BH : Annual Report 2006

Bumrungrad Hospital Public Company Limited

Annual Report 2006 Bumrungrad Hospital Public Company Limited 33 Sukhumvit 3, Bangkok 10110, Thailand Tel: +66 (0) 2667 1000 Fax: +66 (0) 2667 2525 E-mail: ir@bumrungrad.com www.bumrungrad.com

Annual Report 2006 Bumrungrad Hospital Public Company Limited

Table of Contents Message from the Chairman

2

Message from the Group CEO

3

Our People

4

Financial Information Financial Highlights

19

Management Discussion and Analysis

20

Report of the Audit Committee

23

Report of the Accountability of the Board of Directors to the Company’s Financial Reports

24

Financial Statements

25

Other Importation Information General Information

63

Company Profile

64

Risk Factors

69

Shareholding Structure & Management

70

Corporate Governance

84

Related Parties Transactions

90

1

Annual Report 2006 Bumrungrad Hospital Public Company Limited

Message from the Chairman Defining what makes Bumrungrad a market leader in healthcare really boils down to one word: people.

Everyday we touch, change and improve the lives of thousands of people in so many different ways. After 26 years in the healthcare business, this is the one constant.

As Bumrungrad’s business network expands, we will continue to focus on people – our patients, our doctors, nurses and support staff. Any visitor to Bumrungrad can feel the difference that a ‘patient-centric’ healthcare model delivers. It shows on the smiles of our staff, the extra time our doctors spend with patients, and the emphasis we put on customer service.

We believe that by putting people first, we attract the best doctors, earn the loyalty of our patients, and build a healthcare brand recognized for world class quality and service. These simple guiding principles drive our business and financial success.

It is clear that major changes are taking place in healthcare delivery systems worldwide, and these global challenges are creating opportunities for a new consumer-driven

healthcare

model. As

always,

Bumrungrad is prepared to meet those challenges through innovation and by utilizing its greatest asset – people.

Mr. Chai Sophonpanich Chairman

2

Annual Report 2006 Bumrungrad Hospital Public Company Limited

Message from the Group CEO

A retrospective look at Bumrungrad validates strong performance in key areas of our business – record earnings and revenues, growth in patient volume, re-accreditation by the Joint Commission International, dominance in medical tourism, and worldwide brand recognition as a leading healthcare destination by Newsweek International.

Initiatives to expand our business domestically and internationally are well underway, and include a campaign to attract and retain Thai nationals – the foundation of our business; the commissioning of our new Health Screening Center in early 2007; agreements with US insurers and corporations to develop new global health plans; and continued 2006 was a year of solid continuity for Bumrungrad

development of our international network.

International. In a year that brought both changes and challenges, Bumrungrad continued to expand its

Bumrungrad is well positioned to capitalize on the

facilities and network, execute its business plan and

growing demand for medical services in Asia, while

meet the expectations of its customers and

attracting more patients from Europe and North

shareholders.

makes

America looking for high quality, lower cost care. By

Bumrungrad a trusted business partner and healthcare

investing in our brand, our network and our people

provider for millions of patients around the world.

today, we are ensuring our competitiveness tomorrow.

This

continuity

is

what

Mr. Curtis J. Schroeder Group Chief Executive Officer

3

Annual Report 2006 Bumrungrad Hospital Public Company Limited

Our Guiding Principals

Dennis Brown CEO, Bumrungrad International Limited A seasoned healthcare veteran, Dennis oversees Bumrungrad’s

international

expansion

and

development. Network expansion is a critical part of Bumrungrad’s growth and brand development strategy, as the company seeks to meet the rising demand of healthcare services from the Middle East to the Far East.

4

Annual Report 2006 Bumrungrad Hospital Public Company Limited

Mack Banner CEO, Bumrungrad International, Bangkok With over 30 years in healthcare administration spanning four continents, Mack represents the skill and experience of Bumrungrad senior management. He manages Thailand’s premier hospital and its 3,100 employees by focusing on patient satisfaction, staff development and continuous improvement.

5

Annual Report 2006 Bumrungrad Hospital Public Company Limited

Our Patients

Simon and Carrie Ann Clark Expatriate Family Meet the Clarks: Simon, Carrie Ann and their three children – Jade, Alex and Caitlin – all born at Bumrungrad.

The Clarks are just one of the thousands of expatriate families that choose Bumrungrad, and part of the 430,000 international patients that select Bumrungrad as their healthcare provider.

6

Annual Report 2006 Bumrungrad Hospital Public Company Limited

Lidy and Paul Gundersen Medical Tourists Uninsured and unable to afford surgical treatment in the USA, Lidy and her husband Paul traveled halfway around the world from their home in Arkansas to Bumrungrad for medical treatment. Lidy and Paul represent a growing trend of medical tourists seeking afforable medical care overseas, and one of the 65,000 Americans Bumrungrad treated in 2006.

Paramee Thongcharoen and Suchari Thongcharoen Thai Nationals Paramee and her mom, are the root and foundation of Bumrungrad’s one million plus patient base. Our patients entrust us with more than their healthcare; they entrust us with the lives of their mothers and fathers, husbands and wives, and sons and daughters.

Treating them like family seems only natural.

7

Annual Report 2006 Bumrungrad Hospital Public Company Limited

Our Doctors

Dr. Sukitti Panpunnung Cardiologist and Emergency Medicine

Mr. 24/7. The 1-2-Call. Dr. Sukitti has many nicknames because he is seemingly everywhere, all the time. Bumrungrad is home to over 800 medical specialists, like Dr. Sukitti, whose dedication to patient care is what makes them so special. Delivering integrated healthcare one-patient-at-a-time has made Bumrungrad a recognized center of excellence and a regional referral center for specialty care.

8

Annual Report 2006 Bumrungrad Hospital Public Company Limited

Dr. Borihan Suwandee GP and Arabic Medical Coordinator

Educated in Egypt and fluent in Arabic, Dr. Borihan helps coordinate the care of the more than 90,000 Arabic patients that travel to Bumrungrad annually for medical treatment. Bumrungrad doctors treat patients from over 190 countries around the globe, making Bumrungrad the world’s leading destination for overseas care.

9

Annual Report 2006 Bumrungrad Hospital Public Company Limited

Our Staff

Gaysorn Phancharoensinn Nurse Manager A nurse with an MBA, Gaysorn manages Bumrungrad’s bustling Health Screening Center catering to over 50,000 patients annually. Bumrungrad’s new center is part of our campus expansion program, which includes a new 25,000 sq. m. outpatient clinic that will re-define the healthcare experience for our patients.

10

Annual Report 2006 Bumrungrad Hospital Public Company Limited

Phatcharin In-On, Nurse Rattanah Hoisang, Radiology Technician Wilasinee Natenopparat, Customer Service Representative These women are stars. Through our Star of Bumrungrad program, patients recognize Bumrungrad staff that demonstrate exceptional care and service standards. Staff development and recognition programs are core to Bumrungrad’s position as a service leader in the healthcare industry.

11

Annual Report 2006 Bumrungrad Hospital Public Company Limited

Our Corporate Citizens

Prawnapa Chantapoom Nurse Aide

Prawnapa is just one of the hundreds of young women that Bumrungrad supports through its participation in the UNICEF Youth Career Development Program, which provides scholarships, training and career opportunities in the healthcare and hospitality industries for young women from the provinces of Thailand.

12

Annual Report 2006 Bumrungrad Hospital Public Company Limited

Dr. Oradee Chandavasu Neonatologist

Over the past three years, Bumrungrad has helped over 150 children with life threatening congenital heart defects by providing them with free surgical treatment.

Our commitment to helping disadvantaged children and their families is reflected in skill and dedication of physicans, like Dr. Oradee, who give these children new hearts and new hope.

13

Annual Report 2006 Bumrungrad Hospital Public Company Limited

You’ve met

14

Annual Report 2006 Bumrungrad Hospital Public Company Limited

People

our

15

Annual Report 2006 Bumrungrad Hospital Public Company Limited

And now for

16

Annual Report 2006 Bumrungrad Hospital Public Company Limited

the numbers

17

Annual Report 2006 Bumrungrad Hospital Public Company Limited

18

Annual Report 2006 Bumrungrad Hospital Public Company Limited

Financial Highlights 2006

2005

2004

Financial Performance (Bt ‘000) Total Current Assets

1,629,054

1,103,842

1,503,740

Total Assets

6,622,894

5,727,518

5,021,086

Total Current Liabilities

1,571,898

1,580,758

1,181,395

Total Liabilities

2,994,347

3,031,729

2,960,888

Total Shareholders’ Equity

3,628,547

2,695,789

2,060,198

Total Revenues

7,895,518

6,806,775

5,809,298

Net Earnings for the Year

1,095,702

1,052,739

934,547

Basic Earnings Per Share

1.51

1.45

1.36

Earnings per Share - Fully Diluted

1.26

1.21

1.08

Book Value per Share

4.51

3.59

3.00

Book Value per Share - Fully Diluted

3.79

3.01

2.39

Dividend per Share

0.75

0.75

0.70

Gross Profit Margin (%)

37.6

37.6

35.6

EBITDA Margin (%)

24.5

24.5

23.4

Pre-tax Profit Margin (%)

19.4

18.7

18.3

Net Profit Margin (%)

13.9

15.5

16.1

Growth on Sales from Hospital Operations (%)

15.1

16.9

26.6

4.1

12.6

40.2

Return on Equity (%)

34.7

44.3

56.3

Return on Assets (%

17.7

19.6

19.7

Liabilities to Equity (x)

0.91

1.16

1.44

Debt to Equity (x)

0.48

0.66

1.02

Net Debt to Equity (x)

0.24

0.37

0.37

17.54

15.57

11.36

1.04

0.70

1.27

Average Collection Period (days)

22.01

17.55

16.36

Average Inventory Period (days)

11.92

11.04

9.73

Average Payable Period (days)

39.06

38.98

39.88

Financial Ratios

Growth on Net Profit (%)

Interest Coverage Ratio (x) Current Ratio (x)

19

Annual Report 2006 Bumrungrad Hospital Public Company Limited

Management Discussion and Analysis 1.

Revenues and Margins

For the year 2006, the Company reported total revenues of Baht 7,896 million, an increase by 16% from Baht 6,807 million for year 2005. The increase is the result of 12% increase in inpatient revenues and 20% increase in outpatient revenues.

The cost of hospital operations for the year ended 2006 was at Baht 4,775 million, or an increase of 15% from year-end 2005, in line with the increase in the hospital operations. The gross margin therefore remained stable at 37.6% for both 2005 and 2006. Administrative expenses increased by 18% to accommodate the growth in hospital operations, resulting in a stable EBIDTA margin at 24.5% for both 2005 and 2006.

2.

Corporate Income Tax and Net Profit

For 2006, the Company reported corporate income tax of Baht 432 million (effective tax rate of 28.3%), an increase of 98% from Baht 218 million (effective tax rate of 17.1%) for 2005, as the Company pays full tax rate in 2006. As a result, the net profit margin decreased from 15.5% for year 2005 to 13.9% for year 2006. However, the Company’s net profit still saw a 5% increase from Baht 1,053 million in 2005 to Baht 1,096 million in 2006.

Year-end 2006 basic EPS was at Baht 1.51 per share, or an increase of 4% from Baht 1.45 per share for year-end 2005.

Similarly, fully diluted EPS increased by 4% from Baht 1.21 per share for 2005 to Baht 1.26 per share for year-end 2006.

(Unit: Baht Million)

3.

2006

2005

Growth

Total Revenues

7,896

6,807

16%

Gross Profit

2,875

2,501

15%

Gross Profit Margin

37.6%

37.6%

EBITDA

1,928

1,657

EBITDA Margin

24.5%

24.5%

Net Profit

1,096

1,053

Net Profit Margin

13.9%

15.5%

EPS - Basic

1.51

1.45

4%

EPS - Fully Diluted

1.26

1.21

4%

16% 5%

Balance Sheet

Total assets increased to Baht 6,623 million as at 31 December 2006 from Baht 5,728 million as at 31 December 2005, primarily because of increase in cash from Baht 544 million in 2005 to Baht 854 million in 2006, mainly from the Company’s subsidiary, Bumrungrad International Company Limited (BIL)’s capital increase of Baht 453 million, increase in accounts receivables from Baht 339 million in 2005 to Baht 525 million in 2006, in line with the growth of revenues from hospital operations and increasing average collectible days because of increasing foreign accounts, coupled with the increase in property, plant and equipment from Baht 3,270 million in 2005 to Baht 3,752 million in

20

Annual Report 2006 Bumrungrad Hospital Public Company Limited

2006 from the construction of new outpatient and parking building, netted off with decrease in pledge of fixed deposits at financial institutions from Baht 230 million in 2005 to Baht 10 million in 2006, as the condition on maintaining an escrow account for the term loan has been released.

The Company’s average collection period increased to 22 days as at 31 December 2006 from 18 days as at 31 December 2005, as the Company’s composition of insurance and corporate contracts are gradually changing towards an increasing of foreign accounts. Naturally, these accounts take longer to process and collect the bills. The Company’s average inventory period remains stable at 12 days for both 2005 and 2006.

Total liability was at Baht 2,994 million as at 31 December 2006, stable compared to Baht 3,032 million as at 31 December 2005. The Company’s long-term debt (including current portion) remained stable at Baht 1,751 million as at 31 December 2006 compared to Baht 1,779 million as at 31 December 2005, as during 2006, the Company made a scheduled repayment of Baht 329 million and made a draw-down of Baht 300 million in 4Q06. Net debt to equity declined to 0.24x as at 31 December 2006 compared to 0.37x as at 31 December 2005, as a result in an increase in cash and increase in equity. The Company’s interest coverage ratio improved to 17.5x for the year 2006 from 15.6x in 2005 as EBITDA improves.

Shareholder’s equity attributable to Company’s shareholders (excluding equity attributable to minority shareholders of subsidiaries) increased to Baht 3,284 million as at 31 December 2006 from Baht 2,615 million as at 31 December 2005, primarily a result of unrealized gain from BIL’s capital increase to strategic partners in excess of par value (Baht 153.52 per share vs. par value of Baht 100 per share) of Baht 156 million, coupled with 2006 net profit of Baht 1,096 million netted off with dividend payment of Baht 548 million. In July 2006, the Company waived its rights to subscribe to BIL’s 5,764,701 new shares to allow strategic partners to buy such shares. As a result, its shareholding in BIL was diluted to 51% from 100%. Consequently, the equity attributable to minority shareholders of subsidiaries significantly increased from Baht 81 million as at 31 December 2005 to Baht 344 million as at 31 December 2006. Average return on assets for 2006 was at 18% while average return on equity remained high at 35% for 2006.

(Unit: Baht Million) 2006

2005

Growth

Total Assets

6,623

5,728

16%

Total Liabilities

2,994

3,032

-1%

3,284

2,615

35%

Average Collection Period (days)

22.0

17.6

Average Inventory Period (days)

11.9

11.0

Average Payables Period (days)

39.1

39.0

Net Debt to Equity

0.24x

0.37x

Interest Coverage Ratio

17.5x

15.6x

Average Return on Assets

17.7%

19.6%

Average Return on Equity

34.7%

44.3%

Total Shareholders’ Equity (excluding equity attributable to minority shareholders of subsidiaries)

21

Annual Report 2006 Bumrungrad Hospital Public Company Limited

4.

Liquidity

The Company’s cash flow from operating activities for 2006 was at Baht 1,137 million, lower than 2005 of Baht 1,513 million, primarily because of the increase in accounts receivable, decrease in corporate income tax payable resulting from income tax payment, decrease in accrued expense as miscellaneous expenses have been paid down and decrease in accounts payable – others as the Company paid for its construction of the new outpatient center. Net cash used in investment activities decreased to Baht 678 million in 2006 from Baht 859 million in 2005, primarily because in 2005, the Company spent Baht 323 million in investment in Asian Hospital Inc. to expand its hospital business into the Philippines. Net cash used in financing activities significantly decreased to Baht 141 million in 2006 from Baht 857 million in 2005, as in 2006, BIL received cash from shares issued in the amount of Baht 453 million, together with the Company’s increase in long term loan of Baht 300 million. As a result, cash and cash equivalents at the end of the period increased to Baht 854 million as at 31 December 2006 from Baht 544 million as at 31 December 2005.

Liquidity ratio stood at 1.04x as at 31 December 2006, an increase from 0.70x as at 31 December 2005, as a result of stronger cash position. Consequently, quick ratio was at 0.99x as at 31 December 2006, an increase from 0.65x as at 31 December 2005.

(Unit: Baht Million) 2006

2005

Cash Flow from Operating Activities

1,137

1,513

Cash Flow from Investing Activities

-678

-859

Cash Flow from Financing Activities

-141

-857

318

-203

at end of year

854

544

Liquidity Ratio

1.04x

0.70x

Quick Ratio

0.99x

0.65x

Net Increase (Decrease) in cash and cash equivalents Cash and Cash Equivalents

22

Annual Report 2006 Bumrungrad Hospital Public Company Limited

Report of the Audit Committee To the Shareholders of Bumrungrad Hospital Public Company Limited The Audit Committee was established by a board resolution. The Committee comprises of three independent directors of the Company, namely, Miss Sophavadee Uttamobol, Chairperson, Mr. Boonpakorn Chokwathana and Mr. Soradis Vinyaratn as Audit Committee Members. The duties and responsibilities of the committee are mainly to review the financial reports to ensure sufficient compliance with accounting standards and credibility; to review the company’s internal control system for adequacy and effectiveness; to ensure that the company complies with the regulations and other relevant laws, and to review any possible conflict of interest between the company and persons or any related parties transaction.

The Audit Committee had 5 meetings in year 2006 to perform the duties assigned. The major topics are: 1. Reviewed the Company and subsidiaries’ financial statements prior to submission to the Board of Directors.

After due considerations with the external auditors and the management, it is the opinion of the committee that the financial statements are presented with sufficient and accurate disclosure of material information.

2. Considered and recommended an appointment of external auditor and the yearly audit fee to the Board of Directors and Shareholders.

3. Reviewed an internal auditing policy, which is part of the company’s administrative policy, and agreed to a written procedure for internal audit as working criteria in accordance with international standard.

4. Considered the disclosure of information concerning connected transaction and disposition assets.

5. Reviewed and acknowledge the reports from internal auditors in relation to various policies, regulation, procedures, and rules as prescribed by the laws as well as the adequate effectiveness of risk assessment for various divisions of the Company. The committee is of the opinion that the internal control systems are adequate and appropriate to prevent risks in the Companyís operation.

The Audit Committee has performed its assigned duties with care and at its fullest ability for the benefit of the company’s stakeholders.

Miss Sophavadee Uttamobol Chairperson of Audit Committee 6 March 2007

23

Annual Report 2006 Bumrungrad Hospital Public Company Limited

Report of the Accountability of the Board of Directors to the Company’s Financial Reports The board of directors is responsible for the consolidated financial statements of the Company and its subsidiaries and information as appears in the annual report. The financial statements have been prepared in accordance with the generally accepted accounting principles, using appropriate and consistent accounting policies. The financial statements have been prepared with caution and have been evaluated for appropriateness of the overall presentation of the financial statement. There was sufficient information disclosure in the notes to the financial statements.

The board of directors has set up an efficient and effective internal control system to ensure that all accounting transactions have been recorded correctly and comprehensively, and that there has been a record-keeping system of assets to protect the Company from any material fraud or damage.

The board of directors has the opinion that the overall internal control system of the Company was at a satisfactory level, which resulted in confidence in the reliability of the financial statements of the Company and its subsidiaries as at 31 December 2006.

Mr. Chai Sophonpanich Chairperson

24

Mrs. Linda Lisahapanya Managing Director

Annual Report 2006 Bumrungrad Hospital Public Company Limited

Report of Independent Auditor To The Board of Directors and Shareholders of Bumrungrad Hospital Public Company Limited I have audited the consolidated balance sheets of Bumrungrad Hospital Public Company Limited and its subsidiaries as at 31 December 2006 and 2005, the related consolidated income statements, statements of changes in shareholders’ equity and cash flows for the years then ended, and the separate financial statements of Bumrungrad Hospital Public Company Limited for the same periods. These financial statements are the responsibility of the Company’s management as to their correctness and the completeness of the presentation. My responsibility is to express an opinion on these financial statements based on my audits.

