ANNUAL REPORT 2015 | BANGKOK DUSIT MEDICAL SERVICES Public Company Limited TRUSTYOUR TRUSTED HEALTHCARE NETWORK 003Content Message from Chairman of the Board of Directors 004 Message from the Chief Executive Officer & President 008 Financial Highlights 012 Group Structure 016 Board of Directors 018 Biography of Board of Directors and Company Management 028 Policy and Nature of Business 040 Nature of Business 050 Risk Factors 054 Securities and Shareholders 062 Management Structure 072 Good Corporate Governance 094 Internal Control 095 Report of the Audit Committee 096 Connected Transactions 104 Management Discussion and Analysis 112 The Board of Director’s Report on its Responsibility to the Financial Statements 115 Report of Independent Auditor 116 Financial Statements 128 Notes to Consolidated Financial Statements 188 Juristic persons in which the company holds 10% of shares or greater 192 General Information and other Important Information Message from Chairman of the Board of Directors In 2015, Bangkok Dusit Medical Services Public Company Limited was met with many challenging economic factors. Despite the im- provement in the domestic political environment and some growing conųdence in the countryĴs economy, some regions of the country still faced economic slowdown. However, with the strength of the BDMS network, the Company was able to grow as a whole as anticipated. Throughout the past 43 years, the Company has determined to enhance our healthcare services to meet the international standards of leading overseas hospitals. We have also collaborated with various leading foreign medical institutions in terms of academics and research. Examples of such institutions are the University of Texas MD Anderson Cancer Center, Department of Orthopaedic Surgery at Stanford University, Oregon Health & Science University (OHSU) and Nagoya University, Japan. This is another policy that elevates the quality of healthcare services provided by the BDMS network of hospitals to meet international standards, which is one of our main missions to our customers who have continuously put their trust in our company. Apart from our efforts to develop medical knowledge and the quality of our services, in 2015, the Company received Corporate Governance Rating (CGR) of “Very Good CG Scoring” from the Thai Institute of Directors, the Stock Exchange of Thailand and the Ofųce of the Securities and Exchange Commission. The Company also received a score of 99.5% from evaluation of the quality of the 2015 Annual General Shareholders Meeting, as well as received the Outstanding Investor Relations Award 2015 for companies with market capitalization over Baht 100,000 million from the Stock Exchange of Thailand. BDMS strives to continue to improve and develop our corporate governance. To this end, the Board of Directors, management and all personnel are determined to operate our business with transparency as well as to strictly adhere to business ethics. On behalf of Bangkok Dusit Medical Services Public Company Limited, I would like to thank the doctors, nurses, executives and all personnel for dedicating their skills and efforts to propel the Company to grow with stability and sustainability. I would also like to express my sincere gratitude to our investors and stakeholders who have continually entrusted and supported us. Professor Emeritus Arun Pausawadi Chairman of the Board of Directors 03 BANGKOK DUSIT MEDICAL SERVICES Public Company Limited Message from the Chief Executive Officer & President 2015 was another year that Bangkok Dusit Medical Services Public Company Limited achieved growth in line with the set goals, despite some network hospitals being affected by the economic slowdown. With the shared collaboration and beneųts, the network has remained strong enabling the BDMS Group to overcome the challenges that we faced in our 43rd year of business. Overall, the Company grew 12% and had been afųrmed the company rating at “AA-“ Stable from TRIS Rating Company Limited (TRIS) for the second consecutive year. In terms of medicine, we have had changes and developments for the good of the Company through the cooperation of our physicians, nurses, management and employees, who have led BDMS to become the leader in providing healthcare services that meet international standards. The Group has received accreditation at all levels. For instance, a total of 22 hospitals within the network received Hospital Accreditation (HA), while 12 received accreditation from Joint Commission International (JCI). Furthermore, Bangkok Hospital Head 2uater received an Advanced HA certiųcation, becoming one of only 3 hospitals that have received this level of accreditation, namely, Siriraj Hospital, Bhumibol Hospital and Bangkok Hospital. In 2015, the