report on opinion of the independent ... - bangkok hospital

Enclosure 14

(Translation)

Report on Opinion of the Independent Financial Advisor

on Asset Acquisition from Conditional Voluntary Tender Offer

with Respect to All of the Securities of

Bumrungrad Hospital Public Company Limited

by

Bangkok Dusit Medical Services Public Company Limited

Prepared by

Advisory Plus Company Limited

March 16, 2020

Table of Contents

Page

Executive Summary........................................................................................................................ 3

1. Characteristics and details of the transaction ....................................................................... 5

1.1 Type and size of the transaction .......................................................................................... 5

1.2 Value of consideration and criteria used to determine the value of consideration .............. 6

1.3 Parties involved and their relationship ................................................................................ 7

1.4 Sources of funds for the transaction .................................................................................... 7

1.5 Conditions for the transaction ............................................................................................. 7

1.6 Details of the acquired assets .............................................................................................. 8

2. Profile of the Company ............................................................................................................ 8

3. Reasonableness of the transaction .......................................................................................... 8

3.1 Objectives and necessity of the transaction ......................................................................... 8

3.2 Advantages and disadvantages of the transaction ............................................................... 9

4. Fairness of price and conditions for the transaction........................................................... 14

4.1 Fairness of price ................................................................................................................ 14

4.2 Fairness of conditions for the transaction .......................................................................... 31

5. Conclusion of the IFA’s opinion ........................................................................................... 32

Attachment 1 Profile of Bumrungrad Hospital Public Company Limited

Attachment 2 Profile of Bangkok Dusit Medical Services Public Company Limited

AP. 016/2020

March 16, 2020

Subject Opinion of the Independent Financial Advisor on asset acquisition from Conditional

Voluntary Tender Offer with respect to all of the securities of Bumrungrad Hospital Public

Company Limited by Bangkok Dusit Medical Services Public Company Limited

To Shareholders


The Board of Directors’ Meeting No. 2/2020 of Bangkok Dusit Medical Services Public

Company Limited (“the Company” or “BDMS”), convened on 26 February 2020, resolved to

propose that the shareholders’ meeting consider and approve the entering into the Conditional

Voluntary Tender Offer with respect to all of the securities of Bumrungrad Hospital Public Company

Limited (“BH”) in compliance with the Notification of the Capital Market Supervisory Board No.

TorChor. 12/2554 Re: Rules, Conditions and Procedures for the Acquisition of Securities for Business

Takeovers (including any amendment thereto) (the “Business Takeover Notification”). Considering

that the Company is now holding 182,513,006 ordinary shares of BH, representing 24.99% of the total

issued shares of BH, the remaining securities of BH for which the Company intends to make a tender

offer comprise:

(l) 546,358,351 ordinary shares, representing 74.84% of the total issued shares of BH;

(2) 1,180,865 preference shares, representing 0.16% of the total issued shares of BH; and

(3) all convertible debentures (comprising BH Convertible Debentures Series#1 and BH

Convertible Debentures Series#2, which can be converted into 137,362,636 ordinary shares of BH)

(the “Tender Offer”).

The Company will make the Tender Offer with respect to all of the securities of BH at the

price of Baht 125 per share, totaling Baht 85,612,731,500, provided the offering price for the

securities may be increased at the rate of not exceeding 20% of the offering price (if the offering price

is adjusted, the total consideration of the Tender Offer will be Baht 85,612,731,500 - Baht

102,735,277,800). The price adjustment would depend on the appropriateness of the market condition

of the Stock Exchange of Thailand (the “SET”) and the trading price of BH shares at the time. In this

regard, the Company will inform the final offering price after all Conditions Precedent are fully

satisfied. Nevertheless, the Company reserves the rights to reduce the final offering price only for the

special case where BH makes an additional dividend payment which is material and not in line with

the guideline on the dividend payment for the past three years. In the case of the adjustment of the

final offering price, the Company will further disclose the definite offering price accordingly and will

propose the shareholders’ meeting to consider and approve the authorization of the Board of Directors

or the person designated by the Board of Directors to determine, amend, and adjust the final offering

price, which will be before the submission of the Tender Offer.

The Tender Offer is classified as a purchase or acceptance of transfer of the business of other

companies under Section 107 (2) (b) of the Public Limited Companies Act B.E. 2535 (1992)

Opinion of the Independent Financial Advisor on Acquisition of Assets

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(including any amendment thereto), and as an asset acquisition transaction pursuant to the

Notification of the Capital Market Supervisory Board No. TorChor. 20/2551 Re: Rules on Entering

into Material Transactions Deemed as Acquisition or Disposal of Assets dated 31 August 2008

(including any amendment thereto), and the Notification of the Board of Governors of the Stock

Exchange of Thailand Re: Disclosure of Information and Other Acts of Listed Companies Concerning

the Acquisition and Disposition of Assets B.E. 2547 (2004), dated 29 October 2004 (including any

amendment thereto) (collectively, the "Notifications on Acquisition or Disposal"), with the highest

transaction value of 76.86%, calculated by applying the total value of consideration basis based on the

information under the consolidated financial statements of the Company for the period ended 31

December 2019. In this regard, after combining such transaction value with other asset acquisition

transactions during the six months preceding this transaction, the total value of the asset acquisition

transaction is 82.36%. The transaction is thus classified as a Class 1 Asset Acquisition Transaction

with the size of 50% or higher but lower than 100%, resulting in the Company having the duties to

prepare a report and disclose an information memorandum on the asset acquisition transaction to the

SET, and to deliver to the shareholders a notice calling a shareholders’ meeting no less than 14 days

in advance, whereby the notice must consist of information required by the Notifications on

Acquisition or Disposal at a minimum. The Company will convene the 2020 Annual General Meeting

of Shareholders on 10 April 2020 to seek approval on the entering into the transaction, whereby the

resolution shall be passed by votes of no less than three-fourths of the total votes cast by the

shareholders attending the meeting and being entitled to vote, without counting the votes cast by the

shareholders with an interest.

In the notice calling a shareholders’ meeting, the Company is required to submit opinion of an

independent financial advisor on (1) reasonableness and benefits of the transaction for listed

company, (2) fairness of price and conditions for the transaction, and (3) whether the shareholders are

recommended to approve or disapprove the transaction with the supporting reasons provided thereto.

In this regard, the Company has appointed Advisory Plus Co., Ltd. as an independent financial

advisor (“IFA”) to give an opinion to the shareholders on the entry into such transaction.

In rendering our opinion on this transaction, we have a limited access to the internal

information of BH. Therefore, we have studied the information and documents obtained from the

Company and the publicly available information such as the resolution of the Board of Directors’

meeting of the Company on the tender offer for the securities of BH, information memorandum

related to the Company’s acquisition of assets, annual registration statement (Form 56-1), annual

reports of the Company and BH, auditor report, financial statements of the Company and BH,

documents for the analyst presentation of BH, documents from investor kits on

www.bumrungrad.com, statistical data of listed companies in the SET’s Healthcare Services Sector,

analysis and forecast on the economic and relevant industry situation, as well as the information

derived from interviews with the management of the Company, to be used as a basis for our analysis

and provision of opinion herein.

The opinion given is based on the assumption that all information and documents used as

reference for preparing this report, are true, correct and complete without any change or amendment

therein after our study, and we are unable to certify or guarantee the correctness or completeness of

the information publicly available. Moreover, our consideration has been made based solely on the

economic environment and the information prevailing at the time of conducting this study. As such, if

there is any significant change in these factors, it will likely pose a material impact on BH, the

Company and the transaction described herein and also on the shareholders’ decision. Therefore, we

may not affirm as to whether there will be any material impact on the Company and its shareholders

in the future.

Our objective is merely to render an opinion to the shareholders as a basis for their voting

decision on the entry into the transaction described above. The decision whether to vote in favor of or

against the transaction depends primarily on the shareholders’ individual judgment. Our opinion is by

no means a guarantee for the success of the transaction contemplated herein and any potential impacts

thereof. We shall not be held accountable for any impacts that may arise from the entry into such

transaction.


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Our opinion is summarized as follows:

Executive Summary

The Board of Directors’ Meeting No. 2/2020 of the Company, convened on 26 February

2020, resolved to propose that the shareholders’ meeting consider and approve the entering into the

Conditional Voluntary Tender Offer with respect to all of the securities of BH in compliance with the

Business Takeover Notification. Considering that the Company is now holding 182,513,006 ordinary

shares of BH, representing 24.99% of the total issued shares of BH, the remaining securities of BH for

which the Company intends to make a tender offer comprise:




Convertible Debentures Series#2, which can be converted into 137,362,636 ordinary shares of BH).




is adjusted, the total consideration of the Tender Offer will be Baht 85,612,731,500 - Baht


of the SET and the trading price of BH shares at the time. In this regard, the Company will inform the

final offering price after all Conditions Precedent are fully satisfied (details of the Conditions

Precedent are provided in Item 1.5 “Conditions for the transaction” on Page 7 of this report).

Nevertheless, the Company reserves the rights to reduce the final offering price only for the special

case where BH makes an additional dividend payment which is material and not in line with the

guideline on the dividend payment for the past three years. In the case of the adjustment of the final

offering price, the Company will further disclose the definite offering price accordingly and will



price, which will be before the submission of the Tender Offer. The sources of funds to be used in the

Tender Offer will be derived from working capital and loans from financial institutions.


companies under Section 107 (2) (b) of the Public Limited Companies Act B.E. 2535 (1992)

(including any amendment thereto), and as an asset acquisition transaction pursuant to the

Notifications on Acquisition or Disposal, with the highest transaction value of 76.86%, calculated by

applying the total value of consideration basis based on the information under the consolidated

financial statements of the Company for the year ended 31 December 2019. In this regard, after

combining such transaction value with other asset acquisition transactions during the six months

preceding this transaction, the total value of the asset acquisition transaction is 82.36%. The

transaction is thus classified as a Class 1 Asset Acquisition Transaction with the size of 50% or higher

but lower than 100%, resulting in the Company having the duties to prepare a report and disclose an

information memorandum on the asset acquisition transaction to the SET, and to deliver to the

shareholders a notice calling a shareholders’ meeting no less than 14 days in advance, whereby the

notice must consist of information required by the Notifications on Acquisition or Disposal at a

minimum. The Company will convene the 2020 Annual General Meeting of Shareholders on 10 April

2020 to seek approval on the entering into the transaction, whereby the resolution shall be passed by

votes of no less than three-fourths of the total votes cast by the shareholders attending the meeting and

being entitled to vote, without counting the votes cast by the shareholders with an interest.

The Tender Offer is in line with the investment policy of the Company, which focuses on

investment in the healthcare business due to Thailand having a competitive advantage in providing

healthcare services at a globally accepted standard and competitive pricing in comparison with the

quality of the service. The Company believes that BH's business demonstrates strong growth potential

and has the ability to generate favorable long-term returns, as it is a reputable hospital for treating


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highly complex diseases, staffed by experienced medical personnel, and is well known to both Thais

and foreigners. In addition, this transaction will be an important opportunity for the Company’s

business expansion to strengthen the operation and accommodate future growth. The Company has

invested in BH for a long time and gained favorable yields. The additional investment in BH which

will result in the Company’s holding of 25% or more of the total issued shares of BH, shall be made if

and when the Company has made the Tender Offer with respect to all of the securities of BH in

accordance with the criteria under the Business Takeover Notification. However, in making this

Tender Offer, the Company has neither intention to change the management or key policies of BH nor

plan to delist the securities of BH from the stock exchange.

The Tender Offer will create advantages to the Company in terms of revenue growth from

profit sharing in proportion to the additional number of shares to be acquired or from the

consolidation of operating results with those of BH, which will occur if the Company holds less than

50% of total issued shares of BH, as well as an increase in cash flow from dividend receivable from

BH shares. It is believed that BH's business demonstrates strong growth potential and ability to

generate favorable long-term returns, as it is a reputable hospital for treating highly complex diseases,

staffed by experienced medical personnel, and is well known to both Thais and foreigners, especially

to the Middle East and Asia-Pacific countries. The success of the Tender Offer will help strengthen

the expansion of foreign customer base to attract patients from around the globe. Both Bangkok

Hospital and Bumrungrad Hospital are internationally renowned for their medical services and ability

to treat complex diseases with competitive pricing in comparison with the quality of the service, thus

making them a popular and well accepted private hospital group of Thailand among foreigners. In

addition, this transaction will enhance business opportunities amid the growing demand for healthcare

service in the local and regional markets, resulting from the entering into the aging society of

Thailand and the region, growth in per capita income, people’s increasing health consciousness for

quality longevity, and growth in health insurance business.

However, the Tender Offer, of which the total value will be in a range of Baht 85,612,731,500

- 102,735,277,800, may lead to an increase in debts and interest expenses on borrowings to pay the

consideration for the purchase of securities. The amount of such debts and interest expenses depends

on the number of shares to be acquired from the Tender Offer. The Company may incur risk of failure

to fulfill the Conditions Precedent and, hence, to successfully enter into this transaction. As such, the

expenses that have already been incurred would be wasted. In addition, the Company may incur a

post-transaction risk since it had no opportunity to examine in-depth information of BH prior to the

transaction, which may cause damages to the Company, or the return on investment may fail to meet

the target set forth. There will also be impact of the accounting standard concerning goodwill from the

Tender Offer.

Considering the reasonableness of the offering price of Baht 125 per share, with a possible

increase at the rate of not exceeding 20% of such offering price or to the highest price of not more

than Baht 150 per share, in comparison with the price of BH shares appraised by the IFA using

various approaches, we view that such offering price is reasonable and within the fair price range

derived from the market value approach and the discounted cash flow approach which are suitable for

the share valuation, i.e. Baht 107.13 - 156.60 per share. The appraised price of share is Baht 132.85 -

148.06 per share by the market value approach and Baht 107.13 - 156.60 per share by the discounted

cash flow approach, with Baht 127.04 per share derived in the base case scenario and Baht 107.13 -

156.60 per share from the sensitivity analysis.

Taking into consideration the appropriateness of the conditions for this transaction, we are of

the opinion that they are reasonable. The Conditional Voluntary Tender Offer is in accordance with

the Business Takeover Notification. The requirement that the Conditions Precedent shall be fully

satisfied before entering into the transaction is necessary to ensure compliance with the laws, rules

and regulations of the regulatory authorities, and does not cause any loss of benefits for the Company.

In deciding whether to approve or not approve the entry into this transaction, the shareholders

can consider the reasons and opinion provided herein by the IFA. However, the final decision depends

primarily on the shareholders’ individual judgment.


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1. Characteristics and details of the transaction

The Company will make the Tender Offer with respect to all of the securities of BH according

to the Business Takeover Notification after the Conditions Precedent are fully satisfied or waived by

the Company. These securities comprise:




Convertible Debentures Series#2, which can be converted into 137,362,636 ordinary shares of BH).




is adjusted, the total consideration of the Tender Offer will be Baht 85,612,731,500 -


of the Stock Exchange of Thailand and the trading price of BH shares at the time. In this regard, the

Company will inform the final offering price after all Conditions Precedent are fully satisfied.

Nevertheless, the Company reserves the rights to reduce the final offering price only for the special

case where BH makes an additional dividend payment which is material and not in line with the

guideline on the dividend payment for the past three years. In the case of the adjustment of the final

offering price, the Company will further disclose the definite offering price accordingly and will




As a result, in the case where all shareholders of BH accept the offer under the Tender Offer

with respect to all of the securities of BH, the Company will acquire 728,871,357 ordinary shares and

1,180,865 preference shares of BH, representing 100% of the total issued shares of BH (before the

exercise of conversion rights by the holders of the debentures), from all shareholders of BH, resulting

in BH becoming a wholly owned subsidiary of the Company. In addition, in the case where all holders

of convertible debentures of BH accept the offer under the Tender Offer with respect to all of the

securities of BH, the Company will acquire convertible debentures which can be converted into

137,362,636 ordinary shares of BH. Such convertible debentures can be converted into ordinary

shares on or before 23 August 2027. In this regard, in the case where the Company exercises the right

to convert the convertible debentures into ordinary shares, the Company will hold an additional

137,362,636 ordinary shares, and when such additional number is accumulated with the existing

ordinary shares and preference shares held by the Company, as well as the shares purchased under the

Tender Offer, the Company would hold a total of 867,414,858 shares in BH.

1.1 Type and size of the transaction

Calculation of the transaction value

Calculation basis Formula Transaction

value

1. Net tangible assets

(NTA1/)

Percentage of NTA of BH to be acquired / NTA of the Company x 100%

Baht 14,850.74 million2/ / Baht 63,782.90 million x 100%

23.28%

2. Net profit Percentage of net profit of BH to be acquired / Net profit of the Company x 100%

Baht 2,959.17 million3/ / Baht 15,517.17 million x 100%

19.07%

3. Total value of

consideration

Total value of consideration paid / Total assets of the Company x 100%

Baht 102,735.28 million / Baht 133,661.74 million4/ x 100%

76.86%

4. Value of securities -Not applicable for there is no issuance of securities- -

Highest value 76.86%


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Sources: 1/ NTA = Total assets - Goodwill - Intangible assets - Leasehold rights - Deferred tax assets - Total liabilities -

Non-controlling interests

2/ Percentage of NTA of BH to be acquired = NTA of BH as at 31 December 2019 of Baht 18,808.17 million x

Percentage of BH shares to be acquired from this Tender Offer, i.e. 78.96%, which is calculated by dividing

the number of all BH shares in the Tender Offer of 867,414,858 shares by total issued shares of BH including

additional ordinary shares to be derived after conversion of all BH convertible debentures

3/ Percentage of net profit of BH to be acquired = Net profit of the shareholders’ equity of BH for 2019, i.e. Baht

3,747.73 million x Percentage of BH shares to be acquired from this Tender Offer, i.e. 78.96%, which is

calculated by dividing the number of all BH shares in the Tender Offer of 867,414,858 shares by total issued

shares of BH including additional ordinary shares to be derived after conversion of all BH convertible

debentures

4/ Total assets based on the consolidated financial statements of the Company for the year ended 31 December

2019 duly audited by the certified public accountant

The Company will make the Tender Offer with respect to all of the securities of BH from all

of BH shareholders at the price of Baht 125 per share, totaling Baht 85,612,731,500, provided the

offering price for the securities may be increased at the rate of not exceeding 20% of the offering price

(if the offering price is adjusted, the total consideration of the Tender Offer will be Baht

85,612,731,500 - 102,735,277,800). The Tender Offer is classified as an acquisition of the business of

other companies pursuant to Section 107 (2) (b) of the Public Limited Companies Act B.E. 2535

(1992) (including any amendment thereto) with the highest transaction value of 76.86% of the total

asset value of the Company, calculated by applying the total value of consideration basis based on the

information under the consolidated financial statements of the Company and subsidiaries for the year

2019, ended 31 December 2019.

In this regard, after combining such transaction value with other asset acquisition transactions

during the six months preceding this transaction, the total value of the asset acquisition transaction is

82.36%. The transaction is thus classified as a Class 1 Asset Acquisition Transaction, which has the

value of 50% or higher but lower than 100%.

Accordingly, the Company is required to prepare a report and disclose an information

memorandum on the asset acquisition transaction to the SET, and to convene a meeting of

shareholders to seek approval for the entering into the transaction. The Company will propose to the

2020 Annual General Meeting of Shareholders to be held on 10 April 2020 for consideration and

approval of the transaction, whereby the resolution shall be passed by votes of no less than three-

fourths of the total votes cast by the shareholders attending the meeting and being entitled to vote,

without counting the votes cast by the shareholders with an interest.

1.2 Value of consideration and criteria used to determine the value of consideration

The total value of consideration will be in the form of cash amounting to Baht 85,612,731,500

and the total maximum consideration will be approximately 102,735,277,800, based on the highest

offering price which may be adjusted at the rate of not exceeding 20% of the offering price, which the

Company will pay to the shareholders of BH who will sell the ordinary shares and preference shares,

and the holders of the convertible debentures of BH who will sell the convertible debentures under the

Tender Offer, in accordance with the criteria and procedure specified in the Tender Offer.

Nevertheless, the Company reserves the rights to reduce the final offering price only for the

special case where BH makes an additional dividend payment which is material and not in line with

the guideline on the dividend payment for the past three years. In the case of the adjustment of the

final offering price, the Company will further disclose the definite offering price accordingly and will





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The criteria used to determine the value of consideration are in accordance with the valuation

of the business of BH by various internationally and generally accepted approaches such as the past

market price of BH, the price to earnings (P/E ratio), and enterprise value to EBITDA (EV/EBITDA

ratio), compared with that of other companies engaging in businesses of a similar nature which have

their securities traded on the stock exchange.

