Kdh 09

Auditors 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 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 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 AUDITORS REPORT

KRUNGDHON HOSPITAL PUBLIC COMPANY LIMITED

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

Notes 2009 2008

Current Assets

Cash and cash equivalents 33,983 41,051

Current investment 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 #### ####

Non-current assets

Restricted deposits with financial institutions 9 9,128 9,025

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 439 626

Total non-current assets #### ####

Total assets #### ####


(Unit: Thousand Baht)

ASSETS

BALANCE SHEETS

AS AT DECEMBER 31, 2009 AND 2008

The accompanying notes are an integral part of these financial statements 2

Notes 2009 2008

Current liabilities

Trade accounts payable 16,431 13,063

Other current liabilities 14 19,328 21,237

Total current liabilities 35,759 34,300

Non-current liabilities

Deferred income from government grants - net 15 15,079 13,124

Other non-current liabilities 72 72

Total non-current liabilities 15,151 13,196

Total liabilities 50,910 47,496

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 17 15,000 15,000

Unappropriated 27,275 54,103

Total shareholders' equity #### ####

Total liabilities and shareholders' equity #### ####


LIABILITIES AND SHAREHOLDER'S EQUITY


BALANCE SHEETS

AS AT DECEMBER 31, 2009 AND 2008

The accompanying notes are an integral part of these financial statements 3

Notes 2009 2008

Revenues from hospital operations 3 320,862 313,892

Cost of hospital operations 3, 19 ##### #####

Gross profit 58,643 60,309

Gain on sale of other long-term investments - 5,000

Gain on sale of unit trust - 1,050

Gain on disposal of fixed assets - 11,143

Other incomes 15 9,634 11,278

Profit before expenses 68,277 88,780

Selling expenses 3, 19 (1,294) (656)

Administrative expenses 3, 19 (71,938) (73,099)

Management benefit expenses (14,366) (18,829)

Loss before finance cost and income tax expenses (19,321) (3,804)

Finance costs (7) (7)

Loss before income tax (19,328) (3,811)

Income tax expense - -

Net loss for the year (19,328) (3,811)

Basic loss per share: (1.29) (0.25)



STATEMENTS OF INCOME


The accompanying notes are an integral part of these financial statements. 4

Unrealised gain on

Share capital Premium on changes in the value Appropriated

Note Issues and fully paid common shares of investment legal reserve Unappropriated Total

Balance as at January 1, 2009 150,000 67,943 - 15,000 54,103 ####

Dividend payment 18 - - - - (7,500) (7,500)

Net loss for the year - - - - (19,328) (19,328)

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 ####### ####

Realised since sales of unit trust - - (517) - - (517)

Dividend payment 18 - - - - (62,249) (62,249)

Net loss for the year - - - - (3,811) (3,811)

Balance as at December 31, 2008 150,000 67,943 - 15,000 54,103 ####

Retained earnings


STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY



The accompanying notes are an integral part of the financial statement 5

Note 2009 2008

Cash flows from (used in) operating activities

Net profit (loss) before corporate income tax #### (3,811)

Adjustment to reconcile net profit to net cash provided by

(used in) operating activities

Bad debt 627 10

Depreciation and amortisation 24,374 24,407

Amortisation of deferred income from government grants (4,472) (3,970)

Allowance for stocks obsolescence (35) 22

Gain on sale of other long-term investment - (5,000)

Gain on sale of unit trust - (1,050)

Gain on disposal of fixed assets (79) (11,143)

Interest income (1,039) (3,872)

Interest expenses 7 7

55 (4,400)

Operating assets - (increase) decrease

Trade accounts receivable (5,256) 2,355

Inventories (21) 1,595

Other current assets (780) 23,767

Other non-current assets (4) -

Operating liabilities - increase (decrease)

Trade accounts payable 3,367 460

Other current liabilities (1,694) (6,961)

Cash provided by operating activities (4,333) 16,816

Cash paid for interest expenses (7) (7)

Cash paid for income tax (1,748) (3,880)

Net cash provided by (used in) operating activities (6,089) 12,929


Profit (loss) from operations before changes in operating

assets and liabilities


STATEMENTS OF CASH FLOWS



Note 2009 2008



STATEMENTS OF CASH FLOWS


Cash flows from (used in) investing activities

Increase in deposits at financial institutions with restrictions (103) (354)

Short - term loan receivable increased (2,000) -

Cash received from short-term loan 900 -

Cash received from selling of long-term investment - 11,000

Cash received from selling of unit trusts - 121,050

Proceeds from sales of fixed assets 181 14,264

Cash received from interest revenue 1,229 3,829

Cash received from investment in promissory notes 10,000 -

Cash paid for investment in government bonds - #####

Cash paid for acquisition of intangible assets (5) (52)

Decrease in accounts payable from purchasing fixed assets - (11)

Cash paid for acquisition of fixed assets (9,923) (9,422)

Net cash provided by investing activities 279 40,304

Cash flows from (used in) financing activities

Decrease in bank overdrafts - (10)

Cash received on deferred income from government grants 6,427 -

Dividend paid (7,715) (62,248)

Net cash used in financing activities (1,288) (62,258)

Net cash and cash equivalents decrease (7,097) (9,025)

Cash and cash equivalents at beginning of years 41,158 50,183

Cash and cash equivalents at end of years 23 34,061 41,158


8


NOTES TO FINANCIAL STATEMENTS


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.

