A Journey of Continuous Caring

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2 A Journey of Continuous Caring The butterfly on the front cover symbolises the transformation that KPJ has undergone in its colourful and exciting corporate journey. A butterfly does not begin as such, but must evolve and transform in order to reach its true potential. Like the butterfly, KPJ has gone through various phases on its transformational journey. From the formative stage, strengthening stage to consolidation phase and now the transformation stage, KPJ is transforming into a regional leader in healthcare management and services. A butterfly continuously journeys from flower to flower, and KPJ journeys from location to location, and strength to strength. Along the journey, it creates a legacy of warmth and caring, wellness and healing. KPJ has taken the journey from Johor to Kuala Lumpur to Ipoh, on to other states of Malaysia and further and beyond, to the other parts of the world. Along the way, KPJ has established its hospitals with similar commitment, providing the best of healthcare services. All these are the result of the Journey of Continuous Caring taken by its committed team made up of professional managers, doctors, nurses, support staff and stakeholders in line with its Vision and Mission.

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4 KPJ CARES For the last 27 years, KPJ has remained as an organisation with a heart touching the lives of many people. Embracing Corporate Responsibility (CR) throughout KPJ s business has been the hallmark of its services. Professional managers, doctors, nurses, support staff and stakeholders have moved beyond merely giving medical services towards striving for greater visibility and prominence in compassion through strong community outreach programmes based on the spirit of Continuous Sharing and Caring

5 Ensuring the GROWTH AND STRENGTH of KPJ over the years through creative and innovative strategies has enabled the organisation to move forward in DRIVING STANDARDS AND CONTINUOUS INNOVATION and in DEVELOPING THE COMMUNITY as KPJ s contribution towards the well-being of society. DEVELOPING THE GROUP S OWN Human Capital Strength allows KPJ to be the best in all it does, particularly in CARING FOR HEALTH, SAFETY AND THE ENVIRONMENT. With its unwavering commitment, KPJ is known for INSPIRING TRUST AND ACCOUNTABILITY and standing firm on the principles of BUSINESS JIHAD: Integrity Uprightness Community Spirit The Group s JIHAD is the adherence to the RIGHT CONDUCT AND ETHICS to achieve BUSINESS EXCELLENCE. At the same time, KPJ remains focussed on: KPJ s CORPORATE VISION The Preferred Provider in Healthcare Services KPJ s CORPORATE MISSION Delivering Quality Healthcare Services to our Customers As KPJ continuously strives to achieve the Vision and carrying out the Mission, it will also continue to build on its CORE VALUES: Ensuring SAFETY Delivering service with COURTESY Performing the duties with INTEGRITY Exercising PROFESSIONALISM at all times Striving for CONTINUOUS IMPROVEMENT

6 Contents 3 Vision/Mission/Core Values 5 Corporate Profile 6 Corporate Information 10 Corporate Structure 11 Key Performance Statistics 12 At the Helm of the KPJ Group 13 Board of Directors 14 Directors Profile 22 Statement to Shareholders 32 Making It Happen A Strong Management Team 38 Realising Operational Excellence 39 Growth and Strength 41 Driving Standards and Continuous Innovation 44 Developing the Community 46 Developing KPJ s Own Human Capital Strength 48 Caring for Health, Safety and the Environment 50 Events & Happenings of KPJ Hospitals 54 Inspiring Trust and Accountability 55 Statement on Corporate Governance 61 Statement on Internal Control 65 Audit Committee Report 68 Medical Advisory Committee Report 73 Hospital Medical Directors 74 Announcements to Bursa Malaysia 76 Financial Statements 142 Shareholdings Statistics 144 Compliance Information 146 List of Properties 148 Notice of Annual General Meeting 151 Statement Accompanying Notice of Annual General Meeting 153 Proxy Form 155 Media and Communications

7 Corporate Profile Leading and Delivering the Best in Healthcare KPJ Healthcare Berhad (KPJ) is the healthcare division of Johor Corporation (JCorp) and a leader in Malaysia s challenging healthcare service industry. Since the establishment of its first hospital in 1981, KPJ has grown from strength to strength and currently has 42 subsidiary and associate companies, which principally provide medical and specialist healthcare services, making it one of Malaysia s largest healthcare enterprises. Its portfolio of businesses includes hospital management, healthcare technical services, hospital development and commissioning, nursing, health sciences and continuous professional healthcare education, pathology services and central procurement. KPJ is the first homegrown healthcare group in Malaysia listed on the Main Board of Bursa Malaysia on 29 November With more than RM1.1 billion in assets and shareholders funds in excess of RM508.9 million, KPJ is now one of the leading and largest listed private healthcare providers in the country with paid up capital of RM207.8 million. Standing firmly behind its corporate vision, The Preferred Provider in Healthcare Services, KPJ since its establishment, continuously seeks new opportunities to ensure a commendable performance. KPJ s achievements are largely the result of its firm corporate philosophy which inspires excellence, encourages individual initiative and teamwork, harnesses strategic synergy and instills high integrity and entrepreneurial spirit to be in the forefront of national and international healthcare delivery and development. This is further strengthened through the corporate mission, which is to Deliver Quality Healthcare Services to Our Customers, in line with its five core values: Safety, Courtesy, Integrity, Professionalism and Continuous Improvement. KPJ is committed to its customers to deliver quality care with unsurpassed service provided by a professional team of specialists and support staff using state-of-the-art technology. KPJ is anchored by a pool of expert clinical professionals and experienced healthcare managers, giving KPJ a strong position within the healthcare industry. KPJ s extensive network now includes 25 private specialist hospitals consisting of 19 in Malaysia, 3 in Indonesia, 1 in Bangladesh and 2 in Saudi Arabia. KPJ, with its firm foundation, more than 27 years experience and strong dedication and commitment is poised to greet the challenges of the globalised market. 5 Annual Report 2008

8 Corporate Information REGISTERED OFFICE Level 2, Persada Johor International Convention Centre Jalan Abdullah Ibrahim, Johor Bahru, Johor. Tel : (607) Fax : (607) pdnjohor@jcorp.com.my Auditor PRICEWATERHOUSECOOPERS Level 10, 1 Sentral, Jalan Travers, Kuala Lumpur Sentral, P.O. Box 10192, Kuala Lumpur, Wilayah Persekutuan. 6 CORPORATE OFFICE 7, Persiaran Titiwangsa 3, Kuala Lumpur, Wilayah Persekutuan. Tel : (603) Fax : (603) kpj@kpjhealth.com.my Company Secretaries * Salmah Abd Wahab (LS 02140) * Idham Jihadi Abu Bakar ACIS (MAICSA ) Principal Bankers Malayan Banking Berhad 343, Jalan Pahang, Setapak, Kuala Lumpur, Wilayah Persekutuan. CIMB Bank Berhad Ground Floor, No 338, Bangunan AMAL, Jalan Tuanku Abdul Rahman, Kuala Lumpur, Wilayah Persekutuan. HSBC Bank Malaysia Berhad No. 2, Lebuh Ampang, P.O.Box 10244, Kuala Lumpur, Wilayah Persekutuan. Registrar PRO CORPORATE MANAGEMENT SERVICES SDN BHD Suite 2, 17th Floor, KOMTAR, Jalan Wong Ah Fook, Johor Bahru, Johor Darul Takzim. Postal Address : KB No 735, Johor Bahru, Johor Tel : (607) / Fax : (607) Stock Exchange Listing BURSA MALAYSIA SECURITIES BERHAD Main Board (Since 29 November 1994) KPJ Healthcare Berhad (Company No M)

9 KPJ s Strong Network of Hospitals HEAD OFFICE KPJ HEALTHCARE BERHAD 7, Persiaran Titiwangsa 3, Kuala Lumpur. Tel : (603) Fax : (603) / kpj@kpjhealth.com.my Website : MALAYSIA ACCREDITED HOSPITALS BY MALAYSIAN SOCIETY FOR QUALITY IN HEALTH (MSQH) KPJ JOHOR SPECIALIST HOSPITAL 39-B, Jalan Abdul Samad, Johor Bahru, Johor. Tel : (607) Fax : (607) jsh@jsh.kpjhealth.com.my KPJ IPOH SPECIALIST HOSPITAL 26, Jalan Raja Dihilir, Ipoh, Perak. Tel : (605) Fax : (605) ish@ish.kpjhealth.com.my KPJ AMPANG PUTERI SPECIALIST HOSPITAL 1, Jalan Mamanda 9, Taman Dato Ahmad Razali, Ampang, Selangor. Tel : (603) Fax : (603) apsh@apsh.kpjhealth.com.my KPJ DAMANSARA SPECIALIST HOSPITAL 119, Jalan SS 20/10, Damansara Utama, Petaling Jaya, Selangor. Tel : (603) Fax : (603) dsh@dsh.kpjhealth.com.my KPJ SELANGOR Specialist Hospital Lot 1, Jalan Singa 20/1, Section 20, Shah Alam, Selangor. Tel : (603) Fax : (603) / kpjselangor@kpjselangor. kpjhealth.com.my Annual Report 2008

10 Corporate Information Malaysia TAWAKAL HOSPITAL 202-A, Jalan Pahang, Kuala Lumpur, Wilayah Persekutuan. Tel : (603) Fax : (603) tawakal@tawakal.kpjhealth.com.my KUANTAN SPECIALIST HOSPITAL 51, Jalan Alor Akar, Taman Kuantan, Kuantan, Pahang. Tel : (609) Fax : (609) ksh@ksh.kpjhealth.com.my PUTERI SPECIALIST HOSPITAL 33, Jalan Tun Abdul Razak (Susur 5), Johor Bahru, Johor. Tel : (607) Fax : (607) psh@psh.kpjhealth.com.my 8 BUKIT MERTAJAM SPECIALIST HOSPITAL 565, Jalan Sungai Rambai, Bukit Mertajam, Seberang Perai,Pulau Pinang. Tel : (604) Fax : (604) bmsh@bmsh.kpjhealth.com.my KEDAH MEDICAL CENTRE Pumpong, Alor Setar, Kedah. Tel : (604) Fax : (604) kmc@kedahmedical.com.my PERDANA SPECIALIST HOSPITAL Lot PT 37 & 600, Seksyen 14, Jalan Bayam, Kota Bharu, Kelantan. Tel : (609) Fax : (609) perdana@perdana.kpjhealth.com.my KUCHING SPECIALIST HOSPITAL Lot 10420, Block 11, Tabuan Stutong Commercial Centre, Jalan Setia Raja, Kuching, Sarawak. Tel : (6082) Fax : (6082) kcsh@kcsh.kpjhealth.com.my SEREMBAN SPECIALIST HOSPITAL Lot 6219 & 6220, Jalan Toman 1, Kemayan Square, Seremban, Negeri Sembilan. Tel : (606) Fax : (606) ssh@ssh.kpjhealth.com.my DAMAI SPECIALIST HOSPITAL DSC Building, Lorong Pokok Tepus 1,Off Jalan Damai, Kota Kinabalu, Sabah. Tel : (6088) Fax : (6088) / dsc@dsc.kpjhealth.com.my SENTOSA MEDICAL CENTRE No.36, Jalan Chemur, Kompleks Damai, Kuala Lumpur. Tel : (603) Fax : (603) sentosa@sentosa.kpjhealth.com.my KPJ KAJANG SPECIALIST HOSPITAL Jalan Cheras, Kajang, Selangor. Tel : (603) Fax : (603) kpjkajang@kpjkajang.kpjhealth.com.my TAIPING MEDICAL CENTRE 45-49, Jalan Medan Taiping 2, Medan Taiping, Taiping, Perak. Tel : (605) / Fax : (605) tmc@tmc.kpjhealth.com.my KPJ Healthcare Berhad (Company No M)

11 PUSAT PAKAR KLUANG UTAMA No. 1, Susur 1, Jalan Besar, Kluang, Johor Tel : (607) Fax : (607) utamaklu@streamyx.com HOSPITAL PENAWAR 17 & 18, Pusat Perniagaan Pasir Gudang, Pasir Gudang, Johor. Tel : (607) Fax : (607) hospen@hospitalpenawar.com INTERNATIONAL Hospitals RS MEDIKA PERMATA HIJAU Jalan Raya Kebayoran Lama 64, Jakarta Barat, Indonesia. Tel : (6221) Fax : (6221) rsmph@rad.net.id RS SELASIH Jalan Khatib Sulaiman, No.72 Padang, Indonesia. Tel : (62751) Fax : (62751) rsselasih@yahoo.com RS BUMI SERPONG DAMAI Jalan Letnan Sutopo Kav Kom 111A, No. 1, Bumi Serpong Damai, Serpong Tangerang, 15321, Indonesia. Tel : (6221) Fax : (6221) UNITED HOSPITAL LIMITED Plot 15, Road 71, Gulshan, Dhaka 1212, Bangladesh. Tel : (8802) Fax : (8802) info@united.com Website : JEDDAH CLINIC HOSPITAL Al-Kandara, Airport Street, P.O. Box 115, Jeddah 21411, Kingdom of Saudi Arabia. Tel : (966) Fax : (966) njc@njchospital.com NEW JEDDAH CLINIC HOSPITAL Madinah Road, Palasteen Square, P.O. Box 7692, Jeddah 21472, Kingdom of Saudi Arabia. Tel : (966) Fax : (966) njc@njchospital.com Healthcare Related Companies KPJ INTERNATIONAL COLLEGE OF NURSING AND HEALTH SCIENCES Lot PT 17010, Persiaran Seriemas, Kota Seriemas, Nilai, Negeri Sembilan. Tel : (606) Fax : (606) pnc@kpjic.edu.my Website : LABLINK (M) SDN BHD Suite 1, 3rd Floor, Bangunan PharmaCARE, Lot 129, Jalan Pahang Barat, Kuala Lumpur. Tel : (603) Fax : (603) PHARMASERV ALLIANCES SDN BHD No. 22 & 24, Jalan 225, Section 51A, Petaling Jaya, Selangor. Tel : (603) Fax : (603) TERAJU FARMA SDN BHD Level 1, No. 22, Jalan 225, Section 51A, Petaling Jaya, Selangor. Tel : (603) Fax : (603) FABRiCARE LAUNDRY SDN BHD No.11A, Jalan Petaling, Kawasan Perindustrian Dato Onn, Larkin, Johor Bahru, Johor. Tel : (607) /3 Fax : (607) HEALTHCARE TECHNICAL SERVICES SDN BHD Suite 1, Mezzanine Floor, Bangunan PharmaCARE, Lot 129, Jalan Pahang Barat, Kuala Lumpur. Tel : (603) Fax : (603) Annual Report 2008

12 Corporate Structure 100% Ampang Puteri Specialist Hospital Sdn Bhd (KPJ Ampang Puteri Specialist Hospital) 70% Kuching Specialist Hospital Sdn Bhd (Kuching Specialist Hospital) 100% Damansara Specialist Hospital Sdn Bhd (KPJ Damansara Specialist Hospital) 61% Perdana Specialist Hospital Sdn Bhd (Perdana Specialist Hospital, Kota Bharu) 100% Johor Specialist Hospital Sdn Bhd (KPJ Johor Specialist Hospital) 100% Sentosa Medical Centre Sdn Bhd (Sentosa Medical Centre, Kuala Lumpur) 60% Selangor Specialist Hospital Sdn Bhd (KPJ Selangor Specialist Hospital) % 100% 100% Kumpulan Perubatan (Johor) Sdn Bhd RenalCare Perubatan (M) Sdn Bhd Puteri Specialist Hospital (Johor) Sdn Bhd (Puteri Specialist Hospital) 100% 100% 100% 100% Kajang Specialist Hospital Sdn Bhd (KPJ Kajang Specialist Hospital) Prai Specialist Hospital Sdn Bhd (KPJ Penang Specialist Hospital) Renal-Link Sentosa Sdn Bhd Taiping Medical Centre Sdn Bhd (Taiping Medical Centre) 30% 100% 46% 51% Kedah Medical Centre Sdn Bhd (Kedah Medical Centre) Hospital Penawar Sdn Bhd (Hospital Penawar, Pasir Gudang) Puteri Nursing College Sdn Bhd (KPJ International College of Nursing and Health Sciences) Hospital Pusrawi SMC Sdn Bhd 100% 98% Tawakal Holdings Sdn Bhd 100% Ipoh Specialist Hospital Sdn Bhd (KPJ Ipoh Specialist Hospital) Pusat Pakar Tawakal Sdn Bhd (Tawakal Hospital) 100% 95% Pusat Pakar Kluang Utama Sdn Bhd (Pusat Pakar Kluang Utama) Kota Kinabalu Specialist Hospital Sdn Bhd (Damai Specialist Hospital) 100% Pharmaserv Alliances Sdn Bhd 100% 75% FP Marketing (S) Pte Ltd Medical Supplies (Sarawak) Sdn Bhd 77% Kuantan Specialist Hospital Sdn Bhd (Kuantan Specialist Hospital) 100% PharmaCARE Sdn Bhd 49% Al-'Aqar KPJ REIT 75% PT Khasanah Putra Jakarta Medica (Rumah Sakit Medika Bumi Serpong Damai, Jakarta) 90% FABRiCARE Laundry Sdn Bhd 72% 70% Seremban Specialist Hospital Sdn Bhd (Seremban Specialist Hospital) Bukit Mertajam Specialist Hospital Sdn Bhd (Bukit Mertajam Specialist Hospital) 84% 75% Lablink (M) Sdn Bhd 30% Teraju Farma Sdn Bhd Healthcare Technical Services Sdn Bhd KPJ Healthcare Berhad (Company No M)

13 Key Performance Statistics Year No. of Hospitals in Malaysia Outpatients 1,078,933 1,162,585 1,556,172 1,733,500 1,956,303 Inpatients 108, , , , ,291 Turnover (RM 000) 583, , ,455 1,108,024 1,267,305 Profit Before Taxation (RM 000) 40,646 42,301 60,060 85, ,052 Net Profit Attributable to Equity Holders (RM 000) 31,836 32,657 40,962 74,237 85,644 Earnings per Share (sen) Dividend Rate (%) Share Capital (RM 000) 201, , , , ,461 Shareholders Fund (RM 000) Net Tangible Assets (RM 000) 359, , , , , , , , , , Economic Value Added (RM Million) Annual Report 2008

14 At the Helm of the KPJ Group 12 Chairman 1 Tan Sri Dato Muhammad Ali Hashim Managing Director 2 Datin Paduka Siti Sa diah Sheikh Bakir KPJ Healthcare Berhad (Company No M)

15 Board of Directors 13 Board Members 3 Tan Sri Datuk Arshad Ayub Independent Non-Executive Director 7 Zainah Mustafa Independent Non-Executive Director 11 Dr Yoong Fook Ngian Independent Non-Executive Director 4 5 Tan Sri Dato Dr Abu Bakar Suleiman Independent Non-Executive Director Datuk Azzat Kamaludin Independent Non-Executive Director 8 9 Ahamad Mohamad Non-Independent Non-Executive Director Kamaruzzaman Abu Kassim Non-Independent Non-Executive Director (Resigned on 1 January 2009) Rozan Mohd Sa at (not in picture) Non-Independent Non-Executive Director (Appointed on 1 January 2009) 6 Datuk Dr Hussein Awang Independent Non-Executive Director 10 Dr Kok Chin Leong Independent Non-Executive Director Annual Report 2008

16 At the Helm of the KPJ Group Tan Sri Dato Muhammad Ali Hashim Aged 62, Tan Sri Dato Muhammad Ali Hashim was appointed as the Non-Independent Non-Executive Chairman of KPJ Healthcare Berhad (KPJ) since 15 September Tan Sri is the President and CEO of Johor Corporation (JCorp), the ultimate holding corporation of KPJ, and has held that position since January He graduated from the University of Malaya with a Bachelor of Economics (Honors) Degree in 1969 and participated in the Senior Executive Programme, Stanford University, United States of America in Tan Sri was conferred the Honorary Doctorate of Management by Universiti Teknologi Malaysia on 19 August, 2000; Honorary Doctorate in Entrepreneurship by Universiti Teknologi MARA (UiTM) on 24 May 2007; and Honorary Doctorate in Technology Management by Universiti Tun Hussein Onn Malaysia (UTHM) on 2 September Tan Sri s tenacity, business acumen and entrepreneurial leadership had enabled JCorp to grow into one of Malaysia s leading conglomerates with more than 250 companies, 8 of which are listed on Bursa Malaysia and another on the London Stock Exchange. Market capitalisation of JCorp s portion of PLC shares stood at RM3.7 billion at end of This highly diversified Group offers meaningful career opportunities to more than 50,000 employees. As President and CEO of JCorp Group, Tan Sri had also successfully steered the Group through extreme business challenges, especially when the JCorp Group was hard hit by the 1997 Asian Financial Crisis. In , JCorp, through Kulim (Malaysia) Berhad had also successfully acquired two PLCs namely QSR Brands Bhd and KFC Holdings (Malaysia) Bhd, overcoming a protracted hostile challenge. This had led to the exercise becoming one of Malaysia s landmark corporate acquisitions. JCorp, has also successfully managed Malaysia s one and only market-driven local authority, namely the Pasir Gudang Local Authority (PGLA) now known as Pasir Gudang Municipal Council (PGMC), with Tan Sri Ali as President with mayorial responsibilities from January 1982 up to July JCorp was the single most important agency responsible for Pasir Gudang s development into one of Malaysia s vibrant and dynamic industrial townships. PGMC made history by becoming the first business-driven local authority in Malaysia to issue a Mudharabah Bond rated triple A by Rating Agency Malaysia Berhad. Tan Sri is the Chairman of Kulim (Malaysia) Berhad, QSR Brands Bhd, KFC Holdings (Malaysia) Bhd, Sindora Berhad, Johor Land Berhad and Damansara Realty Berhad, which are JCorp s subsidiaries listed on the Main Board of the Bursa Malaysia. Tan Sri is also active as a Council Member of Malaysian Industrial Development Authority (MIDA), President of the Malaysian Kite Council, President of Malaysian Yachting Association, Vice President of the Malaysian Islamic Chamber of Commerce (MICC), Chairman of the MICC Corporate Bureau, and Chairman of Kumpulan Waqaf An-Nur Berhad, an Islamic endowment institution that spearheads JCorp Group s Corporate Responsibility programmes, including the unique Corporate Waqaf Concept initiated by JCorp. Other than as disclosed, Tan Sri does not have any family relationship with any director and/or major shareholder of the Company. He has no personal interest in any business arrangement involving KPJ Healthcare Berhad. He has not been convicted for any offence within the past 10 years and has attended all four (4) Board of Directors Meetings of the Company in the financial year ended 31 December KPJ Healthcare Berhad (Company No M)

17 Directors Profile Datin Paduka Siti Sa diah Sheikh Bakir Aged 57, Datin Paduka Siti Sa diah is the Managing Director of KPJ Healthcare Berhad (KPJ) since 1 March She graduated with a Bachelor in Economics degree from the University of Malaya in 1974, and holds an MBA from Henley Management College, London, United Kingdom. Her career with JCorp commenced in 1974 and she has been directly involved in JCorp s Healthcare Division since Datin Paduka was appointed as the Chief Executive of Kumpulan Perubatan (Johor) Sdn Bhd (KPJSB), the holding company of KPJ, in 1989 and held the post until the listing of KPJ. Datin Paduka currently serves as the Chairman of various hospitals in the KPJ Group. She also is the Chairman of Willis (Malaysia) Sdn Bhd, and a Director of Kulim (Malaysia) Berhad, Damansara REIT Managers Sdn Berhad, Puteri Hotels Sdn Bhd and Kumpulan Waqaf An-Nur Berhad, all of which are companies within the JCorp Group. Committed to promoting excellence in healthcare, Datin Paduka is the President of the Malaysian Society for Quality in Health (MSQH), elected since its inception in 1997 until today. Datin Paduka is a Board member of MATRADE since 1999, a member of the Malaysia Productivity Corporation s (MPC) Consultative Panel on Healthcare since 2001, and a member of the National Patient Safety Council, Ministry of Health since Datin Paduka is an elected Independent Director of Bursa Malaysia since Other than as disclosed, Datin Paduka does not have any family relationships with any director and/or major shareholder of the Company. She has no personal interest in the business arrangement involving KPJ. She has not been convicted for any offence within the past 10 years, and has attended all four (4) Board of Directors Meetings of the Company in the financial year ended 31 December Zainah Mustafa Aged 55, Puan Zainah has served as a Director of KPJ since 21 February 1994 and is also a member of the KPJ Audit Committee. She has been an Independent Non- Executive Director since 1 December She also sits on the board of four other companies in the JCorp Group of Companies namely Damansara Realty Berhad, Puteri Hotels Sdn Bhd, Damansara REIT Managers Sdn Berhad and Al- `Aqar Capital Sdn Bhd. She started her career as an Assistant Senior Auditor in Perbadanan Nasional Berhad in 1977 after graduating from Institut Teknologi MARA (presently UiTM). She obtained her Association of Chartered Certified Accountants (ACCA) United Kingdom in She joined JCorp in October 1978 and rose through the ranks to become the Group Chief Financial Officer before retiring on 31 October Other than as disclosed, she does not have any family relationship with any director and/or major shareholder of the Company. She has no personal interest in any business arrangement involving KPJ. She has not been convicted for any offence, and has attended all four (4) Board of Directors Meetings of the Company in the financial year ended 31 December Annual Report 2008

18 At the Helm of the KPJ Group 16 Tan Sri Datuk Arshad Ayub Aged 81, Tan Sri Datuk Arshad Ayub was appointed to the Board of KPJ on 1 September He is currently an Independent Non- Executive Director and Chairman of the Audit Committee of KPJ. Tan Sri graduated with a Diploma in Agriculture in 1954 from Serdang Agricultural College, Selangor and with a Bachelor of Science (Honours) in Economics and Statistics in 1958 from University College of Wales Aberystwyth, United Kingdom. He graduated with a post graduate Diploma in Business Administration IMEDE now IMD Lausanne, Switzerland. He has had a distinguished career in the Malaysian Civil Service, serving as Deputy Governor of Bank Negara Malaysia ( ), Deputy Director General in the Economics Planning Unit of the Prime Minister s Department ( ) and as Secretary General in the Ministry of Primary Industries (1978), Ministry of Agriculture ( ) and Ministry of Land and Regional Development ( ). He also holds Directorship in Kulim (Malaysia) Berhad, Sindora Berhad, LBI Capital Berhad, Audrey International (M) Berhad, Tomypak Holdings Berhad, Top Glove Corporation Berhad, and Malayan Flour Mills Berhad. Tan Sri is the Chairman and/or Director of several other non-listed companies including Bata Sdn Bhd, CSR Building Materials Sdn Bhd, Pelaburan Johor Berhad, Bistari Johor Berhad, PFM Capital Holdings Sdn Bhd and Chairman of AmanahRaya JMF Asset Management Sdn Bhd. He is presently the President of the Malaysian Rubber Products Manufacturers Association (MRPMA) and Chairman of Malaysian Rubber Export Promotion Council (MREPC). He is a member of the Co-operative College Council and Chairman of the Board of Directors of University of Malaya. Other than as disclosed, he does not have any family relationship with any director and/or major shareholder of the Company. He has no personal interest in any business arrangement involving KPJ. Tan Sri has not been convicted for any offence, and has attended all four (4) Board of Directors Meetings of the Company in the financial year ended 31 December TAN SRI DATO DR ABU BAKAR SULEIMAN Aged 65, Tan Sri Dato Dr Abu Bakar Suleiman was appointed to the Board of KPJ on 15 March He is currently an Independent Non-Executive Director of KPJ. He also sits on the Board of CCM Duopharma Biotech Berhad and Chemical Corporation of Malaysia Berhad. A medical practitioner by profession, he obtained his Bachelor of Medicine and Bachelor of Surgery from Monash University, Australia in 1968 and a Master of Medicine from University of Singapore in He is a member of Royal Australasian College of KPJ Healthcare Berhad (Company No M)

19 Directors Profile Physicians, and an honorary fellow of the American College of Physicians. He began his career as a Medical Officer with the Ministry of Health in 1969 and subsequently completed training in Internal Medicine before he became a Consultant Physician with the Department of Nephrology of Hospital Kuala Lumpur. In 1975, he served as visiting fellow to the Division of Nephrology of Georgetown University Hospital, Washington DC as well as Prince Henry s Hospital of Melbourne, Australia. In 1976, he returned to be the Consultant Nephrologist and Head of Department of Nephrology of Hospital Kuala Lumpur. In 1987, he held the position of Director of Medical Services of Ministry of Health and became Deputy Director General of Health in 1989 before rising to the rank of Director General of Health of the Ministry in 1991 to He attended the advanced management course in Harvard Business School in Upon his official retirement, he was appointed as the President of the International Medical University. He is President of the Malaysian Health Informatics A s s o c i a t i o n, P r e s i d e n t o f N a t i o n a l K i d n e y Foundation, Chairman of the Consultative Panel on Healthcare, Malaysia Productivity Corporation (MPC), Chairman of the Ministry of Health Committee on Living Unrelated Donor Transplantation, a Member of the National Health Welfare Fund, a Committee Member of the Malaysia-Indonesia Business Council and a past President of the Association of Private Hospitals. He is also currently the Chairman of the Medical Advisory Committee of KPJ. Other than as disclosed, he does not have any family relationship with any director and/or major shareholder of the Company. He has no personal interest in any business arrangement involving KPJ. He has not been convicted for any offence, and has attended four (4) Board of Directors Meetings of the Company in the financial year ended 31 December DATUK DR HUSSEIN AWANG Aged 68, Datuk Dr Hussein Awang was appointed to the Board of KPJ on 21 February 1994 and was appointed as a member of the Audit Committee on 12 December He received his Bachelor of Medicine and Bachelor of Surgery (MBBS) in 1964 from University of Melbourne, Australia. He was made a Fellow of the Australasian College of Surgeons in He was the Senior Consultant Urological Surgeon and Head of Department of Urology, General Hospital, Kuala Lumpur from 1976 to He was also the Honorary Professor of Surgery (Urology) Department of Surgery, Universiti Kebangsaan Malaysia, Selangor, from 1978 to May Datuk is a Foundation Fellow of the Academy of Science Malaysia. He is presently the Consultant Urological Surgeon and Medical Director at Hospital Tawakal, a position he has held since May His directorship in other public listed companies includes Hong Leong Bank Berhad and Tasek Corporation Berhad. Other than as disclosed, he does not have any family relationship with any director and/or major shareholder of the Company. He has no personal interest in any business arrangement involving KPJ. He has not been convicted for any offence, and has attended all four (4) Board of Directors Meetings of the Company in the financial year ended 31 December Annual Report 2008

20 At the Helm of the KPJ Group AHAMAD MOHAMAD Aged 56, Ahamad Mohamad was appointed to the Board of KPJ on 1 January He is currently a Non-Independent and Non-Executive Director of KPJ. 18 He graduated with a Bachelor of Economics (Honours) degree in 1976 from the University of Malaya. He joined JCorp in 1976 as a Company Secretary for various companies within the JCorp Group. He has been involved in many of JCorp s projects, among them, the early development of the Johor Specialist Hospital, prefabricated housing project and the Kotaraya Complex in Johor Bahru. At present, he is the Chief Executive of the Palm Oil Division of JCorp. He is currently the Managing Director of Kulim (Malaysia) Berhad, Deputy Chairman of QSR Brands Bhd and KFC Holdings (Malaysia) Bhd and a director of Johor Land Berhad and New Britain Palm Oil Limited (Papua New Guinea) and also in several other companies within the JCorp Group. Other than as disclosed, he does not have any family relationship with any director and/or major shareholder of the Company. He has no personal interest in any business arrangement involving KPJ. He has not been convicted for any offence, and has attended three (3) Board of Directors Meetings of the Company in the financial year ended 31 December DATUK AZZAT KAMALUDIN Aged 64, Datuk Azzat Kamaludin was appointed to the Board of Directors of KPJ on 1 September He is currently an Independent Non-Executive Director and is also a member of the Audit Committee of KPJ. A lawyer by training, he was admitted as an advocate and solicitor of the High Court in 1979 and has been in practice since then as partner of Azzat and Izzat, a law firm. Prior to that, from 1970 to 1979, he served as an administrative and diplomatic officer with the Ministry of Foreign Affairs. He currently serves as Director of several public-listed companies, KPJ Healthcare Berhad (Company No M)

21 Directors Profile namely, Visdynamics Holdings Berhad, Affin Holdings Berhad, Pulai Springs Berhad, Boustead Holdings Berhad, BHIC Berhad and TM International Berhad. Other than as disclosed, he does not have any family relationship with any director and/or major shareholder of the Company. He has no personal interest in any business arrangement involving KPJ. He has not been convicted for any offence, and has attended all four (4) Board of Directors Meetings of the Company in the financial year ended 31 December KAMARUZZAMAN ABU KASSIM 19 Aged 45, Kamaruzzaman Abu Kassim was appointed to the Board of KPJ on 1 August 2006 as a Non-Independent Non-Executive Director. He is the Vice President Corporate Services, International Business & Finance/Chief Operating Officer of JCorp. He subsequently resigned as Director on 1 January He graduated with a Bachelor of Commerce majoring in Accountancy from the University of Wollongong, New South Wales, Australia, in He embarked on his career as an Audit Assistant with Messrs K.E Chen & Associates in May 1988 and later joined Coopers & Lybrand (currently known as PricewaterhouseCoopers) in Johor Bahru. In December 1992, he left the firm to join JCorp as Deputy Manager, Corporate Finance Department. He left JCorp as the General Manager to join Damansara Realty Berhad as Executive Director in September 1999 until September He is currently the Deputy Chairman of Damansara Realty Berhad and a Director of Kulim (Malaysia) Berhad, both are JCorp s companies listed on the Main Board of Bursa Malaysia. Other than as disclosed, he does not have any family relationship with any director and/or major shareholder of the Company. He has no personal interest in any business arrangement involving KPJ. He has not been convicted for any offence, and has attended three (3) Board of Directors Meetings of the Company in the financial year ended 31 December Annual Report 2008

22 At the Helm of the KPJ Group 20 DR YOONG FOOK NGIAN Aged 68, Dr Yoong Fook Ngian is a Director of KPJ and was appointed to the Board of KPJ on 7 July He is an Independent N o n - E x e c u t i v e Director of KPJ and a member of the Medical Advisory Committee and Chairman of the Clinical Governance Action Committee of KPJ. He received his Bachelor of Medicine and Bachelor of Surgery (MBBS) from the University of Sydney in He obtained his post-graduate qualification in Otolaryngology in 1972 and was conferred a Fellow of the Royal College of Surgeons of Edinburgh. He is also a Fellow of the College of Surgeons of Malaysia and a member of the Academy of Medicine of Malaysia. He was employed by the Ministry of Health from 1966 to During this period, he worked as a Medical Officer in the field of Anaesthesiology, Accident and Emergency Medicine, General Surgery and as Registrar in Ear, Nose and Throat (ENT) Surgery. He left for Britain in 1970 for further training in ENT Surgery. In 1972, he established the ENT Department in Hospital Ipoh. His last posting with the Ministry of Health was as Head of ENT Surgery in General Hospital Kuala Lumpur before venturing into private practice in In private practice, he was ENT Consultant at Our Lady s Hospital in Ipoh from 1975 to He has been Resident ENT Consultant in Ipoh Specialist Hospital since 1983 and is one of its founding-doctors. He has been the Medical Director of Ipoh Specialist Hospital since 1994 until December He is a Life Member of the Malaysian Medical Association and a Past-Chairman of the Perak branch. He is also a Past- President of the Perak Medical Practitioners Society. He is an active member of the Rotary Club of Greentown and a Past-President of the club. Dr Yoong is a Trustee of the Hope Haemodialysis Society, an NGO which provides subsidised haemodialysis for poor patients. In 1997, Dr Yoong was conferred the Perak State Award of Darjah Paduka Mahkota Perak (PMP). Other than as disclosed, he does not have any family relationship with any director and/or major shareholder of the Company. He has no personal interest in any business arrangement involving KPJ. He has not been convicted for any offence, and has attended all four (4) Board of Directors Meetings of the Company in the financial year ended 31 December DR KOK CHIN LEONG Aged 52, Dr Kok Chin Leong is a Director of KPJ and was appointed to the Board of KPJ on 7 July He is an Independent Non-Executive Director of KPJ and a member of the KPJ Clinical Governance Policy Committee since 2001 and presently the Chairman for the Committee since 2005 and the Advisor for KPJ s Clinical Information System since January He received his Bachelor of Medicine and Bachelor of Surgery (MBBS) in 1982 from University of Malaya and completed his post-graduate studies in Paediatrics (Master of Medicine Paediatrics) in 1990 from Universiti Kebangsaan Malaysia. He was conferred a Fellow of the Royal College of Physician of United Kingdom in 1990 and registered as full medical practitioner with the Malaysian Medical Council in His medical KPJ Healthcare Berhad (Company No M)

