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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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China Med | LSE:CMDS | London | Ordinary Share | SG9999002489 | ORD NPV (DI) |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 57.00 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
China Medstar Limited Interim results for the six months ended 30 June 2007 China Medstar Limited ("Medstar" or ""Group") is a specialist healthcare provider of radiotherapy and diagnostic equipment for the diagnosis and treatment of cancer to hospitals in China. The Group enables medical care to be provided through the provision of financing, equipment and support services to First Tier hospitals in China. The Group currently operates 17 medical centres in ten cities. SIX MONTHS HIGHLIGHTS - Revenue of the Group increased by 10.3% to RMB 31.6million (2006: RMB 28.6million) - Gross Profit has increased by 5.3% to RMB 19.5million (2006: RMB 18.6million) - 2 new centre openings, with a further 6 diagnostic and treatment centres to be opened this year, bringing the total number of centres to 21 diagnostic and treatment centres, 2 high intensity focused ultrasound ("HIFU") centres and 1 Leksell Knife Centre - Strong pipeline of further openings, with 8 signed contracts including those set out above Post period end - In discussions with Varian Medical to form strategic partnership for their new Linear Accelerator equipment in China - In the process of applying for a finance lease license which will enable the Group to have the potential to offer another business model to hospitals - Key equipment sale identified and to be negotiated in second half of financial year Dr. Cheng Zheng, Chairman and CEO, commented: "As seen in previous years the Group has a large financial second half bias. While the performance of the Group has not met expectations for the first half of the year the Directors are confident that with a keen focus on costs and a number of centres identified for opening the Group can achieve satisfactory results for 2007 and position the Group for growth in 2008." 28 September 2007 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 Nexus Financial Ltd Tel: +44 (0) 20 7451 7050 Nicholas Nelson/Kathy Boate The Directors are responsible for the preparation of the interim statement as required by the AIM Rules issued by the London Stock Exchange. The interim statement, including the financial information contained therein prepared and presented in accordance with the International Accounting Standards 34 - Interim Financial Reporting ("IAS 34"), is the responsibility of, and has been approved by the Directors. CHAIRMAN AND CHIEF EXECUTIVE OFFICER'S STATEMENT On 7th September 2007, the Group announced a trading update stating that revenues for the current financial year would fall below market expectations. The reasons for this as outlined in the trading update are repeated in the Financial Summary below. The Directors however do not believe that these issues detract from the underlying prospects and quality of the business. Business Summary Medstar provides private financing to hospitals to solve the funding shortfall caused by a decrease in state government investment into hospital development. This comes at a time when demand for radiotherapy equipment is high and cancer rates in China are rising. Medstar is able to purchase advanced treatment and diagnostic equipment and finance the establishment of medical centres. In return the Group receives revenue through profit sharing leasing agreements with the hospitals. In addition to this equipment leasing and profit sharing agreements, the Group also sells equipment directly to hospitals. The Group was admitted to the Alternative Investment Market of the London Stock Exchange (AIM) in November 2006. There has been a good response from hospitals to the Group's business model as it aims to minimize the risks associated with setting up a new medical centre. The Directors believe it also provides the hospital with a fully integrated operational solution to maximise the returns from the medical centre, while allowing the hospital to continue to treat patients without the distraction of sourcing and maintaining equipment. As part of the leasing arrangements, the Group provides a number of management services to the medical centres following the acquisition/lease of the