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 management, as well as evaluating the overall financial statement presentation. I believe that my audits provide 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 Bumrungrad Hospital Public Company Limited and its subsidiaries and of Bumrungrad Hospital Public Company Limited as at 31 December 2006 and 2005, and the results of their operations and cash flows for the years then ended, in accordance with generally accepted accounting principles.

Sumalee Reewarabandith Certified Public Accountant (Thailand) No. 3970

Ernst & Young Office Limited Bangkok: 27 February 2007

25

Annual Report 2006 Bumrungrad Hospital Public Company Limited

BUMRUNGRAD HOSPITAL PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES BALANCE SHEETS as at 31 December 2006 and 2005

(Unit: Baht) CONSOLIDATED Note

2006

THE COMPANY ONLY

2005

2006

2005

ASSETS Current assets Cash and cash equivalents

853,860,177

543,506,119

353,636,646

382,385,685

10,000,000

-

10,000,000

-

6, 7

525,196,532

339,475,021

468,695,611

314,651,484

7

6,520,043

1,383,764

17,242,430

5,863,072

11,300,539

10,014,019

9,563,658

9,523,442

7

-

-

-

20,097,671

8

166,413,300

149,895,896

161,111,044

147,181,909

Prepaid expenses

44,390,574

49,969,718

37,078,848

26,073,426

Other current assets

11,372,648

9,597,054

2,209,237

1,245,248

1,629,053,813

1,103,841,591

1,059,537,474

907,021,937

9

9,605,495

229,883,845

1,251,095

221,250,972

equity method

10

464,948,666

481,415,370

1,678,669,626

1,492,256,552

Other long-term investments - net

11

2,047,213

2,047,213

2,047,213

2,047,213

16,370,994

-

-

-

-

-

18,121,384

22,603,851

Property, plant and equipment - net

12 3,751,950,703

3,269,654,875

2,680,514,143

2,153,355,063

Intangible assets - net

13

732,093,327

624,219,061

786,428,585

692,026,413

16,823,645

16,456,303

19,823,645

19,456,303

Total non-current assets

4,993,840,043

4,623,676,667

5,186,855,691

4,602,996,367

TOTAL ASSETS

6,622,893,856

5,727,518,258

6,246,393,165

5,510,018,304

Current investments - fixed deposit at financial institution Trade accounts receivable - net Amounts due from related parties Advances to employees and directors Short-term loans and interest receivable – a related party Inventories

Total current assets Non-current assets Pledged fixed deposits at financial institutions Investments accounted for under

Advance for future subscription - net Long-term loans and interest receivable – a related party

Other non-current assets

7

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

26

Annual Report 2006 Bumrungrad Hospital Public Company Limited

BUMRUNGRAD HOSPITAL PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES BALANCE SHEETS (Continued) as at 31 December 2006 and 2005

(Unit: Baht) CONSOLIDATED Note

2006

THE COMPANY ONLY

2005

2006

2005

LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities Trade accounts payable

551,815,024

484,362,198

547,325,609

482,523,293

7

1,800,000

-

1,800,000

-

14

328,521,802

328,521,802

-

-

7

-

-

1,465,263,415

1,709,236,428

255,561,894

213,240,714

253,511,894

213,049,372

768,021

585,039

-

-

6,232,877

6,232,877

6,232,877

6,232,877

Corporate income tax payable

196,122,348

205,622,400

196,122,348

204,543,949

Accrued expenses

137,849,661

203,357,059

126,178,348

171,015,278

Amount due to a related party Current portion of long-term loan Short-term loans and interest payable – a related party Accrued physician’s fee Interest payable

Interest payable – convertible bonds treated as equity securities

Accounts payable – others

7

27,802,694

71,126,079

27,576,890

67,173,381

Unearned income

7

25,391,445

34,131,272

-

-

40,031,930

33,578,559

38,130,678

32,445,898

1,571,897,696

1,580,757,999

2,662,142,059

2,886,220,476

14 1,422,449,491

1,450,971,293

300,000,000

-

-

-

-

8,561,836

Total non-current liabilities

1,422,449,491

1,450,971,293

300,000,000

8,561,836

TOTAL LIABILITIES

2,994,347,187

3,031,729,292

2,962,142,059

2,894,782,312

Other current liabilities Total current liabilities Non-current liabilities Long-term loan Provision for loss in excess of cost of investment in subsidiary

10

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

27

Annual Report 2006 Bumrungrad Hospital Public Company Limited

BUMRUNGRAD HOSPITAL PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES BALANCE SHEETS (Continued) as at 31 December 2006 and 2005

(Unit: Baht) CONSOLIDATED Note

2006

THE COMPANY ONLY

2005

2006

2005

Shareholders’ equity Share capital

16

Registered 920,475,835 ordinary shares of Baht 1 each (2005: 920,341,835 ordinary shares of Baht 1 each)

920,475,835

920,341,835

920,475,835

920,341,835

2,226,850

2,360,850

2,226,850

2,360,850

727,825,372

727,691,372

727,825,372

727,691,372

2,226,850 preference shares of Baht 1 each (2005: 2,360,850 preference shares of Baht 1 each) Issued and paid-up 727,825,372 ordinary shares of Baht 1 each (2005: 727,691,372 ordinary shares of Baht 1 each) 2,226,850 preference shares of Baht 1 each (2005: 2,360,850 preference shares of Baht 1 each

2,226,850

2,360,850

2,226,850

2,360,850

285,568,300

285,568,300

285,568,300

285,568,300

156,134,945

-

156,134,945

-

13,045,673

30,828,437

13,045,673

30,828,437

15

550,000,000

550,000,000

550,000,000

550,000,000

10

(192,661,558)

(192,661,558)

(192,661,558)

(192,661,558)

17

92,275,000

92,275,000

92,275,000

92,275,000

1,649,836,524

1,119,173,591

1,649,836,524

1,119,173,591

3,284,251,106

2,615,235,992

3,284,251,106

2,615,235,992

Premium on ordinary shares Unrealised gain resulting from the sale of subsidiary’s shares to the public in excess of par value Translation adjustment Convertible bonds treated as equity securities Excess of investment over book value of a susidiary Retained earnings Appropriated - statutory reserve Unappropriated Total equity attributable to company’s shareholders Minority interest – equity attributable to minority shareholders of subsidiaries Total shareholders’ equity

344,295,563

80,552,974

-

-

3,628,546,669

2,695,788,966

3,284,251,106

2,615,235,992

6,622,893,856

5,727,518,258

6,246,393,165

5,510,018,304

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

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

28

Annual Report 2006 Bumrungrad Hospital Public Company Limited

BUMRUNGRAD HOSPITAL PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES INCOME STATEMENTS For the years ended 31 December 2006 and 2005

(Unit: Baht) CONSOLIDATED Note

2006

THE COMPANY ONLY

2005

2006

2005

Revenues Revenues from hospital operations

7

7,650,579,386

6,646,518,382

7,585,397,295

6,595,730,218

Revenues from hospital management

7

57,093,812

6,876,693

-

-

Rental income

7

118,423,241

89,087,699

145,367,048

114,204,008

Interest income

7

18,480,051

8,414,581

11,328,721

8,402,714

15,218,810

25,216,037

21,446,128

24,467,416

7

27,958,782

27,501,701

63,067,371

36,903,233

7,763,568

3,160,025

74,352,816

29,804,599

7,895,517,650

6,806,775,118

7,900,959,379

6,809,512,188

Gain on exchange rate Other income

Share of income from investments accounted for under equity method Total revenues Expenses Cost of hospital operations Depreciation and amortisation

4,775,141,818

4,145,590,150

4,752,401,403

4,127,593,520

12, 13

342,093,936

291,816,213

300,424,972

251,605,807

7

1,148,589,490

986,095,496

1,195,092,972

1,006,276,837

10,426,768

11,430,248

(6,788,266)

11,430,248

Administrative expenses Allowance for loss on impairment of assets (reversal) Share of loss from investments accounted for under equity method Total expenses Income before interest expense and income tax Interest expense Corporate income tax

7 18

Income after corporate income tax Net loss attributable to minority interest Net income for the year Basic earnings per share

-

-

17,520,733

37,995,459

6,276,252,012

5,434,932,107

6,258,651,814

5,434,901,871

1,619,265,638

1,371,843,011

1,642,307,565

1,374,610,317

(109,946,409)

(106,867,549)

(120,396,441)

(101,549,396)

(432,140,026)

(217,907,995)

(426,209,024)

(220,321,642)

1,077,179,203

1,047,067,467

1,095,702,100

1,052,739,279

18,522,897

5,671,812

-

-

1,095,702,100

1,052,739,279

1,095,702,100

1,052,739,279

1.51

1.45

1.51

1.45

727,798,572

727,630,430

727,798,572

727,630,430

1.26

1.21

1.26

1.21

867,414,859

867,414,859

867,414,859

867,414,859

20

Net income Weighted average number of ordinary shares (shares) Diluted earnings per share Net income

20

Weighted average number of ordinary shares (shares)

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

29

30 727,825,372

-

2,226,850

-

-

-

-

-

-

(134,000)

2,360,850

-

-

-

-

-

-

-

(332,000)

2,692,850

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

Balance as at 31 December 2006

Net loss attributable to minority interest

-

23

Dividend paid

-

-

-

134,000

-

15

16

727,691,372

-

Net income for the year

equity securities

Interest paid for convertible bonds treated as

Translation adjustment

a subsidiary

Capital increase of minority shareholders of

Preference shares converted to ordinary shares

Balance as at 31 December 2005

Net loss attributable to minority interest

-

23

Dividend paid

-

-

-

332,000

-

17

15

16

727,359,372

Net income for the year

Transferred to statutory reserve

equity securities

Interest paid for convertible bonds treated as

Translation adjustment

of investment in a subsidiary

Investment of minority interest as at purchase date

Preference shares converted to ordinary shares

Balance as at 31 December 2004

Note

285,568,300

-

-

-

-

-

-

-

285,568,300

-

-

-

-

-

-

-

-

285,568,300

156,134,945

-

-

-

-

-

156,134,945

-

-

-

-

-

-

-

-

-

-

-

from the sale of subsidiary’s shares Issued and paid-up share capital Premium on to the public in Ordinary shares Preference shares ordinary shares excess of par value

-

-

-

13,045,673

-

-

-

-

(17,782,764)

-

-

30,828,437

-

-

-

-

-

30,828,437

Translation adjustment

Unrealised gain resulting

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

550,000,000 (192,661,558)

-

-

-

-

-

-

-

550,000,000 (192,661,558)

-

-

-

-

-

-

-

-

550,000,000 (192,661,558)

92,275,000

-

-

-

-

-

-

-

92,275,000

-

-

-

45,775,000

-

-

-

-

46,500,000

-

-

-

80,552,974

(5,671,812)

-

-

-

-

7,901,275

78,323,511

Minority interest

-

-

-

(3,212,329)

1,649,836,524 344,295,563

- (18,522,897)

(547,539,167)

1,095,702,100

(17,500,000)

-

- 285,477,815

-

1,119,173,591

-

(511,029,555)

1,052,739,279

(45,775,000)

(17,500,000)

-

-

-

640,738,867

Excess of Convertible investment over Retained earnings bonds treated as book value of Appropriatedequity securities a subsidiary statutory reserve Unappropriated

CONSOLIDATED

FOR THE YEARS ENDED 31 DECEMBER 2006 AND 2005

STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

BUMRUNGRAD HOSPITAL PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES

3,628,546,669

(18,522,897)

(547,539,167)

1,095,702,100

(17,500,000)

(20,995,093)

441,612,760

-

2,695,788,966

(5,671,812)

(511,029,555)

1,052,739,279

-

(17,500,000)

38,729,712

78,323,511

-

2,060,197,831

Total

(Unit: Baht)

Annual Report 2006 Bumrungrad Hospital Public Company Limited

727,825,372

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

Balance as at 31 December 2006

-

23

Dividend paid

-

15

Net income for the year

securities

Interest paid for convertible bonds treated as equity

-

Translation adjustment

134,000 -

16

727,691,372

Capital increase of minority shareholders of a subsidiary

Preference shares converted to ordinary shares

Balance as at 31 December 2005

-

23

Dividend paid

-

-

-

332,000

-

17

15

16

727,359,372

Net income for the year

Transferred to statutory reserve

securities

Interest paid for convertible bonds treated as equity

Translation adjustment

Preference shares converted to ordinary shares

Balance as at 31 December 2004

Note

2,226,850

-

-

-

-

-

(134,000)

2,360,850

-

-

-

-

-

(332,000)

2,692,850

-

-

-

-

-

-

-

-

-

-

-

30,828,437

-

-

-

-

30,828,437

-

-

-

-

-

13,045,673

-

-

-

- (17,782,764)

285,568,300 156,134,945

-

-

-

-

- 156,134,945

-

285,568,300

-

-

-

-

-

-

285,568,300

from the sale of subsidiary’s shares Issued and paid-up share capital Premium on to the public in Translation Ordinary shares Preference shares ordinary shares excess of par value adjustment

Unrealised gain resulting

550,000,000

-

-

-

-

-

-

550,000,000

-

-

-

-

-

-

550,000,000

Convertible bonds treated as equity securities

(192,661,558)

-

-

-

-

-

-

(192,661,558)

-

-

-

-

-

-

(192,661,558)

Excess of investment over book value of a subsidiary

THE COMPANY ONLY

FOR THE YEARS ENDED 31 DECEMBER 2006 AND 2005

STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Continued)

BUMRUNGRAD HOSPITAL PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES

92,275,000

-

-

-

-

-

-

92,275,000

-

-

45,775,000

-

-

-

46,500,000

1,649,836,524

(547,539,167)

1,095,702,100

(17,500,000)

-

-

-

1,119,173,591

(511,029,555)

1,052,739,279

(45,775,000)

(17,500,000)

-

-

640,738,867

Retained earnings Appropriatedstatutory reserve Unappropriated

3,284,251,106

(547,539,167)

1,095,702,100

(17,500,000)

(17,782,764)

156,134,945

-

2,615,235,992

(511,029,555)

1,052,739,279

-

(17,500,000)

30,828,437

-

2,060,197,831

Total

(Unit: Baht)

Bumrungrad Hospital Public Company Limited Annual Report 2006

31

Annual Report 2006 Bumrungrad Hospital Public Company Limited

BUMRUNGRAD HOSPITAL PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES STATEMENTS OF CASH FLOWS For the year ended 31 December 2006 and 2005

(Unit: Baht) CONSOLIDATED 2006

THE COMPANY ONLY

2005

2006

2005

Cash flows from operating activities Net income

1,095,702,100

1,052,739,279

1,095,702,100

1,052,739,279

342,093,936

291,816,213

300,424,972

251,605,807

10,426,768

11,430,248

(6,788,266)

11,430,248

54,482,057

14,264,748

52,550,495

12,776,194

(7,763,568)

(3,160,025)

(56,832,083)

8,190,860

(18,522,897)

(5,671,812)

-

-

6,098,983

2,694,621

6,098,983

3,073,072

1,482,517,379

1,364,113,272

1,391,156,201

1,339,815,460

(240,203,567)

(118,781,734)

(206,594,622)

(93,541,690)

(5,136,279)

-

(11,379,358)

-

(16,517,404)

(45,444,839)

(13,929,135)

(45,154,175)

3,803,550

(24,080,958)

(11,969,411)

2,825,506

(11,127,448)

8,523,531

(13,777,958)

7,957,506

1,800,000

-

1,800,000

-

42,321,180

46,239,046

40,462,522

46,672,327

182,982

585,039

-

-

(9,500,052)

144,729,028

(8,421,601)

204,543,949

Accrued expenses

(65,507,398)

67,203,470

(44,836,930)

36,946,606

Accounts payable – others

(43,323,385)

23,263,630

(39,596,491)

27,108,553

(8,739,827)

34,131,272

-

-

6,453,371

12,262,058

5,684,780

12,451,452

1,137,023,102

1,512,742,815

1,088,597,997

1,539,625,494

Adjustments to reconcile net income to net each provided by (paid from) operating activities: Depreciation and amortisation Allowance for loss on impairment of assets (reversal) Bad debts and allowance for doubtful accounts Share of loss (income) from investments accounted for under equity method Net loss attributable to minority interest Loss on disposal of equipment Income from operating activities before change in operating assets and liabilities Decrease (increase) in operating assets Trade accounts receivable Amounts due from related parties Inventories Other current assets Increase (decrease) in operating liabilities Trade accounts payable Amount due to a related party Accrued physicians’ fee Interest payable Corporate income tax payable

Unearned income Other current liabilities Net cash from operating activities

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

32

Annual Report 2006 Bumrungrad Hospital Public Company Limited

BUMRUNGRAD HOSPITAL PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES STATEMENTS OF CASH FLOWS (Continued) For the years ended 31 December 2006 and 2005

(Unit: Baht) CONSOLIDATED 2006 Cash flows from investing activities Decrease (increase) in deposits at financial institutions with maturity of more than 3 months and those pledged Increase in advances to employees and directors Decrease (increase) in short-term loans and interest receivable-related parties Decrease in long-term loans and interest receivable-related parties Sales (purchase) of investments in a subsidiary and associated companies Increase in long term advance for future subscription Increase in plant and equipment Increase in other non-current assets Net cash used in investing activities Cash flows from financing activities Capital increase of minority shareholders of a subsidiary Increase (decrease) in short-term loans and interest payable-a related party Increase in long-term loan Long-term loan repayment Dividend paid Interest paid for convertible bonds treated as equity securities Net cash used in financing activities Net increase (decrease) in cash and cash equivalents Translation adjustment Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Supplemental cash flows information Cash paid during the year for: Interest expense Corporate income tax

THE COMPANY ONLY

2005

2006

2005

210,278,350

399,943,927

209,999,877

(92)

(1,286,520)

(4,480,728)

(40,216)

(4,086,563)

-

(953,736)

20,097,671

4,132,918

-

-

4,482,467

2,418,518

209,354

(385,002,855)

209,354

(599,000,000)

(33,586,028) (680,434,863) (172,926,881) (677,746,588)

(653,109,053) (215,474,922) (859,077,367)

(670,157,128) (172,926,881) (608,334,856)

(665,176,119) (116,787,922) (1,378,499,260)

452,644,323

-

-

-

300,000,000 (328,521,802) (547,539,167)

(328,521,802) (511,029,555)

(243,973,013) 300,000,000 (547,539,167)

233,488,839 (511,029,555)

(17,500,000) (140,916,646)

(17,500,000) (857,051,357)

(17,500,000) (509,012,180)

(17,500,000) (295,040,716)

318,359,868 (8,005,810)

(203,385,909) 24,010,087

(28,749,039) -

(133,914,482) -

543,506,119 853,860,177

722,881,941 543,506,119

382,385,685 353,636,646

516,300,167 382,385,685

109,763,427 441,640,078

106,270,888 73,178,967

110,369,454 435,396,812

106,930,038 15,777,693

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

33

Annual Report 2006 Bumrungrad Hospital Public Company Limited

BUMRUNGRAD HOSPITAL PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the years ended 31 December 2006 and 2005

1.

GENERAL INFORMATION

Bumrungrad Hospital Public Company Limited (“the Company”) is registered as a public limited company under Thai laws. The Company operates its business in Thailand and is principally engaged in hospital business, investment in other companies and rental of properties service. Its registered address is 33 Soi 3 (Nana Nua) Sukhumvit Road, Klongtoey Nua Sub District, Wattana District, Bangkok.

The meeting of the Company’s Board of Directors No. 2/2548 dated 28 February 2005 has approved an investment of 49% of shares in a new company to be incorporated in Dubai, United Arab Emirates for operating hospital business, with investment value amounting to Baht 388 million. A subsidiary (Bumrungrad International Ltd.) entered into a Memorandum of Understanding and Shareholders Agreement relating to the Establishment with the counterparty on 16 March 2005 and 31 January 2006, respectively. The initial investment of Baht 25.8 million was made on 7 September 2006.

On 14 February 2006, a subsidiary (Bumrungrad International Holdings (Hong Kong) Ltd.) entered into Call Option Agreement with the counterparties for investment in the People’s Republic of China. The subsidiary paid USD 1 million for call option as deposit and recorded in advance for future subscription account in the consolidated financial statements.

The meeting of the Company’s Board of Directors No. 3/2549 dated 30 March 2006 has resolved to approve the following resolutions: a)

Approve the increase in registered capital of Bumrungrad International Ltd. (“BIL”), a wholly-owned subsidiary of the Company, from 6,000,000 shares to 19,764,701 shares by issuing new 13,764,701 ordinary shares at a par value of Baht 100 per share.

The subscription for the capital increase will be made in 2 stages. In the first capital increase, 5,764,701 new shares will be issued at Baht 153.52 per share to strategic investors, raising fund of Baht 884,996,897.52. The Company’s shareholding in BIL will reduce to 51% after the first capital increase.

In the second capital increase, all shareholders of BIL will subscribe to 8,000,000 new shares on a pro-rata basis at Baht 100 per share to raise an additional Baht 800 million. After the second capital increase, the Company’s shareholding will remain at 51%.

b)

Approve a waiver of right to subscribe to a maximum of 5,764,701 new shares of BIL to allow subscription by Bangkok Bank Public Company Limited (“BBL”), Istithmar PJSC (“Istithmar”) and V-Sciences Investment Pte Ltd (“V-Sciences”).

34

Annual Report 2006 Bumrungrad Hospital Public Company Limited

This transaction is subject to the following conditions: -

The Company, BBL, Istithmar and V-Sciences shall obtain all necessary regulatory approvals/permissions for the transaction; and

-

The execution of the definitive agreements in relation to the transaction by the Company, BBL, Istithmar and VSciences.

Provided that, the actual amount of new BIL shares to be waived by the Company shall depend on the amount of shares approved for each investors under condition a) above. Particularly for BBL, the waiver is subject to approval of the Company’s shareholders’ meeting with affirmative votes of not less than three-fourths of all votes of the shareholders or proxy present at the meeting and having the right to vote, excluding the shareholders having interest therein. In case any investor is not allowed to subscribe to the shares, the Company may reduce the amount of shares to be waived as the Board of Directors may deem appropriate.

On 15 May 2006, the extraordinary meeting of the Company’s shareholders No. 1/2549 passed a resolution approving the waiver of the right to subscribe new shares of BIL to allow subscription by BBL, which is the connected transaction.

On 2 June 2006, the Company, BIL, BBL, Istithmar and V-Sciences have executed contracts for investment in BIL. On 28 July 2006, BIL registered the first increase of share capital.

2.

BASIS OF FINANCIAL STATEMENTS PREPARATION

The financial statements have been prepared in accordance with accounting standards enunciated under the Accounting Profession Act B.E. 2547. The presentation of financial statements has been made in compliance with the stipulations of the Notification of the Department of Business Development dated 14 September 2001, issued under the Accounting Act B.E. 2543.

The financial statements have been prepared on a historical cost basis except where otherwise disclosed in the accounting policies.

3.

BASIS OF CONSOLIDATION 3.1

The consolidated financial statements included the financial statements of Bumrungrad Hospital Public Company Limited, its subsidiaries and joint venture (applying the proportionate consolidated method) jointly controlled by the Company or its subsidiary as follows: -

Company’s name

Subsidiaries held by the Company Bumrungrad Medical Center Ltd. (BMC) Bumrungrad International Ltd. (BIL) Vitallife Corporation Ltd.

Nature of business

Building lease Holding company Health care center

Percentage of shareholding 2006 Percent

2005 percent

100.00 51.00 100.00

100.00 100.00 100.00

Country of incorporation

Thailand Thailand Thailand

Assets as a percentage to the consolidated total assets as at 31 December

Revenues as a percentage to the consolidated total revenues for the year ended 31 December

2006 Percent

2005 Percent

2006 Percent

2005 Percent

17 8 1

20 3 1

1 1

1

35

Annual Report 2006 Bumrungrad Hospital Public Company Limited

Company’s name

Nature of business

Subsidiaries held by a subsidiary (BIL) Bumrungrad International Philippines Inc. Neptune Stroika Holdings, Inc. Bumrungrad International Holdings (Hong Kong) Limited Bumrungrad International Management (Hong Kong) Limited Joint venture held by a subsidiary (BIL) Bumrungrad Hospital Dubai LLC

3.2

Percentage of indirect shareholding 2006 2005 Percent Percent

Country of incorporation

Hospital Management Holding company Holding company Hospital Management

100.00 40.00 100.00 100.00

100.00 40.00 100.00 100.00

Philippines Philippines Hong Kong Hong Kong

Hospital business (not yet commenced operation)

49.00

-

United Arab Emirates

The financial statements of the subsidiaries incorporated overseas are translated into Thai Baht at the average closing exchange rate for assets and liabilities, and at the monthly average exchange rate applying during the year for revenues and expenses. The resultant differences have been shown under the caption of “Translation adjustment” in shareholders‘ equity.

3.3

Material balances and transactions between the Company and its subsidiaries have been eliminated from the consolidated financial statements.

3.4

Investments in the subsidiaries as recorded in the Company’s books of account are eliminated against the equity of the subsidiaries. The resultant differences are amortised over a period of 5 and 10 years commencing as from the date of acquisition of the investment.

3.5

In September 2006, a subsidiary (Bumrungrad International Ltd.) invested in Bumrungrad Hospital Dubai LLC (BHD), a newly established company incorporated in United Arab Emirates, in which it holds 49% of equity.

3.6

In February 2005, a subsidiary (Bumrungrad International Ltd.) invested in Bumrungrad International Philippines Inc. (BIPI), incorporated in Philippines, in which it holds 100% of equity.

3.7

In February 2005, a subsidiary (Bumrungrad International Ltd.) invested in Neptune Stroika Holdings, Inc. (Neptune), incorporated in Philippines, in which it holds 40% of equity. Although the subsidiary holds only a 40% shareholding in Neptune, this companyís financial statements have nevertheless been consolidated since the subsidiary has controlled over its management.

3.8

In December 2005, a subsidiary (Bumrungrad International Ltd.) invested in Bumrungrad International Holdings (Hong Kong) Limited (BIH (HK)) and Bumrungrad International Management (Hong Kong) Limited (BIM (HK)), incorporated in Hong Kong, in which it holds 100% of equity.

4.

ADOPTION OF NEW ACCOUNTING STANDARDS

In October 2006, the Federation of Accounting Professions issued Notification No. 26/2006 regarding Accounting Standard No. 44 “Consolidated Financial Statements and Accounting for Investments in Subsidiaries” (Amendment No. 1) under which investments in subsidiaries, jointly controlled entities and associates are to be presented in the separate financial statements under the cost method rather than the equity method. Entities which are not ready to adopt the cost method in 2006 can continue to use the equity method through the end of 2006 and adopt the cost method as from 1 January 2007.

36

Annual Report 2006 Bumrungrad Hospital Public Company Limited

In this regard, the Company has elected to adopt the change in 2007. Adoption of the change in 2007 will necessitate the restatement of the Company’s 2006 separate financial statements to be presented for comparative purposes along with the financial statements for 2007. The effect to net income and net worth in the Company’s separate financial statements for 2006 is in the process of consideration.

5.

SIGNIFICANT ACCOUNTING POLICIES 5.1

Revenue and expense recognition a) Revenues from hospital operations, mainly consisting of medical fees, hospital room sales, and medicine sales, are recognised as income when services have been rendered or medicine delivered. b) Consulting and management fee income are recognised when service have been rendered taking into account the stated of completion. c) Rental income and related service income are recognised on an accrual basis in accordance with a period as stipulated in an agreement. d) Interest income and expenses are recognised on an accrual basis.

5.2

Cash and cash equivalents Cash and cash equivalents consist of cash in hand, cash at bank, and all highly liquid investments with an original maturity of three months or less and not subject to withdrawal restrictions.

5.3

Trade accounts receivable Trade accounts receivable are stated at the net realisable value. Allowance for doubtful accounts is provided for the estimated losses that may be incurred in collection of receivables. The allowance is generally based on collection experiences and analysis of debtor aging.

5.4

Inventories Inventories are valued at the lower of cost (weighted average basis) and net realisable value.

5.5

Investments Investments in subsidiaries (in the separate financial statements of the Company), jointly controlled entity and associates are valued at the equity method.

Long-term investments in non-marketable equity securities, which are held as other investments, are valued at cost net of allowance for loss on diminution in value (if any).

5.6

Property, plant and equipment/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-line basis over the following estimated useful lives: Leasehold right lease period (30 years) Land improvement 3 years and 30 years Buildings and construction 8 - 30 years Facility systems 5 - 20 years Medical accessory equipment 5 - 15 years Hospital equipment 3 - 15 years Equipment and furniture 5 - 15 years Motor vehicles 5 - 10 years Depreciation is included in determining income.

No depreciation is provided on land and construction in progress and under installation.

37

Annual Report 2006 Bumrungrad Hospital Public Company Limited

5.7

Intangible assets and amortisation Intangible assets are stated at cost less accumulated amortisation. Amortisation is calculated by reference to cost on a straight-line basis over the expected future period, for which the assets are expected to generate economic benefit, as follows: Computer software

-

5 years and 10 years

Goodwill on purchase of business

-

10 years

Other intangible asset

-

10 years

The amortisations is included in determining income.

5.8

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 that gives them significant influence over the Company, key management personnel, directors and officers with authority in the planning and direction of the CompanyĂ­s operations.

5.9

Foreign currencies Foreign currency transactions are translated into Baht at the exchange rates ruling on the transaction dates. Monetary assets and liabilities denominated in foreign currencies outstanding at the balance sheet date are translated into Baht at the exchange rates ruling on the balance sheet date.

Gains and losses on exchange are included in determining income.

5.10 Impairment of assets The Company and its subsidiaries assess at each reporting date whether there is an indication that an asset of the Company and subsidiary may be impaired. If any such indication exists, the Company and its subsidiaries make an estimate of the assetís recoverable amount. Where the carrying amount of the asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. Impairment losses are recognised in the income statement. An asset’s recoverable amount is the higher of fair value less costs to sell and value in use.

5.11 Employee benefits Salaries, wages, bonuses and contributions to the social security fund and provident fund are recognised as expenses when incurred.

5.12 Provisions Provisions are recognised when the Company and its subsidiaries have 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.

38

Annual Report 2006 Bumrungrad Hospital Public Company Limited

5.13 Income tax Income tax of the Company and its subsidiaries in Thailand is provided for in the accounts based on the taxable profits determined in accordance with tax legislation.

Overseas subsidiaries calculate corporate income tax in accordance with tax rates regulated in tax laws of those countries.

5.14 Use of accounting estimates Preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions in certain circumstances, affecting amounts reported in these financial statements and related notes. Actual results could differ from these estimates.

6.

TRADE ACCOUNTS RECEIVABLE

The outstanding balances of trade accounts receivable as at 31 December 2006 and 2005 are aged, based on due date, as follows: (Unit: Baht) CONSOLIDATED Age of receivables Not yet due

2006 269,103,295

2005 209,272,336

THE COMPANY ONLY 2006 232,975,428

2005 186,997,648

Past due 1 - 30 days

98,189,592

67,190,268

97,876,579

65,560,381

31 - 60 days

50,190,426

24,610,224

49,951,413

24,016,496

61 - 90 days

34,091,683

15,250,749

33,766,064

14,244,873

91 - 180 days

40,457,551

22,180,489

37,451,898

22,038,206

181 - 365 days

21,432,824

15,347,076

20,331,900

14,690,543

More than 365 days

39,555,519

28,688,726

20,746,572

28,679,631

Total

553,020,890

382,539,868

493,099,854

356,227,778

Less: Allowance for doubtful accounts

(27,824,358)

(43,064,847)

(24,404,243)

(41,576,294)

Trade accounts receivable - net

525,196,532

339,475,021

468,695,611

314,651,484

39

Annual Report 2006 Bumrungrad Hospital Public Company Limited

7.

RELATED PARTY TRANSACTIONS

During the years, the Company and its subsidiaries had significant business transactions with their related parties, which have been concluded on the commercial terms and bases agreed upon in the ordinary course of businesses between the Company and those companies. Below is a summary of those transactions.

(Unit: Million Baht) CONSOLIDATED 2006

THE COMPANY ONLY

2005

2006

2005

-

-

26.9

25.1

4.6

1.9

2.1

2.4

Transfer pricing policy

Transactions with subsidiary companies (eliminated from the consolidated financial statements) Rental income Interest income

As per contracts 7.1) 10% p.a., MLR less 0.5% p.a. to MLR plus 0.25% p.a. (2005: 10% p.a., MLR less 0.5% p.a.)

Medical service income

-

-

17.0

10.6

11.9

-

36.9

9.9

Rental expense

-

-

84.0

84.0

Interest expense

-

-

116.0

101.5

Consulting fee income

Cost plus margin As per contract 7.10), Actual charge As per contract 7.2) MLR less 0.45% p.a. to MLR p.a. (2005: MLR less 0.45% p.a.)

Purchase of equipment

-

-

-

8.5

Book value plus margin

Sales of equipment

-

-

-

0.7

Book value

5.4

6.8

-

-

Transactions with associated companies System implementation income Software license fee income Management fee income

As per contract 7.6)

7.7

5.7

-

-

As per contract 7.7)

40.6

23.1

-

-

As per contract 7.8)

2.8

-

-

-

Cost

85.4

57.3

85.4

57.3

1.3

1.3

1.3

1.3

As per contract 7.3) As per contract 7.9)

Transactions with joint venture (eliminated from the consolidated financial statements) Consulting fee income Transactions with related companies Medical service income Rental income Software maintenance expense

Cost plus margin

74.9

-

74.9

-

Other income

0.9

1.0

0.9

1.0

Rental expense

31.5

20.1

31.5

20.1

As per contract 7.4)

7.2

11.6

7.2

11.6

-

Donation expense Consulting fee expense Purchase of computer software Sales of equipment System implementation expense Insurance expense

40

9.3

0.8

4.0

0.8

139.1

164.2

139.1

64.2

Cost

As per contracts As per contracts 7.5)

-

7.7

-

-

As 7.5)

3.5

4.1

-

-

As per contract 7.6)

18.5

15.7

18.5

15.6

As per insurance policies

Annual Report 2006 Bumrungrad Hospital Public Company Limited

7.1

A subsidiary (Bumrungrad Medical Center Ltd.) has leased a plot of land for its hospital operations. The lease agreements cover a period of 30 years, commencing from the year 1996. The rental fees are Baht 22 million per annum.

Another subsidiary (Vitallife Corporation Ltd.) has leased building spaces from the Company for use in its operations. The lease agreement covers a period of 11 years, commencing from the year 2001, and rental fees are Baht 3 million per annum. On 1 July 2004, the Company and the subsidiary made an addendum to lease agreement. The subsidiary has to pay rental fee equal to 5% of gross revenue inclusive of value added tax, but not less than Baht 238,200 per month.

7.2

The Company has leased hospital building from Bumrungrad Medical Center Ltd. for use in its hospital business. The lease agreement covers a period of 3 years, commencing from August 2004, and the rental fees are Baht 84 million per annum.

7.3

Global Care Solutions (Thailand) Co., Ltd. has leased building spaces from the Company for use in its operations. The lease agreement covers a period of 3 years, commencing from the year 2001, and shall be extended for a further period of 3 years. The rental fees are Baht 1 million per annum, not including rental fees for room at B.H. Residence.

7.4

The Company has entered into an agreement to lease land and a building (B.H. Tower) from Bangkok Bank Plc. for a period of 3 years, commencing from August 2000. The rental fee is calculated at the rate of 75% of net income (total revenues minus total expenses) from the sub-lease, with a minimum rental of Baht 8 million per annum. On 11 November 2005, the bank approved renewal of agreement, commencing on 29 August 2005 to 28 August 2006. The rate of rental and other conditions shall be in accordance with the initial agreement. At the present, the Company is in the process of agreement renewal.

Rental payable as at 31 December 2006, amounting to Baht 8.0 million (2005: Baht 3.3 million), was shown in the balance sheet under the caption of “Accounts payable - others�.

7.5

In December 2006, the Company entered into a license agreement with Global Care Solutions (Thailand) Co., Ltd. to purchase additional computer software, totaling USD 3.25 million (exclusive of value added tax).

The Company paid for such software in December 2006.

In January 2005, the Company entered into a license agreement with Global Care Solutions (Thailand) Co., Ltd. to purchase additional computer software, totaling USD 1.5 million (exclusive of value added tax). The Company paid for such software in the first quarter of 2005.

A subsidiary (Bumrungrad International Ltd.) has entered into a license agreement with Global Care Solutions (Thailand) Co., Ltd. in January 2005 to purchase computer software for use in its international hospital management service business. The subsidiary paid a minimum license fee of USD 2.5 million in the second quarter of 2005.

In January 2005, a subsidiary (Bumrungrad Medical Center Ltd.) sold its equipment to Global Care Solutions (Thailand) Co., Ltd., amounting to Baht 7.7 million (book value plus margin) and fully received the proceeds.

7.6)

A subsidiary (Bumrungrad International Ltd.) has entered into the provision of services under system implementation agreement with Global Care Solutions (Thailand) Co., Ltd. in April 2005 to provide computer system implementation services to Asian Hospital, Inc. (AHI) for the use in its overseas hospital

41

Annual Report 2006 Bumrungrad Hospital Public Company Limited

business. The subsidiary is obliged to pay such fee totaling USD 200,000. During the year 2005 and 2006, the subsidiary recorded for such fee amounting to USD 103,000 and USD 94,000, respectively.

The subsidiary has also entered into computer system implementation agreement with AHI, totaling USD 350,000. The subsidiary called for such fee during the year 2006 and 2005 amounting to USD 175,000 and USD 140,000, respectively.

7.7

In February 2005, a subsidiary (Bumrungrad International Ltd.) and Asian Hospital, Inc. (AHI) have entered into a software site license agreement. AHI paid all license fee of 52,676,342 pesos in 2005. The license fee will be recognised as income in accordance with the period as stipulated in the agreement. Unrecognised license fee as at 31 December 2006, amounting to Baht 24.9 million (2005: Baht 32.6 million), was shown in “Unearned income” in consolidated financial statements.

7.8

In February 2005, a subsidiary (Bumrungrad International Philippines Inc.) (BIPI) and Asian Hospital, Inc. (AHI) have entered into a management service agreement under which AHI has to pay the subsidiary a percentage of its total revenue and profit before interest expense, income, tax, and depreciation and amortisation expenses. The management fee shall be paid in form of cash up to a certain amount, the excess of which will be paid in form of AHI’s shares, up to maximum 10% of total issued and outstanding capital stock of AHI (fully diluted basis). The agreement covers a period of 5 years, expiring in the year 2010, and shall be renewed. Management fee receivable as at 31 December 2006, amounting to Baht 52.8 million (2005: Baht 22.8 million) was recorded in “Trade accounts receivable” in consolidated financial statements.

7.9

On 4 January 2006, the Company has entered into a Maintenance Services for Software Hospital 2000/DOT NET with Global Care Solutions (Thailand) Co., Ltd. The Company is obliged to pay such fee totaling USD 1,750,000 (exclusive of value added tax). The agreement expired on 31 December 2006.

7.10

On 2 June 2006, the Company has entered into a Consulting Support Agreement with a subsidiary (Bumrungrad International Ltd.). The subsidiary is obliged to pay such fee totaling Baht 55 million per annum starting from August 2006. The agreement will expire as per the agreementís conditions. In addition, the Company charged Baht 14 million for consulting services provided from January to July 2006.

42

Annual Report 2006 Bumrungrad Hospital Public Company Limited

The balances of the accounts as at 31 December 2006 and 2005 between the Company and those related companies are as follows: (Unit: Million Baht) CONSOLIDATED 2006

THE COMPANY ONLY

2005

2006

2005

Amounts due from related parties Former subsidiary The Bumrungrad Hospital Rayong Co., Ltd.

-

-

-

39,431,842

Less: Allowance for doubtful accounts

-

-

-

(39,431,842)

-

-

-

-

Bumrungrad Medical Center Ltd.

-

-

-

4,921,080

Bumrungrad International Ltd.

-

-

15,932,419

5,878

Vitallife Corporation Ltd.

