Health Management International

CIRCULAR DATED 14 OCTOBER 2013

THISCIRCULARISISSUEDBYHEALTHMANAGEMENTINTERNATIONAL LTD. THIS CIRCULAR IS IMPORTANT AS IT CONTAINS THE RECOMMENDATION OF THE UNCONFLICTEDDIRECTORS(AS DEFINEDHEREIN)ANDTHEADVICEOFDELOITTE&TOUCHECORPORATE FINANCE PTE LTD TO THEUNCONFLICTEDDIRECTORS.THISCIRCULARREQUIRESYOURIMMEDIATE ATTENTION AND YOU SHOULD READ IT CAREFULLY. If you are in any doubt in relation to this Circular or as to the action you should take, you should consult your stockbroker, bank manager, solicitor, accountant or other professional adviser immediately. If you have sold or transferred all your issued ordinary shares in the capital of Health Management International Ltd, you should immediately forward this Circular to the purchaser, the transferee or the bank, stockbroker or agent through whom you effected the sale or transfer for onward transmission to the purchaser or the transferee. The Singapore Exchange Securities Trading Limited assumes no responsibility for the correctness of any of the statements made, reports contained or opinions expressed in this Circular.

HEALTH MANAGEMENT INTERNATIONAL LTD (Company Registration No: 199805241E) (Incorporated in the Republic of Singapore)

CIRCULARTOSHAREHOLDERS

in relation to the

VOLUNTARY CONDITIONAL CASH PARTIAL OFFER

by PRIMEPARTNERS CORPORATE FINANCE PTE. LTD. (Company Registration No: 200207398D) (Incorporated in Singapore)

for and on behalf of NAMSEEINVESTMENT(PTE)LTD. (Company Registration No: 197802181C) (Incorporated in Singapore)

to acquire 61,000,000 ordinary shares in the capital of Health Management International Ltd other than the shares held in treasury and shares already owned, controlled or agreed to be acquired by Nam See Investment (Pte) Ltd. and its Concert Parties (as defined herein)

Independent Financial Adviser to the Unconflicted Directors

DELOITTE & TOUCHE CORPORATE FINANCE PTE LTD (Company Registration No: 200200144N) (Incorporated in the Republic of Singapore)

SHAREHOLDERSSHOULDNOTETHATTHEOFFERDOCUMENT(ASDEFINED HEREIN) STATES THAT THE ACCEPTANCE AND APPROVAL OF THE OFFER (AS DEFINED HEREIN)SHOULDBE RECEIVED BY THE OFFEROR (AS DEFINED HEREIN) BY 5.30 P.M. (SINGAPORE TIME) ON 28 OCTOBER 2013 OR SUCH LATER DATE(S), IF ANY, AS MAY BE ANNOUNCEDFROMTIMETOTIME BYORONBEHALFOFTHEOFFEROR.ACCORDINGLY,SHAREHOLDERSWHOWISHTOACCEPT ANDAPPROVETHEOFFERMUSTDOSOBYSUCHTIMEANDDATE. CONTENTS

Page

DEFINITIONS...... 2

CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS ...... 6

CORPORATE INFORMATION ...... 7

INDICATIVE TIMELINE ...... 8

LETTERTOSHAREHOLDERS

1. INTRODUCTION ...... 9

2. THEOFFER...... 10

3. INFORMATION ON THE OFFEROR AND ITS CONCERT PARTIES...... 12

4. RATIONALE FOR THE OFFER AND THE OFFEROR’S INTENTIONS RELATINGTO THECOMPANY...... 13

5. IRREVOCABLE UNDERTAKINGS...... 15

6. EXEMPTION RELATING TO DIRECTORS’ RECOMMENDATION...... 15

7. DIRECTORS’ INTERESTSAND INTENTIONS ...... 16

8. ADVICEOFTHEIFA...... 16

9. RECOMMENDATION OF THE UNCONFLICTED DIRECTORS...... 18

10. OVERSEAS SHAREHOLDERS ...... 18

11. INFORMATION PERTAINING TO CPFIS INVESTORS ...... 20

12. ACTION TO BE TAKEN BY THE OFFER SHAREHOLDERS...... 20

13. RESPONSIBILITY STATEMENT ...... 20

14. ADDITIONALINFORMATION...... 21

LETTERFROMTHEIFATOTHEUNCONFLICTEDDIRECTORS...... 22

APPENDICES

1. GENERALINFORMATION...... 48

2. ADDITIONAL INFORMATION ON THE OFFEROR ...... 64

3. AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2013...... 67

1 DEFINITIONS

Except where the context otherwise requires, the following definitions apply throughout this Circular:

“2013 Annual Report” : TheannualreportoftheCompanyforFY2013

“Acceptance Condition” : Hasthemeaninggiventoitin Section 2.1(e) of this Circular

“Approval Condition” : Hasthemeaninggiventoitin Section 2.1(e) of this Circular

“Audited FY2012 Results” : The audited consolidated financial statements of the Group for FY2012

“Audited FY2013 Results” : The audited consolidated financial statements of the Group for FY2013

“CDP” : TheCentralDepository(Pte)Limited

“Circular” : This circular to Shareholders dated 14 October 2013 in relation to the Offer

“Closing Date” : TheFirstClosingDateorsuchlaterdate(s),ifany,asmay be announced from time to time by or on behalf of the Offeror, being the last day and time for lodgement of votes on and acceptances of the Offer

“Code” : TheSingaporeCodeonTake-oversandMergers

“Companies Act” : TheCompaniesAct,Chapter50ofSingapore

“Company” or “HMI” : HealthManagementInternationalLtd

“Competing Offer” : Hasthemeaninggiventoitin Section 2.1(c) of this Circular

“Competing Proposal” : Any transaction or arrangement with any person other than the Offeror (whether by way of a general offer, partial offer, scheme of arrangement, amalgamation, asset purchase, capital reduction, joint venture or otherwise whatsoever), pursuant to which such person will, if the proposed transaction or arrangement is entered into or completed substantially in accordance with its terms, directly or indirectly, acquire any legal, beneficial or economic interest in:

(a) 5% or more of the total number of Shares outstanding; or

(b) such of the assets, business or undertakings of the Group which represent 5% or more of the total consolidated assets of the Group as at 30 June 2013 or contribute 5% or more of the total consolidated revenues of the Group for FY2013, in each case as derived from the audited consolidated financial statements of the Group for FY2013

“Concert Parties” : PartiesactinginconcertwiththeOfferorinrelationtoOffer, as more particularly described in Section 3 of this Circular

2 “CPFIS” : CentralProvidentFundInvestmentScheme

“CPFIS Investors” : Investors who have purchased Shares using their monies pursuant to the CPFIS

“Directors” : The directors of the Company (including the Unconflicted Directors) as at the Latest Practicable Date

“FAA” : FormofAcceptanceandAuthorisation

“FAT” : FormofAcceptanceandTransfer

“First Closing Date” : 5.30p.m.on28October2013

“FY” : Financialyearended30June

“Group” : TheCompany,itssubsidiariesandassociatedcompanies

“HMI Share Option : The HMI Employee Share Option Scheme, which was Scheme” approved by the Shareholders at the extraordinary general meeting of the Company held on 23 October 2008

“HMI Performance Share : The HMI Performance Share Plan, which was approved by the Plan” Shareholders at the extraordinary general meeting of the Company held on 23 October 2008

“IFA” or “Deloitte” : Deloitte&ToucheCorporateFinancePteLtd,theindependent financial adviser to the Unconflicted Directors in connection with the Offer

“IFA Letter” : Hasthemeaninggiventoitin Section 8.1 of this Circular

“IU” : IrrevocableundertakingtoacceptandapprovetheOffer, as more particularly described in Section 5 of this Circular

“IU Shareholders” : Persons from whom IUs have been received, as shown in Section 5.2 of this Circular

“Latest Practicable Date” : 4 October 2013, being the latest practicable date prior to the printing of this Circular

“Listing Manual” : ThelistingmanualoftheSGX-ST

“Market Day” : AdayonwhichtheSGX-STisopenfortradinginsecurities

“Offer” : ThevoluntaryconditionalcashpartialofferbyPrimePartners, for and on behalf of the Offeror, to acquire the Offer Shares on the terms set out in the Offer Document, the FAA and the FAT or on such revised terms, if any, as may be announced from time to time by or on behalf of the Offeror in accordance with the Code

“Offer Announcement” : The announcement of the Offer released by PrimePartners, for and on behalf of the Offeror, on the Offer Announcement Date on the SGXNET

3 “Offer Announcement : 16 September 2013, being the date of release of the Offer Date” Announcement on the SGXNET

“Offer Document” : The offer document dated 30 September 2013 issued by PrimePartners, for and on behalf of the Offeror, and any other document(s) which may be issued, for and on behalf of the Offeror, to amend, revise, supplement or update the Offer Document and such other document(s) from time to time

“Offer Price” : S$0.16incashforeachOfferShareorsuchrevisedprice,if any, as may be announced from time to time by or on behalf of the Offeror in accordance with the Code

“Offer Shareholders” : Shareholders as at the Record Date, other than the Offeror and its Concert Parties, being Shareholders who are entitled to accept and approve the Offer, as more particularly described in Section 2.1(b) of this Circular

“Offer Shares” : 61,000,000 Shares to which the Offer relates, as more particularly described in Section 2.1(a) of this Circular

“Offeror” : NamSeeInvestment(Pte)Ltd.

“Overseas Shareholders” : Hasthemeaninggiventoitin Section 10.1 of this Circular

“PrimePartners” : PrimePartners Corporate Finance Pte. Ltd., the financial adviser to the Offeror in connection with the Offer

“Record Date” : 5.00p.m.on14October2013,beingthedateonwhichthe Share Register and the Depository Register will be closed in order to determine the entitlements of Shareholders to accept and approve the Offer

“SGX-ST” : SingaporeExchangeSecuritiesTradingLimited

“Share Register” : The register of members (or shareholders) of the Company, as maintained by the Share Registrar

“Share Registrar” : BoardroomCorporate&AdvisoryServicesPte.Ltd.

“Shareholders” : HoldersofSharesinissue(includingpersonswhoseShares are deposited with CDP)

“Shares” : OrdinarysharesinthecapitaloftheCompany

“SIC” : SecuritiesIndustryCouncilofSingapore

“Unaudited FY2013 : The unaudited consolidated financial statements of the Group Results” for FY2013

“Unconflicted Directors” : The Directors who are considered independent for the purpose of making recommendations to the Shareholders in respect of the Offer, namely, Cheah Way Mun, Gan Lai Chiang, Andy and Tan Chin Tiong

“per cent.” or “%” : Percentumorpercentage

4 “S$” and “cents” : Singapore dollars and cents, respectively, being the lawful currency of Singapore

“RM” and “sen” : Ringgit and sen, respectively, being the lawful currency of Malaysia

Acting in Concert, Associated Company. Unless otherwise defined, the expressions “acting in concert” and “associates” shall have the meanings given to them respectively in the Code.

Depositors. The expressions “Depositor” and “Depository Register” shall have the meanings given to them respectively in the Companies Act.

Genders. Words importing the singular shall, where applicable, include the plural and vice versa. Words importing the masculine gender shall, where applicable, include the feminine and neuter genders and vice versa. References to persons shall, where applicable, include corporations.

Headings. The headings in this Circular are inserted for convenience only and shall be ignored in construing this Circular.

Shares in the Capital of the Company. In this Circular, the total number of Shares is 577,071,286 (excluding 210,000 treasury shares) as at the Latest Practicable Date.

Subsidiary. The expression “subsidiary” shall have the meaning given to it in the CompaniesAct.

Rounding. Any discrepancies in the figures in this Circular between the listed amounts and the total thereof are due to rounding. Accordingly, figures shown as totals in this Circular may not be an arithmetic aggregation of the figures that precede them.

Shareholders. References to “you”,“your” and “yours” in this Circular are, as the context so determines, to Shareholders.

Statutes. Any reference in this Circular to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any word defined under the Companies Act, the Code, the Listing Manual or any statutory modification thereof and not otherwise defined in this Circular shall, where applicable, have the same meaning assigned to it under the Companies Act, the Code, the Listing Manual or any statutory modification thereof, as the case may be, unless the context otherwise requires.

Time and Date. Any reference to a time of day and date in this Circular shall be a reference to Singapore time and date respectively unless otherwise stated.

5 CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS

All statements other than statements of historical facts included in this Circular are or may be forward-looking statements. Forward-looking statements include but are not limited to those using words such as “expect”, “anticipate”, “believe”, “intend”, “project”, “plan”, “strategy”, “forecast” and similar expressions or future or conditional verbs such as “will”, “would”, “should”, “could”, “may” and “might”. These statements reflect the Company’s current expectations, beliefs, hopes, intentions or strategies regarding the future and assumptions in light of currently available information. Such forward-looking statements are not guarantees of future performance or events and involve known and unknown risks and uncertainties. Accordingly, actual results or outcomes may differ materially from those described in such forward-looking statements. Shareholders and investors should not place undue reliance on such forward-looking statements, and neither the Company nor the IFA undertakes any obligation to update publicly or revise any forward-looking statements, subject to compliance with all applicable laws and regulations and/or rules of the SGX-ST and/or any other regulatory or supervisory body or agency.

6 CORPORATE INFORMATION

Board of Directors : Dr.GanSeeKhem Dr. Chin Koy Nam Dr. Cheah Way Mun Mr. Gan Lai Chiang, Andy Professor Tan Chin Tiong

Company Secretary : Mr.LoKimSeng

Registered Office : 167 Jalan Bukit Merah #05-10, Connection One Singapore 150167

Share Registrar : Boardroom Corporate & Advisory Services Pte. Ltd. 50 Raffles Place, #21-01 Singapore Land Tower Singapore 048623

Independent Financial : Deloitte & Touche Corporate Finance Pte Ltd Adviser to the 6 Shenton Way Tower Two Unconflicted Directors in #32-00 relation to the Offer Singapore 068809

Legal Adviser to the : Stamford Law Corporation Company in relation to 10 Collyer Quay the Offer #27-00 Ocean Financial Centre Singapore 049315

Auditors of the Company : PricewaterhouseCoopers LLP 8 Cross Street #17-00 PwC Building Singapore 048424

Audit Partner-in-charge: Ms. Tan Khiaw Ngoh

7 INDICATIVE TIMELINE

Date of despatch of Offer : 30 September 2013 Document

Date of despatch of this : 14October2013 Circular

RecordDate : 5.00p.m.on14October2013

Despatch of Entitlement : On or about 18 October 2013 Notification Letter (as defined in the Offer Document)

FirstClosingDate : 5.30p.m.on28October2013

ClosingDate : First Closing Date or such later date(s), if any, as may be announced from time to time by or on behalf of the Offeror

Payment of Offer Price : SubjecttotheOfferbecomingorbeing declared unconditional in all respects, within 10 calendar days of the Closing Date

8 HEALTH MANAGEMENT INTERNATIONAL LTD (Company Registration No.: 199805241E) (Incorporated in the Republic of Singapore)

Directors: Registered Office:

Gan See Khem 167 Jalan Bukit Merah Chin Koy Nam #05-10, Connection One Cheah Way Mun Singapore 150167 Gan Lai Chiang, Andy Tan Chin Tiong

14 October 2013

To: The Shareholders of Health Management International Ltd

Dear Sir/Madam

VOLUNTARY CONDITIONAL CASH PARTIAL OFFER

1. INTRODUCTION

1.1 Offer Announcement. On 16 September 2013, PrimePartners announced, for and on behalf of the Offeror, inter alia, that in accordance with Rule 16 of the Code, the Offeror intends to make the Offer. An announcement in relation to the Offer was then made by the Company on the same day following the Offer Announcement.

Copies of the announcements referred in this Section 1.1 are available on the website of the SGX-ST at www.sgx.com.

1.2 Offer Document. Shareholders should by now have received a copy of the Offer Document issued by PrimePartners, for and on behalf of the Offeror, setting out, inter alia, the terms and conditions of the Offer. Shareholders are advised to read the terms and conditions of the Offer contained therein carefully.

A copy of the Offer Document is available on the website of the SGX-ST at www.sgx.com.

1.3 IFA. The Company has appointed Deloitte as the independent financial adviser to advise the Unconflicted Directors in respect of the Offer.

1.4 Circular. The purpose of this Circular is to provide Shareholders with relevant information pertaining to the Company and to set out the recommendation of the Unconflicted Directors and the advice of the IFA to the Unconflicted Directors in respect of the Offer.

Shareholders should read the Offer Document, this Circular and the IFA Letter carefully and consider the recommendation of the Unconflicted Directors and the advice of the IFA to the Unconflicted Directors in respect of the Offer before deciding whether or not to accept the Offer.

9 2. THE OFFER

2.1 Offer Terms and Conditions. As set out in the Offer Document, the Offer is made on the following terms and conditions:

(a) Offer Shares: the Offer is made to acquire 61,000,000 Offer Shares, other than:

(i) Shares held in treasury – there are 201,000 treasury Shares as at the Latest Practicable Date; and

(ii) Shares already owned, controlled or agreed to be acquired by the Offeror and its Concert Parties1.

The Offer Shares represent approximately 10.57% of the issued share capital of the Company as at the Latest Practicable Date. As at the Latest Practicable Date, the Offeror owns 218,883,673 Shares and the Offeror and its Concert Parties own 240,270,048 Shares in aggregate, representing approximately 37.93% and 41.64% respectively, of the Shares in the issued share capital of the Company.

As at the Latest Practicable Date, the Offeror has received IUs to accept and approve the Offer in respect of 66,481,844 Offer Shares in aggregate, representing approximately 11.52% of the Shares in the issued share capital of the Company. Accordingly, as the Offer is made to acquire 61,000,000 Shares, upon the IU Shareholders tendering the Shares covered by their respective IUs in acceptance of the Offer, the Offer will become and be declared unconditional as to acceptances.

If the Offer becomes or is declared unconditional in all respects, and assuming no new or treasury Share is issued or transferred between the Latest Practicable Date and the close of the Offer, the Offer would increase the aggregate shareholdings of the Offeror and its Concert Parties from 41.64% (240,270,048 Shares) to 52.21% (301,270,048 Shares) of the Shares in the issued share capital of the Company as at the close of the Offer.

The Offeror and its Concert Parties will be able to exercise statutory control over the Company and will be free, subject to a six-month moratorium after the close of the Offer, to acquire further Shares without incurring any obligation to make a general take-over offer for the Company;

(b) Offer Shareholders: the Offer will be made to all Offer Shareholders.

As prescribed by the Code, the Record Date on which the Share Register and the Depository Register is to be closed to determine the entitlements of Shareholders to accept and approve the Offer will be the 14th day2 before the First Closing Date. It is the Shareholders (not being the Offeror and its Concert Parties) as at the Record Date who are entitled to participate in the Offer and their entitlements will be determined in proportion to the number of Shares held by them as at the Record Date. Such entitlements are not transferable.

Each Offer Shareholder may only accept and approve the Offer in respect of the number of Shares held by it as at the Record Date. If any Offer Shareholder acquires any additional Shares after the Record Date but does not sell any of the Shares held by it as at the Record Date, it will not be entitled to accept or approve the Offer in respect of any of those additional Shares. If any person becomes a Shareholder after

1 Please refer to Section 3 of this Circular for details on the Concert Parties.

2 Or, if such day falls on a non-business day, the next immediately following business day.

10 the Record Date, it will not be eligible to participate in the Offer as an Offer Shareholder – it will not be entitled to accept or approve the Offer in respect of any Shares held by it;

Further information on the entitlement of Offer Shareholders to vote on and accept the Offer is set out in Schedule 6 to the Offer Document.

The Offeror has no intention to revise the Offer Price of S$0.16, save that the Offeror reserves the right to revise the terms of the Offer in accordance with the Code if an offer which is, or is deemed under the Code to be, competitive to the Offer (a “Competing Offer”) arises. Accordingly, unless otherwise announced by or on behalf of the Offeror in the event of a Competing Offer, the Offer Price is final and will not be revised;

(d) Rights and Encumbrances: the Offer Shares will be acquired (i) fully paid, (ii) free from all liens, equities, mortgages, charges, encumbrances, rights of pre-emption and other third party rights or interests of any nature whatsoever, and (iii) together with all rights, benefits and entitlements attached thereto as at the Offer Announcement Date and thereafter attaching thereto, including the right to receive and retain all dividends, other distributions and return of capital (if any) which may be announced, declared, paid or made by the Company on or after the Offer Announcement Date.

Any Offer Shareholder who tenders its Shares in acceptance of the Offer will be deemed to have unconditionally and irrevocably warranted that it sells such Shares as or on behalf of the beneficial owner(s) thereof in the terms set out in Sections 2.1(d)(i) to (iii) above.

If any dividend, other distribution or return of capital is announced, declared, paid or made by the Company on or after the Offer Announcement Date, the Offeror reserves the right to reduce the Offer Price by the amount of such dividend, other distribution or return of capital; and

(e) Offer Conditions: the Offer will be subject to the following conditions:

(i) the Offeror having received, by the close of the Offer, approval of the Offer by the Offer Shareholders representing more than 50% of the valid votes received from Offer Shareholders (the Offeror, its Concert Parties and their associates not being allowed to vote) (“Approval Condition”); and

(ii) the Offeror having received, by the close of the Offer, valid acceptances in respect of not less than 61,000,000 Offer Shares which, when taken together with the Shares owned, controlled or agreed to be acquired by the Offeror and its Concert Parties, will result in the Offeror and its Concert Parties holding more than 50% (to be precise, 52.21%) of the total number of Shares outstanding as at the close of the Offer (“Acceptance Condition”).

Accordingly, as noted in Section 2.1(a) above, as the Offer is made to acquire 61,000,000 Shares, upon the IU Shareholders tendering the Shares covered by their respective IUs in acceptance of the Offer, the Offer will become and be declared unconditional as to acceptances.

The Offer will be unconditional in all other respects.

11 2.2 No Other Class of Shares or Convertible Securities. As at the Latest Practicable Date, the Company:

(a) has only one class of shares in issue – the Shares; and

(b) has not issued any rights, options, warrants or other securities which are convertible, exercisable or redeemable into, for or with any Shares or other class of shares which remains outstanding.

Accordingly, no comparable offer need to be made for any other class of shares in the capital of the Company.

2.3 First Closing Date. Shareholders should note that the Offer will close at 5.30 p.m. on 28 October 2013 or such later date(s) as may be announced from time to time for and on behalf of the Offeror.

2.4 Further Details. Further details on the Offer, including in relation to (a) the duration of the Offer, (b) the right to revise the Offer, (c) the settlement of the consideration for the Offer, (d) the requirements relating to the announcement of the level of acceptances of the Offer, and (e) the right of withdrawal of acceptances are set out in Schedule 5 to the Offer Document.

3. INFORMATION ON THE OFFEROR AND ITS CONCERT PARTIES

3.1 Offeror and its Concert Parties. Information on the Offeror and its Concert Parties as set out in Section 3 of the Offer Document is reproduced below. Unless otherwise stated, all terms and expressions used in the extract below shall have the meanings given to them in the Offer Document.

“3. OFFERORANDITSCONCERTPARTIES

3.1 Offeror. The Offeror is a limited exempt private company incorporated in Singapore in 1978. Its directors are GSK and CKN, who are wife and husband. Its principal activity is investment holding. It has a paid-up share capital of S$6 million. Its shareholders are the NSI Family.

GSK is the Executive Chairman and Managing Director of the Company and CKN is an Executive Director of the Company. Additionally, CWJ serves as the General Manager of the Company and Chief Executive Officer of Regency Specialist Hospital in Johor (one of the two hospitals within the Group), while CWS serves as the Marketing Manager of the Company.

As at the LPD, the Offeror is the single largest shareholder of the Company.

3.2 Concert Parties. The Concert Parties of the Offeror consist of:

(a) the NSI Family;

(b) PrimePartners, the financial adviser to the Offeror in relation to the Offer;

(c) CWH, a former Chief Financial Officer of the Company and who had been assisting the Offeror in its preparation of the Offer; and

(d) (by reason only of the presumption under the Code of the existence of a concert party relationship between “close relatives”) the Extended Family Shareholders.

12 3.3 Extended Family Shareholders. The Offeror acknowledges that the Extended Family Shareholders, as shown in Schedule 1 hereto, are presumed to be Concert Parties as they fall within the definition of “close relative” under the Code and has accordingly aggregated the 10,806,253 Shares (1.87%) held by the Extended Family Shareholders as part of the 240,270,048 Offeror Shares (41.64%) held by the Offeror and its Concert Parties as at the LPD.

3.4 Rebuttal of Presumption and Implications. As with any other concert party relationship which arises by reason only of a presumption under the Code, the Offeror reserves the right to rebut such presumption in relation to any particular Extended Family Shareholder if and when the need to do so arises.

In light of the Offer being a partial offer (as opposed to a general offer), and in order to give certainty as to the scope of the Offer, even if such presumption is rebutted in relation to any particular Extended Family Shareholder:

(a) Shares held by that Extended Family Shareholder are not eligible as Offer Shares;

(b) the Offer will not be extended to that Extended Family Shareholder;

(c) any and all Shares held by that Extended Family Shareholder, if purported to be tendered in acceptance of the Offer, will not count towards the Acceptance Condition; and

(d) any and all Shares held by that Extended Family Shareholder, if purported to be voted in acceptance of the Offer, will not count towards the Approval Condition.

