Principal Capital Public Company Limited Annual Report 2020 Purpose “A Corporation that attracts and nurtures people with compassion, in order to provide care to our customers, the community and society.” Vision PRINC will become more healthcare focused, invest in healthcare property and be a trusted hospital management organization with emphasis on digitalization and efficiency, while fully utilize the properties we currently own, for the utmost benefits of all stakeholders. Mission • To take part in enhancing the health of the community through building hospitals in areas with shortages for the benefit of people in the community and society and creating a sustainable healthy society. • To provide professional hospital management services, along with non-medical shared services, to our subsidiary hospitals as well as our partner hospitals. • To efficiently operate the hospital, with the use of IT, to deliver the desired outcomes in every perspective including financial, service quality, • and customer satisfaction. • To strengthen our network of hospitals through partnership and new acquisitions. • To develop viable health-related projects to serve potential markets both in our own properties and in new promising sites. • To continually develop our human resources to be competent with up-to-date technology, enhanced with new capabilities, and adaptive to our fast-growing organizations and to instill giver’s consciousness among them so that they, in turn, deliver heartfelt service to the community and society. • Determine to develop excellence in service providing of existing hotel and serviced apartment in order to build customer satisfaction. Contents 2 58 Massage from Chairman Board of Directors of of the Board of Directors Principal Capital 3 Public Company Limited Message from 91 Managing Director Corporate 5 Governance Policy Message from Chairman 101 of the Audit Committee Internal Control and 8 Risk Management Financial 104 Highlight Corporate Social 12 Responsibilities Business 109 Overview Related Party 41 Transaction Major 110 Development Independent 46 Auditor’s Report Capital structure and 116 general information Statement of 54 Financial Position Management Structure and 126 Director and Executive’s Notes to the Consolidated and Remuneration Separate Financial Statements 205 Management Discussion and Analysis Massage from Chairman of the Board of Directors COVID-19 Pandemic brought about public health as We also see major changes in the healthcare market. well as economic crisis all over the world. To limit the spread Thus, we have initiated new lines of services. Setting up of COVID-19, we all have to adjust our way of living. As primary care clinic is one of the examples. We expanded vaccine become available, we hope that crisis phase of beyond the hospitals to serve our customers closer to their the pandemic will be over soon. However, the impact of home. Use of information technology will help enhance COVID-19 pandemic on society, economics and healthcare connection between the hospitals to clinics to our patients. industry will be felt for a long long time. Recognising that healthcare and business environment At Principal Capital PCL, we experience the impact of will never be the same post COVID-19, we have intensified COVID-19 in many ways. Our clinical team, management, training of our management and staff, enhancing their skill together with all our staff have made contribution and so we can serve better. sacrifice in order to continue in operations. Our customers Acquisition and building new hospitals continue through have cooperated with us in the efforts to prevent spread the last year. We will continue our growth strategies, shifting of COVID-19. To all who have worked so hard, I want to emphasis from property sector to healthcare sector, while express our deep appreciation. creating greater shareholders value. As we face the crisis, we also see opportunities to We thank our shareholders and customers for their improve our services to the customers and do better in trust and encouragement. We look forward to a better year emerging as a stronger and better company post COVID-19. in 2021 and beyond. The management has worked tirelessly to conserve resources, especially financial resources. We have also look for possibilities of serving the community better. Thus, innovative service products were created that help the community and bringing in revenue. (Mr. John Lee Kohshun) Chairman of the Board of Directors 2 Principal Capital Public Company Limited Annual Report 2020 Message from Managing Director In 2020 Principal Capital Public Company Limited In terms of medical co-operation, the Company and operated the business according to the plan and also started Bumrungrad Health Network set up a Spine and Joint Center a new business with high potential. Also, the Company in Princ Hospital Suvarnabhumi and Holistic Cancer Center expands the network in terms of business, social care, in Phitsanuvej Hospital, Phisanulok Province, and Princ and environment in parallel with the transparent business Hospital Ubonratchathani. It will be opened for service in operation. Shared services also expanded to cover more 2021. Furthermore, the Company also co-operated with areas to enhance efficiency and develop the standard Nihon Keiei (Thailand) Co., Ltd. from Japan to set up elderly and search for a new business alliance to strengthen the care Center, which will be opened for services in 2021. ecosystem under the Covid-19 outbreaks situation. 2020 is the year with an enormous challenge from the According to the expansion plan of the healthcare shrink of the overall economy and the Covid-19 outbreaks business, the Company targets to have 20 hospitals in the which directly affected hospital business. The crisis provided network within 2023. The Company opened 3 new hospitals an opportunity for the hospital in Princ network to develop including Viratsilp Hospital in Chumphon Province, Princ the potential, review the process to respond to the demand Hospital Ubonratchathani, Princ Hospital Lamphun making of the patients with their best efforts, determined to be a part the existing hospital of 10 hospitals in 9 provinces by the of Thai Healthcare society to help people become healthy end of 2020. In addition, the primary care serviced will be to be a major force in country development and revive the provided by Klai Baan Klai Jai Co., Ltd. The first 10 pilot economy. Doing business in parallel with taking care of clinics will provide medical services to Gold Cardholders in society. Hold on to the determination to develop people in Bangkok. The Company targets to increase the number of the organization to be a giver. The crisis limits the Company clinics to 100 in 2022. to set activities to foster this culture as normal. But the Last year the Company joined with Sisaket Meditech company tried its best to bring the employee advance with Co., Ltd. to prepare for the commercial operation of Princ the organization without leaving behind those who have Hospital Sisaket in April 2021. To cover the area in the the same determinations as to the Company. There are secondary provinces as a target, there are 3 projects in 3 various forms of assistance such as online coach to listen regions, which are in the feasibility study and negotiation to the problem, meal sharing cabinet, happy meal project by process. giving a treat to the employee to save their living expense to thank you for their effort to fight with the obstacle and adjust themselves along with the organization. 3 The organization restructuring was undergone by It is clearly showed that technology plays a very recruiting the personnel with expertise in Artificial Intelligence important role to life and business in the situation of (AI), Marketing technology from MEDcury Co., Ltd. as well Covid-19. The enhancement of services does not limit only as recruiting additional staff who have medical expertise in medical services within the hospital but also leading to Digital the hospital business. Currently, the number of employees is Health. The Board of Director plans to support the Company 2,409, increased from 1,941 last year to support the business to step into the full scale of HealthTech to support the New expansion to be in line with the company’s objective to Normal lifestyle and the other risk that has potential to occur. expand healthcare business to the secondary provinces so Finally, I would like to thank you shareholders, and the local people can access good quality medical services all stakeholders for the trust in the Company under the at affordable price. management of the executive team. I hope that the The hospital’s business operation last year focused on Company will still be trusted and supported by all of you to the quality development system. Principal Healthcare was make this organization, an organization that creates well- certified ISO9001:2015 and another 3 hospitals including being for the employee, create value to the people in the Virajsilp Hospital in Chumphon Province was awarded a community, and generates a return to the alliance in the certificate from the Healthcare Accreditation Institute (Public ecosystem of the business and all shareholders. Organization) for following the Step 3 Path towards HA, whereas Pitsanuvej Uttaradit Hospital and Princ Hospital Suvarnabhumi received rewarded a certificate from the Healthcare Accreditation Institute (Public Organization) for following the Step 2 Path towards HA. Besides, Princ Hospital Suvarnabhumi was certified to have achieved HIMSS Analytics Stage 6 as designated by HIMSS Analytics and plan to achieve HIMSS Analytics stage 7 which is the highest level after around 1 year of opening. This is the proof of determination to bring in technology to upgrade the quality of the medical services for the highest benefits of the patients which aligns with the investment policy of International Finance Corporation, an international institute of World Bank that invested in the Company in the previous year. (Dr.