-

-

1,041,658

647,323

514,127

1,094,973

-

-

-

105

-

105

5,737,563

-

-

-

Subsidiaries

Associated companies Asian Hospital, Inc. L.S. Cleaning Co., Ltd. Joint venture Bumrungrad Hospital Dubai LLC Related companies Global Care Solutions (Thailand) Co., Ltd. The Bumrungrad Hospital Foundation Total

67,268

138,547

67,268

138,547

201,085

150,139

201,085

150,139

6,520,043

1,383,764

17,242,430

5,863,072

-

-

-

20,097,671

-

-

18,121,384

22,603,851

1,800,000

-

1,800,000

-

Short-term loans and interest receivable - a related party Subsidiary Vitallife Corporation Ltd. Long-term loans and interest receivable - a related party Subsidiary Vitallife Corporation Ltd. Amounts due to a related party Related company The Bumrungrad Hospital Foundation Short-term loans and interest payable - a related party Subsidiary Bumrungrad Medical Center Ltd.

-

- 1,465,263,415 1,709,236,428

43

Annual Report 2006 Bumrungrad Hospital Public Company Limited

The short-term and long-term loans to Vitallife Corporation Ltd. carry interest at the rates of MLR less 0.5% per annum, MLR per annum, and MLR plus 0.25% per annum (2005: MLR less 0.5% per annum).

Bumrungrad International Ltd. granted short-term loan of USD 1 million to Bumrungrad International Holdings (Hong Kong) Limited. The loan carries interest at the rate of MLR less 0.45% per annum.

Bumrungrad International Ltd. granted long-term loan to Neptune Stroika Holdings, Inc. of 30 million pesos, carrying interest at the rate of 10% per annum, for a period of 7 years (within the year 2012). The loan has been secured by a pledge of shares in Neptune Stroika Holdings, Inc., which are held by Mr. Augusto G. Gan. The short-term loans from Bumrungrad Medical Center Ltd. carry interest at the rates of MLR less 0.45% per annum, and MLR per annum (2005: MLR less 0.45% per annum).

During 2006, movements of loans to and loans from related parties were as follows.

(Unit: Baht) During the year Balance as at 31 December 2005

Increase

Decrease

Balance as at 31 December 2006

Short-term loans and interest receivable - a related party Subsidiary Vitallife Corporation Ltd. Principal

20,000,000

-

20,000,000

-

97,671

549,151

646,822

-

20,097,671

549,151

20,646,822

-

22,494,000

-

4,494,000

18,000,000

109,851

1,512,891

1,501,358

121,384

22,603,851

1,512,891

5,995,358

18,121,384

40,000,000

294,000,000

1,455,236,428

Interest receivable

Long-term loans and interest receivable - a related party Subsidiary Vitallife Corporation Ltd. Principal Interest receivable

Short-term loans and interest payable - a related party Subsidiary Bumrungrad Medical Center Ltd. Principal Interest payable

1,709,236,428 -

116,040,757

106,013,770

10,026,987

1,709,236,428

156,040,757

400,013,770

1,465,263,415

Directors and management’s remuneration In 2006 the Company and its subsidiaries paid salaries, bonuses, meeting allowances and gratuities to their directors and management totaling Baht 126.3 million (The Company only: Baht 118.2 million) (2005: Baht 93.8 million, The Company only: Baht 93.8 million).

44

Annual Report 2006 Bumrungrad Hospital Public Company Limited

8.

INVENTORIES (Unit: Baht) CONSOLIDATED 2006 Medicine

2005

103,969,481

2006

90,825,694

2005

98,667,225

88,111,707

Medical supplies

28,613,789

25,784,871

28,613,789

25,784,871

Other supplies

33,830,030

33,285,331

33,830,030

33,285,331

166,413,300

149,895,896

161,111,044

147,181,909

Total inventories

9.

THE COMPANY ONLY

PLEDGED FIXED DEPOSITS AT FINANCIAL INSTITUTIONS

As at 31 December 2006, deposits at financial institutions of Baht 9.6 million (2005: Baht 9.9 million) have been pledged with banks to secure bank guarantees issued by banks on behalf of the Company and a subsidiary (Bumrungrad Medical Center Ltd.).

As at 31 December 2005, fixed deposit of Baht 220 million had been pledged to secure long-term loan of that subsidiary and the pledge of fixed deposits had been cancelled in 2006 as described in Note 14.

10. INVESTMENTS ACCOUNTED FOR UNDER EQUITY METHOD/PROVISION FOR LOSS IN EXCESS OF COST OF INVESTMENT IN SUBSIDIARY These represent investments in ordinary shares in the following subsidiary and associated companies.

CONSOLIDATED (Unit: Baht) Paid-up capital 2006 2005

Companies Associate held by the Company L.S. Cleaning Co., Ltd. Associate held by subsidiaries Asian Hospital, Inc.

Percentage of shareholding 2006 2005 % %

Investment Cost method Equity method 2006 2005 2006 2005

Dividend 2006 2005

-

1,250,000

-

25.00

-

312,500

-

209,354

-

-

1,422,424,944 Peso

1,409,179,552 Peso

35.10

35.19

385,759,564

385,759,564

464,948,666

481,206,016

-

-

5,000,000 AED

-

49.00

-

25,051,549

-

-

-

-

-

410,811,113

386,072,064

464,948,666

481,415,370

Joint venture held by a subsidiary Bumrungrad Hospital Dubai LLC Total investments

THE COMPANY ONLY (Unit: Baht) Paid-up capital 2006 2005

Companies Subsidiaries Bumrungrad Medical Center Ltd. Bumrungrad International Ltd. Vitallife Corporation Ltd. Total investments in subsidiaries

Percentage of shareholding 2006 2005 % %

958,953,608 744,117,525 31,500,000

958,953,608 600,000,000 31,500,000

100.00 51.00 100.00

100.00 100.00 100.00

-

1,250,000

-

25.00

Associate held by the Company L.S. Cleaning Co., Ltd. Total investment in associated company Total investments

Investment Cost method Equity method 2006 2005 2006 2005

1,691,902,972 1,691,902,972 1,146,352,548 1,092,852,182 599,999,400 599,999,400 712,688,023 591,856,574 25,610,000 25,610,000 12,290,613 (8,561,836) 2,317,512,372 2,317,512,372 1,871,331,184 1,676,146,920 -

312,500

-

209,354

Dividend 2006 2005

-

-

-

-

312,500 209,354 2,317,512,372 2,317,824,872 1,871,331,184 1,676,356,274

45

Annual Report 2006 Bumrungrad Hospital Public Company Limited

(Unit: Baht) THE COMPANY ONLY 2006

2005

1,678,669,626

1,492,256,552

192,661,558

192,661,558

Net investments Investments accounted for under equity method Excess of investment over book value of a subsidiary Provision for loss in excess of cost of investment in subsidiary Total

-

(8,561,836)

1,871,331,184

1,676,356,274

On 28 July 2006, Bumrungrad International Ltd. registered the first increase of registered share capital by issuing 5,764,701 ordinary shares with a par value of Baht 100 each. Therefore, the registered share capital of the subsidiary is increased from Baht 600,000,000 to Baht 1,176,470,100. The new shares were issued at Baht 153.52 per share, with initial paid up in cash of Baht 78.52 per share. On 15 May 2006, the extraordinary meeting of the Company’s shareholders No. 1/2549 passed a resolution approving the waiver of the right to subscribe new shares of BIL to allow subscription by BBL, Istithmar and V-Sciences. As a result, the Company’s shareholding in BIL reduced to 51%.

On 24 February 2005, a subsidiary (Bumrungrad International Ltd.) invested Baht 131,949,605.69 (Peso 185 million) in Neptune Stroika Holdings, Inc. (Neptune) to acquire 66,667 preferred shares at a par value of Peso 1,000 each (40% ownership) and also invested Baht 59,155,653.07 in Bumrungrad International Philippines Inc. (BIPI) to acquire 7,000,000 shares at a par value of Peso 1 each (a 100% holding) and further inject Capital in the form of loans to BIPI amounted to Baht 179,386,827.26 (Peso 253,856,573.29).

On 31 January 2006, BIPI registered the increase of registered share capital by issuing new 19,000,000 ordinary shares at a par value of Peso 1 each. Therefore, the registered share capital of the subsidiary is increased from Peso 7,000,000 to Peso 26,000,000. Bumrungrad International Ltd. purchased all increased shares therefore the subsidiary’s shareholding in BIPI is still at 100%. Baht 179,386,827.26 loans to BIPI were used for such share subscription.

Neptune and BIPI acquired investments in the ordinary shares of Asian Hospital, Inc. (AHI) for Peso 215 million (190,265,487 shares) and Peso 283 million (423,238,004 shares), respectively, representing respective shareholdings of 13.41% and 29.83%. AHI is incorporated in Philippines and operates the hospital business.

On 7 September 2006, a subsidiary (Bumrungrad International Ltd.) invested AED 2,450,000 or equivalent to Baht 25,774,000 in Bumrungrad Hospital Dubai LLC (BHD) to acquire 2,450 ordinary shares at a par value of AED 1,000 each (49% ownership). BHD is a newly established company incorporated in United Arab Emirates. Its principal activity is hospital business. At the present, BHD is in a progress of construction of 250-bed-hospital and shall commence an operation in 2008.

L.S. Cleaning Co., Ltd. registered its dissolution with the Ministry of Commerce on 8 December 2005 and registered the liquidation on 22 May 2006.

The share of the profit/loss of L.S. Cleaning Co., Ltd. for the year 2005 had been calculated from the management accounts of that company.

The share of the profit/loss of AHI for the year 2006 and 2005 has been calculated from the audited financial statements of that company.

46

Annual Report 2006 Bumrungrad Hospital Public Company Limited

11. OTHER LONG-TERM INVESTMENTS (Unit: Baht) PERCENTAGE OF COMPANIES

Chantaburi Country Club Co., Ltd. Global Care Solutions S.A. Total Less: Allowance for impairment loss Other long-term investments - net

SHAREHOLDING

CONSOLIDATED

2006

2005

2006

%

%

0.5

0.5

14.0

14.0

2005

4,500,000 4,500,000

THE COMPANY ONLY 2006

2005

4,500,000

4,500,000

347,213

347,213

347,213

4,847,213 4,847,213

4,847,213

4,847,213

347,213

(2,800,000) (2,800,000) (2,800,000) (2,800,000) 2,047,213 2,047,213

2,047,213

2,047,213

47

48 -

Transfer

-

Depreciation for the year

Depreciation on disposals

31 December 2006

-

Decrease during the year

31 December 2006

290,861,482

31 December 2006

Motor

equipment

56,640,000

(12,910,295)

314,678,909

814,693,153

572,986,030

13,641,982

(6,788,266)

20,430,248

724,818,121

(4,044,308)

127,534,065

601,328,364

199,351,523

191,402,522

-

-

-

381,574,542

(1,337,004)

48,077,988

334,833,558

580,926,065

-

(2,729,112)

57,419,097

526,236,080

equipment

128,034,315

130,873,745

-

-

-

183,498,562

(188,397)

16,521,245

167,165,714

311,532,877

495,469

(826,740)

13,824,689

298,039,459

furniture

13,213,066

19,494,228

-

-

-

32,145,694

(3,456,038)

4,655,873

30,945,859

45,358,760

-

(7,761,327)

2,680,000

50,440,087

vehicles

826,888,018

564,476,715

-

-

-

-

-

-

-

826,888,018

(62,895,333)

-

325,306,636

564,476,715

installation

3,751,950,703

3,269,654,875

13,641,982

(6,788,266)

20,430,248

2,020,289,437

(9,025,747)

277,408,663

1,751,906,521

5,785,882,122

-

(24,227,474)

768,117,952

5,041,991,644

Total

277,408,663

78,645,071

75,232,799

-

-

-

56,067,006

-

7,250,361

48,816,645

134,712,077 1,553,153,256

-

-

10,662,633

124,049,444 1,194,744,642

systems

and under

2006

1,378,056,018

1,401,016,277

-

-

-

629,512,660

-

72,266,111

557,246,549

2,007,568,678

5,759,864

-

43,545,988

1,958,262,826

construction

and

233,373,296

22,208,057

23,311,077

-

-

-

12,672,852

-

1,103,020

11,569,832

34,880,909

-

-

-

34,880,909

improvement

Hospital

accessory

Facility

and land Building and

in progress

Medical

right Equipment

Construction

Leasehold

CONSOLIDATED

(Unit: Baht)

2005

Depreciation included in the income statement for the year

290,861,482

31 December 2005

Net book value

-

31 December 2005

Allowance for impairment loss

-

31 December 2005

Accumulated depreciation

290,861,482

-

Disposals

31 December 2006

-

290,861,482

Purchase

31 December 2005

Cost

Land

12. PROPERTY, PLANT AND EQUIPMENT

Annual Report 2006 Bumrungrad Hospital Public Company Limited

-

Transfer

-

Depreciation for the year

Depreciation on disposals

31 December 2006

-

Decrease during the year

31 December 2006

290,861,482

31 December 2006

Motor

56,640,000

(12,910,295)

314,678,909

753,764,183

equipment

838,884,712

599,312,003

13,641,982

(6,788,266)

20,430,248

259,646,103

(4,044,242)

129,668,413

134,021,932

197,539,465

188,698,833

-

-

-

156,748,865

(1,337,004)

46,904,192

111,181,677

354,288,330

-

(2,729,112)

57,136,932

299,880,510

equipment

104,024,875

106,318,909

-

-

-

87,812,574

(188,397)

15,965,214

72,035,757

191,837,449

495,469

(826,740)

13,814,054

178,354,666

furniture

13,213,057

19,494,219

-

-

-

9,709,946

(3,456,038)

4,655,873

8,510,111

22,923,003

-

(7,761,327)

2,680,000

28,004,330

vehicles

816,903,077

564,476,714

-

-

-

-

-

-

-

816,903,077

(62,895,333)

-

315,321,696

564,476,714

installation

2,680,514,143

2,153,355,063

13,641,982

(6,788,266)

20,430,248

622,636,467

(9,025,681)

222,267,605

409,394,543

3,316,792,592

-

(24,227,474)

757,840,212

2,583,179,854

Total

222,267,605

85,675,189

82,124,202

-

-

-

24,226,036

-

7,111,646

17,114,390

109,901,225 1,112,172,797

-

-

10,662,633

99,238,592

systems

2006

325,161,287

293,358,601

-

-

-

77,180,602

-

17,503,166

59,677,436

402,341,889

5,759,864

-

43,545,988

353,036,037

construction

and under

177,768,329

8,250,999

8,710,100

-

-

-

7,312,341

-

459,101

6,853,240

15,563,340

-

-

-

15,563,340

improvement

and

2005

Depreciation included in the income statement for the year

290,861,482

31 December 2005

Net book value

-

31 December 2005

Allowance for impairment loss

-

31 December 2005

Accumulated depreciation

290,861,482

-

Disposals

31 December 2006

-

290,861,482

Purchase

31 December 2005

Cost

Land

Hospital

accessory

Facility

and land Building and

in progress

Medical

right Equipment

Construction

Leasehold

THE COMPANY ONLY

(Unit: Baht)

Bumrungrad Hospital Public Company Limited Annual Report 2006

49

Annual Report 2006 Bumrungrad Hospital Public Company Limited

The Company has mortgaged all of the land with a book value of Baht 290.9 million (Baht 719 million appraisal fair value as of 14 February 2006) with a commercial bank, acting as bondholders’ trustee, as collateral for the convertible bonds treated as equity securities as described in Note 15.

The Company and Bumrungrad Medical Center Ltd. have mortgaged their buildings and pledged medical instruments and hospital equipment, with a total net book value as at 31 December 2006 of Baht 1,236 million (2005: Baht 1,285 million) (the Company only: Baht 170 million 2005: Baht 165 million), as collaterals for long-term loan credit facilities granted by a local commercial bank as described in Note 14.

As at 31 December 2006, certain equipment items have been fully depreciated but are still in use. The original cost of those assets amounted to Baht 105 million (2005: Baht 112 million) (the Company only: Baht 97 million 2005: Baht 110 million).

13. INTANGIBLE ASSETS (Unit: Baht) CONSOLIDATED

THE COMPANY ONLY

Other

Goodwill on

Computer

intangible

software

asset

Total

Computer

purchase of

software

business

Total

Cost 31 December 2005

683,625,752

1,687,000 685,312,752

583,625,752

192,927,561 776,553,313

Additions

172,559,539

- 172,559,539

172,559,539

- 172,559,539

31 December 2006

856,185,291

1,687,000 857,872,291

756,185,291

192,927,561 949,112,852

Accumulated amortisation 31 December 2005 Amortisation during the year

61,065,496

61,093,691

660,662

57,195,496

27,331,404

84,526,900

19,292,756

78,157,367

64,685,273

58,864,611

125,090,107

688,857 125,778,964

116,060,107

46,624,160 162,684,267

31 December 2005

622,560,256

1,658,805 624,219,061

526,430,256

165,596,157 692,026,413

31 December 2006

731,095,184

998,143 732,093,327

640,125,184

146,303,401 786,428,585

31 December 2006

64,024,611

28,195

Net book value

Amortisation included in the income statement for the year 2005

58,414,722

28,195

58,442,917

54,544,722

19,292,756

73,837,478

2006

64,024,611

660,662

64,685,273

58,864,611

19,292,756

78,157,367

50

Annual Report 2006 Bumrungrad Hospital Public Company Limited

14. LONG-TERM LOAN (Unit: Baht) CONSOLIDATED 2006

2005

THE COMPANY ONLY 2006

2005

Bumrungrad Medical Center Ltd. Loan from a local commercial bank

1,750,971,293

1,779,493,095

300,000,000

-

Less: Current portion

(328,521,802)

(328,521,802)

-

-

Long-term portion

1,422,449,491

1,450,971,293

300,000,000

-

Movements in long-term loan account during the year are summarised below.

(Unit: Baht) CONSOLIDATED Balance as at 1 January 2006

THE COMPANY ONLY

1,779,493,095

-

Add : Additional loan

300,000,000

300,000,000

Less: Repayment

(328,521,802)

-

Balance as at 31 December 2006

1,750,971,293

300,000,000

On 16 September 2002, the subsidiary entered into a loan agreement in the Baht currency with a local commercial bank to obtain a Baht 2,400,000,000 credit facility. Such loan carries interest at 5.5% per annum for the first two years and then at MLR less 0.5% per annum. Interest is payable on a monthly basis and principal is repayable in 24 quarterly installments, commencing 30 December 2004. To guarantee this loan, the subsidiary has mortgaged its building and pledged medical instruments, hospital equipment and fixed deposits as described in Notes 12 and 9. In July 2004, the Company has entered into the Amendment Agreement and the Amended and Restated Facility Agreement with that bank in order to assume joint responsibility for these liabilities.

On 25 May 2006, the Company and the subsidiary entered into Second Amendment Dated 25 May 2006 to Baht 2,400,000,000 Facility Agreement Dated 12 September 2002 (As Amended and Restated) with the bank creditor to change the interest rate of Baht 2,250,000,000 credit facility from MLR less 0.5% per annum to average MLR less 1.25% per annum and cancel the pledged of fixed deposits.

In addition, the Company and the subsidiary obtain additional Baht 1,370,000,000 credit facilities, divided into 4 tranches as follows: a)

Tranche B2 of Baht 650,000,000 carries interest at average MLR less 1.25% per annum. Principal is repayable in 32 quarterly installments, commencing 31 March 2008.

b)

Tranche C of Baht 400,000,000 carries interest at average MLR less 1.25% per annum. Principal is repayable in 32 quarterly installments, commencing 31 March 2008.

c)

Tranche D of Baht 300,000,000 for 8-year working capital carries interest at average MLR less 1.25% per annum.

d)

Tranche E of Baht 20,000,000 for 8-year working capital carries interest at MOR per annum.

Original mortgaged building and pledged medical instruments and hospital equipment are still used as collaterals for above loan credit facilities except for Tranche C; B.H. Residence building will be mortgaged when the Company buys it back from Bangkok Bank Plc.

51

Annual Report 2006 Bumrungrad Hospital Public Company Limited

The loan agreement contains normal covenants pertaining to matters such as the maintenance of certain financial ratios, and restriction on financial indebtedness and the payment of dividends, among others.

As at 31 December 2006, outstanding long-term credit facilities of the Company and its subsidiaries which have yet to be drawn down total Baht 750 million.

