Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

MediNet Group Limited

醫匯集團有限公司
(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 8161)

INTERIM RESULTS ANNOUNCEMENT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2016

CHARACTERISTICS OF THE GROWTH ENTERPRISE MARKET ("GEM") OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE "STOCK EXCHANGE")

GEM has been positioned as a market designed to accommodate companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors. Given the emerging nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board of the Stock Exchange and no assurance is given that there will be a liquid market in the securities traded on GEM.

This announcement, for which the directors (the "Directors") of MediNet Group Limited (the "Company") collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on GEM of the Stock Exchange (the "GEM Listing Rules") for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this announcement is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this announcement misleading.

This announcement will remain on the Stock Exchange's website at www.hkexnews.hk, and in the case of the announcement, on the "Latest Company Announcements" page for at least seven days from the date of its publication and the Company's website at www.medinetgroup.com.

FINANCIAL HIGHLIGHTS

The board of Directors (the “Board”) of the Company is pleased to announce the unaudited condensed consolidated results of the Company and its subsidiaries (collectively, the “Group”) for the six months ended 30 September 2016, together with the unaudited comparative figures for the corresponding period in 2015, as follows:

| | For the six months ended
30 September | | |
| --- | --- | --- | --- |
| | 2016
HK$’000 | 2015
HK$’000 | Change % |
| Revenue | 48,630 | 44,114 | 10.2% |
| Loss for the period | (2,525) | (1,990) | 26.9% |

The Group’s revenue amounted to approximately HK$48.6 million for the six months ended 30 September 2016, representing an increase of approximately HK$4.5 million or approximately 10.2% as compared with the six months ended 30 September 2015.
The loss for the period of the Group is approximately HK$2.5 million for the six months ended 30 September 2016, representing an increase of approximately HK$0.5 million or approximately 26.9% as compared with the six months ended 30 September 2015.
The Board does not recommend the payment of an interim dividend for the six months ended 30 September 2016.

– 2 –

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the six months ended 30 September 2016

	Notes	Six months ended 30 September
		2016 HK$'000 (Unaudited)	2015 HK$'000 (Unaudited)
Revenue	3	48,630	44,114
Other income	4	448	1,339
Other gains and losses	5	114	(767)
Medical and dental professional services expenses		(23,956)	(20,489)
Staff costs		(11,439)	(10,233)
Depreciation of property, plant and equipment		(630)	(1,650)
Cost of medical and dental supplies		(1,881)	(1,695)
Rental expenses		(2,957)	(2,041)
Other expenses		(5,740)	(3,674)
Finance costs		-	(474)
Listing expenses		(4,190)	(5,165)
Loss before taxation	6	(1,601)	(735)
Income tax expense	7	(924)	(1,255)
Loss for the period		(2,525)	(1,990)
Other comprehensive income
Item that will not be subsequently reclassified to profit or loss:
Surplus on revaluation of a land and building		-	1,652
Other comprehensive income for the period		-	1,652
Total comprehensive expense for the period		(2,525)	(338)
Loss for the period attributable to:
Owners of the company		(2,391)	(1,990)
Non-controlling interest		(134)	-
		(2,525)	(1,990)
Total comprehensive expense attributable to:
Owners of the Company		(2,391)	(338)
Non-controlling interest		(134)	-
		(2,525)	(338)
Loss per share — Basic (Hong Kong cents)	9	(0.25)	(0.26)

At 30 September 2016

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 30 September 2016

	Notes	At 30 September 2016 HK$'000 (Unaudited)	At 31 March 2016 HK$'000 (Audited)
Non-current assets
Property, plant and equipment	10	3,755	1,896
Rental deposits	11	1,557	652
Deferred tax assets		83	83
Loans and receivables	12	13,000	-
		18,395	2,631
Current assets
Inventories		503	504
Held-for-trading investments		-	3,413
Accounts and other receivables	11	14,461	18,133
Amount due from a director		43	660
Amounts due from related parties		30	352
Amount due from a non-controlling interest		5	-
Bank balances and cash		67,296	22,054
		82,338	45,116
Current liabilities
Accounts and other payables	13	18,422	24,550
Taxation payable		1,231	602
		19,653	25,152
Net current assets		62,685	19,964
Total assets less current liabilities		81,080	22,595
Non-current liability		1	1
Deferred tax liability
Net assets		81,079	22,594
Capital and reserves
Share capital	14	10,400	-*
Reserves		70,808	22,594
Equity attributable to owners of the Company		81,208	22,594
Non-controlling interest		(129)	-
Total equity		81,079	22,594

Less than HK$1,000.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 September 2016

BASIS OF PREPARATION

The condensed consolidated financial statements have been prepared in accordance with Hong Kong Accounting Standard (“HKAS”) 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”) as well as with the applicable disclosure requirements of Appendix 15 to the Rules Governing the Listing of Securities on the Growth Enterprise Market of The Stock Exchange of Hong Kong Limited.