23 Directors Profile career started in 1986 at Kuala Lumpur General Hospital in Clinical Paediatrics, and he has worked as Senior House Officer/Registrar at Derby Children s Hospital, United Kingdom in He served as the Clinical Specialist in Paediatrics at Hospital Sultanah Aminah, Johor Bahru from 1991 to 1992 and was the Head of Department of Paediatrics at Batu Pahat Hospital from 1991 to 1993 and Senior Consultant Paediatrician at Hospital Sultanah Aminah, Johor Bahru from 1993 until He was the Project Co-ordinator/Chairman for the Batu Pahat Rotary Club Haemodialysis Centre from 1992 to 1993 and was the Southern Representative for Malaysian Paediatric Association from 2000 to 2004 and the Southern Co-ordinator for Infant Touch Therapy. He has been the Resident Consultant Paediatrician at Puteri Specialist Hospital since 1994 and was appointed as the Medical Director in February 2000 until June His main interests are delivering Healthcare via Information and Communication Technology (ICT), Patient Safety and Physicians Performance and Appraisal assessment. Other than as disclosed, he does not have any family relationship with any director and/or major shareholder of the Company. He has no personal interest in any business arrangement involving KPJ. He has not been convicted for any offence, and has attended three (3) Board of Directors Meetings of the Company in the financial year ended 31 December Rozan Mohd Sa at Aged 49, Rozan Mohd Sa at is a Director of KPJ and was appointed to the Board of KPJ on 1 January He is a Non-Independent Non-Executive Director of KPJ. He is the Managing Director of Sindora Berhad. He holds a Bachelor of Economics (Honours) majoring in Statistics from Universiti Kebangsaan Malaysia. He started his career in 1983 as an Administrative Officer in Planning and Research Department of JCorp before being seconded as an Operations Manager in Sergam Berhad, a subsidiary of JCorp in From , he served in the Corporate Communications Department, JCorp as an Administrative Officer. From 1988 to 1993, he was appointed as the Executive Director of several subsidiaries in JCorp Group. In 1994, he was appointed as the General Manager of JCorp s Tourism Division before assuming the post of Chief Executive of the same Division on 15 June 1996, a post which he held until his appointment as the General Manager, Business Development, JCorp beginning January He served as the Senior General Manager, Business Development of JCorp from 2000 until August He is currently the Senior Vice President, Intrapreneur D e v e l o p m e n t o f JCorp. He is also a Director of Kulim (Malaysia) Berhad a n d K u m p u l a n Wa q a f A n - N u r Berhad. Other than as disclosed, he does not have any family relationship with any director and/or major shareholder of the Company. He has no personal interest in any business arrangement involving KPJ. He has not been convicted for any offence. Annual Report 2008

24 22 Sitting: Tan Sri Dato Muhammad Ali Hashim (Chairman) Standing: Datin Paduka Siti Sa diah Sheikh Bakir (Managing Director) KPJ Healthcare Berhad (Company No M)

25 Statement to Shareholders KPJ embraces the notion of Caring for Life. Hence, KPJ has chosen A Journey of Continuous Caring as the theme for the 2008 Annual Report. Beneath this theme lies KPJ s deep devotion to continuously care for its patients as well as its team of dedicated medical consultants and personnel at all levels. KPJ values its people and build trusted teams to deliver its services to the customers with much care. At the same time, KPJ constantly improves and transforms its services and facilities. Acting with credibility, professionalism and integrity, KPJ instils public trust and confidence as it continues with its journey to deliver the best in healthcare services. Although 2008 was a challenging year for the global economy, KPJ Healthcare Berhad (KPJ) managed to emerge in stronger shape and the business was better positioned for future growth. There were several significant developments in 2008 and on behalf of the Board, we are pleased to present the Annual Report and Financial Statements of the company for the financial year ended 31 December CONTINUOUS JOURNEY From its maiden achievement of operating just one hospital in 1981, KPJ has today become a key player in Malaysia s healthcare industry. The company now operates 19 hospitals in the country and six overseas, making it the owner of the largest network of hospitals in Malaysia. Through the years, KPJ has consistently been able to maintain a harmonious balance between the need to remain as a viable and profitable business venture with that of delivering quality healthcare to all the customers. KPJ s ability to achieve this balance hinges on the consistent emphasis on selfless and dedicated service in line with the motto of Caring for Life which has become very much a part of the Group s corporate culture. With this culture deeply ingrained, KPJ persistently embarked on A JOURNEY OF CONTINUOUS CARING, guided by its corporate values and principles. Throughout its 27 years in the business, KPJ has undergone four phases, thriving through each one. These four stages the formative stage, strengthening stage, consolidation phase and now the transformation stage are evidence of the long and sometimes arduous journey forward, from an unknown to key industry player. Strengthening Corporate Governance through Business Jihad KPJ has in place a sound corporate governance framework throughout its extensive network of 19 hospitals within the country. This is aligned to Johor Corporation as the ultimate holding Group s Business Jihad principles of advocating peace and prosperity through enterprise. Based on the values and principles of Business Jihad, KPJ applies good practices and ethics, as well as adheres to the right conduct in serving the customers. This philosophy is embodied in continual emphasis on excellent customer care through the KPJ Experience, a level of quality healthcare services that is associated nationally and globally with the Group s brand. The fulfilment of Business Jihad will see all KPJ hospitals in Malaysia and overseas becoming the Preferred Hospital in their respective localities. The Group adopts four key corporate governance practices: compliance with the law and commercial legitimacy; fair treatment of employees and business partners; responsibility to the environment and the community in which it operates; and probity, integrity and business ethics in operational practices. Adherence to the Group s corporate governance practices, supported by the Business Jihad principles, has enabled KPJ to attain a financial milestone and record a number of significant developments in 2008, especially in growing the company s business. Strong and sound strategies have enabled it to maintain its financial form as well as strengthened its position as a market leader in the private healthcare sector. It would be prudent 23 Annual Report 2008

26 Statement to Shareholders to look at the Group s performance vis-à-vis the Malaysian economy and the healthcare industry scenario in Malaysian Economy Year 2008 The year 2008 would be remembered as the year when the world at large was impacted by the global economic slowdown. Malaysia was no exception. Following this worldwide turmoil, Bank Negara announced that the growth of the Malaysian economy had slowed to 0.1% in the fourth quarter of 2008 (3Q 08 : 4.7%), as global economic conditions deteriorated. Growth was affected by the sharply weaker external demand, resulting in a further decline in net real exports of goods and services. Domestic demand continued to provide support to the nation s economic growth, fuelled primarily by private consumption and public spending. For the year as a whole, the Malaysian economy expanded by 4.6% (2007: 6.3%). Healthcare Industry in Malaysia The outlook for the healthcare industry in Malaysia remained cautiously optimistic, with analysts and industry watchers expressing belief that although the hospital business is not recession proof, it is more resilient than other businesses as services rendered by hospitals are considered nondiscretionary and often necessary. KPJ benefited from the continued growth momentum of the healthcare industry in Domestically, the demand for healthcare services continued to be driven by heightened consumer awareness of the importance of quality healthcare, an aging population and rising incomes. The Group has also moved in tandem with the nation s transition, from providing basic healthcare services, to becoming a state-of-the-art medical hub in the region offering a wide range of medical procedures of preventive, curative and promotive to both local and international patients. KPJ S Financial Performance 2008 KPJ crossed, for the first time, the one-hundred-million-ringgit profit-before-tax benchmark with a figure of RM114.1 million (2007: RM85.3 million). This was realised on a turnover of RM1.3 billion, compared to RM1.1 billion in year 2007, when KPJ had passed its first one-billion-ringgit turnover benchmark. The earnings per share for the year under review were sen (2007: sen). The KPJ network of hospitals saw an increase in the number of outpatients treated from 1,734,000 in 2007 to 1,956,000 in 2008, an increase by 11.6%. There was also a rise in the number of inpatients from 179,000 in 2007 to 196,000 in 2008, which translates to an increase by 9.5%. KPJ also created an Economic Value Added (EVA) of RM43.2 million for the financial year ended 2008, an increase of RM19.8 million or 84.6% over RM23.4 million in Dividend For the financial year ended 31 December 2008, KPJ has declared an interim and final dividend of 7 sen in cash (2007: 10 sen) and 31 sen in dividend in specie, bringing the total dividend to 38 sen, totaling RM58.5 million, which is an increase of 97% over dividends paid out in Investor Relations Good rapport with investment houses has been maintained through KPJ s Investor Relationship Programme. KPJ is KPJ Healthcare Berhad (Company No M)

27 1. KPJ is a state-of-the-art medical hub in the region. 2. KPJ s doctors and nurses are dedicated in delivering the best services to patients. 3. KPJ s medical team is committed in providing quality healthcare. 3 monitored by both local and international houses. Through this programme, the Group is able to provide better understanding to the financial fraternity on KPJ s corporate role in the Malaysian healthcare industry. Al- Aqar KPJ Real Estate Investment Trust (REIT) KPJ s innovative Al- Aqar KPJ REIT continued to perform well in The Group was the first healthcare organisation in Malaysia to set up a REIT in 2006, and Al- Aqar was the first healthcare REIT registered in Asia, the first global Islamic REIT as well as the first Islamic healthcare REIT. Two exercises undertaken by end-december 2008 have enabled the company to unlock total assets worth RM651.5 million. In the initial launch, six hospitals, i.e. KPJ Johor Specialist Hospital, Puteri Specialist Hospital, KPJ Ampang Puteri Specialist Hospital, KPJ Damansara Specialist Hospital, KPJ Selangor Specialist Hospital and KPJ Ipoh Specialist Hospital, were injected into the REIT. Subsequently, five more hospitals have been included, namely Kuantan Specialist Hospital, Perdana Specialist Hospital, Kedah Medical Centre, Sentosa Medical Centre and KPJ Kajang Specialist Hospital. The 3rd exercise, approved by the Securities Commission on 16 December 2008, comprises 9 properties, namely the Seremban Specialist Hospital building, Taiping Medical Centre building, Kota Kinabalu Specialist Hospital building, Bukit Mertajam Specialist Hospital building, KPJ Penang Specialist Hospital building, Tawakal Hospital s existing building, KPJ Tawakal Specialist Hospital s building, as well as two non-hospital properties, namely the Selesa buildings, comprising the Selesa Hotel and Metropolis Tower that houses the KPJ International College of Nursing And Health Sciences. Upon completion in 2009, the 3rd injection would further give KPJ more than RM292 million in terms of purchase consideration. Al-Aqar KPJ s Healthcare REIT has undoubtedly been one of the key strategic thrusts that had positioned KPJ Group with an extraordinary competitive advantage. At the same time, in times of crises and economic challenges, a REIT that is linked to a resilient healthcare sector offers tremendous value to investors. The REIT will continue to be one of the Group s main strategies, enabling the unlocking of the true value of its properties and thereby reducing overall gearing. The funds raised will also help KPJ seize upon any strategic investment opportunities that may be presented to it. Growing the Business During the year, KPJ also expanded its network of hospitals with the acquisition of Pusat Pakar Kluang Utama, in Kluang, Johor, bringing the total number of hospitals in the Group to 19 in Malaysia. Together with three hospitals in Indonesia, one in Bangladesh and two in Saudi Arabia, KPJ reaffirmed its position as the leading private healthcare provider in the region. With the latest addition, the Group now has more than 650 medical consultants offering a full range of medical and surgical services from all disciplines. It has also benefited tremendously from the presence of 6,800 team members made up of management, nursing, allied and support services. Hospital Expansion and Facilities Development In line with its Preferred Hospital public image, KPJ believes in providing the very best not only in terms of treatment but 25 Annual Report 2008

28 Statement to Shareholders KPJ Ipoh Specialist Hospital s five-storey new wing. 2. Official launching of KPJ Ipoh Specialist Hospital s new building by the Sultan of Perak, DYMM Paduka Seri Sultan Azlan Muhibbuddin Shah ibni Almarhum Sultan Yussuf Izzuddin Shah Ghafarullahu-lah. 3. The 12th Convocation Ceremony of KPJ International College of Nursing and Health Sciences. 4. Graduates of KPJ International College of Nursing and Health Sciences. 26 also in the aspects of hospital ambience and facilities. Hence, KPJ is committed in making constant improvements so as to make the hospitals more customer friendly. These include renovating and upgrading the existing buildings, as well as continuously improving the facilities. The official opening of KPJ Ipoh Specialist Hospital s new building by HRH the Sultan of Perak on 7 October 2008 was an example of its commitment towards improving facilities. The hospital, one of the first private specialist facilities in Ipoh, has been at the forefront of the industry in offering the latest medical facilities. The five-storey wing adjacent to the existing hospital added 50 new consultant suites and new wards that increased the total number of beds to 280, making the hospital the largest private hospital in Perak. The year 2008 also saw the development of a new, modern KPJ Tawakal, which will accommodate the relocation of the existing Tawakal Hospital. It is anticipated that KPJ Tawakal, with its latest facilities and services, will ultimately be transformed into a well-accepted icon for the Klang Valley s healthcare industry. Another hospital being built is KPJ Penang in Bandar Perda, Bukit Mertajam, to be opened in Its opening will provide KPJ with an even bigger platform to cater to the customers in the northern part of the Peninsula, thus contributing to the Group s strategic growth in this market. Other hospitals in the Group are also aggressively undergoing renovation and expansion, to further improve their facilities for patients comfort. Human Capital Development As a service provider, KPJ fully understands the importance of having a professional, highly skilled, dedicated and valueadding workforce that is willing to go the extra mile. Group success relies on the teamwork and talents of the team, both in the clinical and administrative segments of the organisation. Building and Retaining Trained Staff and Professionals A firm believer in the fact that people drive the Group s success, KPJ has in place very strategic human resource (HR) development programmes that seek to enhance the team s expertise, skills and competencies at all levels from the management, medical consultancy, nursing care, allied health services as well as support services. The programmes include formal training and on-the-job training as well as seminars and conferences, including the Annual KPJ Healthcare Conferences / Workshops which allow the Group s medical professionals and managers to deliberate, discuss and improve the company s standards of clinical and customer service excellence. In addition, medical consultants are also encouraged to share their knowledge within the Group, and to have their analytical works published. As a visionary organisation, KPJ has also always given strong focus on the development and growth of career opportunities of team members with the Group. The general organisational climate has been oriented towards releasing people s energies and not to stifle them. Qualified individuals are provided the exposure to fully explore their inherent talents. Professionally trained staff members are important to the hospital teams and therefore, it is crucial that they are maintained through continuous training and retraining. KPJ believes in training and managing people well, which over the years, has helped KPJ to be a market leader. The Group also regularly identifies talented and high potential staff members, including Heads of Services, to KPJ Healthcare Berhad (Company No M)

29 3 4 undergo professional programmes that lead towards formal academic qualifications. This also serves to enrich careers, curb brain drain and ensure that the Group s professionals be retained. Preparing Tomorrow s Leaders Leadership skills are prized and are a well-nurtured element of the Group, driven by KPJ s strong corporate culture and further strengthened by the values espoused by Transformational Leadership. This positive scenario is especially reflected in KPJ s emphasis on hands-on management, where both leaders and team members work together to ensure all-round drive and performance, thus raising each other to higher levels ethically as well as motivationally. Catering to the Country s Increasing Need for Nurses KPJ, being committed to training of nurses, had set up its own nursing college, Puteri Nursing College (PNC) in 1991 which is today known as KPJ International College of Nursing and Health Sciences (KPJ IC). The College s establishment was truly an important milestone, an internally strategic move for KPJ and a turning point in the nation s healthcare and nursing education fields, as PNC was the first Nursing Training Institution in Malaysia to be named a College and the first to provide the Diploma in Nursing Programme recognised by the Ministry of Health. KPJ IC, with its campus in Kota Seriemas, Nilai, Negeri Sembilan, has produced more than 2,500 graduates encompassing nurses and other allied health professionals since its formation 17 years ago. It also has established collaborative programmes with reputable overseas universities, such as the University of South Australia, Liverpool John Moores University and University of Hertfordshire of the United Kingdom. The continuous demand for qualified nurses has also prompted KPJ to invest RM26.0 million in 2008 to purchase 6.8 hectares of land adjacent to the current college and to expand its nursing and health science educational facilities. When fully utilised in the future, KPJ IC will be able to train 10,000 nursing and allied health students, which could make it the largest nursing and health sciences educational centre in the region. During the year too, a branch campus was opened in Johor Bahru, Johor, to cater to nursing requirements in the southern region of Malaysia. It is anticipated that KPJ IC will continue setting up other new branches in the near future. Customer Service Excellence Service excellence is a journey and not a destination. Throughout the years, KPJ has consistently been able to maintain a harmonious balance between the need to remain as a viable and profitable business venture with that of delivering quality healthcare services to all its customers. Implementation of the Service Excellence - The KPJ Way initiative in most of the Group s hospitals ensure that courtesy and professional standards are consistently sustained at the highest levels. This is a reflection of a commitment to care towards customers and further accentuates KPJ s emphasis on service excellence. Adopting World CLASS Standards In ensuring quality care for KPJ s patients, KPJ adopts and implements world standards and best practices. As it 27 Annual Report 2008

30 Statement to Shareholders 1. Tan Sri Dato Muhammad Ali Hashim receiving a donation on behalf of Klinik Waqaf An-Nur Sarawak. 2. A touch of care from Datin Paduka Siti Sa diah Sheikh Bakir KPJ won the inaugural StarBiz ICR Malaysia Corporate Responsibility Awards expands its hospital network, KPJ is set to pursue its aspiration of becoming an excellent healthcare provider of international standard. In line with this, the Group considers safety and security requirements of patients, customers and employees to be of paramount importance. KPJ has put in place the best quality systems and patient care management. Its commitment to ensuring quality has earned KPJ hospitals quality certifications, primarily Hospital Accreditation by the Malaysian Society for Quality in Health (MSQH). Five of KPJ s hospitals in the country are already accredited by MSQH, and others are striving to achieve the Accreditation status in the near future, which attest to their conformance to quality standards. All KPJ hospitals are also implementing the 7 Patient Safety Goals, introduced by the World Health Organisation, in order to ensure patients safety and health are properly safeguarded and continuously improved upon. The other quality achievements and benchmarks earned by the various hospitals include MS ISO 9001: 2000, ISO 14001, ISO/IEC Guide 62: 1996, OHSAS 18001, SIRIM Quality System, Hazard Analysis Critical Control Points (HACCP) for Food Safety, Baby Friendly Hospital initiative and the Integrated Management System (IMS) for quality, environmental safety and health management. Recognition and Awards KPJ s accomplishments were also given due recognition by noted bodies and publications in On 13 June 2008, KPJ was presented with the Southeast Asia Private Hospital Group Growth Strategy Leadership Award by Frost & Sullivan for being recognised as the best in class for innovation and perseverance. On 1 July 2008, KPJ received The BrandLaureate Award in Healthcare (Best Brand), for maintaining exemplary brand performance, contributing to the country s brand equity and being a role model for aspiring brands, in line with the specifications of the Asia Pacific Brand Foundation (APBF). The highlight of the year was when KPJ was honoured for its exemplary corporate responsibility initiatives, at the inaugural StarBiz-ICR Malaysia Corporate Responsibility Awards on 22 August 2008, in the category for companies with market capitalisation below RM1.0 billion (Marketplace Category). The Award was in recognition of main activities which the Group undertakes, namely efforts through JCorp s Klinik Waqaf programme for the poor and underprivileged, as well as sponsorship of medical treatment for the needy. On 31 October 2008, KPJ was named the winner of the Excellence in the Health Sector (Healthcare Services) for being the most prominent healthcare provider in the industry at Technology Business Review Awards and Technology Business Review ASEAN Awards. Health Tourism KPJ is also tapping on the lucrative medical tourism market in light of Malaysia fast becoming known as an affordable healthcare hub in Asia. According to the online investment news service NuWire Investor, Malaysia ranks third amongst the world s top medical tourism destinations, after Panama and Brazil. The number of medical tourism patients has tripled since 2003 to 341,288 patients in 2007, while for the first nine months of 2008, more than 282,000 foreigners sought medical treatment in Malaysia. KPJ Healthcare Berhad (Company No M)

31 2 3 KPJ is benefiting from this increasing interest from foreigners who are attracted to seek medical treatment in Malaysia because of the quality of the country s private hospitals, competitive costs, regulated medical charges and welltrained medical consultants and staff. The majority of medical tourists in KPJ s hospitals come from Indonesia, with others hailing from neighbouring Southeast Asian countries, Australia, Great Britain, Japan, South Korea and the Middle East. Corporate Responsibility (CR) ~ Caring for the Community KPJ is determined to be of greater service to the community, driven by a strong sense of corporate responsibility which has always been an important part of its values and a key component of its Business Jihad aspiration. The Group s main CR contribution has been through the provision of medical and professional support to the charity clinics under JCorp s Klinik Wakaf An-Nur (KWAN) initiative, which was first launched in By 2008, KPJ was managing KWAN s existing 8 clinics (4 in Johor, 2 in Selangor, 1 in Negeri Sembilan, 1 in Sarawak) and the Hospital Waqaf in Pasir Gudang, Johor. More than 400,000 underprivileged patients earning less than RM1,000 a month have been treated since KWAN s inception, with the clinics providing medical care at a standard rate of only RM5.00. Measures are in place to open more clinics in 2009, and their establishment is part of the Group s efforts in making quality healthcare affordable to all walks of life. KPJ also gives back through community outreach programmes. As the concept of CR is closely linked with the principles of sustainable development, which encourages corporations to make decisions based not only on financial factor, such as profit, but also to consider the immediate and long-term social and environmental consequences of their activities, KPJ believes that CR and doing business have to be mutually inclusive. Fully comprehending the far-reaching impact of the mass media, KPJ contributed extensively to efforts by its parent company, Johor Corporation, to sponsor community-oriented television programmes such as the At-Tijarah and the At- Tijarah Ramadan programmes. In KPJ, CR programmes enhance its ability to recruit, develop and retain staff and this is the direct result of pride in the company s services and practices. It is also the indirect result of programmes and activities that improve employee morale and loyalty. CR also creates more robust social licence to operate in the community as the stakeholders understanding of the company s objectives and activities translate into improved stakeholder relations as well as relation with the public and regulators. CR activities go beyond those required by regulation or any statutory bodies and they are undertaken completely on KPJ s own initiative. KPJ s approach to CR also allows the Medical Directors and Consultants to strive for greater visibility and prominence within professional bodies, societies and the general community. In this respect, the KPJ Consultants Charity Fund has been set to enable projects to be undertaken for the benefit of the community. Rising Above Future Challenges The year ahead will be one of extreme challenges for the business sectors and for all organisations not only in 29 Annual Report 2008

32 Statement to Shareholders 1. The new premier ward at KPJ Damansara Specialist Hospital. 2. Nursing students from KPJ IC undergoing practical training in a KPJ hospital. 3. Quality healthcare provided by warm and caring staff at KPJ the country but also globally. The fallout from the current economic downturn is expected to bring Malaysia s GDP growth down to about 0.6 per cent in However, these same challenges create opportunities for organisations that are flexible and adept at responding proactively to changes in the environment. KPJ strongly believes that it is such an organisation. With a proven business model and extraordinary strategic positioning, the Group expects to withstand the impact of the economic downturn and sustain its growth momentum. The main strategies in 2009 and beyond are to increase its existing capacity through prudent measures and tap on its internal creativity for smart and innovative ways to sustain and grow its business. Among the major plans for the future include growth through acquisition of stand-alone hospitals, and this is expected to be facilitated by moves, regulatory or otherwise, towards consolidation as stand-alone private hospitals may find it more difficult to operate. This is anticipated to provide KPJ with more merger-and-acquisition opportunities that will strengthen its position as the market leader in the private healthcare sector. Organically, there are also plans for expansion through new development projects, and three sites in Johor Bahru, Johor, others in the Klang Valley, Kuala Lumpur, Kuantan, Pahang and Kuching, Sarawak have been identified. With these in place, KPJ is optimistic that it shall be able to expand its network, enlarge the customer base and further establish itself as a key service provider in Malaysia. The company is also in a strong position to operate in an environment with increasingly stringent quality and regulatory frameworks imposed on service providers. These actually will augur well for KPJ as they help to control and safeguard the standard of service and gain more trust from patients locally and internationally. In line with Johor Corporation s philosophy of its companies being members of a Community of Enterprises, more intrapreneurs will be created in the KPJ Group to drive its diversified businesses further. The development of these intrapreneurs will also contribute to the creation of value and economic wealth, especially when undertaken through transforming cost centres into profit centres. Towards this end, KPJ will identify the appropriate services to be outsourced and find the right people within the organisation prepared to take up the challenge in areas such as food services, ambulance services, home nursing, health tourism, information technology (IT) and other healthcare-related services. Given medium-term uncertainties globally, the company will be cautious in venturing abroad but intend to capitalise and build upon its years of experience in the healthcare industry to provide very specialised services to both local and overseas hospitals. KPJ will continue to offer services in hospital management and nursing management, including professional nursing manpower, to overseas hospitals. The company will further develop nursing and allied health education and training as well as other technical and nontechnical support. Appreciation For Invaluable Support KPJ has succeeded in becoming a preferred provider in healthcare services due to the invaluable support of so many people. Therefore KPJ wishes to thank the shareholders for their trust in the company s management and the medical KPJ Healthcare Berhad (Company No M)

33 2 3 teams for their highly professional contributions as well as their co-operation with our professional managers and overall confidence in the staff to bring this organisation to the forefront of the healthcare industry. In this regard, thanks are also due to all members of the Board of Directors who have been most forthcoming in providing their expertise, experience and wisdom towards achieving the company s corporate vision and mission. KPJ would like to record its deep appreciation for the contributions of Encik Kamaruzzaman Abu Kassim, Vice President and Chief Operating Officer (Corporate) of JCorp, who had relinquished his Directorship in the company on the 1 January 2009, and welcomes Tuan Haji Rozan Mohd Sa at, Vice President and Chief Operating Officer (Intrapreneur) of JCorp who was appointed to the Board on 1 January Heartfelt appreciation is also extended to YBhg Tan Sri Datuk Arshad Ayub, Chairman of the Audit Committee and the Audit Committee members, who have played significant roles in ensuring KPJ s continued compliance to regulatory frameworks. Also, recognition is given to the continuous contributions of YBhg Tan Sri Dato Dr. Abu Bakar Suleiman, Chairman of the Medical Advisory Committee (MAC), the Committee s members, as well as all its sub-committees, who have proactively safeguarded the high standards of clinical excellence within the Group s hospitals, thereby ensuring quality patient care. The Board also wishes to express its gratitude to all the Ministries, Government agencies and authorities for their guidance in helping the team conduct its business in a conducive environment. To partners and business associates, much appreciation goes to all of them for their belief in the company s capabilities. There is a group of people without whom the company would not have been able to go as far as it has. This comprises the medical consultants, nurses, allied health members and all managers, executives and employees of KPJ. They all have continually strived to deliver the highest level of professional care to patients and customers. We also wish to record our appreciation to them for their dedication and commitment in fulfilling their duties and responsibilities. Many thanks also to each patient and customer, who are the reason for the company s existence. KPJ is eternally grateful to the many thousands who have been loyal since the beginning and hopes to live up to their trust and to provide them and their friends, children and families with the very best healthcare possible. 31 Tan Sri Dato Muhammad Ali Hashim Chairman Datin Paduka Siti Sa diah Sheikh Bakir Managing Director Annual Report 2008

34 Making It Happen A Strong Management Team 32 Sitting from left to right : Alvin Lee Swee Hee, Datin Paduka Siti Sa diah Sheikh Bakir, Amiruddin Abdul Satar and Jasimah Hassan Standing from left to right : Yusof Ismail, Mohd Sahir Rahmat, Aminudin Dawam, Abdol Wahab Baba and Norhaizam Mohammad KPJ Healthcare Berhad (Company No M)

35 Executive Committee 33 Chairman Datin Paduka Siti Sa diah Sheikh Bakir Managing Director Alvin Lee Swee Hee Chief Financial Officer Amiruddin Abdul Satar Senior Group General Manager Hospital Operations Jasimah Hassan Senior Group General Manager Clinical & Professional Services Aminudin Dawam Group General Manager Business Development (International) & Marketing Mohd Sahir Rahmat Group General Manager Business Development (Malaysia) & Intrapreneur Yusof Ismail General Manager Human Resource Management Abdol Wahab Baba General Manager Risk Management Norhaizam Mohammad Senior Finance Manager Annual Report 2008

36 Making It Happen A Strong Management Team 34 From left to right Divisional Committee EXCO Abdol Wahab Baba General Manager Risk Management Mohd Sahir Rahmat Group General Manager Business Development (Malaysia) and Intrapreneur Aminudin Dawam Group General Manager Business Development (International) & Marketing Amiruddin Abdul Satar Senior Group General Manager Hospital Operations Chairman Datin Paduka Siti Sa diah Sheikh Bakir Managing Director Alvin Lee Swee Hee Chief Financial Officer Jasimah Hassan Senior Group General Manager Clinical & Professional Services Yusof Ismail General Manager Human Resource Management Norhaizam Mohammad Senior Finance Manager KPJ Healthcare Berhad (Company No M)

37 Divisional Committee From left to right Clinical, Professional & Operational Services Zaharah Osman Corporate Manager Clinical & Professional Services Dr. Abdul Rahim Rahman Hamzah Corporate Manager Clinical, Occupational Safety & Health Naziah Ismail Senior Corporate Manager KPJ International College of Nursing and Health Sciences Wan Rusliah Md Daud Corporate Manager Clinical & Professional Services Elman Mustafa El Bakri Corporate Manager Biomedical Engineering 35 Dr. K V Anitha Corporate Manager Clinical & Professional Services Marhalis Hasan Deputy Manager Clinical & Professional Services From left to right Corporate Services Andrew William Burr Corporate Manager Group Marketing Khairol Badariah Basiron Senior Corporate Manager Internal Audit Rafeah Ariffin Senior Corporate Manager Business Development & Corporate Communications Noreen Abdul Rashid Corporate Manager Legal cum Secretary Hanida Mohd Hassan Deputy Manager Customer Service Mohd Taufik Ismail Senior Corporate Manager Strategic Planning Annual Report 2008

38 Making It Happen A Strong Management Team From left to right 36 Aminudin Dawam Executive Director KPJ Ampang Puteri Specialist Hospital, KPJ Damansara Specialist Hospital and Tawakal Hospital Yusof Ismail Executive Director KPJ Ipoh Specialist Hospital and Kuantan Specialist Hospital Amiruddin Abdul Satar Executive Director KPJ Selangor Specialist Hospital and Kedah Medical Centre Chairman Datin Paduka Siti Sa diah Sheikh Bakir Managing Director Jasimah Hassan Director-in-Charge Indonesia Hospitals Abdol Wahab Baba Executive Director Bukit Mertajam Specialist Hospital, Seremban Specialist Hospital, Perdana Specialist Hospital, Kuching Specialist Hospital and Damai Specialist Hospital Mohd Sahir Rahmat Executive Director KPJ Johor Specialist Hospital, Puteri Specialist Hospital and Pusat Pakar Kluang Utama Alvin Lee Swee Hee Chief Financial Officer Norhaizam Mohammad Senior Finance Manager From left to right Roslan Ahmad General Manager KPJ Johor Specialist Hospital Mohd Farid Salim General Manager Puteri Specialist Hospital Zabidi Abdul Razak General Manager RS Selasih, Padang Indonesia Mohammad Badri Hussin General Manager RS Permata Hijau, Jakarta, Indonesia Mohd Azhar Abdullah Chief Executive Officer United Hospital Limited, Dhaka, Bangladesh Zaiton Sulaiman General Manager Pusat Pakar Kluang Utama Abdul Aziz Abdul Rahman General Manager Seremban Specialist Hospital KPJ Healthcare Berhad (Company No M)

39 Hospital Management Committee From left to right Maisarah Omar General Manager KPJ Kajang Specialist Hospital Mohd Johar Ismail General Manager KPJ Selangor Specialist Hospital Gunavathy Kalee General Manager Sentosa Medical Centre Datin Sabariah Fauziah Jamaluddin Director-in-Charge Sentosa Medical Centre and KPJ Kajang Specialist Hospital Senior General Manager KPJ Damansara Specialist Hospital Mohd Nasir Mohamed Senior General Manager KPJ Ampang Puteri Specialist Hospital Dr. Munirah Khudri General Manager Tawakal Hospital Tay Chee Kim Deputy General Manager KPJ Ampang Puteri Specialist Hospital 37 From left to right Ahmad Nasirruddin Harun Director-in-Charge Taiping Medical Centre General Manager KPJ Ipoh Specialist Hospital Yasser Arafat Ishak General Manager Bukit Mertajam Specialist Hospital Mahazan Khamis General Manager Taiping Medical Centre R Gunasingam General Manager Kuantan Specialist Hospital Khairun Ahmad General Manager Kedah Medical Centre Asmadi Mohd Bakri General Manager Perdana Specialist Hospital Mah Lai Heng General Manager Kuching Specialist Hospital Alice Liu Ghee Voon General Manager Damai Specialist Hospital Annual Report 2008

40 Realising Operational Excellence KPJ Group continued to record excellent performance in This could not have been achieved without the full commitment of all the people of KPJ. Successful risk-taking, together with skilful and innovative management as well as highly professional medical consultancy services, supported by loyal shareholders, have enabled KPJ to sustain its position as Malaysia s leading healthcare service provider. KPJ Healthcare Berhad (Company No M)

41 Growth and Strength In an ever-changing healthcare industry landscape, KPJ continued to build its capability and capacity in 2008 to not only strengthen its position in the marketplace but also to ensure that it delivers its firm commitment towards safeguarding the interests of all its stakeholders, foremost of whom were its customers from all levels of society. By continuing to do so, KPJ also provided significant input in helping the nation advance public health. of its customers. This is based on its strong conviction that excellent customer service is the very foundation for expanding and maintaining its leading position in the healthcare industry. 39 KPJ s growth from strength to strength has been made possible by its innovativeness and farsightedness in taking many approaches in 2008 including the following: Expanding its Hospital Network and Range of Healthcare Services The move to continue with expansion enabled KPJ to meet the growing demand of its patients for quality healthcare delivery. Upgrading and expanding facilities by adding stateof-the-art equipment and modernising hospital buildings as well as introducing a comprehensive range of services allowed for much better care (Above) Datin Paduka Siti Sa diah Sheikh Bakir launching the Comprehensive Pain Management Services at KPJ Ampang Puteri Specialist Hospital. (Left) Pusat Pakar Kluang Utama, the latest addition to KPJ s network. Annual Report 2008

