HEALTHWAY MEDIC AL - Morningstar, Inc.

Annual Report 2011

HealtHway MedicAlDiscover Better Care

Corporate Profile 04

Chairman’s Message 08

Operations Review 10

Board of Directors 12

Senior Management 13

Corporate Information 14

Group Structure 15

Report on Corporate Governance 17

Directors’ Report 30

Statement by Directors 33

Independent Auditors’ Report 34

Statements of Financial Position 36

Consolidated Income Statement 37

Consolidated Statement of Comprehensive Income 38

Consolidated Statement of Changes in Equity 39

Consolidated Statement of Cash Flows 41

Notes to the Financial Statements 43

Shareholding Statistics 93

Notice of Annual General Meeting 95

Proxy Form

Contents

Healthway’s specialist medical practice groups are well-known medical establishments in Singapore

This annual report has been prepared by the Company and its contents have been reviewed by the Company’s sponsor, PrimePartners Corporate Finance Pte. Ltd. (the “Sponsor”), for compliance with the relevant rules of the Singapore Exchange Securities Trading Limited (the “SGX-ST”). The Sponsor has not independently verified the contents of this annual report.

This annual report has not been examined or approved by the SGX-ST and the SGX-ST assumes no responsibility for the contents of this annual report, including the correctness of any of the statements or opinions made or reports contained in this annual report.

The contact person for the Sponsor is Mr Mark Liew, Managing Director, Corporate Finance, at 20 Cecil Street, #21-02 Equity Plaza, Singapore 049705, telephone (65) 6229 8088.

Corporate profile

HeAlTHWAY MedicAl cORPORATiON liMiTed4

Healthway Medical Corporation Limited (“Healthway Medical” or the “Group”) is a leading private healthcare provider with the largest network of medical centres and clinics in Singapore and a fast developing network in Shanghai, China. The Group has a strong presence in these cities, owning, operating and managing over 100 medical centres and clinics which are easily accessible and located in the communities.

Our patients can discover better medical care from a wide selection of family medicine clinics which are easily accessible from where they are located, and also from across a comprehensive range of specialist disciplines like paediatrics, orthopaedics, dental surgery, sports medicine, aesthetics, ophthalmology, ear, nose & throat, child development, psychological wellness, cardiology, general surgery, specialist dentistry, plastic surgery, obstetrics and gynaecology.

Since inception in 1990, Healthway Medical has stayed committed to providing care that is accessible, affordable and with positive outcomes to our patients.

Primary Healthcare Division in Singapore

This division forms one of the largest primary healthcare group in Singapore in terms of number of clinics and delivers high quality outpatient medical services to both private individuals and a large corporate clientele base.

Healthway Medical General Practitioner (GP) and Dental clinics are glad to participate in the Community Health Assist Scheme (CHAS), supported by the Ministry of Health. As Healthway Medical Group has over 50 GP clinics and dental clinics island wide, we believe that being one of the largest network of private clinics in Singapore, we are able to provide convenience to Singaporeans on the CHAS with medical care near their homes.

Corporate profile

ANNUAl RePORT 2011 5

Family Medicine

Our growing chain of family medicine and dental clinics are conveniently located either near the train stations or major housing estates, thus providing high quality, accessible and affordable healthcare to our patients.

Patients recognise our dedication to consistently offer the highest quality healthcare and this has contributed primarily to the steady growth of our family medicine practice groups; comprising established chains such as Healthway and Silver Cross.

Services at our family medicine clinics include general medical consultations, management of chronic medical conditions, health screening and preventive medicine. With a full range of medical and diagnostic services, we are able to meet most medical needs of our patients.

Dentistry

This group provides a wide range of general and specialist dental services throughout Singapore, through its subsidiary dental groups namely Aaron Dental, Universal Dental, Popular Dental and NeuGlow Dental.

These dental services include general dentistry, restorative dentistry and cosmetic dentistry.

Healthcare Benefits Management

Corporate healthcare and healthcare benefits management provides many opportunities for growth. Our Healthcare Benefits Management leverages on the strengths of our network of more than 450 affiliated clinics and in-house IT modules to offer the most appropriate solutions for our clients. In today’s challenging environment, this service has benefited many of our clients which include several large corporations and insurers.

Specialist and Wellness Division in Singapore

Our Specialist and Wellness Division has a comprehensive range of specialist services. The scope covers speciality and wellness care in the fields of paediatrics, orthopaedics, general surgery, plastic surgery, cardiology, psychiatry, child development, sports medicine,

ophthalmology, ear, nose & throat, medical aesthetics and obstetrics & gynaecology.

Paediatrics

Healthway Medical has grown into one of the largest provider of paediatric medical services in Singapore, comprising leading paediatric groups namely Thomson Paediatric Clinic and SBCC Baby & Child Clinic (formerly Singapore Baby & Child Clinic) in our stable. We are able to provide greater convenience to parents and our young patients at clinics located ideally within major private hospitals and major residential estates.

Orthopaedics

Island Orthopaedic Group has a strong reputation in the orthopaedic and sports medicine fields. Our surgeons provide quality specialist orthopaedic and trauma care as well as a comprehensive range of orthopaedic sub-specialty services such as complex spine surgery, sports constructive surgery, adult reconstructive surgery and minimally invasive surgery.

Child Development

At Healthway Medical, we believe that it is important to start off with good healthcare from an early age. We are pleased to offer complete and comprehensive assessment for paediatric neurology, including specialised evaluations and interventions for children with special developmental needs, at our Child Development Centre.

Medical Aesthetics and Plastic Surgery

NeuGlow is the Group’s medical aesthetics and plastic surgery group, offering clinically proven treatment procedures to provide personalised care. We believe in a team approach so that our team of doctors and sub-specialists can offer the best answers for even very complex problems. Our team includes trained aesthetic physicians and plastic surgeon who can provide our patients in Singapore and from the region with the solutions to make them look and feel better.

Division under Management

Besides some of the clinics in the Family Medicine, Dentistry, and Wellness Division, we

Corporate profile


also operate and manage specialists clinics in several disciplines: cardiology, ear, nose & throat, ophthalmology, chest & internal medicine, general surgery, specialist dentistry, psychiatry, sports medicine, and obstetrics & gynaecology.

Cardiology

At Nobel Heart Centre, our cardiologists aim to provide excellent quality, holistic, cost effective cardiovascular disease prevention, diagnosis and treatment to our patients.

We are equipped to provide a full spectrum of cardiology services including routine outpatient modalities like treadmill exercise stress test, 2-dimensional echocardiography, 24-hour ambulatory blood pressure monitoring, as well as various forms of stress echocardiography.

Ear, Nose & Throat, Head & Neck and Thyroid

Nobel Ear, Nose & Throat, Head & Neck and Thyroid Surgery Centre, located within Mount Alvernia Hospital and our Healthway Medical and Specialist Centre @ TripleOne Somerset, is fully committed to providing patient-centric services. Our diagnostic equipment and therapeutic equipment fully equip us to handle and treat the full range of all common ear, nose & throat and head & neck conditions in patients of all ages, including complex head and neck surgeries. It is also fully equipped to provide sleep studies and allergy testing.

Ophthalmology

Nobel Eye & Vision Centre is committed to provide high quality specialist eye services through rigorous processes that ensure high levels of safety and excellent outcomes. Our centre is centrally located at Mount Alvernia Medical Centre and our Healthway Medical and Specialist Centre @ TripleOne Somerset, with a satellite screening centre at Novena Medical Centre.

Chest & Internal Medicine

Nobel Chest & Internal Medicine Centre aims to provide excellent and holistic service to our patients in the prevention, diagnosis, investigation and treatment of respiratory and general medical conditions.

Our centre at Mount Alvernia Medical Centre provides a wide range of respiratory services by a dedicated and experienced team of doctors, nurses and technicians.

General Surgery

Nobel Surgery Centre provides a wide range of surgical services including gastrointestinal, laparoscopic and colorectal surgery. It is conveniently situated at Gleneagles and Mount Alvernia Medical Centre to deliver accessible and affordable general surgery services.

Specialist Dentistry

The Group’s specialist dentistry service offers care in aesthetic dentistry like crowns and bridges, veneers, whitening; as well as prosthodontic dentistry covering services like implants.

Psychological Wellness

The Group’s specialist field of psychiatry enhances the services under our Specialist and Wellness Division.

Our two psychological wellness clinics, located at Novena Medical Centre and within a major housing community in Ang Mo Kio, are set in environments optimally conducive as a highly comforting and receptive setting to bring care and relief in mental health.

Obstetrics & Gynaecology

Our SBCC Women’s Clinic was newly-established in 2011 to bring first-class and personalised medical care, catered to the wellness of women of all ages, providing a comprehensive range of services which include general gynaecology services, general obstetrics care, well-women screening packages, antenatal/pregnancy packages and pre-marital screening packages.

The clinics are located in prime residential estates in Clementi and Ang Mo Kio, to deliver premier, holistic care at your convenience. Our team of dedicated specialists and nurses, together with the latest medical technology, provide the most advanced medical care at reasonable prices.

Corporate profile


China

The Group is actively developing opportunities to bring our integrated, multi-disciplinary care to the China market. Healthway Medical manages and operates a network of 10 medical and dental centres in Shanghai and Hangzhou.

Healthway Nobel Hospital in Puxi, Shanghai, provides eye, ear, nose & throat and dental specialist services. Our medical centres are Healthway International Medical Centre in Pudong, Shanghai, which provides family medicine, dentistry, paediatrics, gynaecology and medical aesthetics, and Healthway NeuGlow Medical Centre in Lujiazui as the flagship for Shanghai with services in dentistry, health screening, family medicine, wellness, dermatology and aesthetics.

Our network of 7 dental centres are well located and mainly in the inner districts of Shanghai, namely, Jingan, Huangpu, Luwan, Putuo, Pudong, and Minhang, and also in Hangzhou. These clinics cater to a wide range of patients, both the local residents and expatriates.

We will continue to build our presence in China, by progressively offering a more comprehensive range of medical specialties and services, with the goal of becoming a prominent provider of healthcare services in Shanghai, China.

Chairman’s message


Dear Fellow Shareholders,

On behalf of the board of directors (the “Board”), I am pleased to present to you the annual report of Healthway Medical Corporation Limited (the “Company” and together with its subsidiaries, the “Group”) for the financial year ended 31 December 2011 (“FY2011”).

For FY2011, the Group’s revenue was S$78.2 million, 9.6% lower as compared to FY2010. The lower revenue for the year is a result of the divestment of the Group’s low income generating clinics. Steps are taken to grow our clinics revenues, manage our costs through improvement of processes, reducing wastages and various programs that would generate productivity gains. These efforts are starting to show positive outcomes.

The Group reported a net loss for FY2011 of S$63.1 million as compared to net profit of S$2.8 million for FY2010. This is mainly due to the combination of a one-time write-off of S$58.4 million on goodwill and deferment of S$7.1 million income earned in the current year, which for prudence consideration, will be recognised when collected. Excluding these prudent adjustments, the net profit for the year would have amounted to S$2.4 million. The one-time goodwill write-off has no impact on our on-going services to care for our clients and patients.

Growth in Singapore: Expanding our clinic network

and deepening our specialist division

In FY2011 we manage and operate 15 new clinics and medical centres in Singapore. The services include family medicine, screening and wellness, dental, sports medicine and Japanese medical services.

We also added to the Group, an obstetrics and gynaecology medical practice, SBCC Women’s Clinic (an affiliated brand to our SBCC Baby & Child Clinic). 2 O&G clinics were established,

and these clinics, which are managed and operated by us under the management services agreement, provide a comprehensive range of services catered to females of all ages, which include general gynaecology services, general obstetrics care, well-women screening packages, antenatal/pregnancy packages and pre-marital screening packages.

We aim to offer a range of specialist medical services so that we can better serve our clients and patients. We seek to provide a one-stop care for their medical needs. We have been able to attract new clientele bases from international clients, international insurance companies and at the same time increase our number of corporate customers.

We expect demand for primary care and specialist services in Singapore to grow as a result of strong demographics, competitive pricing, favourable Medisave policy changes, increased insurance coverage of the local population and more government initiatives such as baby bonus and Community Health Assist Scheme.

China: Expanding our network of medical centres

in the community

In the second half of FY2011, we manage and operate the Neuglow Medical Centre in Luijiazui, the financial hub in Shanghai, China, providing dentistry, health screening, family medicine, wellness, dermatology, and aesthetics services. Currently, we manage and operate a total of 10 medical centres and dental centres in Shanghai and Hangzhou. Our move is driven by our belief that bringing accessible, affordable and high quality healthcare to the local communities where our medical and dental centres are.

As most of the medical centres and dental centres were opened in later part of FY2010, these medical centres had not contributed to the

Chairman’s message


Group’s profit in FY2011. With the strong growth in private consumption in China, we expect to benefit from the expansion in private healthcare in the near future. Our on-going efforts are directed at improving our delivery of care at these centres.

Going forward

Despite the weaker global economic growth and as a consequence slower growth in Singapore, the Group expects to benefit from a steady demand for quality healthcare services from our existing and expanding patient base. To meet the expanding client and patient base, we will continue to improve the standard and scope of our medical care.

We will focus on patients care and also work on improving the performance and returns on our network. Improving returns would be achieved through working with our medical professionals and clinical staff, developing clientele channels, improving delivery of care to our patients and collaborative programs with clients.

We will build on our existing presence in Singapore and Shanghai. These are important hubs for our expanding healthcare networks for this region and China. Over time, we aim to steadily grow our medical centres in these regions.

The priority and attention is to improve our current performance of our existing network. While this is on-going, we will seek out new opportunities that can further strengthen our ability to serve our patient well and a further uplift that could transform us into a quality Asian healthcare provider.

Foremost at the very core of our business, we will always put patient’s care as priority.

Appreciation to the Healthway Team

I would again like to express my deep and sincere gratitude to all our doctors and medical team for their strong work ethic and tireless commitment in helping our patients. I would also like to welcome our new colleagues who have joined the Group during FY2011. I encourage every one of you to believe that you can make a difference in the lives of your patients, by working together as a closely knit team, so as to continually deliver high quality medical care to each one of them.

We express our deep sorrow with the loss of our late Independent Director, Mr Arthur Ouellette on his demise. Mr Ouellette had made invaluable contributions to the Group, and we would like to record our appreciation of his services. We also thank Mr Png Paak Liang, Ivan who resigned from the Board due to an overseas sabbatical leave.

I am most grateful and thank my fellow directors for committing their time and sharing from their vast reservoir of experience, to guide me and our senior management team throughout the past years.

On behalf of the Board, I wish to thank all our patients, bankers, business partners and shareholders for supporting the Group as we journey to make high quality, affordable healthcare accessible to even more people.

Mr Fan Kow Hin

Executive Chairman

operations review


OPERATIONS REVIEW

The demand for private healthcare services will continue to grow in Asia with growing affluence, ageing population and increasing preference for personalised and easily accessible private healthcare. Manpower shortage and cost inflation remain as our key challenges. The Group will continue to improve the effectiveness and efficiency of our operations to sharpen our competitive edge.

We remain committed to provide affordable, accessible and high quality integrated healthcare services through reasonable pricing, convenient locations, new service offerings and good service delivery to strengthen our patient advocacy and customer loyalty. We have been successful in securing key government and corporate contracts and will continue to maintain our existing clientele whilst developing new corporate clients and individual patients.

To strengthen our market position and drive growth, the Group plans to continue to expand our clinic network and offer seamless integrated healthcare across a comprehensive range of primary care, health screening, dental, medical aesthetics and specialist services.

PRIMARY HEALTHCARE DIVISIONOverview

In FY2011, the Primary Healthcare Division accounted for 67.2% of Group’s revenue, compared to 57.2% in FY2010.

Our General Practitioner (GP) and dental clinics are strategically located at prominent areas with high traffic flow, prominent visibility and easy accessibility by both private and public transport. The Group will continue to focus on providing healthcare services that are both personalised and of high quality and to identify suitable sites to expand our clinic network. Our large network of primary care clinics provides an important referral channel for our specialist services.

There is a constant effort to streamline operating procedures and improve efficiency so that costs

to our patients are carefully contained so as to maintain affordability with no compromise on the standard of care. Information technology is being employed to provide better service through more efficient handling of patient data, a more efficient billing process and to improve our inventory management. In addition, clinic upgrading programs were undertaken to improve and standardise the appearance of selected clinics so as to provide our patients a better customer experience whenever they visit any of our clinics.

With the changes in demography in Singapore such as ageing population and increasing immigrants, the demand for family medicine is set to increase. In FY2011, we have opened 3 new GP clinics within various housing estates. During the year, we also saw the opening of our Healthway Japanese Medical Centre, Healthway Screening & Wellness Centre, Healthway Diagnostic Centre and Healthway International Medical Centre at our Healthway Medical & Specialist Centre @ TripleOne Somerset.

Health screening continues to be a growing sector as the public is becoming more aware of the need for preventive care. Hence the Group’s focus will be on preventive care, chronic disease management and health screening programs for both our private and corporate patients.

SPECIALIST AND WELLNESS DIVISIONOverview

The Specialist and Wellness Division accounted for 32.8% of Group’s revenue in FY2011, compared to 42.8% in FY2010.

The Group provides comprehensive and accessible specialist healthcare to our patients, covering a comprehensive range of medical and surgical specialties in many accessible locations and within major private hospitals in Singapore.

In FY2011, 5 new specialist clinics were opened at our Healthway Medical & Specialist Centre @ TripleOne Somerset. They are namely, Nobel Colorectal & General Surgery Centre, Nobel

operations review


ENT and Head & Neck Surgery Centre, Nobel Eye Centre, SportsMed Central and Nobel Endoscopy Centre. This allows us to extend our specialist service footprint to serve more patients in a central location and to strengthen our Nobel brand as a multi-disciplinary specialist arm.

Our medical aesthetic practice group provides aesthetic and wellness solutions focusing on enhancing facial features, improving skin condition and other well-being issues such as hair loss. We have also recently opened a NeuGlow S & Health Retail Store at TripleOne Somerset to further add on to our NeuGlow brand name to cater to our growing clientele base.

The Group believes that with better informed customers, higher disposable incomes and improved technology, our Specialist and Wellness Division is poised for significant growth in the coming years.

CHINA Overview

The China market is a significant part of the Group’s future growth plan. To-date, the Group manages and operates a total of 10 medical and dental centres in Shanghai and Hangzhou which are beginning to show positive revenue growth. The Group aims to build a network based on a distributed cluster of medical expertise in Shanghai and Hangzhou, then expanding it to other major cities in the Yangtze Delta.

The Group will continue to explore investments in healthcare institutions, such as specialist hospitals, multi-specialist hospitals, multi-specialist medical centres and screening centres, to offer access to high quality healthcare in underserved areas of China.

Board of direCtors


Mr Fan Kow Hin Executive Chairman

Mr Fan was appointed as the Executive Chairman on 16 May 2007 and was last re-elected on 29 April 2011.

Mr Fan is responsible for steering the strategic direction of the Group and providing leadership to the Board so as to achieve more effective performance.

Mr Fan holds a Bachelor of Commerce & Administration from the University of Wellington, New Zealand.

Mr Lam Pin WoonPresident & Executive Director

Mr Lam was appointed as the Executive Director on 1 January 2011 and was last re-elected on 29 April 2011.

Mr Lam is responsible for the overall performance and sustainable growth of the Group.

Prior to joining the Group, Mr Lam was the Chief Executive Officer of the Health Promotion Board (“HPB”). Before joining HPB, Mr Lam held senior positions in several multi-national companies such as Cerebos Pacific Limited, Quaker Oats Asia Inc and F&N Coca-Cola Pte Ltd. He brings with him good business development experience and networks across the Asia Pacific markets including China.

Mr Lam holds a Bachelor of Science (Pharmacy)(Honours) from the National University of Singapore and a Master of Business Administration from the Georgia State University, USA.

Dr Jong Hee SenNon-Executive & Non-Independent Director

Prior to Dr Jong’s appointment as a Non-Executive and Non-Independent Director, he was the Executive Director of the Group from May 2007 to August 2011. He was last re-elected as a Director on 26 April 2010.

Dr Jong holds a Doctor of Philosophy in Business Administration and a Master of Science

(Psychology) from the University of Michigan, Ann Arbor, USA. He has a Master of Business Administration from the University of Wisconsin, Madison, USA and a Bachelor of Science from the National University of Singapore.

Mr Siew Teng KeanIndependent Director

Mr Siew has served on the Board since April 2008 and was last re-elected on 26 April 2010. From 1998 to 2006, Mr Siew was with Temasek Holdings (Private) Limited in private equity and funds investments where he was appointed Managing Director from 2002.

After leaving Temasek Holdings (Private) Limited, Mr Siew joined UOB Asset Management Ltd as Senior Director, Head of Business Development for Alternative Investments and in 2007, was appointed as Senior Director, Head of Institutional Business.

Mr Siew holds a Master’s degree in Computer Science & Engineering from the University of Michigan, Ann Arbor, USA, a Master degree in Science from the National University of Singapore, and a Bachelor’s degree in Electrical Engineering from the University of Adelaide, Australia.

Ms Kuek Chiew HiaIndependent Director

Ms Kuek has served on the Board since April 2008 and was last re-elected on 29 April 2009. She has extensive experience in the area of human resources with multi-national corporations, publicly-listed and private companies.

Ms Kuek was the Human Resource Director (Asia Pacific) of Avid Technology Inc. from 1997 to 1998. She joined Citibank N.A. in 1998 as its Human Resource Director (Asia Pacific Operations & Technology) and later moved to Standard Chartered Bank as its Global Head of Organisation Effectiveness (Wholesale Bank). From 2005 to 2007, Ms Kuek was Group Human Resource Director of Asia Pacific Breweries Ltd.

Ms Kuek holds a Bachelor’s degree in Business Administration (Distinction) from the Royal Melbourne Institute of Technology.

senior management


Top row (From left to right):

Mr Kyaw Kyaw Thein (Head of Systems and Business Process Improvement)

Ms Catherine Quek (General Manager of Wellness Division and Corporate

Communication & Marketing Services)

Ms Veronica Chan (General Manager of Healthway China)

Ms Myra Teo (Head of Adult Specialities, Specialist Division)

Ms Cynthia Tjong (Head of Women & Children Specialities, Specialist Division)

Ms Michelle Tan (Head of Dental Division)

Dr Noel Yeo (Head of Healthway Mobile and Recruitment, Primary Care

Division)

Bottom row (From left to right):

Ms Angeleca Lim (Financial Controller)

Ms Adeline Hwee (General Manager, Corporate Finance)

Mr Lam Pin Woon (President & Executive Director)

Dr Koh Eng Hoe (Head of Medical Affairs, Primary Care Division)

Corporate information


BOARD OF DIRECTORSFan Kow Hin (Executive Chairman)Lam Pin Woon (President and Executive Director)Dr Jong Hee Sen (Non-Executive and Non-Independent Director)Siew Teng Kean (Independent Director)Kuek Chiew Hia (Independent Director)

AUDIT COMMITTEESiew Teng Kean Kuek Chiew Hia

EXECUTIVE COMMITTEEFan Kow Hin (Chairman)Siew Teng Kean Lam Pin WoonDr Jong Hee Sen

NOMINATING COMMITTEESiew Teng Kean (Chairman)Fan Kow Hin

REMUNERATION COMMITTEESiew Teng Kean (Chairman)Kuek Chiew HiaDr Jong Hee Sen

COMPANY SECRETARIESWee Woon HongLee Hock Heng

REGISTERED OFFICE2 Leng Kee Road#06-07 Thye Hong CentreSingapore 159086Telephone: (65) 6323 4415 / 6323 4416Facsimile: (65) 6479 5347www.healthwaymedical.com

SHARE REGISTRARBoardroom & Corporate & Advisory Services Pte. Ltd.50 Raffles Place#32-01 Singapore Land TowerSingapore 048623Tel: (65) 6536 5355

SPONSORPrimePartners Corporate Finance Pte. Ltd.20 Cecil Street#21-02 Equity PlazaSingapore 049705

AUDITORSKPMG LLPCertified Public Accountants16 Raffles Quay#22-00 Hong Leong BuildingSingapore 048581Partner-in-charge: Barry LeeAppointment since FY2008

PRINCIPAL BANKERSDBS Bank Ltd6 Shenton WayDBS Building Tower OneSingapore 068809

Citibank N.A.3 Temasek Avenue #10-01 Centennial TowerSingapore 039190

Maybank2 Battery RoadMaybank TowerSingapore 049907

Standard Chartered Bank6 Battery RoadSingapore 049909

United Overseas Bank Limited 80 Raffles Place UOB PlazaSingapore 048624

our group struCtureas at report date


100%

100% 100% 100%

100% 100%

100% 100%

100% 100%

100% 100%

100% 100%

100% 100%

100% 100%

100% 100%

100% 100%

100% 100%

100% 99.9%

100%

100%

100%

100% 100% 25%100%China

Healthway HMG Unimedic Vista HMD*

UniversalDentalcareSC 21Crane

Medical

Universal(Braddell)SC 24hrs

Kang Wei(Shanghai)

Universal(Woodlands)SC ACKang Hong

HW DentalSC Medical

Popular(Woodlands)

Picton

100%

100%

100%

100%

NeuGlow Medical Resorts

(Chengdu)

HW Medical Centre

(KLCC)

HW ShanghaiMedical Village

Golden Summit

100%

100%

HW MedicalAssets

AaronDentalcare

Aaron Seow

Aaron CTP

IOC

IOCH

CLAAS

BCNG

Peace Family(AMK)

SBCC Clinic

SBCC S&T

SC North

Peace Family(Anchorvale)

Peace Family(Sembawang)

ThomsonPaediatric

SC Healthcare SBCC Women& Child

100%ChinaUnimedic

Healthway Medical Corporation Limited

* Only direct Subsidiaries of HMD are disclosed

group struCture definitions


“Aaron CTP” : Aaron CTP Dental Surgery Pte. Ltd.

“Aaron Dentalcare” : Aaron Dentalcare Pte. Ltd.

“Aaron Seow” : Aaron Seow International Pte Ltd

“BCNG” : BCNG Holdings Pte. Ltd.

“China Healthway” : China Healthway Pte. Ltd.

“China Unimedic” : China Unimedic Pte. Ltd.

“CLAAS” : CLAAS Medical Centre Pte. Ltd.

“Golden Summit” : Golden Summit Development Pte. Ltd.

“HW Dental” :Healthway Dental Pte. Ltd. [formerly known as Popular Dental (CCK) Pte. Ltd.]

“HW Shanghai Medical Village” : Healthway Shanghai Medical Village Pte. Ltd.

“HW Medical Assets” : Healthway Medical Assets Pte. Ltd.

“HMD” : Healthway Medical Development (Private) Limited

“HMG” : Healthway Medical Group Pte Ltd

“IOC” : Island Orthopaedic Consultants Pte Ltd

“IOCH” : Island Orthopaedic Consultants Holdings Pte. Ltd.

“Kang Wei (Shanghai)” : Kang Wei Investment Consultancy (Shanghai) Co., Ltd

“Kang Hong” : Kang Hong (Shanghai) Medical Equipment Lease Co., Ltd

“NeuGlow Medical Resorts (Chengdu)” : NeuGlow Medical Resorts (Chengdu) Private Limited

“Peace Family (AMK)” : Peace Family Clinic and Surgery (AMK) Pte. Ltd.

“Peace Family (Anchorvale)” : Peace Family Clinic and Surgery (Anchorvale) Pte. Ltd.

“Peace Family (Sembawang)” : Peace Family Clinic and Surgery (Sembawang) Pte. Ltd.

“Picton” : Picton Medical Centre Pte. Ltd.

“Popular (Woodlands)” : Popular Dental (Woodlands) Pte. Ltd.

