2. BUSINESS DESCRIPTION

2.1 Company History

  1980: Bumrungrad Hospital was the first private hospital to open in
  central Bangkok with a capacity of 220 beds.

  1989: Bumrungrad Hospital Public Company Limited (“the Company”)
  became a listed company on the Stock Exchange of Thailand.

  1997: The hospital opened the new replacement facility with capacity
  of 554 beds.

  1999: Bumrungrad Hospital received ISO9002 certification and was the
  first private hospital in Thailand to receive Thai Hospital
  Accreditation (HA).

  2000: The Company voluntarily requested for the suspension of the
  trading of its shares on the SET, as the Company was in the process of
  negotiating with its creditors on the debt restructuring. In August of
  the same year, the Company successfully completed its debt
  restructuring.

  2001: With its commitment to being the leader in quality, Bumrungrad
  Hospital received ISO14001 standard for its environmental management,
  and was the first hospital in Asia to receive ISO9001:2000
  accreditation. In addition, it was the first hospital to receive the
  renewal of Thai Hospital Accreditation, making it the first hospital
  in Thailand to have received all three standards at the same time.
  Regarding business expansion, the Company saw the opportunity to
  expand into the “preventive medicine” segment, and established
  Vitallife Corporation Limited (“Vitallife”), which commenced its
  operation as an anti-aging clinic on 28 August 2001.

  2002: The Company continued to expand its services for international
  patients, and formally opened the International Patient Center to
  accommodate the increasing demand. In addition, the Company launched a
  business unit, BH International, with the objective at that time to
  provide management and consultancy services, and hospital planning and
  design services to hospitals in the region. At present, BH
  International is operated under Bumrungrad International Limited, a
  31.5% associated company. In addition, in the same year, Bumrungrad
  Hospital was the first hospital in Asia to receive the highly
  prestigious international standard hospital accreditation by the
  US-based Joint Commission on International Accreditation (“JCIA”).

  2003: The Company succeeded in transferring its securities to the
  Healthcare Service Sector and the Company’s shares commenced trading
  on the Stock Exchange of Thailand again on 29 October 2003. In
  addition, the Company started its expansion plan by building a new
  outpatient facility to accommodate the increase in demand.

  2004: The Company reduced its par value from Baht 10 per share to Baht
  5 per share and used all the reduced paid-up share capital to settle
  against retained loss. In addition, the Company changed its par value
  from Baht 5 per share to Baht 1 per share (share split). On the
  international expansion, BH International business unit was
  transferred to be under the responsibility of Bumrungrad International
  Limited, the Company’s 100% subsidiary at the time. Bumrungrad
  International Limited’s policy was changed from providing consulting
  and management services to investments in hospitals in the region.

  2005: Bumrungrad International Limited invested an effective
  shareholding of 43.25% in Asian Hospital Inc. (“AHI”) which is the
  operator of 253-bed private hospital in Manila, the Philippines.

  2006: Bumrungrad International Limited made a 49% investment in
  Bumrungrad Hospital Dubai LLC, the operator of a 250-bed private
  hospital in Dubai, United Arab Emirates. The investment size is
  expected to be Baht 388 million, of which Bumrungrad International
  Limited paid the initial investment of Baht 25.8 million in 2006. In
  addition, in 2006, Bumrungrad International Limited increased its
  capital through an issuance of 5,764,701 new shares to strategic
  partners, Temasek, Istithmar and Bangkok Bank Public Company Limited.
  As a result, the Company’s shareholding in Bumrungrad International
  Limited was decreased from 100% to 51%.

  2007: For the expansion of the Bangkok facility, the Company completed
  the construction of the new Bumrungrad International Clinic Building
  and opened the Health Screening Center on the 11^(th) floor and the
  parking in the beginning of 2007.

  In 2007, Bumrungrad International Limited increased its capital from
  Baht 1,176,470,100 to Baht 2,749,336,700 in two tranches: the first
  tranche to allow AFH International Company Limited ("AFH"), Asia
  Financial Holdings Limited’s wholly-owned subsidiary, to become a
  19.5% shareholder in Bumrungrad International Limited, while the
  Company’s shareholding in Bumrungrad International Limited decreased
  from 51% to 31.5%; and the second tranche to raise additional capital
  for Bumrungrad International Limited’s investments.

