Connected Transaction — Issue of Unlisted Warrants

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your licensed securities dealer or registered institution in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your securities in China Renji Medical Group Limited (the ‘‘Company’’), you should at once hand this circular and the accompanying form of proxy to the purchaser or the transferee or to licensed securities dealer or registered institution in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

This circular is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for any Shares.

CONNECTED TRANSACTION — ISSUE OF UNLISTED WARRANTS

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

A letter from the Independent Board Committee containing its advice to the Independent Shareholders is set out on pages 17 to 18 of this circular, and a letter from the Independent Financial Adviser containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 19 to 44 of this circular.

A notice convening the extraordinary general meeting of the Company (the ‘‘EGM’’) to be held at Suites 903–905, 9th Floor, Shui On Centre, 6–8 Harbour Road, Wanchai, Hong Kong on Saturday, 11 January 2014 at 5: 30 p.m. is set out on pages 61 to 62 of this circular. A form of proxy for use at the EGM is enclosed with this circular. Such form of proxy is also published on the websites of The Stock Exchange of Hong Kong Limited at www.hkex.com.hk and the Company at www.renjimedical.com.

Whether or not you are able to attend the EGM, you are requested to complete the accompanying form of proxy, in accordance with the instructions printed thereon and deposit the same at the office of the Company at 30/F., Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish. Delivery of an instrument appointing a proxy shall not preclude you from attending and voting in person at the EGM and in such event, the instrument appointing a proxy shall be deemed revoked.

24 December 2013 CONTENTS

Page

Definitions ...... 1

Letter from the Board ...... 4

Letter from the Independent Board Committee ...... 17

Letter from the Independent Financial Adviser ...... 19

Appendix I — Valuation Report ...... 45

Appendix II — General Information ...... 56

Notice of EGM ...... 61

–i– DEFINITIONS

In this circular, unless the context otherwise requires, the following expressions shall have the following meanings:

‘‘Company’’ China Renji Medical Group Limited, a company incorporated in Hong Kong with limited liability and whose issued shares are listedonthemainboardoftheStockExchange

‘‘Director(s)’’ the director(s) of the Company

‘‘EGM’’ the extraordinary general meeting of the Company to be held at Suites 903–905, 9th Floor, Shui On Centre, 6–8 Harbour Road, Wanchai, Hong Kong on Saturday, 11 January 2014 at 5: 30 p.m. for the Independent Shareholders to consider, and if thought fit, approve the Warrant Subscription Agreements and the transactions contemplated thereunder

‘‘First Supplemental the supplemental agreement dated 31 October 2013 entered into Warrant Subscription between the Company and the Subscriber for purpose of Agreement’’ amending certain terms and conditions of the Warrant Subscription Agreement

‘‘Group’’ the Company and its subsidiaries

‘‘Hong Kong’’ The Hong Kong Special Administrative Region of the PRC

‘‘Independent Board an independent board committee of the Company, comprising all Committee’’ the independent non-executive Directors, established to advise the Independent Shareholders in relation to the Warrant Subscription Agreements and the transactions contemplated thereunder

‘‘Independent Financial Reorient Financial Markets Limited, a corporation licensed to Adviser’’ or carry out Type 1 (dealing in securities), Type 4 (advising on ‘‘Reorient’’ securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities under the SFO, and the independent financial adviser to the Independent Board Committee and the Independent Shareholders to advise the terms of the Warrant Subscription Agreements and the transactions contemplated thereunder

‘‘Independent Shareholders other than the Subscriber and its associates Shareholders’’

‘‘Issue Price’’ HK$0.0002 per Warrant

‘‘Latest Practicable 20 December 2013, being the latest practicable date prior to the Date’’ printing of this circular for the purpose of ascertaining certain information contained in this circular

–1– DEFINITIONS

‘‘Listing Committee’’ the listing sub-committee of the board of the Stock Exchange

‘‘Listing Rules’’ the Rules Governing the Listing of Securities on the Stock Exchange

‘‘PRC’’ the People’s Republic of China

‘‘Second Supplemental the supplemental agreement dated 20 December 2013 entered Warrant Subscription into between the Company and the Subscriber for purpose of Agreement’’ amending certain terms and conditions of the Warrant Subscription Agreement

‘‘SFO’’ the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

‘‘Share(s)’’ ordinary share(s) of HK$0.1 each in the share capital of the Company

‘‘Shareholders’’ shareholders of the Company

‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited

‘‘Subscriber’’ Wisdom Phoenix Limited, a company incorporated in the British Virgin Islands with limited liability

‘‘Tranche One Warrants an exercise price of HK$0.022 per Warrant Share at which Subscription Price’’ holder(s) of the Tranche One Warrants may subscribe for the Warrant Shares

‘‘Tranche Two an exercise price of HK$0.05 per Warrant Share at which Warrants holder(s) of the Tranche Two Warrants may subscribe for the Subscription Price’’ Warrant Shares

‘‘Tranche One the 1,350,000,000 unlisted warrants to be issued by the Company Warrant(s)’’ pursuant to the Warrant Subscription Agreements

‘‘Tranche Two the 1,350,000,000 unlisted warrants to be issued by the Company Warrant(s)’’ pursuant to the Warrant Subscription Agreements

‘‘Valuer’’ Greater China Appraisal Limited, an independent valuer

‘‘Warrant(s)’’ the total of 2,700,000,000 unlisted warrants to be issued by the Company under the Tranche One Warrants and the Tranche Two Warrants

–2– DEFINITIONS

‘‘Warrant Shares’’ the new Shares to be issued by the Company upon the exercise of the subscription rights attaching to the Warrants under the Tranche One Warrants and the Tranche Two Warrants at the Tranche One Warrants Subscription Price and the Tranche Two Warrants Subscription Price, respectively

‘‘Warrant Subscription’’ the subscription for the Warrants by the Subscriber pursuant to the Warrant Subscription Agreement (as amended by the First and Second Supplemental Warrant Subscription Agreements)

‘‘Warrant Subscription the conditional warrant subscription agreement dated 5 July Agreement’’ 2013 entered into between the Subscriber and the Company in relation to the Warrant Subscription or as the context requires, the Warrant Subscription Agreement as supplemented and amended by the First and Second Supplemental Warrant Subscription Agreements

‘‘Warrant Subscription the Warrant Subscription Agreement, the First Supplemental Agreements’’ Warrant Subscription Agreement and the Second Supplemental Warrant Subscription Agreement

‘‘HK$’’ Hong Kong dollars, the lawful currency of Hong Kong

‘‘%’’ per cent.

–3– LETTER FROM THE BOARD

Executive Directors: Registered office: Mr. Tang Chi Chiu (Chairman) 30th Floor, Hopewell Centre Mr. Chan Ka Chung 183 Queen’s Road East Mr. Wang Jianguo Wanchai Hong Kong Independent non-executive Directors: Mr. Kwok Chung On Mr. Wu Chi Keung Ms. Wu Yan

24 December 2013

To the Shareholders and for information only, the option holders and the note holders,

Dear Sir or Madam,

CONNECTED TRANSACTION — ISSUE OF UNLISTED WARRANTS

INTRODUCTION

On 5 July, 31 October and 20 December 2013, the Company entered into the Warrant Subscription Agreement, the First and Second Supplemental Warrant Subscription Agreements, respectively.

The purpose of this circular is to provide you with, among other things, details regarding (i) the Warrant Subscription Agreements and the transactions contemplated thereunder; (ii) a letter from the Independent Board Committee containing its advice to the Independent Shareholders in respect of the Warrant Subscription; (iii) a letter from the Independent Financial Adviser containing its advice to the Independent Board Committee and the Independent Shareholders in respect of the Warrant Subscription; (iv) the valuation report in respect of the Warrants prepared by the Valuer; (v) a notice convening the EGM; and (vi) other information as required under the Listing Rules.

–4– LETTER FROM THE BOARD

THE WARRANT SUBSCRIPTION AGREEMENT AND THE FIRST AND SECOND SUPPLEMENTAL WARRANT SUBSCRIPTION AGREEMENTS

Date

The Company entered into the Warrant Subscription Agreement, the First and Second Supplemental Warrant Subscription Agreements with the Subscriber on 5 July, 31 October and 20 December 2013, respectively.

Parties

(1) the Company, as the issuer; and

(2) the Subscriber, as the subscriber.

The Subscriber is a company incorporated in the British Virgin Islands with limited liability and is principally engaged in investment holding. The beneficial owner of the Subscriber is Mr. Chan Ka Chung (‘‘Mr. Chan’’), who has become a Director since 9 September 2013.

Conditions

Completion of the Warrant Subscription Agreements is subject to, among other things, the followings:

(i) (if required) the Listing Committee having approved the issue of the Warrants either unconditionally or subject to conditions which neither the Company nor the Subscriber shall reasonably object and the satisfaction of such conditions;

(ii) the Listing Committee having granted (either unconditionally or subject to conditions to which neither the Company nor the Subscriber shall reasonably object) the listing of, and the permission to deal in, the Warrant Shares which may fall to be allotted and issued upon the exercise of the subscription rights attached to the Warrants;

(iii) all necessary consent and approval to be obtained by the Company in respect of the issue of the Warrants having been obtained;

(iv) the nominal value of the Shares having been reduced/abolished from HK$0.10 per Share to a value below the Tranche One Warrants Subscription Price and/or the Tranche Two Warrants Subscription Price, whether as permitted or required under the Companies Ordinance or as a result of a capital reorganisation (the ‘‘Capital Reorganisation’’) in such reasonable manner conducted by the Company effecting the same; and

–5– LETTER FROM THE BOARD

(v) the passing of the necessary resolution(s) by the independent shareholders of the Company (other than the Subscriber and its associates) who are entitled to vote and not required to be abstained from voting under the Listing Rules at the EGM to be convened and held to approve Warrant Subscription Agreement and the transactions contemplated hereunder.

Pursuant to the Second Supplemental Warrant Subscription Agreement, the condition numbered (iv) above may be waived by the Subscriber provided that the Subscriber agrees to increase the Tranche One Warrants Subscription Price and/or the Tranche Two Warrants Subscription Price to HK$0.1 per Warrant Share or to such nominal value per Share as a result of the Capital Reorganisation. For avoidance of doubt, the maximum number of Warrant Shares to be issued and allotted upon the full exercise of the Warrants if the Subscriber exercises its discretion to waive the requirement for the Capital Reorganisation under condition numbered (iv) above shall remain 2,700,000,000.

In the event that any of the conditions is not fulfilled (or waived, as the case may be) on or before the tenth business day following the fulfillment or waiver of condition numbered (iv) or 28 February 2014 (whichever is later) (the ‘‘Long Stop Date’’), or such other date as may be agreed between the Company and the Subscriber, the Warrant Subscription Agreements shall lapse and become null and void and the parties to the Warrant Subscription Agreements shall be released from obligation thereunder, save for any liabilities for any antecedent breaches thereof.

Completion

Completion of the Warrant Subscription shall take place within three business days following the date on which the aforesaid conditions of the Warrant Subscription Agreements have been fulfilled or waived (as the case may be), or such other date as the Company and the Subscriber may agree.

PRINCIPAL TERMS OF THE WARRANTS

Number of Warrants

Pursuant to the Warrant Subscription Agreement, the Company has agreed to issue and the Subscriber has agreed to subscribe for a total of 2,700,000,000 Warrants under the Tranche One Warrants and the Tranche Two Warrants, each of which comprises 1,350,000,000 Warrants, respectively.

Issue Price

The total premium for the Warrants to be issued under the Tranche One Warrants and the Tranche Two Warrants is HK$540,000 (to be settled by cash) which was arrived at after arm’s length negotiations between the Company and the Subscriber and had taken into a number of factors, including the illiquid nature of the Warrants, possible failure of the Capital Reorganisation, the lengthy period between the date of the Warrant Subscription Agreement and the corresponding completion date (if the Capital Reorganisation is able to

–6– LETTER FROM THE BOARD be completed), and the lack of investors having approached the Company with serious interest to subscribe for new shares or derivatives of the Company given the constraints and limitation faced by the Company to issue new Shares (as detailed below).

Number of Warrant Shares

Each of the Tranche One Warrants and each of the Tranche Two Warrants carries the right to subscribe for one Warrant Share, respectively.

Based on the total of 13,545,112,521 Shares in issue as at the Latest Practicable Date, 2,700,000,000 Warrant Shares will be issued upon the full exercise of the subscription rights attached to the Warrants, which represent (i) approximately 19.93% of the existing issued share capital of the Company; and (ii) approximately 16.62% of the issued share capital of the Company as enlarged by the issue of the Warrant Shares.

Subscription Price

Tranche One Warrants Subscription Price

The Tranche One Warrants Subscription Price was determined after arm’s length negotiations between the Company and the Subscriber, and has taken into account the then recent trading prices of the Shares prior to the Warrant Subscription Agreement was entered into.

The aggregate of the Issue Price and the Tranche One Warrants Subscription Price of approximately HK$0.0222 represents:

(i) a premium of approximately 0.9% over the closing price of HK$0.022 per Share as quoted on the Stock Exchange on the date of the announcement (the ‘‘Announcement’’) relating to the Warrant Subscription Agreement; and

(ii) a premium of approximately 2.8% over the average closing prices of approximately HK$0.0216 per Share as quoted on the Stock Exchange for the last 5 consecutive trading days up to and including the date of the Announcement.

Tranche Two Warrants Subscription Price

The Tranche Two Warrants Subscription Price was determined after arm’s length negotiations between the Company and the Subscriber and has taken into account the then recent trading prices of the Shares prior to the Warrant Subscription Agreement.

–7– LETTER FROM THE BOARD

TheaggregateoftheIssuePriceandtheTranche Two Warrants Subscription Price of approximately HK$0.0502 represents:

(i) a premium of approximately 128.2% over the closing price of HK$0.022 per Share as quoted on the Stock Exchange on the date of the Announcement; and

(ii) a premium of approximately 132.4% over the average closing prices of approximately HK$0.0216 per Share as quoted on the Stock Exchange for the last 5 consecutive trading days up to and including the date of the Announcement.

As detailed below, with the issue of the Warrants in two tranches with two different subscription prices, the Company will be able to, on one hand and through the Tranche One Warrants, introduce the Subscriber to become a Shareholder at the Tranche One Warrants Subscription Price which is comparable to the then closing price of the Shares prior to the date of the Warrant Subscription Agreement and aligns the interest of the Subscriber with that of the Company and the Shareholders as a whole, while on the other hand, through the Tranche Two Warrants at the Tranche Two Warrants Subscription Price being at a premium of more than 100% over the then closing prices of the Shares prior to the date of the Warrant Subscription Agreement, to motivate the Subscriber’s contribution towards the future development of the Group.

The Tranche One Warrants Subscription Price and the Tranche Two Warrants Subscription Price are subject to adjustments in the following events including:

(i) any consolidation or subdivision of the Shares;

(ii) an issue (other than pursuant to a scrip dividend scheme in lieu of a cash dividend) by the Company of Shares credited as fully paid by way of capitalisation of profits or reserves (including any share premium account or capital redemption reserve fund);

(iii) a capital distribution in cash or in specie other than out of distributable profits of the Company being made by the Company, whether on a reduction of capital or otherwise, to holders of Shares (in their capacity as such);

(iv) a grant by the Company to Shareholders (in their capacity as such) of rights to acquire for cash assets of the Company or any of its subsidiaries;

(v) an offer of new Shares for subscription by way of rights, or a grant of options or warrants to subscribe for new Shares, at a price which is less than 90 per cent. of the average market price of one Share for the five consecutive dealings days ending on such last dealing day immediately preceding the day on which the market price is to be ascertained (the ‘‘market price’’) being made by the Shareholders (in their capacity as such);

(vi) an issue wholly for cash being made by the Company or any of its subsidiaries of securities convertible into or exchangeable for or carrying rights of subscription for new Shares, if in any case the total effective consideration per new Share is less

–8– LETTER FROM THE BOARD

than 90 per cent. of the market price, or the conversion, exchange or subscription rights of any such issue are altered so that the said total effective consideration is less than 90 per cent. of such market price;

(vii) an issue of Shares being made wholly for cash at a price less than 90 per cent. of the market price;

(viii) the purchase by the Company of Shares or securities convertible into Shares or any rights to acquire Shares (excluding any such purchase made on the Stock Exchange or any recognized stock exchange) in circumstances where the Directors consider that it may be appropriate to make an adjustment to the relevant subscription price under the Warrants; and

(ix) such circumstances where the Directors consider that an adjustment to the subscription price under the Warrants should be made subject to the certification by the auditors of the Company or an approved merchant bank.

Such adjustments will be certified by the auditors of the Company or an approved merchant bank.

Exercise Period

The subscription rights attaching to the Warrants to be issued under the Tranche One Warrants and the Tranche Two Warrants can be exercised at any time during a period of 5 years from the date of issue of the Warrants (the ‘‘Exercise Period’’).

Listing

No listing of the Warrants will be sought on the Stock Exchange or any other stock exchanges, and an application has been made by the Company to the Listing Committee for the listing of, and the permission to deal in, the Warrant Shares on the Stock Exchange.

Ranking of the Warrant Shares

The Warrant Shares, when issued and fully paid, will rank pari passu in all respects with the existing issued Shares as at the date of allotment.

Transferability

The Warrants are freely transferable in integral multiples of 1,000,000 Warrants and to person(s) who is (are) independent of and not connected with the Company or any of its associates (as defined in the Listing Rules). Transfer of any Warrants to connected person(s) (as defined in the Listing Rules) of the Company shall be subject to the written consent of the Company.

–9– LETTER FROM THE BOARD

Voting rights of the Warrants

The holder(s) of the Warrants will not have any right to attend or vote at any general meeting(s) of the Company by reason of them being the holders of the Warrants. The holder(s) of the Warrants shall not have the right to participate in any distributions and/or offers of further securities made by the Company by reason of them being the holders of the Warrants.

Rights of holder(s) of the Warrants on the liquidation of the Company

If the Company is wound up during the Exercise Period, the subscription rights attaching to the Warrants which have not been exercised at the date of the passing of the resolution approving the winding-up shall lapse and the certificate of the Warrants shall cease to be valid for any purpose, save for (i) if such winding-up is for the purpose of reconstruction or amalgamation pursuant to a scheme of arrangement to which the holder(s) of the Warrants, or some person designated by them for such purpose by special resolution, shall be a party or in conjunction with which a proposal is made to the holder(s) of the Warrants and is approved by special resolution of the Company, the terms of such scheme of arrangement or (as the case may be) proposal shall be binding on the holder(s) of the Warrants; and (ii) in the event of a voluntary winding-up of the Company, the holders of the Warrants shall be entitled within six weeks after the passing of such resolution approving the winding-up of the Company to exercise the subscription rights attaching to the Warrants in accordance with the terms and conditions of the Warrants Subscription Agreement.

SPECIFIC MANDATE TO ISSUE THE WARRANT SHARES

Since the transactions contemplated under the Warrant Subscription Agreements will constitute connected transactions (as detailedbelow)oftheCompany,theissueofthe Warrants and the subsequent subscription of the Warrant Shares will be subject to the specific mandate to be approved by the Independent Shareholders at the EGM.

RIGHT TO REQUEST FOR EXERCISE OF WARRANTS BY THE COMPANY

Pursuant to the First Supplemental Warrant Subscription Agreement, amendments have been made to the instrument constituting the Tranche One Warrants (the ‘‘Tranche One Warrants Instrument’’) such that the Company is granted the right and discretion (the ‘‘Put Options’’) which entitle the Company, during the Exercise Period of the Tranche One Warrants, to request the holder(s) of the Tranche One Warrants to exercise its/their rights to subscribe for the Warrant Shares at the Tranche One Warrants Subscription Price by written notice(s) served by the Company to the holder(s) of the Tranche One Warrants. As detailed below, the inclusion of the Put Options under the Tranche One Warrants serves as a means for the Company to secure the Subscriber’s commitment towards the subscription of the Warrant Shares under the Tranche One Warrants and, if the price of the Shares is higher than the Tranche One Subscription Price, the exercise of the Put Options will be dependent on a number of factors, including but not limited to, the then funding needs and financial position of the Group and the availability of other financing means that are favourable to the Company. If otherwise, other things being equal, it will be in the interest

–10– LETTER FROM THE BOARD of the Company and the Shareholders to exercise the Put Options. The Company will make further announcement(s) on the exercising/non-exercising of the Put Options as and when appropriate in compliance with the Listing Rules. It is the intention of the Subscriber as at Latest Practicable Date to exercise the subscription rights attached to the Tranche One Warrants after the Capital Reorganisation.

For exercising the Put Options, the Company shall serve the relevant holder(s) of the Tranche One Warrants a written notice specifying the number of Warrants to be exercised (provided that such number of Tranche One Warrants shall be in integral multiples of 1,000,000 Tranche One Warrants (or if at the time of the exercise of the Put Option, the outstanding number of Tranche One Warrants are less than 1,000,000 units, the whole but not in part of the outstanding Tranche One Warrants)). The then holders of the Warrants shall within ten business days (or such longer period as stipulated on the written notice) upon receiving such written notice exercise the subscription rights attaching to the Tranche One Warrants to subscribe for the Warrant Shares at the Tranche One Warrant Subscription Price. In the event that there are more than one holder(s) of the Tranche One Warrants, the Company shall have the discretion to request any of them to exercise the Tranche One Warrants and the Company shall not be obliged to request the exercise of the Tranche One Warrants on a pro rata basis. For the avoidance of doubt, the Put Options is vested in the Company and is not transferable and the exercise of the Put Options shall be at the absolute discretion of the Company.

REASONS FOR THE ISSUE OF WARRANTS AND USE OF PROCEEDS

The Group is principally engaged in the provision of medical equipment and services for the network of its medical centres specialising in the diagnosis and treatment of tumours and/or cancer related diseases in the PRC.

The Company considers that the Warrant Subscription Agreements were entered into on normal commercial terms after arm’s length negotiations between the Company and the Subscriber and represent an opportunity to secure an interested investor. It is because the Company, a Hong Kong incorporated company, cannot issue new Shares below the nominal value of HK$0.1 each under the Companies Ordinance. However, the trading price of the Shares has been substantially below the nominal value of the Shares of HK$0.1 since the resumption of trading of the Shares in April 2013 and therefore, it is currently not possible for the Company to conduct any equity fund raising exercise through the issuance of new Shares. Furthermore, with the increasingly difficult business environment faced by the Group’s medical business as described in the Company’s earlier announcements and in its interim report, the Company is uncertain about the availability of any debt financing with favourable terms (not to mention the further adverse impact as a result of debt financing e.g. an increase in the Group’s gearing position, additional interest payments and the pressure on the loan principal repayment, etc.). Given the circumstances, the Company would be able to, through the Warrant Subscription, maximise its flexibility to obtain the potential fund from the Subscriber and permitted under the Companies Ordinance. Mr. Chan is an entrepreneur and an investor having in-depth knowledge and experience in finance as described in the Company’s announcement dated 9 September 2013. With the issue of the Warrants in two tranches (together with the Put Options under the Tranche One

–11– LETTER FROM THE BOARD

Warrants) with two different subscription prices, the Company will be able to, on one hand and under the Tranche One Warrants, introduce the Subscriber to become a Shareholder at the Tranche One Warrants Subscription Price which is comparable to the then closing price of the Shares at the time that the Warrant Subscription Agreement was entered into and aligns the interest of the Subscriber (or Mr. Chan) with that of the Company and the Shareholders and, on the other hand, motivate the Subscriber’s (or Mr. Chan’s) contribution towards the future development of the Group (since theoretically, if the Tranche Two Warrants were to be exercised, the market price of the Shares would be increased to or above the Tranche Two Warrants Subscription Price, which represents a substantial premium of more than 100% over the then closing price of the Shares when the Warrant Subscription Agreement was entered into). The issue of the Warrants thus provides the Company with an effective source of funding for the Group’s future development.

According to the valuation report (the ‘‘Valuation Report’’) prepared by the Valuer, the Tranche One Warrants and the Tranche Two Warrants had a fair value of approximately HK$12.96 million and HK$7.29 million as at the date of the Warrant Subscription Agreement, respectively. However, the computation of the fair value of the Warrants under the Black-Scholes model is subject to a number of limitations and would result in a possible over-estimation of the fair value of the Tranche Two Warrants, including (i) the fact that the Black-Scholes model has not taken into account the illiquidity of the unlisted Warrants and there is also no generally accepted model on analysing the marketability of unlisted warrants; (ii) the recent historical trading performance of the Shares not being reliable to yield a fair estimation of the long-term volatility of the Shares (a key input in the Black-Scholes model) due to the relatively short trading history following the resumption in the trading of the Shares in April 2013 and prior to the entering into of the Warrant Subscription Agreement; and (iii) the lack of other warrants/options relating to the Shares traded in the market. The Directors are also of the view that in additional to the ‘‘theoretical’’ fair value of the Warrants, attention should also be given to, including (i) the difficulty for the Company to attract investors who are willing to commit to the subscription of new Shares at the Tranche Two Warrants Subscription Price and bear the uncertainty that the Capital Reorganisation may not be successful; (ii) the unlisted (illiquid) nature of the Warrants and the difficulty for the holders to realise the intrinsic value of the Tranche Two Warrants without exercising the subscription rights attached to the Warrants (not to mention the fact that the Tranche Two Warrants are still ‘‘out-of-the money’’ as at the Latest Practicable Date); and (iii) the potential benefit that can be enjoyed by the Company through motivating the Subscriber to contribute more to the future development of the Group.

In addition, as described in the Valuation Report, the Tranche One Warrants and the Put Options when taken as a whole has turned the structure of the Tranche One Warrants into a forward contract and the fair valueoftheTrancheOneWarrantswillbecome minimal as of the date of the Warrant Subscription Agreement. Despite the facts that (i) the Tranche One Warrants Subscription Price, which was determined on the date of the Warrant Subscription Agreement i.e. 5 July 2013, is HK$0.022 per Warrant Share when compared with the then closing price of the Shares of HK$0.022, and (ii) the exercise price of Put Options, which was determined on the date of the First Supplemental Warrant

–12– LETTER FROM THE BOARD

Subscription Agreement i.e. 31 October 2013, is HK$0.022 per Warrant Share (which reflects the intention of both parties to issue the Warrant Shares under the Tranche One Warrants based on the then market price of HK$0.022 as soon as possible after the Capital Reorganisation becoming effective) when compared with the then closing price of the Shares of HK$0.043, the Directors concurred with the view of the Valuer on the consideration of (i) the five-year Exercise Period, during which the Subscriber would bear the risk of fluctuation in the price of the Shares resulted from changes in market sentiments and further change, if any, in the business operation situation of the Group; (ii) the long period of time from the date of the First Supplemental Warrant Subscription Agreement and the date of completion of the Capital Reorganisation, during which the Subscriber would bear the risk of drop in the price of the Shares resulted from changes in market sentiments and further change, if any, in the business operation situation of the Group, resulting in the Warrant Subscription in respect of the Tranche One Warrants becoming unfavourable to be exercised by the Subscriber and the Put Options favourable to be exercised by the Company, especially the exercise of the Put Options is subject to the discretion of the Company; and (iii) the possibility of the Capital Reorganisation being unsuccessful.

In light of the above, the Directors considered that the premium of the Warrants of approximately HK$0.5 million, which was arrived at after arm’s length negotiation between the Company and the Subscriber, is fair and reasonable.

The proceeds from the Warrant Subscription of approximately HK$0.5 million will be used as the general working capital of the Group. Assuming the subscription rights attached to the Warrants having been exercised in full, the total fund available from the exercise of the subscription rights attached to the Warrants is expected to amount to approximately HK$97 million. The proceeds obtained from the Warrant Subscription and the subsequent exercise of the rights attached to the Warrants will be used as general working capital of the Group.

