Broadening Horizon
Broadening Horizon
Annual Report 2008
Contents
1 Mission & Vision
2 Financials at a Glance
3 Corporate Profile
4 Chairman’s Message
8 Operation’s Review
10 Board of Directors
11 Key Management
12 Corporate Information
14 Report on Corporate Governance
19 Risk Management Policies & Process
21 Financial Report
66 Statistics of Shareholdings
68 Notice of Annual General Meeting
Proxy Form
China Healthcare Limited • Annual Report 2008
Our Mission
We are dedicated to provide high quality and customer-focused
healthcare services. We will achieve this by focusing on:
Customer Needs
Being sensitive to our customers’ needs
Research & Development
Improving our services through constant research and skills
development
Quality System
Continuing to be highly systematic and organized in our service
delivery and quality control
Networking
Building up our local and international network with our
partners in healthcare
People Development
Caring and grooming our people to set and achieve higher goals
Our Vision
To be a premium and leading brand in healthcare services in the Asia
Pacific region, recognized by our customers for our holistic approach,
personal touch and technological advancement.
China Healthcare Limited • Annual Report 2008
Financials at a
Glance
18,647
16,259
+15 %
07
08
Revenue ($’000)
29,602
19,278
+54 %
07
08
Equity attributable to equity holders
of the parent ($’000)
Corporate Profile
China Healthcare Limited • Annual Report 2008
China Healthcare Group was founded in 1987 by Mr
Ong Chu Poh, the Group Chairman and CEO. Beginning
with just one nursing home, it is now the market
leader in providing quality healthcare and elder care
to the population in Singapore and Malaysia.
China Healthcare Ltd owns and operates seven
nursing homes and medicare centres in Singapore, one
medicare centre in Kuala Lumpur, Malaysia, a careskill
training centre, and also provides professional
care services such as home care, rehabilitation,
ambulance, traditional Chinese medicine under the
well respected ECON Healthcare brand. Additionally,
it owns West Point Hospital, the only hospital in
Singapore providing both acute and convalescent
care. In China, the group has a strategic 20% stake in
an associate that manufactures hospital equipment.
ECON Healthcare was the first in the nursing home
industry to obtain the ISO 9002 Certificate in 1996. It
then upgraded its quality standard to ISO 9001:2000
Certifi cate in 2002. In 2003, it achieved the Singapore
Quality Class status and the Singapore Promising
Brand Award. ECON Healthcare has also been
invited by SPRING Singapore to lead in establishing
quality standards and operational procedures for
the Singapore nursing home industry as part of the
National Skills Recognition System (NSRS).
With 21 years of experience in the healthcare industry,
China Healthcare is recognised by the community
for its holistic approach, high quality and customerfocused
services. Our key strength lies in our ability
to provide a wide range of personalised healthcare
services for our customers.
China Healthcare Limited • Annual Report 2008
Chairman’s
Message
“Share Capital has also grown
nearly threefold since 2002,
with an increment of 60% in
the current year reflecting
the adoption of a high growth
strategy comprising equity
funding such as Private
Placement and Rights Issues.”
Dear Shareholders,
On behalf of the Board of the Directors, I am pleased to
present to you our Annual Report for the financial year
ended 31 March 2008.
Last five years of growth
Our Group has achieved an average growth of 13% in
Revenue since its IPO in 2002, ranging from the humble
growth of 4% in FY 2003 to the current 14% annual growth
for FY 2007. We have been consistently channeling
our resources towards upgrading and enhancing our
facilities as well as building our Human Capital Resources,
which resulted in a reduction of our operating profit
from FY 2003 till FY 2007. Since FY 2007, we have
improved our operational financial performance to
become profitable in the current year under review.
From the financial position chart, the China Healthcare
Limited (“CHL”) Group’s Net Assets have more than
doubled in the last five years, growing an average
of 20% per year, or an incremental of 4% in 2003 to
approximately 50% in 2008, as the Company has invested
more of its resources in the expansion and upgrading of
its Medicare Centres and West Point Hospital (“WPH)”.
Share Capital has also grown nearly threefold since 2002,
with an increment of 60% in the current year reflecting
the adoption of a high growth strategy comprising
equity funding such as Private Placement and Rights
Issues.
The Great Breakthrough from LOCAL
The acquisition of a 49.11% stake in WPH in June
2003, with the management contract granted to CHL,
synergised our Medicare Centres and Nursing Homes’
operations. Upon the completion of the remaining
shares acquisition in September 2006, WPH is now a
wholly-owned subsidiary of CHL. With a more costefficient
operation and greater competitiveness, we
have successfully narrowed the losses accumulated over
the years in WPH’s history prior to CHL’s acquisition of
WPH. WPH has also obtained URA’s Outline Permission
Approval on 2 April 2008 to build a 200-bed (approx.)
New Hospital with a site area of 4,758 sqm.
With the setting up of SingaporeMedicine, a multiagency
government initiative that aims to develop
Singapore as Asia’s Premier Healthcare Service Hub for
International Patients, the recent successful bid for a
99-year, 17,000 sqm healthcare site at Novena was
tendered for more than $1.24 billion. The potential
benefit that is expected to arise from this investment is
apparent, since WPH was purchased at a very attractive
price without any external financing required. We are
confident that with our relatively much lower property
investment cost incurred for land purchase, we are
able to develop WPH into a new hospital with excellent
cost effectiveness in the Taman Jurong area mainly
serving the Western population of Singapore.
In preparation of a new West Point Hospital to be added
to our stable of Medicare Centres and Nursing Homes in
order to increase our competitive advantage, we expect
the Company to grow even further locally as well as in
the overseas markets.
The Break Through from OVERSEAS
China - Chengdu, Mt Juguan
An excellent opportunity arose for the Group to tag our
business to China’s vibrant economic growth. On 10
September 2007 an MOU was signed between the group
and Chengdu TianLi (Group) Co., Ltd, to jointly develop
China Healthcare Limited • Annual Report 2008
25,000
22,376
THOUSANDS
20,000
15,000
16,259
18,647
10,000
5,000
8,850 9,202
11,323
13,419 13,627
1,557
-
2,126 2,316
992
1,096
585
677
(227)
(5,000)
31-3-02 31-3-03 31-3-04 31-3-05 31-3-06 31-3-07 31-3-08 31-3-09
Revenue 8,849,892 9,201,789 11,231,693 13,418,662 13,627,301 16,259,214 18,646,635 22,375,692
Operating Profit 2,125,968 2,316,481 991,939 1,095,816 585,372 (227,485) 676,983 1,557,061
Financial Performance Chart
30,000
29,602
THOUSANDS
25,000
20,000
21,303
19,278
28,457
15,000
14,386
17,634
17,634
11,807
12,260
10,000
5,000
9,967
9,967 9,967
31-3-03 31-3-04 31-3-05 31-3-06 31-3-07 31-3-08
Net Assets 11,806,698 12,260,401 14,385,698 21,303,048 19,278,031 29,602,392
Share Capital ($) 9,966,883 9,966,883 9,966,883 17,633,743 17,633,743 28,456,839
a scenic Healthcare Park located approximately 96 km
west of Chengdu City, about 90 km from Chengdu
International Airport and approximately 4 hours direct
flight between Chengdu and Singapore. The healthcare
park has the flexibility for us to develop various
healthcare facilities such as rehabilitation centre,
retirement village, SPA Centre, sports and recreation
centre. The outdoor sports facilities are suitable for both
the young and senior. We concluded with the signing
of the Acquisition Agreement on the 28 September
2007 to acquire a 51% of the registered capital of
Chengdu Tian Li (Group) Co. Ltd. We further made an
announcement on 25 February 2008 that we had obtained
the China Authority’s Approval on the transaction,
following through with the payment on the Purchase
Consideration in accordance with the Sales and
Purchase Agreement.
During the recent earthquake in Sichuan, China, we
were fortunate that our staff working on this project
were safe and our property was not affected.
China - Zhu Hai, Boxuan
Another opportunity arose when the Group was offered
a chance to increase its stake in Boxuan Medical
Equipment Pte Ltd, a China-based Hospital Equipment
Manufacturing Company. It augmented its share from
20% to 35%.
Zhu Hai, Boxuan has been a profitable business since its
inception in 2005. Revenue has increased five-fold from
$2 million in FY 2006 to $12 million in FY 2007, and again
increased by a further 32% in FY 2008 to $15 million
(before it was adjusted to the percentage of ownership).
The Equity profit has increased 28 times from FY 2006
Financial Position Chart
from a mere $4,000 to $103,000 in FY 2007, and up again
by another 31% to $135,000 in FY 2008. This figure does
not include the appreciation in Net Tangible Assets.
Malaysia
100% owned Subsidiary
Revenue increased by 18% in FY 2008 as compared with
FY 2007, yielding a 24% higher operating profit for
FY 2008, owing to an increased bed occupancy in the
Malaysia operations. This is further buoyed by the recent
acquisition of a piece of Land in Johor Bahru to develop
another Medicare Centre to link up the operations in
Singapore and Kuala Lumpur, with West Point Hospital
as the strategic linkage point.
Word of Appreciation
On behalf of the Board of Directors, I would like to
thank our customers for entrusting their loved ones to
our care. I would also like to thank our staff at all levels
for their dedicated efforts and teamwork in meeting all
the challenges in FY 2008.
I wish to affirm to our shareholders that with their longterm
support, we should be looking at an impressive
growth ahead.
Last but not least, I would also like express my deepest
gratitude to the Board of Directors for their wise counsel
and guidance throughout the years.
Ong Chu Poh
Group Chairman & CEO
China Healthcare Limited • Annual Report 2008
China Healthcare Limited • Annual Report 2008
25,000
22,376
20,000
15,000
16,259
18,647
10,000
5,000
8,850 9,202
11,323
13,419 13,627
(5,000)
-
1,557
2,126 2,316
992
1,096
585
677
(227)
31-3-02 31-3-03 31-3-04 31-3-05 31-3-06 31-3-07 31-3-08 31-3-09
8,849,892 9,201,789 11,231,693 13,418,662 13,627,301 16,259,214 18,646,635 22,375,692
2,125,968 2,316,481 991,939 1,095,816 585,372 (227,485) 676,983 1,557,061
30,000
25,000
29,602
28,457
20,000
21,303
19,278
15,000
14,386
17,634
17,634
11,807
12,260
10,000
5,000
9,967
9,967 9,967
31-3-03 31-3-04 31-3-05 31-3-06 31-3-07 31-3-08
11,806,698 12,260,401 14,385,698 21,303,048 19,278,031 29,602,392
9,966,883 9,966,883 9,966,883 17,633,743 17,633,743 28,456,839
China Healthcare Limited • Annual Report 2008
Operation’s
Review
CHL Group has achieved another year of remarkable
performance in both its local and overseas operations.
Revenue grew 14% from last years’ $16.3 million,
standing at $18.6 million this year. This is mainly
attributed to a higher bed occupancy rate in our
Medicare Centres & Nursing Homes in Singapore and
Malaysia. Operating pre-tax profit for FY 2008 was
$0.59 million – 4.9 times more than the pre-tax profit
of $0.12 million in FY 2007.
In order to facilitate the Group’s local and regional
expansion plans, additional staff had to be recruited.
As such, staff costs increased by 14%, or $1.1 million
from the $7.8 million of FY 2007 to $8.9 million in FY
2008.
Property, Plant and Equipment Expenses increased by
$4.7 million, from $39.4 million in FY 2007 to $44.1
million in FY 2008, mainly due to the expansion and
upgrading of its Singapore and Malaysia operations.
This includes the purchase of new and advanced
equipments such as CT Scans. This resulted in an
increase of depreciation of Property, Plant and
Equipment of $0.2 million. Financial Expenses, though
partially offset by the reduced interest rate, registered
a marginal decrease of $0.03 million. The increase of
Interest bearing borrowing was used for the financing
of the purchase/upgrade of the Medicare Centre
facilities.
After the adjustment for fair value loss on investment
designated for trading of $0.98 million in the current
financial year, net loss for FY 2008 was $0.5 million
against the previous years’ loss of $1.43 million. The
improvement in the current year was mainly due
to a one-time impairment loss of available-for-sale
unquoted equity securities of $1.999 million which
was offset by negative goodwill of $0.7 million.
In order to improve the facilities and living conditions
at the oldest ECON Nursing Home – Bukit Timah, the
Group has proposed to acquire another piece of
property at Recreation Road to develop a new Nursing
Home, with plans to relocate the current Bukit Timah
Nursing Home there once it’s completed.
Completed Projects
West Point Hospital (“WPH”)
July 2007 saw the completion of upgrading works at
WPH to better serve the community. With totally
new premises, upgraded equipment and a group of
well-trained healthcare staff to render high quality
services, we are poised to become an Integrated
Community Healthcare Hospital.
In fact, during the year under review, great efforts
were geared towards industrial and commercial
corporate clients in the Jurong Industrial Estate so as
China Healthcare Limited • Annual Report 2008
to provide more efficient and affordable healthcare
services to the community. Additionally, the
hospital’s 24-hour Accident & Emergency department
is well-placed to serve the increasing demand of
the acute industrial accident cases, which it was
not able to handle previously. It is noted that with
improved facilities, a warmer and cosier ambience,
West Point Hospital now has an increased patient
load spanning multidisciplinary specialty cases after
the renovation.
Other services such as x-ray, laboratory, CT Scan,
physiotherapy and Traditional Chinese Medicine will
continue to benefit from the aggressive marketing
activities undertaken by the Hospital.
Purpose-Built Home
In September 2007, the purpose-built home for
dementia residents located in the Northeast (IMH)
was completed to support the current Nursing Homes’
capacity to care for dementia patients.
Reconstruction for Sunnyville Home is 90% completed
to date and we expect it to be ready for operation by
September 2008.
Enlarging the company share capital base
10 for 3 Rights Issue of 53 million new shares equivalent
to $6.3 million - with the support and trust from our
shareholders in the Group, we have successfully raised
the funds through the Rights Issue Exercise, reflecting
the strong belief that our shareholders have placed in
China Healthcare Limited.
Private Placement of 20 million new shares, equivalent
to $5 million - together, this enhances our Cash
position during the financial year so as to be better
equipped to seize opportunities as they arise.
Moving Forward
West Point Hospital
There was an overwhelming response to the unveiling
of the rejuvenated West Point Hospital Ceremony on 25
November 2007 where we saw higher public awareness
and acceptance of WPH. An announcement was also
made to the public on the hospital’s plan to build a
200-bed (approx.) new hospital with state-of-the-art
facilities and a medical specialist centre that covers
specialties such as cancer, orthopaedics, geriatrics,
Ear, Nose & Throat and etc. We have already received
approval in principle from the Urban Redevelopment
Authority for us to build the new WPH.
Looking ahead, we will progressively announce our
development plans to the public.
10
China Healthcare Limited • Annual Report 2008
Board of
Directors
1. Mr Ong Chu Poh
Group Chairman and CEO
Mr Ong is the founder of the Group. He has extensive
management experience in both local and MNCs. He
set up the Group’s first nursing homes in 1987 and
has since, under his strong leadership and vision for
the industry, managed the expansion and growth of
the business. Mr Ong is responsible for the overall
management, operational efficiency and the charting
and reviewing of the Group’s policies, strategies and
corporate directions. He holds a Bachelor of Arts
degree from the Nanyang University, Singapore and
a diploma in Marketing Management from Ngee Ann
Polytechnic. He is also a graduate of the Singapore
Staff and Command College.
2. Mdm Koh Hin Ling
Executive Director
Mdm Koh spearheads the development and management
of the Traditional Chinese Medicine (“TCM”) Division of
the Group. Mdm Koh holds a Bachelor of Arts degree
from the Nanyang University, Singapore and has a
diploma in Chinese Medicine from Singapore Chinese
Physicians’ Training College. She also holds a Master
Degree in TCM from Nanjing University of TCM and has
a practicing certificate for TCM.
3
1
4
2
3. Mr Wong Kook Fei
Independent Director
Mr Wong is the Chairman for the Audit Committee
and Nominating Committee and he is a Member of the
Remuneration Committee. He has extensive working
experience in the banking industry with more than 20
years experience in loan syndication and corporate
banking. Mr Wong is currently employed as Managing
Director and Head of Loan Syndication at Aareal Bank
Asia Limited covering the Asia Pacific region. Prior to
that, he had worked in both local and foreign banks
like United Overseas Bank, Credit Agricole Indosuez,
Bank Austria, Bayerische Hypo-und Vereinsbank and
Standard Merchant Bank. He holds a Bachelor of
Commerce (Honours) Degree from McMaster University,
Ontario, Canada.
4. Dr Tan Hung Yong Richard
Independent Director
Dr Tan Hung Yong Richard is the CEO and Medical
Director of Singapore Aeromedical Centre with
ST Medical Services Pte Ltd, a wholly owned subsidiary
of ST Logistics Ltd. Prior to this, Dr Tan served with
the Singapore Armed Forces (“SAF”) for 19 years. Dr
Tan holds Medical Degrees in Aviation Medicine and
Masters of Medical (Occupational Medicine) from the
National University of Singapore. He is a fellow of the
Academy of Medicine Singapore and an Academician
of the International Academy of Aviation and Space
Medicine.