medical equipment. This includes system purchase and installation, centre start-up, operational management and business development. The Directors believe that these management services are a benefit to the hospitals which, as state-owned enterprises, have not previously been operating with a view to generating revenues. Consequently, their personnel have limited to no experience in running the business as a revenue generating centre. The ability of the Group to co-ordinate the system installation, provide detailed day-to-day operational procedures and promote the medical centre to assist in building its patient base, are services which the Directors believe are valued by the hospitals. Furthermore, by its involvement, the Group can seek to ensure the medical centre is being operated profitably and achieves growth targets which will provide higher returns to both the hospital and the Group under its profit sharing arrangements. As a service provider to the hospitals, the Group is not involved in the provision of medical services or in the treatment of patients in the centres, nor involved in the day-to-day management of the centres, which is the ultimate responsibility of the hospital. Financial Summary Revenue increased by 10.3% to RMB 31,588,226(2006: RMB 28,641,382) compared to same period last year, while Gross Profit increased by 5.3%. During the period, the Group was forced to enter into discussions with a hospital concerning a default in payment to the Group from an existing contract with a diagnostic and treatment centre. Due to these discussions, Medstar has not yet been able to recognise the revenue from this centre of RMB 3,105,766. As a result of this, both gross and operating margins have been affected as the cost, but not the revenue, of the centre in question has been recognised. The Directors are working towards a resolution of this matter and will keep shareholders informed. In some older centres in operation, revenue has not been increasing as had been forecast due to the after effects from last year's Ministry of Health initiative to remove inefficiencies relating to the over treatment of patients. The result has been that certain hospital administrators are cautious and have tightened the selection procedure for patients for permitted operations. The lease revenue from these centres, as a result, has decreased although we are hopeful of a return to more favourable conditions in due course. Trading margins were also affected due to the slippage of an order of a 64 CT Scanner, due to a hospital delay in obtaining the permit for acquisition from the government, but it is hoped that this will be finalised in the second half of this year. The increase in operating and administrative expenses by 188% to RMB 11,138,419 (2006: RMB 3,873,090) is in part a direct reflection of the increased central office costs following the admission to AIM. However, as announced in the recent trading update, the Group is going to institute a cost control programme to be monitored by the non-executive directors alongside the finance director. This increase in expenses, coupled with additional medical equipment depreciation arising from the change in accounting estimate for depreciation, has led to a decrease in net profit to RMB4,117,020 (2006: RMB 10,450,345) for the Group in the period under review. Review of Operations The first six months of the financial year have seen two new centre openings, namely the PET-CT diagnostic centre with the Beijing Navy Hospital and a Leksell Knife centre with Guangzhou 458 Air force Hospital. There is an encouraging pipeline of further centre openings for the remainder of the year, with signed contracts for eight diagnostic and treatments centres. As a result the Directors expect to open six new diagnostic and treatment centres in 2007 and a further HIFU centre, bringing the total number in operation to 21 diagnostic and treatment centres and 2 HIFU centres by the end of the year. In addition, the Group's Trading Division is currently in advanced negotiations on two equipment sales and will actively pursue additional opportunities. In addition to the signed agreements for new centre openings in 2007, the Group also signed key strategic agreements with Toshiba China for the distribution and leasing of its imaging products, and with GE Healthcare China for its latest HDeMRI scanner. Discussions are under way with Varian Medical to form