SIGNIFICANT ACCOUNTING POLICIES

The condensed consolidated financial statements have been prepared on the historical cost basis, except for a property and certain financial instruments which are measured at revalued amount or fair values.

Except as described below, the accounting policies and methods of computation used in the condensed consolidated financial statements for the six months ended 30 September 2016 are the same as those followed in the preparation of the annual consolidated financial statements of the Group for the year ended 31 March 2016.

(i) Application of new and revised Hong Kong Financial Reporting Standards (“HKFRSs”)

During the period, the Group has applied, for the first time, the following new amendments to HKFRSs issued by the HKICPA that are relevant for the preparation of the Group’s condensed consolidated financial statements.

Amendments to HKFRS 11	Accounting for Acquisitions of Interests in Joint Operations
Amendments to HKAS 1	Disclosure Initiative
Amendments to HKAS 16 and HKAS 38	Clarification of Acceptable Methods of Depreciation and Amortisation
Amendments to HKAS 16 and HKAS 41	Agriculture: Bearer Plants
Amendments to HKAS 27	Equity Method in Separate Financial Statements
Amendments to HKFRS 10, HKFRS 12 and HKAS 28	Investment Entities: Applying the Consolidation Exception
Amendments to HKFRSs	Annual Improvements to HKFRSs 2012–2014 Cycle

The adoption of these amendments to HKFRSs in the current interim period has had no material effect on the amounts reported in and/or disclosures set out in this condensed consolidated financial statements.

(ii) Application of new accounting policy in respect of non-controlling interests

Profit or loss and each item of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

REVENUE AND SEGMENT INFORMATION

The following is an analysis of the Group’s revenue and results by operating segments:

Six months ended 30 September 2016

	Dental solutions and dental services HK$’000 (unaudited)	Medical solutions and medical services HK$’000 (unaudited)	Segment total HK$’000 (unaudited)	Eliminations HK$’000 (unaudited)	Total HK$’000 (unaudited)
SEGMENT REVENUE
External revenue	11,978	36,652	48,630	–	48,630
Inter-segment revenue	342	–	342	(342)	–
Segment revenue	12,320	36,652	48,972	(342)	48,630
Segment profit	981	4,387	5,368		5,368
Unallocated expenses					(3,262)
Unallocated income					509
Unallocated loss					(26)
Listing expenses					(4,190)
Loss before taxation					(1,601)

Six months ended 30 September 2015

	Dental solutions and dental services HK$’000 (unaudited)	Medical solutions and medical services HK$’000 (unaudited)	Segment total HK$’000 (unaudited)	Eliminations HK$’000 (unaudited)	Total HK$’000 (unaudited)
SEGMENT REVENUE
External revenue	11,683	32,431	44,114	–	44,114
Inter-segment revenue	280	–	280	(280)	–
Segment revenue	11,963	32,431	44,394	(280)	44,114
Segment profit	1,094	4,665	5,759		5,759
Unallocated expenses					(1,352)
Unallocated income					1,264
Unallocated loss					(767)
Finance costs					(474)
Listing expenses					(5,165)
Loss before taxation					(735)

Revenue from type of services

	Six months ended 30 September
	2016 HK$’000 (Unaudited)	2015 HK$’000 (Unaudited)
Provision of healthcare solutions to contract customers, which mainly comprise of corporations and insurance companies:
Medical services	27,854	25,483
Dental services	3,537	3,712
Provision of healthcare services to self-paid patients, which refer to individual patients who visit the medical centres or dental clinics run by the Group and pay out of their own expenses:
Medical services	8,798	6,948
Dental services	8,441	7,971
	48,630	44,114