China Healthcare Limited • Annual Report 2008
11
Key
Management
Dr Gan Qing Hui, Edward
General Manager, China Division
Dr Gan joined CHL Group as Deputy Operations Manager
in January 2002 and was promoted to his current position
in April 2004. He is responsible for the development and
implementation of the Group’s business development
projects and activities in China. Dr Gan has more than 10
years of experience in the healthcare industry and he holds
a degree in Medicine from Shanghai Medical University and
a Postgraduate Diploma in Marketing from the Chartered
Institute of Marketing in the United Kingdom.
Ms Shirley Lim Shiel
Director of Operation, West Point Hospital
Ms Lim joined CHL Group in November 2007. She has more
than 20 years of experience in the healthcare industry since
graduating from the Singapore Nursing School (School of
Nursing) in 1986. She brings with her nursing and managerial
exposures from both the private and public healthcare
sectors. Ms Lim holds a Bachelor Degree in Commerce,
majoring in Management from the University of Western
Sydney. She also holds a Degree in Management from the
Singapore Institute of Management.
Dr Liew Cheng
Resident Medical Officer of China Healthcare Group
Dr Liew joined CHL Group as Resident Medical Officer
in February 2007. He has more than 10 years of clinical
experience since graduating from National University of
Singapore with an M.B.B.S. in 1993. He also has a Diploma
in Occupational Medicine from the Postgraduate School of
Medical Studies.
Dr Liew brings with him several years of Clinical experience
in the public healthcare sector namely Tan Tock Seng
Hospital, Kandang Kerbau Women’s and Children’s Hospital
and Singapore General Hospital (Department of Cardiology
and A&E Department), as well as experience in handling
chronic diseases in the geriatric population as a Family
Physician in various government polyclinics.
Ms Sally Lum
Director of Marketing
Ms Lum joined the CHL Group in November 2006. She
brings with her more than 10 years of regional business
management, sales & marketing, corporate & marketing
communications and brand management expertise in
diverse industries such as Siemens Medical, Nippon Paint
South East Asia Group, Ms Lum has also managed a regional
advertising agency and a company distributing healthcare
products.
She holds a Master’s degree in Marketing from the Macquarie
University, Australia.
Ms Tan Meng Guek
Head of Operation
Ms Tan joined CHL Group in November 2004 as Centre
Manager and she brings with her more than 20 years of
clinical experience in the Singapore restructured Hospitals.
In 2007, she assumed responsibility as a Quality Manager
of CHL Group and was subsequently promoted to the
current position.
Ms Tan is a State Registered Nurse and holds a Bachelor
degree of Health Science Nursing (BHSN) from the
University of Sydney as well as a Certificate in Advanced
Nursing (Medical-Surgical Nursing Elective) from National
University Hospital / National University Singapore.
Mr Daniel Goh Seng Huat
Financial Controller
Mr Goh joined CHL Group in August 2007. He has
approximately 10 years of experience in financial,
administrative and corporate management and
implementation experience in public listed company and
GLC in various industries such as manufacturing, retail,
audit and constructions.
Mr Goh is a Fellow Chartered Certified Accountant (FCCA),
international by profession. He also holds a double diploma
in Accounting and Management Accounting from Thames
School of Commerce.
Ms Teo Li Li
Human Resource Manager
Ms Teo joined CHL Group in April 2008. She has approximately
15 years of management experience in a wide spectrum of
HR and HR related functions. Ms Teo is a graduate from
Ngee Ann Polytechnic with a diploma in Business.
12
China Healthcare Limited • Annual Report 2008
Corporate
Information
Board of Directors
Ong Chu Poh (Group Chairman & CEO)
Koh Hin Ling (Executive Director)
Wong Kook Fei (Independent Director)
Dr Tan Hung Yong Richard (Independent Director)
Audit Committee
Wong Kook Fei (Chairman)
Dr Tan Hung Yong Richard
Koh Hin Ling
Remuneration Committee
Dr Tan Hung Yong Richard (Chairman)
Wong Kook Fei
Koh Hin Ling
Nominating Committee
Wong Kook Fei (Chairman)
Dr Tan Hung Yong Richard
Ong Chu Poh
Company Secretary
Lee Seng Suan (CPA)
Share Registrar
& Share Transfer Office
M & C Services Private Limited
138 Robinson Road, #17-00
The Corporate Office
Singapore 068906
Auditors
KPMG
Certifi ed Public Accountants
16 Raffl es Quay #22-00
Hong Leong Building
Singapore 048581
Partner-in-charge:
Tan Huay Lim
(Appointed from commencement of financial
period ended 31 March 2007)
Principal Bankers
DBS Bank Limited
Oversea-Chinese Banking Corporation Limited
RHB Bank Berhad
Registered Office
452 Upper East Coast Road
Singapore 466500
Company Registration Number
200202500K
Report on
Corporate Governance
14
China Healthcare Limited • Annual Report 2008
Report On Corporate Governance
China Healthcare Limited is committed to high standards of corporate governance to ensure greater transparency and
accountability to its shareholders.
The Group recognizes and supports the principles and spirit of the Code of Corporate Governance 2005 (the “Code”) and
has put in place various mechanisms to ensure that effective corporate governance is in place.
BOARD MATTERS
The Board’s Conduct of Its Affairs
The Board is entrusted with the responsibility for the overall corporate governance of the Group including setting its
corporate strategy and direction, overseeing the management of the business and reviewing the affairs and financial
position of the Group.
The Board has direct responsibility for decision making in the following corporate events and actions:
• Approval for the release of the half year and full year results announcements;
• Approval of the annual report and financial statements;
• Convening of the shareholders' meetings;
• Approval of corporate strategies;
• Material acquisitions and disposals of assets; and
• Approval of interested person transactions.
The Company has in place general orientation-training programmes to ensure that all new incoming directors are familiar
with the Group's business and governance practices. The Company relies on the Directors to undergo further relevant
training if necessary to update themselves on the relevant new laws, regulations and changing commercial risks, from
time to time. The Board meets regularly with at least 2 half yearly scheduled meetings within each financial year. Special
and ad-hoc meetings will be convened as and when circumstances require. The Company's Articles of Association allow
Board meetings to be held by way of conference telephone and other electronic communications equipment.
During the financial year under review, the number of meetings of the Board and Board Committees held and the
attendance of the Directors at such meetings are as follows:
Name Board Audit Committee Nominating
Committee
No. of
meetings
Attendance
No. of
meetings
Attendance
No. of Attendance
meetings
Remuneration
Committee
No. of
meetings
Attendance
Ong Chu Poh 2 2 2 2 1 1 1 1
Koh Hin Ling 2 2 2 1 1 1 1 1
Wong Kook Fei 2 2 2 2 1 1 1 1
Dr Tan Hung Yong 2 1 2 1 1 1 1 1
Richard
Li Ling Xia (1)
Alternate Director,
Chow Hock Meng)
1 0 1 0 - - 1 0
(1) Resigned on 13 July 20087
China Healthcare Limited • Annual Report 2008
Report On Corporate Governance
15
Board Composition & Guidance
The Board at the date of this report comprises 4 directors, namely:
Ong Chu Poh
Koh Hin Ling
Wong Kook Fei
Dr Tan Hung Yong Richard
(Chairman and Managing Director)
(Executive Director)
(Independent Director)
(Independent Director)
The independence of each director is reviewed annually by the Nominating Committee. The Nominating Committee
adopts the Code’s definition of what constitutes an independent director in its review.
The Board is of the opinion that, given the scope and nature of the operations of the Group, the present size of the Board is
appropriate for effective decision making. The composition is reviewed annually by the Nominating Committee to ensure
that the Board has the appropriate mix of expertise and experience.
Chairman and Chief Executive Officer (“CEO”)
The Chairman and Managing Director of the Company is Mr Ong Chu Poh. He is responsible to the Board for the corporate
directions and operational efficiency, development and review of the Group’s policies and strategies and ensuring a
cohesive working relationship and timeliness of information flow between the Board and management.
The Board is of the view that it is not necessary to separate the role of Chairman and CEO given the present Group
corporate structure, scope of operations and the presence of 2 competent and professional independent directors.
Board Membership
The Nominating Committee comprises Mr Wong Kook Fei, Chairman of the Committee, Mr Ong Chu Poh and Dr Tan Hung
Yong Richard. The responsibilities of the Nominating Committee are to identify candidates and review all nominations and
re-nominations for the appointments of Board members, evaluate the effectiveness and performance of the Board and
individual Directors, and review the independence of the Directors annually.
All Directors who are appointed by the Board are subject to re-election by shareholders at the next Annual General
Meeting (“AGM”). In addition, pursuant to the Company’s Articles of Association, at least one third of the Directors other
than the Managing Director, are required to retire by rotation and submit themselves for re-election at each AGM.
Board Performance
The Nominating Committee recommends to the Board how the Board’s performance is to be evaluated and propose
objective performance criteria which address how the Board can enhance long-term shareholders’ value. The Board
also implements a process to be carried out by the Nominating Committee for assessing the effectiveness of the Board
as a whole and the contribution of each director to the effectiveness of the Board. Each member of the Nominating
Committee shall abstain from voting on any resolutions in respect of the assessment of his performance or re-nomination
as director.
Access to Information
In order to ensure that the Board is able to fulfill its responsibilities, the management is required to provide the Board with
complete, adequate information in a timely manner.
The Board is provided with the relevant background information relating to the business of the meeting, information on
major operational, financial and corporate issues. In respect of budgets, any material variance between the projections
and actual results are disclosed and explained.
The Board has separate and independent access to senior management and the Company Secretary at all times. It is the
responsibility of the Company Secretary to attend all Board meetings and to ensure that Board procedures are followed
and that applicable rules and regulations are complied with.
16
China Healthcare Limited • Annual Report 2008
Report On Corporate Governance
REMUNERATION MATTERS
Procedures for Developing Remuneration Policies
The Remuneration Committee is chaired by Dr Tan Hung Yong Richard with Mr Wong Kook Fei and Mdm Koh Hin Ling
as members.
The Remuneration Committee reviews and recommends to the Board a framework of remuneration for the directors and
key executives, and determines specific remuneration packages for each executive director. The recommendations of the
Remuneration Committee are submitted for endorsement by the entire Board. All aspects of remuneration, including but
not limited to directors’ fees, salaries, allowances, bonuses, options and benefits-in-kind are covered by the Remuneration
Committee. Each member of the Remuneration Committee shall abstain from voting on any resolutions in respect of this
own remuneration package.
Level & Mix of Remuneration
The Group’s remuneration policy is to provide compensation packages at market rates which reward successful
performance and attract, retain and motivate the Directors and key executives.
The Independent Directors receive directors’ fees, in accordance with their contributions, taking into account factors such
as effort and time spent and responsibilities of the directors. The Directors’ fees are recommended and endorsed by the
Board for approval by shareholders of the Company at the AGM.
Disclosure on Remuneration
The breakdown, showing the level and mix of each individual Director’s remuneration in FY2008 is as follows:
Remuneration Band & Name of
Director
Base/Fixed
Salary
Director’s
fees
Variable or performance
related income
bonuses,
benefits-in-kind, stock
options, others
S$250,000 to S$499,999
Ong Chu Poh
95% - 5%
Below S$250,000
Koh Hin Ling
Wong Kook Fei
Dr Tan Hung Yong Richard
Li Ling Xia (1)
(Alternate Director, Chow Hock Meng)
95%
-
-
-
-
100%
100%
100%
5%
-
-
-
(1) Resigned on 13 July 20087
Our top Executives (who are not Directors) of the Group fall within the remuneration band of below S$150,000.
Dr Edward Gan - General Manager, Overseas Business Development
Ms Teo Lili - Human Resource Manager
Tan Meng Guek - Head of Operations
Sally Lum - Director of Marketing
Daniel Goh - Financial Controller
None of the employees of the Company was an immediate family member of a Director or the CEO and whose remuneration
exceeded S$150,000 during the year.
China Healthcare Limited • Annual Report 2008
Report On Corporate Governance
17
ACCOUNTABILITY AND AUDIT
Accountability
It is the aim of the Board to provide shareholders with detailed analysis, explanation and assessment of the Group’s
performance, financial position and prospects. Management currently provides the Board with detailed management
accounts of the Group’s performance, financial position and prospects on a quarterly basis.
Audit Committee
The Audit Committee consists of three members, two of whom are independent. The Audit Committee is chaired by Mr
Wong Kook Fei and has as its members, Dr Tan Hung Yong Richard and Mdm Koh Hin Ling who is an executive Director.
The Nominating Committee is of the opinion that as majority of the Audit Committee members are independent and nonexecutive,
the Audit Committee is able to exercise objective judgement independently. The Audit Committee has explicit
authority to investigate any matter within its terms of reference, full access to and co-operation by Management and
full discretion to invite any director or executive officer to attend its meetings, and reasonable resources to enable it to
discharge its functions properly.
The Audit Committee met twice during the financial year. In performing its functions, the Audit Committee, meets to, inter
alia, discuss and review:
• audit plan of the Company’s external auditors;
• external auditors' report;
• assistance provided by the Company's officers to the external auditors;
• the scope and results of internal audit procedures;
• the financial statements of the Group and of the Company prior to their submission to the Board of the Company
for approval;
• the Company's half-year and full-year results announcements; and
• all interested person transactions.
The Audit Committee meets with the external auditors, without the presence of management, at least annually.
The Audit Committee reviews the independence of the external auditors annually. In particular, the Audit Committee
undertakes a review of all non-audit services that are provided by the external auditors and is satisfied that the provision
of such services has not affected the independence of the external auditors.
Internal Controls
The Board is responsible for ensuring that Management maintains a sound system of internal controls to safeguard
shareholder investments and Group's assets. The Board believes that, in the absence of any evidence to the contrary
and from due enquiry, the system of internal controls maintained by the Company's management that has been in place
throughout the financial year and up to the date of this report is adequate to meet the needs of the Group in the current
business environment. The system of internal controls is designed to manage rather than to eliminate the risk of failure
to achieve business objectives. As such, the controls can only provide reasonable but not absolute assurance against
material misstatement or loss.
The Board has adopted a set of internal controls which sets out approval limits for expenditure, investments and cheque
signatory arrangements. The effectiveness of the internal control system and procedures is monitored by management
and reviewed by the Board.
The Board is satisfied that there are adequate internal controls in the Company.
Internal Audit
The Group outsources its internal audit function to a firm of Certified Public Accountants, namely BDO Consultants
Raffles Singapore. The Internal Auditor's primary line of reporting is directly to the Chairman of the Audit Committee.
Administratively, the Internal Auditor reports to the Managing Director of the Company. The Internal Auditor reviews,
identifies and analyses the risks incurred by the Group in its activities and examines if there are any material noncompliance
and internal control weaknesses. The Audit Committee will oversee and monitor the implementation of any
improvements thereto.
18
China Healthcare Limited • Annual Report 2008
Report On Corporate Governance
COMMUNICATION WITH SHAREHOLDERS
In line with the continuing disclosure obligations of the Company pursuant to the SGX-ST's Listing Manual and the
Singapore Companies Act, the Board's policy is that all shareholders should be equally informed of all major developments
that impact the Group in a timely manner. Half year and full year results and other major developments of the Group are
published via SGXNET and press releases. The Company maintains a corporate website at www.chinahealthcare.com
at which shareholders can access information on the Group. The website provides corporate announcements, press
releases and disclosures to the SGX-ST.
The Company encourages its shareholders to attend the AGM to ensure a high level of accountability. The Annual Report,
together with the Notice of AGM, are dispatched to the shareholders at least 14 days prior to the meeting. The Board
welcomes the views of shareholders on matters affecting the Company at the AGM and the Chairmen of the Audit,
Remuneration and Nominating Committees are normally available at the meeting to answer questions relating to the work
of these committees.
DEALING IN SECURITIES
The Company has observed and compiled with Rule 120 (18) of the SGX-ST’s Listing Manual in relation to dealings in the
Company’s securities by Directors and executives of the Company.
The Company has advised directors and all key executives not to deal in the Company’s shares while in possession of
price sensitive information and during the period commencing 1 month prior to each announcement of financial results
by the Company and ending on the date of the announcement of the results.
Directors and executives are also expected to observe insider-trading laws at all times even when dealing in securities
within permitted trading periods.
MATERIAL CONTRACTS [RULE 1207(8) OF SGX-ST LISTING MANUAL]
Except as disclosed in the financial statements, there are no material contracts of the Company or its subsidiaries involving
the interests of the Chief Executive officer, each director or controlling shareholder of the Company either still subsisting at
the end of the financial year or if not then subsisting, entered into since the end of the previous financial year.