1.3 Parties involved and their relationship

- Parties involved

Offeror : Bangkok Dusit Medical Services Public Company Limited (“the Company”)

Offeree

: Ordinary shareholders, preference shareholders and holders of convertible

debentures of Bumrungrad Hospital Public Company Limited (“BH”) who

accept the Tender Offer with respect to the securities of BH

- Relationship between the parties involved

After having examined the names of BH shareholders as appearing on the website of BH

as at 26 February 2020 and the names of the holders of convertible debentures, the Company

understands that the holders of convertible debentures and the shareholders of a significant amount of

BH neither have any relationship with nor are connected persons of the Company.

1.4 Sources of funds for the transaction

In this Tender Offer, the Company will use cash in the total amount of 85,612,731,500. If the

highest offering price is adjusted at the rate of not exceeding 20% of the offering price, the total

amount of cash required will not exceed Baht 102,735,277,800. The expected sources of funds will

be derived from working capital of the business in the amount of not more than Baht 2,000 million

and loans secured from financial institutions of approximately Baht 100,735.28 million, depending

however on the final amount of securities successfully acquired by the Company.

1.5 Conditions for the transaction

The Tender Offer will be made after the following conditions are fully satisfied or waived by

the Company:

(1) The shareholders’ meeting of the Company approves the Conditional Voluntary Tender Offer

with respect to all of the securities of BH, including the entry into the asset acquisition

transaction by the Company;

(2) The Company is granted the necessary and relevant permissions as required by the laws from

the Trade Competition Commission (“TCC”) under the Trade Competition Act B.E. 2560

(2017) with respect to the Tender Offer (in case where the Trade Competition Commission

grants the permission and determines the conditions to the Company to comply with, the

approval from the Board of Directors shall be obtained prior to complying with such

conditions);1

1 The Company is in the process of submitting an application for business combination permission to TCC and

expects to complete the said submission process by March 2020. TCC shall consider and decide whether to

grant its permission within 90 days of receipt of such application and, where necessary, may extend the

consideration period for no more than 15 days. Its decision shall be made based on justifiable business need,

contribution to business promotion, no incurrence of severe damage to the economy and impact on significant

benefits obtainable by consumers in overall. In granting its permission, TCC may determine a time period or

conditions for the approved applicant to comply with and must provide reason/s for granting or not granting

its permission of the business combination.


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(3) The Company receives financial support in the form of a credit facility from a financial

institution to be used as the source of funds for the Tender Offer;2 and

(4) From the date of the Board of Directors’ Meeting resolving the Conditional Voluntary Tender

Offer with respect to all of the securities of BH to the effective date that the Tender Offer of

Securities Form (Form 247-4) is filed with the Office of the Securities and Exchange

Commission (the “SEC Office''), BH and its subsidiaries shall not enter into any material

agreements with other persons, or amend the terms and conditions under any material

agreement, with the exception of the case where such act is undertaken for the purposes of the

ordinary course of business of BH and its subsidiaries including there is no events which

cause or may result in the material damage to the business, status, assets and share price of

BH.

(The conditions under (1) to (4) above are collectively referred to as the “Conditions

Precedent.”)

Tentatively, the Company anticipates that all Conditions Precedent will be fully satisfied by

the third quarter of 2020.

After all Conditions Precedent are fully satisfied, the Company will make the Tender Offer to

purchase all of the securities of BH from all of the shareholders and holders of convertible debentures

of BH, by filing the Announcement of Intention to Make a Tender Offer Form (Form 247-3) and/or

the Tender Offer of Securities Form (Form 247-4), in accordance with the relevant rules and

regulations of the SEC Office and/or the Capital Market Supervisory Board.

1.6 Details of the acquired assets

By making the Tender Offer, the Company will acquire ordinary shares of BH. The profile of

BH is provided in Attachment 1 of this report.

2. Profile of the Company

The profile of the Company is provided in Attachment 2 of this report.

3. Reasonableness of the transaction

3.1 Objectives and necessity of the transaction

The Tender Offer is in line with the investment policy of the Company, which focuses on

investment in the healthcare business as Thailand has a competitive advantage in providing healthcare

services at a globally accepted standard and competitive pricing in comparison with the quality of the

services. This helps attract patients from across the world and contributes to the country’s industrial

and economic development. The Company believes that BH's business demonstrates strong growth

potential and ability to generate favorable long-term returns due to its popularity, high potential to

treat complex diseases, and experienced medical personnel. BH is well known among Thais and

foreigners, especially those from the Middle East and Asia-Pacific countries. Moreover, demand for

healthcare services in the country and the region is growing as Thailand and the region are entering

into the aging society, coupled with growth in per capita income, increasing health consciousness for


The Conditional Voluntary Tender Offer with respect to all of the securities of BH will be an

important opportunity for the Company’s business expansion to strengthen the operation and

accommodate future growth. The Company has invested in BH for a long time and gained favorable

2 The Company is in the process of applying for credit facilities from commercial banks as a funding source

that will be adequate for the Tender Offer.


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yields. As at 26 February 2020, the Company holds 182,513,006 ordinary shares in BH, equivalent to

24.99% of the total issued shares of BH. As a result, the additional investment, which will result in the

Company holding 25% or more of the total shares of BH, shall be made if and when the Company has

made the Tender Offer with respect to all of the securities of BH in accordance with the criteria under

the Business Takeover Notification. However, with this Tender Offer, the Company has neither any

intention to change the management or key policies of BH nor any plan to delist the securities of BH

from the stock exchange.

3.2 Advantages and disadvantages of the transaction

1) Advantages of the transaction

1.1) Increase of revenues from profit sharing or from consolidation of BH’s operating

performance

Currently, BH is an associate of the Company which holds 24.99% of the total issued shares

of BH, equivalent to Baht 12,473.46 million by cost method and Baht 16,691.75 million by equity

method (data as of 31 December 2019). In 2019, the Company recorded a share of income from

investment in BH by equity method of Baht 933.41 million in the consolidated financial statements,

and dividend income from BH shares of Baht 535.90 million in the Company’s separate financial

statements. Such profit sharing and dividend were proportional to the shareholding of the Company in

BH.

BH's business demonstrates strong growth potential and ability to generate favorable long-

term return. Thus, additional investment in BH through the Tender Offer will provide opportunity for

the Company to own additional shares and increase the shareholding proportion, thereby increasing

the share of income from investment in BH and dividend income from BH shares.

The Company’s investment in BH in 2017-2019 is summarized in the table below:

For the year ended 31 December

(Unit: Baht million) 2017 2018 2019

Investment in ordinary shares of BH

Shareholding in BH

- Number (shares)

- Percentage (%)

149,660,706

20.50%

181,660,706

24.88%

182,513,006

24.99%

Value of investment in BH shares

By cost method 6,417.25 12,357.83 12,473.46

By equity method 9,792.56 16,197.45 16,691.75

By fair value 28,285.87 34,061.38 26,829.41

Recognition of income from investment in BH

shares

Share of income 843.18 893.72 933.41

Dividend income during the year 420.68 419.05 535.90

Information on the operating results of BH

Total revenues 18,271.57 18,541.03 18,718.27

Net profit 3,943.89 4,151.89 3,747.73

Net profit margin (%) 21.58% 22.39% 20.02%

Market value of BH shares at year-end 137,722.19 136,640.88 107,139.68

In addition, if the Company is able to own not less than 50% of the total issued shares of BH,

the Company is required to include the operating results and financial position of BH, as a subsidiary,


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in the Company’s consolidated financial statements. As such, the Company and its subsidiaries will

post an increase in total revenues and net profit. In 2019, the Company and its subsidiaries recorded

total revenues of Baht 91,512.22 million and net profit of Baht 15,517.17 million. Meanwhile, BH and

its subsidiaries recorded total revenues of Baht 18,718.27 million and net profit of Baht 3,747.73

million. With the consolidation of BH’s operating results, total revenues and net profit of the

Company and its subsidiaries will increase by approximately 20.45% and 24.15% respectively (the

assumptions for the calculation are based on total revenues and net profit of both companies in 2019,

taking no account of the related party transactions the amount of which was insignificant).

1.2) Increase of cash flow from dividend on BH shares

The Company has received dividend from investment in BH on a yearly basis. BH’s business

demonstrates the ability to generate favorable long-term return. It has satisfactory operating results

with consistently high annual net profit and profit margin with regular dividend payment to the

shareholders. In 2017-2019, BH announced the annual dividend payment from the operating results at

the rate of Baht 2.70, Baht 2.90 and Baht 3.20 per share respectively, or a total amount of Baht 1,971

million, Baht 2,117 million and Baht 2,336 million respectively, equivalent to a payout ratio of 50%,

51% and 62% respectively.

In 2017-2019, cash flow from dividend on BH shares during the year recorded as income in

the Company’s separate financial statements amounted to Baht 420.68 million, Baht 419.05 million

and Baht 535.90 million respectively. In making the Tender Offer, if the Company is able to increase

the shareholding in BH, the Company will have an opportunity to gain more dividend income from

BH, thus leading to an increase in cash flow from investing activities.

1.3) Increase in network hospital

At present, the Company operates a large private hospital business having a network of 48

hospitals in Thailand and Cambodia (as of 31 December 2019), which are operated under six hospital

groups, namely, Bangkok Hospital Group, Samitivej Hospital Group, BNH Hospital, Phyathai

Hospital Group, Paolo Hospital Group, and Royal Hospital Group, with a total of 8,299 beds. If this

Tender Offer is successful, the Company will have one more hospital in its network, i.e. Bumrungrad

International Hospital, and the number of beds will be increased by 7% to 8,879 beds. With a greater

network, the Company will be able to enhance its efficiency through economies of scale from sharing

of some resources such as purchase of medical supplies and equipment, etc. The Company will also

have a full and efficient referral base to serve the target groups as the advantage of its country-wide

network will allow patients of Bumrungrad Hospital with inconvenience to receive treatment at

hospitals in Bangkok to be transferred to other hospitals in the network which are located in all parts

of the country so as to ensure efficient services to the patients.

Moreover, the Company will acquire another well-known hospital brand, “Bumrungrad

Hospital” which is one of the most creditable healthcare brands in the world. It is well known for its

outstanding treatment, particularly the tertiary care for complex diseases and coordination of

multidisciplinary expertise of physicians who are highly experienced in all fields. It is also well

accepted for the best quality and safety standard of medical treatment and is a leader in innovation and

cutting-edge healthcare technologies which ensure high quality, safety and medical results.

1.4) Strengthened expansion of foreign customer base to attract patients worldwide

Bangkok Hospital Group and Bumrungrad Hospital are notable for their globally accepted

healthcare services, ability to treat difficult and complex diseases, and competitive pricing compared

with the overall quality of services, with a large number of foreign customers each year. They are

considered private hospital groups in Thailand that have strong growth potential and are popular and

well known among foreigners, especially those from the Middle East and Asia-Pacific countries.


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The Tender Offer will create opportunity for business partnership of both hospital groups to

enhance the competitive advantages in terms of quality, standard and efficiency of medical and

healthcare services. Focus will be placed on expansion of foreign customer base to attract patients

across the globe, especially customers of medical tourism who travel to use medical services in

Thailand, which are likely to grow by leaps and bounds. With the increasing popularity of medical

tourism and the government policy that promotes Thailand as “international medical hub” to

continuously attract medical tourists, medical tourism has thus expanded from the previously targeted

premium customers to the middle-market customers who prefer globally renowned hospitals with

reasonable prices compared to the quality of service.

In addition, the Tender Offer will help strengthen the competitiveness with overseas

competitors. At present, many Asian countries position themselves as a medical hub and have the

same target groups as Thailand, e.g. Singapore, Malaysia, India, as well as China which will develop

a commercial tourism hub to attract its own Chinese people who prefer overseas medical services.

Countries in the Middle East such as Qatar and Kuwait which are major customers of leading

hospitals in Thailand also launch more local hospitals to serve their citizens, while the government of

UAE focuses on the policy to provide more support for healthcare expenses in the country.

1.5) Increase of business opportunities from growing local and regional demand for

healthcare services

Due to the changing social structure with rapid growth in elderly population in many

countries across the globe, the number of elderly population in Thailand is equivalent to that of many

developed countries and Thailand has entered into aging society3 since 2004. At year-end 2019, the

number of population aged 60 years or over represented 16.73% of total population (source:

Department of Older Persons, Ministry of Social Development and Human Security). It is projected

that in 2021, Thailand will enter into aged society,4 the second ASEAN country following Singapore.

The number of population aged 60 or over will be not less than 13 million or 20% of total population.

By the next 20 years, in 2040, Thailand will record the number of elderly population of about 20

million, i.e. one-third of its population will be the elderly.

Due to the wear and tear of physical condition, the elderly are at risk from chronic diseases

and possible disability, particularly non-communicable diseases (NCDs) such as cancer, stroke, heart

disease, diabetes, etc. These diseases grow steadily and become intensified to the extent that causes

chronic symptoms. They have grave impacts on the living of the patients and people around them, and

require treatment and therapy over the long term. In an aged society, demand for more complex

medical services and highly advanced technologies is growing and likely to increase even more in the

future. Meanwhile, factors such as growth in per capita income, increasing health consciousness, and

growth in health insurance business for quality longevity accelerate the rising demand for medical

services. This will be a good business opportunity for the Company which will have to gear up for

such growing demand in the country and the region.

Both Bangkok Hospital and Bumrungrad Hospital are leaders of tertiary care for complex and

severe diseases as well as specific diseases that require multidisciplinary medical treatment with high

expertise. They are private hospitals well equipped with physicians of various fields and specialized

medical personnel. Combining the strengths of both hospitals together will help enhance business

opportunities and sharpen the competitive edge so as to prepare to accommodate the expanding aging

society of the country and the region, the rising trends of healthcare and preventive medicine, and the

growth in health insurance business in the future.

3 Aging society refers to a society or country where population aged 60 or over exceeds 10% of the whole

population, or population aged 65 or over exceeds 7% of the whole population.

4 Aged society refers to a society or country where population aged 60 or over exceeds 20% of the whole

population, or population aged 65 or over exceeds 14% of the whole population.


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1.6) Increase in rights to vote at BH

As of 26 February 2020, the Company owned 182,513,006 shares in BH, representing

24.99% of the total issued shares of BH. The shareholding is aimed for investment, without any role

in the management of BH and no representative to perform as director of BH. However, after the

Tender Offer, if holders of BH securities accept the Tender Offer to the extent that leads the

Company’s shareholding in BH to exceed 25% of the total issued shares of BH, this will be a

percentage crucial for business management with the right to veto important agenda items that require

affirmative votes of three-fourths of the shareholders, e.g. amendment to the articles of association of

the company, disposal or transfer of business to a third party, merger of business with a third party,

increase/decrease of capital, acquisition/disposal of large assets, entering into large connected

transactions, delisting of securities, etc.

In the event that the Company’s shareholding in BH is higher than 50% but less than 75% of

the total issued shares of BH, the Company will acquire control power in BH and be able to control

almost all resolutions of the shareholders’ meeting of BH and determine management policy of BH,

including appointment of directors or request for other resolutions that require the majority of the

votes at the shareholders’ meeting, except for the matters required by laws or BH’s Articles of

Association to be approved by not less than three-fourths of the votes at the shareholders’ meeting in

which case the Company must own 75% of the total issued shares of BH. Such shareholding

proportion that entitles the management control in BH will be beneficial to the Company in terms of

management and determination of policies in BH, including business direction and synergy creation

based on the cooperative network to create opportunities and enhance competitiveness in an efficient

manner. Nonetheless, in making this Tender Offer, the Company has neither intention to change the

management or key policies of BH nor plan to delist the securities of BH from the stock exchange.

However, after the Tender Offer, if the Company is not able to acquire 50% of the total issued

shares of BH, the Company will be required to further make a tender offer to purchase all securities of

BH in order to obtain the shareholding of 50% or more of the total issued shares of BH in the future.

2) Disadvantages of the transaction

2.1) Increase in debts and interest expenses from borrowings to pay the consideration for the

Tender Offer

In this transaction, the Company will use funds from its working capital and borrowings from

financial institutions, mostly expected to be loans from financial institutions. As at 31 December

2019, before the Tender Offer, the Company and its subsidiaries had cash and cash equivalents of

Baht 4,696.21 million, current investments of Baht 899.84 million, total liabilities of Baht 46,480.11

million, and shareholders’ equity of Baht 87,181.62 million, with interest bearing debt to equity ratio

of 0.29 times. Therefore, if all securities holders accept the Tender Offer with value in a range of Baht

85,612.73 million - 102,735.28 million, it is expected that the Company will incur additional debts

from borrowings for payment of the consideration under the Tender Offer, hence increasing its total

liabilities and financial cost which may affect its financial position and operating results. Nonetheless,

the actual amount of debts and interest expenses will depend on the number of shares to be acquired

from the Tender Offer.

The Company must also comply with the financial covenants under the loan agreements and

the terms and conditions of debentures, thereby requiring it to maintain the net debt to equity ratio at

not over 1.75 times, calculated on a quarterly basis, and the net debt5 to EBITDA ratio at not over

5 Net debt refers to interest-bearing debt as per the latest financial statement, excluding accrued expenses, trade

payable debt and documentary trade credit from bank arising in the usual course of business, less cash and

other cash equivalent assets.


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3.25 times, calculated on a quarterly basis for financial covenants under the loan agreements and

calculated on a yearly basis for the terms and conditions of debentures.

Given it is able to acquire all of the securities of BH under the Tender Offer, the Company

will consolidate the financial position and operating results of BH. As such, assuming that the

Company secures additional debt financing from financial institutions in the maximum amount of

Baht 100,735.28 million, according to information from the consolidated financial statements of the

Company and BH for the year ended 31 December 2019, the consolidated financial statements of the

Company will then show a net debt to equity of 1.38 times, which not exceed the financial covenants

set forth in the loan agreements and the terms and conditions of debentures and a net debt to EBITDA

ratio of 3.71 times, which exceed the financial covenants set forth in the loan agreements and the

terms and conditions of debentures. However, the Company has devised measures and contingency

plans such as seeking of approval from the 2020 Annual General Meeting of Shareholders for a

general mandate with respect to a capital increase and/or request for relaxation of the financial

covenants from financial institutions and/or request for relaxation of the financial covenants from a

meeting of the debenture holders, and others.

2.2) Expenses incurred on the transaction, regardless of success or failure of the transaction

The Tender Offer will be made after the following Conditions Precedent are fully satisfied or

waived by the Company:

(1) The shareholders’ meeting of the Company approves the Conditional Voluntary Tender

Offer with respect to all of the securities of BH, including the entry into the asset

acquisition transaction by the Company;

(2) The Company is granted the necessary and relevant permissions as required by the laws

from TCC under the Trade Competition Act B.E. 2560 (2017) with respect to the Tender

offer (in case where TCC grants the permission and determines the conditions to the

Company to comply with, the approval from the Board of Directors shall be obtained

prior to complying with such conditions);


institution to be used as the source of funds for the Tender Offer; and

(4) From the date of the Board of Directors’ Meeting resolving the Conditional Voluntary

Tender Offer with respect to all of the securities of BH to the effective date that the

Tender Offer of Securities Form (Form 247-4) is filed with the SEC Office, BH and its

subsidiaries shall not enter into any material agreements with other persons, or amend the

terms and conditions under any material agreement, with the exception of the case where

such act is undertaken for the purposes of the ordinary course of business of BH and its

subsidiaries, including there is no events which cause or may result in the material

damage to the business, status, assets and share price of BH.

Thus, if the Conditions Precedent cannot be satisfied or not waived by the Company, the

Company will not be able to enter into the transaction. To process this transaction, the Company has

already incurred expenses such as advisor and expert fees, expenses on the preparation of notice

calling the shareholders’ meeting, document delivery, the venue of the shareholders’ meeting, etc. If

the Tender Offer fails, the related expenses incurred prior to the entering into the transaction would be

wasted.


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2.3) Possible risks after the transaction

In making the Conditional Voluntary Tender Offer, the Company has no opportunity to

examine in-depth information of BH. This could lead to various risks after the transaction, which may

be related to internal information that the Company could not access or acknowledge in advance and

did not conduct any analysis or evaluation of the impacts from such risks. As such, it may incur

damages to the Company or the return on investment may fail to meet the target set forth.

Nevertheless, in entering into this transaction, the Company has studied the information of

BH from information and documents received as a shareholder and the publicly available information

such as annual reports, annual registration statement (Form 56-1), auditor report and financial

statements, information memorandum disclosed via SETLink of the SET, information available on

website of the SEC Office and website of BH, which are major sources of reliable information of

listed companies. After all, BH is a listed company monitored and supervised by the SET and the SEC

Office, thus helping to lower risks to a certain level.