15. CONVERTIBLE BONDS Convertible bonds as at 31 December 2006 and 2005 are as follows: a)

Partly secured convertible bonds in an amount of Baht 300 million, with a maturity of 12 years, and a coupon rate of 2.5% for years 1 - 4, 5% for years 5 - 8, and 10% for years 9-12, payable semi-annually. The current conversion price is Baht 4.55 per one ordinary share. The bondholders have the option to convert the bonds into ordinary shares throughout the life of the bonds. The bonds are secured by the mortgage of the Company’s land.

b)

Partly secured convertible bonds in an amount of Baht 250 million (after conversion by the bondholder of Baht 750 million in the year 2003); with a maturity of 12 years, and a coupon rate of 1% per annum, payable semi-annually. The current conversion price is Baht 3.50 per one ordinary share. The bondholders have the option to convert the bonds into ordinary shares throughout the life of the bonds. The bonds are secured by the mortgage of the Companyís land.

On 24 November 2000, an extraordinary meeting of the Company’s shareholders passed approval of the amendment to the terms and conditions governing the rights and obligations of the issuer and the bondholders, which gives the Company the option to either redeem the convertible bonds or to convert the bonds into ordinary shares on the maturity date.

According to the Thai Accounting Standard No. 48 “Financial Instruments: Disclosure and Presentation”, because the Company has the option to either redeem the convertible bonds or to convert them into ordinary shares on the maturity date, and delivery of equity securities will not be changed by fair value of such equity securities (since the Company determined a certain conversion price), so the convertible bonds are not covered by the definition of financial liabilities and are to be treated as equity securities. In addition, the Company’s management expresses their intention to convert these bonds into ordinary shares on the maturity date. Therefore, the whole amounts of the convertible bonds are presented as part of shareholders’ equity and future interest on the bonds will be recorded as a deduction from shareholders’ equity.

The Company has reserved 178,571,433 ordinary shares to accommodate the above convertible bonds.

Interest expense for the year 2006 of the convertible bonds amounted to Baht 17.5 million (2005: Baht 17.5 million), being recorded as a reduction to “retained earnings”.

16. SHARE CAPITAL Preference shareholders have the same right as the ordinary shareholders except that they are entitled to receive an annual dividend at 15% of preference shares capital prior to the dividend paid to the ordinary shareholders.

Preference shares can be converted into ordinary shares.

52

Annual Report 2006 Bumrungrad Hospital Public Company Limited

In the first quarter of 2006, 134,000 preference shares (2005: 332,000 shares) were converted into ordinary shares at ratio of one preference share to one ordinary share. The Company registered this conversion with the Ministry of Commerce on 14 March 2006.

17. STATUTORY RESERVE Pursuant to Section 116 of the Public Limited Companies Act B.E. 2535, the Company is required to set aside to a statutory reserve at least 5% of its net income after deducting accumulated deficit brought forward (if any), until the reserve reaches 10% of the registered capital. The statutory reserve is not available for dividend distribution.

During the years 2006 and 2005, the statutory reserve reaches 10% of the Company’s registered capital.

18. CORPORATE INCOME TAX The Company’s corporate income tax for the years 2006 and 2005 has been calculated at the rate of 25% of net income not exceed Baht 300 million and 30% for the rest. The tax rate applied are in compliance with the provision of Royal Decree 387 (B.E. 2544) dated 28 August 2001, issued under the Revenue Code, regarding the reduction of income tax rates.

Corporate income tax for the years 2006 and 2005 of a subsidiary (Bumrungrad Medical Center Ltd.) has been calculated at the rate of 30% of net taxable income.

19. NUMBER OF EMPLOYEES AND RELATED COSTS CONSOLIDATED Number of employees at end of year (persons) Employee costs for the year (Thousand Baht)

THE COMPANY ONLY

2006

2005

2006

2005

3,130

2,841

3,089

2,809

1,090,770

928,897

1,061,837

916,257

20. EARNINGS PER SHARE Basic earnings per share is calculated by dividing the net income for the year by the weighted average number of ordinary shares in issue during the year.

Diluted earnings per share is calculated by dividing the net income for the year by the sum of the weighted average number of ordinary shares in issue during the year and the weighted average number of ordinary shares which would need to be issued to convert all dilutive potential ordinary shares into ordinary shares. The calculation assumes that the conversion took place either at the beginning of the year or on the date the potential ordinary shares were issued.

53

Annual Report 2006 Bumrungrad Hospital Public Company Limited

Reconciliation between basic earnings per share and diluted earnings per share is presented below.

For the years ended 31 December Weighted average Net income

number of ordinary shares

Earnings per share

2006

2005

2006

2005

2006

Baht

Baht

Shares

Shares

Baht

2005 Baht

Basic earnings per share Net income

1,095,702,100 1,052,739,279 727,798,572 727,630,430

1.51

1.45

1.26

1.21

Effect of dilutive potential ordinary shares Preference shares

-

-

Convertible bonds

-

- 137,362,637 137,362,637

2,253,650

2,421,792

Diluted earnings per share Net income of ordinary shareholders assuming the conversion of dilutive potential ordinary shares

1,095,702,100 1,052,739,279 867,414,859 867,414,859

21. SEGMENT INFORMATION The Company’s and its subsidiaries’ business operations involve 2 principal segments: (1) hospital and health care center and (2) hospital management business. These operations are mainly carried on in Thailand. Below is the consolidated financial information for the years ended 31 December 2006 and 2005 of the Company and its subsidiaries by segment.

(Unit: Million Baht) Hospital and

Hospital

Elimination of inter-

health care center management business segment revenues 2006

2005

2006

2005

2006

2005

Consolidation 2006

2005

Revenues

7,668

6,657

57

7

(17)

(11)

7,708

6,653

Segment income

2,875

2,501

57

7

-

-

2,932

2,508

180

150

Unallocated income and expenses: Other income Depreciation and amortisation

(342)

(292)

(1,159)

(997)

8

3

Interest expense

(110)

(107)

Corporate income tax

(432)

(218)

19

6

1,096

1,053

Administrative expenses Share of income of associated companies and joint venture

Minority interest Net income

54

Annual Report 2006 Bumrungrad Hospital Public Company Limited

(Unit: Million Baht) Hospital and

Hospital

Elimination of inter-

health care center management business segment revenues 2006

2005

2006

2005

3,784

3,304

-

1

786

692

114

121

4,303

4,452

1,018

624

8,873

8,448

1,132

746

2006

Consolidation

2005

2006

2005

(32)

(35)

3,752

3,270

(168)

(189)

732

624

(3,182)

(3,242)

2,139

1,834

(3,382)

(3,466)

6,623

5,728

Assets Property, plant and equipment - net Intangible assets Other assets Total assets

Transfer prices between business segments are set out as described in Note 7.

22. PROVIDENT FUND The Company, its subsidiaries and its employees have jointly established a provident fund in accordance with the Provident Fund Act B.E. 2530. Employees contributed to the fund monthly at the rate of 5% of their basic salaries and the Company or subsidiaries contributed 5% - 7% of basic salary. The fund, which is managed by Finansa Asset Management Limited, will be paid to employees upon termination in accordance with the fund rules. During the year 2006, the Company and subsidiaries contributed Baht 24.7 million (2005: Baht 21.9 million) to the fund.

23. DIVIDENDS PAID (Unit: Baht) Dividends

Approved by

Final dividends for 2005

Annual General Meeting of the shareholders

Interim dividends for 2006

Board of Directors’ meeting on 16 August 2006

on 26 April 2006

Interim dividends for 2005

Dividend per share

328,523,500

0.45

219,015,667

0.30

547,539,167

0.75

on 27 April 2005

292,013,889

0.40

Board of Directors’ meeting on 17 August 2005

219,015,666

0.30

511,029,555

0.70

Total for 2006 Final dividends for 2004

Total dividends

Annual General Meeting of the shareholders

Total for 2005

24. COMMITMENTS AND CONTINGENT LIABILITIES 24.1

Capital commitment As at 31 December 2006, the Company has capital commitments to pay a total of Baht 98.4 million (2005: Baht 79.5 million) in relation to the construction of a new building and Baht 120.2 million (2005: Baht 150.1 million) in respect of purchase of medical instrument and hospital equipment.

55

Annual Report 2006 Bumrungrad Hospital Public Company Limited

24.2

Long-term service commitments As at 31 December 2006, the Company and its subsidiaries have the following outstanding long-term service commitments: (Unit: Million Baht) Details of commitments

Paid in

Amount

The Company 1) To pay fee to a bank which is bondholders’ representative

2007

0.3

2008 - 2012

1.2

2) Land rental for construction of nursing dormitory (shall be extended for a further period of 20 years)

2007

30.9

2008 - 2035

60.8

3) Lease of medical instrument

2007

20.0

2008 - 2009

39.9

2007

24.8

2008

6.4

2007

9.1

2008

4.0

2007

33.6

2008

11.2

4) Lease of land and building for operating service apartment (shall be extended for a further period of 2 years) 5) Lease of building for nursing dormitory and related services (shall be renewed automatically) 6) Maintenance service fee for medical instrument 7) Rental and maintenance service fee for cars

2007

8.8

2008 - 2011

26.1

2007

30,000

2008 - 2012

82,500

Subsidiaries Bumrungrad International Inc. 1) To pay consulting fee (Unit: USD)

24.3

Bank guarantees As at 31 December 2006, there were outstanding bank guarantees of Baht 3.4 million (2005: Baht 1.9 million) issued by a bank on behalf of the Company, and of Baht 8.4 million (2005: Baht 8.4 million) issued on behalf of a subsidiary. All were required in the normal course of business.

24.4

Contingent liabilities On 4 October 2005, Asian Hospital, Inc. (AHI), an associated company, received a preliminary deficiency tax findings for the year ended 31 December 2002 from the Revenue Department of Philippines. AHI’s management strongly believes that the finding was made without grounds and vigorously challenged it. AHI has therefore not set aside allowance for the assessment in its accounts.

25. FINANCIAL INSTRUMENTS 25.1

Financial risk management The Company’s and subsidiaries’ financial instruments, as defined under Thai Accounting Standard No. 48 “Financial Instruments: Disclosure and Presentations”, principally comprise cash and cash equivalents, trade accounts receivable, loans, investments, and short-term and long-term loans. The financial risks associated with these financial instruments and how they are managed is described below.

56

Annual Report 2006 Bumrungrad Hospital Public Company Limited

Credit risk The Company and subsidiaries are exposed to credit risk primarily with respect to trade accounts receivable, loans, and other receivables. The Company and subsidiaries manage the risk by adopting appropriate credit control policies and procedures and therefore do not expect to incur material financial losses. In addition, the Company and subsidiaries do not have high concentration of credit risk since they have a large customer base. The maximum exposure to credit risk is limited to the carrying amounts of receivables, loans and other receivables as stated in the balance sheet.

Interest rate risk The Company’s and its subsidiaries’ exposures to interest rate risk relate primarily to their cash at banks, bank overdrafts, and long-term borrowings. However, since most of the Company’s and its subsidiaries’ financial assets and liabilities bear floating interest rates or fixed interest rates which are close to the current market rate, the interest rate risk is expected to be minimal.

Significant financial assets and liabilities as at 31 December 2006 classified by type of interest rates are summarised in the table below, with those financial assets and liabilities that carry fixed interest rates further classified based on the maturity date, or the repricing date if this occurs before the maturity date.

CONSOLIDATED Fixed interest rates Within 1 year

1-5 years

Floating

Non-

Over

interest

interest

5 years

rate

bearing

Total

(Million Baht)

Interest rate (% p.a.)

Financial assets Cash and cash equivalents

419

-

-

402

33

854

0.25 - 4.62

10

-

-

-

-

10

5.125

Current investments - fixed deposits at financial institutions Trade accounts receivable - net

-

-

-

-

525

525

-

Amounts due from related parties

-

-

-

-

7

7

-

10

-

-

-

-

10

3.25 - 3.50

-

-

-

-

2

2

-

439

-

-

402

567

1,408

Pledged fixed deposits at financial institutions Other long-term investments - net

Financial liabilities Trade accounts payable

-

-

-

-

552

552

-

Amount due to a related party

-

-

-

-

2

2

MLR less 1.25

Long-term loan

-

-

-

1,751

-

1,751

-

-

-

1,751

554

2,305

57

Annual Report 2006 Bumrungrad Hospital Public Company Limited

THE COMPANY ONLY Fixed interest rates Within 1 year

1-5 years

Floating

Non-

Over

interest

interest

5 years

rate

bearing

Total

Interest rate

(Million Baht)

(% p.a.)

Financial assets Cash and cash equivalents

-

-

-

333

21

354

0.25 - 0.50

10

-

-

-

-

10

5.125

Trade accounts receivable - net

-

-

-

-

469

469

-

Amounts due from related parties

-

-

-

-

17

17

-

1

-

-

-

-

1

3.25 - 3.50

-

-

-

-

2

2

MLR plus 0.25

Current investments - fixed deposits at financial institutions

Pledged fixed deposits at financial institutions Other long-term investments - net Long-term loans and interest receivable - a related party

-

-

-

18

-

18

11

-

-

351

509

871

Financial liabilities Trade accounts payable

-

-

-

-

547

547

-

Amount due to a related party

-

-

-

-

2

2

-

-

-

-

1,455

10

1,465

MLR

-

-

-

300

-

300

MLR less 1.25

-

-

-

1,755

559

2,314

Short-term loans and interest payable - a related part Long-term loan

Foreign currency risk The Company’s and its subsidiaries’ exposures to foreign currency risk arise mainly from servicing transactions and payments for service fee that are denominated in foreign currencies.

The balances of financial assets and liabilities denominated in foreign currencies as at 31 December 2006 are summarised below.

Foreign currency

US dollar

58

Financial

Financial

Average exchange rate

assets

liabilities

as at 31 December 2006

(Million)

(Million) (Baht per 1 foreign currency unit)

-

0.2

36.2308

Annual Report 2006 Bumrungrad Hospital Public Company Limited

25.2

Fair values of financial instruments Since the majority of the Company’s and its subsidiaries’ financial instruments are short-term in nature and loans and borrowings bear floating interest rates, their 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 arm’s length transaction. The fair value is determined by reference to the market price of the financial instrument or by using an appropriate valuation technique, depending on the nature of the instrument.

26. SUBSEQUENT EVENTS 26.1

On 29 January 2007, the Company’s Board of Directors approved a waiver of future rights to subscribe to a maximum of 3,714,283 new shares at Baht 153.52 per share, totaling Baht 570,216,726.16, of Bumrungrad International Ltd. (“BIL”) and to allocate such rights to Asia Financial Holdings Limited (“AFH”), or its wholly-owned subsidiary. As a result, BH’s shareholding in BIL will reduce to 31.5% of the diluted share capital.

26.2

On 27 February 2007, the Company’s Board of Directors approved the proposal to the annual general meeting of the Company’s shareholders for consideration of the payment of Baht 0.45 per share from the Company’s income for the year ended 31 December 2006. This constitutes a total dividend of Baht 329 million. In addition, the meeting also resolved that the interim dividend of Baht 0.30 per share, totaling Baht 219 million, which had been distributed on 15 September 2006 be reported to the annual general meeting of the Company’s shareholders. The total dividend payment for the year 2006 is Baht 0.75 per share, totaling Baht 548 million.

27. RECLASSIFICATION Certain amounts in the financial statements for the year ended 31 December 2005 have been reclassified to conform to the current year’s classification, with no effect on previously reported net income or shareholders’ equity.

28. APPROVAL OF FINANCIAL STATEMENTS These financial statements were authorised for issue by the Company’s Board of Directors on 27 February 2007.

59

Other Important Information

Annual Report 2006 Bumrungrad Hospital Public Company Limited

62

Annual Report 2006 Bumrungrad Hospital Public Company Limited

Other Important Information 1.

General Information

1.1 Company Information Name :

Bumrungrad Hospital Public Company Limited (“the Company�)

Type of Business :

Private hospital

Head Office Address :

33 Sukhumvit Soi 3 (Nana Nua) Sukhumvit Road Klong Toey Nua, Wattana, Bangkok 10110

Registration No. :

Public Company Limited 173

Home page :

http://www.bumrungrad.com

E-mail address :

ir@bumrungrad.com

Telephone :

0 2667 1000

Fax :

0 2667 2525

Registered Capital :

Bt 922,702,685 Divided into Ordinary shares of 920,475,835 shares, par value at Bt 1 per share Preferred shares of 2,226,850 shares, par value at Bt 1 per share

Issued and Paid up Capital:

Bt 730,052,222 Divided into Ordinary shares of 727,825,372 shares, par value at Bt 1 per share Preferred shares of 2,226,850 shares, par value at Bt 1 per share

1.2 Entities in which the Company has more than 10% shareholding Company

Bumrungrad Medical Center Limited

Type of Business

Property Lease

33/3 Sukhumvit 3 (Nana Nua) Sukhumvit Road, Klong Toey Nua,

Issued Shareholding and paid up (%) ordinary shares 119,869,201

100%

shares

Wattana, Bangkok 10110 Phone 0 2667 1000, Fax 0 2667 2525 Vitallife Corporation Limited

Wellness Center

210 Sukhumvit Soi 1 Sukhumvit Road, Klong Toey Nua,

315,000

100%

shares

Wattana, Bangkok 10110 Phone 0 2667 2340, Fax 0 2667 2341 Bumrungrad International Limited 33 Sukhumvit Soi 3 (Nana Nua) Sukhumvit Road, Klong Toey Nua,

International

11,767,701

Investment

shares

Healthcare software

31,426

development

shares

51%

Wattana, Bangkok 10110 Phone 0 2667 1000, Fax 0 2667 2525 Global Care Solutions S.A. 9 Rue Schiller, L-2519 Luxembourg

14%

Phone 41 (76) 565 1533, Fax 41 (44) 496 6319

63

Annual Report 2006 Bumrungrad Hospital Public Company Limited

1.3 Reference Persons 1.

Auditor

Ernst & Young Office Limited 33rd Floor, Lake Rajada Office Complex, 193/136-137 New Rajadapisek Road, Bangkok 10110 Phone 0 2264 0777, Fax 0 2264 0789-90

2.

Legal Consultant

Thai Consultant Limited 63 Soi 8 (Soi Preeda), Sukhumvit Road, Bangkok 10110 Phone 0 2255 2552, Fax 0 2653 1133

3.

Share Registrar

Thailand Securities Depository Co., Ltd. 62 The Stock Exchange of Thailand Building, 4th and 6th-7th Floor, Rachadapisek Road, Bangkok 10110 Phone 0 2229 2800, Fax 0 2359 1259

4.

Convertible Bonds

Bumrungrad Hospital Public Company Limited

Registrar

33 Sukhumvit Soi 3 (Nana Nua) Sukhumvit Road, Klong Toey Nua, Wattana, Bangkok 10110 Phone 0 2667 2025, Fax 0 2667 2031

5.

Bondholders’

Thai Military Bank Public Company Limited

Representative

3000 Paholyothin Road, Jatujak, Bangkok 10900 Phone 0 2299 1111, 0 2617 9111, Fax 02 299 1784

2.

Financial Highlights

2.1

Financial Summary (Page 19)

2.2

Financial Ratios (Page 19)

3.

3.1

Company Profile Executive Summary Bumrungrad Hospital Public Company Limited (“the Company”) operates a private hospital business in Bangkok with capacity of 554 beds and 3,500 outpatients per day. The Company is one of the leading healthcare providers in Thailand and in the Southeast Asian region, providing complete healthcare services for both outpatients and inpatients.

The Company has always emphasized the importance of quality healthcare and experienced physicians and staff. The Company is the first hospital in Asia to receive the US standard accreditation from Joint Commission International Accreditation (JCIA).

The Company is expanding and upgrading its Bangkok facilities over the next 5 years to accommodate the increasing demand for private healthcare. The expansion will ultimately increase the Company’s ability to service patients to 650 beds and 6,000 outpatients per day, almost doubling its current capacity. In addition, the Company is looking to expand its operations overseas through its 51% subsidiary, Bumrungrad International Limited (BIL). Currently, BIL has two investments, one in Asian Hospital Inc. in the Philippines, which is currently in operation, and the other investment in Bumrungrad Hospital Dubai LLC, which is currently under construction. BIL is aggressively looking for other healthcare opportunities in the region.

