Cayman Islands | 8011 | Not Applicable | ||
(State or other jurisdiction
of
incorporation or organization) |
(Primary Standard Industrial
Classification Code Number) |
(I.R.S. Employer
Identification Number) |
Leiming Chen | Portia Ku | |
Simpson Thacher & Bartlett LLP | OMelveny & Myers LLP | |
35th Floor, ICBC Tower | 37/F Plaza 66, 1266 Nanjing Road W | |
3 Garden Road | Shanghai, Peoples Republic of China | |
Central, Hong Kong | (86 21) 2307-7000 | |
(852) 2514-7600 |
Proposed Maximum
|
||||||||||||
Offering Price
|
Proposed
|
|||||||||||
Title of Each Class of
|
Amount to Be
|
per Ordinary
|
Maximum Aggregate
|
Amount of
|
||||||||
Securities to be Registered | Registered (1)(2) | Share (1) | Offering Price (1) | registration fee | ||||||||
Ordinary shares, par value US$0.0001 per
share
(2)(3)
|
41,400,000 | US$3.8333 | US$158,700,000 | US$8,855 (4) | ||||||||
(1) | Estimated solely for the purpose of determining the amount of registration fee in accordance with Rule 457(a) under the Securities Act of 1933. | |
(2) | Includes ordinary shares initially offered and sold outside the United States that may be resold from time to time in the United States either as part of their distribution or within 40 days after the later of the effective date of this registration statement and the date the shares are first bona fide offered to the public, and also includes ordinary shares that may be purchased by the underwriters pursuant to an over-allotment option. These ordinary shares are not being registered for the purposes of sales outside of the United States. | |
(3) | American depositary shares issuable upon deposit of the ordinary shares registered hereby will be registered under a separate registration statement on Form F-6 (Registration No. 333- ). Each American depositary share represents three ordinary shares. |
(4) | Previously paid. |
The
information in this prospectus is not complete and may be
changed. Neither we nor the selling shareholders may sell these
securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus
is not an offer to sell these securities and we are not
soliciting offers to buy these securities in any state where the
offer or sale is not permitted.
|
Underwriting
|
||||||
Discounts
|
||||||
Price to
|
and
|
Proceeds to
|
||||
Public | Commissions | Company | ||||
Per ADS
|
$ | $ | $ | |||
Total
|
$ | $ | $ |
MORGAN STANLEY | J.P.MORGAN | CICC |
Cms O J centers in .30 cities* Concord Medical operates the largest network of radiotherapy and diagnostic imaging centers in China** 1 As ot September 30,2009. In terms of revenues and the total number of centers in operation in 2008, according to a Frost & Sullivan report commissioned by Concord Medical. |
1 | ||||||||
18 | ||||||||
47 | ||||||||
48 | ||||||||
49 | ||||||||
50 | ||||||||
51 | ||||||||
53 | ||||||||
54 | ||||||||
56 | ||||||||
58 | ||||||||
62 | ||||||||
96 | ||||||||
100 | ||||||||
117 | ||||||||
126 | ||||||||
133 | ||||||||
136 | ||||||||
138 | ||||||||
148 | ||||||||
157 | ||||||||
159 | ||||||||
165 | ||||||||
171 | ||||||||
172 | ||||||||
172 | ||||||||
173 | ||||||||
F-1 | ||||||||
F-75 | ||||||||
P-1 | ||||||||
EX-1.1 | ||||||||
EX-4.3 | ||||||||
EX-4.19 | ||||||||
EX-10.21 | ||||||||
EX-23.1 |
i
1
Table of Contents
leading market position and successful track record;
doctors with extensive cancer treatment experience developed and
supported by our network;
market-oriented management of centers;
successful track record of new center development and
acquisitions; and
strong and experienced management team.
2
Table of Contents
continue to develop new radiotherapy and diagnostic imaging
centers;
increase marketing efforts to drive growth in patient cases at
our existing centers;
establish specialty cancer hospitals;
introduce advanced cancer treatment options and diagnostic
technology in our network; and
complement our development of new centers with selected
acquisitions.
we may encounter difficulties in successfully opening new
centers or renewing agreements for existing centers due to the
limited number of suitable hospital partners and their potential
ability to finance the purchase of medical equipment directly;
we have historically derived a significant portion of our
revenues from centers located at a limited number of our
hospital partners and regions;
we conduct our business in a heavily regulated industry;
any failure by our hospital partners to make contracted payments
to us or any disputes over, or significant delays in receiving,
such payments could have a material adverse effect on our
business and financial condition; and
our business may be harmed by technological and therapeutic
changes or by shifts in doctors or patients
preferences for alternative treatments.
3
Table of Contents
Shenzhen Aohua Medical Services Co., Ltd., our wholly owned
subsidiary incorporated in the PRC that engages in the provision
of radiotherapy and diagnostic center management services to
hospitals in the PRC;
Shenzhen Aohua Medical Leasing and Services Co., Ltd., our
wholly owned subsidiary incorporated in the PRC that engages in
the provision of radiotherapy and diagnostic equipment leasing
services to hospitals in the PRC;
Medstar (Shanghai) Leasing Co., Ltd., our wholly owned
subsidiary incorporated in the PRC that engages in the sale of
medical equipment and the provision of radiotherapy and
diagnostic equipment leasing and management services to
hospitals in the PRC;
CMS Hospital Management Co., Ltd., our wholly owned subsidiary
incorporated in the PRC that engages in the provision of
radiotherapy and diagnostic equipment management services to
hospitals in the PRC; and
Beijing Xing Heng Feng Medical Technology Co., Ltd., our wholly
owned subsidiary incorporated in the PRC that engages in the
provision of radiotherapy and diagnostic equipment management
services to hospitals in the PRC.
4
Table of Contents
5
Table of Contents
ADRs are to the American depositary receipts, which,
if issued, evidence our ADSs;
ADSs are to our American depositary shares, each of
which represents three ordinary shares;
China and the PRC are to the
Peoples Republic of China, excluding, for the purposes of
this prospectus only, Taiwan and the special administrative
regions of Hong Kong and Macau;
ordinary shares are to our ordinary shares, par
value US$0.0001 per share;
PRC subsidiaries are to our subsidiaries
incorporated in the Peoples Republic of China, including
Aohua Medical, Aohua Leasing, Shanghai Medstar, CMS Hospital
Management Co., Ltd., or CMS Hospital Management, and Xing Heng
Feng Medical;
RMB and Renminbi are to the legal
currency of China;
US$ and U.S. dollars are to the
legal currency of the United States;
we, us, our company and
our are to Concord Medical Services Holdings
Limited, its predecessor entities and its consolidated
subsidiaries; and
£ is to the legal currency of the United
Kingdom of Great Britain and Northern Ireland.
6
Table of Contents
Price per ADS
We currently estimate that the initial public offering price
will be between US$9.50 and US$11.50 per ADS.
ADS offered by us
12,000,000 ADSs
Each ADS represents three ordinary shares, par value US$0.0001
per share. The ADSs may be evidenced by an ADR.
The depositary will be the holder of the ordinary shares
underlying the ADSs and you will have the rights of an ADS
holder as provided in the deposit agreement among us, the
depositary and owners and beneficial owners of ADSs from time to
time.
You may surrender your ADSs to the depositary to withdraw the
ordinary shares underlying your ADSs. The depositary will charge
you a fee for such an exchange.
We may amend or terminate the deposit agreement for any reason
without your consent. If an amendment becomes effective, you
will be bound by the deposit agreement as amended if you
continue to hold your ADSs.
To better understand the terms of the ADSs, you should carefully
read the section in this prospectus entitled Description
of American Depositary Shares. We also encourage you to
read the deposit agreement, which is an exhibit to the
registration statement that includes this prospectus.
The selling shareholders identified in this prospectus have
granted the underwriters an option, exercisable within
30 days from the date of this prospectus, to purchase up to
an aggregate of 1,800,000 additional ADSs representing
5,400,000 ordinary shares.
immediately after the
offering
147,455,500 ordinary shares, excluding
4,765,800 ordinary shares reserved for issuance under our
2008 share incentive plan.
after the offering
12,000,000 ADSs (or 13,800,000 ADSs if the
underwriters exercise the option to purchase additional ADSs in
full).
We estimate that we will receive net proceeds from this offering
of approximately US$113.9 million, after deducting the
underwriting discounts and commissions and estimated aggregate
offering expenses payable by us. This estimate is based upon an
assumed initial public offering price of US$10.50 per ADS,
the midpoint of the range shown on the front cover of this
prospectus. We intend to use a portion of the net proceeds we
receive from this offering for the following purposes:
7
Table of Contents
We will use any remaining portion of the net proceeds we receive
from this offering for general corporate purposes, including
potential acquisitions of, or investments in, other businesses
or technologies that we believe will complement our current
operations and expansion strategies. See Use of
Proceeds for additional information.
We will not receive any of the proceeds from the sale of the
ADSs by the selling shareholders.
We have received approval to list our ADSs on the New York Stock
Exchange, or the NYSE. Our ordinary shares will not be listed on
any exchange or quoted for trading on any over-the-counter
trading system.
CCM
We, our directors, executive officers and all existing
shareholders have agreed with the underwriters, subject to
certain exceptions, not to sell, transfer or dispose of any of
our ADSs, ordinary shares or similar securities for a period of
180 days after the date of this prospectus. See
Underwriting.
At our request, the underwriters have reserved for sale, at the
public offering price, up to an aggregate of 600,000 ADSs
offered by this prospectus to our directors, officers,
employees, business associates and related persons through a
reserved share program.
JPMorgan Chase Bank, N. A.
The ADSs are expected to be delivered against payment
on ,
2009. The ADSs will be deposited with a custodian for, and
registered in the name of a nominee of, The Depository
Trust Company, or DTC, in New York, New York. Initially,
beneficial interests in the ADSs will be shown on, and transfers
of these beneficial interest will be effected through, records
maintained by DTC and its direct and indirect participants.
See Risk Factors and other information included in
this prospectus for a discussion of factors you should carefully
consider before deciding to invest in the ADSs.
8
Table of Contents
10
11
12
9
Table of Contents
Concord
Medical
Predecessor
(Successor)
Combined
Concord Medical (Successor)
Period from
Period from
January 1,
September 10,
2007 to
2007 to
Year Ended
October 30,
December 31,
December 31,
Year Ended
Nine Months Ended September 30,
2007
2007
2007
December 31, 2008
2008
2009
RMB
RMB
RMB
RMB
US$
RMB
RMB
US$
(in thousands, except share, per share and per ADS data)
63,082
13,001
76,083
155,061
22,716
94,296
184,937
27,092
4,340
982
5,322
12,677
1,857
7,519
20,096
2,944
4,051
593
178
624
91
67,422
13,983
81,405
171,789
25,166
101,993
205,657
30,127
(20,396
)
(1,908
)
(22,304
)
(25,046
)
(3,669
)
(14,671
)
(42,144
)
(6,174
)
(2,002
)
(2,002
)
(20,497
)
(3,003
)
(13,671
)
(20,388
)
(2,987
)
(20
)
(4
)
(24
)
(54
)
(8
)
(19
)
(9
)
(1
)
(20,416
)
(3,914
)
(24,330
)
(45,597
)
(6,680
)
(28,361
)
(62,541
)
(9,162
)
47,006
10,069
57,075
126,192
18,486
73,632
143,116
20,965
(1,601
)
(757
)
(2,358
)
(5,497
)
(805
)
(3,275
)
(4,463
)
(654
)
(8,467
)
(57,171
)
(65,638
)
(18,869
)
(2,764
)
(12,468
)
(19,687
)
(2,884
)
36,938
(47,859
)
(10,921
)
101,826
14,917
57,889
118,966
17,427
(2,494
)
(649
)
(3,143
)
578
84
(5,262
)
(4,275
)
(626
)
34,444
(48,508
)
(14,064
)
102,404
15,001
52,627
114,691
16,801
(15,014
)
182
(14,832
)
(23,335
)
(3,418
)
(12,611
)
(25,734
)
(3,770
)
19,430
(48,326
)
(28,896
)
79,069
11,583
40,016
88,957
13,031
(270,343
)
(39,604
)
(262,286
)
(23,851
)
(3,494
)
(304,763
)
(44,646
)
(38,383
)
(5,623
)
19,430
(48,326
)
(28,896
)
(496,037
)
(72,667
)
(222,270
)
26,723
3,914
0.39
(0.97
)
(0.58
)
(8.63
)
(1.26
)
(3.67
)
0.38
0.06
1.17
(2.91
)
(1.74
)
(25.89
)
(3.78
)
(11.01
)
1.14
0.18
50,000,000
50,000,000
50,000,000
57,481,400
57,481,000
60,621,700
70,428,100
70,428,100
16,666,667
16,666,667
16,666,667
19,160,467
19,160,467
20,207,233
23,476,033
23,476,033
(1)
Our general and administrative
expenses include share-based compensation expenses related to
certain share options granted in 2007 that amounted to
RMB49.5 million, RMB4.2 million (US$0.6 million)
and RMB4.2 million in 2007, 2008 and for the nine months
ended September 30, 2008, respectively. We did not
recognize any
share-based
compensation expenses for the nine months ended
September 30, 2009.
(2)
On November 17, 2009, we
effected a share split whereby all of our issued and outstanding
704,281 ordinary shares of a par value of US$0.01 per share were
split into 70,428,100 ordinary shares of US$0.0001 par value per
share and the number of our authorized ordinary shares was
increased from 4,500,000 to 450,000,000. The share split has
been retroactively reflected in this prospectus so that share
numbers, per share price and par value data are presented as if
the share split had occurred from our inception.
Table of Contents
Actual
Pro Forma as
As of December 31,
As of September 30,
Adjusted as of
2007
2008
2008
2009
September 30,
2009
(1)
RMB
RMB
US$
RMB
US$
RMB
US$
(in thousands)
39,792
353,991
51,858
285,703
41,854
1,063,207
155,754
66,135
492,978
72,219
466,487
68,338
1,243,991
182,238
54,703
349,121
51,144
557,433
81,661
557,433
81,661
259,282
300,163
43,972
300,163
43,972
300,163
43,972
129,998
181,838
26,638
161,450
23,652
161,450
23,652
543,023
1,514,395
221,850
1,673,254
245,122
2,450,758
359,022
39,840
5,836
44,880
6,575
44,880
6,575
52,120
7,636
104,912
15,369
104,912
15,369
254,358
37,262
269,017
39,410
411,101
60,224
434,036
63,584
394,878
565,020
82,772
591,582
86,663
2,072,139
303,557
543,023
1,514,395
221,850
1,673,254
245,122
2,450,758
359,022
(1)
Pro forma as adjusted summary
consolidated balance sheet data take into account (i) the
automatic conversion of all our outstanding contingently
redeemable convertible preferred shares into 41,027,400 of our
ordinary shares immediately upon the completion of this offering
and (ii) the issuance and sale of 36,000,000 ordinary
shares in the form of ADSs by us in this offering, assuming an
initial public offering price of US$10.50 per ADS, the
midpoint of the estimated range of the initial public offering
price, after deducting estimated underwriting discounts and
commissions and estimated aggregate offering expenses payable by
us and assuming no exercise of the underwriters option to
purchase additional ADSs and no other change to the number of
ADSs sold by us as set forth on the cover of this prospectus.
Assuming the number of ADSs offered by us as set forth on the
cover page of this prospectus remains the same, and after
deduction of underwriting discounts and commissions and the
estimated offering expenses payable by us, a US$1.00 increase
(decrease) in the assumed initial public offering price of
US$10.50 per ADS would increase (decrease) each of cash,
total current assets, total assets, total shareholders
equity and total liabilities and shareholders equity by
US$11.2 million.
Predecessor
Concord Medical (Successor)
Period
Period
from
from
January 1,
September 10,
2007 to
2007 to
Nine Months Ended
October 30,
December 31,
Year Ended
September 30,
2007
2007
December 31, 2008
2008
2009
RMB
RMB
RMB
US$
RMB
RMB
US$
(in thousands)
44,593
6,103
46,774
6,852
27,370
104,500
15,308
(50,452
)
(30,441
)
(376,371
)
(55,136
)
(300,692
)
(223,426
)
(32,731
)
6,020
63,225
649,494
95,147
278,407
50,829
7,448
138
(5,698
)
(834
)
(5,949
)
(191
)
(29
)
161
39,025
314,199
46,029
(864
)
(68,288
)
(10,004
)
(1)
Net cash used in investing
activities in 2008 and for the nine months ended September 30,
2008 and 2009 includes cash used for acquisitions, net of cash
acquired, of RMB231.5 million (US$33.9 million),
RMB219.1 million and RMB21.5 million (US$3.2 million),
respectively.
Table of Contents
Concord
Medical
Predecessor
(Successor)
Combined
Concord Medical (Successor)
Period
Period
from
from
January 1,
September 10,
2007 to
2007 to
Year Ended
Nine Months Ended
October 30,
December 31,
December 31,
Year Ended
September 30,
2007
2007
2007
December 31, 2008
2008
2009
RMB
RMB
RMB
RMB
US$
RMB
RMB
US$
(in thousands)
54,844
4,753
59,597
144,167
21,120
85,188
174,455
25,556
(1)
Adjusted EBITDA is defined as net
(loss) income plus interest, taxes, depreciation and
amortization, share-based compensation expenses and other
adjustments. Adjusted EBITDA is used by management to evaluate
our financial performance and determine the allocation of
resources and provides the management with the ability to
determine our return on capital expenditure relating to our
purchase of medical equipment used in our network of centers and
businesses acquired. Items that are eliminated from the
calculation of Adjusted EBITDA are collectively managed by our
senior executive officers, taking into consideration our
strategic, business and financial goals. Depreciation and
amortization are primarily managed by our chief executive
officer, our chief operating officer and our chief financial
officer. Share-based compensation expense is primarily managed
by our chief executive officer and our financial officers.
Interest expense and income, income tax expense or benefit and
all other items eliminated from the calculation of Adjusted
EBITDA are primarily managed by our chief executive officer, our
financial controller and corporate vice president. In addition,
we believe that Adjusted EBITDA will be a key metric analyzed in
determining the amount of new debt financing that may be
available to us and, therefore, we believe this measure provides
investors with additional information about our ability to fund
our growth through debt financing, if needed. Furthermore,
Adjusted EBITDA eliminates the impact of items that we do not
consider indicative of the performance of our network of
centers. For example, depreciation and amortization expenses
relating to the medical equipment used in our network of centers
and acquired intangibles represented historical accrued
expenditures that are not indicative of the operating
performance of our network of centers during the periods
presented. We believe investors will similarly use Adjusted
EBITDA as one of the key metrics to evaluate our financial
performance and to compare our current operating results with
corresponding historical periods and with other companies in the
healthcare services industry. The presentation of Adjusted
EBITDA should not be construed as an indication that our future
results will be unaffected by other charges and gains we
consider to be outside the ordinary course of our business.
The use of Adjusted EBITDA has
certain limitations. Items excluded from Adjusted EBITDA are
significant components in understanding and assessing our
operating and financial performance. Depreciation and
amortization expense, income tax expense, interest expense and
interest income as well as share-based compensation expenses
have been and will be incurred in our business and are not
reflected in the presentation of Adjusted EBITDA. Each of these
items should also be considered in the overall evaluation of our
results. Additionally, Adjusted EBITDA does not consider capital
expenditures and other investing activities and should not be
considered as a measure of our liquidity. We compensate for
these limitations by providing the relevant disclosure of our
depreciation and amortization expense, interest expense and
interest income, income tax expense, capital expenditures as
well as share-based compensation expenses and other relevant
items both in our reconciliations to the U.S. GAAP financial
measures and in our consolidated financial statements, all of
which should be considered when evaluating our performance. The
term Adjusted EBITDA is not defined under U.S. GAAP, and
Adjusted EBITDA is not a measure of net income, operating
income, operating performance or liquidity presented in
accordance with U.S. GAAP. When assessing our operating and
financial performance, you should not consider this data in
isolation or as a substitute for our net income, operating
income or any other operating performance measure that is
calculated in accordance with U.S. GAAP. In addition, our
Adjusted EBITDA may not be comparable to Adjusted EBITDA or
similarly titled measures utilized by other companies since such
other companies may not calculate Adjusted EBITDA in the same
manner as we do.
Table of Contents
The following table is a
reconciliation of Adjusted EBITDA to net income, the most
directly comparable financial measure calculated and presented
in accordance with U.S. GAAP:
Concord
Medical
Predecessor
(Successor)
Combined
Concord Medical (Successor)
Period from
Period from
January 1,
September 10,
2007 to
2007 to
Year Ended
October 30,
December 31,
December 31,
Year Ended
Nine Months Ended September 30,
2007
2007
2007
December 31, 2008
2008
2009
RMB
RMB
RMB
RMB
US$
RMB
RMB
US$
(in thousands)
19,430
(48,326
)
(28,896
)
79,069
11,583
40,016
88,957
13,031
939
279
1,218
7,025
1,029
5,177
4,057
594
15,014
(182
)
14,832
23,335
3,418
12,611
25,734
3,770
17,906
3,086
20,992
38,126
5,585
23,084
55,489
8,129
49,526
49,526
4,215
617
4,215
1,555
370
1,925
(7,603
)
(1,114
)
85
218
32
54,844
4,753
59,597
144,167
21,120
85,188
174,455
25,556
13
Table of Contents
As of December 31,
As of September 30,
Operating
Data
(1)
2007
2008
2009
1
12
16
(2)
15
15
16
8
9
10
3
7
2
10
16
8
15
16
34
64
81
Year Ended December 31,
Nine Months Ended September 30,
2007
2008
2009
697
4,678
8,554
8,493
9,455
7,767
2,635
3,057
2,706
1,929
3,766
11,830
31,827
57,972
Predecessor
Concord Medical (Successor)
Combined
Concord Medical (Successor)
Period from
Period from
September 1,
Nine Months
January 1, 2007
2007 to
Year Ended
Year Ended
Ended
to October 30,
December 31,
December 31,
December 31,
September 30,
2007
2007
2007
2008
2008
2009
(in RMB thousands)
3,206
877
4,083
40,506
21,588
60,183
40,408
8,731
49,139
65,365
47,096
51,673
13,537
2,565
16,102
20,071
12,225
18,204
5,241
578
14,289
2,899
437
3,336
15,123
7,515
27,618
3,032
391
3,423
8,755
5,294
12,970
63,082
13,001
76,083
155,061
94,296
184,937
(1)
Excluding data from seven, eight
and two centers under service-only agreements as of
December 31, 2007, December 31, 2008 and
September 30, 2009, respectively.
