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ANNUAL REPORT 2004

BANGKOK DUSIT MEDICAL SERVICES PUBLIC COMPANY LIMITED

Bangkok Dusit Medical Services Public Company Limited

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Samitivej Public Company Limited

Bangkok Hatyai Hospital Company Limited

Bangkok Phuket Hospital Company Limited

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Contents

Bangkok Dusit Medical Services Public Company Limited


Contents

ë Message from the Board of Directors ë Board of Director's Profile ë Report of the Audit Committee ë General Information & Reference Information ë Juristic Persons in which the Company Holds 10% of Shares or Greater ë Financial Overview ë Nature of Business ë Research and Development ë Industry and Competitions ë Future Projects ë Risks ë Shareholding Structure and Management ë Report of compliance with Good Corporate Governance ë Transactions with Associated Companies ë Explanation and Analysis of Operational Results and Financial Status ë Responsibility of the Board of Directors to the Financial Statements ë Financial Statements and Audit Report of Certified Public Accountant

2 4 10 11 12 13 16 23 24 26 30 31 35 39 41 43 44


Message from the Board of Directors

The Board of Directors is pleased to present our dear shareholders with the operational results of Bangkok Dusit Medical Services Public Company Limited for 2004 as follows: The private hospital business has seen significant growth in all regions of Thailand in 2004. Hospitals with high medical standards, specialist clinicians for all tracts and adequate modern medical equipments required for the diagnosis of all uncommon diseases are able to respond to the requirements of patients who, unfortunately, are not only affected by increasingly severe diseases which are difficult to treat but also complications involved. As we, Bangkok Hospital Group, are fortified by solid medical foundation and given the confidence of our patients, it is only natural that we continue to grow quickly in accommodation of the increasing number of patients. Thailand has been affected by situations involving epidemic diseases and natural disasters in the

02

past year. A number of patients had to resort to private hospitals for treatment as public hospitals were unable to cope with the influx of demand. Notable achievements and activities of Bangkok Hospital Group in the past year include ISO 14001 certification for safety and environmental conservation and Mor OrGor. 18001 certification by JACO and ISO; the launch of Bangkok Hospital web site through which information on medical services is disseminated to the general public as well as two prizes under Thai Webmaster Association Award 2004: top online service


web site and top social service web site for two consecutive years. As for medical service quality improvement, Bangkok Hospital has installed a computerized medical image storage and retrieval system enabling quick and highdefinition onscreen display of x-ray images and reducing the use of film, cost and burden from the storage of massive amount of x-ray film each year. A second MRI machine was installed at Bangkok Hospital to match the increasing number of patients as well. A number of expansions were realized in the Group with the launch of Bangkok Samui Hospital Co., Ltd. whose operational results were satisfactory given the large number of foreign tourists who required medical treatment and the launch of Bangkok Cardiac hospital on the 1st of December 2004. Bangkok Cardiac hospital, opposite to Bangkok Hospital, is the first and the only cardiac hospital in Thailand providing treatment of even greater excellence to patients with cardiac diseases. On the occasion of our 32nd anniversary, Bangkok Hospital has

organized the fourth annual academic seminar, the private hospital-organized medical seminar which attracts the greatest interest, participated by almost two thousand clinicians, nurses and medical personnel. Bangkok Dusit Medical Services Public Company Limited has donated One Million Baht as a research fund to doctors and medical personnel for the improvement of medical services and quality of life. The Nursing Department has organized the fifth critical patient treatment seminar for nurses. The event attracted the interests of nurses across the country as in the preceding years. In 2004, Bangkok Dusit Medical Services Public Company Limited has altered the investment in three associated companies: Samitivej Public Company Limited, Bangkok Hatyai Hospital Co., Ltd. and Bangkok Phuket Hospital Co., Ltd. The extraordinary shareholders meeting 1/2004 has had a resolution to prepare a proposal to purchase all shares of the said companies. This has resulted in the company holding 92.9%, 98.5% and 99.5% of the issued and paid-up shares of the three companies respectively. This move has brought about a significant medical and administrative cooperation in the Bangkok Hospital Group. Lastly, we would like to thank each of you, dear owner of Bangkok Hospital, for your continued support. We are now a leading private hospital with great potentials to grow. With the good deeds of yours in the treatment of financially distressed patients through Wejchadusit Foundation under the Royal Patronage of HRH Princess Galyani Vadhana Krom Luang Naradhiwas Rajanagarindra, you shall be graced with happiness and luck in all of your endeavours.

(Prof. Arun Pausawasdi, M.D.)

(Pongsak Viddayakorn, M.D.)

Chairman Board of Directors

President

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Board of Director's Profile

Professor Arun Pausawasdi, M.D.

Prasert Prasarttong-Osoth, M.D.

Professor Snoe Indrasukhsri, M.D.

Chairman of the Board Age 66 years old

Vice Chairman Age 71 years old

Independent Director and Chairman of Audit Committee Age 83 years old

Education • Medical Doctor, Siriraj Hospital • Doctor of Medicine, Mahidol University • Facharzt fur Chirurgie

Education • Medical Doctor, Siriraj Faculty of Medicine • Graduated from National Defense College

Experience • Secretary General, Royal College of Surgeons of Thailand • Chairman of Scientific Session Medical, The Medical Association of Thailand • Dean, Faculty of Medicine, Siriraj Hospital • President of the Medical Association of Thailand

Experience • Resident/Professor in Surgery, Siriraj Hospital • Member of National Legislative Council (Senator)

Other Position • Chairman, Consortium of Medical Specialty Training Associations of Thailand • President, Royal College of Surgeons of Thailand • Assistant President, The Prince Mahidol Award Foundation • Council Member, Asian Surgical Association • Vice President, Siriraj Foundation • Member of National Legislative Council (Senator) Percentage held • 0.02 Relationship with Executive Committee • None

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Other Position • President, Bangkok Airways Co., Ltd. Percentage held • 12.06 Relationship with Executive Committee • None

Education • Medical Doctor (Honorary) Certificate in Pediatric Surgery Experience • Head , Department of Surgery, Faculty of Medicine, Siriraj Hospital • Secretary General, Department of Medicine, Siriraj Hospital • Managing Director, School of Therapist Rehabilitation • President, Medical Society of Private Practioner • Chairman, Pediatric Association Other Position • None Percentage held • 0.41 Relationship with Executive Committee • None


Chuladej Yossundharakul, M.D.

Chirotchana Suchato, M.D.

Director /President Age 70 years old

Director Age 72 years old

Director Age 68 years old

Education • Medical Doctor, Siriraj Faculty of Medicine, Mahidol University • Post Graduate Course, Hospital University of Pennsylvania, USA. • DTM&H Diploma of Tropical Medicine and Hygiene • National Defense College

Education • Medical Doctor • Diplomate of American Board of Surgery

Education • Medical Doctor • Graduated Course Radiobiology at M.D. Anderson Hospital Houston, Texas • Diplomate of American Board of Radiology, Downstate University of New York

Experience • Adviser to the Bangkok Metropolitan Administration Governor (Healthcare) • Director, Teacher Clinic of Thailand, Ministry of Education • Chairman, Private Hospital Association • Director of the Medical Association of Thailand Other Position • Deputy Chairman/Samitivej Group • Chairman Board of Director, Bangkok Rayong Hospital Ltd. • Chairman-Bangkok Trad Hospital Co., Ltd. • CEO-BNH Medical Center Co., Ltd. • Director-Bangkok Samui Hospital Co., Ltd. • Director-National Healthcare System Co., Ltd. • Director-Bio-Molecular Laboratories (Thailand) Co., Ltd. • Adviser to Private Hospital Association Percentage held • 3.91 Relationship with Executive Committee • Mr. Satit Viddayakorn (Son)

Experience • Head, Surgical Unit, National Cancer Institute • Hospital Director, Karuna Pitak Hospital • Hospital Director, Bangkok Hospital Other Position • Chairman, Board of Director Bangkok Prapadaeng Hospital • Board Director, Bangkok Pattaya Hospital, Co. Ltd. Percentage held • 2.30 Relationship with Executive Committee • None

BANGKOK HOSPITAL

Pongsak Viddayakorn, M.D.

Experience • Director, School of X-Tray Technician • Professor-Radiology, Department of Medicine, Ramathibodi Hospital • Adviser to Radiology, Clinic of Teacher Council

Other Position • Chairman- Board of Director Bangkok Pattaya Hospital Co., Ltd • Director, Bangkok Phuket Hospital Percentage held • 3.01 Relationship with Executive Committee • None

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Professor Santasiri Sornmani, M.D. Yingdao Krairiksh, M.D.

Mr. Anuchat Chaiprapa

Independent Director/Audit Committee Age 71 years old

Independent Director/Audit Committee Age 72 years old

Education • Medical Doctor • Ph.D. (Tropical Medicine), Liverpool University Experience • Vice President for Administration & Administration Development, Mahidol University • Dean, Faculty of Tropical Medicine, Mahidol University • Member, Expert Committee on Food Borne Parasitic Diseases, WHO Other Position • Chairman-Board of Director, Medicpharma Co., Ltd. • Director Wattanawej Co., Ltd. Percentage held • 0.15 Relationship with Executive Committee • None

Director Vice President and Hospital Director Age 53 years old Education • Medical Doctor • Resident Training Program (Internal Medicine) Siriraj Hospital • Stanford Executive Program Graduate School of Business, Stanford University Experience • Managing Director, Bangkok Prapadaeng Hospital Other Position • Director, Bangkok Samui Hospital • Director, Bangkok Rayong Hospital • Director, Bangkok Prapadaeng Co., Ltd. • Director, Bangkok Phuket Hospital Co., Ltd. • Director Bio-Molecular Laboratory (Thailand)Co., Ltd. • Committee, Medical Association of Thailand • Committee, Siriraj Medical Alumni Association under Royal Patronage • Committee, Sports Medicine Association of Thailand • Committee, Thailand Hospital Administrator Association • Adviser, Sports Medicine of Association of Thailand Percentage held • 0.22 Relationship with Executive Committee • None

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Education • Bachelor of Accounting, Chulalongkorn University • Certified Public Accountant • Certificate at National Defense College Experience • Senior Executive General Manager, Thai Military Bank • Director, Navanthanakij Finance & Securities PLC • Director, Paiboon Insurance Co., Ltd. • Director, Small Industry Credit Guarantee Corporation Other Position • Director, Synmunkong Insurance Co., Ltd. • Director, Bangkok Prapadaeng Hospital Co., Ltd. Percentage held • 0.01 Relationship with Executive Committee • None


BANGKOK HOSPITAL

Wallop Adhikomprapa

Tavatwong Thanasumitra

Kittipan Visudharom, M.D.

Director Vice President-Corporate Finance Age 61 years old

Director Age 57 years old

Director Age 66 years old

Education • Directors Certification Program batch 27, Thai Institute of Directors Association • B.A. Law, Thammasart University

Education • Medical Doctor, Siriraj Hospital • Internship, University of Kentucky Medical Center, USA • Residency Training, University of Minnesota, School of Medicine, USA • Ph.D. (Surgery) University of Minnesota, Graduate School, Minneapolis, Minnesota, USA • Diplomate American Board of Surgery • Diplomate American Board of Thoracic Surgery

Education • Directors Certification Program batch 20, Thai Institute of Directors Association • Senior Executive Program, Sasin Graduate Institute of Business Administration • MS-Accounting, Roosevelt University, USA. Experience • Board Director Thai Wah Resorts Development Co., Ltd. • Thai Wah Plaza Co., Ltd. • Financial Controller, Holiday Inn Crown Plaza • Assistant Director-Accounting and Finance-Hostmark Hospitality Group Other Position • Director-Bangkok Rayong Hospital Co., Ltd. • Director-Bangkok Pattaya Hospital Company Ltd. • Director-Bangkok Phuket Hospital Co., Ltd. • Director-Samitivej Hospital PCL. • Director-BNH Medical Center Co., Ltd. • Director-National Healthcare Systems Co., Ltd. • Director-Bio-Molecular Laboratory (Thailand) Co., Ltd.

Experience • Managing Director, Air Lanka Catering Service Co., Ltd. • Director and Manager Thai Petroleum Service Co., Ltd. Other Position • Director Thai Petroleum Service Co., Ltd. • Managing Director-Thai Petroleum Service Co., Ltd. • Director & Senior Managing DirectorAccount, Bangkok Airways Co.,Ltd. Percentage held • 0.16 Relationship with Executive Committee • None

Experience • Cardiac Surgeon, Minessotta Hospital, USA • Associate Professor, Department of Surgery, Uthsesa, USA • Cardiac Surgeon, Minneapolis Heart Institute-Abbott Northwestern Hospital, Minnesota, USA • Chief Heart Surgeon, John Nasseff Heart Hospital, USA

Other Position • Director - Bangkok Heart Center • Head, Heart Institute SamitivejSukhumvit • President-Heart Association of Thailand

Percentage held • 1.46

Percentage held • 0.26

Relationship with Executive Committee • None

Relationship with Executive Committee • None

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Thongchai Jira-alongkorn

Associate Professor Ajjima Srethaputr

Director Age 46 years old

Vice President Deputy Hospital Director-Business Development Age 54 years old

Education • B.A. Marketing, Bangkok College Experience • Assistant Manager, Fire Insurance Department, Chalerm Nakorn Insurance Co., Ltd. Other Position • Director, Bangkok Rayong Hospital • Managing Director and Member of Board Director, Thonburi Automotive Co., Ltd. • Managing Director and Member of Board Director, Viriyah Auto Sales Co., Ltd. • Managing Director, Thonburi Phanich Leasing Co., Ltd. • Finance and Investment Manager, Viriyah Insurance Co., Ltd. • General Manager, Viriyah Leasing Co., Ltd. • Adviser to Executive Committee, Thonburi Auto Sales Co., Ltd. Percentage held • None Relationship with Executive Committee • None

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Other Position • Director-Medicpharma Co., Ltd • Advisor-Marketing Association of Thailand • Committee-Foundation of King Rama Education IX-The Great • Stanford Executive Program, Stanford • Committee & Secretary, Dusit Graduate School of Business (U.S.A.) • MBA, Lehigh University of Virginia, USA Foundation under the Royal Patronage of H.R.H Princess Galyanivadhana • B.A. Economics, University of West • Member of the Academy of Standard Virginia, USA Committee-Dept. of Marketing & • BBA Marketing (Hons), Thammasat General Management, Faculty of Business Administration (ABAC) Experience • Managing Director, Tele Data (Thailand) • Member of the Academy of Standard committee-Dept. of Marketing & USA General Management, Department of • Assistant to Regional Director, The Coca Technology and Management (ABAC) Cola Export Corporation Ltd. • Advisor to Minister of Public Health Percentage held • Instructor, The Journal of Business • None Administration, Faculty of Commerce & Accountancy-Thammasat University Relationship with Executive Committee • None


BANGKOK HOSPITAL

Satit Viddayakorn

Prayut Somprakit, M.D.

Paisal Chantarpitak, M.D.

Vice President Deputy Hospital Directior Information Technology Age 42 years old

Deputy Hospital Director-OPD & IPD-Japan Medical Services (JMS) Age 52 years old

(Group Captain-Royal Thai Airforce)

Education • Senior Executive Program, Sasin Graduate Institute of Business Administration • Mini Master of Management • Management Program for Private Hospital, Private Hospital Association • Diplomate-Gynecogyst-obstetrician • Medical Doctor, Siriraj Hospital, Mahidol University

Education • Medical Doctor • Diplomate Thai Board of Orthopedic Surgery

Education • Senior Executive Program, Sasin Graduate Institute of Business Administration • MBA Management, Golden Gate University, San Francisco, USA • B.S. Mechanical Engineering, Chulalongkorn University Experience • System Engineer, Jardine Matheson (Thailand) Co., Ltd. • Supervisor, ESSO (Thailand) Co., Ltd.

Experience • Board of Director and Hospital Director-Taksin Chantaburi Hospital

Other Position • CEO-Bangkok Pattaya Hospital Co., Ltd. • Managing Director, Bangkok Samui Hospital Co., Ltd. • Managing Director, National Healthcare Systems Co., Ltd. • Director, Bangkok Rayong Co., Ltd. • Director, Bangkok Phuket Hospital Co., Ltd. • Director, Bangkok Hatyai Co., Ltd.

Other Position • Chairman-Wattanawej Co., Ltd. • Chairman-Bangkok Samui Hospital Co., Ltd. • Managing Director, Bangkok Prapadaeng Hospital Co., Ltd. • Director-Medicpharma Co., Ltd. • Board of Director-Bio-Molecular Laboratory (Thailand) Co., Ltd.

Percentage held • 5.95

Percentage held • 0.01

Relationship with Executive Committee • Pongsak Viddayakorn, M.D. (Father)

Relationship with Executive Committee • None

Deputy Hospital Director Age 50 years old

Experience • Director of Orthopedic Unit Bhumibnol Adulyadejj Hospital Other Position • Director, Medicpharma Co., Ltd. Percentage held • 0.06 Relationship with Executive Committee • None

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Report of the Audit Committee

The Board of Directors of Bangkok Dusit Medical Services Public Company Limited has appointed an Audit Committee comprising of three independent members: Prof. Snoe Indrasukhsri, M.D., as the chairman, Prof. Santasiri Sornmani, M.D., and, Mr. Anuchat Chaiprapa, as members. The Audit Committee is entrusted with the duties of giving credibility to the financial statements prior to submission to the Board of Directors, ensuring efficient internal control with respects to financial statements and compliance with relevant regulations and laws, preventing conflict of interests, providing risk management advices, promoting the observance of good practices of listed company and nominating auditors. The Audit Committee has had twelve meetings with the auditors and the management in 2004 to review financial statements, assess internal control measures, review compliance with regulations and laws as well as the auditing practices of the auditor for 2004. It is the opinion of the Audit Committee that the financial statements of the company is correct in significant details as per the generally certified accounting standard and that the disclosure of information is adequate. The Audit Committee shall nominate auditors for 2005 to the Board of Directors for further submission to and the approval o the shareholders meeting.

Prof. Snoe Indrasukhsri, M.D. Chairman Audit Committee

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General Information & Reference Information

General Information Type of business

Health Care Business

Location

2 Soi Soonwijai 7, New Petchaburi Road, Bang Kapi, Huai Khwang, Bangkok 10320 Tel: 02-318-0066, 02-310-3000 Fax: 02-318-1546, 02-310-3327

Company registration number

BorMorJor. 249

Web site

www.bangkokhospital.com

Registered capital

1,180.5 Million Baht, 1,163.41 Million Baht of which is paid for and issued as 1,163.41 million shares with par value of 1 Baht each

Reference Information Security registrar

Thailand Securities Depository Co., Ltd. 4th Floor, Stock Exchange of Thailand Building, 62 Ratchadapisek Road, Khlong Toey, Bangkok 10110 Tel: 02-229-2800, 02-654-5599 Fax: 0-2359-1259

Auditor

KPMG Poomchai Auditing Co., Ltd. Mr. Niran Leelametawattana Mr. Supoj Singhasaneh Mr. Terdtong Tepmungkorn Mrs. Wilai Booranaittisophon 21st Floor, Empire Tower, 195 South Sathorn Road, Yannawa, Sathorn, Bangkok 10120 Tel: 02-677-2000 Fax: 02-677-2222

Legal consultant

Poonyarit Law Office Apichai Chandrasane, Ph. D. 22 Soi Suntornsarntoon (Onnut 21/1) Sukhumvit 77 Road, Bangkok Tel: 02-760-6969-76 Fax: 02-760-6967-68

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Juristic Persons in which the Company Holds 10% of Shares or Greater (as of the 31st of December 2004) Name

Bangkok Samui Hospital Co., Ltd.

