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China Medical Technologies Fourth Quarter and Full Year Financial Results
Monday June 18, 6:00 am ET
FY2006 Outlook Targets Exceeded


BEIJING--(BUSINESS WIRE)--China Medical Technologies, Inc. (the "Company") (Nasdaq: CMED - News), a leading China-based medical device company that develops, manufactures and markets advanced in-vitro diagnostic products and high intensity focused ultrasound tumor therapy system, today announced its unaudited financial results for the fourth quarter ("4Q FY2006") and full year of the fiscal year ended March 31, 2007 ("FY2006").
FY2006 Highlights

Net revenues increased by 47.1% year-over-year to RMB547.0 million (US$70.8 million) exceeding the high end of our targeted range of RMB533 million.
Net income increased by 45.6% year-over-year to RMB289.7 million (US$37.5 million) exceeding the high end of our targeted range of RMB271 million. Non-GAAP adjusted net income, as defined below, increased by 48.8% year-over-year to RMB309.9 million (US$40.1 million).
Diluted earnings per ADS* were RMB10.74 (US$1.39). Non-GAAP adjusted diluted earnings per ADS*, as defined below, were RMB11.44 (US$1.48).
Cash dividend of US$0.40 per ADS* was declared.
4Q FY2006 Highlights

Net revenues increased by 46.0% year-over-year to RMB163.1 million (US$21.1 million).
Net income increased by 21.3% year-over-year to RMB83.7 million (US$10.8 million). Non-GAAP adjusted net income, as defined below, increased by 37.2% year-over-year to RMB91.8 million (US$11.9 million).
Diluted earnings per ADS* were RMB3.11 (US$0.40). Non-GAAP adjusted diluted earnings per ADS*, as defined below, were RMB3.37 (US$0.44).
*One American Depositary Share ("ADS") = 10 ordinary shares

See "Non-GAAP Measure Disclosures" below, where the impact of certain items on reported results is discussed.

"The strong financial and operational progress we achieved in FY2006 is a direct result of the successful execution of our business strategy and our continuous commitments to our customers, shareholders and other stakeholders," commented Mr. Xiaodong Wu, Chairman and CEO of the Company. "Our ECLIA and HIFU operations continued to deliver robust results and we expect the launch of our FISH products and their sales in June to further solidify our position as a leading advanced in-vitro diagnostics company in China."

"Our performance exceeded our own targets and market consensus," commented Mr. Sam Tsang, CFO of the Company. "HIFU accounted for approximately 60% of our net revenues in FY2006. We expect that HIFU will maintain a steady growth while ECLIA will continue its growth momentum from increasing reagent revenue. We have integrated the FISH operation into our core business after completion of the acquisition in March 2007 and expect the diagnostic revenues from ECLIA and FISH will contribute more than half of our net revenues in FY 2007."

4Q FY2006 Financial Results

The Company reported net revenues of RMB163.1 million (US$21.1 million) for 4Q FY2006, representing a 46.0% increase from the corresponding period of FY2005.

The Company's revenues are currently generated from two product lines, ECLIA diagnostic systems and HIFU tumor therapy systems. ECLIA system sales include the sales of ECLIA analyzers and reagent kits.

ECLIA system sales for 4Q FY2006 were RMB65.9 million (US$8.5 million), representing a 74.3% increase from the corresponding period of FY2005. The year-over-year growth in the ECLIA system sales reflects rapid acceptance of the ECLIA technology in the medical community in China which in turn drove an increase in sales of reagent kits. Our robust growth in the sales of reagent kits in 4Q FY2006 was a direct result of strong customer reception of our reagents and the launch of more new reagents.

HIFU tumor therapy system sales for 4Q FY2006 were RMB97.2 million (US$12.6 million), representing a 31.6% increase from the corresponding period of FY2005. The year-over-year growth in this sector was driven primarily by an increase in unit sales resulting from an increased level of awareness and acceptance of the HIFU tumor therapy system in the medical community in China due to the Company's continued marketing efforts. The increase in selling price also contributed to the growth.