4. OTHER INCOME

	Six months ended 30 September
	2016 HK$'000 (Unaudited)	2015 HK$'000 (Unaudited)
Dividend income	–	115
Imputed interest income from the then shareholder of the Hong Kong Subsidiaries	–	267
Interest income on loans and receivables	152	–
Interest income on bank deposits	50	–
Bank interest income	2	1
Others	244	956
	448	1,339

5. OTHER GAINS AND LOSSES

	Six months ended 30 September
	2016 HK$'000 (Unaudited)	2015 HK$'000 (Unaudited)
Gain on disposal of property, plant and equipment	140	–
Loss on fair value change of held-for-trading investments	(26)	(767)
	114	(767)

6. LOSS BEFORE TAXATION

	Six months ended 30 September
	2016 HK$'000 (Unaudited)	2015 HK$'000 (Unaudited)
Loss before taxation has been arrived at after charging:
Cost of inventories recognised as an expense	1,881	1,695

7. INCOME TAX EXPENSE

	Six months ended 30 September
	2016 HK$'000 (Unaudited)	2015 HK$'000 (Unaudited)
Current tax	924	1,111
Deferred tax	–	144
	924	1,255

Hong Kong Profits Tax is calculated at 16.5% on the estimated assessable profit for both periods.

8. DIVIDENDS

The directors of the Company does not recommend any interim dividend for the six months ended 30 September 2016 (six months ended 30 September 2015: nil).

During the current period, a final dividend of HK0.12 cents (six months ended 30 September 2015: nil) per share amounting to approximately HK$1,248,000 (six months ended 30 September 2015: nil) was declared and paid to the shareholders in respect of the year ended 31 March 2016.

9. LOSS PER SHARE

	Six months ended 30 September
	2016	2015
	HK$'000	HK$'000
	(Unaudited)	(Unaudited)
Loss for the purpose of calculating basic loss per share for the period	(2,391)	(1,990)
	'000	'000
Number of shares: Weighted average number of ordinary shares for the purpose of calculating basic loss per share	953,333	780,000

The weighted average number of ordinary shares for the purpose of calculating basic loss per share for the six months ended 30 September 2016 and 2015 has been determined on the assumption that the Capitalisation Issue had been effective on 1 April 2015.

No diluted loss per share for the current and prior period was presented as there were no dilutive potential ordinary shares in issue.

10. MOVEMENTS IN PROPERTY, PLANT AND EQUIPMENT

During the period, the Group disposed of certain fully depreciated property, plant and equipment (six months ended 30 September 2015: nil) for cash proceeds of approximately HK$140,000 (six months ended 30 September 2015: nil), resulting in a gain on disposal of approximately HK$140,000 (six months ended 30 September 2015: nil).

In addition, the Group spent approximately HK$2,489,000 (six months ended 30 September 2015: HK$485,000), during the period on acquisition of property, plant and equipment for the purpose of expanding and upgrading the Group's capacity for operation.

10 -

11. ACCOUNTS AND OTHER RECEIVABLES, RENTAL DEPOSITS

| | At 30 September 2016
HK$’000
(Unaudited) | At 31 March 2016
HK$’000
(Audited) |
| --- | --- | --- |
| Accounts receivables | 7,760 | 9,598 |
| Other receivables | | |
| — Other receivables | 4,703 | 4,199 |
| — Prepayments | 1,477 | 3,465 |
| — Rental and utility deposits | 2,078 | 1,523 |
| Total accounts and other receivables | 16,018 | 18,785 |
| Less: Receivables within twelve months shown under current assets | (14,461) | (18,133) |
| Rental deposits shown under non-current assets | 1,557 | 652 |

The customers of the Group would usually settle payments by cash, credit cards and Easy Pay System ("EPS"). For credit card and EPS payments, the banks will normally settle the amounts a few days after the trade date. Payments by customers using medical cards will normally be settled by the medical card issuing companies or banks within 60 to 90 days from the invoice dates.

The following is an aged analysis of accounts receivables based on the invoice date:

| | At 30 September 2016
HK$’000
(Unaudited) | At 31 March 2016
HK$’000
(Audited) |
| --- | --- | --- |
| Within 30 days | 3,787 | 4,092 |
| 31 to 60 days | 2,456 | 3,615 |
| 61 to 90 days | 1,261 | 1,046 |
| 91 to 180 days | 256 | 845 |
| | 7,760 | 9,598 |

12. LOANS AND RECEIVABLES

During the period, the Group purchased debt securities that are issued by listed companies in Hong Kong, and carried fixed interest rate at 4.5% to 8% per annum, payable quarterly, and will mature in 2018.

