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China Medstar Limited (CMDS)

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Friday 20 June, 2008

China Medstar Limited

Final Results


China Medstar Limited

Preliminary results for the year to 31 December 2007

China Medstar Limited ("Medstar" or the "Company") is a specialist healthcare
provider of radiotherapy and diagnostic equipment for the diagnosis and
treatment of cancer to hospitals in China. The Company enables first rate
medical care to be provided through the provision of financing, equipment and
support services to First Tier hospitals in China. Through their profit sharing
operating leases, the Company currently operates 23 medical centres in 14
cities.

Highlights

  * Revenue from the leasing business increased 17.9% to RMB 69.3m (2006: RMB
    58.8m)
   
  * Profit before Tax increasing 59% to RMB 19,275,068 (2006: RMB 12,115,766)
   
  * Of the agreements signed during 2007, Medstar has opened 7 diagnostic
    centres and 3 more are scheduled to be operational by the first half of 2008

      + As a result, Medstar is now concentrating more on MRI and PET-CT
        centres, where these imaging machines serve as a key cancer diagnostic
        tool
       
  * Offer for the Company at 62 pence per ordinary share
   
                                                                   20 June 2008

Dr Cheng Zheng, Chairman and CEO commented:

"Whilst overall revenues declined in the year, I believe the business rationale
and investment case for Medstar remains strong. There is a huge unmet need in
China for cancer diagnosis and treatment and we see ourselves as being central
to the solution.

"The takeover offer by Ascendium which came at a significant premium to the
prevailing shareprice at the time the offer was announced, recognises the true
future value of Medstar. I am delighted with the turn of events and look
forward to a long term future with the enlarged company."

Enquiries:

China Medstar Ltd                      Tel: +86 (10) 5825-6867               
                                                                             
Dr Cheng Zheng, Chairman and CEO/ Yap                                        
Yaw Kong, CFO                                                                
                                                                             
Evolution Securities                   Tel: +44 (0) 20 7071 4300             
                                                                             
Tom Price/Bobbie Hilliam                                                     
                                                                             
Haggie Financial LLP                   Tel: +44 (0) 20 7417 8989             
                                                                             
Nicholas Nelson/Kathy Boate                                                  

Chairman and Chief Executive Officer's Statement

As detailed in the Review of Operations below, there were two key factors which
led to the 2007 results being below the expectations we set out at the
beginning of the financial year. Firstly, slippage in the sale of two pieces of
equipment into 2008 and secondly, ongoing contract discussions with a major
hospital meant that these revenues could not be included in today's results.

While Group revenues fell slightly to RMB 76,497,110 (2006: RMB 80,153,583),
revenue from the leasing business increased 17.9% to RMB 69.3m (2006: RMB
58.8m).

The Group maintained good margins, with Profit before Tax increasing 59% to RMB
19,275,068 (2006: RMB 12,115,766), in line with management expectations. This
is encouraging for the Company considering the difficulties of the past year.

A cost control programme implemented to monitor rising operating and
administrative expenses has resulted in maintaining costs at RMB 20,873,344
(2006: RMB 11,274,106), which is still above levels that management would like.

Business Summary

Medstar provides specialist diagnostic and radiotherapy equipment for the
treatment and diagnosis of cancer to medical centres in Chinese hospitals.
China's principal health crisis centres on the adequate treatment of the high
levels of the population affected by cancer, which accounts for the majority of
health-related deaths.

It is thought that the pollution effects of rapid urbanisation, together with
an unhealthy adoption of western lifestyle and eating habits, a lack of
screening and proper equipment are the underlying reasons. In the population,
rates of certain cancers such as breast, stomach, lung, liver and cervical
cancers, have increased dramatically in the last two decades. Chinese hospitals
are struggling to meet this demand and most are unable to purchase specialist
technology based on their current government funding and then locate suitably
trained staff to operate the equipment.

The Company's business model of leasing radiotherapy and diagnostic equipment
based on profit-sharing leasing agreements allows hospitals to open state of
the art diagnostic and treatment centres with full operational support.

Medstar is also actively engaged in equipment sales through its Trading
Division and has strategic agreements in place with high end suppliers to sell
their products.

Considering the number of hospitals in China without the necessary resources to
help treat the alarming number of cancer patients across the population,
coupled with Medstar's attractive leasing agreements and first rate equipment,
the Directors maintain a strong belief in the Company's modus operandi.