a strategic alliance for distribution of their Linear Accelerators which the Directors are hoping to finalise in the second half of this year. The Group is actively seeking out further contracts to open diagnostic and treatment centres and is confident its leasing arrangements will continue to prove attractive to hospitals lacking the funding to secure radiotherapy equipment. In addition to the eight signed contracts mentioned, there are a number of others currently in discussion or with a signed letter of intent. Outlook As seen before due to the seasonality of the centres' revenue where it would be lower in the first half of the financial year, mainly due to the major festive seasons and long holidays such as Chinese Lunar New Year and week-long Labour Day falling on the first half of the calendar year which usually sees less patients visiting the centres for treatments, there will be a strong second half bias to the results. The Directors are hopeful that by focusing on controlling and where possible, reducing operating and administrative costs without adversely affecting the Group's expansion plans, the Group can position itself for strong growth in the second half of the current financial year and in 2008. Furthermore, the Directors are confident that if the contract discussions in relation to the default in payment can be resolved, key equipment sales are made and additional revenue from the new diagnostic and treatment centres is as forecast, the Group will finish the year in a much stronger position. Dr. Cheng Zheng Chairman and CEO 28 September 2007 CHINA MEDSTAR LIMITED AND ITS SUBSIDIARY CONSOLIDATED INCOME STATEMENT FOR THE FINANCIAL PERIOD FROM 1 JANUARY 2007 TO 30 JUNE 2007 (Unaudited) (Unaudited) (Audited) 1.1.2007 1.1.2006 1.1.2006 to to to 30.06.2007 30.6.2006 31.12.2006 NOTE RMB RMB RMB Revenue 6 31,588,226 28,641,382 80,153,583 Cost of sales (12,051,204) (10,096,304) (37,609,236) Gross profit 19,537,022 18,545,078 42,544,347 Other income 1,444,671 288,639 3,591,149 Other expenses (413,000) (200,000) (17,270,684) Selling and distribution expenses (651,884) (217,982) (912,567) General and administrative expenses 7 (11,138,419) (3,873,090) (11,274,106) Profit from operations 8,778,390 14,542,645 16,678,139 Finance costs (2,912,027) (2,134,754) (4,562,373) Profit before income tax 5,866,363 12,407,891 12,115,766 Income tax expense (1,749,343) (1,957,546) (4,490,566) Net profit attributable to equity holders of the parent 4,117,020 10,450,345 7,625,200 Earnings per share(RMB) 8 Basic 0.31 1.05 0.57 Diluted 0.31 0.68 0.57 CHINA MEDSTAR LIMITED AND ITS SUBSIDIARY CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2007 (Unaudited) (Unaudited) (Audited) 30.6.2007 30.6.2006 31.12.2006 NOTE RMB RMB RMB ASSETS Non-current assets Property, plant and equipment 9 154,433,037 124,911,289 148,320,470 Intangible asset 141,406 167,150 158,721 Deferred tax assets 1,794,957 697,224 1,322,238 Trade and other receivables 15,351,089 - 16,271,557 171,720,489 125,775,663 166,072,986 Current assets Inventories 151,160 1,162,452 310,018 Trade and other receivables 82,131,428 17,154,507 19,563,546 Advances to suppliers and prepayments 18,777,648 41,650,400 53,883,349 Cash and bank balances 10 29,731,357 987,923 62,830,899 130,791,593 60,955,282 136,587,812 Total assets 302,512,082 186,730,945 302,660,798 EQUITY AND LIABILITIES Capital and reserves attributable to equity holders of the parent Share capital 126,477,963 502,513 126,477,963 Statutory reserves 7,148,163 4,764,688 6,188,583 Other reserve 17,450,811 17,450,811 17,450,811 Share options reserve 1,102,530 - 158,142 Translation reserve 1,757,728 267,899 1,757,728 Accumulated profits 39,527,290 40,618,890 36,369,850 193,464,485 63,604,801 188,403,077 Non-current liabilities Preference shares - 40,100,276 - Bank loans 11 43,220,000 57,610,000 27,257,500 Trade and other payables 1,833,513 - 1,772,108 45,053,513 97,710,276 29,029,608 Current liabilities Trade and other payables 12,752,263 9,035,708 20,527,581 Provision for staff welfare benefit 20,054 180,230 250,176 Income tax liabilities 2,523,595 2,713,912 3,476,248 Other tax liabilities 1,292,868 836,018 2,224,108 Bank loans 11 47,405,304 12,650,000 58,750,000 63,994,084 25,415,868 85,228,113 Total equity and liabilities 302,512,082 186,730,945 302,660,798 CHINA MEDSTAR LIMITED AND ITS SUBSIDIARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL PERIOD FROM 