IMPROVING LIVES through healthcare and education
ANNUAL REPORT 2010
VISION Improving lives through healthcare and education MISSION To be a leading regional healthcare and education company, committed to the delivery of quality products and services with care and compassion, that: • Creates sustainable shareholder value; • Improves the quality of human life; • Adheres to the highest ethical standards; and • Attracts and develops quality human capital.
CONTENTS 01
Highlights
02
Regional footprint
04
Chairman’s message
08
Healthcare division
14
Education division
18
Board of directors
20
Corporate information
21
Financial contents
C O R P O R AT E P R O F I L E
Health Management International Ltd (“HMI”) is a regional healthcare and education services provider listed on the Mainboard of the Singapore Exchange. HMI has presence in Singapore, Malaysia, Indonesia, Cambodia and China. The HMI Group has 2 core businesses:
H E A LT H C A R E
E D U C AT I O N
The Group owns and operates 2 hospitals in Malaysia,
HMI owns and operates the HMI Institute of Health
Mahkota Medical Centre in Malacca and Regency
Sciences in Singapore that provides nursing education,
Specialist Hospital in Johor Bahru, and has 20
healthcare training and job placement services.
Representative Offices located in Indonesia, Malaysia, Cambodia and Singapore that provide information and assistance to international patients. The Group also provides hospital management, project consultancy and advisory services.
HIGHLIGHTS
HIGHLIGHTS
•
•
Mahkota Medical Centre increased its capacity
HMI Institute of Health Sciences achieved Singapore
by 23% to 288 beds, and established itself as the
National Resuscitation Council (“NRC”) accredited
largest private hospital in Southern Malaysia.
training centre status for Cardio-Pulmonary Resuscitation (“CPR”) / Automated External
•
•
Regency Specialist Hospital was officially launched
Defibrillation (“AED”) and Basic Cardiac Life
on 21 November 2009.
Support (“BCLS”).
On 1 March 2010, the Singapore Ministry of Health allowed Singapore residents to use their Medisave for hospitalisation and day surgeries at HMI’s hospitals in Malaysia.
•
4 new Representative Offices in Indonesia, a second Representative Office in Malaysia and the first Medisave-accredited HMI Referral Centre in Singapore were launched, bringing the total number of Representative Offices to 20.
2010 ANNUAL REPORT Health Management International Ltd 01
IMPROVING LIVES
ACROSS THE REGION 20 Representative Offices, 2 Hospitals, 1 Source for Quality Healthcare
HEADQUARTERS • Health Management International Ltd, Singapore
INSTITUTE • HMI Institute of Health Sciences, Singapore
REPRESENTATIVE OFFICES • Aceh
• Palembang
• Bali
• Pekan Baru
• Bandung
• Phnom Penh
• Batam
• Semarang
• Batu Pahat
• Singapore
• Jakarta Selatan
• Surabaya
• Jakarta Utara
• Tanjung Balai
• Jambi • Kuantan • Makassar
HOSPITALS • Mahkota Medical Centre, Malacca
COLLABORATIONS • Shandong Medical College, China
• Medan • Padang
• Regency Specialist Hospital, Johor
“Committed to providing our patients with the best in medical facilities, equipment and customer service.”
02 Health Management International Ltd 2010 ANNUAL REPORT
Karimun • Yogyakarta
CHINA Collaboration with Shandong Medical College
MALAYSIA • • •
Mahkota Medical Centre, Malacca Regency Specialist Hospital, Johor 2 Representative Offices in Batu Pahat and Kuantan
SINGAPORE • • •
HMI Headquarters HMI Institute of Health Sciences HMI Referral Centre
CAMBODIA
Representative Office in Phnom Penh
I N D O N ESIA 16 Representative Offices in Aceh, Bali, Bandung, Batam, Jakarta Selatan, Jakarta Utara, Jambi, Makassar, Medan, Padang, Palembang, Pekan Baru, Semarang, Surabaya, Tanjung Balai Karimun, Yogyakarta
2010 ANNUAL REPORT Health Management International Ltd 03
C H A I R M A N ’ S S TAT E M E N T
AN EVENTFUL YEAR
In the past year, the Group’s healthcare
In the past year, the Group’s healthcare and
global economic recovery. Aside from
education businesses have continued to
efficiency, cost management and the
grow in tandem with the global economic
invested in capacity expansion and
recovery. Aside from focusing on improving
and
education
businesses
have
continued to grow in tandem with the focusing on improving operational consolidation
of
businesses,
HMI
the extension of its marketing network to provide the Group with a strong
operational efficiency, cost management and
platform for further growth.
the consolidation of businesses, HMI invested
Medical tourism has been identified as
in capacity expansion and the extension of its
Malaysian economy, and is spurred by
marketing network to provide the Group with a
related incentives by the Malaysian
strong platform for further growth.
one of the key pillars for growth for the the introduction of medical tourismgovernment
and
the
liberalisation
of Medisave for overseas use by the Singapore Ministry of Health. Furthermore,
04 Health Management International Ltd 2010 ANNUAL REPORT
with
increasing
Looking ahead, HMI is bullish on the growth of healthcare and medical tourism in Malaysia, which has proven to be resilient and robust despite the recent financial crisis.
healthcare costs in Singapore and
FINANCIAL PERFORMANCE
While Regency continued to incur
political instability in Thailand, the
The Group registered a 17% growth in
start-up losses, the Group’s net loss
Group’s hospitals are well-positioned
turnover to S$58.6 million from S$49.9
narrowed by 75% to S$0.8 million
to benefit from the fast growing
million in the previous financial year,
due to Regency’s consistent month-
medical tourism industry in Malaysia.
an increase in revenue for the seventh
on-month revenue growth. With its
consecutive year. The increase was
revenue contributions increasing three-
attributable to the expansion in both the
fold from the previous financial year,
healthcare and education businesses.
the Group expects Regency to become
In
Singapore,
the
rapidly
ageing
population and rising demand for healthcare services has led to a vast
a significant revenue contributor to
increase in new healthcare infrastructure
The Group’s healthcare business realised
the Group’s healthcare business going
development and upgrading initiatives.
a 17% increase in revenue primarily as
forward.
Over the next 10 years, the healthcare
a result of higher patient load at both
sector may see an estimated 60%
Mahkota Medical Centre (“Mahkota”)
The
increase in hospital and nursing home
and
Hospital
performance with a net loss attributable
beds. This will result in a sustainable
(“Regency”).
The Group’s education
to equity shareholders of S$1.3 million
growth
manpower
business registered a 25% increase in
as compared to a net loss of S$3.5
demand and training, which the Group’s
revenue which was largely attributable
million in FY2009.
education arm is scaling up to meet.
to higher student enrolment in the
in
healthcare
Regency
Specialist
Group
improved
its
overall
government-initiated Skills Programme for Upgrading and Resilience (“SPUR”) programmes.
2010 ANNUAL REPORT Health Management International Ltd 05
C H A I R M A N ’ S S T A T E M E N T (Continued)
GROUP STRATEGY
It has obtained its Malaysian Society
needs of the region. In addition to
Healthcare
for
(“MSQH”)
actively marketing its services in Johor,
At HMI hospitals, patients’ well-being
accreditation and is in the process
Regency intends to further develop its
and comfort are our top priorities.
of applying for Joint Commission
Indonesian and Singaporean medical
Apart from focusing on increasing
International (“JCI”) accreditation. In
tourism markets; launch specialty centres
internal capacity and expanding its
addition to maintaining the quality
in Medical Oncology, Cardiology and
hospital operations in Malaysia, the
assurance, Mahkota aims to continue
Renal Care; and improve its standing
Group intends to embark on new
to meet patients’ needs and expand
through
initiatives to better provide holistic and
through improving its internal practices;
accreditation. Through these measures,
patient-centric quality healthcare for an
diversifying its patient sources; and
Regency strives to deliver a wide range
enhanced patient experience.
expanding its suite of medical services
of quality services to meet patients’
and facilities.
healthcare needs.
In the upcoming year, Mahkota will
Regency Specialist Hospital
Education
work towards maintaining its leading
Regency was officially launched on 21
To strengthen its position as an industry
position in the mid-priced segment
November 2009 and has since unveiled
training
of the healthcare market in Malaysia.
an Eye Centre to cater to the healthcare
provider for the Singapore healthcare
Quality
Healthcare
national
and
international
Mahkota Medical Centre
and
manpower
solutions
industry, the Group is focused on delivering quality nursing and vocational healthcare programs to a growing pool of local and international students. HMI Institute of Health Sciences (“HMI-IHS”) In
the
past
year,
HMI-IHS
has
successfully obtained the Singapore National Resuscitation Council training centre accreditation for CPR / AED and BCLS, as well as launched a Traineeship Program for Foreign Educated Nurses. Moving forward, HMI-IHS intends to leverage on these new developments
06 Health Management International Ltd 2010 ANNUAL REPORT
and intensify its local and international
ACKNOWLEDGEMENT
Last but not least, we would like to
marketing
activities;
On behalf of the Board of Directors, we
convey our sincerest appreciation to
secure more public and corporate
would like to extend our appreciation to
HMI’s management and employees
healthcare
our shareholders and partners for their
for their commitment and dedication.
continued support for the Group.
Moving forward, we believe that our
and
outreach
training
contracts;
and
enhance its training methodologies to meet the escalating market demand for skilled healthcare professionals.
dynamic team will remain the key driver We would also like to express our
of the company’s success.
gratitude to the Ministry of Health, government agencies and community organisations in Singapore and Malaysia
DR GAN SEE KHEM
for their support of HMI’s healthcare
Executive Chairman /
and education initiatives.
Managing Director Health Management International Ltd
2010 ANNUAL REPORT Health Management International Ltd 07
QUALITY HEALTHCARE Strong growth in revenue from hospital operations
08 Health Management International Ltd 2010 ANNUAL REPORT
HMI hospitals are well-equipped with comprehensive facilities and advanced medical equipment to deliver quality healthcare services to a growing pool of patients in Malaysia and the region. With the growth in healthcare services and medical tourism in Malaysia in recent years, HMI hospitals are poised to capture a larger share of the private healthcare market in Malaysia.
17.0% Annual Increase in Healthcare Revenue
2010 ANNUAL REPORT Health Management International Ltd 09
H E A LT H C A R E D I V I S I O N
Mahkota Medical Centre Mahkota Medical Centre (“Mahkota”) is a multi-disciplinary tertiary care hospital located in the heart of Malacca, Malaysia. Established in 1994, Mahkota is the largest private hospital in Southern Malaysia with 288 beds and more than 50 resident consultants specializing in a wide range of medical and surgical disciplines.
Mahkota continued on a strong growth
reach S$51.6 million from S$46.5 million
Mahkota was conferred 3 awards in
path
despite
in FY2009. This was driven primarily
FY2010: (i) Asia Pacific International
the threats posed by the H1N1 virus
by higher patient loads from local and
Honesty Enterprise-Keris Award 2009
and recent financial crisis. Mahkota’s
regional markets.
by
throughout
FY2010
revenue in FY2010 increased 11% to
10 Health Management International Ltd 2010 ANNUAL REPORT
the
Entrepreneur
Development
Association, (ii) Melaka Tourism Award
(Health Tourism Category) 2008/2009
patient demand, Mahkota also invested
Singapore to bring the total number
by the Melaka Tourism Association and
in a second Cardiac Catheterisation
of Representative Offices to 20. In
Melaka Tourism Promotion Board and
Laboratory
FY2010, 4 new Representative Offices
(iii) Business of the Year Award in the
Accelerator machine.
and
second
Linear
in Indonesia, a second Representative
Service Provider Category by Small
Office in Malaysia, and the first Medisave-
Medium Industries (SMI) and Small
At Mahkota, patients come first. With
accredited HMI Referral Centre in
Medium Enterprises (SME) Worldwide
its firm belief that good customer
Singapore were set up. Mahkota also
Network.
experience is integral to ensuring
intensified its marketing and outreach
patient satisfaction, Mahkota engaged
activities to increase patient load from
In the year under review, Mahkota
professional
both Malaysia and the region.
increased its capacity by 23% to
customer engagement and service
288 beds, from 235 beds in the
excellence training to all front-line staff.
trainers
to
provide
previous financial year, and secured
Moving forward, Mahkota will focus on improving efficiency and quality
its position as the largest private
Mahkota is committed to providing
to maintain its leading position in the
hospital in Southern Malaysia. Mahkota
quality health care and continues to
mid-priced segment of the healthcare
continued to focus on bottom-line
benchmark itself against national and
market, as well as invest in expanding
enhancement by streamlining internal
international quality standards and
capacity
and quality assurance practices to
frameworks.
its
patients’ increasing healthcare needs,
maximize operational efficiency and
Malaysian Society for Quality Healthcare
Mahkota will continue to streamline
effectiveness.
(“MSQH”) accreditation in 2008 and is
internal and quality assurance practices,
currently in the final stages of obtaining
upgrade its existing facilities, invest in
As part of Mahkota’s planned upgrading
Joint Commission International (“JCI”)
medical equipment, and enhance its
and refurbishment program to create a
accreditation. This is a validation of
customer service delivery. Mahkota
healing environment for patients, the
the Group’s commitment to deliver
will also concentrate on expanding its
maternity wards and patient waiting
excellent clinical outcomes and patient
regional patient referral network and
areas were upgraded and renovation
care.
intensifying its marketing activities to
Mahkota
obtained
retail
To effectively reach out to regional
pharmacy and cafeteria a refreshed
patients, Mahkota further expanded
interior design. To meet growing
its presence in Indonesia, Malaysia and
department,
capability.
To
meet
widen its local and regional patient
works were carried out to give the radiotherapy
and
base.
2010 ANNUAL REPORT Health Management International Ltd 11
H E A LT H C A R E D I V I S I O N
Regency Specialist Hospital Regency Specialist Hospital (“Regency”) is a licensed 218-bed tertiary care hospital located within the Iskandar Malaysian region in Johor, Malaysia. Officially launched in November 2009 by the Chief Minister of Johor, Regency is poised to provide high quality and affordable healthcare services to local and regional patients.
For FY2010, Regency’s start-up revenue
Since
its
has
In the year under review, Regency
contribution was a healthy S$3.9 million,
commenced work on its master plan to
continued to expand its range of
having been officially launched in
meet the anticipated needs of patients
healthcare services and specialties, as
November 2009. The hospital registered
as well as to position the hospital for
well as strengthen its healthcare delivery
consistent month-on-month revenue
growth. This development will result in
systems. In FY2010, Regency established
growth, with revenue contributions
greater flexibility for improved hospital
the following new services: (i) Eye
increasing three-fold compared to the
optimisation and expansion room for
Centre, which provides comprehensive
previous financial year.
new specialty centres.
screening, diagnostic and surgical eye
12 Health Management International Ltd 2010 ANNUAL REPORT
launch,
Regency
services; (ii) Executive Health Screening
surgeries at HMI hospitals in Malaysia,
with
corporate
Centre, which provides a comprehensive
and the Group set up its first Medisave-
firms
and
range of health screening packages; (iii)
accredited HMI Referral Centre in
of
Cardiac
Singapore.
associations and clans in Johor. It also
Catheterisation
which
features
Laboratory,
and
signed
Understanding
insurance
Memorandums (“MOUs”)
with
conducted regular health talks and
state-of-the-art wide
Due to its close proximity to Singapore,
participated in health exhibitions and
range of diagnostic and curative heart
Regency has attracted a group of
community health screening events in
treatment; and (iv) Endoscopy Suite,
Singapore-based medical specialists
Johor and Singapore. These marketing
which
who practice on both sides of the
activities have helped to generate
causeway. This has provided both
publicity and increase brand awareness
Singapore and Malaysia residents the
of the hospital.
technology
and
provides
provides
a
colonoscopy
and
gastroscopy outpatient services. The number of medical specialists
option of seeking medical treatment
practicing at Regency increased to 28
from a Singapore-based specialist in
Moving forward, Regency will focus
specialists from 17 specialists in the
Regency. Since the liberalization of
on recruitment of medical specialists
previous year. As a result, patient load
Medisave, Regency has received over
and the launch of specialty centres in
picked up towards the end of FY2010
150 Singapore patients who visited
Medical Oncology, Cardiology and
with a significant increase in the number
Regency for a wide range of medical
Renal Care. To grow its local patient
of patients from both Johor and the
treatments,
obstetrics
base, Regency will focus on increasing
region. In response to growing demand
and
gastroenterology,
collaborations with the local community
by specialists for clinic space, Regency
orthopaedics, health screening and
and corporate organisations in Johor.
also recently completed the renovation
more.
Regency will also continue to actively
including
gynaecology,
for a 20,000 square feet Specialist Outpatient Clinic on the ground floor.
market its services to increase patient To increase awareness and patient
load from Indonesia, concentrating in
numbers, Regency concentrated its
Batam and the surrounding Indonesian
Starting 1 March 2010, the Singapore
marketing and outreach activities within
islands, as well as leverage on the HMI
Ministry of Health allowed Singapore
its local community in Johor, and more
Referral Centre to grow its patient
residents to use their Medisave for
recently in Singapore and Batam. In the
volume from Singapore.
approved
year under review, Regency collaborated
hospitalisation
and
day
2010 ANNUAL REPORT Health Management International Ltd 13
INNOVATIVE
EDUCATION Continued revenue growth from increased student enrolment
25% Annual Increase in Education Revenue
14 Health Management International Ltd 2010 ANNUAL REPORT
With the expansion in healthcare infrastructure and a rapidly ageing population, the demand for skilled and professionally trained healthcare personnel will continue to rise. By providing industry-relevant nursing and healthcare training courses, HMI Institute of Health Sciences (“HMI-IHS”) is poised to benefit from the rapidly increasing demand for skilled healthcare personnel and continuing adult education in Singapore and the region.
2010 ANNUAL REPORT Health Management International Ltd 15
E D U C AT I O N D I V I S I O N
HMI Institute of Health Sciences HMI Institute of Health Sciences (“HMI-IHS”) is the largest private healthcare education provider in Singapore offering nursing education and healthcare vocational training services. Established in 2002, HMI-IHS is a Continuing Education and Training (“CET”) Centre appointed by the Singapore Workforce Development Agency (“WDA”). To date, HMI-IHS has trained over 2,500 graduates for the Singapore healthcare sector.
In the financial year under review, HMI-
enrolment for life support short courses
Changing demographics in Singapore
IHS registered a 25% increase in revenue
following certification of the Institute
have
to S$3.0 million from S$2.4 million in the
as a National Resuscitation Council
healthcare services and correspondingly,
previous financial year. This is primarily
accredited training centre for BCLS and
skilled healthcare vocational personnel.
attributable to the continued strong
AED/CPR courses in 2009.