Gross margin increased to 73.2% for 4Q FY2006 as compared to 70.1% for the corresponding period of FY2005. This improvement in gross margin was primarily due to the price increase for the Company's HIFU tumor therapy system and higher revenue contribution from ECLIA reagents.

Research and development expenses were RMB8.0 million (US$1.0 million) for 4Q FY2006, representing a 56.8% year-over-year increase. The increase was primarily due to the HIFU-related medical study that is being conducted in partnership with the PRC Ministry of Health (the "MOH"), the pre-clinical trials on the Company's HIFU tumor therapy system that are being conducted in the United States for FDA pre-market approval and research collaboration with the Biomed-X Centre of Peking University.

Sales and marketing expenses were RMB5.4 million (US$0.7 million) for 4Q FY2006, representing a 33.6% year-over-year increase. The increase was primarily due to greater participation at exhibitions and more promotional events organized by the Company.

General and administrative expenses were RMB18.3 million (US$2.4 million) for 4Q FY2006, representing a 14.2% year-over-year increase. The increase was primarily due to amortization of intangible assets from FISH acquisition in the month of March 2007.

Other income was RMB2.3 million (US$0.3 million) for 4Q FY2006, which was primarily related to government grants in support of the Company's ECLIA development.

Amortization of convertible notes issuance costs of RMB2.1 million (US$0.3 million) for 4Q FY2006 was due to the US$150 million convertible notes issued in November 2006. The issuance costs are amortized over the term of the convertible notes which is five years.

Interest income was RMB15.1 million (US$2.0 million) for 4Q FY2006, representing a significant increase from the corresponding period of FY2005. The increase was primarily due to interest income generated from the net proceeds received from the issuance of convertible notes in November 2006.

Interest expense of RMB10.2 million (US$1.3 million) for 4Q FY2006 was primarily due to interest incurred by the convertible notes issued in November 2006. The notes bear interest at 3.5% per annum.

Income tax expense was RMB9.2 million (US$1.2 million) for 4Q FY2006. However, there was income tax benefit for 4Q FY2005 because an income tax concession was granted by the PRC tax authorities in February 2006. As a result, income tax rate for the Company's PRC subsidiary was retroactively reduced from 15% to 10% starting from January 2005 which will expire in December 2007. The effective tax rate for 4Q FY2006 was 9.9%.

On March 16, 2007, the 10th people's Congress of China passed the China Unified Corporate Income Tax Law (the "New Law"), which will become effective on January 1, 2008. The New Law established a single unified 25% income tax rate for most companies with some preferential income tax rates to be applicable to qualified hi-tech enterprises. The related detailed implementation rules and regulations (the "IRRs") on the definition of various terms and the interpretation and application of the provisions of the New Law are expected to be promulgated by the State Council within 2007. The Company currently believes that the IRRs will not impact its qualification as a hi-tech enterprise, and as such, believes the current tax rate of 15% will continue to apply. In the event the promulgation of the new IRRs results in a change such that the Company will no longer qualify as a hi-tech enterprise, it will be required to pay income tax in accordance with the IRRs starting on January 1, 2008.

Net income was RMB83.7 million (US$10.8 million) for 4Q FY2006, representing a 21.3% increase from the corresponding period of FY2005.

Adjusted net income excluding stock compensation expense, amortization of acquired intangible assets and income from arranging secondary offering (non-GAAP) was RMB91.8 million (US$11.9 million) for 4Q FY2006, representing a 37.2% increase from the corresponding period of FY2005.

Upon approval by the Company last week, 2,550,000 restricted stocks and stock options, equivalent to 255,000 ADS representing approximately 1% of our share capital, were granted to certain directors, officers and management personnel. The restricted stocks and stock options will vest over a period of three years.

As of March 31, 2007, the Company's cash balance was RMB1.2 billion (US$152.0 million). Net operating cash flow for 4Q FY2006 was RMB 99.1 million (US$12.8 million).

