Wanjia Group Holdings Limited provided unaudited consolidated earnings guidance for the year ended 31 March 2024. For the year, the group expects the loss for the Current Period of the Company of approximately HKD 40 million, as compared to the actual profit of approximately HKD 1.94 million recorded for the year ended 31 March 2023. The expected loss is mainly due to, among others, the following reasons: the provision in expected credit loss of approximately HKD 4.60 million, mainly due to the overdue trade and other receivables from customers; each of the Group's two hemodialysis treatment centres have been requested by the relevant county medical security bureau in the Guangdong Province, the PRC to refund certain items charged by then relating to hemodialysis treatment between 2020 to 2023 in the amount of approximately HKD 6.50 million.

During the inspection by the Bureau in 2023, the Bureau considered that some ancillary services rendered by the Centres to the hemodialysis patients during 2020 to 2023 were excessive. Hence, the Centres were required to refund those claimed fees in connection with the excessive services to the Bureau. Such amount has been fully settled before the year ended 31 March 2024.

Notwithstanding the refund request from the Bureau, the Group has obtained the legal advice to the PRC law which opined that the request for refund was not an administrative penalties but merely a demand for refund to the Bureau. Such refund does not denote any breach nor violation of any rules and regulations with the hemodialysis treatment practices on the part of the Centres. The PRC legal adviser further opined that the Centres' medical insurance claiming position are in normal settlement status and the operation of the Centres during 2020 to 2023 were in compliance with all applicable laws and regulations in the PRC.

As at the date of this announcement, the Centres are still carrying out its operation as usual. However, it is expected that the overall profitability of the Centres in the coming years will be decreased; and the provision of impairment loss of goodwill of approximately HKD 22 million for the Current Period. The Impairment was primarily due to (i) cost control measures imposed by a county's medical security bureau in the Guangdong Province, PRC to limit the medical treatment fee that can be charged for each patient's visit by the hemodialysis treatment centre which thus will reduce the overall revenue generated by the hemodialysis treatment centre; and (ii) the opening of an another hemodialysis treatment centre in the Guangdong Province, PRC in 2025 will require additional capital investment and funding which in turn will lower the projection of the cash flow forecast in 2024 and 2025 respectively.

The Board would like to emphasize that the Impairment is a non-cash item and has no effect on the Group's daily operations and cash flow.