11 -

13. ACCOUNTS AND OTHER PAYABLES

| | At 30 September 2016
HK$’000
(Unaudited) | At 31 March 2016
HK$’000
(Audited) |
| --- | --- | --- |
| Accounts payables | 9,204 | 9,032 |
| Other payables | 596 | 925 |
| Receipt in advance | 6,920 | 9,534 |
| Accrued expenses | 1,702 | 5,059 |
| | 18,422 | 24,550 |

The credit period of accounts payables is from 30 to 120 days.

The following is an aged analysis of accounts payables based on the invoice date at the end of each period:

| | At 30 September 2016
HK$’000
(Unaudited) | At 31 March 2016
HK$’000
(Audited) |
| --- | --- | --- |
| Within 30 days | 3,709 | 3,479 |
| 31 to 60 days | 2,799 | 2,889 |
| 61 to 90 days | 2,544 | 2,485 |
| 91 to 180 days | 152 | 179 |
| | 9,204 | 9,032 |

12 -

14. SHARE CAPITAL

The share capital of the Group at 30 September 2016 represented the issued and fully paid share capital of the Company and details of movements of authorised and issued capital of the Company upto 30 September 2016 are as follow:

	Number of shares	Share capital HK$
Ordinary share of HK$0.01 each
Authorised:
At incorporation and 31 March 2016 (note i)	39,000,000	390,000
Increase during the period (note ii)	4,961,000,000	49,610,000
At 30 September 2016	5,000,000,000	50,000,000
Issued and fully paid:
At incorporation	1	0.01
Allotment of shares (note iii)	99	0.99
At 31 March 2016	100	1
Capitalisation Issue	779,999,900	7,799,999
Issue of new shares upon listing	260,000,000	2,600,000
At 30 September 2016	1,040,000,000	10,400,000

Notes:

(i) The Company was incorporated on 20 August 2015 with an authorised share capital of HK$390,000 dividend into 39,000,000 ordinary shares of HK$0.01 each.

(ii) On 19 May 2016, the Company passed written resolution pursuant to which the authorised share capital of the Company was increased by HK$49,610,000 by the creation of 4,961,000,000 shares of par value HK$0.01 each.

(iii) On 11 November 2015, the Company issued 74 shares and 25 shares to Medinet International Limited and NSD Capital Limited respectively.

MANAGEMENT DISCUSSION AND ANALYSIS

INTRODUCTION

The Group is principally engaged in the provision of corporate medical and dental solutions to our contract customers (which mainly comprise insurance companies and corporations in terms of revenue) through (i) design and administration of tailored medical and/or dental benefit plans for the contract customers and the provision of different combinations of medical and/or dental services through the MediNet Network, as defined in the prospectus of the Company dated 24 May 2016 (the “Prospectus”), to the plan members (including members and employees of contract customers); and (ii) the operation of our MediNet Centres, as defined in the Prospectus, and Dental Clinics, as defined in the Prospectus, offering services to both plan members and self-paid patients (which generally refer to patients who visit our MediNet Centres and/or Dental Clinics and pay out their own expenses).

BUSINESS REVIEW AND OUTLOOK

The MediNet Network comprised more than 400 points of services across Hong Kong, including the MediNet Centres and Dental Clinics, as well as the affiliated clinics and affiliated auxiliary services providers at which a range of medical and dental services are provided by doctors, dentists, dental hygienists, affiliated services providers and other medical and dental professionals. The Group’s competitive strengths include (i) well-established presence in the corporate medical solutions industry in Hong Kong and well-established MediNet Network; (ii) the long-term rapport with major customers and suppliers; and (iii) the experienced and dedicated management team of the Group. Throughout its operating history, the Directors believe that the Group has established a strong presence in the corporate medical solutions industry in Hong Kong which may give it an advantage in terms of maintaining existing contract customers and securing new business opportunities.

For the six months ended 30 September 2016, the Group recorded a revenue growth, mainly due to the increased revenue generated from the medical solutions segment. The Group possess the expertise and experience to deliver medical and dental services and solutions to its customers and the demand for the Group’s services increased and thus the revenue of the Group recorded a growth in the current year.

