Final Results

    China Medstar Limited

Preliminary results for the year to 31 December 2006

A year of strong progress

China Medstar Limited ("Medstar" or ""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 16 medical centres in
ten cities.

Highlights

  - Successful admission to AIM in November 2006 raising £4.5 million
    after expenses
  - Continued turnover and profits growth compared to 2005

- Turnover up 23.5% to RMB80 million (£5.3 million)

- Pre tax Profit from operations up 7.6% to RMB31.5 million (£2.1 million)
(excluding the share listing expenses of RMB17,070,684 included in "Other
expenses" in the financial statements relating to the AIM admission and the
one time extra depreciation charge of RMB2,317,045 due to changes in
accounting estimates)

  - 16 cancer treatment and diagnostic centres in operation

- 5 newly opened during 2006 including the first high intensity focused
ultrasound ("HIFU") centre

Since the year end:

Centre Opening:

  - First PET-CT diagnostic centre in operation with the Beijing Navy
    Hospital
  - First Leksell Knife Centre for treatment of Parkinson's Disease in
    operation with Guangzhou 458 Navy Hospital

In the Pipeline:

  - Signed agreement with Henan Traditional Chinese Medicine Hospital
    for its CT and MRI Diagnostic imaging Centre - target opening 2007/Q3
  - Signed agreement with People's Hospital of Jiyuan City for its CT
    Diagnostic Imaging Centre - target opening 2007/Q3
  - Signed agreement with Beijing 306 Military hospital for its PET-CT
    diagnostic centre - target opening 2007/Q4

Business Partnership:

  - Signed strategic distribution agreement with Toshiba China for
    distribution and leasing of its imaging products
  - Strategic Alliances Agreement with GE Healthcare China for its
    latest HDe 1.5T MRI scanner

Financing Activities:

  - Agricultural Bank of China has approved a RMB150 million loan with
    RMB60 million available as a revolving credit line
  - Obtained a 3 year term loan from Bank of China for RMB12 million

Dr. Cheng Zheng, Chairman and CEO, commented:

"We are extremely pleased with developments during 2006 and the
progress made since the Company's admission to AIM.

"Trading in the current year has started well. We have seen an
acceleration in activity as we aim towards a further 16 centre openings during
2007. We view our relationships with local banks and finance houses as being
vital to our ongoing success. In this regard we have negotiated improved terms
for short term funding with existing and new banks and will shortly be granted
a finance lease license to enable us to negotiate the best terms with our
suppliers and customers.

"We remain on a sound footing financially and therefore well placed
to continue growing the high quality revenues available to us through our long
term partnerships with an increasing number of China's leading hospitals.

"While mindful of the seasonality in revenues, the continued
success of our expansion plans lead the Directors to look to the future with
confidence."

                                                                  28 June 2007

Enquiries:

China Medstar Ltd                   Tel: [phone]
Dr Cheng Zheng, Chairman and CEO/
Yap Yaw Kong, CFO
Evolution Securities                Tel: [phone]
Tom Price/Bobbie Hilliam
Nexus Financial Ltd                 Tel: [phone]
Nicholas Nelson/Kathy Boate
Chairman and Chief Executive Officer's Statement

Overview

I am pleased to report our maiden preliminary results since China
Medstar's admission to AIM on 30 November 2006. The year was a period of
significant change for the Company, not least the successful AIM flotation
with £4.5 million (after expenses) raised for further expansion of the
Company's diagnostic and radiotherapy centres, but also for the tangible
operational progress made.

Medstar is moving to fulfil a huge unmet need in China, that of
cancer diagnosis and treatment. Cancer has become the leading health problem
in China with an estimated two million diagnosed with the disease. 25% of all
deaths in China are from cancer. This acceleration in terminal cancer rates,
from only 5% in the late 1950s, has been driven largely by the pace of
urbanisation and industrial growth which has led to severe environmental
pollution.

The cancer problem is placing ever greater pressures on hospitals,
which are looking to the private sector for resources and expertise in this
and other areas of medical care. Medstar operates in complete symbiosis with
hospitals in providing state of the art treatment centres staffed by hospital
medical professionals and operated on the basis of profit-sharing leasing
agreements. Moreover, the Company maintains excellent relationships with the
state and local health authorities which view Medstar as a valuable part of
China's present and future healthcare industry.