3.5 Restrictions on Acquisitions by Offeror and its Concert Parties during and subsequent to the Offer Period. As prescribed under the Code, the Offeror and its Concert Parties will not acquire any Shares (excluding Shares acquired by the Offeror and its Concert Parties via a rights issue and/or bonus issue without increasing their aggregate percentage shareholdings):

(a) during the Offer Period (except pursuant to the Offer); and

(b) during a period of six months after the close of the Offer, if the Offer becomes or is declared unconditional in all respects.”

3.2 Further Information. Schedule 2 to the Offer Document sets out further information on the Offeror, which is reproduced in Appendix 2 to this Circular.

4. RATIONALE FOR THE OFFER AND THE OFFEROR’S INTENTIONS RELATINGTOTHE COMPANY

The full text of the rationale for the Offer and the Offeror’s intentions relating to the Company as set out in Section 5 of the Offer Document has been extracted from the Offer Document and reproduced below. Unless otherwise stated, all terms and expressions used in the extract below shall have the meanings given to them in the Offer Document.

“5. RATIONALE FOR THE OFFER AND INTENTIONS FOR THE COMPANY

5.1 Rationale for Offer. The Offer is made to increase the shareholdings of the Offeror and the NSI Family to more than 50% and so that they may acquire statutory control of the Company. Noting the following statements made in the FY2013 Results Announcement, the Offeror believes that it will, with statutory control of the Company,

13 be in a better position to contribute to the Group meeting the challenges from increased competition in the healthcare sector in Malaysia, where the Group’s operations are principally based:

“Demand for private healthcare in Malaysia remains resilient driven by rising income levels. While growth has been encouraging over the last few years, the Group is mindful of new competitors in the two markets i.e. Malacca and Johor where the Group’s two hospitals operate.

In Malacca, Mahkota Medical Centre Sdn Bhd (“MMCSB”) will face a new competitor by mid-2014, with the opening of the nearby 300-bed Oriental Melaka Straits Medical Centre. In addition, two new hospitals, Hospital Pakar Hang Tuah and KPJ Muar Specialist Hospital, which are in or around the vicinity of Malacca, are being built.

In Johor, the 120-bed KPJ Pasir Gudang Specialist Hospital, which is less than 3km from the Regency Specialist Hospital Sdn Bhd (“RSHSB”) began operations during the financial year. By 2015, there are expected to be three new hospitals in Johor, namely the 300-bed Gleneagles Medini Hospital, 390-bed KPJ Specialist Hospital Bandar Dato’ Onn and a 200-bed hospital by a Singapore investor and the Johor Royal Family. These new hospitals are expected to transform the healthcare landscape in Iskandar.

The Group is aware of the growing competition and challenges posed by the new hospitals. The new hospitals in Malacca and Johor are likely to increase competition for patients and bring further challenges in terms of manpower and talent retention for MMCSB and RSHSB. The Group will strive to continue delivering quality healthcare to its patients, specifically by recruiting more doctors and improving overall healthcare services and patient experience.”

The Offer also represents an opportunity for Shareholders to realise part of their investment in the Company and the Group, while continuing to participate and have an exposure in the future performance of the Company and the Group through their remaining investment (if they choose to retain such investment).

5.2 Intentions for Company. Presently, the Offeror intends to carry on the business of the Company and the Group of providing healthcare services and has no intention to introduce major changes to the business, including to redeploy the fixed assets of the Company and the Group or to discontinue the employment of the employees of the Company and the Group, in each case other than in the ordinary course of business5.

5.3 Listing Status and Compulsory Acquisition. The Offer, being a partial offer as opposed to a general offer, will not result in:

(a) either trading in the Shares on the SGX-ST being suspended or the Company being delisted from the SGX-ST due to a lack of public float; or

(b) the Offeror either being entitled or bound to exercise the rights of compulsory acquisition under Section 215(1) of the Companies Act. Neither would Shareholders be entitled to require the Offeror to acquire their Shares at the same terms as those under the Offer under Section 215(3) of the Companies Act.

5 Based on the Offeror’s present assessment of market conditions, operating circumstances and general economic and regulatory environment, over which the Offeror has limited or no control. As these factors change over the course of time, the Offeror reserves the right to review and consider its intentions as and when necessary.”

14 5. IRREVOCABLE UNDERTAKINGS

5.1 Irrevocable Undertakings. As stated in Section 6 of the Offer Document, the Offeror has received IUs from IU Shareholders to, inter alia, accept and approve the Offer in respect of 66,481,844 Offer Shares in aggregate, representing approximately 11.52% of the Shares in the issued share capital of the Company. Accordingly, as the Offer is made to acquire 61,000,000 Shares, upon the IU Shareholders tendering the Shares covered by their respective IUs in acceptance of the Offer, the Offer will become and be declared unconditional as to acceptances. Under the IUs, each IU Shareholder has undertaken not to accept any Competing Proposal. The IUs will lapse if the Offer is withdrawn or lapses.

5.2 IU Shareholders. As set out in Schedule 1 to the Offer Document, the IU Shareholders and the number of Shares covered by the respective IUs are as follows:

Number of Percentage IU Shareholders Shares Shareholding Dr. Cheah Way Mun 22,162,119 3.84% TanHanShingRichard 12,477,984 2.16% Chuah Ah Nooi 7,905,781 1.37% KakaSinghs/oDalipSingh 7,500,000 1.30% Ching Kwok Choy 3,588,000 0.62% ProfessorTanChinTiong 3,153,360 0.55% LeungKaiFookMedicalCoPteLtd 2,889,600 0.50% Leong Heng Keng 2,689,000 0.47% Cheong Bick Mui 2,000,000 0.35% Kwa Kie Tjiong 1,612,000 0.28% Leong Mun Sum 504,000 0.09% TotalforIUShareholders 66,481,844 11.52%

5.3 No Other Undertakings to Accept. Save as disclosed in the Offer Document, as at 30 September 2013, none of the Offeror or its Concert Parties has received any irrevocable undertaking from any party to accept or reject the Offer.

6. EXEMPTION RELATING TO DIRECTORS’ RECOMMENDATION

6.1 SIC. In its letter dated 13 September 2013, the SIC ruled that the following Directors, namely Gan See Khem and Chin Koy Nam, are not considered independent for the purposes of the Offer under Rule 8.3 of the Code, as they face irreconcilable conflicts of interest. Gan See Khem, who is the Chairman and Managing Director of the Company, is a director and shareholder of the Offeror. In addition, Chin Koy Nam, who is an Executive Director of the Company, is also a director and shareholder of the Offeror. Gan See Khem and Chin Koy Nam are therefore Concert Parties of the Offeror.

6.2 Scope of Responsibility. In view of the relationship between each of Gan See Khem, Chin Koy Nam and the Offeror as set out in Section 6.1 above and the potential conflicts of interests arising therefrom, Gan See Khem and Chin Koy Nam have been exempted by the SIC from the requirement to make a recommendation on the Offer to the Shareholders. However, they remain responsible for the accuracy of facts stated and opinions expressed in documents or advertisements issued by, or on behalf of, the Company to the Shareholders in connection with the Offer.

15 7. DIRECTORS’ INTERESTS AND INTENTIONS

7.1 Interests in Offer Shares. Details of the Directors, including inter alia, the Directors’ direct and deemed interests in the Offer Shares as at the Latest Practicable Date, are set out in Appendix 1 to this Circular.

7.2 Intentions with regards to the Offer. Directors who are also Offer Shareholders have indicated their intention in respect of voting and/or accepting or declining the Offer in respect of their respective holdings of Shares as at the Latest Practicable Date, as follows:

(a) Cheah Way Mun holds 22,162,119 Shares, which represents approximately 3.84% of the total number of issued Shares as at the Latest Practicable Date. Pursuant to the IUs given by the IU Shareholders, Cheah Way Mun (as one of the IU Shareholders) has informed the Company that he intends vote in favour of the Offer and accept the Offer, in respect of all the Shares held by him directly or indirectly in the Company.

(b) Tan Chin Tiong holds 3,153,360 Shares, which represents approximately 0.55% of the total number of issued Shares as at the Latest Practicable Date. Pursuant to the IUs given by the IU Shareholders, Tan Chin Tiong (as one of the IU Shareholders) has informed the Company that he intends vote in favour of the Offer and accept the Offer, in respect of all the Shares held by him directly or indirectly in the Company.

7.3 Interests in shares of the Offeror. The Directors’ direct and deemed interests in the shares of the Offeror as at the Latest Practicable Date are set out in Appendix 1 to this Circular.

8. ADVICE OF THE IFA

8.1 IFA. Deloitte has been appointed as the independent financial adviser to advise the Unconflicted Directors in respect of the Offer. Shareholders should consider carefully the recommendation of the Unconflicted Directors and the advice of Deloitte to the Unconflicted Directors before deciding whether to accept or reject the Offer. Deloitte’s advice is set out in its letter dated 7 October 2013, which is set out in pages 22 to 47 of this Circular (the “IFA Letter”).

8.2 Factors Taken into Consideration by Deloitte. In arriving at its recommendation, Deloitte has taken into consideration certain factors, an extract of which is set out below. Shareholders should read the following extract in conjunction with, and in the context of, the full text of the IFA Letter. Unless otherwise stated, all terms and expressions used in the extract below shall have the meanings given to them in the IFA Letter.

“7. CONCLUSION

In arriving at our advice in respect of the financial terms of the Offer, we have taken into account the factors which we consider to have a significant bearing on our assessment which include the following:

a. Our analysis of the liquidity of the Shares indicates that the liquidity of the Shares especially the period after the Announcement Date should not in any way be relied upon as an indication of the future liquidity of the Shares. There is no assurance that the liquidity of the Shares will remain at these levels after the Offer closes.

16 b. The Shares have traded below the Offer Price in the period post the Announcement Date to the Latest Practicable Date. The Offer price represents a premium in the range of 32.4% to 37.1% during the last two years. We have also noted that during the last 5 years, the share price has not traded above the Offer price. c. We note that the market price of the Shares outperformed the benchmark indices (being FSSTI and MXASJHC). It is possible that the Offer is in part responsible for this rise and outperformance. d. The implied premium based on the Offer Price is significantly higher than the premiums implied by other Partial and Mandatory Offers over the past 2 years prior to the Offer. However, during the past 2 years, there were only 2 Partial Cash Offers and 8 Mandatory Cash Offers (which offered a positive premium). The implied premium based on the Offer Price is within the range but lower than the average and median premiums offered for Voluntary Cash Offers over the past 2 years. The implied premium is within the range, lower than the average and higher than the median of premiums offered for all Cash Offers noted above. e. The Company’s EBITDA margin is lower than the average and higher than the median EBITDA margin of Comparable Companies. The Company’s net margin and return on equity are lower than both the median and the average of the Comparable Companies. f. The LTM EV/EBITDA of 13.1x, is higher than the average and median of the LTM EV/EBITDA of the Comparable Companies. LTM P/E of 29.2x implied by the Offer Price is higher than the average and median of the Comparable Companies and higher than the maximum noted for Comparable Companies. The P/NTA of 2.5x implied by the Offer price is lower than the average and median P/NTA of the Comparable Companies. We note that the Comparable Companies are not under offer and that the financial ratios of the Company are in general more favourable than those of the Comparable Companies. g. The LTM EV/EBITDA implied by the Offer Price of 13.1x is marginally lower than the average and the median of the Comparable Transactions of 13.3x and 13.7x, respectively, and the LTM P/E implied by the Offer Price of 29.2x is higher than the average and the median of the Comparable Transactions of 20.9x. h. The Offeror has stated that it does not intend to revise the Offer Price. i. The Offer is conditional upon the conditions mentioned in Section 2.1(e) of the Circular and paragraph 3.5 above. j. Shareholders should also note that if the offer turns unconditional the Offeror and its Concert Parties would exercise statutory control over the Company. They will be free, subject to a six month moratorium after the close of the Offer, to acquire further Shares without incurring any obligation to make a general take-over offer for the Company. k. Shareholders may choose to tender in shares in part or in full with respect to their holdings. l. Shareholders should be aware that dividend policies and payments going forward may vary from historical norms.

17 m. The Company has not received any competing offer(s) from the Announcement Date up to the Latest Practicable Date. There may be a limited possibility of receiving a competing offer if the offer turns unconditional.”

8.3 Advice of Deloitte. After having regard to the considerations set out in the IFA Letter, and based on the circumstances of the Company and the information as at the Latest Practicable Date, Deloitte has made certain recommendations to the Unconflicted Directors, an extract of which is set out below. Shareholders should read the extract in conjunction with, and in the context of, the full text of the IFA Letter. Unless otherwise stated, all terms and expressions used in the extract below shall have the meanings given to them in the IFA Letter.

“Having considered the factors listed in paragraph 6 and subject to the assumptions and qualifications set out elsewhere in this letter and taking into account the conditions prevailing as at the Latest Practicable Date, we are of the opinion that the Offer is fair and reasonable and not prejudicial to the interests of the Offer Shareholders. Accordingly, we advise the Unconflicted Directors that they should recommend that the Shareholders vote in favour of the Offer and ACCEPT the Offer.”

9. RECOMMENDATION OF THE UNCONFLICTED DIRECTORS

9.1 Recommendation. The Unconflicted Directors, having considered carefully the terms of the Offer and the advice given by Deloitte in the IFA Letter, concur with the advice of Deloitte in respect of the Offer, and accordingly, recommend that Shareholders vote in favour of the Offer and ACCEPT the Offer.

SHAREHOLDERSAREADVISEDTOREADTHEIFALETTERSETOUTONPAGES 22 TO 47 OF THIS CIRCULAR CAREFULLY BEFORE DECIDING WHETHER TO ACCEPTOR REJECTTHEOFFER.

SHAREHOLDERSSHOULDNOTETHATTHEOPINIONANDADVICEOFDELOITTE AND/ORTHERECOMMENDATIONOFTHEUNCONFLICTEDDIRECTORSSHOULDNOT BERELIEDUPONBYANYSHAREHOLDERASTHESOLEBASISFORDECIDING WHETHERORNOTTOACCEPTTHEOFFER.

9.2 No Regard to Specific Objectives. In making their recommendation, the Unconflicted Directors have not had regard to the general or specific objectives, financial situation, tax status, risk profiles or unique needs and constraints of any individual Shareholder. Accordingly, the Unconflicted Directors recommend that any individual Shareholder who may require advice in the context of his specific investment portfolio should consult his stockbroker, bank manager, solicitor, accountant, tax adviser or other professional adviser immediately.

10. OVERSEAS SHAREHOLDERS

10.1 Overseas Shareholders. The availability of the Offer to Shareholders whose addresses are outside Singapore, as shown on the Share Register or the records of CDP (each, an “Overseas Shareholder”) may be affected by the laws of the relevant jurisdictions. Overseas Shareholders should refer to Section 12 of the Offer Document which is reproduced below. Unless otherwise stated, all terms and expressions used in the extract below shall have the meanings given to them in the Offer Document.

18 “12. OVERSEAS SHAREHOLDERS

12.1 Overseas Shareholders. The availability of the Offer to Shareholders whose addresses are outside Singapore, as shown on the Share Register or the records of CDP (each, an “Overseas Shareholder”) may be affected by the laws of the relevant jurisdictions. For the avoidance of doubt, the Offer is made to all Offer Shareholders including those to whom this Offer Document, the FAA and/or the FAT have not been, or will not be, sent, provided that this Offer Document, the FAA and/or the FAT do not constitute an offer or a solicitation to any person in any jurisdiction in which such offer or solicitation is unlawful and the Offer is not being made into any jurisdiction in which the making or acceptance of the Offer would not be in compliance with the laws of such jurisdiction. However, the Offeror may, in its sole discretion, take such action as it may deem necessary to extend the Offer to Offer Shareholders in any such jurisdiction.

12.2 Copies of Offer Document. Offer Shareholders and Overseas Shareholders (subject to compliance with applicable laws) may attend in person and obtain copies of this Offer Document, the FAA and/or the FAT and any related documents, during normal business hours up to 5.30 p.m. on the Closing Date, from:

(a) the Share Registrar, Boardroom Corporate & Advisory Services Pte. Ltd., at 50 Raffles Place, #32-01 Singapore Land Tower, Singapore 048623; or

(b) The Central Depository (Pte) Limited at 4 Shenton Way, #02-01 SGX Centre 2, Singapore 068807.

Alternatively, an Overseas Shareholder may (subject to compliance with applicable laws) write to:

(i) the Offeror c/o Boardroom Corporate & Advisory Services Pte. Ltd. at 50 Raffles Place, #32-01 Singapore Land Tower, Singapore 048623; or

(ii) the Offeror c/o The Central Depository (Pte) Limited at 4 Shenton Way, #02-01 SGX Centre 2, Singapore 068807,

to request for a copy of this Offer Document, the FAA and/or the FAT and any related documents to be sent to an address in Singapore by ordinary post at his own risk, up to three Market Days prior to the Closing Date.

12.3 Overseas Jurisdiction. It is the responsibility of an Overseas Shareholder who wishes to accept the Offer to satisfy himself as to the full observance of the laws of the relevant jurisdictions in that connection, including the obtaining of any governmental or other consent which may be required, or compliance with other necessary formalities or legal requirements.

If any Shareholder is in any doubt about his position, he should consult his professional adviser in the relevant jurisdiction. All Overseas Shareholders should inform themselves about, and observe, any applicable legal requirements in their own jurisdictions.

12.4 Notice. The Offeror reserves the right to notify any matter, including the fact that the Offer has been made, to any or all Shareholders (including Overseas Shareholders) by announcement to the SGX-ST or paid advertisement in a daily newspaper published and circulated in Singapore, in which case, such notice shall be deemed to have been sufficiently given notwithstanding any failure by any Shareholder to receive or see such announcement or advertisement.”

19 10.2 Copies of Circular. This Circular may not be sent to Overseas Shareholders due to potential restrictions on sending such documents to the relevant overseas jurisdictions. Any affected Overseas Shareholder may, nevertheless, obtain copies of this Circular during normal business hours up to the Closing Date, from the office of the Share Registrar at 50 Raffles Place, #32-01 Singapore Land Tower, Singapore 048623, or make a request to the Share Registrar for this Circular to be sent to an address in Singapore by ordinary post at his own risk, up to five Market Days prior to the Closing Date.

11. INFORMATION PERTAINING TO CPFIS INVESTORS

CPFIS Investors should refer to Section 13 of the Offer Document which is reproduced below. Unless otherwise stated, all terms and expressions used in the extract below shall have the meanings given to them in the Offer Document.

“13. CPFIS INVESTORS

CPFIS Investors should receive further information on how to accept the Offer from their respective CPF Agent Banks shortly. CPFIS Investors are advised to consult their respective CPF Agent Banks should they require further information. If they are in any doubt as to the action they should take, CPFIS Investors should seek independent professional advice. CPFIS Investors who wish to accept the Offer are to reply to their respective CPF Agent Banks by the deadline stated in the letter from their respective CPF Agent Banks. Subject to the Offer becoming or being declared unconditional in all respects, CPFIS Investors who accept the Offer will receive the Offer Price payable in respect of their Offer Shares in their CPF investment accounts.”

12. ACTION TO BE TAKEN BY THE OFFER SHAREHOLDERS

12.1 Voting on the Offer. The Offer Shareholders who wish to approve the Offer in respect of all or any number of Shares held by them as at the Record Date must do so not later than 5.30 p.m. on 28 October 2013 or such later date(s) as may be announced from time to time by or on behalf of the Offeror, abiding by the procedures for the voting of the Offer as set out in Section 10 of and Schedule 6 to the Offer Document, the FAA and/or the FAT.

12.2 Accepting the Offer. The Offer Shareholders who wish to accept the Offer must do so not later than 5.30 p.m. on 28 October 2013 or such later date(s) as may be announced from time to time by or on behalf of the Offeror, abiding by the procedures for the acceptance of the Offer as set out in Section 10 of and Schedule 6 to the Offer Document, the FAA and/or the FAT.

Acceptances should be completed and returned as soon as possible and, in any event, so as to be received, on behalf of the Offeror, by CDP (in respect of the FAA) or the Share Registrar (in respect of the FAT), as the case may be, not later than 5.30 p.m. on 28 October 2013 or such later date(s) as may be announced from time to time by or on behalf of the Offeror.

The Offer Shareholders who do not wish to accept the Offer need not take any further action in respect of the Offer Document, the FAA and/or the FAT which have been sent to them.

13. RESPONSIBILITY STATEMENT

The Directors (including any who may have delegated detailed supervision of this Circular) have taken all reasonable care to ensure that the facts stated and all opinions expressed in this Circular are fair and accurate and that no material facts have been omitted from this Circular, and the Directors jointly and severally accept full responsibility accordingly.

20 Where any information has been extracted or reproduced from published or otherwise publicly available sources (including, without limitation, the Offer Document), the sole responsibility of the Directors has been to ensure through reasonable enquiries that such information is accurately extracted from such sources or, as the case may be, reflected or reproduced in this Circular.

In respect of the IFA Letter, the sole responsibility of the Directors has been to ensure that the facts stated with respect to the Group are fair and accurate.

14. ADDITIONAL INFORMATION

The attention of the Shareholders is also drawn to the Appendices which form part of this Circular.

Yours faithfully For and on behalf of the Board of Directors

Gan Lai Chiang, Andy Non-Executive and Independent Director

21 LETTERFROMTHEIFATOTHEUNCONFLICTEDDIRECTORS

DELOITTE & TOUCHE CORPORATE FINANCE PTE LTD (Company Registration Number 200200144N) 6 Shenton Way OUE Downtown Two #32-00 Singapore 068809

7 October 2013

The Unconflicted Directors Health Management International Limited 167 Jalan Bukit Merah, #05-10, Connection One Singapore 150167.

Dear Sirs,

PROPOSED VOLUNTARY CONDITIONAL CASH PARTIAL OFFER FOR SHARES OF HEALTH MANAGEMENT INTERNATIONAL LIMITED PURSUANT TO RULES 16 OF THECODEON TAKE-OVERS AND MERGERS

Unless otherwise defined or the context otherwise requires, all terms defined in the Circular to the Shareholders dated 14 October 2013 (“Circular”) shall have the same meaning herein.

1. INTRODUCTION

On 16 September 2013, (the “Announcement Date”), Health Management International Limited (the “Company”) announced (the “Offer Announcement”) that the Board of Directors of the Company had received a voluntary conditional cash partial offer (the “Offer”) from PrimePartners Corporate Finance Pte Ltd, (“Prime”) for and on behalf of Nam See Investment Pte Ltd (the “Offeror”) to acquire 61,000,000 ordinary shares in the capital of the Company, other than the Shares held in treasury and shares already owned, controlled or agreed to be acquired by the Offeror and parties acting in concert with the Offeror (the “Shares”) (as defined in the Offer Announcement).

We, Deloitte & Touche Corporate Finance Pte Ltd (“DTCF”), have been appointed by the Company to advise the directors of the Company who are regarded as independent for the purposes of Offer under the Singapore Code on Takeovers and Mergers (the “Code”) (the “Independent Directors”; or the “Unconflicted Directors”) in respect of their recommendation on the actions to be taken by the shareholders (“Offer Shareholders”) other than the Offeror and the parties acting in concert with the Offeror (“Concert Parties”) in respect of the Offer. This letter sets out our assessment of the financial terms of the Offer and our advice to the Unconflicted Directors. It will form part of the Circular dated 14 October 2013 issued by the Company to provide the Offer Shareholders with details of the Offer and the recommendations of the Unconflicted Directors on the actions to be taken by the Offer Shareholders in respect of the Offer.

2. TERMS OF REFERENCE

We have been appointed to advise the Unconflicted Directors in respect of their recommendation on the actions to be taken by the Offer Shareholders in respect of the Offer.

We have confined our assessment to the financial terms of the Offer. We are not required to evaluate, comment or form a view on the commercial risks or merits of the Offer or on the future prospects and earnings potential of the Company and its subsidiaries and associated

22 company (the “Group”) and we have made no such evaluation. Such evaluation, if any, remains the responsibility of the directors of the Company (the “Directors”) and the management of the Company (the “Management”). We have drawn upon their views to the extent we have deemed necessary or appropriate in arriving at our advice as set out in this letter. We do not express any view as to the prices at which the shares of the Company may trade in the absence of the Offer.

We do not make any representation or warranty in relation to the merits of the Offer nor have we been requested, and we do not express an opinion on, the relative merits of the Offer as compared to any other alternative transaction. We have not been instructed or authorized to solicit, and we have not solicited, any indications of interest from any third party with respect to the Shares or the Offer. We have not made an independent evaluation or appraisal of the assets and liabilities including without limitation the real properties of the Group and we have not been furnished with any such independent evaluation or appraisal.