The listing of the Company (the “Listing”) provided additional capital to the Group to implement the corporate plans as set out in the Prospectus. Furthermore, the Listing also strengthened the financial position and enhanced the competitiveness of the Group.

Looking forward, the Directors consider that the future opportunities and challenges of the Group will be related to the macroeconomic environment which affects the demand for secondary dental services in Hong Kong as well as the potential rising of operating costs. The Directors believe that the Group will benefit from certain industry drivers, including but not limited to (i) increasing average life expectancy and aging population in Hong Kong; (ii) increasing demand from patients due to increasing health awareness and subsidies from the government; and (iii) higher demand for corporate medical solutions services in Hong Kong due to increasing number of companies and more regional offices set up by multinational companies.

13 -

FINANCIAL REVIEW

Revenue

Our revenue increased from approximately HK$44.1 million for the six months ended 30 September 2015 to approximately HK$48.6 million for the six months ended 30 September 2016, representing a growth of approximately 10.2%. The following table sets forth a breakdown of the Group's revenue:

| | Six-month period ended
30 September 2016 | | Six-month period ended
30 September 2015 | |
| --- | --- | --- | --- | --- |
| | HK$'000 | % | HK$'000 | % |
| Medical solutions to contract customers | 27,854 | 57.3 | 25,483 | 57.8 |
| Medical services to self-paid patients | 8,798 | 18.1 | 6,948 | 15.7 |
| Dental solutions to contract customers | 3,537 | 7.3 | 3,712 | 8.4 |
| Dental services to self-paid patients | 8,441 | 17.3 | 7,971 | 18.1 |
| | 48,630 | 100 | 44,114 | 100 |

The Listing provided additional capital to the Group to implement the corporate plans as set out in the Prospectus under the heading of "Business — Business Strategies" and "Statement of Business Objectives and Use of Proceeds — Implementation Plans". Therefore, we have expanded our Dental Clinic located in Central from 3 surgery rooms to 4 surgery rooms so the revenue derived from provision of dental services to self-paid patients increased by approximately 5.9% from approximately HK$8.0 million for the six-month period ended 30 September 2015 to HK$8.4 million for the six-month period ended 30 September 2016. We also relocated our MediNet Centre in Central so as to provide better services quality and capacity to our customers, resulting in an increase in the revenue derived from provision of medical services to self-paid patients by approximately 26.6% from approximately HK$6.9 million for the six-month period ended 30 September 2015 to HK$8.8 million for the six-month period ended 30 September 2016. The revenue of dental solutions to contract customers slightly decreased by approximately 4.7% from approximately HK$3.7 million for the six-month period ended 30 September 2015 to approximately HK$3.5 million for the six-month period ended 30 September 2016, primarily due to decreased number of contract customers.

14 -

15 -

Other income

Other income decreased by approximately 66.5% from approximately HK$1.3 million for the six-month period ended 30 September 2015 to approximately HK$0.4 million for the six-month period ended 30 September 2016 due to decrease in other services income which included other services income from laboratory and other healthcare services provider, bank interest income and dividend income from listed equity securities in Hong Kong.

Medical and dental professional services expenses

The Group’s medical and dental professional services expenses increased by approximately 16.9% from approximately HK$20.5 million for the six-month period ended 30 September 2015 to approximately HK$24.0 million for the six-month period ended 30 September 2016, mainly as a result of the combined effect of the following:

(1) The aggregate amount of fees to affiliated doctors and affiliated auxiliary services providers and reimbursement to plan members of the Group’s contract customers amounted to approximately HK$17.6 million for the six-month period ended 30 September 2016 and approximately HK$16.4 for the six-month period ended 30 September 2015, representing an increase of approximately 7.2%. Such increase was mainly due to an increase in the amount of medical services received by plan members through our MediNet Network or reimbursed by us as a result of an increase usage by the active member of contract customers of the Group. The approximate 7.2% increase in the aggregate amount of fees to affiliated doctors and affiliated auxiliary services providers and reimbursement to plan members also increased in line with the approximate 8.2% increase in the Group’s revenue from the provision of medical solutions to contract customer during the relevant period.

(2) Fees for engaging external dentists increased by approximately 12.5% from approximately HK$978,000 for the six-month period ended 30 September 2015 to approximately HK$1.1 million for the six-month period ended 30 September 2016 as the Group experienced an increase in demand from self-paid patients for certain secondary dental care services which were carried out by external dentists with relevant expertise.