42 Realising Operational Excellence 40 Sharpening Competitiveness through Maximising Synergies within the Group Creating and maximising synergies have enabled KPJ to tap unlimited possibilities. KPJ continued to sharpen its competitiveness by forging synergies across all its corporate and business services as well as professional and operational delivery. It also consistently encouraged its people to scale new heights and move forward together as one solid organisation. Many of KPJ s key tasks and targets were inter-connected and all of these have contributed towards achieving the same core objectives of the Group. KPJ has also long recognised the value of smart partnerships, which it has undertaken with many organisations and individuals. The relationships with them have been nurtured in line with KPJ s objective of developing entrepreneurial organisations providing different services, from procurement, project management services and laboratory management to highly specialised therapies such as stem cell treatment, bariatric surgery, among others. At the same time, KPJ also continued to actively develop intrapreneurs who ran businesses which complemented and strengthened the Group s overall services in safeguarding the company s assets and utilising them well so as to derive optimum benefits. Among others, KPJ has introduced flexible hours, staff multi-tasking and extended operational hours. Tapping Greater Opportunities in Medical Tourism Another area in which KPJ aims to make greater inroads is health tourism based on the encouraging performance in The number of patients seeking treatment in this sector in 2008 was 8,239, an increase of 11.96% over 7,359 patients registered in In terms of the number of treatments/procedures (patient episode), the total of 18,667 in 2008 exceeded the total of 15,689 in 2007 by 18.98%. The sector still has the potential for bigger growth as Malaysia is aggressively promoting the country as an attractive destination for medical tourism. KPJ will be in existence for 39 years by 2020, the year that Malaysia sees herself as becoming a developed nation. By then, it is envisaged that KPJ will remain in the lead position in the country and at the same time become the largest healthcare group in the region. Its performance in 2008 is a testimony to its ability to achieve this vision. Optimising the Use of Assets and Resources KPJ fully subscribes to the view that a company s growth fundamentally depends on its employees ability to maximise their potential through continuous learning, upgrading skill and enriching experience which contribute towards the building of their overall competency. Coupled with commitment and discipline, KPJ s competent employees are entrusted with before after (Above) The before and after results of a successful severe obesity surgery. (Left) The high end diagnostic ultrasound machine at Damai Specialist Hospital. KPJ Healthcare Berhad (Company No M)

43 Driving Standards and Continuous Innovation KPJ s commitment towards quality and excellence in the delivery of healthcare services continued to be its driving force in its ongoing journey towards becoming the Hospital of Choice in the communities it serves. As a network of hospitals carrying the KPJ name, it was of paramount importance that all patients continued to enjoy the same standard of care, The KPJ Experience, in each and every hospital. This required a high level of clinical governance and the standardisation of policies and procedures across all hospitals within the Group. In addition, the achievement of accreditation standards ensured a continuing commitment in the areas of Organisational Management, Human Resource Management, Policies and Procedures, Facilities and Equipment, and Quality Improvement Activities. By embarking on these, KPJ was able to face an operating environment that was increasingly sophisticated and dynamic. A key success factor in 2008 was KPJ has earned several awards and accolodes in 2008: (Top Left) Gold and Silver Awards in Occupational Health and Safety. (Bottom Left) Excellence in the Healthcare Sector (Healthcare Services) Award from Technology Business Review. (Top Right) The BrandLaureate Award. (Bottom Right) Frost & Sullivan South East Asia Private Hospital Group Growth Strategy Leadership Award. KPJ s ability to innovate by defining new strategies and reinventing itself. Through continuous transformation, KPJ was better placed to progress forward. The result of its hard work to realise its commitment towards quality and excellence in its hospitals has earned KPJ many awards and accolades in Annual Report 2008

44 Realising Operational Excellence Collection of KPJ s Awards and Accolades 42 KPJ Healthcare Berhad (Company No M)

45 State-of-the-Art Facilities and Specialist Services STATE-OF-THE-ART FACILITIES 24-hour Accident & Emergency Unit 24-hour Ambulance Services 24-hour Outpatient Clinics 3-D Ultrasound Bone Densitometer Coronary Intensive Care Unit (CICU) Coronary Care Unit (CCU) Cardiothoracic Centre Convalescent Centre/Home Nursing Diagnostic Imaging-MRI / Mammogram/ Multi-slice CT Scan/ X-Ray Diagnostic Centre Dental X-Ray Day Care Ward Haemodialysis Centre High Dependency Unit (HDU) / Neonatal HDU Intensive Care Unit (ICU) / Neonatal ICU Lithotripsy Centre Medical Screening Centre Operation Theatre & Cardiac Operation Theatre Oncology & Radiotherapy Centre Ophthalmic Laser Pharmacy & Laboratory Physiotherapy & Rehabilitative Centre Private Delivery Rooms Special Care Nursery Specialist Outpatient Clinics Treadmill Stress Test Women & Baby Centre Cancer & Chemotherapy Services Cardiology & Cardiothoracic Surgery Child Psychiatry Clinic Pathology Cochlear Transplant Surgery Colorectal Surgery Cornea Transplant Surgery Diet Counselling Dermatology (Skin) Day Surgery Ear, Nose & Throat (ENT) 3-D Ultrasound Services Foetal Maternal Medicine General Surgery General / Internal Medicine Gastroscopy / Colonoscopy / ERCP Haemodialysis Immunisation & Vaccination Services Interventional Angioplasty Interventional Chronic Pain Management Services / Centre In-vitro Fertilisation Laparoscopic Surgery Maternity & Gynaecology Services Neurology (EEG & EMG) Neurosurgery Neonatology Nephrology Occupational Health Services Orthopaedic & Trauma Surgery Ophthalmic Laser Ophthalmic (Eye) Surgery Ophthalmology Orthodontic & Maxillofacial Surgery Obstetrics & Gynaecology (O&G) Outpatient Treatment Paediatric Surgery/Urology Plastic Surgery/Plastic & Reconstructive Surgery Physiotherapy, Rehabilitative & Occupational Therapy Services Psychiatry Pharmacy & Laboratory Services Radiotherapy & Oncology Respiratory Medicine Services Restorative Dentistry & Endodontics Sleep Disorder Centre Sports Medicine Spinal Surgery Stem Cell Therapy Urology Vascular Surgery 43 SPECIALIST SERVICES Anaesthesiology Angiogram Audiology Bariatric Surgery Annual Report 2008

46 Realising Operational Excellence Developing the Community KPJ strongly believes in giving back to society as an expression of gratitude for the success that it enjoys as the leading healthcare player in Malaysia. KPJ also recognises the value that a well thought-out and meaningful CR programme gives to its brand, reputation and standing in the community. In 2008, KPJ continued to implement many programmes for the community, among which were: Helping the Less Privileged 44 Through its charity clinics programme, Klinik Waqaf An-Nur, KPJ made available medical facilities and services to those in need. Special groups within the community were also given a helping hand through KPJ s outreach community services. Orang Asli villages, the physically challenged and the elderly were some of the groups who benefited from activities that included medical screening and nutritional counselling. Partnering to Help Others There were also many other channels for helping the less privileged including partnering other caring organisations in planning and implementing community activities, managing funds and medical camps, holding talks, providing patient support services, medical assistance and a host of other services. Helping through Knowledge KPJ also helped through disseminating knowledge as it recognised that knowledge was important to living a good life. Understanding health-related issues were critical in helping people make informed decisions and rational choices to improve their way of life. Thus, as part of the CR activities, KPJ s hospitals around the country organised regular talks for the public on current health topics that included pain management, obesity, healthy eating, stress management, osteoporosis, diabetes and cancer. KPJ Healthcare Berhad (Company No M)

47 (Left) KPJ Ipoh Specialist Hospital providing assistance to Puan Bedah Jaafar through the Tijarah Ramadan programme. (Right) Free health screening is part of KPJ Hospital s CR programme. (Below Left) The 30-bed Waqaf Hospital in Pasir Gudang, Johor. (Below Right) KPJ s doctors participate in health-related radio shows. 45 The hospitals also organised activities, many of which were held in conjunction with special days in the calendar, to help increase awareness amongst the public on health matters. On World Health Day, World Heart Day and World Breastfeeding Day, for example, the lobbies of KPJ s hospitals would have information displays and booths that provided health-related services such as blood screening. Blood donation drives, which were usually held together with public health forums as well as free blood test and blood pressure screening, were also regularly held as part of the hospitals CR programmes. In addition, KPJ s hospitals accepted invitations to participate in health-related events organised by various public bodies and private companies as well as to deliver health talks and answer questions on radio shows. KPJ believes that the concept of CR and business are mutually inclusive for the sustainability of its operations. CR is not evident in just various initiatives and activities undertaken at certain times of the year. At KPJ, the commitment to being an exemplary corporate citizen is ongoing and its CR programme embodies all that it does on a daily basis in delivering quality healthcare. KPJ s CR initiatives are, therefore, integrated into its overall business objective to Care for Life. Annual Report 2008

48 Realising Operational Excellence 46 Developing KPJ s Own Human Capital Strength One of the elements providing KPJ with a competitive edge in the healthcare industry is its human capital. There is a continual striving towards quality and excellence amongst KPJ s medical consultants, nurses, allied health and support service staff. They are constantly encouraged to better themselves professionally so as to improve the level of patient care and safety in the hospitals. Opportunities are provided for furthering their studies as well as advancing their careers within the KPJ Group. As at end-december 2008, KPJ s hospitals and companies in Malaysia employed more than 6,800 staff, of whom more than 90% were working in the hospitals. Of the number in the hospitals, 54% were nursing staff, 13% were allied health staff and 33% were support service staff. More than 650 are practising in the Group and many more medical consultants are attracted to practise in KPJ s hospitals because of the strong clinical governance in place, quality initiatives and high working standards. To assist these experts, KPJ has to employ and retain talent in the fields of nursing, allied and support services. It has succeeded in doing this through a fair and equitable remuneration and benefits package in line with the market. Further, staff commitment and loyalty are fostered by an KPJ s corporate values are firmly emphasised during PEDOMAN. open management style, merit-based evaluation system, equal opportunity policy in career advancement as well as value-based corporate culture. Staff members are also motivated by the concept of lifelong learning that is pursued and practised across the entire Group. Other human capital development initiatives carried out for the year included: Delivering Consistent Message through PEDOMAN A consistent message to deliver Continued Excellence through Business Jihad is promoted in the KPJ s annual corporate address, PEDOMAN, undertaken by each and every hospital. During this session, the Management shares information on progress, targets and aspirations for the year with its staff in an open and transparent manner. At the same time, KPJ s corporate values of safety, courtesy, integrity, professionalism and continuous improvement are firmly emphasised so that these become incorporated into the work culture of the individual. PEDOMAN has been effective in rallying the many levels of staff within the Group towards achieving KPJ s vision and mission in healthcare. The session enables the staff to keep abreast with developments in the economy and industry as well as within the Group and helps them to align their work and performance with Management s expectations. It is also an opportunity for them to obtain clarification or make suggestions on issues of concern to them. Training to Keep Up-to-date The field of healthcare is constantly evolving, marked by groundbreaking developments in the medical fields, pharmaceuticals, products as well as patient care. For KPJ to remain at the top of its industry, it is important that its KPJ Healthcare Berhad (Company No M)

49 KPJ s 8th National Medical Conference and Workshop. staff be kept up-to-date with the latest systems, methods and procedures available. Staff training and development, therefore, was accorded high priority in terms of allocation of resources. From January to December 2008, staff from hospitals and the nursing college attended 2,572 training programmes, of which 1,139 were external programmes. Over this period, KPJ invested a total sum of RM6.9 million in training and development activities, of which RM1.8 million were for short-term courses. In addition, the Group has sponsored 16 eligible executives to further their studies in MBA in Healthcare Management at Universiti Teknologi Malaysia. Nurses were also encouraged to obtain a Degree in Nursing or Masters in Science (Nursing) or further their studies in specialised areas, such as operation theatre, intensive care, coronary intensive care, renal care and midwifery. The Group also organises the annual KPJ Medical Conference, Medical Workshop and Nursing Convention for the medical consultants, nurses and allied health staff to deliberate and discuss medical and clinical issues related to their practices to promote patient safety. Developing for the Long-term Qualified staff members were also given the opportunity to further their studies to the next level. Sponsorships were given to qualified staff to pursue various academic programmes both locally and overseas. In addition, special efforts were made to widen the experience and expose KPJ s nursing professionals to different working environments. Among the measures taken were to second them to the Group s hospitals abroad under the Overseas Placement Programme. Executives with management potential were selected to participate in a job rotation programme at the ultimate holding company, JCorp. Their capabilities were assessed and their knowledge and skills enhanced to develop them as future leaders of KPJ. Meeting of Minds A key event in KPJ s annual calendar is the National Medical Conference and Workshop. During the year under review, the 8th conference was organised around the theme, Enhancing the Culture of Safety and Health. More than 300 guests attended the two-day conference, during which speakers from the medical and nursing professions discussed KPJ s patient safety goals and guidelines. Also covered were topics such as severe obesity, national patient safety and clinical indicators, stem cell research and therapy, chronic pain management and health tourism. 47 Annual Report 2008

50 Realising Operational Excellence Caring for Health, Safety and the Environment KPJ s corporate mission is to deliver quality healthcare services to its customers. Therefore, it remains committed to delivering quality healthcare within a healthy and safe workplace and environment for its staff, patients, customers, visitors and other stakeholders. To achieve this, a policy 48 on health, safety and the environment was introduced to emphasise KPJ s commitment to caring for its stakeholders. The core activities in this system are to identify hazards, quantify or assess the risks in regard to the hazards, prioritise these risks and control the hazards. KPJ s Policy on Health, Safety and the Environment (HSE) KPJ shall endeavour to take every reasonable and practical step to prevent and eliminate the risks of ill health, injuries and damage to the environment in all its operations; KPJ shall ensure that all the facilities it designs, builds and operates as well as the products it manufactures and the services it provides are in accordance with the appropriate legal requirements, industry standards and best practices; KPJ shall provide the necessary resources, organisation and training, and shall communicate with staff, patients, customers, visitors and other stakeholders with regard to appropriate matters on HSE; KPJ shall ensure that disaster preparedness and contingency planning are in place to deal with disasters or emergencies; KPJ shall periodically review the HSE management system and practices to ensure its continuing suitability and to measure its effectiveness in satisfying organisational requirements; KPJ expects all its staff and contractors to strictly adhere to this policy at all times. The Seven Patient Safety Goals In any hospital, there may be incidences relating to safety, health and the environment. It is possible for doctors and nurses to contract diseases from their patients if the appropriate standards and procedures are not in place. If strict protocols are not adhered to, patients could be subjected to the wrong treatment or surgical procedures. Clinical waste may not be properly disposed of, thus endangering the environment and making waste, such as syringes, a hazard. At KPJ, to ensure safety of patients and healthcare providers, the Seven Patient Safety Goals have been implemented across the KPJ group of hospitals as the initial focus for further development in the future. The hospitals are required to fully comply with these goals which are: Improve the safety of using medication; Patient identification; Effective communication; Eliminate wrong site, wrong patient, wrong procedure surgery; Accurately and completely reconcile medication across the continuum of care; Improve hand hygiene to prevent healthcareassociated infection; Reduce the risk of patient harm resulting from falls. KPJ Healthcare Berhad (Company No M)

51 Complying with Legal and Other Standards Many aspects of the operations of hospitals are subject to legal compliance. The Environmental Quality Act 1974, for example, requires that scheduled waste be managed by a clinical waste contractor registered with the Department of Environment. The disposal of radiological, solids, watery, gaseous and other waste also has to comply with legislation and regulatory as well as licensing requirements. These are elements of clinical governance, a matter that is given serious attention in KPJ. Enabling through Technology Technology is an enabler that will assist KPJ s hospitals to monitor the achievement of HSE standards set throughout the Group, thus realising its mission of delivering quality healthcare. A number of systems are in place in some hospitals while being systematically implemented in the others. Hospitals in the KPJ network are exhorted to fully comply with the law and other regulations and to focus on activities that can improve clinical outcomes. Towards this end, KPJ s hospitals ensure that they attain the standards spelled out by the ISO 9000 (corporate governance a n d q u a l i t y ), O H S A S (worker health and safety) and ISO (environmental management). Their success is attested by the numerous quality awards and certifications that these hospitals have achieved over the years. All hospitals within the KPJ s network are also required to gain full accreditation by MSQH in due course. So far 5 hospitals have been accredited. In 2008, the MSQH s standard and organisation were accredited by the International Society for Quality (ISQua), an indication of the high standards set by the Malaysian body. The Hospital Information Technology System (HITS) is complemented by the KPJ Clinical Information System (KCIS), which incorporates clinical information with patient management data. KCIS includes the Nursing Care Solutions System, which is a guided nursing care plan that follows international standards in nursing practices. An electronic prescription system, known as the Pharmacy Information System, provides automatic alerts and will be integrated into the drug information databank to further improve patient safety. The implementation of the KPJ Corporate Network, an Internet Protocol Virtual Private Network (IP VPN) connecting all KPJ local hospitals to the computer centre at head office, has made possible several consolidation initiatives. These include the central management of s, a centralised human resource system and central management of networks. A central data warehouse is set for implementation to collate relevant information and facilitate business and management decision-making. In addition, nine hospitals within the Group now enable patient registration by using the MyKad and a Total College Management System has been implemented at KPJ International College of Nursing and Health Sciences. 49 Annual Report 2008

52 Events & Happenings of KPJ Hospitals KPJ Damansara Specialist Hospital held a Chinese New Year Open House on 23 February 2008 with the participation of the residents of Taman Tun Dr Ismail and Damansara Utama. 50 Tan Sri Dato Muhammad Ali Hashim, KPJ s Chairman, at the official launch of Klinik Waqaf An-Nur Sarawak on 28 February Seremban Specialist Hospital organised a Career talk for the students of SMK Pendita on 29 April In conjunction with Nurses Day, nurses from KPJ Johor Specialist Hospital and Puteri Specialist Hospital took part in an outreach programme at Perkampungan Orang Asli, Pasir Gudang Johor on 10 May KPJ Healthcare Berhad (Company No M)

53 Puteri Specialist Hospital held a Mother s Day Celebration on 11 May Datin Paduka Siti Sa diah Sheikh Bakir, KPJ s Managing Director, celebrated International Nurses Day with the nurses at KPJ Selangor Specialist Hospital on 12 May Sentosa Medical Centre conducted a health talk on back aches at Elektrisola, Janda Baik, Pahang on 16 May On 31 May 2008, KPJ Kajang Specialist Hospital held a public talk on eye care. KPJ Damansara Specialist Hospital won the Gold Award from the National Occupational Safety and Health Council on 9 July Tawakal Hospital participated in the Relay for Life 16-hour walk in support of cancer survivors at Stadium Bukit Jalil from 31 May to 1 June Annual Report 2008

54 Events & Happenings of KPJ Hospitals Kuantan Specialist Hospital collaborated with PRIDE Foundation to organise the PRIDE Breast Cancer Awareness Campaign at Giant Kuantan on 20 July KPJ Ipoh Specialist Hospital held a blood donation drive at Tesco Hypermarket Ipoh on 27 July 2008 in conjunction with Tesco Care Programme. Perdana Specialist Hospital celebrated Merdeka Day 2008 by displaying the largest Jalur Gemilang in Kota Bharu. Merdeka Day babies were also celebrated. Kuching Specialist Hospital made a 6-day marketing trip to Kalimantan Barat from 21 to 25 August On 11 September 2008, Perdana Specialist Hospital organised a Berbuka Puasa gathering with corporate companies, members of the media, children from orphanages and Pertubuhan Masyarakat Prihatin Kota Bharu. KPJ Healthcare Berhad (Company No M)

55 Seremban Specialist Hospital emerged runner-up in the Hospital Management Asia 2008 awards for Community Service on 26 September Tawakal Hospital held monthly free health screening for the public for the whole year. 53 KPJ Johor Specialist Hospital and Puteri Specialist Hospital organised a continuous medical education (CME) talk and get together dinner on 17 October Staff of KPJ Ipoh Specialist Hospital joined in the gotongroyong to clear their hospital compound as part of the Dengue Campaign on 15 November Hospital and Klinik Waqaf An-Nur in Pasir Gudang, Johor collaborated with KPJ to sponsor mass circumcision for children. KPJ Ampang Puteri Specialist Hospital received the National Award for Management Accounting (NAfMA). Staff of Damai Specialist Hospital performed Christmas Carols and distributed gifts to patients during Christmas Day celebration on 27 December Annual Report 2008

56 54 Inspiring Trust and Accountability KPJ Healthcare Berhad (Company No M)

57 Statement on Corporate Governance (Pursuant to Section of the Bursa Malaysia Listing Requirements) The Board of KPJ Healthcare Berhad (KPJ) is pleased to report to the shareholders, in particular and other stakeholders in general, on the manner the Group has applied the Principles as set out in Part 1 of the Malaysian Code on Corporate Governance (The Code). The Board, to the best of their knowledge, confirms that the Group has complied with the Best Practices as set out in Part 2 of the Code throughout the year ended 31 December The Board recognises the importance of Corporate Governance in conducting the day-to-day business and affairs of the Group. Thus, at all times the practice of good corporate governance is the main priority in safeguarding and enhancing the shareholders value and protecting the interest of other stakeholders. BOARD OF DIRECTORS Board Structure, Composition and Balance There have been changes in the composition of the Board of Directors of KPJ (The Board) from last year. Tuan Haji Rozan Mohd Sa at was appointed as Non-Executive Director on 1 January 2009 in place of En Kamaruzaman Abu Kassim who has resigned as Non-Executive Director on the same date. The present size and composition of the Board is well balanced and is made up of professionals with a wide range of knowledge and experience in business, operations and finance relevant to the direction of a large expanding Group. The profiles of Board Members are on page 14 to 21 of this annual report. The Board comprises of, one (1) Non-Executive Chairman and two (2) Non-Executive Directors as representatives of the majority shareholders, seven (7) Independent Non-Executive Directors and one (1) Managing Director. This is consistent with the requirement of the Bursa Malaysia Listing Requirements. Whilst the Company has a significant and majority shareholder (Johor Corporation), the investment of minority shareholders is fairly reflected through Board representation of Independent Non-Executive Directors. The independence of each independent Non-Executive Director is safeguarded, as none is involved in the day-to-day management of the Company and he/she does not engage in any business dealings or other relationships with the Company. Hence, he/she is capable of exercising independent judgement and act in the best interest of the Company and its shareholders. The responsibilities between the Chairman and the Managing Director are clearly divided to ensure that there is a balance of power and authority. The Managing Director has the principal responsibility of implementing the policies and decisions approved by the Board and progressively reports and communicates all strategic and operational matters to the Board for decision-making purposes. The Board has also developed and approved the corporate objectives for 2009, which the Managing Director is responsible to achieve. Terms of reference have been developed for both the Board and the Management defining their respective authorities, duties and responsibilities. While the Chairman encourages full discussion and deliberation of issues affecting the Group by all Board members, the Board has appointed YBhg Tan Sri Datuk Arshad Ayub as the Senior Independent Non-Executive Director, to whom concerns pertaining to the Group may be conveyed by shareholders and the public. Board Responsibility In discharging their duties and responsibilities, the Board constantly takes the responsibility of ensuring that all decisions made are in the best interests of the 55 Annual Report 2008

58 Statement on Corporate Governance 56 Company and Stakeholders. The key duties of the Board include the following: Reviewing and adopting the business strategic plans for the Group. The strategic and business plan for the period was tabled, discussed and approved by the Board at its meeting on 24 November Additionally on an ongoing basis as the need arises, the Board will assess whether projects, purchases and sale of equity as well as other strategic consideration being proposed at Board meetings during the year are in line with the objectives and broad outline of the adopted strategic plans. Overseeing and reviewing the Group s operational and financial performance on a periodic basis against the budget. At Board meetings, all operations matters will be discussed and appropriate consultation will be sought if necessary. Where and when available the performance of the Group will be benchmarked and compared against performance of competitors. Identifying and managing principal risks and ensuring the implementation of appropriate systems to manage these risks. Succession planning, including appointing, training, fixing the compensation of and where appropriate, replacing senior management. Developing and implementing investors relations programme or shareholder communications policy for the Group. Reviewing adequacy and integrity of the Internal Controls of the Group and management information systems, including compliance with applicable laws, regulations, rules, directive and gudielines. The Board is also responsible for ensuring the smooth functioning of core processes, board governance, business value and ethical oversight. Board Meetings and Supply of Information The Board meets on a quarterly basis with additional meetings convened for specific matters when necessary. Meetings are scheduled ahead to facilitate Directors attendance. For the year ended 31 December 2008, the Board convened 4 meetings on the following dates and at the following venues. Date of Meeting Description Venue Attendance 24 March th Board of Directors Meeting KPJ Damansara Specialist Hospital 11/11 28 May st Board of Directors Meeting Puteri Pacific Hotel, Johor Bahru 10/11 19 August nd Board of Directors Meeting KPJ Damansara Specialist Hospital 10/11 24 November rd Board of Directors Meeting KPJ Damansara Specialist Hospital 10/11 The detail attendance of each Director is as follows:- No Name BOD Attendance 1 Tan Sri Dato Muhammad Ali Hashim C 4/4 2 Datin Paduka Siti Sa diah Sheikh Bakir M 4/4 3 Tan Sri Datuk Arshad Ayub M 4/4 4 Tan Sri Dato Dr Abu Bakar Suleiman M 4/4 5 Datuk Dr Hussein Awang M 4/4 6 Datuk Azzat Kamaludin M 4/4 7 Zainah Mustafa M 4/4 8 Ahamad Mohamed M 3/4 9 Dr Kok Chin Leong M 3/4 10 Dr Yoong Fook Ngian M 4/4 11 Kamaruzzaman Abu Kassim M 3/4 C = Chairman M = Members KPJ Healthcare Berhad (Company No M)

59 Prior to each meeting, the Board Report will be circulated to all Directors so that each Director has ample time to peruse and review it for further deliberation at the Board meetings. The Board Report includes among others, the following details: Minutes of meeting of all Committees of the Board Any matters arising from previous meetings Business strategies and corporate proposals Review of operational matters and financial report of the Group Review of clinical and professional services report Approval sought for capital expenditure and expansion project reports Progress report on risk management and Audit Committee report Report of the Registrar There is also a schedule of matters reserved specifically for the Board s decision, including the approval of corporate plans and budgets, acquisitions and disposals of assets that are material to the Group, major investments, changes to management and control structure of the Group, including key policies, procedures and authority limits. The Directors, whether as a full Board or in their individual capacities, have access to all information within the Company and could where necessary take independent advice at the Group s expense, in the furtherance of their duties. All Directors are also entitled to have access to the advice and services of the Company Secretary. Directors Training As an integral element of the process of appointing new Directors, the Board ensures that there is an orientation and education programme for new Board members. Directors also received further training from time to time through Continuous Education Program (CEP), particularly on relevant laws and regulations and changing commercial risks as required by the Bursa Malaysia. BOARD COMMITTEES The Board as part of its leadership role co-ordinates and delegates specific responsibilities to 3 working sub-committees (Audit Committee, Medical Advisory Committee and Options Committee). These Committees have the authority to examine particular issues and report back to the Board with their recommendations. The ultimate responsibility for the final decisions and recommendations on all matters emanating from these Committees, however, lies with the entire Board. In line with Johor Corporation s (JCorp) group wide corporate practice, the functions and responsibilities of KPJ s Nomination and Remuneration Committees (NRC) are vested with JCorp Group NRC. This approach in centralising NRC functions is not an uncommon practice among top global companies and leading multi-national corporations. The prime consideration is the strategic advantage that the Centre provides by allowing wider access and greater reach to a much larger pool of talent, skills and expertise as well as to benchmark remunerations on a group-wide basis. AUDIT COMMITTEE The Audit Committee is chaired by Tan Sri Datuk Arshad Ayub and comprises of 4 members of which all are Independent Non-Executive Directors. The Committee meets on a scheduled basis at least 4 times a year. The functions and activities carried out by the Committee is set out under the Audit Committee Report. MEDICAL ADVISORY COMMITTEE The Committee s role is to ensure that the best clinical governance activities and guidelines are being practised by the Group. The Committee meets on a scheduled basis 4 times a year. The detail functions and activities carried out by the Committee is set out under the Medical Advisory Committee Report. OPTIONS COMMITTEE The Options Committee was set up in conjunction with the establishment of the Employee Share Options Scheme (ESOS) in The Committee supervised the allocation of share options to employees under the Group s ESOS. Details of the ESOS are set out in the Notes to the Financial Statements. NOMINATION AND REMUNERATION COMMITTEE PROCEDURE The Company is directly represented at the JCorp Group NRC by its Chairman, Managing Director, an Independent Non-Executive Director, Tan Sri Datuk Arshad Ayub, and 57 Annual Report 2008

60 Statement on Corporate Governance 58 two Non-Independent Directors, who are respectively the Chairman and official members of the JCorp Group NRC. In accordance with the terms of reference, the meeting of NRC was last held on 31 December Appointments to The Board The number and composition of Board membership is reviewed on a regular basis to ensure the effectiveness of the Board for the long term interest of the Company. In the event of a need to appoint new member(s) of the Board, JCorp, as the ultimate Holding Corporation in its Nomination and Remuneration Committee, will nominate a qualified candidate with the required core competency to effectively discharge his/her role as a Director of the Company. In any case, the appointment of the Board Member(s) is effected only after the official approval by the Board. Re-Election In accordance with the Company s Articles of Association, all Directors are subjected to re-election by shareholders at the first opportunity after their appointment. The Articles provide that one third or the number nearest to one third of the Directors is subjected to re-election by rotation at each Annual General Meeting. The Managing Director shall retire from office at least once every three years but shall be eligible for re-election. Directors Remuneration The Committee is responsible for making recommendations on the framework, policy and procedures in reviewing and determining the specific remuneration package of the Executive Directors and senior management employed in the Company. The objectives of the Remuneration Policy are: to ensure that individual rewards and incentives relate fairly to the performance of the individual, the Company and the interests of shareholders; and to attract and retain the most qualified and experienced senior executives. The Committee, where appropriate, seeks independent advice and also has access to pooled information on the latest remuneration and compensation packages practised in the market. The performance of the Managing Director is evaluated under the Performance Management Framework based on the achievement of certain key performance indicators (KPI) set by the Board.This performance evaluation is conducted by the Remuneration Committee annually. The details of the remuneration of each Director during the year are as below:- Salary and other Remuneration RM 000 Allowances and Fees RM 000 Total RM 000 Non-Executive Director Tan Sri Dato Muhammad Ali Hashim (a) Ahamad Mohamad (a) Kamaruzzaman Abu Kassim (a) Independent Non-Executive Directors Tan Sri Datuk Arshad Ayub Tan Sri Dato Dr Abu Bakar Suleiman (b) Zainah Mustafa Datuk Azzat Kamaludin (c) Datuk Dr Hussein Awang (d) Dr Kok Chin Leong (e) Dr Yoong Fook Ngian Executive / Managing Director Datin Paduka Siti Sa diah Sheikh Bakir ,045 Total ,869 (a) Representatives of majority shareholders. (b) Received allowances for professional advisory services as Medical Advisory Chairman. (c) Received allowances for appointment as Independent Director of subsidiary companies. (d) Received allowances for professional advisory services as Medical Director of subsidiary companies. (e) Received allowances for professional advisory services on implementation of KPJ Clinical Information System (KCIS). KPJ Healthcare Berhad (Company No M)

61 SHAREHOLDERS Annual General Meeting At each Annual General Meeting, the Chairman presents the progress and performance of the business and encourages shareholders to participate in the question and answer session. The Managing Director, the Chairman of the Audit Committee and other Board members are available to respond to shareholders questions during the meeting. Where appropriate, the Chairman will undertake to provide a written answer to any significant question that cannot be readily answered at the meeting. Each item of special business included in the notice of the meeting will be accompanied by detailed explanations. Separate resolutions are proposed for substantially different issues at the meeting and the Chairman declares the number of proxy votes received both for and against each resolution. The Company provides shareholders with a summary of the discussions at the Annual General Meeting. Dialogue between Companies and Investors The Company values dialogue with shareholders as this will complement good practice of corporate governance. The Chairman and Managing Director hold discussions with analysts and shareholders from time to time on the Group s results submitted to Bursa Malaysia. Presentations are made, where appropriate, to explain the Group s strategies, performance and major developments. However, any information that may be regarded as undisclosed material information about the Group will be safeguarded. In addition, the Group has established a website at which shareholders can access. The Group s quarterly, half-yearly and annual results announcements and press releases are also posted on the Group s website. ACCOUNTABILITY AND AUDIT Financial Reporting In presenting the annual financial statements and quarterly announcements to shareholders, the Directors aim to present a balanced and understandable assessment of the Group s position and prospects. This also applies to other price-sensitive public reports and reports to regulators. Timely release of announcements reflects the Board s commitment to provide transparent information on the Group s activities. The Audit Committee reviews both annual financial statements and quarterly announcements to ensure reports are accurate and the preparation is consistent with the accounting policies adopted by the Group. Statement Of Directors Responsibility For Preparing The Financial Statements The Board acknowledges its responsibility for preparing the annual audited accounts and for ensuring that the Company keeps accounting records which disclose with reasonable accuracy, the financial position of the Group and Company and enable them to ensure that the financial statements comply with the Companies Act The Directors have overall responsibilities for taking such steps necessary to safeguard the assets of the Group and to prevent and detect fraud and other irregularities. Internal Control The Board acknowledges its primary responsibility for the Group s system of internal controls covering not only financial controls but also operational, compliance controls and risk management, and for reviewing the adequacy and integrity of those systems. The effectiveness of the system of internal controls of the Group is reviewed by the Audit Committee during its quarterly meetings. Overview of the state of internal control is set out in the Statement on Internal Control. Relationship with the External Auditors The Board through the Audit Committee has maintained an appropriate relationship with the External Auditors and there is a formal and transparent arrangement in the review of the External Auditor s audit plan, report, internal control issues and procedures. The Committee meets with the External Auditor without the presence of the Executive Board members and Senior Management once a year. 59 Annual Report 2008

62 Statement on Corporate Governance Representatives from the External Auditor are also invited to attend every Audit Committee and Annual General Meeting. Related Party Transactions The significant related party transactions for the financial year ended 31 December 2008 are set out in the notes to the financial statements. At an Annual General Meeting held on 28 May 2008, the Company obtained a shareholders mandate to allow the Group to enter into recurrent related party transactions as set out in the Notes of the Compliance Information. As set out in Bursa Malaysia Listing Requirements and Company s Articles of Association, a Director who has an interest in a transaction shall abstain from deliberation and voting on the relevant resolution in respect of such transaction at the Board and general meeting convened to consider the matter. Signed on behalf of the Board of Directors in accordance with their resolution dated 24 March Tan Sri Dato Muhammad Ali Hashim Chairman Datin Paduka Siti Sa diah Sheikh Bakir Managing Director KPJ Healthcare Berhad (Company No M)

