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value of Baht 25 per share, total amount of Baht 25 million from Mr. Thaweesak Hongthong who did not have any related business with the company. After that, Mr. Thaweesak Hongthong was appointed to be director of the company. In 1998, the company transferred the whole shares to Mr. Nutthawat for purpose of debt restructuring or replacement of Mr. Nutthawat's old securities and delivered share certificate in early 1998. Later on, the company acknowledged that those shares were recouped for third parties. Until December 31, 2000, the company was settled from Mr. Nattawat total amount of Baht 6.20 million (amount of Baht 4 million In 1998 and transferred asset to a trust company on behave of the company total amount Baht 2.2 million in 1999). Resulted the remaining of the debt with the company is Baht 18.80 million. More than a year that the company had demanded payment of the debt, thus the company has set allowance for doubtful account for the whole debt. Nevertheless, the company does not abandon to notify. In the past, the company has always followed up dept repayment. Until December 21, 2001, the Court has ordered this debtor in custodies according to bankruptcy act in 1940, section 27, case red no 1312/2001. The company has already requested to receive performance as 25th creditor to Official Receiver as appeared in Official Receiver's report, execution bankrupt division 1 on November 28, 2003. This debtor is subject to only Official Receiver and there was no limit of time or total amount of debt for debt repayment. 8. Policy of financial aids offering or related transactions with related parties for preventing burden of overdue liability, which could damage the company The related transactions which may cause the damage to the company mostly were occurred in the past by former board of committee which differ from present board of committee. Decision of the board to process the related transactions in the past were done on the basis of necessity and suitability at that time. Presently, board of committee has paid an extra attention to any occurring transactions or aids by asking for an approval from the audit committee every time related transaction is going to occur. In case of inexperienced audit committee, the company will send specialize such as auditor, assessor or law firm that work separately or people who may have confliction with the company to express opinions about that transaction. All opinions will be used in the decisions of board of committee or shareholder case by case. Issue 2 Investment in associated companies and other long term investments as on March 31, 2004 1. Capital in associated company Theparak Hospital Public Company Limited Theparak Hospital Public Company Limited is joint venture between the company and M-Thai Estate Co., Ltd. as the shareholders of 38.33% and 20% accordingly. Theparak Hospital Public Company Limited is not performing its business and held its construction. Anyway, Theparak Hospital Public Company Limited is not yet starting its operation and still held its construction to taken into consideration of continuing its operation. On June 21, 2002, Theparak Hospital Public Company Limited has paid whole dept that company has guaranteed amount of Baht 14.49 million. On June 28, 2002, the company sold 2.5 million Theparak Hospital Public Company Limited's shares. Resulting the company to hold 2,299,770 shares or 38.33% 2. Capital in associated company Khao Yai Spa Co., Ltd. Khao Yai Spa Co., Ltd. was founded to conduct its business in health centre. Paid up capital Baht 300 Million as the shareholders of 48%. Its office is 3 stories building which was constructing its 3rd floor. Presently, the construction is now held because its economic situation justified unfavourable. The company has invested in Khao Yai Spa Co., Ltd. and informed to The Stock Exchange of Thailand as follows: - On September 1995 Baht 96.00 Million - On December 1996 Baht 42.95 Million And in 1997, the company increased capital amount of Bath 5.05 million, total amount of Bath 144 million In 1995 the company's former executives has signed a contract to buy shares of Khao Yai Spa Co., Ltd. from last shareholder without approving the resolution of board of committee because former board of committee and executive completely differ from present board of committee. After interviewing persons who knew the subject, Khao Yai Spa Co., Ltd. is associated company and performing a health centre project in Khao Yai. It owns land and has been constructed 3 stories health centre building with 140 rooms. But the economic crisis in 1996, impacted financial institute, supporter of their credit for the construction, to be closed down. Thus, the construction must be held. This causes damage to the company until the company has to set allowance for impairment of whole investment. 