Page 1

Auditor s Report To the Shareholders and the Board of Directors of Krungdhon Hospital Public Company Limited I have audited the accompanying balance sheet of Krungdhon Hospital Public Company Limited as at December 31, 2009, the related statement of income, the statement of changes in shareholders equity and statement of cash flows for the year then ended. The Company s 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 audit. The financial statements of Krungdhon Hospital Public Company Limited for the year ended 31 December 2008, as presented herein for comparative purpose, were audited by another auditor under her report dated February 23, 2009, expressed an unqualified opinion on those statements.

I conducted my audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance as to whether the financial statements are free of material misstatements. 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 management, as well as evaluating the overall financial statements presentation. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Krungdhon Hospital Public Company Limited as at December 31, 2009, and the results of its operations, and its cash flows for the year then ended, in conformity with generally accepted accounting principles.

Atipong Atipongsakul Certified Public Accountant Registration Number 3500 ANS Audit Company Limited Bangkok, February 24, 2010


FINANCIAL STATEMENTS AND AUDITOR S REPORT KRUNGDHON HOSPITAL PUBLIC COMPANY LIMITED FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008


KRUNGDHON HOSPITAL PUBLIC COMPANY LIMITED BALANCE SHEETS AS AT DECEMBER 31, 2009 AND 2008 (Unit: Thousand Baht) ASSETS

Notes

2009

2008

Current Assets 33,983

41,051

Current investment

Cash and cash equivalents 4

90,108

####

Trade accounts receivable - net

5

14,311

9,040

Inventories - net

6

6,851

6,795

Short - term loan receivable

7

1,100

-

Income receivable

8

7,617

6,875

Withholding tax deducted at source

3,911

2,163

Other current assets

1,580

2,186

Total current assets

####

#### 9,025

Non-current assets Restricted deposits with financial institutions

9

9,128

Other long-term investment - net

10

-

-

Property, plant and equipment - net

11

####

####

Intangible assets - net

12

2,505

2,968

Leasehold rights to land and building - net

13

8,647

10,652

Other non-current assets Total non-current assets Total assets

The accompanying notes are an integral part of these financial statements

439

626

####

####

####

####

2


KRUNGDHON HOSPITAL PUBLIC COMPANY LIMITED BALANCE SHEETS AS AT DECEMBER 31, 2009 AND 2008

LIABILITIES AND SHAREHOLDER'S EQUITY

Notes

(Unit: Thousand Baht) 2009 2008

Current liabilities Trade accounts payable Other current liabilities

14

Total current liabilities

16,431

13,063

19,328

21,237

35,759

34,300

15,079

13,124

Non-current liabilities Deferred income from government grants - net

15

Other non-current liabilities

72

72

Total non-current liabilities

15,151

13,196

50,910

47,496

####

####

Total liabilities Shareholders' equity Share capital Authorized share capital Common shares, Baht 10 par value, 15,000,000 shares Issued and paid-up share capital Common shares, Baht 10 par value, 15,000,000 shares Premium on common shares

####

####

67,943

67,943

Retained earnings Appropriated - legal reserve Unappropriated Total shareholders' equity Total liabilities and shareholders' equity

The accompanying notes are an integral part of these financial statements

17

15,000

15,000

27,275

54,103

####

####

####

####

3


KRUNGDHON HOSPITAL PUBLIC COMPANY LIMITED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

Revenues from hospital operations Cost of hospital operations Gross profit Gain on sale of other long-term investments Gain on sale of unit trust Gain on disposal of fixed assets Other incomes Profit before expenses Selling expenses Administrative expenses Management benefit expenses Loss before finance cost and income tax expenses Finance costs Loss before income tax Income tax expense Net loss for the year

Notes 3 3, 19

15 3, 19 3, 19

Basic loss per share:

The accompanying notes are an integral part of these financial statements.