64

Annual Report 2006 Bumrungrad Hospital Public Company Limited

The Company has three subsidiaries, including 100% shareholding in Bumrungrad Medical Center Limited, 100% in Vitallife Corporation Limited and 51% in Bumrungrad International Limited and a 14% investment in Global Care Solutions S.A. The corporate structure of the Company is as follows:

Bumrungrad Hospital Public Company Limited

- Operates private hospital in Bangkok

100% Bumrungrad Medical Center Limited - Owner of main hospital building and lesser of the building to the Company

100% Vitallife Corporation Limited - Comprehensive wellness center specializing in preventive care

51%

14%

Bumrungrad International Limited

Global Care Solutions S.A.

- International investment and business development

- Healthcare software development company

Notes: * As at 31 December 2006 ** L.S. Cleaning Co., Ltd., the Company’s previous 25% subsidiary, registered the liquidation with the Ministry of Commerce on 22 May 2006.

Details of subsidiaries, affiliates and related companies are as follows: 1. Bumrungrad Medical Center Limited (“BMC”) is the owner of the existing hospital building, which is leased to the Company.

2. Vitallife Corporation Limited (“Vitallife”) is a pioneer in wellness and anti-aging which provides preventive care services targeted at health-conscious individuals. The Vitallife program brings together experienced medical professionals and world-class technologies to provide customers with a customized exercise programs, nutrition plans, and food and vitamin supplements for healthy living.

3. Bumrungrad International Limited (“BIL”) is the Company’s international investment arm. BIL’s policy is to enter into management contracts only when BIL has an equity stake with management control, or there is an evident pathway towards an equity stake. BIL currently has 2 investments: a 43% stake in Asian Hospital, Inc. in the Philippines and 49% investment in Bumrungrad Hospital Dubai LLC in the United Arab Emirates.

4. Global Care Solutions S.A. (“GCS”) is a healthcare software development company headquartered in Luxemburg.

65

Annual Report 2006 Bumrungrad Hospital Public Company Limited

3.2 Revenue Structure Unit: Bt Million Product line / Business Group

Operate by

% Shareholding

by Company

Healthcare

Bumrungrad Hospital Pcl.

Healthcare

Bumrungrad Medical Center Ltd.

100.00

Healthcare

Vitallife Corporation Ltd.

100.00

7,572

Total Healthcare Hospital Management

2006 Revenue

78 7,650

Bumrungrad International Ltd.

51.00

Total Hospital Management Rental

Bumrungrad Hospital Pcl.

Rental

Bumrungrad Medical Center Ltd.

100.00

Total Rental Others

Bumrungrad Hospital Pcl.

Others

Bumrungrad Medical Center Ltd.

100.00

Others

Bumrungrad International Ltd.

100.00

Total Others Total

2005 %

Revenue

95.9 6,586 -

-

1.0

61

96.9 6,647

2004 %

Revenue

%

96.8 2,482

42.7

- 3,167

54.5

37

0.7

97.6 5,686

0.8

97.9

57

0.7

7

0.1

-

-

57

0.7

7

0.1

-

-

118

1.5

89

1.3

41

0.7

-

-

-

-

12

0.2

118

1.5

89

1.3

53

0.9

57

0.7

58

0.9

36

0.6

1

-

-

-

34

0.6

12

0.2

6

0.1

-

-

70

0.9

64

1.0

70

1.2

100.0 6,807 100.0 5,809

100.0

7,895

3.3 Business Characteristics and Competition Bumrungrad Hospital Public Company Limited (“the Company”) Bumrungrad Hospital Public Company Limited is the operator of Bumrungrad Hospital in Bangkok, which is the main revenue contributor. The Company’s revenue from hospital operations is 95.9% of total revenues.

The hospital, which is supported by the advanced Hospital 2000 Medical Information System, has services which can be detailed as follows: 1.

Outpatient service has 34 outpatient clinics with 135 examination rooms, and capacity to service 3,500 patients per day.

2.

Inpatient service has 554 beds. As at 31 December 2006, the hospital has 449 beds in operation.

3.

Emergency facilities and operating theaters: The Company has emergency center open 24 hours, equipped with specialized physicians. In addition, the Company has 19 operating theaters fully equipped with modern medical equipment.

66

Annual Report 2006 Bumrungrad Hospital Public Company Limited

In 2006, the Company has treated a total of over one million patients. The client base of the hospital can be segmented in 2 ways as follows: 1.

Inpatient and outpatient (% of total revenue)

Inpatient 51%

Outpatient 49%

Data as at 31 December 2006

2.

Domestic and international patients

The Company has a strong and successful track record in increasing its presence in the international market. In 2006, Bumrungrad Hospital in Thailand treated over 430,000 international patients from over 190 countries. The top three highest revenue contributors by country are the United Arab Emirates, the United States and Oman.

% of revenue

The following graph shows the historical revenue contribution of international patients over the past five years.

The Company has a master plan to expand and upgrade its Bangkok facility over the next 5 years. The plan includes the opening of the new Bumrungrad International Clinic building, expanding its inpatient capacity to BH Tower building and renovating and upgrading the existing hospital building as it is entering its 10th year of operation.

The new Bumrungrad International Clinic is a 22-storey outpatient facility, with the first 10 floors being used as parking spaces and the top 12 floors as outpatient clinics. The Company plans to gradually occupy the building floor by floor as the additional space is needed, and expects to take 5-7 years before the building is fully occupied. In February 2007, the parking space was open for patient use, while the health screening center was the first unit to occupy the 11th floor of the new Bumrungrad International Clinic in March 2007.

67

Annual Report 2006 Bumrungrad Hospital Public Company Limited

The Company also has a long-term plan to expand its inpatient capacity to grow in line with the expansion of its outpatient capacity. The Company plans to reacquire the BH Tower Building from Bangkok Bank Pcl. and to gradually convert the building into inpatient beds. The building was given to Bangkok Bank Pcl. as part of the Company’s debt restructuring plan after the economic crisis in 1997 and it is currently being leased from Bangkok Bank Pcl. to be used as the serviced apartments for patients’ families and relatives.

The third part of the expansion plan is the renovation and upgrade of the existing hospital building as it is entering its 10th year of operations. This includes rolling renovation of existing patient beds as well as expansion of the outpatient clinics that remain in this existing building while others move to the new Bumrungrad International Clinic Building.

After the 5-7 years of expansion, the Company’s capacity will ultimately increase to 650 beds and 6,000 outpatients per day, almost doubling its current capacity, and making Bumrungrad one of the largest outpatient clinics in the world.

Bumrungrad International Limited (BIL) Bumrungrad International Limited is the Company’s 51% subsidiary which operates as a holding company, with the objective to invest in overseas healthcare related businesses through joint ventures with local partners and to provide consulting and management services for those businesses. Currently, BIL has investments through its subsidiaries in two hospitals in the Philippines and in United Arab Emirates.

BIL made a 43.25% investment in Asian Hospital Inc. (AHI) in 2005. AHI commenced its operations in 2002 and is one of the first large-scale private hospitals in Manila. It is a 258-bed hospital located in the south of Metro Manila and is well known for its modern medical equipment and experienced physicians, particularly in cardiology.

Similar to the Bangkok facility, AHI also targets the middle class population.

In 2006, BIL entered into a 49% joint venture with Istithmar PJSC, an investment arm of the United Arab Emirates government, to operate a 250-bed private hospital under the name Bumrungrad Hospital Dubai. Currently, the hospital is under construction and is expected to be operational in 2009.

In addition to the two existing investments, BIL is aggressively pursuing other investment opportunities in the region. In July 2006, BIL went through a capital increase process and invited Istithmar, Temasek and Bangkok Bank Pcl. as strategic partners. In addition to the capital availability, the strategic partners are also sources of new investment opportunities and network in their respective regions of presence. As a result of the capital increase, the Company’s shareholding in BIL was diluted from 100% to 51%.

Industry and Competition As at 2003, there were 346 private hospitals in Thailand, of which 100 are in Bangkok. The demand for healthcare continues to grow with the growth of GDP and the rise of life expectancy. However, supply of private healthcare facilities in Thailand remains in excess of domestic demand and as a result competition for Thai patients remains intense. Many private hospitals have undergone upgrades to keep pace with Bumrungrad including quality of service and building renovations and expansion. In any case, the private healthcare industry in Thailand is a fragmented market and only a few hospitals are operating close to its full capacity.

68

Annual Report 2006 Bumrungrad Hospital Public Company Limited

The bigger market that is growing faster than domestic demand is medical tourism. The global medical tourism industry is expected to see continued strong growth as more and more people are traveling abroad for healthcare services. Thailand’s regional competitors are hospitals in countries such as Singapore, Malaysia and India. Private hospitals in Thailand have a competitive advantage compared to many of the countries, as Thailand has a unique combination of high quality healthcare, accessibility and affordability, coupled with Thailand being a popular tourist destination with a good supporting infrastructure. Within Thailand itself, there are only a few private hospitals that have the technology and sophistication to address the needs of international patients.

The Company’s strategy is to maintain quality superiority through a differentiated product that includes Bumrungrad as Asia’s first internationally accredited hospital. Also, pricing is targeted within the top tier of Thai hospitals while remaining price competitive in the region.

For regional competition, in addition to maintaining the quality and the pricing strategy, the Company also seeks to continue as the dominant player by operating hospitals in key markets through investments in hospitals abroad, which at present includes the Philippines and the Middle East. In addition, the Company operates twenty overseas representative offices in its major markets and has an international patient center to accommodate the needs of international patients. The Company is also a tertiary referral center for both domestic and international hospitals.

4.

Risk Factors

1.

Slow down of the tourism industry In the past, Thailand’s tourism industry has been affected by many issues, including public health epidemics, international terrorism, the unrest in southern Thailand, and most recently, the political situation and the Bangkok New Year’s bombings. Although medical tourism is not as easily affected as the regular tourism industry as there is an established relationship between patients and the hospital and physicians, these events could cause a postponement or a reduction in number of patients traveling to Thailand and could in turn affect revenues from international patients.

In order to minimize the possible risk, the Company maintains a balanced portfolio of international and Thai patients so that the Company does not rely excessively on revenue from international patients.

2.

Intensified competition in the premium healthcare sector With the current environment where purchasing power may be slowing down because of the political and economic uncertainties, while the supply of private hospital remains high, competition in the private healthcare sector continues to intensify. The risk of the Company losing its clients to other competitors therefore increases.

In order to maintain its leading position in Thailand and Asia and to mitigate the risk, the Company has invested in up-to-date technology and has continuously improved its quality of care. The Company was the first hospital in Asia to receive US standard accreditation from Joint Commission International Accreditation (JCIA), and was the first private hospital in Thailand to receive Thai Hospital Accreditation (HA). In addition, the Company has a strong client base of referral patients both from within Thailand and internationally. This signifies the reputation of the Company as the leader both within Thailand and in the region.

69

Annual Report 2006 Bumrungrad Hospital Public Company Limited

3.

Shortage of professional staff The hospital business requires personnel with specific technical expertise and knowledge, including nurses, pharmacists and various technicians. A shortage of these professionals is possible due to the increasing demand.

In addition, because the Company sees the importance of its international client base, multi-lingual professionals are also required.

In order to minimize the risk, the Company offers competitive compensation and benefits for its staff. The Company also provides education and training, recreation and staff welfare activities to all staff members, on par with other competitors. Through a decentralized management structure, the Company also offers excellent career paths to various categories of staff members.

4.

International investments Bumrungrad International Limited (“BIL”) has made investments in hospitals in the Philippines and the United Arab Emirates. Such investments carry the inherent risk of investment and expose the Company to country and currency risk outside Thailand.

To mitigate this risk, BIL’s experienced international management team conducts extensive feasibility studies and carries out detailed due diligence using firms with local knowledge before recommending Company’s investment. Risk is also reduced by engaging local equity partners in most overseas investments.

5.

Legal disputes Hospital business is subject to litigation risk attended to the provision of healthcare services by hospital staff and physicians.

Therefore, in order to minimize the risk, the Company has implemented a healthcare risk management system to ensure that the risk of mistakes by the Company’s personnel is minimized and corrected. In addition, the Company has various insurance policies in place against possible legal lawsuits.

5.

Shareholding Structure and Management

5.1 Major Shareholders List of Company’s 10 major shareholders as at 19 February 2007 is as follows: Shareholder

Number of shares*

Shareholding** (%)

1.

Bangkok Insurance Pcl.

96,286,402

13.19

2.

HSBC (Singapore) Nominees Pte Ltd

77,206,000

10.58

3.

Sinsuptawee Asset Management Co., Ltd.

63,258,514

8.66

4.

Istithmar PJSC

43,370,743

5.94

5.

Thai NVDR Co., Ltd.

40,735,894

5.58

6.

UOB Kay Hian Private Limited

30,920,390

4.24

7.

Wattanasophonpanich Co., Ltd.

25,121,875

3.44

8.

Littledown Nominees Limited 9

24,615,100

3.37

9.

Citibank Nominees Singapore Pte Ltd - Aranda Investments Pte Ltd

21,685,372

2.97

10.

TLS Alpha Pte Ltd

21,685,371

2.97

444,885,661

60.94

Total * Number of shares includes both preferred shares and common shares ** The calculation of holding percentage includes both preferred shares and ordinary shares

70

Annual Report 2006 Bumrungrad Hospital Public Company Limited

The Company has shareholders in the top ten major shareholders list who are foreign financial institutions or custodians acting as trust companies or nominee accounts. The Company has no knowledge of the ultimate shareholders of these companies as these shareholders have never nominated their representatives to serve on the Board of Directors or take part in the management of the Company.

The shareholders with significant influence on the policies or management of the Company Bangkok Bank Pcl, the major shareholder of the Company with 9.75* percent shareholding, has 2 representatives on the Board of Directors, which are Mr. Chatri Sophonpanich and Mrs. Kulathida Sivayathorn. The other group of major shareholders, Istithmar and Temasek, with a total shareholding of 11.88%, has one rotating board seat between the two. Currently, Sultan Ahmed Bin Sulayem from Istithmar is the representative on the Company’s Board of Directors. *

The data as of at 19 February 2007; the shareholding includes that of Sinsuptawee Asset Management Co., Ltd. and Bangkok Bank Pcl.

** The data as of at 19 February 2007; the shareholding includes that of Istithmar PJSC, Aranda Investments Pte Ltd and TLS Alpha Pte Ltd.

5.2 Management (1) Management Management Structure The Company has 4 sets of committees; i.e. the Company’s Board of Directors, the Audit Committee, Governing Board and Investment Committee. Details of each committee are as follows: Board of Directors The Company’s Board of Directors as at 31 December 2006 consists of the following: 1. Mr. Chai Sophonpanich

Chairperson

2. Mr. Chanvit Tanphiphat, MD

Vice Chairperson

3. Mrs. Linda Lisahapanya

Director, Managing Director

4. Mr. Curtis John Schroeder

Director, Group Chief Executive Officer

5. Mr. Dhanit Dheandhanoo, MD

Director, Chairperson of the Medical Director

6. Mr. Chatri Sophonpanich

Director

7. Mr. Anant Tejavej, MD

Director

8. Mr. John Yangpichitt, MD

Director

9. Ms. Khun Sawanya Dej-Udom, MD

Director

10. Mrs. Kulathida Sivayathorn

Director

11. Mr. Chong Toh

Director

12. Sultan Ahmed Bin Sulayem

Director

13. Ms. Sophavadee Uttamobol

Director, Chairperson of Audit Committee

14. Mr. Soradis Vinyaratn

Director, Member of Audit Committee

15. Mr. Boonpakorn Chokwathana

Director, Member of Audit Committee

Ms. Suthinee Tevidhaya is the secretary of the Board of Directors.

Legal Binding of the Company Any two authorized directors, except Mr. Chatri Sophonpanich, Mrs. Kulathida Sivayathorn and Mr. Chong Toh, sign and affix the Company’s seal.

71

Annual Report 2006 Bumrungrad Hospital Public Company Limited

Duties and Responsibilities of Board of Directors: 1.

To perform duties in accordance with the laws, the Company’s objectives and regulations, and resolutions of the shareholders’ meetings in good faith and with care for the best interest of the Company

2.

To establish the Company’s vision, direction and strategies

3.

To endorse major strategies and policies, including objectives, business plans, financial targets, operation plans and capital expenditure budgets, as proposed by the management; and to monitor and ensure the implementation and follow up on the outcome

4.

To ensure proper systems for corporate accounting, financial reporting and financial auditing; to ensure that the Company has an effective internal control and internal audit system

5.

To approve quarter and annual financial reports; to ensure that they are correct, accurate, credible, in compliance with Generally Accepted Accounting Standards and report to shareholders in the annual report

6.

To supervise and approve, as the case may be, and to ensure transparency in the transactions which are connected transactions and may cause conflict of interest

7.

To have the authority to enter into any transaction on behalf of the Company, which requires two signatures of any authorized directors and affixing of the Company’s seal

Audit Committee The Company’s Audit Committee as at 31 December 2006 comprises the following: 1.

Ms. Sophavadee Uttamobol

Chairperson of the Audit Committee

2.

Mr. Soradis Vinyaratn

Member of the Audit Committee

3.

Mr. Boonpakorn Chokwathana

Member of the Audit Committee

Mrs. Tawichar Tansathit is the secretary of the Audit Committee.

Duties and Responsibilities of the Audit Committee The Company’s Audit Committee has the scope of duties and responsibilities to report to the Board of the Directors as follows: 1.

To review the financial report of the Company to be in accordance with the accounting standards, and ensure that the financial reporting is sufficient and reliable, before being presented to the Board of Directors

2.

To consider and recommend the appointment of external auditors and audit fees

3.

To ensure that the Company has adequate and effective internal control system

4.

To ensure the Company’s compliance with regulations and other relevant laws

5.

To ensure that there is no conflict of interest arising from connected parties

6.

To prepare the report of the Audit Committee to be disclosed in the Company’s annual report; the report must be signed by the Chairperson of the Audit Committee

7.

To be responsible for any other matters assigned by the Board of Directors.

Other responsibilities: 1.

To consider the budget and human resources of the internal audit office

2.

To coordinate with the Company’s internal auditors regarding the internal control system, audit plans and audit programs, and to evaluate the results of the internal auditing of various operations of the Company, according to the generally accepted methods and standards

3.

72

To appoint, dismiss, transfer or terminate the employment of director (chief ) of internal audit.

Annual Report 2006 Bumrungrad Hospital Public Company Limited

Governing Board The Company’s Governing Board for the Bumrungrad Hospital in Bangkok as at 31 December 2006 comprises the following: 1.

Mr. Chanvit Tanphiphat, MD

Chairman

2.

Mr. Mack Banner

Secretary

3.

Mr. Chong Toh

Member

4.

Mr. Karoon Mekanontchai, MD

Member

5.

Mr. Mondej Sookpranee, MD

Member

6.

Ms. Oradee Chandavasu, MD

Member

7.

Mr. Rujapong Sukhabote, MD

Member

8.

Mr. Sira Sooparb, MD

Member

9.

Ms. Sophavadee Uttamobol

Member

10.

Mr. Vatana Supromajakr, MD

Member

11.

Mr. Visuit Vivekaphirat, MD

Member

12.

Mr. Watcharaphong Saechere, MD

Member

13.

Mr. Apichati Sivayathorn, MD

Ex officio

14.

Ms. Janice Chan Mun Yee

Ex officio

15.

Mrs. Khor Lee Chan

Ex officio

16.

Mr. Sinn Anuras, MD

Ex officio

Duties and Responsibilities of the Governing Board The Governing Board has the objective to recommend and implement the Company’s Hospital Policy, promote patient safety and performance improvement, provide quality patient care and provide for organizational management and planning of the Hospital. The Governing Board has the scope of duties and responsibilities to report to the Board of the Directors as follows: 1.

To organize physicians and other practitioners granted clinical privileges at the Hospital into a medical staff under Professional Staff Bylaws, Rules and Regulations approved by the Governing Board

2.

To appoint and reappoint Medical Staff members and assign clinical privileges in accordance with Professional Staff Bylaws, Rules and Regulations

3.

To establish and amend, together with the Medical Staff, and approve Professional Staff Bylaws, Rules and Regulations which set forth its organization and governance

4.

To assign to the Medical Staff reasonable authority to ensure appropriate professional care to Hospital patients, including to direct that all reasonable and necessary steps be taken by the Medical Staff and Hospital administration for meeting JCIA and HA accreditation standards and complying with applicable laws and regulations.

