, namely Dr. Hu Yiming (Chairman of the audit committee), Mr. Karsono Tirtamarta (Kwee Yoe Chiang) and Mr. Sutikno Liky.
The interim results of the Group for the Period are unaudited but have been reviewed by the audit committee of the Company, which is of the opinion that the preparation of the interim financial information of the Group complied with the applicable accounting principles and standard, practices adopted by the Group, the Stock Exchange and legal requirements, and that adequate disclosures have been made.
Interim Report 2020 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | 19 |
INTERIM CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS
For the six months ended 30 June 2020
For the six months ended 30 June
2020 | 2019 | ||
(Unaudited) | (Unaudited) | ||
Notes | RMB'000 | RMB'000 | |
REVENUE | 4 | 1,602,278 | 2,287,118 |
Cost of sales | (1,314,593) | (1,646,577) | |
Gross profit | 287,685 | 640,541 | |
Other income and gains | 4 | 37,668 | 17,565 |
Selling and distribution expenses | (118,472) | (120,607) | |
Administrative expenses | (167,698) | (171,982) | |
Impairment losses on financial assets | (7,511) | (215) | |
Other expenses | (734,633) | (7,694) | |
Finance costs | 5 | (64,485) | (64,016) |
Share of profit and loss of an associate | - | (2,779) | |
(LOSS)/PROFIT BEFORE TAX | 6 | (767,446) | 290,813 |
Income tax credit/(expense) | 7 | 64,599 | (90,252) |
(LOSS)/PROFIT FOR THE PERIOD | (702,847) | 200,561 | |
Attributable to: | |||
Owners of the parent | (640,253) | 141,992 | |
Non-controlling interests | (62,594) | 58,569 | |
(702,847) | 200,561 | ||
(LOSS)/EARNINGS PER SHARE ATTRIBUTABLE TO | |||
ORDINARY EQUITY HOLDERS OF THE PARENT | |||
Basic and diluted | |||
- For (loss)/profit for the period | 9 | RMB(27.05) cents | RMB5.91 cents |
20 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | Interim Report 2020 |
INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 2020
For the six months ended 30 June
2020 | 2019 | |
(Unaudited) | (Unaudited) | |
RMB'000 | RMB'000 | |
(LOSS)/PROFIT FOR THE PERIOD | (702,847) | 200,561 |
OTHER COMPREHENSIVE INCOME | ||
Other comprehensive income that may be reclassified to | ||
profit or loss in subsequent periods: | ||
Exchange differences: | ||
Exchange differences on translation of foreign operations | (24,807) | (3,477) |
Net other comprehensive loss that may be reclassified to | ||
profit or loss in subsequent periods | (24,807) | (3,477) |
OTHER COMPREHENSIVE LOSS FOR THE PERIOD, NET OF TAX | (24,807) | (3,477) |
TOTAL COMPREHENSIVE (LOSS)/INCOME FOR THE PERIOD | (727,654) | 197,084 |
Attributable to: | ||
Owners of the parent | (665,060) | 138,515 |
Non-controlling interests | (62,594) | 58,569 |
(727,654) | 197,084 | |
Interim Report 2020 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | 21 |
INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 June 2020
30 June | 31 December | ||
2020 | 2019 | ||
(Unaudited) | (Audited) | ||
Notes | RMB'000 | RMB'000 | |
NON-CURRENT ASSETS | |||
Property, plant and equipment | 10 | 142,564 | 144,670 |
Right-of-use assets | 243,746 | 273,529 | |
Goodwill | 420,067 | 905,338 | |
Other intangible assets | 1,074,559 | 1,463,778 | |
Deferred tax assets | 18,391 | 13,415 | |
Total non-current assets | 1,899,327 | 2,800,730 | |
CURRENT ASSETS | |||
Inventories | 11 | 807,064 | 781,423 |
Trade and bills receivables | 12 | 1,292,449 | 1,560,585 |
Prepayments, other receivables and other assets | 220,776 | 181,924 | |
Financial assets at fair value through profit or loss | - | 32,000 | |
Pledged deposits | 70,925 | 118,707 | |
Cash and cash equivalents | 708,588 | 546,186 | |
Total current assets | 3,099,802 | 3,220,825 | |
CURRENT LIABILITIES | |||
Trade and bills payables | 13 | 607,441 | 599,206 |
Other payables and accruals | 14 | 1,333,511 | 1,644,959 |
Interest-bearing bank and other borrowings | 15 | 292,965 | 296,948 |
Lease liabilities | 77,310 | 89,075 | |
Contract liabilities | 29,517 | 21,835 | |
Tax payable | 116,448 | 141,568 | |
Total current liabilities | 2,457,192 | 2,793,591 | |
NET CURRENT ASSETS | 642,610 | 427,234 | |
TOTAL ASSETS LESS CURRENT LIABILITIES | 2,541,937 | 3,227,964 | |
22 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | Interim Report 2020 |
INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 June 2020 | |||
30 June | 31 December | ||
2020 | 2019 | ||
(Unaudited) | (Audited) | ||
Notes | RMB'000 | RMB'000 | |
NON-CURRENT LIABILITIES | |||
Interest-bearing bank and other borrowings | 15 | 1,414,168 | 1,383,551 |
Lease liabilities | 110,639 | 131,284 | |
Deferred tax liabilities | 297,136 | 394,582 | |
Other liabilities | 14 | 7,605 | 7,700 |
Total non-current liabilities | 1,829,548 | 1,917,117 | |
Net assets | 712,389 | 1,310,847 | |
EQUITY | |||
Equity attributable to owners of the parent | |||
Share capital | 16 | 47,226 | 47,519 |
Treasury shares | (5,379) | (4,166) | |
Reserves | 549,500 | 1,129,319 | |
591,347 | 1,172,672 | ||
Non-controlling interests | 121,042 | 138,175 | |
Total equity | 712,389 | 1,310,847 | |
James Hartono | Wang Hong |
Director | Director |
Interim Report 2020 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | 23 |
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2020
Attributable to owners of the parent | |||||||||||||
Put- | |||||||||||||
options | |||||||||||||
written on | |||||||||||||
Share | non- | Statutory | Exchange | Non- | |||||||||
Share | Treasury | premium | Contributed | controlling | reserve | Other | Retained | fluctuation | controlling | Total | |||
capital | shares | account | surplus | interests | fund | reserve | profits | reserve | Total | interests | equity | ||
Note | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | |
At 1 January 2020 (audited) | 47,519 | (4,166) | 809,275 | 84,991 | (832,849) | 140,383 | (158,637) | 1,122,390 | (36,234) | 1,172,672 | 138,175 | 1,310,847 | |
Loss for the period | - | - | - | - | - | - | - | (640,253) | - | (640,253) | (62,594) | (702,847) | |
Other comprehensive income | |||||||||||||
for the period: | |||||||||||||
Exchange differences on | |||||||||||||
translation of foreign | |||||||||||||
operations | - | - | - | - | - | - | - | - | (24,807) | (24,807) | - | (24,807) | |
Total comprehensive loss | |||||||||||||
for the period | - | - | - | - | - | - | - | (640,253) | (24,807) | (665,060) | (62,594) | (727,654) | |
Change in the share of ownership | |||||||||||||
of subsidiary | - | - | - | - | 188,557 | - | (65,992) | - | - | 122,565 | 55,924 | 178,489 | |
Shares repurchased | 16 | (293) | (1,213) | (14,956) | - | - | - | - | - | - | (16,462) | - | (16,462) |
Dividend paid to non-controlling | |||||||||||||
shareholders | - | - | - | - | - | - | - | - | - | - | (25,500) | (25,500) | |
Payables to non-controlling | |||||||||||||
interests | - | - | - | - | (22,368) | - | - | - | - | (22,368) | 15,037 | (7,331) | |
At 30 June 2020 (unaudited) | 47,226 | (5,379) | 794,319* | 84,991* | (666,660)* | 140,383* | (224,629)* | 482,137* | (61,041)* | 591,347 | 121,042 | 712,389 | |
- These reserve accounts comprise the consolidated reserves of RMB549,500,000 (31 December 2019: RMB1,129,319,000) in the consolidated statement of financial position.