(Unit: Thousand Baht) 2009 2008 320,862 313,892 ##### ##### 58,643 60,309 5,000 1,050 11,143 9,634 11,278 68,277 88,780 (1,294) (656) (71,938) (73,099) (14,366) (18,829) (19,321) (3,804) (7) (7) (19,328) (3,811) (19,328) (3,811)

(1.29)

(0.25)

4


KRUNGDHON HOSPITAL PUBLIC COMPANY LIMITED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 (Unit: Thousand Baht) Unrealised gain on Share capital Note

Issues and fully paid common shares

Balance as at January 1, 2009 Dividend payment

Premium on

Net loss for the year

Appropriated

of investment

legal reserve

67,943

-

15,000

54,103

####

-

-

-

-

(7,500)

(7,500)

-

-

-

-

(19,328)

(19,328) ####

150,000 18

changes in the value

Retained earnings

Unappropriated

Total

Balance as at December 31, 2009

150,000

67,943

-

15,000

27,275

Balance as at January 1, 2008

150,000

67,943

517

15,000

120,163

-

-

(517)

-

-

-

-

-

-

(62,249)

(62,249)

-

-

-

-

(3,811)

(3,811)

67,943

-

15,000

54,103

####

Realised since sales of unit trust Dividend payment

18

Net loss for the year Balance as at December 31, 2008

The accompanying notes are an integral part of the financial statement

150,000

#######

#### (517)

5


KRUNGDHON HOSPITAL PUBLIC COMPANY LIMITED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

Note Cash flows from (used in) operating activities Net profit (loss) before corporate income tax Adjustment to reconcile net profit to net cash provided by (used in) operating activities Bad debt Depreciation and amortisation Amortisation of deferred income from government grants Allowance for stocks obsolescence Gain on sale of other long-term investment Gain on sale of unit trust Gain on disposal of fixed assets Interest income Interest expenses Profit (loss) from operations before changes in operating assets and liabilities Operating assets - (increase) decrease Trade accounts receivable Inventories Other current assets Other non-current assets Operating liabilities - increase (decrease) Trade accounts payable Other current liabilities Cash provided by operating activities Cash paid for interest expenses Cash paid for income tax Net cash provided by (used in) operating activities

The accompanying notes are an integral part of the financial statement

(Unit: Thousand Baht) 2009 2008 ####

(3,811)

627 24,374 (4,472) (35) (79) (1,039) 7

10 24,407 (3,970) 22 (5,000) (1,050) (11,143) (3,872) 7

55

(4,400)

(5,256) (21) (780) (4)

2,355 1,595 23,767 -

3,367 (1,694) (4,333) (7) (1,748) (6,089)

460 (6,961) 16,816 (7) (3,880) 12,929

6


KRUNGDHON HOSPITAL PUBLIC COMPANY LIMITED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

Note Cash flows from (used in) investing activities Increase in deposits at financial institutions with restrictions Short - term loan receivable increased Cash received from short-term loan Cash received from selling of long-term investment Cash received from selling of unit trusts Proceeds from sales of fixed assets Cash received from interest revenue Cash received from investment in promissory notes Cash paid for investment in government bonds Cash paid for acquisition of intangible assets Decrease in accounts payable from purchasing fixed assets Cash paid for acquisition of fixed assets Net cash provided by investing activities Cash flows from (used in) financing activities Decrease in bank overdrafts Cash received on deferred income from government grants Dividend paid Net cash used in financing activities Net cash and cash equivalents decrease Cash and cash equivalents at beginning of years Cash and cash equivalents at end of years

The accompanying notes are an integral part of the financial statement

23

(Unit: Thousand Baht) 2009 2008 (103) (2,000) 900 181 1,229 10,000 (5) (9,923) 279

(354) 11,000 121,050 14,264 3,829 ##### (52) (11) (9,422) 40,304

6,427 (7,715) (1,288) (7,097) 41,158 34,061

(10) (62,248) (62,258) (9,025) 50,183 41,158

7


KRUNGDHON HOSPITAL PUBLIC COMPANY LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 1.

