Auditors Report
To the Shareholders and the Board of Directors of Krungdhon Hospital Public Company Limited
I have audited the accompanying balance sheet of Krungdhon Hospital Public
Company Limited as at December 31, 2009, the related statement of income, the statement of
changes in shareholders equity and statement of cash flows for the year then ended. The Companys
management is responsible for the correctness and completeness of information presented in these
financial statements. My responsibility is to express an opinion on these financial statements based
on my audit. The financial statements of Krungdhon Hospital Public Company Limited for the year
ended 31 December 2008, as presented herein for comparative purpose, were audited by another
auditor under her report dated February 23, 2009, expressed an unqualified opinion on those
statements.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable assurance as to
whether the financial statements are free of material misstatements. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statements
presentation. I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Krungdhon Hospital Public Company Limited as at
December 31, 2009, and the results of its operations, and its cash flows for the year then
ended, in conformity with generally accepted accounting principles.
Atipong Atipongsakul
Certified Public Accountant Registration Number 3500
ANS Audit Company Limited Bangkok, February 24, 2010
FINANCIAL STATEMENTS AND AUDITORS REPORT
KRUNGDHON HOSPITAL PUBLIC COMPANY LIMITED
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
Notes 2009 2008
Current Assets
Cash and cash equivalents 33,983 41,051
Current investment 4 90,108 ####
Trade accounts receivable - net 5 14,311 9,040
Inventories - net 6 6,851 6,795
Short - term loan receivable 7 1,100 -
Income receivable 8 7,617 6,875
Withholding tax deducted at source 3,911 2,163
Other current assets 1,580 2,186
Total current assets #### ####
Non-current assets
Restricted deposits with financial institutions 9 9,128 9,025
Other long-term investment - net 10 - -
Property, plant and equipment - net 11 #### ####
Intangible assets - net 12 2,505 2,968
Leasehold rights to land and building - net 13 8,647 10,652
Other non-current assets 439 626
Total non-current assets #### ####
Total assets #### ####
KRUNGDHON HOSPITAL PUBLIC COMPANY LIMITED
(Unit: Thousand Baht)
ASSETS
BALANCE SHEETS
AS AT DECEMBER 31, 2009 AND 2008
The accompanying notes are an integral part of these financial statements 2
Notes 2009 2008
Current liabilities
Trade accounts payable 16,431 13,063
Other current liabilities 14 19,328 21,237
Total current liabilities 35,759 34,300
Non-current liabilities
Deferred income from government grants - net 15 15,079 13,124
Other non-current liabilities 72 72
Total non-current liabilities 15,151 13,196
Total liabilities 50,910 47,496
Shareholders' equity
Share capital
Authorized share capital
Common shares, Baht 10 par value, 15,000,000 shares #### ####
Issued and paid-up share capital
Common shares, Baht 10 par value, 15,000,000 shares #### ####
Premium on common shares 67,943 67,943
Retained earnings
Appropriated - legal reserve 17 15,000 15,000
Unappropriated 27,275 54,103
Total shareholders' equity #### ####
Total liabilities and shareholders' equity #### ####
(Unit: Thousand Baht)
LIABILITIES AND SHAREHOLDER'S EQUITY
KRUNGDHON HOSPITAL PUBLIC COMPANY LIMITED
BALANCE SHEETS
AS AT DECEMBER 31, 2009 AND 2008
The accompanying notes are an integral part of these financial statements 3
Notes 2009 2008
Revenues from hospital operations 3 320,862 313,892
Cost of hospital operations 3, 19 ##### #####
Gross profit 58,643 60,309
Gain on sale of other long-term investments - 5,000
Gain on sale of unit trust - 1,050
Gain on disposal of fixed assets - 11,143
Other incomes 15 9,634 11,278
Profit before expenses 68,277 88,780
Selling expenses 3, 19 (1,294) (656)
Administrative expenses 3, 19 (71,938) (73,099)
Management benefit expenses (14,366) (18,829)
Loss before finance cost and income tax expenses (19,321) (3,804)
Finance costs (7) (7)
Loss before income tax (19,328) (3,811)
Income tax expense - -
Net loss for the year (19,328) (3,811)
Basic loss per share: (1.29) (0.25)
(Unit: Thousand Baht)
KRUNGDHON HOSPITAL PUBLIC COMPANY LIMITED