  Bumrungrad International Limited invested US$ 75 million for a 100%
  stake of Asia Renal Care Limited (“ARC”), the largest private provider
  of dialysis and related services in Asia. Also, Bumrungrad
  International Limited signed a four-year agreement with the Health
  Authority of Abu Dhabi to manage Bumrungrad Al Mafraq Hospital in Abu
  Dhabi, United Arab Emirates. In addition, Bumrungrad International
  Limited converted management fees received from AHI in the Philippines
  into equity stake, resulting in an increase in its shareholding in AHI
  from 43.25% to 45.5% as at 31 December 2007.

  Global Care Solution (Thailand) Company Limited (“GCS Thailand”), the
  Company’s 30% associated company, sold its software and other assets
  to Microsoft Corporation in the United States and Microsoft (Thailand)
  Co., Ltd, resulting in a share of profit from GCS Thailand of Baht 829
  million in the fourth quarter of 2007. GCS Thailand then changed its
  name from Global Care Solutions (Thailand) Company Limited to CDE
  Trading Company Limited.

  2008: For the Bangkok facility, the majority of the new Bumrungrad
  International Clinic Building is operational, with seven additional
  floors opened in June 2008, of which four floors are outpatient
  clinics. The new building offers a variety of specialties including
  check-ups, allergy, heart, hormones and nutrition, infectious disease,
  kidney, neurology, pain management, pulmonology, rheumatology,
  urology, and men’s health. As a result, the hospital’s outpatient
  capacity increased from 3,500 patients per day to 4,500 patients per
  day. In addition to the new clinics, Bumrungrad International Clinic
  also offers new sky lobby, patient lounges and new restaurants “the
  Mezz”. In 2008, the hospital also invested in major technologies to
  improve its quality of service especially for patient safety,
  including the new state-of-the-art, fully-automated drug management
  system by Swisslog, the ‘Pharmacy Robot’, which is the first of its
  kind in Asia, and Thailand’s first modern medical lab automation
  system, Beckman Coulter’s Lab Automation. In addition, the Company
  bought back BH Tower from Bangkok Bank Public Company Limited for Baht
  470 million. The building is currently being used as serviced
  apartments for patients and families and will be converted into
  inpatient beds as needed.

  For the international business, in February 2008, Bumrungrad
  International Limited increased its paid-up capital from Baht
  2,749,336,700 to Baht 3,199,336,700. The fund was used for the
  expansion of AHI in the Philippines. As Bumrungrad International
  Limited was the only shareholder that participated in AHI’s capital
  increase, together with the conversion of management fees into equity
  stake, Bumrungrad International Limited’s shareholding in AHI
  increased from 45.5% to 54.4% as at 31 December 2008.

  In December 2008, the Company, together with Asia Renal Care (SEA)
  Limited (“ARC (SEA)”), which is Bumrungrad International Limited’s
  100% subsidiary, through Asia Renal Care Limited, formed a joint
  venture, Asia Renal Care (Thailand) Co., Ltd. (“ARC Thailand”), with
  registered and paid-up capital of Baht 12 million. The Company has 51%
  shareholding in ARC Thailand while ARC (SEA) holds the remaining
  stake. In February 2009, ARC Thailand made a 20% investment in
  Nephromed Co., Ltd. (“Nephromed”), a dialysis provider with 14 clinics
  in Thailand. With ARC (SEA) directly holding another 40% in Nephromed,
  the group’s collective shareholding in Nephromed is 60%.

  At present, Bumrungrad International Limited is in the process of
  reviewing the Bumrungrad Hospital Dubai project, which is on hold.
  Bumrungrad International Limited has made a full provision for its
  investment in this project in 2008.

  In 2008, the Company has been recognized by third-party organizations
  for its achievements in various areas and received awards as follows:

1.  Best Managed Company in Thailand - Small Cap 2008 by Asiamoney
    Magazine.

2.  Total Quality Class Award by Office of Thailand Quality Award, which
    is considered a world-class award, as the fundamental of the
    technical and decision-making processes are identical to the Malcolm
    Baldrige National Quality Award (MBNQA) of the US.

3.  Ranked No. 4 for Thailand’s top 10 (overall, ranked by average
    score) and No. 1 for Thailand’s five most-admired companies by
    attribute in quality category in Asia’s Top 200 Most Admired Company
    by the Wall Street Journal.

4.  Award of Excellence in the category of Health Tourism by Tourism
    Authority of Thailand. Bumrungrad was the first hospital to win the
    award for this category.

5.  Excellence and outstanding achievement in applied medical
    informatics award by the Association of Medical Directors of
    Information Systems (AMDIS) of the US. Bumrungrad International is
    the only hospital outside the US to receive the award in 2008.

