Broadening Horizon

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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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