Bangkok Medical Center - listed companybdms.listedcompany.com/misc/ar/ar2005.pdf · 2008-09-10 ·...

Bangkok Medical CenterBANGKOK DUSIT MEDICAL SERVICES Public Company Limited

ANNUAL REPORT 2005

"Bangkok Medical Center is where advances in medicine meet with compassion"

Contents

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12

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18

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31

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41

49

54

57

59

62

ë Message from the Board of Directors

ë Board of Directors' Profile

ë Report of the Audit Committee

ë General Information

ë Juristic Persons in which the Company Holds 10% of Shares or Greater

ë Financial Overview

ë Nature of Business

ë Research and Development

ë Industry Outlook and Competitions

ë Future Projects

ë Risk Factors

ë Shareholders Structure and Management

ë Corporate Governance

ë Transactions with Related Parties

ë Explanation and Analysis of Operational Results and Financial Status

ë Responsibility of the Board of Directors to the Financial Statements

ë Financial Statements and Auditor Report

2

The Board of Directors is pleased to present our dear shareholders with the operational results of Bngkok

Dusit Medical Services Public Company Limited for 2005 as follows:

All countries have been affected by the gradually rising oil prices and cost of living in 2005, more serious

natural disasters, political instability in many countries and new epidemics, resulting in stagnant and receding

businesses. Nevertheless, people continue to have illnesses while medical advancements are still being made.

People have become more concerned about their health and private hospitals need to keep themselves abreast

of new medical developments. They could not afford to remain idle as before. Hospitals need the latest medical

equipments which allow early diagnosis, expert clinicians in each tract for the diagnosis and the treatment of

diseases involvingall systems of the body. Bangkok Hospital Group is trusted by patients for this very reason.

We have a very well established medical credibility and we continue to improve the quality of our services and

upgrade existing safety and environmental standard achievements, partly to celebrate our 34th Anniversary

in 2006.

The year 2005 has been a year of expansion for Bangkok Hospital Group. Firstly, Her Majesty Queen Sirikit

graciously presided over the grand opening ceremony of Bangkok Heart Hospital on Friday, the 26th of August

2005. Subsequently, the company has installed the Brilliance CT 64-Channel Configuration Equipment, the

latest medical innovation which allows unobtrusive inspection of cardiac vessel at Bangkok Heart Hospital.

It was the first to be installed in Thailand and South East Asia, in order to meet the demands and enhance

diagnosis efficiency.

In addition, the company expanded the new service building "Bangkok Rehabilitation Center" since an

increase in the number of patients. Additionally, Wattanosoth Hospital or Bangkok Cancer Hospital has been

operating unofficially since late 2005. It is fully equipped with the most efficient medical equipments in Asia

Pacific such as IMRT, PET/CT and Cyclotron which make it possible to detect cancer at any part of the body

at an early stage plus radioactive therapy equipments and clinicians with expertise in the diagnosis and

treatment of cancers.

As for regional services, Bangkok Trad Hospital Co., Ltd., the company's subsidiary, has launched "Koh Chang

International Clinic" on the 8th of December 2005. The clinic is an extension service of Bangkok Trad Hospital

providing medical services to Thai and foreign tourists as well as locals on Koh Chang.

Furthermore, the company still has a new hospital project in Cambodia and also constructed a hospital for

expatriates called "Bangkok International Hospital" which will be ready for operation in early 2006. These

have in line with the government's policy of promoting Thailand as the Healthcare and Medical Hub of Asia

by expanding the client base to cover more in South East Asia and bring our medical service capability to

neighbouring countries.

Message fromthe Board ofDirectors

3

With regard to academic promotion efforts, the company organized the Fifth BGH Annual Academic Meeting

during Monday, the 7th to Wednesday, the 9th of March 2005 with statesman Prof. Kasem Wattanachai, M.D.,

chairing the opening ceremony. In addition, the Sixth BGH Congress on Critical Care for Nurse was organized

on Friday, the 10th of March 2006. The mentioned academic conferences were well received and attended by

numerous doctors, dentists, pharmacists, nurses, medical and public health personnel from public and private

hospitals as like the preceding years.

Bangkok Hospital and Bangkok Heart Hospital have shown great interest in quality management and the

latest medical equipments, some of which were installed at Bangkok Hospital for the first time in Thailand.

A total of 1,250 practitioners from 52 medical institutions have visited us to view these devices so far.

In late 2005, the Extraordinary General Meeting of shareholders No.1/2005 approved the company's

restructuring planning by acquisition shares from all shareholders of the eastern hospital group, which

comprised of Bangkok Pattaya Hospital Co., Ltd., Bangkok Trad Hospital Co., Ltd., Wattanavej Co., Ltd.

(Bangkok Chantaburi Hospital), and Bangkok Rayong Hospital Co., Ltd. in accordance with the business

expansion plan. The Board of Directors has believed that this acquisition will enhance the company's

competitiveness and further fortify our position in the medical service industry.

Finally, the company would like to thank each of you, dear shareholders of Bangkok Hospital, for your

continued support. We are now a leading private hospital with great potentials to grow and capable of reaching

a broader range of patients. With the good deeds of yours in the treatment of financially distressed patients

through Vejchadusit Foundation under the Royal Patronage of HRH Princess Galyani Vadhana Krom Luang

Naradhiwas Rajanagarindra, you shall be graced with happiness and luck in all of your endeavours. May you

prosper and be in good health always.

4

Educationë Directors Accreditation Program Batch 45,

Thai Institute of Directors Associationë Certificated from National Defense Collegeë Medical Doctor, Faculty of Medicine

Siriraj Hospital, Mahidol University

Experienceë Resident/Professor in Department of Surgery,

Faculty of Medicine Siriraj Hospital ë Member of National Legislative

Council (Senator)


Thai Institute of Directors Associationë Certificate in Pediatric Surgeryë Medical Doctor (Honour), Faculty of Medicine


Experienceë Head , Department of Surgery, Faculty of

Medicine Siriraj Hospital, Mahidol Universityë General Secretary, Department of Medicine,

Siriraj Hospitalë School Director, School of Therapist Rehabilitationë President, Medical Society of Private Practionerë Chairman, Pediatric Association


Thai Institute of Directors Association ë Facharzt fur Chirugie, The Medical Council of

Hamburg, German ë Certificate of Medical Clinic, Mahidol Universityë Medical Doctor, Faculty of

Medicine Siriraj Hospital, Mahidol University

Experienceë Secretary General, Royal College of Surgeons

of Thailandë Chairman of Scientific Session Medical,

The Medical Association of Thailandë Dean, Faculty of Medicine Siriraj Hospital,

Mahidol Universityë Director of the Medical Association

ProfessorArun Pausawasdi, M.D.Chairman ofthe Board of DirectorsAge 67 years old

Other Positionë Assistant to Ministry of Public Healthë Chairman, Centre for Continuing

Medical Education of Thailandë President, Royal College of Surgeons

of Thailandë Vice President, The Prince Mahidol

Award Foundationë Member of the Thai medical

registration license committeeë Vice President, Siriraj Foundation

Percentage of shareholdingë 0.03

Relationship among other managementë None

Prasert Prasarttong-Osoth,M.D.Vice Chairman/ Chairman ofCEO Committee Age 72 years old

ProfessorSnoe Indrasukhsri, M.D.Independent Director andChairman of Audit CommitteeAge 84 years old

Other Positionë President, Bangkok Airways Co., Ltd.



Other Position

ë None



Boardof Director'sProfile

5


Thai Institute of Directors Association ë Diplomate of American Board of Surgery ë Medical Doctor, Faculty of Medicine


Experienceë Head, Surgical Unit, National Cancer Instituteë Hospital Director, Karuna Pitak Hospitalë Hospital Director, Bangkok Hospital

Pongsak Viddayakorn,M.D.President/ 1st Vice Chairmanof CEO committee Age 71 years old

Other Positionë Vice President of Samitivej PLC.ë Chairman,

Bangkok Helicopter Services Co.,Ltd.ë Chairman,

Bangkok Phuket Hospital Co., Ltd.ë Chairman, B.D.M.S International

Medical Services Co., Ltd.ë Chairman,

S.R. Property Investment Co., Ltd.

Percentage of shareholding

ë 5.22


Chuladej Yossundharakul,M.D.Director/ 2nd Vice Chairmanof CEO Committee Age 73 years old

Chirotchana Suchato,M.D.Director/Member of CEO CommitteeAge 69 years old

Other Positionë Chairman,

Bangkok Prapadaeng Hospital Co., Ltd.ë Director,

Bangkok Pattaya Hospital, Co., Ltd.

Percentage of shareholding

ë 2.31



Bangkok Pattaya Hospital Co., Ltdë Director,

Bangkok Phuket Hospital Co., Ltd.




Thai Institute of Directors Association ë Diplomate of American Board of Radiology,

Downstate University of New Yorkë Graduated Course Radiobiology at M.D.

Anderson Hospital, Houston, Texasë Medical Doctor, Faculty of Medicine


Experienceë School Director, School of X-Tray Technicianë Professor of Radiology division,

Faculty of Medicine, Ramathibodi Hospitalë Consultant to Radiology,

Clinic of The Teacher Council of Thailand


Thai Institute of Directors Associationë Honorary Doctorate in Business Management,

Christian Universityë Certificate from National Defense Collegeë DTM & H Diploma, Faculty of Tropical Medicine

and Hygiene, Mahidol Universityë Post Graduate Study, University of Pennsylvania, USA.ë Medical Doctor, Faculty of Medicine Siriraj Hospital,

Mahidol University

Experienceë Member of consultation committee of the Bangkok

Metropolitan Administration Governor (Healthcare)

ë Director of the Medical Heath Care Centre ofthe Teacher Council of Thailand

ë Chairman, Private Hospital Associationë Director of Medical Association

6


Thai Institute of Directors Association ë Ph.D. (Tropical Medicine),

Liverpool Universityë Medical Doctor, Faculty of Medicine


Experienceë Vice President for Administration,

Mahidol Universityë Dean, Faculty of Tropical Medicine,

Mahidol Universityë Member, Expert Committee on

Food Borne Parasitic Diseases, WHO


The Medic Pharma Co., Ltd.



Other Positionë Director,

Syn Mun Kong Insurance PLC.ë Director,

Bangkok Prapadaeng Hospital Co., Ltd.



Yingdao Krairiksh, M.D.Director/ Member ofCEO committeeAge 54 years old


Thai Institute of Directors Association ë Stanford Executive Program Graduate School

of Business, Stanford University ë Resident Training Program (Internal Medicine)

Siriraj Hospitalë Medical Doctor, Faculty of

Medicine Siriraj Hospital, Mahidol University

Experienceë Hospital Director, Bangkok Hospitalë Managing Director,

Bangkok Prapadaeng Hospital Co., Ltd.

Other Positionë Chairman of Executive committee,

Bangkok Samui Hospital Co., Ltdë Chairman of Executive committee,

Bangkok Pattaya Hospital Co., Ltd.

ProfessorSantasiri Sornmani, M.D.Independent Director/Audit CommitteeAge 72 years old

Mr. Anuchat ChaiprapaIndependent Director/Audit CommitteeAge 73 years old

Education ë Directors Accreditation Program Batch 14,

Thai Institute of Directors Association ë Certificate, National Defense Collegeë Certified Public Accountant ë Bachelor of Accounting, Chulalongkorn University

Experienceë Senior Executive General Manager,

Thai Military Bank PLC.ë Director, Nava Finance & Securities PLCë Director, Paiboon Insurance Co., Ltd.ë Director, Small Business Credit Guarantee Corporation

ë Chairman of Executive committee,Bangkok Rayong Hospital Co., Ltd.

ë Chairman of Executive committee,Wattanavej Co., Ltd.

ë Chairman of Executive committee,Bangkok Trat Hospital Co.,Ltd.

ë Consultation Director,Medical Association of Thailand

ë Consultation Director, Siriraj MedicalAlumni Association under Royal Patronage

ë Consultation Director, Thailand HospitalAdministrator Association




7

ë Cardiac Surgeon,Minneapolis Heart Institute - AbbottNorthwestern Hospital, Minnesota, USA

ë Chief Heart Surgeon,John Nasseff Heart Hospital, USA

Other Positionë Head, Heart Institute Samitivej - Sukhumvitë President, Heart Association of Thailand



Other Positionë Director,

Bangkok Helicopter Services Co., Ltd.ë Managing Director,

Thai Petroleum Service Co., Ltd.ë Director, Executive Vice President of

Finance, Bangkok Airways Co., Ltd.



Education ë Directors Certification Program Batch 27,

Thai Institute of Directors Associationë Bachelor of Law, Thammasart University

Experienceë Managing Director

Air Lanka Catering Service Co., Ltd.ë Director and Manager Thai Petroleum Service Co., Ltd.

Education ë The Role of the Chairman, Batch 9,

Thai Institute of Directors Association ë Directors Certification Program Batch 20,

Thai Institute of Directors Association ë Senior Executive Program, Sasin Graduate

Institute of Business Administration ë MBA - Accounting, Roosevelt University, USA.

Experienceë Managing Director,

Thai Wah Resorts Development Co., Ltd.ë Managing Director, Thai Wah Plaza Co., Ltd.ë Financial Controller, Holiday Inn Crown Plazaë Assistant Director - Accounting and Finance,

Hostmark Hospitality Group

Other Positionë Chairman, Bangkok Rayong Hospital Co., Ltd.

Wallop AdhikomprapaDirector/ Member ofCEO Committee Vice President -Accounting& FinanceAge 62 years old

ë Director, Bangkok Pattaya Hospital Co., Ltd.ë Director, Bangkok Phuket Hospital Co., Ltd.ë Director, Samitivej PLC.ë Director, BNH Medical Centre Co., Ltd.ë Director, National Healthcare Systems Co., Ltd.ë Director, Bio Molecular Laboratory

(Thailand) Co., Ltd.ë Director, Bangkok Helicopter Services Co., Ltd.ë Director, First Health Food Co., Ltd.ë Director, Sodexho Support Services (Th) Co., Ltd.ë Director, B.D.M.S. International Medical

Services Co., Ltd.ë Director, S.R. Property Investment., Ltd.



Kittipan Visudharom,M.DDirector/ Member ofCEO Committee/Vice Hospital Director ofBangkok Heart Hospital Age 67 years old

Thavatwong ThanasumitraDirectorAge 58 years old

Experienceë Diplomate American Board of Surgeryë Diplomate American Board of Thoracic Surgeryë Ph.D. (Surgery) University of Minnesota,

Graduate School, Minneapolis, Minnesota, USAë Residency Training, University of Minnesota,

School of Medicine, USAë Internship, University of Kentucky

Medical Center, USAë Medical Doctor, Faculty of Medicine


Experienceë Cardiac Surgeon, Minessotta Hospital, USAë Associate Professor,

Department of Surgery, Uthsesa, USA

8

Education ë Director Certification Program Batch 22,

Thai Institute of Directors Associationë Advanced Management, Wharton's

Business School, University of Pennsylvaniaë Dermatologist, Medical School,

Chulalongkorn Universityë Medical Doctor, Faculty of Medicine,

Chulalongkorn University

Experienceë Hospital Director, Samitivej Hospital

Education ë Certified of National Defense College ë Fellow, American College of Medical Qualityë Certified, American Board of Quality Assurance &

Utilization Review Physiciansë Fellow, American Academy of Pediatricsë Certified, American Board of Pediatrics ë Medical Doctor, Chulalongkorn University

Experienceë Group Chief Medical Officer,

Bumrungrad Hospital, Bangkokë Chief Executive Administrator, Bangkok Hospital, ë Clinical Assistant Professor of Pediatrics,

College of Medicine, Pennsylvania State University,Pennsylvania, USA

ë Chairman of the Board, Jameson Physician HospitalOrganization, New Castle, Pennsylvania, USA

ë President, Lawrence Independent PhysicianAssociation, Lawrence County, Pennsylvania, USA

Other Positionë Managing Director,

Bangkok Pattaya Hospital Co., Ltd.ë Managing Director, BNH Medical Centre Co., Ltd.ë Director, Bangkok Rayong Hospital Co., Ltd.ë Director, National Healthcare Systems Co., Ltd. ë Director, Bio Molecular

Laboratory (Thailand) Co., Ltd.



Chatree Duangnet, M.D.Member of CEO Committee/Chief Operating OfficerAge 61 years old

ë Director and Chairman of Executivecommittee, BNH Medical Centre Co., Ltd.

ë Director and Chairman of Executivecommittee, the Medic Pharma Co., Ltd.

ë Director, Bangkok Pattaya Hospital Co., Ltd. ë Director, National Healthcare Systems Co., Ltd.ë Director, Bio Molecular

Laboratory (Thailand) Co., Ltd.ë Director, First Health Food Co., Ltd.ë Director, Sodexho Healthcare

Support Services (Th) Co., Ltd.ë Director, Sodexho Support Services (Th)

Co., Ltd.



Education ë Directors Certification Program Batch 23,

Thai Institute of Directors Associationë Post Graduate Studies in Health Administration,

Loma Linda University, CA, U.S.A.ë MPH (International Health),

Loma Linda University, CA, U.S.A.ë BA, MA (Philosophy & Counseling),

Philippine Adventist University, The Philippines

Experienceë Chief Executive Officer, Gleneagles

Oncology Center, Kuala Lumpur ë Company Director,

Gleneagles Oncology Center, Kuala Lumpur

Other Positionë Managing Director, CEO & Chairman of

Executive Committee, Samitivej PLC.ë Managing Director & Chairman of Executive

Committee, Samitivej Sriracha Hospital Co., Ltd.

Mr. Lee Khoe SoaMember of CEO CommitteeAge 61 years old

Krittavith Lertutsahakul,M.D.Member of CEO CommitteeAge 48 years old

ë Physician Executive, Jameson Health System,New Castle, Pennsylvania, USA

ë Training courses in QA/ UR/ RM. American Board ofQuality Assurance & Utilization Review Physicians, USA

Other Positionë Chairman of Executive Committee,

Bangkok Prapradaeng Hospital Co., Ltd. ë Chairman of Executive Committee,

Bangkok Had Yai Hospital Co., Ltd. ë Chairman of Executive Committee,

Bangkok Phuket Hospital Co., Ltd. ë Director, B.D.M.S International Medical Services Co., Ltd.

Percentage of shareholdingë 0



9

Education ë Certificate in Advanced Management,

Harvard Business Schoolë Diplomat Board of Clinical Preventive

Medicine (Thailand Medical Council)ë Certificate in Health Economics,

Mahidol Universityë Doctor of Medicine, Mahidol University -

Ramathibodi Faculty of Medicine

Experienceë Managing Director, Wattanvej, Co., Ltd.ë Managing Director,

Bangkok Rayong Hospital Co., Ltd.ë Managing Director, Bangkok Trat Hospital Co., Ltd. ë Hospital Director, Bangkok Pattaya Hospital Co., Ltd.

Other Position ë Director, Bangkok Pattaya Hospital Co., Ltd.ë Director, Bangkok Samui Hospital Co., Ltd.ë Director, National Healthcare

Systems Co., Ltd. ë Director, Bio Molecular

Laboratory (Thailand) Co., Ltd.



Other Positionë Managing Director,

Bangkok Phuket Hospital Co., Ltd.ë Director, Bangkok Samui Hospital Co., Ltd.



Education ë Certificate in Advanced Management,

Harvard Business Schoolë Board of Internal Medicine,

Chulalongkorn Universityë Doctor of Medicine, Sonklanagarind University

Experienceë Hospital Director,

Bangkok Phuket Hospital, Co., Ltd.ë Hospital Director, Yaring Hospital ë Head of Dialysis Unit,

The Vachira Phuket Hospital

Education ë Stanford Executive Program,

Stanford Graduate School of Business (U.S.A.)ë MBA, Lehigh University of Virginia, USAë Bachelor of Economics,

University of West Virginia, USAë Bachelor of Business Administration

Major Marketing (Honour),Thammasat University

Experienceë Associate consultant to Minister of

Public Health ë Instructor, The Journal of Business

Administration, Faculty of Commerce &Accountancy - Thammasat University

Associate ProfessorAjjima SrethaputrMember of CEO Committee/Assistant to Chairman ofCEO Committee/Vice President - Marketing &Business Development Age 55 years old

Pichit Kangwolkij, M.D. Member of CEO Committee,Hospital Director ofBangkok HospitalAge 44 years old

SuraphongLookhanumanjao, M.D.Hospital Director ofWattanosoth Hospital Age 45 years old

Other Positionë Managing director, Cool & Joy Co., Ltd. ë Director, The Medic Pharma Co., Ltdë Member of the Academy of Standard

Committee, Dept. of Marketing &General Management, Faculty of BusinessAdministration, Thammasat University.