(2)
Including a MM50
intensity-modulated radiation therapy system.
(3)
Other primary medical equipment
used includes computed tomography scanners, or CT scanners, and
emission computed tomography scanners, or ECT scanners, for
diagnostic imaging, electroencephalography for the diagnosis of
epilepsy, thermotherapy to increase the efficacy of and for pain
relief after radiotherapy and chemotherapy, high intensity
focused ultrasound therapy for the treatment of cancer,
stereotactic radiofrequency ablation for the treatment of
Parkinsons Disease and refraction and tonometry for the
diagnosis of ophthalmic conditions.
14
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16
FOR THE YEAR ENDED DECEMBER 31, 2008
15
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Pro Forma
Pro Forma
Concord Medical
China Medstar
Adjustment
Combined
Seven-month
Year Ended
Period Ended
December 31, 2008
July 31, 2008
2008
RMB
RMB
RMB
US$
(in thousands, except share, per share and per ADS data)
155,061
48,745
203,806
29,856
12,677
7,980
20,657
3,026
4,051
6,148
10,199
1,494
171,789
62,873
234,662
34,377
(25,046
)
(14,806
)
5,624
(1)
(34,228
)
(5,014
)
(20,497
)
(5,743
)
(1)
(26,240
)
(3,844
)
(54
)
(63
)
(117
)
(17
)
(45,597
)
(14,869
)
(60,585
)
(8,875
)
126,192
48,004
174,077
25,501
(5,497
)
(1,581
)
(7,078
)
(1,037
)
(18,869
)
(8,340
)
(27,209
)
(3,986
)
101,826
38,083
139,790
20,478
(7,455
)
(1,585
)
(9,040
)
(1,324
)
(464
)
(464
)
(68
)
(325
)
(230
)
(555
)
(81
)
658
658
96
430
32
462
68
7,734
(200
)
7,534
1,104
102,404
36,100
138,385
20,273
(23,335
)
(8,445
)
21
(2
)
(31,759
)
(4,653
)
79,069
27,655
106,626
15,620
1.38
1.85
0.27
57,481,400
57,481,400
57,481,400
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(1)
The aggregate purchase price of
approximately £17.1 million (RMB238.7 million or
US$35.0 million) for the purchase of China Medstar is
comprised of the following:
RMB
US$
(in thousands)
21,210
3,107
77,053
11,287
9,397
1,377
217,965
31,931
52,380
7,673
83,505
12,233
23,089
3,382
(12,529
)
(1,835
)
(233,323
)
(34,180
)
238,747
34,975
The preliminary purchase price
allocation and preliminary intangible asset valuations described
above were based on valuation work determined by us with the
assistance of American Appraisal China Limited, an independent
valuation firm. The valuation report utilizes and considers
generally accepted valuation methodologies such as the income,
market, cost and actual transaction of shares approach. We have
incorporated certain assumptions which include projected cash
flows and replacement costs.
This adjustment of
RMB5.6 million reflects an additional seven full months of
amortization of the acquired intangibles recorded as a result of
our acquisition of China Medstar on July 31, 2008 as if the
acquisition had been consummated on January 1, 2008.
This adjustment of
RMB5.7 million reflects an additional reduction in
depreciation expense as if the acquisition had been consummated
on January 1, 2008 related to medical equipment because the
assigned estimated fair values are lower than the net book
values as at the acquisition date.
(2)
Reflects the adjustment to income
tax expense based on the pro forma adjusting entries to
depreciation expense and amortization expense discussed above.
17
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18
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reduction in the number of patient cases at the centers located
at these partner hospitals;
loss of key experienced medical professionals;
decrease in the profitability of such centers;
failure to maintain or renew our agreements with these hospital
partners;
any failure of these hospital partners to pay us our contracted
percentage of any such centers revenue net of specified
operating expenses;
any regulatory changes in the geographic areas where our
hospital partners are located; or
any other disputes with these hospital partners.
19
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20
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21
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22
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23
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24
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25
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26
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27
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our future financial condition, results of operations and cash
flows;
general market conditions for capital raising and debt financing
activities; and
economic, political and other conditions in China and elsewhere.
28
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29
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have a majority of the board be independent (other than due to
the requirements for the audit committee under the United States
Securities Exchange Act of 1934, as amended, or the Exchange
Act);
have a minimum of three members in our audit committee;
have a compensation committee, a nominating or corporate
governance committee;
provide annual certification by our chief executive officer that
he or she is not aware of any non-compliance with any corporate
governance rules of the NYSE;
have regularly scheduled executive sessions with only
non-management directors;
have at least one executive session of solely independent
directors each year;
seek shareholder approval for (i) the implementation and
material revisions of the terms of share incentive plans,
(ii) the issuance of more than 1% of our outstanding
ordinary shares or 1% of the voting power outstanding to a
related party, (iii) the issuance of more than 20% of our
outstanding ordinary shares, and (iv) an issuance that
would result in a change of control;
adopt and disclose corporate governance guidelines; or
adopt and disclose a code of business conduct and ethics for
directors, officers and employees.
30
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31
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32
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33
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34
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the degree of government involvement;
the level of development;
the growth rate;
the control of foreign exchange;
the allocation of resources;
an evolving regulatory system; and
lack of sufficient transparency in the regulatory process.
35
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36
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37
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38
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39
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40
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41
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42
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announcements of technological or competitive developments;
regulatory developments in China affecting us or our competitors;
announcements of studies and reports relating to the
effectiveness or safety of the services provided in our network
of centers or those of our competitors;
actual or anticipated fluctuations in our quarterly operating
results and changes or revisions of our expected results;
changes in financial estimates by securities research analysts;
changes in the economic performance or market valuations of
other medical services companies;
addition or departure of our senior management and other key
personnel;
release or expiry of
lock-up
or
other transfer restrictions on our outstanding ordinary shares
or ADSs; and
sales or perceived sales of additional ordinary shares or ADSs.
43
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44
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45
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46
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the risks, challenges and uncertainties in the radiotherapy and
diagnostic imaging industry and for our business generally;
our beliefs regarding our strengths and strategies;
our current expansion strategy, including our ability to expand
our network of centers and to establish specialty cancer
hospitals;
our ability to maintain strong working relationships with our
hospital partners;
our expectations regarding patients and their referring
doctors demand for and acceptance of the radiotherapy and
diagnostic imaging services offered by our centers;
changes in the healthcare industry in China, including changes
in the healthcare policies and regulations of the PRC government;
technological or therapeutic changes affecting the field of
cancer treatment and diagnostic imaging;
our ability to comply with all relevant environmental, health
and safety laws and regulations;
our ability to obtain and maintain permits, licenses and
registrations to carry on our business;
our planned use of proceeds;
our future prospects, business development, results of
operations and financial condition; and
fluctuations in general economic and business conditions in
China.
47
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approximately US$50 million to US$60 million to expand
our network of centers;
approximately US$25 million to US$30 million to
develop our Beijing Proton Medical Center; and
approximately US$20 million to US$25 million to
develop our Changan CMS International Cancer Center.
48
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49
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on an actual basis; and
on a pro forma as adjusted basis to reflect (i) the
automatic conversion of all our outstanding Series A and B
contingently redeemable convertible preferred shares into
41,027,400 of our ordinary shares immediately upon the
completion of this offering and (ii) the issuance and sale
of 36,000,000 ordinary shares represented by 12,000,000 ADSs by
us in this offering, assuming an initial public offering price
of US$10.50 per ADS, the midpoint of the estimated range of
the initial public offering price, after deducting estimated
underwriting discounts and commissions and estimated aggregate
offering expenses payable by us and assuming no exercise of the
underwriters option to purchase additional ADSs and no
other change to the number of ADSs sold by us as set forth on
the cover page of this prospectus.
As of September 30, 2009
Actual
Pro Forma as Adjusted
RMB
US$
RMB
US$
(in thousands)
104,912
15,369
104,912
15,369
8,719
1,277
8,719
1,277
269,017
39,410
434,036
63,584
55
8
108
16
1,113,204
163,078
2,593,708
379,964
(4,037
)
(592
)
(4,037
)
(592
)
(517,640
)
(75,831
)
(517,640
)
(75,831
)
591,582
86,663
2,072,139
303,557
1,408,266
206,303
2,185,770
320,203
(1)
On November 17, 2009, we
effected a share split whereby all of our issued and outstanding
704,281 ordinary shares of a par value of US$0.01 per share were
split into 70,428,100 ordinary shares of US$0.0001 par value per
share and the number of our authorized ordinary shares was
increased from 4,500,000 to 450,000,000. The share split has
been retroactively reflected in this prospectus so that share
numbers, per share price and par value data are presented as if
the share split had occurred from our inception.
(2)
Assuming the number of ADSs offered
by us as set forth on the cover page of this prospectus remains
the same, and after deduction of underwriting discounts and
commissions and the estimated offering expenses payable by us, a
US$1.00 increase (decrease) in the assumed initial public
offering price of US$10.50 per ADS would increase
(decrease) each of additional paid-in capital, total
shareholders equity and total capitalization by
US$11.2 million.
50
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US$
3.50
US$
1.06
US$
1.93
US$
5.79
(1)
After giving effect to the
conversion of all our outstanding Series A and B contingently
redeemable convertible preferred shares into ordinary shares
upon the completion of this offering.
51
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Ordinary Shares
Average Price
Purchased
Total Consideration
per Ordinary
Average Price
Number
Percent
Amount
Percent
Share
per ADSs
(in thousands, except for percentages)
111,456
75.6
%
US$
115,996
(1)
47.9
%
US$
1.04
US$
3.12
36,000
24.4
US$
126,000
52.1
US$
3.50
US$
10.50
147,456
100.0
%
US$
241,996
100.0
%
(1)
Includes US$5.5 million paid
to OMS, the predecessor entity.
52
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Noon Buying Rate
Period End
Average
(1)
Low
High
(RMB per US$1.00)
8.2765
8.2768
8.2774
8.2764
8.0702
8.1826
8.2765
8.0702
7.8041
7.9579
8.0702
7.8041
7.2946
7.5806
7.8127
7.2946
6.8225
6.9193
7.2946
6.7800
6.8262
6.8306
6.8470
6.8176
6.8227
6.8221
6.8265
6.8176
6.8302
6.8334
6.8371
6.8264
6.8319
6.9186
6.8342
6.8300
6.8299
6.8323
6.8358
6.8299
6.8262
6.8277
6.8303
6.8247
6.8264
6.8267
6.8292
6.8248
6.8272
6.8271
6.8300
6.8255
(1)
Annual averages are calculated from
month-end rates. Monthly averages are calculated using the
average of the daily rates during the relevant period.
53
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political and economic stability;
an effective judicial system;
a favorable tax system;
the absence of exchange control or currency restrictions; and
the availability of professional and support services.
the Cayman Islands has a less developed body of securities laws
as compared to the United States and provides significantly less
protection to investors; and
Cayman Islands companies do not have standing to sue before the
federal courts of the United States.
recognize or enforce judgments of United States courts obtained
against us or our directors or officers predicated upon the
civil liability provisions of the securities laws of the United
States or any state in the United States; or
entertain original actions brought in each respective
jurisdiction against us or our directors or officers predicated
upon the securities laws of the United States or any state in
the United States.
a final and conclusive judgment in the federal or state courts
of the United States under which a sum of money is payable,
other than a sum payable in respect of taxes, fines, penalties
or similar charges, and which was neither obtained in a waiver
nor is of a kind of enforcement which is contrary to natural
justice or the public policy of the Cayman Islands, may be
subject to enforcement proceedings as a debt in the courts of
the Cayman Islands under common law; and
54
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it is unlikely that a monetary award ordered by a
U.S. court as a result of a fine or a penalty arising under
the U.S. federal securities laws would be recognized as
valid, or enforced, by the courts of the Cayman Islands.
55
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Shenzhen Aohua Medical Services Co., Ltd., our wholly owned
subsidiary incorporated in the PRC that engages in the provision
of radiotherapy and diagnostic center management services to
hospitals in the PRC;
Shenzhen Aohua Medical Leasing and Services Co., Ltd., our
wholly owned subsidiary incorporated in the PRC that engages in
the provision of radiotherapy and diagnostic equipment leasing
services to hospitals in the PRC;
Medstar (Shanghai) Leasing Co., Ltd., our wholly owned
subsidiary incorporated in the PRC that engages in the sale of
medical equipment and the provision of radiotherapy and
diagnostic equipment leasing and management services to
hospitals in the PRC;
CMS Hospital Management Co., Ltd., our wholly owned subsidiary
incorporated in the PRC that engages in the provision of
radiotherapy and diagnostic equipment management services to
hospitals in the PRC; and
Beijing Xing Heng Feng Medical Technology Co., Ltd., our wholly
owned subsidiary incorporated in the PRC that engages in the
provision of radiotherapy and diagnostic equipment management
services to hospitals in the PRC.
56
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57
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59
58
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Predecessor
Concord Medical (Successor)
Period from
Period from
January 1,
September 10,
Year Ended
2007 to
2007 to
Year Ended
Nine Months Ended
December 31,
October 30,
December 31,
December 31,
September 30,
2006
2007
2007
2008
2008
2009
RMB
RMB
RMB
RMB
US$
RMB
RMB
US$
(in thousands, except share, per share and per ADS data)
61,440
63,082
13,001
155,061
22,716
94,296
184,937
27,092
876
4,340
982
12,677
1,857
7,519
20,096
2,944
4,051
593
178
624
91
62,316
67,422
13,983
171,789
25,166
101,993
205,657
30,127
(22,388
)
(20,396
)
(1,908
)
(25,046
)
(3,669
)
(14,671
)
(42,144
)
(6,174
)
(2,002
)
(20,497
)
(3,003
)
(13,671
)
(20,388
)
(2,987
)
(24
)
(20
)
(4
)
(54
)
(8
)
(19
)
(9
)
(1
)
(22,412
)
(20,416
)
(3,914
)
(45,597
)
(6,680
)
(28,361
)
(62,541
)
(9,162
)
39,904
47,006
10,069
126,192
18,486
73,632
143,116
20,965
(1,267
)
(1,601
)
(757
)
(5,497
)
(805
)
(3,275
)
(4,463
)
(654
)
(15,600
)
(8,467
)
(57,171
)
(18,869
)
(2,764
)
(12,468
)
(19,687
)
(2,884
)
23,037
36,938
(47,859
)
101,826
14,917
57,889
118,966
17,427
(1,710
)
(954
)
(279
)
(7,455
)
(1,092
)
(5,293
)
(4,880
)
(715
)
(341
)
(464
)
(68
)
(464
)
(4
)
(325
)
(48
)
(13
)
(218
)
(32
)
(469
)
(1,555
)
(25
)
658
96
392
68
15
430
63
116
823
121
7,734
1,133
20,926
34,444
(48,508
)
102,404
15,001
52,627
114,691
16,801
(4,097
)
(15,014
)
182
(23,335
)
(3,418
)
(12,611
)
(25,734
)
(3,770
)
16,829
19,430
(48,326
)
79,069
11,583
40,016
88,957
13,031
(270,343
)
(39,604
)
(262,286
)
(23,851
)
(3,494
)
(304,763
)
(44,646
)
(38,383
)
(5,623
)
16,829
19,430
(48,326
)
(496,037
)
(72,667
)
(222,270
)
26,723
3,914
0.34
0.39
(0.97
)
(8.63
)
(1.26
)
(3.67
)
0.38
0.06
1.02
1.17
(2.91
)
(25.89
)
(3.78
)
(11.01
)
1.14
0.18
50,000,000
50,000,000
50,000,000
57,481,400
57,481,000
60,621,700
70,428,100
70,428,100
16,666,667
16,666,667
16,666,667
19,160,467
19,160,467
20,207,233
23,476,033
23,476,033
(1)
Our general and administrative
expenses include share-based compensation expenses related to
certain share options granted in 2007 that amounted to
RMB49.5 million, RMB4.2 million (US$0.6 million)
and RMB4.2 million in 2007, 2008 and for the nine months
ended September 30, 2008, respectively. We did not
recognize any share-based compensation expenses in 2006 and for
the nine months ended September 30, 2009.
(2)
On November 17, 2009, we
effected a share split whereby all of our issued and outstanding
704,281 ordinary shares of a par value of US$0.01 per share were
split into 70,428,100 ordinary shares of US$0.0001 par value per
share and the number of our authorized ordinary shares was
increased from 4,500,000 to 450,000,000. The share split has
been retroactively reflected in this prospectus so that share
numbers, per share price and par value data are presented as if
the share split had occurred from our inception.
Table of Contents
As of December 31,
As of September 30,
2006
2007
2008
2008
2009
RMB
RMB
RMB
US$
RMB
US$
(in thousands)
606
39,792
353,991
51,858
285,703
41,854
23,333
66,135
492,978
72,219
466,487
68,338
231,215
54,703
349,121
51,144
557,433
81,661
259,282
300,163
43,972
300,163
43,972
129,998
181,838
26,638
161,450
23,652
256,330
543,023
1,514,395
221,850
1,673,254
245,122
39,840
5,836
44,880
6,575
52,120
7,636
104,912
15,369
254,358
37,262
269,017
39,410
411,101
60,224
434,036
63,584
134,264
394,878
565,020
82,772
591,582
86,663
256,330
543,023
1,514,395
221,850
1,673,254
245,122
Predecessor
Concord Medical (Successor)
Period from
Period from
January 1,
September 10,
2007
2007
to
to
October 30,
December 31,
Year Ended December 31,
Nine Months Ended September 30,
2007
2007
2008
2008
2009
RMB
RMB
RMB
US$
RMB
RMB
US$
(in thousands)
44,593
6,103
46,774
6,852
27,370
104,500
15,308
(50,452
)
(30,441
)
(376,371
)
(55,136
)
(300,692
)
(223,426
)
(32,731
)
6,020
63,225
649,494
95,147
278,407
50,829
7,448
138
(5,698
)
(834
)
(5,949
)
(191
)
(29
)
161
39,025
314,199
46,029
(864
)
(68,288
)
(10,004
)
(1)
Net cash used in investing
activities in 2008 and for the nine months ended September 30,
2008 and 2009 includes acquisition, net of cash acquired, of
RMB231.5 million (US$33.9 million).
RMB219.2 million and RMB21.5 million
(US$3.2 million), respectively.
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As of December 31,
As of September 30,
Operating
Data
(1)
2007
2008
2009
1
12
16
(2)
15
15
16
8
9
10
3
7
2
10
16
8
15
16
34
64
81
Year Ended December 31,
Nine Months Ended September 30,
2007
2008
2009
697
4,678
8,554
8,493
9,455
7,767
2,635
3,057
2,706
1,929
3,766
11,830
31,827
57,972
Predecessor
Concord Medical (Successor)
Combined
Concord Medical (Successor)
Period from
Period from
January 1, 2007
September 1,
Year Ended
Year Ended
Nine Months
to October 30,
2007 to
December 31,
December 31,
Ended September 30,
2007
December 31, 2007
2007
2008
2008
2009
(in RMB thousands)
3,206
877
4,083
40,506
21,588
60,183
40,408
8,731
49,139
65,365
47,096
51,673
13,537
2,565
16,102
20,071
12,225
18,204
5,241
578
14,289
2,899
437
3,336
15,123
7,515
27,618
3,032
391
3,423
8,755
5,294
12,970
63,082
13,001
76,083
155,061
94,296
184,937
(1)
Excluding data from seven, eight
and two centers under service-only agreements as of
December 31, 2007, December 31, 2008 and
September 30, 2009, respectively.
(2)
Including a MM50
intensity-modulated radiation therapy system.
(3)
Other primary medical equipment
used includes CT scanners and ECT scanners for diagnostic
imaging, electroencephalography for the diagnosis of epilepsy,
thermotherapy to increase the efficacy of and for pain relief
after radiotherapy and chemotherapy, high intensity focused
ultrasound therapy for the treatment of cancer, stereotactic
radiofrequency ablation for the treatment of Parkinsons
Disease and refraction and tonometry for the diagnosis of
ophthalmic conditions.
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98
AND RESULTS OF OPERATIONS
62
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our ability to expand our network of centers;
the number of patient cases treated in our network;
the operational arrangements with our hospital partners;
the range and mix of services provided in our network; and
the cost of our medical equipment.
63
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the reputation of our existing network of centers and doctors
providing services in our network of centers;
our financial resources;
our ability to timely establish and manage new centers in
conjunction with our hospital partners; and
our relationship with our hospital partners.
the size and location of potential hospital partner;
the length of the arrangement;
the type of medical equipment to be installed in the
hospitals center;
the capabilities of the doctors that will provide services at
the centers; and
the potential growth of such center.
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China Medstar in July 2008 for approximately
£17.1 million or approximately RMB238.7 million
(US$35.0 million);
Xing Heng Feng Medical in October 2008 for approximately
RMB35.0 million (US$5.1 million);
certain medical equipment located in Tianjin Peoples
Liberation Army 272 Hospital and the related business from a
third party for RMB14.0 million
(US$2.1 million); and
certain medical equipment located in Peoples Liberation
Army 254 Hospital and the related business from another third
party for RMB4.0 million (US$0.6 million).