Interested Person Transactions
The Company has adopted an internal policy in respect of any transactions with interested persons and has set out the
procedures for review and approval of interested person transactions. All interested person transactions are reviewed
and approved by the Audit Committee.
For the financial year ended 31 March 2008, there were no interested person transactions that required disclosure under
Rule 907 of the SGX-ST Listing Manual.
China Healthcare Limited • Annual Report 2008
Risk Management Policies & Process
19
Pursuant to Rule 1207 (4) (b) (iv) of the SGX-ST Listing Manual, the operating and financial risk management policies and
processes of the Group are summarized as follows:
OPERATING RISK
Management Growth
The growth of our Group in the past few years has resulted in added responsibilities for overseeing the expansion and
enhancing our service quality. In order to meet the demands of our current and future projects, we will need to attract,
motivate and retain a significant number of professionals who have relevant industry experiences to drive the growth. We
will continue to attract more talents into our Group and to motivate and retain such professionals at a competitive cost,
as well as improve the operational efficiency and financial management of our Group in order to manage and sustain our
growth effectively.
Enhancement of Quality Service
Our marketing activities are limited as a result of the stringent Ministry of Health promotion guidelines. Consequently, we
rely on personal references from our existing network or residents and their family members, relatives, friends and doctors.
References are also received from other institutions such as hospitals, voluntary welfare organizations and community
clubs. The decline in quality services that we provide may cause cessation or reduction of these referrals. We will continue
to train our staff to upgrade their competencies and skills. We jointly collaborate with PSB Corporation in the development
and conducting of training programmes in healthcare services and nursing under the National Skill Recognition System
(“NSRS”). The system requires organizations to establish work performance standards to consistently deliver quality
goods and services.
Competition
Despite the high barriers to entry, other healthcare providers have facilities and personnel to provide healthcare services
similar to that of our Group. The Group’s continued success depends on the ability to compete effectively with its
competitors. We intend to upgrade our existing nursing homes to medicare centres, where feasible, and to build more
facilities to meet the increasing demand. Besides the upgrading of the infrastructure, we emphasize on quality services.
We conduct in-house training for our nursing staff regularly to ensure our nursing care services provided to our customers
are enhanced. Such a strategy has enabled our Group to enjoy significant growth in recent years and we believe we will
continue to lead the commercial nursing home market in Singapore.
Risk Associated with Future Acquisitions
Besides the acquisition of land to construct new medicare centres, we intend to pursue other strategic acquisitions
as part of our plan to provide our Group with complementary services, customer bases, technologies and qualified
professionals. Such acquisitions present risks that could potentially have an adverse effect on the Group’s operations
and earnings, such as diversion of management’s attention, anticipated returns not being achieved and amortization
of goodwill and intangible assets. We will continue to adopt a cautious approach and to exercise due diligence when
considering all material acquisitions.
FINANCIAL RISKS
Our Group’s financial risks are set out on page 58 under Note 23 to the financial statements.
Financial Contents
China Healthcare Limited • Annual Report 2008
21
Directors’ Report
We are pleased to submit this annual report to the members of the Company together with the audited financial statements
for the financial year ended 31 March 2008.
DIRECTORS
The directors of the Company in office at the date of this report are as follows:
Mr Ong Chu Poh
Mdm Koh Hin Ling
Mr Wong Kook Fei
Dr Tan Hung Yong Richard
DIRECTORS’ INTERESTS
According to the register kept by the Company for the purposes of Section 164 of the Companies Act, Chapter 50 (the Act),
particulars of interests of directors who held office at the end of the financial year (including those held by their spouses
and infant children) in shares, debentures, warrants and share options in the Company and in related corporations (other
than wholly-owned subsidiaries) are as follows:
Number of ordinary shares
Shares registered
in the name of Director
Shares in which Director
is deemed to have an interest
Name of director and corporations
in which interests are held
The Company –
China Healthcare Limited
Holdings
at beginning
of the year
Holdings
at end
of the year
Holdings
at beginning
of the year
Holdings
at end
of the year
Mr Ong Chu Poh 12,114,850 15,749,305 69,796,150 91,592,994
Mdm Koh Hin Ling 2,700,017 3,510,022 79,210,983 103,832,277
Mr Wong Kook Fei 100,000 100,000 - -
Dr Tan Hung Yong Richard 300,000 300,000 - -
TMI Holdings (1997) Pte Ltd
Mr Ong Chu Poh 9,334,137 9,334,137 429,606 429,606
Mdm Koh Hin Ling 429,606 429,606 9,334,137 9,334,137
22
China Healthcare Limited • Annual Report 2008
Directors’ Report
By virtue of Section 7 of the Act, Mr Ong Chu Poh and Mdm Koh Hin Ling are deemed to have interests in all the
subsidiaries of the Company, at the beginning and at the end of the financial year.
Except as disclosed in this report, no director who held office at the end of the financial year had interests in shares,
debentures, warrants or share options of the Company, or of related corporations, either at the beginning or at the end of
the financial year.
There were no changes in any of the above mentioned interests in the Company between the end of the financial year
and 21 April 2008.
Except as disclosed under the “Share Options” section of this report, neither at the end of, nor at any time during the
financial year, was the Company a party to any arrangement whose objects are, or one of whose objects is, to enable the
directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or
any other body corporate.
Except for salaries, bonuses and fees and those benefits that are disclosed in this report and in note 25 to the financial
statements, since the end of the last financial year, no director has received or become entitled to receive, a benefit
by reason of a contract made by the Company or a related corporation with the director, or with a firm of which he is a
member, or with a company in which he has a substantial financial interest.
SHARE OPTIONS
The China Healthcare Employees’ Share Option Scheme (the Scheme) of the Company was approved and adopted by
its members at an Extraordinary General Meeting held on 23 October 2002.
The Scheme is administered by the Remuneration Committee comprising:
Dr Tan Hung Yong Richard, Chairman
Mr Wong Kook Fei
Mdm Koh Hin Ling
(Independent Director)
(Independent Director)
(Executive Director)
The Scheme applies to directors of the Company and employees of the Group. Persons who are controlling shareholders
or their associates are not eligible to participate in the Scheme.
A controlling shareholder is a person who:
(i)
(ii)
holds directly or indirectly 15% or more of the nominal amount of all voting shares in the Company. The Singapore
Exchange Securities Trading Limited (SGX-ST) may determine that a person who satisfies this paragraph is not a
controlling shareholder; or
in fact exercises control over the Company.
The size of the Scheme shall not exceed 15 per cent of the issued share capital of the Company on the day preceding
the date of grant of options.
Directors’ Report
China Healthcare Limited • Annual Report 2008
23
Other information regarding the Scheme is set out below:
(i)
The subscription price of the options will be:
(a)
(b)
at the market price, based on the average of the last dealt prices per share determined by reference to the
daily official list published by the SGX-ST for a period of 5 consecutive market days immediately prior to the
relevant date of grant; or
at a price which is set at a discount to the market price. The maximum discount shall not exceed 20 per cent
of the market price.
(ii)
Options granted with the subscription price set at the market price may be exercised in multiples of 1,000, in whole
or in part, as follows:
(a)
(b)
up to 50 per cent of the option at any time after 12 months of the date of grant of that option; and
the balance 50 per cent of the option at any time after 24 months of the date of grant of that option.
Provided always that an option shall be exercised before the end of 120 months (or 60 months where the participant
is a non-executive director) of the date of grant of that option and subject to such other conditions as may be
introduced by the Remuneration Committee from time to time.
Options granted with the subscription price set at a discount to the market price may only be exercised after 2
years from the date of grant, in multiples of 1,000, in whole or in part, as follows:
(a)
(b)
up to 50 per cent of such options at any time after 36 months from the date of grant of that option; and
the balance 50 per cent at any time after 48 months of the date of grant of that option.
Provided always that such option shall be exercised before the end of 120 months (or 60 months where the
participant is a non-executive director) of the date of grant of that option and subject to such other conditions as
may be introduced by the Remuneration Committee from time to time.
(iii)
The Scheme shall continue to be in force at the discretion of the Remuneration Committee, subject to a maximum
of 10 years commencing on the date upon which the Scheme is adopted by the shareholders at a general meeting.
Provided always that the Scheme may continue beyond the above stipulated period with the approval of the
shareholders by way of an ordinary resolution passed at a general meeting and of any relevant authorities which
may then be required.
During the financial year, there were:
(i)
(ii)
no options granted by the Company or its subsidiaries to any person to take up unissued shares in the Company
or its subsidiaries; and
no shares issued by virtue of any exercise of option to take up unissued shares of the Company or its
subsidiaries.
As at the end of the financial year, there were no unissued shares of the Company or its subsidiaries under option.
24
China Healthcare Limited • Annual Report 2008
Directors’ Report
AUDIT COMMITTEE
The members of the Audit Committee at the date of this report are:
Mr Wong Kook Fei, Chairman
Dr Tan Hung Yong Richard
Mdm Koh Hin Ling
(Independent Director)
(Independent Director)
(Executive Director)
The Audit Committee performs the functions specified in Section 201B of the Companies Act, the Listing Manual, the
Best Practices Guide of the Singapore Exchange and the Code of Corporate Governance. The functions performed are
detailed in the Report on Corporate Governance.
The Audit Committee is satisfied with the independence and objectivity of the external auditors and has recommended to
the Board of Directors that the auditors, KPMG, be nominated for re-appointment as auditors at the forthcoming Annual
General Meeting of the Company.
AUDITORS
The auditors, KPMG, have indicated their willingness to accept re-appointment.
On behalf of the Board of Directors
Ong Chu Poh
Director
Koh Hin Ling
Director
18 June 2008
Statement by Directors
China Healthcare Limited • Annual Report 2008
25
In our opinion:
(a)
(b)
the financial statements set out on pages 27 to 65 are drawn up so as to give a true and fair view of the state of
affairs of the Group and of the Company as at 31 March 2008 and the results, changes in equity and cash flows
of the Group for the year ended on that date in accordance with the provisions of the Singapore Companies Act,
Chapter 50 and Singapore Financial Reporting Standards; and
at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts
as and when they fall due.
The Board of Directors has, on the date of this statement, authorised these financial statements for issue.
On behalf of the Board of Directors
Ong Chu Poh
Director
Koh Hin Ling
Director
18 June 2008
26
China Healthcare Limited • Annual Report 2008
Independent Auditors’ Report
Members of China Healthcare Limited
We have audited the financial statements of China Healthcare Limited (the Company) and its subsidiaries (the Group),
which comprise the balance sheets of the Group and the Company as at 31 March 2008, the income statement, statement
of changes in equity and cash flow statement of the Group for the year then ended, and a summary of significant
accounting policies and other explanatory notes, as set out on pages 27 to 65.
Management’s responsibility for the financial statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with the
provisions of the Singapore Companies Act, Chapter 50 (the Act) and Singapore Financial Reporting Standards. This
responsibility includes:
(a)
(b)
(c)
devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance
that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly
authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss
accounts and balance sheets and to maintain accountability of assets;
selecting and applying appropriate accounting policies; and
making accounting estimates that are reasonable in the circumstances.
Auditors’ responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in
accordance with Singapore Standards on Auditing. Those Standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Opinion
In our opinion:
(a)
(b)
the consolidated financial statements of the Group and the balance sheet of the Company are properly drawn up
in accordance with the provisions of the Act and Singapore Financial Reporting Standards to give a true and fair
view of the state of affairs of the Group and of the Company as at 31 March 2008 and of the results, changes in
equity and cash flows of the Group for the year ended on that date; and
the accounting and other records required by the Act to be kept by the Company and by those subsidiaries
incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions
of the Act.
KPMG
Public Accountants and
Certified Public Accountants
Singapore
18 June 2008
Balance Sheet
as at 31 March 2008
China Healthcare Limited • Annual Report 2008
27
Group
Company
Restated
Note 2008 2007 2008 2007
$ $ $ $
Non-current assets
Property, plant and equipment 3 44,124,135 39,369,374 29,741,792 29,720,095
Subsidiaries 4 - - 6,031,932 6,031,929
Associate 5 1,425,861 1,291,094 - -
Deposits for proposed acquisition of a
subsidiary and an associate 1,988,255 - - -
Current assets
47,538,251 40,660,468 35,773,724 35,752,024
Inventories 6 112,063 124,127 - -
Trade and other receivables 7 3,704,965 2,233,530 13,034,716 7,888,159
Other investments 8 1,078,966 283,024 1,078,966 283,024
Cash and cash equivalents 9 4,724,478 1,177,206 2,964,066 468,009
9,620,472 3,817,887 17,077,748 8,639,192
Total assets 57,158,723 44,478,355 52,851,472 44,391,216
Equity attributable to equity holders of
the Company
Share capital 10 28,456,839 17,633,743 28,456,839 17,633,743
Currency translation reserve 11 3,044 3,302 - -
Merger deficit 11 (1,485,364) (1,485,364) - -
Accumulated profits 2,627,873 3,126,350 197,000 1,534,443
Total equity 29,602,392 19,278,031 28,653,839 19,168,186
Non-current liabilities
Interest-bearing borrowings 12 17,978,269 18,131,522 16,310,790 18,131,522
Deferred tax liabilities 13 551,172 541,365 59,076 59,076
18,529,441 18,672,887 16,369,866 18,190,598
Current liabilities
Trade and other payables 14 3,273,145 2,973,397 4,256,733 3,627,391
Interest-bearing borrowings 12 5,505,666 3,283,141 3,502,942 3,283,141
Current tax payable 248,079 270,899 68,092 121,900
9,026,890 6,527,437 7,827,767 7,032,432
Total liabilities 27,556,331 25,200,324 24,197,633 25,223,030
Total equity and liabilities 57,158,723 44,478,355 52,851,472 44,391,216
The accompanying notes form an integral part of these financial statements.
28
China Healthcare Limited • Annual Report 2008
Consolidated Income Statement
year ended 31 March 2008
Restated
Note 2008 2007
$ $
Revenue 15 18,646,635 16,259,214
Other income 59,223 143,704
Negative goodwill 20 - 719,559
Supplies and consumables (2,685,779) (2,527,409)
Staff costs (8,910,979) (7,809,015)
Depreciation of property, plant and equipment 3 (1,302,970) (1,111,633)
Operating lease expense (1,439,907) (1,346,074)
Utilities (637,138) (591,431)
(Loss)/gain on fair value on investments held for trading (985,010) 75,584
Impairment loss on goodwill on consolidation - (185,749)
Impairment loss on equity securities available-for-sale 8 - (1,999,000)
Impairment loss on trade receivables 20 - (217,102)
Other operating expenses (2,201,859) (1,741,088)
Results from operating activities 542,216 (330,440)
Finance income 22,132 27,913
Finance expense (963,876) (1,001,038)
Net finance expense 17 (941,744) (973,125)
Share of profit in associate (net of tax) 134,767 102,955
Loss before income tax (264,761) (1,200,610)
Income tax expense 18 (233,716) (232,595)
Loss for the year 16 (498,477) (1,433,205)
Attributable to:
Equity holders of the parent (498,477) (1,270,324)
Minority interests - (162,881)
Loss for the year (498,477) (1,433,205)
Earnings per share (cents)
Basic 19 (0.29) (0.80)
Diluted 19 (0.29) (0.80)
The accompanying notes form an integral part of these financial statements.
China Healthcare Limited • Annual Report 2008
29
Consolidated Statement of Changes in Equity
year ended 31 March 2008
Note
Share
capital
Currency
translation
reserve
Merger
deficit
Accumulated
profits
Total
attributable
to equity
holders of
the parent
Minority
interests
$ $ $ $ $ $ $
Total
equity
At 1 April 2006 17,633,743 1,313 (1,485,364) 4,396,674 20,546,366 756,682 21,303,048
Translation differences relating to
financial statements of subsidiaries - 1,989 - - 1,989 - 1,989
Net gain recognised directly in equity - 1,989 - - 1,989 - 1,989
Loss for the year, as previously stated - - - (828,251) (828,251) (162,881) (991,132)
Prior year adjustments 20 - - - (442,073) (442,073) - (442,073)
Loss for the year, restated - - - (1,270,324) (1,270,324) (162,881) (1,433,205)
Total recognised income and expense
for the year - 1,989 - (1,270,324) (1,268,335) (162,881) (1,431,216)
Purchase of equity interest from
minority shareholder - - - - - (593,801) (593,801)
At 31 March 2007 17,633,743 3,302 (1,485,364) 3,126,350 19,278,031 - 19,278,031
At 1 April 2007, as previously stated 17,633,743 3,302 (1,485,364) 3,568,423 19,720,104 - 19,720,104
Prior year adjustments 20 - - - (442,073) (442,073) - (442,073)
At 1 April 2007, restated 17,633,743 3,302 (1,485,364) 3,126,350 19,278,031 - 19,278,031
Translation differences relating to
financial statements of subsidiaries - (258) - - (258) - (258)
Net loss recognised directly in equity - (258) - - (258) - (258)
Loss for the year - - - (498,477) (498,477) - (498,477)
Total recognised income and expense
for the year - (258) - (498,477) (498,735) - (498,735)
Issue of shares under private placement 5,030,000 - - - 5,030,000 - 5,030,000
Issue of shares from right issue 5,793,096 - - - 5,793,096 - 5,793,096
At 31 March 2008 28,456,839 3,044 (1,485,364) 2,627,873 29,602,392 - 29,602,392
The accompanying notes form an integral part of these financial statements.