(3) Laboratory charges increased by approximately 25.6% from approximately HK$3.1 million for the six-month period ended 30 September 2015 to approximately HK$3.9 million for the six-month period ended 30 September 2016, primarily due to increase in demand from self-paid patients for certain body check up and other testing procedures.

(4) Fees to the Group’s doctors increased from nil for the six-month period ended 30 September 2015 to approximately HK$1.4 million for the six-month period ended 30 September 2016 due to the change in employment arrangement between the Group and the Group’s doctors pursuant to the MediNet Doctor Agreement, as defined in the Prospectus, effective from 1 November 2015. Therefore, fees to the Group’s doctors were recognised in “Staff Costs” and “Medical and dental professional services expenses” before and after such effective date respectively.

16 -

Staff costs

Staff cost increased by approximately 11.8% from approximately HK$10.2 million for the six-month period ended 30 September 2015 to approximately HK$11.4 million for the six-month period ended 30 September 2016. Besides, due to change in employment arrangements between the Group and the Group’s doctors pursuant to the MediNet Doctor Agreement effective from 1 November 2015 as discussed above. If the Group’s doctor fee of HK$1.4 million had been recognised under staff costs, then the staff costs will increase by approximately HK$2.6 million. The increase was attributable by (i) increase in staff costs paid to directors; (ii) general increase in salaries for the staff; and (iii) increase of staff head count mainly due to the set up of a new sales, marketing and customer service team. Therefore total number of staff increased from 61 to 82 as at 30 September 2015 and 30 September 2016 respectively.

Depreciation of property, plant and equipment

Depreciation of property, plant and equipment decreased by approximately 61.8% from approximately HK$1.7 million for the six-month period ended 30 September 2015 to approximately HK$0.6 million for the six-month period ended 30 September 2016 primarily as a result of the decrease of the carrying amount of property, plant and equipment due to the disposal of a leasehold property which was completed on 15 October 2015, details of which have been discussed in the Prospectus.

Cost of medical and dental supplies

Cost of medical and dental supplies increased by approximately 11.0% from approximately HK$1.7 million for the six-month period ended 30 September 2015 to approximately HK$1.9 million for the six-month period ended 30 September 2016 as the Group experienced an increase in demand from contract customers and self-paid patients, resulting in an increase in cost of medical and dental supplies.

Rental expenses

Rental expenses increased by approximately 44.9% from approximately HK$2.0 million for the six-month period ended 30 September 2015 to approximately HK$3.0 million for the six-month period ended 30 September 2016, mainly due to increase in rental expenses for the Tsim Sha Tsui MediNet Centre, head office, Dental Clinics in Central and Kwun Tong as a result of renewal of the respective tenancy agreements and the new tenancy agreement entered for the MediNet Centre at Central during the six-month period ended 30 September 2016.

Other expenses

Other expenses increased by approximately 56.2% from approximately HK$3.7 million for the six-month period ended 30 September 2015 to approximately HK$5.7 million for the six-month period ended 30 September 2016, primarily due to increase in professional fees and other general administrative expenses.

17 -

Finance cost

Finance cost decreased to nil for the six-month period ended 30 September 2016 from approximately HK$0.5 million for the six-month period ended 30 September 2015, mainly due to the full repayment of the mortgage loan and finance lease obligation in November 2015 and June 2015 respectively.

Listing expenses

For each of the six-month period ended 30 September 2016 and 30 September 2015, the Group recognised non-recurring listing expenses of approximately HK$4.2 million and HK$5.2 million respectively as expenses in connection with the Listing.

Income tax expense

Income tax expense for the Group decreased by approximately 26.4% from approximately HK$1.3 million for the six-month period ended 30 June 2015 to approximately HK$0.9 million for the six-month period ended 30 June 2016. The decrease was mainly due to the decrease in tax assessable income.

Loss and total comprehensive expense for the period attributable to the owners of the Company

Due to the combined effect of the factors mentioned above, we recorded a loss for the six-month period ended 30 September 2016 of approximately HK$2.4 million, which increased by approximately HK$2.1 million as compared with loss for the period of approximately HK$338,000 for the six-month period ended 30 September 2015. If the listing expenses of approximately HK$4.2 million and HK$5.2 million for the six-month period ended 30 September 2016 and 30 September 2015 and surplus on revaluation of a land and building for the six-month period ended 30 September 2015 were excluded, we would have recorded a profit of approximately HK$1.8 million and HK$3.2 million for the six-month period ended 30 September 2016 and 30 September 2015 respectively which was lower than the profit for the six-month period ended 30 September 2015 of approximately HK$1.4 million.