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Year Ended December 31,
Nine Months Ended September 30,
2007
(1)
2008
2008
2009
% of Total
% of Total
% of Total
% of Total
RMB
Net Revenues
RMB
US$
Net Revenues
RMB
Net Revenues
RMB
US$
Net Revenues
(in thousands, except for percentages)
76,083
93.5
155,061
22,716
90.3
94,296
92.5
184,937
27,092
89.9
5,322
6.5
12,677
1,857
7.4
7,519
7.4
20,096
2,944
9.8
4,051
593
2.3
178
0.1
624
91
0.3
81,405
100.0
171,789
25,166
100.0
101,993
100.0
205,657
30,127
100.0
(1)
Represent the addition of the
amounts for the specific line items of OMS, our predecessor, for
the period from January 1, 2007 to October 30, 2007,
and the amounts for the corresponding line items of Concord
Medical for the period from September 10, 2007 to
December 31, 2007. For the period from September 10,
2007, the date of inception of Ascendium, to October 30,
2007, during which period the financial statements of our
predecessor and those of Concord Medical overlap, Ascendium did
not engage in any business or operations. The unaudited combined
financial data for the year ended December 31, 2007 do not
comply with U.S. GAAP.
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Year Ended December 31,
Nine Months Ended September 30,
2007
(1)
2008
2008
2009
% of Total
% of Total
% of Total
% of Total
RMB
Net Revenues
RMB
US$
Net Revenues
RMB
Net Revenues
RMB
US$
Net Revenues
(in thousands, except for percentages)
22,304
27.4
25,046
3,669
14.6
14,671
14.4
42,144
6,174
20.5
2,002
2.5
20,497
3,003
11.9
13,671
13.4
20,388
2,987
9.9
24
0.0
54
8
0.0
19
0.0
9
1
0.0
24,330
29.9
45,597
6,680
26.5
28,361
27.8
62,541
9,162
30.4
57,075
70.1
126,192
18,486
73.5
73,632
72.2
143,116
20,965
69.6
2,358
2.9
5,497
805
3.2
3,275
3.2
4,463
654
2.2
65,638
80.6
18,869
2,764
11.0
12,468
12.2
19,687
2,884
9.6
67,996
83.5
24,366
3,569
14.2
15,743
15.4
24,150
3,538
11.7
(1)
Represent the addition of the
amounts for the specific line items of OMS, our predecessor, for
the period from January 1, 2007 to October 30, 2007,
and the amounts for the corresponding line items of Concord
Medical for the period from September 10, 2007 to
December 31, 2007. For the period from September 10,
2007, the date of inception of Ascendium, to October 30,
2007, during which the financial statements of our predecessor
and those of Concord Medical overlap, Ascendium did not engage
in any business or operations. The unaudited combined financial
data for the year ended December 31, 2007 do not comply
with U.S. GAAP.
(2)
Our general and administrative
expenses include share-based compensation expenses related to
certain share options granted in 2007 that amounted to
RMB49.5 million, RMB4.2 million (US$0.6 million)
and RMB4.2 million in 2007, 2008 and for the nine months
ended September 30, 2008, respectively. We did not
recognize any share-based compensation expenses for the nine
months ended September 30, 2009.
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75
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hiring a professional consulting firm to help us to improve
internal control in preparation for compliance with the
Sarbanes-Oxley Act and other applicable SEC rules and
regulations;
hiring additional qualified personnel with U.S. GAAP
expertise and SEC reporting experience to further build an
internal finance team and a dedicated internal audit department;
improving internal control procedures and standards, including
compiling an internal accounting policies and procedures manual,
and implementing policies as to the inspections and reporting of
the medical equipment used in our network of centers;
enhancing the periodic and systematic physical inspections of
the medical equipment used in our network of centers to monitor
the working condition of the equipment and to report damages in
a timely manner;
enhancing the management of agreements with our hospital
partners and establishing standard policies and procedures
governing agreement terms and approval process; and
conducting accounting and financial reporting training for our
existing personnel as part of our commitment to provide ongoing
U.S. GAAP trainings to our employees.
78
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(1)
Our general and administrative
expenses include share-based compensation expenses related to
certain share options granted in 2007 that amounted to RMB49.5
million, RMB4.2 million (US$0.6 million) and RMB4.2 million
in 2007, 2008 and for the nine months ended September 30,
2008, respectively. We did not recognize any share-based
compensation expenses for the nine months ended
September 30, 2009.
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an increase in the number of new centers that are in operation
and the higher cost of revenues as a percentage of total net
revenues associated with such centers during their
ramp-up
period; and
an increase in the number of new centers that offer diagnostic
imaging services, which have a higher cost of revenues as a
percentage of total net revenues as compared to radiotherapy
treatments.
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Selling Expenses.
Our selling expenses
increased by 36.3% to RMB4.5 million (US$0.6 million)
for the nine months ended September 30, 2009 from
RMB3.3 million for the same period in 2008. This increase
in our selling expenses was due primarily to an increase in
salaries and benefits payment associated with an increased
headcount as a result of our acquisition of China Medstar, an
increase in marketing expenses and salaries and benefits payment
in connection with an increase in our business development
efforts for the nine months ended September 30, 2009 as
compared to the same period in 2008 to increase the number of
new centers and for the development of specialty cancer
hospitals. Selling expenses as a percentage of our total net
revenues decreased to 2.1% for the nine months ended
September 30, 2009 from 3.2% for the same period in 2008.
This was due primarily to increased economies of scale.
General and Administrative Expenses.
Our
general and administrative expenses increased by 57.9% to
RMB19.7 million (US$2.9 million) for the nine months
ended September 30, 2009 from RMB12.5 million for the
same period in 2008. This increase was due primarily to
increases in salaries and benefits payment in connection with
the increased headcount of our personnel and their travel
related expenses principally as a result of our acquisition of
China Medstar and also in connection with the continued
expansion of our business. Our general and administrative
expenses include charges of RMB4.2 million for the nine
months ended September 30, 2008 related to share-based
compensation. General and administrative expenses as a
percentage of our total net revenues decreased to 9.6% for the
nine months ended September 30, 2009 from 12.2% for the
same period in 2008. This was due primarily to
share-based
compensation expenses that were incurred during the nine months
ended September 30, 2008 that we did not incur for the same
period in 2009. On November 27, 2009, we granted options to
purchase pursuant to our 2008 share incentive plan an aggregate
of 4,765,800 ordinary shares to our executive officers,
directors and other employees. Consequently, we expect to start
recording share-based compensation expense associated with this
grant commencing in the quarter ending December 31, 2009.
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Selling Expenses.
Our selling expenses were
RMB5.5 million (US$0.8 million) in 2008. Our selling
expenses were RMB1.6 million for the period from
January 1, 2007 to October 30, 2007 and
RMB0.8 million for the period from September 10, 2007
to December 31, 2007. Our selling expenses as a percentage
of total net revenues were 3.2% in 2008. Our selling expenses as
a percentage of total net revenues were 2.4% for the period from
January 1, 2007 to October 30, 2007 and 5.4% for the
period from September 10, 2007 to December 31, 2007.
General and Administrative Expenses.
Our
general and administrative expenses were RMB18.9 million
(US$2.8 million) in 2008. Our general and administrative
expenses were RMB8.5 million for the period from
January 1, 2007 to October 30, 2007 and
RMB57.2 million for the period from September 10, 2007
to December 31, 2007. Our general and administrative
expenses as a percentage of total net revenues were 11.0% in
2008. Our general and administrative expenses as a percentage of
total net revenues were 12.6% for the period from
January 1, 2007 to October 30, 2007 and 408.9% for the
period from September 10, 2007 to December 31, 2007.
The general and administrative expenses for the period from
September 10, 2007 to December 31, 2007 were affected
by the share-based compensation expenses from the grant of
certain OMS share options, which amounted to
RMB49.5 million. The general and administrative expenses in
2008 were also affected by the share-based compensation expenses
that amounted to RMB4.2 million (US$0.6 million) from
the transfer of vested options of certain OMS share options to
three of our executive directors.
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the downward purchase price adjustment to the fair value of the
medical equipment used in our network of centers and a decrease
in depreciation expenses as a result;
an increase in net revenues derived from centers managed under
service-only agreements as a percentage of our total net
revenues to 7.4% in 2008 from 6.5% in 2007. Centers managed
under service-only agreements have a lower cost of revenues as a
percentage of total net revenues as compared to centers managed
under lease and management services arrangements. This is
because we do not purchase the medical equipment used in the
centers managed under service-only agreements and, as a result,
do not incur the associated equipment depreciation
expenses; and
our acquisition of China Medstar, which had a lower cost of
revenues as a percentage of total net revenues as compared to
our company. This was because of the higher cost of certain of
our installed medical equipment as compared to the cost of China
Medstars medical equipment, which had a higher
depreciation expenses.
Selling Expenses.
Our selling expenses increased by
129.2% to RMB5.5 million (US$0.8 million) in 2008 from
RMB2.4 million in 2007. This increase in our selling
expenses was due primarily to an increase in marketing expenses
and salaries and benefits payment in connection with an increase
in our business development efforts in 2008 as compared to 2007
to increase the number of new centers and for the development of
specialty cancer hospitals. Selling expenses as a percentage of
our total net revenues in 2008 remained in line with 2007 and
increased slightly to 3.2% in 2008 from 2.9% in 2007.
General and Administrative Expenses.
Our general and
administrative expenses decreased by 71.2% to
RMB18.9 million (US$2.8 million) in 2008 from
RMB65.6 million in 2007. Our general and administrative
expenses include charges of RMB4.2 million
(US$0.6 million) and RMB49.5 million in 2008 and 2007,
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respectively, related to share-based compensation. Our general
and administrative expenses, not including the share-based
compensation expenses, have also increased in 2008 from 2007,
which was due primarily to increases in salaries and benefits
payments in connection with the increased headcount of our
personnel as well as their travel related expenses.
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For the Three Months Ended
March 31,
June 30,
September. 30,
December 31,
March 31,
June 30,
September 30,
2008
2008
2008
2008
2009
2009
2009
(in RMB thousands)
20,672
23,813
49,811
60,765
47,349
66,696
70,892
2,013
2,751
2,755
5,158
8,323
5,084
6,689
178
3,873
79
137
408
22,685
26,564
52,744
69,796
55,751
71,917
77,989
(3,092
)
(3,335
)
(8,244
)
(10,375
)
(11,171
)
(15,270
)
(15,703
)
(4,008
)
(4,008
)
(5,655
)
(6,826
)
(6,882
)
(6,882
)
(6,624
)
(7
)
(7
)
(5
)
(35
)
(3
)
(4
)
(2
)
(7,107
)
(7,350
)
(13,904
)
(17,236
)
(18,056
)
(22,156
)
(22,329
)
15,578
19,214
38,840
52,560
37,695
49,761
55,660
(799
)
(1,053
)
(1,423
)
(2,222
)
(1,316
)
(1,671
)
(1,476
)
(2,407
)
(2,742
)
(7,319
)
(6,401
)
(5,754
)
(5,722
)
(8,211
)
12,372
15,419
30,098
43,937
30,625
42,368
45,973
(1,006
)
(1,732
)
(2,555
)
(2,162
)
(1,638
)
(1,571
)
(1,671
)
(883
)
1,297
(878
)
(76
)
109
(46
)
(312
)
(663
)
542
(97
)
127
265
266
3
52
61
314
224
423
176
7,734
10,410
15,272
26,945
49,777
28,548
41,762
44,381
(3,062
)
(3,651
)
(5,898
)
(10,724
)
(6,709
)
(8,826
)
(10,199
)
7,348
11,621
21,047
39,053
21,839
32,936
34,182
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For the Three Months Ended
March 31,
June 30,
September 30,
December 31,
March 31,
June 30,
September 30,
2008
2008
2008
2008
2009
2009
2009
91.1
%
89.6
%
94.4
%
87.1
%
84.9
%
92.7
%
90.9
%
8.9
10.4
5.2
7.4
15.1
7.1
8.6
0.4
5.5
0.2
0.5
100.0
100.0
100.0
100.0
100.0
100.0
100.0
(13.6
)
(12.6
)
(15.6
)
(14.9
)
(20.0
)
(21.2
)
(20.1
)
(17.7
)
(15.1
)
(10.8
)
(9.7
)
(12.4
)
(9.6
)
(8.5
)
(0.1
)
(31.3
)
(27.7
)
(26.4
)
(24.7
)
(32.4
)
(30.8
)
(28.6
)
68.7
72.3
73.6
75.3
67.6
69.2
71.4
(3.5
)
(4.0
)
(2.7
)
(3.2
)
(2.4
)
(2.3
)
(1.9
)
(10.6
)
(10.3
)
(13.8
)
(9.2
)
(10.3
)
(8.0
)
(10.6
)
54.6
58.0
57.1
62.9
54.9
58.9
58.9
(4.4
)
(6.5
)
(4.8
)
(3.1
)
(2.9
)
(2.2
)
(2.1
)
(3.9
)
4.9
(1.7
)
(0.1
)
(0.3
)
0.4
(0.1
)
(0.4
)
(1.2
)
0.8
(0.1
)
0.5
0.5
0.4
0.2
0.1
0.5
0.4
0.6
0.2
11.1
46.0
57.5
51.1
71.3
51.2
58.1
56.9
(13.5
)
(13.8
)
(11.2
)
(15.3
)
(12.0
)
(12.3
)
(13.1
)
32.5
43.7
39.9
56.0
39.2
45.8
43.8
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Predecessor
Concord Medical (Successor)
Period from
Period from
January 1, 2007
September 10, 2007
Year Ended
Nine Months Ended
to
to
December 31,
September 30,
October 30, 2007
December 31, 2007
2008
2008
2008
2009
RMB
RMB
RMB
US$
RMB
RMB
US$
(in thousands)
44,593
6,103
46,774
6,852
27,370
104,500
15,308
(50,452
)
(30,441
)
(376,371
)
(55,136
)
(300,692
)
(223,426
)
(32,731
)
6,020
63,225
649,494
95,147
278,407
50,829
7,448
138
(5,698
)
(834
)
(5,949
)
(191
)
(29
)
161
39,025
314,199
46,029
(864
)
(68,288
)
(10,004
)
606
767
39,792
5,829
39,792
353,991
51,858
767
39,792
353,991
51,858
38,928
285,703
41,854
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Contractual Obligations
Less Than
More Than
1 Year
1-3 Year
3-5 Year
5 Years
Total
RMB
RMB
RMB
RMB
RMB
(in thousands)
20,800
20,800
39,840
52,120
91,960
5,084
7,562
6,392
19,038
2,700
2,703
1,144
6,547
115,919
115,919
184,343
62,385
7,536
254,264
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In April 2009, the Financial Accounting Standards Board, or
FASB, issued Accounting Standards Codification
805-20,
Accounting for Assets Acquired and Liabilities Assumed in
a Business Combination That Arise from Contingencies, or
ASC
805-20,
to amend SFAS 141 (revised 2007) Business
Combinations. ASC
805-20
addresses the initial recognition, measurement and subsequent
accounting for assets and liabilities arising from contingencies
in a business combination, and requires that such assets
acquired or liabilities assumed be initially recognized at fair
value at the acquisition date if fair value can be determined
during the measurement period. If the acquisition-date fair
value cannot be determined, the asset acquired or liability
assumed arising from a contingency is recognized only if certain
criteria are met. ASC
805-20
also
requires that a systematic and rational basis for subsequently
measuring and accounting for the assets or liabilities be
developed depending on their nature. The Company does not
anticipate that the adoption of this statement will have a
material impact on its consolidated financial statements, absent
any material business combinations.
In June 2009, the FASB issued SFAS No. 166,
Accounting for Transfers of Financial Assets
an amendment of FASB Statement No. 140, or SFAS 166.
SFAS 166 seeks to improve the relevance,
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representational faithfulness, and comparability of the
information that a reporting entity provides in its financial
statements about a transfer of financial assets; the effects of
a transfer on its financial position, financial performance, and
cash flows; and a transferors continuing involvement, if
any, in transferred financial assets. Specifically,
SFAS 166 eliminates the concept of a qualifying
special-purpose entity, creates more stringent conditions for
reporting a transfer of a portion of a financial asset as a
sale, clarifies other sale-accounting criteria, and changes the
initial measurement of a transferors interest in
transferred financial assets. The Company does not anticipate
that the adoption of this statement will have a material impact
on its consolidated financial statements.
In June 2009, the FASB issued SFAS No. 167,
Amendments to FASB Interpretation No. 46(R), or
SFAS 167. SFAS 167 amends FASB Interpretation
No. 46(R), Variable Interest Entities for
determining whether an entity is a variable interest entity, or
VIE, and requires an enterprise to perform an analysis to
determine whether the enterprises variable interest or
interests give it a controlling financial interest in a VIE.
Under SFAS 167, an enterprise has a controlling financial
interest when it has a) the power to direct the activities
of a VIE that most significantly impact the entitys
economic performance and b) the obligation to absorb losses
of the entity or the right to receive benefits from the entity
that could potentially be significant to the VIE. SFAS 167 also
requires an enterprise to assess whether it has an implicit
financial responsibility to ensure that a VIE operates as
designed when determining whether it has power to direct the
activities of the VIE that most significantly impact the
entitys economic performance. SFAS 167 also requires
ongoing assessments of whether an enterprise is the primary
beneficiary of a VIE, requires enhanced disclosures and
eliminates the scope exclusion for qualifying special-purpose
entities. The Company is currently evaluating the impact the
adoption of SFAS 167 will have on its consolidated
financial statements.
In June 2009, the FASB issued Statement of Financial Accounting
Standard, or SFAS, No. 168, The FASB Accounting Standards
Codification
tm
and the Hierarchy of Generally Accepted Accounting Principles, a
replacement of FASB Statement No. 162. This statement
modifies the Generally Accepted Accounting Principles, or GAAP,
hierarchy by establishing only two levels of GAAP, authoritative
and nonauthoritative accounting literature. Effective July 2009,
the FASB Accounting Standards
Codification
tm
,
or ASC, also known collectively as the Codification,
is considered the single source of authoritative
U.S. accounting and reporting standards, except for
additional authoritative rules and interpretive releases issued
by the SEC. Nonauthoritative guidance and literature would
include, among other things, FASB Concepts Statements, American
Institute of Certified Public Accountants Issue Papers and
Technical Practice Aids and accounting textbooks. The
Codification was developed to organize U.S. GAAP
pronouncements by topic so that users can more easily access
authoritative accounting guidance. It is organized by topic,
subtopic, section, and paragraph, each of which is identified by
a numerical designation. This statement applies beginning in
third quarter 2009. All accounting references have been updated,
and therefore U.S. GAAP standards have been replaced with
ASC references. This standard had no impact on the
Companys financial position, results of operations or cash
flows.
In August 2009, the FASB issued Accounting Standards Update
No. 2009-5,
Measuring Liabilities at Fair Value, or ASU
2009-05.
ASU
2009-05
amends Accounting Standards Codification Topic 820, Fair
Value Measurements. Specifically, ASU
2009-05
provides clarification that in circumstances in which a quoted
price in an active market for the identical liability is not
available, a reporting entity is required to measure fair value
using one or more of the following methods: 1) a valuation
technique that uses a) the quoted price of the identical
liability when traded as an asset or b) quoted prices for
similar liabilities or similar liabilities when traded as assets
and/or
2) a valuation technique that is consistent with the
principles of Topic 820 of the Accounting Standards Codification
(e.g. an income approach or market approach). ASU
2009-05
also
clarifies that when estimating the fair value of a liability, a
reporting entity is not required to adjust to include inputs
relating to the existence of transfer restrictions on that
liability. The Company does not anticipate that the adoption of
this statement will have a material impact on its consolidated
financial statements.
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In September 2009, the Emerging Issues Task Force, or EITF,
reached final consensus on ASC
605-25,
Revenue Arrangements with Multiple Deliverables. ASC
605-25
addresses how to determine whether an arrangement involving
multiple deliverables contains more than one unit of accounting,
and how the arrangement consideration should be allocated among
the separate units of accounting.
EITF 08-1
may be applied retrospectively or prospectively for new or
materially modified arrangements and early adoption is
permitted. The Company does not anticipate that the adoption of
this statement will have a material impact on its consolidated
financial statements.
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Increasing cancer incidence rate:
The cancer incidence
rate in China has grown from approximately 0.216% in 2003 to
approximately 0.260% in 2008, an increase of 20.4%, according to
a report by Frost & Sullivan. It is expected that
demographic changes and urbanization will lead to further
increases in the number of cancer cases in China.
Increasing physician adoption of advanced diagnostic imaging
equipment:
With the modernization of medical care in China,
more physicians are expected to utilize more advanced diagnostic
imaging equipment, such as MRI and PET-CT.
Increasing percentage of cancer patients treated with
radiotherapy:
The percentage of cancer patients treated with
radiotherapy is expected to increase due to improving awareness
of radiotherapy among the doctors and patients, and increased
availability of radiotherapy and diagnostic imaging equipment.
Increasing affordability and potentially increased
accessibility:
Chinas rising disposable income and
increasing government expenditure on healthcare are also
expected to stimulate the overall demand for radiotherapy and
diagnostic imaging services. In addition, China recently
approved a new round of healthcare reforms that encourage the
investment of private capital in non-profit hospitals, which may
potentially increase the accessibility of radiotherapy and
diagnostic imaging services to patients.
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F-22
F-50
II-2
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101
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102
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population density, demographics and the level of economic
development of the regions or cities in which such new centers
would be located; and
the reputation of the potential hospital partner and its
doctors, nurses and other personnel and the number of licensed
patient beds and patient volume.