ë Committee & Secretary, Vej Dusit Foundationunder the Royal Patronage of H.R.HPrincess Galyani Vadhana Krom LuangNaradhiwas Rajanagarindra

ë Director, Institute for small and mediumenterprise Development

Percentage of shareholdingë 0


Reportof the AuditCommittee

10

The Board of Directors of Bangkok Dusit Medical Services Public Company Limited has appointed an

Audit Committee comprising of three independent members; Prof. Snoe Indrasukhsri, M.D., as the chairman,

Prof. Santasiri Sornmani, M.D., and Mr. Anuchat Chaiprapa, as members.

The Audit Committee is entrusted with the duties of giving credibility to the financial statements prior to

submission to the Board of Directors, ensuring efficient internal control with respects to financial statements

and compliance with relevant regulations and laws, preventing conflict of interests, providing risk management

advices, promoting the observance of good practices of listed company and nominating auditors.

The Audit Committee has had twelve meetings with the auditors and the management in 2005 to review

financial statements, assess internal control measures, review compliance with regulations and laws as well as

the auditing practices of the auditor for 2005. It is the opinion of the Audit Committee that the consolidated

financial statements of the company and its subsidiaries is correct in significant details as per the generally

certified accounting standard and that the disclosure of information is adequate.

The Audit Committee shall nominate the auditors for 2006 to the Board of Directors for further submission

to and the approval from the shareholders' meeting.

11

GeneralInformation

General InformationType of business

Location

Company registration number

Web site

Registered capital

Security registrar

Auditor

Legal consultant

Health Care Business

2 Soi Soonvijai 7, New Petchaburi Road,

Huay Khwang, Bangkok 10310

Tel: 02-318-0066, 02-310-3000

Fax: 02-318-1546, 02-310-3327

Bor.Mor.Jor. 249

www.bangkokhospital.com

Baht 1,183.41 million of which is paid up and issued at

Baht 1,163.41 million with par value of Baht 1 each

Thailand Securities Depositor Co., Ltd.

4th Floor, Stock Exchange of Thailand Building,

62 Ratchadapisek Road, Klong Toey, Bangkok 10110

Tel: 02-229-2800, 02-654-5599

Fax: 0-2359-1259

Ernst & Young Office Company Limited

Mr. Ruth Chaowanagawi

Mrs. Saifon Inkaew

Ms. Ratana Jala

33rd Floor, Lake Rajada Office Complex,

193/136-137 Ratchadapisek Road, Klong Toey,

Bangkok 10110

Tel: 02-264-0777

Fax: 02-264-0789-90

Punyariddhi Law Office

Apichai Chandrasane, Ph.D.

22 Soi Soontornsaratoon (Onnut 21/1)

Sukhumvit 77 Road, Bangkok 10250

Tel: 02-760-6969-76

Fax: 02-760-6967-68

Reference information

12

(as of the 31st of December 2005)

B.D.M.S. International

Medical Services Co., Ltd.

Bangkok Helicopter

Services Co., Ltd.

Bangkok Samui

Hospital Co., Ltd.

New Petchburi Medical

Services Co., Ltd.

Bangkok Phuket Co., Ltd.

Bangkok Hatyai

Hospital Co., Ltd.

Bio Molecular Laboratory

(Thailand) Co., Ltd.

Samitivej Public

Company Limited

BNH Medical

Centre Co., Ltd.

Bangkok Rayong

Hospital Co., Ltd.

Bangkok Prapadang

Hospital Co., Ltd.

20 December 2005

29 June 1995

14 August 2003

20 December 2002

15 March 1994

27 July 1995

7 November 2001

28 December 1976

27 August 1991

13 July 2002

7 September 1992

61A Street 214,

Sangkat Beong Rang ,

Phnom Penh, Cambodia

1111 Ploenchit Rd.,

Pathumwan, Bangkok

57 Moo 3, Amphur

Kaosamui, Suratthani

2 Soi Soonvijai 7,

New Petchburi Rd.,

Huaykwang, Bangkok

2/1 Hongyok-utit Rd.,

Amphur Muang, Phuket

75 Soi 15 Petchkasem Rd.,

Hadyai, Sohgkhla

2 Soi Soonvijai 7,

New Petchburi Rd.,

Huaykwang, Bangkok

133 Sukhumvit 49,

Klongton, Wattana, Bangkok

9/1 Convent Rd., Silom,

Bangrak, Bangkok

8 Moo 2,

Soi Sangchanneramit,

Amphur Muang, Rayong

288 Suksawasdi,

Amphur Muang,

Samutprakarn

1,000

Par : KHR

9,200,000/share

3,000,000

Par : Baht

10/share

15,000,000

Par : Baht

10/share

10,000

Par : Baht

100/share

100,000,000

Par : Baht

5/share

100,000,000

Par : Baht

5/share

1,000,000

Par : Baht

10/share

100,000,000

Par : Baht

10/share

58,611,935

Par : Baht

10/share

40,000,000

Par : Baht

10/share

10,500,000

Par : Baht

10/share

100.0

100.0

100.0

100.0

99.5

98.5

95.0

92.9

87.6

81.0

79.0

100-bed

private hospital

Medical Evacuation

50-bed

private hospital

150-bed

private hospital

400-bed

private hospital

Biomolecular

laboratory

Private hospitals

• Samitivej

Sukhumvit Hospital

(275 beds)

• Samitivej

Srinakarindra

Hospital (400 beds)

225-bed

private hospital

200-bed

private hospital

145-bed

private hospital

1,000

2,999,992

14,999,993

9,993

99,467,500

98,533,300

949,993

92,919,772

51,326,179

32,399,993

8,295,000

Name Date ofregistration Location Type of business

Numberof issued and

paid-up shares

Number ofshares held

by thecompany

%Share

holding

Juristic personsin which thecompany holds10% of sharesor greater

13

(as of the 31st of December 2005)

National Healthcare

Systems Co., Ltd.

Bangkok Trad

Hospital Co., Ltd.

Wattanavej Co., Ltd.

S.R. Property

Investment Co., Ltd.

Medical Pharma Co., Ltd.

Bangkok Pattaya

Hospital Co., Ltd.

Cool & Joy Co., Ltd.

Ramkhamhang

Hospital Public Company Limited

Udon Pattana Co., Ltd.

25 July 2001

25 January 1994

28 October 1983

20 December 2005

26 August 1971

1 May 1989

20 May 2003

25 August 1986

9 June 1994

2 Soi Soonvijai 7,

New Petchburi Rd.,

Huaykwang, Bangkok

276 Sukhumvit Rd.,

Amphur Muang, Trad

25/14 Taluang Rd.,

Amphur Muang, Chantaburi

571 Road No. 6,

Phum Salakanseng,

Siem Reap, Cambodia

124 Thonburi-Pakthor Rd.,

Bangkok

301 Sukhumvit K.M.143 Rd.,

Amphur Muang, Chonburi

2 Soi Soonvijai 7,

New Petchburi Rd.,

Huaykwang, Bangkok

2138 Ramkhamhang,

Bangkapi, Bangkok

555/5 Phosri Rd.,

Amphur Muang, Udornthani

7,500,000

Par : Baht

10/share

40,000,000

Par : Baht

5/share

18,000,000

Par : Baht

10/share

1,000

Par : KHR

20,000/share

2,143,000

Par : Baht

10/share

28,000,000

Par : Baht

10/share

5,000,000

Par : Baht

10/share

12,000,000

Par : Baht

10/share

30,000,000

Par : Baht

10/share

74.0

63.4

62.0

49.0

49.0

49.0

30.0

19.0

10.0

Medical laboratory

150-bed

private hospital

200-bed

private hospital

Land Holding

Company

Sale and production

of medications

200-bed

private hospital

Public Relationship

and Marketing

300-bed

private hospital

350-bed

private hospital

5,551,793

25,341,034

11,158,324

490

1,050,000

13,720,000

1,500,000

2,280,000

3,000,000

Name Date ofregistration Location Type of business

Numberof issued and

paid-up shares

Number ofshares held

by thecompany

%Share

holding

14

SVH92.90%

BSH100%

BNH87.57%

BPH49%

RAM19%

BDMS International100%

BRH81%

MP49%

Udon Pattana10%

Bangkok Helicopter100%

BPD79%

S.R. Property Investment

49%

NPMS99.93%

NHS74.02%

Cool & Joy30%

BPK99.50%

BTH63.35%

BHH98.50%

BCH61.99%

BIO95%

SVH

BPK

BHH

BIO

NPMS

BSH

BDMS International

Bangkok Helicopter

BNH

Samitivej Public Company Limited

Bangkok Phuket Co., Ltd.

Bangkok Hatyai Hospital Co., Ltd.



New Petchburi Medical

Services Co., Ltd.

Bangkok Samui Hospital Co., Ltd.

B.D.M.S. International Medical

Services Co., Ltd.

Bangkok Helicopter Services Co., Ltd.

BNH Medical Centre Co., Ltd.

BRH

BPD

NHS

BTH

BCH

BPH

MP

S.R. Property

Cool & Joy

RAM

Udon Pattana

Bangkok Rayong Hospital Co., Ltd.

Bangkok Prapadang Hospital Co., Ltd.

National Healthcare Systems Co., Ltd.

Bangkok Trad Hospital Co., Ltd.




S.R.PROPERTY INVESTMENT

COMPANY LIMITED


Ramkhamhang Hospital Public Co., Ltd.

Udon Pattana Co., Ltd.

Juristic personsin which thecompany holds10% of sharesor greater

15

Operational Results

Total Revenues

Revenue from Patient Services

Gross Profit

EBITDA

Net Profit

EPS (Baht)

Weighted Average Shares

Total Assets

Total Liabilities

Minority Interest

Shareholders' Equity

Current Ratio (times)

Quick Ratio (times)

Days Receivable (day)

Days Inventory (day)

Debt to Equity Ratio (times)

Interest Coverage Ratio (times)

Patient Services Revenue Growth Rate

Net Profit Growth Rate

Gross Profit Margin

EBITDA Margin

Net Profit Margin

Return on Equity

Assets Growth Rate

Return on Assets

Assets Turnover (times)

(Unit : Million Baht)

(Unit : Million Baht)Financial status

Financial Ratio

5,635

5,274

2,275

1,102

623

0.71

875,129,812

14,598

6,711

362

7,887

0.92

0.86

22

10

0.85

12.84

71.0%

62.1%

43.1%

16.4%

11.8%

8.3%

99.8%

4.3%

0.39

10,724

10,254

4,319

1,865

832

0.72

1,163,410,108

17,677

9,260

528

8,418

0.51

0.45

18

8

1.10

8.18

94.4%

33.5%

42.1%

18.2%

8.1%

10.5%

21.1%

4.7%

0.61

3,899

3,679

1,634

889

623

0.71

875,129,812

10,142

2,616

0

7,525

1.33

1.28

15

6

0.35

15.30

34.0%

62.1%

44.4%

23.98%

16.9%

8.3%

64.3%

6.1%

0.38

4,696

4,243

1,878

955

832

0.72

1,163,410,108

11,664

3,775

0

7,890

0.38

0.33

17

8

0.48

10.34

15.3%

33.5%

44.3%

22.5%

19.6%

10.5%

15.0%

7.1%

0.40

2,957

2745

1,097

539

385

0.51

750,000,000

6,173

2,789

0

3,384

0.89

0.86

15

6

0.82

8.01

24.8%

25.7%

40.0%

19.64%

14.0%

11.4%

9.0%

6.2%

0.48

3,314

3,085

1,223

578

385

0.51

750,000,000

7,305

3,579

341

3,725

0.70

0.66

18

8

0.96

9.84

31.6%

25.7%

39.7%

18.7%

12.5%

11.4%

27.4%

5.3%

0.45

2005 2004 2003 2005 2004 2003

The Company and Subsidiaries The Company Only

FinancialOverview

BANGKOKHEARTHOSPITAL

BANGKOK MEDICAL CENTER

The grand opening ceremony MR.Adulkit Kitiyakara Minimally Invasive and Robotic Heart Center of which was

presided over by Her Majesty Queen Sirikit on Friday, the 26th of August 2005. This is the first private heart

hospital in Thailand.

1. Background

Bangkok Dusit Medical Services Public Company Limited was established

on the 30th of October 1969 as “Bangkok Dusit Medical Services Co., Ltd.”

with an initial registered capital of Baht 10 million with the objectives of

engaging in a private hospital business called “Bangkok Hospital”. The

operation officially commenced on the 26th of February 1972. Throughout

the thirty-three years of its operation, the company has gradually expanded

to the extent where it could become registered in the Stock Exchange of

Thailand on the 2nd of October 1991 and registered its conversion to limited

public company in 1994 with gradually increasing registered capital. The

company key business milestones are as follows:

2001

• Hospital Accreditation (HA) by Hospital Standard Certification and

Development Institution, Ministry of Public Health

• Prime Minister’s Export Award: Best Service Provider by Department

of Export Promotion, Ministry of Commerce, on the 20th of August 2001.

• Register of the change in paid up capital from Baht 356.25 million to

Baht. 500 million

2002

• The Asian Hospital Management Awards for Marketing PR or Brand

Management Project and Quality Management Program out of the ten prizes.

The awards were presented by International Hospital Association, John

Hopkins International Institute, Summa Foundation and Thai Private

Hospital Association.

• Register of the change in paid up capital from Baht 500 million to

Baht 750 million.

2003

• ISO 14001 certification, MorOrGor. 18001/ OHSAS 18001 for environmental

management standard, and, occupational hygiene and safety management

standard certification by the Industrial Standard Organization.

• Bangkok Hospital was pronounced by Superbrands as the preferred

hospital of consumers and one of the only two hospitals in Thailand

18

Nature ofBusiness

19

remembered by consumers for positive reputation and medical service

excellence.

2004

• ISO 14001 certification for environmental management, Mor Or Gor

18001/ OHSAS 18001 and occupational hygiene and safety management

standard certification by Japan Audit and Certification (JACO).

• Register of the change in paid up capital from Baht 750 million to

Baht 1,000 million. Including register of the change of par value from Baht

10 to Baht 1 per share.

• The company has made a tender offer for all shares in Samitivej Public

Company Limited, Bangkok Hadyai Hospital Co., Ltd. and Bangkok Phuket

Hospital Co., Ltd. and issued the new ordinary shares as the share price

payment to those shareholders. Following the completion of the said acquisition,

the shareholdings in the three companies are 92.9%, 98.5% and 99.5% of their

issued and paid up capital, respectively. The company has registered the

change of paid up capital from Baht 1,000 million to Baht 1,163.41 million

as well.

2. Important events in 2005

Officially Launch of Bangkok Heart Hospital and M.R. Adulkit Kitiyakara

Minimally Invasive and Robotic Heart Center

The company has officially launched Bangkok Heart Hospital and

M.R. Adulkit Kitiyakara Minimally Invasive and Robotic Heart Center. The

grand opening ceremony of which was presided over by Her Majesty Queen

Sirikit on Friday, the 26th of August 2005. During the ceremony, Her Majesty

also marked and blessed the plaque naming the M.R. Adulkit Kitiyakara

Minimally Invasive & Robotic Heart Center.

Bangkok Heart Hospital is the first private heart hospital in Thailand which

features three key readiness factors as follows :

1) Expertise of medical personnel in all tracts

2) Advanced technology such as the first Da Vinci heart surgery assisting

robot in Thailand, cardiac MRI, cardiac CT scanner and mobile CCU.

3) Cardiac rehabilitation and enhancement of international standard

for utmost satisfaction of the clients and a step towards medical excellence.

WATTANOSOTHHOSPITAL


Her Royal Highness Princess Maha Chakri Sirindhorn gives the name Wattanosoth, which means Progressive

Medicine in Thai. This is the first private cancer hospital in Thailand.

Launch of Wattanosoth Hospital (Bangkok Cancer Hospital)

Wattanosoth Hospital has been operating unofficially since late 2005 in

order to treat cancer patients. The name Wattanosoth, which means Progressive

Medicine in Thai, was given by Her Royal Highness Princess Maha Chakri

Sirindhorn.

This is the first private cancer hospital in Thailand complete with

advanced medical technology and clinicians specialized in the diagnosis and

treatment of all cancers. Some of the featured equipment are:

• PET/CT (Positron Emulsion Tormography/ Computed Tomography)

PET/CT is a major advance in imaging technology and patient care. The

Wattanosoth PET/CT scanner (GEMINI, Philips) is the first to be installed

for medical services in Thailand. It is a functional imaging technology using

radioisotopes. The medical applications of PET primarily include early

detection of cancers of various organs, assessment of heart muscle viability

in heart diseases and evaluation of functional brain anatomy in dementia,

epilepsy and stroke.

• Cyclotron A radioactive pharmaceuticals producing equipment for

use with PET/CT in the detection of cancer. Most advanced and efficient,

this equipment is adopted by several cancer institutes in the United States

of America including Memorial Slone Kettering (MSKCC) and University

of California Los Angeles (UCLA).

• IMRT (Novalis) A medical equipment used for non-invasive stereotactic

radiosurgery. Novalis is the optimal tool to effectively and safely perform the

advanced techniques of 3-D CRT, high resolution ntensity Modulated

RadioSurgery (IMRS) and Intensity Modulated RadioTherapy (IMRT) on

tumors throughout the body. This provides the most accurate radioactive

treatment at the site of tumor with minimal effects on good tissues. Novalis

can be programmed for exposure of specific sites in four dimensions and

accurate tumor shape.

• Linear Accelerator

• Brachy Therapy System Equipment with components for cancer

treatment

22

23

It is an objective of Wattanosoth Hospital to strive for practical and academic

excellence. Moreover, Samitivej hospital, BNH hospital and Bangkok Hospital

group across the country can link up with Wattanosoth Hospital to obtain

expert consultation through VCD conference system. This saves patients from

having to visit Wattanosoth Hospital on every occasion.

Bangkok Dusit Medical Service Public Company Limited rated as one of

the best companies in Asia Pacific by Forbes.

Bangkok Dusit Medical Service Public Company Limited was rated as one

of the best companies in Asia Pacific in 2005 under “Best Under a Billion”

category by Forbes.

The annual evaluation of Forbes “200 Best Under a Billion” in Asia Pacific

is based on the performance of the region's listed companies with annual

revenue under One Billion United States Dollar. The criteria includes companies

which have displayed profitability, economic dynamism, entrepreneurial

effectiveness and an impressive track record of giving value to shareholders.

Including continuous growth during the past five years and a profit before tax of

at least 5% in the latest fiscal year. Bangkok Dusit Medical Services Plc. or BGH,

which made it to the elite list along with 11 top Thai companies selected by Forbes.

This ranking is a great pride of the company. Especially, BGH is only

hospital business firm among the two hundred companies in the Asia Pacific

selected by Forbes. This further reaffirms our leader-ship position in the Asia

Pacific region.

BANGKOKINTERNATIONALHOSPITAL


Bangkok International Hospital has been operating since early 2006. In order to provide the International

standard high quality healthcare, advanced medical technology and services to foreign clients.

The Company’s Shareholding Restructuring

On the 17th of October 2005, the Extraordinary General Meeting of

Shareholders No.1/2005 has approved the company’s restructuring planning

by acquisition shares from all shareholders of the eastern hospital group, which

comprised of Bangkok Pattaya Hospital Co., Ltd., Bangkok Trad Hospital

Co., Ltd., Wattanavej Co., Ltd.(Bangkok Chantaburi Hospital), and Bangkok

Rayong Hospital Co., Ltd. Such purchase was subject to the condition that

those shareholders must purchase the company's shares by using all proceeds

received from the company as payment for the company's shares at the price

of Baht 14.59 each. The proposal and reservation of shares were scheduled

for the period from the 4th to the 20th of January 2006.

The company expects to hold at least 95% stake in each hospital in the

eastern group which will enhance the competitiveness and further fortify the

company’s position in the healthcare business, considering the fact that the

eastern region is one with unabated economic growth and a key economic

and industrial center of Thailand.

3. Operation

The company, the affiliates and the subsidiaries are related as may be

explained below:

Primary business Specialized private medical institutions operated under

the name of Bangkok Medical Center : BMC which is comprised of Bangkok

Hospital, Bangkok Heart Hospital, Wattanosoth Hospital, and, Bangkok

International Hospital which will be operational in early 2006.

Investment business In addition to the healthcare business operated

under Bangkok Dusit Medical Services Public Company Limited, the company

has invested in healthcare and many relevant businesses.