“SBCC Clinic” : SBCC Clinic Pte Ltd

“SBCC S&T” : SBCC Services & Trading Pte Ltd

“SBCC Women & Child” : SBCC Women & Child Hospital Pte. Ltd.

“SC 21” : Silver Cross 21 Pte. Ltd.

“SC 24hrs” : Silver Cross 24hrs Pte Ltd

“SC AC” : Silver Cross AC Pte. Ltd.

“SC Healthcare” : Silver Cross Healthcare Pte Ltd

“SC Medical” : Silver Cross Medical Centre Pte Ltd

“SC North” : Silver Cross North Pte Ltd

“Thomson Paediatric” : Thomson Paediatric Clinic Pte Ltd

“Unimedic” : Unimedic Pte. Ltd.

“Universal Dentalcare” : Universal Dentalcare Pte Ltd

“Universal (Braddell)” : Universal Dental Group (Braddell) Pte. Ltd.

“Universal (Woodlands)” : Universal Dental Group (Woodlands) Pte. Ltd.

“Vista” : Vista Medicare Pte. Ltd.

RepoRt on CoRpoRate GoveRnanCe

ANNUAL REPORT 2011 17

The Board of Directors (the “Board” or the “Directors”) of Healthway Medical Corporation Limited (“HMC” or the “Company” and together with its subsidiaries, the “Group”) is committed to maintaining a high standard of corporate governance to ensure greater transparency and to protect the interests of the Company’s shareholders (the “Shareholders”).

The Company has put in place various policies and practices that will safeguard the interests of Shareholders and enhance Shareholders’ value as part of its effort to maintain high standards of corporate governance. This report describes the corporate governance practices and procedures adopted by the Company with specific reference to the Code of Corporate Governance 2005 (the “Code”) prescribed by the Singapore Exchange Securities Trading Limited (the “SGX-ST”). References to the principles of the Code are listed below. The Company has complied with the principles of the Code where appropriate.

Principle 1: The Board’s Conduct of its Affairs

The Company is headed by an effective Board to lead and control the Company.

As at the date of this report, the Board comprises the following members:-

Fan Kow Hin (Executive Chairman)Lam Pin Woon (President and Executive Director)Dr Jong Hee Sen (Non-Executive and Non-Independent Director)Siew Teng Kean (Independent Director)Kuek Chiew Hia (Independent Director)

The Board is entrusted with the responsibility for the overall management of the business and corporate affairs of the Group.

Matters which specifically require the Board’s decision or approval are those involving:-

– corporate strategy and business plans;

– investment and divestment proposals;

– funding decisions of the Group;

– nominations of the Directors for appointment to the Board and appointment of key personnel;

– announcement of quarterly, half year and full year results, annual report and accounts;

– material acquisitions and disposal of assets; and

– all matters of strategic importance.

All other matters are delegated to Board committees whose actions are monitored and endorsed by the Board. These Board committees include the Audit Committee (the “AC”), the Nominating Committee (the “NC”), the Remuneration Committee (the “RC”) and the Executive Committee (the “EC”), all of which operate within clearly defined terms of reference and functional procedures.


HEALTHWAY MEDICAL CORPORATION LIMITED18

To get a better understanding of the Group’s business, the Company adopts a policy whereby the Directors are encouraged to request for further explanations, briefings or informal discussion on the Company’s operations or business with the management of the Company (the “Management”).

The Board conducts scheduled meetings on a quarterly basis. Ad-hoc meetings are convened when circumstances require. The Company’s Articles of Association (the “Articles”) provide for Board meetings by means of teleconference. The attendance of the Directors at meetings of the Board and Board committees, and the frequency of these meetings for the financial year ended 31 December 2011 (“FY2011”) are disclosed as follows:-

Name of Director BoardAudit

CommitteeNominating Committee

Remuneration Committee

Executive Committee

No. of Meetings

No. of Meetings

No. of Meetings

No. of Meetings

No. of Meetings

Held Attended Held Attended Held Attended Held Attended Held Attended

Fan Kow Hin 6 6 – – 1 1 – – 4 4

Lam Pin Woon 6 6 – – – – – – 4 4

Dr Jong Hee Sen 6 5 – – – – – – 4 4

Siew Teng Kean 6 5 6 6 1 1 – – 4 4

Kuek Chiew Hia 6 6 6 6 – – 1 1 – –

Arthur RaymondOuellette(1)

3 3 3 3 – – 1 1 3 3

Png Paak Liang, Ivan(2) 4 4 – – 1 1 1 1 – –

Dr Adrian Francis LeongPeng Kheong(3)

4 3 – – – – – – 4 4

Tan Kuang Hui(4) 2 2 2 2 – – – – – –

Dr Lu Jiade Jay(5) 6 6 – – – – – – – –

Notes:

(1) Demised on 19 July 2011.

(2) Resigned as Independent Director on 30 September 2011.


(4) Resigned as Independent Director on 5 March 2012.


Executive Committee

The Board has delegated the EC with the following functions:-

– to provide overall strategic direction to the Board and to guide development policies and strategies for the Group;



– to review and approve business transactions recommended by the President and the Executive Directors of the Group subject to a limit per transaction;

– to review major business transactions for the Board’s approval, wherever required;

– to review and monitor the financial performance and progress of the Group; and

– to oversee specific matters and/or projects as delegated by the Board from time to time.

The EC currently comprises Mr Fan Kow Hin (who is the Chairman of the EC), Mr Lam Pin Woon, Dr Jong Hee Sen and Mr Siew Teng Kean.

Principle 2 : Board Composition and Guidance

The Board currently has five (5) Directors, comprising two (2) Independent Directors, two (2) Executive Directors and one (1) Non-Executive and Non-Independent Director. Information regarding each Board member is provided under the Board of Directors section set out on page 12 of this Annual Report.

The independence of each Director is reviewed annually by the NC. The NC adopts the definition in the Code as to what constitutes an independent director in its review to ensure that the Board consists of persons who, together, will provide core competencies necessary to meet the Company’s objectives. The Independent Directors have confirmed that they do not have any relationship with the Company or its related companies or its officers that could interfere, or be reasonably perceived to interfere, with the exercise of the Directors’ independent business judgement with a view to the best interests of the Company.

The NC is of the view that Mr Siew Teng Kean and Ms Kuek Chiew Hia are independent. As one third (1/3) of the Board is independent, the requirement of the Code that at least one third (1/3) of the Board comprises independent directors is satisfied. The NC is satisfied that the Board has substantial independent elements to ensure that objective judgment is exercised on corporate affairs.

The Board through the NC has examined its structure, size and composition is of the view that it is an appropriate size for effective decision-making, taking into account the scope and nature of the operations of the Company. The NC is of the view that no individual or small group of individuals dominates the Board’s decision-making process.

The Board comprises Directors who as a group provide core competencies such as accounting or finance, business or management experience, industry knowledge and strategic planning experience. Hence, the NC is of the view that the current Board comprises persons who as a group provide capabilities required for the Board to be effective.

Principle 3: Role of Chairman and President

There is a clear division of responsibilities between the Chairman and the President, which ensures there is a balance of power and authority at the top of the Group. Mr Fan Kow Hin is the Executive Chairman while Mr Lam Pin Woon is the President of the Company.



The Chairman is responsible for the formulation of the Group’s strategic direction and ensures that Board meetings are held when necessary and sets the Board agenda in consultation with the President. The Chairman ensures that all Board members are provided with complete, adequate and timely information. As a rule, the Board papers are sent to the Directors in advance for the Directors to be adequately prepared for the meetings.

The President executes decisions taken by the Board and is responsible for the conduct of the Group’s daily business operations. The Board is of the view that there are sufficient safeguards and checks to ensure that the process of decision making by the Board is independent and based on collective decisions without any individual or group of individuals exercising any considerable concentration of power or influence.

Principle 4 : Board Membership

The NC comprises two (2) Directors, namely Mr Siew Teng Kean and Mr Fan Kow Hin. The Chairman of the NC is Mr Siew Teng Kean. Pursuant to the resignation of Mr Tan Kuang Hui on 5 March 2012, the NC comprises only two (2) Directors and does not meet the Code’s requirement that the NC should at least comprise three (3) Directors. The Company will reconstitute the NC in due course to meet the requirement under the Code. The NC has written terms of reference that describe the responsibilities of its members.

The principal functions of the NC are as follows:-

– to review and recommend the nomination or re-nomination of the Directors having regard to the Director’s contribution and performance;

– to set criteria for identifying candidates and reviewing nominations for the appointments referred to above;

– to determine on an annual basis whether or not a Director is independent; and

– to assess the overall performance of the Board and contribution of each Director to the effectiveness of the Board.

In the nomination and selection process of a new director, the NC identifies the candidates and reviews the nominations for the appointments based on the following criteria:-

(i) at least one-third of directors shall be independent directors; and

(ii) the candidate shall be a fit and proper person to hold such office, and the most qualified candidate nominated for the office, taking into account the candidate's track record, age, experience, capabilities and other relevant factors.

Under Article 98 of the Company’s Articles, one third (1/3) of the Board is to retire by rotation and subject themselves to re-election by Shareholders at every annual general meeting. The NC recommended to the Board that Dr Jong Hee Sen and Ms Kuek Chiew Hia be nominated for re-election at the forthcoming annual general meeting (“AGM”).

In making the recommendations, the NC had considered the Directors’ overall contributions and performance.



Principle 5 : Board Performance

The NC decides on how the Board’s performance is to be evaluated and to propose objective performance criteria, subject to the Board’s approval, which address how the Directors have enhanced long-term Shareholders’ value. The Board has also implemented a process to be carried out by the NC for assessing the effectiveness of the Board as a whole and for assessing the contribution from each individual Director to the effectiveness of the Board. Each member of the NC shall abstain from voting on any resolution in respect of the assessment of his performance or re-nomination as a Director.

In evaluating the Board’s performance, the NC considers a set of quantitative and qualitative performance criteria that has been approved by the Board. The performance criteria for the Board evaluation are in respect of:

a. Board composition;

b. Board information;

c. Board process and accountability; and

d. Standards of conduct.

The individual Director’s performance criterion is in relation to the Director’s:

a. Interactive skills;

b. Knowledge including industry or professional expertise, specialist or functional contribution and regional expertise;

c. Directors’ duties including attendance at meetings, meeting preparation, participation and performance of specific assignments; and

d. Directors’ conduct including maintenance of independence, disclosure of related party transactions and compliance with company policies.

The Chairman, in consultation with the NC, will then act on the results of the performance evaluation, and where appropriate, propose new members be appointed to the Board or seek the resignation of the Directors.

The NC has assessed the current Board’s performance to-date and is of the view that the performance of the Board as a whole was satisfactory. Although some of the Board members have multiple board representations, the NC is satisfied that sufficient time and attention has been given by the Directors to the Group.

Principle 6 : Access to Information

In order to ensure that the Board is able to fulfil its responsibilities, the Management provides the Board with complete, adequate and timely information prior to Board meetings and on an on-going basis.



The Directors are furnished regularly with information from the Management about the Group as well as the relevant background information relating to the business to be discussed at the Board meetings. The Directors are also provided with the contact details of the senior Management and the Company Secretaries to facilitate separate and independent access.

In furtherance of their duties, each Director has the right to seek independent legal and other professional advice, at the Company’s expense, concerning any aspect of the Group’s operations or undertakings in order to fulfil his duties and responsibilities as a Director of the Company.

The Company Secretaries and/or his/her representatives attend all Board and Board committee meetings. Together with the Management, the Company Secretaries are responsible for ensuring that appropriate procedures are followed and that the requirements of the Act, and the provisions in the Listing Manual (Section B: Rules of Catalist) of the SGX-ST (“Rules of Catalist”) are complied with.

Changes to regulations and accounting standards are closely monitored by the Management. The Directors are briefed either during Board and Board Committee meetings or by the Company Secretaries of these changes especially where these changes have an important bearing on the Directors’ disclosure obligations. Principle 7 : Procedures for Developing Remuneration PoliciesPrinciple 8 : Level and Mix of RemunerationPrinciple 9 : Disclosure on Remuneration

The RC comprises two (2) Independent Directors, namely Mr Siew Teng Kean and Ms Kuek Chiew Hia and one (1) Non-Executive and Non-Independent Director, Dr Jong Hee Sen. The Chairman of the RC is Mr Siew Teng Kean. The RC has written terms of reference that describe the responsibilities of its members.

The RC’s principal responsibilities are to review and recommend to the Board a framework of remuneration for the Directors and executive officers, and to determine specific remuneration packages for the Executive Chairman and each Executive Director. The RC should cover all aspects of remuneration, including but not limited to Directors' fees, salaries, allowances, bonuses, options and benefits-in-kind. The recommendations are submitted to the Board for endorsement.

The Independent Directors do not have service agreements with the Company. They are paid fixed Directors’ fees, which are determined by the Board, appropriate to the level of their contributions, taking into account factors such as the effort and time spent and the responsibilities of the Independent Directors. The fees are subject to approval by Shareholders at each annual general meeting. Except as disclosed, the Independent Directors do not receive any other remuneration from the Company.

The Company had entered into service agreements with two (2) Executive Directors, both Mr Fan Kow Hin and Mr Lam Pin Woon, on 15 April 2008 and on 22 September 2010 respectively. The service agreement with Mr Fan Kow Hin is for a period of three (3) years, subject to automatic renewal for a further period of three (3) years on such terms and conditions as may be agreed between the Executive Director and the Company. The service agreement with Mr Lam Pin Woon does not have a fixed term.

The review of the remuneration of the executive officers takes into consideration the performance and the contributions of the officer to the Company and gives due regard to the financial and business performance of the Group. The Group seeks to offer a competitive level of remuneration to attract, motivate and retain senior management of the required competency to run the Group successfully.



The Company adopts a remuneration policy that comprises a fixed as well as variable component. The fixed component is in the form of base salary and benefits while the variable component is in the form of performance bonus.

The Company does not have any employee share option scheme or other long-term employee incentive scheme.

The level and mix of the Director’s remuneration for FY2011 are set out below:

Name of DirectorFee#

%Salary

%Bonus

%Benefits*

%Total

%

S$250,000 to S$499,999

Lam Pin Woon 0 98 0 2 100

Dr Adrian Francis Leong Peng Kheong (1) 0 94 4 2 100

Below S$250,000

Fan Kow Hin 0 71 0 29 100

Siew Teng Kean 100 0 0 0 100

Kuek Chiew Hia 100 0 0 0 100

Arthur Raymond Ouellette(2) 100 0 0 0 100

Png Paak Liang, Ivan(3) 100 0 0 0 100

Tan Kuang Hui(4) 100 0 0 0 100

Dr Lu Jiade Jay(5) 100 0 0 0 100

Notes:-

# These fees are subject to the approval of Shareholders at the forthcoming AGM.

* Other benefits include mainly employers’ contributions to the Central Provident Fund and transport allowances.

(1) Resigned on 30 September 2011.

(2) Demised on 19 July 2011.




Annual remuneration of top 5 key executives who are not Directors in remuneration bands of S$250,000 are set out below for FY2011.

Number of employees

S$250,000 to S$499,999 0

Below S$250,000 5



The Code recommends that the remuneration of at least the top five (5) key executives who are not also Directors be disclosed within the bands of S$250,000. However, the Board is of the opinion that the remuneration details of individual key executives are confidential and full disclosure of such information would not be in the interest of the Company.

No employee of the Company and its subsidiaries was an immediate family member of a Director and whose remuneration exceeded S$150,000 in FY2011.

Principle 10 : Accountability

The announcements for the quarterly, half-year and full-year financial results are released via the SGXNET, and are also posted on the Company’s website. All material information relating to the Company is disseminated via SGXNET.

The Board ensures that the Management maintains a sound system of internal controls to safeguard the Shareholders’ investment and the Group’s assets.

The Management will provide all members of the Board with management accounts of the Group’s performance, with explanatory details on its operations on a monthly basis. Board papers are given prior to any Board meeting to facilitate effective discussion and decision-making.

Certain subsidiaries of the Company were audited by different auditors as disclosed in Note 6 to the financial statements in this annual report. The Board and the AC have considered this and are satisfied that the appointment would not compromise the standard and effectiveness of the audit of the Company. Rule 712 and Rule 716 of the Rules of Catalist has been complied with by the Company.

Principle 11 : Audit Committee

The AC, which has written terms of reference clearly setting out its authority and duties, is made up of two (2) Independent Directors, namely Mr Siew Teng Kean and Ms Kuek Chiew Hia. Pursuant to the resignation of Mr Tan Kuang Hui on 5 March 2012, the AC comprises only two (2) Directors and does not meet the Code’s requirement that the AC should at least comprise three (3) Directors. The Company will reconstitute the AC in due course to meet the requirement of the Code. The Board is of the view that the AC has the necessary experience and expertise required to discharge its duties.

The AC schedules a minimum of four (4) meetings in each financial year. The meetings are held, inter alia, for the following purposes:-

– to review with the external auditors the audit plan, their evaluation of the system of internal accounting controls, their letter to the Management and the Management’s response;

– to review the quarterly, half year and full year financial statements including balance sheet and profit and loss accounts, before submission to the Board for approval, focusing in particular on changes in accounting policies and practices, major risk areas, significant adjustments resulting from the audit, compliance with accounting standards and compliance with the Rules of Catalist and any other relevant statutory or regulatory requirements;



– to review the internal control procedures and ensure co-ordination between the external auditors and the Management, and review the assistance given by the Management to the external auditors, and discuss problems and concerns, if any, arising from the interim and full year’s audits, and any matters which the external auditors may wish to discuss (in the absence of the Management, where necessary);

– to review the independence of the external auditors;

– to review and discuss with the external auditors any suspected fraud or irregularity, or suspected infringement of any relevant laws, rules or regulations, which has or is likely to have a material impact on the Group’s operating results or financial position, and the Management’s response;

– to consider and recommend the appointment or re-appointment of the external auditors and matters relating to the resignation or dismissal of the external auditors;

– to review interested person transactions (if any) falling within the scope of Chapter 9 of the Rules of Catalist;

– to undertake such other reviews and projects as may be requested by the Board, and to report to the Board its findings from time to time on matters arising and requiring the attention of the AC; and

– generally undertake such other functions and duties as may be required by statute or the Rules of Catalist, or by such amendments as may be made thereto from time to time.

In addition, the AC is given the task to commission investigations into matters where there is suspected fraud or irregularity, or failure of internal controls or infringement of any laws, rules or regulations, which has or is likely to have a material impact on the Company’s operating results or financial position, and to review the findings thereof.

The AC meets with the external auditors, KPMG LLP, without the presence of the Management, at least annually, to review the adequacy of audit arrangements, with emphasis on the scope and quality of their audit, and the independence, objectivity and observations of the auditors. The AC has reasonable resources to enable it to discharge its functions properly.

The aggregate amount of fees paid to the external auditors of the Company, broken down into audit and non-audit services during FY2011 are as follows:-

Audit fees : S$362,000 Non-audit fees : – Total : S$362,000

The AC will review the independence of the external auditors annually. There was no-non-audit service rendered by the external auditors for FY2011. In the AC’s opinion, KPMG LLP is suitable for re-appointment and it has accordingly recommended to the Board that KPMG LLP be nominated for re-appointment as auditors of the Company at the forthcoming AGM.



Whistle-blowing Policy

The AC has put in place a whistle-blowing policy, whereby employees of the Group, may in confidence raise concerns about possible improper financial reporting or other matters to Mr Siew Teng Kean. The objective for such arrangement is to ensure independent investigations of such matters and for appropriate follow-up actions.

Principle 12 : Internal Controls

The Board believes that, in the absence of any evidence to the contrary, the system of internal controls maintained by the Management provides reasonable assurance against material financial misstatements or loss and includes the safeguarding of assets, the maintenance of proper accounting records, the reliability of financial information, compliance with appropriate legislations, regulations and best practices and the identification and management of business risks.

The Board notes that no system of internal controls can provide absolute assurance against the occurrence of material errors, poor judgement in decision-making, human error, fraud or other irregularities. The Board believes that, in the absence of any evidence to the contrary, the system of internal controls maintained by the Management, and that was in place throughout FY2011 and up to the date of this report, is adequate to meet the needs of the Group in its current business environment.

The Board, with the concurrence of the AC, is of the view that, in the absence of evidence to the contrary, the system of internal controls maintained by the Company provides reasonable, but not absolute, assurance of the adequacy of the internal controls in addressing the financial, operational and compliance risks of the Company. The Board and the AC noted that all internal controls contain inherent limitations and no systems of internal controls could provide absolute assurance against the occurrence of material errors, poor judgment in decision making, human error, losses, fraud or other irregularities. The Board will continue its risk assessment process, which is an on-going process, with a view to improve the Company’s internal controls system.

Principle 13 :Internal Audit

The AC is aware of the need to establish a system of internal controls within the Group to safeguard Shareholders’ interests and the Group’s assets, and to manage risks. The system is intended to provide reasonable but not absolute assurance against material misstatements or loss, and to safeguard assets and ensure maintenance of proper accounting records, reliability of financial information, compliance with appropriate legislations, regulations and best practices, and the identification and containment of business risks.

The size of the operations of the Group does not warrant the Group having an in-house internal audit function. The Group has therefore appointed a professional firm, Yang Lee & Associates, to undertake the functions of an internal auditor.

The scope of the internal audit is:-

– to review the effectiveness of the Group’s material internal controls;

– to provide assurance that key business and operational risks are identified and managed;



– to determine that internal controls are in place and functioning as intended; and

– to evaluate that operations are conducted in an effective and efficient manner.

The AC has reviewed with the internal auditors their audit plan and their evaluation of the system of internal controls, their audit findings and the Management’s responses to those findings; the effectiveness of material internal controls, including financial, operational and compliance controls and overall risk management of the Company and the Group for FY2011. The AC is satisfied that the internal audit is adequately resourced and has the appropriate standing within the Group.

Principle 14 : Communication with ShareholdersPrinciple 15 : Greater Shareholder Participation

The Company is committed to maintaining and improving its level of corporate transparency of financial results and other pertinent information. Other than the routine announcements made in accordance with the requirements of the Rules of Catalist, the Company has issued additional announcements and press releases to update Shareholders on the activities of the Company and the Group in FY2011.

The Company does not practise selective disclosure. Price-sensitive information is first publicly released via SGXNET before the Company meets with any group of investors or analysts. Results and annual reports are announced or issued within the mandatory period (and where this is not possible, relevant extensions of time are sought in accordance with applicable laws, regulations and rules).

All Shareholders will receive the Company’s annual report and notice of annual general meeting. At the annual general meeting, Shareholders will be given the opportunity and time to air their views and ask the Directors or the Management questions regarding the Company.

The Chairmen of the AC, the RC and the NC as well as the external auditors will be present and on hand to address all issues raised at the annual general meeting .

The Articles of the Company allow members of the Company to appoint not more than two (2) proxies to attend and vote on their behalf at a general meeting.

Separate resolutions are proposed at general meetings for each distinct issue.

Dealing in Securities

The Company has adopted policies in line with the requirements of the Rule 1204(19) of the Rules of Catalist on dealings in the Company’s securities.

The Company prohibits its officers from dealing in the Company’s shares on short term considerations or when they are in possession of unpublished price-sensitive information. They are not allowed to deal in the Company’s shares during the period commencing two (2) weeks before the announcement of the Company’s financial results for each of the first three (3) quarters and one (1) month before the announcement of the Company’s full year financial results, as the case may be, and ending on the date of the announcement of the relevant financial results.



Interested Person Transactions

The Company has adopted an internal policy in respect of any transaction with an interested person, which sets out the procedures for review and approval of such interested person transaction.

All interested person transactions will be documented and submitted periodically to the AC for their review to ensure that such transactions are carried out on an arm’s length basis and on normal commercial terms and are not prejudicial to the Company.

The following is the interest person transaction entered into the Group during FY2011:

Name of Interested Person

Aggregate value of all interested person transactions during the financial year under review (excluding transactions less than S$100,000 and t ransact ions conducted under shareholders’ mandate pursuant to Rule 920)

Aggregate value of all t ransact ions conducted under shareholders’ mandate pursuant to Rule 920 (excluding transactions less than S$100,000)

Healthway Medical Development (Private) Limited

– S$4,487,000

Non-Sponsor Fees

During FY2011, non-sponsor fees paid to the Company’s sponsor, PrimePartners Corporate Finance Pte. Ltd. for their financial advisory and related services amounted to S$157,402.

Material Contracts and Loans

Pursuant to Rule 1204(8) of the Rules of Catalist, the Company confirmed that except as disclosed in the Report of Directors and Financial Statements there were no other material contracts and loans of the Company and its subsidiaries involving the interests of any Director or controlling shareholder of the Company, either still subsisting at the end of FY2011 or if not then subsisting, which were entered into since the end of the previous financial year.



Risk Management

The Management frequently reviews the Company’s business and operational activities to identify areas of significant business risks as well as appropriate measures to control and mitigate these risks within the Company’s policies and strategies. The significant risk management policies are as disclosed in the audited financial statements.

Use of Proceeds from Placements and IFC Loan

Out of the net proceeds of approximately S$45.7 million from the Placements and the IFC Loan which were completed on 6 May 2010, the IFC Loan has not yet been drawn down, and S$24.7 million of the placement proceeds has, as at 1 March 2012, been fully disbursed and utilised as follows:

Placement and IFC Loan

AllocationS$’000

Amount Utilised

S$’000

Balance Amount

S$’000

The Group’s expansion plans in China 28,000 12,500 15,500

General working capital purposes in China and Singapore 17,700 12,200 5,500

45,700 24,700 21,000*

* The balance amount of S$21 million is the equivalent of the undrawn US$15 million IFC Loan based on an exchange rate of US$1.4 : S$1 as at 6 May 2010.

Use of Rights Issue Proceeds

The net proceeds of approximately S$16.7 million from the Rights Issue which was completed on 22 June 2011, has been fully disbursed and utilised according to its intended uses which are as follows:

Rights Issue Proceeds

AllocationS$’000

Amount Utilised

S$’000

The Group's expansion plans in China and for general working capital purposes as the Group expands its operations in China 10,000 10,000

General working capital 6,700 6,700

16,700 16,700

DiReCtoRs’ RepoRt


We are pleased to submit this annual report to the members of the Company together with the audited financial statements for the financial year ended 31 December 2011.

Directors

The directors in office at the date of this report are as follows:

Fan Kow HinDr Jong Hee SenLam Pin WoonSiew Teng KeanKuek Chiew Hia

Directors’ interests

According to the register kept by the Company for the purposes of Section 164 of the Singapore Companies Act, Chapter 50 (the Act), particulars of interests of directors who held office at the end of the financial year and 21 January 2012 (including those held by their spouses and infant children) in shares, debentures, warrants and share options in the Company and in related corporations are as follows:

Holdings registered in the name of director

Holdings in which director is deemed to have an interest

Name of directors and corporation in which interests are held

At beginningof the year

At endof the year

At beginningof the year

At endof the year

Healthway Medical Corporation Limited

– ordinary shares

Fan Kow Hin 1,251,875 – 454,688,918 509,865,378(1)

Dr Jong Hee Sen 78,905,135 3,905,276 61,890,426 133,890,426(2)

Siew Teng Kean 1,380,756 1,553,350 – –Kuek Chiew Hia 240,000 270,000 – –

(1) Fan Kow Hin is deemed to be interested in 509,865,378 shares in which 234,430,252 shares are held by One Organisation Limited (“OOL”) by virtue of his shareholding in OOL, 66,875,000 Shares held by One Organisation Pte Ltd (“OOPL”) by virtue of his shareholding in OOPL, 3,744,566 shares are held by his sister, Fan Kwee Lan and 204,815,560 Shares registered in the name of a nominee account.

(2) Dr Jong Hee Sen is deemed to be interested in 133,890,426 shares registered in the name of various nominee accounts.