–13– LETTER FROM THE BOARD

SHAREHOLDING STRUCTURE

As at the Latest Practicable Date, the Company had 13,545,112,521 Shares in issue. The shareholding structures of the Company (i) as at the Latest Practicable Date; and (ii) immediately after the issue of the 2,700,000,000 Warrant Shares upon full exercise of the subscription rights attached to the Warrants are as follows:

Immediately after the exercise of the subscription rights attaching to the As at the Latest Practicable Date Warrants in full No. of Shares No. of Shares Approximately (Shares) Approximately % (Shares) (%)

Yong Chang Investment Limited 2,439,000,000 18.01% 2,439,000,000 15.01% Wuhu Long Yuan Investment Company Limited 1,950,000,000 14.40% 1,950,000,000 12.01% Subscriber — — 2,700,000,000 16.62% Public shareholders 9,156,112,521 67.59% 9,156,112,521 56.36%

Total 13,545,112,521 100.00% 16,245,112,521 100.00%

FUND RAISING ACTIVITIES IN THE PAST TWELVE MONTHS

The Company has not conducted any fund raising activities in the past twelve months before the date of the Warrant Subscription Agreement.

IMPLICATION UNDER THE LISTING RULES

Mr. Chan was appointed as the Director with effect from 9 September 2013 and has therefore become a connected person of the Company. Accordingly, the Warrant Subscription and the transactions contemplated under the Warrant Subscription Agreements will constitute connected transactions on part of the Company under Chapter 14A the Listing Rules and the Warrant Subscription is subject to, among other things, reporting, announcement and the independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

Pursuant to Rule 15.02(1) of the Listing Rules, the Warrant Shares to be issued upon exercise of the Warrants must not, when aggregated with all other equity securities remain to be issued upon exercise of any other subscription rights of the Company, if all such rights were immediately exercised, whether or not such exercise is permissible, exceed 20% of the issued share capital of the Company at the time that the Warrants are issued (options granted under share option schemes in compliance with Chapter 17 of the Listing Rules are excluded for the purpose of such limit). As at the Latest Practicable Date, save for options which may be granted under the share option scheme of the Company adopted in October 2001, the Company had no securities with subscription rights outstanding and not yet exercised. Based on the total of 13,545,112,521 Shares in issue as at the Latest Practicable Date, and assuming that (i) the subscription rights attaching to the Warrants have been exercise in full; and (ii) no Shares are further issued and repurchased, the total of

–14– LETTER FROM THE BOARD

2,700,000,000 Warrant Shares that can be issued under the warrants represent (i) 19.93% of the existing issued share capital of the Company; and (ii) approximately 16.62% of the issued share capital of the Company as enlarged by the allotment and issue of the Warrant Shares. As such, the issue of the Warrants is in compliance with Rule 15.02(1) of the Listing Rules.

Save for Mr. Chan, none of the Directors has a material interest in the First and Second Supplemental Warrant Subscription Agreements and the transactions contemplated thereunder. Accordingly, no Director apart from Mr. Chan was required to abstain from voting on the board resolutions in respect of the First and Second Supplemental Warrant Subscription Agreements.

EGM

A notice convening the EGM to be held at Suites 903–905, 9th Floor, Shui On Centre, 6–8 Harbour Road, Wanchai, Hong Kong, on Saturday, 11 January 2014 at 5: 30 p.m. is set out on pages 61 to 62 of this circular. A proxy form for the EGM is enclosed. Whether or not you intend to attend the EGM, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and deposit the same at the registered office of the Company at 30/F., Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding of the EGM or any adjournments thereof. Completion and return of the proxy form will not preclude you from attending and voting at the EGM or any adjournments thereof should you so wish. Delivery of an instrument appointing a proxy shall not preclude you from attending and voting in person at the EGM and in such event, the instrument appointing a proxy shall be deemed revoked. Since neither Mr. Chan, the Subscriber nor their respective associates held any Shares as at the Latest Practicable Date, no Shareholders are required to abstain from voting for the resolution to be proposed at the EGM to approve the Warrant Subscription Agreements and the transactions contemplated thereunder.

RECOMMENDATION

Having considered the above and taken into accounts the factors and analysis contained in the letter from the Independent Financial Adviser, the Directors (including the independent non-executive Directors) consider that the terms under the Warrant Subscription Agreements are fair and reasonable and the entering into of the Warrant Subscription Agreements is in the interests of the Company and the Shareholders as a whole, and therefore recommend the Shareholders to vote in favour of the resolution to be proposed at the EGM to approve the Warrant Subscription Agreements and the transactions contemplated thereunder.

ADDITIONAL INFORMATION

Your attention is drawn to the further information set out in the appendices of this circular.

–15– LETTER FROM THE BOARD

GENERAL

Completion of the Warrant Subscription is subject to the satisfaction of the conditions precedent in the Warrant Subscription Agreements. As the Warrant Subscription may or may not proceed, Shareholders and potential investors are advised to exercise caution when dealing in the Shares.

By order of the Board of Directors Tang Chi Chiu Chairman

–16– LETTER FROM THE INDEPENDENT BOARD COMMITTEE

24 December 2013

To the Independent Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTION — ISSUE OF UNLISTED WARRANTS

We refer to the circular of the Company dated 24 December 2013 (the ‘‘Circular’’) of which this letter forms part. Unless the context specifies otherwise, capitalised terms used herein have the same meanings as defined in the Circular.

The Independent Board Committee has been established to advise the Independent Shareholders on the terms of the Warrant Subscription Agreements and the transactions contemplated thereunder, details of which are set out in the section headed ‘‘Letter from the Board’’ contained in this Circular. Reorient has been appointed to advise the Independent Board Committee and the Independent Shareholders in this respect.

Having considered the terms of the Warrant Subscription Agreements, the valuation report prepared by the Valuer as set out on pages 45 to 55 of the Circular and the recommendation from the letter of advice prepared by Reorient in relation to the Warrant Subscription Agreements and the transactions contemplated thereunder as set out on pages 19 to 44 of the Circular, we are of the opinion that the terms of the Warrant Subscription Agreements are fair and reasonable, on normal commercial terms and are in the interest of the Company and the Shareholders as a whole.

–17– LETTER FROM THE INDEPENDENT BOARD COMMITTEE

We therefore recommend the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM to approve the Warrant Subscription Agreements and the transactions contemplated thereunder.

Yours faithfully, For and on behalf of the Independent Board Committee Mr. Kwok Chung On Mr. Wu Chi Keung Ms. Wu Yan Independent Non-executive Directors

–18– LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the text of a letter of advice from REORIENT, the independent financial adviser to the Independent Board Committee and the Independent Shareholders, for the purpose of incorporation into this circular.

11th Floor, Far East Finance Centre 16 Harcourt Road, Admiralty, Hong Kong

24 December 2013

The Independent Board Committee and the Independent Shareholders China Renji Medical Group Limited

Dear Sirs,

CONNECTED TRANSACTION — ISSUE OF UNLISTED WARRANTS

INTRODUCTION

We refer to our appointment as the independent financial adviser to the Independent Board Committee and the Independent Shareholders in connection with the Warrant Subscription, details of which are set out in the circular of the Company dated 24 December 2013 (the ‘‘Circular’’) of which this letter forms part. Capitalised terms used in this letter have the same meanings as defined in the Circular, unless the context requires otherwise.

On 5 July 2013, the Company entered into the Warrant Subscription Agreement with the Subscriber, pursuant to which the Subscriber agreed to subscribe for 2,700,000,000 Warrants. On 31 October 2013 and 20 December 2013, the Company entered into the First Supplemental Warrant Subscription Agreement and the Second Supplemental Warrant Subscription Agreement respectively with the Subscriber to revise certain terms of the Warrant Subscription. Subsequent to the entering into of the Warrant Subscription Agreement, Mr Chan Ka Chung (‘‘Mr Chan’’), the ultimate beneficial owner of the Subscriber, became an executive Director on 9 September 2013 and thus the Subscriber has thereafter become a connected person of the Company. The Warrant Subscription constitutes a connected transaction for the Company under Chapter 14A of the Listing Rules and is subject to the reporting, announcement and independent shareholders’ approval requirements.

–19– LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Independent Board Committee comprising all the independent non-executive Directors, namely Mr Kwok Chung On, Mr Wu Chi Keung and Ms Wu Yan, has been established to give advice and recommendation to the Independent Shareholders in relation to the Warrant Subscription.

We, REORIENT Financial Markets Limited, have been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders as to whether the terms of the Warrant Subscription are fair and reasonable and whether the Warrant Subscription is on normal commercial terms, in the ordinary and usual course of business and in the interests of the Company and its Shareholders as a whole. We understand from the Company that neither Mr Chan nor any of his associates held any Shares as at the Latest Practicable Date and no Shareholders have a material interest in the Warrant Subscription and are required to abstain from voting in respect of the Warrant Subscription.

In formulating our opinion, we have relied upon the information, facts and representations contained in the Circular and those supplied or made available by the management of and advisers to the Company to us. We have assumed that all such information, facts and representations were true and accurate in all respects at the time they were supplied or made and continue to be true and accurate at the date of the Circular and can be relied upon. We have no reason to doubt the truth, accuracy and completeness of such information and representations and have confirmed with the management of the Company that no material facts have been withheld or omitted from such information and representations.

We have taken all reasonable and necessary steps to comply with the requirements set out in Rule 13.80 of the Listing Rules. We consider that we have been provided with sufficient information to enable us to reach an informed view. We have not, however, conducted any independent verification of such information or any independent in-depth investigation into the business, affairs, financial position or prospects of the Group nor have we carried out any in-depth research on the Group, the Subscriber and their respective associates.

–20– LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

PRINCIPAL FACTORS CONSIDERED

In formulating our opinion on the Warrant Subscription, we have taken into consideration the following principal factors:

Information on the Group

Business of the Group

The Group is principally engaged in the provision of medical equipment and services for its medical centres in the PRC specialising in the diagnosis and treatment of tumours and/or cancer related diseases through the application of advanced radiotherapy technology. As at the Latest Practicable Date, the Group had 13 medical centres in the PRC.

The Group partners with hospitals in the PRC in which its medical centres are located. The medical centres are typically equipped with radiotherapy and/or diagnostic imaging equipment, such as linear accelerators, head/body gamma knife systems, positron emission tomography-computed tomography scanners or magnet resonance imaging scanners. The Group shares agreed percentages of the revenue of the medical centres after specific operating expenses. As disclosed in the annual report of the Company for the year ended 31 December 2012, the Group’s certain business involving medical assets which lacked the necessary licences for operations (the ‘‘Non-licensed Medical Assets’’). With a view to minimising the potential risks associated with the business involving the Non-Licensed Medical Assets, the Group disposed of all Non-Licensed Medical Assets in 2012.

In June 2013, the Group entered into agreements relating to (i) the disposal of a 35% equity interest in its medical centre business (the ‘‘Disposal’’); (ii) the investment in a medical project involving the upgrading and the participation in the management of a hospital in the PRC (the ‘‘Medical Project’’); and (iii) the acquisition of a 38% equity interest in a group engaging in the design, manufacture and sale of household products (the ‘‘Acquisition’’).

In July 2013, the Company entered into the memorandum of understanding (the ‘‘MOU’’) in relation to a possible investment in a business engaging in (i) a patented hospital management system; and (ii) e-government business in the PRC and Southeast Asia including the research, development, manufacture and distribution of patented hi-tech systems/products (the ‘‘Potential Investment’’). The patented hospital management system is mainly used for computerised medicine dispensing as well as the analysis and sharing of patients’ data to enable remote diagnosis by medical specialists located in different places/ cities. The patented e-government products/systems can be applied in various government departments and industries such as customs departments, inspection and quarantine bureaus, police force, power grid companies and toll road operators in custom clearance, quarantine clearance, logistics, toll free-pass monitoring, security, see-through checking and position tracking, etc.

–21– LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Directors expect that the Disposal will enable the Group to reduce its exposure to the risk of its existing medical centre business and provide the Group with additional working capital for its future development. The other investments such as the investment in the Medical Project and the Acquisition as well as the Potential Investment (if proceeds after further evaluation and negotiations) will on the other hand help broaden the Group’s business scope and diversify the overall business risks. Both the Disposal and the Acquisition have been completed.

Group’s development plan

We understand from the Company’s interim report for the six months ended 30 June 2013 (the ‘‘2013 Interim Report’’) that non-civilian medical institutions in the PRC are no longer permitted to enter into cooperation agreements with third parties to set up for-profit medical centres, but these non-civilian medical institutions are permitted to lease medical equipment from their partners if they do not have adequate funds to purchase the relevant medical equipment (the ‘‘New Policies’’). The Directors consider that this imposes an increasing uncertainty as to whether the Group will be able to continue with its existing business model. As at the Latest Practicable Date, the Group had received notices from four of its partners terminating their cooperation arrangements with the Group. As a development strategy, the Company will continue to develop its existing medical centre business and at the same time explore new business areas with good prospects.

Prolonged trading suspension in the Shares

On 18 October 2010, trading in the Shares was suspended pending the release of an announcement to clarify certain press articles relating to allegations made by two former Directors mainly against some former management members of the Company in respect of the Group’s acquisitions of medical assets in 2007 and 2008 and matters relating to the Group’s operations and financial management (the ‘‘Allegations’’).

During the period of the trading suspension, the Company took steps to address the Allegations and satisfy other requirements of the Stock Exchange. During this period, the Company’s management structure has changed significantly. Details of the Allegations and the steps taken by the Company are set out in the Company’s announcement dated 3 April 2013 (the ‘‘Resumption Announcement’’). Trading in the Shares suspended for about two years and five months and resumed on 5 April 2013 following the publication of the Resumption Announcement.

–22– LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Financial performance of the Group

As set out in the 2013 Interim Report, the Group mainly derived its income from leasing of medical equipment in the PRC.

Abridged financial information of the Group for the six months ended 30 June 2012 and 2013 and the years ended 31 December 2010, 2011 and 2012 (as extracted from the Company’s annual reports and interim reports) is set out below.