26

27

Investment in Healthcare Businesses

1. Inner Bangkok covering

Sukhumvit, Asoke, Silom

and Sathorn

2. Outer Bangkok and

Samutprakarn

3. Eastern region covering

Chonburi, Rayong,

Chantaburi and Trat

4. Northeastern region

covering Udon Thani

5. Southern region covering

Phuket, Songkla and

Surat Thani

6. Siem Reap, Cambodia

Samitivej Public Company Limited:

Samitivej Sukhumvit Hospital

BNH Medical Centre Co., Ltd.: BNH Hospital

Samitivej Public Company Limited:

Samitivej Srinakarindra Hospital


Ramkhamhaeng Hospital Public Company Limited

(A general investment. not involved

with the management in this company).



Wattanavej Co., Ltd.: Bangkok Chanthaburi Hospital

Bangkok Trad Hospital Co., Ltd.

Samitivej Sriracha Hospital Co., Ltd.

Udon Pattana Co., Ltd.: Ake Udon Hospital

(A general investment, not involved

with the management in this company)





Services Co., Ltd. (Not in operation)

275

225

400

145

300

200

200

200

150

100

350

170

400

50

50

92.9

87.60

92.9

79.0

19.0

49.0

81.0

62.0

63.4

30.0

by Samitivej Plc.

10.0

99.5

98.5

100.0

100.0

Area of service Entity providing service Shareholdingpercentage

Numberof beds

For businesses, the company has invested in 14 subsidiaries and affiliates operating private

hospitals in different areas with profit center management. Patients are occasionally referred to

specialized clinicians at another hospital in the network where necessary.

With regard to relevant businesses, the company has invested in subsidiaries and affiliates

engaged in businesses such as pharmaceutical production, laboratory and medical evacuation.

These companies were established to cater to third parties and to support the company’s network

at market price.

Type of Revenue Entity providing serviceShareholding

percentage


2005

Amount %

2004

Amount %

2003

Amount %

88.9

4.9

2.1

0.7

2.0

98.6

1.2

0.2

1.4

100.0

From

medical service fees

From

laboratory fees

Total Revenue from core operations

Bangkok Dusit Medical Services Plc.



Bangkok Trad Co., Ltd.




Samitivej Public Plc.



Total




Total

79.0

81.0

63.4

98.5

100.0

99.5

92.9

87.6

62.0

74.0

95.0

3,678.2

189.2

334.2

124.7

446.3

50.3

368.0

5,190.9

69.4

13.9

83.3

5,274.2

69.7

3.6

6.3

2.4

8.5

1.0

7.0

98.4

1.3

0.3

1.6

100.0

4,238.2

134.8

474.9

144.2

540.6

159.8

787.5

2,776.6

720.6

209.8

10,187.0

42.7

21.1

66.8

10,253.8

41.3

1.3

4.6

1.4

5.3

1.6

7.7

27.1

7.0

2.1

99.4

0.4

0.2

0.6

100.0

2,743.6

150.2

63.3

22.5

62.6

3,042.1

37.2

5.3

42.5

3,084.6

Investment in Relevant Businesses

Type of business Entity providing service Shareholdingpercentage



Bio Molecular Laboratory (Thailand) Co., Ltd.




1. Production and sale of medication

2. Medical laboratory

3. Bio Molecular laboratory

4. PR and marketing service

5. Medical Evacuation

6. Land lease for the operation of

hospital businesses in Cambodia.

49.0

74.0

95.0

30.0

100.0

49.0

28

4. Revenue structure of the company and subsidiary companies

The revenue structures of the company and subsidiary companies in 2003 through 2005 may becompared as below:

29

The company has regularly oganized academic seminars for Bangkok

Hospital doctors as well as those from other institutions in order to maximize

the capabilities of doctors in all tracts. Bangkok Hospital is currently certified

as the primary institution for continuous medical education project of the

Medical Practitioners Council. Doctors, nurses and medical practitioners

participating in seminars will be granted a Continuous Medical Education

(CME) credit for their renewal of medical professional practice license. The

notable medical seminars in 2005 were as follows :

• March 2005 : The Fifth BGH Annual Academic Congress and the First

Dental and Maxillofacial Academic Meeting held at the Medical Practitioners

of Thailand.

• August 2005 : The Sixth BGH Congress on Critical Care for Nurses was

held to further improve technical and managerial knowledge of nurses and

medical practitioners. The contents revolved around continuous care of

critical patients under the theme "For the Best in the Practical Knowledge

and Management of Critical Care".

ResearchandDevelopment

30

• The company has continuously provided its support to the activities of

Vejdusit Foundation under the Royal Patronage of HRH Princess Galyani

Vadhana Krom Luang Naradhiwas Rajanagarindra in order to help financially

distressed patients and to promote research efforts of doctors working

Bangkok Hospital Group and elsewhere for the development of Thai medical

community.

• Our contribution to research and development work over the past

three years may be summarized as follows:

2003 27.09 Million Baht



31

Industry Outlook and competition inthe international arena

In this age of globalization, several countries have made it an agenda to

turn the medical service industry into a foreign currency earner. Thailand is

one of such countries. We have a policy aimed at turning Thailand into the

Medical Hub of Asia within five years from 2004 to 2008 with three emphases

on health products and services: medical treatment service business, health

promotion service business and Thai herb and health product business. It is

expected that the total income in this five years space will be 210,815 Million

Baht. Asian, Middle Eastern and European countries are targeted.

Foreigners traveling to Thailand for treatments may be classified into

three groups:

1. Patients from countries with poorer medical advancement than Thailand

such as Bangladesh, Burma and Cambodia. These clients are well to do people

or country leaders.

2. Patients from countries with equivalent medical advancement as Thailand

such as Japan, Australia and Middle Eastern countries. These clients travel to

Thailand for treatments because their countries do not have sufficient medical

personnel to keep up with the demand of the clients.

3. Patients from countries with more advanced medical advancement than

Thailand such as the United States of America, England and European

countries. Most of the clients come to Thailand for the treatment of diseases

not covered by the health insurance they have in their country. They are less

well to do people who do not wish to pay high medical bills. The queues for

medical treatment in their country are usually long as well.

Most of the hospitals in Thailand which are capable of providing medical

service to foreign clients in Thailand are private hospitals with Bangkok

Hospital Group and Bamrungrad Hospital at the forefront. Other private

hospitals are also attempting to tap into this group of

Industry Outlook andCompetitions

32

clients. With the combined efforts of private institutions, medical colleges

and MOPH agencies, the objective of becoming Medical Hub of Asia is not

a far fetched one. Thailand has many strengths other countries do not.

Firstly, our South East Asian location is a regional hub for airlines and a

convenient destination, especially with the opening of Suwannabhumi Airport.

Secondly, we have a firmly established tourism industry that attracts foreigners

to come for our health and medical services. Thirdly, our private and public

hospitals are as capable as other countries in the region. We are generously

supplied with modern medical equipments and specialized doctors. The

quality of our service is unsurpassed as well.

Industry Outlook and competition in Thailand

Public and private institutions vie for the local medical service market and

all seek to increase their market share. Medical institutions may be classified

into three classes by their capability. Primary care: clinics, health centers and

small hospitals capable of treating outpatients and simple procedures. Secondary

care: medium-class public and private hospitals with a higher level of

capability, able to operate and care for patients with more serious conditions

and diseases. Tertiary care: large hospitals capable of treating nearly all

diseases and performing more complex surgeries or procedures.

All three classes of were greatly affected when the government announced

their 30 Baht medical treatment policy. Clients are then divided into two

groups. The first group being those who are covered by social security,

government officials and 30 Baht medical treatment plan. The second group

being those who are of better financial position and more capable of paying

for medical services or covered by private company insurance plans. Public

medical institutions, particularly those run by Ministry of Public Health, are

required to accommodate clients who are covered by these different forms

of health insurance plans. Many of these institutions are not allocated

adequate budget

33

by the government. This is the reason why they are not able to improve their

service and technology as quickly. With more people turning to them for

medical treatments, the workload on their personnel increase and so are the

number of complaints as more mistakes are made.

Small private medical institutions had to participate in the 30 Baht

medical treatment and social security plans. They are compensated for the

number of patients under their responsibility and as such they need to lower

their expenses which lead to complaints on service quality and drugs prescribed

for the users. They have difficulties expanding their services and competing

with public institutions with budget allocation.

Most medical institutions catering to financially capable people with high

purchase power or private health insurance plans are in the tertiary care group

with or without a network. Some of such institutions are public limited

companies. The competition in this class is considerably high and many

players have developed themselves into specific centers for diseases such as

heart disease, diabetes, and neurological diseases. As high-level medical

equipments and technologies are required for these centers, it is imperative

for these institutions to have access to such technology and become the industry

leader. Additionally, they need a network transferring patients from other areas

of the country in order for them to become a major disease-specific center.

To summarize, changes in the medical service industry are not as rapid

or significant as in other industries. We are partly affected by these changes.

Regardless of economic improvement or deterioration, people will continue

to have illnesses although their purchase power may vary from time to time.

Visionary entrepreneurs who keep themselves abreast of these changes should

be able to survive and evolve.

34

The Company is progressing into its fourth decade marked by the recovery

of the Thai economy, the possibility that Thai people will be more concerned

about their health, the promotion of Thailand as “the Asian Healthcare Hub”,

medical freedom under the FTA and the increasing interest of foreign patients

to be treated in Thailand for our international standard medical personnel

and lower service fees compared to other countries of a similar medical

standard.

Given the factors above, the company has altered the administration

of Bangkok Hospital at Soi Soonvijai so that it is presently known as

Bangkok Medical Center : BMC which is comprised of Bangkok Hospital,

Bangkok Heart Hospital, Wattanosoth Hospital and Bangkok International

Hospital. Further investment plans are as follows:

FutureProjects

35

1. Bangkok Dental and Maxilofacial Center located at the entrance of

Soi Soonvijai on New Petchaburi Road. Construction has been started since

late 2005 with approximately cost of Baht 250 million. It is expected to

become operational within 2007.

2. 100-bed private hospital in Siam Reap, Cambodia, to be operated

under a new subsidiary company which incorporated in Cambodia in

December 2005.

Expected benefits

1. To expand special tract medical services and accommodate the increasing

number of patients.

2. To tap into the South East Asian market and receive patients transferred

from other countries.

BANGKOKREHABILITATIONCENTER


Bangkok Rehabilitation Center is located at Rehabilitation Building, 3rd floor. To complete medical expertise,

physiotherapist, activitor and stomatologist for service exclusively upgrade.

38

1. Risks from economic fluctuations

Private hospital business is one which may be affected by economic fluctuations. At a time of economic

recession when people earn less, they may cut down on their health expenses and opt for cheaper services of

public hospitals. On the contrary, people prefer private hospitals to public ones when the economy is rising

and they earn more as the services offered by private hospitals are superior. Fortunately, the majority of the

company’s clients are in the premium class. They are not greatly affected by economic situations and continue

to use our services even when the economy is in recess. In addition, the company’s constant investments in

modern medical equipments help build confidence in the clients as well. More importantly, the facts that the

company is a large company with strong financial position and experienced executives have shown their

capability in leading the company through several economic crises are clear evidence that the impact of

economic fluctuations on us can be mitigated.

2. Risks from the operation

Reputation and confidence are key decision factors for patients. Bangkok Hospital is backed by over thirty

years of experience, highly capable and attentive executives, careful selection of personnel and efficient

management system. The company has a quality assurance center dedicated to the implementation of systems,

standards, evaluations and supervisions that ensure quality. This is inclusive of risk management, medical

treatment quality control, infectious disease control and environmental issues for the safety of clients and

employees. The company has also published quality control manuals for the different departments as a

guideline for all staffs. Additionally, we have established a Medical Staff Organization to monitor and

evaluate the performance of doctors and nurses. All of these efforts greatly help boost the confidence

patients have in our services.

Risk Factors

39

3. Risks from the competition

The medical business has become increasingly competitive. In addition to public and private hospitals, it is

possible that foreign entrepreneurs will soon enter the scene with the government’s plan to liberate the medical

service industry. These foreign entrepreneurs with good reputation and experience will likely be interested in

setting up hospitals in Thailand. They are at an advantage because of their technological advancement,

network size and image as global players. Nevertheless, the hospital business is a complex one and varies from

one country to another so entrepreneurs need to understand consumers’ requirements well. This is where

foreign entrepreneurs are at a disadvantage. Further, medical personnel practicing in Thailand need to be

issued a proper license by the Thai authority therefore foreign entrepreneurs may not relocate their personnel

from foreign countries and have them practice in Thailand. Given the reasons above, foreign entrepreneurs

will face numerous obstacles even if Thai medical service industry is liberalized. As a strong local entrepreneurs,

the company has an extensive network of hospitals covering key locations across the country, a great state of

readiness, necessary equipments and standardized services. We believe that these factors help mitigate risks

from the competition. We will nevertheless continue to improve our services and remain at the top of the

industry.

4. Risks from medical personnel scarcity

Despite the effort of the government to encourage production of medical practitioners by educational

institutions, the actual process requires time and expertise. Consequently, with the rapid growth of the economy

and the medical service industry, it is possible that the supply of practitioners may not be sufficient in the

future. The company is not yet significantly affected because medical personnel are attracted by reputation of

the group. In spite of this, the company has prepared to accommodate the growth through compensations,

trainings, welfares and recreational activities which will attract the employees and retain them at the

same time.

40

5. Financial risks

Risks from loans to subsidiaries and joint ventures

The company deeply concerns with the provision of financial assistance to subsidiaries and affiliates. As of

the 31st of December 2005, the burden of loans to subsidiaries was only Baht 1.2 million. This amount is not

considered significant to our financial status. In addition, the company does not have a policy to provide

additional loans to subsidiaries and affiliates. Such companies will be encouraged to secure loans directly

from financial institutions.

Risks from rising interest rates

The rising interest rates may affect to financial costs as well as cash flows of the company and the subsidiaries.

Since the group still has an existing loans and also need the external sources of funds for the further expansion.

However, the group has a positive relationship with many financial institues, the higher in interest rate may

not significantly affect to the group performance as compared to the others.

Risks from debt collection

Patients are generally treated before payment is made. This practice poses risks from collection of service

fees in full amount. Nevertheless, the company has a strict policy of avoiding possible risks from debt collection.

No credit is granted to clients. The hospital prepares an estimate of treatment fees for the patients in advance

and informs them of the treatment fees incurred at intervals in order to minimize the burden of a single payment

of treatment fee upon their discharge from the hospital. As for clients who are party to agreements, the company

has a policy of carefully granting credits based upon the credit and financial status of the party company and

reviewing transactions made with the company on an annual basis. The said policy is effective in the reduction

of possible risks from debt collection.

41

Shareholders StructureandManagement

1. Shareholders structure

The major shareholders as of the 3rd of October 2005, which was the latest closing date of registrar book

in year 2005, were as follows:

Number of shares

149,235,707

110,841,869

89,608,758

69,266,790

60,722,757

40,027,446

39,183,026

36,953,748

31,985,000

27,777,900

655,603,001

Name

Prasert Prasartthong-osoth, M.D. *

Bangkok Airways Co., Ltd.*

Viriyah Insurance Co., Ltd.

Mr. Satit Viddayakorn and spouse

Pongsak Viddayakorn, M.D. and spouse

Raffles Nominees (PTE) Limited


Chirotchana Suchato, M.D. and spouse

Miss Poramaporn Prasartthong-osoth

HSBC (Singapore) Nominees (PTE) Limited

Shareholding percentage

12.83%

9.53%

7.70%

5.95%

5.22%

3.44%

3.37%

3.18%

2.75%

2.39%

56.35%

No.

1

2

3

4

5

6

7

8

9

10

Total

Doctors

Nurses

General staffs

Total

(Unit: Person)

196

599

1,308

2,103

233

32

121

386

429

631

1,429

2,489

Source: Thailand Securities Depository Co., Ltd.* The first and the second ranking shareholders are considered as the same person under Section 258.of the SEC Act B.E.2535 (A.D.1992)

Permanent doctors,nurses and staffs

Temporary doctors,nurses and staffs

Type of employeeTotal

2. Management

2.1 Number of Employees

The company has a total of 2,489 employees as of the 31st of December 2005 as below:

42

2.2 Managerial structure

As of the 31st of December 2005, the company’s managerial structure is comprised of the Board of

Directors, the Audit Committee and the executives as follows:

Board of Director

Prof. Arun Pausawasdi, M.D.

Prasert Prasartthong-osoth, M.D.

Prof. Snoe Indrasukhsri, M.D.

Pongsak Viddayakorn, M.D.

Chirotchana Suchato, M.D.

Chuladej Yossundharakul, M.D.

Prof. Santasiri Sornmani, M.D.

Yingdao Krairiksh, M.D.

Mr. Anuchat Chaiprapa

Mr. Wallop Adhikomprapa

Mr. Thavatwong Thanasumitra

Kitipan Visudharom, M.D.

Chairman

Vice Chairman

Independent Director

Director

Director

Director


Director


Director

Director

Director

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

Authorized directors

Two directors out of Pongsak Viddayakorn, M.D., Chuladej Yossundharakul, M.D., Chirotchana Suchato,

M.D., and, Mr. Wallop Adhikomprapa sign jointly and affix the company’s seal.

Duties and responsibilities

1. Perform duties using their knowledge and expertise for the benefit of the company in accordance with the

regulations of the company and resolutions of the shareholders meeting. Directors are authorized to perform

actions indicated in the articles of association, Public Company Act and relevant laws.

2. Comply with the provisions and the good practices of listed company directors of the Stock Exchange

of Thailand.

3. Establish policies, approve business plans, annual budget and investment; and, make financial decisions.

4. Monitor the operational results of the company in order to ensure consistency with the established

goals and plans.

43

5. Arrange for efficient internal control and audit systems for the purposes of auditing, operational oversight

and liaison with the audit committee.

6. Protect the interests of shareholders and practice standardized and transparent disclosure of information.

Audit Committee

1. Prof. Snoe Indrasukhsri, M.D.

2. Prof. Santasiri Sornmani, M.D.

3. Mr. Anuchat Chaiprapa


In order that the Audit Committee may perform the duties assigned by the Board of Directors, the Audit

Committee shall have the following duties and responsibilities:

1. Ensure the correct, complete and reliable issuance of reports and disclosure of information in financial

reports of the company by liaising with external auditors and executives responsible for the preparation of

quarterly and annual financial reports.

2. Ensure the use of proper and efficient internal control measures and engage in the joint revision with

independent external auditors and internal auditors in order to ensure consistency.

3. Review transactions with associated companies or individuals in order to prevent conflicts of interest.

4. Ensure compliance with the regulations of the Stock Exchange of Thailand and other relevant laws.

5. Review evidence for internal investigation in the case where fraud or abnormality is suspected or significant

defect is found in the internal control measures for further submission to the Board of Directors.

6. Order and review evidence in the case where violation of law or any regulation of the Stock Exchange

of Thailand with possible significant effects on the financial status and the operational results of the listed

company is suspected.

7. Nominate auditors and annual auditing fee to the Board of Directors for the approval of the shareholders

meeting.

8. Complete the other tasks assigned by the Board of Directors.

Chairman

Member

Member

44

CEO Committee

As of the 17th of September 2005, the Board of Directors has had a resolution at Meeting No. 9/2005 appointing

the CEO Committee as follows:

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.







Chatri Duangnate, M.D., FAAP., FACMQ.


Mr.Lee Khoe Soa

Krittavith Lertutsahakul, M.D.

Pichit Kangwolkij, M.D.

Assoc.Prof. Ajjima Srethaputr

Chairman

First Vice Chairman

Second Vice Chairman

Member

Member

Member

Member

Member

Member

Member

Member

Member and Secretary


1. Establish strategies, policies, business and budget plans for the approval of Board of Directors.

2. Oversee and monitor the operation as authorized by Board of Directors in accordance with the regulation

approved by Board of Directors with utmost benefit of the company and the shareholders in mind to ensure

efficiency and favorable business environment.

3. Assign duties to, follow up on and oversee the operation of the management under the supervision of

Chairman of Executive Board as assigned by Board of Directors.

4. Review matters to be presented to Board of Directors for approval, identify solutions to the problems

of the company, and, propose administrative and personnel policies for the consideration of Board of Directors.

5. Propose the appointment and the removal of high level executives and specify duties and responsibilities

of high level executives in different areas.

6. Engage in other duties occasionally assigned by Board of Directors.

7. Legitimately and honestly proceed in accordance with the resolutions of shareholders meetings and

Board of Directors meetings while mindful of interests, objectives and regulations of the company.

45

The duties and the authorities above shall not allow the executives and Chairman of CEO Committee to approve

transactions relating to individuals with whom they have conflicts of interests or transactions which may lead to

conflicts of interests of other nature (according to the Notification of Securities and Exchange Commission)

with the company or subsidiaries. Such transactions or matter shall be presented to the Audit Committee and/

or Board of Directors whichever the case may be for approval.