There was no change in any of the above-mentioned interests in the Company between the end of the financial year and 21 January 2012.

DiReCtoRs’ RepoRt


By virtue of Section 7 of the Act, Fan Kow Hin is deemed to have interests in the other subsidiaries of the Company, all of which are wholly-owned, at the beginning and at the end of the financial year.

Except as disclosed in this report, no director who held office at the beginning of the year, or date of appointment if later, or at the end of the financial year had interests in shares, debentures, warrants or share options of the Company, or of related corporations, either at the beginning of the financial year or at the end of the financial year.

Neither at the end of, nor at any time during the financial year, was the Company a party to any arrangement whose objects are, or one of whose objects is, to enable the directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

Except for salaries, bonuses and fees and those benefits that are disclosed in this report and in Note 23 to the financial statements, since the end of the last financial year, no director has received or become entitled to receive, a benefit by reason of a contract made by the Company or a related corporation with the director, or with a firm of which he is a member, or with a company in which he has a substantial financial interest.

Share options

The Company does not have any share options scheme currently. During the financial year, there were no options granted by the Company or its subsidiaries to any person to take up unissued shares in the Company or its subsidiaries.

Audit Committee

As at the date of this report, the Audit Committee comprises Mr Siew Teng Kean and Ms Kuek Chew Hia.

The Audit Committee performs the functions specified in Section 201B of the Act, the Listing Manual Section B: Rules of Catalist of the Singapore Exchange Limited (the “SGX-ST”) (“Rules of Catalist”) and the Code of Corporate Governance 2005.

The Audit Committee held six meetings during the financial year. In performing its functions, the Audit Committee had met with the Company’s internal and external auditors to discuss the scope of their work, the results of their examination and evaluation of the Company’s internal accounting control system.

DiReCtoRs’ RepoRt


The Audit Committee reviewed the quarterly financial information and annual financial statements of the Group and the Company prior to their submission to the directors of the Company for adoption. The Audit Committee also reviewed interested person transactions (as defined in Chapter 9 of the Rules of Catalist) transacted during the financial year.

The Audit Committee has full access to and co-operation by the management of the Company for it to discharge its functions.

The external and internal auditors have unrestricted access to the Audit Committee. The Audit Committee is satisfied with the independence and objectivity of the external auditors and has confirmed with the external auditors that the provision of non-audit services by external auditors would not affect their independence.

The Audit Committee has recommended to the Board of Directors that the auditors, KPMG LLP, be nominated for re-appointment as auditors at the forthcoming Annual General Meeting of the Company.

Auditors

The auditors, KPMG LLP, have indicated their willingness to accept re-appointment.

On behalf of the Board of Directors

Dr Jong Hee SenDirector

Lam Pin WoonDirector

11 April 2012

statement By DiReCtoRs


In our opinion:

(a) the financial statements set out on pages 36 to 92 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 2011 and the results, changes in equity and cash flows of the Group for the year then ended in accordance with the provisions of the Singapore Companies Act, Chapter 50 and Singapore Financial Reporting Standards; and

(b) at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.

The Board of Directors has, on the date of this statement, authorised these financial statements for issue.

On behalf of the Board of Directors

Dr Jong Hee SenDirector

Lam Pin WoonDirector

11 April 2012

inDepenDent auDitoRs’ RepoRt


Members of the CompanyHealthway Medical Corporation Limited

Report on the financial statements

We have audited the accompanying financial statements of Healthway Medical Corporation Limited (the Company) and its subsidiaries (the Group), which comprise the statements of financial position of the Group and the Company as at 31 December 2011, the income statement, statement of comprehensive income, statement of changes in equity and statement of cash flows of the Group for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 36 to 92.

Management’s responsibility for the financial statements

Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the provisions of the Singapore Companies Act, Chapter 50 (the Act) and Singapore Financial Reporting Standards, and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance sheets and to maintain accountability of assets.

Auditors’ responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements of the Group and the statement of financial position of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2011 and the results, changes in equity and cash flows of the Group for the year ended on that date.

inDepenDent auDitoRs’ RepoRt


Report on other legal and regulatory requirements

In our opinion, the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.

KPMG LLPPublic Accountants andCertified Public Accountants

Singapore11 April 2012

statements of finanCial positionAs at 31 December 2011


The accompanying notes form an integral part of the consolidated financial statements.

Group CompanyNote 2011 2010 2011 2010

$’000 $’000 $’000 $’000

AssetsProperty, plant and equipment 4 6,132 6,678 – –Intangible assets 5 119,284 177,597 1,225 1,118Subsidiaries 6 – – 133,325 176,755Associate 7 868 – 1,250 –Loan receivables 8 23,716 22,796 – –Deferred tax asset 9 – 85 – –

Total non-current assets 150,000 207,156 135,800 177,873

Inventories 10 2,775 2,961 – –Loan receivables 8 15,000 – – –Trade and other receivables 11 17,719 12,631 3,011 164Cash and cash equivalents 12 8,327 18,880 5,435 4,146

Total current assets 43,821 34,472 8,446 4,310

Total assets 193,821 241,628 144,246 182,183

Equity Share capital 13 181,831 165,195 181,831 165,195Currency translation reserve 434 (329) – –(Accumulated losses)/Retained earnings (34,566) 28,578 (60,245) (997)

Total equity attributable to equity holders of the Company 147,699 193,444 121,586 164,198

LiabilitiesProvision for restoration costs 14 396 396 – –Financial liabilities 15 11,905 15,422 7,656 9,188Deferred tax liabilities 9 389 – – –

Total non-current liabilities 12,690 15,818 7,656 9,188

Financial liabilities 15 13,684 20,746 7,632 3,481Trade and other payables 16 19,395 11,357 7,366 5,316Current tax payable 353 263 6 –

Total current liabilities 33,432 32,366 15,004 8,797

Total liabilities 46,122 48,184 22,660 17,985

Total equity and liabilities 193,821 241,628 144,246 182,183

ConsoliDateD inCome statementYear ended 31 December 2011



Note 2011 2010$’000 $’000

Revenue 17 78,230 86,515

Other operating income 3,242 7,801

Medical supplies and consumables used (11,125) (14,431)

Laboratory and other expenses (4,625) (2,004)

Staff costs (50,488) (52,872)

Depreciation of property, plant and equipment 4 (1,186) (1,278)

Amortisation of intangible assets 5 (245) (20)

Impairment loss of intangible assets 5 (58,410) –

Other operating expenses (16,242) (18,916)

Finance costs (net) (1,108) (1,521)

Share of loss of an associate (382) –

(Loss)/Profit before income tax 18 (62,339) 3,274

Income tax expense 19 (805) (440)

(Loss)/Profit for the year attributed to owners of the Company (63,144) 2,834

(Loss)/Earnings per share

Basic and diluted (loss)/earnings per share (cents) 20 (3.21) 0.16

ConsoliDateD statement of CompRehensive inComeYear ended 31 December 2011



2011 2010$’000 $’000

(Loss)/Profit for the year (63,144) 2,834

Other comprehensive income

Foreign currency translation differences on foreign operations 763 (329)

Total comprehensive (loss)/income for the year (62,381) 2,505

ConsoliDateD statement of ChanGes in equityYear ended 31 December 2011



Share capital

Ordinary shares

Treasuryshares Total

Currency translation

Retained earnings/

(Accumulated losses)

Total equity

$’000 $’000 $’000 $’000 $’000 $’000

At 1 January 2010 121,914 (627) 121,287 – 27,941 149,228

Comprehensive income for the year

Profit for the year – – – – 2,834 2,834


Foreign currency translation differences on foreign operations – – – (329) – (329)

Total other comprehensive income – – – (329) – (329)

Total comprehensive income for the year – – – (329) 2,834 2,505

Transactions with owners, recorded directly in equityContributions by and distributions to ownersDividends – – – – (2,197) (2,197)Issue of new shares 47,154 – 47,154 – – 47,154Purchase of treasury shares – (2,422) (2,422) – – (2,422)Share issue expenses (824) – (824) – – (824)

Total contributions by and distributions to owners 46,330 (2,422) 43,908 – (2,197) 41,711

At 31 December 2010 168,244 (3,049) 165,195 (329) 28,578 193,444

ConsoliDateD statement of ChanGes in equityYear ended 31 December 2011



Share capital

Ordinary shares

Treasuryshares Total

Currency translation

Retained earnings/

(Accumulated losses)

Total equity

$’000 $’000 $’000 $’000 $’000 $’000

At 1 January 2011 168,244 (3,049) 165,195 (329) 28,578 193,444

Comprehensive income for the year

Loss for the year – – – – (63,144) (63,144)


Foreign currency translation differenceson foreign operations – – – 763 – 763

Total other comprehensive income – – – 763 – 763

Total comprehensive loss for the year – – – 763 (63,144) (62,381)

Transactions with owners, recorded directly in equity

Contributions by and distributions to owners

Issue of new shares 17,298 – 17,298 – – 17,298Rights issue expenses (662) – (662) – – (662)Total contributions by and distributions to owners 16,636 – 16,636 – – 16,636

At 31 December 2011 184,880 (3,049) 181,831 434 (34,566) 147,699

ConsoliDateD statement of Cash flowsYear ended 31 December 2011



Note 2011 2010$’000 $’000

Cash flows from operating activities(Loss)/Profit before income tax (62,339) 3,274Adjustments for:- Depreciation of property, plant and equipment 4 1,186 1,278- Amortisation of intangible assets 5 245 20- Impairment loss on intangible assets 5 58,410 –- Allowance for impairment loss on doubtful receivables 909 811- Loss on disposal of property, plant and equipment – 13- Gain on disposal of a subsidiary (2) (4,035)- Gain on bargain purchase of subsidiaries – (1,370)- Interest expense 1,108 1,494- Interest income (24) (78)- Share of loss of an associate 382 –

(125) 1,407Changes in working capital:- Inventories 186 294- Trade and other receivables (5,492) (2,944)- Trade and other payables 8,266 2,327Cash generated from operations 2,835 1,084- Income taxes paid (241) (3,287)Net cash generated from/(used in) operating activities 2,594 (2,203)

Cash flows from investing activitiesInterest received 24 78Acquisition of intangible asset (342) (1,128)Loan receivables (15,920) (17,448)Net cash inflow on acquisition of subsidiaries – 211Net cash inflow on disposal of a subsidiary 2 1,915Proceeds from sale of property, plant and equipment – 3Purchase of property, plant and equipment (173) (5,147)Investment in an associate (1,250) –Net cash used in investing activities (17,659) (21,516)

Cash flows from financing activitiesFixed deposits pledged (1,625) 19,589Interest paid (1,108) (1,494)Dividends paid – (387)Proceeds from issuance of shares – 45,344Proceeds from borrowings 6,983 12,787Proceeds from rights issue 17,298 –Repayment of borrowings (17,549) (38,723)Repayment of finance lease liabilities (382) (563)Purchase of treasury shares – (3,049)Shares/rights issue expenses (662) (824)Net cash generated from financing activities 2,955 32,680

Net (decrease)/increase in cash and cash equivalents (12,110) 8,961Cash and cash equivalents at 1 January 17,017 8,056Effect of exchange rate fluctuations on cash held 30 –

Cash and cash equivalents at 31 December 12 4,937 17,017

ConsoliDateD statement of Cash flowsYear ended 31 December 2011



Significant non-cash transactions

In 2011, the Group acquired property, plant and equipment with an aggregate cost of $640,000 (2010: $5,474,000), of which $467,000 (2010: $327,000) was acquired under finance leases.

notes to the finanCial statementsYear ended 31 December 2011


These notes form an integral part of the financial statements.

The financial statements were authorised for issue by the Board of Directors on 11 April 2012.

1 Domicile and activities

Healthway Medical Corporation Limited (the “Company”) is incorporated in the Republic of Singapore. The address of the Company’s registered office is 2 Leng Kee Road, #06-07 Thye Hong Centre, Singapore 159086.

The principal activities of the Company are those of an investment holding company and to carry on the business of healthcare management. The principal activities of the subsidiaries are as set out in note 6.

The financial statements of the Company comprise the Company and its subsidiaries (together referred to as the “Group” and individually as “Group entities”) and the Group’s interest in an associate.

2 Basis of preparation

2.1 Statement of compliance

The financial statements have been prepared in accordance with Singapore Financial Reporting Standards (FRS).

2.2 Basis of measurement

The financial statements have been prepared on the historical cost basis except for certain financial assets and financial liabilities which are measured at fair value.

2.3 Functional and presentation currency

These financial statements are presented in Singapore dollars, which is the Company’s functional currency. All financial information presented in Singapore dollars has been rounded to the nearest thousand, unless otherwise stated.

2.4 Use of estimates and judgements

The preparation of the financial statements in conformity with FRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.



2 Basis of preparation (cont’d)

2.4 Use of estimates and judgements (cont’d)

In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements and that have a significant risk of resulting in a material adjustment within the next financial year are described in the following notes:

l Note 5 – Key assumptions used in discounted cash flow projections l Note 9 – Utilisation of tax losses l Note 27 – Recoverability of loan receivables l Note 27 – Recoverability of trade and other receivables

2.5 Changes in accounting policies

Measurement of non-controlling interests in business combinations

From 1 January 2011, the Group has applied the amendments to FRS 103 Business Combinations resulting from the Improvements to FRSs 2010 in measuring at the acquisition date, non-controlling interests that are not present ownership interests and do not entitle their holders to a proportionate share of the acquiree’s net assets in the event of liquidation. Such non-controlling interests are now measured at fair value (see note 3.1).

Previously, the Group has elected on a transaction-by-transaction basis whether to measure non-controlling interests that are not present ownership interests and do not entitle holders to proportionate share of the acquiree’s net assets on liquidation at fair value, or at the non-controlling interests’ proportionate share of the recognised amounts of the acquiree’s identifiable net assets, at the acquisition date.

This change in accounting policy has been applied prospectively to new business combinations occurring on or after 1 January 2010 and has no material impact on (loss)/earnings per share.

Identification of related party relationships and related party disclosures

From 1 January 2011, the Group has applied the revised FRS 24 Related Party Disclosures (2010) to identify parties that are related to the Group and to determine the disclosures to be made on transactions and outstanding balances, including commitments, between the Group and its related parties. FRS 24 (2010) improved the definition of a related party in order to eliminate inconsistencies and ensure symmetrical identification of relationships between two parties.

The adoption of FRS 24 (2010) affects only the disclosures made in the financial statements. There is no financial effect on the results and financial position of the Group for the current and previous financial years. Accordingly, the adoption of FRS 24 (2010) has no impact on (loss)/earnings per share.



3 Significant accounting policies

The accounting policies set out below have been applied consistently to all periods presented in these financial statements, and have been applied consistently by the Group entities, except as explained in note 2.5, which addresses changes in accounting policies.

3.1 Basis of consolidation

Business combinations

Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the Group takes into consideration potential voting rights that are currently exercisable.

The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in the consolidated income statement.

Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.

Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is classified as equity, it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration are recognised in the consolidated income statement.

For non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the acquiree’s net assets in the event of liquidation, the Group elects on a transaction-by-transaction basis whether to measure them at fair value, or at the non-controlling interests’ proportionate share of the recognised amounts of the acquiree’s identifiable net assets, at the acquisition date. All other non-controlling interests are measured at acquisition-date fair value or, when applicable, on the basis specified in another standard.

Subsidiaries

Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the Group. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.



3 Significant accounting policies (cont’d)

3.1 Basis of consolidation (cont’d)

Loss of control

Upon the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in the consolidated income statement. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted for as an equity-accounted investee or as an available-for-sale financial asset depending on the level of influence retained.

Investments in associates (equity-accounted investees)

Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies of these entities. Significant influence is presumed to exist when the Group holds between 20% and 50% of the voting power of another entity.

Investments in associates are accounted for using the equity method (equity-accounted investees) and are recognised initially at cost. The cost of the investments includes transaction costs.

The consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income of the equity-accounted investees, after adjustments to align the accounting policies of the equity-accounted investees with those of the Group, from the date that significant influence commences until the date that significant influence ceases.

When the Group’s share of losses exceeds its interest in an equity-accounted investee, the carrying amount of that interest, including any long-term investments, is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee.

Acquisition of non-controlling interests

Acquisitions of non-controlling interests are accounted for as transactions with owners in their capacity as owners and therefore the carrying amounts of assets and liabilities are not changed and goodwill is not recognised as a result of such transactions. The adjustments to non-controlling interests are based on appropriate amount of the net assets of the subsidiary. Any difference between the adjustments to non-controlling interests and the fair value of consideration paid is recognised directly in equity and presented as part of equity attributable to owners of the Company.

Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income or expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

Unrealised gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.




3.1 Basis of consolidation (cont’d)

Accounting for subsidiaries and associates by the Company

Investments in subsidiaries and associates are stated in the Company’s statement of financial position at cost less accumulated impairment losses.

3.2 Foreign currency

Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are retranslated to the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortised cost in the functional currency at the beginning of the year, adjusted for effective interest and payments during the year, and the amortised cost in foreign currency translated at the exchange rate at the end of the year.

Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items in a foreign currency that are measured in terms of historical cost in foreign currency are translated using exchange rate at the date of the transaction. Foreign currency differences arising on retranslation are recognised in the consolidated income statement.

Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to Singapore dollars at exchange rates at the reporting date. The income and expenses of foreign operations are translated to Singapore dollars at exchange rates at the dates of the transactions. Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.

Foreign currency differences are recognised in other comprehensive income and presented in the foreign currency translation reserve in equity. However, if the foreign operation is a non-wholly-owned subsidiary, then the relevant proportionate share of the translation difference is allocated to the non-controlling interests. When a foreign operation is disposed of such that control or significant influence is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to the consolidated income statement as part of the gain or loss on disposal. When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of only part of its investment in an associate that includes a foreign operation while retaining significant influence, the relevant proportion of the cumulative amount is reclassified to the consolidated income statement.

When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign operation. These are recognised in other comprehensive income, and are presented in the translation reserve in equity.




3.3 Financial instruments

Non-derivative financial assets

The Group initially recognises loans and receivables on the date that they are originated. All other financial assets are recognised initially on the trade date, which is the date that the Group becomes a party to the contractual provisions of the instrument.

The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Group is recognised as a separate asset or liability.

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

The Group’s non-derivative financial assets include loans and receivables.

Loans and receivables

Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses.

Loans and receivables comprise cash and cash equivalents, loan receivables, and trade and other receivables.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances and bank deposits. For the purpose of the statement of cash flows, pledged deposits are excluded whilst bank overdrafts that are repayable on demand and that form an integral part of the Group’s cash management are included in cash and cash equivalents.

Non-derivative financial liabilities

Financial liabilities are recognised initially on the trade date, which is the date that the Group becomes a party to the contractual provisions of the instrument.

The Group derecognises a financial liability when its contractual obligations are discharged or cancelled or expire.

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.




3.3 Financial instruments (cont’d)

Non-derivative financial liabilities (cont’d)

Such financial liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest method.

The Group’s non-derivative financial liabilities include loans and borrowings, bank overdrafts and trade and other payables.

Derivative financial instruments

Derivatives are recognised initially at fair value; attributable transaction costs are recognised in the consolidated income statement as incurred. Subsequent to initial recognition, derivatives are measured at fair value, all changes in its fair value are recognised immediately in the consolidated income statement.

Share capital

Ordinary shares

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, net of any tax effects.

Repurchase, disposal and reissue of share capital (treasury shares)

When share capital recognised as equity is repurchased, the amount of the consideration paid, which includes directly attributable costs, net of any tax effects, is recognised as a deduction from equity. Repurchased shares are classified as treasury shares and are presented in the reserve for own share account. When treasury shares are sold or reissued subsequently, the amount received is recognised as an increase in equity, and the resulting surplus or deficit on the transaction is presented in non-distributable capital reserve.

Financial guarantees

Intra-group

Financial guarantees are financial instruments issued by the Group that requires the issuer to make specified payments to reimburse the holder for the loss it incurs because a specified debtor fails to meet payment when due in accordance with the original or modified terms of a debt instrument.

Intra-group financial guarantees are accounted for as insurance contracts. A provision is recognised based on the Group’s estimate of the ultimate cost of settling all claims incurred but unpaid at the balance sheet date. The provision is assessed by reviewing individual claims and tested for adequacy by comparing the amount recognised and the amount that would be recognised to settle the guarantee contract.




3.3 Financial instruments (cont’d)

Others

All other (non intra-group) financial guarantees are recognised initially at fair value and are classified as financial liabilities. Subsequent to initial measurement, the financial guarantees are stated at the higher of the initial fair value less cumulative amortisation and the amount that would be recognised if they were accounted for as contingent liabilities. When financial guarantees are terminated before their original expiry date, the carrying amount of the financial guarantee is transferred to the consolidated income statement.

3.4 Property, plant and equipment

Recognition and measurement

Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses.

Cost includes expenditure that is directly attributable to the acquisition of the asset. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

The gain and loss on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and is recognised net within other income/other expenses in the consolidated income statement.

Subsequent costs

The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in the consolidated income statement as incurred.

Depreciation

Depreciation is calculated over the depreciable amount, which is the cost of an asset, or other amount substituted for cost, less its residual value.

Depreciation is recognised in the consolidated income statement on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset.




3.4 Property, plant and equipment (cont’d)

Depreciation (cont’d)

The estimated useful lives for the current and comparative periods are as follows:

Leasehold improvements 2 to 10 years Medical equipment 5 to 10 years Computers 1 to 3 years Furniture and fittings 5 to 10 years Office equipment 5 to 10 years Signboards 2 to 10 years

Depreciation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate.

3.5 Intangible assets

Goodwill

Goodwill that arises upon the acquisition of subsidiaries is included in intangible asssets and represents the excess of:

l the fair value of the consideration transferred; plus

l the recognised amount of any non-controlling interests in the acquiree; plus

l if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree,

over the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.

When the excess is negative, a bargain purchase gain is recognised immediately in the consolidated income statement.

Subsequent measurement

Goodwill is measured at cost less accumulated impairment losses. In respect of equity-accounted investees, the carrying amount of goodwill is included in the carrying amount of the investment, and an impairment loss on such an investment is not allocated to any asset, including goodwill, that forms part of the carrying amount of the equity-accounted investee.

Other intangible assets

Other intangible assets that are acquired by the Group and have finite useful lives are measured at cost less accumulated amortisation and accumulated impairment losses.




3.5 Intangible assets (cont’d)

Subsequent expenditure

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in the consolidated income statement as incurred.

Amortisation

Amortisation is calculated based on the cost of the asset, less its residual value.

Amortisation is recognised in the consolidated income statement on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use. Computer software development in progress is not depreciated. The estimated useful lives for the current and comparative periods are as follows:

l Brand name Indefinite Life

l Computer software 3 years

Amortisation methods, useful lives and residual values are reviewed at the end of each reporting period and adjusted if appropriate.

3.6 Leased assets

Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

Other leases are operating leases and are not recognised in the Group’s statement of financial position.

3.7 Inventories

Inventories comprising pharmacy, medical and surgical supplies are measured at the lower of cost and net realisable value.

The cost of inventories is based on the weighted average cost formula and comprises all costs of purchase and other costs incurred in bringing the inventories to their present location and condition. Allowance is made for all damaged, expired and slow moving items.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs necessary to make the sale.




3.8 Impairment

Non-derivative financial assets

A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.

Objective evidence that financial assets (including equity securities) are impaired can include default or delinquency by a debtor, restructuring of an amount due to the Group on terms that the Group would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, adverse changes in the payment status of borrowers or issuers in the Group, economic conditions that correlate with defaults or the disappearance of an active market for a security.


The Group considers evidence of impairment for loans and receivables at specific asset level. All individually significant loans and receivables are assessed for specific impairment.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Losses are recognised in the consolidated income statement and reflected in an allowance account against loans and receivables. Interest on the impaired asset continues to be recognised. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through the consolidated income statement.

Non-financial assets

The carrying amounts of the Group’s non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For goodwill, and intangible assets that have indefinite useful lives or that are not yet available for use, the recoverable amount is estimated each year at the same time. An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit (CGU) exceeds its estimated recoverable amount.

The recoverable amount of an asset or CGU is the greater of its value-in-use and its fair value less costs to sell. In assessing value-in-use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGU. Subject to an operating segment ceiling test, for the purposes of goodwill impairment testing, CGUs to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes. Goodwill acquired in a business combination is allocated to groups of CGUs that are expected to benefit from the synergies of the combination.




3.8 Impairment (cont’d)

Non-financial assets (cont’d)

The Group’s corporate assets do not generate separate cash inflows and are utilised by more than one CGU. Corporate assets are allocated to CGUs on a reasonable and consistent basis and tested for impairment as part of the testing of the CGU to which the corporate asset is allocated.

An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognised in the consolidated income statement. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the CGU (group of CGUs), and then to reduce the carrying amounts of the other assets in the CGU (group of CGUs) on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

Goodwill that forms part of the carrying amount of an investment in associate is not recognised separately, and therefore is not tested for impairment separately. Instead, the entire amount of the investment in an associate is tested for impairment as a single asset when there is objective evidence that the investment in an associate may be impaired.

3.9 Employee benefits

Defined contribution plans

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an employee benefit expense in the consolidated income statement in the periods during which services are rendered by employees.

Short-term employee benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.

A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.




3.10 Provisions

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as financial cost.

3.11 Revenue

Provision of medical consultancy services

Revenue from the provision of medical consultancy services is recognised upon completion of the services rendered, where it is probable that the benefits will flow to the Group. Revenue excludes goods and services tax or other sales taxes.

Management and administrative fees

Management and administrative fees are recognised upon completion of services rendered, where it is probable that the benefits will flow to the Group.

Rental income

Rental income receivable under operating leases is recognised in the consolidated income statement on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income to be received. Contingent rentals are recognised as income in the accounting period in which they are earned.

3.12 Lease payments

Payments made under operating leases are recognised in the consolidated income statement on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease.

Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.




3.13 Finance income and finance costs

Finance income comprises interest income from bank deposits and loans. Interest income is recognised as it accrues in the consolidated income statement where it is probable that the benefits will flow to the Group, using the effective interest method.

Finance costs comprise interest expense on borrowings recognised in the consolidated income statement. Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset which necessarily takes a substantial period of time to be prepared for its intended use or sale are recognised in the consolidated income statement using effective interest method.

Foreign currency gains and losses are reported on a net basis as either finance income or finance cost depending on whether foreign currency movements are in a net gain or net loss position.

3.14 Tax

Tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in the consolidated income statement except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment for tax payable in respect of previous years.

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:

l temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss;

l temporary differences related to investment in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future; and

l taxable temporary differences arising on the initial recognition of goodwill.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.




3.14 Tax (cont’d)

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

In the ordinary course of business, there are many transactions and calculations for which the ultimate tax treatment is uncertain. Therefore, the Group recognises tax liabilities based on estimates of whether additional taxes will be due. These tax liabilities are recognised when the Group believes that certain positions may not be fully sustained upon review by tax authorities, despite the Group’s belief that its tax return positions are supportable. The Group believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors including interpretations of tax law and prior experience. This assessment relies on estimates and assumptions and may involve a series of multifaceted judgements about future events. New information may become available that causes the Group to change its judgement regarding the adequacy of existing tax liabilities, such changes to tax liabilities will impact tax expense in the period that such a determination is made.

3.15 Earnings per share

The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year, adjusted for own shares held. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares.

3.16 Segment reporting

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. The Group’s Chief Operating Decision Maker (“CODM”) refers to a group comprising of the Group’s Executive Chairman; President & Executive Director; Managing Director, Medical Services/Group Medical Director; and Executive Director, Investments. All operating segments’ operating results are reviewed regularly by the CODM to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

Segment results that are reported to the CODM include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly current and deferred tax liabilities.

Segment capital expenditure is the total cost incurred during the year to acquire property, plant and equipment, and intangible assets other than goodwill.