Six months ended 30 June Year ended 31 December 2013 2012 2012 2011 2010 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Audited) (Audited) (Audited)

Revenue 56,000 71,324 134,438 152,302 177,549 Profit/(loss) attributable to owners of the Company (113,135) 35,691 61,261 (266,889) (375,570)

The results of the Group for the three years ended 31 December 2012 and the six months ended 30 June 2013 fluctuated significantly. In 2010 and 2011, the Group’s medical centre business was affected by intensifying competition, a decrease in the Group’s percentage sharing of certain medical centres’ revenue in that time, and impairment provisions made relating mainly to the then under-utilisation of certain medical assets as well as the proposed sale of the Non-Licensed Medical Assets. The Group disposed of the Non-Licensed Medical Assets in 2012. This adversely affected the Group’s revenue in the six months ended 30 June 2013 and the year ended 31 December 2012. Among other developments and factors, the aforesaid New Policies in the PRC have adversely affected the Group’s principal medical centre business. The Group has accordingly provided an impairment on its property, plant and equipment and other intangible assets totalling approximately HK$140.5 million during the six months ended 30 June 2013. The track record of the Group demonstrated that the present core medical centre business of the Group is subject to significant policy risks and competition risks. We consider that the Group’s performance and results in 2010, 2011 and 2012 were also adversely affected by the management changes during the years.

–23– LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Financial position of the Group

We set out below information in respect of the consolidated statements of financial position of the Company as at 31 December 2010, 2011 and 2012 and 30 June 2013 as extracted from the respective annual reports and interim report.

As at 30 June As at 31 December 2013 2012 2011 2010 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Audited) (Audited) (Audited)

Non-current assets 252,804 323,239 298,660 655,886 Current assets 307,008 344,877 299,421 188,778

Total assets 559,812 668,116 598,081 844,664

Current liabilities 131,419 135,669 157,605 148,901 Non-current liabilities 2,337 5,647 6,041 25,393

Total liabilities 133,756 141,316 163,646 174,294

Net assets 426,056 526,800 434,435 670,370

Equity attributable to owners of the Company 394,425 495,689 434,435 670,370 Non-controlling interests 31,631 31,111 — —

Total equity 426,056 526,800 434,435 670,370

Over the years of 2010, 2011 and 2012, the total assets of the Group decreased due to, among other reasons, impairments made on various assets as explained above with the Group’s net assets fell from approximately HK$670.4 million (representing a net asset value per Share of approximately HK$0.0495) as at 31 December 2010 to approximately HK$426.1 million (representing a net asset value per Share of approximately HK$0.0315) as at 30 June 2013. The drop in net asset value per Share related mainly to the Group’s losses and changes in fair value of its assets.

–24– LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Cash flow position of the Group

We set out below information in respect of the consolidated statements of cash flow of the Company for the six months ended 30 June 2012 and 2013 and the years ended 31 December 2010, 2011 and 2012 with reference to the Company’s annual reports and interim report.

Six months ended 30 June Year ended 31 December 2013 2012 2012 2011 2010 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Audited) (Audited) (Audited)

Net cash generated from/ (used in) operating activities 26,681 (41,863) 3,507 92,546 38,375 Net cash generated from/ (used in) investing activities (80,338) 18,469 37,219 (80,612) (55,619) Net cash generated from/ (used in) financing activities — 25,555 25,548 (17,291) (14,131)

Net increase/(decrease) in cash and cash equivalents (53,657) 2,161 66,274 (5,357) (31,375)

For the year ended 31 December 2012, the Group had net cash inflow from operating activities of approximately HK$3.5 million which was significantly lower than that in each of the two years ended 31 December 2010 and 2011. For the six months ended 30 June 2013, the Group had net cash inflow from operating activities of approximately HK$26.7 million.

Background of the Subscriber

The Subscriber is an investment holding company. Mr Chan Ka Chung is an executive Director and the ultimate beneficial owner of the Subscriber. As detailed in the announcement of the Company dated 9 September 2013, Mr Chan is an entrepreneur and an investor with in-depth knowledge and experience in finance. Mr Chan has also been awarded the ‘‘Outstanding Entrepreneur of Guangdong’’ by the Guangdong Provincial Executive Association of Entrepreneurs. Mr Chan has been appointed as an executive Director with effect from 9 September 2013 (subsequent to the entering into of the Warrant Subscription Agreement). The Company considers that the appointment of Mr Chan will enhance the knowledge and expertise of the Board, in particular in this period after a significant change in the Company’s management over the past 2 years after the Allegations.

–25– LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Reasons for and benefits of the Warrant Subscription

We have discussed with the Company and understand that whilst the issue of the Warrants gives the Company flexibility to raise capital and strengthen its capital base, another reason for the issue of the Warrants is to invite the Subscriber to become an investor in the Company after the Capital Reorganisation (which is still subject to Hong Kong Court’s approval or the requirement of having a par value being abolished). The current structure of the Tranche One Warrants is to secure the Subscriber’s commitment towards the subscription of 1,350,000,000 new Warrant Shares such that the Tranche One Warrants comprise a call element at the Subscriber’s discretion and a put element at the Company’s discretion. The exercise price of the Tranche One Warrants was determined with reference to the then market price at the time of the Warrant Subscription Agreement. Subject to the Company complying with the related Listing Rules requirements from time to time, the structure of the Tranche One Warrants effectively represents a future commitment of the Subscriber to subscribe for 1,350,000,000 Warrant Shares at a total consideration of HK$29.7 million. Even if the Subscriber does not exercise the Tranche One Warrants, the Company can require the Subscriber (or the then holder of the Warrants) to exercise the Tranche One Warrants (through the exercise of the Put Options). This will substantially help align the interests of the Subscriber (Mr Chan) with those of the Company whilst at the same time allowing the Company to raise further working capital, when the Tranche One Warrants are exercised.

The proposed issue of the Tranche Two Warrants aims to further promote and motivate the Subscriber’s (or Mr Chan’s) contribution to the Group’s development. The exercise price of the Tranche Two Warrants was set at a substantial premium of approximately 127.27% over the then market price as at the date of the Warrant Subscription Agreement. Logically if the Tranche Two Warrants are to be exercised, the market price of the Shares would have to increase by at least 127.27% from the closing price of HK$0.022 per Share at the time when the Warrant Subscription Agreement was entered into to a level equal to or higher than the related subscription price of HK$0.05 per Share.

After the entering into of the Warrant Subscription Agreement, the Company successfully obtained Mr Chan’s agreement to join the Company as an executive Director. We consider that the Warrant Subscription signifies Mr Chan’s confidence in the development potential of the Group.

As the background of the Subscriber is an important factor being considered in the current Warrants issue proposal, other financing options will not be able to meet the same objective.

Having considered the information above, we agree with the Directors’ view that the Warrant Subscription is in the interests of the Company and its Shareholders.

–26– LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Principal terms of the Warrant Subscription

Under the Warrant Subscription Agreement, the Subscriber has agreed to subscribe for a total of 2,700,000,000 Warrants at a total premium of approximately HK$540,000. The Warrant Subscription is conditional on:

(iii) all necessary consent and approval to be obtained by the Company in respect of the issue of the Warrants having been obtained;

(iv) completion of the Capital Reorganisation; and

(v) the passing of the necessary resolution(s) by the Independent Shareholders to approve Warrant Subscription Agreement and the transactions contemplated hereunder.

Each of the Tranche One Warrants and the Tranche Two Warrants carries a right to subscribe for one Warrant Share at the Tranche One Warrants Subscription Price of HK$0.022 per Warrant Share and the Tranche Two Warrants Subscription Price of HK$0.05 per Warrant Share, respectively. Upon exercise of the subscription rights attaching to the Warrants in full, a total of 2,700,000,000 Warrant Shares will be issued, representing (i) approximately 19.93% of the existing issued share capital of the Company; and (ii) approximately 16.62% of the issued share capital of the Company as enlarged by the issue of the Warrant Shares.

Under the Tranche One Warrants, the Company has been granted the rights and discretion (the ‘‘Put Options’’) which entitles the Company to request the holder(s) of the Tranche One Warrants to exercise its/their rights to subscribe for the Warrant Shares at the Tranche One Warrants Subscription Price.

The Warrant Shares, when issued and fully paid, will rank pari passu in all respects among themselves and with all the Shares in issue at the date of allotment.

–27– LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Subscription Prices

We note that the Tranche One Warrants Subscription Price and the Tranche Two Warrants Subscription Price were arrived at after arm’s length negotiation between the Company and the Subscriber with reference to, among others, the then recent trading prices of the Shares at the time when the Warrant Subscription Agreement was entered into.

As explained above in the paragraph headed ‘‘Reasons for and benefits of the Warrant Subscription’’, the issue of the Tranche One Warrants represents a firm commitment of the Subscriber to subscribe for Warrants Shares, the Tranche One Warrants Subscription Price was agreed based on the closing price per Share on 5 July 2013 (i.e., the date of the Announcement), being the date of entering into of the Warrant Subscription Agreement. The Tranche One Warrants Subscription Price also represents:

(i) a small premium of approximately 1.85% over the average closing price of approximately HK$0.0216 per Share for the last 5 consecutive trading days up to and including the date of the Announcement; and

(ii) a small discount of approximately 0.45% to the average closing price of approximately HK$0.0221 per Share for the last 10 consecutive trading days up to and including the date of the Announcement.

On the other hand, the issue of the Tranche Two Warrants serves as an incentive for the Subscriber to commit under the Tranche One Warrants and to motivate the owner of the Subscriber (Mr Chan) to help promote the Group’s development. The Tranche Two Warrants Subscription Price was determined with a substantial premium of approximately 127.27% over the closing price on the date of the Announcement, and represents:

(i) a premium of approximately 131.48% over the average closing price of approximately HK$0.0216 per Share for the last 5 consecutive trading days up to and including the date of the Announcement; and

(ii) a premium of approximately 126.24% over the average closing price of approximately HK$0.0221 per Share for the last 10 consecutive trading days up to and including the date of the Announcement.

–28– LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Historical performance of Share price

As set out in the paragraph headed ‘‘Prolonged trading suspension in the Shares’’ above, trading in the Shares was suspended during the period from 18 October 2010 to 4 April 2013. During this period, the management of the Group has changed and the business of the Group has also been restructured (including the disposal of the Non-Licensed Medical Assets). Prices and trading history prior to resumption on 5 April 2013 may no longer be a meaningful reference. Accordingly, we have reviewed the closing prices of the Shares from 5 April 2013 to the date of the Warrant Subscription Agreement (the ‘‘Review Period’’). The chart below illustrates the daily closing prices of the Shares during the Review Period:

Source: Bloomberg

During the Review Period, the closing price gradually fell from the closing price on 5 April 2013 of HK$0.04 per Share to HK$0.021 per Share on 27 and 28 June 2013. On the date of the Announcement, the closing price was HK$0.022 per Share. Before the signing of the Warrant Subscription Agreement, the Shares demonstrated a negative daily return of 1.02% from 5 April 2013 to 5 July 2013, representing a negative annualised return of 257.18%. Even if we ignore the significant drop in the first week after resumption, the Shares demonstrated a negative annualised return of 168.61% from 15 April 2013 to 5 July 2013.

–29– LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

After the issue of the Announcement, the closing price moved up to HK$0.023 per Share on 8 July 2013 (the trading day immediately following the date of the Announcement) and to HK$0.027 on 9 July 2013 (with a trading volume of 108,466,264 Shares on that day, which increased significantly as compared with the daily trading volume before the publication of the Announcement). We consider that this indicates that the market accepted and did not react negatively towards the Warrant Subscription. The chart below shows the closing price per Share from the date of the Announcement to the Latest Practicable Date.

Source: Bloomberg

–30– LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Trading liquidity of the Shares

We set out below the monthly trading volume, the average daily number of Shares traded per month expressed in (i) number of Shares; (ii) a percentage to the total number of Shares in issue; and (iii) a percentage to the total number of Shares held by public Shareholders since the trading resumption date:

Percentage of average daily Percentage of trading volume to average daily total number of trading volume to Shares held by Total monthly Average daily total number of public Month trading volume trading volume Shares in issue Shareholders (Number of (Number of Shares) Shares) (%) (%) (Note 1) (Note 2) (Note 3)

2013 April (since the date of trading resumption in the Shares) 1,244,640,300 73,214,135 0.54% 0.80% May 522,961,300 24,902,919 0.18% 0.27% June 514,586,000 27,083,474 0.20% 0.30%

July (up to and including the Last Trading Day) 161,362,000 40,340,500 0.30% 0.44% July 4,349,557,900 197,707,177 1.46% 2.16% August 1,081,966,800 51,522,229 0.38% 0.56% September 874,837,000 43,741,850 0.32% 0.48% October 801,932,000 38,187,238 0.28% 0.42% November 340,044,800 16,192,610 0.12% 0.18% December (up to the Latest Practicable Date) 225,749,100 15,049,940 0.11% 0.16%

Source: the Stock Exchange website (www.hkex.com.hk)

Notes

1. Average daily trading volume is calculated by dividing the total trading volume of the Shares for the month/period by the number of trading days during the month/period.

2. Based on 13,545,112,521 Shares in issue as at the Latest Practicable Date.

3. Based on 9,156,112,521 Shares held by public Shareholders as at the Latest Practicable Date as set out in the shareholding structure of the Company in the paragraph headed ‘‘Shareholding Structure’’ in the Letter from the Board.

–31– LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

During the Review Period, the average daily trading volume of the Shares as a percentage of the total number of issued Shares ranged from the lowest of approximately 0.18% in May to the highest of 0.54% in April (since the date of trading resumption). Trading volume of the Shares on the Stock Exchange increased more significantly after the entering into of the MOU announced on 12 July 2013. Nevertheless, trading volume of the Shares on the Stock Exchange gradually fell back to a relative low level about 2 weeks after the trading excitement.

The chart below shows the daily trading volume of the Shares since 5 April 2013 up to the Latest Practicable Date.

Source: Bloomberg

As trading in the Shares has been suspended for a prolonged period of more than two years and only been resumed for a short period of time since April this year, we consider that the historical trading performance of the Shares offers little value in projecting possible future pattern.

–32– LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Issue Price (premium of the Warrants)

The Warrants are to be issued at a total consideration of about HK$540,000 which was agreed between the Company and the Subscriber at arm’s length negotiation. The Warrants are derivative instruments without an active trading market. Apart from the Shares, the Company has not issued any listed derivative instruments. We are also not aware of any listed/traded derivative instruments relating to the Shares in the market.

The Company has engaged Greater China Appraisal Limited (‘‘Greater China’’), an independent professional valuer, to assess the value of the Warrants as at 5 July 2013, the date of the Warrant Subscription Agreement. A copy of the valuation report dated 24 December 2013 issued by Greater China on the Warrants (the ‘‘Valuation Report’’) is set out in Appendix I to the Circular.