Review of Operations

Cancer Diagnostic and Treatment Centres

With the constant struggle to find sufficient funding for large pieces of
equipment, hospitals will, in the Directors' belief, continue to turn to Medstar
as an economical means to establish fully functioning treatment centres. While
the Company does not directly engage in the provision of medical services, it
provides training for the hospital staff and maintains a close working
relationship with management to ensure that the centre is run efficiently and
properly. The leasing and profit sharing agreements are the main source of
revenue for the Company, with hospitals keen to take part due to the high costs
of equipment - which Medstar can acquire at a discount due to bulk purchases
from suppliers.

Medstar currently operates 23 diagnostic imaging and cancer treatment centres
in China, which include 10 diagnostic centres (including 1 PET-CT and 1 ECT
Centre), 10 radiotherapy treatment centres and 3 other centre such as
Ophthalmic Centre, High Intensity Focused Ultrasound ("HIFU") and Leksell Knife
centre for the treatment of Parkinson's disease. Of the agreements signed
during 2007, Medstar has opened 7 diagnostic centres and 3 more are schedule to
be operational by the first half of 2008.

As a result, Medstar is now concentrating more on MRI and PET-CT centres, where
these imaging machines serve as a key cancer diagnostic tool.

As previously reported on the 5th February talks remain ongoing with a large
existing treatment centre in relation to the terms of a key contract. The
Company will be unable to recognise revenue from this contract until an
agreement is formalised and shareholders will be updated as appropriate.

In November 2007 Medstar was granted a Finance Lease Licence from the Chinese
Government, which enables it to provide more funding options to hospitals eager
to enter into partnership with the Company. This licence enables the Company to
offer both short and long term finance leases and to seek out further business
opportunities in the financing market.

Equipment Sales

The Trading Division, which sells radiotherapy and other equipment to
hospitals, had a difficult year, as there was a lengthy delay in a key
equipment sale that was to be recognised in the first half of the year. This
was eventually completed in November, adding to the second half bias of the
year's earnings. The sale of a GE 64CT scanner plus ancillary equipment to a
General Hospital in Luoyang, Henan Province, was delayed in light of the
hospital obtaining the necessary government permits for the scanner.

In addition, two more equipment sales which had been anticipated for the final
quarter of 2007 were not completed, with one of them now to be finalised in the
2nd Quarter of 2008.

The strategic agreement with General Electric ("GE") Healthcare China allows
for distribution of the latest HDe 1.5T MRI scanner through China, and the
Company has now become one of the largest buyers of MRIs from GE. The Directors
see further benefits from this relationship in terms of an increased profile,
collaborations and business opportunities with new centres.

In addition to GE agreement, the Company also has one with Toshiba China,
signed in 2007 for the distribution and leasing of its various imaging
products.

Dividend

The Company does not intend to pay a dividend for the year ended 31 December
2007.

Offer for the Company

The Company announced on 4 June 2008 that it had agreed to a recommended offer
for the Company by Ascendium Group Limited valuing the Company at £17.1million.
This represents a premium of approximately 96.8 per cent. to the Medstar
closing price of 31.5 pence on 1 May 2008 (being the last business day
immediately prior to the announcement by Medstar that it was in discussions
which may or may not lead to a recommended offer for Medstar) and approximately
93.4 per cent. to the average price for one month to the same date of 32.1
pence per Medstar share.

The offer is conditional upon valid acceptances being received (and not, where
permitted) withdrawn in respect of not less than 75 per cent. (or such lesser
percentage as Ascendium Group Limited may decide but being more than 50 per
cent) in nominal value of the Medstar shares to which the offer relates.

The offer is conditional upon Ascendium Group Limited receiving valid
acceptance in respect of not less than 75 per cent. (or such lower percentage
as the Offeror may decide) in nominal value of the offer shares and upon the
Medstar shareholders approving the relevant resolutions at a Medstar general
meeting to cancel the listing on AIM and to re-register the Company as a
private limited company. The general meeting is to take place on 27 June 2008
and an announcement will be made updating shareholders on the result of this
meeting.

Subject to the Ascendium Group Limited receiving valid acceptance in respect of
not less than 75 per cent. under the AIM Rules for Companies, the cancellation
can take five business days following the general meeting. Assuming that more
than 75% of Shareholders accept the offer and the resolutions are passed by not
less than 75 per cent. of the Shareholders, it is proposed that the
cancellation will take place on or around 7 July 2008.

Dr. Cheng Zheng

Chairman and CEO

19 June 2008



CHINA MEDSTAR LIMITED

AND ITS SUBSIDIARIES

CONSOLIDATED INCOME STATEMENT

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2007

                                               Note          2007           2006
                                                                                
                                                              RMB            RMB
                                                                                
Revenue                                         1      76,497,110     80,153,583
                                                                                
Cost of sales                                        (32,239,397)   (37,609,236)
                                                                                
                                                     ------------   ------------
                                                                                
Gross profit                                           44,257,713     42,544,347
                                                                                
Other income                                            2,845,198      3,591,149
                                                                                
Other expenses                                          (413,000)   (17,270,684)
                                                                                
Selling and distribution expenses                     (1,374,962)      (912,567)
                                                                                
General and administrative expenses                  (20,873,344)   (11,274,106)
                                                                                
Finance costs                                   2     (5,166,537)    (4,562,373)
                                                                                
                                                     ------------   ------------
                                                                                
Profit before income tax                               19,275,068     12,115,766
                                                                                
Income tax expense                                    (4,553,191)    (4,490,566)
                                                                                
                                                     ------------   ------------
                                                                                
Profit for the financial year                          14,721,877      7,625,200
                                                                                
                                                     ============   ============
                                                                                
Profit attributable to:                                14,892,748      7,625,200
Equity holders of the Company                                                   
                                                                                
Minority interest                                       (170,871)              -
                                                                                
                                                     ------------   ------------
                                                                                
                                                       14,721,877      7,625,200
                                                                                
                                                     ============   ============
                                                                                
Earnings per share (RMB)                        3                               
                                                                                
Basic                                                        0.54           0.57
                                                                                
                                                     ============   ============
                                                                                
Diluted                                                      0.54           0.57
                                                                                
                                                     ============   ============

CHINA MEDSTAR LIMITED

AND ITS SUBSIDIARIES

BALANCE SHEETS AS AT 31 DECEMBER 2007

                                         Group                  Company        

                      Note          2007          2006          2007          2006
                                                                                  
                                     RMB           RMB           RMB           RMB
                                                                                  
ASSETS                                                                            
                                                                                  
Non-current assets                                                                
                                                                                  
Property, plant and          218,072,072   148,320,470             -         3,559
equipment                                                                         
                                                                                  
Intangible asset                 124,091       158,721             -             -
                                                                                  
Investments in                         -             -   104,044,169    77,319,635
subsidiaries                                                                      
                                                                                  
Deferred tax assets            2,277,259     1,322,238             -             -
                                                                                  
Trade and other               12,988,588    16,271,557             -             -
receivables                                                                       
                                                                                  
                            ------------  ------------  ------------  ------------
                                                                                  
                             233,462,010   166,072,986   104,044,169    77,323,194
                                                                                  
                            ------------  ------------  ------------  ------------
                                                                                  
Current assets                                                                    
                                                                                  
Inventories                    2,742,501       310,018             -             -
                                                                                  
Trade and other               29,379,922    19,563,546        10,025     1,070,560
receivables                                                                       
                                                                                  
Advances to suppliers         59,504,402    53,883,349             -       533,924
and prepayments                                                                   
                                                                                  
Cash and cash          4      30,137,511    62,830,899       388,564    34,327,219
equivalents                                                                       
                                                                                  
                            ------------  ------------  ------------  ------------
                                                                                  
                             121,764,336   136,587,812       398,589    35,931,703
                                                                                  
                            ------------  ------------  ------------  ------------
                                                                                  
Total assets                 355,226,346   302,660,798   104,442,758   113,254,897
                                                                                  
                            ============  ============  ============  ============
                                                                                  
EQUITY AND                                                                        
LIABILITIES                                                                       
                                                                                  
Capital and reserves                                                              
attributable to                                                                   
equity holders of the                                                             
Company                                                                           
                                                                                  
Share capital                126,477,963   126,477,963   126,477,963   126,477,963
                                                                                  
Statutory reserves             8,706,725     6,188,583             -             -
                                                                                  
Other reserve                 17,450,811    17,450,811             -             -
                                                                                  
Share options reserve          2,049,702       158,142     2,049,702       158,142
                                                                                  