3.17 New standards and interpretations not yet adopted

A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 January 2011, and have not been applied in preparing these financial statements. The Group is in the process of assessing the impact of these new standards and interpretations not yet adopted on the financial statements of the Group.



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5 Intangible assets

GoodwillBrand name

Computer software

Computer software

development-in-progress Total

$’000 $’000 $’000 $’000 $’000

Group

CostAt 1 January 2010 149,118 27,313 183 – 176,614Additions – – 10 1,118 1,128At 31 December 2010 149,118 27,313 193 1,118 177,742

Additions – – 12 330 342Reclassification – – 1,448 (1,448) –

At 31 December 2011 149,118 27,313 1,653 – 178,084

Accumulated amortisation and impairment lossesAt 1 January 2010 – – 125 – 125Amortisation for the year – – 20 – 20

At 31 December 2010 – – 145 – 145

Amortisation for the year – – 245 – 245Impairment loss 58,410 – – – 58,410

At 31 December 2011 58,410 – 390 – 58,800

Carrying amountAt 1 January 2010 149,118 27,313 58 – 176,489At 31 December 2010 149,118 27,313 48 1,118 177,597At 31 December 2011 90,708 27,313 1,263 – 119,284



5 Intangible assets (cont’d)

GoodwillBrand name

Computer software

Computer software

development-in-progress Total

$’000 $’000 $’000 $’000 $’000

Company

CostAt 1 January 2010 – – – – –Additions – – – 1,118 1,118At 31 December 2010 – – – 1,118 1,118

Additions – – – 330 330Reclassification – – 1,448 (1,448) –

At 31 December 2011 – – 1,448 – 1,448

Accumulated amortisation and impairment lossesAt 1 January 2010 – – – – –Amortisation for the year – – – – –

At 31 December 2010 – – – – –Amortisation for the year – – 223 – 223

At 31 December 2011 – – 223 – 223

Carrying amountAt 1 January 2010 – – – – –At 31 December 2010 – – – 1,118 1,118At 31 December 2011 – – 1,225 – 1,225




Impairment test for cash-generating units containing goodwill and brand name with indefinite lives

For the purpose of impairment testing, goodwill and brand name with indefinite lives are allocated to the respective operating divisions (“cash-generating units” or “CGUs”) which represent the lowest level within the Group at which they are monitored for internal management purposes.

The aggregate carrying amount and impairment loss of goodwill and brand name with indefinite lives are allocated to each CGU identified according to service groups as follows:

Carrying amount

Impairment loss

Carrying amount

2010 2011 2011$’000 $’000 $’000

Family medicine (comprising up to 45 clinics) 49,313 – 49,313Dentistry (comprising up to 10 clinics) 7,191 (1,145) 6,046Paediatrics (comprising up to 10 clinics) 70,417 (39,411) 31,006Orthopaedics (comprising up to 4 clinics) 44,853 (16,293) 28,560Wellness and aesthetic (comprising up to 3 clinics) 4,657 (1,561) 3,096

176,431 (58,410) 118,021

The recoverable amount of the respective CGUs was based on their value-in-use. Value-in-use was determined by discounting the future cash flows generated from the continuing use of the CGUs. The respective carrying amounts of Dentistry, Paediatrics, Orthopaedics as well as Wellness and aesthetic were determined to be higher than the recoverable amounts and an aggregate impairment loss of $58,410,000 was recognised in the consolidated income statement in 2011.

The lower recoverable amounts computed in 2011 as compared to 2010 were mainly due to the higher discount rate used in 2011 which reflects increased investment risks in the current economic climate in Singapore. A discount rate of 8.5% (2010: 7%) was therefore applied in determining the recoverable amount of the CGUs. The discount rate reflects current market assessment of the risks specific to the CGUs.

Cash flows were projected based on actual operating results, financial budget and targeted revenue growth approved by management covering a period of five years and its projected terminal value. Terminal value for the respective CGU is based on the CGU’s Earnings Before Income Tax (“EBIT”) from the 6th year, at annual growth rates of 1% to 3% (2010: 4%) to perpetuity. This is within the long-term average growth rates for various segments of the healthcare industry in Singapore.

In respect of the earnings generated from the CGUs, the other underlying key assumptions used in calculation of the recoverable amounts are outlined below.




• Whendeterminingthebasisofthegrowthprojectionsfortheperiod(FY2012to2016andbeyond), both endogenous and exogenous factors have been considered. Endogenous or internal drivers for revenue and profit growth are derived from the Group’s strategic plans for each CGU, comprising marketing and cost optimisation programs; while external revenue drivers are derived through the analysis of demographics, understanding of market/industry dynamics, and the keeping abreast of government policies and initiatives which would impact the private and public expenditure on healthcare.

• TheanticipatedannualrevenuegrowthofFamilyMedicine,DentistryaswellasWellnessandaesthetic included in the cash flow projection was approximately 4% (2010: 3- 4%) for years 2012 to 2016.

• Theanticipatedannualrevenuegrowthof(3-4%)PaediatricsandOrthopaedicsincludedinthe cash flow projection was approximately 9% for years 2012 to 2016.

• Cost growth rates of 3% for the years 2012 to 2016,whichwas in linewith expectedannual inflation rates in Singapore and expected impact of internal cost containment initiatives since FY2011.

The values assigned to the key assumptions represent management’s assessment of future trends in the industry and are based on both external sources and internal sources.

Sensitivity to changes in assumptions:

The Group determines the impairment amount to goodwill based on the value in use of the respective CGUs. Significant judgement is involved in estimating the value in use. It requires the Group to make an estimate of the expected future cash flows from the CGUs and to choose a suitable discount rate in order to calculate the present value of those cash flows. Any adverse changes to the underlying parameters of the cash flow estimates or the discount rate in the future would result in additional impairment being required. The additional impairment, if required, would be made in the year when the changes occur.

Assuming the discount rate is increased by 0.5% while all other key assumptions are held constant, the profit before tax in the future would accordingly be reduced by $5.9 million.

6 Subsidiaries

Company2011 2010$’000 $’000

Equity investments, at cost 12,343 12,343Amounts due from subsidiaries (non-trade) 179,392 164,412Impairment loss* (58,410) –

133,325 176,755

* Refer to note 5 for details on impairment of goodwill

Non-trade amounts due from subsidiaries are unsecured and interest-free. The settlement of these amounts is neither planned nor likely to occur in the foreseeable future. As these amounts are, in substance, a part of the Company’s net investments in these subsidiaries, they are stated at cost less accumulated impairment loss.



6 Subsidiaries (cont’d)

As at 31 December, the Group had the following significant subsidiaries:

Name of subsidiaries Principal activitiesCountry of

incorporation

Effective equity held by the

Group2011 2010

% %

Held by the Company

China Healthway Pte. Ltd.(1) Investment holding Singapore 100 100

Healthway Medical Group Pte Ltd(2)

Practice of general medical practitioners

Singapore 100 100

Unimedic Pte. Ltd.(2) Investment holding Singapore 100 100

Vista Medicare Pte. Ltd.(1) Provision of managed healthcare

Singapore 100 100

Held by China Healthway Pte. Ltd.

China Unimedic Pte. Ltd.(1) Investment holding Singapore 100 100

Crane Medical Pte. Ltd.(2) Investment holding Singapore 100 100

Held by Unimedic Pte. Ltd.

Aaron Dentalcare Pte. Ltd.(1) Practice of dental surgery and operation of dental clinics

Singapore 100 100

Aaron Seow InternationalPte Ltd(1)

Practice of dental surgery and operation of dental clinics

Singapore 100 100

CLAAS Medical Centre Pte. Ltd.(1)

Investment holding Singapore 100 100

Island Orthopaedic Consultants Pte Ltd(2)

Provision of orthopaedic services and operation of medical clinics

Singapore 100 100

Peace Family Clinic & Surgery(AMK) Pte. Ltd.(1)


Singapore 100 100

Peace Family Clinic & Surgery (Anchorvale) Pte. Ltd.(1)


Singapore 100 100

Peace Family Clinic & Surgery(Sembawang) Pte. Ltd.(1)


Singapore 100 100





incorporation


Group2011 2010

% %


Picton Medical Centre Pte. Ltd.(1)


Singapore 100 100

Healthway Dental Pte. Ltd.(1)

(Formerly known as Popular Dental (CCK) Pte. Ltd.)


Singapore 100 100

Popular Dental (Woodlands) Pte. Ltd.(1)


Singapore 100 100

Thomson Paediatric Clinic Pte Ltd(2)

Provision of paediatric services and operation of medical clinics

Singapore 100 100

Universal Dentalcare Pte Ltd(1) Practice of dental surgery and operation of dental clinics

Singapore 100 100

Universal Dental Group (Braddell) Pte. Ltd.(1)


Singapore 100 100

Universal Dental Group(Woodlands) Pte. Ltd.(1)


Singapore 100 100

SBCC Clinic Pte Ltd(2) Provision of paediatric services and operation of medical clinics

Singapore 100 100

SBCC Services & Trading Pte Ltd(1)

Provision of paediatric services and operation of medical clinics

Singapore 100 100

Silver Cross 21 Pte. Ltd.(1) Practice of general medical practitioners

Singapore 100 100

Silver Cross 24 Hrs Pte Ltd(1) Practice of general medical practitioners

Singapore 100 100

Silver Cross AC Pte. Ltd.(1) Practice of general medical practitioners

Singapore 100 100





incorporation


Group2011 2010

% %


Silver Cross Healthcare Pte Ltd(2)


Singapore 100 100

Silver Cross Medical Centre Pte Ltd(1)


Singapore 100 100

Silver Cross North Pte Ltd(1) Practice of general medical practitioners

Singapore 100 100

Held by CLAAS Medical Centre Pte. Ltd.

BCNG Holdings Pte. Ltd.(1) Provision of services and products related to wellness and beauty

Singapore 99.99 99.99

Held by Aaron Seow International Pte Ltd

Aaron CTP Dental SurgeryPte. Ltd.(1)


Singapore 100 100

Held by Island Orthopaedic Consultants Pte Ltd

Island Orthopaedic Consultants Holdings Pte. Ltd.(1)

Provision of orthopaedic services and operation of medical clinics

Singapore 100 100

Held by Crane Medical Pte. Ltd.

Healthway Medical Assets (HK) Limited

Provision of medical services

Hong Kong 100 100

Healthway Medical Enterprises (HK) Limited


Hong Kong 100 100

Healthway Medical Facilities (HK) Limited


Hong Kong 100 100

Healthway Medical Holdings (HK) Limited


Hong Kong 100 100





incorporation


Group2011 2010

% %

Held by Crane Medical Pte. Ltd.

Healthway Medical Services (HK) Limited


Hong Kong 100 100

Kang Wei Investment Consultancy (Shanghai) Co., Ltd.(3)

Provision of medical services and consultancy

China 100 100

Held by Kang WeiInvestment Consultancy(Shanghai) Co., Ltd.

Kang Hong (Shanghai) Finance Lease Co., Ltd.

Provision of medical services and consultancy

China – 100

Kang Hong (Shanghai) Medical Equipment Lease Co., Ltd

Provision of services and consultancy

China 100 –

(1) Audited by Sashi Kala Devi Associates (2) Audited by KPMG LLP (3) Audited by KPMG Huazhen

7 Associate

Group Company2011 2010 2011 2010$’000 $’000 $’000 $’000

Investment in an associate 868 – 1,250 –

Name of associateCountry of

incorporationEffective equity held by

the Group2011 2010

% %

Healthway Medical Development Pte Ltd Singapore 25 –

This associate is not considered significant to the Group and is audited by Sashi Kala Devi Associates. For this purpose, an associated company is considered not significant as defined under the Singapore Exchange Limited Listing Manual if the Group’s share of its net tangible assets represents less than 20% of the Group’s consolidated net tangible assets, or if the Group’s share of its pre-tax profits accounts for less than 20% of the Group’s consolidated pre-tax profits.



7 Associate (cont’d)

During the financial year, the Company invested $1,250,000 in Healthway Medical Development Pte Ltd, representing 25% equity interests in the investee.

The summarised financial information for the associate, not adjusted for the percentage of ownership held by the Group, is as follows:

2011$’000

Current assets 5,724Non-current assets 13,911

Total assets 19,635

Current liabilities (13,412)Non-current liabilities (2,750)

Total liabilities (16,162)

Income –Expenses (1,527)

Loss (1,527)

8 Loan receivables

Group Company2011 2010 2011 2010$’000 $’000 $’000 $’000

Loan A 16,364 7,443 – –Loan B 21,252 15,353 – –Loan C 1,100 – – –

38,716 22,796 – –

Current 15,000 – – –Non-current 23,716 22,796 – –

38,716 22,796 – –



8 Loan receivables (cont’d)

Loan A

The loan is denominated in Singapore dollars and is unsecured. The interest is based on DBS Bank Ltd’s Prime rate at 4.25% p.a.. The borrower is a company that owns medical clinics in Singapore. Under the loan agreement, the Group provides long term funding for the development, set up and operations of the borrower. The loan was originally repayable on 15 November 2013. In 2011, it was mutually agreed with the borrower that $15 million will be repaid in 2012.

None of the directors of the Company has any interest in the borrower or any of these medical centres.

Loan B

These loans are denominated in Chinese Renminbi and are secured by way of corporate guarantees from the borrowers’ holding company. The interest rate is 5% p.a. and can be subject to changes based on China’s bank lending rate ranging from 6.6% p.a. to 8.0% p.a. (2010: 5.6% p.a. to 6.4% p.a.) to be mutually agreed upon between both parties. The borrowers are medical centres in China. These loans are for the development, setup and operations of these medical centres. The loans have tenor periods of 10 years and are repayable by 31 December 2020.


Loan C

The unsecured loan is denominated in Singapore dollars. The interest is based on DBS Bank Ltd’s Prime rate at 4.25% p.a.. The borrower is an owner of a medical clinic in Singapore which has commenced operations in late 2011. Under the loan agreement, the Group provides long term funding for the development, set up and operations of the borrower. The loan is repayable by 1 September 2015.




9 Deferred tax assets and liabilities

Movements in deferred tax assets and liabilities of the Group (prior to offsetting of balances) during the year are as follows:

At 1 January

2010

Recognised in income statement (note 19)

At 31

December 2010

Recognised in income statement (note 19)

At 31

December 2011

Group $’000 $’000 $’000 $’000 $’000

Deferred tax assets/ (liabilities)Tax loss carry forward – 140 140 – 140Property, plant and equipment (112) 57 (55) (474) (529)

(112) 197 85 (474) (389)

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same tax authority.

Unrecognised deferred tax assets and liabilities

Deferred tax assets have not been recognised in respect of the following items:

2011 2010$’000 $’000

GroupDeductible temporary differences 83 83Tax losses 1,922 1,363

2,005 1,446

The utilisation of tax losses accumulated as of 31 December 2011 is subject to compliance with the provisions of Section 37 of the Singapore Income Tax Act, Chapter 134 and agreement with the Comptroller of Income Tax.

10 Inventories

Group2011 2010$’000 $’000

Pharmacy, medical and surgical supplies, at cost 2,775 2,961



11 Trade and other receivables

Group Company2011 2010 2011 2010$’000 $’000 $’000 $’000

Trade receivables 10,025 5,442 1,162 –Unbilled receivables 1,203 1,586 – –

11,228 7,028 1,162 –Allowance for impairment loss (1,704) (966) – –

Net receivables 9,524 6,062 1,162 –Deposits 1,773 1,692 – –Other receivables 3,037 3,642 – 86Due from an associate (trade) 2,135 – 1,800 –

16,469 11,396 2,962 86Amount due from former shareholders of certain subsidiaries 480 396 – –Allowance for impairment loss (171) – – –

Net amount due from former shareholders of certain subsidiaries 309 396 – –

Loans and receivables 16,778 11,792 2,962 86Prepayments 941 839 49 78

17,719 12,631 3,011 164

The Group’s other receivables included amounts due from vendors of $1,862,000 (2010: $1,143,000) due from vendors of certain acquired medical clinics where the Group has entered into certain performance guarantee arrangements. At the balance sheet date, the Group has assessed the collectability of these amounts and does not consider any allowance for doubtful debts necessary.

The amount due from former shareholders of certain subsidiaries is unsecured, interest free and repayable on demand.

The Group’s exposures to credit risk and impairment losses related to trade receivables are disclosed in note 27.



12 Cash and cash equivalents


$’000 $’000 $’000 $’000

Cash at bank and in hand 8,327 18,880 5,435 4,146

Fixed deposits pledged as collateral for banking facilities (2,036) (411) – –

Bank overdrafts 15 (1,354) (1,452) – –

Cash and cash equivalents in the consolidated statement of cash flows 4,937 17,017 5,435 4,146

The weighted average effective interest rates relating to cash and cash equivalents excluding bank overdrafts, at the balance sheet date for the Group and Company are 0.06% (2010: 0.38%) and 0.21% (2010: 0.48%) per annum, respectively. Interest rates reprice at intervals of one month.

Fixed deposits pledged represent bank balances of the Company pledged to secure certain banking facilities (refer to note 15).

13 Capital and reserves

Share capital

Group and Company

2011 2010 2011 2010Number of

sharesNumber of

shares’000 ’000 $’000 $’000

Fully paid ordinary shares, with no par value:At 1 January 1,845,099 1,379,753 165,195 121,287Issue of new shares 230,637 479,044 17,298 47,154Share/rights issue expenses – – (662) (824)

2,075,736 1,858,797 181,831 167,617Purchase of treasury shares – (13,698) – (2,422)

At 31 December 2,075,736 1,845,099 181,831 165,195

Treasury shares:At 1 January 18,698 5,000 3,049 627Purchase of treasury shares – 13,698 – 2,422

At 31 December 18,698 18,698 3,049 3,049



13 Capital and reserves (cont’d)

Issue of ordinary shares

On 22 June 2011, the Company allotted and issued additional 230,637,353 shares for $17,297,801 pursuant to the Rights Issue exercise. Each share has an issue price of $0.075 on the basis of one rights share for every eight existing ordinary shares.

Ordinary shares

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All shares rank equally with regard to the Company’s residual assets.

Treasury shares

The cost of treasury shares purchased is recorded as a separate category of equity. At 31 December 2011 and 2010, the Group held 18,698,000 of the Company’s shares. All of these shares have been pledged as security for a loan amounting to $15,000,000 extended by a lender to an associate. Under the terms and conditions of the loan agreement, the Group is restricted from disposing these shares or subjecting them to further charges.

Translation reserve

The translation reserve comprises foreign currency differences arising from the translation of the financial statements of foreign operations.

Dividends

Dividends declared and paid by the Group and Company were as follows:

Group and Company2011 2010$’000 $’000

Final tax exempt (one-tier) dividend of 0.12 cents per share paid in respect of the year ended 31 December 2009 – 2,197

Capital risk management

The Board’s policy is to maintain a capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board of Directors monitors the return on capital, which the Group defines as total shareholders’ equity and the level of dividends to the ordinary shareholders.

The Board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position.

There were no changes in the Group’s approach to capital management during the year.

Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.



14 Provision for restoration costs

The provision for restoration costs relates to the estimated cost of dismantling, removing and restoring the commercial premises to its original condition at the expiration of the lease period.

15 Financial liabilities

This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings, which are measured at amortised cost. For more information about the Group’s exposure to interest rate and liquidity risk, see note 27.


$’000 $’000 $’000 $’000

Non-current liabilitiesBank loans 11,588 15,193 7,656 9,188Finance lease liabilities 317 229 – –

11,905 15,422 7,656 9,188

Current liabilitiesBank loans 11,932 18,893 6,278 2,029Bank overdrafts 12 1,354 1,452 1,354 1,452Finance lease liabilities 398 401 – –

13,684 20,746 7,632 3,481

25,589 36,168 15,288 12,669

Terms and repayment scheduleBank loans - Due within 1 year 11,932 18,893 6,278 2,029- Due after 1 year but within 5 years 11,588 15,193 7,656 9,188

23,520 34,086 13,934 11,217

Bank loans comprise:(a) 4-year term loan facilities 9,380 12,305 5,324 6,217(b) 4-year term loan facility with 16 quarterly instalments 3,580 14,831 – –(c) Revolving credit facilities 5,950 6,950 4,000 5,000(d) 3-year term loan facilities 4,610 – 4,610 –

23,520 34,086 13,934 11,217

(a) These 4-year term loan facilities are denominated in Singapore dollars and are secured by joint and several guarantees from certain directors of the Company. These loans will mature in 2013 and 2014.



15 Financial liabilities (cont’d)

(b) The Singapore dollar bank loan is a 4-year term loan facility repayable in 16 quarterly instalments which is secured by the Company’s shares in certain subsidiaries with carrying value of $164 million as at 31 December 2011; a fixed and floating charge on the assets of certain subsidiaries with carrying value of $40 million as at 31 December 2011; and a corporate guarantee from the Company. This bank loan will mature on 1 July 2012.

(c) These revolving credit facilities are secured by joint and several guarantees from certain directors of the Company. There are no fixed repayment schedules.

(d) These Singapore dollar bank loans are 3-year term loan facilities which are secured by joint and several guarantees from certain directors of the Company. These loans will mature in 2014.

Finance lease liabilities

Finance lease liabilities are payable as follows:

2011 2010 Principal Interest Payments Principal Interest Payments

$’000 $’000 $’000 $’000 $’000 $’000

Group

Within 1 year 398 18 416 401 19 420Between one and five years 317 12 329 229 41 270

Total 715 30 745 630 60 690



15 Financial liabilities (cont’d)

Effective interest rates and repricing analysis

Fixed interest rate maturing

Effective interest rate

Floating interest

within 1 year

in 1 to 5 years Total

% $’000 $’000 $’000 $’000

Group

At 31 December 2011Bank loans 1.97 – 12.00 16,092 3,501 3,927 23,520Bank overdrafts 5.00 1,354 – – 1,354Finance lease liabilities 2.00 – 5.50 – 398 317 715

17,446 3,899 4,244 25,589

At 31 December 2010Bank loans 1.50 – 6.69 25,572 2,780 5,734 34,086Bank overdrafts 5.00 1,452 – – 1,452Finance lease liabilities 2.80 – 11.20 – 401 229 630

27,024 3,181 5,963 36,168

Company

At 31 December 2011Bank loans 1.97 – 9.92 10,561 1,428 1,945 13,934Bank overdrafts 5.00 1,354 – – 1,354

11,915 1,428 1,945 15,288

At 31 December 2010Bank loans 1.50 – 6.69 8,792 746 1,679 11,217Bank overdrafts 5.00 1,452 – – 1,452

10,244 746 1,679 12,669



16 Trade and other payables

Group Company2011 2010 2011 2010$’000 $’000 $’000 $’000

Trade payables 7,019 5,541 276 97Accrued operating expenses 4,056 3,850 462 122Other payables 1,704 1,966 12 –Non-trade amounts due to subsidiaries – – – 5,097Non-trade amounts due to an associate 6,616 – 6,616 –

19,395 11,357 7,366 5,316

The non-trade amounts due to subsidiaries and an associate are unsecured, interest-free and repayable on demand.

17 Revenue

Revenue represents invoiced value of medical consultancy services and administrative and management fees as follows:

Group2011 2010$’000 $’000

Medical consultancy services 74,611 81,432Management and administrative fees 3,619 5,083

78,230 86,515



18 (Loss)/Profit before income tax

The following items have been included in arriving at (loss)/profit before income tax:

Group2011 2010$’000 $’000

Rental income 720 959Interest income 24 78Gain on disposal of a subsidiary 2 4,035Gain on bargain purchase – 1,370Government grants – Jobs credit scheme – 201Audit fees paid to: - Auditors of the Company (362) (360) - Other auditors (137) (95)Non-audit fees paid to other auditors – (42)Interest expense – banks (1,108) (1,494)Loss on disposal of property, plant and equipment – (13)Impairment loss of intangible assets (58,410) –Allowance for impairment loss on doubtful receivables (909) (811)Operating lease expenses (8,338) (11,062)

Contributions to defined contribution plans included in staff costs (1,502) (2,519)



19 Income tax expense

Group2011 2010$’000 $’000

Current tax expenseCurrent year 119 –Underprovided in respect of prior years 212 637

331 637

Deferred tax expenseOrigination and reversal of temporary differences (7) (197)Underprovided in respect of prior years 481 –

474 (197)

805 440

Reconciliation of effective tax rate(Loss)/Profit before income tax (62,339) 3,274

Tax calculated using Singapore tax rate of 17% (2010: 17%) (10,598) 557Non-deductible expenses 10,240 1,091Tax exempt income (38) (1,097)Underprovided in prior years 693 637Recognition of previously unrecognised tax losses – (670)Effect of tax rates in foreign jurisdiction 230 (78)Deferred tax assets not recognised 95 –Others 183 –

805 440



20 (Loss)/Earnings per share

Group2011 2010$’000 $’000

Basic and diluted (loss)/earnings per share is based on:Net (loss)/profit attributable to ordinary shareholders (63,144) 2,834

Group2011 2010

Number of shares

Number of shares

’000 ’000

Issued ordinary shares at 1 January 1,863,797 1,384,753Effect of new shares issued 121,953 364,374Effect of own shares held (18,698) (16,678)

Weighted average number of ordinary shares at 31 December 1,967,052 1,732,449

The calculation of the basic (loss)/earnings per share is based on the net (loss)/profit attributable

to equity holders of the Company for the year ended 31 December 2011 and 31 December 2010 and on the weighted average number of ordinary shares in issue as at 31 December 2011 and 31 December 2010.

Diluted (loss)/earnings per share for the year ended 31 December 2011 and 31 December 2010 are computed on the same basis as basic (loss)/earnings per share as there were no options and warrants granted and there were no other potential ordinary shares outstanding.



21 Acquisition of subsidiaries

On 1 April 2010, the Group acquired 100% equity interests of Crane Medical Pte Ltd and its subsidiaries (“Crane”) for $100. These companies are engaged in the provision of consultancy and management services of medical clinics in Singapore, China and Hong Kong.

In the nine months to 31 December 2010, Crane contributed revenue of $4,821,000 and profit after tax of $3,297,000 to the Group’s results. Had the acquisition occurred on 1 January 2010, management estimated that the contribution from Crane would not have resulted in the Group’s consolidated revenue and consolidated profit after tax for the year to be significantly different.

The effects of the acquisitions of subsidiaries are set out below:

Note 2010$’000

Identifiable assetsProperty, plant and equipment 4 26Inventories 134Trade and other receivables 5,677Cash and cash equivalents 211

6,048

Trade and other payables (4,538)Current tax payable (140)

(4,678)

Identifiable net assets acquired 1,370Bargain purchase on acquisition (1,370)

Acquisition cost of subsidiaries *

Add: Cash and cash equivalents in subsidiaries acquired 211

Net cash inflow on acquisition of subsidiaries 211

* Represents $100 cash consideration paid to acquire Crane Medical Pte Ltd and its subsidiaries.



22 Disposal of subsidiaries

On 15 November 2010, the Group disposed of its entire shareholding interest in its wholly-owned subsidiary, Healthway Medical Enterprises Pte Ltd, which currently owns a number of medical clinics in Singapore to an independent third party for a total consideration of $2 million.

The effects of the disposal of the subsidiary are set out below:

GroupNote 2010

$’000

Identifiable assetsProperty, plant and equipment 4 2,611Inventories 476Trade and other receivables 2,073Cash and cash equivalents 85

5,245

Identifiable liabilitiesTrade and other payables (5,053)Term loan (1,695)Finance lease liabilities (503)Deferred tax liability (29)

(7,280)

Identifiable net liabilities disposed (2,035)Gain on disposal 4,035

Total consideration received/receivable 2,000

Cash and cash equivalents in subsidiary disposed off (85)

Net cash inflow on disposal of subsidiary 1,915

23 Related parties

For the purposes of these financial statements, parties are considered related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.