We understand that Greater China is an appraisal and consulting company which carries out, among others, valuation of various kinds of financial instruments and derivatives. Its team members are experienced in financial instruments and derivatives valuations. We have reviewed the qualifications and experience of Greater China and its relevant staff members and we consider that Greater China possesses the relevant qualification and experience to conduct valuation of the Warrants. We have complied with the requirements under Note 1(d) to Rule 13.80 of the Listing Rules in respect of the Valuation Report.

We have read the Valuation Report and have discussed the major bases and assumptions of the valuation for the Warrants with Greater China. Greater China has adopted the Black-Scholes model using Trinomial Tree method.

Black-Scholes valuation models are commonly adopted in valuing stock related derivative instruments based on the assumption that stock price moves following a geometric Brownian distribution. To explain this in simple terms, it assumes that stock price moves randomly based on a constant volatility, the return (change) of which demonstrates a normal distribution. Other assumptions of Black-Scholes valuation models include, among other things, a constant risk free rate which holders of the Warrants can borrow and lend, and a constant dividend yield. Whilst Black Scholes valuation models are widely used for valuing warrants or options, it is also commonly known that the models are subject to various limitations and over-simplicationswhichinturnleadtoinaccurate results. We shall go through some of those limitations in more details in this letter below.

–33– LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We set out below the distribution of the stock daily returns since 5 April 2013:

Daily return of Shares (1) from 5 April 2013 to the date of the Warrant Subscription Agreement; and (2) from 5 April 2013 to the Latest Practicable Date show quite different bell shapes (i.e. different distributions) than the relevant normal distribution bell shapes bearing the mean equaling the related average daily return and the standard deviation equaling the related annualised volatility. Based on the limited available data, daily return of the Share did not fall under a normal distribution. It is empirically shown that stock prices do not generally move in the manner as predicted in the geometric Brownian motion models. Stock prices experience upward or downward jumps as in the case of the Shares (a downward jump soon after resumption and an upward jump shortly after the announcement of the MOU) which are not accounted for under Black-Scholes models.

Volatility is stock specific. Based on our understanding, when determining the volatility to be used in a Black-Scholes valuation model, implied volatility calculated based on other publicly traded derivatives of the same stock provides the best estimate. However as mentioned above, we are not aware of any other listed/traded derivatives in relation to the Shares in the market. Accordingly, the method of obtaining the implied volatility for the Warrants is not feasible. Alternatively, historical volatility of the stock could be used. Trading in the Shares only resumed on 5 April 2013. Up to and including the date of the Announcement, there were only 62 trading days. We consider the trading period too short to be used to derive the annualised volatility of the Shares based on historical closing prices for the purposes of a fair estimation of the implied volatility. Greater China holds the same

–34– LETTER FROM THE INDEPENDENT FINANCIAL ADVISER view as we do and the volatility of the Share prices used in the Valuation Report was estimated based on the average annualised volatility of the share prices of five comparable companies with similar business operation as at 5 July 2013.

A common problem with Black-Scholes models is the assumption of a constant volatility. We set out below the weekly annualised volatility of the Shares since 5 April 2013 up to the Latest Practicable Date.

Source: Calculated based on closing prices of the Shares obtained from Bloomberg

Based on the closing price of the Shares from 5 April 2013 to the date of the Announcement, the annualised volatility is 69.40%. However, as you can see from the chart above, annualised volatility of the Shares based on the closing prices in each week is itself very volatile. The Shares experienced a highest annualised volatility of 73.59% in week 15 (i.e. from 15 July 2013 to 19 July 2013) and a lowest annualised volatility of 5.95% in week 18 (i.e. from 5 August 2013 to 9 August 2013). An assumption of constant volatility in the case of the Shares is not practicable.

Greater China has chosen to use the historical annualised volatility of comparable companies as input. Whilst we understand from Greater China that without reliable specific data on the Company’s stock return, the historical average long term volatility of the selected comparable companies’ stock return is the remaining best available market data for estimating the long term volatility for the Company’s business segment of the medical photography industry and the implied volatility for valuating the Warrants. However, we consider this could only serve as a rough reference and may not be a very meaningful reference as volatility of stock return tends to be very company, market and time specific.

–35– LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We note from the Valuation Report that Greater China has chosen five comparable companies with a similar line of business as compared with the Company. We understand that Greater China has selected the comparable companies using Bloomberg by choosing listed companies which engage in the medical photography industry, e.g. providing radiosurgery services, operating stereotactic radiosurgery centres or gamma knife centres, and providing medical imaging services. We have discussed with Greater China about the criteria adopted in selecting comparable companies. We understand from Greater China that these five selected companies represent the closest comparable companies for the purpose of valuing the Warrants. We set out below a summary of the selected comparable companies.

–36– LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

American Shared Varian Medical Shinva Medical Alliance HealthCare Hospital Services Elekta AB Systems Inc. Instrument Co. Ltd. Services Inc. The Company (AMS US) (EKTAB SS) (VAR US) (600587 CH) (AIQ US) (648)

Exchange listed NYSE MKT LLC Stockholm New York Shanghai NASDAQ GM the Stock Exchange

Business description American Shared Elekta AB produces Varian Medical Shinva Medical Alliance HealthCare Provision of Hospital Services and sells advanced Systems, Inc. Instrument Co., Services, Inc. medical provides medical products designs, Ltd. manufactures provides equipment to stereotactic for treatment of manufactures, and markets outsourced its medical radiosurgery neurological sells, and services medical diagnostic imaging centres and services to several disorders and equipment and instruments and services. The recently medical centers in radiation of software products equipment. The company provides diversified the United States. cancer. The for treating cancer company’s imaging and into The company’s company has with radiotherapy, products include therapeutic manufacture radiosurgery is an developed the stereotactic sterilization services primarily and sale of alternative to Gamma Knife as radiosurgery and equipment, to hospitals and household conventional brain well as a complete brachytherapy. radiation diagnosis other healthcare products. surgery. system for The company also and radiotherapy providers on a stereotactic supplies products equipment, mobile, shared- neurosurgery. that include x-ray chemical service basis. tubes, linear indication Alliance also accelerators, products, and provides systems digital image medical that are located detectors, image environmental full-time at processing protection particular software and equipment. hospitals and image detection clinics. The products. company also offers radiation therapy services.

Principal region of United States Worldwide North America, The PRC United States The PRC business Europe and China

Market capitalisation as at US$13.9 million SEK37,000.2 million US$8,116.1 million RMB12,309.5 million US$263.0 million HK$460.5 million the Latest Practicable (equivalent to about (equivalent to about (equivalent to about (equivalent to about (equivalent to about Date HK$108.4 million) HK$43,660.2 HK$63,305.6 HK$15,756.16 HK$2,051.4 million) million) million) million)

Trading price earnings N/A 29.39 18.69 51.90 N/A N/A ratio as at the Latest Practicable Date

Average daily trading 0.23% 0.39% 0.75% 0.63% 0.39% 0.65% volume to total issued shares for the past 12 complete calendar months

Annualised volatility used 66.70% 41.23% 33.34% 50.40% 66.41% 69.4%+ by Greater China (in thecaseofthe Comparable Companies) based on share price for the period up to 5 July 2013#

Annualised volatility of 17.52% 22.89% 21.24% 25.88% 27.53%* 24.95% the exchange based on the related market index (over a period of 10 years up to 5 July 2013)

Source: Greater China/Bloomberg

–37– LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

* the related index only launched in September 2006

# the length of the period is approximately 5.65 years, being the period from the valuation date of the Warrants to the expiry of the assumed exercisable period of the Warrants, i.e. 5 July 2013 to 27 February 2019

+ actual annualised volatility from 5 April 2013 to 5 July 2013

Despite these companies serve the best available comparables, we would like to point out that none of the selected comparable companies are listed on the Stock Exchange. We understand from Greater China that it considers that there is no suitable comparable company on the Stock Exchange and the selected comparable companies with a similar line of business as the Company are listed on other stock exchanges (as indicated above). Volatility of different markets also varies as demonstrated in the table above. Over the past 10 years, among the above markets, NYSE MKT LLC (based on AMEX XMI) demonstrated the lowest annualised volatility of 17.52%. NASDAQ demonstrated the highest annualised volatility of 27.53%. Save for Shinva Medical Instrument Co., Ltd. (‘‘Shinva’’), other four selected comparable companies do not have a major market focus in the PRC. However, Shinva’s market capitalisation was about 34 times of that of the Company as at the Latest Practicable Date.

We understand from Greater China that the annualised volatility of 51.6146% used on the valuation model represents the simple average of the annualised volatility of five comparable companies (with annualised volatility ranges from 33.337% to 66.699%). We believe that this can only serve as a very rough general reference. It is not fair to conclude that this is a reasonable expected implied volatility to be used under the Black Scholes models for valuing the Warrants.

As set out in the Valuation Report, the total fair value of the Tranche One Warrants and the Tranche Two Warrants is HK$12,960,000 and HK$7,290,000 as at 5 July 2013, respectively. We again consider that the above valuation only serve a very limited reference due to the limitations as described above. We have discussed with Greater China about our view on the limitations to this valuation model. Greater China understands our points made, but it believes that there is limited quantitative adjustment that can be made to the valuation model in spite of the limitations to the assumptions.

We would also like to point out that, save for all the limitations that we have described above, the above valuation of the Tranche One Warrants has not taken into account the value of the embedded Put Options to the Company. Accordingly, the valuation of the Tranche One Warrants by Greater China in the Valuation Report cannot be used as a reference. As explained above in our letter, the structure of the Tranche One Warrants actually represents a commitment of the Subscriber to subscribe for 1,350,000,000 Warrant Shares during the exercise period. The Company may require (through the exercise of the Put Options) the Subscriber to exercise the Tranche One Warrants at the Tranche One Warrants Subscription Price even when the market price is lower than the Tranche One Warrants Subscription Price. The Tranche One Warrants are effectively a forward contract

–38– LETTER FROM THE INDEPENDENT FINANCIAL ADVISER imposing an obligation on the Subscriber to subscribe for the 1,350,000,000 Warrant Shares. Unlike option contracts (or warrants), forward contracts usually do not come with a premium to either party of the agreement. We understand that a forward contract is marked to market based on the market price of the underlying stock from time to time. The Tranche One Warrants Subscription Price equals the closing price per Share on the date of the Warrant Subscription Agreement. Neither the Company nor the Subscriber should be required to pay any premium for the Tranche One Warrants (which structure actually represents a forward contract). Accordingly, we consider that no premium shall be required to be paid by the Subscriber for the commitment under the Tranche One Warrants.

The Tranche Two Warrants Subscription Price was set at a significant premium over the market price. As at the Latest Practicable Date, the Tranche Two Warrants were still out of the money. The Tranche Two Warrants Subscription Price also represents a premium of approximately 58.73% over the unaudited net asset value per Share as at 30 June 2013 of approximately HK$0.0315 and a premium of approximately 63.40% over the net asset values per Share of approximately HK$0.0306 after the Tranche One Warrants are exercised in full. As explained above, under the Black-Scholes model, the value of (or premium payable for) the Tranche Two Warrants shall depend on, among other things, the implied volatility. Based on the Valuation Report, if the implied volatility is about 51.6146%, the Tranche Two Warrants would be valued at about HK$7.3 million. We understand from Greater China that if an implied volatility of 33.337% (being the annualised volatility of the comparable company with the lowest annualised volatility selected by Greater China) is used, the Tranche Two Warrants would only have a value of approximately HK$2.7 million. On the other hand, the valuation can increase to HK$11.1 million if the implied volatility is 66.699% (being the annualised volatility of the comparable company with the highest annualised volatility selected by Greater China).

The value of the Tranche Two Warrants is highly sensitive depending on, among other things, the annualised implied volatility used which we consider it particularly difficult to get a reasonable reference in the present case as explained above.

We understand that there are studies (including the 2 references that we have quoted in this letter: (a) Empirical Study on the Performances of Black-Scholes Model for Evaluating European Options published in Romanian Journal of Economic Forecasting in 2009; and (b) Black Scholes and the Volatility Surface published by Martin Haugh in 2009) which suggested that Black-Scholes models may tend to misprice long-term, out-of-the money warrants. As explained above in this letter, Black-Scholes models assume a flat constant implied volatility regardless of the exercise price and term of the warrants. However, it was suggested in those researches that there is a correlation between the implied volatility and the exercise price and term: (a) warrants with lower exercise prices tend to have higher implied volatility than warrants with higher exercises prices; and (b) warrants with a shorter term demonstrate a higher volatility than warrants with a longer term. The researches hypothesised that these correlation may be a result of numerous factors, such as the fear of

–39– LETTER FROM THE INDEPENDENT FINANCIAL ADVISER crisis (downward jump in share price). Accordingly, there are further reasonable bases to believe that the valuation prepared by Greater China may likely have over valued the Tranche Two Warrants.

Another assumption of the Black-Scholes models is that the underlying stock and the warrants are traded continuously. Black-Scholes models are not designed to account for illiquidity. The Warrants will not be listed and it is not expected that there will be a liquid market for them. Illiquidity of both the Warrants and the underlying Shares will adversely affect the value of the Warrants as a securities instrument. We have read a study in Hong Kong in 2009reference 1 based on trading data from 2002 to 2007 which concluded that derivation warrants (with high trading liquidity) were traded at higher prices than options with the same underlying asset, strike price and maturity. We also understand from a study in 2006 in the United Statesreference 2 that the illiquidity discount to warrant valuation could be significant. This is particularly the case when the warrants are out-of-the money. In addition, without a market for the Warrants, it would be most difficult for the Subscriber to realise any underlying intrinsic value of the Warrants without exercising them. Accordingly, any valuation based on a liquid market assumption may not be appropriate. As explained above, if the Tranche Two Warrants are to be exercised, the Share price would logically have increased to HK$0.05 by then. This shall be in the interests of the Shareholders.