As stated at the time of the admission to AIM, the Company's
objectives were to raise its profile within China and the investment community
at large, invest in further radiotherapy centres, recruit and retain skilled
employees and fund future growth with the proceeds from the placing.

Since that time, the Company has made good progress in meeting
these objectives, and has seen its number of radiotherapy and diagnostic
centres in operation increase from 10 to 16 centres, while continuing to
diversify revenue sources through the growing Trading Division. The admission
has also helped raise Medstar's profile and reputation, with AIM being held in
high regard amongst business leaders in China.

Expansion opportunities are huge with a ready market for Medstar's
products and services. There are over 18,000 hospitals in China with the
Company's target market being represented by the 900 or so first tier
hospitals, and a further 1500 second tier -AAA grade hospitals.

Review of Operations

Cancer Diagnostic and Treatment Centres

Medstar's principal source of revenue is its operating lease and
profit sharing agreements with large hospitals. The Company funds the purchase
of cancer diagnostic and treatment equipment which is installed at minimal
cost to the hospital and then provides management support as well as training
and promotional services for the staff at the treatment centres.

The centres are run at maximum efficiency without compromise to the
reliability of the machinery, hospital staff and patient care. The Company has
a strong track record of increasing patient throughput and centre
profitability and has achieved its budgeted targets in the year in terms of
numbers of patients attended to and price per treatment.

A key part of the Company's success arises from its relationships
with equipment suppliers and distributors which are keen to sell into China
but have historically struggled due to the lack of available hospital funds
and poor hospital infrastructure. This places Medstar in a competitively
strong position as it can provide the funding to acquire the equipment from
not only single but multiple equipment suppliers in order to establish a
successful centre for the hospital.

Medstar has entered into an agreement to begin supplying High
Intensity Focused Ultrasound ("HIFU") equipment in order to increase the range
of cutting-edge equipment offered to medical centres. It opened its first HIFU
centre in August 2006 and expects to increase this to a total of six fully
operational centres in the current year.

Five new centres were opened during the year and with the move into
HIFU, the Company runs three different types of centres: cancer treatment
(with 10 centres operational in 2006); diagnostic (with 3 centres operational
in 2006) and HIFU centres (with 1 centre operational in 2006). The Board
anticipates that 2007 will result in an acceleration of the number of centre
openings, and has opened the first PET-CT diagnostic centre at the Beijing
Navy Hospital in April 2007 and also the first Leksell Knife Centre for the
treatment of Parkinson's Disease at Guangzhou 458 Navy Hospital. In the past
month, Medstar agreed to establish another PET-CT diagnostic centre with the
Beijing 306 Military Hospital, with a planned opening for October.

An agreement with GE Healthcare China, which was signed on 18 June
2007, is expected to result in a further growth opportunity for the Company
that will enhance its business strategy in allowing for a bigger market share
of the diagnostic imaging centre sector. The Company's strategic partnership
with GE allows it to distribute GE's latest HDe 1.5T MRI scanner throughout
China, with Medstar given the first option to invest in the centres that
require either lease financing or lease with profit sharing financing. The
effect will be an acceleration in the number of Diagnostic centre openings to
a total of 11 (from an expected eight) in the current year and a possible
reduction in the number of Treatment Centres to a total of 15 (from an
expected 17).

Despite the shift in openings of Diagnostic and Treatment centres,
the Directors expect the revenues to show continued growth.

Equipment Sales

The Company's second area of business is the sale of radiotherapy
and other equipment to hospitals. An active marketing programme aimed at
hospitals throughout China augmented by close alliances with hospital managers
ensures that the Company often has prior knowledge of those hospitals
considering the purchase of new equipment. Medstar is then in a position to
promote an attractively priced package of equipment, benefiting from its
competitive purchasing power.

The Company has also made progress in broadening different avenues
to grow the business. One such avenue is through exclusive arrangements with
equipment manufacturers which the management believes is a logical
development. The Company has seen success from this already. Last month, on 15
May 2007, the Company signed an agreement with Toshiba China as their
strategic distributor throughout China on a profit sharing basis for all of
its imaging products.

Financial Summary

The Company has also delivered financial results that were broadly
in line with market expectations.

A period of strong trading resulted in Group revenues increasing
23.5% to RMB 80,153,583 (£5.3 million at year end exchange rate of
£1=RMB15.1), from RMB 64,927,891 in the year to 31 December 2005.