Other than disclosed elsewhere in the financial statements, the transactions with related parties at terms agreed between the parties, are as follows:



23 Related parties (cont’d)

Key management personnel compensation

Key management personnel of the Group are those persons having the authority and responsibility for planning, directing and controlling the activities of the Group. The Board of Directors and senior management team are considered as key personnel of the Group.

Key management personnel compensation comprised:

Group2011 2010$’000 $’000

Short-term employee benefits (including CPF) 1,982 2,502

24 Determination of fair values

A number of the Group’s accounting policies and disclosures require significant assumptions applied in determining the fair value, for both financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

(i) Derivatives

The fair value of call option contracts is determined by using a valuation technique. Valuation techniques employed include market multiples and discounted cash flow analysis using expected future cash flows and a market-related discount rate.

The Company has obtained a call option contract from a third party to acquire medical clinic

during the year.

Based on an independent valuation performed by an independent valuer, the directors of the Company have assessed the fair value of this call option contract to have no significant financial impact on the results of the Group for the year ended 31 December 2011.

(ii) Financial guarantees

The Company has issued a financial guarantee to a third party on a proportionate share basis in respect of a loan obtained by an associated company during the year.

The fair value of this financial guarantee is determined by reference to the difference in the

interest rates between the actual rates charged by the lender with these guarantees made available and the estimated rates that the lender would have charged had these guarantees not been available.

The directors of the Company assessed the fair value of this financial guarantee has no significant financial impact on the results of the Group for the year ended 31 December 2011.



24 Determination of fair values (cont’d)

(iii) Interest-bearing assets and liabilities

Fair value is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date. The interest-bearing assets and liabilities of the Group are principally variable rate instruments and their carrying values approximate their fair values.

(iv) Other financial assets and liabilities

The carrying amounts of other financial assets and liabilities with a maturity of less than one year (including trade and other receivables, cash and cash equivalents, and trade and other payables) approximate their fair values because of the short period to maturity.

25 Commitments

Commitments comprise loan commitments (agreements to provide loan facilities to the owners of medical centres in China) and operating lease commitments.

Loan commitments

Loan commitments granted to the owners of medical centres in China are denominated in Chinese Renminbi and the undrawn commitments will expire between February 2012 and June 2012. Undrawn Chinese Renminbi loan commitments at the balance sheet date amounted to Singapore dollar equivalent of approximately $1,795,000 (2010: $1,600,000).

A loan commitment granted to an owner of medical clinics in Singapore is denominated in Singapore Dollars and the undrawn commitment will expire on 15 November 2013. Undrawn portion of the loan commitment at the balance sheet date amounted to $1,636,000 (2010: $10,557,000).

Lease commitments

Non-cancellable operating lease rentals are payable as follows:

Group2011 2010$’000 $’000

Within 1 year 6,957 7,258After 1 year but within 5 years 5,499 5,288

12,456 12,546

The Group leases a number of commercial and office premises under operating leases. The leases typically run for an initial period of two to three years, with an option to renew the lease after that date.



25 Commitments (cont’d)

The Group has sublet some of its leased premises. Non-cancellable operating lease rentals are receivable as follows:

Group2011 2010$’000 $’000

Within 1 year 498 158After 1 year but within 5 years 618 84

1,116 242

26 Contingencies

A subsidiary is defending an action brought by a consulting company in Singapore for a total sum of $780,000 in respect of certain service fees deemed due and payable.

On 1 February 2012, the high court in Singapore declined to award Summary Judgment to the consulting company and has given the subsidiary company conditional leave to defend the action by providing a banker’s guarantee for the sum of $400,000. Based on legal advice, no provision has been made as at 31 December 2011 as the Group believes that it has good prospects of success in defending the claim by the consultancy company.

27 Financial risk management

Overview

The Group has exposure to the following risks from its use of financial instruments:

l Credit risk l Market risk l Liquidity risk

This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and managing risks. Further quantitative disclosures are included in these financial statements.



27 Financial risk management (cont’d)

Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers.

At the balance sheet date, except for the loan receivables as disclosed in note 8, there was no other significant concentration of credit risk in any one or group of customers. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statement of financial position. Most of the Group’s credit customers have been transacting with the entities in the Group for a number of years, and there have been no significant losses.

Cash and cash equivalents

Cash and fixed deposits are placed with banks and financial institutions which are regulated.

Trade and other receivables

The Group’s exposure to credit risk in trade and other receivables is mainly corporate customers.

To minimise credit risk, management has established a credit policy under which each new credit customer is analysed individually for creditworthiness before the Group’s credit terms are offered. Customers that fail to meet the Group’s benchmark creditworthiness may transact with the Group only on a cash basis.

The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. The collective loss allowance is determined based on historical data of payment statistics for similar financial assets.

Loan receivables

The Group has entered into loan and management service agreements with various parties which are in the business of provision of medical services, for which the Group provides long term funding for the development, set up and operations of these businesses. The arrangement results in amounts due to the Group which are classified under loan receivables. To assess a prospective party, the Group evaluates among other factors, the party’s credit history, current financial position, as well as, its business outlook, taking into account the risks specific to the party, which include its market and industry dynamics, and internal strategic and business plans. Once the prospective party is contracted, the Group, based on past experience and expectations for the future, monitors on an on-going basis the party’s planned cash flow projections and earnings, which would indicate if the loan and receivables are recoverable when they fall due.




Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:

Note Group2011 2010$’000 $’000

Loan receivables:- Non- current 8 23,716 22,796- Current 8 15,000 –Trade and other receivables 11 16,778 11,792Cash at bank and in hand 12 8,327 18,880

Recognised financial assets 63,821 53,468

Impairment loss

The ageing of loan and receivables at the reporting date is:

GrossImpairment

Losses GrossImpairment

Losses2011 2011 2010 2010$’000 $’000 $’000 $’000

GroupNot past due 50,470 – 30,689 –Past due 0 – 30 days 1,158 – 849 –Past due 31 – 120 days 1,570 – 2,197 –More than 120 days 4,171 (1,875) 1,819 (966)

57,369 (1,875) 35,554 (966)

The movement in the allowance for impairment in respect of trade receivables during the year is as follows:

Group2011 2010$’000 $’000

At 1 January 966 155Impairment loss recognised 909 811

At 31 December 1,875 966




The impairment allowance account is used to record impairment losses unless the Group is satisfied that no recovery of the amount owing is possible; at that point, the amount considered irrecoverable is written off against the trade receivables directly.

Based on historical default rates, the Group believes that no impairment allowance is necessary in respect of trade receivables not past due or past due up to 120 days. These receivables are mainly arising by customers that have a good credit track record with the Group.

Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

Interest rate risk

The Group’s exposure to changes in interest rates relates primarily to interest-earning financial assets and interest-bearing financial liabilities. Interest rate risk is managed by the Group on an on-going basis with the primary objective of limiting the extent to which net interest expense could be affected by an adverse movement in interest rates. Where necessary, the Group will consider using hedging strategies to reduce exposure to adverse interest rate movements.

Sensitivity analysis

At balance sheet date, management assessed that an increase/(decrease) of 100 basis points in the interest rate in respect to the interest-earning financial assets and interest-earning financial liabilities would have no significant impact to the Group.

Foreign currency risk

As at 31 December 2011, the Group has extended loans to third party entities amounting to approximately RMB88,552,000 ($18,252,000) (2010: RMB63,251,000 ($12,350,000)). Other than these Renminbi loans, the Group is not exposed to significant foreign currency risk on sales, purchases and borrowings that are denominated in a currency other than the respective functional currencies of Group entities.

Sensitivity analysis

As at 31 December 2011, a 10% strengthening/weakening of Singapore dollar against Renminbi would decrease/ increase profit before tax by approximately $1,825,000 (2010: $1,235,000).

Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.




Typically, the Group ensures that it has sufficient cash on demand to meet expected operational demands, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted.

The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements:

NoteCarrying amount

Contractual cash flows

Within 1 year

Within 1 to 5 years

$’000 $’000 $’000 $’000

Group2011Non-derivative financial liabilitiesBank loans 15 23,520 25,965 14,016 11,949Finance lease liabilities 15 715 745 416 329Bank overdrafts 15 1,354 1,354 1,354 –Trade and other payables 16 19,395 19,395 19,395 –

44,984 47,459 35,181 12,278

2010Non-derivative financial liabilitiesBank loans 15 34,086 35,811 16,091 19,720Finance lease liabilities 15 630 690 420 270Bank overdrafts 15 1,452 1,452 1,452 –Trade and other payables 16 11,357 11,357 11,357 –

47,525 49,310 29,320 19,990

Company2011Non-derivative financial liabilitiesBank loans 15 13,934 14,789 6,796 7,993Bank overdrafts 15 1,354 1,354 1,354 –Trade and other payables 16 7,366 7,366 7,366 –

22,654 23,509 15,516 7,993

2010Non-derivative financial liabilitiesBank loans 15 11,217 11,951 2,309 9,642Bank overdrafts 15 1,452 1,452 1,452 –Trade and other payables 16 5,316 5,316 5,316 –

17,985 18,719 9,077 9,642




Accounting classifications and fair values

The fair values of financial assets and liabilities, together with the carrying amounts shown in the statement of financial position, are as follows:


Other financial liabilities

within the scope of FRS

39

Other liabilities

outside the scope of FRS

39Total carrying

amount Fair value$’000 $’000 $’000 $’000 $’000

Group2011

Financial assets 63,821 – – 63,821 63,821

Financial liabilities – 44,269 715 44,984 44,984

2010


Financial liabilities – 46,895 630 47,525 47,525

Company2011


Financial liabilities – 22,654 – 22,654 22,654

2010


Financial liabilities – 17,985 – 17,985 17,985



28 Operating segments

The Group has two reportable segments, as described below, which are the Group’s strategic business units.

l Primary Healthcare comprising family medicine, dentistry and healthcare benefit management; and

l Specialist and Wellness Healthcare comprising paediatrics, orthopaedics and aesthetic medicine.

The CODM regularly reviews internal management reports for each of the business units.

Geographical segments

The Group’s operations are mainly in Singapore and China.

Major customer

The Group does not rely on a single external customer for 10% or more of the Group’s revenues.

Results of operating segments

Information regarding the results of each reportable segment is included below. Performance is measured based on segment profit before tax, as included in the internal management reports that are reviewed by the CODM. Segment profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of a segment relative to another.

Group2011 2010$’000 $’000

Segment revenuePrimary healthcare 52,603 49,515Specialist and wellness healthcare 25,627 37,000

Total 78,230 86,515

Segment resultsPrimary healthcare (55,804) 2,769Specialist and wellness healthcare (6,153) 505

(61,957) 3,274Share of losses of an associate (382) –

Consolidated profit before tax (62,339) 3,274Tax expense (805) (440)

Profit for the year (63,144) 2,834



28 Operating segments (cont’d)

Group2011 2010$’000 $’000

Segment assetsPrimary healthcare 287,354 243,656Specialist and wellness healthcare 161,305 83,234Elimination of inter-segment assets (254,838) (85,262)

Total 193,821 241,628

Segment liabilitiesPrimary healthcare 39,424 38,270Specialist and wellness healthcare 63,404 65,268Elimination of inter-segment liabilities (56,706) (55,354)

Total 46,122 48,184

Capital expenditure

Primary healthcare 59,171 1,918

Specialist and wellness healthcare 227 4,688

Total 59,398 6,606

DepreciationPrimary healthcare 516 427Specialist and wellness healthcare 670 851

Total 1,186 1,278

AmortisationPrimary healthcare 242 20Specialist and wellness healthcare 3 –

Total 245 20



28 Operating segments (cont’d)

Geographical segments

The Group predominantly operates in Singapore and China.

Group2011 2010$’000 $’000

Segment revenueSingapore 78,100 81,694China 130 4,821

Total 78,230 86,515

Segment resultsSingapore (60,087) 2,260China (1,870) 1,014

(61,957) 3,274Share of losses of an associate (382) –

Consolidated profit before tax (62,339) 3,274Tax expense (805) (440)

Profit for the year (63,144) 2,834

Segment assets

Singapore 408,908 267,543

China 39,751 59,347

Elimination of inter-segment assets (254,838) (85,262)

Total 193,821 241,628

Segment liabilitiesSingapore 84,925 67,381China 17,903 36,157Elimination of inter-segment liabilities (56,706) (55,354)

Total 46,122 48,184

29 Subsequent events

In January 2012, the Company issued a corporate guarantee to a third party in respect of a loan amounting to $5,000,000 granted to an owner of medical clinics in Singapore

shaReholDinG statistiCsAs at 15 March 2012


Issued and fully paid : S$187,572,099 Number of shares with voting rights : 2,075,736,183Number of treasury shares held : 18,698,000 (0.9%)(1)

Class of shares : Ordinary shares Voting rights : 1 vote per ordinary share

SHAREHOLDINGS HELD IN HANDS OF PUBLIC

Based on the information provided and to the best knowledge of the Directors, approximately 53.07% of the issued ordinary shares of the Company were held in the hands of the public as at 15 March 2012 and therefore Rule 723 of the Rules of Catalist is complied with.

DISTRIBUTION OF SHAREHOLDINGS

Range of Shareholdings

Number of Shareholders Percentage

Number of Shares Percentage

1 – 999 498 4.86 132,220 0.011,000 – 10,000 2,080 20.31 10,971,002 0.5310,001 – 1,000,000 7,559 73.81 672,833,078 32.411,000,001 and above 104 1.02 1,391,799,883 67.05

TOTAL 10,241 100.00 2,075,736,183 100.00

TWENTY LARGEST SHAREHOLDERS

Rank Name of Shareholder Shares Held Percentage

1 DMG & PARTNERS SECURITIES PTE LTD 385,225,457 18.562 HL BANK NOMINEES (S) PTE LTD 178,341,729 8.593 CITIBANK NOMINEES SINGAPORE PTE LTD 134,473,776 6.484 MAYBANK NOMINEES (S) PTE LTD 127,152,205 6.135 UNITED OVERSEAS BANK NOMINEES PTE LTD 118,551,714 5.716 HONG LEONG FINANCE NOMINEES PTE LTD 38,454,547 1.857 OCBC SECURITIES PRIVATE LTD 34,403,519 1.668 UOB KAY HIAN PTE LTD 29,681,819 1.439 HANIF MOEZ NOMANBHOY 28,163,811 1.3610 CIMB SECURITIES (SINGAPORE) PTE LTD 26,476,625 1.2811 PHILLIP SECURITIES PTE LTD 20,924,662 1.0112 DB NOMINEES (S) PTE LTD 14,648,375 0.7113 TAN KHEEN SENG JOHN 14,616,774 0.7014 RAFFLES NOMINEES (PTE) LTD 11,354,936 0.5515 DBS NOMINEES PTE LTD 9,742,842 0.4716 BANK OF SINGAPORE NOMINEES PTE LTD 9,284,931 0.4517 MERRILL LYNCH (SINGAPORE) PTE LTD 7,880,000 0.3818 MAYBANK KIM ENG SECURITIES PTE LTD 7,693,103 0.3719 TEH KIU CHEONG 7,000,000 0.3420 HSBC (SINGAPORE) NOMINEES PTE LTD 6,223,772 0.30

TOTAL 1,210,294,597 58.33

shaReholDinG statistiCsAs at 15 March 2012


SUBSTANTIAL SHAREHOLDERS

Direct Interest Deemed InterestNumber of

Shares %(1)

Number of Shares %(1)

Fan Kow Hin(2) – – 505,865,378 24.37

Dr Jong Hee Sen(3) 3,905,276 0.19 133,890,426 6.45

One Organisation Limited(4) – – 234,430,252 11.29

Aathar Ah Kong Andrew(5) 2,169,046 0.10 202,760,287 9.77

Chee Yin Meh(6) – – 502,120,812 24.19

International Finance Corporation(7) – – 119,645,655 5.76

Notes:

(1) Percentage calculated based on 2,075,736,183 voting shares of the Company as at 15 March 2012.

(2) Fan Kow Hin is deemed to be interested in 234,430,252 shares held by One Organisation Limited (“OOL”) by virtue of his shareholding in OOL, 66,875,000 shares held by One Organisation Pte Ltd (“OOPL”) by virtue of his shareholding in OOPL, 3,744,566 shares held by his sister, Fan Kwee Lan and 200,815,560 shares registered in the name of a nominee account.

(3) Dr Jong Hee Sen is deemed to be interested in 133,890,426 shares registered in the names of various nominee accounts.

(4) OOL is deemed to be interested in 234,430,252 shares registered in the name of a nominee account. (5) Aathar Ah Kong Andrew is deemed to be interested in 202,760,287 shares in which 3,444,000 shares are held by his

brother, Aathar Ah Tuk Henry and 199,316,287 shares registered in the names of various nominee accounts.

(6) Chee Yin Meh is deemed to be interested in 502,120,812 shares in which 200,815,560 shares are registered in the name of a nominee account for which the beneficiary is Fan Kow Hin, 234,430,252 shares in the name of a nominee account for which the beneficiary is OOL, and 66,875,000 shares registered in the name of a nominee account for which the beneficiary is OOPL.

(7) International Finance Corporation, a member of World Bank Group is deemed to be interested 119,645,655 shares registered in the name of a nominee account.

notiCe of annual GeneRal meetinG


NOTICE IS HEREBY GIVEN that the fifth Annual General Meeting (“AGM”) of Healthway Medical Corporation Limited (the “Company”) will be held at The National University of Singapore Society, Kent Ridge Guild House, Evans Room, 9 Kent Ridge Drive Singapore 119241 on Monday, 30 April 2012 at 10.30 a.m., for the following purposes:-

AS ORDINARY BUSINESS

1. To receive and adopt the Directors’ Report and the Audited Accounts for the financial year ended 31 December 2011 together with the Auditors’ Report thereon. (Resolution 1)

2. To approve the payment of Directors’ fees of S$266,948 for the financial year ended 31 December

2011 (2010: S$280,100). (Resolution 2) 3. To re-elect the following Directors retiring by rotation under Article 98 of the Company’s Articles of

Association:-

Dr Jong Hee Sen (Resolution 3) Ms Kuek Chiew Hia (see explanatory note 1) (Resolution 4)

4. To re-appoint Messrs KPMG LLP as Auditors of the Company and to authorise the Directors to fix their remuneration. (Resolution 5)

5. To transact any other business that may be properly transacted at an annual general meeting.

AS SPECIAL BUSINESS

To consider and if thought fit, to pass the following resolutions (with or without amendments) as ordinary resolutions:-

6. Ordinary Resolution: The Proposed General Share Issue Mandate (the “Share Issue Mandate”)

“That pursuant to Section 161 of the Companies Act, Chapter 50 of Singapore (the “Companies

Act”), and Rule 806 of the Listing Manual (Section B: Rules of Catalist) (the “Rules of Catalist”) of the Singapore Exchange Securities Trading Limited (the “SGX-ST”), authority be and is hereby given to the directors of the Company (the “Directors”) to:-

(a) (i) allot and issue shares in the capital of the Company (the “Shares”) whether by way of rights, bonus or otherwise; and/or

(ii) make or grant offers, agreements or options (collectively, “Instruments”) that might or would require Shares to be issued, including but not limited to the creation and issue of (as well as adjustments to) warrants, debentures or other instruments convertible into Shares,

at any time and upon such terms and conditions and for such purposes and to such persons as the Directors may in their absolute discretion deem fit;



(b) (notwithstanding that the authority conferred by this resolution may have ceased to be in force) issue Shares in pursuance of any Instruments made or granted by the Directors while this resolution was in force,

provided always that:-

(i) the aggregate number of Shares to be issued pursuant to this resolution (including Shares to be issued in pursuance of Instruments made or granted pursuant to this resolution) shall not exceed one hundred per cent (100%) of the total issued Shares (excluding treasury shares) (as calculated in accordance with sub-paragraph (ii) below), of which the aggregate number of Shares and Instruments to be issued other than on a pro-rata basis to existing shareholders of the Company (the “Shareholders”) shall not exceed fifty per cent (50%) of the total issued Shares (as calculated in accordance with sub-paragraph (ii) below);

(ii) (subject to such manner of calculation as may be prescribed by the SGX-ST) for the purpose of determining the aggregate number of Shares that may be issued under sub-paragraph (i) above, the percentage of total issued Shares shall be based on total issued Shares (excluding treasury shares) at the time of passing this resolution, after adjusting for:-

(1) new Shares arising from the conversion or exercise of any convertible securities outstanding at the time this authority is given;

(2) new Shares arising from the exercise of share options or vesting of share awards outstanding or subsisting at the time of passing this resolution, provided the options or awards were granted in compliance with Part VIII of Chapter 8 of the Rules of Catalist; and

(3) any subsequent bonus issue, consolidation or subdivision of Shares;

(c) in exercising the authority conferred by this resolution, the Directors shall comply with the provisions of the Rules of Catalist for the time being in force (unless such compliance has been waived by the SGX-ST), all applicable legal requirements under the Companies Act, and otherwise, and the Company’s Articles of Association for the time being; and

(d) (unless revoked or varied by the Company in a general meeting) this authority shall continue in force until the conclusion of the next annual general meeting of the Company or the date by which the next annual general meeting of the Company is required by law to be held, whichever is the earlier.”

(see explanatory note 2) (Resolution 6)



7. Ordinary Resolution: The Proposed Renewal of Shareholders’ Mandate for Interested Person Transactions

“That:-

(a) approval be and is hereby given, for the purposes of Chapter 9 of the Rules of Catalist, for the Company, its subsidiaries and associated companies, or any of them, to enter into any of the transactions falling within the types of interested person transactions described in the addendum to this Annual Report dated 13 April 2012 (“Addendum I”), provided that such transactions are made on normal commercial terms and in accordance with the review procedures for the interested person transactions as set out in the Addendum I (“IPT Mandate”);

(b) the IPT Mandate shall, unless revoked or varied by the Company in a general meeting, continue in force until the next annual general meeting of the Company is held or is required by law to be held; and

(c) the Directors be and are hereby authorised to take such steps, approve all matters and enter into all such transactions, arrangements and agreements and execute all such documents and notices as may be necessary or expedient for the purposes of giving effect to the IPT Mandate as such Directors or any of them may deem fit or expedient or to give effect to this resolution.”

(see explanatory note 3) (Resolution 7) 8. Ordinary Resolution: The Proposed Renewal of Share Buy Back Mandate “That:

(a) for the purposes of Sections 76C and 76E of the Companies Act, the Directors be and are hereby authorised to exercise all the powers of the Company to purchase or otherwise acquire ordinary shares in the capital of the Company not exceeding in aggregate the Prescribed Limit (as hereinafter defined), at such price(s) as may be determined by the Directors from time to time up to the Maximum Price (as hereinafter defined) described in the addendum to this Annual Report dated 13 April 2012 (“Addendum II”), whether by way of:-

(i) market purchases (each a “Market Purchase”) on the SGX-ST; and/or

(ii) off-market purchases (each an “Off-Market Purchase”) effected otherwise than on the SGX-ST in accordance with any equal access schemes as may be determined or formulated by the Directors as they consider fit, which schemes shall satisfy all the conditions prescribed by the Companies Act,

and otherwise in accordance with all other provisions of the Companies Act and the Rules of Catalist as may for the time being be applicable (the “Share Buy Back Mandate”);



(b) any share that is purchased or otherwise acquired by the Company pursuant to the Share Buy Back Mandate shall, at the discretion of the Directors, either be cancelled or held in treasury and dealt with in accordance with the Companies Act;

(c) unless varied or revoked by the Company in a general meeting, the authority conferred on the Directors pursuant to the Share Buy Back Mandate may be exercised by the Directors at any time and from time to time during the period commencing from the passing of this resolution and expiring on the earlier of:-

(i) the date on which the next annual general meeting of the Company is held or is required by law to be held;

(ii) the date on which the share buy back is carried out to the full extent mandated; or

(iii) the date on which the authority contained in the Share Buy Back Mandate is varied or revoked;

(d) for purposes of this resolution:-

“Prescribed Limit” means ten per cent (10%) of the share as at the date of passing of this resolution unless the Company has effected a reduction of the share capital of the Company in accordance with the applicable provisions of the Companies Act, at any time during the Relevant Period (as hereinafter defined), in which event the shares shall be taken to be the amount of the shares as altered (excluding any treasury shares that may be held by the Company from time to time);

“Relevant Period” means the period commencing from the date on which the last annual general meeting was held and expiring on the date the next annual general meeting is held or is required by law to be held, whichever is the earlier, after the date of this resolution;

“Maximum Price” in relation to a share to be purchased, means an amount (excluding

brokerage, commission, stamp duties, applicable goods and services tax, clearance fees and other related expenses) not exceeding:-

(i) in the case of a Market Purchase: 105% of the Average Closing Price; and

(ii) in the case of an Off-Market Purchase: 120% of the Average Closing Price, where:

“Average Closing Price” means the average of the closing market prices of a share over the last five (5) market days, on which transactions in the shares were recorded, preceding the day of the Market Purchase by the Company or, as the case may be, the day of the making of the offer pursuant to the Off-Market Purchase, and deemed to be adjusted for any corporate action that occurs after the relevant five-day period;

“day of the making of the offer” means the day on which the Company announces its intention to make an offer for the purchase of shares from shareholders of the Company stating the purchase price (which shall not be more than the Maximum Price calculated on the foregoing basis) for each share and the relevant terms of the equal access scheme for effecting the Off-Market Purchase; and



“market day” means a day on which the SGX-ST is open for trading in securities; and

any of the Directors be and are hereby authorised to complete and do all such acts and things (including without limitation, to execute all such documents as may be required and to approve any amendments, alterations or modifications to any documents), as they or he may consider desirable, expedient or necessary to give effect to the transactions contemplated by this resolution.”

(see explanatory note 4) (Resolution 8)

BY ORDER OF THE BOARD

Wee Woon HongLee Hock HengCompany Secretaries

13 April 2012Singapore



Explanatory Notes:-

1. Ms Kuek Chiew Hia will, upon re-election as a Director of the Company, remain as the member of the Audit Committee and the Remuneration Committee of the Company, and will be considered independent for the purposes of Rule 704(7) of the Rules of Catalist.

2. Under the Rules of Catalist, a share issue mandate approved by shareholders as an ordinary resolution will enable directors of an issuer to issue an aggregate number of new shares and/or convertible securities of the issuer of up to one hundred per cent (100%) of the total issued shares (excluding treasury shares) as at the time of passing of the resolution approving the share issue mandate, of which the aggregate number of new shares and/or convertible securities to be issued other than on a pro rata basis to existing shareholders must be not more than fifty per cent (50%) of the total issued shares of the issuer (excluding treasury shares).

The Directors are of the opinion that the Share Issue Mandate will enable the Company to respond faster to business opportunities and to have greater flexibility and scope in negotiating with third parties in potential fund raising exercises or other arrangements or transactions involving the capital of the Company.

The ordinary resolution 6 proposed in item 6 above, if passed, will empower the Directors from the date of the AGM until the date of the next annual general meeting is to be held or is required by law to be held, whichever is the earlier, to allot and issue shares and/or convertible securities in the capital of the Company. The aggregate number of shares and/or convertible securities which the Directors may allot and issue under this resolution, shall not exceed one hundred per cent (100%) of the Company’s issued share capital of which the aggregate number of shares and/or convertible securities to be issued other than on a pro-rata basis to existing shareholders shall not exceed fifty per cent (50%) of the Company’s issued share capital (excluding treasury shares) at the time of passing of this resolution. This authority will, unless previously revoked or varied at a general meeting, expire at the next annual general meeting of the Company.

3. The ordinary resolution 7 proposed in item 7 above, if passed, will authorise the interested person transactions as described in the Addendum I and recurring in the year and will empower the Directors, from the date of the AGM until the date of the next annual general meeting is to be held or is required by law to be held, whichever is the earlier, to do all acts necessary to give effect to the IPT Mandate. The rationale for and categories of interested person transactions pursuant to the IPT Mandate are set out in greater detail in the Addendum I accompanying this Annual Report.