The management is responsible for internal administration in accordance with established policies and

business goals.

2.3 Selection of directors

The appointment and the removal of directors shall be as prescribed in the articles of association as follows:

• The board of directors of the company shall be consisting of not less than five persons, not less than

one half of the number of such directors must reside within the Kingdom of Thailand

• The director must be an ordinary person and has the following qualifications:

(1) Having become sui juris;

(2) Not being a bankrupt, incompetent or quasi-incompetent;

(3) Having never been imprisoned by the final judgment of the court for an offence related to property

committed with dishonest intent;

(4) Having never been dismissed or removed from the position in a governmental authority or organization

or state unit on a charge of performance of duty in bad faith.

1.

2.

3.

4.

5.

6.

Name


Chatri Duangnate, M.D., FAAP., FACMQ.


Assoc. Prof. Ajjima Srethaputr

Pichit Kangwolkij, M.D.

Surapong Lookhanumanjao, M.D.

Position

President and Acting Hospital Director of

Bangkok Heart Hospital

Chief Operating Officer

Vice President-Accounting & Finance

Vice President-Marketing and Business

Development, and, Assistant to Chairman

of CEO Committee

Hospital Director of Bangkok Hospital

Hospital Director of Wattanosoth Hospital

Management team (as definition of the Securities and Exchange Commission)

46

• The directors shall be elected at the shareholders meeting in accordance with the criteria and procedures

as follows:

(1) Each shareholder shall have one share for one vote multiplied by the number of the nominated

directors;

(2) Each shareholder may exercise all the votes, he or she has under (1) to elect one or several persons as

director or directors, but the shareholder cannot divide his or her votes to any particular person or

persons; and

(3) Persons who receive the highest votes arranged in order from higher to lower in a number equal to

that of the number of directors to be appointed are elected to be the directors of the Company. In the

event of a tie at a lower place, which would make the number of directors greater than that required,

it should be elected by a draw in order to get the number of directors who should be elected.

• At every annual general meeting of shareholders, all directors shall resign from the board of directors

of the company and the new board of directors shall be elected at the same time, but the former board of

directors may perform its duties as necessary until the new board of directors may take over its roles.

• A vacating director may be eligible for re-election.

• Apart from vacating at the end of his office term, directors shall vacate office upon.

(1) death;

(2) resignation;

(3) lack of qualifications or possession of prohibited characteristics under the laws;

(4) the shareholders meeting passed a resolution to resign with a vote not less than three-fourths (3/4) of

the total votes of shareholders who attend the meeting and are entitled to vote and must also have total

shares not less than one-half of the number of shares held by shareholders who attend the meeting

and are entitled to vote.

(5) removal by a court order.

• Any director wishing to resign from the director position shall submit a resignation letter to the Company.

The resignation shall take effect from the date on which the resignation letter reaches the Company.

• In the event that a position of director becomes vacant for any reason other than the end of his office

term, the board of directors shall on the next board meeting appoint a qualified person, not possessing

prohibited characteristics under the laws to be a new director, except if such office term remaining is less than

two (2) months. The substitute director shall hold office only for the remainder of the term of office of the

director whom he replaces.

The resolution of the board of directors pursuant to the first paragraph must be approved by the votes of

not less than three-fourths (3/4) of the number of the remaining directors.

47

• In the event that the vacancies in the vacancies in the board of directors resulting in the number of directors

being less than the number required for a quorum, the remaining directors shall perform and act in the name

of the board of directors only in matters relating to the calling of the shareholders meeting to elect directors to

replace all the vacancies.

In addition, the company has stipulated that the Board of Directors shall be comprised of at least three

independent directors of the qualifications specified by the Securities and Exchange Commission and the

Stock Exchange of Thailand.

3. Executives’ compensation

3.1 Monetary compensation in 2005

• The twelve members of the Board of Directors have been paid a compensation in the form of meeting

allowance and director’s remuneration for a total of Baht 15.61 million in 2005 as follows:

• Twelve members of CEO Committee were paid compensation in the form of meeting allowance for a

total of Baht 0.19 million in 2005. (CEO Committee was appointed by Board of Directors on the 17th of

September 2005.)

• Six executives were paid compensation in the form of monthly salary, bonus and meeting allowance for

a total of Baht 23.96 million in 2005.

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

List of Directors' Name

Prof. Arun Pausawasdi, M.D.


Prof. Snoe Indrasukhsri, M.D.




Prof. Santasiri Sornmani, M.D.


Mr. Anuchat Chaiprapa


Mr. Thavatwong Thanasumitra


Total compensation

1.76

1.26

1.26

1.26

1.26

1.26

1.26

1.26

1.26

1.26

1.26

1.26

(Million Baht)

Year of operational results for which dividend is paid

2004

2003

2002

2001

Payment of dividend from the operational

results of January - December 2004.





1. Payment of dividend from the operational

results of July-December 2001.

2. Payment of interim dividend from the

operational results of January-June 2001.

Rate of dividend (Baht per share) Date of dividend payment

The 6th of May 2005.

The 21st of May 2004.

The 23rd of May 2003.

The 24th of May 2002.

The 17th of September 2001.

Remark: The company has registered the change of ordinary share par value from 10 Baht to 1 Baht on the 11th of May 2004.

0.50 Baht per share*

4 Baht per share

3 Baht per share

2 Baht per share

1 Baht per share

48

3.2 Other compensations

In addition to meeting allowances, directors’ rewards, salary and bonus, the company provides the directors

and executives with office cars, cellular phones and other items. They are also entitled to medical treatment

welfare as per the regulation of the company as like permanent employees.

4. Dividend payment policy

The company and the subsidiaries pay out dividends to the shareholders at the approval of the Board of

Directors, dependent upon the operational results and the dividend payment ability of the company in each

year. An approval of the shareholders meeting is required with the exception of interim dividend payment for

which approval is granted by the Board of Directors.

The payment of dividends during the past four years (2001-2005) may be summarized as follows:

49

The Board of Directors realizes its roles, duties and responsibilities of good corporate governance in order

to ensure continuous and stable growth of the business through efficient and transparent management for

the confidence of all parties involved and the utmost benefit of the company and the shareholders.

Therefore, the Board of Directors has had a resolution at the 9/2005 meeting on the 17th of September 2005

approving existing and future policies concerning good corporate governance which are consistent with the

fifteen principals of corporate governance.

1. Corporate governance policy (the first principal of corporate governance)

The company is operating under the governance of the Board of Directors with the policy of transparent

and effective management with responsibility to the greatest benefits of the organization and all interested

parties in order to prevent any conflict of interests and ensure the long-term benefit of the shareholders.

The company requires compliance with the articles of association of the company, laws on securities and

Security Exchange, requirements of the Security Exchange and laws relevant to the business of the company

as well as the criteria of company with good corporate governance stipulated by the Security Exchange.

2. Shareholders: Rights, equality and shareholders meeting (the second and the fourth principals of

corporate governance)

The company realizes and respects the equality of rights of all shareholders and is seriously concerned about

the receipt of accurate and complete information by the shareholders. Shareholders may exercise their right

and safeguard their interests by giving opinions and voting at shareholders meetings as well as taking part in

important decisions including Board of Directors appointment. For the past shareholders meetings, the

company has sent letter of notifications and accompanying information to the shareholders at least seven days

in advance and arranged for publication of shareholders meeting notification in newspapers for three

consecutive days at least three business days prior to the date of meeting. The opinion of the Board of

Directors and detailed documents associated with the meeting in Thai and English shall be provided to the

shareholders prior to the meeting. The company has granted an alternative to the shareholders in 2003 in that

they may assign their authority to the three independent directors in the event where they are unable to

participate in the meeting. Shareholders may prepare a petition requesting Board of Directors to call for an

extraordinary shareholders meeting at any reasonable time as specified in regulations of the company by

stating a clear reason. Board of Directors shall call for a shareholders meeting within one month from the day

on which the letter from the shareholders is received.

CorporateGovernance

50

The Board of Directors recognizes the importance of shareholders meeting and all twelve directors shall

participate in the meeting in order that the shareholders may equally exercise their rights in expressing their

opinions and direct questions to the board of directors. Correct and complete minutes are taken for later revision

by the shareholders and relevant parties.

3. Rights of stakeholders (the third and the seventh principals of the corporate governance)

The company recognizes the importance of rights of all interested parties and treats all employees with

equality and fairness. Purchases of product and service from trading partners are completed as per the trading

conditions and agreements entered into with them. Conditions of loan agreements are observed. Further, we

are seriously concerned with the confidentiality of clients and have established a unit to specifically monitor

quality. The company has a policy of operating with responsibility to the society, relevant parties and personnel

of the organization. The company has adopted the ISO 14001 environment management system and announced

the “Environment, Hygienic Profession and Safety Policy” for use within the hospital. Employees and relevant

parties are informed of this for determinedand continuous practice.

Further, the Company has established Wejchadusit Foundation to support the research efforts of doctors

nationwide. Other notable projects include “Rak Jai Khun Hospital” under which youths are encouraged to

creatively develop measures to prevent health problems and a healthcare preventive program called “Thai

Chuay Thai”.

4. Leadership and visions (the fifth principal of corporate governance)

The Board of Directors has a role of establishing the visions of the company in conjunction with the

executives, practicing good corporate governance and assessing the performance of executives while giving

them the freedom to make decisions for the utmost benefit of shareholders as well as all interested parties.

In practice, the Board of Directors has appointed the President as the person responsible for the management

of the company and established definite roles, duties and responsibilities for the Board of Directors and the

executives.

Additionally, the company encourages directors of the company and associated companies to participate

in the Director Certificate Program (DCP) and Director Accreditation Program (DAP) of Thai Institute of

Directors Association in order that they may attain better understanding on efficient governance and use the

knowledge gained to realize the corporate governance policies. Directors having completed the Director

Certificate Program are Mr. Wallop Adhikomprapa (20th Class) and Mr. Thavatwong Thanasumitra

(27th Class).

51

Prof. Santasiri Sornmani, M.D. (43rd Class), Yingdao Krairiksh, M.D. (44th Class), Prof. Snoe Indrasukhsri,

M.D. (45th Class), Prof. Arun Pausawasdi, M.D. (45th Class), Prasert Prasartthong-osoth, M.D. (45th Class),

Pongsak Viddayakorn, M.D. (45th Class), Chuladej Yossundharakul, M.D. (45th Class), and, Chirotchana

Suchato, M.D. (45th Class).

5. Conflicts of interest (the sixth principal of corporate governance)

The Board of Directors and the executives have proceeded strictly in accordance with the criteria of the

Stock Exchange of Thailand and the Securities & Exchange Commission in order to carefully, reasonably and

independently eliminate conflicts of interest in good faith for the benefit of the company. In order to ensure

transparency and prevent personal gaining of benefits, the company has established a policy on the use of

internal information preventing directors, executives and employees (including spouses and children not of

juristic age of the said individuals) from receiving vital internal information which may affect the stock trading

price or the use of vital, undisclosed internal information for the benefit of oneself or others. Directors and

executives are responsible for the preparation and the submission of shareholding report to the Securities &

Exchange Commission. They need to report any change in the shareholding to the Secretary of Board of

Directors on the monthly basis in order that the secretary may prepare a report of such for subsequent

presentation to the Board of Directors meeting.

6. Business ethics (the seventh principal of corporate governance)

The company seriously values operational ethics, particularly that concerning clients treated at the hospitals.

Therefore, all personnel are encouraged to constantly observe the rights of patients. A code of ethical conduct

for executives and personnel is being prepared as a guideline for practice with clients and all related parties.

7. Balance of non-executive directors (the eighth and the ninth principals of corporate governance)

The Board of Directors is comprised of 12 directors; 7 of which are executive directors, 3 of which are

independent directors and 2 of which are non-executive directors. The Chairman of the Board of Directors

shall be a non-executive director and not the same person as the President of the company in order that the

Chairman may be sufficiently independent from the management and that policy and management works

are appropriately separated for balance.

8. Compensation of directors and executives (the tenth principal of corporate governance)

The company does not currently have a subcommittee to specify compensations. However, an appropriate

consideration process is in place. That is, the compensation of directors shall be approved by the shareholders

meeting and the compensation of high-level executives shall be as per the criteria and the policy specified by

the Board of Directors and dependent upon the operational results of the company and the performance of

each executive.

Director

1. Prof. Arun Pausawasdi, M.D.

2. Prasert Prasartthong-Osoth, M.D.

3. Pongsak Viddayakorn, M.D.

4. Chirotchana Suchato, M.D.

5. Chuladej Yossundharakul, M.D.

6. Yingdao Krairiksh, M.D.

7. Mr. Wallop Adhikomprapa

8. Mr. Thavatwong Thanasumitra

9. Kitipan Visudharom, M.D.

10. Prof. Snoe Indrasukhsri, M.D.

11. Prof. Santasiri Sornmani, M.D.


Title

Chairman

Vice Chairman

Director

Director

Director

Director

Director

Director

Director




15/16

9/16

16/16

15/16

16/16

15/16

15/16

16/16

12/16

16/16

16/16

15/16

Number of participation/number of all meetings

52

9. Board of Directors meetings (the eleventh principal of corporate governance)

The company has scheduled Board of Directors meetings in advance throughout the year on every third

Saturday of the month so that all directors may be aware of the schedule and allocate the time for their

participation on every occasion. Agendas for each meeting have been prepared in advance with continued agenda

for the follow up on the duty assigned. The secretary of the Board of Directors shall deliver a letter of

invitation with agendas at least seven business days in advance in order to grant the board of directors sufficient

time to study the data prior to the meeting. The Board of Directors has held a total of 16 meetings in 2005, 12

of which were ordinary meetings and 4 of which were extraordinary meetings. Directors present for these

meetings were as follows:

10. Subcommittees (the twelfth principal of corporate governance)

The Board of Directors of the company has appointed an Audit Committee to review financial reports of

the company to ensure correctness, complete and sufficient disclosure, availability of appropriate and efficient

internal control measures, compliance with relevant regulations and laws; to screen and nominate auditors,

to prevent conflicts of interest and to perform any other duty assigned by the Board of Directors.

53

11. Internal control measures and auditing (the thirteenth principal of corporate governance)

The Board of Directors has the roles, the duties and the responsibilities stated under the managerial

structure section. An Audit Committee comprising of three members, one of whom is of accounting and

financial knowledge, is appointed by the Board of Directors.

As for internal control, the company has arranged for an accounting office to serve as the internal auditor

who would periodically inspect the operations in order to ascertain that the internal control measures of the

company are sufficient for the prevention of possible risks and to report the results of such internal audit to

the executives and the Board of Directors meeting so that improvements can be made for greater efficiency.

12. Investor relations (the fifteenth principal of corporate governance)

The Board of Directors of the company recognizes the importance of disclosure of correct and complete

information including financial reports and general information to the shareholders and investors. However,

the company has yet to establish a unit specifically responsible for the provision of information to investors.

The Vice President for Accounting and Finance was assigned to communicate with institutional investors,

shareholders, analysts and relevant governmental agencies. Investors or other interested parties may request

for information at www.bangkokhospital.com

13. Internal information usage

The company has a policy prohibiting directors, executives and employees who have learned of internal

information from using such information to their own benefits. The individuals involved are required to

proceed as follows:

• The company educates directors and executives on their duties to report the stock trading conducted by

themselves, their spouses and minor children as well as the penalties under the Securities and Exchange Act

B.E. 2535 (A.D.1992), its amendments and the stipulations of the Stock Exchange of Thailand.

• Directors and executives are responsible for the preparation and the submission of the shares held

by themselves, their spouses and minor children to the Securities & Exchange Commission as follows:

(1) Report of the security holding of the company (Form 59-1) within thirty days from the day on which

they are appointed as a director or an executive.

(2) Report of change in security holding of the company (Form 59-2) as a result of acquisition, disposition

or transferring of securities within three business days from the day of such transactions and a copy

of such shareholding report shall be submitted to the company within the same day as the day on

which such report is submitted to the Securities & Exchange Commission.

54

1. Natures of transactions

Transactions between Bangkok Dusit Medical Services Public Company Limited and related companies

or individuals are disclosed in Note 4 to the financial statements and may be classified as follows:

1.1 Trading conventional to the course of business

The company has a policy of completing transactions with associated companies as those in the normal

course of business. Such transactions shall be necessary, reasonable, supportive of the business and for the

utmost benefit of the company. The trading conditions are not different from those used in transactions with

outsiders.

1.2 Financial assistance

As of the 31st of December 2005, the company has provided financial assistance to subsidiaries as follows:

Associated company Nature of relationshipShort-term

loan

(Unit: Million Baht)

Long-termloan

0 1.20

0 1.20

TransactionswithRelatedParties

Individuals involved as joint directors and executives include:

1. Chuladej Yossundharakul, M.D.


Interested individuals holding more than 5% of shares with voting right in the subsidiaries or the joint

ventures.

- None -

Subsidiaries

Bangkok Prapadang Hospital Co., Ltd. The company holds 79% of its

shares and has installed joint directors.

55

2. Method of entering into the transactions

The company has related transactions like other businesses. These transactions are necessary and reasonable

for liquidity and utmost benefit of the company.

Small related transactions with conventional trading conditions are considered and approved by the

management. Medium to large transactions with conventional and unconventional trading conditions are

considered and approved by the Board of Directors. Large transactions with unconventional trading conditions

are considered and approved by the shareholders meeting. Transactions are categorized as follows:

• Small transactions: Transactions valued Baht 1 million or below, or, 0.03% of net tangible assets or

below, whichever is greater.

• Medium transactions: Transactions valued Baht 1 million to Baht 20 million , or, 0.03% to 3% of net

tangible assets or below, whichever is greater.

• Large transactions: Transactions valued Baht 20 million or greater, or, 3% of net tangible assets or greater,

whichever is greater.

Rules and regulations of Stock Exchange of Thailand are strictly observed in the case where the transaction

in question qualifies as a related transaction by the definition of Stock Exchange of Thailand.

As a concern for investors, the company has arranged for members of the audit committee to participate in

the Board of Directors meeting in order to ensure that related transactions are fair, appropriately priced

considering and of conventional trading conditions. In the case where the Audit Committee lacks expertise in

the matter of the transaction, the company shall arrange for an expert to give opinions on the transaction in

question for further consideration by the Audit Committee and/or Board of Directors and/or shareholders

meeting, whichever the case may be. Related transactions are disclosed in notes to the financial statements

audited by the auditors.

With regard to the provision of financial assistance to subsidiaries, the current outstanding debt is only

1.20 Million Baht. The said borrowing was approved by the 2001 annual ordinary shareholders meeting allowing

provision of financial assistance to subsidiaries, subsidiaried and associated companies within a credit line of

Baht 1,500 million. United Advisory Service Co., Ltd., the financial advisor, had an opinion at that time that

such lendings to subsidiaries and relevant companies were reasonable and fair.

56

3. Policy on the future related transactions

The company’s policy on the future related transactions are as follows:

Type of transaction Outlook and policy

The company observes conventional business practices

and charges a fair market price not unlike third parties.

The company conducts business as normal, gives and/

or is given similar repayment conditions as well as

repayment duration to third parties.

The company shall minimize the number of transactions

and restrict type and amount of transactions.

• At the present, the company has no any policy to provide

financial assistance to subsidiaries and affiliates as

they are capable of securing loans on their own such as

directly from a financial institution. But the company will

negotiate for the best conditions to the group.

• Nevertheless, the company might consider granting

financial assistance if any subsidiary company is unable to

borrow directly from a financial institution.

• However, the such loan will be considered from their

repayment ability. Conditions and interest rates are more

as that of the market but not lower than the companyís

cost of funds. In addition, the transactions shall comply

with rules and regulations according to the Notification of

Stock Exchange of Thailand.

Consultation and management services fee are charged

at appropriate market price not difference to the third parties

with proper service agreements made.

General business such as treatment

and laboratory services

Transactions arising from general trading

such as accounts receivable and

accounts payable

Advance payment

Financial assistance

Consultation and management

57

1. Operating results

In 2005, the revenues from operations of the Company and Subsidiaries rose by 94.4% YoY, from Baht 5,274.2

million to Baht 10,253.8 million. Compared to 71.0% growth in 2004 and 31.6% growth in 2003. A continuous

revenue growth was attributed by the following reasons:

• The increase in the Company’s operating revenues from Baht 2,743.6 million in 2003 to Baht 3,678.2

million and 4,238.2 million in 2004-2005. They grew by 34.0% YoY and 15.3% YoY, respectively. The growth

was supported by both increases in number of patients and service charges.