At the same time, a challenging
performance of its WDA-awarded CET Centre contract and increased student
16 Health Management International Ltd 2010 ANNUAL REPORT
increased
the
demand
for
economic climate generated stronger
demand
of
Moving forward, HMI-IHS will focus
vocational courses due to the inherent
community
HMI-IHS
on increasing its international nursing
stability of the healthcare sector. These
intensified its community outreach to
student numbers and local healthcare
factors, coupled with more effective
the intermediate and long-term sector.
vocational program student numbers
management, resulted in an improved
In particular, a joint pilot collaboration
to meet the increasing local market
financial performance for HMI-IHS.
was held between HMI-IHS and Ren
demand
Ci Hospital & Medicare Centre to train
professionals. In line with the public
volunteers in healthcare skills.
sector’s best-sourcing and outsourcing
For
for
FY2010,
HMI-IHS’
HMI-IHS
healthcare
intensified
Recognizing
the
importance
engagement,
student recruitment for its government SPUR-funded
healthcare
skilled
healthcare
initiatives, HMI-IHS will step up its In FY2010, HMI-IHS also sought to
development of new courses and
training courses and diversified into
establish
more
marketing drive to benefit from the
new healthcare training courses. HMI-
strategic
partnerships
IHS commenced the new CPR / AED
healthcare and community organizations
contracts expected to be tendered out
certification course and was awarded
to expand its network of partners
in the months ahead.
the Singapore Armed Forces (“SAF”)
for placement, training and student
contract to provide CPR / AED training
referrals. For example, on 1 March 2010,
for SAF recruits. For the year under
HMI-IHS signed a MOU to collaborate
review, there was an overall increase in
with
student enrolment for its international
Assistance
nursing
promote healthcare as a career to the
programmes
vocational
for
and
healthcare vocational courses.
local
the
collaborative
Chinese Council
with
and
various
healthcare
training
and
services
Development (“CDAC”)
to
Mandarin-speaking community.
2010 ANNUAL REPORT Health Management International Ltd 17
BOARD OF DIRECTORS
DR GAN SEE KHEM | Executive Chairman / Managing Director Dr Gan See Khem was appointed Chairman of the Board in January 1999 and the Managing Director of Health Management International Ltd in July 1999. She is also Chairman of HMI Institute of Health Sciences Pte Ltd, Regency Specialist Hospital Sdn Bhd and the Chairman and Managing Director of Mahkota Medical Centre Sdn Bhd. Dr Gan is also director of several private companies in Singapore, Malaysia and Hong Kong that are involved in various industries including property investment and development. Dr Gan is an active figure in public services. Dr Gan is on the Board of Trustees for the Singapore Management University and serves on the Malaysia - Singapore Business Council. Dr Gan was a Nominated Member of Parliament of the Republic of Singapore. She holds the distinction of being one of the first two women to step into the male domain of the Singapore Chinese Chamber of Commerce and Industry (SCCCI) in 1995. She was also previously on the Board of Trustees of the Institute of South East Asian Studies (ISEAS) and was a member of the International Advisory Board of the Curtin Business School. Dr Gan specialized in strategic planning and management during her 15-year tenure with the National University of Singapore. She holds a Ph.D. in Business Administration from the University of Sheffield, United Kingdom.
DR CHIN KOY NAM | Executive Director Dr Chin Koy Nam has been a Director since January 1999. Dr Chin is also a Director of HMI Institute of Health Sciences Pte Ltd, Mahkota Medical Centre Sdn Bhd and Regency Specialist Hospital Sdn Bhd. An established medical practitioner currently in private practice, Dr Chin holds special interest in haematology, preventive medicine and diabetes management. He is the medical advisor to two clan associations and one community guild. Dr Chin holds a Ph.D and M.B.Ch.B degree from the University of Bristol and University of Sheffield, United Kingdom respectively.
DR CHEAH WAY MUN | Director (Non-Executive, Independent) Dr Cheah Way Mun was appointed a Director of Health Management International Ltd in September 1999. He is a member of the Audit Committee, Remuneration Committee and Nominating Committee. He is also a director of HMI Institute of Health Sciences Pte Ltd, Mahkota Medical Centre Sdn Bhd and Regency Specialist Hospital Sdn Bhd.
18 Health Management International Ltd 2010 ANNUAL REPORT
Dr Cheah is an accomplished ophthalmic surgeon currently in private practice. He was previously the head of the eye department of Tan Tock Seng Hospital and a visiting consultant to National University Hospital and the Singapore National Eye Centre. Dr Cheah holds an MBBS from the then University of Singapore and is a fellow of the Royal College of Surgeons (Glasgow and Edinburgh) and the American Academy of Ophthalmology.
PROFESSOR TAN CHIN TIONG | Director (Non-Executive, Independent) Professor Tan Chin Tiong was appointed a Director of Health Management International Ltd in September 1999. He is Chairman of the Remuneration Committee and Nominating Committee. He is also a member of the Audit Committee. Professor Tan is the founding President of the newly launched Singapore Institute of Applied Technology (SIAT), and was previously the Deputy President and Provost at the Singapore Management University. Professor Tan specializes in marketing strategy and strategic management. He is the co-author of several books on marketing and business and consults for corporations around the world. Professor Tan holds a Ph.D. from the Pennsylvania State University. He is also the independent director of several listed companies.
MR GAN LAI CHIANG, ANDY | Director (Non-Executive, Independent) Mr Gan Lai Chiang was appointed a Director of Health Management International Ltd in April 2002. He is also Chairman of the Audit Committee and a member of the Nominating Committee and Remuneration Committee. Mr Gan, a Certified Public Accountant, is the Managing Director of Swiss Securitas Asia Pte Ltd and sits on the board of various other companies. Mr Gan was a Member of Parliament for Marine Parade GRC and was a member of the government parliament committees for Health and Transport. Mr Gan holds a Bachelor of Commerce degree from the University of Western Australia and a Graduate Diploma in Accounting from Curtin University, Australia. He is a Fellow member of the Institute of Certified Public Accountant of Singapore and CPA Australia.
2010 ANNUAL REPORT Health Management International Ltd 19
C O R P O R AT E I N F O R M AT I O N
BOARD OF DIRECTORS Dr Gan See Khem
JOINT COMPANY SECRETARIES
Executive Chairman and
Ms Noraini Latiff
Managing Director
Mr Lim Lian Peng
Dr Chin Koy Nam
REGISTERED OFFICE
Executive Director
167 Jalan Bukit Merah, Tower 5, #05-10
Dr Cheah Way Mun
Singapore 150167
Independent Non-Executive Director
Tel: 65 6253 3818 Fax: 65 6253 8259
Professor Tan Chin Tiong
Website: www.hmi.com.sg
Independent Non-Executive Director
SHARE REGISTRAR Mr Gan Lai Chiang, Andy
Boardroom Corporate & Advisory
Independent Non-Executive Director
Services Pte Ltd 50 Raffles Place, #21-01
EXECUTIVE COMMITTEE
Singapore Land Tower
Dr Gan See Khem - Chairman
Singapore 048623
Dr Chin Koy Nam
Tel: 65 6536 5355
AUDIT COMMITTEE
INDEPENDENT AUDITORS
Mr Gan Lai Chiang, Andy - Chairman
PricewaterhouseCoopers LLP
Professor Tan Chin Tiong
8 Cross Street #17-00
Dr Cheah Way Mun
PWC Building Singapore 048424
NOMINATING COMMITTEE
Tel: 65 6236 3388
Professor Tan Chin Tiong - Chairman Mr Gan Lai Chiang, Andy
Audit Partner-in-charge:
Dr Cheah Way Mun
Mr Daniel Khoo Year of appointment: 2008
REMUNERATION COMMITTEE Professor Tan Chin Tiong - Chairman
PRINCIPAL BANKER
Mr Gan Lai Chiang, Andy
OCBC Bank
Dr Cheah Way Mun
65 Chulia Street OCBC Centre Singapore 049513
20 Health Management International Ltd 2010 ANNUAL REPORT
FINANCIAL CONTENTS 22 Corporate Governance Report 30 Directors’ Report 33 Statement By Directors 34 Independent Auditor’s Report 35 Consolidated Statement of Comprehensive Income 36 Balance Sheets 37 Consolidated Statement Of Changes In Equity 38 Consolidated Statement of Cash Flows 39 Notes To The Financial Statements 82 Supplementary Information 83 Statistics of Shareholdings 85 Notice of Annual General Meeting Proxy Form
C O R P O R AT E G O V E R N A N C E R E P O R T
In this report, we describe the Company’s Corporate Governance processes and activities with specific reference to the requirements of the Singapore Exchange Securities Trading Limited (“SGX-ST”)’s Listing Manual and the Code of Corporate Governance 2005 (the “Code”) issued by the Singapore Council on Corporate Disclosure and Governance.
BOARD OF DIRECTORS Role of the Board In managing the Group’s business, the principal functions of the Board are: Undertaking the strategic planning and setting of long-term objectives and business directions for the Group; Establishing the control systems and policies; and Monitoring the financial performance of the Group. Matters which are specifically reserved for the Board’s decision are those involving a conflict of interest for a substantial shareholder or a Director, material acquisitions and disposal of assets, corporate or financial restructuring and share issuances, dividends and other returns to shareholders and matters which require Board approval as specified under the Company’s interested person transaction policy. The Board conducts regular scheduled meetings. Ad-hoc meetings are convened when circumstances require. The attendance of the Directors at meetings of the Board and Board committees, as well as the frequency of such meetings, is set out below.
Name
HMI Board
Audit Committee
Nominating Committee
Remuneration Committee
No. of Meetings
No. of Meetings
No. of Meetings
No. of Meetings
Held
Held
Attended
Held
Attended
Held
Attended
Attended
Dr Gan See Khem
3
3
NA
NA
NA
NA
NA
NA
Dr Chin Koy Nam
3
3
NA
NA
NA
NA
NA
NA
Dr Cheah Way Mun
3
3
3
2
2
2
2
2
Professor Tan Chin Tiong
3
3
3
3
2
2
2
2
Mr Andy Gan Lai Chiang
3
3
3
3
2
2
2
2
Lim Poon Thoo*
3
2
NA
NA
NA
NA
NA
NA
* Mr Lim Poon Thoo resigned as a Director of the Company with effect from 31 May 2010. Note : The Company has adopted a policy that Directors are also welcome to request further explanations, briefings or informal discussions on any aspects of the Company’s operations or business issues from the Management.
Board Processes To facilitate effective management, the Board has established a number of Board Committees including an Executive Committee, a Nominating Committee, a Remuneration Committee and an Audit Committee, each of which has its own written terms of reference and the terms of reference are reviewed on a regular basis. The effectiveness of each committee is also constantly monitored. No formal meeting was held for the Executive Committee as the Members held regular discussions / consultations with Management. The Company has held three meetings of the Board, three meeting of the Audit Committee, two meeting of the Nominating Committee and two meetings of the Remuneration Committee. The approval for Directors’ fees and remuneration were deliberated and approved at the Remuneration Committee meeting.
22 Health Management International Ltd 2010 ANNUAL REPORT
C O R P O R AT E G O V E R N A N C E R E P O R T
TRAINING OF DIRECTORS Directors receive appropriate induction training and coaching to develop individual skills as required. As part of the Company’s continuing education program for all Directors, the Board maintains a policy for any Director to attend relevant seminars and courses at the Company’s expense. The Group provides extensive background information about its history, mission and values to its Directors.
BOARD COMPOSITION AND BALANCE As at the date of this report, the Board of Directors comprises of two executive and three non-executive Directors, who provide core competencies including healthcare, education, accounting, finance, law, business, and management. The Directors also bring to the Board their industry knowledge and vast experiences in strategic planning and corporate development. Executive Directors Dr Gan See Khem Dr Chin Koy Nam
Non-Executive Directors Professor Tan Chin Tiong (Independent) Mr Andy Gan Lai Chiang (Independent) Dr Cheah Way Mun (Independent)
Details of the qualifications and major appointments of the Directors are set out in pages 18 and 19 of this Annual Report. The independence of each Director is reviewed by the Nominating Committee. The Nominating Committee adopts the Code’s definition of what constitutes an independent Director in its review. The Nominating Committee considers that, apart from Dr Gan See Khem and Dr Chin Koy Nam, the three remaining Directors are all independent. The Nominating Committee considers its non-executive directors to be of calibre and adequate in number and their views to be of sufficient weight that no individual or small group can dominate the Board’s decision making processes. The nonexecutive Directors have no financial or contractual interests in the Group other than by way of their fees and shareholdings as set out in the Directors’ Report. The Nominating Committee is also of the view that the current Board comprise persons who as a group, provides core competencies necessary to meet the Group’s objectives.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER Dr Gan See Khem is the Executive Chairman and Managing Director of the Group. Dr Gan has also effectively assumed the role of Group CEO. As such, Dr Gan See Khem has executive responsibilities for the Company’s business as well as responsibility for the working of the Board and ensures that procedures are introduced to comply with the Code. Dr Gan has played an instrumental role in developing the business of the Group and has also provided the Group with sound and strong leadership. Although the roles and responsibilities for Chairman and CEO are vested in Dr Gan See Khem, all major decisions are made in consultation with the Board, Nominating Committee and Remuneration Committee. Independent Directors represent more than one-third of the Board while the Audit Committee, Nominating Committee and Remuneration Committee comprise only of Independent Directors. Therefore, the Board believes that there are adequate safeguards in place against having a concentration of power and authority in a single individual.
2010 ANNUAL REPORT Health Management International Ltd 23
C O R P O R AT E G O V E R N A N C E R E P O R T
KEY MANAGEMENT STAFF The key management staff of the Company is as follows: Dr Gan See Khem – Executive Chairman and Managing Director As the above key management staff is also director of the Company, information on her background is set out on page 18 of the Annual Report.
BOARD COMMITTEES Executive Committee The Executive Committee comprises two members, who are responsible for supervising and managing the Group’s core businesses within the limits of authority delegated by the Board. Director / Executive Dr Gan See Khem Dr Chin Koy Nam
Chairman Member
Audit Committee The Audit Committee of the Company comprises three members, all of whom are independent non-executive directors: Mr Andy Gan Lai Chiang Professor Tan Chin Tiong Dr Cheah Way Mun
Chairman (Independent Non-Executive Director) Member (Independent Non-Executive Director) Member (Independent Non Executive Director)
The Board is of the view that at least two members of the Audit Committee have the appropriate accounting or related financial management expertise or experience. The Audit Committee monitors proposed changes in accounting policies, reviews the internal audit functions and discusses the accounting implications of major transactions. In addition, the Audit Committee advises the Board regarding the adequacy of the Group’s internal controls and contents and presentation of its preliminary, interim and annual reports. The Audit Committee discharged the following delegated functions: Reviews with the internal audit department and external auditors the adequacy of the internal control systems; Reviews the consolidated financial statements of the Group with external auditors before submission to the Board for adoption; Reviews interested person transactions (as defined in Chapter 9 of the Listing Manual of the SGX-ST) to ensure that they are on normal commercial terms and not prejudicial to the interest of the Company or its shareholders; Reviews the scope of the internal and external audit functions and the scope of work of the statutory auditors and the results arising there from; Reviews the independence and objectivity of the external auditors, consideration of their appointment, and their audit fee; Reviews the audit plans and findings of the internal audit department and external auditors; Reviews the interim and full year announcements and reports that are submitted to the Board for approval; Reviews suspected fraud or irregularity, or suspected infringement of any Singapore law, rule and regulation, of which the Audit Committee is aware, which has or is likely to have a material impact on the Company’s or Group’s operating results and/or financial position, and the findings of any internal investigations, and Management’s response thereto; and Considers other matters as requested by the Board.
24 Health Management International Ltd 2010 ANNUAL REPORT
C O R P O R AT E G O V E R N A N C E R E P O R T
The Audit Committee meets periodically with the Group’s internal audit department and external auditors and its Management to review accounting, auditing and financial reports matters so as to ensure that an effective control environment is maintained in the Group. The Audit Committee meets with the internal audit department and external auditors, without the presence of Management, at least once a year. In accordance with the principles and best practices as set out in the Code issued by the Singapore Council on Corporate Disclosure and Governance, the Audit Committee has: Full access to and cooperation from Management as well as full discretion to invite any Director or executive officer to attend its meetings; Been given reasonable resources to enable it to complete its function properly; and Reviewed findings and evaluation of the system of internal controls with the internal audit department and external auditors. Nominating Committee The Nominating Committee comprises three members, all of whom are independent non-executive directors: Professor Tan Chin Tiong Mr Andy Gan Lai Chiang Dr Cheah Way Mun
Chairman (Independent Non-Executive Director) Member (Independent Non-Executive Director) Member (Independent Non Executive Director)
The Nominating Committee is guided by its terms of reference, which sets out its responsibilities: To make recommendations to the Board on all candidates nominated for appointments and re-appointments; To decide on the procedure for the evaluation of the Board’s performance and to propose objective performance criteria; To assess the effectiveness of the Board as a whole and the contribution by each Director to the effectiveness of the Board; To re-nominate Director(s) based on the review of Director’s contribution and performance; and To ensure that the independent Directors meet the criteria set out in the SGX-ST guidelines. Remuneration Committee The Remuneration Committee comprises three members, all of whom are independent non-executive directors: Professor Tan Chin Tiong Mr Andy Gan Lai Chiang Dr Cheah Way Mun
Chairman (Independent Non-Executive Director) Member (Independent Non-Executive Director) Member (Independent Non Executive Director)
The Remuneration Committee deals with the remuneration of the Directors, the Executive Chairman/Managing Director, CEO and senior management. Its main terms of reference are: To make recommendations to the Board of a framework of remuneration for the Board and key executives; To decide on the appropriate level of remuneration to attract, retain and motivate the Directors and executives; To evaluate the Executive Directors’ performance; To consider whether Directors should be eligible under long-term incentive schemes; and To do all other things as may form part of the responsibilities of the Remuneration Committee under the provision of the Code.
2010 ANNUAL REPORT Health Management International Ltd 25
C O R P O R AT E G O V E R N A N C E R E P O R T
CRITERIA FOR BOARD MEMBERSHIP The role of the Nominating Committee is to oversee the appointment and induction process for Directors. It is also responsible for reviewing the composition of the Board and making recommendations to the Board on the appropriate skills mix, personal qualities and experience required for the effective performance of the Board. Candidates are selected for their character, judgement, business experience and acumen. Where a director has multiple board representations, the Nominating Committee will evaluate whether or not a director is able to and has been adequately carrying out his or her duties as director of the Company. Final approval of a candidate is determined by the full Board. In appointing directors, the Board considers the range of skills and experience required in the light of: The geographical spread and diversity of the Group’s businesses; The strategic direction and progress of the Group; The current composition of the Board; and The need for independence. The Nominating Committee is of the view that the current Board size of five directors is appropriate, taking into account the nature and scope of the Group’s businesses and operations. Article 95 of the Company’s Articles of Association requires one-third of its Directors, other than the Managing Director, to retire and subject themselves to re-election by shareholders at every AGM. Directors above the age of 70 are also required under the Companies Act to retire and subject themselves to re-appointment by shareholders at every AGM. The Directors standing for re-election at the forthcoming AGM pursuant to articles 95 are Mr Andy Gan Lai Chiang and Dr Cheah Way Mun. The Nominating Committee is also satisfied that the current directors, having external directorships have devoted sufficient time and attention to the affairs of the Group.
BOARD PERFORMANCE The Nominating Committee is working on the setting up of a formal process and a set of assessment parameters including objective performance criteria for the evaluation of the performance and effectiveness of the Board as well as on the contribution by each Director. In evaluating the Directors’ contribution and performance for the purpose of re-nomination, the Nominating Committee will take into consideration factors such as attendance, preparedness, participation and candour. Access to Information All Directors receive a regular supply of information from Management about the Group. Directors receive Board and Board Committee papers in advance of the respective meetings. The papers generally include sufficient information from Management on financial, business and corporate issues to enable the Directors to be properly briefed on issues to be considered at the Board and Board Committee meetings. Management and staff who have prepared the papers, or who can provide additional insight into the matters to be discussed, are invited to attend at the relevant time during the meeting. All Directors have unrestricted access to the Company’s records and information and independent access to the Company’s senior management and Company Secretary. The Company Secretary attends Board meetings and is responsible to ensure that Board procedures are followed. It is the Company Secretary’s responsibility to ensure that the Company complies with the requirements of its Memorandum and Articles of Association, the Companies Act and the Listing Manual of the SGX-ST.