We have held discussions with the Unconflicted Directors and Management and have examined publicly available information collated by us as well as information, written and verbal, provided to us by the Unconflicted Directors, the Management and the professional advisers of the Company (which has included its solicitors). We have relied upon and assumed the accuracy of the relevant information, both written and verbal, provided to us by the aforesaid parties and have not independently verified such information, whether written or verbal, and accordingly cannot and do not warrant, and do not accept any responsibility for the accuracy, completeness and adequacy of such information. We have not independently verified and have assumed that all statements of fact, belief, opinion and intention made by the Directors in the Circular have been reasonably made after due and careful enquiry. Accordingly, no representation or warranty (whether expressed or implied) is made and no responsibility is accepted by us concerning the accuracy, completeness or adequacy of such information. We have nonetheless made reasonable enquiries and exercised our judgement on the reasonable use of such information and have found no reason to doubt the accuracy or reliability of such information.

Where information relating to the Offer, and the parties acting or deemed to be acting in concert with the Offeror in connection with the Offer, has been extracted from published or otherwise publicly available sources, our sole responsibility has been to ensure that such information has been accurately and correctly extracted from the relevant sources.

Our opinion is based upon market, economic, industry, monetary, regulatory and other conditions in effect on, and the information made available to us as at, the Latest Practicable Date.

In rendering our advice, we have not had regard to the general or specific investment objectives, financial situation, risk profiles, tax position or particular needs and constraints of any shareholder. As different shareholders have different investment profiles and objectives, we advise the Unconflicted Directors to recommend that any Offer Shareholder who may require specific advice in relation to his or her investment portfolio should consult his or her stockbroker, bank manager, solicitor, accountant, tax adviser or other professional adviser.

The Company has been separately advised by its own professional advisers in the preparation of the Circular other than this letter. We have had no role or involvement and have not and will not provide any advice (financial or otherwise) in the preparation, review and verification of the Circular other than this letter. Accordingly, we take no responsibility for and express no views, whether expressed or implied, on the contents of the Circular other than this letter.

23 Whilst a copy of this letter may be reproduced in the Circular, neither the Company nor the Unconflicted Directors may reproduce, disseminate or quote this letter (or any part thereof) for any other purposes at any time and in any manner without our prior written consent in each specific case. Our advice in relation to the financial terms of the Offer should be considered in the context of the entirety of this letter and the Circular.

3. THE TERMS OF THE OFFER

Offer Shareholders should refer to the Circular setting out, inter alia, the background of the Offeror, the terms and conditions of the Offer and the intentions of the Offeror with respect to the Company, Offer Shareholders are advised to read these documents and the terms and conditions contained therein very carefully.

The following summary of the salient terms of the Offer have been obtained from the Offer Announcement and Section 2 of the Circular.

3.1. The Offer

As stated in the Offer Announcement, Prime, for and on behalf of the Offeror, has offered to acquire 61,000,000 Shares in accordance with the Code.

The Offer for the Shares is made on the terms and subject to the conditions set out in this Circular, the Offer Announcement and the Acceptance Forms, on the following basis:

For each Offer Share: S$0.16 in cash (the “Offer Price”).

The Offeror does not intend to revise the Offer Price.

3.2. Offer Shares

As stated in the Offer Announcement, the Offer is extended to 61,000,000 Shares other than:

(a) 201,000 shares held by the Company as treasury shares; and

(b) Shares already owned, controlled or agreed to be acquired by the Offeror and the Concert Parties;

(collectively, the “Offer Shares”)

As at the Latest Practicable Date, the Offeror owns 218,883,673 Shares and the Offeror and its Concert Parties own 240,270,048 Shares in aggregate, representing approximately 37.93% and 41.64%, respectively of the issued share capital of the Company. As at the Announcement Date the Offeror has received irrevocable undertakings (“IUs”) to accept and approve the Offer in respect of 51,287,244 Offer Shares, representing approximately 8.89% of the issued share capital of the Company.

Prime subsequently announced on 17 September 2013 (“Additional Irrevocable Undertakings”) on behalf of the Offeror that the Offeror has received additional IUs to accept and approve the Offer in respect of 15,194,600 Shares in aggregate, representing approximately 2.63% of the issued share capital of the Company.

24 Taking into account the initial IUs disclosed in the Offer Announcement and the additional IUs, as at the date of this Announcement, the Offeror has received IUs in respect of 66,481,844 Shares in aggregate, representing approximately 11.52% of the issued share capital of the Company.

3.3. No Encumbrances

As stated in the Circular, the Offer Shares will be acquired fully paid and free from all liens, equities, mortgages, charges, encumbrances, rights of pre-emption and any other third party rights and interests of any nature whatsoever, and together with all rights, benefits and entitlements attached thereto as at the Announcement Date and thereafter attaching thereto (including the right to receive and retain all dividends, rights and other distributions, if any, which may be announced, declared, paid or made thereon by the Company, on or after the Announcement Date). If any dividend, other distribution or return of capital is declared, made or paid by the Company on or after the Announcement Date, the Offeror reserves the right to reduce the Offer Price by the amount of such dividend, distribution or return of capital.

3.4. Closing Date

The Offer is expected to close by 5.30 p.m. on Monday, 28 October 2013 or such later date(s) as may be announced from time to time by or on behalf of the Offeror, being the last day for the lodgment of acceptances of the Offer.

3.5. Offer Conditions

As stated in the Offer Announcement, the Offer will be conditional on:

(a) the Offeror having received, by the close of the Offer, approval of the Offer by the Offer Shareholders representing more than 50% of the valid votes received from Offer Shareholders (the Offeror, its Concert Parties and their associates not being allowed to vote (“Approval Condition”); and

(b) the Offeror having received, by the close of the Offer, valid acceptances in respect of not less than 61,000,000 Offer Shares which, when taken together with the Shares owned, controlled or agreed to be acquired by the Offeror and its Concert Parties, will result in the Offeror and its Concert Parties holding more than 50% (to be precise, 52.21%) of the total number of Shares outstanding as at the close of the Offer (“Acceptance Condition”).

As discussed in paragraph 3.2 above, the Offeror has received IUs for 66,481,844 Shares in aggregate, representing approximately 11.52% of the issued share capital of the Company. Accordingly, as the Offer is made to acquire 61,000,000 Shares, upon the IU Shareholders tendering the Shares covered by their respective IUs in acceptance of the Offer, the Offer will become and be declared unconditional as to acceptances.

It should also be noted that, if the Offer is unconditional in all respects, the Offeror and its Concert Parties will be able to exercise statutory control over the Company and will be free, subject to a six month moratorium after the close of the Offer, to acquire further Shares without incurring any obligation to make a general take-over offer for the Company.

The offer will be unconditional in all other aspects.

25 3.6. Duration

As stated in the Announcement, the formal offer document (“Offer Document”), setting out the terms and conditions of the Offer and enclosing the relevant forms of acceptance and approval of the Offer (“Offer Forms”), will be despatched to shareholders of the Company not earlier than 14 days and not later than 21 days from the date thereof. The Offer will remain open for approval and acceptances by Offer Shareholders for at least 28 days after the date of posting of the Offer Document.

No extension of the Offer is currently contemplated.

4. INFORMATION ON THE COMPANY AND THE OFFEROR

4.1. Information on the Company

Information on the Company is set out in Section 4 of the Offer Announcement and Appendix 1 of the Circular.

4.2. Information on the Offeror and the Concert Parties

Information on the Offeror is set out in Section 3 of the Offer Announcement and Section 3 of the Circular.

We highlight the following sentences “The Offeror is a limited exempt private company incorporated in Singapore in 1978. Its directors are Gan See Khem (“GSK”) and Chin Koy Nam (“CKN”), who are wife and husband. Its principal activity is investment holding. It has a paid-up share capital of S$6 million. Its shareholders are GSK, CKN and their children, Chin Wei Jia (“CWJ”), Chin Wei Shan (“CWS”) and Chin Wei Yao (“CWY”), who together with GSK, CKN, CWJ and CWS, comprise the (“NSI Family”).

The Concert Parties of the Offeror consist of:

(a) the NSI Family;

(b) PrimePartners, the financial adviser to the Offeror in relation to the Offer;

(c) Chan Wang Hon, a former Chief Financial Officer of the Company and who had been assisting the Offeror in its preparation of the Offer; and

(d) (by reason only of the presumption under the Code of the existence of a concert party relationship between “close relatives”) the Extended Family Shareholders (as defined below).

The Offeror acknowledges that various extended family members of the NSI Family (“Extended Family Shareholders”), as shown in the table below, are presumed to be Concert Parties as they fall within the definition of “close relative” under the Code and has accordingly aggregated the 10,806,253 Shares (1.87%) held by the Extended Family Shareholders as part of the 240,270,048 Offeror Shares (41.64%) held by the Offeror and its Concert Parties as at the Announcement Date.”

26 We have presented below a summary table of shareholding for the Offeror and Concert parties based on Schedule 1 of the Offer Announcement. (For a detailed listing please refer to the Offer Announcement).

Shareholder Numberofshares Percentage Offeror 218,883,673 37.93% NSI Family 9,450,122 1.64% Other Concert Parties (excluding ExtendedFamilyShareholders) 1,130,000 0.20% ExtendedFamilyShareholders 10,806,253 1.87% TotalOfferorandConcertParties 240,270,048 41.64%

5. RATIONALE FOR THE OFFER AND INTENTIONS OF THE COMPANY

5.1. Rationale for the Offer

We refer to Section 5 of the Offer Announcement and Section 4 of the Circular. We highlight that these Sections further state the following: “The Offer is made to increase the shareholdings of the Offeror and the NSI Family to more than 50% and so that they may acquire statutory control of the Company. Noting the following statements made in the FY2013 Results Announcement, the Offeror believes that it will, with statutory control of the Company, be in a better position to contribute to the Group meeting the challenges from increased competition in the healthcare sector in Malaysia, where the Group’s operations are principally based:

The Offer also represents an opportunity for shareholders of the Company to realise part of their investment in the Company and the Group, while continuing to participate and have an exposure in the future performance of the Company and the Group through their remaining investment (if they choose to retain such investment).”

27 5.2. Intentions for the Company

We refer to Section 5 of the Offer Announcement and Section 4 of the Circular. We highlight that these Sections further state the following: “Presently, the Offeror intends to carry on the business of the Company and the Group of providing healthcare services and has no intention to introduce major changes to the business, including to redeploy the fixed assets of the Company and the Group or to discontinue the employment of the employees of the Company and the Group, in each case other than in the ordinary course of business.”

The Offeror has also stated that the current intentions are based on the Offeror’s present assessment of market conditions, operating circumstances and general economic and regulatory environment, over which the Offeror has limited or no control. As these factors change over the course of time, the Offeror reserves the right to review and consider its intentions as and when necessary.

6. FINANCIAL ASSESSMENT OF THE OFFER

In assessing the financial terms of the Offer, we have taken into account the following factors:

a. Liquidity of the Shares;

b. Market quotations for the Shares;

c. Comparison of prices for the Shares with selected, relevant indices;

d. Volume weighted average prices for the Shares;

e. Premia for takeovers of SGX-listed companies;

f. Comparison of ratings with Comparable Companies;

g. Comparison of ratings with Comparable Transactions; and

h. Other considerations.

6.1. Liquidity of the Shares

Share prices transacted in the equity capital market can be affected by their liquidity which for this purpose is expressed as average daily volume traded as a percentage of free float. In order to evaluate whether the historical market prices of the Shares provide a meaningful reference point for comparison of the Offer, we have considered the historical liquidity of the Shares over selected reference periods. We have also compared the liquidity of the Shares with the liquidity of the ten largest companies by market capitalisation within the FTSE Straits Times Index.

28 Average Daily Approximate Percentage Trading Volume of Free Float Reference Periods (’000 Shares) (%) Announcement Date to the Latest Practicable Date (16 September – 4 October 2013)

LatestPracticableDate 426 0.13%

Announcement Date to the Latest PracticableDate 1,779 0.56%

Last Traded Date prior to Announcement Date (13Sep2013) 132 0.04%

Prior to Announcement Date

Last 1 month VWAP prior to AnnouncementDate 196.5 0.06%

Last 3 month VWAP prior to AnnouncementDate 198.5 0.06%

Last 6 month VWAP prior to AnnouncementDate 218.2 0.07%

Last 1 year VWAP prior to AnnouncementDate 327.1 0.09%

Last 1 year VWAP prior to AnnouncementDate 261.8 0.06%

Table 1 – Liquidity of the Shares

Source: Bloomberg

We note that the liquidity of the Shares in the reference periods prior to the Announcement Date was between 0.6% and 0.9%.

We have also benchmarked the liquidity of the Shares to the liquidity of the Top 10 SGX Companies (by market capitalisation) for the one year period preceding the Announcement Date.

We note that the liquidity of the Top 10 SGX Companies in the one year period prior to the Announcement Date ranged from 0.11% to 0.45% with an average and median of 0.24% and 0.20% respectively. The liquidity of the Shares during this one year reference period was 0.09% and as such is (i) below the lower end of the range of the liquidity of the Top 10 SGX Companies, and (ii) significantly below the median and average liquidity of the Top 10 SGX Companies.

The liquidity of the Shares especially the period after the Announcement Date should not in any way be relied upon as an indication of the future liquidity of the Shares. There is no assurance that the liquidity of the Shares will remain at these levels after the Offer closes.

29 6.2. Market Quotations for the Shares

We have compared the Offer Price against the historical and current prices of the Shares.

We set out below a chart showing the Offer relative to the daily closing prices and trading volumes of the Shares for the period from 16 September 2011 (being the two year period up to the last trading day prior to the Announcement Date) to the Latest Practicable Date.

Share Price S($) Volume (000) 0.20 14,000,000 Note 7 0.18 12,000,000 Offer Price =S$ 0.16 0.16 2 Year High = S$ 0.152 Note 5 0.14 Note 2 Note 3 10,000,000 Note 1 0.12 8,000,000 0.10 Note 6 6,000,000 0.08 Note 4 2 Year Low = S$ 0.083

0.06 4,000,000

0.04 2,000,000 0.02

0.00 0 Jul-12 Jul-13 Oct-11 Apr-12 Apr-13 Oct-12 Jan-12 Jan-13 Jun-12 Jun-13 Sep-11 Nov-11 Dec-11 Feb-12 Feb-13 Mar-12 Mar-13 Sep-12 Nov-12 Dec-12 Sep-13 Aug-12 Aug-13 May-12 May-13

Volume Last Price 2 year low 2 Year High Offer Price Events

Chart 1 – Price-Volume chart of the Company from 16 September 2011 (being the two year period up to the Announcement Date) to the Latest Practicable Date

Source: Bloomberg

A summary of the significant corporate developments and announcements of financial performance made by the Company for the two year period prior to 16 September 2013 (being the Announcement Date) to the Latest Practicable Date is as follows:

Notes Dates Event (1) 14-Feb-12 Announcement of net profit of RM 235k and revenue of RM 98.9 million for the six months ended 31 December 2011, as compared to a net loss of RM 1.8 million and an increase of 16% (RM 85.3 million) in revenue for the six months ended 31 December 2010. (2) 29-Aug-12 Announcement of net loss of RM 481k and revenue of RM 209.2 million for the year ended 30 Jun 2012, as compared to profit of RM 1.8 million and revenue of RM 173.9 million (increase of 20%) for the year ended 31 Jun 2011. (3) 02-Jan-13 Announcement of award of 405,000 shares pursuant to the Company’s Performance Share Plan when the market price of the shares was S$0.113. (4) 07-Feb-13 Announcement of net profit of RM 3.1 million and revenue of RM 118.0 million for the six months ended 31 December 2012, as compared to a net profit of RM 235k and an increase of 16% (RM 98.4 million) in revenue for the six months ended 31 December 2011. (5) 30-Aug-13 Announcement of net profit of RM 7.6 million and revenue of RM 245.4 million for the year ended 30 Jun 2013, as compared to loss of RM 480k and revenue of RM 209.2 million (increase of 17%) for the year ended 31 Jun 2012.

30 Notes Dates Event (6) 16-Sep-13 Announcement of Voluntary Conditional Cash Partial Offer by Prime Partners for and on behalf of Nam See Investment Pte Ltd to acquire 61,000,000 shares at an offer price of S$0.16. (7) 17-Sep-13 Announcement with regards to receipt of additional irrevocable undertakings to accept and approve the Offer in respect of 51,287,244 Offer Shares in aggregate, representing approximately 8.89% of the issued share capital of the Company.

We highlight the following in respect of the development in market prices of the Shares:

a. The Offer Price of S$0.16 is higher than the traded price of the Shares in the two year period preceding the Announcement Date (where the Shares traded in the range of 0.083 to 0.152 per Share).

b. The Shares have traded below the Offer Price in the period post the Announcement Date to the Latest Practicable Date.

6.3. Comparison of prices for the Shares with selected, relevant indices

We have benchmarked movements of the market prices of the Shares against selected relevant indices being:

a. FTSE Straits Times Index (“FSSTI Index”);

b. MSCI AC Asia ex Japan Healthcare Index (“MXASJHC Index”); and

The reference price for the prices of the Shares is the closing price on 16 September 2013. The period of comparison is the 2 year period prior to the Announcement Date up to the Latest Practicable Date.

0.16 0.15 0.14 0.13 0.12 0.11 0.10 Announcement 0.09 Date (16 September 2013) 0.08 11 12 13 - -13 - - -13 -12 Jul Jul Oct-11 Oct-12 Apr-12 Jun-12 Jan-13 Jun-13 Nov-11 Dec Sep-11 Mar-13 Mar-12 Feb-12 Feb Dec-12 Nov-12 Aug-12 Aug-13 Sep May May-13

HMI Equity FSSTI MSCI AC Asia ex Japan Healthcare Index

Chart 2 – Comparison of the Price Performance of the Shares Relative to the FSSTI and MXASJHC Index

Source: Bloomberg

31 We highlight that the following key observations in respect of this comparison:

a. The market price of the Shares has traded above the FSSTI and MXASJHC indices except December to February 2011; and

b. The market price of the Shares outperformed the FSSTI and MXASJHC indices between the period from September 2011 to the Announcement Date and to the Latest Practicable Date. It is possible that the Sale Process is in part responsible for this rise and outperformance.

6.4. Volume Weighted Average Prices for the Shares

We have compared the Offer Price with the VWAP of the Shares for the selected reference periods in the table below:

Premium/ Highest Lowest (Discount) Transacted Transacted VWAP of Offer Price Price Reference Periods (S$) (%) (S$) (S$) Announcement Date to the Latest Practicable Date (16 September – 4 October 2013)

Latest Practicable Date(1) 0.1420 12.7% 0.1420 0.1420

Announcement Date to the LatestPracticableDate 0.1462 9.5% 0.1520 0.1400

Prior to Announcement Date (Last Trading Day prior to the Announcement Date)

Last trading day prior to the Announcement date(2) (13September2013) 0.1220 31.1% 0.1220 0.1200

Last 1 month VWAP prior to the AnnouncementDate 0.1208 32.4% 0.1250 0.1160

Last 3 month VWAP prior to the AnnouncementDate 0.1199 33.5% 0.1280 0.1110

Last 6 month VWAP prior to the AnnouncementDate 0.1207 32.5% 0.1300 0.1110

Last 1 year VWAP prior to the AnnouncementDate 0.1208 32.4% 0.1400 0.1100

Last 2 year VWAP prior to the AnnouncementDate 0.1167 37.1% 0.1400 0.0830

Table 2 – Comparison of the VWAP of the Shares and the Offer

Notes:

1. Closing Share price as at Latest Practicable Date 2. Closing Share price as at 13 September 2013 Source: Bloomberg

32 We highlight the following:

a. The Offer Price is S$0.16 represents a premium of S$0.018 (or 12.7%) above the closing Share price on Latest Practicable Date.

b. The Offer Price represents a premium of S$0.0138 (or 9.5%) above the VWAP of the Share from the Announcement Date to the Latest Practicable Date. Within this period, the Share price has traded below the Offer Price and with a highest price of S$0.152.

c. The Offer Price represents a premium of S$0.038 (or 31.1%) above the Share price on the last trading day prior to the Announcement Date.

d. The Offer Price represents a premium of S$0.039 (or 32.4%) to the 1 month VWAP of the Shares prior to the Announcement Date; a premium of S$0.040 (or 33.5%) over the 3 month VWAP of the Shares prior to the Announcement Date and a premium of S$0.039 (or 32.5%) over the 6 month VWAP of the Shares prior to the Announcement Date.

e. The Offer Price represents a premium of S$0.039 (or 32.4%) to the 1 year VWAP prior to the Announcement Date.

The market price of the Shares has traded below the Offer Price during the two year period prior to the Announcement Date and the market price of the Shares has traded at or marginally below the Offer Price from the Announcement Date to the Latest Practicable Date.

6.5. Premia for Takeovers of SGX-Listed Companies

We have benchmarked the premium implied by the Offer Price over the VWAP of the Shares against the premia or discounts paid in respect of selected takeovers of companies listed on the SGX-ST. We have compiled data of such transactions from the two year period preceding the Announcement Date up to the Latest Practicable Date (“Reference Period”) and have presented a summary of such data in the table below.

Premium/ Premium/ Premium/ (Discount) for (Discount) for (Discount) for 1 month 3 month 6 month Offer Price 32.4% 33.5% 32.5%

AllCashOffers Number 36 36 36 Average 35.2% 35.1% 35.6% Median 31.8% 34.0% 32.4% Minimum 2.7% 4.9% 2.2% Maximum 169.8% 106.9% 104.8%

Partial Cash Offers Number 2 2 2 Average 8.5% 7.9% 14.8% Median 8.5% 7.9% 14.8% Minimum 2.7% 6.2% 8.2% Maximum 14.3% 9.6% 21.5%

33 Premium/ Premium/ Premium/ (Discount) for (Discount) for (Discount) for 1 month 3 month 6 month Mandatory Cash Offers Number 8 8 8 Average 21.9% 24.5% 23.8% Median 19.4% 29.4% 28.7% Minimum 5.5% 6.9% 2.2% Maximum 39.2% 41.2% 41.2%

Voluntary Cash Offers Number 26 26 26 Average 42.7% 41.9% 42.2% Median 35.9% 37.3% 37.3% Minimum 3.7% 4.9% 8.5% Maximum 169.8% 106.9% 104.8%

Table 3 – Selected Data in Respect of Takeovers on the SGX-ST

Source: Company announcements, offer documents and circulars to shareholders

We note the following: a. The Offer Price represents a premium of 32.4% to the VWAP of the Shares in the 1 month period before the Holding Announcement Date. The average and median of the 2 partial cash offers are at premiums of 8.5% and 8.5% respectively when compared with the targets’ 1 month VWAP. The average and median of the 8 observed mandatory cash offers (which offered a positive premium) are at premiums of 21.9% and 19.4% respectively when compared with the targets’ 1 month VWAP. The average and median of the 26 voluntary cash offers are at premiums of 42.7% and 35.9% respectively when compared with the targets’ 1 month VWAP. b. The Offer Price represents a premium of 33.5% over the VWAP of the Shares in the 3 month period before the Announcement Date. The average and median of the 2 partial cash offers are at premiums of 7.9% and 7.9% respectively when compared with the targets’ 3 month VWAP. The average and median of the 8 observed mandatory cash offers (which offered a positive premium) are at premiums of 24.5% and 29.4% respectively when compared with the targets’ 3 month VWAP. The average and median of the 26 voluntary cash offers are at premiums of 41.9% and 37.3% respectively when compared with the targets’ 3 month VWAP. c. The Offer Price represents a premium of 32.5% over the VWAP of the Shares in the 6 month period before the Announcement Date. The average and median of the 2 partial cash offers are at premiums of 14.8% and 14.8% respectively when compared with the targets’ 6 month VWAP. The average and median of the 8 observed mandatory cash offers (which offered a positive premium) are at premiums of 23.8% and 28.7% respectively when compared with the targets’ 6 month VWAP. The average and median of the 26 voluntary cash offers are at premiums of 42.2% and 37.3% respectively when compared with the targets’ 6 month VWAP.

The Offer Price’s premium of 32.4% (for the 1 month VWAP), 33.5% (for the 3 month VWAP) and 32.5% (for the 6 month VWAP) is significantly higher than the premiums offered for partial and mandatory cash offers, however, they are in the range but lower than the average and median takeover premiums as compared to the 26 voluntary cash offers.

34 6.6. Comparison of ratings with Comparable Companies

The Company, its subsidiaries and associated companies (“Group”) are engaged in the business of providing healthcare services. The Group operates two hospitals in Malaysia, Mahkota Medical Centre in Malacca and Regency Specialist Hospital in Johor.

We highlight that we have not identified any listed company which is truly comparable to the Company in terms of the composition of its business activities, geographical spread, size of operations, asset base, track record, financial performance, operating and financial leverage, market capitalisation, risk profile, liquidity, future prospects and other relevant criteria. As a result, any comparisons drawn can serve only as an illustrative guide.

Thus for this purpose, we have considered companies whose principal activities are broadly similar to the Group’s healthcare services activities (the “Comparable Companies”).

We have benchmarked the Offer Price by generating selected valuation statistics for the Company implied by the Offer Price and compared those statistics with those for the Comparable Companies. The list of Comparable Companies has been prepared after consultation with the Directors and the Management of the Company.

In our analysis, we have collated and presented the following ratios:

LTM P/E A variant of the Price-to-Earnings ratio (“P/E”) where the earnings of a Company is computed based upon the last-twelve- month (“LTM”) period ending on the most recent quarter for which financial results have been published.