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
The accompanying notes are an integral part of these financial statements. 4
Unrealised gain on
Share capital Premium on changes in the value Appropriated
Note Issues and fully paid common shares of investment legal reserve Unappropriated Total
Balance as at January 1, 2009 150,000 67,943 - 15,000 54,103 ####
Dividend payment 18 - - - - (7,500) (7,500)
Net loss for the year - - - - (19,328) (19,328)
Balance as at December 31, 2009 150,000 67,943 - 15,000 27,275 ####
Balance as at January 1, 2008 150,000 67,943 517 15,000 120,163 ####### ####
Realised since sales of unit trust - - (517) - - (517)
Dividend payment 18 - - - - (62,249) (62,249)
Net loss for the year - - - - (3,811) (3,811)
Balance as at December 31, 2008 150,000 67,943 - 15,000 54,103 ####
Retained earnings
KRUNGDHON HOSPITAL PUBLIC COMPANY LIMITED
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
(Unit: Thousand Baht)
The accompanying notes are an integral part of the financial statement 5
Note 2009 2008
Cash flows from (used in) operating activities
Net profit (loss) before corporate income tax #### (3,811)
Adjustment to reconcile net profit to net cash provided by
(used in) operating activities
Bad debt 627 10
Depreciation and amortisation 24,374 24,407
Amortisation of deferred income from government grants (4,472) (3,970)
Allowance for stocks obsolescence (35) 22
Gain on sale of other long-term investment - (5,000)
Gain on sale of unit trust - (1,050)
Gain on disposal of fixed assets (79) (11,143)
Interest income (1,039) (3,872)
Interest expenses 7 7
55 (4,400)
Operating assets - (increase) decrease
Trade accounts receivable (5,256) 2,355
Inventories (21) 1,595
Other current assets (780) 23,767
Other non-current assets (4) -
Operating liabilities - increase (decrease)
Trade accounts payable 3,367 460
Other current liabilities (1,694) (6,961)
Cash provided by operating activities (4,333) 16,816
Cash paid for interest expenses (7) (7)
Cash paid for income tax (1,748) (3,880)
Net cash provided by (used in) operating activities (6,089) 12,929
(Unit: Thousand Baht)
Profit (loss) from operations before changes in operating
assets and liabilities
KRUNGDHON HOSPITAL PUBLIC COMPANY LIMITED
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
The accompanying notes are an integral part of the financial statement 6
Note 2009 2008
(Unit: Thousand Baht)
KRUNGDHON HOSPITAL PUBLIC COMPANY LIMITED
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
Cash flows from (used in) investing activities
Increase in deposits at financial institutions with restrictions (103) (354)
Short - term loan receivable increased (2,000) -
Cash received from short-term loan 900 -
Cash received from selling of long-term investment - 11,000
Cash received from selling of unit trusts - 121,050
Proceeds from sales of fixed assets 181 14,264
Cash received from interest revenue 1,229 3,829
Cash received from investment in promissory notes 10,000 -
Cash paid for investment in government bonds - #####
Cash paid for acquisition of intangible assets (5) (52)
Decrease in accounts payable from purchasing fixed assets - (11)
Cash paid for acquisition of fixed assets (9,923) (9,422)
Net cash provided by investing activities 279 40,304
Cash flows from (used in) financing activities
Decrease in bank overdrafts - (10)
Cash received on deferred income from government grants 6,427 -
Dividend paid (7,715) (62,248)
Net cash used in financing activities (1,288) (62,258)
Net cash and cash equivalents decrease (7,097) (9,025)
Cash and cash equivalents at beginning of years 41,158 50,183
Cash and cash equivalents at end of years 23 34,061 41,158
The accompanying notes are an integral part of the financial statement 7
8
KRUNGDHON HOSPITAL PUBLIC COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
1. GENERAL INFORMATION
1.1 Krungdhon Hospital Public Company Limited (1the Company2) is a public company incorporated
and domiciled in Thailand. The Company registered address having 2 hospitals, Krungdhon
Hospital 1 located at 337, Somdet Prachao Taksin Road, Samrae, Thonburi, Bangkok and
Krungdhon Hospital 2 located at 272, Suksawad Road, Bangpakok, Radburana, Bangkok.
1.2 The Company is principally engaged in the operation of a hospital business, and was listed on the
Stock Exchange of Thailand in 1989.