2.4) Impact of the accounting standard caused by goodwill from the Tender Offer

If the Tender Offer is successful, the Company will acquire control power in BH or a

shareholding of more than 50% in BH, leading BH’s status to change from an associate to a

subsidiary company. In this regard, the Company will have to make a purchase price allocation (PPA)

and appoint an independent appraiser to measure a fair value of assets and liabilities, both tangible

and intangible, in accordance with TFRS3. In this respect, the Company must carry out such fair value

measurement within 12 months from the date of acquiring the control power in BH. Also, the

Company must allocate the fair value of net assets of BH, including intangible assets and liabilities,

and record the difference between the purchase price and the fair value of net assets of BH. Surplus of

the Tender Offer price on the fair value of net assets of BH shall be recorded as goodwill in the

consolidated financial statements of the Company in accordance with the related financial reporting

standard. However, goodwill shall be tested for impairment on a yearly basis according to the

accounting standard. If the operating results of BH fail to meet the projection, the Company will be

required to set allowance for impairment of such goodwill, which will have impact on the operating

results of the Company in the future.

4. Fairness of price and conditions for the transaction

4.1 Fairness of price

In rendering our opinion on this transaction, we have a limited access to the internal

information of BH. Therefore, we have appraised BH shares based on the publicly available

information of BH such as annual registration statement (Form 56-1), annual reports, auditor report

and financial statements, documents for the analyst presentation and documents from investor kits on

www.bumrungrad.com, statistical data of listed companies in the SET’s Healthcare Services Sector,

analysis and forecast on the economic and relevant industry situation, as well as the information

memorandum on acquisition of assets from the Conventional Voluntary Tender Offer for all securities

of BH, and the resolution of the Board of Directors’ meeting of the Company on acquisition of assets

from the Conventional Voluntary Tender Offer for all securities of BH, to be used as a basis for our

analysis and provision of opinion regarding appropriateness of price of BH shares to be acquired by

the Company.

The opinion given is based on the assumption that all information and documents mentioned

above are true, correct and complete without any material change therein. We have considered such

information prudently and reasonably based on the professional standards. Moreover, our

consideration has been made based solely on the economic environment and the information

prevailing at the time of conducting this study. As such, if there is any significant change in these

factors, it will likely pose a material impact on BH, the Company and the transaction contemplated

http://www.bumrungrad.com/


- 15 -

herein and also on the shareholders’ decision. Therefore, we may not affirm as to whether there will

be any material impact on the Company in the future.


price of Baht 125 per share, provided the offering price for the securities may be increased at the rate

of not exceeding 20% of the offering price or to the highest offering price of not more than Baht 150

per share. The price adjustment would depend on the appropriateness of the market condition of the

SET and the trading price of BH shares at the time. In this regard, the Company will inform the final

offering price after all Conditions Precedent are fully satisfied. Nevertheless, the Company reserves

the rights to reduce the final offering price only for the special case where BH makes an additional

dividend payment which is material and not in line with the guideline on the dividend payment for the

past three years. The Company has not yet determined any significant conditions or criteria for

dividend payment that may pose an impact on the final offering price. The Board of Directors has the

authority to consider and determine those criteria, whereby the Company will further disclose the

details thereof in the Tender Offer Form (Form 247-4).

Over the past years, BH usually announced interim dividend payment in either late July or

early August and annual dividend payment around late February of each year. In 2017-2019, BH

made dividend payment out of the operating results of such respective years to the shareholders at the

rate of Baht 2.70, Baht 2.90 and Baht 3.20 per share or amounting to Baht 1,971 million, Baht 2,117

million and Baht 2,336 million, representing a payout ratio of 50%, 51% and 62% respectively.

However, in the case of the adjustment of the final offering price, the Company will further

disclose the definite offering price accordingly and will propose the shareholders’ meeting to consider

and approve the authorization of the Board of Directors or the person designated by the Board of

Directors to determine, amend, and adjust the final offering price.

To render our opinion on the reasonableness of the offering price, we have measured a fair

value of BH shares to compare with the offering price by the following approaches:

(1) Book Value Approach

(2) Adjusted Book Value Approach

(3) Market Comparable Approach

(3.1) Price to Book Value Approach

(3.2) Price to Earnings Approach

(3.3) Enterprise value to EBITDA Approach

(4) Market Value Approach

(5) Discounted Cash Flow Approach (DCF)

Details of the share valuation by each approach are as follows:

(1) Book Value Approach

By this approach, the share value is appraised based on the book value of BH and its

subsidiaries according to the consolidated financial statements of BH for the year ended 31 December

2019, which were duly audited by Ms. Kosum Cha-em of EY Office Limited, an SEC-approved

auditor. Details are summarized as follows:


- 16 -

Items as of 31 December 2019 Amount (Baht million)

Issued and paid-up capital 730.05

Ordinary shares 728.84

Preference shares 1.21

Premium on ordinary shares 285.57

Convertible debentures treated as equity securities 550.00

Retained earnings

Appropriated - statutory reserve 92.27

Unappropriated 18,560.05

Other components of shareholders' equity, i.e. difference

from translation of foreign-currency financial statements

and other capital surplus of associates

(244.57)

Equity attributable to owners of BH (excluding non-

controlling interests of the subsidiaries) 19,973.37

Par value (Baht/share) 1.00

Total number of paid-up shares (million shares) 730.05

Book value per share (Baht) 27.36

The book value approach reflects the financial position of BH and its subsidiaries in a certain

period. However, it reflects neither the present market value of assets which may increase or decrease

in line with the book value nor the events after the financial reporting period that are material to the

financial statements. Moreover, it takes no account of the operating results and profitability prospect

of BH and its subsidiaries in the future and the overall economic and related industrial trend.

By this approach, BH shares are appraised at Baht 27.36 per share, which is lower than the

offering price of Baht 125 per share by Baht 97.64 per share or by 78.11% of the offering price, or

lower than the offering price which may be increased at the rate of not exceeding 20% of such

offering price or the highest offering price of Baht 150 per share by Baht 122.64 per share or by

81.76% of the highest offering price.

(2) Adjusted Book Value Approach

This method is conducted through adjustment of the book value of some items appearing in

the financial statements of BH and its subsidiaries for the year ended 31 December 2019 in order to

reflect the market value or the fair value of such assets. The major items for book value adjustment

include property, plant and equipment, short-term investments, investments in associates and long-

term investments, as well as key items arising after the date of such financial statements that impose

material impact on the financial statements such as announcement of the dividend payment for 2019,

in order to reflect the market value of assets as close as possible to the present or true value of BH.

Property, plant and equipment

As at 31 December 2019, BH and its subsidiaries recorded property, plant and equipment,

stated at cost less accumulated depreciation, of Baht 11,860.08 million, representing 45.30% of the

total assets. Depreciation of buildings and equipment is calculated from their costs on the straight-line

basis over the estimated useful lives. No depreciation is calculated on land and assets under

construction and installation. The book value of some of these assets may not reflect their market

value. However, due to the limited access to the internal information of BH, we have no information

on the valuation of such assets of BH performed by the independent appraiser for public purpose

during the past six months. As such, we are unable to adjust the fair value of such assets.


- 17 -

Short-term investments

As at 31 December 2019, BH had short-term investments of Baht 6,409.69 million, divided

into fixed deposits at banks of Baht 5,819.22 million which, in our opinion, reflect the fair value as

they were deposited by BH with financial institutions, investments in held-to-maturity securities -

government and state enterprise bonds of Baht 319.99 million, and investments in held-to-maturity

securities - private sector debt securities of Baht 270.48 million, stated at amortized cost. These

amounts to some extent reflect the fair value of such investments.

Investments in associates

As at 31 December 2019, investments in associates of BH amounted to Baht 78.10 million,

comprising investments in associates held by subsidiaries of BH, namely Inovital International AG

established in Swiss Confederation and iDoctor Pte. Ltd. established in Singapore. Such investments

in associates were recorded using the equity method at Baht 81.49 million to reflect their fair value.

Long-term investments

Other long-term investments as at 31 December 2019 were Baht 1,317.56 million, divided

into investments in non-marketable equity securities of Baht 1.70 million which the Company

classified as general investments, stated at cost net of allowance for impairment loss, and investments

in held-to-maturity debt securities of Baht 1,315.86 million which were investments in private sector

debt securities, stated at amortized cost. These amounts to some extent reflect the fair value of such

investments.

Dividend paid

On 26 February 2020, the Board of Directors’ Meeting of BH No. 1/2020 deemed it

appropriate to propose to the 2020 Annual General Meeting of Shareholders to consider and approve

the dividend payment from the profit in 2019 to the shareholders at the rate of Baht 3.20 per share,

totaling Baht 2,336 million. However, BH already paid interim dividend at the rate of Baht 1.15 per

share or the total amount of Baht 839 million on 5 September 2019. As such, the remaining dividend

will be paid after the 2020 Annual General Meeting of Shareholders of BH (scheduled for 29 April

2020) at the rate of Baht 2.05 per share or the total dividend paid of Baht 1,496.61 million for the total

of 730,052,222 shares. Such dividend was set to be paid on 8 May 2020, which will affect the cash

flow of BH. Therefore, we have adjusted such dividend paid of Baht 1,496.61 million from its book

value of BH as at 31 December 2019.

The adjusted book value of BH is summarized in the table below:

Items as of 31 December 2019 Amount

(Baht million)

Total equity attributable to owners of BH (excluding non-

controlling interests of the subsidiaries) 19,973.37

Less Dividend paid (1,496.61)

Net book value after adjustment 18,476.76

Par value (Baht/share) 1.00


Adjusted book value per share (Baht) 25.31

This approach reflects the net asset value of BH and its subsidiaries better than the book value


- 18 -

approach. However, due to the limited access to the internal information of BH, we were unable to

obtain detailed information on property, plant and equipment, or the value of such assets appraised by

the independent appraiser for public purpose, for use in the adjustment of the book value. This

approach also has a major weakness as it takes into account neither the operating results and

profitability prospect of BH and its subsidiaries in the future nor the overall economic and related

industrial trend.

By the adjusted book value approach, BH shares are appraised at Baht 25.31 per share, which

is lower than the offering price of Baht 125 per share by Baht 99.69 per share or by 79.75% of the

offering price, or lower than the offering price which may be increased at the rate of not exceeding

20% of such offering price or the highest offering price of Baht 150 per share by Baht 124.69 per

share or by 83.13% of the highest offering price.

(3) Market Comparable Approach

This approach takes into consideration market ratios, i.e. price to book value (P/BV), price to

earnings (P/E), and enterprise value to EBITDA (EV/EBITDA) ratios of SET-listed companies in

Services Industry Group, Healthcare Services Sector, and mai-listed companies engaging in hospital

business. Initially, we took into consideration the listed companies each with total asset value as at 31

December 2019 of more than Baht 10,000 million, which comprised:

Name

Symbol Total assets as at

31 December 2019

(Baht million)

Turnover ratio*

1. Bangkok Dusit Medical Services Plc. BDMS 133,661.74 0.24

2. Bumrungrad Hospital Plc. BH 26,181.03 0.20

3. Thonburi Healthcare Group Plc. THG 20,284.99 0.18

4. Vibhavadi Hospital Plc. VIBHA 19,629.85 0.05

5. Ramkhamhaeng Hospital Plc. RAM 18,465.39 0.01

6. Principal Capital Plc. PRINC 14,620.05 0.01

7. Bangkok Chain Hospital Plc. BCH 14,115.63 0.49

8. Samitivej Plc. SVH 13,529.76 0.00

9. Chiang Mai Ram Medical Business Plc. CMR 10,151.01 0.00

Note: * Average trading volume per day over retroactive period of 1 year up to 25 February 2020

divided by number of paid-up shares.

Considering the trading liquidity of the above listed companies over the retroactive period of

1 year up to 25 February 2020, which was the last business day before the date on which the Board of

Directors’ meeting of the Company resolved to approve the Tender Offer, based on the turnover ratio

of each security, the trading volumes of RAM, PRINC, SVH and CMR were very small with the

turnover ratio in a range of 0.00%-0.01% during the said period. These securities are not suitable for

use as reference in the share valuation by the market comparable approach. Besides, PRINC recorded

a net loss. Therefore, only the following five listed companies are used for reference in the share

valuation by this approach:


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Company (Symbol)

Business

Assets as at

31 Dec. 19

2019

Total revenues Net profit

(Baht million) (Baht million) (Baht million)

1. Bangkok Dusit

Medical Services

Plc. (BDMS)

BDMS operates large private hospital business with

networks in Thailand and Cambodia under six hospital

groups, namely, Bangkok Hospital Group, Samitivej

Hospital Group, BNH Hospital, Phyathai Hospital

Group, Paolo Hospital Group, and Royal Hospital

Group. In addition, its network also covers businesses

that support medical care such as medical laboratories,

medicine production, saline production and

pharmacies, etc.

133,661.74 91,512.22 16,009.16

2. Bumrungrad

Hospital Plc. (BH)

BH operates a private hospital business in Bangkok

under the name “Bumrungrad International Hospital”

providing complete healthcare services for both

outpatients and inpatients with International Customer

Service Center. It also invests in medical services and

related services, both at home and overseas.

26,181.03 18,718.27 3,760.31

3. Thonburi

Healthcare Group

Plc. (THG)

THG provides (1) medical services, (2) healthcare

solutions such as senior care and living service, home

healthcare service, distribution of medical supplies,

chemical products and medical tools and equipment,

and (3) other businesses to support businesses of the

group such as development of software systems for

hospital management.

20,284.99 8,232.16 459.77

4. Vibhavadi

Hospital Plc.

(VIBHA)

VIBHA provides medical services to inpatients and

outpatients under the name Vibhavadi Hospital.

19,629.85 6,872.66 992.80

5. Bangkok Chain

Hospital Plc.

(BCH)

BCH operates its business as a group of hospitals

which consists of 12 hospitals and one polyclinics in

Bangkok and upcountry, providing medical services in

the level of primary-tertiary care under four hospital

groups, namely 1) World Medical Hospital which

targets high-income cash patients and international

patients, 2) Kasemrad International Hospital which

targets upper middle-income cash patients, 3)

Kasemrad Hospital which targets middle-income cash

patients and social security patients, and 4) Karunvej

Hospital which targets social security patients.

14,115.63 8,996.28 1,298.04

(3.1) Price to Book Value Approach

By this method, the share price is derived by multiplying the book value of BH and its

subsidiaries as at 31 December 31 2019 of Baht 27.36 per share by the average P/BV ratio of the

above-mentioned five SET-listed peers in Services Industry Group, Healthcare Services Sector,

prevailing over the retroactive 3 months, 6 months, 9 months and 12 months up to 25 February 2020,

which was the last business day before the date on which the Board of Directors’ meeting resolved to

approve the Tender Offer. Details are summarized as follows:

Average P/BV of listed peer companies in the Healthcare Services Sector

Period BDMS BH BCH THG VIBHA Average

Average of retroactive 3 months 4.91 5.27 6.70 2.70 2.98 4.51




Note: Data available from www.setsmart.com


- 20 -

Conclusion of BH share valuation by the price to book value approach

Period

Average P/BV of peer

companies in Healthcare

Services Sector*

Appraised price

(Baht per share)

Average of retroactive 3 months 4.51 123.39




This approach reflects the operating results and financial position of BH as at 31

December 2019, but does not reflect the market value of the assets at present and the profitability

prospect in the future.

By this approach, BH shares are appraised at Baht 123.12 - 130.23 per share, which is

(lower)/higher than the offering price of Baht 125 per share by Baht (1.88) - 5.23 per share or by

(1.50)% - 4.18% of the offering price, or (lower) than the offering price which may be increased at the

rate of not exceeding 20% of such offering price or the highest offering price of Baht 150 per share by

Baht (19.77 - 26.88) per share or by (13.18 - 17.92)% of the highest offering price.

(3.2) Price to Earnings Approach

By this approach, the shares are valued by multiplying BH’s net earnings per share for

2019, which was Baht 5.13 per share, by the average P/E ratio of the above-mentioned five SET-listed

peer companies in Services Industry Group, Healthcare Services Sector, prevailing over different

retroactive periods of 3 months, 6 months, 9 months and 12 months up to 25 February 2020, which

was the last business day before the date on which the Board of Directors’ meeting resolved to

approve the Tender Offer. Details are summarized below:

Average P/E of listed peer companies in Healthcare Services Sector

Period BDMS BH BCH THG VIBHA Average1/






1/

Excluding the average P/E of THG

The calculation of the average P/E excluded the average P/E of THG, which is in a range of

55.10 - 74.77 times, since it is considered an outlier among other peer companies.

Conclusion of BH share valuation by the price to earnings approach

Period

Average P/E of peer

companies in Healthcare

Services Sector

Appraised price

(Baht/share)






- 21 -

The share valuation by this approach is based on profit earned by BH over the past 12

months, which reflects the operating results at the present time, but takes no account of the operating

results and profitability prospect in the future.


higher than the offering price of Baht 125 per share by Baht 26.75-42.19 per share or by 21.40%-

33.75% of the offering price, or higher than the offering price which may be increased at the rate of

not exceeding 20% of such offering price or the highest offering price of Baht 150 per share by Baht

1.75-17.19 per share or by 1.17%-11.46% of the highest offering price.

(3.3) Enterprise value (EV) to EBITDA Approach

This approach reflects the profitability only in terms of cash from operation and does not

take into account the value of assets. The shares are valued by multiplying the average EV/EBITDA

of the listed peer companies by EBITDA of BH, then deducted by interest-bearing debt and non-

controlling interests and added by cash. EBITDA of BH for 2019 amounted to Baht 5,883.81 million.

As at 31 December 2019, BH recorded cash and cash equivalents and short-term investments of Baht

8,490.27 million, interest-bearing debt of Baht 2,513.04 million and non-controlling interests of Baht

291.76 million. BH share value was measured by the following formula:

EV of BH = Average EV/EBITDA of listed peer companies x EBITDA

Where: EV = Market cap + Non-controlling interests + Interest-bearing debt - Cash

Market cap of shares = Share price x Total number of paid-up shares

Price of BH share

= [(Average EV/EBITDA of listed peer companies x EBITDA) - Non-controlling

interests - Interest-bearing debt + Cash] /Total number of paid-up shares

Average EV/EBITDA of listed peer companies in Healthcare Services Sector

Period BDMS BH BCH THG VIBHA Average





Note: Data from the calculation by IFA

Conclusion of BH share valuation by the EV/EBITDA approach

Period

Average EV/EBITDA of listed

peer companies in Healthcare

Services Sector

Appraised price

(Baht/share)





Source: Calculation by IFA

The share valuation by this approach takes into account the profitability of the latest year

and the financial position as at 31 December 2019 through comparison of EV/EBITDA ratio of the


- 22 -

listed peer companies, which reflects the share value to some extent. However, it takes no account of

the long-term potential and profitability prospect of BH in the future.


higher than the offering price of Baht 125 per share by Baht 23.67 - 29.87 per share or by 18.94% -

23.90% of the offering price, or (lower)/higher than the offering price which may be increased at the

rate of not exceeding 20% of such offering price or the highest offering price of Baht 150 per share by

Baht (1.33) - 4.87 per share or by (0.89)% - 3.25% of the highest offering price.

(4) Market Value Approach

Under this method, the shares are appraised based on the weighted average market price

(trading value/trading volume) of BH shares traded on the SET over different periods. We have

adopted the weighted average market price in different time periods over one year up to 25 February

2020, which was the last business day before the date on which the Board of Directors’ meeting

resolved to approve the Tender Offer. The outcome is as follows:

Conclusion of BH share valuation by the market value approach

Period

Average daily trading Weighted average

market price

(Baht/share)

Volume

(million shares)

Value

(Baht million)

Average of retroactive 3 months 1.6857 230.32 136.63





Graph illustrating weighted average market price and trading volume of BH shares in one year

(26 February 2019 - 25 February 2020)

Apparently, the trading volume of BH shares in different retroactive periods of 3 months, 6

months, 9 months and 12 months was in a range of 1.4807-1.6857 million shares per day or roughly

0.20%-0.23% of its total paid-up shares and the trading volume over the past 12 months amounted to

361.29 million shares or 49.57% of its total paid-up shares, representing a liquid trading of the shares.

The said market price was driven by investors’ demand/supply for the shares over different time

horizons, as well as the general investors’ demand with respect to the potential and growth in the

future.

