PT SILOAM INTERNATIONAL HOSPITALS Tbk AND SUBSIDIARIES. Consolidated Financial Statements For the Years Ended December 31, 2014 and 2013

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1 PT SILOAM INTERNATIONAL HOSPITALS Tbk AND SUBSIDIARIES Consolidated Financial Statements Final Draft/April 6, 2015 Paraf:

2 PT SILOAM INTERNATIONAL HOSPITALS Tbk AND SUBSIDIARIES Table of Contents Page Directors Statement Letter Independent Auditors Report Consolidated Financial Statements Consolidated Statements of Financial Position 1 Consolidated Statements of Comprehensive Income 3 Consolidated Statements of Changes in Equity 4 Consolidated Statements of Cash Flows 5 Notes to the Consolidated Financial Statements 6 Draft/April 6, 2015 paraf:

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6 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION As of December 31, 2014 and 2013 (Expressed in Full Rupiah, Unless Otherwise Stated) Notes ASSETS CURRENT ASSETS Cash and Cash Equivalents 2.d, 2.e, 2.f, 2.r, 3, 10, 31, ,958,770, ,437,837,445 Trade Receivables 2.r, 2.u, 4, 32 Related Parties 2.f, 10 3,549,747,601 2,432,208,891 Third Parties 389,096,670, ,370,030,779 Other Current Financial Assets 2.r, 5, 32 9,435,126,642 3,143,279,756 Inventories 2.g, 2.k, 6 105,857,883,964 94,831,081,782 Prepaid Taxes 2.q, 7.a 6,991,423, Prepaid Expenses 2.h, 8 45,907,747,875 23,250,233,636 Total Current Assets 840,797,370, ,464,672,289 NON-CURRENT ASSETS Advances 9 84,624,464,968 60,581,873,952 Due from Related Parties Non-Trade 2.f, 2.r, 10, 32 1,341,961, ,189,971 Property and Equipment 2.i, 2.k, 2.u, 12 1,589,306,930,919 1,402,270,240,507 Goodwill 2.l, 2.m, 13.a 282,568,092, ,791,360,696 Intangible Assets 2.m, 2.u, 13.b 9,605,766,175 7,332,931,883 Deferred Tax Assets 2.q, 7.d 22,442,922,330 18,981,601,213 Other Non-Current Financial Assets 11 13,398,002,929 22,836,666,648 Total Non-Current Assets 2,003,288,141,441 1,693,309,864,870 TOTAL ASSETS 2,844,085,512,104 2,600,774,537,159 The accompanying notes form an integral part of these consolidated financial statements Draft/06 April Paraf:

7 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Continued) As of December 31, 2014 and 2013 (Expressed in Full Rupiah, Unless Otherwise Stated) LIABILITIES AND EQUITY Notes LIABILITIES CURRENT LIABILITIES Trade Payables - Third Parties 2.r, 14, ,762,995, ,966,851,520 Short-Term Bank Loans 2.r, 17, 32 3,540,195,011 4,927,167,196 Accrued Expenses 2.f, 2.r, 10, 16, ,004,370,941 66,910,610,412 Advances from Patients 2.p 14,914,613,299 9,915,718,285 Taxes Payable 2.q, 7.b 33,130,693,777 16,983,882,633 Other Current Financial Liabilities 2.r, 15, 32 64,476,339,112 9,526,754,910 Current Portion of Long-Term-Bank Loans 2.r, 17, 32 12,435,856,488 11,792,174,233 Current Portion of Deferred Gain on Sale and Leaseback Transactions 2.j, 18, 33.a 11,897,445,548 11,897,445,548 Total Current Liabilities 478,162,509, ,920,604,737 NON-CURRENT LIABILITIES Long-Term Bank Loans 2.r, 17, 32 30,525,083,739 42,960,940,232 Due to Related Parties Non-Trade 2.f, 2.r, 10, ,813,668, ,074,492,750 Deferred Gain on Sale and Leaseback Transactions 2.j, 18, 35.a 118,909,263, ,806,709,541 Long-Term Employment Benefit Liabilities 2.n, ,858,564,915 93,036,906,549 Deferred Tax Liabilities 2.q, 7.d 28,147,868,966 11,983,104,371 Total Non-Current Liabilities 712,254,450, ,862,153,443 Total Liabilities 1,190,416,960, ,782,758,180 EQUITY Equity Attributable to Owners of the Parent Capital Stock, par Value per Share Authorized Capital - 4,000,000,000 shares Issued and Fully Paid: ,610,000, ,610,000,000 1,156,100,000 Shares as of December 31, 2014 and 2013; Additional Paid-in Capital - Net 2.o, 2.r, 21 1,289,664,515,321 1,289,664,515,321 Difference in Value from Non-controlling Interest 22 (25,748,354,393) -- Retained Earnings 268,677,463, ,108,534,831 Total Equity Attributable to Owners of the Parent 1,648,203,624,640 1,611,383,050,152 Non-Controlling Interest 2.c, 24 5,464,927,320 27,608,728,827 TOTAL EQUITY 1,653,668,551,960 1,638,991,778,979 TOTAL LIABILITIES AND EQUITY 2,844,085,512,104 2,600,774,537,159 The accompanying notes form an integral part of these consolidated financial statements Draft/06 April Paraf:

8 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Expressed in Full Rupiah, Unless Otherwise Stated) Notes REVENUE 2.p, 25 3,340,793,371,873 2,503,599,992,916 COST OF REVENUE 2.p, 26 (2,388,731,054,071) (1,844,902,051,712) GROSS PROFIT 952,062,317, ,697,941,204 Operating Expenses 2.f, 2.p, 10, 27 (783,947,104,458) (582,764,965,156) Others - Net (34,262,795,577) 2,751,821,279 PROFIT FROM OPERATION 133,852,417,767 78,684,797,327 Interest Income 28 15,432,527,455 12,021,433,715 Financial Charges 28 (55,779,008,271) (18,945,082,871) PROFIT BEFORE TAX 93,505,936,951 71,761,148,171 Tax Expenses 2.q, 7.c (33,799,163,970) (21,568,661,267) PROFIT FOR THE YEAR 59,706,772,981 50,192,486,904 OTHER COMPREHENSIVE INCOME TOTAL COMPREHENSIVE INCOME FOR THE YEAR 59,706,772,981 50,192,486,904 PROFIT FOR THE YEAR ATTRIBUTABLE TO: Owners of the Parent Company 62,568,928,881 49,870,418,855 Non-Controlling Interest 2.c (2,862,155,900) 322,068,049 59,706,772,981 50,192,486,904 TOTAL COMPREHENSIVE INCOME FOR THE YEAR ATTRIBUTABLE TO: Owners of the Parent Company 62,568,928,881 49,870,418,855 Non-Controlling Interest 2.c (2,862,155,900) 322,068,049 59,706,772,981 50,192,486,904 EARNINGS PER SHARE Basic, Profit for the Year Attributable to Ordinary Shareholders of the Parent Company 2.s, The accompanying notes form an integral part of these consolidated financial statements Draft/06 April Paraf:

9 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Expressed in Full Rupiah, Unless Otherwise Stated) Total Equity Attributable to Owner of Parent Notes Capital Stock Additional Paid-in Capital - Net Retained Earnings Total Equity Non-Controlling Total Difference in Value Difference in Value Appropriated Unappropriated Attributable to Interest Equity Paid-in between Change in Equity from Non-Controlling Owners of the Capital Entities Under Transactions of Interest Parent Excess of Common Control- Subsidiaries Total Par Net BALANCE AS OF DECEMBER 31, ,000,000, (11,329,652,726) (11,728,781,953) (23,058,434,679) ,238,115, ,179,681,297 11,461,117, ,640,798,509 ` ` ` ` ` ` ` Changes in Equity for the Year 2013 Proceeds from Initial Public Offering - Net of Share Issuance Costs 20, 21 15,610,000,000 1,312,722,950, ,312,722,950, ,328,332,950, ,328,332,950,000 Non-Controlling Interest 2.c ,825,543,566 15,825,543,566 Total Comprehensive Income for the Year ,870,418,855 49,870,418, ,068,049 50,192,486,904 BALANCE AS OF DECEMBER 31, ,610,000,000 1,312,722,950,000 (11,329,652,726) (11,728,781,953) 1,289,664,515, ,108,534,831 1,611,383,050,152 27,608,728,827 1,638,991,778,979 ` ` ` ` ` ` ` Changes in Equity for the Year 2014 Distribution of Profit to Reserve Fund ,100,000,000 (23,100,000,000) Acquisition of Shares of Subsidiaries 22 Non-Controlling Interest (25,748,354,393) (25,748,354,393) (19,281,645,607) (45,030,000,000) Total Comprehensive Income for the Year ,568,928,881 62,568,928,881 (2,862,155,900) 59,706,772,981 BALANCE AS OF DECEMBER 31, ,610,000,000 1,312,722,950,000 (11,329,652,726) (11,728,781,953) 1,289,664,515,321 (25,748,354,393) 23,100,000, ,577,463,712 1,648,203,624,640 5,464,927,320 1,653,668,551,960 ` ` ` ` ` ` ` The accompanying notes form an integral part of these consolidated financial statements Draft/6 April Paraf:

10 CONSOLIDATED STATEMENTS OF CASH FLOWS (Expressed in Full Rupiah, Unless Otherwise Stated) Notes CASH FLOWS FROM OPERATING ACTIVITIES Collections from Customers 3,218,128,438,733 2,436,892,008,979 Payments to Suppliers and Third Parties (2,375,426,399,678) (1,804,866,184,158) Payments to Management and Employees (531,054,022,103) (408,338,251,060) Cash Flows from Operations 311,648,016, ,687,573,761 Financial Charges Payment - Net (5,772,163,585) (6,923,649,156) Payments of Taxes (22,195,779,215) (27,314,028,929) Net Cash Provided by Operating Activities 283,680,074, ,449,895,676 CASH FLOWS FROM INVESTING ACTIVITIES Advances for Purchase of Property and Equipment and Others (50,889,937,133) (212,572,886,877) Property and Equipment and Software Disposal ,630, ,907,127 Acquisition 12, 13.b (331,472,153,901) (385,554,741,760) Acquisition of Non-Controlling Interest Shares 1.c (45,030,000,000) -- Acquisition of SubsidiarY - Net of Cash Acquired 29 (83,695,538,337) (163,163,909,554) Net Cash Used in Investing Activities (510,571,999,068) (760,589,631,064) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from Initial Public Offering Proceeds -- 1,404,900,000,000 Share Issuance Costs (1,899,274,884) (78,466,324,884) Receipts from (Payment to) Related Parties 75,766,161,883 (411,564,922,780) Bank Loans 17 Proceeds -- 73,583,300 Payments (81,381,882,713) (11,218,103,421) Net Cash Provided by Financing Activities (7,514,995,714) 903,724,232,215 NET INCREASE IN CASH AND CASH EQUIVALENTS (234,406,920,629) 332,584,496,827 Effect of Foreign Exchange on Cash and Cash Equivalents at the End of the Year (1,072,146,768) 14,145,381,939 CASH AND CASH EQUIVALENTS AT BEGINNING YEAR 3 515,437,837, ,707,958,679 CASH AND CASH EQUIVALENTS AT ENDING YEAR 3 279,958,770, ,437,837,445 The accompanying notes form an integral part of these consolidated financial statements Draft/06 April Paraf:

11 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. General 1.a. The Company s Establishment PT Siloam International Hospitals Tbk ( the Company ) was established under the name of PT Sentralindo Wirasta on August 3, 1996 based on the Deed of Establishment No. 3, which was made in the presence of Myra Yuwono, S.H., a notary in Sukabumi. The deed of establishment was approved by the Minister of Justice of the Republic of Indonesia in his decree No. C HT TH.96 dated August 27, 1996 and was published in the State Gazette No. 97, Supplement No on December 3, The Company s articles of association have been amended several times, and the latest was by Notarial Deed No. 2 dated May 2, 2014, made in the presence of Nurlani Yusup, S.H., M.Kn., a notary in Tangerang, to change the Company s articles of association one of them is the Company s purpose and objective. The change in articles of association was approved by the Minister of Law and Human Rights of the Republic of Indonesia in his decree No. AHU dated May 5, Notification of changes the Company s articles of association have been received by the Minister of Law and Human Rights of the Republic of Indonesia in his decree No. AHU dated May 5, In accordance with Article 3 of the Company's articles of association, the Company's principal activity is engage in healthcare provision, including setting up and managing hospitals, polyclinics, health facilities and supporting infrastructure, and engaging in government healthcare programs. The Company commenced commercial operations in 2010 after the restructuring of PT Lippo Karawaci Tbk s hospital units. The Company's principal activity is engage in healthcare provision, including setting up and managing hospitals. The operation of hospital units of the Company and the subsidiaries (the Group) are in several cities on the island of Sumatra, Java, Bali, Kalimantan, Sulawesi and Nusa Tenggara. The Company s head office is located at Siloam Hospital Lippo Village 5th Floor, Jl. Siloam No. 6, Lippo Village, Tangerang 15811, Banten - Indonesia. The parent entity of the Company is PT Megapratama Karya Persada and the ultimate parent entity is PT Lippo Karawaci Tbk. 1.b. The Company s Initial Public Offering The Company s initial public offering of 156,100,000 shares was declared effective by the Indonesian Financial Services Authority in its letter No. S-260/D.04/2013 dated September 2, 2013, and was listed in the Indonesian Stock Exchange on September 12, c. The Group s Structure The Company has ownership of more than 50%, either direct or indirectly, in the following subsidiaries: Subsidiary Domicile Main Direct Indirect Year of Total Assets Business Ownership Ownership Starting Percentage Percentage Operation PT Aritasindo Permaisemesta Jakarta Trading, 99.99% ,124,746 65,883,437 Development, Mining, Agriculture, Land Transportation, Printing and Industry PT Perdana Kencana Mandiri Jakarta Industry, 99.75% ,403, ,940,484 Development, Trading, Land Transportation, Workshop, Printing, Agriculture, Mining and Services PT Multiselaras Anugerah Tangerang Development, 99.99% ,067, ,439,411 Trading and Services PT Nusa Medika Perkasa Jakarta Healthcare % ,687, ,583,214 PT Siloam Graha Utama and Subsidiary Jakarta Trading, 99.99% ,511,589, ,926,169,055 Development, Land Transportation, and Services PT East Jakarta Medika Bekasi Healthcare % ,492,350, ,919,068,042 Final Draftt/April 6, Paraf:

12 Subsidiary Domicile Main Direct Indirect Year of Total Assets Business Ownership Ownership Starting Percentage Percentage Operation PT Guchi Kencana Emas and Subsidiary Jakarta Development 99.97% ,570,503, ,536,422,739 and Services PT Golden First Atlanta Jambi Healthcare and % ,539,839, ,525,497,989 Pharmacy PT Prawira Tata Semesta and Subsidiary Jakarta Trading, 99.98% ,404,060, ,387,041,953 Development, Industry, Mining, Land Transportation, Agriculture, Printing, Workshop and Services except Services of Legal and Tax PT Balikpapan Damai Husada Balikpapan Healthcare % ,183,010, ,152,322,686 including Hospital Clinic, Health Centre, Polyclinic and Other related Services PT Siloam Emergency Services Tangerang Healthcare 99.99% ,624,415,127 1,391,968,353 PT Medika Harapan Cemerlang Indonesia Tangerang Trading, 99.99% ,177,323,630 2,969,022,018 Industry and Services PT Pancawarna Semesta and Subsidiary Tangerang Trading, 99.99% ,026,074,020 70,275,326,965 Development, Printing and Services PT Diagram Healthcare Indonesia Depok Hospital services, % ,467,645,852 39,716,721,868 Clinic and Policlinic, Medical Treatment Clinic and Other related Services PT Adamanisa Karya Sejahtera Jakarta Trading, 99.90% ,085,833 1,000,000,000 Development, Printing and Services PT Brenada Karya Bangsa Tangerang Trading, 99.99% ,403, ,000,000 Development, Printing and Services PT Harmoni Selaras Indah Tangerang Trading, 99.99% ,340, ,000,000 Development, Printing and Services PT Kusuma Primadana and Subsidiaries Tangerang Trading, 99.99% ,195,707, ,376,903,302 Development, Printing and Services PT Adijaya Buana Sakti and Subsidiaries Jakarta Services, % ,188,966, ,368,878,302 Development, Trading, Workshop, Land Industry, Printing and Agriculture PT Siloam Sumsel Kemitraan Tangerang Trading, % -- 8,003,625,337 7,997,550,337 Development and Services PT RS Siloam Hospital Sumsel Palembang Healtcare include % ,163,599, ,356,656,020 (d/h PT Karyatama Indah Sentosa) Hospital Clinical, and Health Center, Polyclinic and Other Related Service PT Optimum Karya Persada Jakarta Services, 99.90% ,017,232,500 1,000,000,000 Development, Trading, Workshop, Land Industry, Printing and Agriculture PT Rosela Indah Cipta Tangerang Trading, 99.99% ,153, ,000,000 Development, Printing and Services PT Sembada Karya Megah Tangerang Trading, 99.99% ,340, ,000,000 Development, Printing and Services PT Trijaya Makmur Bersama Tangerang Trading, 99.99% ,340, ,000,000 Development, Printing and Services PT Visindo Galaxi Jaya Tangerang Trading, 99.99% ,993,540,833 5,000,000,000 Development, Real Estate, Industry, Printing, Agribusiness, Services and Transport Final Draft/April 6, Paraf:

13 Subsidiary Domicile Main Direct Indirect Year of Total Assets Business Ownership Ownership Starting Percentage Percentage Operation PT Tunggal Pilar Perkasa and Subsidiaries Tangerang Trading, 99.99% ,863,440, ,737,757,798 Development, Real Estate, Industry, Printing, Agribusiness, Services and Transport PT Tirtasari Kencana Tangerang Trading, % -- 1,130,696, ,921,700 Development, and Services PT Gramari Prima Nusa Tangerang Hospital services, % ,585,488,531 50,878,778,974 Clinic and Policlinic, Medical Treatment Clinic and Other related Services PT Krisolis Jaya Mandiri Tangerang Healthcare % ,331,687, ,000,000 including Hospital Clinic, Health Centre, Polyclinic and Other related Services PT Kusuma Bhakti Anugerah Tangerang Real Estate, % -- 7,199,648,894 7,000,000,000 Industry, Printing Agribusiness, Services and Transport PT Agung Cipta Raya Tangerang Healthcare % ,630,000 1,000,000,000 including Hospital Clinic, Health Centre, Polyclinic and Other related Services PT Bina Cipta Semesta Jakarta Healthcare % -- 1,012,427,500 1,000,000,000 including Hospital Clinic, Health Centre, Polyclinic and Other related Services PT Mega Buana Bhakti Tangerang Trading, % -- 5,982,333,520 6,000,000,000 Development, Real Estate, Industry, Printing, Agriculture, Services and Transport PT Taruna Perkasa Megah Tangerang Trading, % -- 19,014,504, ,000,000 Development, Printing and Services PT Tataka Bumi Karya Tangerang Trading, % ,452, ,000,000 Development, Printing and Services PT Tataka Karya Indah Tangerang Trading, % ,254, ,000,000 Development, Printing and Services PT Siloam Medika Cemerlang**) Tangerang Trading, % -- 3,388,608, ,000,000 Development, Real Estate, Industry, Printing, Agribusiness, Services and Transport PT Koridor Usaha Maju and Subsidiaries Tangerang Trading, % ,363,437, ,600,057,124 Development, Printing, Agribusiness, Services and Transport PT Medika Sarana Traliansia and Subsidiary Badung, Bali Hospital Public % ,054,381, ,638,402,814 Services PT Trisaka Raksa Waluya Jakarta Commence % ,992,756, ,522,915,190 Special Service in Healthcare PT Buana Utama Sejati*) Tangerang Hospital Service % -- 16,312,100, Clinic, Policlinic, Private Hospital PT Sentra Sejahtera Utama*) Hospital Sevice % ,000, Clinic, Policlinic, and Treatment Clinic PT Berlian Cahaya Indah Tangerang Trading, % -- 45,004,044, ,000,000 Development, Printing and Service Final Draft/April 6, Paraf:

14 Subsidiary Domicile Main Direct Indirect Year of Total Assets Business Ownership Ownership Starting Percentage Percentage Operation PT Rashal Siar Cakra Medika Tangerang Trading, % ,352,264, Development, Real Estate, Printing Agribusiness, Service and Transport PT Mulia Pratama Cemerlang*) Tangerang Hospital Service % ,000, Clinic, Policlinic and Treatment Clinic, Policlinic PT Karya Pesona Cemerlang*) Tangerang Hospital Service % ,000, Clinic, Policlinic and Treatment Clinic, Policlinic PT Indah Kemilau Abadi*) Tangerang Hospital Service % ,000, Clinic, Policlinic and Treatment Clinic, Policlinic PT Persada Dunia Semesta*) Tangerang Hospital Service % ,000, Clinic, Policlinic and Treatment Clinic, Policlinic PT Inti Pratama Medika*) Tangerang Hospital Service % ,000, Clinic, Policlinic and Treatment Clinic, Policlinic PT Sentra Sehat Sejahtera*) Tangerang Hospital Service % ,000, Clinic, Policlinic and Treatment Clinic, Policlinic PT Genta Raya Internusa*) Tangerang Hospital Service % ,000, Clinic, Policlinic and Treatment Clinic, Policlinic PT Sembilan Raksa Dinamika*) Tangerang Hospital Service % ,000, Clinic, Policlinic and Treatment Clinic, Policlinic PT Saritama Mandiri Zamrud*) Tangerang Hospital Service % ,000, Clinic, Policlinic and Treatment Clinic, Policlinic PT Gempita Nusa Sejahtera*) Tangerang Hospital Service % ,000, Clinic, Policlinic and Treatment Clinic, Policlinic PT Aryamedika Teguh Tunggal*) Tangerang Hospital Service % ,000, Clinic, Policlinic and Treatment Clinic, Policlinic PT Mahkota Buana Selaras Tangerang Trading, 99.99% ,623,709, ,000,000 Development, Industry, Printing, Services and Transport *) Established in 2014 **) Established in 2013 On September 10, 2013, the Company acquired 99.99% ownership in PT Tunggal Pilar Sejahtera from PT Primakreasi Propertindo and PT Grand Villa Persada at the acquisition cost of 599,999,000. The acquisition transactions were recorded in accordance with PSAK No. 38 (Revised 2012) Business Combination for Entities Under Common Control. There was no net difference between the purchase price and the proportionate of stocks on net book value of assets of the subsidiary acquired. On September 11, 2013, the Company acquired 99.90% ownership in PT Mahkota Buana Selaras (through direct ownership of 99.99% and 0.01% indirect ownership in PT Tunggal Pilar Sejahtera) at the acquisition cost of 600,000,000. The acquisition transactions were recorded in accordance with PSAK No. 38 (Revised 2012) Business Combination for Entities Under Common Control. There was no net difference between the purchase price and the proportionate of stocks on net book value of assets of the subsidiary acquired. On November 26, 2013, TPP and MBS, acquired 99.99% and 0.01%, respectively, ownership in PT Koridor Usaha Maju (KUM) from PT Primakreasi Propertindo and PT Grand Villa Persada, at the acquisition cost of 599,999,000 and 1,000, respectively. The acquisition transactions were recorded in accordance with PSAK No. 38 (Revised 2012) Business Combination for Entities Under Common Control. There was no net difference between the purchase price and the proportionate of stocks on net book value of assets of the subsidiary acquired. Final Draft/April 6, Paraf:

15 On December 6, 2013, TPP and MBS, acquired 75% and 25%, respectively, ownership in PT Gramari Prima Nusa (GPN), at the acquisition cost of 750,000,000 and 250,000,000, respectively. At the acquisition date, GPN had not yet started operations and therefore, it was recorded as an asset acquisition. Based on the deed Nos. 65, 66 and 67 on December 13, 2013 made in presence of Sriwi Bawana Nawaksari, S.H., M.Kn., notary in Tangerang, KUM acquired 80% ownership in PT Medika Sarana Traliansia (MST), at the acquisition cost of 189,600,000. This transaction represent business combination (see Note 29). MST commenced commercial operations in MST had ownership 99.99% of PT Trisaka Raksa Waluya. TRW commenced commercial operations in On July 26, 2014, TPP and MBS, acquired 75% and 25%, respectively, ownership in PT Rashal Siar Cakra Medika (RSCM), at the acquisition cost of 78,540,426,657 and 26,180,142,219, respectively. This transaction represent business combination (see Note 29). RSCM commenced commercial operations in On November 28, 2014, TPP acquired 20% ownership of MST from Steer Clear Limited, at the acquisition cost of 45,030,000,000. Difference from acquisition cost and investment value amounted to 25,748,354, d. Board of Commissioners, Directors, Employees and Audit Committee Based on Notarial Deed No. 2 dated May 2, 2014, made in the presence of Nurlani Yusup, S.H., M.Kn., notary in Tangerang, which has been accepted by the Ministry of Law and Human Rights of the Republic of Indonesia through notification No. AHU dated May 5, 2014, Notarial Deed No. 369 dated April 24, 2013, made in the presence of Dr. Irawan Soerodjo, S.H, M.Si, notary in Jakarta, which has been accepted by Ministry of Law and Human Rights of the Republic of Indonesia through notification No. AHU- AH dated April 26, 2013, the composition of the Board of Commisioners and Directors as of December 31, 2014 and 2013, are as follows: Board of Commissioners President Commissioner Ketut Budi Wijaya Ketut Budi Wijaya Commissioner Theo Leo Sambuaga Theo Leo Sambuaga Rahmawaty Agus Benjamin Lambock V. Nahattands Independent Commissioner Farid Harianto Farid Harianto Muladi Muladi Jonathan Limbong Parapak Jonathan Limbong Parapak Directors President Director Romeo Fernandez Lledo *) Gershu Chandy Paul Director Grace Frelita Indradjaja Grace Frelita Indradjaja Andry Sugianganto Budisuharto Kailas N. Raina Romeo Fernandez Lledo George Mathew George Mathew Anang Prayudi *) Anang Prayudi *) *) Unaffiliated Director The audit committee composition as of December 31, 2014 and 2013 are as follows: Audit Committee Chairman Members Farid Harianto Lie Kwang Tak Siswanto Pramono As of December 31, 2014, the Company s Corporate Secretary is Sugianganto Budisuharto and head of internal audit is Gunawan HP. As of December 31, 2014 and 2013, the Group have 6,547 and 4,905 permanent employees, respectively (unaudited). Final Draft/April 6, Paraf:

16 2. Summary of Significant Accounting Policies 2.a. Compliance with the Financial Accounting Standards The Group s consolidated financial statements have been prepared and presented in accordance with the Indonesian Financial Accounting Standards which include the Statements and the Interpretations as issued by the Financial Accounting Standards Board of the Indonesian Institute of Accountants (DSAK-IAI) and Regulation of Bapepam-LK No. VIII.G.7 regarding the Guidance of Financial Statements Presentation asset forth in decree No. KEP-347/BL/2012 regarding the amendment to Regulation No. VIII.G.7 and other accounting policies which prevailing in the Capital Market. 2.b. Basis of Measurement and Preparation of Consolidated Financial Statements The consolidated financial statements have been prepared on a going concern assumption and on the accrual basis, except for the consolidated statements of cash flows which used the cash basis. The basis of measurement in the preparation of these consolidated financial statements is the historical cost principle, except for certain accounts that were measured using other basis, as described in the respective accounting policy. The consolidated statements of cash flows have been presented by classifying the activities into operating, investing and financing. The cash flows from operating activities were prepared using the direct method. The functional currency of the Group is Indonesian Rupiah. Transactions are recorded using the functional currency. The reporting currency used in the preparation of these consolidated financial statements is the Indonesian Rupiah. New accounting standard or improvement on accounting standard which is relevant to the Group and mandatory for the first time for the financial period beginning 1 January 2014 is ISAK No. 27 Transfer of Assets from Customers and ISAK No. 28 Termination of Financial Liabilities with Equity Instruments. Meanwhile, revocation of ISAK No. 27, Transfer of Assets from Customers and ISAK No. 28 Extinguishing of Financial Liabilities with Equity Instruments with an effective date of 1 January 2014 is not relevant, and did not result in changes to the Company's accounting policies and had no effect on the amounts reported for the current period or prior financial years. 2.c. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiaries controlled directly with the percentage of ownership more than 50% as presented in Note 1.c. Control also exists when the parent entity owns half or less of the voting power of an entity when there is: a. power over more than half of the voting rights by virtue of an agreement with other investors; b. power to govern the financial and operating policies of the entity under a statute or an agreement; c. power to appoint or remove the majority of the members of the board of directors or equivalent governing body and control of the entity is by that board or body; or d. power to cast the majority of votes in the meetings of the board of directors or equivalent governing body and control of the entity is by that board or body. The existence and effect of potential voting rights that can be implemented or converted on the date of the reporting period should be considered when assessing whether an entity has the power to govern financial and operating policies of another. The entities are consolidated from the date on which control was transferred to the Company and are no longer consolidated when the Company ceases to have control. Control is obtained when the entity has the power to govern the financial and operating policies of another entity to obtain the benefits of the entity activity. Final Draft/April 6, Paraf:

17 The consolidated financial statements have been prepared on the basis of entity concept. All significant related intercompany accounts, transactions and profits among the consolidated companies have been eliminated to reflect the financial position and result of operations as a whole entity. The changes in the Company s ownership interest in a subsidiary that do not result to a loss of control are accounted for as equity transactions and attributed to the owners of the parent. All major transactions and inter-company account balances (including significant unrealized gain or loss) have been eliminated. Non-controlling interest reflects the profit or loss and net assets of subsidiaries portion that are not attributable directly or indirectly to the parent entity, which is presented in the consolidated statements of comprehensive income and as equity in the consolidated statements of financial position, separated from portion which is attributable to parent. 2.d. Foreign Currency Transactions A foreign currency is a currency other than the functional currency. Transactions during the current year using foreign currencies were recorded at the spot rate prevailing on the transaction date. At the reporting date, transactions in foreign currencies were translated using the following closing rates: 1 United State Dollar (USD) 12,440 12,189 1 Euro (EUR) 15,133 16,821 1 Singapore Dollar (SGD) 9,422 9,628 1 Australian Dollar (AUD) 10,218 10,876 Gains and losses from foreign exchange differences arising from foreign currency transactions into Rupiah were charged to profit or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency shall be translated using the exchange rate at the date of transaction. Non-monetary items that are measured at fair value in a foreign currency shall be translated using the exchange rate when the fair value was determined. 2.e. Cash and Cash Equivalent Cash consist of cash on hand and in banks, are not used as collateral and not restricted. Cash equivalent consists of time deposits certificates with maturities of not more than or equal to three (3) months from the date of placement and are not restricted. 2.f. Transactions with Related Parties A related party is a person or entity that is related to the Company (referred to as the reporting entity ), which includes: a) A person or a close member of that person s family is related to a reporting entity if that person: (i) has control or joint control over the reporting entity; (ii) has significant influence over the reporting entity; (iii) is a member of the key management personnel of the reporting entity or of a parent of the reporting entity. b) An entity is related to the reporting entity if any of following conditions applies: (i) The entity and the reporting entity are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others); Final Draft/April 6, Paraf:

18 (ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member); (iii) Both entities are joint ventures of the same third party; (iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity. (v) The entity is a post-employment benefit plan for the benefit of employees of either the reporting entity or an entity related to the reporting entity. If the reporting entity is managing the plan, the sponsoring entity is also related to the reporting entity; (vi) The entity is controlled or jointly controlled by a person identified in (a); or (vii) A person identified in (a) (i) has significant influence over the entity or is a member of the key management personnel of the entity (or a parent of the entity). 2.g. Inventories Inventories are stated at the lower of cost or net realizable value. Cost is determined by the average method. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and selling cost. In determining obsolete inventory, the Group conducts a regular review of each unit individually significant inventory and when obtained reliable evidence, the Group will reduce the value of inventories to realizable value. 2.h. Prepaid Expenses Prepaid expenses are amortized over the period benefitted using straight line method. 2.i. Property and Equipment At initial recognition, property and equipment are measured at acquisition cost. After initial recognition, property and equipment except land are accounted for using the cost model which is carried at cost less accumulated depreciation and accumulated impairment losses. Land is not depreciated and carried at cost less accumulated impairment losses. Depreciation is computed by using the straight line method based on the estimated useful lives of the assets as follows: Years Building, Infrastructure and Renovations 4-20 Equipment and Medical Supplies 4-8 Furniture, Fixtures and Office Equipment 4-10 Vehicles 5 The cost of repairs and maintenance is charged to profit or loss as incurred while significant renovations and addition which add estimated useful life or future economic benefits are capitalized. When assets are retired or otherwise disposed of, the cost and the related accumulated depreciation and accumulated impairment loss, if any, are removed from the accounts and any resulting gains or losses are charged to operations for the relevant year. Accumulated construction costs of property and equipment are capitalized as "Construction in Progress " and recorded in "property and equipment" account until the construction process is completed. These costs are reclassified to property and equipment when the construction are completed. The carrying amount of property and equipment is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is credited or charged to operations in the year the asset is derecognized. Final Draft/April 6, Paraf:

19 Management has reviewed the estimated useful lives, depreciation methods and residual values of the propery and equipment, at each reporting year. Necessary adjustments made prospectively. 2.j. Leases The determination of whether an arrangement is a lease agreement or lease agreement containing the substance of the agreement based on the inception date and whether the fulfillment of the agreement depends on the use of an asset and the agreement provides a right to use the asset. Leases are classified as finance leases if the lease substantially transferred all the risks and benefits related to ownership of the asset. Leases are classified as operating leases if the lease did not substantially transfer all the risks and benefits related to ownership of the asset. Group as Lessee At the beginning of the lease term, the Group recognizes finance leases as assets and liabilities in the consolidated statements of financial position at fair value of the leased property or the present value of the minimum lease payments, if the present value is lower than the fair value. The valuation of a lease is determined at the initial contract. The discount rate used in calculating the present value of the minimum lease payments is the implicit interest rate of the lease, if practicable. If not, the discount rate used is the level of the lessee's incremental borrowing rate applied. Initial direct costs of the lessee are capitalized and recognized as an asset. Leased asset depreciation policy is consistent with the policy for the Group s own property and equipment. Under an operating lease, the Group recognizes lease payments as an expense on a straight-line basis over the lease term. Group as lessor The Group recognizes lease receivables in the consolidated statements of financial position as a net lease investment. Collection of leases are considered as payments of lease principal and finance lease income. Recognition of finance lease income is based on a pattern reflecting a constant periodic rate of return on the Group's net investment as lessor in a finance lease. The Group is required to present assets subject to operating leases in its consolidated statements of financial position according to the nature of the asset. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognized as an expense over the lease term on the same basis as operating rental income. Contingent rents, if any, are recognized as revenue in the periods in which they are earned. Lease income from operating leases is recognized as income on a straight-line basis over the lease term. Sale and Leaseback A sale and leaseback transaction involves the sale of an asset and leasing back the same asset. If a sale and leaseback transaction is a finance lease, any excess of sales proceeds over the carrying value is not immediately recognized as income in the consolidated financial statements of a seller (lessee) but is deferred and amortized over the lease period. If a sale and leaseback transaction is an operating lease, and it is clear that the transaction is established at fair value, any profit or loss is recognized immediately. If the sales price is below fair value, any profit or loss is recognized immediately except if the loss is compensated by future lease payments below market price where it is deferred and amortized in proportion to the lease payments over the period for which the asset is expected to be used. Final Draft/April 6, Paraf:

20 2.k. Impairment of Non-Financial Assets The recover amount of non-financial assets shall be estimated at the time of the events or changes in circumstances indicate that the carrying value may not be recoverable. An impairment loss is recognized in the current year. Impairment loss been recognized in prior periods is reversed if and only if, there is a change in the estimate used to determine the assets recoverable amount since the last impairment loss is recognized. If so, the carrying amount of the asset is increased to its recoverable amount. The increase is a reversal of an impairment loss. The carrying amount of assets increased due to the reversal of an impairment loss, should not exceed the carrying amount of the asset if no impairment loss for the previous period. 2.l. Business Combination The Group accounts for each business combination by applying the acquisition method, including measuring non-controlling interest. The consideration transferred for an acquisition is measured at the aggregate of the fair values of assets given-up, liabilities assumed and equity instruments issued by the Company. Acquisition-related costs are recognized in the profit or loss as incurred. The Group recognizes the identifiable assets acquired and liabilities taken over at their fair value on the acquisition date, except for the following: Deferred tax assets or liabilities that are related to assets acquired and liabilities taken over in business combination are recognized and measured in accordance with PSAK No. 46 (Revised 2010), Income Taxes. Liabilities (or assets, if any) related to employee benefit arrangements from the acquiree are recognized and measured in accordance with PSAK No. 24 (Revised 2010), Employee Benefits. Liabilities or equity instruments related to the replacement of an acquiree s share-based payment awards are measured in accordance with PSAK No. 53 (Revised 2010), Share-based Payment. Non-current assets (or disposal groups) acquired which are classified as held for sale are measured in accordance with PSAK No. 58 (Revised 2009), Non-current Assets Held for Sale and Discontinued Operations. 2.m. Intangible Assets Goodwill Goodwill arising in a business combination is recognized as an asset on the date that control is acquired. Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any noncontrolling interests in the acquiree, and the fair value of the acquirer s previously held equity interest in the acquiree over the net of the acquisition date amounts of the identifiable assets acquired and the liabilities taken over. Goodwill is not amortized but is reviewed for impairment at least annually or more frequently when there is an indication that the goodwill may be impaired. For the purpose of impairment testing, goodwill is allocated to each of the cash-generating units expected to benefit from the synergies of the combination. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit prorated on the basis of the carrying amount of each asset in the unit. An impairment loss is charged to the consolidated statements of comprehensive income for the current year. An impairment loss recognized for goodwill is not reversed in the subsequent year, whereas the negative goodwill that resulted from bargain purchases is recognized as gain in profit or loss. The gain is attributed to the acquirer. Final Draft/April 6, Paraf:

21 If goodwill has been allocated to a cash-generating unit and certain operations on the cash-generating unit is stopped, the goodwill associated with discontinued operations are included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill removed is measured based on the relative value of discontinued operations and share of the cash-generating unit retained. Cost of Software Software costs are initially recognized at cost or amounts attributable to the assets at the time of acquisition. Acquisition cost of accounting software is deferred and amortized using the straight line method based on the estimated economic useful life of five (5) years. 2.n. Employee Benefits Short-term employee benefits Short-term employee benefits are recognized as wages and salaries for rendered services to the Company during the accounting period. Post-employment Benefits The Group has a defined benefit pension plan without funding for all its permanent employees and have computed and recorded a provision for employee post-employment benefits in accordance with the Labour Law No. 13/2003 and PSAK No. 24 (Revised 2010), "Employee Benefits". Post-employment benefits are recognized at a discounted amount when the employees have rendered services to the company during the accounting period. Liabilities and expenses are measured using actuarial techniques which include constructive obligation that arises from the Group s common practices. In calculating such liabilities, the benefit must be discounted using the projected unit credit method. Past service cost is recognized in profit or loss when the benefit becomes vested and recognized as an expense using the straight-line method for the average period of vested benefit. Accumulated unrecognized actuarial gain (loss) that is more than 10% of the present value of defined benefit liabilities are amortized using the straight line method over the remaining projected average service period of employees in the programme. 2.o. Difference in Value between Entities Under Common Control Transactions business combination between entities under common control, such as transfers of assets, liabilities, shares or other ownership instruments by re-organizing entities within the same group, do not represent changes of ownership in terms of economic substance, and thus, should not result in a gain or loss for the group of companies as a whole or for the individual entity in the groups. Since transactions with entities under common control do not result in changes in term of economic substance of ownership in transferred assets, liabilities or other ownership instruments, the transferred assets or liabilities (in legal form) should be recorded at book value in a manner similar to business combination transactions using the pooling of interest method. The difference between transfer price and book value does not represent goodwill. Such difference is recorded in the account Difference in Value from Restructuring Transactions between Entities under Common Control and is presented in additional paid in capital as part of equity and can not be recognized as realized gain nor loss is reclassified to retained earning. 2.p. Revenue and Expense Recognition Revenue is recognized when medical services are rendered or when medical supplies are delivered to patients. Expenses are recognized when incurred. Final Draft/April 6, Paraf:

22 2.q. Income Tax Current income tax is calculated from taxable income, the earnings that have been adjusted to the appropriate tax rules. Amendments to taxation liabilities are recorded when an assessment is received or, if appealed against, when the results of the appeal are determined. Current tax assets and current tax liabilites are offset if, and only if, the entity: 1) has a legally enforceable right to set off the recognised amount; and 2) intends to settle in net basis, or realises and settles the asset and liability simultaneously. All temporary differences between the tax bases of assets and liabilities and their carrying value for financial reporting purposes are recognized as deferred tax using the balance sheet liability method. Currently or substantially enacted tax rates are used to determine deferred income tax. Deferred tax assets and deferred tax liabilites are offset if, and only if, the entity: 1) has a legally enforceable right to set off current tax asset against current tax liability; and 2) the deferred tax asset and the deferred tax liability relate to income taxes levied by the same tax authority on the same taxable entity. 2.r. Financial Instruments Financial Assets The Group classified its financial assets into four (4) categories, as follows (i) financial assets measured at fair value through profit or loss (FVTPL), (ii) loans and receivables, (iii) held-to-maturity financial assets (HTM financial assets) and (iv) available-for-sale financial assets (AFS financial assets). The classification depends on the purpose for which the financial assets were acquired. The management determines the classification of its financial assets at initial recognition. (i) Financial Assets at FVTPL Financial assets which are recognized as FVTPL are financial assets for trading. Assets are classified in this category when they are held principally for the purpose of selling or repurchasing in the near term and there is evidence of a recent actual pattern of short-term profit taking. Derivatives are classified as trading assets, except when designated and effective as hedging instruments At initial recognition, financial assets are measured at fair value through profit or loss are recognized at fair value. Transaction costs in connection with the acquisition are recognized in profit or loss for the year. The increase or decrease in fair value recognized in profit or loss subsequently. (ii) Loans and Receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are initially recognized at fair value plus transaction costs and are subsequently measured at amortized cost using the effective interest rate method. (iii) HTM Financial Assets HTM investments are non-derivative financial assets with fixed or determinable payments and fixed maturity that management has the positive intention and ability to hold to maturity, other than: a. Investments which from initial recognition, were designated as financial assets measured at FVTPL; b. Investments which are designated as available-for-sale; and c. Investments that meet the definition of loans and receivables. At initial recognition, HTM investments are recognized at fair value plus transaction costs and are subsequently measured at amortized cost using the effective interest rate method. Final Draft/April 6, Paraf:

23 (iv) AFS Financial Assets AFS financial asset are non-derivative financial assets that are held during a certain period with the intention for sale in order to fulfill liquidity needs, changes in interest rates or foreign exchange, or those that are not classified as loans and receivables, investments that are classified as held-to-maturity or financial assets at fair value through profit or loss. At initial recognition, available for sale financial assets are recognized at fair value plus transaction costs and subsequently measured at fair value with any gain or loss recognized as other comprehensive income, except for impairment loss and foreign exchange, until the derecognition of the financial assets. Financial Liabilities and Equity Instruments Classification as debt or equity Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual arrangements entered into and the definitions of financial liabilities and equity instruments. Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments are recorded as the proceeds received, net of direct issue costs. Share issuance costs are presented as part of equity under "Additional Paid-in Capital Net. Financial Liabilities Financial liabilities are classified into the categories of (i) financial liabilities measured at fair value through profit or loss (FVTPL) and (ii) financial liabilities measured at amortized cost. (i) Financial liabilities measured at FVTPL Financial liabilities at fair value through profit or loss are the financial liabilities that are designated for trading. Financial liabilities are classified for trading if acquired primarily for the purpose of selling or repurchasing in the near term and there is evidence of a pattern of short-term profit taking. Derivatives are classified as trading liabilities except those effectively designated as hedging instruments. At initial recognition, financial liabilities measured at amortized cost are recognized at fair value net of transaction costs and subsequently measured at amortized cost using the effective interest rate. (ii) Financial Liabilities Measured at Amortized Cost Financial liabilities not classified as financial liabilities at fair value through profit or loss are categorized and measured using amortized cost. At initial recognition, financial liabilities measured at amortized cost are recognized at fair value net of transaction costs and subsequently measured at amortized cost using the effective interest rate method. Impairment of Financial Assets Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the reporting date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted. For listed and unlisted equity investments classified as AFS, a significant or prolonged decline in the fair value of the equity investment below its cost is considered to be an objective evidence of impairment. Some objective evidence for impairment value are as follows: significant financial difficulty of the issuer or counterparty; or default or delinquency in interest or principal payments; or Final Draft/April 6, Paraf: