通用環球醫療集團有限公司 GENERTEC UNIVERSAL MEDICAL GROUP COMPANY LIMITED ANNUAL REPORT 2018 CONTENTS 2 Corporate Information 3 Definition 7 Corporate Profile 8 CEO’s Statement 12 Performance Overview 16 Management Discussion and Analysis 58 Corporate Governance Report 74 Biography of Directors and Senior Management 84 Directors’ Report 104 Environmental, Social and Governance Report 134 Independent Auditor’s Report 139 Consolidated Statement of Profit or Loss 140 Consolidated Statement of Comprehensive Income 141 Consolidated Statement of Financial Position 143 Consolidated Statement of Changes in Equity 145 Consolidated Statement of Cash Flows 147 Notes to Financial Statements CORPORATE INFORMATION BOARD OF REMUNERATION REGISTERED OFFICE DIRECTORS COMMITTEE Room 702, Fairmont House Chairman and Mr. Chow Siu Lui (Chairman) 8 Cotton Tree Drive Vice-chairman Mr. Liu Zhiyong* Central Mr. Han Demin Hong Kong Mr. Zhang Yichen (Chairman) Mr. Luo Xiaofang** Ms. Peng Jiahong Mr. Jiang Xin# (Vice-chairwoman)* HEAD OFFICE AND Mr. Luo Xiaofang PRINCIPAL PLACE OF (Vice-chairman)** NOMINATION BUSINESS IN CHINA Mr. Jiang Xin (Vice-chairman) # COMMITTEE 8/F, Zhongyi Tower No. 6 Xizhimenwai Avenue Executive Directors Mr. Zhang Yichen (Chairman) Mr. Chow Siu Lui Xicheng District Ms. Peng Jiahong Mr. Kong Wei Beijing, China (Chief Executive Officer*, Chief Financial Officer) SHARE REGISTRAR Mr. Yu Gang* STRATEGY Mr. Guo Weiping COMMITTEE Computershare Hong Kong (Chief Executive Officer)## Investor Services Limited Ms. Peng Jiahong (Chairwoman)* Shops 1712-1716, 17th Floor Mr. Zhang Yichen Hopewell Centre Non-executive Ms. Liu Kun* Directors 183 Queen’s Road East Mr. Luo Xiaofang (Chairman)** Wan Chai Mr. Zhang Yichen Mr. Guo Weiping ## Hong Kong Ms. Liu Kun* Mr. Liu Zhiyong RISK CONTROL AUDITOR Mr. Liu Xiaoping COMMITTEE Mr. Su Guang Ernst & Young Mr. Luo Xiaofang** Mr. Su Guang (Chairman) Mr. Jiang Xin# Mr. Liu Zhiyong LEGAL ADVISER Ms. Peng Jiahong Independent Non- Wilson Sonsini Goodrich & Rosati executive Directors COMPANY Mr. Li Yinquan SECRETARY PRINCIPAL BANKERS Mr. Chow Siu Lui Bank of Communications, Beijing Mr. Kong Wei Ms. Cheng Pik Yuk Fuwai Subbranch Mr. Han Demin Bank of China (Hong Kong) AUTHORISED Limited AUDIT COMMITTEE REPRESENTATIVES Mr. Li Yinquan (Chairman) Ms. Peng Jiahong COMPANY’S Mr. Liu Xiaoping Ms. Cheng Pik Yuk WEBSITE Mr. Chow Siu Lui www.universalmsm.com STOCK CODE 2666 * Appointed with effect from 30 November 2018 ** Appointed with effect from 1 March 2018 and resigned with effect from 28 November 2018 # Resigned with effect from 1 March 2018 ## Resigned with effect from 28 November 2018 2 Genertec Universal Medical Group Company Limited DEFINITION “2019 AGM” the AGM to be held on 5 June 2019 “AGM” annual general meeting of the Company “Ansteel General Hospital” Ansteel Group General Hospital (鞍鋼集團公司總醫院), a leading comprehensive Grade III Class A hospital in Anshan City, Liaoning Province, the PRC “Ansteel Group” Ansteel Group Corporation Limited (鞍鋼集團有限公司), a state-owned enterprise established in the PRC in May 2010 “Articles” the Company’s articles of association “Audit Committee” the audit committee of the Board “Board” or “Board of the board of directors of the Company Directors” “CEC” China Electronics Corporation “CEC Caihong” CEC Caihong Group Co., Ltd. (咸陽中電彩虹集團控股有限公司) “CG Code” the “Corporate Governance Code” contained in Appendix 14 to the Listing Rules “CNSG Hong Sifang” CNSG Anhui Hong Sifang Co., Ltd. (中鹽安徽紅四方股份有限公司), a company incorporated under the laws of the PRC in July 2003 “Companies Ordinance” the Companies Ordinance (Chapter 622 of the Laws of Hong Kong), which has become effective from 3 March 2014, as amended, supplemented or otherwise modified from time to time “Company” or “Universal Genertec Universal Medical Group Company Limited (通用環球醫療集團有 Medical“ 限公司) (formerly known as Universal Medical Financial & Technical Advisory Services Company Limited (環球醫療金融與技術咨詢服務有限公司), Universal Medical Services & Health Management Company Limited (環球醫療服務有 限公司) and Universal International Leasing Co., Limited (環球國際租賃有限 公司)), a company incorporated with limited liability under the laws of Hong Kong on 19 April 2012 2018 Annual Report 3 DEFINITION “controlling shareholder” has the meaning ascribed thereto under the Listing Rules “CULC” China Universal Leasing Co., Ltd.