3. Capital in associated company Sikrin Had Yai Hospital Co., Ltd. The company had been invested in Sikrin Had Yai hospital Co.,Ltd. until December 31, 1996 as follows. - On December 1994 Baht 120.00 Million - On December 1996 Baht 120.00 Million - On December 1997 Baht 72.00 Million Total Baht 312.00 Million Sikrin Had Yai hospital Co.,Ltd. used fore-mention increased capital in construction and operation of the company. The company acknowledged investment value using the equity method as total amount Bath 180.76 million as on March 31, 2004. At first, performance of associated was continuously loss, thus the company had set allowance for impairment of investment which improved trend of growth. The company has policy to adjust the investment value as appropriated. 4. Capital in associated company Surgitec co., Ltd. In 1995, former board of committee signed a contract with Bangkok Legal consultant Co., Ltd. to buy 156,000 Surgitec co., Ltd's shares which have a par value of Baht 225 per share. Former board of committee and executive completely differ from present board of committee. After interviewing persons who knew the subject, Surgitec co.,Ltd. is associated company that conduct its business in medical equipments and supplies which former board of committee considered a backward integration and will give good effect to the company. Thus, former board of committee decided to increase ratio of ownership in Surgitec Co., Ltd. But after the economic crisis and devaluation in 1997, Surgitec Co.,Ltd., importer of medical equipment and debtor of large amount of foreign currency could not follow up their business plan and leaded to damage. Presently, Surgitec Co., Ltd. decides to restructure the dept with financial institutes. The company has policy to closely testify the performance of Surgitec Co., Ltd. Presently, the company is shareholders of 141,495 Surgitec co., Ltd.'s shares or 40.43% 5. Capital in associated company Management Service Partner Co., Ltd. Management Service Partner Co., Ltd. registered on May 27, 1993. Conducted its business in food and beverage. Its mission is to serve food and beverage to Sikrin hospital, with its office located at No. 1748 Moo 1, Sukhumvit 78 Road, Samrong Nhou Sub-district, Muang Samutprakarn District, Samutprakarn Province. Paid up capital Baht 2 Million as the shareholders of 17.99% and will not change their ratio of ownership. Presently Management Service Partner Co., Ltd. is not performing its business. 6. Capital in associated company Kanjanaburi Memorial Hospital Co., Ltd. Kanjanaburi Memorial Hospital Co., Ltd, conducted it business in the private-sector hospital 100 beds facility, with its head office located at No. 111 Moo 5, Tharmakarm Sub-district, Muang Kanjanaburi District, Kanjanaburi Province. The registration capital is Baht 150 million as the shareholders of 6.67% and there will be no change in their ratio of ownership. Table shows ratio of investment in subsidiaries, associates and others Company Name Type of Business Paid Up Capital(Million Baht) Percent of ownership Associated companies - Theparak Hospital Public Company Hospital 60.00 38.33 Limited - Sikrin Had Yai Co., Ltd. Hospital 650.00 48.00 - Khao Yai Spa Co., Ltd. Health Center 300.00 48.00 - Surgitec Co., Ltd. Medical Tools and 35.00 40.43 Instruments Other Companies - Management Service Partner Co., Ltd. Food 2.0 17.99 - Kanjanaburi Memorial Co., Ltd. Hospital 150.0 6.67 Investment policy in subsidiary companies and associated companies In March 31, 2004 the company has invested in 4 associate companies which are Sikrin Had Yai Co., Ltd., Theparak Hospital Public Company Limited, Khao Yai Spa Co., Ltd. and Surgitec Co., Ltd. The company has a policy to send representative to take part in company's management according to company's ratio of ownership. The company has also invested in other 2 companies which are Kanjanaburi Memorial Co., Ltd. and Management Service Partner Co., Ltd. Beside of these investment, the company will not yet increase capital in any of subsidiaries, associates and others. Issue 3 Long Term Lease Agreement on March 31, 2004 . (A) Lease of land in front of hospital