• An expansion of the group which acquired more subsidiaries over the period 2003-2005. Especially a

rising stake in Samitivej from 37% in 2004 to 92.9%.in 2005, made a 276.9% hike in subsidiaries’ operating

revenues which contributed to the group, from Baht 1,596.0 million in 2004 to Baht 6,015.6 million in 2005.

As a result of the significant increase in consolidated operating revenues over the past two years, the ratio

of patient service cost to operating revenues improved from 60.3% in 2003 to 56.9%-57.9% in 2004-2005,

respectively. In addition, the administrative expenses to consolidated operating revenues ratio decreased from

26.7% in 2004 to 23.9% in 2005.

However, a substantial expansion in buildings and medical equipment expenditure of the group during

2005 resulted to the group’s depreciation expenses rose from 7.0% of operating revenues in 2003-2004 to

9.7% in 2005.

Consequently, the consolidated net profit margin fell from 11.8%-12.5% in 2004-2003 to 8.1% in 2005.

Consolidated Operating Revenues Structure 2005 2004 2003

Operating Revenues from the Company

Operating Revenues from Subsidiries

Total Operating Revenues

4,238.2

6,015.6

10,253.8

3,678.2

1,596.0

5,274.2

2,743.6

341.1

3,084.6

Explanationand analysisof operatingresultsand financialstatus

58

2. Financial Status

2.1 Total Assets

By the end of 2005, the Company and subsidiaries posted total assets of Baht 17,677.2 million, a rise of

21.1%YoY. The components were broken down into current assets of 8.1%, investment in affiliates and

subsidiaries of 7.0%, net property, plant & equipment of 78.6% and other assets of 6.3%. As compared to the

end of 2004, the proportion was composed of 11.7% current assets, 10.5% investment in affiliates and

subsidiaries, 73.7% net property, plant & equipment, and 4.1% other assets.

2.2 Capital Structure

At the end of 2005, total liabilities of the company and subsidiaries totaled Baht 9,259.7 million, representing

52.4% of total liabilities and equity. A 38.0% rise from Baht 6,710.9 million in 2004. This was due to the group’s

business expansion which led to an increase in the group’s external sources of funds together with accounts

payable and accrued expenses.

While total equity was recorded at Baht 7,889.6 million by the end of 2005, representing 44.6% of total

liabilities and equity. A slight growth of 4.8% from Baht 7,525.0 million at the end of 2004.

3. Liquidity and Leverage ratio

As of 2005, the Company and subsidiaries had a current ratio of 0.5 times, lower from 0.9 and 0.7 times at

the end of 2004 and 2003, respectively.

However, the group still maintained the capital structure with debt to equity ratio of 0.9-1.1 times at the

end of 2003-2005 despite a 38.0% increase in the group’s liabilities during 2005. Also, the group had an impressive

interest coverage ratio at 8.2 times at the end of 2005 which was still acceptable in term of loan payment ability.

59

The Board of Directors is responsible for the financial statements and has assigned the Audit Committee

to review the financial statements for the past year. It was consequently informed that the financial statements

are carefully prepared in accordance with the generally accepted accounting principles, consistency with

appropriately selected accounting policies. The appropriateness of items shown in the consolidated financial

statement was evaluated and the disclosures of information in the notes to the financial statements was found

to be sufficient.

In addition, the Board of Directors has established efficient internal control measures in order to ensure that

all accounting data are recorded completely and precisely. The assets are also kept safe from fraudulently acts or

significantly damages.

It is the opinion of the Board of Directors that our internal control measures are satisfactory and capable of

instilling the credibility in the company’s separate financial statements and the consolidated financial statements

of the company and its subsidiaries for the year 2005.

Responsibilityof the Boardof Directorsto the financialstatements

FINANCIALSTATEMENT

62

To The Board of Directors and Shareholders of Bangkok Dusit Medical Services Public

Company Limited

I have audited the accompanying consolidated balance sheet of Bangkok Dusit Medical Services Public

Company Limited and its subsidiaries as at 31 December 2005, the related consolidated statements of earnings,

changes in shareholders' equity and cash flows for the year then ended, and the separate financial statements

of Bangkok Dusit Medical Services Public Company Limited for the same period. 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 audit.

The consolidated financial statements of Bangkok Dusit Medical Services Public Company Limited and its

subsidiaries, and the separate financial statements of Bangkok Dusit Medical Services Public Company Limited

as at and for the year ended 31 December 2004, which are presented herein for comparative purpose, were

audited by another auditor who, under his report dated 25 February 2005 expressed an unqualified opinion

on those financial statements.

I conducted my audit in accordance with generally accepted auditing standards. Those standards require

that I plan and perform the audit to obtain reasonable assurance 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 statements

presentation. I believe that my audit provides a reasonable basis for my opinion.

In my opinion, the aforementioned financial statements referred to above present fairly, in all material

respects, the financial position of Bangkok Dusit Medical Services Public Company Limited and its subsidiaries

and of Bangkok Dusit Medical Services Public Company Limited as at 31 December 2005 and the results of

their operations and cash flows for the year then ended in accordance with generally accepted accounting

principles.

Ernst & Young Office LimitedBangkok : 28 February 2006

Report ofIndependentAuditor

63

BANGKOK DUSIT MEDICAL SERVICES PUBLIC COMPANY LIMITED AND SUBSIDIARIESAS AT 31 DECEMBER 2005 AND 2004

ASSETS

528,949,910

746,600

13,966,690

550,448,224

564,414,914

2,796,804

-

160,861,479

181,678,199

1,439,447,906

20,609,107

576,079,361

55,316,980

605,177,072

-

15,392,644

13,453,639,598

438,927,180

736,653,504

206,824,771

129,135,918

16,237,756,135

17,677,204,041

4

6

7

7

7

8

5

9

11

10

7

7

12

14

13

1,038,564,334

18,469,108

15,532,417

424,041,139

439,573,556

10,390,188

-

115,401,683

86,001,127

1,708,399,996

14,941,655

988,497,808

56,241,514

486,068,333

80,258,062

37,781,643

10,283,195,833

471,427,180

287,885,450

96,122,724

87,549,909

12,889,970,111

14,598,370,107

2005Note 2004

CONSOLIDATED

100,760,368

8,018

4,481,572

221,618,147

226,099,719

18,889,273

-

70,004,964

96,889,697

512,652,039

7,440,000

5,708,672,045

55,316,980

604,953,392

1,200,951

92,999,284

4,189,714,924

438,927,180

-

41,519,126

10,907,984

11,151,651,866

11,664,303,905

749,445,142

6,240,255

5,122,091

178,065,909

183,188,000

12,149,742

130,000,000

42,365,738

41,169,488

1,164,558,365

6,000,000

4,922,796,434

56,241,514

485,844,653

18,480,951

190,883,686

2,770,342,607

471,427,180

-

44,422,368

10,518,673

8,976,958,066

10,141,516,431

2005

THE COMPANY ONLY

(Unit : Baht)

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

2004

CURRENT ASSETS

Cash and cash equivalents

Short - term investments

Trade accounts receivable

Related parties

Other - net

Total accounts receivable - net

Other receivable - related parties

Short-term loans to related parties

Inventories

Other current assets-net

TOTAL CURRENT ASSETS

NON-CURRENT ASSETS

Restricted bank deposit

Investments in subsidiary and associated

companies accounted for under equity method

Investmets in other companies - net

Other long-term investments - net

Long-term loans to related parties

Interest receivable - related parties - net

Property, plant and equipment - net

Land not used in operation

Goodwill - net

Other intangible assets - net

Other non-current assets - net

TOTAL NON-CURRENT ASSETS

TOTAL ASSETS

BALANCESHEETS

64

LIABILITIES AND SHAREHOLDERS' EQUITY

251,535,824

104,050,012

10,000,000

16,761,728

624,151,251

640,912,979

776,491,199

115,794,481

179,908,453

12,027,493

118,867,847

364,461,803

263,505,600

2,837,555,691

-

5,994,853,745

200,957,320

183,431,233

42,867,812

6,422,110,110

9,259,665,801

15

7

7

16

17

7

9

16

17

87,875,030

-

-

5,263,302

475,510,688

480,773,990

432,599,172

80,839,331

222,826,931

9,190,716

104,460,619

310,915,632

148,901,186

1,878,382,607

-

4,463,807,004

198,467,556

159,819,890

10,483,685

4,832,578,135

6,710,960,742

2005Note 2004

CONSOLIDATED

180,000,000

-

-

7,334,691

233,106,396

240,441,087

426,450,103

37,280,269

96,024,037

16,695,585

114,231,878

134,107,274

109,534,132

1,354,764,365

2,853,715

2,165,649,834

60,807,473

183,431,233

7,199,585

2,419,941,840

3,774,706,205

-

-

-

13,714,010

192,425,549

206,139,559

270,599,345

22,859,587

75,070,461

5,468,450

102,963,874

111,938,685

171,636,647

966,676,608

2,620,547

1,439,931,599

42,913,892

159,819,890

4,523,890

1,649,809,818

2,616,486,426

2005

THE COMPANY ONLY

(Unit : Baht)


2004

CURRENT LIABILITIES

Bank overdrafts and short-term loans from

financial institutions

Short-term loans

Short-term loans from related company

Trade accounts payable

Related parties

Others

Total trade accounts payable

Current portion of long-term loans

Current portion of liabilities under

hire purchase and financial lease

Accounts payable - construction and retention

Other payable - related parties

Corporate income tax payable

Accrued expenses

Other current liabilities

TOTAL CURRENT LIABILITIES

NON-CURRENT LIABILITIES

Excess for loss over cost of investment

in subsidiarycompany accounted

for under equity method

Long - term loans - net of current portion

Long - term liabilities under hire purchase

and financial lease - net of current portion

Deferred income

Other non-current liabilities

TOTAL NON-CURRENT LIABILITIES

TOTAL LIABILITIES


BALANCESHEETS

65

LIABILITIES AND SHAREHOLDERS' EQUITY (Continued)

1,183,410,108

1,163,410,108

4,322,607,094

254,659,742

963,796,488

118,341,011

1,066,783,257

7,889,597,700

527,940,540

8,417,538,240

17,677,204,041

18

10

20

1,180,500,000

1,163,410,108

4,322,607,094

135,551,004

968,741,516

90,157,544

844,562,739

7,525,030,005

362,379,360

7,887,409,365

14,598,370,107

2005Note 2004

CONSOLIDATED

1,183,410,108

1,163,410,108

4,322,607,094

254,659,742

963,796,488

118,341,011

1,066,783,257

7,889,597,700

-

7,889,597,700

11,664,303,905

1,180,500,000

1,163,410,108

4,322,607,094

135,551,004

968,741,516

90,157,544

844,562,739

7,525,030,005

-

7,525,030,005

10,141,516,431

2005

THE COMPANY ONLY

(Unit : Baht)


2004

SHAREHOLDERS' EQUITY

Share capital

Registered

1,183,410,108 ordinary shares of

Baht 1 each (2004 : 1,180,500,000 ordinary

shares of Baht 1 each)

Issued and fully paid-up

1,163,410,108 ordinary shares of Baht 1 each

Premium

Premium on ordinary shares

Revaluation surplus on investments

Revaluation surplus on land and buildings

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

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY


BALANCESHEETS

66

10,253,785,357

133,357,756

4,603,882

172,943,122

310,904,760

159,043,698

10,723,733,815

5,934,640,660

3,422,215,207

23,995,510

9,380,851,377

1,342,882,438

(275,631,227)

(207,989,020)

859,262,191

(27,153,152)

832,109,039

0.72

1,163,410,108

7

7

7

7

7

5,274,182,052

37,496,629

13,833,329

87,315,552

138,645,510

222,505,847

5,635,333,409

2,998,851,154

1,753,166,705

21,429,225

4,773,447,084

861,886,325

(121,656,107)

(211,974,378)

528,255,840

94,895,036

623,150,876

0.71

875,129,812

2005Note 2004

CONSOLIDATED

4,243,154,894

36,381,860

7,009,730

74,509,797

117,901,387

334,813,148

4,695,869,429

2,364,868,347

1,179,507,094

19,378,000

3,563,753,441

1,132,115,988

(105,573,847)

(194,433,102)

832,109,039

-

832,109,039

0.72

1,163,410,108

3,679,026,532

36,120,537

21,628,856

60,668,803

118,418,196

101,772,915

3,899,217,643

2,044,651,422

932,501,983

18,938,100

2,996,091,505

903,126,138

(78,441,823)

(201,533,439)

623,150,876

-

623,150,876

0.71

875,129,812

2005

THE COMPANY ONLY

(Unit : Baht)


2004

REVENUES

Revenues from hospital operations

Other income

Revenue from sales of food and beverages

Interest income

Others

Total other Income

Share of profit from investments accounted


TOTAL REVENUES

EXPENSES

Cost of hospital operations and others

Administrative expenses

Directors' remuneration

TOTAL EXPENSES

EARNINGS BEFORE INTEREST EXPENSE

AND INCOME TAX

INTEREST EXPENSE

CORPORATE INCOME TAX

EARNINGS BEFORE MINORITY INTEREST

MINORITY INTEREST IN NET LOSS (EARNINGS)

NET EARNINGS FOR THE YEAR

BASIC EARNINGS PER SHARE

Net earnings

Weighted average number of ordinary shares (shares)


STATEMENTSOFEARNINGS

67


750,000,000

-

-

-

413,410,108

-

-

-

-

-

1,163,410,108

-

-

-

-

-

-

1,163,410,108

1,567,600,000

-

-

-

-

2,755,007,094

-

-

-

-

4,322,607,094

-

-

-

-

-

-

4,322,607,094

33,110

-

135,517,894

-

-

-

-

-

-

-

135,551,004

-

119,108,738

-

-

-

-

254,659,742

59,000,000

-

-

-

-

-

-

-

-

31,157,544

90,157,544

-

-

-

-

-

28,183,467

118,341,011

547,313,803

-

-

5,255,604

-

-

623,150,876

-

(300,000,000)

(31,157,544)

844,562,739

-

-

832,109,039

-

(581,705,054)

(28,183,467)

1,066,783,257

341,057,062

-

-

-

-

-

-

21,322,298

-

-

362,379,360

-

-

-

165,561,180

-

-

527,940,540

3,725,442,175

513,558,920

135,517,894

-

413,410,108

2,755,007,094

623,150,876

21,322,298

(300,000,000)

-

7,887,409,365

(4,945,028)

119,108,738

832,109,039

165,561,180

(581,705,054)

-

8,417,538,240

Total

Issued and

paid-up

share capital

Premium on

ordinary

shares

Revaluation

surplus

on investment

460,438,200

513,558,920

-

(5,255,604)

-

-

-

-

-

-

968,741,516

(4,945,028)

-

-

-

-

-

963,796,488

Revaluation

surplus on land

and buildings

Appropriated-

statutory

reserveUnappropriated

Minority

interest

Retained earnings

CONSOLIDATED

(Unit : Baht)

Balance - as at 1 January 2004

Increase in revaluation surplus on land and buildings

Adjustment of fair value of investment

Other premium

Increase in share capital

Increase in permium on share capital

Net earnings for the year

Minority interest

Dividend paid (Note 19)

Transfer to statutory reserve

Balance - as at 31 December 2004

Transfer revaluation surplus on land and buildings



Minority interest




750,000,000

-

-

-

413,410,108

-

-

-

-

1,163,410,108

-

-

-

-

-

1,163,410,108

1,567,600,000

-

-

-

-

2,755,007,094

-

-

-

4,322,607,094

-

-

-

-

-

4,322,607,094

33,110

-

135,517,894

-

-

-

-

-

-

135,551,004

-

119,108,738

-

-

-

254,659,742

59,000,000

-

-

-

-

-

-

31,157,544

90,157,544

-

-

-

-

28,183,467

118,341,011

547,313,803

-

-

5,255,604

-

-

623,150,876

(300,000,000)

(31,157,544)

844,562,739

-

-

832,109,039

(581,705,054)

(28,183,467)

1,066,783,257

3,384,385,113

513,558,920

135,517,894

-

413,410,108

2,755,007,094

623,150,876

(300,000,000)

-

7,525,030,005

(4,945,028)

119,108,738

832,109,039

(581,705,054)

-

7,889,597,700

460,438,200

513,558,920

-

(5,255,604)

-

-

-

-

-

968,741,516

(4,945,028)

-

-

-

-

963,796,488

Retained earnings

THE COMPANY ONLY

Balance - as at 1 January 2004

Increase in revaluation surplus on land and buildings


Other Premium

Increase in share capital

Increase in permium on share capital





Transfer revaluation surplus on land and buildings







STATEMENTSOF CHANGESIN SHARE-HOLDERS'EQUITY

TotalIssued and

paid-upshare capital

Premium on ordinary

shares

Revaluationsurplus

on investment

Revaluation surplus on land and buildings

Appropriated-statutoryreserve

Unappropriated

Cash flows from operating activities

832,109,039

992,094,118

21,706,686

(24,388,657)

(159,043,698)

27,153,152

924,534

72,487,577

9,755,095

(5,712,407)

-

1,767,085,439

(102,126,467)

7,593,384

(34,925,236)

-

(73,578,834)

(11,074,262)

91,385,510

(7,338,271)

14,407,228

(2,218,325)

42,231,908

48,000,000

32,384,127

1,771,826,201

623,150,876

366,585,398

19,899,625

(16,383,123)

(222,505,847)

-

198,041,706

38,116,757

-

3,291,277

(789,327)

1,009,407,342

(124,245,401)

-

(18,965,041)

118,439,930

41,127,408

1,316,531

94,555,012

-

48,360,161

(68,985,827)

91,866,708

46,800,000

(10,842,052)

1,228,834,771

2005 2004

CONSOLIDATED

832,109,039

275,276,151

15,915,863

(24,388,657)

(334,813,148)

-

924,534

-

3,629,851

(1,782,842)

-

766,870,791

(58,827,582)

123,260,469

(27,639,226)

-

(55,720,209)

(389,311)

34,301,528

11,227,135

11,268,004

22,168,589

(85,127,916)

48,000,000

2,675,695

792,067,967

623,150,876

199,412,714

9,696,922

(16,383,123)

(101,772,915)

-

9,388,101

-

-

1,628,682

(789,327)

724,331,930

(58,670,338)

-

(14,536,339)

34,447,128

(13,327,238)

7,919,755

113,425,672

-

47,772,102

(21,166,613)

58,988,484

46,800,000

(5,893,515)

920,091,028

2005

THE COMPANY ONLY

(Unit : Baht)

2004

Net earnings

Adjustments to reconcile net earnings to net cash

provided by (paid from) operating activities: -

Depreciation and amortisation

Bad debts and allowance for doubtful accounts

Amortisation of deferred income

Share of profit from investments accounted for

under equity method

Minority interests in net earnings for the year

Loss on impairment of fixed assets

Amortisation of goodwill

Amortisation of deferred interest

Loss (gain) on disposal of fixed assets

Unrealize gain on foreign exchange rate

Earnings from operating activities before changes

in operating assets and liabilities

Decrease (increase) in operating assets

Trade accounts receivable

Other receivable and short - term loans to related parites

Inventories

Interest receivable

Other current assets

Other non-current asset

Increase (decrease) in operating liabilities



Corporate income tax payable

Accrued expenses


Deferred income

Other non-current liabilities

Net cash from operating activities

68



STATEMENTSOFCASH FLOWS

69


Cash flows from investing activities

12,189,299

99,715,000

-

(236,570,936)

-

125,925,110

(2,728,263,072)

102,647,061

(25,115,340)

-

(2,649,472,878)

267,710,806

10,000,000

-

1,335,073,474

(107,813,839)

-

(484,012,426)

(581,705,054)

-

(71,220,708)

368,032,253

(509,614,424)

1,038,564,334

528,949,910

285,061,568

232,609,749

135,503,658

(10,851,270)

-

(69,869,795)

(333,574,521)

2,840,040

9,177,272

(1,504,158,903)

265,636,822

-

1,229,150

(1,639,571,205)

(417,277,899)

(24,535,115)

16,951,150

-

-

477,400,000

(349,684,572)

(300,000,000)

1,500,000,000

21,322,298

924,175,862

513,439,428

525,124,906

1,038,564,334

123,287,420

170,838,499

98,896,000

2005 2004

CONSOLIDATED

4,792,237

99,715,000

-

(555,489,324)

-

4,185,329

(1,546,697,309)

115,164,402

(10,971,427)

-

(1,889,301,092)

180,000,000

-

-

1,166,505,600

(31,315,588)

-

(284,936,607)

(581,705,054)

-

-

448,548,351

(648,684,774)

749,445,142

100,760,368

104,787,426

183,344,203

60,000,000

(6,045,107)

44,758,750

-

(567,294,951)

-

3,899,326

(957,538,036)

177,522,904

-

7,755,000

(1,296,942,114)

(176,349,000)

(48,660)

-

-

-

-

(302,688,319)

(300,000,000)

1,500,000,000

-

720,914,021

344,062,935

405,382,207

749,445,142

72,742,046

153,665,286

27,743,919

2005

THE COMPANY ONLY

(Unit : Baht)

2004

Decrease (increase) in short - term investments

and restricted bank deposit

Cash from dividend received

Increase in goodwill

Cash paid for purchase of investments in

subsidiary and associated companies

Cash received from sales of investment

Cash received from disposal of fixed assets

Cash paid for purchase of fixed assets

Decrease in loans to and interest receivable

from related parties

Increase in intangible assets

Decrease in account receivables from

disposal of fixed assets

Net cash used in investing activities

Cash flows from financing activities

Increase (decrease) in bank overdraft and

short-term loans from financial institutions

Increase (decrease) in short-term loans from

related parties

Decrease in subcription receivables of

subsidiary company

Increase in long-term loan

Decrease in financial lease

Increase in other long - term liabilities

Repayment of long-term liabilities

Dividend paid

Cash received from increase of share capital

Increase (decrease) in minority interests

Net cash from financing activities

Net increase (decrease) in cash and cash equivalents

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

Non-cash items :-

Fixed assets under financial lease and

hire-purchase agreements


STATEMENTSOFCASH FLOWS

Note to Financial Statements

70

1. GENERAL INFORMATION

Bangkok Dusit Medical Services Public Company Limited was incorporated as a limited company under Thai laws

and registered the change of the status of the Company to a public limited company on 3 January 1994. The Company

operates in Thailand and its principal activity is hospital with the registered office being located at 2, Soi Soonvijai 7,

New Petchburi Road Bang Kapi Huaykwang, Bangkok.

