1.  RISK FACTORS

  1. Political and macroeconomic factors

  In the past year, Thailand’s tourism industry was affected by
  political unrest, particularly in the second quarter. Other external
  factors affecting the industry from time to time include global and
  domestic economic downturns and contractions in activity caused by
  incidents such as flu pandemics. Although medical tourism is not as
  easily affected as the typical tourism industry as there is often an
  established relationship between patients and the hospital and
  physicians, these events could cause a postponement or a reduction in
  the number of patients traveling to Thailand, and could in turn affect
  revenues from international patients.

  In order to minimize the risk, the Company maintains a balanced
  portfolio of international and Thai patients so that the Company does
  not rely excessively on revenue from international patients. In the
  past year, the Company has focused on marketing activities for the
  domestic market while continuing to work to attract international
  patients. As a result, the Thai patient market was a major contributor
  in terms of volume, at 58% of total volume in 2010.

  2. Intensified competition in the premium healthcare sector

  As private hospitals in Thailand and the region continue to develop,
  competition in the private healthcare sector continues to intensify
  the risk of losing clients to competitors.

  In order to maintain its leading position in Thailand and Asia and to
  mitigate risk, the Company has focused on continuing to recruit
  doctors of the highest caliber, invested in up-to-date equipment and
  information technology, upgraded and expanded both inpatient and
  outpatient facilities as well as continuously improved its quality of
  care. The Company’s hospital was the first hospital in Asia to receive
  US standard accreditation from Joint Commission International (JCI).
  The hospital has also received JCI’s Clinical Care Program
  Certification (CCPC) for specialty programs, including the Primary
  Stroke Program, Myocardial Infarction with ST Segment Elevation,
  Diabetes Mellitus Type I and II, and Chronic Kidney Disease Stage I to
  IV. The hospital was also the first private hospital in Thailand to
  receive Thai Hospital Accreditation (HA). In 2010, the Company was
  recognized by third-party organizations for achievements in various
  areas and received awards including “Prime Minister’s Export Award
  2010” for Best Service Provider (Hospital Service) and Thailand
  Tourism Award: “Award of Outstanding Performance in Medically-Oriented
  Establishment” by The Tourism Authority of Thailand. In addition, the
  Company has a strong client base of referral patients both from within
  Thailand and internationally.

  3. Shortage of professional staff

  The hospital business requires personnel including nurses, pharmacists
  and various technicians, with specific technical expertise and
  knowledge. A shortage of these professionals is partially due to the
  increasing demand from both the private and public sectors. Given the
  importance of its international client base, the Company also requires
  multi-lingual professionals.

  In order to minimize the risk, the Company offers competitive
  compensation and benefits for its staff. The Company also provides
  education and training, recreation, staff engagement projects and
  staff welfare activities to all staff members. Through a decentralized
  management structure, the Company also offers excellent career paths
  to various categories of staff. In 2010, the Company received the
  “Best Practice Workplace Award on Labor Relations and Labor Welfare
  Award 2010” from the Ministry of Labor.

  4. Risk from interest rate volatility

  The Company has loans from local financial institutions. Most of these
  are long-term loans at floating interest rates; therefore, interest
  rate volatility could affect the financial performance of the Company.

  However, the loan size is small compared to the Company’s equity and
  assets. Therefore, the Company has limited risk from interest rate
  volatility. As of 31 December 2010, the Company had a total balance of
  long-term floating interest rate loans from financial institutions of
  Baht 1,430 million, accounting for 23.6% of total equity and 15.6% of
  total assets.

  5. International investments

  Currently Bumrungrad International Limited has an investment in a
  hospital in the Philippines and a management agreement in Abu Dhabi,
  United Arab Emirates. Such investment and operations carry the
  inherent risk of investment and expose the Company to country and
  currency risk outside Thailand.

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

  6. Legal disputes

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

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