GENERAL INFORMATION 1.1 Krungdhon Hospital Public Company Limited (1the Company2) is a public company incorporated and domiciled in Thailand. The Company registered address having 2 hospitals, Krungdhon Hospital 1 located at 337, Somdet Prachao Taksin Road, Samrae, Thonburi, Bangkok and Krungdhon Hospital 2 located at 272, Suksawad Road, Bangpakok, Radburana, Bangkok. 1.2 The Company is principally engaged in the operation of a hospital business, and was listed on the Stock Exchange of Thailand in 1989.

2.

BASIS OF FINANCIAL STATEMENTS PRESENTATION The financial statements are prepared in accordance with Thai Accounting Standards (1TAS2) including related interpretations and guidelines promulgated by the Federation of Accounting Professions (1FAP2) in accordance with generally accepted accounting principles in Thailand and applicable rules and regulations of the Securities and Exchange Commission. The presentation of the financial statements has been made in compliance with the stipulations of the Notification of the Department of Business Development dated January 30, 2009, issued under the Accounting Act B.E.2543. The financial statements issued for Thai reporting purposes are prepared in the Thai language. This English translation of the financial statements has been prepared for the convenience of readers not conversant with the Thai language. They are prepared on a historical cost basis, except as disclosed in respective accounting policies The preparation of financial statements in conformity with Thai accounting standard requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying amounts of assets and liabilities that are not readily apparent from other sources. Subsequent actual results may differ from these estimates.

8


The estimates and underlying assumptions 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, and in the period of the revision and future periods, if the revision affects both current and future periods. Accounting standards which are effective for the current year On May 15, 2009, the Federation of Accounting Professions (FAP) has made the announcement No. 12/2009 to renumber Thai Accounting Standards (TAS) to be the same as International Accounting Standards (IAS). The Federation of Accounting Professions has issued Notification No. 86/2551 and 16/2552, mandating the use of new accounting standards, financial reporting standard and accounting treatment guidance as follows. a) Accounting standards, financial reporting standard and accounting treatment guidance which are effective for the current year Framework for Preparation and Presentation of Financial Statements (revised 2007) TAS 36 (revised 2007) Impairment of Assets TFRS 5 (revised 2007) Non-current Assets Held for Sale and Discontinued Operations Accounting Treatment Guidance for Leasehold right Accounting Treatment Guidance for Business Combination under Common Control These accounting standards, financial reporting standard and accounting treatment guidance became effective for the financial statements for fiscal years beginning on or after 1 January 2009. The management has assessed the effect of these standards and Guidance do not have any significant impact on the financial statements for the current period. b) Accounting standards which are not effective for the current year TAS 20

TAS 24 (revised 2007) TAS 40

Accounting for Government Grants and Disclosure of Government Assistance Related Party Disclosures Investment Property

Effective date 1 January 2012

1 January 2011 1 January 2011

The management of the Company is still evaluating the effect of these three accounting standards. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Recognition of revenues and expenses 9


(a) Revenues from hospital operation Revenues from hospital operation, mainly consisting of medical fees, hospital room sales, medicine sales and other income, are recognized as income when services have been rendered or medicine delivered.

(b) Other revenues and expenses Other revenues and expenses are recognized on an accrual basis. Cash and cash equivalents Cash and cash equivalents comprise of cash balances, all deposits (except time deposits) and highly liquid short-term investments which have negligible risk of value changing and free from commitments. Trade accounts receivable and allowance for doubtful accounts Trade accounts receivable are stated at the net realizable value. Allowance for doubtful accounts is provided for the estimated losses that may be incurred in collection of receivable. The allowance is generally based on collection experience and analysis of debt aging. Inventories Inventories are valued at the lower of cost (weighted average basis) and net realizable value. Net realizable value is calculated from the estimated selling price in ordinary course of business less the estimated costs necessary to make the sale. Allowance for obsolete stocks is made for long outstanding or obsolete stocks. Long - term investment Long - term investment in other company which is non-marketable equity securities and held as other investment is valued at cost. The company recognizes loss on impairment of other investment (if any) in the income statement. Property, plant and equipment and depreciation Land is stated at cost. Buildings and equipment are stated at cost less accumulated depreciation and allowance for loss on impairment of assets (if any). Depreciation of buildings and equipment is calculated by reference to their costs on a straight C line basis over the following estimate useful lives:Buildings and construction Equipment and tools Motor vehicles