63 Statement on Internal Control (Pursuant to Paragraph 15.27(b) of Bursa Malaysia s Listing Requirements) The Board of Directors of KPJ Healthcare Berhad (KPJ) is pleased to provide the following statement on the state of internal controls of the Group for the financial year ended 31 December 2008, which has been prepared in accordance with Paragraph 15.27(b) of the Listing Requirements of Bursa Malaysia and the Statement on Internal Control Guidance for Directors of Public Listed Companies. The system of internal controls described in this statement is considered appropriate to business operations and is designed and applied to manage the likelihood and consequences of risks to an acceptable level within the context of the business environment throughout the Group. BOARD RESPONSIBILITY The Malaysian Code on Corporate Governance requires listed companies to maintain a sound system of internal control to safeguard shareholders investments and the Group s assets. Hence, the Board acknowledges its primary responsibility for the Group s systems of internal controls covering not only financial controls but also operational, compliance controls and risk management, and for reviewing the adequacy and integrity of those systems. The principal objective of the system of internal controls is to effectively manage business risks to enhance the value of shareholder s investments and safeguard all assets. The role of the Managing Director and Management is to assist in the design and implementation of the Board s policies on internal control. The internal control systems is a process, designed to manage and reduce risks rather than eliminate the risks. As such, internal control can provide only reasonable assurance to Management and the Board of Directors regarding the achievement of company objectives in the following categories: effectiveness and efficiency of operations. reliability of financial reporting. compliance with applicable laws and regulations. The likelihood of achievement is affected by limitation inherent in all internal control systems. Additionally, the Management needs to consider the cost of implementation against the expected benefits derived from the implementation of the internal control system. The Board still relies on the COSO Internal Control Framework to ensure an appropriate and sound system of internal control, which encompasses five inter-related components i.e. the Control Environment, Risk Assessment Framework, Control Activities, Information and Communication process and Continuous Monitoring process. CONTROL ENVIRONMENT Integrity and Ethical Values The Management is committed to inculcate ethical behaviour for employees. At the annual staff assembly or PEDOMAN, (Perhimpunan, Dialog dan Anugerah Tahunan Anggota Pekerja) new staff recite the oath and sign the Service Pledge. All employees are also reminded during the PEDOMAN of the five Core Values adopted by the Group, which are Safety, Courtesy, Integrity, Professionalism and Continuous Improvement. As Integrity is part of the core values of the Group, all employees are also encouraged to report directly to the Managing Director of any misconduct or unethical behaviour commited by any employee of the Group through a declaration in the Borang Peradaban annually. Commitment to Competence The Group is committed to improving skills and competencies of its management, medical consultants and employees through various training programmes, seminars, workshops, quality initiatives and advanced learning. Some of the hospitals in the Group received their accreditation certification from Malaysian Society for Quality in Health (MSQH) for the first, second and third cycles. The focus of the MSQH certification is on patient safety and quality of care. To improve efficiency and effectiveness of services, the Group allocated 1% of salary for training. Training on 61 Annual Report 2008

64 Statement on Internal Control 62 work related areas such as customer services, fire safety and corporate culture are done either internally or through external moderators. KPJ Ampang Puteri Specialist Hospital has pioneered the training on Customer Services called Service Excellence The KPJ Way by using the Standard People Practice (SPP) as a tool and followed by KPJ Damansara Specialist Hospital, KPJ Johor Specialist Hospital and KPJ Ipoh Specialist Hospital. Other hospitals will also embark on the same training in the next phase. New ideas and creativities are encouraged through Suggestion Scheme and Innovative Circle Committee (ICC) competition, held yearly, whereby the winner of these events will represent KPJ at JCorp level. Board of Directors and Audit Committee The Board of Directors reviews the operational and financial performance of the Group through regular quarterly meetings and approves appropriate amendments to the Group policies in relation to internal control effectiveness. The Audit Committee also conducts quarterly reviews and holds discussions with Management on the actions taken on internal control issues identified by the internal and the external auditors, and reports back to the Board. To ensure independency, the Audit Committee will meet the external auditor in the absence of the Management team. Organisational Structure The organisation structure of the Group, headed by the Managing Director, is divided into five (5) main divisions: Financial, Hospitals Operations, Clinical & Professional Services, Business Development (International) & Marketing and Business Development (Malaysia) & Intrapreneur. For the day-to-day operations, every hospital within the Group is managed by a General Manager and supervised by an Executive Director, who holds corporate responsibilities as well. The Executive Director and General Manager are assisted by a Medical Director in relation to clinical issues in the hospital. At Corporate level, the Group is assisted by the Medical Advisory Committee on matters pertaining to clinical issues. Assignment of Authority and Responsibility The Board assigns authority and responsibility mainly to the Executive Committee (EXCO) to discuss operational as well as strategic issues pertaining to the delivery of services and future direction of the Group. Major purchases are discussed and deliberated by the EXCO before they are purchased. The objective is to ensure synergy in pricing and standardisation within the Group. At the same time various committees were formed to identify, evaluate, monitor and manage the significant risks affecting the achievement of business objectives. These committees and their respective roles are: 1. Medical Advisory Committee To develop, implement and monitor clinical governance activities and guidelines for the Group. 2. Clinical Governance Committee a. To continuously improve service quality. b. Ensure high standard of care. c. Create an environment that promotes excellence in clinical care. There are various sub-committees under the Clinical Governance Committee; namely Clinical Governance Policy Committee, Clinical Governance Action Committee and Clinical Risk Management Committee. 3. Procurement /Tender Committee a. Ensure that purchases of equipment and tenders for projects are made in accordance to the standard operating procedures as well as leveraging on the Group discount. b. This Committee is also responsible to co-ordinate the standardisation of equipment purchases. RISK ASSESSMENT FRAMEWORK AND PROCESS Company-wide Objectives Enterprise-Wide Risk Management has been implemented across the Group through Risk Co-ordinators, appointed at each hospital to co-ordinate and monitor the implementation of risk management activities. All hospitals and companies are encouraged to identify and mitigate relevant risks that may affect the achievement of the Group s Key Performance Indicators (KPI). During the year under review, the Group focused its Risk Management activities on incident reporting, root cause analysis, developing and adopting the Seven Patient Safety Goals as introduced by the World Health Organisation (WHO) and monitoring events or activities that depart from the best practices. This is to ensure that every incident is investigated, the root cause is identified to prevent future recurrence and ensure patient safety is given top priority. KPJ Healthcare Berhad (Company No M)

65 CONTROL ACTIVITIES Policies and Procedures Policies and procedures are documented comprehensively in the MSQH accreditation standards as well as the MS ISO 9001:2000 standard operating procedure manuals, which are updated from time to time. These policies and procedures help to ensure management directives are carried out and necessary actions are taken to address and minimise risks. All hospitals in the Group are targeted to obtain the MSQH Accreditation certification. Currently, the following hospitals have been certified with the MSQH Accreditation certification and re-branded as KPJ accredited hospitals: KPJ Ampang Puteri Specialist Hospital, KPJ Damansara Specialist Hospital, KPJ Ipoh Specialist Hospital, KPJ Johor Specialist Hospital and KPJ Selangor Specialist Hospital. Several more hospitals are going for the MSQH Accreditation certification in the year The other hospitals are either certified with the MS ISO 9001:2000 certification or with the integrated ISO certification. Segregation of Duties The delegation of responsibilities between the Board, the Management and Operating Units are clearly defined and authority limits are strictly enforced. Different authority limits were set for various categories of executives for the procurement of capital expenditure. As a measure to curb and reduce the incidents of fraud and error, duties and tasks are segregated between different members of staff especially those in finance and purchasing services. INFORMATION AND COMMUNICATION PROCESS The Management is upgrading and strengthening the Hospital Information Technology System (HITS) for speedy information flow and to increase productivity as well as improve competitiveness and internal control. KPJ has successfully implemented the KPJ Clinical Information System (KCIS) in Puteri Specialist Hospital. New modules and features introduced include the Medical Care Solution for patient management, Nursing Care Solution catering for nursing care planning and management, Pharmacy module with interface to a drugs database Decision Support System and also Picture Archiving and Communications System for the Imaging Services. Currently, efforts are being made to implement the same information systems in KPJ Ampang Puteri Specialist Hospital and KPJ Damansara Specialist Hospital to enhance healthcare delivery. Ultimately, all hospitals within the Group would be connected to the same system. By implementing and utilising this system, all patient activities from the point of registration until discharge will be recorded electronically. The system also captures follow-up information and future requests for services and facilities in the hospitals. CONTINUOUS MONITORING PROCESS Ongoing Monitoring Ongoing monitoring of internal control effectiveness is appropriately and sufficiently done through not only normal daily supervision by immediate supervisors, but also the Internal Auditor and Quality Auditor, who make both scheduled and surprise audit visits to ensure compliance. Any discrepancy and irregularity will be reported to the Management for correction and improvement. The Management also monitors the performance of the hospitals and companies through regular meetings and reports. Separate Evaluation All hospitals certified with the MSQH accreditation have to undergo stringent surveillance audit by the respective surveyors and audit team to ensure compliance especially on patient safety and infection control issues. The Group Internal Audit also visits the hospitals to monitor and evaluate their activities and performance and report back to the Audit Committee quarterly. As mentioned above, the Group also monitors the effectiveness of internal control through Borang Peradaban, the declaration form used by employees to report any deficiency or dishonest acts directly to the Managing Director of the Group. ASSURANCE The Board is of the view that the system of internal controls instituted throughout the Group is sound and effective and provides a level of confidence on which the Board relies for 63 Annual Report 2008

66 Statement on Internal Control assurance. In the year under review, there is no significant control failure or weakness that would result in any material losses, contingencies or uncertainties that would require separate disclosure in the Annual Report. The Board ensures that the internal control system and the risk management practices of the Group are reviewed regularly to meet the changing and challenging operating environment. The Board is therefore pleased to disclose that the state of internal controls of the Group is sufficient, appropriate and effective and in line with the Malaysian Code of Corporate Governance and the Statement of Internal Control Guidance. Signed on behalf of the Board of Directors in accordance with their resolution dated 24 March Tan Sri Dato Muhammad Ali Hashim Chairman Datin Paduka Siti Sa diah Sheikh Bakir Managing Director 64 KPJ Healthcare Berhad (Company No M)

67 Audit Committee Report Audit Committee Sitting: Tan Sri Datuk Arshad Ayub (Chairman) Standing from left to right : Datuk Dr Hussein Awang, Zainah Mustafa and Datuk Azzat Kamaludin 65 TERMS OF REFERENCE Purpose The primary objective of the Audit Committee (Committee) is to assist the Board of Directors (the Board) in the effective discharge of its fiduciary responsibilities for corporate governance, financial reporting and internal control. Composition a) The Committee members shall be appointed by the Board amongst their numbers, who fulfil the following requirements: i) comprised no fewer than three (3) members; ii) all members must be Non-Executive Directors; and iii) all members should be financially literate and at least one must be a member of the Malaysian Institute of Accountants (MIA) or having the relevant qualifications and experience as specified in the Listing Requirements of Bursa Malaysia. b) The Chairman of the Committee, elected from amongst the Audit Committee members, shall be approved by the Board and shall be an Independent Director. c) The term of office and performance of the Committee members are reviewed by the Board yearly and may be re-nominated and appointed by the Board. Reporting Responsibilities The Committee will report to the Board on the nature and extent of the functions performed by it and may take such recommendations to the Board on any audit and financial reporting matters as it may think fit. Attendance at Meetings a) The Managing Director, Chief Financial Officer, senior management team, Executive Directors of the hospitals as well as the Head of Internal Audit and representatives of the External Auditors shall normally attend the meetings. b) Other directors and employees of the Company and/or Group may attend any particular meeting upon invitation where appropriate. c) The Company Secretary shall be the secretary of the meeting. Frequency of Meetings A minimum of four (4) meetings a year shall be planned, although additional meetings may be called at any time at the Chairman s discretion. The Committee held four (4) meetings at various hospitals during the financial year ended 31 December Three Annual Report 2008

68 Audit Committee Report 66 (3) meetings were held at KPJ Damansara Specialist Hospital (KPJ DSH) while another at KPJ Johor Specialist Hospital (KPJ JSH). This is to give the members the opportunity to have first-hand views of operations at the respective hospitals. The details of attendance of the members are as follows: Composition of Committee Tan Sri Datuk Arshad Ayub (Chairman) Datuk Azzat Kamaludin Datuk Dr Hussein Awang Date of Meeting 2008 / Venue 27 Feb (KPJ DSH) 13 May (KPJ DSH) 11 Aug (KPJ JSH) 13 Nov (KPJ DSH) Zainah Mustafa (*) (*) MIA member, (3) present The Committee shall meet at least once annually with the External Auditors in separate sessions without the presence of Management to discuss any matters that the Committee believes should be discussed privately. Objectives The objectives of the Committee are:- to ensure transparency, integrity and accountability in the Group s activities so as to safeguard the rights and interests of the shareholders; to provide assistance to the Board in fulfilling its fiduciary responsibilities relating to corporate accounting and reporting practices; to improve the Group s business efficiency, the quality of the accounting and audit function and strengthening public confidence in the Group s reported financial results and to maintain open lines of communication between the Board and the External and Internal Auditors. Authority The Committee is empowered by the Board to:- investigate any matter within its terms of reference or as directed by the Board; determine and obtain the resources which are required to perform its duties; have full and unrestricted access to any information pertaining to the Group; have direct communication channels with the External and Internal Auditors and obtain external legal and other independent professional advice. Duties and Responsibilities The duties and responsibilities of the Committee shall be:- a) Financial Reporting Review To review the quarterly and year-end financial statements of the Company, focusing particularly on:- i) any changes in accounting policies and practices; ii) significant adjustments arising from the audit; iii) the going concern assumption; iv) compliance with accounting standards and v) compliance with the Listing Requirements of Bursa Malaysia and other legal and statutory requirements. b) Risk Management i) To review the adequacy and provide independent assurance to the Board of the effectiveness of risk management functions in the Group and whether principles and requirements of managing risk are consistently adopted throughout the Group; ii) To review the risk profile of the Group and major initiatives having significant impact on the business. c) Internal Audit i) To review the adequacy of the scope, functions and resources of the internal audit function, and that it has the necessary authority to carry out its work; ii) To review the internal audit programme and results of the internal audit process and where necessary ensure that appropriate action is taken on the recommendations of the internal audit function; iii) To approve any appointment or dismissal of the Head of Internal Audit; and iv) To review any appraisal or assessment of the performance of members of the internal audit function. d) External Audit i) To review the External Auditor s audit plan, scope of the audit and audit reports; ii) To consider the appointment of the External Auditors, the audit fee and any questions of resignation or dismissal of the External Auditors before making any recommendation to the Board; iii) To discuss issues and reservations arising from the interim and final audits, and any matters the Auditors may wish to discuss; and KPJ Healthcare Berhad (Company No M)

69 iv) To review the External Auditor s Management Letter and Management s response. e) Related Party Transactions To monitor and review any related party transactions that may arise within the Company or Group. f) Other Matters To consider such other matters as the Committee considers appropriate or as authorised by the Board. SUMMARY OF ACTIVITIES During the year, the Committee carried out the following activities: a) Financial results i) Reviewed the quarterly financial statements, interim financial announcements and year-end financial statements of the Group and press releases relating to financial matters prior to the approval by the Board; and ii) Reviewed the Company s compliance, in particular the quarterly and year-end financial statements, with the Listing Requirements of Bursa Malaysia, Malaysian Accounting Standards Board and other relevant legal and regulatory requirements. b) Risk Management i) Reviewed the Group s risk management process in mitigating the principal business risks identified; and ii) Reviewed the risk profile of the Group and major initiatives having significant impact on the business. c) Internal Audit i) Reviewed the annual audit plan to ensure adequate scope and comprehensive coverage over the audit activities; and ii) Deliberated on the Internal Audit Reports that were tabled and appraised Management s response to the key audit observations and recommendations. d) External Audit i) Reviewed the audit plan, audit strategy and scope of work for the year; and ii) Reviewed the results of the interim and annual audit as well as the External Auditor s Management Letter and evaluated Management s response. e) Related Party Transactions Reviewed the recurrent related party transactions entered into by the Group. f) Other Matters Reviewed the Audit Committee Report, Statement on Corporate Governance and Statement of Internal Control prior to their inclusion in the Company s Annual Report. INTERNAL AUDIT FUNCTION The Group has an Internal Audit Department that reports to the Audit Committee. The Committee is aware of the fact that an independent and adequately resourced internal audit function is essential to assist the Board in monitoring and managing risks and reviewing internal controls so as to provide reasonable assurance that such system continues to operate satisfactorily and effectively in the Group. The high-risk operational activities identified are audited annually. Audits are prioritised according to an assessment of the potential risk exposures. The internal audit covers the review of operational controls, compliance with the established procedures, guidelines and statutory requirements. Areas where internal control improvement could be made were identified during the financial year. Appropriate corrective actions have either been made or in the process of being implemented. The Internal Audit Services within its terms and reference carried out the following activities for the period:- reviewed and appraised the adequacy and integrity of the internal financial controls so as to ensure that they provide a reasonable but not absolute assurance that assets are properly safeguarded; ascertained the effectiveness of the Management in identifying principal risks and to manage such risks through the Risk Management Framework set up by the Group; ascertained the level of compliance with the Group s plans, policies, procedures and adherence to laws and regulations; appraised the effectiveness of administrative and financial controls applied and the reliability and integrity of data that is produced within the Group; and performed follow-up reviews of previous audit reports to ensure appropriate actions are implemented to address and control weaknesses highlighted. 67 Annual Report 2008

70 Medical Advisory Committee Report Medical Advisory Committee Sitting from left to right : Datuk Dr Hussein Awang, Dr Yoong Fook Ngian, Datin Paduka Siti Sa diah Sheikh Bakir, Dr Kok Chin Leong and Tan Sri Dato Dr Abu Bakar Suleiman 68 Standing from left to right : Dr K V Anitha, Jasimah Hassan, Dato Dr K Kulaveerasingam, Dato Dr S.Jenagaratnam and Amiruddin Abdul Satar Chairman Tan Sri Dato Dr Abu Bakar Suleiman Board Member KPJ Datin Paduka Siti Sa diah Sheikh Bakir Managing Director KPJ Datuk Dr Hussein Awang Medical Director Tawakal Hospital Board Member KPJ Dr Kok Chin Leong Chairman Clinical Governance Policy Committee Consultant Paediatrician Puteri Specialist Hospital Board Member KPJ Dr Yoong Fook Ngian Chairman Clinical Governance Action Committee Consultant ENT Surgeon KPJ Ipoh Specialist Hospital Board Member KPJ Dato Dr Lim Kee Jin (absent in picture) Consultant Physician KPJ Johor Specialist Hospital Dato Dr K Kulaveerasingam Group Advisor for Medical Development & Marketing KPJ Dr Chakr Sri Na Nagara (absent in picture) Consultant O&G KPJ Ipoh Specialist Hospital Dato Dr S. Jenagaratnam Chairman Clinical Risk Management Committee Consultant Anaesthetist KPJ Ipoh Specialist Hospital Amiruddin Abdul Satar Senior Group General Manager Hospital Operations Jasimah Hassan Senior Group General Manager Clinical & Professional Services Dr K V Anitha Corporate Manager Clinical & Professional Services (Secretary) KPJ Healthcare Berhad (Company No M)

71 MEDICAL ADVISORY COMMITTEE The Medical Advisory Committee (MAC) roles are to develop, implement and monitor clinical governance activities and guidelines for the Group. MAC governs and functions through a number of committees, namely the Clinical Governance Policy Committee (CGPC), Clinical Governance Action Committee (CGAC), Clinical Risk Management Committee (CRM), Central Credentialing & Privileging Committee (CCPC) and Central Mortality Review Committee (CMRC). Members of the MAC The term of office of the members are reviewed by the Board of Directors every two years. In the year 2008, the Committee held a total of three meetings on 4 March, 25 July and 18 November The following are the members of the MAC for the term : NAME MEMBERS OF MAC 1 Tan Sri Dato Dr Abu Bakar Suleiman (Chairman of the MAC) Board Member of KPJ 69 2 Datin Paduka Siti Sa diah Sheikh Bakir Managing Director KPJ 3 Datuk Dr Hussein Awang Medical Director Tawakal Hospital Board Member of KPJ Dr Kok Chin Leong (Chairman of Clinical Governance Policy Committee) Dr Yoong Fook Ngian (Chairman of Clinical Governance Action Committee) Dato Dr S Jenagaratnam (Chairman of Clinical Risk Management Committee) Consultant Paediatrician Puteri Specialist Hospital Board Member of KPJ Consultant ENT Surgeon KPJ Ipoh Specialist Hospital Board Member of KPJ Consultant Anaesthetist KPJ Ipoh Specialist Hospital Board Member of KPJ Ipoh Specialist Hospital 7 Dato Dr Lim Kee Jin 8 Dato Dr K Kulaveerasingam 9 Dr Chakr Sri Na Nagara 10 Amiruddin Abdul Satar 11 Jasimah Hassan Consultant Physician KPJ Johor Specialist Hospital Board Member of KPJ Johor Specialist Hospital Group Advisor for Medical Development & Marketing, KPJ Board Member of KPJ Ampang Puteri Specialist Hospital Consultant O&G KPJ Ipoh Specialist Hospital Board Member of KPJ Ipoh Specialist Hospital Senior Group General Manager Hospital Operations, KPJ Senior Group General Manager Clinical & Professional Services, KPJ 12 Dr K V Anitha (Secretary) Corporate Manager Clinical Services, KPJ Annual Report 2008

72 Medical Advisory Committee Clinical governance is defined as A framework through which the organisation is accountable for continually improving the quality of their services and safeguarding high standards of care by creating an environment in which excellence in clinical care will flourish. KPJ recognises the importance of maintaining high quality services whilst encouraging its staff to demonstrate leadership, teamwork and effective communication as well as placing importance to high-quality clinical care and effectiveness of risk management. 70 The Group is committed to continuously strive to enhance clinical governance as the main thrust for improving the quality of care and developing the capacity to maintain high standards. Approaches are needed to enable the recognition and replication of good clinical practice to ensure that lessons are learnt from failures in standards of care and to also deal with poor professional performance when it occurs. At the individual hospital level, the Hospital Clinical Governance Committee under the chairmanship of the Medical Director oversees the implementation and compliance to clinical governance through various clinical sub-committees such as the Medical Advisory, Credentialing, Audit & Medical Education, Infection Control, Medical Records, Mortality Review, Pharmacy & Therapeutics and Surgical Medical Intervention Committees besides participation in other hospital committees. The safety of its patients, staff and visitors is of paramount importance and KPJ believes in building a culture of safety by continuously reviewing and improving all aspects of activities and services that directly affect safety and risk to patients, staff and others. Incident reporting is a vital part of making KPJ s hospitals and services safer for patients. It is the mechanism for monitoring services. Data on patient safety incidents have been compiled since 2004 and KPJ continuously strives to learn and improve from these experiences by sharing examples of good and bad practices and improving on weaknesses of the system. In 2008, KPJ embarked on the implementation of the Seven Patient Safety Goals proposed by the World Alliance for Patient Safety in 2007 at all its hospitals as shown in Table 1 below. Table 1: Patient Safety Goals 1. Improve the Safety of Using Medication Errors sometimes tragic, have resulted from medications and other solutions removed from their original containers and placed into unlabeled containers. Medications or other solutions in unlabeled containers are unidentifiable and this unsafe practice neglects the basic principles of medications management safety yet has been routine in many organisations. Confusing drug names is one of the most common causes of medication errors and is a worldwide concern. With tens of thousands of drugs currently on the market, the potential for error created by confusing brand or generic drug names and packaging is significant. 2. Patient Identification The widespread and continuing failures to correctly identify patients often leads to medication, transfusion and testing errors, wrong person procedures and the discharge of infants to the wrong families. 3. Effective Communication Gaps in hand-over (or hand-off) communication between patient care units and between and among care teams, can cause serious breakdowns in the continuity of care, inappropriate treatment, and potential harm for the patient. 4. Eliminate wrong site, wrong patient, wrong procedure surgery Considered totally preventable, cases of wrong procedure or wrong site surgery are largely the result of miscommunication and unavailable or incorrect information. A major contributing factor to these types of errors is the lack of a standardised pre-operative process. KPJ Healthcare Berhad (Company No M)

73 5. Accurately and Completely Reconcile Medication across the Continuum of Care Patients are most at risk during transitions in care (Hand-Offs) across settings, services, providers or levels of care. The development, reconciliations and communication of an accurate medication list throughout the continuum of care is essential in the reduction of transition-related adverse drug events. 6. Improve Hand Hygiene to Prevent Health Care-Associated Infection It is estimated that at any point in time, more than 1.4 million people worldwide are suffering from infections acquired in hospitals. Effective hand hygiene is the primary preventive measure for avoiding this problem. 7. Reduce the Risk Of Patient Harm Resulting From Falls Falls account for a significant portion of injuries in hospitalised patients, long-term care residents and home care recipients. In the context of the population it serves, the services it provides and its environment of care, the organisation should evaluate its risk for such falls and take action to reduce the risk of falling and to reduce the risk of injury should a fall occur. The evaluation could include fall history, medications and alcohol consumption review, gait and balance screening, walking aids, assistive technologies and protective devices and environmental assessments. 71 Table 2: Incident Reporting from Incident reporting began in 2004 and after numerous training and awareness sessions, the hospitals showed an increase in the number of incidents reported. Incident Reporting for As a percentage of total number of patients 0.10% 0.09% 0.09% % 0.06% Incident Reporting for As a Percentage of Inpatients Clinical incidents Non-Clinical incidents Total number of incidents % 1.0% 1.3% % 0.5% 0.6% 0.3% 0.5% 0.2% 0.8% 0.9% 0.4% 0.7% 0.3% 0.9% Annual Report 2008

74 Medical Advisory Committee Table 3: Credentialing & Privileging for New Consultants The Central Credentialing & Privileging Committee (CCPC), a sub-committee of the MAC, was set up to monitor and review the credentials of all the new resident consultants for the Group after interviews at the hospital level. Table 4: Mortality statistics Mortality review is recorded and monitored monthly by the hospitals. In 2008, the top three (3) causes of death recorded in the Group classified in accordance to the International Classification of Diseases (ICD)-10 classification are: 1. Diseases of circulatory system 26 % 2. Neoplasm 19 % 3. Certain infectious & parasitic diseases 12 % 72 KPJ Healthcare Berhad (Company No M)

75 Hospital Medical Directors From left to right Dato Dr Azizi Hj Omar Medical Director KPJ Damansara Specialist Hospital Dato Dr Shahrudin Mohd Dun Medical Director KPJ Selangor Specialist Hospital Jasimah Hassan Senior Group General Manager Clinical & Professional Services Dr Yoong Fook Ngian Chairman Clinical Governance Action Committee Datuk Dr Hussein Awang Chairman Hospital Medical Directors Committee Medical Director - Tawakal Hospital Datin Paduka Siti Sa diah Sheikh Bakir Managing Director Tan Sri Dato Dr Abu Bakar Suleiman Chairman Medical Advisory Committee Dr Kok Chin Leong Chairman Clinical Governance Policy Committee Dato Dr S Jenagaratnam Chairman Clinical Risk Management Committee Dr Mohd Hafetz Ahmad Medical Director KPJ Johor Specialist Hospital Dato Dr Hj Fadzli Cheah Medical Director KPJ Ipoh Specialist Hospital Dato Dr Mohd Rani Jusoh Medical Director KPJ Ampang Puteri Specialist Hospital 73 From left to right Dr KV Anitha Secretary Dr Ong Boon Taik Medical Director Taiping Medical Centre Dr Mohd Harris Lu Medical Director Sentosa Medical Centre Dr Wan Hazmy Che Hon Medical Director Seremban Specialist Hospital Dato Dr Ismail Yaacob Medical Director Kedah Medical Centre Dr Ewe Khay Guan Medical Director Bukit Mertajam Specialist Hospital Dato Dr Ngun Kok Weng Medical Director Kuantan Specialist Hospital Dr Ab Razak Samsudin Medical Director Puteri Specialist Hospital Dr Mahayidin Muhamad Medical Director Perdana Specialist Hospital Dr David Ling Sheng Tee Medical Director Kuching Specialist Hospital Dr Lim Keok Tang Medical Director Damai Specialist Hospital Dr Balakrishnan Subramaniam Medical Director KPJ Kajang Specialist Hospital Dr Neo Chee Beng Medical Director Pusat Pakar Kluang Utama Annual Report 2008

76 Announcements to Bursa Malaysia During the Financial Year ended 31 December /01/08 Proposed acquisition by Kumpulan Perubatan (Johor) Sdn. Bhd., a wholly owned subsidiary of KPJSB, of 100% of the equity interest in Taiping Medical Centre Sdn Bhd (TMCSB) comprising 231,619 ordinary shares of RM1.00 each for an aggregate cash consideration of RM18.0 million. 17/01/08 Change of name of subsidiary company of KPJ Healthcare Berhad Previous Name New Name Medical Centre (Johore) Sdn Bhd Puteri Specialist Hospital (Johor) Sdn Bhd 05/02/08 Proposed disposal by Pharmacare Sdn Bhd (Pharmacare), a wholly-owned subsidiary of KPJSB, of 95.83% of the equity interest in Sejahtera Farma Sdn Bhd (SFSB) comprising 172,500 ordinary shares of RM1.00 each for a cash consideration of RM130, /02/08 Change of name of subsidiary company of KPJ Healthcare Berhad Previous Name New Name Damai Specialist Centre Sdn Bhd Kota Kinabalu Specialist Hospital Sdn Bhd 18/03/08 Proposed disposals by the subsidiary and associated companies of KPJ of their entire interest in Perdana Specialist Hospital building, Kuantan Specialist Hospital building, Sentosa Medical Centre building, KPJ Kajang Specialist Hospital building and Kedah Medical Centre building to Al- Aqar KPJ Reit for a total sale consideration of RM170,040,000 to be satisfied partly by cash consideration of RM85,755,050 and partly by issuance of 88,721,000 new units in Al- Aqar KPJ Reit at an issue price of RM0.95 per unit to be credited as fully paid-up. 10/04/08 Change of name of subsidiary company of KPJ Healthcare Berhad Previous Name New Name Selangor Medical Centres Sdn Bhd Selangor Specialist Hospital Sdn Bhd 15/04/08 Proposed Renewal of the Share Buy-Back Authority 15/04/08 Proposed Renewal of Existing Shareholders Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature 28/05/08 Resolutions proposed at the 15th Annual General Meeting (AGM) of KPJ HEALTHCARE BERHAD were duly passed by the shareholders of the company 04/06/08 Proposed acquisition by Puteri Nursing College Sdn. Bhd. (PNC), a wholly-owned subsidiary of Kumpulan Perubatan (Johor) Sdn. Bhd (KPJSB), which in turn is a wholly-owned subsidiary of KPJ, or its nominee, in relation to the purchase of 4 parcels of land from I&P Permodalan Harta Sdn Bhd (IPPH), a wholly-owned subsidiary of Island and Peninsular Berhad for a total purchase consideration of RM26.0 million KPJ Healthcare Berhad (Company No M)

77 11/08/08 Change of name of subsidiary company of KPJ Healthcare Berhad Previous Name New Name SMC Land & Properties Sdn Bhd Prai Specialist Hospital Sdn Bhd 19/08/08 Interim Dividend of 7% gross less 26% income tax 04/09/08 Proposed disposals of KPJ s entire interest in Seremban Specialist Hospital building, Taiping Medical Centre building, Kota Kinabalu Specialist Hospital building, Bukit Mertajam Specialist Hospital building, KPJ Penang Specialist Hospital building, Tawakal Hospital existing building, KPJ Tawakal Specialist Hospital building and PNC International College of Nursing and Health Sciences to Al- Aqar KPJ Reit (Al- Aqar) for a total sale consideration of RM296,400,000 to be satisfied partly by cash consideration of RM179,526,250 and partly by issuance of 123,025,000 new units in Al- Aqar at an issue price of RM0.95 per unit to be credited as fully paid-up 75 08/10/08 Proposed acquisition by Kumpulan Perubatan (Johor) Sdn. Bhd. (KPJSB), a wholly-owned subsidiary of KPJSB, of 100% of the equity interest in Pusat Pakar Kluang Utama Sdn Bhd (PPKUSB) comprising 2,000,000 ordinary shares of RM1.00 each for a cash consideration of RM12,000,000 12/11/08 Proposed joint venture between Kumpulan Perubatan (Johor) Sdn Bhd (KPJSB), a wholly-owned subsidiary of KPJ and Sterilgamma (M) Sdn Bhd (SMSB) 01/12/08 Change of registered office of KPJ Healthcare Berhad Previous Address New Address Johor Corporation, Level 2, Persada Johor International Convention Centre, 13th Floor, Menara Johor Corporation, Jalan Abdullah Ibrahim, Kotaraya, Johor Bahru, Johor Johor Bahru, Johor Annual Report 2008

78 Financial Statements

79 Contents Financial Statements 78 Directors Report 83 Statement by Directors 83 Statutory Declaration 84 Independent Auditors Report 86 Income Statements 87 Balance Sheets 88 Consolidated Statement of Changes in Equity 90 Company Statement of Changes in Equity 91 Cash Flow Statements 93 Notes to the Financial Statements

80 For the Financial Year ended 31 December 2008 Directors Report The Directors are pleased to submit their annual report to the members together with the audited financial statements of the Group and the Company for the financial year ended 31 December PRINCIPAL ACTIVITIES The principal activities of the Company are investment holding and provision of management services to subsidiary companies. The principal activities of the subsidiaries are mainly the operation of specialist hospitals. There was no significant change in the nature of these activities during the financial year ended 31 December FINANCIAL RESULTS Group RM 000 Company RM 000 Profit for the financial year attributable to equity holders of the Company 85,644 15,148 DIVIDENDS The dividends paid and declared by the Company since 31 December 2007 were as follows: 78 RM 000 In respect of the financial year ended 31 December 2007: Interim gross dividend of 10 sen per share on 207,744,615 ordinary shares, less 27% tax, was declared on 11 December 2007 and paid on 31 January ,165 In respect of the financial year ended 31 December 2008: Interim gross dividend of 7 sen per share on 207,867,315 ordinary shares, less 26% tax,was declared on 19 August 2008 and paid on 26 September ,768 Interim gross dividend by way of Dividend-in-specie of 31 sen gross per share on 208,907,315 ordinary shares, less 26% tax distributed on the basis of 23 units of Al- Aqar KPJ REIT for every 100 ordinary shares held in the Company, was declared on 25 February ,781 58,549 The Directors do not propose any final dividend for the year ended 31 December RESERVES AND PROVISIONS All material transfers to or from reserves and provisions during the financial year are shown in the financial statements. ISSUE OF SHARES During the financial year, 1,716,000 new ordinary shares of RM1.00 each were issued by the Company for cash by virtue of the exercise of options pursuant to the Company s Employees Share Option Scheme ( ESOS ) at exercise price of RM1.33 per share. The new ordinary shares issued during the financial year ranked pari passu in all respects with the existing ordinary shares of the Company. SHARE BUY BACK On 28 May 2008, the shareholders of the Company renewed their approval for the Company to buy-back its own shares. During the financial year, the Company bought back from the open market 620,800 units of KPJ Healthcare Berhad shares, listed on the Main Board of Bursa Malaysia Securities Berhad, at an average buy-back price of RM3.02 per share. The total consideration paid for share buy-back, including transaction costs, was RM1,885,947 and was financed by internally generated fund. The shares purchased were retained as treasury shares. KPJ Healthcare Berhad (Company No M)