Translation reserve            1,757,728     1,757,728       810,890       810,890
                                                                                  
Accumulated profits/          48,744,456    36,369,850  (29,512,218)  (19,542,131)
(losses)                                                                          
                                                                                  
                            ------------  ------------  ------------  ------------
                                                                                  
Equity attributable          205,187,385   188,403,077    99,826,337   107,904,864
to equity holders                                                                 
of the Company                                                                    
                                                                                  
Minority interests             2,179,129             -             -             -
                                                                                  
                            ------------  ------------  ------------  ------------
                                                                                  
                             207,366,514   188,403,077    99,826,337   107,904,864
                                                                                  
                            ------------  ------------  ------------  ------------
                                                                                  
Non-current                                                                       
liabilities                                                                       
                                                                                  
Bank loans             5      89,600,000    27,257,500             -             -
                                                                                  
Trade and other        6       1,894,915     1,772,108             -             -
payables                                                                          
                                                                                  
                            ------------  ------------  ------------  ------------
                                                                                  
                              91,494,915    29,029,608             -             -
                                                                                  
                            ------------  ------------  ------------  ------------
                                                                                  
Current liabilities                                                               
                                                                                  
Trade and other               16,461,584    20,527,581     4,462,841     5,350,033
payables                                                                          
                                                                                  
Provision for staff               97,983       250,176             -             -
welfare benefit                                                                   
                                                                                  
Income tax                     4,482,653     3,476,248             -             -
liabilities                                                                       
                                                                                  
Other tax liabilities          1,200,197     2,224,108       153,580             -
                                                                                  
Bank loans             5      34,122,500    58,750,000             -             -
                                                                                  
                            ------------  ------------  ------------  ------------
                                                                                  
                              56,364,917    85,228,113     4,616,421     5,350,033
                                                                                  
                            ------------  ------------  ------------  ------------
                                                                                  
Total equity and             355,226,346   302,660,798   104,442,758   113,254,897
liabilities                                                                       
                                                                                  
                             ===========   ===========   ===========   ===========



CHINA MEDSTAR LIMITED

AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2007

              Attributable to equity holders of the Company                    

            Note       Share    Statu-      Other     Share    Trans-      Accum-       Total  Minority       Total
                     capital      tory    reserve   options    lation      ulated             Interests      Equity
                              reserves              reserve   reserve     profits                                  
                                                                                                                   
                         RMB       RMB        RMB       RMB       RMB         RMB         RMB       RMB         RMB
                                                                                                                   
Balance              502,513 3,676,506 17,450,811         - 1,544,133  31,256,727  54,430,690         -  54,430,690
as at 1                                                                                                            
January                                                                                                            
2006                                                                                                               
                                                                                                                   
Trans-                     -         -          -         -   213,595           -     213,595         -     213,595
lation                                                                                                             
difference                                                                                                         
                                                                                                                   
Net                        -         -          -         -   213,595           -     213,595         -     213,595
income                                                                                                             
recognised                                                                                                         
directly in                                                                                                        
equity                                                                                                             
                                                                                                                   
Profit                     -         -          -         -         -   7,625,200   7,625,200         -   7,625,200
for the                                                                                                            
financial                                                                                                          
year                                                                                                               
                                                                                                                   
Total                      -         -          -         -   213,595   7,625,200   7,838,795         -   7,838,795
recognised                                                                                                         
income and                                                                                                         
expense                                                                                                            
                                                                                                                   
Issue of          94,024,467         -          -         -         -           -  94,024,467         -  94,024,467
share                                                                                                              
capital                                                                                                            
during the                                                                                                         
financial                                                                                                          
year                                                                                                               
                                                                                                                   
Conversion        39,800,932         -          -         -         -           -  39,800,932         -  39,800,932
of                                                                                                                 
preference                                                                                                         
shares to                                                                                                          
ordinary                                                                                                           
shares                                                                                                             
                                                                                                                   
Transfer                   - 2,512,077          -         -         - (2,512,077)           -         -           -
to                                                                                                                 
statutory                                                                                                          
reserves                                                                                                           
                                                                                                                   
Share            (7,849,949)         -          -         -         -           - (7,849,949)         - (7,849,949)
issue                                                                                                              
expenses                                                                                                           
                                                                                                                   
Share                      -         -          -   158,142         -           -     158,142         -     158,142
options                                                                                                            
expense                                                                                                            
                                                                                                                   