30
China Healthcare Limited • Annual Report 2008
Consolidated Cash Flow Statement
year ended 31 March 2008
Restated
Note 2008 2007
$ $
Operating activities
Loss before income tax (264,761) (1,200,610)
Adjustments for:
Negative goodwill 20 - (502,457)
Impairment loss on goodwill - 185,749
Impairment loss on equity securities available-for-sale - 1,999,000
Dividend income (10,139) (7,589)
Depreciation of property, plant and equipment 3 1,302,970 1,111,633
Gain on disposal of property, plant and equipment - (6,897)
Write-off of property, plant and equipment 525 -
Share of profit of associate (134,767) (102,955)
Gain arising from waiver of interest by minority shareholder - (52,223)
Interest income (4,323) (19,834)
Gain on disposal of equity securities held for trading (7,670) (490)
Interest expense 905,968 987,602
Net change in fair value of investments held for trading 985,010 (75,584)
Exchange loss on investing activities 34,463 2,611
2,807,276 2,317,956
Changes in working capital:
Inventories 12,064 (55,015)
Trade and other receivables (1,471,435) (781,930)
Trade and other payables 299,748 (189,840)
Cash generated from operations 1,647,653 1,291,171
Income taxes paid (246,729) (296,211)
Cash flows from operating activities 1,400,924 994,960
Investing activities
Interest received 4,323 19,834
Dividend received 10,139 7,589
Deposits for proposed acquisition of a subsidiary and an associate (1,988,255) -
Purchase of property, plant and equipment (4,758,745) (1,694,175)
Purchase of equity securities held for trading (1,853,817) -
Proceeds from sale of property, plant and equipment - 40,823
Proceeds from sale of equity securities held for trading 80,535 9,800
Fixed deposit charged to bank - 37,996
Purchase of additional equity interest in subsidiary 21 - (992,105)
Cash flows from investing activities (8,505,820) (2,570,238)
Financing activities
Interest paid (905,968) (966,218)
Payment of finance lease liabilities (251,053) (22,889)
Deposit pledged with the bank 4,099 -
(Repayments of)/ proceeds from borrowings (340,921) 335,295
Net proceeds from issuance of shares 10,823,096 -
Cash flows from financing activities 9,329,253 (653,812)
Net increase/(decrease) in cash and cash equivalents 2,224,357 (2,229,090)
Cash and cash equivalents at beginning of the year 899,150 3,128,240
Cash and cash equivalents at end of the year 9 3,123,507 899,150
The accompanying notes form an integral part of these financial statements.
China Healthcare Limited • Annual Report 2008
Notes to the Financial Statement
31
These notes form an integral part of the financial statements.
The financial statements were authorised for issue by the Board of Directors on 18 June 2008.
1 DOMICILE AND ACTIVITIES
China Healthcare Limited (the Company) is incorporated in the Republic of Singapore and has its principal place of
business at 20 Jalan Afifi, #06-02/03/04, CISCO Centre II, Singapore 409179.
The principal activities of the Group and the Company are those relating to the operation of medicare centres and
nursing homes, provision of hospital extension ward management services, homecare services and ambulance
services, letting of properties and investment holding.
The immediate and ultimate holding companies during the financial year are Econ Medicare Centre Holdings Pte Ltd
and TMI Holdings (1997) Pte Ltd, respectively. Both are incorporated in the Republic of Singapore.
The consolidated financial statements relate to the Company and its subsidiaries (together referred to as the Group)
and the Group’s interests in an associate.
2 SUMMARY OF 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 on the historical cost basis, except as disclosed in the accounting
policies set out below.
The financial statements are presented in Singapore dollars which is the Company’s functional currency.
The preparation of financial statements in conformity with FRS requires management to make judgements,
estimates and assumptions that affect the application of accounting policies and the reported amounts of
assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimates are revised and in any future periods affected. In particular,
information about significant areas of estimation uncertainty and critical judgements in applying accounting
policies that have the most significant effect on the amount recognised in the financial statements are described
in note 26.
The accounting policies set out below have been applied consistently by the Group. The accounting policies
used by the Group have been applied consistently to all periods presented in these financial statements.
2.2 Consolidation
Acquisitions from entities under common control
Business combinations arising from transfers of interests in entities that are under the control of the shareholder
that controls the Group are accounted for as if the acquisition had occurred at the beginning of the earliest
comparative period presented or, if later, at the date that common control was established; for this purpose,
comparatives are restated. The assets and liabilities acquired are recognised at the carrying amounts
recognised previously in the Group’s controlling shareholder’s consolidated financial statements. Any difference
between the amount recorded as share capital issued plus any additional consideration in the form of cash or
other assets and the amount recorded for the share capital acquired are adjusted against equity.
Business combinations
Business combinations are accounted for under the purchase method. The cost of an acquisition is measured
at the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of
exchange, plus costs directly attributable to the acquisition.
The excess of the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent
liabilities over the cost of acquisition is credited to the income statement in the period of the acquisition.
32
China Healthcare Limited • Annual Report 2008
Notes to the Financial Statement
2.2 Consolidation (cont’d)
Subsidiaries
Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the
financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control,
potential voting rights that presently are exercisable are taken into account. The financial statements of
subsidiaries are included in the consolidated financial statements from the date that control commences until
the date that control ceases.
Associates
Associates are those entities in which the Group has significant influence, but not control, over their financial
and operating policies. Significant influence is presumed to exist when the Group holds between 20% and
50% of the voting power of another entity. Associates are accounted for using the equity method.
The consolidated financial statements include the Group’s share of the post-acquisition results and reserves
of associates, after adjustments to align the accounting policies with those of the Group, from the date that
significant influence commences until the date that significant influence ceases. The latest audited financial
statements of the associates are used and where these are not available, unaudited financial statements are
used. Any significant differences between the unadjusted financial statements and the audited financial
statements obtained subsequently are adjusted for in the subsequent financial year.
Where the Group’s share of losses exceeds its interest in an associate, the carrying amount of that interest is
reduced to zero and the recognition of further losses is discontinued except to the extent that the Group has
an obligation or has made payments on behalf of the associate.
Transactions eliminated on consolidation
Intra-group balances, and any unrealised income or expenses arising from intra-group transactions, are
eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with
equity accounted investees are eliminated against the investment to the extent of the Group’s interest in the
investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that
there is no evidence of impairment.
Accounting for subsidiaries and associate
Investments in subsidiaries and an associate are stated in the Company’s balance sheet at cost less
accumulated impairment losses.
2.3 Affiliates
An affiliate is defined as one, other than a related corporation, which has common direct or indirect shareholders
or common directors with the Company.
Amounts due from affiliates are stated at cost less allowance for doubtful receivables.
2.4 Foreign currencies
Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of Group entities at
the exchange rate at the date of the transaction. The functional currencies of the Group entities are mainly the
Singapore Dollars. Monetary assets and liabilities denominated in foreign currencies at the reporting date are
retranslated to the functional currency at the exchange rate at the reporting date. Non-monetary assets and
liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional
currency at the exchange rate at the date on which the fair value was determined.
Foreign currency differences arising on retranslation are recognised in the income statement.
China Healthcare Limited • Annual Report 2008
Notes to the Financial Statement
33
2.4 Foreign currencies (cont’d)
Foreign operations
The assets and liabilities of foreign operations including goodwill and fair value adjustments arising on the
acquisition of foreign operations are translated to Singapore dollars for consolidation at the rates of exchange
ruling at the balance sheet date. Revenue and expenses of foreign operations are translated at the average
exchange rates for the year. Exchange differences arising on translation are recognised directly in equity. On
disposal, the accumulated translation differences are recognised in the consolidated income statement as part
of the gain or loss on sale.
2.5 Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.
Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed
assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the
asset to a working condition for its intended use, and the cost of dismantling and removing the items and
restoring the site on which they are located. Purchased software that is integral to the functionality of the
related equipment is capitalised as part of that equipment.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as
separate items (major components) of property, plant and equipment.
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of
the item if it is probable that the future economic benefits embodied within the part will flow to the Group and
its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are
recognised in the income statement as incurred.
Property, plant and equipment acquired through finance leases is capitalised at the lower of its fair value and
the present value of the minimum lease payments at the inception of the lease, less accumulated depreciation
and impairment losses. Lease payments are apportioned between the finance charges and reduction of the
lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance
charges are charged directly against the income statement. Capitalised leased assets are depreciated over
the shorter of the economic useful life of the asset and the lease term.
Freehold land and property under construction are not depreciated. Depreciation on other property, plant and
equipment is recognised in the income statement on a straight-line basis over the estimated useful lives (or
lease term, if shorter) of each part of an item of property, plant and equipment.
The estimated useful lives are as follows:
Freehold buildings
Leasehold buildings
Leasehold improvements
Nursing home and hospital equipment
Ambulances and medical equipment
Furniture and fittings
Office and other equipment
Renovations
Motor vehicles
Computers and accessories
50 years
remaining lease period
shorter of 3% and remaining lease period
10 years
5 years
10 years
5 years
shorter of 20% and remaining lease period
5 years
3 years
Depreciation methods, useful lives and residual values are reviewed, and adjusted as appropriate, at each
balance sheet date.
34
China Healthcare Limited • Annual Report 2008
Notes to the Financial Statement
2.6 Financial instruments
Non-derivative financial instruments
Non-derivative financial instruments comprise investments in equity securities, trade and other receivables,
cash and cash equivalents, financial liabilities and trade and other payables.
Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value
through income statement, any directly attributable transaction costs, except as described below. Subsequent
to initial recognition, non-derivative financial instruments are measured as described below.
A financial instrument is recognised if the Group becomes a party to the contractual provisions of the
instrument. Financial assets are derecognised if the Group’s contractual rights to the cash flows from the
financial assets expire or if the Group transfers the financial asset to another party without retaining control or
transfers substantially all the risks and rewards of the asset. Financial liabilities are derecognised if the Group’s
obligations specified in the contract expire or are discharged or cancelled.
Cash and cash equivalents comprise cash balances and bank deposits. Bank overdrafts that are repayable on
demand and that form an integral part of the Group’s cash management are included as a component of cash
and cash equivalents for the purpose of the cash flow statement.
Investment at fair value through income statement
An instrument is classified as fair value through income statement if it is held for trading or is designated as
such upon initial recognition. Financial instruments are designated as fair value through income statement
if the Group manages such investments and makes purchase and sale decisions based on their fair value.
Upon initial recognition, attributable transaction costs are recognised in the income statement when incurred.
Financial instruments at fair value through income statement are measured at fair value, and changes therein
are recognised in the income statement.
Available-for-sale financial assets
The Group’s investments in unquoted equity securities are classified as available-for-sale financial assets.
Subsequent to initial recognition, they are measured at fair value and changes therein, other than for impairment
losses, are recognised directly in equity. When an investment is derecognised, the cumulative gain or loss in
equity is transferred to the income statement.
Where these financial instruments do not have quoted market prices in an active market and other methods of
determining fair value do not result in a reasonable estimate, they are stated at cost less impairment losses.
Other
Other non-derivative financial instruments are measured at amortised cost using the effective interest method,
less any impairment losses.
Derivative financial instruments and hedging activities
The Group does not hold derivative financial instruments or engage in hedging activities.
Impairment of financial assets
A financial asset is assessed at each reporting date to determine whether there is any objective evidence that
it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more
events have had a negative effect on the estimated future cash flows of that asset.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference
between its carrying amount, and the present value of the estimated future cash flows discounted at the original
effective interest rate. An impairment loss in respect of an available-for-sale financial asset is calculated by
reference to its current fair value.
Individually significant financial assets are tested for impairment on an individual basis. The remaining financial
assets are assessed collectively in groups that share similar credit risk characteristics.
All impairment losses are recognised in the income statement. Any cumulative loss in respect of an availablefor-sale
financial asset recognised previously in equity is transferred to the income statement.
An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment
loss was recognised. For financial assets measured at amortised cost, the reversal is recognised in the income
statement. For available-for-sale financial assets that are equity securities, the reversal is recognised directly
in equity.
China Healthcare Limited • Annual Report 2008
Notes to the Financial Statement
35
2.7 Leases
When entities within the Group are lessors of an operating lease
Assets subject to operating leases are included in property, plant and equipment. Rental income (net of any
incentives given to lessees) is recognised on a straight-line basis over the lease term.
When entities within the Group are lessees of an operating lease
Where the Group has the use of assets under operating leases, payments made under the leases are
recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives
received are recognised in the income statement as an integral part of the total lease payments made.
Contingent rentals are charged to the income statement in the accounting period in which they are incurred.
When entities within the Group are lessees of a financing lease.
Leased assets in which the Group assumes substantially all the risks and rewards of ownership are classified
as finance leases. Upon initial recognition, property, plant and equipment acquired through finance leases
are capitalised at the lower of its fair value and the present value of minimum lease payments. Subsequent to
initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.
Leased assets are depreciated over the shorter of the lease term and their useful lives. Lease payments are
apportioned between finance expense and reduction of the lease liability. The finance expense is allocated
to each period during the lease term so as to produce a constant periodic rate of interest on the remaining
balance of the liability. Contingent lease payments are accounted for by revising the minimum lease payments
over the remaining term of lease when the lease adjustment is confirmed.
At inception, an arrangement that contains a lease is accounted for as such based on the terms and conditions
even though the arrangement is not in legal form of a lease.
2.8 Inventories
Inventories comprising mainly pharmacy, hospital and surgical supplies are stated at the lower of cost and net
realisable value. Cost is calculated using the first-in, first-out formula and comprises all costs of purchase, costs
of conversion and other costs incurred in bringing the inventories to their present location and condition.
2.9 Impairment – non-financial assets
The carrying amounts of the Group’s non-financial assets, other than inventories and deferred tax assets,
are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any
such indication exists, the assets’ recoverable amounts are estimated. For goodwill, recoverable amount is
estimated at each balance sheet date, and as and when indicators of impairment are identified.
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its
recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows
that largely are independent from other assets and groups. Impairment losses are recognised in the income
statement unless it reverses a previous revaluation, credited to equity, in which case it is charged to equity.
Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying
amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the
unit (group of units) on a pro rata basis.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value
less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of the time value of money and the
risks specific to the asset or cash-generating unit.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses
recognised in prior periods are assessed at each balance sheet date for any indications that the loss has
decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates
used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s
carrying amount does not exceed the carrying amount that would have been determined, net of depreciation,
if no impairment loss had been recognised.
36
China Healthcare Limited • Annual Report 2008
Notes to the Financial Statement
2.10 Employee benefits
Defined contribution plans
Obligations for contributions to post-employment benefits and employees’ retirement gratuity under defined
contribution plans are recognised as an expense in the income statement as incurred.
Short-term compensated absences
Short-term accumulating compensated absences are recognised when the employees render services that
increase their entitlement to future compensated absences.
A provision is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing
plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service
provided by the employee and the obligation can be estimated reliably.
Share-based payments
The share option programme allows the Group’s employees and non-executive directors to acquire shares of
the Company. The fair value of options granted is recognised as an employee expense with a corresponding
increase in equity. The fair value is measured at grant date and spread over the period during which the
employees become unconditionally entitled to the options. At each balance sheet date, the Company revises
its estimates of the number of options that are expected to become exercisable. It recognises the impact of
the revision of original estimates in employee expense and in a corresponding adjustment to equity over the
remaining vesting period.
The proceeds received net of any directly attributable transactions costs are credited to share capital when
the options are exercised.
No options have been granted during the year.
2.11 Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation
that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle
the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that
reflects current market assessments of the time value of money and the risks specific to the liability.
2.12 Share capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a
deduction from equity.
2.13 Revenue recognition
Rendering of services and sale of drugs
Provided that it is probable that the economic benefits will flow to the Group and the revenue and costs, can be
reliably measured, home fees, other ancillary services and sale of pharmacy drug is recognised upon services
rendered.
Rental income
Rental income receivable under operating leases is recognized in the income statement on a straight-line
basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental
income to be received. Contingent rentals are recognised as income in the accounting period in which they
are earned.
China Healthcare Limited • Annual Report 2008
Notes to the Financial Statement
37
2.13 Revenue recognition (cont’d)
Government subvention
Government subvention is recognised in the income statement when the right to receive payment is
established.