Medstar enjoys an excellent trading margin although as expected at
the time of Admission to AIM, the result of the Chinese State Health Reform in
2006 resulted in a change to our pricing structure with hospitals and a drop
in gross margin to 58%. The Directors hope that this level of margin can be
maintained in the coming year and beyond.

Group income was augmented through a RMB2,842,000 subsidy given to
companies registered in the Shanghai Waigaoqiao Tax Free Zone areas.

The share listing expenses of RMB17,070,684 relating to the AIM
admission in November 2006 and a change in accounting estimates for the
residual value of the property, plant and equipment were the main reasons for
the decline in profit before tax to RMB 12,115,766, from RMB29,272,421 for the
year ended 31 December 2005. Disregarding these above-mentioned items, profits
are in line with market expectations.

The Balance Sheet includes RMB62,830,899 of cash as at the year
end. This relates to the funds received as part of the Placing and Admission
to AIM in November 2006 which resulted in approximately RMB 68 million of net
proceeds. The net debt/equity ratio as at the year end is at a comfortable
12.3%. Net debt/equity is defined as total debt (short and long term) less
cash and cash equivalents divided by shareholder equity.

Along with most businesses in China, Medstar is affected by
pronounced seasonality of sales as a result of extended national holidays in
February and May. This bias is a result of many patients seeking treatment for
cancer such as agricultural workers who tend to defer treatment until the
second half of the year after the harvest season. As in past periods, the
Directors expect that the first half of 2007 will account for approximately
40% of total revenues for the year.

Dividend

The Company does not intend to pay a dividend for the year ended 31
December 2006, but expects to pay its maiden dividend in respect of the year
ending 31 December 2007.

People

Our employees continue to deliver outstanding loyalty, commitment,
hard work and talent. I would like to thank them all for the superb way in
which they have performed throughout the year.

Outlook for the Forthcoming Year

We are extremely pleased with developments during 2006 and the
progress made since the Company's admission to AIM.

Trading in the current year has started well. We have seen an
acceleration in activity as we aim towards a further 16 centre openings during
2007. We view our relationships with local banks and finance houses as being
vital to our ongoing success. In this regard we have negotiated improved terms
for short term funding with existing and new banks and will shortly be granted
a finance lease license to enable us to negotiate the best terms with our
suppliers and customers.

We remain on a sound footing financially and therefore well placed
to continue growing the high quality revenues available to us through our long
term partnerships with an increasing number of China's leading hospitals.

While mindful of the seasonality in revenues, the continued success
of our expansion plans lead the Directors to look to the future with
confidence.

Dr. Cheng Zheng

Chairman and CEO



CHINA MEDSTAR LIMITED AND ITS SUBSIDIARY

AUDITED CONSOLIDATED INCOME STATEMENT
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2006

                                         Note             Group
                                                       2006            2005
                                                        RMB             RMB
 
Revenue                                   5      80,153,583      64,927,891
 
Cost of sales                                  (37,609,236)    (23,460,594)
 
Gross profit                                     42,544,347      41,467,297
 
Other income                                      3,591,149          24,182
 
Other expenses                                 (17,270,684)               -
 
Selling and distribution
expenses                                          (912,567)       (501,224)
 
General and
administrative
 
expenses                                       (11,274,106)     (7,485,582)
Profit from operations                           16,678,139      33,504,673
 
Finance costs                                   (4,562,373)     (4,232,252)
Profit before income tax                  6      12,115,766      29,272,421
 
Income tax expense                              (4,490,566)     (4,592,433)
 
Net profit attributable
to equity holders of the
parent                                            7,625,200      24,679,988
 
Earnings per share (RMB)                  7
 
Basic                                                  0.57            2.47
Diluted                                                0.57            1.83



CHINA MEDSTAR LIMITED AND ITS SUBSIDIARY

AUDITED BALANCE SHEETS AS AT 31 DECEMBER 2006

                         Note            Group                       Company
                                      2006           2005          2006            2005
                                       RMB            RMB           RMB             RMB
ASSETS
Non-current assets
Property, plant and
equipment                 8    148,320,470    131,691,065         3,559           7,117
Intangible asset                   158,721              -             -               -
Investment in subsidiary                 -              -    77,319,635      38,834,951
Deferred tax assets              1,322,238        489,199             -               -
Trade and other
receivables                     16,271,557              -             -               -
                               166,072,986    132,180,264    77,323,194      38,842,068
Current assets
Inventories                        310,018        892,761             -               -
Trade and other
receivables                     19,563,546     10,033,531     1,070,560         189,641
Advances to suppliers
and prepayments                 53,883,349     22,528,000       533,924               -
Cash and bank balances          62,830,899     14,879,195    34,327,219         626,078
                               136,587,812     48,333,487    35,931,703         815,719
Total assets                   302,660,798    180,513,751   113,254,897      39,657,787
 
EQUITY AND LIABILITIES
Capital and reserves
attributable to equity
holders of the parent
Share capital                  126,477,963        502,513   126,477,963         502,513
Statutory reserves               6,188,583      3,676,506             -               -
Other reserve                   17,450,811     17,450,811             -               -
Share options reserve              158,142              -       158,142               -
Translation reserve              1,757,728      1,544,133       810,890         823,490
Accumulated
profits/(losses)                36,369,850     31,256,727  (19,542,131)     (1,615,197)
                               188,403,077     54,430,690   107,904,864       (289,194)
Non-current liabilities
Preference shares         9              -     38,834,976             -      38,834,976
Bank loans                10    27,257,500     59,650,000             -               -
Trade and other payables         1,772,108              -             -               -
                                29,029,608     98,484,976             -      38,834,976
Current liabilities
Trade and other payables        20,527,581     14,801,959     5,350,033       1,112,005
Provision for staff
welfare benefit                    250,176        426,700             -               -
Income tax liabilities           3,476,248      1,839,814             -               -
Other tax liabilities            2,224,108        529,612             -               -
Bank loans                      58,750,000     10,000,000             -               -
                                85,228,113     27,598,085     5,350,033       1,112,005
Total equity and
liabilities                    302,660,798    180,513,751   113,254,897      39,657,787



CHINA MEDSTAR LIMITED AND ITS SUBSIDIARY

AUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

                                Attributable to equity holders of the parent
                                                              Share
                          Share    Statutory        Other   options   Translation   Accumulated
                        capital     reserves      reserve   reserve       reserve       profits         Total
                            RMB          RMB          RMB       RMB           RMB           RMB           RMB
GROUP
Balance as at 1
January 2005            502,513      539,723   17,450,811         -       135,453     9,713,522    28,342,022
Translation
difference                    -            -            -         -     1,408,680             -     1,408,680
Net income
recognised
directly in
equity                        -            -            -         -     1,408,680             -     1,408,680
Net profit for
the year                      -            -            -         -             -    24,679,988    24,679,988
Total recognised
income and
expense                       -            -            -         -     1,408,680    24,679,988    26,088,668
Transfer to
statutory
reserves                      -    3,136,783            -         -             -   (3,136,783)             -
Balance as at 31
December 2005           502,513    3,676,506   17,450,811         -     1,544,133    31,256,727    54,430,690
Translation
difference                    -            -            -         -       213,595             -       213,595
Net income
recognised
directly in
equity                        -            -            -         -       213,595             -       213,595
Net profit for
the year                      -            -            -         -             -     7,625,200     7,625,200
Total recognised
income and
expense                       -            -            -         -       213,595     7,625,200     7,838,795
Issue of share
capital during
the year             94,024,467            -            -         -             -             -    94,024,467
Conversion of
preference shares
to ordinary
shares               39,800,932            -            -         -   -                       -    39,800,932
Transfer to
statutory
reserves                      -    2,512,077            -         -             -   (2,512,077)             -
Share issue
expenses            (7,849,949)            -            -         -             -             -   (7,849,949)
Share options
expense                       -            -            -   158,142             -             -       158,142
Balance as at 31
December 2006       126,477,963    6,188,583   17,450,811   158,142     1,757,728    36,369,850   188,403,077



CHINA MEDSTAR LIMITED AND ITS SUBSIDIARY

AUDITED CONSOLIDATED CASH FLOW STATEMENT
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2006

                                                 Note         2006          2005
                                                               RMB           RMB
Cash flows from operating activities
Profit before income tax                                12,115,766    29,272,421
 