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As of September 30,
% of Total
2009
Employees
28
18.7
%
37
24.7
62
41.3
11
7.3
7
4.7
5
3.3
150
100.0
%
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286
July 2010
16
November 2009
34
May 2010
195
January 2011
522
November 2012
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Urban Employees Basic Medical
Urban Residents Basic Medical
Insurance Program
Insurance Program
1998
2007
2003
Urban employees
Urban non-employees
Rural residents
Mandatory
Voluntary
Voluntary
in 2008
Approximately 200.0 million (33.0% of Chinas urban
population)
Approximately 118.3 million (19.5% of Chinas urban
population)
Approximately 815 million (91.5% of Chinas rural
population)
amount in 2008
RMB208.4 billion
N/A
RMB66.2 billion
employer contributes approximately 6% of each employees total salary; and
monthly premium are paid by each household; and
individual pays no less than RMB20 per year and local government subsidizes no less than RMB40 per person annually; and
All of the employees contribution and 30% of the employers contribution are allocated to the individuals reimbursement account; the reimbursement cap from the individual account is the balance of that account; and
There is no specific requirement or guidance from the central
government. Reimbursement policy is separately determined by
local governments.
The central government suggests that, beginning in the second
half of 2009, the reimbursement cap for all regions should be no
less than six times the average annual per capita net income of
rural residents in the region.
Shanghai:
reimbursement cap from the social medical
expense pool for an individual participant in a calendar year is
approximately four times the average annual salary in Shanghai
from the previous year.
Inner Mongolia:
reimbursement cap from the social medical
expense pool for an individual participant in a calendar year is
RMB25,000.
Jiangsu Province:
approximately 50% to 60% of medical
expense can be reimbursed by the program.
Sichuan Province:
approximately 60% (and not less than
50%) of medical expense can be reimbursed by the program.
Guangdong Province:
approximately 40% to 60% of medical
expense can be reimbursed by the program; maximum reimbursement
amount is approximately two times the average annual salary in
Guangdong province from the previous year.
Guangdong Province:
maximum reimbursement amount is
approximately RMB50,000 per person per year.
Hubei Province:
maximum reimbursement amount for
hospitalization is approximately RMB30,000 per person per
year.
Anhui Province:
maximum reimbursement amount for
hospitalization is approximately RMB30,000 per person per year.
Sources:
MOH, MHRSS, National Bureau of Statistics, and various other
central and local PRC government websites.
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Age
38
Director, chief executive officer and president
45
Co-chairman of the board of directors and chief operating officer
48
Co-chairman of the board of directors and chief financial officer
45
Director and executive president
45
Director and financial controller
44
Director
37
Director
38
Director
58
Director
41
Independent director
33
Corporate vice president
*
Mr. Denny Lee has accepted our
appointment to be an independent director of our company,
effective upon the commencement of trading of our ADSs on the
NYSE.
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convening shareholders annual general meetings and
reporting its work to shareholders at such meetings;
declaring dividends and distributions;
appointing officers and determining the term of office of
officers;
exercising the borrowing powers of our company and mortgaging
the property of our company; and
approving the transfer of shares of our company, including
registering such shares in our share register.
selecting our independent registered public accounting firm and
pre-approving all auditing and non-auditing services permitted
to be performed by our independent registered public accounting
firm;
reviewing with our independent registered public accounting firm
any audit problems or difficulties and managements
response;
reviewing and approving all proposed related-party transactions,
as defined in Item 404 of
Regulation S-K
under the Securities Act;
discussing the annual audited financial statements with
management and our independent registered public accounting firm;
reviewing major issues as to the adequacy of our internal
controls and any special audit steps adopted in light of
significant control deficiencies;
annually reviewing and reassessing the adequacy of our audit
committee charter;
such other matters that are specifically delegated to our audit
committee by our board of directors from time to time;
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meeting separately and periodically with management and our
internal auditor and independent registered public accounting
firm; and
reporting regularly to the full board of directors.
approving and overseeing the compensation package for our
executive officers;
reviewing and making recommendations to the board with respect
to the compensation of our directors;
reviewing and approving corporate goals and objectives relevant
to the compensation of our chief executive officer, evaluating
the performance of our chief executive officer in light of those
goals and objectives, and setting the compensation level of our
chief executive officer based on such evaluation; and
reviewing periodically and making recommendations to the board
regarding any long-term incentive compensation or equity plans,
programs or similar arrangements, annual bonuses, employee
pension and welfare benefit plans.
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each of our directors and executive officers;
each person known to us to own beneficially more than 5.0% of
our ordinary shares; and
each other selling shareholders.
Ordinary Shares Beneficially
Ordinary Shares Being Sold
Ordinary Shares Beneficially
Owned Prior to This Offering
in This Offering
Owned After This Offering
Number
%
Number
%
Number
%
4,065,800
3.6
4,065,800
2.8
7,319,900
6.6
7,319,900
5.0
4,065,800
3.6
4,065,800
2.8
2,979,900
2.7
2,979,900
2.0
*
*
*
*
7,533,800
6.8
7,533,800
5.1
26,172,700
23.5
26,172,700
17.7
10,418,000
9.3
10,418,000
7.7
2,889,500
2.6
2,889,500
2.0
*
*
*
*
66,240,400
59.4
66,240,400
44.9
26,172,700
23.5
26,172,700
17.7
23,321,300
20.9
3,000,000
2.7
20,321,300
13.8
10,418,000
9.3
10,418,000
7.7
9,215,800
8.3
1,200,000
1.1
8,015,800
5.4
7,319,900
6.6
7,319,900
5.0
7,177,200
6.4
7,177,200
4.9
*
*
750,000
0.7
*
*
*
*
450,000
0.4
*
*
*
Beneficially owns less than 1.0% of
our outstanding ordinary shares.
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(1)
Represents 4,065,800 ordinary
shares held by Daketala International Investment Holdings Ltd.,
a limited liability company organized under the laws of the
British Virgin Islands wholly owned by Dr. Yang. 2,910,800
of the ordinary shares held by Daketala International Investment
Holdings Ltd. have been pledged to certain of our shareholders
in connection with the issuance of our Series B
contingently redeemable convertible preferred shares on
October 20, 2008.
(2)
Represents 7,319,900 ordinary
shares held by CZY Investment Ltd., a limited liability company
organized under the laws of the British Virgin Islands wholly
owned by Mr. Cheng. 5,232,200 of the ordinary shares held
by CZY Investment Ltd. have been pledged to certain of our
shareholders in connection with the issuance of our
Series B contingently redeemable convertible preferred
shares on October 20, 2008. In addition, 2,087,700 of the
ordinary shares held by CZY Investment Ltd. have been pledged to
certain of our shareholders as security for a loan.
(3)
Represents 4,065,800 ordinary
shares held by Dragon Image Investment Ltd., a limited liability
company organized under the laws of the British Virgin Islands
wholly owned by Mr. Sun. 3,193,800 of the ordinary shares
held by Dragon Image Investment Ltd. have been pledged to
certain of our shareholders in connection with the issuance of
our Series B contingently redeemable convertible preferred
shares on October 20, 2008.
(4)
Represents 2,979,900 ordinary
shares held by Thousand Ocean Group Limited, a limited liability
company organized under the laws of the British Virgin Islands
wholly owned by Mr. Zhang. 1,675,000 of the ordinary shares
held by Thousand Ocean Group Limited have been pledged to
certain of our shareholders in connection with the issuance of
our Series B contingently redeemable convertible preferred
shares on October 20, 2008.
(5)
Represents ordinary shares held by
Top Mount Group Limited, a limited liability company organized
under the laws of the British Virgin Islands wholly owned by
Mr. Yap. Certain portion of the ordinary shares held by Top
Mount Group Limited have been pledged to certain of our
shareholders in connection with the issuance of our
Series B contingently redeemable convertible preferred
shares on October 20, 2008.
(6)
Represents 6,616,900 and 323,200
ordinary shares held by CICC Sun Company Limited and Perfect Key
Holdings Limited, respectively, issuable upon conversion of all
Series A and Series B contingently redeemable
convertible preferred shares held by such shareholders and
560,300 and 33,400 ordinary shares, respectively, held by such
shareholders. For a description of the beneficial ownership of
our ordinary shares by CICC Sun Company Limited, see Note 16
below. Ms. Shirley Chen disclaims beneficial ownership of
our ordinary shares held by CICC Sun Company Limited except to
the extent of her pecuniary interest in these shares. Perfect
Key Holdings Limited is a limited liability company organized
under the laws of the British Virgin Islands in which
Ms. Shirley Chen holds 47.4% beneficial ownership.
(7)
Represents 23,085,700 and 920,600
ordinary shares held by Carlyle Asia Growth Partners III, L.P.
and CAGP III Co-Investment, L.P., respectively, issuable upon
conversion of all Series A and Series B contingently
redeemable convertible preferred shares held by such
shareholders and 2,083,300 and 83,100 ordinary shares,
respectively, held by such shareholders. Carlyle Asia Growth
Partners III, L.P. and CAGP III Co-Investment, L.P. are
collectively referred to in this prospectus as the Carlyle
Entities. For a description of the beneficial ownership of our
ordinary shares by the Carlyle Entities, see Note 11 below.
Mr. Feng Xiao disclaims beneficial ownership of our
ordinary shares held by the Carlyle Entities, except to the
extent of his pecuniary interest in these shares.
(8)
Represents 9,722,200 ordinary
shares issuable upon conversion of all Series B contingently
redeemable convertible preferred shares held by Starr
Investments Cayman II, Inc. and 695,800 ordinary shares held by
such shareholder. For a description of the beneficial ownership
of our ordinary shares by Starr Investments Cayman II, Inc., see
Note 12 below. Ms. Elaine Zong disclaims beneficial
ownership of our ordinary shares held by Starr Investments
Cayman II, Inc. except to the extent of her pecuniary interest
in these shares.
(9)
Represents 2,889,500 ordinary
shares held by Grand Best Group Limited, a limited liability
company organized under the laws of the British Virgin Islands.
For a description of the beneficial ownership of our ordinary
shares held by Grand Best Group Limited, see Note 14 below.
Mr. Ku owns 31.4% of the equity interest in Grand Best
Group Limited.
(10)
Represents ordinary shares held by
Triumph Concept Investment Limited, a limited liability company
organized under the laws of the British Virgin Islands wholly
owned by Mr. Zhang.
(11)
Represents 23,085,700 and 920,600
ordinary shares held by Carlyle Asia Growth Partners III, L.P.
and CAGP III Co-Investment, L.P., respectively, issuable upon
conversion of all Series A and Series B contingently
redeemable convertible preferred shares held by such
shareholders and 2,083,300 and 83,100 ordinary shares,
respectively, held by such shareholders. The general partner of
each Carlyle Entity is CAGP General Partner, L.P., which is in
turn managed by its general partner, CAGP Ltd. The directors of
CAGP Ltd. are Mr. William E. Conway, Jr., Mr. Daniel
A. DAniello, Mr. David Rubenstein, Mr. Jeffery
Ferguson and Mr. Curtis L. Buser. The address of the
Carlyle Entities is Walker House, PO Box 908GT, Mary
Street, George Town, Grand Cayman, Cayman Islands.
(12)
Notable Enterprise Limited is a
limited liability company organized under the laws of the
British Virgin Islands wholly owned by Ms. Bona Lau.
Ms. Lau is the daughter of Mr. Haifeng Liu, the
chairman of Aohua Medical from December 2005 to December 2007
and our director until July 2009. Prior to serving as chairman
of Aohua Medical, Mr. Liu was detained in March 2004 by the
authorities of Luoyang city, Henan Province, for alleged
misappropriation of funds while serving as chairman of a company
unrelated to Aohua Medical or us. Mr. Liu was released in
June 2005 by the local prosecutor without an indictment due to
insufficient evidence. Notable Enterprise Limited was originally
owned by Mr. Liu, who irrevocably transferred all of his
interest in Notable Enterprise Limited to Ms. Lau in
November 2007 for consideration not significantly lower than the
then fair market value. At the time of the transfer, Notable
Enterprise Limited indirectly held a 44.2% equity interest in
OMS. The address of Notable Enterprise Limited is
P.O. Box 957, Offshore Incorporations Centre, Road
Town, Tortola, British Virgin Islands. 134,478 of the ordinary
shares held by Notable Enterprise Limited have been pledged to
certain of our shareholders in connection with the issuance of
our Series B contingently redeemable convertible preferred
shares on October 20, 2008.
(13)
Represents 9,722,200 ordinary
shares issuable upon conversion of all Series B contingently
redeemable convertible preferred shares held by Starr
Investments Cayman II, Inc. and 695,800 ordinary shares held by
such shareholder. Starr Investments Cayman II, Inc. is
ultimately controlled by Starr International Company, Inc. whose
voting shareholders (none of whom control 10% or more
individually) are Mr. Maurice R. Greenberg, Mr. Edward
E. Matthews, Mr. Howard I. Smith, Mr. John J. Roberts,
Mr. Houghton Freeman, Mr. Joseph C. H. Johnson,
Mr. Cesar Zalamea, Mr. Peter Hammer, Mr. Michael
Morrison, Mr. Bertil P. Lundqvist and Ms. Florence
Davis. The address of Starr Investments Cayman II, Inc. is
Avalon Management Limited, Landmark Square, 64 Earth Close, West
Bay Beach, Grand Cayman, KY1-1107, Cayman Islands
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(14)
Grand Best Group Limited is a
limited liability company organized under the laws of the
British Virgin Islands. The shareholders of Grand Best Group
Limited are Ku Wai Hong, Ever Bounteous Group Limited, Iu Kong,
Cheng Mai Yue, Wang Rong Kang, Brave Faith Development Limited,
Echolac Company Limited and Huang Pei Lin. The address of Grand
Best Group Limited is Portcullis TrustNet Chambers, P.O.
Box 3444, Road Town, Tortola, British Virgin Islands.
(15)
CZY Investments Limited is a
limited liability company organized under the laws of the
British Virgin Islands wholly owned by Dr. Zheng Cheng. The
address of CZY Investments Limited is P.O. Box 957,
Offshore Incorporations Centre, Road Town, Tortola, British
Virgin Islands.
(16)
Represents 6,616,900 ordinary
shares issuable upon conversion of all Series A and
Series B contingently redeemable convertible preferred
shares held by CICC Sun Company Limited and 560,300 ordinary
shares held by such shareholder. CICC Sun Company Limited is
wholly owned by China International Capital Corporation Limited,
one of our underwriters, in which Morgan Stanley, another
underwriter to this offering, beneficially owns 34.0% of its
equity interest. China International Capital Corporation Limited
has ultimate investment and voting power over the shares held by
CICC Sun Company Limited. The address of CICC Sun Company
Limited is 2/F., Abbott Building, Road Town, Tortola, British
Virgin Islands.
(17)
Sino Prime Investments Limited is a
limited liability company organized under the laws of the
British Virgin Islands. The shareholder of Sino Prime
Investments Limited is Sirong Tian. The address of Sino Prime
Investments Limited is Palm Grove House, P.O. Box 438,
Road Town, Tortola, British Virgin Islands.
(18)
ATL International Group Limited is
a limited liability company organized under the laws of the
British Virgin Islands. The shareholders of ATL International
Group Limited are Huaying Shang and Qiushi Ren. The address of
ATL International Group Limited is P.O. Box 957,
Offshore Incorporations Centre, Road Town, Tortola, British
Virgin Islands.
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the instrument of transfer is lodged with us, accompanied by the
certificate for the ordinary shares to which it relates and such
other evidence as our board of directors may reasonably require
to show the right of the transferor to make the transfer;
the instrument of transfer is in respect of only one class of
ordinary shares;
the instrument of transfer is properly stamped, if required;
in the case of a transfer to joint holders, the number of joint
holders to whom the ordinary share is to be transferred does not
exceed four; or
the ordinary shares transferred are free of any lien in favor of
us.
issue ordinary shares on terms that they are to be redeemed or
are liable to be redeemed at our option or at the option of the
shareholders, on such terms and in such manner as we may, before
the issue of such ordinary shares, determine;
purchase our own ordinary shares (including any redeemable
shares) on such terms and in such manner as we may determine and
agree with our shareholders; and
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make a payment in respect of the redemption or purchase of our
own ordinary shares in any manner authorized by the Companies
Law, including out of our capital, profits or the proceeds of a
fresh issue of ordinary shares.
increase the share capital by such sum, to be divided into
shares of such classes and amount, as the resolution shall
prescribe;
consolidate and divide all or any of our share capital into
shares of a larger amount than our existing shares;
convert all or any of our paid up shares into stock and
reconvert that stock into paid up shares of any denomination;
sub-divide our existing shares, or any of them into shares of a
smaller amount that is fixed by the third amended and restated
memorandum and articles of association; and
cancel any shares that, at the date of the passing of the
resolution, have not been taken or agreed to be taken by any
person and diminish the amount of our share capital by the
amount of the shares so cancelled.
the designation of the series;
the number of shares of the series;
the dividend rights, dividend rates, conversion rights, voting
rights; and
the rights and terms of redemption and liquidation preferences.
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the appointment or removal of either our chief executive officer
or chief financial officer;
any anti-takeover action in response to a takeover attempt;
any merger resulting in our shareholders immediately prior to
such merger holding less than a majority of the voting power of
the outstanding share capital of the surviving business entity;
the sale or transfer of all or substantially all of our assets;
and
any change in the number of directors on our board of directors.
an exempted company does not have to file an annual return of
its shareholders with the Registrar of Companies;
an exempted companys register of members is not open to
inspection;
an exempted company does not have to hold an annual general
meeting;
an exempted company may issue negotiable or bearer shares or
shares with no par value;
an exempted company may obtain an undertaking against the
imposition of any future taxation (such undertakings are usually
given for 20 years in the first instance);
an exempted company may register by way of continuation in
another jurisdiction and be deregistered in the Cayman Islands;
an exempted company may register as a limited duration company;
and
an exempted company may register as a segregated portfolio
company.
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the statutory provisions as to the dual majority vote have been
met;
the shareholders have been fairly represented at the meeting in
question;
the arrangement is such that a businessman would reasonably
approve; and
the arrangement is not one that would more properly be
sanctioned under some other provision of the Companies Law.
a company acts or proposes to act illegally or ultra vires;
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the act complained of, although not ultra vires, could be duly
effected if authorized by a special or ordinary resolution that
has not been obtained; and
those who control the company are perpetrating a fraud on
the minority.
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sell such rights if practicable and distribute the net proceeds
in the same manner as cash to the ADR holders entitled
thereto; or
if it is not practicable to sell such rights, do nothing and
allow such rights to lapse, in which case ADR holders will
receive nothing.
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temporary delays caused by closing our transfer books or those
of the depositary or the deposit of shares in connection with
voting at a shareholders meeting, or the payment of
dividends;
the payment of fees, taxes and similar charges; or
compliance with any U.S. or foreign laws or governmental
regulations relating to the ADRs or to the withdrawal of
deposited securities.
to receive any distribution on or in respect of shares,
to give instructions for the exercise of voting rights at a
meeting of holders of shares,
to pay the fee assessed by the depositary for administration of
the ADR program and for any expenses as provided for in the
ADR, or
to receive any notice or to act in respect of other matters all
subject to the provisions of the deposit agreement.
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a fee of up to US$1.50 per ADR or ADRs for transfers of
certificated or direct registration ADRs;
a fee of up to US$0.05 per ADS for any cash distribution made
pursuant to the deposit agreement;
a fee of up to US$0.05 per ADS per calendar year (or portion
thereof) for services performed by the depositary in
administering the ADRs (which fee may be charged on a periodic
basis during each calendar year and shall be assessed against
holders of ADRs as of the record date or record dates set by the
depositary during each calendar year and shall be payable in the
manner described in the next succeeding provision);
reimbursement of such fees, charges and expenses as are incurred
by the depositary
and/or
any
of the depositarys agents (including, without limitation,
the custodian and expenses incurred on behalf of holders in
connection with compliance with foreign exchange control
regulations or any law or regulation relating to foreign
investment) in connection with the servicing of the shares or
other deposited securities, the delivery of deposited securities
or otherwise in connection with the depositarys or its
custodians compliance with applicable law, rule or
regulation (which charge shall be assessed on a proportionate
basis against holders as of the record date or dates set by the
depositary and shall be payable at the sole discretion of the
depositary by billing such holders or by deducting such charge
from one or more cash dividends or other cash distributions);
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a fee for the distribution of securities (or the sale of
securities in connection with a distribution), such fee being in
an amount equal to the fee for the execution and delivery of
ADSs which would have been charged as a result of the deposit of
such securities (treating all such securities as if they were
shares) but which securities or the net cash proceeds from the
sale thereof are instead distributed by the depositary to those
holders entitled thereto;
stock transfer or other taxes and other governmental charges;
cable, telex and facsimile transmission and delivery charges
incurred at your request in connection with the deposit or
delivery of shares;
transfer or registration fees for the registration of transfer
of deposited securities on any applicable register in connection
with the deposit or withdrawal of deposited securities; and
expenses of the depositary in connection with the conversion of
foreign currency into U.S. dollars.