The P/E is the ratio of market capitalisation relative to its profit after tax attributable to shareholders of the Company (“NPAT”). The P/E is affected by, inter alia, the capital structure of a Company, its tax position as well as its accounting policies relating to depreciation and intangible assets.

LTM EV/EBITDA A variation of the EV/EBITDA ratio where the EBITDA of a company is computed based upon the LTM period ending on the most recent quarter for which financial results have been published.

“EV” or “Enterprise Value” is the sum of a company’s market capitalisation, preferred equity, minority interests, short and long term debts less its cash and cash equivalents. “EBITDA” stands for historical consolidated earnings before interest, tax, depreciation and amortisation expenses.

The EV/EBITDA ratio illustrates the ratio of the market value of a Company’s business relative to its historical consolidated pre-tax operating cashflow performance, without regard to its capital structure.

Price-to-Net Tangible NTA refers to consolidated net tangible assets, which is the total Assets (“P/NTA”) assets of a company less intangible assets (such as goodwill, patents and trademarks) and total liabilities.

P/NTA refers to the ratio of a company’s share price divided by NTA per share.

35 We note that the Group’s key activities include provision of healthcare services and healthcare education.

The value of the Company is derived predominantly from its ability to generate positive cash flows and streams of net earnings using a large asset base including hospitals. Accordingly, we have selected cash flows and earnings-based valuation ratios (such as EV/EBITDA and P/E) and asset based evaluation ratio (Price/NTA) as the benchmarks for evaluation.

The selected valuation statistics of the Comparable Companies are based upon their closing prices on the Latest Practicable Date while those of the Company are as implied by the Offer Price. Such comparisons are affected by differences in their accounting policies. Our analysis has not attempted to adjust for such differences.

The following is the list of Comparable Companies, together with a brief description of their principal activities:

Market Capitalisation(1) Revenue LTM(2) Company Name Principal Activities (S$ millions) (S$ millions)

Raffles Medical Operates in three segments: 1,721.5 329.7 Group Limited healthcare services hospital services and investment holdings. (“Raffles”) • Healthcare services include the operations of medical clinics and other general medical services; provision of health insurance, trading in pharmaceutical and nutraceutical products and diagnostic equipment, and provision of management and consultancy services

• Hospital services include the provision of specialized medical services and operation of hospital and business of medical laboratory and imaging centre

Mahachai Owner and operator of Mahachai 94.8 64.5 Hospital PCL Hospital. Located in Samut Sakorn, a province adjacent to Bangkok (“Mahachai”) (Thailand) the Hospital has 180 inpatient beds and 17 diagnostic rooms for 880 outpatients daily. The services include medical treatment, surgery services, child clinic, heart centre, dental clinic, orthopedic clinic etc.

36 Market Capitalisation(1) Revenue LTM(2) Company Name Principal Activities (S$ millions) (S$ millions)

Nonthavej • A Thailand-based provider of 155.3 72.0 Hospital PCL healthcare services. Operates a private general hospital under (“Nonthavej”) the name of Nonthavej Hospital in Bangkok, which has an inpatient capacity of 208 beds and an outpatient capacity of 2,000 per day with 90 diagnostic rooms.

• Offers various medical treatments, which include: bone and joint disorders; digestive diseases; ear, nose and throat disorders; endocrine and metabolic disorders; eye disorders; heart and vascular disorders etc. It also provides health check-up centre, mobile X-ray service and 24 hour ambulance service.

Chiang Mai Ram • AThaicompanyoperatinga180- 163.2 96.3 Medical bed general hospital, namely Business PCL Lanna Hospital, which is located in Muang District Chiang Mai (“Chiang Mai province. Lanna Hospital Ram”) provides a full range of around- the-clock inpatient and outpatient services with a full capacity of approximately 950 outpatients per day.

• It services include intensive care unit (ICU), dental clinic, orthopaedic surgery, child clinic, X-ray, cancer clinic, eye, nose and throat clinic, heart centre, and full equipped operation rooms. It also offers an emergency ambulance service and an international patient centre.

37 Market Capitalisation(1) Revenue LTM(2) Company Name Principal Activities (S$ millions) (S$ millions)

Thai Nakarin Operates the Thai Nakarin Hospital. 90.2 58.4 Hospital PCL The hospital provides 24-hour inpatient and outpatient services. It (“Nakarin”) provides a full range of inpatient and outpatient services, including medical services, surgical services, an emergency room, laboratories, a dental clinic and other services. It also provides Deluxe and Very Important Person (VIP) rooms, as well as an international ward.

KPJ Healthcare • A Malaysia-based private 1,641.1 852.1 Bhd (“KPJ”) healthcare provider in the region with a network of approximately 21 hospitals in Malaysia and two in Indonesia, with approximately 3,000 licensed beds.

• KPJ portfolio includes hospital management, healthcare technical services, hospital development and commissioning, nursing, health sciences and continuous professional healthcare education, pathology services, central procurement and retail pharmacy. The Company also operates a private nursing college. The Company’s subsidiaries include Johor Specialist Hospital Sdn Bhd, Ipoh Specialist Hospital Sdn Bhd, Kumpulan Perubatan (Johor) Sdb Bhd, and Puteri Specialist Hospital (Johor) Sdn Bhd.

Table 4 – Description of Comparable Companies

Source: Bloomberg, OneSource, the annual report and Company filings of the respective companies, (www.oanda.com – used for exchange rates as of LPD for conversion to Singapore Dollar from the respective local currency).

Notes:

(1) Market Capitalisation of the Comparable Companies is as at Latest Practicable Date.

(2) LTM revenue is computed based upon the last-twelve-month period ending on the most recent quarter (or half-year if Comparable Companies do not publish quarterly filings) for which financial results have been published.

38 To give a degree of comfort as to the comparability of the Company with the Comparable Companies, we have presented selected financial ratios using the latest financial statements of the Comparable Companies:

EBITDA Net Return on Net Asset 3YrCAGR LTM margin(1) Margin(2) Equity(3) Gearing(4) Turnover(5) Revenue(6) Company Name ending (%) (%) (%) (%) (times) (%)

TheCompany 30/06/2013 16.7% 3.3% 8.7% 57.8% 0.9x 17.0%

Raffles 30/06/2013 24.8% 19.1% 15.0% -29.3% 0.6x 12.5%

Mahachai 30/06/2013 15.4% 6.4% 13.9% 50.4% 1.1x 9.7%

Nonthavej 30/06/2013 24.8% 14.2% 22.2% 18.6% 1.1x 9.4%

ChiangMaiRam 30/06/2013 25.1% 9.9% 13.2% 54.0% 0.5x 8.0%

Nakarin 31/07/2013 19.9% 11.8% 21.7% -7.8% 1.4x 8.6%

KPJ 30/06/2013 11.7% 5.4% 11.0% 53.6% 0.9x 8.0%

Average 20.3% 11.1% 16.2% 44.2% 0.9x 9.4%

Median 22.4% 10.8% 14.5% 34.5% 1.0x 9.0%

Maximum 25.1% 19.1% 22.2% 54.0% 1.4x 12.5%

Minimum 11.7% 5.4% 11.0% -29.3% 0.5x 8.0%

Table 5 – Financial Ratios of Comparable Companies

Source: Bloomberg, the annual report and Company filings of the respective companies

Notes:

(1) EBITDA margin is computed based on the ratio of LTM EBITDA over the LTM revenue. LTM EBITDA has been adjusted for non-operating, non-recurring and extraordinary items.

(2) Net margin is computed based on the ratio of LTM NPAT over the LTM revenue. LTM NPAT has been adjusted for non-operating, non-recurring and extraordinary items; corporate tax rates have been applied to these adjustments.

(3) Return on equity is computed based on the ratio of normalised NPAT over shareholders’ funds, excluding minority interest.

(4) Net gearing is computed based on the ratio of total borrowings less cash and cash equivalents over shareholders’ equity, excluding minority interest.

(5) Asset turnover is computed based on the ratio of revenue over total assets.

(6) 3Yr-CAGR revenue is the compound annual growth rate in revenue over a 3 year period.

We note the following: a. The Company’s EBITDA margin is lower than the average and the median of Comparable Companies. The Company’s net margin and return on equity are also lower than the median and the average of the Comparable Companies. b. The Company’s net gearing is 57.8% which is higher than the average net gearing of 44.2% and higher than the median net gearing of 18.6% of Comparable Companies. c. The Company’s asset turnover is marginally lower than the average and median of the Comparable Companies. d. The Company’s revenue CAGR over the last three years is higher than the Comparable Companies and the median and average CAGR of the Comparable Companies.

39 On an overall basis, we note that the Company’s margins are lower than Comparable Companies and the Company has a higher gearing but however is growing at a faster rate than all Comparable Companies.

With this in mind, we have compared the multiples implied by the Offer Price with those of the Comparable Companies.

Market LTM Capitalisation EV/EBITDA LTM P/E Company Name (S$ millions) (Normalised)(1) (Normalised)(2) LTM P/NTA The Offer Price(3) 92.4 13.1x(4) 29.2x 2.5x

Raffles 1,721.5 19.6x 27.4x 4.1x Mahachai 94.8 11.2x 22.9x 3.2x Nonthavej 155.3 9.2x 15.2x 3.5x ChiangMaiRam 163.2 9.9x 17.3x 2.8x Nakarin 90.2 7.5x 13.1x 2.9x KPJ 1,641.1 18.9x 35.8x 4.7x

Average 12.7x 15.2x 3.5x Median 10.5x 20.1x 3.3x Maximum 19.6x 35.8x 4.7x Minimum 7.5x 13.1x 2.8x

Table 6 – Valuation multiples of Comparable Companies

Source: Bloomberg, the annual report and Company filings of the respective companies

Notes:

(1) Computed as the ratio of EV to normalised LTM EBITDA, where EV is calculated as equity value + net debt + minority interest. LTM EBITDA has been adjusted for non-operating, non-recurring and extraordinary items. (2) Computed as the ratio of market capitalisation to normalised LTM NPAT. LTM NPAT has been adjusted for non-operating, non-recurring and extraordinary items; corporate tax rates have been applied to these adjustments. (3) Implied by the Offer Price. (4) For the purpose of this exercise we have adjusted the Enterprise value of the Company to exclude minority interest and also adjusted the EBITDA to exclude the earnings that pertain to minority interest holdings. This adjustment provides a more appropriate multiple for comparison against other comparable companies as a major portion of the Company’s EBITDA pertains to minority interest holdings. The LTM EV/EBITDA on a pre-adjusted basis is 7.6x.

We highlight the following key observations arising from the data presented above:

a. The LTM EV/EBITDA implied by the Offer Price is 13.1x which is higher than the average and the median LTM EV/EBITDA of the Comparable Companies of 12.7x and 10.5x respectively; b. The LTM P/E implied by the Offer Price of 29.2x is significantly above the average and median LTM P/E of the Comparable Companies of 15.2x and 20.1x respectively; and

40 c. The LTM P/NTA implied by the Offer Price of 2.5x is lower than the average and median P/NTA of the Comparable Companies of 3.5x and 3.3x, respectively.

For the purpose of comparison of Valuation multiples for Comparable Companies we have excluded Pacific Healthcare, Singapore Medical and Healthway Medical. This has been done because though these companies are comparable from a market perspective i.e. they cater largely to South East Asian patients, the nature of services and the business model vary widely as compared to the Company. It should also be noted that both Pacific and Singapore Medical are loss making and the implied valuation multiples cannot be used for comparison purposes.

Shareholders must also note that the Company has been investing over the past few years in its Regency Specialist Hospital business in Iskandar, Johor Bahru which is in the growth phase. We further highlight that from Section 4 of the Circular the following: “The Group is aware of the growing competition and challenges posed by the new hospitals. The new hospitals in Malacca and Johor are likely to increase competition for patients and bring further challenges in terms of manpower and talent retention for MMCSB and RSHSB. The Group will strive to continue delivering quality healthcare to its patients, specifically by recruiting more doctors and improving overall healthcare services and patient experience”.

We would like to highlight the following with regard to the NTA of the Company. The NTA of the Company that has been used to calculate the ratios is based on the audited financials for the year ended 30 Jun 2013. The NTA comprises of certain properties which are held by subsidiaries. We refer to the accounting policy of the Company for accounting of subsidiaries. The policy states the following: “Investment 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”. As a result of this, the properties held by subsidiary companies would be reflected at historical cost in the Company’s balance sheet.

We understand that these properties do not reflect current market value. We have been informed by the management that the Company carries out an annual valuation of the properties.

Hence, based on information provided by the management, if the re-valued properties were to be considered in the calculation of the NTA, the resultant P/NTA would be 2.2x which would lower than the average and median of the Comparable Companies.

The key observations above illustrate that the Offer Price is fair and reasonable as the LTM EV/EBITDA and LTM P/E implied by the Offer Price are higher than the median and average multiples implied by the Comparable Companies. The P/NTA is lower than the average and median multiples implied by the Comparable Companies but are within the range. Please note that this comparison is for illustration purposes only and our opinion in paragraph 7 is based on the factors listed in paragraph 6 and subject to the assumptions and qualifications set out elsewhere in this letter and taking into account the conditions prevailing as at the Latest Practicable Date.

It is relevant to note that the Comparable Companies are not subject to take-over offers as at the Latest Practicable Date.

41 6.7. Comparison of ratings with Comparable Transactions

We have made comparison between the valuation ratios implied by the Offer Price and the valuation ratios indicated by selected completed transactions between 11 March 2010 and the Latest Practicable Date, involving targets that operate in the healthcare services segment that are broadly comparable to the Company (“Comparable Transactions”).

We note the following in respect of such comparison:

a. The list of Comparable Transactions cannot be exhaustive.

b. The Comparable Transactions identified as being comparable are few in number.

c. The Comparable Transactions occurred over a period of time, when conditions may have been different from those presently.

Announcement Date TargetName Description 05/03/2012 China Healthcare A Singapore-based healthcare service Limited provider, China Healthcare, along with its subsidiaries provides planning, design, (“China Healthcare”) development and management of facilities and services for the medical and healthcare industry. It operates in three business segments: operation of medicare centres and nursing homes, hospital services and other ancillary services. Its hospital services are engaged in providing hospital extension ward management services. Through its other ancillary services, it provides homecare services, ambulance services and sale and rental of healthcare equipment and accessories. 05/03/2012 IHH Healthcare A Malaysia-based private healthcare Berhard provider operating an integrated healthcare business and related services. Its (“IHH”) segments include Hospital, Healthcare, Education and Non-healthcare. The Hospital segment includes its hospitals operated by Parkway Pantai Limited (PPL) and Acibadem Holding. The Healthcare segment includes the operation of medical clinics and provision of primary healthcare services, ownership and management of radiology clinics, provision of diagnostic laboratory services and provision of managed care and related services. Its business is presented in Singapore, Malaysia, Turkey, The People’s Republic of China, India, Hong Kong, Vietnam, Macedonia and Brunei.

42 Announcement Date TargetName Description 15/03/2011 Qualitas Medical A Malaysian based primary healthcare Group Limited provider group. owns and operates one of the largest integrated network of General (“Qualitas”) Practice clinics in Malaysia as well as Medical centres in India, Singapore, Australia and New Zealand. Has ownership in dental practices in India and Singapore 29/10/2010 Thomson Medical A Singapore-based healthcare service Centre provider. The centre provides various healthcare services in the areas of (“Thomson”) obstetrics, gynaecology and paediatrics. Its services include new-born care, childhood vaccination, eye screening and biomedical screening for autism. Offers services through nutritional clinic, skin clinic, chronic cough clinic, allergy clinic, autism clinic and behavioural clinic. Its fertility centre offers clinical services including investigations of male and female infertility TMC is headquartered in Singapore. 27/05/2010 Parkway Holdings Ltd A Singapore-based healthcare provider. Operates hospitals, medical centres and 11/03/2010 (“Parkway”) clinics. Manages 17 hospitals located in Singapore, Brunei, China, Malaysia and India, 14 clinics in Singapore, Hong Kong, Malaysia and China; and five ancillary centres located in Singapore, Malaysia and India. Provides a wide range of healthcare services such as specialised industrial healthcare consultancy, general and acute care services such as, orthopaedics and general surgery, Parkinson disease, trauma, radiotherapy, oncology, cardiology, dental, clinical laboratory services etc. It is a wholly-owned subsidiary of IHH Healthcare Berhad.

Table 7 – Comparable Transactions Target Company Descriptions

Source: OneSource, Circular, Offer Document and Company Filings

Our Comparable Transactions analysis is based on data compiled from publicly available sources and serves as a guide to the premium paid in connection with the acquisitions or divestments of companies in the healthcare services sector. Each transaction must be judged on its own commercial and financial merits. The premium that an acquirer pays in any particular transaction depends on various factors such as the potential synergy that the acquirer can gain from the acquisition, the presence of competing bids, prevailing market conditions, attractiveness of the target’s business and assets, size of consideration, scarcity value of an asset of a particular size (especially in the case of IHH Healthcare) and existing and desired level of control in the target Company. Conclusions drawn from the comparisons made may not reflect any perceived market valuation of the Company. Hence, the comparison of the Offer Price with the Comparable Transactions is for illustration purposes only.

43 Implied Equity LTM Announcement % Shares Value EV/EBITDA(1) LTM P/E(2) Date Acquirer Target Acquired (S$ million) (Normalised) (Normalised) P/NTA 18 September 2013 (Announcement The Date) Offeror Company(2) NA NA 13.1x 29.2x 2.5x

Econ EQT Investment China 05/03/2012 Pte Ltd Healthcare 100% 80.4 15.4x 22.2x 2.2x

Mitsui & 07/04/2011 CoLtd IHH 30% 4,578.6 9.0x 18.2x 9.4x

Qualitas Healthcare Holdings 15/03/2011 Limited Qualitas 100% 47.1 6.4x 11.2x 9.7x

Sasteria 29/10/2010 Pte.Ltd. Thomson 61% 513.2 12.1x 19.7x 2.2x

Khazanah Nasional 27/05/2010 Berhad Parkway 28% 4,277.4 18.2x 26.7x 2.9x

Fortis Healthcare 11/03/2010 Limited Parkway 24% 4,008.4 18.7x 27.5x 3.0x

Average 13.3x 20.9x 4.9x

Median 13.7x 20.9x 2.9x

Maximum 18.7x 27.5x 9.8x

Minimum 6.4x 11.2x 2.2x

Table 8 – Valuation Analysis for Comparable Transactions

Source: Bloomberg, Mergermarket, Company filings, offer documents and circulars to shareholders in relation to the respective transactions and DTCF’s computation, as the case may be.

Notes:

(1) Based on normalised LTM EBITDA and NPAT for last twelve-month period prior to each transaction’s announcement date. EBITDA has been adjusted for non-operating, non-recurring and extraordinary items. NPAT has been adjusted for non-operating, non-recurring and extraordinary items; corporate tax rates have been applied to these adjustments. (2) Based on cash position, debt, net earnings and EBITDAfor the 12 month period ended 30 June 2013, as provided by the Company.

We highlight the following key observations arising from the data presented above:

a. The LTM EV/EBITDA implied by the Offer Price of 13.1x is marginally lower than the average and the median of the Comparable Transactions of 13.3x and 13.7x, respectively; and

b. The LTM P/E implied by the Offer Price of 29.2x is higher than the average and higher than the median of those of the Comparable Transactions of 20.9x and 20.9x, respectively.

44 In addition, the implied LTM EV/EBITDA, LTM P/E and LTM P/NTA are lower than the maximum observed in the Comparable Companies.

The key observations above illustrate that the Offer Price is fair and reasonable, as the LTM EV/EBITDA is comparable to the average and median implied by the Offer Price and the LTM P/E is higher than the average and median of Comparable Transactions. Please note that this comparison is for illustration purposes only and our opinion in paragraph 7 is based on the factors listed in paragraph 6 and subject to the assumptions and qualifications set out elsewhere in this letter and taking into account the conditions prevailing as at the Latest Practicable Date.

6.8. Other considerations

6.8.1. No obligation to make a general offer

As discussed in 3.5 above, if the Offer is unconditional in all respects, the Offeror and its Concert Parties will be able to exercise statutory control over the Company and will be free, subject to a six month moratorium after the close of the Offer, to acquire further Shares without incurring any obligation to make a general take-over offer for the Company.

6.8.2. No Intention to Revise the Offer Price and Extension of duration

The Offeror has stated that it does not intend to revise the Offer Price. Although no extension of the Offer is currently contemplated, if the Offer is extended, an announcement will be made of such extension, and the Offer will remain open for acceptance for such period as may be announced. If the Offer is extended, holders who have validly accepted the Offer in respect of part of their Shares will be entitled to tender additional Shares in acceptance of the Offer.

6.8.3. The intentions of the Offeror and its concert parties for the Company

The Offeror has stated in the Offer Announcement, inter alia, the following intentions “Presently, the Offeror intends to carry on the business of the Company and the Group of providing healthcare services and has no intention to introduce major changes to the business, including to redeploy the fixed assets of the Company and the Group or to discontinue the employment of the employees of the Company and the Group, in each case other than in the ordinary course of business.”

6.8.4. Dividend policies going forward

The Offeror has not stated dividend polices for the Company going forward. As such, Shareholders should be aware that going forward dividend policies and payments may vary from historical norms.

6.8.5. Absence of Competing Offers

We understand from the Company that from the Announcement date up to the Latest Practicable Date, no competing offer has been forthcoming. It should also be noted that, if the Offer is unconditional in all respects, the Offeror and its Concert Parties will be able to exercise statutory control over 53.16% of the shares the Company. Hence, unless a new Offeror is willing to make an offer for a minority stake, there may be limited possibility of a Competing Offer for the Company.

45 7. CONCLUSION

b. The Shares have traded below the Offer Price in the period post the Announcement Date to the Latest Practicable Date. The Offer price represents a premium in the range of 32.4% to 37.1% during the last two years. We have also noted that during the last 5 years, the share price has not traded above the Offer price.

c. We note that the market price of the Shares outperformed the benchmark indices (being FSSTI and MXASJHC). It is possible that the Offer is in part responsible for this rise and outperformance.

d. The implied premium based on the Offer Price is significantly higher than the premiums implied by other Partial and Mandatory Offers over the past 2 years prior to the Offer. However, during the past 2 years, there were only 2 Partial Cash Offers and 8 Mandatory Cash Offers (which offered a positive premium). The implied premium based on the Offer Price is within the range but lower than the average and median premiums offered for Voluntary Cash Offers over the past 2 years. The implied premium is within the range, lower than the average and higher than the median of premiums offered for all Cash Offers noted above.

e. The Company’s EBITDAmargin is lower than the average and higher than the median EBITDA margin of Comparable Companies. The Company’s net margin and return on equity are lower than both the median and the average of the Comparable Companies.

f. The LTM EV/EBITDA of 13.1x, is higher than the average and median of the LTM EV/EBITDA of the Comparable Companies. LTM P/E of 29.2x implied by the Offer Price is higher than the average and median of the Comparable Companies and higher than the maximum noted for Comparable Companies. The P/NTA of 2.5x implied by the Offer price is lower than the average and median P/NTA of the Comparable Companies. We note that the Comparable Companies are not under offer and that the financial ratios of the Company are in general more favourable than those of the Comparable Companies.

g. The LTM EV/EBITDA implied by the Offer Price of 13.1x is marginally lower than the average and the median of the Comparable Transactions of 13.3x and 13.7x, respectively, and the LTM P/E implied by the Offer Price of 29.2x is higher than the average and the median of the Comparable Transactions of 20.9x.

h. The Offeror has stated that it does not intend to revise the Offer Price.

i. The Offer is conditional upon the conditions mentioned in Section 2.1(e) of the Circular and paragraph 3.5 above.

j. Shareholders should also note that if the offer turns unconditional the Offeror and its Concert Parties would exercise statutory control over the Company. They will be free, subject to a six month moratorium after the close of the Offer, to acquire further Shares without incurring any obligation to make a general take-over offer for the Company.

46 k. Shareholders may choose to tender in shares in part or in full with respect to their holdings.

l. Shareholders should be aware that dividend policies and payments going forward may vary from historical norms. m. The Company has not received any competing offer(s) from the Announcement Date up to the Latest Practicable Date. There may be a limited possibility of receiving a competing offer if the offer turns unconditional.

Having considered the factors listed in paragraph 6 and subject to the assumptions and qualifications set out elsewhere in this letter and taking into account the conditions prevailing as at the Latest Practicable Date, we are of the opinion that the Offer is fair and reasonable and not prejudicial to the interests of the Offer Shareholders. Accordingly, we advise the Unconflicted Directors that they should recommend that the Shareholders vote in favour of the Offer and ACCEPT the Offer.

In rendering our opinion, we have not had regard to any general or specific investment objectives, financial situations, risk profiles, tax positions or particular needs or constraints of any individual Shareholder or any specific group of Shareholders and we neither assume any responsibility for, nor hold ourselves out as advisers to any person other than the Unconflicted Directors.

Our opinion is only based on a financial analysis and does not incorporate any assessment of commercial, legal, tax, regulatory or other matters. Such factors (including the aforesaid illustrations) are beyond the ambit of our review and do not fall within our terms of reference in connection with the Offer.