6.  “Thailand’s Most Innovative Company” award by Chulalongkorn
    University’s School of Business.

7.  “Best Website for International Medical Travel” at the 2008 Consumer
    Health World Awards event in the US.

8.  Ranked No. 7 for “Company most desired to work for” by Business.com
    Consumer Vote Survey by Business.com magazine.

2.2 Business Overview 

Corporate structure:

  []

  Bumrungrad Hospital Public Company Limited (“the Company”) operates a
  private hospital business in Bangkok with a licensed capacity of 554
  beds and 4,500 outpatients per day. The Company is one of the leading
  healthcare providers in Thailand and in the Southeast Asian region,
  providing complete healthcare services for both outpatients and
  inpatients. The Company has always emphasized the importance of
  quality healthcare and experienced physicians and staff. Bumrungrad
  International Hospital, Bangkok is the first hospital in Asia to
  receive the US standard accreditation from the Joint Commission on
  International Accreditation (JCIA).

  The Company has two 100%-owned subsidiaries, including Bumrungrad
  Medical Center Limited and Vitallife Corporation Limited, one
  51%-owned subsidiary, Asia Renal Care (Thailand) Company Limited, two
  associated companies, including 31.5% stake in Bumrungrad
  International Limited and 30% stake in CDE Trading Company Limited
  (previously Global Care Solutions (Thailand) Company Limited), and one
  related company, which is a 14% investment in Global Care Solutions
  S.A. in Luxemburg.

  Bumrungrad Medical Center Limited (“BMC”) is the owner of the existing
  Bumrungrad International Hospital Building, which is leased to the
  Company.

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

  Bumrungrad International Limited is the Company’s international
  investment arm. Bumrungrad International Limited currently has 85
  hospital and clinic locations in 7 countries outside of Thailand.
  Bumrungrad International Limited’s strategic partners are Istithmar,
  an investment arm of the United Arab Emirates government, Temasek of
  Singapore, Asia Financial Holdings in Hong Kong and Bangkok Bank
  Public Company Limited. These strategic partners are internationally
  well known with strong presence in their respective regions, thereby
  providing important sources of new investment opportunities and
  referral network especially in the Middle East and Asia.

  Asia Renal Care (Thailand) Company Limited (“ARC Thailand”) is a
  joint-venture between the Company and Asia Renal Care (SEA) Limited.
  ARC Thailand has entered into an agreement to invest a 20% stake in
  Nephromed Company Limited, a dialysis service provider with 14
  dialysis clinics in Thailand.

  CDE Trading Company Limited (previously Global Care Solutions
  (Thailand) Company Limited) was a software development company for
  healthcare business. In December 2007, Global Care Solutions
  (Thailand) Company Limited completed the sale of its core assets,
  which was the hospital software, and other assets to Microsoft
  Corporation and Microsoft (Thailand) Co., Ltd. It also changed its
  name from Global Care Solutions (Thailand) Company Limited to CDE
  Trading Company Limited and is in the process of studying new
  investment opportunities.

  Global Care Solutions S.A. (“GCS Luxemburg”) is currently a dormant
  company.

2.3 Revenue Structure

  Unit: Baht Million

  -------------------------------------------------------------------------------------------------
  Product line Operate by      % Shareholding 2008              2007              2006      
  / Business                   by Company                                                   
  Group                                                                                     
  ------------ --------------- -------------- --------- ------- --------- ------- --------- -------
                                              Revenue   %       Revenue   %       Revenue   %

  Healthcare   Bumrungrad                     8,540     95.7    8,227     87.4    7,572     95.9
               Hospital Pcl.                                                                

  Healthcare   Vitallife       100.0          89        1.0     97        1.0     78        1.0
               Corporation                                                                  
               Ltd.                                                                         

  Total                                       8,629     96.7    8,324     88.4    7,650     96.9
  Healthcare                                                                                

  Hospital     Bumrungrad      31.50*         -         -       17        0.2     57        0.7
  Management   International                                                                
               Ltd.                                                                         

  Total                                       -         -       17        0.2     57        0.7
  Hospital                                                                                  
  Management                                                                                

  Rental       Bumrungrad                     128       1.4     132       1.4     118       1.5
               Hospital Pcl.                                                                

  Total Rental                                128       1.4     132       1.4     118       1.5

  Others       Bumrungrad                     167       1.9     925       9.9     57        0.7
               Hospital Pcl.**                                                              