Objective : The company use that area for car parking to facilitate hospital occupancy Contract sign date : September 1, 2001 parties to the contract : person Relationship with parties to the contract : None Contract period : 9 Years Start and end of contract : September 1, 2001 August 1, 2010 Amount : Baht 5.184 Million (rent rate Baht 48,000 per month) Calculation of percent compared with total assets using value of compensation Total payment : Baht 5.184 Million % compared with total assets* : 0.72% *Total assets on second quarter in 2001 = Baht 717.32 million Description : % compared with total assets lower than 15% considered not to be acquisition or distribution of property. (B) Lease of land on side of hospital ( 4 contracts ) Objective : The company use that area for car parking to facilitate hospital occupancy Contract 1 Contract sign date : November 22, 2002 Parties to the contract : person Relationship with parties to the contract : None Contract Period : 10 Years Start and end of contract : November 22, 2002 November 21, 2007. Rent rate Baht 24,480 per month November 22, 2007 November 21, 2012. Rent rate Baht 28,560 per month Amount : Baht 3,182,400 Contract 2 Contract sign date : November 22, 2002 parties to the contract : person Relationship with parties to the contract : None Contract Period : 10 Years Start and end of contract : November 22, 2002 November 21, 2007. Rent rate Baht 24,000 per month November 22, 2007 November 21, 2012. Rent rate Baht 28,000 per month Amount : Baht 3,120,000 Contract 3 Contract sign date : November 22, 2002 parties to the contract : person Relationship with parties to the contract : None Contract Period : 10 Years Start and end of contract: November 22, 2002 November 21, 2007. Rent rate Baht 47,040 per month November 22, 2007 November 21, 2012. Rent rate Baht 54,880 per month Amount : Baht 6,115,200 Contract 4 Contract sign date : November 22, 2002 parties to the contract : person Relationship with parties to the contract : None Contract Period : 10 Years Start and end of contract : November 22, 2002 November 21, 2007. Rent rate Baht 48,000 per month November 22, 2007 November 21, 2012. Rent rate Baht 56,000 per month Amount : 6,240,000 Calculation of percent compared with total assets using value of compensation Total payment : Baht 18.65 Million % compared with total assets* : 3.01% *Total assets on third quarter in 2002 = Baht 618.59 million Description : % compared with total assets lower than 15% considered not to be acquisition or distribution of property. (C) Lease and service of office building ( 4 contracts ) Objective : Building Contract 1 Contract sign date : January 1, 2003. parties to the contract : Juristic person Relationship with parties to the contract : None Contract Period : 2 Years Start and end of contract : January 1, 2003 December 31, 2004. Amount : Baht 1.12 Million (Rent and Service rate Baht 46,650.00 per month) Contract 2 Contract sign date : February 1, 2003. parties to the contract : Juristic person Relationship with parties to the contract : None Contract Period : 2 Years Start and end of contract : February 1,2003 January 31, 2005. Amount : Baht 0.94 Million (Rent and Service rate Baht 39,450.00 per month) Contract 3 Contract sign date : April 1, 2003. parties to the contract : Juristic person Relationship with parties to the contract : None Contract Period : 2 Years Start and end of contract : April 1, 2003 March 31, 2005. Amount : Baht 0.36 Million (Rent and Service rate Baht 15,000.00 per month) Contract 4 Contract sign date : July 1, 2003. parties to the contract : Juristic person Relationship with parties to the contract : None Contract Period : 2 Years Start and end of contract : July 1, 2003 June 30, 2005. Amount : Baht 0.31 Million (Rent and Service rate Baht 13,000.00 per month) Calculation of percent compared with total assets using value of compensation Total payment : Baht 2.73 Million % compared with total assets* : 0.40 % *Total assets on second quarter in 2003 = Baht 680.74 million Description : % compared with total assets lower than 15% considered not to be acquisition or distribute. Issue 4 Issuance of secured debenture as value Baht 275 Million 4.1 list of debenture shareholder and ratio of their ownership as on June 30, 2004. Debenture shareholder Number of Share Percent of ownership 1. AJF Star Multiple Fund 160,000 58.18% 2. AJF Emerging Corporate Dept Fund 28,000 10.18% 3. AJF Emerging Corporate Dept Fund 2 22,000 8.00% 4. Ayudhya Sinmongkol Fund 65,000 23.64% Relationship between debenture shareholder and the company List of debentures in clause 4.1 which do not have any related business with the majority shareholders, directors and executives of Sikrin Public Company Limited. 