We wish to emphasize that we have been appointed to render our opinion as of the Latest Practicable Date. Our terms of reference do not require us to express, and we do not express, an opinion on the future growth prospects of the Company.

Shareholders should note that the trading of the Shares is subject to, inter alia, the performance and prospects of the Group, prevailing economic conditions, economic outlook and stock market conditions and sentiments. Accordingly, our advice on the Offer does not and cannot take into account future trading activities or patterns or price levels that may be established for the Shares after the Latest Practicable Date since these are governed by factors beyond the ambit of our review and also, such advice, if given, would not fall within our terms of reference in connection with the Offer.

Our opinion is addressed to the Unconflicted Directors for their benefit in connection with and for the purposes of their consideration in respect of the Offer. Any recommendations made by the Unconflicted Directors in respect of the Offer shall remain their responsibility.

Whilst a copy of this letter may be reproduced in the Circular, no other person may reproduce, disseminate or quote this letter (or any part thereof) for any purpose (other than the intended purpose in relation to the Offer Announcement and the Offer) at any time and in any manner without our prior written consent in each specific case. Our opinion is governed by the laws of Singapore, and is strictly limited to the matters stated in this letter and do not apply by implication to any other matter.

Yours faithfully

DELOITTE & TOUCHE CORPORATE FINANCE PTE LTD

Ng Jiak See Executive Director

47 APPENDIX 1

GENERAL INFORMATION

1. DIRECTORS

The names, addresses and descriptions of the Directors as at the Latest Practicable Date are set out below:

Name Address Designation Dr.GanSeeKhem 26RochalieDrive Executive Chairman and Rose Garden Managing Director Singapore 248257 Dr.ChinKoyNam 26RochalieDrive Executive Director Rose Garden Singapore 248257 Dr.CheahWayMun 5AChanceryHillRoad Non-Executive and Singapore 309645 Independent Director Mr. Gan Lai Chiang, Andy 21 Siak Kew Avenue Non-Executive and Sennett Estate Independent Director Singapore 348065 Professor Tan Chin Tiong 52 Kingsmead Road Non-Executive and Singapore 267996 Independent Director

2. BACKGROUND INFORMATION

The Company was incorporated in Singapore on 26 October 1998 and its registered office is at 167 Jalan Bukit Merah, #05-10, Connection One, Singapore 150167. Listed on the Main Board of the SGX-ST since 2008, the Company is a regional healthcare services and education provider with presence in Singapore, Malaysia, Indonesia, Cambodia and Myanmar. The Group owns and operates two tertiary care hospitals in Malaysia, the flagship Mahkota Medical Centre in Malacca, Malaysia and Regency Specialist Hospital in Iskandar Malaysia, Johor, which provide a comprehensive suite of medical and surgical disciplines. To reach out to regional patients, the Group has a network of 21 patient representative offices. With more than 23 years of experience in hospital management, the Company provides project consultancy and advisory services. The Company also owns and operates HMI Institute of Health Sciences in Singapore and Mahkota Institute of Health Sciences and Nursing in Malacca, Malaysia.

3. SHARE CAPITAL

3.1 Issued Shares. As at the Latest Practicable Date, the Company has an issued share capital of S$40,404,772.24 comprising 577,071,286 issued Shares (excluding treasury shares). As at the Latest Practicable Date, the Company has 201,000 Shares in treasury. Since the end of the previous financial year, the Company did not issue any new Shares. Shareholders should note that pursuant to the HMI Performance Share Plan, 405,000 treasury shares have been re-issued to the employees of the Company on 11 January 2013. Please refer to the announcement made by the Company on 16 January 2013 entitled “Use of Treasury Shares” for further information in this regard, which is available on the website of the SGX-ST at www.sgx.com. A copy of the said announcement is also available for inspection at the registered office of the Company.

48 The Shares are ordinary shares carrying equal ranking rights to dividends, voting at general meetings and return of capital. The Company does not have any other class of share capital as at the Latest Practicable Date. There is no restriction in the Memorandum and Articles of Association of the Company on the right to transfer any Shares, which has the effect of requiring the holders of Offer Shares, before transferring them, to offer them for purchase to members of the Company or to any other person.

3.2 Rights in Respect of Capital, Dividends and Voting. The rights of Shareholders in respect of capital, dividends and voting in relation to the Shares is extracted from the Articles of Association of the Company and reproduced as follows:

(a) Rights in Respect of Capital

3. (1) ISSUEOFSHARES. The shares taken by the subscribers to the Memorandum of Association shall be issued by the Directors. Subject as aforesaid and to these Articles, the shares shall be under the control of the Directors, who may allot and issue the same to such persons on such terms and conditions and at such times as the Directors think fit but so that no shares shall be issued at a discount except in accordance with Section 68 of the Act.

(2) REPURCHASEOFCOMPANY’SSHARES. The Company may purchase or otherwise acquire its issued shares subject to and in accordance with the provisions of the Act and any other relevant rule, law or regulation enacted or promulgated by any relevant competent authority from time to time (hereafter, the “Relevant Laws”), on such terms and subject to such conditions as the Company may in general meeting prescribe in accordance with the Relevant Laws. Any shares purchased or acquired by the Company as aforesaid shall be dealt with in accordance with the Relevant Laws.

4. RESTRICTIONONISSUEOFSHARETOTRANSFERACONTROLLING INTEREST. No share shall be issued so as to transfer a controlling interest (as defined in the listing rules of the Stock Exchange of Singapore Limited, as the same may be amended from time to time) in the Company without the prior approval of the shareholders in a general meeting.

5. SPECIALRIGHTS. Without prejudice to any special rights previously conferred on the holders of any existing shares or class of shares, any share in the Company may be issued with such preferred, deferred or other special rights or such restrictions, whether in regard to dividend, voting, return of capital or otherwise as the Company may from time to time by ordinary resolution determine; PROVIDED ALWAYS THAT the total nominal value of issued preference shares shall not at any time exceed the total nominal value of issued ordinary shares of the Company.

6. REDEEMABLEPREFERENCESHARES. Subject to Section 70 of the Act, any preference shares may be issued on the terms that they are, or at the option of the Company are liable, to be redeemed. The Company shall also have the power to issue further preference shares ranking equally with or in priority to any preference shares already issued.

49 7. RIGHTSOFPREFERENCESHAREHOLDERS. Holders of preference shares shall have the same rights as ordinary shareholders as regards receiving notices, reports and balance sheets, and attending general meetings of the Company. They shall have the right to vote at any meeting convened for the purpose of reducing the capital or winding up or sanctioning a sale of the undertaking, or where the proposition to be submitted to the meeting directly affects their rights and privileges, or when the dividends on the preference shares are in arrears more than six months.

8. MODIFlCATION OF RIGHTS OF PREFERENCE SHAREHOLDERS. The repayment of preference capital other than redeemable preference capital, or any other alteration of preference shareholders’ rights, may only be made pursuant to a special resolution of the preference shareholders concerned; PROVIDED ALWAYS THAT where the necessary majority for such a special resolution is not obtained at the meeting, consent in writing, if obtained from the holders of three-fourths of the preference shares concerned within two months of the meeting, shall be as valid and effectual as a special resolution carried at the meeting.

9. RIGHTSNOTVARIEDBYISSUEOFADDITIONALSHARES. The rights conferred upon the holders of the shares of any class issued with preferred or other rights shall not unless otherwise expressly provided by the terms of issue of the shares of that class be deemed to be varied by the creation or issue of further shares ranking pari passu therewith.

10. COMMISSIONONSUBSCRIPTION. The Company may pay a commission to any person in consideration of his subscribing or agreeing to subscribe, whether absolutely or conditionally, or procuring or agreeing to procure subscriptions, whether absolute or conditional, for any shares in the Company; PROVIDED ALWAYS THAT such commission shall not exceed ten per cent of the price at which such shares are issued, or an amount equivalent to such percentage, and that the requirements of Section 67 of the Act shall be observed. Subject to the provisions of Section 63 of the Act, such commission may be satisfied by the payment of cash or the allotment of fully paid shares or partly in one way and partly in the other.

11. NOTRUSTSRECOGNISED. No person, other than the Depository, shall be recognised by the Company as holding any share upon any trust, and the Company shall not be bound by or be required in any way to recognise (even when having notice thereof) any equitable, contingent future or partial interest in any share or any other rights in respect of any share other than an absolute right to the entirety thereof in the registered holder, except only as by these Articles otherwise provided for or as required by the Statutes or pursuant to any order of Court.

12. OFFEROFNEWSHARES.

(1) Subject to any direction to the contrary that may be given by the Company in general meeting or except as permitted by the listing rules of the Stock Exchange of Singapore Limited (as the same may be amended from time to time), all new shares of whatever kind shall, before issue, be offered to such persons as at the date of the offer are entitled to receive notices from the Company of general meetings in proportion, as nearly as the circumstances admit, to the amount of the existing shares to which they are entitled. The offer shall be made by notice specifying the number of shares offered, and limiting a time within which the offer, if not accepted, will be deemed to be

50 declined and, after the expiration of that time or on the receipt of an intimation from the person to whom the offer is made that he declines to accept the shares offered, the Directors may dispose of those shares in such manner as they think most beneficial to the Company. The Directors may likewise so dispose of any new shares which (by reason of the ratio which the new shares bear to shares held by persons entitled to an offer of new shares) cannot, in the opinion of the Directors, be conveniently offered under this Article.

(2) Notwithstanding Article 12(1), the Company may by ordinary resolution in general meeting give to the Directors a general authority, either unconditionally or subject to such conditions as may be specified in the ordinary resolution, to issue shares (whether by way of rights, bonus or otherwise) where the aggregate number of shares to be issued pursuant to such authority does not exceed any applicable limit as may be prescribed by the listing rules of the Stock Exchange of Singapore Limited (as the same may be amended from time to time).

13. SHARE CERTIFICATES. Unless otherwise resolved by the Directors, securities will be allotted and certificates issued in the name of and despatched to every person whose name is entered as a Member in the Register of Members within ten market days of the final applications closing date for an issue of securities and within fifteen market days after the lodgement of any transfer. Every person whose name is entered as a Member in the Register of Members shall be entitled without payment to one certificate under the seal of the Company in respect of each class of shares held by him for all his shares in that class or several certificates in reasonable denominations each for one or more of his shares in any one class upon payment of $2.00 (or such lesser sum as the Directors shall from time to time determine) for every certificate after the first. Stamp duty payable on such certificate shall be borne by such Member unless otherwise directed by the Directors; PROVIDED ALWAYS THAT in the case of joint holders the Company shall not be bound to issue more than one certificate and delivery of such certificate to any one of them shall be sufficient delivery to all such holders. PROVIDED FURTHER THAT the Company shall not be bound to register more than three persons as the holders of any share except in the case of executors or administrators of the estate of a deceased Member.

14. RENEWAL OF CERTIFICATES. If a share certificate be worn out, defaced, destroyed, lost or stolen, it may be renewed on payment of such fee not exceeding $1.00 or in the event of the Company being listed on the Stock Exchange of Singapore Limited such other sum as may from time to time be prescribed by the Stock Exchange of Singapore Limited and on such terms, if any, as to evidence and indemnity and the payment of out-of-pocket expenses of the Company of investigating evidence including the payment of stamp duty on such certificate, as the Directors think fit and, in the case of defacement or wearing out, on delivery up of the old certificate.

51 ALTERATION OF CAPITAL

49. COMPANY MAY INCREASE ITS CAPITAL. The Company may from time to time by ordinary resolution increase the share capital by such sum, to be divided into shares of such amount, as the resolution shall prescribe.

50. COMPANY MAY ALTER ITS CAPITAL. The Company may by ordinary resolution:–

(1) consolidate and divide all or any of its share capital into shares of larger amount than its existing shares; or

(2) sub-divide its existing shares, or any of them, into shares of smaller amount than is fixed by the Memorandum of Association subject, nevertheless, to the provisions of the Statutes and so that as between the resulting shares, one or more of such shares may by the resolution by which such subdivision is effected be given any preference or advantage as regards dividend, capital, voting or otherwise over the others or any other of such shares; or

(3) cancel any shares not taken or agreed to be taken by any person.

51. COMPANY MAY REDUCE ITS CAPITAL. The Company may by special resolution reduce its share capital and any capital redemption reserve fund in any manner authorised and subject to any conditions prescribed by the Statutes.

MODIFICATIONOFCLASSRIGHTS

52. RIGHTS OF SHAREHOLDERS MAY BE ALTERED. Subject to the provisions of Section 74 of the Act, all or any of the rights, privileges or conditions for the time being attached or belonging to any class of shares for the time being forming part of the share capital of the Company may from time to time be modified, affected, varied, extended or surrendered in any manner with the consent in writing of the holders of not less than three-fourths of the issued shares of that class or with the sanction of a special resolution passed at a separate meeting of the Members of that class. To any such separate meeting all the provisions of these Articles as to general meetings of the Company shall mutatis mutandis apply, but so that the necessary quorum shall be Members of the class holding or representing by proxy one-third of the share capital paid or credited as paid on the issued shares of the class, and every holder of shares of the class in question shall be entitled on a poll to one vote for every such share held by him.

(b) Rights in Respect of Dividends

DIVIDENDSANDRESERVE

110. DISTRIBUTIONOFPROFITS. Subject to any preferential or other special rights for the time being attached to any special class of shares, the profits of the Company which it shall from time to time determine to distribute by way of dividend shall be applied in payment of dividends upon the shares of the Company in proportion to the amounts paid up or credited as paid up thereon respectively otherwise than in advance of calls.

52 111. DECLARATIONOFDIVIDENDS. The Directors may, with the sanction of a general meeting, from time to time declare dividends, but no such dividend shall be payable except out of the profits of the Company. The Directors may, if they think fit, from time to time declare and pay to the Members such interim dividends as appear to them to be justified by the position of the Company, and may also from time to time if in their opinion such payment is so justified, pay any preferential dividends which by the terms of issue of any shares are made payable on fixed dates. No higher dividend shall be paid than is recommended by the Directors, and the declaration of the Directors as to the amount of the net profits shall be conclusive.

112. DEDUCTIONFROMDIVIDEND. The Directors may deduct from any dividend payable to any Member all sums of money (if any) presently payable by him to the Company on account of calls or otherwise in relation to the shares of the Company.

113. PAYMENT OTHERWISE THAN IN CASH. Any general meeting declaring a dividend or bonus may direct payment of such dividend or bonus wholly or partly by the distribution of specific assets and in particular of paid up shares, debentures or debenture stock of any other company or in any one or more of such ways, and the Directors shall give effect to such resolution, and where any difficulty arises in regard to such distribution, the Directors may settle the same as they think expedient, and in particular may issue fractional certificates and fix the value for distribution of such specific assets or any part thereof and may determine that cash payments shall be made to any Members upon the footing of the value so fixed in order to adjust the rights of all parties, and may vest any such specific assets in trustees as may seem expedient to the Directors.

114. DIRECTORS MAY FORM RESERVE FUND AND INVEST. The Directors may, before recommending any dividend, set aside out of the profits of the Company such sums as they think proper as a reserve or reserves, which shall at the discretion of the Directors be applicable for meeting contingencies, or for repairing or maintaining any works connected with the business of the Company, or for equalising dividends, or for distribution by way of special dividend or bonus, or may be applied for such other purposes for which the profits of the Company may lawfully be applied as the Directors may think expedient in the interests of the Company, and pending such application the Directors may employ the sums from time to time so set apart as aforesaid in the business of the Company or invest the same in such securities, other than the shares of the Company, as they may select. The Directors may also from time to time carry forward such sums as they may deem expedient in the interests of the Company.

115. DIVIDENDWARRANTSTOBEPOSTEDTOMEMBERS. Every dividend warrant may, unless otherwise directed, be sent by post to the last registered address of the Member entitled thereto, and the receipt of the person, whose name at the date of the declaration of the dividend appears on the Register of Members as the owner of any share or, in the case of joint holders, of any one of such joint holders, shall be a good discharge to the Company for all payments made in respect of such share. No unpaid dividend or interest shall bear interest as against the Company.

53 CAPITALISATION OF PROFITS

116. COMPANY MAY CAPITALISE RESERVES AND UNDIVIDED PROFITS. The Company in general meeting may at any time and from time to time pass a resolution (including any resolution passed pursuant to Article 12(2)) that any sum not required for the payment or provision of any fixed preferential dividend, and (1) for the time being standing to the credit of any reserve of the Company, including premiums received on the issue of any shares or debentures of the Company, or (2) being undivided net profits in the hands of the Company, be capitalised, and that such sum be appropriated as capital to and amongst the ordinary shareholders in the proportions in which they would have been entitled thereto if the same had been distributed by way of dividend on the ordinary shares, and in such manner as the resolution may direct, and such resolution shall be effective; and the Directors shall in accordance with such resolution apply such sum in paying up in full any unissued shares or debentures of the Company on behalf of the ordinary shareholders aforesaid, and appropriate such shares or debentures and distribute the same credited as fully paid up to and amongst such shareholders in the proportions aforesaid in satisfaction of the shares and interests of such shareholders in the said capitalised sum or shall apply such sum or any part thereof on behalf of the shareholders aforesaid in paying up the whole or part of any uncalled balance which shall for the time being be unpaid in respect of any issued ordinary shares held by such shareholders or otherwise deal with such sum as directed by such resolution. Where any difficulty arises in respect of any such distribution, the Directors may settle the same as they think expedient, and in particular they may issue fractional certificates, fix the value for distribution of any fully paid-up shares or debentures, make cash payments to any shareholders on the footing of the value so fixed in order to adjust rights, and vest any such shares or debentures in trustees upon such trust for the persons entitled to share in the appropriation and distribution as may seem just and expedient to the Directors. When deemed requisite a proper contract for the allotment and acceptance of any shares to be distributed as aforesaid shall be delivered to the Registrar of Companies for registration in accordance with Section 63 of the Act and the Directors may appoint any person to sign such contract on behalf of the persons entitled to share in the appropriation and distribution and such appointment shall be effective.

GENERALMEETINGS

53. GENERALMEETINGS. A general meeting shall be held once in every calendar year, at such time and place as may be determined by the Directors, but so that not more than fifteen months shall be allowed to elapse between any two such general meetings.

54. GENERALANDEXTRAORDINARYMEETINGS. The abovementioned general meetings shall be called general meetings. All other general meetings shall be called extraordinary meetings.

55. EXTRAORDINARYMEETINGS. The Directors may call an extraordinary meeting whenever they think fit, and extraordinary meetings shall also be convened on such requisition, or in default may be convened by such requisitionists, as provided by Section 176 of the Act.

54 56. NOTICEOFMEETING. Any general meeting at which it is proposed to pass a special resolution or a resolution of which special notice has been given to the Company, shall be called by twenty-one days’ notice at least and any other general meeting by fourteen days’ notice at least, provided that a general meeting notwithstanding that it has been called by a shorter notice than that specified above, shall be deemed to have been duly called if it is so agreed by all the Members entitled to attend and to vote thereat. Every notice calling a general meeting shall specify the place and the day and the hour of meeting and be given in manner hereinafter mentioned to such persons as are under the provisions of these Articles entitled to receive notices of general meetings from the Company. Any notice of a meeting called to consider special business shall be accompanied by a statement regarding the effect of any proposed resolution in respect of such special business. In the event of the Company being listed on the Stock Exchange of Singapore Limited at least fourteen days’ notice of every such meeting shall be given by advertisement in the daily press and in writing to the Stock Exchange of Singapore Limited. The accidental omission to give such notice to, or the non-receipt of such notice by, any such person shall not invalidate the proceedings or any resolution passed at any such meeting.

57. RESOLUTIONSIGNEDBYALLMEMBERSASEFFECTIVEASIFPASSEDAT GENERALMEETING. Subject to the Statutes, a resolution in writing signed by all the Members for the time being entitled to receive notice of and attend and vote at general meetings (or being corporations by their duly authorised representatives) shall be valid and effective as if the same had been passed at a general meeting of the Company duly convened and held, and may consist of several documents in the like form each signed by one or more Members.

PROCEEDINGSATGENERALMEETINGS

58. SPECIALBUSINESS. All business shall be deemed special that is transacted at an extraordinary meeting, and also all that is transacted at a general meeting, with the exception of declaring a dividend, the consideration of the accounts, balance sheets, and the reports of the Directors and Auditors, and any other documents annexed to the balance sheets, the election of Directors in the place of those retiring and the fixing of the remuneration of the Directors and the appointment and fixing of the remuneration of the Auditors.

59. NOBUSINESSTOBETRANSACTEDUNLESSQUORUMPRESENT. No business shall be transacted at any general meeting unless a quorum is present when the meeting proceeds to business. For all purposes the quorum shall be two Members personally present or represented by proxy.

60. IFNOQUORUMMEETINGADJOURNEDORDISSOLVED. If within half an hour from the time appointed for the holding of a general meeting a quorum is not present, the meeting, if convened on the requisition of Members, shall be dissolved. In any other case it shall stand adjourned to the same day in the next week at the same time and place, and if at such adjourned meeting a quorum is not present within half an hour from the time appointed for holding the meeting, the Members present shall be a quorum.

55 61. CHAIRMANOFBOARDTOPRESIDEATALLMEETINGS. The Chairman of the Directors shall preside as Chairman at every general meeting, in his absence, the Deputy Chairman, and in the absence of both the Chairman and the Deputy Chairman, the Vice-Chairman shall preside as Chairman at every general meeting. If at any meeting the Chairman, the Deputy Chairman or the Vice-Chairman be not present within fifteen minutes after the time appointed for holding the meeting or be unwilling to act, the Members present shall choose one of the Directors to be Chairman of the meeting, or if no Director be present or if all the Directors present decline to take the chair, one of their number present shall be Chairman.

62. NOTICEOFADJOURNEDMEETINGS. The Chairman may, with the consent of any meeting at which a quorum is present and shall, if so directed by the meeting, adjourn any meeting from time to time and from place to place as the meeting shall determine. Whenever a meeting is adjourned for ten days or more, notice of the adjourned meeting shall be given in the same manner as in the case of an original meeting. Save as aforesaid, no Member shall be entitled to any notice of any adjournment or of the business to be transacted at an adjourned meeting. No business shall be transacted at any adjourned meeting other than the business which might have been transacted at the meeting from which the adjournment took place.

63. HOWRESOLUTIONDECIDED. At any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands, unless before or on the declaration of the result of the show of hands a poll is demanded by the Chairman or by any person for the time being entitled to vote at the meeting, and unless a poll is so demanded a declaration by the Chairman that a resolution has on a show of hands been carried or carried unanimously, or carried by a particular majority, or lost, shall be conclusive, and an entry to that effect in the book containing the minutes of the proceedings of the Company shall be conclusive evidence thereof without proof of the number or proportion of the votes recorded in favour of or against such resolution.

64. HOW POLL TO BE TAKEN. A poll demanded on the election of a Chairman or on a question of adjournment shall be taken forthwith. A poll demanded on any other question shall be taken at such time and place, and in such manner as the Chairman directs, and the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. Any business other than that upon which a poll has been demanded may be proceeded with at a meeting pending the taking of the poll.

65. CHAlRMAN TO HAVE CASTING VOTE. In the case of an equality of votes, whether on a show of hands or on a poll, the Chairman shall be entitled to a second or casting vote.

VOTESOFMEMBERS

66. NUMBEROFVOTES. Subject to any rights or restrictions for the time being attached to any class or classes of shares, every Member present in person and each proxy and each attorney shall have one vote on a show of hands and on a poll, every Member present in person or by proxy shall have one vote for each share which he holds or represents. Where the shares of the Company are of different monetary denominations, a unit of capital in each such class of shares shall, when reduced to a common denominator, carry the same voting power when such right is exercisable.

56 67. SPLITVOTES. On a poll a Member entitled to more than one vote need not, if he votes, use all his votes or cast all the votes he uses in the same way.

68. VOTESOFJOINTHOLDERSOFSHARES. In the case of joint holders any one of such persons may vote, but if more than one of such persons be present at a meeting, the vote of the senior who tenders a vote whether in person or by proxy shall be accepted to the exclusion of the votes of the other joint holder; and for this purpose seniority shall be determined by the order in which the names stand in the Register of Members.

69. VOTES OF LUNATIC MEMBER. A person of unsound mind, or in respect of whom an order has been made by any court having jurisdiction in lunacy, may vote, whether on a show of hands or on a poll, by his committee, receiver, curator bonis, or other legal curator and such last-mentioned persons may give their votes either personally or by proxy.

70. MEMBERSINDEBTEDTOCOMPANYINRESPECTOFSHARESNOT ENTITLEDTOVOTE. No Member shall be entitled to vote at any general meeting unless all calls or other sums presently payable by him in respect of shares held by him in the Company, whether in his own name or in a Securities Account, and whether alone or jointly with any other person, have been paid.

71. (1) APPOINTMENTOFPROXIES. A Member may appoint not more than two proxies to attend and vote at the same general meeting.

(2) Where the Member appoints more than one proxy to attend and vote at the same general meeting he shall specify on each instrument of proxy the number of shares in respect of which the appointment is made, failing which, the appointment shall be deemed to be in the alternative.

(3) No instrument appointing a proxy of a Depositor shall be rendered invalid merely by reason of any discrepancy between the Depositor’s shareholding specified in the instrument of proxy, or where the same has been apportioned between two proxies the aggregate of the proportions of the Depositor’s shareholding they are specified to represent, and the true balance standing to the Securities Account of the Depositor as appears on the Depository Register forty-eight hours before the general meeting.

(4) A proxy or representative need not be a Member.

(5) The instrument appointing a proxy shall be deemed to confer authority to demand or join in demanding a poll.

72. INSTRUMENTAPPOINTINGAPROXYTOBELEFTATTHEOFFICE. The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed, or a notarially certified copy of that power or authority shall be deposited at the Office not less than forty-eight hours before the time for holding the meeting or adjourned meeting at which the person named in the instrument proposes to vote, and in default the instrument of proxy shall not be treated as valid.

57 73. FORM OF PROXY. An instrument appointing a proxy or representative shall be in writing in the common form or any other form approved by the Directors and:–

(a) in the case of an individual, shall be signed by the appointor or by his attorney; and

(b) in the case of a corporation, shall be either under its common seal or signed by its attorney or by an officer on behalf of the corporation.

74. OMISSIONTOINCLUDEPROXYFORM. In the event that forms of proxy are sent to Members of the Company together with any notice of meeting, the accidental omission to include the form of proxy to, or the non-receipt of such form of proxy by any person entitled to receive a notice of meeting shall not invalidate any resolution passed or any proceeding at any such meeting.

75. CORPORATION ACTING BY REPRESENTATIVES AT MEETING. Any corporation which is a Member of the Company may by resolution of its directors or other governing body authorise such person as it thinks fit to act as its representative at any meeting of the Company or of any class of Members of the Company, and the person so authorised shall be entitled to exercise the same powers on behalf of the corporation which he represents as that corporation could exercise if it were an individual Member of the Company.

3.3 Outstanding Options under the Option Scheme. As at the Latest Practicable Date, there are no outstanding options under the HMI Share Option Scheme. All options under the HMI Share Option Scheme have been exercised.

3.4 Outstanding Awards under the HMI Performance Share Plan. As at the Latest Practicable Date, there are no outstanding awards granted under the HMI Performance Share Plan. All awards under the HMI Performance Share Plan have vested and the corresponding number of Shares pursuant to such awards has been issued.

4. DISCLOSURE OF INTERESTS

4.1 Interests and Dealings of Company in Shares and Convertible Securities of the Offeror. As at the Latest Practicable Date, neither the Company nor its subsidiaries:

(a) has any direct or deemed interests in (i) any shares of the Offeror or (ii) convertible securities, warrants, options and derivatives in respect of (i); and

(b) has dealt in (i) any shares of the Offeror or (ii) convertible securities, warrants, options and derivatives in respect of (i), during the period commencing six months prior to the Offer Announcement Date and ending on the Latest Practicable Date.

4.2 Interests and Dealings of Directors in Shares and Convertible Securities of the Offeror. As at the Latest Practicable Date, none of the Directors:

(a) save as disclosed below, has any direct or deemed interests in (i) any shares of the Offeror or (ii) convertible securities, warrants, options and derivatives in respect of (i); and

58 Interests of Directors in the shares of the Offeror:

DirectInterest DeemedInterest No. of Shares Percentage1 No. of Shares Percentage1

Directors Gan See Khem2 2,785,575 46.43% 3,214,4253 53.57% Chin Koy Nam2 214,425 3.57% 5,785,5754 96.43%

Notes:

1. Based on the Offeror’s issued share capital of 6,000,000 shares as at the Latest Practicable Date. 2. Gan See Khem and Chin Koy Nam are wife and husband. The remaining shareholding in the Offeror is held by their children, Chin Wei Jia, Chin Wei Shan and Chin Wei Yao, each of them holding 1,000,000 shares representing 16.67% of the total share capital of the Offeror.

3. Gan See Khem is deemed interested in (i) the 214,425 shares of the Offeror held by Chin Koy Nam, her husband; and (ii) the 1,000,000 shares of the Offeror held by each of Chin Wei Jia, Chin Wei Shan and Chin Wei Yao, her children.

4. Chin Koy Nam is deemed interested in (i) the 2,785,575 shares of the Offeror held by Gan See Khem, his wife; and (ii) the 1,000,000 shares of the Offeror held by each of Chin Wei Jia, Chin Wei Shan and Chin Wei Yao, his children.

4.3 Interests and Dealings of Directors in Shares and Convertible Securities of the Company. As at the Latest Practicable Date, none of the Directors:

(a) save as disclosed below, has any direct or deemed interests in (i) any Shares or (ii) convertible securities, warrants, options and derivatives in respect of (i); and

(b) has dealt in (i) any Shares or (ii) convertible securities, warrants, options and derivatives in respect of (i), during the period commencing six months prior to the Offer Announcement Date and ending on the Latest Practicable Date.

Interests of Directors in Shares:

DirectInterest DeemedInterest No. of Shares Percentage1 No. of Shares Percentage1

Directors GanSeeKhem 600,600 0.10% 227,733,1952 39.46% ChinKoyNam 1,524,000 0.26% 226,809,7953 39.30% CheahWayMun 22,162,119 3.84% – – TanChinTiong 3,153,360 0.55% – –

Notes:

1. Based on the Company’s issued share capital of 577,071,286 Shares (excluding 201,000 treasury shares) as at the Latest Practicable Date. 2. Gan See Khem is deemed interested in (i) the 1,524,000 Shares held by Chin Koy Nam, her husband; (ii) the 4,742,400 Shares, 1,435,522 Shares and 1,147,600 Shares held by Chin Wei Jia, Chin Wei Shan and Chin Wei Yao respectively, her children; and (iii) the 218,883,673 Shares held by the Offeror. 3. Chin Koy Nam is deemed interested in the 600,600 Shares held by Gan See Khem, his wife; (ii) the 4,742,400 Shares, 1,435,522 Shares and 1,147,600 Shares held by Chin Wei Jia, Chin Wei Shan and Chin Wei Yao respectively, his children; and (iii) the 218,883,673 Shares held by the Offeror.

4.4 Interests and Dealings of the IFA in Shares and Convertible Securities of the Company. As at the Latest Practicable Date, none of the IFA or funds whose investments are managed by the IFA on a discretionary basis:

59 (a) has any direct or deemed interests in (i) any Shares or (ii) convertible securities, warrants, options and derivatives in respect of (i); and

5. OTHER DISCLOSURES

5.1 Directors’ Service Contracts. There are no service contracts between any Director or proposed Director with the Company or any of its subsidiaries with more than 12 months to run and which cannot be terminated by the employing company within the next 12 months without paying any compensation. In addition, there are no service contracts entered into or amended between any Director or proposed Director, with the Company during the period commencing six months prior to the Offer Announcement Date and ending on the Latest Practicable Date.

5.2 No Payment or Benefit to Directors. It is not proposed, in connection with the Offer, that any payment or other benefit be made or given to any Director or to any director of any other corporation which is, by virtue of Section 6 of the Companies Act, deemed to be related to the Company as compensation for loss of office or otherwise in connection with the Offer.

5.3 No Agreement Conditional upon Outcome of Offer. Save for the IU given by each of Cheah Way Mun and Tan Chin Tiong, there are no agreements or arrangements made between any Director and any other person in connection with or conditional upon the outcome of the Offer.

5.4 Material Contracts entered into by Offeror. There are no material contracts entered into by the Offeror in which any Director has a material personal interest, whether direct or indirect.

6. FINANCIAL INFORMATION ON THE GROUP

6.1 Introduction. Rule 24.4 of the Code requires the Company to disclose, inter alia, the following information in this Circular:

(a) details, for the last three financial years, of turnover, exceptional items, net profit or loss before and after tax, minority interests, net earnings per share and net dividends per share;

(b) a statement of the assets and liabilities shown in the last published audited accounts;

(c) particulars of all known material changes in the financial position of the Company subsequent to the last published audited accounts or a statement that there are no such known material changes;

(d) details relating to items referred to in (a) in respect of any interim statement or preliminary announcement made since the last published audited accounts;

(e) significant accounting policies together with any points from the notes of the accounts which are of major relevance for the interpretation of the accounts; and

(f) where, because of a change in accounting policy, figures are not comparable to a material extent, this should be disclosed and the approximate amount of the resultant variation should be stated.

60 As at the Latest Practicable Date, the latest published audited accounts of the Group are that for FY2012 and the Company has also published the Unaudited FY2013 Results on 30 August 2013. However, the Directors note that as at the Latest Practicable Date, the Audited FY2013 Results are ready and are in print together with the 2013 Annual Report. The 2013 Annual Report is expected to be released on or around 14 October 2013, the same day as the date of this Circular. The Directors have decided to use the Audited FY2013 Results (instead of the Audited FY2012 Results) as the “last published audited accounts” for the purposes of disclosures under Rule 24.4 of the Code, as (i) the Audited FY2013 Results reflect the most recent and accurate financial position of the Company to the Shareholders and as such are more relevant to the Shareholders in order to evaluate the Offer compared to the Unaudited FY2013 Results and the Audited FY2012 Results, and (ii) as at the Latest Practicable Date, the Audited FY2013 Results are in print and will be available to the Shareholders simultaneously with this Circular. The Company confirms that the Audited FY2013 Results are not materially different from the Unaudited FY2013 Results. The Audited FY2013 Results are reproduced in Appendix 3 to this Circular.

6.2 Consolidated Income Statements. A summary of the audited consolidated income statements of the Group for the past three financial years ended 30 June 2011, 30 June 2012, and 30 June 2013 is set out below. The following summary should be read in conjunction with the audited consolidated financial statements of the Group for the relevant financial periods and the accompanying notes thereto, contained in the annual reports of the Company for FY2011, FY2012 and FY2013, which are available for inspection at the registered office of the Company. Please refer to Section 12 of this Appendix 1 for further information. The Audited FY2013 Results are also reproduced in Appendix 3 to this Circular.

Audited Audited Audited FY2013 FY2012 FY2011 RM RM RM Revenue 245,415,384 209,221,235 173,883,730 Exceptional Items ––– Profitbeforetaxation 26,067,921 12,128,310 10,021,515 Profit after tax and non-controlling interests (after exceptional items) 7,306,933 155,034 2,977,483 Profit after tax and non-controlling interests (before exceptionalitems) 7,306,933 155,034 2,977,483 Non-controllingInterests 11,597,448 8,615,036 4,997,578 Earnings per Share (sen) (before exceptional items) 1.31 (0.08) 0.33 Earnings per Share (sen) (after exceptional items) 1.31 (0.08) 0.33

The Company did not declare any dividend in respect of each of FY2011, FY2012 and FY2013.

61 6.3 Consolidated Balance Sheets. A summary of the audited consolidated balance sheet of the Group as at 30 June 2013 and as at 30 June 2012 is set out below. The following summary should be read in conjunction with the Audited FY2013 Results and the accompanying notes thereto, which are reproduced in Appendix 3 to this Circular.

Audited Audited As at 30 June 2013 As at 30 June 2012 RMRM Non-currentassets 174,212,717 170,862,774 Current assets 90,537,525 73,643,315 Non-currentliabilities 39,039,772 43,836,692 CurrentLiabilities 93,311,498 82,203,447 Net assets 132,398,972 118,465,950 Share capital 90,564,308 90,564,308 Reserves&Retainedearnings 2,778,308 (4,639,727) Non-controlling interests 39,056,356 32,541,369 Total equity 132,398,972 118,465,950

7. MATERIAL CHANGES IN FINANCIAL POSITION

As at Latest Practicable Date, save as disclosed in the Audited FY2013 Results and any other information on the Group which is publicly available (including without limitation, the announcements released by the Group on the SGX-ST), there have been no material changes to the financial position of the Group since 30 June 2013, being the date of the last audited accounts of the Group.

8. SIGNIFICANT ACCOUNTING POLICIES AND CHANGES IN ACCOUNTINGPOLICIES

8.1 Significant Accounting Policies

A summary of the significant accounting policies of the Group is set out in Note 2 of the Audited 2013 Results, which is reproduced in Appendix 3 to this Circular. Save as disclosed in Note 2 of the Audited 2013 Results, there are no significant accounting policies or any matter from such notes, which are of any major relevance for the interpretation of the accounts of the Group referred to in this Circular.

8.2 No Change in Accounting Policies

Save as disclosed in Note 2 of theAudited 2013 Results, there is no change in the accounting policies of the Group which would cause the financial information disclosed in this Circular not to be comparable to a material extent.

9. MATERIAL CONTRACTS WITH INTERESTED PERSONS

As at the Latest Practicable Date, neither the Company nor any of its subsidiaries have entered into any material contracts with interested persons (other than those entered into in the ordinary course of business) during the period commencing three years before the Offer Announcement Date and ending on the Latest Practicable Date.

62 Notes:

An interested person, as defined in the Note on Rule 24.6 read with the Note on Rule 23.12 of the Code, is:

a. a director, chief executive officer, or substantial shareholder of the Company; b. the immediate family of a director, the chief executive officer, or a substantial shareholder (being an individual) of the Company;

c. the trustees, acting in their capacity as such trustees, of any trust of which a director, the chief executive officer or a substantial shareholder (being an individual) and his immediate family is a beneficiary;

d. any company in which a director, the chief executive officer or a substantial shareholder (being an individual) and his immediate family together (directly or indirectly) have an interest of 30% or more; e. any company that is the subsidiary, holding company or fellow subsidiary of the substantial shareholder (being a company); or f. any company in which a substantial shareholder (being a company) and any of the companies listed in (e) above together (directly or indirectly) have an interest of 30% or more.

10. MATERIAL LITIGATION

As at the Latest Practicable Date, neither the Company nor any of its subsidiaries is engaged in any material litigation or arbitration proceedings, as plaintiff or defendant, which might materially and adversely affect the financial position of the Company and its subsidiaries, taken as a whole. As at the Latest Practicable Date, the Directors are not aware of any litigation, claim or proceedings pending or threatened against the Company or any of its subsidiaries or of any fact likely to give rise to any litigation, claims or proceedings which might materially and adversely affect the financial position of the Company and its subsidiaries, taken as a whole.

11. GENERAL

11.1 Costs and Expenses. All expenses and costs incurred by the Company in relation to the Offer will be borne by the Company.

11.2 Consent of the IFA. Deloitte has given and has not withdrawn its written consent to the issue of this Circular with the inclusion herein of the IFA Letter and references to its name and the IFA Letter, in the form and context in which they appear in this Circular.

12. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the registered office of the Company at 167 Jalan Bukit Merah, #05-10, Connection One, Singapore 150167, during normal business hours for the period which the Offer remains open for acceptance:

(a) the Memorandum and Articles of Association of the Company;

(b) the annual reports of the Company for FY2011, FY2012 and FY2013;

(d) the IFA Letter;

(e) the letter of consent referred to in Section 11.2 of this Appendix 1 above; and

(f) the announcement referred to in Section 3.1 of this Appendix 1 above.

63 APPENDIX 2

ADDITIONALINFORMATIONONTHEOFFEROR

The following additional information on the Offeror as set out in Schedule 2 to the Offer Document has been extracted from the Offer Document and reproduced below. Unless otherwise stated, all terms and expressions used in the extract below shall have the meanings given to them in the Offer Document.

“SCHEDULE 2 ADDITIONALINFORMATIONONTHEOFFEROR

1. DIRECTORS

The names, addresses and descriptions of the Directors of the Offeror as at the LPD are as follows:

Name Address Description DrGanSeeKhem 26RochalieDrive Director Singapore 248257 DrChinKoyNam 26RochalieDrive Director Singapore 248257

2. BACKGROUND AND PRINCIPAL ACTIVITIES

The Offeror is a limited exempt private company incorporated in Singapore in 1978. Its registered office is at 84 Circular Road, Singapore 049436. Its directors are GSK and CKN, who are wife and husband. Its principal activity is investment holding. It has a paid-up share capital of S$6 million. Its shareholders are the NSI Family.

As at the LPD, the Offeror is the single largest shareholder of the Company.

3. FINANCIAL INFORMATION – INCOME STATEMENT

Set out below are certain financial information of the Offeror for the financial years ended 30 June 2011, 30 June 2012 and 30 June 2013, as extracted from the Offeror’s Accounts.

Audited Audited Unaudited 30 June 2011 30 June 2012 30 June 2013 (S$) (S$) (S$) Revenue ––– Exceptional Items ––– Profit/(loss)beforetax 108,835 (296,775) (48,104) Profit/(loss)aftertax 108,835 (296,775) (48,104) Minority Interests − − − Netearnings/(loss)pershare 0.0181 (0.0495) (0.0080) Netdividendspershare – – –

64 4. FINANCIAL INFORMATION – BALANCE SHEET

Set out below is the balance sheet of the Offeror as at 30 June 2012, the date to which the last audited accounts of the Offeror have been drawn up, as extracted from the Offeror’s Accounts (in S$):

Share capital issued and fully paid, 6,000,000 ordinary shares 6,000,000 Capital and other reserves (951,044) Accumulated loss (4,263,221)

785,735

Represented by: Non-current asset Investment in associated company 12,975,107

12,975,107

Current asset Bank balance 3,730

Less: current liabilities Accruals 4,600 Amount due to related parties 1,496,407 Short term loans 1,942,842 Bank overdrafts 2,491,301

5,935,150

Net current liabilities (5,931,420)

Non-current liability Amount due to directors (6,257,952)

785,735

5. MATERIAL CHANGES IN FINANCIAL POSITION

Since 30 June 2012, the outstanding short term loans and bank overdrafts shown in Section 4 of this Schedule 2 have been repaid in full. This repayment was funded by a loan from the Directors of the Offeror and the “amount due to directors” shown in Section 4 of this Schedule 2 has therefore increased.

As at the LPD, except as disclosed, the Offeror is not aware of any material changes to its financial position since 30 June 2012.

6. INTERIM FINANCIAL STATEMENTS

In relation to the items set out:

(a) in Section 3 of this Schedule 2, the Offeror has not prepared any interim financial statements since 30 June 2013; and

65 (b) in Section 4 of this Schedule 2, the material changes to the financial position of the Offeror since 30 June 2012 have been disclosed in Section 5 of this Schedule 2.

7. SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies, together with any points from the notes to the financial statements, of the Offeror which are of major relevance for the interpretation of the Offeror’s Accounts are set out in Schedule 7 hereto.

8. CHANGES IN ACCOUNTING POLICIES

There are no changes in the accounting policies of the Offeror which would make the figures disclosed in Sections 3 and 4 of this Schedule 2 not comparable to a material extent.”

66 APPENDIX 3

AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2013

The information set out in this Appendix 3 is a reproduction of selected financial information extracted from the 2013 Annual Report, and was not specifically prepared for inclusion in this Circular.

67 Consolidated Statement of Comprehensive Income For the ﬁnancial year ended 30 June 2013

Group Note 2013 2012 RM RM

Revenue 4 245,415,384 209,221,235 Cost of services 7 (174,005,170) (156,410,376) Gross proﬁt 71,410,214 52,810,859

Interest income 4 2,059,997 1,398,673

Other gains - net 5 1,492,389 1,667,647

Expenses - Distribution and marketing 7 (2,885,286) (3,249,671) - Administrative 7 (42,798,270) (36,118,570) - Finance 6 (4,112,178) (4,336,729)

Share of proﬁt/(loss) of associated corporations 14 901,055 (43,899)

Proﬁt before income tax 26,067,921 12,128,310

Income tax expense 8 (6,895,765) (3,995,716)

Total proﬁt 19,172,156 8,132,594

Other comprehensive income

Currency translation differences arising from consolidation - (Losses)/gains (267,775) 637,476

Total comprehensive income 18,904,381 8,770,070

Proﬁt/(loss) attributable to: Equity holders of the Company 7,573,942 (480,618) Non-controlling interests 11,598,214 8,613,212 19,172,156 8,132,594

Total comprehensive income attributable to: Equity holders of the Company 7,306,933 155,034 Non-controlling interests 11,597,448 8,615,036 18,904,381 8,770,070

Earnings/(loss) per share for proﬁt/(loss) attributable to equity holders of the Company (expressed in cents per share) - Basic 9(a) 1.31 (0.08) - Diluted 9(b) 1.31 (0.08)

The accompanying notes form an integral part of these ﬁnancial statements.

42 Health Management International Ltd 68 Balance Sheets As at 30 June 2013

Group Company Note 2013 2012 2013 2012 RM RM RM RM

ASSETS Current assets Cash and cash equivalents 10 9,699,530 6,535,410 751,492 1,163,162 Trade and other receivables 11 69,437,561 56,732,237 37,871,039 38,183,084 Inventories 12 5,531,111 5,452,591 – – Other current assets 13 5,869,323 4,918,126 29,269 25,871 Income tax recoverable 8 – 4,951 – – 90,537,525 73,643,315 38,651,800 39,372,117

Non-current assets Trade and other receivables 11 7,115,636 6,698,024 7,115,636 6,698,024 Investments in associated corporations 14 25,487,927 26,501,935 5,593,253 6,137,605 Investments in subsidiaries 15 – – 48,412,272 48,840,644 Property, plant and equipment 16 139,876,672 136,618,546 33,962 107,791 Deferred income tax assets 21 1,732,482 1,044,269 – – 174,212,717 170,862,774 61,155,123 61,784,064 Total assets 264,750,242 244,506,089 99,806,923 101,156,181

LIABILITIES Current liabilities Trade and other payables 17 52,277,518 40,690,633 5,397,389 6,042,710 Current income tax liabilities 8 1,423,869 1,694,549 – – Borrowings 18 38,788,085 39,292,195 12,648,876 15,730,510 Deferred income 20 822,026 526,070 – – 93,311,498 82,203,447 18,046,265 21,773,220 Non-current liabilities Trade and other payables 17 13,273,462 13,273,462 – – Borrowings 18 24,860,376 30,563,230 – 7,406 Deferred income tax liabilities 21 905,934 – – – 39,039,772 43,836,692 – 7,406 Total liabilities 132,351,270 126,040,139 18,046,265 21,780,626

NET ASSETS 132,398,972 118,465,950 81,760,658 79,375,555

EQUITY Capital and reserves attributable to equity holders of the Company Share capital 22 90,564,308 90,564,308 90,564,308 90,564,308 Treasury shares 22 (47,117) (142,056) (47,117) (142,056) Currency translation reserve 23(b) 4,773,928 5,040,937 5,459,303 6,157,109 Other reserves 23(c) 67,950 51,787 16,163 – Accumulated losses 23(a) (2,016,453) (9,590,395) (14,231,999) (17,203,806) 93,342,616 85,924,581 81,760,658 79,375,555 Non-controlling interests 39,056,356 32,541,369 – – TOTAL EQUITY 132,398,972 118,465,950 81,760,658 79,375,555

The accompanying notes form an integral part of these ﬁnancial statements.

Annual Report 2013 43 69 Consolidated Statement of Changes in Equity For the ﬁnancial year ended 30 June 2013

Attributable to equity holders of the Company (Accumulat- Currency ed losses)/ Non-control- Share Treasury translation Other retained ling Total Note capital shares reserve reserves earnings Total Interests equity RM RM RM RM RM RM RM RM 2013 Beginning of ﬁnancial year 90,564,308 (142,056) 5,040,937 51,787 (9,590,395) 85,924,581 32,541,369 118,465,950

Total comprehensive income – – (267,009) – 7,573,942 7,306,933 11,597,448 18,904,381 Performance Share Plan - Treasury shares re-issued – 94,939 – 16,163 – 111,102 – 111,102 Dividend paid to non- controlling interests by a subsidiary – – – – – – (5,082,461) (5,082,461)

End of ﬁnancial year 90,564,308 (47,117) 4,773,928 67,950 (2,016,453) 93,342,616 39,056,356 132,398,972

2012 Beginning of ﬁnancial year 90,564,308 (142,056) 4,405,285 51,787 (9,109,777) 85,769,547 26,478,942 112,248,489

Total comprehensive income – – 635,652 – (480,618) 155,034 8,615,036 8,770,070 Dividend paid to non- controlling interests by a subsidiary – – – – – – (2,552,609) (2,552,609)

End of ﬁnancial year 90,564,308 (142,056) 5,040,937 51,787 (9,590,395) 85,924,581 32,541,369 118,465,950

An analysis of the movements in each category within “Currency translation reserve” and “Other reserves” are presented in Note 23(b) and 23(c) respectively.

The accompanying notes form an integral part of these ﬁnancial statements.