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payment with respect thereto of (i) any stock transfer or
other tax or other governmental charge, (ii) any stock
transfer or registration fees in effect for the registration of
transfers of shares or other deposited securities upon any
applicable register and (iii) any applicable fees and
expenses described in the deposit agreement;
the production of proof satisfactory to it of (i) the
identity of any signatory and genuineness of any signature and
(ii) such other information, including without limitation,
information as to citizenship, residence, exchange control
approval, beneficial ownership of any securities, compliance
with applicable law, regulations, provisions of or governing
deposited securities and terms of the deposit agreement and the
ADRs, as it may deem necessary or proper; and
compliance with such regulations as the depositary may establish
consistent with the deposit agreement.
any present or future law, rule, regulation, fiat, order or
decree of the United States, the Cayman Islands, The
Peoples Republic of China (including the Hong Kong Special
Administrative Region, the Peoples Republic of China) or
any other country, or of any governmental or regulatory
authority or securities exchange or market or automated
quotation system, the provisions of or governing any deposited
securities, any present or future provision of our charter, any
act of God, war, terrorism or other circumstance beyond our, the
depositarys or our respective agents control shall
prevent, delay or subject to any civil or criminal penalty any
act which the deposit agreement or the ADRs provide shall be
done or performed by us, the depositary or our respective agents
(including, without limitation, voting);
it exercises or fails to exercise discretion under the deposit
agreement or the ADR;
it performs its obligations under the deposit agreement and ADRs
without gross negligence or bad faith;
it takes any action or refrains from taking any action in
reliance upon the advice of or information from legal counsel,
accountants, any person presenting shares for deposit, any
registered holder of ADRs, or any other person believed by it to
be competent to give such advice or information; or
it relies upon any written notice, request, direction or other
document believed by it to be genuine and to have been signed or
presented by the proper party or parties.
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be a party to and bound by the terms of the deposit agreement
and the applicable ADR or ADRs, and
appoint the depositary its attorney-in-fact, with full power to
delegate, to act on its behalf and to take any and all actions
contemplated in the deposit agreement and the applicable ADR or
ADRs, to adopt any and all procedures necessary to comply with
applicable laws and to take such action as the depositary in its
sole discretion may deem necessary or appropriate to carry out
the purposes of the deposit agreement and the applicable ADR and
ADRs, the taking of such actions to be the conclusive
determinant of the necessity and appropriateness thereof.
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1.0% of the number of our ordinary shares then outstanding, in
the form of ADSs or otherwise, which will equal approximately
1,474,555 ordinary shares immediately after this
offering; and
the average weekly trading volume of our ADSs on the NYSE during
the four calendar weeks preceding the date on which notice of
the sale is filed with the SEC.
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an individual citizen or resident of the United States;
a corporation (or other entity treated as a corporation for
United States federal income tax purposes) created or organized
in or under the laws of the United States, any state thereof or
the District of Columbia;
an estate the income of which is subject to United States
federal income taxation regardless of its source; or
a trust if it (1) is subject to the primary supervision of
a court within the United States and one or more United States
persons have the authority to control all substantial decisions
of the trust or (2) has a valid election in effect under
applicable United States Treasury regulations to be treated as a
United States person.
a dealer in securities or currencies;
a financial institution;
a regulated investment company;
a real estate investment trust;
an insurance company;
a tax exempt organization;
a person holding our ordinary shares or ADSs as part of a
hedging, integrated or conversion transaction, a constructive
sale or a straddle;
a trader in securities that has elected the mark-to-market
method of accounting for your securities;
a person liable for alternative minimum tax;
a person who owns or is deemed to own more than 10% of our
voting stock;
a partnership or other pass-through entity for United States
federal income tax purposes; or
a person whose functional currency is not the United
States dollar.
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at least 75% of our gross income is passive income; or
at least 50% of the value of our assets (based on an average of
the quarterly values) is attributable to assets that produce or
are held for the production of passive income.
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the excess distribution or gain will be allocated ratably over
your holding period for the ADSs or ordinary shares;
the amount allocated to the current taxable year, and any
taxable year prior to the first taxable year in which we were a
PFIC, will be treated as ordinary income; and
the amount allocated to each other year will be subject to tax
at the highest tax rate in effect for that year and the interest
charge generally applicable to underpayments of tax will be
imposed on the resulting tax attributable to each such year.
163
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164
Table of Contents
Number of
ADSs
12,000,000
US$
US$
US$
US$
US$
165
Table of Contents
offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase, lend or
otherwise transfer or dispose of, directly or indirectly, any
ordinary shares or ADSs or any securities convertible into or
exercisable or exchangeable for ordinary shares or ADSs;
enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences
of ownership of the ordinary shares or ADSs; or
file any registration statement with the SEC relating to the
offering of any ordinary shares, ADSs or any securities
convertible into or exercisable or exchangeable for ordinary
shares or ADSs (other than a registration statement on
Form S-8).
ADSs to be sold by us to the underwriters in the offering;
transactions by the selling shareholders relating to ordinary
shares, ADSs or other securities acquired in open market
transactions after the completion of the offering, provided that
no filing under Section 16(a) of the Exchange Act shall be
required or shall be voluntarily made in connection with
subsequent sales of ordinary shares, ADSs or other securities
acquired in such open market transactions;
the issuance by us of ordinary shares issuable upon the exercise
of an option or warrant or the conversion of any outstanding
securities, provided that such recipients shall agree in writing
to be subject to the restrictions described above; or
the grant or issuance by us of options, shares, restricted
shares, restricted share units, share appreciation rights,
performance units or performance shares under our equity plans
and the shares or other securities issued upon exercise or
conversion of any of the foregoing, provided that such
recipients shall agree in writing to be subject to the
restrictions described above.
offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase, lend or
otherwise transfer or dispose of, directly or indirectly, any
ordinary shares or ADSs or any securities convertible into or
exercisable or exchangeable for ordinary shares or ADSs; or
enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences
of ownership of the ordinary shares or ADSs.
166
Table of Contents
the ordinary shares as represented by the ADSs to be sold in
this offering;
transactions relating to ordinary shares, ADSs or other
securities acquired in open market transactions after the
completion of the offering, provided that no filing under
Section 16(a) of the Exchange Act will be required or will
be voluntarily made in connection with subsequent sales of
ordinary shares, ADSs or other securities acquired in such open
market transactions;
the exercise of rights to acquire ordinary shares, ADSs or other
securities of our company issued pursuant to any of our share
option or similar equity incentive or compensation plan for the
issuance of share options or equity grants, provided that, in
each case, such plan is in effect as of the date of and
disclosed in the prospectus, and that any subsequent sale,
transfer or disposition of any securities issued upon exercise
of such equity incentive grants should be subject to the
restrictions described above;
transfers of our ordinary shares or ADSs to shareholders who are
our existing shareholders prior to the offering or partners,
members, stockholders or affiliates (as defined in
Rule 12b-2
of the Exchange Act) of such existing shareholders, provided
that each transferee should agree in writing to be subject to
the restrictions described above, and that no filing under
Section 16(a) of the Exchange Act reporting a reduction in
beneficial ownership of ordinary shares or ADSs will be required
or will be voluntarily made during the applicable
lock-up
period;
transfers of our ordinary shares, ADSs or any security
convertible into our ordinary shares or ADSs (i) to an
immediate family member or a trust formed for the benefit of an
immediate family member, (ii) as a bona fide gift or
(iii) through will or intestacy, provided that each
transferee or donee should agree in writing to be subject to the
restrictions described above, and that no filing under
Section 16(a) of the Exchange Act reporting a reduction in
beneficial ownership of our ordinary shares or ADSs will be
required or will be voluntarily made during the applicable
lock-up
period;
transfers or distributions of our ordinary shares, ADSs or any
security convertible into our ordinary shares or ADSs to
partners, members, stockholders or affiliates, provided that
each transferee or distributee should agree in writing to be
subject to the restrictions described above, and that no filing
under Section 16(a) of the Exchange Act reporting a
reduction in beneficial ownership of our ordinary shares or ADSs
should be required or should be voluntarily made during the
applicable
lock-up
period; or
the establishment of a trading plan pursuant to
Rule 10b5-1
under the Exchange Act for the sale of our ordinary shares or
ADSs, provided that such plan does not provide for the transfer
of our ordinary shares or ADSs during the applicable
lock-up
period.
167
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168
Table of Contents
(a)
to legal entities which are authorized or regulated to operate
in the financial markets or, if not so authorized or regulated,
whose corporate purpose is solely to invest in securities;
(b)
to any legal entity which has two or more of (1) an average
of at least 250 employees during the last financial year;
(2) a total balance sheet of more than 43,000,000 and
(3) an annual net turnover of more than 50,000,000,
as shown in its last annual or consolidated accounts;
(c)
to fewer than 100 natural or legal persons (other than qualified
investors as defined in the Prospectus Directive; or
(d)
in any other circumstances which do not require the publication
by the company of a prospectus pursuant to Article 3 of the
Prospectus Directive;
169
Table of Contents
(a)
a corporation (which is not an accredited investor) the sole
business of which is to hold investments and the entire share
capital of which is owned by one or more individuals, each of
whom is an accredited investor; or
(b)
a trust (where the trustee is not an accredited investor) whose
sole purpose is to hold investments and each beneficiary is an
accredited investor,
(1)
to an institutional investor (for corporations, under 274 of the
SFA) or to a relevant person defined in Section 275(2) of
the SFA, or to any person pursuant to an offer that is made on
terms that such shares, debentures and units of shares and
debentures of that corporation or such rights and interest in
that trust are acquired at a consideration of not less than
S$200,000 (or its equivalent in a foreign currency) for each
transaction, whether such amount is to be paid for in cash or by
exchange of securities or other assets, and further for
corporations, in accordance with the conditions specified in
Section 275 of the SFA;
(2)
where no consideration is or will be given for the
transfer; or
(3)
where the transfer is by operation of law.
170
Table of Contents
US$
8,855
100,000
16,370
350,000
1,400,000
675,000
729,775
US$
3,280,000
171
Table of Contents
172
Table of Contents
173
Table of Contents
Page
F-2
F-3
F-5
F-5
F-7
F-7
F-9
F-9
F-10
F-53
F-55
F-57
F-59
F-60
F-1
Table of Contents
F-2
Table of Contents
F-3
Table of Contents
As at December 31,
Pro Forma as at December 31,
Note
2007
2008
2008
2008
2008
(successor)
(successor)
RMB
RMB
US$
RMB
US$
(unaudited)
(Note 2)
10
52,120
7,636
5,524
6,314
925
12
1,631
11,656
1,707
3,215
471
17
15,765
20,078
2,941
13
36,853
148,145
283,916
41,592
22
14
254,358
37,262
14
411,101
60,224
15
41
55
8
83
12
443,016
1,113,150
163,070
1,778,581
260,552
147
(3,822
)
(560
)
(3,822
)
(560
)
(48,326
)
(544,363
)
(79,746
)
(544,363
)
(79,746
)
394,878
565,020
82,772
1,230,479
180,258
543,023
1,514,395
221,850
F-4
Table of Contents
January 1, 2007
September 10, 2007
to
to
For the Year Ended
Notes
October 30, 2007
December 31, 2007
December 31, 2008
(Predecessor)
(Successor)
(Successor)
RMB
RMB
RMB
US$
63,082
13,001
155,061
22,716
4,340
982
12,677
1,857
4,051
593
67,422
13,983
171,789
25,166
(20,396
)
(1,908
)
(25,046
)
(3,669
)
(2,002
)
(20,497
)
(3,003
)
(20
)
(4
)
(54
)
(8
)
(20,416
)
(3,914
)
(45,597
)
(6,680
)
47,006
10,069
126,192
18,486
(1,601
)
(757
)
(5,497
)
(805
)
(8,467
)
(57,171
)
(18,869
)
(2,764
)
36,938
(47,859
)
101,826
14,917
20
(954
)
(279
)
(7,455
)
(1,092
)
13
(341
)
(464
)
(68
)
(4
)
(325
)
(48
)
(1,555
)
(25
)
658
96
15
430
63
18
7,734
1,133
34,444
(48,508
)
102,404
15,001
17
(15,014
)
182
(23,335
)
(3,418
)
19,430
(48,326
)
79,069
11,583
F-5
Table of Contents
January 1, 2007
September 10, 2007
to
to
For the Year Ended
Notes
October 30, 2007
December 31, 2007
December 31, 2008
(Predecessor)
(Successor)
(Successor)
RMB
RMB
RMB
US$
14
(270,343
)
(39,604
)
14
(304,763
)
(44,646
)
19,430
(48,326
)
(496,037
)
(72,667
)
24
0.39
(0.97
)
(8.63
)
(1.26
)
24
50,000,000
50,000,000
57,481,400
57,481,400
24
(4.76
)
(0.70
)
24
98,508,800
98,508,800
F-6
Table of Contents
January 1, 2007 to
September 10, 2007 to
For the Year Ended
October 30, 2007
December 31, 2007
December 31, 2008
(predecessor)
(successor)
(successor)
RMB
RMB
RMB
US$
19,430
(48,326
)
79,069
11,583
49,526
4,215
617
8
96
2,991
438
17,906
1,084
17,629
2,583
2,002
20,497
3,003
1,555
25
(658
)
(96
)
9,472
(1,608
)
(5,080
)
(744
)
341
464
68
895
131
(5,416
)
(2,771
)
(19,283
)
(2,825
)
(4,782
)
2,723
(23,043
)
(3,376
)
(280
)
(621
)
(91
)
(20,221
)
(2,962
)
4,095
2,049
(13,709
)
(2,008
)
(1,666
)
(244
)
30
4
2,605
962
5,265
771
44,593
6,103
46,774
6,852
(20,821
)
(3,050
)
(231,481
)
(33,911
)
(43,398
)
(22,466
)
(31,575
)
(4,625
)
(13,031
)
(13,573
)
(95,110
)
(13,933
)
5,977
5,598
2,616
383
(50,452
)
(30,441
)
(376,371
)
(55,136
)
F-7
Table of Contents
January 1, 2007 to
September 10, 2007 to
For the Year Ended
October 30, 2007
December 31, 2007
December 31, 2008
(predecessor)
(successor)
(successor)
RMB
RMB
RMB
US$
36,523
140,241
20,545
67,671
9,913
405,331
59,379
20,800
3,047
7,460
1,093
(786
)
(5,698
)
(5,525
)
(809
)
(37,890
)
(5,551
)
(21,500
)
(3,150
)
114,606
16,789
6,806
32,400
(41,700
)
(6,109
)
6,020
63,225
649,494
95,147
138
(5,698
)
(834
)
161
39,025
314,199
46,029
606
767
39,792
5,829
767
39,792
353,991
51,858
(737
)
(11,688
)
(1,712
)
(946
)
(184
)
(3,538
)
(518
)
1,961
50,601
7,413
14,520
2,127
176,082
25,795
F-8
Table of Contents
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS
EQUITY
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
Accumulated
Retained
Number of
Additional
Other
Earnings
Total
Ordinary
Ordinary
Paid-in
Comprehensive
(Cumulative
Shareholders
Shares
Shares
Capital
Income(loss)
Deficit)
Equity
RMB
RMB
RMB
RMB
RMB
50,000,000
41
45,779
88,444
134,264
19,430
19,430
8
8
50,000,000
41
45,787
107,874
153,702
347,607
(107,874
)
239,733
(48,326
)
(48,326
)
147
147
(48,179
)
96
96
49,526
49,526
50,000,000
41
443,016
147
(48,326
)
394,878
79,069
79,069
(3,969
)
(3,969
)
75,100
2,991
2,991
21,184,600
15
114,591
114,606
(756,500
)
(1
)
1
4,215
4,215
253,317
253,317
295,019
295,019
(270,343
)
(270,343
)
(304,763
)
(304,763
)
70,428,100
55
1,113,150
(3,822
)
(544,363
)
565,020
8
163,070
(560
)
(79,746
)
82,772
F-9
Table of Contents
1.
ORGANIZATION
AND BASIS OF PRESENTATION
Percentage of
Date of
Place of
Ownership by the
Establishment
Establishment
Company
September 10, 2007
BVI
100
%
Investment Holding
August 22, 1996
BVI
100
%
Investment Holding
August 8, 2003
Singapore
100
%
Investment Holding
May 26, 2006
Hong Kong
100
%
Investment Holding
July 18, 2008
Hong Kong
100
%
Investment Holding
July 23, 1997
PRC
100
%
Leasing of medical equipment and
provision of management services
February 21, 2008
PRC
100
%
Leasing of medical equipment and
provision of management services
March 21, 2003
PRC
100
%
Leasing and sales of medical
equipment, provision of
management services
July 23, 2008
PRC
100
%
Provision of management services
July 26, 2007
PRC
100
%
Provision of management services
F-10
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
RMB
US$
259,282
37,983
37,253
5,458
53,786
7,879
132,000
19,337
13,753
2,015
41,199
6,035
(58,792
)
(8,612
)
7,538
1,104
(92,584
)
(13,563
)
393,435
57,636
F-11
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
2.
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
F-12
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
Estimated residual
value
Shorter of customer contract or 6-20 years
5 years
5-10
%
5 years
5-10
%
shorter of lease term or 5 years
*
The cost of the asset is amortized
over the lease term. However, if ownership is transferred at the
end of the lease term, the cost of the asset is amortized over
the shorter of customer contract or the useful life of the asset
which ranges from 6-20 years.
F-13
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
F-14
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
F-15
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
F-16
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
F-17
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
F-18
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
3.
CONCENTRATION
OF RISKS
F-19
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
F-20
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
4.
ACQUISITIONS
RMB
US$
21,210
3,107
77,053
11,287
9,397
1,377
217,965
31,931
52,380
7,673
83,505
12,233
23,089
3,382
(12,529
)
(1,835
)
(233,323
)
(34,180
)
238,747
34,975
F-21
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
September 10, 2007
to December 31,
For the Year Ended December 31,
2007
2008
(successor)
(successor)
RMB
RMB
US$
25,392
234,662
34,377
(45,638
)
106,626
15,620
(45,610
)
(603,628
)
(88,428
)
(0.91
)
(10.50
)
(1.54
)
RMB
US$
10,906
1,598
12,680
1,857
15,288
2,239
18,000
2,637
(21,895
)
(3,207
)
34,979
5,124
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
5.
ACCOUNTS
RECEIVABLE
December 31,
2007
2008
2008
(successor)
(successor)
(successor)
RMB
RMB
US$
22,818
96,602
14,152
(3,808
)
(3,830
)
(561
)
19,010
92,772
13,591
2,528
3,808
558
1,280
22
3
3,808
3,830
561
6.
PREPAYMENT
AND OTHER CURRENT ASSETS
December 31,
2007
2008
2008
(successor)
(successor)
(successor)
RMB
RMB
US$
15,000
2,197
9,953
1,458
2,217
2,568
376
7,005
1,026
3,915
9,040
1,325
6,132
43,566
6,382
*
The amount represents an
interest-free cash deposit paid to a customer hospital pursuant
to the management service contract to which the deposit is
repayable at the termination of the service contract (see
note 25.)
**
The amount represents interest-free
non-refundable partial payments to suppliers associated with
contracts the Group enters into for the future scheduled
delivery of medical equipment for sales. The remaining
contractual obligations associated with these purchase contracts
are approximately RMB4,200 (US$615) which is included in the
amount disclosed as Purchase Commitments at note 22. The
risk of loss arising from non-performance by or bankruptcy of
the suppliers is assessed prior to ordering the equipment. To
date, the Group has not experienced any loss on advances to
suppliers.
F-23
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
7.
PROPERTY,
PLANT AND EQUIPMENT, NET
December 31,
2007
2008
2008
(successor)
(successor)
(successor)
RMB
RMB
US$
54,225
299,100
43,816
1,186
1,895
278
178
178
26
113
1,182
173
65,029
9,526
55,702
367,384
53,819
(999
)
(18,263
)
(2,675
)
54,703
349,121
51,144
8.
OTHER
INTANGIBLE ASSETS AND GOODWILL
September 10,
2007
January 1, 2007 to
to December 31,
For the Year Ended December 31,
October 30,
2007
2008
(predecessor)
(successor)
(successor)
(successor)
RMB
RMB
RMB
US$
259,282
37,983
259,282
21,209
3,107
10,906
1,598
8,766
1,284
259,282
300,163
43,972
F-24
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
December 31,
2007
2008
2008
(successor)
(successor)
(successor)
RMB
RMB
US$
122,000
122,000
17,872
10,000
10,000
1,465
67,259
9,853
5,078
744
(2,002
)
(22,499
)
(3,296
)
129,998
181,838
26,638
Amortization
RMB
US$
26,493
3,881
26,815
3,928
23,142
3,390
23,142
3,390
18,862
2,763
118,454
17,352
9.
DEPOSITS
FOR NON-CURRENT ASSETS
December 31,
2007
2008
2008
(successor)
(successor)
(successor)
RMB
RMB
US$
9,461
128,749
18,861
15,904
17,630
2,583
20,821
3,050
25,365
167,200
24,494
*
Represents interest-free
non-refundable partial payments to suppliers associated with
contracts the Company enters into for the future scheduled
delivery of medical equipment to customers. The remaining
contractual obligations associated with these purchase contracts
are approximately RMB50,220 (US$7,357) which is included in the
amount disclosed as Purchase Commitments in Note 22. The
risk of loss arising from non-performance by or bankruptcy of
the suppliers is assessed prior to ordering the equipment. To
date, the Group has not experienced any loss on deposit to
suppliers.
F-25
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
**
On October 31, 2007, the Group
entered into a long-term sale and purchase agreement with Our
Medical, under which the Group agreed to purchase gamma knife
systems at agreed upon prices and Our Medical also agreed to
provide the Group relevant maintenance and repair services and
training. Our Medical is controlled by an individual who was a
director of the Group until July 2009.
***
The Group has entered into two
distinct framework agreements with Changan Hospital Co.
Ltd. (Changan) towards the development and
construction of the following two medical facilities:
On December 18, 2007, the Group entered into a framework
agreement to build a proton treatment center in Beijing,
pursuant to which the Group paid deposits to a subsidiary of
Changan Information Industry (Group) Co., Ltd.,
(Changan Information) to be used towards the
construction of the proton treatment center (Beijing
Proton Medical Center). Total deposits paid as of
December 31, 2008 pursuant to this arrangement amounted to
RMB3,821 (US$560).