2.14 Finance income and expense
Finance income comprises interest income on funds invested, dividend income, foreign currency gains and
changes in fair value through profit or loss. Interest income is recognised as it accrues, using the effective
interest method. Dividend income is recognised on the date that the Group’s right to receive payment is
established, which in the case of quoted securities, is the ex-dividend date.
Finance expenses comprise interest expense on borrowings, unwinding of the discount on provisions, foreign
currency losses and changes in fair value of financial assets at fair value through profit or loss. All borrowing
costs are recognised in the income statement using the effective interest method, except to the extent that they
are capitalised as being directly attributable to the acquisition, construction or production of an asset which
necessarily takes a substantial period of time to be prepared for its intended use or sale.
2.15 Income tax expense
Income tax expense comprises current and deferred tax. Income tax expense is recognised in the income
statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised
in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or
substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous
years.
Deferred tax is recognised using the balance sheet method, providing for temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation
purposes. Deferred tax is not recognised for the temporary differences arising from the initial recognition of
goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and
that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries to
the extent that they probably will not reverse in the foreseeable future. Deferred tax is measured at the tax
rates that are expected to be applied to the temporary differences when they reverse, based on the laws that
have been enacted or substantively enacted by the balance sheet date. Deferred tax assets and liabilities
are offset if there is a legally enforceable right to offset current tax liabilities and assets and they relate to
income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they
intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised
simultaneously.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available
against which temporary differences can be utilised. Deferred tax assets are reviewed at each balance sheet
date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
38
China Healthcare Limited • Annual Report 2008
Notes to the Financial Statement
2.16 Segment reporting
A segment is a distinguishable component of the Group that is engaged either in providing related products
or services (business segment), or in providing products or services within a particular economic environment
(geographical segment), which is subject to risks and rewards that are different from those of other
segments.
Segment information is presented in respect of the Group’s business segments. The primary format, business
segments, is based on the Group’s management and internal reporting structure. Geographical segment
information is not presented as the Group operates mainly in Singapore.
Inter-segment pricing is determined on mutually agreed terms.
Segment results, assets and liabilities include items directly attributable to a segment as well as those that
can be allocated on a reasonable basis. Unallocated items mainly comprise corporate assets and expenses,
finance income and expense and related assets and liabilities.
Segment capital expenditure is the total cost incurred during the year to acquire segment assets that are
expected to be used for more than one period.
The main business segments of the Group comprise operation of medicare centre and nursing homes, hospital
services and other ancilliary services.
China Healthcare Limited • Annual Report 2008
39
Notes to the Financial Statement
3 PROPERTY, PLANT AND EQUIPMENT
Freehold
land
Freehold
buildings
Leasehold
buildings
Properties
under
construction
Leasehold
improvements
Nursing home
and hospital
equipment
Ambulances
and
medical
equipment
Furniture and
fittings
Office
and other
equipment
Computers
and
accessories Renovations Motor vehicles Total
$ $ $ $ $ $ $ $ $ $ $ $ $
Group
Cost
At 1 April 2006 18,138,010 10,491,406 4,800,000 275,535 - 1,635,435 344,877 711,411 320,983 269,245 2,887,093 221,086 40,095,081
Additions - - - 987,488 - 392,762 - 62,357 3,292 32,107 216,169 - 1,694,175
Fair value adjustments
arising from acquisition
of minority interest - - 1,610,898 - - - - - - - - - 1,610,898
Disposals - - - - - (28,106) (108,848) (2,143) (1,887) (17,671) (7,980) - (166,635)
Reclassifications - - - (1,203,001) 770,471 - - - - - 432,530 - -
Translation differences
on consolidation - - - - - 16,894 - 1,207 6,170 1,559 40,140 - 65,970
At 31 March 2007 18,138,010 10,491,406 6,410,898 60,022 770,471 2,016,985 236,029 772,832 328,558 285,240 3,567,952 221,086 43,299,489
Additions 1,735,496 - - 1,410,137 47,607 311,324 1,025,013 86,923 14,545 86,803 1,056,096 319,033 6,092,977
Disposals/write - off - - - - - (260) - (280) (333) - - - (873)
Reclassifications - - - (390,159) - - - - - - 390,159 - -
Translation differences
on consolidation (25,115) - - - - (2,400) - (200) (523) (80) (10,971) - (39,289)
At 31 March 2008 19,848,391 10,491,406 6,410,898 1,080,000 818,078 2,325,649 1,261,042 859,275 342,247 371,963 5,003,236 540,119 49,352,304
40
China Healthcare Limited • Annual Report 2008
Notes to the Financial Statement
3 PROPERTY, PLANT AND EQUIPMENT (CONT’D)
Freehold
land
Freehold
buildings
Leasehold
buildings
Properties
under
construction
Leasehold
improvements
Nursing home
and hospital
equipment
Ambulances
and
medical
equipment
Furniture and
fittings
Office
and other
equipment
Computers
and
accessories Renovations Motor vehicles Total
$ $ $ $ $ $ $ $ $ $ $ $ $
Group
Accumulated depreciation
At 1 April 2006 - 265,058 434,802 - - 750,891 256,311 406,868 143,611 177,870 316,598 132,590 2,884,599
Depreciation charge
for the year - 205,560 137,246 - 40,581 181,436 35,744 59,765 57,760 59,210 296,685 37,646 1,111,633
Translation differences
on consolidation - - - - - 16,992 - 1,218 6,203 1,559 40,620 - 66,592
Disposals - - - - - (5,089) (108,848) (456) (644) (17,672) - - (132,709)
Reclassifications - - - - - (176) - 72 104 - - - -
At 31 March 2007 - 470,618 572,048 - 40,581 944,054 183,207 467,467 207,034 220,967 653,903 170,236 3,930,115
Depreciation charge
for the year - 209,828 158,355 - 49,086 178,311 108,213 52,958 55,321 58,324 389,609 42,965 1,302,970
Disposals/write - off - - - - - (69) - (89) (190) - - - (348)
Translation differences
on consolidation - - - - - (836) - (68) (313) (66) (3,285) - (4,568)
At 31 March 2008 - 680,446 730,403 - 89,667 1,121,460 291,420 520,268 261,852 279,225 1,040,227 213,201 5,228,169
Carrying amount
At 1 April 2006 18,138,010 10,226,348 4,365,198 275,535 - 884,544 88,566 304,543 177,372 91,375 2,570,495 88,496 37,210,482
At 31 March 2007 18,138,010 10,020,788 5,838,850 60,022 729,890 1,072,931 52,822 305,365 121,524 64,273 2,914,049 50,850 39,369,374
At 31 March 2008 19,848,391 9,810,960 5,680,495 1,080,000 728,411 1,204,189 969,622 339,007 80,395 92,738 3,963,009 326,918 44,124,135
China Healthcare Limited • Annual Report 2008
41
Notes to the Financial Statement
3 PROPERTY, PLANT AND EQUIPMENT (CONT’D)
Freehold
land
Freehold
buildings
Properties
under
construction
Leasehold
improvements
Furniture
and
fittings
Office
and other
equipment
Computers
and
accessories Renovations
Motor
vehicles Total
$ $ $ $ $ $ $ $ $ $
Company
Cost
At 1 April 2006 18,138,010 10,491,406 85,712 - 9,935 29,248 148,487 1,507,119 188,230 30,598,147
Additions - - 100,952 - - 545 23,208 7,397 - 132,102
Transfers - - (186,664) 770,471 - - - (583,807) - -
At 31 March 2007 18,138,010 10,491,406 - 770,471 9,935 29,793 171,695 930,709 188,230 30,730,249
Additions - - - 47,606 20,627 12,465 24,985 53,418 319,033 478,134
At 31 March 2008 18,138,010 10,491,406 - 818,077 30,562 42,258 196,680 984,127 507,263 31,208,383
Accumulated depreciation
At 1 April 2006 - 265,058 - - 3,114 17,613 81,923 115,796 99,736 583,240
Depreciation charge
for the year - 205,560 - 40,581 994 5,949 45,882 90,302 37,646 426,914
At 31 March 2007 - 470,618 - 40,581 4,108 23,562 127,805 206,098 137,382 1,010,154
Depreciation charge
for the year - 209,828 - 49,085 2,369 6,334 38,137 107,721 42,963 456,437
At 31 March 2008 - 680,446 - 89,666 6,477 29,896 165,942 313,819 180,345 1,466,591
Carrying amount
At 1 April 2006 18,138,010 10,226,348 85,712 - 6,821 11,635 66,564 1,391,323 88,494 30,014,907
At 31 March 2007 18,138,010 10,020,788 - 729,890 5,827 6,231 43,890 724,611 50,848 29,720,095
At 31 March 2008 18,138,010 9,810,960 - 728,411 24,085 12,362 30,738 670,308 326,918 29,741,792
The carrying amount of property, plant and equipment of the Group includes amounts totalling $1,233,817 (2007: $50,848) held under finance leases.
All freehold land and buildings of the Group and of the Company are mortgaged as security for banking facilities (refer to note 12).
42
China Healthcare Limited • Annual Report 2008
Notes to the Financial Statement
4 SUBSIDIARIES
Company
2008 2007
$ $
Unquoted equity shares, at cost 4,961,932 4,961,929
Loan to a subsidiary 1,070,000 1,070,000
6,031,932 6,031,929
Details of the subsidiaries are as follows:
Name of subsidiary
Country of
incorporation
Effective
equity interest
held by the
Group
2008 2007
Held by the Company % %
Econ Nursing Home Services (1987) Pte Ltd Singapore 100 100
Sunnyville Nursing Home (1996) Pte Ltd Singapore 100 100
Econ Ambulance Services Pte Ltd Singapore 100 100
Econ Medicare Centre Pte Ltd Singapore 100 100
Econ Careskill Training Centre Pte Ltd Singapore 100 100
Econ Healthcare (China) Pte Ltd Singapore 100 100
Econ TCM Services Pte Ltd Singapore 100 100
Econ Healthcare (M) Pte Ltd Singapore 100 100
West Point Hospital Pte Ltd Singapore 100 100
Econ Healthcare (S) Pte Ltd Singapore 100 100
Econ Healthcare (Vietnam) Pte Ltd Singapore 100 -
Air Ambulance Asia Pte Ltd Singapore 100 -
Econ Healthcare & Tourism Development Pte Ltd Singapore 100 -
Held by Econ Careskill Training Centre Pte Ltd
EHL Language Centre Pte Ltd Singapore 100 100
Held by Econ Healthcare (M) Pte Ltd
Econ Healthcare (M) Sdn Bhd Malaysia 100 100
Econ Medicare Centre Sdn Bhd Malaysia 100 100
All of the above subsidiaries are audited by KPMG Singapore, except for Econ Healthcare (M) Sdn. Bhd. and Econ
Medicare Centre Sdn. Bhd., which are audited by BDO Binder, Kuala Lumpur.
The loan to a subsidiary is unsecured and interest-free. The settlement of the loan is neither planned nor likely to
occur in the foreseeable future. As the loan is, in substance, a part of the Company’s net investment in the subsidiary,
it is included as interests in subsidiaries.
China Healthcare Limited • Annual Report 2008
Notes to the Financial Statement
43
5 ASSOCIATE
Group
2008 2007
$ $
Investment in associate 1,425,861 1,291,094
Investment in associate includes goodwill of $509,000.
Details of the associate are as follows:
Name of associate
Place of
incorporation
Effective
equity interest
held by the
Group
2008 2007
Held by Econ Healthcare (China) Pte Ltd % %
1
Boxuan Medical Equipment Pte Ltd
and its subsidiary
Singapore 20 20
1
Audited by KPMG Singapore
The principal activities of the associate are those relating to investment holding. The principal activities of its whollyowned
subsidiary, incorporated in the People’s Republic of China, are those relating to the manufacture and sale of
hospital equipment.
The summarised financial information of the associate not adjusted for the percentage of ownership held by the
Group is as follows:
Assets and liabilities
2008 2007
$ $
Total assets 6,838,281 6,520,259
Total liabilities 3,091,751 3,386,149
Results
Revenue 15,511,057 11,753,782
Expenses (14,837,220) (11,239,005)
Profit after taxation 673,837 514,777
6 INVENTORIES
Group
2008 2007
$ $
Medical and surgical products 79,587 38,681
Pharmacy drugs 32,476 85,446
112,063 124,127
44
China Healthcare Limited • Annual Report 2008
Notes to the Financial Statement
7 TRADE AND OTHER RECEIVABLES
Group
Company
Restated
2008 2007 2008 2007
$ $ $ $
Trade receivables 2,421,358 2,049,298 1,930 1,890
Allowance for doubtful receivables (653,411) (653,411) - -
Net receivables 1,767,947 1,395,887 1,930 1,890
Advances extended to a shareholder of an
investee company 854,247 - - -
Rentals and other deposits 399,317 448,719 140,819 143,219
Downpayment for purchase of medical
equipment 287,400 20,710 -
Prepayments 84,440 95,642 33,006 13,901
Staff advances 48,456 15,326 - -
Other receivables:
subvention claims receivables 77,549 38,577 - -
grant receivables 32,950 - - -
others 146,659 207,379 937 -
Amounts due from:
- (subsidiaries non-trade) - - 12,852,024 7,697,149
- (affiliate non-trade) 6,000 32,000 6,000 32,000
3,704,965 2,233,530 13,034,716 7,888,159
The advances extended to Chengdu Tian Li Food and Entertainment Co., Ltd, a shareholder of an investee company
is unsecured, interest-free and repayable on demand.
The non-trade amounts due from subsidiaries and affiliate are unsecured, interest-free and repayable on demand.
There is no allowance for doubtful debts arising from the outstanding balance.
Concentration of credit risk relating to trade receivables is limited due to the Group’s many varied customers.
The Group’s historical experience in the collection of trade receivables fall within in the recorded allowances. Due
to these factors, management believes that no additional credit risk beyond amounts provided for collection losses
is inherent in the Group’s trade receivables.
The maximum exposure to credit risk for trade receivables at the reporting date (by business segment) is:
Group
Company
2008 2007 2008 2007
$ $ $ $
Operating of medicare centres and nursing
homes 619,311 545,835 - -
Hospital services 1,110,378 834,716 - -
Other ancillary services 38,258 15,336 1,930 1,890
1,767,947 1,395,887 1,930 1,890
China Healthcare Limited • Annual Report 2008
Notes to the Financial Statement
45
7 Trade and other receivables (cont’d)
Impairment losses
The aging of trade receivables (including trade amounts due from subsidiaries) at reporting date is:
Restated
Gross
Impairment
losses
Gross
impairment
losses
2008 2008 2007 2007
$ $ $ $
Group
Not past due 1,132,382 - 1,179,884 -
Past due 0 – 30 days 273,887 - 140,202 -
Past due more than 30 days 1,015,089 (653,411) 729,212 (653,411)
2,421,358 (653,411) 2,049,298 (653,411)
Company
Not past due 1,930 - 1,890 -
Based on historical default rates, the Group believes that no impairment allowance is necessary in respect of trade
receivables not past due or past due up to 30 days. These receivables are mainly arising from customers that have
a good record with the Group.
The maximum exposure to credit risk in respect of receivables (including trade amounts due from subsidaries) at the
reporting date (by type of customer) is:
Group
Company
Restated
2008 2007 2008 2007
$ $ $ $
Individual customers 1,006,048 438,257 - -
Corporate customers 761,899 957,630 1,930 1,890
1,767,947 1,395,887 1,930 1,890
The change in impairment loss in respect of trade receivables (including trade amounts due from subsidiaries)
during the year is as follows:
Group
Restated
Company
Note 2008 2007 2008 2007
$ $ $ $
At 1 April 653,411 212,774 - -
Impairment loss recognised - 1,435 - -
Prior year adjustments 20 - 442,073 - -
Impairment loss written off - (2,871) - -
At 31 March 653,411 653,411 - -
46
China Healthcare Limited • Annual Report 2008
Notes to the Financial Statement
8 OTHER INVESTMENTS
Group and Company
2008 2007
$ $
Non-current investments
Unquoted equity securities available-for-sale - 1,999,000
Less: impairment loss - (1,999,000)
- -
Current investments
Quoted equity securities held-for-trading 1,078,966 283,024
All equity securities are denominated in Singapore dollar.
Quoted equity securities held-for-trading are stated at fair values determined directly by reference to published price
quotations in an active market.
In the previous financial year, the investment in unquoted equity securities was considered impaired considering that
the investee company has ceased operations and there was no positive development in the efforts being taken by
management to divest the investment.
9 CASH AND CASH EQUIVALENTS
Group
Company
Note 2008 2007 2008 2007
$ $ $ $
Cash at bank and in hand 4,611,567 1,060,196 2,864,055 370,581
Fixed deposits 112,911 117,010 100,011 97,428
4,724,478 1,177,206 2,964,066 468,009
Deposit pledged (112,911) (117,010) (100,011) (97,428)
Secured bank overdrafts 12 (1,488,060) (161,046) - (161,046)
Cash and cash equivalents in the
cash flow statement 3,123,507 899,150 2,864,055 209,535
The weighted average effective interest rate per annum relating to fixed deposits at the balance sheet date is 1.80%
(2007: 1.80%). Interest rates reprice yearly.
