UMP Healthcare : Annual Results Announcement For The Year Ended 30 June 2021

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UMP HEALTHCARE HOLDINGS LIMITED

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 722)

ANNUAL RESULTS ANNOUNCEMENT

FOR THE YEAR ENDED 30 JUNE 2021

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1. = (a) + (b) + (c) + (d) + (e) + (f) + (g) + (h)+ (i) + (j) + (k) + (l) + (m) + (n) + (o) + (p)

1. EBITDA represents earnings before interest (including interest expenses on lease liabilities), tax, depreciation and amortisation.
2. Adjusted EBITDA is adjusted for certain non-recurring items, non-cash items and interest expense and depreciation of right-of-use assets, giving shareholders a proxy of operating cash flow generated by the Group's businesses in Hong Kong, Macau and Mainland China.
3. The comparative amount of adjusted EBITDA has been adjusted in respect of "Government subsidies" in order to match with the current year disclosure and provide a more comprehensive comparison in light of the current year amount.

Operating profit/(loss) by business lines and EBITDA are not standard measures under Hong Kong Financial Reporting Standards ("HKFRS") and therefore should not be considered in isolation or constructed as substitutes for analysis of HKFRS financial measures. The consolidated results of the Company and its subsidiaries for the year ended 30 June 2021 are shown on page 10 to 13.

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CHAIRMAN'S STATEMENT

Overview

COVID-19 has continued to present unprecedented challenges to the overall business environment of the Group during the last financial year. As a socially responsible healthcare group, we expanded our online product offerings in a timely manner to include virtual care telemedicine services and same-day-deliveryCOVID-19 screening test kits in the past year to help individuals and enterprises overcome the barriers of social distancing and achieve peace of mind amid concerns over the lingering healthcare crisis.

Despite the challenging economic environment, our Group continued to record steady performance for the financial year ended 30 June 2021. Our revenue increased by 11.7% from HK$557.5 million in FY2020 to HK$622.8 million, mainly due to strong growth in our imaging and specialist lines of business and health assessments performed. Our reported net profit decreased by 47.7% from HK$60.3 million in FY2020 to HK$31.5 million, mainly due to one-off adjustments recognised in both the current and prior year. Despite the macroeconomic uncertainty, we have taken prompt measures to mitigate the adverse impact of the pandemic on our operations, and the Group's financial position has remained healthy. Our adjusted EBITDA increased by 29.6% from HK$70.7 million in FY2020 to HK$91.7 million in FY2021, mainly attributable to strong growth in our imaging and specialist lines of business and health assessments performed which enjoyed relatively higher margin, while our corporate healthcare solutions service has been affected by the knock-on impact on corporates, particularly those in the travel, hospitality and retail sectors. Backed by our recognised business and financial strengths, the Board has recommended, subject to shareholders' approval, a final dividend of HK2.8 cents per share, taking our full year dividend to HK3.8 cents per share (FY2020 full year dividend: HK3.3 cents per share).

To achieve our strategic goals of expanding the number of our online and offline patient visits in Hong Kong, Macau and the Mainland China markets, we are determined to realise transformation on our solid foundation and have carried out a number of strategic decisions to update our internal governance structure and external business approaches during the year.

Enhanced Corporate Governance Structure

To foster growth of our business, ensure our strategic goals are aligned among our business units and streamline decision-making process, we have created UMP functional units comprising medical, finance and internal audit, legal and compliance, investor relations, technology and innovation as well as brand management reporting directly to a newly-established UMP Group management committee consisting of our Executive Directors. We believe strong commitment and clear strategic direction from the board is essential for our Group to achieve further milestones in our expansion plan. The synergies inspired by the newly-created functional units will allow us to retain, upskill and expand our talent pool and ensure we have the right enablers to achieve our strategic goals.

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As part of our continued strategic approach of talent recruitment and retention, we expanded our senior management team during the year by on-boarding professionals that have significant experience and knowledge in clinic chain management, information technology, finance, legal, and talent acquisition and resources to support the robust growth of our businesses.