Balance          126,477,963 6,188,583 17,450,811   158,142 1,757,728  36,369,850 188,403,077         - 188,403,077
as at 31                                                                                                           
December                                                                                                           
2006                                                                                                               
                                                                                                                   
Balance          126,477,963 6,188,583 17,450,811   158,142 1,757,728  36,369,850 188,403,077         - 188,403,077
as at 1                                                                                                            
January                                                                                                            
2007                                                                                                               
                                                                                                                   
Profit                     -         -          -         -         -  14,892,748  14,892,748 (170,871)  14,721,877
for the                                                                                                            
financial                                                                                                          
year                                                                                                               
                                                                                                                   
Total                      -         -          -         -         -  14,892,748  14,892,748 (170,871)  14,721,877
recognised                                                                                                         
income                                                                                                             
and                                                                                                                
expense                                                                                                            
                                                                                                                   
Transfer                   - 2,518,142          -         -         - (2,518,142)           -         -           -
to                                                                                                                 
statutory                                                                                                          
reserves                                                                                                           
                                                                                                                   
Acquisition                -         -          -         -         -           -             2,350,000   2,350,000
of                                                                                                                 
subsidiary                                                                                                         
                                                                                                                   
Share        26            -         -          - 1,891,560         -           -   1,891,560         -   1,891,560
options                                                                                                            
expense                                                                                                            
                                                                                                                   
Balance          126,477,963 8,706,725 17,450,811 2,049,702 1,757,728  48,744,456 205,187,385 2,179,129 207,366,514
as at 31                                                                                                           
December                                                                                                           
2007                                                                                                               

CHINA MEDSTAR LIMITED

AND ITS SUBSIDIARIES

CONSOLIDATED CASH FLOW STATEMENT

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2007

                                               Note          2007           2006
                                                                                
                                                              RMB            RMB
                                                                                
Cash flows from operating activities                                            
                                                                                
Profit before income tax                               19,275,068     12,115,766
                                                                                
Adjustments for:                                                                
                                                                                
Depreciation of property, plant and equipment          23,792,845     18,963,275
                                                                                
Exchange loss arising from conversion of                        -        965,956
Redeemable Convertible Preference Shares                                        
                                                                                
Intangible asset amortisation                              34,630         14,429
                                                                                
Interest income                                       (1,331,198)      (108,718)
                                                                                
Interest expense                                        5,166,537      4,562,373
                                                                                
Loss on disposal of plant and equipment                   408,000              -
                                                                                
Share options expense                                   1,891,560        158,142
                                                                                
Provision for staff welfare benefit                       125,907        125,604
                                                                                
                                                     ------------   ------------
                                                                                
                                                       49,363,349     36,796,827
                                                                                
Inventories                                           (2,432,483)        582,743
                                                                                
Trade and other receivables                           (6,533,407)   (25,801,572)
                                                                                
Advances to suppliers and prepayments                 (5,621,053)   (31,355,349)
                                                                                
Trade and other payables                              (4,967,101)      9,192,226
                                                                                
Utilisation of provision of staff welfare               (278,100)      (302,128)
benefit                                                                         
                                                                                
                                                     ------------   ------------
                                                                                
Cash generated from/(used in) operating                29,531,205   (10,887,253)
activities                                                                      
                                                                                
Interest income                                         1,331,198        108,718
                                                                                
Income tax paid                                       (4,501,807)    (3,687,171)
                                                                                
                                                     ------------   ------------
                                                                                
Net cash generated from/(used in) operating            26,360,596   (14,465,706)
activities                                                                      
                                                                                
                                                     ------------   ------------
                                                                                
Cash flows from investing activities                                            
                                                                                
Purchase of plant and equipment                      (94,110,262)   (35,592,680)
                                                                                
Purchase of intangible asset                                    -      (173,150)
                                                                                
Cash deposits pledged with a bank                      17,524,051   (17,524,051)
                                                                                
Proceeds from disposal of plant and equipment             157,815              -
                                                                                
                                                     ------------   ------------
                                                                                
Net cash used in investing activities                (76,428,396)   (53,289,881)
                                                                                
                                                     ------------   ------------
                                                                                
Cash flows from financing activities                                            
                                                                                
Proceeds from issue of share capital                            -     94,024,467
                                                                                
Share issue expenses paid                                       -    (7,849,949)
                                                                                