We agree with the valuer that Black-Scholes valuation models are the most commonly used methods in valuing options and warrants despite their drawbacks as discussed in this letter above. Black-Scholes valuation generally works better in cases where the related stocks have been trading on a liquid market for a long period of time and if there are traded options/warrants in respect of such stocks on the market. We have discussed with Greater China about our view on the valuation of the Tranche Two Warrants. We understand that Greater China agrees with us that there are a lot of uncertainties about the valuation of the Tranche Two Warrants using Black-Scholes models and there are significant risks that the valuation of the Tranche Two Warrants may be overstated as affected by a number of factors, including but not limited to, the illiquidity discount to the value of non-listed warrants and the transaction cost for trading the Shares. If a number has to be assigned to the Warrants value, we agree with Greater China that Black-Scholes models (including the trinomial tree model being used by Greater China) are the appropriate models to be used, and Greater China has selected the best available input data given the assumptions under the Black-Scholes models. Apart from the trinomial tree method, Black-Scholes formula and Monte Carlo Simulation are also commonly used in valuing option contracts. However, these two models have the same problems of Black-Scholes valuation models as mentioned in our letter as they all rely on basically the same assumptions. However, with regard to all the limitations and constraints in the valuation methods, we, and Greater China, do not have any suggestion on any adjustment or modification to the model presently used by Greater China which, from our point of view can provide a better quantitative valuation to the Warrants, nor we have an alternative quantitative valuation methodology which can avoid the above limitations and constraints.

–40– LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As stated above, a reason for the issue of the Tranche Two Warrants is to encourage the Subscriber’s future contribution to the Group. We consider this similar to and comparable with the grant of share options to employees or other stakeholders (usually allotted at a nominal consideration) by companies listed on the Stock Exchange pursuant to their share option schemes.

After taking into account the reasons for the issue of the Warrants, the benefits of providing incentive to the Subscriber (Mr Chan) to promote the Group’s business development, that the terms of the Warrant Subscription Agreement were agreed after arm’s length negotiation when the Subscriber was an independent third party (the amendments under the First Supplemental Agreement are mainly to clarify the original intention of both parties), the Put Options embedded in the Tranche One Warrants which make the Tranche One Warrants a forward contract rather than an option contract, the negative annualised return of the Shares prior to the entering into of the Warrant Subscription Agreement on 5 July 2013, the significant premium of the Tranche Two Warrants Subscription Price over the closing price per Share on the date of the Warrant Subscription Agreement and the net asset value per Share, the relatively long term of the Warrants, and the lack of a liquid market for the Warrants, we agree with the Company that the issue price of the Warrants of HK$540,000 in aggregate is fair and reasonable.

Possible financial effects of the Warrant Subscription

Working capital

According to the 2013 Interim Report, the Group had bank balances and cash, and net current assets of approximately HK$68.8 million and HK$175.6 million respectively. As set out in the Letter from the Board, the proceeds from the exercise of the Warrants (HK$29.7 million from the exercise of the Tranche One Warrants and HK$67.5 million from the exercise of the Tranche Two Warrants) will be applied as general working capital of the Group. The Group’s working capital is expected to be strengthened as a result of the cash inflow from the exercise of the Warrants.

Net asset value

The issue of the Warrants is not expected to have any material effect on the Group’s net assets. According to the 2013 Interim Report, the unaudited net assets of the Group was approximately HK$426.1 million and the Group’s unaudited net asset value per Share was approximately HK$0.0315 as at 30 June 2013. The Tranche One Warrants Subscription Price is lower than the latest net asset value per Share. The exercise of the Tranche One Warrants may lead to a slight dilution to the net asset value per Share. Assuming the Tranche One Warrants were exercised in full, the net asset value per Share would decrease by approximately 2.86% from approximately HK$0.0315 to approximately HK$0.0306. On the other hand, the Tranche Two Warrants Subscription Price is higher than the latest net asset value per Share. In the event that the subscription rights attaching to the Warrants are

–41– LETTER FROM THE INDEPENDENT FINANCIAL ADVISER exercised in full, based on the estimated net proceeds of approximately HK$97 million, the Group’s net assets would increase to approximately HK$523.1 million and the unaudited net asset value per Share would increase to approximately HK$0.0322.

Gearing

According to the 2013 Interim Report, the Group’s gearing ratio (calculated based on the Group’s total borrowings and guaranteed convertible note to the equity attributable to owners of the Company) as at 30 June 2013 was approximately 21.1%. Since the issue of the Warrants will result in an increase in the Company’s equity by the amount of premium received (i.e. approximately HK$0.54 million), it is expected that the Warrant Subscription will not have a material effect on the Group’s gearing position. In the event that the subscription rights attaching to the Warrants are exercised in full, the Group’s total equity will further increase which will result in a further improvement in the Group’s gearing ratio (assuming all other balance sheet item remained at a similar level as at 30 June 2013).

We consider that the effect of the Warrant Subscription and the subsequent exercise of the Warrants by the Subscriber on the Group’s financial position are fair and reasonable.

Effect on the shareholding structure of the Company

Reference is made to the shareholding structure of the Company as set out in the section headed ‘‘Shareholding Structure’’ in the Letter from the Board. The issue of the Warrants will not have any effect on the Company’s shareholding structure. Upon exercise of the subscription rights attaching to the Warrants in full, the shareholding of the existing Shareholders will be diluted from 100% to approximately 83.38%.

Having considered (i) the benefits of the Warrant Subscription attributable to the Group as mentioned in the paragraph head ‘‘Reasons for and benefits of the Warrant Subscription’’; and (ii) the Tranche One Warrants Subscription Price and the Tranche Two Warrants Subscription Price are determined with reference to the market price of the Shares as at the date of the Warrant Subscription Agreement, we consider that the dilution effect on shareholdings upon exercise of the subscription rights attaching to the Warrants in full is acceptable.

RECOMMENDATION

We consider that the Tranche One Warrants are effectively a forward contract and it is common that no premium is payable by either party to the forward contract when the contract is entered into. Greater China has valued the Tranche Two Warrants based on a Black-Scholes model. However, due to the various limitations as detailed in our letter, we consider it not practicable to estimate a reasonably accurate implied volatility as a key valuation input. Greater China has used an implied volatility of 51.6146% based on the average annualised volatility of the selected comparable companies ranging from 33.337% to 66.699%. If the above range of annualised volatility is used as the implied volatility for

–42– LETTER FROM THE INDEPENDENT FINANCIAL ADVISER valuation purposes, the theoretical value of the Tranche Two Warrants would range from HK$2.7 million to HK$11.1 million. Whilst the lower end of the above valuation range is still significantly higher than the premium payable by the Subscriber, the implied volatility is only one of the many factors in assessing the value of the Warrants. There are other factors, like illiquidity and moneyness, that can also significantly affect the value of the Tranche Two Warrants. The Warrants will not be listed on any stock exchange and therefore it would be very unlikely for the holder to sell and thus realise the value of the Warrants without exercising them. Also Black-Scholes models tend to over-value out-of-the money options, which is the case of the Tranche two Warrants. However, it will not be possible to quantify the amount being over-valued under the model. Accordingly, we consider that a direct comparison of the issue price of the Warrants with theoretical valuation of the Tranche Two Warrants is not meaningful.

Despite the lack of a reliable quantitative valuation figure of the Warrants, we agree with the Company that that it is fair and reasonable to issue the Warrants to the Subscriber at a total premium of HK$540,000 based on the major reasons as stated in this letter above andassummarisedbelow.

1. It is the intention of the Company and the Subscriber to complete the subscription of the Warrant Shares under the Tranche One Warrants as soon as practicable after the Capital Reorganisation has become effective. The issue of the Tranche One Warrants effectively represents a commitment of the Subscriber to subscribe the Warrant Shares under the Tranche One Warrants at the then market price when the Warrant Subscription Agreement was agreed between the parties and entered into.

2. It was the intention of the Company to invite Mr Chan as an executive Director. The issue of the Warrants to the Subscriber helped invite Mr Chan and will continue to help align his interests with those of the Company.

3. The Tranche Two Warrants Subscription Price was set significantly higher than the then market price when the Warrant Subscription Agreement was entered into. Given the expected illiquidity of the Warrants, the value of the Warrants to the Subscriber will more likely only become realisable when they are in the money. As at the Latest Practicable Date, the Tranche Two Warrants were still out of the money. The Tranche Two Warrants will continue to give a strong target to Mr Chan to help create value for the Company and the Shareholders as to be reflected by an increase in the Share price to, at least, the Tranche Two Warrant Subscription Price.

4. The Warrants (in particular the Tranche One Warrants) also, to a certain extent, help secure a source of funding to the Company whilst we understand from the Company that it has difficulty in securing any fund raising given the recent prolonged suspension history of the Company and the low trading liquidity of the Shares.

–43– LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Having considered the above principal factors and reasons, we consider that the terms of the Warrant Subscription are fair and reasonable and the Warrant Subscription is on normal commercial terms and in the interests of the Company and the Shareholders as a whole. Whilst the issue of the Warrants is not in the Company’s ordinary and usual course of business, it may help enhance the Group’s further development prospect. Accordingly, we advise the Independent Board Committee to recommend the Independent Shareholders vote in favour of the ordinary resolution to be proposed at the EGM to approve the Warrant Subscription.

Yours faithfully, For and on behalf of REORIENT Financial Markets Limited Allen Tze Managing Director

References

1. Gang Li and Chu Zhang, ‘‘Why are Derivative Warrants More Expensive than Options? An Empirical Study’’, Hong Kong Baptist University and Hong Kong University of Science and Technology (2009)

2. Espen Robak, ‘‘Discounts for Illiquid Shares and Warrants: The LiquiStatTM Database of Transactions on the Restricted Securities Trading Network’’, Pluris Valuation Advisers LLC (2006)

3. Chapter 4 of Romanian Journal of Economic Forecasting — 1/2009, Empirical Study on the Performances of Black-Scholes Model for Evaluating European Options

4. Black-Scholes and the Volatility Surface by Martin Haugh (Fall 2009)

–44– APPENDIX I VALUATION REPORT

24 December 2013

THE DIRECTORS CHINA RENJI MEDICAL GROUP LIMITED UNIT 3001, 30/F HOPEWELL CENTRE 183 QUEEN’S ROAD EAST WANCHAI, HONG KONG

Dear Sirs,

In accordance with your instructions, we have completed a valuation (the ‘‘Valuation’’) of the fair value of the 2,700,000,000 warrants (the ‘‘Warrants’’) as at 5 July 2013 (the ‘‘Valuation Date’’) pursuant to the warrant subscription agreement (the ‘‘Warrant Subscription Agreement’’) entered into by China Renji Medical Group Limited (the ‘‘Company’’) on the even date, the details of which were disclosed in the announcement of the Company dated 5 July 2013.

This letter identifies the Warrants valued, describes the basis of the Valuation, investigation, analysis, assumptions and limiting conditions, and presents our opinion of value. It is our understanding that this Valuation will be used by your Company for disclosure purpose of the proposed issuance of the Warrants only. Our analysis is for this purpose only and this report should be used for no other purposes.

I. INTRODUCTION

The Company, through its subsidiaries, manages and operates a network of medical centres specializing in the diagnosis and treatment of tumors and cancer in China.

On 5 July 2013, the Company and Wisdom Phoenix Limited (the ‘‘Subscriber’’) entered into the Warrant Subscription Agreement, pursuant to which the Company agreed to issue and the Subscriber agreed to subscribe for the Warrants. Completion of the Warrant Subscription Agreement is subject to the fulfillment of several conditions and shall take place within three business days following the date on which such conditions have been fulfilled or waived.

–45– APPENDIX I VALUATION REPORT

The following information extracted from the circular dated 24 December 2013 which describes the key characteristics of the Warrants:

Table 1 — 1 Description of the terms of the Warrants

Tranche One Tranche Two Note Valuation Date 05/07/2013 — Issue date 28/02/2014* After the fulfillment of the conditions, which is assumed to be on or about 28 February 2014 (or 0.65 year after the Valuation Date). No. of Warrants 1,350,000,000 1,350,000,000 — Assumed Exercisable 28/02/2014–27/02/2019* Exercisable at any time period during a period of 5 years from the date of issuance of the Warrants. Assumed Maturity 27/02/2019 5 years from the date of date issuance of the Warrants. Time to maturity 5.65 years (approximately) With the assumption that the Warrants will be issued 0.65 year after the Valuation Date, the expected time to maturity of the Warrants is 5.65 years as at the Valuation Date. Strike price (HKD) 0.022 0.050 —

* Assuming the Warrants will be issued on 28 February 2014.

The terms of the Warrants under this Valuation are based solely on the Warrant Subscription Agreement. The effect on the fair value of the Tranche One Warrants caused by the amendment to its terms under the First and Second Supplemental Warrant Subscription Agreement, namely the inclusion of the Put Options, is not considered in this Valuation because it was signed after the Valuation Date. Users of this report shall consider the relevant impacts on the fair value by the amendment of the terms. Please refer to Section IV. ASSUMPTIONS for details.

II. FAIR VALUE OF FINANCIAL INSTRUMENT

Fair value has been adopted as the basis of this Valuation. Hong Kong Financial Reporting Standard 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

–46– APPENDIX I VALUATION REPORT

III. VALUATION METHODOLOGY

For equity derivative instruments, Black-Scholes model is considered generally acceptable. The underlying assumptions of the Black-Scholes model are as follows:

1 The underlying share price follows the geometric Brownian motion with known risk-free rate (r), dividend yield (div) and constant volatility (σ),

dSt = μStdt + σStdWt,whereμ is the drift and σ is the volatility;

2 The holder can borrow and lend unlimited amount of cash at risk-free rate;

3 There are no transaction costs and no bid-ask spread;

4 There are no arbitrage opportunities; and

5 The holder can long or short any number of the underlying stock.

The Black-Scholes model is implemented by applying computational methods such as the Black-Scholes option pricing formula, Binomial/Trinomial Tree and Monte Carlo Simulation. In this case, the Trinomial Tree method is adopted because of its capability of considering various factors including early conversion/redemption, dilution effect and its superior computational efficiency.