As of March 31, 2007, the Company's accounts receivable was RMB201.8 million (US$26.1 million), representing an increase of 6.2% from the balance at December 31, 2006. The accounts receivable turnover days improved to 135 days from 140 days of previous quarter.

FY2006 Financial Results

Net revenues were RMB547.0 million (US$70.8 million) for FY2006, representing a 47.1% year-over-year increase. The targeted net revenues for FY2006 ranged from RMB521 million to RMB533 million.

ECLIA system sales for FY2006 were RMB215.6 million (US$27.9 million), representing a 72.3% year-over-year increase. HIFU tumor therapy system sales for FY2006 were RMB331.4 million (US$42.9 million), representing a 34.3% year-over-year increase.

Gross margin increased to 72.3% for FY2006 as compared to 70.3% for FY2005 primarily due to similar reasons for 4Q FY2006.

Research and development expenses were RMB31.5 million (US$4.1 million) for FY2006, representing a significant year-over-year increase. The increase was primarily due to the HIFU-related medical study that is being conducted in partnership with the MOH, the pre-clinical trials on the Company's HIFU tumor therapy system that are being conducted in the United States for FDA pre-market approval and research collaboration with the Chinese Academy of Sciences Institute of Acoustics and the Biomed-X Centre of Peking University.

Sales and marketing expenses were RMB18.3 million (US$2.4 million) for FY2006, representing a 19.2% year-over-year increase.

General and administrative expenses were RMB55.4 million (US$7.2 million) for FY2006, representing a 44.5% year-over-year increase primarily due to an increase in headcount to meet the expansion of the Company's operations and amortization of intangible assets from FISH acquisition in the month of March 2007.

Other income was RMB6.0 million (US$0.8 million) for FY2006, which was primarily due to government grants in support of the Company's HIFU and ECLIA development.

Amortization of convertible notes issuance costs was RMB3.1 million (US$0.4 million) for FY2006.

Interest income was RMB42.0 million (US$5.4 million) for FY2006, representing a significant year-over-year increase. The increase was primarily due to interest income generated from the net proceeds received from the Company's initial public offering in August 2005 and the net proceeds received from the Company's issuance of convertible notes in November 2006.

Interest expense was RMB15.3 million (US$2.0 million) for FY2006 primarily due to interest incurred by the convertible notes issued in November 2006.

Income tax expense was RMB30.1 million (US$3.9 million) for FY2006. The effective tax rate for FY2006 was 9.4%.

Net income was RMB289.7 million (US$37.5 million) for FY2006, representing a 45.6% year-over-year increase. The targeted net income for FY2006 ranged from RMB263 million to RMB271 million.

Adjusted net income excluding stock compensation expense, amortization of acquired intangible assets and income from arranging secondary offering (non-GAAP) was RMB309.9 million (US$40.1 million) for FY2006, representing a 48.8% year-over-year increase.

Net operating cash flow for FY2006 was RMB347.3 million (US$45.0 million).

For the convenience of readers, certain RMB amounts have been translated into U.S. dollars at the rate of RMB7.7232 to US$1.00, the noon buying rate in New York City for cable transfers of RMB per U.S. dollar as certified for customs purposes by the Federal Reserve Bank of New York, as of Friday, March 30, 2007.

Cash Dividend

The Board of Directors has declared a cash dividend on its ordinary shares of US$0.04 per share, equivalent to US$0.40 per ADS based on the Company's net income for FY2006. The cash dividend will be paid on or around August 17, 2007 to shareholders of record as of July 18, 2007.

Appointment of Director

The Company has appointed Mr. Sam Tsang to its Board of Directors, effective June 11, 2007. Mr. Tsang will continue to serve as the Chief Financial Officer of the Company.

Prior to joining the Company in February 2004, Mr. Tsang worked as a manager of KPMG Hong Kong. Mr. Tsang has extensive experience in finance, accounting and internal controls. Mr. Tsang is a Certified Public Accountant in the United States and Hong Kong.

"We are delighted to welcome Sam to the board." stated Mr. Xiaodong Wu, Chairman and CEO of the Company. "We believe that the Board will benefit from Sam's in-depth financial, legal and operational experience and his contribution is invaluable to the Company's continual success in China's diagnostic and cancer therapeutic business."