Contribution from minority shareholders                 2,350,000              -
                                                                                
Proceeds from bank loans                              165,996,250     44,410,000
                                                                                
Repayment of bank loans                             (128,281,250)   (28,052,500)
                                                                                
Interest paid                                         (5,166,537)    (4,562,373)
                                                                                
                                                     ------------   ------------
                                                                                
Net cash generated from financing activities           34,898,463     97,969,645
                                                                                
                                                     ------------   ------------
                                                                                
Net change in cash and cash equivalents              (15,169,337)     30,214,058
                                                                                
Cash and cash equivalents at beginning of              45,306,848     14,879,195
financial year                                                                  
                                                                                
                                                     ------------   ------------
                                                                                
Exchange differences on cash and cash                           -        213,595
equivalents                                                                     
                                                                                
                                                     ------------   ------------
                                                                                
Cash and cash equivalents at end of financial   4      30,137,511     45,306,848
year                                                                            
                                                                                
                                                     ============   ============

CHINA MEDSTAR LIMITED

AND ITS SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2007

1. Revenue

                                                                    Group              
                                                                                       
                                                                 2007              2006
                                                                                       
                                                                  RMB               RMB
                                                                                       
Equipment leasing (rendering of service)                   69,298,581        58,811,736
                                                                                       
Sale of goods                                             10,681,420.        24,107,349
                                                                                       
Sales tax                                                 (3,482,891)       (2,765,502)
                                                                                       
                                                      ---------------   ---------------
                                                                                       
                                                           76,497,110        80,153,583
                                                                                       
                                                             ========          ========
                                                                                       

2. Finance costs

                                                                      Group              
                                                                                    
                                                               2007             2006
                                                                                    
                                                                RMB              RMB
                                                                                    
Interest on bank loans                                    6,401,269        4,562,373
                                                                                    
Less: Amount capitalised in plant and equipment           (773,818)                -
                                                                                    
Less: Amount capitalised in advances to suppliers         (460,914)                -
(for acquisition of plant and equipment)                                            
                                                                                    
                                                    ---------------  ---------------
                                                                                    
                                                          5,166,537        4,562,373
                                                                                    
                                                           ========         ========

The capitalised interest rate range from 6.5% to 7.47% per annum (2006: Nil)

3. Earnings per share

Basic earnings per share is calculated by dividing the Group's net profit
attributable to equity holders by the weighted average number of ordinary
shares in issue during the financial year as follows:

                                                                Group           
                                                                             
                                                          2007           2006
                                                                             
                                                           RMB            RMB
                                                                             
Basic earnings per share                                  0.54           0.57
                                                                             
                                                      ========       ========
                                                                             
The calculation of the basic earnings per share is                           
based on:                                                                    
                                                                             
Net profit attributable to equity holders           14,892,748      7,625,200
                                                                             
                                                      ========       ========

Weighted average number of fully paid                                        
                                                                             
ordinary shares issued during the financial year    27,564,138     13,263,499
                                                                             
                                                      ========       ========

For the purpose of calculating diluted earnings per share, the Group's net
profit attributable to equity holders and the weighted average number of
ordinary shares in issue are adjusted for the effects of all dilutive potential
ordinary shares.

Diluted earnings per share amounts are calculated by dividing the profit
attributable to the equity holders of the Company by the weighted average
number of ordinary shares outstanding during the financial year plus the
weighted average number of ordinary shares that would be issued on the
conversion of all dilutive potential ordinary shares into ordinary shares.

All the 872,853 share options did not have a dilutive effect on the Group's
earnings per share as the average market price per ordinary share of the
Company during the period from the first day of trading on the Alternative
Investment Market of the London Stock Exchange in the United Kingdom to 31
December 2007 was below the exercise price of the share option granted.