9

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

Effective date

TAS 20 Accounting for Government Grants

and Disclosure of Government

Assistance

1 January 2012

TAS 24 (revised 2007) Related Party Disclosures 1 January 2011

TAS 40 Investment Property 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

10

(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 20 years

Equipment and tools 3 - 20 years

Motor vehicles 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).

11

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.

12

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:

13

2009 2008

Fixed deposits at financial institutions 108 107

Held to maturity debt security due within one year

Bill of exchange 90,000 100,000

Total current investments 90,108 100,107


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


6. INVENTORIES - NET


2009 2008

Outstanding period

Not yet due 7,416 5,345

Over due

1 - 30 days 4,235 2,462

31 - 60 days 1,860 797

61 - 90 days 450 110

Over 90 days 511 502

Total 14,472 9,216

Less: Allowance for doubtful accounts (161) (176)

Trade accounts receivable - net 14,311 9,040


14

2009 2008Medicines and medical supplies 5,818 5,885 Supplies 899 697

Stationery supplies 234 349 6,951 6,931

Less: Allowance for obsolete stocks (100) (136) Net 6,851 6,795


7. 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


2009 2008

7,427 6,304

190 571

7,617 6,875Total


National Health Security Office

Social Security Scheme

9. 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


(Unit:

Thousand Baht)

15

CompanyEs name Type of

business

Percentage of

shareholding

Investment

2009 2008 2009 2008

Kendall Gammatron Limited Trading of

medical supplies

6.70 6.70 8,00

0

8,00

0

Less: Allowance for

impairment

of investment (8,00

0)

(8,00

0)

Other long-term investments

- net

- -

11. PROPERTY, PLANT AND EQUIPMENT C NET

As at December 31, 2009 property, plant and equipment comprised of:

16

Balance as at Balance as at

January 1, 2009 Increase Decrease December 31, 2009

At cost

Land 34,775 - - 34,775

Buildings and Construction 183,349 43 - 183,392

Equipment and tools 245,755 6,189 (203) 251,741

Motor vehicles 15,303 - (2,518) 12,785

Work in progress 43 3,681 (43) 3,681

479,225 9,913 (2,764) 486,374

Accumulated depreciation

Buildings and Construction 120,967 7,945 - 128,912

Equipment and tools 204,258 12,593 (165) 216,686

Motor vehicles 10,946 1,379 (2,497) 9,828

336,171 21,917 (2,662) 355,426

Net book value 143,054 130,948

Depreciation charge included in income statements for the year

2008 21,933

2009 21,917

Movement during the year


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

17

2009 2008

5,337 5,285

5 52

5,342 5,337

(2,837) (2,369)

2,505 2,968

Amortisation expenses included in the income

statement for the year 468 474

Add Purchase during the year


Less Accumulated amortisation

Computer software - net

Computer software -cost

13. LEASEHOLD RIGHT TO LAND AND BUILDING - NET

2009 2008

Cost 40,000 40,000

(31,353) (29,348)

8,647 10,652

statement for the year 2,000 2,000


Less Accumulated amortisation

Leasehold right to land and building - net

Amortisation expense included in the income

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:

18


2009 2008

Accrued medical service expenses 4,745 4,953

Income received in advance 1,078 5,524

Accrued dividend 4,713 4,628

Accrued expenses 7,167 5,564

Others 1,625 568

Total 19,328 21,237

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.


2009 2008

13,124 12,265

6,427 4,829

(4,472) (3,970)15,079 13,124

Deferred income from government grants - beginning of the year

Add Increase in government grants during the year

Deferred income from government grants - end of the year

Less Recognised as income during the year

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)

19

2009

2008

Transfer pricing policy

Transaction with related company

Siam Brother Housing Co., Ltd.

Rental expense

6,869

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:


2009 2008

Salary, wages, medical service expenses and other employee

benefits

176,947 183,738

Depreciation and amortization expenses 24,980 24,406

Rental expenses 7,651 7,538

Purchase medicines and medical supplies

51,260 47,577

Changes in inventories 21 1,595

20. FINANCIAL INFORMATION BY SEGMENT

20

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 Operating lease

commitments

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

21

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.

Fixed interest Interest

Rate due with in Floating Non - interest rate

1 year Interest rate bearing Total (% p.a.)

Financial Assets

Cash and cash equivalents - 32,547 1,436 33,983 0.75%

Current investments 90,108 - - 90,108 1%

Trade account receivable - - 14,311 14,311 -

Pledged fixed deposits at

financial institutions 9,128 - - 9,128 1.0-1.25%

99,236 32,547 15,747 147,530

Financial liabilities

Trade account payable - - 16,431 16,431 -

- - 16,431 16,431


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

22

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:-


2009 2008

33,983 41,051

108 107

34,091 41,158

Cash and cash equivalents in statements

Cash and Cash equivalents

of cash flows

Current investment - fixed deposits

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:

23

As reclassified

Revenues from hospital operations 313,892 317,346

Cost of hospital operations (253,583) (258,321)

Administrative expenses (73,099) (91,300)

Management benefit expenses (18,829) -

Selling expenses (656) -

As previously reported


26. Approval of financial statements

These financial statements were approved by the authorized directors of the Company on February 24,

2010.

Kdh 09

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