Date of registration

Location

14 Aug 2003 57 Village No. 3, Bor Pood,

Type of business

50-bed private hospital

20 Dec 2002 2 Soonwijai 7 , New Petchaburi Rd, 70-bed cardiac hospital

15 Mar 1994 2/1 Hongyok-utit Rd, Muang,

Tel: 076-254-421-9 Fax: 076-254-430 Bangkok Hatyai Hospital Co., Ltd. Tel: 074-365-780-9 Fax: 074-365-790 Bio Molecular Laboratory

400-bed private hospital 100,000,000

Vadhana, Bangkok

99.5

98,533,300

98.5

1,000,000

949,993

95.0

92,919,772

92.9

32,399,993

81.0

8,295,000

79.0

5,551,793

74.0

25,341,034

63.4

1,050,000

49.0

13,720,000

49.0

28,400,002

48.5

5,760,000

48.0

1,500,000

30.0

2,280,000

19.0

3,000,000

10.0

(par value of 10 Baht per share)

Huai Khwang , Bangkok

Tel: 02-392-0011 Fax: 02-381-3490

99,467,500

(par value of 5 Baht per share)

7 Nov 2001 2 Soonwijai 7, New Petchaburi Rd, Biomolecular laboratory

28 Dec 1976 133 Sukhumvit 49 Khlong Ton,

9,993 100.0

(par value of 5 Baht per share)

Hatyai, Songkhla

(Thailand) Co., Ltd. Samitivej Public Company Limited

75, 15th, Petchkasem Rd.,

10,000

150-bed private hospital 100,000,000

Phuket 27 Jul 1995

14,999,993 100.0

(par value of 100 Baht per share)

Huai Khwang, Bangkok Bangkok Phuket Hospital Co., Ltd.

15,000,000 (par value of 10 Baht per share)

Koh Samui, Surat Thani New Petchburi Medical Services Co., Ltd.

Share Number of Number of held holding issued and paid-up shares by the percentage shares company

Private hospitals - Samitivej Hospital

100,000,000 (par value of 10 Baht per share)

with 275 beds - Samitivej Srinakarin with 400 beds

Bangkok Rayong Hospital Co., Ltd.

13 Aug 2002 8 Village No. 2, Sangchandra-

Tel: 038-612-999 Fax: 038-610-777 Bangkok Prapadang Hospital Co., Ltd.

7 Sep 1992

145-bed private hospital 10,500,000 (par value of 10 Baht per share)

Samut Prakan 25 Jul 2001

Tel: 02-717-3932-5 Fax: 02-717-3936 Bangkok Trat Co., Ltd.

288 Suksawasdi Rd, Muang,

2 Soonwijai 7, New Petchaburi Rd, Medical laboratory

(formerly known as Trat Vejchakij Co., Ltd.)

7,500,000 (par value of 10 Baht per share)

Huai Khwang , Bangkok 25 Jan 1994 276 Sukhumvit Rd,

40,000,000 (par value of 10 Baht per share)

neramit, Nuenpra , Muang, Rayong

Tel: 02-815-7141-50 Fax: 02-425-9859 National Healthcare Systems Co., Ltd.

200-bed private hospital

150-bed private hospital

40,000,000 (par value of 5 Baht per share)

Muang, Trat

Tel: 039-532-735 Fax: 039-532-735 Medical Pharma Co., Ltd.

26 Aug 1971 124 Thonburi-Paktor Rd,

Tel: 02-203-0640-2 Fax: 02-203-0642 Bangkok Pattaya Hospital Co., Ltd.

Bangkok 1 May 1989 301 Sukhumvit Rd (143 KM),

Tel: 038-427-751-5 Fax: 038-427-755 BNH Medical Centre Co., Ltd.

27 Aug 1991 9/1 Convent Rd, Silom,

Tel: 039-351-457-70 Fax: 039-321-430 Cool & Joy Co., Ltd.

Tel: 042-342-555 Fax: 042-341-033

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28,000,000 (par value of 10 Baht per share)

225-bed private hospital

200-bed private hospital

555/5 Poesri Rd, Muang, Udon Thani

5,000,000 (par value of 10 Baht per share)

300-bed private hospital

12,000,000 (par value of 10 Baht per share)

Bang Kapi, Bangkok 9 Jun 1994

12,000,000 (par value of 10 Baht per share)

Bangkok 25 Aug 1986 2138 Ramkhamhaeng Rd,

58,611,935 (par value of 10 Baht per share)

20 May 2003 2 Soonwijai 7, New Petchaburi Rd, Marketing activity

Public Company Limited Udon Pattana Co., Ltd.

200-bed private hospital

Chanthaburi

Tel: 02-310-3350 Fax: 02-310-3252 Ramkhamhaeng Hospital

of medications

Bangrak , Bangkok 28 Dec 1983 25/14 Thaluang Rd, Muang,

2,143,000 (par value of 10 Baht per share)

Muang Pattaya, Chon Buri

Tel: 02-632-0550 Fax: 02-632-0578 Watanavej Co., Ltd.

Production and sale

350-bed private hospital

30,000,000 (par value of 10 Baht per share)


Financial Overview Operational results

(unit: Million Baht)

Consolidated financial statement 2004

2003

2002

Company financial statement 2004

2003

2002

Total income

5,635

3,314

2,643

3,899

2,957

2,509

Income from provision of medical servicse

5,274

3,085

2,345

9,679

2,745

2,200

Initial profit

2,275

1,223

895

1,634

1,097

833

Profit before interest expense and depreciation

1,102

578

380

889

539

348

Operational profit

735

370

230

690

377

208

Profit before minority interests

528

389

309

623

385

306

Profit at minority interests

(95)

4

3

0

0

0

Net profit

623

385

306

623

385

306

Profit per share (Baht)

0.71

0.51

0.48

0.71

0.51

0.48

Number of weighted average share (shares) 875,129,812 750,000,000 637,671,230

875,129,812 750,000,000 637,671,230

Financial status

(unit: Million Baht)

14,598

7,305

5,734

10,142

6,173

5,665

6,711

3,579

2,501

2,616

2,789

2,464

362

341

32

0

0

0

7,887

3,725

3,233

7,525

3,384

3,201

Liquidity (times)

0.92

0.70

3.26

1.33

0.89

3.43

Rapid liquidity (times)

0.86

0.66

3.20

1.28

0.86

3.37

Debt collection period (days)

22

18

13

15

15

13

Inventory period (days)

10

8

7

6

6

7

0.89

1.06

0.78

0.35

0.82

0.77

12.84

9.84

4.45

15.30

8.01

4.25

Rise in income from medical service fees

71.0%

31.6%

21.2%

34.0%

24.8%

21.1%

Rise in operational profit

98.5%

60.9%

84.7%

83.2%

81.2%

75.6%

Rise in net profit

62.1%

25.7%

47.7%

62.1%

25.7%

47.7%

Initial profit

43.1%

39.7%

38.2%

44.4%

40.0%

37.9%

Operational profit

13.9%

12.0%

9.8%

18.7%

13.7%

9.4%

Net profit

11.8%

12.5%

13.0%

16.9%

14.0%

13.9%

8.3%

10.3%

9.5%

8.3%

11.4%

7.5%

Asset expansion

99.8%

27.4%

17.9%

64.3%

9.0%

18.0%

Returns to assets

4.3%

5.3%

5.3%

6.1%

6.2%

4.3%

0.39

0.45

0.46

0.38

0.48

0.43

Total assets Total liabilities Minority interests Shareholders’ equity

Financial ratios

Liability to capital (times) Interest payment ability (times)

Returns to shareholders

Change of assets (times)

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BANGKOK HOSPITAL


Nature of Business 1. Background Bangkok Dusit Medical Services Public Company Limited was established on the 26th of February 1972 as “Bangkok Dusit Medical Services Co., Ltd.” with the objectives of engaging in a private hospital business called “Bangkok Hospital”.Throughout the thirty-two years of its operation, the company has gradually expanded to the extent where it could become registered in the Stock Exchange of Thailand on the 2nd of October 1991 and register its conversion to limited public company in 1994. Presently, Bangkok Hospital is a 550-bed private hospital capable of serving 2,500 outpatients daily. The hospital itself is well-staffed and well-equipped with state of the art medical equipments. • Hospital Accreditation (HA) by Hospital Standard Certification and Development Institution,

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Ministry of Public Health in 2001 and the Prime Minister’s Export Award: Best Service Provider by Department of Export Promotion, Ministry of Commerce, on the 20th of August 2001. • The Asian Hospital Management Awards for Marketing PR or Brand Management Project and Quality Management Program out of the ten prizes given in 2002. The awards were presented by International Hospital Association, John Hopkins International Institute, Summa Foundation and Thai Private Hospital Association.


2. Notable events in 2004 • ISO 14001 certification, MorOrGor. 18001 / OHSAS 18001 for environmental management standard, and, occupational hygiene and safety management standard certification by the Industrial Standard Organization in 2003. Bangkok Hospital was pronounced by Superbrands as the preferred hospital of consumers and one of the only two hospitals in Thailand remembered by consumers for positive reputation and medical service excellence. • ISO 14001 certification for environmental management, MorOrGor 18001 / OHSAS 18001 and occupational hygiene and safety management standard certification by Japan Audit and Certification (JACO) in 2004.

Alteration of investment in associated companies The company was given an approval by the extraordinary shareholders meeting 1/2004 on the 3rd of August 2004 to prepare a proposal to purchase all shares of Samitivej Public Company Limited, Bangkok Hatyai Hospital Co., Ltd. and Bangkok Phuket Hospital Co., Ltd. The preparation was to be completed during the 10th of November and the 16th of December 2004 or a total of twenty-five business days. This has resulted in the company holding 92.9%, 98.5% and 99.5% of the issued and paid-up shares of the three companies respectively. This move has brought about a significant medical and administrative cooperation in the Bangkok Hospital Group and Samitivej. It empowered the group with the ability to compete in the long term given the more efficient financial cost management, management and medical personnel. Bangkok Hospital and Samitivej Hospital are now one of the strongest network of medical service establishments in Thailand providing the country with the basis on which it can build its status as the regional medical leader in the future.

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Echocardiography

Cardiac Computered Tomography (CT Scan)

Mobile CCU

Bangkok Heart Hospital is the first private Heart institute in Thailand, it provides 24- hour care of all heart disease, with highly experienced technicians and nurse, Center of the examine kinds, diagnose, operation and rehabilitation, and high medical equipment technology. It is going to be comprehensive medical center of Asia.


da Vinci Robotic Cardiac Surgery

Cardiovascular Magnetic Resonance Imaging

BANGKOK HEART HOSPITAL


Launch of Bangkok Cardiac Hospital Bangkok Hospital has launched “Bangkok included) on a 377-square wah plot of land in Soonwijai Alley opposite to Bangkok Hospital on the 1st of December 2004. Bangkok Cardiac Hospital is the first cardiac hospital in Thailand established upon the success of Bangkok Hospital Cardiac Center, a previous specialist center of Bangkok Hospital with clinicians specializing in heart disease and relevant equipments. With the concern of rising number of patients, the management has decided to expand the said service through the establishment of Bangkok Cardiac Hospital as the first comprehensive center for heart disease in Thailand. The hospital is on par with its international counterparts and staffed by medical personnel specializing in all tracts of heart disease. We have invested in numerous state of the art medical equipment and technology as follows: Cardiac surgery theatre with seamless walls and laminar air flow preventing dust build-up and minimizing infection.

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Da Vinci robotic cardiac surgery machine rendering it possible for the surgeon to perform a small-opening, high-precision surgery through a hole-like opening. This minimizes risks from the surgery, the pain sustained by patients and the time required for the recovery. 3 Telsa MRI machine and 64 Slice CT Scan machine capable of accurately and quickly displaying clotted or plaqued cardiac blood vessel with similar or identical results to Percutaneous Coronary Intervention (PCI). Mobile CCU imported from Germany fully equipped with life-sustaining and heart disease related equipments as found in hospital CCU. Patients in transit will be attended to by a team of doctor and nurses who are able to render medical assistance in severe or acute cases prior to arrival at the hospital.


3. Operation The operation of the company may be classified into two areas as follows: 3.1 Primary business: Private hospital business under the name “Bangkok Hospital�. 3.2 Investment activities; The company is currently investing in medical and relevant businesses through associated companies as follows: 3.2.1 Medical service business Number of beds

Shareholding percentage

70

100.0

275

92.9

225

48.5

400

92.9

Bangkok Prapadang Hospital Co., Ltd.

145

79.0

Ramkhamhaeng Hospital Public Company Limited

300

19.0

Bangkok Pattaya Hospital Co., Ltd.

200

49.0

Chonburi, Rayong,

Bangkok Rayong Hospital Co., Ltd.

200

81.0

Chantaburi and Trat

Watanavej Co., Ltd.: Bangkok Chanthaburi Hospital

200

48.0

Bangkok Trat Hospital Co., Ltd.

150

Area of service 1. Inner Bangkok covering

Entity providing service New Petchburi Medical Services Co., Ltd.

Sukhumvit, Asoke, Silom

: Bangkok Cardiac Hospital

and Sathorn

Samitivej Public Company Limited : Samitivej Sukhumvit Hospital BNH Medical Centre Co., Ltd. : BNH Hospital

2. Outer Bangkok and Samutprakarn

3. Eastern region covering

Samitivej Public Company Limited : Samitivej Srinakarindra Hospital

Ruambhaet Sriracha Co., Ltd.

100

: Samitivej Sriracha Hospital

63.4 An associated company of Samitivej Public Co., Ltd.

Udon Pattana Co., Ltd.: Ake Udon Hospital

350

10.0

Bangkok Phuket Hospital Co., Ltd.

170

99.5

Phuket, Songkla and

Bangkok Hatyai Hospital Co., Ltd.

400

98.5

Surat Thani

Bangkok Samui Hospital Co., Ltd.

50

100.0

4. Northeastern region covering Udon Thani 5. Southern region covering

3.2.2 Treatment related services Type of business

Entity providing service

Shareholding percentage

1. Production and sale of medication

Medical Pharma Co., Ltd.

49.0

2. Medical laboratory

National Healthcare Systems Co., Ltd.

74.0

3. Bio Molecular laboratory

Bio Molecular Laboratory (Thailand) Co., Ltd.

95.0

4. PR and marketing service

Cool & Joy Co., Ltd.

30.0

for associated hospitals

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4. Income structure of the company and associated companies The income structures of the company and associated companies in 2002 through 2004 may be compared as below: (unit: Million Baht)

Type of income Income from

Entity providing service Bangkok Dusit Medical Services

medical service

Public Company Limited

fees

Bangkok Prapadang Hospital

Shareholding percentage

2547 Income % 3,678.2 69.7

2546 Income % 2,743.6 88.9

2545 Income % 2,199.8 93.8

79.0

189.2

3.6

150.2

4.9

144.9

6.2

Bangkok Rayong Hospital Co., Ltd.

81.0

334.2

6.3

63.3

2.1

-

-

Bangkok Trat Co., Ltd. (formerly

63.4

124.7

2.4

22.5

0.7

-

-

Bangkok Hatyai Hospital Co., Ltd.

67.8

446.3

8.5

62.6

2.0

-

-

Bangkok Samui Hospital Co., Ltd.

100.0

50.3

1.0

-

-

-

-

Bangkok Phuket Hospital Co., Ltd.

51.8

368.0

7.0

-

-

-

-

Co., Ltd.

known as Trat Vejchakij Co., Ltd.)

Total

5,190.8 98.4

3,042.1 98.6

2,344.8 100.0

Income from

National Healthcare Systems Co., Ltd. 74.0

69.4

1.3

37.3

1.2

-

-

laboratory fees

Bio Molecular Laboratory

13.9

0.3

5.3

0.2

-

-

83.4

1.6

42.6

1.4

0.0

0.0

95.0

(Thailand) Co., Ltd. Total Total income from all operations

5,274.2 100.0

3,084.6 100.0

2,344.8 100.0

Remarks : The company has been holding 92.9%, 98.5% and 99.5% of shares in Samitivej Public Company Limited, Bangkok Hatyai Hospital Co., Ltd. and Bangkok Phuket Hospital Co., Ltd. respectively since the 21st of December 2004. Therefore, they are listed as associated companies in the consolidated financial statement (balance sheet) as of the 31st of December 2004. Nevertheless, as their operational results during a period of only eleven days (the 21st to the 31st of December 2004) were insignificant compared to the year-long income, the company does not consolidate their income to reflect the newly increased investment in the consolidated profit and loss sheet of the company. Their operational results are acknowledged through equity method using the previous investment percentage. The income structure as appearing above reflects the previous investment percentage.

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Research and Development The company regularly holds seminars for Bangkok Hospital doctors as well as those from other institutions in order to maximize the capabilities of doctors in all tracts. Bangkok Hospital is currently certified as the primary institution for continuous medical education project of the Medical Practitioners Council. Doctors, nurses and medical professionals participating in our seminars will be granted a continuous medical education credit for their renewal of medical professional practice license. The notable medical seminar in 2004 was the fourth annual seminar held on the occasion of the 32nd anniversary of Bangkok Hospital at the Medical Practitioners Council of Thailand.

Bangkok Hospital has continuously lent its support to the activities of Wejchadusit Foundation under the Royal Patronage of HRH Princess Galyani Vadhana Krom Luang Naradhiwas Rajanagarindra in order to help financially distressed patients and to promote research efforts of doctors working Bangkok Hospital and elsewhere for the development of Thai medical community. With the concern for the environment, Bangkok Hospital has adopted the ISO 14001 standard in order to minimize effects on the environment, ensure the safety of clients and improve the services while encouraging all members of the community to take part in such effort. Additionally, TIS 18001 / OHSAS 18001 is adopted in order to ensure the occupational hygiene and safety of the personnel as complicated procedures posing risks of exposure to serious communicable diseases are involved with the hospital business. Our contribution to research and development work over the past three years may be summarized as follows: 2002 20.25 Million Baht 2003 27.09 Million Baht 2004 40.72 Million Baht

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Industry and Competitions Thailand has spent 2004 preparing to emerge as the Asian Healthcare Hub with several governmental projects in support of such policy. It is expected that Thailand will realize this goal within the next four years. One of the healthcare services which has seen a highly active development is the spa business with its various services and growing reputation on the global level. Private medical institutions have been considerably improved, particularly the Bangkok Hospital Group under the management of Bangkok Dusit Medical Services Public Company Limited. We are restructuring ourselves in order to accommodate the business expansion and to better provide medical services to foreign patients under the relevant policies of the government. This restructure is beneficial to the company in that improvements will be attained in terms of strategic management and competitiveness. In addition to the governmental policies promoting the development of healthcare businesses, a number of public health incidents have placed Thailand under the spotlight since 2003. The incidents are the second bird flu outbreak which is better managed by Thailand than the first and the tsunami attack on the 26th of December 2004 in southern Thailand causing severe damages to six provinces in the area including Phuket and Krabi. As there were a large number of foreign tourists in the affected area, Bangkok Phuket Hospital has exercised its capability to provide medical services to these tourists. Patients for whom further treatment is required were transferred to Bangkok Hospital, Samitivej Hospital and BNH Hospital. A great number of foreign patients

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were treated and have recovered before leaving for their home country and praises were given for the services rendered. Most importantly, we are touched by the visit of King Gustav VII and Queen Sylvia of Sweden to Phuket, Bangkok Phuket Hospital and Samitivej Sukhumvit Hospital and their gesture of thank for our dedication to Swedish nationals. The Bangkok Hospital Group is expanding its services in order to accommodate the increasing number of patients. Bangkok Samui Hospital was officially launched in late May 2004 to serve the increasing cases of sickness and accident as more foreign tourists visit Samui each year. Additionally, Bangkok Cardiac Hospital was launched on the 1st of December 2004. Bangkok Cardiac Hospital is complete with highly experienced medical personnel and the latest technology required for the diagnosis and the treatment. The element that differentiates this hospital from others are the Da Vinci Cardiac Surgical System, the first robotic system used in surgery in Thailand and South East Asia, and the technologically advanced and sterile surgical theatre.

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Future Projects Bangkok Hospital is progressing into its fourth decade marked by the recovery of the Thai economy, the possibility that Thai people will be more concerned about their health, the promotion of Thailand as “the Asian Healthcare Hub”, medical freedom under the FTA and the increasing interest of foreign patients to be treated in Thailand for our international standard medical personnel and lower service fees compared to other countries of a similar medical standard. The above factors are attracting investors to the hospital business and fueling the competition among private hospitals. Operators desiring to compete in this business need to be of a good management, an ability to efficiently control cost and to offer new products. Consequently, we are planning to expand our range of services to better respond to the requirements of the clients. Our development projects are as follows: 1. Construction of Bangkok International Hospital worth approximately 510 Million Baht with approximately 90 beds for inpatients.