Such decrease was primarily attributable to (i) increase in revenue of approximately HK$4.5 million for the six-month period ended 30 September 2016 and (ii) offset by the increase in medical and dental professional services, staff costs, rental expenses, cost of medical and dental supplies for the six-month period ended 30 September 2016 as compared to the corresponding period in 2015.

LIQUIDITY AND FINANCIAL RESOURCES

The current ratio of the Group as at 30 September 2016 was 4.19 times as compared to that of 1.79 times as at 31 March 2016. The increase was mainly due to increase the bank balance and cash from used of proceed on 31 May 2016.

18 -

CAPITAL STRUCTURE

The shares of the Company were successfully listed on the GEM Board of the Stock Exchange on 31 May 2016. There has been no change in the capital structure of the Group since then. The share capital of the Group only comprises of ordinary shares.

As at 30 September 2016, the Company’s issued share capital was HK$10,400,000 and the number of its issued ordinary shares was 1,040,000,000 of HK$0.01 each.

SEGMENTAL INFORMATION

Segmental information is presented for the Group as disclosed on note 3 of the notes to the unaudited condensed consolidated financial statements.

SIGNIFICANT INVESTMENTS HELD, FUTURE PLANS FOR MATERIAL INVESTMENTS AND CAPITAL ASSETS

On 20 July 2016, the Group entered into placing letter with Convoy Asset Management Limited, as placing agent, in relation to the subscription of the Jun Yang Notes and First Credit Notes (as defined in the Company’s announcement dated 20 July 2016) in principal amount of HK$5 million and HK$8 million respectively, which bear an annual interest rate of 8% and 4.5% respectively and both with a term of 2 years, details of which have been discussed in the Company’s announcement dated 20 July 2016.

Save as disclosed above and in the Prospectus, the Group did not have other significant investments held, future plans for material investments and capital assets as at 30 September 2016.

MATERIAL ACQUISITIONS AND DISPOSALS OF SUBSIDIARIES AND AFFILIATED COMPANIES

During the six months ended 30 September 2016, the Group did not have any material acquisitions or disposals of subsidiaries and affiliated companies saved for those related to the Group’s reorganisation (as stated in the note b to the unaudited condensed consolidated financial statements of changes in equity).

CONTINGENT LIABILITIES

As at 30 September 2016, the Group did not have any material contingent liabilities (31 March 2016: Nil).

EMPLOYEES AND REMUNERATION POLICIES

As at 30 September 2016, the Group employed a total of 82 employees (30 September 2015: 61 employees). The staff costs, including Directors’ emoluments, of the Group were approximately HK$11.4 million for the six months ended 30 September 2016 (30 September 2015: approximately HK$10.2 million). Remuneration is determined with reference to market terms and the performance, qualification and experience of individual employee. In addition to a basic salary, year-end discretionary bonuses were offered to those staff with outstanding performance to attract and retain eligible employees to contribute to the Group.

COMPARISON OF BUSINESS OBJECTIVES WITH ACTUAL BUSINESS PROGRESS

An analysis comparing the business objectives as set out in the Prospectus with the Group’s actual business progress for the period from the date of Listing on 31 May 2016 to 30 September 2016 is set out below:

Business objectives as set out in the Prospectus	Actual business progress
Expand the operation of MediNet Centre and Dental Clinic in Central	The Group has used approximately HK$1.75 million to expand the operation of MediNet Centre and Dental Clinic in Central.
Expand our MediNet Network	The Group has used approximately HK$0.06 million for the sales and marketing expenses to expand its MediNet Network.

USE OF PROCEEDS

The net proceeds from the Listing on 31 May 2016, after deducting listing related expenses, were approximately HK$47.36 million. After the Listing, these proceeds were used for the purposes in accordance with the future plans and use of proceeds as set out in the Prospectus. The unused amount of the net proceeds from the Listing as at 30 September 2016 was approximately HK$45.49 million.