2. BASIS OF FINANCIAL STATEMENTS PRESENTATION
The financial statements are prepared in accordance with Thai Accounting Standards (1TAS2)
including related interpretations and guidelines promulgated by the Federation of Accounting
Professions (1FAP2) in accordance with generally accepted accounting principles in Thailand and
applicable rules and regulations of the Securities and Exchange Commission.
The presentation of the financial statements has been made in compliance with the stipulations of the
Notification of the Department of Business Development dated January 30, 2009, issued under the
Accounting Act B.E.2543.
The financial statements issued for Thai reporting purposes are prepared in the Thai language. This
English translation of the financial statements has been prepared for the convenience of readers not
conversant with the Thai language.
They are prepared on a historical cost basis, except as disclosed in respective accounting policies
The preparation of financial statements in conformity with Thai accounting standard requires
management to make judgments, estimates and assumptions that affect the application of policies and
reported amounts of assets, liabilities, income and expenses. The estimates and associated
assumptions are based on historical experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis of making the judgments
about carrying amounts of assets and liabilities that are not readily apparent from other sources.
Subsequent actual results may differ from these estimates.
9
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognized in the period in which the estimate is revised, if the revision affects only that
period, and in the period of the revision and future periods, if the revision affects both current and
future periods.
Accounting standards which are effective for the current year
On May 15, 2009, the Federation of Accounting Professions (FAP) has made the announcement
No. 12/2009 to renumber Thai Accounting Standards (TAS) to be the same as International
Accounting Standards (IAS).
The Federation of Accounting Professions has issued Notification No. 86/2551 and 16/2552,
mandating the use of new accounting standards, financial reporting standard and accounting
treatment guidance as follows.
a) Accounting standards, financial reporting standard and accounting treatment guidance which
are effective for the current year
Framework for Preparation and Presentation of Financial Statements (revised 2007)
TAS 36 (revised 2007) Impairment of Assets
TFRS 5 (revised 2007) Non-current Assets Held for Sale and
Discontinued Operations
Accounting Treatment Guidance for Leasehold right
Accounting Treatment Guidance for Business Combination under Common Control
These accounting standards, financial reporting standard and accounting treatment guidance
became effective for the financial statements for fiscal years beginning on or after 1 January
2009. The management has assessed the effect of these standards and Guidance do not
have any significant impact on the financial statements for the current period.
b) Accounting standards which are not effective for the current year
Effective date
TAS 20 Accounting for Government Grants
and Disclosure of Government
Assistance
1 January 2012
TAS 24 (revised 2007) Related Party Disclosures 1 January 2011
TAS 40 Investment Property 1 January 2011
The management of the Company is still evaluating the effect of these three accounting
standards.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Recognition of revenues and expenses
10
(a) Revenues from hospital operation
Revenues from hospital operation, mainly consisting of medical fees, hospital room sales,
medicine sales and other income, are recognized as income when services have been rendered
or medicine delivered.
(b) Other revenues and expenses
Other revenues and expenses are recognized on an accrual basis.
Cash and cash equivalents
Cash and cash equivalents comprise of cash balances, all deposits (except time deposits) and highly
liquid short-term investments which have negligible risk of value changing and free from
commitments.
Trade accounts receivable and allowance for doubtful accounts
Trade accounts receivable are stated at the net realizable value. Allowance for doubtful accounts is
provided for the estimated losses that may be incurred in collection of receivable. The allowance is
generally based on collection experience and analysis of debt aging.
Inventories
Inventories are valued at the lower of cost (weighted average basis) and net realizable value. Net
realizable value is calculated from the estimated selling price in ordinary course of business less the
estimated costs necessary to make the sale.
Allowance for obsolete stocks is made for long outstanding or obsolete stocks.
Long - term investment
Long - term investment in other company which is non-marketable equity securities and held as
other investment is valued at cost. The company recognizes loss on impairment of other investment
(if any) in the income statement.
Property, plant and equipment and depreciation
Land is stated at cost. Buildings and equipment are stated at cost less accumulated depreciation
and allowance for loss on impairment of assets (if any). Depreciation of buildings and equipment is
calculated by reference to their costs on a straight C line basis over the following estimate useful
lives:-
Buildings and construction 20 years
Equipment and tools 3 - 20 years
Motor vehicles 5 - 10 years
Intangible assets and amortisation
Intangible assets acquired separately are measured on initial recognition at cost. Following initial
recognition, intangible assets are carried at cost less accumulated amortisation and accumulated
impairment loss (if any).