81 For the Financial Year ended 31 December 2008 Directors Report (continued) SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR The significant events during the financial year are as disclosed in Note 41 to the financial statements. EVENT SUBSEQUENT TO BALANCE SHEET DATE On 24 February 2009, Majlis Agama Islam Negeri Sembilan ( MAINS ) agreed to dispose its entire interest amounting to 28.3% in Seremban Specialist Hospital Sdn Bhd to KPJ Healthcare Berhad for a cash consideration of RM14.5 million. The acquisition is expected to be completed in the 2nd quarter of EMPLOYEES SHARE OPTION SCHEME ( ESOS ) The Company implemented an ESOS on 13 July 2004 for a period of 5 years which is governed by the by-laws approved by the shareholders on 15 June Details of the ESOS are set out in Note 33 to the financial statements. DIRECTORS The Directors who have held office during the financial period since the date of the last report are as follows: Tan Sri Dato Muhammad Ali Hashim (Chairman) Datin Paduka Siti Sa diah Sheikh Bakir (Managing Director) Tan Sri Datuk Arshad Ayub Tan Sri Dato Dr Abu Bakar Suleiman Datuk Dr Hussein Awang Datuk Azzat Kamaludin Zainah Mustafa Ahamad Mohamad Dr Kok Chin Leong Dr Yoong Fook Ngian Rozan Mohd Saat (Appointed wef ) Kamaruzzaman Abu Kassim (Resigned wef ) 79 In accordance with Article 96 of the Company s Articles of Association, Datin Paduka Siti Sa diah Sheikh Bakir and Zainah Mustafa retire at the forthcoming Annual General Meeting and being eligible, offer themselves for re-election. In accordance with Article 97 of the Company s Articles of Association, Rozan Mohd Saat, who was appointed during the period, retires at the forthcoming Annual General Meeting and being eligible, offers himself for election. Tan Sri Datuk Arshad Ayub retires in accordance with Section 129(6) of the Companies Act, 1965 and, being eligible, offers himself for re-appointment in accordance with Section 129(6) of the said Act, and to hold office until the conclusion of the next Annual General Meeting of the Company. DIRECTORS BENEFITS During and at the end of the financial year, no arrangements subsisted to which the Company is a party, being arrangements with the object or objects of enabling 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, other than the Company s Employees Share Option Scheme (see Note 33 to the financial statements). Since the end of previous 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, except that certain Directors received remuneration from the Company, fellow subsidiaries, and ultimate holding corporation; and certain Directors who have entered into service agreement with the Company where consultant s fees are paid to them (disclosed in Note 8 and 10 to the financial statements). Annual Report 2008

82 For the Financial Year ended 31 December 2008 Directors Report (continued) DIRECTORS INTERESTS IN SHARES AND IN OPTIONS According to the Register of Directors Shareholdings, particulars of interests of Directors who held office at the end of the financial year in shares and in options in the Company or its related corporations are as follows: Number of ordinary shares of RM1 each At At Bought (Sold) KPJ Healthcare Berhad Tan Sri Dato Muhammad Ali Hashim - direct 81,100 36, ,200 - indirect 12, ,000 Tan Sri Datuk Arshad Ayub - direct 386,000 41, ,000 - indirect 733, ,000 Datin Paduka Siti Sa diah Sheikh Bakir - direct 126, , ,100 - indirect 5, ,000 Datuk Azzat Kamaludin 20, , Ahamad Mohamad 16,600 0 (13,700) 2,900 Dr Kok Chin Leong 40, ,000 Dr Yoong Fook Ngian 130, ,000 Johor Land Berhad (a fellow subsidiary) Tan Sri Dato Muhammad Ali Hashim - direct 100, ,360 - indirect 4, ,300 Tan Sri Datuk Arshad Ayub - direct 217, , ,980 - indirect 537, , ,690 Datin Paduka Siti Sa diah Sheikh Bakir - direct 23, ,200 Dr Yoong Fook Ngian 54, ,790 Sindora Berhad (a fellow subsidiary) Tan Sri Dato Muhammad Ali Hashim - direct 73,977 30, ,977 Tan Sri Datuk Arshad Ayub - direct 413, ,824 - indirect 1,016, ,016,666 Datin Paduka Siti Sa diah Sheikh Bakir - direct 14, ,700 - indirect 1, ,067 Ahamad Mohamad - direct 15, ,128 - indirect 31, ,516 Kamaruzzaman Abu Kassim 15,111 0 (15,111) 0 KPJ Healthcare Berhad (Company No M)

83 For the Financial Year ended 31 December 2008 Directors Report (continued) DIRECTORS INTERESTS IN SHARES AND IN OPTIONS (continued) Number of ordinary shares of RM0.50 each At At Bought (Sold) Kulim (Malaysia) Berhad (a fellow subsidiary) Tan Sri Dato Muhammad Ali Hashim - direct 284,000 96, ,200 - indirect 22, ,400 Tan Sri Datuk Arshad Ayub - direct 882,950 0 (173,000) 709,950 - indirect 1,383,200 0 (33,000) 1,350,200 Datin Paduka Siti Sa diah Sheikh Bakir - direct 10,000 35, ,700 Ahamad Mohamad 169,600 62, ,600 Kamaruzzaman Abu Kassim 0 4, ,000 Number of ordinary shares of RM1 each At At Bought (Sold) KFC Holdings (M) Bhd (a fellow subsidiary) Dr Kok Chin Leong 5,000 0 (5,000) 0 QSR Brands Bhd (a fellow subsidiary) Tan Sri Datuk Arshad Ayub - direct 0 100, ,000 - indirect 0 100, ,000 Datin Paduka Siti Sa diah Sheikh Bakir 0 1, ,000 Employees Share Option Scheme KPJ Healthcare Berhad Number of options over ordinary shares of RM1 each As at As at Granted Exercised Forfeited Lapsed Datin Paduka Siti Sa diah Sheikh Bakir 15,000 0 (15,000) Other than as disclosed above, according to the Register of Directors Shareholdings, none of the other Directors in office at the financial year held any interest in shares and in options over shares in the Company or shares, options over shares and debentures of its related corporations during the financial year. ULTIMATE HOLDING CORPORATION The Directors regard Johor Corporation, a body corporate established under the Johor Corporation Enactment (No. 4 of 1968) (as amended by Enactment No. 5 of 1995), as the ultimate holding corporation. Annual Report 2008

84 For the Financial Year ended 31 December 2008 Directors Report (continued) STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS Before the income statements and balance sheets were made out, the Directors took reasonable steps: (a) (b) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts; and to ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course of business their values as shown in the accounting records of the Group and the Company had been written down to an amount which they might be expected so to realise. At the date of this report, the Directors are not aware of any circumstances: (a) (b) (c) which would render the amounts written off for bad debts or the amount of the allowance for doubtful debts in the financial statements of the Group and the Company inadequate to any substantial extent; or which would render the values attributed to current assets in the financial statements of the Group and the Company misleading; or which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and the Company misleading or inappropriate. 82 No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may affect the ability of the Group or the Company to meet their obligations when they fall due. At the date of this report, there does not exist: (a) (b) any charge on the assets of the Group or the Company which has arisen since the end of the financial year which secures the liability of any other person; or any contingent liability of the Group or the Company which has arisen since the end of the financial year. At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements, which would render any amount stated in the financial statements misleading. In the opinion of the Directors: (a) (b) the results of the Group's and the Company's operations during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature. except as disclosed in Note 42 to the financial statements, there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the Group or the Company for the financial year in which this report is made. AUDITORS The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office. Signed on behalf of the Board of Directors in accordance with their resolution dated 24 March TAN SRI DATO MUHAMMAD ALI HASHIM CHAIRMAN DATIN PADUKA SITI SA DIAH SHEIKH BAKIR MANAGING DIRECTOR KPJ Healthcare Berhad (Company No M)

85 For the Financial Year ended 31 December 2008 Statement by Directors Pursuant to Section 169(15) of the Companies Act, 1965 We, Tan Sri Dato' Muhammad Ali Hashim and Datin Paduka Siti Sa'diah Sheikh Bakir, two of the Directors of KPJ Healthcare Berhad, state that, in the opinion of the Directors, the financial statements set out on pages 86 to 141 are drawn up so as to give a true and fair view of the state of affairs of the Group and the Company as at 31 December 2008 and of the results and the cash flows of the Group and the Company for the financial year ended on that date in accordance with the provisions of the Companies Act, 1965 and MASB Approved Accounting Standards in Malaysia for Entities Other Than Private Entities. Signed on behalf of the Board of Directors in accordance with their resolution dated 24 March TAN SRI DATO MUHAMMAD ALI HASHIM CHAIRMAN DATIN PADUKA SITI SA DIAH SHEIKH BAKIR MANAGING DIRECTOR 83 Statutory Declaration Pursuant to Section 169(16) of the Companies Act, 1965 I, Lee Swee Hee, the Chief Financial Officer, primarily responsible for the financial management of KPJ Healthcare Berhad, do solemnly and sincerely declare that the financial statements set out on pages 86 to 141 are, in my opinion, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, LEE SWEE HEE Subscribed and solemnly declared by the abovenamed Lee Swee Hee At : Kuala Lumpur On : 24 March 2009 Before me: COMMISSIONER FOR OATHS Annual Report 2008

86 For the Financial Year ended 31 December 2008 Independent Auditors Report To the members of KPJ Healthcare Berhad (Incorporated in Malaysia) (Company No M) REPORT ON THE FINANCIAL STATEMENTS We have audited the financial statements of KPJ Healthcare Berhad, which comprise the balance sheets as at 31 December 2008 of the Group and of the Company, and the income statements, statements of changes in equity and cash flow statements of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 86 to 141. Directors Responsibility for the Financial Statements 84 The Directors of the Company are responsible for the preparation and fair presentation of these financial statements in accordance with MASB Approved Accounting Standards in Malaysia for Entities Other Than Private Entities and the Companies Act, This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; 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 approved standards on auditing in Malaysia. 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 our judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company 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 Company s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, 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, the financial statements have been properly drawn up in accordance with MASB Approved Accounting Standards in Malaysia for Entities Other than Private Entities and the Companies Act, 1965 so as to give a true and fair view of the financial position of the Group and of the Company as of 31 December 2008 and of their financial performance and cash flows for the year then ended. KPJ Healthcare Berhad (Company No M)

87 For the Financial Year ended 31 December 2008 Independent Auditors Report (continued) REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following: (a) (b) (c) (d) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act. We have considered the accounts and the auditors reports of all the subsidiaries of which we have not acted as auditors, which are indicated in note 19 to the financial statements. We are satisfied that the accounts of the subsidiaries that have been consolidated with the Company s financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes. The audit reports on the accounts of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act. 85 OTHER MATTERS This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report. PRICEWATERHOUSECOOPERS (No. AF: 1146) Chartered Accountants SHIRLEY GOH (No. 1778/08/10 (J)) Chartered Accountant Kuala Lumpur 24 March 2009 Annual Report 2008

88 For the Financial Year ended 31 December 2008 Income Statements Note Group Company RM 000 RM 000 RM 000 RM 000 Revenue 7 1,267,305 1,108,024 49, ,093 Cost of sales 8(a) (898,950) (780,635) 0 0 Gross profit 368, ,389 49, ,093 Other operating income 15,964 13, Administrative expenses 8(a) (267,810) (245,279) (15,338) (13,099) Other operating expenses 8(a) (2,629) (2,499) 0 0 Finance costs 12 (18,533) (20,206) (15,092) (11,960) Share of results of associates 18,705 12, Profit before tax 8 114,052 85,255 19, ,034 Tax expense 13 (24,744) (7,464) (4,110) (29,809) Profit for the financial year 89,308 77,791 15,148 81,225 Attributable to: Equity holders of the Company 85,644 74,237 15,148 81,225 Minority interest 3,664 3, Profit for the financial year 89,308 77,791 15,148 81,225 Earnings per share attributable to ordinary equity holders of the Company: - basic (sen) 15 (a) diluted (sen) 15 (b) The notes on pages 93 to 141 form an integral part of these financial statements. KPJ Healthcare Berhad (Company No M)

89 For the Financial Year ended 31 December 2008 Balance Sheets as at 31 December 2008 Note Group Company RM 000 RM 000 RM 000 RM 000 Non-current assets Property, plant and equipment , , Prepaid leases 17 4,252 7, Investment properties 18 25,488 17, Interest in subsidiaries , ,631 Interest in associates , , Other investments 21 3,980 3, Intangible assets , , Deferred tax assets 24 14,889 11, , , , ,631 Current assets Inventories 25 29,730 27, Receivables, deposits and prepayments , , , ,176 Tax refund receivable 11,221 29,283 1,304 1,111 Deposits, cash and bank balances , , , , , ,451 Non-current assets held for sale , , , , , ,451 Less: Current liabilities Payables , , , ,530 Borrowings 30 - bank overdrafts 1,982 6, others 98,582 80, ,000 Current tax liabilities 1,768 1, Dividend payable 0 15, ,198 Deferred revenue 31 13,761 4, , , , ,728 Net current assets 236, , , ,723 Less: Non-current liabilities Borrowings , , , ,000 Deposits 32 11,359 10, Deferred tax liabilities 24 18,571 14, , , , , , , , ,354 Capital and reserves attributable to equity holders of the Company Share capital , , , ,745 Reserves , ,083 99,555 94, , , , ,354 Less: Treasury shares 33(a) (1,886) 0 (1,886) 0 581, , , ,354 Minority interest 47,532 45, Total equity 628, , , ,354 The notes on pages 93 to 141 form an integral part of these financial statements. Annual Report 2008

90 For the Financial Year ended 31 December 2008 Consolidated Statement of Changes in Equity Attributable to equity holders of the Company Issued and fully paid ordinary shares of RM1.00 each Non-distributable Distributable Number of Nominal Share Merger Exchange Revaluation Retained Minority Total Note Shares Value Premium Reserve Reserve Reserve Earnings Total Interest Equity 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 At 1 January , ,999 32,065 (3,367) (223) 38, , ,590 44, ,282 Acquisition of minority interest (2,859) (2,859) Translation of foreign subsidiaries (409) 0 0 (409) 0 (409) Reversal of deferred tax on revaluation reserve , , , Realisation of revaluation reserve (2,921) 2, Income and expenses recognised directly in equity (409) 14,206 2,921 16,718 (2,504) 14,214 Profit for the financial year ,237 74,237 3,554 77,791 Total recognised income and expenses for the financial year (409) 14,206 77,158 90,955 1,050 92,005 Dividends in respect of the financial year ended 31 December 2007: - Dividend-in-specie (14,534) (14,534) 0 (14,534) - Interim (15,165) (15,165) 0 (15,165) (29,699) (29,699) 0 (29,699) Issue of shares: - exercise of share options 33 3,746 3,746 1, , ,982 At 31 December , ,745 33,301 (3,367) (632) 53, , ,828 45, ,570 The notes on pages 93 to 141 form an integral part of these financial statements. KPJ Healthcare Berhad (Company No M)

91 For the Financial Year ended 31 December 2008 Consolidated Statement of Changes in Equity (continued) Attributable to equity holders of the Company Issued and fully paid ordinary shares of RM1.00 each Non-distributable Distributable Number of Nominal Share Treasury Merger Exchange Revaluation Retained Minority Total Note Shares Value Premium Shares Reserve Reserve Reserve Earnings Total Interest Equity 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 At 1 January , ,745 33,301 0 (3,367) (632) 53, , ,828 45, ,570 Acquisition of minority interest (2,047) (2,047) Translation of foreign subsidiaries (133) 0 0 (133) 0 (133) Reversal of deferred tax on revaluation reserve , , ,832 Realisation of revaluation reserve (11,882) 7,526 (4,356) (229) (4,585) Income and expenses recognised directly in equity (133) (10,452) 7,526 (3,059) (1,874) (4,933) 89 Profit for the financial year ,644 85,644 3,664 89,308 Total recognised income and expenses for the financial year (133) (10,452) 93,170 82,585 1,790 84,375 Dividends in respect of the financial year ended 31 December 2008: - Interim (10,768) (10,768) 0 (10,768) Issue of shares: - exercise of share options 33 1,716 1, , ,282 Shares bought back (1,886) (1,886) 0 (1,886) At 31 December , ,461 33,867 (1,886) (3,367) (765) 42, , ,041 47, ,573 The notes on pages 93 to 141 form an integral part of these financial statements. Annual Report 2008

92 For the Financial Year ended 31 December 2008 Company Statement of Changes in Equity Issued and fully paid ordinary shares of Non- RM1.00 each distributable Distributable Number of Nominal Share Treasury Retained Total Note shares value premium shares earnings equity 000 RM 000 RM 000 RM 000 RM 000 RM 000 At 1 January , ,999 27, , ,846 Profit for the financial year ,225 81,225 Dividends in respect of the financial year ended 31 December 2007: - Dividend-in-specie (14,534) (14,534) - Interim dividend (15,165) (15,165) (29,699) (29,699) Issues of shares: - exercise of share options 33 3,746 3,746 1, ,982 At 31 December , ,745 28, , , At 1 January , ,745 28, , ,354 Profit for the financial year ,148 15,148 Dividends in respect of the financial year ended 31 December 2008: - Interim dividend (10,768) (10,768) Issues of shares: - exercise of share options 33 1,716 1, ,282 Shares bought back (1,886) 0 (1,886) At 31 December , ,461 28,845 (1,886) 70, ,130 KPJ Healthcare Berhad (Company No M) The notes on pages 93 to 141 form an integral part of these financial statements.

93 For the Financial Year ended 31 December 2008 Cash Flow Statements Group Company RM 000 RM 000 RM 000 RM 000 OPERATING ACTIVITIES Profit for the financial year attributable to equity holders of the Company 85,644 74,237 15,148 81,225 Adjustments for items not involving the movement of cash and cash equivalents: Tax expense 24,744 7,464 4,110 29,809 Minority interest 3,664 3, Associates: - share of results (18,705) (12,361) 0 0 Interest income (6,122) (2,809) (6,225) (6,231) Dividend income 0 0 (21,311) (110,403) Interest expense 18,533 20,206 15,092 11,960 Allowance for doubtful debts 3,958 3, Bad debts written off Amortisation of prepaid leases Impairment loss of property, plant and equipment 1, (Gain)/loss on fair value of investment properties (50) Property, plant and equipment - depreciation 41,374 42, loss/(gain) on disposals 392 (86) write offs 3, Inventories written off Gain on disposal of shares in associated company (594) (Gain)/loss on disposal of shares in a subsidiary company 6 (461) 0 0 Negative goodwill on acquisition of additional interest in a subsidiary (594) (2,016) 0 0 Impairment loss of investment in an associated company 6, Operating profit before changes in working capital 165, ,810 6,814 6,360 Changes in working capital: Inventories (3,281) (4,841) 0 0 Receivables (32,430) (28,547) 2,842 4,623 Payables 15,642 35,912 (758) 646 Related companies 2,494 1,704 5,569 (105,779) Cash flows from operations 147, ,038 14,467 (94,150) Long term deposits Interest paid (19,986) (21,889) (15,092) (11,960) Income tax paid (4,566) (25,147) (1,493) (30,920) Net cash generated from/(used in) operating activities 123,950 93,002 (2,118) (137,030) The notes on pages 93 to 141 form an integral part of these financial statements. Annual Report 2008

94 For the Financial Year ended 31 December 2008 Cash Flow Statements (continued) Note Group Company RM 000 RM 000 RM 000 RM 000 INVESTING ACTIVITIES Purchase of property, plant and equipment (120,644) (101,912) 0 0 Proceeds from disposal of property, plant and equipment 41, Additional investment in subsidiaries 19 (23,543) (5,795) 0 (100) Additional investment in associate company (3,341) Proceeds from disposal of shares in a subsidiary , Proceeds from disposal of shares in associated company 29, Decrease/(increase) in deposits pledged with banks (80) 55, Dividends received 9,870 10,447 18, ,403 Interest received 6,122 2,809 6,225 6,231 Net cash (used in)/generated from investing activities (61,258) (37,033) 24, , FINANCING ACTIVITIES Issue of shares: - exercise of share options 33(b) 2,282 4,982 2,282 4,982 - shares bought back 33(a) (1,886) 0 (1,886) 0 Bank borrowings: - drawdown 91,037 42,000 44,000 36,000 - repayment (117,761) (25,026) (41,000) 0 Dividends paid to: - shareholders (25,966) (20,552) (25,933) (20,552) Net cash generated from/(used in) financing activities (52,294) 1,404 (22,537) 20,430 NET CHANGES IN CASH AND CASH EQUIVALENTS 10,398 57, (66) CASH AND CASH EQUIVALENTS AT BEGINNING OF THE FINANCIAL YEAR 90,905 33, CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL YEAR ,303 90, The notes on pages 93 to 141 form an integral part of these financial statements. KPJ Healthcare Berhad (Company No M)

95 For the Financial Year ended 31 December 2008 Notes to the Financial Statements 1 GENERAL INFORMATION The principal activities of the Company are investment holding and provision of management services to subsidiaries. The principal activities of the subsidiaries in the Group are mainly the operation of specialist hospitals. There was no significant change in the nature of these activities during the financial year ended 31 December The holding corporation is Johor Corporation, a body corporate established under the Johor Corporation Enactment (No. 4 of 1968) (as amended by Enactment No. 5 of 1995). The Company is a public limited liability company, incorporated and domiciled in Malaysia and listed on the Main Board of Bursa Malaysia Securities Berhad. The address of the registered office of the Company is: Level 2, Persada Johor International Convention Centre Jalan Abdullah Ibrahim Johor Bahru, Johor The address of the principal place of business of the Company is: No 7, Persiaran Titiwangsa Kuala Lumpur 2 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The Group s activities expose it to a variety of financial risks, including liquidity and cash flow risk, interest rate risk, market risk, credit risk and foreign currency exchange risk. The Group s overall financial risk management objective is to ensure that the Group creates value for its shareholders. The Group focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. Financial risk management is carried out through risk reviews, internal control systems, an insurance programme and adherence to Group financial risk management policies. 93 (a) (b) (c) (d) Liquidity and cash flow risk Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities. Due to the dynamic nature of the underlying businesses, the Group aims at maintaining flexibility in funding by ensuring that committed credit lines are available. Despite the increase in Group s borrowings due to the growth of the businesses of the Group, the debt to equity level has been kept at a manageable level. In addition, the permitted level of debt to equity is also provided under the terms of Commercial Papers/Medium Term Notes (CP/MTN). The Group considers the risk of exceeding the maximum level of indebtedness to be unlikely, as the terms of the CP/MTN are designed to prevent debts being overdrawn, and any increase in the maximum level of indebtedness requires prior approval from the CP/MTN holders. Hence, the Group strictly monitors its level of borrowings. As at 31 December 2008, the unutilised CP/MTN amounts to RM36 million (2007: RM44 million). Interest rate risk Interest rate exposure arises from certain Group s borrowings and deposits, which are on floating rates. Under the current market environment, the Group considers the risk of material loss in the event of an increase in interest rate to be manageable through the use of fixed and floating rate debts. For certain borrowings under the Islamic facilities, the Group has minimised its exposure to any increase in finance cost as those borrowings are borrowed under fixed rates. Credit risk The Group seeks to invest cash assets safely and profitably. Its deposits are placed with credit worthy financial institutions. It also seeks to control credit risk by setting credit limits and ensuring that sales of products and services are made to customers with an appropriate credit history. The credit worthiness of all counter parties are periodically reviewed and services to delinquent customers are suspended should they exceed their credit terms and limit, with the approval of the management. The Group considers the risk of material loss in the event of non-performance by trade receivables to be unlikely. Foreign currency exchange risk The Group does not face significant exposure from currency risk from foreign currency transactions entered into by subsidiary companies in currencies other than their functional currency. Annual Report 2008

96 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 3 BASIS OF PREPARATION The financial statements of the Group and the Company have been prepared under the historical cost convention, except as disclosed in Note 4 to the financial statements, in accordance with Financial Reporting Standards, MASB Approved Accounting Standards in Malaysia for Entities Other Than Private Entities, and the provisions of the Companies Act, The preparation of financial statements in conformity with the Financial Reporting Standards, requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reported period. It also requires Directors to exercise its judgement in the process of applying the Group s accounting policies. Although these estimates and judgement are based on the Directors best knowledge of current events and actions, actual results may differ. The areas involving a higher degree of judgement of complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note (a) (b) Standards, amendments to published standards and interpretations that are applicable and effective The new accounting standards, amendments to published standards and interpretations to existing standards effective for the Group s financial period ended 31 December 2008 is as follows: Amendment to FRS The Effects of Changes in Foreign Exchange Rates Net Investment in a Foreign Operations FRS Income Taxes FRS Cash Flow Statements FRS Revenue FRS Provisions, Contingent Liabilities and Contingent Assets IC Interpretation 8 Scope of FRS 2 The above standards adopted by the Group require retrospective application except for IC Interpretation 8 which requires retrospective application subject to the transitional provision of FRS 2. FRS 2 requires retrospective application for all equity instruments granted after 31 December 2004 and not vested at 1 January The adoption of the revised Financial Reporting Standards above did not have a significant financial impact on the Group and did not result in substantial changes to the Group s accounting policies. Standards that are applicable but not yet effective and have not been early adopted The new standards and IC Interpretation that is applicable to the Group, but which the Group has not early adopted, are as follows: FRS 8 Operating Segments (effective for annual period beginning on or after 1 July 2009). FRS 8 replaces FRS Segment Reporting. The new standard requires a management approach, under which segment information is presented on the same basis as that used for internal reporting purposes. The Group will apply this standard from financial periods beginning on 1 January The adoption of this revised standard does not have a significant impact on the financial statements of the Group and Company. IC Interpretation 10 Interim Financial Reporting and Impairment (effective for annual period beginning on or after 1 January 2010). IC Interpretation 10 prohibits the impairment losses recognised in an interim period on goodwill and investments in equity instruments and in financial assets carried at cost to be reversed at a subsequent balance sheet date. The Group will apply this standard from financial periods beginning on 1 January The adoption of this revised standard does not have a significant impact on the financial statements of the Group and Company. The following standards will be effective for annual period beginning on or after 1 January The Group will apply these standards from financial periods beginning on 1 January The Group has applied the transitional provision in the respective standards which exempts entities from disclosing the possible impact arising from the initial application of the standard on the financial statements of the Group and Company. FRS 139 Financial Instruments: Recognition and Measurement. FRS 7 Financial Instruments: Disclosures (c) Standards and interpretations that are not yet effective and are not relevant to the Group The new accounting standards and interpretations which are not yet effective and are not relevant to the Group are as follows: FRS 4 Insurance Contracts (effective for annual period beginning on or after 1 January 2010) IC Interpretation 9 Reassessment of Embedded Derivatives (effective for annual period beginning on or after 1 January 2010) KPJ Healthcare Berhad (Company No M)

97 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 4 SIGNIFICANT ACCOUNTING POLICIES Unless otherwise stated, the following accounting policies have been used consistently in dealing with items which are considered material in relation to the financial statements. (a) Economic entities in the Group (i) Subsidiaries Subsidiaries are those corporations, partnerships or other entities (including special purpose entities) in which the Group has the power to exercise control over the financial and operating policies so as to obtain benefits from their activities, generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are consolidated using the purchase method of accounting except for Johor Specialist Hospital Sdn Bhd and Ipoh Specialist Hospital Sdn Bhd which were consolidated using the merger method of accounting. The subsidiaries were consolidated prior to 1 April 2002 in accordance with Malaysia Accounting Standard 2 Accounting for Acquisitions and Mergers, the generally accepted accounting principles prevailing at that time. The Group has taken advantage of the exemption provided under FRS Business Combinations to apply the standard prospectively. Accordingly, business combinations entered into prior to 1 January 2007 have not been restated with this standard. Under the purchase method of accounting, subsidiaries are fully consolidated from the date on which control is transferred to the Group and are de-consolidated from the date that control ceases. The cost of an acquisition is measured as 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. 95 Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group s share of the identifiable net assets acquired is recorded as goodwill. See the accounting policy Note 4(f) on goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement. Minority interest represent that portion of the profit and loss and net assets of a subsidiary attributable to equity interests that are not owned, directly or indirectly through subsidiaries, by the parent. It is measured at the minorities share of the fair values of the subsidiaries identifiable assets and liabilities at the acquisition date and the minorities share of changes in the subsidiaries equity since that date. Where more than one exchange transaction is involved, any adjustment to the fair values of the subsidiaries identifiable assets, liabilities and contingent liabilities relating to previously held interests of the Group is accounted for as a revaluation. Under the merger method of accounting, the results of subsidiaries are presented as if the merger had been affected throughout the current and previous years. The assets and liabilities combined are accounted for based on the carrying amounts from the perspective of the common control shareholder at the date of transfer. On consolidation, the cost of the merger is cancelled with the values of the shares received. Any resulting credit difference is adjusted against any suitable reserve. Any share premium, capital redemption reserve and any other reserves which are attributable to share capital of the merged enterprises, to the extent that they have not been capitalised by a debit difference, are reclassified and presented as movement in other capital reserves. Intragroup transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated but considered an impairment indicator of the asset transferred. Where necessary, adjustments are made to the financial statements of subsidiaries to ensure consistency of accounting policies with those adopted by the Group. The gain or loss on disposal of a subsidiary is the difference between net disposal proceeds and the Group s share of its net assets as of the date of the disposal including the cumulative amount of any exchange differences that relate to the subsidiary is recognised in the consolidated income statement. Annual Report 2008

98 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 4 SIGNIFICANT ACCOUNTING POLICIES (continued) (a) Economic entities in the Group (continued) (ii) Transactions with minority interests The Group applies a policy of treating transactions with minority interests as transactions with parties external to the Group. Disposals to minority interests result in gains and losses for the Group that are recorded in the income statement. Purchases from minority interests result in goodwill, being the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary. (iii) Associates Associates are those corporations, partnerships or other entities in which the Group exercises significant influence, but which it does not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Significant influence is the power to participate in the financial and operating policy decisions of the associates but not the power to exercise control over those policies. Investments in associates are accounted for using the equity method of accounting and are initially recognised at cost. The Group s investment in associates includes goodwill identified on acquisition, net of any accumulated impairment loss. See accounting policy Note 4(i) on impairment of assets. 96 The Group s share of its associates post-acquisitions profits or losses is recognised in the income statement, and its share of post-acquisition movements is adjusted against the carrying amount of the investment. When the Group s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group s interest is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate. Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group s interest in the associates; unrealised losses are also eliminated unless the transaction provides evidence on impairment of the asset transferred. Where necessary, in applying the equity method, adjustments are made to the financial statements of associates to ensure consistency of accounting policies with those of the Group. Dilution gains and losses in associates are recognised in the income statement. For incremental interest in associate, the date of acquisition is purchase date at each stage and goodwill is calculated at each purchase date based on the fair value of assets and liabilities identified. There is no step up to fair value of net assets of previously acquired stake and the share of profits and equity movements for the previously acquired stake is recorded directly through equity. (b) Property, plant and equipment All property, plant and equipment are initially stated at cost. Freehold land and buildings are subsequently shown at fair value, based on periodic, but at least once in every five years, valuations by external independent valuers, less subsequent depreciation and impairment losses. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset, and the net amount is restated to the revalued amount of the asset. All other 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 items. Subsequent costs are included in the asset s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. Surpluses arising on revaluation are credited to revaluation reserve. Any deficit arising from revaluation is charged against the revaluation reserve to the extent of a previous surplus held in the revaluation reserve for the same asset. In all other cases, a decrease in carrying amount is charged to income statement. KPJ Healthcare Berhad (Company No M)

99 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 4 SIGNIFICANT ACCOUNTING POLICIES (continued) (b) Property, plant and equipment (continued) Freehold land is not depreciated as it has an infinite life. Other property, plant and equipment are depreciated on the straightline basis to write off the cost of the property, plant and equipment, or their revalued amounts, to their residual values over their estimated useful lives at the following annual rates: Buildings 2% Renovation 10% Medical and other equipment 7.5% - 25% Furniture and fittings 10% - 20% Motor vehicles 20% Computers 20% - 30% Depreciation of capital work-in-progress commences when the assets are ready for their intended use. Residual values and useful lives of assets are reviewed, and adjusted if appropriate, at each balance sheet date. At each balance sheet date, the Group assesses whether there is any indication of impairment. If such indications exist, an analysis is performed to asses whether the carrying amount of the assets is fully recoverable. A write down is made if the carrying amount exceeds the recoverable amount. See accounting policy Note 4(i) on impairment of assets. Gains or losses on disposals are determined by comparing proceeds with carrying amount and are included in profit/(loss) from operations. On disposal of revalued assets, amounts in revaluation reserve relating to those assets are transferred to retained earnings. 97 (c) Prepaid leases Prepaid leases consist of prepayments for long term leasehold land and are carried at cost less accumulated amortisation and accumulated impairment losses. The prepaid leases are amortised in equal instalments over the lease period of 50 to 999 years. (d) Investment properties Investment property is stated at fair value, representing open market value determined annually by external valuers. Fair value is based on active market prices, adjusted, if necessary, for any difference in the nature, location or condition of the specific asset. If this information is not available, the Company uses alternative valuation methods such as recent prices on less active markets or discounted cash flow projections. Changes in fair values are recorded in the income statement as part of other income. Included in investment property, is leasehold land held for capital appreciation, and is not occupied by the Group. On disposal of an investment property, or when it is permanently withdrawn from use and no future economic benefits are expected from its disposals, it shall be derecognised (eliminated from the balance sheet). The difference between the net disposals and the carrying amount is recognised in profit or loss in the period of the retirement or disposal. (e) Investments Investments in subsidiaries and associates are shown at cost. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. See accounting policy Note 4(i) on impairment of assets. Investments in other non-current investments are shown at cost and an allowance for diminution in value is made where, in the opinion of the Directors, there is a decline other than temporary in the value of such investments. Where there has been a decline other than temporary in the value of an investment, such a decline is recognised as an expense in the period in which the decline is identified. On disposal of an investment, the difference between net disposal proceeds and its carrying amount is charged or credited to the income statement. Annual Report 2008

100 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 4 SIGNIFICANT ACCOUNTING POLICIES (continued) (f) Intangible assets Goodwill Goodwill represents the excess of the cost of an acquisition of subsidiaries and associates over the fair value of the Group s share of the identifiable assets at the date of acquisition. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cashgenerating units or groups of cash-generating units that are expected to benefit from the synergies of the business combination in which the goodwill arose. See accounting policy Note 4(i) on impairment of assets. Goodwill on acquisitions of associates is included in investments in associates. Such goodwill is tested for impairment as part of the overall balance. 98 (g) Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined principally on the weighted average method. Net realisable value is the estimated of the selling price in the ordinary course of business, less the applicable variable selling expenses. (h) Non-current assets (or disposal groups) classified as assets held for sale Non-current assets (or disposal groups) are classified as assets held for sale and stated at the lower of carrying amount and fair value less cost to sell if their carrying amount is recovered principally through a sale transaction rather than through a continuing use. (i) Impairment of non-financial assets Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is the higher of an asset s net selling price and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there is separately identifiable cash flows (cashgenerating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date. The impairment loss is charged to the income statement unless it reverses a previous revaluation in which case it is charged to the revaluation surplus. Impairment losses on goodwill are not reversed. In respect of other assets, any subsequent increase in recoverable amount is recognised in income statement unless it reverses an impairment loss on a revalued asset in which case it is taken to revaluation surplus. (j) Trade receivables Trade receivables are carried at invoiced amount less an allowance for doubtful debts based on a review of outstanding amounts at the financial year end. Known bad debts are written off and specific allowance is made for debts considered to be doubtful of collection. (k) Cash and cash equivalents For the purpose of cash flow statement, cash and cash equivalents comprise cash on hand, bank balances and deposits held at call with banks and licensed financial institutions, other short term and short term, highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are included within borrowings in current liabilities on the balance sheet. KPJ Healthcare Berhad (Company No M)

101 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 4 SIGNIFICANT ACCOUNTING POLICIES (continued) (l) Contingent liabilities and contingent assets The Group does not recognise a contingent liability but discloses its existence in the financial statements. A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in the extremely rare case where there is a liability that cannot be recognised because it cannot be measured reliably. When a change in the probability of an outflow of economic resources occurs, so that outflow is probable, it will then be recognised as a provision. A contingent asset is a possible asset that arises from past events whose existence will be confirmed by occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group. The Group does not recognise contingent assets but discloses its existence where inflows of economic benefits are probable, but not virtually certain. When inflow of economic resources is virtually certain, the asset is recognised. In the acquisition of subsidiaries by the Group under a business combination, the contingent liabilities assumed are measured initially at their fair value at the acquisition date, irrespective of the extent of any minority interest. The Group recognises separately the contingent liabilities of the acquirees as part of allocating the cost of a business combination where their fair values can be measured reliably, the resulting effect will be reflected in the goodwill arising from the acquisitions. Subsequent to the initial recognition, the Group measures the contingent liabilities that are recognised separately at the date of acquisition at the higher of the amount that would be recognised in accordance with the provisions of FRS 137 and the amount initially recognised less, when appropriate, cumulative amortisation recognised in accordance to FRS (m) Borrowings (i) Classification Borrowings are initially recognised based on the proceeds received, net of transaction costs incurred. In the subsequent financial year, borrowings are stated at amortised cost using the effective yield method; any difference between proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings. Interest, dividends, losses and gains relating to a financial instrument, or a component part, classified as a liability is reported within finance cost in the income statement. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date. (ii) Capitalisation of borrowing costs Borrowing costs incurred to finance the freehold land and development of the new building is capitalised as part of the cost of the property, plant and equipment during the period of time that is required to complete and prepare the asset for its intended use. All other borrowing costs are expensed to the income statement. (n) Financial instruments (i) Description A financial instrument is any contract that gives rise to both a financial asset of one enterprise and a financial liability or equity instrument of another enterprise. A financial asset is any asset that is cash, a contractual right to receive cash or another financial asset from another enterprise, a contractual right to exchange financial instruments with another enterprise under conditions that are potentially favourable, or an equity instrument of another enterprise. A financial liability is any liability that is a contractual obligation to deliver cash or another financial asset to another enterprise, or to exchange financial instruments with another enterprise under conditions that are potentially unfavourable. Annual Report 2008

102 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 4 SIGNIFICANT ACCOUNTING POLICIES (continued) (n) Financial instruments (continued) (ii) Financial instruments recognised on the balance sheet The particular recognition method adopted for financial instruments recognised on the balance sheet is disclosed in the individual policy statements associated with each item. (iii) Fair value estimation for disclosure purposes The fair value of publicly traded derivatives and securities is based on quoted market prices at the balance sheet date. In assessing the fair value of other derivatives and financial instruments, the Group uses a variety of method and makes assumptions that are based on market conditions existing at each balance sheet date. Quoted market prices or dealer quotes for the specific or similar instruments are used for long term debt. Other techniques, such as discounted value of future cash flows, is used to determine fair value for the remaining financial instruments. In particular, the fair value of financial liabilities is estimated by discounting the future contractual cash flows at the current market interest rate obtainable to the Group for similar financial instruments. The face values of financial assets (less any estimated credit adjustments) and financial liabilities with a maturity period of less than one year are assumed to approximate their fair values. 100 (o) Leases Finance leases Leases of property, plant and equipment where the Group assumes substantially all the benefits and risks of ownership are classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased property or the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in borrowings. The interest element of the finance charge is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Property, plant and equipment acquired under finance leases are depreciated over the shorter of the estimated useful life of the asset and the lease term. Operating leases Leases of assets where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the lease period. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place. (p) Hire-purchase arrangements Property, plant and equipment acquired under hire-purchase arrangements are capitalised in the financial statements and the corresponding obligations treated as liabilities. Finance charges are allocated to the income statement over the hire-purchase periods to give a constant periodic rate of interest on the remaining liabilities. Property, plant and equipment acquired under hire-purchase agreements are depreciated over the useful lives of the assets. (q) Income taxes Current tax expense is determined according to the tax laws of each jurisdiction in which the Group operates and include all taxes based upon the taxable profits, including the withholding taxes payable by a foreign subsidiary, associates or joint venture on distributions of retained earnings to companies in the Group, and real property gains taxes payable on disposal of properties. Deferred tax is determined using the tax rates (and tax laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or liability is settled. KPJ Healthcare Berhad (Company No M)

103 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 4 SIGNIFICANT ACCOUNTING POLICIES (continued) (q) Income taxes (continued) Deferred taxation is provided in full, using the liability method, on temporary differences arising between the amounts attributed to assets and liabilities and their carrying amounts in the financial statements. However, deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences or unused tax losses can be utilised. Deferred tax is recognised on temporary differences arising on investments in subsidiaries and associates except where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. (r) Segment reporting Segment reporting is presented for enhanced assessment of the Group s risk and returns. A business segment is a group of assets and operations engaged in providing products or services that are subject to risk and returns that are different from those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment that is subject to risks and returns that are different from those components operating in other environments. Segment revenue, expense, assets and liabilities are those amounts resulting from the operating activities of a segment that are directly attributable to the segment and the relevant portion that can be allocated on a reasonable basis to the segment. 101 Segment revenue, expense, assets and segment liabilities are determined before intra-group balances and intra-group transactions are eliminated as part of the consolidation process, except to the extent that such intra-group balances and transactions are between group enterprises within a single segment. Inter-segment pricing is based on similar terms as those available to other external parties. (s) Foreign currencies The financial statements are presented in Ringgit Malaysia. (i) (ii) Functional and presentation currency Items included in the financial statements of each of the Group s entities are measured using the currency of the primary economic environment in which the entity operates ( the functional currency ). The consolidated financial statements are presented in Ringgit Malaysia, which is the Company s functional and presentation currency. Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement. (iii) Group companies The results and financial position of all the group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet; income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and all resulting exchange differences are recognised as a separate component of equity. Annual Report 2008

104 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 4 SIGNIFICANT ACCOUNTING POLICIES (continued) (s) Foreign currencies (continued) (iii) Group companies (continued) On consolidation, exchange differences arising from the translation of the net investment in foreign operations are taken to shareholders equity. When a foreign operation is partially disposed of or sold, exchange differences that were recorded in equity are recognised in the income statement as part of the gain or loss on sale. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. (t) Revenue recognition (i) Income from hospital operations comprises inpatient and outpatient hospital charges, consultation fees, sales of pharmaceutical products and medical supplies. These are recognised when services are rendered and goods are delivered, net of discounts, rebates and returns. 102 (ii) Other hospital income mainly consists of clinic rental for consultants. These are recognised on an accrual basis in accordance with the substance of the relevant agreements. Laboratory test fees Laboratory test fees are recognised upon delivery of products and customer acceptance, if any, or performance of services and net of discounts. (iii) Deferred revenue Deferred revenue represents revenue students fees, accommodation fees and other external courses fees received. Amounts are included in the financial statements as deferred revenue at the commencement of the course and recognised as revenue on monthly basis over the duration of the course. (iv) Dividend income Dividend income is recognised when the right to receive payment is established. (v) Management fees Management fees represent fees charged to subsidiaries for assisting in the management of the subsidiaries and these are recognised upon performance of services. (vi) Interest income Interest income from short term deposits and fixed deposits are recognised on a time proportion basis, taking into account the principal outstanding and the effective rate over the period of maturity, when it is determined that such income will accrued to the Group. (u) Employee benefits (i) Short term employee benefits Salaries, bonuses, allowances and non-monetary benefits are accrued in the financial year in which the associated services are rendered by employees of the Group. (ii) Post-employment benefits Defined contribution plan The Group contributes to the Employee Provident Fund, the national defined contribution plan. Once the contributions have been paid, the Group has no further payment obligations. KPJ Healthcare Berhad (Company No M)

105 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 4 SIGNIFICANT ACCOUNTING POLICIES (continued) (u) Employee benefits (continued) (iii) Equity compensation benefits Details of the Group s Employees Share Option Scheme are set out in Note 33. The Group does not make a charge to the income statement in connection with share options granted to Directors and employees. When the share options are exercised, the proceeds received, net of any transaction costs, are credited to share capital (nominal value) and share premium. (v) Share capital (i) Classification Ordinary shares are classified as equity. (ii) Share issue costs Incremental external costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds. (iii) Dividends to shareholders of the Company Dividends are recognised as a liability in the period in which they are declared. 103 (iv) Purchase of own shares Where the Company or its subsidiaries purchases the Company s equity share capital, the consideration paid, including any directly attributable incremental external costs, net of tax, is deducted from total shareholders equity as treasury shares until they are cancelled, reissued or disposed of. Where such shares are subsequently sold or reissued, any consideration received, net of any directly attributable incremental costs and the related tax effects, is included in shareholders equity. 5 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENT Estimates and judgments are continually evaluated by Directors and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Critical accounting estimates and assumptions The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results. To enhance the information content of the estimates, certain key variables that are anticipated to have material impact to the Group s results and financial position are tested for sensitivity to changes in the underlying parameters. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are outlined below. (i) Estimated impairment of goodwill The Group tests goodwill for impairment annually whether goodwill has suffered any impairment, in accordance with its accounting policy stated in Note 4(f). More regular reviews are performed if events indicate that this is necessary. The recoverable amounts of cash-generating units have been determined based on value in use calculations. The calculations require the use of estimates as set out in Note 23. There will be no impairment to the carrying amount of goodwill unless the estimated gross margin reduces from 28% to 26% (2007: 24.3%) There will be no impairment to the carrying value of goodwill unless the pre-tax discount rate increases from 12% to 19% (2007: 39%). Annual Report 2008

106 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 5 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENT (continued) Critical accounting estimates and assumptions (continued) (ii) Deferred tax assets The Group is subject to income taxes in numerous jurisdictions. Significant judgment is required in determining the worldwide 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 income tax and deferred tax provisions in the period in which such determination is made. Deferred tax assets is recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. This involves judgement regarding the future financial performance of the particular entity in which the deferred tax asset has been recognised. If the projected growth rate applied in the profit projections of the respective entities in the Group do not fall below 10% (2007: 10%) from management s estimate as at financial year end, the deferred tax assets recognised will remain fully recoverable. 6 SEGMENT REPORTING (a) Primary reporting - business segments 104 The Group principally operates in one main business segment namely the operating of specialist hospitals. The hospitals segment also includes the support services companies which has been principally providing services and supports the operations of the hospitals. These support services companies mainly comprise provision of management services and pathology and laboratory services, marketing and distribution of pharmaceutical, medical and surgical products and operating a private nursing college. Other operations of the Group mainly comprise import and distribution of pharmaceutical, medical and consumer healthcare products and retail pharmacy. None of these operations is of a sufficient size to be reported separately and they contributed less than 10% of consolidated revenue or assets. (b) Secondary reporting - geographical segments The Group principally operates in Malaysia. The other geographical areas of the Group s operations are in Singapore and Indonesia, mainly in marketing and distribution of pharmaceutical, medical and surgical products and to operate as a specialist hospital respectively. These countries contributed less than 10% of consolidated revenue or assets. 7 REVENUE Group Company RM 000 RM 000 RM 000 RM 000 Hospital income 470, , Consultation income 394, , Sale of pharmaceutical, medical and surgical products 376, , Laboratory test fees 5,615 1, Other hospital income - clinics rental 12,109 11, others 7,860 8, Dividend income from subsidiary companies , ,403 Interest income 0 0 6,225 6,231 Management fees ,152 19,459 1,267,305 1,108,024 49, ,093 KPJ Healthcare Berhad (Company No M)

107 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 8 PROFIT BEFORE TAX Note Group Company RM 000 RM 000 RM 000 RM 000 (a) Expenses by nature: Auditors remuneration , Allowance for doubtful debts 3,958 3, Amortisation of prepaid leases Advertisement, marketing & promotion 2,282 1,129 1, Bad debts written off Directors remuneration 10 1,869 1,763 1,720 1,571 Inventories written off Utilities 24,312 20, Medical expenses 15,922 13, Professional fees 2,171 3, Repairs & maintenance 29,473 24, Property, plant & equipment: - depreciation 41,374 42, written off 3, loss/(gain) on disposal 392 (86) 0 0 Rental expense of land & buildings 51,303 40, Rental of equipment 6,408 6, Training expense 969 5, Travelling 7,753 3,495 1,702 1,989 Included in cost of sales: - material costs 304, , medical consultants fees: - paid to companies which certain Directors have financial interest paid to other consultants 362, , Impairment loss of property, plant and equipment 1, Impairment loss of investment in associate company 20 6, Employee benefits costs , ,213 7,146 5,124 (Gain)/Loss on fair value of investment property 18 (50) Other expenses 67,434 80,075 1,043 1, Total expenses* 1,169,389 1,028,413 15,338 13,099 *Total expenses consist of the following: Cost of sales 898, , Administrative expenses 267, ,279 15,338 13,099 Operating expenses 2,629 2, Total expenses 1,169,389 1,028,413 15,338 13,099 (b) The following amounts have been credited in arriving at profit before tax: Bad debts recovered (212) Loss/(gain) on disposal of subsidiaries (Note 19) 6 (461) 0 0 Gain on disposal of shares in associated company (594) Interest income (6,122) (2,809) 0 0 Rental income (3,963) (3,648) 0 0 Negative goodwill on acquisition of additional interest in subsidiaries (Note 19) (594) (2,016) 0 0 Annual Report 2008

108 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 9 AUDITORS REMUNERATION Group / Kumpulan Group Company / Company Syarikat RM 000 RM 000 RM 000 RM 000 PricewaterhouseCoopers: Malaysian firm Statutory audit - current under provision in prior financial year Fees for other services - current (over)/under provision in prior financial year (2) 45 Total remuneration 722 1, Other audit firms: Statutory audit - current Total remuneration 804 1, DIRECTORS REMUNERATION The aggregate amount of emoluments receivable by Directors of the Company during the financial year is as follows: Group Company RM 000 RM 000 RM 000 RM 000 Directors remuneration - fees salaries, allowances and bonus contribution to defined contribution plan benefits in kind ,869 1,763 1,720 1, EMPLOYEE BENEFITS COSTS Group Company RM 000 RM 000 RM 000 RM 000 Staff costs (excluding Directors remuneration): - salaries, allowances and bonus 211, ,486 6,399 4,727 - contribution to defined contribution plan 21,425 15, , ,213 7,146 5,124 KPJ Healthcare Berhad (Company No M)

109 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 12 FINANCE COSTS Group / Kumpulan Group Company / Company Syarikat RM 000 RM 000 RM 000 RM 000 Finance cost on Islamic facilities 2,514 2, Interest expense - commercial papers 9,447 7,244 9,380 7,244 - overdrafts term loans 5,193 6, revolving credits lease and hire purchase 2,347 3, others ,582 4,418 19,986 21,889 15,092 11,960 Less: Interest capitalised into property, plant and equipment (Note 16) (1,451) (1,683) 0 0 Less: Waiver on interest expense (2) ,533 20,206 15,092 11, TAX EXPENSE Group / Kumpulan Group Company / Company Syarikat RM 000 RM 000 RM 000 RM 000 Current tax: - Malaysian income tax 24,024 (459) 4,110 29,809 - Foreign income tax ,403 (126) 4,110 29,809 Deferred tax (Note 24) 341 7, ,744 7,464 4,110 29,809 Current tax Current year 22,189 19,817 4,034 29,809 (Over)/under provision in prior years 2,214 (215) 76 0 Reversal of tax charge in prior year* 0 (19,728) ,403 (126) 4,110 29,809 Deferred tax Origination and reversal of temporary differences 1,521 7, Over provision in prior years (1,180) (336) , ,744 7,464 4,110 29,809 * The reversal of tax charge in 31 December 2007 is due to the waiver of balancing charge, arising from the disposal of 6 hospitals land and buildings to Al- Aqar KPJ REIT in the previous year, which was approved by Ministry of Finance on 2 November Annual Report 2008

110 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 13 TAX EXPENSE (continued) The explanation of the relationship between tax expense and profit before tax is as follows: Numerical reconciliation between tax expense and the product of accounting profit multiplied by the Malaysia tax rate Group Company RM 000 RM 000 RM 000 RM 000 Profit before tax 114,052 85,255 19, ,034 Tax calculated at a statutory tax rate 26% (2007: 27%) 29,654 23,019 5,007 29,979 Effects of: Difference in tax for the first RM500,000 (2007: RM500,000) of chargeable income, taxed at 20% 13 (126) 0 0 Income not subject to tax (5,373) (3,723) (2,730) (620) Expenses not deductible for tax purposes 3,701 5,427 1, Interest expense capitalised deducted for tax purposes (377) (609) Current year tax losses and temporary differences not recognised 944 1, Recognition of previously unrecognised tax losses (894) (4,161) 0 0 Reversal of deferred tax assets recognised in prior years 0 9, Reversal of deferred tax liabilities due to exemption on taxes arising on disposal of buildings to Al- Aqar KPJ REIT (3,910) (1,765) 0 0 Substantively enacted changes to the statutory rate from YA 2008 (48) (533) 0 0 Under/(over) provision of prior years - tax 2,214 (215) deferred tax (1,180) (336) 0 0 Reversal of tax charge in prior year 0 (19,728) 0 0 Tax expense 24,744 7,464 4,110 29,809 Average effective tax rate (%) DIVIDENDS Dividends declared or proposed in respect of the financial year ended 31 December 2008 are as follows: Group / Company RM 000 RM Interim dividend of 7 sen (2007: 10 sen) gross per share less 26% tax (2007: 27%) 10,768 15,165 - Dividend-in-specie of 31 sen (2007: 9.6 sen) gross per share less 26% tax (2007: 27%) distributed on the basis of 23 units (2007: 7 units) of Al- Aqar KPJ REIT for every 100 ordinary shares held in the Company 47,781 14,534 58,549 29,699 Dividends recognised as distribution to ordinary equity holders of the Company 10,768 29,699 KPJ Healthcare Berhad (Company No M)

111 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 15 EARNINGS PER SHARE (a) Basic earnings per share Basic earnings per share of the Group is calculated by dividing the profit attributable to ordinary equity holders of the Company for the financial year by the weighted average number of ordinary shares in issue during the financial year. Group / Kumpulan Group Profit attributable to ordinary equity holders of the Company (RM 000) 85,644 74,237 Weighted average number of ordinary shares in issue ( 000) 206, ,080 Basic earnings per share (sen) (b) Diluted earnings per share For the diluted earnings per share calculation, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. The dilutive potential ordinary shares for the Group are share options granted to employees. 109 For the share options granted to employees, a calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average share price of the Company s shares) based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options. The difference is added to the denominator as an issue of ordinary shares for no consideration. This calculation serves to determine the bonus element in the ordinary shares outstanding for the purpose of computing the dilution. No adjustment is made to profit for the financial year for the share options calculation. Group Profit attributable to equity holders of the Company (RM 000) 85,644 74,237 Weighted average number of ordinary shares in issue ( 000) 206, ,080 Adjusted weighted average number of ordinary shares in issue and issuable ( 000) 3,020 2,764 Weighted average number of ordinary shares for diluted earnings per share ( 000) 209, ,844 Diluted earnings per share (sen) Annual Report 2008

112 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 16 PROPERTY, PLANT AND EQUIPMENT Furniture, fittings, motor Medical vehicles Capital Freehold and other and work-in- Note land Buildings Renovations equipment computers progress Total RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM Group 2008 At 1 January - cost 12,503 32, , ,255 72, ,783 - valuation 71,944 56, ,774 Currency translation differences (282) (1,831) (2,703) (4,453) Additions 75 2,676 7,627 42,324 19,919 52, ,304 Acquisition through business combinations , , ,014 Disposals (3,531) (1,579) (156) (5,266) Reclassifications (82) (710) 0 Reclassification to non-current assets held for sale 28 (76,486) (66,944) 0 (1,001) (9,445) (92,482) (246,358) Write offs 0 (621) 0 (467) (3,320) (56) (4,464) 7,754 30,080 8, , ,442 29, ,334 At 31 December - cost 2,404 24,232 8, , ,442 29, ,136 - valuation 5,350 5, ,198 Accumulated depreciation At 1 January 0 (8,290) 0 (141,262) (86,397) 0 (235,949) Currency translation differences 0 (82) 0 0 (22) 0 (104) Charge for the financial year 0 (3,020) (451) (24,036) (13,867) 0 (41,374) Disposals ,338 1, ,094 Reclassifications 0 0 (4) 252 (248) 0 0 Reclassification to non-current assets held for sale , , ,916 Write offs At 31 December 0 (7,026) (455) (161,665) (93,651) 0 (262,797) Accummulated impairment losses At 1 January Impairment loss for the year 0 (4,854) (4,854) At 31 December 0 (4,854) (4,854) Net book value At 31 December ,754 18,200 7, ,971 82,791 29, ,683 KPJ Healthcare Berhad (Company No M)

113 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 16 PROPERTY, PLANT AND EQUIPMENT (continued) Furniture, fittings, motor Medical vehicles Capital Freehold and other and work-in- Note land Buildings equipment computers progress Total RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Group 2007 At 1 January - cost 2,602 24, , ,425 42, ,522 - valuation 84, , ,263 Currency translation differences (220) (35) 0 (1,630) (1,865) (3,750) Additions 11,563 3,580 31,791 25,877 40, ,594 Disposals 0 (332) (2,623) (2,166) (68) (5,189) Reclassifications 0 6, (67) (7,109) 0 Reclassification to non-current assets held for sale 28 (14,042) (92,638) 0 (11,669) (1,141) (119,490) Write offs 0 0 (2,601) (515) (277) (3,393) 84,447 89, , ,255 72, ,557 At 31 December - cost 12,503 32, , ,255 72, ,783 - valuation 71,944 56, , Accumulated depreciation At 1 January 0 (6,254) (124,689) (74,724) 0 (205,667) Currency translation differences Charge for the financial year 0 (5,039) (21,488) (15,685) 0 (42,212) Disposals ,587 1, ,724 Reclassifications (10) (97) 0 0 Reclassification to non-current assets held for sale , , ,474 Write offs 0 0 2, ,722 At 31 December 0 (8,290) (141,262) (86,397) 0 (235,949) Net book value At 31 December ,447 81, ,719 84,858 72, ,608 Annual Report 2008

114 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 16 PROPERTY, PLANT AND EQUIPMENT (continued) The freehold land and buildings stated at valuation were revalued by the Directors on 15 November 2005 and 31 December 2005 based on open market valuations carried out by an independent firm of professional valuers, CH Williams, Talhar & Wong of 3228, Menara Tun Razak, Jalan Raja Laut, Kuala Lumpur to reflect fair value. The book values of the buildings were adjusted to reflect the revaluation and the resultant surpluses were credited to revaluation reserve. If the total amounts of the freehold land and buildings had been determined in accordance with the historical cost convention, they would have been included at: Group RM 000 RM 000 Cost Freehold land 56,128 69,555 Buildings 50,857 67, , , Accumulated depreciation Buildings (6,080) (8,882) Net book value 100, ,781 The additions and net book value of assets under hire purchase and finance leases are as follows: Group RM 000 RM 000 Assets under hire purchase and finance leases: - additions during the financial year (Note 36 (i)) 2,089 9,999 - net book value at the end of financial year 34,821 40,359 The net book value of property, plant and equipment pledged for borrowing facility (Note 30) as at 31 December 2008 is RM168,048,000 (2007: RM190,813,000). Borrowing costs of RM1,451,000 (2007: RM1,683,000), arising on financing specifically entered into for the construction of the hospital building, were capitalised during the financial year and included in additions of property, plant and equipment of the Group during the financial year. KPJ Healthcare Berhad (Company No M)

115 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 17 PREPAID LEASES Group RM 000 RM 000 Cost At 1 January 7,911 13,992 Additions 1,100 2,419 Acquisition through business combination (Note 19) 7,020 0 Reclassification to non-current assets held for sale (Note 28) (10,092) (8,500) At 31 December 5,939 7,911 Less: Accumulated amortisation At 1 January (213) (152) Charge during the financial year (Note 8 (a)) (156) (328) Reclassification to non-current assets held for sale (Note 28) At 31 December (313) (213) Less: Accumulated impairment losses 1 January 0 0 Charge during the financial year (Note 8(a)) (1,374) At 31 December (1,374) 0 Net book value 4,252 7, INVESTMENT PROPERTIES Group RM 000 RM 000 At 1 January 17,438 18,085 Addition 8,000 0 Gain/(loss) on fair value (Note 8(a)) 50 (647) At 31 December 25,488 17,438 Included in the investment properties is an investment property with carrying value of RM15,500,000 (2007: RM7,500,000) that has been pledged as security for term loans (Note 30). The fair value of the properties was estimated at RM25,488,000 (2007: RM17,438,000) based on valuations by an independent professionally qualified valuers, CH Williams, Talhar & Wong of 3228, Menara Tun Razak, Jalan Raja Laut, Kuala Lumpur and Directors valuations based on the comparison method of actual sales transactions in the particular area surrounding the property. Valuations were based on current prices in an active market for the respective properties. The following amounts have been recognised in the income statement: Group RM 000 RM 000 Rental income (159) (124) Direct operating expenses arising from investment properties that generate rental income Annual Report 2008

116 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 19 INTEREST IN SUBSIDIARIES Company / Company Syarikat RM 000 RM 000 Unquoted shares, at cost 222, ,631 (a) The following are subsidiaries of the Company: Country of Group s effective Name of company incorporation interest Principal activities % % 114 Johor Specialist Hospital Sdn Bhd Malaysia Operating as a specialist hospital Ipoh Specialist Hospital Sdn Bhd Malaysia Operating as a specialist hospital Kumpulan Perubatan (Johor) Sdn Bhd Malaysia Investment holding, provision of management services and rental of equipment Puteri Specialist Hospital (Johor) Malaysia Operating as a specialist hospital Sdn Bhd 1 Tawakal Holdings Sdn Bhd Malaysia Investment holding Subsidiary of Johor Specialist Hospital Sdn Bhd Renalcare Perubatan (M) Sdn Bhd Malaysia Retail shop Subsidiary of Ipoh Specialist Hospital Sdn Bhd Ipoh Radiotherapy Sdn Bhd Malaysia Dormant Subsidiary of Tawakal Holdings Sdn Bhd Pusat Pakar Tawakal Sdn Bhd 2 Malaysia Operating as a specialist hospital Subsidiaries of Kumpulan Perubatan (Johor) Sdn Bhd Bukit Mertajam Specialist Hospital Malaysia Operating as a specialist hospital Sdn Bhd Kota Kinabalu Specialist Hospital Malaysia Operating as a specialist hospital Sdn Bhd 5 (formerly known as Damai Specialist Hospital Sdn Bhd) Damansara Specialist Hospital Malaysia Operating as a specialist hospital Sdn Bhd 3 Kuantan Specialist Hospital Sdn Bhd Malaysia Operating as a specialist hospital Perdana Specialist Hospital Sdn Bhd Malaysia Operating as a specialist hospital (formerly known as Pusat Pakar Darul Naim Sdn Bhd) Ampang Puteri Specialist Hospital Malaysia Operating as a specialist hospital Sdn Bhd Kuching Specialist Hospital Sdn Bhd Malaysia Operating as a specialist hospital Selangor Specialist Hospital Sdn Bhd 5 Malaysia Operating as a specialist hospital (formerly known as Selangor Medical Centres Sdn Bhd) Sentosa Medical Centre Sdn Bhd Malaysia Operating as a specialist hospital KPJ Healthcare Berhad (Company No M)

117 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 19 INTEREST IN SUBSIDIARIES (continued) (a) The following are subsidiaries of the Company: (continued) Country of Group s effective Name of company incorporation interest Principal activities % % Subsidiaries of Kumpulan Perubatan (Johor) Sdn Bhd (continued) Seremban Specialist Hospital Sdn Bhd Malaysia Operating as a specialist hospital Kajang Specialist Hospital Sdn Bhd Malaysia Operating as a specialist hospital Taiping Medical Centre Sdn Bhd Malaysia Operating as a specialist hospital Pusat Pakar Kluang Utama Sdn Bhd Malaysia Operating as a specialist hospital Prai Specialist Hospital Sdn Bhd Malaysia Operating as a specialist hospital (formerly known as SMC Land & Properties Sdn Bhd) Puteri Nursing College Sdn Bhd Malaysia Operating a private nursing college Pharmaserv Alliances Sdn Bhd Malaysia Marketing and distribution of medical and pharmaceutical products PT Khasanah Putera Jakarta Medika 4 Indonesia To operate as a specialist hospital PharmaCARE Sdn Bhd 5 Malaysia Providing human resource, training services and rental of human resource information system Diaper Technology Industries Sdn Bhd Malaysia Providing information technology related services and rental of software Fabricare Laundry Sdn Bhd 5 Malaysia Providing business of laundry services Teraju Farma Sdn Bhd Malaysia Provision of management services Maharani Specialist Hospital Sdn Bhd Malaysia Dormant Freewell Sdn Bhd Malaysia Dormant Bayan Baru Specialist Hospital Malaysia Dormant Sdn Bhd PharmaCARE Surgical Technologies Malaysia Dormant Sdn Bhd Lablink (M) Sdn Bhd Malaysia Pathology and laboratory services KPJ Medik TV Sdn Bhd 5 Malaysia Dormant 115 Subsidiary of Selangor Specialist Hospital Sdn Bhd Hospital Pusrawi SMC Sdn Bhd 5 Malaysia Operating as a specialist hospital Subsidiary of Sentosa Medical Centre Sdn Bhd Renal-Link Sentosa Sdn Bhd Malaysia Operating as dialysis centre Subsidiaries of PharmaCARE Sdn Bhd Sejahtera Farma Sdn Bhd 5 Malaysia 0 96 Retail pharmacy Open Access Sdn Bhd 5 Malaysia Retail pharmacy Annual Report 2008

118 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 19 INTEREST IN SUBSIDIARIES (continued) (a) The following are subsidiaries of the Company: (continued) Country of Group s effective Name of company incorporation interest Principal activities % % Subsidiaries of Pharmaserv Alliances Sdn Bhd Medical Supplies (Sarawak) Sdn Bhd Malaysia Distributor of pharmaceutical products Malaysian Institute of Healthcare Malaysia Dormant Management Sdn Bhd FP Marketing (S) Pte Ltd 4 Singapore Import, export and distributors of pharmaceutical, medical and consumer healthcare products Direct equity holding by the Company is 84% (2007: 84%) 2 Direct equity holding by the Company is 14% (2007: 14%) 3 Direct equity holding by the Company is 10% (2007: 10%) 4 Audited by firms other than PricewaterhouseCoopers International Limited 5 Audited by firms other than PricewaterhouseCoopers, Malaysia During the financial year, the Group completed its acquisition in new interests and increased its stake in several subsidiaries as follows: 2008 RM 000 Additional interests in subsidiaries [Note (b)(ii), (b)(iii) and (b)(v)] 1,563 Acquisition of interests in newly acquired subsidiaries [Note (b)(i)and (b)(iv)] 30,000 31,563 Less: Cash and cash equivalents of subsidiaries acquired (8,020) Cash outflow of the Group on acquisition of subsidiaries 23,543 During the financial year, the Group completed its acquisition in new interests and increased its stake in several subsidiaries as follows: (i) (ii) On 7 December 2007, Kumpulan Perubatan (Johor) Sdn Bhd ( KPJSB ), a subsidiary, acquired 100% of the equity interest in Taiping Medical Centre Sdn Bhd comprising 231,619 ordinary shares of RM1.00 each for an aggregate cash consideration of RM18,000,000. The acquisition has been approved by Foreign Investment Committee vide its letter dated 28 December The acquisition was completed on 22 January The fair value of net assets in Taiping Medical Centre Sdn Bhd at the date of acquisition was RM10,824,609 and the goodwill arising on this acquisition amounted to RM7,175,391. On 16 July 2008, Sentosa Medical Centre Sdn Bhd, a subsidiary of KPJSB, acquired additional 50% of the equity interest in Renal-Link Sentosa Sdn Bhd comprising 25,000 ordinary shares of RM1.00 each for an aggregate cash consideration of RM63,250. The fair value of net assets in Renal-Link Sentosa Sdn Bhd at the date of acquisition was RM271,156 and the negative goodwill arising on this acquisition amounted to RM207,906. (iii) On 1 August 2008, KPJSB, a subsidiary, entered into a sale and purchase agreement with Selangor Specialist Hospital Sdn Bhd (formerly known as Selangor Medical Centre Sdn Bhd), subsidiary of KPJSB, for the additional interest of 40% equity interest in Prai Specialist Hospital (formerly known as SMC Land & Properties Sdn Bhd) for a cash consideration of RM2 and the goodwill arising on this acquisition amounted to RM6,251. (iv) On 8 October 2008, KPJSB, a subsidiary, acquired 100% of the equity interest in Pusat Pakar Kluang Utama Sdn Bhd comprising 2,000,000 ordinary shares of RM1.00 each for an aggregate cash consideration of RM12,000,000. The fair value of net assets in Pusat Pakar Kluang Utama Sdn Bhd at the date of acquisition was RM9,355,825 and the goodwill arising on this acquisition amounted to RM2,644,175. KPJ Healthcare Berhad (Company No M)

119 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 19 INTEREST IN SUBSIDIARIES (continued) (v) On 10 December 2008, KPJSB, a subsidiary, acquired 150,000 ordinary shares of RM1.00 each in Lablink (M) Sdn Bhd for a cash consideration of RM1,500,000. As a result of the acquisition, the Groups effective interest of Lablink (M) Sdn Bhd has been increased from 60% to 84%. The fair value of net assets for the 24% equity interest in Lablink (Malaysia) Sdn Bhd at the date of acquisition was RM1,884,654 and the negative goodwill arising on this acquisition amounted to RM384,654. The effect of the acquisitions on the financial results of the Group during the financial year is as follows: Revenue 10,827 Operating costs (9,297) Profit before tax 1,530 Tax expense (425) 1,105 Minority interest 0 Profit for the financial year 1, RM 000 Had the acquisitions took effect at the beginning of the financial year, the revenue and profit of the Group would have been RM1,278,884,012 and RM86,960,000 respectively. These amounts have been calculated using the Group s accounting policies and by adjusting the results of the subsidiaries to reflect the additional depreciation and amortisation that would have been charged assuming the fair value adjustments to property, plant and equipment had applied from 1 January 2008, together with the consequential tax effect. 117 The details of net assets acquired and cash flows arising from the acquisitions of the following significant subsidiaries are as follows: Acquiree s carrying amount RM 000 Fair value RM 000 Taiping Medical Centre Sdn Bhd Property, plant and equipment 2,125 2,889 Prepaid leases (leasehold land) 785 6,170 Inventories Receivables, deposits and prepayments Tax recoverable Deposits, bank and cash balances 3,163 3,163 Payables (844) (844) Deferred taxation (101) (1,638) Net assets 6,213 10,825 Less: Minority interest 0 Fair value of net assets acquired 10,825 Goodwill on acquisition 7,175 Purchase consideration settled in cash 18,000 Less: Cash and cash equivalents of subsidiaries acquired (3,163) Cash outflow of the Group on acquisition 14,837 Annual Report 2008

120 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 19 INTEREST IN SUBSIDIARIES (continued) Acquiree s carrying amount RM 000 Fair value RM 000 Pusat Pakar Kluang Utama Sdn Bhd Property, plant and equipment 4,298 4,021 Prepaid leases (leasehold land) Inventories Receivables, deposits and prepayments Tax recoverable Deposits, bank and cash balances 4,554 4,554 Payables (1,247) (1,247) Deferred taxation (153) (250) Fair value of net assets acquired 9,065 9,356 Goodwill on acquisition 2,644 Purchase consideration settled in cash 12,000 Less: Cash and cash equivalents of subsidiaries acquired (4,554) 118 Cash outflow of the Group on acquisition 7,446 A summary of the details of net assets acquired and cash flows arising from the acquisitions during the financial year as described in note (b)(i), (b)(iii), b(iv), b(v) and b(vi) are as follows: Acquiree s carrying amount RM 000 Fair value RM 000 Property, plant and equipment (Note 16) 6,528 7,014 Prepaid leases (leasehold land) (Note 17) 970 7,020 Inventories Receivables, deposits and prepayments 1,478 1,478 Tax recoverable Deposits, bank and cash balances 7,883 7,883 Payables (2,182) (2,182) Deferred tax liabilities (Note 24) (263) (1,897) Net assets acquired 15,548 20,452 Add: Minority Interest 1,878 Fair value of net assets acquired 22,330 Goodwill on acquisition (Note 22) 9,827 Negative goodwill (Note 8(b)) (594) Purchase consideration settled in cash 31,563 Less: Cash and cash equivalents of subsidiaries acquired (8,020) Cash outflow of the Group on acquisition of subsidiaries 23,543 KPJ Healthcare Berhad (Company No M)

121 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 19 INTEREST IN SUBSIDIARIES (continued) (b) Acquisition of companies in 2007 During the previous financial year, the Group completed its acquisition in new interests and increased its stake in several subsidiaries as follows: (i) (ii) On 7 March 2007, Kumpulan Perubatan (Johor) Sdn Bhd ( KPJSB ), a subsidiary, subscribed to a rights issue for a further 550,000 ordinary shares of RM1.00 in Bukit Mertajam Specialist Hospital Sdn Bhd for a cash consideration of RM550,000. There was no change in the Group s interest, following the acquisition. On 17 May 2007, Kumpulan Perubatan (Johor) Sdn Bhd ( KPJSB ), a subsidiary, acquired 1,784,160 ordinary shares of RM1.00 each in Kota Kinabalu Specialist Hospital Sdn Bhd (formerly known as Damai Specialist Centre Sdn Bhd) for a cash consideration of RM1,793,970. The fair value of net assets for the 30% equity interest at the date of acquisition was RM3,367,344 and the negative goodwill arising on this acquisition amounted to RM1,573,374. (iii) On 25 July 2007, Kumpulan Perubatan (Johor) Sdn Bhd ( KPJSB ), a subsidiary, subscribed to a rights issue for a further 6,538,843 ordinary shares of RM1.00 in Seremban Specialist Hospital Sdn Bhd for a cash consideration of RM6,538,843, and acquired a further 4,181,374 ordinary shares of RM1.00 each in Seremban Specialist Hospital Sdn Bhd for a cash consideration of RM4,181,374. The fair value of net assets for the 16.73% equity interest in Seremban Specialist Hospital Sdn Bhd at the date of acquisition was RM4,624,198 and the negative goodwill arising on this acquisition amounted to RM442,824. (iv) On 1 November 2007, Kumpulan Perubatan (Johor) Sdn Bhd ( KPJSB ), a subsidiary, entered into a sale and purchase agreement with Sentosa Medical Centre Sdn Bhd, a fully owned subsidiary of KPJSB, for the acquisition of 100% equity interest in Kajang Specialist Hospital Sdn Bhd (formerly known as Hospital Sentosa Sdn Bhd) comprising 12,000,000 shares of RM1.00 each for a cash consideration of RM7,823,717. There was no change in the Group s interest in its subsidiary, Kajang Specialist Hospital Sdn Bhd, following the acquisition. 119 The effect of the acquisitions on the financial results of the Group during the financial year is as follows: 2007 RM 000 Revenue 5,867 Operating cost (5,797) Profit before tax 70 Tax expense (29) 41 Minority interest 0 Profit for the financial year 41 Annual Report 2008

122 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 19 INTEREST IN SUBSIDIARIES (continued) (b) Acquisition of companies in 2007 (continued) Had the acquisitions took effect at the beginning of the financial year, the revenue and profit of the Group would have been RM1,120,888,000 and RM77,956,000 respectively. These amounts have been calculated using the Group s accounting policies and by adjusting the results of the subsidiaries to reflect the additional depreciation and amortisation that would have been charged assuming the fair value adjustments to property, plant and equipment had applied from 1 January 2007, together with the consequential tax effect. The details of net assets acquired and cash flows arising from the acquisitions of the following significant subsidiaries are as follows: Seremban Specialist Hospital Sdn Bhd Subcription of rights issues renounced by minority shareholder 4,181 Share of net assets acquired (4,624) Negative goodwill on acquisition (443) 2007 RM Kota Kinabalu Specialist Hospital Sdn Bhd (formerly known as Damai Specialist Centre Sdn Bhd) Purchase consideration settled in cash 1,794 Share of net assets acquired (3,367) Negative goodwill on acquisition (1,573) Net cash outflow arising from both of the acquisitions above are as follows: Purchase consideration settled in cash 5,975 Less: Cash and cash equivalents of subsidiaries acquired (180) Net cash outflow on acquisition 5,795 (c) Disposals in 2008 (i) (ii) On 5 February 2008, PharmaCARE Sdn Bhd, a subsidiary of Kumpulan Perubatan (Johor) Sdn Bhd ( KPJSB ), a subsidiary, disposed 95.83% of the equity interest in Sejahtera Farma Sdn Bhd comprising 172,500 ordinary shares of RM1.00 each for a cash consideration of RM130,000. The disposal was completed by approval of Foreign Investment Committee ("FIC") on 18 November On 31 December 2008, KPJSB disposed 50,000 ordinary shares of RM1.00 each of Teraju Farma Sdn Bhd, a subsidiary of KPJSB, to the minority shareholder for a net proceeds of RM50,000. During the financial year, consideration of RM20,000 had been received in cash. The remaining RM30,000 will be paid in As a result of the disposal, the Group s effective interest in Teraju Farma Sdn Bhd is reduced from 85% to 75%. KPJ Healthcare Berhad (Company No M)

123 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 19 INTEREST IN SUBSIDIARIES (continued) (c) Disposals in 2008 (continued) The effect of the disposals on the financial results of the Group during the financial year is as follows: Share of Net Assets RM 000 Property, plant and equipment 34 Inventories 239 Receivables, deposits and prepayments 851 Deposits, bank and cash balances 91 Borrowings (100) Payables (978) Tax payable (4) Deferred taxation 53 Net assets 186 Loss on disposal (6) Purchase consideration settled in cash 180 Less: Cash and cash equivalents of subsidiaries disposed (91) Cash inflow of the Group on disposal Disposals in 2007 (i) (ii) On 10 April 2007, Kumpulan Perubatan (Johor) Sdn Bhd, a subsidiary, entered into a conditional sale and purchase agreement with Damansara Realty Berhad for the disposal of 70% equity interest in Healthcare Technical Services Sdn Bhd comprising 175,000 shares of RM1.00 each to Damansara Realty Berhad for a cash consideration of RM1,717,032. The disposal was completed on 5 July In May 2007, the Company disposed 30,000 ordinary shares of RM1.00 each of Fabricare Laundry Sdn Bhd (formerly known as Tulus Ikhtiar Sdn Bhd) to the subsidiary s minority shareholder for a net proceeds of RM30,000. As a result, the Company s effective interest of Fabricare Laundry Sdn Bhd (formerly known as Tulus Ikhtiar Sdn Bhd) is reduced from 95% to 90%. The effect of the disposals on the financial results of the Group during the financial year is as follows: Share of Net Assets RM 000 Property, plant and equipment 160 Receivables, deposits and prepayments 4,124 Deposits, bank and cash balances 604 Payables (3,355) Bank borrowings (2) Deferred taxation 66 Current tax liabilities (85) Net assets 1,512 Less: Minority interest (226) Fair value of net assets acquired 1,286 Gain on disposal 461 Purchase consideration settled in cash 1,747 Less: Cash and cash equivalents of subsidiaries disposed (604) Cash inflow of the Group on disposal 1,143 Annual Report 2008

124 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 20 INTEREST IN ASSOCIATES Group RM 000 RM 000 Quoted ordinary shares in Al- Aqar KPJ REIT 208, ,651 Unquoted ordinary shares, at cost 10,312 10,338 Group s share of post acquisition retained profits and reserves less losses 14,990 7, , ,935 Less: Accumulated impairment losses (Note 8(a)) (6,460) 0 226, ,935 Share of capital commitments for property, plant and equipment 2, Share of non-cancellable operating lease commitments 25,233 0 Market value of quoted ordinary shares in Al- Aqar KPJ REIT 198, , The associates of the Group are as follows: Country of Group s effective Name of company incorporation interest Principal activities % % Unit Trusts Al- Aqar KPJ REIT Malaysia Real Estate Investment Trust Associates of Kumpulan Perubatan (Johor) Sdn Bhd Kedah Medical Centre Sdn Bhd Malaysia Operating as a specialist hospital Hospital Penawar Sdn Bhd Malaysia Operating as a specialist hospital Healthcare Technical Services Sdn Bhd Malaysia Project management and engineering maintenance services for specialist hospital Associates of Sentosa Medical Centre Sdn Bhd Renal-Link Sentosa Sdn Bhd * Malaysia Operating as a dialysis service centre Audited by firm other than PricewaterhouseCoopers, Malaysia * Subsidiary of the Group as at 31 December 2008 KPJ Healthcare Berhad (Company No M)

125 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 20 INTEREST IN ASSOCIATES (continued) The aggregate amount of revenue, profit, assets, (excluding goodwill) and liabilities of the associates of the Group are as follows: Group RM 000 RM 000 Revenue 126, ,651 Profit after tax 39,356 29,444 Non-current assets 704, ,425 Current assets 71,542 30,967 Current liabilities (48,651) (35,509) Non-current liabilities (241,680) (158,958) Net assets 485, , OTHER INVESTMENTS Group RM 000 RM 000 Current Unquoted redeemable non-cumulative preference shares, at cost 1,500 1,500 Less: Accumulated impairment losses (1,500) (1,500) 0 0 Non-current Unquoted convertible secured loan stocks, at cost Unquoted ordinary shares, at cost 3,526 3,526 3,980 3,980 Total Unquoted convertible secured loan stocks, at cost Unquoted ordinary shares, at cost 3,526 3,526 3,980 3, The investment in unquoted redeemable non-cumulative preference shares was written down in the previous financial years as the company had temporarily ceased operations. 22 INTANGIBLE ASSETS GOODWILL Group RM 000 RM 000 Cost At 1 January 100, ,522 Acquisitions of subsidiary companies (Note 19) 9,827 0 Disposal of a subsidiary (Note 19) (49) (56) At 31 December 110, ,466 Annual Report 2008

126 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 23 IMPAIRMENT OF ASSETS Impairment tests for goodwill The carrying amounts of goodwill allocated to the Group s Cash Generating Units (CGUs) are as follows: Group RM 000 RM 000 Hospitals and support services in Malaysia 109,184 99,406 Hospital in Indonesia 1,060 1, , ,466 Recoverable amount based on value-in-use The recoverable amount of a CGU is determined based on value-in-use calculations. These calculations use pre-tax cash flow projections based on financial budgets approved by the Directors covering a five-year period. Cash flows beyond the five-year period are extrapolated using the estimated growth rates stated below. The growth rate does not exceed the long-term average growth rate for the relevant CGUs. 124 The key assumptions used in the value-in-use calculations are as follows: % % Gross margin Growth rate Discount rate Terminal growth rate 5 5 Assumptions: 1 Budgeted gross margin. 2 Weighted average growth rate used to extrapolate cash flows beyond the budget period. 3 Pre-tax discount rate applied to the cash flow projections. The Directors have determined budgeted gross margin based on past performance and its expectations of market development. The discount rates used are pre-tax and reflect specific risks relating to the relevant segments. 24 DEFERRED TAXATION Deferred tax assets and liabilities were 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 tax authority. The following amounts, determined after appropriate offsetting, are shown on the balance sheet: Group RM 000 RM 000 Deferred tax assets 14,889 11,467 Deferred tax liabilities - subject to income tax (18,571) (14,341) - subject to capital gains tax 0 0 (18,571) (14,341) At 31 December (3,682) (2,874) KPJ Healthcare Berhad (Company No M)

127 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 24 DEFERRED TAXATION (continued) The movement in the deferred tax assets and liabilities (prior of offsetting of balances within the same tax jurisdiction) during the financial year is as follows: Group / Kumpulan Group RM 000 RM 000 At 1 January (2,874) (12,766) (Charged)/credited to income statement (Note 13): - property, plant and equipment (850) (2,707) - tax losses (423) (7,024) - provisions 932 2, (7,590) Credited/(charged) to equity - reversal due to Real Property Gains Tax exemption 0 1,336 - change in manner of recovery via disposal of land and buildings to Al- Aqar KPJ REIT 1,430 16,146 1,430 17,482 Deferred tax arising from acquisitions (1,897) 0 At 31 December (3,682) (2,874) 125 Subject to income tax Deferred tax assets (before offsetting) - tax losses 10,571 10,994 - property, plant and equipment 6,026 11,741 - provisions 5,904 5,439 22,501 28,174 Offsetting (7,612) (16,707) Deferred tax assets (after offsetting) 14,889 11,467 Deferred tax liabilities (before offsetting) - property, plant and equipment (26,183) (31,048) (26,183) (31,048) Offsetting 7,612 16,707 Deferred tax liabilities (after offsetting) (18,571) (14,341) The amount of the deductible temporary differences and unutilised tax losses (both of which have no expiry date) for which no deferred tax assets is recognised on the balance sheet are as follows: Group RM 000 RM 000 Deductible temporary differences 21,805 21,107 Unutilised tax losses 28,166 28,671 Annual Report 2008

128 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 25 INVENTORIES Group RM 000 RM 000 Pharmaceutical products 21,405 19,501 Medical supplies 6,027 5,961 Consumables and disposable items 1, Laboratory chemicals Other supplies ,730 27, RECEIVABLES, DEPOSITS AND PREPAYMENT Group Company RM 000 RM 000 RM 000 RM Trade receivables 152, , Allowance for doubtful debts (12,322) (12,173) , , Amount due from ultimate holding corporation Amount due from subsidiaries , ,637 Amount due from associates 744 1, Amount due from other related companies 3,355 3, Amount due from subsidiary s minority shareholder Other receivables 23,470 21,049 1,231 5,529 Deposits 12,099 6, Prepayments 15,150 3,476 1, , , , ,176 Included in the amount due from subsidiaries is advances amounting to RM49,727,167 (2007: RM69,772,685) bearing effective weighted average interest rate of 7.75% (2007: 7.75%) per annum. Other balances with ultimate holding corporation, subsidiaries, associates and other related companies and related parties are unsecured, interest-free and have no fixed terms of repayments. Credit terms of trade receivables range from 30 to 60 days. The currency exposure profile of the receivables and deposits (excluding prepayments) are as follows: Group Company RM 000 RM 000 RM 000 RM 000 Ringgit Malaysia 191, , , ,176 Singapore Dollar 3,741 3, , , , ,176 KPJ Healthcare Berhad (Company No M)

129 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 27 DEPOSITS, CASH AND BANK BALANCES Group Company RM 000 RM 000 RM 000 RM 000 Deposits with licensed banks 24,854 15, Deposits with licensed finance companies 0 1, Cash and bank balances 81,308 83, , , Bank balances are deposits held at call with licensed banks and do not earn interest. The fixed deposits with certain subsidiaries have been pledged to licensed banks for the following facilities: Group RM 000 RM 000 Performance bonds to Tenaga Nasional Berhad 1,739 1,648 As a security for: - borrowing facilities performance guarantee of RM750,000 (2007: RM750,000) bankers acceptance and bank overdrafts ,877 2,797 The weighted average interest rates of deposits with licensed banks and licensed finance companies of the Group during the financial year were 3.10% (2007: 3.30%) and nil (2007: 3.18%) per annum respectively. The currency exposure profile of the deposits, cash and bank balances as at balance sheet date is as follows: Group Company RM 000 RM 000 RM 000 RM 000 Ringgit Malaysia 103,631 98, Singapore Dollar 2,531 1, , , Deposits of the Group and the Company have an average maturity of 365 days (2007: 365 days). 28 NON-CURRENT ASSETS HELD FOR SALES Group RM 000 RM 000 Non current assets classified as held for sale - transferred from property, plant and equipment (Note 16) 236, ,016 - transferred from prepaid leases (Note 17) 10,036 8, , ,249 As at balance sheet date, the disposal of 7 hospital land and buildings in the Group (Note 41(ii)) has yet to be completed. In accordance with the provisions of FRS 5 Non-current Assets Held for Sale, the net book value of the above assets has been reclassified to non-current assets held for sale. Annual Report 2008

130 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 29 PAYABLES Group Company RM 000 RM 000 RM 000 RM 000 Trade payables 140, , Other payables 60,384 59, Accruals 28,821 35,866 1,588 1,613 Amount due to minority shareholders 2,084 1, Amount due to ultimate holding corporation Amounts due to subsidiaries , ,932 Amounts due to other related companies 1, Amounts due to associate companies 2,573 1, , , , , Amounts due to minority shareholders, ultimate holding corporation, subsidiaries, associates and other related companies are unsecured, interest-free and have no fixed terms of repayment. Credit terms of trade payables range from 30 to 60 days. The currency exposure profile of payables is as follows: Group Company RM 000 RM 000 RM 000 RM 000 Ringgit Malaysia 233, , , ,530 Singapore Dollar 6,034 4, , , , , BORROWINGS Group RM 000 RM 000 Current Term loans (secured) 83,661 31,662 Revolving credits (unsecured) 0 16,500 Islamic facilities: - Al-Istisna (secured) 0 16,132 - Hiwalah term loan (secured) 1,200 1,200 - Al-Bai Bithaman Ajil (secured) 0 1,786 - Al-Ijarah 4 11 Hire purchase and finance lease liabilities 13,717 12,901 98,582 80,192 Bank overdrafts (unsecured) 1,573 6,361 Bank overdrafts (secured) ,982 6, ,564 86,553 KPJ Healthcare Berhad (Company No M)

131 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 30 BORROWINGS (continued) Group RM 000 RM 000 Non-current Term loans (secured) 32,350 72,533 Commercial papers (unsecured) 214, ,000 Islamic facilities: - Hiwalah term loan (secured) 3,300 4,500 - Al-Ijarah 0 4 Hire purchase and finance lease liabilities 18,229 24, , ,377 Total Term loans (secured) 116, ,195 Commercial papers (unsecured) 214, ,000 Revolving credits (unsecured) 0 16,500 Islamic facilities: - Al-Istisna (secured) 0 16,132 - Hiwalah term loan (secured) 4,500 5,700 - Al-Bai Bithaman Ajil (secured) 0 1,785 - Al-Ijarah 4 15 Hire purchase and finance lease liabilities 31,946 37,240 Bank overdrafts (unsecured) 1,573 6,361 Bank overdrafts (secured) , ,928 The currency exposure profile of the borrowings is as follows: Group RM 000 RM 000 Ringgit Malaysia 368, ,162 Singapore Dollar 173 1, , ,928 Company RM 000 RM 000 Current Revolving credits (unsecured) 0 5,000 Non-current Commercial papers (unsecured) 214, ,000 Total 214, ,000 Annual Report 2008

132 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 30 BORROWINGS (continued) Functional Effective currency/ interest rate Total Currency Interest at balance carrying Maturity profile exposure rate sheet date amount < 1 year 1-2 years 2-3 years 3-4 years 4-5 years > 5 years % per annum RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM Group Term loans (secured) RM/RM Floating ,011 83,661 7,143 7,618 8,125 5,962 3,502 Commercial papers (unsecured) RM/RM Floating , , Revolving credits (unsecured) RM/RM Floating Nil Islamic facilities: - Al-Istisna (secured) RM/RM Fixed Hiwalah term loan (secured) RM/RM Fixed ,500 1,200 1,200 1, Al-Bai Bithaman Ajil (secured) RM/RM Fixed Al-Ijarah RM/RM Fixed Hire purchase and finance lease liabilities RM/RM Fixed ,946 13,717 10,894 5,310 1, Bank overdrafts (unsecured) RM/RM Floating ,573 1, Bank overdrafts (secured) RM/RM Floating , ,564 19, ,128 10,447 6,391 3,676 Company Commercial papers (unsecured) RM/RM Floating , , KPJ Healthcare Berhad (Company No M)

133 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 30 BORROWINGS (continued) Functional Effective currency/ interest rate Total Currency Interest at balance carrying Maturity profile exposure rate sheet date amount < 1 year 1-2 years 2-3 years 3-4 years 4-5 years > 5 years % per annum RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM Group Term loans (secured) RM/RM Floating ,195 31,662 13,844 13,013 12,212 11,569 21,895 Commercial papers (unsecured) RM/RM Floating , , Revolving credits (unsecured) RM/RM Floating ,500 16, Islamic facilities: - Al-Istisna (secured ) RM/RM Fixed ,132 16, Hiwalah term loan (secured) RM/RM Fixed ,700 1,200 1,200 1,200 1, Al-Bai Bithaman Ajil (secured) RM/RM Fixed ,785 1, Al-Ijarah RM/RM Fixed Hire purchase and finance lease liabilities RM/RM Fixed ,240 12,902 11,014 9,072 3, Bank overdrafts (unsecured) RM/RM Floating ,361 6, ,928 86,553 26,062 23, ,873 13,206 21, Company Commercial papers (unsecured) RM/RM Floating , , Revolving credits (unsecured) RM/RM Floating ,000 5, ,000 5, , Annual Report 2008

134 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 30 BORROWINGS (continued) Later than Later than Later than Later than 1 year and 2 years 3 years 4 years Not later not later and not and not and not than than later than later than later than Later than 1 year 2 years 3 years 4 years 5 years 5 years Total RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Group 2008 Hire purchase and finance lease liabilities 14,282 11,120 7,317 1, ,298 Al-Ijarah Less: Future finance charges - Hire purchase and finance lease liabilities (3,351) - Al-Ijarah (1) 31, Hire purchase and finance lease liabilities 14,652 11,715 9,680 3, ,833 Al-Ijarah Less: Future finance charges - Hire purchase and finance lease liabilities (3,609) - Al-Ijarah (4) 37, 239 The borrowings are secured by: (a) fixed charge on the certain landed properties of the Group (Note16 and 18); (b) first fixed charge on certain assets of the Group by way of debenture; (c) letter of awareness, letter of comfort and letter of subordinates from Johor Corporation; (d) a negative pledge over some of the fixed and floating assets of the Group; (e) fixed first and floating charge over some movable and immovable assets of the Group; and (f) finance leases are effectively secured as the rights to the leased asset revert to the lessor in the event of default. Commercial Papers/Medium Term Notes ( CP/MTN ) Salient features of the CP/MTN are as follows: 1) Total outstanding nominal value of the CPs and MTNs (collectively known as Notes ) shall not exceed RM250 million. 2) The tenure of the Facility is up to 7 years from date of the first issuance of any Notes (12 November 2004) under the Facility. 3) CP has a maturity of between 1, 2, 3, 6 and 7 months and are mandatorily redeemed at nominal value upon maturity date. The CP is issued at a discount to its value. 4) MTN has a maturity of 1 year but not more than 7 years and on condition that the MTN matures prior to the expiry of the tenure of the Facility. The MTN shall be mandatorily redeemed at nominal value upon maturity date. The interest for the MTN shall be payable semi-annually upon maturity of MTN. 5) The CP/MTN Facility is issued on a clean basis and shall be fully repaid at the end of the tenure of the Facility. KPJ Healthcare Berhad (Company No M)

135 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 30 BORROWINGS (continued) The proceeds which were raised from the CP issue during the financial year have been utilised by the Group and the Company in the following manner: Group / Company RM 000 RM 000 CP/MTN At 1 January 206, ,000 Issued during the financial year for working capital purposes 44,000 36,000 Repayment (36,000) 0 At 31 December 214, ,000 As at 31 December 2008, the unutilised amount of CP/MTN amounted to RM36 million (2007: RM44 million). 31 DEFERRED REVENUE Group RM 000 RM At 1 January 4,138 3,226 Additions 26,684 14,560 Earned during the financial year (17,061) (13,648) At 31 December 13,761 4,138 Represented by: Students fees 6,581 3,368 Accommodation fees 1, KPJ Wellness Subscription Fees 5, ,761 4, DEPOSITS Deposits represent refundable practising fees received from consultants, repayable on death, retirement (at age 65) or disability of the consultants. Deposits are forfeited on termination of a consultant s practice either by the Group due to events of breach or on early termination by the consultant. However, the deposits may be refunded to the consultants if approval from the Board of Directors is obtained. The fair value of the deposits as at the balance sheet date is disclosed in Note 40. Annual Report 2008

136 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 33 SHARE CAPITAL Group / Company RM 000 RM 000 Authorised ordinary shares of RM1 each: At 1 January/31 December 500, ,000 Issued and fully paid ordinary shares of RM1 each: At 1 January 207, ,999 Issued during the financial year: - exercise of share options 1,716 3,746 At 31 December 209, ,745 (a) Treasury shares 134 The treasury shares of the Company, by an ordinary resolution passed in a general meeting held on 28 May 2008, approved the Company s plan to repurchase its own shares. The Directors of the Company are committed to enhancing the value of the Company to its shareholders and believe that the repurchase plan can be applied in the best interests of the Company and its shareholders. During the period, the Company repurchased 620,800 of its issued share capital from the open market on the Kuala Lumpur Stock Exchange for RM1,885,947. The average price paid for the shares repurchased was approximately RM3.02 per share. The repurchase transactions were financed by internally generated funds. The accumulated total treasury shares purchased as at balance sheet date was RM1,885,947 (2007: NIL). The shares repurchased are being held as treasury shares as allowed under Section 67A of Companies Act The Company has the right to reissue these shares at later date. As treasury shares, the rights attached as to voting, dividends and participation in other distributions are suspended. None of the treasury shares repurchased has been sold as at 31 December (b) Employees Share Option Scheme The Company implemented an Employees Share Option Scheme ( ESOS ) on 13 July 2004 which is governed by the by-laws approved by the shareholders on 15 June Share options are granted to executive directors and key employees with more than five years of service. The main features of the ESOS are as follows: The total number of ordinary shares to be issued by the Company under the ESOS shall not exceed 10% of the total issued and paid-up ordinary shares of the Company, such that not more than 50% of the shares available under the ESOS is allocated, in aggregate, to directors and senior management. Not more than 10% of the shares available under the ESOS is allocated to any individual director or employee who, either singly or collectively through his/her associates, holds 20% or more in the issued and paid-up capital of the Company. Only staff and executive directors of the Group are eligible to participate in the scheme. Executive directors are those involved in the day-to-day management and on the payroll of the Group. The option price under the ESOS is the average of the mean market quotation of the shares of the Company as quoted in the Daily Official List issued by Bursa Malaysia Securities Berhad for the five market days preceding the offer date, or the par value of the shares of the Company of RM1.00, whichever is higher. The options granted are exercisable one year beginning from the date of grant and have a contractual option term of five years. The employees entitlements to the options are vested (i.e. they are not conditional on future employment) as soon as they become exercisable and are exercisable in the following manner: Percentage of new shares comprised in the option exercisable each year from Date of Offer Year 1 Year 2 Year 3 Year 4 Year 5 20% 20% 20% 20% 20% KPJ Healthcare Berhad (Company No M)

137 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 33 SHARE CAPITAL (continued) (b) Employees Share Option Scheme (continued) Options granted under the ESOS carry no dividend or voting rights. Upon exercise of the options, shares issued rank pari passu in all respects with existing ordinary shares of the Company. The persons to whom the options have been granted have no right to participate by virtue of the options in any share issue of any other company. Executive Directors of the Company and its subsidiary companies have been granted options under the Employees Share Options Scheme on the same terms and conditions as those offered to other executive employees. The unissued shares on options granted to Directors of the Company under the scheme are as follows: Number of shares At Granted and Exercised/ At Grant date Subscription price accepted lapsed (RM/share) July (15) 0 Set out below are details of options over the ordinary shares of the Company granted under the ESOS: Number of share options At At Grant date Expiry date Exercise price Granted Exercised Lapsed (RM/share) July July ,266 0 (1,716) 0 3,550 Number of share options Number / Jumlah of opsyen share options saham Number of share options vested at balance sheet date 12,000 9,615 Number of share options not vested at balance sheet date 0 2,386 Details relating to options exercised during the period are as follows: Fair value of shares Number of shares issued Exercise date at share issue date Exercise price (RM/share) (RM/share) January - December ,716 3,746 Group / Company RM 000 RM 000 Ordinary share capital - at par 1,716 3,746 Share premium 566 1,236 Proceeds received on exercise of options 2,282 4,982 Fair value at exercise date of shares issued 5,594 11,079 The fair value of shares issued on the exercise of options is the mean market price at which the Company s shares were traded on the Main Board of Bursa Malaysia Securities Berhad on the day prior to the exercise of the options. Annual Report 2008

138 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 34 RESERVES Group Company RM 000 RM 000 RM 000 RM 000 Non-distributable reserves: Share premium 33,867 33,301 28,845 28,279 Merger reserve (3,367) (3,367) 0 0 Exchange reserve (765) (632) 0 0 Revaluation reserve 42,622 53, ,357 82,376 28,845 28,279 Distributable reserve: Retained earnings 301, ,707 70,710 66, , ,083 99,555 94,609 Under the single-tier tax system which came into effect from the year of assessment 2008, companies are not required to have tax credits under Section 108 of the Income Tax Act 1967 for dividend payment purposes. Dividends paid under this system are tax exempt in the hands of shareholders. 136 Companies with Section 108 credits as at 31 December 2008 may continue to pay franked dividends until the Section 108 credits are exhausted or 31 December 2013 whichever is earlier unless they opt to disregard the Section 108 credits to pay single-tier dividends under the special transitional provisions of the Finance Act As at 31 December 2008 and 31 December 2007, subject to agreement with the tax authorities, the Company has sufficient Section 108 tax credits to pay in full the retained earnings of the Company as franked dividends, and RM5,917,000 tax exempt income to pay as exempt dividends. The revaluation reserve includes surplus from the revaluation of Group s land and buildings and unrealised revaluation reserves retained in the Group s interest in Al- Aqar KPJ REIT. This reserve is not distributable by way of cash dividends. Revaluation reserve (non-distributable) Group / Kumpulan Company RM 000 RM 000 At 1 January 53,074 38,868 Reversal of deferred tax on revaluation reserve due to: - Real Property Gains Tax exemption 0 1,149 - change in the manner of recovery via disposal of land and buildings to Al- Aqar KPJ REIT 1,430 15,978 1,430 17,127 Transfer to retained earnings on disposal of property, plant and equipment to Al- Aqar KPJ REIT net of minority interest (7,297) 0 Realisation of revaluation reserves on reduction in share of investment in associate 0 (2,921) Realisation of revaluation reserves due to impairment of asset (4,585) 0 (10,452) 14,206 At 31 December 42,622 53,074 KPJ Healthcare Berhad (Company No M)

139 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 35 CASH AND CASH EQUIVALENTS Group Company RM 000 RM 000 RM 000 RM 000 Deposits, cash and bank balances (Note 27) 106, , Less: Bank overdrafts (Note 30) (1,982) (6,361) 0 0 Less: Pledged fixed deposits (Note 27) (2,877) (2,797) 0 0 Cash and cash equivalents 101,303 90, NON-CASH TRANSACTIONS The principal non-cash transactions during the financial year are as follows; (i) (ii) The acquisition of property, plant and equipment of which RM2,089,000 (2007: RM9,405,000) is by means of finance lease (Note 16) and RM Nil (2007: RM594,000) is by means of hire purchase (Note 16). The disposal of land and buildings in Perdana Specialist Hospital Sdn Bhd, Kuantan Specialist Hospital Sdn Bhd, Sentosa Medical Centre Sdn Bhd and Kajang Specialist Hospital Sdn Bhd for a total sales consideration of RM million, which was satisfied by the issuance of million new units of shares of Al- Aqar KPJ REIT at RM0.95 each and cash consideration of RM38.91 million. The disposal resulted in loss on disposals of RM392,508 and the realisation of revaluation reserve of RM20.4 million SIGNIFICANT RELATED PARTY DISCLOSURES In addition to the related party disclosures elsewhere in the financial statements, set out below are other significant related party transactions and balances. The related party transactions described below were carried out on terms, conditions and prices obtainable in transactions with unrelated parties. (a) Related parties and relationship Group In the normal course of business, the Group undertake on an arm s length basis a variety of transactions with its holding corporation, subsidiaries, associates and other companies deemed related parties by virtue of being members of the Johor Corporation Group of Companies. The Johor Corporation Group of Companies with whom the Group transacted with, include the following companies: Related parties Johor Corporation Damansara Assets Sdn Bhd HC Duraclean Sdn Bhd Metro Parking (M) Sdn Bhd Teraju Fokus Sdn Bhd Al- Aqar KPJ REIT Relationship Ultimate holding corporation Subsidiary of ultimate holding corporation Subsidiary of ultimate holding corporation Subsidiary of ultimate holding corporation Subsidiary of ultimate holding corporation Associate Annual Report 2008

140 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 37 SIGNIFICANT RELATED PARTY DISCLOSURES (continued) (b) Significant related party transactions The significant related party transactions during the financial year are as follows: Group RM 000 RM 000 Sales of services to: - Johor Corporation Housekeeping contract fees paid/payable to: - HC Duraclean Sdn Bhd 3,460 3,573 Security services paid/payable to: - Teraju Fokus Sdn Bhd 1,520 1,033 Rental parking - Metro Parking (M) Sdn Bhd Lease payment - Al- Aqar KPJ REIT 44,654 35, Project Management and Maintenance fee - Healthcare Technical Services 4,164 2,566 Type of transactions Company RM 000 RM 000 Paid/payable to/(received/receivable from) subsidiaries Ampang Puteri Specialist Hospital Sdn Bhd Management fees (2,414) (2,035) Advances received 0 (10,000) Dividend received (net) (7,000) (13,875) Interest expense 1, Bukit Mertajam Specialist Hospital Sdn Bhd Management fees (387) (362) Interest income (613) (631) Advances given 1,238 16,100 Interest on advances given Expenses recharge Repayment of advances 16,100 0 Damansara Specialist Hospital Sdn Bhd Management fees (2,051) (1,862) Advances received (13,200) (2,800) Dividend received (net) (2,500) (6,497) Interest expense 1,011 1,007 Payment on behalf Ipoh Specialist Hospital Sdn Bhd Management fees (2,232) (1,839) Repayment of advance 1,788 0 Dividend received (net) (787) (1,940) Interest expense 1, Payment on behalf Johor Specialist Hospital Sdn Bhd Management fees (2,354) (2,160) Dividend received (net) (4,063) (21,540) Interest expense 1,166 1,560 Payment on behalf Kuching Specialist Hospital Sdn Bhd Interest income (694) (699) Management fees (533) (396) Kumpulan Perubatan (Johor) Sdn Bhd Interest income (2,298) (2,079) KPJ Healthcare Berhad (Company No M)

141 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 37 SIGNIFICANT RELATED PARTY DISCLOSURES (continued) (b) Significant related party transactions (continued) Type of transactions Company RM 000 RM 000 Paid/payable to/(received/receivable from) subsidiaries (continued): Kuantan Specialist Hospital Sdn Bhd Management fees (578) (519) Interest expense Pharmaserv Alliances Sdn Bhd Management fees (2,159) (1,917) Interest income (855) (852) Puteri Nursing College Sdn Bhd Management fees (1,200) (1,200) Perdana Specialist Hospital Sdn Bhd Interest income (870) (1,018) (formerly known as Pusat Pakar Darul Advances given 13,329 0 Naim Sdn Bhd) Repayment of advance 3,073 0 Management fees (498) (353) Payment on behalf Puteri Specialist Hospital (Johor) Sdn Bhd Management fees (1,543) (1,367) Dividend received (net) (2,879) (6,247) Interest expense Pusat Pakar Tawakal Sdn Bhd Management fees (1,383) (1,310) Dividend received (net) (188) (539) Selangor Specialist Hospital Sdn Bhd Management fees (1,134) (1,008) (formerly known as Selangor Medical Advances received (15,000) (10,000) Centres Sdn Bhd) Advances CICPS (12,165) (3,766) Insurance premium Interest expense Sentosa Medical Centre Sdn Bhd Management fees (811) (752) Dividend received (net) (1,000) (27,740) Interest expense Seremban Specialist Hospital Sdn Bhd Management fees (1,117) (871) Interest income (890) (945) Tawakal Holdings Sdn Bhd Dividend received (net) (84) (2,403) Kajang Specialist Hospital Sdn Bhd Management fees (592) (409) Insurance premium (186) 0 Lablink Sdn Bhd Management fees (150) (108) Taiping Medical Centre Sdn Bhd Advances received (2,500) 0 Management fees (117) 0 Repayment of advance 1,000 0 Interest income on advance The balances outstanding with related parties in respect of the above transactions are as disclosed in Notes 26 and 29. (c) Key management personnel compensation Group / Company RM 000 RM 000 Salaries, allowances and bonus 3,055 2,776 Contribution to defined contribution plan ,421 3,060 Annual Report 2008

142 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 38 NON-CANCELLABLE OPERATING LEASE COMMITMENTS The future minimum lease payments under non-cancellable operating leases are as follows: Group / Kumpulan Group RM 000 RM 000 Represented by: Not later than 1 year 47,034 36,430 Later than 1 year and not later than 2 years 96,722 74,430 Later than 2 years and not later than 5 years 259, ,112 Later than 5 years 268, , , ,255 The Group has entered into a contractual agreement with Amanah Raya Berhad (as Trustee for Al- Aqar KPJ REIT) and Damansara REIT Managers Sdn Bhd to lease the hospital land and buildings including certain equipment for a period of fifteen years, with an option to renew for another fifteen years subject to terms and conditions as stipulated in the agreement CONTINGENT LIABILITIES Corporate guarantees given for banking facilities (unsecured) Company RM 000 RM subsidiaries 9,594 14, FAIR VALUES The carrying amounts of financial assets and liabilities of the Group at the balance sheet date approximately their fair values except as set out below: Carrying amount RM 000 Group Fair value RM Associates 226, ,393 Investments (Note 21) 3,980 8,123 Deposits (Note 32) 11,359 5,998 Long term borrowings (fixed rate) (Note 30) 36,431 32, Associates 166, ,856 Investments (Note 21) 3,980 7,065 Deposits (Note 32) 10,459 4,467 Long term borrowings (fixed rate) (Note 30) 41,740 33,126 KPJ Healthcare Berhad (Company No M)

143 For the Financial Year ended 31 December 2008 Notes to the Financial Statements (continued) 41 SIGNIFICANT EVENT DURING THE FINANCIAL YEAR (i) (ii) On 12 November 2008, Kumpulan Perubatan (Johor) Sdn Bhd ( KPJSB ), a wholly owned subsidiary of KPJ Healthcare Berhad entered into a Joint Venture Agreement incorporating Shareholders Agreement ( JVA ) with Sterilgamma (M) Sdn Bhd ( SMSB ) to offer sterilisation services to hospitals under the Group, hospitals owned by the Ministry of Health, Malaysia, Hospitals outside of the Group and any related businesses. The proposed joint venture will be jointly held through a Joint Venture company. On 4 September 2008, KPJ Healthcare Berhad ( KPJ ) proposes to dispose its entire interest in Seremban Specialist Hospital Building, Taiping Medical Centre Building, Kota Kinabalu Specialist Hospital Building, Bukit Mertajam Specialist Hospital Building, KPJ Penang Specialist Hospital Building, Tawakal Hospital Existing Building, KPJ Tawakal Specialist Hospital Building and PNC International College Of Nursing And Health Sciences Building to Al- Aqar KPJ Real Estate Investment Trust ( Al- Aqar KPJ REIT ) for a proposed total sale consideration of RM296.4 million to be satisfied partly by cash consideration of RM million and partly by issuance of million new units in Al- Aqar at an issue price of RM0.95 per unit to be credited as fully paid-up. The approvals from the Securities Commission and shareholders for the Proposed Disposal were obtained on 18 December 2008 and 25 February 2009 respectively. (iii) On 4 June 2008, Puteri Nursing College Sdn Bhd ( PNC ), a wholly-owned subsidiary of Kumpulan Perubatan Johor Sdn Bhd ( KPJSB ), which in turn is a wholly-owned subsidiary of KPJ Healthcare Berhad, has entered into a conditional Sale and Purchase Agreement ( SPA ) with I&P Permodalan Harta Sdn Bhd ( IPPH ) to acquire four (4) parcels of land for a total purchase consideration of RM26,000,000 of which two (2) parcels of land with current administrative and academic block and hostel buildings will be disposed off to Al Aqar KPJ Real Estate Investment Trust ( Al- Aqar KPJ REIT ) for a price consideration of RM16,500,000. The proposed acquisition has yet to be completed todate EVENT SUBSEQUENT TO BALANCE SHEET DATE On 24 February 2009, Majlis Agama Islam Negeri Sembilan ( MAINS ) agreed to dispose its entire interest, 28.3% in Seremban Specialist Hospital Sdn Bhd to KPJ Healthcare Berhad for a cash consideration of RM14.5 million. The acquisition is expected to be completed in the 2nd quarter of CAPITAL COMMITMENTS Capital expenditure not provided for in the financial statements are as follows: Group RM 000 RM 000 Authorised by the Directors and contracted 88, ,616 Authorised by the Directors but not contracted 65,919 56, , ,583 Analysed as follows: - Land Buildings 80,841 90,744 - Medical equipment 64,684 59,136 - Other property, plant and equipment 9,138 10, , ,583 The Group s interest in capital commitments of the associates is disclosed in Note APPROVAL OF FINANCIAL STATEMENTS The financial statements have been approved for issue in accordance with a resolution of the Board of Directors on 24 March Annual Report 2008

144 Shareholding Statistics as at 31 March 2009 AUTHORISED SHARE CAPITAL ISSUED & FULLY PAID-UP CAPITAL CLASS OF SHARES : RM500,000,000 : RM209,736,615 less RM620,800 Treasury Shares = RM209,115,815 : Ordinary Shares of RM1.00 each VOTING RIGHTS OF SHAREHOLDERS Every member of the Company present in person or by proxy shall have one vote on a show of hand and in the case of a poll shall have one vote for every share of which he/she is the holder. BREAK DOWN OF SHAREHOLDINGS Size of Shareholdings No. of Shareholders % No. of Shares % Less than , , , ,001 10, ,704, , , ,281, ,001 to less than 5% of Issued Capital ,725, % and above of Issued Capital ,771, Total 2, ,115, TOP THIRTY SECURITIES ACCOUNT HOLDERS (Without aggregating the securities from different securities accounts belonging to the same depositor) Name No. of Shares % 1 Johor Corporation 101,055, HSBC Noms (A) Sdn Bhd - A/C HSBC-FS for Arisaig Asean Fund Limited 19,121, Kumpulan Waqaf An-Nur Berhad 18,595, Lembaga Tabung Haji 7,635, Employees Provident Fund Board 7,085, Cartaban Noms (A) Sdn Bhd - A/C State Street Luxembourg Fund DW37 for DWS Invest Asian Small/Mid Cap (DWS INVST SICAV) 3,555, HSBC Noms (A) Sdn Bhd - A/C Exempt An for J.P. Morgan Bank Luxembourg S.A 3,251, Amanah Raya Noms (T) Sdn Bhd - A/C Public Islamic Opportunities Fund 2,340, Johor Corporation 2,304, Amanah Raya Noms (T) Sdn Bhd - A/C Public Islamic Dividend Fund 2,122, Amanah Raya Noms (T) Sdn Bhd - A/C Public Islamic Balanced Fund 1,926, Johor Corporation 1,805, Citigroup Noms (A) Sdn Bhd - A/C CBNY for DFA Emerging Markets Fund 1,570, Amanah Raya Noms (T) Sdn Bhd - A/C Public Islamic Select Treasures Fund 1,568, Mayban Noms (T) Sdn Bhd - A/C Etiqa Takaful Berhad (Family Fund) 1,500, Amanah Raya Noms (T) Sdn Bhd - A/C Public Islamic Optimal Growth Fund 1,450, Citigroup Noms (A) Sdn Bhd - A/C UBS AG for Aims Absolute Asia Fund Ltd 1,357, Mayban Noms (T) Sdn Bhd - A/C Etiqa Insurance Berhad (Life Par Fund) 1,161, Mayban Noms (T) Sdn Bhd - A/C Mayban Life Assurance Berhad (Par Fund) 956, MCIS Zurich Insurance Berhad 827, Citigroup Noms (A) Sdn Bhd - A/C CIPLC for Manulife Global Fund-Asian Small Cap Equity Fund 814, Mayban Noms (T) Sdn Bhd - A/C Mayban Life Assurance Berhad (Non-Par Fund) 765, Zalaraz Sdn Bhd 753, KPJ Healthcare Berhad (Company No M)

145 Shareholdings Statistics (continued) TOP THIRTY SECURITIES ACCOUNT HOLDERS (continued) Name No. of Shares % 24 HSBC Noms (A) Sdn Bhd A/C Exempt An for Morgan Stanley & Co. Incorporated 678, DB (M) Nom (A) Sdn Bhd A/C Deustche Bank AG London for Doric Asia Pacific Small Cap Fund 645, Mayban Noms (T) Sdn Bhd A/C Etiqa Insurance Berhad (General Fund) 639, Cartaban Noms (A) Sdn Bhd A/C Exempt An for Caceis Bank Luxembourg (CLTACCT-NON LUX) 464, Kumpulan Wang Simpanan Pekerja 434, Arshad Ayub 427, Neoh Choo Ee & Company Sdn Berhad 400, SUBSTANTIAL SHAREHOLDERS Name Direct Indirect No. of Shares % No. of Shares % 1 Johor Corporation - 4 a/cs 105,185, , HSBC Noms (A) Sdn Bhd - A/C HSBC-FS for Arisaig Asean Fund Limited 19,121, Kumpulan Waqaf An-Nur Berhad 18,595, ANALYSIS OF SHAREHOLDERS No. of Shareholders % No. of Shares % Malaysian - Bumiputra ,370, Others 1, ,424, Foreigners ,321, Total 2, ,115, DIRECTORS SHAREHOLDING AS AT 31 MARCH 2009 Name No. of Shares % 1 Tan Sri Dato Muhammad Ali Hj Hashim - 3 a/cs - Direct 189, % - Indirect (Noorzilah Mohammad Ali) 12, % 2 Datin Paduka Siti Sa diah Sheikh Bakir - Direct 305, % - Indirect (Amy Nadzlina Mohamed) 5,000-3 Tan Sri Datuk (Dr) Arshad Ayub - Direct 427, % - Indirect (Zalaraz Sdn Bhd) 753, % 4 Dr Yoong Fook Ngian 130, % 5 Dr Kok Chin Leong 40, % 6 Datuk Azzat Kamaludin 20, % 7 Ahamad Mohamad 2,900-8 Rozan Mohd Sa at Tan Sri Dato Dr Abu Bakar Suleiman Datuk Dr Hussein Awang Zainah Mustafa - - Annual Report 2008

146 Compliance Information In conformance with the Bursa Malaysia Listing Requirements, the following additional information is provided: 1. UTILISATION OF PROCEEDS RAISED FROM CORPORATE PROPOSAL The proceeds of RM214.0 million raised from the Commercial Papers/Medium Term Notes Programme have been fully utilised in the following manner: RM 000 CP/MTN At start of the financial year 206,000 Issued during the financial year for working capital purposes 41,000 Repayment (36,000) At end of financial year 214, SHARE BUYBACK During the financial year, the Company repurchased 620,800 of its issued share capital from the open market on the Kuala Lumpur Stock Exchange for RM1,885,947. The repurchase transactions were financed by internally generated funds. The shares repurchased are being held as treasury shares. 144 Date of purchase No. of KPJ Shares purchased Lowest purchase price Purchase Consideration (RM) (RM) February 25, ,075 March 47, ,834 April 20, ,176 July 10, ,568 August 285, ,357 October 132, ,519 November 21, ,481 December 78, ,937 Total 620,800 1,885, OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES The Company did not issue any warrants or convertible securities. The Company launched Employee Share Options Scheme on 15 June 2004 and on 13 July 2004 the Company granted options to subscribe for 12.0 million ordinary shares of RM1 each at an option price of RM1.33 per share to eligible executive directors and employees. Options representing 1,716,000 shares were exercised during the financial year. 4. AMERICAN DEPOSITORY RECEIPT (ADR) OR GLOBAL DEPOSITORY RECEIPT (GDR) PROGRAMME During the financial year, the Company did not issue any ADR or GDR Programme. 5. IMPOSITIONS OF SANCTIONS/PENALTIES There were no sanctions and/or penalties imposed on the Company and its subsidiaries, Directors or Management by the relevant regulatory bodies. KPJ Healthcare Berhad (Company No M)

147 Compliance Information (continued) 6. NON-AUDIT FEES Auditors Services RM PricewaterhouseCoopers Professional services in connection with - accounting fees 56,000 56, PROFIT ESTIMATE, FORECAST OR PROJECTIONS The Company did not make any release on the profit estimate, forecast or projections for the financial year. 8. PROFIT GUARANTEE There is no profit guarantee given by the Company in respect of the financial year. 9. MATERIAL CONTRACTS There is no material contract by the Company and its subsidiary companies, involving Directors and major shareholders interest substituting at the end of the financial year RECURRENT RELATED PARTY TRANSACTIONS STATEMENT The actual transactions for the financial year ended 31 December 2008 are disclosed in Notes 37 to the financial statements. At an Annual General Meeting (AGM) held 28 May 2008, the Company obtained a shareholders mandate to allow the Group to enter into recurrent related party transactions of revenue or trading nature with the following parties: Estimated aggregate value from 28 May 2008 Frequency of Party transacted with Nature of transactions to date of next AGM transactions RM 000 Metro Parking (M) Sdn Bhd Rental income for renting of land for carpark 1,500 Monthly Teraju Fokus Sdn Bhd Security service fees payable 2,000 Monthly HC Duraclean Sdn Bhd Housekeeping contract fees payable 5,000 Monthly Pro Corporate Management Services Sdn Bhd Secretarial fees payable 200 Monthly Al- Aqar KPJ REIT Rental payable for hospital building 49,000 Monthly Healthcare Technical Services Sdn Bhd Project Management and Maintenance fee 5,500 Contract basis 63,200 Annual Report 2008

148 List of Properties AS AT 31 DECEMBER 2008 Net book Location Description Tenure & expiry date Area sq. m value (RM million) Tawakal Hospital Lot 78-91, , and 124 & 125 (all inclusive), Jalan Pahang Private Hospital 16 lots Freehold 2, Setapak Kuala Lumpur KPJ Tawakal Specialist Hospital Lot 62, 92 & 128 Land under Term in perpetuity 12, Jalan Pahang Barat Development Kuala Lumpur Bukit Mertajam Specialist Hospital 565, Jalan Sungai Rambai Private Hospital Term in perpetuity 12, Bukit Mertajam Pulau Pinang 146 Seremban Specialist Hospital Lot No & Pekan Bukit Kepayang Private Hospital Freehold 12, Seksyen 2, Sungai Ujung Seremban Negeri Sembilan Lot PT 1809, Pekan Bukit Kepayang Seksyen 2, Sungai Ujung Vacant Land Leasehold 99 years 4, Seremban expiring in 2103 Negeri Sembilan Jalan Mayang Pasir 2 Bayan Baru, Pulau Pinang (H.S.(D) Vacant Land Leasehold 99 years 12, P.T. No. 5027, Mukim 12 expiring in 2098 South West District Pulau Pinang No 5 & 7, Persiaran Titiwangsa 3 Office Building Term in perpetuity & Kuala Lumpur No 3, Lorong San Ah Wing Off Lorong Gurney Bungalow Term in perpetuity 1, Kuala Lumpur The Palladium Unit No C/5/8/5 (14-5-1) Condominium Freehold Jalan Gurney Kuala Lumpur 24-N, 24-P & 24D-1, Jalan Tarom Johor Bahru Nurse Hostel Freehold 2, Johor (Lot 3262 Mukim Johor Bahru) KPJ Healthcare Berhad (Company No M)

149 List of Properties (continued) Net book Location Description Tenure & expiry date Area sq. m value (RM million) KPJ Selangor Specialist Hospital No.2 Jalan 18/24, Seksyen 18 Vacant Land Leasehold 99 years 15, Shah Alam expiring in 2096 Selangor Lot No. PT Taman Dato Ahmad Razali (Batu 4 1 / 2, Jalan Ampang) Commercial Building Leasehold 99 years 1, Mukim of Ampang expiring in 2092 District of Hulu Langat Selangor Hospital Pusrawi SMC No.19, Jalan USJ 9/3F Subang Jaya Clinic and office Freehold Petaling Jaya Selangor Damai Specialist Hospital DSC Building, Lorong Pokok Tepus 1 Private Hospital Leasehold 99 years 3, Off Jalan Damai expiring in Kota Kinabalu Sabah 147 Puteri Specialist Hospital No. 1, Jalan Sentosa, Lorong 1 Temporary car park/ Leasehold 99 years 1, Kampung Dato Onn office expiring in Johor Bahru Johor Puteri Specialist Hospital No. 1, Jalan Sentosa, Lorong 1 Temporary office Leasehold 99 years 1, Kampung Dato Onn expiring in Johor Bahru Johor Pusat Pakar Kluang Utama No. 1 to 11, Jalan Susur 1, Jalan Besar Private Hospital Leasehold 99 years Kluang expiring in 2100 Johor Taiping Medical Centre 45-49, Jalan Medan Taiping 2 Private Hospital Leasehold 99 years 4, Medan Taiping expiring in Taiping Perak KPJ Penang Specialist Hospital Bandar Baru Perda Jalan Perda Utama Private Hospital Term in perpetuity 20, Bukit Mertajam Seberang Perai, Pulau Pinang Annual Report 2008

150 Notice of Annual General Meeting NOTICE IS HEREBY GIVEN that the Sixteenth (16 th ) Annual General Meeting ( AGM ) of KPJ Healthcare Berhad ( KPJ or the Company ) will be held at the Tanjung Puteri 303, Level 3, Persada Johor International Convention Centre, Jalan Abdullah Ibrahim, Johor Bahru, Johor on Wednesday 20 May, 2009 at p.m. for the purpose of transacting the following businesses: AGENDA As Ordinary Business 1.To receive and adopt the Audited Financial Statements for the year ended 31 December 2008 and the Reports of the Directors and Auditors thereon. (Resolution 1) 2.To re-elect the following Directors retire in accordance with Article 96 of the Articles of Association of the Company: (i) Datin Paduka Siti Sa diah Sheikh Bakir (Article 96) (Resolution 2) (ii) Zainah Mustafa (Article 96) (Resolution 3) (iii) Rozan Mohd Sa at (Article 97) (Resolution 4) 3.To consider, and if thought fit, to pass the following resolution pursuant to Section 129(6) of the Companies Act 1965:- That Tan Sri Datuk Arshad Ayub, who is above the age of seventy (70) years, be and is hereby re-appointed as Director of the Company to hold office until the next AGM of the Company. (Resolution 5) To approve the payment of Directors fees in respect of the financial year ended 31 December (Resolution 6) 5.To re-appoint Messrs PricewaterhouseCoopers as Auditors and to authorise the Directors to fix their remuneration. (Resolution 7) As Special Business To consider and if thought fit, to pass the following resolutions: 6. ORDINARY RESOLUTION 1 AUTHORITY TO ISSUE SHARES PURSUANT TO SECTION 132D OF THE COMPANIES ACT, 1965 THAT pursuant to Section 132D of the Companies Act, 1965 ( Act ), the Directors be and are hereby authorised to issue and allot shares in the Company, at any time and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion deem fit, provided that the aggregate number of shares issued pursuant to this resolution does not exceed ten percent (10%) of the issued share capital of the Company for the time being and that the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on the Bursa Malaysia Securities Berhad ( Bursa Securities ) and that such authority shall continue in force until the conclusion of the next AGM of the Company, subject always to the Act, the Articles of Association of the Company and approval of all relevant bodies being obtained for such allotment and issues. (See Note f) (Resolution 8) 7. ORDINARY RESOLUTION 2 PROPOSED DISTRIBUTION BY WAY OF A DIVIDEND-IN-SPECIE OF THE INVESTMENT OF UP TO 48,992,442 UNITS OF AL- AQAR KPJ REIT ( AL-`AQAR ) HELD BY KPJ AND ITS SUBSIDIARIES TO THE SHAREHOLDERS OF KPJ ON THE BASIS OF TWENTY THREE (23) UNITS IN AL- AQAR FOR EVERY HUNDRED (100) ORDINARY SHARES OF RM1.00 EACH HELD IN KPJ ( PROPOSED DISTRIBUTION ) THAT approval be and is hereby given for the Company to undertake and implement the Proposed Distribution, AND THAT the Board of Directors of the Company be and is hereby authorized to take such steps, execute such documents and enter into any arrangements, agreements and/or undertakings as it may deem fit, necessary, expedient and/or appropriate in order to implement, finalise and/or give effect to the Proposed Distribution with full powers to assent to any terms, conditions, modifications, variations and/or amendments as may be agreed to/required by the relevant regulatory authorities as a consequence of any such requirement or as may be deemed necessary and/or expedient in the best interests of the Company. (See Note g) (Resolution 9) KPJ Healthcare Berhad (Company No M)

151 Notice of Annual General Meeting (continued) 8. ORDINARY RESOLUTION 3 PROPOSED RENEWAL OF SHAREHOLDERS MANDATE ON EXISTING RECURRENT RELATED PARTY TRANSACTIONS ( RRPT ) OF A REVENUE OR TRADING NATURE ( PROPOSED RENEWAL OF RRPT MANDATE ) THAT authority be and is hereby given in line with Chapter of the Listing Requirements of Bursa Securities ( Listing Requirements ) for the Company, its subsidiaries or any of them, to renew the shareholders mandate for RRPT of a revenue or trading nature for any of the aforesaid companies to enter into and to give effect to the specified RRPT, all with the particulars of which are set out in the Circular to Shareholders dated 27 April 2009 ( Circular ) with the related parties as described in the Circular, provided that such transactions are of revenue or trading nature, which are necessary for the day-to-day operations of the Company and/or its subsidiaries, within the ordinary course of business of the Company and/or its subsidiaries, made on an arm s length basis and on normal commercial terms which those generally available to the public and are not detrimental to the minority shareholders of the Company; and AND THAT such authority shall continue to be in force until: (a) the conclusion of the next AGM of the Company following this AGM, at which time the authority shall lapse unless by a resolution passed at the AGM, such authority is renewed; or (b) the expiration of the period within which the next AGM after the date that is required by law to be held pursuant to Section 143(1) of the Companies Act (but shall not extend to such extensions as may be allowed pursuant to Section 143(2) of the Companies Act); or (c) revoked or varied by a resolution passed by the shareholders of the Company at a general meeting; whichever is earlier. AND THAT the Directors of the Company be authorised to complete and do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary or give effect to the Proposed Renewal of RRPT Mandate. (See Note h) (Resolution 10) 9. ORDINARY RESOLUTION 4 PROPOSED RENEWAL OF AUTHORITY TO PURCHASE ITS OWN ORDINARY SHARES THAT, subject always to the Act, the provisions of the Articles of Association of the Company and the Listing Requirements and any other relevant authorities, the Company be and is hereby authorised, to the extent permitted by law, to purchase its own ordinary shares of RM1.00 each in the Company ( Shares ) as may be determined by the Directors of the Company from time to time through Bursa Securities upon such terms and conditions as the Directors may deem fit and expedient in the interests of the Company provided that: (a) The maximum number of Shares which may be purchased by the Company shall not exceed ten percent (10%) of the total issued and paid-up share capital of the Company for the time being subject to the restriction that the issued and paid-up capital of the Company does not fall below the applicable minimum share capital requirement of the Listing Requirements; (b) The maximum fund to be allocated by the Company for the purpose of purchasing its Shares shall not exceed the retained profits and the share premium account of the Company; and (c) Upon completion of the purchase by the Company of its own Shares, the Directors of the Company are authorised to deal with the shares so bought-back in their absolute discretion in any of the following manners: (i) cancel the Shares so purchased; or (ii) retain the Shares so purchased as Treasury Shares and held by the Company; or (iii) retain part of the Shares so purchased as Treasury Shares and cancel the remainder, and the Treasury Shares may be distributed as dividends to the Company s shareholders and/or resold in the open market in accordance with the relevant rules of Bursa Securities and/or subsequently cancelled. AND THAT the authority conferred by this resolution shall continue to be in force until: (a) the conclusion of the next AGM of the Company at which such resolution was passed, at which time it shall lapse, unless by an ordinary resolution passed at that meeting, the authority is renewed either unconditionally or subject to conditions; or (b) the expiration of the period within which the next AGM is required to be held pursuant to Section 143(1) of the Act (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act; or (c) revoked or varied by a resolution passed by the shareholders of the Company in general meeting; whichever is earlier. 149 Annual Report 2008

152 Notice of Annual General Meeting (continued) AND THAT authority be and is hereby unconditionally and generally given to the Directors of the Company; to take all such steps as are necessary or expedient (including without limitation, the opening and maintaining of central depository account(s) under the Securities Industry (Central Depositories) Act, 1991 to implement, finalise and give full effect to the Proposed Share Buy-Back with full power to assent to any conditions, modifications, revaluations and/or amendments as may be imposed by the relevant authorities and with full power to do all such acts and things thereafter in accordance with the Act, the provisions of the Memorandum and Articles of Association of the Company and the guidelines issued by Bursa Securities and any other relevant authorities. (See Note i) (Resolution 11) 10.To transact any other business of which due notice shall have been given. By Order of the Board, KPJ HEALTHCARE BERHAD SALMAH HJ ABD WAHAB (LS 02140) IDHAM JIHADI ABU BAKAR, ACIS (MAICSA ) Secretaries Johor Bahru Dated : 27 April NOTES: a.a member entitled to attend and vote at this meeting is entitled to appoint a proxy to attend and vote instead of him.a proxy may but need not be a member of the Company and the provision of Section 149(1)(b) of Companies Act, 1965 need not be complied with. b.the instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or if the appointor is a corporation, under its common seal or in other manner approved by its Board of Directors. c.where a member of the Company is an Authorised Nominee as defined under the Central Depositories Act 1991, he may appoint at least one (1) proxy in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of the said Securities Account. d.any alteration made in this form should be initialed by the person who signs it. e.the instrument appointing a proxy, together with the power of attorney (if any) under which it is signed or a certified copy thereof, shall be deposited at the registered office of the Company at: KPJ HEALTHCARE BERHAD, Level 2, Persada Johor International Convention Centre, Jalan Abdullah Ibrahim, Johor Bahru, Johor at least forty-eight (48) hours before the time appointed for holding the meeting or any adjournment thereof. f.the proposed Resolution 8 if passed is primarily to give flexibility to the Board to issue and allot shares to staff who exercised their Employees Share Option Scheme (ESOS) during the year. In order to facilitate the process, it is thus appropriate that the Directors be authorised to issue shares in the Company up to an amount not exceeding in total 10% of the issued share capital of the Company for the time being for such purposes. g.the proposed Resolution 9 if passed is primarily to authorise the Company to distribute the units to its shareholders based on their respective shareholdings in KPJ as at an entitlement date to be determined and announced later. h.the proposed Resolution 10 if passed is primarily to authorise the Company and/its unlisted subsidiaries to enter into arrangements or transactions with Related Parties, particulars of which are set out in Section 2.3 and 2.4 of the Circular to Shareholders dated 27 April 2009 circulated together with this Annual Report, which are necessary for the day-to-day operations of the Group and are based on normal commercial terms that are not more favourable to the Related Parties than those generally made to the public. i.the proposed Resolution 11 if passed will enable the Company to utilise any of its surplus financial resources to purchase its own shares from the market. KPJ Healthcare Berhad (Company No M)

153 Statement Accompanying Notice of Annual General Meeting Pursuant to Paragraph 8.28(2) of the Listing Requirements of the Bursa Malaysia:- 1.Directors who are standing for re-election at the Sixteenth (16 th ) Annual General Meeting are as follows :- i.datin Paduka Siti Sa diah Sheikh Bakir - Resolution 3 ii.zainah Mustafa - Resolution 4 iii.rozan Mohd Sa at - Resolution 5 2.Tan Sri Datuk Arshad Ayub retires and re-appointed pursuant to Section 129(6) of the Companies Act A total of four (4) Board Meetings were held during the financial year ended 31 December 2008.Details of attendance of Directors at Board Meetings held during the financial year ended 31 December 2008 are as follows: 24 March 28 May 19 August 24 November Non Executive Director Tan Sri Dato Muhammad Ali Hashim Ahamad Mohamad Kamaruzzaman Abu Kassim Independent Non Executive Director Tan Sri Datuk Arshad Ayub Tan Sri Dato Dr Abu Bakar Suleiman Datuk Azzat Kamaludin Datuk Dr Hussein Awang Zainah Mustafa Dr Yoong Fook Ngian Dr Kok Chin Leong 151 Executive Director Datin Paduka Siti Sa diah Sheikh Bakir Note : Present Absent Date of Meeting Day Time Venue 24 March 2008 Monday 2.30 p.m. KPJ Damansara Specialist Hospital 28 May 2008 Wednesday 9.30 a.m. Puteri Pacific Hotel, Johor Bahru 19 August 2008 Tuesday 9.30 a.m. KPJ Damansara Specialist Hospital 24 November 2008 Monday 9.30 a.m. KPJ Damansara Specialist Hospital 4.Particulars of Directors seeking re-election at the Annual General Meeting are set out in the Directors Profile appearing in pages 15 & 21 of the Annual Report. Annual Report 2008

154 KPJ HEALTHCARE BERHAD PROXY FORM No. of ordinary shares CDS Account No I/We* of being a member(s) of KPJ HEALTHCARE BERHAD hereby appoint (Full name and NRIC no./company no. in block letter) (Full address in block letter) (Full name in block letter) of or failing him/her of or failing him/her, THE CHAIRMAN OF THE MEETING (Full address in block letter) (Full name in block letter) (Full address in block letter) as my/our* proxy to vote for me/us* on my/our* behalf at the Sixteenth (16 th ) Annual General Meeting of the Company to be held at the Tanjung Puteri 303, Level 3, Persada Johor International Convention Centre, Jalan Abdullah Ibrahim, Johor Bahru, Johor on Wednesday 20 May, 2009 at p.m. and at any adjournment in respect of my/our holdings of shares in the manner indicated below: Resolution Description For Against 1 TO RECEIVE THE REPORT AND AUDITED ACCOUNTS TO RE-ELECT DIRECTORS 2 DATIN PADUKA SITI SA DIAH SHEIKH BAKIR 3 ZAINAH MUSTAFA 4 ROZAN MOHD SA AT 5 TO RE-APPOINT TAN SRI DATUK ARSHAD AYUB 6 TO APPROVE DIRECTORS FEE 7 TO RE-APPOINT AUDITORS ANY OTHER BUSINESS 8 AUTHORITY TO ISSUE SHARES 9 PROPOSED DISTRIBUTION 10 PROPOSED RENEWAL OF RRPT MANDATE 11 PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY (Please indicate with an X in the appropriate box whether you wish your vote to be cast for or against the resolution. In the absence of specific direction, your proxy will vote or abstain at his/her discretion. However, if more than one proxy is appointed, please specify in the table below the number of shares represented by each proxy, failing which the appointment shall be invalid.) Name of proxy 1: Name of proxy 2: Total number of shares held Proportion of shares held Signature(s)/Common Seal of Shareholder(s) Dated this day of 2009 NOTES: a.a member entitled to attend and vote at this meeting is entitled to appoint a proxy to attend and vote instead of him.a proxy may but need not be a member of the Company and the provision of Section 149(1)(b) of Companies Act, 1965 need not be complied with. b.the instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly uthorized in writing or if the appointor is a corporation, under its common seal or in other manner approved by its Board of Directors. c.where a member of the Company is an Authorised Nominee as defined under the Central Depositories Act 1991, he may appoint at least one (1) proxy in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of the said Securities Account. d.any alteration made in this form should be initialed by the person who signs it. e.the instrument appointing a proxy, together with the power of attorney (if any) under which it is signed or a certified copy thereof, shall be deposited at the registered office of the Company at: KPJ HEALTHCARE BERHAD, Level 2, Persada Johor International Convention Centre, Jalan Abdullah Ibrahim, Johor Bahru, Johor at least forty-eight (48) hours before the time appointed for holding the meeting or any adjournment thereof.

155 Secretary KPJ HEALTHCARE BERHAD ( M) Level 2, Persada Johor International Convention Centre Jalan Abdullah Ibrahim Johor Bahru Johor Darul Takzim MALAYSIA STAMP

156 Media and Communications KPJ in the News KPJ Healthcare Berhad Annual Report 2008

157 Publications Annual Report Annual Report 1994 Annual Report 1995 Annual Report 1996 Annual Report 1997 Annual Report 1998 Annual Report 1999 Annual Report 2000 Annual Report 2001 Annual Report 2002 Annual Report 2003 Annual Report 2004 Annual Report 2005 Annual Report 2006 Annual Report 2007 KPJ Healthcare Berhad (Company No M)

158 25th Anniversary Medical Digest/ Journal KPJ Medical Digest Issue 2002 KPJ Medical Journal Issue Nursing Bulletin 25th Anniversary Special Edition KPJ Healthcare Quarterly 81 Nursing Bulletin 1st Issue Nursing Bulletin 2nd Issue Nursing Bulletin 3rd Issue KPJ Healthcare Quarterly Issue 1 KPJ Healthcare Quarterly Issue 2 Nursing Bulletin 4th Issue Nursing Bulletin 5th Issue Nursing Bulletin 6th Issue KPJ Healthcare Quarterly Issue 3 KPJ Healthcare Quarterly Issue 4 For more information, please contact: Nursing Bulletin 7th Issue Nursing Bulletin 8th Issue Nursing Bulletin 9th Issue KPJ Group Marketing 1st Floor, KPJ Ampang Puteri Specialist Hospital, No 1, Jalan Mamanda 9, Ampang, Selangor Darul Ehsan, Malaysia. Tel: (603) Fax: (603) marketing@kpjhealth.com.my Website: Annual Report 2008