Company also continued to collaborate with various leading universities and medical institutions in the United States. Examples of such collaborations are the exchange of knowledge and skills in orthopaedics with the Department of Orthopaedic Surgery at Stanford University, the collaboration with the Oregon Health & Science University (OHSU) in establishing the BDMS-OHSU International Health Alliance, as well as the continued collaboration between Wattanosoth Hospital and the MD Anderson Cancer Center (MDACC) at the University of Texas to elevate the level of cancer patient care of Wattanosoth Hospital to meet the standards of the MD Anderson Cancer Center in the United States. Moreover, BDMS has collaborated with Dr. Keith L. Black, one of the leading neurosurgeons in the world, who currently holds the position of Director of the Maxine Dunitz Neurosurgical Institute at Cedars-Sinai Medical Center in Los Angeles, California. This collaboration has focused on researching and developing capabilities in treating diseases of the brain and nervous system, thus enabling BDMS to become one of the most up-to-date medical centers in diseases of the brain and nervous system (neuroscience) in the Asia Paciųc Region. Samitivej PLC. also opened the Samitivej International ChildrenĴs Hospital in collaboration with the Doernbecher ChildrenĴs Hospital located in Oregon, U.S.A. to develop an excellence center. The aforementioned collaborations are another of our policies that were established to support the growth of Thailand to become the medical hub of Asia. It is also a part of the BDMS GroupĴs vision to be one of the three leading referral hospitals in the Asia Paciųc Region by the year 201. Furthermore, the collaborations help us to gain capabilities in treating and caring for patients with brain disease, bone disease, spine disease, geriatric medicine and rehabilitation that meet international standards, which aligns with the global increase of the aging society. 04 A n n u a l R e p o r t 2 0 1 5 In terms of investments, the BDMS Group has expanded in many provincial areas providing secondary level care, which cares for non-complex ailments, in order to increase the opportunity to receive medical care to the population in rural areas. Such provincial hospitals include Sri Rayong Hospital in Rayong Province, Samitivej Chonburi Hospital in Chonburi Province, Dibuk Hospital in Phuket Province, Paolo Rangsit Hospital and Bangkok Muangraj Hospital in Ratchaburi Province. Presently, BDMS has 43 hospitals within the network across Thailand and in Cambodia, and we are in the process of opening new hospitals in Chiang Rai Province and Surat Thani Province. Additionally, in 2015 BDMS invested in the General Hospital Products Public Company Limited, a manufacturer of intravenous solutions namely, saline, glucose and other medical supplies. This is the ųrst time that the Company has invested in a business that is jointly operated by the Government Pharmaceutical Organization under the Ministry of Public Health. Apart from the success in expanding our network, BDMS has also organized many socially responsible activities to help the less fortunate, both on behalf of the Company and through the Vejdusit Foundation established in 194. We also organized many activities to help Thai society in terms of medicine and public health. The Company has prepared the Sustainability Report to record our socially responsible activities, including the CompanyĴs work pro- cedures, social activities and stakeholders so that our business, society and environment can work together with balance, leading to sustainable development and growth. The awards that the Company received in 2015 which reŴect our management and corporate governance efforts are “ThailandĴs Top Corporate Brand 2015” award in the category of medicine, from the Faculty of Commerce and Accountancy, Chulalongkorn University, with an organi- zational brand worth Baht 1,000.29 million, ranking 5th out of the 19 sectors, listed on the Stock Exchange of Thailand in the category; “Outstanding Investor Relations Award 2015” for listed companies with market capitalization of over Baht 100,000 million awarded by the Stock Exchange of Thailand; and the Corporate Governance Rating (CGR) of “Very Good CG Scoring” from the Thai Institute of Directors in association with the Stock Exchange of Thailand and the Ofųce of the Securities and Exchange Commission. In the past 43 years of success, we have grown rapidly and have entered the international arena, thus meeting the goals that we have set. I would like to thank the doctors, nurses, and all personnel for their dedication, both physically and emotionally, in supporting the organization. I would also like to express my sincere gratitude to