2. Bangkok International Cancer Center to support cancer patients. This center which is expected to be operation within 2005 will be equipped with state of the art medical equipments and staffed by highly experienced clinicians. The company shall import efficient equipments used to diagnose and treat cancers worth approximately 420 Million Baht for this center as follows: • PET Scan (Positron Emission Tormography): A machine used for the diagnosis of cancer. • Cyclotron: A machine used to produce chemicals required by PET Scan for the diagnosis of cancer. This cyclotron is of the

Bangkok International Hospital

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latest technology and highest efficiency and used by several cancer institutes in the United States of America such as Memorial Slone Kettering (MSKCC) and University of California Loas Angelis (UCLA). • Novalis: The most advanced cancer surgery in South East Asia. 3. Bangkok Dental and Maxilofacial Center worth approximately 127 Million Baht. 4. A new 6-storey parking building worth approximately 85 Million Baht.

Expected benefits Status of comprehensive healthcare complex with high state of readiness. Better accommodation of existing patients and new patients in accordance with the rise in Thai population and foreign patients under the Asian Healthcare Hub and Medical Tourism policies of the government.

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Technology of Novalis Brain LAB

Cyclotron

High technology for diagnosis plays an important role for the accurate, results. The advance technology is another important function to support the expertise technician, in order to complete diagnosis. In 2005, the Bangkok Hospital has planed to launch the International Bangkok Cancer Center, which has the advance technology to accommodate the patients. The Bangkok Cancer Center will have the PET scan, Cyclotron and the Technology of Novalis which is the latest medical equipment use to operate cancer. Bangkok Hospital has invested on estimated 420 million Baht for PET Scan, Cyclotron and Novalis.


PET Scan

NEW HIGH TECHNOLOGY


Risks 1. Risks from currency exchange rate fluctuations As of the 31st of December 2004, the company had a burden of foreign loan for the amount of only 1.47 Million US Dollar due in April 2005. No affect from currency exchange rate fluctuation is expected.

2. Risks from loans to subsidiaries and joint ventures As of the 31st of December 2004, the burden of loans to subsidiaries and joint ventures was 148.5 Million Baht of which 115.0 Million Baht was shortterm loan to subsidiaries whose shares were held by the company and 33.5 Million Baht was loans to joint ventures. The amount of loans to companies under the group has gradually decreased each year. However, the company may be subject to risks associated with such loans in the event of economic instability. Consequently, in order to minimize the risks of repayment inability on the part of subsidiaries and joint ventures, the company shall carefully consider the ability to repay the principal and the interest before approving each loan, the returns and the appropriate repayment period. The company does not have a policy to provide additional loans to subsidiaries and joint ventures. Such companies will be encouraged to secure loans directly from financial institutions.

3. Risks from the competition Although the private hospital business is presently highly competitive, the company believes that it shall not affect the operation of the company as hospital business operates on the trust of the users. Bangkok Hospital, as a hospital with over thirty years of operational experience, is trusted and relied upon by users and has its own permanent regular clients. Most of the clients are of the higher segments with high loyalty and trust in the medical personnel who are satisfied with the quality of the services. It is apparent

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that Bangkok Hospital has been operating with reputable practitioners covering all fields of medical services using modern and highly efficient medical equipments, making it possible to provide a comprehensive range of services that accommodate all requirements of the clients. Therefore, the company believes that the competition will not affect the operation of the company.

4. Risks from fee collection The company has a strict policy of avoiding possible risks from treatment fee collection. No credit is granted to clients. The hospital prepares an estimate of treatment fees for the patients in advance and informs them of the treatment fees incurred at intervals in order to minimize the burden of a single payment of treatment fee upon their discharge from the hospital. As for clients who are party to agreements, the company has a policy of carefully granting credits based upon the credit and financial status of the party company and reviewing transactions made with the company on an annual basis. The said policy is effective in the reduction of possible risks from fee collection.


Shareholding Structure and Management 1. Shareholding structure Ten major shareholders (as of the 31st of December 2004). Name

Number of shares

Shareholding percentage

1. Thailand Securities Depository Co., Ltd.

245,194,916

21.16

2. Prasert Prasarttong-Osoth, M.D.

140,287,707

12.06

3. Thailand Securities Depository Company Limited for Depositor

126,144,733

10.84

4. Bangkok Aviation Co., Ltd.

110,841,869

9.53

5. Wiriya Insurance Co., Ltd.

89,608,758

7.70

6. Mr. Satit Viddayakorn and wife

69,266,790

5.95

7. Pongsak Viddayakorn, M.D. and wife

60,682,849

5.22

8. Bangkok Pattaya Hospital Co., Ltd.

39,183,026

3.37

9. Chirotchana Suchato, M.D. and wife

36,953,748

3.18

10. BDH Holdings Co., Ltd.

18,000,000

1.55

937,164,396

80.55

Total

Remark: The second and forth shareholders are subjected to clause 258. The sixth and eighth shareholders are subjected to clause 258.

2. Management 2.1 Number of personnel Person) The company has a total of 2,194 employees as of the 31st of December 2004(Unit: as below: Type of employee

Permanent doctors and staffs

Temporary doctors and staffs

Total

Doctor

158

230

388

Nurse

510

31

541

General staff

1,164

101

1,265

Total

1,832

362

2,194

2.2 Managerial structure As of the 31st of December 2004, the internal managerial structure is comprised of the Board of Directors, the Audit Committee and the executives as follows:

Board of Directors 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13.

Prof. Arun Pausawasdi, M.D. Prasert Prasarttong-Osoth, M.D. Prof. Snoe Indrasukhsri, M.D. Pongsak Viddayakorn, M.D. Chirotchana Suchato, M.D. Chuladej Yossundharakul, M.D. Prof. Santasiri Sornmani, M.D. Yingdao Krairiksh, M.D. Mr. Anuchat Chaiprapa Mr. Wallop Adhikomprapa Mr. Tavatwong Thanasumitra Kitipan Visudharom, M.D. Mr. Thongchai Jira-Alongkorn

Chairman Vice Chairman Independent Director Director Director Director Independent Director Director Independent Director Director Director Director Director 31


Duties and responsibilities 1. Perform duties prescribed in the articles of association. 2. Comply with the provisions and the good practices of listed company directors of the Stock Exchange of Thailand. 3. Establish policies, approve business plans, annual budget and investment; and, make financial decisions. 4. Monitor the operational results of the company in order to ensure consistency with the established goals and plans.

Audit Committee 1. Prof. Snoe Indrasukhsri, M.D. 2. Prof. Santasiri Sornmani, M.D. 3. Mr. Anuchat Chaiprapa

Chairman Member Member

Duties and responsibilities In order that the Audit Committee may perform the duties assigned by the Board of Directors, the Audit Committee shall have the following duties and responsibilities: 1. Ensure the correct, complete and reliable issuance of reports and disclosure of information in financial reports of the company by liaising with external auditors and executives responsible for the preparation of quarterly and annual financial reports. 2. Ensure the use of proper and efficient internal control measures and engage in the joint revision with independent external auditors and internal auditors in order to ensure consistency. 3. Review transactions with associated companies or individuals in order to prevent conflicts of interest. 4. Ensure compliance with the regulations of the Stock Exchange of Thailand and other relevant laws. 5. Review evidence for internal investigation in the case where fraud or abnormality is suspected or significant defect is found in the internal control measures for further submission to the Board of Directors. 6. Order and review evidence in the case where violation of law or any regulation of the Stock Exchange of Thailand with possible significant effects on the financial status and the operational results of the listed company is suspected. 7. Nominate auditors and annual auditing fee to the Board of Directors for the approval of the shareholders meeting. 8. Complete other tasks assigned by the Board of Directors.

Executives 1. Pongsak Viddayakorn, M.D. 2. Mr. Wallop Adhikomprapa 3. Yingdao Krairiksh, M.D. 4. Assoc. Prof. Utchima Satetabutra 5. Mr. Satit Viddayakorn 6. Prayudh Somprakij, M.D. 7. Paisarn Chandrapitak, M.D.

President Vice President for Accounting and Finance Vice President and Director of Bangkok Hospital Vice President and Deputy Director for Business Development of Bangkok Hospital Vice President and Deputy Director for Information Technology of Bangkok Hospital Deputy Director for Outpatient and Inpatient Services (JMS) of Bangkok Hospital Deputy Director for Special Affairs of Bangkok Hospital

Duties and responsibilities The executives shall be responsible for the management of tasks in order to realize the established policies and business goals.

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2.3 Selection of directors The appointment and the removal of directors shall be as prescribed in the articles of association as follows: • The Board of Directors shall be comprised of at least five directors and more than half of such shall have a residency in Thailand. • The directors shall be individuals with the following qualifications: (1) A person of juristic age. (2) A person who is not bankrupt, incompetent or quasi-incompetent. (3) A person who has never been sentenced to imprisonment by a final judgment on a charge relating to fraudulent assets. (4) A person who has never been removed of service in the government or a governmental organization on account of an fraudulent act. • Directors shall be elected by the shareholders meeting using the following criteria: (1) The number of votes a shareholder can cast is the multiplication of the number of shares and the number of directors to be elected. (2)Each shareholder shall cast all votes available to them under (1) to a single or multiple persons. In the event where multiple directors are elected, votes may be distributed across the candidates at varying proportions. (3)The individuals of the same number as the directors to be elected who have attained the greatest number of votes shall be elected. In the event of a tie, drawing must be exercised in order to have the proper number of directors. • The Board of Directors shall be retired and a new Board of Directors shall be elected at the time of annual ordinary shareholders meeting. Nevertheless, the previous Board of Directors shall serve in the office until the new Board of Directors assumes the duty. Retired directors may be relected by the shareholders meeting. • In addition to the completion of term, a director may be retired from the position under the following circumstances: (1) Death. (2) Resignation. (3) Disqualification or presence of prohibited quality. (4) The resolution of the shareholders meeting with at least three-fourths of the shares with voting right and present provided that the total number of shares is not fewer than half of the shares held by the present shareholders with voting right. (5) Court order expelling the director from the position. • Directors wishing to resign from the position may submit a letter of resignation to the company. The resignation shall be effective upon the receipt of the letter of resignation by the company. • In the event where a position of director is vacant as a result of a cause other than completion of term, the Board of Directors shall select a qualified person without a prohibited quality to serve as a director in the next Board of Directors meeting with the exception of the case where the remaining term of the director is shorter than two months. The individual serving as the replacement shall remain in the office for the remainder of the term of the director whom he replaces. The resolution of the Board of Directors under Article 1 shall be comprised of the votes of at least three-fourths of the remaining directors. • In the event where many positions of director are vacant in such a manner that a quorum cannot be met, the remaining directors may act on behalf of the Board of Directors only in the organization of a shareholders meeting to elect directors to fill the vacant positions. The meeting shall be held within one month from the day on which the number of directors has reduced to lower than that required for a quorum. The individual serving as the replacement shall remain in the office for the remainder of the term of the director whom he replaces. In addition to the criteria for the selection of the Board of Directors above, the company has stipulated that the Board of Directors shall be comprised of at least three independent directors of the qualifications specified by the Securities & Exchange Commission and the Stock Exchange of Thailand. 33


3. Executives’ compensation 3.1 Monetary compensation in 2004 • The thirteen members of the Board of Directors have been paid a compensation in the form of meeting allowance and director’s remuneration for a total of 16.87 Million Baht in 2004 as follows: Director 1. Prof. Arun Pausawasdi, M.D. 2. Prasert Prasarttong-Osoth, M.D. 3. Prof. Snoe Indrasukhsri, M.D. 4. Pongsak Viddayakorn, M.D. 5. Chirotchana Suchato, M.D. 6. Chuladej Yossundharakul, M.D. 7. Prof. Santasiri Sornmani, M.D. 8. Yingdao Krairiksh, M.D. 9. Mr. Anuchat Chaiprapa 10. Mr. Wallop Adhikomprapa 11. Mr. Tavatwong Thanasumitra 12. Kitipan Visudharom, M.D. 13. Mr. Thongchai Jira-Alongkorn

Total compensation (Baht) 1,767,760 1,258,520 1,258,520 1,258,520 1,258,520 1,258,520 1,258,520 1,258,520 1,258,520 1,258,520 1,258,520 1,258,520 1,258,520

• Seven executives were paid compensation in the form of monthly salary, bonus and meeting allowance for a total of 45.01 Million Baht in 2004.

3.2 Other compensations The company has provided the executives with an office car in addition to monthly salary, bonus and meeting allowance.

4. Dividend payment policy The company and the subsidiaries pay out dividends to the shareholders at the approval of the Board of Directors, dependent upon the operational results and the dividend payment ability of the company in each year. An approval of the shareholders meeting is required with the exception of interim dividend payment for which approval is granted by the Board of Directors. The payment of dividends during the past three years (2001-2003) may be summarized as follows: 2003

Year of operational results for which dividend is paid

Rate of dividend

Date of dividend payment

Payment of dividend from the operational results of

4 Baht per share

The 21st of May 2004.

3 Baht per share

The 23rd of May 2003.

2 Baht per share

The 24th of May 2002.

1 Baht per share

The 17th of September

January – December 2003. 2002

Payment of dividend from the operational results of January – December 2002.

2001

1. Payment of dividend from the operational results of July - December 2001. 2. Payment of interim dividend from the operational results of January - June 2001.

2001.

Remark: The above rates of dividend were announced prior to the registration of change of ordinary share par value from 10 Baht to 1 Baht on the 11th of May 2004. 34


Report of Compliance with Good Corporate Governance The Board of Directors realizes its roles, duties and responsibilities of good corporate governance in order to ensure continuous and stable growth of the business through efficient and transparent management for the confidence of all parties involved and the utmost benefit of the company and the shareholders. Therefore, the Board of Directors has had a resolution at the 7/2004 meeting on the 17th of July 2004 approving existing and future policies concerning good corporate governance which are consistent with the fifteen principals of corporate governance.

1. Corporate governance policy (the first principal of corporate governance) The company is operating under the governance of the Board of Directors with the policy of transparent and effective management with responsibility to the greatest benefits of the organization and all interested parties in order to prevent any conflict of interests and ensure the long-term benefit of the shareholders. The company requires compliance with the articles of association of the company, laws on securities and Security Exchange, requirements of the Security Exchange and laws relevant to the business of the company as well as the criteria of company with good corporate governance stipulated by the Security Exchange.

2. Shareholders : Rights, equality and shareholders meeting (the second and the fourth principals of corporate) The company realizes and respects the equality of rights of all shareholders and is seriously concerned about the receipt of accurate and complete information by the shareholders. For the past shareholders meetings, the company has sent letter of notifications and accompanying information to the shareholders at least seven days in advance and arranged for publication of shareholders meeting notification in newspapers for three consecutive days at least three business days prior to the date of meeting. The opinion of the Board of Directors and detailed documents associated with the meeting shall be provided to the shareholders prior to the meeting. The company has granted an alternative to the shareholders in 2003 in that they may assign their authority to the three independent directors in the event where they are unable to participate in the meeting. The Board of Directors recognizes the importance of shareholders meeting and all thirteen directors shall participate in the meeting in order that the shareholders may equally exercise their rights in expressing their opinions and direct questions to the board of directors. Correct and complete minutes are taken for later revision by the shareholders and relevant parties.

3. Rights of interested parties (the third and the seventh principals of the corporate governance) The company recognizes the importance of rights of all interested parties and treats all employees with equality and fairness. Purchases of product and service from trading partners are completed as per the trading conditions and agreements entered into with them. Conditions of loan agreements are observed. Further, we are seriously concerned with the confidentiality of clients and have established a unit to specifically monitor quality. The company has a policy of operating with responsibility to the society, relevant parties and personnel of the organization. The company has adopted the ISO 14001 environment management system and announced the “Environment, Hygienic Profession and Safety Policy� for use within the hospital. Employees and relevant parties are informed of this for determined and continuous practice. 35


Further, the Company has established Wejchadusit Foundation to support the research efforts of doctors nationwide. Other notable projects include “Rak Jai Khun Hospital” under which youths are encouraged to creatively develop measures to prevent health problems and a healthcare preventive program called “Thai chuay Thai”.

4. Leadership and visions (the fifth principal of corporate governance) The Board of Directors has a role of establishing the visions of the company in conjunction with the executives, practicing good corporate governance and assessing the performance of executives while giving them the freedom to make decisions for the utmost benefit of shareholders as well as all interested parties. In practice, the Board of Directors has appointed the President as the person responsible for the management of the company and established definite roles, duties and responsibilities for the Board of Directors and the executives. Additionally, the company encourages directors of the company and associated companies to participate in the Director Certificate Program of Thai Institute of Directors Association in order that they may attain better understanding on efficient governance and use the knowledge gained to realize the corporate governance policies. Directors having completed the Director Certificate Program are Mr. Wallop Adhikomprapa (20th Class in October 2002) and Mr. Tavatwong Thanasumitra (27th Class in October 2003). Other directors are undergoing the said program.

5. Conflicts of interest (the sixth principal of corporate governance) The Board of Directors and the executives have proceeded strictly in accordance with the criteria of the Stock Exchange of Thailand and the Securities & Exchange Commission in order to carefully, reasonably and independently eliminate conflicts of interest in good faith for the benefit of the company. In order to ensure transparency and prevent personal gaining of benefits, the company has established a policy on the use of internal information preventing directors, executives and employees (including spouses and children not of juristic age of the said individuals) from receiving vital internal information which may affect the stock trading price or the use of vital, undisclosed internal information for the benefit of oneself or others. The individuals involved are required to proceed as follows: 1. The company educates directors and executives on their duty to report the stock trading conducted by themselves, their spouses and children not of juristic age as well as the penalties under the Stock and Stock Exchange Act B.E. 2535, its amendments and the stipulations of the Stock Exchange of Thailand. 2. Directors and executives are responsible for the preparation and the submission of the shares held by themselves, their spouses and children not of juristic age to the Securities & Exchange Commission and the Stock Exchange of Thailand as follows: 2.1 Report of first stock holding (Form No. 59-1) within thirty days from the day on which they are appointed as a director or an executive. 2.2 Report of change in stock holding (Form No. 59-2) as a result of purchasing, selling or transferring of securities within three business days from the day of such transaction and a copy of such stock holding report shall be submitted to the company within the same day as the day on which such report is submitted to the Securities & Exchange Commission and the Stock Exchange of Thailand in order that the secretary of the Board of Directors may prepare a report on the change of stock holding for presentation to the Board of Directors meeting. 36


6. Business ethics (the seventh principal of corporate governance) The company seriously values operational ethics, particularly that concerning clients treated at the hospitals. Therefore, all personnel are encouraged to constantly observe the rights of patients. A code of ethical conduct for executives and personnel is being prepared as a guideline for practice with clients and all related parties.

7. Balance of non-executive directors (the eighth and the ninth principals of corporate governance) The Board of Directors is comprised of 13 directors; 5 of which are executive directors, 3 of which are independent directors and 5 of which are non-executive directors. The Chairman of the Board of Directors shall be a non-executive director and not the same person as the President of the company in order that the Chairman may be sufficiently independent from the management and that policy and management works are appropriately separated for balance.

8. Compensation of directors and executives (the tenth principal of corporate governance) The company does not currently have a subcommittee to specify compensations. However, an appropriate consideration process is in place. That is, the compensation of directors shall be approved by the shareholders meeting and the compensation of high-level executives shall be as per the criteria and the policy specified by the Board of Directors and dependent upon the operational results of the company and the performance of each executive.