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

100

120

140

160

180

200

Weigted Average Market Price (Baht/share) No. of shares (Shares)

Baht/share ShareShare Price

Trading Volume


- 23 -

By this approach, BH shares are appraised at Baht 132.85-148.06 per share, which is higher

than the offering price of Baht 125 per share by Baht 7.85-23.06 per share or by 6.28%-18.45% of the

offering price, or (lower) than the offering price which may be increased at the rate of not exceeding

20% of such offering price or the highest offering price of Baht 150 per share by Baht (1.94-17.15)

per share or by (1.29-11.43)% of the highest offering price.

(5) Discounted Cash Flow Approach (DCF)

This approach focuses on the future profitability prospect of BH and its subsidiaries. The

shares are valued from an estimation of the present value of free cash flow expected from future

operation of BH and its subsidiaries based on a 10-year financial projection (covering 2020-2029)

using the weighted average cost of capital (WACC) as a discount rate. The projection is under

assumption that BH and its subsidiaries continue operation on a going concern basis without any

material change and under the current economic condition and circumstances.

Due to the limited access to the internal information of BH, we have prepared the assumptions

for this financial projection based on the historical financial information or ratios and the publicly

available information of BH, i.e. annual registration statement (Form 56-1) and annual reports of BH

for 2017-2018, financial statements of BH and its subsidiaries for 2017-2019, documents for the

analyst presentation of BH, documents from investor kits on www.bumrungrad.com, etc. None of the

internal information of BH was used and no interviews with the management and staff of BH were

conducted. The assumptions have been established based on the present economic situation. Thus, any

material changes from the assumptions in the economic condition and other external factors impacting

the operation of BH and its subsidiaries as well as the status of BH will relatively lead to changes in

the share valuation by this approach.

Key assumptions used for preparing the financial projection are described below:

BH operates a private hospital business in Bangkok with 580 licensed beds for inpatient

service and a capacity to serve over 5,500 outpatients per day. It is one of the leading healthcare

service providers in Thailand and South East Asia providing fully-integrated services to both

outpatients and inpatients.

1) Revenues from hospital operations

In 2017-2019, revenues from hospital operations grew by 0.9%, 1.4% and 0.8% respectively.

The average revenues from outpatients and inpatients in 2017-2019 represented

approximately 52% and 48% of revenues from hospital operations.

In 2020, revenues from hospital operations are projected, based on the actual data of 2019, to

increase by 1.8% per year in line with growth in medical fees, with a forecast of average

number of 3,100 outpatients/day, slightly up from 3,063 outpatients/day in 2019, 89

inpatients/day and hospitalized period of 4.6 days/patient. The number of patients in 2020 is

forecast to see no growth, especially foreign patients travelling for medical services in

Thailand including medical tourists who are major customers of BH due to the economic

slowdown and the impacts of the worldwide spread of the novel coronavirus (COVID-19)

since early 2020. Medical fees are projected to rise by 1% for outpatients and 1% for

inpatients, based on the growth rate of medical fees in 2019, to an average of Baht 8,648/visit

for outpatients and Baht 274,735/visit for inpatients.

Revenues from hospital operations in 2021 are forecast to grow by 4% per year with an

increase of 1% in number of outpatients, 1% in number of inpatients and 3% in medical fees.

In such year, the operating results of BH will improve from 2020 which will record no growth

in number of foreign patients to Thailand as hit by the impacts of the COVID-19 pandemic.

For 2022-2023, growth in revenues from hospital operations is projected at 6.1% per year,


- 24 -

driven by an increase in number of outpatients of 1.5% per year and inpatients of 1.5% per

year. Medical fees are forecast to rise by 4.9% per year for outpatients and 4.1% per year for

inpatients, based on the increase in medical fees for each type of patients during 2016-2018,

excluding 2019 which faced unusual circumstances. The IFA views that BH will be able to

grow its revenues from hospital operations since the said revenue growth of BH remains low

when compared with the 13% per year growth in medical tourism in Asia-Pacific countries.

From 2024 onwards, revenues from hospital operations are projected to expand by 6.6% per

year in accordance with growth in number of outpatients of 2% per year and inpatients of 2%

per year. Medical fees are expected to rise by 4.9% per year for outpatients and 4.1% per year

for inpatients. It is projected that BH will record growth in line with medical tourism.

According to the projection of Global Wellness Institute,6 spending on medical tourism is

forecast to increase 7.5% per year in 2017-2022, with Asia-Pacific countries ranking top with

the highest growth in spending on medical tourism of 13% per year. Thailand’s private

hospitals are well-accepted internationally as one of the world’s medical tourism destinations,

with their competitive advantages in healthcare service quality and efficiency of a globally

accepted standard yet at lower pricing compared with other countries of the same standard.

Besides, Thailand is rich in natural tourist attractions that are ideal for patients’ rehabilitation

and also offers medical facilities with international accreditations.

Taking into account the projection of revenues from hospital operations for 2020-2029 with a

compound annual growth rate (CAGR) of 6.2% based on the average historical growth rate in

2010-2019 of 7.3% per year, the IFA is of the opinion that the said forecast of revenues from

hospital operations could fairly reflect BH’s management capability.

Actual revenues from hospital operations of BH in 2017-2019 and projection for 2020-

2029 are shown below:

-------------Actual------------ ----------------Projected-----------------

2017 2018 2019 2020 2021 2022 2023

Revenues from hospital operations

(Baht million)

18,020 18,264 18,409 18,738 19,493 20,684 21,949

Growth rate 0.9% 1.4% 0.8% 1.8% 4.0% 6.1% 6.1%

----------------------------------Projected----------------------------

2024 2025 2026 2027 2028 2029


(Baht million)

23,405 24,959 26,617 28,385 30,270 32,282

Growth rate 6.6% 6.6% 6.6% 6.6% 6.6% 6.6%

2) Rental income

Rental income in 2020-2029 is estimated to grow at 3% per year based on the rental

increase rate in general.

Actual rental income of BH in 2017-2019 and projection for 2020-2029 are shown

below:

----------Actual---------- --------------Projected----------------

2017 2018 2019 2020 2021 2022 2023

Rental income (Baht million) 67 62 65 67 69 71 73

Growth rate 4.6% -7.7% 5.5% 3.0% 3.0% 3.0% 3.0%

6 Global Wellness Institute is a non-profit organization in the US with a mission to empower wellness

worldwide by educating the public and private sectors about preventative health, wellness and longevity.


- 25 -

----------------------------------Projected----------------------------

2024 2025 2026 2027 2028 2029

Rental income (Baht million) 76 78 80 83 85 88

Growth rate 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%

3) Other income

Other income in 2020-2029 is projected at 0.5% of revenues from hospital operations

based on the average percentage of actual other income to revenues from hospital

operations in 2017-2019.

Actual other income of BH in 2017-2019 and projection for 2020-2029 are as follows:

------------Actual----------- ----------------Projected---------------

2017 2018 2019 2020 2021 2022 2023

Other income (Baht million) 82 90 85 94 98 104 110

Other income as % of

revenues from hospital

operations

0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5%

----------------------------------Projected----------------------------

2024 2025 2026 2027 2028 2029

Other income (Baht million) 118 126 134 143 152 162

Other income as % of

revenues from hospital

operations

0.5% 0.5% 0.5% 0.5% 0.5% 0.5%

4) Cost of hospital operations

Cost of hospital operations in 2017-2019 was 57.1%, 55.0% and 55.3% respectively. For

2020-2029, cost of hospital operations is forecast based on the average percentage of cost

of hospital operations (excluding depreciation and amortization) to the actual revenues

from hospital operations in 2017-2019 of 51.5% plus depreciation recorded for cost of

hospital operations, whereby the actual depreciation for 2019 was projected according to

the useful lives of assets, and plus depreciation for capital expenditure.

Actual cost of hospital operations of BH in 2017-2019 and projection for 2020-2029

are as follows:

-------------Actual------------ ----------------Projected----------------

2017 2018 2019 2020 2021 2022 2023


(Baht million)

18,020 18,264 18,409 18,738 19,493 20,684 21,949

Cost of hospital operations (Baht million) 10,286 10,046 10,182 10,504 10,990 11,678 12,386

Cost of hospital operations as % of

revenues from hospital operations

57.1% 55.0% 55.3% 56.1% 56.4% 56.5% 56.4%

----------------------------------Projected----------------------------

2024 2025 2026 2027 2028 2029


(Baht million)

23,405 24,959 26,617 28,385 30,270 32,282

Cost of hospital operations (Baht million) 13,200 14,002 14,882 15,851 16,886 17,989

Cost of hospital operations as % of

revenues from hospital operations

56.4% 56.1% 55.9% 55.8% 55.8% 55.7%


- 26 -

5) Selling and administrative expenses

Selling and administrative expenses in 2017-2019 were 16.9%, 18.0% and 20.1% of

revenues from hospital operations respectively. For 2020-2029, selling and administrative

expenses are estimated based on the average percentage of selling and administrative

expenses (excluding depreciation and amortization) to the actual revenues from hospital

operations in 2017-2019 of 16.1% plus depreciation recorded for selling and

administrative expenses, whereby the actual depreciation for 2019 was projected

according to the useful lives of assets, and plus depreciation for capital expenditure.

Actual selling and administrative expenses of BH in 2017-2019 and projection for 2020-

2029 are as follows:

----------Actual---------- --------------Projected----------------

2017 2018 2019 2020 2021 2022 2023


(Baht million)

18,020 18,264 18,409 18,738 19,493 20,684 21,949

Selling and administrative expenses

(Baht million)

3,048 3,288 3,694 3,486 3,649 3,870 4,092

Selling and administrative expenses as

% of revenues from hospital operations

16.9% 18.0% 20.1% 18.6% 18.7% 18.7% 18.6%

-----------------------------------Projected----------------------------

2024 2025 2026 2027 2028 2029


(Baht million)

23,405 24,959 26,617 28,385 30,270 32,282

Selling and administrative expenses

(Baht million)

4,348 4,584 4,848 5,160 5,493 5,848

Selling and administrative expenses as

% of revenues from hospital operations

18.6% 18.4% 18.2% 18.2% 18.1% 18.1%

6) Interest expense

For 2020-2029, interest expense is estimated at 4.97% per year which is equal to the

interest rate of long-term debentures of Baht 2,500 million due for redemption on 20

December 2021. The IFA assumes that BH will redeem the debentures upon maturity, and

will mobilize funds through issuance of new debenture series with the same issue size and

interest rate in order to use the proceeds thereof for redemption of the maturing

debentures.

7) Corporate income tax

Corporate income tax is set to be 17.20% of profit before income tax expenses, based on

the average effective tax rate of BH in 2017-2019.

8) Capital expenditure

- Capital expenditure for property, plant and equipment in 2020-2022 is projected at Baht

2,330 million, Baht 1,245 million and Baht 901 million respectively based on the

documents for the analyst presentation of BH. From 2023 onwards, capital expenditure is

set at 5% of revenues from hospital operations, which is a normal rate for hospital

business, and will be for repair and maintenance of assets to ensure good condition and

for investment in tools and equipment in the business operation. This excludes

investments in business expansion of two entities, namely Bumrungrad Hospital on New

Phetchaburi Road and Bumrungrad Hospital on Soi Sukhumvit 1, as we have no clear

information on the business expansion plan.


- 27 -

- Investment in intangible assets such as computer software for 2020-2029 is set to be 1.5%

of revenues from hospital operations based on the average actual investment in intangible

assets in 2017-2019.

9) Working capital

Average collection period 44 days

Average age of inventories 13 days

Average repayment period 35 days

The projection of average collection period, average age of inventories and average

repayment period is based on the actual average collection period, average age of

inventories and average repayment period in 2017-2019.

10) Dividend

On 26 February 2020, the Board of Directors’ Meeting of BH No. 1/2020 approved the

dividend payment in cash from the 2019 profit to the holders of preference shares and

ordinary shares of BH at the rate of Baht 3.20 per share, totaling Baht 2,336 million.

However, BH already paid interim dividend at the rate of Baht 1.15 per share or the total

amount of Baht 839 million on 5 September 2019. As such, the remaining dividend will

be paid after obtaining approval from the 2020 Annual General Meeting of Shareholders

of BH (scheduled for 29 April 2020) at the rate of Baht 2.05 per share amounting to Baht

1,496.61 million for the total of 730.05 million issued and paid-up shares (including

preference shares and ordinary shares). Such dividend payment will be made to the

holders of preference shares and ordinary shares whose names appeared as at the date of

determination of list of the shareholders entitled to receive dividend payment on 27

March 2020, and the payment was scheduled for 8 May 2020. Therefore, the IFA has

adjusted the enterprise value down with such dividend.

11) Land for development

BH has two plots of land for development, comprising the land on New Phetchaburi Road

covering the total area of 5-0-51 rai and the land on Soi Sukhumvit 3 covering the total

area of 2-0-49.4 rai. We have considered the market price of the land on New Phetchaburi

Road based on the offering price of land in nearby areas obtained by web searching. The

offering price/bargain price is in a range of Baht 800,000-1,200,000 per square wah or an

average of Baht 1,000,000 per square wah, making up the market price of Baht 2,051

million. For the land on Soi Sukhumvit 3, the market price is based on the acquisition

price by BH in 2019 of Baht 930 million. The price of both plots of land totals Baht 2,981

million. Without clear development plan of such land provided, we have included the

value of such land as part of the enterprise value.

12) Terminal growth rate

Terminal growth rate from 2029 onwards is set to be 3% based on a forecast that the

business of BH will grow continuously, attributable to favorable growth in private

hospital industry with the support of the government policy to promote Thailand as an

international medical hub, the aging society trend and health consciousness trend.

We have calculated the present value of free cash flow based on the 10-year projection (2020-

2029) of operating performance and financial position of BH and its subsidiaries, using a discount rate


- 28 -

derived from the Weighted Average Cost of Capital (WACC) which is calculated under the following

formula:

WACC = Ke(E/V) + Kd(1-t)(D/V)

Ke = Cost of equity of 8.71%

Kd = Average interest rate on loans of the company of 4.97%

t = Corporate income tax of 17.20% based on the effective tax rate in

2019

E = Total shareholders’ equity as at 31 December 2019 of Baht 20,265

million

D = Interest-bearing debt as at 31 December 2019 of Baht 2,513.04

million

V = D + E

E/V = 88.32%

D/V = 11.68%

Formula for Ke calculation is as follows:

Ke = Rf + (Rm - Rf)

Where: Risk Free Rate

(Rf)

Average bid yield on the government bond with remaining

maturity of 25 years as of 14 February 2020, equal to 1.91%

(available from www.thaibma.or.th).

Beta () A variance of market return versus a variance of return on BH

shares based on the daily records in the past two years up to 26

February 2020, equal to 0.888 (this is based on the calculation

by the IFA and such time period could well reflect the

investment condition).

Rm Average rate of return on the SET over the past 25 years (from

SET data during December 1994 – January 2020), equal to

9.57%.

The number of shares used in the valuation of shares by this approach is 867.41 million,

which includes 728.84 million BH shares as at 31 December 2019 plus the new number of shares

under the assumption that there will be a conversion of 1.21 million preference shares and 137.36

million convertible debentures upon acceptance of the Tender Offer.

Table summarizing cash flow projection of BH and its subsidiaries in 2020-2029

(Unit : Baht million) 2020 2021 2022 2023 2024

EBIT 4,909.27 5,021.39 5,312.11 5,654.35 6,050.78

Depreciation and amortization 1,310.73 1,458.53 1,572.44 1,660.24 1,758.85

EBITDA 6,220.00 6,479.92 6,884.55 7,314.60 7,809.64

Less Income tax (842.21) (861.44) (911.31) (970.03) (1,038.04)

Add / (Less) Net change in working capital 520.43 (15.74) (24.84) (26.36) (30.37)

Less Capital expenditure (2,654.07) (1,537.40) (1,211.26) (382.23) (1,521.36)

Free cash flow to firm 3,244.16 4,065.34 4,737.13 5,935.97 5,219.87

PV of free cash flow to firm 3,078.43 3,566.62 3,842.45 4,451.62 3,618.48


- 29 -

(Unit : Baht million) 2025 2026 2027 2028 2029

EBIT 6,576.79 7,100.49 7,598.38 8,129.10 8,695.00

Depreciation and amortization 1,761.58 1,802.61 1,893.60 1,990.95 2,094.94

EBITDA 8,338.37 8,903.10 9,491.98 10,120.06 10,789.94

Less Income tax (1,128.28) (1,218.12) (1,303.53) (1,394.58) (1,491.66)

Add / (Less) Net change in working capital (32.40) (34.56) (36.86) (39.32) (41.94)

Less Capital expenditure (1,622.36) (1,730.09) (1,845.00) (1,967.57) (2,098.32)

Free cash flow to firm 5,555.34 5,920.34 6,306.59 6,718.58 7,158.01

PV of free cash flow to firm 3,560.50 3,508.16 3,455.10 3,402.39 3,351.45

Terminal value 7,158.01

PV of free cash flow to firm 35,835.20

PV of terminal value 66,899.05

Total PV of free cash flow to firm (firm value) 102,734.25

Less Interest-bearing debt as at 31 December 2019 (2,513.04)

Add Cash and short-term investments as at

31 December 2019 8,490.27

Add Land for development 2,981.00

Less Dividend paid (1,496.61)

Total PV of free cash flow - net 110,195.87


Price of BH shares (Baht per share) 127.04

Based on the above calculation, the WACC of BH is 8.16% which is used as a discount rate

for estimating present value of cash flow of BH over a 10-year projection period. The appraised

price of BH shares by this approach is equal to Baht 127.04 per share, which is higher than the

offering price of Baht 125 per share by Baht 2.04 per share or by 1.63% of such offering price.

We have additionally conducted a sensitivity analysis on the share valuation with an

increase/decrease of 0.50%-1.00% in WACC, or equivalent to 7.16%-9.16%. The price of BH

shares is as follows:

From the above sensitivity analysis, the price of BH shares by the discounted cash flow

approach is appraised in a range of Baht 107.13-156.60 per share.

WACC Price of BH shares

(Baht/share)

7.16% 156.60

7.66% 140.23

8.16% 127.04

8.66% 116.20

9.16% 107.13


- 30 -

Table summarizing the valuation of BH shares

Valuation approach

Appraised

price

(Baht/share)

Offering price

(Baht/share)

Appraised price (lower)/higher

than offering price

Baht million %

1. Book value approach 27.36 125 - 150 (97.64 - 122.64) (78.11 - 81.76)

2. Adjusted book value approach 25.31 125 - 150 (99.69 - 124.69) (79.75 - 83.13)

3. Market comparable approach

3.1 P/BV approach 123.12 - 130.23 125 - 150 (26.88) - 5.23 (17.92) - 4.18

3.2 P/E approach 151.75 - 167.19 125 - 150 1.75 - 42.19 1.17 - 33.75

3.3 EV/EBITDA approach 148.67 - 154.87 125 - 150 (1.33) - 29.87 (0.89) - 23.90

4. Market value approach 132.85 - 148.06 125 - 150 (17.15) - 23.06 (11.43) - 18.45

5. Discounted cash flow approach

5.1 Base case 127.04 125 2.04 1.63

5.2 Sensitivity analysis 107.13 - 156.60 125 - 150 (42.87) - 31.60 (28.58) - 25.28

The above valuation approaches have different strengths and weaknesses in identifying a

reasonable share price, as described below:

1) The book value approach and the price to book value (P/BV) approach take into account

the financial position at a certain point of time. However, they reflect neither the present market value

of assets which may increase or decrease in line with the book value, nor the events arising after the

financial reporting period which are material to the financial statements. Besides, they take no account

of the operating results and profitability prospect of BH and its subsidiaries in the future and the

overall economic and related industrial trend.

2) The adjusted book value approach can reflect the net asset value better than the book value

approach. Nonetheless, due to the limited access to the internal information of BH, we were unable to

obtain detailed information on property, plant and equipment, or the value of such assets appraised by

the independent appraiser for public purpose, for use in the adjustment of the book value. This

approach also has a weakness as it takes into account neither the operating results and profitability

prospect of BH and its subsidiaries in the future nor the overall economic and related industrial trend.

3) The price to earnings ratio approach and the EV/EBITDA approach take into consideration

the profitability of BH in comparison with the average EV/EBITDA of listed peer companies

engaging in hospital business. However, the valuation is based on short-term profit only and does not

reflect the profitability prospect of BH and its subsidiaries in the future.

4) The market value approach with the shares’ liquid trading could reflect demand and supply

of shares in different periods and also reflect demand from general investors in respect of the future

business potential and growth of BH.

5) The discounted cash flow approach focuses on future business operation and profitability

prospect of BH and its subsidiaries. The calculation by this approach is based on present value of

expected future free cash flow as well as the overall economic and industrial trend.