20 years 3 - 20 years 5 - 10 years

Intangible assets and amortisation Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortisation and accumulated impairment loss (if any). 10


Intangible assets with finite lives are amortised on systematic basis over the economic useful live and tested for impairment whenever there is an indication that the intangible assets may be impaired. The amorisation period and the amortization method of such intangible assets are reviewed at least at each financial year end. The amortisation expense is charged to the statement of income. A summary of the intangible assets with finite useful lives is as follows Useful lives Computer software

10 years

Leasehold rights to land and building and amortisation Leasehold right to land and building are stated at cost less accumulated amortisation. Amortisation of leasehold rights is calculated by reference to its cost on a straight C line basis over the shorter of the estimate useful lives and the lease period (20 years). The amortization expenses is charged to the statement of income. Impairment of assets The carrying amounts of the CompanyEs assets, other than inventories are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the assetEs recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognized in the statement of income.

Calculation of recoverable amount The recoverable amount is the greater of the assetEs net selling price and value in use. In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

Reversals of impairment An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the assetEs carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. All reversals of impairment losses are recognized in the statement of income.

11


Related party transactions Related parties comprise enterprises and individuals that control, or are controlled by, the Company, whether directly or indirectly, or which are under common control with the Company. They also include associated companies and individuals which directly or indirectly own a voting interest in the Company the gives them significant influence over the Company, key management personnel, directors and officers with authority in the planning and direction of the CompanyEs operations. Government grants The Company records government grants provided to purchase medical equipment as deferred income and recognizes them as income on a straight-line basis over the useful life of the related assets. Provisions Provisions are recognized when the Company has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Income tax Income tax is provided in the accounts based on the taxable profits determined in accordance with tax legislation. Litigation The Company has contingent liabilities as a result of litigation. The CompanyEs management has used judgement to the results of the litigation and believes that no loss will result. Therefore no contingent liabilities are recorded as at the balance sheet date. Basic earnings (loss) per share Basic earnings (loss) per share is calculated by dividing net profit (loss) for the year by the weighted average number of issued and paid up common shares during the year.

4. CURRENT INVESTMENTS As of December 31, 2009 and 2008, this account consisted of: 12


Fixeddeposits at financial institutions Heldtomaturitydebt securityduewithinoneyear Bill of exchange Total current investments

(Unit: ThousandBaht) 2009 2008 108 107 90,000 90,108

100,000 100,107

As at December 31, 2009, the Company has bill of exchange with a financial institution amounting to Baht 90 million carrying interest at a rate of 1% per annum, which will mature on January 14, 2010. 5. TRADE ACCOUNTS RECEIVABLE - NET As of December 31, 2009 and 2008, this account consisted of:

(Unit: ThousandBaht) 2009 2008 Outstandingperiod Not yet due Over due 1- 30days 31- 60days 61- 90days Over 90days Total Less: Allowancefor doubtful accounts Tradeaccountsreceivable- net

6.

7,416

5,345

4,235 1,860 450 511 14,472 (161) 14,311

2,462 797 110 502 9,216 (176) 9,040

INVENTORIES - NET As of December 31, 2009 and 2008, this account consisted of:

13


Medicines andmedical supplies Supplies Stationerysupplies Less: Allowancefor obsoletestocks Net

7.

(Unit: ThousandBaht) 2009 2008 5,818 5,885 899 697 234 349 6,951 6,931 (100) (136) 6,851 6,795

SHORT-TERM LOAN RECEIVABLE This represents short - term loan to the doctor who paid compensation by Baht 2 million to the plaintiff as the order of the court in 2008. Such short - term loan has no interest bearing, and no guarantee. This loan agreement requires the monthly repayment of Baht 100,000, commencing from April 2009. During the period, the Company received the repayment of short-term loan receivable in the total amount of Baht 900,000, and the remaining balance of short-term loan receivable as of December 31, 2009 is Baht 1.1 million.

8.

INCOME RECEIVABLE As of December 31, 2009 and 2008, this account consisted of:

(Unit: ThousandBaht) 2009 2008 National HealthSecurityOffice Social SecurityScheme Total 9.