                                                             Group           
                                                                             
                                                          2007           2006
                                                                             
                                                           RMB            RMB
                                                                             
Diluted earnings per share                                0.54           0.57
                                                                             
                                                      ========       ========
                                                                             
The calculation of the basic earnings per share is                           
based on:                                                                    
                                                                             
Net profit attributable to equity holders           14,892,748      7,625,200
                                                                             
                                                      ========       ========

Weighted average number of fully paid                                        
                                                                             
ordinary shares issue during the financial year     27,564,138     13,263,499
                                                                             
                                                      ========       ========

4. Cash and cash equivalents

                                     Group                      Company           
                                                                                  
                                  2007           2006          2007           2006
                                                                                  
                                   RMB            RMB           RMB            RMB
                                                                                  
Cash in hand                    17,511         70,271             -              -
                                                                                  
Cash at bank                30,120,000     54,260,628       388,564     34,327,219
                                                                                  
Guarantee money for bank             -      8,500,000             -              -
acceptance deposits                                                               
                                                                                  
                          ------------   ------------   -----------   ------------
                                                                                  
Cash and cash equivalents   30,137,511     62,830,899       388,564     34,327,219
                                                                                  
                              ========       ========        ======       ========

Cash at bank earns interest at floating rates based on daily bank deposit rates
ranging from 0.72% to 0.81% (2006: 0.72% to 2.61%) per annum.

For the purpose of the consolidated cash flow statement, cash and cash
equivalents comprise the following at the balance sheet date:

                                                                Group               
                                                                                    
                                                              2007              2006
                                                                                    
                                                               RMB               RMB
                                                                                    
Cash and cash equivalents as per consolidated           30,137,511        62,830,899
balance sheet                                                                       
                                                                                    
Less: Pledge of cash deposit to secure banking                   -      (17,524,051)
facilities for a subsidiary                                                         
                                                                                    
                                                  ----------------  ----------------
                                                                                    
                                                        30,137,511        45,306,848
                                                                                    
                                                         =========         =========

Cash and cash equivalents are denominated in the following currencies:

                                   Group                            Company            
                                                                                       
                                 2007            2006              2007            2006
                                                                                       
                                  RMB             RMB               RMB             RMB
                                                                                       
Singapore dollar              162,065      15,116,287           162,065      15,116,287
                                                                                       
United States dollar          316,520      34,780,310           226,499      19,210,932
                                                                                       
Chinese Renminbi           29,658,926      12,934,302                 -               -
                                                                                       
                       --------------  --------------    --------------  --------------
                                                                                       
                           30,137,511      62,830,899           388,564      32,327,219
                                                                                       
                             ========        ========          ========        ========


5. Bank loans

                                                                  Group              
                                                                                     
                                                                2007             2006
                                                                                     
                                                                 RMB              RMB
                                                                                     
The borrowings are repayable as                                                      
follows:                                                                             
                                                                                     
On demand within one financial year                       34,122,500       58,750,000
                                                                                     
From second to fifth financial year                       89,600,000       27,257,500
                                                                                     
                                                    ----------------  ---------------
                                                                                     
                                                         123,722,500       86,007,500
                                                                                     
                                                           =========        =========

 1. As at the balance sheet date, the bank loans from Waigaoqiao Subbranch,
    Agricultural Bank of China are as follows:
   
 i. Bank loan of RMB 3,250,000 (2006: RMB 9,000,000) was secured by the
    original investor and Director, Cheng Zheng, and mortgage of a subsidiary's
    equipment at net book value of RMB 11,535,354 (2006: RMB 13,162,104) and
    carry an interest rate of 7.227% (2006: 6.93%) per annum.
   
ii. Bank loan of RMB 5,720,000 (2006: RMB 8,800,000) was secured by the
    original investor and Director, Cheng Zheng, and mortgage of a subsidiary's
    equipment at net book value of RMB 16,754,694 (2006: RMB 19,192,383) and
    carried an interest rate of 7.227% (2006: 6.93%) per annum.
   
iii. Bank loans of RMB 56,970,000 (2006: Nil) were secured by the guarantee
    with total amount up to RMB 150,000,000 by third party, Xie Shengying and
    the original investor and Director, Cheng Zheng, and carried interest rates
    ranging from 6.75% to 7.56% (2006: Nil) per annum.
   
iv. Bank loan of RMB 12,630,000 (2006: Nil) was secured by the guarantee with
    total amount up to RMB 150,000,00 by a third party, Xie Shengying and the
    original investor and Director, Cheng Zheng, and mortgage of a subsidiary's
    equipment at net book value of RMB 22,364,912 (2006:Nil) and carried an
    interest rate of 7.02% (2006: Nil) per annum.
   
 v. Bank loan of RMB 20,000,000 (2006: Nil) was secured by the guarantee with
    total amount up to RMB 150,000,000 by a third party, Xie Shengying and the
    original investor and Director, Cheng Zheng, and mortgage of a subsidiary's
    equipment at net book value of RMB 42,685,325 (2006: Nil) and carried an
    interest rate of 7.47% (2006: Nil) per annum.
   