11
Intangible assets with finite lives are amortised on systematic basis over the economic useful live
and tested for impairment whenever there is an indication that the intangible assets may be
impaired.
The amorisation period and the amortization method of such intangible assets are reviewed at least
at each financial year end.
The amortisation expense is charged to the statement of income.
A summary of the intangible assets with finite useful lives is as follows
Useful lives
Computer software 10 years
Leasehold rights to land and building and amortisation
Leasehold right to land and building are stated at cost less accumulated amortisation. Amortisation
of leasehold rights is calculated by reference to its cost on a straight C line basis over the shorter
of the estimate useful lives and the lease period (20 years).
The amortization expenses is charged to the statement of income.
Impairment of assets
The carrying amounts of the CompanyEs assets, other than inventories are reviewed at each balance
sheet date to determine whether there is any indication of impairment. If any such indication exists,
the assetEs recoverable amount is estimated.
An impairment loss is recognized whenever the carrying amount of an asset or its cash-generating
unit exceeds its recoverable amount. Impairment losses are recognized in the statement of income.
Calculation of recoverable amount
The recoverable amount is the greater of the assetEs net selling price and value in use. In assessing
the value in use, the estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and the
risks specific to the asset. For an asset that does not generate cash inflows largely independent of
those from other assets, the recoverable amount is determined for the cash-generating unit to
which the asset belongs.
Reversals of impairment
An impairment loss is reversed if there has been a change in the estimates used to determine the
recoverable amount.
An impairment loss is reversed only to the extent that the assetEs carrying amount does not exceed
the carrying amount that would have been determined, net of depreciation or amortization, if no
impairment loss had been recognized. All reversals of impairment losses are recognized in the
statement of income.
12
Related party transactions
Related parties comprise enterprises and individuals that control, or are controlled by, the
Company, whether directly or indirectly, or which are under common control with the Company.
They also include associated companies and individuals which directly or indirectly own a voting
interest in the Company the gives them significant influence over the Company, key management
personnel, directors and officers with authority in the planning and direction of the CompanyEs
operations.
Government grants
The Company records government grants provided to purchase medical equipment as deferred
income and recognizes them as income on a straight-line basis over the useful life of the related
assets.
Provisions
Provisions are recognized when the Company has a present obligation as a result of a past event,
it is probable that an outflow of resources embodying economic benefits will be required to settle
the obligation, and a reliable estimate can be made of the amount of the obligation.
Income tax
Income tax is provided in the accounts based on the taxable profits determined in accordance with
tax legislation.
Litigation
The Company has contingent liabilities as a result of litigation. The CompanyEs management has
used judgement to the results of the litigation and believes that no loss will result. Therefore no
contingent liabilities are recorded as at the balance sheet date.
Basic earnings (loss) per share
Basic earnings (loss) per share is calculated by dividing net profit (loss) for the year by the weighted
average number of issued and paid up common shares during the year.
4. CURRENT INVESTMENTS
As of December 31, 2009 and 2008, this account consisted of:
13
2009 2008
Fixed deposits at financial institutions 108 107
Held to maturity debt security due within one year
Bill of exchange 90,000 100,000
Total current investments 90,108 100,107
(Unit: Thousand Baht)
As at December 31, 2009, the Company has bill of exchange with a financial institution
amounting to Baht 90 million carrying interest at a rate of 1% per annum, which will mature on
January 14, 2010.
5. TRADE ACCOUNTS RECEIVABLE - NET
As of December 31, 2009 and 2008, this account consisted of:
6. INVENTORIES - NET
As of December 31, 2009 and 2008, this account consisted of:
2009 2008
Outstanding period
Not yet due 7,416 5,345
Over due
1 - 30 days 4,235 2,462
31 - 60 days 1,860 797
61 - 90 days 450 110
Over 90 days 511 502
Total 14,472 9,216
Less: Allowance for doubtful accounts (161) (176)
Trade accounts receivable - net 14,311 9,040
(Unit: Thousand Baht)
14
2009 2008Medicines and medical supplies 5,818 5,885 Supplies 899 697
Stationery supplies 234 349 6,951 6,931
Less: Allowance for obsolete stocks (100) (136) Net 6,851 6,795
(Unit: Thousand Baht)
7. SHORT-TERM LOAN RECEIVABLE
This represents short - term loan to the doctor who paid compensation by Baht 2 million to the
plaintiff as the order of the court in 2008. Such short - term loan has no interest bearing, and no
guarantee. This loan agreement requires the monthly repayment of Baht 100,000, commencing
from April 2009. During the period, the Company received the repayment of short-term loan
receivable in the total amount of Baht 900,000, and the remaining balance of short-term loan
receivable as of December 31, 2009 is Baht 1.1 million.