Figure 3 — 1 Black-Scholes Model with Computational Methods

Black-Scholes model

Black-Scholes Binomial/ Monte Carlo Option Pricing Trinomial Tree Simulation formula method method

–47– APPENDIX I VALUATION REPORT

Under the Black-Scholes model, the underlying share price dynamic is assumed to follow the geometric Brownian motion, and the distribution of future underlying share price under the risk-neutral measure can be approximated by a trinomial tree with many steps. The trinomial tree is constructed by assuming that the underlying share price may only go up, go down or remain unchanged in each step. The tree grows/is expanded by repeating the aforementioned process. The parameters are as follows:

2 ⎡exp ()()r − div Δt / 2 − exp ()−σ Δt / 2 ⎤

u = exp ()σ 2Δt ; pu = ⎢ ⎥ ⎣ exp ()σ Δt / 2 − exp ()−σ Δt / 2 ⎦

⎡exp ()σ Δt / 2 − exp ()()r − div Δt / 2 ⎤ 2 d = exp ()−σ 2Δt ; pd = ⎢ ⎥ ⎣ exp ()σ Δt / 2 − exp ()−σ Δt / 2 ⎦

The figure above illustrates a sample trinomial tree with four steps. In our valuation, thetreegrows:wecalculatethefutureunderlying price starting from the initial step based on the equations stated. As a result, the terminal payoff of the derivatives can be found. Subsequently, the derivative price (or value of continuation) at each step before the terminal nodes can be found through backward induction:

Value = exp ()()− rΔt []pu ()Valueup + ()(pd Value Down )(+ 1− pu − pd )(Value Middle )

If there is any embedded option attached on the Warrants which may be exercised by the issuer/holder in certain intermediate steps, the minimum/maximum of the exercise value and the continuation value are taken at each node of the tree. The value of the Warrants as at the Valuation Date is found by ‘‘backward induction’’: repeat the aforesaid comparison and discount the payoffs from the terminal steps to the initial step.

–48– APPENDIX I VALUATION REPORT

IV. ASSUMPTIONS

The fair values of the financial instruments calculated are inherently subjective and uncertain due to the assumptions made and the limitations of the models used. The following assumptions were made in this valuation:

Black-Scholes model with Trinomial Tree method

Share price: the Company’s closing share price as at the Valuation Date, quoted from Bloomberg.

Strike price: based on the Warrant Subscription Agreement.

Issue date: assumed to be on or about 28 February 2014 (or 0.65 year after the Valuation Date).

Time to maturity: 5.65 years approximately, given the assumption that the Warrants will be issued on 28 February 2014 (approximately 0.65 year after the Valuation Date) and 5 years of the exercisable period of the Warrants after the issuance of the Warrant.

Exercisable period: from the expected issue date to the expected maturity date, i.e. 5 years.

Risk-free rate: interpolated from the HKD Hong Kong Sovereign (IYC 95) Zero Coupon Yield as at the Valuation Date, quoted from Bloomberg.

Dividend yield: estimated by the trailing 12-month dividend payout of the Company divided by the Company’s closing share price as at the dividend declaration date, quoted from Bloomberg.

Volatility: we considered that the implied volatility derived from listed warrants on the Company’s shares with the same moneyness as that of the Warrants as at the Valuation Date would be the best candidate for the input to the model. However, due to the absence of listed options or warrants on the Company’s shares, we have to adopt historical volatility instead, which is deemed acceptable as the input for the calculation of fair value. According to HKAS 39 -Appendix A- Application Guidance- para. AG82(f), volatility of the Company’s share price (the ‘‘Volatility’’) shall be estimated by the historical performance of the Company’s share price. However, with the similar reasons suggested in HKFRS 2 -Appendix B- Application guidance- para. B25(d), and the suspension of trading of the Company’s shares from 18 October 2010 to 5 April 2013 (about three months before the Valuation Date), we considered the Company’s recent historical performance unreliable to yield a fair estimation for the long-term volatility of the Company’s share price due to, among other things, the extraordinarily high volatility of the share price occurred during a short period after the resumption of trading on its shares. With inadequate reliable price history to forecast the long-term volatility, we considered that, similar to the situation of estimating an expected volatility of the options on a newly listed entity’s shares in accordance with HKFRS 2 -Appendix B- Application guidance- para. B26, the Volatility shall be estimated by the historical volatility of the share price of companies in ‘‘the same industry’’, i.e. medical

–49– APPENDIX I VALUATION REPORT

photography, which details are given below. In this Valuation, the average annualized standard deviations of the continuously compounded rates of return on the share prices of five comparable companies (the ‘‘Comparable Companies’’) with similar business operation, as at the Valuation Date, quoted from Bloomberg, was adopted.

For the purpose of computing the Volatility, we based on the Bloomberg database, searched for publicly traded companies with at least 1471-day-long (the number of trading day to maturity given the assumption of 260 trading days per year) trading records on its share prices preceding the Valuation Date, which conduct similar line of business as the Company, i.e. companies which are principally engaged in medical photography industry, such as providing radiosurgery services, operating stereotactic radiosurgery centres or gamma knife centres, as well as providing medical imaging services. However, based on our search, we were not able to identify any companies which are listed in Hong Kong and carrying on similar line of business as that of the Company, but were only able to identify the five Comparable Companies which are listed in other countries, namely the United States, China and Sweden. Accordingly, we considered that the below five Comparable Companies selected are representative samples to provide a meaningful comparison for purpose of computing the Volatility.

Table 4 — 1 List of Comparable Companies

Company Name Ticker Brief Description Of The Business

1. American Shared AMS US — Provides stereotactic radiosurgery services to Hospital Services several medical centres in the United States.

2. Elekta AB EKTAB — Produces and sells advanced medical SS products for treatment of neurological disorders and radiation of cancer.

3. Varian Medical VAR US — Designs, manufactures, sells, and services Systems Inc. equipment and software products for treating cancer with radiotherapy, stereotactic radiosurgery and brachytherapy.

4. Shinva Medical 600587 — Manufactures and markets medical Instrument Co. CH instruments and equipment which include Ltd. sterilization equipment, radiation diagnosis and radiotherapy equipment, chemical indication products, and medical environmental protection equipment.

5. Alliance AIQ US — Provides outsourced diagnostic imaging HealthCare services. Services Inc. — Provides imaging and therapeutic services primarily to hospitals and other healthcare providers on a mobile, shared-service basis.

–50– APPENDIX I VALUATION REPORT

Table 4 — 2 Summary of Parameters

Black-Scholes model with Trinomial Tree method Share price (HKD) 0.022 Strike price (HKD) 0.022/0.050 Time to maturity (year) 5.65, approximately Risk-free rate 1.368% Dividend yield 0.000% Volatility 51.6146%

Others

— The terms of the Warrants under this Valuation are based solely on the Warrant Subscription Agreement. The effect on the fair value of the Tranche One Warrants caused by the amendment to its terms under the First and Second Supplemental Warrant Subscription Agreements, namely the inclusion of the Put Option, is not considered in this Valuation because it was signed after the Valuation Date. Since the Put Options are part of the Tranche One Warrants and if the Put Options are taken into consideration, the Tranche One Warrants would effectively become a forward contract on the Company’s shares at the strike price of the Tranche One Warrants (i.e. the Tranche One Warrants Subscription Price of HK$0.022). The Tranche One Warrants’ fair value should be estimated under, instead of Black- Scholes model, spot-forward parity. Under spot-forward parity, market participants can hedge away the risk attributed by the underlying of the forward contract by holding or short-selling certain amount of the underlying. As at the Valuation Date, under the assumption of 0% dividend yield during the life of the Tranche One Warrants, the fair value for the Tranche One Warrants combined with the Put Option (the ‘‘Forward’’) would be minimal because the strikepriceoftheForwardwasatthesamelevelastheclosingpriceoftheshares of the Company as at 5 July 2013. Users of this report shall consider the relevant impacts on the fair value by the inclusion of the Put Option as a result of such amendment.

— Black-Scholes model with Trinomial Tree method is applicable and yields to approximation of the fair values of the Warrants. That means we have to assume that delta hedging/dynamic hedging to eliminate the risk of the Company’s share price is plausible.

— There is no change of the existing Warrants policy.

— The Company will continue the listing status on the Hong Kong Stock Exchange.

— There will be no change in the business of the Company.

V. LIMITING FACTORS OF THE VALUATION

The Black-Scholes model (the ‘‘Model’’) is the most generally adopted method in assessing the fair values of warrants. However, the Model contains a number of assumptions which we consider are not realistic or suitable for the purpose of valuing the

–51– APPENDIX I VALUATION REPORT

Warrants. Since there are currently no other methods/models which we consider are more appropriate than the Model for the purpose of valuing the Warrants, the Model has been adopted. In addition, if only the proceeds from the issuance of the Warrants and their fair values are considered in assessing the fairness of the terms of the Warrant Subscription Agreement, certain practical benefits of the Warrants will be ignored. We set out below the limiting factors which we consider may affect the fair values of the Tranche One Warrants and the Tranche Two Warrants. Users of this report shall take into consideration such limiting factors and exercise their own judgements when reading this report.

— The Model does not capture the impact on the Warrants’ fair values attributed by the illiquidity of the Warrants given their unlisted nature and has assumed a frictionless market (a market without transaction cost). However, there is currently no generally accepted model in analysing/quantifying the amount of discount due to the lack of marketability for unlisted warrants. Therefore, it is not possible and we are unable to give a reliable estimate on the effect of such lack of marketability on the fair value of the Warrants. As a result, the fair values of both Tranche One Warrants and Tranche Two Warrants are likely to be overestimated. In our opinion, the illiquidity discount on out-of-the-money unlisted warrants on shares of a listed company (such as the Tranche Two Warrants), is larger when compared to those in-the-money ones with similar terms, because the holder cannot exercise the warrants for shares which can then be converted into cash with a small amount of transaction cost;

— Due to the relatively short trading history of the Company’s shares prior to the Valuation Date (trading in the shares of the Company only resumed in early April 2013 or approximately three months before the Valuation Date), we consider that the recent historical performance for the shares of the Company is incapable to yield a fair estimation for the long-term volatility of the Company’s share price. Therefore, the historical volatility of the Comparable Companies has been adopted which is the best available approximation of the implied volatility of the Company’s share price. However, such approximation is not flawless and, together with the illiquidity of the Warrants, will likely to over-estimate the fair values of both Tranche One Warrants and Tranche Two Warrants as a result;

— The Put Options have not been taken into account on the valuation of the Tranche One Warrants because such amendment on the Tranche One Warrants was made under the Supplemental Warrant Subscription Agreement which was entered into after the Valuation Date. However, we consider the Put Options are in fact, part of the Tranche One Warrants and the combined effect of both will structure a synthetic forward to ensure the Subscriber’s commitment towards the subscription of the 1,350,000,000 Warrants Shares during the Tranche One Warrants’ exercisable period at the subscription price of HK$0.022 per Warrant Share. The fair value of the Forward depends on, including but not limited to the share price of the Company, interest rate and dividend yield, and may change when the aforementioned factors change as time goes by;

— The Model only values the Warrants with regard to the difference between the price of the underlying asset (i.e. the shares of the Company) and the strike price of the Warrants, and does not consider the strategic benefit that might be

–52– APPENDIX I VALUATION REPORT

contributed by the Subscriber to the Company such as the alignment of interests between the shareholders of the Company and the Subscriber through the exercise of the Warrants and the underlying motivation induced by the Tranche Two Warrants to the Subscriber for better development of the Group, etc. Thus, such potential positive impact on the Company is not considered in the Valuation;

— In addition, the Model does not consider the transaction cost or finance cost which can be saved consequently given the availability of debt financing with favourabletermsisuncertain;and

— The Model assumes that the holder of the Warrants can borrow at risk-free rate. Hence the fair values of the Warrants will be overestimated under this unrealistic assumption. We would like the users oftheValuationtobeawareofthis limitation and the overestimation on the fair values of both Tranche One Warrants and Tranche Two Warrants therefore.

VI. LIMITING CONDITIONS

We have made no investigation of and assumed no responsibility for the title to or any liabilities against the Company and the Warrants valued.

The opinion expressed in this report has been based on the information supplied to us by the Company, as well as from various institutes and government bureaus. We have exercised all due care in reviewing the supplied information. Although we have compared key supplied data with expected values, the accuracy of the results and conclusions from the review are reliant on the accuracy of the supplied data. We have relied on this information and have no reason to believe that any material facts have been withheld, or that a more detailed analysis may reveal additional information. We do not accept responsibility for any errors or omissions in the supplied information and do not accept any consequential liability arising from commercial decision or actions resulting from them.

This valuation reflects facts and conditions existing at the Valuation Date. Subsequent events have not been considered, and we have no obligation to update our report for such events and conditions.

VII. CONCLUSION OF FAIR VALUE

Based on the investigation and analysis stated above and on the valuation method employed, in our opinion, the fair values of the Warrants, as at the Valuation Date, are reasonably stated as follows:

Tranche One Tranche Two Valuation Date 05/07/2013 No. of Warrants 1,350,000,000 1,350,000,000 Assumed Exercisable period 28/02/2014–27/02/2019 AssumedMaturitydate 27/02/2019 Strike price (HKD) 0.022 0.050 Total fair value (HKD) 12,960,000 7,290,000

–53– APPENDIX I VALUATION REPORT

Caution: users of this report shall be aware of the limitations of the Valuation disclosedinsectionV.LIMITINGFACTORSOFTHEVALUATION.

The opinion of value was based on generally accepted valuation procedures and practices that rely extensively on the use of numerous assumptions and consideration of many uncertainties, not all of which can be easily quantified or ascertained.

We hereby certify that we have neither present nor prospective interests in the subject under valuation. Moreover, we have neither personal interests nor bias with respect to the parties involved. This valuation report is issued subject to our general service conditions.

Yours faithfully, For and on behalf of GREATER CHINA APPRAISAL LIMITED

Analysed and Reported by: Diana K. Y. Chiu, CFA, FRM Director

BrianW.C.Wong,FRM Assistant Director, Financial Risk Management

Thomas K. W. Chan, FRM Assistant Manager, Financial Risk Management

INVOLVED STAFF BIOGRAPHY

Diana K. Y. Chiu, CFA, FRM

Director

Ms. Diana K.Y. Chiu, CFA, FRM, is currently the Director of Greater China Appraisal Limited. Diana mainly focuses on risk management advisory and valuation of financial instruments for financial reporting, transactions and IPO purposes. Her consulting expertise includes advisory on structuring financial instruments in suiting acquisition needs. Most of Diana’s clients were listed companies or large private companies looking for going public in Hong Kong, China, Singapore and the United States.