4.2 Criteria of offering debentures to investors The Minutes of Extraordinary Meeting of Shareholders No. 1/2003 held on October 16, 2003, approved a resolution to issue and sell the secured debenture type of gradually capital refund using all of regulations, conditions and other details under determination of The Board of Directors and/or The Executive Committee and/or anyone that was assigned from The Board of Directors. On November 10, 2003, the company offered 275,000 debentures, with a face value of Baht 1,000 each, to institutional investors, total of Baht 275,000,000 with interest rate 6.5% which called "A secured debenture of Sikrin Public Company Limited, No. 1/2546, maturing in 2003" as specification of shareholders, unsubordinated, a secured and represented debenture shareholder, negotiable debenture. 4.3 Criteria of consideration of debenture's interest expenses rate Board of committee has considered trend of domestic's economy status that rate of interest is likely to go up. In September, 2003, domestic bank's average rate of interest was 5.50-9.75% per year. Thus, advantage of issuance of debenture amount of Baht 275 million with fixed rate 6.5% per year within 10 years period could not be compared with only Baht 18 million credit of a bank with 2-year special interest rate. Additionally, in that period, there were no financial institutes who will authorize preferably large amount of credit. Thus, company had to seriously negotiated the conditions and interest of debentures issuance to the maximized advantages of the company as followed 4.3.1 Changing of interest rate from flexible exchange rate into fixed rate will reduce risk from future alteration of interest rate. Resulted the company to firmly and exactly manage the expenses, efficiently plan the business and stabilized long-term expenses. 4.3.2 Debenture with 2-year period without settlement (2004-2005). In that period, company planed to extend the business of Sikrin Hospital and Rattarin Hospital as followed - Construction of additional facilities - Improving of Emergency room complex (Thrauma Center) - Nursing center and clinic network This will partly release company's financial burden and enable the company to efficiently manage current capital. 4.3.3 The company will use money earned by debenture selling to settle for loan and make more profit to the company which are 1) Debt repayment to a bank amount of Baht 164.29 million with interest rate MLR+0.5 % to reduce risk of failure of payment which will caused the company to pay the whole sum without discount on interest rate. 2) Settlement of rent of medical equipments which has restructured the dept amount of Baht 75.30 million and pay advancement in 2004 amount of Baht 76.54 million, total amount of Baht 151.84 million, with settlement overdue Baht 105 million. issue 5 Accounting issue As auditor expressed comment to company's financial statement of year 2003 with condition about associated company's financial statements which are Sikrin Had Yai Hospital Co., Ltd. and Surgitec Co., Ltd. that they provided information with no auditing from the auditor. The company would like to notify that present board of committee has been continuously assigned policies to improve supervision of associated companies' accounting procedure. Since that associated companies, although has been finished their annual financial statements, but yet the delay in their auditing procedure cause by terms of both associated company, which are private companies, that allow the lateness of all report after their revelation of registered company's information. Thus, auditor has been expressed the opinion with condition, in case of Khao Yai Spa Co., Ltd. that is held its construction because of economic crisis since 1997. Resulted no displacement in balance sheet and performance. Thus, present board of committee has assigned legal sector and accounting sector of the company to urgent Khao Yai Spa Co., Ltd. to completely finish and correct its financial statement. As fore-mentioned, the company will use measure urgency with the associated companies to manage to complete their financial statement which audited by the auditor. Thus, reflex real financial status of the companies since 2005. Please notify the shareholders and investors as deemed necessary. 19