8. INCOME RECEIVABLE
As of December 31, 2009 and 2008, this account consisted of:
2009 2008
7,427 6,304
190 571
7,617 6,875Total
(Unit: Thousand Baht)
National Health Security Office
Social Security Scheme
9. RESTRICTED DEPOSITS WITH FINANCIAL INSTITUTIONS
As at December 31, 2009 and 2008, all fixed deposits of the Company at financial institutions are
pledged with banks to secure letters of guarantee facilities issued by the banks on behalf of the
Company.
10. OTHER LONG C TERM INVESTMENT - NET
As of December 31, 2009 and 2008, this account consisted of:
(Unit:
Thousand Baht)
15
CompanyEs name Type of
business
Percentage of
shareholding
Investment
2009 2008 2009 2008
Kendall Gammatron Limited Trading of
medical supplies
6.70 6.70 8,00
0
8,00
0
Less: Allowance for
impairment
of investment (8,00
0)
(8,00
0)
Other long-term investments
- net
- -
11. PROPERTY, PLANT AND EQUIPMENT C NET
As at December 31, 2009 property, plant and equipment comprised of:
16
Balance as at Balance as at
January 1, 2009 Increase Decrease December 31, 2009
At cost
Land 34,775 - - 34,775
Buildings and Construction 183,349 43 - 183,392
Equipment and tools 245,755 6,189 (203) 251,741
Motor vehicles 15,303 - (2,518) 12,785
Work in progress 43 3,681 (43) 3,681
479,225 9,913 (2,764) 486,374
Accumulated depreciation
Buildings and Construction 120,967 7,945 - 128,912
Equipment and tools 204,258 12,593 (165) 216,686
Motor vehicles 10,946 1,379 (2,497) 9,828
336,171 21,917 (2,662) 355,426
Net book value 143,054 130,948
Depreciation charge included in income statements for the year
2008 21,933
2009 21,917
Movement during the year
(Unit: Thousand Baht)
Depreciations for the year 2009 and 2008, has been charged to cost of hospital operations
amounted to Baht 14.6 million and Baht 13.5 million, respectively, while the remaining amount
of Baht 7.3 million and Baht 8.4 million respectively, has been charged to administrative expenses.
As at 31 December 2009 and 2008, certain buildings, equipment and motor vehicles of the
Company have been fully depreciated but are still in use. The original cost of those assets are
approximately Baht 198 million and 204 million, respectively.
The Company has pleded its land, including buildings and construction to secure its bank overdraft
facilities with two financial institutions
During the year 2008, the Company sold land and construciton thereon with a net book value of
approximately Baht 3 million to an individual, at a price of Baht 14 million. The company
recognised the approximately Baht 11 millon as gain on the sale of fixed assets in income
statement of the year 2008.
12. INTANGIBLE ASSETS - NET
17
2009 2008
5,337 5,285
5 52
5,342 5,337
(2,837) (2,369)
2,505 2,968
Amortisation expenses included in the income
statement for the year 468 474
Add Purchase during the year
(Unit: Thousand Baht)
Less Accumulated amortisation
Computer software - net
Computer software -cost
13. LEASEHOLD RIGHT TO LAND AND BUILDING - NET
2009 2008
Cost 40,000 40,000
(31,353) (29,348)
8,647 10,652
statement for the year 2,000 2,000
(Unit: Thousand Baht)
Less Accumulated amortisation
Leasehold right to land and building - net
Amortisation expense included in the income
Amortisation for year 2009 and 2008, have been charged to cost of hospital operations
amounted to Baht 1.6 million, while the remaining amount of Baht 0.4 million have been
charged to administrative expenses.