vi. Bank loan of RMB 21,500,000 (2006: Nil) was secured by the guarantee with
    total amount up to RMB 150,000,000 by a third party, Xie Shengying and the
    original investor and Director, Cheng Zheng and mortgage of a subsidiary's
    equipment at net book value of RMB 45,301,283 (2006: Nil) and carried an
    interest rate of 7.29% (2006: Nil) per annum.
   
vii. In 2006, bank loan of RMB 26,000,000 which carried an interest rate of
    6.03% per annum was guaranteed by related parties, namely, Beijing Medstar
    Hi-Tech Investment Co., Ltd. and Beijing Tengyuan Tongda Trading Co., Ltd.,
    and a non-related party, Hongneng Century Energy Source Technology
    Development Co., Ltd., and secured by a charge over certain equipment of
    Beijing Tengyuan Tongda Trading Co., Ltd., amounting RMB 12,000,000 and the
    equipment of a subsidiary at net book value amounting RMB 35,545,617.
   
viii. In 2006, bank loan of RMB 4,750,000 was secured by a third party,
    Shanghai Affiliation of Zhongtou Credit Guaranty Co., Ltd., and mortgage of
    a subsidiary's equipment at net book value of RMB 14,527,236 and carried an
    interest rate of 6.93% per annum.
   
ix. In 2006, bank loan of RMB 5,750,000 was secured by a third party, Shanghai
    Affiliation of Zhongtou Credit Guaranty Co., Ltd., and mortgage of a
    subsidiary's equipment at net book value of RMB 12,431,286 and carried an
    interest rate of 6.93% per annum.
   
 x. In 2006, bank loan of RMB 7,250,000 was secured by a third party, Xie
    Shengying and the original investor and Director, Cheng Zheng, and mortgage
    of a subsidiary's equipment at net book value of RMB 19,616,848 and carried
    an interest rate of 8.75% per annum.
   
(2) As at the balance sheet date, the bank loans from HSBC are as follows:

 i. Bank loans of RMB 3,652,500 (2006: RMB 9,457,500) and RMB revolving loan of
    Nil (2006: RMB 15,000,000) were secured by way of a mortgage over a
    subsidiary's equipment leased to Beijing Friendship Hospital with total
    invoice value no less than RMB 10,000,000 (2006: RMB 10,000,000), equipment
    leased to the First Hospital Affiliated to Fujian Medical University with
    total invoice value no less than RMB 12,000,000 (2006: RMB 12,000,000), and
    a Personal Guarantee of RMB 5,600,000 from original investor and Director,
    Cheng Zheng, supported by the personal net worth statement (2006: cash
    deposit of USD 2,000,000 from the Company). The RMB revolving loan had a
    limit of USD 3,300,000 (2006: USD 2,000,000) or equivalent RMB. The bank
    loans carried interest rates ranging from 6.336% to 7.425% (2006: 5.58% to
    6.633%).
   
Bank loans have an average maturity period of 4-24 months (2006: 18-28 months)
from the balance sheet date.

The management considers the fair value of the Group's borrowings to
approximate their carrying amounts.

The carrying amounts of all bank loans were denominated in Renminbi.


6. Trade and other payables - non-current

                                                              Group            
                                                                               
                                                           2007            2006
                                                                               
                                                            RMB             RMB
                                                                               
Deposit to be refunded after one year                 1,894,915       1,772,108
                                                                               
                                                      =========       =========

Deposit to be refunded after one year is a deposit received from JiangSu
Provincial I.T.W.M Hospital according to the agreement signed by the subsidiary
company with the hospital. According to the agreement, this deposit which will
be refunded in December 2010, bears interest at a fixed rate of 3.69% (2006:
3.69%) per annum, which are also repayable at the end of the term.

The original deposit amount received was RMB 2 million and it had been carried
at amortised cost as at balance sheet date. The weighted average effective
interest rate of this deposit is 7.56% (2006: 6.93%).

                                                       Estimated fair value   
                                                                              
                                                           2007           2006
                                                                              
                                                            RMB            RMB
                                                                              
Non-current deposit payable                           1,861,813      1,772,108
                                                                              
                                                      =========      =========

a d v e r t i s e m e n t