Adjustments for:
Depreciation of property, plant and equipment           18,963,275    11,214,375
Exchange loss arising from conversion of
Redeemable Convertible Preference Shares                   965,956             -
Intangible asset amortisation                               14,429             -
Interest expense                                         4,562,373     4,232,252
Share options expense                                      158,142             -
Provision for staff welfare benefit                        125,604       156,839
Operating profit before working capital changes         36,905,545    44,875,887
Inventories                                                582,743       366,251
Trade and other receivables                           (25,801,572)    12,540,644
Advances to suppliers and prepayments                 (31,355,349)  (18,853,500)
Trade and other payables                                 9,192,226     2,104,609
Utilisation of provision of staff welfare
benefit                                                  (302,128)             -
Cash (used in)/generated from operating
activities                                            (10,778,535)    41,033,891
Income tax paid                                        (3,687,171)   (5,759,615)
Net cash (used in)/generated from operating
activities                                            (14,465,706)    35,274,276
 
Cash flows from investing activities
Purchase of plant and equipment                       (35,592,680)  (32,214,994)
Purchase of intangible asset                             (173,150)             -
Cash deposits pledged with a bank                     (17,524,051)             -
Net cash used in investing activities                 (53,289,881)  (32,214,994)
 
Cash flows from financing activities
Proceeds from issue of share capital                    94,024,467             -
Share issue expenses paid                              (7,849,949)             -
Preference shares                                                -     7,213,483
Proceeds from bank loans                                44,410,000    45,000,000
Repayment of bank loans                               (28,052,500)             -
Repayment of finance leases                                      -  (53,850,000)
Interest paid                                          (4,562,373)   (4,232,252)
Net cash generated from/(used in) financing
activities                                              97,969,645   (5,868,769)
 
Net increase/(decrease) in cash and cash
equivalents                                             30,214,058   (2,809,487)
Cash and cash equivalents at beginning of year          14,879,195    17,984,182
Exchange differences on cash and cash
equivalents                                                213,595     (295,500)
Cash and cash equivalents at end of year                45,306,848    14,879,195


CHINA MEDSTAR LIMITED AND ITS SUBSIDIARY

NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2006

1. General

The Company is domiciled and incorporated in Singapore.

The principal activity of the Company is the holding of investments. The
registered office of the Company is at No. 80 Robinson Road, #11-02,
Singapore.

On 17 August 2006, the Company's name was changed from China Medstar (S) Pte.
Ltd. to China Medstar Pte. Ltd. On 23 November 2006, the Company converted
into a public limited company and changed its name to China Medstar Limited.

On 30 November 2006, the Company was admitted to the official list of the
Alternative Investment Market of the London Stock Exchange in the United
Kingdom.

The principal activities of the subsidiary, Shanghai Medstar Medical
Investment Management Limited Company, incorporated in Shanghai, People's
Republic of China, are the leasing and sale of medical equipment to hospitals.

The financial statements of the Company and its subsidiary ("the Group") for
the year ended 31 December 2006 were authorised for issue by the Board of
Directors on 22 June 2007 and the balance sheets were signed on the board's
behalf by Dr. Cheng Zheng and Yap Yaw Kong.

2. Accounting policies

(a) Basis of preparation

 The consolidated financial statements have been prepared in
accordance with the provisions of the Singapore Companies Act, Cap. 50 (the
"Act") and International Financial Reporting Standards ("IFRS") issued by the
International Accounting Standards Board ("IASB"). The Company has received
approval from the Accounting and Corporate Regulatory Authority of Singapore
to prepare its financial statements in accordance with IFRS instead of the
Singapore Financial Reporting Standards as required by the Act. These policies
have been consistently applied by the Group and the Company and are consistent
with those used in the previous financial year.

 The consolidated financial statements have been prepared in
accordance with the historical cost convention except as disclosed in the
accounting policies below.

 The financial statements are presented in Renminbi (RMB), which is
also the Group's functional currency.

By virtue of Section 201(15) of the Act, the Company is required to
present the balance sheet of the Company, which is not a requirement under
IFRS.

 In 2006, the Group adopted all the new and revised IFRS and IFRIC
Interpretations that are relevant to its operations and effective for annual
periods beginning on or after 1 January 2006.

 The adoption of these new and revised IFRS and IFRIC
Interpretations did not result in substantial changes to the Group's
accounting policies.