China Healthcare Limited • Annual Report 2008
Notes to the Financial Statement
47
10 SHARE CAPITAL
Group and Company
2008 2007
No. of
shares
No. of
shares
Fully paid ordinary shares, with no par value:
At 1 April 156,749,500 156,749,500
Issue of shares under private placement 20,000,000 -
Issue of rights issue shares 53,024,850 -
At 31 March 229,774,350 156,749,500
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one
vote per share at meetings of the Company. All shares rank equally with regard to the Company’s residual assets.
Pursuant to a subscription agreement signed by the Company on 26 June 2007 and in-principle approval from the
Singapore Exchange Securities Limited on 6 July 2007, three private investors have subscribed for an aggregate of
20,000,000 new ordinary shares in the capital of Company at $0.2515 per new share for an aggregate consideration
of $5,030,000.
On 18 February 2008, the Company allotted and issued 53,024,850 new ordinary shares (the “rights share”) at an
issue price of $0.118 for each rights share on the basis of three rights shares for every ten existing ordinary shares
pursuant to approval of a board resolution dated 17 December 2007.
Capital management
The Board’s policy is to maintain strong capital base so as to maintain investor, creditor and market confidence and
to sustain future development of the business. The Board of Directors monitors return on capital, which the Group
defines as net operating income divided by total shareholders’ equity excluding minority interest. The primary
objective of the Group’s capital management is to ensure that it maintains healthly capital ratios in order to support
its business and maximise shareholders’ value.
The Group manages its capital structure and makes alignment to it, in light of changes in economic conditions. To
maintain or adjust the capital structure, the Group may align the dividend payment to shareholders, return capital to
shareholders or issue new shares.
There were no changes in the Group’s approach to capital management during the year
11 RESERVES
The currency translation reserve of the Group comprises foreign exchange differences arising from the translation of
the financial statements of subsidiaries whose functional currencies are different from that of the Company.
The merger deficit arises from the difference between the nominal value of shares issued by the Company and the
nominal value of shares of the subsidiaries acquired under the historical cost method of consolidation.
48
China Healthcare Limited • Annual Report 2008
Notes to the Financial Statement
12 INTEREST-BEARING BORROWINGS
Group
Company
Note 2008 2007 2008 2007
$ $ $ $
Current liabilities
Secured bank overdrafts 9 1,488,060 161,046 - 161,046
Secured bank loans 1,781,005 1,099,809 1,443,191 1,099,809
Unsecured revolving credit facility 2,000,000 2,000,000 2,000,000 2,000,000
Finance lease liabilities 236,601 22,286 59,751 22,286
5,505,666 3,283,141 3,502,942 3,283,141
Non-current liabilities
Secured bank loans 17,100,622 18,122,109 16,063,323 18,122,109
Finance lease liabilities 877,647 9,413 247,467 9,413
17,978,269 18,131,522 16,310,790 18,131,522
Total borrowings 23,483,935 21,414,663 19,813,732 21,414,663
Maturity of borrowings (excluding finance lease liabilities)
Group
Company
2008 2007 2008 2007
$ $ $ $
Within 1 year 5,269,065 3,260,855 3,443,191 3,260,855
After 1 year but within 5 years 17,100,622 5,239,967 16,063,323 5,239,967
After 5 years - 12,882,142 - 12,882,142
Total borrowings 22,369,687 21,382,964 19,506,514 21,382,964
The bank loans and bank overdrafts are secured by corporate guarantees from its subsidiaries, Econ Nursing Home
Services (1987) Pte Ltd and Econ Medicare Centre Pte Ltd, and on the freehold land and buildings with carrying
amount of $29,659,351 at 31 March 2008 (2007: $28,158,798).
Finance lease liabilities
At 31 March 2008, the Group and Company had obligations under finance leases that are payable as follows:
Principal Interest Payments
Group $ $ $
2008
Repayable within 1 year 236,601 28,221 264,822
Repayable after 1 year but within 5 years 877,647 65,565 943,212
1,114,248 93,786 1,208,034
2007
Repayable within 1 year 22,286 2,782 25,068
Repayable after 1 year but within 5 years 9,413 1,321 10,734
31,699 4,103 35,802
Company
2008
Repayable within 1 year 59,751 8,871 68,622
Repayable after 1 year but within 5 years 247,467 37,121 284,588
307,218 45,992 353,210
2007
Repayable within 1 year 22,286 2,782 25,068
Repayable after 1 year but within 5 years 9,413 1,321 10,734
31,699 4,103 35,802
China Healthcare Limited • Annual Report 2008
Notes to the Financial Statement
49
12 Interest-bearing borrowings (cont’d)
Effective interest rates and repricing analysis
Effective
Fixed interest rate maturing
interest
rate
Floating
interest
within
1 year
1 to 5
years
Total
% $ $ $ $
Group
2008
S$ floating rate loans 2.25 - 5.00 20,369,687 - - 20,369,687
Unsecured revolving credit
facility 3.10 2,000,000 - - 2,000,000
Finance lease liabilities 2.51 - 236,601 877,647 1,114,248
2007
22,369,687 236,601 877,647 23,483,935
S$ floating rate loans 2.25 19,221,918 - - 19,221,918
Unsecured revolving credit
facility 4.91 2,000,000 - - 2,000,000
Secured bank overdrafts 3.82 161,046 - - 161,046
Finance lease liabilities 2.51 - 22,286 9,413 31,699
Company
21,382,964 22,286 9,413 21,414,663
2008
S$ floating rate loans 2.25 17,506,514 - - 17,506,514
Unsecured revolving credit
facility 3.10 2,000,000 - - 2,000,000
Finance lease liabilities 2.51 - 59,751 247,467 307,218
2007
19,506,514 59,751 247,467 19,813,732
S$ floating rate loans 2.25 19,221,918 - - 19,221,918
Unsecured revolving credit
facility 4.91 2,000,000 - - 2,000,000
Secured bank overdrafts 3.82 161,046 - - 161,046
Finance lease liabilities 2.51 - 22,286 9,413 31,699
21,382,964 22,286 9,413 21,414,663
50
China Healthcare Limited • Annual Report 2008
Notes to the Financial Statement
13 DEFERRED TAX
Movements in deferred tax assets and liabilities of the Group (prior to offsetting of balances) during the year are as
follows:
At
1/4/2006
Arising from
acquisition
of minority
interest
Recognised
in income
statement
(note 18)
At
31/3/2007
Recognised
in income
statement
(note 18)
At
31/3/2008
$ $ $ $ $ $
Group
Deferred tax liabilities
Property, plant and
equipment 194,849 322,180 10,804 527,833 41,089 568,922
Investments held for
trading 17,435 - 13,605 31,040 (31,040) -
212,284 322,180 24,409 558,873 10,049 568,922
Deferred tax assets
Trade and other
receivables (8,570) - - (8,570) (242) (8,812)
Liability for short-term
accumulating
compensated
absences (8,938) - - (8,938) - (8,938)
(17,508) - - (17,508) (242) (17,750)
Deferred tax liabilities of the Company are attributable to the following:
At
1/4/2006
Recognised
in income
statement
At
31/3/2007
Recognised
in income
statement
At
31/3/2008
Company $ $ $ $ $
Deferred tax liabilities
Property, plant and
equipment
41,641
(13,605) 28,036 31,040 59,076
Investments held for trading 17,435 13,605 31,040 (31,040) -
59,076 - 59,076 - 59,076
China Healthcare Limited • Annual Report 2008
Notes to the Financial Statement
51
13 DEFERRED TAX (CONT’D)
Deferred tax liabilities and assets are offset when there is a legally enforceable right to set off current tax assets
against current tax liabilities and when the deferred taxes relate to the same taxation authority. The net amounts,
determined after appropriate offsetting are as follows:
Group
2008 2007
$ $
Deferred tax liabilities 551,172 541,365
Deferred tax assets have not been recognised in respect of the following items:
Group
Restated
2008 2007
$ $
Unutilised wear and tear allowances 932,622 1,834,000
Tax losses 13,118,394 13,030,073
14,051,016 14,864,073
The unutilised wear and tear allowances and tax losses are subject to agreement by the tax authorities. Deferred
tax assets have not been recognised in respect of these items as it is not probable that future taxable profit will be
available against which the temporary differences can be utilised.
14 TRADE AND OTHER PAYABLES
Group
Company
2008 2007 2008 2007
$ $ $ $
Trade payables and accrued operating
expenses 1,376,120 1,520,526 147,628 179,747
Deposits from patients 938,550 887,821 - -
Home fees collected in advance 337,820 367,123 - -
Unearned income 24,624 - - -
Liability for short-term accumulated
compensated absences 19,187 42,159 - -
Amounts due to:
- subsidiaries (non-trade) - - 4,039,799 3,439,170
- affiliate (non-trade) 279,723 - - -
Other payables 297,121 155,768 69,306 8,474
3,273,145 2,973,397 4,256,733 3,627,391
The non-trade amounts due to subsidiaries and an affiliate are unsecured, interest-free and repayable on demand.
52
China Healthcare Limited • Annual Report 2008
Notes to the Financial Statement
15 REVENUE
Group
2008 2007
$ $
Home fees and other ancilliary services 17,487,041 15,363,273
Sale of pharmacy drugs 1,111,594 843,081
Rental income 48,000 52,860
18,646,635 16,259,214
16 LOSS FOR THE YEAR
The following items have been included in arriving at loss for the year:
Group
Restated
Note 2008 2007
$ $
Non-audit fees paid to auditors of the Company 11,000 1,000
Contributions to defined contribution plans
included in staff costs 395,219 335,417
Impairment loss on equity securities available-for-sale 8 - 1,999,000
Impairment loss on equity securities held for trading 985,010 -
Impairment loss on goodwill on consolidation - 185,749
Impairment loss on trade receivables 20 217,102
Gain on disposal of property, plant and equipment - (6,897)
Negative goodwill 20 - (719,559)
17 FINANCE INCOME AND EXPENSE
Group
2008 2007
$ $
Interest income from bank deposits 4,323 19,834
Gain on disposal of equity securities held for trading 7,670 490
Dividend income from investments held for trading 10,139 7,589
Finance income 22,132 27,913
China Healthcare Limited • Annual Report 2008
Notes to the Financial Statement
53
17 FINANCE INCOME AND EXPENSE (CONT’D)
Group
2008 2007
$ $
Interest paid and payable to:
Bank (884,375) (963,436)
Finance lease creditors (21,593) (2,782)
Minority shareholder of a subsidiary - (21,384)
(905,968) (987,602)
Exchange loss (57,908) (13,436)
Finance expense (963,876) (1,001,038)
Net finance expense (941,744) (973,125)
18 INCOME TAX EXPENSE
Group
Restated
Note 2008 2007
$ $
Current tax expense
Current year 223,395 182,144
Under provided in prior years 514 101,963
Group relief - (75,921)
223,909 208,186
Deferred tax expense
Origination and reversal of temporary differences 78,482 48,671
Reduction in tax rate - (19,478)
Over provided in prior years (68,675) (4,784)
13 9,807 24,409
Income tax expense 233,716 232,595
Reconciliation of effective tax rate
Group
Restated
2008 2007
$ $
Loss for the year (498,477) (1,433,205)
Total income tax expense 233,716 232,595
Loss excluding income tax (264,761) (1,200,610)
54
China Healthcare Limited • Annual Report 2008
Notes to the Financial Statement
18 INCOME TAX EXPENSE (CONT’D)
Group
Restated
2008 2007
$ $
Tax calculated using Singapore tax rate of 18% (2007: 18%) (47,657) (216,110)
Effect of reduction in tax rate - (19,478)
Expenses not deductible for tax purposes 76,382 439,868
Tax exempt revenues (86,108) (44,184)
Effect of group relief not recognised 254,104 -
Effect of different tax rates in other country 616 -
Tax benefit of losses not recognised 15,208 -
Temporary differences not recognised 1,011 -
Income not subject to tax - (90,920)
Deferred tax assets not recognised 88,321 66,240
(Over)/ under provided in prior years (68,161) 97,179
233,716 232,595
19 EARNINGS PER SHARE
Group
Restated
2008 2007
$ $
Basic and diluted earnings per share is based on:
Net loss attributable to ordinary shareholders (498,477) (1,270,324)
No. of
shares
No. of
shares
Weighted average number of shares
outstanding during the year 175,268,037 158,473,745
The diluted earnings per share is the same as the basic earnings per share as the Company does not have any
dilutive potential ordinary shares.
China Healthcare Limited • Annual Report 2008
Notes to the Financial Statement
55
20 PRIOR YEAR ADJUSTMENTS
In September 2006, the Company acquired an additional interest of 50.89% in its subsidiary, West Point Hospital
Pte Ltd (“WPH”) at a cash consideration of $950,000. The acquisition increased the Company’s ownership in
WPH from 49.11% to 100%. Prior to the acquisition, WPH was already considered a subsidiary of the Company,
despite holding only 49.11% of the equity, as the Company had control of WPH through a shareholders’
agreement. Accordingly, negative goodwill of $944,530 was recognised immediately in the consolidated income
statement, resulted from the difference between the purchase price and the fair values of the assets and
liabilities acquired.
As at 31 March 2008, management noted that they did not take into account the Group’s share of the impairment
loss on trade receivables in WPH of $217,102, which arose from inpatients that had been discharged as at 31
March 2007. Accordingly, the initial purchase price allocation of WPH previously determined had been computed
incorrectly. Accordingly, the changes have been accounted for in accordance with FRS 8: Accounting Policies,
Changes in Accounting Estimates and Errors by restating the following balances in the consolidated balance sheet
and income statement:
Impact on consolidated balance sheet:
Note $
Allowance for doubtful receivables, as previously stated 211,338
Prior year adjustment on impairment loss on inpatient trade receivables 217,102
Prior year adjustment on initial accounting on business combination:
Impairment loss on inpatient trade receivables 224,971
Allowance for doubtful receivables, restated 7 653,411
Impact on consolidated income statement: $
Impairment loss on trade receivables:
Impairment loss on inpatient trade receivables, as previously stated -
Prior year adjustment on impairment loss on inpatient trade receivables 217,102
Impairment loss on inpatient trade receivable, restated 217,102
Negative goodwill:
Negative goodwill recognised, as previously stated 944,530
Prior year adjustment on initial accounting on business combination:
Impairment loss on inpatient trade receivables (224,971)
Negative goodwill recognised, restated 16 719,559
Arising for the prior year adjustments, issuance of new ordinary shares and right issue, the basis and diluted earnings
per share for 2007 has decreased from (0.53 cents) to (0.80 cents).
56
China Healthcare Limited • Annual Report 2008
Notes to the Financial Statement
21 ACQUISITION OF SUBSIDIARY AND MINORITY INTEREST
In the previous financial year, the Company acquired an additional 50.89% interest in West Point Hospital Pte. Ltd.
(WPH), increasing its ownership from 49.11% to 100%. The cash consideration was $950,000. In connection with
this acquisition, the repayment of $106,339 owing by WPH to the minority shareholder was waived. Of this amount,
$21,384 relates to interest expense incurred during the year on the loan from the minority shareholder.
The carrying amount of WPH’s net assets in the consolidated financial statements on the date of the acquisition was
$368,830 (restated).
The effect of the acquisition of additional 50.89% ownership during the previous financial year is set out below:
Restated
As previously stated
Note
Carrying †
amounts
Fair value Recognised
adjustments values
Carrying †
amounts
Fair value Recognised
adjustments values
2007 2007 2007 2007 2007 2007
$ $ $ $ $ $
Property, plant and
equipment 3 2,626,015 1,610,898 4,236,913 2,626,015 1,610,898 4,236,913
Inventories 29,286 - 29,286 29,286 - 29,286
Trade and other receivables 20 217,102 - 217,102 442,073 - 442,073
Cash and cash equivalents 32,351 - 32,351 32,351 - 32,351
Trade and other payables (2,535,924) 54,116 (2,481,808) (2,535,924) 54,116 (2,481,808)
Deferred tax liabilities 13 - (322,180) (322,180) - (322,180) (322,180)
Net identifiable assets and
liabilities 368,830 1,342,834 1,711,664 593,801 1,342,834 1,936,635
Purchase consideration
paid, satisfied in cash* (992,105) (992,105)
Negative goodwill 719,559 944,530
* Includes legal fees amounting to $42,105.
†
Represents 50.89% of the carrying amounts in the accounting records of WPH.
The fair value of the property, plant and equipment is primarily determined by an independent valuation of a leasehold
building. The values of the other assets and liabilities recognised on the date of acquisition are their carrying
amounts on that date, which approximated their estimated fair values.
22 SEGMENT REPORTING
Segment information is presented in respect of the Group’s business segments. The primary format, business
segments, is based on the Group’s management and internal reporting structure. Geographical segment information
is not presented as the Group operates mainly in Singapore.