On July 20, 1993, the Company entered into an agreement to lease land and building for a
period of 20 years from a company which has director in common with the Company. Under the
agreement the Company paid Baht 40 million for the leasehold right in order to establish
Krungdhon Hospital 2, and transferred the beneficiary rights under the insurance policy to the
lessor.
Most of the land title deeds of the lessor covered by the agreement to lease land and building has
been mortgaged by the lessor.
14. OTHER CURRENT LIABILITIES
As of December 31, 2009 and December 31, 2008, this account consisted of:
18
(Unit: Thousand Baht)
2009 2008
Accrued medical service expenses 4,745 4,953
Income received in advance 1,078 5,524
Accrued dividend 4,713 4,628
Accrued expenses 7,167 5,564
Others 1,625 568
Total 19,328 21,237
15. DEFERRED INCOME FROM GOVERNMENT GRANTS - NET
The National Health Security Office approved the grant-in-aid budget for private hospitals that
have joined the Universal Health Care Coverage Project, for procurement of medical equipment.
The Company recoded such grant as 1Deferred income from government grants2 in the balance
sheets. It is recognized as income on a straight-line basis over the useful life of the related assets.
(Unit: Thousand Baht)
2009 2008
13,124 12,265
6,427 4,829
(4,472) (3,970)15,079 13,124
Deferred income from government grants - beginning of the year
Add Increase in government grants during the year
Deferred income from government grants - end of the year
Less Recognised as income during the year
16. RELATED PARTY TRANSACTIONS
During the years, the Company had significant business transactions with related company, which
related by way of common directors. Such transactions are summarized below: -
(Unit:
Thousand Baht)
19
2009
2008
Transfer pricing policy
Transaction with related company
Siam Brother Housing Co., Ltd.
Rental expense
6,869
6,869
Approximately Baht
0.57 million per month
(2008: approximately
Baht 0.57 million per
month)
17. LEGAL RESERVE
The CompanyEs legal reserve is provided under the Public Limited Companies Act B.E. 2535
(1992), the Company is required to appropriate not less than 5% of its annual net income after
deducting accumulated deficit brought forward (if any) as legal reserve until the reserve fund
reaches 10% of the authorized share capital. The reserve is non-distributable.
18. DIVIDENDS
On April 21, 2009, the Annual General Meeting of the CompanyEs shareholders for the year
2009 approved the payment of dividend at Baht 0.5 per share for 15 million ordinary shares
from the year 2008Es operating result of totaling Baht 7.5 million. The dividend was paid on May
20, 2009.
On April 25, 2008, the Annual General Meeting of the CompanyEs shareholders for the year
2008 approved the payment of dividend at Baht 4.15 per share for 15 million ordinary shares
from the year 2007Es operating result of totaling Baht 62 million. The dividend was paid on May
23, 2008.
19. EXPENSES BY NATURE
Significant expenses by nature for the years 2009 and 2008 were as follow:
(Unit: Thousand Baht)
2009 2008
Salary, wages, medical service expenses and other employee
benefits
176,947 183,738
Depreciation and amortization expenses 24,980 24,406
Rental expenses 7,651 7,538
Purchase medicines and medical supplies
51,260 47,577
Changes in inventories 21 1,595
20. FINANCIAL INFORMATION BY SEGMENT
20
The CompanyEs operation involves in a single industry segment in the hospital business and is
carried on in the single geographic area in Thailand. As a result, all of the revenues, operating
profits and assets as reflected in these financial statements pertain to the aforementioned industry
segment and geographic area.
21. COMMITMENTS
21.1 Operating lease
commitments
As at December 31, 2009, the Company has commitments amounting to Baht 25.8 million in
respect of long-term agreement with a related company to lease land and buildings for setting
up a Krungdhon Hospital 2 as follow:
Year Unit : Million
Baht
2010 7.3
2011 - 2013 18.5
21.2 Bank guarantees
As at December 31, 2009, there were outstanding bank guarantees of approximately Baht
10.6 million issued by the banks on behalf of the Company in respect of certain performance
bonds as required in the normal course of business. The Company has mortgaged its land,
including buildings and structure thereon to secure its bank guarantees.
21.3 Bank overdrafts
As at December 31, 2009, Baht 35 million of bank overdrafts facilities are secured by the
mortgage of the CompanyEs land and structure thereon.