New standards and interpretations issued but not yet effective

 The IASB and IFRIC have issued the following standards and
interpretations effective for annual periods beginning on or after the date of
these financial statements:

International Accounting Standards (IAS/IFRSs): Effective date (annual periods
beginning on or after)

IAS 1 Amendment - Presentation of Financial Statements (Capital Disclosures):

1 January 2007

IAS 23 (revised) - Borrowing costs: 1 January 2009

IFRS 7 Financial Instruments: Disclosures: 1 January 2007

IFRS 8 Operating segments: 1 January 2009

International Financial Reporting Interpretations Committee (IFRIC): Effective
date (annual periods beginning on or after)

IFRIC 8 Scope of IFRS 2 Share-based Payment: 1 May 2006

IFRIC 9 Reassessment of Embedded Derivatives: 1 June 2006

IFRIC 10 Interim Financial Reporting and Impairment: 1 November 2006

IFRIC 11 Group and Treasury Share Transactions: 1 March 2007

IFRIC 12 Service Concession Arrangements: 1 January 2008

The amendment to IAS 1 requires the Group to make new disclosures
to enable users of the financial statements to evaluate the Group's
objectives, policies and processes for managing capital.

 Upon adoption of IFRS 7, the Group will have to disclose
additional information about its financial instruments, their significance and
the nature and extent of risks that they give rise to. More specifically, the
Group will need to disclose the fair value of its financial instruments and
its risk exposure in greater detail. There will be no effect on reported
income or net assets.

 IFRS 8's core principle is that an entity should disclose
information to enable users of its financial statements to evaluate the nature
and financial effects of the types of business activities in which it engages
and the economic environments in which it operates. IFRS 8 requires operating
segments to be identified on the basis of internal reports about components of
the entity that are regularly reviewed by the chief operating decision maker
in order to allocate resources to the segment and to assess its performance.
The Group considers that there is likely to be little change on the segment
information on the application of IFRS 8.

 Except for the above, the Directors do not anticipate that the
adoption of these standards and interpretations will have a material impact on
the Group's financial statements in the period of initial application.

b) Revenue recognition

 Revenue of the subsidiary company is derived from the leasing of
medical equipment and is recognised upon receipt of a monthly statement of net
results from the hospitals with which the subsidiary company has a contractual
relationship. The net results are shared between the subsidiary company and
the respective hospitals in accordance with the terms and conditions of the
contracts.

 Provided it is probable that the economic benefits will flow and
the revenue and costs can be measured reliably, revenue from sale of equipment
is recognised when the significant risks and rewards of the ownership of goods
have been transferred to the buyers, which generally coincides with the
delivery and acceptance of the equipment.

 Any income not relating to the accounting period is carried
forward on the balance sheet as deferred income.

 Interest income is accrued on a time basis, by reference to the
principal outstanding and at the effective interest rate applicable.

 Subsidy income is accrued when the right to receive the income has
been established and the inflow of economic benefits is probable.

(c) Leasing

 Leases are classified as finance leases whenever the terms of the
lease transfer substantially all the risks and rewards of ownership to the
lessee. All other leases are classified as operating leases.

 As lessee

 Finance leases

 Assets held under finance leases are recognized as assets at their
fair value at the inception of the lease or, if lower, at the present value of
the minimum lease payments. The corresponding liability to the lessor is
included in the balance sheet as a finance lease obligation. Lease payments
are apportioned between finance charges and reduction of the lease obligation
so as to achieve a constant rate of interest on the remaining balance of the
liability. Finance charges are charged to income statement.

 Operating leases

 Leases of assets in which a significant portion of the risks and
rewards of ownership are retained by the lessor are classified as operating
leases. Payments made under operating leases (net of any incentives received
from the lessor) are taken to the income statement on a straight-line basis
over the period of the lease.

 When an operating lease is terminated before the lease period has
expired, any payment required to be made to the lessor by way of penalty is
recognized as an expense in the period in which termination takes place.

The definition of a lease includes contracts for the hire of an
asset which contain a provision giving the hirer an option to acquire title to
the asset upon the fulfilment of agreed conditions. These contracts are
sometimes known as hire purchase contracts.

 As lessor

Operating leases

 Rental income (net of any incentives given to lessees) from assets
other than medical equipments, if any, is recognised on a straight-line basis
over the lease term. Assets leased out under operating leases are included in
property, plant and equipment. Initial direct costs incurred by lessors in
negotiating and arranging an operating lease are added to the carrying amount
of the leased asset and recognised as an expense over the lease term on the
same basis as the lease income.

 Contingent rents are recognised as revenue in the period in which
they are earned.

 Refer to Note 2(b) for revenue recognition policy for operating
leases of medical equipment.

(d) Significant accounting judgements, estimates and assumptions

The preparation of the financial information requires management to
exercise judgement in the process of applying the Group's accounting policies
and requires the use of accounting estimates and assumptions. Although these
estimates are based on management's best knowledge of current events and
actions, actual results may differ from those estimates. The main areas that
require significant accounting estimates and assumptions are discussed below.