44 Health Management International Ltd 70 Consolidated Statement of Cash Flows For the ﬁnancial year ended 30 June 2013

Note 2013 2012 RM RM

Cash flows from operating activities Net profit after tax 19,172,156 8,132,594 Adjustments for: - Income tax 6,895,765 3,995,716 - Performance shares expense 111,102 – - Recovery of trade receivables previously written off– net 130,811 (477,411) - Depreciation of property, plant and equipment 12,345,565 10,858,413 - Loss on disposals and write-off of property, plant and equipment 490,721 301,848 - Loss on redemption of preference shares 85,834 – - Interest income (2,059,997) (1,398,673) - Interest expense 4,112,178 4,336,729 - Share of (profit)/loss from associated corporations (901,055) 43,899 Operating cash flow before working capital changes 40,383,080 25,793,115

Change in operating assets and liabilities - Inventories (78,520) (107,769) - Trade and other receivables (11,050,341) (1,533,475) - Other current assets (951,197) (55,303) - Trade and other payables 9,023,833 3,921,666 - Deferred income 295,956 (310,792) - Currency translation differences (216,375) 747,236 Cash provided by operations 37,406,436 28,454,678

Interest paid (4,112,178) (4,336,729) Income tax paid (6,943,773) (5,378,309) Net cash provided by operating activities 26,350,485 18,739,640

Cash ﬂows from investing activities Loans to an associated corporation (2,192,854) (265,418) Additions to property, plant and equipment (12,008,954) (8,423,571) Proceeds from redemption of preference shares by an associated corporation 1,799,875 – Proceeds from disposal of property, plant and equipment 478,909 210,771 Net cash used in investing activities (11,923,024) (8,478,218)

Cash flows from financing activities Drawdown of borrowings 5,344,239 7,065,661 Repayment of borrowings (5,917,060) (12,861,282) Repayment of lease liabilities (10,187,073) (9,538,594) Dividends paid to non-controlling interests (2,529,961) (2,552,609) Interest received 2,059,997 1,398,673 Net cash used in financing activities (11,229,858) (16,488,151)

Net increase/(decrease) in cash and cash equivalents 3,197,603 (6,226,729) Cash and cash equivalents at beginning of ﬁnancial year 10 1,120,737 7,319,917 Effects of currency translation on cash and cash equivalents (9,013) 27,549 Cash and cash equivalents at end of ﬁnancial year 10 4,309,327 1,120,737

The accompanying notes form an integral part of these ﬁnancial statements.

Annual Report 2013 45 71 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

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 to 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 critical accounting estimates and assumptions. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in Note 3.

Interpretations and amendments to published standards effective in 2013

On 1 July 2012, the Group adopted the following 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.

• Amendments to FRS 1 Presentation of Items at other Comprehensive Income (effective for annual periods beginning on or after 1 July 2012)

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.

46 Health Management International Ltd 72 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

2. Signiﬁcant accounting policies (continued)

2.2 Going concern

In the opinion of the Management, the consolidated ﬁnancial statements of the Group and the balance sheet of the Company 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 will generate additional cash ﬂows for the Group; and

(ii) The Group continues to receive the support of its bankers.

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 collectability 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 relevant 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.

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 straight-line basis over the lease term.

Annual Report 2013 47 73 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

2. Signiﬁcant accounting policies (continued)

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 so as to obtain beneﬁts from its activities, generally accompanied by 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.

Non-controlling interests are that part of the net results of operations and of net assets of subsidiaries 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

The acquisition method of accounting is used to account for business combinations by the Group.

The consideration transferred for the acquisition of a subsidiary or business 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.

48 Health Management International Ltd 74 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

2. Signiﬁcant accounting policies (continued)

2.4 Group accounting (continued)

(a) Subsidiaries (continued)

(iii) Disposals

When a change in the Group’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 previously 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 standard.

Any retained equity interest in the entity is remeasured at fair value. The difference between the carrying amount of the retained interest 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, and associated corporations” for the accounting policy on investments in subsidiaries in the separate ﬁnancial statements of the Company.

(b) Transactions with non-controlling interests

Changes in the Group’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 Company. 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.

Associated corporations 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 corporations are accounted for in the consolidated financial statements using the equity method of accounting less impairment losses, if any.

(i) Acquisitions

Investments in associated corporations 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.

Annual Report 2013 49 75 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

2. Signiﬁcant accounting policies (continued)

2.4 Group accounting (continued)

(ii) Equity method of accounting (continued)

In applying the equity method of accounting, the Group’s share of its associated corporations’ post-acquisition proﬁts or losses is recognised in proﬁt or loss and its share of post-acquisition other comprehensive income is recognised in other comprehensive income. These post- acquisition movements and distributions received from the associated corporations are adjusted against the carrying amount of the investments. When the Group’s share of losses in an associated corporation equals or exceeds its interest in the associated corporation, 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 corporation.

Unrealised gains on transactions between the Group and its associated corporations are eliminated to the extent of the Group's interest in the associated corporations. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. The accounting policies of associated corporations have been changed where necessary to ensure consistency with the accounting policies adopted by the Group.

(iii) Disposals

Gains and losses arising from partial disposals or dilutions in investments in associated corporations are recognised in proﬁt or loss.

Investments in associated corporations are derecognised when the Group loses significant influence. Any retained equity interest in the entity is remeasured at its fair value. The difference between the carrying amount of the retained interest 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 corporations” for the accounting policy on investments in associated corporations in the separate ﬁnancial statements of the Company.

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.

50 Health Management International Ltd 76 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

2. Signiﬁcant accounting policies (continued)

2.5 Property, plant and equipment (continued)

(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 Over the lease term of 99 years commencing Leasehold land 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 proﬁt or loss when the changes arise.

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 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 proﬁt or loss within “Other gains - net”.

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.

Annual Report 2013 51 77 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

2. Signiﬁcant accounting policies (continued)

2.7 Investment properties

Investment properties held by associated corporations 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 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 proﬁt or loss. The cost of maintenance, repairs and minor improvements is charged to proﬁt or loss when incurred.

On disposal of an investment property, the difference between the disposal proceeds and the carrying amount is recognised in proﬁt or loss.

Please refer to “Supplementary Information” for details of investment properties held by associated corporations of the Group.

2.8 Investments in subsidiaries and associated corporations Loan to an associated corporation

Investments in subsidiaries and associated corporations including loans and receivables from subsidiaries or associated corporations that form part of the net investment in the subsidiary or associated corporation are carried at cost less accumulated impairment losses in the Company’s balance sheet. On disposal of investments in subsidiaries and associated corporations, the difference between disposal proceeds and the carrying amounts of the investments are recognised in proﬁt or loss.

2.9 Impairment of non-ﬁnancial assets

Property, plant and equipment Investments in subsidiaries and associated corporations

Property, plant and equipment and investments in subsidiaries and associated corporations 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.

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 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 proﬁt or loss.

52 Health Management International Ltd 78 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

2. Signiﬁcant accounting policies (continued)

2.10 Loans and receivables

Trade and other receivables

Trade and other receivables are initially recognised at fair value plus transaction costs and subsequently carried at amortised cost using the effective interest method. They are presented as current assets, except those maturing later than 12 months after the balance sheet date which are presented 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 corporations 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 and recognises an allowance for impairment when such evidence exists. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy and default or significant delay in payments are objective evidence that these financial assets are impaired.

The carrying amount of these assets is reduced through the use of an impairment allowance account which is calculated as the difference between the carrying amount and the present value of estimated future cash ﬂows, discounted at the original effective interest rate.

These assets are presented as current assets except for those that are expected to be realised later than 12 months after the balance sheet date, which are presented as non-current assets.

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 proﬁt or loss over the period of the borrowings using the effective interest method.

2.12 Trade and other payables

Trade and other payables represent liabilities for goods and services provided to the Group prior to the end of ﬁnancial period which are unpaid. They are classiﬁed as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.

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.

Annual Report 2013 53 79 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

2. Signiﬁcant accounting policies (continued)

2.14 Leases

The Group leases 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 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 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 the 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.

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 corporations, 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.

54 Health Management International Ltd 80 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

2. Signiﬁcant accounting policies (continued)

2.16 Income taxes (continued)

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 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 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 functional currency of the Company is the Singapore Dollar. The presentation currency of the Company and the Group is the Malaysian Ringgit as it provides a better understanding of the Group’s operations being predominantly based in Malaysia.

(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 proﬁt or loss.

In preparation of the consolidated financial statements of the Group, exchange differences arising on a monetary item that forms part of a reporting entity’s net investment in a foreign operation shall be recognised in profit or loss in the separate financial statements of the reporting entity or the individual financial statements of the foreign operation, as appropriate. In the financial statements that include the foreign operation and the reporting entity, such exchange differences shall be recognised initially in a separate component of equity and recognised in profit or loss on disposal of the net investment.

Annual Report 2013 55 81 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

2. Signiﬁcant accounting policies (continued)

2.18 Currency translation (continued)

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:

(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.

2.19 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.

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 recognised as a 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.

56 Health Management International Ltd 82 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

2. Signiﬁcant accounting policies (continued)

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 the Company’s shareholders are recognised when the dividends are approved for payments.

3. Critical accounting estimates and assumptions

(a) Current and deferred income taxes

The Group is subject to income taxes in different jurisdictions. In determining the income tax liabilities, management continues to take positions in tax returns based on well-ground positions taken in good faith. Judgements concerning positions taken may change as developments in case law, new rulings or regulations by the tax authorities become available.

Deferred tax assets are recognised for unused tax losses, unabsorbed capital allowances and unutilised tax credit to the extent that it is probable that taxable proﬁt will be available against which the losses, capital allowances and tax credit can be utilised. This involves judgement regarding the future ﬁnancial performance of the Group in which the extent of deferred tax asset can be recognised.

(b) Impairment of property, plant and equipment

Property, plant and equipment are reviewed for impairment whenever there is any indication that the assets may be impaired. If any such indication exists, the recoverable amount (higher of the fair value less costs to sell and value in use) of the assets is estimated in determining the impairment losses. The key assumptions for the value in use calculation are those relating to patients’ growth rate, expected change of billing and direct costs for a period of 5 years. The sensitivity tests indicated that no impairment loss is required where other realistic variations are applied to key assumptions.

Annual Report 2013 57 83 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

4. Revenue and interest income

Group 2013 2012 RM RM

Revenue from hospital and other healthcare services 238,761,872 202,066,474 Healthcare education and training 6,653,512 7,154,761 Total revenue 245,415,384 209,221,235

Interest income - bank deposits 129,957 76,532 - loans to an associated corporation 1,930,040 1,322,141 2,059,997 1,398,673 247,475,381 210,619,908

The healthcare education and training revenues include grants from the Singapore Workforce Development Agency (“WDA”) amounting to RM 3,591,204 (2012: RM 3,648,629).

5. Other gains – net

Group 2013 2012 RM RM

Currency exchange gains/(losses) – net 280,699 (718,666) Loss on disposals and write-off of property, plant and equipment (490,721) (301,848) Car park income 622,405 571,755 Rental income 375,176 251,735 Other grants 279,072 347,662 Recovery of trade receivables previously written off 412,220 524,356 Provision for impairment of trade receivables (543,031) (46,945) Others 556,569 1,039,598 1,492,389 1,667,647

Other grants comprise funding from government bodies for course development and promotion.

6. Finance expenses

Group 2013 2012 RM RM Interest expense : - bank borrowings 3,137,022 3,047,568 - ﬁnance lease liabilities 975,156 1,289,161 4,112,178 4,336,729

58 Health Management International Ltd 84 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

7. Expenses by nature

Group 2013 2012 RM RM

Depreciation of property, plant and equipment 12,345,565 10,858,413

Directors’ fee: - Directors of the Company 666,808 640,031 - Directors of subsidiaries 148,024 148,154

Staff costs: Directors’ remuneration other than fees (i) Directors of the Company - Salaries and other related expenses 2,753,325 2,413,381 - Contribution to deﬁned contribution plans 48,376 47,934

(ii) Directors of subsidiaries - Salaries and other related expenses 325,637 359,995 - Contribution to deﬁned contribution plans 39,156 39,744

(iii) Other than directors: - Salaries and other related expenses 46,104,160 45,101,539 - Contribution to deﬁned contribution plans 4,681,541 4,622,396

Included in cost of services: - Medical materials costs 51,206,507 45,280,564 - Medical consultants’ fees 67,481,545 55,013,082 - Educators’ fees 1,132,235 1,075,221

Rental and other operating leases 12,336,941 10,560,445 Utilities 3,604,903 3,559,974 Repairs and maintenance 3,383,847 2,103,304 Others* 13,430,156 13,954,440 Total cost of services, distribution and marketing expenses and administrative expenses 219,688,726 195,778,617

* Included in the other expenses are fees paid to auditors of the Company and other auditors, for audit and non-audit services for the ﬁnancial year ended 30 June 2013, of RM 592,896 (2012: RM 644,668) and RM 23,919 (2012: 84,560) respectively.

Annual Report 2013 59 85 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

8. Income taxes

(a) Income tax expense

Group 2013 2012 RM RM

Tax expense attributable to proﬁt is made up of: Current income tax - Singapore 71,013 81,413 - Foreign 6,560,718 5,591,035 Deferred income tax (Note 21) 184,080 (1,237,715) 6,815,811 4,434,733

Under/(over) provision in preceding ﬁnancial years - current income tax (b) 46,313 2,222,216 - deferred income tax (Note 21) 33,641 (2,661,233) 79,954 (439,017) 6,895,765 3,995,716

The tax on the Group’s proﬁt before tax differs from the theoretical amount that would arise using the Singapore standard rate of income tax as follows:

Group 2013 2012 RM RM

Proﬁt before tax 26,067,921 12,128,310 Share of (proﬁt)/loss of associated corporations (901,055) 43,899 25,166,866 12,172,209

Tax calculated at a tax rate of 17% (2012: 17%) 4,278,367 2,069,276 Effects of: - Different tax rates in other countries 2,304,060 1,525,869 - Expenses not deductible for tax purposes 1,824,335 774,885 - Income not subject to tax (1,041,391) (862,102) - Utilisation of deferred tax assets previously unrecognised (38,798) – - Utilisation of tax incentive in other country (2,219,541) (3,014,887) - Deferred income tax assets on temporary differences not recognised 1,708,779 3,941,692 Tax charge 6,815,811 4,434,733

In both ﬁnancial years, one of the subsidiaries was granted tax incentives equivalent to the increase in value of services exported.

60 Health Management International Ltd 86 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

8. Income taxes (continued)

(b) Movements in current income tax liabilities

Group Company 2013 2012 2013 2012 RM RM RM RM

Beginning of financial year 1,689,598 (826,757) – – Income tax paid (6,943,773) (5,378,309) (71,013) (81,413) Tax expense on profit for the current financial year 6,631,731 5,672,448 71,013 81,413 Under provision in preceding financial years 46,313 2,222,216 – – End of financial year 1,423,869 1,689,598 – –

Income tax recoverable – (4,951) – – Current income tax liabilities 1,423,869 1,694,549 – – 1,423,869 1,689,598 – –

9. Earnings per share

(a) Basic earnings per share

Basic earnings per share is calculated by dividing the net proﬁt attributable to equity holders of the Company by the weighted average number of ordinary shares outstanding during the ﬁnancial year.

Group 2013 2012

Net proﬁt/(loss) attributable to equity holders of the Company (RM) 7,573,942 (480,618)

Weighted average number of ordinary shares outstanding for basic earnings per share 577,071,286 576,666,286

Basic earnings/(losses) per share (RM cents per share) 1.31 (0.08)

(b) Diluted earnings per share

Diluted earnings per share for ﬁnancial years ended 30 June 2013 and 2012 are the same as basic earnings per share since there are no dilutive potential ordinary shares.

Annual Report 2013 61 87 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

10. Cash and cash equivalents

For the purpose of presenting the consolidated statement of cash ﬂows, cash and cash equivalents comprise the following:

Group Company 2013 2012 2013 2012 RM RM RM RM

Cash at bank and on hand 9,699,530 6,535,410 751,492 1,163,162 Less: Bank overdrafts (Note 18) (5,390,203) (5,414,673) – – Cash and cash equivalents per consolidated statement of cash ﬂows 4,309,327 1,120,737 751,492 1,163,162

11. Trade and other receivables

Group Company 2013 2012 2013 2012 RM RM RM RM Current Trade receivables - non-related 25,136,510 16,119,139 – – Less: Allowance for impairment of receivables (2,920,236) (2,789,425) – – Trade receivables – net 22,216,274 13,329,714 – –

Other receivables 3,087,880 946,578 21,459 65,576 Less: Allowance for impairment of receivables (80,000) (80,000) – – 3,007,880 866,578 21,459 65,576

Amount due from subsidiaries – – 17,781,369 15,241,104 Amount due from associated corporations - non-trade 44,206,080 42,420,286 19,942,940 22,760,745 Amount due from non-controlling interest of a subsidiary 7,327 115,659 125,271 115,659 69,437,561 56,732,237 37,871,039 38,183,084

Non-current Trade receivables - non-related 1,193,732 1,193,732 – – Less: Allowance for impairment of receivables (1,193,732) (1,193,732) – – – – – –

Amount due from associated corporations - non-trade 9,870,899 9,453,287 9,870,899 9,453,287 Less: Allowance for impairment of receivables (Note 14(b)) (2,755,263) (2,755,263) (2,755,263) (2,755,263) 7,115,636 6,698,024 7,115,636 6,698,024 7,115,636 6,698,024 7,115,636 6,698,024

62 Health Management International Ltd 88 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

11. Trade and other receivables (continued)

Included in trade receivables from third parties was RM 874,140 (2012: nil) relating to grants receivable from the Singapore Workforce Development Agency (“WDA”). There are no unfulﬁlled conditions and other contingencies attached to the WDA grants receivable.

The amounts due from subsidiaries represent advances which are unsecured, interest-free and are recoverable on demand.

The current amounts due from associated corporations arose from sales of leasehold land and building and advances granted to certain associates. These balances are unsecured, recoverable on demand and bear interest at 6.95% (2012: 6.95%) per annum.

An amount of RM 7,115,636 (2012: RM 6,698,024) has been loaned to an associated corporation as its expansion capital. The settlement is neither planned nor likely to occur in the foreseeable future and is in substance part of the Company’s net investment in the associated corporation. Accordingly this amount is classiﬁed as non-current. The balance is unsecured, recoverable on demand and bears an interest at 6.95% (2012: 6.95%) per annum.

12. Inventories

Group 2013 2012 RM RM At cost Pharmaceutical and surgical medicine 2,627,095 2,724,340 Medical supplies 2,904,016 2,728,251 5,531,111 5,452,591

The cost of inventories recognised as an expense and included in cost of services amounted to RM 51,206,507 (2012: RM 45,280,564).

13. Other current assets

Group Company 2013 2012 2013 2012 RM RM RM RM

Deposits 2,012,244 1,796,046 2,489 2,511 Prepayments 3,479,474 2,668,759 26,780 23,360 Deposit for purchase of plant and equipment 377,605 453,321 – – 5,869,323 4,918,126 29,269 25,871

Included in deposits are rental deposits of RM 1,403,833 (2012: RM 1,403,833) placed with associated corporations.

Annual Report 2013 63 89 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

14. Investments in associated corporations

Group Company 2013 2012 2013 2012 RM RM RM RM Cost Beginning of ﬁnancial year 8,824,949 8,641,934 Translation difference (77,401) 183,015 End of ﬁnancial year 8,747,548 8,824,949

Accumulated impairment losses Beginning of ﬁnancial year (2,687,344) (2,631,614) Impairment loss made (c) (490,521) – Translation difference 23,570 (55,730) End of ﬁnancial year (b) (3,154,295) (2,687,344)

Net carrying value 5,593,253 6,137,605

Beginning of financial year 26,501,935 26,418,549 Share of profit/(loss) 901,055 (43,899) Redemption of preference shares (1,885,709) – Currency translation differences (29,354) 127,285 End of financial year 25,487,927 26,501,935

The summarised ﬁnancial information of associated corporations adjusted for the proportion of ownership interest held by the Group are as follows:

Group 2013 2012 RM RM

- Assets 104,769,747 108,192,435 - Liabilities 91,327,181 93,904,730 - Revenues 6,388,465 6,260,838 - Net proﬁt/(loss) (before non-controlling interests) 806,797 (1,020,092)

Details of associated corporations are provided in Note 30.

64 Health Management International Ltd 90 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

14. Investments in associated corporations (continued)

(a) Investments in an associated corporation of RM 44,194 (2012: RM 44,585) have been pledged as security for bank borrowings of the Company (Note 18(a)).

(b) The Company has made an allowance of RM 3,154,295 (2012: RM 2,687,344) for impairment of its investment in two associated corporations and an allowance of RM 2,755,263 (2012: RM 2,755,263) for impairment of receivables from one of the associated corporations (Note 11) which has been dormant for the current and past ﬁnancial years.

(c) During the current ﬁnancial year, the Group has not recognised its share of loss of two associated corporations amounting to RM 192,430 (2012: RM 169,445) because the Group’s cumulative share of losses exceeds its interest in the associated corporations and the Group has no obligation in respect of those losses. The cumulative unrecognised losses amount to RM 1,573,875 (2012: RM 1,381,445) at the balance sheet date.

15. Investments in subsidiaries

Company 2013 2012 RM RM Equity investments at cost Beginning of ﬁnancial year 85,725,218 83,947,392 Translation differences (751,880) 1,777,826 End of ﬁnancial year 84,973,338 85,725,218

Less: Impairment losses Beginning of ﬁnancial year (36,884,574) (35,955,049) Translation differences 323,508 (765,250) Impairment loss made – (164,275) End of ﬁnancial year (36,561,066) (36,884,574) 48,412,272 48,840,644

Details of subsidiaries are included in Note 30.

(a) Security for bank borrowings

Investments in a subsidiary of RM 26,406,944 (2012: RM 26,640,604) have been pledged as security for bank borrowings of the Company (Note 18(a)).

Annual Report 2013 65 91 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

16. Property, plant and equipment

Furniture, office equipment and Leasehold Leasehold Electrical Medical Motor housekeeping land buildings equipment equipment vehicles equipment Total RM RM RM RM RM RM RM The Group 2013 Cost Beginning of financial year 19,038,386 63,187,006 26,592,928 86,902,060 2,191,442 21,183,263 219,095,085 Currency translation differences – – (73) – (5,498) (24,025) (29,596) Additions – – 5,276,357 9,991,875 97,926 1,220,196 16,586,354 Disposals/Write-offs – – (375,417) (4,362,929) (58,177) (323,860) (5,120,383) End of financial year 19,038,386 63,187,006 31,493,795 92,531,006 2,225,693 22,055,574 230,531,460

Accumulated depreciation Beginning of ﬁnancial year 1,026,064 9,799,758 19,277,098 42,422,272 1,459,057 8,492,290 82,476,539 Currency translation differences – – (46) – (4,202) (12,315) (16,563) Depreciation charge 223,014 1,411,362 1,553,915 6,880,316 250,683 2,026275 12,345,565 Disposals/Write-offs – – (314,833) (3,678,888) (58,178) (98,854) (4,150,753) End of ﬁnancial year 1,249,078 11,211,120 20,516,134 45,623,700 1,647,360 10,407,396 90,654,788

Net book value at end of ﬁnancial year 17,789,308 51,975,886 10,977,661 46,907,306 578,333 11,648,178 139,876,672

Furniture, office equipment and Leasehold Leasehold Electrical Medical Motor housekeeping land buildings equipment equipment vehicles equipment Total RM RM RM RM RM RM RM The Group 2012 Cost Beginning of financial year 19,038,386 63,187,006 24,958,229 78,886,212 2,055,760 17,524,211 205,649,804 Currency translation differences – – 172 – 13,002 57,477 70,651 Additions – – 1,695,553 9,017,634 122,680 3,782,082 14,617,949 Disposals/Write-offs – – (61,026) (1,001,786) – (180,507) (1,243,319) End of financial year 19,038,386 63,187,006 26,592,928 86,902,060 2,191,442 21,183,263 219,095,085

Accumulated depreciation Beginning of ﬁnancial year 803,034 8,525,219 18,042,252 37,060,785 1,196,437 6,682,132 72,309,859 Currency translation differences – – 107 – 9,806 29,054 38,967 Depreciation charge 223,030 1,274,539 1,265,467 6,018,416 252,814 1,824,147 10,858,413 Disposals/Write-offs – – (30,728) (656,929) – (43,043) (730,700) End of ﬁnancial year 1,026,064 9,799,758 19,277,098 42,422,272 1,459,057 8,492,290 82,476,539

Net book value at end of ﬁnancial year 18,012,322 53,387,248 7,315,830 44,479,788 732,385 12,690,973 136,618,546

66 Health Management International Ltd 92 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

16. Property, plant and equipment (continued)

Furniture and office equipment Motor vehicles Total RM RM RM Company 2013 Cost Beginning of financial year 50,017 431,807 481,824 Currency translation differences (438) (3,786) (4,224) End of financial year 49,579 428,021 477,600

Accumulated depreciation Beginning of ﬁnancial year 14,194 359,839 374,033 Currency translation differences (141) (3,247) (3,388) Depreciation charge 11,758 61,235 72,993 End of ﬁnancial year 25,811 417,827 443,638

Net book value End of ﬁnancial year 23,768 10,194 33,962

Company 2012 Cost Beginning of ﬁnancial year 20,280 422,852 443,132 Currency translation differences 1,092 8,955 10,047 Additions 28,645 – 28,645 End of ﬁnancial year 50,017 431,807 481,824

Accumulated depreciation Beginning of ﬁnancial year 7,085 291,970 299,055 Currency translation differences 307 7,578 7,885 Depreciation charge 6,802 60,291 67,093 End of ﬁnancial year 14,194 359,839 374,033

Net book value End of ﬁnancial year 35,823 71,968 107,791

Annual Report 2013 67 93 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

16. Property, plant and equipment (continued)

(a) The net carrying amount of motor vehicles and medical equipment of the Group and Company held under ﬁnance leases are as follows:

Group Company 2013 2012 2013 2012 RM RM RM RM

Motor vehicles 578,333 732,385 10,194 71,968 Medical equipment 31,415,128 35,799,662 – – 31,993,461 36,532,047 10,194 71,968

During the year, motor vehicles and medical equipment amounting to RM 4,577,400 (2012: RM 6,194,378) were acquired under ﬁnance leases.