In our opinion, the market value approach and the discounted cash flow approach are suitable

for valuation of BH shares. The fair share value is equal to Baht 132.85-148.06 per share measured by

the market value approach and Baht 127.04 per share (base case) or Baht 107.13 - 156.60 per share

(sensitivity analysis) by the discounted cash flow approach. The offering price of Baht 125 per share

or the offering price which may be increased at the rate of not exceeding 20% of such offering price


- 31 -

or the highest offering price of Baht 150 per share is within the fair price range appraised by the IFA

by those two approaches.

4.2 Fairness of conditions for the transaction


companies under the Public Limited Companies Act, and also as a material asset acquisition

transaction pursuant to the Notifications on Acquisition or Disposal. The Company is required to seek

approval from the shareholders’ meeting for the entering into the transaction, whereby the resolution

shall be passed by votes of no less than three-fourths of the total votes cast by the shareholders

attending the meeting and being entitled to vote, without counting the votes cast by the shareholders

with an interest.

Besides the approval of the shareholders’ meeting of the Company, the Tender Offer will be

made after the following conditions are fully satisfied or waived by the Company:

(1) The Company is granted the necessary and relevant permissions as required by the laws

from TCC under the Trade Competition Act B.E. 2560 (2017) with respect to the Tender

Offer (in case where TCC grants the permission and determines the conditions to the

Company to comply with, the approval from the Board of Directors shall be obtained

prior to complying with such conditions);


institution to be used as the source of funds for the Tender Offer; and

(3) From the date of the Board of Directors’ Meeting resolving the Conditional Voluntary

Tender Offer with respect to all of the securities of BH to the effective date that the

Tender Offer of Securities Form (Form 247-4) is filed with the SEC Office, BH and its

subsidiaries shall not enter into any material agreements with other persons, or amend the

terms and conditions under any material agreement, with the exception of the case where

such act is undertaken for the purposes of the ordinary course of business of BH and its

subsidiaries including there is no events which cause or may result in the material damage

to the business, status, assets and share price of BH.


the opinion that they are reasonable. The Tender Offer is in accordance with the Business Takeover

Notification. The requirement that the Conditions Precedent shall be fully satisfied before entering

into the transaction is necessary to ensure compliance with the laws, rules and regulations of the

regulatory authorities, and does not cause any loss of benefits to the Company.


- 32 -

5. Conclusion of the IFA’s opinion

In our opinion, the Tender Offer will create advantages to the Company in terms of revenue

growth from profit sharing in proportion to the additional number of shares to be acquired or from the

consolidation of operating results with those of BH, which will occur if the Company holds less than

50% of total issued shares of BH, as well as an increase in cash flow from dividend receivable from

BH shares. It is believed that BH's business demonstrates strong growth potential and ability to

generate favorable long-term returns, as it is a reputable hospital for treating highly complex diseases,

staffed by experienced medical personnel, and is well known to both Thais and foreigners, especially

to the Middle East and Asia-Pacific countries. The success of the Tender Offer will help strengthen

the expansion of foreign customer base to attract patients from around the globe. Both Bangkok

Hospital and Bumrungrad Hospital are internationally renowned for their medical services and ability

to treat complex diseases with competitive pricing in comparison with the quality of the service, thus

making them a popular and well accepted private hospital group of Thailand among foreigners. In

addition, this transaction will enhance business opportunities amid the growing demand for healthcare

service in the local and regional markets, resulting from the entering into the aging society of

Thailand and the region, growth in per capita income, people’s increasing health consciousness for


However, the Tender Offer may lead to an increase in debts and interest expenses on

borrowings to pay the consideration for the purchase of securities. The amount of such debts and

interest expenses depends on the number of shares to be acquired from the Tender Offer. The

Company may incur risk of failure to fulfill the Conditions Precedent and, hence, to successfully enter

into this transaction. As such, the expenses that have already been incurred would be wasted. In

addition, the Company may incur a post-transaction risk since it had no opportunity to examine in-

depth information of BH prior to the transaction, which may cause damages to the Company, or the

return on investment may fail to meet the target set forth. There will also be impact of the accounting

standard concerning goodwill from the Tender Offer.

Considering the reasonableness of the offering price of Baht 125 per share, with a possible

increase at the rate of not exceeding 20% of such offering price or to the highest price of not more

than Baht 150 per share, in comparison with the price of BH shares appraised by the IFA using

various approaches, we view that such offering price is reasonable and within the fair price range

derived from the market value approach and the discounted cash flow approach which are suitable for

the share valuation, i.e. Baht 107.13 - 156.60 per share. The appraised price of share is Baht 132.85 -

148.06 per share by the market value approach and Baht 107.13 - 156.60 per share by the discounted

cash flow approach, with Baht 127.04 per share derived in the base case scenario and Baht 107.13 -

156.60 per share from the sensitivity analysis.


the opinion that they are reasonable. The Conditional Voluntary Tender Offer is in accordance with

the Business Takeover Notification. The requirement that the Conditions Precedent shall be fully

satisfied before entering into the transaction is necessary to ensure compliance with the laws, rules

and regulations of the regulatory authorities, and does not cause any loss of benefits for the Company.

As described above, we are of the opinion that the shareholders will gain benefits from this

transaction and that the transaction is reasonable with a fair price and fair conditions. Thus, we

recommend that the shareholders should vote to approve the acquisition of assets.

In deciding whether to approve or not approve the entry into this transaction, the shareholders

can consider the reasons and opinion provided herein by the IFA. However, the final decision depends

primarily on the shareholders’ individual judgment.


- 33 -

We hereby certify that we have rendered opinion with due care according to professional

practices and in the interest of the shareholders.

Yours sincerely,

Advisory Plus Company Limited

- Nisaporn Rerkaram -

(Mrs. Nisaporn Rerkaram)

Managing Director

- Sumalee Tantayaporn -

(Miss Sumalee Tantayaporn)

Supervisor


Attachment 1 Page 1

Attachment 1

Company Profile

Bumrungrad Hospital Public Company Limited

1. Business Overview

Bumrungrad Hospital Public Company Limited (“BH”) operates a private hospital business in

Bangkok with 580 licensed beds and a capacity to accommodate over 5,500 outpatients per day. It is

one of the leading healthcare providers in Thailand and the Southeast Asian region, providing

complete healthcare services for both outpatients and inpatients. BH has always emphasized the

importance of quality healthcare with experienced physicians and staff. Bumrungrad International

Hospital, Bangkok, is the first hospital in Asia to receive the US standard accreditation from the Joint

Commission International (JCI) and is the first private hospital to be approved by Thai Hospital

Accreditation (HA). Additionally, BH has been accredited by the College of American Pathologists

(CAP) and is the first in Asia to receive Det Norske Veritas (DNV) in Managing Infection Risk

(MIR).

Corporate structure as of 31 December 2018

BH has nine directly owned subsidiaries, namely (1) Vitallife Corporation Limited, (2) Asia

Global Health Limited, (3) Asia Global Research Company Limited, (4) Ruenmongkol Company

Limited, (5) Life and Longevity Limited, (6) Bumrungrad Personnel Development and Training

Center Company Limited, (7) Bumrungrad Health Network Company Limited (formerly known as

Bumrungrad Personnel Development Center Co., Ltd.), (8) Health Horizons Enterprises Pte. Ltd., and

(9) Bumrungrad Services Company Limited.

BH also has three indirectly owned subsidiaries, including (1) Bumrungrad Mongolia LLC

(80%-owned as per its shareholding portion in Health Horizons Enterprises Pte. Ltd.), (2) Seoul

Seniors Towers LLC (approx. 41%-owned as per its shareholding portion through Health Horizons

Enterprises Pte. Ltd. and Bumrungrad Mongolia LLC), and (3) Bumrungrad Myanmar Co., Ltd.

(80%-owned through Bumrungrad Health Network Co., Ltd.).


Attachment 1 Page 2

BH has two associated companies, including (1) Bumrungrad International Limited, 31.5%-

owned; and (2) Inovital International AG, 49%-indirectly owned through Life and Longevity Limited.

BH is the owner and operator of multiple healthcare-related entities, both within and outside

of Thailand, i.e. Bumrungrad International Hospital, Bumrungrad International Clinic, Vitallife

Scientific Wellness Center, Vitallife Skin Clinic, Bumrungrad International Dialysis Clinic, and

Esperance Cancer Clinic, all of which are in Bangkok, Bumrungrad Clinic Yangon in Myanmar, and

Ulaanbaatar Songdo Hospital in Mongolia. Bumrungrad International Hospital is the main revenue

contributor, generating over 95% of the group’s core revenues.

As at 31 December 2018, revenue from hospital operations of the Bangkok facility was 97.2%

of total revenues. The services of Bumrungrad International Hospital, Bangkok, can be detailed as

follows:

1) Outpatient service is offered through 47 clinics/centers with more than 272 examination

rooms and a capacity to serve over 5,500 outpatients per day, comprising:

Allergy Center Medical Clinic

Arrhythmia Center Memory Clinic

Breast Care Clinic Men's Center

Behavioral Health Center Neuroscience Center

Children’s (Pediatrics) Center New Life Healthy Aging Clinic

Dental Center Orthopedic Center

Diabetes Center Parkinson's Disease and Movement Disorders Clinic

Diagnostic Center Perinatal Center

Dialysis Center Physical Therapy & Rehabilitation

Digestive Disease (GI) Center Plastic (Cosmetic) Surgery Center

Ear, Nose and Throat Center Pulmonary (Lung) Center

Emergency Center Refractive Surgery Center

Eye Center Robotic Scoliosis Center

Fertility Center & IVF Clinic Robotic Surgery Center

Health Screening Center (Check-up) Skin Center (Dermatology)

Hearing and Balance Clinic Sleep Lab

Heart Center (Cardiology) Spine Institute

Horizon Regional Cancer Center Surgical Clinics

Hyperbaric Oxygen Therapy Travel Medicine Center

Hypertension Clinic Urology Center

Intensive Care Unit (ICU) Wellness & Anti-aging (Vitallife)

Joint Replacement Center Women’s Center

Liver Center

2) Inpatient service offers a total of 580 licensed beds, which include ward beds and

intensive care beds. In 2018, BH treated more than 1.1 million medical episodes. The revenue

contribution by inpatient and outpatient services in 2018 represented 52% and 48% respectively.


Attachment 1 Page 3

International Patient Services:

BH has an International Patient Services Center to facilitate and accommodate international

patients. The services offered include interpreters, insurance coordination, medical coordination,

referral service, e-mail communication, visa extension, embassy assistance, airport reception and

travel assistance, etc. BH also has 47 overseas referral offices in 26 countries.

In 2018, BH treated over 629,000 international medical episodes from over 190 countries.

The top three highest revenue contributors by country are Myanmar, Oman and United Arab Emirates

(UAE).

The Bangkok Facility: At present, the hospital services are conducted in five buildings:

1. Bumrungrad International Clinic Building (BIC) is a 22-storey outpatient facility, with the

first 10 floors being used as parking spaces and the top 12 floors as outpatient clinics and

ancillary services together with non-clinic floors for patient services, conference and

educational facilities.

2. Bumrungrad International Hospital Building (BIH) offers a combination of inpatient and

outpatient services, with a capacity of 580 licensed inpatient beds.

3. Bumrungrad International Tower Building (BIT) offers clinical and support functions,

with seven floors of parking spaces.

4. Vitallife Building is occupied by Vitallife Corporation Limited, which provides a

scientifically based, highly personalized treatment for the prediction and prevention of age-

related disease, as well as helping customers live a more youthful life.

5. Bumrungrad Residential and Office Building (BRO) accommodates back office functions

and employee housing for over 1,000 persons.

The Ulaanbaatar Songdo Hospital in Mongolia is one of the leading private hospitals in

Mongolia, strategically located in the center of the country’s capital. The hospital’s services are

offered in an 8-storey building, with 87 inpatient beds.

2. Board of Directors and Shareholders

2.1 Board of Directors

The Board of Directors of BH as at 25 February 2020 was composed of 10 members as follows:

Name Position

1. Mr. Chai Sophonpanich Chairman of the Board, Chairman of the Investment Committee

2. Mr. Chanvit Tanphiphat, MD Vice Chairman of the Board, Member of the Nomination and

Remuneration Committee

3. Mr. Suvarn Valaisathien, PhD Vice Chairman of the Board

4. Mrs. Linda Lisahapanya Managing Director, Member of the Investment Committee

5. Ms. Sophavadee Uttamobol Independent Director, Chairperson of the Audit Committee

6. Mr. Soradis Vinyaratn Independent Director, Member of the Audit Committee

7. Mr. Prin Chirathivat Independent Director, Member of the Audit Committee

8. Mrs. Aruni Kettratad Independent Director, Chairperson of the Nomination and

Remuneration Committee

9. Mr. Chong Toh Director, Member of the Nomination and Remuneration

Committee

10. Mr. Bernard Charnwut Chan Director


Attachment 1 Page 4

Authorized signatories

Any two of all directors, except Mr. Chong Toh, are authorized to jointly sign with the company’s

seal affixed.

Source: Annual Registration Statement of BH (Form 56-1)

2.2 Shareholders

As at 23 August 2019 (the latest closing date of the shareholders register book to determine

rights to receive dividend payment for 2019), BH had a registered capital of Baht 922,702,685, with

an issued and paid-up capital of Baht 730,052,222, divided into 728,841,357 ordinary shares at par

value of Baht 1 per share and 1,210,865 preferred shares at par value of Baht 1 per share. BH’s top ten

shareholders are as follows:

No. Name* No. of shares

(shares)**

Shareholding

(%)***

1 Bangkok Dusit Medical Services PCL 181,660,706 24.88

2 Bangkok Insurance PCL 106,760,417 14.62

3 UOB Kay Hian (Hong Kong) Limited – Client Account 61,509,565 8.43

4 Thai NVDR Co., Ltd. 60,738,011 8.32

5 Wattanasophonpanich Co., Ltd. 26,138,875 3.58

6 Social Security Office 24,499,900 3.36

7 South East Asia UK (Type C) Nominees Limited 13,963,283 1.91

8 GIC Private Limited 12,655,483 1.73

9 State Street Europe Limited 12,305,427 1.69

10 Sinsuptawee Asset Management Co., Ltd. 11,381,614 1.56

Total of top 10 shareholders 511,613,281 70.08

Other shareholders 218,438,941 29.92

Total 730,052,222 100.00

Source: www.set.or.th

Note: * Among BH’s top ten shareholders are foreign financial institutions or custodians acting

as trust companies or nominee accounts. It has no knowledge of the ultimate

shareholders of these companies as these shareholders have never nominated their

representatives to serve on the Board of Directors nor taken part in the management of

BH.

** Number of shares includes both preferred shares and ordinary shares.

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

shares.

3. Revenue Structure of BH and Its Subsidiaries in 2017 - 2018

Product line /

Business Group Operated by

% of

shareholding

by BH

2017 2018

Total

revenue %

Total

revenue %

Healthcare Bumrungrad Hospital Pcl. 17,375 95.1 17,498 94.4

Healthcare Vitallife Corporation Ltd. 100.0 422 2.3 521 2.8

Healthcare Seoul Seniors Towers LLC 40.8 194 1.1 222 1.2

Healthcare Bumrungrad Myanmar Co., Ltd. 80.0 28 0.2 23 0.1

Total of healthcare 18,019 98.6 18,264 98.5

Rental Bumrungrad Hospital Pcl. 67 0.4 62 0.3

Total of rental 67 0.4 62 0.3

Others Bumrungrad Hospital Pcl. 162 0.9 176 0.9

Others Vitallife Corporation Ltd. 100.0 5 0.0 9 0.0


Attachment 1 Page 5

Product line /

Business Group Operated by

% of

shareholding

by BH

2017 2018

Total

revenue %

Total

revenue %

Others Asia Global Research Ltd. 100.0 4 0.0 14 0.1

Others Health Horizons Enterprises Pte. Ltd. 80.0 7 0.0 9 0.0

Others Bumrungrad Health Network Co., Ltd. 100.0 - 0.0 - 0.0

Others Bumrungrad Services Co., Ltd 100.0 7 0.0 7 0.0

Total of others 185 1.0 215 1.2

Total 18,271 100.0 18,541 100.0

Source: Annual Registration Statement of BH (Form 56-1)

Note: For the revenue structure of BH and its subsidiaries in 2019, please see details in Form 56-1 of BH

available at www.set.or.th which will be disclosed by 31 March 2020.

4. Summary of Operating Results and Financial Position

4.1 Summary of consolidated financial position and operating results of BH and its subsidiaries

Summary of consolidated financial position and operating results of BH and its subsidiaries in

2017 - 2019

Consolidated statements of financial position

2017 2018 2019

Baht

million %

Baht

million %

Baht

million %

Assets

Current assets

Cash and cash equivalents 2,464.43 10.49 2,522.75 10.19 2,080.58 7.95

Short-term investments 5,797.89 24.69 6,477.82 26.17 6,409.69 24.48

Trade and other receivables 1,818.55 7.74 2,560.67 10.35 2,747.66 10.49

Inventories 307.84 1.31 391.81 1.58 330.32 1.26

Prepaid expenses 111.06 0.47 109.23 0.44 116.86 0.45

Other current assets 44.55 0.19 32.50 0.13 51.33 0.20

Total current assets 10,550.33 44.90 12,094.78 48.87 11,736.44 44.83

Non-current assets

Restricted bank deposits 6.00 0.03 6.00 0.02 6.00 0.02

Investments in associates 219.86 0.94 219.84 0.89 78.10 0.30

Other long-term investments 1.70 0.01 1.70 0.01 1,317.56 5.03

Property, plant and equipment 11,784.24 50.18 11,256.01 45.48 11,860.08 45.30

Intangible assets 500.16 2.13 789.32 3.19 771.57 2.95

Goodwill 111.01 0.47 74.32 0.30 66.77 0.26

Deferred tax assets 291.19 1.24 289.75 1.17 326.86 1.25

Other non-current assets 25.46 0.11 17.09 0.07 17.65 0.07

Total non-current assets 12,933.62 55.10 12,654.03 51.13 14,444.59 55.17

Total assets 23,483.95 100.00 24,748.81 100.00 26,181.03 100.00

Liabilities and shareholders' equity

Current liabilities

Trade and other payables 856.98 3.65 964.67 3.90 870.35 3.32

Accrued physicians' fees 626.33 2.67 739.35 2.99 720.77 2.75

Short-term loan and interest payable to a related party 187.63 0.80 168.18 0.68 - -

Current portion of long-term debentures 998.57 4.25 - - - -

Accrued expenses 507.86 2.16 518.98 2.10 568.83 2.17


Attachment 1 Page 6


2017 2018 2019

Baht

million %

Baht

million %

Baht

million %

Income tax payable 393.55 1.68 407.47 1.65 413.23 1.58

Other current liabilities 75.97 0.32 79.49 0.32 65.87 0.25

Total current liabilities 3,646.89 15.53 2,878.14 11.63 2,639.05 10.08

Non-current liabilities

Long-term loan and interest payable to an unrelated party 18.13 0.08 19.70 0.08 18.43 0.07

Long-term debentures – net of current portion 2,489.67 10.60 2,492.08 10.07 2,494.61 9.53

Deferred tax liabilities 48.11 0.20 47.82 0.19 4.27 0.02

Provision for long-term employee benefits 576.20 2.45 566.65 2.29 759.54 2.90

Total non-current liabilities 3,132.11 13.34 3,126.25 12.63 3,276.85 12.52

Total liabilities 6,779.00 28.87 6,004.39 24.26 5,915.90 22.60

Shareholders' equity

Registered capital

Ordinary shares of Baht 1 each 921.34 921.40

921.49

Preferred shares of Baht 1 each 1.36 1.30

1.21

922.70 922.70

922.70

Issued and paid-up capital

Ordinary shares of Baht 1 each 728.69 3.10 728.75 2.94 728.84 2.78

Preferred shares of Baht 1 each 1.36 0.01 1.30 0.01 1.21 0.00

730.05 3.11 730.05 2.95 730.05 2.79

Premium on ordinary shares 285.57 1.22 285.57 1.15 285.57 1.09

Convertible debentures treated as equity securities 550.00 2.34 550.00 2.22 550.00 2.10

Retained earnings

Appropriated - statutory reserve 92.27 0.39 92.27 0.37 92.27 0.35

Unappropriated 14,665.13 62.45 16,789.30 67.84 18,560.05 70.89

Other components of shareholders' equity 79.36 0.34 7.41 0.03 (244.57) (0.93)

Equity attributable to owners of the Company 16,402.38 69.85 18,454.60 74.57 19,973.37 76.29

Non-controlling interests of the subsidiaries 302.57 1.29 289.81 1.17 291.76 1.11