On July 1, 2008, the Group entered into a framework
agreement with Changan to build a cancer center in
northwest China, the Changan CMS International Cancer
Center (CCICC) pursuant to which the Group paid
security deposits to Changan totaling RMB17,000
(US$2,490), which were been recorded as a non-current deposit as
of December 31, 2008. (See note 25.)
10.
BANK
BORROWINGS
December 31,
2007
2008
2008
(successor)
(successor)
(successor)
RMB
RMB
US$
112,760
16,519
20,800
3,047
39,840
5,836
60,640
8,883
52,120
7,636
112,760
16,519
F-26
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
11.
ACCRUED
EXPENSES AND OTHER LIABILITIES
December 31,
2007
2008
2008
(successor)
(successor)
(successor)
RMB
RMB
US$
3,013
3,772
553
2,152
2,650
388
4,879
9,339
1,368
4,993
20,509
3,004
6,942
6,174
905
21,979
42,444
6,218
12.
OBLIGATIONS
UNDER CAPITAL LEASES
Minimum Lease Payments
RMB
US$
5,084
745
3,781
554
3,781
554
3,781
554
2,611
382
19,038
2,789
(3,663
)
(537
)
15,375
2,252
(3,719
)
(545
)
11,656
1,707
F-27
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
13.
CONVERTIBLE
NOTES
F-28
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
14.
CONTINGENTLY
REDEEMABLE CONVERTIBLE PREFERRED SHARES
F-29
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
F-30
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
F-31
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
Series A
Series B
Total
RMB
RMB
RMB
176,082
176,082
70,120
70,120
(2,964
)
(2,964
)
411,021
411,021
(5,677
)
(5,677
)
895
895
(253,317
)
(295,019
)
(548,336
)
253,317
295,019
548,336
6,801
3,987
10,788
10,225
5,757
15,982
261,159
415,088
676,247
254,358
411,101
665,459
37,262
60,224
97,486
6,801
3,987
10,788
996
584
1,580
15.
SHAREHOLDERS
EQUITY
F-32
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
16.
RESTRICTED
NET ASSETS
17.
TAXATION
F-33
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
January 1, 2007 to
September 10, 2007
For the Year Ended
October 30, 2007
to December 31,
2007
December 31,
2008
(predecessor)
(successor)
(successor)
RMB
RMB
US$
(54,205
)
(6,335
)
(928
)
34,444
5,697
108,739
15,929
34,444
(48,508
)
102,404
15,001
F-34
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
January 1, 2007 to
September 10, 2007
For the Year Ended
October 30, 2007
to December 31,
2007
December 31,
2008
(predecessor)
(successor)
(successor)
RMB
RMB
US$
5,542
1,426
28,395
4,159
9,472
(1,608
)
(5,060
)
(741
)
15,014
(182
)
23,335
3,418
January 1, 2007 to
September 10, 2007
For the Year Ended
October 30, 2007
to December 31,
2007
December 31,
2008
(predecessor)
(successor)
(successor)
RMB
RMB
US$
34,444
(48,508
)
102,404
15,001
11,367
(16,007
)
25,601
3,750
17,887
1,548
227
234
57
1,181
173
(6,328
)
(1,057
)
(8,684
)
(1,272
)
8,929
(1,248
)
(378
)
(55
)
812
186
4,067
595
15,014
(182
)
23,335
3,418
January 1, 2007 to
September 10, 2007
For the Years Ended
October 30, 2007
to December 31,
2007
December 31,
2008
(predecessor)
(successor)
(successor)
(successor)
RMB
RMB
RMB
US$
1,552
2,941
3,218
471
1,389
277
7,393
1,083
2,294
336
2,941
3,218
12,905
1,890
F-35
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
January 1, 2007 to
September 10, 2007
For the Years Ended
October 30, 2007
to December 31,
2007
December 31,
2008
(predecessor)
(successor)
(successor)
(successor)
RMB
RMB
RMB
US$
(amounts in thousands except for the per share data)
5,676
1,488
8,684
1,272
0.11
0.03
0.15
0.02
0.11
0.03
0.15
0.02
F-36
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
December 31,
2007
2008
2008
(successor)
(successor)
(successor)
RMB(000)
RMB(000)
US$(000)
516
300
44
685
994
146
2,595
380
1,201
3,889
570
(1,240
)
(182
)
1,201
2,649
388
3,765
552
36,520
54,044
7,917
1,105
1,841
270
530
595
87
38,155
60,245
8,826
(1,240
)
(1,523
)
(223
)
(29,945
)
(44,750
)
(6,556
)
(22,735
)
(21,400
)
(3,135
)
(53,920
)
(67,673
)
(9,914
)
12,650
1,853
(15,765
)
(20,078
)
(2,941
)
*
As at December 31, 2007 and
2008, deferred tax assets, current portion of approximately nil
and RMB1,240 (US$182) have been offset against deferred tax
liabilities, current portion relating to a particular tax-paying
component of an enterprise and within a particular tax
jurisdiction, respectively.
**
As at December 31, 2007 and
2008, deferred tax assets, non-current portion of approximately
RMB38,155 and RMB47,595 (US$6,972) have been offset against
deferred tax liabilities, non-current portion relating to a
particular tax-paying component of an enterprise and within a
particular tax jurisdiction, respectively.
F-37
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
18.
Other
Income
19.
Employee
Share Options
F-38
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
November 17,
August 18,
August 18,
2007
2008
2008
(Successor)
(Successor)
(Successor)
OMS Options
OMS Options
Concord Options
4.17
%
2.94
%
2.94
%
38.34
%
39.53
%
39.53
%
1.5 times
1.5 times
1.5 times
F-39
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
Weighted
Average
Remaining
Share Options Granted to
Number of
Weighted-Average
Weighted-Average
Contractual
Aggregate Intrinsic
Shares
Exercise Price
Grant-date Fair Value
Term (Years)
Value
25,000,000
US$
0.80
US$
0.26
1.09
25,000,000
US$
0.80
US$
0.26
1
(25,000,000
)
US$
0.80
US$
0.26
0.39
21,184,600
US$
0.79
US$
0.25
0.38
(21,184,600
)
US$
0.79
US$
0.25
0.38
US$
10,793
F-40
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
20.
RELATED
PARTY TRANSACTIONS
A relative of a shareholder of the Company
Director and shareholder of the Company
Director and shareholder of the Company
Director and shareholder of the Company
A company owned by Mr. Haifeng Liu
A company under the control of Mr. Zheng Cheng
A company under the control of Mr. Haifeng Liu
January 1, 2007 to
September 10, 2007
For the Year Ended
October 30, 2007
to December 31,
2007
December 31,
2008
(predecessor)
(successor)
(successor)
(successor)
RMB
RMB
RMB
US$
38,700
4,000
1,000
4,000
586
38,700
5,669
2,000
293
5,000
732
11,521
706
1,726
253
F-41
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
As at December 31,
2007
2008
2008
(successor)
(successor)
(successor)
RMB
RMB
US$
38,700
196
29
4,000
2,000
293
1,000
1,351
198
60
9
43,700
3,607
529
15,904
17,630
2,583
21.
EMPLOYEE
DEFINED CONTRIBUTION PLAN
F-42
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
22.
COMMITMENTS
AND CONTINGENCIES
RMB
US$
2,700
396
1,512
221
1,191
174
1,144
168
6,547
959
23.
SEGMENT
REPORTING
F-43
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
24.
INCOME
(LOSS) PER SHARE
January 1, 2007 to
September 10, 2007
For the Year Ended
October 30, 2007
to December 31,
2007
December 31,
(predecessor)
(successor)
(successor)
(successor)
RMB
RMB
RMB
US$
(amounts in thousands except for the number of shares and per
share data)
19,430
(48,326
)
(496,037
)
(72,667
)
50,000,000
50,000,000
57,481,400
57,481,400
0.39
(0.97
)
(8.63
)
(1.26
)
F-44
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
25.
ARRANGEMENT
WITH CHANGAN HOSPITAL CO., LTD.
F-45
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
F-46
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
For The Year Ended December 31,
2007
2008
2008
RMB
RMB
US$
4,500
8,000
1,172
2,000
293
4,500
10,000
1,465
4,000
4,000
586
As at December 31,
2007
2008
2008
RMB
RMB
US$
15,000
2,197
20,821
3,050
35,821
5,247
26.
SUBSEQUENT
EVENTS
F-47
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
To distribute an interim dividend to the holders of the ordinary
shares as at November 17, 2009 in the sum of
(i) US$2,391,534 to the holders of the ordinary shares; and
(ii) US$1,590,676 to the holders of the Series A and B
Preferred Shares, such dividend to be payable in cash on or
about November 27, 2009.
To amend the Articles of Association in conjunction with the
Companys initial public offering, to reflect
1-for-100
share split of the Companys ordinary shares whereby each
ordinary share of the Company is subdivided into 100 shares
at a par value of US$0.0001. All shares and per share amounts
presented in the accompanying consolidated financial statements
have been revised on a retroactive basis to reflect the effect
of the share split. The par value per ordinary share has been
retroactively revised as if it had been adjusted in proportion
to the
1-for-100
share split.
To amend the Companys 2008 Share Incentive Plan, to
increase the total number of ordinary shares that may be issued
under the 2008 Share Incentive Plan from 1,321,800 ordinary
shares to 4,765,800 ordinary shares.
27.
Events
Subsequent to the Date of the Report of Independent Auditors
(Unaudited)
F-48
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
28.
PARENT
COMPANY ONLY CONDENSED FINANCIAL INFORMATION
F-49
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
As at December 31,
2007
2008
2008
(successor)
(successor)
(successor)
RMB
RMB
US$
254,358
37,262
411,101
60,224
41
55
8
443,016
1,113,150
163,070
147
(3,822
)
(560
)
(48,326
)
(544,363
)
(79,746
)
394,878
565,020
82,772
431,731
1,242,411
182,006
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
September 10, 2007
For the Years Ended
to December 31,
2007
December 31,
2008
(successor)
(successor)
RMB
RMB
US$
(53,862
)
(4,593
)
(673
)
(53,862
)
(4,593
)
(673
)
5,877
84,731
12,413
364
53
(895
)
(131
)
(341
)
(464
)
(68
)
(74
)
(11
)
(48,326
)
79,069
11,583
(270,343
)
(39,604
)
(304,763
)
(44,646
)
(48,326
)
(496,037
)
(72,667
)
F-51
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Amounts in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
For the Period from
For the Year Ended
September 10, to
December 31,
December 31,
2007
2008
2008
(successor)
(successor)
(successor)
RMB
RMB
US$
526
77
(448,224
)
(65,662
)
727,849
106,626
(5,636
)
(826
)
274,515
40,215
274,515
40,215
176,082
25,795
36,523
F-52
Table of Contents
F-53
Table of Contents
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Continued)
(Amounts in thousands of Renminbi (RMB) and US
dollar (US$),
except for number of shares)
As at
December 31
As at September 30,
Pro Forma as at September 30,
Note
2008*
2009
2009
2009
2009
RMB
RMB
US$
RMB
US$
(unaudited)
(unaudited)
(unaudited)
5
52,120
104,912
15,369
6,314
5,470
801
11,656
8,719
1,277
3,215
3,269
479
20,078
18,189
2,665
283,916
378,619
55,465
12
6
254,358
269,017
39,410
6
411,101
434,036
63,584
55
55
8
83
12
1,113,150
1,113,204
163,078
1,816,229
266,068
(3,822
)
(4,037
)
(592
)
(4,037
)
(592
)
(544,363
)
(517,640
)
(75,831
)
(517,640
)
(75,831
)
565,020
591,582
86,663
1,294,635
189,657
1,514,395
1,673,254
245,122
*
Amounts for the year ended
December 31, 2008 were derived from the December 31,
2008 audited consolidated financial statements.
F-54
Table of Contents
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands of Renminbi (RMB) and US
dollar (US$),
except for number of shares and per share data)
For the Nine Months Ended September 30,
Note
2008
2009
2009
RMB
RMB
US$
(unaudited)
(unaudited)
(unaudited)
94,296
184,937
27,092
7,519
20,096
2,944
178
624
91
101,993
205,657
30,127
(14,671
)
(42,144
)
(6,174
)
(13,671
)
(20,388
)
(2,987
)
(19
)
(9
)
(1
)
(28,361
)
(62,541
)
(9,162
)
73,632
143,116
20,965
(3,275
)
(4,463
)
(654
)
(12,468
)
(19,687
)
(2,884
)
57,889
118,966
17,427
10
(5,293
)
(4,880
)
(715
)
(464
)
(13
)
(218
)
(32
)
392
116
823
121
52,627
114,691
16,801
8
(12,611
)
(25,734
)
(3,770
)
40,016
88,957
13,031
F-55
Table of Contents
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands of Renminbi (RMB) and US
dollar (US$),
except for number of shares and per share data)
For the Nine Months Ended September 30,
Note
2008
2009
2009
RMB
RMB
USD
(unaudited)
(unaudited)
(unaudited)
6
(262,286
)
(23,851
)
(3,494
)
6
(38,383
)
(5,623
)
(222,270
)
26,723
3,914
14
(3.67
)
0.38
0.06
14
60,621,700
70,428,100
70,428,100
14
0.80
0.12
14
111,455,500
111,455,500
F-56
Table of Contents
For the Nine Months Ended September 30,
2008
2009
2009
RMB
RMB
US$
(unaudited)
(unaudited)
(unaudited)
40,016
88,957
13,031
4,215
2,425
54
8
9,413
35,101
5,142
13,671
20,388
2,987
(392
)
(2,830
)
(2,014
)
(295
)
464
895
(12,623
)
(26,355
)
(3,861
)
(49,570
)
(10,828
)
(1,586
)
(500
)
(1,035
)
(152
)
340
3
16,057
(5,543
)
(812
)
5,898
(105
)
(15
)
12
54
8
(121
)
5,823
853
27,370
104,500
15,308
(219,163
)
(21,534
)
(3,155
)
(300
)
(11,800
)
(1,729
)
(12,439
)
(74,033
)
(10,845
)
(71,406
)
(116,059
)
(17,002
)
2,616
(300,692
)
(223,426
)
(32,731
)
F-57
Table of Contents
For the Nine Months Ended September 30,
2008
2009
2009
RMB
RMB
US$
(unaudited)
(unaudited)
(unaudited)
140,241
67,671
(529
)
(77
)
(3,355
)
(491
)
19,000
2,783
128,780
18,866
(2,703
)
(3,074
)
(450
)
(17,260
)
(70,948
)
(10,393
)
(9,800
)
(1,436
)
(11,000
)
(2,000
)
(293
)
(7,245
)
(1,061
)
101,458
278,407
50,829
7,448
(5,949
)
(191
)
(29
)
(864
)
(68,288
)
(10,004
)
39,792
353,991
51,858
38,928
285,703
41,854
(7,346
)
(20,787
)
(3,045
)
(1,671
)
(4,771
)
(699
)
18,957
2,777
14,712
152,181
22,294
176,082
F-58
Table of Contents
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
CHANGES IN SHAREHOLDERS
(Amounts in thousands of Renminbi (RMB) and US
dollar (US$))
Accumulated
Retained
Number of
Additional
Other
Earnings
Total
Ordinary
Ordinary
Paid-in
Comprehensive
(Cumulative
Shareholders
Shares
Shares
Capital
Income(loss)
Deficit)
Equity
RMB
RMB
RMB
RMB
RMB
RMB
50,000,000
41
443,016
147
(48,326
)
394,878
40,016
40,016
(5,810
)
(5,810
)
34,206
2,425
2,425
21,184,600
15
114,591
114,606
(756,500
)
(1
)
1
4,215
4,215
253,317
253,317
(262,286
)
(262,286
)
70,428,100
55
817,565
(5,663
)
(270,596
)
541,361
39,053
39,053
1,841
1,841
40,894
566
566
295,019
295,019
(8,057
)
(8,057
)
(304,763
)
(304,763
)
70,428,100
55
1,113,150
(3,822
)
(544,363
)
565,020
88,957
88,957
(215
)
(215
)
88,742
54
54
(23,851
)
(23,851
)
(38,383
)
(38,383
)
70,428,100
55
1,113,204
(4,037
)
(517,640
)
591,582
8
163,078
(590
)
(75,831
)
86,664
F-59
Table of Contents
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Amount in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
1.
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
F-60
Table of Contents
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
(Amount in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
In April 2009, the Financial Accounting Standards Board
(FASB) issued Accounting Standards Codification
(ASC)
805-20,
Accounting for Assets Acquired and Liabilities Assumed in
a Business Combination That Arise from Contingencies to
amend SFAS 141 (revised 2007) Business
Combinations. ASC
805-20
addresses the initial recognition, measurement and subsequent
accounting for assets and liabilities arising from contingencies
in a business combination, and requires that such assets
acquired or liabilities assumed be initially recognized at fair
value at the acquisition date if fair value can be determined
during the measurement period. If the acquisition-date fair
value cannot be determined, the asset acquired or liability
assumed arising from a contingency is recognized only if certain
criteria are met. ASC
805-20
also
requires that a systematic and rational basis for subsequently
measuring and accounting for the assets or liabilities be
developed depending on their nature. The Company does not
anticipate that the adoption of this statement will have a
material impact on its consolidated financial statements, absent
any material business combinations.
In June 2009, the FASB issued SFAS No. 166,
Accounting for Transfers of Financial Assets
an amendment of FASB Statement No. 140
(SFAS 166). SFAS 166 seeks to improve the
relevance, representational faithfulness, and comparability of
the information that a reporting entity provides in its
financial statements about a transfer of financial assets; the
effects of a transfer on its financial position, financial
performance, and cash flows; and a transferors continuing
involvement, if any, in transferred financial assets.
Specifically, SFAS 166 eliminates the concept of a
qualifying special-purpose entity, creates more stringent
conditions for reporting a transfer of a portion of a financial
asset as a sale, clarifies other sale-accounting criteria, and
changes the initial measurement of a transferors interest
in transferred financial assets. The Company does not anticipate
that the adoption of this statement will have a material impact
on its consolidated financial statements.
In June 2009, the FASB issued SFAS No. 167,
Amendments to FASB Interpretation No. 46(R)
(SFAS 167). SFAS 167 amends FASB
Interpretation No. 46(R), Variable Interest
Entities for determining whether an entity is a variable
interest entity (VIE) and requires an enterprise to
perform an analysis to determine whether the enterprises
variable interest or interests give it a controlling financial
interest in a VIE. Under SFAS 167, an enterprise has a
controlling financial interest when it has a) the power to
direct the activities of a VIE that most significantly impact
the entitys economic performance and b) the
obligation to absorb losses of the entity or the right to
receive benefits from the entity that could potentially be
significant to the VIE. SFAS 167 also requires an enterprise to
assess whether it has an implicit financial responsibility to
ensure that a VIE operates as designed when determining whether
it has power to direct the activities of the VIE that most
significantly impact the entitys economic performance.
SFAS 167 also requires ongoing assessments of whether an
enterprise is the primary beneficiary of a VIE, requires
enhanced disclosures and eliminates the scope exclusion for
qualifying special-purpose entities. The Company is currently
evaluating the impact the adoption of SFAS 167 will have on
its consolidated financial statements.
In June 2009, the FASB issued
ASC 105-10,
Generally Accepted Accounting Principles, previously
referenced as FASB Statement No. 168, The FASB Accounting
Standards
Codification
TM
and the Hierarchy of Generally Accepted Accounting Principles, a
replacement of FASB Statement No. 162. This statement
modifies the Generally Accepted Accounting Principles
(GAAP) hierarchy by establishing only two levels of
GAAP, authoritative and nonauthoritative accounting literature.
Effective July 2009, the FASB Accounting Standards
Codification
TM
(ASC), also known collectively as the
Codification, is considered
F-61
Table of Contents
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
(Amount in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
the single source of authoritative U.S. accounting and
reporting standards, except for additional authoritative rules
and interpretive releases issued by the SEC. Nonauthoritative
guidance and literature would include, among other things, FASB
Concepts Statements, American Institute of Certified Public
Accountants Issue Papers and Technical Practice Aids and
accounting textbooks. The Codification was developed to organize
U.S. GAAP pronouncements by topic so that users can more
easily access authoritative accounting guidance. It is organized
by topic, subtopic, section, and paragraph, each of which is
identified by a numerical designation. This statement applies
beginning in third quarter 2009. All accounting references have
been updated, and therefore U.S. GAAP standards have been
replaced with ASC references. This standard had no impact on the
Companys financial position, results of operations or cash
flows.
In August 2009, the FASB issued Accounting Standards Update
No. 2009-5,
Measuring Liabilities at Fair Value (ASU
2009-05).
ASU
2009-05
amends Accounting Standards Codification Topic 820, Fair
Value Measurements. Specifically, ASU
2009-05
provides clarification that in circumstances in which a quoted
price in an active market for the identical liability is not
available, a reporting entity is required to measure fair value
using one or more of the following methods: 1) a valuation
technique that uses a) the quoted price of the identical
liability when traded as an asset or b) quoted prices for
similar liabilities or similar liabilities when traded as assets
and/or
2) a valuation technique that is consistent with the
principles of Topic 820 of the Accounting Standards Codification
(e.g. an income approach or market approach). ASU
2009-05
also
clarifies that when estimating the fair value of a liability, a
reporting entity is not required to adjust to include inputs
relating to the existence of transfer restrictions on that
liability. The Company does not anticipate that the adoption of
this statement will have a material impact on its consolidated
financial statements.
In September 2009, the Emerging Issues Task Force (EITF) reached
final consensus on ASC
605-25,
Revenue Arrangements with Multiple Deliverables. ASC
605-25
addresses how to determine whether an arrangement involving
multiple deliverables contains more than one unit of accounting,
and how the arrangement consideration should be allocated among
the separate units of accounting.