An analysis of the planned amount utilised up to 30 September 2016 is set out below:

| | Planned amount utilised up to 30 September 2016
HK$’million | Actual utilised amount as at 30 September 2016
HK$’million | Unutilised amount out of the planned amount as at 30 September 2016
HK$’million |
| --- | --- | --- | --- |
| Expand the operation of MediNet Centre and Dental Clinic in Central | 5.10 | 1.75 | 3.35 |
| Expand our MediNet Network | 0.06 | 0.06 | 0.00 |
| General working capital | 0.06 | 0.06 | 0.00 |
| | 5.22 | 1.87 | 3.35 |

As disclosed in the Prospectus, one of the Group’s business strategies is to purchase a property for operation of Dental Clinic in Causeway Bay. During the period from the date of Listing to 30 September 2016, the Company was in the process of identifying suitable and strategic location for the purchase of property for the relocation of our current Dental Clinic in Causeway Bay.

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COMPETING AND CONFLICTS OF INTERESTS

The Directors are not aware of any business or interest of the Directors, the controlling shareholder of the Company and any of their respective close associates (as defined in the GEM Listing Rules) that compete or may compete with the business of the Group and any other conflicts of interest which any such person has or may have with the Group during the six-month period ended 30 September 2016.

INTERESTS OF COMPLIANCE ADVISER

As notified by the compliance adviser of the Company, Messis Capital Limited, as at 30 September 2016, save for the compliance adviser agreement dated 20 November 2015 and entered into between the Company and Messis Capital Limited, neither Messis Capital Limited, its directors, employees and associates had any interests in relation to the Group which is required to be notified to the Group pursuant to Rule 6A.32 of the GEM Listing Rules.

PURCHASE, SALES OF REDEMPTION OF THE COMPANY'S LISTED SECURITIES

Neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of the Company's listed securities during the six-month period ended 30 September 2016.

CORPORATE GOVERNANCE CODE

Pursuant to the code provision A.2.1 of the Corporate Governance Code (the "CG Code") as set out in Appendix 15 of the GEM Listing Rules, the roles of chairman and chief executive should be separate and should not be performed by the same individual. The division of responsibilities between the chairman and chief executive should be clearly established.

Mr. Chan Chi Wai Nelson currently assumes the role of both chairman of the Company and chief executive of the Company. The Board considers that this structure could enhance efficiency in formulation and implementation of the Company's strategies. The Board will review the need of appointing suitable candidate to assume the role of chief executive when necessary.

As at 30 September 2016, save as disclosed above, the Company has complied with the applicable code provisions of the CG Code.

DIRECTORS' SECURITIES TRANSACTIONS

The Group has adopted a code of conduct regarding securities transactions by the Directors on terms no less exacting than the required standards of dealings set out in Rules 5.48 to 5.67 of the GEM Listing Rules. The Company had also made specific enquiries of all the Directors and the Company and was not aware of any non-compliance with the required standard of dealings regarding securities transactions by the Directors throughout the six-month period ended 30 September 2016.

DIVIDEND

The Board does not recommend the payment of interim dividend for the six months ended 30 September 2016.

AUDIT COMMITTEE

The Company established an audit committee (“Audit Committee”) with its written terms of reference in compliance with the GEM Listing Rules, in accordance with provisions set out in the CG Code which are available on the websites of the Stock Exchange and the Company. The primary duties of the Audit Committee are to make recommendations to the Board on the appointment, reappointment and removal of the external auditor, to review and monitor the internal control and risk management systems, the external auditor’s independence and objectivity and the effectiveness of the audit process in accordance with applicable standards, and to monitor the integrity of the Company’s annual report and interim financial reports before submission to the Board. The Audit Committee consists of three members, namely Dr. Lieu Geoffrey Sek Yiu, Mr. Leung Po Hon and Mr. Wong Wai Leung, all being independent non-executive Directors of the Company. Mr. Leung Po Hon currently serves as the chairman of the Audit Committee.

The Audit Committee has reviewed the unaudited condensed consolidated financial statements of the Group for the six-month period ended 30 September 2016.

By order of the Board
MediNet Group Limited
Chan Chi Wai Nelson
Chairman and Executive Director

Hong Kong, 10 November 2016

As at the date of this announcement, the executive Directors are Mr. Chan Chi Wai Nelson and Ms. Jiang Jie; and the independent non-executive Directors are Dr. Lieu Geoffrey Sek Yiu, Mr. Leung Po Hon and Mr. Wong Wai Leung.

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