26 Health Management International Ltd 2010 ANNUAL REPORT
C O R P O R AT E G O V E R N A N C E R E P O R T
Remuneration Matters The Group’s remuneration policy is to provide compensation packages at market rates which reward successful performance and attract, retain and motivate managers and directors. The Remuneration Committee determines the remuneration packages for the Executive Chairman/Managing Director, Executive Directors and the CEO based on the performance of the Group and the key executives. No individual Directors is allowed to fix his own remuneration. Directors’ fees are set in accordance with a remuneration framework comprising responsibility fees after taking into consideration the performance of the Group and the individual Directors. The payment of the Directors’ fees is subject to approval of the shareholders at each AGM. Our Executive Directors’ remuneration consists of their Directors’ salary and allowance. For competitive reason, the company is not disclosing each individual Directors’ remuneration. Independent Directors are paid Directors’ fees determined by the full Board based on the efforts, time spent and responsibilities of the Directors. The remuneration of the Directors of the Company for the year under review is as follows: Remuneration bands: Above $500,000 1) Dr Gan See Khem – Executive Chairman and Managing Director $250,000 to $499,999 1) Mr Lim Poon Thoo* Below $250,000 1) Dr Chin Koy Nam – Executive Director 2) Mr Andy Gan Lai Chiang – Non Executive Director 3) Professor Tan Chin Tiong – Non Executive Director 4) Dr Cheah Way Mun – Non Executive Director * Mr Lim Poon Thoo resigned as a Director of the Company with effect from 31 May 2010.
The Company has no key executive, who is not a director, and receiving remuneration in excess of S$250,000 during the financial year under review. Save for the Directors disclosed in the table above, there are no employees who are immediate family members of the Directors whose remuneration exceeded S$150,000 during the year under review.
ACCOUNTABILITY AND AUDIT In presenting the annual financial statements and half-year announcements to shareholders, it is the aim of the Board to provide the shareholders with a balanced and comprehensible assessment of the Group’s performance and prospects.
INTERNAL CONTROLS The Board is responsible for ensuring that Management maintains a sound system of internal controls to safeguard shareholders’ investments and company assets. The Board believes that in the absence of any evidence to the contrary and from due enquiry, the system of internal controls maintained by the Group’s Management and set in place throughout the financial year up to and as at the date of this report, is adequate to meet the needs of the Group in the current business environment. The system of internal controls is designed to manage rather than eliminate the risk of failure to achieve business objectives. As such, the controls can only provide reasonable and not absolute assurance against misstatement or loss.
2010 ANNUAL REPORT Health Management International Ltd 27
C O R P O R AT E G O V E R N A N C E R E P O R T
The Company does not have a Risk Management Committee. However, the Audit Committee, the internal audit department and senior managers assume the responsibility and set the Group risk management policy and strategy. The Audit Committee seeks to identify areas of significant business risk, including revenue loss, property loss and breach of information security, as well as appropriate measures to control and mitigate these risks. In determining the appropriate measures, the cost of control/risk management, and the impact of risks occurring will be balanced with the benefits of reducing risk.
INTERNAL AUDIT The Group has an in-house internal audit department which is independent of the activities it audits. The internal audit department is expected to meet the standards set by nationally or internationally recognized professional bodies. The internal audit department supports the Directors in assessing key internal controls through a structured review program. The Group has also outsourced certain of its internal audit functions to a third party to further strengthen and develop its internal audit functions. In addition, the Group has plans to implement peer review and audit among companies within the group. The internal audit department reports primarily to the Chairman of the Audit Committee on audit matters and reports to the Executive Chairman/ Managing Director on administrative matters. The Audit Committee ensures that the internal audit department has adequate resources and has appropriate standing within the Group. The Audit Committee will, on an annual basis, assess the effectiveness of the internal audit department by examining: The scope of the internal audit department’s work; The quality of their reports; Their relationship with the external auditors; and Their independence of the areas reviewed.
COMMUNICATION WITH SHAREHOLDERS In line with continuous disclosure obligations of the Company, pursuant to the SGX-ST’s Listing Rules and the Singapore Companies Act, the Board’s policy is that shareholders are informed of all major developments that impact the Group. Information is communicated to shareholders on a timely basis. Communication is made through: Annual reports that are prepared and issued to all shareholders. The Board makes every effort to ensure that the annual report includes all relevant information about the Group, including future developments and other disclosures required by the Companies Act and Singapore Statements of Accounting Standard; Half-year and full year financial statements containing a summary of financial information and affairs of the Group for the period under review; Notices of the explanatory memoranda for AGMs and extraordinary general meetings (“EGM”); Press releases on major developments of the Group; Disclosures to the SGX-ST; and The Group’s website at http://www.hmi.com.sg at which shareholders can access information on the Group. The website provides, inter alia, corporate announcements, press releases, annual reports, and profiles of the Group. In addition, shareholders are encouraged to attend the AGM/EGM to ensure a high level of accountability and to stay informed of the Group’s strategy and goals. The AGM/EGM is the principal forum for dialogue with shareholders. The notice of the AGM/EGM is despatched to shareholders, together with explanatory notes or a circular on items of special business, in accordance with the required notice period. The notice is also advertised in newspapers and made available on the SGXNET.
28 Health Management International Ltd 2010 ANNUAL REPORT
C O R P O R AT E G O V E R N A N C E R E P O R T
The Board welcomes questions from shareholders who have an opportunity to raise issues either formally or informally before or at the AGMs/EGMs. The articles of association of the Company permit a member of the Company to appoint one or two proxies to attend and vote instead of the member. The Chairman of the Audit, Remuneration, and Nominating Committees are normally available at the meeting to answer those questions relating to the work of these committees. The external auditors would also be present to assist the Directors in addressing any relevant queries by shareholders. As there is still a major concern on the security of information transmitted over the internet, the Board has decided that it is not appropriate, for the time being, to amend its articles of association to allow for in absentia voting methods.
SECURITIES TRANSACTIONS The Company has adopted internal codes pursuant to the SGX-ST Listing Manual applicable to all its officers in relation to dealings in the Company’s securities. Its officers are not allowed to deal in the Company’s shares during the period commencing one month before the announcement of the Company’s half-year and full year results and ending on the date of the announcement of the results.
RELATED PARTY TRANSACTIONS POLICY The Company has adopted an internal policy in respect of any related persons and has set out in the procedures for review and approval of the Company’s related party transactions. For the financial year ended 30 June 2010, there was no interested person transactions pursuant to Rule 1207(16) and whereby the transaction was S$100,000 or more.
MATERIAL CONTRACTS There were no other material contracts of the Company or its subsidiaries involving a related person.
CODE OF CORPORATE GOVERNANCE 2005 The Company has complied materially with the Code issued by the Singapore Council on Corporate Disclosure and Governance.
2010 ANNUAL REPORT Health Management International Ltd 29
DIRECTORS’ REPORT For The Financial Year Ended 30 June 2010 The directors present their report to the shareholders together with the audited financial statements of the Group for the financial year ended 30 June 2010 and the balance sheet of the Company at 30 June 2010.
Directors The directors of the Company in office at the date of this report are as follows: Dr Gan See Khem Dr Chin Koy Nam Dr Cheah Way Mun Professor Tan Chin Tiong Mr Andy Gan Lai Chiang
Arrangements to enable directors to acquire shares and debentures Neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose object was to enable the directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.
Directors’ interests in shares or debentures According to the register of directors’ shareholdings, none of the directors holding office at the end of the financial year had any interest in the shares or debentures of the Company or its related corporations, except as follows: Holdings registered in name of director or nominee At 30.6.2010
At 1.7.2009
Holdings in which a director is deemed to have an interest At 30.6.2010
At 1.7.2009
500,500
189,369,330
189,009,330
Company (Number of ordinary shares) Dr Gan See Khem Dr Chin Koy Nam Dr Cheah Way Mun Professor Tan Chin Tiong
500,500 1,020,000
720,000
188,849,830
188,789,830
18,301,766
17,847,766
–
–
2,627,800
2,627,800
–
–
The directors’ interests in the ordinary shares of the Company as at 21 July 2010 were the same as those as at 30 June 2010.
Directors’ contractual benefits Since the end of the previous financial year, no director has received or become entitled to receive a benefit by reason of a contract made by the Company or a related corporation with the director or with a firm of which he is a member or with a company in which he has a substantial financial interest, except as disclosed in the accompanying financial statements.
30 Health Management International Ltd 2010 ANNUAL REPORT
DIRECTORS’ REPORT For The Financial Year Ended 30 June 2010 Share options On 23 October 2008, the shareholders of the Company approved the adoption of an Employee Share Option Scheme (“ESOS”) to grant equity-based incentives to all its eligible employees. The maximum aggregate number of shares on which options may be granted under the ESOS is 15% of the total issued equity shares. In the event of a bonus issue, rights issue or a capital reconstruction, the number of options and the exercise price would be adjusted in accordance with the formula stipulated in the ESOS. No options to subscribe for unissued shares of the Company were granted during the financial year. No shares have been issued during the financial year by virtue of the exercise of options to take up unissued shares of the Company. There were no unissued shares of the Company under option at the end of the financial year.
Audit Committee The members of the Audit Committee at the end of the financial year were as follows: Mr Andy Gan Lai Chiang (Chairman) Professor Tan Chin Tiong Dr Cheah Way Mun All members of the Audit Committee are non-executive directors and are independent. The Audit Committee carried out its functions in accordance with Section 201B(5) of the Singapore Companies Act. In performing those functions, the Committee reviewed: the scope and the results of internal audit procedures with the internal auditors; the audit plan of the Company’s independent auditor and its report on the weaknesses of internal accounting controls arising from the statutory audit; the assistance given by the Company’s management to the independent auditor; and the balance sheet of the Company and the consolidated financial statements of the Group for the year ended 30 June 2010 before their submission to the Board of Directors, as well as the independent auditor’s report on the balance sheet of the Company and the consolidated financial statements of the Group. The Audit Committee has recommended to the Board that the independent auditor, PricewaterhouseCoopers LLP, be nominated for re-appointment at the forthcoming Annual General Meeting of the Company.
2010 ANNUAL REPORT Health Management International Ltd 31
DIRECTORS’ REPORT For The Financial Year Ended 30 June 2010 Independent Auditor The independent auditor, PricewaterhouseCoopers LLP, has expressed its willingness to accept re–appointment.
On behalf of the directors
DR GAN SEE KHEM Director
27 September 2010
32 Health Management International Ltd 2010 ANNUAL REPORT
ANDY GAN LAI CHIANG Director
S TAT E M E N T B Y D I R E C T O R S For The Financial Year Ended 30 June 2010 In the opinion of the directors, (a)
the balance sheet of the Company and the consolidated financial statements of the Group as set out on pages 35 to 81 are drawn up so as to give a true and fair view of the state of affairs of the Company and of the Group at 30 June 2010 and of the results of the business, changes in equity and cash flows of the Group for the financial year then ended; and
(b)
at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.
On behalf of the directors
DR GAN SEE KHEM Director
ANDY GAN LAI CHIANG Director
27 September 2010
2010 ANNUAL REPORT Health Management International Ltd 33
INDEPENDENT AUDITOR’S REPORT To The Shareholders of Health Management International Ltd We have audited the accompanying financial statements of Health Management International Ltd (the “Company”) and its subsidiaries (the “Group”) set out on pages 35 to 81, which comprise the balance sheets of the Company and of the Group as at 30 June 2010, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated cash flow statement of the Group for the financial year then ended, and a summary of significant accounting policies and other explanatory notes.
Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Singapore Companies Act (Cap. 50) (the “Act”) and Singapore Financial Reporting Standards. This responsibility includes: (a)
devising and maintaining a system of internal accounting control sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance sheets and to maintain accountability of assets;
(b)
selecting and applying appropriate accounting policies; and
(c)
making accounting estimates that are reasonable in the circumstances.
Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance as to whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion In our opinion, (a)
the balance sheet of the Company and the consolidated financial statements of the Group are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Company and of the Group as at 30 June 2010, and the results, changes in equity and cash flows of the Group for the financial year ended on that date; and
(b)
the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditor, have been properly kept in accordance with the provisions of the Act.
PricewaterhouseCoopers LLP Public Accountants and Certified Public Accountants Singapore, 27 September 2010 34 Health Management International Ltd 2010 ANNUAL REPORT
C O N S O L I D AT E D S TAT E M E N T O F C O M P R E H E N S I V E I N C O M E For The Financial Year Ended 30 June 2010
Group Note
Revenue
3
2010
2009
$
$
58,579,100
49,895,523
Cost of services
(43,885,026)
(37,600,706)
Gross profit
14,694,074
12,294,817
Interest income
3
420,593
401,055
Other gains - net
4
934,786
506,548
Expenses - Distribution and marketing - Administrative
(1,361,569)
(867,081)
(12,036,886)
(13,230,736)
- Finance
5
(1,659,649)
(1,556,284)
Share of profit of associated companies
13
567,657
236,922
1,559,006
(2,214,759)
(2,313,841)
(817,981)
(754,835)
(3,032,740)
Currency translation difference arising from consolidation
2,023,041
(618,852)
Total comprehensive income/(loss)
1,268,206
(3,651,592)
(1,265,669)
(3,543,725)
510,834
510,985
(754,835)
(3,032,740)
(69,766)
(3,947,259)
Profit/(loss) before income tax Income tax expense
7
Total loss Other comprehensive income/(loss)
(Loss)/profit attributable to: Equity holders of the Company Non-controlling interests
Total comprehensive loss attributable to: Equity holders of the Company Non-controlling interests
1,337,972
295,667
1,268,206
(3,651,592)
Loss per share for loss attributable to equity holders of the Company (expressed in cents per share) - Basic
8(a)
(0.26)
(0.74)
- Diluted
8(b)
(0.26)
(0.74)
2010 ANNUAL REPORT Health Management International Ltd 35
BALANCE SHEETS As At 30 June 2010
Group Note
2010 $
Company 2009 $
2010 $
2009 $
ASSETS Current assets Cash and cash equivalents
9
3,050,799
1,268,085
123,701
450,923
Trade and other receivables
10
27,176,608
13,900,092
13,630,404
292,914
Inventories
11
1,882,171
1,382,634
–
–
Other current assets
12
2,612,089
1,316,958
76,992
37,535
Income tax recoverable
7
–
32,062
–
14,370
34,721,667
17,899,831
13,831,097
795,742
–
10,081,299
Non-current assets Trade and other receivables
10
–
10,081,299
Investments in associated companies
13
8,036,648
7,113,030
2,500,301
2,513,517
Investments in subsidiaries
14
–
–
17,162,604
16,042,495
Property, plant and equipment
15
Total assets
54,110,812
47,988,082
84,002
107,622
62,147,460
65,182,411
19,746,907
28,744,933
96,869,127
83,082,242
33,578,004
29,540,675
LIABILITIES Current liabilities Trade and other payables
16
19,876,873
10,132,178
6,611,083
4,038,377
Current income tax liabilities
7
548,919
139,863
–
–
Borrowings
17
11,423,160
8,005,606
1,755,361
1,797,861
Deferred income
19
620,676
844,752
–
–
32,469,628
19,122,399
8,366,444
5,836,238
Non-current liabilities Borrowings
17
19,781,898
17,960,687
1,545,052
1,856,532
Deferred income tax liabilities
20
1,028,569
961,169
–
–
20,810,467
18,921,856
1,545,052
1,856,532
Total liabilities
53,280,095
38,044,255
9,911,496
7,692,770
NET ASSETS
43,589,032
45,037,987
23,666,508
21,847,905
EQUITY Capital and reserves attributable to equity holders of the Company Share capital
21
33,152,878
33,152,878
33,152,878
33,152,878
Treasury shares
21
(58,516)
(58,516)
(58,516)
(58,516)
Currency translation reserve
22(b)
(1,328,762)
(2,524,665)
–
–
Other reserves
22(c)
22,329
–
–
–
Accumulated losses
22(a)
(2,521,676)
(1,256,007)
(9,427,854)
(11,246,457)
29,266,253
29,313,690
23,666,508
21,847,905
Non-controlling interests
14,322,779
15,724,297
–
–
TOTAL EQUITY
43,589,032
45,037,987
23,666,508
21,847,905
36 Health Management International Ltd 2010 ANNUAL REPORT
C O N S O L I D AT E D S TAT E M E N T O F C H A N G E S I N E Q U I T Y For The Financial Year Ended 30 June 2010
Note
Attributable to equity holders of the Company (Accumulated losses)/ Currency retained translation Other Treasury earnings reserve reserves shares $ $ $ $
Share capital $
Noncontrolling Interests $
Total $
Total equity $
2010 Beginning of financial year Total comprehensive loss Dilution of interest in a subsidiary
22(c)
Dividend paid to non-controlling interests by a subsidiary Capital injection in a subsidiary End of financial year
33,152,878
(58,516)
(2,524,665)
–
(1,256,007) 29,313,690 15,724,297 45,037,987
–
–
1,195,903
–
(1,265,669)
(69,766)
1,337,972
1,268,206
–
–
–
22,329
–
22,329
(12,077)
10,252
–
–
–
–
–
–
(3,237,353)
(3,237,353)
–
–
509,940
509,940
–
–
–
–
33,152,878
(58,516)
(1,328,762)
22,329
33,152,878
–
(2,121,131)
–
2,287,718
–
–
(403,534)
–
(3,543,725)
(3,947,259)
295,667
(3,651,592)
–
(58,516)
–
–
–
(58,516)
–
(58,516)
–
–
–
–
–
–
(2,287,175)
(2,287,175)
–
–
208,187
208,187
(2,521,676) 29,266,253 14,322,779 43,589,032
2009 Beginning of financial year Total comprehensive loss Purchase of treasury shares Dividend paid to non-controlling interests by a subsidiary Acquisition of a subsidiary End of financial year
21(a)
–
–
–
–
33,152,878
(58,516)
(2,524,665)
–
33,319,465 17,507,618 50,827,083
(1,256,007) 29,313,690 15,724,297 45,037,987
An analysis of the movements in each category within “Currency translation reserve” is presented in Note 22(b).
2010 ANNUAL REPORT Health Management International Ltd 37
C O N S O L I D AT E D S TAT E M E N T O F C A S H F L O W S For The Financial Year Ended 30 June 2010
Note
Cash flows from operating activities Net loss after tax Adjustments for: - Income tax - Allowance for impairment of trade and other receivables - Allowance for impairment of associated companies - Depreciation of property, plant and equipment - Loss on disposals of property, plant and equipment - Loss on disposals of subsidiaries - Gain on dilution of interest in an associated company - Interest income - Interest expense - Share of profit from associated companies Operating cash flow before working capital changes Change in operating assets and liabilities - Inventories - Trade and other receivables - Other current assets - Trade and other payables - Deferred income - Currency translation differences Cash provided by operations Interest paid Income tax paid Net cash provided by/(used in) operating activities Cash flows from investing activities Repayment of loans by an associated company Additions to property, plant and equipment Disposals of property, plant and equipment Dilution of interest in an associated company Proceeds from dilution of interest in a subsidiary Acquisition of a subsidiary, net of cash acquired Net cash used in investing activities
2010 $
2009 $
(754,835)
(3,032,740)
2,313,841 8,805 – 3,040,903 266,486 51,522 (55,778) (420,593) 1,659,649 (567,657) 5,542,343
817,981 216,883 1,134,953 2,579,249 24,826 – – (401,055) 1,556,284 (236,922) 2,659,459
(499,537) (3,599,450) (1,295,131) 5,664,933 224,076 155,626 6,192,860 (1,659,649) (1,880,453) 2,652,758
(503,202) (9,100) (101,305) (1,087,608) 387,724 38,297 1,384,265 (1,559,835) (714,866) (890,436)
955,737 (2,324,046) 132,991 61,156 10,252 – (1,163,910)
4,892,142 (8,211,465) 383 – – 208,601 (3,110,339)
Cash flows from financing activities Drawdown of borrowings Repayments of borrowings Repayments of lease liabilities Purchase of treasury shares Loan from shareholders Capital injection in a subsidiary by non-controlling interests Dividends paid to non-controlling interests Interest received Net cash provided by financing activities
1,455,684 (1,433,723) (2,576,855) – 4,891,312 509,940 (3,237,353) 420,593 29,598
7,338,310 (3,394,683) (1,660,556) (58,516) – – (2,287,175) 401,055 338,435
Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of financial year Effects of currency translation on cash and cash equivalents Cash and cash equivalents at end of financial year
1,518,446 1,268,085 32,610 2,819,141
(3,662,340) 4,970,233 (39,808) 1,268,085
38 Health Management International Ltd 2010 ANNUAL REPORT
14
9 9
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 These notes form an integral part of and should be read in conjunction with the accompanying financial statements.
1.
General information Health Management International Ltd (the “Company”) is listed on the Singapore Exchange and is incorporated and domiciled in Singapore. The address of its registered office is 167 Jalan Bukit Merah, #05-10 Connection One, Singapore 150167. The principal activities of the Company are those of investment holding and management consultants. The principal activities of its subsidiaries are stated in Note 30 of the financial statements.
2.
Significant accounting policies
2.1
Basis of preparation The financial statements have been prepared in accordance with Singapore Financial Reporting Standards (“FRS”). The financial statements have been prepared under the historical cost convention, except as disclosed in the accounting policies below. The preparation of financial statements in conformity with FRS requires management to exercise its judgement in the process of applying the Group’s accounting policies. It also requires the use of certain critical accounting estimates and assumptions. Interpretations and amendments to published standards effective in 2010 On 1 July 2009, the Group adopted the new or amended FRS and Interpretations to FRS (“INT FRS”) that are mandatory for application from that date. Changes to the Group’s accounting policies have been made as required, in accordance with the relevant transitional provisions in the respective FRS and INT FRS. The adoption of these new or amended FRS and INT FRS did not result in substantial changes to the Group’s and Company’s accounting policies and had no material effect on the amounts reported for the current or prior financial years except as disclosed below: FRS 1 (revised), Presentation of financial statements (effective from 1 January 2009). The revised standard prohibits the presentation of items of income and expenses (that is, ‘non-owner changes in equity’) in the statement of changes in equity. All non-owner changes in equity are shown in a performance statement, but entities can choose whether to present one performance statement (the statement of comprehensive income) or two statements (the income statement and statement of comprehensive income). The Group has chosen to adopt the former alternative. Where comparative information is restated or reclassified, a restated balance sheet is required to be presented as at the beginning comparative period. There is no restatement of the balance sheet as at 1 July 2008 in the current financial year. FRS 108, Operating segments (effective from 1 January 2009) replaces FRS 14, ‘Segment reporting’, and requires a ‘management approach’, under which segment information is presented on the same basis as that used for internal reporting purposes. Segment revenue, segment profits and segment assets are also measured on a basis that is consistent with internal reporting. Amendment to FRS 107 Improving Disclosures about Financial Statements (effective from 1 January 2009). The amendment requires enhanced disclosures about fair value measurement and liquidity risk. In particular, the amendment requires disclosure of fair value measurements by level of a fair value measurement hierarchy. The adoption of the amendment results in additional disclosures but does not have an impact on the accounting policies and measurement bases adopted by the Group.
2010 ANNUAL REPORT Health Management International Ltd 39
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 2.
Significant accounting policies (continued)
2.1
Basis of preparation (continued) FRS 40 (Amendment), Investment property (and consequential amendments to FRS 16) (effective from 1 January 2009). Prior to 1 January 2009, property that is under construction or development for future use as an investment property was accounted for under FRS 16 Property, Plant and Equipment at cost less impairment. With effect from 1 January 2009, such property is accounted in accordance with FRS 40 Investment Property at fair value as the Group has adopted the fair value model for accounting of investment property. The amendment is applied prospectively from 1 January 2009, and has no impact on the financial statements for the previous financial year. The amendment has no impact on the financial statements of the Group as at 30 June 2010. Revised FRS 23, Borrowing Costs (effective for annual periods beginning on or after 1 January 2009). The revised standard removes the option to recognise immediately as an expense borrowing costs that are attributable to qualifying assets, except for those borrowing costs on qualifying assets that are measured at fair value or inventories that are manufactured or produced in large quantities on a repetitive basis. The Group applied the revised FRS 23 from 1 July 2009 and the revised standard has no impact on the Group’s financial statements. FRS 27 (revised) Consolidated and Separate Financial Statements (effective for annual periods beginning on or after 1 July 2009). The revisions to FRS 27 principally change the accounting for transactions with non-controlling interests. Please refer to Notes 2.4(a)(iii) for the revised accounting policy on changes in ownership interest that results in a lost of control and Note 2.4(b) for that on changes in ownership interests that do not result in lost of control. As the changes have been implemented prospectively, no adjustments were necessary to any of the amounts previously recognised in the financial statements. There were no transactions with non-controlling interests in the current financial year. Accordingly, these changes do not have any impact on the financial statements for the current financial year, except as disclosed in Note 14(c). FRS 103 (revised) Business Combinations (effective for annual periods beginning on or after 1 July 2009) (a) FRS 103 (revised) Business Combinations (effective for annual periods beginning on or after 1 July 2009). Please refer to Note 2.4(a)(ii) for the revised accounting policy on business combinations. As the changes have been implemented prospectively, no adjustments were necessary to any of the amounts previously recognised in the financial statements.
2.2
Going concern The Group incurred a loss after tax of $754,835 for the financial year ended 30 June 2010. In addition, as at 30 June 2010, the Group has various amounts which fall due in the foreseeable future in relation to its contracted capital commitments (Note 23(a)), borrowings (Note 17) and non-cancellable operating leases (Note 23(b)). In the opinion of the directors, the Company and consolidated financial statements of the Group are prepared under the going concern assumption on the basis that: (i)
the new and continuing investments made by the Group in its hospital and healthcare operations generate additional cashflows for the Group;
(ii)
the Group’s healthcare education and training operations continue to contribute net positive cashflows;
(iii)
the Company and Group continue to receive the support of its bankers and other financial institutions; and
(iv)
additional share capital of $6.5 million is generated via the proposed renounceable underwritten rights issue announced on 1 September 2010 (Note 28).
40 Health Management International Ltd 2010 ANNUAL REPORT
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 2.
Significant accounting policies (continued)
2.3
Revenue recognition Revenue comprises the fair value of the consideration received or receivable for the rendering of services in the ordinary course of the Group’s activities. Revenue is presented, net of value-added tax, rebates and discounts, and after eliminating sales within the Group. The Group recognises revenue when the amount of revenue and related cost can be reliably measured, when it is probable that the collectibility of the related receivables is reasonably assured and when the specific criteria for each of the Group’s activities are met as follows: (a)
Rendering of services Revenue from hospital and other healthcare services is recognised in the period in which the services are rendered. Revenue from healthcare education and training is recognised on a straight-line basis over the duration of the course. Revenue received in advance is deferred and recognised in the balance sheet as deferred income.
(b)
Interest income Interest income is recognised using the effective interest method.
(c)
Car park income Car park income is recognised on a straight-line time proportion basis.
(d)
Rental income Rental income from operating leases (net of any incentives given to the lessees) is recognised on a straightline basis over the lease term.
2.4
Group accounting (a)
Subsidiaries (i)
Consolidation Subsidiaries are entities (including special purpose entities) over which the Group has power to govern the financial and operating policies, generally accompanying a shareholding giving rise to a majority of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date on which control ceases. In preparing the consolidated financial statements, transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated but considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
2010 ANNUAL REPORT Health Management International Ltd 41
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 2.
Significant accounting policies (continued)
2.4
Group accounting (continued) (a)
Subsidiaries (continued) (i)
Consolidation (continued) Non-controlling interests are that part of the net results of operations and of net assets of a subsidiary attributable to the interests which are not owned directly or indirectly by the equity holders of the Company. They are shown separately in the consolidated statement of comprehensive income, statement of changes in equity and balance sheet. Total comprehensive income is attributed to the non-controlling interests based on their respective interests in a subsidiary, even if this results in the non-controlling interests having a deficit balance.
(ii)
Acquisition of businesses The acquisition method of accounting is used to account for business combinations by the Group. The consideration transferred for the acquisition of a subsidiary comprises the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred also includes the fair value of any contingent consideration arrangement and the fair value of any pre-existing equity interest in the subsidiary. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree at the date of acquisition either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net identifiable assets. The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the net identifiable assets acquired is recorded as goodwill.
(iii)
Disposals of subsidiaries or businesses When a change in the Company’s ownership interest in a subsidiary results in a loss of control over the subsidiary, the assets and liabilities of the subsidiary including any goodwill are derecognised. Amounts recognised in other comprehensive income in respect of that entity are also reclassified to profit or loss or transferred directly to retained earnings if required by a specific FRS. Any retained interest in the entity is remeasured at fair value. The difference between the carrying amount of the retained investment at the date when control is lost and its fair value is recognised in profit or loss. Please refer to the paragraph “Investments in subsidiaries, joint ventures and associated companies” for the accounting policy on investments in subsidiaries in the separate financial statements of the Company.
42 Health Management International Ltd 2010 ANNUAL REPORT
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 2.
Significant accounting policies (continued)
2.4
Group accounting (continued) (b)
Transactions with non-controlling interests Changes in the Company’s ownership interest in a subsidiary that do not result in a loss of control over the subsidiary are accounted for as transactions with equity owners of the Group. Any difference between the change in the carrying amounts of the non-controlling interest and the fair value of the consideration paid or received is recognised in a separate reserve within equity attributable to the equity holders of the Company.
(c)
Associated companies Associated companies are entities over which the Group has significant influence, but not control, and generally accompanied by a shareholding giving rise to voting rights of 20% and above but not exceeding 50%. Investments in associated companies are accounted for in the consolidated financial statements using the equity method of accounting less impairment losses, if any. Investments in associated companies are initially recognised at cost. The cost of an acquisition is measured at the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. In applying the equity method of accounting, the Group’s share of its associated companies’ post-acquisition profits or losses is recognised in the profit or loss and its share of post-acquisition other comprehensive income is recognised in other comprehensive income. These post-acquisition movements and distributions from the associated companies are adjusted against the carrying amount of the investment. When the Group’s share of losses in an associated company equals or exceeds its interest in the associated company, including any other unsecured non-current receivables, the Group does not recognise further losses, unless it has obligations or has made payments on behalf of the associated company. Unrealised gains on transactions between the Group and its associated companies are eliminated to the extent of the Group’s interest in the associated companies. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. The accounting policies of associated companies have been changed where necessary to ensure consistency with the accounting policies adopted by the Group. Gains and losses arising from partial disposals or dilutions in investments in associated companies are recognised in profit or loss. Investments in associated companies are derecognised when the Group loses significant influence. Any retained interest in the entity is remeasured at its fair value. The difference between the carrying amount of the retained investment at the date when significant influence is lost and its fair value is recognised in profit or loss. Please refer to the paragraph “Investment in subsidiaries and associated companies” for the accounting policy on investments in associated companies in the separate financial statements of the Company.
2010 ANNUAL REPORT Health Management International Ltd 43
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 2.
Significant accounting policies (continued)
2.5
Property, plant and equipment (a)
Measurement All items of property, plant and equipment are initially recognised at cost and subsequently carried at cost less accumulated depreciation and accumulated impairment losses. The cost of an item of property, plant and equipment initially recognised includes its purchase price and any cost that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. The projected cost of dismantlement, removal or restoration is also included as part of the cost of property, plant and equipment if the obligation for the dismantlement, removal or restoration is incurred as a consequence of acquiring or using the asset.
(b)
Depreciation Depreciation on property, plant and equipment is calculated using the straight-line method to allocate their depreciable amounts over their estimated useful lives as follows: Useful lives Leasehold land
Over the lease term of 99 years commencing from 2002
Leasehold buildings
50 years
Electrical equipment
10 years
Medical equipment
8 - 10 years
Motor vehicles
5 - 10 years
Furniture, office equipment and housekeeping equipment
3 - 10 years
The residual values, estimated useful lives and depreciation method of property, plant and equipment are reviewed, and adjusted as appropriate, at each balance sheet date. The effects of any revision are recognised in the profit or loss when the changes arise. Construction in progress represents medical equipment under construction which is stated at cost less any impairment losses, and is not depreciated. Cost comprises direct costs incurred during the periods of construction. Construction in progress is reclassified to the appropriate category of property, plant and equipment when completed and ready for use. (c)
Subsequent expenditure Subsequent expenditure relating to property, plant and equipment that has already been recognised is added to the carrying amount of the asset only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repair and maintenance expenses are recognised in the profit or loss when incurred.
(d)
Disposal On disposal of an item of property, plant and equipment, the difference between the disposal proceeds and its carrying amount is recognised in the profit or loss within “Other gains - net”.
44 Health Management International Ltd 2010 ANNUAL REPORT
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 2.
Significant accounting policies (continued)
2.6
Borrowing costs Borrowing costs are recognised in profit or loss using the effective interest method except for those costs that are directly attributable to the construction or development of properties. This includes those costs on borrowings acquired specifically for the construction or development of properties, as well as those in relation to general borrowings used to finance the construction or development of properties. The actual borrowing costs incurred during the period up to the issuance of the temporary occupation permit less any investment income on temporary investment of these borrowings, are capitalised in the cost of the property under development. Borrowing costs on general borrowings are capitalised by applying a capitalisation rate to construction or development expenditures that are financed by general borrowings.
2.7
Investment properties Investment properties held by associated companies include those portions of office buildings that are held for long-term rental yields and/or for capital appreciation and land under operating leases that are held for long-term capital appreciation or for a currently indeterminate use. Investment properties are initially recognised at cost and subsequently carried at fair value, determined annually by independent professional valuers on the highest-and-best-use basis. Changes in fair values are recognised in the profit or loss. Investment properties are subject to renovations or improvements at regular intervals. The cost of major renovations and improvements is capitalised and the carrying amounts of the replaced components are written off to the profit or loss. The cost of maintenance, repairs and minor improvements is charged to the profit or loss when incurred. On disposal of an investment property, the difference between the disposal proceeds and the carrying amount is recognised in the profit or loss.
2.8
Investments in subsidiaries and associated companies Loan to an associated company Investments in subsidiaries and associated companies including loans and receivables from subsidiaries or associated companies that form part of the net investment in the subsidiary or associated company are carried at cost less accumulated impairment losses in the Company’s balance sheet. On disposal of investments in subsidiaries and associated companies, the difference between disposal proceeds and the carrying amounts of the investments are recognised in the profit or loss.
2.9
Impairment of non-financial assets (a)
Property, plant and equipment Investments in subsidiaries and associated companies Property, plant and equipment and investments in subsidiaries and associated companies are tested for impairment whenever there is any objective evidence or indication that these assets may be impaired. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. If this is the case, recoverable amount is determined for the Cash Generating Unit “CGU” to which the asset belongs.
2010 ANNUAL REPORT Health Management International Ltd 45
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 2.
Significant accounting policies (continued)
2.9
Impairment of non-financial assets (continued) (a)
Property, plant and equipment Investments in subsidiaries and associated companies (continued) If the recoverable amount of the asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. The difference between the carrying amount and recoverable amount is recognised as an impairment loss in the profit or loss. An impairment loss for an asset is reversed if, and only if, there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. The carrying amount of an asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortisation or depreciation) had no impairment loss been recognised for the asset in prior years. A reversal of impairment loss for an asset is recognised in the profit or loss.
2.10
Trade and other receivables Trade and other receivables are initially recognised at fair value plus transaction cost and subsequently carried at amortised cost using the effective interest method. They are current assets, except those maturing later than 12 months after the balance sheet date which are classified as non-current assets. Trade receivables are derecognised when the rights to receive cash flows from the customers have expired or have been received. Receivables that form part of the net investment in subsidiaries or associated companies are carried at cost less impairment. The Group assesses at each balance sheet date whether there is objective evidence that trade and other receivables are impaired. An allowance for impairment is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the receivable is impaired. The amount of the allowance is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The amount of the allowance is recognised in the profit or loss.
2.11
Borrowings Borrowings are presented as current liabilities unless the Group has an unconditional right to defer settlement for at least 12 months after the balance sheet date. Borrowings are initially recognised at fair value (net of transaction costs) and subsequently carried at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the profit or loss over the period of the borrowings using the effective interest method.
46 Health Management International Ltd 2010 ANNUAL REPORT
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 2.
Significant accounting policies (continued)
2.12
Trade and other payables Trade and other payables are initially recognised at fair value, and subsequently carried at amortised cost, using the effective interest method.
2.13
Fair value estimation of financial assets and liabilities The fair values of current financial assets and liabilities carried at amortised cost approximate their carrying amounts.
2.14
Leases The Group leases certain land, medical equipment and motor vehicles under finance leases. Land and buildings and office premises are leased under operating leases. (a)
Lessee – Finance leases Leases where the Group assumes substantially all risks and rewards incidental to ownership of the leased assets are classified as finance leases. The leased assets and the corresponding lease liabilities (net of finance charges) under finance leases are recognised on the balance sheet as property, plant and equipment and borrowings respectively, at the inception of the leases based on the lower of the fair values of the leased assets and the present value of the minimum lease payments. Each lease payment is apportioned between the finance expense and the reduction of the outstanding lease liability. The finance expense is recognised in the profit or loss on a basis that reflects a constant periodic rate of interest on the finance lease liability.
(b)
Lessee - Operating leases Leases where substantially all risks and rewards incidental to ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessors) are recognised in the profit or loss on a straight-line basis over the period of the lease. When a lease is terminated before the lease period expires, any payment made (or received) by the Group as penalty is recognised as an expense (or income) in the period when termination takes place.
2.15
Inventories Inventories are carried at the lower of cost and net realisable value. Cost is determined using weighted average basis and includes all costs in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.
2.16
Income taxes Current income tax for current and prior periods is recognised at the amounts expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantially enacted by the balance sheet date.
2010 ANNUAL REPORT Health Management International Ltd 47
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 2.
Significant accounting policies (continued)
2.16
Income taxes (continued) Deferred income tax is recognised for all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements except when the deferred income tax arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profit or loss at the time of the transaction. A deferred income tax liability is recognised on temporary differences arising on investments in subsidiaries and associated companies, except where the Group is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. A deferred income tax asset is recognised to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and tax losses can be utilised. Deferred income tax is measured: (i)
at the tax rates that are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled, based on tax rates and tax laws that have been enacted or substantially enacted by the balance sheet date; and
(ii)
based on the tax consequence that would follow from the manner in which the Group expects, at the balance sheet date, to recover or settle the carrying amounts of its assets and liabilities.
Current and deferred income tax are recognised as income or expenses in the profit or loss. 2.17
Employee compensation (a)
Defined contribution plans Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into separate entities such as the Central Provident Fund on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The Group’s contributions are recognised as employee compensation expense when they are due.
(b)
Employee leave entitlement Employee entitlements to annual leave are recognised when they accrue to employees. An accrual is made for the estimated liability for annual leave and long-service leave as a result of services rendered by employees up to the balance sheet date.
2.18
Currency translation (a)
Functional and presentation currency Items included in the financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (“functional currency”). The financial statements are presented in Singapore Dollars, which is the functional currency of the Company.
48 Health Management International Ltd 2010 ANNUAL REPORT
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 2.
Significant accounting policies (continued)
2.18
Currency translation (continued) (b)
Transactions and balances Transactions in a currency other than the functional currency (“foreign currency”) are translated into the functional currency using the exchange rates at the dates of the transactions. Currency exchange differences from the settlement of such transactions and from the currency translation differences of monetary assets and liabilities denominated in foreign currencies at the closing rates at the balance sheet date are recognised in the profit or loss, unless they arise from borrowings in foreign currencies, and other currency instruments designated and qualifying as net investment hedges and net investment in foreign operations. Those currency translation differences are recognised in the currency translation reserve in the consolidated financial statements and transferred to the profit or loss as part of the gain or loss on disposal of the foreign operation. Non-monetary items measured at fair values in foreign currencies are translated using the exchange rates at the date when the fair values are determined.
(c)
Translation of Group entities’ financial statements The results and financial position of all the group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
2.19
(i)
Assets and liabilities are translated at the closing rates at the date of the balance sheet;
(ii)
Income and expenses are translated at average exchange rates (unless the average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated using the exchange rates at the dates of the transactions); and
(iii)
All resulting currency translation differences are recognised in the currency translation reserve.
Provisions Provision for other liabilities and charges are recognised when the Group has a present legal or constructive obligation as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated. Provision for cost of conversion of wards to medical suites is measured at the present value of the expenditure expected to be required to settle the obligation using a pre-tax discount rate that reflects the current market assessment of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognised in the profit or loss as finance expense.
2010 ANNUAL REPORT Health Management International Ltd 49
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 2.
Significant accounting policies (continued)
2.20
Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the executive committee whose members are responsible for allocating resources and assessing performance of the operating segments.
2.21
Cash and cash equivalents For the purpose of presentation in the consolidated statement of cash flows, cash and cash equivalents include cash on hand, deposits with financial institutions which are subject to an insignificant risk of change in value, and bank overdrafts. Bank overdrafts are presented as current borrowings on the balance sheet.
2.22
Government grants Grants from the government are recognized as receivable at their fair value where there is reasonable assurance that the grant will be received and the Group will comply with all the attached conditions. Government grants receivable are recognised as income over the periods necessary to match them with the related costs which they are intended to compensate, on a systematic basis. Government grants relating to expenses are shown separately as other income. Government grants relating to assets are deducted against the carrying amount of the assets.
2.23
Share capital and treasury shares Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares are deducted against the share capital account. When any entity within the Group purchases the Company’s ordinary shares (“treasury shares”), the consideration paid including any directly attributable incremental cost is presented as a component within equity attributable to the Company’s equity holders, until they are cancelled, sold or reissued. When treasury shares are subsequently cancelled, the cost of treasury shares are deducted against the share capital account if the shares are purchased out of capital of the Company, or against the retained earnings of the Company if the shares are purchased out of earnings of the Company. When treasury shares are subsequently sold, the cost of treasury shares is reversed from the treasury share account and the realised gain or loss on sale or reissue, net of any directly attributable incremental transaction costs and related income tax, is recognised in the capital reserve of the Company.
2.24
Dividends to Company’s shareholders Dividends to Company’s shareholders are recognised when the dividends are approved for payments.
50 Health Management International Ltd 2010 ANNUAL REPORT
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 3.
Revenue Group
Revenue from hospital and other healthcare services Healthcare education and training Total revenue
2010 $
2009 $
55,561,580
47,476,656
3,017,520
2,418,867
58,579,100
49,895,523
5,898
27,168
414,695
373,887
Interest income - bank deposits - loan to associated companies
420,593
401,055
58,999,693
50,296,578
The healthcare education training revenues included grants from the Singapore Workforce Development Agency (‘WDA”) amounting to $2,240,051 (2009: $1,829,223).
4.
Other gains – net Group 2010 $ Currency exchange gain – net Loss on disposals of subsidiaries
2009 $
386,041
13,356
(51,522)
–
Loss on disposals of property, plant and equipment
(266,486)
(24,826)
Car park income
247,306
151,567
15,217
15,180
Rental income Gain on dilution of interest in an associated company
55,778
–
Government grant – Jobs Credit Scheme
62,400
33,402
Recovery of trade receivables previously written off
124,199
–
Others
361,853
317,869
934,786
506,548
The Jobs Credit Scheme is a cash grant introduced in the Singapore Budget 2009 to help businesses preserve jobs in the economic downturn. The amount an employer can receive depends on the fulfillment of certain conditions under the scheme.
5.
Finance expenses Group 2010 $
2009 $
1,210,863
1,166,580
448,786
389,704
1,659,649
1,556,284
Interest expense : - bank borrowings - finance lease liabilities
2010 ANNUAL REPORT Health Management International Ltd 51
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 6.
Expense by nature Group
Depreciation of property, plant and equipment
2010
2009
$
$
3,040,903
2,579,249
250,787
291,457
49,410
49,025
1,043,615
1,146,992
35,083
44,547
108,758
108,705
13,066
13,065
13,045,985
12,240,924
1,221,905
1,208,260
Directors’ fee: - Directors of the Company - Directors of subsidiaries Staff cost: Directors’ remuneration other than fee (i)
Directors of the Company - Salaries and other related expenses - Contribution to defined contribution plans
(ii)
Directors of subsidiaries - Salaries and other related expenses - Contribution to defined contribution plans
(iii)
Other than directors: - Salaries and other related expenses - Contribution to defined contribution plans Included in cost of services: - Medical materials costs
11,458,275
9,838,443
- Medical consultants’ fee
16,039,409
13,533,033
278,759
578,258
8,805
215,462
- Educators’ fee Allowance for impairment of trade receivables Allowance for impairment of non-trade receivables from an associated company
–
1,134,953
Rental and other operating leases
4,006,433
3,749,778
Utilities
1,568,672
1,600,378
497,769
222,200
4,615,847
3,143,794
57,283,481
51,698,523
Repairs and maintenance Others Total cost of services, distribution and marketing costs and administrative expenses
52 Health Management International Ltd 2010 ANNUAL REPORT
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 7.
Income taxes (a)
Income tax expense Group 2010 $
2009 $
Tax expense attributable to profit/(loss) is made up of: Current income tax - Singapore - Foreign Deferred income tax (Note 20)
13,916
23,817
1,956,864
1,361,725
46,987
(14,982)
2,017,767
1,370,560
- current income tax (b)
330,179
(702,235)
- deferred income tax (Note 20)
(34,105)
149,656
296,074
(552,579)
2,313,841
817,981
Under/(over) provision in preceding financial years
The tax on the Group’s profit/(loss) before tax differs from the theoretical amount that would arise using the Singapore standard rate of income tax as follows: Group
Profit/(loss) before tax Less: Share of profit of associated companies
Tax calculated at a tax rate of 17% (2009: 17%)
2010 $
2009 $
1,559,006
(2,214,759)
(567,657)
(236,922)
991,349
(2,451,681)
168,529
(416,785)
1,184,608
1,348,839
Effects of: - Different tax rates in other countries - Expenses not deductible for tax purposes
590,265
631,012
- Income not subject to tax
(421,431)
(495,877)
–
(217,104)
- Utilisation of tax losses not previously recognised as deferred income tax assets
(93,722)
(71,476)
- Deferred income tax assets on temporary differences not recognised
589,518
591,951
2,017,767
1,370,560
- Utilisation of tax incentives in other countries
Tax charge
In 2009, one of the subsidiaries was granted tax incentives equivalent to the increase in value of services exported.
2010 ANNUAL REPORT Health Management International Ltd 53
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 7.
Income taxes (continued) (b)
Movements in current income tax liabilities Group
Beginning of financial year
2009
2010
2009
$
$
$
$
107,801
143,021
(14,370)
(14,370)
20,612
(1,434)
–
–
Income tax (paid)/ received
(1,880,453)
(714,866)
454
(23,817)
Tax expense on profit/(loss) for the current financial year
1,970,780
1,385,542
13,916
23,817
330,179
(702,235)
–
–
Currency translation differences
Under/(over) provision in preceding financial years Acquisition of subsidiary (Note 14(c)) End of financial year Income tax recoverable Current income tax liabilities
8.
Company
2010
–
(2,227)
–
–
548,919
107,801
–
(14,370)
–
(32,062)
–
(14,370)
548,919
139,863
–
–
548,919
107,801
–
(14,370)
Loss per share (a)
Basic loss per share Basic loss per share is calculated by dividing the net loss attributable to equity holders of the Company by the weighted average number of ordinary shares outstanding during the financial year. Group 2010 Net loss attributable to equity holders of the Company ($)
(1,265,669)
(3,543,725)
Weighted average number of ordinary shares outstanding for basic earnings per share
480,555,239
480,966,746
(0.26)
(0.74)
Basic loss per share (cents per share) (b)
2009
Diluted loss per share Diluted loss per share for financial years 2010 and 2009 are the same as basic loss per share since there are no dilutive potential ordinary shares.
54 Health Management International Ltd 2010 ANNUAL REPORT
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 9.
Cash and cash equivalents For the purpose of presenting the consolidated statement of cash flows, cash and cash equivalents comprise the following: Group
Cash at bank and on hand Less: Bank overdrafts (Note 17) Cash and cash equivalent per consolidated statement of cash flows
10.
Company
2010 $
2009 $
2010 $
2009 $
3,050,799
1,268,085
123,701
(231,658)
–
–
2,819,141
1,268,085
123,701
450,923 – 450,923
Trade and other receivables Group
Company
2010 $
2009 $
2010 $
2009 $
6,776,579
6,164,529
Less: Allowance for impairment of receivables
(1,490,323)
(1,780,944)
–
–
Trade receivables – net
5,286,256
4,383,585
–
–
247,951
556,118
–
4,927
Current Trade receivables: - non-related
Other receivables Less: Allowance for impairment of receivables
Amount due from subsidiaries Amount due from associated companies - non-trade Amount due from a related party
–
–
(34,494)
(32,954)
–
–
213,457
523,164
–
4,927
–
–
3,053,228
168,193
21,647,615
8,993,343
10,552,428
119,794
29,280
–
24,748
–
27,176,608
13,900,092
13,630,404
292,914
Trade receivables - non-related
497,188
497,188
–
–
Less: Allowance for impairment of receivables
(497,188)
(497,188)
–
–
–
–
–
–
Amount due from associated companies - non-trade
1,134,953
11,216,252
1,134,953
11,216,252
Less: Allowance for impairment of receivables (Note 13(b))
(1,134,953)
(1,134,953)
(1,134,953)
(1,134,953)
–
10,081,299
–
10,081,299
–
10,081,299
–
10,081,299
Non-current
2010 ANNUAL REPORT Health Management International Ltd 55
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 10.
Trade and other receivables (continued) Included in trade receivables from third parties was $730,490 (2009: $709,139) relating to grants receivable from the Singapore Workforce Development Agency (“WDA”). There are no unfulfilled conditions and other contingencies attaching to the WDA grants receivable. The amounts due from subsidiaries represent advances which are unsecured, interest-free and are repayable on demand. The amounts due from associates arose from sales of leasehold land and building and advances granted to certain associates. These balances are unsecured and are repayable on demand and bear interest at 6.95% (2009: 6.95%). In previous financial years, the non-current non-trade amounts due from an associated company of $10,552,428 formed part of the Group’s net investment in the associate as the amounts were unsecured, interest-free and settlement was neither planned nor likely to occur in the foreseeable future. As the amounts were, in substance, a part of the Group’s net investment in the associate, they were classified as non-current assets. In the current financial year, the Company is in the process of finalising the repayment arrangement with the associated company and the receivable is planned to be settled within the next twelve months.
11.
Inventories Group 2010 $
2009 $
At cost Pharmaceutical and surgical medicine Medical supplies
692,206
493,014
1,189,965
889,620
1,882,171
1,382,634
The cost of inventories recognised as expense and included in “cost of services” amounted to $11,458,275 (2009: $9,838,443).
12.
Other current assets Group 2010 $ Deposits Prepayments Down-payment for purchase of plant and equipment
Company 2009 $
2010 $
2009 $
715,662
680,864
4,492
–
1,276,028
636,094
72,500
37,535
620,399
–
–
–
2,612,089
1,316,958
76,992
37,535
Included in deposits are rental deposits of $584,494 (2009: $558,401) placed with associated companies.
56 Health Management International Ltd 2010 ANNUAL REPORT
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 13.
Investments in associated companies Group 2010 $
Company 2009 $
Equity investment at cost Additional capital injection Less: Impairment losses Dilution of interest (d)
Beginning of financial year
7,113,030
6,955,414
Currency translation differences
361,339
(79,306)
Share of profit
567,657
236,922
Dilution of interest (d) End of financial year
(5,378)
–
8,036,648
7,113,030
2010 $
2009 $
3,528,417
3,528,417
4,755
–
(1,014,900)
(1,014,900)
(17,971)
–
2,500,301
2,513,517
The summarised financial information of associated companies adjusted for the proportion of ownership interest held by the Group are as follows: Group 2010 $
2009 $
- Assets
42,487,394
38,754,655
- Liabilities
39,761,501
36,213,624
- Revenues
2,487,334
2,453,046
105,662
(141,225)
- Net profit/(loss) (before non-controlling interests) Details of associated companies are provided in Note 30. (a)
Investments in associated companies of $17,760 (2009: $17,760) have been pledged as security for bank borrowings of the Company (Note 17(a)).
(b)
The Company has made allowance of $1,014,900 and $1,134,953 (Note 10) for impairment of its investment in and receivables from an associated company. This associated company has been dormant for the current and past financial years.
(c)
In the current financial year, the Group has not recognised its share of loss of an associated company amounting to $488,000 (2009: $17,000) because the Group’s cumulative share of losses exceeds its interest in that associated company and the Group has no obligation in respect of those losses. The cumulative unrecognised losses amount to $505,000 (2009: $17,000) at the balance sheet date.
(d)
As a result of the disposal of 0.25% interest in Regency Medical Centre (Seri Alam) Sdn. Bhd. for a cash consideration of $61,156, the Group’s interest decreased from 29.25% to 29%. The Company and the Group has recorded a gain on dilution of $43,185 and $55,778 in the profit or loss respectively.
2010 ANNUAL REPORT Health Management International Ltd 57
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 14.
Investments in subsidiaries Company 2010 $
2009 $
Equity investments at cost Beginning of financial year
30,667,608
30,667,608
Additional capital contribution (b)
2,469,025
–
Disposal (c)
(1,348,916)
–
End of financial year
31,787,717
30,667,608
(14,625,113)
(14,625,113)
17,162,604
16,042,495
Less: Impairment losses Beginning and end of financial year
Details of subsidiaries are included in Note 30. (a)
Security for bank borrowings Investments in subsidiaries of $10,611,628 (2009: $10,611,628) have been pledged as security for bank borrowings of the Company (Note 17(a)).
(b)
Additional capital contribution in 2010 On 16 November 2009, one of the subsidiaries issued new shares amounting RM20,000,000 which were fully subscribed in proportion to the existing shareholdings of the Company and the non-controlling interests. The Company’s interest remained unchanged after completion of the subscription.
(c)
Disposals in 2010 In the current financial year, the Company liquidated its wholly-owned subsidiaries, Unirio Corporation Sdn. Bhd. and 633 Medical Sdn. Bhd. with carrying value of investment of $1,338,007 and $1 respectively. On 31 October 2009, the Company disposed a 0.25% interest in Regency Specialist Hospital Sdn. Bhd. with carrying amount of $10,908, for a cash consideration of $10,252. The effect of such change on the equity attributable to the Group is as follows: 2010 $ Change in carrying amount of non-controlling interests
12,077
Consideration received from non-controlling interests, net of transaction cost
10,252
Recognised in other reserves (Note 22(c))
22,329
58 Health Management International Ltd 2010 ANNUAL REPORT
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 14.
Investments in subsidiaries (continued) (d)
Investment in a subsidiary - Mahkota Land Sdn. Bhd. (“MLSB”) in financial year 2009 Mahkota Land Sdn. Bhd. (“Mahkota Land”) was a wholly owned subsidiary of Mahkota Commercial Sdn. Bhd. (“Mahkota Commercial”), a 48.95% owned associated company of the Group. On 15 September 2008, a subsidiary, Mahkota Medical Centre Sdn. Bhd. (“MMC”) subscribed for 1,500,000 new ordinary shares, representing 75% of the total enlarged issued share capital in Mahkota Land for a cash consideration of $624,561. Accordingly, Mahkota Land became a subsidiary of the Group and Mahkota Commercial’s stake in Mahkota Land was diluted from 100% to 25%. The effects of the acquisition of the subsidiary on the cash flows of the Group in financial year 2009 were as follows:
2009
Group Acquisition Carrying amount in acquiree’s books At fair value $ $
Identifiable assets and liabilities Cash and cash equivalents Trade and other receivables Leasehold land (Note 15) Current income tax recoverable (Note 7(b))
833,162
833,162
485,670
485,670
1,550,042
2,340,022
2,227
2,227
Total assets
2,871,101
3,661,081
Trade and other payables
(2,038,353)
(2,038,353)
Total liabilities
(2,038,353)
(2,038,353)
Identifiable net assets
832,748
1,622,728
Less: Minority interests
(208,187)
(208,187)
Identifiable net assets acquired
624,561
1,414,541
Cash consideration paid
(624,561)
Less: Cash and cash equivalents in subsidiary acquired
833,162
Net cash inflow on acquisition
208,601
2010 ANNUAL REPORT Health Management International Ltd 59
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 15.
Property, plant and equipment
Leasehold land $
Leasehold buildings $
Electrical equipment $
Medical equipment $
Motor vehicles $
Furniture, office equipment and housekeeping equipment $
Total $
The Group 2010 Cost Beginning of financial year
7,685,823
26,002,918
8,109,399
26,713,408
889,762
4,510,812
73,912,122
Currency translation differences
411,578
1,241,073
323,988
1,357,368
27,591
279,465
3,641,063
Additions
149,490
–
493,193
5,519,854
53,923
812,731
7,029,191
Disposals
–
–
(148,098)
(2,563,883)
(117,050)
(8,394)
(2,837,425)
8,246,891
27,243,991
8,778,482
31,026,747
854,226
5,594,614
81,744,951
95,029
2,519,297
6,985,964
14,070,230
575,702
1,677,818
25,924,040
End of financial year Accumulated depreciation Beginning of financial year Currency translation differences
4,935
32,346
252,830
697,225
20,606
99,202
1,107,144
Depreciation charge
145,313
477,038
301,551
1,575,961
90,399
450,641
3,040,903
Disposals End of financial year Net book value at end of financial year
–
–
(146,489)
(2,172,194)
(117,050)
(2,215)
(2,437,948)
245,277
3,028,681
7,393,856
14,171,222
569,657
2,225,446
27,634,139
8,001,614
24,215,310
1,384,626
16,855,525
284,569
3,369,168
54,110,812
60 Health Management International Ltd 2010 ANNUAL REPORT
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 15.
Property, plant and equipment (continued) Furniture, office equipment and housekeeping Construction equipment in progress $ $
Leasehold land $
Leasehold Electrical Medical buildings equipment equipment $ $ $
Motor vehicles $
1,235,622
26,104,179
7,666,144
19,004,036
834,507
3,672,377
4,361,144
62,878,009
(89,596)
(294,076)
(89,648)
(290,585)
(7,063)
(43,576)
(3,384)
(817,928)
Total $
The Group 2009 Cost Beginning of financial year Currency translation differences Acquisition of a subsidiary (Note 14 (c))
1,550,042
–
–
–
–
–
–
1,550,042
Additions
4,989,755
192,815
541,286
4,816,869
62,318
882,011
–
11,485,054
Reclassifications
–
–
–
4,357,760
–
–
(4,357,760)
–
Disposals
–
–
(8,383)
(1,174,672)
–
–
–
(1,183,055)
7,685,823
26,002,918
8,109,399
26,713,408
889,762
4,510,812
–
73,912,122
Beginning of financial year
83,305
1,946,575
6,818,065
14,115,132
485,541
1,317,126
–
24,765,744
Currency translation differences
(1,046)
(6,907)
(77,415)
(156,239)
(5,365)
(16,135)
–
(263,107)
Depreciation charge
12,770
579,629
252,505
1,261,992
95,526
376,827
–
2,579,249
–
–
(7,191)
(1,150,655)
–
–
–
(1,157,846)
95,029
2,519,297
6,985,964
14,070,230
575,702
1,677,818
–
25,924,040
7,590,794 23,483,621 1,123,435 12,643,178
314,060
2,832,994
–
47,988,082
End of financial year Accumulated depreciation
Disposals End of financial year Net book value at end of financial year
2010 ANNUAL REPORT Health Management International Ltd 61
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 15.
Property, plant and equipment (continued) Furniture and office equipment $
Motor vehicles $
Total $
Beginning of financial year
6,634
172,000
178,634
Additions
1,615
–
1,615
End of financial year
8,249
172,000
180,249
1,393
69,619
71,012
Company 2010 Cost
Accumulated depreciation Beginning of financial year Depreciation charge
663
24,572
25,235
End of financial year
2,056
94,191
96,247
6,193
77,809
84,002
6,634
172,000
178,634
Net book value End of financial year 2009 Cost Beginning and end of financial year Accumulated depreciation Beginning of financial year
730
45,048
45,778
Depreciation charge
663
24,571
25,234
End of financial year
1,393
69,619
71,012
5,241
102,381
107,622
Net book value End of financial year (a)
The net carrying amount of motor vehicles and medical equipment of the Group and Company held under finance leases are as follows: Group 2010 $ Motor vehicles Medical equipment
Company 2009 $
2010 $
2009 $
284,569
314,750
77,809
102,381
13,928,834
8,218,501
–
–
14,213,403
8,533,251
77,809
102,381
(b)
Property, plant and equipment of certain subsidiaries with net book value of $42,243,093 (2009: $38,480,650) have been pledged to financial institutions for credit facilities granted to the Group.
(c)
During the financial year, the Group acquired property, plant and equipment at aggregate cost of $7,029,191 (2009: $11,485,054) of which $4,705,145 (2009: $3,273,589) were acquired by means of finance leases.
62 Health Management International Ltd 2010 ANNUAL REPORT
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 16.
Trade and other payables Group 2010 $
Company 2009 $
2010 $
2009 $
Trade payables (non-related)
7,240,897
5,656,172
70,838
87,085
Deferred grant from WDA
1,048,529
–
–
–
199,370
190,470
–
–
–
7,101
–
7,101
73,953
78,710
–
–
Provision for cost of conversion of wards to medical suites Interest payable Deposits received Directors’ fee payable Other payables and accruals Amount due to associated companies (non-trade) Amount due to subsidiaries (non-trade) Amount due to shareholders
156,200
156,200
156,200
156,200
5,659,226
3,996,449
130,042
108,154
607,386
47,076
–
–
–
–
4,224,231
3,679,837
4,891,312
–
2,029,772
–
19,876,873
10,132,178
6,611,083
4,038,377
Included in “other payables and accruals” are lease expenses accrued on a straight-line basis for a non-cancellable operating lease with an associated company of $2,968,400 (2009: $1,507,361). Please refer to Note 23(b). Included in “other payables and accruals” in 2009 was other payables of $1,820,010 in relation to addition of plant and equipment. The amounts due to subsidiaries, associated companies and shareholders are unsecured, interest-free and are repayable on demand. Amounts due to shareholders are unsecured, interest free and are repayable on demand. Movement on provision for cost of conversion of wards to medical suites is as follow: Group 2010 $ Beginning of financial year Currency translation difference End of financial year
190,470
2009 $ 192,586
8,900
(2,116)
199,370
190,470
Provision for cost of conversion of wards to medical suites is in respect of wards sold in prior years for which a subsidiary incorporated in Malaysia has a contractual obligation to convert.
2010 ANNUAL REPORT Health Management International Ltd 63
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 17.
Borrowings Group 2010 $
Company 2009 $
2010 $
2009 $
Current Overdraft (Note 9) - secured
231,658
–
–
–
Short-term bank loan - secured
4,742,872
3,281,041
–
–
Current portion of long-term bank borrowings - secured
2,985,672
2,727,707
1,737,500
1,780,000
Finance lease liabilities - secured (Note 18)
3,462,958
1,996,858
17,861
17,861
11,423,160
8,005,606
1,755,361
1,797,861
11,847,677
12,870,522
1,506,380
1,800,000
7,934,221
5,090,165
38,672
56,532
19,781,898
17,960,687
1,545,052
1,856,532
31,205,058
25,966,293
3,300,413
3,654,393
Non-current Long-term bank borrowings - secured Finance lease liabilities - secured (Note 18) Total borrowings (a)
Security granted The borrowing facilities are secured by the following:
(b)
(i)
The Company - A memorandum of charge and assignment over all of the Company’s shares in a subsidiary incorporated in Malaysia (Note 14(a)) and an associate incorporated in Malaysia (Note 13(a)).
(ii)
The Group - A first assignment on land and buildings and assignment of rental proceeds of certain subsidiaries in Malaysia (Note 15(b)).
(iii)
The finance lease liabilities of the Group and the Company are effectively secured as the rights to the hire purchase asset (Note 15(a)) revert to the hirer in the event of default.
Maturity of borrowings The non-current borrowings (excluding finance lease liabilities (Note 18)) had the following maturity: Group
Between two and five years Later than five years
64 Health Management International Ltd 2010 ANNUAL REPORT
Company
2010 $
2009 $
2010 $
2009 $
7,239,518
7,066,988
1,506,380
1,800,000
4,608,159
5,803,534
–
–
11,847,677
12,870,522
1,506,380
1,800,000
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 17.
Borrowings (continued) (c)
Interest rate risks The weighted average effective interest rates of total borrowings at the balance sheet date were as follows: Group 2010 %
(d)
Company 2009 %
2010 %
2009 %
Short-term bank loan
5.94
4.52
–
–
Long-term bank borrowings
6.64
6.50
6.39
9.00
Finance lease liabilities
5.18
5.11
6.47
6.47
Carrying amounts and fair values The carrying amounts of current borrowings approximated their fair values. The carrying amounts and fair value of non-current borrowings were as follows: Group Carrying amounts
Bank borrowings Finance lease liabilities
Fair values
2010
2009
2010
2009
$
$
$
$
11,847,677
12,870,522
11,847,677
12,870,522
7,934,221
5,090,165
7,934,221
4,815,490
Company Carrying amounts 2010 2009 $ $ Bank borrowings Finance lease liabilities
Fair values 2010 $
2009 $
1,506,380
1,800,000
1,506,380
1,800,000
38,672
56,532
38,672
53,998
The fair values were determined from cash flow analyses, discounted at the borrowing rates which the directors expect to be available to the Group and the Company at the balance sheet date. (e)
Undrawn borrowing facilities The Group and the Company had the following undrawn borrowing facilities: Group
Company
2010 $
2009 $
- Expiring not later than one year
4,323,165
2,100,801
- Expiring later than one year
2,155,851 6,479,016
2010 $
2009 $
Floating rates: –
–
2,450,000
–
–
4,550,801
–
–
The facilities expiring within one year were annual facilities subjected to review at various dates during 2011. The borrowing facilities were arranged to partially finance the Group’s expansion.
2010 ANNUAL REPORT Health Management International Ltd 65
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 18.
Finance lease liabilities The Group and the Company leases certain plant and equipment, and motor vehicles from non-related parties under finance leases. The lease agreements do not have renewal clauses but provide the Group and the Company with options to purchase the leased assets at nominal values at the end of the lease term. Group
Company
2010 $
2009 $
2010 $
2009 $
- Not later than one year
4,042,078
2,388,804
22,236
22,236
- Between two and five years
8,574,049
5,558,127
48,151
70,387
–
–
–
–
Minimum lease payments due:
- Later than five years
12,616,127
7,946,931
70,387
92,623
Less: Future finance charges
(1,218,948)
(859,908)
(13,854)
(18,230)
Present value of finance lease liabilities
11,397,179
7,087,023
56,533
74,393
The present value of finance lease liabilities is analysed as follows: Group
Not later than one year (Note 17)
Company
2010 $
2009 $
2010 $
2009 $
3,462,958
1,996,858
17,861
17,861
7,934,221
5,090,165
38,672
56,532
11,397,179
7,087,023
56,533
74,393
Later than one year (Note 17): - Between two and five years
19.
Deferred income This relates to fees received in advance in respect of healthcare education and training courses as follows: Group 2010 $ Beginning of financial year
2009 $
844,752
457,028
Additions during the financial year
2,513,955
2,522,753
Amount credited to profit or loss
(2,738,031)
(2,135,029)
620,676
844,752
End of financial year
66 Health Management International Ltd 2010 ANNUAL REPORT
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 20.
Deferred income taxes Deferred income tax assets and liabilities are offset when there is a legally enforceable right to set off current income tax assets against current income tax liabilities and when the deferred income taxes relate to the same fiscal authority. The amounts, determined after appropriate offsetting, are shown on the balance sheets as follows: Group 2010 $
2009 $
Deferred income tax liabilities: - to be settled after one year
1,028,569
961,169
The movement in the deferred income tax account is as follows: Group 2010 $ Beginning of financial year Currency translation differences Tax charge/(credit) to profit or loss (Note 7) End of financial year
2009 $
961,169
838,557
54,518
(12,062)
12,882
134,674
1,028,569
961,169
The movement in deferred income tax assets and liabilities (prior to offsetting of balances within the same tax jurisdiction) during the financial year were as follows: Group Deferred income tax liabilities Accelerated tax depreciation $
Deferred income tax assets
Provisions $
Total $
2010 Beginning of financial year
1,366,499
(405,330)
961,169
Currency translation differences
75,931
(21,413)
54,518
Charged/(credited) to profit or loss
80,260
(67,378)
12,882
1,522,690
(494,121)
1,028,569
838,557
End of financial year 2009 Beginning of financial year
1,099,409
(260,852)
Currency translation differences
(16,450)
4,388
(12,062)
Charged/(credited) to profit or loss
283,540
(148,866)
134,674
1,366,499
(405,330)
961,169
End of financial year
Deferred income tax assets are recognised for tax losses and capital allowances carried forward to the extent that realisation of the related tax benefits through future taxable profits is probable. The Group has unrecognised tax losses of $20,187,000 (2009: $16,312,000) and capital allowances and provisions of $8,460,000 (2009: $9,884,000) at the balance sheet date which can be carried forward and used to offset against future taxable income.
2010 ANNUAL REPORT Health Management International Ltd 67
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 21.
Share capital No. of ordinary shares Issued share Treasury capital shares
Amount Issued share Treasury capital shares $
$
2010 Beginning and end of financial year
481,161,239
(606,000)
33,152,878
(58,516)
481,161,239
–
33,152,878
–
2009 Beginning of financial year Treasury shares purchased (Note (a)) End of financial year
–
(606,000)
–
(58,516)
481,161,239
(606,000)
33,152,878
(58,516)
All issued ordinary shares are fully paid. There is no par value for these ordinary shares. (a)
22.
In 2009, the Company acquired 606,000 shares in the Company through purchases on the Singapore Exchange. The total amount paid to acquire the shares was $58,516 and this was presented as a component within shareholders’ equity.
Other reserves (a)
Accumulated losses (i)
Accumulated losses of the Group include the accumulated share of profits of associated companies amounting to $4,542,128 (2009: $3,974,471).
(ii)
Movement in accumulated losses for the Company is as follows: Company
Beginning of financial year
(b)
2010 $
2009 $
(11,246,457)
(9,710,508)
Net profit/(loss)
1,818,603
(1,535,949)
End of financial year
(9,427,854)
(11,246,457)
Currency translation reserve Group
Beginning of financial year Net currency translation differences of financial statements of foreign subsidiaries and associated companies Exchange differences on monetary balances forming part of net investment in foreign operations Non-controlling interests End of financial year
68 Health Management International Ltd 2010 ANNUAL REPORT
2010 $
2009 $
(2,524,665)
(2,121,131)
2,023,041
(506,388)
–
(112,464)
(827,138)
215,318
1,195,903
(403,534)
(1,328,762)
(2,524,665)
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 22.
Other reserves (continued) (b)
Currency translation reserve (continued) The currency translation reserve comprises:
(c)
(a)
Foreign exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from the presentation currency of the Group; and
(b)
The exchange differences on monetary items which form part of the Group’s net investment in foreign operations.
Other reserves Other reserves represents the difference between the change in the carrying amounts of the non-controlling interest and the fair value of the consideration received, arising from transactions with non-controlling interests. Group 2010 $ Beginning of financial year
–
Disposal of interest in a subsidiary (Note 14(c))
22,329
End of financial year
22,329
Other reserves are non-distributable.
23.
Commitments (a)
Capital commitments Capital expenditure contracted for at the balance sheet date but not recognised in the financial statements are as follows: Group
Property, plant and equipment
Company
2010 $
2009 $
2010 $
2,392,706
1,538,096
–
2009 $ –
2010 ANNUAL REPORT Health Management International Ltd 69
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 23.
Commitments (continued) (b)
Operating lease commitments – where the Group is a lessee The Group leases various land and office premises under non-cancellable operating lease agreements. The leases have varying terms, escalation clauses and renewal rights. The future aggregate minimum lease payable under non-cancellable operating leases contracted for at the balance sheet date but not recognised as liabilities are as follows: Group 2010 $ Not later than one year
2009 $
4,382,928
3,886,433
Between two and five years
15,353,227
11,767,315
Later than five years
48,835,040
53,277,787
68,571,195
68,931,535
Less: Accrual for operating lease expenses recognised on a straight-line basis (Note 16)
(2,968,400)
(1,507,361)
Operating lease commitments not recognised as liabilities at balance sheet date
65,602,795
67,424,174
In the previous financial year, the Group revised a hospital leasing arrangement with an associated company, Regency Medical Centres Seri Alam Sdn. Bhd. (“RMCSA”). The revised lease was non-cancellable with remaining lease term of 28 years as at balance sheet date, with an option to renew for another 30 years.
24.
Contingent liabilities (a)
Litigation As at the balance sheet date, the Group has two outstanding litigation claims filed at the Malaysia, Malacca High Court against one of its subsidiary company and its medical specialist for alleged medical negligence for general and specific damages estimated at $12,500 (RM30,000) (2009: $25,000 (RM60,000)). The directors are of the view that no material liabilities are anticipated at the balance sheet date as it is indemnified by the insurance companies.
(b)
Corporate guarantee The Company has issued corporate guarantees to banks for borrowings of a subsidiary. These bank borrowings amount to $1,738,736 (2009: $281,250) at the balance sheet date.
25.
Financial risk management (a)
Financial risk factors The Group’s financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Group’s business whilst managing its currency, interest rates, credit and liquidity risks. The Group’s policy is not to engage in speculative transactions.
70 Health Management International Ltd 2010 ANNUAL REPORT
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 25.
Financial risk management (continued) (b)
Market risk (i)
Currency risk Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in currency exchange rates. The Company’s operational activities are carried out in Singapore dollars. The Group also has operational activities carried out in Malaysian Ringgit (“RM”) by its subsidiaries in Malaysia. Management monitors the Group’s exposure to currency risk to keep the net exposure at an acceptable level. In addition, the Group is exposed to currency translation risk on the net assets in foreign operations. Currency exposure to the net assets of the Group’s foreign operations in Malaysia is managed primarily through borrowings denominated in RM. As at balance sheet date, the Company’s subsidiaries have their financial instruments mainly denominated in their respective functional currencies, hence any currency risk is insignificant. The Company’s exposure to currency risk mainly arises from amount due from an associated company amounting to $10,552,428 denominated in RM. As at 30 June 2010, if RM has strengthened/ weakened by 4% (2009: 4%) against the SGD with all other variables including tax rate being held constant, the Group and the Company’s profit after tax would have been $383,533 (2009:$5,670) higher/lower, as a result of currency translation gains/losses on these RM-denominated balances.
(ii)
Cash flow and fair value interest rate risk Cash flow interest rate risk is the risk that future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the value of financial instrument will fluctuate because of changes in market interest rate. The Group’s exposure to movements in market interest rates is primarily due to its debt obligations with financial institutions. The Group manages its interest rate exposure by monitoring movements in interest rates and actively reviewing its debt obligations. As the Group has no significant interest bearing assets, the Group’s income is substantially independent of changes in market interest rates. The Group’s borrowings at variable rates comprises approximately 83% (2009: 75%) of the total borrowings and are denominated in RM. All the Company’s borrowings are at fixed rate ranging from 5% to 9% (2009: 9%). If the RM interest rate during the financial year was higher/lower by 0.5% (2009: 0.5%) with all other variables including tax rates being held constant, the loss after tax will be higher/ lower by $67,854 (2009: profit after tax will be lower/higher by $62,325) as a result of higher/lower interest expense on variable rate borrowings.
2010 ANNUAL REPORT Health Management International Ltd 71
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 25.
Financial risk management (continued) (b)
Market risk (continued) (iii)
Credit risk Credit risk refers to the risk that counterpart will default on its contractual obligations resulting in financial loss to the Group. Trade receivables are monitored on an ongoing basis via Group management reporting procedures. The Group has no significant concentration exposure to any individual customer or counterparty nor does it have any major concentration of credit risk related to any financial instruments. Concentrations of credit risk with respect to trade receivables are limited due to the Group’s large number of customers who are dispersed. Management believes that there is no anticipated additional credit risk beyond the amount of allowance for impairment made in the Group’s trade receivables. As the Group and Company does not hold any collateral, the maximum exposure to credit risk for each class of financial instruments is the carrying amount of that class of financial instruments presented on the balance sheet. The Group’s and Company’s major classes of financial assets that are subject to credit risk are shortterm bank deposits and trade and non-trade receivables. All non-trade receivables are from subsidiaries and associated companies and the carrying amounts are not past due. The Group’s dominant operations are in Malaysia, and the Group’s trade receivables located in Malaysia represents 84% (2009: 77%) of total trade receivables. The remainder represents revenues arising from operations in Singapore. Trade receivables arises entirely from non-related parties: corporate customers and individual customers which represents 95% (2009: 93%) and 5% (2009:7%) respectively. It is the Group’s policy to transact with creditworthy counterparties. In addition, the granting of material credit limits to counterparties is reviewed and approved by senior management. (i)
Financial assets that are neither past due nor impaired Trade and other receivables that are neither past due nor impaired are creditworthy debtors with good payment record with the Group. Cash and cash equivalents are placed with or entered into with reputable financial institutions.
72 Health Management International Ltd 2010 ANNUAL REPORT
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 25.
Financial risk management (continued) (b)
Market risk (continued) (iii)
Credit risk (continued) (ii)
Financial assets that are either past due or impaired There is no other class of financial assets that is past due and/or impaired except for trade receivables (refer below for analysis) and an amount due from an associated company (refer to Note 13(b) for analysis). The age analysis of trade receivables past due but not impaired is as follows: Group 2010 $
2009 $
Past due 1 to 3 months
2,231,439
1,552,684
Past due 4 to 6 months
221,496
325,094
Past due over 6 months
999,300
489,135
3,452,235
2,366,913
The carrying amount of trade receivables individually determined to be impaired and the movement of the related allowance for impairment are as follows: Group 2010 $
2009 $
Gross amount
1,987,511
2,278,132
Less: Allowance for impairment
(1,987,511)
(2,278,132)
–
–
2,278,132
2,078,058
65,687
(15,388)
8,805
215,462
Beginning of financial year Currency translation differences Allowance made Allowance utilised End of financial year
(365,113)
–
1,987,511
2,278,132
The impaired trade receivables arise mainly from corporate and individual customers, which are provided on a case-by-case basis.
2010 ANNUAL REPORT Health Management International Ltd 73
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 25.
Financial risk management (continued) (b)
Market risk (continued) (iv)
Liquidity risk The Group and the Company manage liquidity risk by maintaining sufficient cash to enable them to meet their normal operating commitments and having an adequate amount of committed credit facilities. The table below analyses the maturity profile of the financial liabilities of the Group and the Company based on contractual undiscounted cash flow. Less than 1 year $
Between 2 and 5 years $
Over 5 years $
Group 2010 Trade and other payables
19,876,873
–
–
Borrowings
12,805,294
17,966,671
5,534,813
32,682,167
17,966,671
5,534,813
10,132,178
–
–
9,648,578
15,033,036
6,778,008
19,780,756
15,033,036
6,778,008
2009 Trade and other payables Borrowings
Company 2010 Trade and other payables
6,611,083
–
–
Borrowings
1,147,236
52,526
–
7,758,319
52,526
–
2009
(v)
Trade and other payables
4,038,377
–
–
Borrowings
2,146,236
2,032,387
–
6,184,613
2,032,387
–
Capital risk The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern and to maintain an optimal capital structure so as to maximise shareholder value. In order to maintain or achieve an optimal capital structure, the Group may adjust the amount of dividend payment, return capital to shareholders, issue new shares, buy back issued shares, obtain new borrowings or sell assets to reduce borrowings.
74 Health Management International Ltd 2010 ANNUAL REPORT
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 26.
Related party transactions (a)
In addition to the information disclosed elsewhere in the financial statements, the following transactions took place between the Group and the related parties at terms agreed between the parties: Group
(i)
(ii)
(v)
(iii)
(iv)
(vi)
Company
2010 $
2009 $
3,398,998
3,304,077
–
–
12,000
–
12,000
–
Agency fee recharged to subsidiaries
–
–
12,000
–
Management fee income from a subsidiary
–
–
209,105
210,479
Salaries recharged to subsidiaries
–
–
377,800
–
Service fee income from subsidiaries
–
–
2,059
–
Rental expense to associated companies Agency fee paid to a company owned by a director of the Company
2010 $
2009 $
Rental expense to associated companies is based on lease agreements. Interest income from associated companies and service fee income from subsidiaries are determined based on commercial terms and conditions and at market prices. (b)
27.
Key management compensation (represents to directors only) is disclosed in Note 6 – Directors’ remuneration other than fees.
Segment information Management has determined the operating segments based on the reports that are used to make strategic decisions. The Management includes the Executive Chairman / Managing Director and executive directors. The Management considers the business from both a geographic and business segment perspective. Geographically, management manages and monitors the business in the two primary geographic areas, Singapore and Malaysia. The Singapore segment derives revenue from healthcare education and training services. The Malaysia segment derives revenue from hospital and other healthcare services. Other operations included within Singapore and Malaysia relate to investment holding; but these are not included within the reportable operating segments, as they are not included in the reports provided to the Management. The results of these operations are included in the “all other segments” column.
2010 ANNUAL REPORT Health Management International Ltd 75
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 27.
Segment information (continued) The segment information provided to the Management for the reportable segments are as follows: Malaysia Hospital and otherhealthcare services $
Singapore Healthcare education and training $
55,561,580
3,017,520
–
Adjusted EBIT
3,091,105
427,759
489,522
4,008,386
Depreciation
2,923,994
91,674
25,235
3,040,903
–
–
–
567,657
76,600,840
1,326,663
18,941,624
96,869,127
–
–
8,036,648
8,036,648
6,987,735
39,841
1,615
7,029,191
13,279,340
1,968,306
5,249,903
20,497,549
47,476,656
2,418,867
–
49,895,523
Adjusted EBIT
1,585,972
236,108
(238,968)
1,583,112
Depreciation
1,973,419
83,651
522,179
2,579,249
–
–
–
236,922
63,528,547
1,569,578
17,952,055
83,050,180
5,121
–
7,107,909
7,113,030
11,413,266
71,788
–
11,485,054
9,605,292
1,011,656
359,982
10,976,930
All other segments $
Total $
2010 Revenue: - external revenue
Share of profit of associated companies Segment assets
58,579,100
Segment assets includes: Investment in associated companies Additions to: - property, plant and equipment Segment liabilities 2009 Revenue: - external revenue
Share of profit of associated companies Segment assets Segment assets includes: Investment in associated companies Additions to: - property, plant and equipment Segment liabilities
Revenue between segments are carried out at arm’s length. The revenue from external parties reported to the Management is measured in a manner consistent with that in the statement of comprehensive income. The Management assesses the performance of the operating segments based on a measure of Earnings before interest and tax (“adjusted EBIT”). Interest income and finance expenses are not allocated to segments, as this type of activity is driven by the Group finance function, which manages the cash position of the Group.
76 Health Management International Ltd 2010 ANNUAL REPORT
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 27.
Segment information (continued) (a)
Reconciliations (i)
Segment profits A reconciliation of adjusted EBIT to profit/(loss) before tax and discontinued operations is as follows: Group
Adjusted EBIT for reportable segments Other segments EBIT Finance expense Interest income
2010 $
2009 $
3,518,864
1,822,080
489,522
(238,968)
(1,659,649)
(1,556,284)
420,593
401,055
(1,777,981)
(2,879,564)
567,657
236,922
1,559,006
(2,214,759)
Unallocated: Corporate expenses Share of profit of associated companies Profit/(loss) before tax (ii)
Segments assets The amounts provided to the Management with respect to total assets are measured in a manner consistent with that of the financial statements. For the purposes of monitoring segment performance and allocating resources between segments, the Management monitors the property, plant and equipment, inventories, receivables and operating cash attributable to each segment. All assets are allocated to reportable segments other than income tax recoverable. Segment assets are reconciled to total assets as follows: Group 2010 $
2009 $
Segment assets for reportable segments
77,927,503
65,098,125
Other segment assets
18,941,624
17,952,055
Unallocated: Income tax recoverable
–
32,062
96,869,127
83,082,242
2010 ANNUAL REPORT Health Management International Ltd 77
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 27.
Segment information (continued) (a)
Reconciliations (continued) (iii)
Segment liabilities The amounts provided to the Management with respect to total liabilities are measured in a manner consistent with that of the financial statements. These liabilities are allocated based on the operations of the segment. All liabilities are allocated to the reportable segments other than income tax liabilities, borrowings and deferred tax liabilities. Segment liabilities are reconciled to total liabilities as follows: Group
Segment liabilities for reportable segments Other segment liabilities
2010 $
2009 $
15,247,646
10,616,948
5,249,903
359,982
548,919
139,863
Unallocated: Income tax liabilities Deferred tax liabilities Borrowings
(b)
1,028,569
961,169
31,205,058
25,966,293
53,280,095
38,044,255
Revenue from major products and services Revenue from external customers are derived mainly from hospital and other healthcare services and healthcare education and training. Investment holding is included in “Others”. Breakdown of the revenue is as follows: Group
Hospital and other healthcare services Healthcare education and training
78 Health Management International Ltd 2010 ANNUAL REPORT
2010 $
2009 $
55,561,580
47,476,656
3,017,520
2,418,867
58,579,100
49,895,523
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 27.
Segment information (continued) (c)
Geographical information The Group’s two business segments operate in two main geographical areas: (i)
Singapore – the Company is headquartered and has operations in Singapore. The operations in this area are healthcare education and training
(ii)
Malaysia – the operations in this area are hospital and other healthcare services Total sales 2010 $
Singapore Malaysia
2009 $
3,017,520
2,418,867
55,561,580
47,476,656
58,579,100
49,895,523
Total non-current assets
Singapore Malaysia
28.
2010
2009
$
$
8,453,402
17,685,243
53,694,058
47,497,168
62,147,460
65,182,411
Events occurring after balance sheet date On 1 September 2010, the Board of Directors of the Company announced that the Company is proposing to undertake a renounceable underwritten rights issue of 96,111,047 new ordinary shares (“Rights Share”) in the capital of the Company at an issue price of S$0.07 for each Rights Share, on the basis of one Rights Share for every five existing ordinary shares in the capital of the Company (excluding treasury shares) held by shareholders.
29.
New or revised accounting standards and interpretations Below are the mandatory standards, amendments and interpretations to existing standards that have been published, and are relevant for the Group’s accounting periods beginning on or after 1 July 2010 or later periods and which the Group has not early adopted: Amendments to FRS 24 – Related party disclosures (effective for annual periods beginning on or after 1 January 2011) Amendments to FRS 32 Financial instruments: Presentation – classification of rights issues (effective for annual periods beginning on or after 1 February 2010) Amendments to INT FRS 114 – Prepayments of a minimum funding requirement (effective for annual periods commencing on or after 1 January 2011) INT FRS 119 Extinguishing financial liabilities with equity instruments (effective for annual periods commencing on or after 1 July 2010) The management anticipates that the adoption of the above INT FRS and amendments to FRSs and INT FRSs in the future periods will not have a material impact on the financial statements of the Group and of the Company in the period of their initial adoption. 2010 ANNUAL REPORT Health Management International Ltd 79
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 30.
Listing of companies in the Group
Name of companies
Principal activities
Country of business/ incorporation
Equity holding 2010
2009
%
%
Subsidiaries held by the Company HMI Consulting Pte. Ltd. (a)
Consulting services
Singapore
100
100
HMI Institute of Health Sciences Pte. Ltd. (formerly known as HMI Education Pte. Ltd.) (a)
Healthcare education and training
Singapore
100
100
HMI Health Management (M) Sdn. Bhd. (b)
Hospital management services
Malaysia
100
100
Mahkota Medical Centre Sdn. Bhd. (“MMCSB”) (b) (f)
Hospital and healthcare services, higher education and training courses for nurses, paramedical personnel and provision of project management and hospital consultancy services
Malaysia
48.95
48.95
Unirio Corporation Sdn. Bhd. (h)
Investment holding
Malaysia
–
100
Mahkota Medical Group Sdn. Bhd. (“MMGSB”) (b)(g)
Investment holding
Malaysia
48.95
48.95
Regency Specialist Hospital Sdn. Bhd. (“RSH”) (b)(i)
Hospital and healthcare services
Malaysia
29
29.25
633 Media Sdn. Bhd. (h)
Dormant
Malaysia
–
100
Mahkota Realty Sdn. Bhd. (b)
Property investment
Malaysia
75
75
Mahkota Land Sdn Bhd. (b)
Property investment
Malaysia
75
75
PT. Mahkota Healthcare Services (b)
Dormant
Indonesia
95
95
Regency Specialist Hospital Sdn. Bhd. (“RSH”) (b)(i)
Hospital and healthcare services
Malaysia
65
65
Regency Specialist Hospital (S) Pte Ltd (a)
Singapore patient centres
Singapore
100
–
Held by MMCSB
Held by MMGSB
Associated companies held by the Company Nathill Track (M) Sdn. Bhd. (d)
Dormant
Malaysia
30
30
Mahkota Commercial Sdn. Bhd. (“MCSB”) (e)
Holding company of investment properties
Malaysia
48.95
48.95
Regency Healthcare Sdn. Bhd. (“RHSB”) (e)
Investment holding
Malaysia
35
35
80 Health Management International Ltd 2010 ANNUAL REPORT
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S For The Financial Year Ended 30 June 2010 30.
Listing of companies in the Group (continued)
Name of companies
Principal activities
Country of business/ incorporation
Equity holding 2010
2009
%
%
Associated companies held by the Company (continued) Regency Medical Centre (Seri Alam) Sdn. Bhd. (e)
Development and lease of a hospital building
Malaysia
29
29.25
Panodahlia Sdn. Bhd. (b)
Dormant
Malaysia
43.35
40.10
Mahkota Realty Sdn. Bhd. (b)
Property investment
Malaysia
25
25
Raspuri Sdn. Bhd. (e)
Property investment
Malaysia
100
100
Mahkota Land Sdn. Bhd. (b)
Property investment
Malaysia
25
25
Pancastle Sdn. Bhd. (e)
Property investment
Malaysia
100
100
Regency Healthcare Sdn. Bhd. (“RHSB”) (e)
Investment holding
Malaysia
65
65
Regency Medical Centre (Seri Alam) Sdn. Bhd. (e)
Development and lease of a hospital building
Malaysia
65
65
Dormant
Malaysia
85
85
Held by MCSB
Held by RHSB Regency Medical Centre (Sungai Petani) Sdn. Bhd. (e)
31.
(a)
Audited by PricewaterhouseCoopers LLP, Singapore
(b)
Audited by PricewaterhouseCoopers, Malaysia
(c)
Audited by Moore Stephens Associates & Co., Malaysia
(d)
Audited by BKR Peter Chong, Malaysia
(e)
Audited by Horwath, Malaysia
(f)
Although the Company holds 48.95% equity interest in MMCSB, pursuant to an agreement signed by the shareholders of MMCSB on 21 September 2002, the Company exercises control over the Board of Directors and accordingly consider MMCSB as a subsidiary.
(g)
Although the Company holds 48.95% equity interest in MMGSB, pursuant to an agreement signed by the shareholders of MMGSB on 31 January 2009, the Company exercises control over the Board of Directors and accordingly consider MMGSB as a subsidiary.
(h)
Liquidated during the financial year.
(i)
The Company controls directly and indirectly interest of 29% and 48.95% respectively and accordingly consider RSH a subsidiary.
Authorisation of financial statements These financial statements were authorised for issue in accordance with a resolution of the Board of Directors of Health Management International Ltd on 27 September 2010.
2010 ANNUAL REPORT Health Management International Ltd 81
S U P P L E M E N TA R Y I N F O R M AT I O N
Leasehold land and leasehold buildings of the Group as set out in Note 15 to the financial statements held by subsidiaries includes the following: Location
Description
Gross Floor Area (Sq ft)
Tenure
42,786
99 years commencing from 19 July 2002
112,752
99 years commencing from 19 July 2002
Malaysia Held by Mahkota Medical Centre Sdn. Bhd. (“MMCSB”) No. 3 Mahkota Melaka, Jalan Merdeka, 75000 Melaka
Basement of a Mahkota Medical Centre for facilities support
Held by Mahkota Reality Sdn. Bhd. (subsidiary of MMCSB) No. 3 Mahkota Melaka, Jalan Merdeka, 75000 Melaka
Ground floor, 1st, 2nd, 3rd,5th, and 6th floor of Mahkota Medical Centre, which include commercial area, ward, medical suite, hospital services and hostel
Held by Mahkota Land Sdn. Bhd. (subsidiary of MMCSB) Lot 1349, Kawasan Bandar XLII, Melaka Tengah, Melaka
Car park
46,812
95 years commencing from 16 November 2007
Lot 1344, Kawasan Bandar XLII, Melaka Tengah, Melaka
Car park
115,884
99 years commencing from 19 July 2002
82 Health Management International Ltd 2010 ANNUAL REPORT
S TAT I S T I C S O F S H A R E H O L D I N G S As At 27 September 2010 Share Capital Issued and fully paid-up shares Class of shares Voting rights Treasury shares
: : : :
481,161,239 Ordinary shares One vote per share 606,000 (0.13%)
Distribution of Shareholdings
Size of Shareholdings 1
-
999
1,000
-
10,001 -
No. of Shareholders
%
No. of Shares
%
90
1.66
14,008
0.00
10,000
3,546
65.27
10,027,197
2.09
10,000,000
1,749
32.19
120,755,700
25.13
1,000,001 and above Total :
48
0.88
349,758,334
72.78
5,433
100.00
480,555,239
100.00
Substantial Shareholders
Name of shareholders Nam See Investment (Pte) Ltd Dr Gan See Khem Dr Chin Koy Nam Kabouter Management, LLC
Registered in the name of the substantial shareholders
Shareholdings in which substantial shareholders are deemed to have an interest
38,083,061
144,320,000
500,500
189,369,330
1,020,000
188,849,830
24,361,000
–
Based on the information available to the Company as at 27 September 2010, approximately 51.06% of the issued shares of the Company is held by the public and therefore, Rule 723 of the SGX-ST’s Listing Manual is complied with.
2010 ANNUAL REPORT Health Management International Ltd 83
S TAT I S T I C S O F S H A R E H O L D I N G S As At 27 September 2010 Twenty Largest Shareholders No.
Name
1
Mayban Nominees (S) Pte Ltd
50,000,000
10.40
2
Nam See Investment Pte Ltd
38,083,061
7.92
3
SBS Nominees Pte Ltd
37,561,200
7.82
4
KB Nominees Pte Ltd
35,350,000
7.36
5
Raffles Nominees (Pte) Ltd
24,361,000
5.07
6
Singapore Nominees Pte Ltd
18,970,000
3.95
7
Cheah Way Mun
18,301,766
3.81
8
HSBC (Singapore) Nominees Pte Ltd
17,514,320
3.64
9
Sing Investment & Finance Nominees Pte Ltd
16,000,000
3.33
10
OCBC Securities Private Ltd
8,380,850
1.74
11
Chuah Ah Nooi
6,254,818
1.30
12
United Overseas Bank Nominees Pte Ltd
5,904,031
1.23
13
Kaka Singh s/o Dalip Singh
5,900,000
1.23
14
DBS Nominees Pte Ltd
4,844,775
1.01
15
Amfraser Securities Pte. Ltd.
4,534,000
0.94
16
DBS Vickers Securities (S) Pte Ltd
3,439,600
0.72
17
Tan Seng Hock
3,167,000
0.66
18
Ng Chee Fatt
3,000,000
0.62
19
Low Chen Kiong
2,700,000
0.56
20
Tan Chin Tiong
2,627,800
0.55
306,894,221
63.86
Total :
84 Health Management International Ltd 2010 ANNUAL REPORT
No. of Shares
%
NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the Twelfth Annual General Meeting of HEALTH MANAGEMENT INTERNATIONAL LTD will be held at: Venue
:
i-Connect Room, 168 Jalan Bukit Merah, Ground Floor, Surbana One, Singapore 150168
Date/Time
:
Wednesday, 27 October 2010 at 3:00 p.m.
to transact the following business:
AS ORDINARY BUSINESS Item No. 1.
To receive, consider and adopt the Directors’ Report and Financial Statements for the financial year ended 30 June 2010 together with the Auditors’ Report thereon. [Resolution 1]
2.