Talent Attraction and Retention

We place an immense emphasis on strategic talent acquisition and efficient talent retention which we believe have lasting impact on our long-term business sustainability and growth. Employee engagement and competency building remain a key priority of our talent management approach. As an incentive scheme for our senior management members, we granted a total of 20,686,000 share options during the year to attract and retain talents who have made significant contribution to our business performance and results.

Despite the ongoing influence of the pandemic, our Group remains optimistic of the business outlook and seizes the opportunity of business expansion. As such, in July 2021, we expanded and relocated our headquarters in Central, Hong Kong to accommodate our rapid business growth. The new, enlarged office space supports our growth strategy and allows us to further expand our team and capabilities to serve a wider range of patients in the region.

Business Overview & Strategies

Hong Kong and Macau

Leveraging 31 years of strong development and industry experience, our Hong Kong and Macau business is the foundation for our past and future success. With a well-established team of clinical and business development professionals, we continue to generate good investment returns for our Hong Kong and Macau business notwithstanding the recent challenges imposed by COVID-19 and the associated economic worries. We continue to see significant potential for growth in our Hong Kong and Macau business, which allows us to cement our leading position in healthcare management services, as well as to expand our scope of clinical services.

As with many other developed economies around the globe, Hong Kong is witnessing a rapidly aging population. Such demographic traits lead to the rising prevalence of chronic diseases such as hypertension, diabetes and heart diseases. A full-service medical care is therefore crucial to serve the needs of individuals across different demographic.

With our proactive approach in seizing market opportunities, the Group is expanding its flagship medical centre at Wing On House in Central, Hong Kong, with a newly leased floor on 16/F with a total gross floor area of approximately 11,000 sq. ft. The new medical centre will provide dedicated specialist medical services, including the Group's first cardio metabolic centre, first physiotherapy and rehabilitation centre and a newly-extended specialist centre featuring elderly care, diabetes and chronic disease management, as well as preventive cardiology. This new flagship centre will be used to fulfill the huge demand rising from the aging population for years to come.

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Health assessment is another key segment of our clinical healthcare services, which has seen rapid growth during the year driven by enhanced focus on healthcare in the post-COVID era as well as immigration visa requirements. To cope with such growing demand, the Group is also renovating its existing leased floor on 14/F Wing On House with gross floor area of approximately 16,000 sq. ft. The floor will be dedicated to the Group's businesses of general medical services, including but not limited to a new dedicated health checkup centre and a new business unit targeting the B2B2C market, which is expected to be our growth engine for the next financial year. The expansion of our two medical floors will allow us to realise a one-stop medical care ecosystem to cater the needs of the B2B2C market, particularly in Central district. It is within our strategic plan to develop such healthcare ecosystem in areas with increasing demand.

As part of our growth strategy, we are also strategically expanding our medical network to untapped locations to expand the offerings of our offline clinical services to areas that have seen the most rapid population growth in recent years. Consumer behaviour has seen expected changes due to the pandemic. The launch of new medical service points at strategic locations will further expand our large medical networks to enable our Group to cater for patients with different demands and preferences.

Our professional team of General Practitioners, specialist practitioners and other medical specialists are our valuable assets to help us realise our mission of becoming a trusted and preferred partner offering quality and affordable healthcare services to an inclusive clientele. We have been growing our professional medical team and have recruited additional medical expertise in specialties including family medicine, internal medicine, geriatric care, radiology, imaging and laboratory during the year to support the aforementioned expansion and development.

Against the backdrop of the profound impact of COVID-19 and increasing healthcare concern driven by an aging population in Hong Kong, the demand for advanced medical imaging services has seen rapid growth with enormous development potential. Our medical imaging and laboratory business delivered strong performance during the year, achieving significant revenue growth of over 50% year-on-year.

To support our growth in this sector, we completed the acquisition of 75% of the beneficial interests of an MRI centre. Following the acquisition, UMP has become one of the largest private medical imaging and laboratory operators in Hong Kong with 10 service points, offering a broad service coverage including PET-CT, CT Scan, MRI, ultrasound, mammogram and other medical imaging and laboratory services in some of the most populated areas in Hong Kong such as Causeway Bay, Central, Tsim Sha Tsui and Mongkok. Smooth business integration of the acquired MRI centre has generated revenue growth of more than 20% as at 30 June 2021.

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