4. The ordinary resolution 8 proposed in item 8 above, if passed, will empower the Directors from the date of the AGM until the date of the next annual general meeting is to be held or is required by law to be held, whichever is the earlier, to make purchases (whether by way of Market Purchases or Off-Market Purchases on an equal access scheme) from time to time of up to ten per cent (10%) of the total number of shares (excluding treasury shares) at prices up to but not exceeding the Maximum Price. The rationale for, the authority and limitation on, the source of funds to be used for the purchase or acquisition including the amount of financing and the financial effects of the purchase or acquisition of Shares by the Company pursuant to the Share Buy Back Mandate are set out in greater detail in the Addendum II accompanying this Annual Report.

Notes:-

(i) A member of the Company entitled to attend and vote at the AGM may appoint not more than two (2) proxies to attend and vote instead of him.

(ii) Where a member appoints two (2) proxies, he shall specify the proportion of his shareholding to be represented by each proxy in the instrument appointing the proxies. A proxy need not be a member of the Company.

(iii) If the member is a corporation, the instrument appointing the proxy must be under seal or the hand of an officer or attorney duly authorised.

(iv) The instrument appointing a proxy must be deposited at the Registered Office of the Company at 2 Leng Kee Road, #06-07 Thye Hong Centre, Singapore 159086 not less than 48 hours before the time appointed for holding the AGM.

HEALTHWAY MEDICAL CORPORATION LIMITED(Incorporated in the Republic of Singapore)(Company Registration Number 200708625C)

pRoxy foRmANNUAL GENERAL MEETING

I/We, (Name)

of (Address)

being a *member/members of Healthway Medical Corporation Limited (the “Company”) hereby appoint:-

Name NRIC/Passport Number Proportion of Shareholdings

Number of Shares %

Address

*and/or

Name NRIC/Passport Number Proportion of Shareholdings

Number of Shares %

Address

or failing *him/her, the Chairman of the Annual General Meeting (“AGM”) of the Company as *my/our *proxy/proxies to attend and to vote for *me/us on *my/our behalf and, if necessary to demand a poll, at the AGM of the Company to be held at The National University of Singapore Society, Kent Ridge Guild House, Evans Room, 9 Kent Ridge Drive Singapore 119241 on 30 April 2012 at 10.30 a.m. and at any adjournment thereof.

(Please indicate with an “X” in the spaces provided whether you wish your vote(s) to be cast for or against the Ordinary Resolutions as set out in the Notice of AGM. In the absence of specific directions, the *proxy/proxies will vote or abstain as *he/they may think fit, as *he/they will on any other matter arising at the AGM.)

No. Ordinary Resolutions relating to:-To be used on a show of hands

To be used in the event of a poll

For Against Number of Votes

For

Number of VotesAgainst

1. Adoption of Directors’ Report and Audited Accounts for the financial year ended 31 December 2011

2. Approval of Directors’ Fees amounting to S$266,948 for the financial year ended 31 December 2011

3. Re-election of Dr Jong Hee Sen as a Director of the Company

4. Re-election of Ms Kuek Chiew Hia as a Director of the Company

5. Re-appointment of Messrs KPMG LLP as Auditors of the Company and to authorise the Directors to fix their remuneration

6. Authority to allot and issue shares pursuant to the General Share Issue Mandate

7. Renewal of the IPT Mandate

8. Renewal of the Share Buy Back Mandate(Note: The vote of this resolution will be conducted by poll)

* Delete accordingly

Dated this day of 2012

Signature(s) of Shareholder(s)/or Common Seal

IMPORTANT: PLEASE READ NOTES OVERLEAF

Total Number of Shares Held

&

Notes:-

1. Please insert the total number of shares held by you. If you have shares entered against your name in the Depository Register (as defined in Section 130A of the Companies Act, Chapter 50 of Singapore), you should insert that number of shares. If you have shares registered in your name in the Register of Members, you should insert that number of shares. If you have shares entered against your name in the Depository Register and the Register of Members, you should insert the aggregate number of shares entered against your name in the Depository Register and registered in your name in the Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the shares held by you.

2. A member of the Company entitled to attend and vote at the AGM of the Company is entitled to appoint not more than two (2) proxies to attend and vote on his/her behalf. A proxy need not be a member of the Company.

3. The instrument appointing the a proxy or proxies must be deposited at the Company’s registered office at 2 Leng Kee Road, #06-07 Thye Hong Centre, Singapore 159086 not less than 48 hours before the time appointed for the AGM.

4. Where a member appoints more than one (1) proxy, he/she shall specify the proportion of his/her shareholdings to be represented by each proxy. If no percentage is specified, the first named proxy shall be deemed to represent 100 per cent. (100%) of the shareholding and the second named proxy shall be deemed to be an alternate to the first named.

5. The instrument appointing a proxy or proxies must be under the hand of the appointor or his/her attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its common seal or under the hand of its attorney or a duly authorised officer.

6. Where an instrument appointing a proxy is signed on behalf of the appointor by an attorney, the letter or power of attorney or a duly certified copy thereof must (failing previous registration with the Company) be lodged with the instrument of proxy, failing which the instrument may be treated as invalid.

7. A corporation which is a member may authorise by resolution of its directors or other governing body such person as it thinks fit to act as its representative at the meeting, in accordance with Section 179 of the Companies Act, Chapter 50 of Singapore.

8. The submission of an instrument or form appointing a proxy by a member does not preclude him/her from attending and voting in person at the AGM if he/she so wishes.

9. The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed, illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument appointing a proxy or proxies. In addition, in the case of a member whose shares are entered against his/her name in the Depository Register, the Company may reject any instrument of proxy lodged if such member, being the appointor, is not shown to have shares entered against his/her name in the Depository Register 48 hours before the time appointed for holding the AGM, as certified by the Depository to the Company.

HEALTHWAY MEDICAL CORPORATION LIMITED2 Leng Kee Road

#06-07 Thye Hong CentreSingapore 159086

AFFIXSTAMP

Fold along this line (1)

Fold along this line (2)

our group struCtureas at report date

Healthway Medical Corporation limitedcompany Registration 200708625c

2 leng Kee Road #06-07 Thye Hong centre Singapore 159086Tel: +65 6323 4415 / 6323 4416Tel: +65 6397 6966 (24 hrs medical hotline)Fax: +65 6479 5347

www. healthwaymedical.com

ADDENDUM I DATED 13 APRIL 2012

If a shareholder of Healthway Medical Corporation Limited (the “Company”) is in any doubt as to theactions he should take, he should consult his legal, financial, tax or other professional advisersimmediately.

This Addendum is circulated to shareholders of the Company together with the Company’s annual report.Its purpose is to provide shareholders of the Company with the relevant information relating to, and toseek shareholders’ approval to renew the shareholders’ mandate for Interested Person Transactions (asdefined hereinafter) to be tabled at the Annual General Meeting to be held at The National University ofSingapore Society, Kent Ridge Guild House, Evans Room, 9 Kent Ridge Drive, Singapore 119241 on30 April 2012 at 10.30 a.m..

The Notice of Annual General Meeting and a Proxy Form are enclosed with the Annual Report. ThisAddendum has not been examined or approved by the Singapore Exchange Securities Trading Limited(the “SGX-ST”) and the SGX-ST assumes no responsibility for the contents of this Addendum, includingthe correctness of any of the statements or opinions made or reports contained in this Addendum.

This Addendum has been prepared by the Company and its contents have been reviewed by theCompany’s sponsor, PrimePartners Corporate Finance Pte. Ltd. (the “Sponsor”), for compliance with therelevant rules of the SGX-ST. The Sponsor has not independently verified the contents of this Addendum.

The contact person for the Sponsor is Mr Mark Liew, Managing Director, Corporate Finance, at 20 CecilStreet, #21-02 Equity Plaza, Singapore 049705, telephone (65) 6229 8088.

HEALTHWAY MEDICAL CORPORATION LIMITED(Incorporated in the Republic of Singapore)(Company Registration No. 200708625C)

ADDENDUM IN RELATION TO THE PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE FOR

INTERESTED PERSON TRANSACTIONS

DEFINITIONS

For the purpose of this Addendum, the following definitions apply throughout unless otherwise stated:-

“AGM” : The annual general meeting of the Company

“Audit Committee” or “Independent : The audit committee of the Company comprising Mr Siew Directors” Teng Kean and Ms Kuek Chiew Hia, who are deemed to be

independent for the purpose of making a recommendation toShareholders in respect of the Proposed Renewal of IPTMandate

“Associate” : (a) in relation to any director, chief executive officer,substantial shareholder or controlling shareholder(being an individual) means:-

(i) his immediate family;

(ii) the trustees of any trust of which he or hisimmediate family is a beneficiary or, in the caseof a discretionary trust, is a discretionary object;and

(iii) any company in which he and his immediatefamily together (directly or indirectly) have aninterest of 30% or more

(b) in relation to a substantial shareholder or a controllingshareholder (being a company) means any othercompany which is its subsidiary or holding company oris a subsidiary of such holding company or one in theequity of which it and/or such other company orcompanies taken together (directly or indirectly) havean interest of 30% or more

“Board” or “Board of Directors” : The board of Directors of the Company as at the date of thisAddendum

“Catalist” : The sponsor-supervised listing platform of the SGX-ST

“Catalist Rules” : The Listing Manual (Section B: Rules of Catalist) of the SGX-ST, as amended or modified from time to time

“CDP” : The Central Depository (Pte) Limited

“Chapter 9” : Chapter 9 of the Catalist Rules

“Companies Act” : The Companies Act, Chapter 50 of Singapore, as amendedor modified from time to time

“Company” : Healthway Medical Corporation Limited, a companyincorporated in the Republic of Singapore

“Controlling Shareholder” : A person who:-

(a) holds directly or indirectly 15% or more of the nominalamount of all voting shares in the Company; or

(b) in fact exercises control over a Company

2

“Director(s)” : The director(s) of the Company for the time being

“Executive Director” : A director of the Company who is a full-time employee andperforms an executive function

“EGM” : The extraordinary general meeting of the Company held on 2November 2010

“Golden Cliff” : Golden Cliff International Limited, a company incorporated inthe British Virgin Islands and wholly-owned by Mr Fan KowHin, the Executive Chairman and Controlling Shareholder ofthe Company

“Group” : The Company and its subsidiaries; and in connection with theProposed Renewal of IPT Mandate includes associatedcompanies of the Company that are not listed on the SGX-STor any approved exchange over which the Company, itssubsidiaries or Interested Person(s) has control

“HMD” : Healthway Medical Development (Private) Limited, acompany incorporated in Singapore pursuant to the JV

“HMD Group” : HMD and any future subsidiaries which maybe newly set upor to be acquired by it from time to time

“Interested Person(s)” : Has the meaning ascribed to it in Section 2.2 of thisAddendum

“Interested Person Transaction(s)” : Has the meaning ascribed to it in Section 2.2 of this or “IPT(s)” Addendum

“IPT Mandate” : The shareholders’ general mandate pursuant to Chapter 9permitting the Company, its subsidiaries and associatedcompanies or any of them, to enter into certain types ofrecurrent transactions of a revenue or trading naturenecessary for day-to-day operations with specific classes ofInterested Persons, which was approved by Shareholders atthe EGM

“JV” : Joint venture among the JV Partners

“JV Partners” : Collectively, the parties entered into the joint ventureagreement dated 22 September 2010, including theCompany, Golden Cliff, Real Empire, Xanery and “JVPartner” means each and any one of them

“Latest Practicable Date” : 2 April 2012, being the latest practicable date prior to theprinting of this Addendum

“Medical Development Business” : The business comprising the development, investment andmanagement of real estate projects which include medicalfacilities

“NTA” : Net tangible assets as determined in accordance with theSingapore Financial Reporting Standards

“PRC” : People’s Republic of China

“Proposed Renewal of IPT Mandate” : Proposed renewal of the IPT Mandate

3

“Real Empire” : Real Empire International Limited, a company incorporated inthe British Virgin Islands and wholly-owned by Mr Aathar AhKong Andrew, a Substantial Shareholder of the Company

“SFA” : Securities and Futures Act, Chapter 289 of Singapore, asamended or modified from time to time

“Share(s)” : Ordinary share(s) in the capital of the Company

“Shareholder(s)” : Registered holder(s) of Shares, except that where theregistered holder is CDP, the term “Shareholders” shall, inrelation to such Shares and where the context admits, meanthe persons named as Depositors in the Depository Registermaintained by CDP whose Securities Accounts are creditedwith those Shares

“Substantial Shareholder(s)” : Person(s) (including a corporation) who holds not less than5% (directly or indirectly) of the total votes attached to all thevoting Shares in the Company

“Xanery” : Xanery Limited, a company incorporated in the British VirginIslands and wholly-owned by Dr Jong Hee Sen, the Non-Executive and Non-Independent Director and a SubstantialShareholder of the Company

“S$” and “cents” : Singapore dollars and cents, respectively

“%” or “per cent.” : Per cent

The terms “Depositor”, “Depository Agent” and “Depository Register” shall have the same meaningsascribed to them respectively in Section 130A of the Companies Act.

The term “Subsidiary” shall have the same meaning ascribed to it under Section 5 of the Companies Act.

Words importing the singular shall, where applicable, include the plural and vice versa and wordsimporting the masculine gender shall, where applicable, include the feminine and neuter genders andvice versa. References to persons shall include corporations.

Any reference in this Addendum to any enactment is a reference to that enactment as for the time beingamended or re-enacted. Any word or term defined under the Companies Act, the SFA, the Catalist Rulesor any statutory modification thereof and not otherwise defined in this Addendum, where applicable, shallhave the same meaning assigned to it under the Companies Act, the SFA, the Catalist Rules or anymodification thereof, as the case may be, unless otherwise provided.

Any reference to a time of day and to dates in this Addendum is made by reference to Singapore timeand dates, unless otherwise stated.

4

HEALTHWAY MEDICAL CORPORATION LIMITED(Incorporated in the Republic of Singapore)

(Company Registration Number 200708625C)

Directors Registered Office

Fan Kow Hin (Executive Chairman) 2 Leng Kee RoadLam Pin Woon (President and Executive Director) #06-07 Thye Hong CentreDr Jong Hee Sen (Non-Executive Non-Independent Director) Singapore 159086Siew Teng Kean (Independent Director)Kuek Chiew Hia (Independent Director)

13 April 2012

To: The Shareholders of Healthway Medical Corporation Limited

Dear Sir/Madam

1. INTRODUCTION

1.1 Reference is made to the notice of AGM dated 13 April 2012 (“Notice of AGM”) of the Companyconvening the AGM to be held on 30 April 2012.

1.2 The proposed ordinary resolution 7 in the Notice of AGM relates to the proposed renewal of theIPT Mandate. The IPT Mandate is subject to annual renewal and was last renewed at the AGMheld on 29 April 2011. The authority conferred by the IPT Mandate will expire on 30 April 2012,being the date of the forthcoming AGM.

1.3 The purpose of this Addendum is to provide Shareholders with the relevant information relating to,and to explain the rationale for the Proposed Renewal of IPT Mandate to be tabled at theforthcoming AGM.

2. PROPOSED RENEWAL OF IPT MANDATE

2.1 Chapter 9 of the Catalist Rules

Chapter 9 governs transactions between a listed company or any of its unlisted subsidiaries orunlisted associated companies and interested persons. An “interested person” is defined as adirector, chief executive officer or controlling shareholder of the listed company or an associate ofsuch director, chief executive officer or controlling shareholder.

Chapter 9 allows a listed company to seek a general mandate from its shareholders for recurrenttransactions of a revenue or trading nature or those necessary for its day-to-day operations whichmay be carried out with the listed company’s interested persons, but not the purchase or sale ofassets, undertakings or businesses provided such transactions are entered into at arm’s lengthbasis and on normal commercial terms and are not prejudicial to the interests of the listedcompany and its minority shareholders.

The current IPT Mandate, which was last renewed by the Shareholders during the AGM held on29 April 2011, will continue to be in force until the forthcoming AGM. Accordingly, the Directorspropose that the IPT Mandate be renewed at the forthcoming AGM.

General information relating to Chapter 9, including the meanings of terms such as “interestedperson”, “associate”, “associated company” and “controlling shareholder”, are set out in theannexure of this Addendum.

5

2.2 Classes of Interested Persons

The Company and the JV Partners had on 22 September 2010 entered into a joint ventureagreement (the “JVA”). HMD had been established to pursue opportunities in the MedicalDevelopment Business in the region, particularly in the PRC. As at the Latest Practicable Date, theCompany holds 25.00% equity interest in HMD, while Golden Cliff holds 34.70% equity interest,Real Empire holds 21.65% equity interest and Xanery holds 12.00% equity interest in HMD. Theremaining 6.65% equity interest in HMD are held by five unrelated third parties. As at the LatestPracticable Date, the directors of HMD are Dr Jong Hee Sen who is also a Director of theCompany, together with Mr Teo Cheng Hiang Richard, Mr Goh Yong Chian and Mr Yip Yuen Leong.

By virtue of Mr Fan Kow Hin’s equity interest of 34.70% in HMD, the HMD Group is categorised asan associate of Mr Fan Kow Hin. It is therefore defined as an “Interested Person” for the purposeof Chapter 9. Accordingly, certain transactions entered into between the Company together with itssubsidiaries and/or associated companies and the HMD Group will therefore constitute as“Interested Person Transactions” under Chapter 9.

The IPT Mandate, if renewed, will apply to the Interested Person Transactions which are carriedout with the HMD Group. The following classes of the Interested Persons are:-

(a) Mr Fan Kow Hin, who is the Executive Chairman and Controlling Shareholder of theCompany as at the Latest Practicable Date;

(b) any person, entity or company who, at the point in time when the transaction is proposed tobe entered into, is an associate of Mr Fan Kow Hin;

(c) Dr Jong Hee Sen, who is the Non-Executive and Non-Independent Director and SubstantialShareholder of the Company as at the Latest Practicable Date;

(d) any person, entity or company who, at the point in time when the transaction is proposed tobe entered into, is an associate of Dr Jong Hee Sen; and

(e) the HMD Group.

2.3 Categories of Interested Persons Transactions

The following Interested Person Transactions with the Interested Persons (as described in Section2.2 above) which will be covered by the renewed IPT Mandate are those recurrent transactionsarising in the ordinary course of business of revenue or trading nature or necessary for day-to-dayoperations:-

(a) Healthcare and specialist services

(i) provision of a wide range of healthcare/medical/hospital services (including inpatientand outpatient services) in various specialties including but not limited toanaesthesiology, cardiology, dentistry, dermatology, gastroenterology, general surgery,geriatric medicine, haematology, hand surgery, hepatobiliary surgery, infectiousdiseases, internal medicine, medical oncology, neurology, neurosurgery, obstetrics &gynaecology, ophthalmology, oral & maxillofacial surgery, oral surgery, orthodontics &prosthodontics, orthopaedic surgery, otorhinolaryngology, paediatric medicine andsurgery, plastic surgery, podiatry, psychiatry, public health medicine, rehabilitationmedicine, renal medicine, respiratory medicine, rheumatology, urology, physiotherapy,pathology and orthopaedics wellness services, sports medicine, spinal surgery, sportsdevelopment services, adult reconstructive surgery and trauma surgery;

(ii) provision of laboratory services including clinical, histopathology and cytogeneticservices;

(iii) provision and purchase of laboratory tests services;

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(iv) provision of diagnostic and therapeutic radiology services including generalradiography, magnetic resonance imaging, ultrasound and screening services;

(v) provision of clinical research services;

(vi) provision and purchase of healthcare equipments;

(vii) referral of patients;

(viii) provision and outsourcing of rehabilitation services;

(ix) provision and purchase of clinical waste management services, cleansingmanagement services, ash disposal services and other hospital/clinical/medicalfacility maintenance related services;

(x) provision and purchase of pharmaceutical, surgical, medical products/supplies, drugsas well as hospital equipments; and

(xi) outsourcing of food/catering services for inpatients.

(b) Wellness services

(i) provision of aesthetic services including wellness solutions for facial features, the skinand well-being and laser treatments; and

(ii) provision of traditional Chinese medicine services including sports injury treatmentand wellness management.

(c) Management and/or Support Services

Provision of the management and/or support services in the areas of management,operations of the medical facilities, business development, marketing, advertising, publicity,logistics, management information systems, multimedia, consultancy, training, secretarial,human resources and administrative support, clinical governance or other related services.

Pursuant to the JVA, the principal commercial terms of such management and/or supportservices are briefly:-

(1) the duration of the management agreement is for a period of five (5) years, subject torenewal by the parties to the management agreement;

(2) the Company shall be paid (a) management fees based on a percentage of the totalunaudited revenues of each real estate project to be mutually agreed on a project toproject basis; (b) incentive fees based on a percentage of each real estate project’sunaudited consolidated earnings before interest, tax, depreciation and amortisationand other deductions; and (c) any other fees imposed by the Company subject to theintention of the JV Partners and agreed upon general principles of the JVA;

(3) the Company shall have the power and right to act for and on behalf of the HMDGroup with regards to any matter in relation to each of the real estate projectsundertaken by the HMD Group and the management of working capital for each realestate project undertaken by the HMD Group, in its full and absolute discretion;

(4) while the Company shall devote such time and effort as may be reasonably requiredto achieve the business objectives of the parties to the management agreement, theservices of the Company are not exclusive to the HMD Group and the Company shallbe free to render similar services to any other third parties; and

(5) the Company may terminate its services to the HMD Group if (a) the HMD Group is inmaterial default; and (b) the joint venture becomes illegal for the Company and/orHMD to continue with the real estate project for any reason whatsoever.

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(d) Financial and Insurance

(i) purchase or obtaining of insurances and the underwriting of risks;

(ii) provision of underwriting of accident and healthcare insurance policies;

(iii) purchasing or obtaining of hire purchase facilities, term loans and other creditfacilities;

(iv) obtaining of banking, financial and advisory services and related facilities; and

(v) providing or obtaining of financial assistance and services including lending and/orborrowing of funds.

(e) General Transactions

(i) provision or obtaining such products and/or services incidental to or in connectionwith the Interested Person Transactions set out above, which are necessary for theday-to-day operations of the Group;

(ii) provision or obtaining of cleaning of communal stairs, landings and hallways, lifts,communal heating, lighting and water charges, CCTV systems and communal refusedisposal areas and/or rubbish chutes;

(iii) rental, as lessee, provision or obtaining of building maintenance services and securityservices;

(iv) purchase or obtaining of spare parts for biomedical engineering and other bio-medicalrelated technology/services;

(v) purchase or obtaining of biotechnology related services, such as, research anddevelopment, laboratory services and/or other biotechnology related services orfacilities;

(vi) provision or obtaining of management, support and other related services; and

(vii) any other transactions relating to the provision or obtaining from the InterestedPersons, of products and services related to the Group’s principal and ancillaryactivities in the normal course of their businesses and on normal commercial terms.

2.4 Rationale for and Benefits of the Proposed Renewal of IPT Mandate

The Interested Person Transactions are entered into or are to be entered into by the Group in itsordinary course of business. The Interested Person Transactions are recurring transactions whichare likely to occur with some degree of frequency and may arise at any time and from time to time.The Directors are of the view that it will be beneficial to the Group to transact with the InterestedPersons. It is intended that the Interested Person Transactions shall continue in the future as longas the Interested Persons remains in the Group and so long as the transactions are at arm’slength basis and on normal commercial terms and are not prejudicial to the Company and theminority Shareholders.

The renewal of the IPT Mandate on an annual basis will eliminate the need to announce and/orconvene separate general meetings on each occasion in order to seek Shareholders’ approval foreach Interested Person Transaction to be entered into between the Group and the InterestedPersons. This will substantially reduce the expenses associated with the convening of such generalmeetings (including the engagement of external advisers and preparation of documents) from timeto time, improve administrative efficiency and allow resources and time of the Group to be focusedtowards other business objectives.

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The Proposed Renewal of IPT Mandate is intended to facilitate the Interested Person Transactions,provided that they are carried out at arm’s length basis and on normal commercial terms and arenot prejudicial to the interest of the Company and the minority Shareholders.

2.5 Review Procedures for Interested Person Transactions

To ensure that Interested Person Transactions are undertaken at arm’s length basis and on normalcommercial terms and are consistent with the Group’s usual business practices and policies, whichare generally no more favourable to the Interested Persons than those extended to unrelated thirdparties, the Group has established the following procedures to ensure that the Interested PersonTransactions are undertaken on an arm’s length basis and on the Group’s normal commercialterms:-

(a) Review Procedures

There are procedures established by the Group to ensure that the Interested PersonTransactions are undertaken on an arm’s length basis and on the Group’s normalcommercial terms, consistent with the Group’s usual business practices and policies, whichare generally no more favourable to the Interested Persons than those extended to orobtained from unrelated independent third parties. The Group proposes to implement thefollowing internal procedures for the Interested Person Transactions. In particular, thefollowing review procedures will be put in place:-

(i) Provision of Services or the Sale of Products

The review procedures are:-

(1) all contracts entered into or transactions with the Interested Persons are to becarried out at the prevailing market rates or prices of the service or productproviders on terms which are no more favourable to the Interested Person thanthe usual commercial terms extended to unrelated independent third parties(including, where applicable, preferential rates/rebates/discounts accorded tocorporate customers or for bulk purchases) or otherwise in accordance withapplicable industry norms. In particular, prior to such sales to an InterestedPerson, the terms of at least two (2) other contemporaneous sale transactionsto the Group’s unrelated independent third party customers for similar productsand/or services will be used as comparison, where possible and practicable, todetermine whether the price and terms offered to the Interested Person are fairand reasonable and comparable to those offered to other unrelatedindependent third parties for the same or substantially similar type of productsand/or services. In determining whether the price and terms offered to theInterested Person are fair and reasonable, where applicable, factors such as(but not limited to) delivery schedules, strategic purposes of the transaction,creditworthiness, payment terms and where applicable, preferential rates,rebates or discounts accorded for bulk purchases will be taken into account;and

(2) where the prevailing market rates or prices are not available due to the natureof service to be provided or the product to be sold, the Group’s pricing for suchservices to be provided or products to be sold to the Interested Persons isdetermined in accordance with the Group’s usual business practices andpricing policies, consistent with the usual margin to be obtained by the Groupfor the same or substantially similar type of contract or transaction withunrelated independent third parties taking into consideration factors such as,but not limited to, quantity, volume, consumption, customer requirements,specifications, duration of contract and strategic purposes of the transaction.

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(ii) Obtaining of Services or the Purchasing of Products

All purchases made by the Group, including purchases from the Interested Personsare governed by internal control procedures which detail matters such as theconstitution of internal approving authorities and their monetary jurisdictions. Theguiding principle is to objectively obtain the best goods and/or services on the bestterms through competitive quotations, if appropriate.

The review procedures are:-

(1) all contracts entered into or transactions with the Interested Persons are to becarried out by obtaining quotations (wherever possible or available) from atleast two (2) other unrelated independent third party suppliers for similarquantities and/or quality of services or products, prior to contracting ortransacting with the Interested Person, as a basis for comparison to determinewhether the price and terms offered by the Interested Person are fair andreasonable and comparable to those offered by other unrelated independentthird parties for the same or substantially similar type of services or products. Indetermining whether the price and terms offered by the Interested Persons arefair and reasonable, factors such as, but not limited to, delivery schedules,specification compliance, track record, experience and expertise, and whereapplicable, preferential rates, rebates or discounts accorded for bulk purchases,will also be taken into account; and

(2) in the event that such competitive quotations cannot be obtained (for instance,if there are no unrelated independent third party vendors of similar products orservices, or if the product is proprietary in nature), the senior management staffof the relevant company in the Group (with no interest, direct or indirect in thetransaction), will (a) determine whether the price and terms offered by theInterested Persons are fair and reasonable by using their business experienceand taking into account (including but not limited to), where possible andapplicable, factors such as, the prices of the closest possible substituteproducts or services after considering the additional specification or features ifany, quality and nature of the products or services, the profit margins that maybe generated from the sale or provision of such products or services and theprevailing market conditions; (b) ensure that the terms of supply will, whereapplicable, be in accordance with, or not be more adverse to the Group thanindustry norms; and (c) consider whether the terms are, in their opinion, in theinterest of the Group and not prejudicial to the minority Shareholders.