7,427 190 7,617

6,304 571 6,875

RESTRICTED DEPOSITS WITH FINANCIAL INSTITUTIONS As at December 31, 2009 and 2008, all fixed deposits of the Company at financial institutions are pledged with banks to secure letters of guarantee facilities issued by the banks on behalf of the Company.

10. OTHER LONG C TERM INVESTMENT - NET As of December 31, 2009 and 2008, this account consisted of: (Unit: Thousand Baht) 14


Type of business

CompanyEs name Kendall Gammatron Limited Less: Allowance impairment of investment

Trading of medical supplies

Percentage of shareholding 2009 2008 6.70 6.70

Investment 2009 8,00 0

2008 8,00 0

(8,00 0) -

(8,00 0) -

for

Other long-term investments - net

11. PROPERTY, PLANT AND EQUIPMENT C NET As at December 31, 2009 property, plant and equipment comprised of:

15


(Unit: ThousandBaht) Balanceas at January1, 2009 At cost Land Buildings andConstruction Equipment andtools Motor vehicles Workinprogress Accumulateddepreciation Buildings andConstruction Equipment andtools Motor vehicles Net bookvalue

Movement duringtheyear Increase Decrease

Balanceas at December 31, 2009

34,775 183,349 245,755 15,303 43 479,225

43 6,189 3,681 9,913

(203) (2,518) (43) (2,764)

34,775 183,392 251,741 12,785 3,681 486,374

120,967 204,258 10,946 336,171 143,054

7,945 12,593 1,379 21,917

(165) (2,497) (2,662)

128,912 216,686 9,828

Depreciationchargeincludedinincomestatements for theyear 2008 2009

355,426 130,948

21,933 21,917

Depreciations for the year 2009 and 2008, has been charged to cost of hospital operations amounted to Baht 14.6 million and Baht 13.5 million, respectively, while the remaining amount of Baht 7.3 million and Baht 8.4 million respectively, has been charged to administrative expenses. As at 31 December 2009 and 2008, certain buildings, equipment and motor vehicles of the Company have been fully depreciated but are still in use. The original cost of those assets are approximately Baht 198 million and 204 million, respectively. The Company has pleded its land, including buildings and construction to secure its bank overdraft facilities with two financial institutions During the year 2008, the Company sold land and construciton thereon with a net book value of approximately Baht 3 million to an individual, at a price of Baht 14 million. The company recognised the approximately Baht 11 millon as gain on the sale of fixed assets in income statement of the year 2008. 12. INTANGIBLE ASSETS - NET

16


(Unit: ThousandBaht) 2009 Computer software-cost AddPurchaseduringtheyear LessAccumulatedamortisation Computer software- net Amortisationexpenses includedintheincome statement for theyear

2008

5,337 5 5,342

5,285 52 5,337

(2,837) 2,505

(2,369) 2,968

468

474

13. LEASEHOLD RIGHT TO LAND AND BUILDING - NET

Cost LessAccumulatedamortisation Leaseholdright tolandandbuilding- net Amortisationexpenseincludedintheincome statement for theyear

(Unit: ThousandBaht) 2009 2008 40,000 40,000 (31,353) 8,647

(29,348) 10,652

2,000

2,000

Amortisation for year 2009 and 2008, have been charged to cost of hospital operations amounted to Baht 1.6 million, while the remaining amount of Baht 0.4 million have been charged to administrative expenses. On July 20, 1993, the Company entered into an agreement to lease land and building for a period of 20 years from a company which has director in common with the Company. Under the agreement the Company paid Baht 40 million for the leasehold right in order to establish Krungdhon Hospital 2, and transferred the beneficiary rights under the insurance policy to the lessor. Most of the land title deeds of the lessor covered by the agreement to lease land and building has been mortgaged by the lessor.