2. BASIS OF CONSOLIDATION

2.1 The consolidated financial statements include the financial statements for the years ended 31 December 2005

and 2004 of Bangkok Dusit Medical Services Public Company Limited (herein after called "the Company") and its

subsidiaries (herein after called "the subsidiaries") which were incorporated in Thailand except B.D.M.S. International

Medical Services Co., Ltd. which was incorporated in Cambodia as follows :-

2004

Subsidiary companies Type of business Registered capital

Percentage of shareholding by

the Company (percent)

2004

Held by the Company

Bangkok Prapradang Hospital Co., Ltd.


Bio Molecular Laboratories



New Petchburi Medical Services Co., Ltd.



Bangkok Trat Hospital Co., Ltd.


BNH Medical Center Co., Ltd.




Services Co., Ltd.

Samitivej Public Co., Ltd.

Hospital

Central lab

Central lab

Hospital

Hospital

Hospital

Hospital

Hospital

Hospital

Hospital

Hospital

Services

Hospital

Hospital

105 million Baht

75 million Baht

10 million Baht

400 million Baht

1 million Baht

150 million Baht

500 million Baht

200 million Baht

500 million Baht

-

-

-

-

1,000 million Baht

79

74

95

81

100

100

99

63

99

-

-

-

-

93

105 million Baht

75 million Baht

10 million Baht

400 million Baht

1 million Baht

150 million Baht

500 million Baht

200 million Baht

500 million Baht

586 million Baht

180 million Baht

30 million Baht

9,200 million Baht

1,000 million Baht

2005 2005

79

74

95

81

100

100

99

63

99

88

62

100

100

93

BANGKOK DUSIT MEDICAL SERVICES PUBLIC COMPANY LIMITED AND SUBSIDIARIES

71

2005 2004

Subsidiary companies Type of business Registered capital

Percentage of shareholding by

the Company (percent)

2005 2004

Held by the Company

Irving Sheridan SE Co., Ltd.

(held by a subsidiary at 95%)

First Health Food Co., Ltd.


Phuket Health And Travel Co., Ltd.


Sodexho Healthcare Support Services

Thailand Ltd.


Management assets

for health care business

Restaurant and

distributing health

food products

Healthcare travel

service

Restaurant and

distributing health

food products

0.1

million Baht

14

million Baht

5

million Baht

15

million Baht

0.1

million Baht

7.1

million Baht

5

million Baht

7.5

million Baht

-

-

-

-

-

-

-

-

2005 2004

Subsidiary’s total assetsas a percentage to

the consolidated total

Subsidiary’s total revenues from patient service

as a percentage to the consolidated total

2005 2004

Subsidiaries



Bio Molecular Laboratories (Thailand) Co., Ltd.










B.D.M.S. International Medical Services Co., Ltd.


1.00

0.70

0.16

4.73

0.01

1.68

6.43

2.06

4.96

6.66

3.79

0.19

0.53

27.61

1.40

0.82

0.18

5.28

0.81

2.01

7.49

2.27

6.17

-

-

-

-

31.79

1.31

0.42

0.23

4.63

-

1.56

5.27

1.41

7.68

7.03

2.05

-

-

27.08

3.6

1.3

0.3

6.3

-

1.0

8.5

2.4

7.0

-

-

-

-

-

2.2 Percentage of total assets and revenues of the subsidiary company to the consolidated financial statements

The percentage of total assets and revenues of the subsidiary company for the years ended 31 December 2005 and

2004 to the consolidated financial statements are as follow :-

72

2.3 Intercompany balances and significant intercompany transactions between the Company and its subsidiaries are

eliminated from the consolidated financial statements.

2.4 The differences between cost of investments over/under the fair value of identifiable assets and liabilities of the

subsidiary company to the extent of the Company's portion on acquisition date are shown under the caption of

"Goodwill/negative goodwill" in the consolidated balance sheets and subject to amortisation over the period of 10 - 20 years.

2.5 Results of operations of the subsidiary companies have been included in the consolidated financial statements

from their effective dates of acquisition of the investment.

3. SIGNIFICANT ACCOUNTING POLICIES

The financial statements have been prepared in accordance with accounting standards enunciated under under the

Accounting Profession Act B.E. 2547.

3.1 Revenue and expense recognition

Revenues from hospital operations, mainly consisting of medical fees, hospital room sales, and medicine sales, are

recognized as income when services have been rendered or medicine delivered.

Revenue from sales of food and beverages are recognised when food and beverages have been delivered.

Interest income, other income and expenses are recognized on an accrual basis.

3.2 Cash and cash equivalents

Cash and cash equivalents consist of cash in hand and at financial institutions with an original maturity of three

months or less and are free from restrictions.

3.3 Trade accounts receivable and allowance for doubtful accounts

Trade accounts receivable are stated at the net realizable value. Allowance for doubtful accounts is provided to cover

the estimated losses that may incur in collection. The adequacy of the allowance is reviewed and evaluated in relation

to the collection experience, age of debt and payment ability. Debt will be written off when considered uncollectible.

3.4 Inventories

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

estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale.

3.5 Investments

Investments in subsidiary companies (in the Company's financial statements) and associated companies are stated

under the equity method

73

Other investments in non-marketable securities which the Company regards as other investment are stated at

cost. Allowance for impairment loss will be made when the net realizable value is lower than the cost of investments.

Investment in available for sales securities is determined at fair value, which is based on the latest bid price quoted

on the Stock Exchange of Thailand on the last working day of the year. Change in the value of the available for sales

securities is shown as a separate item in shareholder's equity as revaluation surplus on investments until securities are

sold, the change will be included in determining earnings.

3.6 Property, plant and equipment and depreciation

Land is stated at cost or revalued amount. Plant and equipment are stated at cost or revalued amount less

accumulated depreciation and provision for impairment. Depreciation of plant and equipment is calculated by reference

to their cost or revalued amount on a straight-line basis over the estimated useful lives of each item of property plant

equipment, except assets of the Company which were acquired before 1988 are depreciated on a declining balance

method.

The estimated useful lives of assets are as follows :-

Building, structures and building improvements

Medical tools and equipment, furniture and office equipment

Vehicles

No depreciation is provided on land and fixed assets under construction and installation.

Revalued assets

The Company and the subsidiary companies initially recorded land and buildings at cost on acquisition dates.

Land and buildings are subsequently revalued by independent professional valuer, to their fair values. Revaluations

are made with sufficient regularity to ensure that their carrying amounts do not differ materially from their fair value

at the balance sheet date.

The Company and subsidiary companies records the differences incurred from revaluation as follows :-

• When an asset's carrying amount is increased as a result of a revaluation, the increase should be credited directly

to equity under the heading of "Surplus on revaluation of land and buildings". However, a revaluation increase should

be recognised as income to the extent that it reverses a revaluation decrease of the same asset previously recognised

as an expense.

• When an asset's carrying amount is decreased as a result of a revaluation, the decrease should be recognised as an

expense in the earnings statement. However, a revaluation decrease should be charged directly against any related

"Surplus on revaluation of land and buildings" to the extent that the decrease does not exceed the amount held in the

revaluation surplus in respect of that same asset and the excess is recognised an expense in the earnings statement.

5 - 50 years

3 - 10 years

5 - 8 years

74

During the year 2005, a subsidiary company used accounting policy related to the recording of the revaluation

surplus on land and building, by being transferred through the earnings statements, as pemitted under the Institute of

Certified Accountants and Auditors of Thailand ("ICAAT")'s announcement No. 006/2544-2546.

Nevertheless, the ICAAT announcement is effective until 2006 and the subsidiary will again have to comply with

Accounting Standard No. 32 which requires such revaluation surplus to be transferred directly to retained earnings as

from 1 January 2007. The subsidiary has to retroactively restate all presented comparative figures when it changes its

accounting policy.

3.7 Hire-purchase and financial lease agreements

The Company and its subsidiary companies record medical tools and vehicles under hire-purchase and financial

lease agreements as assets and liabilities in the balance sheet at amount equal to the fair value of such assets at the inception

of the agreements or, if lower, at the present value of the minimum payments. In calculating the present value of the

minimum payments, the discount factor used is the interest rate implicit in the agreements. The interest charge is

recorded over the contract period based on the remaining balance of the liabilities for each period.

3.8 Other intangible assets and amortization

Other intangible assets, mainly leasehold right and computer software, are stated at cost less accumulated amortisation

and provision for impairment. The Company and the subsidiary companies amortise intangible assets on a straight-line

method over the period of 5 - 10 years or based on the period in the agreement and the amortisation is included in the

earnings statement.

3.9 Operating lease

Lease of assets where a significant portion of the risks and rewards of ownership are retained by the lessor are classified

as operating leases. Payments made under operating leases are recognized as expenses in the statements of earnings

over the period of the lease.

3.10 Impairment of assets

The Company and its subsidiary companies review the impairment of assets whenever events indicate that carrying

value of an asset exceeds its recoverable amount or fair value (the higher of an assets net selling price or value in use).

The review is made for individual assets or for the cash generating unit, as the case may be.

The Company and its subsidiary companies recognises an impairment loss in the statements of earnings whenever

the book value of an asset exceeds its recoverable amount. The Company and its subsidiary companies will reverse

the impairment loss whenever there is any indication that an impairment loss recognized may no longer exist or may

have decreased.

3.11 Deferred income

Deferred income represents payments from Life Privilege holders and is amortized over 10 years.

75

3.12 Foreign currencies

Transactions in foreign currencies incurred during the year are translated into Baht at the rates ruling on the

transaction dates. Monetary assets and liabilities denominated in foreign currency outstanding at the balance sheet

date are translated into Baht at the rates ruling on the balance sheet date. Exchange gains and losses are included in

determining earnings.

3.13 Financial instruments

Financial instruments presented in the balance sheets consist of cash and cash at bank, short-term investments,

accounts receivable, accounts payable, loans and borrowings. The accounting policy is separately disclosed in the

related notes.

The Company and its subsidiary companies have no policy to engage in any off balance sheet derivative financial

instruments for speculative or trading purpose.

3.14 Corporate income tax

Corporate income tax has been calculated on the earnings before income tax, after adding back certain provisions

for expenses which are disallowable for tax computation purposes, deducting accumulated tax loss brought forward

from previous year (if any) and excluding share of profit (loss) from investments accounted for under equity method

and dividend received from subsidiaries.

3.15 Earnings per share

Earnings per share as presented in the statements of earnings is the basic earnings per share which is determined by

dividing the net earnings for the year by the weighted average number of ordinary shares in issue during the year.

3.16 Use of accounting estimates

Preparation of financial statements in conformity with generally accepted accounting principles requires management

to make estimates for certain accounting transactions, affecting amounts reported in the financial statements and notes

thereto. Subsequent actual results may differ from these estimates.

4. CASH AND CASH EQUIVALENTS

Cash and cash equivalents for the years ended 31 December 2005 and 2004, consist of the following :

The Company only

2005 2004

Consolidated

2005 2004

Cash and deposit at banks

Fixed deposit

Less : Fixed deposits more than 3 months and

restricted bank deposit


449,604,359

100,701,257

550,305,616

(21,355,706)

528,949,910

1,070,504,016

1,471,081

1,071,975,097

(33,410,763)

1,038,564,334

108,208,386

-

108,208,386

(7,448,018)

100,760,368

760,214,316

1,471,081

761,685,397

(12,240,255)

749,445,142

(Unit : Baht)

5. RESTRICTED BANK DEPOSIT

As at 31 December 2005, the Company and its subsidiaries had placed their fixed deposits at bank over 3 months

and savings account of Baht 20.6 million and the Company only of Baht 7.4 million (2004 : Baht 14.9 million and the

Company only of Baht 6.0 million respectively) as a collateral against bank guarantees as discussed in Note 25 to the

financial statements.

6. TRADE ACCOUNTS RECEIVABLE

As at 31 December 2005 and 2004, the aging analysis of the outstanding trade accounts receivable is as follows :-

76

The Company Only

2005 2004

Consolidated

2005 2004

Related parties

• Less than 3 months

• 3 - 6 months

• 6 - 12 months

• over 12 months

Total accounts receivable - related parties

Others

• Less than 3 months

• 3 - 6 months

• 6 - 12 months

• over 12 months

Total accounts receivable - others

Less : Allowance for doubtful accounts

Total trade accounts receivable

Total trade accounts receivable -net

13,288

57

231

391

13,967

521,675

31,969

14,443

16,721

584,808

(34,360)

550,448

564,415

13,815

1,516

185

16

15,532

376,421

36,036

20,112

26,490

459,059

(35,017)

424,042

439,574

4,284

115

83

-

4,482

212,850

13,504

7,291

8,897

242,542

(20,924)

221,618

226,100

4,838

218

50

16

5,122

155,127

15,109

9,454

19,300

198,990

(20,924)

178,066

183,188

(Unit : Thousand Baht)

7. RELATED PARTY TRANSACTIONS

During the years, the Company had significant business transactions with its subsidiaries (eliminated from the

consolidated financial statements) and with its related companies (related by way of shareholding, common shareholders

and/or common directors). Such transactions which mainly consisted of revenue from hospital, loans, administration

and purchase of fixed assets have been concluded on the terms and basis agreed between the Company and those

companies, with the pricing policies as follow : -

77

The significant intercompany transactions are as follows :-

The Company Only

2005 2004

Consolidated

2005 2004

Transactions with subsidiaries

(eliminated from the consolidated financial statements)

Patient services income and lab services

Consulting and management fees income

Interest income

Gain on sales of fixed assets

Dividend income

Other income

Service cost

Other expenses

Purchase of investments in common shares

Purchase of medical instruments

Purchase of building and structure

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

4,907,174

5,546,578

4,539,411

395,665

-

26,855,260

117,118,326

3,603,631

-

38,200,000

127,000,000

796,718

5,962,435

7,110,840

716,912

2,073,750

9,621,174

119,231,317

2,802,798

1,843,292,244

-

-

(Unit : Baht)

Transaction

Revenue from hospital operation

Revenue from lab analysis service

Revenue from consulting and management

Interest rate charge of inter-company loan

Sales and purchase of fixed assets

Pricing and lending policy

Prices are based on the price charged to normal customers

Prices are based on the price charged to normal customers

Agreed prices and in accordance with normal course of business

Interest rate is close to rate charged by bank to normal customer

Agreed prices and in accordance with normal course of business

78

The outstanding balances of the above transactions have been separately shown in the balance sheets,

as follows :-

The Company Only

2005 2004

Consolidated

2005 2004

Trade accounts receivable - related parties

Subsidiary companies

Associated companies

Related companies

Total trade accounts receivable - related parties

Other receivable - related parties

Consulting and management fee receivable



Total

-

5,775

8,192

13,967

-

-

-

-

10,328

5,204

15,532

-

8,395

8,395

1,369

2,056

1,057

4,482

15,760

-

15,760

523

809

3,790

5,122

330

8,395

8,725


The Company Only

2005 2004

Consolidated

2005 2004

Transactions with associated companies


Consulting and management fees income

Interest income

Dividend income

Other income

Service cost

Interest expense

Other expenses

Dividend payment

Purchase of investments in common shares

Transactions with related parties


Interest expense

Other expenses

Dividend payment

12,563,019

6,643,266

203,099

99,715,000

4,908,963

18,759,264

-

220,216

17,632,362

134,958,100

7,088,331

-

4,162,000

5,642,962

82,131,482

35,697,244

12,276,397

42,688,768

7,821,598

40,222,240

545,955

11,680,762

11,395,260

49,505,060

9,179,673

450,000

42,295

32,796,900

5,756,022

1,818,854

203,099

99,715,000

4,370,061

17,229,408

-

4,440

17,632,362

134,958,100

7,073,031

-

4,162,000

5,642,962

3,462,348

7,690,261

11,646,617

42,685,000

3,370,519

33,176,320

-

1,843,658

11,395,260

49,505,060

9,179,673

450,000

42,295

32,796,900

(Unit : Baht)

79

The Company Only

2005 2004

Consolidated

2005 2004

Other



Total

Total other receivable - related parties

Short-term loans to related parties




Total short-term loans to related parties

-

2,797

2,797

2,797

-

-

-

-

1,995

1,995

10,390

-

-

-

2,977

152

3,129

18,889

-

-

-

1,784

1,641

3,425

12,150

115,000

15,000

130,000


The Company Only

2005 2004

Consolidated

2005 2004

Long-term loans to related parties

Subsidiary company


Associated company


Total long-term loans to related parties

Interest receivable - related parties



Total interest receivable - related parties

Short-term loans from related party

Associated company


Total short-term loans from related party

Trade accounts payable - related parties



Related companies

Total trade accounts payable - related parties

-

-

-

-

15,393

15,393

10,000

10,000

-

16,098

664

16,762

-

80,258

80,258

-

37,782

37,782

-

-

-

5,023

240

5,263

1,201

-

1,201

77,606

15,393

92,999

-

-

4,582

2,753

-

7,335

1,201

17,280

18,481

157,607

33,277

190,884

-

-

10,949

2,525

240

13,714


80

Decrease 31 December 2005

The Company Only

31 December 2004 Increase

Short-term loan to related parties


New Petchaburi Medical Services Co., Ltd.


Long-term loan to related parties

Subsidiary company


Associated company


115,000

15,000

130,000

1,201

17,280

18,481

-

-

-

-

-

-

115,000

15,000

130,000

-

17,280

17,280

-

-

-

1,201

-

1,201


The Company Only

2005 2004

Consolidated

2005 2004




Related companies

Related persons

Total other payable - related parties

-

3,879

3,358

4,790

12,027

-

-

4,401

4,790

9,191

11,906

-

-

4,790

16,696

378

100

200

4,790

5,468


Decrease 31 December 2005

Consolidated

31 December 2004 Increase

Long-term loan to related parties

Associated company

Bangkok Pattaya Hospital

Short-term loans from related party

Associated company


80,258

80,258

-

-

-

-

10,000

10,000

80,258

80,258

-

-

-

-

10,000

10,000


Movement of loans to and loans from related parties during the year are summarized as follow:-

81

The Company charges interest on loans to subsidiary and associated companies at the interest rate actually paid

by the Company plus 0.25-0.50% per annum, MLR+1-2% per annum, MLR-1% per annum, and fixed rate of 4%,

4.25%, 4.5%, 5% and 7% per annum.

Bangkok Phuket Hospital Co., Ltd. has an interest payable to the Company totalling Baht 4 million which it will

repay in two equal installments, in December 2009 and December 2010.

Bangkok Phuket Hospital Co., Ltd. has mortgaged its land, building and construction to be erected in the future as

collateral security against the loan.

As at 31 December 2005, the Company had long overdue loan interest receivable from Bangkok Hatyai Hospital

Co., Ltd. of Baht 83.19 million (2004 : Baht 83.19 million). The Company has provided allowance for doubtful accounts

of Baht 9.58 million (2004 : Baht 9.58 million). The management believes that the allowance for doubtful accounts

will be sufficient in respect of these loans because the Company expects that the outstanding balance will be collected

and the subsidiary has pledged its land as collateral for the loan.

