Financials

Condensed Interim Consolidated Financial Statements For The Six Months Ended 30 June 2024

Condensed Interim Consolidated Statement Of Profit Or Loss And Other Comprehensive Income

Condensed Interim Statements Of Financial Position

Review of Performance

Revenue increased by $2.4 million (or 23%) to $13.2 million for the six months ended 30 June 2024 ("1H2024"), from $10.7 million for the six months ended 30 June 2023 ("1H2023"). This was contributed by an increase in revenue from all major service lines of the Group, with diagnostic imaging and aesthetic services generating the most significant increase of S$1.6 million followed by medical aesthetic services increasing by $0.6 million. The increase in revenue from the diagnostic imaging business was due to the addition of a third MRI scanner in the last quarter of 2023. The increase in revenue from the aesthetic business was due to the engagement of a senior aesthetic doctor in July 2023 and the acquisition of the medical aesthetic business of LE Private Clinic in August 2023.

Consumables expenses increased by $0.3 million (or 44%) to $1.0 million due mainly to the increase in revenue. Personnel expenses increased by $1.7 million (or 30%) to $7.4 million due to increase in revenue as well as the strategy of opportunistic hiring of additional staff and doctors amidst intense competition for talent in the healthcare industry to support the Group's expansion plans. Depreciation of right-of-use assets also increased due mainly to (i) the purchase the new MRI scanner in the last quarter of 2023 and the new CT scanner in 1H2024, and (ii) the lease of new clinic space for medical aesthetic business at Orchard Building in 1H2023. Laboratory and consultancy fees increased by $0.8 million (or 55%) to $2.2 million due mainly to (i) the increase in revenue, and (ii) the outsourcing of the imaging business' CT scans to a third party when the new CT scanner was being installed in 1H2024. The increase in finance costs of $42,000 to $241,000 in 1H2024 was due mainly to the financing obtained for the purchase of the third MRI in the last quarter of 2023. Share of results of the associate, Positron Tracers Pte. Ltd., decreased by $93,000 (or 41%) as a result of its lower sales in 1H2024 as compared to 1H2023.

The Group registered higher percentage increase in operating costs and expenses as compared to the percentage increase in revenue, mainly due to inflationary cost pressures and time needed to ramp up sales. As a result, the Group recorded a loss of $104,000 in 1H2024 as compared to a profit of $631,000 in 1H2023. The Group's EBITDA (earnings before interest, tax, depreciation and amortisation) for 1H2024 was $1.1 million compared to $1.5 million for 1H2023.

Statements of Financial Position

Non-Current Assets

Non-current assets increased by $0.5 million to $15.3 million as at 30 June 2024, from $14.8 million as at 31 December 2023. The increase was due mainly to the increase in the right-of-use assets ("ROUA") which was partially offset by the decrease in prepayment for the purchase of equipment. ROUA increased to $9.0 million as at 30 June 2024 from $8.4 million as at 31 December 2023 mainly due to the purchase of a new CT scanner in 1H2024. The prepayment for purchase of the CT scanner of $260,000 as at 31 December 2023 was capitalised as ROUA in 1H2024.

Current Assets

Current assets decreased to $13.6 million as at 30 June 2024, from $14.2 million as at 31 December 2023. The decrease was mainly due to the decrease in cash and cash equivalents and cash pledged as security, partly offset by the increase in trade receivables. Please refer to the cash flow analysis below for the decrease in cash and cash equivalents. Cash pledged as security decreased to $0.5 million as at 30 June 2024 from $0.6 million as at 31 December 2023 due to the reduction in the required bond amount for the health screening projects. The increase in trade receivables to $3.9 million as at 30 June 2024 from $2.8 million as at 31 December 2023 was due to the increase in revenue.

Current Liabilities

Current liabilities remained stable at $6.8 million as at 30 June 2024 and 31 December 2023, as contract liabilities decreased, while other payables and accruals and borrowings (current portion) increased. Contract liabilities decreased to $0.6 million as at 30 June 2024, from $0.9 million as at 31 December 2023, due to the decrease in level of prepaid aesthetics and health screening packages. Other payables and accruals increased to $2.4 million as at 30 June 2024, from $2.2 million as at 31 December 2023, mainly due to higher payroll-related accruals in line with the increase in personnel expenses in 1H2024. Borrowings (current portion) increased to $1.9 million as at 30 June 2024, from $1.7 million as at 31 December 2023 due mainly to the bank financing obtained for the purchase of the new CT scanner in 1H2024.

Net Current Assets

As a result of the decrease in current assets, net current assets decreased to $6.9 million as at 30 June 2024 from $7.4 million as at 31 December 2023.

Non-Current Liabilities

Non-current liabilities increased to $9.0 million as at 30 June 2024, from $8.9 million as at 31 December 2023. Borrowings (non-current portion) increased to $7.8 million as at 30 June 2024, from $7.7 million as at 31 December 2023 due mainly to the bank financing obtained for the purchase of the new CT scanner in 1H2024.

Statements of Cash Flows

Net cash flows used in operating activities amounted to $0.2 million in 1H2024 as compared to net cash flows from operating activities of $0.8 million in 1H2023. This was due mainly to lower operating cash flows coupled with a higher cash utilised for working capital in 1H2024. Net cash flows used in investing activities was $1.5 million in 1H2024 as compared to $1.3 million in 1H2023 due mainly to the higher purchase of plant and equipment which was partially offset by a lower short-term investment. Net cash flows from financing activities amounted to $58,000 in 1H2024 as compared net cash flows used in financing activities of $0.4 million in 1H2023, due mainly to the financing obtained for the new CT scanner in 1H2024. As a result of the above, there was a net cash outflow of $1.5 million in 1H2024 as compared to $0.9 million in 1H2023.

Commentary

While the broader long-term outlook for the healthcare and wellness industry is positive, the operating environment over the next 12 months continues to be highly competitive with a shortage of skilled manpower and rising labour costs. The Group has intensified its efforts to mitigate the impact of these challenges, adopting new technology to enhance patients' experience, improve workflows, efficiency, and patient care. This includes the implementation of a new artificial intelligence virtual assistant to automate the scheduling of patient appointments.

The Group's new 3T MRI scanner and CT scanner have enabled the Group to expand its capacity and serve more patients. Since commencing operations in September 2023 and March 2024 respectively, the new scanners have delivered more positive experiences as well as clinical outcomes with shorter scanning time and higher quality images for patients.

The Group continues to pursue further capacity expansion to serve more patients with the establishment of a new diagnostic imaging centre in Novena, Singapore. Barring unforeseen circumstances, the planned facility set-up in partnership with Sunway Berhad is expected to commence operations by November 2024 and is expected to nearly double the Group's diagnostic imaging capacity.

The set-up of the new diagnostic imaging centre in Novena as well as the Group's expanded capacity at Shaw Centre have necessitated the hiring of additional staff and doctors amidst intense competition for talent in the healthcare industry. The additional manpower is needed to support the Group's investments for future growth following the acquisition of state-of-the-art equipment.

While our essential investments in new talent and technology may lead to margin compression in the short term, it is expected that the expanded capacity and increase in productivity will generate economies of scale and operational efficiencies, which in turn will play a significant role in the Group's focus on attaining sustainable higher margins in the longer term.

The Group is confident in the long-term potential of the medical aesthetics market amidst an ageing population. Continuous innovations in aesthetic procedures, such as less invasive techniques, make treatments more appealing and accessible to a broader range of consumers. The Group will continue to adapt to the latest cutting-edge industry trends to ensure our aesthetic services align with evolving customer preferences.