14. OTHER CURRENT LIABILITIES As of December 31, 2009 and December 31, 2008, this account consisted of: 17


(Unit: ThousandBaht) 2009 2008 4,745 4,953 1,078 5,524 4,713 4,628 7,167 5,564 1,625 568 19,328 21,237

Accruedmedical serviceexpenses Incomereceivedinadvance Accrueddividend Accruedexpenses Others Total

15. DEFERRED INCOME FROM GOVERNMENT GRANTS - NET The National Health Security Office approved the grant-in-aid budget for private hospitals that have joined the Universal Health Care Coverage Project, for procurement of medical equipment. The Company recoded such grant as 1Deferred income from government grants2 in the balance sheets. It is recognized as income on a straight-line basis over the useful life of the related assets.

Deferredincomefromgovernment grants- beginningof theyear AddIncreaseingovernment grantsduringtheyear LessRecognisedasincomeduringtheyear Deferredincomefromgovernment grants- endof theyear

(Unit: ThousandBaht) 2009 2008 13,124 12,265 6,427

4,829

(4,472) 15,079

(3,970) 13,124

16. RELATED PARTY TRANSACTIONS During the years, the Company had significant business transactions with related company, which related by way of common directors. Such transactions are summarized below: (Unit: Thousand Baht) 18


Transfer pricing policy 2009 Transaction with related company Siam Brother Housing Co., Ltd. Rental expense

6,869

2008

6,869

Approximately Baht 0.57 million per month (2008: approximately Baht 0.57 million per month)

17. LEGAL RESERVE The CompanyEs legal reserve is provided under the Public Limited Companies Act B.E. 2535 (1992), the Company is required to appropriate not less than 5% of its annual net income after deducting accumulated deficit brought forward (if any) as legal reserve until the reserve fund reaches 10% of the authorized share capital. The reserve is non-distributable. 18. DIVIDENDS On April 21, 2009, the Annual General Meeting of the CompanyEs shareholders for the year 2009 approved the payment of dividend at Baht 0.5 per share for 15 million ordinary shares from the year 2008Es operating result of totaling Baht 7.5 million. The dividend was paid on May 20, 2009. On April 25, 2008, the Annual General Meeting of the CompanyEs shareholders for the year 2008 approved the payment of dividend at Baht 4.15 per share for 15 million ordinary shares from the year 2007Es operating result of totaling Baht 62 million. The dividend was paid on May 23, 2008. 19. EXPENSES BY NATURE Significant expenses by nature for the years 2009 and 2008 were as follow: (Unit: Thousand Baht)

Salary, wages, medical service expenses and other employee benefits Depreciation and amortization expenses Rental expenses Purchase medicines and medical supplies Changes in inventories

2009 176,947

2008 183,738

24,980 7,651

24,406 7,538

51,260 21

47,577 1,595

20. FINANCIAL INFORMATION BY SEGMENT 19


The CompanyEs operation involves in a single industry segment in the hospital business and is carried on in the single geographic area in Thailand. As a result, all of the revenues, operating profits and assets as reflected in these financial statements pertain to the aforementioned industry segment and geographic area. 21.

COMMITMENTS 21.1 commitments

Operating

lease

As at December 31, 2009, the Company has commitments amounting to Baht 25.8 million in respect of long-term agreement with a related company to lease land and buildings for setting up a Krungdhon Hospital 2 as follow: Year

Unit : Million Baht

2010

7.3

2011 - 2013

18.5

21.2

Bank guarantees

As at December 31, 2009, there were outstanding bank guarantees of approximately Baht 10.6 million issued by the banks on behalf of the Company in respect of certain performance bonds as required in the normal course of business. The Company has mortgaged its land, including buildings and structure thereon to secure its bank guarantees. 21.3