Inter-segment pricing is determined on mutually agreed terms.
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can
be allocated on a reasonable basis. Unallocated items mainly comprise corporate assets and expenses, finance
income and expense and related assets and liabilities.
The Group comprises the following main business segments:
Operation of medicare centres
and nursing homes
: Operation of four medicare centres and three nursing
homes.
Hospital services : Provision of hospital extension ward management
services.
Other ancillary services : Provision of homecare services, ambulance services and
sale and rental of healthcare equipment and accessories.
China Healthcare Limited • Annual Report 2008
57
Notes to the Financial Statement
22 SEGMENT REPORTING (CONT’D)
Business segments
Operation of
medicare centres
and nursing homes Hospital services
Other ancillary
services Eliminations Total
Restated Restated
2008 2007 2008 2007 2008 2007 2008 2007 2008 2007
$ $ $ $ $ $ $ $ $ $
Revenue and expenses
Revenue from external customer 12,642,880 11,287,659 4,120,991 3,469,807 1,882,764 1,501,748 - - 18,646,635 16,259,214
Inter-segment revenue - - 164,458 186,894 600,212 586,318 (764,670) (773,212) - -
Total revenue 12,642,880 11,287,659 4,285,449 3,656,701 2,482,976 2,088,066 (764,670) (773,212) 18,646,635 16,259,214
Segment results 5,629,904 3,512,540 (35,358) 447,289 87,271 58,074 - - 5,681,817 4,017,903
Impairment loss on equity
securities available-for-sale - (1,999,000)
Unallocated corporate expenses (4,154,591) (2,424,927)
(Loss)/gain on fair value on
investments held for trading (985,010) 75,584
Net finance expense (941,744) (973,125)
Share of profit in associate 134,767 102,955
Loss before tax (264,761) (1,200,610)
Income tax expense (233,716) (232,595)
Loss for the year (498,477) (1,433,205)
58
China Healthcare Limited • Annual Report 2008
Notes to the Financial Statement
22 SEGMENT REPORTING (CONT’D)
Operation of
medicare centres
and nursing homes Hospital services
Other ancillary
services Eliminations Total
Restated Restated
2008 2007 2008 2007 2008 2007 2008 2007 2008 2007
$ $ $ $ $ $ $ $ $ $
Assets and liabilities
Segment assets 36,569,033 34,000,473 10,356,167 8,085,983 2,457,389 704,110 (721,182) (692,373) 49,634,756 42,098,193
Unallocated assets 8,497,316 2,380,162
Total assets 57,158,723 44,478,355
Segment liabilities 2,082,305 1,737,810 1,249,274 1,609,812 164,178 129,928 (721,182) (692,373) 2,775,375 2,785,177
Unallocated liabilities 498,570 188,220
Borrowings 23,483,935 21,414,663
Current and deferred tax liabilities 799,251 812,264
Total liabilities 27,556,331 25,200,324
Capital expenditure
Capital expenditure 3,411,048 1,332,741 2,229,389 313,092 75,429 24,588 - - 5,715,866 1,670,421
Unallocated capital
expenditure 377,111 23,754
6,092,977 1,694,175
Significant non-cash items
Depreciation 793,745 691,524 357,899 271,875 61,523 57,763 - - 1,213,167 1,021,162
Unallocated depreciation 89,803 90,471
1,302,970 1,111,633
Impairment loss on goodwill - - - 185,749 - - - - - 185,749
Negative goodwill - - - (719,559) - - - - - (719,559)
China Healthcare Limited • Annual Report 2008
Notes to the Financial Statement
59
23 FINANCIAL RISK MANAGEMENT
Overview
Risk management is integral to the whole business of the Group. The Group has a system of controls in place
to create an acceptable balance between the cost of risks occurring and the cost of managing the risks. The
management continually monitors the Group’s risk management process to ensure that an appropriate balance
between risk and control is achieved. Risk management policies and systems are reviewed regularly to reflect
changes in market conditions and the Company’s activities.
The Board of Directors oversees how management monitors compliance with the Group’s risk management policies
and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the
Group.
Credit risk
Credit risk is the potential financial loss resulting from the failure of a customer or a counterparty to settle its financial
and contractual obligations to the Group, as and when they fall due.
Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis.
At the balance sheet date, there was no significant concentration of credit risk. The maximum exposure to credit risk
is represented by the carrying amount of each financial asset in the balance sheets.
Liquidity risk
The Group monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate by
management to finance the Group’s operations and to mitigate the effects of fluctuations in cash flows. The following
are the expected contractual undiscounted cash inflows (outflows) of financial liabilities, including interest payments
and excluding the impact of netting agreements:
Carrying
amount
Carrying
amount
Cash flows
Contractual
cash
flows Within 1 year 1 to 5 years
More than
5 years
Group $’000 $’000 $’000 $’000 $’000
31 March 2008
Non-derivative financial
liabilities
Secured bank overdrafts 1,488,060 3,403,937 1,573,623 1,830,314 -
Secured bank loans 18,881,627 21,239,124 2,705,456 10,215,068 8,318,600
Unsecured revolving
credit facility 2,000,000 2,058,092 2,058,092 - -
Finance lease liabilities 1,114,248 1,260,109 285,222 974,887 -
Trade and other payables 3,272,145 3,273,145 3,273,145 - -
31 March 2007
Non-derivative financial
liabilities
26,757,080 31,234,407 9,895,538 13,020,269 8,318,600
Secured bank overdrafts 161,046 161,258 161,258 - -
Secured bank loans 19,221,918 21,611,488 2,376,186 9,228,408 10,006,894
Unsecured revolving
credit facility 2,000,000 2,093,756 2,093,756 - -
Finance lease liabilities 31,699 35,802 25,068 10,734 -
Trade and other payables 2,973,397 2,973,397 2,973,397 - -
24,388,060 26,875,701 7,629,665 9,239,142 10,006,894
60
China Healthcare Limited • Annual Report 2008
Notes to the Financial Statement
23 FINANCIAL RISK MANAGEMENT (CONT’D)
The following are the expected contractual undiscounted cash inflows (outflows) of financial liabilities, including
interest payments and excluding the impact of netting agreements:
Carrying
amount
Carrying
amount
Cash flows
Contractual
cash
flows Within 1 year 1 to 5 years
More than
5 years
Company $’000 $’000 $’000 $’000 $’000
31 March 2008
Non-derivative financial
liabilities
Secured bank loans 17,506,514 19,601,654 2,288,576 8,994,478 8,318,600
Unsecured revolving
credit facility 2,000,000 2,058,092 2,058,092 - -
Finance lease liabilities 307,218 353,210 68,622 284,588 -
Trade and other payables 4,256,733 4,256,733 4,256,733 - -
24,070,465 26,269,689 8,672,023 9,279,066 8,318,600
31 March 2007
Non-derivative financial
liabilities
Secured bank overdrafts 161,046 161,469 161,469 - -
Secured bank loans 19,221,918 21,611,488 2,376,186 9,228,408 10,006,894
Unsecured revolving
credit facility 2,000,000 2,093,756 2,093,756 - -
Finance lease liabilities 31,699 35,802 25,068 10,734 -
Trade and other payables 3,627,391 3,627,391 3,627,391 - -
25,042,054 27,529,906 8,283,870 9,239,142 10,006,894
Interest rate risk
The Group’s exposure to interest rate risk relates primarily to its interest-bearing liabilities. The Group balances this
risk by maintaining a mixture of fixed and floating rate borrowings.
The Group does not hedge its exposure to changes in interest rates on interest-bearing borrowings.
Sensitivity analysis
For variable rate financial assets and liabilities, a change of 1% in interest rate at the reporting date would increase/
(decrease) income statement by the amounts shown below:
31 March 2008
1%
increase
Group
1%
Decrease
1%
increase
Company
1%
decrease
$ $ $ $
Income statement (223,697) 223,697 (195,065) 195,065
31 March 2007
Income statement (213,830) 213,830 (213,830) 213,830
China Healthcare Limited • Annual Report 2008
Notes to the Financial Statement
61
23 FINANCIAL RISK MANAGEMENT (CONT’D)
Foreign currency risk
The Group incurs foreign currency risk on transactions that are denominated in a currency other than the respective
functional currencies of the entities of the Group. The currency giving rise to this risk is primarily Singapore Dollar
denominated balances in subsidiaries that have a Malaysia Ringgit functional currency.
The Group does not hedge its exposure to foreign currency risk.
Group
2008 2007
Singapore
Dollars
Singapore
Dollars
$ $
Trade and other receivables 2,145,105 789,630
Sensitivity analysis
A 10% strengthening of Singapore dollar against the Malaysia Ringgit the reporting date would increase/(decrease)
equity and income statement by the amounts shown below. This analysis assumes that all other variables, in
particular interest rates, remain constant.
Group and Company
2008 2007
Singapore
Dollars
Singapore
Dollars
$ $
Income statement 214,511 78,963
Sensitivity analysis-equity price risk
The Group’s and the Company’s equity instruments are listed. A 10% increase/(decrease) in the underlying equity
prices at the reporting date would increase/(decrease) income statement by the following amount.
Group and Company
2008 2007
$ $
Income statement 107,897 28,302
This analysis assumes that all other variables remain constant.
Estimating fair values
Quoted investments held-for-trading
The fair value of the investments have been determined based on quoted market prices as at the balance
sheet date.
Interest-bearing loans
Fair value is calculated based on discounted expected future principal and interest cash flows.
Finance lease liabilities
The fair value of finance lease liabilities is estimated as the present value of future cash flows, discounted at market
interest rates for homogeneous lease agreements. The estimated fair values reflect change in interest rates.
62
China Healthcare Limited • Annual Report 2008
Notes to the Financial Statement
23 FINANCIAL RISK MANAGEMENT (CONT’D)
Other financial assets and liabilities
The notional amounts of financial assets and liabilities with a maturity of less than one year (including trade and
other receivables, cash and cash equivalents, and trade and other payables) are assumed to approximate their fair
values because of the short period to maturity. All other financial assets and liabilities are discounted to determine
their fair values.
24 COMMITMENTS
As at 31 March 2008, the Group had the following commitments:
(a)
The Group leases offices and equipment under operating leases. The leases typically run for an initial
period of 1 to 30 years, with an option to renew the lease after that date. Lease payments are usually revised
at each renewal date to reflect market rentals. None of the leases include contingent rental.
Future minimum lease payments payable under non-cancellable operating leases:
2008 2007
$ $
Within 1 year 1,641,736 1,151,922
After 1 year but within 5 years 5,332,090 3,548,179
After 5 years 18,558,869 8,857,013
25,532,695 13,557,114
(b)
Capital expenditure contracted for but not recognised in the financial statements is as follows:
2008 2007
$ $
Capital commitments in respect of:
- proposed acquisition of a subsidiary 5,993,515 -
- proposed additional investment in an associate 281,426 -
- proposed renovation of a nursing home - 410,000
6,274,941 410,000
On 25 September 2007, the Company’s wholly-owned subsidiary, Econ Healthcare Tourism & Development
Pte. Ltd. entered into an acquisition agreement to acquire 51% of the registered share capital of Chengdu Tian
Li (Group) Co., Ltd from Chengdu Tian Li Food and Entertainment Co., Ltd, Chengdu Tian Li Renovation Co.,
Ltd and Si Chuan Chong Zhou Industrial Development Company Edible Oil Trading Co., Ltd at a consideration
of approximately SGD 7,446,000.
On 28 March 2008, the Company’s wholly-owned subsidiary, Econ Healthcare (China) Pte. Ltd. entered into
an acquisition agreement to acquire an additional 855,000 shares in an associate, Boxuan Medical Equipment
Pte. Ltd. from an existing shareholder. The additional acquisition represented 15% of the total share capital of
the associate, which amounted to $826,186.
China Healthcare Limited • Annual Report 2008
Notes to the Financial Statement
63
24 COMMITMENTS (CONT’D)
(c)
The Group leases out certain rooftop areas of its leasehold building to telecommunication operators to install
and maintain radio antennae with any related equipment. The leases typically run for an initial period of 5
years, with an option to renew the lease after that date. Lease payments are usually revised at each renewal
date to reflect market rentals. None of the leases include contingent rental.
Non-cancellable operating lease rentals are receivable as follows:
2008 2007
$ $
Within 1 year 43,500 48,000
After 1 year but within 5 years 75,000 118,500
118,500 166,500
25 RELATED PARTIES
Key management personnel compensation
Compensation payable to key management personnel comprise:
Group
2008 2007
$ $
Short-term employee benefits 401,628 343,128
Post-employment benefits 10,581 9,180
412,209 352,308
Key management personnel are those persons having the authority and responsibility for planning, directing and
controlling the activities of the Company. The Board of Directors and senior management team are considered as
key management personnel.
Other related party transactions
Other than disclosed elsewhere in the financial statements, transactions with related parties are as follows:
Group
2008 2007
$ $
Rental expenses paid to:
Immediate holding company 145,532 58,058
Affiliate 187,200 187,200
332,732 245,258
64
China Healthcare Limited • Annual Report 2008
Notes to the Financial Statement
26 ACCOUNTING ESTIMATES AND JUDGEMENTS
Management assessed and reviewed the development, selection and disclosure of the Group’s critical accounting
policies and estimates, and the application of these policies and estimates.
Key sources of estimation uncertainty and critical judgments made in applying accounting policies
In the process of applying the Group’s accounting policies, management has made certain judgements, which
have a significant effect on the amounts recognised in the financial statements. These, together with the key
assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that
have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the
next financial year are discussed below.
Impairment of trade receivables
The Group performs regular evaluation of the recoverability of its trade receivable balances to ascertain if such
balances are impaired. This requires an evaluation of the financial standing, historical repayment patterns and
historical trends of bad debt occurrences for the individual debtors and related balances.
Significant judgement is required in determining the appropriate impairment loss to be recognised on trade receivable
balances. The ultimate recoverability of trade receivables is uncertain and any differences between the impairment
losses initially recognised and eventual amounts recovered from the trade debtors will impact the net profit and
carrying value of trade receivables in the period for which such impairment losses were recognised. The carrying
amount of the Group’s trade receivables as at 31 March 2008 is $1,767,947 (2007: $1,395,887).
Income taxes
Significant judgement is required in determining the capital allowances, the types and rates of taxes payable,
deductibility of certain expenses, and taxability of certain income during the estimation of the provision for income
taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the
ordinary course of business. The Group recognises liabilities for anticipated tax audit issues based on estimates of
whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that
were initially recorded, such differences will impact the provision for income tax and deferred income tax provisions
in the period in which such determination is made. The carrying amounts of the Group’s current tax payable
and deferred tax liabilities as at 31 March 2008 are $248,079 (2007: $270,899) and $551,172 (2007: $541,365)
respectively.
Impairment and depreciation of property, plant and equipment
Property, plant and equipment are depreciated over their estimated useful lives. Useful lives are derived based on
management’s estimates of the period that the assets will generate revenue, which are periodically reviewed for
continued appropriateness. Due to the long lives of assets, changes to the estimates used can result in significant
variations in the carrying value.
The Group assesses the impairment of property, plant and equipment subject to depreciation whenever events or
changes in circumstances indicate that the carrying value may not be recoverable. Factors considered important
that could trigger an impairment review include the following:
• Significant under performance relative to historical or projected future operating results;
• Significant changes in the manner of the use of the required assets or the strategy for the overall business; and
• Significant negative industry or economic trends.
The complexity of the estimation process and issues related to the assumptions, risks and uncertainties inherent in
the application of the Group’s accounting estimates in relation to property, plant and equipment affect the amounts
reported in the financial statements, especially the estimates of the expected useful economic lives and the carrying
values of those assets. If business conditions were different, or if different assumptions were used in the application
of this and other accounting estimates, it is likely that materially different amounts could be reported in the Group’s
financial statements.
Changes in the expected level of usage and technological developments could impact the economic useful lives
and the residual values of these assets, therefore future depreciation charges could be revised.
China Healthcare Limited • Annual Report 2008
Notes to the Financial Statement
65
27 SUBSEQUENT EVENT
Subsequent to the balance sheet date, the Company entered into a sale and purchase agreement (the “Agreement”)
with its immediate holding company, to acquire the properties at 25 and 27 Recreation Road, Singapore 546522 (the
“Properties”), conditional on approval from the shareholder of the Company. The consideration for the acquisition of
the properties is $6.1 million, based on the valuation carried out by Knight Frank Pte Ltd. Pursuant to the Agreement,
a deposit of $610,000, being 10% of the purchase price has been paid.
28 COMPARATIVE INFORMATION
Comparatives in the financial statements have been changed for the previous year due to prior year adjustment
described in note 20.