–54– APPENDIX I VALUATION REPORT

BrianW.C.Wong,FRM

Assistant Director, Financial Risk Management

Mr. Brian W.C. Wong, FRM, is currently the Assistant Director of Greater China Appraisal Limited. Brian is specialized in the valuation of financial instruments and has performed a wide range of financial instrument valuation solutions to a number of locally listed companies for financial reporting and M&A purposes. His experience also includes providing advisory and project coordination service for pre-IPO purpose.

Thomas K. W. Chan, FRM

Assistant Manager, Financial Risk Management

Mr. Thomas K.W. Chan, FRM, passed all 3 CFA exams at first attempts, has joined the team since 2010, specialized in performing and executing valuation of various derivatives and instruments for M&A, instrument structuring advisory and reporting purposes.

GENERAL SERVICE CONDITIONS

The service(s) provided by Greater China Appraisal Limited will be performed in accordance with professional appraisal standard. Our compensation is not contingent in any way upon our conclusions of value. We assume, without independent verification, the accuracy of all data provided to us. We will act as an independent contractor and reserve the right to use subcontractors. All files, working papers or documents developed by us during the course of the engagement will be our property. We will retain this data for at least seven years after completion of the engagement.

Our report is to be used only for the specific purpose stated herein and any other use is invalid. No reliance may be made by any third party without our prior written consent. You may show our report in its entirety to those third parties who need to review the information contained herein. No one should rely on our report as a substitute for their own due diligence. No reference to our name or our report, in whole or in part, in any document you prepare and/or distribute to third parties may be made without our written consent.

You agree to indemnify and hold us harmless against and from any and all losses, claims, actions, damages, expenses, or liabilities, including reasonable attorneys’ fees, to which we may become subject in connection with this engagement. You will not be liable for our negligence. Your obligation for indemnification and reimbursement shall extend to any controlling person of Greater China Appraisal Limited, including any director, officer, employee, subcontractor, affiliate or agent. In the event we are subject to any liability in connection with this engagement, regardless of legal theory advanced, such liability will be limited to the amount of fees we received for this engagement.

We reserve the right to include your company/firm name in our client list, but we will maintain the confidentiality of all conversations, documents provided to us, and the contents of our reports, subject to legal or administrative process or proceedings. These conditions can only be modified by written documents executed by both parties.

–55– APPENDIX II GENERAL INFORMATION

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein misleading.

2. DISCLOSURE OF INTERESTS

Interest of directors and chief executives of the Company

As at the Latest Practicable Date, the interests and short positions of the directors and chief executive of the Company in the Shares, underlying Shares and debentures of the Company or any of its associated corporation(s) (within the meaning of Part XV of the SFO) which (i) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions in which they were taken or deemed to have under such provisions of the SFO); or (ii) were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein; or (iii) were required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies contained in the Listing Rules (the ‘‘Model Code’’), were as follows:

Number of shares or Approximate underlying percentage of shares held the issued Name of Director Capacity (long position) share capital

Mr. Chan corporate interest 2,700,000,000 19.93% (Note)

Note: Reference is made to the announcements of the Company dated 5 July, 9 September, 31 October and 20 December 2013. On 5 July 2013, the Company and the Subscriber entered into the Warrant Subscription Agreement pursuant to which the Company would issue to the Subscriber unlisted Warrants entitling the holder(s) thereof to subscribe for up to 2,700,000,000 Shares. As Mr. Chan is the beneficial owner of the Subscriber, Mr. Chan is deemed to be interested in the underlying Shares to be issued and allotted upon the exercise of Warrants to be issued by the Company to the Subscriber. As at the Latest Practicable Date, the conditions of Warrant Subscription Agreements have not been fulfilled and the Warrants have not been issued by the Company.

Except as disclosed above, as at the Latest Practicable Date, none of the Directors had or was deemed to have any interests or short positions in the shares, underlying shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) which (i) were required to be notified to the Company

–56– APPENDIX II GENERAL INFORMATION

and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) were required to be notified to the Company and the Stock Exchange pursuant to the Model Code.

Substantial shareholders’ and other persons’ interests and short positions in shares and underlying shares of the Company

As at the Latest Practicable Date, the interests or short positions of each person other than a Director or chief executive of the Company in shares or underlying shares of the Company which would fall to be disclosed to the Company pursuant to Divisions 2 and 3 of Part XV of the SFO as recorded in the register required to be kept under section 336 of the SFO, or who is, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group were as follows:

Long positions of substantial shareholders in the shares and underlying shares of the Company

Approximate Number of percentage of Name of substantial ordinary Shares the issued shareholder Capacity each held Shares

Pang Wei corporate interest 2,439,000,000 18.01% and beneficial (Note) owner

China North Heating Group corporate interest 2,439,000,000 18.01% Corporation (‘‘China and beneficial (Note) North’’) owner

Yong Chang Investment beneficial owner 2,439,000,000 18.01% Limited (‘‘Yong Chang’’) (Note)

蕪湖隆源投資有限公司 beneficial owner 1,950,000,000 14.40% (Wuhu Longyuan Investment Company Limited*)

* for identification purpose only

Note: Yong Chang is wholly-owned by China North and China North is wholly-owned by Pang Wei. By virtue of the SFO, each of Pang Wei and China North is deemed to be interested in the shares held by Yong Chang in the Company.

–57– APPENDIX II GENERAL INFORMATION

Apart from the above, the Directors are not aware of any other interest or short position in the shares or underlying shares of the Company which would fall to be disclosed to the Company pursuant to Divisions 2 and 3 of Part XV of the SFO as recorded in the register required to be kept under section 336 of the SFO, or who is, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group as at the Latest Practicable Date.

3. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contract with any member of the Group which does not expire or is not terminable by such member of the Group within one year without payment of compensation (other than statutory compensation).

4. LITIGATION

As at the Latest Practicable Date, to the best of the Directors’ knowledge, information and belief, the Group was not engaged in any litigation, arbitration or claim of material importance and no litigation, arbitration or claim of material importance is known to the Directors to be pending or threatened by or against any member of the Group.

5. COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors or proposed Directors or their respective associates had any interest in any business which competes or may compete, either directly or indirectly, with the business of the Group or has or may have any other conflicts of interest with the Group pursuant to the Listing Rules.

6. DIRECTORS’ INTEREST IN CONTRACTS AND ASSETS

Save for the Warrant Subscription and Mr. Chan being a shareholder of an associate of the Group, as at the Latest Practicable Date, none of the Directors were materially interested in any subsisting contract or arrangement which is significant in relation to the business of the Group. As at the Latest Practicable Date, none of the Directors or experts (as referred to below) had any direct or indirect interest in any assets which have been, since 31 December 2012, being the date to which the latest published audited accounts of the Group were made up, acquired or disposed of by, or leased to any member of the Group, or were proposed to be acquired or disposed of, or leased to any member of the Group.

7. MATERIAL ADVERSE CHANGE

As described in the announcements of the Company in June and July 2013 as well as the interim report of the Company for the six months ended 30 June 2013, the National Health and Family Planning Commission of the PRC has recently launched a program (the “Program”) outlining a number of measures to strengthen the management of the PRC’s hospitals and rectify their noncompliance operations, including the rental/contract-out arrangement of medical departments. It is expected that the Program will have an adverse

–58– APPENDIX II GENERAL INFORMATION impact on the ongoing working relationship between the Group and its hospital partners, including the non-renewal upon the expiry or termination before the expiry of the Group’s cooperation with the hospitals via its partners (four of the Group’s medical centres have received notices demanding for termination of the existing cooperation arrangements for compliance with the relevant PRC rules and regulations). It is expected that such uncertainty in connection with the possible renewal or the continuation of the Group’s cooperation arrangements for its other medical centres in the future will continuously adversely affect the operations of its medical network business.

Save for disclosed as above, as at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 December 2012, being the date to which the latest published audited consolidated financial statements of the Group were made up.

8. EXPERTS AND CONSENTS

The following are the qualifications of the experts who have given opinions and advice whicharecontainedorreferredtointhiscircular:

Name Qualification

Reorient Financial Markets Limited a corporation licensed to carry out type 1 (dealing in securities), type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (asset management) regulated activities under the SFO

Greater China Appraisal Limited independent professional valuer

As at the Latest Practicable Date, the experts above have given and have not withdrawn their respective written consents to the issue of this circular with the inclusion herein of its report and/or letter and/or summary of valuations and/or opinion (as the case may be), and/or the references to its name included in the form and context in which it is respectively included.

As at the Latest Practicable Date, the experts above were neither beneficially interested in the share capital of any member of the Group nor had any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

As at the Latest Practicable Date, the experts above did not have any direct or indirect interest in any assets which have been acquired, or disposed of by, or leased to any member of the Group, or are proposed to be acquired, or disposed of by, or leased to any member of the Group since 31 December 2012 (the date to which the latest published audited consolidated financial statements of the Group were made up).

–59– APPENDIX II GENERAL INFORMATION

9. MISCELLANEOUS

(a) The registered office of the Company is 30/F., Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.

(b) The share registrar of the Company is Tricor Tengis Limited at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong.

(c) The English text of this circular, the notice of the EGM and the accompanying form of proxy shall prevail over their respective Chinese texts in case of inconsistency.

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the Company’s office at 30/F., Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong during normal business hours on any weekday (except Saturdays and public holidays), from the date of this circular up to and including the date of the EGM:

(a) the Warrant Subscription Agreement and the First and Second Supplemental Warrant Subscription Agreements;

(b) the letter from the Independent Board Committee to the Independent Shareholders, the text of which is set out on pages 17 to 18 of this circular;

(c) the letter of advice from Reorient to the Independent Board Committee and the Independent Shareholders, the text of which is set out on pages 19 to 44 of this circular;

(d) the valuation report from Greater China Appraisal Limited, the text of which is set out on pages 45 to 55 of this circular;

(e) the written consents of the experts referred to in the section headed ‘‘Experts and Consents’’ in this appendix; and

(f) this circular.

–60– NOTICE OF EGM

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that an extraordinary general meeting of China Renji Medical Group Limited (the ‘‘Company’’) will be held at Suites 903–905, 9th Floor, Shui On Centre, 6–8 Harbour Road, Wanchai, Hong Kong on Saturday, 11 January 2014 at 5: 30 p.m. for the purpose of considering and, if thought fit, passing (with or without modifications) the following resolution as ordinary resolution of the Company:

ORDINARY RESOLUTION:

‘‘THAT

(a) the conditional warrant subscription agreement dated 5 July 2013 (as supplemented and amended by the supplemental warrant subscription agreement dated 31 October 2013 (the ‘‘First Supplemental Warrant Subscription Agreement’’) and the second supplemental warrant subscription agreement dated 20 December 2013 (the ‘‘Second Supplemental Warrant Subscription Agreement’’)) (together as the ‘‘Warrant Subscription Agreements’’) entered into between the Company as issuer and Wisdom Phoenix Limited as subscriber (the ‘‘Subscriber’’), pursuant to which the Company shall issue a total of 2,700,000,000 warrants (the ‘‘Warrants’’) in two tranches at an issue price of HK$0.0002 per Warrant to the Subscriber entitling to subscribe for shares in the share capital of the Company (the ‘‘Shares’’) at an initial exercise price of HK$0.022 per Share and HK$0.05 per Share respectively and details of which are set out in a circular of the Company dated 24 December 2013, a copy of the Warrant Subscription Agreements is tabled at the meeting and marked ‘‘A’’ and initialled by the chairman of the meeting for identification purpose, and the transactions contemplated thereunder, be and are hereby confirmed, approved and ratified;

(b) the allotment and issue of such number of ordinary Shares in the share capital of the Company to the holder(s) of the Warrants upon exercise of the Warrants and the transactions contemplated thereunder be and are hereby approved and confirmed and subject to the completion of the Warrant Subscription Agreements, the directors of the Company (‘‘Directors’’) be and are hereby granted with a specific mandate and are authorised to exercise all the powers of the Company

–61– NOTICE OF EGM

and to take all steps as might in their opinion be desirable or necessary in connection with the Warrant Subscription Agreements to, including without limitation, allot and issue the Shares upon the exercise of the Warrants; and

(c) any one Director be and is hereby authorised for and on behalf of the Company to execute all such other documents, instruments and agreements (whether under common seal or not) and to do all such acts or things deemed by him/he/them to be incidental to, ancillary to or in connection with the matters contemplated under the Warrant Subscription Agreements as he/she/they may in his/her/their absolute discretion consider necessary, desirable or expedient to give effect to the Warrant Subscription Agreements and the issue of the Warrants and the implementation of all transactions contemplated thereunder, including but not limited to the issue and allotment of Shares upon the exercise of the Warrants and to agree with such variation, amendment or waiver as, in the opinion of the Directors, in the interests of the Company and its shareholders as a whole.’’

For and on behalf of the board of directors of China Renji Medical Group Limited Tang Chi Chiu Chairman

Hong Kong, 24 December 2013

Registered office: 30/F., Hopewell Centre 183 Queen’s Road East Wanchai, Hong Kong

Notes:

(i) A member entitled to attend and vote at the above meeting is entitled to appoint one proxy or, if he/she/it is a holder of more than one share, more proxies to attend and vote instead of him/her/it. A proxy needs not be a member of the Company.

(ii) Where there are joint holders of any share of the Company, any one of such joint holders may vote at the meeting, either personally or by proxy, in respect of such share as if he/she/it was solely entitled thereto, but if more than one of such joint holders be present at the meeting personally or by proxy, that one of the said persons so present whose name stands first on the Register of Members of the Company in respect of such share shall alone be entitled to vote in respect thereof.

(iii) The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed, or a notarially certified copy of such power of attorney or authority, must be lodged with the registered office of the Company at Unit 3001, 30/F.,HopewellCentre,183Queen’sRoadEast,Wanchai, Hong Kong for registration not less than 48 hours before the time appointed for holding the meeting.

(iv) Completion and return of the form of proxy will not preclude a member from attending the meeting and voting in person at the meeting or any adjournment thereof if he/she/it so desires. If a member attends the meeting after having deposited the form of proxy, his/her/its form of proxy will be deemed to have been revoked.

–62–