9. Board of Directors meetings (the eleventh principal of corporate governance) The company has scheduled Board of Directors meetings in advance throughout the year on every third Saturday of the month so that all directors may be aware of the schedule and allocate the time for their participation on every occasion. Agendas for each meeting are prepared in advance with continued agenda for the follow up on the duty assigned. The secretary of Board of Directors shall deliver a letter of invitation with agendas at least seven business days in advance in order to grant the board of directors sufficient time to study the data prior to the meeting. The Board of Directors have held a total of 15 meetings in 2004: 12 of which were ordinary meetings and 3 of which extraordinary meetings. Directors present for these meetings are as follows:

37


Director 1. Prof. Arun Pausawasdi, M.D. 2. Prasert Prasarttong-Osoth, M.D. 3. Pongsak Viddayakorn, M.D. 4. Chirotchana Suchato, M.D. 5. Chuladej Yossundharakul, M.D. 6. Yingdao Krairiksh, M.D. 7. Mr. Wallop Adhikomprapa 8. Mr. Tavatwong Thanasumitra 9. Kitipan Visudharom, M.D. 10. Mr. Thongchai Jira-Alongkorn 11. Prof. Snoe Indrasukhsri, M.D. 12. Prof. Santasiri Sornmani, M.D. 13. Mr. Anuchat Chaiprapa

Number of participation /

number of all meetings Title 13/15 Chairman 10/15 Vice Chairman 15/15 Director 15/15 Director 15/15 Director 15/15 Director 15/15 Director 15/15 Director 11/15 Director 14/15 Director 15/15 Independent Director 14/15 Independent Director 13/15 Independent Director

10. Subcommittees (the twelfth principal of corporate governance) The Board of Directors of the company has appointed an Audit Committee to review financial reports of the company to ensure correctness, complete and sufficient disclosure, availability of appropriate and efficient internal control measures, compliance with relevant regulations and laws; to screen and nominate auditors, to prevent conflicts of interest and to perform any other duty assigned by the Board of Directors.

11. Internal control measures and auditing (the thirteenth principal of corporate governance) The Board of Directors has the roles, the duties and the responsibilities stated under the managerial structure section. An Audit Committee comprising of three members, one of whom is of accounting and financial knowledge, is appointed by the Board of Directors. As for internal control, the company has arranged for an accounting office to serve as the internal auditor who would periodically inspect the operations in order to ascertain that the internal control measures of the company are sufficient for the prevention of possible risks and to report the results of such internal audit to the executives and the Board of Directors meeting so that improvements can be made for greater efficiency.

12. Investor relations (the fifteenth principal of corporate governance) The Board of Directors of the company recognizes the importance of disclosure of correct and complete information including financial reports and general information to the shareholders and investors. However, the company has yet to establish a unit specifically responsible for the provision of information to investors. The Vice President for Accounting and Finance was assigned to communicate with institutional investors, shareholders, analysts and relevant governmental agencies. Investors or other interested parties may request for information at "http://www.bangkokhospital.com"

38


Transactions with Associated Companies 1. Natures of transactions Transactions between Bangkok Dusit Medical Services Public Company Limited and associated companies or individuals are disclosed in Note 4 to the financial statements and may be classified as follows: 1.1 Trading conventional to the course of business The company has a policy of completing transactions with associated companies as those in the normal course of business. Such transactions shall be necessary, reasonable, supportive of the business and for the utmost benefit of the company. The trading conditions are not different from those used in transactions with outsiders. 1.2 Financial assistance As of the 31st of December 2004, the company has provided financial assistance to associated companies as follows:

(Unit: Million Baht)

Associated company

Nature of relationship

Short-term Loan

Long-term loan

Subsidiaries 1. Bangkok Prapadang Hospital Co., Ltd.

The company holds 79% of its shares

15.00

1.20

115.00

-

130.00

1.20

and has installed joint directors. 2. New Petchburi Medical Services Co., Ltd. The company holds 100% of its shares.

Joint ventures 1. Bangkok Pattaya Hospital Co., Ltd.

The company holds 49% of its shares and has installed joint directors.

130.00

17.28 18.48

Individuals involved as joint directors and executives include: 1. Pongsak Viddayakorn, M.D. 2. Chirotchana Suchato, M.D. 3. Chuladej Yossundharakul, M.D. 4. Yingdao Krairiksh, M.D. 5. Mr. Wallop Adhikomprapa 6. Mr. Anuchat Chaiprapa 7. Mr. Satit Viddayakorn 8. Prayudh Somprakij, M.D. Interested individuals holding more than 5% of shares with voting right in the subsidiaries or the joint ventures. - None 39


2. Method of transaction The management shall consider the approval of small scale transactions with associated companies with conventional trading conditions. Medium and large scale transactions with conventional trading conditions are approved by the Board of Directors. The Board of Directors has instructed all individuals involved to close observe the orders and the regulations of the Stock Exchange of Thailand when completing transactions with unconventional trading conditions. It is necessary to engage in transactions with Bangkok Pattaya Hospital Co., Ltd. and Bangkok Prapadang Hospital Co., Ltd. as the company is better positioned to procure loans. Funds must be provided to the two companies in order to reduce their interest expense. The said transactions were made possible under the resolution of the ordinary shareholders meeting 2001 approving the provision of financial assistance to subsidiaries, joint ventures and associated companies within the amount of 1,500 Million Baht. United Advisory Service Co., Ltd., the independent financial consultant, is of the opinion that such transactions are reasonable and fair.

40


Explanation and Analysis of Operational Results and Financial Status 1. Operational results 1.1 Income from operational results The company and the subsidiaries have gained 5,274.2 Million Baht in service fee in 2004 as opposed to 3,084.6 Million Baht and 2,344.8 Million Baht in 2003 and 2002 respectively. The growth in service fee is 71.0% and 31.6% in 2004 and 2003 respectively for the company and the subsidiaries. Income from the operation Bangkok Dusit Medical Services Public Company Limited All subsidiaries Total

2004 3,678.2 1,596.0 5,274.2

2003 2,743.6 341.1 3,084.6

2002 2,199.8 144.9 2,344.8

1.2 Service cost The company and the subsidiaries have had gradually decreasing service cost. The cost in 2004 is 56.9% of the income from service fee compared to 60.3% and 61.8% in 2003 and 2002 respectively. As the result, the 2004 net profit of company and subsidiaries have increased dramatically 43.1% compare with 39.7 and 38.2 in 2003 and 2004. 1.3 Sales and managerial expenses The company and the subsidiaries have had stable sales and managerial expenses during 2004 and 2002 or 22.2% in 2004, 209.% in 2003 and 22.0% in 2002. 1.4 Interest expense The company and the subsidiaries have had gradually decreasing interest expense. The interest expense is only 2.3% of the income from service fee in 2004 compared to 3.3% and 5.2% in 2003 and 2002 respectively. This was made possible with the loan interest rate which has been decreasing since 2002 and the repayment of the company and the subsidiaries in each year.

2. Financial status 2.1 Total assets The total assets of the company and the subsidiaries as of the end of 2004 is comprised of revolving assets (12.0%), investment in associated businesses (10.5%), land, building and equipments (net) (73.7%) and other non-revolving assets (approximately 3.8%). The total assets as of 2003 is comprised of revolving assets (12.5%), investment in associated businesses (19.5%), land, building and equipments (net) (60.5%) and other permanent assets (approximately 7.5%). The total assets of the group has gradually increased during 2004 and 2002. The total assets of the company and the subsidiaries in 2004 is 14,598.4 Million Baht as opposed to 7,304.9 Million Baht in 2003 or 99.8% compared to 2003. The increase in total assets is 27.4% compared to the total assets of 5,733.9 Million Baht in 2002. The increase attained in the past three years is a result of the expansion of private hospital business requiring the company and the subsidiaries to invest more in buildings and medical equipments.

41


2.2 Liabilities As of the end of 2004, the company and the subsidiaries have total liabilities of 6,710.9 Million Baht or 46.0% of liabilities and capital. The said amount is relatively similar to those in the past two years of 3,579.5 Million Baht in 2003 and 2,500.6 Million Baht in 2002 or 49.0% and 43.6% of liabilities and capital respectively. 2.3 Shareholders’ equity As the company has obtained funds of 1,500 Million Baht from the increase of registered capital in 2004 through the issuance of 250 million shares at 6 Baht each and as there is growth in the combined operational results of the company and the subsidiaries, the shareholders’ equity as of the end of 2004 is 7,525.0 Million Baht or an increase of 122.3% compared to 3,384.4 Million Baht of 2003. The increase in shareholders’ equity in 2003 over 2002 is only 5.7%.

3. Liquidity and repayment ability As of the end of 2004 and 2003, the company and the subsidiaries have the liquidity ratio of 0.9 and 0.7 times compared to 3.6 times at the end of 2002. The expansion of private hospital business has required the company and the subsidiaries to spend the internal capital on investment in buildings and medical equipments resulting in the decrease in the revolving capital from approximately 23.3% of total assets in 2002 to approximately 12.0% of total assets in 2004 and 2003. Nevertheless, upon the consideration of repayment ability, it is evident that the company remains adequately able to make repayment given the relatively low liability to capital ratio during the past three years or 0.9 times in 2004, 1.0 times in 2003 and 0.8 times in 2002 while the interest payment ability ratio is high or 12.8 times in 2004 compared to 9.8 and 4.5 times during the same period of 2004 and 2002.

42


Responsibility of the Board of Directors to the Financial Statements

The Board of Directors is responsible for the financial statements and has assigned the Audit Committee to review the financial statements for the past year. It was consequently informed that the financial statements are carefully prepared in accordance with the generally certified accounting standard, consistent with appropriately selected accounting policy. The appropriateness of items shown in the consolidated financial statement was evaluated and the disclosure of information in the notes to the financial statements was found to be sufficient. Additionally, the Board of Directors has established efficient internal control measures in order to ensure that accounting data is recorded completely and correctly and that the assets are kept safe from fraudulent acts or significant damages. It is the opinion of the Board of Directors that our internal control measures are satisfactory and capable of instilling the credibility in the consolidated and the company financial statements for 2004.

(Prof. Arun Pausawasdi, M.D.) Chairman Board of Directors

(Pongsak Viddayakorn, M.D.) President

43


Audit Report of Certified Public Accountant To the Shareholders of Bangkok Dusit Medical Services Public Company Limited I have audited the accompanying consolidated balance sheets of Bangkok Dusit Medical Services Public Company Limited and subsidiaries as at December 31, 2004 and 2003, and the consolidated statements of income, changes in shareholders' equity and cash flows for each of the years then ended. I have also audited the balance sheets of Bangkok Dusit Medical Services Public Company Limited as at December 31, 2004 and 2003 and the statements of income, changes in shareholders' equity and cash flows for each of the years then ended. The Companys' management is responsible for the correctness and completeness of information presented in these financial statements. My responsibility is to express an opinion on these financial statements based on my audits. The consolidated financial statements and the separate financial statements of Bangkok Dusit Medical Services Public Company Limited and subsidiaries for the year ended December 31, 2004 and 2003 included investments in five associated companies of Baht 931.21 million and Baht 1,090.37 million, respectively, which were accounted for using the equity method (6.38% of total assets in consolidated financial statements and 9.18% of total assets in the separate financial statements for 2004 and 14.93% of total assets in consolidated financial statements and 17.66 % of total assets in the separate financial statements for 2003), and which reflect a net gain of Baht 94.62 million and Baht 41.69 million, respectively, in the consolidated statements of income and the separate statements of income of the Company (1.67% of total revenues in consolidated financial statements and 2.43% of the total revenues in the separate financial statements for 2004 and 1.26% of total revenues in consolidated financial statements and 1.41% of the total revenues in the separate financial statements for 2003) whereby the financial statements of such associated companies used as the basis for recording the equity in net income have been audited by other auditors whose reports have been furnished me, insofar as it relates to the amounts included for these associated companies, is based solely reports of the other auditors. I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion. Based on my audits and the reports of other auditors as described in the first paragraph, in my opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Bangkok Dusit Medical Services Public Company Limited and subsidiaries as at December 31, 2004 and 2003, and the consolidated results of their operations and cash flows for each of the years then ended, and the separate financial position and results of operations and cash flows of Bangkok Dusit Medical Services Public Company Limited for the same year, in conformity with generally accepted accounting principles.

Thirdthong Thepmongkorn Certified Public Accountant Registration No. 3787 KPMG Phoomchai Auditing Co., Ltd. Bangkok February 25, 2005

44


Balance Sheets

Bangkok Dusit Medical Services Public Company Limited and Subsidiaries

As at December 31, 2004 and 2003

ASSETS

Baht

Notes

Consolidated 2004 2003

The Company Only 2004 2003

CURRENT ASSETS Cash and cash equivalents

5

Short-term investments Trade accounts receivable - net

4, 6

Short-term loan to related parties

4

Inventories

7

1,038,564,334

525,124,906

749,445,142

405,382,206

33,410,763

13,602,287

12,240,255

6,195,148

439,573,556

192,395,626

183,187,882

131,645,742

-

-

130,000,000

50,600,000

42,365,738

27,829,400

115,401,683

53,996,208

-

1,229,150

-

Accounts receivable from sales of fixed assets

4

7,755,000

Accrued interest income - net

4

23,705,365

58,148,382

106,896,930

141,344,058

Other current assets - net

4

96,347,315

66,633,571

53,309,073

42,550,559

1,747,003,016

911,130,130

1,277,445,020

813,302,113

Total Current Assets NON-CURRENT ASSETS Investments recorded by the equity method Investments in related companies - net

8 8

Other long-term investments - net Long-term loans to related parties - net

4

Property, plant and equipment - net

9

Land not used in operations

11

988,497,808 1,358,285,030

4,922,796,434 2,456,805,496

56,241,514

61,414,005

56,241,514

58,573,965

486,068,333

7,411,911

485,844,653

7,411,911

80,258,062

274,202,905

18,480,951

275,403,856

10,283,195,833 3,947,595,233

2,770,342,607 1,961,772,464

471,427,180

471,427,180

471,427,180

471,427,180

287,885,450

116,872,576

-

-

96,122,724

37,638,258

44,422,368

18,769,600

-

83,996,913

83,996,913

83,996,913

101,670,187

34,942,152

10,518,673

25,494,079

Intangible assets Goodwill-net Other intangible assets - net

10

Accrued interest income

4

Other non-current assets - net Total Non-Current Assets

12,851,367,091 6,393,786,163

8,864,071,293 5,359,655,464

TOTAL ASSETS

14,598,370,107 7,304,916,293

10,141,516,313 6,172,957,577

The notes to the financial statements from an interal part of these financial statements.

45


Balance Sheets

Bangkok Dusit Medical Services Public Company Limited and Subsidiaries

As at December 31, 2004 and 2003

LIABILITIES AND SHAREHOLDERS' EQUITY Notes

Baht

Consolidated 2004 2003

The Company Only 2004 2003

CURRENT LIABILITIES Bank overdrafts and short-term loans from financial institutions Trade accounts payable

87,875,030

405,824,149

-

176,349,000

4

525,182,990

204,435,524

259,783,322

146,357,650

12

538,398,103

346,376,490

293,458,932

342,666,481

4

4,400,716

22,033,230

-

-

104,460,619

56,100,457

102,963,874

55,191,771

Current portion of other long-term loans Account payable and short-term loans from related parties Accrued income tax Accrued expenses

4

310,915,632

183,759,680

118,521,065

139,687,679

Others current liabilities

4

327,319,817

87,493,703

187,159,297

51,354,409

1,898,552,907

1,306,023,233

961,886,490

911,606,990

4,637,314,940

2,128,755,055

159,819,890

129,403,014

159,819,890

129,403,014

15,273,005

15,292,816

11,934,437

15,207,405

Total Non-Current Liabilities

4,812,407,835

2,273,450,885

1,654,599,818 1,876,965,474

TOTAL LIABILITIES

6,710,960,742

3,579,474,118

2,616,486,308 2,788,572,464

Total Current Liabilities NON-CURRENT LIABILITIES Other long-term loans - net Deferred income Other non-current liabilities

4, 12

The notes to the financial statements from an interal part of these financial statements.

46

1,482,845,491 1,732,355,055


Balance Sheets

Bangkok Dusit Medical Services Public Company Limited and Subsidiaries

As at December 31, 2004 and 2003

LIABILITIES AND SHAREHOLDERS' EQUITY (Continued) Notes

Baht

Consolidated 2004 2003

The Company Only 2004 2003

SHAREHOLDERS' EQUITY Authorized share capital :

13

1,180,500,000 common shares, Baht 1 par value in 2004 75,000,000 common shares, Baht 10 par value in 2003 Issued and paid-up share capital : 1,163,410,108 common shares, Baht 1 par value in 2004

1,163,410,108

-

1,163,410,108

-

-

750,000,000

-

750,000,000

75,000,000 common shares, Baht 10 par value in 2003 Premium on share capital : Premium on common shares Other surpluses

4,322,607,094 1,567,600,000

4,322,607,094 1,567,600,000

9, 11

Surplus on investment revaluation

135,551,004

33,110

135,551,004

33,110

968,741,516

460,438,200

968,741,516

460,438,200

16

90,157,544

59,000,000

90,157,544

59,000,000

14

844,562,739

547,313,803

844,562,739

547,313,803

Surplus on additional land and building revaluation Retained earnings Appropriated Legal reserve Unappropriated Retained earnings Total Shareholders' Equity of the Parent Company Minority Interests Total Shareholders' Equity

7,525,030,005 3,384,385,113 362,379,360

7,525,030,005 3,384,385,113

341,057,062

-

-

7,887,409,365 3,725,442,175

7,525,030,005 3,384,385,113

14,598,370,107 7,304,916,293

10,141,516,313 6,172,957,577

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

The notes to the financial statements from an interal part of these financial statements.

47


Bangkok Dusit Medical Services Public Company Limited and Subsidiaries

Statements of Income For each of the Years Ended December 31, 2004 and 2003

Baht

Notes

Consolidated 2004 2003

The Company Only 2003 2004

5,274,182,052 3,084,649,302

3,679,026,532 2,744,718,338

Revenues Patient services Other income Revenue from sales of food and beverages

37,496,629

32,182,452

36,120,537

31,395,822

Interest income

13,833,329

31,022,453

21,628,856

30,605,985

868,970

10,677,601

898,280

10,677,601

86,446,582

58,598,370

59,770,523

48,364,623

138,645,510

132,480,876

118,418,196

121,044,031

222,505,847

96,858,132

101,772,915

91,531,997

Gain on exchange rate - net Others Total Other Income Share of profit from investments recorded by the equity method Total Revenues

5,635,333,409 3,313,988,310

3,899,217,643 2,957,294,366

2,044,651,422 1,648,131,621

Expenses Nursing and other operating services

14, 17

2,998,851,154 1,861,402,373

Administrative expenses

14, 17

1,518,466,176

826,151,770

925,444,453

702,053,490

21,429,225

18,698,450

18,938,100

17,930,500

191,579,462

9,494,866

2,332,451

8,678,949

38,116,757

7,986,126

5,004,310

7,986,126

Directors' remuneration Loss on impairment of assets Amortization of goodwill Other expenses Total Expenses

4,773,447,084 2,731,719,711

-

-

4,725,079

-

2,996,091,505 2,376,794,560

Profit before Interest Expense and Income Tax

582,268,599

903,126,138

580,499,806

Interest Expense

(121,656,107) (101,068,524)

(78,441,823)

(94,979,448)

Income Tax

(211,974,378) (107,458,526)

Profit after Income Tax Net Profit (loss) of Minority Interests Profit from Ordinary Activities

861,886,325

(201,533,439) (101,046,307)

528,255,840

373,741,549

623,150,876

384,474,051

94,895,036

(4,027,498)

-

-

623,150,876

369,714,051

623,150,876

384,474,051

-

14,760,000

-

-

623,150,876

384,474,051

623,150,876

384,474,051

0.71

0.49

0.71

0.51

Extraordinary item Gain from debt restructuring NET PROFIT Earnings Per Share Profit from Ordinary Activities Extraordinary item Basic Earnings Per Share

-

0.02

-

-

0.71

0.51

0.71

0.51

875,129,812

750,000,000

875,129,812

750,000,000

Weighted average number of common shares (shares)

The notes to the financial statements from an interal part of these financial statements.