EITF 08-1
may be applied retrospectively or prospectively for new or
materially modified arrangements and early adoption is
permitted. The Company does not anticipate that the adoption of
this statement will have a material impact on its consolidated
financial statements.
2.
BUSINESS
COMBINATION
F-62
Table of Contents
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
(Amount in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
Nine Months Ended September 30, 2008
RMB
US$
164,867
24,152
67,573
9,899
(194,274
)
(28,460
)
(3.20
)
(0.47
)
3.
PROPERTY,
PLANT AND EQUIPMENT, NET
December 31,
2008
September 30, 2009
RMB
RMB
US$
(unaudited)
(unaudited)
299,100
524,514
76,838
1,895
2,154
316
178
520
76
1,182
2,552
375
65,029
79,883
11,702
367,384
609,623
89,307
(18,263
)
(52,190
)
(7,646
)
349,121
557,433
81,661
F-63
Table of Contents
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
(Amount in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
4.
DEPOSITS
FOR NON-CURRENT ASSETS
December 31,
2008
September 30,
2009
RMB
RMB
US$
(unaudited)
(unaudited)
128,749
98,822
14,477
17,630
16,420
2,405
20,821
32,609
4,777
167,200
147,851
21,659
*
Represents interest-free
non-refundable partial payments to suppliers associated with
contracts the Group enters into for the future scheduled
delivery of medical equipment to customers. As at
September 30, 2009, the remaining contractual obligations
associated with these purchase contracts are approximately
RMB102,688 (US$15,043) which is included in the amount disclosed
as Purchase commitments in note 12. The risk of loss
arising from non-performance by or bankruptcy of the suppliers
is assessed prior to ordering the equipment. To date, the Group
has not experienced any loss on deposit to suppliers.
**
On October 31, 2008, the Group
entered into a long-term sale and purchase agreement with Our
Medical New Technology, under which the Group agreed to purchase
gamma knife systems at agreed upon prices and Our Medical New
Technology also agreed to provide the Group relevant maintenance
and repair services and training. Our Medical New Technology is
controlled by an individual who is a relative of a shareholder
of the company. (See note 10.)
***
The Group has entered into two
distinct framework agreements with Changan Hospital Co.
Ltd. (Changan) and Changan Information
Industry (Group) Co., Ltd., (Changan
Information) towards the development and construction of
the following two medical facilities:
5.
BANK
BORROWINGS
December 31,
2008
September 30,
2009
RMB
RMB
US$
(unaudited)
(unaudited)
112,760
179,792
26,339
20,800
30,000
4,395
39,840
44,880
6,575
60,640
74,880
10,970
52,120
104,912
15,369
112,760
179,792
26,339
F-64
Table of Contents
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
(Amount in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
6.
CONTINGENTLY
REDEEMABLE CONVERTIBLE PREFERRED SHARES
F-65
Table of Contents
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
(Amount in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
7.
RESTRICTED
NET ASSETS
F-66
Table of Contents
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
(Amount in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
8.
TAXATION
9.
EMPLOYEE
SHARE OPTIONS
10.
RELATED
PARTY TRANSACTIONS
A relative of shareholder of the Company
Director and shareholder of the Company
Director and shareholder of the Company
Director and shareholder of the Company
A company owned by Mr. Haifeng Liu
A company under the control of Mr. Zheng Cheng
A company under the control of Mr. Haifeng Liu
F-67
Table of Contents
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
(Amount in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
b)
The Group had the following related party transactions for the
nine months ended September 30, 2008 and 2009:
Nine Months Ended September 30,
2008
2009
RMB
RMB
US$
(unaudited)
(unaudited)
(unaudited)
4,000
12,000
3,000
2,000
293
126
11,442
1,676
12,652
1,853
December 31,
2008
September 30,
2009
RMB
RMB
US$
(unaudited)
(unaudited)
196
196
28
2,000
1,351
1,351
198
60
60
9
3,607
1,607
235
17,630
16,420
2,405
11.
EMPLOYEE
DEFINED CONTRIBUTION PLAN
F-68
Table of Contents
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
(Amount in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
12.
COMMITMENTS
AND CONTINGENCIES
RMB
US$
1,336
196
5,148
754
4,763
698
2,305
338
13,552
1,986
13.
SEGMENT
REPORTING
F-69
Table of Contents
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
(Amount in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
14.
(LOSS)
INCOME PER SHARE (UNAUDITED)
Nine Months Ended September 30,
2008
2009
(amounts in thousands except for the number of shares and per
share data)
RMB
RMB
US$
(222,270
)
26,723
3,914
60,621,700
70,428,100
70,428,100
(3.67
)
0.38
0.06
F-70
Table of Contents
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
(Amount in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
15.
ARRANGEMENT
WITH CHANGAN HOSPITAL CO., LTD.
F-71
Table of Contents
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
(Amount in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
F-72
Table of Contents
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
(Amount in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
Nine Months Ended September 30,
2008
2009
2009
RMB
RMB
US$
(unaudited)
(unaudited)
(unaudited)
6,135
10,921
1,600
9,024
1,322
2,036
298
6,135
21,981
3,220
4,000
21,981
3,220
December 31,
September 30,
September 30,
2008
2009
2009
RMB
RMB
US$
(unaudited)
(unaudited)
15,000
15,000
2,197
20,821
32,615
4,778
35,821
47,615
6,975
F-73
Table of Contents
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
(Amount in thousands of Renminbi (RMB) and United
States Dollar (US$),
except for number of shares)
16.
SUBSEQUENT
EVENTS
To distribute an interim dividend to the holders of the ordinary
shares as at November 17, 2009 in the sum of
(i) US$2,391,534 to the holders of the ordinary shares; and
(ii) US$1,590,676 to the holders of the Series A and B
Preferred Shares, such dividend to be payable in cash on or
about November 27, 2009.
To amend the Articles of Association in conjunction with the
Companys initial public offering, to reflect a 1-for-100
share split of the Companys ordinary shares whereby each
ordinary share of the Company is subdivided into 100 shares
at a par value of US$0.0001. All shares and per share amounts
presented in the accompanying consolidated financial statements
have been revised on a retroactive basis to reflect the effect
of the share split. The par value per ordinary share has been
retroactively revised as if it had been adjusted in proportion
to the
1-for-100
share split.
To amend the Companys 2008 Share Incentive Plan, to
increase the total number of ordinary shares that may be issued
under the 2008 Incentive Plan from 1,321,800 ordinary shares to
4,765,800 ordinary shares
F-74
Table of Contents
Page
F-76
F-77
F-79
F-80
F-82
F-83
F-75
Table of Contents
F-76
Table of Contents
As at
December 31,
As at July 31,
Notes
2007
2008
2008
RMB
RMB
US$
25,926
19,584
2,869
21,038
49,731
7,285
4
3,780
7,477
1,095
8
58
261
38
9
4,410
55,212
77,053
11,287
5
216,918
284,699
41,707
58,678
83,505
12,233
8
7,747
7,526
1,103
9
316
8,435
7,229
1,059
347,306
460,012
67,389
F-77
Table of Contents
As at
December 31,
As at July 31,
Notes
2007
2008
2008
RMB
RMB
US$
6
21,500
21,500
3,150
6
12,623
19,320
2,830
6,733
30,238
4,430
192
8,595
1,259
7
7,032
20,825
3,051
3,605
4,743
694
737
4,622
677
9
90
11
1,591
13,881
2,033
54,103
123,724
18,124
6
89,600
103,070
15,099
3,683
3,344
490
2,118
3,185
467
149,504
233,323
34,180
13
2,179
1
129,557
129,557
18,979
19,237
21,962
3,218
(929
)
(682
)
(100
)
47,758
75,852
11,112
195,623
226,689
33,209
347,306
460,012
67,389
F-78
Table of Contents
Year Ended
December 31,
Seven Month Period Ended
Notes
2007
July 31, 2008
RMB
RMB
US$
65,357
48,745
7,141
7,980
1,169
3,094
6,148
900
68,451
62,873
9,210
(23,484
)
(14,806
)
(2,169
)
(63
)
(9
)
(4,781
)
(28,265
)
(14,869
)
(2,178
)
40,186
48,004
7,032
(2,911
)
(1,581
)
(232
)
(17,224
)
(8,340
)
(1,221
)
20,051
38,083
5,579
351
32
5
(5,204
)
(1,585
)
(233
)
(400
)
(49
)
(230
)
(34
)
(5
)
(200
)
(29
)
14,744
36,100
5,288
8
(922
)
(8,445
)
(1,237
)
13,822
27,655
4,051
9
(193
)
(683
)
(100
)
9
1,122
164
(193
)
439
64
13,629
28,094
4,115
F-79
Table of Contents
Year Ended
December 31,
Seven Month Period Ended
2007
July 31, 2008
RMB
RMB
US$
13,629
28,094
4,115
193
(439
)
(64
)
13,822
27,655
4,051
1,529
2,725
399
23,180
14,857
2,176
400
(4,776
)
18
3
(11,196
)
(28,694
)
(4,204
)
(803
)
(1,083
)
(159
)
10,613
1,205
177
(1,803
)
23,506
3,444
270
1,964
288
(826
)
3,545
519
188
108
16
117
1,068
156
(762
)
1,138
167
29,953
48,012
7,033
(4,684
)
413
61
25,269
48,425
7,094
(19,661
)
(26,351
)
(3,860
)
(81,637
)
(72,713
)
(10,652
)
158
(101,140
)
(99,064
)
(14,512
)
(317
)
(77
)
(11
)
(101,457
)
(99,141
)
(14,523
)
F-80
Table of Contents
Year Ended
Seven Month Period
December 31,
January 1 to
2007
July 31, 2008
RMB
RMB
US$
10,500
21,500
135,200
53,780
7,878
12,000
1,758
12,274
1,798
(103,985
)
(33,613
)
(4,924
)
(14,222
)
48,993
44,441
6,510
2,350
51,343
44,441
6,510
3,384
(67
)
(10
)
(21,461
)
(6,342
)
(929
)
47,387
25,926
3,798
25,926
19,584
2,869
(4,502
)
(5,979
)
(876
)
(5,204
)
(1,585
)
(232
)
8,403
1,231
75,809
47,885
7,015
F-81
Table of Contents
Accumulated
Number of
Additional
Other
Total
Ordinary
Share
Paid-In
Comprehensive
Retained
Shareholders
Shares
Capital
Capital
Income (Loss)
Earnings
Equity
RMB
RMB
RMB
RMB
RMB
27,564,138
129,557
17,708
(353
)
34,129
181,041
13,629
13,629
(576
)
(576
)
13,053
1,529
1,529
27,564,138
129,557
19,237
(929
)
47,758
195,623
28,094
28,094
247
247
28,341
2,725
2,725
27,564,138
129,557
21,962
(682
)
75,852
226,689
18,979
3,218
(100
)
11,112
33,209
F-82
Table of Contents
1.
ORGANIZATION
AND BASIS OF PRESENTATION
Percentage of Ownership by the Company
Date of
Place of
December 31,
July 31,
Establishment
Establishment
2007
2008
March 21, 2003
PRC
100%
100%
Leasing and sales of medical equipment, provision of
management services
September 29, 2007
PRC
53%
Provision of technology and consultancy services
2.
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
F-83
Table of Contents
F-84
Table of Contents
Estimated Residual
Value
Shorter of customer contract or 6-12 years
5 years
5-10
%
Shorter of lease term or 5 years
*
The cost of the asset is amortized over the lease term. However,
if ownership is transferred at the end of the lease term, the
cost of the asset is amortized over the shorter of customer
contract or 6-12 years.
F-85
Table of Contents
F-86
Table of Contents
F-87
Table of Contents
F-88
Table of Contents
F-89
Table of Contents
3.
CONCENTRATION
OF RISKS
F-90
Table of Contents
4.
PREPAYMENT
AND OTHER CURRENT ASSETS
As at December 31,
As at July 31,
2007
2008
2008
RMB
RMB
US$
2,564
2,564
376
2,950
432
1,216
1,963
287
3,780
7,477
1,095
5.
PROPERTY,
PLANT AND EQUIPMENT, NET
As at December 31,
As at July 31
2007
2008
2008
RMB
RMB
US$
210,176
286,581
41,983
448
448
66
528
528
77
73,485
79,718
11,678
284,637
367,275
53,804
(67,719
)
(82,576
)
(12,097
)
216,918
284,699
41,707
F-91
Table of Contents
6.
BANK
BORROWINGS
As at December 31,
As at July 31
2007
2008
2008
RMB
RMB
US$
21,500
21,500
3,150
12,623
19,320
2,830
34,123
40,820
5,980
89,600
103,070
15,099
123,723
143,890
21,079
7.
ACCRUED
EXPENSES AND OTHER LIABILITIES
As at December 31,
As at July 31
2007
2008
2008
RMB
RMB
US$
2,692
4,056
594
12,000
1,758
4,340
4,769
699
7,032
20,825
3,051
*
The amount represents interest-free
loans borrowed from an unrelated party. Such loan is for working
capital purpose and is repayable on demand. The balance was
settled by the end of December 31, 2008.
8.
TAXATION
F-92
Table of Contents
Period From
Year Ended December 31,
January 1 to July 31,
2007
2008
RMB
RMB
US$
(9,175
)
(3,392
)
(497
)
23,919
39,492
5,785
14,744
36,100
5,288
Year Ended
Period From
December 31,
January 1 to July 31,
2007
2008
RMB
RMB
US$
5,698
8,427
1,234
(4,776
)
18
3
922
8,445
1,237
Year Ended
Period From
December 31,
January 1 to July 31,
2007
2008
RMB
RMB
US$
14,744
36,100
5,288
4,866
9,025
1,322
3,285
1,572
230
(6,431
)
(3,009
)
(441
)
(1,137
)
168
25
339
689
101
922
8,445
1,237
F-93
Table of Contents
Unrecognized Tax Benefits
RMB(000)
US$(000)
1,192
175
427
62
1,619
237
675
99
2,294
336
As at December 31,
As at July 31,
2007
2008
RMB
RMB
US$
216
32
58
45
6
58
261
38
4,917
3,810
558
(1,664
)
(1,198
)
(175
)
4,174
4,642
680
320
272
40
7,747
7,526
1,103
F-94
Table of Contents
9.
DISCONTINUED
OPERATIONS
10.
SHARE
BASED COMPENSATION
F-95
Table of Contents
Weighted-Average
Weighted Average
Share Options
Weighted-Average
Grant-Date Fair
Remaining
Aggregated
granted to
Exercise Price
Value
Contractual Term
Intrinsic Value
Number of Shares
(GB pound)
(GB pound)
(Years)
(GB pound)
872,853
0.78
0.36
9.9
872,853
0.78
0.36
8.9
(872,853
)
0.78
0.36
8.3
4.7
%
Nil
37
%
6.5 years
F-96
Table of Contents
11.
RELATED
PARTY TRANSACTIONS
Director of the Company
Director of the Company
A company under the control of a director of the Company
As at December 31,
As at July 31,
2007
2008
RMB
RMB
US$
196
196
29
1,191
1,191
174
204
220
32
12,274
1,798
1,591
13,881
2,033
12.
EMPLOYEE
DEFINED CONTRIBUTION PLAN
13.
COMMITMENTS
AND CONTINGENCIES
RMB
US$
866
127
1,362
199
94
14
2,322
340
F-97
Table of Contents
F-98
Table of Contents
P-2
Table of Contents
for the Year Ended December 31, 2008
(Amounts in thousands of Renminbi (RMB) except for
number of shares)
Pro forma
Pro forma
Concord Medical
China Medstar
Adjustment
Notes
Combined
For the seven
For the Year Ended
month period
December 31,
ended July 31,
2008
2008
2008
RMB
RMB
RMB
RMB
155,061
48,745
203,806
12,677
7,980
20,657
4,051
6,148
10,199
171,789
62,873
234,662
(25,046
)
(14,806
)
5,624
(1
)
(34,228
)
(20,497
)
(5,743
)
(1
)
(26,240
)
(54
)
(63
)
(117
)
(45,597
)
(14,869
)
(60,585
)
126,192
48,004
174,077
(5,497
)
(1,581
)
(7,078
)
(18,869
)
(8,340
)
(27,209
)
101,826
38,083
139,790
(7,455
)
(1,585
)
(9,040
)
(464
)
(464
)
(325
)
(230
)
(555
)
658
(658
)
430
32
462
7,734
(200
)
7,534
102,404
36,100
138,385
(23,335
)
(8,445
)
21
(2
)
(31,759
)
79,069
27,655
106,626
1.38
1.85
57,481,400
57,481,400
P-3
Table of Contents
RMB
US$
21,210
3,107
77,053
11,287
9,397
1,377
217,965
31,931
52,380
7,673
83,505
12,233
23,089
3,382
(12,529
)
(1,835
)
(233,323
)
(34,180
)
238,747
34,975
P-4
Table of Contents
Table of Contents
ITEM 6
INDEMNIFICATION
OF DIRECTORS AND OFFICERS
ITEM 7
RECENT
SALES OF UNREGISTERED SECURITIES
Underwriting
Date of Sale or
Consideration in
Discount and
November 27, 2007
1 ordinary share*
$
0.05
n/a
March 8, 2008
225,000 ordinary
shares
(1)
$
2,250
n/a
March 8, 2008
37,500 ordinary
shares
(1)
*
$
375
n/a
March 8, 2008
37,500 ordinary
shares
(1)
*
$
375
n/a
March 8, 2008
199,999 ordinary
shares
(1)
*
$
1,999.99
n/a
April 3, 2008
53,292 Series A contingently redeemable convertible preferred
shares
(2)
$
4,808,250
n/a
April 3, 2008
2,125 Series A contingently redeemable convertible preferred
shares
(2)
$
191,750
n/a
April 3, 2008
26,535 Series A contingently redeemable convertible preferred
shares
$
5,000,000
n/a
April 10, 2008
convertible loan promissory
note
(3)
$
19,233,000
n/a
April 10, 2008
convertible loan promissory
note
(4)
$
767,000
n/a
August 18, 2008
109,736 ordinary
shares
(5)
*
$
8,669,144
n/a
August 18, 2008
47,030 ordinary
shares
(5)
*
$
3,715,370
n/a
August 18, 2008
32,624 ordinary
shares
(5)
*
$
2,577,296
n/a
August 18, 2008
16,524 ordinary
shares
(5)
*
$
1,305,396
n/a
August 18, 2008
5,932 ordinary
shares
(5)
*
$
468,628
n/a
II-1
Table of Contents
Underwriting
Date of Sale or
Consideration in
Discount and
October 20, 2008
93,493 Series B contingently redeemable convertible preferred
shares
$
24,041,250
n/a
October 20, 2008
3,728 Series B contingently redeemable convertible preferred
shares
$
958,750
n/a
October 20, 2008
38,889 Series B contingently redeemable convertible preferred
shares
$
10,000,000
n/a
October 20, 2008
97,222 Series B contingently redeemable convertible preferred
shares
$
25,000,000
n/a
November 27, 2009
Option to purchase 4,765,800 ordinary shares
Nil
n/a
(1)
Issued in connection with a share
swap with Ascendium Group Limited as part of the reorganization
to establish Concord Medical Services Holdings Limited as our
ultimate holding company.
(2)
The numbers of Series A
contingently redeemable convertible preferred shares issued to
Carlyle Asia Growth Partners III, L.P. and CAGP III
Co-Investment, L.P. on April 3, 2008 also include
Series A contingently redeemable convertible preferred
shares issued as a result of the conversion of two convertible
loan promissory notes issued on November 16, 2007 by our
predecessor, Our Medical Services, Ltd., or OMS, plus accrued
interest. OMS received consideration for the issuance of such
convertible loan promissory notes in the amount of $4,808,250
and $191,750 from Carlyle Asia Growth Partners III, L.P. and
CAGP III Co-Investment, L.P., respectively.
(3)
The convertible loan promissory
note was converted into 84,072 of our Series A contingently
redeemable convertible preferred shares on July 30, 2008.
(4)
The convertible loan promissory
note was converted into 3,353 of our Series A contingently
redeemable convertible preferred shares on July 30, 2008.
(5)
Issued as settlement for the share
options issued to certain of our directors under the share
option plan adopted by our predecessor company, Our Medical
Services Limited, on November 17, 2007.
*
Does not take into account the
share split effective on November 17, 2009 whereby all of
our issued and outstanding 704,281 ordinary shares of a par
value of US$0.01 per share were split into 70,428,100 ordinary
shares of US$0.0001 par value per share and the number of our
authorized ordinary shares was increased from 4,500,000 to
450,000,000.