1 JANUARY 2007 TO 30 JUNE 2007 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 (Unaudited) Balance as at 1 January 2007 126,477,963 6,188,583 17,450,811 158,142 1,757,728 36,369,850 188,403,077 Net profit for the period - - - - - 4,117,020 4,117,020 Total recognised income and expense - - - - - 4,117,020 4,117,020 Share option expenses - - - 944,388 - - 944,388 Transfer to statutory reserves - 959,580 - - - (959,580) - Balance as at 30 June 2007 126,477,963 7,148,163 17,450,811 1,102,530 1,757,728 39,527,290 193,464,485 (Unaudited) Balance as at 1 January 2006 502,513 3,676,506 17,450,811 - 1,544,133 31,256,727 54,430,690 Translation difference - - - - (1,276,234) - (1,276,234) Net expense recognised directly in equity - - - - (1,276,234) - (1,276,234) Net profit for the period - - - - - 10,450,345 10,450,345 Total recognised income and expense - - - - (1,276,234) 10,450,345 9,174,111 Transfer to statutory reserves - 1,088,182 - - - (1,088,182) - Balance as at 30 June 2006 502,513 4,764,688 17,450,811 - 267,899 40,618,890 63,604,801 CHINA MEDSTAR LIMITED AND ITS SUBSIDIARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL PERIOD FROM 1 JANUARY 2007 TO 30 JUNE 2007 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 (Audited) Balance as at 1 January 2006 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 CONSOLIDATED CASH FLOW STATEMENT FOR THE FINANCIAL PERIOD FROM 1 JANUARY 2007 TO 30 JUNE 2007 (Unaudited) (Unaudited) (Audited) 1.1.2007 1.1.2006 1.1.2006 to to to 30.6.2007 30.6.2006 31.12.2006 RMB RMB RMB Cash flows from operating activities Profit before income tax 5,866,363 12,407,891 12,115,766 Adjustments for: Depreciation of property, plant and equipment 11,628,121 7,639,886 18,963,275 Exchange loss arising from conversion of Redeemable Convertible Preference Shares - - 965,956 Intangible asset amortisation 17,315 - 14,429 Interest expense 2,912,027 2,134,754 4,562,373 Loss on disposal of property, plant and equipment 413,000 - - Share options expense 944,388 - 158,142 Provision for staff welfare benefit 47,979 54,409 125,604 Operating profit before working capital changes 21,829,193 22,236,940 36,905,545 Inventories 158,858 (269,691) 582,743 Trade and other receivables (61,647,414) (5,535,677) (25,801,572) Advances to suppliers and prepayments 35,105,701 (19,122,400) (31,355,349) Trade and other payables (8,645,153) (7,281,587) 9,192,226 Utilisation of provision of staff welfare benefit (278,101) - (302,128) Cash used in operating activities (13,476,916) (9,972,415) (10,778,535) Income tax paid (3,174,715) (1,291,472) (3,687,171) Net cash used in operating activities (16,651,631) (11,263,887) (14,465,706) Cash flows from investing activities Proceeds from disposal of plant and equipment 152,815 - - Purchase of plant and equipment (18,306,503) (859,880) (35,592,680) Purchase of intangible asset - (167,150) (173,150) Cash deposits pledged with a bank 7,423,747 - (17,524,051) Net cash used in investing activities (10,729,941) (1,027,030) (53,289,881) Cash flows from financing activities Proceeds from issue of share capital - - 94,024,467 Share issue expenses paid - - (7,849,949) Proceeds from bank loans 31,296,250 5,610,000 44,410,000 Repayment of bank loans (26,678,446) (5,000,000) (28,052,500) Interest paid (2,912,027) (2,134,754) (4,562,373) Net cash generated from/(used in) financing activities 1,705,777 (1,524,754) 97,969,645 Net (decrease)/increase in cash and cash equivalents (25,675,795) (13,815,671) 30,214,058 Cash and cash equivalents at beginning of year 45,306,848 14,879,195 14,879,195 Exchange differences on cash and cash equivalents - (75,601) 213,595 Cash and cash equivalents at end of year (Note 10) 19,631,053 987,923 45,306,848 CHINA MEDSTAR LIMITED AND ITS SUBSIDIARY NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD FROM 1 JANUARY 2007 TO 30 JUNE 2007 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 068898. 