(iii) When renting properties from or to an Interested Person, the Group shall takeappropriate steps to ensure that such rent is commensurate with the prevailing marketrates, including adopting measures such as making relevant enquiries regardingsimilar property and obtaining necessary reports or reviews published by propertyagents or independent valuers, where considered appropriate. The amount payableshall be based on the most competitive market rental rate of similar property in termsof size and location, and based on the results of the relevant inquiries. Whereprevailing market rentals are not available, whether due to the unavailability orimpracticability of obtaining rental comparisons or otherwise, the rental will bedetermined in accordance with the Group’s usual business practices and policies.

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(b) Threshold Limits

In addition to the review procedures, the following approval procedures will be implementedto supplement existing internal control procedures for the Interested Person Transactions toensure that such transactions are undertaken on an arm’s length basis and on normalcommercial terms:-

(i) Category 1 threshold

The Category 1 threshold shall apply where the aggregate value of the InterestedPerson Transaction(s) entered into with the same Interested Person within a financialyear of the Company is equal to or exceeds S$1 million. Such transaction(s) must bereviewed and approved by the Audit Committee prior to being contracted.

(ii) Category 2 threshold

The Category 2 threshold shall apply where the aggregate value of the InterestedPerson Transaction(s) entered into with the same Interested Person within a financialyear of the Company is equal to or exceeds S$100,000 but is less than S$1 million.Such transaction(s) does not require the prior approval of the Audit Committee butshall be reviewed on a quarterly basis by the Audit Committee.

The threshold limits set out above are adopted by the Company taking into account, interalia, the nature, volume, recurrent frequency and size of the transactions as well as theGroup’s day-to-day operations, administration and businesses. The threshold limits arearrived at as a result of the balancing exercise after considering the operational efficiency forthe day-to-day business operations of the Group and the internal control for the InterestedPerson Transactions. The threshold limits act as an additional safeguard to supplement thereview procedures which will be implemented by the Company for the Interested PersonTransactions.

All Interested Person Transactions entered into pursuant to the renewed IPT Mandate shallbe tabled to the Audit Committee for information on a quarterly basis.

Individual transactions of a value less than S$100,000 do not require review and approvaland will not be taken into account in the aggregation.

If any person has an interest in a transaction falling within a category of transactions to bereviewed or approved by him, he will abstain from any decision making in respect of thattransaction.

(c) General review procedures

In addition to the review procedures and threshold limits set out above, the followingprocedures will also be implemented:-

(i) the Company will maintain a register of all Interested Person Transactions carried outpursuant to the renewed IPT Mandate (recording the basis, including quotationsand/or offers obtained, if any, where applicable to support such basis, on which theyare entered into);

(ii) the annual internal audit plan shall incorporate a review of all Interested PersonTransactions entered into pursuant to the renewed IPT Mandate, including a report tobe submitted to the Audit Committee for its review;

(iii) the Audit Committee may, as it deems fit, request for additional information pertainingto the Interested Person Transactions under review from independent sources oradvisers;

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(iv) further to the above, where any Director has an interest (direct or indirect) in anyInterested Person Transaction, such Director (or his alternate, where appropriate)shall abstain from voting on the matter;

(v) the Audit Committee will carry out periodic reviews (not fewer than twice a year) toascertain that the established review procedures as set out above in respect of therenewed IPT Mandate have been complied with, and to ensure that the thenprevailing rules and regulations of the SGX-ST (in particular Chapter 9) are compliedwith;

(vi) the Audit Committee shall review from time to time whether the review proceduresestablished to monitor the Interested Person Transactions remain adequate and/orcommercially practicable in ensuring that the Interested Person Transactions will becarried out on normal commercial terms, and are not prejudicial to the interests of theCompany and its minority Shareholders;

(vii) the Company will report all Interested Person Transactions to the Audit Committee.The Audit Committee will review and ratify all Interested Person Transactions on aquarterly basis. In the event of ambiguity as to whether a transaction or transactionswould fall within the renewed IPT Mandate, the Company will consult the AuditCommittee prior to entering into such transactions; and

(viii) if a member of the Audit Committee has an interest in an Interested PersonTransaction to be reviewed by the Audit Committee, that member will abstain frommaking any recommendation and any decision-making in respect of that transactionand the review and approval of that transaction will be undertaken by the remainingmembers of the Audit Committee.

2.6 Audit Committee’s Statements

(a) The Audit Committee confirms that the methods and procedures for determining thetransaction prices have not changed since the last Shareholders’ approval at the AGM heldon 29 April 2011.

The Audit Committee having reviewed and considered, inter alia, the terms of the renewedIPT Mandate and are satisfied that the methods and procedures for determining thetransaction prices, review procedures for the Interested Person Transactions, as well as thereviews to be made periodically by the Audit Committee in relation thereto, are sufficient toensure that the Interested Person Transactions will be made with the relevant categories ofthe Interested Persons at arm’s length basis and on normal commercial terms and will notbe prejudicial to the interests of the Company and its minority Shareholders.

(b) If, during the periodic reviews by the Audit Committee, the Audit Committee are of the viewthat the established guidelines and procedures are not sufficient to ensure that theInterested Person Transactions will be at arm’s length basis and on normal commercialterms and will not be prejudicial to the interests of the Company and its minorityShareholders, the Company will revert to Shareholders for a fresh mandate based on newguidelines and procedures for transactions with the Interested Persons.

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3. DIRECTORS’ AND SUBSTANTIAL SHAREHOLDERS’ INTERESTS

The interests of the Directors and Substantial Shareholders in the Shares as at the LatestPracticable Date are set out below:-

Direct Interest Deemed InterestNumber of % of voting Number of % of voting

Shares Shares Shares Shares

Directors

Fan Kow Hin(1) – – 505,865,378 24.37

Lam Pin Woon 4,000,000 0.19 – –

Dr Jong Hee Sen(2) 3,905,276 0.19 133,890,426 6.45

Siew Teng Kean 1,553,350 0.07 – –

Kuek Chiew Hia 270,000 0.01 – –

Substantial Shareholders (other than Directors)

One Organisation Limited(3) – – 234,430,252 11.29


Chee Yin Meh(5) – – 502,120,812 24.19


Notes:

(1) Fan Kow Hin is deemed to be interested in 234,430,252 Shares held by One Organisation Limited (“OOL”) by virtueof his shareholding in OOL, 66,875,000 Shares held by One Organisation Pte Ltd (“OOPL”) by virtue of hisshareholding in OOPL, 3,744,566 Shares held by his sister, Fan Kwee Lan and 200,815,560 Shares registered in thename of a nominee account.

(2) Dr Jong Hee Sen is deemed to be interested in 133,890,426 Shares registered in the name of various nomineeaccounts.

(3) OOL is deemed to be interested in 234,430,252 Shares registered in the name of a nominee account.

(4) Aathar Ah Kong Andrew is deemed to be interested in 202,760,287 Shares in which 3,444,000 Shares are held byhis brother, Aathar Ah Tuk Henry and 199,316,287 Shares registered in the names of various nominee accounts.

(5) Chee Yin Meh is deemed to be interested in 502,120,812 Shares in which 200,815,560 Shares are registered in thename of a nominee account for which the beneficiary is Fan Kow Hin, 234,430,252 Shares in the name of a nomineeaccount for which the beneficiary is OOL, and 66,875,000 Shares registered in the name of a nominee account forwhich the beneficiary is OOPL.

(6) International Finance Corporation, a member of World Bank Group is deemed to be interested 119,645,655 Sharesregistered in the name of a nominee account.

Save as disclose above, none of the Directors or Substantial Shareholders is related to oneanother in any way.

4. APPROVALS AND RESOLUTIONS

Shareholders’ approval for the Proposed Renewal of IPT Mandate is sought at the forthcomingAGM. The resolution relating to the Proposed Renewal of IPT Mandate is contained in the Noticeof AGM as ordinary resolution 7.

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Rule 919 of the Catalist Rules requires that interested persons and any associate of the interestedperson must not vote on any shareholders’ resolution approving any mandate in respect of anyinterested person transactions, nor accept appointments as proxies unless specific instructions asto voting are given. Accordingly, each of the interested persons referred to in paragraph 2.2 of thisAddendum together with their associates who are Shareholders of the Company shall abstain fromvoting in respect of ordinary resolution 7 at the forthcoming AGM to be held on 30 April 2012 andwill not accept appointments as proxies unless specific instructions as to voting are given.

5. INDEPENDENT DIRECTORS’ RECOMMENDATION

The Independent Directors are of the opinion that it is in the interests of the Company that theGroup be permitted to have the flexibility to enter into the Interested Person Transactionsdescribed in Section 2.3 above in their ordinary course of business with the Interested Persons forreasons stated in this Addendum. Accordingly, the Independent Directors recommend thatShareholders vote in favour of the ordinary resolution 7 in relation to the Proposed Renewal of IPTMandate.

Any Shareholder who may require specific advice in relation to his Shares should consult hisstockbroker, bank manager, solicitor, accountant or other professional advisers immediately.

6. DIRECTORS’ RESPONSIBILITY STATEMENT

The Directors who collectively and individually accept full responsibility for the accuracy of theinformation given in this Addendum and confirm, after having made all reasonable enquiries, thatto the best of their knowledge and belief, this Addendum constitutes full and true disclosure of allmaterial facts about the Proposed Renewal of IPT Mandate, the Company and its subsidiaries,and the Directors are not aware of any facts the omission of which would make any statement inthis Addendum misleading.

Where information in this Addendum has been extracted from published or otherwise publiclyavailable sources or obtained from a named source, the sole responsibility of the Directors hasbeen to ensure that such information has been accurately and correctly extracted from thosesources and/or reproduced in this Addendum in its proper form and context.

7. ABSTENTION FROM VOTING

By virtue of their interest in the renewed IPT Mandate, Mr Fan Kow Hin and Dr Jong Hee Sen,being the Interested Persons, will abstain from voting, and will procure that its associates willabstain from voting the ordinary resolution 7 in respect of the Proposed Renewal of IPT Mandateto be tabled at the forthcoming AGM. They shall also abstain from making a recommendation toShareholders on the Proposed Renewal of IPT Mandate at the forthcoming AGM.

Yours faithfullyFor and on behalf of the Board of Directors ofHealthway Medical Corporation Limited

Fan Kow HinExecutive Chairman

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Annexure

GENERAL INFORMATION RELATING TO CHAPTER 9 OF THE CATALIST RULES

Scope

Chapter 9 applies to transactions which a listed company or any of its subsidiaries (other than asubsidiary that is listed on an approved stock exchange) or associated companies (other than anassociated company that is listed on an approved stock exchange or over which the listed group and/orits interested person(s) has no control) proposes to enter into a counter-party who is an interestedperson of the listed company.

Definitions

An “interested person” means a director, chief executive officer or controlling shareholder of the listedcompany or an associate of such director, chief executive officer or controlling shareholder.

An “associate” means:-

(a) in relation to any director, chief executive officer, substantial shareholder or controlling shareholder(being an individual) means:-

(i) his immediate family;

(ii) the trustees of any trust of which he or his immediate family is a beneficiary or, in the caseof a discretionary trust, is a discretionary object; and

(iii) any company in which he and his immediate family together (directly or indirectly) have aninterest of 30% or more,

(b) in relation to a substantial shareholder or a controlling shareholder (being a company) means anyother company which is its subsidiary or holding company or it’s a subsidiary of such holdingcompany or one in the equity of which it and/or such other company or companies taken together(directly or indirectly) have an interest of 30% or more.

An “associated company” means a company in which at least 20% but not more than 50% of its sharesare held by the listed company or the group.

A “controlling shareholder” means a person who holds (directly or indirectly) 15% or more of the nominalamount of all voting shares in the listed company or one who in fact exercises control over its listedcompany.

General Requirements

Except for certain transactions which, by reason of the nature of such transactions, are not considered toput the listed company at risk to its interested person and are hence excluded from the ambit of Chapter9, immediate announcement, or, immediate announcement and shareholders’ approval would be requiredin respect of transactions with interested persons if certain thresholds (which are based on the value ofthe transaction as compared with the listed company’s latest audited consolidated NTA), are reached orexceeded. In particular, shareholders’ approval is required where:

(a) the value of such transaction is equal to or exceeds five per cent (5%) of the latest auditedconsolidated NTA of the group; or

(b) the value of such transaction when aggregated with the value of all other transactions previouslyentered into with the same interested person in the same financial year of the group is equal to orexceeds five per cent (5%) of the latest audited consolidated NTA of the group. However, atransaction which has been approved by shareholders, or is the subject approved by shareholders,need not be included in any subsequent aggregation.

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Immediate announcement of a transaction is required where:

(a) the value of such transaction is equal to or exceeds three per cent (3%) of the latest auditedconsolidated NTA of the group, or

(b) the value of such transaction when aggregated with the value of all other transactions previouslyentered into with the same interested person in the same financial year of the group is equal to orexceeds three per cent (3%) of the latest audited consolidated NTA of the group.

(c) The above requirements for immediate announcement and for shareholders’ approval do not applyto any transaction below S$100,000.

General Mandate

A listed company may seek a general mandate from its shareholders for recurrent transactions withinterested persons of a revenue or trading nature or those necessary for its day-to-day operations suchas the purchase and sale of supplies and materials but not in respect of the purchase or sale of assets,undertakings or businesses. A general mandate is subject to annual renewal.

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ADDENDUM II DATED 13 APRIL 2012

If a shareholder of Healthway Medical Corporation Limited (the “Company”) is in any doubt as to theactions he should take, he should consult his legal, financial, tax or other professional advisersimmediately.

This Addendum is circulated to shareholders of the Company together with the Company’s annual report.Its purpose is to provide shareholders of the Company with the relevant information relating to, and toseek shareholders’ approval to renew the Share Buy Back Mandate (as defined hereinafter) to be tabledat the Annual General Meeting to be held at The National University of Singapore Society, Kent RidgeGuild House, Evans Room, 9 Kent Ridge Drive, Singapore 119241 on 30 April 2012 at 10.30 a.m..

The Notice of Annual General Meeting and a Proxy Form are enclosed with the Annual Report. ThisAddendum has not been examined or approved by the Singapore Exchange Securities Trading Limited(the “SGX–ST”) and the SGX-ST assumes no responsibility for the contents of this Addendum, includingthe correctness of any of the statements or opinions made or reports contained in this Addendum.

This Addendum has been prepared by the Company and its contents have been reviewed by theCompany’s sponsor, PrimePartners Corporate Finance Pte. Ltd. (the “Sponsor”), for compliance with therelevant rules of the SGX-ST. The Sponsor has not independently verified the contents of this Addendum.

The contact person for the Sponsor is Mr Mark Liew, Managing Director, Corporate Finance, at 20 CecilStreet, #21-02 Equity Plaza, Singapore 049705, telephone (65) 6229 8088.

HEALTHWAY MEDICAL CORPORATION LIMITED(Incorporated in the Republic of Singapore)(Company Registration No. 200708625C)

ADDENDUM IN RELATION TO THE PROPOSED RENEWAL OF THE SHARE BUY BACK MANDATE

HEALTHWAY MEDICAL CORPORATION LIMITED(Incorporated in the Republic of Singapore)

(Company Registration Number 200708625C)

Directors Registered Office

Fan Kow Hin (Executive Chairman) 2 Leng Kee RoadLam Pin Woon (President and Executive Director) #06-07 Thye Hong CentreDr Jong Hee Sen (Non-Executive and Non-Independent Director) Singapore 159086Siew Teng Kean (Independent Director)Kuek Chiew Hia (Independent Director)

13 April 2012

To: The Shareholders of Healthway Medical Corporation Limited

Dear Sir/Madam

1. INTRODUCTION

1.1 Reference is made to the notice of annual general meeting (“AGM”) dated 13 April 2012 (“Noticeof AGM”) of Healthway Medical Corporation Limited (the “Company”) convening the AGM of theshareholders of the Company (“Shareholders”) to be held on 30 April 2012 (“AGM 2012”).

1.2 The Company had on 14 January 2009, obtained the approval of Shareholders for the proposedadoption of a share buy back mandate (“Share Buy Back Mandate”) at the extraordinary generalmeeting. The Share Buy Back Mandate is subject to annual renewal. The Share Buy BackMandate was last renewed at the AGM held on 29 April 2011 and will expire at the AGM 2012. Theproposed ordinary resolution 8 in the Notice of AGM relates to the renewal of the Share Buy BackMandate, to authorise the directors of the Company (“Directors”) to purchase issued ordinaryshares in the capital of the Company (“Shares”) on the terms of the Share Buy Back Mandate.

1.3 The purpose of this Addendum is to provide Shareholders with relevant information relating to, andto explain the rationale for the proposed renewal of the Share Buy Back Mandate to be tabled atthe AGM 2012.

2. PROPOSED RENEWAL OF THE SHARE BUY BACK MANDATE

2.1 Authority and Limits of the Renewed Share Buy Back Mandate

Only Shares which are issued and fully paid-up may be purchased by the Company.

The Share Buy Back Mandate, if renewed, will authorise the Directors, from time to time, topurchase Shares either through on-market purchases (“On-Market Purchases”) or off-marketpurchases on an equal access scheme (“Off-Market Purchases”) as defined in Section 76C ofthe Companies Act, Chapter 50 of Singapore (the “Companies Act”) of up to a maximum of tenper cent (10%) of the issued Shares as at the date of the AGM at which the Share Buy BackMandate is in force, at such price up to but not exceeding the Maximum Price (as defined below).For the purpose of calculating the percentage of issued Shares above, any Shares which are heldas treasury shares (“Treasury Shares”) will be disregarded.

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For illustrative purposes only, based on 2,075,736,183 issued Shares (excluding 18,698,000Treasury Shares) as at 2 April 2012 (“Latest Practicable Date”), and assuming that no furtherShares are issued or purchased and kept as Treasury Shares on or prior to the AGM 2012, nomore than 207,573,618 Shares representing ten per cent (10%) of the issued Shares (excludingTreasury Shares) as at the date of the AGM 2012 may be bought by the Company pursuant to therenewed Share Buy Back Mandate.

“On-Market Purchases” refer to purchases of Shares by the Company effected on the SGX-STthrough the ready market system or, as the case may be, any other stock exchange for the timebeing on which the Shares may be listed and quoted, through one (1) or more duly licensedstockbrokers appointed by the Company for the purpose.

“Off-Market Purchases” refer to purchases of Shares by the Company made under an equalaccess scheme that is a scheme for the purchase of Shares from all Shareholders. The Directorsmay impose such terms and conditions which are not inconsistent with the renewed Share BuyBack Mandate, the Listing Manual (Section B: Rules of Catalist) of the SGX-ST (the “CatalistRules”), and the Companies Act, as they consider fit in the interests of the Company in connectionwith or in relation to an equal access scheme. Under Section 76C of the Companies Act, an equalaccess scheme must, however, satisfy all of the following conditions:-

(a) offers for the purchase of issued Shares shall be made to every person who holds issuedShares to purchase the same percentage of their issued Shares;

(b) all of those persons shall be given a reasonable opportunity to accept the offers made tothem; and

(c) the terms of all the offers are the same, except that there shall be disregarded:-

(i) differences in consideration attributable to the fact that offers may relate to Shareswith different accrued dividend entitlements;

(ii) (if applicable) differences in consideration attributable to the fact that offers relate toShares with different amounts remaining unpaid; and

(iii) differences in the offers introduced solely to ensure that each member is left with awhole number of Shares.

Additionally, the Catalist Rules provides that, in making an Off-Market Purchase, the Companymust issue an offer document to all Shareholders which must contain, inter alia:-

(i) the terms and conditions of the offer;

(ii) the period and procedures for acceptances;

(iii) the reasons for the proposed Share buy back;

(iv) the consequences, if any, of Share buy back by the Company that will arise under theSingapore Code on Take-overs and Mergers (the “Take-over Code”) or other applicabletake-over rules;

(v) whether the Share buy back, if made, would have any effect on the listing of the Shares onCatalist;

(vi) details of any Share buy back made by the Company in the previous twelve (12) months(whether On-Market Purchases or Off-Market Purchases), giving the total number of Sharespurchased, the purchase price per Share or the highest and lowest prices paid for thepurchases, where relevant, and the total consideration paid for the purchases; and

(vii) whether the Share purchased by the Company will be cancelled or kept as Treasury Shares.

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The purchase price (excluding brokerage, stamp duties, applicable goods and services tax andother related expenses) to be paid for the Shares will be determined by the Directors.

However, the purchase price to be paid for a Share as determined by the Directors must notexceed:-

(a) in the case of a On-Market Purchase, 105% of the Average Closing Price (as definedhereinafter); and

(b) in the case of an Off-Market Purchase pursuant to an equal access scheme, up to 120% ofthe Average Closing Price (as defined hereinafter),

(the “Maximum Price”) in either case, excluding related expenses of the purchase.

For the above purpose,

“Average Closing Price” means the average of the closing market prices of a Share over the lastfive (5) Market Days, on which transactions in the Shares were recorded, preceding the day of theOn-Market Purchase, or, as the case may be, the day of the making of the offer pursuant to anOff-Market Purchase, and deemed to be adjusted for any corporate action that occurs after therelevant five-day period.

“day of the making of the offer” means the day on which the Company announces its intention tomake an offer for the purchase of Shares from the Shareholders stating the purchase price (whichshall not be more than the Maximum Price calculated on the foregoing basis) for each Share andthe relevant terms of the equal access scheme for effecting the Off-Market Purchase.

“Market Day” means a day on which the SGX-ST is open for trading in securities.

If renewed by Shareholders at the AGM 2012, the renewed Share Buy Back Mandate will takeeffect from the date of the AGM 2012 and continue to be in force until the conclusion of the nextAGM or the expiration of the period within which the next AGM is required by law to be held,whichever is earlier, unless prior thereto, Share purchases are carried out to the full extentmandated or the authority conferred by the Share Buy Back Mandate is revoked or varied byShareholders in a general meeting.

2.2 Rationale for the Renewal of the Share Buy Back Mandate

The proposed renewal of the Share Buy Back Mandate will give the Directors the flexibility topurchase the Shares if and when circumstances permit. The Directors believe that the Share buyback will provide the Company and its Directors with a mechanism to facilitate the return of surpluscash over and above its ordinary capital requirements, in an expedient and cost-efficient manner. Italso allows the Directors to exercise greater control over the Company’s share capital structure,dividend payout and cash reserves.

The purchases of Shares may, depending on market conditions and funding arrangements at thetime, lead to an enhancement of the earnings per Share (“EPS”) of the Group, and will only bemade when the Directors believe that such purchases would benefit the Company and itsShareholders.

Shareholders should note that purchases of Shares pursuant to the renewed Share Buy BackMandate will only be made when the Directors believe that such purchases would be made incircumstances which would not have a material adverse effect on the financial position of theCompany.

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2.3 Source of Funds for Share Buy Back

In purchasing the Shares, the Company may only apply funds legally available for such purchasein accordance with its Memorandum and Articles of Association, and the applicable laws inSingapore. The Company may not buy Shares for a consideration other than cash or for settlementotherwise than in accordance with the Catalist Rules. The buy back of Shares by the Companymay be made out of the Company’s profits or capital so long as the Company is solvent.

Pursuant to Section 76F(4) of the Companies Act, a company is solvent if (a) it is able to pay itsdebts in full at the time of payment and will be able to pay its debts as they fall due in the normalcourse of business in the twelve (12) months following such date of payment; and (b) the value ofits assets is not less than the value of its liabilities (including contingent liabilities) and such valueof its assets will not, after any purchase of shares for purposes of any proposed acquisition orrelease of the company’s obligations, become less than the value of its liabilities (includingcontingent liabilities). In determining that the company is solvent, the directors must have regard tothe most recently audited financial statements, other relevant circumstances, and may rely onvaluations or estimation of assets or liabilities. In determining the value of contingent liabilities, thedirectors may take into account the likelihood of the contingency occurring, as well as any counter-claims by the company.

When Shares are purchased, and cancelled:-

(a) if the Shares are purchased entirely out of the capital of the Company, the Company shallreduce the amount of its share capital by the total amount of the purchase price paid by theCompany for the Shares (excluding brokerage, stamp duties, applicable goods and servicestax, clearance fees and other related expenses) (the “Purchase Price”);

(b) if the Shares are purchased entirely out of profits of the Company, the Company shallreduce the amount of its profits by the total amount of the Purchase Price; or

(c) if the Shares are purchased out of both the capital and the profits of the Company, theCompany shall reduce the amount of its share capital and profits proportionately by the totalamount of the Purchase Price.

The Company may use internal resources and/or external borrowings to finance purchases of itsShares pursuant to the renewed Share Buy Back Mandate.

The Directors do not propose to exercise the renewed Share Buy Back Mandate in a manner andto such extent that the liquidity and capital adequacy position of the Company and its subsidiaries(the “Group”) would be materially adversely affected.

2.4 Status of Purchased Shares Under the Renewed Share Buy Back Mandate

2.4.1 Cancellation

Any Share which is purchased by the Company shall, unless held as Treasury Shares to theextent permitted under the Companies Act, be deemed cancelled immediately on purchase,and all rights and privileges attached to that Share will expire on cancellation. The totalnumber of Shares will be diminished by the number of Shares purchased by the Companyand which are not held as Treasury Shares.

All Shares purchased by the Company (other than Treasury Shares held by the Company tothe extent permitted under the Companies Act) will be automatically de-listed by the SGX-ST, and certificates in respect thereof will be cancelled and destroyed by the Company assoon as reasonably practicable following settlement of any such purchase.

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2.4.2 Treasury Shares

Under the Companies Act, Shares purchased by the Company may be held or dealt with asTreasury Shares. Some of the provisions on Treasury Shares under the Companies Act aresummarised below:-

(i) Maximum Holdings

The number of Shares held as Treasury Shares cannot at any time exceed ten percent (10%) of the total number of issued Shares (“Treasury Shares Limit”).

(ii) Voting and Other Rights

The Company shall not exercise any right in respect of Treasury Shares. In particular,the Company shall not exercise any right to attend or vote at the general meetingsand for the purposes of the Companies Act, the Company shall be treated as havingno right to vote and the Treasury Shares shall be treated as having no voting rights.

In addition, no dividends may be paid, and no other distribution of the Company’sassets may be made, to the Company in respect of Treasury Shares. However, theallotment of Shares as fully paid bonus shares in respect of Treasury Shares isallowed. A subdivision or consolidation of any Treasury Share is also allowed so longas the total value of the Treasury Shares after the subdivision or consolidation is thesame as before.

(iii) Disposal and Cancellation

Where Shares are held as Treasury Shares, the Company may at any time:-

(a) sell the Treasury Shares for cash;

(b) transfer the Treasury Shares for the purposes of or pursuant to an employees’share scheme;

(c) transfer the Treasury Shares as consideration for the purchase of shares in orassets of another company or assets of a person;

(d) cancel the Treasury Shares; or

(e) sell, transfer or otherwise use the Treasury Shares for such other purposes asmay be prescribed by the Minister for Finance.

In respect of Shares that are purchased pursuant to the renewed Share Buy Back Mandate, theDirectors intend for such repurchased Shares to be held as Treasury Shares.