 (i) Depreciation of property, plant and equipment

 The depreciable costs of these assets are allocated on a
straight-line basis over the estimated useful lives of the assets. Management
estimates the useful lives of these assets to be within 3 to 17 years. The
carrying amount of the Group's property, plant and equipment as at 31 December
2006 was RMB148,320,470 (2005: RMB131,691,065). Changes in expected level of
usage, technological developments, government regulations and industrial
circumstances could impact the economic useful lives and the residual values
of these assets and therefore future depreciation charges could be revised.

(ii) Impairment of property, plant and equipment

An assessment is made at each reporting date on whether there is
any indication that the assets may be impaired. If any such indication exists,
an estimate is made of the recoverable amount of the asset. The recoverable
amounts of assets or cash-generating units ("CGU") will be determined based on
value-in-use calculations. These calculations require the use of estimates.

Management's assessment of whether there is any indication of
impairment on property, plant and equipment is based on the estimation of the
expected future cash flows for a period of up to 2 years, taking into
consideration factors such as past performance and the management's
expectation of the market development. The carrying amount of property, plant
and equipment was RMB 148,320,470 (2005: RMB 131,691,065) as at the balance
sheet date.

(iii) Income taxes

The Group has exposure to income taxes in Singapore and China.
There are certain transactions and computations for which the ultimate tax
determination is uncertain. The Group recognises liabilities for expected tax
issues based on estimates of whether additional taxes will be due. Where the
final tax outcome of these matters is different from the amounts that were
initially recognised, such differences will impact the income tax provisions
for the period in which such determination is made. The carrying amount of the
Group's income tax liabilities at 31 December 2006 was RMB3,476,248 (2005:
RMB1,839,814).

(iv) Deferred tax assets

Deferred tax assets are recognised to the extent that it is probable that the
taxable profit will be available against which the deferred tax asset
recognised can be utilised. Management's judgement is required to determine
the amount of deferred tax assets that can be recognised, based upon the
likely timing and level of future tax planning strategies. The carrying amount
of the recognised deductible temporary differences as at 31 December 2006 was
RMB 1,322,238 (2005: RMB 489,199). The management is of the view that these
deferred tax assets are considered to be fully recoverable based on
anticipated future profitability of the Group.

(v) Impairment of trade and other receivables

The determination of whether these financial assets are impaired requires
judgement to be exercised by the management. The management has to consider
factors, among others, financial position of the customers and the performance
of the industry and sector in which the customers are operating. These factors
affect the judgement made by the management in their assessment of impairment
of the trade and other receivables balances.

3. Change in accounting estimates

During the financial year, the Group carried out an annual review on the
useful lives, depreciation method and residual values of the Group's property,
plant and equipment. In the course of the review, the Directors noted changes
in the previous assumptions used in the estimation of the residual values of
the Group's medical equipment due to changes in market conditions and
customers' expectations. In view of these changes, the Directors reduced the
residual value of the Group's medical equipment from 10% of the cost of
equipment to nil. The change in the residual values has been applied
prospectively from the current financial year. This has led to the increase in
the remaining depreciable costs of the medical equipment and with the
remaining useful lives unchanged, it has the effect of increasing the annual
depreciation charge from the current financial year onwards.

The change in the above accounting estimate has resulted in an increase in the
depreciation charge of RMB 2,317,045 and a corresponding decrease in the
profit before income tax of the Group for the current financial year. The
decrease in the profit before income tax of the Group arising from this change
would be in the range of RMB 53,257 to RMB 2,568,398 for the next 11 years.

4. Segment information

 The principal activities of the Group are leasing and sale of
medical equipment which are considered by the Directors to be one segment in
the "PRC" only.

Accordingly, no business and geographical segment analysis is required.

5. Revenue

                                                                     Group
                                                                  2006           2005
                                                                   RMB            RMB
 
Equipment leasing (rendering of service)                    58,811,736     50,887,539
Sale of goods                                               24,107,349     16,743,932
Sales tax                                                  (2,765,502)    (2,703,580)
                                                            80,153,583     64,927,891
 
6. Profit before income tax

                                                                                                Group
                                                                                             2006          2005
                                                                                              RMB           RMB
The above is arrived at after charging:
Amortisation of intangible asset                                                           14,429             -
Cost of inventories recognised as expenses                                             18,342,785    12,163,908
Depreciation of property, plant and equipment                                          18,963,275    11,214,375
Foreign exchange loss                                                                     965,956             -
Lease payments under operating leases of buildings                                        937,301       838,349
Allowance for impairment of doubtful receivables (non-trade)                              130,000        23,274
Foreign exchange loss

Foreign exchange loss arose from conversion of the redeemable
convertible preference shares to ordinary shares.