  Others       Bumrungrad      100.0          1         -       2         -       1         -
               Medical Center                                                               
               Ltd.                                                                         

  Others       Bumrungrad      31.5           -         -       13        0.1     12        0.2
               International                                                                
               Ltd.                                                                         

  Total Others                                168       1.9     940       10.0    70        0.9

  Total                                       8,925     100.0   9,413     100.0   7,895     100.0
  -------------------------------------------------------------------------------------------------

  * Bumrungrad International Limited changed its status from a
  subsidiary to an associated company in April 2007. Therefore, the
  revenue from hospital management of Baht 17 million in 2007 was only
  the 1Q07 revenue as Bumrungrad International Limited’s accounts were
  no longer consolidated into the Company’s from 2Q07 onwards.

  ** In 2007, Bumrungrad Hospital Pcl. reported other revenues of Baht
  925 million, of which Baht 829 million was the share of profit from
  investments in CDE Trading Co., Ltd. (Previously Global Care Solutions
  (Thailand) Co., Ltd.), a one-time non-operating gain from sale of
  assets in CDE Trading, netted off with CDE Trading’s operations.

 

2.4 Company’s Business Goal

  The Company has business goals as follows:

  1. Expansion and upgrade of the Bangkok facility in the next five
  years: the Company plans to expand its capacity to accommodate patient
  demand, particularly for its outpatient facilities and renovate its
  existing facilities for better quality of service. In order to
  continue to improve its services with the growing customer base, the
  Company has a comprehensive plan to upgrade and expand its Bangkok
  facility as follows:

  1.1 New Bumrungrad International Clinic Building: The Company
  constructed a 22-storey outpatient clinic building, of which the first
  10 floors are parking. The Company plans to open the floors as needed
  over the next five years to accommodate the rising demand.

  1.2 Existing Bumrungrad International Hospital Building: As the
  existing hospital has been opened for over ten years, the Company will
  be renovating and upgrading its existing hospital building, including
  inpatient rooms and outpatient clinics, over the next two years. The
  renovation will not only be the hard refurbishment of the rooms but
  will also include bedside medication administration technology, total
  communication and entertainment, environmental control and patient
  safety.

  1.3 BH Tower Building: Currently, BH Tower building is used as
  serviced apartment for patient family and relatives. The Company plans
  to convert the serviced apartments into inpatient beds and open the
  floors as needed.

  2. Be the leader of healthcare provider in the region: The Company is
  committed to maintain its leadership status in healthcare provider,
  both within Thailand and in the region, with continuous development in
  the quality of services.

  3. International expansion: The Company’s strategy is to expand its
  international business through Bumrungrad International Limited.

  4. Opportunities in ancillary businesses: The Company is the first
  hospital to expand its business into a comprehensive wellness center
  specializing in anti-aging and preventive medicine. The Company looks
  for similar opportunities in order to support its hospital business.

  Progress on the business goals:

  1. Expansion and upgrade of the Bangkok facility:

  1.1 New Bumrungrad International Clinic Building: The construction was
  completed and the majority of the building is now open for service,
  including the first 10 floors of parking, five floors of outpatient
  clinics, and four floors of ancillary services, sky lobby and
  restaurants.

  1.2 Existing hospital building: Rolling renovation of the inpatient
  wards has started. As at 31 December 2008, 76 beds have been
  completed.

  1.3 BH Tower building: The Company reacquired the BH Tower land and
  building in 2008. BH Tower is currently used as serviced apartments
  and will be closed for renovation into inpatient beds as needed.

  2. Leader in medical service provider in the region: Bumrungrad
  Hospital has continuously developed and improved its quality of
  service. As a result, the hospital is a leader in terms of quality, as
  evidenced that the hospital was the first private hospital to be
  accredited by HA, and the first in Asia to receive the international
  standard JCI Accreditation. The Hospital received its third
  consecutive JCI Accreditation in 2008.

  3. International expansion: The Company made investments in hospitals
  in the region through Bumrungrad International Limited. Bumrungrad
  International Limited invested in Asian Hospital Inc. in the
  Philippines in 2005, invested 100% in Asia Renal Care Limited and
  received a management contract of the Bumrungrad Al Mafraq Hospital in
  Abu Dhabi in 2007.

  In 2008, all operating investments were contributing positively to
  Bumrungrad International Limited’s earnings and Bumrungrad
  International Limited itself recorded positive earnings.