Outlook for FY2007

The targeted net revenues for the fiscal year ending March 31, 2008 are expected to be between RMB830 million and RMB870 million, representing a year-over-year increase of 51.7% - 59.1%.

The targeted adjusted net income excluding stock compensation expense and amortization of acquired intangible assets (non-GAAP) for the fiscal year ending March 31, 2008 are expected to be between RMB390 million and RMB410 million, representing a year-over-year increase of 25.8% - 32.3%. The lower estimated year-over-year growth rates of non-GAAP targeted adjusted net income compared to targeted net revenues are primarily due to higher interest expense and amortization arising from convertible notes, lower interest income resulting from cash payments for FISH acquisition and increase in income tax rate after expiration of income tax concession.

The targeted adjusted diluted EPS excluding stock compensation expense and amortization of acquired intangible assets (non-GAAP) for the fiscal year ending March 31, 2008 is expected to be between RMB14.15 and RMB14.80 assuming a diluted number of ADS of 31,000,000 and excluding interest for convertible notes and amortization of convertible notes issuance cost.

The targets are based on the Company's current views on the operating and market conditions which are subject to change.

Non-GAAP Measure Disclosures

To supplement its consolidated financial statements presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), the Company uses non-GAAP measures of adjusted net income and adjusted earnings per share, which are adjusted from results based on GAAP to exclude the impact of stock compensation expense, amortization of acquired intangible assets and income from arranging secondary offering. Non-GAAP financial measures are used by the Company in their financial and operating decision-making because management believes they reflect the Company's ongoing business in a manner that allows meaningful period-to-period comparison. The Company's management believes that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating the Company's current operating performance and future prospects in the same manner as management does, if they so choose. The Company's management also believes the non-GAAP financial measures are useful for itself and investors because it makes more meaningful comparisons of the Company's current results of operations to those of prior periods.

The Company's management believes excluding the non-cash stock compensation expense from its non-GAAP financial measures is useful for itself and investors as such expense will not result in future cash payment and is otherwise unrelated to the Company's core operating results.

The Company's management believes excluding the non-cash amortization expense of acquired intangible assets resulting from acquisitions from its non-GAAP financial measures is useful for itself and investors because they enable a more meaningful comparison of the Company's performance between reporting periods. In addition, such amortization will not result in cash settlement in the future.

The Company's management believes excluding income from arranging secondary offering from its non-GAAP financial measures is useful for itself and investors because this income is non-recurring in nature and is unrelated to the Company's core operating results.

The presentation of this additional financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. For a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measure, please see the financial statements included with this press release.

Conference Call

China Medical's management team will host a conference call at 8:00 a.m. Eastern Time on June 18, 2007 (or 8:00 p.m. Beijing/Hong Kong time on June 18, 2007) to discuss the results following this earnings announcement.

The dial-in details for the live conference call are as follows:

U.S. Toll Free Number 1-866-202-3109
International dial-in number 1-617-213-8844
Passcode CMEDCALL.

A live webcast of the conference call will be available on http://ir.chinameditech.com.

A replay of this webcast will be available for one month on this website.

A telephone replay of the call will be available after the conclusion of the conference call through 10:00 a.m. Eastern Time on June 19, 2007.

The dial-in details for the replay are as follows:

U.S. Toll Free Number 1-888-286-8010
International dial in numbers 1-617-801-6888
Passcode 32584628

About China Medical Technologies

China Medical Technologies is a leading China-based medical device company that develops, manufactures and markets advanced in-vitro diagnostics products using Enhanced Chemiluminescence (ECLIA) technology and Fluorescent in situ Hybridization (FISH) technology, to detect and monitor various diseases and disorders, and system using High Intensity Focused Ultrasound (HIFU) for the treatment of solid cancers and benign tumors. For more information, please visit www.chinameditech.com.