7. 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
                                                                   2006          2005
                                                                    RMB           RMB
 
Basic earnings per share                                           0.57          2.47
 
The calculation of the basic earnings per share is based on:
 
Net profit attributable to equity holders                     7,625,200    24,679,988
Weighted average number of fully paid
ordinary shares issued during the financial year             13,263,499    10,000,000


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.

For 2005, Redeemable Convertible Preference Shares were assumed to
have been converted into ordinary shares.

For 2006, 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 2006 was below the exercise price of the share
option granted.

                                                                      Group
                                                                   2006          2005
                                                                    RMB           RMB
 
Diluted earnings per share                                         0.57          1.83
 
The calculation of the basic earnings per share is based on:
 
Net profit attributable to equity holders                     7,625,200    24,679,988
Weighted average number of fully paid
ordinary shares issue during the financial year              13,263,499    10,000,000
Effect of dilution arising from RCPS                                  -     3,500,003
Weighted average number of ordinary shares
adjusted for effect of dilution                              13,263,499    13,500,003
8. Property, plant and equipment

                                    Fixtures
                           Medical       and    Leasehold Assets under
Group                    equipment equipment improvements construction       Total
                               RMB       RMB          RMB          RMB         RMB
2006
Cost
Balance as at 1        141,246,742   143,894      216,408   13,689,000 155,296,044
January 2006
Additions                  982,380    12,300            -   34,598,000  35,592,680
Transfers               48,287,000         -            - (48,287,000)           -
Balance as at 31       190,516,122   156,194      216,408            - 190,888,724
December 2006
 
Accumulated
depreciation
Balance as at 1         23,333,047    55,524      216,408            -  23,604,979
January 2006
Depreciation charge     18,934,497    28,778            -            -  18,963,275
for the year
Balance as at 31        42,267,544    84,302      216,408            -  42,568,254
December 2006
 
Net book value
As at 31 December 2006 148,248,578    71,892            -            - 148,320,470

2005

Cost

Balance as at 1 January  90,170,263  120,719      216,408   32,573,660 123,081,050
2005
Additions                 8,143,119   23,175            -   24,048,700  32,214,994
Transfers                42,933,360        -            - (42,933,360)           -
Balance as at 31        141,246,742  143,894      216,408   13,689,000 155,296,044
December 2005
 
Accumulated
depreciation
Balance as at 1 January  12,145,372   28,849      216,408            -  12,390,629
2005
Depreciation charge for  11,187,675   26,700            -            -  11,214,375
the year
Exchange difference               -     (25)            -            -        (25)
Balance as at 31         23,333,047   55,524      216,408            -  23,604,979
December 2005
 
Net book value
As at 31 December 2005  117,913,695   88,370            -   13,689,000 131,691,065
As at 31 December 2004   78,024,891   91,870            -   32,573,660 110,690,421


9. Preference shares

                                             Group and Company
                                       2006                       2005
                                Number of       Amount    Number of     Amount
                                     RCPS          RMB         RCPS        RMB
 
Balance as at 1 January
Class A redeemable              5,333,337      264,590    3,333,336    167,503
convertible preference
shares ("RCPS")
Premium of Class A RCPS                 -   39,424,172            - 24,958,145
 
Issued during the year
 
(a) Class A RCPS of SGD 0.01
each                                    -            -    2,000,001     97,087
 
(b) Premium of Class A RCPS
from (a)                                -            -            - 14,466,027
 
(c) Exchange difference                 -    (853,786)            -  (853,786)
 
(d) Conversion to ordinary
shares
 
during the year               (5,333,337) (38,834,976)            -          -
 
Balance at 31 December                  -            -    5,333,337 38,834,976

10. Bank loans

                                                        Group
                                                     2006          2005
                                                      RMB           RMB
 
The borrowings are repayable as follows:
 
On demand within one year                      58,750,000    10,000,000
From second to fifth year                      27,257,500    59,650,000
                                               86,007,500    69,650,000



END