Total shareholders' equity 16,704.95 71.13 18,744.41 75.74 20,265.13 77.40

Total liabilities and shareholders' equity 23,483.95 100.00 24,748.80 100.00 26,181.03 100.00

Summary of statements of comprehensive income of BH and its subsidiaries for the years ended

31 December 2017 - 2019

Consolidated statements of comprehensive income

2017 2018 2019

Baht

million %

Baht

million %

Baht

million %

Revenues

Revenues from hospital operations 18,019.78 98.62 18,264.20 98.51 18,409.15 98.35

Rental income 66.89 0.37 61.76 0.33 65.16 0.35

Interest income 103.25 0.57 125.39 0.68 159.07 0.85

Other income 81.65 0.45 89.67 0.48 84.89 0.45

Total revenues 18,271.57 100.00 18,541.02 100.00 18,718.27 100.00

Expenses

Cost of hospital operations 10,285.87 56.29 10,045.96 54.18 10,285.08 54.95


Attachment 1 Page 7


2017 2018 2019

Baht

million %

Baht

million %

Baht

million %

Selling expenses 311.65 1.71 386.07 2.08 486.90 2.60

Administrative expenses 2,736.22 14.98 2,902.23 15.65 3,264.29 17.44

Loss on investments in associates - - - - 6.01 0.03

Exchange losses 9.17 0.05 5.18 0.03 12.43 0.07

Total expenses 13,342.91 73.03 13,339.44 71.95 14,054.71 75.09

Profit before share of profit (loss) from

investments in associates, finance cost and income

tax expenses 4,928.66 26.97 5,201.58 28.05 4,663.56 24.91

Share of profit (loss) from investments in associates 3.55 0.02 - - (3.05) (0.02)

Profit before finance cost and income tax expenses 4,932.21 26.99 5,201.58 28.05 4,660.51 24.90

Finance cost (149.85) (0.82) (165.15) (0.89) (127.01) (0.68)

Profit before income tax expenses 4,782.36 26.17 5,036.43 27.16 4,533.50 24.22

Income tax expenses (840.96) (4.60) (880.20) (4.75) (773.19) (4.13)

Profit for the year 3,941.40 21.57 4,156.23 22.42 3,760.31 20.09

Profit (loss) attributable to:

Equity holders of the Company 3,943.89 4,151.89

3,747.73

Non-controlling interests of the subsidiaries (2.51) 4.34

12.58

3,941.38 4,156.23

3,760.31

Earnings per share

Basic earnings per share (Baht)

Profit attributable to equity holders of the Company 5.41 5.70

5.14

Diluted earnings per share

Profit attributable to equity holders of the Company 4.55 4.79

4.32

Summary of cash flow statements of BH and its subsidiaries for the years ended 31 December

2017 - 2019

Cash flow statements

(Unit: Baht million)


2017 2018 2019

Net cash flows from operating activities 5,243.38 4,733.93 4,897.34

Net cash flows provided by (used in) investing activities (5,867.60) (1,430.59) (2,854.51)

Net cash flows provided by (used in) financing activities (2,061.32) (3,245.34) (2,475.94)

Increase (decrease) in translation adjustment 1.81 0.32 (9.06)

Net increase (decrease) in cash and cash equivalents (2,683.73) 58.32 (442.17)

Cash and cash equivalents at beginning of year 5,148.16 2,464.43 2,522.75

Cash and cash equivalents at end of year 2,464.43 2,522.75 2,080.58

Note: The consolidated financial statements for 2017 were audited by Ms. Vissuta Jariyathanakorn,

Certified Public Accountant (Thailand) No. 3853, of EY Office Limited, and the consolidated

financial statements for 2018 - 2019 by Ms. Kosum Cha-em, Certified Public Accountant (Thailand)

No. 6011, of EY Office Limited, being auditors approved by the Office of the Securities and

Exchange Commission.


Attachment 1 Page 8

Key financial ratios

Financial ratio 2017 2018 2019

Liquidity ratio

Current ratio (times) 2.89 4.20 4.45

Quick ratio (times) 1.17 1.77 1.83

Cash ratio (times) 1.75 1.45 1.78

Accounts receivables turnover ratio (times) 9.19 7.61 6.36

Average collection period (days) 39.17 47.30 56.57

Inventory turnover (times) 33.27 28.61 28.35

Average selling period (days) 10.82 12.58 12.70

Accounts payable turnover ratio (times) 12.57 12.04 13.51

Average payment period (days) 28.65 29.90 26.64

Cash cycle (days) 21.34 29.98 42.63

Profitability ratio

Gross profit margin (%) 42.92 45.00 44.13

Operating profit margin (%) 26.55 27.57 24.44

Cash to operating profit (%) 108.10 93.61 107.03

Net profit margin (%) 21.58 22.39 20.02

Return on equity (%) 25.05 23.42 19.21

Efficiency ratio

Return on assets (%) 17.60 17.22 14.72

Return on fixed assets (%) 44.08 46.28 43.01

Asset turnover (times) 0.82 0.77 0.74

Financial policy ratio

Debt to equity ratio (times) 0.41 0.32 0.29

Interest coverage ratio (times) 17.86 15.93 20.88

Commitment coverage ratio (times) 0.66 0.98 0.85

Dividend per share (Baht per share) 2.70 2.90 3.20

Dividend payout ratio (%) 49.89 50.90 62.23

4.2 Analysis of operating results and financial position

Operating results in 2017 - 2019

BH and its subsidiaries reported revenues from hospital operations for 2017 - 2019 of Baht

18,020 million, Baht 18,264 million and Baht 18,409 million, a year-on-year increase of Baht 244

million and Baht 145 million or 1.4% and 0.8% in 2018 and 2019 respectively. Such increase in 2018

was mostly due to a 2.2% increase in revenues from non-Thai patients, offset by a 2.9% decrease in

revenues from Thai patients. As a result, the revenue contribution from Thai patients in 2018 was

34.5% and from non-Thai patients was 65.5%, compared with 35.6% and 64.4% respectively in 2017.

In 2019, the year-on-year increase in revenues from hospital operations was mainly attributable to a

1.6% increase in revenues from non-Thai patients, offset by a 0.7% decrease in revenues from Thai

patients. Therefore, the revenue contribution from Thai patients in 2019 was 34.0% and from non-

Thai patients was 66.0%.

BH and its subsidiaries reported cost of hospital operations (including depreciation and

amortization) in 2017 - 2019 of Baht 10,286 million, Baht 10,046 million and Baht 10,285 million

respectively, or a year-on-year increase (decrease) of Baht (240) million and Baht 239 million or


Attachment 1 Page 9

(2.3)% and 2.4% in 2018 - 2019 respectively. Such decrease in cost of hospital operations in 2018

suggested a positive change compared to the 1.4% growth in revenues from hospital operations.

Meanwhile, the year-on-year increase in 2019 resulted partly from an increase in physicians’ fees of

Baht 74 million, which was in line with the increase in revenues from patients before discount but

outpaced the increase rate of net revenues after discount, and partly from an increase in employee

expenses of Baht 60 million due mainly to the annual salary increase. The cost to revenues from

hospital operations in 2017 - 2019 stood at 57.1%, 55.0% and 55.9% respectively.

Selling expenses (including depreciation and amortization) in 2017 - 2019 were Baht 312

million, Baht 386 million and Baht 487 million respectively, up year-on-year by Baht 74 million and

Baht 101 million or by 23.9% and 26.1% in 2018 and 2019 respectively. Such increase was mostly

ascribed to an increase in marketing expenses of Baht 53 million and Baht 66 million in 2018 and

2019 respectively.

Administrative expenses (including depreciation and amortization) in 2017 - 2019 totaled

Baht 2,736 million, Baht 2,902 million and Baht 3,264 million, rising year-on-year by Baht 166

million and Baht 362 million or 6.1% and 12.5% in 2018 and 2019 respectively. Such increase mainly

stemmed from an increase in software support and maintenance cost of Baht 62 million and Baht 93

million in 2018 and 2019 respectively, due to additional IBM Watson software support and

maintenance and new IT support service, and also from an increase in depreciation and amortization

of Baht 55 million and Baht 75 million in 2018 and 2019 respectively, due mainly to amortization of

newly purchased HIS software and renovation of BI Tower. In addition, employee-related expenses in

2018 rose by Baht 31 million as a result of annual adjustment of salary and wages while, in 2019,

advisory fee increased by Baht 53 million and copyright fee by Baht 35 million.

EBITDA in 2017 - 2019 was Baht 6,031 million, Baht 6,256 million and Baht 5,894 million,

a year-on-year increase (decrease) of Baht 225 million and Baht (362) million or 3.7% and (5.8)% in

2018 and 2019 respectively, with an EBITDA margin of 33.2%, 34.0% and 31.8% in 2017 - 2019

respectively.

Net profit (attributable to equity holders of the company) in 2017 - 2019 amounted to Baht

3,944 million, Baht 4,152 million and Baht 3,748 million, a year-on-year increase (decrease) of Baht

208 million and Baht (404) million or 5.3% and (9.7)% in 2018 - 2019 respectively, with a net profit

margin of 21.6%, 22.4% and 20.0% in 2017 - 2019 respectively.

Financial position for the year ended 31 December 2017 - 2019

As at 31 December 2017 - 2019, BH and its subsidiaries reported total assets of Baht 23,484

million, Baht 24,749 million and Baht 26,181 million, a year-on-year increase of Baht 1,265 million

and Baht 1,432 million or 5.4% and 5.8% at year-end 2018 and 2019 respectively. They were divided

into (1) current assets of Baht 10,544 million, Baht 12,095 million and Baht 11,736 million,

increasing (decreasing) by Baht 1,551 million and Baht (359) million or 14.7% and (3.0)% at year-

end 2018 and 2019 respectively and constituting 44.9%, 48.9% and 44.8% of total assets at year-end

2017 - 2019 respectively; and (2) non-current assets of Baht 12,940 million, Baht 12,654 million and

Baht 14,445 million, increasing (decreasing) by Baht (286) million and Baht 1,791 million or (2.2)%

and 14.2% at year-end 2018 and 2019 respectively and making up 55.1%, 51.1% and 55.2% of total

assets at year-end 2017 - 2019 respectively.

The increase in total assets at year-end 2018 was due mainly to an increase in current assets,

comprising an increase in trade and other receivables of Baht 742 million owing to greater revenues

and collection periods associated with Middle East customers, and an increase in cash and cash

equivalents and short-term investments of Baht 738 million which resulted mostly from increase in

cash from operating activities of Baht 4,734 million, offset by Baht 2,043 million dividend payment,

Baht 1,000 million repayment of debentures, and Baht 893 million investment in fixed assets and

computer software in 2018. Meanwhile, non-current assets decreased as a result of a decrease of Baht


Attachment 1 Page 10

528 million in property, plant and equipment as depreciation and amortization exceeded CAPEX

addition in 2018, offset by a Baht 289 million increase in intangible assets associated with various

new software.

The increase in total assets at year-end 2019 was ascribed to an increase in non-current assets

which mostly resulted from an increase in long-term investments in bonds and debentures of Baht

1,316 million, and in property, plant and equipment of Baht 604 million. Meanwhile, a decrease in

current assets resulted mainly from a Baht 510 decrease in cash and cash equivalents and short-term

investments caused by Baht 2,151 million dividend payment in 2019, Baht 1,885 million investment

in fixed assets and Baht 1,316 million long-term investment in bonds and debentures, offset by cash

from operating activities of Baht 4,897 million.

As at 31 December 2017 - 2019, total liabilities amounted to Baht 6,779 million, Baht 6,004

million and Baht 5,916 million, down year-on-year by Baht 775 million and Baht 88 million or 11.4%

and 1.5% at year-end 2018 and 2019 respectively. They were divided into (1) current liabilities of

Baht 3,647 million, Baht 2,878 million and Baht 2,639 million which decreased by Baht 769 million

and Baht 239 million or 21.1% and 8.3% at year-end 2018 and 2019 respectively and made up 53.8%,

47.9% and 44.6% of total liabilities at year-end 2017 - 2019 respectively; and (2) non-current

liabilities of Baht 3,132 million, Baht 3,126 million and Baht 3,277 million, increasing (decreasing)

by Baht (6) million and Baht 151 million or (0.2)% and 4.8% at year-end 2018 and 2019 respectively

and accounting for 46.2%, 52.1% and 55.4% of total liabilities at year-end 2017 - 2019 respectively.

The decrease in total liabilities at year-end 2018 was attributed to a decrease in current

liabilities, consisting of a drop in current portion of long-term debentures of Baht 999 million

associated with the Baht 1,000 million repayment of debentures in December 2018, offset by Baht

113 million increase in accrued physicians’ fee, and a decrease in non-current liabilities due to a

decline in provision for long-term employee benefits of Baht 10 million.

The decrease in total liabilities at year-end 2019 was attributable to a Baht 168 million

decrease in short-term loans and accrued interest payable to a related party which resulted from

closing down of a related business in December 2019, and a Baht 94 million decrease in trade and

other payables, a Baht 44 million decrease in deferred tax liabilities associated with the closing down

of a related business in 2019. Meanwhile, provision for long-term employee benefits increased by

Baht 193 million, of which Baht 160 million resulted from the impact of change in the rate of

severance pay in case of termination of employment according to the new Labor Protection Act.

Total shareholders’ equity as at 31 December 2017 - 2019 was Baht 16,705 million, Baht

18,744 million and Baht 20,265 million, a year-on-year increase of Baht 2,039 million and Baht 1,521

million or 12.2% and 8.1% at year-end 2018 and 2019 respectively. The increase in shareholders’

equity at year-end 2018 stemmed from the 2018 net profit of Baht 4,152 million, offset by Baht 2,044

million dividend payment. Meanwhile, the increase at year-end 2019 was due mainly to growth in the

2019 net profit of Baht 3,748 million, offset by Baht 2,153 million dividend payment. Return on

assets (ROA) in 2017 - 2019 was 17.6%, 17.2% and 14.7% respectively, and return on equity (ROE)

in 2017 - 2019 was 25.0%, 23.4% and 19.2% respectively.


Attachment 2 Page 1

Attachment 2

Company Profile


1. Business Overview

Bangkok Dusit Medical Services Public Company Limited (“BDMS” or “the Company”) was

incorporated on 30 October 1969 under the name "Bangkok Dusit Medical Services Company

Limited" with initial registered capital of Baht 10 million. “Bangkok Hospital” commenced its

operations on 26 February 1972. The Company was listed on the Stock Exchange of Thailand on 2

October 1991 and registered its conversion to a public limited company in 1994. At present, the

Company has a registered capital of Baht 1,758.22 million, with issued and paid-up capital of Baht

1,589.20 million.

BDMS engages in a large private hospital business with a network of 48 hospitals in Thailand

and Cambodia (as of 31 December 2019). The Company operates under 6 hospital groups, namely,

Bangkok Hospital Group, Samitivej Hospital Group, BNH Hospital, Phyathai Hospital Group, Paolo

Hospital Group, and Royal Hospital Group. In addition, the Company’s network also covers

businesses that support medical care such as medical laboratories, medicine production, saline

production, pharmacies, etc.

At present, there are six hospitals under direct management of the Company, namely

“Bangkok Hospital,” “Bangkok Heart Hospital,” “Wattanosoth Cancer Hospital,” “Bangkok

International Hospital,” “Chiva Transitional Care Hospital” and “Bangkok Hospital Hua Hin.”

Another hospital of the Company, “Samitivej Chinatown Hospital” is under the management of

Samitivej Hospital Public Company Limited.

1) Bangkok Hospital

Bangkok Hospital (BH) is a 373-bed hospital located on Soi Soonvijai, New Petchburi Road,

Bangkok, providing 24-hour full complement of treatment with expert physicians and modern

equipment for both inpatients and outpatients. BH has 50 specialized centers and clinics as listed

below:

1. GI and Liver Center

2. GI Endoscopy Center

3. Bangkok Health Promotion Center 1

4. Bangkok Occupational Health Center and Health Promotion Center 2

5. Bangkok Health Promotion Center 3

6. Medical Center

7. Urology Center

8. Bangkok Referral Center

9. Eye Center

10. Bangkok Civil Aeromedical Center

11. Bangkok Lasik Center

12. Hyperbaric Oxygen Therapy Center

13. Ear Nose Throat Center

14. Hospital Dental Center

15. Chest & Respiratory System Center

16. Diabetes Center

17. Allergy and Asthma Center

18. Skin and Aesthetics Center

19. Bangkok Hemodialysis Center


Attachment 2 Page 2

20. Child Health Center

21. Rehabilitation Center

22. Trauma Center

23. Fertility Center

24. Plastic Surgery and Reconstruction Center

25. Hearing, Speech, Balance Tinnitus Center

26. Women's Health Center

27. Internal Medicine Clinic

28. Glaucoma Clinic

29. Hip & Knee Center

30. Prostate Health Clinic

31. Male Wellness Clinic

32. Surgery Center

33. Bariatric Surgery Center

34. Plastic Surgery and Reconstruction Center

35. Special Clinic

36. General Surgery Clinic

37. Colorectal Surgery Clinic

38. BDMS Medevac Center

39. Academy of Sports and Exercise Medicine (BASEM)

40. Wound Care Clinic

41. Child Development Neuropsychiatric Clinic

42. Infectious Clinic

43. Hypertension Clinic

44. Mental Health Center

45. Rheumatoid Arthritis Clinic

46. Bangkok Vaccine Clinic

47. Chronic Wound Clinic

48. Royal Life Anti-Aging Center

49. BDMS Emergency Services (BES)

50. GI Motility Unit

International Customer Service Center provides services for outpatients and inpatients with

interpreters of major languages such as English, Japanese, Arabic, Korean, French, Chinese, Burmese,

Khmer, etc., and other services for non-Thai customers including contact with insurance companies

overseas, visa extension, air ticket reservation, hotel reservation, currency exchange, etc. The services

for non-Thai customers are categorized as follows:

- Japanese Medical Service (JMS)

- Arab Medical Services (AMS)

- Myanmar Medical Services (MMS)

- Bangladesh Medical Services (BMS)

- International Medical Services (IMS)

- Travel Medicine Clinic

Since 2006, International Customer Service Center has provided services to non-Thai patients

from more than 160 countries and is reputed for its excellence in meeting the patients’ satisfaction,

especially its international patient program which makes the patients feel healthier, happier, and able

to recover faster with less expenses and shorter period of hospitalized treatment through quality-

driven medical services and the ability to respond to the demand of multi-national customers.

2) Bangkok Heart Hospital

Bangkok Heart Hospital is a 7-storey hospital (including basement) with a capacity of 97

beds, located on Soi Soonvijai near Bangkok Hospital. It is the first private heart hospital of Thailand,


Attachment 2 Page 3

established after the success of Bangkok Heart Center, which previously was a specialized center of

Bangkok Hospital. Considering the increasing number of patients with heart disease and the rapid

technological advancement for heart disease treatment, the management of the Company decided to

expand the premise for heart disease treatment. “Bangkok Heart Hospital” was established with

preparedness of three key components, i.e. expertise of medical personnel in all fields, state-of-the-art

technologies, and fully integrated services covering prevention, treatment and rehabilitation that attain

international standards and ensure maximum satisfaction of its customers.

Bangkok Heart Hospital features heart physicians of all areas, including cardiology, cardiac

surgeon, cardiology specialized in cardiac failure, preventive cardiology, cardiac radiology, and

cardiac rehabilitation, who have been trained from abroad such as the USA, Australia, England,

Belgium, and Germany. Nurses and medical personnel are also well prepared to take care of heart

disease patients with international standards. It provides diagnosis, treatment, surgery, prevention and

rehabilitation services for heart and coronary diseases as well as medical transport service with 24-

hour mobile CCU. The services comprise:

1. Heart Clinic

2. Arrhythmia and AF Clinic

3. Cardiothoracic Surgery Clinic

4. Prevention Clinic

5. Heart Failure Clinic

6. Cardiac Catheterization and Balloon Angioplasty

7. M.R. Adulkit Kittiyakorn Heart Surgery Center

8. Cardiac Rehabilitation Clinic

9. Coronary Angiogram

10. Non-invasive Special Equipment Unit

With its highly advanced medical readiness and as one of the most experienced

cardiovascular tertiary care centers in the region, Bangkok Heart Hospital is ready for cardiovascular

treatment in the 21st Century.