Management Agreement

The Company

The Company has entered into the Hospital Managing Employment Agreement with B.N.H. Medical Centre

Limited, a subsidiary company, for a period of five years. The agreement is renewable. Remuneration rates for the

1st - 5th years are 2.5% - 5% gross margin before interest expense, income tax, depreciation, and amortization of

deferred expense per annum, and these rates rise to 8% per annum from the 6th year onward.

The employer requests to suspend the management remuneration of the 1st - 5th years until the 6th year.

The Subsidiary

The subsidiary company has entered into a Hospital Managing Employment Agreement with an associated company

for a period of ten years and is entitled to renew this agreement. The subsidiary company shall receive remuneration

at the certain percentage of total operation result as stated in the agreement. The payment shall be made on a monthly

basis, starting in September 2002.

Long Term Agreement

The Subsidiary

On 5 June 2003, the subsidiary company entered into the 3-year land lease agreement with another subsidiary

company for building construction. That subsidiary company has to pay a monthly rental fee at Baht 100,000,

commencing from 1 January 2004.

In 2005, the subsidiary company entered into the 3-year building rental agreement with another subsidiary

company for the hospital operation. That subsidiary company has to pay a monthly rental fee Baht 1,000,000,

commencing from May 2005.

82

The Company Only

2005 2004

Consolidated

2005 2004

Drugs and supplies

Medical supplies and others

Reagent

Total

134,225,375

17,683,268

8,952,836

160,861,479

98,700,041

8,930,075

7,771,567

115,401,683

55,121,268

14,883,696

-

70,004,964

35,388,089

6,977,649

-

42,365,738

(Unit : Baht)

8. INVENTORIES

As at 31 December 2005 and 2004, inventories consisted of :-

9. INVESTMENTS IN SUBSIDIARY AND ASSOCIATED COMPANIES ACCOUNTED FOR UNDER EQUITY METHOD / EXCESS OF LOSS OVER COST OF INVESTMENT IN SUBSIDIARY COMPANY ACCOUNTED FOR UNDER EQUITY METHOD

Equity Method

2004200520042005 2004200520042005

Company name Type of businessPaid-up Capital % Shareholding Investments Dividends

Cost Method


Associated companies held by

the Company


Wattanavej Co.,Ltd.





Total investments in associated

companies held by the Company

Accociated companies held by the

subsidiary company

Samitivej Sriracha Co., Ltd. (Formerly

known as "Ruampat Sriracha Co., Ltd.")

Sodexho Support Services (Thailand) Ltd.

Total investments in associated

companies of the subsidiary company

Total investments in associated companies

accounted for under equity method in

consolidated financial statement

Hospital

Hospital

Pharmaceutical

Hospital

Production of Television and Radio Program

Real estate

280 million Baht

120 million Baht

21.4 million Baht

586 million Baht

5 million Baht

20 million Riel

49.00

-

49.00

-

30.00

49.00

49.00

48.00

49.00

48.45

30.00

-

223,489

-

52,500

-

1,500

101

277,590

223,489

132,480

52,500

284,000

1,500

-

693,969

432,908

-

69,413

-

567

101

502,989

396,939

175,032

66,931

291,743

566

-

931,211

96,040

-

3,675

-

-

-

99,715

34,300

5,760

2,625

-

-

-

42,685


Hospital

Management service

188 million Baht

5 million Baht

30.00

26.00

30.00

26.00

56,253

1,300

57,553

335,143

56,253

1,300

57,553

751,522

72,091

999

73,090

576,079

55,999

1,288

57,287

988,498

-

-

-

-

-

-

83




Bio Molecular Laboratories













Services Co., Ltd.

Total investments in

subsidiary companies

Total investments in subsidiary and

associated companies accounted

for under equity method in the

Company's financial statement

Presented as :

Investments in subsidiary and

associated companies accounted


Excess of loss over cost of

investment in subsidiary company

accounted for under equity method

Hospital

Central Lab

Central Lab

Hospital

Hospital

Hospital

Hospital

Hospital

Hospital

Hospital

Hospital

Hospital

Hospital

Hospital

105 million Baht

75 million Baht

10 million Baht

400 million Baht

1 million Baht

500 million Baht

200 million Baht

150 million Baht

500 million Baht

1,000 million Baht

586 million Baht

180 million Baht

30 million Baht

9,200 million Riel

79.00

74.02

95.00

81.00

100.00

98.53

63.35

100.00

99.47

92.92

87.57

61.99

100.00

100.00

79.00

74.02

95.00

81.00

100.00

98.53

63.35

100.00

99.47

92.92

-

-

-

-

96,775

56,768

9,502

323,288

999

572,465

122,897

150,000

607,014

1,453,948

576,325

267,438

33,843

94,208

4,365,470

4,643,060

96,775

56,768

9,502

323,288

999

572,465

122,897

150,000

607,014

1,453,948

-

-

-

-

3,393,656

4,087,625

112,415

81,992

19,807

355,654

(2,853)

750,749

125,528

133,369

562,088

2,008,568

588,789

338,669

33,847

94,208

5,202,830

5,705,819

5,708,672

(2,853)

5,705,819

128,565

75,327

15,761

328,629

(2,620)

717,930

125,434

133,055

517,583

1,949,301

-

-

-

-

3,988,965

4,920,176

4,922,796

(2,620)

4,920,176

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

99,715

2,074

-

-

-

-

-

-

-

-

-

-

-

-

-

2,074

44,759


As at 31 December 2005 and 2004, accumulated share of loss of New Petchaburi Medical Services Co., Ltd. exceeded

the cost of investment. The Company therefore recorded such excess as liabilities under the caption of "Excess of loss

over cost of investment in subsidiary company accounted for under equity method" in other non-current liabilities in

the balance sheets.

The calculation of investment under the equity method as at 31 December 2005 and share of profit from investment

in some associated companies for the year ended 31 December 2005 of Baht 7 million, or equivalent to 0.8 percent of

net earnings for the period, was based on financial statements prepared by the associated companies and have not yet

been audited by their auditors.

Equity Method

2004200520042005 2004200520042005

Company nameType of business

Paid-up Capital % Shareholding Investments Dividends

Cost Method

84

Investments in associated companies which change the status to be subsidiary companies

In April 2005, the Company purchased additional investments of 7.62 million shares at Baht 12.25 per share totally

Baht 93.35 million in BNH Medical Center Co., Ltd. from the former shareholders. As a result, the Company increases

the percentage of share holding in that Company from 48.45 percent to 61.45 percent and that company changes the

status from an associated company to be a subsidiary company.

In June 2005, the Company purchased additional investment in BNH Medical Center Co., Ltd. from former

shareholders of 15.3 million shares at Baht 13 per share totally Baht 198.98 million and the percentage of shareholding

increases to 87.57 percent.

In June 2005, the Company purchased additional investment from the former shareholders of Wattanavej Co., Ltd.

of 5.40 million shares at Baht 25 per share totally Baht 135 million. As a result the Company increases the percentage

of share holding in that company from 48 percent to 61.99 percent and that company changes the status from an

associated company to be a subsidiary company.

New investments

In June 2005, the Company purchased all shares of Bangkok Helicopter Services Co., Ltd. (formerly known as

Thai Cougar Helicopter and Petrolium Services Co., Ltd.) which consist of 0.75 million shares at Baht 7.63 per share

totally Baht 5.7 million. Subsequently, the subsidiary has increases its share capital from Baht 7.5 million (consist of

750,000 ordinary shares as at Baht 10 per share, paid up Baht 2.5 per share) to Baht 30 million which the Company

subscribed all of the shares.

In December 2005, the Company invested in S.R. Property Investment Co., Ltd. which was registered under the law

of Combodia of RIEL 20 million total investment was RIEL 9.8 million or Baht 0.1 million and the percentage of

holding is 49 percent.

In December 2005, the Company invested in of B.D.M.S. International Medical Services Co., Ltd. which was

registered under the law of Cambodia of RIEL 9,200 million or approximately Baht 94 million and the percentage of

holding is 100 percent.

Capital increase of a subsidiary company which is held by a subsidiary company

During the second quarter of 2005, First Health Food Company Limited, a subsidiary company of Samitivej Public

Co., Ltd., increased its registered capital by issuing additional ordinary shares totaling 690,000 shares with par value of

Baht 10 and offered all shares to the existing shareholders. Therefore, the registered capital increased from Baht

7,100,000 to Baht 14,000,000 and the subsidiary company had already paid the subscription for share capital increase

of subsidiary company in the year 2005.

During the second quarter of 2005, Sodexho Healthcare Support Services (Thailand) Limited, a subsidiary company

of First Health Food Company Limited, increased its registered capital by issuing additional ordinary shares totaling

75,000 shares with par value of Baht 100 and offered to the existing shareholders in proportion to the shares held by

them, called for the payment of Baht 100 per share. Therefore the registered capital

85

20042005

Company name Type or business Paid-up capital(Million Baht)

% shareholding

Investment(cost)

Other companies held by the Company

Investments in marketable securities

Ramkhamhaeng Hospital Public Co., Ltd.

Thai Military Bank Public Co., Ltd.

Krungdhon Hospital Public Co., Ltd.

Eakchon Hospital Public Co., Ltd.

Add : Revaluation surplus on investments

Investments in marketable securities

Investments in other companies

X-Ray Computer Urupong Co., Ltd.

Computer Center Co., Ltd.

Phyathai X-ray Co., Ltd.

Winstore Co., Ltd.

Thai Longstay Management Co., Ltd.

Truste Allergy Co., Ltd.

Less : Allowance for impairment of investments

Investments in other companies-net

Other long-term investments - net

(in the Company's financial statement)

Other company held by the subsidiary company

Thai Herbal Products Co., Ltd.

Less : Allowance for impairment of investments

Investment in other companies - net

Other long-term investment - net (Consolidated)

Hospital

Bank

Hospital

Hospital

X-ray lab

Rental of medical

instrument

Retail and wholesale

Travel business

Sales of herbal

products

120

133,143

150

125

80

-

130

142

25

-

80

19

-

0.13

0.2

5.11

-

-

0.36

2.12

-

0.6

342,915

1,770

208

350

345,243

254,659

599,902

4,520

25

3

226

531

-

5,305

(254)

5,051

604,953

290

(66)

224

605,177

342,915

1,770

208

350

345,243

135,550

480,793

4,520

25

3

226

531

1,249

6,554

(1,503)

5,051

485,844

290

(66)

224

486,068


increased from 75,000 shares to 150,000 shares with par value of Baht 100 totaling Baht 15,000,000. First Health Food

Company Limited subscribed the capital increase in according to the entitlement of shares of 55,497 shares with par

value of Baht 100 totaling Baht 5,549,700 so after the capital increase, First Health Food Company Limited had 110,994

ordinary shares with par value of Baht 100 totaling Baht 11,099,400, representing 73.996 percent of share capital of

that company.

10. OTHER LONG-TERM INVESTMENTS


86

20042005

Company nameDividendreceived

Related companies

Udon Pattana (1994) Co.,Ltd.

Bangkok Airways Co., Ltd

Total

Less : Allowance for impairment

of investments

Total other investment

-

-

-

-

-

-

7,762

7,762

-

7,762

20042005

Type ofbusiness

Paid upshare capital

% shareholding

Investment underCost method

Hospital

Airline

300,000

440,000

10.00

3.27

31,650

36,000

67,650

(12,333)

55,317

31,650

36,000

67,650

(11,408)

56,242


11. OTHER INVESTMENTS

12. PROPERTY, PLANT AND EQUIPMENT

Building underconstruction and

medical toolsand equipment

under installation

Total

Cost/reappraised value

31 December 2004

Increase from investments

in subsidiary

Purchase

Transfer in

Transfer out

Disposals

31 December 2005

Accumulated depreciation

31 December 2004

Increase from investments

in subsidiary

Depreciation for the year

Disposals

31 December 2005

Net book value

31 December 2004

31 December 2005

Depreciation charged (included in statement of earnings) for the year

2004

2005

14,509,859,776

2,121,555,765

2,881,285,197

1,239,759,541

(1,236,856,366)

(235,413,021)

19,280,190,892

4,226,663,943

762,556,788

952,530,880

(115,200,317)

5,826,551,294

10,283,195,833

13,453,639,598

354,884,462

952,530,880

Land and improvement

Building and structure

Medical tools and equipment

Vehicles

Consolidated

Assets which are stated at cost or reappraised value Assets which are stated at cost

2,672,876,435

122,743,480

49,140,000

32,500,000

-

-

2,877,259,915

15,221,439

-

-

-

15,221,439

2,657,654,996

2,862,038,476

6,127,951,256

1,271,910,461

89,304,535

1,027,477,432

(749,035)

(124,047,617)

8,391,847,032

1,502,611,943

376,470,126

389,555,292

(1,652,117)

2,266,985,244

4,625,339,313

6,124,861,788

4,480,528,420

561,830,642

628,746,218

176,334,905

(23,710,801)

(107,994,308)

5,715,735,076

2,618,230,347

376,460,448

528,558,116

(110,491,261)

3,412,757,650

1,862,298,073

2,302,977,426

183,632,131

18,037,396

61,721,001

3,447,204

-

(3,371,096)

263,466,636

90,600,214

9,626,214

34,417,472

(3,056,939)

131,586,961

93,031,917

131,879,675

1,044,871,534

147,033,786

2,052,373,443

-

(1,212,396,530)

-

2,031,882,233

-

-

-

-

-

1,044,871,534

2,031,882,233

(Unit : Baht)

87

The cumulative capitalized interest on loans recorded as part of the cost of the building amounted to approximately

Baht 87.48 million for the Company and Baht 436.12 million for the subsidiary companies.

In 1999, the Company and some subsidiary companies engaged an independent professional appraiser to appraise

all of the Company's and the subsidiary companies' land (including the land not used in operations) with carrying

cost value of approximately Baht 210 million and Baht 80 million, respectively. Based on the appraisal reports dated

July 14, 1999 and July 15, 1999, respectively, the Market Approach Method was applied to the revaluation, reflecting

the fair market value of the revalued land of approximately Baht 637 million and Baht 93 million, respectively, which

was higher than the cost by approximately Baht 427 million and Baht 13 million, respectively. The Company and the

subsidiary companies recorded the difference between the historical cost and appraisal value as "Revaluation surplus

of land" under shareholders' equity in the balance sheets.

Building underconstruction and

medical toolsand equipment

under installationTotal

Cost/reappraised value

31 December 2004

Purchase

Transfer in

Transfer out

Disposals

31 December 2005

Accumulated depreciation

31 December 2004

Depreciation for the year

Disposals

31 December 2005

Net book value

31 December 2004

31 December 2005

Depreciation charged (included in statement of earnings) for the year

2004

2005

3,978,626,843

1,661,665,804

503,338,066

(481,809,495)

(10,282,756)

5,651,538,462

1,208,284,236

261,379,507

(7,840,205)

1,461,823,538

2,770,342,607

4,189,714,924

192,635,057

261,379,507

Land and improvement

Building and structure

Medical tools and equipment

Vehicles

Consolidated

Assets which are stated at cost or reappraised value Assets which are stated at cost

478,575,242

48,975,000

32,500,000

-

-

560,050,242

-

-

-

-

478,575,242

560,050,242

1,251,733,221

6,970,051

303,496,584

-

-

1,562,199,856

294,783,102

55,350,923

-

350,134,025

956,950,119

1,212,065,831

1,585,802,964

284,920,678

136,926,444

(11,009,837)

(7,498,229)

1,989,142,020

859,098,175

186,595,257

(5,359,683)

1,040,333,749

726,704,789

948,808,271

102,846,624

48,385,587

-

-

(2,784,527)

148,447,684

54,402,959

19,433,327

(2,480,522)

71,355,764

48,443,665

77,091,920

559,668,792

1,272,414,488

-

(440,384,620)

-

1,391,698,660

-

-

-

-

559,668,792

1,391,698,660

(Unit : Baht)

88

In 2004, 3 subsidiaries engaged an independent professional appraiser to appraise all of their land and buildings.

Based on the appraisal reports dated December 15, 2004 and December 16, 2004, the Cost Approach Method was

applied to the revaluation, reflecting the fair values of the revalued land and buildings of approximately totaling Baht

1,972.02 million and Baht 2,699.04 million, respectively, which were higher than the former revalued cost by approximately

Baht 1,085.32 million and Baht 498.68 million, respectively. The Subsidiaries recorded the total revaluation surplus of

Baht 1,584 million as "Revaluation surplus on land and buildings" in shareholders' equity in the balance sheets of Baht

1,544.49 million and reversed the loss on valuation of and of a Subsidiary of Baht 228.05 million and recorded loss on

revaluation of land in another subsidiary of Baht 188.54 million.

Based on the appraisal of land and buildings of such Subsidiaries, the Company recognized the surplus on revaluation

of land and buildings of the Subsidiaries in the consolidated financial statements and the separate financial statements

of the Company by using equity method in the amount of Baht 513.56 million as "Revaluation surplus on land and

buildings" in shareholders' equity in the balance sheets.

For the year ended 31 December 2005, a subsidiary company calculated depreciation of buildings that had been

revalued and transferred revaluation surplus on land and buildings to reduce related depreciation in statement of

earnings of approximately Baht 74.07 million.

If the Company and the subsidiary companies record the land and buildings at cost, their net book value as at

31 December 2005 and 2004 would have been as follows :-

The Company and the subsidiary companies have mortgaged their land and buildings and constructions to be

created in the future as collateral for long-term loans as discussed in Note 16 to the financial statements.

A subsidiary company's building and equipment and inventories were damaged by flood in November 2005.

However, the subsidiary company has accident insurance with a domestic insurance company which covers property

damage as a result of the flood. The subsidiary company has not recorded loss on impairment of the fixed assets

destroyed and damaged by the flood and the amount of compensation for losses to be received under the insurance in

the financial statements for the year ended 31 December 2005 since the subsidiary company and the insurance company

are in the process of assessing the damage to the property. However, the subsidiary management believes that the

provision for impairment of fixed assets destroyed would be fully covered by the insurance or if any, the subsidiary

would have an insignificant loss from such accident.

Net book value :

As of 31 December 2005

As of 31 December 2004

5,397,684,364

3,919,695,625

1,476,058,123

1,348,186,994

237,172,790

155,697,790

-

-

(Unit : Baht)

LandBuilding structureand improvement

The Company only

LandBuilding structureand improvement

Consolidated

89

In 1999, the Company revalued such land based on the independent professional appraiser's value as described

in Note 12 to the financial statements.

The cumulative capitalized interest on loans recorded as a portion of cost of land not yet used in operations amounted

to approximately Baht 29 million.

15. BANK OVERDRAFTS AND SHORT-TERM LOANS FROM FINANCIAL INSTITUTION

As at 31 December 2005, the Company and its subsidiary companies have bank overdraft facilities with local

banks of Baht 158 million and the Company only of Baht 50 million with interest rate at MOR (Minimum

Overdraft Rate).

13. INTANGIBLE ASSETS

The Company only

2005 2004

Consolidated

2005 2004

Computer software

Leasehold right

Expenditure relating to certain rights

and benefits received from Bangkok Nursing Home

Less : Accumulated amortization

Intangible assets - net

Amortization for the year

153,266,241

46,268,019

113,723,076

313,257,336

(106,432,565)

206,824,771

39,563,238

112,324,408

40,468,019

-

152,792,427

(56,669,703)

96,122,724

11,700,934

40,472,572

38,218,019

-

78,690,591

(37,171,465)

41,519,126

13,874,670

12,982,006

38,218,019

-

51,200,025

(6,777,657)

44,422,368

6,777,657

(Unit : Baht)

2005 2004

Consolidated and The Company Only

Land at historical cost

Revaluation surplus

Transfer to land for operation

Total

367,181,670

104,245,510

(32,500,000)

438,927,180

367,181,670

104,245,510

-

471,427,180

(Unit : Baht)

14. LAND NOT USED IN OPERATIONS

Land not used in operations as at 31 December 2005 and 2004 consisted of:

90

16. LONG-TERM LOANS

As at 31 December 2005, long-term loans consist of : -

Non-Current

Portion Total

The Company only

1.

2.

3.

4.

5.

6.

7.

8.

Total loans of the Company

The Company only

1.

2.

3.

4.

5.

6.

7.

8.

1,430

10

71

119

87

350

45

480

2,592

Agreement dateNo. Lender Credit facility

Current

Portion

Outstanding long - term loan amount

17 December 2001

26 March 2002

19 November 2004

13 January 2005

13 January 2005

5 October 2005

29 September 2005

1 December 2005

Local Bank

Local Bank

Local Bank

Local Bank

Local Bank

Local Bank

Local Bank

Local Bank

2,300

20

85

139

102

350

45

600

290

3

21

29

21

53

9

-

426

1,140

7

50

90

66

297

36

480

2,166


Interestpayment Interest rate

At fixed rate or MLR less fixed

rate as stipulated in the agreement.