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. On 22 January 2007, the name of the subsidiary was changed from Shanghai Medstar Medical Investment Management Limited Company to Medstar (Shanghai) Leasing Co., Ltd. The principal activities of the subsidiary, which is incorporated in Shanghai, People's Republic of China, are the leasing and sale of medical equipment to hospitals. The interim financial statements of the Company and its subsidiary ("the Group") for the financial period ended 30 June 2007 were authorised for issue by the Board of Directors on 28 September 2007 and the balance sheets were signed on the board's behalf by Dr. Cheng Zheng and Yap Yaw Kong. 2. Basis of preparation The interim financial statements for the financial period ended 30 June 2007 have been prepared in accordance with International Accounting Standard 34 - Interim Financial Reporting ("IAS 34"). The interim financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual financial statements for the financial year ended 31 December 2006. 3. Accounting policies The same accounting policies and methods of computation adopted in the most recently audited financial statements for the financial year ended 31 December 2006 have been applied to these interim financial statements except that in the current interim period, the Group has adopted all of the new and revised standards and interpretations issued by the International Accounting Standards Board ("IASB") and the International Financial Reporting Interpretations Committee ("IFRIC") of the IASB that are relevant to its operations and effective for accounting periods beginning on or after 1 January 2007. The adoption of the new and revised standards and interpretations did not result in significant changes to the Group's accounting policies or the amounts or disclosures in these interim financial statements. The financial statements for the financial year ended 31 December 2006 were audited and the report dated 22 June 2007 expressed an unqualified opinion on those statements. The financial information for the six-month comparative period ended 30 June 2006 has been extracted from the prospectus prepared for the purpose of the Company's admission to the official list of the Alternative Investment Market of the London Stock Exchange in the United Kingdomon 30 November 2006. 4. Change in accounting estimates In the previous financial year, the Group had changed its accounting estimate in relation to the residual values of the Group's medical equipment due to changes in market conditions and customers' expectations. The change has resulted in an increase in the depreciation charge of RMB 2,317,045 and RMB 1,532,087 with a corresponding decrease in the profit before income tax of the Group for the financial year ended 31 December 2006 and for the financial period ended 30 June 2007 respectively. 5. 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. 6. Revenue (Unaudited) (Unaudited) (Audited) 1.1.2007 1.1.2006 1.1.2006 to to to 30.6.2007 30.6.2006 31.12.2006 RMB RMB RMB Equipment leasing (rendering of service) 32,694,905 27,114,217 58,811,736 Sale of goods 536,239 2,692,950 24,107,349 Sales tax (1,642,918) (1,165,785) (2,765,502) 31,588,226 28,641,382 80,153,583 7. General and administrative expenses (Unaudited) (Unaudited) (Audited) 1.1.2007 1.1.2006 1.1.2006 to to to 30.6.2007 30.6.2006 31.12.2006 RMB RMB RMB Staff costs 3,016,563 1,595,858 5,547,820 Directors' fees 1,297,116 - - Foreign exchange losses 617,559 - 965,956 Lease payments under operating leases of building 979,878 436,432 937,301 Professional fees 2,863,939 49,032 1,361,277 Share option expense 944,388 - 158,142 Others 1,418,976 1,791,768 2,303,610 11,138,419 3,873,090 11,274,106 8. 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 period as follows: (Unaudited) (Unaudited) (Audited) 1.1.2007 1.1.2006 1.1.2006 to to to 30.6.2007 30.6.2006 31.12.2006 RMB RMB RMB Basic earnings per share 0.31 1.05 0.57 The calculation of the basic earnings per share is based on: Net profit attributable to equity holders 4,117,020 10,450,345 7,625,200 Weighted average number of fully paid ordinary shares issued during the financial year 13,263,499 10,000,000 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 period/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 the financial period ended 30 June 2006, Redeemable Convertible Preference Shares were assumed to have been converted into ordinary shares. All the 872,853 share options granted on 27 November 2006 did not have a dilutive effect on the Group's earnings per share as at 31 December 2006 and 30 June 2006 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 30 June 2007 was below the exercise price of the share option granted. (Unaudited) (Unaudited) (Audited) 1.1.2007 1.1.2006 1.1.2006 to to to 30.6.2007 30.6.2006 31.12.2006 RMB RMB RMB Diluted earnings per share 0.31 0.68 0.57 The calculation of the basic earnings per