Safe Harbor Statement

This press release contains forward-looking statements. These statements constitute "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the quotations from management in this press release, the Company's strategic operational plans, as well as outlook for FY2007, contain forward-looking statements. Such statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, including risks related to the Company's ability of successfully commercialize the products utilizing the FISH technology and launch products in China or elsewhere in a timely manner. Further information regarding these and other risks is included in the Company's filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F. The Company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.

China Medical Technologies, Inc.
Unaudited Condensed Consolidated Balance Sheets
As of
-------------------------------------------
March 31, December 31,
2006 2006 March 31, 2007
---------- ------------ -------------------
RMB RMB RMB US$
(in thousands)
Assets
Current assets
Cash and cash equivalents 843,791 1,699,350 1,173,640 151,963
Trade accounts receivable 155,751 189,973 201,778 26,126
Prepayments and other
receivables 26,260 30,557 41,484 5,371
Inventories 10,380 13,808 27,991 3,624
---------- ------------ ---------- --------
Total current assets 1,036,182 1,933,688 1,444,893 187,084

Property, plant and
equipment, net 105,570 130,790 135,791 17,582
Goodwill and other
intangible assets, net 224,744 213,556 1,269,229 164,340
Lease prepayments, net 7,811 7,668 7,620 987
Prepayments and other
receivables - 235,673 - -
Deferred income taxes 1,534 790 542 70
Convertible notes issuance
costs - 40,495 38,020 4,923
---------- ------------ ---------- --------
Total assets 1,375,841 2,562,660 2,896,095 374,986
========== ============ ========== ========

Liabilities
Current liabilities
Trade accounts payable 33,833 41,107 47,847 6,195
Accrued liabilities and
other payables 73,872 108,224 285,561 36,974
Income tax payable 21,602 37,614 38,467 4,981
---------- ------------ ---------- --------
Total current
liabilities 129,307 186,945 371,875 48,150
---------- ------------ ---------- --------

Convertible notes - 1,170,615 1,158,480 150,000
Other payable - long term - - 77,232 10,000
---------- ------------ ---------- --------
Total long term
liabilities - 1,170,615 1,235,712 160,000
---------- ------------ ---------- --------
Total liabilities 129,307 1,357,560 1,607,587 208,150
---------- ------------ ---------- --------

Shareholders' equity
Share capital 225,125 225,125 225,125 29,149
Ordinary shares US$0.1 par
value: 500,000,000
authorized; 273,600,001
issued and fully paid as
of March 31 and December
31, 2006 and March 31,
2007
Additional paid-in capital 739,936 504,484 504,795 65,361
General reserve fund 22,275 22,275 36,147 4,680
Unearned compensation (226) - - -
Accumulated other
comprehensive loss -
cumulative translation
adjustments (5,737) (17,938) (18,566) (2,404)
Retained earnings 265,161 471,154 541,007 70,050
---------- ------------ ---------- --------
Total shareholders'
equity 1,246,534 1,205,100 1,288,508 166,836
---------- ------------ ---------- --------
Total liabilities and
shareholders' equity 1,375,841 2,562,660 2,896,095 374,986
========== ============ ========== ========

Note:
The Company has performed preliminary purchase price allocation after
completion of FISH acquisition in March 2007 based on internal
valuation. The final purchase price allocation will be determined
when the valuation by independent valuers is complete.

China Medical Technologies, Inc.
Unaudited Condensed Consolidated Statements of Income


For the Three Months Ended
-------------------------------------------------
March 31, December 31,
2006 2006 March 31, 2007
----------- ------------ ------------------------
RMB RMB RMB US$
(in thousands except for per ADS information)
Revenues, net 111,712 161,509 163,103 21,119
Cost of revenues (33,455) (44,259) (43,766) (5,667)
----------- ------------ ----------- ------------
Gross profit 78,257 117,250 119,337 15,452
Operating expenses:
Research and
development (5,078) (9,271) (7,960) (1,031)
Sales and
marketing (4,038) (4,252) (5,395) (699)
General and
administrative (15,995) (13,538) (18,259) (2,364)
----------- ------------ ----------- ------------
Total operating
expenses (25,111) (27,061) (31,614) (4,094)
----------- ------------ ----------- ------------
Operating income 53,146 90,189 87,723 11,358
Other income 5,905 2,624 2,300 298
Interest income 7,204 11,115 15,143 1,960
Interest expense - (5,160) (10,183) (1,318)
Amortization of
convertible notes
issuance cost - (1,046) (2,064) (267)
----------- ------------ ----------- ------------
Income before income
tax 66,255 97,722 92,919 12,031
Income tax
benefit/(expense) 2,752 (9,294) (9,194) (1,190)
----------- ------------ ----------- ------------
Net income 69,007 88,428 83,725 10,841
=========== ============ =========== ============
Earnings per ADS
- basic 2.52 3.30 3.20 0.41
=========== ============ =========== ============
- diluted 2.52 3.24 3.11 0.40
=========== ============ =========== ============
Weighted average
number of ADS
- basic 27,360,000 26,765,505 26,196,308 26,196,308
=========== ============ =========== ============
- diluted 27,406,167 29,175,363 30,882,901 30,882,901
=========== ============ =========== ============



For the Years Ended
-----------------------------------
March 31,
2006 March 31, 2007
----------- -----------------------
RMB RMB US$
(in thousands except for per ADS
information)
Revenues, net 371,767 546,970 70,822
Cost of revenues (110,494) (151,614) (19,631)
----------- ----------- -----------
Gross profit 261,273 395,356 51,191
Operating expenses:
Research and development (14,374) (31,469) (4,075)
Sales and marketing (15,327) (18,264) (2,365)
General and administrative (38,309) (55,351) (7,167)
----------- ----------- -----------
Total operating expenses (68,010) (105,084) (13,607)
----------- ----------- -----------
Operating income 193,263 290,272 37,584
Other income 9,790 6,024 780
Interest income 14,048 41,970 5,434
Interest expense - (15,342) (1,986)
Amortization of convertible
notes issuance cost - (3,111) (403)
----------- ----------- -----------
Income before income tax 217,101 319,813 41,409
Income tax benefit/(expense) (18,088) (30,094) (3,896)
----------- ----------- -----------
Net income 199,013 289,719 37,513
=========== =========== ===========
Earnings per ADS
- basic 8.06 10.76 1.39
=========== =========== ===========
- diluted 8.05 10.74 1.39
=========== =========== ===========
Weighted average number of ADS
- basic 24,687,826 26,923,217 26,923,217
=========== =========== ===========
- diluted 24,716,317 28,697,979 28,697,979
=========== =========== ===========


Note:
In computing diluted EPS, interest expense and amortization in
connection with convertible notes are added back to net income before
dividing by the diluted number of ADS.

China Medical Technologies, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows

For the Years Ended
------------------------------
March 31,
2006 March 31, 2007
--------- --------------------
RMB RMB US$
(in thousands)
Cash flow from operating activities
Net income 199,013 289,719 37,513
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation of property, plant and
equipment 3,782 8,484 1,098
Amortization of lease prepayments 190 190 25
Amortization of intangible assets 14,918 18,935 2,452
Amortization of stock compensation 238 1,278 165
Amortization of convertible notes
issuance costs - 3,111 403
Changes in assets and liabilities:
Trade accounts receivable (69,985) (46,027) (5,959)
Prepayments and other receivables (5,687) (13,469) (1,744)
Inventories 3,450 (6,934) (898)
Deferred income tax (1,534) 992 128
Trade accounts payable 11,238 14,014 1,814
Accrued liabilities and other
payables (918) 60,140 7,787
Income tax payable 12,207 16,865 2,184
--------- ---------- ---------
Net cash provided by operating
activities 166,912 347,298 44,968
--------- ---------- ---------
Cash flow from investing activities
Capital expenditures (34,064) (36,283) (4,698)
FISH acquisition - (839,744) (108,730)
Repayment to a related party for the
remaining balance on the purchase
for intangible assets (100,000) - -
Net repayments and advances from
related parties (2,714) - -
--------- ---------- ---------
Net cash used in investing activities (136,778) (876,027) (113,428)
--------- ---------- ---------
Cash flow from financing activities
Net proceeds from issuance of new
shares 799,067 - -
Net proceeds from issuance of
convertible notes - 1,117,350 144,674
Repurchase of own stock - (236,193) (30,582)
Advance from selling shareholders in
secondary offering 10,422 - -
Payment for secondary offering
expenses of selling shareholders (802) (9,750) (1,262)
Principal payments on long-term loan (24) - -
Dividends paid (4,225) - -
--------- ---------- ---------
Net cash provided by financing
activities 804,438 871,407 112,830
--------- ---------- ---------
Effect of foreign currency exchange
rate change on cash (5,427) (12,829) (1,661)
--------- ---------- ---------
Net increase in cash and cash
equivalents 829,145 329,849 42,709
Cash and cash equivalents:
At beginning of year 14,646 843,791 109,254
--------- ---------- ---------
At end of year 843,791 1,173,640 151,963
========= ========== =========