ITEM 8
EXHIBITS AND
FINANCIAL STATEMENT SCHEDULES
ITEM 9
UNDERTAKINGS
Table of Contents
II-3
Table of Contents
By:
Title:
Director, Chief Executive Officer and President
II-4
Table of Contents
By:
Title:
Managing Director
II-5
Table of Contents
Exhibit
Form of Underwriting Agreement
Second Amended and Restated Memorandum and Articles of
Association of the Registrant, as currently in effect
Secretarys Certificate of the Registrant dated as of
November 17, 2009 as to the Amendment to the Second Amended
and Restated Memorandum and Articles of Association of the
Registrant
Form of Third Amended and Restated Memorandum and Articles of
Association of the Registrant
Form of Registrants American Depository Receipt (included
in Exhibit 4.3)
Specimen Certificate for Ordinary Shares of the Registrant
Form of Deposit Agreement among the Registrant, the Depositary
and Owners and Beneficial Owners of the American Depository
Shares issued thereunder
Series A Preferred Shares Subscription Agreement, dated as
of February 5, 2008, as amended on April 2, 2008 and
on October 20, 2008, among CICC Sun Company Limited,
Carlyle Asia Growth Partners III, L.P., CAGP III Co-Investment,
L.P., Liu Haifeng, Steve Sun, Yang Jianyu, Bona Liu, Our Medical
Services, Ltd., Ascendium Group Limited, Shenzhen Aohua Medical
Services Co., Ltd. and Concord Medical Services Holdings Limited
Amendment No. 1 to Series A Preferred Shares
Subscription Agreement, dated as of April 2, 2008, among
CICC Sun Company Limited, Carlyle Asia Growth Partners III,
L.P., CAGP III Co-Investment, L.P., Liu Haifeng, Steve Sun, Yang
Jianyu, Bona Liu, Our Medical Services, Ltd., Ascendium Group
Limited, Shenzhen Aohua Medical Services Co., Ltd. and Concord
Medical Services Holdings Limited
Amendment No. 2 to Series A Preferred Shares
Subscription Agreement, dated as of October 20, 2008, among
CICC Sun Company Limited, Carlyle Asia Growth Partners III,
L.P., CAGP III Co-Investment, L.P., Liu Haifeng, Steve Sun, Yang
Jianyu, Bona Liu, Our Medical Services, Ltd., Ascendium Group
Limited, Shenzhen Aohua Medical Services Co., Ltd. and Concord
Medical Services Holdings Limited
Series B Preferred Shares Subscription Agreement, dated as
of October 10, 2008, as amended on October 20, 2008,
among CICC Sun Company Limited, Carlyle Asia Growth Partners
III, L.P., CAGP III Co-Investment, L.P., Starr Investments
Cayman II, Inc., Concord Medical Services Holdings Limited and
other persons named therein
Amendment to Series B Preferred Shares Subscription
Agreement, dated as of October 20, 2008, among CICC Sun
Company Limited, Carlyle Asia Growth Partners III, L.P., CAGP
III Co-Investment, L.P., Starr Investments Cayman II, Inc.,
Concord Medical Services Holdings Limited and other persons
named therein
Amended and Restated Shareholders Agreement, dated as of
October 20, 2008, among Concord Medical Services Holdings
Limited, Carlyle Asia Growth Partners III, L.P., CAGP III
Co-Investment, CICC Sun Company Limited, Perfect Key Holdings
Limited, Starr Investments Cayman II, Inc. and certain other
persons named therein
Share Charge, dated as of November 10, 2008, by CZY Investments
Limited in favor of CICC Sun Company Limited, Carlyle Asia
Growth Partners III, L.P., CAGP III Co-Investment, L.P. and
Starr Investments Cayman II, Inc.
Share Charge, dated as of November 10, 2008, by Daketala
International Investment Holdings Ltd. in favor of CICC Sun
Company Limited, Carlyle Asia Growth Partners III, L.P., CAGP
III Co-Investment, L.P. and Starr Investments Cayman II, Inc.
Share Charge, dated as of November 10, 2008, by Dragon Image
Investment Ltd. in favor of CICC Sun Company Limited, Carlyle
Asia Growth Partners III, L.P., CAGP III Co-Investment, L.P. and
Starr Investments Cayman II, Inc.
Share Charge, dated as of November 10, 2008, by Notable
Enterprise Limited in favor of CICC Sun Company Limited, Carlyle
Asia Growth Partners III, L.P., CAGP III Co-Investment, L.P. and
Starr Investments Cayman II, Inc.
Share Charge, dated as of November 10, 2008, by Thousand Ocean
Group Limited in favor of CICC Sun Company Limited, Carlyle Asia
Growth Partners III, L.P., CAGP III Co-Investment, L.P. and
Starr Investments Cayman II, Inc.
II-6
Table of Contents
Exhibit
Share Charge, dated as of November 10, 2008, by Top Mount Group
Limited in favor of CICC Sun Company Limited, Carlyle Asia
Growth Partners III, L.P., CAGP III Co-Investment, L.P. and
Starr Investments Cayman II, Inc.
Deed of Amendment, dated as of September 14, 2009, among
CICC Sun Company Limited, Carlyle Asia Growth Partners III,
L.P., CAGP III Co-Investment, L.P., Starr Investments Cayman II,
Inc. and Notable Enterprise Limited
Deed of Partial Release, dated as of September 14, 2009, by
CICC Sun Company Limited, Carlyle Asia Growth Partners III,
L.P., CAGP III Co-Investment, L.P. and Starr Investments Cayman
II, Inc. in favor of CZY Investment Limited
Amendment to Amended and Restated Shareholders Agreement, dated
as of November 17, 2009, among Concord Medical Services
Holdings Limited, Carlyle Asia Growth Partners III, L.P.,
CAGP III Co-Investment, CICC Sun Company Limited, Perfect
Key Holdings Limited, Starr Investments Cayman II, Inc. and
certain other persons named therein
Amendment No. 2 to Amended and Restated Shareholders
Agreement, dated as of December 7, 2009, among Concord
Medical Services Holdings Limited, Carlyle Asia Growth
Partners III, L.P., CAGP III Co-Investment, CICC Sun
Company Limited, Perfect Key Holdings Limited, Starr Investments
Cayman II, Inc. and certain other persons named therein
Opinion of Walkers regarding the validity of the ordinary shares
being registered
Opinion of Walkers regarding certain Cayman Islands tax matters
(included in Exhibit 5.1)
Opinion of Simpson Thacher & Bartlett LLP regarding
certain U.S. tax matters
2008 Share Incentive Plan adopted as of October 16,
2008
Form of Indemnification Agreement with the Registrants
directors and officers
Form of Medical Equipment Lease Agreement
Form of Equipment Management Services Agreement
Form of Service-only Management Agreement
Summary of the Oral Agreement entered into between China Medstar
Pte. Ltd. and Beijing Medstar Hi-Tech Investment Co., Ltd.
Summary of the Oral Agreement entered into between China Medstar
Pte. Ltd. and Cheng Zheng
Summary of the Oral Agreement entered into between China Medstar
Pte. Ltd. and Yaw Kong Yap
Translation of Medical Equipment Lease Agreement, dated as of
August 25, 2009, by and between Medstar (Shanghai) Leasing Co.,
Ltd. and Changan Hospital Co., Ltd.
Translation of Service-Only Management Agreement, dated as of
August 1, 2008, among CMS Hospital Management Co., Ltd.,
Xian Wanjiechangxin Medical Services Company Limited and
Changan Hospital Co., Ltd.
Translation of Agreement Concerning the Establishment of the
Aohai Radiotherapy Treatment and Diagnosis Research Center,
dated as of September 19, 1995, by and between the Chinese
Peoples Liberation Army Navy General Hospital and Beijing
Our Medical Equipment Development Company, which transferred its
interest in the agreement to Shenzhen Aohua Medical Services
Co., Ltd.
Translation of Supplemental Agreement Concerning the Development
of the Aohai Radiotherapy Treatment and Diagnosis Research
Center, dated as of March 18, 1999, by and between Shenzhen
Aohua Medical Services Co., Ltd. and the Chinese Peoples
Liberation Army Navy General Hospital.
Translation of Supplemental Agreement Concerning the Development
of the Aohai Radiotherapy Treatment and Diagnosis Research
Center, dated as of September 27, 2003, by and between Shenzhen
Aohua Medical Services Co., Ltd. and the Chinese Peoples
Liberation Army Navy General Hospital.
Translation of Medical Equipment Lease Agreement, dated as of
September 29, 2006, by and between Shanghai Medstar Investment
Management Co., Ltd., the predecessor of Medstar (Shanghai)
Leasing Co., Ltd., and the Chinese Peoples Liberation Army
Navy General Hospital.
Translation of Supplemental Agreement Concerning the Development
of the Aohai Radiotherapy Treatment and Diagnosis Research
Center, dated as of July 8, 2009, by and between Shenzhen Aohua
Medical Services Co., Ltd. and the Chinese Peoples
Liberation Army Navy General Hospital.
Translation of Supplemental Agreement to the Service-only
Management Agreement, dated as of August 1, 2008, among
Xian Wanjiechangxin Medical Services Company Limited,
Changan Hospital Co., Ltd. and CMS Hospital Management
Co., Ltd.
II-7
Table of Contents
Exhibit
Translation of Agreement Regarding the Transfer of Equity in
Aohai Radiotherapy Treatment and Diagnosis Research Center,
dated as of May 5, 1997, among Beijing Our Medical Equipment
Development Company, Shenzhen Aohua Medical Services Co., Ltd.
and the Chinese Peoples Liberation Army Navy General
Hospital.
Translation of Supplemental Agreement to the Supplemental
Agreement Concerning the Development of the Aohai Radiotherapy
Treatment and Diagnosis Research Center, dated as of September
15, 2004, by and between Shenzhen Aohua Medical Services Co.,
Ltd. and the Chinese Peoples Liberation Army Navy General
Hospital.
Translation of Supplemental Agreement to the Cooperation
Contract Concerning the Aohai Radiotherapy Treatment and
Diagnosis Research Center, dated as of August 16, 2003, by and
between Shenzhen Aohua Medical Services Co., Ltd. and the
Chinese Peoples Liberation Army Navy General Hospital.
Amendment to 2008 Share Incentive Plan adopted as of
November 17, 2009
Translation of Strategic Cooperative Agreement, dated as of
November 17, 2009, between China Construction Bank
Corporation, Shenzhen Branch and China Medical Services Holdings
Limited
Subsidiaries of the Registrant
Consent of Independent Registered Public Accounting Firm
Consent of Walkers (included in Exhibit 5.1)
Consent of Simpson Thacher & Bartlett LLP (included in
Exhibit 8.2)
Consent of Jingtian & Gongcheng Attorneys At Law
Consent of Frost & Sullivan
Powers of Attorney (included on the signature page in
Part II of this registration statement)
Code of Business Conduct and Ethics
Form of Opinion of Jingtian & Gongcheng Attorneys At Law
*
Previously filed.
Portions of this document have been omitted pursuant to a
confidential treatment request and the omitted information has
been filed separately with the Securities and Exchange
Commission.
II-8
c/o |
Morgan Stanley & Co. International plc
25 Cabot Square, Canary Wharf London E14 4QA United Kingdom and J.P. Morgan Securities Inc. 383 Madison Avenue, Floor 4 New York, New York 10179 |
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- 48 -
Very truly yours,
CONCORD MEDICAL SERVICES HOLDINGS LIMITED |
||||
By: | ||||
Name: | ||||
Title: | ||||
The Selling Shareholders named in
Schedule I hereto |
||||
By: | ||||
Jianyu Yang | ||||
Attorney-in-fact for and on behalf
of the Selling Shareholders |
||||
By: | ||||
Name: | ||||
Title: | ||||
By: | ||||
Name: | ||||
Title: | ||||
By: |
China International Capital Corporation
Hong Kong Securities Limited |
By: | ||||
Name: | ||||
Title: | ||||
Number of | ||||
Additional Shares | ||||
Selling Shareholder | To Be Sold | |||
Notable Enterprise Limited
|
1,000,000 | |||
Grand Best Group Limited
|
400,000 | |||
Sino Prime Investments Limited
|
250,000 | |||
ATL International Group Limited
|
150,000 | |||
|
||||
Total:
|
1,800,000 | |||
|
I-1
Number of Firm | ||||
Shares To Be | ||||
Underwriter | Purchased | |||
Morgan Stanley & Co. International plc
|
||||
J.P. Morgan
Securities Inc.
|
||||
China International Capital Corporation
Hong Kong Securities Limited
|
||||
|
||||
Total:
|
||||
|
II-1
1. | Preliminary Prospectus issued November 27, 2009 | |
2. | Free writing prospectus filed by the Company with the Commission on December [ ], 2009 | |
3. | [Other free writing prospectuses filed by the Company under Rule 433(d) of the Securities Act] | |
4. | Price to public: US$[ ] per ADS | |
5. | Underwriting discounts and commissions: US$[ ] per ADS |
III-1
Exhibit A-1
Exhibit A-2
Exhibit A-3
Very truly yours,
|
||||
(Name) | ||||
(Address) | ||||
Exhibit A-4
Page | ||||||
PARTIES | 1 | |||||
RECITALS | 1 | |||||
Section 1.
|
Certain Definitions | |||||
(a)
|
ADR Register | 1 | ||||
(b)
|
ADRs; Direct Registration ADRs | 1 | ||||
(c)
|
ADS | 1 | ||||
(d)
|
Custodian | 1 | ||||
(e)
|
Deliver, execute, issue et al. | 1 | ||||
(f)
|
Delivery Order | 1 | ||||
(g)
|
Deposited Securities | 2 | ||||
(h)
|
Direct Registration System | 2 | ||||
(i)
|
Holder | 2 | ||||
(j)
|
Securities Act of 1933 | 2 | ||||
(k)
|
Securities Exchange Act of 1934 | 2 | ||||
(l)
|
Shares | 2 | ||||
(m)
|
Transfer Office | 2 | ||||
(n)
|
Withdrawal Order | 2 | ||||
Section 2.
|
ADRs | 2 | ||||
Section 3.
|
Deposit of Shares | 3 | ||||
Section 4.
|
Issue of ADRs | 3 | ||||
Section 5.
|
Distributions on Deposited Securities | 4 | ||||
Section 6.
|
Withdrawal of Deposited Securities | 4 | ||||
Section 7.
|
Substitution of ADRs | 4 | ||||
Section 8.
|
Cancellation and Destruction of ADRs | 5 | ||||
Section 9.
|
The Custodian | 5 | ||||
Section 10.
|
Co-Registrars and Co-Transfer Agents | 5 | ||||
Section 11.
|
Lists of Holders | 5 | ||||
Section 12.
|
Depositary's Agents | 5 | ||||
Section 13.
|
Successor Depositary | 6 | ||||
Section 14.
|
Reports | 6 | ||||
Section 15.
|
Additional Shares | 7 | ||||
Section 16.
|
Indemnification | 7 | ||||
Section 17.
|
Notices | 8 | ||||
Section 18.
|
Miscellaneous | 8 | ||||
Section 19.
|
Consent to Jurisdiction | 8 | ||||
TESTIMONIUM | 11 | |||||
SIGNATURES | 11 |
i
Page | ||||||||
|
||||||||
EXHIBIT A | ||||||||
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FORM OF FACE OF ADR | A-1 | |||||||
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Introductory Paragraph | A-1 | |||||||
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(1) | Issuance of ADRs and Pre-Release of ADRs | A-2 | |||||
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(2) | Withdrawal of Deposited Securities | A-3 | |||||
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(3) | Transfers of ADRs | A-4 | |||||
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(4) | Certain Limitations | A-4 | |||||
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(5) | Taxes | A-5 | |||||
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(6) | Disclosure of Interests | A-6 | |||||
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(7) | Charges of Depositary | A-6 | |||||
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(8) | Available Information | A-7 | |||||
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(9) | Execution | A-8 | |||||
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Signature of Depositary | A-8 | |||||||
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Address of Depositarys Office | A-8 | |||||||
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FORM OF REVERSE OF ADR | A-9 | |||||||
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(10) | Distributions on Deposited Securities | A-9 | |||||
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(11) | Record Dates | A-10 | |||||
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(12) | Voting of Deposited Securities | A-10 | |||||
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(13) | Changes Affecting Deposited Securities | A-10 | |||||
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(14) | Exoneration | A-11 | |||||
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(15) | Resignation and Removal of Depositary; the Custodian | A-12 | |||||
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(16) | Amendment | A-12 | |||||
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(17) | Termination | A-13 | |||||
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(18) | Appointment | A-14 | |||||
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(19) | Waiver | A-14 |
ii
1
2
3
4
5
6
7
(a) |
JPMorgan Chase Bank, N.A.
Four New York Plaza New York, New York 10004 Attention: ADR Administration Fax: (+1) 212-623-0079 |
(b) |
Concord Medical Services Holdings Limited
18/F, Tower A, Global Trade Center 36 North Third Ring Road East Dongcheng District Beijing, 100013 Peoples Republic of China Attention: Jianyu Yang Fax: (+86) 10 5959-5252 |
8
9
CONCORD MEDICAL SERVICES HOLDINGS LIMITED
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By: | ||||
Name: | ||||
Title: | ||||
JPMORGAN CHASE BANK, N.A.
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By: | ||||
Name: | ||||
Title: |
10
A-1
A-2
A-3
A-4
A-5
A-6
JPMORGAN CHASE BANK, N.A., as Depositary
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By | ||||
Authorized Officer | ||||
A-7
A-8
A-9
A-10
A-11
A-12
A-13
/s/ Jianyu Yang | ||||
For and on behalf of | ||||
Concord Medical Services Holdings Limited | ||||
/s/ Bo Tao Shi | ||||
For and on behalf of | ||||
Grand Best Group Limited | ||||
/s/ Steve Sun | ||||
For and on behalf of | ||||
Dragon Image Investment Ltd. | ||||
/s/ Jianyu Yang | ||||
For and on behalf of | ||||
Daketala International Investment Holdings Ltd. | ||||
/s/ Sirong Tian | ||||
For and on behalf of | ||||
Sino Prime Investments Limited | ||||
/s/ Xiaogang Wang | ||||
For and on behalf of | ||||
Latek Corporation | ||||
/s/ Peipei Zhang | ||||
For and on behalf of | ||||
Genius Aspect Investment Ltd. |
/s/ Wenqing Tan | ||||
For and on behalf of | ||||
Star Rising Ltd. | ||||
For and on behalf of | ||||
Homerun Technology Ltd. | ||||
/s/ Wenqing Tan | ||||
For and on behalf of | ||||
Sino First Holdings Ltd. | ||||
/s/ Bona Lau | ||||
For and on behalf of | ||||
Notable Enterprise Limited | ||||
/s/ Zheng Cheng | ||||
For and on behalf of | ||||
CZY Investment Limited | ||||
/s/ Jing Zhang | ||||
For and on behalf of | ||||
Thousand Ocean Group Limited | ||||
/s/ Yap Yaw Kong | ||||
For and on behalf of | ||||
Top Mount Group Limited |
/s/ Boxun Zhang | ||||
For and on behalf of | ||||
Triumph Concept Investment Limited | ||||
For and on behalf of | ||||
ATL International Group Limited | ||||
Huang Jen-Fu, in his individual capacity | ||||
Wang Jen-Wen, in his individual capacity | ||||
Ni Shiao-Jane, in her individual capacity | ||||
/s/ Daniel A. DAniello | ||||
For and on behalf of | ||||
Carlyle Asia Growth Partners III, L.P. | ||||
/s/ Daniel A. DAniello | ||||
For and on behalf of | ||||
CAGP III Co-Investment, L.P. | ||||
/s/ Michael J. Horvath | ||||
For and on behalf of | ||||
Starr Investments Cayman II, Inc. |
/s/ Shirley Chen | ||||
For and on behalf of | ||||
CICC Sun Company Limited | ||||
/s/ Shirley Chen | ||||
For and on behalf of | ||||
Perfect Key Holdings Limited | ||||
(1) | Credit Financing Service |
(a) | Conditions for Grant of Credit Facility |
(b) | Approval procedures for grant of credit facility |
(2) | Innovative financial service |
(3) | Fund settlement service |
(1) | Undertakings on grant of credit facility |
(a) | Party A shall maintain reasonable financial conditions and shall have sound operating conditions and development prospects. |
1 | Article III was used twice in the original Chinese version. |
(b) | Upon accepting a credit facility from Party B, Party A shall act in accordance with the principle of fairness and reasonableness in accepting any credit facility from another bank so as not to prejudice the rights of Party B. | |
(c) | Party A shall promptly provide Party B or its branches with material information as well as basic information reflecting the changes in its operations and management. |
(2) | Party A shall on a priority basis choose to open with Party B its sweeping accounts for IPO proceeds, follow-on offerings and rights issues. | |
(3) | Party A shall use its best efforts to perform the obligations required to be performed by it in the course of its existing and future business cooperation with Party B. | |
(4) | Where the conditions are equal, Party A and its subordinated enterprises and controlled enterprises shall on a priority basis choose to open their accounts with Party B and shall utilize, on a priority basis, the financial products and services of Party B, including: |
(a) | To select Party B as one of their major RMB and foreign currency financing banks; | |
(b) | To select party B as one of their major RMB and foreign currency account-opening banks (including the basic account, the capital funds account, the foreign debt account, the rent payment account, the escrow account and the general settlement account) and settlement banks; | |
(c) | To select Party B as the main bank for their international settlement business (including but not limited to L/C, remittance, profit repatriation, letter of guarantee and other non-trade settlement businesses), as well as the major RMB settlement reporting bank for their cross-border trading businesses; | |
(d) | To select Party B as one of the main banks for their co-branding card, credit card and personal wealth management businesses; | |
(e) | To select Party B as one of the main handling banks for their cash management and drafts operations as well as for the NRA accounts of Party Bs 2 offshore affiliates; | |
(f) | To select, in line with their business growth needs, Party B as the provider of financial advisory service, public housing fund service, personal residential mortgage loans, corporate annuity service, and other financial services and products provided by Party B; and | |
(g) | To utilize other financial products not specified herein. |
(1) | Cooperation on Cash Management |
2 | As shown in the original Chinese version. |
disbursements of Party A and thereby procure the value maintenance and appreciation of the relevant funds. |
(2) | Consultancy and Advisory Service |
(3) | Party B will fully tap into its strengths in the Bank-Customs-Connection system and the online trade settlement system (E-TRADE) so as to satisfy Party As business needs for fast customs clearance, fast remittance, etc. |
(4) | Other Services |
China Medical Services Holdings Limited
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China Construction Bank Corporation Shenzhen Branch | |
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(Corporate Seal)
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(Corporate Seal) | |
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Legal Representative (or Authorized Representative)
|
Legal Representative (or Authorized Representative) | |
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(Signature)
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(Signature) | |
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17 November, 2009
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17 November, 2009 |