share is based on: Net profit attributable to equity holders 4,117,020 10,450,345 7,625,200 Weighted average number of fully paid ordinary shares issued during the financial year 13,263,499 10,000,000 13,263,499 Effect of dilution arising from RCPS - 5,333,337 - Weighted average number of ordinary shares adjusted for effect of dilution 13,263,499 15,333,337 13,263,499 9. Property, plant and equipment Medical Fixtures and Leasehold Assets under equipment equipment improvements construction Total RMB RMB RMB RMB RMB (Unaudited) 30 June 2007 Cost Balance as at 1 January 2007 190,516,122 156,194 216,408 - 190,888,724 Additions 17,651,075 127,500 527,928 - 18,306,503 Disposals (669,000) - - - (669,000) Balance as at 30 June 2007 207,498,197 283,694 744,336 - 208,526,227 Accumulated depreciation Balance as at 1 January 2007 42,267,544 84,302 216,408 - 42,568,254 Depreciation charge for the period 11,574,316 18,610 35,195 - 11,628,121 Disposals (103,185) - - - (103,185) Balance as at 30 June 2007 53,738,675 102,912 251,603 - 54,093,190 Net book value As at 30 June 2007 153,759,522 180,782 492,733 - 154,433,037 (Unaudited) 30 June 2006 Cost Balance as at 1 January 2006 141,246,742 143,894 216,408 13,689,000 155,296,044 Additions 847,580 12,300 - - 859,880 Transfers 13,500,000 - - (13,500,000) - Exchange differences - 346 - - 346 Balance as at 30 June 2006 155,594,322 156,540 216,408 189,000 156,156,270 Accumulated depreciation Balance as at 1 January 2006 23,333,047 55,524 216,408 - 23,604,979 Depreciation charge for the period 7,627,763 12,123 - - 7,639,886 Exchange differences - 116 - - 116 Balance as at 30 June 2006 30,960,810 67,763 216,408 - 31,244,981 Net book value As at 30 June 2006 124,633,512 88,777 - 189,000 124,911,289 (Audited) 31 December 2006 Cost Balance as at 1 January 2006 141,246,742 143,894 216,408 13,689,000 155,296,044 Additions 982,380 12,300 - 34,598,000 35,592,680 Transfers 48,287,000 - - (48,287,000) - Balance as at 31 December 2006 190,516,122 156,194 216,408 - 190,888,724 Accumulated depreciation Balance as at 1 January 2006 23,333,047 55,524 216,408 - 23,604,979 Depreciation charge for the year 18,934,497 28,778 - - 18,963,275 Balance as at 31 December 2006 42,267,544 84,302 216,408 - 42,568,254 Net book value As at 31 December 2006 148,248,578 71,892 - - 148,320,470 Rental income is received from the leasing of the above mentioned Medical Equipment to the hospitals for medical treatment. As of 30 June 2007, bank loans of RMB 59,855,000 (30 June 2006: RMB 70,260,000 and 31 December 2006: RMB 71,007,500) were secured by way of mortgage over the Group's equipment with net book value of RMB 115,860,623 (30 June 2006: RMB 103,073,396 and 31 December 2006: RMB 125,461,724) and a mortgage over the equipment leased to Beijing Friendship Hospital with total invoice value no less than RMB 10,000,000 (31 December 2006: RMB 10,000,000). As of 30 June 2007, the net book value of the equipment was RMB 7,369,875 (31 December 2006: RMB 7,890,101). 10. Cash and bank balances (Unaudited) (Unaudited) (Audited) 30.06.2007 30.06.2006 31.12.2006 RMB RMB RMB Cash in hand 273,117 63,214 70,271 Cash at bank 28,458,240 924,709 54,260,628 Guarantee money for bank acceptance 1,000,000 - 8,500,000 deposits Cash and bank balances as per consolidated balance sheet 29,731,357 987,923 62,830,899 Less: Pledge of cash deposit to secure banking facilities for the subsidiary (10,100,304) - (17,524,051) Cash and cash equivalents as per consolidated cash flow statement 19,631,053 987,923 45,306,848 11. Bank loans (Unaudited) (Unaudited) (Audited) 30.06.07 30.06.06 31.12.06 RMB RMB RMB The borrowings are repayable as follows: On demand within one financial year 47,405,304 12,650,000 58,750,000 (secured) From second to fifth financial year 43,220,000 57,610,000 27,257,500 (secured) 90,625,304 70,260,000 86,007,500 Following are the summaries of the above bank loans obtained from major banking institutions in People's Republic of China: (i) These loans carried interest rates ranging from 5.49% - 8.01% (30 June 2006: 5.49% - 8% and 31 December 2006: 5.58% - 8.75%) per annum, which are also the weighted average effective interest rates. (ii) These loans have an average maturity period of 1 - 35 months (30 June 2006 and 31 December 2006: 18 - 28 months) from the end of the financial period. (iii) These loans are secured by: (a) charges over certain of the Group's property, plant and