48


Consolidated Statements of Changes in Shareholders' Equity

Bangkok Dusit Medical Services Public Company Limited and Subsidiaries

For each of the Years Ended December 31, 2004 and 2003

Baht Consolidated Retained Earnings

Notes

BALANCE AS AT JANUARY 1, 2003

Issued and paid-up share capital

Premium on share capital

750,000,000 1,567,600,000

Other surplus

Legal reserve

436,436,902 46,125,000

Unappropriated

Minority interests

400,684,752

32,422,441 3,233,269,095

Total

Increase in surplus on investments revaluation

-

-

24,034,408

-

-

-

24,034,408

-

-

24,034,408

-

-

-

24,034,408

Minority interests

-

-

-

-

-

308,643,621

308,634,621

Net profit

-

-

-

-

384,474,051

-

384,474,051

Legal reserve

-

-

-

12,875,000 (12,875,000)

-

-

Payment of dividend

-

-

-

Sum of items not recognised in the income statements

BALANCE AS AT DECEMBER 31, 2003

750,000,000 1,567,600,000

-

460,471,310 59,000,000

(224,970,000)

-

(224,970,000)

547,313,803 341,057,062 3,725,442,175

Increase in surplus on investments revaluation

-

-

135,517,894

-

-

-

135,517,894

-

-

513,558,920

-

-

-

513,558,920

-

-

(5,255,604)

-

5,255,604

-

-

-

-

643,821,210

-

5,255,604

-

649,076,814

-

-

-

-

-

413,410,108

-

-

-

-

2,755,007,094

Increase in surplus on land and building revaluation

9

Other surpluses amortization Sum of items not recognised in the income statements Increase in share capital - common shares

13

413,410,108

Increase in premium on share capital

13

-

2,755,007,094

Increase in minority interests

-

-

-

-

-

21,322,298

21,322,298

Net profit

-

-

-

-

623,150,876

-

623,150,876

31,157,544 (31,157,544)

-

-

Legal reserve

16

-

-

-

Payment of dividend

14

-

-

-

BALANCE AS AT DECEMBER 31, 2004

-

1,163,410,108 4,322,607,094 1,104,292,520 90,157,544

(300,000,000)

-

(300,000,000)

844,562,739 362,379,360 7,887,409,365

The notes to the financial statements from an interal part of these financial statements.

49


Consolidated Statements of Changes in Shareholders' Equity

Bangkok Dusit Medical Services Public Company Limited and Subsidiaries

For each of the Years Ended December 31, 2004 and 2003

Baht The Company Only Retained Earnings

Notes

Issued and paid-up share capital

Premium on share capital

750,000,000 1,567,600,000

BALANCE AS AT JANUARY 1, 2003

Other surplus

Legal reserve

436,436,902 46,125,000

Unappropriated

Total

400,684,752 3,200,846,654

-

-

24,034,408

-

-

24,034,408

-

-

24,034,408

-

-

24,034,408

Net profit

-

-

-

-

384,474,051

384,474,051

Legal reserve

-

-

-

Payment of dividend

-

-

-

Increase in surplus on investments revaluation Sum of items not recognised in the income statements

750,000,000 1,567,600,000

BALANCE AS AT DECEMBER 31, 2003 Increase in surplus on investments revaluation Increase in surplus on land and building revaluation

9

Other surpluses amortization

12,875,000 (12,875,000) -

460,471,310 59,000,000

-

(224,970,000) (224,970,000)

547,313,803 3,384,385,113

-

-

135,517,894

-

-

135,517,894

-

-

513,558,920

-

-

513,558,920

-

-

(5,255,604)

-

5,255,604

-

-

-

643,821,210

-

5,255,604

649,076,814

-

-

-

-

413,410,108

-

-

-

2,755,007,094

-

623,150,876

Sum of items not recognised in the income statements Increase in share capital - common shares

13

413,410,108

Increase in premium on share capital

13

-

Net profit

2,755,007,094

-

-

-

Legal reserve

16

-

-

-

Payment of dividend

14

-

-

-

BALANCE AS AT DECEMBER 31, 2004

-

1,163,410,108 4,322,607,094 1,104,292,520 90,157,544

The notes to the financial statements from an interal part of these financial statements.

50

31,157,544 (31,157,544)

623,150,876 -

(300,000,000) (300,000,000) 844,562,739 7,525,030,005


Bangkok Dusit Medical Services Public Company Limited and Subsidiaries

Statements of Cash Flows For each of the Years Ended December 31, 2004 and 2003

Baht

Consolidated 2004 2003

The Company Only 2003 2004

CASH FLOWS FROM OPERATING ACTIVITIES Net Profit

623,150,876

384,474,051

623,150,876

384,474,051

366,585,398

207,894,189

199,412,714

162,424,670

19,899,625

(13,229,927)

9,696,922

(14,700,000)

(16,383,123)

(12,565,479)

(16,383,123)

(12,565,479)

(222,505,847)

(34,237,048)

(101,772,915)

(91,531,997)

198,041,706

8,452,599

9,388,101

8,452,599

38,116,757

7,986,126

3,291,277

12,066,783

Reconciliation of net profit to net cash provided by (used in) operating activities: Depreciation and amortization Bad debts and doubtful accounts (reversal) Amortization of deferred income Share of profit from investments recorded by equity method Loss on impairment of assets Amortization of goodwill (Gain) loss gain on disposal of fixed assets

1,628,682

(416,494)

Loss from sale of investments

-

-

-

991,820

Gain on debt restructuring

-

(14,760,000)

-

-

(789,327)

(10,579,874)

(789,327)

(10,579,874)

1,009,407,342

535,501,420

724,331,930

426,549,296

(124,245,401)

(71,333,966)

(58,670,338)

(17,133,577)

Increase in inventories

(18,965,041)

(28,536,741)

(14,536,339)

(4,539,343)

Decrease (increase) in accrued interest income

118,439,930

83,005,544

34,447,128

(194,132)

41,127,408

(34,358,205)

(13,327,238)

(11,904,853)

1,316,531

(22,107,725)

7,919,755

(14,261,664)

94,555,012

59,532,665

113,425,672

8,174,038

(68,985,827)

121,009,501

(21,166,613)

68,456,314

Increase in accrued income tax

48,360,161

13,009,927

47,772,102

15,269,834

Increase in other current liabilities

91,866,708

45,233,834

58,988,484

9,655,336

Increase in deferred income

46,800,000

74,800,000

46,800,000

74,800,000

(10,842,052)

10,257,169

(5,893,515)

10,248,234

1,228,834,771

786,013,423

920,091,028

565,119,483

Unrealized gain on foreign exchange rate - net Gain from operating activities before changes in operating assets and liabilities Changes in operating assets and liabilities Increase in trade accounts receivable

Decrease (increase) in other current assets Decrease (increase) in other non-current assets Increase in trade accounts payable Increase (decrease) in accrued expenses

Increase (decrease) in other non-current liabilities Net Cash Provided by Operating Activities

The notes to the financial statements from an interal part of these financial statements.

51


Statements of Cash Flows

Bangkok Dusit Medical Services Public Company Limited and Subsidiaries

(Continued)

For each of the Years Ended December 31, 2004 and 2003

Baht

Consolidated 2004 2003

The Company Only 2004 2003

CASH FLOWS FROM INVESTING ACTIVITIES Increase in current investments Cash from dividend received Increase in goodwill Payments for purchases of investments Proceeds from sales of investments

(10,851,270)

(1,966,067)

(6,045,107)

(67,251)

-

30,015,000

44,758,750

34,162,500

(69,869,795)

(124,856,857)

-

-

(567,294,951)

(946,357,241)

(416,301,920)

(48,000)

2,840,040

31,552,018

-

79,360,000

337,500

-

337,500

Cash received from liquidation of long term investments Purchases of fixed assets and intangible assets

-

(1,504,158,903) (2,411,760,243)

(957,538,036)

(452,545,486)

Proceeds from sales of fixed assets and intangible assets Decrease in loans to related parties

9,177,272

14,088,882

3,899,326

4,751,675

265,636,822

276,923,545

177,522,904

227,836,062

1,229,150

41,211,325

7,755,000

34,685,475

Decrease in accounts receivable from sales of fixed assets Net Cash Used in Investing Activities

(1,722,298,604) (2,144,502,897)

(1,296,942,114) (1,017,836,765)

CASH FLOWS FROM FINANCING ACTIVITIES Increase (decrease) in bank overdafts and short-term loans from financial institutions Decrease in loans from related parties

(417,277,899) (24,535,115)

-

(176,349,000) (48,660)

176,349,000 -

-

-

2,129,833

-

-

477,400,000

603,369,006

-

-

Repayment of long-term loans

(349,684,572)

(218,384,049)

(302,688,319)

(60,230,798)

Dividend payment

(300,000,000)

(224,970,000)

(300,000,000)

(224,970,000)

Cash received from increase in share issuance

1,500,000,000

-

1,500,000,000

-

-

-

Cash from decrease in subcription receivables Increase in payables to related parties Increase in long-term loans

Increase in minority interests

16,951,150

405,824,149

-

-

21,322,298

308,634,621

924,175,862

876,603,560

720,914,021

(108,851,798)

430,712,029

(481,885,914)

344,062,935

(561,569,080)

525,124,906

1,007,010,820

405,382,207

966,951,287

82,727,399

-

Net Cash Provided by (Used in) Financing Activities NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR CASH OF SUBSIDIARIES AS AT THE ACQUISITION DATE

-

-

CASH AND CASH EQUIVALENTS AT END OF YEAR

1,038,564,334

525,124,906

The notes to the financial statements from an interal part of these financial statements.

52

749,445,142

405,382,207


Statements of Cash Flows

Bangkok Dusit Medical Services Public Company Limited and Subsidiaries

(Continued)

For each of the Years Ended December 31, 2004 and 2003

Baht

Consolidated 2004 2003

The Company Only 2003 2004

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION 1. Cash paid during the year for Interest expense

123,287,420

97,041,470

72,742,046

90,117,808

Income tax

170,838,499

97,047,873

153,665,286

85,661,249

2. Non-Cash Transactions In 2004, the Company additionally invested in common shares of two associated companies until they become new subsidiaries of the Company and invested in common shares of a subsidiary. The following summarizes the detail of net assets of these companies as of acquisition date:

Baht

Short-term investments Trade accounts receivable - net

8,957,206 140,263,430

Short-term loans to related party

70,179,462

Inventories

42,440,434

Other current assets - net

91,873,542

Investments recorded by the equity method

81,820,438

Other long-term investments - net Property, plant and equipment - net

223,680 5,046,353,086

Intangible assets - net

20,472,824

Other non-current assets - net

69,100,217

Bank overdrafts and short-term loans from financial institutions

(99,328,780)

Trade accounts payable

(226,192,454)

Current portion of other long-term loans

(132,746,744)

Accounts payable and short-term loans from related parties Accrued expenses Other current liabilities

(6,902,602) (196,141,777) (95,964,314)

Other long-term loans - net

(2,372,485,891)

Other non-current liabilities

(769,819)

Non - cash net assets

2,441,151,938

The notes to the financial statements from an interal part of these financial statements.

53


Notes to Financial Statements

Bangkok Dusit Medical Services Public Company Limited and Subsidiaries

December 31, 2004 and 2003

1. GENERAL Bangkok Dusit Medical Services Public Company Limited (The Company) is a company registered in Thailand and listed on the Stock Exchange of Thailand. The Company is engaged in the hospital business and management of 12 hospitals. The registered office is located at 2 Soi Soonvijai 7, New Petchburi Road, Bangkok.

2. BASIS OF PREPARATION OF FINANCIAL STATEMENTS The financial statements are prepared in Thai Baht, in the Thai language, and in conformity with generally accepted accounting standards in Thailand. Accordingly the financial statements are intended solely to present the financial position and results of operations and cash flows in accordance with accounting principles and practices generally accepted in Thailand. Other than those specific in the notes to the financial statements, the financial statements are prepared under the historical cost convention. For the convenience of the readers, an English language translation of financial statements has been prepared from the Thai language financial statements, which are issued for domestic financial reporting purposes. The consolidated financial statements for the years ended December 31, 2004 and 2003 comprise the financial statements of Bangkok Dusit Medical Services Public Company Limited, its subsidiaries (the Group) and the Group's interest in associates. Details of the Company's subsidiaries are as follows: Percentage of Holdings (%)

Subsidiaries Bangkok Prapradang Hospital Co., Ltd. National Healthcare Systems Co., Ltd. Bio Molecular Laboratories (Thailand) Co., Ltd. Bangkok Rayong Hospital Co., Ltd. New Petchburi Medical Services Co., Ltd. Bangkok Samui Hospital Co., Ltd. Bangkok Hatyai Hospital Co., Ltd. Bangkok Trat Hospital Co., Ltd. (Formerly: Trat Vejchakij Co., Ltd.) Bangkok Phuket Hospital Co., Ltd. (As from July 2, 2004) Samitivej Public Co., Ltd. (As from December 21, 2004) Phuket Health And Travel Co., Ltd. (As from July 2, 2004) (held by a subsidiary at 100%) Irving Sheridan SE Co., Ltd. (As from December 21, 2004) (held by a subsidiary at 95%)

54

Business Type

Country of Registration

2004

2003

Hospital Central Lab Central Lab Hospital Hospital Hospital Hospital

Thailand Thailand Thailand Thailand Thailand Thailand Thailand

79% 74% 95% 81% 100% 100% 99%

79% 100% 95% 81% 100% 100% 68%

Hospital

Thailand

63%

63%

Hospital

Thailand

99%

-

Hospital

Thailand

93%

-

Thailand

-

-

Thailand

-

-

Healthcare Travel Service Management Assets for healthcare business


Percentage of Holdings (%)

Business Type Subsidiaries First Health Food Co., Ltd. (As from December 21, 2004) (held by a subsidiary at 100%) Sodexho Healthcare Support Service (Thailand) Co., Ltd. (held 74% by a subsidiary company) (As from December 21, 2004)

Restaurant and distributing health food product Restaurant and distributing health food product

Country of Registration

2004

2003

Thailand

-

-

Thailand

-

-

Significant intra-group transactions between the Company and its subsidiaries are eliminated on consolidation. The Company's financial statements for the year ended December 31, 2003 have been reclassified to conform with the year ended December 31, 2004 presentation.

3. SIGNIFICANT ACCOUNTING POLICIES 3.1 Basis of consolidation The consolidated financial statements of the Company comprise the Company, its subsidiaries and the Group's interest in associates. Subsidiaries Subsidiaries are those entities controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are presently exercisable or convertible are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Associates Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. The consolidated financial statements include the Group's share of the total recognized gains and losses of associates on an equity accounted basis, from the date that significant influence commences until the date that significant influence ceases. When the Group's share of losses exceeds its interest in an associate, the Group's carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of an associate. 3.2 Trade and other receivables and allowance for doubtful accounts Trade and other receivables (including balances with related parties) are stated at their invoice value, net of allowance for doubtful accounts. Allowance for doubtful accounts is assessed primarly on analysis of payment histories and future expectations of customer payments. Allowances made are based on historical write-off patterns and the aging of accounts receivables. Bad debts are written off when incurred. 3.3 Inventories Inventories are valued at the lower of cost, determined by the moving average method and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale.

55


3.4 Investments Investment in subsidiaries and associates Investments in subsidiaries and associates in the separate financial statements of the Company are accounted for using the equity method. Investments in other equity securities Debt securities and marketable equity securities other than those securities held for trading or intended to be held to maturity, are classified as being available-for-sale and are stated at fair value. Any resultant gains or losses are recognized in equity, except for impairment losses, until disposal whereupon the gain or loss is recognized in the income statement. Equity securities which are not marketable are stated at cost less impairment losses. 3.5 Property, plant and equipment Own assets Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Property that is being constructed or developed for future use as fixed assets is classified as building, medical tools and equipment under installation and stated at cost until construction or development is complete, at which time it is reclassified as property, plant and equipment. Leased assets Leases in terms of which the Group substantially assumes all the risk and rewards of ownership are classified as finance leases. Property, plant and equipment acquired by way of finance leases is capitalized at the lower of its fair value and the present value of the minimum lease payments at the inception of the lease, less accumulated depreciation and impairment losses. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to the statement of income. Revalued assets Any increase in value, on revaluation, is credited to the revaluation reserve unless it offsets a previous decrease in value recognized in the statement of income. A decrease in value is recognized in the statement of income to the extent it exceeds an increase previously recognized in the revaluation reserve. Upon disposal, any related revaluation surplus is transferred directly from the revaluation reserve to retained earnings. Subsequent expenditure Subsequent expenditure relating to an item of property, plant and equipment is added to the carrying amount of the asset when it is probable that the future economic benefits in excess of the originally assessed standard of performance of the existing asset will flow to the Group. All other subsequent expenditure is recognized as an expense in the period in which it is incurred. Depreciation Depreciation is charged to the statement of income on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Assets, which were acquired before 1988 are depreciated on a declining balance method for the Company. The estimated useful lives are as follows:

56


Years Subsidiary companies Buildings, structures and building improvements Medical tools and equipment, furniture, office equipment and others Vehicles Acquired before 1988 Buildings and building improvements

5 - 50 3 - 10 5-8 -

The Company 5 - 50 3 - 10 5-8 20

No depreciation is provided on freehold land or assets under construction. 3.6 Intangible assets Goodwill Goodwill arising on acquisition represents the excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired. Negative goodwill arising on acquisition represents the excess of the fair value of the Group's share of the identifiable net assets acquired over the cost of acquisition. Goodwill and negative goodwill are stated at cost less accumulated amortization and impairment losses. Goodwill and negative goodwill arising on acquisition of shares in subsidiaries and associates in the Company's separate financial statements is included in investments. The gain or loss on disposal of an entity includes the unamortized balance of goodwill relating to the entity disposed of. Other intangible assets Other intangible assets that are acquired by the Group are stated at cost less accumulated amortization and impairment losses. Amortization Amortization is charged to the statement of income on a straight-line basis over the estimated useful lives of intangible assets. Intangible assets are amortized from the date they are available for use. The estimated useful lives are as follows: Number of years Goodwill Leasehold improvement Computer software

10 - 20 10 - 30 5

Subsequent expenditure Subsequent expenditure relating to an intangible asset is added to the carrying value of the asset only when it increases the future economic benefits embodied in the specific asset to which it relates. All other subsequent expenditure is recognized as an expense in the period in which it is incurred. 3.7 Impairment of assets The Group reviews property, plant and equipment, investments and intangible assets for impairment whenever events indicate that the carrying value of an asset exceeds its recoverable amount (the higher of an asset's net selling price or value in use). The review is made for individual assets or for the cash-generating unit.

57


In the event that the carrying value of an asset exceeds its recoverable amount, the Group recognizes the impairment loss in the statement of income, or reduces the revaluation increment if those assets were previously revalued and the revaluation increment was recorded under Shareholders' Equity. The reversal of impairment losses recognized in prior years is recorded as income when there is an indication that the impairment losses recognized for the assets no longer exist. 3.8 Trade and other payables Trade and other payables (including balances with related parties) are stated at cost. 3.9 Deferred income Deferred income represents payments from Life Privilege holders and is amortized over 10 years. 3.10 Revenue Revenue excludes value added taxes and is arrived at after deduction of trade discounts. Service income is recognized on an accrual basis. 3.11 Expenses Operating leases Payments made under operating leases are recognized in the statement of income on a straight-line basis over the term of the lease. Finance lease payments Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Other income and expenses Interest expenses and similar costs are charged to the statement of income in the period in which they are incurred, except to the extent that they are capitalized as being directly attributable to the acquisition, construction or production of an asset which necessarily takes a substantial period of time to be prepared for its intended use or sale. The interest component of finance lease payments is recognized in the statement of income using the effective interest rate method. Interest income is recognized in the statement of income as it accrues. 3.12 Foreign currency transactions Transaction in foreign currencies are translated at the foreign exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to Thai Baht at the foreign exchange rates ruling at that date. Foreign exchange differences arising on translation are recognized in the statement of income. 3.13 Financial instruments Financial assets and financial liabilities carried on the balance sheet include cash on hand and at banks, trade and other accounts receivable and payable, loans and investments which are disclosed in the related notes to financial statements. Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends, gains, and losses relating to a financial instrument classified as a liability are

58


reported as expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity. Financial instruments are offset when the Company has a legally enforceable right to offset and intends to settle either on a net basis or to realize the asset and settle the liability simultaneously. 3.14 Use of estimation In order to prepare financial statements in conformity with generally accepted accounting standards in Thailand, management needs to make estimates and set assumptions that affect income, expenditure, assets and liabilities in order to disclose information on the valuation of assets, liabilities and contingent liabilities. Actual outcomes may, therefore, differ from the estimates used. The estimates and underlying assumptions used in the preparation of these financial statements are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the peiod of the revision and future periods if the revision affects both current and future periods. 3.15 Income tax Income tax on the profit or loss for the year comprises current tax and is recognized in the statement of income. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted at the balance sheet date. 3.16 Cash and cash equivalents Cash and cash equivalents comprise cash balances, call deposit and highly liquid short-term investments net of deposits on obligation. Bank overdrafts that are repayable on demand are a component of financing activities for the purpose of the statement of cash flows. 3.17 Basic earnings per share Basic earnings per share is computed by dividing net profit for year by the weighted average number of shares in issue during the year, which are 875,129,812 shares and 750,000,000 shares for the year ended December 31, 2004 and 2003, respectively. Basic earnings per share for the year ended December 31, 2003 was recalculated by adjusting the par value to be Baht 1 each, which was for comparative purposes with the year 2004.