22. FINANCIAL INSTRUMENTS
22.1 Financial risk management
The CompanyEs financial instruments, as defined under Thai Accounting Standard No.32
1Financial Instruments :Disclosure and Presentations2 principally comprise cash and cash
equivalents, trade accounts receivable, investments and trade accounts payable. The financial
risk associated with these financial instruments and how they are managed is described below.
Credit risk
The Company is exposed to credit risk primarily with respect to trade accounts receivable. The
Company manages the risk by adopting appropriate credit control policies and procedures and
therefore does not expect to incur material financial losses. In addition, the Company does not
have high concentrations of credit risk sicne it has a large customer base. The maximum
21
exposure to credit risk is limited to the carrying amounts of receivables as stated in the balance
sheet.
Interest rate risk
The Company is exposed to interest rate risk relates primarily to its cash at banks, and bank
overdrafts. However, since most of the CompanyEs financial assets and liabilities have fixed
interest rates which are close to the market rate, the interest rate risk is expected to be
minimal.
Significant financial assets and liabilities as December 31, 2009, classified by type of interest
rate are summarised in the table below, with those financial assets and liabilities the carry
fixed interest rates further classified based on the maturity date, or the repricing date if this
occurs before the maturity date.
Fixed interest Interest
Rate due with in Floating Non - interest rate
1 year Interest rate bearing Total (% p.a.)
Financial Assets
Cash and cash equivalents - 32,547 1,436 33,983 0.75%
Current investments 90,108 - - 90,108 1%
Trade account receivable - - 14,311 14,311 -
Pledged fixed deposits at
financial institutions 9,128 - - 9,128 1.0-1.25%
99,236 32,547 15,747 147,530
Financial liabilities
Trade account payable - - 16,431 16,431 -
- - 16,431 16,431
(Unit: Thousand Baht)
Foreign currency risk
The companyEs exposure to foreign currency risk is limited since the majority of business
transaction are denominated in Thai Baht.
22.2 Fair value of financial instruments
Since the majority of the CompanyEs financial instruments are short-term in nature, its fair
value is not expected to be materially different from the amounts presented in the balance
sheets.
A fair value is the amount for which an asset can be exchanged or a liability settled between
knowledgeable, willing parties in an armEs length transaction. The fair value is determined by
22
reference to the market price of the financial instruments or by using an appropriate valuation
technique, depending on the nature of the instruments.
23. STATEMENTS OF CASH FLOWS
For the purpose of the statements of cash flows, cash and cash equivalents include cash in hand
and at banks with an original maturity of three months or less and free from restriction.
As at December 31, 2009 and 2008, cash and cash equivalents as reflected in the statements
of cash flows consist of the following:-
(Unit: Thousand Baht)
2009 2008
33,983 41,051
108 107
34,091 41,158
Cash and cash equivalents in statements
Cash and Cash equivalents
of cash flows
Current investment - fixed deposits
24. LITIGATIONS
As at December 31, 2009, the Company has litigations as follows:
24.1 In 2007, the Company was sued by the relative of a patient, claiming compensation of Baht
10 million, on the grounds that the doctor did not provide care in accordance with the highest
standards. In addition, the Company was sued by a patient, claiming compensation of Baht 1.5
million. Both cases were dismissed by the court of first instance in March 2008 and are being
heard by the appellate court; however, the CompanyEs management believes both cases will be
dismissed and that there will be no material effect on the results of the CompanyEs operations,
or its financial position.
24.2 During the year 2008, the Company was sued by a patient, claiming compensation of Baht 5
million, on the grounds that the doctor did not provide care in accordance with the highest
standards. The case were dismissed by the court of first instance and are being heard by the
appellate court. The CompanyEs management believes that the ultimate resolutions of these
legal proceedings are not likely to have a material effect on the results of the CompanyEs
operations, or its financial position.
25. Reclassification
Certain amounts in the financial statement for the year ended 31 December 2008 have been
reclassified to conform to the current yearEs classification but with no effect to previously reported
net income or shareholdersE equity. The reclassifications are as follow:
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As reclassified
Revenues from hospital operations 313,892 317,346
Cost of hospital operations (253,583) (258,321)
Administrative expenses (73,099) (91,300)
Management benefit expenses (18,829) -
Selling expenses (656) -
As previously reported
(Unit: Thousand Baht)
26. Approval of financial statements
These financial statements were approved by the authorized directors of the Company on February 24,
2010.
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