Bank overdrafts

As at December 31, 2009, Baht 35 million of bank overdrafts facilities are secured by the mortgage of the CompanyEs land and structure thereon. 22. FINANCIAL INSTRUMENTS 22.1 Financial risk management The CompanyEs financial instruments, as defined under Thai Accounting Standard No.32 1Financial Instruments :Disclosure and Presentations2 principally comprise cash and cash equivalents, trade accounts receivable, investments and trade accounts payable. The financial risk associated with these financial instruments and how they are managed is described below. Credit risk The Company is exposed to credit risk primarily with respect to trade accounts receivable. The Company manages the risk by adopting appropriate credit control policies and procedures and therefore does not expect to incur material financial losses. In addition, the Company does not have high concentrations of credit risk sicne it has a large customer base. The maximum 20


exposure to credit risk is limited to the carrying amounts of receivables as stated in the balance sheet. Interest rate risk The Company is exposed to interest rate risk relates primarily to its cash at banks, and bank overdrafts. However, since most of the CompanyEs financial assets and liabilities have fixed interest rates which are close to the market rate, the interest rate risk is expected to be minimal. Significant financial assets and liabilities as December 31, 2009, classified by type of interest rate are summarised in the table below, with those financial assets and liabilities the carry fixed interest rates further classified based on the maturity date, or the repricing date if this occurs before the maturity date. (Unit: ThousandBaht) Fixedinterest Rateduewithin Floating Non- interest 1year Interest rate bearing Financial Assets Cashandcashequivalents

Total

Interest rate (%p.a.)

-

32,547

1,436

33,983

0.75%

Current investments Tradeaccount receivable Pledgedfixeddeposits at

90,108 -

-

14,311

90,108 14,311

1% -

financial institutions

9,128 99,236

32,547

15,747

9,128 147,530

-

-

16,431 16,431

16,431 16,431

1.0-1.25%

Financial liabilities Tradeaccount payable -

-

-

Foreign currency risk The companyEs exposure to foreign currency risk is limited since the majority of business transaction are denominated in Thai Baht. 22.2 Fair value of financial instruments Since the majority of the CompanyEs financial instruments are short-term in nature, its fair value is not expected to be materially different from the amounts presented in the balance sheets. A fair value is the amount for which an asset can be exchanged or a liability settled between knowledgeable, willing parties in an armEs length transaction. The fair value is determined by 21


reference to the market price of the financial instruments or by using an appropriate valuation technique, depending on the nature of the instruments. 23. STATEMENTS OF CASH FLOWS For the purpose of the statements of cash flows, cash and cash equivalents include cash in hand and at banks with an original maturity of three months or less and free from restriction. As at December 31, 2009 and 2008, cash and cash equivalents as reflected in the statements of cash flows consist of the following:(Unit: ThousandBaht) 2009 2008 33,983 41,051 CashandCashequivalents Current investment - fixeddeposits 108 107 Cashandcashequivalents instatements of cashflows

34,091

41,158

24. LITIGATIONS As at December 31, 2009, the Company has litigations as follows: 24.1 In 2007, the Company was sued by the relative of a patient, claiming compensation of Baht 10 million, on the grounds that the doctor did not provide care in accordance with the highest standards. In addition, the Company was sued by a patient, claiming compensation of Baht 1.5 million. Both cases were dismissed by the court of first instance in March 2008 and are being heard by the appellate court; however, the CompanyEs management believes both cases will be dismissed and that there will be no material effect on the results of the CompanyEs operations, or its financial position. 24.2 During the year 2008, the Company was sued by a patient, claiming compensation of Baht 5 million, on the grounds that the doctor did not provide care in accordance with the highest standards. The case were dismissed by the court of first instance and are being heard by the appellate court. The CompanyEs management believes that the ultimate resolutions of these legal proceedings are not likely to have a material effect on the results of the CompanyEs operations, or its financial position. 25. Reclassification Certain amounts in the financial statement for the year ended 31 December 2008 have been reclassified to conform to the current yearEs classification but with no effect to previously reported net income or shareholdersE equity. The reclassifications are as follow: 22


(Unit: ThousandBaht) Asreclassified

As previouslyreported

Revenues fromhospital operations

313,892

317,346

Cost of hospital operations

(253,583)

(258,321)

Administrativeexpenses

(73,099)

(91,300)

Management benefit expenses

(18,829)

-

(656)

-

Sellingexpenses

26. Approval of financial statements These financial statements were approved by the authorized directors of the Company on February 24, 2010.

23

Kdh 09  

KDH_2009 THONBURI MEDICAL CENTRE PCL Annual Report 2009