73

Annual Report 2006 Bumrungrad Hospital Public Company Limited

Investment Committee The Company’s Investment Committee as at 31 December 2006 comprises the following: 1.

Mr. Chai Sophonpanich

Chairperson

2.

Mrs. Linda Lisahapanya

Member

3.

Mr. Chong Toh

Member

4.

Ms. Sophavadee Uttamobol

Member

5.

Mr. Curtis John Schroeder

Member

6.

Mr. Dennis Brown

Observer

7.

Mr. Carl Stanifer

Observer

Duties and Responsibilities of the Investment Committee To consider investment opportunities, appropriateness and feasibility studies, including the structure of the Company’s investment projects both within the country and in the region.

Management The Company’s Management as at 31 December 2006 consists of the following: 1.

Mrs. Linda Lisahapanya

Managing Director

2.

Mr. Dhanit Dheandhanoo, MD

Chairperson of the Medical Director

3.

Mr. Curtis John Schroeder

Group Chief Executive Officer

4.

Mr. Sinn Anuras, MD

Group Medical Director

5.

Mr. Karoon Mekanontchai, MD

Medical Director

6.

Mrs. Chamaree Chuapetcharasopon, MD Senior Associate Medical Director

7.

Mr. Carl Stanifer

Group Chief Financial Officer and Director of International Development

8.

Mr. Dennis Brown

Group Chief Operating Officer and Chief Executive Officer, Bumrungrad International Limited

74

9.

Mr. James Matthew Banner

Chief Executive Officer

10.

Mrs. Khor Lee Chan

Chief Financial Officer

11.

Ms. Janice Chan Mun Yee

Chief Operating Officer

Annual Report 2006 Bumrungrad Hospital Public Company Limited

Details of Management and Controlling Parties Directors

Mr. Chanvit Tanphiphat, MD

Mr. Chai Sophonpanich

Age: 63 years

Age: 65 years

Position in the Company:

Position in the Company:

Vice Chairperson

Chairperson

Education:

Education: -

Bachelor of Science, University of Colorado, USA

-

Advanced Management Program, The Wharton School, University of Pennsylvania, USA

-

Director Certification Program Class 16/2002, Thai Institute of Directors

-

Chairman 2000, Class 10/2004, Thai Institute of

MB ChB (Bachelor of Medicine and Bachelor of Surgery), Leeds University, England

-

FRCS (Fellowship of the Royal College of Surgeons), England

The Joint State - Private Sectors Course, Class 6, The National Defense College of Thailand

-

-

Shareholding: 0.07% Family Relationship between Management: -

None

Work Experience:

Directors

-

Shareholding:

Professor, Faculty of Medical Science, Surgery Department, Chulalongkorn University

1.09% Family Relationship between Management: -

Husband of Mrs. Linda Lisahapanya’s siste

-

Brother of Mr. Chatri Sophonpanich President and Managing Director, Bangkok Insurance Pcl.

1978 - Present 1986 - Present 1988 - Present

Age: 55 years Position in the Company:

Work Experience: 1976 - Present

Mrs. Linda Lisahapanya

Chairman, Bangkok Insurance Pcl.

Director Managing Director Education:

Chairman, Charoong Thai Wire &

-

Master of Finance, University of Illinois, USA

Cable Pcl.

-

Director Certification Program Class 78/2006, Thai Institute of Directors

Chairman, Furukawa Metal (Thailand) Pcl.

1989 - Present

Director, Amata Corporation Pcl.

1968 - Present

Director, Bangkok Life Assurance Ltd.

1968 - Present

Vice Chairman, Thai Reinsurance Pcl.

Shareholding: 0.18% Family Relationship between Management: -

Sister of Mr. Chai Sophonpanich’s wife

Work Experience: -

Managing Director, Bumrungrad Hospital Pcl.

* Shareholding as at 19 February 2007, including spouse and minors

75

Annual Report 2006 Bumrungrad Hospital Public Company Limited

Mr. Curtis John Schroeder

Mr. Chatri Sophonpanich

Age: 51 years

Age: 73 years

Position in the Company:

Position in the Company:

Director

Director

Group Chief Executive Officer Education: -

-

Master’s degree in Health Services Administration, University of Southern California, USA

-

Education: Thammasart University -

Director Certification Program Class 78/2006,

the Philippines -

0.01% None

Family Relationship between Management: Group Chief Executive Officer, Bumrungrad Hospital Pcl.

1987 - 1993

Shareholding: 0.50%

Work Experience: 1997 - Present

Certificate of Banking from Institute of Bankers, London, England

Family Relationship between Management: -

Honorary Doctorate of Philosophy in Business Administration, De La Salle University,

Thai Institute of Directors Shareholding:

Honorary Doctorate in Business Administration,

-

Brother of Mr. Chai Sophonpanich

Work Experience:

Director, USC University Hospital,

1999 - present

Chairman, Bangkok Bank Pcl.

Los Angeles, California

1999 - present

Chairman, Bangkok Entertainment

Present

Chairman, Dusit Thani Pcl.

1963 - Present

Director, Bangkok Bank Pcl.

Co., Ltd. Mr. Dhanit Dheandhanoo, MD Age: 71 years Position in the Company: Director

Mr. Anant Tejavej, MD

Chairperson of the Medical Director Education:

Age: 73 years Position in the Company:

-

Doctor of Medicine, Mahidol University

-

Board Certification: Neurosurgery, England

Shareholding:

Director Education: -

0.02%

Surgery), Edinburgh University, Scotland

Family Relationship between Management: -

None

-

Work Experience: -

MB ChB (Bachelor of Medicine and Bachelor of DCH, England FRCP (Fellow of the Royal College of Physicians), Edinburgh, Scotland

Clinical Professor Emeritus, Director, Neurology

-

Surgery Department, Ramathibodi University

Director Accreditation Program Class 47/2005, Thai Institute of Directors

Shareholding: 0.14% Family Relationship between Management: -

None

Work Experience: Emeritus Professor, Pediatrics, Medical Science Faculty, Mahidol University

* Shareholding as at 19 February 2007, including spouse and minors

76

Annual Report 2006 Bumrungrad Hospital Public Company Limited

Mr. John Yangpichitt, MD

Mrs. Kulathida Sivayathorn

Age: 71 years

Age: 54 years

Position in the Company:

Position in the Company:

Director

Director

Education:

Education:

-

MRCOG (Member of Royal College of Obstetricians

-

Bachelor of Science in Chemistry, Stetson University, USA

and Gynecologists), Queens University, England

-

Chief Financial Officer Certification Program,

-

Advanced Management Program, Harvard Business

-

Director Certification Program Class 3/2000, Thai

FRCOG (Fellow of Royal College of Obstetricians and Gynecologists), Queens University, England

Federation of Accounting Professions, Class 6/2006

Shareholding:

School, 1997

Family Relationship between Management: -

None

Institute of Directors Shareholding:

Work Experience:

-

Independent physician, Ruamrudee Clinic

Family Relationship between Management: -

Ms. Khun Swanya Dej-Udom, MD

None

Work Experience: 1976 - Present

Age: 61 years

Current Position: Executive Vice President, Bangkok Bank Pcl.

Position in the Company: Director Education:

Mr. Chong Toh

-

Doctor of Medicine, Mahidol University

-

Board Certification:

-

-

Internal Medicine

-

Cardiology

Age: 39 years Position in the Company: Director Education:

Director Accreditation Program Class 47/2005,

-

Thai Institute of Directors Shareholding:

institute of Technology, USA -

0.04% None

Shareholding: -

Work Experience:

Family Relationship between Management:

1980 - Present

Cardiologist, Bumrungrad Hospital Pcl.

1992 - Present

Cardiologist, Paat Pattana Medical Center

Present

Bachelor of Arts in Philosophy, Politics and Economics, Oxford University, England

Family Relationship between Management: -

Master of Science in Management, Massachusetts

-

None

Work Experience: 2005 - Present

Executive Vice President,

Academic Director,

International Banking Group,

The Heart Foundation of Thailand

Bangkok Bank Plc.

Under Royal Patronage

2005 - Present

Executive Chairman, Bualuang Securities Plc.

2001 - Present

Director, Bualuang Securities Plc.

2000 - Present

Director, Asia Cement Plc.

2001 - 2005

President, Bualuang Securities Plc.

1999 - 2005

President, Bualuang Finance Co., Ltd.

2000 - 2001

Director, Bualuang Finance Co., Ltd.

* Shareholding as at 19 February 2007, including spouse and minors

77

Annual Report 2006 Bumrungrad Hospital Public Company Limited

Sultan Ahmad Bin Sulayem

Mr. Soradis Vinyaratn

Age: 52 years

Age: 67 years

Position in the Company:

Position in the Company:

Director

Director

Education: -

Member of Audit Committee

Master’s degree in Economics, Temple University, Philadelphia, USA

Education: -

Shareholding:

Banking, London, England

-

-

Family Relationship between Management: -

Bank Management, City of London College of

None

Director Accreditation Program Class CP on 5 May 2005, Thai Institute of Directors

Shareholding:

Work Experience:

0.02%

-

Executive Chairman, Dubai Ports

-

Executive Chairman, Customs and Free Zone Corporation

Family Relationship between Management: -

None

Work Experience:

-

Chairman, Nakheel LLC

-

Chairman, Tejari.com

1982 - present

-

Chairman, Dubai Metals and Commodities Center

Vice Chairperson, Landmark Hotel Group

1957 - 1990

Executive Vice President, Bangkok Bank Pcl.

Ms. Sophavadee Uttamobol Age: 47 years

Mr. Boonpakorn Chokwathana

Position in the Company:

Age: 72 years

Director

Position in the Company:

Chairperson of Audit Committee Education: -

Member of Audit Committee

Master of Business Administration, Chulalongkorn University

-

Director Accreditation Program Class 5/2003, Thai Audit Committees Program Class 2/2004, Thai The Role of the Chairman Program Class 14/2006,

Shareholding:

Director Accreditation Program Class 3/2003, Thai Institute of Directors

Shareholding: 0.04%

-

Family Relationship between Management:

Family Relationship between Management: -

Director Certification Program Class 68/2005, Thai Institute of Directors

-

Thai Institute of Directors

Bachelor’s Degree of Economics, University of Nottingham, England

-

Institute of Directors -

Education: -

Institute of Directors -

Director

None

-

None

Work Experience:

Work Experience:

-

Chairperson, New City (Bangkok) Pcl.

1991 - present

Legal Consultant, Dhamrongtham

-

Chairperson, Dr. Tiem Chokwathana Foundation

Law Office

-

Vice Chairperson, Saha Pathanapibul Pcl.

2001 - present

Director, S&P Syndicate Pcl.

-

Vice Chairperson, Saha Pathana Inter-Holding Pcl,

-

Director, IT City Pcl.

* Shareholding as at 19 February 2007, including spouse and minors

78

Annual Report 2006 Bumrungrad Hospital Public Company Limited

Management Mrs. Linda Lisahapanya

Mr. Curtis John Schroeder

Age: 55 years

Age: 51 years

Position in the Company:

Position in the Company:

Director

Director

Managing Director

Group Chief Executive Officer

Education:

Education:

-

Master of Finance, University of Illinois, USA

-

Director Certification Program Class 78/2006, Thai Institute of Directors

-

Master’s degree in Health Services Administration,

-

Director Certification Program Class 78/2006,

University of Southern California, USA

Shareholding:

Thai Institute of Directors

0.18%

Shareholding:

Family Relationship between Management: -

Sister of Mr. Chai Sophonpanich’s wife

Work Experience:

0.01% Family Relationship between Management: -

Managing Director, Bumrungrad Hospital Pcl.

None

Work Experience: 1997 - Present

Mr. Dhanit Dheandhanoo, MD

Group Chief Executive Officer, Bumrungrad Hospital Pcl.

Age: 71 years

1987 - 1993

Position in the Company:

Director, USC University Hospital, Los Angeles, California

Director Chairperson of the Medical Director Education:

Age: 66 years

-

Doctor of Medicine, Mahidol University

-

Board Certification: Neurosurgery, England

Shareholding:

Position in the Company: Group Medical Director Education:

0.02% Family Relationship between Management: -

Mr. Sinn Anuras, MD

-

MD Chulalongkorn University

-

Board Certifications:

None

- American Board of Internal Medicine

Work Experience:

- American Board of Gastroenterology

Clinical Professor Emeritus, Director, Neurology Surgery Department, Ramathibodi University

Shareholding: Family Relationship between Management: -

None

Work Experience: 1987-1994

Vice Chairperson for Medical Affair University Medical Center Lubbook, Texas

* Shareholding as at 19 February 2007, including spouse and minors

79

Annual Report 2006 Bumrungrad Hospital Public Company Limited

Mr. Karoon Mekanontchai, MD Age: 57 years

Mr. Carl Stanifer Age: 58 years

Position in the Company:

Position in the Company:

Medical Director

Group Chief Financial Officer and Director of

Education:

International Development

-

MD, Mahidol University

-

Board Certification: Orthopedic Surgery

Education: -

Shareholding:

Administration at the University of Cincinnati, USA

-

-

Family Relationship between Management: -

None

Bachelor’s Degree in Accounting and Finance, Cumberland College, USA

Shareholding:

Work Experience: 1989

Graduate studies in Health Planning and

0.02% Orthopedics Consultant, Bumrungrad Hospital Pcl.

1983-1998

Orthopedics and Rehabilitation

1978-1993

Full time physician, Saraburi Province

Medical School Mahidol University Hospital

Family Relationship between Management: -

None

Work Experience: -

Chairperson and President of VISTA Healthcare, Singapore

-

Senior Vice President, Operations of International Healthcare Division, Tenet Healthcare Corporation

Mrs. Chamaree Chuapetcharasopon , MD

-

Experience in Saudi Arabia, Australia and Malaysia

Age: 52 years Position in the Company:

Mr. Dennis Brown

Senior Associate Medical Director Education:

Age: 53 years Position in the Company:

-

MD, Mahidol University, Ramathibodi Hospital

Group Chief Operating Officer

-

Board Certification: General Radiology, Thailand

Chief Executive Officer, Bumrungrad International

-

Fellowships:

Limited

-

Vascular and Interventional Radiology, USA

-

Body Imaging, USA

Education: -

Shareholding:

Stanford University, USA

-

-

Family Relationship between Management: -

None

Company Director’s Diploma, University of New England, Australia

-

Work Experience: 1998-present

Executive Program, Graduate School of Business,

Master of Business Administration in Health and Hospital Administration, University of Florida, USA

Executive Committee, Royal College of Radiologists of Thailand

1994-present

Consultant Radiologist, National

1990-1995

Instructor, Department of Radiology,

Cancer Institute Ramathibodi Hospital, Mahidol

Shareholding: Family Relationship between Management: -

None

Work Experience: 2003-2004

University

Chief Executive Officer, BFT Investments, LLC.

1980-1984,

Senior Vice President,

1985-2003

Operations Northern Region, Tenet Healthcare Corporation Chief Executive Officer, Australian Medical Enterprises, Australia Chief Executive Officer, Mount Elizabeth Hospital, Ltd.

* Shareholding as at 19 February 2007, including spouse and minors 80

Annual Report 2006 Bumrungrad Hospital Public Company Limited

Mr. James Matthew Banner

Ms. Janice Chan Mun Yee

Age: 59 years

Age: 45 years

Position in the Company:

Position in the Company:

Chief Executive Officer

Chief Operating Officer

Education: -

Education:

Master of Hospital Administration, Medical College of Virginia, USA

Shareholding:

Master Degree, George Washington University

-

-

Family Relationship between Management:

Family Relationship between Management: -

-

Shareholding:

None

-

None

Work Experience:

Work Experience:

2003-2005

-

BUPA Health Care Asia (previously VISTA)

-

Director and CEO of Subang Jaya Medical Center, Kuala Lumpur

Director of Operations, Bumrungrad Medical Center

2000-2003

Division Director, Hospital Administrative, Bumrungrad Medical Center

Mrs. Khor Lee Chan Age: 52 years Position in the Company: Chief Financial Officer Education: -

Bachelor’s degree, Victoria University of Wellington, New Zealand

Shareholding: 0.00% Family Relationship between Management: -

None

Work Experience: 1987-1994

Chief Financial Officer, Mount

1984-1986

Chief Accountant, Scotts Holding (S)

1982-1983

Internal Manager, Diethelm

Elizabeth Hospital Ltd. Pte. Ltd Singapore Pte. Ltd.

* Shareholding as at 19 February 2007, including spouse and minors 81

Annual Report 2006 Bumrungrad Hospital Public Company Limited

Details of Directorship in Subsidiaries and Related Companies Subsidiaries

BMC

VITALLIFE

BIL

Directors 1. Mr. Chai Sophonpanich

X

X

2. Mr. Chanvit Tanphiphat, MD

/

3. Mrs. Linda Lisahapanya

//

4. Mrs. Kulathida Sivayathorn

/

5. Mr. Dhanit Dheandhanoo, MD

//

6. Mr. Chong Toh

/

7. Mr. Boonpakorn Chokwathana

/

8. Mr. Curtis John Schroeder

//

/

9. Mr. Sinn Anuras, MD

//

/

/

/

10. Mrs. Khor Lee Chan

/

11. Mrs. Anongnuth Chiangpradit, MD

//

12. Mr. Carl Stanifer

X

/

Notes 1.

/ = Director

2.

GCS does not appear in this table as no director, chairperson or management of the Company holds a directorship

X = Chairperson

// = Management

position in GCS.

(2)

Election of Directors and Management

The Company does not have a nominating committee for the selection of directors and management. The election of any members of the Board of Directors must be approved by the shareholders’ meeting, in accordance with the following rules and principles: 1.

Each shareholder has one vote for one share.

2.

The election of directors may be either by voting for each individual director, or by voting for a group of directors, whichever way the shareholders’ meeting deems appropriate. For each resolution, each shareholder must exercise all of his/her votes for one individual director or for one group of directors. Votes by each shareholder may not be split between any directors or any groups of directors.

3.

The election passes with the majority of the votes. If the number of votes is equal, the chairperson of the meeting has the final vote.

The process for selection of independent directors is the same as the selection of directors and management.

The fundamental qualifications of independent directors are as follows: 1.

Is an external director with no management or employment position in the Company, subsidiaries, affiliates or related companies

2.

Is not a management of the Company, subsidiaries, affiliates or related companies

3.

Does not have direct or indirect benefits or interests, either financially or managerially, in the Company, subsidiaries, affiliates or related companies

4.

82

Is independent from the major shareholders, management and related parties

Annual Report 2006 Bumrungrad Hospital Public Company Limited

5.

Is able to protect the interest of every shareholder fairly

6.

Is able to prevent transactions with conflict of interest between the Company and related parties

7.

Holds shares accounting for not more than 5 percent of paid-up capital of the Company, subsidiaries, affiliates or related companies (Including shares held by related parties).

(3)

Remuneration of Directors, Audit Committee and Management

Directors’ Remunerations and Audit Committee’s Remuneration Directors’ remunerations and Audit Committee’s remunerations for the year ended 31 December 2006 for 15 directors are as follows:

Director’s Remuneration

Name

Number of Meetings Attending/ Invitation

Audit Committee’s Remuneration

Annual Meeting Remuneration Remuneration

Total

Number of Meetings Attending/ Invitation

Total Remuneration Meeting Remuneration

1

Mr. Chai Sophonpanich

6/6

280,000

240,000

520,000

520,000

2

Mr. Chanvit Tanphiphat, MD

6/6

240,000

180,000

420,000

420,000

3

Mrs. Linda Lisahapanya

6/6

200,000

150,000

350,000

350,000

4

Mr. Curtis Schroeder

6/6

200,000

150,000

350,000

350,000

5

Mr. Dhanit Dheandhanoo, MD

5/6

200,000

125,000

325,000

325,000

6

Mr. Chatri Sophonpanich

1/6

200,000

25,000

225,000

225,000

7

Mr. Anant Tejavej, MD

5/6

200,000

125,000

325,000

325,000

8

Mr. John Yangpichitt, MD

6/6

200,000

150,000

350,000

350,000

9

Ms. Khun Sawanya Dej-Udom, MD

6/6

200,000

150,000

350,000

350,000

10 Mrs. Kulathida Sivayathorn

5/6

200,000

125,000

325,000

325,000

11 Mr. Chong Toh

5/6

200,000

125,000

325,000

325,000

12 Sultan Ahmed Bin Sulayem*

0/6

120,000

0

120,000

120,000

13 Ms. Sophavadee Uttamobol

6/6

200,000

150,000

350,000

5/5

200,000

550,000

14 Mr. Soradis Vinyaratn

6/6

200,000

150,000

350,000

5/5

125,000

475,000

15 Mr. Boonpakorn Chokwathana

6/6

200,000

150,000

350,000

5/5

125,000

475,000

3,040,000

1,995,000 5,035,000

280,000 5,485,000

* Sultan Ahmed Bin Sulayem was appointed the Company’s director by the Extraordinary General Meeting of Shareholders No. 1/2006 held on 15 May 2006

Directors’ remuneration represents the benefits paid to the Company’s directors, exclusive of salaries and related benefits payable to the management. The above remunerations have been approved by the shareholders.