3) Wattanosoth Cancer Hospital

Wattanosoth Cancer Hospital is a 48-bed hospital located on Soi Soonvijai in the same

premise as Bangkok Hospital. It is the first private specialist hospital for cancer care in Thailand,

well-equipped with front-line diagnostic and treatment technology and physicians highly experienced

in comprehensive cancer care, comprising:

1. Breast Center

2. Stem Cell and Bone Marrow Transplantation Center

3. Hematology Clinic

4. Surgical Oncology Center

5. Medical Oncology Center

6. Palliative Care Clinic

7. Ambulatory Chemotherapy Care Center

8. Radiotherapy Center

9. Oncology Imaging Center

10. Supportive Care Center

11. Pain Management Clinic

12. Wattanosoth Early Detection Center

13. PET/CT Scan Center

14. Intervention Radiology Clinic

15. Nuclear Medicine Clinic

16. Radiotherapy Clinic


Attachment 2 Page 4

In addition, it provides special services such as interpreter service in 26 languages, physicians,

nurses and interpreters with excellent English skills, facilities for non-Thai patients throughout the

stay period, appointment service, provision of treatment information, medical services, transportation,

consultation on expenses, and contact with persons as requested by the patients.

4) Bangkok International Hospital

Bangkok International Hospital (BIH) is the 48th hospital in the Bangkok Dusit Medical

Services Public Company Limited (BDMS) Group, located in Soi Soonvijai, Petchaburu Rd.,

Bangkok. Provide advanced treatment specializing in neurology, orthopedics and spine as well as

Integrated Care Services. BIH has 172-bed consisting of 5 operating rooms (Including Hybrid

Operating Room), A Intervention Suite room and the Intensive care unit ( ICU 6, ICU 7 และ ICU 8),

total of 32 rooms.

BIH under a concept of “Where Art Meets Science” ” that combines art and science to

provide a new level of experience and satisfaction in holistic health care, creating happiness from the

inside out to drive the organization to become a treatment center and provide leading regional medical

services. Hold up “People” or multidisciplinary personnel to drive the organization to be strong and

sustainable. Emphasizing expertise in specialized fields by holding the 'highest patient satisfaction' as

the heart. Answer all holistic care by putting the patient at the center with individual service design.

Allow clients to choose the best thing for themselves at a reasonable price. While also striving to

become the leading “Smart Hospital” in Asia and truly meet the digital age.

BIH provide an art space combining with the hospital features healing environment which

combining the hospital with a five-star hotel. Patients can also have convenient access to dedicated

personal butler from their room and anywhere in the hospital 24 hours a day. Moreover, Bangkok

International Hospital utilizes advanced technology to improve efficiency and improve safety, such

as; ARTIS Pheno Machine, a 3D fluoroscope that provides high resolution 2D and 3D imaging for

minimally invasive surgery in orthopedics, resulting in more accuracy and precision as well as

lowered postoperative complications and faster recovery time; Hybrid Operating Room (Hybrid OR)

with an imaging system such as CT scan and MRI scan combined with navigation system as well as

other operation tools; Biplane Interventional Suite for cerebral vascular angiography, using two

rotating cameras that recreate detailed real-time 3D views of the blood vessels; 3-Tesla MRI scan

which produces detailed images of brain, spine and bone as well as internal organs and tissues. This

advanced imaging tool can be used to plan surgical treatments with high degree of precision, leading

to the effective treatment outcomes and safety; Robotic-Assisted Gait Training (RAGT) an

important emerging field in rehabilitation care that applies the high-intensity repetitive principle to

restore and improve mobility and activity of patients with stroke or other neurological disorders

BIH has specialized centers and clinics services with a team of specialized physicians as listed

below:

1. Neuroscience Center 1

2. Neuroscience Center 2

3. Bone & Joint Center

4. Spine Center

5. Diagnostic Imaging Center - MRI

6. Diagnostic Imaging Center - CT Scan

7. Diagnostic Imaging Center - X-Ray

8. Rehabilitation Center

International Customer Service Center provides services for outpatients and inpatients with

interpreters of major languages such as English, Arabic, Burmese, Khmer, Bengali, Germany, French,


Attachment 2 Page 5

Chinese, Japanese, etc., and other services for non-Thai customers including contact with insurance

companies overseas, visa extension, air ticket reservation, hotel reservation, currency exchange, etc.

Since July 2019, International Customer Service Center has provided services to non-Thai

patients from more than 160 countries and is reputed for its excellence in meeting the patients’

satisfaction, especially its international patient program with personal butler which makes the patients

feel healthier, and able to recover faster through quality-driven medical services and the ability to

respond to the demand of multi-national customers, and also focus on healthcare quality and safety.

5) Chiva Transitional Care Hospital

Chiva Transitional Care Hospital is a 52-bed hospital for patients who need medical

rehabilitation after recovering from surgery or acute illness such as after knee surgery, hip surgery or

elderly patients who have low muscle mass or paralysis/paresis, patients with nerve disease such as

stroke or traumatic brain injury, those who had grave accident and injured body systems, and elderly

who have congenital diseases. Premier healthcare services are provided by a team of specialized

physicians in the areas of medicines, geriatrics medicine and rehabilitation, and by nurses and

physical therapists for rehabilitation. Continuous care covers rehabilitation, nutrition, and

development of ability to perform daily activities. The physical and mental integrated care prepares

the patients for self-support daily life and enables them to take part in social activities. The hygienic

and modern patient rooms with full functionalities are specially and properly designed for recovering

patients.

6) Bangkok Hospital Hua Hin

Bangkok Hospital Hua Hin is a 64-bed private hospital which is promoted by the Board of

Investment. It is located on the 12-rai land on Petchkasem Road, Hua Hin Sub-district, Hua Hin

District, Prachuap Khiri Khan Province. It has a five-storey building with rooftop helipad and 255-car

parking in the premise. Bangkok Hospital Hua Hin was opened in November 2010 and started

providing medical service for outpatients in early 2011. The official opening for both inpatients and

outpatients was on 6 April 2011.

Bangkok Hospital Hua Hin aims to provide fully integrated healthcare services ranging from

examination to treatment, health promotion, disease prevention and rehabilitation according to the

medical standards. It is well-equipped with specialized physicians including emergency medicine,

obstetrics and gynecology, general surgery, orthopedics, brain and nerve surgery, pediatrics, general

internal medicine, arthritis and rheumatic, neurological medicine, GI medicine, respiratory medicine,

nephrology, cardiac medicine and dentistry. The services classified by areas are as follows:

• Medical Records & Reception Department

• Bangkok Hospital Hua Hin Heart Center with Cardiac Catheterization Laboratory (1 room)

• Trauma and Emergency Center

• Medical Examination Department

• Bone & Joint Clinic • Children’s Clinic • Women’s Health Clinic

• Skin and Aesthetics Center

• OPD with 14 outpatient examination rooms

• X-ray including MRI, CT Scan, Ultrasound 4D-3D, Mammogram and General X-ray

• Pharmacy Department

• Operative Room (2 rooms) • GI Endoscopy (1 room)


Attachment 2 Page 6

• Obstetric Gynecology (OB) with 2 delivery rooms • ICU with 14 intensive care rooms

• Hemodialysis Department

• Dental Department (3 dental rooms)

• Nursery (NSY)

• Physical Therapy Department

• Laboratories

• Meeting Room & Doctor’s Room

• Office of the Director

• Inpatient rooms (50 beds)

Top floor : a helicopter rooftop landing pad for air ambulance, emergency medical service.

7) Samitivej Chinatown Hospital

Samitivej Chinatown Hospital is a 59-bed secondary healthcare provider located on Yaowarat

Road, Samphanthawong District. Its mission is to provide premium healthcare service, from

consultation to diagnosis and treatment to the community and Thai society according to the Joint

Commission International (JCI) standard. It is well-equipped with experienced multidisciplinary team

of physicians, nurses and medical personnel specialized in geriatric care, cutting edge technologies

and equipment, and professional services that meet the Samitivej Hospital standard. The services are

provided through the following:

• Health Promotion Center • Samitivej Smart Joint Center

• Internal Medicine Department • Ear Nose Throat Center

• Heart Center • Rehabilitation Center

• Royal Life Anti-Aging Center • Pediatrics Department

• Liver and Digestive Institute • Radiology Center

• Trauma Center • Ophthalmological Institute

• Surgery Center • Esthetics Institute

• The Hair Restoration Medical Center

2. Board of Directors and Shareholders

2.1 Board of Directors

The Company’s Board of Directors as of 5 February 2020 consisted of 14 members, namely:

Director’s Name Title

1. Professor Emeritus Arun Pausawasdi, M.D. Chairman of the Board / Independent Director

2. Mr. Chuladej Yossundharakul, M.D. Vice Chairman

3. Mrs. Narumol Noi-am Acting President / Director

4. Mr. Sripop Sarasas Director

5. Mr. Pradit Theekakul Director

6. Mr. Thongchai Jira-alongkorn Director

7. Mr. Att Thongtang Director

8. Mr. Puttipong Prasarttong-Osoth Director

9. Mr. Chairat Panthuraamphorn, M.D. Director

10. Professor Emeritus Santasiri Sornmani, M.D. Independent Director / Chairman of the Audit Committee

11. Mr. Chavalit Sethameteekul Independent Director / Member of Audit Committee

12. Mr. Weerawong Chittmittrapap Independent Director / Member of Audit Committee

13. Mr. Kan Thakulhoon Independent Director

14. Mr. Arsa Sarasin Independent Director


Attachment 2 Page 7

Authorized signatories

Any two out of four directors, namely Mr. Chuladej Yossundharakul, Mr. Pradit Theekakul, Mrs.

Narumol Noi-am and Mr. Sripop Sarasas, are authorized to jointly sign with the Company’s seal

affixed.

2.2 Shareholders Structure

As at 30 December 2019 (the latest closing date of the shareholders register book), the Company

had a registered capital of Baht 1,758,223,567.20, with an issued and paid-up capital of Baht

1,589,200,189.50, divided into 15,892,001,895 ordinary shares at par value of Baht 0.10 per share.

The Company’s top ten major shareholders are as follows:

No. Top 10 Major Shareholders Number of

Shares

Percentage of

Shareholding

1 Mr. Prasert Prasarttong-Osoth, M.D. and spouse 2,589,322,740 16.29

Miss Poramaporn Prasarttong-Osoth, M.D 551,377,610 3.47

Ms. Somrutai Prasarttong-Osoth 36,800,000 0.23

Mr. Puttipong Prasarttong-Osoth and spouse 19,326,660 0.12

Mrs. Ariya Prasarttong-Osoth 13,102,800 0.08

Total 3,209,929,810 20.20

2 Thai NVDR Co., Ltd. 1,394,618,571 8.78

3 Bangkok Airways PCL (1) 828,418,690 5.21

Bangkok Airways Holding Co., Ltd. (2) 205,000,000 1.29

Total 1,033,418,690 6.50

4 Mr. Wichai Thongtang 32,531,753 0.20

Mr. Att Thongtang and Spouse 212,744,295 1.34

Mr. Itti Thongtang and Spouse 309,275,544 1.95

Miss Viorn Thongtang 240,525,494 1.51

Mr. Atikhun Thongtang 188,409,604 1.19

Total 983,486,690 6.19

5 The Viriyah Insurance PCL (3) 948,283,830 5.97

6 Mr. Chirotchana Suchato and Spouse 393,151,090 2.47

Mr. Chanat Suchato 3,952,260 0.02

Mrs. Nasuda Darnchaivijitr and Spouse 5,654,000 0.04

Mrs. Ranittha Thongdee and Spouse 7,286,930 0.05

Total 410,044,280 2.58

7 Social Security Office 397,203,500 2.50

8 Southeast Asia UK (Type C) Nominees Limited 382,113,387 2.40

9 Miss Napamas Ladpli 168,172,300 1.06

Mrs. Atinuch Malakul na Ayudhaya, D.D.S. 131,708,020 0.83

Mr. Parameth Ladpli, M.D. 65,290,150 0.41

Total 365,170,470 2.30

10 State Street Europe Limited 330,528,242 2.08

Total Top 10 Major Shareholders 9,454,797,470 59.49

Other Shareholders 6,437,204,425 40.51

Grand Total 15,892,001,895 100.00


Attachment 2 Page 8

Source : The Company

Note :

(1) Top 5 shareholders of Bangkok Airways Public Company Limited as of the latest registrar closing date on 13 March

2019 are as Follows:

No. Name - Last Name Number of Shares Percentage of

Shareholding

1. Mr. Puttipong Prasarttong-Osoth and spouse 524,187,900 24.96

2. Mrs. Ariya Prasarttong-Osoth 243,440,900 11.59

3. Mr. Prasert Prasarttong-Osoth, M.D. and spouse 223,027,500 10.62

4. Miss Poramaporn Prasarttong-Osoth, M.D. 136,250,000 6.49

5. Bangkok Bank Public Company Limited 105,000,000 5.00

Total 1,231,906,300 58.66

(2) Bangkok Airways Public Company Limited hold 99.99% of Bangkok Airways Holding Company Limited

(3) Top 5 major shareholders of the Viriyah Insurance PCL, as of 22 April 2019 are as follows:

No. Name - Last Name Number of Shares Percentage of

Shareholding

1 Viriyah Property Co., Ltd. 8,000,000 40.00

2 Viriyabhun Family 5,745,836 28.73

3 The Ancient City Co., Ltd. 2,000,000 10.00

4 Mrs. Orawan Pongpipat and family 1,641,668 8.21

5 Mrs. Suvaporn Thongthew and family 1,641,666 8.21

Total 19,029,170 95.15

3. Revenue Structure of the Company and its Subsidiaries: (Year 2017-2019)

The Company’s main line of business is the private hospital business which is operated

through the Company and its subsidiaries. Apart from the private hospital business, the Company

has also invested in many other supporting or related businesses. Such businesses and their

income structure according to the consolidated financial statements can be summarized as

follows:

Type of

Revenue

Operated by % of Holding

2017 2018 2019

Amount % Amount % Amount %

Revenue from hospital operations

Bangkok Dusit Medical Services Pcl. 100.00 13,317.32 19.27 13,749.41 18.51 14,703.51 18.46

Samitivej Pcl. 95.76 10,723.45 15.51 11,506.83 15.49 12,449.03 15.63

BNH Medical Center Co., Ltd. 91.48 2,903.41 4.20 2,946.40 3.97 2,990.17 3.76

Prasit Pattana Pcl. 98.60 11,986.51 17.34 12,887.95 17.35 13,506.70 16.96

Paolo Medic Co., Ltd. 100.00 2,917.17 4.22 3,313.73 4.46 3,672.88 4.61

Siam Medical Co., Ltd. 85.71 1,138.19 1.65 1,193.64 1.61 1,136.52 1.43

Thai Medical Center PLC. 99.76 1,201.99 1.74 1,232.11 1.66 1,059.13 1.33

Paolo Samut Prakran Co., Ltd. 93.65 1,269.80 1.84 1,334.79 1.80 1,339.45 1.68

Paolo Hospital Prapradaeng Co., Ltd. 84.00 295.04 0.43 324.57 0.44 400.93 0.50

Bangkok Hospital Pattaya Co., Ltd. 97.27 3,755.54 5.43 3,936.28 5.30 4,069.42 5.11

Bangkok Hospital Rayong Co., Ltd. 100.00 2,424.27 3.51 2,536.74 3.41 2,785.63 3.50

Bangkok Hospital Trad Co., Ltd. 99.76 532.50 0.77 550.51 0.74 630.56 0.79

Wattanavej Co., Ltd. 99.72 1,366.70 1.98 1,427.64 1.92 1,634.85 2.05

Bangkok Hospital Hat Yai Co., Ltd. 98.82 1,525.54 2.21 1,636.09 2.20 1,664.75 2.09

Bangkok Hospital Samui Co., Ltd. 100.00 654.96 0.95 715.52 0.96 774.38 0.97


Attachment 2 Page 9

Type of

Revenue

Operated by % of Holding

2017 2018 2019

Amount % Amount % Amount %

Bangkok Hospital Phuket Co., Ltd. 99.70 2,697.15 3.90 2,900.54 3.90 3,028.52 3.80

Bangkok Hospital Ratchasima Co., Ltd. 91.45 1,602.62 2.32 1,721.00 2.32 1,893.11 2.38

Bangkok Hospital Udon Co., Ltd. 100.00 870.29 1.26 956.59 1.29 1,026.76 1.29

Bangkok Hospital Phitsanulok Co., Ltd. 100.00 642.90 0.93 728.95 0.98 767.19 0.96

Thonburi Medical Centre PCL. 63.45 668.49 0.97 761.32 1.02 944.11 1.19

Bangkok Hospital Chiangmai Co., Ltd. 100.00 798.60 1.16 977.96 1.32 1,181.62 1.48

Bangkok Hospital Khon Kaen Co., Ltd. 100.00 536.08 0.78 671.67 0.90 742.13 0.93

Bangkok Hospital Sanamchan Co., Ltd.

(shareholding through BSN)

100.00 1,145.66 1.66 1,365.49 1.84 1,559.35 1.96

Tepakorn Hospital Co., Ltd.

(shareholding through BSN)

50.03 146.44 0.21 142.57 0.19 150.94 0.19

Bangkok Hospital Phuket International Co.,

Ltd.

100.00 1,204.02 1.74 1,197.63 1.61 1,158.88 1.46

Samitivej Chonburi Co., Ltd. 100.00 541.54 0.78 729.72 0.98 898.17 1.13

Bangkok Hospital Muang Raj Co., Ltd. 100.00 508.52 0.74 586.54 0.79 648.21 0.81

Bangkok Hospital Surat Co., Ltd. 100.00 100.57 0.15 249.12 0.34 316.37 0.40

BDMS Wellness Clinic Co., Ltd. 100.00 0.21 0.00 102.91 0.14 239.06 0.30

Bangkok Hospital Chiangrai Co., Ltd. 100.00 - - - - 126.46 0.16

Angkor Pisith Co., Ltd. 80.00 174.51 0.25 178.94 0.24 199.38 0.25

Phnom Penh Medical Services Co., Ltd. 100.00 618.21 0.89 789.02 1.06 940.37 1.18

Total

68,268.20 98.76 73,352.18 98.74 78,638.54 98.75

Other revenues related to healthcare

National Healthcare Systems Co., Ltd. 98.69 821.35 1.19 896.41 1.21 945.33 1.19

N Health (Cambodia) Co., Ltd. 100.00 2.19 0.00 0.70 0.00 4.26 0.01

N Health Pathology Co., Ltd 95.00 0.24 0.00 0.11 0.00 - -

N Health Myanmar Co.,Ltd 60.00 30.02 0.04 36.80 0.05 42.17 0.05

Bio-Molecular Laboratories (Thailand)

Co., Ltd.