29 NEW ACCOUNTING STANDARDS AND INTERPRETATIONS NOT YET ADOPTED
The Group has not applied the following accounting standards (including their consequential amendments) and
interpretations that have been issued as of the balance sheet date but are not yet effective:
• FRS 1 (revised 2008) Presentation of Financial Statements
• FRS 23 (amended) Borrowing Costs
• FRS 108 Operating Segments
• INT FRS 111 FRS 102 – Group and Treasury Share Transactions
• INT FRS 112 Service Concession Arrangements
• INT FRS 113 Customer Loyalty Programmes
• INT FRS 114 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction
FRS 1 (revised 2008) will become effective for the Group’s financial statements for the year ending 31 March 2010.
The revised standard requires an entity to present, in a statement of changes in equity, all owner changes in equity.
All non-owner changes in equity (i.e. comprehensive income) are required to be presented in one statement of
comprehensive income or in two statements (a separate income statement and a statement of comprehensive
income). Components of comprehensive income are not permitted to be presented in the statement of changes in
equity. In addition, a statement of financial position is required at the beginning of the earliest comparative period
following a change in accounting policy, the correction of an error or the reclassification of items in the financial
statements. FRS 1 (revised 2008) does not have any impact on the Group’s financial position or results.
FRS 23 (amended) will become effective for financial statements for the year ending 31 March 2010. FRS 23
(amended) removes the option to expense borrowing costs and requires an entity to capitalise borrowing costs
directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that
asset.
FRS 108 will become effective for financial statements for the year ending 31 March 2010. FRS 108, which replaces
FRS 14 Segment Reporting, requires identification and reporting of operating segments based on internal reports
that are regularly reviewed by the Group’s chief operating decision maker in order to allocate resources to the
segment and to assess its performance.
Currently, the Group presents segment information in respect of its business segments (see note 22). The Group is
currently reviewing the presentation of segment information based on operating segments.
Other than the change in disclosures relating to FRS 108, the initial application of the other new standards and
interpretations are not expected to have any material impact on the Group’s financial statements. The Group has not
considered the impact of accounting standards issued after balance sheet date.
66
China Healthcare Limited • Annual Report 2008
Statistics of Shareholdings
as at 13 June 2008
Number of shares issued : 229,774,350
Class of shares
: Ordinary shares
Voting rights
: One vote per ordinary share
ANALYSIS OF SHAREHOLDINGS
Size of Shareholdings No. of Shareholders % No. of Shares %
1 - 999 2 0.24 320 0.00
1,000 – 10,000 487 58.25 2,155,350 0.94
10,001 – 1,000,000 332 39.71 21,657,020 9.42
1,000,001 and above 15 1.80 205,961,660 89.64
Total 836 100.00 229,774,350 100.00
TWENTY LARGEST SHAREHOLDERS
No. Name No. of Shares %
1 Econ Medicare Centre Holdings Private Limited 62,082,972 27.02
2 Goi Seng Hui 50,704,550 22.07
3 DBS Nominees Pte Ltd 26,467,400 11.52
4 Ong Chu Poh 15,749,305 6.85
5 UOB Kay Hian Pte Ltd 9,429,300 4.10
6 Teo Kee Bock 8,619,000 3.75
7 Goh Yang Chye 7,981,000 3.47
8 Lim & Tan Securities Pte Ltd 6,768,000 2.95
9 Ang Yu Seng 4,887,000 2.13
10 Koh Hin Ling 3,510,022 1.53
11 Wee Toon Lee 2,982,911 1.30
12 DMG & Partners Securities Pte Ltd 2,865,200 1.25
13 Ong Siew Keng 1,494,000 0.65
14 Ng Siok Keow 1,313,000 0.57
15 Mak Chuey Ling 1,108,000 0.48
16 Kua Sei Peng or Kee Puay Kiang 721,000 0.31
17 Della Suantio Mrs Della Suantio Lee 698,000 0.30
18 So Foi Chin 594,100 0.26
19 Foo Ket 500,000 0.22
20 Loo Cheng Chuan 490,000 0.21
Total 208,964,760 90.94
China Healthcare Limited • Annual Report 2008
Statistics of Shareholdings
as at 13 June 2008
67
SUBSTANTIAL SHAREHOLDERS
Number of Shares
Direct Interest Deemed Interest Total %
EMCH 88,082,972 - 88,082,972 38.33
TMI Holdings (1) - 88,082,972 88,082,972 38.33
Ong Chu Poh (2) 15,749,305 91,592,994 107,342,299 46.72
Koh Hin Ling (3) 3,510,022 103,832,277 107,342,299 46.72
Goi Seng Hui 50,704,550 - 50,704,550 22.07
(1) Deemed interested by virtue of its 100% shareholding in Econ Medicare Centre Holdings Pte Ltd.
(2) Mr Ong Chu Poh is deemed to be interested in the 88,082,972 Shares held by EMCH by virtue of Section 7 of the Companies
Act, Cap. 50 and the 3.510,022 Shares held by his spouse, Mdm Koh Hin Ling.
(3) Mdm Koh Hin Ling is deemed to be interested in 88,082,972 Shares held by EMCH by virtue of Section 7 of the Companies
Act, Cap. 50 and the 15,749,305 Shares held by her spouse, Mr Ong Chu Poh.
SHAREHOLDINGS HELD BY THE PUBLIC
Based on the information available to the Company as at 13 June 2008, approximately 31.21% of the issued ordinary
shares of the Company are held by the public and therefore, the Company is in compliance with Rule 723 of the SGX-ST
Listing Mannual
68
China Healthcare Limited • Annual Report 2008
Notice of Annual General Meeting
CHINA HEALTHCARE LIMITED
(Incorporated in the Republic of Singapore)
Company Reg. No. 200202500K
NOTICE IS HEREBY GIVEN that the Sixth Annual General Meeting of the Company will be held at 235 Corporation Drive,
West Point Hospital, Singapore 619771 on Friday, 25 July 2008 at 11.00 a.m. to transact the following business:-
AS ORDINARY BUSINESS
1. To receive and adopt the Directors’ Report and Audited Financial Statements for the financial
year ended 31 March 2008.
Resolution 1
2. To re-elect Madam Koh Hin Ling, who will retire by rotation pursuant to Article 89 of the
Company’s Articles of Association and who, being eligible, will offer herself for re-election
as Director.
Resolution 2
3. To approve Directors’ fees of S$31,500 for the financial year ended 31 March 2008 (31 March
2007: S$40,000).
Resolution 3
4. To re-appoint Messrs KPMG as Auditors of the Company and to authorise the Directors to fix
their remuneration.
Resolution 4
5. To transact any other ordinary business that may be transacted at an Annual General
Meeting.
AS SPECIAL BUSINESS
6. To consider and, if thought fit, to pass with or without modifications the following
resolution as an Ordinary Resolution:
Resolution 5
(1) That pursuant to Section 161 of the Companies Act, Cap. 50 and Rule 806
of the Listing Manual of the Singapore Exchange Securities Trading Limited,
authority be and is hereby given to the Directors of the Company to:
(i)
issue shares in the capital of the Company whether by way of rights,
bonus or otherwise; and/or
(ii)
make or grant offers, agreements or options (collectively, “Instruments”)
that might or would require shares to be issued, including but not
limited to the creation and issue of (as well as adjustments to) warrants,
debentures or other instruments convertible into shares;
at any time and upon such terms and conditions and for such purposes and
to such persons as the Directors may in their absolute discretion deem fit;
and
(2) (notwithstanding the authority conferred by this Resolution may have ceased
to be in force) issue shares in pursuance of any Instrument made or granted
by the Directors while this Resolution was in force,
China Healthcare Limited • Annual Report 2008
Notice of Annual General Meeting
69
provided that:
(a)
(b)
the aggregate number of shares to be issued pursuant to this Resolution
(including shares to be issued in pursuance of Instruments made or granted
pursuant to this Resolution) does not exceed fifty per cent (50%) of the
total number of issued shares excluding treasury shares in the capital of
the Company, of which the aggregate number of shares and convertible
securities to be issued other than on a pro rata basis to existing shareholders
of the Company (including shares to be issued in pursuance of Instruments
made or granted pursuant to this Resolution) does not exceed twenty per
cent (20%) of the total number of issued shares excluding treasury shares in
the capital of the Company;
for the purpose of determining the aggregate number of shares that may be
issued under this Resolution, the total number of issued shares excluding
treasury shares shall be based on the total number of issued shares excluding
treasury shares in the capital of the Company at the time this Resolution is
passed, after adjusting for:
(i)
new shares arising from the conversion or exercise of any convertible
securities or share options or vesting of share awards outstanding or
subsisting at the time this Resolution is passed; and
(c)
(ii)
any subsequent bonus issue, consolidation or sub-division of shares;
and
the authority conferred by this Resolution shall, unless revoked or varied by
the Company in general meeting, continue in force until the conclusion of
the next Annual General Meeting of the Company or the date by which the
next Annual General Meeting of the Company is required by law to be held,
whichever is the earlier.
7. To consider and, if thought fit, to pass with or without modifications the following
resolution as an Ordinary Resolution:
Resolution 6
That authority be and is hereby given to the Directors of the Company to offer and
grant options in accordance with the provisions of the China Healthcare Employees’
Share Option Scheme (the “Scheme”) and pursuant to Section 161 of the Companies
Act, Cap. 50, to allot and issue from time to time such number of shares in the capital
of the Company as may be required to be issued pursuant to the exercise of the
options granted under the Scheme provided always that the aggregate number of
shares to be issued pursuant to the Scheme shall not exceed fifteen per cent (15%)
of the total number of issued shares excluding treasury shares in the capital of the
Company from time to time.
By Order of the Board
Lee Seng Suan
Company Secretary
Singapore
10 July 2008
70
China Healthcare Limited • Annual Report 2008
Notice of Annual General Meeting
NOTES
1. A Member entitled to attend and vote at the Annual General Meeting is entitled to appoint not more than two proxies to
attend and vote in his/her stead. Such proxy need not be a Member of the Company and where there are two proxies,
the number of shares to be represented by each proxy must be stated.
2. The instrument or form appointing a proxy, duly executed, must be deposited at the Company’s registered office at
452, Upper East Coast Road, Singapore 466500, not less than 48 hours before the time for holding the above Annual
General Meeting.
EXPLANATORY NOTES ON SPECIAL BUSINESS TO BE TRANSACTED
1. The proposed Ordinary Resolution 5, if passed, will empower the Directors, from the date of this Annual General
Meeting until the next Annual General Meeting, to allot and issue new shares and/or convertible securities in the
capital of the Company including a rights or bonus issue without seeking further approval from shareholders in general
meeting, for such purposes as the Directors consider would be in the best interests of the Company. The maximum
number of shares which the Directors may issue pursuant to this Resolution shall not exceed the quantum set out in
the Resolution.
2. The proposed Ordinary Resolution 6, if passed, will empower the Directors of the Company to offer and grant options
under the China Healthcare Employees’ Share Option Scheme (the “Scheme”) and to allot and issue shares pursuant
to the exercise of such options under the Scheme up to an aggregate number of shares not exceeding fifteen (15%)
of the total number of issued shares in the capital of the Company from time to time.
CHINA HEALTHCARE LIMITED
(Incorporated in the Republic of Singapore)
Company Reg. No. 200202500K
PROXY FORM
IMPORTANT:
1. For Investors who have used their CPF moneys to buy shares of
China Healthcare Limited, the Annual Report 2008 is forwarded to
them at the request of their CPF Approved Nominees and is sent
solely FOR INFORMATION ONLY.
2. This Proxy Form is not valid for use by CPF Investors and shall be
ineffective for all intents and purposes if used or purported to be
used by them.
3. CPF Investors who wish to vote should contact their CPF Approved
Nominees.
I/We,
of
(Name)
(Address)
being a member/members of China Healthcare Limited (the “Company”), hereby appoint
Name Address NRIC/Passport No.
Proportion of
Shareholdings (%)
(a)
and/or (delete as appropriate)
(b)
as my/our proxy/proxies to attend and to vote for me/us and on my/our behalf and, if necessary, to demand a poll, at the
6th Annual General Meeting of the Company to be held at 235 Corporation Drive, West Point Hospital, Singapore 619771 on
Friday, 25 July 2008 at 11.00 a.m. and at any adjournment thereof.
(Please indicate with an “X” in the spaces provided whether you wish your vote(s) to be cast for or against the Resolutions
to be proposed at the Meeting as indicated hereunder. In the absence of specific directions, the proxy/proxies will vote
or abstain as he/they may think fit, as he/they will on any other matter arising at the Meeting.)
No. Resolutions relating to: For Against
1 Adoption of Directors’ Report and Financial Statements.
2 Re-election of Mdm Koh Hin Ling as Director.
3 Approval of Directors’ fees.
4 Re-appointment of KPMG as Auditors.
5 Authority for Directors to allot and issue new shares.
6 Authority for Directors to offer and grant options and issue shares pursuant to the
exercise of options under the China Healthcare Employees’ Share Option Scheme.
&
Dated this day of 2008
Total number of shares in: No. of Shares
a) CDP Register
b) Register of Members
Signature of Shareholder(s) or
Common Seal of Corporate Shareholder
Notes:
1. A member of the Company entitled to attend and vote at the above meeting is entitled to appoint not more than two proxies to attend and vote in his/her
stead. A proxy need not be a member of the Company and where there are two proxies, the number of shares to be represented by each proxy must
be stated.
2. This Proxy Form must be signed by the appointor or his/her duly authorised attorney or, if the appointor is a body corporate, signed by a duly authorised
officer or his attorney and affixed with its common seal thereto.
3. This instrument appointing a proxy [together with the power of attorney (if any) under which it is signed or a certified copy thereof], must be deposited
at the registered office of the Company at 452, Upper East Coast Road, Singapore 466500 not less than 48 hours before the time fixed for holding the
Annual General Meeting.
4. Please insert the total number of shares held by you. If you have shares entered against your name in the Depository Register (as defined in Section
130A of the Companies Act, Chapter 50 of Singapore), you should insert that number of shares. If you have shares registered in your name in the
Register of Members, you should insert that number of shares. If you have shares entered against your name in the Depository Register and shares
registered in your name in the Register of Members, you should insert the aggregate number of shares entered against your name in the Depository
Register and registered in your name in the Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be
deemed to relate to all the shares held by you.
5. The Company shall be entitled to reject this instrument of proxy if it is incomplete, not properly completed or illegible or where the true intention of the
appointor is not ascertainable from the instructions of the appointor specified in this instrument of proxy. In addition, in the case of members whose
shares are deposited with The Central Depository (Pte) Limited (“CDP”), the Company may reject any instrument of proxy lodged if such member is not
shown to have shares entered against his name in the Depository Register 48 hours before the time fixed for holding the Annual General Meeting as
certified by CDP to the Company.
fold along this line (1)
Please affix
postage
stamp
The Company Secretary
China Healthcare Limited
452 Upper East Coast Road
Singapore 466500
fold along this line (2)
Our Services
Residential Nursing Care
Respite Care
Long & Short Term Care
Incontinence Management
Wound Management
Therapy Services
Speech Therapy
Physiotherapy
Occupational Therapy
Rehabilitation Services
Stroke Rehabilitation
Geriatric Rehabilitation
Respiratory Rehabilitation
Auxiliary Services
Home Care
Hospital Management
Ambulance
Traditional Chinese Medicine
Caregiver Training Program
West Point Hospital
In Patient Services
24 Hrs Outpatient and A&E Services
Retail Pharmacy
Rehabilitation and Physiotherapy
Laboratory Tests
Radiology Services
Traditional Chinese Medicine
Our Locations
SINGAPORE
Upper East Coast Road
452 Upper East Coast Road
Tel: (65) 6445 8838
Chai Chee
351 Chai Chee Street #03-01
Tel: (65) 6441 6811
Braddell
58 Braddell Road
Tel: (65) 6487 3133
Buangkok
10 Buangkok View, Block 5,
Basement, Level 1 & 2
Tel: (65) 6385 6860
Choa Chu Kang
53 Choa Chu Kang Road
Tel: (65) 6769 8878
Bukit Timah
16 Bukit Timah Avenue
Tel: (65) 6467 0170
Sunnyville Nursing Home
10 Ama Keng Road
Tel: (65) 6793 7009
ECON TCM Services
351 Chai Chee Street #02-06
Tel: (65) 6449 8636
ECON Home Care Services
260 Sims Avenue #04-01
Tel: (65) 6745 4335
ECON Careskill Training
Centre
260 Sims Avenue #04-01
Tel (65) 6741 8640
ECON Ambulance Services
Hotline: (65) 6382 8888
West Point Hospital
235 Corporation Drive
Tel: (65) 6262 5858
MALAYSIA
ECON Medicare Centre
6th Floor
Chinese Maternity Hospital
No.106 Jalan Pudu
55100 Kuala Lumpur
Tel: 603-20267118
20 Jalan Afifi, Cisco Centre #06-02/03/04, Singapore 409179
Tel: (65) 6447 8788 Fax: (65) 6449 7707
Email: econ@econhealthcare.com
www.econhealthcare.com
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