China Medical Technologies, Inc.
Reconciliations of Non-GAAP Adjusted Net Income to GAAP Net Income


For the Three Months Ended
-------------------------------------------------
March 31, December 31,
2006 2006 March 31, 2007
----------- ------------ ------------------------
RMB RMB RMB US$
(in thousands except for per ADS information)
GAAP net income 69,007 88,428 83,725 10,841
Adjustments:
Stock compensation
expense 56 315 311 40
Amortization of
acquired
intangible assets 3,729 3,729 7,747 1,003
Income from
arranging
secondary
offering (5,905) - - -
----------- ------------ ----------- ------------
Non-GAAP adjusted
net income 66,887 92,472 91,783 11,884
=========== ============ =========== ============
GAAP earnings per
ADS
- basic 2.52 3.30 3.20 0.41
=========== ============ =========== ============
- diluted 2.52 3.24 3.11 0.40
=========== ============ =========== ============
Non-GAAP adjusted
earnings per ADS
- basic 2.44 3.45 3.50 0.45
=========== ============ =========== ============
- diluted 2.44 3.38 3.37 0.44
=========== ============ =========== ============
Weighted average
number of ADS
- basic 27,360,000 26,765,505 26,196,308 26,196,308
=========== ============ =========== ============
- diluted 27,406,167 29,175,363 30,882,901 30,882,901
=========== ============ =========== ============



For the Years Ended
-----------------------------------
March 31,
2006 March 31, 2007
----------- -----------------------
RMB RMB US$
(in thousands except for per ADS
information)
GAAP net income 199,013 289,719 37,513
Adjustments:
Stock compensation expense 238 1,278 165
Amortization of acquired
intangible assets 14,918 18,935 2,452
Income from arranging secondary
offering (5,905) - -
----------- ----------- -----------
Non-GAAP adjusted net income 208,264 309,932 40,130
=========== =========== ===========
GAAP earnings per ADS
- basic 8.06 10.76 1.39
=========== =========== ===========
- diluted 8.05 10.74 1.39
=========== =========== ===========
Non-GAAP adjusted earnings per
ADS
- basic 8.44 11.51 1.49
=========== =========== ===========
- diluted 8.43 11.44 1.48
=========== =========== ===========
Weighted average number of ADS
- basic 24,687,826 26,923,217 26,923,217
=========== =========== ===========
- diluted 24,716,317 28,697,979 28,697,979
=========== =========== ===========


Note:
In computing diluted EPS, interest expense and amortization in
connection with convertible notes are added back to net income before
dividing by the diluted number of ADS.



Contact:
China Medical Technologies, Inc.
Winnie Fan, 86-10-6530-8833
[e-mail]
or
Christensen
Tip Fleming, 852-2117-0861
[e-mail]
or
Chris Gustafson, 1-212-618-1978
[e-mail]

--------------------------------------------------------------------------------
Source: China Medical Technologies, Inc.

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fantastische zahlen!