To re-elect the following directors retiring pursuant to Article 95 of the Articles of Association of the Company. (i) (ii)
Mr. Andy Gan Lai Chiang Dr. Cheah Way Mun
[Resolution 2] [Resolution 3]
Mr. Andy Gan Lai Chiang, if re-elected, will remain as the Chairman of the Audit Committee and a member of the Nominating Committee and the Remuneration Committee. Dr. Cheah Way Mun, if re-elected, will remain as a member of the Audit Committee, Nominating Committee and Remuneration Committee. 3.
To approve the payment of Directors’ Fees of S$156,200 for the financial year ended 30 June 2010 (2009: S$156,200). [Resolution 4]
4.
To re-appoint Messrs PricewaterhouseCoopers LLP as the Auditors of the Company and to authorise the Directors to fix their remuneration. [Resolution 5]
AS SPECIAL BUSINESS To consider and if thought fit, to pass the following resolutions as Ordinary Resolutions, with or without any modifications: 5.
Mandate to issue shares in the capital of the Company [Resolution 6] That authority be and is hereby given to the Directors to: (a)
(i)
issue shares in the Company (“shares”) whether by way of rights, bonus or otherwise; and/or
(ii)
make or grant offers, agreements or options (collectively, the “Instruments”) that might or would require shares to be issued, including but not limited to the creation and issue of (as well as adjustments to) options, warrants, debentures or other instruments convertible into shares, at any time and upon such terms and conditions and for such purposes and to such persons as the Directors of the Company may in their absolute discretion deem fit; and
(b)
(notwithstanding the authority conferred by this Resolution may have ceased to be in force) issue shares in pursuance of any Instrument made or granted by the Directors of the Company while this Resolution was in force,
2010 ANNUAL REPORT Health Management International Ltd 85
NOTICE OF ANNUAL GENERAL MEETING
provided that: (1)
6.
the aggregate number of shares to be issued pursuant to this Resolution (including shares to be issued in pursuance of Instruments made or granted pursuant to this Resolution): (A)
by way of renounceable rights issues on a pro rata basis to shareholders of the Company (“Renounceable Rights Issues”) shall not exceed 100 per cent of the total number of issued shares in the capital of the Company excluding treasury shares (as calculated in paragraph (3) below); and
(B)
otherwise than by way of Renounceable Rights Issues (“Other Share Issues”) shall not exceed 50 per cent of the total number of issued shares in the capital of the Company excluding treasury shares (as calculated in accordance with paragraph (3) below), of which the aggregate number of shares to be issued other than on a pro rata basis to shareholders of the Company shall not exceed 20 per cent of the total number of issued shares in the capital of the Company excluding treasury shares (as calculated in accordance with paragraph (3) below);
(2)
the Renounceable Rights Issues and Other Share Issues shall not, in aggregate, exceed 100 per cent of the total number of issued shares in the capital of the Company excluding treasury shares (as calculated in paragraph (3) below);
(3)
(subject to such manner of calculation as may be prescribed by the SGX-ST) for the purpose of determining the aggregate number of shares that may be issued under paragraphs (1)(A) and (1)(B) above, the percentage of issued shares shall be based on the total number of issued shares in the capital of the Company excluding treasury shares at the time this Resolution is passed, after adjusting for: (i)
new shares arising from the conversion or exercise of any convertible securities or share options or vesting of share awards which are outstanding or subsisting at the time this Resolution is passed; and
(ii)
any subsequent bonus issue or consolidation or subdivision of shares;
(4)
in exercising the authority conferred by this Resolution, the Company shall comply with the provisions of the Listing Manual of the SGX-ST for the time being in force (unless such compliance has been waived by the SGX-ST) and the Articles of Association for the time being of the Company; and
(5)
(unless revoked or varied by the Company in General Meeting) the authority conferred by this Resolution shall continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is the earlier, or in relation to the additional increase of a further 50 per cent limit for Renounceable Rights Issues, until 31 December 2010 or such other deadline as may be extended by the SGX-ST, whichever is earlier. [See Explanatory Note (i)]
Authority to Issue Shares at a Discount Exceeding 10 per cent but not more than 20 per cent
[Resolution 7]
Subject to Resolution 6 being passed, that authority be and is hereby given to the Directors to: (i)
(where exercising the authority conferred by Resolution 6 in relation to the issue of new shares other than on a pro rata basis to shareholders of the Company in connection with a share placement), price the discount of such issue of shares at a discount exceeding 10 per cent but not more than 20 per cent in accordance with the provisions of the Listing Manual of the SGX-ST for the time being in force (unless such compliance has been waived by the SGX-ST) and the Articles of Association for the time; and
86 Health Management International Ltd 2010 ANNUAL REPORT
NOTICE OF ANNUAL GENERAL MEETING
(ii)
7.
(unless revoked or varied by the Company in General Meeting) the authority conferred by this Resolution shall continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, or 31 December 2010 or such other deadline as may be extended by the SGX-ST, whichever is the earlier. [See Explanatory Note (ii)]
Authority to issue shares under the HMI Employee Share Option Scheme
[Resolution 8]
That pursuant to Section 161 of the Companies Act, Cap. 50, the Directors of the Company be authorised and empowered to offer and grant options under the HMI Employee Share Option Scheme (“the Scheme”) and to issue from time to time such number of shares in the capital of the Company as may be required to be issued pursuant to the exercise of options granted by the Company under the Scheme, whether granted during the subsistence of this authority or otherwise, provided always that the aggregate number of additional ordinary shares to be allotted and issued pursuant to the Scheme shall not exceed 15 per cent of the total number of issued shares (excluding treasury shares, if any) in the capital of the Company from time to time and that such authority shall, unless revoked or varied by the Company in a general meeting, continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is earlier. [See Explanatory Note (iii)] 8.
Renewal of Share Buy Back Mandate
[Resolution 9]
That: (a)
for the purposes of Sections 76C and 76E of the Companies Act, Chapter 50 of Singapore (the “Companies Act”), the Directors of the Company be and are hereby authorised to exercise all the powers of the Company to purchase or otherwise acquire ordinary shares in the capital of the Company (the “Shares”) not exceeding in aggregate the Prescribed Limit (as hereinafter defined), at such price(s) as may be determined by the Directors of the Company from time to time up to the Maximum Price (as hereinafter defined), whether by way of: (i)
market purchases (each a “Market Purchase”) on the Singapore Exchange Securities Trading Limited (the “SGX-ST”); and/or
(ii)
off-market purchases (each an “Off-Market Purchase”) effected otherwise than on the SGX- ST in accordance with any equal access schemes as may be determined or formulated by the Directors of the Company as they consider fit, which schemes shall satisfy all the conditions prescribed by the Companies Act,
and otherwise in accordance with all other provisions of the Companies Act and the Listing Manual of the SGX-ST as may for the time being be applicable, be and is hereby authorized and approved generally and unconditionally (the “Share Buy Back Mandate”); (b)
any Share that is purchased or otherwise acquired by the Company pursuant to the Share Buy Back Mandate shall, at the discretion of the Directors of the Company, either be cancelled or held in treasury and dealt with in accordance with the Companies Act;
(c)
unless varied or revoked by the Company in general meeting, the authority conferred on the Directors of the Company pursuant to the Share Buyback Mandate may be exercised by the Directors at any time and from time to time during the period commencing from the passing of this Resolution and expiring on the earlier of: (i)
the date on which the next annual general meeting of the Company (“AGM”) is held or is required by law to be held;
2010 ANNUAL REPORT Health Management International Ltd 87
NOTICE OF ANNUAL GENERAL MEETING
(d)
(ii)
the date on which the share buybacks are carried out to the full extent mandated; or
(iii)
the date on which the authority contained in the Share Buyback Mandate is varied or revoked;
for purposes of this Resolution: “Prescribed Limit” means 10 per cent of the issued ordinary share capital of the Company as at the date of passing of this Resolution unless the Company has effected a reduction of the share capital of the Company in accordance with the applicable provisions of the Companies Act, at any time during the Relevant Period, in which event the issued ordinary share capital of the Company shall be taken to be the amount of the issued ordinary share capital of the Company as altered (excluding any Treasury shares that may be held by the Company from time to time); “Relevant Period” means the period commencing from the date on which the last AGM was held and expiring on the date the next AGM is held or is required by law to be held, whichever is the earlier, after the date of this Resolution; and “Maximum Price” in relation to a Share to be purchased, means an amount (excluding brokerage, commission, stamp duties, applicable goods and services tax, clearance fees and other related expenses) not exceeding: (i)
in the case of a Market Purchase: 105 per cent of the Average Closing Price; and
(ii)
in the case of an Off-Market Purchase: 120 per cent of the Average Closing Price, where:
“Average Closing Price” means the average of the closing market prices of a Share over the last five Market Days, on which the Shares are transacted on the SGX-ST or, as the case may be, such securities exchange on which the Shares are listed or quoted, immediately preceding the date of the Market Purchase by the Company or, as the case may be, the date of the making of the offer pursuant to the Off-Market Purchase, and deemed to be adjusted, in accordance with the rules of the SGX-ST, for any corporate action that occurs after the relevant five-day period; “day of the making of the offer” means the day on which the Company announces its intention to make an offer for the purchase of Shares from shareholders of the Company stating the purchase price (which shall not be more than the Maximum Price calculated on the foregoing basis) for each Share and the relevant terms of the equal access scheme for effecting the Off-Market Purchase; and “market day” means a day on which the SGX-ST is open for trading in securities; and (e)
any of the Directors of the Company be and are hereby authorised to complete and do all such acts and things (including without limitation, to execute all such documents as may be required and to approve any amendments, alterations or modifications to any documents), as they or he may consider desirable, expedient or necessary to give effect to the transactions contemplated by this Resolution. [See Explanatory Note (iv) ]
By Order of the BOARD Ms Noraini Latiff Company Secretary 12 October 2010 Singapore
88 Health Management International Ltd 2010 ANNUAL REPORT
NOTICE OF ANNUAL GENERAL MEETING
EXPLANATORY NOTES (i)
Resolution 6 above empower the Directors to issue shares in the capital of the Company and to make or grant instruments (such as warrants or debentures) convertible into shares, and to issue shares in pursuance of such instruments, up to a number not exceeding (i) 100 per cent for Renounceable Rights Issues and (ii) 50 per cent for Other Share Issues, of which up to 20 per cent may be issued other than on a pro rata basis to shareholders, provided that the total number of shares which may be issued pursuant to (i) and (ii) shall not exceed 100 per cent of the issued shares (excluding treasury shares) in the capital of the Company. For the purpose of determining the aggregate number of shares that may be issued, the percentage of issued shares shall be based on the total number of issued shares (excluding treasury shares) in the capital of the Company at the time that Resolution 6 is passed, after adjusting for (a) new shares arising from the conversion or exercise of any convertible securities or share options or vesting of share awards which are outstanding or subsisting at the time that Resolution 6 is passed, and (b) any subsequent bonus issue or consolidation or subdivision of shares. The authority for 100 per cent Renounceable Rights Issues is proposed pursuant to the SGX-ST news release of 19 February 2009 (“News Release”) which introduced further measures to accelerate and facilitate listed issuers’ fund raising efforts, and will expire on 31 December 2010 unless extended. It will provide the Directors with an opportunity to raise funds and avoid prolonged market exposure by reducing the time taken for shareholders’ approval, in the event the need arises. Minority shareholders’ interests are mitigated as all shareholders have equal opportunities to participate and can dispose their entitlements through trading of nilpaid rights if they do not wish to subscribe for their rights shares. It is subject to the condition that the Company makes periodic announcements on the use of the proceeds as and when the funds are materially disbursed and provides a status report on the use of proceeds in the annual report.
(ii)
Resolution 7 above is to empower the Directors to issue new shares pursuant to a share placement, undertaken using general share issue mandate for a discount of up to 20 per cent. Earlier, under the Listing Manual of SGX-ST, the quantum of discount allowed was 10 per cent. The News Release which introduced further measures to accelerate and facilitate listed issuers’ fund raising efforts, now allows a company to undertake placements of new shares priced at discounts of up to 20 per cent subject to the conditions that: a)
the issuer seeks shareholders’ approval in a separate resolution (“Resolution”) at a general meeting to issue new shares on a non pro-rata basis at a discount exceeding 10 per cent but not more than 20 per cent; and
b)
the resolution seeking a general mandate from shareholders (i.e. Resolution No. 6) for issuance of new shares on a non prorata basis is not conditional on the aforementioned Resolution.
As such, the Directors seek shareholders’ approval for issuing new shares at a discount of up to 20 per cent pursuant to a share placement. (iii)
The Resolution 8 above, if passed, will empower the Directors of the Company, from the date of this Meeting until the next Annual General Meeting of the Company, or the date by which the next Annual General meeting of the Company is required by law to be held or such authority is varied or revoked by the Company in general meeting, whichever is the earlier, to issue shares in the Company pursuant to the exercise of options granted or to be granted under the Scheme up to a number not exceeding in total (for the entire duration of the Scheme) 15 per cent of the total number of issued shares (excluding treasury shares, if any) in the capital of the Company from time to time.
(iv)
The Resolution 9 above, if passed, will empower the Directors of the Company from the date of the above meeting until the next Annual General Meeting, or the day by which the next Annual General Meeting is required by law to be held or when varies or revoked by the Company in general meeting, whichever is the earlier, to make on-market and off-market purchases or acquisitions or ordinary shares of the Company up to 10 per cent of the issued shares excluding treasury shares in the capital of the Company as at the date of this Resolution at a Maximum price (as defined in Resolution 9 above). Detailed information on the Share Buy Back Mandate (as defined in Resolution 9 above) is set out in the Circular dated 8 October 2010 accompanying this Notice of Annual General Meeting.
NOTES 1.
A member of the Company entitled to attend and vote at the Twelfth Annual General Meeting of the Company is entitled to appoint one or two proxies to attend and vote in his stead.
2.
Where a member appoints two proxies, the appointments shall be invalid unless he specifies the proportion of his shareholdings (expressed as a percentage of the whole) to be represented by each proxy.
3.
A proxy need not be a member of the Company.
4.
If the appointer is a corporation, the instrument appointing the proxy must be executed under seal or the hand of its duly authorised officer or attorney.
5.
The instrument appointing a proxy must be deposited at the Registered Office of the Company at 167 Jalan Bukit Merah, #05-10 Connection One, Singapore 150167 not less than forty-eight (48) hours before the time appointed for holding the Meeting.
2010 ANNUAL REPORT Health Management International Ltd 89
HEALTH MANAGEMENT INTERNATIONAL LTD
IMPORTANT:
(Company Registration No : 199805241E) (Incorporated in the Republic of Singapore)
1.
For investors who have used their CPF monies to buy shares in Health Management International Ltd, this report is forwarded to them at the request of their CPF Approved Nominees and is sent solely FOR INFORMATION ONLY.
2.
This Proxy Form is not valid for use by CPF investors and shall be ineffective for all intents and purposes if used or purported to be used by them.
3.
CPF investors who wish to vote should contact their CPF Approved Nominees.
PROXY FORM (Please see notes overleaf before completing this Form)
*I/We of being *member/members of HEALTH MANAGEMENT INTERNATIONAL LTD (the “Company”), hereby appoint Name
Address
NRIC/Passport Number
Proportion of Shareholdings (%)
and/or (delete as appropriate)
as my/our proxy to vote for me/us on my/our behalf and, if necessary, to demand a poll, at the Twelfth Annual General Meeting of the Company to be held at i-Connect Room, 168 Jalan Bukit Merah, Ground Floor, Surbana One, Singapore 150168 on 27 October 2010, at 3.00 p.m. and at any adjournment thereof. (Please indicate with an “X” in the spaces provided whether you wish your vote(s) to be cast for or against the Resolutions as set out in the Notice of Twelfth Annual General Meeting. In the absence of specific directions, your proxy/proxies will vote or abstain from voting as he/she/they may think fit, as he/she/they will on any other matter arising at the Twelfth Annual General Meeting.) RESOLUTIONS
TO BE USED ON A SHOW OF HANDS For* Against*
Ordinary Resolutions:
1
2 3 4 5
6 7 8
9
Adoption of Financial Statements for the financial year ended 30 June 2010 and the Reports of the Directors and Auditors and the Statement by Directors thereon. Re-election of Mr. Andy Gan Lai Chiang retiring pursuant to Article 95 of the Association of the Company. Re-election of Dr. Cheah Way Mun retiring pursuant to Article 95 of the Articles of Association of the Company. Approval of Directors’ Fees of S$156,200 for the financial year ended 30 June 2010. To re-appoint Messrs PricewaterhouseCoopers LLP as the Auditors of the Company and to authorise the Directors to fix their remuneration. Authority to Directors to allot and issue new shares. Authority to issue shares at a discount exceeding 10% but not more than 20%. Authority to issue shares up to 15% of issued ordinary shares, excluding treasury shares under the HMI Employee Share Option Scheme. Authority to purchase up to 10% of issued ordinary shares, excluding treasury shares under a Share Buy Back Mandate.
Dated this
TO BE USED IN THE EVENT OF A POLL Number of Number Votes For** of Votes Against**
day of
Signature(s) of Member(s) or *Delete accordingly
2010
Total number of Shares Held
FOLD HERE FOR SEALING
PLEASE AFFIX 26 CENTS POSTAGE STAMP HERE
The Company Secretary
HEALTH MANAGEMENT INTERNATIONAL LTD 167 Jalan Bukit Merah, #05-10 Connection One Singapore 150167
FOLD HERE
Notes: 1.
Please insert the total number of shares held by you. If you have shares entered against your name in the Depository Register (as defined in Section 130A of the Companies Act, Cap. 50), you should insert that number of shares. If you have shares registered in your name in the Register of members, you should insert that number of shares. If you have shares entered against your name in the Depository Register and shares registered in your name in the Register of Members, you should insert the aggregate number of shares entered against your name in the Depository Register and registered in your name in the Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the shares held by you.
2.
A member of the Company entitled to attend and vote at the Twelfth Annual General Meeting is entitled to appoint one or two proxies to attend and vote in his stead. A proxy need not be a member of the Company.
3.
Where a member appoints two proxies, the appointments shall be invalid unless he specifies the proportion of his shareholding (expressed as a percentage of the whole) to be represented by each proxy. However, if no such proportion is specified, the first named proxy may be treated as representing 100 per cent of the shareholding and any second named proxy as an alternate to the first named.
4.
The instrument appointing a proxy or proxies must be deposited at the Registered Office of the Company at 167 Jalan Bukit Merah, #05-10 Connection One, Singapore 150167 not less than forty-eight (48) hours before the time fixed for holding the Twelfth Annual General Meeting.
5.
This instrument appointing a proxy or proxies must be under the hand of the appointor or his attorney duly authorized in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its seal or under the hand of any officer or attorney duly authorized.
6.
A corporation which is a member may also authorize by resolution of its directors or other governing body such person as it thinks fit to act as its representative at the Twelfth Annual General Meeting in accordance with Section 179 of the Companies Act, Chapter 50 of Singapore.
7.
The Company shall be entitled to reject this instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument appointing a proxy or proxies.
8.
In the case of members whose Shares are entered against their names in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if such members are not shown to have Shares entered against their names in the Depository Register as at forty-eight (48) hours before the time fixed for holding the Twelfth Annual General Meeting as certified by the CDP to the Company.
HEALTH MANAGEMENT INTERNATIONAL LTD (Company Reg. No: 199805241E) 167 Jalan Bukit Merah Connection One #05-10 Singapore 150167 Tel: (65) 6253 3818 Fax: (65) 6253 8259 Website: www.hmi.com.sg