83

Annual Report 2006 Bumrungrad Hospital Public Company Limited

Remunerations of Management In 2006, the total remuneration of the 11 executives of the Company and its subsidiaries amounted to Bt 121.8 million. The remuneration represents the salaries and benefits paid to the management.

(4)

Corporate Governance

The Company realizes the importance of good corporate governance, and is committed to follow the Principles of Good Governance Guidelines provided by the Stock Exchange of Thailand as follows: 1.

Corporate governance policy The Board of Directors sees the importance of good corporate governance, and has the intention to follow such policies for the long-term benefits of shareholders, under the regulations and laws and business ethics.

The Company is currently in the process of drafting its Corporate Governance Manual and Code of Ethics.

The draft is expected to be completed and to be proposed to the Board for approval and implemented in 2007.

2.

Shareholders’ rights The Company acknowledges the importance of all shareholders’ rights, including equitable treatment of major and minority shareholders. The Company also emphasizes on providing correct, timely, equal and transparent information sufficient for all shareholders and investors to make their investment decision.

For every shareholder meeting, the Company sends invitation letters to shareholders in advance to inform of the meeting agenda and Board of Directors’ opinion on each agenda, with supporting documents and information sufficient to facilitate shareholders in making their decisions. If the shareholders cannot attend, the shareholders have the right to authorize a person or an independent director as their proxy to attend the meeting on their behalf.

During the shareholders’ meeting, the Chairman of the Meeting gives all shareholders the right to comment, ask questions or give opinions and suggestions on all agendas. The Chairman and management see the importance of every question and give precise and clear answers. The Company also has minutes of the shareholders meeting which are correct and complete available for shareholders to verify.

3.

Stakeholders’ rights The Company recognizes the importance of the rights of each stakeholder, and intends to interact with each party fairly. The important stakeholders are as follows: Customers / Patients

The Company provides patient care in an ethical manner, and at the best quality possible. The hospital’s Ethics Committee protects patients’ rights. In addition, the Company has a department to monitor and improve the quality of the care provided to all patients, taking into consideration patients’ needs and suggestions.

Suppliers / Contractors

The Company abides by the contracts with all suppliers and contractors and ensures timely payment to all suppliers and contractors.

84

Annual Report 2006 Bumrungrad Hospital Public Company Limited

Employees

The Company believes that its employees are valuable resources and therefore gives all employees the equal opportunity in their employment. The Company has the policy to provide employees with appropriate compensation and to develop human resources through continuous education and regular training programs.

Competitors

The Company competes with competitors fairly and in accordance with the rules and regulations. The Company focuses on competition in the area of quality and efficiency of the service for the best benefit of customers and patients.

Creditors

The Company strictly abides by loan agreements, loan covenants and ensures timely payments.

Community

The Company has social responsibilities, including environmental responsibilities, and has set up an environmental policy to communicate to employees its views on environment preservation and encourages employees to help protect global environment. The Company is committed to controlling environmental impact to neighboring communities and efficiently utilizing natural resources.

In addition, the Company has various activities to support the community through its Bumrungrad Hospital Foundation, including the UNICEF Youth Career Development program to develop nurse aids and the “80 Hearts Project” for heart disease children.

4.

Shareholders’ meetings The Company understands the rights of every shareholders, including major and minority shareholders.

The Board of Directors therefore sees the importance of shareholders’ meetings and emphasizes on giving equal and transparent information sufficient for shareholders to make their decision on each of the agenda. In the 2006 annual general shareholders’ meeting, 12 directors attended the meeting to provide information and details to shareholders.

In every shareholders’ meeting, in addition to the Board of Directors, which includes the Chairperson of Audit Committee, management of the Company also attended the meeting to answer questions that shareholders may have. The Chairperson of the meeting encouraged and gave all shareholders equal opportunity to ask questions, express their views, and make suggestions without limitation on the time of the meeting. The Company has recorded the important issues raised in the minutes of the meeting.

5.

Leadership and vision The Board of Directors comprises of qualified directors with extensive experience in various fields. Every director participates in the setting of the Company’s vision, mission, strategies, goals, business plans and budgets. The Board of Directors also ensures that the plans are carried out efficiently and effectively, to ensure the maximization of the Company’s value and stability to shareholders. The Board of Directors meets quarterly to review the management’s report on the Company’s operations.

Moreover, the Board of Directors has set roles and responsibilities for various committees, including internal control system and internal audit, as well as has communicated such roles and responsibilities to all levels of management and employees.

85

Annual Report 2006 Bumrungrad Hospital Public Company Limited

6.

Conflict of interest To prevent any conflicts of interest, the Board of Directors pays special attention to the consideration of transactions which conflicts of interest may arise, and to related parties transaction, as well as strictly follows the Stock Exchange of Thailand rules and regulations, with pricing and other conditions on an armslength basis. Details of the transactions, including amount, contracting party, and reasons for entering into the transactions are disclosed in financial statements, annual report, and the 56-1 filing.

7.

Business ethics The Company’s mission statement is “We provide world class healthcare with care and compassion”. In addition, the Company has guiding principles, which are communicated to all employees as follows: 1. We treat our patients as we would our family members.

2. We embrace cultural diversity.

3. We are trusted, honest and ethical in all our dealings.

4. We work as a team.

5. We continually improve the quality of everything we do.

6. We strive for a happy working environment with respect and mutual trust.

7. We encourage professional development and innovation through a constant process of learning.

8. We provide efficient healthcare to bring value to our external and internal customers.

9. We are a good corporate citizen.

All employees are expected to observe and follow these guiding principles.

8.

Balance of power in the Board of Directors The Company has 3 directors who are management: 1. Mrs. Linda Lisahapanya 2. Mr. Dhanit Dheandhanoo, MD 3. Mr. Curtis John Schroeder There are 9 directors who are not management: 1. Mr. Chai Sophonpanich 2. Mr. Chanvit Tanphiphat, MD 3. Mrs. Kulathida Sivayathorn 4. Mr. John Yangpichitt, MD 5. Ms. Khun Swanya Dej-Udom, MD 6. Mr. Anant Tejavej, MD 7. Mr. Chong Toh 8. Mr. Chatri Sophonpanich 9. Sultan Ahmed Bin Sulayem The Company has 3 directors who are independent directors and members of the Audit Committee: 1. Ms. Sophavadee Uttamobol 2. Mr. Soradis Vinyaratn 3. Mr. Boonpakorn Chokwathana The 3 independent directors account for 20% of total Board of Directors. The Company plans to increase the number of independent directors to not less than 1/3 of all directors in the future.

86

Annual Report 2006 Bumrungrad Hospital Public Company Limited

9.

Aggregation and segregation of positions Chairperson of the Board of Directors is not the same person as the Managing Director, in order to segregate the duties of policy setting and control from the day-to-day management.

10.

Directors and management remuneration The Company does not yet have a compensation committee. The directors’ remunerations are in the form of annual remunerations and meeting fees, which have already been approved by the shareholders.

Management’s remunerations are in the form of salaries and bonus, and are based upon both the Company’s performance and individual performance.

The details of remunerations for directors and management are in Section Remuneration of Directors, Audit Committee and Management.

11.

Board of Directors’ meetings The Board of Directors has a regular meeting every quarter, and has extraordinary meetings as necessary.

The Secretary to the Board prepares and sends invitation letters to directors at least 7 days in advance, together with all the agendas of the meeting and other necessary documents, so that the directors will have sufficient time to study the information. Normally, each meeting takes approximately 2 hours. In 2006, there were 6 meetings, with details of the attendance of each director in the table in Section Remuneration of Directors, Audit Committee and Management.

The Company has documented minutes for every board meeting, which are approved at the next board meeting. The Company keeps the minutes available for directors and relevant persons’ verification.

12.

Committees The Board of Directors has set up committees to assist with specific tasks, including the following: Audit Committee, consisting of 3 independent directors appointed by the Board of Directors. In 2006, Audit Committee held 5 meetings and reported their meeting results to the Board of Directors. The Audit Committee members and their responsibilities are detailed in Management Structure Section.

Governing Board, appointed by the Board of Directors, consisting of 3 directors, 3 management and 7 physicians. In 2006, Governing Board held 6 meetings. The Governing Board members and their responsibilities are detailed in Management Structure Section.

Investment Committee, appointed by the Board of Directors, consisting 1 independent director, 2 nonexecutive directors and 2 executive directors. In 2006, the Investment Committee held 2 meetings. The Investment Committee members and their responsibilities are detailed in Management Structure Section.

The Company does not yet have a compensation committee.

13.

Internal control and internal audit systems The Company has given importance to internal control and internal audit systems, by establishing an internal audit unit, with the primary objective to support and develop effective internal control of the organization, in order to minimize operational risks, and to ensure quality of the work process and

87

Annual Report 2006 Bumrungrad Hospital Public Company Limited

operations. Emphasis is on effectiveness and efficiency, and appropriateness of expenses and costs, including operations in accordance to the policy and/or requirements of the management.

To ensure the independence of the internal audit unit and the balance of power, the internal audit unit reports directly to the Audit Committee.

14. Directors’ report Report of the Accountability of the Board of Directors to the Company’s Financial Reports The Board of Directors is responsible for the consolidated financial statements of the Company and its subsidiaries and information as appears in the annual report. The financial statements have been prepared in accordance with generally accepted accounting principles, using appropriate and consistent accounting policies. The financial statements have been prepared with caution and have been evaluated for appropriateness of the overall presentation of the financial statement. There was sufficient information disclosure in the notes to the financial statements.

The Board of Directors has set up an efficient and effective internal control system to ensure that all accounting transactions have been recorded correctly and comprehensively, and that there has been a record-keeping system of assets to protect the Company from any material fraud or damage.

The Board of Directors has the opinion that the overall internal control system of the Company was at a satisfactory level, which resulted in confidence in the reliability of the financial statements of the Company and its subsidiaries as at 31 December 2006.

15.

Relations with investors The Board of Directors sees the importance of the disclosure which is correct, complete, reliable, timely, transparent and dispersed, including the disclosure of financial information and general information which are important to investors’ decision making process. The Company also ensures that the disclosures are in accordance with the Securities and Exchange Commission, Thailand and Stock Exchange of Thailand’s rules and regulations.

The Company has various ways of communicating with investors and shareholders, including participating in roadshows and investor conferences, organizing quarterly analyst meetings, arranging investor meetings and company visits, and providing an investor relations section website with updated information available both in Thai and English.

The Company has assigned personnel to be responsible for investor relations activities to facilitate interested investors and shareholders in this regard. Interested investors or shareholders can inquire regarding the Company’s information at the following: Investor Relations Telephone: 0 -2667- 2010 Email address: ir@bumrungrad.com Website: www.bumrungrad.com

88

Annual Report 2006 Bumrungrad Hospital Public Company Limited

(5)

Internal Control of Information The Company has the policy regarding management using internal information for personal benefits as follows: 1. According to Company’s rules and regulations, directors are required to inform the Company immediately in the event that they may have any interests in any transactions being entered into by the Company, or that there is an increase or decrease in their holding of shares or bonds of the Company or subsidiaries.

2. Directors and management must prepare and disclose securities holding report to the Securities Exchange Commission within the required time.

Penalties for violation include the following: 1. Verbal warning for corrective action 2. Report to shareholders’ meeting for consideration 3. Compensation for any damages 4. Disclosure to Securities and Exchange Commission and The Stock Exchange of Thailand

(6)

Internal Control See Report of Audit Committee (Page23)

(7)

Dividend Policy 1. The Company’s dividend policy is as follows: 1.1 When the Company has net profit which can be distributed to shareholders, the preferred shareholders will receive dividends before the ordinary shareholders. In any year that dividends distributed to the preferred shareholders reaches 15% of the capital represented by the preferred shares, the balance of the profit shall be distributed to the ordinary shareholders at any amount as determined by the shareholders meeting.

In any year that the Company is able to distribute dividends of more than 15% of its capital, the shareholders of both types shall receive the dividends equally.

1.2 For the payment of dividends, the Board of Directors is to follow the resolution of the shareholders’ meeting.

1.3 For every dividend payment, the Company shall reserve at least 5% of the profit as appropriated statutory reserve, until the reserve accounts for 10% of the Company’s capital.

1.4 Accrued dividends are not entitled to any interest payment.

2. Subsidiaries’ dividend policy is as follows: 2.1 When the company has profit which can be distributed to shareholders, the company is eligible to pay dividends to its shareholders at any amount in accordance with the resolution of shareholders’ meeting.

2.2 Accrued dividends are not entitled to any interest payment.

For the year 2006, the Company paid an interim dividend to preferred and ordinary shareholders from the net profit of 1 January 2006 89

Annual Report 2006 Bumrungrad Hospital Public Company Limited

until 30 June 2006 of Bt 0.30 per share, totaling to Bt 219 million. In addition, on 27 February 2007, the Board of Directors has approved dividend payment to preferred and ordinary shareholders of Bt 0.45 per share, amounting to Bt 329 million. Such amount is subject to shareholders’ approval in shareholders’ meeting to be held in April 2007. Therefore, the total dividend payment for the operation of the year 2006 is expected to be Bt 0.75 per share, which is 50.0% dividend pay-out ratio. For the year 2005, the Company paid dividend of Bt 0.75 per share, which is 52.0% of the Company’s 2005 net profit.

6.

Related Parties Transactions 1.

Characteristics of Related Parties Transactions The Company has transactions with its subsidiaries, affiliates and related companies as detailed in note to financial statement no. 7.

For the period ending 31 December 2005 and 31 December 2006, the Company and subsidiaries entered into a number of transactions with related parties that may have conflict of interest with the Company and its subsidiaries. These connected transactions include normal course of business transactions and other transactions, and can be summarized as follows:

90

BKI

shareholding as at 19 Feb

Bangkok Bank Pcl. (BBL)

services received from

the Company, with 13.19%

Common director

Company invested in various

market rate.

system. The fees paid to BBL are at the

from efficient use of credit card payment

infrastructures to maximize the benefits

to BBL

BBL is the credit card service provider which the Company has always used. The

commission fees paid

- Bank credit cards

Expenses 44.3

transaction is reasonable.

the opinion that the

The Audit Committee has

BBL

36.5

the opinion that the transaction is reasonable.

business, charging at normal price and benefits as customers in general.

20.9

services received from

22.8

The Audit Committee has

- Revenues from hospital

It is the Company’s normal course of

Revenues

to BKI was at the rate which BKI offers to its customers in general.

transaction is reasonable.

used. In addition, the insurance premium that the Company and subsidiaries paid

subsidiaries paid to BKI

- Insurance fees which the

The Audit Committee has

transaction is reasonable.

benefits as customers in general.

the opinion that the

The Audit Committee has the opinion that the

business, charging at normal price and

Reason for the Transaction

It is the Company’s normal course of

Pricing Policy

BKI is the insurance provider which the

18.5

21.3

Dec 2006

ended 31

For the year

Company and subsidiaries have always

15.7

22.1

For the year ended 31 Dec 2005

Amount (Baht Million)

Company and

Expenses

- Revenues from hospital

is the major shareholder of

(BKI)

2007

Revenues

Description

Common director, and BKI

Relationship

Bangkok Insurance Pcl.

Related Company

Bumrungrad Hospital Public Company Limited Annual Report 2006

91

92

the opinion that the transaction is reasonable.

with the actual cost of the resources used.

restructuring agreement.

approved by the shareholders.

million principal of convertible bonds.

The Transaction has been

Interest rates are in accordance with debt

The Company paid interest on Baht 550

hospital management

36.9

patients’ families. The rental fees are reasonable.

received from BIL

common director

(BIL)

9.9

17.5

approved by shareholders.

to support its hospital business and to use for parking and serviced apartments for

The Transaction has bee

Reason for the Transaction

The Company rented a building from BBL

Pricing Policy

The Audit Committee has

- Consulting fees on

31.5

20.1

17.5

Dec 2006

ended 31

For the year ended 31 Dec 2005

For the year

Amount (Baht Million)

The Company charges the fees in relation

Revenues

Subsidiary which the

Company holds 51% with

bonds paid to BBL

- Interest on convertible

building paid to BBL

- Rental of land and

Description

Bumrungrad

Relationship

International Limited

(Cont’d)

Bangkok Bank Pcl. (BBL)

Related Company

Annual Report 2006 Bumrungrad Hospital Public Company Limited

Annual Report 2006 Bumrungrad Hospital Public Company Limited

Other transactions On 15 May 2006, the Company’s shareholders approved waiver of the Company’s right to subscribe to BIL’s new shares in order to allow Bangkok Bank Pcl to subscribe to new shares. Such waiver is a related transaction, with the details as follows: Related Company:

Bangkok Bank Pcl. (BBL)

Relationship:

BBL, including its subsidiary, Sinnsuptawee Asset Management Company Limited, are major shareholders of the Company holding 136,158,279 shares or 18.65% of paid-up capital of the Company as of 20 January 2006. As a potential investor in Bumrungrad International Limited (BIL), a 99.99% owned subsidiary of the Company, BBL is considered a Connected Person.

Description:

- Waiver of rights by the Company to subscribe to 1,176,469 shares in BIL in order to allow BBL to subscribe to the shares.

- BIL offers new 1,176,469 shares to BBL.

Amount (Baht Million):

The value of the Transaction is approximately Baht 180.6 million

Pricing Policy

The subscription price of the new shares of BIL of Baht 153.52 was calculated based on the accumulated cost of investment by BH in BIL plus an agreed upon rate of return. This is in substantial premium to BIL’s book value per share of Baht 120.18 as of 31 December 2005, which is in line with IFA report.

Reasons for the transaction:

The Transaction was approved by the shareholders’ meeting on 15 May 2006

2. The Necessity and Rationale of the Related Parties Transactions The Company has entered into related parties transactions to support the normal business of the Company. The rental of building from Bangkok Bank Pcl (as detailed in notes to financial statements no. 7) has helped the Company to maintain and expand its international patient base. The corporate contracts and insurance contracts have helped expand the Company’s client base.

3. Approval Process for Entering into Related Parties Transactions For contracts which were entered into as part of normal courses of business, the transactions are approved through the normal process in accordance with the Company’s policy. In addition, the Audit Committee has considered the appropriateness and reasonableness of these transactions. For other transactions which are significant in size as per the definition of the Stock Exchange of Thailand, Board of Directors’ and/or shareholders’ approvals are obtained in accordance with rules and regulations, where management and/or directors with vested interests are not allowed to vote.

93

Annual Report 2006 Bumrungrad Hospital Public Company Limited

4. Policy on Related Parties Transactions in the Future The Company will continue to have related parties’ transactions, as these transactions are beneficial to the Company as explained earlier. The Company will strictly abide by the Company’s policy, as well as the rules and regulations of the Stock Exchange of Thailand. In addition, the Company will emphasize the transparency of the related parties transactions, and will protect the highest benefit of the Company.

7.

Management Discussion and Analysis Page 20 - 22

8.

Financial Statements 8.1 Financial Statements Page 25- 59 8.2 Audit Fees (a) Audit Fees For the year 2006, the Company and subsidiaries have paid the audit fee in the amount of Bt 2,140,000. The 2006 audit fee has been approved by the shareholders’ meeting. (b) Non-Audit Fees For the year 2006, the Company has paid non-audit fee of Bt 85,000 as special audit fee for BH Tower.

94

Annual Report 2006 Bumrungrad Hospital Public Company Limited

95

Annual Report 2006 Bumrungrad Hospital Public Company Limited

96