Agreement dateNo. Lender Credit facilityPrincipal

repayment

Significant conditions of the loan agreements

17 December 2001

26 March 2002

19 November 2004

13 January 2005

13 January 2005

5 October 2005

29 September 2005

1 December 2005

Local Bank

Local Bank

Local Bank

Local Bank

Local Bank

Local Bank

Local Bank

Local Bank

2,300

20

85

139

102

350

45

600

Monthly

Monthly

Monthly

Monthly

Monthly

Monthly

Monthly

Monthly

Monthly

Monthly

Monthly

Monthly

Monthly

Monthly

Monthly

Monthly

LoanPeriod

9 years

7 years

5 years

5 years

5 years

7 years

5 years

9 years


91

Non- Current

Portion Total

Subsidiaries


1.

Bangkok Trat Co., Ltd

1.

Bangkok Hatyai Hospital Co., Ltd

1.

2.


1.


1.


1.

2.


1.


1.

2.

3.


1.

Total loans of subsidiary companies

Total loans of the Company and subsidiary companies

437

93

300

28

324

150

433

433

116

1,518

185

47

115

4,179

6,771


Curren

Portion

Outstanding long - term loan amount

18 December 2002

1 December 2003

9 May 2003

8 September 2004

29 March 2004

11 June 2004

20 October 1996

20 October 1990

27 Noember 2003

11 October 2001

26 December 2003

2 June 2005

26 December 2003

Local Bank

Local Bank

Local Bank

Local Bank

Local Bank

Local Bank

Local Bank

Local Financial

Institution

Local Bank

Local Bank

Local Bank

Local Bank

500

140

400

37

330

150

679

679

135

1,700

185

165

115

50

7

-

8

-

-

22

22

26

160

19

25

11

350

776

387

86

300

20

324

150

411

411

90

1,358

166

22

104

3,829

5,995


92

Interest payment Interest rate

Principal repayment

Significant conditions of the loan agreements

Quarterly

Monthly

Monthly

Monthly

Monthly

Monthly

Quarterly

Quarterly

Quarterly

Monthly

Quarterly

Quarterly

Quarterly

Monthly

Monthly

Monthly

Monthly

Monthly

Monthly

Monthly

Monthly

Quarterly

Monthly

Monthly

Monthly

Monthly

LoanPeriod

10 years

6 years

10 years

5 years

10 years

10 years

13 years

13 years

6 years

10 years

10 years

6 years

10 years


Subsidiaries


1.

Bangkok Trat Co., Ltd

1.

Bangkok Hatyai Hospital Co., Ltd

1.

2.


1.


1.


1.

2.


1.


1.

2.

3.


1.


18 December 2002

1 December 2003

9 May 2003

8 September 2004

29 March 2004

11 June 2004

20 October 1996

20 October 1990

27 Noember 2003

11 October 2001

26 December 2003

2 June 2005

26 December 2003

Local Bank

Local Bank

Local Bank

Local Bank

Local Bank

Local Bank

Local Bank

Local FinancialInstitution

Local Bank

Local Bank

Local Bank

Local Bank

500

140

400

37

330

150

679

679

135

1,700

185

165

115



























93

The Company and its subsidiaries have mortgaged certain plots of land and buildings, including construction to

be erected in the future and equipment with banks to secure long-term loan obtained from those banks.

During1998 - 2004, a subsidiary company, BNH Medical Center Co., Ltd. entered into 4 debt restructuring agreements

with 2 local financial institutions and the subsidiary company has to comply with the conditions as stipulatedin the

agreements.

The above long-term loans are secured by land lease agreements, buildings and equipment. In addition, the financial

institutions are named as beneficiaries of the insurance policies for that company's building and equipment.

17. LIABILITIES UNDER HIRE-PURCHASE AND FINANCIAL LEASEAGREEMENTS

THE COMPANY ONLY

2005 2004

CONSOLIDATED

2005 2004

Hire-purchase and financial lease payable

Less : Deferred interest

Total

Less: Current portion due within one year

Liabilities under hire-purchase and financial

lease agreement - net of current portion

352,907

(36,156)

316,751

(115,794)

200,957

319,029

(39,722)

279,307

(80,839)

198,468

108,493

(10,406)

98,087

(37,280)

60,807

74,459

(8,685)

65,774

(22,860)

42,914


Liabilities under hire-purchase agreements

Hire-purchase payable consists of amounts payable under various vehicle hire-purchase agreements, with payments

to be made in 32-60 monthly installments.

Liabilities under financial lease agreements

The Company and its subsidiaries have entered into various financial lease agreements with various leasing companies

to rent medical equipment and vehicle for use in their operations. Installments are paid on a monthlybasis over 36-60

periods and at the end of the agreements, the Company and the subsidiaries have the option to purchase the equipment

at prices specified in the agreements.

18. SHARE CAPITAL

On 22 April 2004, the Annual General Meeting of the Company's shareholders resolved to change the par value

of the Company's shares from Baht 10 each to Baht 1 each. The Company has subsequently registered the change in

par value of its shares with the Ministry of Commerce on 11 May 2004.

94

In addition, such Meeting also passed a resolution to approve the Company to increase its registered capital from

Baht 750 million to Baht 1,000 million, by issuing of 250 million new ordinary shares of Baht 1 each at the issue price

of Baht 6 per share by offering to the existing shareholders in the proportion of 3 existing shares to 1 newly issued

share, and have a right to exercise over right. The Company registered the increase of its registered share capital on

May 14, 2004. The shareholders subscribed and paid for the increased shares during 21st-25th June 2004 totalling

Baht 1,769 million. In July 2004, the Company repaid the shareholders who over paid the subscribed money in the

amount of Baht 269 million. The Company registered the paid-up share capital to be Baht 1,000 million on July 9, 2004

The Extraordinary General Meeting of the Company's Shareholders No 1/2547 held on August 3, 2004, passed a

resolution to approve the Company to further increase its registered capital by Baht 180.50 million by issuing 180.5

million new ordinary shares at the par value of Baht 1 per share, increasing share capital from Baht 1,000 million to

Baht 1,180.50 million, divided into 1,180.50 million ordinary shares at Baht 1 per share. The Company registered the

increase of its registered capital on August 5, 2004.

In addition, the Meeting also passed a resolution to approve the shareholding restructuring by offering to purchase

all the issued shares of Samitivej Public Company Limited, Bangkok Hatyai Hospital Company Limited and Bangkok

Phuket Hospital Company Limited not already held by the Company. The Company will pay the consideration for the

share in those companies in the form of new issued ordinary shares of the Company without offering any other

alternative in term of cash, and approved to purchase shares of Ramkhamhaeng Hospital Public Company Limited, in

a portion not more than 20% of the total issued shares of this company, at the price not higher than Baht 150 per share,

up to Baht 360 million in total. In July 2004, the Company purchased shares of Ramkhanhaeng Hospital Public

Company Limited in the amount of Baht 215.49 million.

Later in December 2004, the Company purchased additional shares of Ramkhamhang Hospital Public Company

Limited by Baht 127.42 million, totaling the investments in this company of Baht 342.91 million.

The Securities and Exchange Commission ("SEC") had approved the Company to start the tender offer period

during November 10, 2004 to December 16, 2004. After the share swap arrangement, the percentage of shareholding

in Samitivej Public Company Limited, Bangkok Hatyai Hospital Company Limited and Bangkok Phuket Hospital

Company Limited were 92.92%, 98.53% and 99.47%, respectively, and the Company's shares were allotted to these

companies of 112,251,510 shares, 18,528,904 shares and 32,629,694 shares, respectively or a total of 163,410,108 shares.

For the remaining 17,089,892 shares, the Extraordinary General Meeting of the Company's Shareholders No.1/2547

held on August 3, 2004 passed a resolution to approve the Company's Board of Directors to manage the remaining

shares by offering those shares by private placement according to SEC's Notification No. Kor Jor 12/2543.

The 163,410,108 shares issued for share swap arrangement with these three companies were recorded at fair value, a

ppraisal by an independent financial advisor, using discounted cash flows method, at Baht 10.21 per share, resulting in

the increase in issued and paid-up share capital by Baht 163.41 million, and increase in premium on share capital by

Baht 1,505 million. The Company registered the issued and paid-up share capital to be Baht 1,163.41 million on

December 21, 2004.

95

On 17 September 2005, the Board of Directors Meeting No. 9/2005 approved to decrease share capital of 17,089,892

shares remaining from the above allotment and on 17 October 2005 the Extraordinary General Meeting of the Company's

shareholders No. 1/2005 passed a resolution approving a capital reduction on such remaining share capital and approved

the increase in registered share capital of 20,000,000 ordinary shares. The increase and decrease in share capital is

registered on 28 October 2005 and the Company's registered share capital is now Baht 1,183,410,108.

In addition, such meeting approved the Company's restructuring planning by acquisition of shares from all other

shareholders of the eastern hospital group, which comprised Bangkok Pattaya Hospital Co., Ltd., Bangkok Trat Hospital

Co., Ltd., Wattanavej Co., Ltd., and Bangkok Rayong Co., Ltd.. Such purchase was subject to the condition that those

shareholders must purchase the Company's shares by using all proceeds received from the Company for such purchase

as payment for the Company's shares. The Company's shares to be offered to the shareholders of the eastern hospital

group would comprise of the above new 20 million ordinary shares and/or the shares of the Company held by Bangkok

Pattaya Hospital Co., Ltd. All of them would be offered to those shareholders in the same time at the price of Baht 14.59

each. For the purpose of eliminating cross shareholding between the Company and Bangkok Pattaya Hospital Co., Ltd.

the entire shares of Company which are held by Bangkok Pattaya Hospital Co., Ltd. would be offered to those

shareholders before the new ordinary shares of the Company.

19. DIVIDENDS

The 2005 Annual General Meeting of the Company's shareholders held on 7 April 2005, passed a resolution approving

a dividend payment of Baht 0.50, to the holders of the Company's 1,163,410,108 shares (par value of Baht 1 each), or

a total of Baht 582 million and the appropriation of net profit as statutory reserve in the amount of Baht 27.8 million.

The dividend payment was made on 6 May 2005.

On 22 April 2004, the Annual General Meeting of the Company's shareholders approved to pay a dividend for

75 million shares (at par value of Baht 10 each) at the rate of 4 Baht per share, totaling Baht 300 million which was the

rate before the Company change its par value from Baht 10 per share to be Baht 1 per share and the appropriation of

net profit as statutory reserve in the amount of Baht 16 million. The dividend payment was made on May 21, 2004.

20. STATUTORY RESERVE

Under the Public Companies Limited Act B.E. 2535, the Company is required to set aside as a statutory reserve at

least 5 percent of its net profit, after deducting accumulated deficit brought forward (if any), until the reserve reaches

10 percent of its registered share capital. The statutory reserve is not available for dividend payment.

Pursuant to Section 1202 of the Thai Civil and Commercial Code, a local subsidiary must appropriate to a reserve

fund, at each distribution of dividend, at least five percent of the profits arising from the business of the subsidiary

company, until the reserve fund reaches ten percent of the registered capital of the subsidiary company. The statutory

reserve is not available for dividend distribution.

96

21. PROVIDENT FUND

The Company, its subsidiaries and their employees jointly established a provident fund in accordance with the

Provident Fund Act B.E. 2530. The fund is contributed by both employees and the Company and its subsidiaries at the

agreed percentage rates based on their basic salaries and is managed by many financial institutions. The fund will be

paid to the employees upon termination in accordance with the rules of the fund.

During the year 2005, the Company and its subsidiaries contributed Baht 35.43 million (2004 : Baht 18.42 million)

to the fund and the Company only contributed Baht 11.50 million (2004 : Baht 9.28 million).

The Company only

2005 2004

Consolidated

2005 2004

Number of employees at end of year (persons)

Employee costs for the year (Thousand Baht)

7,817

2,511,711

5,972

1,846,365

2,256

968,765

1,964

828,048

22. NUMBER OF EMPLOYEES AND RELATED COSTS

23. FINANCIAL INSTRUMENTS

23.1 Financial risk management and policies

The Company and its subsidiaries are exposed to risk arising from changes in market interest rates and from

nonperformance of contractual obligations by counterparties in the future. The Company and its subsidiaries use

derivative instruments, as and when they consider appropriate, to manage such risks. They do not hold or issue

derivative financial instruments for speculative or trading purposes.

23.2 Interest rate risk

The interest rate risk is risk whereby future movement in market interest rates will affect the results of the Company

and its subsidiaries' operations and their cash flows. The Company's and its subsidiaries' exposure to the interest rate

risk relates primarily to deposits with and loans from banks. However, deposits with and loans from banks carry interest

at floating rates. The Company and its subsidiaries do not use derivative financial instruments to hedge such risk.

23.3 Credit risk

Credit risk is the risk that a counterparty is unable to meet a commitment entered into with the Company and the

subsidiaries. This risk is controlled by the application of credit approvals, limits and monitoring procedures. The

maximum credit risk exposure is the book value of assets after deduction of allowance for doubtful accounts as

presented in the balance sheets.

97

23.4 Fair value

As the majority of financial assets and liabilities are short-term or carry interest at the floating rate, their carrying

value do not materially differ from their fair value.

24. LONG-TERM LEASE AGREEMENTS

The Company

The Company has entered into a land lease agreement on which a garden is to be built. The lease agreement covers

a period of 30 years from 1 January 2005 to 31 December 2033 and the Company is obliged to payrental on a monthly

basis. The rental fee for the first 5 years is Baht 10,000 per month and this fee is to be increased by every 5 years. The

rental for the last 5 years will thus be Baht 25,000 per month.

The Company has entered into a land rental agreement for a parking building for 20 years from 26 February 2004

to 25 February 2024. The rental fee for the first 17 months is Baht 200,000 per month and this is to be increased by the

rate as stipulated in the agreement. The rental for the last 3 years will be Baht 560,000 per month.

The Company has entered into a land rental agreement whereby the land is to be used for construction of an OPD

building for a period of 30 years from 28 September 2004 to 27 September 2034. The first payment date is 10 October 2005

at the rental fee of Baht 50,000 per month, with this rate being increased by 10% of the latest rental every three years.

The Company has entered into a land rental agreement for a car park for a period of 7 years from 1 September 2005

to 31 August 2012 and the rental is paid on a monthly basis. The first payment date is 1 September 2005 and rental to

be paid at Baht 131,000 per month and from 1 September 2006 onward at Baht 175,000 per month.


The subsidiary has entered into a rental agreement for a parking building dated 10 September 2003, for 30 years,

effective from 8 December 2004. The rental fee for the first year was Baht 3.39 million and is to be increased by 2.75%

every year. The total rental fee over the lease will thus be Baht 155.11 million. The subsidiary is committed to pay

Baht 38.78 million as prepaid rental as per the schedule. The remaining rental fee will be paid at 85% of rental. In

addition, the subsidiary has entered into a service agreement with the same company for provision of services in the

said parking building for 30 years totaling Baht 103.41 million.

As at 31 December 2005, the subsidiary company already paid an advance rental payment of Baht 38.78 million

(2004 : Baht 32.80 million) and amortised as an expense in the current year of Baht 0.85 million (2004 : Baht 0.08 million).

In 2005, the subsidiary company entered into the 3-year building rental agreement with another subsidiary company

for the hospital operation. The subsidiary has to pay a monthly rental fee of Baht 1,000,000 commencing from May 2005.

98

25.2 Litigations

As at 31 December 2005, a subsidiary company was named joint defendant with doctors in a case relatingto the

medical treatment of a patient in 1996, whereby the plaintiff claimed for a compensation amounting to approximately

Baht 659.6 million. On 9 February 2004, the Civil Court dismissed the case, and it is currently being heard by the Court

of Appeal. The management of the subsidiary, after consulting with the subsidiary's legal counsel, is of the opinion that

the Appeal Court will not reverse the judgement of the Civil Court to dismiss the case.

In addition, as at 31 December 2005, the said subsidiary was named joint defendant with doctors in a case relating

to the medical treatment of a patient in 2002, whereby the plaintiff claimed for a compensation amounting to

approximately Baht 39.40 million. The case is being considered by the Primary Court. The management of the subsidiary

and the subsidiary's legal counsel are of the opinion that the court will ultimately rule in favour of the subsidiary.

A subsidiary has a contingent liabilities as a defendant in a legal case related to the building construction retention

of Baht 14.37 million. The case is being considered by the Central Bankruptcy court.

26. PURCHASE OF SUBSIDIARY COMPANIES

During April to December 2005, the Company has invested in additional ordinary shares in subsidiaries companies,

BNH Medical Center Co., Ltd., Wattanavej Co., Ltd, and B.D.M.S. International Medical Services Co., Ltd. which have

fair values of assets purchased and liabilities as at purchased dates as follows :-

25. COMMITMENTS AND CONTINGENT LIABILITIES

As at 31 December 2005 commitments and contingent liabilities are as follows:-

25.1 Commitments

The Company onlyConsolidated

Contractual commitments

the land and building rental contracts (including long-term agreements in Note 24)

• the office equipment rental and maintenance contracts

• the medical equipment providing contracts

• the building decoration contracts

Contingent liabilities

• For letters of guarantee issued by banks 64 44

Total

320

37

178

444

64

1,043

83

19

133

248

44

527


99

27. SEGMENT INFORMATION

The Company and its subsidiary companies operate mainly in the hospital business in Thailand. As a result all

of the revenues, operating profits and assets as reflected in these financial statements pertain to the aforementioned

ndustry segment and geographic area.

28. DIRECTORS' REMUNERATION

Directors' remuneration of the Company represents the benefits paid to the Company's directors in accordance

with Section 90 of the Public Limited Companies Act, exclusive of salaries and related benefits payable to executive

directors.

(Unit : Baht)

318,868,431

134,243

44,421,577

10,534,578

22,098,220

19,060,010

1,349,530,584

125,149,945

11,451,737

(68,753,479)

(10,175,048)

(55,780,338)

(32,048,152)

(1,023,877,720)

710,614,588

(216,284,654)

(213,778,255)

280,551,679

75,810,560

356,362,239

198,976,310

555,338,549

(318,868,431)

236,470,118


Short-term investments

Trade accounts receivable - net

Inventories - net

Other current assets

Investments

Property, plant and equipment - net

Intangible assets - net

Other non-current assets



Accrued expenses


Long-term loans

Net acquired assets

Changes in investment from change of the status from associated to subsidiary companies

Changes in minority interest from change of the status from associated to subsidiary companies

Net assets from acquisition of subsidiary companies

Add : Goodwill

Cash paid for investment which change of the status from associated to subsidiary companies

Cash paid for additional investment in subsidiaries

Cash flows used in acquisition of the subsidiary company

Less : Cash and cash equivalents of subsidiary companies

Net assets from acquisition of subsidiary companies

100

29. SUBSEQUENT EVENT

In January 2006, the Company has already acquired the shares from the shareholders of the eastern hospital group

according to the resolution of the Extraordinary General Meeting of the Company's shareholders No. 1/2005 which

will increase its percentage of shareholding in these group companies. On 30 January 2006 the Company has registered

an increase in its paid up share capital from Baht 1,163 million to Baht 1,181 million to allocate to shareholders of these

group companies.

The Board of Directors' Meeting No. 1/2006 hold on 21 January 2006 has passed a resolution to set up a subsidiary

company and an associated company in Cambodia with an investment amounting to Baht 84 million with the objectives

to hold land and operate the hospital in that country.

The Board of Directors' Meeting No. 2/2006 held on 28 February 2006 passed a resolution approving a dividend

payment of Baht 0.50 per share, to the holders of the Company's 1,181,037,800 shares (par value of Baht 1 each), or a

total of Baht 590.5 million and the appropriation of net profit as statutory reserve in the amount of Baht 0.29 million.

The resolution will be presented to the Annual General Meeting of the Company's shareholders for approval of dividend

payment which will be paid on 28 April 2006.

30. PRESENTATION AND RECLASSIFICATION

The presentation of the financial statements has been made in compliance with the stipulations of the Notification

of the Department of Business Development dated 14 September 2001 as empowered under the Accounting Act B.E. 2543.

Certain amounts in the financial statements for the year 2004 which are presented herein for the comparative

purpose have been reclassified to conform to the current year's classification, with no effect on previously reported net

earnings or shareholders' equity.

31. APPROVAL OF FINANCIAL STATEMENTS

These financial statements have been authorised for issue by the Company's authorised directors on 28 February 2006.

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

www.bangkokhospital.com

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