95.00 0.92 0.00 - - - -

Total

854.72 1.24 934.02 1.26 991.75 1.25

Grand Total

69,122.92 100.00 74,286.20 100.00 79,630.29 100.00

Source: The Company’s Annual Registration Statement (Form 56-1)



4. Summary of Operating Results and Financial Position

4.1 Summary of consolidated financial position and operating results of BDMS and its

subsidiaries

Summary of consolidated financial position and operating results of BDMS and its subsidiaries in

2017-2019


2017 2018 2019

Baht

Million %

Baht

Million %

Baht

Million %

Assets

Current assets

Cash and cash equivalents 5,091.15 4.15 5,033.52 3.77 4,696.21 3.51

Short-term investments 571.62 0.47 816.67 0.61 899.84 0.67

Trade and other receivables 6,974.71 5.69 7,545.01 5.65 8,850.03 6.62

Inventories 1,735.27 1.42 1,785.91 1.34 1,843.36 1.38

Other current assets 21.09 0.02 91.95 0.07 35.74 0.03

Total current assets 14,393.84 11.74 15,273.06 11.44 16,325.18 12.21

Non-current assets

Restricted financial institution deposits 7.95 0.01 9.56 0.01 11.26 0.01

Investments in associates 15,807.18 12.89 22,646.99 16.96 17,538.29 13.12

Other long-term investments 645.80 0.53 526.65 0.39 465.83 0.35

Investment properties 307.78 0.25 316.72 0.24 353.70 0.26

Property, plant and equipment 71,559.48 58.36 74,546.96 55.84 78,439.83 58.69

Goodwill 17,538.87 14.30 17,538.87 13.14 17,538.87 13.12

Intangible assets 1,237.37 1.01 1,272.82 0.95 1,344.62 1.01

Deferred tax assets 68.01 0.06 96.10 0.07 125.20 0.09

Other non-current assets

Leasehold rights 664.72 0.54 901.01 0.67 1,021.84 0.76

Others 395.69 0.32 370.01 0.28 497.11 0.37

Total non-current assets 108,232.85 88.26 118,225.69 88.56 117,336.55 87.79

Total assets 122,626.69 100.00 133,498.75 100.00 133,661.73 100.00

Liabilities and shareholders' equity

Current liabilities

Bank overdrafts and short-term loans from financial

institutions 72.34 0.06 5,877.53 4.40 23.80 0.02

Trade and other payables 4,749.67 3.87 5,191.77 3.89 5,990.18 4.48

Accrued expenses 5,223.01 4.26 5,957.29 4.46 6,178.37 4.62

Liabilities for discontinued lifelong medical care

program 440.02 0.36 623.89 0.47 - -

Current portion of long-term liabilities

Long-term loans from financial institutions 1,463.31 1.19 4,181.36 3.13 193.44 0.14

Liabilities under finance lease agreements 22.04 0.02 14.05 0.01 16.88 0.01

Debentures - - - - 4,999.81 3.74

Convertible debentures - liability component - - 5,056.40 3.79 - -

Short-term loans from non-related parties 67.00 0.05 67.00 0.05 66.00 0.05

Income tax payable 706.02 0.58 863.68 0.65 1,013.78 0.76

Current provision for employee benefits 2.44 0.00 - - - -

Deferred income - membership due within one year 224.10 0.18 225.58 0.17 206.73 0.15

Other current liabilities 447.17 0.36 515.15 0.39 574.16 0.43




2017 2018 2019

Baht

Million %

Baht

Million %

Baht

Million %

Total current liabilities 13,417.12 10.94 28,573.70 21.40 19,263.15 14.41

Non-current liabilities

Long-term loans from financial institutions 9,335.33 7.61 5,145.47 3.85 4,507.47 3.37

Liabilities under finance lease agreements 16.49 0.01 19.51 0.01 30.51 0.02

Debentures 19,584.60 15.97 19,588.05 14.67 14,591.68 10.92

Convertible debentures - liability component 8,774.27 7.16 - - - -

Provision for lifelong medical care program - - - - 723.96 0.54

Provision for employee benefits 2,005.84 1.64 2,582.07 1.93 4,130.65 3.09

Deferred income - membership 632.00 0.52 632.66 0.47 612.02 0.46

Deferred tax liabilities 2,847.12 2.32 3,447.62 2.58 2,550.29 1.91

Other non-current liabilities 142.81 0.12 71.60 0.05 70.38 0.05

Total non-current liabilities 43,338.46 35.34 31,486.98 23.59 27,216.96 20.36

Total liabilities 56,755.58 46.28 60,060.68 44.99 46,480.11 34.77

Shareholders' equity

Share capital 1,758.22 1,758.22

1,758.22

Issued and fully paid-up capital 1,549.10 1.26 1,566.90 1.17 1,589.20 1.19

Premium on ordinary shares 20,572.87 16.78 24,741.07 18.53 30,166.10 22.57

Difference from shareholding restructure 305.00 0.25 305.00 0.23 305.00 0.23

Surplus investment over book value of subsidiaries (2,683.45) (2.19) (2,683.56) (2.01) (2,693.61) (2.02)

Retained earnings

Appropriated - statutory reserve 175.82 0.14 175.82 0.13 175.82 0.13

Unappropriated 34,314.51 27.98 37,657.40 28.21 45,708.00 34.20

Other components of shareholders' equity 8,837.35 7.21 8,557.48 6.41 8,562.92 6.41

Equity attributable to owners of the Company 63,071.20 51.43 70,320.11 52.67 83,813.43 62.71

Non - controlling interests of the subsidiaries 2,799.91 2.28 3,117.96 2.34 3,368.19 2.52

Total shareholders' equity 65,871.11 53.72 73,438.07 55.01 87,181.62 65.23

Total liabilities and shareholders' equity 122,626.69 100.00 133,498.75 100.00 133,661.73 100.00

Summary of statements of income of the Company and its subsidiaries for the year ended 31

December 2017-2019


2017 2018 2019

Baht

million %

Baht

million %

Baht

million %

Revenues

Revenues from hospital operations 69,122.92 91.29 74,286.19 94.80 79,630.29 87.02

Revenues from sales of goods 2,809.58 3.71 3,086.76 3.94 3,092.35 3.38

Other income

Interest income 51.76 0.07 58.05 0.07 110.08 0.12

Dividend income 15.59 0.02 16.30 0.02 9.31 0.01

Gain on disposal of investment in an associate and

other long-term investment 2,880.06 3.80 - - 7,618.99 8.33

Others 839.56 1.11 915.30 1.17 1,051.19 1.15

Total other income 3,786.97 5.00 989.65 1.26 8,789.57 9.60

Total revenues 75,719.47 100.00 78,362.60 100.00 91,512.21 100.00

Expenses

Cost of hospital operations and goods sold 47,975.23 63.36 50,501.75 64.45 54,276.72 59.31

Administrative expenses 14,487.86 19.13 15,998.18 20.42 17,446.56 19.06




2017 2018 2019

Baht

million %

Baht

million %

Baht

million %

Total expenses 62,463.09 82.49 66,499.93 84.86 71,723.28 78.38

Profit before share of income from investments in

associates, finance cost and income tax expense 13,256.38 17.51 11,862.67 15.14 19,788.93 21.62

Share of income from investments in associates 1,417.31 1.87 1,689.69 2.16 1,022.45 1.12

Profit before finance cost and income tax expense 14,673.69 19.38 13,552.36 17.29 20,811.38 22.74

Finance cost (1,535.45) (2.03) (1,165.47) (1.49) (928.76) (1.01)

Profit before income tax expense 13,138.24 17.35 12,386.89 15.81 19,882.62 21.73

Income tax expense (2,563.54) (3.39) (2,739.85) (3.50) (3,873.46) (4.23)

Net profit for the year 10,574.70 13.97 9,647.04 12.31 16,009.16 17.49

Profit (loss) attributable to:

Equity holders of the Company 10,215.74 9,191.46

15,517.17

Non-controlling interests of the subsidiaries 358.96 455.58

491.99

10,574.70 9,647.04

16,009.16

Basic earnings per share (Baht)

Profit attributable to equity holders of the Company 0.66

0.59

0.99

Summary of cash flow statements of the Company and its subsidiaries for the year ended 31

December 2017-2019

Cash flow statements

(Unit : Baht million)


2017 2018 2019

Cash flow from operating activities 10,933.35 14,804.28 14,546.09

Cash flow provided by (used in) investing activities (11,869.65) (13,350.82) 2,817.94

Net cash flow provided by (used in) financing activities 1,810.62 (1,511.09) (17,701.34)

Net increase (decrease) in cash and cash equivalents 874.32 (57.63) (337.31)

Cash and cash equivalents at beginning of year 4,216.83 5,091.15 5,033.52

Cash and cash equivalents at end of year 5,091.15 5,033.52 4,696.21

Note: The consolidated financial statements for the year 2017 were audited by Ms. Kamoltip

Lertwitworatep, Certified Public Accountant (Thailand) No. 4377, of EY Office Limited, and the

consolidated financial statements for 2018-2019 by Mr. Wichart Lokatekrawee, Certified Public

Accountant (Thailand) No. 4451, of EY Office Limited, being auditors approved by the Office of the

Securities and Exchange Commission.

Key financial ratios


Liquidity ratio

Current ratio (times) 1.07 0.53 0.85

Quick ratio (times) 0.94 0.47 0.75

Cash ratio (times) 0.70 0.71 0.61

Accounts receivables turnover ratio (times) 11.17 10.36 10.75

Average collection period (days) 32.23 34.75 33.50

Inventory turnover ratio (times) 29.27 28.23 29.04

Average selling period (days) 12.30 12.75 12.40

Accounts payable turnover ratio (times) 14.92 15.27 15.77

Average payment period (days) 24.12 23.58 22.83

Cash cycle (days) 20.41 23.93 23.07




Profitability ratio

Gross profit margin (%) 33.31 34.73 34.39

Operating profit margin (%) 15.13 16.24 14.53

Cash to operating profit (%) 100.43 117.84 121.00

Net profit margin (%) 13.49 11.73 16.96

Return on equity (%) 16.45 13.20 19.32

Efficiency ratio

Return on assets (%) 8.90 7.18 11.62

Return on fixed assets (%) 24.03 19.95 27.81

Asset turnover (times) 0.66 0.61 0.69

Financial policy ratio

Debt to equity ratio (times) 0.86 0.82 0.53

Interest coverage ratio (times) 14.90 19.19 21.31

Commitment coverage ratio (times) 0.37 0.70 0.52

Dividend payout ratio (%) 54.60 54.50 56.30

4.2 Analysis of operating results and financial position

Operating results in 2017-2019

The Company and its subsidiaries recorded revenues from hospital operations in 2017-2019

of Baht 69,123 million, Baht 74,286 million and Baht 79,630 million, a year-on-year increase of Baht

5,163 million and Baht 5,344 million or 7.5% and 7.2% in 2018 and 2019 respectively. The revenue

growth in 2018 was attributable to expansion of health insurance customer base, both Thai and non-

Thai patients, and increase in medical fees according to complexity of diseases. In 2019, the revenues

increased due to growth in number of patients, increase in medical fees according to complexity of

diseases, expansion of insurance customer base, and timely and efficient coordination for patient

referral in case of accident or patients in critical conditions through Bangkok Emergency Services.

Cost of hospital operations in 2017-2019 amounted to Baht 47,975 million, Baht 50,502

million and Baht 54,277 million, a year-on-year increase of Baht 2,527 million and Baht 3,775 million

or 5.3% and 7.5% in 2018 and 2019 respectively. Such continuous cost increase in 2018-2019 was

due mainly to higher expenses from doctors and medical staffs and rising cost of medicines and

medical supplies in tandem with a growing number of outpatients and inpatients. The percentage of

cost of hospital operations to revenues from hospital operations in 2017-2019 was 69.4%, 68.0% and

68.2% respectively.

Administrative expenses (including depreciation and amortization) in 2017-2019 were Baht

14,488 million, Baht 15,998 million, Baht 17,447 million, up year-on-year by Baht 1,510 million and

Baht 1,449 million or by 10.4% and 9.1% in 2018 and 2019 respectively. Such increase stemmed

primarily from an increase in non-clinical personnel expenses, repair and maintenance expenses for

service areas, and marketing expenses for Happy and Healthy Bike Lane Project to support public

health and sports activities and the winter festival, “Un Ai Rak Khlai Khwam Nao,” to promote

beautiful Thai culture, as well as an increase in depreciation and amortization of new network

hospitals and the opening of BDMS Wellness Clinic. In 2019, such growth in administrative expenses

resulted from depreciation and amortization of new network hospitals, opening of Movenpick BDMD

Wellness Resort Bangkok (“BWR”), and expenses on non-recurring items (before income tax

expense) during the year of Baht 776 million.

The Company and its subsidiaries recorded non-recurring items in 2017-2019. In 2017, the

Company posted gain on partial sale of investment in Bumrungrad Hospital Public Company Limited

(“BH”) of Baht 2,195 million (net of income tax). In 2018, it recognized income tax expense of Baht



727 million according to the Thai Accounting Standard No. 12 concerning deferred tax liabilities as a

result of the disposal of entire investment in Ramkhamhaeng Hospital Public Company Limited

(“RAM”) during 1Q/2019. In 2019, non-recurring items included 1) provision for employee benefits

of Baht 616 million to support termination of employment of employees working for 20 consecutive

years or more who were be entitled to a severance pay of not less than 400 days of the latest salary, 2)

expense on procurement of land for power stations of Metropolitan Electricity Authority of Baht 110

million to accommodate electricity usage of Bangkok International Hospital, and 3) impairment of

Save Drugs franchise of Baht 50 million.

In 2017-2019, the Company and its subsidiaries posted a net profit of Baht 10,216 million,

Baht 9,191 million and Baht 15,517 million, a year-on-year increase (decrease) of Baht (1,025)

million and Baht 6,326 million or (10.03)% and 68.83% in 2018 and 2019 respectively. Net profit

margin in 2017-2019 was 13.5%, 11.7% and 17.0% respectively.

Financial position for the years ended 31 December 2017-2019

As of 31 December 2017-2019, the Company and its subsidiaries reported total assets of Baht

122,627 million, Baht 133,499 million and Baht 133,662 million, growing year-on-year by Baht

10,872 million and Baht 163 million or 8.9% and 0.1% at year-end 2018 and 2019 respectively. They

were divided into (1) current assets of Baht 14,394 million, Baht 15,273 million and Baht 16,325

million, increasing by Baht 879 million and Baht 1,052 million or 6.1% and 6.9% at year-end 2018

and 2019 respectively and making up 11.7%, 11.4% and 12.2% of total assets at year-end 2017 - 2019

respectively; and (2) non-current assets of Baht 108,233 million, Baht 118,226 million and Baht

117,337 million, increasing (decreasing) by Baht 9,993 million and Baht (889) million or 9.2% and

(0.8)% at year-end 2018 and 2019 respectively and constituting 88.3%, 88.6% and 87.8% of total

assets at year-end 2017 - 2019 respectively.

The total assets growth at year-end 2018 was due mainly to an increase in investments in

associates of Baht 6,840 million resulting from additional investment in BH and a net increase in

property, plant and equipment of Baht 2,937 million from investment in hospital network expansion.

The decrease in total assets at year-end 2019 was caused chiefly by a decrease in investments

in associates of Baht 5,109 million resulting from the disposal of entire investment in RAM and a

decrease in cash and cash equivalents of Baht 337 million, net of an increase in property, plant and

equipment of Baht 3,893 million and an increase in trade and other receivables of Baht 1,305 million.

As at 31 December 2017-2019, total liabilities amounted to Baht 56,756 million, Baht 60,061

million and Baht 46,480 million, a year-on-year increase (decrease) of Baht 3,305 million and Baht

(13,581) million or 5.8% and (22.6)% at year-end 2018 and 2019 respectively. They were divided into

(1) current liabilities of Baht 13,417 million, Baht 28,574 million and Baht 19,263 million, which

increased (decreased) by Baht 15,157 million and Baht (9,311) million or 113.0% and (32.6)% at

year-end 2018 and 2019 respectively and accounted for 23.6%, 47.6% and 41.4% of total liabilities at

year-end 2017-2019 respectively; and (2) non-current liabilities of Baht 43,338 million, Baht 31,487

million and Baht 27,217 million, dropping by Baht 11,851 million and Baht 4,270 million or 27.3%

and 13.6% at year-end 2018 and 2019 respectively and making up 76.4%, 52.4% and 58.6% total

liabilities at year-end 2017-2019 respectively.

Such increase in total liabilities at year-end 2018 resulted from an increase in bank overdrafts

and short-term loans of Baht 5,805 million netted by a decrease in convertible debentures of Baht

3,718 million and long-term loans of Baht 1,472 million. Meanwhile, the decrease in total liabilities at

year-end 2019 sprang from the redemption due date of debentures, a decrease in long-term loans from

financial institutions of Baht 4,626 million and a decrease in bank overdrafts and short-term loans of

Baht 5,855 million.

Total shareholders’ equity as at 31 December 2017-2019 stood at Baht 65,871 million, Baht

73,438 million and Baht 87,182 million, growing year-on-year by Baht 7,567 million and Baht 13,743



million or 11.5% and 18.7% at year-end 2018 and 2019 respectively. The increase in shareholders’

equity as at year-end 2018 was mainly due to net profit growth of Baht 9,647 million, yet with

dividend payment of Baht 5,598 million. The increase at year-end 2019 resulted largely from the

exercise of conversion rights of debentures to ordinary shares of the Company and net profit during

the year. The Company recorded return on assets in 2017-2019 of 8.9%, 7.2% and 11.6% respectively

and return on equity of 16.5%, 13.2% and 19.2% respectively.

4.3 Relevant industry situation

Private hospital industry

The Survey Report on Private Hospitals and Healthcare Facilities B.E. 2560 (2017) prepared

by the National Statistical Office, Ministry of Digital Economy and Society, revealed that at year-end

2016, Thailand recorded a total of 347 private hospitals, up from 321 hospitals at year-end 2011.

Among these, 116 hospitals (33.4% of total private hospitals) were in the Central Region, 105

(30.3%) in Bangkok, 52 (15.0%) in the North, 40 (11.5%) in the North East and 34 (9.8%) in the

South respectively. At year-end 2016, there were a total of 40,718 beds, increasing from 36,070 beds

at year-end 2011. Private hospitals were categorized into three groups according to the business size

measured by the number of beds, which is an indicator of their IPD capacity, as follows:

Large hospitals (more than 250 beds): There were 21 large hospitals or 6.0% of total

private hospitals, with a combined capacity of 9,192 beds or 22.6% of total private

hospital beds. About 90% of large hospitals are clustered in Bangkok and the central part,

which are densely populated by mid- to upper-level consumers.

Medium hospitals (31-250 beds): There were a total of 243 medium hospitals or 70.0% of

total private hospitals with a combined capacity of 29,812 beds or 73.2% of total private

hospital beds.

Small hospitals (1-30 beds): There were a total of 83 small hospitals or 23.9% of total

private hospitals with a combined capacity of 1,714 beds or 4.2% of total private hospital

beds.

Since 2003, private hospital business in Thailand has been significantly supported by the

government policy to promote Thailand as a medical hub, which contributes to continuous growth in

medical tourism. Thai private hospitals have speedily adjusted themselves and are well accepted

internationally as one of the world’s medical tourism destinations, having the advantages of world-

ranking quality service and treatment efficiency, and lower medical fees compared to those countries

with the same treatment standards. Thailand also is home to natural tourist attractions that are suitable

for patients’ rehabilitation and has as many as 66 healthcare facilities with “JCI” (Joint Commission

International Accreditation) standard. Such number is higher than that of the competitors in the

region, e.g., 38 in India, 22 in Singapore and 13 in Malaysia. In 2017, Thai medical tourism was

ranked by “The International Healthcare Research Center (IHRC)” at No. 6, following India,

Colombia, Mexico, Canada and Dominican, and could capture the highest share of 38% in Asia in

terms of number of medical tourists. In addition, the public sector continues implementing supportive

measures to develop Thailand as international medical hub within 10 years (2017-2026), entailing (1)

extension of stay from 30 days to 90 days for a maximum of four visitors, one patient with three

attendants, from the CLMV and China, (2) extension of long stay visa for foreigners from 14

countries from 1 year to 10 years, (3) offering of dental and medical check-up packages for foreigners,

etc. These factors have contributed to accelerating market expansion of private hospitals to focus on

foreign patients with high purchasing power who mostly spend a higher amount on medical treatment

than local patients. Revenues of private hospitals have thus rising consistently with favorable

profitability.



In earlier circumstances, private hospital operators have concentrated on upgrading their

efficiency and services to attain international standards through continuous investment expansion to

increase market share and maintain revenue growth in the long term. Various strategies have been

adopted such as expansion of areas for services and facilities and investment in specialty and complex

disease centers. Meanwhile, large hospitals have speeded up their network expansion to accommodate

patients from neighboring countries, merger and acquisition (M&A) of other hospitals with high

profitability, shareholding in profitable hospitals, partnership with other hospitals or businesses to

acquire new target groups, expansion to health-related businesses such as medicines and medical

products, food supplements, cosmetics, beauty clinics, senior care centers, etc.

Private hospital industry outlook

According to the report on private hospital industry outlook by Economic and Industry

Research Department, Bank of Ayudhya PCL. (“Krungsri Research”), private hospital industry in

2019-2021 is projected to grow continuously. Large hospitals with broad networks will have

competitive advantages in costs, personnel, and access to both local and foreign customers. “Stand

alone” small and medium hospitals, on the other hand, will face more pressure as their main customer

bases are domestic patients with medium- to lower-income, with the exception of those which are

specialized hospitals or focus on a niche market. However, some potential small and medium

hospitals that have accessed financing through the stock market for investment in business

improvement or expansion or for use as working capital. Meanwhile, some will likely form

partnership in patient referral to enhance their competitiveness against larger hospitals. Krungsri

Research anticipates that revenues of SET-listed hospitals will grow by an average of 10%-13% per

year.

Structural changes that will help to drive growth in private hospital business are (1) the entry

into aging society which will boost demand for complex and high-tech medical treatment, (2) a

growing number of middle class population with higher spending power which will increase demand

for healthcare services of private hospitals, and (3) urbanization which will create greater

opportunities for hospital operators to expand into provincial areas to accommodate local patients,

including expatriates working in Thailand. In addition, there are also other factors contributing to

growth in private hospital business such as (1) a higher rate of illness and death caused by non-

communicable diseases (NCD) among Thai people, (2) development of a new customer base by

operators through expansion of investment in various forms to build a complete supply chain for

private hospitals, (3) expansion of patient base/market to new groups of foreign customers, and (4)

government policies such as promotion of Thailand as an international medical hub which is in line

with the current popularity of medical tourism among tourists from across the world, designation of

medical service industry as one of the country’s ten targeted industries, etc.

report on opinion of the independent ... - bangkok hospital

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