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ACQUISITIONS AND DISPOSALS | 12 Months Ended
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Dec. 31, 2017
ACQUISITIONS AND DISPOSALS [Abstract] |
ACQUISITIONS AND DISPOSALS |
4. | ACQUISITIONS AND DISPOSALS
For the year ended December 31, 2015 Acquisition of CHS As part of the Group’s business expansion strategy to expand into hospital services abroad, on April 6, 2015, the Company, through its wholly owned subsidiary Concord Medical Services (International) Pte. Ltd., purchased 100% equity interest of Fortis Surgical Hospital from Fortis Healthcare International Pte. Ltd. (the “Seller”), a subsidiary of Fortis Healthcare Ltd., for a total cash consideration of SGD55,000 (in equivalent of RMB253,499). Fortis Surgical Hospital is a private facility in Singapore that was established in July 2012, currently with 31 bed patient capacity, the Group changed the name of the acquired hospital to Concord Healthcare Singapore Pte. Ltd. (“CHS”) after the acquisition. The Company has completed the valuations necessary, with the assistance of an independent third party valuation firm, to assess the fair values of the tangible and intangible assets acquired and liabilities assumed, resulting from which a gain from bargain purchase was determined and recognized as of the acquisition date. The valuation utilized generally accepted valuation methodologies including the income, market and cost approaches. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of April 6, 2015, the date of acquisition:
|  | RMB |
Purchase consideration |  |  | 253,499 |
Current assets |  |  | 9,578 |
Property and equipment, net |  |  | 260,321 |
Intangible assets |  |  | 3,094 |
Current liabilities |  |  | (8,528) |
Deferred tax assets |  |  | 2,452 |
Deferred tax liabilities |  |  | (588) |
Gain on bargain purchase |  |  | (12,830) |
The Seller, an Indian listed company, intended to improve its financial gearing ratio so as to focus on India domestic market, and thus accepted a purchase price lower than the fair value of the net assets for the disposal of CHS which is an investment outside India. The Group performed a comprehensive reassessment of the procedures it used to identify and measure the assets acquired and liabilities assumed, and measure the consideration transferred to verify that all of those measurements are appropriate and reasonable. A gain on bargain purchase of RMB12,830 was recorded as “other income” in the consolidated statements of comprehensive loss for the year ended December 31, 2015. The following unaudited supplemental pro forma consolidated financial information for the years ended December 31, 2014 and 2015 are presented as if the acquisition had occurred at the beginning of the periods presented. These pro forma results have been prepared for comparative purposes only and do not purport to be indicative of what the combined company’s operating results would have been had the acquisition actually taken place on January 1, 2014, nor do they project the future results of operations of the combined company. The actual results of operations of the combined company may differ significantly from the pro forma adjustments reflected here due to many factors.
|  | Unaudited Supplemental Pro Forma |
|  | For the year ended December 31, |
|  | 2014 |  | 2015 |
|  | RMB |  | RMB |
Net revenues |  |  | 643,764 |  |  | 625,479 |
Net income |  |  | 25,119 |  |  | 165,626 |
The results of operations of CHS since the acquisition date included in the consolidated statement of comprehensive loss of the Company for the year ended December 31, 2015 is as follows:
|  | For the Years Ended December 31 |
|  | 2015 |
|  | RMB |
Net revenues |  |  | 18,739 |
Net loss |  |  | (39,628) |
Disposal of Beijing Allcure Medical Technology Ltd. (“JWYK”) On June 30, 2015, the Group entered into a share exchange agreement with Beijing Allcure Medical Information Technology Co., Ltd. (“Allcure Information”), a newly established third-party company, pursuant to which, the Group exchanged 100% equity interest JWYK for 20% of Allcure Information’s equity interest. The disposal of JWYK was completed on July 24, 2015 and did not meet the criteria of discontinued operations in accordance with ASC 205. The breakdown of assets and liabilities as of July 24, 2015 (the date of disposal), are as follows:
|  | RMB |
Current assets |  |  | 5,335 |
Property, plant and equipment, net |  |  | 2,470 |
Current liabilities |  |  | (2,026) |
Net assets disposed |  |  | 5,779 |
The Group, with the assistance of an independent third party valuation firm, determined the fair value of the 20% equity interest of Allcure Information based on a discounted cash flow model. The 20% equity interest in Allcure Information is accounted for as a cost method investment of the Group (note 14). As a result of the disposal of JWYK, the Group recognized a gain of RMB16,381 as “other income” as summarized below:
|  | RMB |
Consideration (20% of Allcure Information) |  |  | 22,160 |
Disposition of net assets |  |  | 5,779 |
Gain on disposal of JWYK |  |  | 16,381 |
For the year ended December 31, 2016 Acquisition of Beijing Century Friendship and BPMC On December 18, 2007, the Group entered into a framework agreement with Chang'an Information Industry (Group) Co., Ltd. (“Chang’an Information”) and China-Japan Friendship Hospital to set up Beijing Proton Medical Center Co., Ltd. (“BPMC”), a proton treatment center in Beijing. Pursuant to the framework agreement, the Group paid a deposit of RMB29,600 to Beijing Century Friendship Science & Technology Development Co., Ltd. (“Beijing Century Friendship”), an entity set up by Chang'an Information, to be used for the construction of the proton treatment center. BPMC was legally set up on July 6, 2012. On May 24, 2015, the Group entered into a transfer agreement with Chang’an Information to acquire 100% equity interest of Beijing Century Friendship at a cash consideration of RMB70,000. The closing of the acquisition of Beijing Century Friendship is subject to the condition that Beijing Century Friendship obtains 55% interest of BPMC. The Group fully paid the consideration of RMB70,000 and paid an additional RMB1,000 for the future operations of BPMC as of December 31, 2015. However, as Beijing Century Friendship did not obtain 55% equity interest in BPMC until January 27, 2016, the deposit of RMB70,000 paid by the Group was recorded as “deposit for non-current assets” in the consolidated balance sheets as of December 31, 2015. The acquisition was completed on January 27, 2016 when Beijing Century Friendship obtained 55% equity interest in BPMC, at a total consideration of RMB100,600. Upon the completion, the Group holds 100% equity interests of Beijing Century Friendship and indirectly holds 80% equity interest of BPMC. The transaction did not meet the definition of a business acquisition and was accounted for as an asset acquisition under ASC 805. The purpose of the acquisition is to obtain the license to operate the proton treatment center from the Ministry of Health of China upon the completion of construction of the proton treatment center in BPMC. The major asset acquired was the prepayment for operating license of RMB99,851 (US$14,382), with other insignificant financial assets acquired and financial liabilities assumed. For the year ended December 31, 2017 Disposal of Beijing Century Friendship and BPMC On April 6, 2017, Guofu Huimei, an equity method investee of the Group, made a capital injection of RMB388,500 (note 1) in cash to Beijing Century Friendship to obtain 78.31% of its equity interest. Before the capital injection, Beijing Century Friendship was a wholly owned subsidiary of the Group and held 55% equity interest in BPMC. Upon the the capital injection from Guofu Huimei, the Group’s effective interest in Beijing Century Friendship was diluted to 42.1% with a direct interest of 21.69% held by two subsidiaries of the Company and an indirect interest of 20.41% through Guofu Huimei. The Group lost control in Beijing Century Friendship and BPMC on April 6, 2017 and accounted for it as a deemed disposal and recognized a gain of RMB58,854 (US$9,046) in accordance with ASC 810-10-40. The gain was measurued as the difference between the fair value of the retained noncontrolling interest at the date of deconsolidation and the carrying amount of the former subsidiaries’ net assets. The direct interest held in Beijing Century Friendship and BPMC by the Group was accounted for as equity method investment (note 14). The carrying value of assets and liabilities of Beijing Century Friendship and BPMC as of April 6, 2017 (the date of disposal), are as follows:
|  | RMB |  | US$ |
Current assets |  |  | 18,035 |  |  | 2,772 |
Deposit for operating license |  |  | 109,581 |  |  | 16,842 |
Other non-current assets |  |  | 45 |  |  | 7 |
Current liabilities |  |  | (35,152) |  |  | (5,403) |
Non-controlling interests |  |  | (8) |  |  | (1) |
Net assets disposed |  |  | 92,501 |  |  | 14,217 |
The Group with the assistance of an independent third party valuation firm, determined the fair value of the retained noncontrolling interest of Beijing Century Friendship and BPMC based on a discounted cash flow model. As a result of the disposal, the Group recognized a gain on the deemed disposal of Beijing Century Friendship and BPMC as summarized below:
|  | RMB |  | US$ |
Fair value of retained noncontrolling investment |  |  | 151,355 |  |  | 23,263 |
Disposition of net assets |  |  | 92,501 |  |  | 14,217 |
Gain on disposal of Beijing Century Friendship and BPMC |  |  | 58,854 |  |  | 9,046 |
Disposal of Allcure Medical Holdings Ltd. (BVI) (“Allcure BVI”) On October 18, 2017, the Group entered into a share transfer agreement with Bluestone Holdings Limited (“Bluestone”), a related party controlled by a director of the Company, to transfer 100% interest of a subsidiary, Allcure BVI with its subsidiary Beijing Allcure Medical Technology Ltd. at consideration of RMB3 (US$ nil). A disposal gain of RMB59 (US$9) was recognized in consolidated financial statements of comprehensive loss for the year ended December 31, 2017.

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