（中國環球租賃有限公司） , a wholly foreign-owned enterprise incorporated in China on 1 November 1984 and a wholly-owned subsidiary of the Company “CVA” cerebral vascular accident “Director(s)” the director(s) of the Company “Evergreen” Evergreen 021 Co., Ltd, a company incorporated under the laws of the British Virgin Islands on 14 August 2014 with limited liability “First Affiliated Hospital” First Affiliated Hospital of Xi’an Jiaotong University (西安交通大學第一附屬 醫院) “Group”, “our Group”, the Company and its subsidiaries “we” or “us” “GT-HK” Genertec Hong Kong International Capital Limited (通用技術集團香港國際 資本有限公司), a company incorporated under the laws of Hong Kong on 24 March 1994 with limited liability, an indirect wholly-owned subsidiary of GT-PRC, and one of the controlling shareholders of the Company “GT-PRC” China General Technology (Group) Holding Company Limited (中國通用技術 (集團)控股有限責任公司), which is a state-owned enterprise under the direct administration of the PRC central government, the controlling shareholder of the Company “HK$” Hong Kong dollars, the lawful currency of Hong Kong “Hong Kong” the Hong Kong Special Administrative Region of the People’s Republic of China 4 Genertec Universal Medical Group Company Limited DEFINITION “Listing Rules” the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, as amended or supplemented from time to time “Model Code” the Model Code for Securities Transactions by Directors of Listed Issuers contained in Appendix 10 to the Listing Rules “Nomination Committee” the nomination committee of the Board “Pangang Chengdu Pangang Group Chengdu Hospital (攀鋼集團成都醫院), a comprehensive Hospital” Grade II Class A hospital in Chengdu City, Sichuan Province, the PRC “Pangang General Hospital” Pangang Group General Hospital (攀鋼集團總醫院), a leading comprehensive Grade III Class A hospital in Panzhihua City, Sichuan Province, the PRC “Pangang Group” Panzhihua Iron and Steel (Group) Company Limited (攀鋼集團有限公司), a state-owned enterprise established in the PRC in October 1989 “PRC” or “China” The People’s Republic of China, for the sole purpose of this report, excluding Hong Kong, Macau and Taiwan “Prospectus” the prospectus issued by the Company on 24 June 2015 “Remuneration Committee” the remuneration committee of the Board “Risk Control Committee” the risk control committee of the Board “RMB” Renminbi, the lawful currency of the PRC “SASAC” The State-owned Assets Supervision and Administration Commission of the State Council (國務院國有資產監督管理委員會) “Securities Dealing Code” the Company’s own code of conduct regarding directors’ and employees’ dealings in the Company’s securities “SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), as amended or supplemented from time to time “Shaanxi Huahong” Shaanxi Huahong Medical Company Limited (陝西華虹醫藥有限公司), an indirect subsidiary of the Company 2018 Annual Report 5 DEFINITION “Share(s)” ordinary share(s) in the share capital of the Company “Shareholder(s)” holder(s) of Shares “SOE(s)” state-owned enterprise(s) “Stock Exchange” The Stock Exchange of Hong Kong Limited “Strategy Committee” the strategy committee of the Board “USD” the lawful currency of the United States “Wiseman” Wiseman Hospital Investment Management (Tianjin) Co., Ltd. (融慧濟民醫 院投資管理（天津）有限公司), a wholly-owned subsidiary of the Company established in the PRC in 2015 “XD Group” China XD Group Co., Ltd. (中國西電集團有限公司), a state-owned enterprise established in the PRC in July 1959 “XD Group Hospital” Xi’an XD Group Hospital (西電集團醫院), a leading comprehensive Grade III Grade A hospital in Xi’an City, Shaanxi Province, the PRC “Xi’an Aero-Engine Group” AECC Xi’an Aero-Engine Ltd. (中國航發西安航空發動機有限公司), a company incorporated under the laws of the PRC in March 1998 “Xi’an Ronghui” Xi’an Ronghui Hospital Construction Management Co., Ltd. (西安融慧醫院 建設管理有限公司), a wholly-owned subsidiary of the Company “Xi’an Wanheng” Xi’an Wanheng Medical Technology Development Co., Ltd. (西安萬恒醫療 科技發展有限公司), a company established jointly by Universal Medical and First Affiliated Hospital of Xi’an Jiaotong University (西安交通大學第一附屬 醫院), through their respective wholly-owned subsidiaries, on 13 January 2017 “Yantai Port Group” Yantai Port Group Co., Ltd. (煙台港集團有限公司), a company incorporated under the laws of the PRC with limited liability in November 1984 6 Genertec Universal Medical Group Company Limited CORPORATE PROFILE Genertec Universal Medical Group Company Limited (通用環球醫療集團有限公司), along with its subsidiaries, is a leading medical and health conglomerate in China. Focused on China’s rapid growing healthcare industry, the Company has been committed to practically enhancing its hospitals’ comprehensive strength by improving their technical level, service capability, operational efficiency and management effectiveness, with its medical resources and strong financing support. The largest shareholder of the Company is China General Technology (Group) Holding Company Limited (中國通用技術(集團)控股有限責任公司), which is a backbone state-owned enterprise under direct administration of the PRC central government, focusing on medical healthcare industry. Based on years of in-depth understanding and service experience in the medical industry, strong financing