24 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | Interim Report 2020 |
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2020
Attributable to owners of the parent | ||||||||||||
Put- | ||||||||||||
options | ||||||||||||
written on | ||||||||||||
Share | non- | Statutory | Exchange | Non- | ||||||||
Share | Treasury | premium | Contributed | controlling | reserve | Other | Retained | fluctuation | controlling | Total | ||
capital | shares | account | surplus | interests | fund | reserve | profits | reserve | Total | interests | equity | |
RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | |
At 1 January 2019 (audited) | 48,179 | - | 846,823 | 84,991 | (789,697) | 112,162 | (158,637) | 947,938 | (14,097) | 1,077,662 | 11,280 | 1,088,942 |
Profit for the period | - | - | - | - | - | - | - | 141,992 | - | 141,992 | 58,569 | 200,561 |
Other comprehensive income | ||||||||||||
for the period: | ||||||||||||
Exchange differences on | ||||||||||||
translation of foreign operations | - | - | - | - | - | - | - | - | (3,477) | (3,477) | - | (3,477) |
Total comprehensive income for the period | - | - | - | - | - | - | - | 141,992 | (3,477) | 138,515 | 58,569 | 197,084 |
Shares repurchased | (173) | (11,169) | (11,849) | - | - | - | - | - | - | (23,191) | - | (23,191) |
Dividend paid to non-controlling | ||||||||||||
shareholders | - | - | - | - | - | - | - | - | - | - | (15,000) | (15,000) |
Transfer from retained profits | - | - | - | - | - | 10,578 | - | (10,578) | - | - | - | - |
Put-options in relation to | ||||||||||||
non-controlling interests | - | - | - | - | (11,225) | - | - | - | - | (11,225) | (43,584) | (54,809) |
At 30 June 2019 (unaudited) | 48,006 | (11,169) | 834,974* | 84,991* | (800,922)* | 122,740* | (158,637)* | 1,079,352* | (17,574)* | 1,181,761 | 11,265 | 1,193,026 |
Interim Report 2020 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | 25 |
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 30 June 2020
For the six months ended 30 June
2020 | 2019 | ||
(Unaudited) | (Unaudited) | ||
Notes | RMB'000 | RMB'000 | |
CASH FLOWS FROM OPERATING ACTIVITIES | |||
(Loss)/profit before tax | (767,446) | 290,813 | |
Adjustments for: | |||
Finance costs | 5 | 64,485 | 64,016 |
Impairment of inventories | 6 | 123 | 186 |
Impairment of financial assets | 6 | 7,511 | 215 |
Impairment of investment in an associate | 6 | - | 2,991 |
Impairment of goodwill | 6 | 447,450 | - |
Impairment of other intangible assets | 6 | 277,173 | - |
Exchange loss | 5,143 | 1,862 | |
Interest income | (1,734) | - | |
Net gain on financial assets at fair value through profit or loss | 4 | (265) | (326) |
Share of profit and loss of an associate | - | 2,779 | |
Recognition of deferred income | (95) | (94) | |
Depreciation of property, plant and equipment | 6 | 14,615 | 11,259 |
Depreciation of right-of-use assets | 6 | 53,989 | 16,170 |
Amortisation of other intangible assets | 6 | 64,601 | 65,481 |
Gain on disposal of other intangible assets | 6 | (17,189) | - |
Loss on disposal of items of property, plant and equipment | 6 | 714 | 1,095 |
149,075 | 456,447 | ||
Decrease/(increase) in trade and bills receivables | 260,625 | (61,619) | |
Increase in prepayments, other receivables and other assets | (36,282) | (64,082) | |
Increase in inventories | (25,764) | (16,122) | |
Increase/(decrease) in trade and bills payables | 8,235 | (76,570) | |
Decrease in other payables and accruals | (36,853) | (52,329) | |
Increase/(decrease) in contract liabilities | 7,682 | (500) | |
Increase in pledged deposits for issuance of bank acceptance | |||
notes | (153) | (1,782) | |
Cash generated from operations | 326,565 | 183,443 | |
Income tax paid | (62,943) | (128,210) | |
NET CASH FROM OPERATING ACTIVITIES | 263,622 | 55,233 | |
26 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | Interim Report 2020 |
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 30 June 2020
For the six months ended 30 June
2020 | 2019 | |
(Unaudited) | (Unaudited) | |
RMB'000 | RMB'000 | |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchases of items of property, plant and equipment | (15,541) | (6,412) |
Addition to other intangible assets | (945) | (64) |
Proceeds from disposal of items of property, plant and equipment | 2,318 | 63 |
Disposal of financial assets at fair value through profit and loss | 32,265 | - |
Purchase of financial assets at amortised cost | (837) | - |
Net proceeds from disposal of financial assets measured at fair value | ||
through profit or loss | - | 326 |
NET CASH FROM/(USED IN) INVESTING ACTIVITIES | 17,260 | (6,087) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
New bank loans | 245,578 | 257,118 |
Repayment of bank loans | (249,561) | (234,373) |
Decrease/(increase) in pledged deposits for bank borrowings | 47,935 | (70,476) |
Acquisition of a non-controlling interest | - | (5,540) |
Principal portion of lease payments | (56,616) | (14,896) |
Repurchase of shares | (16,462) | (23,191) |
Dividend paid to non-controlling interests of a subsidiary | (25,500) | (15,000) |
Interest paid | (64,521) | (63,768) |
NET CASH FLOWS USED IN FINANCING ACTIVITIES | (119,147) | (170,126) |
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS | 161,735 | (120,980) |
Cash and cash equivalents at beginning of period | 546,186 | 721,325 |
Effect of foreign exchange rate changes, net | 667 | (12) |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 708,588 | 600,333 |
ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS
Cash and bank balances
Non-pledged time deposits with original maturity of less than three months when acquired
708,588473,967
- 126,366
CASH AND CASH EQUIVALENTS AS STATED IN THE STATEMENT | ||
OF FINANCIAL POSITION | 708,588 | 600,333 |
Interim Report 2020 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | 27 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
30 June 2020
1. CORPORATE INFORMATION
Yestar Healthcare Holdings Company Limited (the "Company") was incorporated in the Cayman Islands on 1 February 2012 as an exempted company with limited liability under the Companies Law, Chapter 22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands. The registered office address of the Company is Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1-1111, Cayman Islands. In the opinion of the directors, the Company's ultimate controlling shareholders are Jeane Hartono, Rico Hartono, James Hartono and Chen Chen Irene Hartono.
The Company's shares have been listed on the Main Board of The Stock Exchange of Hong Kong Limited (the "Stock Exchange") since 11 October 2013 (the "Listing").
The Company is an investment holding company. During the six months ended 30 June 2020 (the "Period"), the Company's subsidiaries were involved in the following principal activities:
- manufacture and sale of color photographic paper, industrial NDT x-ray films and PWB films, and trading of imaging equipment; and
- manufacture and sale of medical dry films, medical wet films and dental films, and distribution of medical equipment and diagnostic reagents.
2. BASIS OF PREPARATION AND CHANGES TO THE GROUP'S ACCOUNTING POLICIES
-
Basis of preparation
The interim condensed consolidated financial information for the six months ended 30 June 2020 has been prepared in accordance with IAS 34 Interim Financial Reporting . The interim condensed consolidated financial information does not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual consolidated financial statements for the year ended 31 December 2019. - Changes in accounting policies and disclosures
The accounting policies adopted in the preparation of the interim condensed consolidated financial information are consistent with those applied in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2019, except for the adoption of the following revised International Financial Reporting Standards ("IFRSs") for the first time for the current period's financial information.
Amendments to IFRS 3 | Definition of a Business |
Amendments to IFRS 9, IAS 39 | Interest Rate Benchmark Reform |
and IFRS 7 | |
Amendment to IFRS 16 | Covid-19-Related Rent Concessions (early adopted) |
Amendments to IAS 1 and IAS 8 | Definition of Material |
28 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | Interim Report 2020 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
30 June 2020
2. BASIS OF PREPARATION AND CHANGES TO THE GROUP'S ACCOUNTING POLICIES (Continued)
2.2 Changes in accounting policies and disclosures (Continued)
The nature and impact of the revised IFRSs are described below:
- Amendments to IFRS 3 clarify and provide additional guidance on the definition of a business. The amendments clarify that for an integrated set of activities and assets to be considered a business, it must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output. A business can exist without including all of the inputs and processes needed to create outputs. The amendments remove the assessment of whether market participants are capable of acquiring the business and continue to produce outputs. Instead, the focus is on whether acquired inputs and acquired substantive processes together significantly contribute to the ability to create outputs. The amendments have also narrowed the definition of outputs to focus on goods or services provided to customers, investment income or other income from ordinary activities. Furthermore, the amendments provide guidance to assess whether an acquired process is substantive and introduce an optional fair value concentration test to permit a simplified assessment of whether an acquired set of activities and assets is not a business. The Group has applied the amendments prospectively to transactions or other events that occurred on or after 1 January 2020. The amendments did not have any impact on the financial position and performance of the Group.
- Amendments to IFRS 9, IAS 39 and IFRS 7 address the effects of interbank offered rate reform on financial reporting. The amendments provide temporary reliefs which enable hedge accounting to continue during the period of uncertainty before the replacement of an existing interest rate benchmark. In addition, the amendments require companies to provide additional information to investors about their hedging relationships which are directly affected by these uncertainties. The amendments did not have any impact on the financial position and performance of the Group as the Group does not have any interest rate hedge relationships.
-
Amendment to IFRS 16 provides a practical expedient for lessees to elect not to apply lease modification accounting for rent concessions arising as a direct consequence of the covid-19 pandemic. The practical expedient applies only to rent concessions occurring as a direct consequence of the covid-19 pandemic and only if (i) the change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change; (ii) any reduction in lease payments affects only payments originally due on or before 30 June 2021; and (iii) there is no substantive change to other terms and conditions of the lease. The amendment is effective retrospectively for annual periods beginning on or after 1 June 2020 with earlier application permitted.
During the period ended 30 June 2020, certain monthly lease payments for the leases of the Group's office buildings have been reduced or waived by the lessors as a result of the covid-19 pandemic and there are no other changes to the terms of the leases. The Group has early adopted the amendment on 1 January 2020 and elected not to apply lease modification accounting for all rent concessions granted by the lessors as a result of the covid-19 pandemic during the period ended 30 June 2020. Accordingly, a reduction in the lease payments arising from the rent concessions of RMB586,000 has been accounted for as a variable lease payment by derecognising part of the lease liabilities and crediting to profit or loss for the period ended 30 June 2020.
Interim Report 2020 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | 29 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
30 June 2020
-
BASIS OF PREPARATION AND CHANGES TO THE GROUP'S ACCOUNTING POLICIES (Continued)
2.2 Changes in accounting policies and disclosures (Continued) - Amendments to IAS 1 and IAS 8 provide a new definition of material. The new definition states that information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements. The amendments clarify that materiality will depend on the nature or magnitude of information. The amendments did not have any impact on the Group's interim condensed consolidated financial information.
- OPERATING SEGMENT INFORMATION
For management purposes, the Group is organised into business units based on their products and services and has two reportable operating segments as follows:
- Imaging printing products: manufacture and sale of color photographic paper, industrial NDT x-ray films, and trading of imaging equipment; and
- Medical products and equipment: manufacture and sale of medical dry films, medical wet films and dental films, and sale of medical equipment and reagents.
Management monitors the results of the Group's operating segments separately for the purpose of making decisions about resources allocation and performance assessment. Segment performance is evaluated based on reportable segment profit, which is a measure of adjusted profit before tax. The adjusted profit before tax is measured consistently with the Group's profit/(loss) before tax except that corporate and unallocated expenses are excluded from this measurement.
Segment assets exclude unallocated head office and corporate assets as these assets are managed on a group basis.
Segment liabilities exclude unallocated head office and corporate liabilities as these liabilities are managed on a group basis.
Intersegment sales and transfers are transacted with reference to the selling prices used for sales made to third parties at the then prevailing market prices.
30 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | Interim Report 2020 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
30 June 2020
3. OPERATING SEGMENT INFORMATION (Continued)
The following tables present revenue and profit information regarding the Group's operating segments for the six months ended 30 June 2020 and 2019, respectively:
Imaging | Medical | ||
printing | products and | ||
Six months ended 30 June 2020 | products | equipment | Total |
(Unaudited) | (Unaudited) | (Unaudited) | |
RMB'000 | RMB'000 | RMB'000 | |
Segment revenue (note 4) | |||
Sales to external customers | 125,067 | 1,477,211 | 1,602,278 |
Intersegment sales | 203,027 | 587,701 | 790,728 |
Reconciliation: | |||
Elimination of intersegment sales | (790,728) | ||
Revenue | 1,602,278 | ||
Segment results | (4,850) | (748,696) | (753,546) |
Reconciliation: | |||
Corporate and other unallocated expenses | (13,900) | ||
Loss before tax | (767,446) | ||
Other segment information: | |||
Depreciation of items of property, | |||
plant and equipment | 3,032 | 11,583 | 14,615 |
Depreciation of items of right-of-use assets | 1,245 | 52,744 | 53,989 |
Amortisation of other intangible assets | 282 | 64,319 | 64,601 |
Impairment loss recognised in the statement | |||
of profit or loss | (15) | 732,272 | 732,257 |
Loss/(gain) on disposal of items of property, | |||
plant and equipment | 721 | (7) | 714 |
Gain on disposal of other intangible assets | - | (17,189) | (17,189) |
Capital expenditure* | 1,366 | 15,120 | 16,486 |
Interim Report 2020 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | 31 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
30 June 2020
3. OPERATING SEGMENT INFORMATION (Continued)
Imaging | Medical | ||
printing | products and | ||
Six months ended 30 June 2019 | products | equipment | Total |
(Unaudited) | (Unaudited) | (Unaudited) | |
RMB'000 | RMB'000 | RMB'000 | |
Segment revenue (note 4) | |||
Sales to external customers | 234,839 | 2,052,279 | 2,287,118 |
Intersegment sales | 106,417 | 104,014 | 210,431 |
Reconciliation: | |||
Elimination of intersegment sales | (210,431) | ||
Revenue | 2,287,118 | ||
Segment results | 10,100 | 300,452 | 310,552 |
Reconciliation: | |||
Corporate and other unallocated expenses | (19,739) | ||
Profit before tax | 290,813 | ||
Other segment information: | |||
Depreciation of items of property, | |||
plant and equipment | 3,650 | 7,609 | 11,259 |
Depreciation of items of right-of-use assets | 1,210 | 14,960 | 16,170 |
Amortisation of other intangible assets | 156 | 65,325 | 65,481 |
Share of loss of an associate | - | 2,779 | 2,779 |
Impairment loss recognised in the statement | |||
of profit or loss | - | 3,392 | 3,392 |
Loss on disposal of items of property, | |||
plant and equipment | 11 | 1,084 | 1,095 |
Capital expenditure* | 64 | 6,412 | 6,476 |
- Capital expenditure consists of additions to property, plant and equipment and other intangible assets.
32 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | Interim Report 2020 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
30 June 2020
3. OPERATING SEGMENT INFORMATION (Continued)
The following table presents the asset and liability information of the Group's operating segments as at
30 June 2020 and 31 December 2019, respectively:
Imaging | Medical | ||
printing | products and | ||
Six months ended 30 June 2020 | products | equipment | Total |
(Unaudited) | (Unaudited) | (Unaudited) | |
RMB'000 | RMB'000 | RMB'000 | |
Segment assets | 342,666 | 4,546,497 | 4,889,163 |
Reconciliation: | |||
Corporate and other unallocated assets | 109,966 | ||
Total assets | 4,999,129 | ||
Segment liabilities | 38,755 | 3,842,981 | 3,881,736 |
Reconciliation: | |||
Corporate and other unallocated liabilities | 405,004 | ||
Total liabilities | 4,286,740 | ||
Interim Report 2020 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | 33 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
30 June 2020
3. OPERATING SEGMENT INFORMATION (Continued)
Imaging | Medical | ||
printing | products and | ||
Year ended 31 December 2019 | products | equipment | Total |
(Audited) | (Audited) | (Audited) | |
RMB'000 | RMB'000 | RMB'000 | |
Segment assets | 375,192 | 5,473,495 | 5,848,687 |
Reconciliation: | |||
Corporate and other unallocated assets | 172,868 | ||
Total assets | 6,021,555 | ||
Segment liabilities | 217,613 | 4,119,097 | 4,336,710 |
Reconciliation: | |||
Corporate and other unallocated liabilities | 373,998 | ||
Total liabilities | 4,710,708 | ||
Information about major customers
During the six months ended 30 June 2020, the Group had one individual customer from whom the revenue derived by selling medical imaging products and imaging printing products of RMB406,253,000 (six months ended 30 June 2019: RMB419,944,000) accounted for about 25.35% (six months ended 30 June 2019: 18.36%) of the Group's total revenue during the Period.
Geographical information
Since the Group solely operates business in Mainland China and all of the non-current assets of the Group are located in Mainland China, geographical information required by IFRS 8 Operating Segments is not presented.
Seasonality of operations
The Group's operations are not subject to seasonality.
34 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | Interim Report 2020 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
30 June 2020
4. REVENUE, OTHER INCOME AND GAINS
An analysis of revenue is as follows:
For the six months ended 30 June
2020 | 2019 | ||
(Unaudited) | (Unaudited) | ||
RMB'000 | RMB'000 | ||
Revenue from contracts with customers | 1,602,278 | 2,287,118 | |
Disaggregated revenue information for revenue from contracts with customers | |||
For the six months ended 30 June 2020 | |||
Imaging | Medical | ||
printing | products and | ||
Segments | products | equipment | Total |
(Unaudited) | (Unaudited) | (Unaudited) | |
RMB'000 | RMB'000 | RMB'000 | |
Types of goods or services | |||
Sale of goods | 125,067 | 1,448,557 | 1,573,624 |
Rendering of services | - | 28,654 | 28,654 |
Total revenue from contracts with customers | 125,067 | 1,477,211 | 1,602,278 |
Timing of revenue recognition | |||
Goods transferred at a point in time | 125,067 | 1,448,557 | 1,573,624 |
Services transferred over time | - | 28,654 | 28,654 |
Total revenue from contracts with customers | 125,067 | 1,477,211 | 1,602,278 |
Interim Report 2020 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | 35 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
30 June 2020
4. REVENUE, OTHER INCOME AND GAINS (Continued)
Disaggregated revenue information for revenue from contracts with customers (Continued)
For the six months ended 30 June 2019
Imaging | Medical | ||
printing | products and | ||
Segments | products | equipment | Total |
(Unaudited) | (Unaudited) | (Unaudited) | |
RMB'000 | RMB'000 | RMB'000 | |
Types of goods or services | |||
Sale of goods | 234,839 | 2,033,216 | 2,268,055 |
Rendering of services | - | 19,063 | 19,063 |
Total revenue from contracts with customers | 234,839 | 2,052,279 | 2,287,118 |
Timing of revenue recognition | |||
Goods transferred at a point in time | 234,839 | 2,033,216 | 2,268,055 |
Services transferred over time | - | 19,063 | 19,063 |
Total revenue from contracts with customers | 234,839 | 2,052,279 | 2,287,118 |
Set out below is the reconciliation of the revenue from contracts with customers to the amounts disclosed in the segment information:
For the six months ended 30 June 2020
Imaging | Medical | ||
printing | products and | ||
Segments | products | equipment | Total |
(Unaudited) | (Unaudited) | (Unaudited) | |
RMB'000 | RMB'000 | RMB'000 | |
Revenue from contracts with customers | |||
External customers | 125,067 | 1,477,211 | 1,602,278 |
Intersegment sales | 203,027 | 587,701 | 790,728 |
Intersegment adjustments and eliminations | (203,027) | (587,701) | (790,728) |
Total revenue from contracts with customers | 125,067 | 1,477,211 | 1,602,278 |
36 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | Interim Report 2020 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
30 June 2020
4. REVENUE, OTHER INCOME AND GAINS (Continued)
Disaggregated revenue information for revenue from contracts with customers (Continued)
For the six months ended 30 June 2019
Imaging | Medical | ||
printing | products and | ||
Segments | products | equipment | Total |
(Unaudited) | (Unaudited) | (Unaudited) | |
RMB'000 | RMB'000 | RMB'000 | |
Revenue from contracts with customers | |||
External customers | 234,839 | 2,052,279 | 2,287,118 |
Intersegment sales | 106,417 | 104,014 | 210,431 |
Intersegment adjustments and eliminations | (106,417) | (104,014) | (210,431) |
Total revenue from contracts with customers | 234,839 | 2,052,279 | 2,287,118 |
An analysis of other income and gains is as follows: | |||
For the six months ended 30 June | |||
2020 | 2019 | ||
(Unaudited) | (Unaudited) | ||
RMB'000 | RMB'000 | ||
Other income and gains | |||
Government grants (note) | 13,589 | 15,576 | |
Interest income | 5,900 | 1,553 | |
Net gain on financial assets at fair value through profit or loss | 265 | 326 | |
Net gain on disposal of other intangible assets | 17,189 | - | |
Others | 725 | 110 | |
37,668 | 17,565 | ||
Note: The amount represents grants received from local PRC government authorities by the Group's subsidiaries in connection with certain financial support to local business enterprises for the purpose of encouraging business development. There are no unfulfilled conditions and other contingencies relating to these grants.
Interim Report 2020 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | 37 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
30 June 2020
5. FINANCE COSTS
An analysis of finance costs is as follows:
For the six months ended 30 June
2020 | 2019 | |
(Unaudited) | (Unaudited) | |
RMB'000 | RMB'000 | |
Finance costs | ||
Interest on bank loans, overdrafts and other borrowings | 58,959 | 60,154 |
Interest expense on lease liabilities | 5,446 | 1,837 |
Cash discount for collection of trade receivables | - | 641 |
Interest arising from discounted bills | 80 | 1,384 |
64,485 | 64,016 | |
38 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | Interim Report 2020 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
30 June 2020
6. (LOSS)/PROFIT BEFORE TAX
The Group's (loss)/profit before tax is arrived at after charging/(crediting):
For the six months ended 30 June
2020 | 2019 | |
(Unaudited) | (Unaudited) | |
RMB'000 | RMB'000 | |
Cost of inventories sold and services provided | 1,314,593 | 1,646,577 |
Depreciation of items of property, plant and equipment | 14,615 | 11,259 |
Depreciation of right-of-use assets/recognition of | ||
prepaid land lease payments | 53,989 | 16,170 |
Amortisation of other intangible assets | 64,601 | 65,481 |
Research and development costs | 70 | 297 |
Lease payments not included in the measurement of | ||
lease liabilities | 21,403 | 9,706 |
Employee benefit expense including | ||
- Wages and salaries | 93,084 | 90,017 |
- Pension scheme contributions | 1,450 | 8,024 |
94,534 | 98,041 | |
Exchange differences, net | 3,574 | 1,282 |
Impairment of inventories (note 11) | 123 | 186 |
Impairment of financial assets (note 12) | 7,511 | 215 |
Impairment of investment in an associate | - | 2,991 |
Impairment of goodwill | 447,450 | - |
Impairment of other intangible assets | 277,173 | - |
Gain on disposal of other intangible assets | (17,189) | - |
Loss on disposal of items of property, plant and equipment | 714 | 1,095 |
Interim Report 2020 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | 39 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
30 June 2020
7. INCOME TAX
The Group is subject to income tax on an entity basis on profits arising in or derived from the jurisdictions in which members of the Group are domiciled and operate.
Pursuant to the rules and regulations of the Cayman Islands and the British Virgin Islands ("BVI"), the Group is not subject to any income tax in the Cayman Islands and BVI.
Hong Kong profits tax is to be provided at the rate of 16.5% on the estimated assessable profits arising in Hong Kong. No provision for Hong Kong profits tax has been made as the Group had no assessable profits derived from or earned in Hong Kong during the Period.
The provision for current income tax in Mainland China is based on the statutory rate of 25% of the assessable profits of the Group as determined in accordance with the PRC Corporation Income Tax Law which was approved and became effective on 1 January 2008.
The major components of income tax charge for the Period were as follows:
For the six months ended 30 June
2020 | 2019 | |
(Unaudited) | (Unaudited) | |
RMB'000 | RMB'000 | |
Current - charged for the period | 37,823 | 106,779 |
Deferred | (102,422) | (16,527) |
Total tax charge for the period | (64,599) | 90,252 |
8. DIVIDENDS
The directors did not recommend the payment of an interim dividend in respect of the Period (six months ended 30 June 2019: Nil).
The shareholders did not declare any dividend for the year ended 31 December 2019 at the annual general meeting of the Company on 22 May 2020.
40 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | Interim Report 2020 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
30 June 2020
9. (LOSS)/EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE PARENT
The calculation of basic loss per share is based on the loss for the Period attributable to ordinary equity holders of the parent of RMB640,253,000 and the weighted average number of ordinary shares of 2,367,232,000 in issue during the Period.
The calculation of basic earnings per share is based on the profit for the six months ended 30 June 2019 attributable to ordinary equity holders of the parent of RMB141,992,000 and the weighted average number of ordinary shares of 2,401,996,000 in issue during the period.
The diluted (loss)/earnings per share amounts were equal to the basic (loss)/earnings per share amounts for the Period and the six months ended 30 June 2019 as no diluting events occurred.
10. PROPERTY, PLANT AND EQUIPMENT
During the six months ended 30 June 2020, the Group acquired property, plant and equipment at a cost of RMB15,541,000 (six months ended 30 June 2019: RMB6,412,000).
During the six months ended 30 June 2020, depreciation of property, plant and equipment was RMB14,615,000 (six months ended 30 June 2019: RMB11,259,000).
During the six months ended 30 June 2020, property, plant and equipment with a net book value of RMB3,032,000 (six months ended 30 June 2019: RMB1,158,000) were disposed of by the Group resulting in a net loss on disposal of RMB714,000 (six months ended 30 June 2019: a net loss of RMB1,095,000).
As at 30 June 2020, none of the Group's property, plant and equipment was pledged (31 December 2019: Nil).
Interim Report 2020 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | 41 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
30 June 2020
11. INVENTORIES
30 June | 31 December | |
2020 | 2019 | |
(Unaudited) | (Audited) | |
RMB'000 | RMB'000 | |
Raw materials | 45,230 | 41,169 |
Finished goods | 771,292 | 749,589 |
816,522 | 790,758 | |
Less: Provision for inventories | 9,458 | 9,335 |
807,064 | 781,423 | |
The movements in inventory provision are as follows: | ||
30 June | 31 December | |
2020 | 2019 | |
(Unaudited) | (Audited) | |
RMB'000 | RMB'000 | |
At beginning of the period | 9,335 | 4,217 |
Impairment provision recognised (note 6) | 123 | 5,118 |
9,458 | 9,335 | |
42 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | Interim Report 2020 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
30 June 2020 | |||
12. TRADE AND BILLS RECEIVABLES | |||
30 June | 31 December | ||
2020 | 2019 | ||
(Unaudited) | (Audited) | ||
RMB'000 | RMB'000 | ||
Trade receivables | 1,306,702 | 1,565,120 | |
Bills receivable | 20,243 | 22,450 | |
Impairment | (34,496) | (26,985) | |
1,292,449 | 1,560,585 | ||
An aging analysis of trade receivables at the end of the reporting period, based on the invoice date and net of provisions, is as follows:
30 June | 31 December | |
2020 | 2019 | |
(Unaudited) | (Audited) | |
RMB'000 | RMB'000 | |
Within 90 days | 641,628 | 978,265 |
91 to 180 days | 198,759 | 339,484 |
181 to 365 days | 350,337 | 166,842 |
1 to 2 years | 74,127 | 48,113 |
2 to 3 years | 7,355 | 5,431 |
1,272,206 | 1,538,135 | |
Interim Report 2020 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | 43 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
30 June 2020
13. TRADE AND BILLS PAYABLES
30 June | 31 December | |
2020 | 2019 | |
(Unaudited) | (Audited) | |
RMB'000 | RMB'000 | |
Trade payables | 592,147 | 571,453 |
Bills payable | 15,294 | 27,753 |
607,441 | 599,206 | |
An aging analysis of the outstanding trade payables as at the end of the reporting period, based on the invoice date, is as follows:
30 June | 31 December | |
2020 | 2019 | |
(Unaudited) | (Audited) | |
RMB'000 | RMB'000 | |
Within 90 days | 562,428 | 545,706 |
91 to 180 days | 9,756 | 12,284 |
181 to 365 days | 9,626 | 11,235 |
1 to 2 years | 10,254 | 2,151 |
Over 2 years | 83 | 77 |
592,147 | 571,453 | |
The trade payables are non-interest-bearing and are normally settled within 180 days.
The outstanding bills payable were issued to FUJIFILM (China) Investment Co., Ltd., a major supplier of the Group, for the purchase of raw materials.
44 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | Interim Report 2020 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
30 June 2020 | |||
14. OTHER PAYABLES AND ACCRUALS | |||
30 June | 31 December | ||
2020 | 2019 | ||
(Unaudited) | (Audited) | ||
RMB'000 | RMB'000 | ||
Current portion: | |||
Other payables | 110,389 | 100,913 | |
Interest payable | 24,869 | 29,236 | |
Value-added tax payable | 10,892 | 49,394 | |
Payroll and welfare payable | 29,200 | 26,097 | |
Payables to non-controlling interests (Note) | 1,158,161 | 1,439,319 | |
1,333,511 | 1,644,959 | ||
30 June | 31 December | |
2020 | 2019 | |
(Unaudited) | (Audited) | |
RMB'000 | RMB'000 | |
Non-current portion: | ||
Deferred government grant | 7,605 | 7,700 |
Interim Report 2020 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | 45 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
30 June 2020
14. OTHER PAYABLES AND ACCRUALS (Continued)
Note: Payables to non-controlling interests represent the rights granted to the non-controlling shareholders to dispose of the 30% interests in each of Shanghai Emphasis Investment Management Consulting Co., Ltd., Shanghai Jianchu Medical Instrument Co., Ltd., Shanghai Chaolian Trading Co., Ltd., Shanghai Haole Industrial Co., Ltd., and Shanghai Dingpei Industrial Co., Ltd. (collectively referred to as "Anbaida Group Companies"), Guanzhou Hongen Medical Diagnostic Technologies Co., Ltd. (referred to as "Hongen"), Shenzhen De Run Li Jia Co., Ltd. (referred to as "Derunlijia"), Guangzhou Shengshiyuan Trading Co., Ltd. (referred to as "Shengshiyuan") and Beijing Kaihongda Technologies Co., Ltd. (referred to as "Kaihongda") to the Group during the acquisition by the Company of the 70% interests in each of Anbaida Group Companies, Hongen, Derunlijia, Shengshiyuan and Kaihongda disclosed below:
- Pursuant to the share purchase agreement entered into between Yestar (Guangxi) Medical System Co., Ltd. ("Yestar Medical"), a subsidiary of the Company, Mr. Li Bin, Mr. Li Changgui, Mr. Li Changkuan, Ms. Yu Liping and Ms. Liu Hong on 9 April 2015, Yestar Medical acquired the 70% equity interests in Anbaida Group Companies and Mr. Li Bin and Mr. Li Changgui ("Mr. Li") held the remaining 30% equity interests. The non-controlling equity interests holders shall have the right to require Yestar Medical to acquire the remaining 30% equity interests in Anbaida Group Companies if the respective net profits of Anbaida Group Companies in 2015, 2016 and 2017 have reached the annual guarantee profits. The maximum consideration shall not exceed RMB675 million. Since Anbaida Group Companies have met the annual guarantee profit targets for the years from 2015 to 2017, the Group is obligated to acquire the remaining 30% equity interests of Anbaida Group Companies. Yestar Medical reached a new separate share transfer agreement on 7 August 2020 with Mr. Li to acquire the remaining 30% equity interests in Anbaida Group Companies. Yestar Medical shall purchase the remaining 30% equity interests in each of Anbaida Group Companies in 3 phases by 31 August 2021 at a consideration of RMB675 million.
- Pursuant to the share purchase agreement entered into between Yestar Medical, Mr. Wang Kaijun, Mr. Zhang Shuqiang, Ms. Song Yalin, and Mr. Ma Boming on 13 October 2016, Yestar Medical acquired the 70% equity interest in Hongen. Yestar Medical is obligated to acquire the remaining 30% equity interest in Hongen if the respective net profits of Hongen in 2017, 2018 and 2019 have reached the annual guarantee profits. The maximum consideration shall not exceed RMB270 million. Since Hongen has met the annual guarantee profit targets for the years from 2017 to 2019, Yestar Medical is obligated to acquire the
remaining | 30% equity interest of | Hongen. Yestar | Medical signed a share purchase | agreement on |
27 March | 2020 to purchase the remaining 20% equity interest at the consideration | of | Hongen's entire | |
existing tissue diagnostic business | of the distribution | of Roche Diagnostic Products | in | the Guangdong |
province in the PRC and then the Group did not have contractual obligation to purchase the remaining 10% equity interest.
46 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | Interim Report 2020 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
30 June 2020
14. OTHER PAYABLES AND ACCRUALS (Continued)
Note: (Continued)
-
Pursuant to the share purchase agreement entered into between Yestar Medical, Mr. Chen Baocun and Ms. Chen Shaoyu on 27 October 2016, Yestar Medical acquired the 70% equity interest of Derunlijia. Yestar Medical is obligated to acquire the remaining 30% equity interest in Derunlijia if the respective net profits of Derunlijia in 2017, 2018 and 2019 have reached the annual guarantee profits. The maximum consideration shall not exceed RMB332 million. In the event that the net profit in any of these years is less than the annual guarantee profit, the non-controlling equity interest holders shall pay compensation to Yestar Medical which is calculated by the following formula:
(Annual guarantee profit - 2017 net profit/2018 net profit/2019 net profit)*2
Since Derunlijia did not meet the annual guarantee profit targets for the years from 2017 to 2019, Yestar Medical did not have a contractual obligation to purchase the remaining 30% equity interest. - Pursuant to the share purchase agreement entered into between Yestar Medical, Ms. Liu Yanling, Ms. Li Xu, Mr. Ai Jiaying, Mr. Zhang Lixiong and Mr. Li Shenlian on 11 November 2016, Yestar Medical acquired the 70% equity interest in Shengshiyuan. Yestar Medical is obligated to acquire the remaining 30% equity interest in Shengshiyuan if the respective net profits of Shengshiyuan in 2017, 2018 and 2019 have reached the annual guarantee profits. The maximum consideration shall not exceed RMB120 million. Since Shengshiyuan has met the annual guarantee profit targets for the years from 2017 to 2019, Yestar Medical is negotiating with Mr. Li about the remaining 30% equity interest. No agreement was reached as of the report date.
- Pursuant to the share purchase agreement entered into between Yestar Medical, Mr. Pang Haibin, Mr. Xie Dingjie, Ms. An Hong, Mr. Yu Huimin and Mr. Zhu Yongping on 20 September 2017, Yestar Medical acquired the 70% equity interest in Kaihongda. Yestar Medical is obligated to acquire the remaining 30% equity interest in Kaihongda if the respective net profits of Kaihongda in 2017, 2018 and 2019 have reached the annual guarantee profits. The maximum consideration shall not exceed RMB71.28 million. Since Kaihongda has met the annual guarantee profit targets for the years from 2017 to 2019, Yestar Medical is negotiating with Mr. Pang about the remaining 30% equity interest. No agreement was reached as of the report date.
Interim Report 2020 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | 47 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
30 June 2020
15. INTEREST-BEARING BANK AND OTHER BORROWINGS
30 June 2020 | 31 December 2019 | |||||
Effective | Effective | |||||
interest | interest | |||||
rate (%) | Maturity | RMB'000 | rate (%) | Maturity | RMB'000 | |
(Unaudited) | (Unaudited) | (Unaudited) | (Audited) | (Audited) | (Audited) | |
Current | ||||||
Bank loans - unsecured | 4.27-4.79 | 2021 | 108,220 | 4.35-4.79 | 2020 | 10,500 |
Bank loans - secured | 2.35-6.75 | 2021 | 174,745 | 2.10-6.31 | 2020 | 217,948 |
Current portion of long term | ||||||
bank loans - unsecured | 4.75 | 2020 | 10,000 | 4.75 | 2020 | 20,000 |
Current portion of long term | ||||||
bank loans - secured | - | - | - | 5.70-5.95 | 2020 | 48,500 |
292,965 | 296,948 | |||||
Non-current | ||||||
Senior notes (note (2)) | 7.43 | 2021 | 1,414,168 | 7.43 | 2021 | 1,383,551 |
1,414,168 | 1,383,551 | |||||
1,707,133 | 1,680,499 | |||||
Analysed into: | ||||||
Bank and other borrowings | ||||||
repayable: | ||||||
Within one year or on | ||||||
demand | 292,965 | 296,948 | ||||
In the second year | 1,414,168 | 1,383,551 | ||||
1,707,133 | 1,680,499 | |||||
48 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | Interim Report 2020 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
30 June 2020
15. INTEREST-BEARING BANK AND OTHER BORROWINGS (Continued)
Notes:
- Certain of the Group's bank loans are guaranteed by the Company.
-
On 8 September 2016, the Company issued five-year senior notes (the "Notes") with a par value of USD200 million at an effective interest rate of 7.43% per annum and the Notes will mature on 8 September 2021. The interest will be paid semi-annually in arrears.
The shares of Yestar Asia Company Limited and Yestar International (HK) Company Limited were pledged to the holders of the Notes. - Certain of the Group's bank loans are secured by the pledge of certain of the Group's deposits amounting to RMB40,848,000 (31 December 2019: RMB88,783,000).
16. SHARE CAPITAL AND TREASURY SHARES
30 June | 31 December | |
2020 | 2019 | |
(Unaudited) | (Audited) | |
RMB'000 | RMB'000 | |
Issued and fully paid: | ||
2,357,392,500 (31 December 2019: 2,371,872,500) | ||
ordinary shares of HKD0.025 each | 47,112 | 47,442 |
Treasury shares: | ||
4,962,500 (31 December 2019: 3,427,500) | ||
ordinary shares of HKD0.025 each | 114 | 77 |
47,226 | 47,519 | |
Interim Report 2020 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | 49 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
30 June 2020
16. SHARE CAPITAL AND TREASURY SHARES (Continued)
A summary of movements in the Company's share capital is as follows:
Number of | ||||
shares in issue | Share capital | |||
('000) | RMB'000 | |||
At 31 | December 2019 and 1 | January 2020 (audited) | 2,375,300 | 47,519 |
Repurchase and cancellation of shares (note) | (12,945) | (293) | ||
At 30 | June 2020 (unaudited) | 2,362,355 | 47,226 | |
Note: During the six months ended 30 June 2020, the Group repurchased 14,480,000 shares on the Hong Kong Stock Exchange for a total consideration of HK$18,076,500 in accordance with section 257 of the Hong Kong Companies Ordinance, among which 12,945,000 shares were cancelled and 4,962,500 shares are treasury shares.