As at the Latest Practicable Date, the Company had 18,698,000 Treasury Shares, representingapproximately 0.9 per cent (0.9%) of the total number of issued Shares. Where Shares purchasedpursuant to the renewed Share Buy Back Mandate are held as Treasury Shares, the number ofsuch Shares to be held as Treasury Shares, when aggregated with the then existing TreasuryShares held, shall not, subject to the Companies Act, exceed the Treasury Shares Limit at anytime.

2.5 Financial Impact

The financial impact on the Group arising from purchases of Shares which may be made pursuantto the renewed Share Buy Back Mandate will depend on, inter alia, whether the Shares arepurchased out of capital and/or retained profits of the Company, the aggregate number of Sharespurchased, the consideration paid for such Shares and whether the Shares purchased are held asTreasury Shares or cancelled.

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Shareholders should note that the financial effects illustrated below are for illustration purposesonly. In particular, it is important to note that the financial analysis set out below is based on theaudited consolidated financial statements for the financial year ended 31 December 2011(“FY2011”) and are not necessarily representative of future financial performance of the Group.Although the renewed Share Buy Back Mandate would authorise the Company to purchase up toten per cent (10%) of the Company’s issued Shares (excluding Treasury Shares), the Companymay not necessarily buy back or be able to buy back ten per cent (10%) of the issued Shares(excluding Treasury Shares) in full.

2.5.1 Financial Effects of the Renewed Share Buy Back Mandate

It is not possible for the Company to realistically calculate or quantify the impact ofpurchases that may be made pursuant to the renewed Share Buy Back Mandate on thefinancial effects as it would depend on factors such as the aggregate number of Sharespurchased, the Purchase Prices paid at the relevant time, and the amount (if any) borrowedby the Company to fund the purchases, whether the purchase is made out of profits orcapital, and whether the Shares purchased are held in treasury or cancelled. Where thePurchase Price paid by the Company for the Shares is paid out of retained profits, suchPurchase Price will correspondingly reduce the amount available for the distribution of cashdividends by the Company. The Directors do not propose to exercise the renewed Share BuyBack Mandate to such an extent that it would have a material adverse effect on the workingcapital requirements of the Group. The purchase of the Shares will only be effected afterconsidering relevant factors such as the working capital requirements, availability of financialresources, the expansion and investment plans of the Group, and the prevailing marketconditions. The renewed Share Buy Back Mandate will be exercised with a view to enhancethe EPS and/or net tangible assets (“NTA”) per Share of the Group.

The financial effects presented below are based on the assumptions set out below:-

(a) Information as at the Latest Practicable Date

As at the Latest Practicable Date, the Company had 2,075,736,183 issued Shares(excluding Treasury Shares).

(b) Illustrative Financial Effects

Purely for illustrative purposes, on the basis of 2,075,736,183 Shares in issue(excluding Treasury Shares) and 18,698,000 issued Shares held as Treasury Sharesas at the Latest Practicable Date and assuming no further Shares are issued orpurchased and kept as Treasury Shares on or prior to the AGM 2012, the Companypurchases 207,573,618 Shares which represents the full ten per cent (10%) of itsissued Shares (excluding Treasury Shares). 209,443,418 Shares will be held asTreasury Shares while the remaining 16,828,200 of such Shares will be cancelled.

In the case of On-Market Purchases by the Company and assuming that theCompany purchases 207,573,618 Shares at the Maximum Price of S$0.0972 for eachShare (being the price equivalent to 105% of the Average Closing Price of the Sharesfor the five (5) Market Days on which the Shares were traded on Catalist immediatelypreceding the Latest Practicable Date), the maximum amount of funds required for thepurchase of 207,573,618 Shares is approximately S$20,176,155.

In the case of Off-Market Purchases by the Company and assuming that theCompany purchases 207,573,618 Shares at the Maximum Price of S$0.111 for eachShare (being the price equivalent to 120% of the Average Closing Price of the Sharesfor the five (5) Market Days on which the Shares were traded on Catalist immediatelypreceding the Latest Practicable Date), the maximum amount of funds required for thepurchase of 207,573,618 Shares is approximately S$23,040,671.

(c) Source of funds for Share Buy Back

Such Share purchases are funded solely by internal resources.

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The financial effects pursuant to the renewed Share Buy back Mandate on the auditedconsolidated financial results of the Group for FY2011 are set out below:-

(i) Purchases made entirely out of capital

Group

On-Market Purchase Off-Market Purchase

Before BeforeShare Share

(S$’000) Purchase After Share Purchase Purchase After Share Purchase

Purchased PurchasedShares Shares

Purchased held as Purchased held asShares Treasury Shares Treasury

As at 31 December 2011 cancelled Shares cancelled Shares

Share Capital and Reserves 150,749 130,573 150,749 150,749 127,708 150,749

Treasury Shares (3,050) (3,050) (23,226) (3,050) (3,050) (26,091)

Total Shareholders’ Equity 147,699 127,523 127,523 147,699 124,658 124,658

NTA 28,415 8,239 8,239 28,415 5,374 5,374

Net Asset Value 147,699 127,523 127,523 147,699 124,658 124,658

Current Assets 43,821 23,645 23,645 43,821 20,780 20,780

Currents Liabilities 33,432 33,432 33,432 33,432 33,432 33,432

Working Capital 10,389 (9,787) (9,787) 10,389 (12,652) (12,652)

Total Borrowings 25,589 25,589 25,589 25,589 25,589 25,589

Number of Shares (’000) 2,075,736 1,868,163 1,868,163 2,075,736 1,868,163 1,868,163

Financial Ratios

NTA per Share (cents) 1.37 0.44 0.44 1.37 0.29 0.29

NAV per Share (cents) 7.12 6.83 6.83 7.12 6.67 6.67

Gearing (times) 0.17 0.20 0.20 0.17 0.21 0.21

Current Ratio (times) 1.31 0.71 0.71 1.31 0.62 0.62

Basic EPS (cents) (3.04) (3.38) (3.38) (3.04) (3.38) (3.38)

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(ii) Purchases made entirely out of profit

Group

On-Market Purchase Off-Market Purchase

Before BeforeShare Share

(S$’000) Purchase After Share Purchase Purchase After Share Purchase

Purchased PurchasedShares Shares

Purchased held as Purchased held asShares Treasury Shares Treasury

As at 31 December 2011 cancelled Shares cancelled Shares

Share Capital and Reserves 150,749 130,573 150,749 150,749 127,708 150,749

Treasury Shares (3,050) (3,050) (23,226) (3,050) (3,050) (26,091)

Total Shareholders’ Equity 147,699 127,523 127,523 147,699 124,658 124,658

NTA 28,415 8,239 8,239 28,415 5,374 5,374

Net Asset Value 147,699 127,523 127,523 147,699 124,658 124,658

Current Assets 43,821 23,645 23,645 43,821 20,780 20,780

Currents Liabilities 33,432 33,432 33,432 33,432 33,432 33,432

Working Capital 10,389 (9,787) (9,787) 10,389 (12,652) (12,652)

Total Borrowings 25,589 25,589 25,589 25,589 25,589 25,589

Number of Shares (’000) 2,075,736 1,868,163 1,868,163 2,075,736 1,868,163 1,868,163

Financial Ratios

NTA per Share (cents) 1.37 0.44 0.44 1.37 0.29 0.29

NAV per Share (cents) 7.12 6.83 6.83 7.12 6.67 6.67

Gearing (times) 0.17 0.20 0.20 0.17 0.21 0.21

Current Ratio (times) 1.31 0.71 0.71 1.31 0.62 0.62

Basic EPS (cents) (3.04) (3.38) (3.38) (3.04) (3.38) (3.38)

Notes:-

(1) The Average Closing Price of the Shares for the five (5) Market Days immediately preceding the LatestPracticable Date is S$0.093.

(2) Total borrowings means the aggregate amount of liabilities from the bank loans, bank overdrafts and financelease liabilities.

(3) NTA per Share equals to shareholders’ funds less minority interests and intangible assets divided by thenumber of Share.

(4) Net asset value per Share equals to net asset value divided by number of Shares.

(5) Gearing equals to total borrowings divided by total shareholders’ equity.

(6) Current ratio equals to current assets divided by current liabilities.

(7) Basic EPS equals to Group’s profit attributable to Shareholders divided by number of Shares.

The financial effects set out above are for illustrative purposes only. Although the renewedShare Buy Back Mandate would authorise the Company to purchase up to ten per cent(10%) of the issued Shares (excluding Treasury Shares), the Company may not necessarilypurchase or be able to purchase the entire ten per cent (10%) of the issued Shares(excluding Treasury Shares). In addition, the Company may cancel all or part of the Sharesrepurchased or hold all or part of the Shares repurchased in treasury.

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2.6 Take-over Implications under the Take-over Code

An increase in the percentage of voting rights held by a Shareholder and persons acting in concertwith him, resulting from a purchase of Shares by the Company will be treated as an acquisition forthe purposes of Rule 14 of the Take-over Code (“Rule 14”). Consequently, depending on thenumber of Shares at that time, a Shareholder or group of Shareholders acting in concert with eachother could obtain or consolidate effective control of the Company and could become obliged tomake a take-over offer under Rule 14.

Under the Take-over Code, persons acting in concert comprise individuals or companies who,pursuant to an agreement or understanding (whether formal or informal) co-operate through theacquisition by any of them of shares in a company to obtain or consolidate effective control of thatcompany. Unless the contrary is established, the following persons will be presumed to be acting inconcert, namely, (a) a company with any of its directors (together with their close relatives, relatedtrusts as well as companies controlled by any of the directors, their close relatives and relatedtrusts) and (b) a company, its parent, subsidiaries and fellow subsidiaries, and their associatedcompanies and companies of which such companies are associated companies, all with eachother. For this purpose, ownership or control of twenty per cent (20%) but not more than fifty percent (50%) of the voting rights of a company will be regarded as the test of associated companystatus.

The circumstances under which Shareholders (including the Directors) and persons acting inconcert with them respectively will incur an obligation to make a general offer under Rule 14 aftera purchase of Shares by the Company are set out in Rule 14 and Appendix 2 of the Take-overCode. In general terms, the effect of Rule 14 and Appendix 2 of the Take-over Code is that, unlessexempted, the Directors and persons acting in concert with them will incur an obligation to make atake-over offer for the Company under Rule 14 if, as a result of the Company purchasing itsShares, the voting rights of such Directors and their concert parties would increase to thirty percent (30%) or more, or if the voting rights of such Directors and their concert parties fall betweenthirty per cent (30%) and fifty per cent (50%) of the Company’s voting rights, the voting rights ofsuch Directors and their concert parties would increase by one per cent (1%) in any period of six(6) months.

Under Appendix 2 of the Take-over Code, a Shareholder not acting in concert with the Directorswill not be required to make a general offer under Rule 14 if, as a result of the Companypurchasing its Shares, the voting rights of such Shareholder would increase to thirty per cent(30%) or more, or, if such Shareholder holds between thirty per cent (30%) and fifty per cent(50%) of the Company’s voting rights, the voting rights of such Shareholder would increase bymore than one per cent (1%) in any period of six (6) months. Such Shareholder need not abstainfrom voting in respect of the resolution authorising the renewed Share Buy Back Mandate.

One Organisation Limited (“OOL”), Wong Weng Hong, Wong Pang Kin, Fan Kwee Lan and AatharAh Tuk Henry (collectively, the “Voting Parties”, and each a “Voting Party”) had on 14 November2008 entered into a voting agreement (the “Voting Agreement”) pursuant to which the membersof the Voting Parties agreed to vote (or cause to be voted) all the Shares in the Company ownedby him, and any other voting securities of the Company (whenever acquired) and to direct thevoting, in the same manner and in the same proportions as OOL for a period commencing fromthe date of the Voting Agreement to the date falling two (2) years from the date of the VotingAgreement or occurrence of a triggering event as set out in the Voting Agreement. Fan Kow Hin,Dr Jong Hee Sen and Aathar Ah Kong Andrew are considered parties in concert with the VotingParties (collectively, the “Former Concert Party Group”).

Under the Take-over Code, where a ruling has been made by the Securities Industry Council(“SIC”) that a group of persons is or has been acting in concert, SIC will require clear evidence tothe contrary to rule that they are no longer acting in concert. Hence, notwithstanding the lapse ofthe Voting Agreement, the concert party presumption will continue to exist and accordingly, all ofthe above parties are still deemed as parties acting in concert.

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As at the Latest Practicable Date, the details of the Former Concert Party Group and the relevantrelationship are as follows:-

Number ofRelevant Relationship Voting Shares (%)

Fan Kow Hin is a Shareholder of the Company (including 66,875,000 267,690,560 12.90 Shares held by One Organisation Pte Ltd (“OOPL”) by virtue of his shareholding in OOPL)

Dr Jong Hee Sen is a Shareholder of the Company 137,795,702 6.64

One Organisation Limited is owned by Fan Kow Hin and his spouse, 234,430,252 11.29Chee Yin Meh

Wong Weng Hong is a former director of the Company 2,500,200 0.12

Wong Pang Kin is the father of Wong Weng Hong 625 NM

Fan Kwee Lan is the sister of Fan Kow Hin 3,744,566 0.18

Aathar Ah Tuk Henry is the brother of Aathar Ah Kong Andrew 3,444,000 0.17

Aathar Ah Kong Andrew is a Shareholder of the Company 201,485,333 9.71

Total 851,091,238 41.00

NM: Not meaningful

As at the Latest Practicable Date, the Former Concert Party Group has an aggregate interest in851,091,238 Shares, representing 41.00% of the voting rights of the Company. Based on theshareholding of the Former Concert Party Group, in the event the Company undertakes Share buyback under the renewed Share Buy Back Mandate up to the maximum number of ten per cent(10%) of the issued share capital of the Company as permitted by the renewed Share Buy BackMandate (the “Share Purchases”), the shareholdings and voting rights of the Former ConcertParty Group will increase from 41.00% to 45.15%. Under the Take-over Code, in the event that theaggregate shareholding and voting rights of the Former Concert Party Group increases by morethan one per cent (1%) within a six-month period as a result of Share buy backs, the FormerConcert Party Group will be required to make a general offer to the other Shareholders under Rule14.1(b) of the Take-over Code.

Save as disclosed above, the Directors are not aware of any Shareholder or group of Shareholdersacting in concert who may become obligated to make a mandatory offer in the event that theDirectors exercise the power to purchase Shares pursuant to the renewed Share Buy BackMandate.

The Company had written to SIC in respect of the obligation of the Former Concert Party Groupunder the Take-over Code. SIC had in their letter dated 29 March 2012, ruled that the requirementfor the Former Concert Party Group to make a general offer for the Company pursuant to therenewed Share Buy Back Mandate, shall be waived subject to the following conditions:-

(a) this Addendum to Shareholders on the resolution to approve the renewal of the Share BuyBack Mandate contain advice to the effect that by voting to approve the renewal of theShare Buy Back Mandate, Shareholders are waiving their rights to a general offer at therequired price from the Former Concert Party Group and parties acting in concert with them;and the names of the Former Concert Party Group and parties acting in concert with them,and their voting rights as at the Latest Practicable Date and after the Share Purchases aredisclosed in this Addendum;

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(b) the resolution to approve the renewal of the Share Buy Back Mandate is approved by amajority of those Shareholders present and voting at the general meeting on a poll whocould not become obliged to make a general offer for the Company as a result of the SharePurchases;

(c) the Former Concert Party Group and parties acting in concert with them abstain from votingfor and recommending Shareholders to vote in favour of the resolution to approve therenewal of the Share Buy Back Mandate; and

(d) the Former Concert Party Group and parties acting in concert with them have notpurchased and will not purchase any Shares between the date on which they know that theannouncement of the renewed Share Buy Back Mandate is imminent and the earlier of:-

(i) the date on which the authority of the renewed Share Buy Back Mandate expires; and

(ii) the date on which the Company announces it has bought back such number ofShares as authorised by the renewed Share Buy Back Mandate or it has decided tocease buying back its Shares, as the case may be,

if such acquisitions, taken together with the Share Purchases, would cause their aggregatevoting rights in the Company to increase by more than one per cent (1%) in the precedingsix (6) months.

SIC has further ruled that if the Company ceases to buy back its Shares and the increase in theaggregate voting rights held by the Former Concert Party Group and parties acting in concert withthem are less than one per cent (1%), the Former Concert Party Group and parties acting inconcert with them may acquire further voting rights in the Company. However, any increase in theirpercentage voting rights in the Company as a result of the renewed Share Buy Back Mandate willbe taken into account with any voting rights acquired by the Former Concert Party Group andparties acting in concert with them (by whatever means) in determining whether they haveincreased their voting rights by more than one per cent (1%) in any six-month period.

It should therefore be noted that approving the renewal of the Share Buy Back Mandate willconstitute a waiver by the Shareholders in respect of their right to a general offer by the FormerConcert Party Group and parties acting in concert with them at the required price, if SharePurchases by the Company results in the aggregate shareholding of the Former Concert PartyGroup and parties acting in concert with them to increase by one per cent (1%) or more in any six-month period. The voting rights of the Former Concert Party Group as at the Latest PracticableDate and in the event of the Share Purchases at the maximum of ten per cent (10%) of the issuedshare capital of the Company (excluding Shares held as Treasury Shares) are set out above in thisAddendum.

Shareholders who are in doubt as to their obligations, if any, to make a mandatory generaloffer under the Take-over Code as a result of the Share Purchases by the Company areadvised to consult their professional advisers and/or SIC and/or other relevant authoritiesbefore they purchase any Shares in the Company during the period when the renewedShare Buy Back Mandate is in force.

Shareholders are advised that by voting in favour of the ordinary resolution 8 relating to therenewal of the Share Buy Back Mandate, they will be waiving their rights to a take-over offer at therequired price from the Former Concert Party Group and parties acting in concert with them, who,as a result of the purchase of Shares by the Company pursuant to the renewed Share Buy BackMandate, would increase their interest in the voting Shares of the Company.

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2.7 Disclosure Requirements for Substantial Shareholders

Under Section 82 of the Companies Act, a person who is a substantial shareholder in a companyshall, within two (2) business days after becoming a substantial shareholder, give notice in writingto the company stating his name and address and full particulars of the voting shares in thecompany in which he has an interest or interests and full particulars of each such interest and ofthe circumstances by reason of which he has that interest.

A substantial shareholder in a company is defined under the Companies Act as a person who hasan interest or interests in one (1) or more voting shares in the company and the nominal amount ofthat share, or the aggregate nominal amount of those shares, is not less than five per cent (5%) ofthe aggregate of the nominal amount of all the voting shares in the company.

Shareholders should note that a purchase of Shares by the Company may inadvertently cause thepercentage shareholding of Shareholders, particularly Shareholders whose current holding ofShares is close to five per cent (5%) to become a substantial Shareholder of the Company for thepurposes of the Companies Act.

2.8 Taxation

Pursuant to Section 10J of the Income Tax Act, Chapter 134 of Singapore, where a company buysback its own shares and makes payment out of its contributed capital, it will not be regarded as apayment of dividends. Where a company buys back its own shares using its distributable profits, itis deemed as having paid a dividend to the shareholders from whom the shares are purchased.

Shareholders should note that the foregoing is not ought to be regarded as advice on thetax position of any Shareholder. Shareholders who are in doubt as to their respective taxpositions or any such tax implications of Share buy back by the Company or who may besubject to tax in a jurisdiction other than Singapore should consult their own professionaladvisers.

2.9 Interested Persons

The Company is prohibited from knowingly buying Shares on Catalist from an interested person,that is, a Director, the chief executive officer of the Company or controlling Shareholder or any oftheir associate, and an interested person is prohibited from knowingly selling his Shares to theCompany.

2.10 Reporting Requirements under the Companies Act

Within thirty (30) days of the passing of a Shareholders’ resolution to approve the purchases ofShares by the Company, the Company shall lodge a copy of such resolution with the Accountingand Corporate Regulatory Authority (“ACRA”). Within thirty (30) days of a purchase of Shares onthe Catalist or otherwise, the Company shall lodge with ACRA the notice of the purchase in theprescribed form, such notification including, inter alia, details of the purchase, the total number ofShares purchased by the Company, the total number of Shares cancelled, the number of Sharesheld as Treasury Shares, the Company’s issued share capital before the purchase and after thepurchase of Shares, the amount of consideration paid by the Company for the purchase, andwhether the Shares were purchased out of the profits or the capital of the Company.

2.11 Catalist Rules

2.11.1 Under the Catalist Rules, a listed company is required to ensure that at least ten per cent(10%) of equity securities (excluding Treasury Shares, preference shares and convertibleequity securities) in a class that is listed is held by the public. As at the Latest PracticableDate, 1,101,676,765 Shares representing approximately 53.07% of the issued sharecapital of the Company are held in the hands of the public. Assuming that the Companypurchases 207,573,618 Shares which represents the full ten per cent (10%) of its issuedshare capital as at the Latest Practicable Date from members of the public by way of aOn-Market Purchase (excluding Treasury Shares) and 209,443,418 Shares will be held astreasury shares while the remaining 16,828,200 of such Shares will be cancelled, thepercentage of Shares held by the public would be approximately 58.44%.

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Accordingly, the Company is of the view that there is a sufficient number of the Shares inissue held by public Shareholders which would permit the Company to undertakepurchases of its Shares through On-Market Purchases up to the full ten per cent (10%)limit pursuant to the renewed Share Buy Back Mandate without adversely affecting thelisting status of the Shares on Catalist, and that the number of Shares remaining in thehands of the public will not fall to such a level as to cause market illiquidity or to adverselyaffect orderly trading.

2.11.2 Under the Catalist Rules, a listed company may only purchase shares by way of a marketacquisition at a price which is not more than five per cent (5%) above the average closingmarket price. The term average closing market price is defined as the average of theclosing market prices of shares over the last five (5) Market Days, on which transactions inthe shares were recorded, before the day on which purchases are made. The MaximumPrice for a Share in relation to On-Market Purchases by the Company, referred to inSection 2.1 of this Addendum, conforms to this restriction.

Additionally, the Catalist Rules also specifies that a listed company shall report allpurchases of its shares to the SGX-ST not later than 9.00 a.m.:-

(a) in the case of a On-Market Purchase, on the Market Day following the day of purchase of any of its shares; and

(b) in the case of an Off-Market Purchase under an equal access scheme, on thesecond Market Day after the close of acceptances of the offer.

Such announcement shall include, inter alia, details of the total number of Sharesauthorised for purchase, the date of purchase, the total number of Shares purchased, thepurchase price per Share or (in the case of On-Market Purchases) the purchase price perShare or the highest price and lowest price per Share, the total consideration paid for theShares and the number of issued Shares after purchase, in the form prescribed under theCatalist Rules.

While the Catalist Rules does not expressly prohibit any purchase of shares by a listedcompany during any particular time, because the listed company would be regarded as an“insider” in relation to any purchase of its issued shares, the Company will not undertakeany purchase of Shares pursuant to the renewed Share Buy Back Mandate at any timeafter any matter or development of a price-sensitive nature has occurred or has been thesubject of consideration and/or a decision of the Board until such price-sensitiveinformation has been publicly announced. Further, in conformity with the best practices ondealing with securities under the Catalist Rules, the Company will not purchase anyShares through On-Market Purchases during the period commencing two (2) weeksbefore the announcement of the Company’s financial statements for each of the first threequarters of its financial year, or one (1) month immediately preceding the announcementof the Company’s annual (full year) financial results.

2.12 Details of the Shares Bought by the Company in the Previous 12 Months

The Company did not purchase any Shares pursuant to the previous renewal of the ShareBuy Back Mandate approved by Shareholders at the AGM on 29 April 2011 up to theLatest Practicable Date.

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3. INTERESTS OF THE DIRECTORS AND/OR SUBSTANTIAL SHAREHOLDERS

The interests of the Directors and substantial Shareholders in the Shares as at the LatestPracticable Date are set out below:-

Direct Interest Deemed Interest

Number of % of voting Number of % of voting Shares Shares Shares Shares

Directors

Fan Kow Hin(1) – – 505,865,378 24.37

Lam Pin Woon 4,000,000 0.19 – –

Dr Jong Hee Sen(2) 3,905,276 0.19 133,890,426 6.45

Siew Teng Kean 1,553,350 0.07 – –

Kuek Chiew Hia 270,000 0.01 – –

Substantial Shareholders (other than Directors)

OOL(3) – – 234,430,252 11.29


Chee Yin Meh(5) – – 502,120,812 24.19


Notes:

(1) Fan Kow Hin is deemed to be interested in 234,430,252 Shares held by OOL by virtue of his shareholding in OOL,66,875,000 Shares held by OOPL by virtue of his shareholding in OOPL, 3,744,566 Shares held by his sister, FanKwee Lan and 200,815,560 Shares registered in the name of a nominee account.

(2) Dr Jong Hee Sen is deemed to be interested in 133,890,426 Shares registered in the name of various nomineeaccounts.

(3) OOL is deemed to be interested in 234,430,252 Shares registered in the name of a nominee account.

(4) Aathar Ah Kong Andrew is deemed to be interested in 202,760,287 Shares in which 3,444,000 Shares are held byhis brother, Aathar Ah Tuk Henry and 199,316,287 Shares registered in the names of various nominee accounts.

(5) Chee Yin Meh is deemed to be interested in 502,120,812 Shares in which 200,815,560 Shares are registered in thename of a nominee account for which the beneficiary is Fan Kow Hin, 234,430,252 Shares in the name of a nomineeaccount for which the beneficiary is OOL, and 66,875,000 Shares registered in the name of a nominee account forwhich the beneficiary is OOPL.

(6) International Finance Corporation, a member of World Bank Group is deemed to be interested 119,645,655 Sharesregistered in the name of a nominee account.

As at the Latest Practicable Date, the Former Concert Party Group held an aggregate interest of41.00% in the total voting Share of the Company.

Save as disclose above, none of the Directors or substantial Shareholders of the Company isrelated to one another in any way.

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4. APPROVALS AND RESOLUTIONS

Shareholders’ approval for the proposed renewal of the Share Buy Back Mandate is sought at theforthcoming AGM 2012 The resolution relating to the proposed renewal of the Share Buy BackMandate is contained in the Notice of AGM as ordinary resolution 8.

5. DIRECTORS’ RECOMMENDATION

The Directors (other than Fan Kow Hin and Dr Jong Hee Sen who have abstained from making arecommendation) are of the opinion that the proposed renewal of the Share Buy Back Mandate isin the best interest of the Company and they recommend that Shareholders vote in favour of theordinary resolution 8 as set out in the Notice of AGM.

6. SHAREHOLDERS WHO SHOULD ABSTAIN FROM VOTING

The Former Concert Party Group and parties acting in concert with them shall abstain from votingin respect of the ordinary resolution 8 to be proposed at the forthcoming AGM 2012. They shallalso decline to accept appointment as proxies for any Shareholder to vote in respect of the saidordinary resolution unless the Shareholder concerned shall have given instructions in his proxyform as to the manner in which his votes are to be cast in respect of the ordinary resolution 8.

7. DIRECTORS’ RESPONSIBILITY STATEMENT

The Directors who collectively and individually accept full responsibility for the accuracy of theinformation given in this Addendum and confirm, after having made all reasonable enquiries, thatto the best of their knowledge and belief, this Addendum constitutes full and true disclosure of allmaterial facts about the proposed renewal of Share Buy Back Mandate, the Company and itssubsidiaries, and the Directors are not aware of any facts the omission of which would make anystatement in this Addendum misleading.

Where information in this Addendum has been extracted from published or otherwise publiclyavailable sources or obtained from a named source, the sole responsibility of the Directors hasbeen to ensure that such information has been accurately and correctly extracted from thosesources and/or reproduced in this Addendum in its proper form and context.

Yours faithfullyFor and on behalf of the Board of Directors ofHealthway Medical Corporation Limited

Fan Kow HinExecutive Chairman

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