4. TRANSACTIONS WITH RELATED PARTIES Related parties are those parties linked to companies in the Group by common shareholders or directors. Transactions with related parties are conducted at prices based on market prices or at contractually agreed prices where no market prices exist. Significant balances at each balance sheet date, and transactions for the financial years then ended, with related parties are as follows: The Company's significant related party transactions and balance with person and related parties as at and for the years ended December 31, 2004 and 2003 consisted of: Baht

Consolidated 2004 2003 Subsidiaries Patient services income and lab services Consulting and management fees income Interest income Gain on sales of fixed assets Dividend income Other income

-

-

The Company Only 2004 2003 796,718 5,962,435 7,110,840 716,912 2,073,750 9,621,174

1,136,590 11,090 4,337,450 4,147,500 8,515,388

59


Baht

Consolidated 2004 2003

The Company Only 2004 2003

Subsidiaries (Continued) Service cost

-

-

119,231,317

Loss on sales of investment

-

-

-

Other expenses

-

-

2,802,798

-

Purchase of investments in common shares

-

-

1,843,292,244

-

Patient services income and lab services

82,131,482

50,567,653

3,462,348

7,235,344

Consulting and management fees income

35,697,244

13,217,304

7,690,261

1,679,375

Interest income

12,276,397

27,437,047

11,646,617

27,437,047

Dividend income

42,688,768

30,015,000

42,685,000

30,015,000

7,821,598

21,939,687

3,370,519

21,939,687

40,222,240

16,655,239

33,176,320

13,796,752

Interest expense

545,955

188,750

-

-

Other expenses

11,680,762

2,128,113

1,843,658

1,447,999

Dividend payment

11,395,260

8,546,445

11,395,260

8,546,445

-

2,570,656

-

-

49,505,060

-

49,505,060

-

9,179,673

4,087,792

9,179,673

3,612,087

56,100,610 991,820

Associates

Other income Service cost

Purchases of fixed assets Purchase of investments in common shares Other Related Parties (The companies related through common directorships) Patient services income and lab services Consulting and management fees income

-

189,658

-

-

Other income

-

1,498,088

-

1,498,088

Service cost

-

30,882,896

-

30,882,896

925,000

-

-

-

-

-

20,374,875

32,796,900

20,374,875

Interest expense

450,000

Other expenses

42,295

Dividend payments

32,796,900

Balances with related parties as at December 31, 2004 and 2003. Baht

Consolidated 2004 2003

The Company Only 2004 2003

Trade Accounts Receivable (Form part of the trade accounts receivable in the balance sheets) Subsidiaries

-

-

522,892

8,279,518

Associates

9,950,014

19,493,081

809,409

4,638,299

Other related parties

5,582,403

4,631,658

5,124,055

4,631,658

15,532,417

24,124,739

6,456,356

17,549,475

Total

60


Baht

Consolidated 2004 2003

The Company Only 2004 2003

Short-term loan to related party (interest rate/annum) Subsidiary New Petchburi Medical Services Co., Ltd. (4%)

-

-

115,000,000

50,600,000

Bangkok Prapradang Hospital Co.,Ltd.(4.5%)

-

-

15,000,000

-

Total

-

-

130,000,000

50,600,000

Subsidiaries

-

-

-

7,755,000

Associates

-

1,229,150

-

-

Total

-

1,229,150

-

7,755,000

-

-

1,784,109

341,668

Associates

1,995,331

4,162,948

1,640,776

4,082,698

Total

1,995,331

4,162,948

3,424,885

4,424,366

-

-

167,191,535

83,205,713

Accounts Receivable from Sales of Fixed Assets

Other Receivables Subsidiaries

Interest Receivable (Form part of interest receivable in the balance sheets) Subsidiaries Associates

47,366,538

151,720,153

33,277,047

151,720,153

Allowance for doubtful accounts

(9,584,895)

(9,584,895)

(9,584,895)

(9,584,895)

Total

37,781,643

142,135,258

190,883,687

225,340,971

Consulting and Management Fees Receivables -

-

Associates

8,394,857

2,955,466

8,394,857

2,955,466

Total

8,394,857

2,955,466

8,724,857

2,955,466

-

-

1,638,058

13,042,023

Subsidiaries

330,000

-

Advances Receivable Subsidiaries Associates Other related parties Total

1,813,331

173,800

336,731

173,800

13,500

9,816

13,500

9,816

1,826,831

183,616

1,988,289

13,225,639

Long-term Loans (interest rate/annum) Subsidiary: Bangkok Prapradang Hospital Co., Ltd.(0%)

-

-

1,200,951

1,200,951

Total

-

-

1,200,951

1,200,951

61


Baht

Consolidated 2004 2003 Associates Bangkok Pattaya Hospital Co., Ltd.(3-9%) Wattanawej Co., Ltd. (6.75-7%) Total Total Long-term Loans

The Company Only 2004 2003

80,258,062 80,258,062 80,258,062

182,687,381 91,515,524 274,202,905 274,202,905

17,280,000 17,280,000 18,480,951

182,687,381 91,515,524 274,202,905 275,403,856

Trade Accounts Payable (Form part of the trade accounts payable in the balance sheets) Subsidiaries Associates Other related parties Total

5,023,302 240,000 5,263,302

5,840,587 5,840,587

10,948,700 2,525,310 240,000 13,714,010

221,357 2,967,985 3,189,342

Short-term Borrowings (interest rate/annum) Other Related Parties Loan from directors (6%) Total

-

15,000,000 15,000,000

-

-

Accounts Payable from Purchase of Fixed Assets Associates Total

-

16,900,000 16,900,000

-

-

39,207 39,207

44,108 44,108

-

-

206,667 206,667

1,020,620 75,000 1,095,620

Other Payables Associates Total Accrued Expenses Subsidiaries Associates Other related parties Total

478,450 200,000 678,450

30,921,719 717,399 31,639,118

Movements of short-term loans to related parties in the Company's financial statements for the year ended December 31, 2004: Baht

Subsidiaries Balance as at December 31, 2003 Increase during the year Balance as at December 31, 2004

62

50,600,000 79,400,000 130,000,000


Movements of long-term loans to related parties in the consolidated financial statements for the year ended December 31, 2004: Baht

Associates Balance as at December 31, 2003 Increase during the year Decrease during the year Balance as at December 31, 2004

274,202,905 64,295,184 (258,240,027) 80,258,062

Movements of long-term loans to related parties in the Company's financial statements for the year ended December 31, 2004: Baht

Balance as at December 31, 2003 Increase during the year Decrease during the year Balance as at December 31, 2004

Subsidiaries

Associates

1,200,951 150,000,000 (150,000,000) 1,200,951

274,202,905 1,317,122 (258,240,027) 17,280,000

Movements of short-term borrowings from related parties in the consolidated financial statements for the year ended December 31, 2004: Baht

Other related parties Balance as at December 31, 2003 Decrease during the year Balance as at December 31, 2004

15,000,000 (15,000,000) -

The Company charges interest on loans to subsidiary and associated companies at the interest rate actually paid by the Company plus 0.25-0.50% per annum, MLR+1-2% per annum, MLR-1% per annum, and fixed rate of 4%, 4.25%, 5% and 7% per annum. Bangkok Phuket Hospital Co., Ltd. has a receivable of interest totalling Baht 84 million shall repay this interest in two equal installments in December 2009 and December 2010. Bangkok Phuket Hospital Co., Ltd. pledged its land, building and existing construction in progress as collateral security against the loan. As at December 31, 2004 and 2003, the Company had long overdue loan interest receivable from Bangkok Hatyai Hospital Co., Ltd. of Baht 83.19 million. The Company has provided allowance for doubtful accounts of Baht 9.58 million. The management believes that the allowance for doubtful accounts will be sufficient in respect of these loans because the Company expects that the outstanding balance will be collected and the subsidiary has pledged its land as collateral for the loan. Sale of investments At October 27, 2003, the Company sold its investment in common shares of Bangkok Rayong Hospital Co., Ltd. totaling 3,600,000 shares at Baht 10 each to Viriya Assurance Co., Ltd. As the result, the Company recorded loss on

63


sale of investment of Baht 0.97 million in the statement of income. Such investment was accounted for using the equity method up to the date of selling the investment. At November 13, 2003, the Company sold its investment in common share of Bangkok Rayong Hospital Co., Ltd. totaling 4,000,000 shares at Baht 10 each to Isalamic Bank. As the result, the Company recorded loss on sale of investment of Baht 0.48 million in the statement of income. Such investment was accounted for using the equity method up to the date of selling the investment. Purchase of investments At April 9, 2003, the Company purchased shares of Bangkok Rayong Hospital Co., Ltd., totaling 9,993 shares at Baht 10 each, amounting to Baht 0.10 million. At April 25, 2003, the Company purchased shares of Bangkok Hatyai Hospital Co., Ltd. from Wattanawej Co., Ltd. totaling 9,600,000 shares at Baht 7.36 each, amounting to Baht 70.66 million. At April 29, 2003, the Company purchased shares of Bangkok Hatyai Hospital Co., Ltd. from Bangkok Pattaya Hospital Co., Ltd totaling 14,900,000 shares at Baht 6.31 each, amounting to Baht 94.02 million. At May 6, 2003, the Company purchased shares of New Petchburi Medical Services Co., Ltd. totaling 9,993 shares at Baht 100 each, amounting to Baht 0.99 million. At May 13, 2003, the Company purchased 39,990,000 the newly issued common shares at Baht 10 each of Bangkok Rayong Hospital Co., Ltd., amounting to Baht 399.90 million. At May 19, 2003, the Company purchased shares of National Healthcare Systems Co.,Ltd. from Bangkok Pattaya Hospital Co., Ltd totaling 4,999,993 shares at Baht 10.25 each, amounting to Baht 51.25 million. At May 19, 2003, the Company purchased shares of Bio Molecular Laboratories (Thailand) Co., Ltd. from Wattanawej Co., Ltd. totaling 949,993 shares at Baht 10 each, amounting to Baht 9.50 million. At August 15, 2003, the Company purchased 3,000,000 newly issued common shares at Baht 5 each of Trat Vejchakij Co., Ltd., amounting to Baht 15 million. At September 20, 2003, the Borad of Directors of the Company pass a resolution to set up a new subsidiary company named Bangkok Samui Hospital Co., Ltd., with an initial registered capital of Baht 60 million, divided into 6 million shares at par value of Baht 10 each. The Company holds 5,999,993 shares in aforedsaid company and paid for the amount of Baht 15 million, representing 25% of its registered capital. At September 23, 2003, the Company purchased shares of Bangkok Hatyai Hospital Co., Ltd. totaling 24,500,000 shares at Baht 5 each, amounting to Baht 122.50 million. At November 5, 2003, the Company purchased shares of Bangkok Hatyai Hospital Co., Ltd., which is the unsubscribed shares from other existing shareholders, totaling 18,776,000 shares at Baht 5 each, amounting to Baht 93.88 million. At November 24, 2003, the Company purchased shares of Trat Vejchakij Co., Ltd., which is the unsubsribed shares from other existing shareholders, totaling 14,701,034 shares at Baht 5 each, amounting to Baht 73.50 million. In June 2004, the Company purchased additional share capital of Bangkok Phuket Hospital Co., Ltd. totalling 9,801,000 shares at Baht 5 each, amounting to Baht 49.01 million. The Company fully paid for this share capital on July 15, 2004. In July 2004, the Company made a further of purchase 2,170,700 shares at Baht 5 each, amounting to Baht 10.85 million in Bangkok Phuket Hospital Co., Ltd.

64


In July 2004, the Company purchased increased share capital of Bangkok Samui Hospital Co., Ltd. totalling 9,000,000 shares at Baht 10 each, amounting to Baht 90 million. In September 2004, the Company purchased the share capital of Cool & Joy Co., Ltd. totalling 99,994 shares at Baht 10 each, amounting to Baht 1 million. On December 30, 2004, the Company purchased the increase share capital of National Healthcare Systems Co., Ltd. totalling 551,800 shares of Baht 10 each, amounting to Baht 5.52 million. In December 2004, the Company acquired additional shares in Samitivej Public Company Limited, Bangkok Hatyai Hospital Company Limited and Bangkok Phuket Hospital Company Limtied through share swap arrangement as disclosed in Note 13. Management Agreement The Company has entered into a Hospital Managing Employment Agreement with BNH Medical Centre Limited for a period of five years, which may be renewed. The conditions on remuneration for the 1st-5th years are 2.5%-5% per annum and from the 6th year onwards 8% per annum, of gross margin before interest expense, income tax, depreciation, and amortization of deferred expense. For the remuneration of the 1st- 5th years, the employer agrees to suspend payment of the said management remuneration until the 6th year.

5. CASH AND CASH EQUIVALENTS Cash and cash equivalents as at December 31, 2004 and 2003 consisted of: Baht

Consolidated 2004 2003 Cash and deposits at banks Fixed deposits at banks not over 3 months Total Cash and Cash Equivalents

1,037,093,253 1,471,081 1,038,564,334

518,592,757 6,532,149 525,124,906

The Company Only 2004 2003 747,974,061 1,471,081 749,445,142

403,918,399 1,463,807 405,382,206

6. TRADE ACCOUNTS RECEIVABLE As at December 31, 2004 and 2003 the Company and its subsidiaries had outstanding balances of trade accounts receivable aged by number of months as follow: Baht

Consolidated 2004 2003 Less than and up to 3 months Over 3 months up to 6 months Over 6 months up to 12 months Over 12 months Total Less Allowance for doubtful accounts Trade Accounts Receivable - Net

390,236,105 37,552,457 20,297,257 26,505,683 474,591,502 (35,017,946) 439,573,556

154,141,254 27,455,336 12,516,072 18,740,460 212,853,122 (20,457,496) 192,395,626

The Company Only 2004 2003 159,964,452 15,327,279 9,504,238 19,315,877 204,111,846 (20,923,964) 183,187,882

107,588,854 12,915,987 11,626,039 17,135,853 149,266,733 (17,620,991) 131,645,742

65


7. INVENTORIES Inventories as at December 31, 2004 and 2003 consisted of: Baht

Consolidated 2004 2003 Drugs and supplies Medical supplies and others Reagent Total

98,700,041 8,930,075 7,771,567 115,401,683

The Company Only 2004 2003

48,328,624 270,542 5,397,042 53,996,208

35,388,089 6,977,649 42,365,738

27,829,400 27,829,400

8. INVESTMENTS RECORDED BY THE EQUITY METHOD As at December 31, 2004 and 2003, investments recorded by the equity method consisted of the investments in shares of subsidiaries and associates in the Company's financial statements, and investments in shares of associates in the consolidated financial statements, as follows: Investments recorded using the equity method in the consolidated financial statements as at December 31, 2004 consisted of: In Thousand Baht Type of Business

Paid-up Capital % Share (Thousand Baht) Holding

At Cost Method

At Equity Dividends Method received

Associated companies Bangkok Pattaya Hospital Co., Ltd. Wattanawej Co., Ltd. The Medic Pharma Co., Ltd. BNH Medical Center Co., Ltd. Cool & Joy Co., Ltd.

Hospital

280,000

49.00

223,489

396,939

34,300

Hospital

120,000

48.00

132,480

175,032

5,760

Pharmaceutical

21,430

49.00

52,500

66,931

2,625

Hospital

586,119

48.45

284,000

291,743

-

5,000

30.00

1,500

566

-

693,969

931,211

42,685

Production of Television and Radio Program

Total investments in associated companies Associates of subsidiary company Ruampat Sriracha Co., Ltd. Sodexho Support Services (Thailand) Co.,Ltd. Management Service

Hospital

187,510

30.00

56,253

55,999

-

5,000

26.00

1,300

1,288

-

57,553

57,287

-

751,522

988,498

42,685

Management Service

Total investments in associates of subsidiary company Total investments in associates of the company Related companies Udon Pattana (1994) Co., Ltd. Hospital Bangkok Airways Co., Ltd. Airline Less Allowance for impairment of investments Total investments in related companies

66

Hospital

300,000

10.00

31,650

Airline

440,000

3.27

36,000

7,762

67,650

7,762

(11,408) 56,242

-

7,762


Investments recorded by the equity method in the Company's financial statements as at December 31, 2004 consisted of: In Thousand Baht Paid-up Capital % Share Type of Business (Thousand Baht) Holding

At Cost Method

At Equity Method

Dividends received

Subsidiary Companies Bangkok Prapadang Hospital Co., Ltd.

Hospital

105,000

79.00

96,775

128,565

2,074

National Healthcare Systems Co., Ltd.

Central Lab

75,000

74.72

56,768

75,327

-

Bio Molecular Laboratories (Thailand) Co., Ltd.

Central Lab

10,000

95.00

9,502

15,761

-

Bangkok Rayong Hospital Co., Ltd.

Hospital

400,000

81.00

344,728

328,629

-

New Petchburi Medical Services Co., Ltd.

Hospital

1,000

100.00

999

-

-

Bangkok Hatyai Hospital Co., Ltd.

Hospital

500,000

98.53

572,465

717,930

-

Bangkok Trat Hospital Co., Ltd. Hospital

200,000

63.35

122,897

125,434

-

Bangkok Samui Hospital Co., Ltd.

Hospital

150,000

100.00

150,000

133,055

-

Bangkok Phuket Hospital Co., Ltd.

Hospital

500,000

99.47

607,014

517,583

-

Samitivej Public Co., Ltd.

Hospital

1,000,000

92.92

1,453,948

1,949,301

-

3,415,096

3,991,585

2,074

(Formerly: Trat Vejchakij Co., Ltd.)

Total investment in Subsidiaries companies Associated Companies Bangkok Pattaya Hospital Co., Ltd. Wattanawej Co., Ltd. The Medic Pharma Co., Ltd. BNH Medical Center Co., Ltd. Cool & Joy Co., Ltd.

Hospital

280,000

49.00

223,489

396,939

34,300

Hospital

120,000

48.00

132,480

175,032

5,760

Pharmaceutical

21,430

49.00

52,500

66,931

2,625

Hospital

586,119

48.45

284,000

291,743

-

5,000

30.00

1,500

566

-

693,969

931,211

42,685

4,109,065

4,922,796

44,759

Production of Television and Radio Program

Total Investments in associated companies Total Investments in subsidiaries and associated companies Related Companies Udon Pattana (1994) Co., Ltd. Hospital Bangkok Airways Co., Ltd. Airline

Hospital

300,000

10.00

31,650

-

Airline

440,000

3.27

36,000

7,762

67,650

7,762

(11,408)

Less Allowance for impairment of investments

-

56,242

Total investments in related companies-nets

7,762

Investments recorded by the equity method in the consolidated financial statements as at December 31, 2003 consisted of: In Thousand Baht Paid-up Capital % Share Type of Business (Thousand Baht) Holding

At Cost Method

At Equity Method

Dividends received

20,580

Associated Companies Bangkok Pattaya Hospital Co., Ltd. Wattanawej Co., Ltd. The Medic Pharma Co., Ltd.

Hospital

280,000

49.00

223,489

337,393

Hospital

120,000

48.00

132,480

172,710

Pharmaceutical

21,430

49.00

52,500

64,059

5,760 3,675

Bangkok Phuket Hospital Co., Ltd.

Hospital

400,000

49.01

210,080

212,594

Samitivej Public Co., Ltd.

Hospital

1,000,000

36.79

294,352

267,917

-

-

67


In Thousand Baht Paid-up Capital % Share Type of Business (Thousand Baht) Holding

Associated Companies BNH Medical Center Co., Ltd. Total investments in associated companies Related Companies Udon Pattana (1994) Co., Ltd. Bangkok Airways Co., Ltd. The Medic Pharma Co., Ltd. Total Less Allowance for impairment of investments Total investments in related companies

Hospital

586,119

48.45

At Cost Method

284,000

At Equity Dividends Method received

303,666

1,196,901 1,358,285

30,015

Hospital

300,000

10.00

31,650

-

Airline

440,000

3.27

36,000

-

Pharmaceutical

21,430

2.01

2,840

-

70,490

-

(9,076)

-

61,414

-

Investments recorded by the equity method in the Company's financial statements as at December 31, 2003 consisted of: In Thousand Baht Paid-up Capital % Share Type of Business (Thousand Baht) Holding

At Cost Method

At Equity Dividends Method received

Subsidiary Companies Hospital

105,000

79.00

96,775

123,013

4,148

National Healthcare Systems Co., Ltd.

Central Lab

50,000

100.00

51,250

59,072

-

Bio Molecular Laboratories (Thailand) Co., Ltd.

Central Lab

10,000

95.00

9,502

12,119

-

Bangkok Rayong Hospital Co., Ltd.

Hospital

400,000

81.00

319,648

323,850

-

New Petchburi Medical Services Co., Ltd.

Hospital

1,000

100.00

999

635

-

Bangkok Hatyai Hospital Co., Ltd.

Hospital

500,000

67.78

381,055

435,481

-

Trat Vejchakij Co., Ltd.

Hospital

200,000

63.35

122,897

129,965

-

Bangkok Samui Hospital Co., Ltd.

Hospital

15,000

100.00

15,000

14,385

Bangkok Prapradang Hospital Co., Ltd.

997,126 1,098,520

Total Investment in Subsidiary companies

4,148

Associated Companies Bangkok Pattaya Hospital Co., Ltd.

Hospital

280,000

49.00

223,489

337,339

20,580

Wattanawej Co., Ltd.

Hospital

120,000

48.00

132,480

172,710

5,760

Pharmaceutical

21,430

49.00

52,500

64,059

3,675

Bangkok Phuket Hospital Co., Ltd.

Hospital

400,000

49.01

210,080

212,594

-

Samitivej Public Co., Ltd.

Hospital

1,000,000

36.79

294,352

267,917

-

BNH Medical Center Co., Ltd.

Hospital

586,119

48.45

284,000

303,666

-

The Medic Pharma Co., Ltd.

Total Investments in associated companies

1,196,901 1,358,285

30,015

2,194,027 2,456,805

34,163

Total investments in subsidiary and associated Related Companies Hospital

300,000

10.00

31,650

-

Airline

440,000

3.27

36,000

-

Total

67,650

-

Less Allowance for impairment of investments

(9,076)

-

Total Investments in related companies

58,574

-

Udon Pattana (1994) Co., Ltd. Bangkok Airways Co., Ltd.

68


9. PROPERTY, PLANT AND EQUIPMENT Change in property, plant and equipment for the year ended December 31, 2004 summarized as follows: Baht

Consolidated Cost Beginning balance

Depreciation

Disposal

Transfer in/ (transfer out)-net

Ending balance

Land at appraisal value At historical cost

478,193,940

58,298,105

-

811,694,949

1,348,186,994

Revaluation surplus

336,027,207

-

-

973,311,646

1,309,338,853

Total

814,221,147

58,298,105

-

1,785,006,595

2,657,525,847

Land improvements Buildings, structures and Improvements Revaluation surplus Total

-

-

-

15,221,463

15,221,463

2,472,739,542

26,207,982

-

2,567,567,791

5,066,515,315

-

-

-

848,320,557

848,320,557

2,472,739,542

26,207,982

-

3,415,888,348

5,914,835,872

402,311,216 53,889,813 2,315,888,057

4,452,643,488

Medical tools Equipment, office Equipment and other

1,788,334,028

Vehicles

105,550,579

18,269,695

5,505,515

Improvements in progress

181,490,975

841,485,779

8,382,196

379,508,524

65,317,372

183,632,131

-

(281,126,691)

741,850,063

-

122,514,524

510,405,244

Medical tools and Equipment under Installation Total

5,370,718,467 1,726,081,301 59,395,328 7,438,709,668 14,476,114,108

Baht

Consolidated Accumulated Depreciation Beginning balance

Depreciation

Disposal

Transfer in/ (transfer out)-net

Ending balance

Land at appraisal value At historical cost

-

-

-

-

-

Revaluation surplus

-

-

-

-

-

Total

-

-

-

-

-

Land improvements

-

-

-

15,221,439

15,221,439

395,952,318

106,686,850

-

644,180,522

1,146,819,690

-

-

-

349,644,970

349,644,970

395,952,318

106,686,850

-

993,825,492

1,496,464,660

977,678,699

229,922,303 24,200,373 1,407,231,330

2,590,631,959

Buildings, structures and Improvements Revaluation surplus Total Medical tools Equipment, office Equipment and other Vehicles Improvements in progress

49,492,217 -

18,275,309

3,687,348

-

-

-

-

-

-

26,520,039

90,600,217 -

Medical tools and Equipment under Installation Total

1,423,123,234

354,884,462 27,887,721 2,442,798,300

4,192,918,275

69


Baht

Consolidated Book Value Beginning balance

Ending balance

Land at appraisal value At historical cost

478,193,940

1,348,186,994

Revaluation surplus

336,027,207

1,309,338,853

Total

814,221,147

2,657,525,847

Land improvements

-

Buildings, structures and Improvements

24

2,076,787,224

Revaluation surplus

-

Total Medical tools Equipment, office Equipment and other

4,418,371,212

810,655,329

1,862,011,529

56,058,362

93,031,914

181,490,975

741,850,063

8,382,196

510,405,244

3,947,595,233

10,283,195,833

Medical tools and Equipment under Installation Total

498,675,587

2,076,787,224

Vehicles Improvements in progress

3,919,695,625

Baht

The Company Only Cost Beginning balance

Purchase

18,986,660

Disposal

Transfer in

Transfer out

Ending balance

Land at appraisal value At historical cost

136,711,130

Revaluation surplus

322,877,452

Total

459,588,582

-

-

-

155,697,790

-

-

-

322,877,452

18,986,660

-

-

-

478,575,242

1,144,709,678

6,344,427

-

100,679,116

-

1,251,733,221

1,284,276,160

167,117,118

40,803,348

175,213,034

-

1,585,802,964

Vehicles

89,077,906

9,337,558

3,619,840

8,051,000

-

102,846,624

Improvements in progress

10,544,275

452,541,041

-

-

76,899,516

386,185,800

8,382,196

372,144,430

-

-

207,043,634

173,482,992

2,996,578,797

1,026,471,234

44,423,188

283,943,150

283,943,150

3,978,626,843

-

Buildings, structures and Improvements Medical tools Equipment, office Equipment and other

Medical tools and Equipment under Installation Total

70


Baht

The Company Only Accumulated Depreciation Beginning balance

Depreciation

Land at appraisal value At historical cost

-

-

-

-

Revaluation surplus

-

-

-

-

Disposal

Ending balance

-

-

Buildings, structures and Improvements

250,999,159

43,783,943

-

294,783,102

Medical tools Equipment, office Equipment and other

741,764,694

134,374,543

17,041,062

859,098,175

42,042,480

14,476,571

2,116,092

54,402,959

Total

Vehicles

-

-

Improvements in progress

-

-

-

-

Medical tools and Equipment under Installation

-

-

-

-

1,034,806,333

192,635,057

19,157,154

1,208,284,236

Total

Baht

The Company Only Book Value Beginning balance Ending balance

Land at appraisal value At historical cost

136,711,130

155,697,790

Revaluation surplus

322,877,452

322,877,452

Total

459,588,582

478,575,242

Buildings, structures and Improvements

893,710,519

956,950,119

Medical tools Equipment, office Equipment and other

542,511,466

726,704,789

Vehicles

47,035,426

48,443,665

Improvements in progress

10,544,275

386,185,800

8,382,196

173,482,992

1,961,772,464

2,770,342,607

Medical tools and Equipment under Installation Total

Depreciation for the years ended December 31, 2004 and 2003 for the Company and subsidiary companies consisted of: Baht

Consolidated

Depreciation

The Company Only

2004

2003

2004

354,884,462

250,105,140

192,635,057

2003 162,398,904

The cumulative capitalized interest on loans recorded as part of the cost of the building amounted to approximately Baht 86.29 million, for the Company and Baht 434.52 million, for the subsidiary company. In 1999, the Company and subsidiary companies engaged an independent professional appraiser to appraise all of the Company’s land (including the land not used in operations) with carrying cost value of approximately Baht 210 million and 80 million, respectively. Based on the appraisal reports dated July 14, 1999 and July 15, 1999, respectively, the Market Approach Method was applied to the revaluation, reflecting the fair market value of the revalued land of approximately Baht 637 million and Baht 93 million, respectively, which was higher than the cost

71


by approximately Baht 427 million and Baht 13 million, respectively. The Company recorded the difference between the historical cost and appraisal value as “Revaluation surplus of land” under Shareholders’ Equity in the balance sheets. In 2004, 3 subsidiaries engaged an independent professional appraiser to appraise all of its land and buildings. Based on the appraisal reports dated December 15, 2004 and December 16, 2004, the Cost Approach Method was applied to the revaluation, reflecting the fair values of the revalued land and buildings as approximately totalling Baht 1,972.02 million and Baht 2,699.04 million, respectively, which were higher than the former revalued cost by approximately Baht 1,085.32 million and Baht 498.68 million, respectively. The Subsidiaries recorded the total revaluation surplus of Baht 1,584 million as “Other surplus” under Shareholders’ Equity in their balance sheets of Baht 1,544.49 million and reverse the loss on valuation of land in a Subsidiary of Baht 228.05 million and loss on revaluation of land in another Subsidiary of Baht 188.54 million was charged to the statement of income. Based on the appraisal of land and buildings of such Subsidiaries, the Company recognized the surplus on revaluation of land and buildings of the Subsidiaries in the consolidated financial statements and the separate financial statements of the Company by using equity method in the amount of Baht 513.56 million as “Surplus on land and building revaluation” under Shareholders’ Equity in the balance sheets. The Company and subsidiaries’ land, buildings and existing construction in progress were mortgaged as collateral for long-term loans obtained from a local bank.

10. OTHER INTANGIBLE ASSETS Changes in other intangible assets for the year ended December 31, 2004 were summarized as follows: Baht

Consolidated

The Company Computer software Leasehold improvement Subsidiaries Computer software Leasehold improvement Total

Beginning balance

Transfer from Subsidiaries at acquisition date

12,769,600 6,000,000

-

18,868,658 37,638,258

Additional

Amortization Ending balance

212,406 (5,900,226) 32,218,019 (877,431)

7,081,780 37,340,588

27,257,428 4,697,547 (4,923,277) 5,800,000 27,257,428 42,927,972 (11,700,934)

45,900,356 5,800,000 96,122,724

Baht

The Company Only

Computer software Leasehold improvement Total

72

Beginning balance

Additional

12,769,600 6,000,000 18,769,600

212,406 32,218,019 32,430,425

Amortization

5,900,226 877,431 6,777,657

Ending balance

7,081,780 37,340,588 44,422,368


11. LAND NOT USED IN OPERATIONS Land not used in operations as at December 31, 2004 and 2003 consisted of: Baht

Consolidated and The Company Only

2004

2003

367,181,670 104,245,510 471,427,180

Land at historical cost Revaluation surplus Total

367,181,670 104,245,510 471,427,180

In 1999, the Company revalued such land based on the independent professional appraiser’s value as described in Note 9. The cumulative capitalized interest on loans recorded as a portion of cost of land not yet used in operations amounted to approximately Baht 29 million.

12. OTHER LONG-TERM LOANS Other long - term loans as at December 31, 2004 and 2003 consisted of: Baht

Consolidated

Loans from local bank Foreign bank loans Hire purchase creditor Liabilities under finance lease contracts Payables for purchase of fixed assets Total Less current portion due within one year Long-term Loans - Net

The Company Only

2004

2003

2004

2003

4,838,600,130 57,806,046 40,022,061 239,284,806 5,175,713,043 (538,398,103) 4,637,314,940

2,265,531,365 117,190,746 10,231,166 80,226,254 1,952,014 2,475,131,545 (346,376,490) 2,128,755,055

1,652,724,897 57,806,047 25,673,479 40,100,000 1,776,304,423 (293,458,932) 1,482,845,491

1,865,531,365 117,190,746 10,231,166 80,116,245 1,952,014 2,075,021,536 (342,666,481) 1,732,355,055

Loans from banks consisted of: Loan with a credit limit of Baht 2,300 million and the Company withdrew this loan of Baht 1,850 million, principal and interest are repayable in 108 monthly installments. Interest is payable during the 1st – 2nd year at a fixed rate of 2-6% per annum and from the 3rd year onwards at the rate of average MLR from four commercial banks, starting on December 2001 and the principal repayment condition is as agreed in the agreement. As at December 31, 2004 and 2003, the Company presented the loan as current portion of long-term debts in the amount of Baht 210 million and loan under other long-term debts in the amount of Baht 1,430 million and Baht 1,640 million, respectively.

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Certain land and buildings, including the existing construction in progress, of Bangkok Dusit Medical Services Public Co., Ltd., Bangkok Phuket Hospital Co., Ltd. and Bangkok Prapadang Hospital Co., Ltd. were pledged as collateral security against the loan up to Baht 2,300 million. Loan amounting to Baht 20 million, Principal and interest are repayable in 83 monthly installments. Interest is payable during the 1st - 2nd year at a fixed rate of 6% per annum and from the 3rd year onwards at the rate of MLR, starting in April 2002, and the principal repayment conditions are as agreed in the agreement. As at December 31, 2004 and 2003, the Company presented the loan as current portion of long-term debt of Baht 2.79 million and Baht 2.64 million, respectively, and other long-term debt of Baht 9.93 million and Baht 12.89 million, respectively. Certain land and buildings, including existing construction in progress of the Company, were pledged as collateral security against the loan up to Baht 20 million.

Loans from domestic banks (Subsidiaries): Bangkok Rayong Hospital Co., Ltd. As at December 31, 2004, the Subsidiary has entered into a long-term loan agreement with a local bank for loan of Baht 330 million. Interest is payable in monthly instalments at MLR-1.75% per annum for the first year, MLR-1.50% per annum for the second year, MLR-1.25% per annum for the third year and at MLR per annum from the forth year onwards. The Subsidiary will fully pay within March 29, 2014. This loan has 3 years grace period from the agreement date. The principal is repayable monthly during the 4th - 5th year of Baht 2.50 million each, the 6th - 7th year of Baht 3.75 million each and the 8th - 10th year of Baht 5 million each. As at December 31, 2004, the Subsidiary has presented the loan under other long-term debts in the amount of Baht 290.20 million. Bangkok Trat Hospital Co., Ltd. As at December 31, 2004 and 2003, the Subsidiary has entered into a long-term loan agreement with a local bank for loan of Baht 140 million, repayable within 6 years with 1 year and 3 months in the grace period at MLR per annum. Certain land and building were pledged as collateral security against the loan up to Baht 150 million. As at December 31, 2004 and 2003, the Subsidiary presented the loan as current portion of long-term debts of Baht 3.60 million and other long-term debts in the amount of Baht 92.80 million and Baht 96.40 million, respectively. Bangkok Hatyai Hospital Co., Ltd. As at December 31, 2004 and 2003, the Subsidiary has entered into a long-term loan agreement with a local bank for loan of Baht 400 million. Interest is payable during the 1st and the 2nd year at 5.25% and 5.50% per annum, respectively, and the 3rd year at MLR per annum. The Subsidiary will fully pay within May 9, 2013. This loan has 2 years in grace period from the agreement date. The principal is repayable in 96 monthly installment of Baht 3.12 million each and interest is payable at the end of each month from the agreement date. As at December 31, 2004, the Subsidiary has entered into a long-term loan agreement dated September 8, 2004 with a local bank for loan of Baht 37.40 million with fixed interest of 5.25% per annum. The principal is repayable in 60 monthly installments of Baht 0.63 million each. The Subsidiary will fully pay within September 8, 2009. As at December 31, 2004, the Subsidiary has presented these two loans as current portion of long-term debts of Baht 32.52 million and other long-term debts of Baht 302.99 million and as at December 31, 2003, the Subsidiary presented the loan as other long-term debts of Baht 300 million. Certain land and building, including future construction of the Subsidiary, were pledged as collateral security for the loan up to Baht 425 million.

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Bangkok Phuket Hospital Co., Ltd. The Subsidiary has entered into a loan agreement dated December 18, 2002 with a local bank for loan of Baht 500 million. Interest is payable in monthly installments during the 1st and the 2nd year at 6% per annum and the 3rd year onward at MLR per annum. The principal is repayable every quarterly during the 1st - 3rd years at quarter of Baht 12.50 million each, the 4th year at quarter of Baht 15 million each, the 5th - 7th years at quarter of Baht 17.50 million each and the 8th year at quarter of Baht 20 million each, starting on March 30, 2005 and the Subsidiary pledged its land and buildings as collateral security. As at December 31, 2004, the Subsidiary presented the loan as current portion of long-term debts of Baht 50 million and loan under other long-term debts in the amount of Baht 437 million. Bangkok Samui Hospital Co., Ltd. As at December 31, 2004 a Subsidiary has entered into a long-term loan agreement with a local bank for loan of Baht 150 million. Interest is payable during the 1st year at MLR-2.00% p.a., the 2nd year at MLR-1.75% p.a., the 3rd year at MLR-1.25% p.a., the 4th year at MLR-1.00% and after the 4th year onward at MLR-0.50% per annum. The Subsidiary will fully paid within June 11, 2014. This loan has 3 years in grace period from the agreement date. The principal is repayable in the 4 th-6th installment of Baht 1.50 million each and repayable in the 7 th-10th installment of Baht 2.00 million each. As at December 31, 2004, the Subsidiary presented the loan as other long-term debts in the amount of Baht 150 million. The Comapny had pledge its land and building as collateral security for this loan. Samitivej Public Company Limited The Subsidiary has entered into a long-term loan agreement with a local bank for a loan of Baht 1,700 million. This loan is repayable within ten years with monthly repayments of principal commencing from November 2002. In 2003, the subsidiary entered into the memorandum of understanding of loan agreement, attached to the loan agreement to extend the principal repayment for another 2 years, starting from June 2003 to May 2005 and to reduce the interest rate. Other conditions follow the principal loan agreement. The loan bears interest at the rate specified in the agreement. As at December 31, 2004 and 2003, the Subsidiary presented the long-term loan as current portion of long-term debt of Baht 100.84 million for 2004 and other long-term debts of Baht 1,514 million for 2004 and Baht 1,614.84 million for 2003, respectively. In December 2003, the Subsidiary and its subsidiary company entered into a joint long-term loan agreement with a local bank for a loan in the amount of Baht 300 million, split Baht 185 million to the subsidiary and Baht 115 million to its subsidiary company. The loan is repayable within 10 years with quarterly repayment commencing from June 2006. Interest is charged at the rate specified in the agreement. The said bank also provided a guarantee facility of Baht 10 million to the subsidiary. The Subsidiary has given a second mortgage on its land and building as collateral for the above facility. As at December 31, 2004 and 2003, the Subsidiary and its subsidiary presented this loan as current portion of long-term debt of Baht 130.70 million and other long-term debts of Baht 81.23 million, for 2004 and Baht 12.33 million and Baht 3.02 million, respectively, for 2003. The Subsidiary has mortgaged its land and buildings and construction in progress as collateral for this loan in the amount of Baht 2,010 million.

