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ANNUAL REPORT 2017 Annual Report 2017 Contents 2 Corporate Information 3 Definition 7 Corporate Profile 8 CEO's Statement 12 Performance Overview 16 Management Discussion and Analysis 48 Corporate Governance Report 63 Biography of Directors and Senior Management 72 Directors’ Report 93 ESG Report 129 Independent Auditors’ Report 134 Consolidated Statement of Profit or Loss 135 Consolidated Statement of Comprehensive Income 136 Consolidated Statement of Financial Position 138 Consolidated Statement of Changes in Equity 139 Consolidated Statement of Cash Flows 141 Notes to Financial Statements CORPORATE INFORMATION BOARD OF NOMINATION HEAD OFFICE AND DIRECTORS COMMITTEE PRINCIPAL PLACE OF BUSINESS IN CHINA Chairman and Non- Mr. Zhang Yichen (Chairman) executive Directors Mr. Chow Siu Lui 8/F, Zhongyi Tower Mr. Kong Wei Mr. Zhang Yichen (Chairman) No. 6 Xizhimenwai Avenue Mr. Jiang Xin (Vice-chairman)** Xicheng District Mr. Luo Xiaofang (Vice-chairman) ## STRATEGY Beijing, China COMMITTEE Executive Directors SHARE REGISTRAR Mr. Jiang Xin (Chairman)** Mr. Guo Weiping Mr. Luo Xiaofang (Chairman) ## Computershare Hong Kong (Chief Executive Officer) Mr. Zhang Yichen Investor Services Limited Ms. Peng Jiahong Mr. Guo Weiping Shops 1712-1716, 17th Floor (Chief Financial Officer) Hopewell Centre 183 Queen’s Road East Non-executive RISK CONTROL COMMITTEE Wan Chai Directors Hong Kong Mr. Liu Zhiyong Mr. Su Guang (Chairman) Mr. Liu Xiaoping Mr. Liu Zhiyong AUDITOR Mr. Su Guang Ms. Peng Jiahong Mr. Zeng Yu* Ernst & Young COMPANY Independent Non- SECRETARY LEGAL ADVISERS executive Directors Wilson Sonsini Goodrich & Rosati Mr. Li Yinquan Ms. Cheng Pik Yuk Chiu & Partners Mr. Chow Siu Lui Mr. Kong Wei AUTHORISED Mr. Han Demin REPRESENTATIVES PRINCIPAL BANKERS Ms. Peng Jiahong Bank of Communications, Beijing AUDIT COMMITTEE Ms. Cheng Pik Yuk Fuwai Subbranch Bank of China (Hong Kong) Mr. Li Yinquan (Chairman) Limited Mr. Liu Xiaoping REGISTERED OFFICE Mr. Chow Siu Lui Room 702, Fairmont House COMPANY’S 8 Cotton Tree Drive WEBSITE REMUNERATION Central COMMITTEE Hong Kong www.universalmsm.com Mr. Chow Siu Lui (Chairman) Mr. Han Demin STOCK CODE Mr. Zeng Yu* 2666 Mr. Jiang Xin#** Mr. Luo Xiaofang## * Resigned with effect from 4 May 2017 ** Resigned with effect from 1 March 2018 # Appointed with effect from 4 August 2017 ## Appointed with effect from 1 March 2018 2 Universal Medical Financial & Technical Advisory Services Company Limited DEFINITION “Articles” the Company’s article of association “Audit Committee” the audit committee of the Board “Board” or “Board of the board of directors of our Company Directors” “CG Code” the “Corporate Governance Code” contained in Appendix 14 to the Listing Rules “CNTIC” China National Technical Import & Export Corporation (中國技術進出口總公 司), a company incorporated in the PRC and a wholly-owned subsidiary of GT-PRC “Company” or “Universal Universal Medical Financial & Technical Advisory Services Company Limited (環 Medical“ 球醫療金融與技術咨詢服務有限公司) (formerly known as 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 “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 “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 our Company 2017 Annual Report 3 DEFINITION “CVA” cerebral vascular accident “Director(s)” the director(s) of the Company “Evergreen” Evergreen021 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 “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), a state-owned enterprise, which is under the direct administration of the PRC central government “HK$” Hong Kong dollars, the lawful currency of Hong Kong “HKICPA” Hong Kong Institute of Certified Public Accountants “Hong Kong” the Hong Kong Special Administrative Region of the People’s Republic of China “International Land Port public not-for-profit First Affiliated Hospital of Xi’an Jiaotong University Hospital” International Land Port Hospital to be promoted by First Affiliated Hospital 4 Universal Medical Financial & Technical Advisory Services Company Limited DEFINITION “ITCCL” International Technological Cooperation Co., Ltd (國際技術合作有限公司), a company incorporated under the laws of the British Virgin Islands on 14 August 2014 with limited liability “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 “NHFPC” National Health and Family Planning Commission “Nomination Committee” the nomination committee of the Board “PRC” or “China” The People’s Republic of China, for the purpose of this annual 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 “Securities Dealing Code” the Company’s own code of conduct regarding directors’ and employee’s 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 2017 Annual Report 5 DEFINITION “Shaanxi Huahong” Shaanxi Huahong Medical Company Limited (陝西華虹醫藥有限公司), an indirect subsidiary of the Company “Share(s)” ordinary share(s) in the share capital of the Company “SOE” State-owned Enterprise “Stock Exchange” The Stock Exchange of Hong Kong Limited “Strategy Committee” the strategy committee of the Board “substantial shareholder(s)” has the meaning ascribed thereto under the Listing Rules “Uni-One” Universal Number One Co., Ltd, a company incorporated with limited liability under the laws of the Cayman Islands on 30 June 2008 and a direct wholly-owned subsidiary of our Company “USD” United States dollars, the lawful currency of the United States “Xi’an Qinrun” Xi’an Qinrun Medical Technology Development Co., Ltd.* (西安秦潤醫療科 技發展有限公司), a wholly-owned subsidiary of First Affiliated Hospital “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 our 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, through their respective wholly-owned subsidiaries, on 13 January 2017 6 Universal Medical Financial & Technical Advisory Services Company Limited CORPORATE PROFILE Universal Medical Financial & Technical Advisory Services Company Limited and its subsidiaries are a leading medical and health conglomerate. Focusing on the fast-growing healthcare service industry in China and leveraging on our diversified healthcare resources platform and strong financial capacity, we are committed to enhancing hospitals’ comprehensive capabilities in terms of healthcare technology, service quality, operating efficiency as well as managerial capacity. The controlling 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), a key state-owned enterprise under direct administration of the PRC central government and also a Fortune Global 500 company. Since our incorporation, leveraging on our in-depth insights into healthcare industry and rich experience of providing services to hospitals over the years, our strong financial capacity and business developing capability, we have accumulated over a thousand hospital customers across China, established good cooperation with hundreds of domestic and foreign well-known medical experts and academic leaders and formed strategic partnerships with famous healthcare services institutions in China, the United States, the United Kingdom, Germany and Norway, etc. Through our continuous expansion of healthcare resources, we have established a unique and innovative business model, providing customers with integrated healthcare services, which comprise healthcare financial services, hospital investment and management services, healthcare technology services focusing on clinical department upgrade, and healthcare digitalization services. Our headquarter is located in Hong Kong and we have set up an operation center in Beijing. We have also established four subsidiaries in Tianjin Free Trade Zone, set up or purchased three subsidiaries of International Land Port Hospital of the First Affiliated Hospital, and established representative offices in major cities