equipment with net book value amounting to RMB115,860,623 (30 June 2006: RMB103,073,396 and 31 December 2006: RMB125,461,724); (b) charges over certain equipment of a related party with net book value amounting to RMB12,000,000 (30 June 2006 and 31 December 2006: RMB12,000,000); (c) the pledge of cash deposits of USD1,300,000 (30 June 2006: Nil and 31 December 2006: USD2,000,000) and RMB1,000,000 (30 June 2006: Nil and 31 December 2006: RMB2,000,000); (d) a mortgage over the equipment leased to Beijing Friendship Hospital with total invoice value no less than RMB10,000,000 (30 June 2006: Nil and 31 December 2006: 10,000,000); (e) the pledge of trade receivable balances due from Oriental Hepatobiliary Hospital and No.306 of the Chinese People's Liberation Army Hospital; and (f) guarantees from certain related parties, non-related parties, original investor and a Director of the Company (30 June 2006 and 31 December 2006: guaranteed by same entities). 12. Related party transactions (i) Related parties Name of the related parties Relationship Beijng Tengyuan Tongda Under the control of Directors of the Trading Company from Co., Ltd. 23 April 2004 to 1 January 2006 Beijing Medstar Hi-Tech Under the control of Directors of the Investment Co., Ltd. Company Beijing Medstar Hospital The same Directors as those of the Company Management Co., Ltd. CZY Investment Ltd. Major corporate shareholder of the Company The details of the related party information are disclosed in Sections (iii) and (iv) below. (ii) Key management personnel compensation Key management personnel compensation was as follows: (Unaudited) (Unaudited) (Audited) 1.1.2007 1.1.2006 1.1.2006 to to to 30.6.2007 30.6.2006 31.12.2006 RMB RMB RMB Salaries and other short term benefits 2,418,948 943,044 2,047,934 Post-employment benefits - contributions to defined contribution schemes 228,601 203,963 352,104 Share option expense 944,388 - 158,142 3,591,937 1,147,007 2,558,180 The remuneration disclosed above includes the remuneration of the Directors of RMB 2,026,644 (30 June 2006: RMB 465,686 and 31 December 2006: RMB 1,195,367) and other members of key management of the Group. Share options were granted to four executive Directors and certain key management personnel. (iii) Transactions In addition to related party transactions disclosed elsewhere in the interim financial statements, significant related party transactions during the financial period/year were as follows: (Unaudited) (Unaudited) (Audited) 1.1.2007 1.1.2006 1.1.2006 to to to 30.6.2007 30.6.2006 31.12.2006 RMB RMB RMB With a Director Payment made on behalf of the Group for expenses incurred in relation to Initial Public Offering - - 1,287,932 With related parties Advancement to: CZY Investment Ltd - - 47,876 Advancement from: Beijing Medstar Hi-Tech Company Limited - - 195,618 (iv) Guaranty As of 30 June 2007, a bank loan of RMB 26,000,000 (30 June 2006: RMB 36,000,000 and 31 December 2006: RMB 26,000,000) was guaranteed by Beijing Tengyuan Tongda Trading Co., Ltd. and Beijing Medstar Hi-Tech Medical Investment Co., Ltd. and secured by a charge over certain equipment of Beijing Tengyuan Tongda Trading Co., Ltd. amounting to RMB 12,000,000 (30 June 2006: RMB 12,000,000 and 31 December 2006: RMB 12,000,000). The Director, Mr. Cheng Zheng, guaranteed an aggregate bank loans of RMB 31,800,000 (30 June 2006: RMB 12,150,000 and 31 December 2006: RMB 25,050,000) granted to the subsidiary company (Note 11). 13. Capital commitments (Unaudited) (Unaudited) (Audited) 30.6.2007 30.6.2006 31.12.2006 RMB RMB RMB Capital expenditure contracted for at the balance sheet date 49,921,750 66,160,000 100,950,675 Less: Advances to suppliers (18,500,660) (41,650,400) (53,349,425) Capital commitments contracted but not provided for in the financial statements 31,421,090 24,509,600 47,601,250 14. Subsequent events On 4 July 2007, the Company has increased its investment in the subsidiary by USD 800,000. After the increase, the total paid up capital of the subsidiary will be USD 18,500,000. On 8 May 2007, the Board had approved the application to the local authority for the change in the scope of the principal activities of the subsidiary, primarily for the inclusion of finance leasing business operation. At the date of this announcement, this said application is still subject to the approval by the local authority. END
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