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Loan from foreign bank: The Company entered into a foreign loan agreement amounting to U.S.Dollars 12.45 million with bearing interest at the rate of 1.5% per annum above the Singapore Interbank Offered Rate (SIBOR+1.5%). Principal is payable every 12 months in 5 installments and interest is payable every 3 months. The first repayment was made in April 2001, amounting to U.S. Dollars 8.76 million. As at December 31, 2004 and 2003, the Company has outstanding principal of loan of U.S. Dollars 1.47 million and U.S. Dollars 2.95 million, respectively or equivalent of Baht 57.81 million and Baht 117.19 million, respectively. As at December 31, 2004 and 2003, the Company presented the loan as current portion of long-term debt of Baht 57.81 million and Baht 97.66 million, respectively and other long-term debt of Baht 19.53 million for 2003. Hire-purchase creditor: The Company Hire-purchase creditor relates to hire-purchase contracts for vehicles repayable by 48 monthly installments, each of Baht 272,450. As at December 31, 2004 and 2003, the Company presented this creditor in current portion of long-term debt of Baht 2.91 million and Baht 2.90 million, respectively, and other long-term debt of Baht 4.42 million and Baht 7.32 million, respectively. The Company had hire-purchase creditor related to hire-purchase contracts for ambulances repayable by 32 monthly installments, each of Baht 144,870 in the 1st - 31st installments and of Baht 2.46 million in the 32nd installments. As at December 31, 2004, the Company presented this creditor in current portion of long-term debts and other long-term debts of Baht 1.51 million and Baht 3.65 million, respectively. The Company has hire-purchase contract for medical tools repayable by 48 monthly instalments, each of Baht 388,018. As at December 31, 2004, the Company presented this creditor in current portion of long-term debts of Baht 4.28 million and other long-term debts of Baht 8.91 million. Hire-purchase creditor (Subsidiaries) Bangkok Rayong Hospital Co., Ltd. The subsidiary entered into hire-purchase agreements for vehicles repayable by 48 monthly instalments, each of Baht 25,268. As at December 31, 2004, the subsidiary company presented this creditor in current portion of long-term debts of Baht 0.27 million and other long-term debts of Baht 0.73 million. Samitivej Public Company Limited Hire-purchase payables are in respect of hire-purchase contracts for vehicles with payments in 32-60 monthly installments. As at December 31, 2004 and 2003, the subsidiary presented these hire-purchase payables as current portion of long-term debts of Baht 4.32 million and Baht 4.41 million, respectively, and other long-term debts of Baht 6.51 million and Baht 3.46 million, respectively. Bangkok Phuket Hospital Co., Ltd. The Subsidiary entered into hire-purchase agreements for vehicles repayable by 48 monthly installments, each of Baht 25,924. As at December 31, 2004, the subsidiary company presented this creditor in current portion of long-term debts of Baht 0.28 million and other long-term debts of Baht 0.51 million. In addition, the Subsidiary entered into hire-purchase agreements for ambulance repayable by 60 monthly installments, each of Baht 48,290. As at December 31, 2004, the Subsidiary company presented this creditor in current portion of long-term debts of Baht 0.43 million and other long-term debts of Baht 1.29 million.

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Liability under the finance lease contracts: The Company has finance lease contracts with a company providing medical equipment for use in business operations. The liability is repayable in 60 monthly installments, each of Baht 696,967. At the end of the lease term, the Company has the right to exercise the purchase option on leased medical equipment at the amount shown in the agreement. As at December 31, 2004 and 2003 the Company presented these liabilities as current portion of long-term debt of Baht 6.96 million and other long-term debt of Baht 13.34 million and Baht 32.81 million, respectively. The Company has finance lease contracts with a local bank providing medical tools and equipment for use in business operations. The liability is repayable in 48 monthly installments each of Baht 653,505. As at December 31, 2004 and 2003, the Company presented this liability as current portion of long-term debt of Baht 7.20 million and other long-term debt of Baht 12.60 million and Baht 19.80 million, respectively. The Company has finance lease contracts with a company providing medical tools and equipment for use in business operations. The liability is repayable in 48 monthly installment of Baht 780,656. At the end of the lease term, the Company has the right to exercise the purchase option on medical tools and equipment at the amount shown in the agreement. As at December 31, 2003, the Company presented these liabilities as current portion of long-term debt of Baht 7.20 million. Liability under finance lease contracts (Subsidiaries) Bangkok Rayong Hospital Co., Ltd. The Subsidiary entered into a finance lease contract for medical tools used in business operations. The liability is repayable in 34 monthly instalments, each of Baht 576,798. At the end of the lease term, the subsidiary has the option to purchase the medical tools and equipment at the amount shown in the agreement. As at December 31, 2004, the Subsidiary presented this liability as current portion of long-term debts of Baht 6.04 million and other long-term debts of Baht 8.50 million. Bangkok Samui Hospital Co., Ltd. The Subsidiary entered into a finance lease contract for computers used in business operations. The liability is repayable in 36 monthly installments, each of Baht 67,638. At the end of the lease term, the Subsidiary has the option to purchase the computers at the amount shown in the agreement. As at December 31, 2004, the Subsidiary presented this liability as current portion of long-term debts of Baht 0.78 million and other long-term debts of Baht 1.12 million. Bio Molecular Laboratories (Thailand) Co., Ltd. The Subsidiary entered into a finance lease contract for medical equipment used in business operations. The liability is repayable in 12 monthly installments, each of Baht 250,000. At the end of the lease term, the Subsidiary has the option to purchase the equipment at the amount shown in the agreement. As at December 31, 2004, the Subsidiary presented this liability as current portion of long-term debts of Baht 2.86 million. Bangkok Phuket Hospital Co., Ltd. The Subsidiary entered into various finance lease contract for medical equipment used in business operations. The liability is repayable in 60 monthly installments, each of Baht 1,679,552. At the end of the lease term, the Subsidiary has the option to purchase the equipment at the amount shown in the agreement. As at December 31, 2004, the Subsidiary presented this liability as current portion of long-term debts of Baht 15.41 million and other long-term debts of Baht 43.31 million.

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Samitivej Public Company Limited The Subsidiary has a liability under various finance lease contracts with various companies providing medical equipment for use in its business operation. The liability is repayable in 36-60 monthly installments. At the end of the lease term, the Subsidiary has the right to exercise the bargain purchase option on leased medical equipment at the amount specified in the agreement. As at December 31, 2004 and 2003, the Subsidiary presented its liabilities under the financial lease contract as current portion of long-term debts of Baht 27.59 million and Baht 12.16 million, respectively and other long-term debts of Baht 88.48 million and Baht 39.85 million, respectively. Payables for purchase of fixed assets: The Company entered into a contract to purchase medical tools. The value, according to the contract, is equivalent to Baht 12 million. Debt repayment conditions are as follows. 1st Portion; Repayment of 10% of the contractual value, totaling Baht 1.2 million; 2nd Portion; Repayment of the remaining 90% of the contractual value in 36 monthly installments bearing interest at 6% per annum, starting from June 2001. As at December 31, 2003, the Company classified this creditor as current portion of long-term debt of Baht 1.83 million, which were fully paid in June 2004. In addition, the Company entered into a contract to purchase office equipment. The value according to the contract is equivalent to Baht 0.53 million. Debt repayment conditions are as follows. 1st Portion; Repayment on contract date, totaling Baht 0.05 million 2nd Portion; Repayment in 24 monthly installments each of Baht 20,086 starting from June 2002. As at December 31, 2003, the Company classified this creditor as current portion of long-term debts of Baht 0.12 million, which were fully paid in June 2004.

13. SHARE CAPITAL AND INCREASE IN SHARE CAPITAL The 2004 Annual General Meeting of Shareholders held on April 22, 2004 passed a resolution to approve the Company to change the par value of share capital from Baht 10 each to Baht 1 each. The Company registered the change in par value of its share capital with the Ministry of Commerce on May 11, 2004. In addition, the Meeting of Shareholders also passed a resolution to approve the Company to increase its authorized share capital from Baht 750 million to Baht 1,000 million, by the creation and issued of 250 million new common shares of Baht 1 each at the issue price of Baht 6 per share by offer to the existing shareholders in the proportion of 3 existing shares: 1 newly issued share. The Company registered the increase of its authorized share capital on May 14, 2004. The Shareholders subscribed and paid for the increased shares during 21st-25th June 2004 totalling Baht 1,769 million. This amount was presented as subscription payable in the financial statements. In July 2004, the Company repaid the shareholders who paid the oversubscribed money in the amount of Baht 269 million. The Company registered the paid-up share capital to be Baht 1,000 million on July 9, 2004. The Extraordinary General Meeting of Shareholders No 1/2547 held on August 3, 2004, passed a resolution to approve the Company to increase its authorized share capital by Baht 180.50 million by the creation of 180.5 million new common shares at the par value of Baht 1 per share, from Baht 1,000 million to Baht 1,180.50 million, divided into 1,180.50 million common shares at Baht 1 per share. The Company registered the increase of its authorized share capital on August 5, 2004.

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In addition, the Meeting also passed a resolution to approved the shareholding and management restructuring by offering to purchase all the issued shares of Samitivej Public Company Limited, Bangkok Hatyai Hospital Company Limited and Bangkok Phuket Hospital Company Limited not already held by the Company. The Company will pay the consideration for the share in those companies in the form of new issued ordinary shares of the Company without offering any other alternative in term of cash, and approved to purchase shares of Ramkhamhaeng Hospital Public Company Limited, in portion not more than 20% of the total issued shares of this company, at the price not higher than Baht 150 per share, up to Baht 360 million in total. In July 2004, the Company purchased shares of Ramkhanhaeng Hospital Public Company Limited in the amount of Baht 215.49 million. Later in December 2004, the Company purchased additional shares of Ramkhamhang Hospital Public Company Limited by Baht 127.42 million, totaling the investments in this company of Baht 342.91 million. The Securities and Exchange Commission had approved the Company to start the tender offer period during November 10, 2004 to December 16, 2004. After the share swap arrangement, the percentage of shareholding in Samitivej Public Company Limited, Bangkok Hatyai Hospital Company Limited and Bangkok Phuket Hospital Company Limited were 92.92%, 98.53% and 99.47%, respectively, the CompanyĂ­s shares were allotted to these companies of 112,251,510 shares, 18,528,904 shares and 32,629,694 shares, respectively. For the remaining 17,089,892 shares, the Extra Ordinary Shareholders' Meeting No.1/2547 held on August 3, 2004 passed a resolution to approved the Companys' Board of Directors to manage the remaining shares by offering those share to a specific person or decrease the authorized share capital equal to the issued and paid-up share capital or take no action if the Company decide not to decrease its authorized share. At present, the Company is in the process of considering. The 163,410,108 shares issued for share swap arrangement with these three companies were recorded at fair value, appraisal by an independent financial advisor, using discounted cash flows method, at Baht 10.21 per share, resulting the increase in issued and paid-up share capital by Baht 163.41 million, and increase in premium on share capital by Baht 1,505 million. The Company registered the issued and paid-up share capital to be Baht 1,163.41 million on December 21, 2004.

14. DIVIDEND PAYMENT The 2004 Annual General Meeting of Shareholders held on April 22, 2004, passed a resolution to approve a dividend payment for 75 million shares at the rate of Baht 4 per share, totalling Baht 300 million and the appropriation of net profits as legal reserve in the amount of Baht 16 million. The dividend payment was made on May 21, 2004. The Annual General Meeting of Shareholders held on April 24, 2003 approved a dividend payment for 75 million shares at the rate of Baht 3 per share, totaling Baht 225 million and the appropriation of net profits as legal reserve in the amount of Baht 12.88 million.

15. LONG-TERM LEASE AGREEMENT The Company The Company has entered into a land rental agreement, which covers a period of 10 years. The Company is obliged to pay monthly rental payment of Baht 115,000 for the period from September 1, 2002 to August 31, 2006 and Baht 150,000 for the period from September 1, 2006 to August 31, 2012 and has paid a deposit of Baht 115,000. The Company has entered into a land rental agreement of car park for 15 years from February 26, 2004 to February 25, 2019. A rental fee for first 3 years was Baht 200,000 per month and increase by 20,000 per month for every three years.

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The Company has entered into a land rental agreement for OPD building for 30 years from September 28, 2004 to September 27, 2034. The first repayment date is October 10, 2005 at Baht 50,000 per month and increase by 10% of the last rental charge every three years. Samitivej Public Company Limited The Subsidiary has entered into a rental agreement of car park building dated September 10, 2003 with a company for 30 years effective from December 8, 2004. A rental fee in the first year was Baht 3.39 million and increase by 2.75% every year. Total rental fee would be Baht 155.11 million. The Subsidiary committed to pay Baht 38.78 million as a prepaid rental payment as per the scheduling. The remaining rental fee would be paid at 85% every month. In addition, the Subsidiary has entered into a service agreement with the same company for providing services in the said car park building for 30 years totaling Baht 103.41 million. As at December 31, 2004, the Subsidiary has a prepaid rental payment of Baht 32.80 million, amortized to expense for this year of Baht 0.08 million. The Subsidiary has committed to pay for remaining prepaid rental of Baht 5.98 million.

16. LEGAL RESERVE Under the Public Companies Act, the Company and the Subsidiary who is public company limited are required to set aside as a legal reserve at least 5% of its net profit after accumulated deficit brought forward (if any) until the reserve is not less than 10% of the authorized capital. Under the provisions of the Civil and Commercial Code of Thailand, the non-public company limited subsidiaries are required to set aside as a statutory reserve at least 5% of its net income each time a dividend is declared until the reserve reaches 10% of registered share capital. The reserve is not available for dividend distribution.

17. STAFF COSTS Staff costs and the number of the employees for the years ended December 31, 2004 and 2003, consisted of: Baht

Consolidated

Staff costs (Thousand Baht) Number of employees as at December 31

The Company Only

2004

2003

2004

2003

1,846,365 5,840

886,443 2,883

828,048 1,832

643,816 1,519

18. REGISTERED PROVIDENT FUND The Company established a contributory registered provident fund in accordance with the Provident Fund Act B.E. 2530. The employees are entitled to receive the Company's contribution upon resignation from the Company after completion of five years of service. Under the plan, the Company and the employees are required to contribute tothe fund at certain percentages of the employeesĂ­ basic salaries depending on the length of employment. This provident fund is managed by a fund manager in accordance with the terms and conditions prescribed in the Ministerial Regulation No. 2 (B.E. 2532) issued under the Provident Fund Act B.E. 2530. Therefore, these transactions are not presented in the balance sheet. The Company's contributions, which were charged to operations, amounted to Baht 9,279,584 and Baht 6,468,571 for 2004 and 2003, respectively.

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19. COMMITMENTS AND CONTINGENT LIABILITIES As at December 31, 2004, commitments and contingent liabilities are as follows: The Company Million Baht Contingent Liabilities • for letters of guarantee issued by bank to certain government organizations Commitments • the office equipment rental contracts • the medical equipment providing contracts • the building decoration contracts Total

40.65 21.52 335.17 304.27 701.61

Subsidiaries The Subsidiaries have contingent liabilities are summarized as follows: Million Baht • Letters of guarantee issued by bank to certain government organizations Bangkok Prapradang Hospital Co., Ltd. Bangkok Hatyai Hospital Co., Ltd. Bangkok Trat Hospital Co., Ltd. Bangkok Phuket Hospital Co., Ltd. Samitivej Public Company Limited Total • Letter of credits Samitivej Public Company Limited • Commitments for the building decoration contracts are summarized as follows: Bangkok Rayong Hospital Co., Ltd. New Petchburi Medical Services Co., Ltd. Bangkok Hatyai Hospital Co., Ltd. Bangkok Samui Hospital Co., Ltd. Bangkok Phuket Hospital Co., Ltd. Samitivej Public Company Limited Total

0.80 1.10 1.00 1.51 9.80 14.21

1.98

8.44 6.31 14.87 1.53 57.85 216.92 305.92

Certain land and building, including future constructions in progress of the Company and subsidiaries were mortgaged with local banks as collaterals for long-term loans.

20. SEGMENT INFORMATION Bangkok Dusit Medical Services Public Company Limited and subsidiaries operate mainly in the hospital business in Thailand and therefore there is no segment information to disclose.

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21. DISCLOSURE OF FINANCIAL INSTRUMENTS The Company has a policy not to speculate or trade in any off - balance sheet derivative financial instruments. Accounting Policies Details of significant accounting policies and methods adopted, including criteria on which revenues and expenses are recognized in respect of each class of financial asset and liability are disclosed in Note 3. Foreign Currency Risk The Company has exposure to foreign currency risk arising from foreign bank loan. Interest Rate Risk Exposure to interest rate risk for assets and liabilities in the balance sheet arises from changes in interest rates that will have negative effects on net interest income for the current and future years. It may also arise from the structure and nature of assets, liabilities and shareholdersĂ­ equity and from the time difference of changes in interest rate between financial assets and financial liabilities. As at December 31, 2004 and 2003, the financial assets and liabilities that were exposed to interest rate risk consisted of: In Thousand Baht

Consolidated 2004 Floating Interest Rate

Fixed Interest Rate

Non-Interest Bearing

Total

Average Interest Rate(%) Floating

Fixed

Financial assets Cash and cash equivalents

1,005,418

-

33,146

32,066

-

1,038,564

0.25-1.00

-

33,411

-

0.25-2.50

224

-

-

Current investments

1,345

Other long-term investment

-

-

Loans

-

193,025

-

193,025

8.25

4.00-4.50

59,875

28,000

-

87,875

5.75-6.00

4.00-4.25

4,373,896

472,510

-

4,846,406

1.75-6.00

-

15,539

313,768

-

329,307

-

3.90-7.50

224

Financial Liabilities Bank overdrafts and short- term loans from financial institutions Long term loans from banks Other long-term loans

82


In Thousand Baht

The Company Only

2004 Floating Interest Rate

Fixed Interest Rate

Non-Interest Bearing

Total

Average Interest Rate(%) Floating

Financial assets Cash and cash equivalents Current investments Loans Financial liabilities Long term loans from banks Other long-term loans

721,845 -

12,240 130,000

27,600 -

1,710,531

65,773

-

Fixed

749,445 12,240 130,000

0.25-1.00 8.25

0.50-1.00 4.00-4.50

1,710,531 65,773

1.75-5.75 -

3.90-7.50

In Thousand Baht

The Company Only

2003 Floating Interest Rate

Financial assets Cash at banks Loans Financial liabilities Promissory notes Long term loans from banks Other long-term loans

Fixed Interest Rate

Non-Interest Bearing

Total

Average Interest Rate(%) Floating

Fixed

403,918 225,404

7,659 100,600

411,577 326,004

0.50 6.00-8.25

0.50-1.00 3.00-4.00

1,982,722 -

176,349 92,299

176,349 1,982,722 92,299

1.75-7.25 -

3.10 3.90-7.50

The above financial assets and liabilities classified by year of maturities are as follows: In Thousand Baht

Consolidated

2004 Financial assets Cash and cash equivalents Current investments Other long-term investment Loans Financial liabilities Bank overdrafts and short- term loans from financial institutions Long term loans from banks Other long-term loans

On demand

Not exceeding 1 year

1,038,564 11,025 63,025

13,271 130,000

8,614 -

59,875 2,862

28,000 407,555 127,981

2,287,664 198,464

1-5 years

Over 5 years

501 224 -

2,151,187 -

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In Thousand Baht

Consolidated

2004 Financial assets Cash and cash equivalents Current investments Loans Financial liabilities Long term loans from banks Other long-term loans

On demand

Not exceeding 1 year

1-5 years

Over 5 years

749,445 -

12,240 130,000

-

-

-

270,599 22,860

1,024,972 42,913

414,960 -

In Thousand Baht

The Company Only

2003

Financial assets Cash at banks Loans Financial liabilities Promissory notes Long term loans from banks Other long-term loans

On demand

Not exceeding 1 year

1-5 years

Over 5 years

403,918 225,404

7,659 100,600

-

-

-

176,349 310,302 32,364

872,420 59,935

800,000 -

Credit Risk - Trade Accounts Receivable The Company is exposed to credit risk in respect of trade accounts receivable. The Company grants credit under a prudent policy. Patients are required to pay deposits in advance as security. The Company, therefore, expects that loss from debt collection for these receivables will not exceed the allowance for doubtful accounts. Credit Risk - Loans to Subsidiaries and Associated Companies The Company has a credit risk management policy in respect of loans to subsidiary and associated companies. Certain subsidiaries and associated companies have pledged their land and property and/or medical instruments as collateral for loans from the Company. Fair Value of Financial Assets and Financial liabilities Most of the financial assets and financial liabilities are short-term or bearing interest at floating rate. The management of the Company believes that the fair value of these financial assets and financial liabilities does not materially differ from the carrying amounts.

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Bangkok Dusit Medical Services Public Company Limited 2 Soi Soonvijai 7 New Phetchburi Rd., Bangkok 10310 Tel. 02-310-3000 Fax. 02-318-1546 www.bangkokhospital.com


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