17. RELATED PARTY TRANSACTIONS
- Compensation of key management personnel of the Group:
For the six months ended 30 June
2020 | 2019 | |
(Unaudited) | (Unaudited) | |
RMB'000 | RMB'000 | |
Short-term employee benefits | 4,071 | 4,336 |
Pension scheme contributions | 14 | 65 |
4,085 | 4,401 | |
50 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | Interim Report 2020 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
30 June 2020
18. FINANCIAL INSTRUMENTS BY CATEGORY
The carrying amounts of each of the categories of financial instruments as at the end of the reporting period are as follows:
Financial assets
As at 30 June 2020
Financial assets | |||
at fair value | Financial | ||
through | assets at | ||
profit or loss | amortised cost | Total | |
(Unaudited) | (Unaudited) | (Unaudited) | |
RMB'000 | RMB'000 | RMB'000 | |
Trade and bills receivables | - | 1,292,449 | 1,292,449 |
Financial assets included in prepayments, | |||
other receivables and other assets | - | 130,924 | 130,924 |
Pledged deposits | - | 70,925 | 70,925 |
Cash and cash equivalents | - | 708,588 | 708,588 |
- | 2,202,886 | 2,202,886 | |
As at 31 December 2019 | |||
Financial assets | |||
at fair value | Financial | ||
through | assets at | ||
profit or loss | amortised cost | Total | |
(Audited) | (Audited) | (Audited) | |
RMB'000 | RMB'000 | RMB'000 | |
Trade and bills receivables | - | 1,560,585 | 1,560,585 |
Financial assets included in prepayments, | |||
other receivables and other assets | - | 113,336 | 113,336 |
Financial assets at fair value through | |||
profit or loss | 32,000 | - | 32,000 |
Pledged deposits | - | 118,707 | 118,707 |
Cash and cash equivalents | - | 546,186 | 546,186 |
32,000 | 2,338,814 | 2,370,814 | |
Interim Report 2020 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | 51 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
30 June 2020
18. FINANCIAL INSTRUMENTS BY CATEGORY (Continued)
Financial liabilities As at 30 June 2020
Financial | |||
liabilities | |||
at fair value | |||
designated as | Financial | ||
such upon initial | liabilities at | ||
recognition | amortised cost | Total | |
(Unaudited) | (Unaudited) | (Unaudited) | |
RMB'000 | RMB'000 | RMB'000 | |
Trade and bills payables | - | 607,441 | 607,441 |
Financial liabilities included in other payables | |||
and accruals (note 14) | - | 1,297,750 | 1,297,750 |
Lease liabilities | - | 187,949 | 187,949 |
Interest-bearing bank and other borrowings | |||
(note 15) | - | 1,707,133 | 1,707,133 |
- | 3,800,273 | 3,800,273 | |
As at 31 December 2019 | |||
Financial | |||
liabilities | |||
at fair value | |||
designated as | Financial | ||
such upon initial | liabilities at | ||
recognition | amortised cost | Total | |
(Audited) | (Audited) | (Audited) | |
RMB'000 | RMB'000 | RMB'000 | |
Trade and bills payables | - | 599,206 | 599,206 |
Financial liabilities included in other payables | |||
and accruals (note 14) | - | 1,569,468 | 1,569,468 |
Lease liabilities | - | 220,359 | 220,359 |
Interest-bearing bank and other borrowings | |||
(note 15) | - | 1,680,499 | 1,680,499 |
- | 4,069,532 | 4,069,532 | |
52 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | Interim Report 2020 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
30 June 2020
19. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS
The carrying amounts and fair values of the financial instruments, other than those with carrying amounts that reasonably approximate to fair values, are as follows:
Carrying amounts | Fair values | |||
30 June | 31 December | 30 June | 31 December | |
2020 | 2019 | 2020 | 2019 | |
(Unaudited) | (Audited) | (Unaudited) | (Audited) | |
RMB'000 | RMB'000 | RMB'000 | RMB'000 | |
Financial assets | ||||
Financial assets at fair value | ||||
through profit or loss | - | 32,000 | - | 32,000 |
Financial liabilities | ||||
Interest-bearing bank and | ||||
other borrowings (non- | ||||
current portion) | 1,414,168 | 1,383,551 | 771,666 | 1,006,317 |
Management has assessed that the fair values of cash and cash equivalents, trade and bills receivables, trade and bills payables, financial assets included in prepayments, other receivables and other assets, financial liabilities included in other payables and accruals, and the current portion of interest-bearing bank and other borrowings approximate to their carrying amounts largely due to the short-term maturities of these instruments.
The Group's corporate finance team is responsible for determining the policies and procedures for the fair value measurement of financial instruments. The corporate finance team reports directly to the chief financial officer. At each reporting date, the corporate finance team analyses the movements in the values of financial instruments and determines the major inputs applied in the valuation. The valuation is reviewed and approved by the chief financial officer.
The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:
The fair values of the non-current portion of financial liabilities included the non-current portion of interest-bearing bank and other borrowings have been calculated by discounting the expected future cash flows using rates currently available for instruments with similar terms, credit risk and remaining maturities. The fair value of the Notes is based on the quoted market price. The Group's own non-performance risk for the non-current portion of financial liabilities included other long-term payables, and the non-current portion of interest-bearing bank and other borrowings as at 30 June 2020 was assessed to be insignificant.
Interim Report 2020 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | 53 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
30 June 2020
19. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS (Continued)
Fair value hierarchy
The following tables illustrate the fair value measurement hierarchy of the Group's financial instruments:
Assets measured at fair value:
The Group did not have any financial assets measured at fair value as at 30 June 2020.
As at 31 December 2019
Fair value measurement using | ||||
Significant | Significant | |||
Quoted prices in | observable | unobservable | ||
active markets | inputs | inputs | ||
Level 1 | Level 2 | Level 3 | Total | |
(Audited) | (Audited) | (Audited) | (Audited) | |
RMB'000 | RMB'000 | RMB'000 | RMB'000 | |
Financial assets at fair value | ||||
through profit or loss | 32,000 | - | - | 32,000 |
The movements in fair value measurements in Level 3 during the Period are as follows:
30 June | 31 December | |
2020 | 2019 | |
(Unaudited) | (Audited) | |
RMB'000 | RMB'000 | |
Amounts included in the non-current portion of payables to | ||
non-controlling interests | ||
At 1 January | - | 806,481 |
Decrease | - | (806,481) |
- | - | |
Liabilities measured at fair value:
The Group did not have any financial liabilities measured at fair value as at 30 June 2020 and 31 December 2019.
54 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | Interim Report 2020 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
30 June 2020
19. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS (Continued)
Fair value hierarchy (Continued)
Liabilities for which fair values are disclosed:
As at 30 June 2020
Fair value measurement using | ||||
Significant | Significant | |||
Quoted prices in | observable | unobservable | ||
active markets | inputs | inputs | ||
Level 1 | Level 2 | Level 3 | Total | |
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |
RMB'000 | RMB'000 | RMB'000 | RMB'000 | |
Interest-bearing bank and | ||||
other borrowings | 771,666 | - | - | 771,666 |
As at 31 December 2019 | ||||
Fair value measurement using | ||||
Significant | Significant | |||
Quoted prices in | observable | unobservable | ||
active markets | inputs | inputs | ||
Level 1 | Level 2 | Level 3 | Total | |
(Audited) | (Audited) | (Audited) | (Audited) | |
RMB'000 | RMB'000 | RMB'000 | RMB'000 | |
Interest-bearing bank and | ||||
other borrowings | 1,006,317 | - | - | 1,006,317 |
Interim Report 2020 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | 55 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
30 June 2020
20. SUBSEQUENT EVENT
On 7 August 2020, Yestar Medical and Anbaida Group Companies entered into the share transfer agreement, to purchase the remaining 30% equity interests in each of Anbaida Group Companies in 3 phases by 31 August 2021 at a consideration of RMB675 million. On 7 August 2020, Mr. Li Bin and Mr. Li Changgui ("Mr. Li") and Yestar Medical entered into an agreement of dispute resolution to resolve the arbitration that Mr. Li filed on 31 October 2019. The agreement of dispute resolution states that: (i) Yestar Medical shall pay the remaining 30% equity interests in each of Anbaida Group Companies at the consideration of RMB675 million; (ii) the payment schedule should be followed according to the agreement of dispute resolution in 3 phases; (iii) certain amount of legal fees incurred by Mr. Li and legal fees incurred in connection with the arbitration proceedings will be borne by Yestar Medical; and (iv) there is no further dispute between Yestar Medical and Mr. Li regarding this file. On 14 August 2020, Shanghai International Economics and Trade Arbitration Commission (Shanghai International Arbitration Center) issued an arbitral award that is consistent with the share transfer agreement and the agreement of dispute resolution. Upon completion of the performance of the arbitral award, the parties shall no longer have outstanding disputes over the original arbitration matters.
The original arbitration has been resolved and as at the report date, Yestar Medical's bank deposits amounting to RMB30,077,000 were still frozen by Shanghai Jinshan District People's Court.
21. APPROVAL OF THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The interim condensed consolidated financial statements were approved and authorised for issue by the board of directors on 26 August 2020.
56 | YESTAR HEALTHCARE HOLDINGS COMPANY LIMITED | Interim Report 2020 |
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