(b) Property, plant and equipment of certain subsidiaries with a net carrying amount of RM 61,913,986 (2012: RM 61,632,740) have been pledged to ﬁnancial institutions for credit facilities granted to the Group (Note 18(a)).

17. Trade and other payables

Group Company 2013 2012 2013 2012 RM RM RM RM Current Trade payables (non-related) 26,095,903 22,592,154 – –

Deferred grant 81,871 94,714 – – Accrual for cost of conversion of wards to medical suites 424,144 424,144 – – Deposits received 215,891 209,753 – – Directors’ fee payable 429,171 412,351 429,171 412,351 Accrued employee compensation expense 6,965,641 6,102,149 457,190 384,427 Accrued rental expense 6,130,433 6,381,794 – – Other payables and accruals 9,204,548 4,361,183 727,420 818,170 Amount due to associated corporations (non-trade) 17,705 7,153 – – Amount due to subsidiaries (non-trade) – – 3,623,897 4,322,524 Amount due to related parties (non-trade) 159,711 105,238 159,711 105,238 Dividend payable to non-controlling interests 2,552,500 – – – 52,277,518 40,690,633 5,397,389 6,042,710

Non-current Amount due to non-controlling interests of a subsidiary (non-trade) 13,273,462 13,273,462 – –

68 Health Management International Ltd 94 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

17. Trade and other payables (continued)

Included in “trade payables and other payables” are lease expenses accrued on a straight-line basis for a non-cancellable operating lease with an associated corporation of RM 6,130,433 (2012: RM 6,381,794). Please refer to Note 24(b).

The current amounts due to subsidiaries, associated corporations and related parties are unsecured, interest- free and are repayable on demand.

Accrual for cost of conversion of wards to medical suites is in respect of units sold in prior years to an associated corporation, for which a subsidiary incorporated in Malaysia has a contractual obligation to convert.

The non-current non-trade amount due to non-controlling interests of a subsidiary is in substance part of the non-controlling interests’ investment in the subsidiary. The amount is unsecured, interest-free and settlement is neither planned nor likely to occur in the foreseeable future and accordingly is classiﬁed as non-current.

18. Borrowings

Group Company 2013 2012 2013 2012 RM RM RM RM Current Overdraft (Note 10) – secured 5,390,203 5,414,673 – – Short-term bank loans – secured 21,641,536 16,297,297 12,641,535 11,297,297 Current portion of long-term bank loans – secured 4,350,169 8,114,848 – 4,388,373 Finance lease liabilities - secured (Note 19) 7,406,177 9,465,377 7,341 44,840 38,788,085 39,292,195 12,648,876 15,730,510

Non-current Long-term bank loans - secured 17,391,605 19,543,986 – – Finance lease liabilities - secured (Note 19) 7,468,771 11,019,244 – 7,406 24,860,376 30,563,230 – 7,406

Total borrowings 63,648,461 69,855,425 12,648,876 15,737,915

Annual Report 2013 69 95 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

18. Borrowings (continued)

(a) Security granted

All short-term and long-term bank loans are secured by the following:

(i) The Company - A memorandum of charge and assignment over all of the Company’s shares in a subsidiary incorporated in Malaysia (Note 15(a)) and an associated corporation incorporated in Malaysia (Note 14(a)).

(ii) The Group – In addition to paragraph (i) above, a ﬁrst assignment on land and buildings and assignment of rental proceeds of certain subsidiaries in Malaysia (Note 16(b)).

The ﬁnance lease liabilities of the Group and the Company are effectively secured as the rights to the hire purchase assets (Note 16(a)) revert to the hiree in the event of default.

(b) Maturity of borrowings

The non-current borrowings (excluding ﬁnance lease liabilities (Note 19)) had the following maturity:

Group Company 2013 2012 2013 2012 RM RM RM RM

Between two and ﬁve years 13,100,591 14,596,431 – – Later than ﬁve years 4,291,014 4,947,555 – – 17,391,605 19,543,986 – –

The weighted average effective interest rates of total borrowings at the balance sheet date were as follows:

Group Company 2013 2012 2013 2012 % % % %

Short-term bank loans 5.22 5.38 4.17 4.12 Long-term bank loans 5.87 6.50 – 4.03 Finance lease liabilities 5.60 4.74 6.45 6.45

70 Health Management International Ltd 96 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

18. Borrowings (continued)

(d) Carrying amounts and fair values

The carrying amounts of current borrowings approximated their fair values. The carrying amounts and fair values of non-current borrowings were as follows:

Group

Carrying amounts Fair values 2013 2012 2013 2012 RM RM RM RM

Bank borrowings 17,391,605 19,543,986 17,391,605 19,543,986 Finance lease liabilities 7,468,771 11,019,244 7,468,771 11,019,244

Company

Carrying amounts Fair values 2013 2012 2013 2012 RM RM RM RM

Finance lease liabilities – 7,406 – 7,406

The fair values were determined from cash ﬂow analyses, discounted at the borrowing rates which the management expects 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 2013 2012 2013 2012 RM RM RM RM

Floating rates: - Expiring not later than one year 18,573,008 18,142,311 – – - Expiring later than one year 1,034,488 3,285,117 – – 19,607,496 21,427,428 – –

The facilities expiring within one year were annual facilities subject to review at various dates in 2013. The borrowing facilities were arranged to ﬁnance partially the Group’s expansion.

Annual Report 2013 71 97 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

19. Finance lease liabilities

The Group and the Company lease 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 2013 2012 2013 2012 RM RM RM RM

Minimum lease payments due: - Not later than one year 8,029,788 10,367,081 19,975 55,824 - Between two and five years 7,881,645 11,656,480 – 9,236 15,911,433 22,023,561 19,975 65,060 Less: Future finance charges (1,036,485) (1,538,940) (12,634) (12,814) Present value of finance lease liabilities 14,874,948 20,484,621 7,341 52,246

The present values of ﬁnance lease liabilities are analysed as follows:

Group Company 2013 2012 2013 2012 RM RM RM RM

Not later than one year (Note 18) 7,406,177 9,465,377 7,341 44,840 Later than one year (Note 18): - Between two and ﬁve years 7,468,771 11,019,244 – 7,406 14,874,948 20,484,621 7,341 52,246

20. Deferred income

This relates to fees received in advance in respect of healthcare education and training courses as follows:

Group 2013 2012 RM RM

Beginning of financial year 526,070 836,862 Additions during the financial year 4,597,125 4,116,437 Amount credited to profit or loss (4,296,109) (4,437,527) Currency translation difference (5,060) 10,298 End of financial year 822,026 526,070

72 Health Management International Ltd 98 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

21. Deferred income taxes

Deferred income tax assets and liabilities are offsetted 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 2013 2012 RM RM Deferred income tax assets: - to be settled after one year (1,732,482) (1,044,269)

Deferred income tax liabilities: - to be settled after one year 905,934 –

The movement in the deferred income tax account is as follows:

Group 2013 2012 RM RM

Beginning of financial year (1,044,269) 2,854,679 Tax charge to profit or loss (Note 8) 217,721 (3,898,948) End of financial year (826,548) (1,044,269)

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 RM

2013 Beginning of financial year 4,257,143 (Credited)/charged to profit or loss 863,050 End of financial year 5,120,193

2012 Beginning of financial year 4,402,102 (Credited)/charged to profit or loss (144,959) End of financial year 4,257,143

Annual Report 2013 73 99 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

21. Deferred income taxes (continued)

Group

Deferred income tax assets

Unutilised tax exemption Provisions claimed Total RM RM RM

2013 Beginning of financial year (1,444,936) (3,856,476) (5,301,412) (Credited)/charged to profit or loss (114,676) (530,653) (645,329) End of financial year (1,559,612) (4,387,129) (5,946,741)

2012 Beginning of financial year (1,547,423) – (1,547,423) (Credited)/charged to profit or loss 102,487 (3,856,476) (3,753,989) End of financial year (1,444,936) (3,856,476) (5,301,412)

Deferred income tax assets are recognised for tax losses, capital allowances, provisions and unutilised tax exemptions claimed to the extent that realisation of the related tax beneﬁts through future taxable proﬁts is probable.

The Group has unrecognised tax losses of RM 94,732,000 (2012: RM 91,058,000) and capital allowances and provisions of RM 23,907,000 (2012: RM 27,208,000) at the balance sheet date which can be carried forward and used to offset against future taxable income.

22. Share capital

No. of ordinary shares Amount Issued Issued share Treasury share Treasury capital shares capital shares RM RM 2013 Beginning and end of ﬁnancial year 577,272,286 (201,000) 90,564,308 (47,117)

2012 Beginning and end of ﬁnancial year 577,272,286 (606,000) 90,564,308 (142,056)

All issued ordinary shares are fully paid. There is no par value for these ordinary shares.

74 Health Management International Ltd 100 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

22. Share capital (continued)

The Company re-issued 405,000 (2012: Nil) treasury shares during the ﬁnancial year pursuant to the Performance Share Plan. The cost of the treasury shares re-issued amount to RM 94,939. The total value of employee services (net of expense) for the treasury shares issued is RM 111,102. Accordingly, a gain on reissue of treasury shares of RM 16,163 is recognised in the capital reserve (Note 23 (c)).

23. Other reserves

(a) Accumulated losses

(i) Accumulated losses of the Group include the accumulated share of proﬁts of associated corporations amounting to RM 18,638,487 (2012: RM 17,737,432).

(ii) Movement in accumulated losses for the Company is as follows:

Company 2013 2012 RM RM

Beginning of financial year (17,203,806) (14,752,096) Net profit/(loss) 2,971,807 (2,451,710) End of financial year (14,231,999) (17,203,806)

(b) Currency translation reserve

Group 2013 2012 RM RM

Beginning of ﬁnancial year 5,040,937 4,405,285 Net currency translation differences of holding company and Singapore subsidiaries (267,775) 637,476 Less: Non-controlling interests 766 (1,824) (267,009) 635,652 End of ﬁnancial year 4,773,928 5,040,937

The currency translation reserve comprises foreign exchange differences arising from the translation of the ﬁnancial statements of Singapore operations whose functional currencies are different from the presentation currency of the ﬁnancial statements of the Group.

Annual Report 2013 75 101 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

23. Other reserves (continued)

Other reserves comprise:

(i) 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, and

(ii) the difference between the costs of treasury shares re-issued and the fair value of employee services received (Note 22).

Group Company 2013 2012 2013 2012 RM RM RM RM

Beginning of ﬁnancial year 51,787 51,787 – – Performance Share Plan - Gain on treasury shares re-issued 16,163 – 16,163 – End of ﬁnancial year 67,950 51,787 16,163 –

Other reserves are non-distributable.

24. Commitments

(a) Capital commitments

Capital expenditure contracted for at the balance sheet date but not recognised in the ﬁnancial statements are as follows:

Group Company 2013 2012 2013 2012 RM RM RM RM

Property, plant and equipment 868,978 2,843,278 – –

76 Health Management International Ltd 102 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

24. 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 payables under non-cancellable operating leases contracted for at the balance sheet date but not recognised as liabilities are as follows:

Group 2013 2012 RM RM

Not later than one year 15,308,025 8,481,452 Between two and ﬁve years 55,960,749 24,647,508 Later than ﬁve years 106,929,997 112,749,689 178,198,771 145,878,649 Less: Accrual for operating lease expenses recognised on a straight-line basis (Note 17) (6,130,433) (6,381,794) Operating lease commitments not recognised as liabilities at balance sheet date 172,068,338 139,496,855

25. Contingent liabilities

Corporate guarantee

The Company has issued corporate guarantees to banks for borrowings of its subsidiaries. These bank borrowings amount to RM 5,731,954 (2012: RM 3,651,540) at the balance sheet date.

26. Financial risk management

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 market risk (including currency risk and interest rate risk), credit risk and liquidity risk. The Group’s policy is not to engage in speculative transactions.

(a) 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.

Annual Report 2013 77 103 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

26. Financial risk management (continued)

(a) Market risk (continued)

(i) Currency risk (continued)

As at balance sheet date, the Company’s subsidiaries have their ﬁnancial instruments mainly denominated in their respective functional currencies, and currency risk is insigniﬁcant. The Group’s exposure to currency risk mainly arises from an RM denominated amount due from an associated corporation of RM 19,942,940 (2012: RM 22,760,745) as the Company’s functional currency is the Singapore Dollar (“SGD”).

As at 30 June 2013, if the RM has strengthened/ weakened by 1% (2012: 1%) against the SGD with all other variables including tax rate being held constant, the Group’s proﬁt after tax would have been RM 165,772 (2012: RM 184,644) 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 a 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.

(ii) Cash ﬂow and fair value interest rate risk (continued)

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 comprise approximately 60% (2012: 52%) of the total borrowings. If the interest rate during the financial year had been higher/lower by 0.5% (2012: 0.5%) with all other variables including tax rates being held constant, the profit after tax would have been lower/higher by RM 158,410 (2012: profit after tax will be lower/higher by RM 149,398) as a result of higher/lower interest expense on variable rate borrowings.

(b) Credit risk

Credit risk refers to the risk that a counterparty 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.

78 Health Management International Ltd 104 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

26. Financial risk management (continued)

(b) Credit risk (continued)

The Group’s and Company’s major classes of ﬁnancial assets that are subject to credit risk are short- term bank deposits and trade and non-trade receivables.

All non-trade receivables are from subsidiaries and associated corporations 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 94% (2012: 96%) 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 represent 91% (2012: 94%) and 9% (2012: 6%) 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.

(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 corporation (refer to Note 14(b) for analysis).

The age analysis of trade receivables past due but not impaired is as follows:

Group 2013 2012 RM RM

Past due 0 to 1 months 3,236,133 2,067,121 Past due 1 to 3 months 3,707,951 1,259,888 Past due over 3 months 3,787,261 228,593 10,731,345 3,555,602

Annual Report 2013 79 105 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

26. Financial risk management (continued)

(b) Credit risk (continued)

(ii) Financial assets that are either past due or impaired (continued)

The carrying amount of trade receivables individually determined to be impaired and the movement of the related allowance for impairment is as follows:

Group 2013 2012 RM RM

Gross amount 4,113,968 3,983,157 Less: Allowance for impairment (4,113,968) (3,983,157) – –

Beginning of ﬁnancial year 3,983,157 4,460,568 Allowance made 543,031 46,945 Allowance written back (412,220) (524,356) End of ﬁnancial year 4,113,968 3,983,157

The impaired trade receivables arise mainly from corporate and individual customers, which are provided on a case-by-case basis.

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.

80 Health Management International Ltd 106 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

26. Financial risk management (continued)

The table below analyses the maturity profile of the financial liabilities of the Group and the Company based on contractual undiscounted cash flows.

Less than Between Over 1 year 2 and 5 years 5 years RM RM RM

Group 2013 Trade and other payables 52,277,518 – 13,273,462 Borrowings 40,767,137 23,441,183 5,125,759 93,044,655 23,441,183 18,399,221

2012 Trade and other payables 40,595,919 – 13,273,462 Borrowings 41,847,899 29,601,881 6,109,722 82,443,818 29,601,881 19,383,184

Company 2013 Trade and other payables 5,397,389 – – Borrowings 12,686,921 – – 18,084,310 – –

2012 Trade and other payables 6,042,710 – – Borrowings 15,886,018 9,236 – 21,928,728 9,236 –

(d) 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.

Annual Report 2013 81 107 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

26. Financial risk management (continued)

(e) Financial instruments by category

The aggregate carrying amounts of loans and receivables and ﬁnancial liabilities at amortised cost are as follows:

2013 2012 RM RM

Group Loans and receivables 88,264,971 72,215,038 Financial liabilities at amortised cost 129,199,441 123,724,808

Company Loans and receivables 45,740,656 46,046,781 Financial liabilities at amortised cost 18,046,265 21,780,626

27. 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 Company 2013 2012 2013 2012 RM RM RM RM

(i) Rental expense to associated corporations 9,664,106 8,692,487 – –

(ii) Interest income from associated corporations 1,930,040 1,322,141 477,066 438,265

(iv) Payment on behalf of an associated corporation 3,576,036 2,581,175 – –

(vii) Agency fee paid to a company owned by a director of the Company 111,999 100,604 111,999 100,604

(viii) Agency fee recharged to subsidiaries – – 111,999 100,604

(ix) Management fee income subsidiaries – – 1,404,000 1,404,000

(x) Salaries recharged to subsidiaries – – 619,601 586,848

(xi) Service fee income from subsidiaries – – 33,829 36,446

Rental expense to associated corporations is based on lease agreements. Interest income from associated corporations and service fee income from subsidiaries are determined based on commercial terms and conditions and at market prices.

82 Health Management International Ltd 108 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

27. Related party transactions (continued)

(b) Key management compensation (represents to directors only) is disclosed in Note 7 – Directors’ remuneration other than fees.

28. Segment information

The Management has determined the operating segments based on the reports that are used to make strategic decisions. The Management comprises the Executive Chairman/Managing Director and the Executive Director.

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.

Annual Report 2013 83 109 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

28. Segment information (continued)

The segment information provided to the Management for the reportable segments are as follows:

Malaysia Singapore Hospital and other- Healthcare healthcare education All other services and training segments Total RM RM RM RM 2013

Revenue: - external revenue 238,761,872 6,653,512 – 245,415,384

Adjusted EBIT 31,879,561 87,487 (4,748,001) 27,219,047 Interest expense - net (1,926,319) (24,645) (101,217) (2,052,181) Share of proﬁt of associated corporations 901,055 – – 901,055 Proﬁt before income tax 29,953,242 62,842 (3,948,163) 26,067,921

Segment assets 230,358,197 4,539,597 29,852,448 264,750,242 Segment assets includes: Investment in associated corporations 25,487,927 – – 25,487,927 Additions to: - property, plant and equipment 16,411,587 174,767 – 16,586,354

Segment liabilities 49,253,322 2,966,664 15,058,954 67,278,940

2012

Revenue: - external revenue 202,066,474 7,154,761 – 209,221,235

Adjusted EBIT 22,569,910 (1,185,183) (6,274,462) 15,110,265 Interest expense - net (2,927,343) (27,546) 16,833 (2,938,056) Share of proﬁt of associated corporations (43,899) – – (43,899) Proﬁt before income tax 19,642,567 (1,212,729) (6,301,528) 12,128,310

Segment assets 231,303,566 3,877,285 8,276,018 243,456,869 Segment assets includes: Investment in associated corporations 26,501,935 – – 26,501,935 Additions to: - property, plant and equipment 14,420,145 169,159 28,645 14,617,949

Segment liabilities 36,902,159 2,584,355 15,003,651 54,490,165

84 Health Management International Ltd 110 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

28. Segment information (continued)

Revenue between segments is 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 and borrowings of the Group.

(a) Reconciliations

(i) Segment proﬁts

A reconciliation of adjusted EBIT to proﬁt before tax is as follows:

Group 2013 2012 RM RM

Adjusted EBIT for reportable segments 33,869,085 21,384,727 Other segments EBIT (169,685) (722,998) Finance expense (4,112,178) (4,336,729) Interest income 2,059,997 1,398,673 Unallocated: Corporate expenses (6,480,353) (5,551,464) Share of (loss)/proﬁt of associated corporations 901,055 (43,899)

Proﬁt before tax 26,067,921 12,128,310

(b) 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 2013 2012 RM RM

Hospital and other healthcare services 238,761,872 202,066,474 Healthcare education and training 6,653,512 7,154,761 245,415,384 209,221,235

Annual Report 2013 85 111 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

28. Segment information (continued)

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 2013 2012 RM RM

Singapore 6,662,857 7,162,340 Malaysia 238,752,527 202,058,895 245,415,384 209,221,235

Total non-current assets 2013 2012 RM RM

Singapore 32,637,525 33,307,751 Malaysia 141,575,192 137,555,023 174,212,717 170,862,774

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 2013 or later periods and which the Group has not early adopted:

• FRS 110 Consolidated Financial Statements (effective for annual periods beginning on or after 1 January 2014)

FRS 110 replaces all of the guidance on control and consolidation in FRS 27 “Consolidated and Separate Financial Statements” and SIC 12 “Consolidation – Special Purpose Entities”. The same criteria are now applied to all entities to determine control. Additional guidance is also provided to assist in the determination of control where this is difﬁcult to assess. The Group has yet to assess the full impact of FRS 110 and intends to apply the standard from 1 July 2014.

• FRS 112 Disclosure of Interests in Other Entities (effective for annual periods beginning on or after 1 January 2014)

FRS 112 requires disclosure of information that helps ﬁnancial statement readers to evaluate the nature, risks and ﬁnancial effects associated with the entity’s interests in subsidiaries, associates, joint arrangements and unconsolidated structured entities. The Group has yet to assess the full impact of FRS 112 and intends to adopt the standard from 1 July 2014.

86 Health Management International Ltd 112 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

30. Listing of companies in the Group

Country of business/ Equity Name of companies Principal activities incorporation holding* 2013 2012 % % Subsidiaries (held by the Company) HMI Consulting Pte. Ltd. (a) Consulting services Singapore 100 100

HMI Institute of Health Sciences Healthcare education and Singapore 100 100 Pte. Ltd. (a) training

HMI Health Management (M) Hospital management services Malaysia 100 100 Sdn. Bhd.(b)

Mahkota Medical Centre Sdn. Hospital and healthcare services, Malaysia 48.95 48.95 Bhd. (“MMCSB”) (b) (e) higher education and training courses for nurses, paramedical personnel and provision of project management and hospital consultancy services

Mahkota Medical Group Sdn. Investment holding Malaysia 48.95 48.95 Bhd. (“MMGSB”) (b)(f)

Regency Specialist Hospital Sdn. Hospital and healthcare services Malaysia 29 29 Bhd. (“RSH”) (b)(g)

Held by MMCSB (48.95% held by the Company) Mahkota Realty Sdn. Bhd. (b) Property investment Malaysia 75 75

Mahkota Land Sdn. Bhd. (b) Property investment Malaysia 75 75

PT. Mahkota Healthcare Services Dormant Indonesia 95 95 (b)

Held by MMGSB (48.95% held by the Company) Regency Specialist Hospital Sdn. Hospital and healthcare services Malaysia 65 65 Bhd. (“RSH”) (b)(g)

Held by RSH (60.82%% held by the Company) Regency Specialist Hospital (S) Singapore patient centres Singapore 100 100 Pte. Ltd. (a)

Associated corporations (held by the Company) Nathill Track (M) Sdn. Bhd.(c) Dormant Malaysia 30 30

Mahkota Commercial Sdn. Bhd. Holding company of investment Malaysia 48.95 48.95 (“MCSB”) (d) properties

Regency Healthcare Sdn. Bhd. Investment holding Malaysia 35 35 (“RHSB”) (d)

Annual Report 2013 87 113 Notes to the Financial Statements For the ﬁnancial year ended 30 June 2013

30. Listing of companies in the Group (continued)

Country of business/ Equity Name of companies Principal activities incorporation holding* 2013 2012 % % Associated corporations (held by the Company) (continued) Regency Medical Centre (Seri Development and lease of a hos- Malaysia 29 29 Alam) Sdn. Bhd. (d) pital building

Panodahlia Sdn. Bhd. (b)(h) Healthcare education and training Malaysia 43.45 43.45

Held by MCSB (48.95% held by the Company) Mahkota Realty Sdn. Bhd. (b) Property investment Malaysia 25 25

Raspuri Sdn. Bhd. (d) Property investment Malaysia 100 100

Mahkota Land Sdn. Bhd. (b) Property investment Malaysia 25 25

Pancastle Sdn. Bhd. (d) Property investment Malaysia 100 100

Regency Healthcare Sdn. Bhd. Investment holding Malaysia 65 65 (“RHSB”)(d)

Regency Medical Centre (Seri Development and lease of a hos- Malaysia 65 65 Alam) Sdn. Bhd. (d) pital building

Held by RHSB (66.82% held by the Company) Regency Medical Centre (Sungai Dormant Malaysia 85 85 Petani) Sdn. Bhd. (d)

(a) Audited by PricewaterhouseCoopers LLP, Singapore (b) Audited by PricewaterhouseCoopers, Malaysia (c) Audited by BKR Peter Chong, Malaysia (d) Audited by Crowe Horwath, Malaysia (e) 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 considers MMCSB as a subsidiary. (f) Although the Company holds 48.95% equity interest in MMGSB, pursuant to an agreement signed by the shareholders of MMGSB on 22 October 2008, the Company exercises control over the Board of Directors and accordingly considers MMGSB as a subsidiary. (g) The Company controls directly and indirectly interest of 29% and 48.95% respectively and accordingly considers RSH a subsidiary. (h) The Company operates Mahkota Institute of Health Sciences and Nursing. * Equity holding refers to the equity holding by the respective entity referred above.

31. 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 20 September 2013.

88 Health Management International Ltd 114 TOPPAN VITE PTE. LTD. SPS1310003